NY State Senate Bill 2013-S6359

Senate Bill S6359

Signed By Governor

2013-2014 Legislative Session

Enacts into law major components of legislation necessary to implement the state fiscal plan for the 2014-2015 fiscal year

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Archive: Last Bill Status - Signed by Governor

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 31, 2014	signed chap.59 delivered to governor returned to senate passed assembly ordered to third reading rules cal.34 substituted for a8559d referred to ways and means delivered to assembly passed senate ordered to third reading cal.376
Mar 28, 2014	print number 6359d
Mar 28, 2014	amend (t) and recommit to finance
Mar 14, 2014	print number 6359c
Mar 14, 2014	amend and recommit to finance
Feb 21, 2014	print number 6359b
Feb 21, 2014	amend and recommit to finance
Feb 12, 2014	print number 6359a
Feb 12, 2014	amend (t) and recommit to finance
Jan 21, 2014	referred to finance

Votes

- Mar 31, 2014 - Floor Vote
  S6359
  
  51
  
  Aye
  
  10
  
  Nay
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Mar 31, 2014
      
      aye (51)
      
      Addabbo Jr.
      
      Avella
      
      Ball
      
      Bonacic
      
      Boyle
      
      Breslin
      
      Carlucci
      
      DeFrancisco
      
      Diaz
      
      Dilan
      
      Farley
      
      Felder
      
      Flanagan
      
      Gallivan
      
      Gianaris
      
      Gipson
      
      Golden
      
      Griffo
      
      Grisanti
      
      Hannon
      
      Hassell-Thompson
      
      Kennedy
      
      Klein
      
      LaValle
      
      Lanza
      
      Larkin
      
      Latimer
      
      Libous
      
      Little
      
      Marcellino
      
      Marchione
      
      Martins
      
      Maziarz
      
      Nozzolio
      
      O'Brien
      
      O'Mara
      
      Peralta
      
      Ranzenhofer
      
      Ritchie
      
      Robach
      
      Sampson
      
      Savino
      
      Seward
      
      Skelos
      
      Smith
      
      Stavisky
      
      Stewart-Cousins
      
      Tkaczyk
      
      Valesky
      
      Young
      
      Zeldin
      
      nay (10)
      
      Espaillat
      
      Hoylman-Sigal
      
      Krueger
      
      Montgomery
      
      Parker
      
      Perkins
      
      Rivera
      
      Sanders Jr.
      
      Serrano
      
      Squadron
  Mar 31, 2014 - Finance Committee Vote
  S6359
  
  28
  
  Aye
  
  0
  
  Nay
  
  9
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Finance Committee Vote: Mar 31, 2014
      
      aye (28)
      
      Bonacic
      
      Breslin
      
      DeFrancisco
      
      Diaz
      
      Dilan
      
      Farley
      
      Flanagan
      
      Golden
      
      Griffo
      
      Grisanti
      
      Hannon
      
      Hassell-Thompson
      
      LaValle
      
      Lanza
      
      Larkin
      
      Little
      
      Marcellino
      
      Martins
      
      Nozzolio
      
      O'Mara
      
      Peralta
      
      Ranzenhofer
      
      Robach
      
      Savino
      
      Seward
      
      Stavisky
      
      Valesky
      
      Young
      
      aye wr (9)
      
      Espaillat
      
      Gianaris
      
      Kennedy
      
      Krueger
      
      Montgomery
      
      Parker
      
      Perkins
      
      Rivera
      
      Squadron

Bill Amendments

Original

D (Active)

2013-S6359 - Details

See Assembly Version of this Bill:: A8559
Law Section:: Budget Bills
Laws Affected:: Amd Various Laws, generally

2013-S6359 - Summary

Enacts into law major components of legislation necessary to implement the state fiscal plan for the 2014-2015 state fiscal year; relates to the reformation of the taxation on business corporations; allows direct payment of STAR savings; extends fees for the establishment of oil and gas unit of production value

2013-S6359 - Sponsor Memo

                                BILL NUMBER:S6359

TITLE  OF  BILL:    An act to amend the tax law, the general municipal
law, the urban development corporation act, the  business  corporation
law,  the general associations law, and the administrative code of the
city of New York,  in  relation  to  reforming  taxation  of  business
corporations; and to repeal various provisions of the tax law relating
thereto  (Part  A); to amend the real property tax law, in relation to
the STAR registration program (Part B); to amend chapter  540  of  the
laws  of  1992, amending the real property tax law relating to oil and
gas charges, in relation to the effective date of such  chapter  (Part
C);  to  amend  the  racing, pari-mutuel wagering and breeding law, in
relation to increasing racing regulatory fees (Part D); to  amend  the
tax law, in relation to modifying the signature requirement on e-filed
returns  prepared  by  tax  professionals  (Part E); to amend the real
property tax law, in  relation  to  cost  of  living  adjustments  for
Enhanced  STAR  (Part F); to amend part I of chapter 58 of the laws of
2006, relating to providing an enhanced earned income tax  credit,  in
relation  to  the effectiveness thereof (Part G); to amend the general
obligations law and the tax law, in relation to authorizing electronic
tax clearances for professional and business  licenses  (Part  H);  to
amend the tax law and the administrative code of the city of New York,
in  relation  to  taxing residents who are grantors of exempt resident
trusts that qualify as  non-grantor  incomplete  gift  trusts  on  the
income  from such trusts and taxing residents who are beneficiaries of
all  other  exempt  resident  trusts  or  nonresident  trusts  on  the

distributions of accumulated income that they receive from such trusts
(Part I); to amend the tax law and the administrative code of the city
of New York, in relation to eliminating the personal income tax add-on
minimum  tax;  and  to repeal certain provisions of such laws relating
thereto (Part J); to amend the tax  law,  in  relation  to  adding  an
enhanced real property tax circuit breaker; and to repeal paragraph 14
of  subsection  (e) of section 606 of the tax law, relating to certain
reports (Part K); to amend the tax law, in  relation  to  providing  a
credit  for renters against the personal income tax (Part L); to amend
the tax law, in relation to the prepayment element of the  family  tax
relief  credit  (Part  M);  to  amend  the  tax  law,  in  relation to
eliminating the personal income tax filing requirement  for  residents
having  no  liability  because  income  does  not  exceed the New York
standard deduction if they do not file a  federal  income  tax  return
(Part  N);  to  amend the tax law, in relation to extending the empire
state commercial production tax credit (Part O); to amend  the  public
housing  law,  in  relation to extending the credit against income tax
for persons or entities investing in low-income housing (Part  P);  to
amend  the environmental conservation law, the tax law and the general
municipal law, in relation to eligibility  for  participation  in  the
brownfield   cleanup   program,   and  assignment  of  the  brownfield
redevelopment tax credits; to amend part H of chapter 1 of the laws of
2003, amending the tax law relating to  brownfield  redevelopment  tax
credits,  remediated  brownfield  credit  for  real property taxes for
qualified sites and environmental remediation  insurance  credits,  in
relation  to tax credits for certain sites; to amend the environmental
conservation law, in relation to hazardous waste  generator  fees  and
taxes;  to  amend  the  environmental  conservation  law,  the  public
authorities law  and  the  state  finance  law,  in  relation  to  the
environmental restoration program; and to repeal certain provisions of
the  environmental  conservation  law and the tax law relating thereto


(Part Q);  to  amend  the  tax  law,  in  relation  to  reforming  the
investment tax credit, reducing the tax rate for upstate manufacturers
and  providing  a  tax  credit  for  real  property  taxes to New York
manufacturers;  to  amend the economic development law, in relation to
the excelsior investment tax credit; and to repeal certain  provisions
of  the  tax  law  relating  to  the financial services investment tax
credit (Part R); to amend the economic development law, the  tax  law,
the  transportation  law,  the  administrative code of the city of New
York and the New York state  urban  development  corporation  act,  in
relation  to  repealing the franchise tax on farmers', fruit growers',
and other like agricultural corporations organized and operated  on  a
co-operative  basis; and to repeal section 185 of the tax law relating
to  franchise  tax  on  farmers',  fruit  growers',  and  other   like
agricultural  corporations  organized  and  operated on a co-operative
basis; to repeal sections 187-j, 187-k, 187-l, 187-m, 187-q, 187-r and
187-s of the tax law  relating  to  certain  tax  credits;  to  repeal
paragraph  1  of  subdivision  (h)  of  section  15,  paragraph  1  of
subdivision (g) of section 31, and certain other provisions of the tax
law, in relation to making conforming changes (Part S); to  amend  the
tax  law,  in  relation  to  providing  a  credit  for  excise  tax on
telecommunication services for businesses located in tax-free NY areas
(Part T); to amend the tax law, in relation to reducing the number  of
hours of part-time work needed by employees for employer qualification
for  the  New York youth works tax credit; and to amend the labor law,
in relation to the New York youth works tax credit (Part U); to  amend
chapter  109  of  the laws of 2006 amending the tax law and other laws
relating to providing  exemptions,  reimbursements  and  credits  from
various  taxes for certain alternative fuels, in relation to extending
the alternative fuels tax exemptions for two years (Part V); to  amend
chapter  63  of  the laws of 2000, amending the tax law and other laws
relating to modifying the distribution of funds from the motor vehicle
fuel excise tax and the  vehicle  and  traffic  law,  in  relation  to
simplifying the methodology for distribution of motor vehicle receipts
(Part  W);  to  amend  the  tax law, in relation to the estate tax; to
repeal section 2 of chapter 1013 of the laws of 1962, amending the tax
law relating to imposing a tax on the transfer of estates of decedents
dying on or after April first, nineteen hundred sixty-three,  relating
to  an appendix of applicable internal revenue code provisions, and to
repeal article 26-B  of  the  tax  law,  relating  to  the  generation
skipping  transfer  tax (Part X); to amend the tax law and chapter 912
of the laws of 1920 relating to the regulation of boxing, sparring and
wrestling  matches,  in  relation  to  making  technical   corrections
thereto;  to  repeal  article 19 of the tax law relating to boxing and
wrestling exhibitions tax; and to repeal section 1820 of the  tax  law
relating  to  establishing  misdemeanors  for  certain  violations  of
article 19 of such law (Part Y); to amend the tax law, in relation  to
vendor  fees  paid  to  vendor  tracks  (Part Z); to amend the racing,
pari-mutuel wagering and breeding law, in  relation  to  licenses  for
simulcast  facilities,  sums relating to track simulcast, simulcast of
out-of-state  thoroughbred  races,  simulcasting  of  races   run   by
out-of-state  harness  tracks  and  distributions  of wagers; to amend
chapter 281 of the laws  of  1994  amending  the  racing,  pari-mutuel
wagering  and breeding law and other laws relating to simulcasting and
chapter 346 of the laws  of  1990  amending  the  racing,  pari-mutuel
wagering  and breeding law and other laws relating to simulcasting and
the imposition of certain taxes,  in  relation  to  extending  certain
provisions  thereof; and to amend the racing, pari-mutuel wagering and


breeding law, in relation  to  extending  certain  provisions  thereof
(Part  AA);  to  amend  the  tax law, in relation to capital awards to
vendor tracks (Part BB); to amend the tax law, the  banking  law,  the
public authorities law, and the administrative code of the city of New
York,  in  relation  to  the stock transfer tax, and to repeal certain
provisions  of  the  tax  law,  the  state   finance   law   and   the
administrative  code  of  the  city of New York relating thereto (Part
CC); to amend the tax law, in relation to conforming the due dates for
the metropolitan commuter transportation mobility  tax  for  taxpayers
with  income  from self-employment with the due dates for the personal
income tax (Part DD); to amend the state finance law, the upstate  New
York  gaming  economic  development  act  of  2013 and the tax law, in
relation to moneys appropriated or  transferred  from  the  commercial
gaming revenue fund (Part EE); and to amend the tax law, the education
law,  the  general  municipal  law,  and the real property tax law, in
relation to a real property tax freeze (Part FF)

PURPOSE:

This bill contains provisions needed to implement the Revenue  portion
of the 2014-15 Executive Budget.

This  memorandum  describes  Parts A through FF of the 2014-15 Article
VII Revenue bill which are described wholly within  the  parts  listed
below.

Part A - Corporate tax reform

Purpose:

This  bill  would  establish  a  single  modern system of taxation for
general business corporations and banking  corporations  by  repealing
the  separate  provisions of the Tax Law for banking corporations (Tax
Law Article 32)  and  amending  the  business  corporation  tax  under
Article  9-A to accommodate changes in the financial services industry
and make other modernization changes.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

The  State's  current  corporate  franchise tax structure, which dates
back to the 1940's, is outdated,  unduly  complex  and  vulnerable  to
aggressive  tax  avoidance  techniques.  It  violates basic tax policy
principles by taxing similarly-situated taxpayers differently, and  in
some  instances it creates disincentives to increasing a corporation's
activities in New York. One significant example of the shortcoming  of
the  current  tax structure is that it has not been revised to account
for dramatic changes  in  the  financial  services  sector.  New  York
continues   to  tax  banks  and  other  financial  corporations  under
different articles of the  Tax  Law.  Thus,  a  bank  and  a  non-bank
financial institution would be taxed differently, even though they are
conducting the same activities. Further, many large financial services
firms  provide  bank  and  non-bank financial services within the same
company. This can result in confusion and complexity due to  different
rules  of taxation under Article 9-A and Article 32.  Approximately 25
percent of  the  combined  Article  9-A  and  Article  32  revenue  is
collected on audit.


New  York's  current sourcing rules fail to acknowledge the shift to a
service-based economy. Companies that  generate  significant  receipts
from  services  can incur greater tax liability if they increase their
activity in New York. This reform proposal would source  a  business's
receipts  to  the  location  of  its customers. This assigns income to
various states based on where the customers are located and eliminates
factors that would increase tax if a company increased its activity in
New York. This removes a previous  disincentive  to  locating  in  New
York.

Complexities  within  the  tax  system also complicate tax compliance.
This  creates  disruptions  and  uncertainty  for   businesses   while
increasing  administration  costs  for  New  York State and results in
extremely volatile tax collections that are difficult to forecast  and
can have dramatic effects on the State's financial plan.

This reform proposal addresses the above issues by modernizing the tax
code  to  make it more reflective of the current business environment,
and creates clarity and  certainty  for  the  most  commonly  disputed
areas. This certainty, combined with the elimination of impediments to
businesses  wishing  to  expand their New York activity, will make New
York's corporate tax system more competitive with other states.

Highlights of the reforms and structural  changes  made  by  the  bill
include  (1)  the  repeal  of both Article 32 and the organization and
license taxes and maintenance fees in Tax Law sections 180 and 181 and
(2) the replacement of the entire  net  income  base  with  a  similar
business  income  base  subject  to  a fully effective tax rate of 6.5
percent (effective January 1, 2016) as compared to  the  existing  7.1
percent rate.

Both  the  New York State Tax Relief Commission and the New York State
Tax Reform and Fairness Commission highlighted the need for  New  York
corporate  tax  reform and specifically identified the different rules
under which banks and other corporations are taxed.

This is a new bill.

Budget Implications:

Enactment of  this  bill  is  necessary  to  implement  the  2014-2015
Executive  Budget  because it would reduce revenues by $205 million in
SFY 2015-16 and $346 million annually thereafter.

Effective Date:

This bill takes effect January 1, 2015 and applies  to  taxable  years
beginning on or after January 1, 2015.

Part B - Allow direct payment of STAR tax savings in certain cases.

Purpose:

This  bill  would  allow the Department of Taxation and Finance to pay
the STAR tax savings directly to eligible property owners who register
for STAR after receiving their 2014-15 school tax bills.


Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

The STAR Registration Program was enacted as part of the 2013-14 State
Budget  to  eliminate  inappropriate  "Basic  STAR"  exemptions  while
enabling qualified owners to receive their rightful  tax  relief.  The
law  permits  late  registrations  under  certain conditions, so it is
possible that a limited number of property owners may seek to register
after receiving their 2014-15 school  tax  bills.  While  there  is  a
mechanism  in  current  law to restore a STAR exemption after a school
tax bill has been issued, it is a process  that  forces  the  property
owner  to wait for a refund while local government and school district
personnel process the necessary paperwork. This proposal  would  allow
the Tax Department to directly reimburse these property owners without
delay,  while  sparing local officials the need to bear administrative
burdens in support of this State program.

Budget Implications:

Enactment of this bill is necessary to implement the 2014-15 Executive
Budget and to allow late registrants to be reimbursed promptly for the
value of their lost STAR exemptions.

Effective Date:

This bill takes effect immediately.

Part C - Extend fees for the establishment of  oil  and  gas  unit  of
production values

Purpose:

This  bill would extend fees for the establishment of oil and gas unit
of production values by the Department of Taxation  and  Finance  (the
Department).

Statement  in  Support, Summary of Provisions, Existing Law, and Prior
Legislative History:

The Department establishes "unit of  production  values"  which  local
assessors  must  use  when  assessing  oil  and  gas wells and related
facilities, pursuant to Article 5, Title 5 of the  Real  Property  Tax
Law.  This program, which has been in place since 1981, relieves local
assessors of the burden of attaining the necessary expertise to  value
these properties, while assuring producers that their assessments will
be determined on a uniform, rational basis throughout the State.

In  recognition of the benefit this program provides for the industry,
producers have been obliged since 1992 to pay fees  to  the  State  to
offset  the  administrative costs involved in developing these values.
The statute imposing those fees - § 593 of Real Property Tax Law - has
always been subject to  a  sunset  clause,  and  has  been  repeatedly
renewed  since  enactment.  This  bill  would extend the program until
2018.

Budget Implications:


Enactment of this bill is necessary to implement the 2014-15 Executive
Budget and allow the Department to offset related costs.

Effective Date:

This bill takes effect immediately.

Part  D  -  Increase  racing  regulatory  fee  from 0.5 percent to 0.6
percent

Purpose:

This bill would increase the racing regulatory  fee  on  thoroughbred,
harness,  off-track  pari-mutuel betting and simulcast racing from 0.5
percent to 0.6 percent.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

Regulation   of   the   horse   racing  industry  is  intended  to  be
self-financing-paid for entirely by the industry. However, the cost of
regulating  the  industry  has  consistently  exceeded  the   revenues
collected  by  the industry. This bill ensures that assessments on the
industry are sufficient to meet the cost of regulation.

Budget Implications:

Enactment of this bill is necessary to implement the 2014-15 Executive
Budget and will generate an additional $1.6 million annually.

Effective Date:

This bill takes effect immediately.

Part E - Modify signature requirements on e-filed returns prepared  by
tax professionals

Purpose:

This  bill  would modify the signature requirements on e-filed returns
prepared by tax professionals.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

This bill reflects the recommendation of the New York State Tax Reform
and  Fairness  Commission  that  the signature requirement for e-filed
returns be  modified  It  would  allow  taxpayers  to  use  electronic
signatures  when  authorizing  their tax preparers to e-file their tax
returns and related  documents.  This  would  make  the  process  less
burdensome  for tax professionals and serve to further reduce barriers
to electronic filing.

Budget Implications:

Enactment of  this  bill  is  necessary  to  implement  the  2014-2015
Executive   Budget.   It   would   implement   a   tax  simplification


recommendation of the Tax Reform and Fairness Commission  and  has  no
impact on the State's Financial Plan.

Effective Date:

This bill takes effect immediately.

Part  F  -  Eliminate  the  Income  Threshold Inflation Adjustment For
Enhanced STAR Benefits

Purpose:

This bill eliminates the annual cost  of  living  adjustment  for  the
income  standard  applicable  to the Enhanced STAR exemption under the
STAR program.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

This  bill  amends  RPTL  §  425(4)  by eliminating the annual cost of
living adjustment made  to  the  income  standard  for  Enhanced  STAR
eligibility  beginning  with  the  2015-16  school  year,  effectively
freezing the income threshold at $81,900. Existing law  requires  that
the  income  threshold  applicable  for  Enhanced  STAR eligibility be
adjusted  annually  to  account  for   a   cost-of-living   adjustment
percentage.

STAR  was  enacted  in  1997  to  offset  rising  property  taxes  for
homeowners and to provide additional targeted property tax  relief  to
senior  citizens.  Since  that  time, a number of program enhancements
have been made that  contributed  to  increases  in  the  current  and
projected  cost  of  the  STAR  program. The costs of the STAR program
increased approximately 32% between 2001-02 and  2012-13.  The  direct
costs  of the STAR program, including reimbursements made under RPTL
1306-a and State Finance  Law  §  54-f,  in  2012-13  were  over  $3.3
billion.  Capping  the  growth of the direct costs to the State of the
program at current levels will limit spending at the State  level  and
is critical for a balanced State budget.

Budget Implications:

Eliminating  the  annual cost of living adjustment will reduce General
Fund spending by $3.1 million in SFY 2015-16.

Effective Date:

This bill takes effect immediately and  applies  to  assessment  rolls
completed in 2015 and thereafter.

Part  G  - Extend the Noncustodial Parent Earned Income Tax Credit for
Two Years

Purpose:

This bill would extend  the  noncustodial  parent  earned  income  tax
credit for two years, through tax year 2016.


Statement  in  Support, Summary of Provisions, Existing Law, and Prior
Legislative History:

The  credit is available to noncustodial parents who pay child support
for a qualifying child with whom  they  do  not  reside.  This  credit
rewards  noncustodial  parents  who  are  working,  and  it provides a
substantial  work  incentive  for  those  not   working   or   working
intermittently.   The  credit  is  intended  to  encourage  low-income
noncustodial parents to comply with child support orders. It  is  also
intended  to  encourage low-income noncustodial parents to become more
involved in the economic and social well-being of their children.

The credit currently applies to taxable years beginning before January
1, 2015. This bill would extend the credit for two years  through  tax
year 2016.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget because it would decrease All Funds tax  receipts  by
$4 million in each of SFYs 2016-17 and 2017-18.

Effective Date:

This bill takes effect immediately.

Part H - Mandate for professional and business licenses electronic tax
clearance upon application or renewal

Purpose:

This  bill  would  create  a  new  program  to  aid  in  enforcing and
collecting past-due tax  liabilities  by  preventing  applicants  from
receiving  or  renewing  professional or business licenses if they owe
certain past-due tax liabilities.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

Under  the  Governor's  direction,  the State has initiated one of the
most comprehensive one-stop electronic licensing  initiatives  in  the
country.   This  bill  would  further  the  Governor's  initiative  by
requiring an electronic tax clearance when a professional or  business
license is sought or renewed. In return for the privilege of receiving
such  license, an applicant with fixed and final tax liabilities would
be required either to pay the past-due tax  liabilities  or  to  enter
into  a payment agreement with the Department of Taxation and Finance.
The  bill  would  also  permit  electronic  sales   tax   registration
clearances  for  licenses  related to business activities that require
such registrations.

The bill would build on the successful driver's license tax  clearance
program  enacted  as  part  of  the  2013-14 Budget and on the General
Obligations Law § 3-503  license  clearance  requirements  related  to
delinquent  child  support  obligations.  By  using  modern electronic
processing systems, there would  be  no  inconvenience  to  applicants
without  tax  liabilities,  because  these  liability checks would run


seamlessly in the background as the license application is  processed.
If  the  applicant's  tax  clearance is refused, the government agency
processing the application would provide notice to  the  applicant  to
contact the Tax Department.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget, because it would increase All Funds receipts  by  $3
million in SFY 2015-16 and annually thereafter.

Effective Date:

The  bill  would  take effect on June 1, 2014, provided, however, that
the Department of Taxation  and  Finance  and  any  government  entity
electing to receive an electronic tax clearance from the Department of
Taxation  and Finance may work to execute the necessary procedures and
technical changes to support the electronic tax clearance  process  as
described  in  sections  one  and  two  of  this act before that date;
provided, further, that this  effective  date  would  not  impact  the
administration  of  any electronic tax clearance program authorized by
any other provision of law.

Part I - Close the resident trust loophole

Purpose:

This bill would amend the Tax Law to ensure that certain income earned
by trusts is properly subject to New York income tax.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

This  bill  would  amend  the  Tax Law to make two improvements to the
taxation of  trusts.  First,  the  bill  would  tax  distributions  of
accumulated  trust  income  to  New York beneficiaries of non-resident
trusts and exempt resident trusts. Second, the bill would eliminate  a
loophole that allows incomplete gift, non-grantor trusts set up by New
York  residents  to  completely  avoid  New York income tax. These two
amendments reflect the proposals included in  the  November  18,  2013
report  made  by  the Trusts and Estates section of the New York State
Bar Association to the Tax Reform and Fairness Commission.

In general, from an income tax perspective, income that is earned by a
trust may be included in the income of the grantor, the trust, or  the
beneficiaries   of   the  trust.  Under  the  Tax  Law,  however,  the
accumulated income (i.e the income of a trust that is not  distributed
to a beneficiary) of several types of trusts is not subject to any New
York  tax  at  the  grantor level, the trust level, or the beneficiary
level. The categories of trusts for which all or a  portion  of  their
accumulated  income  is  not  currently subject to New York income tax
include:

(1) non-resident trusts (i .e. a trust whose grantor is not  domiciled
in New York at the time the trust became irrevocable);


(2)  exempt resident trusts (i.e. trusts that are exempt from New York
income taxation because three conditions in Tax Law  §  605(b)(3)  are
satisfied); and

(3)  incomplete  gift, non-grantor or "ING" trusts (i.e certain trusts
that are specifically structured (i) so that the settlor's transfer of
property to the trust is an incomplete gift and (ii) to avoid  grantor
trust  status  under  Sections 671 through 678 of the Internal Revenue
Code, Title 26, United States Code.

This  bill  would  remedy  this  problem  by  (1)  taxing   New   York
beneficiaries of non-resident trusts and exempt resident trusts on the
accumulated income of the trusts when the income is distributed to the
beneficiary  and  (2) including the income of an ING trust established
by a New York resident in the current income of its grantor. The  bill
would also provide a credit for non-resident trust and exempt resident
trust  beneficiaries  for  taxes  paid to other jurisdictions, require
non-resident trusts and exempt resident  trusts  to  file  information
returns,   and   make   conforming   changes  to  the  New  York  City
Administrative Code.

This bill would be effective immediately  and  be  applicable  to  tax
years  beginning  on  or  after January 1, 2014 To mitigate transition
issues, however, the section excludes from tax. (1)  distributions  of
accumulated  income by exempt resident trusts (except ING trusts) made
before June 1, 2014, and (2) income earned  by  ING  trusts  that  are
liquidated on or before June 1, 2014.

Budget Implications:

Enactment of this bill is necessary to implement the 2014-15 Executive
Budget  because  it  would increase tax revenues by $75 million in SFY
2014-15, $225 million  in  SFY  2015-16,  and  $150  million  annually
thereafter.

Effective Date:

This  bill  takes  effect  immediately  and  applies  to taxable years
beginning on or after January 1, 2014, provided that sections 1 and  6
do  not  apply  to  distributions occurring before June 1, 2014, while
sections 2 and 7 do not apply to income earned by  trusts  covered  by
those section that are liquidated prior to June 1, 2014.

Part  J  -  Repeal  the additional minimum personal income tax Purpose
This bill would repeal the personal income tax "add-on" minimum tax.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

This bill would implement the recommendation of the New York State Tax
Reform  and  Fairness  Commission that the additional minimum personal
income tax be repealed. The Commission found that this  tax  pre-dates
the  1986  tax reforms and pertains to only 200 taxpayers with minimal
revenue generated.

New York has been penalized  in  tax  rankings  because,  among  other
things,  provisions  like  the add-on minimum tax make the State's tax


code unnecessarily complex and burdensome This bill would  repeal  the
additional  tax, thereby helping to streamline the tax code to further
the Commission's goal of making it less complex and burdensome.

This bill would also make conforming changes to New York City's add-on
minimum tax.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive  Budget.   It   would   implement   a   tax   simplification
recommendation  of  the  Tax  Reform  and  Fairness Commission and has
minimal impact on the State's Financial Plan.

Effective Date:

This bill takes  effect  immediately  and  applies  to  taxable  years
beginning on or after January 1, 2014.

Part  K  - Establish the Residential Real Property Personal Income Tax
Credit

Purpose:

This bill would create a  new  enhanced  property  tax  circuit  break
credit for low- and middle-income homeowners.

Statement  in  Support, Summary of Provisions, Existing Law, and Prior
Legislative History:

New York homeowners pay some of the highest property tax bills in  the
nation,  whether  measured  in  absolute  terms  or as a percentage of
income or home value.  Property  taxes  have  seriously  burdened  New
York's  working  families and senior citizens. While progress has been
made and should continue under the existing property tax cap, there is
also a need to  help  New  York's  overburdened  homeowners  based  on
ability to pay.

This  bill,  a  recommendation  of the Tax Reduction Commission, would
create a new real property tax  circuit  breaker  that  offers  larger
credit  amounts  for  all  taxing  jurisdictions  that stay within the
property tax cap. The credit is targeted to help low-income and middle
class New York homeowners with qualifying incomes up to $200,000.  The
credit  value  rises  with  the  size  of the homeowner's property tax
burden. The bill would also keep the existing circuit breaker in place
so that New York homeowners  currently  benefiting  from  the  circuit
breaker  are not denied a benefit if their taxing jurisdictions do not
comply with the property tax cap.

Budget Implications:

Enactment of  this  bill  is  necessary  to  implement  the  2014-2015
Executive  Budget.  It  would implement a reform recommendation of the
Tax Reduction Commission and reduce All Funds receipts by a  total  of
$200 million in SFY 2015-16, by $525 million in SFY 2016-17, and by $1
billion annually thereafter.


Effective Date:

This  bill  takes  effect  immediately  and  applies  to taxable years
beginning on or after January 1, 2014.

Part L - Establish a renter's  personal  income  tax  credit  Purpose:
This  bill  would provide a credit against the personal income tax for
eligible renters.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

This  bill would provide a personal income tax credit for eligible low
and middle income taxpayers who rent their  primary  residences.  This
credit  may  be taken in lieu of the current real property tax circuit
breaker credit for renters if the amount of this credit is higher  and
the taxpayer qualifies for both credits.

The amount of credit would be based on the taxpayer's income level and
filing  status A qualified taxpayer who is 65 years or older and has a
"single" filing status would be eligible for  a  base  credit,  and  a
qualified  taxpayer  who  files  a  joint  return with a spouse who is
sixty-five years of age or older, or files as  a  head  of  household,
married  individual  filing  a separate return or surviving spouse and
has at least one dependent, would be eligible for a base credit and an
additional amount based on the number of federal exemptions claimed by
such taxpayer The credit will be phased in for taxable years beginning
in 2014, with the initial credit set at one-half of  the  credit  that
would be applicable for taxable years beginning in or after 2015.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget  and  financial  plan.  It  would  reduce  All  Funds
receipts  by  a total of $200 million in State Fiscal Year 2015-16 and
$400 million annually thereafter.

Effective Date:

This bill takes effect immediately.

Part M - Modify delivery of the family tax  relief  credit  after  Tax
Year 2014

Purpose:

This  bill  would  eliminate  the prepayment element of the family tax
relief credit in section 606 (vv) of the tax  law  for  taxable  years
beginning on or after January 1, 2015.

Summary  of  Provisions,  Existing Law, Prior Legislative History, and
Statement in Support:

This bill would amend § 606(vv)  of  the  Tax  Law  to  eliminate  the
prepayment  of the family tax relief credit in taxable years beginning
on or after January 1, 2015  and  provide  that  eligibility  for  the
credit will be based on the taxpayer's tax return for the current year


Existing  law  provides that the prepayment would be available in each
year that the credit is allowed (i.e., tax years 2014, 2015 and 2016).
Because of the prepayment, it was necessary to  determine  eligibility
from a taxpayer's return filed two years prior.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget because it would increase All Funds tax  receipts  by
$410  million in SFY 2015-16 and reduce All Funds tax receipts by $410
million in SFY 2017-18.

Effective Date:

This bill would take effect immediately and  apply  to  taxable  years
beginning on or after January 1, 2015.

Part  N  - Increase the personal income tax filing threshold to reduce
the number of taxpayers who need to file personal income tax returns

Purpose:

This bill would raise the threshold  for  filers  by  eliminating  the
personal  income  tax  filing  requirement for residents having no tax
liability because the resident's income does not exceed the  New  York
standard deduction.

Statement  in  Support, Summary of Provisions, Existing Law, and Prior
Legislative History:

This bill would eliminate the requirement that a resident  who  has  a
modified  federal  adjusted  gross income in excess of $4,000 but less
than the New York standard deduction  ($15,650  for  married  couples)
file a personal income tax return if he or she does not file a federal
personal income tax return. This bill would require only residents who
have  modified federal adjusted gross income in excess of the New York
standard deduction to file a personal income tax return.

Raising the filing threshold to the current standard deduction  levels
would  eliminate filing for approximately 270,000 taxpayers who owe no
New York personal income tax and are  not  eligible  for  any  refunds
(one-half  of  whom are senior citizens). The Internal Revenue Service
uses a similar standard.

Budget Implications:

Enactment  of  this  bill  would  implement   a   tax   simplification
recommendation  of  the Tax Reform and Fairness Commission and have no
impact on the State's Financial Plan.

Effective Date:

This bill takes effect immediately.

Part O - Extend the Empire State Commercial Production Tax Credit  for
Two Years


Purpose:

This  bill  would  extend  the  Empire State Commercial Production Tax
Credit for two years, until December 31, 2016.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

The  Empire  State  Commercial  Production tax credit is available for
taxable years beginning on or after January 1,  2007  and  expires  on
December  31,  2014. In general, the credit is available to qualifying
taxpayers under Articles 9-A and 22 in an amount equal to  20  percent
of  the  qualifying production costs incurred in the actual filming or
recording of a qualified  commercial  in  New  York  that  exceed  the
average of the previous years' costs for which the credit was applied,
plus  5 percent of costs if costs exceed $500,000 in the calendar year
in the Metropolitan Commuter Transportation District (MCTD) and  above
$200,000  in  the  calendar  year  outside the MCTD.   This bill would
extend the expiration of the tax credit by two years,  until  December
31, 2016.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget. It would decrease  All  Funds  tax  receipts  by  $7
million in each of SFYs 2016-17 and 2017-18.

Effective Date:  This bill takes effect immediately.

Part P - Authorize additional credits of $8 million for the low-income
housing credit for each of the next two fiscal years

Purpose:

This  bill  would  increase the aggregate amount of low income housing
tax credit the Commissioner  of  Housing  and  Community  Renewal  may
allocate  from  $48 million to $56 million for state fiscal year (SFY)
2014-15 and from $56 million to $64 million for SFY 2015-16.

Summary of Provisions, Existing Law, Prior  Legislative  History,  and
Statement in Support:

Section  one of the bill would amend § 22 of the Public Housing Law to
increase the aggregate amount of low income  housing  tax  credit  the
Commissioner  may  allocate  from  $48  million  to $56 million in SFY
2014-15.

Section two of the bill would amend § 22 of the Public Housing Law  to
increase  the  aggregate  amount  of low income housing tax credit the
Commissioner may allocate from $56  million  to  $64  million  in  SFY
2015-16.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget because it would decrease All Funds tax  receipts  by


$8  million  in  SFY 2015-16, $16 million annually through SFY 2024-25
and $8 million in SFY 2025-26.

Effective  Date:  This bill takes effect immediately, however, section
two would take effect on April 1, 2015

Part Q - Extend and Reform the Brownfield Cleanup Program

Purpose:

This bill would extend the brownfield cleanup program and tax  credits
for 10 years and further reform the program.

Statement  in  Support, Summary of Provisions, Existing Law, and Prior
Legislative History:

The bill would:

* Continue the brownfield cleanup program (BCP) and tax credits for 10
years (through December 31, 2025) with needed reforms;

* Separate BCP eligibility from tangible property credit  eligibility,
limiting eligibility for tangible property credits to:

a.  properties  vacant  for  at  least  15  years  or  vacant  and tax
delinquent for 10 years or more;

b. "upside down" properties (where the property  value  is  less  than
cleanup costs); and

c. priority economic development projects;

*  Provide  "bonus"  credits  for  affordable  housing, location in an
Environmental Zone, and conforming with a Brownfield Opportunity  Area
(BOA) plan;

*  Limit  eligible  site  preparation  costs  to only those needed for
effective cleanup;

* Establish  BCP  EZ,  a  fast-track  voluntary  cleanup  option  that
provides liability relief without tax credits;

* Terminate sites that have been in the program since before June 2008
that  do  not  complete cleanup by December 31, 2015, and sites in the
program from June 2008 through July  1,  2014  that  do  not  complete
cleanup by December 31, 2017;

* Limit the tangible property tax credit to five consecutive tax years
either after the date of the issuance of the certificate of completion
or the start of the redevelopment of the site; and

*  Repeal  the  insurance remediation tax credit and the real property
tax credit for new sites accepted into the program after July 1, 2014.

The bill would also exempt hazardous waste generated at certain  sites
from  fees  and  special  assessments,  and  would  authorize  DEC  to


undertake  environmental  restoration  projects   on   behalf   of   a
municipality upon its request.

The  BCP  tax credits are scheduled to sunset on December 31, 2015. In
the ten years since it was established,  the  BCP  has  catalyzed  the
cleanup  of  over  150  contaminated  sites  statewide,  incentivizing
redevelopment. However, it has also resulted in the awarding  of  over
$800  million  in tax credits without regard to the need for financial
assistance Amendments to the BCP program made in  2008  established  a
cap  on tangible (redevelopment) property tax credits; this bill would
eliminate the tangible tax credits for sites that do not need them  to
encourage redevelopment.

The NYS Tax Reform and Fairness Commission recommended that the BCP be
amended  to  prevent developments that would have gone forward without
tax credits from taking advantage of  the  program.  This  bill  would
implement  the  Commission's  recommendation. The bill would focus tax
credits on sites and areas of the State, especially upstate, that need
them the most to foster  redevelopment.  It  would  also  establish  a
fast-track  option  without tax credits that would provide streamlined
state oversight of site cleanup.  BCP-EZ,  in  addition  to  providing
developers  with  a  fast-track  option,  would reduce State spending,
while  allowing  developers  to  obtain  the  post-clean-up  liability
releases necessary to obtain financing for future site redevelopment.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget because it  would  maintain  program  continuity  and
provide certainty to program participants Enactment of this bill would
have  no  impact on tax receipts during the Financial Plan period, but
would provide long term savings.

Effective Date:

This bill takes effect July 1, 2014.

Part R  -  Establish  a  20  percent  real  property  tax  credit  for
manufacturers;  eliminate the net income tax on upstate manufacturers;
reform the investment tax credit; and repeal  the  financial  services
investment tax credit

Purpose:    This  bill would create a new real property tax credit for
"qualified New York manufacturers", reduce the entire net  income  tax
rate   for  qualified  upstate  New  York  manufacturers,  reform  the
investment tax credit (ITC) and repeal the financial services ITC.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

Providing  tax  relief  to manufacturers in this State is necessary to
help  existing  New  York  manufacturers  survive  and   attract   new
manufacturers to the State. This bill incorporates the recommendations
of  the  New  York  State  Tax  Relief  Commission by providing a real
property tax credit to qualified New York manufacturers  and  reducing
the entire net income tax rate for qualified upstate manufacturers.


The  New York State Tax Reform and Fairness Commission recommended ITC
reform in order to more effectively  target  the  State's  investment.
The  ITC  would  no longer be available for property used by companies
that do not qualify as manufacturers. In addition, the New York  State
Tax  Reform  and  Fairness  Commission  recommended that the financial
services ITC authorized under Articles 9-A, 22, 32 and 33 of  the  Tax
Law be eliminated because the credit is complex, frequently subject to
complicated   recapture   provisions,  and  provides  benefits  to  an
extremely limited segment of the financial services industry.

Section  1  would  add  the  definition  of  a  "qualified  New   York
manufacturer"  to  the  Tax  Law.  It  is  derived from the definition
currently  in  place  for  the  reduced  Article  9-A  tax  rates  for
manufacturers,  which defines a "qualified New York manufacturer" as a
taxpayer that is principally engaged in manufacturing (i.e., more than
50% of its gross receipts derived from the sale of manufactured goods)
and has a minimum amount of property used for manufacturing within the
state or employees engaged in manufacturing within the state.

Section 2 would create a new refundable real property tax  credit  for
qualified   New   York  manufacturers  under  Article  9-A  (corporate
franchise tax) equal to 20 percent of the real property tax  qualified
New  York manufacturers paid on property used for manufacturing during
the taxable year.

Sections 3 and 4 would make conforming changes to Article 22 (personal
income tax) for the  new  refundable  real  property  tax  credit  for
qualified manufacturers.

Section  5  would  reform the ITC under Article 9-A by restricting the
credit to qualified New York  manufacturers  and  qualified  New  York
agricultural  and mining businesses for property used to produce goods
for sale or research  and  development  property.  This  section  also
repeals the financial services ITC.

Section  6  would  amend  the  ITC  for  taxpayers that lease tangible
personal property to reflect the repeal of the financial services  ITC
and  the  disallowance  of  the  ITC  for  a qualified film production
facility.

Sections 7 and 8 would exclude air pollution  control  facilities  and
air  or  water pollution control facilities from receiving the ITC and
would  repeal  the  rehabilitation  for  historic  barns  and   retail
enterprise credits that are part of the investment tax credit.

Sections  9  through  13  would  make conforming changes to Article 22
(personal income tax) for the reform of the  ITC  and  repeal  of  the
financial services ITC.

Section 14 would repeal the ITC for Article 32 (bank tax) taxpayers.

Section  15  would  repeal  the  ITC  for  Article  33 (insurance tax)
taxpayers.

Section 16 would reduce the  entire  net  income  tax  rate  from  5.9
percent  to  zero percent for qualified upstate New York manufacturers
defined as taxpayers that have a zero  allocation  percentage  in  the


Metropolitan  Commuter Transportation District for purposes of the MTA
business tax surcharge.

Section  17  would amend the capital base definition under Article 9-A
to include the definition of a  qualified  New  York  manufacturer  as
defined in Section 1 of the bill.

Section  18  would  amend the alternative minimum tax definition under
Article 9-A  to  include  the  definition  of  a  qualified  New  York
manufacturer as defined in Section 1 of the bill.

Section  19  would amend the fixed dollar minimum tax definition under
Article 9-A  to  include  the  definition  of  a  qualified  New  York
manufacturer as defined in Section 1 of the bill.

Section  20  states  that  for  the  purposes of determining whether a
taxpayer is an eligible qualified New York manufacturer  and  able  to
receive  the  associated  tax  benefits  available  for tax years 2012
through 2014, the taxpayer shall use the guidelines and criteria  that
were in effect for December 31, 2013.

Section  21 would remove the Excelsior ITC component for taxpayers who
file under Article 32 or Article 33.

Section 22 contains a severability clause.

Section 23 provides for an effective date of January 1, 2014.

Budget Implications:  Enactment of this bill is necessary to implement
the 2014-2015 Executive Budget. In particular:

* The real property tax credit for manufacturers  would  decrease  All
Funds  tax  receipts  by  $136 million in each of SFYs 2015-16 through
2018-19.

* The reform of the ITC would increase All Funds tax receipts  by  $65
million in each of SFYs 2014-15 through 2018-19.

*  The  repeal  of the financial services ITC would increase All Funds
tax receipts by $30 million in each of SFYs 2014-15 through 2018-19

* The reduction of the entire net income rate  for  qualified  upstate
New  York  manufacturers  would decrease All Funds tax receipts by $24
million in SFYs 201415 through 2015-16 and $25 million in SFYs 2016-17
through 2018-19.

Effective Date:

This bill takes effect immediately and would apply  to  taxable  years
beginning on or after January 1, 2014.

Part S - Repeal the franchise tax on agriculture cooperatives

Purpose:    This bill would repeal the State's Tax Law § 185 franchise
tax  on  farmers',  fruit  growers',  and  other   like   agricultural
corporations organized and operated on a co-operative basis.


Statement  in  Support, Summary of Provisions, Existing Law, and Prior
Legislative History:

The  bill  would  repeal the franchise tax on agriculture cooperatives
and exempt those corporations  from  tax  The  bill  would  also  make
conforming  changes  to  the  Tax  Law and various other laws. Only 45
taxpayers pay this tax, and the median tax is $160 with  one-third  of
taxpayers  only  paying  $10. Since SFY 2006-07, in only one year (SFY
2011-12) were receipts greater than the amount of refunds paid out.

Budget Implications:

Enactment of  this  bill  is  necessary  to  implement  the  2014-2015
Executive  Budget,  because  it  would  implement a tax simplification
recommendation of the Tax Reform and Fairness Commission  and  has  no
impact on the State's Financial Plan.

Effective  Date:   The bill would take effect immediately and apply to
taxable years beginning on or after January 1, 2015.

Part  T  -  Provide  a  refundable  credit  for  the  excise  tax   on
telecommunication services paid by START-UP NY companies.

Purpose:

This  bill  would  provide  a  refundable credit for the excise tax on
telecommunication services paid by START-UP NY companies.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

Section   186-e   of   the   Tax   Law   imposes   an  excise  tax  on
telecommunication services that is customarily passed through  by  the
telecommunications  provider  to its customers. The bill would provide
that START-UP NY companies would be allowed a refundable credit  equal
to the section 186-e tax that is passed through to such businesses.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget, because it would eliminate an inconsistency  in  the
current  START-UP  NY statute The cost of this bill is included in the
Financial Plan as part of the cost of the START-UP NY program.

Effective Date:  This bill takes effect  immediately  and  applies  to
taxable years beginning on or after January 1, 2014.

Part U - Enhance the Youth Works Tax Credit

Purpose:

This  bill would amend the Tax Law to allow employers to claim the New
York State Youth Works credit for certain employees who work ten hours
per week if the employees are enrolled in high school full  time,  and
to  provide  an  additional  tax  credit to employers that employ such
youth for one additional year


Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

Currently,  employers  can claim the New York State Youth Works credit
only for employees employed either full time or part-time (who  worked
at  least  twenty  hours  per  week)  This  bill amends the Tax Law to
conform to amendments to the Labor Law that were added by Chapter  536
of  the  Laws of 2013 which expanded coverage of the credit to include
employees who work at least ten hours per  week  while  enrolled  full
time in high school, for purposes of calculating the credit.

Additionally  this  bill would provide an additional $1,000 tax credit
for employers that retain youth in full-time status for one additional
year and an additional $500 for  employers  that  retain  youth  in  a
part-time status for one additional year.

Finally, this bill increases the allocation amounts under programs two
through five from $6 million to $10 million.

Budget Implications:

Enactment of this bill is necessary to implement the 2013-14 Executive
Budget  because it would decrease All Funds tax receipts by $4 million
in each of SFYs 2015-16 through 2018-19.

Effective Date:  This bill takes effect  immediately  and  applies  to
taxable years beginning on or after January 1, 2014.

Part V - Extend the alternative fuels tax exemptions for two years

Purpose:

This  bill would extend the sunset from September 1, 2014 to September
1, 2016 for the tax exemptions for alternative fuels,  including  E85,
CNG, hydrogen, and B20.

Statement  in  Support,  Summary of Provisions, Existing Law and Prior
Legislative History:

Extending the exemptions  for  alternative  fuels  would  continue  to
provide  an  incentive for the use of renewable fuels and is part of a
comprehensive strategy to reduce dependence  on  foreign  oil  and  to
increase the use of clean energy fuels.

This  bill  would  extend the sunset for the exemptions in the Tax Law
for alternative fuels from September 1, 2014  to  September  1,  2016.
Unless  this sunset is extended, the Tax Law will no longer allow full
exemptions for E85, CNG, and hydrogen, and partial exemption  for  B20
from the motor fuel taxes (Article 12-A), the petroleum business taxes
(Article  13-A),  fuel  use  taxes  (Article 21-A) and State and local
sales and compensating use taxes (Articles 28 and 29).

Budget Implications:

Enactment of  this  bill  is  necessary  to  implement  the  2014-2015
Executive  Budget  because  it  would  reduce All Funds sales and use,


petroleum business, and motor fuel taxes by a total of $8  million  in
SFY 2014-15, $16 million in SFY 2015-16 and $8 million in SFY 2016-17.

Effective Date:

This bill takes effect immediately.

Part W - Simplify the distribution of motor vehicle fee receipts

Purpose:    This  bill  would  replace all current Department of Motor
Vehicles General Fund (MVGF) transfers with a simplified structure.

Summary of Provisions, Existing Law, Prior  Legislative  History,  and
Statement in Support:

Section  one  of  the bill would amend § 15 of Part V of chapter 61 of
the laws of 2005 by ending the current MVGF structure. A  GF  transfer
is also created that in each quarter accomplishes the following:

*  The  Dedicated  Highway  Bridge  Trust  Fund  (DHBTF)  will receive
$16,498,255 (annual amount is $65,993,020);

* The Mass Transportation Trust Fund (MTTF) will  receive  $15,665,245
(annual amount is $62,660,980).

Section  two  of the bill would amend § 503 of the Vehicle and Traffic
Law to end the current transfer of the  first  $40.7  million  of  the
Driver   Responsibility  Act  (DRA)  receipts  to  the  General  Fund.
Instead, all revenues from the DRA will be directed to the DHBTF.  The
DHBTF transfer in section one was reduced to reflect  this  additional
amount.

Current  law requires an annual transfer of $169,354,000 from the MVGF
to the Dedicated Funds ($106,693,020 to the DHBTF and  $62,660,980  to
the  MTTF). This transfer occurs on a monthly basis from non-dedicated
motor vehicle receipts until the transfer amount has been met.

Current law also requires that the first $40.7 million of  the  Driver
Responsibility  Act  receipts  collected  each year be directed to the
MVGF

This bill would replace the identification of specific  motor  vehicle
fee  revenue  streams  as they flow into the GF with DRA revenue going
directly onto a dedicated fund and a simple GF transfer to the correct
dedicated funds.

Budget Implications:

This bill is revenue neutral and there is no impact on overall revenue
for the DHBTF, MTTF or General Fund.

Effective Date:  This bill takes effect immediately.

Part X - Comprehensive estate tax reform

Purpose:


This bill would amend the estate tax to: (1)  increase  the  exclusion
threshold  to  the amount of the current federal unified credit over 5
years; (2) decrease the top estate  tax  rate,  and  (3)  require  the
add-back  of certain gifts and incorporate applicable Internal Revenue
Code  (IRC)  provisions.  The  bill  would  also repeal the generation
skipping transfer (GST) tax in Tax Law Article 26-B.

Statement in Support, Summary of Provisions, Existing  Law  and  Prior
Legislative History:

New  York's  estate  tax  currently  conforms  to  the  IRC  with  all
amendments through July 1, 1998, except that the exclusion  amount  is
fixed  at  $1  million The estate tax is commonly known as a "pick-up"
tax, because the tax is equal to the federal credit for  state  estate
taxes, as it existed on July 22, 1998.

This  tax is woefully out of date. It is tied to a federal law that no
longer exists in practical  effect,  because  the  IRC  has  undergone
significant  amendments  over  the  last  15  years that have not been
adopted by New York For example, the credit for state estate  taxes  -
the  base  of New York's estate tax - no longer exists in federal law.
Moreover, when the current State exclusion amount of  $1  million  was
set, it was not indexed to inflation or tied to the periodic increases
in  the  federal  estate  tax  exclusion amount The federal estate tax
exclusion amount has been raised  to  $5.25  million  and  indexed  to
inflation, leaving New York significantly out of sync. New York is one
of  only  15  states  with an estate tax and only two states currently
have a lower exemption.

Consistent with Governor Cuomo's Tax Relief  Commission  Report,  this
bill  would  increase  the  New  York  exclusion amount to the federal
amount of $5.25 million over four years, with the exclusion indexed to
inflation  thereafter.  Many  estates  of  middle  class   individuals
(including small business owners and family farmers) will no longer be
subject to the tax as a result of increasing the exclusion amount. The
bill  would  also  phase  down  the top tax rate from 16 percent to 10
percent by State Fiscal Year 201718. This will  address  an  incentive
for  wealthy  New  Yorkers  to  leave the State. It would also require
certain gifts made after April 1, 2014 to be included in a  decedent's
New York gross estate, closing a loophole by preventing deathbed gifts
from escaping the estate tax.

The bill would also repeal the GST tax in Article 26-B of the Tax Law,
as  recommended by Governor Cuomo's Tax Reform and Fairness Commission
Currently, federal law imposes estate, gift and GST taxes as part of a
comprehensive scheme for the taxation of wealth transfers. Federal law
also provides for a unified credit that is applied to  each  of  these
taxes  so  that  all  such  wealth  transfers  receive  equivalent tax
treatment. New York's gift tax  was  repealed,  effective  January  1,
2000. The current GST is based on a federal credit for state GST taxes
that expired in 2004 Moreover, that federal credit, and therefore, New
York's   GST   tax,   applied   only  to  certain  specific  types  of
generation-skipping transfers (i.e., distributions and terminations of
trusts that occurred at the same time and as the result of  the  death
of  an  individual)  Because  the  federal GST tax already provides an
effective disincentive to wealth transfers to grandchildren and  later


generations,  New  York's tax is largely unnecessary to prevent estate
tax avoidance.

The  current  GST  tax affects a few dozen taxpayers each year, yields
minimal annual revenue,  and  frequently  causes  taxpayer  confusion.
Repealing  this  tax  would result in minimal revenue loss and provide
taxpayer relief.

A significant portion of the bill creates an appendix to the  Tax  Law
of  all  of  the  IRC  provisions, as amended through January 1, 2014,
which are relevant to the estate tax. The current appendix, which  was
enacted  by  § 2 of Chapter 1013 of the laws of 1962, and periodically
amended, is based on the 1998 version of  the  IRC.  This  bill  would
repeal  the  outdated  appendix in Chapter 1013, and replace it with a
new appendix of current IRC provisions  located  in  the  consolidated
law.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget. It would reduce  revenues  by  $33  million  in  SFY
2014-15,  $175  million  in  SFY 2015-16, $371 million in SFY 2016-17,
$612 million in SFY 2017-18 and $757 million in SFY 2018-19.

Effective Date:

This bill would take effect on  April  1,  2014  and  would  apply  to
estates of decedents dying on or after that date.

Part Y - Repeal the Boxing and Wrestling Exhibitions Tax

Purpose:

This  bill  would  repeal Article 19 of the Tax Law, which imposes the
State's Boxing and Wrestling Exhibitions Tax

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

This  bill  would  repeal Article 19 of the Tax Law, which imposes the
State's Boxing and Wrestling Exhibitions Tax  on  a  promoter's  gross
receipts  from  ticket sales to attend the event and on the promoter's
sale of broadcast rights to the event, at the rate of  three  percent.
The  bill would also repeal section 1820 of the Tax Law, which imposes
misdemeanor penalties for willful failure to comply with provisions of
Article 19.

The effect of repealing the Article 19 tax is  that  State  and  local
sales taxes on admission charges would arise on the charge for tickets
sold  to boxing and wrestling events held in this State, regardless of
where the ticket is sold. Tax Law § 1105(f)(1) imposes  sales  tax  on
admission   charges  including  admissions  to  sporting  events,  but
excludes from sales tax admission  charges  to  boxing,  sparring,  or
wrestling matches or exhibitions which are taxed by another law of the
State.  By repealing the Article 19 tax, the State and local sales tax
on admission charges to such events will automatically apply,  because
the exclusion condition is no longer met.


The  replacement of the boxing and wrestling tax with the sales tax on
admissions to boxing and wrestling bouts was recommended  by  the  New
York   State  Tax  Reform  and  Fairness  Commission  to  create  more
consistent tax treatment between boxing and wrestling events and other
sporting events.

The  bill  would also make conforming amendments to Chapter 912 of the
Laws of 1920,  which  authorized  the  State  Athletic  Commission  to
administer boxing and wrestling events.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget because  it  would  implement  a  tax  simplification
recommendation  of  the  Tax Reform and Fairness Commission and has no
impact on the State's Financial Plan.

Effective Date:

The bill would take effect September 1, 2014. The bill would apply  to
sales  of  tickets to events occurring on or after the effective date,
whether or not the admission was paid prior to that date,  unless  the
tickets  were  actually  sold  and delivered to the purchaser prior to
that date.

Part Z - Extend Monticello Raceway Video Lottery  Terminal  rates  for
one year

Purpose:

This  bill would extend for one year the current distribution of video
lottery gaming revenue at Monticello Raceway (Monticello).

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

This  bill  would extend for one year the current commission rate paid
to Monticello as a video lottery agent. In 2008, Monticello was  given
a higher commission rate for a five-year period in exchange for opting
out  of  participation in a capital award program. Thus, the five-year
rate sunset was applied to coincide with the  five-year  period  other
facilities were provided for approval of capital expenditures eligible
for  reimbursement  through the program. The capital award program was
extended for a sixth year (to 2014) by chapter 454 of the Laws of 2012
and is proposed to be extended to  2015  by  the  2014-2015  Executive
Budget. Since the expiration of Monticello's rate would result in loss
of the enhanced commission, but would not provide for participation in
the  capital  award  program, this bill would extend Monticello's rate
for  an  additional  year  to  maintain  the  original  framework   of
Monticello's  rate structure and keep its duration consistent with the
capital award program.

Section 1 of the bill amends Section 1612(b)(1)(ii)(F) of the Tax  Law
to  extend  from  six  to seven years the forty-one percent vendor fee
paid to a vendor track located in Sullivan  County  and  within  sixty
miles from any gaming facility in a contiguous state.


Section  2  of  the bill provides for an immediate effective date that
shall be deemed in effect on and after April 1, 2014.

Budget Implications:  Enactment of this bill is necessary to implement
the  2013-14  Executive Budget. It would decrease All Funds revenue by
$3 million in SFY 2014-15.

Effective Date:  This bill takes effect after April 1, 2014.

Part AA - Extend certain tax rates and certain simulcasting provisions
for one year

Purpose:

This bill would extend for one additional year various  provisions  of
the Racing, PariMutuel Wagering and Breeding (Racing) Law which expire
during the 2014-15 fiscal year.

Summary  of  Provisions,  Existing Law, Prior Legislative History, and
Statement in Support:

Section 1 would amend Racing Law § 1003(a) to extend the June 30, 2014
expiration date for in-home simulcasting.

Section 2 would amend Racing Law § 1007(3)(d) to  extend  the  current
percentage  of total pools allocated to purses that a track located in
Westchester County  receives  from  a  franchised  corporation,  which
currently are scheduled to expire on June 30, 2014.

Section  3  would amend the opening paragraph of Racing Law § 1014, to
continue  the  provisions  allowing   simulcasting   of   out-of-state
thoroughbred  races  on  any  day  the  Saratoga thoroughbred track is
operating, which currently are scheduled to expire on June 30, 2014.

Section 4 would amend Racing Law § 1015(1) to  extend  the  provisions
governing  the simulcasting of races conducted at out-of-state harness
tracks, which currently are scheduled to expire on June 30, 2014.

Section 5 would amend the opening paragraph of Racing Law § 1016(1) to
continue the provisions governing  the  simulcasting  of  out-of-state
thoroughbred  races  on  any  day  the  Saratoga thoroughbred track is
closed, which currently are scheduled to expire on June 30, 2014.

Section 6 would amend the opening paragraph of  section  1018  of  the
racing,  pari-mutuel  wagering  and breeding law to extend the current
distribution of revenue  from  out-of-state  simulcasting  during  the
Saratoga meet, which expired on September 8, 2013.

Section  7  would  amend  §  32  of chapter 281 of the Laws of 1994 to
extend the current amount of off-track  betting  wagers  on  New  York
Racing  Association, Inc. (NYRA) pools dedicated to purse enhancement,
which currently expire on June 30, 2014.

Section 8 would amend § 54 of chapter 346  of  the  Laws  of  1990  to
continue  binding  arbitration  for  disagreements.  These  provisions
currently expire on July 1, 2014.


Section 9 would amend Racing Law § 238(1)(a) to continue  the  current
distribution  of  revenue  from on-track wagering on NYRA races, which
currently is scheduled to expire on December 31, 2014.

Extending  these provisions would maintain the pari-mutuel betting and
simulcasting structure that is currently in place in New  York  State.
The  provisions extended by sections one through six of this bill were
first enacted in 1994 and section seven was  enacted  in  1990.  These
provisions   were   extended   numerous  times  since  their  original
enactment, and most recently in 2013.

Budget Implications:

Enactment of  this  bill  is  necessary  to  implement  the  2014-2015
Executive  Budget because it maintains the current pari-mutuel betting
structure in New York State.

Effective Date:

This bill takes effect immediately.

Part BB - Extend the  Video  Lottery  Gaming  (VLG)  vendor's  capital
awards program for one year

Purpose:

This  bill  would extend for one year the deadline to receive approval
and to complete capital projects that are reimbursed through the Video
Lottery Gaming (VLG) vendor's capital award program.

Summary of Provisions, Existing Law, Prior  Legislative  History,  and
Statement in Support:

This  bill would extend by one year, until April 1, 2015, the deadline
to receive approval for capital projects to be reimbursed through  the
VLG vendor's capital award program. The bill also extends by one year,
until  April  1,  2017,  the deadline to complete these projects.  For
certain vendor tracks located west of State Route 14, these  deadlines
are  extended  to April 1, 2019 for approvals and to April 1, 2021 for
completion.

Budget Implications:

Enactment of  this  bill  is  necessary  to  implement  the  2014-2015
Executive Budget because it maintains the current VLG revenue stream.

Effective Date:  This bill takes effect immediately.

Part CC - Repeal Article 12 of the Tax Law

Purpose:    This  bill would repeal Article 12 of the Tax Law and make
conforming changes to other provisions of law that reference it.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:


Article 12 of the Tax Law imposes a tax on all sales and deliveries or
transfers  of shares or certificates of stock With the creation of the
Municipal Assistance Corporation (MAC) to provide financial assistance
to New York City, these revenues were used as additional security  for
MAC  bonds  In  1981, a 100% rebate of the tax was instituted, but the
tax itself was kept in place to continue backing the  MAC  bonds.  The
MAC  bonds  were  retired  in  2008,  which means the backing of these
revenues is no longer needed for this purpose.

This bill would repeal Article 12 and also would repeal related  funds
(State  Finance  Law  sections  92-B  and 92-I, which is the Incentive
Fund). The remaining sections of the bill make conforming  changes  to
the  Tax  Law, Banking Law, Public Authorities Law, State Finance Law,
and the Administrative Code of the City of New York.

This act would take effect  June  1,  2014,  however,  the  repeal  of
Incentive  Fund  would  not  take  effect  until  two  years after the
effective date of this act, and a taxpayer's right to claim  a  rebate
would  be  preserved  for those two years. This would allow taxpayers,
who may have paid the tax before its repeal, the  full  statutory  two
years currently. allowed to file for a rebate of the tax paid.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget because  it  would  implement  a  tax  simplification
recommendation  of  the  Tax Reform and Fairness Commission and has no
impact on the State's Financial Plan.

Effective Date:

The bill would take effect on June 1, 2014. However, the repeal of the
Incentive Fund in section 10 of the bill would not take  effect  until
two years from the date this act takes effect.

Part  DD  -  Align  mobility  and  personal income tax filings for the
self-employed

Purpose:

This bill would allow self-employed individuals who are subject to the
Metropolitan Commuter Transportation Mobility Tax  ("MCTMT")  to  file
their  MCTMT  returns  at  the  same time as their personal income tax
returns.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

This  is  a  new bill recommended by the New York State Tax Reform and
Fairness Commission. It would change the due dates for filing  returns
and  making  estimated  tax  payments  for  self-employed  individuals
subject to the MCTMT.  The  bill  would  uncouple  the  due  date  for
estimated  MCTMT  payments for self-employed individuals from the date
for estimated MCTMT payments for employers (i e., April 30,  July  31,
October  31,  January  31). Instead, such payments would be due on the
same date as quarterly estimated personal income tax  payments  (i.e.,
April  15,  June  15,  September  15,  January 15). Taxpayers would be


allowed to file combined returns for their  personal  income  tax  and
MCTMT,  and  the  Tax  Department  would be authorized to pursue joint
assessments and actions for the two taxes. The bill also would  change
the MCTMT return due date from April 30 to April 15, to conform to the
personal income tax due date.

Allowing  self-employed  individuals  to  file  their MCTMT returns in
conjunction with their personal income tax returns, and to make  their
quarterly  estimated  MCTMT  payments  with  their quarterly estimated
personal income tax payments, would simplify tax compliance for  these
taxpayers.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive  Budget.   It   would   implement   a   tax   simplification
recommendation  of  the  Tax Reform and Fairness Commission and has no
impact on the State's Financial Plan.

Effective Date:

This bill takes  effect  immediately  and  applies  to  taxable  years
beginning January 1, 2015.

Part EE - Make technical amendments to the commercial gaming law

Purpose:   This bill would allow for the distribution of moneys in the
Commercial Gaming Revenue Fund for support of education to be made  in
the  year received. It also makes technical changes to the Upstate New
York Gaming and Economic Development Act of 2013.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

This  bill  would  allow  revenue  from commercial gaming dedicated to
support education to be distributed  following  monthly  transfers  to
cover a shortfall, if any, in the Video Lottery Education Fund.  Under
current  law, commercial gaming revenue dedicated to support education
may not be distributed until the fiscal year following receipt of  the
revenue.

Section  one of the bill would amend State Finance Law § 97-nnnn(4) to
require transfers to the Video Lottery Education Fund to be made on  a
monthly  basis,  and  allows  revenue  to  be  distributed  to support
education in the year revenue is received.

Section two of the bill would amend State Finance Law § 97-nnnn(5)  to
make technical corrections to law references.

Section three of the bill would amend section 52 of Chapter 174 of the
Laws  of  2013  to make technical corrections to clarify the effective
dates of certain provisions of Upstate New York  Gaming  and  Economic
Development Act of 2013.

Section  four of the bill would amend State Finance Law § 99-h(3-a) to
clarify that payments of regional  county  aid  equal  10  percent  of
exclusivity payments received by the State.


Section five of the bill would amend Tax Law § 1617-a(g) to extend the
term  of  video  lottery  gaming  licenses issued before July 30, 2013
until the applicant's next birthday following June 30, 2014.

Section six of the bill provides the effective dates.

Budget Implications:

Enactment  of  this  bill  is  necessary  to  implement  the 2014-2015
Executive Budget, because  it  would  allow  revenue  from  commercial
gaming dedicated to support education to be used in the year received.

Effective Date:

This  bill  would  take  effect  immediately,  provided, however, that
section one would take effect on April 1, 2015 and section three would
be deemed to have taken effect on the same date as Chapter 174 of  the
Laws of 2014.

Part  FF - Provide a two-year property tax freeze through a refundable
personal income tax credit

Purpose:

This bill would create a refundable personal  income  tax  credit  for
homeowners  which  would  effectively  hold  property  taxes  on their
primary residences constant for two years.

Statement in Support, Summary of Provisions, Existing Law,  and  Prior
Legislative History:

New  York  homeowners  are subject to some of the highest property tax
bills in the nation, whether  measured  in  absolute  terms  or  as  a
percentage  of  income  or  home  value. Property taxes have seriously
burdened New York's working families and senior citizens and  hindered
job growth. While progress has been made and should continue under the
property  tax  cap  legislation, there is a need to further reduce the
property tax burden.

This bill effectively freezes property taxes on the primary residences
of homeowners with annual incomes at or less than  $500,000  in  local
governments and school districts that stay within the cap for the next
two  years.  This will be effective for school districts starting with
the 2014-15 school year and for  local  governments  in  fiscal  years
beginning in 2015.

In  order  for  homeowners  in  their  jurisdiction to receive the tax
credit in the second year, school districts and local governments must
continue to stay within the tax cap and must work together to  develop
and  implement  plans for sharing or consolidating services that, when
implemented, will achieve real savings for taxpayers.

Budget Implications:

Enactment of  this  bill  is  necessary  to  implement  the  2014-2015
Executive Budget because it would reduce All Funds receipts by a total


of  $400 million in SFY 2014-15, $976 million in SFY 2015-16, and $475
million in SFY 2016-17.

Effective  Date:    This  bill takes effect immediately and applies to
taxable years beginning on or after January 1, 2014.

2013-S6359 - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

    S. 6359                                                  A. 8559

                      S E N A T E - A S S E M B L Y

                            January 21, 2014
                               ___________

IN  SENATE -- A BUDGET BILL, submitted by the Governor pursuant to arti-
  cle seven of the Constitution -- read twice and ordered  printed,  and
  when printed to be committed to the Committee on Finance

IN  ASSEMBLY  --  A  BUDGET  BILL, submitted by the Governor pursuant to
  article seven of the Constitution -- read once  and  referred  to  the
  Committee on Ways and Means

AN ACT to amend the tax law, the general municipal law, the urban devel-
  opment  corporation  act,  the  business  corporation law, the general
  associations law, and the administrative code of the city of New York,
  in relation to reforming taxation of  business  corporations;  and  to
  repeal various provisions of the tax law relating thereto (Part A); to
  amend  the real property tax law, in relation to the STAR registration
  program (Part B); to amend chapter 540 of the laws of  1992,  amending
  the real property tax law relating to oil and gas charges, in relation
  to  the  effective date of such chapter (Part C); to amend the racing,
  pari-mutuel wagering and  breeding  law,  in  relation  to  increasing
  racing  regulatory fees (Part D); to amend the tax law, in relation to
  modifying the signature requirement on e-filed returns prepared by tax
  professionals (Part E);  to  amend  the  real  property  tax  law,  in
  relation  to cost of living adjustments for Enhanced STAR (Part F); to
  amend part I of chapter 58 of the laws of 2006, relating to  providing
  an enhanced earned income tax credit, in relation to the effectiveness
  thereof  (Part  G);  to  amend the general obligations law and the tax
  law, in relation to authorizing electronic tax clearances for  profes-
  sional  and  business  licenses (Part H); to amend the tax law and the
  administrative code of the city of New York,  in  relation  to  taxing
  residents  who  are grantors of exempt resident trusts that qualify as
  non-grantor incomplete gift trusts on the income from such trusts  and
  taxing  residents  who  are beneficiaries of all other exempt resident
  trusts or nonresident  trusts  on  the  distributions  of  accumulated
  income  that  they receive from such trusts (Part I); to amend the tax
  law and the administrative code of the city of New York,  in  relation
  to  eliminating  the  personal  income  tax add-on minimum tax; and to
  repeal certain provisions of such laws relating thereto (Part  J);  to
  amend the tax law, in relation to adding an enhanced real property tax
  circuit  breaker;  and  to  repeal  paragraph  14 of subsection (e) of

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD12674-01-4

S. 6359                             2                            A. 8559

  section 606 of the tax law, relating to certain reports (Part  K);  to
  amend  the  tax  law,  in  relation  to providing a credit for renters
  against the personal income tax (Part L); to amend  the  tax  law,  in
  relation  to  the  prepayment  element of the family tax relief credit
  (Part M); to amend  the  tax  law,  in  relation  to  eliminating  the
  personal income tax filing requirement for residents having no liabil-
  ity  because income does not exceed the New York standard deduction if
  they do not file a federal income tax return (Part N);  to  amend  the
  tax  law,  in  relation  to  extending  the  empire  state  commercial
  production tax credit (Part O); to amend the public  housing  law,  in
  relation  to  extending  the  credit against income tax for persons or
  entities investing in low-income housing (Part P); to amend the  envi-
  ronmental conservation law, the tax law and the general municipal law,
  in relation to eligibility for participation in the brownfield cleanup
  program,  and  assignment of the brownfield redevelopment tax credits;
  to amend part H of chapter 1 of the laws of 2003, amending the tax law
  relating to brownfield redevelopment tax  credits,  remediated  brown-
  field  credit for real property taxes for qualified sites and environ-
  mental remediation insurance credits, in relation to tax  credits  for
  certain  sites;  to  amend  the  environmental  conservation  law,  in
  relation to hazardous waste generator fees and  taxes;  to  amend  the
  environmental  conservation  law,  the  public authorities law and the
  state finance  law,  in  relation  to  the  environmental  restoration
  program; and to repeal certain provisions of the environmental conser-
  vation law and the tax law relating thereto (Part Q); to amend the tax
  law,  in relation to reforming the investment tax credit, reducing the
  tax rate for upstate manufacturers and providing a tax credit for real
  property taxes to New York manufacturers; to amend the economic devel-
  opment law, in relation to the excelsior investment tax credit; and to
  repeal certain provisions of the tax law  relating  to  the  financial
  services  investment tax credit (Part R); to amend the economic devel-
  opment law, the tax law, the transportation  law,  the  administrative
  code  of the city of New York and the New York state urban development
  corporation act, in relation to repealing the franchise tax  on  farm-
  ers',  fruit growers', and other like agricultural corporations organ-
  ized and operated on a co-operative basis; and to repeal  section  185
  of  the tax law relating to franchise tax on farmers', fruit growers',
  and other like agricultural corporations organized and operated  on  a
  co-operative  basis;  to  repeal  sections 187-j, 187-k, 187-l, 187-m,
  187-q, 187-r and 187-s of the tax law relating to certain tax credits;
  to repeal paragraph 1 of subdivision (h) of section 15, paragraph 1 of
  subdivision (g) of section 31, and certain other provisions of the tax
  law, in relation to making conforming changes (Part S); to  amend  the
  tax  law, in relation to providing a credit for excise tax on telecom-
  munication services for businesses located in tax-free NY areas  (Part
  T);  to amend the tax law, in relation to reducing the number of hours
  of part-time work needed by employees for employer  qualification  for
  the  New  York  youth works tax credit; and to amend the labor law, in
  relation to the New York youth works tax credit  (Part  U);  to  amend
  chapter  109  of  the laws of 2006 amending the tax law and other laws
  relating to providing  exemptions,  reimbursements  and  credits  from
  various  taxes for certain alternative fuels, in relation to extending
  the alternative fuels tax exemptions for two years (Part V); to  amend
  chapter  63  of  the laws of 2000, amending the tax law and other laws
  relating to modifying the distribution of funds from the motor vehicle
  fuel excise tax and the  vehicle  and  traffic  law,  in  relation  to

S. 6359                             3                            A. 8559

  simplifying the methodology for distribution of motor vehicle receipts
  (Part  W);  to  amend  the  tax law, in relation to the estate tax; to
  repeal section 2 of chapter 1013 of the laws of 1962, amending the tax
  law relating to imposing a tax on the transfer of estates of decedents
  dying  on or after April first, nineteen hundred sixty-three, relating
  to an appendix of applicable internal revenue code provisions, and  to
  repeal  article  26-B of the tax law, relating to the generation skip-
  ping transfer tax (Part X); to amend the tax law and  chapter  912  of
  the  laws  of  1920 relating to the regulation of boxing, sparring and
  wrestling matches, in relation to making technical corrections  there-
  to; to repeal article 19 of the tax law relating to boxing and wrestl-
  ing  exhibitions tax; and to repeal section 1820 of the tax law relat-
  ing to establishing misdemeanors for certain violations of article  19
  of such law (Part Y); to amend the tax law, in relation to vendor fees
  paid  to  vendor  tracks  (Part  Z);  to amend the racing, pari-mutuel
  wagering and breeding law,  in  relation  to  licenses  for  simulcast
  facilities,  sums  relating  to  track simulcast, simulcast of out-of-
  state thoroughbred races, simulcasting of races  run  by  out-of-state
  harness  tracks  and  distributions of wagers; to amend chapter 281 of
  the laws of 1994 amending the racing, pari-mutuel wagering and  breed-
  ing law and other laws relating to simulcasting and chapter 346 of the
  laws  of  1990  amending the racing, pari-mutuel wagering and breeding
  law and other laws relating to  simulcasting  and  the  imposition  of
  certain  taxes,  in  relation to extending certain provisions thereof;
  and to amend the racing, pari-mutuel wagering  and  breeding  law,  in
  relation  to  extending certain provisions thereof (Part AA); to amend
  the tax law, in relation to capital awards to vendor tracks (Part BB);
  to amend the tax law, the banking law, the public authorities law, and
  the administrative code of the city of New York, in  relation  to  the
  stock  transfer  tax, and to repeal certain provisions of the tax law,
  the state finance law and the administrative code of the city  of  New
  York  relating thereto (Part CC); to amend the tax law, in relation to
  conforming the due dates for the metropolitan commuter  transportation
  mobility  tax  for taxpayers with income from self-employment with the
  due dates for the personal income tax (Part DD); to  amend  the  state
  finance  law,  the upstate New York gaming economic development act of
  2013 and the tax law, in relation to  moneys  appropriated  or  trans-
  ferred from the commercial gaming revenue fund (Part EE); and to amend
  the  tax  law,  the  education law, the general municipal law, and the
  real property tax law, in relation to a real property tax freeze (Part
  FF)

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  This  act enacts into law major components of legislation
which are necessary to implement the state fiscal plan for the 2014-2015
state fiscal year. Each component is  wholly  contained  within  a  Part
identified as Parts A through FF. The effective date for each particular
provision contained within such Part is set forth in the last section of
such Part. Any provision in any section contained within a Part, includ-
ing the effective date of the Part, which makes a reference to a section
"of  this  act", when used in connection with that particular component,
shall be deemed to mean and refer to the corresponding  section  of  the

S. 6359                             4                            A. 8559

Part  in  which  it  is  found. Section three of this act sets forth the
general effective date of this act.

                                 PART A

  Section 1. Article 32 of the tax law is REPEALED.
  S 2. Section 180 of the tax law is REPEALED.
  S 3. Section 181 of the tax law is REPEALED.
  S  4.  Section 208 of the tax law, as added by chapter 415 of the laws
of 1944, subdivision 1 as amended by chapter 576 of the  laws  of  1994,
subdivision  1-A as amended by chapter 166 of the laws of 1991, subdivi-
sion 1-B as added by section 45 of part A and paragraph (k) of  subdivi-
sion  9  as  added by section 46 of part A of chapter 389 of the laws of
1997, subdivision 3, the opening paragraph, subparagraphs 6  and  11  of
paragraph (b), and the opening paragraph of paragraph (g) of subdivision
9  as  amended and subdivision 8-B and subparagraph 3-a of paragraph (b)
of subdivision 9 as added by chapter 817 of the laws of  1987,  subdivi-
sion  4  as  amended by section 1, subdivision 6 as amended by section 2
and subparagraph 2 of paragraph (a)  of  subdivision  9  as  amended  by
section  7  of part M of chapter 407 of the laws of 1999, subdivisions 5
and 7, paragraph (a) of subdivision 8-B, subparagraph  10  of  paragraph
(b)  and  paragraph  (j)  of  subdivision 9 as amended, paragraph (d) of
subdivision 8-B and paragraph (c-1) of subdivision 9 as added and  para-
graphs  (e)  and  (f) of subdivision 8-B as relettered by chapter 170 of
the laws of 1994, subdivisions 8 and 10 as amended by chapter 133 of the
laws of 1945, subdivision 8-A as added and subparagraph 1  of  paragraph
(a)  of  subdivision  9  as  amended by chapter 778 of the laws of 1972,
paragraph (b) of subdivision 8-A and paragraph (i) of subdivision  9  as
amended  by chapter 779 of the laws of 1972, subdivision 9 as amended by
chapter 713 of the laws of 1961,  paragraph  (a)  of  subdivision  9  as
amended by chapter 203 of the laws of 1962, subparagraphs 5, 9 and 10 of
paragraph  (a) and subparagraphs 8 and 9 of paragraph (b) of subdivision
9 as amended by chapter 61 of the laws of  1989  and  paragraph  (f)  of
subdivision  9  as separately amended by sections 278 and 347 of chapter
61 of the laws of 1989, clause (i) of subparagraph 5 of paragraph (a) of
subdivision 9 as amended by section 2 and subparagraph 20  of  paragraph
(b)  of  subdivision  9 as added by section 3 of part C of chapter 25 of
the laws of 2009, subparagraph 6 of paragraph (a) of  subdivision  9  as
added  by  chapter  895 of the laws of 1975 and as renumbered by chapter
613 of the laws of 1976, subparagraph 7 of paragraph (a) of  subdivision
9  as  added  by chapter 33 of the laws of 1978, subparagraph 8 of para-
graph (a) and subparagraph 7  of  paragraph  (b)  of  subdivision  9  as
amended by chapter 639 of the laws of 1986, subparagraph 11 of paragraph
(a) of subdivision 9 as added by chapter 15 of the laws of 1983, subpar-
agraph  12  of  paragraph  (a),  subparagraph  4-a  of paragraph (b) and
subparagraph 2 of paragraph (h) of subdivision 9 as amended and subpara-
graph 13 of paragraph (a) of subdivision 9 as added by  chapter  760  of
the  laws  of 1992, subparagraph 14 of paragraph (a) of subdivision 9 as
added by section 101 and paragraphs (l) and  (m)  of  subdivision  9  as
added  by  section  102  of  part  A  of chapter 56 of the laws of 1998,
subparagraph 15 of paragraph (a) of subdivision 9 as amended by  section
1 of part ZZ of chapter 63 of the laws of 2003, subparagraph 16 of para-
graph  (a)  of  subdivision 9 as added by section 1 of part K3, subpara-
graph 16 of paragraph (b) of subdivision 9 as added by section 2 of part
K3, subparagraph 17 of paragraph  (b)  of  subdivision  9  as  added  by
section  2  of part O3, and paragraphs (o), (p) and (q) of subdivision 9

S. 6359                             5                            A. 8559

as added by section 3 of part O3 of chapter 62  of  the  laws  of  2003,
subparagraph  18 of paragraph (a) of subdivision 9 as added by section 3
of part C and paragraph (o) of subdivision 9 as amended by section 2  of
part  E  of  chapter 59 of the laws of 2013, subparagraph 3 of paragraph
(b) of subdivision 9 as amended by chapter 895  of  the  laws  of  1975,
subparagraph  4  of paragraph (b) and subparagraph 4 of paragraph (f) of
subdivision 9 as amended by chapter 190 of the laws  of  1990,  subpara-
graph  15  of  paragraph (b) of subdivision 9 as added by chapter 309 of
the laws of 1996, subparagraph 18 of paragraph (b) of subdivision  9  as
added by section 21 of part H of chapter 1 of the laws of 2003, subpara-
graph 19 of paragraph (b) of subdivision 9 as added by section 1 of part
HH1  of  chapter  57  of the laws of 2008, paragraphs (c-2) and (c-3) of
subdivision 9 as added by section 10 of part Y of chapter 63 of the laws
of 2000, paragraph (g) of subdivision 9 as added by chapter 178  of  the
laws  of  1965, subparagraph 1 and clauses (B) and (C) of subparagraph 3
of paragraph (g) of subdivision 9 as amended by chapter 613 of the  laws
of  1976, clause (A) of subparagraph 1 of paragraph (g) of subdivision 9
as separately amended by chapters 675 and  836  of  the  laws  of  1977,
clause  (B)  of  subparagraph 1, clause (A) of subparagraph 2 and clause
(A) of subparagraph 3 of paragraph (g) of subdivision 9  as  amended  by
chapter  675 of the laws of 1977, item 1 of clause (B) of subparagraph 1
of paragraph (g) of subdivision 9 as amended by chapter 972 of the  laws
of  1984, clause (B) of subparagraph 2 of paragraph (g) of subdivision 9
as amended by chapter 365 of the laws of 1979, clause  (C)  of  subpara-
graph  2 of paragraph (g) of subdivision 9 as amended by chapter 1005 of
the laws of 1970, paragraph (h) of subdivision 9 as amended  by  chapter
606  of  the  laws  of  1984, paragraph (n) of subdivision 9 as added by
section 1 of part O of chapter 85 of the laws of 2002, subdivision 12 as
added by chapter 828 of the laws of 1977, subdivisions 13, 14, and 15 as
added by section 1 of LBD number 74021-03-4 and subdivision 19 as  added
by chapter 681 of the laws of 1997, is amended to read as follows:
  S 208. Definitions. As used in this article:
  1. The term "corporation" includes (a) an association within the mean-
ing  of  paragraph  three  of  subsection  (a)  of section seventy-seven
hundred one of the internal revenue code (including a limited  liability
company), (b) a joint-stock company or association, (c) a publicly trad-
ed  partnership  treated  as  a corporation for purposes of the internal
revenue code pursuant to section seventy-seven hundred four thereof  and
(d)  any business conducted by a trustee or trustees wherein interest or
ownership is evidenced  by  certificate  or  other  written  instrument.
"DISC"  and  "former DISC" mean any corporation which meets the require-
ments of subsection (a) of section nine hundred ninety-two of the inter-
nal revenue code[;].
  1-A. The term "New York S corporation"  means,  with  respect  to  any
taxable  year, a corporation subject to tax under this article for which
an election is in effect pursuant  to  subsection  (a)  of  section  six
hundred  sixty  of  this  chapter  for such year, any such year shall be
denominated a "New York S year", and such election shall be  denominated
a  "New  York S election". The term "New York C corporation" means, with
respect to any taxable year, a corporation subject  to  tax  under  this
article  which  is not a New York S corporation, and any such year shall
be denominated a "New York C year". The term  "termination  year"  means
any  taxable  year of a corporation during which the New York S election
terminates on a day other than the first day of such year.  The  portion
of  the  taxable  year ending before the first day for which such termi-
nation is effective shall be denominated the "S  short  year",  and  the

S. 6359                             6                            A. 8559

portion  of  such  year beginning on such first day shall be denominated
the "C short year". The term "New York S  termination  year"  means  any
termination  year  which  is  not also an S termination year for federal
purposes.
  1-B. The term "QSSS" means a corporation which is a qualified subchap-
ter  S  subsidiary  as defined in subparagraph (B) of paragraph three of
subsection (b) of section thirteen hundred  sixty-one  of  the  internal
revenue  code. The term "exempt QSSS" means a QSSS exempt from tax under
this article as provided in paragraph (k) of subdivision  nine  of  this
section,  or a QSSS described in subclause (i) of clause (B) of subpara-
graph two of paragraph (k) of subdivision nine of this section,  wherein
the parent corporation of the QSSS is subject to tax under this article,
and  the  assets,  liabilities,  income  and  deductions of the QSSS are
treated as the assets, liabilities, income and deductions of the  parent
corporation. Where a QSSS is an exempt QSSS, then for all purposes under
this article:
  (a)  the  assets,  liabilities, income, deductions, property, payroll,
receipts, capital, credits, and all other tax attributes and elements of
economic activity of the QSSS shall be deemed to be those of the  parent
corporation,
  (b)  the stocks, bonds and other securities issued by, and any indebt-
edness from, the QSSS shall not be [subsidiary,] investment or  business
capital of the parent corporation,
  (c)  transactions between the parent corporation and the QSSS, includ-
ing the payment of interest and  dividends,  shall  not  be  taken  into
account, and
  (d)  general  executive  officers  of  the  QSSS shall be deemed to be
general executive officers of the parent corporation.
  2. The term "taxpayer" means any corporation subject to tax under this
article[;].
  3. The term "subsidiary" means  a  corporation  of  which  over  fifty
percent  of  the number of shares of stock entitling the holders thereof
to vote for the election of  directors  or  trustees  is  owned  by  the
taxpayer[;].
  4.  The  term  ["subsidiary capital" means investments in the stock of
subsidiaries  and  any  indebtedness  from  subsidiaries,  exclusive  of
accounts receivable acquired in the ordinary course of trade or business
for  services  rendered or for sales of property held primarily for sale
to customers, whether or not evidenced by written instrument,  on  which
interest  is  not claimed and deducted by the subsidiary for purposes of
taxation under article nine-A, thirty-two or thirty-three of this  chap-
ter,  provided,  however,  that,  in the discretion of the commissioner,
there shall be deducted from subsidiary capital  any  liabilities  which
are  directly  or indirectly attributable to subsidiary capital] "STOCK"
MEANS A DIRECT INTEREST IN A CORPORATION THAT IS TREATED AS  EQUITY  FOR
FEDERAL INCOME TAX PURPOSES.
  5.  (A)  The  term  "investment capital" means investments in stocks[,
bonds and other securities, corporate and governmental,] THAT  ARE  HELD
BY  THE  TAXPAYER  FOR MORE THAN SIX CONSECUTIVE MONTHS BUT ARE not held
for sale to customers in the regular course of business,  [exclusive  of
subsidiary  capital] OR, IF THE TAXPAYER MAKES THE ELECTION PROVIDED FOR
IN SUBPARAGRAPH ONE OF PARAGRAPH (A) OF SUBDIVISION FIVE OF SECTION  TWO
HUNDRED  TEN-A  OF THIS ARTICLE, ARE NOT QUALIFIED FINANCIAL INSTRUMENTS
AS DESCRIBED IN SUBDIVISION FIVE OF SECTION TWO HUNDRED  TEN-A  OF  THIS
ARTICLE.  STOCK  IN  A CORPORATION THAT IS CONDUCTING A UNITARY BUSINESS
WITH THE TAXPAYER, STOCK IN A CORPORATION THAT IS INCLUDED IN A COMBINED

S. 6359                             7                            A. 8559

REPORT WITH THE TAXPAYER PURSUANT TO THE COMMONLY OWNED  GROUP  ELECTION
IN  SUBDIVISION  FIVE  OF SECTION TWO HUNDRED TEN-C OF THIS ARTICLE, and
stock  issued  by  the  taxpayer[,  provided,  however,  that,  in   the
discretion  of  the commissioner, there] SHALL NOT CONSTITUTE INVESTMENT
CAPITAL. FOR PURPOSES OF THIS  SUBDIVISION,  IF  THE  TAXPAYER  OWNS  OR
CONTROLS,  DIRECTLY OR INDIRECTLY, LESS THAN TWENTY PERCENT OF THE STOCK
OF A CORPORATION THAT ENTITLES THE  HOLDERS  THEREOF  TO  VOTE  FOR  THE
ELECTION OF TRUSTEES  OR DIRECTORS, THAT CORPORATION WILL BE PRESUMED TO
BE  CONDUCTING  A  BUSINESS THAT IS NOT UNITARY WITH THE BUSINESS OF THE
TAXPAYER.
  (B) THERE shall be deducted from investment  capital  any  liabilities
which  are  directly  or indirectly attributable to investment capital[;
and provided, further, that investment]. IF THE AMOUNT OF THOSE  LIABIL-
ITIES EXCEEDS THE AMOUNT OF INVESTMENT CAPITAL, THE AMOUNT OF INVESTMENT
CAPITAL WILL BE ZERO.
  (C)  INVESTMENT  capital  shall  not  include any such investments the
income from which is excluded from entire net  income  pursuant  to  the
provisions  of  paragraph (c-1) of subdivision nine of this section, and
that investment capital shall be computed without regard to  liabilities
directly or indirectly attributable to such investments, but only if air
carriers  organized  in  the  United States and operating in the foreign
country or countries in which the taxpayer has its major base  of  oper-
ations  and  in which it is organized, resident or headquartered (if not
in the same country as its major base of operations) are not subject  to
any  tax based on or measured by capital imposed by such foreign country
or countries or any political subdivision  thereof,  or  if  taxed,  are
provided  an exemption, equivalent to that provided for herein, from any
tax based on or measured by capital imposed by such foreign  country  or
countries  and  from  any  such tax imposed by any political subdivision
thereof[;].
  (D) IF A TAXPAYER ACQUIRES STOCK DURING THE SECOND HALF OF ITS TAXABLE
YEAR AND OWNS THAT STOCK ON THE LAST DAY OF THE TAXABLE YEAR, IT WILL BE
PRESUMED THAT THE TAXPAYER HELD THAT STOCK FOR MORE THAN SIX CONSECUTIVE
MONTHS DURING THE TAXABLE YEAR. HOWEVER, IF THE  TAXPAYER  DOES  NOT  IN
FACT  HOLD THAT STOCK FOR MORE THAN SIX CONSECUTIVE MONTHS, THE TAXPAYER
MUST INCREASE ITS TOTAL BUSINESS CAPITAL IN THE  IMMEDIATELY  SUCCEEDING
TAXABLE  YEAR  BY  THE  AMOUNT  INCLUDED  IN INVESTMENT CAPITAL FOR THAT
STOCK, NET OF ANY LIABILITIES ATTRIBUTABLE TO  THAT  STOCK  COMPUTED  AS
PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (E)  WHEN  INCOME  OR  GAIN  FROM  A DEBT OBLIGATION OR OTHER SECURITY
CANNOT BE  APPORTIONED  TO  THE  STATE  USING  THE  BUSINESS  ALLOCATION
PERCENTAGE  AS  A RESULT OF UNITED STATES CONSTITUTIONAL PRINCIPLES, THE
DEBT OBLIGATION OR OTHER SECURITY WILL BE INCLUDED IN  INVESTMENT  CAPI-
TAL.
  6.  (A)  The  term "investment income" means income, including capital
gains in excess of capital  losses,  from  investment  capital,  to  the
extent  included  in  computing  entire  net  income, less, [(a)] in the
discretion of the commissioner, any  INTEREST  deductions  allowable  in
computing  entire  net income which are directly or indirectly attribut-
able to investment capital or investment income[, and (b)  such  portion
of  any  net  operating loss deduction allowable in computing entire net
income, as the investment income, before such deduction, bears to entire
net income, before such deduction,] provided, however, that in  no  case
shall  investment  income  exceed  entire net income[;]. IF THE TAXPAYER
ATTRIBUTES INTEREST DEDUCTIONS  TO  INVESTMENT  INCOME  AND  THE  AMOUNT
SUBTRACTED  EXCEEDS  INVESTMENT  INCOME,  THE  EXCESS  OF  THE  INTEREST

S. 6359                             8                            A. 8559

DEDUCTIONS OVER INVESTMENT INCOME MUST  BE  ADDED  BACK  TO  ENTIRE  NET
INCOME.
  (B)  IN LIEU OF SUBTRACTING FROM INVESTMENT INCOME THE AMOUNT OF THOSE
INTEREST DEDUCTIONS, THE TAXPAYER MAY ELECT TO REDUCE ITS TOTAL  INVEST-
MENT  INCOME  BY FORTY PERCENT. IF THE TAXPAYER MAKES THIS ELECTION, THE
TAXPAYER MUST ALSO MAKE THE ELECTIONS PROVIDED FOR IN PARAGRAPHS (B) AND
(C) OF SUBDIVISION SIX-A OF THIS SECTION. A TAXPAYER WHICH DOES NOT MAKE
THIS ELECTION BECAUSE IT HAS NO INVESTMENT CAPITAL WILL NOT BE PRECLUDED
FROM MAKING THOSE OTHER ELECTIONS.
  6-A. (A) THE TERM "OTHER  EXEMPT  INCOME"  MEANS  THE  SUM  OF  EXEMPT
SUBPART F INCOME AND EXEMPT UNITARY CORPORATION DIVIDENDS.
  (B)  "EXEMPT SUBPART F INCOME" MEANS THE INCOME, AS DEFINED IN SECTION
952 OF THE INTERNAL REVENUE CODE, RECEIVED FROM A  CORPORATION  THAT  IS
CONDUCTING A UNITARY BUSINESS WITH THE TAXPAYER BUT IS NOT INCLUDED IN A
COMBINED  REPORT  WITH  THE  TAXPAYER,  LESS,  IN  THE DISCRETION OF THE
COMMISSIONER, ANY INTEREST DEDUCTIONS DIRECTLY OR  INDIRECTLY  ATTRIBUT-
ABLE  TO  THAT INCOME.  IN LIEU OF SUBTRACTING FROM ITS EXEMPT SUBPART F
INCOME THE AMOUNT OF THOSE INTEREST DEDUCTIONS, THE TAXPAYER  MAY  ELECT
TO  REDUCE  ITS  TOTAL  EXEMPT SUBPART F INCOME BY FORTY PERCENT. IF THE
TAXPAYER MAKES THIS ELECTION, THE TAXPAYER MUST ALSO MAKE THE  ELECTIONS
PROVIDED  FOR  IN  PARAGRAPH  (B) OF SUBDIVISION SIX OF THIS SECTION AND
PARAGRAPH (C) OF THIS SUBDIVISION.  A TAXPAYER WHICH DOES NOT MAKE  THIS
ELECTION BECAUSE IT HAS NO EXEMPT SUBPART F INCOME WILL NOT BE PRECLUDED
FROM MAKING THOSE OTHER ELECTIONS.
  (C)  "EXEMPT UNITARY CORPORATION DIVIDENDS" MEANS THOSE DIVIDENDS FROM
A CORPORATION THAT IS CONDUCTING A UNITARY BUSINESS  WITH  THE  TAXPAYER
BUT IS NOT INCLUDED IN A COMBINED REPORT WITH THE TAXPAYER, LESS, IN THE
DISCRETION  OF  THE  COMMISSIONER,  ANY  INTEREST DEDUCTIONS DIRECTLY OR
INDIRECTLY ATTRIBUTABLE TO SUCH INCOME.   IN LIEU  OF  SUBTRACTING  FROM
THIS  DIVIDEND  INCOME THOSE INTEREST DEDUCTIONS, THE TAXPAYER MAY ELECT
TO REDUCE THE TOTAL AMOUNT OF THIS DIVIDEND INCOME BY FORTY PERCENT.  IF
THE  TAXPAYER  MAKES  THIS  ELECTION,  THE  TAXPAYER  MUST ALSO MAKE THE
ELECTIONS PROVIDED FOR IN PARAGRAPH  (B)  OF  SUBDIVISION  SIX  OF  THIS
SECTION AND PARAGRAPH (B) OF THIS SUBDIVISION. A TAXPAYER WHICH DOES NOT
MAKE THIS ELECTION BECAUSE IT HAS NOT RECEIVED ANY EXEMPT UNITARY CORPO-
RATION   DIVIDENDS  WILL  NOT  BE  PRECLUDED  FROM  MAKING  THOSE  OTHER
ELECTIONS.
  (D) IF THE TAXPAYER ATTRIBUTES INTEREST  DEDUCTIONS  TO  OTHER  EXEMPT
INCOME AND THE AMOUNT SUBTRACTED EXCEEDS OTHER EXEMPT INCOME, THE EXCESS
OF  THE  INTEREST DEDUCTIONS OVER OTHER EXEMPT INCOME MUST BE ADDED BACK
TO ENTIRE NET INCOME. IN NO CASE SHALL OTHER EXEMPT INCOME EXCEED ENTIRE
NET INCOME.
  7. (a) The term  "business  capital"  means  all  assets,  other  than
[subsidiary capital,] investment capital and stock issued by the taxpay-
er,  less liabilities not deducted from [subsidiary or] investment capi-
tal [except that cash on hand and on deposit shall be treated as invest-
ment capital  or  as  business  capital  as  the  taxpayer  may  elect].
BUSINESS  CAPITAL  SHALL INCLUDE ONLY THOSE ASSETS THE INCOME OR EXPENSE
OF WHICH ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED
IF  NOT  FULLY  DEPRECIATED  OR EXPENSED OR DEPRECIATED OR EXPENSED TO A
NOMINAL AMOUNT) IN THE COMPUTATION OF ENTIRE NET INCOME FOR THE  TAXABLE
YEAR.
  (b)  Provided, however, "business capital" shall not include assets to
the extent employed for  the  purpose  of  generating  income  which  is
excluded  from entire net income pursuant to the provisions of paragraph
(c-1) of subdivision nine of this section and shall be computed  without

S. 6359                             9                            A. 8559

regard  to  liabilities  directly  or  indirectly  attributable  to such
assets, but only if air carriers organized  in  the  United  States  and
operating  in the foreign country or countries in which the taxpayer has
its  major  base of operations and in which it is organized, resident or
headquartered (if not in the same country as its  major  base  of  oper-
ations)  are  not  subject  to  any  tax based on or measured by capital
imposed by such foreign country or countries or any  political  subdivi-
sion thereof, or if taxed, are provided an exemption, equivalent to that
provided  for  herein,  from  any  tax  based  on or measured by capital
imposed by such foreign country or  countries  and  from  any  such  tax
imposed by any political subdivision thereof[;].
  8. The term "business income" means entire net income minus investment
income[;]  AND OTHER EXEMPT INCOME. IN NO EVENT SHALL THE SUM OF INVEST-
MENT INCOME AND OTHER EXEMPT INCOME EXCEED ENTIRE  NET  INCOME.  IF  THE
TAXPAYER  MAKES  THE  ELECTION PROVIDED FOR IN SUBPARAGRAPH ONE OF PARA-
GRAPH (A) OF SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS ARTI-
CLE, THEN ALL INCOME FROM QUALIFIED FINANCIAL INSTRUMENTS SHALL  CONSTI-
TUTE BUSINESS INCOME.
  8-A.  Provided, however, that with respect to a DISC or a former DISC,
the following provisions shall apply:
  (a) investments in the stocks, bonds or other securities of a DISC  or
any  indebtedness from a DISC shall not be treated as [either subsidiary
capital or] investment capital under [subdivisions four or]  SUBDIVISION
five of this section,
  (b)  any amounts deemed distributed from a DISC or a former DISC which
are taxable as dividends pursuant to  subsection  (b)  of  section  nine
hundred  ninety-five  of  the  internal revenue code of nineteen hundred
fifty-four shall be treated as business income, except any such  amounts
from  a  former  DISC attributable to amounts includible in a taxpayer's
entire net income for a prior taxable year  under  subparagraph  (B)  of
paragraph (i) of subdivision nine of this section shall be excluded from
entire net income,
  (c)  any gain recognized for federal income tax purposes on the dispo-
sition of stock in a DISC, and any gain recognized on the disposition of
stock in a former DISC, includible in gross income as a dividend  pursu-
ant  to subsection (c) of section nine hundred ninety-five of the inter-
nal revenue code of nineteen hundred fifty-four,  shall  be  treated  as
business income, and
  (d)  except  as  provided in paragraph (i) of subdivision nine of this
section, any actual distribution from a DISC or a former DISC  shall  be
treated  as  business  income  except  an  actual distribution which for
federal income tax purposes is treated as made out  of  "other  earnings
and  profits"  under  section  nine  hundred  ninety-six of the internal
revenue code of nineteen hundred fifty-four, in which case  such  actual
distribution  shall  be treated as [either subsidiary income or] invest-
ment income under this article.
  [8-B. (a) The term "minimum taxable income" shall mean the entire  net
income of the taxpayer for the taxable year:
  (1) increased by the amount of the federal items of tax preference set
forth  in  section  fifty-seven  of  the internal revenue code (with the
modifications set forth in paragraph (b)  of  this  subdivision),  which
items  of  tax preference shall have the same meaning and be computed in
the same manner as under section fifty-seven  of  the  internal  revenue
code,
  (2) determined with the federal adjustments described in paragraph (c)
of  this  subdivision, which adjustments shall have the same meaning and

S. 6359                            10                            A. 8559

be computed in the same manner as under sections  fifty-six  and  fifty-
eight of the internal revenue code,
  (3)  increased  by  the net operating loss deduction otherwise allowed
under paragraph (f) of subdivision nine of this section, and
  (4) reduced, for taxable years beginning after nineteen hundred  nine-
ty-three, by the alternative net operating loss deduction, as defined in
paragraph (d) of this subdivision.
  (b)  The federal items of tax preference referred to hereinabove shall
be modified by deducting "tax-exempt interest" and "accelerated depreci-
ation or amortization on certain property placed in service before Janu-
ary  1,  1987",  as  determined  under  paragraphs  five  and  seven  of
subsection (a) of section fifty-seven of the internal revenue code.
  (c) The adjustments referred to hereinabove shall be:
  (1) "Depreciation" as determined under paragraph one of subsection (a)
of  section fifty-six of the internal revenue code. For purposes of this
subparagraph, the depreciation item  of  adjustment  provided  for  here
shall  not include any amount attributable to property for which the tax
benefits of the accelerated cost recovery system are not available under
this article by reason of subparagraph ten of paragraph (b) of  subdivi-
sion nine of this section;
  (2)  "Mining  exploration  and  development costs" as determined under
paragraph two of subsection (a) of section  fifty-six  of  the  internal
revenue code;
  (3)  "Treatment  of  certain  long-term contracts" as determined under
paragraph three of subsection (a) of section fifty-six of  the  internal
revenue code;
  (4)  "Installment sales of certain property" as determined under para-
graph six of subsection (a) of section fifty-six of the internal revenue
code;
  (5) "Circulation expenditures of personal holding companies" as deter-
mined under subparagraph (C) of  paragraph  two  of  subsection  (b)  of
section fifty-six of the internal revenue code;
  (6)  "Merchant  marine capital construction funds" as determined under
paragraph two of subsection (c) of section  fifty-six  of  the  internal
revenue code;
  (7)  "Disallowance  of  passive  activity  loss"  as  determined under
subsection (b) of section fifty-eight of the internal revenue code; and
  (8) "Adjusted basis", as it appears in paragraph seven  of  subsection
(a)  of  section  fifty-six  of  the  internal revenue code, but without
taking  into  account  the  references  therein  to  paragraph  five  of
subsection (a) of section fifty-six of the internal revenue code.
  (d)  The term "alternative net operating loss deduction" means the net
operating loss deduction allowed for the taxable  year  under  paragraph
(f) of subdivision nine of this section, except as provided herein.
  (1)(A)  The  net  operating loss for any year beginning after nineteen
hundred eighty-nine which is  included  in  determining  such  deduction
shall be determined with the adjustments provided in subparagraph two of
paragraph  (a) of this subdivision, and shall be reduced by the items of
tax preference determined under subparagraph one  of  paragraph  (a)  of
this  subdivision,  attributable to such year. An item of tax preference
shall be taken into account only to the extent such item  increased  the
amount  of  the  net operating loss for the taxable year under paragraph
(f) of subdivision nine of this section.
  (B) In the case of loss years beginning before nineteen hundred  nine-
ty,  the  amount  of the net operating loss which may be carried over to
taxable years beginning after  nineteen  hundred  eighty-nine  shall  be

S. 6359                            11                            A. 8559

equal  to an amount which may be carried from the loss year to the first
taxable year of the taxpayer beginning after  nineteen  hundred  eighty-
nine.
  (2)  In  determining  the amount of such deduction, loss carryforwards
and carrybacks shall, subject to the provisions of subparagraph five  of
paragraph  (f)  of  subdivision nine of this section, be computed in the
manner set forth in paragraph two  of  subsection  (b)  of  section  one
hundred  seventy-two  of the internal revenue code, except that, for the
reference therein to taxable income,  there  shall  be  substituted  the
phrase  "ninety  percent  of  minimum  taxable income determined without
regard to the alternative net operating loss deduction".
  (3) The amount of such deduction shall not exceed  ninety  percent  of
minimum  taxable  income  determined  without  regard to such deduction,
provided, however, the term "ninety percent" shall be  read  as  "forty-
five  percent"  with  respect  to  taxable  years  beginning in nineteen
hundred ninety-four.
  (e) The tax commission may, whenever necessary in  order  to  properly
reflect  the  minimum taxable income of any taxpayer, determine the year
or period in which any item of income or deduction  shall  be  included,
without regard to the method of accounting employed by the taxpayer.
  (f) If the period covered by a report under this article is other than
the  period  covered by the report to the United States treasury depart-
ment, the minimum taxable income shall be appropriately modified  pursu-
ant to regulations promulgated by the tax commission.]
  9. The term "entire net income" means total net income from all sourc-
es,  which  shall  be  presumably  the same as the entire taxable income
[(but not alternative minimum taxable income)], WHICH, EXCEPT AS HEREIN-
AFTER PROVIDED IN THIS SUBDIVISION,
  (i) [which] the taxpayer is required to report to  the  United  States
treasury department, or
  (ii)  [which]  the  taxpayer would have been required to report to the
United States treasury department if it had not made an  election  under
subchapter s of chapter one of the internal revenue code, or
  (iii)  [which]  the  taxpayer,  in  the case of a corporation which is
exempt from federal income tax (other than the tax on unrelated business
taxable income imposed under section 511 of the internal  revenue  code)
but which is subject to tax under this article, would have been required
to  report  to  the  United  States  treasury  department  but  for such
exemption, [except as hereinafter provided, and subject to any modifica-
tion required by paragraphs (d) and (e) of subdivision three of  section
two hundred ten of this article] OR
  (IV)  IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAWS OF A COUN-
TRY OTHER THAN THE UNITED STATES,  IS  EFFECTIVELY  CONNECTED  WITH  THE
CONDUCT  OF  A  TRADE OR BUSINESS WITHIN THE UNITED STATES AS DETERMINED
UNDER SECTION 882 OF THE INTERNAL REVENUE CODE,
  (a) Entire net income shall not include:
  [(1) income, gains and losses from subsidiary  capital  which  do  not
include  the  amount of a recovery in respect of any war loss except for
such amounts from a former DISC which are  treated  as  business  income
under subdivision eight-A of this section,
  (2)  fifty  percent of dividends (A) other than from subsidiaries, and
(B) other than amounts treated  as  business  income  under  subdivision
eight-A  of  this  section,  on  shares  of  stock  which conform to the
requirements of subsection (c) of section two hundred forty-six  of  the
internal revenue code.]
  (3) bona fide gifts,

S. 6359                            12                            A. 8559

  (4) income and deductions with respect to amounts received from school
districts and from corporations and associations, organized and operated
exclusively  for  religious, charitable or educational purposes, no part
of the net earnings of which inures to the benefit of any private share-
holder or individual, for the operation of school buses,
  (5)  (i)  any  refund  or  credit of a tax imposed under this article,
article twenty-three, or FORMER article thirty-two of this chapter,  for
which  tax  no  exclusion  or  deduction  was allowed in determining the
taxpayer's entire net income under this article,  article  twenty-three,
or  FORMER article thirty-two of this chapter for any prior year, (ii) a
refund or credit of general corporation tax allowed by subdivision elev-
en of section 11-604 of the administrative code of the city of New York,
or (iii) any refund or credit  of  a  tax  imposed  under  sections  one
hundred  eighty-three,  one  hundred eighty-three-a, one hundred eighty-
four or one hundred eighty-four-a of this chapter, and
  (6) any amount treated as dividends pursuant to section  seventy-eight
of the internal revenue code and not [otherwise deductible under subpar-
agraphs  one  and  two of this paragraph] TREATED AS OTHER EXEMPT INCOME
UNDER SUBDIVISION SIX-A OF THIS SECTION;
  (7) that portion of wages and salaries paid or incurred for the  taxa-
ble year for which a deduction is not allowed pursuant to the provisions
of section two hundred eighty-C of the internal revenue code.
  [(8)  in the case of a taxpayer who is separately or as a partner of a
partnership doing an insurance business as a  member  of  the  New  York
insurance  exchange described in section six thousand two hundred one of
the insurance law, any item of income, gain, loss or deduction  of  such
business  which  is  the  taxpayer's  distributive or pro rata share for
federal income tax purposes or which the taxpayer is  required  to  take
into account separately for federal income tax purposes.]
  (9)  for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph  eight
of  subsection  (f)  of  section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty of a taxpayer principally engaged in the conduct of  aviation  (other
than  air  freight  forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years  beginning  in
nineteen  hundred  eighty-nine,  any  amount  which  is  included in the
taxpayer's federal taxable income solely as a result of an election made
pursuant to the provisions of such paragraph eight as it was  in  effect
for  agreements  entered  into  prior to January first, nineteen hundred
eighty-four;
  (10) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph  eight
of  subsection  (f)  of  section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty of a taxpayer principally engaged in the conduct of  aviation  (other
than  air  freight  forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years  beginning  in
nineteen  hundred  eighty-nine, any amount which the taxpayer could have
excluded from federal taxable  income  had  it  not  made  the  election
provided  for in such paragraph eight as it was in effect for agreements
entered into prior to January first, nineteen hundred eighty-four;
  (11) the amount deductible pursuant to paragraph (j) of this  subdivi-
sion; and

S. 6359                            13                            A. 8559

  (12)  upon  the disposition of property to which paragraph (j) of this
subdivision applies, the amount, if any, by which the aggregate  of  the
amounts  described in subparagraph ten of paragraph (b) of this subdivi-
sion attributable to such property exceeds the aggregate of the  amounts
described  in  paragraph  (j)  of  this subdivision attributable to such
property; and
  [(13) if the added tax provided for in either (i)  former  subdivision
two  of section one hundred eighty-two of this chapter (relating to real
estate corporations) or (ii) former subdivision  one-a  of  section  two
hundred  nine of this chapter (relating to real estate corporations) has
been imposed upon the taxpayer,  any  income  which  has  been  used  in
computing such tax.]
  (14)  The  amount  deductible  pursuant to paragraph [(l)] (I) of this
subsection.
  [(15) In the case of an attorney-in-fact,  with  respect  to  which  a
mutual  insurance  company,  which  is  an  interinsurer or a reciprocal
insurer and is subject to tax under subdivision (a) of  section  fifteen
hundred  ten  of  this chapter, has made the election provided for under
section eight hundred thirty-five  of  the  Internal  Revenue  Code,  an
amount  equal  to the excess, if any, of the amounts paid or incurred by
such interinsurer or reciprocal insurer  in  the  taxable  year  to  the
attorney-in-fact  over  the  deduction  allowed  to such interinsurer or
reciprocal insurer with respect to amounts paid or incurred in the taxa-
ble year to the attorney-in-fact under subsection (b)  of  such  section
eight hundred thirty-five of the Internal Revenue Code.]
  (16) In the case of a taxpayer subject to the modification provided by
subparagraph  sixteen  of  paragraph (b) of this subdivision, the amount
required to be recaptured pursuant to subsection (d) of section  179  of
the  internal  revenue  code  with  respect  to property upon which such
modification was based.
  (17) FOR TAXABLE YEARS  BEGINNING  AFTER  DECEMBER  THIRTY-FIRST,  TWO
THOUSAND  TWO, THE AMOUNT DEDUCTIBLE PURSUANT TO PARAGRAPH (N-1) OF THIS
SUBDIVISION.
  (18) the amount of income or gain included in federal  taxable  income
of  a taxpayer that is a partner in a qualified entity or is a qualified
entity that is located both within and without a New  York  state  inno-
vation  hot  spot, to the extent that the income or gain is attributable
to the operations of a qualified entity at or as part of  the  New  York
state  innovation  hot  spot as provided in section thirty-eight of this
chapter.
  (19) THE AMOUNT COMPUTED PURSUANT TO PARAGRAPH  (R)  OR  (S)  OF  THIS
SUBDIVISION, BUT NOT BOTH SUCH AMOUNTS.
  (b)  Entire  net  income  shall  be  determined without the exclusion,
deduction or credit of:
  (1) [the amount of any specific exemption or credit allowed in any law
of the United States imposing any tax on or measured by  the  income  of
corporations,] IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAW OF A
COUNTRY  OTHER THAN THE UNITED STATES, EXCEPT AS TREATED AS OTHER EXEMPT
INCOME UNDER SUBDIVISION SIX-A OF THIS SECTION,  (I)  ANY  PART  OF  ANY
INCOME  FROM  DIVIDENDS  OR INTEREST ON ANY KIND OF STOCK, SECURITIES OR
INDEBTEDNESS,  BUT  ONLY  IF  SUCH  INCOME  IS  TREATED  AS  EFFECTIVELY
CONNECTED  WITH  THE CONDUCT OF A TRADE OR BUSINESS IN THE UNITED STATES
PURSUANT TO SECTION 864 OF THE INTERNAL REVENUE CODE,  (II)  ANY  INCOME
EXEMPT  FROM  FEDERAL  TAXABLE INCOME UNDER ANY TREATY OBLIGATION OF THE
UNITED STATES, BUT ONLY IF SUCH INCOME WOULD BE TREATED  AS  EFFECTIVELY
CONNECTED  IN  ABSENCE OF SUCH EXEMPTION PROVIDED THAT SUCH TREATY OBLI-

S. 6359                            14                            A. 8559

GATION DOES NOT PRECLUDE THE TAXATION OF SUCH  INCOME  BY  A  STATE,  OR
(III) ANY INCOME WHICH WOULD BE TREATED AS EFFECTIVELY CONNECTED IF SUCH
INCOME WERE NOT EXCLUDED FROM GROSS INCOME PURSUANT TO SUBSECTION (A) OF
SECTION 103 OF THE INTERNAL REVENUE CODE;
  (2)  any  part of any income from dividends or interest on any kind of
stock, securities or indebtedness, [except as provided  in  clauses  (1)
and  (2)  of  paragraph (a) hereof] TREATED AS OTHER EXEMPT INCOME UNDER
SUBDIVISION SIX-A OF THIS SECTION,
  (3) taxes on or measured by profits or income paid or accrued  to  the
United States, any of its possessions or to any foreign country, includ-
ing  taxes  in  lieu  of  any of the foregoing taxes otherwise generally
imposed by any foreign country  or  by  any  possession  of  the  United
States,
  (3-a)  taxes  on  or  measured  by profits or income, or which include
profits or income as a measure, paid or accrued to any  other  state  of
the  United  States,  or  any  political  subdivision thereof, or to the
District of Columbia, including taxes expressly in lieu of  any  of  the
foregoing  taxes  otherwise  generally imposed by any other state of the
United States, or any political subdivision thereof, or the District  of
Columbia;
  (4)  taxes  imposed  under  this  article and article thirty-two AS IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN and sections  one
hundred  eighty-three,  one  hundred eighty-three-a, one hundred eighty-
four and one hundred eighty-four-a of this chapter,
  (4-a)(A) [the entire amount allowable as an exclusion or deduction for
stock transfer taxes imposed by article twelve of this chapter in deter-
mining the entire taxable income  which  the  taxpayer  is  required  to
report  to  the United States treasury department but only to the extent
that such taxes are incurred and paid  in  market  making  transactions,
(B)]  in those instances where a credit for the special additional mort-
gage recording tax credit is allowed under [paragraph (a)  of]  subdivi-
sion  [seventeen]  NINE of section two hundred [ten] TEN-B of this arti-
cle, the amount allowed as an exclusion or  deduction  for  the  special
additional  mortgage  recording  tax  imposed  by  subdivision  one-a of
section two hundred fifty-three  of  this  chapter  in  determining  the
entire  taxable  income  which the taxpayer is required to report to the
United States treasury department,  and  [(C)]  (B)  unless  the  credit
allowed  pursuant to subdivision [seventeen] NINE of section two hundred
[ten] TEN-B of this article is reflected in the computation of the  gain
or  loss so as to result in an increase in such gain or decrease of such
loss, for federal income tax purposes, from the sale or  other  disposi-
tion  of the property with respect to which the special additional mort-
gage recording tax imposed pursuant to subdivision one-a of section  two
hundred  fifty-three of this chapter was paid, the amount of the special
additional mortgage  recording  tax  imposed  by  subdivision  one-a  of
section two hundred fifty-three of this chapter which was paid and which
is  reflected  in  the computation of the basis of the property so as to
result in a decrease in such gain or increase in such loss  for  federal
income  tax  purposes from the sale or other disposition of the property
with respect to which such tax was paid.
  (6) [in the discretion of the tax commission, any amount  of  interest
directly  or  indirectly  and  any  other  amount directly or indirectly
attributable as a carrying charge or otherwise to subsidiary capital  or
to  income,  gains or losses from subsidiary capital] ANY AMOUNT ALLOWED
AS A DEDUCTION FOR THE TAXABLE YEAR UNDER SECTION 172  OF  THE  INTERNAL

S. 6359                            15                            A. 8559

REVENUE  CODE,  INCLUDING  CARRYOVERS  OF  DEDUCTIONS FROM PRIOR TAXABLE
YEARS.
  [(7)  in the case of a taxpayer who is separately or as a partner of a
partnership doing an insurance business as a  member  of  the  New  York
insurance  exchange described in section six thousand two hundred one of
the insurance law, such taxpayer's distributive or pro rata share of the
allocated entire  net  income  of  such  business  as  determined  under
sections fifteen hundred three and fifteen hundred four of this chapter,
provided  however,  in  the  event such allocated entire net income is a
loss, such taxpayer's distributive or pro rata share of such loss  shall
not  be  subtracted  from federal taxable income in computing entire net
income under this subdivision.]
  (8) for taxable years beginning after December thirty-first,  nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other
than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine, any amount which the taxpayer claimed as a
deduction in computing its federal taxable income solely as a result  of
an  election  made pursuant to the provisions of such paragraph eight as
it was in effect for agreements entered into  prior  to  January  first,
nineteen hundred eighty-four;
  (9)  for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph  eight
of  subsection  (f)  of  section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty of a taxpayer principally engaged in the conduct of  aviation  (other
than  air  freight  forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years  beginning  in
nineteen  hundred  eighty-nine, any amount which the taxpayer would have
been required to include in  the  computation  of  its  federal  taxable
income had it not made the election permitted pursuant to such paragraph
eight  as  it was in effect for agreements entered into prior to January
first, nineteen hundred eighty-four;
  (10) in the case of property placed in service in taxable years begin-
ning before nineteen hundred ninety-four, for  taxable  years  beginning
after  December  thirty-first,  nineteen hundred eighty-one, except with
respect to property subject to the provisions  of  section  two  hundred
eighty-F   of  the  internal  revenue  code,  property  subject  to  the
provisions of section one hundred sixty-eight of  the  internal  revenue
code which is placed in service in this state in taxable years beginning
after  December  thirty-first, nineteen hundred eighty-four and property
of a taxpayer principally engaged in the conduct of aviation (other than
air freight forwarders acting as principal and like indirect air  carri-
ers)  which is placed in service before taxable years beginning in nine-
teen  hundred  [eight-nine]  EIGHTY-NINE,  the  amount  allowable  as  a
deduction determined under section one hundred sixty-eight of the inter-
nal revenue code;
  (11)  upon  the disposition of property to which paragraph (j) of this
subdivision applies, the amount, if any, by which the aggregate  of  the
amounts  described  in  such paragraph (j) attributable to such property

S. 6359                            16                            A. 8559

exceeds the aggregate of the amounts described in  subparagraph  ten  of
this paragraph attributable to such property.
  (15)  Real  property taxes paid on qualified agricultural property and
deducted in determining federal taxable income, to  the  extent  of  the
amount of the agricultural property tax credit allowed under subdivision
[twenty-two] ELEVEN of section two hundred [ten] TEN-B of this article.
  (16)  In  the  case  of  a taxpayer which is not an eligible farmer as
defined in paragraph (b) of subdivision [twenty-two] ELEVEN  of  section
two  hundred  [ten]  TEN-B  of this article, the amount of any deduction
claimed pursuant to section  179  of  the  internal  revenue  code  with
respect  to  a sport utility vehicle which is not a passenger automobile
as defined in paragraph 5 of subsection  (d)  of  section  280F  of  the
internal revenue code.
  (17)  for  taxable  years  beginning  after December thirty-first, two
thousand two, in the case of qualified property described  in  paragraph
two  of  subsection k of section 168 of the internal revenue code, other
than qualified resurgence zone property described in  paragraph  (q)  of
this subdivision, and other than qualified New York Liberty Zone proper-
ty  described  in  paragraph two of subsection b of section 1400L of the
internal revenue code (without regard to clause (i) of subparagraph  (C)
of  such paragraph), which was placed in service on or after June first,
two thousand three, the amount allowable as a  deduction  under  section
167 of the internal revenue code.
  (18) Premiums paid for environmental remediation insurance, as defined
in  section  twenty-three  of  this chapter, and deducted in determining
federal taxable income, to the extent of the amount of the environmental
remediation insurance credit allowed under such section twenty-three and
subdivision [thirty-five] NINETEEN of section two hundred [ten] TEN-B of
this article.
  (19) The amount of any  deduction  allowed  pursuant  to  section  one
hundred ninety-nine of the internal revenue code.
  (20) The amount of any federal deduction for taxes imposed under arti-
cle twenty-three of this chapter.
  [(c)  Entire  net  income  shall include income within and without the
United States;]
  (c-1)(1) Notwithstanding any other provision of this article,  in  the
case  of a taxpayer which is a foreign air carrier holding a foreign air
carrier permit issued by the United States department of  transportation
pursuant  to  section  four  hundred  two of the federal aviation act of
nineteen hundred fifty-eight, as amended, and which is  qualified  under
subparagraph two of this paragraph, entire net income shall not include,
and  shall  be  computed  without  the deduction of, amounts directly or
indirectly attributable to, (i) any income  derived  from  the  interna-
tional  operation  of  aircraft  as  described  in  and  subject  to the
provisions of section eight hundred eighty-three of the internal revenue
code, (ii) income without the United States which is  derived  from  the
operation  of aircraft, and (iii) income without the United States which
is of a type described in  subdivision  (a)  of  section  eight  hundred
eighty-one  of  the internal revenue code except that it is derived from
sources without the United  States.  Entire  net  income  shall  include
income  described in clauses (i), (ii) and (iii) of this subparagraph in
the case of taxpayers not described in the previous sentence.
  (2) A taxpayer is qualified under this subparagraph  if  air  carriers
organized  in  the United States and operating in the foreign country or
countries in which the taxpayer has its major base of operations and  in
which  it  is  organized,  resident or headquartered (if not in the same

S. 6359                            17                            A. 8559

country as its major base of operations) are not subject to  any  income
tax  or  other tax based on or measured by income or receipts imposed by
such foreign country or countries or any political subdivision  thereof,
or  if  so  subject to such tax, are provided an exemption from such tax
equivalent to that provided for herein.
  (c-2) Adjustments by qualified public utilities. (1) In the case of  a
taxpayer which is a qualified public utility, entire net income shall be
computed with the adjustments set forth in this paragraph.
  (2)  Definitions.  (A)  Qualified  public utility. The term "qualified
public utility" means a taxpayer which: (i)  on  December  thirty-first,
nineteen  hundred ninety-nine, was subject to the ratemaking supervision
of the state department of public service, and (ii) for the year  ending
on  December  thirty-first, nineteen hundred ninety-nine, was subject to
tax under former section one hundred eighty-six of this chapter.
  (B) Transition property. The term "transition property" means property
placed in service by the taxpayer before January  first,  two  thousand,
for  which a depreciation deduction is allowed under section one hundred
sixty-seven of the internal revenue code.
  (3) Federal depreciation disallowed. With respect to transition  prop-
erty,  the  deduction  for  federal income tax purposes for depreciation
shall not be allowed.
  (4) New York depreciation. With  respect  to  transition  property,  a
deduction  shall  be  allowed  for the depreciation expense shown on the
books and records of the taxpayer for the taxable year and determined in
accordance with generally accepted accounting principles.
  (5) Regulatory assets. A deduction shall be allowed for amounts recog-
nized as expense on the books and records of the taxpayer for the  taxa-
ble  year,  which  amounts were recognized as expense for federal income
tax purposes in a taxable year ending  on  or  before  December  thirty-
first,  nineteen  hundred ninety-nine, where: (A) such amounts represent
expenditures which, when made, were charged to a deferred debit  account
or  similar  asset account on the books and records of the taxpayer, and
where (B) the recognition of expense on the books  and  records  of  the
taxpayer  is  matched by revenue stemming from a procedure or adjustment
allowing the recovery of such expenditures, and where (C)  such  revenue
is recognized for federal income tax purposes in the taxable year.
  (6)  Basis for gain or loss. (A) Recognition transactions. (i) General
rule - book basis. Except as provided in subclause (ii) of this  clause,
where  transition property is sold or otherwise disposed of in the taxa-
ble year in a transaction of the type requiring recognition of  gain  or
loss  for  federal  income  tax  purposes, the basis for determining the
amount of such gain or loss under this article shall be the cost of  the
property less the accumulated depreciation on the property determined on
the  books  and  records  of  the  taxpayer in accordance with generally
accepted accounting principles.
  (ii) Qualified gain - New York basis.  Where  a  sale  or  disposition
described in subclause (i) of this clause results in recognition of gain
for  federal  income tax purposes, and where either (I) such recognition
occurs in a taxable year ending after nineteen hundred  ninety-nine  and
before  two  thousand ten, or (II) such recognition is with respect to a
nuclear electric generating facility,  the  basis  for  determining  the
amount of such gain under this article shall be the cost of the property
less  the aggregate of the New York depreciation deductions on the prop-
erty determined under subparagraph four of this paragraph.
  (iii) No conversion of gain to loss.  In  the  event  that  the  basis
determined  under subclause (ii) of this clause results in determination

S. 6359                            18                            A. 8559

of a loss on the sale or disposition of the property, no  gain  or  loss
shall  be  recognized  under  this  article with respect to such sale or
disposition.
  (B)  Nonrecognition transactions. (i) Carryover basis. (I) where tran-
sition property is disposed of ("original disposition") in a transaction
of a type requiring deferral of recognition of gain or loss for  federal
income tax purposes, and where (II) there is a subsequent recognition of
gain  or loss for federal income tax purposes ("clause B gain or loss"),
the amount of which is determined by reference, in whole or in part,  to
the  basis  of  such transition property ("underlying transition proper-
ty"), then (III) the amount of such clause B gain  or  loss  under  this
article shall be adjusted as provided in subclause (ii) or (iii) of this
clause.
  (ii)  General  rule  -  book  basis  adjustment. Except as provided in
subclause (iii) of this clause, the amount of clause  B  gain  shall  be
reduced,  or  the  amount  of  clause B loss increased, by the amount by
which the book basis of the underlying transition property on  the  date
of  original  disposition  (determined using the provisions of subclause
(i) of clause (A) of this subparagraph) exceeds the federal  income  tax
basis of such property on such date.
  (iii)  Qualified gain - New York basis adjustment. Where clause B gain
either (I) occurs in a taxable year ending after nineteen hundred  nine-
ty-nine and before two thousand ten, or (II) is with respect to a nucle-
ar  electric  generating  facility,  the  amount of such gain under this
article shall be reduced, but not below zero, by the amount by which the
New York basis of the underlying transition  property  on  the  date  of
original  disposition (determined using the provisions of subclause (ii)
of clause (A) of this subparagraph) exceeds the federal income tax basis
of such property on such date.
  (iv) Application to replacement  property  and  transferee  taxpayers.
This  clause  shall apply whether the clause B gain or loss: (I) is with
respect to either transition property or depreciable property the  basis
of  which  is determined by reference to transition property, or (II) is
recognized by either a qualified public utility or by a  taxpayer  which
is  a  transferee of transition property (whether or not such transferee
is a qualified public utility, notwithstanding subparagraph one of  this
paragraph).
  (c-3)  Depreciation adjustments by qualified power producers and pipe-
line companies. (1) In the case of  a  qualified  taxpayer,  entire  net
income  shall be computed with the depreciation adjustments set forth in
this paragraph.
  (2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer"
means a qualified power producer or a qualified pipeline.
  (B) Qualified power producer.  The  term  "qualified  power  producer"
means  a  taxpayer which: (i) on December thirty-first, nineteen hundred
ninety-nine, was not subject to the ratemaking supervision of the  state
department  of  public service, and (ii) for the year ending on December
thirty-first, nineteen hundred ninety-nine, was  subject  to  tax  under
former  section one hundred eighty-six of this chapter on account of its
being principally engaged in the business of supplying electricity.
  (C) Qualified pipeline. The term "qualified pipeline" means a taxpayer
which: (i) on December thirty-first, nineteen hundred  ninety-nine,  was
subject to the ratemaking supervision of either the federal energy regu-
latory  commission  or  the state department of public service, and (ii)
for the year ending on December thirty-first, nineteen  hundred  ninety-
nine, was subject to tax under sections one hundred eighty-three and one

S. 6359                            19                            A. 8559

hundred  eighty-four of this chapter on account of its being principally
engaged in the business of pipeline transmission.
  (D) Transition property. The term "transition property" means property
placed  in  service  by  a  qualified taxpayer before January first, two
thousand, for which a depreciation deduction is  allowed  under  section
one hundred sixty-seven of the internal revenue code.
  (3)  Federal depreciation disallowed. With respect to transition prop-
erty, the deduction for federal income  tax  purposes  for  depreciation
shall not be allowed.
  (4)  New  York  depreciation.  With  respect to transition property, a
deduction shall be allowed for  the  depreciation  expense  computed  as
provided  in this subparagraph. (A) All transition property shown on the
books and records of the taxpayer on January first, two  thousand  shall
be  treated  as  a  single asset placed in service on such date. The New
York basis for purposes of computing the depreciation deduction on  such
single  asset  shall  be  the net book value of such transition property
determined on the first day of the federal taxable year  ending  in  two
thousand  (or  on  the  date  any such property is placed in service, if
later) adjusted as provided in clause (B) of this subparagraph.
  (B) If transition property is sold or otherwise disposed of,  the  New
York basis of the single asset shall be reduced on the date of such sale
or  disposition  by the amount of the adjusted federal tax basis of such
property on such date.
  (C) The New York depreciation deduction allowed for any  taxable  year
with  respect to such single asset shall be computed using the straight-
line method, a twenty-year life, and a salvage value of zero.
  (D) For purposes of this subparagraph, the term "net book value" means
cost reduced by accumulated depreciation shown on the books and  records
of the taxpayer and determined, in the case of a qualified power produc-
er,  in accordance with generally accepted accounting principles; and in
the case of a qualified pipeline,  in  accordance  with  the  taxpayer's
regulatory  reports  filed with the federal energy regulatory commission
or state department of public service.
  (d) The [tax commission] COMMISSIONER may, whenever necessary in order
properly to reflect the entire net income of any taxpayer, determine the
year or period in which  any  item  of  income  or  deduction  shall  be
included,  without  regard  to  the method of accounting employed by the
taxpayer[;].
  (e) The entire net income of any bridge commission created by  act  of
congress  to  construct  a bridge across an international boundary means
its gross income less the expense of maintaining and operating its prop-
erties, the annual interest upon its bonds and  other  obligations,  and
the  annual  charge  for  the retirement of such bonds or obligations at
maturity[;].
  [(f) A net operating loss deduction shall be allowed  which  shall  be
presumably  the  same  as the net operating loss deduction allowed under
section one hundred seventy-two of the internal revenue code,  or  which
would  have  been allowed if the taxpayer had not made an election under
subchapter s of chapter one of the internal revenue code, except that in
every instance where such deduction is allowed under this article:
  (1) any net operating loss  included  in  determining  such  deduction
shall  be  adjusted to reflect the inclusions and exclusions from entire
net income required by paragraphs (a), (b) and (g) hereof,
  (2) such deduction shall not include any net operating loss  sustained
during  any  taxable  year  beginning  prior  to January first, nineteen

S. 6359                            20                            A. 8559

hundred sixty-one, or during any taxable year in which the taxpayer  was
not subject to the tax imposed by this article,
  (3) such deduction shall not exceed the deduction for the taxable year
allowed  under  section  one hundred seventy-two of the internal revenue
code, or the deduction for  the  taxable  year  which  would  have  been
allowed  if  the taxpayer had not made an election under subchapter s of
chapter one of the internal revenue code,
  (4) in the case of a New York S corporation, such deduction shall  not
include  any  net  operating  loss sustained during a New York C year or
during a New York S year beginning prior to nineteen hundred ninety, and
in the case of a New  York  C  corporation,  such  deduction  shall  not
include  any  net  operating  loss  sustained  during a New York S year,
provided, however, a New York S year shall be treated as a taxable  year
for  purposes  of determining the number of taxable years to which a net
operating loss may be carried back or carried forward, and
  (5) the net operating loss deduction allowed under section one hundred
seventy-two of the internal revenue code  shall  for  purposes  of  this
paragraph  be  determined  as  if  the  taxpayer  had elected under such
section to relinquish the entire carryback period with  respect  to  net
operating  losses, except with respect to the first ten thousand dollars
of each of such losses, sustained during taxable years ending after June
thirtieth, nineteen hundred eighty-nine.
  (g) For taxable years commencing  prior  to  January  first,  nineteen
hundred eighty-seven, at the election of the taxpayer, a deduction shall
be allowed for expenditures paid or incurred during the taxable year for
the  construction,  reconstruction,  erection  or  improvement of either
industrial waste treatment facilities or air pollution  control  facili-
ties,  or,  with  respect to taxable years beginning on or after January
first, nineteen hundred seventy-seven and before January first, nineteen
hundred eighty-one, industrial waste treatment controlled process facil-
ities or air pollution controlled process facilities.
  (1) (A) (1) The term "industrial  waste  treatment  facilities"  shall
mean  facilities  for  the treatment, neutralization or stabilization of
industrial waste and other wastes (as the terms "industrial  waste"  and
"other  wastes"  are  defined  in  section  17-0105 of the environmental
conservation law) from a point immediately preceding the point  of  such
treatment,  neutralization  or  stabilization  to the point of disposal,
including the necessary pumping and transmitting facilities.
  (2) The term "industrial waste treatment controlled process  facility"
shall mean such portion of the cost of an industrial production facility
designed  for  the  purpose  of  obviating the need for industrial waste
treatment facilities as defined in item one  of  this  clause  as  shall
exceed the cost of an industrial production facility of equal production
capacity  which  if constructed would require industrial waste treatment
facilities to meet emission standards in compliance with the  provisions
of the environmental conservation law and the codes, rules, regulations,
permits  or orders issued pursuant thereto but only to the extent of the
cost of such industrial waste treatment facilities.
  (B) (1) The term "air pollution control facilities" shall mean facili-
ties which remove, reduce, or render less noxious air contaminants emit-
ted from an air contamination source (as the terms "air contaminant" and
"air contamination source" are defined in section 19-0107 of  the  envi-
ronmental conservation law) from a point immediately preceding the point
of  such  removal,  reduction  or rendering to the point of discharge of
air, meeting emission standards as  established  by  the  department  of
environmental  conservation, but excluding such facilities installed for

S. 6359                            21                            A. 8559

the primary purpose of salvaging materials which are usable in the manu-
facturing process or are marketable and excluding those facilities which
rely for their efficacy on dilution, dispersion or assimilation  of  air
contaminants  in the ambient air after emission. Such term shall further
include flue gas desulfurization equipment and attendant sludge disposal
facilities, fluidized bed boilers, precombustion coal  cleaning  facili-
ties  or  other  facilities that conform with this subdivision and which
comply with the provisions of the state acid deposition control act  set
forth  in  title nine of article nineteen of the environmental conserva-
tion law.
  (2) The term "air pollution controlled process  facility"  shall  mean
such  portion  of the cost of an industrial production facility designed
for the purpose of obviating the need for air pollution control  facili-
ties  as  defined in item one of this clause as shall exceed the cost of
an industrial production facility of equal productive capacity which  if
constructed  would  require  air  pollution  control facilities to inert
emission standards as established pursuant to  title  three  of  article
nineteen of the environmental conservation law but only to the extent of
the cost of such air pollution control facilities.
  (2) However, such deduction shall be allowed only
  (A)  with  respect to tangible property which is depreciable, pursuant
to section one hundred sixty-seven of the internal revenue code,  having
a  situs in this state and used in the taxpayer's trade or business, the
construction, reconstruction, erection or improvement of which,  in  the
case  of industrial waste treatment facilities, is initiated on or after
January first, nineteen hundred sixty-five or which, in the case of  air
pollution  control  facilities,  is initiated on or after January first,
nineteen hundred sixty-six, or which in the  case  of  industrial  waste
treatment  controlled  process  facilities  or  air pollution controlled
process facilities is initiated on and  after  January  first,  nineteen
hundred seventy-seven, and
  (B) on condition that such facilities have been certified by the state
commissioner  of  environmental conservation or his designated represen-
tative, pursuant to section 19-0309 of  the  environmental  conservation
law,  as  complying  with  applicable  provisions  of  the environmental
conservation law, the public health law, the  state  sanitary  code  and
codes,  rules,  regulations,  permits or orders issued pursuant thereto,
and
  (C) on condition that entire net income for the taxable year  and  all
succeeding  taxable  years  be  computed without any deductions for such
expenditures or for depreciation or amortization of  the  same  property
other  than  the deductions allowed by this paragraph (g), except to the
extent that the basis of the property may  be  attributable  to  factors
other than such expenditures, or in case a deduction is allowable pursu-
ant to this paragraph for only a part of such expenditures, on condition
that  any  deduction  allowed  for  federal income tax purposes for such
expenditures or for depreciation or amortization of the same property be
proportionately reduced in computing entire net income for  the  taxable
year and all succeeding taxable years, and
  (D)  where  the  election provided for in paragraph (d) of subdivision
three of section two hundred ten of this chapter has not been  exercised
in respect to the same property.
  (3)  (A)  If  expenditures in respect to an industrial waste treatment
facility, an air pollution control facility, an industrial waste  treat-
ment  controlled process facility or an air pollution controlled process
facility have been deducted as provided herein and if within  ten  years

S. 6359                            22                            A. 8559

from  the  end  of  the taxable year in which such deduction was allowed
such property or any part thereof is used for  the  primary  purpose  of
salvaging materials which are usable in the manufacturing process or are
marketable,  the  taxpayer shall report such change of use in its report
for the first taxable year during which it occurs, and the  tax  commis-
sion  may  recompute  the  tax  for  the  year  or  years for which such
deduction was allowed and any  carryback  or  carryover  year,  and  may
assess  any  additional tax resulting from such recomputation within the
time fixed by paragraph nine of subsection (c) of  section  ten  hundred
eighty-three of this chapter.
  (B) If a deduction is allowed as herein provided for expenditures paid
or  incurred during any taxable year on the basis of a temporary certif-
icate of compliance issued pursuant to  the  environmental  conservation
law  and  if  the  taxpayer  fails  to obtain a permanent certificate of
compliance upon completion of the facilities with respect to which  such
temporary certificate was issued, the taxpayer shall report such failure
in  its  report  for  the  taxable year during which such facilities are
completed, and the tax commission may recompute the tax for the year  or
years  for  which such deduction was allowed and any carryback or carry-
over year, and may assess any additional  tax  resulting  from  in  such
recomputation  within the time fixed by paragraph nine of subsection (c)
of section ten hundred eighty-three.
  (C) If a deduction is allowed as herein provided for expenditures paid
or incurred during any taxable year  in  respect  to  an  air  pollution
control  facility  on  the  basis  of a certificate of compliance issued
pursuant to the environmental conservation law and  the  certificate  is
revoked pursuant to subdivision three of section 19-0309 of the environ-
mental  conservation  law,  the tax commission may recompute the tax for
the year or years for which the facility is not or was not in compliance
with the applicable provisions of the  environmental  conservation  law,
the  state sanitary code or codes, rules, regulations, permits or orders
promulgated pursuant thereto, and for which a deduction was allowed,  as
well  as for any carryback or carryover year to which such deduction was
carried, and may assess any additional tax resulting from such  recompu-
tation  within  the  time  fixed  by paragraph nine of subsection (c) of
section ten hundred eighty-three.
  (4) In any taxable year when property is sold  or  otherwise  disposed
of,  with respect to which a deduction has been allowed pursuant to this
paragraph, such deduction shall be  disregarded  in  computing  gain  or
loss,  and  the  gain  or  loss on the sale or other disposition of such
property shall be the gain or loss  entering  into  the  computation  of
entire  taxable  income  which the taxpayer is required to report to the
United States treasury department for such taxable year.]
  (h) If the period covered by a report under this article is other than
the period covered by the report to the United States  treasury  depart-
ment,
  (1)  except  as provided in subparagraph two hereof, entire net income
shall be determined by multiplying the taxable income reported  to  such
department  (as  adjusted pursuant to the provisions of this article) by
the number of calendar months or major  parts  thereof  covered  by  the
report  under this article and dividing by the number of calendar months
or major parts thereof covered by the report to such department.  If  it
shall  appear that such method of determining entire net income does not
properly reflect the taxpayer's income during the period covered by  the
report  under  this  article, the [tax commission] COMMISSIONER shall be
authorized in its discretion to determine such entire net income  solely

S. 6359                            23                            A. 8559

on  the  basis of the taxpayer's income during the period covered by its
report under this article[;].
  (2)  [in]  IN  the  case  of  a  New York S termination year, an equal
portion of entire net income shall be assigned to each day of such year.
The portion of such entire net income thereby assigned to  the  S  short
year  and  the  C short year shall be included in the respective reports
for the S short year and the C short year under this  article.  However,
where paragraph three of subsection (s) of section six hundred twelve of
this  chapter applies, the portion of such entire net income assigned to
the S short year and the C short year shall be determined  under  normal
tax accounting rules.
  (i)  With respect to a DISC which during any taxable year or reporting
year (1) received more than five percent of its  gross  sales  from  the
sale  of  inventory or other property which it purchased from its stock-
holders, (2) received more than five percent of its gross  rentals  from
the  rental of property which it purchased or rented from its stockhold-
ers or (3) received more than five percent of its total  receipts  other
than  sales  and rentals from its stockholders, the following provisions
shall apply.
  (A) For any taxable year in which sub-paragraph (B) of this  paragraph
is  in  effect  and  not rendered invalid, a DISC meeting the above test
shall be exempt from all taxes imposed by this article.
  (B) Supplemental to the provisions of subdivision five of section  two
hundred  eleven  of this article, any taxpayer required to compute a tax
under this article, which during the taxable year being reported  was  a
stockholder  in  any DISC meeting the test prescribed in this paragraph,
shall for any taxable year ending after December thirty-first,  nineteen
hundred  seventy-one  adjust each item of its receipts, expenses, assets
and liabilities, as otherwise computed under  this  article,  by  adding
thereto  its  attributable share of each such DISC's receipts, expenses,
assets and liabilities as reportable by each such  DISC  to  the  United
States Treasury Department for its annual reporting period ending during
the  current  taxable year of such taxpayer; provided, however, (1) that
all transactions between the taxpayer and each such DISC shall be elimi-
nated from  the  taxpayer's  adjusted  receipts,  expenses,  assets  and
liabilities;  (2)  that  the  taxpayer's  entire net income as otherwise
computed under this section, shall be reduced by subtracting the  amount
of  the  deemed  distribution  of current income, if any, from each such
DISC already included in the entire  net  income  of  such  taxpayer  by
virtue  of  having  been  included in its entire taxable income for that
taxable year as reported to the United States Treasury  Department;  and
(3)  that  in  the  event this paragraph should be rendered invalid, all
DISC's and their stockholders taxable hereunder shall be  taxed  instead
under the remaining portions of this article.
  (j)  in the case of property placed in service in taxable years begin-
ning before nineteen hundred ninety-four, for  taxable  years  beginning
after  December  thirty-first,  nineteen hundred eighty-one, except with
respect to property subject to the provisions  of  section  two  hundred
eighty-F  of  the  internal  revenue  code  and  property subject to the
provisions of section one hundred sixty-eight of  the  internal  revenue
code which is placed in service in this state in taxable years beginning
after  December thirty-first, nineteen hundred eighty-four, and provided
a deduction has not been excluded from entire  net  income  pursuant  to
subparagraph  eight  of  paragraph  (b)  of this subdivision, a taxpayer
shall be allowed with respect  to  property  which  is  subject  to  the
provisions  of  section  one hundred sixty-eight of the internal revenue

S. 6359                            24                            A. 8559

code the depreciation deduction  allowable  under  section  one  hundred
sixty-seven  of  the  internal  revenue  code as such section would have
applied to property placed in service on December thirty-first, nineteen
hundred eighty. This paragraph shall not apply to property of a taxpayer
principally  engaged  in the conduct of aviation (other than air freight
forwarders acting as principal and like indirect air carriers) which  is
placed  in  service  before  taxable years beginning in nineteen hundred
eighty-nine.
  (k) QSSS. (1) New York S corporation. In the case  of  a  New  York  S
corporation  which  is the parent of a qualified subchapter S subsidiary
(QSSS) with respect to a taxable year:
  (A) where the QSSS is not an excluded corporation,
  (i) in determining the entire net income of such  parent  corporation,
all  assets,  liabilities,  income  and  deductions of the QSSS shall be
treated as assets, liabilities, income  and  deductions  of  the  parent
corporation, and
  (ii)  the QSSS shall be exempt from all taxes imposed by this article,
and
  (B) where the QSSS is an excluded corporation, the entire  net  income
of  the  parent  corporation  shall be determined as if the federal QSSS
election had not been made.
  (2) New York C corporation. In the case of a New  York  C  corporation
which is the parent of a QSSS with respect to a taxable year:
  (A) where the QSSS is a taxpayer,
  (i)  in  determining the entire net income of such parent corporation,
all assets, liabilities, income and deductions  of  the  QSSS  shall  be
treated  as  assets,  liabilities,  income  and deductions of the parent
corporation, and
  (ii) the QSSS shall be exempt from all taxes imposed by this  article,
and
  (B) where the QSSS is not a taxpayer,
  (i) if the QSSS is not an excluded corporation, the parent corporation
may  make  a QSSS inclusion election to include all assets, liabilities,
income and deductions of the QSSS as  assets,  liabilities,  income  and
deductions of the parent corporation, and
  (ii) in the absence of such election, or where the QSSS is an excluded
corporation,  the  entire  net income of the parent corporation shall be
determined as if the federal QSSS election had not been made.
  (3) Non-New York S corporation not excluded.  In  the  case  of  an  S
corporation which is not a taxpayer and not an excluded corporation, and
which  is  the parent of a QSSS which is a taxpayer, the shareholders of
the parent corporation shall be entitled to make the New York S election
under subsection (a) of section six hundred sixty of this chapter.
  (A) For any taxable year for which such election  is  in  effect,  the
parent  corporation  shall be subject to tax under this article as a New
York S corporation, and the provisions of clause (A) of subparagraph one
of this paragraph shall apply.
  (B) For any taxable year for which such election is not in effect, the
QSSS shall be a New York C corporation, and the entire net income of the
QSSS shall be determined as if the federal QSSS election  had  not  been
made. For purposes of such determination, the taxable year of the parent
corporation  shall  constitute  the taxable year of the QSSS, excluding,
however, any portion of such year during which the QSSS is not a taxpay-
er.
  (4) S corporation excluded. In the case of an S corporation  which  is
an  excluded  corporation  and  which is the parent of a QSSS which is a

S. 6359                            25                            A. 8559

taxpayer, the QSSS shall be a New York C corporation and the  provisions
of clause (B) of subparagraph three of this paragraph shall apply.
  (5)  Excluded  corporation.  The  term  "excluded corporation" means a
corporation subject to  tax  under  sections  one  hundred  eighty-three
through  one  hundred  eighty-six, inclusive, or article [thirty-two or]
thirty-three of this chapter, or a foreign corporation  not  taxable  by
this  state which, if it were taxable, would be subject to tax under any
of such sections or [articles] ARTICLE.
  (6) Taxpayer. For purposes of  this  paragraph,  the  term  "taxpayer"
means  a  parent  corporation or QSSS subject to tax under this article,
determined without regard to the provisions of this paragraph.
  (7) QSSS inclusion election.  The  election  under  subclause  (i)  of
clause  (B) of subparagraph two of this paragraph shall be effective for
the taxable year for which made and for all succeeding taxable years  of
the corporation until such election is terminated. An election or termi-
nation shall be made on such form and in such manner as the commissioner
may prescribe by regulation or instruction.
  (l)  Emerging  technology investment deferral. In the case of any sale
of a qualified emerging technologies investment held for more than thir-
ty-six months and with respect to which the taxpayer elects the applica-
tion of this paragraph, gain from such sale shall be recognized only  to
the extent that the amount realized on such sale exceeds the cost of any
qualified  emerging  technologies  investment  purchased by the taxpayer
during the three hundred sixty-five-day period beginning on the date  of
such  sale,  reduced  by  any portion of such cost previously taken into
account under this paragraph. For purposes of this paragraph the follow-
ing shall apply:
  (1) A qualified investment is stock of a corporation or  an  interest,
other  than as a creditor, in a partnership or limited liability company
that was acquired by the taxpayer as provided in Internal Revenue Code S
1202(c)(1)(B), except that the reference to the  term  "stock"  in  such
section  shall be read as "investment," or by the taxpayer from a person
who had acquired such stock or interest in such a manner.
  (2) A qualified emerging technology investment is a qualified  invest-
ment, that was held by the taxpayer for at least thirty-six months, in a
company  defined  in paragraph (c) of subdivision one of section thirty-
one hundred two-e of the public authorities law or an  investment  in  a
partnership  or limited liability company that is taxed as a partnership
to the extent that such partnership or limited liability company invests
in qualified emerging technology companies.
  (3) For purposes of determining whether  the  nonrecognition  of  gain
under  this  subsection  applies  to  a  qualified emerging technologies
investment that is sold, the taxpayer's holding period for such  invest-
ment   and  the  qualified  emerging  technologies  investment  that  is
purchased shall be determined without regard to Internal Revenue Code  S
1223.
  (m)  Amounts deferred. The amount deferred under paragraph (l) of this
subdivision shall be added to entire net income when the reinvestment in
the New York qualified emerging technology  company  which  qualified  a
taxpayer for such deferral is sold.
  [(n) Qualified gas transportation contracts.
  (1) Any tax paid under this article allocable to receipts attributable
to  a  "qualified  gas  transportation contract" shall be deemed to have
been paid under article nine of this chapter for all purposes of law for
taxable years commencing  on  or  after  January  first,  two  thousand,

S. 6359                            26                            A. 8559

computed as hereinafter provided, if all of the following conditions are
met:
  (i)  For  periods  ending  prior  to  January first, two thousand, the
taxpayer paid the franchise tax due under section  one  hundred  eighty-
four of this chapter.
  (ii)  For  the  taxable  year,  all  of the receipts from the pipeline
transportation of natural gas attributable to the taxpayer and  included
in  the  taxpayer's entire net income (without regard to this paragraph)
are solely from the transportation of natural gas for wholesale  custom-
ers and commercial retail customers.
  (iii)  The  taxpayer's  franchise tax liability under this article for
the taxable year (computed without regard to this paragraph)  is  deter-
mined  under paragraph (a) of subdivision one of section two hundred ten
of this article, and such tax liability (without regard  to  this  para-
graph)  is  greater  than the liability the taxpayer would have incurred
under sections one hundred eighty-three and one hundred  eighty-four  of
this  chapter  (as such sections existed on December thirty-first, nine-
teen hundred ninety-nine) based on the same taxable period.
  (iv) The taxpayer is  a  party  to  a  "qualified  gas  transportation
contract," as defined herein.
  (2)  The provisions of this paragraph shall apply only for the taxable
years during which such qualified gas transportation contract is in full
force and effect, and shall apply only to the receipts of  the  taxpayer
less  any  expenses of the taxpayer (but not less than zero), during the
taxable year, to the extent included in entire  net  income,  which  are
attributable   to  any  such  qualified  gas  transportation  contracts.
Provided, further, in any event, the  characterization  hereunder  shall
expire  and be of no further force and effect for taxable years commenc-
ing on or after January first, two thousand fifteen.
  (3) The term "qualified gas  transportation  contract"  shall  mean  a
service  agreement for the transportation of natural gas for an end-user
which is a qualified cogeneration facility with a rated capacity of  one
thousand  megawatts  or  more, which (i) was entered into before January
first, two thousand, and was in full force and effect and binding on the
parties thereto as of such date, (ii) as originally executed, was for  a
term of at least twenty years, and (iii) the terms of which prohibit the
pass-through  to  such  customer of the franchise tax imposed under this
article, while allowing the recovery of the gross earnings  tax  imposed
under  section one hundred eighty-four of this chapter. A contract shall
not qualify as a qualified gas transportation contract if there is:  (i)
any  renewal  or  extension of an otherwise qualified gas transportation
contract occurring on or after January first, two thousand, or (ii)  any
material amendment to, or supplementation of, an otherwise qualified gas
transportation  contract on or after such date. Such renewal, extension,
or material amendment or supplementation shall have the same  force  and
effect  of terminating the characterization hereunder as if the qualify-
ing contract had expired by its own terms.
  (o)] (N-1) For taxable years beginning  after  December  thirty-first,
two  thousand  two, in the case of qualified property described in para-
graph two of subsection k of section 168 of the internal  revenue  code,
other than qualified resurgence zone property described in paragraph (q)
of  this  subdivision,  and  other  than qualified New York Liberty Zone
property described in paragraph two of subsection b of section 1400L  of
the  internal revenue code (without regard to clause (i) of subparagraph
(C) of such paragraph), which was placed in service  on  or  after  June
first,  two  thousand three, a taxpayer shall be allowed with respect to

S. 6359                            27                            A. 8559

such property the depreciation deduction allowable under section 167  of
the  internal  revenue  code  as such section would have applied to such
property had it been acquired by the taxpayer on  September  tenth,  two
thousand one.
  (o)  Related  members  expense  add back. (1) Definitions. (A) Related
member. "Related member" means a related person as defined  in  subpara-
graph  (c)  of paragraph three of subsection (b) of section four hundred
sixty-five of the internal revenue code,  except  that  "fifty  percent"
shall be substituted for "ten percent".
  (B)  Effective  rate  of tax. "Effective rate of tax" means, as to any
state or U.S. possession, the maximum statutory rate of tax  imposed  by
the  state or possession on or measured by a related member's net income
multiplied by the apportionment percentage, if any,  applicable  to  the
related member under the laws of said jurisdiction. For purposes of this
definition, the effective rate of tax as to any state or U.S. possession
is  zero  where  the  related  member's net income tax liability in said
jurisdiction is reported on a combined or consolidated return  including
both the taxpayer and the related member where the reported transactions
between  the  taxpayer  and the related member are eliminated or offset.
Also, for purposes of this definition, when computing the effective rate
of tax for a jurisdiction in which a  related  member's  net  income  is
eliminated or offset by a credit or similar adjustment that is dependent
upon  the related member either maintaining or managing intangible prop-
erty or collecting interest income in  that  jurisdiction,  the  maximum
statutory rate of tax imposed by said jurisdiction shall be decreased to
reflect  the statutory rate of tax that applies to the related member as
effectively reduced by such credit or similar adjustment.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by  the  commissioner,  and  include  amounts  allowable   as   interest
deductions under section one hundred sixty-three of the internal revenue
code  to the extent such amounts are directly or indirectly for, related
to or in connection with the acquisition, use,  maintenance  or  manage-
ment,  ownership,  sale,  exchange  or  disposition  of  such intangible
assets.
  (D) Valid Business Purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in  a combined report with a related member pursuant to subdivision four
of section two hundred eleven  of  this  article,  for  the  purpose  of
computing entire net income or other applicable taxable basis, a taxpay-
er  must add back royalty payments directly or indirectly paid, accrued,
or incurred in connection with one or more  direct  or  indirect  trans-
actions  with one or more related members during the taxable year to the
extent deductible in calculating federal taxable income.
  (B) Exceptions. (i) The adjustment required in  this  paragraph  shall
not apply to the portion of the royalty payment that the taxpayer estab-

S. 6359                            28                            A. 8559

lishes,  by  clear  and  convincing evidence of the type and in the form
specified by the commissioner, meets all of the following  requirements:
(I) the related member was subject to tax in this state or another state
or  possession of the United States or a foreign nation or some combina-
tion thereof on a tax base  that  included  the  royalty  payment  paid,
accrued  or incurred by the taxpayer; (II) the related member during the
same taxable year directly or indirectly paid, accrued or incurred  such
portion  to  a person that is not a related member; and (III) the trans-
action giving rise to the royalty payment between the taxpayer  and  the
related member was undertaken for a valid business purpose.
  (ii)  The adjustment required in this paragraph shall not apply if the
taxpayer establishes, by clear and convincing evidence of the  type  and
in  the form specified by the commissioner, that: (I) the related member
was subject to tax on or measured by its net income  in  this  state  or
another  state  or  possession  of the United States or some combination
thereof; (II) the tax base for said tax  included  the  royalty  payment
paid,  accrued  or  incurred  by  the  taxpayer; and (III) the aggregate
effective rate of tax applied to the related member in  those  jurisdic-
tions  is  no less than eighty percent of the statutory rate of tax that
applied to the taxpayer under section two hundred ten  of  this  article
for the taxable year.
  (iii)  [The  adjustment  required in this paragraph shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in  the  form  specified by the commissioner, that: (I) the royalty
payment was paid, accrued or incurred  to  a  related  member  organized
under  the  laws  of  a  country  other than the United States; (II) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the related member was subject to tax in a foreign nation on a tax  base
that  included  the  royalty  payment  paid,  accrued or incurred by the
taxpayer; (IV) the related member's  income  from  the  transaction  was
taxed in such country at an effective rate of tax at least equal to that
imposed  by this state; and (V) the royalty payment was paid, accrued or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)] The adjustment required in this paragraph shall not apply if the
taxpayer and the commissioner agree in writing to the application or use
of alternative adjustments or computations. The commissioner may, in his
or her discretion, agree  to  the  application  or  use  of  alternative
adjustments or computations when he or she concludes that in the absence
of  such  agreement  the  income  of  the taxpayer would not be properly
reflected.
  (p) For taxable years beginning after December thirty-first, two thou-
sand two, upon the disposition of  property  to  which  paragraph  [(o)]
(N-1) of this subdivision applies, the amount of any gain or loss inclu-
dible  in  entire net income shall be adjusted to reflect the inclusions
and exclusions from entire net income pursuant to subparagraph seventeen
of paragraph (a) and subparagraph seventeen of  paragraph  (b)  of  this
subdivision attributable to such property.
  (q)  For  purposes  of paragraphs [(o)] (N-1) and (p) of this subdivi-
sion, qualified resurgence zone property shall mean  qualified  property
described  in paragraph two of subsection k of section 168 of the inter-
nal revenue code substantially all of the use of which is in the  resur-
gence zone, as defined below, and is in the active conduct of a trade or
business  by the taxpayer in such zone, and the original use of which in
the resurgence zone commences with the taxpayer after  December  thirty-

S. 6359                            29                            A. 8559

first,  two thousand two. The resurgence zone shall mean the area of New
York county bounded on the south by a line running from the intersection
of the Hudson River with the Holland Tunnel, and running thence east  to
Canal  Street,  then running along the centerline of Canal Street to the
intersection of the Bowery and Canal Street, running thence in a  south-
easterly  direction  diagonally  across  Manhattan  Bridge Plaza, to the
Manhattan Bridge and thence along the centerline of the Manhattan Bridge
to the point where the centerline of the Manhattan Bridge  would  inter-
sect  with the easterly bank of the East River, and bounded on the north
by a line running from the intersection of the  Hudson  River  with  the
Holland  Tunnel and running thence north along West Avenue to the inter-
section of Clarkson Street then running east  along  the  centerline  of
Clarkson  Street  to the intersection of Washington Avenue, then running
south along the centerline of Washington Avenue to the  intersection  of
West  Houston  Street,  then  east  along the centerline of West Houston
Street, then at the intersection of the Avenue of the Americas  continu-
ing  east  along  the  centerline of East Houston Street to the easterly
bank of the East River.
  (R) SUBTRACTION MODIFICATION FOR QUALIFIED  RESIDENTIAL  LOAN  PORTFO-
LIOS.  (1)(A)  A TAXPAYER THAT IS EITHER A THRIFT INSTITUTION AS DEFINED
IN SUBPARAGRAPH THREE OF THIS PARAGRAPH OR A QUALIFIED COMMUNITY BANK AS
DEFINED IN SUBPARAGRAPH TWO OF PARAGRAPH (S)  OF  THIS  SUBDIVISION  AND
MAINTAINS  A QUALIFIED RESIDENTIAL LOAN PORTFOLIO AS DEFINED IN SUBPARA-
GRAPH TWO OF THIS PARAGRAPH SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING
ENTIRE NET INCOME THE AMOUNT, IF ANY, BY WHICH (I) THIRTY-TWO PERCENT OF
ITS ENTIRE NET  INCOME  DETERMINED  WITHOUT  REGARD  TO  THIS  PARAGRAPH
EXCEEDS  (II)  THE AMOUNTS DEDUCTED BY THE TAXPAYER PURSUANT TO SECTIONS
166 AND 585 OF THE INTERNAL REVENUE CODE LESS ANY  AMOUNTS  INCLUDED  IN
FEDERAL TAXABLE INCOME AS A RESULT OF A RECOVERY OF A LOAN.
  (B)(I) IF THE TAXPAYER IS IN A COMBINED REPORT, THIS DEDUCTION WILL BE
COMPUTED ON A COMBINED BASIS. IN THAT INSTANCE, THE ENTIRE NET INCOME OF
THE COMBINED GROUP FOR PURPOSES OF THIS PARAGRAPH SHALL BE MULTIPLIED BY
A  FRACTION,  THE  NUMERATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF ALL
THE THRIFT INSTITUTIONS OR QUALIFIED COMMUNITY  BANKS  INCLUDED  IN  THE
COMBINED REPORT AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS
OF ALL THE CORPORATIONS INCLUDED IN THE COMBINED REPORT.
  (II)  MEASUREMENT  OF  ASSETS  FOR  PURPOSES OF THIS CLAUSE. (I) TOTAL
ASSETS ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE  SHEET,
COMPUTED  IN  THE SAME MANNER AS IS REQUIRED BY THE BANKING REGULATOR OF
THE TAXPAYERS INCLUDED IN THE COMBINED RETURN.
  (II) ASSETS WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES  OF  WHICH
ARE  PROPERLY  REFLECTED  (OR  WOULD HAVE BEEN PROPERLY REFLECTED IF NOT
FULLY DEPRECIATED OR EXPENSED, OR DEPRECIATED OR EXPENSED TO  A  NOMINAL
AMOUNT) IN THE COMPUTATION OF THE COMBINED GROUP'S ENTIRE NET INCOME FOR
THE TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTAN-
GIBLE ASSETS IDENTIFIED AS "GOODWILL".
  (III)  TANGIBLE  REAL  AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND,
MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST.  INTANGIBLE  PROPERTY,
SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT BOOK VALUE.
  (IV)  INTERCORPORATE  STOCKHOLDINGS  AND  BILLS,  NOTES  AND  ACCOUNTS
RECEIVABLE, AND OTHER INTERCORPORATE  INDEBTEDNESS  BETWEEN  THE  CORPO-
RATIONS INCLUDED IN THE COMBINED REPORT SHALL BE ELIMINATED.
  (V) AVERAGE ASSETS ARE COMPUTED USING THE ASSETS MEASURED ON THE FIRST
DAY  OF THE TAXABLE YEAR, AND ON THE LAST DAY OF EACH SUBSEQUENT QUARTER
OF THE TAXABLE YEAR.

S. 6359                            30                            A. 8559

  (2) QUALIFIED RESIDENTIAL LOAN PORTFOLIO. (A) A TAXPAYER  MAINTAINS  A
QUALIFIED  RESIDENTIAL  LOAN  PORTFOLIO IF AT LEAST SIXTY PERCENT OF THE
AMOUNT OF THE TOTAL ASSETS AT THE CLOSE  OF  THE  TAXABLE  YEAR  OF  THE
THRIFT  INSTITUTION  OR  QUALIFIED COMMUNITY BANK CONSISTS OF THE ASSETS
DESCRIBED  IN  ITEMS (I) THROUGH (XII) OF THIS CLAUSE, WITH THE APPLICA-
TION OF THE RULE IN ITEM (XIII). IF  THE  TAXPAYER  IS  A  MEMBER  OF  A
COMBINED  GROUP, THE DETERMINATION OF WHETHER THERE IS A QUALIFIED RESI-
DENTIAL LOAN PORTFOLIO WILL BE MADE BY AGGREGATING  THE  ASSETS  OF  THE
THRIFT INSTITUTIONS OR QUALIFIED COMMUNITY BANKS THAT ARE MEMBERS OF THE
COMBINED GROUP.
  ASSETS:
  (I) CASH;
  (II)  OBLIGATIONS  OF  THE  UNITED  STATES  OR OF A STATE OR POLITICAL
SUBDIVISION THEREOF, AND STOCK OR OBLIGATIONS OF A CORPORATION WHICH  IS
AN  INSTRUMENTALITY  OR  A GOVERNMENT SPONSORED ENTERPRISE OF THE UNITED
STATES OR OF A STATE OR POLITICAL SUBDIVISION THEREOF;
  (III) LOANS SECURED BY A DEPOSIT OR SHARE OF A MEMBER;
  (IV) LOANS SECURED BY AN INTEREST IN REAL PROPERTY WHICH IS  (OR  FROM
THE PROCEEDS OF THE LOAN, WILL BECOME) RESIDENTIAL REAL PROPERTY OR REAL
PROPERTY USED PRIMARILY FOR CHURCH PURPOSES, LOANS MADE FOR THE IMPROVE-
MENT  OF  RESIDENTIAL  REAL PROPERTY OR REAL PROPERTY USED PRIMARILY FOR
CHURCH PURPOSES, PROVIDED THAT FOR PURPOSES OF  THIS  ITEM,  RESIDENTIAL
REAL PROPERTY SHALL INCLUDE SINGLE OR MULTI-FAMILY DWELLINGS, FACILITIES
IN  RESIDENTIAL DEVELOPMENTS DEDICATED TO PUBLIC USE OR PROPERTY USED ON
A NONPROFIT BASIS FOR RESIDENTS, AND MOBILE HOMES NOT USED  ON  A  TRAN-
SIENT BASIS;
  (V)  PROPERTY  ACQUIRED  THROUGH  THE  LIQUIDATION  OF DEFAULTED LOANS
DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
  (VI) ANY REGULAR OR RESIDUAL INTEREST IN A  REMIC,  AS  SUCH  TERM  IS
DEFINED  IN  SECTION  860D OF THE INTERNAL REVENUE CODE, BUT ONLY IN THE
PROPORTION WHICH THE ASSETS OF SUCH REMIC CONSIST OF PROPERTY  DESCRIBED
IN ANY OF THE PRECEDING ITEMS OF THIS CLAUSE, EXCEPT THAT IF NINETY-FIVE
PERCENT  OR  MORE  OF  THE  ASSETS OF SUCH REMIC ARE ASSETS DESCRIBED IN
ITEMS (I) THROUGH (V) OF THIS CLAUSE, THE ENTIRE INTEREST IN  THE  REMIC
SHALL QUALIFY;
  (VII)  ANY  MORTGAGE-BACKED  SECURITY  WHICH REPRESENTS OWNERSHIP OF A
FRACTIONAL UNDIVIDED INTEREST IN A TRUST, THE ASSETS  OF  WHICH  CONSIST
PRIMARILY  OF  MORTGAGE  LOANS,  PROVIDED  THAT  THE REAL PROPERTY WHICH
SERVES AS SECURITY FOR THE LOANS IS (OR FROM THE PROCEEDS OF  THE  LOAN,
WILL  BECOME) THE TYPE OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE
AND ANY COLLATERALIZED  MORTGAGE  OBLIGATION,  THE  SECURITY  FOR  WHICH
CONSISTS  PRIMARILY OF MORTGAGE LOANS THAT MAINTAIN AS SECURITY THE TYPE
OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
  (VIII) CERTIFICATES OF DEPOSIT IN, OR OBLIGATIONS  OF,  A  CORPORATION
ORGANIZED  UNDER  A  STATE LAW WHICH SPECIFICALLY AUTHORIZES SUCH CORPO-
RATION TO INSURE THE DEPOSITS OR SHARE ACCOUNTS OF MEMBER ASSOCIATIONS;
  (IX) LOANS SECURED BY AN INTEREST IN EDUCATIONAL, HEALTH,  OR  WELFARE
INSTITUTIONS OR FACILITIES, INCLUDING STRUCTURES DESIGNED OR USED PRIMA-
RILY FOR RESIDENTIAL PURPOSES FOR STUDENTS, RESIDENTS, AND PERSONS UNDER
CARE, EMPLOYEES, OR MEMBERS OF THE STAFF OF SUCH INSTITUTIONS OR FACILI-
TIES;
  (X)  LOANS  MADE  FOR THE PAYMENT OF EXPENSES OF COLLEGE OR UNIVERSITY
EDUCATION OR VOCATIONAL TRAINING;
  (XI) PROPERTY USED BY  THE  TAXPAYER  IN  SUPPORT  OF  BUSINESS  WHICH
CONSISTS  PRINCIPALLY OF ACQUIRING THE SAVINGS OF THE PUBLIC AND INVEST-
ING IN LOANS; AND

S. 6359                            31                            A. 8559

  (XII) LOANS FOR WHICH THE TAXPAYER IS THE CREDITOR AND WHICH ARE WHOL-
LY SECURED BY LOANS DESCRIBED IN ITEM (IV) OF THIS CLAUSE.
  (XIII)  THE  VALUE OF ACCRUED INTEREST RECEIVABLE AND ANY LOSS-SHARING
COMMITMENT OR OTHER LOAN GUARANTY  BY  A  GOVERNMENTAL  AGENCY  WILL  BE
CONSIDERED  PART OF THE BASIS IN THE LOANS TO WHICH THE ACCRUED INTEREST
OR LOSS PROTECTION APPLIES.
  (B) AT THE ELECTION OF  THE  TAXPAYER,  THE  PERCENTAGE  SPECIFIED  IN
CLAUSE  (A)  OF  THIS  SUBPARAGRAPH SHALL BE APPLIED ON THE BASIS OF THE
AVERAGE ASSETS OUTSTANDING DURING THE TAXABLE YEAR, IN LIEU OF THE CLOSE
OF THE TAXABLE YEAR. THE TAXPAYER CAN ELECT TO COMPUTE AN AVERAGE  USING
THE ASSETS MEASURED ON THE FIRST DAY OF THE TAXABLE YEAR AND ON THE LAST
DAY OF EACH SUBSEQUENT QUARTER, OR MONTH OR DAY DURING THE TAXABLE YEAR.
THIS ELECTION MAY BE MADE ANNUALLY.
  (C)  FOR  PURPOSES  OF  THIS  COMPUTATION, THE DEFINITION OF ASSETS IN
CLAUSE (B) OF SUBPARAGRAPH ONE OF THIS PARAGRAPH APPLIES.
  (D) FOR PURPOSES OF ITEM (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH, IF A
MULTIFAMILY STRUCTURE SECURING A LOAN IS USED IN PART FOR NONRESIDENTIAL
USE PURPOSES, THE ENTIRE LOAN IS DEEMED A RESIDENTIAL REAL PROPERTY LOAN
IF THE PLANNED RESIDENTIAL USE EXCEEDS EIGHTY PERCENT OF THE  PROPERTY'S
PLANNED  USE  (MEASURED,  AT  THE  TAXPAYER'S  ELECTION, BY USING SQUARE
FOOTAGE OR GROSS RENTAL REVENUE, AND DETERMINED AS OF THE TIME THE  LOAN
IS MADE).
  (E)  FOR  PURPOSES  OF  ITEM  (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH,
LOANS MADE TO FINANCE THE ACQUISITION OR DEVELOPMENT OF  LAND  SHALL  BE
DEEMED  TO  BE LOANS SECURED BY AN INTEREST IN RESIDENTIAL REAL PROPERTY
IF THERE IS A REASONABLE ASSURANCE THAT THE PROPERTY WILL  BECOME  RESI-
DENTIAL  REAL  PROPERTY  WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF
ACQUISITION OF SUCH LAND; BUT THIS SENTENCE  SHALL  NOT  APPLY  FOR  ANY
TAXABLE  YEAR  UNLESS,  WITHIN SUCH THREE YEAR PERIOD, SUCH LAND BECOMES
RESIDENTIAL REAL PROPERTY.  FOR  PURPOSES  OF  DETERMINING  WHETHER  ANY
INTEREST  IN  A  REMIC  QUALIFIES  UNDER ITEM (VI) OF CLAUSE (A) OF THIS
SUBPARAGRAPH, ANY REGULAR INTEREST IN ANOTHER REMIC HELD BY  SUCH  REMIC
SHALL  BE  TREATED AS A LOAN DESCRIBED IN A PRECEDING ITEM UNDER PRINCI-
PLES SIMILAR TO THE PRINCIPLE OF SUCH ITEM (VI),  EXCEPT  THAT  IS  SUCH
REMICS  ARE  PART  OF  A  TIERED STRUCTURE, THEY SHALL BE TREATED AS ONE
REMIC FOR PURPOSES OF SUCH ITEM (VI).
  (3) FOR PURPOSES OF  THIS  PARAGRAPH,  A  "THRIFT  INSTITUTION"  IS  A
SAVINGS  BANK, A SAVINGS AND LOAN ASSOCIATION, OR OTHER SAVINGS INSTITU-
TION CHARTERED AND SUPERVISED AS SUCH UNDER FEDERAL OR STATE LAW.
  (S) SUBTRACTION MODIFICATION FOR COMMUNITY BANKS. (1) A TAXPAYER  THAT
IS  A  QUALIFIED  COMMUNITY  BANK AS DEFINED IN SUBPARAGRAPH TWO OF THIS
PARAGRAPH OR A THRIFT INSTITUTION AS DEFINED IN  SUBPARAGRAPH  THREE  OF
PARAGRAPH  (R)  OF  THIS  SUBDIVISION  SHALL  BE  ALLOWED A DEDUCTION IN
COMPUTING ENTIRE NET INCOME EQUAL TO THE AMOUNT COMPUTED UNDER  SUBPARA-
GRAPH THREE OF THIS PARAGRAPH.
  (2)  TO  BE  A  QUALIFIED  COMMUNITY BANK, A TAXPAYER MUST SATISFY THE
FOLLOWING CONDITIONS.
  (A) IT IS A BANK OR TRUST COMPANY ORGANIZED UNDER OR  SUBJECT  TO  THE
PROVISIONS OF ARTICLE THREE OF THE BANKING LAW OR A COMPARABLE PROVISION
OF THE LAWS OF ANOTHER STATE, OR A NATIONAL BANKING ASSOCIATION.
  (B)  THE  AVERAGE  VALUE  DURING THE TAXABLE YEAR OF THE ASSETS OF THE
TAXPAYER, OR THE ASSETS OF THE AFFILIATED GROUP OF  THE  TAXPAYER,  MUST
NOT  EXCEED  EIGHT  BILLION  DOLLARS.  FOR  PURPOSES OF THIS CLAUSE, THE
AFFILIATED GROUP OF THE TAXPAYER INCLUDES ANY CORPORATION THAT MEETS THE
OWNERSHIP REQUIREMENTS TO BE INCLUDED IN A COMBINED REPORT SPECIFIED  IN

S. 6359                            32                            A. 8559

PARAGRAPH  (A)  OF  SUBDIVISION TWO OF SECTION TWO HUNDRED TEN-C OF THIS
ARTICLE.
  (3)(A) THE SUBTRACTION MODIFICATION SHALL BE COMPUTED AS FOLLOWS:
  (I)  MULTIPLY THE TAXPAYER'S NET INTEREST INCOME FROM LOANS DURING THE
TAXABLE YEAR BY A FRACTION, THE NUMERATOR OF WHICH IS THE GROSS INTEREST
INCOME DURING THE TAXABLE YEAR FROM QUALIFYING LOANS AND THE DENOMINATOR
OF WHICH IS THE GROSS INTEREST INCOME DURING THE TAXABLE YEAR  FROM  ALL
LOANS.
  (II)  MULTIPLY  THE  AMOUNT DETERMINED IN CLAUSE (I) BY FORTY PERCENT.
THIS PRODUCT IS THE AMOUNT OF THE DEDUCTION  ALLOWED  UNDER  THIS  PARA-
GRAPH.
  (B)(I) NET INTEREST INCOME FROM LOANS SHALL MEAN GROSS INTEREST INCOME
FROM  LOANS  LESS  GROSS  INTEREST  EXPENSE  FROM  LOANS. GROSS INTEREST
EXPENSE FROM LOANS IS DETERMINED BY MULTIPLYING GROSS  INTEREST  EXPENSE
BY  A  FRACTION,  THE  NUMERATOR  OF WHICH IS THE AVERAGE TOTAL VALUE OF
LOANS OWNED BY THE THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXA-
BLE YEAR AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF THE
THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXABLE YEAR.
  (II) MEASUREMENT OF ASSETS FOR PURPOSES  OF  THIS  CLAUSE.  (I)  TOTAL
ASSETS  ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE SHEET,
COMPUTED IN THE SAME MANNER AS IS REQUIRED BY THE BANKING  REGULATOR  OF
THE TAXPAYERS INCLUDED IN THE COMBINED RETURN.
  (II)  ASSETS  WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH
ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED  IF  NOT
FULLY  DEPRECIATED  OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL
AMOUNT) IN THE COMPUTATION OF THE TAXPAYER'S ENTIRE NET INCOME  FOR  THE
TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTANGIBLE
ASSETS IDENTIFIED AS "GOODWILL".
  (III)  TANGIBLE  REAL  AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND,
MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST.  INTANGIBLE  PROPERTY,
SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT BOOK VALUE.
  (IV)  AVERAGE  ASSETS  ARE  COMPUTED  USING THE ASSETS MEASURED ON THE
FIRST DAY OF THE TAXABLE YEAR, AND ON THE LAST DAY  OF  EACH  SUBSEQUENT
QUARTER OF THE TAXABLE YEAR.
  (C) A QUALIFYING LOAN IS A LOAN THAT MEETS THE CONDITIONS SPECIFIED IN
SUBCLAUSE (I) OF THIS CLAUSE AND SUBCLAUSE (II) OF THIS CLAUSE.
  (I)  THE  LOAN  IS  ORIGINATED OR PURCHASED BY THE QUALIFIED COMMUNITY
BANK  OR  THRIFT  INSTITUTION  IMMEDIATELY  AFTER  ITS  ORIGINATION   IN
CONNECTION  WITH  A COMMITMENT TO PURCHASE MADE BY THE BANK PRIOR TO THE
LOAN'S ORIGINATION.
  (II) THE LOAN IS A SMALL BUSINESS LOAN, THE PRINCIPAL  AMOUNT  OF  THE
LOAN  IS  ONE  MILLION  DOLLARS  OR  LESS,  WHERE EITHER THE BORROWER IS
LOCATED IN THIS STATE AS DETERMINED UNDER SECTION TWO HUNDRED  TEN-A  OF
THIS ARTICLE AND THE LOAN IS NOT SECURED BY REAL PROPERTY LOCATED IN NEW
YORK, OR THE LOAN IS SECURED BY REAL PROPERTY LOCATED IN NEW YORK.
  10.  The term "calendar year" means a period of twelve calendar months
(or any shorter period  beginning  on  the  date  the  taxpayer  becomes
subject  to  the tax imposed by this article) ending on the thirty-first
day of December, provided the taxpayer keeps its books on the  basis  of
such  period  or on the basis of any period ending on any day other than
the last day of a calendar month, or provided the taxpayer does not keep
books, and includes, in case the taxpayer  changes  the  period  on  the
basis of which it keeps its books from a fiscal year to a calendar year,
the  period from the close of its last old fiscal year up to and includ-
ing the following December thirty-first. The term "fiscal year" means  a
period of twelve calendar months (or any shorter period beginning on the

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date  the  taxpayer  becomes subject to the tax imposed by this article)
ending on the last day of any month other than  December,  provided  the
taxpayer  keeps  its books on the basis of such period, and includes, in
case  the  taxpayer changes the period on the basis of which it keeps it
books from a calendar year to a fiscal year or from one fiscal  year  to
another  fiscal year, the period from the close of its last old calendar
or fiscal year up to the date designated as the close of its new  fiscal
year.
  11.  The  term  "tangible  personal property" means corporeal personal
property,  such  as  machinery,  tools,  implements,  goods,  wares  and
merchandise,  and  does  not  mean  money,  deposits in banks, shares of
stock, bonds, notes, credits or evidences of an interest in property and
evidences of debt.
  12. The term elected or appointed officer shall include the  chairman,
president,  vice-president,  secretary,  assistant secretary, treasurer,
assistant treasurer, comptroller, and also any other officer,  irrespec-
tive  of  his title, who is charged with and performs any of the regular
functions of any such officer, unless the  total  compensation  of  such
officer is derived exclusively from the receipt of commissions. A direc-
tor  shall  be  considered  an  elected  or appointed officer only if he
performs duties ordinarily performed by an officer.
  13. The term "manufacturer" means a taxpayer or,  in  the  case  of  a
combined  report,  a  combined  group, that, during the taxable year, is
principally engaged in manufacturing. A taxpayer or a combined group  is
principally  engaged  in manufacturing if more than fifty percent of the
gross receipts of the taxpayer  or  the  combined  group,  respectively,
during  the  taxable year are derived from the sale of goods produced by
manufacturing. In computing a combined group's gross receipts, intercor-
porate receipts shall be eliminated. In computing gross receipts  for  a
taxpayer that is a partner in partnership, inter-entity receipts between
the taxpayer and such partnership shall be eliminated.
  14.  (a)  The  term  "manufacturing"  means the process of working raw
materials into wares suitable for use or which  gives  new  shapes,  new
quality  or  new  combinations  to matter which already has gone through
some artificial process by the use of machinery, tools,  appliances  and
other similar equipment.
  (b)  Notwithstanding  the definition of manufacturing in paragraph (a)
of this subdivision:
  (i) The generation and distribution of electricity, the extraction and
distribution of natural gas, and the production of steam associated with
the generation of electricity does not constitute manufacturing.
  (ii) The creation, production or reproduction of  a  film,  television
show or commercial does not constitute manufacturing.
  (iii)  The  blending of two or more fuels does not constitute manufac-
turing.
  (iv) The mass production of food  products  for  wholesale  commercial
distribution and sale constitutes manufacturing.
  15.  The  term  "qualified New York manufacturer" means a manufacturer
that has property in the state that is used in manufacturing and  either
the  fair market value of that property at the close of the taxable year
is at least ten million dollars or all of its real and personal property
is located in New York. A taxpayer or, in the case of a combined report,
a combined group, that does not  satisfy  the  criteria  in  subdivision
thirteen of this section may be a qualified New York manufacturer if the
taxpayer  or the combined group employs during the taxable year at least
two thousand five hundred employees in manufacturing in New York and the

S. 6359                            34                            A. 8559

taxpayer or the combined group has property in the state used  in  manu-
facturing,  the  adjusted basis of which for federal income tax purposes
at the close of the  taxable  year  is  at  least  one  hundred  million
dollars.
  [19.  The  term "fulfillment services" shall mean any of the following
services performed by an entity on its premises on behalf of a  purchas-
er:
  (a)  the  acceptance  of  orders electronically or by mail, telephone,
telefax or internet;
  (b) responses to consumer correspondence or  inquiries  electronically
or by mail, telephone, telefax or internet;
  (c) billing and collection activities; or
  (d)  the  shipment of orders from an inventory of products offered for
sale by the purchaser.]
  S 5. Subdivisions 1, 2, 4, 5, 6, 7 and 8 of section  209  of  the  tax
law, subdivisions 1 and 6 as amended by chapter 817 of the laws of 1987,
subdivision  2 as amended by chapter 75 of the laws of 1998, subdivision
4 as amended by section 27 of LBD number 74024-03-4, subdivisions 5  and
7  as  amended  by  section  2 of part FF-1 of chapter 57 of the laws of
2008, and subdivision 8 as added by section 1 of part O of chapter 61 of
the laws of 2006, are amended to read as follows:
  1. (A) For the privilege of exercising its corporate franchise, or  of
doing business, or of employing capital, or of owning or leasing proper-
ty in this state in a corporate or organized capacity, or of maintaining
an  office  in this state, OR OF DERIVING RECEIPTS FROM ACTIVITY IN THIS
STATE, for all or any part of each of  its  fiscal  or  calendar  years,
every  domestic or foreign corporation, except corporations specified in
subdivision four of this section, shall annually pay  a  franchise  tax,
upon  the  basis  of its [entire net] BUSINESS income base, or upon such
other basis as may be  applicable  as  hereinafter  provided,  for  such
fiscal  or  calendar  year  or  part thereof, on a report which shall be
filed, except as hereinafter provided, on or before the fifteenth day of
March next succeeding the close of each such year, or, in the case of  a
corporation  which reports on the basis of a fiscal year, within two and
one-half months after the close of such fiscal year, and shall  be  paid
as hereinafter provided.
  (B)  A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE IF
IT HAS RECEIPTS WITHIN THIS STATE OF ONE MILLION DOLLARS OR MORE IN  THE
TAXABLE  YEAR.  FOR  PURPOSES OF THIS SECTION, THE TERM "RECEIPTS" MEANS
THE RECEIPTS THAT ARE SUBJECT TO THE APPORTIONMENT RULES  SET  FORTH  IN
SECTION TWO HUNDRED TEN-A OF THIS ARTICLE, AND THE TERM "RECEIPTS WITHIN
THIS  STATE"  MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPOR-
TIONMENT FACTOR DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTI-
CLE.
  (C) A CORPORATION IS DOING BUSINESS IN THIS STATE IF (I) IT HAS ISSUED
CREDIT CARDS TO ONE THOUSAND  OR  MORE  CUSTOMERS  WHO  HAVE  A  MAILING
ADDRESS  WITHIN  THIS STATE AS OF THE LAST DAY OF ITS TAXABLE YEAR, (II)
IT HAS MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE  TOTAL  NUMBER
OF  LOCATIONS  COVERED  BY  THOSE  CONTRACTS EQUALS ONE THOUSAND OR MORE
LOCATIONS IN THIS STATE TO WHOM THE CORPORATION  REMITTED  PAYMENTS  FOR
CREDIT  CARD  TRANSACTIONS  DURING THE TAXABLE YEAR, OR (III) THE SUM OF
THE NUMBER OF CUSTOMERS DESCRIBED IN SUBPARAGRAPH (I) OF THIS  PARAGRAPH
PLUS  THE  NUMBER  OF  LOCATIONS  COVERED  BY ITS CONTRACTS DESCRIBED IN
SUBPARAGRAPH (II) OF THIS PARAGRAPH EQUALS ONE THOUSAND OR  MORE.    FOR
PURPOSES  OF THIS PARAGRAPH, RECEIPTS FROM PROCESSING CREDIT CARD TRANS-
ACTIONS FOR MERCHANTS INCLUDE MERCHANT DISCOUNT  FEES  RECEIVED  BY  THE

S. 6359                            35                            A. 8559

CORPORATION.  AS USED IN THIS PARAGRAPH, THE TERM "CREDIT CARD" INCLUDES
BANK, CREDIT, TRAVEL AND ENTERTAINMENT CARDS.
  (D)(I)  A  CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT AT LEAST
TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THIS STATE  IN  A  TAXABLE  YEAR
THAT  IS  PART  OF  A COMBINED REPORTING GROUP IS DERIVING RECEIPTS FROM
ACTIVITY IN THIS STATE IF THE RECEIPTS WITHIN THIS STATE OF THE  MEMBERS
OF  THE COMBINED REPORTING GROUP THAT HAVE AT LEAST TEN THOUSAND DOLLARS
OF RECEIPTS WITHIN THIS STATE IN THE AGGREGATE MEET  THE  THRESHOLD  SET
FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (II)  A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET FORTH
IN PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS,  OR
LOCATIONS,  OR CUSTOMERS AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C) OF
THIS SUBDIVISION, AND IS PART OF A COMBINED  REPORTING  GROUP  IS  DOING
BUSINESS IN THIS STATE IF THE NUMBER OF CUSTOMERS, LOCATIONS, OR CUSTOM-
ERS  AND  LOCATIONS,  WITHIN  THIS  STATE OF THE MEMBERS OF THE COMBINED
REPORTING GROUP THAT HAVE AT LEAST TEN CUSTOMERS, LOCATIONS, OR  CUSTOM-
ERS  AND  LOCATIONS, WITHIN THIS STATE IN THE AGGREGATE MEETS ANY OF THE
THRESHOLDS SET FORTH IN PARAGRAPH (C) OF THIS SUBDIVISION.
  (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
TIVE PERCENTAGE CHANGE IN THE CONSUMER  PRICE  INDEX.  THE  COMMISSIONER
SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
CONSUMER  PRICE  INDEX  HAS CHANGED BY TEN PERCENT OR MORE SINCE JANUARY
FIRST, TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS  WERE
LAST  ADJUSTED  UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL BE ADJUSTED
TO REFLECT THAT CUMULATIVE  PERCENTAGE  CHANGE  IN  THE  CONSUMER  PRICE
INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
SAND  DOLLARS.  AS  USED IN THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE  FORM
THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
ANY  ADJUSTMENT  SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER THE ADJUST-
MENT IS MADE.
  2. A foreign corporation shall not be deemed  to  be  doing  business,
employing  capital, owning or leasing property, or maintaining an office
in this state, OR DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, for the
purposes of this article, by reason  of  (a)  the  maintenance  of  cash
balances  with banks or trust companies in this state, or (b) the owner-
ship of shares of stock or securities kept in this state, if kept  in  a
safe  deposit  box,  safe,  vault  or  other  receptacle  rented for the
purpose, or if pledged as collateral security, or if deposited with  one
or more banks or trust companies, or brokers who are members of a recog-
nized  security exchange, in safekeeping or custody accounts, or (c) the
taking of any action by any such bank or trust company or broker,  which
is  incidental  to  the rendering of safekeeping or custodian service to
such corporation, or (d) the maintenance of an office in this  state  by
one or more officers or directors of the corporation who are not employ-
ees  of  the corporation if the corporation otherwise is not doing busi-
ness in this state, and does not employ capital or own or lease property
in this state, or (e) the keeping of books or records of  a  corporation
in this state if such books or records are not kept by employees of such
corporation  and such corporation does not otherwise do business, employ
capital, own or lease property or maintain an office in this  state,  or
(f)  [the  use  of fulfillment services of a person other than an affil-
iated person and the ownership of property stored  on  the  premises  of
such  person  in conjunction with such services, or (g)] any combination
of the foregoing activities. [For purposes of this subdivision,  persons
are  affiliated  persons  with  respect  to each other where one of such

S. 6359                            36                            A. 8559

persons has an ownership interest of more  than  five  percent,  whether
direct or indirect, in the other, or where an ownership interest of more
than  five  percent, whether direct or indirect, is held in each of such
persons  by  another  person  or  by  a group of other persons which are
affiliated persons with respect to each other. The term "person" in  the
preceding  sentence  and in paragraph (f) of this subdivision shall have
the meaning ascribed  thereto  by  subdivision  (a)  of  section  eleven
hundred one of this chapter.]
  4.  Corporations liable to tax under sections one hundred eighty-three
to one hundred  eighty-four-a,  inclusive,  corporations  taxable  under
[articles  thirty-two  and]  ARTICLE  thirty-three  of this chapter, any
trust company organized under a law of this state all of  the  stock  of
which  is  owned by not less than twenty savings banks organized under a
law of this state, [bank holding companies filing a combined  return  in
accordance  with subsection (f) of section fourteen hundred sixty-two of
this chapter,] a captive REIT or a captive RIC filing a combined  return
under  [either  subsection (f) of section fourteen hundred sixty-two or]
subdivision (f) of section fifteen hundred fifteen of this chapter,  and
housing  companies organized and operating pursuant to the provisions of
article two or article five of the private housing finance law and hous-
ing development fund companies organized pursuant to the  provisions  of
article  eleven  of the private housing finance law shall not be subject
to tax under this article.
  5. For any taxable year of a real estate investment trust  as  defined
in section eight hundred fifty-six of the internal revenue code in which
such  trust  is  subject  to federal income taxation under section eight
hundred fifty-seven of such code, such trust shall be subject to  a  tax
computed under either paragraph (a) [, (c)] or (d) of subdivision one of
section  two  hundred  ten  of  this  chapter,  whichever  is [greatest]
GREATER, and shall not be subject to any tax under  article  [thirty-two
or  article]  thirty-three  of  this  chapter  except for a captive REIT
required to file a combined return under  [subdivision  (f)  of  section
fourteen  hundred  sixty-two  or]  subdivision  (f)  of  section fifteen
hundred fifteen of this chapter. In the  case  of  such  a  real  estate
investment  trust, including a captive REIT as defined in section two of
this chapter, the term "entire net income" means "real estate investment
trust taxable income" as defined in paragraph two of subdivision (b)  of
section  eight hundred fifty-seven (as modified by section eight hundred
fifty-eight) of the internal revenue code plus the amount taxable  under
paragraph  three of subdivision (b) of section eight hundred fifty-seven
of such code, subject to the [modification]  MODIFICATIONS  required  by
subdivision  nine  of  section two hundred eight of this article [(other
than the modification required by  subparagraph  two  of  paragraph  (a)
thereof)  including the modifications required by paragraphs (d) and (e)
of subdivision three of section two hundred ten of this article].
  6. For any taxable year of a DISC, not exempt from tax under paragraph
(i) of subdivision nine of section two hundred eight  of  this  article,
the  taxes  imposed by subdivision one of this section shall be computed
only under either paragraph (b) or (d) of subdivision one of section two
hundred ten of this chapter, whichever is greater[, and paragraph (e) of
such subdivision].
  7. For any taxable year, beginning on or after January first, nineteen
hundred eighty of a regulated investment company, as defined in  section
eight  hundred  fifty-one  of  the  internal revenue code, in which such
company is subject  to  federal  income  taxation  under  section  eight
hundred  fifty-two  of such code, such company shall be subject to a tax

S. 6359                            37                            A. 8559

computed under either paragraph (a)[, (c)] or (d) of subdivision one  of
section  two  hundred  ten  of  this  chapter,  whichever  is [greatest]
GREATER, and shall not be subject to any tax under  article  [thirty-two
or  article]  thirty-three  of  this  chapter  except  for a captive RIC
required to file a combined return under  [subdivision  (f)  of  section
fourteen  hundred  sixty-two  or]  subdivision  (f)  of  section fifteen
hundred fifteen of this chapter. In the case of such a regulated invest-
ment company, including a captive RIC as defined in section two of  this
chapter,  the term "entire net income" means "investment company taxable
income" as defined in paragraph two of subdivision (b) of section  eight
hundred  fifty-two,  as modified by section eight hundred fifty-five, of
the internal revenue code plus the amount taxable under paragraph  three
of  subdivision  (b)  of  section  eight  hundred fifty-two of such code
subject to the [modification] MODIFICATIONS required by subdivision nine
of section two hundred eight of this chapter[, other than the  modifica-
tion  required by subparagraph two of paragraph (a) and by paragraph (f)
thereof, including the modification required by paragraphs (d)  and  (e)
of subdivision three of section two hundred ten of this chapter].
  8. For any taxable year beginning on or after January first, two thou-
sand  six,  a  corporation  that  is no longer doing business, employing
capital, or owning or leasing property, OR DERIVING RECEIPTS FROM ACTIV-
ITY in this state in a corporate or organized capacity that has filed  a
final  tax return with the department for the last tax year it was doing
business and has no outstanding tax liability for such final tax  return
or  any  tax  return  for prior tax years shall be exempt from all taxes
imposed by paragraph (d) of subdivision one of section two  hundred  ten
of  this  article for tax years following the last year such corporation
was doing business.
  S 6. Section 209-A of the tax law is REPEALED.
  S 7. The section heading and subdivision 1 of section 209-B of the tax
law, the section heading as amended by chapter 11 of the  laws  of  1983
and subdivision 1 as amended by section 4 of part A of chapter 59 of the
laws of 2013, are amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge.  1. (A) For the privilege of exercising its  corporate  fran-
chise,  or  of  doing business, or of employing capital, or of owning or
leasing property in a corporate or organized capacity, or of maintaining
an office, OR OF DERIVING RECEIPTS FROM  ACTIVITY  in  the  metropolitan
commuter  transportation  district,  for  all or any part of its taxable
year, there is hereby imposed on every corporation,  other  than  a  New
York  S  corporation,  subject  to tax under section two hundred nine of
this article, or any receiver, referee, trustee, assignee or other fidu-
ciary, or any officer or agent appointed by any court, who conducts  the
business  of  any such corporation, [for the taxable years commencing on
or after January first, nineteen hundred eighty-two  but  ending  before
December thirty-first, two thousand eighteen,] a tax surcharge, in addi-
tion to the tax imposed under section two hundred nine of this article[,
to  be  computed  at  the rate of eighteen]. SUCH SURCHARGE SHALL BE THE
PRODUCT OF TWENTY-FOUR AND ONE-HALF percent of  the  tax  imposed  under
such section two hundred nine for such taxable years or any part of such
taxable  years  [ending  before  December thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article,  and  at  the rate of seventeen percent of the tax
imposed under such section for such taxable years or any  part  of  such
taxable years ending on or after December thirty-first, nineteen hundred
eighty-three after] BEFORE the deduction of any credits otherwise allow-

S. 6359                            38                            A. 8559

able  under  this  article; provided, however, that such [rates] RATE of
tax surcharge shall be applied only to that portion of the  tax  imposed
under  section  two  hundred  nine  of  this  article [after] BEFORE the
deduction of any credits otherwise allowable under this article which is
attributable  to  the taxpayer's business activity carried on within the
metropolitan commuter transportation district;  and  provided,  further,
[that  the  tax  surcharge  imposed by this section shall not be imposed
upon any taxpayer for more than four hundred thirty-two months. Provided
however, that for taxable years commencing on or after July first, nine-
teen hundred ninety-eight, such surcharge shall be calculated as if  the
tax  imposed  under section two hundred ten of this article were imposed
under the law in effect for taxable years commencing on  or  after  July
first,  nineteen  hundred  ninety-seven  and before July first, nineteen
hundred ninety-eight. Provided however, that for taxable years  commenc-
ing  on or after January first, two thousand seven, such surcharge shall
be calculated using the highest of the tax  bases  imposed  pursuant  to
paragraphs  (a),  (b),  (c)  or  (d)  of  subdivision one of section two
hundred ten of this article and the amount imposed under  paragraph  (e)
of  subdivision  one  of  such  section two hundred ten, for the taxable
year; and, provided further that, if such highest amount is the tax base
imposed under paragraph (a), (b) or (c) of such  subdivision,  then  the
surcharge  shall  be  computed as if the tax rates and limitations under
such paragraph were the tax rates and limitations under  such  paragraph
in  effect for taxable years commencing on or after July first, nineteen
hundred ninety-seven and before July  first,  nineteen  hundred  ninety-
eight]  THE  SURCHARGE  COMPUTED  ON  A  COMBINED REPORT SHALL INCLUDE A
SURCHARGE ON THE FIXED  DOLLAR  MINIMUM  TAX  FOR  EACH  MEMBER  OF  THE
COMBINED GROUP SUBJECT TO THE SURCHARGE UNDER THIS SUBDIVISION.
  (B)  A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOL-
ITAN COMMUTER TRANSPORTATION DISTRICT IF  IT  HAS  RECEIPTS  WITHIN  THE
METROPOLITAN  COMMUTER TRANSPORTATION DISTRICT OF ONE MILLION DOLLARS OR
MORE IN  A  TAXABLE  YEAR.  FOR  PURPOSES  OF  THIS  SECTION,  THE  TERM
"RECEIPTS"  MEANS  THE  RECEIPTS  THAT  ARE SUBJECT TO THE APPORTIONMENT
RULES SET FORTH IN SECTION TWO HUNDRED TEN-A OF THIS  ARTICLE,  AND  THE
TERM "RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT"
MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FACTOR
DETERMINED UNDER SUBDIVISION TWO OF THIS SECTION.
  (C)  A  CORPORATION  IS  DOING  BUSINESS  IN THE METROPOLITAN COMMUTER
TRANSPORTATION DISTRICT IF (I) IT HAS ISSUED CREDIT CARDS TO  ONE  THOU-
SAND  OR  MORE CUSTOMERS WHO HAVE A MAILING ADDRESS WITHIN THE METROPOL-
ITAN COMMUTER TRANSPORTATION DISTRICT AS OF THE LAST DAY OF ITS  TAXABLE
YEAR,  (II)  IT  HAS  MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE
TOTAL NUMBER OF LOCATIONS COVERED BY THOSE CONTRACTS EQUALS ONE THOUSAND
OR MORE LOCATIONS IN THE METROPOLITAN COMMUTER  TRANSPORTATION  DISTRICT
TO  WHOM  THE CORPORATION REMITTED PAYMENTS FOR CREDIT CARD TRANSACTIONS
DURING THE TAXABLE YEAR, OR (III) THE SUM OF  THE  NUMBER  OF  CUSTOMERS
DESCRIBED  IN  SUBPARAGRAPH  (I)  OF  THIS  PARAGRAPH PLUS THE NUMBER OF
LOCATIONS COVERED BY ITS CONTRACTS DESCRIBED  IN  SUBPARAGRAPH  (II)  OF
THIS  PARAGRAPH  EQUALS ONE THOUSAND OR MORE. FOR PURPOSES OF THIS PARA-
GRAPH, RECEIPTS FROM PROCESSING CREDIT CARD TRANSACTIONS  FOR  MERCHANTS
INCLUDE  MERCHANT  DISCOUNT FEES RECEIVED BY THE CORPORATION. AS USED IN
THIS PARAGRAPH, THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAVEL AND
ENTERTAINMENT CARDS.
  (D)(I) A CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT  AT  LEAST
TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANS-
PORTATION  DISTRICT IN A TAXABLE YEAR THAT IS PART OF A COMBINED REPORT-

S. 6359                            39                            A. 8559

ING GROUP IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOLITAN  COMMU-
TER  TRANSPORTATION  DISTRICT  IF  THE  RECEIPTS WITHIN THE METROPOLITAN
COMMUTER TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY  BUSINESS
GROUP  THAT  HAVE  AT  LEAST TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE
METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN THE AGGREGATE MEET  THE
THRESHOLD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (II)  A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET FORTH
IN PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS,  OR
LOCATIONS,  OR  CUSTOMERS  AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C),
AND IS PART OF A COMBINED REPORTING  GROUP  IS  DOING  BUSINESS  IN  THE
METROPOLITAN  COMMUTER  TRANSPORTATION DISTRICT IF THE NUMBER OF CUSTOM-
ERS, LOCATIONS, OR CUSTOMERS  AND  LOCATIONS,  WITHIN  THE  METROPOLITAN
COMMUTER  TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY BUSINESS
GROUP THAT HAVE AT LEAST TEN  CUSTOMERS,  LOCATIONS,  OR  CUSTOMERS  AND
LOCATIONS,  WITHIN  THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN
THE AGGREGATE MEETS ANY OF THE THRESHOLDS SET FORTH IN PARAGRAPH (C)  OF
THIS SUBDIVISION.
  (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
TIVE  PERCENTAGE  CHANGE  IN  THE CONSUMER PRICE INDEX. THE COMMISSIONER
SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
CONSUMER PRICE INDEX HAS CHANGED BY TEN PERCENT OR  MORE  SINCE  JANUARY
FIRST,  TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS WERE
LAST ADJUSTED UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL  BE  ADJUSTED
TO  REFLECT  THAT  CUMULATIVE  PERCENTAGE  CHANGE  IN THE CONSUMER PRICE
INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
SAND DOLLARS. AS USED IN THIS PARAGRAPH, "CONSUMER  PRICE  INDEX"  MEANS
THE  CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE FROM
THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
ANY ADJUSTMENT SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER  THE  ADJUST-
MENT IS MADE.
  S  8.  The  opening paragraph of subdivision 2 of section 209-B of the
tax law, as amended by chapter 11 of the laws of  1983,  is  amended  to
read as follows:
  The  portion of the taxpayer's business activity carried on within the
metropolitan commuter transportation district shall  be  determined  [by
multiplying the tax imposed under section two hundred nine of this arti-
cle by a percentage to be determined as follows:] PURSUANT TO THE METHOD
PRESCRIBED  IN SECTION TWO HUNDRED TEN-A OF THIS ARTICLE EXCEPT THAT THE
REFERENCES TO "WITHIN THE STATE" SHALL REFER TO WITHIN THE  METROPOLITAN
COMMUTER  TRANSPORTATION  DISTRICT AND REFERENCES TO "WITHIN AND WITHOUT
THE STATE" SHALL REFER TO WITHIN THE STATE.
  S 9. Paragraphs (a), (b), (c) and (d)  of  subdivision  2  of  section
209-B of the tax law are REPEALED.
  S  10.  Subdivisions  2-a  and 2-b of section 209-B of the tax law are
REPEALED.
  S 11. Subdivisions 3 and 5 of section 209-B of the tax  law,  subdivi-
sion 3 as amended by chapter 11 of the laws of 1983 and subdivision 5 as
amended  by  chapter  166  of  the  laws of 1991, are amended to read as
follows:
  3. A corporation shall not be deemed to be doing  business,  employing
capital, owning or leasing property, or maintaining an office, OR DERIV-
ING  RECEIPTS  FROM ACTIVITY in the metropolitan commuter transportation
district, for the purposes of this section, by reason of (a) the mainte-
nance of cash balances with banks or trust companies in the metropolitan
commuter transportation district, or (b)  the  ownership  of  shares  of
stock  or  securities  kept  in the metropolitan commuter transportation

S. 6359                            40                            A. 8559

district, if kept in a safe deposit box, safe, vault or other receptacle
rented for the purpose, or if pledged  as  collateral  security,  or  if
deposited  with one or more banks or trust companies, or brokers who are
members  of  a  recognized  security exchange, in safekeeping or custody
accounts, or (c) the taking of any action by  any  such  bank  or  trust
company  or  broker, which is incidental to the rendering of safekeeping
or custodian service to such corporation, or (d) the maintenance  of  an
office  in  the  metropolitan commuter transportation district by one or
more officers or directors of the corporation who are not  employees  of
the  corporation  if  the corporation otherwise is not doing business in
the metropolitan commuter transportation district, and does  not  employ
capital  or own or lease property in the metropolitan commuter transpor-
tation district, or (e) the keeping of books or records of a corporation
in the metropolitan commuter transportation district if  such  books  or
records  are  not  kept by employees of such corporation and such corpo-
ration does not otherwise do business,  employ  capital,  own  or  lease
property  or maintain an office in the metropolitan commuter transporta-
tion district, or (f) any combination of the foregoing activities.
  5. The provisions concerning  reports  under  [section]  SECTIONS  TWO
HUNDRED  TEN-C  AND  two  hundred  eleven  shall  be  applicable to this
section, except that for purposes of  an  automatic  extension  for  six
months  for  filing  a report covering the tax surcharge imposed by this
section, such automatic extension shall be allowed only  if  a  taxpayer
files with the commissioner an application for extension in such form as
said  commissioner may prescribe by regulation and pays on or before the
date of such filing in addition to any other amounts required under this
article, either ninety percent of the entire tax surcharge  required  to
be  paid  under this section for the applicable period, or not less than
the tax surcharge shown on the taxpayer's return for the preceding taxa-
ble year, if such preceding taxable year was a taxable  year  of  twelve
months;  provided,  however,  that in no event shall such amount be less
than the product of the following three amounts: (1) the  tax  surcharge
rate  in effect for the taxable year pursuant to subdivision one of this
section, (2) the fixed dollar minimum applicable  to  such  taxpayer  as
determined under paragraph (d) of subdivision one of section two hundred
ten  of this chapter for the taxable year, and (3) the percentage deter-
mined under subdivision two of this section for  the  preceding  taxable
year,  unless  the taxpayer was not subject to the tax surcharge imposed
pursuant to this section with respect to such year, in which  case  such
percentage  shall be deemed to be one hundred percent. The tax surcharge
imposed by this section shall be payable to the commissioner in full  at
the  time  the report is required to be filed, and such tax surcharge or
the balance thereof, imposed on any taxpayer which  ceases  to  exercise
its franchise or be subject to the tax surcharge imposed by this section
shall  be payable to the commissioner at the time the report is required
to be filed, provided such tax surcharge of a domestic corporation which
continues to possess its franchise shall be subject to adjustment as the
circumstances may require; all other tax surcharges of any such  taxpay-
er,  which  pursuant  to  the foregoing provisions of this section would
otherwise be payable subsequent to the time such report is  required  to
be  filed,  shall  nevertheless  be  payable  at  such  time. All of the
provisions of this article presently applicable are  applicable  to  the
tax surcharge imposed by this section.
  S 12. Subdivision 1 of section 210 of the tax law, as added by chapter
817  of  the laws of 1987, the opening paragraph as amended by section 1
of part D and paragraph (g) as amended by section 2 of part A of chapter

S. 6359                            41                            A. 8559

63 of the laws of 2000, paragraph (a) as amended by  section 2 of part N
of chapter 60 of the laws of 2007, subparagraphs 2 and  3  of  paragraph
(b) as amended by section 17 of LBD number 74021-03-4, subparagraph (ii)
of paragraph (c) as amended by section 2 of part C and subparagraph 5 of
paragraph  (d) as added by section 3 of part C of chapter 56 of the laws
of 2011, subparagraphs (vi) and (vii) of paragraph  (a)  as  amended  by
section 16 of LBD number 74021-03-4, subparagraph (iii) of paragraph (c)
as  added by section 3 of part Z, and subparagraph 6 of paragraph (d) as
added by section 4 of part Z of chapter 59 of the laws  of  2013,  para-
graph  (b)  as amended by section 1 of part GG1, subparagraph 3 of para-
graph (d) as amended by section 3 of part AA1, subparagraph 4  of  para-
graph  (d)  as  added  by  section  2  of part AA1 and subparagraph 1 of
paragraph (g) as amended by section 4 of part AA1 of chapter 57  of  the
laws  of  2008,  paragraph  (c)  as  amended by section 10 of part A and
subparagraph 1 of paragraph (d) as amended by section 12 of  part  A  of
chapter  56 of the laws of 1998, paragraph (d) as amended by chapter 760
of the laws of 1992, paragraph (e) as amended by section 1 of part P  of
chapter  407  of the laws of 1999, paragraph (f) as amended by section 2
of part E of chapter 61 of the laws of 2005 and paragraph (h)  as  added
by section 20 of LBD number 74021-03-4, is amended to read as follows:
  1.  The  tax imposed by subdivision one of section two hundred nine of
this chapter shall be: (A) in the case of each taxpayer other than a New
York S corporation or a qualified homeowners association,  the  [sum  of
(1) the] highest of the amounts prescribed in paragraphs (a), (b), [(c)]
and  (d) of this subdivision [and (2) the amount prescribed in paragraph
(e) of this subdivision], (B) in the case of  each  New  York  S  corpo-
ration,  the  amount  prescribed in paragraph [(g)] (D) of this subdivi-
sion, and (C) in the case of a  qualified  homeowners  association,  the
[sum  of (1) the] highest of the amounts prescribed in paragraphs (a)[,]
AND (b) [and (c)] of this subdivision [and (2) the amount prescribed  in
paragraph  (e) of this subdivision]. For purposes of this paragraph, the
term "qualified homeowners association" means a homeowners  association,
as  such term is defined in subsection (c) of section five hundred twen-
ty-eight of the internal revenue code without regard to subparagraph (E)
of paragraph one of such subsection (relating to elections to  be  taxed
pursuant  to  such section), which has no homeowners association taxable
income, as such term is defined  in  subsection  (d)  of  such  section.
Provided,  however, that in the case of a small business taxpayer (other
than a New York S corporation) as  defined  in  paragraph  (f)  of  this
subdivision, FOR TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO THOU-
SAND  SIXTEEN,  if the amount prescribed in such paragraph (b) is higher
than the amount prescribed in such paragraph (a) solely by reason of the
application of the rate applicable to  small  business  taxpayers,  then
with  respect  to  such  taxpayer  the  tax  referred to in the previous
sentence shall be [the sum of (1) the highest]  HIGHER  of  the  amounts
prescribed in paragraphs (a)[, (c)] and (d) of this subdivision [and (2)
the amount prescribed in paragraph (e) of this subdivision].
  (a)  [Entire  net]  BUSINESS income base. [For taxable years beginning
before July first, nineteen hundred ninety-nine, the  amount  prescribed
by  this  paragraph shall be computed at the rate of nine percent of the
taxpayer's entire net income base. For  taxable  years  beginning  after
June  thirtieth, nineteen hundred ninety-nine and before July first, two
thousand, the amount prescribed by this paragraph shall be  computed  at
the  rate  of  eight  and  one-half percent of the taxpayer's entire net
income base. For taxable years beginning after June thirtieth, two thou-
sand and before July first, two thousand one, the amount  prescribed  by

S. 6359                            42                            A. 8559

this  paragraph  shall  be  computed at the rate of eight percent of the
taxpayer's entire net income base. For  taxable  years  beginning  after
June  thirtieth, two thousand one and before January first, two thousand
seven,  the amount prescribed by this paragraph shall be computed at the
rate of seven and one-half percent of the taxpayer's entire  net  income
base.]  For  taxable years beginning [on or after] BEFORE January first,
two thousand [seven] SIXTEEN, the amount prescribed  by  this  paragraph
shall  be  computed  at  the  rate of seven and one-tenth percent of the
taxpayer's [entire net] BUSINESS income base. FOR TAXABLE  YEARS  BEGIN-
NING  ON  OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND  SIXTEEN, THE AMOUNT
PRESCRIBED BY THIS PARAGRAPH SHALL BE SIX AND ONE-HALF  PERCENT  OF  THE
TAXPAYER'S  BUSINESS  INCOME  BASE. The taxpayer's [entire net] BUSINESS
income base shall mean the portion of the taxpayer's [entire net]  BUSI-
NESS income allocated within the state as hereinafter provided[, subject
to  any  modification  required by paragraphs (d) and (e) of subdivision
three of this section]. However, in the case of a small business taxpay-
er, as  defined  in  paragraph  (f)  of  this  subdivision,  the  amount
prescribed  by this paragraph shall be computed pursuant to subparagraph
(iv) of this paragraph and in the case of a manufacturer, as defined  in
subparagraph (vi) of this paragraph, the amount prescribed by this para-
graph shall be computed pursuant to subparagraph (vi) of this paragraph.
  [(i)  if the entire net income base is not more than two hundred thou-
sand dollars, (1) for taxable years beginning before July  first,  nine-
teen  hundred  ninety-nine,  the  amount  shall  be eight percent of the
entire net income base; (2) for taxable years beginning after June thir-
tieth, nineteen hundred ninety-nine and before July first, two  thousand
three,  the amount shall be seven and one-half percent of the entire net
income base; and (3) for taxable years beginning after  June  thirtieth,
two  thousand  three  and  before  January first, two thousand five, the
amount shall be 6.85 percent of the entire net income base;
  (ii) if the entire net income base is more than two  hundred  thousand
dollars  but not over two hundred ninety thousand dollars, (1) for taxa-
ble years beginning before July first, nineteen hundred ninety-nine, the
amount shall be the sum  of  (a)  sixteen  thousand  dollars,  (b)  nine
percent  of  the  excess  of the entire net income base over two hundred
thousand dollars and (c) five percent of the excess of  the  entire  net
income  base  over  two  hundred fifty thousand dollars; (2) for taxable
years beginning after June thirtieth, nineteen hundred  ninety-nine  and
before  July  first,  two  thousand,  the amount shall be the sum of (a)
fifteen thousand dollars, (b) eight and one-half percent of  the  excess
of  the entire net income base over two hundred thousand dollars and (c)
five percent of the excess of  the  entire  net  income  base  over  two
hundred  fifty  thousand  dollars; (3) for taxable years beginning after
June thirtieth, two thousand and before July first,  two  thousand  one,
the  amount  shall be the sum of (a) fifteen thousand dollars, (b) eight
percent of the excess of the entire net income  base  over  two  hundred
thousand  dollars  and (c) two and one-half percent of the excess of the
entire net income base over two hundred fifty thousand dollars; (4)  for
taxable  years  beginning  after  June  thirtieth,  two thousand one and
before July first, two thousand three, the amount  shall  be  seven  and
one-half  percent  of  the  entire  net income base; and (5) for taxable
years beginning after June thirtieth,  two  thousand  three  and  before
January  first,  two  thousand  five, the amount shall be the sum of (a)
thirteen thousand seven hundred dollars, (b) 7.5 percent of  the  excess
of  the entire net income base over two hundred thousand dollars and (c)

S. 6359                            43                            A. 8559

3.25 percent of the excess of  the  entire  net  income  base  over  two
hundred fifty thousand dollars;
  (iii) for taxable years beginning on or after January first, two thou-
sand  five  and  ending before January first, two thousand seven, if the
entire net income base is not more  than  two  hundred  ninety  thousand
dollars  the  amount shall be six and one-half percent of the entire net
income base; if the entire net income base  is  more  than  two  hundred
ninety  thousand  dollars  but  not  over  three hundred ninety thousand
dollars the amount shall be the  sum  of  (1)  eighteen  thousand  eight
hundred  fifty  dollars, (2) seven and one-half percent of the excess of
the entire net income base over two hundred ninety thousand dollars  but
not  over  three  hundred ninety thousand dollars and (3) seven and one-
quarter percent of the excess of the entire net income base  over  three
hundred  fifty  thousand dollars but not over three hundred ninety thou-
sand dollars;]
  (iv) for taxable years beginning [on or after] BEFORE  January  first,
two  thousand  [seven] SIXTEEN, if the [entire net] BUSINESS income base
is not more than two hundred ninety thousand dollars the amount shall be
six and one-half percent of the [entire net] BUSINESS  income  base;  if
the  [entire  net]  BUSINESS income base is more than two hundred ninety
thousand dollars but not over three hundred ninety thousand dollars  the
amount  shall  be  the  sum of (1) eighteen thousand eight hundred fifty
dollars, (2) seven and one-tenth percent of the excess  of  the  [entire
net]  BUSINESS  income base over two hundred ninety thousand dollars but
not over three hundred ninety thousand dollars and (3) four and  thirty-
five  hundredths  percent  of  the  excess  of the [entire net] BUSINESS
income base over three hundred fifty thousand dollars but not over three
hundred ninety thousand dollars;
  (v) if the taxable period to which [subparagraphs  (i),  (ii),  (iii),
and]  SUBPARAGRAPH  (iv)  of this paragraph [apply] APPLIES is less than
twelve months, the amount prescribed by this paragraph shall be computed
as follows:
  (A) Multiply the [entire net] BUSINESS income base for  such  taxpayer
by twelve;
  (B)  Divide  the result obtained in (A) by the number of months in the
taxable year;
  (C) Compute an amount pursuant to [subparagraphs (i) and (ii)] SUBPAR-
AGRAPH (IV) as if the result obtained in (B) were the taxpayer's [entire
net] BUSINESS income base;
  (D) Multiply the result obtained in (C) by the number of months in the
taxpayer's taxable year;
  (E) Divide the result obtained in (D) by twelve.
  (vi) except as otherwise provided in this subparagraph or subparagraph
(vii) of this paragraph, for taxable years beginning on or after January
thirty-first, two thousand seven, the amount prescribed  by  this  para-
graph  for  a  taxpayer  which  is a qualified New York manufacturer, as
defined in subdivision fifteen of section  two  hundred  eight  of  this
article, shall be computed at the rate of six and one-half (6.5) percent
of  the taxpayer's [entire net] BUSINESS income base. [For taxable years
beginning on or after January first,  two  thousand  twelve  and  before
January first, two thousand fifteen, the amount prescribed by this para-
graph for a taxpayer which is an eligible qualified New York manufactur-
er shall be computed at the rate of three and one-quarter (3.25) percent
of the taxpayer's entire net income base.  The commissioner shall estab-
lish  guidelines  and  criteria  that  specify  requirements  by which a
manufacturer may  be  classified  as  an  eligible  qualified  New  York

S. 6359                            44                            A. 8559

manufacturer. Criteria may include but not be limited to factors such as
regional unemployment, the economic impact that manufacturing has on the
surrounding  community,  population decline within the region and median
income within the region in which the manufacturer is located. In estab-
lishing  these  guidelines and criteria, the commissioner shall endeavor
that the total annual cost of the lower rates shall not  exceed  twenty-
five million dollars.]
  For  a  qualified  New  York  manufacturer,  as defined in subdivision
fifteen of section two hundred eight of this article, the rate at  which
the  tax  is  computed in effect for taxable years beginning on or after
January first, two thousand thirteen and before January first, two thou-
sand fourteen for qualified New York manufacturers shall be  reduced  by
nine  and  two-tenths  percent  for taxable years commencing on or after
January first, two thousand fourteen and before January first, two thou-
sand fifteen, twelve and three-tenths percent for taxable years commenc-
ing on or after January first, two thousand fifteen and  before  January
first, two thousand sixteen, fifteen and four-tenths percent for taxable
years  commencing  on  or  after January first, two thousand sixteen and
before January first, two thousand eighteen, and twenty-five percent for
taxable years beginning on or after January first,  two  thousand  eigh-
teen.
  (vii)  For a qualified New York manufacturer that has an apportionment
factor for purposes of  the  metropolitan  transportation  business  tax
surcharge  computed  pursuant  to subdivision two of section two hundred
nine-B of this article equal to zero for the taxable  year,  the  amount
prescribed  by  this  paragraph  for taxable years beginning on or after
January first, two thousand fourteen shall be computed at  the  rate  of
zero percent of the taxpayer's entire net income base.
  (VIII)  IN  COMPUTING  THE  BUSINESS INCOME BASE, A NET OPERATING LOSS
DEDUCTION SHALL BE ALLOWED. A NET OPERATING LOSS DEDUCTION IS THE AMOUNT
OF NET OPERATING LOSS OR LOSSES FROM ONE OR MORE TAXABLE YEARS THAT  ARE
CARRIED FORWARD TO A PARTICULAR INCOME YEAR. A NET OPERATING LOSS IS THE
AMOUNT  OF  A BUSINESS LOSS INCURRED IN A PARTICULAR TAX YEAR MULTIPLIED
BY THE APPORTIONMENT FACTOR FOR THAT YEAR AS  DETERMINED  UNDER  SECTION
TWO  HUNDRED  TEN-A OF THIS ARTICLE. THE MAXIMUM NET OPERATING DEDUCTION
THAT IS ALLOWED IN A TAXABLE YEAR IS THE AMOUNT THAT REDUCES THE TAXPAY-
ER'S TAX ON ALLOCATED BUSINESS INCOME TO THE HIGHER OF THE  TAX  ON  THE
CAPITAL  BASE  OR  THE FIXED DOLLAR MINIMUM. SUCH DEDUCTION AND LOSS ARE
DETERMINED IN ACCORDANCE WITH THE FOLLOWING:
  (1) SUCH NET OPERATING LOSS DEDUCTION IS NOT  LIMITED  TO  THE  AMOUNT
ALLOWED  UNDER  SECTION  ONE HUNDRED SEVENTY-TWO OF THE INTERNAL REVENUE
CODE OR THE AMOUNT THAT WOULD HAVE BEEN ALLOWED IF THE TAXPAYER HAD  NOT
MADE  AN  ELECTION  UNDER  SUBCHAPTER  S  OF CHAPTER ONE OF THE INTERNAL
REVENUE CODE.
  (2) SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET  OPER-
ATING  LOSS  INCURRED DURING ANY TAXABLE YEAR BEGINNING PRIOR TO JANUARY
FIRST, TWO THOUSAND FIFTEEN, OR DURING ANY TAXABLE  YEAR  IN  WHICH  THE
TAXPAYER WAS NOT SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE.
  (3) A TAXPAYER THAT FILES AS PART OF A FEDERAL CONSOLIDATED RETURN BUT
ON  A  SEPARATE  BASIS  FOR  PURPOSES  OF  THIS ARTICLE MUST COMPUTE ITS
DEDUCTION AND LOSS AS IF IT WERE FILING ON A SEPARATE BASIS FOR  FEDERAL
INCOME TAX PURPOSES.
  (4) A NET OPERATING LOSS MUST BE CARRIED FORWARD TO EACH OF THE TWENTY
TAXABLE  YEARS  FOLLOWING  THE TAXABLE YEAR OF THE LOSS. NO CARRYBACK OF
THE NET OPERATING LOSS IS ALLOWED. A TAXPAYER MUST APPLY BOTH  OF  THESE
LIMITATIONS IN COMPUTING SUCH NET OPERATING LOSS DEDUCTION.

S. 6359                            45                            A. 8559

  (5)  SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET OPER-
ATING LOSS INCURRED DURING A NEW YORK S YEAR; PROVIDED, HOWEVER,  A  NEW
YORK  S YEAR MUST BE TREATED AS A TAXABLE YEAR FOR PURPOSES OF DETERMIN-
ING THE NUMBER OF TAXABLE YEARS TO WHICH A NET  OPERATING  LOSS  MAY  BE
CARRIED FORWARD.
  (6)  WHERE  THERE  ARE  TWO OR MORE ALLOCATED NET OPERATING LOSSES, OR
PORTIONS THEREOF, CARRIED FORWARD TO BE DEDUCTED IN ONE  PARTICULAR  TAX
YEAR  FROM  ALLOCATED  BUSINESS  INCOME,  THE  EARLIEST  ALLOCATED  LOSS
INCURRED MUST BE APPLIED FIRST.
  (b) Capital base. (1) The [amount prescribed  by  this  paragraph  for
taxable  years  beginning before January first, two thousand eight shall
be computed at .178 percent for each  dollar  of  the  taxpayer's  total
business and investment capital, or the portion thereof allocated within
the  state  as  hereinafter  provided. For taxable years beginning on or
after January first, two thousand eight, the] amount prescribed by  this
paragraph  shall  be  computed  at .15  percent  for  each dollar of the
taxpayer's total business [and investment] capital, or the portion ther-
eof allocated within the state as hereinafter provided. However, in  the
case  of  a  cooperative  housing corporation as defined in the internal
revenue code, the applicable rate shall be .04 percent.    In  no  event
shall the amount prescribed by this paragraph exceed three hundred fifty
thousand  dollars for qualified New York manufacturers and for all other
taxpayers [ten] FIVE million dollars [for taxable years beginning on  or
after  January  first,  two thousand eight but before January first, two
thousand eleven and one million dollars for taxable years  beginning  on
or after January first, two thousand eleven].
  (2)  For  a qualified New York manufacturer, as defined in subdivision
fifteen of section two hundred eight of this article, the rate at  which
the  tax  is  computed in effect for taxable years beginning on or after
January first, two thousand thirteen and before January first, two thou-
sand fourteen shall be reduced by nine and two-tenths percent for  taxa-
ble  years  commencing  on or after January first, two thousand fourteen
and before January first, two thousand fifteen, twelve and  three-tenths
percent  for  taxable  years  commencing  on or after January first, two
thousand fifteen and before January first, two thousand sixteen, fifteen
and four-tenths percent for taxable years commencing on or after January
first, two thousand sixteen and before January first, two thousand eigh-
teen, and twenty-five percent for taxable years beginning  on  or  after
January first, two thousand eighteen.
  [(c)  Minimum  taxable  income  bases. (i) For taxable years beginning
after nineteen hundred eighty-six and before  nineteen  hundred  eighty-
nine,  the  amount prescribed by this paragraph shall be computed at the
rate of three  and  one-half  percent  of  the  taxpayer's  pre-nineteen
hundred  ninety minimum taxable income base. For taxable years beginning
in nineteen hundred eighty-nine, the amount prescribed by this paragraph
shall be computed at the rate of five percent  of  the  taxpayer's  pre-
nineteen  hundred ninety minimum taxable income base. A "taxpayer's pre-
nineteen hundred ninety minimum taxable  income  base"  shall  mean  the
portion  of  the taxpayer's entire net income allocated within the state
as hereinafter provided, subject to any modification required  by  para-
graphs (d) and (e) of subdivision three of this section;
  (ii)  (A)  For  taxable years beginning on or after January first, two
thousand seven,  the  amount  prescribed  by  this  paragraph  shall  be
computed at the rate of one and one-half percent of the taxpayer's mini-
mum  taxable  income  base. The "taxpayer's minimum taxable income base"
shall mean the portion of the taxpayer's minimum  taxable  income  allo-

S. 6359                            46                            A. 8559

cated within the state as hereinafter provided, subject to any modifica-
tions  required  by  paragraphs (d) and (e) of subdivision three of this
section.
  (B)  For  taxable years beginning on or after January first, two thou-
sand twelve and before January first, two thousand fifteen,  the  amount
prescribed by this paragraph for an eligible qualified New York manufac-
turer  shall  be  computed  at the rate of seventy-five hundredths (.75)
percent of the taxpayer's minimum taxable income base. For  purposes  of
this  clause,  the term "eligible qualified New York manufacturer" shall
have the same meaning as in subparagraph (vi) of paragraph (a)  of  this
subdivision.
  (iii)  For  a  qualified New York manufacturer, as defined in subpara-
graph (vi) of paragraph (a) of this subdivision, the rate at  which  the
tax  is computed in effect for taxable years beginning on or after Janu-
ary first, two thousand thirteen and before January first, two  thousand
fourteen  for  qualified New York manufacturers shall be reduced by nine
and two-tenths percent for taxable years commencing on or after  January
first,  two  thousand  fourteen  and  before January first, two thousand
fifteen, twelve and three-tenths percent for taxable years commencing on
or after January first, two thousand fifteen and before  January  first,
two  thousand sixteen, fifteen and four-tenths percent for taxable years
commencing on or after January first, two thousand  sixteen  and  before
January  first, two thousand eighteen, and twenty-five percent for taxa-
ble years beginning on or after January first, two thousand eighteen.]
  (d) Fixed dollar minimum. (1) The [amount prescribed by this paragraph
shall be for a taxpayer which during the taxable year has:
  (A) a gross payroll of six million two hundred fifty thousand  dollars
or more, one thousand five hundred dollars;
  (B)  a  gross payroll of less than six million two hundred fifty thou-
sand dollars but more than one million dollars, four hundred twenty-five
dollars;
  (C) a gross payroll of no more than one million dollars but more  than
five hundred thousand dollars, three hundred twenty-five dollars;
  (D)  a gross payroll of no more than five hundred thousand dollars but
more than two hundred fifty thousand dollars,  two  hundred  twenty-five
dollars;
  (E)  a  gross  payroll  of  two hundred fifty thousand dollars or less
(except as prescribed in clause (F) of this subparagraph),  one  hundred
dollars;
  (F)  a  gross  payroll  of  one  thousand  dollars or less, with total
receipts within and without this state of one thousand dollars or  less,
and the average value of the assets of which are one thousand dollars or
less, eight hundred dollars.
  (2) For purposes of this paragraph:
  (A)  gross  payroll shall be the same as the total wages, salaries and
other personal service compensation of  all  the  taxpayer's  employees,
within and without this state, as defined in subparagraph three of para-
graph  (a)  of  subdivision  three  of this section, except that general
executive officers shall not be excluded.
  (B) total receipts shall be the same as receipts  within  and  without
this  state  as defined in subparagraph two of paragraph (a) of subdivi-
sion three of this section.
  (C) average value of the assets shall be the  same  as  prescribed  by
subdivision two of this section without reduction for liabilities.
  (3)  If  the  taxable  year  is  less  than  twelve months, the amount
prescribed by this paragraph shall be reduced by twenty-five percent  if

S. 6359                            47                            A. 8559

the  period  for  which  the taxpayer is subject to tax is more than six
months but not more than nine months and by fifty percent if the  period
for  which  the  taxpayer is subject to tax is not more than six months.
Provided,  however,  that in determining the amount of gross payroll and
total receipts for purposes of subparagraph one of this paragraph, where
the taxable year is less than twelve months, the amount of each shall be
determined by dividing the amount of each with respect  to  the  taxable
year  by  the  number of months in such taxable year and multiplying the
result by twelve. If the taxable year is less than  twelve  months,  the
amount  of  New  York receipts for purposes of subparagraph four of this
paragraph is determined by dividing the amount of the receipts  for  the
taxable year by the number of months in the taxable year and multiplying
the result by twelve.
  (4)  Notwithstanding  subparagraphs one and two of this paragraph, for
taxable years beginning on or after January first, two  thousand  eight,
the]  amount  prescribed  by  this paragraph for New York S corporations
will be determined in accordance with the following table:

If New York receipts are:                The fixed dollar minimum tax is:
 not more than $100,000                               $   25
 more than $100,000 but not over $250,000             $   50
 more than $250,000 but not over $500,000             $  175
 more than $500,000 but not over $1,000,000           $  300
 more than $1,000,000 but not over $5,000,000         $1,000
 more than $5,000,000 but not over $25,000,000        $3,000
 Over $25,000,000                                     $4,500

Otherwise the amount prescribed by this paragraph will be determined  in
accordance with the following table:
PROVIDED  FURTHER,  THE AMOUNT PRESCRIBED BY THIS PARAGRAPH FOR A QUALI-
FIED NEW YORK MANUFACTURER, AS DEFINED IN SUBDIVISION FIFTEEN OF SECTION
TWO HUNDRED EIGHT OF THIS ARTICLE, WILL BE DETERMINED IN ACCORDANCE WITH
THE FOLLOWING TABLES:
FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2014 AND  BEFORE  JANUARY
1, 2015:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   23
 MORE THAN $100,000 BUT NOT OVER $250,000             $   68
 MORE THAN $250,000 BUT NOT OVER $500,000             $  159
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  454
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,362
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,178
 OVER $25,000,000                                     $4,500

FOR  TAX  YEARS BEGINNING ON OR AFTER JANUARY 1, 2015 AND BEFORE JANUARY
1, 2016:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   22
 MORE THAN $100,000 BUT NOT OVER $250,000             $   66
 MORE THAN $250,000 BUT NOT OVER $500,000             $  153
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  439
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,316
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,070
 OVER $25,000,000                                     $4,385

S. 6359                            48                            A. 8559

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2016 AND  BEFORE  JANUARY
1, 2018:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   21
 MORE THAN $100,000 BUT NOT OVER $250,000             $   63
 MORE THAN $250,000 BUT NOT OVER $500,000             $  148
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  423
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,269
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,961
 OVER $25,000,000                                     $4,230

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2018:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   19
 MORE THAN $100,000 BUT NOT OVER $250,000             $   56
 MORE THAN $250,000 BUT NOT OVER $500,000             $  131
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  375
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,125
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,625
 OVER $25,000,000                                     $3,750

OTHERWISE  THE AMOUNT PRESCRIBED BY THIS PARAGRAPH WILL BE DETERMINED IN
ACCORDANCE WITH THE FOLLOWING TABLE:

If New York receipts are:                The fixed dollar minimum tax is:
 not more than $100,000                               $   25
 more than $100,000 but not over $250,000             $   75
 more than $250,000 but not over $500,000             $  175
 more than $500,000 but not over $1,000,000           $  500
 more than $1,000,000 but not over $5,000,000         $1,500
 more than $5,000,000 but not over $25,000,000        $3,500
 [Over] $25,000,000 BUT NOT OVER $50,000,000          $5,000
 MORE THAN $50,000,000 BUT NOT OVER $100,000,000      $10,000
 MORE THAN $100,000,000 BUT NOT OVER $250,000,000     $20,000
 MORE THAN $250,000,000 BUT NOT OVER $500,000,000     50,000
 MORE THAN $500,000,000 BUT NOT OVER $1,000,000,000   $100,000
 OVER $1,000,000,000                                  $200,000

For purposes of this paragraph,  New  York  receipts  are  the  receipts
[computed in accordance with subparagraph two of paragraph (a) of subdi-
vision  three  of  this]  INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT
FACTOR DETERMINED UNDER section TWO HUNDRED TEN-A for the taxable year.
  (2) IF THE TAXABLE YEAR IS LESS THAN TWELVE MONTHS, THE AMOUNT OF  NEW
YORK  RECEIPTS  IS DETERMINED BY DIVIDING THE AMOUNT OF THE RECEIPTS FOR
THE TAXABLE YEAR BY THE NUMBER OF MONTHS IN THE TAXABLE YEAR AND  MULTI-
PLYING  THE RESULT BY TWELVE. IN THE CASE OF A TERMINATION YEAR OF A NEW
YORK S CORPORATION, THE SUM OF THE TAX COMPUTED UNDER THIS PARAGRAPH FOR
THE S SHORT YEAR AND FOR THE C SHORT YEAR SHALL NOT  BE  LESS  THAN  THE
AMOUNT  COMPUTED  UNDER  THIS PARAGRAPH AS IF THE CORPORATION WERE A NEW
YORK C CORPORATION FOR THE ENTIRE TAXABLE YEAR.
  [(5) For taxable years beginning on or after January first, two  thou-
sand  twelve and before January first, two thousand fifteen, the amounts
prescribed in subparagraphs one and four of this paragraph as the  fixed
dollar minimum tax for an eligible qualified New York manufacturer shall

S. 6359                            49                            A. 8559

be  one-half  of the amounts stated in those subparagraphs. For purposes
of this subparagraph, the term "eligible qualified New York  manufactur-
er" shall have the same meaning as in subparagraph (vi) of paragraph (a)
of this subdivision.
  (6)  For a qualified New York manufacturer, as defined in subparagraph
(vi) of paragraph (a) of this subdivision,  the  amounts  prescribed  in
subparagraphs one and four of this paragraph in effect for taxable years
beginning  on  or  after January first, two thousand thirteen and before
January first, two thousand fourteen for qualified New York  manufactur-
ers  shall  be  reduced by nine and two-tenths percent for taxable years
commencing on or after January first, two thousand fourteen  and  before
January first, two thousand fifteen, twelve and three-tenths percent for
taxable years commencing on or after January first, two thousand fifteen
and  before January first, two thousand sixteen, fifteen and four-tenths
percent for taxable years commencing on  or  after  January  first,  two
thousand  sixteen  and  before January first, two thousand eighteen, and
twenty-five percent for taxable years  beginning  on  or  after  January
first, two thousand eighteen.
  (e)  Subsidiary  capital base. (1) The amount prescribed by this para-
graph shall be computed at the rate of nine-tenths of a  mill  for  each
dollar  of  the  portion  of the taxpayer's subsidiary capital allocated
within the state as hereinafter provided.
  (2) For purposes of this paragraph,  the  amount  of  such  subsidiary
capital,  prior  to  allocation,  shall  be  reduced  by  the applicable
percentage of the taxpayer's (i) investments in the stock  of,  and  any
indebtedness from, subsidiaries subject to tax under section one hundred
eighty-six  of this chapter (but only to the extent such indebtedness is
included in subsidiary capital), and (ii) investments in the  stock  of,
and  any  indebtedness  from,  subsidiaries subject to tax under article
thirty-two or thirty-three of this chapter (but only to the extent  such
indebtedness  is included in subsidiary capital). For purposes of clause
(i) of this subparagraph, the  applicable  percentage  shall  be  thirty
percent  for  taxable  years  beginning in two thousand, and one hundred
percent for taxable years beginning after two thousand. For purposes  of
clause (ii) of this subparagraph, the applicable percentage shall be one
hundred percent for taxable years beginning after nineteen hundred nine-
ty-nine.]
  (f)  For  purposes of this section, the term "small business taxpayer"
shall mean a taxpayer (i) which has an entire net  income  of  not  more
than  three  hundred  ninety thousand dollars for the taxable year; (ii)
[which constitutes a small business as defined in section 1244(c)(3)  of
internal revenue code (without regard to the second sentence of subpara-
graph (A) thereof) as of the last day of the taxable year] THE AGGREGATE
AMOUNT  OF  MONEY  AND  OTHER  PROPERTY  RECEIVED BY THE CORPORATION FOR
STOCK, AS A CONTRIBUTION TO CAPITAL, AND AS PAID-IN  SURPLUS,  DOES  NOT
EXCEED  ONE  MILLION DOLLARS; [and] (iii) which is not part of an affil-
iated group, as defined in section 1504 of the  internal  revenue  code,
unless  such  group,  if  it  had filed a report under this article on a
combined basis, would have itself qualified as a "small business taxpay-
er" pursuant to this subdivision; AND (IV) WHICH HAS AN  AVERAGE  NUMBER
OF INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE OFFICERS, EMPLOYED FULL-TIME
IN  THE  STATE  DURING THE TAXABLE YEAR OF ONE HUNDRED OR FEWER.  If the
taxable period to which subparagraph (i) of this  paragraph  applies  is
less than twelve months, entire net income under such subparagraph shall
be  placed  on  an  annual basis by multiplying the entire net income by
twelve and dividing the result by the number of months  in  the  period.

S. 6359                            50                            A. 8559

FOR  PURPOSES  OF  SUBPARAGRAPH (II) OF THIS PARAGRAPH, THE AMOUNT TAKEN
INTO ACCOUNT WITH RESPECT TO ANY PROPERTY OTHER THAN MONEY SHALL BE  THE
AMOUNT  EQUAL  TO THE ADJUSTED BASIS TO THE CORPORATION OF SUCH PROPERTY
FOR DETERMINING GAIN, REDUCED BY ANY LIABILITY TO WHICH THE PROPERTY WAS
SUBJECT OR WHICH WAS ASSUMED BY THE CORPORATION. THE DETERMINATION UNDER
THE  PRECEDING  SENTENCE  SHALL  BE MADE AS OF THE TIME THE PROPERTY WAS
RECEIVED BY THE CORPORATION. FOR PURPOSES OF SUBPARAGRAPH (III) OF  THIS
SECTION,  "AVERAGE  NUMBER  OF  INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE
OFFICERS, EMPLOYED FULL-TIME" SHALL  BE  COMPUTED  BY  ASCERTAINING  THE
NUMBER  OF SUCH INDIVIDUALS EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST
DAY OF MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF  SEPTEMBER
AND  THE  THIRTY-FIRST DAY OF DECEMBER DURING EACH TAXABLE YEAR OR OTHER
APPLICABLE PERIOD, BY ADDING TOGETHER THE  NUMBER  OF  SUCH  INDIVIDUALS
ASCERTAINED  ON  EACH  OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY
THE NUMBER OF SUCH DATES OCCURRING WITHIN SUCH  TAXABLE  YEAR  OR  OTHER
APPLICABLE PERIOD. AN INDIVIDUAL EMPLOYED FULL-TIME MEANS AN EMPLOYEE IN
A  JOB CONSISTING OF AT LEAST THIRTY-FIVE HOURS PER WEEK, OR TWO OR MORE
EMPLOYEES WHO ARE IN JOBS THAT TOGETHER CONSTITUTE THE EQUIVALENT  OF  A
JOB   AT  LEAST  THIRTY-FIVE  HOURS  PER  WEEK  (FULL-TIME  EQUIVALENT).
FULL-TIME EQUIVALENT EMPLOYEES IN THE STATE INCLUDES ALL EMPLOYEES REGU-
LARLY CONNECTED WITH OR WORKING OUT OF AN OFFICE OR PLACE OF BUSINESS OF
THE TAXPAYER WITHIN THE STATE.
  (g) New York S corporations.  (1) General. The  amount  prescribed  by
this  paragraph  shall  be,  in the case of each New York S corporation,
[(i) the higher of the amounts prescribed in paragraphs (a) and  (d)  of
this  subdivision  (other than the amount prescribed in the final clause
of subparagraph one of that paragraph (d)) (ii) reduced by  the  article
twenty-two  tax  equivalent;  provided,  however,  that  the amount thus
determined shall not be less than the lowest of the  amounts  prescribed
in  subparagraph  one  of that paragraph (d) (applying the provisions of
subparagraph three of that paragraph as necessary).  Provided,  however,
notwithstanding any provision of this paragraph, in taxable years begin-
ning  in  two  thousand  three and before two thousand eight, the amount
prescribed by this paragraph shall be the amount prescribed in  subpara-
graph one of that paragraph (d) (applying the provisions of subparagraph
three  of  that  paragraph as necessary) and applying the calculation of
that amount in the case of a termination year as set forth  in  subpara-
graph four of this paragraph as necessary. In taxable years beginning in
two  thousand  eight and thereafter, the amount prescribed by this para-
graph is] the amount prescribed in subparagraph four of  that  paragraph
(d) [(applying the provisions of subparagraph three of that paragraph as
necessary)] and applying the calculation of that amount in the case of a
termination  year as set forth in subparagraph four of this paragraph as
necessary.
  (2) [Article twenty-two tax equivalent. For  taxable  years  beginning
before  July first, nineteen hundred ninety-nine, the article twenty-two
tax equivalent is the amount computed under paragraph (a) of this subdi-
vision by substituting for the rate therein the rate of  7.875  percent.
For taxable years beginning after June thirtieth, nineteen hundred nine-
ty-nine  and before July first, two thousand, the article twenty-two tax
equivalent is the amount computed under paragraph (a) of  this  subdivi-
sion by substituting for the rate therein the rate of 7.525 percent. For
taxable  years  beginning  after June thirtieth, two thousand and before
July first, two thousand one, the article twenty-two tax  equivalent  is
the  amount  computed under paragraph (a) of this subdivision by substi-
tuting for the rate therein the rate of 7.175 percent. For taxable years

S. 6359                            51                            A. 8559

beginning after June thirtieth, two thousand one and before July  first,
two  thousand three, the article twenty-two tax equivalent is the amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 6.85 percent. For taxable years beginning after
June  thirtieth,  two  thousand three, the article twenty-two tax equiv-
alent is the amount computed under paragraph (a) of this subdivision  by
substituting for the rate therein the rate of 7.1425 percent.
  (3)  Small  business  taxpayers.  Notwithstanding  the  provisions  of
subparagraphs one and two of this paragraph, in the case of a New York S
corporation which is a small business taxpayer, as defined in  paragraph
(f) of this subdivision, the following provisions shall apply:
  (A)  For  taxable  years beginning before July first, nineteen hundred
ninety-nine,  the  article  twenty-two  tax  equivalent  is  the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.875 percent.
  (B) For taxable years beginning after June thirtieth, nineteen hundred
ninety-nine  and  before  July  first,  two  thousand  three, the amount
computed under paragraph (a) of this  subdivision,  as  referred  to  in
subparagraph  one  of  this paragraph, shall be computed by substituting
for the rate therein the rate of 7.5 percent, and the article twenty-two
tax equivalent under paragraph (a) of this subdivision shall be computed
as follows:
  (i) if the entire net income base is not more than two  hundred  thou-
sand  dollars,  the  article  twenty-two  tax  equivalent  is the amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.45 percent;
  (ii) if the entire net income base is more than two  hundred  thousand
dollars  but  not  over two hundred ninety thousand dollars, the article
twenty-two tax equivalent shall be computed as the sum of  (I)  fourteen
thousand  nine  hundred  dollars,  (II)  six  and eighty-five hundredths
percent of the first fifty thousand dollars in excess of the entire  net
income  base  over  two  hundred  thousand  dollars, and (III) three and
eighty-five hundredths percent of the excess, if any, of the entire  net
income base over two hundred fifty thousand dollars.
  (C)  For  taxable  years  beginning after June thirtieth, two thousand
three, the amount computed under paragraph (a) of this  subdivision,  as
referred  to in subparagraph one of this paragraph, shall be computed by
substituting for the rate therein the rate of 7.5 percent, and the arti-
cle twenty-two tax equivalent under paragraph (a)  of  this  subdivision
shall be computed as follows:
  (i)  if  the entire net income base is not more than two hundred thou-
sand dollars, the  article  twenty-two  tax  equivalent  is  the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.4725 percent;
  (ii)  if  the entire net income base is more than two hundred thousand
dollars but not over two hundred ninety thousand  dollars,  the  article
twenty-two  tax  equivalent shall be computed as the sum of (I) fourteen
thousand nine hundred forty-five dollars, (II)  7.1425  percent  of  the
first  fifty  thousand  dollars  in excess of the entire net income base
over two hundred thousand dollars,  and  (III)  5.4925  percent  of  the
excess,  if  any,  of  the entire net income base over two hundred fifty
thousand dollars.
  (4)] Termination year. In the case of a termination year, [the tax for
the S short year shall be computed under this paragraph  without  regard
to  the  fixed  dollar  minimum  tax prescribed in paragraph (d) of this
subdivision, and the tax for the C short year shall  be  computed  under

S. 6359                            52                            A. 8559

the  opening  paragraph  of this subdivision without regard to the fixed
dollar minimum tax prescribed under such paragraph (d), but in no  event
shall]  the  sum  of  the tax for the S short year and the tax for the C
short  year  SHALL  NOT  be less than the fixed dollar minimum tax under
paragraph (d) of this subdivision computed as if the corporation were  a
New York C corporation for the entire taxable year.
  [(h)  For  purposes  of  determining whether a taxpayer is an eligible
qualified New  York  manufacturer  for  purposes  of  the  tax  benefits
provided  in  subparagraph  (vi)  of  paragraph (a) of this subdivision,
subparagraph (ii) of paragraph (c) of this subdivision, and subparagraph
five of paragraph (d) of this subdivision, a taxpayer shall utilize  the
law,  guidelines  and  criteria  in effect on December thirty-first, two
thousand thirteen.]
  S 13. Subdivision 1-c of section 210 of the tax  law,  as  amended  by
chapter  1043  of  the laws of 1981, the opening paragraph and paragraph
(a) as amended by chapter 817 of the laws of 1987, and paragraph (b)  as
amended  by  section  12 of part Y of chapter 63 of the laws of 2000, is
amended to read as follows:
  1-c. The computations specified in paragraph (b) of subdivision one of
this section shall not apply to the first two taxable years of a taxpay-
er which, for one or both such years, is a small  business  [concern.  A
small business concern:
  (a) is  a taxpayer which is a small business corporation as defined in
paragraph three of subsection (c) of section twelve  hundred  forty-four
of  the  internal revenue code (without regard to the second sentence of
subparagraph (A) thereof) as of the last day of the taxable year,
  (b) is not a corporation over fifty percent of the number of shares of
stock of which entitling the holders thereof to vote for the election of
directors or trustees is owned by a taxpayer which (1) is subject to tax
under this article; section one hundred eighty-three, one hundred eight-
y-four or one hundred eighty-five of article nine; article thirty-two or
thirty-three of this chapter, and (2) does not qualify as a small  busi-
ness  corporation  as  defined  in  paragraph three of subsection (c) of
section twelve hundred forty-four of the internal revenue code  (without
regard  to  the  second  sentence of subparagraph (A) thereof) as of the
last day of its taxable year ending within or with the taxable  year  of
the taxpayer,
  (c)  is  not a corporation which is substantially similar in operation
and in ownership to a business entity (or entities) taxable,  or  previ-
ously taxable, under this article; section one hundred eighty-three, one
hundred  eighty-four,  one hundred eighty-five or one hundred eighty-six
of article nine; article thirty-two or  thirty-three  of  this  chapter;
article twenty-three of this chapter or which would have been subject to
tax  under  such  article twenty-three (as such article was in effect on
January first, nineteen hundred eighty) or the  income  (or  losses)  of
which  is  (or was) includable under article twenty-two of this chapter,
and
  (d) at least ninety percent of the assets of such corporation  (valued
at  original  cost)  were  located and employed in this state during the
taxable year and eighty percent of the employees of such corporation (as
ascertained within the meaning and intent of subparagraph three of para-
graph (a)  of  subdivision  three  of  this  section)  were  principally
employed  in  this state during the taxable year] TAXPAYER AS DEFINED IN
PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION.
  S 14. Subdivision 2 of section 210 of the tax law, as amended by chap-
ter 760 of the laws of 1992, is amended to read as follows:

S. 6359                            53                            A. 8559

  2. The amount of [subsidiary capital,] investment capital and business
capital shall each be determined by taking  the  average  value  of  the
assets  included therein (less liabilities deductible therefrom pursuant
to the provisions of subdivisions [four,] five and seven of section  two
hundred eight), and, if the period covered by the report is other than a
period  of  twelve  calendar  months,  by  multiplying such value by the
number of calendar months or major parts thereof included in such  peri-
od,  and  dividing  the product thus obtained by twelve. For purposes of
this subdivision, real  property  and  marketable  securities  shall  be
valued  at  fair  market  value and the value of personal property other
than marketable securities shall be the value thereof shown on the books
and records of  the  taxpayer  in  accordance  with  generally  accepted
accounting principles.
  S  15.  Subdivisions 3, 3-a, 4, 5, 6, 7, 8, 9, 10, 11, 12, 12-A, 12-B,
12-C, 12-D, 12-E, 12-F, 12-G, 13, 14, 15, 16, 17, 18, 19, 20, 21,  21-a,
22,  23,  23-a,  24, 25, 25-a, 26, 26-a, 27, 28, 30, 31, 32, 33, 34, 35,
36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, subdivision 48 as  added
by  section  3  of  LBD number 74039-02-4 and subdivision 48 as added by
section 2 of LBD number 74021-03-4 of section 210 of  the  tax  law  are
REPEALED.
  S  16. The tax law is amended by adding a new section 210-A to read as
follows:
  S 210-A. APPORTIONMENT. 1. GENERAL. BUSINESS INCOME AND CAPITAL  SHALL
BE  APPORTIONED  TO  THE  STATE  BY  THE APPORTIONMENT FACTOR DETERMINED
PURSUANT TO THIS SECTION. THE APPORTIONMENT FACTOR IS A FRACTION, DETER-
MINED BY INCLUDING ONLY THOSE RECEIPTS, NET INCOME, NET GAINS, AND OTHER
ITEMS DESCRIBED IN THIS SECTION THAT ARE INCLUDED IN THE COMPUTATION  OF
THE  TAXPAYER'S  BUSINESS INCOME FOR THE TAXABLE YEAR.  THE NUMERATOR OF
THE APPORTIONMENT FRACTION SHALL BE EQUAL TO THE SUM OF ALL THE  AMOUNTS
REQUIRED  TO  BE INCLUDED IN THE NUMERATOR PURSUANT TO THE PROVISIONS OF
THIS SECTION AND THE DENOMINATOR OF THE APPORTIONMENT FRACTION SHALL  BE
EQUAL  TO  THE  SUM  OF  ALL  THE AMOUNTS REQUIRED TO BE INCLUDED IN THE
DENOMINATOR PURSUANT TO THE PROVISIONS OF THIS SECTION.
  2. SALES OF TANGIBLE PERSONAL PROPERTY AND ELECTRICITY.  (A)  RECEIPTS
FROM  SALES  OF  TANGIBLE  PERSONAL PROPERTY WHERE SHIPMENTS ARE MADE TO
POINTS WITHIN THE STATE OR THE DESTINATION OF THE PROPERTY IS A POINT IN
THE STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT  FRAC-
TION.  RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE SHIPMENTS
ARE MADE TO POINTS WITHIN AND WITHOUT THE STATE OR  THE  DESTINATION  IS
WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE
APPORTIONMENT FRACTION.
  (B)  RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN THE
STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT  FRACTION.
RECEIPTS  FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN AND WITH-
OUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE  APPORTIONMENT
FRACTION.
  (C)  RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY AND ELECTRICITY
THAT ARE TRADED AS COMMODITIES AS DESCRIBED IN SECTION 475 OF THE INTER-
NAL REVENUE CODE ARE INCLUDED IN THE APPORTIONMENT FRACTION  IN  ACCORD-
ANCE WITH CLAUSE (I) OF SUBPARAGRAPH TWO OF PARAGRAPH (A) OF SUBDIVISION
FIVE OF THIS SECTION.
  3. RENTALS AND ROYALTIES. (A) RECEIPTS FROM RENTALS OF REAL AND TANGI-
BLE  PERSONAL  PROPERTY  LOCATED  WITHIN  THE  STATE ARE INCLUDED IN THE
NUMERATOR OF THE APPORTIONMENT FRACTION. RECEIPTS FROM RENTALS  OF  REAL
AND  TANGIBLE  PERSONAL  PROPERTY  LOCATED  WITHIN AND WITHOUT THE STATE
SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.

S. 6359                            54                            A. 8559

  (B) RECEIPTS OF ROYALTIES FROM THE USE  OF  PATENTS,  COPYRIGHTS,  AND
SIMILAR  INTANGIBLE  PERSONAL  PROPERTY WITHIN THE STATE ARE INCLUDED IN
THE NUMERATOR OF THE APPORTIONMENT FRACTION. RECEIPTS OF ROYALTIES  FROM
THE USE OF PATENTS, COPYRIGHTS, TRADEMARKS AND SIMILAR INTANGIBLES WITH-
IN  AND  WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION.
  (C) RECEIPTS FROM THE SALES OF RIGHTS  FOR  CLOSED-CIRCUIT  AND  CABLE
TELEVISION  TRANSMISSIONS  OF AN EVENT (OTHER THAN EVENTS OCCURRING ON A
REGULARLY SCHEDULED BASIS) TAKING PLACE WITHIN THE STATE AS A RESULT  OF
THE  RENDITION OF SERVICES BY EMPLOYEES OF THE CORPORATION, AS ATHLETES,
ENTERTAINERS OR PERFORMING ARTISTS ARE INCLUDED IN THE NUMERATOR OF  THE
APPORTIONMENT FRACTION TO THE EXTENT THAT SUCH RECEIPTS ARE ATTRIBUTABLE
TO  SUCH  TRANSMISSIONS RECEIVED OR EXHIBITED WITHIN THE STATE. RECEIPTS
FROM ALL SALES OF RIGHTS FOR CLOSED-CIRCUIT AND CABLE TELEVISION  TRANS-
MISSIONS  OF  AN EVENT ARE INCLUDED IN THE DENOMINATOR OF THE APPORTION-
MENT FRACTION.
  4. DIGITAL PRODUCTS. (A) FOR PURPOSES OF DETERMINING THE APPORTIONMENT
FRACTION UNDER THIS SECTION, THE TERM "DIGITAL PRODUCT" MEANS ANY  PROP-
ERTY OR SERVICE, OR COMBINATION THEREOF, OF WHATEVER NATURE DELIVERED TO
THE PURCHASER THROUGH THE USE OF WIRE, CABLE, FIBER-OPTIC, LASER, MICRO-
WAVE,  RADIO WAVE, SATELLITE OR SIMILAR SUCCESSOR MEDIA, OR ANY COMBINA-
TION THEREOF. DIGITAL PRODUCT INCLUDES, BUT IS NOT LIMITED TO, AN  AUDIO
WORK,  AUDIOVISUAL  WORK,  VISUAL  WORK,  BOOK OR LITERARY WORK, GRAPHIC
WORK, GAME, INFORMATION OR ENTERTAINMENT  SERVICE,  STORAGE  OF  DIGITAL
PRODUCTS  AND  COMPUTER  SOFTWARE  BY WHATEVER MEANS DELIVERED. THE TERM
"DELIVERED TO" INCLUDES FURNISHED OR  PROVIDED  TO  OR  ACCESSED  BY.  A
DIGITAL  PRODUCT  DOES NOT INCLUDE LEGAL, MEDICAL, ACCOUNTING, ARCHITEC-
TURAL, RESEARCH, ANALYTICAL, ENGINEERING OR CONSULTING SERVICES PROVIDED
BY THE TAXPAYER.
  (B) RECEIPTS FROM THE SALE OF, LICENCE TO USE, OR GRANTING  OF  REMOTE
ACCESS TO DIGITAL PRODUCTS WITHIN THE STATE, DETERMINED ACCORDING TO THE
HIERARCHY  OF  METHODS  SET  FORTH  IN SUBPARAGRAPHS ONE THROUGH FOUR OF
PARAGRAPH (C) OF THIS SUBDIVISION, SHALL BE INCLUDED IN THE NUMERATOR OF
THE APPORTIONMENT FRACTION. RECEIPTS FROM THE SALE OF, LICENSE  TO  USE,
OR  GRANTING OF REMOTE ACCESS TO DIGITAL PRODUCTS WITHIN AND WITHOUT THE
STATE SHALL BE INCLUDED IN THE DENOMINATOR OF  THE  APPORTIONMENT  FRAC-
TION.  THE  TAXPAYER  MUST  EXERCISE  DUE  DILIGENCE  UNDER  EACH METHOD
DESCRIBED IN PARAGRAPH (C) OF THIS SUBDIVISION BEFORE REJECTING  IT  AND
PROCEEDING  TO  THE  NEXT  METHOD IN THE HIERARCHY. IF THE RECEIPT FOR A
DIGITAL PRODUCT IS COMPRISED OF A COMBINATION OF PROPERTY AND  SERVICES,
IT  CANNOT  BE  DIVIDED INTO SEPARATE COMPONENTS AND IS CONSIDERED TO BE
ONE RECEIPT REGARDLESS OF WHETHER IT IS SEPARATELY  STATED  FOR  BILLING
PURPOSES. THE ENTIRE RECEIPT MUST BE ALLOCATED BY THIS HIERARCHY.
  (C)  HIERARCHY  OF  SOURCING  METHODS. (1) DELIVERY DESTINATION OF THE
DIGITAL PRODUCT. A DIGITAL PRODUCT IS DEEMED DELIVERED WITHIN THE  STATE
IF THE LOCATION FROM WHICH THE PURCHASER OR ITS AUTHORIZED USER ACCESSES
OR  USES  THE DIGITAL PRODUCT IS IN THE STATE. DESTINATION MAY BE DEMON-
STRATED BY INTERNET PROTOCOL ADDRESS OR OTHER SIMILAR OR SUCCESSOR INDI-
CATOR, THE GEOGRAPHIC LOCATION OF THE EQUIPMENT  TO  WHICH  THE  DIGITAL
PRODUCT  IS  DELIVERED OR FROM WHICH THE DIGITAL PRODUCT IS ACCESSED, OR
THE DELIVERY DESTINATION INDICATED ON  A  BILL  OF  LADING  OR  PURCHASE
INVOICE.  A  DIGITAL  PRODUCT  ACCESSED  OR USED BY THE PURCHASER OR ITS
AUTHORIZED USER DURING THE TAXPAYER'S TAXABLE YEAR IN MULTIPLE LOCATIONS
IS DELIVERED WITHIN THE STATE TO THE EXTENT THAT THE DIGITAL PRODUCT  IS
ACCESSED OR USED IN THE STATE;
  (2) BILLING ADDRESS OF THE PURCHASER;

S. 6359                            55                            A. 8559

  (3)  ZIP  CODE  OR  OTHER  GEOGRAPHIC  INDICATOR  OF  THE  PURCHASER'S
LOCATION; OR
  (4) THE APPORTIONMENT FRACTION DETERMINED PURSUANT TO THIS SUBDIVISION
FOR  THE  PRECEDING TAXABLE YEAR, OR, IF THE TAXPAYER WAS NOT SUBJECT TO
TAX IN THE PRECEDING TAXABLE YEAR, THEN THE  APPORTIONMENT  FRACTION  IN
THE  CURRENT TAXABLE YEAR FOR THOSE DIGITAL PRODUCTS THAT CAN BE SOURCED
USING THE HIERARCHY OF SOURCING METHODS  IN  SUBPARAGRAPHS  ONE  THROUGH
THREE OF THIS SUBDIVISION.
  5.  FINANCIAL  TRANSACTIONS.  (A)  FINANCIAL  INSTRUMENTS. A FINANCIAL
INSTRUMENT IS A "QUALIFIED FINANCIAL INSTRUMENT"  IF  IT  IS  MARKED  TO
MARKET  UNDER  SECTION 475 OR SECTION 1256 OF THE INTERNAL REVENUE CODE,
PROVIDED THAT LOANS SECURED BY REAL  PROPERTY  SHALL  NOT  BE  QUALIFIED
FINANCIAL  INSTRUMENTS. A FINANCIAL INSTRUMENT IS A "NONQUALIFIED FINAN-
CIAL INSTRUMENT" IF IT IS NOT A QUALIFIED FINANCIAL INSTRUMENT.
  (1) FIXED PERCENTAGE METHOD FOR QUALIFIED  FINANCIAL  INSTRUMENTS.  IN
DETERMINING  THE  INCLUSION  OF  RECEIPTS  AND  NET GAINS FROM QUALIFIED
FINANCIAL INSTRUMENTS IN THE APPORTIONMENT FRACTION, TAXPAYERS MAY ELECT
TO USE THE FIXED PERCENTAGE METHOD DESCRIBED IN  THIS  SUBPARAGRAPH  FOR
QUALIFIED FINANCIAL INSTRUMENTS. THE ELECTION IS IRREVOCABLE, APPLIES TO
ALL QUALIFIED FINANCIAL INSTRUMENTS, AND MUST BE MADE ON AN ANNUAL BASIS
ON  THE TAXPAYER'S ORIGINAL, TIMELY FILED RETURN. IF THE TAXPAYER ELECTS
THE FIXED PERCENTAGE METHOD, THEN ALL INCOME, GAIN OR LOSS, FROM  QUALI-
FIED FINANCIAL INSTRUMENTS CONSTITUTES BUSINESS INCOME, GAIN OR LOSS. IF
THE  TAXPAYER  DOES  NOT  ELECT TO USE THE FIXED PERCENTAGE METHOD, THEN
RECEIPTS AND NET GAINS ARE INCLUDED IN  THE  APPORTIONMENT  FRACTION  IN
ACCORDANCE  WITH  THE CUSTOMER SOURCING METHOD DESCRIBED IN SUBPARAGRAPH
TWO OF THIS PARAGRAPH. UNDER THE FIXED PERCENTAGE METHOD, EIGHT  PERCENT
OF  ALL NET INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRU-
MENTS IS INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRACTION.  ALL
NET  INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRUMENTS IS
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (2) CUSTOMER SOURCING METHOD. RECEIPTS AND NET  GAINS  FROM  QUALIFIED
FINANCIAL  INSTRUMENTS, IN CASES WHERE THE TAXPAYER DID NOT ELECT TO USE
THE FIXED PERCENTAGE METHOD DESCRIBED IN SUBPARAGRAPH ONE OF THIS  PARA-
GRAPH,  AND  FROM NONQUALIFIED FINANCIAL INSTRUMENTS ARE INCLUDED IN THE
APPORTIONMENT  FRACTION  IN  ACCORDANCE  WITH  THIS  SUBPARAGRAPH.   FOR
PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL IS DEEMED TO BE LOCATED IN THE
STATE  IF  HIS OR HER BILLING ADDRESS IS IN THE STATE. A BUSINESS ENTITY
IS DEEMED TO BE LOCATED IN THE  STATE  IF  ITS  COMMERCIAL  DOMICILE  IS
LOCATED IN THE STATE.
  (A)  LOANS.  (I)  RECEIPTS CONSTITUTING INTEREST FROM LOANS SECURED BY
REAL PROPERTY LOCATED WITHIN THE STATE SHALL BE INCLUDED IN THE  NUMERA-
TOR  OF  THE APPORTIONMENT FRACTION. RECEIPTS CONSTITUTING INTEREST FROM
LOANS SECURED BY REAL PROPERTY LOCATED  WITHIN  AND  WITHOUT  THE  STATE
SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (II)  RECEIPTS  CONSTITUTING  INTEREST  FROM LOANS NOT SECURED BY REAL
PROPERTY SHALL BE INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRAC-
TION  IF  THE  BORROWER  IS  LOCATED IN THE STATE. RECEIPTS CONSTITUTING
INTEREST FROM LOANS NOT SECURED BY REAL PROPERTY, WHETHER  THE  BORROWER
IS LOCATED WITHIN OR WITHOUT THE STATE, SHALL BE INCLUDED IN THE DENOMI-
NATOR OF THE APPORTIONMENT FRACTION.
  (III)  NET  GAINS  (NOT LESS THAN ZERO) FROM SALES OF LOANS SECURED BY
REAL PROPERTY ARE INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRAC-
TION  AS  PROVIDED  IN  THIS SUBCLAUSE. THE AMOUNT OF NET GAINS FROM THE
SALE OF LOANS SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF  THE
APPORTIONMENT  FRACTION  IS DETERMINED BY MULTIPLYING THE NET GAINS BY A

S. 6359                            56                            A. 8559

FRACTION THE NUMERATOR OF WHICH IS THE AMOUNT  OF  GROSS  PROCEEDS  FROM
SALES OF LOANS SECURED BY REAL PROPERTY LOCATED WITHIN THE STATE AND THE
DENOMINATOR  OF  WHICH IS THE GROSS PROCEEDS FROM SALES OF LOANS SECURED
BY  REAL  PROPERTY WITHIN AND WITHOUT THE STATE. GROSS PROCEEDS SHALL BE
DETERMINED AFTER THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS
BUT SHALL NOT BE LESS THAN ZERO. NET GAINS (NOT  LESS  THAN  ZERO)  FROM
SALES OF LOANS SECURED BY REAL PROPERTY WITHIN AND WITHOUT THE STATE ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (IV) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS NOT SECURED BY
REAL  PROPERTY  ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION AS PROVIDED IN THIS SUBCLAUSE. THE AMOUNT OF  NET  GAINS  FROM  THE
SALE  OF LOANS NOT SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF
THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS BY
A FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS  FROM
SALES OF LOANS NOT SECURED BY REAL PROPERTY TO PURCHASERS LOCATED WITHIN
THE  STATE  AND THE DENOMINATOR OF WHICH IS THE AMOUNT OF GROSS RECEIPTS
FROM SALES OF LOANS NOT SECURED BY REAL PROPERTY TO  PURCHASERS  LOCATED
WITHIN  AND  WITHOUT THE STATE. GROSS PROCEEDS SHALL BE DETERMINED AFTER
THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS BUT SHALL NOT BE
LESS THAN ZERO.  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS  NOT
SECURED  BY  REAL PROPERTY ARE INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION.
  (B) FEDERAL, STATE, AND MUNICIPAL DEBT. RECEIPTS CONSTITUTING INTEREST
AND NET GAINS FROM SALES  OF  DEBT  INSTRUMENTS  ISSUED  BY  THE  UNITED
STATES,  ANY  STATE,  OR  POLITICAL  SUBDIVISION OF A STATE SHALL NOT BE
INCLUDED IN  THE  NUMERATOR  OF  THE  APPORTIONMENT  FRACTION.  RECEIPTS
CONSTITUTING  INTEREST  AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF
DEBT INSTRUMENTS ISSUED BY THE UNITED STATES AND THE STATE OF  NEW  YORK
OR  ITS  POLITICAL  SUBDIVISIONS SHALL BE INCLUDED IN THE DENOMINATOR OF
THE APPORTIONMENT FRACTION. FIFTY PERCENT OF THE  RECEIPTS  CONSTITUTING
INTEREST  AND  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF DEBT INSTRU-
MENTS ISSUED BY OTHER STATES OR THEIR POLITICAL  SUBDIVISIONS  SHALL  BE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (C) ASSET BACKED SECURITIES. EIGHT PERCENT OF THE INTEREST INCOME FROM
ASSET  BACKED  SECURITIES, INCLUDING SECURITIES ISSUED BY THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION  (GNMA),  THE  FEDERAL  NATIONAL  MORTGAGE
ASSOCIATION  (FNMA),  OR  THE  FEDERAL  HOME  LOAN  MORTGAGE CORPORATION
(FHLMC), THE SMALL BUSINESS ADMINISTRATION OR  OTHER  GOVERNMENT  AGENCY
SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. EIGHT
PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM SALES OF ASSET BACKED
SECURITIES ISSUED BY GNMA, FNMA, OR FHLMC, THE SMALL  BUSINESS  ADMINIS-
TRATION OR OTHER GOVERNMENT AGENCY AND SALES OF OTHER ASSET BACKED SECU-
RITIES THAT ARE SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEALER OR
THROUGH  A  LICENSED  EXCHANGE SHALL BE INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION. THE AMOUNT OF NET GAINS  (NOT  LESS  THAN  ZERO)
FROM SALES OF OTHER ASSET BACKED SECURITIES INCLUDED IN THE NUMERATOR OF
THE  APPORTIONMENT  FRACTION IS DETERMINED BY MULTIPLYING SUCH NET GAINS
BY A FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT  OF  GROSS  PROCEEDS
FROM  SUCH  SALES TO PURCHASERS LOCATED IN THE STATE AND THE DENOMINATOR
OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM SUCH SALES  TO  PURCHASERS
LOCATED  WITHIN  AND  WITHOUT  THE STATE. RECEIPTS CONSTITUTING INTEREST
FROM ASSET BACKED SECURITIES AND NET GAINS (NOT  LESS  THAN  ZERO)  FROM
SALES  OF ASSET BACKED SECURITIES ARE INCLUDED IN THE DENOMINATOR OF THE
APPORTIONMENT FRACTION. GROSS PROCEEDS SHALL  BE  DETERMINED  AFTER  THE
DEDUCTION  OF  ANY  COST TO ACQUIRE THE SECURITIES BUT SHALL NOT BE LESS
THAN ZERO.

S. 6359                            57                            A. 8559

  (D) CORPORATE BONDS. RECEIPTS  CONSTITUTING  INTEREST  FROM  CORPORATE
BONDS ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IF THE
COMMERCIAL  DOMICILE  OF THE ISSUING CORPORATION IS IN THE STATE.  EIGHT
PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM  SALES  OF  CORPORATE
BONDS SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEALER OR THROUGH A
LICENSED  EXCHANGE  IS  INCLUDED  IN  THE NUMERATOR OF THE APPORTIONMENT
FRACTION. THE AMOUNT OF NET GAINS (NOT LESS THAN ZERO) FROM OTHER  SALES
OF  CORPORATE BONDS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION IS DETERMINED BY MULTIPLYING SUCH NET  GAINS  BY  A  FRACTION,  THE
NUMERATOR  OF  WHICH  IS THE AMOUNT OF GROSS PROCEEDS FROM SUCH SALES TO
PURCHASERS LOCATED IN THE STATE AND THE  DENOMINATOR  OF  WHICH  IS  THE
AMOUNT  OF  GROSS  PROCEEDS  FROM SALES TO PURCHASERS LOCATED WITHIN AND
WITHOUT THE STATE. RECEIPTS CONSTITUTING INTEREST FROM CORPORATE  BONDS,
WHETHER THE ISSUING CORPORATION'S COMMERCIAL DOMICILE IS WITHIN OR WITH-
OUT  THE  STATE, AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF CORPO-
RATE BONDS TO PURCHASERS WITHIN AND WITHOUT THE STATE  ARE  INCLUDED  IN
THE  DENOMINATOR  OF THE APPORTIONMENT FRACTION. GROSS PROCEEDS SHALL BE
DETERMINED AFTER THE DEDUCTION OF ANY COST  TO  ACQUIRE  THE  BONDS  BUT
SHALL NOT BE LESS THAN ZERO.
  (E) REVERSE REPURCHASE AGREEMENTS AND SECURITIES BORROWING AGREEMENTS.
EIGHT  PERCENT  OF NET INTEREST INCOME (NOT LESS THAN ZERO) FROM REVERSE
REPURCHASE AGREEMENTS  AND  SECURITIES  BORROWING  AGREEMENTS  SHALL  BE
INCLUDED  IN  THE  NUMERATOR OF THE APPORTIONMENT FRACTION. NET INTEREST
INCOME (NOT LESS THAN ZERO) FROM REVERSE REPURCHASE AGREEMENTS AND SECU-
RITIES BORROWING AGREEMENTS IS INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION. NET INTEREST INCOME FROM  REVERSE  REPURCHASE  AGREE-
MENTS  AND SECURITIES BORROWING AGREEMENTS IS DETERMINED FOR PURPOSES OF
THIS SUBDIVISION AFTER THE DEDUCTION OF THE INTEREST  EXPENSE  FROM  THE
TAXPAYER'S  REPURCHASE  AGREEMENTS AND SECURITIES LENDING AGREEMENTS BUT
CANNOT BE LESS THAN ZERO. FOR  THIS  CALCULATION,  THE  AMOUNT  OF  SUCH
INTEREST  EXPENSE IS THE INTEREST EXPENSE ASSOCIATED WITH THE SUM OF THE
VALUE  OF  THE  TAXPAYER'S  REPURCHASE  AGREEMENTS  WHERE  IT   IS   THE
SELLER/BORROWER  PLUS THE VALUE OF THE TAXPAYER'S AND SECURITIES LENDING
AGREEMENTS WHERE IT IS THE  SECURITIES  LENDER,  PROVIDED  SUCH  SUM  IS
LIMITED  TO  THE  SUM  OF THE VALUE OF THE TAXPAYER'S REVERSE REPURCHASE
AGREEMENTS WHERE IT IS THE SELLER/BORROWER AND THE VALUE OF THE  TAXPAY-
ER'S SECURITIES BORROWING AGREEMENTS.
  (F)  FEDERAL  FUNDS.  EIGHT PERCENT OF THE NET INTEREST (NOT LESS THAN
ZERO) FROM FEDERAL FUNDS IS INCLUDED IN THE NUMERATOR OF THE  APPORTION-
MENT  FRACTION. THE NET INTEREST (NOT LESS THAN ZERO) FROM FEDERAL FUNDS
IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INTER-
EST FROM FEDERAL FUNDS IS DETERMINED AFTER DEDUCTION OF INTEREST EXPENSE
FROM FEDERAL FUNDS.
  (G) DIVIDENDS AND NET GAINS FROM SALES OF STOCK OR PARTNERSHIP  INTER-
ESTS. DIVIDENDS FROM STOCK, NET GAINS (NOT LESS THAN ZERO) FROM SALES OF
STOCK  AND  NET  GAINS (NOT LESS THAN ZERO) FROM THE SALE OF PARTNERSHIP
INTERESTS ARE NOT INCLUDED IN EITHER THE NUMERATOR OR DENOMINATOR OF THE
APPORTIONMENT FRACTION UNLESS THE COMMISSIONER  DETERMINES  PURSUANT  TO
SUBDIVISION  ELEVEN OF THIS SECTION THAT INCLUSION OF SUCH DIVIDENDS AND
NET GAINS (NOT LESS THAN ZERO) IS  NECESSARY  TO  PROPERLY  REFLECT  THE
BUSINESS INCOME OR CAPITAL OF THE TAXPAYER.
  (H)  OTHER  FINANCIAL  INSTRUMENTS. (I) RECEIPTS CONSTITUTING INTEREST
FROM OTHER FINANCIAL INSTRUMENTS SHALL BE INCLUDED IN THE  NUMERATOR  OF
THE  APPORTIONMENT  FRACTION  IF  THE  PAYOR  IS  LOCATED  IN THE STATE.
RECEIPTS CONSTITUTING INTEREST FROM OTHER FINANCIAL INSTRUMENTS, WHETHER

S. 6359                            58                            A. 8559

THE PAYOR IS WITHIN OR WITHOUT THE STATE, ARE INCLUDED IN THE  DENOMINA-
TOR OF THE APPORTIONMENT FRACTION.
  (II)  NET  GAINS  (NOT  LESS  THAN ZERO) FROM SALES OF OTHER FINANCIAL
INSTRUMENTS AND OTHER INCOME (NOT LESS THAN ZERO) FROM  OTHER  FINANCIAL
INSTRUMENTS  WHERE  THE  PURCHASER  OR PAYOR IS LOCATED IN THE STATE ARE
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION, PROVIDED  THAT,
IF THE PURCHASER OR PAYOR IS A REGISTERED SECURITIES BROKER OR DEALER OR
THE  TRANSACTION IS MADE THROUGH A LICENSED EXCHANGE, THEN EIGHT PERCENT
OF THE NET GAINS (NOT LESS THAN ZERO) OR OTHER  INCOME  (NOT  LESS  THAN
ZERO)  IS  INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. NET
GAINS (NOT LESS THAN ZERO) FROM SALES OF OTHER FINANCIAL INSTRUMENTS AND
OTHER INCOME (NOT LESS THAN ZERO) FROM OTHER FINANCIAL  INSTRUMENTS  ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (I)  PHYSICAL  COMMODITIES. NET INCOME (NOT LESS THAN ZERO) FROM SALES
OF PHYSICAL COMMODITIES ARE INCLUDED IN THE NUMERATOR OF THE  APPORTION-
MENT FRACTION AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF NET INCOME
FROM  SALES  OF  PHYSICAL  COMMODITIES  INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET INCOME  FROM
SALES  OF  PHYSICAL COMMODITIES BY A FRACTION, THE NUMERATOR OF WHICH IS
THE AMOUNT OF RECEIPTS  FROM  SALES  OF  PHYSICAL  COMMODITIES  ACTUALLY
DELIVERED  TO POINTS WITHIN THE STATE OR, IF THERE IS NO ACTUAL DELIVERY
OF THE PHYSICAL COMMODITY, SOLD TO CUSTOMERS LOCATED IN THE  STATE,  AND
THE  DENOMINATOR  OF WHICH IS THE AMOUNT OF RECEIPTS FROM SALES OF PHYS-
ICAL COMMODITIES ACTUALLY DELIVERED TO POINTS  WITHIN  AND  WITHOUT  THE
STATE  OR  SOLD  TO  CUSTOMERS LOCATED WITHIN AND WITHOUT THE STATE. NET
INCOME (NOT LESS THAT  ZERO)  FROM  SALES  OF  PHYSICAL  COMMODITIES  IS
INCLUDED  IN  THE  DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INCOME
(NOT LESS THAN ZERO) FROM SALES OF PHYSICAL  COMMODITIES  IS  DETERMINED
AFTER  THE  DEDUCTION  OF  THE  COST  TO ACQUIRE OR PRODUCE THE PHYSICAL
COMMODITIES.
  (B) OTHER RECEIPTS FROM BROKER OR  DEALER  ACTIVITIES.  RECEIPTS  FROM
SECURITIES  OR COMMODITIES BROKER OR DEALER ACTIVITIES DESCRIBED IN THIS
PARAGRAPH SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE AS  DESCRIBED
IN SUBPARAGRAPHS ONE THROUGH EIGHT OF THIS PARAGRAPH. RECEIPTS FROM SUCH
ACTIVITIES GENERATED WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERATOR
OF  THE  APPORTIONMENT FRACTION. RECEIPTS FROM SUCH ACTIVITIES GENERATED
WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE
APPORTIONMENT FRACTION. FOR THE PURPOSES OF  THIS  PARAGRAPH,  THE  TERM
"SECURITIES"  SHALL HAVE THE SAME MEANING AS IN SECTION 475(C)(2) OF THE
INTERNAL REVENUE CODE AND THE TERM "COMMODITIES"  SHALL  HAVE  THE  SAME
MEANING AS IN SECTION 475(E)(2) OF THE INTERNAL REVENUE CODE.
  (1)  RECEIPTS  CONSTITUTING  BROKERAGE  COMMISSIONS  DERIVED  FROM THE
EXECUTION OF SECURITIES OR COMMODITIES PURCHASE OR SALES ORDERS FOR  THE
ACCOUNTS  OF  CUSTOMERS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE
IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER  OF  THE  CUSTOMER
WHO IS RESPONSIBLE FOR PAYING SUCH COMMISSIONS IS WITHIN THE STATE.
  (2)  RECEIPTS CONSTITUTING MARGIN INTEREST EARNED ON BEHALF OF BROKER-
AGE ACCOUNTS SHALL BE DEEMED TO BE GENERATED WITHIN  THE  STATE  IF  THE
MAILING  ADDRESS  IN  THE RECORDS OF THE TAXPAYER OF THE CUSTOMER WHO IS
RESPONSIBLE FOR PAYING SUCH MARGIN INTEREST IS WITHIN THE STATE.
  (3)(A) RECEIPTS CONSTITUTING FEES EARNED BY THE TAXPAYER FOR  ADVISORY
SERVICES TO A CUSTOMER IN CONNECTION WITH THE UNDERWRITING OF SECURITIES
FOR  SUCH CUSTOMER (SUCH CUSTOMER BEING THE ENTITY THAT IS CONTEMPLATING
ISSUING OR IS ISSUING SECURITIES) OR FEES EARNED  BY  THE  TAXPAYER  FOR
MANAGING  AN  UNDERWRITING  SHALL  BE  DEEMED TO BE GENERATED WITHIN THE

S. 6359                            59                            A. 8559

STATE IF THE MAILING ADDRESS IN THE RECORDS  OF  THE  TAXPAYER  OF  SUCH
CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
  (B)  RECEIPTS  CONSTITUTING  THE  PRIMARY SPREAD OF SELLING CONCESSION
FROM UNDERWRITTEN SECURITIES SHALL BE DEEMED TO BE GENERATED WITHIN  THE
STATE TO THE EXTENT THE CUSTOMER IS LOCATED IN THE STATE.
  (C)  THE  TERM "PRIMARY SPREAD" MEANS THE DIFFERENCE BETWEEN THE PRICE
PAID BY THE TAXPAYER TO THE ISSUER OF THE SECURITIES BEING MARKETED  AND
THE  PRICE RECEIVED FROM THE SUBSEQUENT SALE OF THE UNDERWRITTEN SECURI-
TIES AT THE INITIAL PUBLIC OFFERING PRICE, LESS ANY  SELLING  CONCESSION
AND ANY FEES PAID TO THE TAXPAYER FOR ADVISORY SERVICES OR ANY MANAGER'S
FEES,  IF  SUCH  FEES ARE NOT PAID BY THE CUSTOMER TO THE TAXPAYER SEPA-
RATELY. THE TERM "PUBLIC OFFERING PRICE" MEANS THE PRICE AGREED UPON  BY
THE TAXPAYER AND THE ISSUER AT WHICH THE SECURITIES ARE TO BE OFFERED TO
THE  PUBLIC.  THE TERM "SELLING CONCESSION" MEANS THE AMOUNT PAID TO THE
TAXPAYER FOR PARTICIPATING IN THE UNDERWRITING OF A SECURITY  WHERE  THE
TAXPAYER IS NOT THE LEAD UNDERWRITER.
  (4)  RECEIPTS CONSTITUTING ACCOUNT MAINTENANCE FEES SHALL BE DEEMED TO
BE GENERATED WITHIN THE STATE IF THE MAILING ADDRESS IN  THE  RECORD  OF
THE  TAXPAYER OF THE CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH ACCOUNT
MAINTENANCE FEES IS WITHIN THE STATE.
  (5) RECEIPTS CONSTITUTING FEES FOR MANAGEMENT  OR  ADVISORY  SERVICES,
INCLUDING  FEES  FOR ADVISORY SERVICES IN RELATION TO MERGER OR ACQUISI-
TION ACTIVITIES, BUT EXCLUDING FEES PAID FOR SERVICES DESCRIBED IN PARA-
GRAPH (D) OF THIS SUBDIVISION, SHALL BE DEEMED TO  BE  GENERATED  WITHIN
THE  STATE  IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE
CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
  (6) RECEIPTS CONSTITUTING INTEREST EARNED BY THE TAXPAYER ON LOANS AND
ADVANCES MADE BY THE TAXPAYER  TO  A  CORPORATION  AFFILIATED  WITH  THE
TAXPAYER  BUT  WITH  WHICH  THE TAXPAYER IS NOT PERMITTED OR REQUIRED TO
FILE A COMBINED REPORT PURSUANT TO SECTION TWO  HUNDRED  TEN-C  OF  THIS
ARTICLE  SHALL BE DEEMED TO ARISE FROM SERVICES PERFORMED AT THE PRINCI-
PAL PLACE OF BUSINESS OF SUCH AFFILIATED CORPORATION.
  (7) IF THE TAXPAYER RECEIVES ANY OF THE RECEIPTS ENUMERATED IN SUBPAR-
AGRAPHS ONE THROUGH FOUR OF THIS PARAGRAPH AS A RESULT OF  A  SECURITIES
CORRESPONDENT  RELATIONSHIP  SUCH  TAXPAYER  HAS  WITH ANOTHER BROKER OR
DEALER WITH THE TAXPAYER ACTING IN THIS  RELATIONSHIP  AS  THE  CLEARING
FIRM,  SUCH RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO
EXTENT SET FORTH IN EACH OF  SUCH  SUBPARAGRAPHS.  THE  AMOUNT  OF  SUCH
RECEIPTS SHALL EXCLUDE THE AMOUNT THE TAXPAYER IS REQUIRED TO PAY TO THE
CORRESPONDENT  FIRM FOR SUCH CORRESPONDENT RELATIONSHIP. IF THE TAXPAYER
RECEIVES ANY OF THE RECEIPTS ENUMERATED  IN  SUBPARAGRAPHS  ONE  THROUGH
FOUR  OF  THIS  PARAGRAPH  AS  AS  RESULT  OF A SECURITIES CORRESPONDENT
RELATIONSHIP SUCH TAXPAYER HAS WITH ANOTHER BROKER OR  DEALER  WITH  THE
TAXPAYER  ACTING  IN  THIS  RELATIONSHIP  AS  THE INTRODUCING FIRM, SUCH
RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO THE  EXTENT
SET FORTH IN EACH OF SUCH SUBPARAGRAPHS.
  (8) IF, FOR PURPOSES OF SUBPARAGRAPHS ONE, TWO, CLAUSE (A) OF SUBPARA-
GRAPH THREE, FOUR, OR FIVE OF THIS PARAGRAPH THE TAXPAYER IS UNABLE FROM
ITS  RECORDS  TO  DETERMINE  THE  MAILING ADDRESS OF THE CUSTOMER, EIGHT
PERCENT OF THE RECEIPTS IS INCLUDED IN THE NUMERATOR OF  THE  APPORTION-
MENT FRACTION.
  (C)  RECEIPTS FROM CREDIT CARD AND SIMILAR ACTIVITIES. RECEIPTS RELAT-
ING TO THE  BANK,  CREDIT,  TRAVEL  AND  ENTERTAINMENT  CARD  ACTIVITIES
DESCRIBED  IN  THIS PARAGRAPH SHALL BE DEEMED TO BE GENERATED WITHIN THE
STATE AS DESCRIBED IN SUBPARAGRAPHS ONE THROUGH THREE OF THIS PARAGRAPH.
RECEIPTS FROM SUCH  ACTIVITIES  GENERATED  WITHIN  THE  STATE  SHALL  BE

S. 6359                            60                            A. 8559

INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.  RECEIPTS FROM
SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED
IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (1)  RECEIPTS  CONSTITUTING  INTEREST,  AND  FEES AND PENALTIES IN THE
NATURE OF INTEREST, FROM BANK, CREDIT,  TRAVEL  AND  ENTERTAINMENT  CARD
RECEIVABLES  SHALL  BE  DEEMED  TO  BE GENERATED WITHIN THE STATE IF THE
MAILING ADDRESS OF THE CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS  IN
THE STATE;
  (2)  RECEIPTS  FROM  SERVICE CHARGES AND FEES FROM SUCH CARDS SHALL BE
DEEMED TO BE GENERATED WITHIN THE STATE IF THE MAILING  ADDRESS  OF  THE
CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS IN THE STATE; AND
  (3)  RECEIPTS  FROM MERCHANT DISCOUNTS SHALL BE DEEMED TO BE GENERATED
WITHIN THE STATE IF THE MERCHANT IS LOCATED WITHIN  THE  STATE.  IN  THE
CASE  OF  A  MERCHANT  WITH  LOCATIONS  BOTH WITHIN AND WITHOUT NEW YORK
STATE, ONLY RECEIPTS FROM MERCHANT DISCOUNTS ATTRIBUTABLE TO SALES  MADE
FROM LOCATIONS WITHIN NEW YORK STATE ARE ALLOCATED TO NEW YORK STATE. IT
SHALL  BE  PRESUMED  THAT THE LOCATION OF THE MERCHANT IS THE ADDRESS OF
THE MERCHANT SHOWN ON THE INVOICE  SUBMITTED  BY  THE  MERCHANT  TO  THE
TAXPAYER.
  (D)  RECEIPTS FROM CERTAIN SERVICES TO INVESTMENT COMPANIES.  RECEIPTS
RECEIVED FROM AN INVESTMENT COMPANY ARISING FROM THE SALE OF MANAGEMENT,
ADMINISTRATION OR DISTRIBUTION SERVICES TO SUCH INVESTMENT  COMPANY  ARE
INCLUDED  IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.  THE PORTION
OF SUCH RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
(SUCH PORTION REFERRED TO HEREIN AS  THE  NEW  YORK  PORTION)  SHALL  BE
DETERMINED AS PROVIDED IN THIS PARAGRAPH.
  (1)  THE  NEW  YORK  PORTION SHALL BE THE PRODUCT OF THE TOTAL OF SUCH
RECEIPTS FROM THE SALE OF SUCH SERVICES AND A FRACTION. THE NUMERATOR OF
THAT FRACTION IS THE SUM OF THE MONTHLY PERCENTAGES (AS DEFINED  HEREIN-
AFTER)  DETERMINED  FOR  EACH  MONTH OF THE INVESTMENT COMPANY'S TAXABLE
YEAR FOR FEDERAL INCOME TAX PURPOSES WHICH TAXABLE YEAR ENDS WITHIN  THE
TAXABLE  YEAR  OF THE TAXPAYER (BUT EXCLUDING ANY MONTH DURING WHICH THE
INVESTMENT COMPANY HAD NO OUTSTANDING SHARES).  THE  MONTHLY  PERCENTAGE
FOR  EACH  SUCH  MONTH IS DETERMINED BY DIVIDING THE NUMBER OF SHARES IN
THE INVESTMENT COMPANY THAT ARE OWNED ON THE LAST DAY OF  THE  MONTH  BY
SHAREHOLDERS  THAT  ARE  DOMICILED  IN  THE STATE BY THE TOTAL NUMBER OF
SHARES IN THE INVESTMENT COMPANY OUTSTANDING ON THAT DATE.  THE  DENOMI-
NATOR OF THE FRACTION IS THE NUMBER OF SUCH MONTHLY PERCENTAGES.
  (2)(A)  FOR PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL, ESTATE OR TRUST
IS DEEMED TO BE LOCATED IN THE STATE IF HIS, HER OR ITS MAILING  ADDRESS
ON  THE  RECORDS  OF  THE INVESTMENT COMPANY IS IN THE STATE. A BUSINESS
ENTITY IS DEEMED TO BE LOCATED IN THE STATE IF ITS  COMMERCIAL  DOMICILE
IS LOCATED IN THE STATE.
  (B)  FOR  PURPOSES  OF  THIS  PARAGRAPH, THE TERM "INVESTMENT COMPANY"
MEANS A REGULATED INVESTMENT COMPANY, AS DEFINED IN SECTION 851  OF  THE
INTERNAL REVENUE CODE, AND A PARTNERSHIP TO WHICH SECTION 7704(A) OF THE
INTERNAL  REVENUE  CODE APPLIES (BY VIRTUE OF SECTION 7704(C)(3) OF SUCH
CODE) AND THAT MEETS THE REQUIREMENTS OF SECTION 851(B)  OF  SUCH  CODE.
THE  PRECEDING SENTENCE SHALL BE APPLIED TO THE TAXABLE YEAR FOR FEDERAL
INCOME TAX PURPOSES OF THE BUSINESS ENTITY THAT IS ASSERTED  TO  CONSTI-
TUTE  AN  INVESTMENT  COMPANY  THAT  ENDS WITHIN THE TAXABLE YEAR OF THE
TAXPAYER.
  (C) FOR PURPOSES OF THIS PARAGRAPH THE TERM "RECEIPTS FROM AN  INVEST-
MENT  COMPANY"  INCLUDES  AMOUNTS  RECEIVED  DIRECTLY FROM AN INVESTMENT
COMPANY AS WELL AS  AMOUNTS  RECEIVED  FROM  THE  SHAREHOLDERS  IN  SUCH
INVESTMENT COMPANY, IN THEIR CAPACITY AS SUCH.

S. 6359                            61                            A. 8559

  (D)  FOR  PURPOSES  OF  THIS PARAGRAPH, THE TERM "MANAGEMENT SERVICES"
MEANS THE RENDERING OF  INVESTMENT  ADVICE  TO  AN  INVESTMENT  COMPANY,
MAKING  DETERMINATIONS  AS TO WHEN SALES AND PURCHASES OF SECURITIES ARE
TO BE MADE ON BEHALF  OF  AN  INVESTMENT  COMPANY,  OR  THE  SELLING  OR
PURCHASING  OF  SECURITIES CONSTITUTING ASSETS OF AN INVESTMENT COMPANY,
AND RELATED ACTIVITIES, BUT ONLY WHERE SUCH ACTIVITY OR  ACTIVITIES  ARE
PERFORMED  PURSUANT  TO  A  CONTRACT WITH THE INVESTMENT COMPANY ENTERED
INTO PURSUANT TO SECTION 15(A) OF THE FEDERAL INVESTMENT COMPANY ACT  OF
NINETEEN HUNDRED FORTY, AS AMENDED.
  (E)  FOR  PURPOSES OF THIS PARAGRAPH, THE TERM "DISTRIBUTION SERVICES"
MEANS THE SERVICES OF ADVERTISING, SERVICING INVESTOR ACCOUNTS  (INCLUD-
ING  REDEMPTIONS),  MARKETING  SHARES OR SELLING SHARES OF AN INVESTMENT
COMPANY, BUT, IN THE CASE OF ADVERTISING,  SERVICING  INVESTOR  ACCOUNTS
(INCLUDING  REDEMPTIONS) OR MARKETING SHARES, ONLY WHERE SUCH SERVICE IS
PERFORMED BY A PERSON WHO IS (OR WAS, IN THE CASE OF A CLOSED END COMPA-
NY) ALSO ENGAGED IN THE SERVICE OF SELLING SUCH SHARES. IN THE  CASE  OF
AN  OPEN  END  COMPANY, SUCH SERVICE OF SELLING SHARES MUST BE PERFORMED
PURSUANT TO A CONTRACT ENTERED INTO PURSUANT TO  SECTION  15(B)  OF  THE
FEDERAL INVESTMENT COMPANY ACT OF NINETEEN HUNDRED FORTY, AS AMENDED.
  (F) FOR PURPOSES OF THIS PARAGRAPH, THE TERM "ADMINISTRATION SERVICES"
INCLUDES  CLERICAL,  ACCOUNTING,  BOOKKEEPING, DATA PROCESSING, INTERNAL
AUDITING, LEGAL AND TAX SERVICES PERFORMED FOR AN INVESTMENT COMPANY BUT
ONLY IF THE PROVIDER OF SUCH SERVICE OR SERVICES DURING THE TAXABLE YEAR
IN WHICH SUCH SERVICE OR SERVICES ARE  SOLD  ALSO  SELLS  MANAGEMENT  OR
DISTRIBUTION SERVICES, AS DEFINED HEREINABOVE, TO SUCH INVESTMENT COMPA-
NY.
  (E) FOR PURPOSES OF THIS SUBDIVISION, A TAXPAYER SHALL USE THE FOLLOW-
ING HIERARCHY TO DETERMINE THE COMMERCIAL DOMICILE OF A BUSINESS ENTITY,
BASED  ON THE INFORMATION KNOWN TO THE TAXPAYER: (I) THE LOCATION OF THE
TREASURY FUNCTION OF THE BUSINESS ENTITY; (II) THE  SEAT  OF  MANAGEMENT
AND CONTROL OF THE BUSINESS ENTITY; AND (III) THE BILLING ADDRESS OF THE
BUSINESS  ENTITY  IN THE TAXPAYER'S RECORDS.  THE TAXPAYER MUST EXERCISE
DUE DILIGENCE BEFORE REJECTING A METHOD IN THIS HIERARCHY AND PROCEEDING
TO THE NEXT METHOD.
  (F) FOR PURPOSES OF THIS SUBDIVISION, THE TERM "REGISTERED  SECURITIES
BROKER  OR  DEALER"  MEANS  A BROKER OR DEALER REGISTERED AS SUCH BY THE
SECURITIES AND EXCHANGE COMMISSION OR THE  COMMODITIES  FUTURES  TRADING
COMMISSION, AND SHALL INCLUDE AN OTC DERIVATIVES DEALER AS DEFINED UNDER
REGULATIONS  OF THE SECURITIES AND EXCHANGE COMMISSION AT TITLE 17, PART
240,  SECTION  3B-12  OF  THE  CODE  OF  FEDERAL  REGULATIONS  (17   CFR
240.3B-12).
  6.  RECEIPTS  FROM  RAILROAD  AND TRUCKING BUSINESS. RECEIPTS FROM THE
CONDUCT OF A RAILROAD BUSINESS (INCLUDING SURFACE RAILROAD,  WHETHER  OR
NOT OPERATED BY STEAM, SUBWAY RAILROAD, ELEVATED RAILROAD, PALACE CAR OR
SLEEPING CAR BUSINESS) OR A TRUCKING BUSINESS ARE INCLUDED IN THE NUMER-
ATOR  OF  THE  APPORTIONMENT FRACTION AS FOLLOWS. THE AMOUNT OF RECEIPTS
FROM THE CONDUCT OF A RAILROAD BUSINESS OR A TRUCKING BUSINESS  INCLUDED
IN  THE  NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY MULTI-
PLYING THE AMOUNT OF RECEIPTS FROM SUCH  BUSINESS  BY  A  FRACTION,  THE
NUMERATOR OF WHICH IS THE MILES IN SUCH BUSINESS WITHIN THE STATE DURING
THE PERIOD COVERED BY THE TAXPAYER'S REPORT AND THE DENOMINATOR OF WHICH
IS  THE  MILES IN SUCH BUSINESS WITHIN AND WITHOUT THE STATE DURING SUCH
PERIOD.  RECEIPTS FROM THE CONDUCT OF THE RAILROAD BUSINESS OR A  TRUCK-
ING  BUSINESS ARE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC-
TION.

S. 6359                            62                            A. 8559

  7. RECEIPTS  FROM  AVIATION  SERVICES.  (A)  AIR  FREIGHT  FORWARDING.
RECEIPTS  OF  A  TAXPAYER  FROM  THE  ACTIVITY OF AIR FREIGHT FORWARDING
ACTING AS PRINCIPAL AND LIKE INDIRECT AIR CARRIER RECEIPTS ARISING  FROM
SUCH  ACTIVITY  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT
FRACTION  AS  FOLLOWS:  ONE HUNDRED PERCENT OF SUCH RECEIPTS IF BOTH THE
PICKUP AND DELIVERY ASSOCIATED WITH SUCH RECEIPTS ARE MADE IN THE  STATE
AND  FIFTY  PERCENT  OF  SUCH  RECEIPTS IF EITHER THE PICKUP OR DELIVERY
ASSOCIATED WITH SUCH RECEIPTS IS MADE IN THIS  STATE.    SUCH  RECEIPTS,
WHETHER THE PICKUP OR DELIVERY ASSOCIATED WITH THE RECEIPTS IS WITHIN OR
WITHOUT  THE  STATE,  SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION.
  (B) OTHER AVIATION SERVICES. (1)(A)  THE  PORTION  OF  RECEIPTS  OF  A
TAXPAYER  FROM AVIATION SERVICES (OTHER THAN SERVICES DESCRIBED IN PARA-
GRAPH (A) OF THIS SUBDIVISION) TO BE INCLUDED IN THE  NUMERATOR  OF  THE
APPORTIONMENT  FRACTION  SHALL BE DETERMINED BY MULTIPLYING ITS RECEIPTS
FROM SUCH AVIATION SERVICES BY A PERCENTAGE WHICH IS EQUAL TO THE ARITH-
METIC AVERAGE OF THE FOLLOWING THREE PERCENTAGES:
  (I) THE  PERCENTAGE  DETERMINED  BY  DIVIDING  SIXTY  PERCENT  OF  THE
AIRCRAFT  ARRIVALS  AND  DEPARTURES  WITHIN  THIS  STATE BY THE TAXPAYER
DURING THE PERIOD COVERED BY ITS REPORT BY THE TOTAL  AIRCRAFT  ARRIVALS
AND  DEPARTURES  WITHIN  AND  WITHOUT  THIS  STATE  DURING  SUCH PERIOD;
PROVIDED, HOWEVER, ARRIVALS AND DEPARTURES  SOLELY  FOR  MAINTENANCE  OR
REPAIR,  REFUELING  (WHERE  NO  DEBARKATION  OR  EMBARKATION  OF TRAFFIC
OCCURS), ARRIVALS AND DEPARTURES OF FERRY AND PERSONNEL TRAINING FLIGHTS
OR ARRIVALS AND DEPARTURES IN THE EVENT OF  EMERGENCY  SITUATIONS  SHALL
NOT  BE  INCLUDED  IN  COMPUTING  SUCH ARRIVAL AND DEPARTURE PERCENTAGE;
PROVIDED, FURTHER, THE COMMISSIONER MAY ALSO EXEMPT FROM SUCH PERCENTAGE
AIRCRAFT ARRIVALS AND DEPARTURES OF ALL  NON-REVENUE  FLIGHTS  INCLUDING
FLIGHTS  INVOLVING THE TRANSPORTATION OF OFFICERS OR EMPLOYEES RECEIVING
AIR TRANSPORTATION TO PERFORM MAINTENANCE OR REPAIR  SERVICES  OR  WHERE
SUCH  OFFICERS OR EMPLOYEES ARE TRANSPORTED IN CONJUNCTION WITH AN EMER-
GENCY SITUATION OR THE INVESTIGATION OF AN AIR DISASTER (OTHER THAN ON A
SCHEDULED FLIGHT); PROVIDED, HOWEVER, THAT ARRIVALS  AND  DEPARTURES  OF
FLIGHTS TRANSPORTING OFFICERS AND EMPLOYEES RECEIVING AIR TRANSPORTATION
FOR PURPOSES OTHER THAN SPECIFIED ABOVE (WITHOUT REGARD TO REMUNERATION)
SHALL BE INCLUDED IN COMPUTING SUCH ARRIVAL AND DEPARTURE PERCENTAGE;
  (II) THE PERCENTAGE DETERMINED BY DIVIDING SIXTY PERCENT OF THE REVEN-
UE  TONS  HANDLED  BY  THE TAXPAYER AT AIRPORTS WITHIN THIS STATE DURING
SUCH PERIOD BY THE TOTAL REVENUE TONS HANDLED BY IT AT  AIRPORTS  WITHIN
AND WITHOUT THIS STATE DURING SUCH PERIOD; AND
  (III)  THE  PERCENTAGE  DETERMINED  BY  DIVIDING  SIXTY PERCENT OF THE
TAXPAYER'S ORIGINATING REVENUE WITHIN THIS STATE FOR SUCH PERIOD BY  ITS
TOTAL ORIGINATING REVENUE WITHIN AND WITHOUT THIS STATE FOR SUCH PERIOD.
  (B)  AS  USED HEREIN THE TERM "AIRCRAFT ARRIVALS AND DEPARTURES" MEANS
THE NUMBER OF LANDINGS AND TAKEOFFS OF THE AIRCRAFT OF THE TAXPAYER  AND
THE NUMBER OF AIR PICKUPS AND DELIVERIES BY THE AIRCRAFT OF SUCH TAXPAY-
ER;  THE  TERM  "ORIGINATING REVENUE" MEANS REVENUE TO THE TAXPAYER FROM
THE TRANSPORTATION OR REVENUE  PASSENGERS  AND  REVENUE  PROPERTY  FIRST
RECEIVED  BY THE TAXPAYER EITHER AS ORIGINATING OR CONNECTING TRAFFIC AT
AIRPORTS; AND THE  TERM  "REVENUE  TONS  HANDLED"  BY  THE  TAXPAYER  AT
AIRPORTS  MEANS THE WEIGHT IN TONS OF REVENUE PASSENGERS (AT TWO HUNDRED
POUNDS PER PASSENGER) AND REVENUE CARGO FIRST RECEIVED EITHER AS  ORIGI-
NATING  OR  CONNECTING  TRAFFIC OR FINALLY DISCHARGED BY THE TAXPAYER AT
AIRPORTS;

S. 6359                            63                            A. 8559

  (2) ALL SUCH RECEIPTS OF A TAXPAYER FROM AVIATION  SERVICES  DESCRIBED
IN  THIS  PARAGRAPH ARE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT
FRACTION.
  8. RECEIPTS FROM SALES OF ADVERTISING. (A) THE AMOUNT OF RECEIPTS FROM
SALES OF ADVERTISING IN NEWSPAPERS OR PERIODICALS INCLUDED IN THE NUMER-
ATOR  OF  THE  APPORTIONMENT  FRACTION  IS DETERMINED BY MULTIPLYING THE
TOTAL OF SUCH RECEIPTS BY A FRACTION, THE  NUMERATOR  OF  WHICH  IS  THE
NUMBER  OF  NEWSPAPERS  AND  PERIODICALS  DELIVERED TO POINTS WITHIN THE
STATE AND THE DENOMINATOR OF WHICH IS THE NUMBER OF NEWSPAPERS AND PERI-
ODICALS DELIVERED TO POINTS WITHIN AND WITHOUT THE STATE. THE  TOTAL  OF
SUCH  RECEIPTS FROM SALES OF ADVERTISING IN NEWSPAPERS OR PERIODICALS IS
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (B) THE AMOUNT OF RECEIPTS FROM SALES OF ADVERTISING ON TELEVISION  OR
RADIO  INCLUDED IN THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLY-
ING THE TOTAL OF SUCH RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH  IS
THE  NUMBER OF VIEWERS OR LISTENERS WITHIN THE STATE AND THE DENOMINATOR
OF WHICH IS THE NUMBER OF VIEWERS OR LISTENERS WITHIN  AND  WITHOUT  THE
STATE.  THE  TOTAL  OF  SUCH RECEIPTS FROM SALES OF ADVERTISING ON TELE-
VISION AND RADIO IS INCLUDED IN THE  DENOMINATOR  OF  THE  APPORTIONMENT
FRACTION.
  (C)  THE AMOUNT OF RECEIPTS FROM SALES OF ADVERTISING NOT DESCRIBED IN
PARAGRAPH (A) OR (B) OF THIS SUBDIVISION THAT IS FURNISHED, PROVIDED  OR
DELIVERED  TO,  OR ACCESSED BY THE VIEWER OR LISTENER THROUGH THE USE OF
WIRE, CABLE, FIBER-OPTIC, LASER, MICROWAVE,  RADIO  WAVE,  SATELLITE  OR
SIMILAR  SUCCESSOR  MEDIA  OR  ANY  COMBINATION THEREOF, INCLUDED IN THE
NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE
TOTAL OF SUCH RECEIPTS BY A FRACTION, THE  NUMERATOR  OF  WHICH  IS  THE
NUMBER  OF  VIEWERS OR LISTENERS WITHIN THE STATE AND THE DENOMINATOR OF
WHICH IS THE NUMBER OF VIEWERS  OR  LISTENERS  WITHIN  AND  WITHOUT  THE
STATE. THE TOTAL OF SUCH RECEIPTS FROM SALES OF ADVERTISING DESCRIBED IN
THIS PARAGRAPH IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC-
TION.
  9.  RECEIPTS FROM TRANSPORTATION OR TRANSMISSION OF GAS THROUGH PIPES.
RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION OF  GAS  THROUGH  PIPES
ARE  INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION AS FOLLOWS.
THE AMOUNT OF RECEIPTS FROM THE TRANSPORTATION OR  TRANSMISSION  OF  GAS
THROUGH PIPES INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IS
DETERMINED  BY  MULTIPLYING THE TOTAL AMOUNT OF SUCH RECEIPTS BY A FRAC-
TION, THE NUMERATOR OF WHICH  IS  THE  TAXPAYER'S  TRANSPORTATION  UNITS
WITHIN  THE  STATE AND THE DENOMINATOR OF WHICH IS THE TAXPAYER'S TRANS-
PORTATION UNITS WITHIN AND WITHOUT THE STATE. A TRANSPORTATION  UNIT  IS
THE TRANSPORTATION OF ONE CUBIC FOOT OF GAS OVER A DISTANCE OF ONE MILE.
THE  TOTAL AMOUNT OF RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION OF
GAS THROUGH PIPES IS INCLUDED IN THE DENOMINATOR  OF  THE  APPORTIONMENT
FRACTION.
  10.  (A)  RECEIPTS  FROM  OTHER  SERVICES AND OTHER BUSINESS RECEIPTS.
RECEIPTS FROM SERVICES NOT ADDRESSED IN SUBDIVISIONS ONE THROUGH NINE OF
THIS SECTION AND OTHER BUSINESS RECEIPTS NOT ADDRESSED IN SUCH  SUBDIVI-
SIONS  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
IF THE LOCATION OF THE CUSTOMER IS WITHIN THE STATE. SUCH RECEIPTS  FROM
CUSTOMERS  WITHIN  AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR
OF THE APPORTIONMENT FRACTION. WHETHER THE RECEIPTS ARE INCLUDED IN  THE
NUMERATOR  OF  THE APPORTIONMENT FRACTION IS DETERMINED ACCORDING TO THE
HIERARCHY OF METHOD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.  THE
TAXPAYER  MUST  EXERCISE  DUE  DILIGENCE  UNDER EACH METHOD DESCRIBED IN

S. 6359                            64                            A. 8559

PARAGRAPH (B) BEFORE REJECTING IT AND PROCEEDING TO THE NEXT  METHOD  IN
THE HIERARCHY.
  (B)  HIERARCHY  OF  METHODS.  (1)  DELIVERY  DESTINATION. RECEIPTS FOR
SERVICES PERFORMED FOR A CUSTOMER'S PARTICULAR LOCATION, SUCH AS WHERE A
DELIVERY IS MADE TO THAT LOCATION, AS MAY BE  INDICATED  ON  A  BILL  OF
LADING OR PURCHASE INVOICE, ARE SOURCED TO THAT LOCATION.
  (2) BILLING ADDRESS OF THE CUSTOMER.
  (3) ZIP CODE OR OTHER GEOGRAPHIC INDICATOR OF THE CUSTOMER'S LOCATION.
  (4)  PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE DETERMINED
PURSUANT TO THIS SUBDIVISION FOR THE PRECEDING TAXABLE YEAR OR,  IF  THE
TAXPAYER  WAS NOT SUBJECT TO TAX IN THE PRECEDING TAXABLE YEAR, THEN THE
PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE  IN  THE  CURRENT
TAXABLE YEAR DETERMINED PURSUANT TO THIS SUBDIVISION.
  11.  IF  IT  SHALL  APPEAR  TO THE COMMISSIONER THAT THE APPORTIONMENT
FRACTION DETERMINED PURSUANT TO THIS SECTION DOES NOT RESULT IN A PROPER
REFLECTION OF THE TAXPAYER'S  BUSINESS  INCOME  OR  CAPITAL  WITHIN  THE
STATE, THE COMMISSIONER IS AUTHORIZED IN HIS OR HER DISCRETION TO ADJUST
IT BY (A) EXCLUDING ONE OR MORE ITEMS IN SUCH DETERMINATION, (B) INCLUD-
ING  ONE  OR  MORE  OTHER  ITEMS IN SUCH DETERMINATION, OR (C) ANY OTHER
SIMILAR OR DIFFERENT METHOD CALCULATED  TO  EFFECT  A  FAIR  AND  PROPER
APPORTIONMENT  OF  THE BUSINESS INCOME AND CAPITAL REASONABLY ATTRIBUTED
TO THE STATE.
  S 17. The tax law is amended by adding a new section 210-B to read  as
follows:
  S 210-B. CREDITS. 1. INVESTMENT TAX CREDIT (ITC). (A) A TAXPAYER SHALL
BE ALLOWED A CREDIT, TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE
TAX  IMPOSED  BY  THIS  ARTICLE.  THE  AMOUNT OF THE CREDIT SHALL BE THE
PERCENT PROVIDED FOR HEREINBELOW OF  THE  INVESTMENT  CREDIT  BASE.  THE
INVESTMENT CREDIT BASE IS THE COST OR OTHER BASIS FOR FEDERAL INCOME TAX
PURPOSES  OF  TANGIBLE  PERSONAL  PROPERTY  AND OTHER TANGIBLE PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
PARAGRAPH (B) OF THIS SUBDIVISION, LESS THE AMOUNT OF  THE  NONQUALIFIED
NONRECOURSE  FINANCING  WITH RESPECT TO SUCH PROPERTY TO THE EXTENT SUCH
FINANCING WOULD BE EXCLUDIBLE FROM THE CREDIT BASE PURSUANT  TO  SECTION
46(C)(8) OF THE INTERNAL REVENUE CODE (TREATING SUCH PROPERTY AS SECTION
THIRTY-EIGHT  PROPERTY IRRESPECTIVE OF WHETHER OR NOT IT IN FACT CONSTI-
TUTES SECTION THIRTY-EIGHT PROPERTY). IF, AT THE CLOSE OF A TAXABLE YEAR
FOLLOWING THE TAXABLE YEAR IN WHICH SUCH PROPERTY WAS PLACED IN SERVICE,
THERE IS A NET  DECREASE  IN  THE  AMOUNT  OF  NONQUALIFIED  NONRECOURSE
FINANCING  WITH  RESPECT  TO  SUCH  PROPERTY, SUCH NET DECREASE SHALL BE
TREATED AS IF IT WERE THE COST OR OTHER BASIS OF PROPERTY  DESCRIBED  IN
PARAGRAPH  (B)  OF THIS SUBDIVISION ACQUIRED, CONSTRUCTED, RECONSTRUCTED
OR ERECTED DURING THE YEAR OF THE DECREASE IN THE AMOUNT OF NONQUALIFIED
NONRECOURSE FINANCING. IN THE CASE OF A COMBINED REPORT THE TERM INVEST-
MENT CREDIT BASE SHALL MEAN THE SUM OF THE  INVESTMENT  CREDIT  BASE  OF
EACH  CORPORATION  INCLUDED ON SUCH REPORT. THE PERCENTAGE TO BE USED TO
COMPUTE THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION  SHALL  BE  FIVE
PERCENT WITH RESPECT TO THE FIRST THREE HUNDRED FIFTY MILLION DOLLARS OF
THE INVESTMENT CREDIT BASE, AND FOUR PERCENT WITH RESPECT TO THE INVEST-
MENT  CREDIT  BASE  IN  EXCESS  OF  THREE HUNDRED FIFTY MILLION DOLLARS,
EXCEPT IN THE CASE OF RESEARCH AND DEVELOPMENT PROPERTY AT THE OPTION OF
THE TAXPAYER THE APPLICABLE PERCENTAGE SHALL BE NINE.
  (B) QUALIFYING PROPERTY. (I) A CREDIT  SHALL  BE  ALLOWED  UNDER  THIS
SUBDIVISION  TO  A QUALIFIED NEW YORK MANUFACTURER, A QUALIFIED NEW YORK
AGRICULTURAL BUSINESS OR A  QUALIFIED  NEW  YORK  MINING  BUSINESS  WITH
RESPECT  TO  TANGIBLE  PERSONAL  PROPERTY  AND  OTHER  TANGIBLE PROPERTY

S. 6359                            65                            A. 8559

INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF  BUILDINGS,  WHICH  (A)
ARE  DEPRECIABLE  PURSUANT  TO  SECTION  ONE  HUNDRED SIXTY-SEVEN OF THE
INTERNAL REVENUE CODE, (B) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, (C)
ARE  ACQUIRED BY PURCHASE AS DEFINED IN SECTION ONE HUNDRED SEVENTY-NINE
(D) OF THE INTERNAL REVENUE CODE,  (D)  HAVE  NOT  BEEN  PREVIOUSLY  THE
SUBJECT  OF  AN  INVESTMENT  TAX CREDIT OR EMPIRE ZONE INVESTMENT CREDIT
ALLOWED TO ANOTHER TAXPAYER, (E) HAVE A SITUS IN THIS STATE AND (F)  ARE
PRINCIPALLY  USED BY THE TAXPAYER IN THE PRODUCTION OF GOODS FOR SALE OR
ARE RESEARCH AND DEVELOPMENT PROPERTY.
  (II) FOR PURPOSES OF THIS PARAGRAPH, THE FOLLOWING  DEFINITIONS  SHALL
APPLY:
  (A)  PROPERTY  USED  IN THE PRODUCTION OF GOODS FOR SALE SHALL INCLUDE
MACHINERY, EQUIPMENT OR OTHER TANGIBLE  PROPERTY  WHICH  IS  PRINCIPALLY
USED  IN  THE  REPAIR AND SERVICE OF OTHER MACHINERY, EQUIPMENT OR OTHER
TANGIBLE PROPERTY USED PRINCIPALLY IN THE PRODUCTION OF GOODS  FOR  SALE
AND  SHALL  INCLUDE  ALL  FACILITIES  USED  IN  THE PRODUCTION OPERATION
INCLUDING STORAGE OF MATERIAL TO  BE  USED  IN  PRODUCTION  AND  OF  THE
PRODUCTS THAT ARE PRODUCED.
  (B)  RESEARCH  AND  DEVELOPMENT  PROPERTY SHALL MEAN PROPERTY WHICH IS
USED FOR PURPOSES OF RESEARCH AND DEVELOPMENT  IN  THE  EXPERIMENTAL  OR
LABORATORY SENSE. SUCH PURPOSES SHALL NOT BE DEEMED TO INCLUDE THE ORDI-
NARY TESTING OR INSPECTION OF MATERIALS OR PRODUCTS FOR QUALITY CONTROL,
EFFICIENCY  SURVEYS,  MANAGEMENT STUDIES, CONSUMER SURVEYS, ADVERTISING,
PROMOTIONS, OR RESEARCH IN CONNECTION WITH LITERARY, HISTORICAL OR SIMI-
LAR PROJECTS.
  (C) A QUALIFIED NEW YORK AGRICULTURAL BUSINESS SHALL MEAN  A  TAXPAYER
OR COMBINED GROUP PRINCIPALLY ENGAGED IN FARMING, AGRICULTURE, HORTICUL-
TURE,  FLORICULTURE,  VITICULTURE  OR COMMERCIAL FISHING IN THE STATE. A
TAXPAYER OR A COMBINED GROUP IS PRINCIPALLY ENGAGED IN FARMING, AGRICUL-
TURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMERCIAL  FISHING  IN
THE  STATE  IF  MORE  THAN  FIFTY  PERCENT  OF THE GROSS RECEIPTS OF THE
TAXPAYER OR THE COMBINED GROUP, RESPECTIVELY, DURING  THE  TAXABLE  YEAR
ARE  DERIVED  FROM  THE  SALE OF GOODS PRODUCED BY ANY OF THE ACTIVITIES
SPECIFIED IN THIS SENTENCE THAT ARE CONDUCTED IN NEW YORK. IN  COMPUTING
A  COMBINED  GROUP'S  GROSS  RECEIPTS,  INTERCORPORATE RECEIPTS SHALL BE
ELIMINATED. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER THAT IS A PARTNER
IN PARTNERSHIP, INTER-ENTITY RECEIPTS  BETWEEN  THE  TAXPAYER  AND  SUCH
PARTNERSHIP SHALL BE ELIMINATED.
  (D)  A  QUALIFIED  NEW  YORK  MINING BUSINESS SHALL MEAN A TAXPAYER OR
COMBINED GROUP PRINCIPALLY ENGAGED IN MINING IN THE STATE. A TAXPAYER OR
COMBINED GROUP IS PRINCIPALLY ENGAGED IN MINING IN  THE  STATE  IF  MORE
THAN FIFTY PERCENT OF THE GROSS RECEIPTS OF THE TAXPAYER OR THE COMBINED
GROUP,  RESPECTIVELY,  DURING THE TAXABLE YEAR ARE DERIVED FROM THE SALE
OF GOODS PRODUCED BY MINING ACTIVITIES THAT ARE CONDUCTED IN THE  STATE.
IN  COMPUTING A COMBINED GROUP'S GROSS RECEIPTS, INTERCORPORATE RECEIPTS
SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER THAT  IS
A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND
SUCH PARTNERSHIP SHALL BE ELIMINATED.
  (III)  IN  ORDER  TO PROPERLY ADMINISTER THE CREDIT AUTHORIZED BY THIS
SUBDIVISION, THE DEPARTMENT MAY DISCLOSE INFORMATION ABOUT THE ALLOWANCE
TO ANOTHER TAXPAYER OF AN  INVESTMENT  TAX  CREDIT  OR  AN  EMPIRE  ZONE
INVESTMENT  TAX CREDIT UNDER THIS CHAPTER WITH RESPECT TO THE SAME PROP-
ERTY.
  (C) NONQUALIFYING PROPERTY. A TAXPAYER SHALL NOT BE ALLOWED  A  CREDIT
UNDER  THIS  SUBDIVISION  WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND
OTHER TANGIBLE PROPERTY, INCLUDING BUILDINGS AND  STRUCTURAL  COMPONENTS

S. 6359                            66                            A. 8559

OF  BUILDINGS,  WHICH  IT LEASES TO ANY OTHER PERSON OR CORPORATION. FOR
PURPOSES OF THE PRECEDING SENTENCE, ANY CONTRACT OR AGREEMENT  TO  LEASE
OR  RENT  OR  FOR  A  LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED A
LEASE.    PROVIDED,  HOWEVER, IN DETERMINING WHETHER A TAXPAYER SHALL BE
ALLOWED A CREDIT UNDER THIS SUBDIVISION WITH RESPECT TO  SUCH  PROPERTY,
ANY  ELECTION  MADE  WITH  RESPECT  TO  SUCH  PROPERTY  PURSUANT  TO THE
PROVISIONS OF PARAGRAPH EIGHT OF SUBSECTION (F) OF SECTION  ONE  HUNDRED
SIXTY-EIGHT  OF  THE  INTERNAL  REVENUE  CODE,  AS SUCH PARAGRAPH WAS IN
EFFECT FOR AGREEMENTS ENTERED INTO  PRIOR  TO  JANUARY  FIRST,  NINETEEN
HUNDRED EIGHTY-FOUR, SHALL BE DISREGARDED.
  (D)  CARRYOVER.  EXCEPT  AS  OTHERWISE PROVIDED IN THIS PARAGRAPH, THE
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  SHALL  NOT
REDUCE  THE  TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR MINIMUM
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWABLE
UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE  TAX  TO  SUCH
AMOUNT,  ANY AMOUNT OF CREDIT ALLOWED FOR A TAXABLE YEAR AND NOT DEDUCT-
IBLE IN SUCH YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS  NEXT
FOLLOWING  SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX
FOR SUCH YEAR OR YEARS. IN LIEU OF SUCH  CARRYOVER,  ANY  SUCH  TAXPAYER
WHICH  QUALIFIES  AS A NEW BUSINESS UNDER PARAGRAPH (F) OF THIS SUBDIVI-
SION MAY ELECT TO TREAT THE AMOUNT OF SUCH CARRYOVER AS  AN  OVERPAYMENT
OF  TAX  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (E) RECAPTURE. (I) WITH  RESPECT  TO  PROPERTY  WHICH  IS  DEPRECIABLE
PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE
BUT  IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT
OF SUCH CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN  QUALIFIED  USE
PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
THE  AMOUNT  OF  THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED
FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE  MONTHS  OF
QUALIFIED  USE  BEAR  TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR  TO  THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT
TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE
YEAR  OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF
OR CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE  FOR
MORE  THAN  TWELVE  CONSECUTIVE  YEARS, IT SHALL NOT BE NECESSARY TO ADD
BACK THE CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT  OF  CREDIT
ALLOWED  FOR  ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL
CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS
OF USEFUL LIFE. FOR PURPOSES OF THIS PARAGRAPH, USEFUL LIFE OF  PROPERTY
SHALL  BE  THE  SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES WHEN
COMPUTING HIS FEDERAL INCOME TAX LIABILITY.
  (II) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH PARAGRAPH  (IV)  OF
THIS  SUBDIVISION  APPLIES,  WITH  RESPECT  TO  THREE-YEAR  PROPERTY, AS
DEFINED IN SUBSECTION (E) OF SECTION  ONE  HUNDRED  SIXTY-EIGHT  OF  THE
INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED
USE  PRIOR  TO  THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE
TAKEN, THE AMOUNT OF THE CREDIT ALLOWED SHALL BE  THAT  PORTION  OF  THE
CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH
THE  MONTHS  OF  QUALIFIED  USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR TO THE END OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN THE CREDIT

S. 6359                            67                            A. 8559

TAKEN  AND  THE  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE
YEAR OF DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL  USE  SHALL
BE  DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE
MONTHS OF QUALIFIED USE BEAR TO THIRTY-SIX.
  (III)  EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH PARAGRAPH (IV) OF
THIS SUBDIVISION APPLIES,  WITH  RESPECT  TO  PROPERTY  SUBJECT  TO  THE
PROVISIONS  OF  SECTION  ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE
CODE, OTHER THAN THREE-YEAR PROPERTY AS DEFINED  IN  SUBSECTION  (E)  OF
SUCH  SECTION  ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO
BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO SIXTY.  IF PROPERTY  ON  WHICH
CREDIT  HAS  BEEN  TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE
PRIOR TO THE END OF SIXTY MONTHS,  THE  DIFFERENCE  BETWEEN  THE  CREDIT
TAKEN  AND  THE  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE
YEAR OF DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL  USE  SHALL
BE  DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE
MONTHS OF QUALIFIED USE BEAR TO SIXTY.
  (IV) WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED  SIXTY-
EIGHT  OF  THE  INTERNAL  REVENUE CODE APPLIES, WHICH IS A BUILDING OR A
STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO
BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE  TOTAL  NUMBER  OF  MONTHS
OVER  WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER-
NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD  OVER
WHICH  THE  TAXPAYER  CHOOSES  TO DEDUCT THE PROPERTY UNDER THE INTERNAL
REVENUE CODE, THE DIFFERENCE BETWEEN THE CREDIT  TAKEN  AND  THE  CREDIT
ALLOWED  FOR  ACTUAL  USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION.
PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES  TO  BE  IN
QUALIFIED  USE  AFTER  IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE
CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE  CREDIT  AS
PROVIDED  IN  THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL
USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE.
  (V) FOR PURPOSES OF THIS PARAGRAPH, PROPERTY (I) WHICH IS DESCRIBED IN
SUBPARAGRAPH  (II),  (III)  OR (IV) OF THIS PARAGRAPH, AND (II) WHICH IS
SUBJECT TO SUBPARAGRAPH ELEVEN OF PARAGRAPH (A) OF SUBDIVISION NINE  AND
SUBPARAGRAPH  TEN  OF  PARAGRAPH  (B) OF SUBDIVISION NINE OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, SHALL BE TREATED  AS  PROPERTY  WHICH  IS
DEPRECIABLE  PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL
REVENUE CODE BUT IS NOT SUBJECT TO SECTION ONE  HUNDRED  SIXTY-EIGHT  OF
SUCH CODE.
  (VI)  FOR  EACH  TAXABLE  YEAR,  THE  AMOUNT REQUIRED TO BE ADDED BACK
PURSUANT TO THIS PARAGRAPH SHALL BE AUGMENTED BY AN AMOUNT EQUAL TO  THE
PRODUCT  OF  SUCH  AMOUNT AND THE UNDERPAYMENT RATE OF INTEREST (WITHOUT
REGARD TO COMPOUNDING), SET BY THE COMMISSIONER PURSUANT  TO  SUBSECTION
(E) OF SECTION ONE THOUSAND NINETY-SIX, IN EFFECT ON THE LAST DAY OF THE
TAXABLE YEAR.
  (VII) IF, AS OF THE CLOSE OF THE TAXABLE YEAR, THERE IS A NET INCREASE
WITH  RESPECT  TO THE TAXPAYER IN THE AMOUNT OF NONQUALIFIED NONRECOURSE

S. 6359                            68                            A. 8559

FINANCING (WITHIN THE MEANING OF SECTION 46(C)(8) OF THE INTERNAL REVEN-
UE CODE) WITH RESPECT TO ANY PROPERTY WITH RESPECT TO WHICH  THE  CREDIT
UNDER  THIS  SUBDIVISION  WAS LIMITED BASED ON ATTRIBUTABLE NONQUALIFIED
NONRECOURSE  FINANCING,  THEN  AN  AMOUNT  EQUAL TO THE DECREASE IN SUCH
CREDIT WHICH WOULD HAVE RESULTED FROM REDUCING, BY THE  AMOUNT  OF  SUCH
NET INCREASE, THE COST OR OTHER BASIS TAKEN INTO ACCOUNT WITH RESPECT TO
SUCH  PROPERTY  MUST  BE  ADDED BACK IN SUCH TAXABLE YEAR. THE AMOUNT OF
NONQUALIFIED NONRECOURSE FINANCING SHALL NOT BE TREATED AS INCREASED  BY
REASON  OF  A  TRANSFER OF (OR AGREEMENT TO TRANSFER) ANY EVIDENCE OF AN
INDEBTEDNESS IF SUCH TRANSFER OCCURS (OR SUCH AGREEMENT IS ENTERED INTO)
MORE THAN ONE YEAR AFTER THE DATE SUCH INDEBTEDNESS WAS INCURRED.
  (VIII)(A) WHERE PROPERTY WITH RESPECT TO WHICH CREDIT HAS BEEN ALLOWED
UNDER THIS SUBDIVISION IS DISPOSED OF BY TRANSFER TO THE TAXPAYER  IN  A
QUALIFIED  TRANSACTION,  AND SUCH DISPOSITION REQUIRES, PURSUANT TO THIS
PARAGRAPH (WITHOUT REGARD TO THIS  SUBPARAGRAPH)  THAT  SUCH  CREDIT  BE
DECREASED (WHERE THE DISPOSITION OCCURS IN THE TAXABLE YEAR IN WHICH THE
PROPERTY  IS  PLACED  IN SERVICE BY THE TRANSFEROR) OR THAT A PORTION OF
SUCH CREDIT BE ADDED BACK BY THE TRANSFEROR, THEN CLAUSE (B)  OR  CLAUSE
(C) OF THIS SUBPARAGRAPH SHALL APPLY.
  (B) IF THE TAXPAYER AND THE TRANSFEROR JOINTLY ELECT, AT SUCH TIME AND
IN  SUCH  MANNER  AS THE COMMISSIONER MAY PRESCRIBE, THE FOLLOWING SHALL
APPLY:
  (I) SUCH PORTION SHALL NOT  BE  REQUIRED  TO  BE  ADDED  BACK  BY  THE
TRANSFEROR,
  (II) THE AMOUNT OF UNUSED CREDIT SHALL NOT BE DEDUCTED FROM TAX OTHER-
WISE  DUE BY THE TRANSFEROR ON ANY RETURN (INCLUDING AN AMENDED RETURN),
AND SHALL NOT BE SO DEDUCTED AS PART OF  ANY  AUDIT  ADJUSTMENT  OR  ANY
OTHER DETERMINATION, AND
  (III)  THE  AMOUNT  OF  UNUSED CREDIT SHALL BE TREATED AS AN AMOUNT OF
CREDIT OF THE TAXPAYER UNDER THIS SUBDIVISION  CARRIED  FORWARD  BY  THE
TAXPAYER  TO ITS TAXABLE YEAR IN WHICH SUCH TRANSFER OCCURRED, AS IF THE
CREDIT ALLOWED TO THE TRANSFEROR  WITH  RESPECT  TO  SUCH  PROPERTY  HAD
ORIGINALLY BEEN ALLOWED TO THE TAXPAYER BOTH AS TO AMOUNT AND FIRST DATE
OF  QUALIFIED USE, AND AS IF THE PERIOD OF QUALIFIED USE BY THE TRANSFE-
ROR PRIOR TO THE TRANSFER HAD BEEN A PERIOD OF SUCH USE BY THE TAXPAYER.
ANY AMOUNT OF CREDIT TREATED AS CARRIED  FORWARD  TO  THE  TAXABLE  YEAR
PURSUANT TO THIS SUBPARAGRAPH SHALL BE APPLIED AS PROVIDED IN CLAUSE (H)
OF THIS SUBPARAGRAPH.
  (C)  IF  THE  TAXPAYER  AND  THE  TRANSFEROR  DO NOT MAKE THE ELECTION
DESCRIBED IN CLAUSE (B) OF THIS SUBPARAGRAPH, THEN THE AMOUNT OF  CREDIT
REQUIRED  PURSUANT  TO THIS PARAGRAPH TO BE ADDED BACK BY THE TRANSFEROR
SHALL BE TREATED AS AN AMOUNT OF  CREDIT  OF  THE  TAXPAYER  UNDER  THIS
SUBDIVISION TO BE CARRIED FORWARD BY THE TAXPAYER TO ITS TAXABLE YEAR IN
WHICH SUCH TRANSFER OCCURRED, AS IF THE CREDIT ALLOWED TO THE TRANSFEROR
WITH RESPECT TO SUCH PROPERTY HAD ORIGINALLY BEEN ALLOWED TO THE TAXPAY-
ER  BOTH  AS  TO  AMOUNT  AND FIRST DATE OF QUALIFIED USE, AND AS IF THE
PERIOD OF QUALIFIED USE BY THE TRANSFEROR PRIOR TO THE TRANSFER HAD BEEN
A PERIOD OF SUCH USE BY THE TAXPAYER. ANY AMOUNT OF  CREDIT  TREATED  AS
CARRIED  FORWARD TO THE TAXABLE YEAR PURSUANT TO THIS SUBPARAGRAPH SHALL
BE APPLIED AS PROVIDED IN CLAUSE (H) OF THIS SUBPARAGRAPH.
  (D) THE TERM "QUALIFIED TRANSACTION" SHALL MEAN A TRANSACTION WHICH IS
A REORGANIZATION DESCRIBED  IN  SECTION  368(A)(1)(D)  OF  THE  INTERNAL
REVENUE  CODE,  WHEREIN  (I)  SUBSTANTIALLY  ALL  OF  THE  ASSETS OF THE
TRANSFEROR NECESSARY TO CONTINUE THE OPERATION OF A  DIVISION  OR  DIVI-
SIONS OF THE TRANSFEROR ARE TRANSFERRED TO THE TAXPAYER IN A TRANSACTION
TO  WHICH SECTION 351 OF SUCH CODE APPLIES, AND (II) STOCK OR SECURITIES

S. 6359                            69                            A. 8559

OF THE TAXPAYER HELD BY  THE  TRANSFEROR  ARE  DISTRIBUTED  PURSUANT  TO
SECTION 355 OF SUCH CODE.
  (E)  THE TERM "UNUSED CREDIT" SHALL MEAN THE AMOUNT OF CREDIT SHOWN AS
CARRIED FORWARD TO THE TRANSACTION YEAR ON THE TRANSFEROR'S  TAX  RETURN
FOR  ITS  TAXABLE  YEAR  IMMEDIATELY PRECEDING THE TRANSACTION YEAR WITH
RESPECT TO THE PROPERTY DESCRIBED IN CLAUSE (A) OF THIS SUBPARAGRAPH.
  (F) THE TERM "TRANSACTION YEAR" MEANS THE TAXABLE YEAR  IN  WHICH  THE
QUALIFIED TRANSACTION OCCURS.
  (G) NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, IN THE
CASE  OF ALLOWANCE OF CREDIT PURSUANT TO THIS SUBPARAGRAPH TO A TAXPAYER
THE COMMISSIONER SHALL HAVE THE AUTHORITY TO REVEAL TO THE TAXPAYER  ANY
INFORMATION,  WITH RESPECT TO THE CREDIT OF THE TRANSFEROR, WHICH IS THE
BASIS FOR THE DENIAL IN WHOLE OR IN PART OF THE CREDIT CLAIMED  BY  SUCH
TAXPAYER.
  (H)  WHERE A CREDIT IS ALLOWED TO A TAXPAYER PURSUANT TO THIS SUBPARA-
GRAPH, THE TAXPAYER MAY TREAT THE AMOUNT OF SUCH CREDIT AS  AN  OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF  SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER,
THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE  PAID  THEREON.  SUCH
CREDIT  SHALL  BE  ALLOWED  AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH
RESPECT TO THE SECOND SUCCEEDING TAXABLE YEAR NEXT FOLLOWING THE  TRANS-
ACTION  YEAR,  PROVIDED  THAT  NOT MORE THAN ONE-FOURTH OF THE AMOUNT OF
SUCH CREDIT MAY BE APPLIED BY THE TAXPAYER, WHETHER TO REDUCE TAX OTHER-
WISE DUE OR TO BE TREATED AS AN OVERPAYMENT TO BE CREDITED OR  REFUNDED,
WITH RESPECT TO SUCH SECOND SUCCEEDING TAXABLE YEAR AND EACH OF THE NEXT
THREE TAXABLE YEARS FOLLOWING SUCH SECOND SUCCEEDING TAXABLE YEAR.
  (F) NEW BUSINESS. FOR PURPOSES OF PARAGRAPH (D) OF THIS SUBDIVISION, A
NEW BUSINESS SHALL INCLUDE ANY CORPORATION, EXCEPT A CORPORATION WHICH:
  (I)  OVER FIFTY PERCENT OF THE NUMBER OF SHARES OF STOCK ENTITLING THE
HOLDERS THEREOF TO VOTE FOR THE ELECTION OF  DIRECTORS  OR  TRUSTEES  IS
OWNED  OR  CONTROLLED,  EITHER  DIRECTLY  OR  INDIRECTLY,  BY A TAXPAYER
SUBJECT TO TAX UNDER THIS ARTICLE; SECTION ONE HUNDRED  EIGHTY-THREE  OR
ONE HUNDRED EIGHTY-FOUR OF ARTICLE NINE; OR ARTICLE THIRTY-THREE OF THIS
CHAPTER; OR
  (II) IS SUBSTANTIALLY SIMILAR IN OPERATION AND IN OWNERSHIP TO A BUSI-
NESS  ENTITY  (OR  ENTITIES)  TAXABLE, OR PREVIOUSLY TAXABLE, UNDER THIS
ARTICLE; SECTION ONE  HUNDRED  EIGHTY-THREE,  ONE  HUNDRED  EIGHTY-FOUR,
FORMER  SECTION  ONE  HUNDRED  EIGHTY-FIVE OR FORMER SECTION ONE HUNDRED
EIGHTY-SIX OF ARTICLE NINE; ARTICLE THIRTY-TWO OF THIS CHAPTER (AS  SUCH
ARTICLE  WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN);
ARTICLE THIRTY-THREE OF THIS CHAPTER; ARTICLE TWENTY-THREE OF THIS CHAP-
TER OR  WHICH  WOULD  HAVE  BEEN  SUBJECT  TO  TAX  UNDER  SUCH  ARTICLE
TWENTY-THREE  (AS  SUCH ARTICLE WAS IN EFFECT ON JANUARY FIRST, NINETEEN
HUNDRED EIGHTY) OR THE INCOME (OR LOSSES) OF WHICH IS (OR WAS)  INCLUDA-
BLE  UNDER  ARTICLE  TWENTY-TWO  OF  THIS CHAPTER WHEREBY THE INTENT AND
PURPOSE OF THIS PARAGRAPH AND PARAGRAPH (D)  OF  THIS  SUBDIVISION  WITH
RESPECT TO REFUNDING OF CREDIT TO NEW BUSINESS WOULD BE EVADED; OR
  (III) HAS BEEN SUBJECT TO TAX UNDER THIS ARTICLE OR UNDER FORMER ARTI-
CLE THIRTY-TWO OF THIS CHAPTER FOR MORE THAN FIVE TAXABLE YEARS (EXCLUD-
ING SHORT TAXABLE YEARS).
  2.  EMPLOYMENT  INCENTIVE  CREDIT (EIC). (A)(I) APPLICATION OF CREDIT.
WHERE A TAXPAYER IS ALLOWED A  CREDIT  UNDER  SUBDIVISION  ONE  OF  THIS
SECTION,  OTHER  THAN  AT  THE  OPTIONAL RATE APPLICABLE TO RESEARCH AND
DEVELOPMENT PROPERTY, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF
THE TWO YEARS NEXT SUCCEEDING THE TAXABLE  YEAR  FOR  WHICH  THE  CREDIT

S. 6359                            70                            A. 8559

UNDER  SUCH  SUBDIVISION  ONE  IS ALLOWED WITH RESPECT TO SUCH PROPERTY,
WHETHER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT  TAXABLE
YEARS  PURSUANT  TO  PARAGRAPH  (D)  OF  SUCH SUBDIVISION ONE. PROVIDED,
HOWEVER,  THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL BE ALLOWED ONLY IF THE AVERAGE NUMBER OF EMPLOYEES DURING
SUCH TAXABLE YEAR IS AT LEAST ONE HUNDRED ONE  PERCENT  OF  THE  AVERAGE
NUMBER OF EMPLOYEES DURING THE EMPLOYMENT BASE YEAR. THE EMPLOYMENT BASE
YEAR  SHALL  BE  THE TAXABLE YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR
FOR WHICH THE CREDIT UNDER SUCH SUBDIVISION ONE IS ALLOWED  EXCEPT  THAT
IF  THE  TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A TAXABLE YEAR
IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE CREDIT  UNDER  SUCH
SUBDIVISION  ONE  OF  THIS  SECTION IS ALLOWED, THE EMPLOYMENT BASE YEAR
SHALL BE THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION ONE
IS ALLOWED.
  (II) AMOUNT OF CREDIT. THE AMOUNT OF THE  CREDIT  ALLOWED  UNDER  THIS
SUBDIVISION SHALL BE AS SET FORTH IN THE FOLLOWING TABLE:
AVERAGE NUMBER OF EMPLOYEES DURING THE      CREDIT ALLOWED UNDER THIS
TAXABLE YEAR EXPRESSED AS A PERCENTAGE      SUBDIVISION EXPRESSED AS A
OF AVERAGE EMPLOYEES IN EMPLOYMENT          PERCENTAGE OF THE APPLICABLE
BASE YEARS                                  INVESTMENT CREDIT BASIS
LESS THAN 102%                              1.5%
AT LEAST 102% AND LESS THAN 103%            2%
AT LEAST 103%                               2.5%
  (B)  AVERAGE NUMBER OF EMPLOYEES. THE AVERAGE NUMBER OF EMPLOYEES IN A
TAXABLE YEAR SHALL BE COMPUTED BY ASCERTAINING THE NUMBER  OF  EMPLOYEES
WITHIN  THE  STATE,  EXCEPT  GENERAL EXECUTIVE OFFICERS, EMPLOYED BY THE
TAXPAYER ON THE THIRTY-FIRST DAY OF MARCH, THE THIRTIETH  DAY  OF  JUNE,
THE  THIRTIETH  DAY OF SEPTEMBER AND THE THIRTY-FIRST DAY OF DECEMBER IN
THE TAXABLE YEAR, BY ADDING TOGETHER THE NUMBER OF EMPLOYEES ASCERTAINED
ON EACH OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY THE NUMBER  OF
SUCH  ABOVE  MENTIONED DATES OCCURRING WITHIN THE TAXABLE YEAR. HOWEVER,
WITH RESPECT TO THE EMPLOYMENT BASE YEAR, THERE SHALL BE EXCLUDED THERE-
FROM ANY EMPLOYEE WITH RESPECT TO  WHOM  A  CREDIT  PROVIDED  FOR  UNDER
SUBDIVISION  SIX OF THIS SECTION IS CLAIMED, FOR THE TAXABLE YEAR, BASED
ON EMPLOYMENT WITHIN A ZONE EQUIVALENT AREA DESIGNATED AS SUCH  PURSUANT
TO ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW.
  (C)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT
OF  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES
THE TAX TO SUCH AMOUNT, ANY AMOUNT OF  CREDIT  NOT  DEDUCTIBLE  IN  SUCH
TAXABLE YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS IMMEDIATE-
LY  FOLLOWING  SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAYER'S
TAX FOR SUCH YEAR OR YEARS.
  3. EMPIRE ZONE INVESTMENT TAX CREDIT (EZ-ITC). (A) A TAXPAYER SHALL BE
ALLOWED A CREDIT, TO BE COMPUTED AS HEREIN  PROVIDED,  AGAINST  THE  TAX
IMPOSED  BY  THIS ARTICLE IF THE TAXPAYER HAS BEEN CERTIFIED PURSUANT TO
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW. THE AMOUNT OF THE CRED-
IT SHALL BE TEN PERCENT OF THE COST OR OTHER BASIS  FOR  FEDERAL  INCOME
TAX  PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
PARAGRAPH (B) OF THIS SUBDIVISION, WHICH IS  LOCATED  WITHIN  AN  EMPIRE
ZONE  DESIGNATED AS SUCH PURSUANT TO ARTICLE EIGHTEEN-B OF SUCH LAW, BUT
ONLY IF THE ACQUISITION, CONSTRUCTION,  RECONSTRUCTION  OR  ERECTION  OF
SUCH  PROPERTY  OCCURRED  OR  WAS COMMENCED ON OR AFTER THE DATE OF SUCH

S. 6359                            71                            A. 8559

DESIGNATION AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT
IN THE CASE OF AN ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR  ERECTION
WHICH WAS COMMENCED DURING SUCH PERIOD AND CONTINUED OR COMPLETED SUBSE-
QUENTLY,  SUCH CREDIT SHALL BE TEN PERCENT OF THE PORTION OF THE COST OR
OTHER BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD,
WHICH PORTION SHALL BE ASCERTAINED BY MULTIPLYING SUCH COST OR BASIS  BY
A  FRACTION  THE  NUMERATOR  OF  WHICH SHALL BE THE EXPENDITURES PAID OR
INCURRED DURING SUCH PERIOD FOR SUCH PURPOSES  AND  THE  DENOMINATOR  OF
WHICH  SHALL  BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED FOR SUCH
ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION.
  (B) QUALIFIED PROPERTY. A CREDIT SHALL BE ALLOWED UNDER THIS  SUBDIVI-
SION WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROP-
ERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH
  (I) ARE DEPRECIABLE PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE
INTERNAL REVENUE CODE,
  (II) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE,
  (III)  ARE  ACQUIRED  BY  PURCHASE  AS  DEFINED IN SECTION ONE HUNDRED
SEVENTY-NINE (D) OF THE INTERNAL REVENUE CODE,
  (IV) HAVE A SITUS IN AN EMPIRE ZONE DESIGNATED  AS  SUCH  PURSUANT  TO
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW, AND
  (V)  ARE  (A)  PRINCIPALLY  USED  BY THE TAXPAYER IN THE PRODUCTION OF
GOODS  BY  MANUFACTURING,  PROCESSING,  ASSEMBLING,  REFINING,   MINING,
EXTRACTING,  FARMING,  AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICUL-
TURE OR COMMERCIAL FISHING,
  (B) INDUSTRIAL WASTE TREATMENT FACILITIES  OR  AIR  POLLUTION  CONTROL
FACILITIES USED IN THE TAXPAYER'S TRADE OR BUSINESS,
  (C) RESEARCH AND DEVELOPMENT PROPERTY,
  (D) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS  AS  A BROKER OR DEALER IN CONNECTION WITH THE PURCHASE OR SALE
(WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING  INTO,
ASSUMPTION,  OFFSET,  ASSIGNMENT,  TERMINATION,  OR TRANSFER) OF STOCKS,
BONDS  OR  OTHER  SECURITIES  AS  DEFINED  IN   SECTION   FOUR   HUNDRED
SEVENTY-FIVE  (C)(2)  OF THE INTERNAL REVENUE CODE, OR OF COMMODITIES AS
DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
CODE,
  (E) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS OF PROVIDING  INVESTMENT  ADVISORY  SERVICES  FOR  A  REGULATED
INVESTMENT  COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE OF THE
INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT, OR LOAN ORIGINATION
SERVICES TO CUSTOMERS IN CONNECTION WITH THE  PURCHASE  OR  SALE  (WHICH
SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO, ASSUMP-
TION,  OFFSET,  ASSIGNMENT,  TERMINATION  OR  TRANSFER) OF SECURITIES AS
DEFINED IN SECTION FOUR HUNDRED  SEVENTY-FIVE  (C)(2)  OF  THE  INTERNAL
REVENUE CODE,
  (E-1)  PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE
OR BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES OR THE SERVICE  OF
MANAGING INVESTMENT PORTFOLIOS TO ACHIEVE SPECIFIC INVESTMENT OBJECTIVES
FOR  ACCOUNTS  OVER ONE MILLION DOLLARS OF ACCREDITED INVESTORS (AS THAT
TERM IS DEFINED IN RULE 501 OF REGULATION D OF  THE  SECURITIES  ACT  OF
1933), IF THE TAXPAYER SATISFIES THE FOLLOWING CRITERIA:
  (I)  THE TAXPAYER IS A REGULATED BROKER OR DEALER OR AN AFFILIATE OF A
REGULATED BROKER OR DEALER,
  (II) THE TAXPAYER IS REGISTERED AS AN INVESTMENT ADVISER UNDER SECTION
TWO HUNDRED THREE OF THE INVESTMENT ADVISERS ACT OF  1940,  AS  AMENDED,
AND

S. 6359                            72                            A. 8559

  (III)  AT  LEAST  ONE CLIENT OF THE TAXPAYER IS A REGULATED INVESTMENT
COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE  OF  THE  INTERNAL
REVENUE CODE THAT HAS ASSETS OF ONE HUNDRED MILLION DOLLARS, OR
  (F) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S BUSINESS
AS  AN  EXCHANGE REGISTERED AS A NATIONAL SECURITIES EXCHANGE WITHIN THE
MEANING OF SECTIONS 3(A)(1) AND 6(A) OF THE SECURITIES EXCHANGE  ACT  OF
1934  OR A BOARD OF TRADE AS DEFINED IN SUBDIVISION ONE OF PARAGRAPH (A)
OF SECTION FOURTEEN HUNDRED TEN OF THE NOT-FOR-PROFIT CORPORATION LAW OR
AS AN ENTITY THAT IS WHOLLY OWNED BY ONE OR MORE SUCH  NATIONAL  SECURI-
TIES  EXCHANGES OR BOARDS OR TRADE AND THAT PROVIDES AUTOMATION OR TECH-
NICAL SERVICES THERETO.
  (VI) FOR PURPOSES OF CLAUSES (D), (E), (E-1) AND (F)  OF  SUBPARAGRAPH
(V)  OF THIS PARAGRAPH, PROPERTY PURCHASED BY A TAXPAYER AFFILIATED WITH
A REGULATED BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL
SECURITIES  EXCHANGE  OR  BOARD  OF TRADE IS ALLOWED A CREDIT UNDER THIS
SUBDIVISION IF THE PROPERTY IS USED BY ITS AFFILIATED REGULATED  BROKER,
DEALER, REGISTERED INVESTMENT ADVISER OR NATIONAL SECURITIES EXCHANGE OR
BOARD  OF  TRADE  IN  ACCORDANCE  WITH THIS SUBDIVISION. FOR PURPOSES OF
DETERMINING IF THE PROPERTY IS PRINCIPALLY USED IN QUALIFYING USES,  THE
USES BY THE TAXPAYER DESCRIBED IN CLAUSES (D), (E) AND (E-1) OF SUBPARA-
GRAPH  (V) OF THIS PARAGRAPH MAY BE AGGREGATED. IN ADDITION, THE USES BY
THE TAXPAYER, ITS AFFILIATED REGULATED  BROKER,  DEALER  AND  REGISTERED
INVESTMENT  ADVISER  UNDER  ANY  OF  THOSE  CLAUSES  MAY  BE AGGREGATED.
PROVIDED, HOWEVER, A TAXPAYER SHALL NOT BE ALLOWED THE  CREDIT  PROVIDED
BY CLAUSES (D), (E), (E-1) AND (F) OF SUBPARAGRAPH (V) OF THIS PARAGRAPH
UNLESS
  (I) EIGHTY PERCENT OR MORE OF THE EMPLOYEES PERFORMING THE ADMINISTRA-
TIVE  AND  SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING
USES OF SUCH EQUIPMENT ARE LOCATED IN THIS STATE, OR
  (II) THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM  THE  ADMINISTRATIVE
AND  SUPPORT  FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING USES
OF SUCH EQUIPMENT AND ARE LOCATED IN THIS STATE DURING THE TAXABLE  YEAR
FOR  WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN NINETY-FIVE
PERCENT OF THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM THESE  FUNCTIONS
AND  ARE  LOCATED IN THIS STATE DURING THE THIRTY-SIX MONTHS IMMEDIATELY
PRECEDING THE YEAR FOR WHICH THE CREDIT IS CLAIMED, OR
  (III) THE NUMBER OF EMPLOYEES LOCATED IN THIS STATE DURING THE TAXABLE
YEAR FOR WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN  NINETY
PERCENT  OF  THE  NUMBER  OF EMPLOYEES LOCATED IN THIS STATE ON DECEMBER
THIRTY-FIRST, NINETEEN HUNDRED NINETY-EIGHT OR, IF THE TAXPAYER WAS  NOT
A  CALENDAR YEAR TAXPAYER IN NINETEEN HUNDRED NINETY-EIGHT, THE LAST DAY
OF ITS FIRST TAXABLE YEAR ENDING AFTER DECEMBER  THIRTY-FIRST,  NINETEEN
HUNDRED  NINETY-EIGHT.  IF  THE  TAXPAYER BECOMES SUBJECT TO TAX IN THIS
STATE AFTER THE TAXABLE YEAR BEGINNING IN NINETEEN HUNDRED NINETY-EIGHT,
THEN THE TAXPAYER  IS  NOT  REQUIRED  TO  SATISFY  THE  EMPLOYMENT  TEST
PROVIDED  IN  THE  PRECEDING SENTENCE OF THIS SUBPARAGRAPH FOR ITS FIRST
TAXABLE YEAR.
  (VII) FOR THE PURPOSES OF CLAUSE (III) OF SUBPARAGRAPH  (VI)  OF  THIS
PARAGRAPH  THE  EMPLOYMENT TEST WILL BE BASED ON THE NUMBER OF EMPLOYEES
LOCATED IN THIS STATE ON THE LAST DAY OF  THE  FIRST  TAXABLE  YEAR  THE
TAXPAYER  IS  SUBJECT  TO TAX IN THIS STATE. IF THE USES OF THE PROPERTY
MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY IS PRINCIPALLY USED
IN QUALIFYING USES, THEN EITHER EACH AFFILIATE USING THE  PROPERTY  MUST
SATISFY  THIS  EMPLOYMENT TEST OR THIS EMPLOYMENT TEST MUST BE SATISFIED
THROUGH THE AGGREGATION OF THE EMPLOYEES OF THE TAXPAYER, ITS AFFILIATED

S. 6359                            73                            A. 8559

REGULATED BROKER, DEALER, AND REGISTERED INVESTMENT  ADVISER  USING  THE
PROPERTY.
  (VIII) FOR THE PURPOSE OF THIS SUBDIVISION, THE TERM "GOODS" SHALL NOT
INCLUDE ELECTRICITY.
  (IX)  FOR PURPOSES OF THIS SUBDIVISION, "MANUFACTURING" SHALL MEAN THE
PROCESS OF WORKING RAW MATERIALS INTO WARES SUITABLE FOR  USE  OR  WHICH
GIVES  NEW  SHAPES,  NEW  QUALITY  OR  NEW  COMBINATIONS TO MATTER WHICH
ALREADY HAS GONE THROUGH SOME ARTIFICIAL PROCESS BY THE USE  OF  MACHIN-
ERY, TOOLS, APPLIANCES AND OTHER SIMILAR EQUIPMENT. PROPERTY USED IN THE
PRODUCTION OF GOODS SHALL INCLUDE MACHINERY, EQUIPMENT OR OTHER TANGIBLE
PROPERTY  WHICH  IS  PRINCIPALLY USED IN THE REPAIR AND SERVICE OF OTHER
MACHINERY, EQUIPMENT OR OTHER TANGIBLE PROPERTY USED PRINCIPALLY IN  THE
PRODUCTION  OF  GOODS  AND  SHALL  INCLUDE  ALL  FACILITIES  USED IN THE
PRODUCTION OPERATION, INCLUDING  STORAGE  OF  MATERIAL  TO  BE  USED  IN
PRODUCTION  AND  OF THE PRODUCTS THAT ARE PRODUCED. FOR PURPOSES OF THIS
SUBDIVISION, THE TERMS "RESEARCH AND DEVELOPMENT PROPERTY",  "INDUSTRIAL
WASTE  TREATMENT  FACILITIES",  AND  "AIR  POLLUTION CONTROL FACILITIES"
SHALL HAVE THE MEANINGS ASCRIBED THERETO BY CLAUSES (B),  (C)  AND  (D),
RESPECTIVELY,  OF  SUBPARAGRAPH (IV) OF PARAGRAPH (B) OF SUBDIVISION ONE
OF THIS SECTION, AND THE PROVISIONS OF SUBPARAGRAPH (V)  OF  SUCH  PARA-
GRAPH (B) SHALL APPLY.
  (C)  NONQUALIFIED  PROPERTY.  A TAXPAYER SHALL NOT BE ALLOWED A CREDIT
UNDER THIS SUBDIVISION WITH RESPECT TO ANY  TANGIBLE  PERSONAL  PROPERTY
AND  OTHER  TANGIBLE PROPERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPO-
NENTS OF BUILDINGS, WHICH IT LEASES TO ANY OTHER PERSON  OR  CORPORATION
EXCEPT  WHERE  A  TAXPAYER  LEASES  PROPERTY  TO AN AFFILIATED REGULATED
BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL  SECURITIES
EXCHANGE  OR  BOARD  OF TRADE OR OTHER ENTITY DESCRIBED IN CLAUSE (F) OF
SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS  SUBDIVISION  THAT  USES  SUCH
PROPERTY  IN  ACCORDANCE  WITH CLAUSE (D), (E), (E-1) OR (F) OF SUBPARA-
GRAPH (V) OF PARAGRAPH (B) OF THIS  SUBDIVISION.  FOR  PURPOSES  OF  THE
PRECEDING  SENTENCE, ANY CONTRACT OR AGREEMENT TO LEASE OR RENT OR FOR A
LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED  A  LEASE.    PROVIDED,
HOWEVER,  IN  DETERMINING  WHETHER  A TAXPAYER SHALL BE ALLOWED A CREDIT
UNDER THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY, ANY ELECTION  MADE
WITH  RESPECT  TO  SUCH PROPERTY PURSUANT TO THE PROVISIONS OF PARAGRAPH
EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTER-
NAL REVENUE CODE, AS SUCH PARAGRAPH WAS IN EFFECT FOR AGREEMENTS ENTERED
INTO PRIOR TO JANUARY FIRST,  NINETEEN  HUNDRED  EIGHTY-FOUR,  SHALL  BE
DISREGARDED.
  (D) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT
IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR  ANY  TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE
IN  SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS
AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR  YEARS.  IN
LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER WHICH QUALIFIES AS A NEW BUSI-
NESS  UNDER  PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION MAY ELECT,
ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT  IS
ALLOWED,  TO  TREAT  FIFTY PERCENT OF THE AMOUNT OF SUCH CARRYOVER AS AN
OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
PROVISIONS  OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. IN ADDI-
TION, ANY TAXPAYER WHICH IS APPROVED AS THE OWNER OF A QUALIFIED INVEST-
MENT PROJECT OR A SIGNIFICANT CAPITAL  INVESTMENT  PROJECT  PURSUANT  TO

S. 6359                            74                            A. 8559

SUBDIVISION (W) OF SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL MUNIC-
IPAL  LAW, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH SUCH
CREDIT IS ALLOWED, IN LIEU OF SUCH CARRYOVER, MAY ELECT TO  TREAT  FIFTY
PERCENT  OF  THE  AMOUNT  OF SUCH CARRYOVER WHICH IS ATTRIBUTABLE TO THE
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR PROPERTY WHICH IS PART OF SUCH
PROJECT AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORD-
ANCE  WITH  THE  PROVISIONS  OF  SECTION ONE THOUSAND EIGHTY-SIX OF THIS
CHAPTER. PROVIDED, HOWEVER, SUCH OWNER SHALL BE ALLOWED SUCH REFUND  FOR
A MAXIMUM OF TEN TAXABLE YEARS WITH RESPECT TO SUCH QUALIFIED INVESTMENT
PROJECT  AND  EACH SIGNIFICANT CAPITAL INVESTMENT PROJECT, STARTING WITH
THE FIRST TAXABLE YEAR IN WHICH  PROPERTY  COMPRISING  SUCH  PROJECT  IS
PLACED  IN  SERVICE.  PROVIDED,  FURTHER,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (D-1)  ANY  CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL NOT BE
ALLOWED IF AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT  ISSUED  PURSUANT
TO  SUBDIVISION  (W)  OF  SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL
MUNICIPAL LAW TO THE EMPIRE ZONE ENTERPRISE WHICH IS THE  BASIS  OF  THE
CREDIT.
  (E)  AT  THE  OPTION OF THE TAXPAYER, THE TAXPAYER MAY CHOOSE TO CLAIM
THE CREDIT DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION  FOR  PROPERTY
WHICH  ALSO  QUALIFIES  FOR THE CREDIT PROVIDED UNDER SUBDIVISION ONE OF
THIS SECTION. A TAXPAYER SHALL NOT BE ALLOWED A CREDIT UNDER THIS SUBDI-
VISION WITH RESPECT TO ANY PROPERTY DESCRIBED IN PARAGRAPH (A)  OF  THIS
SUBDIVISION  IF  A  CREDIT  IS TAKEN PURSUANT TO SUBDIVISION ONE OF THIS
SECTION.
  (F) RECAPTURE. (I) WITH  RESPECT  TO  PROPERTY  WHICH  IS  DEPRECIABLE
PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE
BUT  IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT
OF SUCH CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN  QUALIFIED  USE
PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
THE  AMOUNT  OF  THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED
FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE  MONTHS  OF
QUALIFIED  USE  BEAR  TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR  TO  THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT
TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE
YEAR  OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF
OR CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE  FOR
MORE  THAN  TWELVE  CONSECUTIVE  YEARS, IT SHALL NOT BE NECESSARY TO ADD
BACK THE CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT  OF  CREDIT
ALLOWED  FOR  ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL
CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS
OF USEFUL LIFE. FOR PURPOSES OF THIS SUBPARAGRAPH, USEFUL LIFE OF  PROP-
ERTY  SHALL  BE  THE SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES
WHEN COMPUTING HIS FEDERAL INCOME TAX LIABILITY.
  (II) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH  SUBPARAGRAPH  (IV)
OF  THIS  PARAGRAPH  APPLIES,  WITH  RESPECT  TO THREE-YEAR PROPERTY, AS
DEFINED IN SUBSECTION (E) OF SECTION  ONE  HUNDRED  SIXTY-EIGHT  OF  THE
INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED
USE  PRIOR  TO  THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE
TAKEN, THE AMOUNT OF THE CREDIT SHALL BE  THAT  PORTION  OF  THE  CREDIT
PROVIDED  FOR  IN  THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE
MONTHS OF QUALIFIED USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH  CREDIT
HAS  BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO
THE END OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN  THE  CREDIT  TAKEN

S. 6359                            75                            A. 8559

AND  THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF
DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETER-
MINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH  THE  MONTHS
OF QUALIFIED USE BEAR TO THIRTY-SIX.
  (III)  EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH (IV)
OF THIS PARAGRAPH APPLIES, WITH  RESPECT  TO  PROPERTY  SUBJECT  TO  THE
PROVISIONS  OF  SECTION  ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE
CODE OTHER THAN THREE-YEAR PROPERTY AS DEFINED IN SUBSECTION (E) OF SUCH
SECTION ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO BE  IN
QUALIFIED  USE  PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT
IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT  PORTION  OF  THE
CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH
THE  MONTHS  OF QUALIFIED USE BEAR TO SIXTY. IF PROPERTY ON WHICH CREDIT
HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO
THE END OF SIXTY MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND THE
CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSI-
TION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY
MULTIPLYING  THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS OF QUALI-
FIED USE BEAR TO SIXTY.
  (IV) WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED  SIXTY-
EIGHT  OF  THE  INTERNAL  REVENUE CODE APPLIES, WHICH IS A BUILDING OR A
STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO
BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE  TOTAL  NUMBER  OF  MONTHS
OVER  WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER-
NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD  OVER
WHICH  THE  TAXPAYER  CHOOSES  TO DEDUCT THE PROPERTY UNDER THE INTERNAL
REVENUE CODE, THE DIFFERENCE BETWEEN THE CREDIT  TAKEN  AND  THE  CREDIT
ALLOWED  FOR  ACTUAL  USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION.
PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES  TO  BE  IN
QUALIFIED  USE  AFTER  IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE
CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE  CREDIT  AS
PROVIDED  IN  THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL
USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE.
  (V) FOR PURPOSES OF THIS PARAGRAPH, DISPOSAL OR CESSATION OF QUALIFIED
USE  SHALL NOT BE DEEMED TO HAVE OCCURRED SOLELY BY REASON OF THE TERMI-
NATION OR EXPIRATION OF AN EMPIRE ZONE'S DESIGNATION AS SUCH.
  (VI)(A) FOR PURPOSES OF THIS PARAGRAPH, THE DECERTIFICATION OF A BUSI-
NESS ENTERPRISE WITH RESPECT  TO  AN  EMPIRE  ZONE  SHALL  CONSTITUTE  A
DISPOSAL  OR  CESSATION  OF  QUALIFIED  USE OF THE PROPERTY ON WHICH THE
CREDIT WAS TAKEN WHICH IS LOCATED IN THE ZONE  TO  WHICH  THE  DECERTIF-
ICATION APPLIES, ON THE EFFECTIVE DATE OF SUCH DECERTIFICATION.
  (B)  WHERE A BUSINESS ENTERPRISE HAS BEEN DECERTIFIED BASED ON A FIND-
ING PURSUANT TO CLAUSE ONE, TWO, OR FIVE OF SUBDIVISION (A)  OF  SECTION
NINE  HUNDRED  FIFTY-NINE  OF  THE  GENERAL  MUNICIPAL  LAW,  THE AMOUNT
REQUIRED TO BE ADDED BACK BY REASON OF THIS PARAGRAPH SHALL BE  (I)  THE
AMOUNT  OF  CREDIT, WITH RESPECT TO THE PROPERTY WHICH IS DISPOSED OF OR
CEASES TO BE IN QUALIFIED USE, WHICH WAS DEDUCTED  FROM  THE  TAXPAYER'S
TAX  OTHERWISE  DUE  UNDER  THIS  ARTICLE  FOR  ALL PRIOR TAXABLE YEARS,
REDUCED (BUT NOT BELOW ZERO) BY (II) THE CREDIT ALLOWED FOR ACTUAL  USE.

S. 6359                            76                            A. 8559

FOR  PURPOSES OF THIS SUBPARAGRAPH, THE ATTRIBUTION TO SPECIFIC PROPERTY
OF CREDIT AMOUNTS DEDUCTED FROM TAX SHALL BE ESTABLISHED  IN  ACCORDANCE
WITH  THE  DATE  OF  PLACEMENT IN SERVICE OF SUCH PROPERTY IN THE EMPIRE
ZONE.
  (C)  IN  NO  EVENT  SHALL THE AMOUNT OF THE CREDIT ALLOWED PURSUANT TO
THIS SUBDIVISION BE RENDERED, SOLELY BY REASON OF  CLAUSE  (A)  OF  THIS
SUBPARAGRAPH,  LESS  THAN THE AMOUNT OF THE CREDIT TO WHICH THE TAXPAYER
WOULD OTHERWISE BE ENTITLED UNDER SUBDIVISION ONE OF THIS SECTION.
  (D) NOTWITHSTANDING ANY OTHER PROVISION OF THIS  SUBDIVISION,  IN  THE
CASE  OF A BUSINESS ENTERPRISE WHICH HAS BEEN DECERTIFIED, ANY AMOUNT OF
CREDIT ALLOWED WITH RESPECT TO THE PROPERTY OF SUCH BUSINESS  ENTERPRISE
LOCATED  IN  THE  ZONE  TO  WHICH  THE  DECERTIFICATION APPLIES WHICH IS
CARRIED OVER PURSUANT TO PARAGRAPH (D) OF THIS SUBDIVISION SHALL NOT  BE
CARRIED  OVER BEYOND THE SEVENTH TAXABLE YEAR NEXT FOLLOWING THE TAXABLE
YEAR WITH RESPECT TO WHICH THE CREDIT PROVIDED FOR IN  THIS  SUBDIVISION
WAS ALLOWED.
  (VII)  FOR  PURPOSES OF THIS PARAGRAPH, WHERE A CREDIT IS ALLOWED WITH
RESPECT TO AN AIR POLLUTION CONTROL FACILITY ON THE BASIS OF  A  CERTIF-
ICATE  OF  COMPLIANCE  ISSUED PURSUANT TO THE ENVIRONMENTAL CONSERVATION
LAW AND THE CERTIFICATE IS REVOKED  PURSUANT  TO  SUBDIVISION  THREE  OF
SECTION  19-0309  OF THE ENVIRONMENTAL CONSERVATION LAW, SUCH REVOCATION
SHALL CONSTITUTE A DISPOSAL OR CESSATION OF QUALIFIED USE,  EXCEPT  WITH
RESPECT  TO  PROPERTY  CONTAINED IN OR COMPRISING SUCH FACILITY WHICH IS
DESCRIBED IN CLAUSE (A), (B), OR (C) OF SUBPARAGRAPH  (V)  OF  PARAGRAPH
(B)  OF  THIS  SUBDIVISION  OTHER  THAN  AS PART OF OR COMPRISING AN AIR
POLLUTION CONTROL FACILITY. ALSO FOR PURPOSES OF THIS PARAGRAPH, THE USE
OF AN AIR POLLUTION CONTROL FACILITY OR AN  INDUSTRIAL  WASTE  TREATMENT
FACILITY FOR THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH ARE USABLE
IN THE MANUFACTURING PROCESS OR ARE MARKETABLE SHALL CONSTITUTE A CESSA-
TION  OF  QUALIFIED USE, EXCEPT WITH RESPECT TO PROPERTY CONTAINED IN OR
COMPRISING SUCH FACILITY WHICH IS DESCRIBED IN  CLAUSE  (A)  OR  (C)  OF
SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS SUBDIVISION.
  (VIII)  EXCEPT  AS PROVIDED IN THIS SUBPARAGRAPH, THIS PARAGRAPH SHALL
NOT APPLY TO A CREDIT ALLOWED BY THIS SUBDIVISION TO A TAXPAYER THAT  IS
A  PARTNER  IN  A  PARTNERSHIP  IN  THE  CASE OF MANUFACTURING PROPERTY;
PROVIDED, AT THE TIME SUCH PROPERTY WAS PLACED IN SERVICE BY SUCH  PART-
NERSHIP  IN AN EMPIRE ZONE THE BASIS FOR FEDERAL INCOME TAX PURPOSES FOR
SUCH PROPERTY (OR A PROJECT THAT  INCLUDES  SUCH  PROPERTY)  EQUALED  OR
EXCEEDED  THREE HUNDRED MILLION DOLLARS AND SUCH PARTNER OWNED ITS PART-
NERSHIP INTEREST FOR AT LEAST THREE YEARS FROM THE  DATE  SUCH  PROPERTY
WAS  PLACED  IN  SERVICE. IF SUCH PROPERTY CEASES TO BE IN QUALIFIED USE
AFTER IT IS PLACED IN SERVICE, THIS PARAGRAPH SHALL APPLY TO SUCH  PART-
NER IN THE YEAR SUCH PROPERTY CEASES TO BE IN QUALIFYING USE.
  (IX)  IF A TAXPAYER, WHICH IS APPROVED BY THE COMMISSIONER OF ECONOMIC
DEVELOPMENT AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A  SIGNIF-
ICANT  CAPITAL INVESTMENT PROJECT PURSUANT TO SUBDIVISION (W) OF SECTION
NINE HUNDRED FIFTY-NINE OF THE  GENERAL  MUNICIPAL  LAW,  FAILS  TO  (A)
CREATE  AT  LEAST THE MINIMUM NUMBER OF JOBS AT SUCH PROJECT AS REQUIRED
BY THE PROVISIONS OF SUBDIVISION (S) OR  (T)  OF  SECTION  NINE  HUNDRED
FIFTY-SEVEN  AND  SUBDIVISION  (W) OF SECTION NINE HUNDRED FIFTY-NINE OF
THE GENERAL MUNICIPAL LAW OR (B) PLACE IN  SERVICE  PROPERTY  COMPRISING
SUCH  QUALIFIED  INVESTMENT  PROJECT  OR  SIGNIFICANT CAPITAL INVESTMENT
PROJECT WITH A BASIS FOR FEDERAL INCOME TAX PURPOSES EQUALING OR EXCEED-
ING THE APPLICABLE MINIMUM REQUIRED BASIS AS PROVIDED IN  SUCH  SUBDIVI-
SION  (S)  OR  (T),  WHICHEVER IS RELEVANT, BY THE LAST DAY OF THE FIFTH
TAXABLE YEAR FOLLOWING THE TAXABLE YEAR  IN  WHICH  A  CREDIT  IS  FIRST

S. 6359                            77                            A. 8559

ALLOWED  UNDER  THIS  SUBDIVISION  FOR THE PROPERTY WHICH COMPRISES SUCH
QUALIFIED INVESTMENT PROJECT  OR  SUCH  SIGNIFICANT  CAPITAL  INVESTMENT
PROJECT,  THE  TOTAL AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR  ALL TAXABLE YEARS WITH RESPECT TO THE PROPERTY WHICH COMPRISES SUCH
PROJECT WHICH HAS BEEN REFUNDED TO SUCH TAXPAYER SHALL BE ADDED BACK  IN
SUCH TAXABLE YEAR.
  (G)  NOTWITHSTANDING  THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL  LAW,  A  TAXPAYER  THAT  IS
CERTIFIED  AS  A  QUALIFIED  INVESTMENT PROJECT PURSUANT TO SUCH ARTICLE
EIGHT-B ON THE DAY  IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE  ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
EIGHTEEN-B  FOR  PURPOSES  OF  THIS SUBDIVISION FOR THE REMAINDER OF THE
TAXABLE YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT  SUCCEED-
ING  NINE  TAXABLE  YEARS.  IN  ADDITION, THE AREAS DESIGNATED AS EMPIRE
ZONES IN WHICH THE TAXPAYER  IS  CERTIFIED  AS  A  QUALIFIED  INVESTMENT
PROJECT  ON  THE  DAY  IMMEDIATELY  PRECEDING  THE  DAY THE EMPIRE ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
THIS SUBDIVISION FOR THE REMAINDER OF THE  TAXABLE  YEAR  IN  WHICH  THE
EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
  (H)  NOTWITHSTANDING  THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW AND EXCEPT  AS  PROVIDED
IN PARAGRAPH (G) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
EMPIRE  ZONE  BUSINESS  PURSUANT  TO  SUCH ARTICLE EIGHTEEN-B ON THE DAY
IMMEDIATELY PRECEDING THE DAY THE  EMPIRE  ZONE  PROGRAM  EXPIRED  SHALL
CONTINUE  TO  BE  DEEMED  CERTIFIED  UNDER  SUCH  ARTICLE EIGHTEEN-B FOR
PURPOSES OF THIS SUBDIVISION UNTIL APRIL FIRST, TWO  THOUSAND  FOURTEEN.
IN  ADDITION, THE AREAS DESIGNATED AS EMPIRE ZONES IN WHICH THE TAXPAYER
IS CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING
THE DAY THE EMPIRE ZONES PROGRAM EXPIRED SHALL  CONTINUE  TO  BE  DEEMED
EMPIRE  ZONES  FOR  PURPOSES OF THIS SUBDIVISIONS UNTIL APRIL FIRST, TWO
THOUSAND FOURTEEN.
  4. EMPIRE ZONE EMPLOYMENT INCENTIVE CREDIT (EZ-EIC).  (A)  APPLICATION
OF  CREDIT. WHERE A TAXPAYER IS ALLOWED A CREDIT UNDER SUBDIVISION THREE
OF THIS SECTION, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF  THE
THREE  YEARS NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER
SUCH SUBDIVISION THREE IS ALLOWED, WITH RESPECT TO SUCH PROPERTY, WHETH-
ER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT TAXABLE YEARS
PURSUANT TO PARAGRAPH (D) OF SUCH SUBDIVISION THREE, OF  THIRTY  PERCENT
OF THE CREDIT ALLOWABLE UNDER SUCH SUBDIVISION THREE; PROVIDED, HOWEVER,
THAT  THE  CREDIT  ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL ONLY BE ALLOWED IF THE AVERAGE NUMBER OF EMPLOYEES EMPLOYED BY THE
TAXPAYER IN THE EMPIRE ZONE, DESIGNATED PURSUANT TO  ARTICLE  EIGHTEEN-B
OF  THE  GENERAL MUNICIPAL LAW, IN WHICH SUCH PROPERTY IS LOCATED DURING
SUCH TAXABLE YEAR IS AT LEAST ONE HUNDRED ONE  PERCENT  OF  THE  AVERAGE
NUMBER OF EMPLOYEES EMPLOYED BY THE TAXPAYER IN SUCH EMPIRE ZONE, DURING
THE  TAXABLE  YEAR  IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE
CREDIT UNDER SUCH SUBDIVISION THREE IS ALLOWED  AND  PROVIDED,  FURTHER,
THAT  IF  THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A TAXABLE
YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE  CREDIT  UNDER
SUBDIVISION THREE OF THIS SECTION IS ALLOWED, THE CREDIT ALLOWABLE UNDER
THIS  SUBDIVISION  FOR  ANY TAXABLE YEAR SHALL BE ALLOWED IF THE AVERAGE
NUMBER OF EMPLOYEES EMPLOYED IN SUCH EMPIRE ZONE IN SUCH TAXABLE YEAR IS
AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE NUMBER OF SUCH EMPLOYEES
DURING THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION THREE
IS ALLOWED.

S. 6359                            78                            A. 8559

  (B) AVERAGE NUMBER OF  EMPLOYEES.  THE  AVERAGE  NUMBER  OF  EMPLOYEES
EMPLOYED IN AN EMPIRE ZONE IN A TAXABLE YEAR SHALL BE COMPUTED BY ASCER-
TAINING  THE  NUMBER  OF  SUCH EMPLOYEES WITHIN SUCH ZONE EXCEPT GENERAL
EXECUTIVE OFFICERS, EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST DAY  OF
MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER AND THE
THIRTY-FIRST DAY OF DECEMBER IN THE TAXABLE YEAR, BY ADDING TOGETHER THE
NUMBER  OF  EMPLOYEES ASCERTAINED ON EACH OF SUCH DATES AND DIVIDING THE
SUM SO OBTAINED BY THE NUMBER OF SUCH  ABOVE-MENTIONED  DATES  OCCURRING
WITHIN THE TAXABLE YEAR.
  (C)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER,  THAT
IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE
IN  SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS
AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR  YEARS.  IN
LIEU  OF  SUCH  CARRYOVER,  ANY  SUCH TAXPAYER, WHICH IS APPROVED AS THE
OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIFICANT CAPITAL INVEST-
MENT PROJECT PURSUANT TO SUBDIVISION (V) OF SECTION NINE HUNDRED  FIFTY-
NINE  OF  THE  GENERAL  MUNICIPAL  LAW, MAY ELECT, ON ITS REPORT FOR ITS
TAXABLE YEAR WITH RESPECT TO WHICH SUCH  CREDIT  IS  ALLOWED,  TO  TREAT
FIFTY  PERCENT  OF THE AMOUNT OF SUCH CARRYOVER AS AN OVERPAYMENT OF TAX
TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF  SECTION
ONE  THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, IN THE CASE
OF SUCH OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIFICANT CAPITAL
INVESTMENT PROJECT, ONLY FIFTY PERCENT OF THE AMOUNT OF  SUCH  CARRYOVER
WHICH  IS ATTRIBUTABLE TO THE CREDIT ALLOWED UNDER THIS SUBDIVISION WITH
RESPECT TO PROPERTY WHICH IS PART OF SUCH PROJECT SHALL BE ALLOWED TO BE
CREDITED OR REFUNDED AND SUCH OWNER SHALL  BE  ALLOWED  SUCH  CREDIT  OR
REFUND ONLY FOR THOSE TAXABLE YEARS IN WHICH SUCH OWNER WOULD BE ALLOWED
A  CREDIT OR REFUND OF THE EMPIRE ZONE INVESTMENT TAX CREDIT PURSUANT TO
PARAGRAPH (D) OF SUBDIVISION THREE OF THIS SECTION.  PROVIDED,  FURTHER,
HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT-
Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THER-
EON.
  (C-1)  ANY  CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL NOT BE
ALLOWED IF AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT  ISSUED  PURSUANT
TO  SUBDIVISION  (W)  OF  SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL
MUNICIPAL LAW TO THE EMPIRE ZONE ENTERPRISE WHICH IS THE  BASIS  OF  THE
CREDIT.
  (D)  NOTWITHSTANDING  THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL  LAW,  A  TAXPAYER  THAT  IS
CERTIFIED  AS  A  QUALIFIED  INVESTMENT PROJECT PURSUANT TO SUCH ARTICLE
EIGHTEEN-B ON THE DAY IMMEDIATELY PRECEDING THE  DAY  THE  EMPIRE  ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
EIGHTEEN-B  FOR  PURPOSES  OF  THIS SUBDIVISION FOR THE REMAINDER OF THE
TAXABLE YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT  SUCCEED-
ING  NINE  TAXABLE  YEARS.  IN  ADDITION, THE AREAS DESIGNATED AS EMPIRE
ZONES IN WHICH THE TAXPAYER  IS  CERTIFIED  AS  A  QUALIFIED  INVESTMENT
PROJECT  ON  THE  DAY  IMMEDIATELY  PRECEDING  THE  DAY THE EMPIRE ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
THIS SUBDIVISION FOR THE REMAINDER OF THE  TAXABLE  YEAR  IN  WHICH  THE
EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
  (E)  NOTWITHSTANDING  THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW AND EXCEPT  AS  PROVIDED

S. 6359                            79                            A. 8559

IN PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
EMPIRE  ZONE  BUSINESS  PURSUANT  TO  SUCH ARTICLE EIGHTEEN-B ON THE DAY
IMMEDIATELY PRECEDING THE DAY THE EMPIRE  ZONES  PROGRAM  EXPIRED  SHALL
CONTINUE  TO  BE  DEEMED  IN  THE  EMPIRE ZONE IN WHICH THE TAXPAYER WAS
CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE  DAY  IMMEDIATELY  PRECEDING
THE  DAY  THE  EMPIRE  ZONES PROGRAM EXPIRED FOR EACH OF THE THREE YEARS
NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER  SUBDIVISION
THREE OF THIS SECTION IS ALLOWED.
  5.  QEZE  CREDIT  FOR  REAL PROPERTY TAXES. (A) ALLOWANCE OF CREDIT. A
TAXPAYER WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED  A
CREDIT  FOR  ELIGIBLE REAL PROPERTY TAXES, TO BE COMPUTED AS PROVIDED IN
SECTION FIFTEEN OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY  THIS  ARTI-
CLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE
IN  SUCH  TAXABLE  YEAR  SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE
CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS  OF  SECTION  ONE
THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  6.  QEZE  TAX  REDUCTION  CREDIT.  (A) ALLOWANCE OF CREDIT. A TAXPAYER
WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A QEZE  TAX
REDUCTION  CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION SIXTEEN OF THIS
CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED,
HOWEVER, THIS PARAGRAPH SHALL NOT APPLY TO A TAXPAYER WITH A ZONE  ALLO-
CATION FACTOR OF ONE HUNDRED PERCENT.
  7. QUALIFIED EMERGING TECHNOLOGY COMPANY EMPLOYMENT CREDIT. (A) APPLI-
CATION  OF  CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED
AS HEREINAFTER PROVIDED,  AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE,
PROVIDED:
  (I)  THE  TAXPAYER IS A QUALIFIED EMERGING TECHNOLOGY COMPANY PURSUANT
TO THE PROVISIONS OF SECTION THIRTY-ONE  HUNDRED  TWO-E  OF  THE  PUBLIC
AUTHORITIES LAW; AND
  (II)  THE  AVERAGE  NUMBER  OF  INDIVIDUALS  EMPLOYED FULL TIME BY THE
TAXPAYER IN NEW YORK STATE DURING THE  TAXABLE  YEAR  IS  AT  LEAST  ONE
HUNDRED  ONE  PERCENT  OF  THE  TAXPAYER'S BASE YEAR EMPLOYMENT. FOR THE
PURPOSES OF THIS SUBDIVISION, "BASE YEAR EMPLOYMENT" MEANS  THE  AVERAGE
NUMBER  OF  INDIVIDUALS  EMPLOYED FULL-TIME BY THE TAXPAYER IN THE STATE
DURING THE THREE TAXABLE YEARS IMMEDIATELY PRECEDING THE  FIRST  TAXABLE
YEAR  IN  WHICH  THE  CREDIT  IS  CLAIMED.  WHERE  THE TAXPAYER PROVIDED
FULL-TIME EMPLOYMENT WITHIN THE STATE DURING  ONLY  A  PORTION  OF  SUCH
THREE-YEAR PERIOD, THEN THE FIRST EFFECTIVE DATE FOR THE COMPANY TO TAKE
ADVANTAGE OF THIS CREDIT SHALL BE THE NEXT YEAR FOLLOWING THE FIRST FULL
TAXABLE  YEAR  THAT  THE  COMPANY  HAD  FULL-TIME EMPLOYMENT IN NEW YORK
STATE. FOR THE PURPOSES OF THIS PARAGRAPH THE TERM "THREE  YEARS"  SHALL
BE  DEEMED  TO  REFER  INSTEAD  TO THE PRIOR YEAR'S FULL-TIME EMPLOYMENT
AFTER THE FIRST YEAR AND THE AVERAGE OF  THE  FIRST  EIGHT  QUARTERS  OF
EMPLOYMENT AFTER THE FIRST TWO TAXABLE YEARS IN NEW YORK STATE.

S. 6359                            80                            A. 8559

  (B)  CREDIT  LIMITATION. THE CREDIT SHALL BE ALLOWED ONLY IN THE FIRST
TAXABLE YEAR IN WHICH THE CREDIT IS CLAIMED AND IN EACH OF THE NEXT  TWO
TAXABLE  YEARS,  PROVIDED  THAT  THE CONDITIONS OF PARAGRAPH (A) OF THIS
SUBDIVISION ARE SATISFIED IN EACH TAXABLE YEAR.
  (C) AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME. FOR THE PURPOSES
OF  THIS  SUBDIVISION,  AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME
SHALL BE COMPUTED BY ADDING THE NUMBER OF SUCH INDIVIDUALS  EMPLOYED  BY
THE  TAXPAYER  AT  THE  END  OF EACH QUARTER DURING EACH TAXABLE YEAR OR
OTHER APPLICABLE PERIOD AND DIVIDING THE SUM SO OBTAINED BY  THE  NUMBER
OF  SUCH QUARTERS OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER APPLICABLE
PERIOD; PROVIDED HOWEVER, EXCEPT THAT IN COMPUTING BASE YEAR EMPLOYMENT,
THERE SHALL BE EXCLUDED THEREFROM ANY EMPLOYEE WITH RESPECT  TO  WHOM  A
CREDIT PROVIDED FOR UNDER SUBDIVISION SIX OF THIS SECTION IS CLAIMED FOR
THE TAXABLE YEAR.
  (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL EQUAL THE PRODUCT
OF  ONE  THOUSAND  DOLLARS  TIMES  THE  NUMBER  OF  INDIVIDUALS EMPLOYED
FULL-TIME BY THE TAXPAYER IN THE TAXABLE YEAR THAT ARE IN EXCESS OF  ONE
HUNDRED PERCENT OF THE TAXPAYER'S BASE YEAR EMPLOYMENT.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  REDUCES
THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  8. QUALIFIED EMERGING  TECHNOLOGY  COMPANY  CAPITAL  TAX  CREDIT.  (A)
AMOUNT  OF  CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX
IMPOSED BY THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO  ONE
OF  THE FOLLOWING PERCENTAGES, PER EACH QUALIFIED INVESTMENT IN A QUALI-
FIED EMERGING  TECHNOLOGY  COMPANY  AS  DEFINED  IN  SECTION  THIRTY-ONE
HUNDRED  TWO-E  OF  THE  PUBLIC AUTHORITIES LAW, MADE DURING THE TAXABLE
YEAR, AND CERTIFIED BY THE COMMISSIONER, EITHER:
  (1) TEN PERCENT OF QUALIFIED INVESTMENTS IN QUALIFIED  EMERGING  TECH-
NOLOGY  COMPANIES,  EXCEPT  FOR  INVESTMENTS  MADE BY OR ON BEHALF OF AN
OWNER OF THE BUSINESS, INCLUDING, BUT NOT  LIMITED  TO,  A  STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH  (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
TAXPAYER CERTIFIES TO THE COMMISSIONER  THAT  THE  QUALIFIED  INVESTMENT
WILL  NOT  BE  SOLD, TRANSFERRED, TRADED, OR DISPOSED OF DURING THE FOUR
YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED; OR
  (2) TWENTY PERCENT OF  QUALIFIED  INVESTMENTS  IN  QUALIFIED  EMERGING
TECHNOLOGY  COMPANIES, EXCEPT FOR INVESTMENTS MADE BY OR ON BEHALF OF AN
OWNER OF THE BUSINESS, INCLUDING, BUT NOT  LIMITED  TO,  A  STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH  (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
TAXPAYER CERTIFIES TO THE COMMISSIONER  THAT  THE  QUALIFIED  INVESTMENT
WILL  NOT  BE  SOLD, TRANSFERRED, TRADED, OR DISPOSED OF DURING THE NINE
YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED.
  (B) QUALIFIED INVESTMENT. "QUALIFIED INVESTMENT"  MEANS  THE  CONTRIB-
UTION  OF PROPERTY TO A CORPORATION IN EXCHANGE FOR ORIGINAL ISSUE CAPI-

S. 6359                            81                            A. 8559

TAL STOCK OR OTHER OWNERSHIP INTEREST, THE CONTRIBUTION OF PROPERTY TO A
PARTNERSHIP IN EXCHANGE FOR AN INTEREST IN THE PARTNERSHIP, AND  SIMILAR
CONTRIBUTIONS IN THE CASE OF A BUSINESS ENTITY NOT IN CORPORATE OR PART-
NERSHIP  FORM IN EXCHANGE FOR AN OWNERSHIP INTEREST IN SUCH ENTITY.  THE
TOTAL AMOUNT OF CREDIT ALLOWABLE TO A TAXPAYER UNDER THIS PROVISION  FOR
ALL  YEARS,  TAKEN  IN THE AGGREGATE, SHALL NOT EXCEED ONE HUNDRED FIFTY
THOUSAND DOLLARS IN THE CASE OF INVESTMENTS MADE  PURSUANT  TO  SUBPARA-
GRAPH  ONE  OF  PARAGRAPH  (A)  OF THIS SUBDIVISION AND SHALL NOT EXCEED
THREE HUNDRED THOUSAND DOLLARS IN THE CASE OF INVESTMENTS MADE  PURSUANT
TO SUBPARAGRAPH TWO OF PARAGRAPH (A) OF THIS SUBDIVISION.
  (C)  CARRYOVER.  IN  NO  EVENT  SHALL THE CREDIT AND CARRYOVER OF SUCH
CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR,  IN  THE
AGGREGATE,  REDUCE  THE  TAX  DUE  FOR  SUCH YEAR TO LESS THAN THE FIXED
DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE  OF
SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, OR IF ANY PART OF
THE CREDIT OR CARRYOVERS OF SUCH CREDIT MAY NOT BE DEDUCTED FROM THE TAX
OTHERWISE DUE BY REASON OF THE FINAL SENTENCE  OF  THIS  PARAGRAPH,  ANY
AMOUNT  OF  CREDIT  OR  CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND
MAY BE DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.  IN  ADDITION,  THE
AMOUNT  OF  SUCH  CREDIT,  AND  CARRYOVERS OF SUCH CREDIT TO THE TAXABLE
YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY  NOT,  IN  THE  AGGREGATE,
EXCEED  FIFTY  PERCENT OF THE TAX IMPOSED UNDER SECTION TWO HUNDRED NINE
OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY CREDIT  PROVIDED  FOR  BY
THIS SECTION.
  (D)  RECAPTURE.  (1)  WHERE  A  TAXPAYER SELLS, TRANSFERS OR OTHERWISE
DISPOSES OF CORPORATE STOCK, A PARTNERSHIP INTEREST OR  OTHER  OWNERSHIP
INTEREST ARISING FROM THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE
BASIS, IN WHOLE OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR
UNDER SUBPARAGRAPH ONE OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN
INVESTMENT  WHICH  WAS  THE  BASIS FOR SUCH ALLOWANCE IS, IN WHOLE OR IN
PART, RECOVERED BY SUCH  TAXPAYER,  AND  SUCH  DISPOSITION  OR  RECOVERY
OCCURS  DURING  THE  TAXABLE  YEAR OR WITHIN FORTY-EIGHT MONTHS FROM THE
CLOSE OF THE TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT IS  ALLOWED,
THE  TAXPAYER  SHALL ADD BACK, WITH RESPECT TO THE TAXABLE YEAR IN WHICH
THE DISPOSITION OR  RECOVERY  DESCRIBED  ABOVE  OCCURRED,  THE  REQUIRED
PORTION OF THE CREDIT ORIGINALLY ALLOWED.
  (2)  WHERE A TAXPAYER SELLS, TRANSFERS OR OTHERWISE DISPOSES OF CORPO-
RATE STOCK, A PARTNERSHIP INTEREST OR OTHER OWNERSHIP  INTEREST  ARISING
FROM  THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE BASIS, IN WHOLE
OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR UNDER  SUBPARA-
GRAPH  TWO  OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN INVESTMENT
WHICH WAS THE BASIS FOR SUCH ALLOWANCE IS IN ANY MANNER, IN WHOLE OR  IN
PART,  RECOVERED  BY  SUCH  TAXPAYER,  AND  SUCH DISPOSITION OR RECOVERY
OCCURS DURING THE TAXABLE YEAR OR WITHIN ONE HUNDRED EIGHT  MONTHS  FROM
THE  CLOSE  OF  THE  TAXABLE  YEAR  WITH RESPECT TO WHICH SUCH CREDIT IS
ALLOWED, THE TAXPAYER SHALL ADD BACK, WITH RESPECT TO THE  TAXABLE  YEAR
IN  WHICH  THE  DISPOSITION OR RECOVERY DESCRIBED IN SUBPARAGRAPH ONE OF
THIS PARAGRAPH OCCURRED THE REQUIRED PORTION OF  THE  CREDIT  ORIGINALLY
ALLOWED.
  (3) THE REQUIRED PORTION OF THE CREDIT ORIGINALLY ALLOWED SHALL BE THE
PRODUCT  OF  (A) THE PORTION OF SUCH CREDIT ATTRIBUTABLE TO THE PROPERTY
DISPOSED OF AND (B) THE APPLICABLE PERCENTAGE.
  (4) THE APPLICABLE PERCENTAGE SHALL BE:

S. 6359                            82                            A. 8559

  (A) FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)
OF THIS SUBDIVISION:
  (I)  ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS WITHIN
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED  OR  WITHIN
TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
  (II)  SEVENTY-FIVE PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE
THAN TWELVE BUT NOT MORE THAN TWENTY-FOUR MONTHS AFTER THE  END  OF  THE
TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (III)  FIFTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
TWENTY-FOUR MONTHS BUT NOT MORE THAN THIRTY-SIX MONTHS AFTER THE END  OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
  (IV)  TWENTY-FIVE  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE
THAN THIRTY-SIX MONTHS BUT NOT MORE THAN FORTY-EIGHT  MONTHS  AFTER  THE
END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED; OR
  (B)  FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH TWO OF PARAGRAPH (A)
OF THIS SUBDIVISION:
  (I) ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  WITHIN
THE  TAXABLE  YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED OR WITHIN
TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
  (II) EIGHTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  MORE  THAN
TWELVE BUT NOT MORE THAN FORTY-EIGHT MONTHS AFTER THE END OF THE TAXABLE
YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (III)  SIXTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
FORTY-EIGHT MONTHS BUT NOT MORE THAN SEVENTY-TWO MONTHS AFTER THE END OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (IV) FORTY PERCENT, IF THE DISPOSITION OR RECOVERY  OCCURS  MORE  THAN
SEVENTY-TWO  MONTHS BUT NOT MORE THAN NINETY-SIX MONTHS AFTER THE END OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
  (V) TWENTY PERCENT, IF THE DISPOSITION OR RECOVERY  OCCURS  MORE  THAN
NINETY-SIX  MONTHS  BUT NOT MORE THAN ONE HUNDRED EIGHT MONTHS AFTER THE
END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED.
  9. CREDIT FOR THE  SPECIAL  ADDITIONAL  MORTGAGE  RECORDING  TAX.  (A)
APPLICATION OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE CRED-
ITED AGAINST THE TAX IMPOSED BY THIS ARTICLE, EQUAL TO THE AMOUNT OF THE
SPECIAL  ADDITIONAL MORTGAGE RECORDING TAX PAID BY THE TAXPAYER PURSUANT
TO  THE  PROVISIONS  OF  SUBDIVISION  ONE-A  OF  SECTION   TWO   HUNDRED
FIFTY-THREE OF THIS CHAPTER OR MORTGAGES RECORDED. PROVIDED, HOWEVER, NO
CREDIT  SHALL  BE  ALLOWED  WITH  RESPECT TO A MORTGAGE OF REAL PROPERTY
PRINCIPALLY IMPROVED OR  TO  BE  IMPROVED  BY  ONE  OR  MORE  STRUCTURES
CONTAINING  IN  THE  AGGREGATE  NOT  MORE  THAN SIX RESIDENTIAL DWELLING
UNITS, EACH DWELLING UNIT HAVING ITS OWN  SEPARATE  COOKING  FACILITIES,
WHERE  THE  REAL  PROPERTY  IS  LOCATED  IN  ONE OR MORE OF THE COUNTIES
COMPRISING  THE  METROPOLITAN  COMMUTER  TRANSPORTATION  AREA.  PROVIDED
FURTHER,  HOWEVER, NO CREDIT SHALL BE ALLOWED WITH RESPECT TO A MORTGAGE
OF REAL PROPERTY PRINCIPALLY IMPROVED OR TO BE IMPROVED BY ONE  OR  MORE
STRUCTURES  CONTAINING  IN  THE  AGGREGATE NOT MORE THAN SIX RESIDENTIAL
DWELLING UNITS, EACH DWELLING  UNIT  HAVING  ITS  OWN  SEPARATE  COOKING
FACILITIES, WHERE THE REAL PROPERTY IS LOCATED IN THE COUNTY OF ERIE.
  (B)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. IF, HOWEVER, THE  AMOUNT
OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR, INCLUD-
ING  ANY  CREDIT CARRIED OVER FROM A PRIOR TAXABLE YEAR, REDUCES THE TAX
TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR

S. 6359                            83                            A. 8559

MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY  BE  DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  10. CREDIT FOR SERVICING CERTAIN MORTGAGES. (A) GENERAL. EVERY TAXPAY-
ER  MEETING  THE  REQUIREMENTS  OF THE STATE OF NEW YORK MORTGAGE AGENCY
APPLICABLE TO THE SERVICING OF MORTGAGES ACQUIRED BY SUCH AGENCY  PURSU-
ANT  TO  THE  STATE  OF  NEW  YORK MORTGAGE AGENCY ACT, WHICH SHALL HAVE
ENTERED INTO A CONTRACT WITH THE STATE OF NEW YORK  MORTGAGE  AGENCY  TO
SERVICE  MORTGAGES  ACQUIRED BY SUCH AGENCY PURSUANT TO THE STATE OF NEW
YORK MORTGAGE AGENCY ACT, SHALL HAVE CREDITED TO IT OR AN  AMOUNT  EQUAL
TO TWO AND NINETY-THREE ONE HUNDREDTHS PER CENTUM OF THE TOTAL PRINCIPAL
AND  INTEREST  COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR ON EACH
SUCH MORTGAGE SECURED BY A LIEN ON REAL ESTATE IMPROVED BY A  ONE-FAMILY
TO FOUR-FAMILY RESIDENTIAL STRUCTURE AND AN AMOUNT EQUAL TO THE INTEREST
COLLECTED  BY THE TAXPAYER DURING ITS TAXABLE YEAR ON EACH SUCH MORTGAGE
SECURED BY A LIEN ON REAL PROPERTY IMPROVED BY A STRUCTURE  OCCUPIED  AS
THE  RESIDENCE  OF  FIVE  OR  MORE FAMILIES LIVING INDEPENDENTLY OF EACH
OTHER, MULTIPLIED BY A FRACTION THE DENOMINATOR OF WHICH  SHALL  BE  THE
INTEREST  RATE PAYABLE ON THE MORTGAGE (COMPUTED TO FIVE DECIMAL PLACES)
AND THE NUMERATOR OF WHICH SHALL BE .00125 IN THE CASE OF SUCH  A  MORT-
GAGE  ACQUIRED  BY  SUCH  AGENCY  FOR LESS THAN ONE MILLION DOLLARS, AND
.00100 IN THE CASE OF SUCH A MORTGAGE ACQUIRED BY SUCH  AGENCY  FOR  ONE
MILLION DOLLARS OR MORE. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER THIS
SUBDIVISION  REDUCE THE TAX TO LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
TEN  OF  THIS ARTICLE. IN COMPUTING SUCH TAX CREDIT FOR THE SERVICING OF
MORTGAGES ON  ONE-FAMILY  TO  FOUR-FAMILY  RESIDENTIAL  STRUCTURES,  THE
TAXPAYER  SHALL NOT BE ENTITLED TO CREDIT FOR THE COLLECTION OF CURTAIL-
MENT OR PAYMENTS IN DISCHARGE OF ANY SUCH MORTGAGE. FOR THE PURPOSES  OF
THIS SUBDIVISION,
  (B)(I) A "CURTAILMENT" SHALL MEAN AMOUNTS PAID BY MORTGAGORS
  (A)  IN  EXCESS  OF  THE  MONTHLY  CONSTANT  DUE  DURING  THE MONTH OF
COLLECTION AND
  (B) IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE  MORTGAGE;  IN
THE ABSENCE OF CLEAR EVIDENCE TO THE CONTRARY, AMOUNTS PAID IN EXCESS OF
THE  MONTHLY CONSTANT DUE DURING THE MONTH OF COLLECTION SHALL BE DEEMED
TO BE IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE; AND
  (II) "MONTHLY CONSTANT" SHALL MEAN THE AMOUNT OF PRINCIPAL AND  INTER-
EST WHICH IS DUE AND PAYABLE ACCORDING TO THE MORTGAGE DOCUMENTS ON EACH
PERIODIC PAYMENT DATE.
  11.  AGRICULTURAL  PROPERTY  TAX CREDIT. (A) GENERAL. IN THE CASE OF A
TAXPAYER WHICH IS AN ELIGIBLE FARMER OR AN ELIGIBLE FARMER WHO HAS  PAID
TAXES  PURSUANT  TO A LAND CONTRACT, THERE SHALL BE ALLOWED A CREDIT FOR
THE ALLOWABLE SCHOOL DISTRICT PROPERTY TAXES. THE TERM "ALLOWABLE SCHOOL
DISTRICT PROPERTY TAXES" MEANS THE SCHOOL DISTRICT PROPERTY  TAXES  PAID
DURING  THE  TAXABLE YEAR ON QUALIFIED AGRICULTURAL PROPERTY, SUBJECT TO
THE ACREAGE LIMITATION PROVIDED IN PARAGRAPH (E) OF THIS SUBDIVISION AND
THE INCOME LIMITATION PROVIDED IN PARAGRAPH (F) OF THIS SUBDIVISION.
  (B) ELIGIBLE FARMER.  FOR  PURPOSES  OF  THIS  SUBDIVISION,  THE  TERM
"ELIGIBLE FARMER" MEANS A TAXPAYER WHOSE FEDERAL GROSS INCOME FROM FARM-
ING  FOR THE TAXABLE YEAR IS AT LEAST TWO-THIRDS OF EXCESS FEDERAL GROSS
INCOME. THE TERM "ELIGIBLE FARMER" ALSO  INCLUDES  A  CORPORATION  OTHER
THAN  THE  TAXPAYER  OF RECORD FOR QUALIFIED AGRICULTURAL LAND WHICH HAS
PAID THE SCHOOL DISTRICT PROPERTY TAXES  ON  SUCH  LAND  PURSUANT  TO  A
CONTRACT FOR THE FUTURE PURCHASE OF SUCH LAND; PROVIDED THAT SUCH CORPO-
RATION  HAS  A  FEDERAL  GROSS  INCOME FROM FARMING FOR THE TAXABLE YEAR
WHICH IS AT  LEAST  TWO-THIRDS  OF  EXCESS  FEDERAL  GROSS  INCOME;  AND

S. 6359                            84                            A. 8559

PROVIDED FURTHER THAT, IN DETERMINING SUCH INCOME ELIGIBILITY, A TAXPAY-
ER  MAY,  FOR  ANY  TAXABLE  YEAR, USE THE AVERAGE OF SUCH FEDERAL GROSS
INCOME FROM FARMING FOR THAT TAXABLE YEAR AND SUCH INCOME  FOR  THE  TWO
CONSECUTIVE  TAXABLE  YEARS  IMMEDIATELY  PRECEDING  SUCH  TAXABLE YEAR.
EXCESS FEDERAL GROSS INCOME MEANS THE AMOUNT  OF  FEDERAL  GROSS  INCOME
FROM  ALL  SOURCES  FOR  THE  TAXABLE  YEAR IN EXCESS OF THIRTY THOUSAND
DOLLARS. FOR THE PURPOSES OF THIS PARAGRAPH, PAYMENTS FROM  THE  STATE'S
FARMLAND  PROTECTION PROGRAM, ADMINISTERED BY THE DEPARTMENT OF AGRICUL-
TURE AND MARKETS, SHALL BE INCLUDED AS FEDERAL GROSS INCOME FROM FARMING
FOR OTHERWISE ELIGIBLE FARMERS.
  (C) SCHOOL DISTRICT PROPERTY TAXES. FOR PURPOSES OF THIS  SUBDIVISION,
THE  TERM  "SCHOOL  DISTRICT  PROPERTY  TAXES" MEANS ALL PROPERTY TAXES,
SPECIAL AD VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE  OF  PENAL-
TIES  AND INTEREST, LEVIED FOR SCHOOL DISTRICT PURPOSES ON THE QUALIFIED
AGRICULTURAL PROPERTY OWNED BY THE TAXPAYER.
  (D) QUALIFIED AGRICULTURAL PROPERTY. FOR PURPOSES OF THIS SUBDIVISION,
THE TERM "QUALIFIED AGRICULTURAL PROPERTY" MEANS LAND  LOCATED  IN  THIS
STATE  WHICH  IS USED IN AGRICULTURAL PRODUCTION, AND LAND IMPROVEMENTS,
STRUCTURES AND BUILDINGS (EXCLUDING BUILDINGS USED  FOR  THE  TAXPAYER'S
RESIDENTIAL  PURPOSE) LOCATED ON SUCH LAND WHICH ARE USED OR OCCUPIED TO
CARRY OUT SUCH PRODUCTION. QUALIFIED AGRICULTURAL PROPERTY ALSO INCLUDES
LAND SET ASIDE OR RETIRED UNDER A  FEDERAL  SUPPLY  MANAGEMENT  OR  SOIL
CONSERVATION  PROGRAM  OR  LAND THAT AT THE TIME IT BECOMES SUBJECT TO A
CONSERVATION EASEMENT, AS DEFINED UNDER SUBDIVISION TWENTY-EIGHT OF THIS
SECTION, MET THE REQUIREMENTS UNDER THIS PARAGRAPH.
  (E) ACREAGE LIMITATION. (I) ELIGIBLE TAXES.  IN  THE  EVENT  THAT  THE
QUALIFIED  AGRICULTURAL  PROPERTY OWNED BY THE TAXPAYER INCLUDES LAND IN
EXCESS OF THE BASE ACREAGE AS PROVIDED IN THIS PARAGRAPH, THE AMOUNT  OF
SCHOOL  DISTRICT  PROPERTY TAXES ELIGIBLE FOR CREDIT UNDER THIS SUBDIVI-
SION SHALL BE THAT PORTION OF THE SCHOOL DISTRICT PROPERTY  TAXES  WHICH
BEARS  THE  SAME  RATIO TO THE TOTAL SCHOOL DISTRICT PROPERTY TAXES PAID
DURING THE TAXABLE YEAR, AS THE ACREAGE ALLOWABLE UNDER  THIS  PARAGRAPH
BEARS TO THE ENTIRE ACREAGE OF SUCH LAND.
  (II)  ALLOWABLE  ACREAGE. THE ALLOWABLE ACREAGE IS THE SUM OF THE BASE
ACREAGE SET FORTH BELOW AND FIFTY PERCENT OF  THE  INCREMENTAL  ACREAGE.
THE INCREMENTAL ACREAGE IS THE EXCESS OF THE ENTIRE ACREAGE OF QUALIFIED
AGRICULTURAL LAND OWNED BY THE TAXPAYER OVER THE BASE ACREAGE. EXCEPT AS
PROVIDED  IN  SUBPARAGRAPH  (III) OF THIS PARAGRAPH, THE BASE ACREAGE IS
THREE HUNDRED FIFTY ACRES.
THE TOTAL BASE ACREAGE MAY BE  INCREASED  BY  ANY  ACREAGE  ENROLLED  OR
PARTICIPATING DURING THE TAXABLE YEAR IN A FEDERAL ENVIRONMENTAL CONSER-
VATION  ACREAGE  RESERVE  PROGRAM PURSUANT TO TITLE THREE OF THE FEDERAL
AGRICULTURE IMPROVEMENT AND REFORM ACT OF NINETEEN HUNDRED NINETY-SIX.
  (III) BASE ACREAGE OF RELATED PERSONS. WHERE THE TAXPAYER AND  ONE  OR
MORE  RELATED  PERSONS  EACH  OWN QUALIFIED AGRICULTURAL PROPERTY ON THE
FIRST DAY OF MARCH OF ANY YEAR, THE BASE ACREAGE UNDER SUBPARAGRAPH (II)
OF THIS PARAGRAPH SHALL  BE  DIVIDED  EQUALLY  AND  ALLOTTED  AMONG  THE
TAXPAYER  AND  SUCH RELATED PERSONS, AND THE TAXPAYER'S BASE ACREAGE FOR
THE TAXABLE YEAR WHICH INCLUDES SUCH MARCH FIRST SHALL BE LIMITED TO ITS
ALLOTTED SHARE. PROVIDED, HOWEVER, IF THE TAXPAYER AND ALL SUCH  RELATED
PERSONS CONSENT (AT SUCH TIME AND IN SUCH MANNER AS THE COMMISSIONER MAY
PRESCRIBE)  TO AN UNEQUAL DIVISION, THE TAXPAYER'S BASE ACREAGE FOR SUCH
TAXABLE YEAR SHALL BE LIMITED TO ITS ALLOTTED SHARE UNDER  SUCH  UNEQUAL
DIVISION.
  (IV)  RELATED  PERSONS. (A) FOR PURPOSES OF SUBPARAGRAPH (III) OF THIS
PARAGRAPH, THE TERM "RELATED PERSON" MEANS:

S. 6359                            85                            A. 8559

  (I) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, WHERE THE TAXPAY-
ER AND THE CORPORATION ARE MEMBERS OF  THE  SAME  CONTROLLED  GROUP,  AS
DEFINED IN SECTION 267(F) OF THE INTERNAL REVENUE CODE;
  (II)  AN  INDIVIDUAL,  PARTNERSHIP,  ESTATE  OR TRUST, WHERE MORE THAN
FIFTY PERCENT IN VALUE OF THE  OUTSTANDING  STOCK  OF  THE  TAXPAYER  IS
OWNED,  DIRECTLY  OR INDIRECTLY, BY OR FOR SUCH INDIVIDUAL, PARTNERSHIP,
ESTATE OR TRUST OR BY OR FOR THE GRANTOR OF SUCH TRUST;
  (III) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, OR  A  PARTNER-
SHIP,  ESTATE  OR TRUST, IF THE SAME PERSON OWNS MORE THAN FIFTY PERCENT
IN VALUE OF THE OUTSTANDING STOCK OF THE TAXPAYER AND  MORE  THAN  FIFTY
PERCENT  IN  VALUE OF  THE OUTSTANDING STOCK OF THE CORPORATION, OR MORE
THAN FIFTY PERCENT OF THE CAPITAL OR PROFITS INTEREST  IN  THE  PARTNER-
SHIP,  OR  MORE  THAN  FIFTY  PERCENT  OF THE BENEFICIAL INTEREST IN THE
ESTATE OR TRUST;
  (IV) A PARTNERSHIP, ESTATE  OR  TRUST  OF  WHICH  THE  TAXPAYER  OWNS,
DIRECTLY  OR INDIRECTLY, MORE THAN FIFTY PERCENT OF THE CAPITAL, PROFITS
OR BENEFICIAL INTEREST.
  (B) IN DETERMINING WHETHER A PERSON IS A  RELATED  PERSON  WITHIN  THE
MEANING OF THIS SUBPARAGRAPH:
  (I)  STOCK  OWNED,  DIRECTLY  OR  INDIRECTLY, BY OR FOR A CORPORATION,
PARTNERSHIP, ESTATE OR TRUST SHALL BE CONSIDERED AS BEING OWNED  PROPOR-
TIONATELY BY OR FOR ITS SHAREHOLDERS, PARTNERS OR BENEFICIARIES;
  (II)  AN  INDIVIDUAL  SHALL  BE  CONSIDERED AS OWNING THE STOCK OWNED,
DIRECTLY OR INDIRECTLY, BY OR FOR HIS SPOUSE;
  (III) STOCK CONSTRUCTIVELY OWNED BY A PERSON BY REASON OF THE APPLICA-
TION OF ITEM (I) OF THIS CLAUSE SHALL, FOR THE PURPOSE OF APPLYING  ITEM
(I) OR (II) OF THIS CLAUSE, BE TREATED AS ACTUALLY OWNED BY SUCH PERSON.
  (F)  INCOME  LIMITATION. (I) IN THE EVENT THAT THE MODIFIED ENTIRE NET
INCOME OF THE TAXPAYER EXCEEDS TWO HUNDRED THOUSAND DOLLARS, THE  ALLOW-
ABLE SCHOOL DISTRICT PROPERTY TAXES UNDER PARAGRAPH (A) OF THIS SUBDIVI-
SION SHALL BE THE ELIGIBLE TAXES UNDER SUBPARAGRAPH (I) OF PARAGRAPH (E)
OF  THIS SUBDIVISION REDUCED BY THE PRODUCT OF THE AMOUNT OF SUCH ELIGI-
BLE TAXES AND A PERCENTAGE, SUCH PERCENTAGE TO BE DETERMINED  BY  MULTI-
PLYING  ONE HUNDRED PERCENT BY A FRACTION, THE NUMERATOR OF WHICH IS THE
LESSER OF ONE HUNDRED THOUSAND DOLLARS OR THE EXCESS OF  THE  TAXPAYER'S
MODIFIED  ENTIRE  NET  INCOME  OVER TWO HUNDRED THOUSAND DOLLARS AND THE
DENOMINATOR OF WHICH IS ONE HUNDRED THOUSAND DOLLARS.  FOR  PURPOSES  OF
THE  PRECEDING  SENTENCE,  THE  TERM "ELIGIBLE TAXES", WHERE THE ACREAGE
LIMITATION OF PARAGRAPH (E) OF THIS SUBDIVISION DOES  NOT  APPLY,  SHALL
MEAN  THE  TOTAL  SCHOOL DISTRICT PROPERTY TAXES PAID DURING THE TAXABLE
YEAR.
  (II) THE TERM "MODIFIED ENTIRE NET INCOME" MEANS THE ENTIRE NET INCOME
FOR THE TAXABLE YEAR REDUCED BY THE AMOUNT OF  PRINCIPAL  PAID  ON  FARM
INDEBTEDNESS DURING THE TAXABLE YEAR. THE TERM "FARM INDEBTEDNESS" MEANS
DEBT INCURRED OR REFINANCED WHICH IS SECURED BY FARM PROPERTY, WHERE THE
PROCEEDS  OF  THE  DEBT  ARE  DISBURSED FOR EXPENDITURES INCURRED IN THE
BUSINESS OF FARMING.
  (G) CARRYOVER. IN NO EVENT SHALL THE CREDIT PROVIDED HEREIN BE ALLOWED
IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS  THAN  THE  FIXED
DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE.  IF,  HOWEVER,  THE  AMOUNT  OF
CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX  TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR MAY BE CARRIED OVER TO THE FOLLOWING  YEAR  OR  YEARS  AND  MAY  BE
DEDUCTED  FROM  THE  TAXPAYER'S  TAX  FOR  SUCH YEAR OR YEARS. PROVIDED,
HOWEVER, IN LIEU OF CARRYING OVER THE UNUSED PORTION OF SUCH CREDIT, THE

S. 6359                            86                            A. 8559

TAXPAYER MAY ELECT TO TREAT SUCH UNUSED PORTION AS AN OVERPAYMENT OF TAX
TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF  SECTION
ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER EXCEPT THAT NO INTEREST SHALL BE
PAID ON SUCH OVERPAYMENT.
  (H)  NONQUALIFIED  USE. (I) NO CREDIT IN CONVERSION YEAR. IN THE EVENT
THAT QUALIFIED AGRICULTURAL PROPERTY IS CONVERTED  BY  THE  TAXPAYER  TO
NONQUALIFIED  USE,  CREDIT  UNDER  THIS SUBDIVISION SHALL NOT BE ALLOWED
WITH RESPECT TO SUCH PROPERTY FOR THE TAXABLE YEAR  OF  CONVERSION  (THE
CONVERSION YEAR).
  (II)  CREDIT RECAPTURE. IF THE CONVERSION BY THE TAXPAYER OF QUALIFIED
AGRICULTURAL PROPERTY TO NONQUALIFIED USE OCCURS DURING  THE  PERIOD  OF
THE  TWO  TAXABLE  YEARS FOLLOWING THE TAXABLE YEAR FOR WHICH THE CREDIT
UNDER THIS SUBDIVISION WAS FIRST CLAIMED WITH RESPECT TO SUCH  PROPERTY,
THE  CREDIT  ALLOWED WITH RESPECT TO SUCH PROPERTY FOR THE TAXABLE YEARS
PRIOR TO THE CONVERSION YEAR MUST BE ADDED BACK IN THE CONVERSION  YEAR.
WHERE  THE PROPERTY CONVERTED INCLUDES LAND, AND WHERE THE CONVERSION IS
OF ONLY A PORTION OF SUCH LAND, THE CREDIT ALLOWED WITH RESPECT  TO  THE
PROPERTY  CONVERTED SHALL BE DETERMINED BY MULTIPLYING THE ENTIRE CREDIT
UNDER THIS SUBDIVISION FOR THE TAXABLE YEARS  PRIOR  TO  THE  CONVERSION
YEAR  BY A FRACTION, THE NUMERATOR OF WHICH IS THE ACREAGE CONVERTED AND
THE DENOMINATOR OF WHICH IS THE ENTIRE ACREAGE OF SUCH LAND OWNED BY THE
TAXPAYER IMMEDIATELY PRIOR TO THE CONVERSION.
  (III) EXCEPTION TO RECAPTURE.  SUBPARAGRAPH  (II)  OF  THIS  PARAGRAPH
SHALL NOT APPLY TO THE CONVERSION OF PROPERTY WHERE THE CONVERSION IS BY
REASON  OF  INVOLUNTARY  CONVERSION,  WITHIN  THE MEANING OF SECTION ONE
THOUSAND THIRTY-THREE OF THE INTERNAL REVENUE CODE.
  (IV) CONVERSION TO NONQUALIFIED USE. FOR PURPOSES OF THIS PARAGRAPH, A
SALE OR OTHER DISPOSITION OF QUALIFIED AGRICULTURAL PROPERTY ALONE SHALL
NOT CONSTITUTE A CONVERSION TO A NONQUALIFIED USE.
  (I) SPECIAL RULES. FOR PURPOSES OF THIS SUBDIVISION, THE TERM "FEDERAL
GROSS  INCOME  FROM  FARMING"  SHALL  INCLUDE  GROSS  INCOME  FROM   THE
PRODUCTION OF MAPLE SYRUP, CIDER, CHRISTMAS TREES DERIVED FROM A MANAGED
CHRISTMAS  TREE  OPERATION WHETHER DUG FOR TRANSPLANTING OR CUT FROM THE
STUMP, OR FROM A COMMERCIAL  HORSE  BOARDING  OPERATION  AS  DEFINED  IN
SUBDIVISION THIRTEEN OF SECTION THREE HUNDRED ONE OF THE AGRICULTURE AND
MARKETS  LAW,  OR  FROM  THE SALE OF WINE FROM A LICENSED FARM WINERY AS
PROVIDED FOR IN ARTICLE SIX OF THE ALCOHOLIC BEVERAGE  CONTROL  LAW,  OR
FROM  THE  SALE  OF CIDER FROM A LICENSED FARM CIDERY AS PROVIDED FOR IN
SECTION FIFTY-EIGHT-C OF THE ALCOHOLIC BEVERAGE CONTROL LAW.
  (J) ELECTION TO DEEM GROSS INCOME OF NEW YORK C CORPORATION TO  SHARE-
HOLDERS.  FOR  PURPOSES  OF  THIS SUBDIVISION, FEDERAL GROSS INCOME FROM
FARMING SHALL BE ZERO FOR ANY TAXABLE YEAR OF A NEW YORK  C  CORPORATION
FOR WHICH THE ELECTION UNDER PARAGRAPH NINE OF SUBSECTION (N) OF SECTION
SIX HUNDRED SIX OF THIS CHAPTER IS IN EFFECT.
  12.  CREDIT FOR EMPLOYMENT OF PERSONS WITH DISABILITIES. (A) ALLOWANCE
OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HERE-
INAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, FOR EMPLOYING
WITHIN THE STATE A QUALIFIED EMPLOYEE.
  (B) QUALIFIED EMPLOYEE. A QUALIFIED EMPLOYEE IS AN INDIVIDUAL:
  (1) WHO IS CERTIFIED BY THE EDUCATION DEPARTMENT, OR IN THE CASE OF AN
INDIVIDUAL WHO IS BLIND OR VISUALLY HANDICAPPED,  BY  THE  STATE  AGENCY
RESPONSIBLE  FOR  PROVISION OF VOCATIONAL REHABILITATION SERVICES TO THE
BLIND AND VISUALLY HANDICAPPED: (I) AS A PERSON WITH A DISABILITY  WHICH
CONSTITUTES  OR RESULTS IN A SUBSTANTIAL HANDICAP TO EMPLOYMENT AND (II)
AS HAVING COMPLETED OR AS RECEIVING  SERVICES  UNDER  AN  INDIVIDUALIZED
WRITTEN  REHABILITATION  PLAN  APPROVED  BY  THE EDUCATION DEPARTMENT OR

S. 6359                            87                            A. 8559

OTHER STATE AGENCY RESPONSIBLE FOR PROVIDING  VOCATIONAL  REHABILITATION
SERVICES TO SUCH INDIVIDUAL; AND
  (2) WHO HAS WORKED ON A FULL-TIME BASIS FOR THE EMPLOYER WHO IS CLAIM-
ING  THE  CREDIT  FOR  AT  LEAST ONE HUNDRED EIGHTY DAYS OR FOUR HUNDRED
HOURS.
  (C) AMOUNT OF CREDIT. EXCEPT AS PROVIDED  IN  PARAGRAPH  (D)  OF  THIS
SUBDIVISION,  THE  AMOUNT  OF CREDIT SHALL BE THIRTY-FIVE PERCENT OF THE
FIRST SIX THOUSAND DOLLARS IN QUALIFIED FIRST-YEAR WAGES EARNED BY  EACH
QUALIFIED  EMPLOYEE.  "QUALIFIED  FIRST-YEAR  WAGES" MEANS WAGES PAID OR
INCURRED BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED  EMPLOYEES
WHICH  ARE  ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE, TO SERVICES
RENDERED DURING THE ONE-YEAR PERIOD BEGINNING WITH THE DAY THE  EMPLOYEE
BEGINS WORK FOR THE TAXPAYER.
  (D)  CREDIT  WHERE  FEDERAL  WORK OPPORTUNITY TAX CREDIT APPLIES. WITH
RESPECT TO ANY QUALIFIED EMPLOYEE WHOSE QUALIFIED FIRST-YEAR WAGES UNDER
PARAGRAPH (C) OF THIS SUBDIVISION ALSO CONSTITUTE  QUALIFIED  FIRST-YEAR
WAGES  FOR  PURPOSES  OF  THE WORK OPPORTUNITY TAX CREDIT FOR VOCATIONAL
REHABILITATION REFERRALS UNDER SECTION FIFTY-ONE OF THE INTERNAL REVENUE
CODE, THE AMOUNT OF CREDIT UNDER  THIS SUBDIVISION SHALL BE  THIRTY-FIVE
PERCENT OF THE FIRST SIX THOUSAND DOLLARS IN QUALIFIED SECOND-YEAR WAGES
EARNED  BY EACH SUCH EMPLOYEE. "QUALIFIED SECOND-YEAR WAGES" MEANS WAGES
PAID OR INCURRED BY THE TAXPAYER DURING THE TAXABLE  YEAR  TO  QUALIFIED
EMPLOYEES  WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE, TO
SERVICES RENDERED DURING THE ONE-YEAR PERIOD BEGINNING  ONE  YEAR  AFTER
THE EMPLOYEE BEGINS WORK FOR THE TAXPAYER.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES
THE  TAX  TO  SUCH  AMOUNT,  ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, AND MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (F)  COORDINATION  WITH  FEDERAL  WORK  OPPORTUNITY  TAX  CREDIT.  THE
PROVISIONS  OF  SECTION  FIFTY-ONE AND FIFTY-TWO OF THE INTERNAL REVENUE
CODE, AS SUCH SECTIONS APPLIED ON OCTOBER FIRST, NINETEEN HUNDRED  NINE-
TY-SIX,  THAT APPLY TO THE FEDERAL WORK OPPORTUNITY TAX CREDIT FOR VOCA-
TIONAL REHABILITATION REFERRALS SHALL APPLY TO  THE  CREDIT  UNDER  THIS
SUBDIVISION  TO  THE  EXTENT  THAT SUCH SECTIONS ARE CONSISTENT WITH THE
SPECIFIC PROVISIONS OF THIS SUBDIVISION, PROVIDED THAT IN THE EVENT OF A
CONFLICT THE PROVISIONS OF THIS SUBDIVISION SHALL CONTROL.
  13. CREDIT FOR PURCHASE OF  AN  AUTOMATED  EXTERNAL  DEFIBRILLATOR.  A
TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS HEREINAFTER
PROVIDED, AGAINST THE TAX IMPOSED BY THIS  ARTICLE,  FOR  THE  PURCHASE,
OTHER  THAN  FOR RESALE, OF AN AUTOMATED EXTERNAL DEFIBRILLATOR, AS SUCH
TERM IS DEFINED IN SECTION THREE THOUSAND-B OF THE  PUBLIC  HEALTH  LAW.
THE  AMOUNT  OF  CREDIT  SHALL  BE THE COST TO THE TAXPAYER OF AUTOMATED
EXTERNAL DEFIBRILLATORS PURCHASED DURING THE TAXABLE YEAR,  SUCH  CREDIT
NOT  TO EXCEED FIVE HUNDRED DOLLARS WITH RESPECT TO EACH UNIT PURCHASED.
THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS CHAPTER.
  14. CREDIT FOR PURCHASE OF LONG-TERM CARE INSURANCE.  (A)  GENERAL.  A
TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE  EQUAL TO TWENTY PERCENT OF THE PREMIUM PAID DURING THE TAXABLE YEAR

S. 6359                            88                            A. 8559

FOR LONG-TERM CARE INSURANCE. IN ORDER TO QUALIFY FOR SUCH  CREDIT,  THE
TAXPAYER'S PREMIUM PAYMENT MUST BE FOR THE PURCHASE OF OR FOR CONTINUING
COVERAGE UNDER A LONG-TERM CARE INSURANCE POLICY THAT QUALIFIES FOR SUCH
CREDIT  PURSUANT  TO  SECTION  ONE THOUSAND ONE HUNDRED SEVENTEEN OF THE
INSURANCE LAW.
  (B) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR
MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION
TWO  HUNDRED  TEN  OF  THIS  ARTICLE.  IF, HOWEVER, THE AMOUNT OF CREDIT
ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO
SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN  SUCH  TAXABLE  YEAR
MAY  BE  CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  15. LOW-INCOME HOUSING CREDIT. (A) ALLOWANCE  OF  CREDIT.  A  TAXPAYER
SHALL  BE  ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH
RESPECT TO THE OWNERSHIP OF ELIGIBLE LOW-INCOME BUILDINGS,  COMPUTED  AS
PROVIDED IN SECTION EIGHTEEN OF THIS CHAPTER.
  (B)  APPLICATION  OF  CREDIT. THE CREDIT AND CARRYOVERS OF SUCH CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL  NOT,  IN  THE
AGGREGATE,  REDUCE  THE  TAX  DUE  FOR  SUCH YEAR TO LESS THAN THE FIXED
DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
MAY  BE  CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED
FROM THE TAX FOR SUCH YEAR OR YEARS.
  (C) CREDIT RECAPTURE. FOR PROVISIONS REQUIRING  RECAPTURE  OF  CREDIT,
SEE SUBDIVISION (B) OF SECTION EIGHTEEN OF THIS CHAPTER.
  16.  GREEN  BUILDING CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL
BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION  NINETEEN  OF
THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) CARRYOVERS. THE CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED UNDER
THIS  SUBDIVISION  FOR  ANY  TAXABLE  YEAR  SHALL NOT, IN THE AGGREGATE,
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT OR  CARRY-
OVERS  OF  SUCH  CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION FOR ANY
TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY  AMOUNT  OF  CREDIT  OR
CARRYOVERS  OF  SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY
BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED  FROM
THE TAX FOR SUCH YEAR OR YEARS.
  17.  BROWNFIELD  REDEVELOPMENT  TAX CREDIT. (A) ALLOWANCE OF CREDIT. A
TAXPAYER SHALL BE ALLOWED A  CREDIT,  TO  BE  COMPUTED  AS  PROVIDED  IN
SECTION  TWENTY-ONE  OF  THIS  CHAPTER,  AGAINST THE TAX IMPOSED BY THIS
ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDITS ALLOWED UNDER THIS  SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX  TO  SUCH  AMOUNT, ANY AMOUNT OF CREDIT THUS NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE

S. 6359                            89                            A. 8559

PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  18. REMEDIATED BROWNFIELD CREDIT FOR REAL PROPERTY TAXES FOR QUALIFIED
SITES.  (A)  ALLOWANCE  OF  CREDIT. A TAXPAYER WHICH IS A DEVELOPER OF A
QUALIFIED SITE SHALL BE ALLOWED A  CREDIT  FOR  ELIGIBLE  REAL  PROPERTY
TAXES,  TO BE COMPUTED AS PROVIDED IN SUBDIVISION (B) OF SECTION TWENTY-
TWO OF THIS CHAPTER, AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE.  FOR
PURPOSES OF THIS SUBDIVISION, THE TERMS "QUALIFIED SITE" AND "DEVELOPER"
SHALL  HAVE  THE  SAME MEANING AS SET FORTH IN PARAGRAPHS TWO AND THREE,
RESPECTIVELY, OF SUBDIVISION (A) OF SECTION TWENTY-TWO OF THIS CHAPTER.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE
IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT  OF  TAX  TO  BE
CREDITED  OR  REFUNDED  IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS
OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  19. ENVIRONMENTAL REMEDIATION INSURANCE CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN
SECTION TWENTY-THREE OF THIS CHAPTER, AGAINST THE TAX  IMPOSED  BY  THIS
ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE  AMOUNT  OF  CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT,  ANY  AMOUNT  OF  CREDIT  THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  20.  EMPIRE  STATE  FILM PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT. A
TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION TWENTY-FOUR OF THIS CHAPTER
SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS  PROVIDED  IN  SUCH  SECTION
TWENTY-FOUR AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI-
SION FOR ANY TAXABLE YEAR REDUCES THE TAX TO  SUCH  AMOUNT,  THE  EXCESS
SHALL  BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF SUBSECTION (C) OF
SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTANDING,  NO
INTEREST SHALL BE PAID THEREON.
  21.  SECURITY TRAINING TAX CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN  SECTION  TWEN-
TY-SIX OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS

S. 6359                            90                            A. 8559

THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER,  IF
THE  AMOUNT  OF  CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR  REDUCES  THE  TAX  TO  SUCH  AMOUNT, ANY AMOUNT OF CREDIT THUS NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  22. CONSERVATION EASEMENT TAX CREDIT. (A) CREDIT ALLOWED. IN THE  CASE
OF  A  TAXPAYER WHO OWNS LAND THAT IS SUBJECT TO A CONSERVATION EASEMENT
HELD BY A PUBLIC OR PRIVATE CONSERVATION AGENCY, THERE SHALL BE  ALLOWED
A CREDIT FOR TWENTY-FIVE PERCENT OF THE ALLOWABLE SCHOOL DISTRICT, COUN-
TY  AND TOWN REAL PROPERTY TAXES ON SUCH LAND. IN NO SUCH CASE SHALL THE
CREDIT ALLOWED UNDER THIS SUBDIVISION  IN  COMBINATION  WITH  ANY  OTHER
CREDIT  FOR  SUCH  SCHOOL  DISTRICT, COUNTY AND TOWN REAL PROPERTY TAXES
UNDER THIS SECTION EXCEED SUCH TAXES.
  (B) CONSERVATION EASEMENT. FOR PURPOSES OF THIS SUBDIVISION, THE  TERM
"CONSERVATION  EASEMENT"  MEANS  A  PERPETUAL AND PERMANENT CONSERVATION
EASEMENT AS DEFINED IN ARTICLE FORTY-NINE OF THE ENVIRONMENTAL CONSERVA-
TION LAW THAT SERVES TO PROTECT OPEN SPACE, SCENIC,  NATURAL  RESOURCES,
BIODIVERSITY,   AGRICULTURAL,  WATERSHED  AND/OR  HISTORIC  PRESERVATION
RESOURCES. ANY CONSERVATION EASEMENT FOR WHICH A TAX CREDIT  IS  CLAIMED
UNDER  THIS  SUBDIVISION  SHALL BE FILED WITH THE DEPARTMENT OF ENVIRON-
MENTAL CONSERVATION, AS PROVIDED FOR IN ARTICLE FORTY-NINE OF THE  ENVI-
RONMENTAL  CONSERVATION  LAW AND SUCH CONSERVATION EASEMENT SHALL COMPLY
WITH THE PROVISIONS OF TITLE THREE OF SUCH ARTICLE, AND  THE  PROVISIONS
OF  SUBDIVISION  (H)  OF SECTION 170 OF THE INTERNAL REVENUE CODE. DEDI-
CATIONS OF LAND FOR OPEN SPACE THROUGH  THE  EXECUTION  OF  CONSERVATION
EASEMENTS  FOR  THE PURPOSE OF FULFILLING DENSITY REQUIREMENTS TO OBTAIN
SUBDIVISION OR BUILDING PERMITS SHALL NOT BE CONSIDERED  A  CONSERVATION
EASEMENT UNDER THIS SUBDIVISION.
  (C)  LAND.  FOR  PURPOSES OF THIS SUBDIVISION, THE TERM "LAND" MEANS A
FEE SIMPLE TITLE TO REAL PROPERTY LOCATED IN THIS STATE, WITH OR WITHOUT
IMPROVEMENTS THEREON; RIGHTS OF WAY; WATER AND  RIPARIAN  RIGHTS;  EASE-
MENTS;  PRIVILEGES  AND  ALL  OTHER  RIGHTS  OR INTERESTS OF ANY LAND OR
DESCRIPTION IN, RELATING TO OR CONNECTED WITH REAL  PROPERTY,  EXCLUDING
BUILDINGS, STRUCTURES, OR IMPROVEMENTS.
  (D) PUBLIC OR PRIVATE CONSERVATION AGENCY. FOR PURPOSES OF THIS SUBDI-
VISION,  THE  TERM  "PUBLIC  OR  PRIVATE  CONSERVATION AGENCY" MEANS ANY
STATE, LOCAL, OR FEDERAL GOVERNMENTAL BODY; OR ANY PRIVATE  NOT-FOR-PRO-
FIT  CHARITABLE  CORPORATION OR TRUST WHICH IS AUTHORIZED TO DO BUSINESS
IN THE STATE OF NEW YORK, IS ORGANIZED AND OPERATED TO PROTECT LAND  FOR
NATURAL  RESOURCES,  CONSERVATION  OR HISTORIC PRESERVATION PURPOSES, IS
EXEMPT FROM FEDERAL INCOME  TAXATION  UNDER  SECTION  501(C)(3)  OF  THE
INTERNAL  REVENUE  CODE, AND HAS THE POWER TO ACQUIRE, HOLD AND MAINTAIN
LAND AND/OR INTERESTS IN LAND FOR SUCH PURPOSES.
  (E) CREDIT LIMITATION. THE AMOUNT OF THE CREDIT THAT MAY BE CLAIMED BY
A TAXPAYER PURSUANT TO THIS SUBSECTION SHALL NOT  EXCEED  FIVE  THOUSAND
DOLLARS IN ANY GIVEN YEAR.
  (F)  APPLICATION OF THE CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVI-
SION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO
LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE
YEAR  REDUCES  THE TAX TO SUCH AMOUNT, ANY AMOUNT OF THE CREDIT THUS NOT

S. 6359                            91                            A. 8559

DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SUBSECTION (C) OF SECTION ONE THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER,
EXCEPT THAT, NO INTEREST SHALL BE PAID THEREON.
  23.  EMPIRE STATE COMMERCIAL PRODUCTION CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER THAT IS ELIGIBLE PURSUANT TO PROVISIONS OF SECTION TWEN-
TY-EIGHT OF THIS CHAPTER SHALL BE ALLOWED A CREDIT  TO  BE  COMPUTED  AS
PROVIDED IN SUCH SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI-
SION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, FIFTY  PERCENT
OF  THE  EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED
OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING,  NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF SUCH
CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE CARRIED OVER
TO THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM  THE
TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF CRED-
IT OVER THE TAX FOR SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF  SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,
THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (C) EXPIRATION OF CREDIT. THE CREDIT ALLOWED  UNDER  THIS  SUBDIVISION
SHALL  NOT BE APPLICABLE TO TAXABLE YEARS BEGINNING ON OR AFTER DECEMBER
THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
  24. BIOFUEL PRODUCTION  CREDIT.  (A)  GENERAL.  A  TAXPAYER  SHALL  BE
ALLOWED  A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION TWENTY-EIGHT OF
THIS CHAPTER ADDED AS PART X OF CHAPTER SIXTY-TWO OF  THE  LAWS  OF  TWO
THOUSAND  SIX,  AGAINST  THE  TAX  IMPOSED  BY  THIS ARTICLE. THE CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX DUE FOR SUCH YEAR TO LESS  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS ARTICLE.  HOWEVER, IF THE AMOUNT  OF  CREDIT  ALLOWED  UNDER
THIS  SUBDIVISION  FOR  ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT,
ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR  SHALL  BE
TREATED  AS  AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORD-
ANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF  THIS
CHAPTER.  PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION
ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING,  NO  INTEREST
SHALL  BE  PAID THEREON. THE TAX CREDIT ALLOWED PURSUANT TO THIS SECTION
SHALL APPLY TO TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST,  TWO  THOU-
SAND TWENTY.
  25.  CLEAN  HEATING  FUEL  CREDIT.  (A)  GENERAL.  A TAXPAYER SHALL BE
ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE.  SUCH  CREDIT,
TO  BE  COMPUTED  AS HEREINAFTER PROVIDED, SHALL BE ALLOWED FOR BIOHEAT,
USED FOR SPACE HEATING OR HOT WATER PRODUCTION FOR RESIDENTIAL  PURPOSES
WITHIN  THIS  STATE  PURCHASED BEFORE JANUARY FIRST, TWO THOUSAND SEVEN-
TEEN. SUCH CREDIT SHALL BE $0.01 PER PERCENT OF BIODIESEL PER GALLON  OF
BIOHEAT,  NOT  TO  EXCEED  TWENTY  CENTS  PER  GALLON, PURCHASED BY SUCH
TAXPAYER.

S. 6359                            92                            A. 8559

  (B) DEFINITIONS. FOR PURPOSES OF THIS SUBDIVISION, THE FOLLOWING DEFI-
NITIONS SHALL APPLY:
  (I)  "BIODIESEL" SHALL MEAN A FUEL COMPRISED EXCLUSIVELY OF MONO-ALKYL
ESTERS OF LONG CHAIN FATTY ACIDS DERIVED FROM VEGETABLE OILS  OR  ANIMAL
FATS, DESIGNATED B100, WHICH MEETS THE SPECIFICATIONS OF AMERICAN SOCIE-
TY OF TESTING AND MATERIALS DESIGNATION D 6751.
  (II)  "BIOHEAT"  SHALL MEAN A FUEL COMPRISED OF BIODIESEL BLENDED WITH
CONVENTIONAL HOME HEATING OIL, WHICH MEETS  THE  SPECIFICATIONS  OF  THE
AMERICAN SOCIETY OF TESTING AND MATERIALS DESIGNATION D 396 OR D 975.
  (C)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE
IN  SUCH  TAXABLE  YEAR  SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE
CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS  OF  SECTION  ONE
THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  26.  CREDIT FOR REHABILITATION OF HISTORIC PROPERTIES. (A) APPLICATION
OF CREDIT. (I) FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,
TWO  THOUSAND  TEN,  AND  BEFORE  JANUARY  FIRST, TWO THOUSAND TWENTY, A
TAXPAYER SHALL BE ALLOWED A CREDIT AS HEREINAFTER PROVIDED, AGAINST  THE
TAX  IMPOSED  BY THIS ARTICLE, IN AN AMOUNT EQUAL TO ONE HUNDRED PERCENT
OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME  TAXABLE  YEAR
WITH  RESPECT  TO A CERTIFIED HISTORIC STRUCTURE UNDER SUBSECTION (C)(2)
OF SECTION 47 OF THE INTERNAL REVENUE CODE WITH RESPECT TO  A  CERTIFIED
HISTORIC  STRUCTURE  LOCATED  WITHIN  THE  STATE. PROVIDED, HOWEVER, THE
CREDIT SHALL NOT EXCEED FIVE MILLION DOLLARS.
  (II) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOU-
SAND  TWENTY,  A  TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT AS HEREINAFTER
PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, IN AN AMOUNT EQUAL TO
THIRTY PERCENT OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME
TAXABLE YEAR WITH  RESPECT  TO  A  CERTIFIED  HISTORIC  STRUCTURE  UNDER
SUBSECTION  (C)(3)  OF  SECTION  47  OF  THE  INTERNAL REVENUE CODE WITH
RESPECT TO A CERTIFIED HISTORIC  STRUCTURE  LOCATED  WITHIN  THE  STATE.
PROVIDED,  HOWEVER,  THE  CREDIT  SHALL  NOT EXCEED ONE HUNDRED THOUSAND
DOLLARS.
  (B) IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP OR A SHAREHOLDER  IN
A  NEW  YORK S CORPORATION, THEN THE CREDIT CAPS IMPOSED IN SUBPARAGRAPH
(A) OF THIS PARAGRAPH SHALL BE APPLIED AT THE ENTITY LEVEL, SO THAT  THE
AGGREGATE  CREDIT  ALLOWED  TO  ALL THE PARTNERS OR SHAREHOLDERS OF EACH
SUCH ENTITY IN THE TAXABLE YEAR DOES NOT EXCEED THE CREDIT CAP  THAT  IS
APPLICABLE IN THAT TAXABLE YEAR.
  (B)  TAX CREDITS ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE ALLOWED
IN THE TAXABLE YEAR THAT  THE  QUALIFIED  REHABILITATION  IS  PLACED  IN
SERVICE UNDER SECTION 167 OF THE FEDERAL INTERNAL REVENUE CODE.
  (C)  IF  THE CREDIT ALLOWED THE TAXPAYER PURSUANT TO SECTION 47 OF THE
INTERNAL REVENUE CODE WITH RESPECT  TO  A  QUALIFIED  REHABILITATION  IS
RECAPTURED  PURSUANT  TO  SUBSECTION  (A)  OF SECTION 50 OF THE INTERNAL
REVENUE CODE, A PORTION OF THE CREDIT ALLOWED UNDER THIS SUBSECTION MUST
BE ADDED BACK IN THE SAME TAXABLE YEAR AND IN THE SAME PROPORTION AS THE
FEDERAL CREDIT.
  (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR
SHALL  NOT  REDUCE  THE  TAX  DUE  FOR SUCH YEAR TO LESS THAN THE AMOUNT

S. 6359                            93                            A. 8559

PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
TEN  OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER
THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX  TO  SUCH  AMOUNT,
ANY  AMOUNT  OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE
TREATED AS AN OVERPAYMENT OF TAX TO BE RECREDITED OR REFUNDED IN ACCORD-
ANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF  THIS
CHAPTER.  PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION
ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING,  NO  INTEREST
SHALL BE PAID THEREON.
  (E)  TO  BE  ELIGIBLE FOR THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION,
THE REHABILITATION PROJECT SHALL BE IN WHOLE OR IN PART LOCATED WITHIN A
CENSUS TRACT WHICH IS IDENTIFIED  AS  BEING  AT  OR  BELOW  ONE  HUNDRED
PERCENT  OF  THE  STATE MEDIAN FAMILY INCOME AS CALCULATED AS OF JANUARY
FIRST OF EACH YEAR USING THE MOST RECENT FIVE  YEAR  ESTIMATE  FROM  THE
AMERICAN COMMUNITY SURVEY PUBLISHED BY THE UNITED STATES CENSUS BUREAU.
  27.  CREDITS  OF NEW YORK S CORPORATIONS. (A) GENERAL. NOTWITHSTANDING
THE PROVISIONS OF THIS SECTION, NO CARRYOVER OF CREDIT  ALLOWABLE  IN  A
NEW  YORK C YEAR SHALL BE DEDUCTED FROM THE TAX OTHERWISE DUE UNDER THIS
ARTICLE IN A NEW YORK S YEAR, AND NO CREDIT ALLOWABLE IN A  NEW  YORK  S
YEAR,  OR  CARRYOVER  OF  SUCH  CREDIT,  SHALL  BE DEDUCTED FROM THE TAX
IMPOSED BY THIS ARTICLE.  HOWEVER, A NEW YORK S YEAR SHALL BE TREATED AS
A TAXABLE YEAR FOR PURPOSES OF DETERMINING THE NUMBER OF  TAXABLE  YEARS
TO  WHICH A CREDIT MAY BE CARRIED OVER UNDER THIS SECTION. NOTWITHSTAND-
ING THE FIRST SENTENCE OF THIS SUBDIVISION, HOWEVER, THE CREDIT FOR  THE
SPECIAL  ADDITIONAL  MORTGAGE RECORDING TAX SHALL BE ALLOWED AS PROVIDED
IN SUBDIVISION FIFTEEN OF THIS SECTION, AND THE CARRYOVER  OF  ANY  SUCH
CREDIT  SHALL  BE  DETERMINED  WITHOUT  REGARD  TO WHETHER THE CREDIT IS
CARRIED FROM A NEW YORK C YEAR TO A NEW YORK S YEAR OR VICE-VERSA.
  28. NET OPERATING LOSS CONVERSION CREDIT. (A) BASE  YEAR  DESIGNATION.
FOR  THE  PURPOSES  OF  THIS SUBDIVISION, THE TERM "BASE YEAR" MEANS THE
LAST TAXABLE YEAR BEGINNING ON OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND
THIRTEEN AND BEFORE JANUARY FIRST, TWO THOUSAND FOURTEEN.
  (B) ALLOWANCE OF CREDIT. A TAXPAYER WHICH HAS ANY UNABSORBED NET OPER-
ATING  LOSS CARRYOVER, REFERRED TO IN THIS SUBDIVISION AS A "NOL", AFTER
CALCULATING ITS ENTIRE NET INCOME UNDER ARTICLE NINE-A OR ARTICLE  THIR-
TY-TWO  FOR  THE  BASE  YEAR  SHALL  BE ALLOWED A CREDIT AGAINST THE TAX
IMPOSED BY THIS ARTICLE FOR TAXABLE YEARS BEGINNING ON OR AFTER  JANUARY
FIRST, TWO THOUSAND FIFTEEN.
  (C)  CALCULATION  OF  CREDIT.  THE  TOTAL AMOUNT OF THE NOL CONVERSION
CREDIT SHALL BE THE PRODUCT OF:
  (I) ANY UNABSORBED PORTION OF NET OPERATING LOSS AS  CALCULATED  UNDER
PARAGRAPH  (F)  OF SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS
ARTICLE OR SUBSECTION (K-1) OF SECTION FOURTEEN HUNDRED  FIFTY-THREE  OF
ARTICLE  THIRTY-TWO, AS SUCH SECTIONS WERE IN EFFECT ON DECEMBER THIRTY-
FIRST, TWO THOUSAND FOURTEEN, THAT WAS NOT DEDUCTIBLE IN PREVIOUS  TAXA-
BLE  YEARS  AND  WAS  ELIGIBLE FOR CARRYOVER ON THE LAST DAY OF THE BASE
YEAR, INCLUDING ANY NET OPERATING LOSS SUSTAINED BY THE TAXPAYER  DURING
THE BASE YEAR;
  (II) THE TAXPAYER'S BUSINESS ALLOCATION PERCENTAGE AS CALCULATED UNDER
PARAGRAPH  (A)  OF  SUBDIVISION THREE OF SECTION TWO HUNDRED TEN OF THIS
ARTICLE FOR THE BASE YEAR, OR THE TAXPAYER'S  ALLOCATION  PERCENTAGE  AS
CALCULATED  UNDER SECTION FOURTEEN HUNDRED FIFTY-FOUR OF ARTICLE THIRTY-
TWO FOR PURPOSES OF ALLOCATING ENTIRE NET INCOME FOR THE BASE YEAR (SUCH
ALLOCATION PERCENTAGES REFERRED TO IN THIS  SUBDIVISION  AS  "BAP"),  AS
SUCH  SECTIONS  WERE  IN  EFFECT  ON DECEMBER THIRTY-FIRST, TWO THOUSAND
FOURTEEN; AND

S. 6359                            94                            A. 8559

  (III) THE TAXPAYER'S TAX RATE FOR THE BASE YEAR  AS  CALCULATED  UNDER
PARAGRAPH  (A)  OF  SUBDIVISION  ONE  OF SECTION TWO HUNDRED TEN OF THIS
ARTICLE OR SUBSECTION (A) OF  SECTION  FOURTEEN  HUNDRED  FIFTY-FIVE  OF
ARTICLE  THIRTY-TWO, AS SUCH SECTIONS WERE IN EFFECT ON DECEMBER THIRTY-
FIRST, TWO THOUSAND FOURTEEN.
  (D)  APPLICATION  OF  CREDIT.  A TAXPAYER, OTHER THAN A SMALL BUSINESS
CORPORATION AS DEFINED IN PARAGRAPH (E) OF THIS SUBDIVISION, IS  ALLOWED
AN  ANNUAL NOL CONVERSION CREDIT THAT IS EQUAL TO ONE-TENTH OF THE TOTAL
NOL CONVERSION CREDIT AS CALCULATED IN PARAGRAPH (C)  OF  THIS  SUBDIVI-
SION.  SUCH  CREDIT  SHALL NOT BE ALLOWED AGAINST THE TAX COMPUTED UNDER
PARAGRAPH (B) OR (D) OF SUBDIVISION ONE OF SECTION TWO  HUNDRED  TEN  OF
THIS ARTICLE.
  (E) SMALL BUSINESS PROVISIONS. (I) FOR PURPOSES OF THIS SUBDIVISION, A
SMALL  BUSINESS  CORPORATION IS A CORPORATION DEFINED IN PARAGRAPH THREE
OF SUBSECTION (C) OF SECTION TWELVE HUNDRED FORTY-FOUR OF  THE  INTERNAL
REVENUE  CODE (WITHOUT REGARD TO THE SECOND SENTENCE OF SUBPARAGRAPH (A)
THEREOF) AS OF THE LAST DAY OF THE BASE YEAR.
  (II) APPLICATION OF CREDIT. A SMALL BUSINESS CORPORATION IS ALLOWED TO
CLAIM THE TOTAL NOL CONVERSION CREDIT AS CALCULATED IN PARAGRAPH (C)  OF
THIS  SUBDIVISION  IN  A  TAXABLE YEAR. SUCH CREDIT SHALL NOT BE ALLOWED
AGAINST THE TAX COMPUTED UNDER PARAGRAPH (B) OR (D) OF  SUBDIVISION  ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  (F)  CARRYOVER.  (I)  THE  CREDIT  ALLOWED BY THIS SUBDIVISION FOR ANY
TAXABLE YEAR MAY ONLY REDUCE THE TAX DUE FOR SUCH YEAR TO THE HIGHER  OF
THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (B) OR (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  (II) HOWEVER, IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, OR, IF THE TAXPAYER
IS REQUIRED TO PAY A TAX UNDER  PARAGRAPH  (B)  OF  SUBDIVISION  ONE  OF
SECTION  TWO HUNDRED TEN OF THIS ARTICLE, ANY REMAINING AMOUNT OF CREDIT
ALLOWED FOR THAT TAXABLE YEAR MAY BE CARRIED OVER TO  THE  NEXT  TAXABLE
YEAR  OR  YEARS FOLLOWING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE
TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (G) COMBINED GROUPS. (I) WHERE A TAXPAYER  WAS  PROPERLY  INCLUDED  OR
REQUIRED  TO BE INCLUDED IN A COMBINED REPORT FOR THE BASE YEAR PURSUANT
TO SUBDIVISION FOUR OF SECTION TWO HUNDRED ELEVEN OF THIS  ARTICLE,  THE
COMBINED  GROUP  SHALL  CALCULATE  ITS CREDIT USING THE COMBINED GROUP'S
TOTAL NOL, BAP, AND TAX RATE ACCORDING TO PARAGRAPH (C) OF THIS SUBDIVI-
SION.
  (II) IF THE MEMBERS OF THE COMBINED GROUP IN A COMBINED REPORT FOR THE
BASE YEAR ARE THE SAME AS  THE  MEMBERS  OF  THE  COMBINED  GROUP  IN  A
COMBINED  REPORT  FOR  THE  TAXABLE YEAR IMMEDIATELY SUCCEEDING THE BASE
YEAR, THE CREDIT SHALL BE CALCULATED USING THE COMBINED GROUP'S NOL, BAP
AND APPLICABLE TAX RATE ACCORDING TO PARAGRAPH (C) OF THIS  SUBDIVISION.
IF  A  TAXPAYER  WAS PROPERLY INCLUDED IN A COMBINED REPORT FOR THE BASE
YEAR AND FILES A SEPARATE REPORT IN A SUBSEQUENT TAXABLE YEAR, THEN  THE
AMOUNT  OF REMAINING NOL CONVERSION CREDIT ALLOWED TO THE SEPARATE FILER
SHALL BE PROPORTIONATE TO THE AMOUNT THAT SUCH TAXPAYER  CONTRIBUTED  TO
THE  ORIGINAL NOL CONVERSION CREDIT ON A COMBINED BASIS, AND THE REMAIN-
ING NOL CONVERSION CREDIT  ALLOWED  TO  THE  REMAINING  MEMBERS  OF  THE
COMBINED  GROUP  SHALL  BE  REDUCED  BY  THE AMOUNT OF PROPORTIONATE NOL
CONVERSION CREDIT ALLOWED TO THE TAXPAYER OR TAXPAYERS FILING  SEPARATE-
LY.  IF A COMBINED GROUP INCLUDES ADDITIONAL MEMBERS IN THE TAXABLE YEAR
IMMEDIATELY SUCCEEDING THE BASE  YEAR  WHO  WERE  NOT  INCLUDED  IN  THE
COMBINED  GROUP DURING THE BASE YEAR, EACH INDIVIDUAL COMBINED GROUP AND
SEPARATELY FILING TAXPAYER SHALL CALCULATE ITS CREDIT FOR THE BASE  YEAR

S. 6359                            95                            A. 8559

AND  THE  SUM OF THE CREDITS SHALL BE THE COMBINED NOL CONVERSION CREDIT
OF THE COMBINED GROUP.
  (H)  EXPIRATION  OF  CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
SHALL NOT BE APPLICABLE TO TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY
FIRST, TWO THOUSAND THIRTY-FIVE.
  29.  HIRE  A  VET  CREDIT.  (A) ALLOWANCE OF CREDIT. FOR TAXABLE YEARS
BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOUSAND  FIFTEEN  AND  BEFORE
JANUARY  FIRST,  TWO  THOUSAND  SEVENTEEN, A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS PROVIDED IN THIS SUBDIVISION, AGAINST THE  TAX
IMPOSED BY THIS ARTICLE, FOR HIRING AND EMPLOYING, FOR NOT LESS THAN ONE
YEAR  AND  FOR  NOT  LESS  THAN THIRTY-FIVE HOURS EACH WEEK, A QUALIFIED
VETERAN WITHIN THE STATE. THE TAXPAYER MAY CLAIM THE CREDIT IN THE  YEAR
IN  WHICH  THE QUALIFIED VETERAN COMPLETES ONE YEAR OF EMPLOYMENT BY THE
TAXPAYER. IF THE TAXPAYER CLAIMS THE CREDIT ALLOWED UNDER THIS  SUBDIVI-
SION, THE TAXPAYER MAY NOT USE THE HIRING OF A QUALIFIED VETERAN THAT IS
THE BASIS FOR THIS CREDIT IN THE BASIS OF ANY OTHER CREDIT ALLOWED UNDER
THIS ARTICLE.
  (B) QUALIFIED VETERAN. A QUALIFIED VETERAN IS AN INDIVIDUAL:
  (1)  WHO  SERVED  ON  ACTIVE DUTY IN THE UNITED STATES ARMY, NAVY, AIR
FORCE, MARINE CORPS, COAST GUARD OR THE RESERVES THEREOF, OR WHO  SERVED
IN  ACTIVE MILITARY SERVICE OF THE UNITED STATES AS A MEMBER OF THE ARMY
NATIONAL GUARD, AIR NATIONAL GUARD, NEW YORK GUARD  OR  NEW  YORK  NAVAL
MILITIA;  WHO  WAS  RELEASED  FROM  ACTIVE  DUTY BY GENERAL OR HONORABLE
DISCHARGE AFTER SEPTEMBER ELEVENTH, TWO THOUSAND ONE;
  (2) WHO COMMENCES EMPLOYMENT BY THE QUALIFIED  TAXPAYER  ON  OR  AFTER
JANUARY  FIRST,  TWO  THOUSAND  FOURTEEN,  AND BEFORE JANUARY FIRST, TWO
THOUSAND SIXTEEN; AND
  (3) WHO CERTIFIES BY SIGNED AFFIDAVIT, UNDER PENALTY OF PERJURY,  THAT
HE OR SHE HAS NOT BEEN EMPLOYED FOR THIRTY-FIVE OR MORE HOURS DURING ANY
WEEK  IN  THE  ONE HUNDRED EIGHTY DAY PERIOD IMMEDIATELY PRIOR TO HIS OR
HER EMPLOYMENT BY THE TAXPAYER.
  (C) EMPLOYER PROHIBITION. AN EMPLOYER SHALL NOT DISCHARGE AN  EMPLOYEE
AND  HIRE  A QUALIFYING VETERAN SOLELY FOR THE PURPOSE OF QUALIFYING FOR
THIS CREDIT.
  (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL BE TEN PERCENT OF
THE TOTAL AMOUNT OF WAGES PAID  TO  THE  QUALIFIED  VETERAN  DURING  THE
VETERAN'S FIRST FULL YEAR OF EMPLOYMENT. PROVIDED, HOWEVER, THAT, IF THE
QUALIFIED  VETERAN IS A DISABLED VETERAN, AS DEFINED IN PARAGRAPH (B) OF
SUBDIVISION ONE OF SECTION EIGHTY-FIVE OF THE  CIVIL  SERVICE  LAW,  THE
AMOUNT  OF  THE  CREDIT  SHALL BE FIFTEEN PERCENT OF THE TOTAL AMOUNT OF
WAGES PAID TO THE QUALIFIED VETERAN DURING THE VETERAN'S FIRST FULL YEAR
OF EMPLOYMENT. THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION SHALL NOT
EXCEED IN ANY TAXABLE YEAR, FIVE  THOUSAND  DOLLARS  FOR  ANY  QUALIFIED
VETERAN  AND FIFTEEN THOUSAND DOLLARS FOR ANY QUALIFIED VETERAN WHO IS A
DISABLED VETERAN.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT  ALLOWABLE
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY  BE
CARRIED  OVER  TO THE FOLLOWING THREE YEARS AND MAY BE DEDUCTED FROM THE
TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  30. ALTERNATIVE FUELS AND ELECTRIC VEHICLE RECHARGING PROPERTY CREDIT.
(A) GENERAL. A TAXPAYER SHALL BE ALLOWED A CREDIT,  TO  BE  COMPUTED  AS
HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE FOR ALTER-

S. 6359                            96                            A. 8559

NATIVE  FUEL  VEHICLE REFUELING AND ELECTRIC VEHICLE RECHARGING PROPERTY
PLACED IN SERVICE DURING THE TAXABLE YEAR.
  (B)  ALTERNATIVE  FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE
RECHARGING PROPERTY. THE CREDIT UNDER THIS SUBDIVISION  FOR  ALTERNATIVE
FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE RECHARGING PROPERTY
SHALL  EQUAL  FOR EACH INSTALLATION OF PROPERTY THE LESSER OF FIVE THOU-
SAND DOLLARS OR FIFTY PERCENT OF THE COST OF ANY SUCH PROPERTY:
  (I) WHICH IS LOCATED IN THIS STATE;
  (II) WHICH CONSTITUTES ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY  OR
ELECTRIC VEHICLE RECHARGING PROPERTY; AND
  (III)  FOR  WHICH NONE OF THE COST HAS BEEN PAID FOR FROM THE PROCEEDS
OF GRANTS, INCLUDING GRANTS FROM THE NEW YORK STATE ENERGY RESEARCH  AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  (C)  DEFINITIONS.  (I)  THE  TERM  "ALTERNATIVE FUEL VEHICLE REFUELING
PROPERTY" MEANS ALL OF THE EQUIPMENT NEEDED  TO  DISPENSE  ANY  FUEL  AT
LEAST EIGHTY-FIVE PERCENT OF THE VOLUME OF WHICH CONSISTS OF ONE OR MORE
OF THE FOLLOWING: NATURAL GAS, LIQUIFIED NATURAL GAS, LIQUIFIED PETROLE-
UM, OR HYDROGEN.
  (II)  THE TERM "ELECTRIC VEHICLE RECHARGING PROPERTY" MEANS ALL OF THE
EQUIPMENT NEEDED TO CONVEY ELECTRIC POWER  FROM  THE  ELECTRIC  GRID  OR
ANOTHER POWER SOURCE TO AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  (D) CARRYOVERS. IN NO EVENT SHALL THE CREDIT UNDER THIS SUBDIVISION BE
ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS ARTICLE. PROVIDED, HOWEVER, THAT IF THE AMOUNT OF
CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH  TAXABLE
YEAR  MAY  BE  CARRIED  OVER  TO  THE FOLLOWING YEAR OR YEARS AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (E) CREDIT RECAPTURE. IF, AT ANY TIME BEFORE THE END OF  ITS  RECOVERY
PERIOD,  ALTERNATIVE FUEL VEHICLE REFUELING OR ELECTRIC VEHICLE RECHARG-
ING PROPERTY CEASES TO BE QUALIFIED, A RECAPTURE AMOUNT  MUST  BE  ADDED
BACK IN THE YEAR IN WHICH SUCH CESSATION OCCURS.
  (I)  ALTERNATIVE  FUEL  VEHICLE REFUELING PROPERTY OR ELECTRIC VEHICLE
RECHARGING PROPERTY CEASES TO BE QUALIFIED IF:
  (I) THE PROPERTY NO LONGER QUALIFIES AS ALTERNATIVE FUEL VEHICLE REFU-
ELING PROPERTY OR ELECTRIC VEHICLE RECHARGING PROPERTY; OR
  (II) FIFTY PERCENT OR MORE OF THE USE OF THE  PROPERTY  IN  A  TAXABLE
YEAR IS OTHER THAN IN A TRADE OR BUSINESS IN THIS STATE; OR
  (III)  THE  TAXPAYER RECEIVING THE CREDIT UNDER THIS SUBDIVISION SELLS
OR DISPOSES OF THE PROPERTY AND KNOWS OR HAS REASON  TO  KNOW  THAT  THE
PROPERTY  WILL  BE USED IN A MANNER DESCRIBED IN CLAUSES (I) AND (II) OF
THIS SUBPARAGRAPH.
  (II) RECAPTURE AMOUNT. THE RECAPTURE AMOUNT IS  EQUAL  TO  THE  CREDIT
ALLOWABLE UNDER THIS SUBDIVISION MULTIPLIED BY A FRACTION, THE NUMERATOR
OF  WHICH IS THE TOTAL RECOVERY PERIOD FOR THE PROPERTY MINUS THE NUMBER
OF RECOVERY YEARS PRIOR TO, BUT NOT INCLUDING, THE RECAPTURE  YEAR,  AND
THE DENOMINATOR OF WHICH IS THE TOTAL RECOVERY PERIOD.
  (F)  TERMINATION. THE CREDIT ALLOWED BY PARAGRAPH (B) OF THIS SUBDIVI-
SION  SHALL  NOT  APPLY  IN  TAXABLE  YEARS  BEGINNING  AFTER   DECEMBER
THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
  31. EXCELSIOR JOBS PROGRAM CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
WILL  BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION THIRTY-
ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY  TAXABLE  YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS

S. 6359                            97                            A. 8559

THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED
IN  ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
INTEREST WILL BE PAID THEREON.
  32. EMPIRE STATE FILM POST PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT.
A TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION THIRTY-ONE OF THIS  CHAP-
TER SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN SUCH SECTION
THIRTY-ONE AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT IF  THE
AMOUNT  OF  THE  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT, FIFTY PERCENT OF THE  EXCESS  SHALL
BE  TREATED  AS  AN  OVERPAYMENT  OF  TAX  TO BE CREDITED OR REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF SUBSECTION (C) OF
SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTANDING,  NO
INTEREST  SHALL BE PAID THEREON. THE BALANCE OF SUCH CREDIT NOT CREDITED
OR REFUNDED IN SUCH TAXABLE YEAR MAY BE A CARRYOVER TO  THE  IMMEDIATELY
SUCCEEDING  TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR
SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF THE CREDIT OVER THE  TAX
FOR SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE
CREDITED  OR  REFUNDED  IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS
OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  33. TEMPORARY DEFERRAL NONREFUNDABLE PAYOUT CREDIT. (A)  ALLOWANCE  OF
CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
IN  SUBDIVISION  ONE OF SECTION THIRTY-FOUR OF THIS CHAPTER, AGAINST THE
TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR THAT YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR MAY BE CARRIED OVER TO THE FOLLOWING  YEAR  OR  YEARS  AND  MAY  BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  34.  TEMPORARY  DEFERRAL  REFUNDABLE  PAYOUT  CREDIT. (A) ALLOWANCE OF
CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
IN SUBDIVISION TWO OF SECTION THIRTY-FOUR OF THIS CHAPTER,  AGAINST  THE
TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF  CREDIT.  IN NO EVENT SHALL THE CREDIT UNDER THIS
SUBDIVISION BE ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE  TAX  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE.  IF,  HOWEVER,  THE  AMOUNT  OF
CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH  TAXABLE
YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE REFUNDED IN ACCORD-

S. 6359                            98                            A. 8559

ANCE  WITH  THE  PROVISIONS  OF  SECTION ONE THOUSAND EIGHTY-SIX OF THIS
CHAPTER, PROVIDED HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  35.  ECONOMIC  TRANSFORMATION  AND  FACILITY REDEVELOPMENT PROGRAM TAX
CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED  A  CREDIT,
TO  BE  COMPUTED  AS  PROVIDED  IN  SECTION THIRTY-FIVE OF THIS CHAPTER,
AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY  TAXABLE  YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED
IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX  OF
THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF SUBSECTION (C) OF
SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTANDING,  NO
INTEREST WILL BE PAID THEREON.
  36.  NEW  YORK  YOUTH  WORKS  TAX CREDIT. (A) A TAXPAYER THAT HAS BEEN
CERTIFIED BY THE COMMISSIONER OF LABOR AS A QUALIFIED EMPLOYER  PURSUANT
TO  SECTION  TWENTY-FIVE-A  OF  THE  LABOR LAW SHALL BE ALLOWED A CREDIT
AGAINST THE TAX IMPOSED BY  THIS  ARTICLE  EQUAL  TO  (I)  FIVE  HUNDRED
DOLLARS  PER  MONTH FOR UP TO SIX MONTHS FOR EACH QUALIFIED EMPLOYEE THE
EMPLOYER EMPLOYS IN A FULL-TIME JOB OR TWO  HUNDRED  FIFTY  DOLLARS  PER
MONTH  FOR  UP  TO  SIX  MONTHS FOR EACH QUALIFIED EMPLOYEE THE EMPLOYER
EMPLOYS IN A PART-TIME JOB OF AT LEAST TWENTY  HOURS  PER  WEEK  OR  TEN
HOURS  PER  WEEK  WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH SCHOOL
FULL-TIME, (II) ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO  IS
EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY THE QUALIFIED EMPLOYER
IN  A  FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE
WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY  THE  QUALIFIED
EMPLOYER  IN  A  PART-TIME  JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN
HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED  IN  HIGH  SCHOOL
FULL-TIME,  AND (III) AN ADDITIONAL ONE THOUSAND DOLLARS FOR EACH QUALI-
FIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER  THE
FIRST  YEAR  OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A
FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS
EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER THE  FIRST  YEAR  OF  THE
EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT
LEAST  TWENTY  HOURS  PER  WEEK OR TEN HOURS PER WEEK WHEN THE QUALIFIED
EMPLOYEE IS ENROLLED IN HIGH SCHOOL  FULL-TIME.  FOR  PURPOSES  OF  THIS
SUBDIVISION,  THE  TERM "QUALIFIED EMPLOYEE" SHALL HAVE THE SAME MEANING
AS SET FORTH IN SUBDIVISION (B) OF SECTION TWENTY-FIVE-A  OF  THE  LABOR
LAW.  THE  PORTION  OF  THE CREDIT DESCRIBED IN SUBPARAGRAPH (I) OF THIS
PARAGRAPH SHALL BE ALLOWED FOR THE TAXABLE YEAR IN WHICH THE  WAGES  ARE
PAID  TO THE QUALIFIED EMPLOYEE, AND THE PORTION OF THE CREDIT DESCRIBED
IN SUBPARAGRAPH (II) OF THIS PARAGRAPH SHALL BE ALLOWED IN  THE  TAXABLE
YEAR IN WHICH THE ADDITIONAL SIX MONTH PERIOD ENDS.
  (B) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR MAY
NOT  REDUCE THE TAX DUE FOR THAT YEAR TO LESS THAN THE AMOUNT PRESCRIBED
IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN  OF  THIS
ARTICLE.  HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDI-
VISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO THAT AMOUNT,  ANY  AMOUNT
OF  CREDIT  NOT  DEDUCTIBLE  IN  THAT TAXABLE YEAR WILL BE TREATED AS AN
OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER, NO INTEREST WILL BE PAID THEREON.

S. 6359                            99                            A. 8559

  (C)  THE  TAXPAYER  MAY  BE  REQUIRED  TO ATTACH TO ITS TAX RETURN ITS
CERTIFICATE OF ELIGIBILITY ISSUED BY THE COMMISSIONER OF LABOR  PURSUANT
TO SECTION TWENTY-FIVE-A OF THE LABOR LAW. IN NO EVENT SHALL THE TAXPAY-
ER  BE  ALLOWED A CREDIT GREATER THAN THE AMOUNT OF THE CREDIT LISTED ON
THE  CERTIFICATE  OF  ELIGIBILITY. NOTWITHSTANDING ANY PROVISION OF THIS
CHAPTER TO THE CONTRARY, THE COMMISSIONER AND THE COMMISSIONER'S  DESIG-
NEES  MAY  RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER CLAIMING THIS
CREDIT AND THE AMOUNT OF THE CREDIT EARNED BY THE TAXPAYER.    PROVIDED,
HOWEVER,  IF  A  TAXPAYER CLAIMS THIS CREDIT BECAUSE IT IS A MEMBER OF A
LIMITED LIABILITY COMPANY OR A PARTNER IN A PARTNERSHIP, ONLY THE AMOUNT
OF CREDIT EARNED BY THE ENTITY AND NOT THE AMOUNT OF CREDIT  CLAIMED  BY
THE TAXPAYER MAY BE RELEASED.
  37. EMPIRE STATE JOBS RETENTION PROGRAM CREDIT. (A) ALLOWANCE OF CRED-
IT.   A TAXPAYER WILL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN
SECTION THIRTY-SIX OF THIS CHAPTER, AGAINST THE TAXES  IMPOSED  BY  THIS
ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR WILL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED
IN  ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
INTEREST WILL BE PAID THEREON.
  38. CREDIT FOR COMPANIES WHO  PROVIDE  TRANSPORTATION  TO  INDIVIDUALS
WITH  DISABILITIES.  (A) ALLOWANCE AND AMOUNT OF CREDIT. A TAXPAYER, WHO
PROVIDES  A  TAXICAB  SERVICE  AS  DEFINED  IN   SECTION   ONE   HUNDRED
FORTY-EIGHT-A  OF  THE  VEHICLE  AND TRAFFIC LAW, OR A LIVERY SERVICE AS
DEFINED IN SECTION ONE HUNDRED TWENTY-ONE-E OF THE VEHICLE  AND  TRAFFIC
LAW,  SHALL  BE  ALLOWED  A  CREDIT,  TO BE COMPUTED AS PROVIDED IN THIS
SUBDIVISION, AGAINST THE TAX IMPOSED BY THIS ARTICLE. THE AMOUNT OF  THE
CREDIT  SHALL BE EQUAL TO THE INCREMENTAL COST ASSOCIATED WITH UPGRADING
A VEHICLE SO THAT IT IS ACCESSIBLE BY INDIVIDUALS WITH  DISABILITIES  AS
DEFINED  IN  PARAGRAPH  (B) OF THIS SUBDIVISION. PROVIDED, HOWEVER, THAT
SUCH CREDIT SHALL NOT EXCEED  TEN  THOUSAND  DOLLARS  PER  VEHICLE.  FOR
PURPOSES  OF  THIS  SUBDIVISION,  PURCHASES  OF  NEW  VEHICLES  THAT ARE
INITIALLY MANUFACTURED TO BE ACCESSIBLE FOR INDIVIDUALS  WITH  DISABILI-
TIES  AND  FOR WHICH THERE IS NO COMPARABLE MAKE AND MODEL THAT DOES NOT
INCLUDE THE EQUIPMENT NECESSARY TO PROVIDE ACCESSIBILITY TO  INDIVIDUALS
WITH DISABILITIES, THE CREDIT SHALL BE TEN THOUSAND DOLLARS PER VEHICLE.
  (B) DEFINITION. THE TERM "ACCESSIBLE BY INDIVIDUALS WITH DISABILITIES"
SHALL,  FOR  THE  PURPOSES  OF THIS SUBDIVISION, REFER TO A VEHICLE THAT
COMPLIES WITH FEDERAL REGULATIONS PROMULGATED PURSUANT TO THE  AMERICANS
WITH  DISABILITIES  ACT  APPLICABLE  TO  VANS  UNDER  TWENTY-TWO FEET IN
LENGTH, BY THE FEDERAL DEPARTMENT OF TRANSPORTATION, IN CODE OF  FEDERAL
REGULATIONS,  TITLE 49, PARTS 37 AND 38, AND BY THE FEDERAL ARCHITECTURE
AND TRANSPORTATION BARRIERS COMPLIANCE BOARD, IN CODE OF  FEDERAL  REGU-
LATIONS, TITLE 36, SECTION 1192.23, AND THE FEDERAL MOTOR VEHICLE SAFETY
STANDARDS, CODE OF FEDERAL REGULATIONS, TITLE 49, PART 57.
  (C)  APPLICATION OF CREDIT. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER
THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR  SUCH  YEAR
TO  LESS  THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT  OF

S. 6359                            100                           A. 8559

CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCTIBLE  IN  SUCH
TAXABLE  YEAR  SHALL BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, AND
MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  39.  BEER  PRODUCTION CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO
BE COMPUTED AS PROVIDED IN SECTION THIRTY-SEVEN OF THIS CHAPTER, AGAINST
THE TAX IMPOSED BY THIS ARTICLE. IN NO EVENT SHALL  THE  CREDIT  ALLOWED
UNDER  THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH
YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  REDUCES
THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  40. MINIMUM WAGE REIMBURSEMENT CREDIT.  (A)  ALLOWANCE  OF  CREDIT.  A
TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS PROVIDED IN
SECTION THIRTY-EIGHT OF THIS CHAPTER, AGAINST THE TAX  IMPOSED  BY  THIS
ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED
IN  ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
INTEREST WILL BE PAID THEREON.
  41. THE TAX-FREE NY AREA TAX ELIMINATION CREDIT. A TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT  TO  BE COMPUTED AS PROVIDED IN SECTION FORTY OF THIS
CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.  UNLESS  THE  TAXPAYER
HAS  A  TAX-FREE  NY  AREA ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  SHALL  NOT
REDUCE  THE  TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN
PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION  TWO  HUNDRED  TEN  OF  THIS
ARTICLE.  HOWEVER,  ANY  AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF  TAX  TO  BE  CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  42. ALTERNATIVE BASE CREDIT. (A) IF THE TAX IMPOSED ON A  TAXPAYER  BY
SUBDIVISION  ONE  OF  SECTION  TWO  HUNDRED  NINE OF THIS ARTICLE IS THE
AMOUNT PRESCRIBED IN PARAGRAPH (B) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS  ARTICLE,  THE TAXPAYER SHALL BE ALLOWED A CREDIT
AGAINST THE TAX IMPOSED UNDER THIS ARTICLE EQUAL TO THE  AMOUNT  OF  TAX
PAID  TO  ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE TAX BASE
PRESCRIBED IN SUCH PARAGRAPH (B). IF THE TAX IMPOSED ON  A  TAXPAYER  BY
SUBDIVISION  ONE  OF  SECTION  TWO  HUNDRED  NINE OF THIS ARTICLE IS THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS  ARTICLE,  THE TAXPAYER SHALL BE ALLOWED A CREDIT
AGAINST THE TAX IMPOSED UNDER THIS ARTICLE EQUAL TO THE  AMOUNT  OF  TAX

S. 6359                            101                           A. 8559

PAID  TO  ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE TAX BASE
PRESCRIBED IN SUCH PARAGRAPH (D).
  (B)  IN  NO  EVENT SHALL THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR
ANY TAXABLE YEAR REDUCE THE TAX DUE FOR  SUCH  YEAR  TO  LESS  THAN  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT  OF  CREDIT  ALLOWED
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH  TAXABLE  YEAR
SHALL  BE  CARRIED  OVER  TO  THE  FOLLOWING  YEAR  OR YEARS, AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  43. REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (A)  A  QUALIFIED  NEW
YORK  MANUFACTURER,  AS  DEFINED  IN  SUBDIVISION FIFTEEN OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, WILL BE ALLOWED A CREDIT EQUAL TO  TWENTY
PERCENT  OF  THE  REAL  PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR
REAL PROPERTY OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH  WAS  PRINCI-
PALLY  USED  DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT
DEDUCTED IN DETERMINING   ENTIRE NET INCOME. THIS  CREDIT  WILL  NOT  BE
ALLOWED  IF  THE  REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT
ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY-
ER.
  (B) FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX MEANS
A CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF A  COUNTY,  CITY,
TOWN,  VILLAGE  OR  SCHOOL  DISTRICT  FOR  MUNICIPAL  OR SCHOOL DISTRICT
PURPOSES, PROVIDED THAT THE CHARGE IS  LEVIED  FOR  THE  GENERAL  PUBLIC
WELFARE  BY  THE  PROPER  TAXING  AUTHORITIES AT A LIKE RATE AGAINST ALL
PROPERTY OVER WHICH SUCH AUTHORITIES  HAVE  JURISDICTION,  AND  PROVIDED
THAT  WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN OF
THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
DETERMINED FOR THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED  BY  SUCH
ARTICLE  EIGHTEEN  OR  NINETEEN,  WHICHEVER IS APPLICABLE. THE TERM REAL
PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
ABLE TO MAINTENANCE OR INTEREST, WHEN (1) THE PROPERTY  SUBJECT  TO  THE
CHARGE  IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (2)
THE AMOUNT OF THE CHARGE IS DETERMINED BY THE BENEFIT  TO  THE  PROPERTY
ASSESSED,  OR (3) THE IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED TENDS
TO INCREASE THE PROPERTY VALUE. THE TERM  REAL  PROPERTY  TAX  DOES  NOT
INCLUDE  A  PAYMENT  IN  LIEU  OF  TAXES  MADE BY THE QUALIFIED NEW YORK
MANUFACTURER.
  (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (1)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2)  THE
AMOUNT  OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES.
IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE  YEAR,
THE  TAXPAYER  MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE
TO EACH YEAR COVERED BY SUCH FINAL ORDER AND  CALCULATE  THE  AMOUNT  OF
CREDIT  WHICH  IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH
YEAR BASED ON SUCH REDUCTION.
  (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR
SHALL  NOT  REDUCE  THE  TAX  DUE  FOR SUCH YEAR TO LESS THAN THE AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
TEN  OF  THIS  CHAPTER.  HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN

S. 6359                            102                           A. 8559

SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE  CRED-
ITED  OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOU-
SAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  44. THE TAX-FREE NY AREA  EXCISE  TAX  ON  TELECOMMUNICATION  SERVICES
CREDIT.  A  TAXPAYER  THAT  IS A BUSINESS OR OWNER OF A BUSINESS THAT IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED  A  CREDIT  EQUAL  TO  THE
EXCISE  TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED
EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS  DURING
THE  TAXABLE  YEAR TO THE EXTENT NOT OTHERWISE DEDUCTED IN COMPUTING TAX
UNDER THIS ARTICLE. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER. THIS CREDIT MAY BE CLAIMED ONLY WHERE ANY
TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPARATELY
STATED ON A BILL FROM THE PROVIDER  OF  TELECOMMUNICATION  SERVICES  AND
PAID BY SUCH BUSINESS DURING THE TAXABLE YEAR. UNLESS THE TAXPAYER HAS A
TAX-FREE  NY  AREA  ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT  PRESCRIBED  IN  PARAGRAPH
(D)  OF  SUBDIVISION  ONE  OF  SECTION  TWO HUNDRED TEN OF THIS CHAPTER.
PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOU-
SAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL  BE
PAID THEREON.
  45.  ORDER  OF CREDITS. (A) CREDITS ALLOWABLE UNDER THIS ARTICLE WHICH
CANNOT BE CARRIED OVER AND WHICH ARE NOT REFUNDABLE  SHALL  BE  DEDUCTED
FIRST.  THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION SHALL
BE DEDUCTED IMMEDIATELY AFTER THE DEDUCTION  OF  ALL  CREDITS  ALLOWABLE
UNDER  THIS  ARTICLE  WHICH  CANNOT  BE  CARRIED  OVER AND WHICH ARE NOT
REFUNDABLE, WHETHER OR NOT A  PORTION  OF  SUCH  CREDIT  IS  REFUNDABLE.
CREDITS  ALLOWABLE  UNDER  THIS  ARTICLE  WHICH CAN BE CARRIED OVER, AND
CARRYOVERS OF SUCH CREDITS, SHALL BE DEDUCTED NEXT AFTER  THE  DEDUCTION
OF THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION, AND AMONG
SUCH  CREDITS,  THOSE  WHOSE  CARRYOVER  IS OF LIMITED DURATION SHALL BE
DEDUCTED BEFORE THOSE WHOSE CARRYOVER IS OF UNLIMITED DURATION.  CREDITS
ALLOWABLE UNDER THIS ARTICLE WHICH ARE REFUNDABLE (OTHER THAN THE CREDIT
ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION) SHALL BE DEDUCTED LAST.
  46.  NOTWITHSTANDING  THE REPEAL OF THE CREDIT PROVISIONS CONTAINED IN
SECTION TWO HUNDRED TEN OF  THIS  ARTICLE  AND  THE  ENACTMENT  OF  THIS
SECTION BY A CHAPTER OF THE LAWS OF TWO THOUSAND FOURTEEN:
  (A) A TAXPAYER SHALL BE ALLOWED TO UTILIZE ANY CARRYFORWARD AMOUNTS OF
CREDITS  TO WHICH THE TAXPAYER WAS ENTITLED AS OF THE CLOSE OF THE TAXA-
BLE YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN  AND
BEFORE  JANUARY FIRST, TWO THOUSAND FIFTEEN, OTHER THAN THE CARRYFORWARD
AMOUNT OF THE MINIMUM TAX CREDIT PROVIDED UNDER SUBDIVISION THIRTEEN  OF
SECTION  TWO  HUNDRED TEN, AS THAT SUBDIVISION WAS IN EFFECT ON DECEMBER
THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (B) A TAXPAYER SHALL BE REQUIRED IN A TAXABLE  YEAR  BEGINNING  ON  OR
AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, TO RECAPTURE ALL OR A PORTION
OF  A CREDIT ALLOWED UNDER A CREDIT PROVISION IN SECTION TWO HUNDRED TEN
FOR A TAXABLE YEAR  BEGINNING  PRIOR  TO  JANUARY  FIRST,  TWO  THOUSAND
FIFTEEN  IF  RECAPTURE  WOULD  HAVE  BEEN  REQUIRED  UNDER  SUCH  CREDIT
PROVISION.

S. 6359                            103                           A. 8559

  47. IN ANY TAXABLE YEAR, A TAXPAYER MUST FIRST CLAIM ANY OF THE  CRED-
ITS  SPECIFIED  IN  THIS SECTION ON ITS ORIGINALLY FILED REPORT FOR SUCH
TAXABLE YEAR. A TAXPAYER SHALL NOT FIRST CLAIM A CREDIT  ON  AN  AMENDED
REPORT.
  S  18. The tax law is amended by adding a new section 210-C to read as
follows:
  S 210-C. COMBINED REPORTS. 1. TAX. THE TAX ON A COMBINED REPORT  SHALL
BE  THE HIGHEST OF THE PRODUCTS OF (I) THE COMBINED BUSINESS INCOME BASE
MULTIPLIED BY THE TAX RATE SPECIFIED IN PARAGRAPH (A) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE; (II)  THE  COMBINED  CAPITAL
BASE  MULTIPLIED  BY THE TAX RATE SPECIFIED IN PARAGRAPH (B) OF SUBDIVI-
SION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE, BUT  NOT  EXCEEDING
THE  LIMITATION  PROVIDED  FOR IN THAT PARAGRAPH (B); OR (III) THE FIXED
DOLLAR MINIMUM THAT IS ATTRIBUTABLE  TO  THE  DESIGNATED  AGENT  OF  THE
COMBINED  GROUP. IN ADDITION, THE TAX ON A COMBINED REPORT SHALL INCLUDE
THE FIXED DOLLAR MINIMUM TAX SPECIFIED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF  SECTION  TWO HUNDRED TEN OF THIS ARTICLE FOR EACH MEMBER OF THE
COMBINED GROUP, OTHER THAN THE DESIGNATED AGENT, THAT IS A TAXPAYER.
  (B) THE COMBINED BUSINESS INCOME BASE IS THE AMOUNT  OF  THE  COMBINED
BUSINESS  INCOME OF THE COMBINED GROUP THAT IS APPORTIONED TO THE STATE,
REDUCED BY ANY NET OPERATING LOSS DEDUCTION FOR THE COMBINED GROUP.  THE
COMBINED CAPITAL BASE IS THE AMOUNT  OF  THE  COMBINED  CAPITAL  OF  THE
COMBINED GROUP THAT IS APPORTIONED TO THE STATE.
  2.  COMBINED REPORTS REQUIRED. (A) EXCEPT AS PROVIDED IN PARAGRAPH (C)
OF THIS SUBDIVISION, ANY TAXPAYER (I)  WHICH  OWNS  OR  CONTROLS  EITHER
DIRECTLY  OR  INDIRECTLY MORE THAN FIFTY PERCENT OF THE CAPITAL STOCK OF
ONE OR MORE OTHER CORPORATIONS, OR (II) MORE THAN FIFTY PERCENT  OF  THE
CAPITAL  STOCK  OF WHICH IS OWNED OR CONTROLLED EITHER DIRECTLY OR INDI-
RECTLY BY ONE OR MORE OTHER  CORPORATIONS,  OR  (III)  MORE  THAN  FIFTY
PERCENT  OF  THE  CAPITAL STOCK OF WHICH AND THE CAPITAL STOCK OF ONE OR
MORE OTHER CORPORATIONS, IS OWNED OR CONTROLLED, DIRECTLY OR INDIRECTLY,
BY THE SAME INTERESTS, AND (IV) THAT IS ENGAGED IN  A  UNITARY  BUSINESS
WITH  THOSE  CORPORATIONS, SHALL MAKE A COMBINED REPORT WITH THOSE OTHER
CORPORATIONS.
  (B) A CORPORATION REQUIRED TO MAKE A COMBINED REPORT WITHIN THE  MEAN-
ING  OF THIS SECTION SHALL ALSO INCLUDE (I) A CAPTIVE REIT AND A CAPTIVE
RIC IF THE CAPTIVE REIT OR CAPTIVE RIC IS NOT REQUIRED TO BE INCLUDED IN
A COMBINED REPORT UNDER ARTICLE THIRTY-THREE OF  THIS  CHAPTER;  (II)  A
COMBINABLE  CAPTIVE  INSURANCE  COMPANY;  AND (III) AN ALIEN CORPORATION
THAT SATISFIES THE CONDITIONS IN PARAGRAPH (A) OF  THIS  SUBDIVISION  IF
(I)  UNDER  ANY PROVISION OF THE INTERNAL REVENUE CODE, THAT CORPORATION
IS TREATED AS A "DOMESTIC CORPORATION" AS DEFINED IN SECTION SEVEN THOU-
SAND SEVEN HUNDRED ONE OF THE INTERNAL REVENUE  CODE,  OR  (II)  IT  HAS
EFFECTIVELY  CONNECTED  INCOME  FOR  THE TAXABLE YEAR PURSUANT TO CLAUSE
(IV) OF THE OPENING PARAGRAPH OF SUBDIVISION NINE OF SECTION TWO HUNDRED
EIGHT OF THIS ARTICLE.
  (C) A CORPORATION REQUIRED OR PERMITTED  TO  MAKE  A  COMBINED  REPORT
UNDER  THIS  SECTION  DOES NOT INCLUDE (I) A CORPORATION THAT IS TAXABLE
UNDER ARTICLE NINE OR THIRTY-THREE OF THIS CHAPTER; (II) A REIT THAT  IS
NOT  A  CAPTIVE  REIT,  AND A RIC THAT IS NOT A CAPTIVE RIC; (III) A NEW
YORK S CORPORATION; (IV) A CORPORATION THAT IS SUBJECT TO TAX UNDER THIS
ARTICLE SOLELY AS A RESULT OF ITS OWNERSHIP OF A LIMITED PARTNER  INTER-
EST  IN A LIMITED PARTNERSHIP THAT IS DOING BUSINESS, EMPLOYING CAPITAL,
OWNING OR LEASING PROPERTY, MAINTAINING AN  OFFICE  IN  THIS  STATE,  OR
DERIVING  RECEIPTS FROM ACTIVITY IN THIS STATE, PROVIDED THAT THE CORPO-
RATION IS NOT OTHERWISE REQUIRED TO FILE A COMBINED REPORT  PURSUANT  TO

S. 6359                            104                           A. 8559

THIS  SECTION;  OR  (V)  AN  ALIEN  CORPORATION  THAT HAS NO EFFECTIVELY
CONNECTED INCOME FOR THE TAXABLE YEAR PURSUANT TO  CLAUSE  (IV)  OF  THE
OPENING  PARAGRAPH  OF  SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF
THIS ARTICLE.
  (D)  A  COMBINED  REPORT SHALL BE FILED BY THE DESIGNATED AGENT OF THE
COMBINED GROUP AS DETERMINED UNDER SUBDIVISION SEVEN OF THIS SECTION.
  3. COMMONLY OWNED GROUP ELECTION. (A) SUBJECT  TO  THE  PROVISIONS  OF
PARAGRAPH  (C)  OF SUBDIVISION TWO OF THIS SECTION, A TAXPAYER MAY ELECT
TO TREAT AS ITS COMBINED GROUP ALL CORPORATIONS THAT MEET THE  OWNERSHIP
REQUIREMENTS  DESCRIBED  IN  PARAGRAPH  (A)  OF  SUBDIVISION TWO OF THIS
SECTION (SUCH CORPORATIONS COLLECTIVELY REFERRED TO IN THIS  SUBDIVISION
AS  THE  "COMMONLY OWNED GROUP"). IF THAT ELECTION IS MADE, THE COMMONLY
OWNED GROUP SHALL CALCULATE THE COMBINED BUSINESS INCOME, COMBINED CAPI-
TAL, AND FIXED DOLLAR MINIMUM BASES OF  ALL  MEMBERS  OF  THE  GROUP  IN
ACCORDANCE  WITH PARAGRAPH FOUR OF THIS SUBDIVISION, WHETHER OR NOT THAT
BUSINESS INCOME OR BUSINESS CAPITAL IS FROM A SINGLE UNITARY BUSINESS.
  (B) THE ELECTION UNDER THIS SUBDIVISION SHALL BE MADE ON AN  ORIGINAL,
TIMELY  FILED  RETURN  OF THE COMBINED GROUP. ANY CORPORATION ENTERING A
COMMONLY OWNED GROUP  SUBSEQUENT  TO  THE  YEAR  OF  ELECTION  SHALL  BE
INCLUDED  IN  THE  COMBINED  GROUP  AND IS CONSIDERED TO HAVE WAIVED ANY
OBJECTION TO ITS INCLUSION IN THE COMBINED GROUP.
  (C) THE ELECTION SHALL BE IRREVOCABLE, AND BINDING FOR AND  APPLICABLE
TO  THE  TAXABLE  YEAR FOR WHICH IT IS MADE AND FOR THE NEXT SIX TAXABLE
YEARS. THE ELECTION WILL AUTOMATICALLY  BE  RENEWED  FOR  ANOTHER  SEVEN
TAXABLE YEARS AFTER IT HAS BEEN IN EFFECT FOR SEVEN TAXABLE YEARS UNLESS
IT  IS  AFFIRMATIVELY  REVOKED.  THE  REVOCATION  SHALL  BE  MADE  ON AN
ORIGINAL, TIMELY FILED RETURN FOR  THE  FIRST  TAXABLE  YEAR  AFTER  THE
COMPLETION  OF  A  SEVEN  YEAR  PERIOD  FOR WHICH AN ELECTION UNDER THIS
SUBDIVISION WAS IN PLACE. IN THE CASE OF A REVOCATION,  A  NEW  ELECTION
UNDER  THIS SUBDIVISION SHALL NOT BE PERMITTED IN ANY OF THE IMMEDIATELY
FOLLOWING THREE TAXABLE YEARS. IN DETERMINING THE SEVEN AND  THREE  YEAR
PERIODS  DESCRIBED  IN  THIS PARAGRAPH, SHORT TAXABLE YEARS SHALL NOT BE
CONSIDERED OR COUNTED.
  4. COMPUTATION OF TAX BASES ON A COMBINED REPORT. (A) IN COMPUTING THE
TAX BASES FOR A COMBINED REPORT, THE COMBINED GROUP SHALL  GENERALLY  BE
TREATED  AS  A  SINGLE  CORPORATION,  EXCEPT  AS OTHERWISE PROVIDED, AND
SUBJECT TO ANY REGULATIONS OR GUIDANCE ISSUED BY THE COMMISSIONER OR THE
DEPARTMENT.
  (B)(I) IN COMPUTING COMBINED BUSINESS INCOME, ALL INTERCORPORATE DIVI-
DENDS SHALL BE ELIMINATED, AND  ALL  OTHER  INTERCORPORATE  TRANSACTIONS
SHALL BE DEFERRED IN A MANNER SIMILAR TO THE RULES RELATING TO INTERCOM-
PANY  TRANSACTIONS  UNDER  SECTION  FIFTEEN  HUNDRED TWO OF THE INTERNAL
REVENUE CODE.
  (II) IN COMPUTING COMBINED CAPITAL, ALL INTERCORPORATE  STOCKHOLDINGS,
INTERCORPORATE  BILLS,  INTERCORPORATE  NOTES  RECEIVABLE  AND  PAYABLE,
INTERCORPORATE ACCOUNTS RECEIVABLE AND PAYABLE, AND OTHER INTERCORPORATE
INDEBTEDNESS, SHALL BE ELIMINATED.
  (C) QUALIFICATION FOR  CREDITS,  INCLUDING  ANY  LIMITATIONS  THEREON,
SHALL  BE  DETERMINED SEPARATELY FOR EACH OF THE MEMBERS OF THE COMBINED
GROUP, AND SHALL NOT BE DETERMINED ON A COMBINED GROUP BASIS, EXCEPT  AS
OTHERWISE  PROVIDED.  HOWEVER,  THE CREDITS SHALL BE APPLIED AGAINST THE
COMBINED TAX OF THE GROUP.
  (D)(I) A NET OPERATING LOSS DEDUCTION  IS  ALLOWED  IN  COMPUTING  THE
COMBINED  BUSINESS INCOME BASE. SUCH DEDUCTION MAY REDUCE THE TAX ON THE
COMBINED BUSINESS INCOME BASE TO THE HIGHER OF THE TAX ON  THE  COMBINED
CAPITAL  BASE OR THE FIXED DOLLAR MINIMUM. A COMBINED NET OPERATING LOSS

S. 6359                            105                           A. 8559

DEDUCTION IS EQUAL TO THE AMOUNT OF COMBINED NET OPERATING LOSS OR LOSS-
ES FROM ONE OR MORE TAXABLE YEARS THAT ARE CARRIED FORWARD TO A  PARTIC-
ULAR INCOME YEAR. A COMBINED NET OPERATING LOSS IS THE COMBINED BUSINESS
LOSS  INCURRED  IN  A PARTICULAR TAXABLE YEAR MULTIPLIED BY THE COMBINED
APPORTIONMENT FRACTION FOR THAT YEAR DETERMINED AS PROVIDED IN  SUBDIVI-
SION FIVE OF THIS SECTION.
  (II)  THE COMBINED NET OPERATING LOSS DEDUCTION AND COMBINED NET OPER-
ATING LOSS ARE ALSO SUBJECT TO THE PROVISIONS CONTAINED IN  CLAUSES  ONE
THROUGH  SIX  OF SUBPARAGRAPH (VIII) OF PARAGRAPH (A) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  (III) IN THE CASE OF A  CORPORATION  THAT  FILES  A  COMBINED  REPORT,
EITHER  IN THE YEAR THE NET OPERATING LOSS IS INCURRED OR IN THE YEAR IN
WHICH A DEDUCTION IS CLAIMED ON ACCOUNT OF THE LOSS,  THE  COMBINED  NET
OPERATING  LOSS  DEDUCTION  IS  DETERMINED AS IF THE COMBINED GROUP IS A
SINGLE CORPORATION AND IS SUBJECT TO THE  SAME  LIMITATIONS  THAT  WOULD
APPLY  FOR  FEDERAL  INCOME TAX PURPOSES UNDER THE INTERNAL REVENUE CODE
AND THE CODE OF FEDERAL REGULATIONS AS IF SUCH CORPORATION HAD FILED FOR
SUCH TAXABLE YEAR A CONSOLIDATED FEDERAL INCOME TAX RETURN WITH THE SAME
CORPORATIONS INCLUDED IN THE COMBINED REPORT. IF A CORPORATION  FILES  A
COMBINED  REPORT,  REGARDLESS  OF  WHETHER IT FILED A SEPARATE RETURN OR
CONSOLIDATED RETURN FOR FEDERAL INCOME TAX PURPOSES, THE  NET  OPERATING
LOSS  AND  NET  OPERATING  LOSS DEDUCTION FOR THE COMBINED GROUP MUST BE
COMPUTED AS IF THE CORPORATION HAD FILED A CONSOLIDATED RETURN  FOR  THE
SAME CORPORATIONS FOR FEDERAL INCOME TAX PURPOSES.
  (IV) IN GENERAL, ANY NET OPERATING LOSS CARRYOVER FROM A YEAR IN WHICH
A COMBINED REPORT WAS FILED SHALL BE BASED ON THE COMBINED NET OPERATING
LOSS OF THE GROUP OF CORPORATIONS FILING SUCH REPORT. THE PORTION OF THE
COMBINED LOSS ATTRIBUTABLE TO ANY MEMBER OF THE GROUP THAT FILES A SEPA-
RATE  REPORT FOR A SUCCEEDING TAXABLE YEAR WILL BE AN AMOUNT BEARING THE
SAME RELATION TO THE COMBINED LOSS AS THE NET  OPERATING  LOSS  OF  SUCH
CORPORATION  BEARS TO THE TOTAL NET OPERATING LOSS OF ALL MEMBERS OF THE
GROUP HAVING SUCH LOSSES TO THE EXTENT THAT THEY ARE TAKEN INTO  ACCOUNT
IN COMPUTING THE COMBINED NET OPERATING LOSS.
  (E)  ANY  ELECTION  MADE PURSUANT TO PARAGRAPH (B) OF SUBDIVISION SIX,
AND PARAGRAPHS (B) AND (C) OF SUBDIVISION SIX-A OF SECTION  TWO  HUNDRED
EIGHT OF THIS ARTICLE SHALL APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
  (F)(I)  IN  THE  CASE  OF A CAPTIVE REIT OR CAPTIVE RIC REQUIRED UNDER
THIS SECTION TO BE INCLUDED IN A  COMBINED  REPORT,  ENTIRE  NET  INCOME
SHALL  BE  COMPUTED AS REQUIRED UNDER SUBDIVISION FIVE (IN THE CASE OF A
CAPTIVE REIT) OR SUBDIVISION SEVEN (IN THE CASE OF  A  CAPTIVE  RIC)  OF
SECTION  TWO  HUNDRED NINE OF THIS ARTICLE. HOWEVER, THE DEDUCTION UNDER
THE INTERNAL REVENUE CODE FOR DIVIDENDS PAID  BY  THE  CAPTIVE  REIT  OR
CAPTIVE  RIC  TO  ANY  MEMBER  OF THE AFFILIATED GROUP THAT INCLUDES THE
CORPORATION THAT DIRECTLY OR INDIRECTLY OWNS OVER FIFTY PERCENT  OF  THE
VOTING  STOCK  OF  THE CAPTIVE REIT OR CAPTIVE RIC SHALL NOT BE ALLOWED.
FOR PURPOSES OF THIS SUBPARAGRAPH, THE  TERM  "AFFILIATED  GROUP"  MEANS
"AFFILIATED  GROUP"  AS  DEFINED  IN SECTION FIFTEEN HUNDRED FOUR OF THE
INTERNAL REVENUE CODE, BUT WITHOUT REGARD TO THE EXCEPTIONS PROVIDED FOR
IN SUBSECTION (B) OF THAT SECTION.
  (II) IN THE CASE OF A COMBINABLE CAPTIVE  INSURANCE  COMPANY  REQUIRED
UNDER  THIS  SECTION  TO  BE  INCLUDED  IN A COMBINED REPORT, ENTIRE NET
INCOME SHALL BE COMPUTED AS REQUIRED BY SUBDIVISION NINE OF SECTION  TWO
HUNDRED EIGHT OF THIS ARTICLE.
  5.  APPORTIONMENT  ON A COMBINED REPORT. (A) IN DETERMINING THE APPOR-
TIONMENT FACTOR FOR A COMBINED REPORT, THE  RECEIPTS,  NET  INCOME,  NET
GAINS  AND  OTHER ITEMS OF ALL MEMBERS OF THE COMBINED GROUP, WHETHER OR

S. 6359                            106                           A. 8559

NOT THEY ARE A  TAXPAYER,  ARE  INCLUDED  AND  INTERCORPORATE  RECEIPTS,
INCOME  AND  GAINS  ARE  ELIMINATED. RECEIPTS, NET INCOME, NET GAINS AND
OTHER ITEMS ARE SOURCED AS PROVIDED IN SECTION TWO HUNDRED TEN-A OF THIS
ARTICLE.
  (B)  AN  ELECTION  MADE  TO APPORTION INCOME AND GAINS FROM QUALIFYING
FINANCIAL INSTRUMENTS PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)  OF
SUBDIVISION  FIVE  OF  SECTION  TWO  HUNDRED TEN-A OF THIS ARTICLE SHALL
APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
  6. LIABILITY OF COMBINED GROUP MEMBERS. EVERY MEMBER OF  THE  COMBINED
GROUP  THAT  IS  SUBJECT  TO TAX UNDER THIS ARTICLE SHALL BE JOINTLY AND
SEVERALLY LIABLE FOR THE TAX DUE PURSUANT TO A COMBINED REPORT.
  7. DESIGNATED AGENT. EACH COMBINED GROUP  SHALL  HAVE  ONE  DESIGNATED
AGENT,  WHICH  SHALL  BE  A TAXPAYER. THE DESIGNATED AGENT IS THE PARENT
CORPORATION OF THE COMBINED GROUP. IF THERE IS  NO  SUCH  PARENT  CORPO-
RATION, OR THE PARENT CORPORATION IS NOT A TAXPAYER, THEN ANOTHER MEMBER
OF  THE COMBINED GROUP THAT IS A TAXPAYER MAY BE APPOINTED AS THE DESIG-
NATED AGENT. ONLY THE DESIGNATED AGENT MAY ACT ON BEHALF OF THE  MEMBERS
OF THE COMBINED GROUP FOR MATTERS RELATING TO THE COMBINED REPORT.
  S  19.  Subdivisions  2-a,  3,  4 and 5 of section 211 of the tax law,
subdivision 2-a as added and subdivision 5 as amended by chapter 817  of
the laws of 1987, subdivision 3 as amended by chapter 770 of the laws of
1992,  subdivision 4 as amended by section 2 of part T of chapter 407 of
the laws of 1999, the opening  paragraph  and  the  second  undesignated
paragraph  of  paragraph  (a)  of subdivision 4 as amended by section 1,
subparagraph 4 of paragraph (a) of subdivision 4 as amended  by  section
2,  and  subparagraph  5 of paragraph (a) of subdivision 4 as amended by
section 3 of part J of chapter 60 of the laws of 2007, subparagraph 6 of
paragraph (a) of subdivision 4 as added by section  3  of  part  FF1  of
chapter  57  of  the  laws  of  2008, subparagraph 7 of paragraph (a) of
subdivision 4 as added by section 2 and subparagraph 1 of paragraph  (b)
of subdivision 4 as amended by section 3 of part E1 of chapter 57 of the
laws of 2009, are amended to read as follows:
  2-a.  The  [tax commission] COMMISSIONER may prescribe regulations and
instructions requiring returns of information to be made  and  filed  in
conjunction  with  the reports required to be filed pursuant to [section
two hundred eleven] THIS ARTICLE, relating to payments  made  to  share-
holders  owning,  directly  or indirectly, individually or in the aggre-
gate, more than fifty percent of the issued capital stock of the taxpay-
er, where such payments are treated  as  payments  of  interest  in  the
computation of entire net income [or minimum taxable income] reported on
such reports.
  3.  If  the  amount  of taxable income [or alternative minimum taxable
income] for any year of any taxpayer (including any taxpayer  which  has
elected  to  be  taxed under subchapter s of chapter one of the internal
revenue code), as returned to the United States treasury  department  is
changed  or  corrected  by the commissioner of internal revenue or other
officer of the United States or other competent authority,  or  where  a
renegotiation  of  a  contract  or  subcontract  with  the United States
results in a change in taxable income [or  alternative  minimum  taxable
income],  such  taxpayer  shall report such changed or corrected taxable
income [or alternative minimum taxable income], or the results  of  such
renegotiation,  within  ninety  days (or one hundred twenty days, in the
case of a taxpayer making a combined report under this article for  such
year)  after  the  final  determination  of such change or correction or
renegotiation, or as required by the commissioner, and shall concede the
accuracy of such determination or state wherein  it  is  erroneous.  The

S. 6359                            107                           A. 8559

allowance of a tentative carryback adjustment based upon a net operating
loss  carryback or net capital loss carryback pursuant to section sixty-
four hundred eleven of the internal revenue code, as amended,  shall  be
treated  as  a final determination for purposes of this subdivision. Any
taxpayer filing an amended return with such department shall  also  file
within ninety days (OR ONE HUNDRED TWENTY DAYS, IN THE CASE OF A TAXPAY-
ER MAKING A COMBINED REPORT UNDER THIS ARTICLE FOR SUCH YEAR) thereafter
an amended report with the commissioner.
  4.  [(a)  Combined  reports permitted or required. Any taxpayer, which
owns or controls either directly or  indirectly  substantially  all  the
capital  stock  of  one or more other corporations, or substantially all
the capital stock of which is owned or  controlled  either  directly  or
indirectly  by  one or more other corporations or by interests which own
or control either directly or indirectly substantially all  the  capital
stock  of  one  or  more other corporations, (hereinafter referred to in
this paragraph as "related corporations"), shall make a combined  report
covering  any  related corporations if there are substantial intercorpo-
rate transactions among the  related  corporations,  regardless  of  the
transfer price for such intercorporate transactions. It is not necessary
that  there  be  substantial intercorporate transactions between any one
corporation and every other related corporation. It is necessary, howev-
er, that there be substantial intercorporate  transactions  between  the
taxpayer  and  a  related  corporation  or collectively, a group of such
related corporations. The report shall set forth such information as the
commissioner may require, subject to the provisions of subparagraphs one
through five of this paragraph.
  In determining whether there  are  substantial  intercorporate  trans-
actions, the commissioner shall consider and evaluate all activities and
transactions  of  the  taxpayer and its related corporations. Activities
and transactions that will be considered include, but  are  not  limited
to:  (i)  manufacturing,  acquiring  goods  or  property,  or performing
services, for related corporations; (ii)  selling  goods  acquired  from
related  corporations;  (iii)  financing  sales of related corporations;
(iv) performing related customer services using  common  facilities  and
employees for related corporations; (v) incurring expenses that benefit,
directly  or  indirectly,  one  or  more  related corporations, and (vi)
transferring assets,  including  such  assets  as  accounts  receivable,
patents or trademarks from one or more related corporations.
  (1)  Any  corporation  which owns or controls either directly or indi-
rectly substantially all the capital stock of a DISC not exempt from tax
under paragraph (i) of subdivision nine of section two hundred eight  of
this  article  shall be allowed, at the election of such corporation, to
make a report on a combined basis covering such DISC, but the failure of
such corporation to make such election shall not  prohibit  the  commis-
sioner  from  requiring  a combined report covering such corporation and
such DISC.
  (2)(i) No taxpayer may be permitted to make a  report  on  a  combined
basis  covering  any  such other corporations where such taxpayer or any
such other corporation  allocates  in  accordance  with  clause  (A)  of
subparagraph  seven of paragraph (a) of subdivision three of section two
hundred ten of this article (relating to aviation corporations) and such
taxpayer or any such other corporation does not so allocate, unless such
taxpayer or such other corporation is a qualified air freight  forwarder
with  respect  to such other corporation or such taxpayer, respectively,
and all taxpayers included on such combined report elect, by filing such

S. 6359                            108                           A. 8559

combined report,  to  have  such  qualified  air  freight  forwarder  so
included.
  (ii)  A  corporation is a qualified air freight forwarder with respect
to another corporation:
  (A) if it owns or controls either directly or indirectly  all  of  the
capital  stock of such other corporation, or if all of its capital stock
is owned or controlled either  directly  or  indirectly  by  such  other
corporation,  or  if  all  of  the capital stock of both corporations is
owned or controlled either directly or indirectly by the same interests,
  (B) if it is principally  engaged  in  the  business  of  air  freight
forwarding, and
  (C)  if  its air freight forwarding business is carried on principally
with the airline or airlines operated by such other corporation.
  (3) No taxpayer may be permitted to make a report on a combined  basis
covering  any  such  other  corporations where such taxpayer or any such
other corporation allocates in accordance  with  subparagraph  eight  of
paragraph  (a)  of  subdivision three of section two hundred ten of this
article (relating  to  railroad  and  trucking  corporations)  and  such
taxpayer or any such other corporation does not so allocate.
  (4)  Except  as  provided  in the first undesignated paragraph of this
paragraph, no combined report covering any corporation shall be required
unless the commissioner  deems  such  a  report  necessary,  because  of
inter-company transactions or some agreement, understanding, arrangement
or transaction referred to in subdivision five of this section, in order
properly to reflect the tax liability under this article.
  (5) A corporation organized under the laws of a country other than the
United  States  shall not be required or permitted to make a report on a
combined basis.
  (6) (i) For purposes of this subparagraph, the term "closest  control-
ling stockholder" means the corporation that indirectly owns or controls
over fifty percent of the voting stock of a captive REIT or captive RIC,
is subject to tax under this article, article thirty-two or thirty-three
of  this  chapter  or  otherwise  required  to be included in a combined
return or report under this article, article thirty-two or  thirty-three
of  this  chapter,  and  is the fewest tiers of corporations away in the
ownership structure from the captive REIT or captive RIC.   The  commis-
sioner  is  authorized  to prescribe by regulation or published guidance
the criteria for determining the closest controlling stockholder.
  (ii) A captive REIT or a captive RIC must be included  in  a  combined
report  with  the  corporation that directly owns or controls over fifty
percent of the voting stock of the captive REIT or captive RIC  if  that
corporation  is  subject to tax or required to be included in a combined
report under this article.
  (iii) If over fifty percent of the voting stock of a captive  REIT  or
captive RIC is not directly owned or controlled by a corporation that is
subject  to  tax  or  required to be included in a combined report under
this article, then the captive REIT or captive RIC must be included in a
combined return or report with  the  corporation  that  is  the  closest
controlling stockholder of the captive REIT or captive RIC. If the clos-
est  controlling  stockholder  of  the  captive  REIT  or captive RIC is
subject to tax or otherwise required to be included in a combined report
under this article, then  the  captive  REIT  or  captive  RIC  must  be
included in a combined report under this article.
  (iv)  If  the  corporation  that  directly owns or controls the voting
stock of the captive REIT or captive RIC is  described  in  subparagraph
two,  three  or five of this paragraph as a corporation not permitted to

S. 6359                            109                           A. 8559

make a combined report, then the provisions  in  clause  (iii)  of  this
subparagraph  must  be  applied  to  determine  the corporation in whose
combined return or report the captive REIT  or  captive  RIC  should  be
included.  If,  under clause (iii) of this subparagraph, the corporation
that is the closest controlling  stockholder  of  the  captive  REIT  or
captive  RIC  is  described  in  subparagraph two, three or five of this
paragraph as a corporation not permitted to make a combined return, then
that corporation is deemed to not be in the ownership structure  of  the
captive  REIT  or  captive  RIC, and the closest controlling stockholder
will be determined without regard to that corporation.
  (v) If a captive REIT owns the stock of a  qualified  REIT  subsidiary
(as  defined in paragraph two of subsection (i) of section eight hundred
fifty-six of the internal revenue code), then the qualified REIT subsid-
iary must be included in a combined report with the captive REIT.
  (vi) If a captive REIT or a captive RIC is required under this subpar-
agraph to be included in a combined report with another corporation, and
that other corporation is also required to be  included  in  a  combined
report with another related corporation or corporations under this para-
graph, then the captive REIT or the captive RIC must be included in that
combined report with those corporations.
  (vii)  If  a  captive  REIT  or  a  captive  RIC is not required to be
included in a combined report with another corporation under clause (ii)
or (iii) of this  subparagraph,  or  in  a  combined  return  under  the
provisions of either subparagraph (v) of paragraph two of subsection (f)
of  section  fourteen hundred sixty-two or paragraph four of subdivision
(f) of section fifteen hundred fifteen of this chapter, then the captive
REIT or captive RIC is subject to the opening provisions of  this  para-
graph  and  the  provisions  of subparagraph four of this paragraph. The
captive REIT or captive RIC must be included in a combined report  under
this  article  with another corporation if either the substantial inter-
corporate transactions requirement in the  opening  provisions  of  this
paragraph or the inter-company transactions or agreement, understanding,
arrangement  or  transaction  requirement  of  subparagraph four of this
paragraph is satisfied and more than fifty percent of the  voting  stock
of  the  captive  REIT  or  the captive RIC and substantially all of the
capital stock of  that  other  corporation  are  owned  and  controlled,
directly or indirectly, by the same corporation.
  (7)  (i) For purposes of this subparagraph, the term "closest control-
ling stockholder" means the corporation that indirectly owns or controls
over fifty percent of the voting stock  of  an  overcapitalized  captive
insurance company; is subject to tax under this article or article thir-
ty-two  of  this  chapter,  or is otherwise required to be included in a
combined return or report under this article or  article  thirty-two  of
this chapter; and is the fewest tiers of corporations away in the owner-
ship  structure from the overcapitalized captive insurance company.  The
commissioner is authorized to prescribe by regulation or published guid-
ance the criteria for determining the closest controlling stockholder.
  (ii) An overcapitalized captive insurance company must be included  in
a  combined  report  with the corporation that directly owns or controls
over fifty percent of the voting stock of  the  overcapitalized  captive
insurance  company  if that corporation is subject to tax or required to
be included in a combined report under this article.
  (iii) If over fifty percent of the voting stock of an  overcapitalized
captive  insurance  company  is  not  directly  owned or controlled by a
corporation that is subject to tax or  required  to  be  included  in  a
combined  report  under  this  article, then the overcapitalized captive

S. 6359                            110                           A. 8559

insurance company must be included in a combined return or  report  with
the corporation that is the closest controlling stockholder of the over-
capitalized captive insurance company. If the closest controlling stock-
holder  of  the  overcapitalized captive insurance company is subject to
tax or otherwise required to be included in a combined report under this
article, then the overcapitalized  captive  insurance  company  must  be
included in a combined report under this article.
  (iv)  If  the  corporation  that  directly owns or controls the voting
stock of the overcapitalized captive insurance company is  described  in
subparagraph  two, three, or five of this paragraph as a corporation not
permitted to make a combined report, then the provisions in clause (iii)
of this subparagraph must be applied to  determine  the  corporation  in
whose  combined  return  or report the overcapitalized captive insurance
company should be included. If, under clause (iii) of this subparagraph,
the corporation that is the closest controlling stockholder of the over-
capitalized captive insurance company is described in subparagraph  two,
three or five of this paragraph as a corporation not permitted to make a
combined return, then that corporation is deemed not to be in the owner-
ship structure of the overcapitalized captive insurance company, and the
closest  controlling  stockholder  will  be determined without regard to
that corporation.
  (v) If an overcapitalized captive insurance company is required  under
this  subparagraph  to  be  included  in  a combined report with another
corporation, and that other corporation is also required to be  included
in  a  combined  report with another related corporation or corporations
under this paragraph, then the overcapitalized captive insurance company
must be included in that combined report with those corporations.
  (vi) If an overcapitalized captive insurance company is  not  required
to  be  included  in  a  combined  report with another corporation under
clause (ii) or (iii) of this subparagraph, or in a combined return under
the provisions of subparagraph (v) of paragraph two of subsection (f) of
section fourteen hundred sixty-two of this chapter, then  the  overcapi-
talized  captive  insurance company is subject to the opening provisions
of this paragraph and the provisions of subparagraph four of this  para-
graph. The overcapitalized captive insurance company must be included in
a  combined report under this article with another corporation if either
the substantial intercorporate transactions requirement in  the  opening
provisions of this paragraph or the inter-company transactions or agree-
ment,  understanding, arrangement or transaction requirement of subpara-
graph four of this paragraph is satisfied,  and  both  more  than  fifty
percent  of  the  voting  stock of the overcapitalized captive insurance
company and substantially all of the capital stock of that other  corpo-
ration  are  owned  and  controlled, directly or indirectly, by the same
corporation.
  (b) Computation. (1) Tax. (i) In the case of a combined report the tax
shall be measured by the combined entire net  income,  combined  minimum
taxable  income,  combined  pre-nineteen  hundred ninety minimum taxable
income or combined capital, of all  the  corporations  included  in  the
report,  including  any  captive  REIT,  captive  RIC or overcapitalized
captive insurance company; provided, however, in no event shall the  tax
measured by combined capital exceed the limitation provided for in para-
graph (b) of subdivision one of section two hundred ten of this article.
  (ii)  In the case of a captive REIT or captive RIC required under this
subdivision to be included in a combined report, entire net income  must
be computed as required under subdivision five (in the case of a captive
REIT) or subdivision seven (in the case of a captive RIC) of section two

S. 6359                            111                           A. 8559

hundred  nine of this article. However, the deduction under the internal
revenue code for dividends paid by the captive REIT or  captive  RIC  to
any  member  of  the affiliated group that includes the corporation that
directly  or  indirectly  owns over fifty percent of the voting stock of
the captive REIT or captive RIC shall not be allowed for  taxable  years
beginning  on  or  after  January  first,  two  thousand eight. The term
"affiliated group"  means  "affiliated  group"  as  defined  in  section
fifteen hundred four of the internal revenue code, but without regard to
the exceptions provided for in subsection (b) of that section.
  (iii)  In  the  case  of  an overcapitalized captive insurance company
required under this subdivision to be included  in  a  combined  report,
entire  net  income  must be computed as required by subdivision nine of
section two hundred eight of this article.
  (2) Tax bases. In computing combined entire net income, combined mini-
mum taxable income or combined pre-nineteen hundred ninety minimum taxa-
ble income intercorporate dividends shall be  eliminated,  in  computing
combined  business  and  investment capital intercorporate stockholdings
and intercorporate bills, notes and accounts receivable and payable  and
other  intercorporate  indebtedness shall be eliminated and in computing
combined subsidiary capital intercorporate stockholdings shall be elimi-
nated, provided, however, that intercorporate dividends from a DISC or a
former DISC not exempt from tax under paragraph (i) of subdivision  nine
of  section two hundred eight of this article which are taxable as busi-
ness income under this article shall not be eliminated.
  (3) Air freight forwarders: allocation. Notwithstanding any  provision
of law to the contrary, where a combined report includes a qualified air
freight  forwarder  and a corporation described in subparagraph seven of
paragraph (a) of subdivision three of section two hundred  ten  of  this
chapter  (relating  to aviation corporations), in computing the combined
business allocation percentage such subparagraph seven shall be  applied
with  respect  to  such  qualified air freight forwarder] FOR PROVISIONS
RELATING TO COMBINED REPORTS, SEE SECTION  TWO  HUNDRED  TEN-C  OF  THIS
ARTICLE.
  5.  In  case it shall appear to the [tax commission] COMMISSIONER that
any agreement, understanding or arrangement exists between the  taxpayer
and  any  other corporation or any person or firm, whereby the activity,
business, income or capital of the taxpayer within the state is  improp-
erly  or  inaccurately  reflected,  the [tax commission] COMMISSIONER is
authorized and empowered, in [its] THE COMMISSIONER'S discretion and  in
such  manner  as [it] THE COMMISSIONER may determine, to adjust items of
income, deductions and capital, and to eliminate assets in computing any
[allocation] APPORTIONMENT percentage  provided  only  that  any  income
directly  traceable  thereto  be  also  excluded from entire net income,
[minimum taxable income or pre-nineteen hundred ninety  minimum  taxable
income,]  so  as  equitably to determine the tax. Where (a) any taxpayer
conducts its activity or business under any  agreement,  arrangement  or
understanding in such manner as either directly or indirectly to benefit
its  members  or  stockholders, or any of them, or any person or persons
directly or indirectly interested  in  such  activity  or  business,  by
entering  into  any transaction at more or less than a fair price which,
but for such agreement, arrangement or understanding,  might  have  been
paid or received therefor, or (b) any taxpayer, a substantial portion of
whose  capital  stock  is owned either directly or indirectly by another
corporation, enters into any transaction with such other corporation  on
such terms as to create an improper loss or net income, the [tax commis-
sion]  COMMISSIONER may include in the entire net income[, minimum taxa-

S. 6359                            112                           A. 8559

ble income or pre-nineteen hundred ninety minimum taxable income] of the
taxpayer the fair profits which, but for such agreement, arrangement  or
understanding,  the  taxpayer  might have derived from such transaction.
WHERE ANY TAXPAYER OWNS, DIRECTLY OR INDIRECTLY, MORE THAN FIFTY PERCENT
OF THE CAPITAL STOCK OF ANOTHER CORPORATION SUBJECT TO TAX UNDER SECTION
FIFTEEN HUNDRED TWO-A OF THIS CHAPTER AND FIFTY PERCENT OR LESS OF WHOSE
GROSS RECEIPTS FOR THE TAXABLE YEAR CONSIST OF PREMIUMS, THE COMMISSION-
ER  MAY  INCLUDE  IN  THE ENTIRE NET INCOME OF THE TAXPAYER, AS A DEEMED
DISTRIBUTION, THE AMOUNT OF THE NET INCOME OF THE OTHER CORPORATION THAT
IS IN EXCESS OF ITS NET PREMIUM INCOME.
  S 19-a. Subdivision 13 of section 211 of the tax law is REPEALED.
  S 20.  Subdivision 11 of section 2 of the tax law, as added by section
1 of part E-1 of chapter 57 of the laws of 2009, is amended to  read  as
follows:
  11.  The term "[overcapitalized] COMBINABLE captive insurance company"
means an entity that is treated as an association taxable  as  a  corpo-
ration  under  the  internal revenue code (a) more than fifty percent of
the voting stock of which is owned or controlled, directly or  indirect-
ly,  by  a  single entity that is treated as an association taxable as a
corporation under the internal revenue code and not exempt from  federal
income  tax;  (b)  that is licensed as a captive insurance company under
the laws of this state or another jurisdiction; AND (c)  whose  business
includes  providing,  directly  and indirectly, insurance or reinsurance
covering the risks of  its  parent  and/or  members  of  its  affiliated
group[;  and  (d)  fifty percent or less of whose gross receipts for the
taxable year consist of premiums].   For purposes of  this  subdivision,
"affiliated group" has the same meaning as that term is given in section
1504  of  the internal revenue code, except that the term "common parent
corporation" in that section is deemed to mean any person, as defined in
section 7701 of the internal revenue code[;] AND references to "at least
eighty percent" in section 1504 of the internal revenue code are  to  be
read  as  "fifty  percent or more;" section 1504 of the internal revenue
code is to be read without regard to  the  exclusions  provided  for  in
subsection (b) of that section[; "premiums" has the same meaning as that
term  is  given  in  paragraph one of subdivision (c) of section fifteen
hundred ten of this chapter, except that it includes  consideration  for
annuity  contracts and excludes any part of the consideration for insur-
ance, reinsurance or annuity contracts that do  not  provide  bona  fide
insurance,   reinsurance  or  annuity  benefits;  and  "gross  receipts"
includes the amounts included in gross receipts for purposes of  section
501(c) (15) of the internal revenue code, except that those amounts also
include all premiums as defined in this subdivision].
  S  21.  Subdivision  (a) of section 1500 of the tax law, as separately
amended by section 1 of part B-1 and section 8 of part E-1 of chapter 57
of the laws of 2009, is amended to read as follows:
  (a) The term "insurance corporation" includes a  corporation,  associ-
ation,  joint stock company or association, person, society, aggregation
or partnership, by whatever name known,  doing  an  insurance  business,
and, notwithstanding the provisions of section fifteen hundred twelve of
this  article,  shall  include  (1) a risk retention group as defined in
subsection (n) of section five thousand nine hundred two of  the  insur-
ance  law,  (2)  the state insurance fund and (3) a corporation, associ-
ation, joint stock company or association, person, society,  aggregation
or  partnership  doing an insurance business as a member of the New York
insurance exchange described in section six thousand two hundred one  of
the  insurance  law.  The  definition  of  the  "state  insurance  fund"

S. 6359                            113                           A. 8559

contained in this subdivision shall be limited  in  its  effect  to  the
provisions  of  this  article and the related provisions of this chapter
and shall have no force and effect  other  than  with  respect  to  such
provisions.  The  term  "insurance  corporation"  shall  also  include a
captive insurance company doing a captive insurance business, as defined
in subsections (c) and (b), respectively, of section seven thousand  two
of  the  insurance law; provided, however, "insurance corporation" shall
not include the metropolitan transportation authority, or a public bene-
fit corporation or not-for-profit corporation formed by a  city  with  a
population  of one million or more pursuant to subsection (a) of section
seven thousand five of the insurance law, each  of  which  is  expressly
exempt  from the payment of fees, taxes or assessments, whether state or
local; and provided further "insurance corporation" does not include any
[overcapitalized] COMBINABLE captive insurance company. The term "insur-
ance corporation" shall also include an unauthorized  insurer  operating
from  an  office  within  the  state,  pursuant  to  paragraph  five  of
subsection (b) of section one thousand one hundred  one  and  subsection
(i)  of section two thousand one hundred seventeen of the insurance law.
The term "insurance corporation"  also  includes  a  health  maintenance
organization required to obtain a certificate of authority under article
forty-four of the public health law.
  S  22. Subdivision (a) of section 1502-b of the tax law, as amended by
section 9 of part E-1 of chapter 57 of the laws of 2009 and  as  further
amended  by  section 104 of part A of chapter 62 of the laws of 2011, is
amended to read as follows:
  (a) In lieu of the taxes and tax surcharge imposed by sections fifteen
hundred one, fifteen hundred two-a, fifteen hundred five-a, and  fifteen
hundred ten of this article, every captive insurance company licensed by
the  superintendent  of financial services pursuant to the provisions of
article seventy of the insurance law, other than the metropolitan trans-
portation authority and a public benefit corporation  or  not-for-profit
corporation  formed  by  a city with a population of one million or more
pursuant to subsection (a) of section seven thousand five of the  insur-
ance  law,  each  of which is expressly exempt from the payment of fees,
taxes or assessments whether state or local, and other than [an overcap-
italized] COMBINABLE captive insurance company, shall, for the privilege
of exercising its corporate franchise, pay a tax on (1) all gross direct
premiums, less return premiums thereon,  written  on  risks  located  or
resident  in  this  state and (2) all assumed reinsurance premiums, less
return premiums thereon, written on risks located or  resident  in  this
state.  The  rate  of  the tax imposed on gross direct premiums shall be
four-tenths of one percent on all  or  any  part  of  the  first  twenty
million  dollars  of premiums, three-tenths of one percent on all or any
part of the second twenty million dollars of premiums, two-tenths of one
percent on all or any part of the third twenty million dollars of premi-
ums, and seventy-five thousandths of  one  percent  on  each  dollar  of
premiums thereafter. The rate of the tax on assumed reinsurance premiums
shall  be  two  hundred twenty-five thousandths of one percent on all or
any part of the first twenty million dollars of  premiums,  one  hundred
and  fifty  thousandths  of one percent on all or any part of the second
twenty million dollars of premiums, fifty thousandths of one percent  on
all  or  any  part  of  the third twenty million dollars of premiums and
twenty-five thousandths of one percent on each dollar of premiums there-
after. The tax imposed by this section shall be equal to the greater  of
(i)  the  sum  of  the  tax imposed on gross direct premiums and the tax
imposed on assumed reinsurance premiums or (ii) five thousand dollars.

S. 6359                            114                           A. 8559

  S 23. Paragraph 4 of subdivision (f) of section 1515 of the  tax  law,
as amended by section 16 of part FF-1 of chapter 57 of the laws of 2008,
is amended to read as follows:
  (4)(i)  For  purposes of this paragraph, the term "closest controlling
stockholder" means the corporation that indirectly owns or controls over
fifty percent of the voting stock of a captive REIT or captive  RIC,  is
subject  to  tax under section fifteen hundred one of this article[,] OR
article nine-A [or article thirty-two] of this chapter or required to be
included in a combined return or report under this article[,] OR article
nine-A [or article thirty-two] of this chapter, and is the fewest  tiers
of corporations away in the ownership structure from the captive REIT or
captive  RIC.  The commissioner is authorized to prescribe by regulation
or published guidance the criteria for determining the closest  control-
ling stockholder.
  (ii)  A  captive  REIT or a captive RIC must be included in a combined
return with the corporation that directly owns or  controls  over  fifty
percent  of  the voting stock of the captive REIT or captive RIC if that
corporation is a life insurance corporation and is  subject  to  tax  or
required to be included in a combined return under this article.
  (iii)  If  over fifty percent of the voting stock of a captive REIT or
captive RIC is not directly owned or  controlled  by  a  life  insurance
corporation  that  is  subject  to  tax  or required to be included in a
combined return under this article, [then the captive  REIT  or  captive
RIC must be included in a combined report or return with the corporation
that  is  the  closest  controlling  stockholder  of the captive REIT or
captive RIC. If] AND the closest controlling stockholder of the  captive
REIT  or  captive RIC is a life insurance corporation that is subject to
tax or required to be included in a combined return under this  article,
then  the  captive  REIT  or  captive RIC must be included in a combined
return WITH THE CLOSEST CONTROLLING STOCKHOLDER under this article.
  (iv) If a captive REIT owns the stock of a qualified  REIT  subsidiary
(as  defined in paragraph two of subsection (i) of section eight hundred
fifty-six of the internal revenue code) AND THE CAPTIVE REIT IS REQUIRED
TO BE INCLUDED IN A COMBINED RETURN UNDER SUBPARAGRAPHS (II) OR (III) OF
THIS PARAGRAPH, then the qualified REIT subsidiary must be  included  in
any  combined  return  required to be made by the captive REIT that owns
the stock of the qualified REIT subsidiary.
  (v) If a captive REIT or a captive RIC is required  under  this  para-
graph  to be included in a combined return with another corporation, and
that other corporation is required to be included in a  combined  return
with  another  [related]  corporation  under  this subdivision, then the
captive REIT or the captive RIC must be included in that combined return
with the other [related] corporation.
  S 24. Subdivisions (a), (b) and (c) of section 12 of the tax  law,  as
added  by  chapter  615  of  the  laws  of  1998, are amended to read as
follows:
  (a) For purposes of subdivision (b) of this section, the term "person"
shall mean a corporation, joint stock company or association,  insurance
corporation,  or  banking  corporation,  as  such  terms  are defined in
section one  hundred  eighty-three,  one  hundred  eighty-four,  or  one
hundred  eighty-six,  or in article nine-A[, thirty-two] or thirty-three
of this chapter, imposing tax on such entities.
  (b) No person shall be subject to the taxes imposed under section  one
hundred eighty-three, one hundred eighty-four or one hundred eighty-six,
or  article nine-A[, thirty-two] or thirty-three of this chapter, solely
by reason of (1)  having its advertising stored on  a  server  or  other

S. 6359                            115                           A. 8559

computer  equipment  located in this state (other than a server or other
computer equipment owned or leased by such person), or  (2)  having  its
advertising  disseminated  or displayed on the Internet by an individual
or  entity  subject  to  tax under section one hundred eighty-three, one
hundred eighty-four or one hundred eighty-six, or article nine-A,  twen-
ty-two[, thirty-two] or thirty-three of this chapter.
  (c)  A  person,  as such term is defined in subdivision (a) of section
eleven hundred one of this chapter, shall not be deemed to be a  vendor,
for  purposes  of article twenty-eight of this chapter, solely by reason
of (1)  having its advertising stored on  a  server  or  other  computer
equipment  located  in this state (other than a server or other computer
equipment owned or leased by such person), or (2) having its advertising
disseminated or displayed on the Internet by  an  individual  or  entity
subject  to  tax  under  section  one  hundred eighty-three, one hundred
eighty-four or one hundred eighty-six, or article  nine-A,  twenty-two[,
thirty-two] or thirty-three of this chapter.
  S  25. Paragraph 1 of subdivision (a) of section 14 of the tax law, as
amended by section 3 of part V1 of chapter 109 of the laws of  2006,  is
amended to read as follows:
  (1)  except as provided in paragraphs one-a and one-b of this subdivi-
sion, for purposes of section one hundred  eighty-seven-j  and  articles
nine-A,  twenty-two[,  thirty-two] and thirty-three of this chapter, for
each of the taxable years within  the  "business  tax  benefit  period,"
which  period  shall consist of (A) in the case of a business enterprise
with a test date occurring on or before December thirty-first, two thou-
sand one, the first fifteen taxable years beginning on or after  January
first, two thousand one, (B) in the case of a business enterprise with a
test  date  occurring  on  or after January first, two thousand two, but
prior to April first, two thousand five, the fifteen taxable years  next
following  the business enterprise's test year, and (C) in the case of a
business enterprise which is first certified under article eighteen-B of
the general municipal law on or after April first,  two  thousand  five,
the  ten taxable years starting with the taxable year in which the busi-
ness enterprise's first date of certification under  article  eighteen-B
of  the  general  municipal law occurs, but only with respect to each of
such business tax benefit period years for which the employment test  is
met,
  S  26.  Subdivision  (f)  of  section 14 of the tax law, as amended by
section 10 of part CC of chapter 85 of the laws of 2002, is  amended  to
read as follows:
  (f)  Taxable  year.  The term "taxable year" means the taxable year of
the business enterprise under  section  one  hundred  eighty-three,  one
hundred  eighty-four,  one  hundred  eighty-five  or  former section one
hundred eighty-six of article nine, or  under  article  nine-A,  twenty-
two[,  thirty-two] or thirty-three of this chapter. If a business enter-
prise does not have a taxable year because it is exempt from taxation or
otherwise not required to file a return under any of  such  sections  of
article  nine or under article nine-A, twenty-two[, thirty-two] or thir-
ty-three, then the term "taxable year" means  (i)  the  business  enter-
prise's federal taxable year, or, (ii) if the enterprise does not have a
federal taxable year, the calendar year.
  S  27. Paragraph 1 of subdivision (i) of section 14 of the tax law, as
amended by section 5 of part A of chapter 63 of the  laws  of  2005,  is
amended to read as follows:
  (1)  for  purposes  of  section  one hundred eighty-seven-j of article
nine, and articles nine-A, twenty-two[, thirty-two] and thirty-three  of

S. 6359                            116                           A. 8559

this  chapter, on the first day of the taxable year during which revoca-
tion of its certification under article eighteen-B of the general munic-
ipal law occurs, and
  S  28.  Paragraphs 1 and 2 of subdivision (j) of section 14 of the tax
law, as amended by section 10 of part CC of chapter 85 of  the  laws  of
2002, are amended to read as follows:
  (1) A new business shall include any corporation, except a corporation
which  is substantially similar in operation and in ownership to a busi-
ness entity (or entities) taxable, or previously taxable, under  section
one  hundred  eighty-three, one hundred eighty-four, one hundred eighty-
five or one hundred eighty-six of article nine; article nine-A[, article
thirty-two] or thirty-three of this  chapter;  article  twenty-three  of
this  chapter or which would have been subject to tax under such article
twenty-three (as such article was in effect on January  first,  nineteen
hundred  eighty), ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD HAVE
BEEN SUBJECT TO TAX UNDER SUCH ARTICLE THIRTY-TWO (AS SUCH  ARTICLE  WAS
IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN) or the income
(or  losses) of which is (or was) includable under article twenty-two of
this chapter.
  (2) For purposes of article twenty-two of this chapter, an  individual
who is either a sole proprietor or a member of a partnership shall qual-
ify as an owner of a new business unless the business of which the indi-
vidual  is  an owner is substantially similar in operation and in owner-
ship to a business entity taxable, or previously taxable, under  section
one  hundred  eighty-three, one hundred eighty-four, one hundred eighty-
five or one hundred eighty-six of article nine; article  nine-A[,  thir-
ty-two] or ARTICLE thirty-three of this chapter; article twenty-three of
this  chapter or which would have been subject to tax under such article
twenty-three (as such article was in effect on January  first,  nineteen
hundred  eighty); ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD HAVE
BEEN SUBJECT TO TAX UNDER SUCH ARTICLE THIRTY-TWO AS SUCH ARTICLE WAS IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND  TEN  or  the  income  (or
losses) of which is (or was) includable under article twenty-two.
  S  29.  Clauses  (i)  and  (ii)  of subparagraph (A) of paragraph 4 of
subdivision (j) of section 14 of the tax law, as added by section  5  of
part  A  of  chapter  63  of  the  laws  of 2005, are amended to read as
follows:
  (i) Notwithstanding paragraphs one and two of this subdivision, a  new
business  shall  include any corporation which is identical in operation
and ownership to a business entity (or entities) taxable  under  section
one  hundred eighty-three, one hundred eighty-four or one hundred eight-
y-five of article nine; article nine-A[, article thirty-two] or  thirty-
three  of  this chapter or the income (or losses) of which is includable
under article twenty-two of this chapter, provided such corporation  and
such  business entity or entities are operating in different counties in
the state.
  (ii) Notwithstanding paragraphs one and two of  this  subdivision,  an
individual  who is either a sole proprietor or a member of a partnership
shall qualify as an owner of a new business if the business of which the
individual is an owner is identical in operation and in ownership  to  a
business  entity (or entities) taxable under section one hundred eighty-
three, one hundred eighty-four or one  hundred  eighty-five  of  article
nine; article nine-A[, article thirty-two] or thirty-three of this chap-
ter or the income (or losses) of which is includable under article twen-
ty-two  of this chapter, provided such business and such business entity
or entities are operating in different counties in the state.

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  S 30. Subparagraph (B) of paragraph 4 of subdivision (j) of section 14
of the tax law, as amended by chapter  161  of  the  laws  of  2005,  is
amended to read as follows:
  (B) Notwithstanding any provisions of this subdivision to the contrary
and  notwithstanding  subdivision  c  of  section eighteen of part CC of
chapter eighty-five of the laws of two thousand two,  a  corporation  or
partnership,  which  was first certified under article eighteen-B of the
general municipal law before August first, two thousand two, has a  base
period  of  zero  years  or  zero employment for its base period, and is
similar in operation and in ownership to a business entity  or  entities
taxable,  or  previously  taxable, under sections specified in paragraph
one or two of this subdivision or which would have been subject  to  tax
under  article  twenty-three  of  this  chapter  (as such article was in
effect on January first, nineteen hundred eighty) OR  WHICH  WOULD  HAVE
BEEN  SUBJECT  TO  TAX UNDER ARTICLE THIRTY-TWO OF THIS CHAPTER (AS SUCH
ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO  THOUSAND  FOURTEEN)
or  the  income  or  losses  of which is or was includable under article
twenty-two of this chapter shall not be deemed a new business if it  was
not  formed  for  a  valid  business purpose, as such term is defined in
clause (D) of subparagraph one of paragraph (o) of subdivision  nine  of
section  two hundred eight of this chapter and was formed solely to gain
empire zone benefits.
  S 31. Subdivision (k) of section 14 of the  tax  law,  as  amended  by
section  5  of  part  A of chapter 63 of the laws of 2005, is amended to
read as follows:
  (k) If the designation of an area as an empire zone is  no  longer  in
effect  because section nine hundred sixty-nine of the general municipal
law was not amended to extend the effective date of such designation  so
that the designations of all empire zones pursuant to article eighteen-B
of  the  general  municipal law have expired, a business enterprise that
was certified pursuant to article eighteen-B of  the  general  municipal
law  on  the day immediately preceding the day on which such designation
expired shall be deemed to continue to be certified under  such  article
eighteen-B  for purposes of this section, and sections fifteen, sixteen,
section one hundred eighty-seven-j, subdivisions [twenty-seven] FIVE and
[twenty-eight] SIX of section two hundred [ten] TEN-B, subsections  (bb)
and  (cc)  of section six hundred six, subdivision (z) of section eleven
hundred fifteen[, subsections (o) and (p) of  section  fourteen  hundred
fifty-six,]  and  subdivisions  (r)  and  (s) of section fifteen hundred
eleven of this chapter. In addition, if the designation of an area as an
empire zone is no longer in effect because section nine  hundred  sixty-
nine  of  the general municipal law was not amended to extend the effec-
tive date of such designation so that the  designations  of  all  empire
zones  pursuant  to article eighteen-B of the general municipal law have
expired, all references to empire zones in the provisions of this  chap-
ter  listed  in  the  previous  sentence  shall be read as meaning areas
designated as empire zones on the day immediately preceding the  day  on
which such designation expired.
  S  32.  Subdivisions  (a)  and  (h)  of  section 15 of the tax law, as
amended by section 5 of part A of chapter 63 of the laws  of  2005,  are
amended to read as follows:
  (a)  Allowance  of credit. A taxpayer which is a qualified empire zone
enterprise (QEZE), or which is a sole proprietor of a QEZE or  a  member
of  a  partnership  which  is  a QEZE, and which is subject to tax under
article nine-A, twenty-two[, thirty-two] or thirty-three of  this  chap-
ter,  shall  be  allowed  a  credit  against  such  tax, pursuant to the

S. 6359                            118                           A. 8559

provisions referenced in subdivision (h) of this section,  for  eligible
real property taxes.
  (h) Definitions and cross-references. For definitions of terms used in
this  section  see  section fourteen of this article. For application of
the credit provided for in this section, see the following provisions of
this chapter:
  (1) Article 9: Section 187-j.
  (2) Article 9-A: Section [210] 210-B: subdivision [27] 5.
  (3) Article 22: Section 606: subsections (i) and (bb).
  (4) [Article 32: Section 1456: subsection (o).
  (5)] Article 33: Section 1511: subdivision (r).
  S 33. Subdivision (a) of section 16  of  the  tax  law,  as  added  by
section  2  of  part GG of chapter 63 of the laws of 2000, is amended to
read as follows:
  (a) Allowance of credit. A taxpayer which is a qualified  empire  zone
enterprise  (QEZE),  or which is a sole proprietor of a QEZE or a member
of a partnership which is a QEZE, and which  is  subject  to  tax  under
article  nine-A,  twenty-two[, thirty-two] or thirty-three of this chap-
ter, shall be allowed  a  credit  against  such  tax,  pursuant  to  the
provisions referenced in subdivision (g) of this section, to be computed
as hereinafter provided.
  S 34. Paragraph 1, clause (ii) of subparagraph (B) of paragraph 2, and
subparagraph  (A) of paragraph 3 of subdivision (f) of section 16 of the
tax law, as amended by section 14 of part CC of chapter 85 of  the  laws
of 2002, are amended to read as follows:
  (1) General. The tax factor shall be, in the case of article nine-A of
this  chapter,  the [larger of the amounts] AMOUNT of tax determined for
the taxable year under [paragraphs] PARAGRAPH (a) [and (c)] of  subdivi-
sion  one  of  section  two  hundred ten of such article. The tax factor
shall be, in the case of article twenty-two of  this  chapter,  the  tax
determined  for  the  taxable  year under subsections (a) through (d) of
section six hundred one of such article. [The tax factor  shall  be,  in
the  case  of  article  thirty-two  of  this  chapter, the larger of the
amounts of tax determined for the taxable year under subsection (a)  and
paragraph  two  of subsection (b) of section fourteen hundred fifty-five
of such article.] The tax factor shall be, in the case of article  thir-
ty-three  of  this  chapter, the larger of the amounts of tax determined
for the taxable year under paragraphs one and three of  subdivision  (a)
of section fifteen hundred two of such article.
  (ii)  For  purposes of article nine-A[, thirty-two or thirty-three] of
this chapter, the term "partner's income  from  the  partnership"  means
partnership  items  of  income,  gain,  loss and deduction, and New York
modifications thereto, entering  into  [entire  net]  BUSINESS  income[,
minimum  taxable  income,  alternative  entire  net income or entire net
income plus compensation] and the term "partner's entire  income"  means
[entire  net]  BUSINESS  income[,  minimum  taxable  income, alternative
entire net income or entire net  income  plus  compensation,]  allocated
within the state.  FOR PURPOSES OF ARTICLE THIRTY-THREE OF THIS CHAPTER,
THE TERM "PARTNER'S INCOME FROM THE PARTNERSHIP" MEANS PARTNERSHIP ITEMS
OF INCOME, GAIN, LOSS AND DEDUCTION, AND NEW YORK MODIFICATIONS THERETO,
ENTERING  INTO  ENTIRE NET INCOME OR ENTIRE NET INCOME PLUS COMPENSATION
AND THE TERM "PARTNER'S ENTIRE  INCOME"  MEANS  ENTIRE  NET  INCOME,  OR
ENTIRE  NET  INCOME  PLUS  COMPENSATION, ALLOCATED WITHIN THE STATE. For
purposes of article twenty-two of  this  chapter,  the  term  "partner's
income  from  the  partnership" means partnership items of income, gain,
loss and deduction, and New York modifications  thereto,  entering  into

S. 6359                            119                           A. 8559

New  York  adjusted gross income, and the term "partner's entire income"
means New York adjusted gross income.
  (A)  Where  the  taxpayer is a qualified empire zone enterprise and is
required or permitted to make a return or report  on  a  combined  basis
under article nine-A[, thirty-two] or ARTICLE thirty-three of this chap-
ter,  the  taxpayer's tax factor shall be the amount determined in para-
graph one of this subdivision which is attributable to the income of the
qualified empire zone enterprise.   Such attribution shall  be  made  in
accordance  with  the  ratio  of  the qualified empire zone enterprise's
income allocated within the state to the combined group's income, or  in
accordance  with such other methods as the commissioner may prescribe as
providing an apportionment which reasonably reflects the portion of  the
combined  group's tax attributable to the income of the qualified empire
zone enterprise. In no event may the ratio so determined exceed 1.0.
  S 35. Subdivision (g) of section 16  of  the  tax  law,  as  added  by
section  2  of  part GG of chapter 63 of the laws of 2000, is amended to
read as follows:
  (g) Definitions and cross-references. For definitions of terms used in
this section see sections fourteen and  fifteen  of  this  article.  For
application  of the credit provided for in this section, see the follow-
ing provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B:  subdivision [28]6.
  (2) Article 22: Section 606: subsections (i) and (cc).
  (3) [Article 32: Section 1456: subsection (p).
  (4)] Article 33: Section 1511: subdivision (s).
  S 36. Paragraph 1 of subdivision (b) of section 17 of the tax law,  as
added  by  section  43  of part S1 of chapter 57 of the laws of 2009, is
amended to read as follows:
  (1) The empire zones tax benefits report must  contain  the  following
information  about  the  empire  zone tax credits claimed under articles
nine, nine-A, twenty-two[, thirty-two] and thirty-three of this  chapter
during the previous calendar year:
  (A) the name of each taxpayer claiming a credit; and
  (B) the amount of each credit earned by each taxpayer.
  S  37. Subdivisions (a) and (d) of section 18 of the tax law, as added
by section 2 of part CC of chapter 63 of the laws of 2000,  are  amended
to read as follows:
  (a)  Allowance  of  credit.  A  taxpayer  subject to tax under article
nine-A, twenty-two[, thirty-two] or thirty-three of this  chapter  shall
be  allowed a credit against such tax, pursuant to the provisions refer-
enced in subdivision (d) of this section, with respect to the  ownership
of  eligible low-income buildings for which an eligibility statement has
been issued by the commissioner of housing and  community  renewal.  The
amount  of  the credit shall be the credit amount for each such building
allocated by such commissioner as  provided  in  article  two-A  of  the
public  housing  law. The credit amount shall be allowed for each of the
ten taxable years in the credit period, and any reduction in  first-year
credit  as provided in subdivision two of section twenty-two of such law
shall be allowed in the eleventh taxable year.
  (d) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B:  subdivision [30] 15,
  (2) Article 22: Section 606: subsections (i) and (x),
  (3) [Article 32: Section 1456: subsection (l),
  (4)] Article 33: Section 1511: subdivision (n).

S. 6359                            120                           A. 8559

  S  38. Subparagraph (A) of paragraph 1 of subdivision (a) and subdivi-
sion (f) of section 19 of the tax law, as added by section 2 of part  II
of chapter 63 of the laws of 2000, are amended to read as follows:
  (A)  Green  building  credit.  A taxpayer subject to tax under article
nine, nine-A, twenty-two[, thirty-two] or thirty-three of  this  chapter
shall  be  allowed a green building credit against such tax, pursuant to
the provisions referenced in subdivision (f) of this section.  Provided,
however,  no  credit  shall  be  allowed  under  this section unless the
taxpayer has complied with the applicable requirements of paragraph  two
of  subdivision  (d)  of  this section (relating to reports to DEC). The
amount of the credit shall be the sum of the credit components specified
in paragraphs two through seven of this subdivision. Provided,  however,
the  amount of each such credit component shall not exceed the limit set
forth in the initial credit component certificate obtained  pursuant  to
subdivision  (c)  of  this  section. In the determination of such credit
components, no cost paid or incurred by the taxpayer shall be the  basis
for more than one such component.
  (f)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article nine: Section one hundred eighty-seven-d;
  (2) Article nine-A: Subdivision [thirty-one] SIXTEEN  of  section  two
hundred [ten] TEN-B;
  (3) Article twenty-two: Subsections (i) and (y) of section six hundred
six;
  (4)  [Article  thirty-two:  Subsection (m) of section fourteen hundred
fifty-six;
  (5)] Article thirty-three: Subdivision (o) of section fifteen  hundred
eleven.
  S  39.  Paragraphs 1 and 5 of subdivision (a) of section 21 of the tax
law, as amended by section 1 of part H of chapter 577  of  the  laws  of
2004, are amended to read as follows:
  (1)  General.  A  taxpayer  subject to tax under article nine, nine-A,
twenty-two[, thirty-two]  or  thirty-three  of  this  chapter  shall  be
allowed a credit against such tax, pursuant to the provisions referenced
in  subdivision  (f)  of this section. Such credit shall be allowed with
respect to a qualified site, as such term is defined in paragraph one of
subdivision (b) of this section. The amount of the credit in  a  taxable
year  shall  be the sum of the credit components specified in paragraphs
two, three and four of this subdivision applicable in such year.
  (5) Applicable percentage. For purposes of paragraphs two,  three  and
four  of  this  subdivision,  the  applicable percentage shall be twelve
percent in the case of credits  claimed  under  article  nine,  nine-A[,
thirty-two] or thirty-three of this chapter, and ten percent in the case
of credits claimed under article twenty-two of this chapter, except that
where  at least fifty percent of the area of the qualified site relating
to the credit provided for in this section is  located  in  an  environ-
mental  zone  as  defined  in  paragraph  six of subdivision (b) of this
section, the applicable percentage shall be increased by  an  additional
eight  percent. Provided, however, as afforded in section 27-1419 of the
environmental conservation law, if the certificate of  completion  indi-
cates  that  the  qualified  site has been remediated to Track 1 as that
term is described in subdivision four of section 27-1415 of the environ-
mental conservation law, the applicable  percentage  set  forth  in  the
first sentence of this paragraph shall be increased by an additional two
percent.

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  S  39-a.  Subdivisions  (c)  and  (f) of section 21 of the tax law, as
added by section 1 of part H of chapter 1  of  the  laws  of  2003,  are
amended to read as follows:
  (c)  Qualifying  property.  Property  which  qualifies  for the credit
provided for under this section and also for a credit provided  for  (1)
under either subdivision [twelve] ONE or subdivision [twelve-B] THREE of
section  two  hundred  [ten]  TEN-B  of  this  chapter,  or both, OR (2)
subsection (a) or subsection (j) of section  six  hundred  six  of  this
chapter,  or  both[, (3) the credit provided for under subsection (i) of
section fourteen hundred fifty-six of this chapter, or  (4)  the  credit
provided under subdivision (q) of section fifteen hundred eleven of this
chapter]  may be the basis for either the credit provided for under this
section or one of the credits enumerated in paragraph  one[,]  OR  two[,
three or four] of this subdivision, but not both.
  (f)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-g
  (2) Article 9-A: Section [210] 210-B, subdivision [33] 17
  (3) Article 22: Section 606, subsections (i) and (dd)
  (4) [Article 32: Section 1456, subsection (q)
  (5)] Article 33: Section 1511, subdivision (u).
  S 40. Paragraph 3 of subdivision (a) and paragraphs 1 and 9 of  subdi-
vision (b) of section 22 of the tax law, as amended by section 4 of part
H of chapter 577 of the laws of 2004, are amended to read as follows:
  (3)  Developer.  (i)  A  "developer" is a taxpayer under article nine,
nine-A, twenty-two[, thirty-two] or thirty-three of this chapter who  or
which  either  (I)  has  been  issued  a  certificate of completion with
respect to a qualified site or (II) has purchased or in  any  other  way
has been conveyed all or any portion of a qualified site from a taxpayer
or  any  other  party  who  or  which  has  been issued a certificate of
completion with respect to such site provided, such purchase or  convey-
ance  occurs within seven years of the effective date of the certificate
of completion issued with respect to  such  qualified  site.    Provided
further, that the taxpayer who or which is purchasing all or any portion
of a qualified site and the taxpayer or any other party who or which has
been  issued  a  certificate of completion with respect to such site may
not be related persons, as such term is defined in subparagraph  (C)  of
paragraph  three of subsection (b) of section four hundred sixty-five of
the internal revenue code.
  (ii) Where the entity to whom a certificate  of  completion  has  been
issued  is a partnership, or where the entity which has purchased all or
any portion of a qualified site from a taxpayer who or  which  has  been
issued  a certificate of completion with respect to such site within the
applicable time limit is a partnership, any partner in such  partnership
who  or  which is taxable under article nine, nine-A, twenty-two[, thir-
ty-two] or thirty-three of this chapter shall be a developer under  this
paragraph. Where the entity to whom a certificate of completion has been
issued  is  a  New  York  S  corporation,  or where the entity which has
purchased all or any portion of a qualified site from a taxpayer who  or
which  has  been issued a certificate of completion with respect to such
site within the applicable time limit is a New York S  corporation,  any
shareholder  in  such  New York S corporation shall be a developer under
this paragraph.
  (1) Allowance of credit. A developer of a qualified site who or  which
is  subject  to tax under article nine, nine-A, twenty-two[, thirty-two]
or thirty-three of this chapter, shall be allowed a credit against  such

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tax,  pursuant  to  the  provisions referenced in paragraph nine of this
subdivision, for eligible real property taxes imposed on such site.
  (9)  Cross-references.  For  application of the credit provided for in
this subdivision, see the following provisions of this chapter:
  (i) Article 9: Section 187-h.
  (ii) Article 9-A: Section [210] 210-B:  subdivision [34] 18.
  (iii) Article 22: Section 606: subsections (i) and (ee).
  (iv) [Article 32: Section 1456: subsection (r).
  (v)] Article 33: Section 1511: subdivision (v).
  S 41. Subdivision (a) of section 23 of the  tax  law,  as  amended  by
section 10 of part H chapter 577 of the laws of 2004, is amended to read
as follows:
  (a)  Allowance  of  credit.  General.  A taxpayer subject to tax under
article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter  shall  be  allowed  a  credit against such tax, pursuant to the
provisions referenced in subdivision (e) of this section. The amount  of
such  credit  shall be equal to the lesser of thirty thousand dollars or
fifty percent of the premiums paid on or after the date  of  the  brown-
field site cleanup agreement executed by the taxpayer and the department
of  environmental  conservation pursuant to section 27-1409 of the envi-
ronmental conservation law by the taxpayer for environmental remediation
insurance issued with respect to a qualified site.
  S 42. Subdivision (e) of section 23  of  the  tax  law,  as  added  by
section  19  of  part  H of chapter 1 of the laws of 2003, is amended to
read as follows:
  (e) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-i
  (2) Article 9-A: Section [210] 210-B, subdivision [35] 19
  (3) Article 22: Section 606, subsections (i) and (ff)
  (4) [Article 32: Section 1456, subsection (s)
  (5)] Article 33: Section 1511, subdivision (w).
  S 43. Paragraphs 1 and 2 of subdivision (a) and clause (i) of subpara-
graph  (D)  of  paragraph  1 of subdivision (b) of section 25 of the tax
law, as added by section 1 of part N of chapter 61 of the laws of  2005,
are amended to read as follows:
  (1)  Every  taxpayer,  or  person as defined in section seven thousand
seven hundred one of the internal  revenue  code,  required  to  file  a
disclosure  statement  with  the  internal  revenue  service pursuant to
section six thousand eleven of the internal revenue code, or  the  regu-
lations promulgated thereunder, related to a reportable transaction or a
listed  transaction, as those terms are defined in such section or regu-
lations, must attach a duplicate of such  disclosure  statement  to  the
return or report required to be filed by such taxpayer or person for the
taxable  year  under  article  nine, nine-A, twenty-two[, thirty-two] or
thirty-three of this chapter, and provide such other information related
to such disclosure as prescribed by the  commissioner.  Such  disclosure
shall be made notwithstanding that one member of an affiliated group, as
defined  by  section  fifteen hundred four of the internal revenue code,
may file such disclosure statement with the internal revenue service  on
behalf of its affiliates including such taxpayer or person.
  (2)  Every  taxpayer  or  such  person  who participates in a New York
reportable transaction for a taxable year  must  disclose  such  partic-
ipation  with  its  return  or report required to be filed under article
nine, nine-A, twenty-two[, thirty-two] or thirty-three of  this  chapter
for  the  taxable  year  in  a  form prescribed by the commissioner, and

S. 6359                            123                           A. 8559

provide such other information related to such transaction as prescribed
by the commissioner. A New York reportable transaction is a  transaction
that  has  the potential to be a tax avoidance transaction as determined
by the commissioner.
  (i)  the  list  required  to  be maintained by such person pursuant to
section six thousand one hundred twelve of  the  internal  revenue  code
identifies  or  is  required to identify a taxpayer subject to tax under
article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter, and
  S  44. Subdivisions (a) and (f) of section 26 of the tax law, as added
by chapter 537 of the laws of 2005, are amended to read as follows:
  (a) Allowance of credit. A taxpayer, which is  subject  to  tax  under
article  nine,  nine-A, twenty-two[, thirty-two] or thirty-three of this
chapter and which is a qualified building  owner,  shall  be  allowed  a
credit  against  such tax.   The amount of the credit allowed under this
section shall equal the sum of the number of qualified security officers
providing protection to a building or buildings owned  by  the  taxpayer
multiplied  by  three  thousand  dollars. Provided, however, that in the
case of a worker not so employed for a full year, such amount  shall  be
prorated  to  reflect the length of such employment under regulations of
the commissioner.
  (f) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) article 9: section 187-n.
  (2) article 9-A: section [210] 210-B:  subdivision [37] 21.
  (3) article 22: section 606: subsection (ii).
  (4) [article 32: section 1456: subsection (t).
  (5)] article 33: section 1511: subdivision (x).
  S 45. Paragraph 3 of subdivision (a) and subdivision (c) of section 28
of  the  tax  law,  as added by section 2 of part V of chapter 62 of the
laws of 2006, are amended to read as follows:
  (3) No qualified production costs used by a  taxpayer  either  as  the
basis for the allowance of the credit provided for under this section or
used  in  the  calculation of the credit provided for under this section
shall be used by such taxpayer to claim any other credit allowed  pursu-
ant to this chapter.
  Notwithstanding  any  provisions  of  this  section to the contrary, a
corporation or partnership, which otherwise  qualifies  as  a  qualified
commercial production company, and is similar in operation and in owner-
ship  to  a  business entity or entities taxable, or previously taxable,
under section one hundred eighty-three, one hundred eighty-four  or  one
hundred  eighty-five  of  article nine; article nine-A[, article thirty-
two] or thirty-three of this chapter or which would have been subject to
tax under article twenty-three of this chapter (as such article  was  in
effect  on  January  first, nineteen hundred eighty) OR WHICH WOULD HAVE
BEEN SUBJECT TO TAX UNDER ARTICLE THIRTY-TWO OF THIS  CHAPTER  (AS  SUCH
ARTICLE  WAS  IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN)
or the income or losses of which is  or  was  includable  under  article
twenty-two  of  this chapter shall not be deemed a new or separate busi-
ness, and therefore shall not be eligible for  empire  state  commercial
production  benefits, if it was not formed for a valid business purpose,
as such term is defined in clause (D) of subparagraph one  of  paragraph
(o) of subdivision nine of section two hundred eight of this chapter and
was  formed  solely  to  gain  empire state commercial production credit
benefits.

S. 6359                            124                           A. 8559

  (c) Cross-references. For application of the credit  provided  for  in
this section, see the following provision of this chapter:
  (1) article 9-A: section [210] 210-B:  subdivision [38] 23.
  (2) article 22: section 606: subsection (jj).
  S  46.  Subdivision  (d)  of  section  28  of the tax law, as added by
section 1 of part X of chapter 62 of the laws of  2006,  is  amended  to
read as follows:
  (d)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-c.
  (2) Article 9-A: Section [210] 210-B, subdivision [38] 24.
  (3) Article 22: Section 606, subsections (i) and (jj).
  S 47. The opening paragraph of subdivision (a)  and  subdivisions  (c)
and  (g) of section 31 of the tax law, the opening paragraph of subdivi-
sion (a) and subdivision (g) as amended by section 7 of part G of  chap-
ter  61  of  the  laws of 2011, subdivision (c) as added by section 2 of
part MM of chapter 59 of the laws  of  2010,  are  amended  to  read  as
follows:
  General.  A  taxpayer subject to tax under section one hundred eighty-
five, article nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter  shall  be  allowed  a  credit against such tax, pursuant to the
provisions referenced in subdivision (g) of this section. The amount  of
the  credit,  allowable  for up to ten consecutive taxable years, is the
sum of the following four credit components:
  (c) Election of credit. A taxpayer who or which is qualified to  claim
the  excelsior  investment tax credit component and is also qualified to
claim the investment tax credit provided for under subdivision  [twelve]
ONE of section two hundred [ten,] TEN-B OR subsection (a) of section six
hundred  six[,  or subsection (i) of section fourteen hundred fifty-six]
of this chapter, may claim either the excelsior  investment  tax  credit
component  or  the  investment tax credit, but not both with regard to a
particular piece of property. In addition, a taxpayer who  or  which  is
qualified  to claim the excelsior investment tax credit component and is
also qualified to claim the brownfield tangible property  credit  compo-
nent  under  section twenty-one of this article, as added by chapter one
of the laws of two  thousand  three,  may  claim  either  the  excelsior
investment  tax credit component or such tangible property credit compo-
nent, but not both with regard to a particular piece  of  property.  The
election  to  claim  the  excelsior investment tax credit component, the
investment tax credit or the brownfield tangible property credit  compo-
nent, with regard to the same property, is irrevocable.
  (g)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9: section 187-q.
  (2) article 9-A: section [210] 210-B: subdivision [41] 31.
  (3) article 22: section 606: subsection (qq).
  (4) [article 32: section 1456: subsection (u).
  (5)] article 33: section 1511: subdivision (y).
  S 48. Subdivision (d) of section 31  of  the  tax  law,  as  added  by
section  12  of  part Q of chapter 57 of the laws of 2010, is amended to
read as follows:
  (d) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) article 9-A: section [210] 210-B: subdivision [41] 32.
  (2) article 22: section 606: subsection (qq).

S. 6359                            125                           A. 8559

  S  49. Subdivision 3 of section 34 of the tax law, as added by section
2 of part Y of chapter 57 of the laws of 2010, is  amended  to  read  as
follows:
  3.  (a) For application of the temporary deferral nonrefundable payout
credit, see the following provisions of this chapter:
  (1) Article 9: section 187-0
  (2) Article 9-A: section [210(41)] 210-B(33)
  (3) Article 22: section 606(qq)
  (4) [Article 32: section 1456(v)
  (5)] Article 33: section 1511(y)
  (b) For application of the temporary deferral refundable payout  cred-
it, see the following provisions of this chapter:
  (1) Article 9: section 187-p
  (2) Article 9-A: section [210(42)] 210-B(34)
  (3) Article 22: section 606(rr)
  (4) [Article 32: section 1456(w)
  (5)] Article 33: section 1511(z)
  S  50.  The  opening paragraph of subdivision (a), subparagraph (C) of
paragraph 2 of subdivision (e), and subdivision (f) of section 35 of the
tax law, as added by section 3 of part V of chapter 61 of  the  laws  of
2011, are amended to read as follows:
  A taxpayer which is a participant or the owner of a participant in the
economic transformation and facility redevelopment program under article
eighteen  of  the  economic development law that is subject to tax under
section one hundred eighty-five of  article  nine,  or  article  nine-A,
twenty-two[,  thirty-two]  or  thirty-three  of  this  chapter  shall be
allowed the sum of following components against such  tax,  pursuant  to
the provisions referenced in subdivision (f) of this section.
  (C) the business entity must not be substantially similar in ownership
and  operation  to  another taxpayer taxable or previously taxable under
section one hundred eighty-three, one hundred eighty-four or one hundred
eighty-five of article nine, former section one  hundred  eighty-six  of
this chapter or article nine-A, twenty-two[, thirty-two] or thirty-three
of  this  chapter  OR  FORMER  ARTICLE THIRTY-TWO OF THIS CHAPTER or the
income or losses of which is or was includable under article  twenty-two
of this chapter;
  (f)  Cross-references.  For application of the credits provided for in
this section, see the following provisions of this chapter:
  (1) section 185: section 187-r.
  (2) article 9-A: section [210(43)] 210-B(35).
  (3) article 22: section 606 (ss).
  (4) [article 32: section 1456(x).
  (5)] article 33: section 1511 (aa).
  S 51. Subdivisions (a) and (e) of section 36 of the tax law, as  added
by section 2 of part E of chapter 56 of the laws of 2011, are amended to
read as follows:
  (a)  Allowance  of  credit.  A  taxpayer  subject to tax under article
nine-A, twenty-two[, thirty-two] or thirty-three of this  chapter  shall
be  allowed a credit against such tax, pursuant to the provisions refer-
enced in subdivision (e) of this section.  The  amount  of  the  credit,
allowable  for  ten consecutive tax years, is equal to the amount deter-
mined pursuant to section  four  hundred  twenty-five  of  the  economic
development law.
  (e)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9-A: section [210] 210-B, subdivision [44] 37;

S. 6359                            126                           A. 8559

  (2) article 22: section 606, subsection (tt);
  (3) [article 32: section 1456, subsection (y);
  (4)] article 33, section 1511, subdivision (bb).
  S  52. Subdivision (c) of section 37 of the tax law, as added by chap-
ter 109 of the laws of 2012, is amended to read as follows:
  (c) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B, subdivision [45] 39.
  (2) Article 22: Section 606, subsections (i) and (uu).
  S 52-a. Subdivision (c) of section 39 of the tax law is REPEALED.
  S  53.  Paragraphs  2, 3 and 4 of subdivision (k) of section 39 of the
tax law, paragraphs 2 and 3 as added by section 2 of part A  of  chapter
68  of  the  laws  of  2013,  paragraph 4 as amended by section 2 of LBD
number 74039-02-4, are amended to read as follows:
  [(2) Article 9: section 180, subdivision 3.
  (3) Article 9: section 181, subdivision 3.]
  (4) Article 9-A: section [210] 210-B, subdivision [47] 41 and subdivi-
sion [48] 44.
  S 54. Subdivision 1 of section 171-a of the tax  law,  as  amended  by
section  1  of  part  R of chapter 60 of the laws of 2004, is amended to
read as follows:
  1. All taxes, interest, penalties and fees collected  or  received  by
the commissioner or the commissioner's duly authorized agent under arti-
cles nine (except section one hundred eighty-two-a thereof and except as
otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
twelve-A (except as otherwise provided in section  two  hundred  eighty-
four-d  thereof),  thirteen, thirteen-A (except as otherwise provided in
section  three  hundred  twelve  thereof),  eighteen,  nineteen,  twenty
(except  as otherwise provided in section four hundred eighty-two there-
of),  twenty-one,  twenty-two,  twenty-six,  twenty-six-B,  twenty-eight
(except  as  otherwise  provided in section eleven hundred two or eleven
hundred three thereof), twenty-eight-A, thirty-one (except as  otherwise
provided  in section fourteen hundred twenty-one thereof), [thirty-two,]
thirty-three and thirty-three-A of this chapter shall be deposited daily
in one account with such responsible  banks,  banking  houses  or  trust
companies  as may be designated by the comptroller, to the credit of the
comptroller. Such an account may be established in one or more  of  such
depositories.  Such  deposits  shall be kept separate and apart from all
other money in the possession of the comptroller. The comptroller  shall
require  adequate  security  from  all  such  depositories. Of the total
revenue collected or received under such articles of this  chapter,  the
comptroller  shall  retain in the comptroller's hands such amount as the
commissioner may determine to be necessary for refunds or reimbursements
under such articles of this chapter [and article  ten  thereof]  out  of
which  amount the comptroller shall pay any refunds or reimbursements to
which taxpayers shall be entitled under the provisions of such  articles
of  this  chapter  [and  article  ten thereof]. The commissioner and the
comptroller shall maintain a system of accounts showing  the  amount  of
revenue  collected  or  received  from each of the taxes imposed by such
articles. The comptroller,  after  reserving  the  amount  to  pay  such
refunds  or  reimbursements,  shall,  on or before the tenth day of each
month, pay into the state treasury to the credit of the general fund all
revenue deposited under this section during the preceding calendar month
and remaining to the comptroller's  credit  on  the  last  day  of  such
preceding  month, (i) except that the comptroller shall pay to the state
department of social services that amount of overpayments of tax imposed

S. 6359                            127                           A. 8559

by article twenty-two of this chapter and the interest  on  such  amount
which  is certified to the comptroller by the commissioner as the amount
to be credited against past-due support pursuant to subdivision  six  of
section  one  hundred  seventy-one-c of this [chapter] ARTICLE, (ii) and
except that the comptroller shall pay  to  the  New  York  state  higher
education  services  corporation and the state university of New York or
the city university of New York respectively that amount of overpayments
of tax imposed by article twenty-two of this chapter and the interest on
such amount which is certified to the comptroller by the commissioner as
the amount to be credited against the amount of defaults in repayment of
guaranteed student loans and state university loans or  city  university
loans  pursuant to subdivision five of section one hundred seventy-one-d
and subdivision six of section one hundred seventy-one-e of this  [chap-
ter]  ARTICLE,  (iii)  and except further that, notwithstanding any law,
the comptroller shall credit to the revenue arrearage account,  pursuant
to  section  ninety-one-a of the state finance law, that amount of over-
payment of tax imposed by  article  nine,  nine-A,  twenty-two,  thirty,
thirty-A,  thirty-B[,  thirty-two]  or thirty-three of this chapter, and
any interest thereon, which is  certified  to  the  comptroller  by  the
commissioner  as  the  amount  to be credited against a past-due legally
enforceable debt owed to a state agency pursuant  to  paragraph  (a)  of
subdivision  six  of  section one hundred seventy-one-f of this article,
provided, however, he shall  credit  to  the  special  offset  fiduciary
account,  pursuant to section ninety-one-c of the state finance law, any
such amount creditable as a liability as set forth in paragraph  (b)  of
subdivision  six  of  section one hundred seventy-one-f of this article,
(iv) and except further that the comptroller shall pay to  the  city  of
New  York  that  amount  of  overpayment of tax imposed by article nine,
nine-A, twenty-two, thirty, thirty-A, thirty-B[, thirty-two,]  or  thir-
ty-three  of  this chapter and any interest thereon that is certified to
the comptroller by the commissioner as the amount to be credited against
city of New York tax warrant  judgment  debt  pursuant  to  section  one
hundred  seventy-one-l  of this article, (v) and except further that the
comptroller shall pay to a non-obligated spouse that amount of  overpay-
ment of tax imposed by article twenty-two of this chapter and the inter-
est  on  such  amount  which  has  been credited pursuant to section one
hundred seventy-one-c, one hundred seventy-one-d, one  hundred  seventy-
one-e,  one  hundred  seventy-one-f or one hundred seventy-one-l of this
article and which is certified to the comptroller by the commissioner as
the amount due such non-obligated spouse pursuant to  paragraph  six  of
subsection  (b)  of  section  six hundred fifty-one of this chapter; and
(vi) the comptroller shall deduct a like amount  which  the  comptroller
shall  pay  into  the  treasury  to  the credit of the general fund from
amounts subsequently payable to the department of social  services,  the
state  university  of  New York, the city university of New York, or the
higher education services corporation, or the revenue arrearage  account
or  special offset fiduciary account pursuant to section ninety-one-a or
ninety-one-c of the state finance law, as the case may be, whichever had
been credited the amount originally withheld from such overpayment,  and
(vii)  with respect to amounts originally withheld from such overpayment
pursuant to section one hundred seventy-one-l of this article  and  paid
to  the  city  of  New York, the comptroller shall collect a like amount
from the city of New York.
  S 55. Subdivision 2 of section 171-a of the tax  law,  as  amended  by
chapter 57 of the laws of 1993, is amended to read as follows:

S. 6359                            128                           A. 8559

  2.  Notwithstanding  subdivision  one  of  this  section  or any other
provision of law to the contrary, the taxes imposed pursuant to sections
one hundred eighty-three-a,  one  hundred  eighty-four-a,  [one  hundred
eighty-six-b,]  one  hundred  eighty-six-c, [one hundred eighty-nine-a,]
two  hundred nine-B[, fourteen hundred fifty-five-b] and fifteen hundred
five-a of this chapter, reduced by an amount for  administrative  costs,
shall be deposited to the credit of the metropolitan mass transportation
operating  assistance  account  in  the  mass  transportation  operating
assistance fund, created pursuant to section eighty-eight-a of the state
finance law, as such taxes are received. The amount  for  administrative
costs  shall  be  determined by the commissioner to represent reasonable
costs of the  department  of  taxation  and  finance  in  administering,
collecting, determining and distributing such taxes. Of the total reven-
ue  collected or received under such sections of this chapter, the comp-
troller shall retain in his hands such amount as  the  commissioner  may
determine  to  be  necessary  for  refunds  or reimbursements under such
sections of this chapter out of which amount the comptroller  shall  pay
any refunds or reimbursements to which taxpayers shall be entitled under
provisions  of  such  sections. The tax commissioner and the comptroller
shall maintain a system  of  accounts  showing  the  amount  of  revenue
collected or received from each of the taxes imposed by such sections.
  S  56. Paragraphs (b) and (c) of subdivision 1 of section 171-f of the
tax law, as amended by chapter 81 of the laws of 1995,  are  amended  to
read as follows:
  (b)  "taxpayer"  shall mean a corporation, association, company, part-
nership, estate, trust, liquidator, fiduciary or other entity  or  indi-
vidual who or which is liable for any tax or other imposition imposed by
or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
ty-B[,  thirty-two,] or thirty-three of this chapter or article two-E of
the general city law, which tax or other imposition is  administered  by
the  commissioner  of  taxation  and finance, or who or which is under a
duty to perform an act under or pursuant  to  such  tax  or  imposition,
excluding  a  state agency, a municipal corporation or a district corpo-
ration; and (c) "overpayment" shall mean an overpayment which  has  been
requested  or determined to be refunded, a refund or a reimbursement, of
a tax or other imposition  imposed  by  or  pursuant  to  article  nine,
nine-A,  twenty-two,  thirty, thirty-A, thirty-B[, thirty-two,] or thir-
ty-three of this chapter or article two-E of the general city law, which
is administered by the commissioner of taxation and finance.
  S 57. Subdivision 2 of section 171-f of the tax law, as added by chap-
ter 55 of the laws of 1992, is amended to read as follows:
  (2) The commissioner of taxation and finance, upon agreement with  the
state  comptroller  and  acting  as  an agent for the state comptroller,
shall set forth the  procedures  for  crediting  any  overpayment  by  a
taxpayer  of  any tax or other imposition imposed by or authorized to be
imposed pursuant to article nine, nine-A, twenty-two, thirty,  thirty-A,
thirty-B[, thirty-two,] or thirty-three of this chapter or article two-E
of  the  general  city law, which is administered by the commissioner of
taxation and finance, and the interest on any such overpayments, against
the amount of a past-due legally enforceable debt owed by such  taxpayer
to  a  state  agency.  An  implementation plan shall be developed by the
division of the budget and the department of taxation and finance  which
shall  provide,  but not be limited to, guidance with respect to coordi-
nation of debt collection pursuant to this section and subdivision twen-
ty-seventh of section one hundred  seventy-one  of  this  article.  This
section  shall  not be deemed to abrogate or limit in any way the powers

S. 6359                            129                           A. 8559

and authority of the state comptroller to set off debts owed  the  state
against  payments from the state, under the constitution of the state or
any other law.
  S  58. Paragraphs (a) and (b) of subdivision 1 of section 171-l of the
tax law, as added by section 6 of part R of chapter 60 of  the  laws  of
2004, are amended to read as follows:
  (a)  "taxpayer"  shall mean a corporation, association, company, part-
nership, estate, trust, liquidator, fiduciary or other entity  or  indi-
vidual who or which is liable for any tax or other imposition imposed by
or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
ty-B[,  thirty-two,] or thirty-three of this chapter, which tax or other
imposition is administered by the commissioner of taxation and  finance,
or  who  or which is under a duty to perform an act under or pursuant to
such tax or imposition, excluding a state  agency,  a  municipal  corpo-
ration or a district corporation;
  (b)  "overpayment"  shall mean an overpayment which has been requested
or determined to be refunded, a refund or a reimbursement, of a  tax  or
other  imposition  imposed by or pursuant to article nine, nine-A, twen-
ty-two, thirty, thirty-A, thirty-B[,  thirty-two,]  or  thirty-three  of
this  chapter, which is administered by the commissioner of taxation and
finance; and
  S 59. Paragraph (b) of subdivision 1 of section 183 of the tax law, as
amended by section 1 of part Y of chapter 63 of the  laws  of  2000,  is
amended to read as follows:
  (b)  For  the  privilege  of exercising its corporate franchise, or of
doing business, or of employing capital, or of owning or leasing proper-
ty in this state in a corporate or organized capacity, or of maintaining
an office in this state, every domestic corporation, joint-stock company
or association formed for or  principally  engaged  in  the  conduct  of
canal, steamboat, ferry (except a ferry company operating between any of
the boroughs of the city of New York under a lease granted by the city),
express,  navigation,  pipe  line,  transfer,  baggage express, omnibus,
taxicab, telegraph, or telephone business, or formed for or  principally
engaged  in  the  conduct  of  two or more of such businesses, and every
domestic corporation, joint-stock company or association formed  for  or
principally  engaged  in the conduct of a railroad, palace car, sleeping
car or trucking business or formed for or  principally  engaged  in  the
conduct of two or more of such businesses and which has made an election
pursuant  to  subdivision  ten of this section, and every other domestic
corporation, joint-stock company or association principally  engaged  in
the  conduct  of  a  transportation  or  transmission business, except a
corporation, joint-stock company or association formed for or principal-
ly engaged in the conduct of a railroad, palace  car,  sleeping  car  or
trucking business or formed for or principally engaged in the conduct of
two  or  more  of  such  businesses  and which has not made the election
provided for in subdivision ten of this section,  and  except  a  corpo-
ration,  joint-stock  company  or association principally engaged in the
conduct of aviation (including air freight forwarders acting as  princi-
pal and like indirect air carriers) and except a corporation principally
engaged  in  providing  telecommunication  services between aircraft and
dispatcher, aircraft and air  traffic  control  or  ground  station  and
ground  station  (or  any combination of the foregoing), at least ninety
percent of the voting stock of which corporation is owned,  directly  or
indirectly,  by  air carriers and which corporation's principal function
is to fulfill the requirements of  (i)  the  federal  aviation  adminis-
tration  (or  the  successor  thereto)  or  (ii) the international civil

S. 6359                            130                           A. 8559

aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and air traffic control or ground station and  ground  station  (or  any
combination of the foregoing) for the purposes of air safety and naviga-
tion  [and  except  a  corporation,  joint-stock  company or association
subject to taxation under article thirty-two  of  this  chapter,]  shall
pay,  in  advance,  an  annual  tax to be computed upon the basis of the
amount of its capital stock within this state during the preceding year,
and upon each dollar of such amount. Provided, however,  a  corporation,
joint-stock  company or association formed for or principally engaged in
the transportation, transmission or distribution of gas, electricity  or
steam  shall  not  be  subject  to tax under this section or section one
hundred eighty-four of this article.
  S 60. Subdivision 10 of section 183 of the tax law, as added by  chap-
ter 309 of the laws of 1996, is amended to read as follows:
  10.  Election. [With respect to taxable years beginning after nineteen
hundred ninety-seven, every] EVERY corporation, joint-stock  company  or
association  formed for or principally engaged in the conduct of a rail-
road (including surface railroad, whether  or  not  operated  by  steam,
subway  railroad  or  elevated  railroad),  palace  car, sleeping car or
trucking business or formed for or principally engaged in the conduct of
two or more of such businesses, which would be subject to article nine-A
[or thirty-two] of this chapter if the election provided for under  this
subdivision  were not made, may elect to be subject to the provisions of
this section and, as applicable, section one hundred eighty-four of this
article, rather than the provisions of such article nine-A  [or  thirty-
two]. [In the case of such a corporation, joint-stock company or associ-
ation  subject to the tax imposed under this section and, as applicable,
section one hundred eighty-four of this article, for  the  taxable  year
ending December thirty-first, nineteen hundred ninety-seven, such corpo-
ration, joint-stock company or association must make such election on or
before March fifteenth, nineteen hundred ninety-eight, and such election
shall  apply  to the taxable year ending on December thirty-first, nine-
teen  hundred  ninety-eight  and  to  succeeding  taxable  years,  until
revoked. In the case of such a corporation, joint-stock company or asso-
ciation  which is not subject to the tax imposed under this section and,
as applicable, section one hundred eighty-four of this article  for  the
taxable  year ending December thirty-first, nineteen hundred ninety-sev-
en, but thereafter would be subject to article nine-A or  thirty-two  of
this  chapter  if  the election provided for under this subdivision were
not made, such] SUCH corporation,  joint-stock  company  or  association
must  make  such  election  by  the first day on which such corporation,
joint-stock company or association would be required to file a return or
report (without regard to extensions) under this section or section  one
hundred  eighty-four  of  this  article,  or section one hundred eighty-
three-a or one  hundred[-]eighty-four-a  of  this  article,  or  article
nine-A  [or  thirty-two]  of  this chapter. An election made pursuant to
this subdivision shall continue to be in effect  until  revoked  by  the
taxpayer.  A  revocation  of  the election to be subject to this section
and, as applicable, section one hundred  eighty-four  of  this  article,
shall  be irrevocable. Such election, and a revocation thereof, shall be
made in the manner prescribed by the commissioner, whether by regulation
or otherwise. Such revocation shall apply as of the first day of January
next following the end of a taxable  year  with  respect  to  which  the
taxpayer  had  been  subject to this section and, as applicable, section

S. 6359                            131                           A. 8559

one hundred eighty-four of this article, by reason of an  election  made
pursuant to this subdivision.
  S 61. The section heading and subdivisions 1 and 5 of section 183-a of
the  tax law, the section heading as added by chapter 931 of the laws of
1982, subdivision 1 as amended by section 1 of part A of chapter  59  of
the laws of 2013 and subdivision 5 as amended by chapter 945 of the laws
of 1990, are amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on transportation and transmission  corporations  and  associ-
ations.  1. The term "corporation" as used in this section shall include
an  association, within the meaning of paragraph three of subsection (a)
of section seventy-seven  hundred  one  of  the  internal  revenue  code
(including  a  limited liability company), a publicly traded partnership
treated as a corporation for  purposes  of  the  internal  revenue  code
pursuant  to section seventy-seven hundred four thereof and any business
conducted by a trustee or trustees  wherein  interest  or  ownership  is
evidenced  by  certificates  or  other written instruments. Every corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease  granted  by  the city), express, navigation, pipe line, transfer,
baggage express, omnibus, taxicab, telegraph, or telephone business,  or
formed  for  or  principally  engaged in the conduct of two or more such
businesses, and every corporation, joint-stock  company  or  association
formed  for  or principally engaged in the conduct of a railroad, palace
car, sleeping car or trucking business  or  formed  for  or  principally
engaged  in  the conduct of two or more of such businesses and which has
made an election pursuant to subdivision  ten  of  section  one  hundred
eighty-three  of  this article, and every other corporation, joint-stock
company or association principally engaged in the conduct of a transpor-
tation or  transmission  business,  except  a  corporation,  joint-stock
company  or association formed for or principally engaged in the conduct
of a railroad, palace car, sleeping car or trucking business  or  formed
for  or  principally engaged in the conduct of two or more of such busi-
nesses and which has not made the election provided for  in  subdivision
ten  of  section  one hundred eighty-three of this article, and except a
corporation, joint-stock company or association principally  engaged  in
the  conduct  of  aviation  (including  air freight forwarders acting as
principal and like indirect air carriers) and except a corporation prin-
cipally engaged in providing telecommunication services between aircraft
and dispatcher, aircraft and air traffic control or ground  station  and
ground  station  (or  any combination of the foregoing), at least ninety
percent of the voting stock of which corporation is owned,  directly  or
indirectly,  by  air carriers and which corporation's principal function
is to fulfill the requirements of  (i)  the  federal  aviation  adminis-
tration  (or  the  successor  thereto)  or  (ii) the international civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and air traffic control or ground station and  ground  station  (or  any
combination of the foregoing) for the purposes of air safety and naviga-
tion [and except a corporation, joint-stock company or association which
is  liable  to taxation under article thirty-two of this chapter], shall
pay for the privilege of exercising its corporate franchise, or of doing
business, or of employing capital, or of owning or leasing  property  in
the  metropolitan  commuter transportation district in such corporate or
organized capacity, or of maintaining an office in such district, a  tax

S. 6359                            132                           A. 8559

surcharge [for all or any part of its years commencing on or after Janu-
ary  first, nineteen hundred eighty-two but ending before December thir-
ty-first, two thousand eighteen], which tax surcharge,  in  addition  to
the  tax  imposed  by  section one hundred eighty-three of this article,
shall be computed at the rate of [eighteen percent of  the  tax  imposed
under  such  section one hundred eighty-three for such years or any part
of such years ending  before  December  thirty-first,  nineteen  hundred
eighty-three  after  the  deduction  of  any credits otherwise allowable
under this article, and at the rate of] seventeen  percent  of  the  tax
imposed  under  such  section  for  such years or any part of such years
[ending on or after  December  thirty-first,  nineteen  hundred  eighty-
three] after the deduction of any credits otherwise allowable under this
article;  provided,  however,  that such rates of tax surcharge shall be
applied only to that portion  of  the  tax  imposed  under  section  one
hundred  eighty-three of this article after the deduction of any credits
otherwise allowable under this article  which  is  attributable  to  the
taxpayer's business activity carried on within the metropolitan commuter
transportation district as so determined in the manner prescribed by the
rules  and  regulations  promulgated by the commissioner[; and provided,
further, that the tax surcharge imposed by this  section  shall  not  be
imposed upon any taxpayer for more than four hundred thirty-two months].
  5.  [The  report  covering  the tax surcharge which must be calculated
pursuant to this section based upon the tax reportable on the report due
by March  fifteenth,  nineteen  hundred  eighty-two  under  section  one
hundred  eighty-three  of this article shall be filed on or before March
fifteenth, nineteen hundred eighty-three. The report  covering  the  tax
surcharge  which  must be calculated pursuant to this section based upon
the tax reportable on  the  report  due  by  March  fifteenth,  nineteen
hundred  eighty-three  under  section  one  hundred eighty-three of this
article shall be filed on or before March  fifteenth,  nineteen  hundred
eighty-four.  The report covering the tax surcharge which must be calcu-
lated pursuant to this section based upon  the  tax  reportable  on  the
report  due  by  March  fifteenth,  nineteen  hundred  eighty-four under
section one hundred eighty-three of this article shall be  filed  on  or
before  March fifteenth, nineteen hundred eighty-five. The report cover-
ing the tax surcharge which must be calculated pursuant to this  section
based  upon  the  tax  reportable  on the report due by March fifteenth,
nineteen hundred eighty-five under section one hundred  eighty-three  of
this  article  shall  be  filed  on  or before March fifteenth, nineteen
hundred eighty-six. The report covering the tax surcharge which must  be
calculated pursuant to this section based upon the tax reportable on the
report due by March fifteenth, nineteen hundred eighty-six under section
one  hundred  eighty-three  of  this article shall be filed on or before
March fifteenth, nineteen hundred eighty-seven. The report covering  the
tax  surcharge  which  must be calculated pursuant to this section based
upon the tax reportable on the report due by March  fifteenth,  nineteen
hundred  eighty-seven  under  section  one  hundred eighty-three of this
article shall be filed on or before March  fifteenth,  nineteen  hundred
eighty-eight. The report covering the tax surcharge which must be calcu-
lated  pursuant  to  this  section  based upon the tax reportable on the
report due by  March  fifteenth,  nineteen  hundred  eighty-eight  under
section  one  hundred  eighty-three of this article shall be filed on or
before March fifteenth, nineteen hundred eighty-nine. The report  cover-
ing  the tax surcharge which must be calculated pursuant to this section
based upon the tax reportable on the  report  due  by  March  fifteenth,
nineteen  hundred  eighty-nine under section one hundred eighty-three of

S. 6359                            133                           A. 8559

this article shall be filed  on  or  before  March  fifteenth,  nineteen
hundred  ninety.]  The  report  covering the tax surcharge which must be
calculated pursuant to this section based upon the tax reportable on the
report  due  by  March  fifteenth  of  any  year [subsequent to nineteen
hundred eighty-nine] under section  one  hundred  eighty-three  of  this
article  shall  be  filed  on or before March fifteenth of the year next
succeeding such year. An extension pursuant to section one hundred nine-
ty-three OF THIS ARTICLE shall be allowed only if a taxpayer files  with
the  commissioner  an  application  for  extension  in such form as said
commissioner may prescribe by regulation and pays on or before the  date
of  such  filing  in  addition  to any other amounts required under this
article, either ninety percent of the entire tax surcharge  required  to
be  paid  under this section for the applicable period, or not less than
the tax surcharge shown on the taxpayer's report for the preceding year,
if such preceding year consisted of twelve  months.  The  tax  surcharge
imposed  by this section shall be payable to the commissioner in full at
the time the report is required to be filed, and such tax  surcharge  or
the  balance  thereof,  imposed on any taxpayer which ceases to exercise
its franchise or be subject to the tax surcharge imposed by this section
shall be payable to the commissioner at the time the report is  required
to be filed, provided such tax surcharge of a domestic corporation which
continues to possess its franchise shall be subject to adjustment as the
circumstances  may require; all other tax surcharges of any such taxpay-
er, which pursuant to the foregoing provisions  of  this  section  would
otherwise  be  payable subsequent to the time such report is required to
be filed, shall nevertheless  be  payable  at  such  time.  All  of  the
provisions  of  this article presently applicable to section one hundred
eighty-three of this article are applicable to the tax surcharge imposed
by this section except for section one hundred ninety-two of this  arti-
cle.
  S  62.  Subdivision  1  of  section  184 of the tax law, as amended by
section 2 of part Y of chapter 63 of the laws of  2000,  is  amended  to
read as follows:
  1.  The  term  "corporation"  as used in this section shall include an
association, within the meaning of paragraph three of subsection (a)  of
section  seventy-seven hundred one of the internal revenue code (includ-
ing a limited liability company), a publicly traded partnership  treated
as  a  corporation for purposes of the internal revenue code pursuant to
section seventy-seven hundred four thereof.
  Every corporation, joint-stock company or association  formed  for  or
principally  engaged in the conduct of canal, steamboat, ferry (except a
ferry company operating between any of the boroughs of the city  of  New
York under a lease granted by the city), express, navigation, pipe line,
transfer,  baggage  express,  omnibus, taxicab, telegraph or local tele-
phone business, or formed for or principally engaged in the  conduct  of
two  or  more  of  such  businesses,  and every corporation, joint-stock
company or association formed for or principally engaged in the  conduct
of  surface railroad, whether or not operated by steam, subway railroad,
elevated railroad, palace car, sleeping  car  or  trucking  business  or
formed  for  or  principally  engaged in the conduct of two or more such
businesses and which has made an election pursuant to subdivision ten of
section one hundred eighty-three of this article, and every other corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged  in  the  conduct  of  a transportation or transmission business
(other than a telephone business),  except  a  corporation,  joint-stock
company  or association formed for or principally engaged in the conduct

S. 6359                            134                           A. 8559

of a surface railroad, whether or not operated by  steam,  subway  rail-
road,  elevated  railroad, palace car, sleeping car or trucking business
or formed for or principally engaged in the conduct of two  or  more  of
such  businesses  and  which  has  not made the election provided for in
subdivision ten of section one hundred  eighty-three  of  this  article,
and, except a corporation, joint-stock company or association principal-
ly  engaged in the conduct of aviation (including air freight forwarders
acting as principal and like indirect air carriers) and except a  corpo-
ration  principally  engaged  in  providing  telecommunication  services
between aircraft and dispatcher, aircraft and  air  traffic  control  or
ground station and ground station (or any combination of the foregoing),
at  least  ninety  percent  of  the voting stock of which corporation is
owned, directly or indirectly, by air carriers and  which  corporation's
principal  function  is  to  fulfill the requirements of (i) the federal
aviation administration (or the successor thereto) or (ii) the  interna-
tional  civil aviation organization (or the successor thereto), relating
to  the  existence  of  a  communication  system  between  aircraft  and
dispatcher,  aircraft  and  air  traffic  control  or ground station and
ground station (or any combination of the foregoing) for the purposes of
air safety and navigation and [except a corporation, joint-stock company
or association which is liable to taxation under article  thirty-two  of
this  chapter,] for the privilege of exercising its corporate franchise,
or of doing business, or of employing capital, or of owning  or  leasing
property  in  this  state in a corporate or organized capacity, or main-
taining an office in this state, shall pay a franchise tax  which  shall
be  equal to [(i) three-quarters of one percent for taxable years ending
before two thousand one, provided that for a taxable year ending in  two
thousand  the  rate  shall  be  reduced  to three-eighths of one percent
effective July first, two thousand with the result that for purposes  of
implementation  of  such  change  in rate the applicable rate for such a
year shall be nine-sixteenths of one percent, and (ii)] three-eighths of
one percent for taxable years commencing after two  thousand,  upon  its
gross  earnings  from  all  sources within this state; except that, [for
taxable years commencing on or after  January  first,  nineteen  hundred
eighty-five  and  ending  on  or  before December thirty-first, nineteen
hundred eighty-nine, every corporation, joint-stock company  or  associ-
ation  formed  for or principally engaged in the conduct of telephone or
telegraph business shall pay a franchise tax which  shall  be  equal  to
three-tenths  of one per centum upon its gross earnings from all sources
within this state and,] for taxable years commencing on or after January
first, nineteen hundred ninety, every corporation,  joint-stock  company
or association formed for or principally engaged in the conduct of local
telephone  business,  or  telegraph  business  shall pay a franchise tax
which shall be equal to [(i) three-quarters of one percent  for  taxable
years  ending  before two thousand one, provided that for a taxable year
ending in two thousand the rate shall be reduced to three-eighths of one
percent effective July first, two thousand  with  the  result  that  for
purposes  of  implementation  of such change in rate the applicable rate
for such a year shall be  nine-sixteenths  of  one  percent,  and  (ii)]
three-eighths  of  one  percent  for  taxable years commencing after two
thousand, upon its gross earnings from all sources  within  this  state,
except that a corporation, joint-stock company or association formed for
or  principally  engaged  in  the  conduct of a local telephone business
shall exclude the following earnings (but  not  in  any  event  earnings
derived  by such taxpayer from the provision of carrier access services)
derived by such taxpayer from sales for ultimate consumption of telecom-

S. 6359                            135                           A. 8559

munications service to its customers (i) thirty  percent  of  separately
charged  intra-LATA  toll  service (which shall also include interregion
regional calling plan service) and (ii) one hundred percent of separate-
ly  charged  inter-LATA,  interstate or international telecommunications
service; and except that [corporations, joint-stock companies or associ-
ations formed for or principally engaged in the conduct of surface rail-
road, whether or not operated by steam, subway railroad, elevated  rail-
road,  palace  car  or  sleeping  car, business or any other corporation
formed for or principally engaged in the conduct of a railroad business,
for taxable years prior to nineteen hundred  ninety-seven,  and]  corpo-
rations, joint-stock companies or associations formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease  granted by the city), navigation or any corporation formed for or
principally engaged in the operation of vessels, shall pay  a  franchise
tax  which  shall  be equal to three-quarters of one per centum upon its
gross earnings from all sources within this  state,  excluding  earnings
derived from business of an interstate or foreign character; except that
for  taxable  years beginning in nineteen hundred ninety-seven or there-
after, in the case of a corporation, joint-stock company or  association
which,  with  respect  to taxable years beginning after nineteen hundred
ninety-seven, has made  an  election  pursuant  to  subdivision  ten  of
section one hundred eighty-three of this article and which is formed for
or  principally  engaged  in the conduct of surface railroad, whether or
not operated by steam, subway railroad, elevated railroad,  palace  car,
sleeping  car  or trucking business or formed for or principally engaged
in the conduct of two or more  of  such  businesses,  such  corporation,
joint-stock company or association shall pay a franchise tax which shall
be  equal  to  [(i)  six-tenths  of one percent for taxable years ending
before two thousand one, provided that for a taxable year ending in  two
thousand  the  rate  shall  be  reduced  to three-eighths of one percent
effective July first, two thousand with the result that for purposes  of
implementation  of  such  change  in rate the applicable rate for such a
year shall be thirty-nine eightieths of one percent,  and  (ii)]  three-
eighths  of one percent for taxable years commencing after two thousand,
upon its gross earnings from all sources  within  this  state,  provided
that  in  the  case of a corporation, joint-stock company or association
formed for or principally engaged in the conduct  of  surface  railroad,
whether  or  not  operated by steam, subway railroad, elevated railroad,
palace car or sleeping  car  business,  or  formed  for  or  principally
engaged  in  the  conduct  of two or more of such businesses, such gross
earnings shall not include earnings derived from business of  an  inter-
state or foreign character.
  Provided, however, with respect to railroad, elevated railroad, palace
car  or  sleeping  car  business  or any other corporation formed for or
principally engaged in the conduct of a  railroad  business  and  canal,
steamboat,  ferry  (except  a ferry company operating between any of the
boroughs of the city of New York under a lease  granted  by  the  city),
navigation  or  any corporation formed for or principally engaged in the
operation of vessels where the gross earnings from  such  transportation
business both originating and terminating within this state and travers-
ing  both  this  state  and  another state or states or country shall be
subject to the franchise tax imposed by this section (except where  such
corporation, joint-stock company or association is formed for or princi-
pally  engaged in the conduct of a railroad (including surface railroad,
whether or not operated by steam, subway railroad or elevated railroad),

S. 6359                            136                           A. 8559

palace car or sleeping car business or formed for or principally engaged
in the conduct of two or more of such businesses, and has not  made  the
election  provided  for  under  subdivision  ten  of section one hundred
eighty-three  of  this  article) and such earnings shall be allocated to
this state in the same ratio that the mileage within the state bears  to
the  total  mileage  of such business. Provided, further, a corporation,
joint-stock company or association formed for or principally engaged  in
the  transportation, transmission or distribution of gas, electricity or
steam shall not be subject to tax under  this  section  or  section  one
hundred eighty-three of this article.
  The  term "local telephone business" means the provision or furnishing
of telecommunication services for hire wherein the service furnished  by
the  provider  thereof consists of carrier access service or the service
originates and terminates within the same  local  access  and  transport
area  ("LATA"),  a local access and transport area being that geographic
area as established and approved, and as so set and in existence on July
first, nineteen hundred ninety-four, pursuant  to  the  modification  of
final  judgment  in  United  States  v.  Western Electric Company (civil
action no. 82-0192) in the United States district court for the District
of Columbia or within the LATA-like Rochester non-associated independent
area.
  The term "telecommunication services" shall have the meaning  ascribed
to such term in section one hundred eighty-six-e of this article.
  S  63.  The section heading and the opening paragraph of subdivision 1
of section 184-a of the tax law, the section heading as added by chapter
931 of the laws of 1982 and the opening paragraph of  subdivision  1  as
amended  by  section  2 of part A of chapter 59 of the laws of 2013, are
amended to read as follows:
  Additional  [temporary]  metropolitan  transportation   business   tax
surcharge  on  transportation  and transmission corporations and associ-
ations services.
  The term "corporation" as used in this section shall include an  asso-
ciation,  within  the  meaning  of  paragraph three of subsection (a) of
section seventy-seven hundred one of the internal revenue code  (includ-
ing  a  limited  liability  company),  and a publicly traded partnership
treated as a corporation for  purposes  of  the  internal  revenue  code
pursuant  to  section  seventy-seven hundred four thereof.  Every corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease  granted  by  the city), express, navigation, pipe line, transfer,
baggage express, omnibus, taxicab, telegraph or  local  telephone  busi-
ness, or formed for or principally engaged in the conduct of two or more
such  businesses,  and every corporation, joint-stock company or associ-
ation formed for or principally engaged in  the  conduct  of  a  surface
railroad,  whether  or  not operated by steam, subway railroad, elevated
railroad, palace car, sleeping car or trucking business  or  principally
engaged in the conduct of two or more such businesses and which has made
an  election  pursuant to subdivision ten of section one hundred eighty-
three of this article, and every other corporation, joint-stock  company
or  association  formed  for  or principally engaged in the conduct of a
transportation or transmission business (other than  a  telephone  busi-
ness)  except  a  corporation, joint-stock company or association formed
for or principally engaged in the conduct of a surface railroad, whether
or not operated by steam, subway  railroad,  elevated  railroad,  palace
car,  sleeping  car  or  trucking business or principally engaged in the

S. 6359                            137                           A. 8559

conduct of two or more such  businesses  and  which  has  not  made  the
election  provided for in subdivision ten of section one hundred eighty-
three of this article, and except a corporation, joint-stock company  or
association  principally  engaged  in the conduct of aviation (including
air freight forwarders acting as principal and like indirect air  carri-
ers)  and except a corporation principally engaged in providing telecom-
munication services between aircraft and dispatcher,  aircraft  and  air
traffic control or ground station and ground station (or any combination
of  the foregoing), at least ninety percent of the voting stock of which
corporation is owned, directly or indirectly, by air carriers and  which
corporation's  principal  function is to fulfill the requirements of (i)
the federal aviation administration (or the successor thereto)  or  (ii)
the  international  civil aviation organization (or the successor there-
to), relating  to  the  existence  of  a  communication  system  between
aircraft  and  dispatcher,  aircraft  and  air traffic control or ground
station and ground station (or any combination of the foregoing) for the
purposes of air safety and navigation [and except a corporation,  joint-
stock  company  or association which is liable to taxation under article
thirty-two of this chapter], shall pay for the privilege  of  exercising
its  corporate franchise, or of doing business, or of employing capital,
or of owning or leasing property in the metropolitan commuter  transpor-
tation district in such corporate or organized capacity, or of maintain-
ing  an office in such district, a tax surcharge [for all or any part of
its taxable years commencing on or after January first, nineteen hundred
eighty-two, but ending before December thirty-first, two thousand  eigh-
teen],  which  tax  surcharge, in addition to the tax imposed by section
one hundred eighty-four of this article, shall be computed at  the  rate
of  [eighteen  percent of the tax imposed under such section one hundred
eighty-four for such taxable years or any part  of  such  taxable  years
ending before December thirty-first, nineteen hundred eighty-three after
the deduction of any credits otherwise allowable under this article, and
at  the rate of] seventeen percent of the tax imposed under such section
for such taxable years or any part of such taxable years [ending  on  or
after  December  thirty-first,  nineteen hundred eighty-three] after the
deduction  of  any  credits  otherwise  allowable  under  this  article;
provided,  however,  that  such  rates of tax surcharge shall be applied
only to that portion of the tax imposed under section one hundred eight-
y-four of this article after the  deduction  of  any  credits  otherwise
allowable  under  this  article  which is attributable to the taxpayer's
business activity carried on within the metropolitan commuter  transpor-
tation  district[; and provided, further, that the tax surcharge imposed
by this section on corporations, joint-stock companies and  associations
formed  for  or principally engaged in the conduct of telephone or tele-
graph business shall be computed in accordance with this subdivision and
paragraph (c) of subdivision two of this section as if  the  three-quar-
ters  of  one  percent  rate  of  tax provided for in subdivision one of
section one hundred eighty-four of this article were applicable to  such
telephone  and  telegraph  businesses for taxable years commencing on or
after January first, nineteen  hundred  eighty-five  and  ending  on  or
before   December   thirty-first,   nineteen  hundred  eighty-nine;  and
provided, further, that the tax surcharge imposed by this section  shall
not  be  imposed upon any taxpayer for more than four hundred thirty-two
months].  Provided, however, that for taxable  years  beginning  in  two
thousand  and  thereafter,  for  purposes  of  this  subdivision the tax
imposed under section one hundred eighty-four of this article  shall  be
deemed  to  have  been  imposed  at  the  rate  of three-quarters of one

S. 6359                            138                           A. 8559

percent, except that in the case of a corporation,  joint-stock  company
or association which has made an election pursuant to subdivision ten of
section  one  hundred eighty-three of this article, for purposes of this
subdivision  the  tax  imposed  under section one hundred eighty-four of
this article shall be deemed to have been imposed at the  rate  of  six-
tenths of one percent.
  S 64. Subdivision 8 of section 186-a of the tax law is REPEALED.
  S  65.   The section heading and subdivision 1 of section 186-c of the
tax law, the section heading as amended by chapter  2  of  the  laws  of
1995,  subdivision  1 as amended by section 3 of part II-1 of chapter 57
of the laws of 2008, subparagraph 1 of paragraph (a) of subdivision 1 as
amended by section 3 of part A of chapter 59 f the  laws  of  2013,  are
amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on utility services and excise tax  on  sale  of  telecommuni-
cation  services.  1. (a) (1) Every utility doing business in the metro-
politan commuter transportation district shall pay a tax  surcharge,  in
addition  to the tax imposed by section one hundred eighty-six-a of this
article[, for all or any parts of its taxable  years  commencing  on  or
after  January  first,  nineteen  hundred  eighty-two  but ending before
December thirty-first, two thousand eighteen], to be  computed  [at  the
rate  of  eighteen  percent of the tax imposed under section one hundred
eighty-six-a of this article for such taxable years or any part of  such
taxable  years  ending  before  December  thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article,  and]  at the rate of seventeen percent of the tax
imposed under such section [for such taxable years or any part  of  such
taxable years ending on or after December thirty-first, nineteen hundred
eighty-three]  after  the deduction of credits otherwise allowable under
this article except any utility credit provided  for  by  article  thir-
teen-A  of  this  chapter;  provided,  however,  that  such rates of tax
surcharge shall be applied only to that portion of the tax imposed under
section one hundred eighty-six-a of this article after the deduction  of
credits otherwise allowable under this article, except any utility cred-
it  provided for by article thirteen-A of this chapter, which is attrib-
utable to the taxpayer's gross income or  gross  operating  income  from
business  activity carried on within the metropolitan commuter transpor-
tation district[; and provided, further, that the tax surcharge  imposed
by  this  section  shall  not be imposed upon any taxpayer for more than
four hundred thirty-two months].
  (2) Provided however, that [commencing January first,  two  thousand,]
in the case of the tax imposed under paragraph (a) of subdivision one of
section  one hundred eighty-six-a of this article (relating to providers
of telecommunications services) such tax surcharge shall  be  calculated
as  if  the  tax  imposed under section one hundred eighty-six-a of this
article were imposed at a rate of three and one-half percent.
  (b) In addition to the surcharge imposed  by  paragraph  (a)  of  this
subdivision,  there  is hereby imposed a surcharge on the gross receipts
from telecommunication services relating to  the  metropolitan  commuter
transportation  district  at  the rate of seventeen percent of the state
tax rate under section one hundred eighty-six-e of this article [for all
or part of taxable years commencing on and after January first, nineteen
hundred ninety-five but ending before December thirty-first,  two  thou-
sand  thirteen]. All the definitions and other provisions of section one
hundred eighty-six-e of this article shall apply to the tax  imposed  by
this paragraph with such modification and limitation as may be necessary

S. 6359                            139                           A. 8559

(including  substituting the words "metropolitan commuter transportation
district" for "state" where appropriate) in order to adapt the  language
of  such  section  one  hundred  eighty-six-e  of  this  article  to the
surcharge  imposed  by  this paragraph within such metropolitan commuter
transportation district so as to include (1) any intra-district telecom-
munication services, except any  telecommunication  services  the  gross
receipts  from  which are subject to tax under subparagraph four of this
paragraph, (2) any inter-district telecommunication services which orig-
inate or terminate in such district and are charged to a service address
therein regardless of where the amounts charged for  such  services  are
billed  or  ultimately  paid, except any telecommunications services the
gross receipts from which are subject to tax under subparagraph four  of
this  paragraph, (3) as apportioned to such district, private telecommu-
nication services,  except  any  telecommunication  services  the  gross
receipts  from  which are subject to tax under subparagraph four of this
paragraph, and (4) mobile telecommunications service provided by a  home
service provider where the place of primary use is within such metropol-
itan  commuter  transportation  district.  Provided however, [commencing
October first, nineteen hundred ninety-eight] such tax  surcharge  shall
be  calculated  as  if the tax imposed under section one hundred eighty-
six-e of this article were imposed at  a  rate  of  three  and  one-half
percent.
  S  66.  Clause  (iii) of subparagraph (D) of paragraph 3 of subsection
(b) of section 605 of the tax law, as added by chapter 658 of  the  laws
of 2003, is amended to read as follows:
  (iii)  Provided  further,  that for the purposes of item (I) of clause
(i) of this subparagraph, a trustee which is a  banking  corporation  as
defined  in subsection (a) of section fourteen hundred fifty-two of this
chapter, AS SUCH SECTION WAS IN EFFECT  ON  DECEMBER  THIRTY-FIRST,  TWO
THOUSAND  FOURTEEN, and which is domiciled outside the state of New York
at the time it becomes a trustee of the trust shall be deemed to contin-
ue to be a trustee domiciled outside the state of New York notwithstand-
ing that it thereafter otherwise becomes  a  trustee  domiciled  in  the
state  of New York by virtue of being acquired by, or becoming an office
or branch of, a corporate trustee domiciled  within  the  state  of  New
York.
  S  67.  Subparagraph  (A) of paragraph 10 of subsection (a) of section
606 of the tax law, as amended by section 3 of part CC of chapter 85  of
the laws of 2002, is amended to read as follows:
  (A)  the business of which the individual is an owner is substantially
similar in operation and in ownership to a business entity  taxable,  or
previously  taxable, under section one hundred eighty-three, one hundred
eighty-four[,] OR one hundred eighty-five [or one hundred eighty-six] of
article nine; article nine-A[, thirty-two] or thirty-three of this chap-
ter; article twenty-three of this  chapter  or  which  would  have  been
subject  to  tax under such article twenty-three (as such article was in
effect on January first, nineteen hundred eighty), ARTICLE THIRTY-TWO OF
THIS CHAPTER OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH  ARTICLE
THIRTY-TWO  (AS SUCH ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO
THOUSAND FOURTEEN) or the income  (or  losses)  of  which  is  (or  was)
includable  under  article twenty-two of this chapter whereby the intent
and purpose of this paragraph and paragraph five of this subsection with
respect to refunding of credit to new business would be evaded; or
  S 68. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law, as amended by section 7 of part C-1 of chapter 57 of the
laws of 2009, clause (ix) as amended by section 4 of part G  of  chapter

S. 6359                            140                           A. 8559

59  of  the laws of 2013, clause (xxxi) as added by section 5 of part MM
of chapter 59 of the laws of 2010, clause (xxxi) as added by section  14
of  part Q of chapter 57 of the laws of 2010, clause (xxxii) as added by
section  6  of part V of chapter 61 of the laws of 2011, clause (xxxiii)
as added by section 4 of part D of chapter  56  of  the  laws  of  2011,
clause  (xxxiii)  as  added  by section 5 of part E of chapter 56 of the
laws of 2011, clause (xxxiii) as added by chapter 604  of  the  laws  of
2011, clause (xxxiv) as added by chapter 109 of the laws of 2012, clause
(xxxv)  as  added  by  section 2 of part AA of chapter 59 of the laws of
2013, clause (xxxv) as added by section 4 of part EE of  chapter  59  of
the  laws  of 2013 and clause (xxxvi) as added by section 8 of part A of
chapter 68 of the laws of 2013, clause (xxxvii) as added by section 3 of
LBD number 74021-03-4, and clause (xxxvii) as added by section 5 of  LBD
number 74039-02-4, is amended to read as follows:
  (B)  shall  be  treated as the owner of a new business with respect to
such share if the corporation qualifies as a new  business  pursuant  to
paragraph  [(j)]  (F) of subdivision [twelve] ONE of section two hundred
[ten] TEN-B of this chapter.

With respect to the following        The corporation's credit base under
credit under this section:           section two hundred [ten or section
                                     fourteen hundred fifty-six] TEN-B
                                     of this chapter is:

(i) Investment tax credit under      Investment credit base or qualified
subsection (a)                       rehabilitation expenditures under
                                     subdivision [twelve] ONE of section
                                     two hundred [ten] TEN-B

(ii) Empire zone investment          Cost or other basis under
tax credit under subsection (j)      subdivision [twelve-B] THREE
                                     of section two hundred [ten] TEN-B

[(iii) Empire zone wage tax credit   Eligible wages under subdivision
under subsection (k)                 nineteen of section two hundred
                                     ten or subsection (e) of section
                                     fourteen hundred fifty-six

(iv) Empire zone capital tax         Qualified investments and
credit under subsection (l)          contributions under subdivision
                                     twenty of section two hundred ten
                                     or subsection (d) of section
                                     fourteen hundred fifty-six]

(v) Agricultural property tax        Allowable school district property
credit under subsection (n)          taxes under subdivision
                                     [twenty-two] ELEVEN of
                                     section two hundred [ten]
                                     TEN-B

(vi) Credit for employment of        Qualified first-year wages or
persons with disabilities            qualified second-year wages under
under subsection (o)                 subdivision [twenty-three] TWELVE
                                     of section two hundred [ten or
                                     subsection (f) of section
                                     fourteen hundred fifty-six] TEN-B

S. 6359                            141                           A. 8559

(vii) Employment incentive credit    Applicable investment credit base
under subsection (a-1)               under subdivision [twelve-D] TWO
                                     of section two hundred [ten]
                                     TEN-B

(viii) Empire zone employment        Applicable investment credit
incentive credit under subsection    under subdivision [twelve-C]
(j-1)                                FOUR of section
                                     two hundred [ten] TEN-B

(ix) Alternative fuels               Amount of credit under subdivision
and electric vehicle                 [twenty-four] THIRTY of section
recharging property                  two hundred [ten] TEN-B
credit under subsection (p)

(x) Qualified emerging technology    Applicable credit base under
company employment credit under      subdivision [twelve-E] SEVEN
subsection (q)                       of section two hundred [ten] TEN-B

(xi) Qualified emerging technology   Qualified investments under
company capital tax credit under     subdivision [twelve-F] EIGHT
subsection (r)                       of section two hundred [ten] TEN-B

(xii) Credit for purchase of an      Cost of an automated external
automated external defibrillator     defibrillator under subdivision
under subsection (s)                 [twenty-five] THIRTEEN of section
                                     two hundred [ten or subsection
                                     (j) of section fourteen hundred
                                     fifty-six] TEN-B

(xiii) Low-income housing credit     Credit amount under subdivision
under subsection (x)                 [thirty] FIFTEEN of section
                                     two hundred [ten or subsection
                                     (l) of section fourteen
                                     hundred fifty-six] TEN-B

[(xiv) Credit for transportation     For taxable years beginning
improvement contributions under      before January first, two thousand
subsection (z)                       nine, amount of credit under
                                     subdivision thirty-two of
                                     section two hundred ten
                                     or subsection (n) of section
                                     fourteen hundred fifty-six]

(xv) QEZE credit for real property   Amount of credit under subdivision
taxes under subsection (bb)          [twenty-seven] FIVE of
                                     section two hundred [ten
                                     or subsection (o) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xvi) QEZE tax reduction credit      Amount of benefit period factor,
under subsection (cc)                employment increase factor and zone
                                     allocation factor (without regard
                                     to pro ration) under subdivision
                                     [twenty-eight] SIX of

S. 6359                            142                           A. 8559

                                     section two hundred [ten
                                     or subsection (p) of section
                                     fourteen hundred fifty-six]
                                     TEN-B and amount
                                     of tax factor as determined under
                                     subdivision (f) of section sixteen

(xvii) Green building credit under   Amount of green building credit
subsection (y)                       under subdivision [thirty-one]
                                     SIXTEEN of section two
                                     hundred [ten or subsection (m)
                                     of section fourteen hundred
                                     fifty-six] TEN-B

(xviii) Credit for long-term care    Qualified costs under subdivision
insurance premiums under subsection  [twenty-five-a] FOURTEEN
(aa)                                 of section two hundred [ten
                                     or subsection (k) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

(xix) Brownfield redevelopment       Amount of credit under subdivision
credit under subsection (dd)         [thirty-three] SEVENTEEN
                                     of section two hundred
                                     [ten or subsection (q) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xx) Remediated brownfield credit    Amount of credit under subdivision
for real property taxes for          [thirty-four] EIGHTEEN
qualified sites under subsection     of section two hundred
(ee)                                 [ten of subsection (r) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxi) Environmental remediation      Amount of credit under subdivision
insurance credit under subsection    [thirty-five] NINETEEN
(ff)                                 of section two hundred
                                     [ten or subsection (s) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxii) Empire state film             Amount of credit for qualified
production credit under              production costs in production of a
subsection (gg)                      qualified film under subdivision
                                     [thirty-six] TWENTY of
                                     section two hundred [ten] TEN-B

[(xxiii) Qualified emerging          Qualifying expenditures and
technology company facilities,       development activities under
operations and training credit       subdivision twelve-G of section two
under subsection (nn)                hundred ten]

(xxiv) Security training tax credit  Amount of credit under subdivision
under subsection (ii)                [thirty-seven] TWENTY-ONE
                                     of section two hundred

S. 6359                            143                           A. 8559

                                     [ten or under subsection (t) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

[(xxv) Credit for qualified fuel     For taxable years beginning before
cell electric generating             January first, two thousand nine,
equipment expenditures               amount of credit under subdivision
under subsection (g-2)               thirty-seven of section two hundred
                                     ten or subsection (t) of section
                                     fourteen hundred fifty-six]

(xxvi) Empire state commercial       Amount of credit for qualified
production credit under subsection   production costs in production of
(jj)                                 a qualified commercial under
                                     subdivision [thirty-eight]
                                     TWENTY-THREE of
                                     section two hundred [ten]
                                     TEN-B

(xxvii) Biofuel production tax       Amount of credit under subdivision
credit under subsection (jj)         [thirty-eight] TWENTY-FOUR
                                     of section two hundred [ten]
                                     TEN-B

(xxviii) Clean heating fuel credit   Amount of credit under subdivision
under subsection (mm)                [thirty-nine] TWENTY-FIVE of
                                     section two hundred [ten]
                                     TEN-B

(xxix) Credit for rehabilitation     Amount of credit under subdivision
of historic properties under         [forty] TWENTY-SIX of
subsection (oo)                      section two hundred [ten]
                                     TEN-B

 (xxxi) Excelsior jobs program tax   Amount of credit under subdivision
credit under subsection (qq)         [forty-one] THIRTY-ONE of
                                     section two hundred [ten
                                     or under subdivision (u) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

(xxxi) Empire state film             Amount of credit for
post production credit under         qualified post production
subsection (qq)                      costs of a qualified film
                                     under subdivision [forty-one]
                                     THIRTY-TWO of section
                                     two hundred [ten] TEN-B

 (xxxii) Economic transformation     Amount of credit under subdivision
and facility redevelopment credit    [forty-three] THIRTY-FIVE
                                     of section [210 or under
                                     subsection (x) of section fourteen
                                     hundred fifty-six] TWO HUNDRED
                                     TEN-B

 (xxxiii) New York youth works       Amount of credit under

S. 6359                            144                           A. 8559

tax credit                           subdivision [forty-four] THIRTY-SIX
                                     of section two hundred [ten]
                                     TEN-B

 (xxxiii) Empire state jobs          Amount of credit under
retention program credit             subdivision [forty-four]
                                     THIRTY-SEVEN of section
                                     two hundred [ten or under
                                     subsection (y) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxxiii) Credit for companies who    Amount of credit under
provide transportation to            subdivision [forty-four]
individuals with disabilities        THIRTY-EIGHT of section
under subsection (tt)                two hundred [ten] TEN-B

(xxxiv) Beer production credit       Amount of credit under
under subsection (uu)                [subdivision] subdivision
                                     [forty-five] THIRTY-NINE of
                                     section two hundred [ten]
                                     TEN-B

(xxxv) Hire a vet credit             Amount of credit under subdivision
under subsection (a-2)               [twenty-three-a] TWENTY-NINE
                                     of section two hundred [ten
                                     or subsection (e-1) of
                                     of section fourteen hundred
                                     fifty-six] TEN-B

(xxxv) Minimum wage reimbursement    Amount of credit under subdivision
credit under subsection (aaa)        [forty-six] FORTY
                                     of section two hundred
                                     [ten or subsection (z) of
                                     section fourteen hundred
                                     fifty-six] TEN-B

(xxxvi) Tax-free NY area tax         Amount of credit under
elimination credit                   subdivision [forty-seven] FORTY-ONE
                                     of section two hundred [ten]
                                     TEN-B

(xxxvii) Real property tax           Amount of credit under
credit for manufacturers             subdivision [forty-eight]
under subsection (xx)                FORTY-THREE of section
                                     two hundred [ten] TEN-B

(xxxvii) Tax-free NY area            Amount of credit under
excise tax on                        subdivision [forty-eight]
telecommunications services          FORTY-FOUR of section
credit under subsection (xx)         two hundred [ten] TEN-B

  S  69.  Subparagraphs  (A) and (B) of paragraph 3 of subsection (i) of
section 606 of the tax law, as added by chapter 170 of the laws of 1994,
are amended to read as follows:

S. 6359                            145                           A. 8559

  (A) Credit carryover. Any excess  credit  under  subparagraph  (A)  of
paragraph  one of this subsection, as it was in effect for taxable years
beginning before nineteen hundred ninety-four, may be  carried  over  to
the  shareholder's following year or years and may be deducted from such
shareholder's  tax for such year or years, except that any excess credit
attributable to subdivision [twelve] ONE of section  two  hundred  [ten]
TEN-B  of  this chapter shall in no event be carried over beyond the ten
taxable years next following the taxable year of origin.
  (B) Credit recapture. Any redetermination of credit required  by  this
subsection  as it was in effect for taxable years beginning before nine-
teen hundred ninety-four, upon disposition or cessation of qualified use
of property pursuant to paragraph [(g)] (E) of subdivision [twelve] ONE,
OR paragraph (f) of subdivision [twelve-B or paragraph (f)  of  subdivi-
sion  eighteen] THREE of section two hundred [ten] TEN-B of this chapter
shall be attributed in pro rata shares  to  the  shareholders  who  were
allowed  credit under this subsection with respect to such property, and
the reduction of a shareholder's proportionate stock interest  shall  be
treated  as  a  disposition  of  property for which a redetermination of
credit under such paragraphs is required with respect to such sharehold-
er.
  S 70. Subparagraph (B) of paragraph 3 and paragraph 21  of  subsection
(b)  and  paragraph  21 of subsection (c) of section 612 of the tax law,
subparagraph (B) of paragraph 3 of subsection (b) as amended by  section
57,  paragraph  21  of subsection (b) as amended by section 59 and para-
graph 21 of subsection (c) as amended by section 60 of part A of chapter
389 of the laws of 1997, are amended to read as follows:
  (B) Shareholders of S corporations. In the case of a shareholder of an
S corporation, with respect to taxes imposed  upon  or  payable  by  the
corporation,  the  term "income taxes" in subparagraph (A) of this para-
graph shall also include the  taxes  imposed  under  [articles]  ARTICLE
nine-A  [and  thirty-two]  of this chapter, regardless of the measure of
such tax, but shall not otherwise include taxes imposed by this  or  any
other  state  of the United States, or any political subdivision of this
or any other state, or the District of Columbia.
  (21) In relation to the disposition of  stock  or  indebtedness  of  a
corporation  which  elected  under  subchapter  s  of chapter one of the
internal revenue code for any taxable year of  such  corporation  begin-
ning,  in the case of a corporation taxable under article nine-A of this
chapter, after December thirty-first, nineteen hundred eighty,  [and  in
the case of a corporation taxable under article thirty-two of this chap-
ter,  after  December  thirty-first,  nineteen  hundred ninety-six,] the
amount required to be added to federal adjusted gross income pursuant to
subsection (n) of this section.
  (21) In relation to the disposition of  stock  or  indebtedness  of  a
corporation  which  elected  under  subchapter  s  of chapter one of the
internal revenue code for any taxable year of  such  corporation  begin-
ning,  in the case of a corporation taxable under article nine-A of this
chapter, after December thirty-first, nineteen hundred eighty,  [and  in
the case of a corporation taxable under article thirty-two of this chap-
ter,  after  December  thirty-first,  nineteen  hundred ninety-six,] the
amounts required to be subtracted from  federal  adjusted  gross  income
pursuant to subsection (n) of this section.
  S  71. Paragraph 2 of subsection (a) of section 632 of the tax law, as
amended by section 2 of part C of chapter 57 of the  laws  of  2010,  is
amended to read as follows:

S. 6359                            146                           A. 8559

  (2) In determining New York source income of a nonresident shareholder
of an S corporation where the election provided for in subsection (a) of
section  six  hundred sixty of this article is in effect, there shall be
included only the portion derived from or connected with New York sourc-
es  of  such  shareholder's  pro  rata  share  of items of S corporation
income, loss and deduction entering  into  his  federal  adjusted  gross
income,  increased  by  reductions for taxes described in paragraphs two
and three of subsection (f) of section thirteen hundred sixty-six of the
internal revenue code, as such portion shall be determined  under  regu-
lations  of  the commissioner consistent with the applicable methods and
rules for allocation under article nine-A [or thirty-two] of this  chap-
ter,  regardless of whether or not such item or reduction is included in
entire net income under article nine-A [or thirty-two] for the tax year.
If a nonresident is a shareholder in an S corporation where the election
provided for in subsection (a) of section  six  hundred  sixty  of  this
article  is in effect, and the S corporation has distributed an install-
ment obligation under section 453(h)(1)(A) of the Internal Revenue Code,
then any gain recognized on the receipt of payments from the installment
obligation for federal income tax purposes will be treated as  New  York
source income allocated in a manner consistent with the applicable meth-
ods  and  rules  for  allocation under article nine-A [or thirty-two] of
this chapter in the year that the assets were sold. In addition, if  the
shareholders  of  the  S corporation have made an election under section
338(h)(10) of the Internal Revenue Code, then any gain recognized on the
deemed asset sale for federal income tax purposes will be treated as New
York source income allocated in a manner consistent with the  applicable
methods and rules for allocation under article nine-A [or thirty-two] of
this  chapter  in  the  year  that  the  shareholder  made  the  section
338(h)(10) election. For purposes of a section 338(h)(10) election, when
a nonresident shareholder exchanges his or her S  corporation  stock  as
part  of  the  deemed  liquidation, any gain or loss recognized shall be
treated as the disposition of an intangible asset and will not  increase
or  offset  any gain recognized on the deemed assets sale as a result of
the section 338(h)(10) election.
  S 72. Subparagraph (A) of paragraph 4 of subsection (c) of section 658
of the tax law, as amended by section 1 of part DD of chapter 686 of the
laws of 2003, is amended to read as follows:
  (A) General. Every entity which is a partnership, other than a public-
ly traded partnership as defined in section 7704 of the federal Internal
Revenue Code, subchapter K limited liability company or an S corporation
for which the election provided for in subsection  (a)  of  section  six
hundred  sixty  of this [article] PART is in effect, which has partners,
members or shareholders who  are  nonresident  individuals,  as  defined
under  subsection  (b) of section six hundred five of this article, or C
corporations, and which has any income derived from  New  York  sources,
determined  in  accordance  with  the  applicable  rules  of section six
hundred thirty-one of this article as in the case of a nonresident indi-
vidual, shall pay estimated tax on such income on behalf of  such  part-
ners,  members or shareholders in the manner and at the times prescribed
by subsection (c) of section six hundred eighty-five  of  this  article.
For  purposes  of  this paragraph, the term "estimated tax" shall mean a
partner's, member's or shareholder's  distributive  share  or  pro  rata
share  of the entity income derived from New York sources, multiplied by
the highest rate of tax prescribed by section six hundred  one  of  this
article  for  the taxable year of any partner, member or shareholder who
is an individual taxpayer,  or  paragraph  (a)  of  subdivision  one  of

S. 6359                            147                           A. 8559

section  two  hundred  ten  of  this chapter for the taxable year of any
partner, member or shareholder which is a C corporation, whether or  not
such  C corporation is subject to tax under article nine, nine-A[, thir-
ty-two,]  or  thirty-three of this chapter, and reduced by the distribu-
tive share or pro rata share of any credits determined under section one
hundred eighty-seven, one  hundred  eighty-seven-a,  six  hundred  six[,
fourteen  hundred  fifty-six] or fifteen hundred eleven of this chapter,
whichever is applicable, derived from the entity.
  S 73. Subsections  (a)  and  (h)  of  section  660  of  the  tax  law,
subsection (a) as amended by section 50 and subsection (h) as amended by
section  66 of part A of chapter 389 of the laws of 1997, are amended to
read as follows:
  (a) Election. If a corporation  is  an  eligible  S  corporation,  the
shareholders  of  the  corporation  may elect in the manner set forth in
subsection (b) of this section to  take  into  account,  to  the  extent
provided for in this article (or in article thirteen of this chapter, in
the case of a shareholder which is a taxpayer under such article), the S
corporation  items  of  income, loss, deduction and reductions for taxes
described in paragraphs two and three of subsection (f) of section thir-
teen hundred sixty-six of the internal revenue code which are taken into
account for federal  income  tax  purposes  for  the  taxable  year.  No
election  under this subsection shall be effective unless all sharehold-
ers of the corporation have so elected. An eligible S corporation is (i)
an S corporation which is subject to tax under article nine-A [or  thir-
ty-two] of this chapter, OR (ii) an S corporation which is the parent of
a qualified subchapter S subsidiary subject to tax under article nine-A,
where  the  shareholders of such parent corporation are entitled to make
the election under this subsection by reason of  subparagraph  three  of
paragraph  (k)  of subdivision nine of section two hundred eight of this
chapter[; or (iii) an S corporation which is the parent of  a  qualified
subchapter  S corporation subject to tax under article thirty-two, where
the shareholders of such parent are entitled to make the election  under
this  subsection  by  reason  of  paragraph  three  of subsection (o) of
section fourteen hundred fifty-three of this chapter].
  (h) Cross reference. For definitions relating to S  corporations,  see
subdivision  one-A of section two hundred eight [and subsections (f) and
(g) of section fourteen hundred fifty] of this chapter.
  S 74. Paragraph 1 of subsection (i) of section 660 of the tax law,  as
added  by  section  1  of  part  L of chapter 60 of the laws of 2007, is
amended to read as follows:
  (1) Notwithstanding the provisions in subsection (a) of this  section,
in  the  case  of an eligible S corporation for which the election under
subsection (a) of this section is not in effect for the current  taxable
year,  the  shareholders of an eligible S corporation are deemed to have
made that election effective for the  eligible  S  corporation's  entire
current  taxable year, if the eligible S corporation's investment income
for the current taxable year is more than fifty percent of  its  federal
gross  income  for  such  year  [provided that this subsection shall not
apply to an eligible S corporation that is subject to tax under  article
thirty-two  of this chapter]. IN DETERMINING AN ELIGIBLE S CORPORATION'S
INVESTMENT INCOME, THE INVESTMENT INCOME OF  A  QUALIFIED  SUBCHAPTER  S
SUBSIDIARY  OWNED  DIRECTLY  OR INDIRECTLY BY THE ELIGIBLE S CORPORATION
SHALL BE INCLUDED.
  S 75. Paragraph 3 of subsection (c) of section 1085 of the tax law, as
amended by section 15 of part Y of chapter 63 of the laws  of  2000,  is
amended to read as follows:

S. 6359                            148                           A. 8559

  (3)  The  provisions of this subsection and subsections (d) and (e) of
this section shall apply to the failure of a taxpayer to file a declara-
tion of estimated tax surcharge or the failure to pay all or any part of
an amount which is applied as an installment against such estimated  tax
surcharge  pursuant  to sections one hundred ninety-seven-a, one hundred
ninety-seven-b, two hundred thirteen-a, two hundred  thirteen-b,  [four-
teen  hundred  sixty, fourteen hundred sixty-one,] fifteen hundred thir-
teen and fifteen hundred fourteen  of  this  chapter.  For  purposes  of
applying this section and subsections (d) and (e) of this section to the
estimated  tax surcharge, where appropriate the term "tax" shall be read
to mean "tax surcharge," and the terms "amount  required  to  be  paid,"
"amount  which  would  be  required to be paid," and "amount which would
have been required to be paid" shall be computed as the product  of  (1)
such  amount computed without regard to the tax surcharges imposed under
sections  one  hundred  eighty-four-a,  one  hundred  eighty-six-c,  one
hundred  eighty-eight, two hundred nine-A, two hundred nine-B, [fourteen
hundred fifty-five-A, fourteen hundred  fifty-five-B,]  fifteen  hundred
five-a,  and  fifteen  hundred  twenty  of this chapter, and (2) the MTA
percentage. The term "MTA percentage" shall mean the product of (A)  the
tax rate applicable under such sections imposing such surcharges and (B)
the  percentage  utilized  in  determining the portion of the taxpayer's
business activity carried on within the metropolitan commuter  transpor-
tation district under such sections.
  S  76.  The  opening  paragraph  of subparagraph (A) of paragraph 3 of
subsection (d) of section 1085 of the tax law, as amended by chapter 170
of the laws of 1994, is amended to read as follows:
  An amount equal to ninety-one percent of the tax for the taxable  year
computed  on all items entering into the computation of the tax or taxes
of the taxpayer for the taxable year under article nine, nine-A[,  thir-
ty-two]  or  thirty-three of this chapter. For purposes of computing the
tax, all items of receipts, income and expenses shall be  placed  on  an
annualized basis--
  S  77. Clause (i) of subparagraph (A) of paragraph 4 of subsection (d)
of section 1085 of the tax law, as amended by chapter 57 of the laws  of
1993, is amended to read as follows:
  (i)  take  the items entering into the computation of the tax or taxes
of the taxpayer for the taxable year under article nine, nine-A[,  thir-
ty-two] or thirty-three of this chapter, for all months during the taxa-
ble year preceding the filing month,
  S 78. Paragraph 5 of subsection (d) of section 1085 of the tax law, as
added by chapter 61 of the laws of 1989, is amended to read as follows:
  (5)  In the case of any declaration installment, any reduction in such
installment resulting from the application of paragraph three or four of
this subsection shall be recaptured by increasing the amount of the next
installment determined under paragraph one or two of this subsection  or
paragraph  one  of  subsection (c) of this section by the amount of such
reduction (and by increasing subsequent installments to the extent  that
the  reduction has not previously been recaptured under this paragraph).
For purposes of the preceding sentence, a declaration installment  means
any installment of estimated tax other than the mandatory first install-
ment  required  under  paragraph  (a)  of subdivision one of section one
hundred ninety-seven-b, subdivision (a) of  section  two  hundred  thir-
teen-b[, subsection (a) of section fourteen hundred sixty-one] or subdi-
vision (a) of section fifteen hundred fourteen of this chapter.

S. 6359                            149                           A. 8559

  S 79. Paragraph 1 of subsection (e) of section 1085 of the tax law, as
amended  by  section 28-p of part H-3 of chapter 62 of the laws of 2003,
is amended to read as follows:
  (1) Paragraphs (1) and (2) of subsection (d) of this section shall not
apply  in  the  case of any corporation (or any predecessor corporation)
which had [entire net] BUSINESS income, or the portion thereof allocated
within the state, of one million dollars or more for  any  taxable  year
during  the  three  taxable years immediately preceding the taxable year
involved; provided, however, that in the case of a  corporation  subject
to  tax  under section fifteen hundred two-a of this chapter, paragraphs
(1) and (2) of subsection (d) of this section shall not  apply  if  such
corporation  had  entire  net  income,  or the portion thereof allocated
within the state, of one million dollars or more for any  of  the  three
taxable years immediately preceding the taxable year involved, or if the
direct  premiums  subject  to tax under section fifteen hundred two-a of
this chapter of the corporation for any of such three preceding  taxable
years  beginning on or after January first, two thousand three equals or
exceeds three million seven hundred fifty thousand dollars.
  S 80. Subsections (m) and (o) of section  1085  of  the  tax  law  are
REPEALED.
  S  81.  Clause  (ii)  of subparagraph (B) of paragraph 2 of subsection
(q), paragraph 3 of subsection (s) and the closing  paragraph  of  para-
graph  1  of  subsection (t) of section 1085 of the tax law, as added by
section 10 of part N of chapter 61 of the laws of 2005, are  amended  to
read as follows:
  (ii)  fifty percent of the gross income that the organizer or material
advisor derived with respect to activities that were the basis  for  the
requirement to file, disclose or provide information pursuant to section
six  thousand  eleven  of  the internal revenue code, to the extent such
gross income is attributable to the avoidance of any tax  imposed  under
article nine, nine-A[, thirty-two,] or thirty-three of this chapter.
  (3)  For  purposes  of  this  subsection,  the term "understatement of
liability" means any understatement  of  the  net  amount  payable  with
respect  to any tax imposed under article nine, nine-A[, thirty-two,] or
thirty-three of this chapter or any  overstatement  of  the  net  amount
creditable or refundable with respect to any such tax.
shall  pay,  with respect to each activity described in subparagraph (A)
of this paragraph, a penalty equal to one thousand dollars  or,  if  the
person  establishes  that it is lesser, one hundred percent of the gross
income derived (or to be derived) by such person from such  activity  to
the  extent  such gross income is attributed to the avoidance of any tax
imposed under articles nine, nine-A[,  thirty-two]  or  thirty-three  of
this  chapter;  provided,  however,  that if an activity with respect to
which a penalty imposed  under  this  subsection  involves  a  statement
described  in  clause  (i)  of subparagraph (B) of paragraph one of this
subsection, the penalty shall be equal to fifty  percent  of  the  gross
income derived (or to be derived) from that activity within the state by
the  person on which the penalty is imposed. For purposes of the preced-
ing sentence, activities described in clause (i) of subparagraph (A)  of
this  paragraph  with  respect  to  each  entity or arrangement shall be
treated as a separate activity and participation in each sale  described
in  clause (ii) of subparagraph (A) of this paragraph shall be so treat-
ed.
  S 82. The opening paragraph of subsection (c) of section 1087  of  the
tax  law,  as  separately amended by chapters 760 and 770 of the laws of
1992, is amended to read as follows:

S. 6359                            150                           A. 8559

  If a taxpayer is required by subdivision three of section two  hundred
eleven[,  subsection (e) of section fourteen hundred sixty-two] or para-
graph one of subdivision (e) of section fifteen hundred fifteen OF  THIS
CHAPTER, to file a report or amended return in respect of (i) a decrease
or  increase  in  federal  taxable income or federal alternative minimum
taxable income or federal tax, or (ii) a federal change or correction or
renegotiation, or computation or recomputation of tax, which is  treated
in  the  same manner as if it were an overpayment for federal income tax
purposes, claim for credit or refund of any resulting overpayment of tax
shall be filed by the taxpayer within  two  years  from  the  time  such
report  or amended return was required to be filed with the commissioner
[of taxation and finance]. If the report or amended return  required  by
any  such provision of law is not filed within the period therein speci-
fied, no interest shall be payable on any claim for credit or refund  of
the  overpayment  attributable  to the federal change or correction. The
amount of such credit or refund--
  S 83. Subsection (g) of section 1088 of the tax  law,  as  amended  by
chapter  61 of the laws of 1989 and relettered by chapter 55 of the laws
of 1992, is amended to read as follows:
  (g) Cross-reference.--For provision with  respect  to  interest  after
failure  to  file  a report or amended return under subdivision three of
section two hundred eleven[, subsection (e) of section fourteen  hundred
sixty-two]  or  paragraph  one  of  subdivision  (e)  of section fifteen
hundred fifteen, see subsection (c) of section one thousand  eighty-sev-
en.
  S 84. Paragraph 2 of subsection (b) of section 1096 of the tax law, as
amended  by  chapter  411  of  the  laws  of 1986, is amended to read as
follows:
  (2) The [tax commission] COMMISSIONER may take any action under  para-
graph  one  of  this  subdivision  to  inquire into the commission of an
offense connected with the administration or enforcement of this article
or article nine, [nine-a] NINE-A,  thirteen,  [thirteen-a,  thirty-two,]
THIRTEEN-A  or  thirty-three  of  this  chapter, provided, however, that
notwithstanding the provisions of section one  hundred  seventy-four  of
this  chapter  no  such  action  shall  be  taken when a referral by the
department or the [tax commission] COMMISSIONER to the attorney general,
a district attorney or any other  prosecutorial  agency  is  in  effect.
Provided,  however,  the [tax commission] COMMISSIONER shall have power,
during the period when such referral is in  effect,  to  examine  or  to
cause  to have examined, by any agent or representative designated by it
for that purpose, any books, papers, records or memoranda  bearing  upon
the  matters  required  to  be included in the return, where such books,
papers, records or memoranda are in its possession, or where such books,
papers, records or memoranda are  in  the  possession  of  the  attorney
general,  district  attorney or other prosecutorial agency to which such
referral is made.
  S 85. Paragraph 1 of subsection (e) of section 1096 of the tax law, as
amended by section 8 of subpart D of part V1 of chapter 57 of  the  laws
of 2009, is amended to read as follows:
  (1)  Authority to set interest rates.---The commissioner shall set the
overpayment and underpayment rates of interest to be  paid  pursuant  to
sections  two  hundred  thirteen,  two  hundred  thirteen-b, two hundred
fifty-eight, two hundred sixty-three, two hundred ninety-four, one thou-
sand eighty-four, one thousand eighty-five[,] AND one  thousand  eighty-
eight[,  fourteen hundred sixty-one and fourteen hundred sixty-three] of
this chapter, but if no such rate or rates of  interest  are  set,  such

S. 6359                            151                           A. 8559

overpayment  rate shall be deemed to be set at six percent per annum and
such underpayment rate shall be deemed to be set at seven  and  one-half
percent  per annum. Such overpayment and underpayment rates shall be the
rates  prescribed in paragraph two of this subsection, but the underpay-
ment rate shall not be less than seven and one-half percent  per  annum.
Any  such  rates  set  by  the commissioner shall apply to taxes, or any
portion thereof, which remain or become due or overpaid on or after  the
date  on  which  such  rates  become effective and shall apply only with
respect to interest computed or computable for periods  or  portions  of
periods occurring in the period during which such rates are in effect.
  S  86. Subdivision (b) of section 1201-a of the tax law, as amended by
section 5 of part Y of chapter 62 of the laws of  2006,  is  amended  to
read as follows:
  (b) Empire state film production credit. Any city in this state having
a  population  of one million or more, acting through its local legisla-
tive body, is hereby authorized to adopt and amend local laws to allow a
credit against the general corporation tax and the unincorporated  busi-
ness  tax  imposed  pursuant  to  the authority of chapter seven hundred
seventy-two of the laws of nineteen hundred  sixty-six  which  shall  be
substantially  identical to the credit allowed under section twenty-four
of this chapter, except that (A) the percentage of qualified  production
costs  used to calculate such credit shall be five percent, (B) whenever
such section twenty-four references the state, such words shall be  read
as  referencing  the  city,  (C)  such credit shall be allowed only to a
taxpayer which is a qualified  film  production  company,  and  (D)  the
effective  date  of  such  credit shall be July first, two thousand six.
Such credit shall be applied in a  manner  consistent  with  the  credit
allowed  under  subdivision  [thirty-six]  TWENTY of section two hundred
[ten] TEN-B of this chapter except as may  be  necessary  to  take  into
account differences between the general corporation tax and the unincor-
porated business tax.
  S  87. Subdivision (c) of section 1201-a of the tax law, as amended by
chapter 300 of the laws of 2007, is amended to read as follows:
  (c) Empire state commercial production credit. Any city in this  state
having  a  population  of  one million or more, acting through its local
legislative body, is hereby authorized to adopt and amend local laws  to
allow a credit against the general corporation tax and the unincorporat-
ed  business  tax  imposed  pursuant  to  the authority of chapter seven
hundred seventy-two of the laws  of  nineteen  hundred  sixty-six  which
shall  be  substantially  identical  to  the  credit  allowed  under the
provisions of section twenty-eight of this chapter, except that (A)  the
percentage  of  qualified production costs used to calculate such credit
shall be five percent, (B) whenever such section twenty-eight references
the state, such words shall be read as referencing the  city,  (C)  such
credit  shall  be allowed only to a taxpayer that is a qualified commer-
cial production company, and (D) the effective date of such credit shall
be as provided in local laws. Such credit shall be applied in  a  manner
consistent  with  the  credit  allowed  under subdivision [thirty-eight]
TWENTY-THREE of section two hundred [ten] TEN-B of this  chapter  except
as may be necessary to take into account differences between the general
corporation tax and unincorporated business tax.
  S 88. The section heading and paragraphs 1 and 3 of subdivision (a) of
section  1505-a  of the tax law, the section heading as added by chapter
11 of the laws of 1983 and paragraphs 1 and  3  of  subdivision  (a)  as
amended  by  section  6 of part A of chapter 59 of the laws of 2013, are
amended to read as follows:

S. 6359                            152                           A. 8559

  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on insurance corporations.
  (1)  Every  domestic  insurance corporation and every foreign or alien
insurance corporation, and every life insurance corporation described in
subdivision (b) of section fifteen hundred one of this article, for  the
privilege  of  exercising its corporate franchise, or of doing business,
or of employing capital, or of owning or leasing property in the  metro-
politan  commuter  transportation  district  in a corporate or organized
capacity, or of maintaining  an  office  in  the  metropolitan  commuter
transportation  district,  [for  all  or  any  part of its taxable years
commencing on or after January first, nineteen hundred  eighty-two,  but
ending  before  December  thirty-first,  two  thousand eighteen,] except
corporations specified in subdivision (c)  of  section  fifteen  hundred
twelve  of  this  article,  shall annually pay, in addition to the taxes
otherwise imposed by this article, a tax surcharge on the taxes  imposed
under  this  article after the deduction of any credits otherwise allow-
able under this article as allocated to such district. Such taxes  shall
be  allocated  to  such  district  for  purposes  of  computing such tax
surcharge upon taxpayers subject to tax under subdivision (b) of section
fifteen hundred ten of this article by applying the methodology,  proce-
dures  and computations set forth in subdivisions (a) and (b) of section
fifteen hundred four of this article, except that  references  to  terms
denoting  New York premiums, and total wages, salaries, personal service
compensation and commissions within New York shall be read  as  denoting
within  the  metropolitan  commuter  transportation  district  and terms
denoting total premiums and  total  wages,  salaries,  personal  service
compensation and commissions shall be read as denoting within the state.
If it shall appear to the commissioner that the application of the meth-
odology,  procedures and computations set forth in such subdivisions (a)
and (b) does not properly reflect the activity, business or income of  a
taxpayer  within the metropolitan commuter transportation district, then
the commissioner shall be authorized, in the commissioner's  discretion,
to  adjust such methodology, procedures and computations for the purpose
of allocating such taxes by:
  (A) excluding one or more factors therein;
  (B) including one or more other factors  therein,  such  as  expenses,
purchases,  receipts  other  than  premiums,  real  property or tangible
personal property; or
  (C) any other similar or different method which allocates  such  taxes
by  attributing a fair and proper portion of such taxes to the metropol-
itan commuter transportation district. The  commissioner  from  time  to
time  shall  publish all rulings of general public interest with respect
to any application of the provisions  of  the  preceding  sentence.  The
commissioner  may  promulgate rules and regulations to further implement
the provisions of this section.
  (3) Such tax surcharge shall be computed  at  the  rate  of  [eighteen
percent  of  the  taxes  imposed  under sections fifteen hundred one and
fifteen hundred ten of  this  article  as  limited  by  section  fifteen
hundred  five  of  this article, as allocated to such district, for such
taxable years or any part of such taxable years ending  before  December
thirty-first,  nineteen  hundred eighty-three after the deduction of any
credits otherwise allowable under this article, at the rate of seventeen
percent of the taxes imposed under such sections as limited  by  section
fifteen hundred five of this article, as allocated to such district, for
such  taxable years or any part of such taxable years ending on or after
December thirty-first, nineteen hundred eighty-three and before  January

S. 6359                            153                           A. 8559

first,  two  thousand three after the deduction of any credits otherwise
allowable under this article, and at the rate of] seventeen  percent  of
the  taxes  imposed  under sections fifteen hundred one, fifteen hundred
two-a,  and fifteen hundred ten of this article, as limited or otherwise
determined by subdivision (a) or (b) of section fifteen hundred five  of
this  article, as allocated to such district, [for such taxable years or
any part of such taxable years ending after December  thirty-first,  two
thousand  two]  after  the  deduction of any credits otherwise allowable
under this article[; provided, however, that the tax  surcharge  imposed
by  this  section  shall  not be imposed upon any taxpayer for more than
four hundred thirty-two months].  Provided  however,  that  for  taxable
years  commencing  on or after July first, two thousand, and in the case
of taxpayers subject to tax under section fifteen hundred two-a of  this
article,  for taxable years of such taxpayers beginning on or after July
first, two thousand and before January first, two thousand  three,  such
surcharge  shall  be  calculated  as if (i) the rate of the tax computed
under paragraph one of subdivision (a) of section fifteen hundred two of
this article was nine percent and (ii) the rate of the limitation on tax
set forth in section fifteen hundred five of this article for  domestic,
foreign  and  alien  insurance corporations except life insurance corpo-
rations was two and six-tenths percent.
  S 89. Section 1825 of the tax law, as amended by section 2 of  part  E
of chapter 25 of the laws of 2009, is amended to read as follows:
  S  1825.  Violation  of secrecy provisions of the tax law.--Any person
who violates the provisions of subdivision (b)  of  section  twenty-one,
subdivision one of section two hundred two, subdivision eight of section
two  hundred  eleven, subdivision (a) of section three hundred fourteen,
subdivision one or two of section  four  hundred  thirty-seven,  section
four  hundred  eighty-seven,  subdivision  one  or  two  of section five
hundred fourteen, subsection (e) of section  six  hundred  ninety-seven,
subsection  (a)  of section nine hundred ninety-four, subdivision (a) of
section eleven hundred forty-six, section twelve  hundred  eighty-seven,
subdivision (a) of section fourteen hundred eighteen, [subsection (a) of
section  fourteen  hundred  sixty-seven,]  subdivision  (a)  of  section
fifteen hundred eighteen, subdivision (a)  of  section  fifteen  hundred
fifty-five  of  this  chapter, and subdivision (e) of section 11-1797 of
the administrative code of the city of New York shall  be  guilty  of  a
misdemeanor.
  S 90. Subdivisions (s) and (t) of section 957 of the general municipal
law,  as  amended  by  section 1 of part S1 of chapter 57 of the laws of
2009, are amended to read as follows:
  (s) "Qualified investment project" shall mean a  project  (i)  located
within  an  empire zone, (ii) at which five hundred or more jobs will be
created, provided such jobs are new to the state and are in addition  to
any  other  jobs  previously created by the owner of such project in the
state, and (iii) which will consist of tangible  personal  property  and
other  tangible  property, including buildings and structural components
of buildings, described in subparagraphs  (i),  (ii),  (iii),  (iv)  and
clause  (A)  or  (C) of subparagraph (v) of paragraph (b) of subdivision
[twelve-B] THREE of section two hundred [ten] TEN-B of the tax law,  the
basis  of  which  for  federal  income tax purposes will equal or exceed
seven hundred fifty million dollars. Provided however, the owner of such
project does not employ more than two hundred persons in  the  state  at
the time such project is commenced.
  (t)  "Significant capital investment project" shall mean a project (i)
located within an empire  zone,  (ii)  which  will  be  either  a  newly

S. 6359                            154                           A. 8559

constructed  facility or a newly constructed addition to or expansion of
a qualified investment project, consisting of tangible personal property
and other tangible property, including buildings and  structural  compo-
nents  of  buildings,  described in subparagraphs (i), (ii), (iii), (iv)
and clause (A) or (C) of subparagraph (v) of paragraph (b)  of  subdivi-
sion [twelve-B] THREE of section two hundred [ten] TEN-B of the tax law,
the  basis of which for federal income tax purposes will equal or exceed
seven hundred fifty million dollars, (iii) which  is  constructed  after
the  basis  for  federal  income tax purposes of the property comprising
such qualified investment project equals or exceeds seven hundred  fifty
million  dollars,  and  (iv)  at which five hundred or more jobs will be
created, provided such jobs are new to the state and are in addition  to
any  other  jobs  previously created by the owner of such project in the
state.
  S 91. Subclauses (III) and (IV) of clause (ii) of subparagraph (B)  of
paragraph 6 of subdivision (a) of section 292 of the tax law, as amended
by section 3 of part E of chapter 59 of the laws of 2013, are amended to
read as follows:
  (III)  [The  adjustment  required in this paragraph shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in  the  form  specified by the commissioner, that: (a) the royalty
payment was paid, accrued or incurred  to  a  related  member  organized
under  the  laws  of  a  country  other  than the United States; (b) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United  States;  (c)
the  related member was subject to tax in a foreign nation on a tax base
that included the royalty payment  paid,  accrued  or  incurred  by  the
taxpayer; (d) the related member's income from the transaction was taxed
in  such  country  at  an  effective  rate of tax at least equal to that
imposed by this state; and (e) the royalty payment was paid, accrued  or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (IV)] The adjustment required in this paragraph shall not apply if the
taxpayer and the commissioner agree in writing to the application or use
of alternative adjustments or computations. The commissioner may, in his
or  her  discretion,  agree  to  the  application  or use of alternative
adjustments or computations when he or she concludes that in the absence
of such agreement the income of  the  taxpayer  would  not  be  properly
reflected.
  S  92.  Clauses  (iii)  and (iv) of subparagraph (B) of paragraph 2 of
subsection (r) of section 612 of the tax law, as amended by section 5 of
part E of chapter 59 of the  laws  of  2013,  are  amended  to  read  as
follows:
  (iii)  [The  adjustment required in this subsection shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in  the  form  specified by the commissioner, that: (I) the royalty
payment was paid, accrued or incurred  to  a  related  member  organized
under  the  laws  of  a  country  other than the United States; (II) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the related member was subject to tax in a foreign nation on a tax  base
that  included  the  royalty  payment  paid,  accrued or incurred by the
taxpayer; (IV) the related member's  income  from  the  transaction  was
taxed  in  such  country at an effective tax rate at least equal to that
imposed by this state; and (V) the royalty payment was paid, accrued  or

S. 6359                            155                           A. 8559

incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)]  The  adjustment  required in this subsection shall not apply if
the taxpayer and the commissioner agree in writing to the application or
use of alternative adjustments or computations. The commissioner may, in
his or her discretion, agree to the application or  use  of  alternative
adjustments or computations when he or she concludes that in the absence
of  such  agreement  the  income  of  the taxpayer would not be properly
reflected.
  S 93. Intentionally omitted.
  S 94. Subclauses (III) and (IV) of clause (ii) of subparagraph (B)  of
paragraph  14  of  subdivision  (b)  of  section 1503 of the tax law, as
amended by section 8 of part E of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  (III)  [The  adjustment  required in this paragraph shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in  the  form  specified by the commissioner, that: (a) the royalty
payment was paid, accrued or incurred  to  a  related  member  organized
under  the  laws  of  a  country  other  than the United States; (b) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United  States;  (c)
the  related member was subject to tax in a foreign nation on a tax base
that included the royalty payment  paid,  accrued  or  incurred  by  the
taxpayer; (d) the related member's income from the transaction was taxed
in  such  country  at  an  effective  rate of tax at least equal to that
imposed by this state; and (e) the royalty payment was paid, accrued  or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (IV)] The adjustment required in this paragraph shall not apply if the
taxpayer and the commissioner agree in writing to the application or use
of alternative adjustments or computations. The commissioner may, in his
or  her  discretion,  agree  to  the  application  or use of alternative
adjustments or computations when he or she concludes that in the absence
of such agreement the income of  the  taxpayer  would  not  be  properly
reflected.
  S  95.  Clauses  (iii)  and (iv) of subparagraph (B) of paragraph 2 of
subdivision (e) of section 11-506 of the administrative code of the city
of New York, as amended by section 9 of part E of chapter 59 of the laws
of 2013, are amended to read as follows:
  (iii) [The adjustment required in this subdivision shall not apply  if
the  taxpayer  establishes, by clear and convincing evidence of the type
and in the form specified by the commissioner of finance, that: (I)  the
royalty payment was paid, accrued or incurred to a related member organ-
ized  under the laws of a country other than the United States; (II) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the related member was subject to tax in a foreign nation on a tax  base
that  included  the  royalty  payment  paid,  accrued or incurred by the
taxpayer; (IV) the related member's  income  from  the  transaction  was
taxed in such country at an effective rate of tax at least equal to that
imposed  by  this city; and (V) the royalty payment was paid, accrued or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)] The adjustment required in this subdivision shall not  apply  if
the  taxpayer  and  the  commissioner of finance agree in writing to the
application or use  of  alternative  adjustments  or  computations.  The

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commissioner  of  finance  may,  in  his or her discretion, agree to the
application or use of alternative adjustments or computations when he or
she concludes that in the absence of such agreement the  income  of  the
taxpayer would not be properly reflected.
  S  96.  Subclauses  (iii)  and (iv) of clause (B) of subparagraph 2 of
paragraph (n) of subdivision 8 of section 11-602 of  the  administrative
code  of  the  city  of  New York, as amended by section 10 of part E of
chapter 59 of the laws of 2013, are amended to read as follows:
  (iii) [The adjustment required in this paragraph shall  not  apply  if
the  taxpayer  establishes, by clear and convincing evidence of the type
and in the form specified by the commissioner of finance, that: (I)  the
royalty payment was paid, accrued or incurred to a related member organ-
ized  under the laws of a country other than the United States; (II) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the related member was subject to tax in a foreign nation on a tax  base
that  included  the  royalty  payment  paid,  accrued or incurred by the
taxpayer; (IV) the related member's  income  from  the  transaction  was
taxed in such country at an effective rate of tax at least equal to that
imposed  by  this city; and (V) the royalty payment was paid, accrued or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)] The adjustment required in this paragraph shall not apply if the
taxpayer and the commissioner of finance agree in writing to the  appli-
cation  or  use  of alternative adjustments or computations. The commis-
sioner of finance may, in his or her discretion, agree to  the  applica-
tion  or  use  of alternative adjustments or computations when he or she
concludes that in the absence  of  such  agreement  the  income  of  the
taxpayer would not be properly reflected.
  S  97.  Clauses  (iii)  and (iv) of subparagraph (B) of paragraph 2 of
subdivision (q) of section 11-641 of the administrative code of the city
of New York, as amended by section 11 of part E of  chapter  59  of  the
laws of 2013, are amended to read as follows:
  (iii)  [The adjustment required in this subdivision shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in the form specified by the commissioner of finance, that: (I) the
royalty payment was paid, accrued or incurred to a related member organ-
ized under the laws of a country other than the United States; (II)  the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the  related member was subject to tax in a foreign nation on a tax base
that included the royalty payment  paid,  accrued  or  incurred  by  the
taxpayer;  (IV)  the  related  member's  income from the transaction was
taxed in such country at an effective rate of tax at least equal to that
imposed by this city; and (V) the royalty payment was paid,  accrued  or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)]  The  adjustment required in this subdivision shall not apply if
the taxpayer and the commissioner of finance agree  in  writing  to  the
application  or  use  of  alternative  adjustments  or computations. The
commissioner of finance may, in his or  her  discretion,  agree  to  the
application or use of alternative adjustments or computations when he or
she  concludes  that  in the absence of such agreement the income of the
taxpayer would not be properly reflected.
  S 98. Clauses (iii) and (iv) of subparagraph (B)  of  paragraph  2  of
subdivision  (t)  of  section  11-1712 of the administrative code of the

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city of New York, as amended by section 12 of part E of  chapter  59  of
the laws of 2013, are amended to read as follows:
  (iii)  [The adjustment required in this subdivision shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in the form specified by the commissioner of finance, that: (I) the
royalty payment was paid, accrued or incurred to a related member organ-
ized under the laws of a country other than the United States; (II)  the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the  related member was subject to tax in a foreign nation on a tax base
that included the royalty payment  paid,  accrued  or  incurred  by  the
taxpayer;  (IV)  the  related  member's  income from the transaction was
taxed in such country at an effective rate of tax at least equal to that
imposed by this city; and (V) the royalty payment was paid,  accrued  or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)]  The  adjustment required in this subdivision shall not apply if
the taxpayer and the commissioner of finance agree  in  writing  to  the
application  or  use  of  alternative  adjustments  or computations. The
commissioner of finance may, in his or  her  discretion,  agree  to  the
application or use of alternative adjustments or computations when he or
she  concludes  that  in the absence of such agreement the income of the
taxpayer would not be properly reflected.
  S 99. Notwithstanding any  provisions  of  law  to  the  contrary  and
notwithstanding  the  repeal of article 32 of the tax law by section one
of this act, the repeal of section 180 of the tax law by section two  of
this  act  and the repeal of section 181 of the tax law by section three
of this act, all provisions  of  such  article  and  such  sections,  in
respect to the imposition, exemption, assessment, payment, payment over,
determination,  collection,  and  credit  or refund of tax, interest and
penalty imposed thereunder, the filing of forms and returns, the preser-
vation of records for the purposes of such tax, the secrecy of  returns,
the disposition of revenues, and the civil and criminal penalties appli-
cable  to  the  violation  of the provisions of such article 32 and such
sections 180 and 181, shall continue  in  full  force  and  effect  with
respect to all such tax accrued for taxable years beginning before Janu-
ary  1,  2015;  and  all  actions  and  proceedings,  civil or criminal,
commenced or authorized to be  commenced  under  or  by  virtue  of  any
provision  of  such  article  32  or  by virtue of any provision of such
section 180 or 181 so repealed, and pending  or  able  to  be  commenced
immediately prior to the taking effect of such repeal, may be commenced,
prosecuted and defended to final effect in the same manner as they might
if such provisions were not so repealed.
  S  100.  Subdivision  1  of  section 187 of the tax law, as amended by
chapter 2 of the laws of 1995, is amended to read as follows:
  1. A taxpayer shall be allowed a credit, to be  credited  against  the
taxes  imposed by this article, other than the taxes and fees imposed by
sections [one hundred  eighty,  one  hundred  eighty-one,]  one  hundred
eighty-six-a and one hundred eighty-six-e of this chapter. The amount of
the  credit  shall  be  the  amount  of  the special additional mortgage
recording tax paid by the taxpayer pursuant to the provisions of  subdi-
vision one-a of section two hundred fifty-three of this chapter on mort-
gages  recorded  on  and  after January first, nineteen hundred seventy-
nine. Provided, however,  that  the  amount  of  such  credit  allowable
against the tax imposed by section one hundred eighty-four of this chap-
ter  shall  be the excess of the amount of such special additional mort-

S. 6359                            158                           A. 8559

gage recording tax paid over the amount of any credit  allowed  by  this
section  against  the tax imposed by section one hundred eighty-three of
this chapter. Provided further, however, no credit shall be allowed with
respect  to  a  mortgage  of real property principally improved or to be
improved by one or more structures containing in the aggregate not  more
than  six  residential dwelling units, each dwelling unit having its own
separate cooking facilities, where the real property is located  in  one
or more of the counties comprising the metropolitan commuter transporta-
tion  district and where the mortgage is recorded on or after May first,
nineteen hundred eighty-seven.  Provided  further,  however,  no  credit
shall be allowed with respect to a mortgage of real property principally
improved  or  to be improved by one or more structures containing in the
aggregate not more than six residential dwelling  units,  each  dwelling
unit having its own separate cooking facilities, where the real property
is  located  in the county of Erie and where the mortgage is recorded on
or after May first, nineteen hundred eighty-seven.
  S 101. Subdivision 1 of section 187-a of the  tax  law,  as  added  by
chapter 142 of the laws of 1997, is amended to read as follows:
  1.    Allowance of credit. A taxpayer shall be allowed a credit, to be
computed as hereinafter provided, against  the  taxes  imposed  by  this
article,  other  than the taxes imposed by sections [one hundred eighty,
one hundred eighty-one,] one hundred eighty-six-a, one  hundred  eighty-
six-e  and one hundred eighty-nine of this article, for employing within
the state a qualified employee. Provided, however, the amount of  credit
allowed  by  this section against the tax imposed by section one hundred
eighty-four of this article shall be the excess of the  credit  computed
under  this  section  over  the amount of credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  S  102.  Subdivision  1  of  section 190 of the tax law, as amended by
section 17 of part B of chapter 58 of the laws of 2004,  is  amended  to
read as follows:
  1.  General.  A  taxpayer  shall  be  allowed a credit against the tax
imposed by this article[, other than  the  taxes  and  fees  imposed  by
sections one hundred eighty and one hundred eighty-one of this article,]
equal  to twenty percent of the premium paid during the taxable year for
long-term care insurance. In order  to  qualify  for  such  credit,  the
taxpayer's premium payment must be for the purchase of or for continuing
coverage under a long-term care insurance policy that qualifies for such
credit  pursuant  to  section  one thousand one hundred seventeen of the
insurance law.
  S 103. Subdivision 5 of section 192 of the tax law is REPEALED.
  S 104. Clauses 1 and 2 of subparagraph (A)  and  subparagraph  (B)  of
paragraph (iii) of subdivision 9 of section 16-v of section 1 of chapter
174  of  the laws of 1968 constituting the urban development corporation
act, as added by section 1 of part C of chapter 59 of the laws of  2013,
is amended to read as follows:
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under the following provisions of the  tax  law:  article
nine-A; section one hundred eighty-three, OR one hundred eighty-four [or
one  hundred eighty-five] of article nine; [article thirty-two] or arti-
cle thirty-three; or
  (2) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable  or  previously  taxable under the

S. 6359                            159                           A. 8559

following provisions of the tax law: article nine-A; section one hundred
eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
y-five or former section one hundred eighty-six of article nine;  FORMER
article thirty-two; article thirty-three; article twenty-three, or would
have  been subject to tax under such article twenty-three (as such arti-
cle was in effect on January first,  nineteen  hundred  eighty)  or  the
income  (or  losses) of which is (or was) includable under article twen-
ty-two; or
  (B) a sole proprietorship, partnership, limited  partnership,  limited
liability  company,  or  New  York  subchapter S corporation that is not
substantially similar in operation and in ownership to a business entity
(or entities) taxable, or previously taxable, under  article  nine-A  of
the  tax law, section one hundred eighty-three, one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  former  section  one  hundred
eighty-six  of article nine of the tax law, FORMER article thirty-two or
ARTICLE thirty-three of the tax law, article twenty-three of the tax law
or which would have been subject to tax under such article  twenty-three
(as  such  article  was  in  effect  on  January first, nineteen hundred
eighty) or the income (or losses) of which is (or was) includable  under
article twenty-two of the tax law; and
  S  105. Section 206 of the tax law, as added by chapter 69 of the laws
of 1978, is amended to read as follows:
  S 206.   Deposit and disposition of  revenue.    The  [license  fees,]
taxes,  percentage,  interest  and other charges imposed by this article
shall be collected and deposited and receipts  therefor  issued  by  the
[tax  commission,  except  that  such  license  fees, taxes, percentage,
interest and other charges imposed by section one hundred eighty of this
chapter shall be collected and deposited and receipts therefor issued by
the proper state officer in accordance with the provisions  of  subdivi-
sion  two  of  section one hundred eighty of this chapter,] COMMISSIONER
and all revenues  so  collected  or  received  shall  be  deposited  and
disposed  of  pursuant to the provisions of section one hundred seventy-
one-a of this chapter.
  S 106. Subsection (a) of section 1080 of the  tax  law,  as  added  by
chapter 188 of the laws of 1964, is amended to read as follows:
  (a)  General.---  The  provisions  of  this article shall apply to the
administration of and the procedures with respect to the  taxes  imposed
by  articles  nine  [(except  section one hundred eighty)], AND nine-a[,
nine-b and nine-c] of this chapter for taxable years or  periods  ending
on or after December thirty-first, nineteen hundred sixty-four.
  S  107.  Subdivisions  (a)  and (c) of section 1809 of the tax law, as
added by section 1 of subpart A of part S of chapter 57 of the  laws  of
2010, are amended to read as follows:
  (a)  Any  person  who, with intent to evade payment of any tax imposed
under article nine [(other than under section one hundred eighty or  one
hundred  eighty-one)],  nine-A,  thirteen, [thirty-two,] thirty-three or
thirty-three-A of this chapter, fails to file a  return  or  report  for
three  consecutive  taxable  years  shall be guilty of a class E felony,
provided that such person had an unpaid tax liability, in excess of  the
threshold  amount  with respect to each of the three consecutive taxable
years. The threshold amount in the case of a taxable year under  article
nine-A  of  this  chapter  ending after June thirtieth, nineteen hundred
eighty-nine is the applicable  fixed  dollar  minimum  prescribed  under
paragraph  (d)  of  subdivision  one  of section two hundred ten of this
chapter. In the event such fixed dollar minimum is less than two hundred
fifty dollars, the threshold amount in the case of such taxable year  is

S. 6359                            160                           A. 8559

two  hundred  fifty  dollars. In all other cases the threshold amount is
two hundred fifty dollars.
  (c)  As  used  in  this section, the terms "return" and "report" shall
mean a return or report required under section one  hundred  ninety-two,
two  hundred  eleven,  two hundred ninety-four, [fourteen hundred sixty-
two,] fifteen hundred fifteen or  fifteen  hundred  fifty-four  of  this
chapter.    It  shall  not  include  any return or report referred to in
section one hundred ninety-seven-a, two  hundred  thirteen-a,  [fourteen
hundred sixty] or fifteen hundred thirteen of this chapter.
  S  108.  Paragraphs (d), (e), (g), (h) and (q) of section 104-A of the
business corporation law, subdivisions (d), (e) and (q)  as  amended  by
chapter 166 of the laws of 1991, subdivision (g) as added by chapter 591
of  the  laws  of 1982, and subdivision (h) as amended by chapter 117 of
the laws of 1986, are amended to read as follows:
  (d) For filing a certificate of incorporation pursuant to section four
hundred two of this chapter, one hundred twenty-five dollars  [plus  the
tax on shares prescribed by section one hundred eighty of the tax law].
  (e)  For  filing  a certificate of amendment pursuant to section eight
hundred five of this chapter, sixty dollars  [plus  the  tax  on  shares
prescribed  by section one hundred eighty of the tax law if such certif-
icate shows a change of shares].
  (g) For filing a restated certificate  of  incorporation  pursuant  to
section eight hundred seven of this chapter, sixty dollars [plus the tax
on  shares  prescribed  by  section one hundred eighty of the tax law if
such certificate shows a change of shares].
  (h) For filing a certificate of merger or  consolidation  pursuant  to
section  nine hundred four of this chapter, or a certificate of exchange
pursuant to section nine hundred thirteen (other than paragraph  (g)  of
section  nine hundred thirteen) of this chapter, sixty dollars [plus the
tax on shares prescribed by section one hundred eighty of the tax law if
such certificate shows a change of shares].
  (q) For filing  a  certificate  of  incorporation  by  a  professional
service  corporation  pursuant  to section fifteen hundred three of this
chapter, one  hundred  twenty-five  dollars  [plus  the  tax  on  shares
prescribed by section one hundred eighty of the tax law].
  S  109.  Subdivision 8 of section 7-a of the general associations law,
as added by chapter 575 of the laws of  1964,  is  amended  to  read  as
follows:
  8. The provisions of section ninety-six of the executive law prescrib-
ing  the  fee  to  be  collected by the department of state for filing a
certificate of incorporation under the business  corporation  law  shall
apply  to  the certificate of incorporation to be filed pursuant to this
section[, and the organization tax payable  under  section  one  hundred
eighty of the tax law in respect of a corporation formed under the busi-
ness  corporation law shall be paid before the department of state shall
file such certificate of incorporation].
  S 110. Severability. If any provision of this act shall for any reason
be finally adjudged by any court of competent jurisdiction to be  inval-
id,  such judgment shall not affect, impair, or invalidate the remainder
of this act, but shall be confined in its  operation  to  the  provision
directly  involved  in the controversy in which such judgment shall have
been rendered. It is hereby declared to be in the intent of the legisla-
ture that this  act  would  have  been  enacted  even  if  such  invalid
provision  had  not  been  included  in this act. Provided further, if a
court of final, competent jurisdiction adjudges the tax rates imposed on
qualified New York manufacturers  to  be  invalid,  qualified  New  York

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manufacturers  shall  be  subject  to  the  same  tax rates as all other
taxpayers subject to tax under article 9-A  of  the  tax  law.  Provided
further,  if  a court of final, competent jurisdiction adjudges that any
of  the  tax  credits provided by this act to be invalid, such credit or
credits shall be deemed repealed and shall be of no force and effect  as
to any taxpayers.
  S  111.  This act shall take effect January 1, 2015 and shall apply to
taxable years commencing on or after such date; provided that the amend-
ments to section 25 of the tax law made by section forty-three  of  this
act  shall  not  affect  the  repeal of such section and shall be deemed
repealed therewith; provided, further, that the amendments to the  open-
ing  paragraph  of  subdivision  (a), subparagraph (C) of paragraph 2 of
subdivision (e) and subdivision (f) of section 35 of the tax law made by
section fifty of this act shall not affect the repeal of such provisions
and shall be deemed repealed  therewith;  provided,  further,  that  the
amendments  to  clause  (xxxii)  of  subparagraph  (B) of paragraph 1 of
subsection (i) of section 606 of the tax law made by section sixty-eight
of this act shall not affect the repeal of  such  clause  and  shall  be
deemed  repealed  therewith;  provided,  further, that the amendments to
clause (xxxiii) of subparagraph (B) of paragraph 1 of subsection (i)  of
section 606 of the tax law made by section sixty-eight of this act shall
not affect the repeal of such clause and shall be deemed repealed there-
with;  and  provided,  further,  that  the  amendments to clause (ii) of
subparagraph (B) of paragraph  2  of  subsection  (q),  paragraph  3  of
subsection  (s)  and  the closing paragraph of paragraph 1 of subsection
(t) of section 1085 of the tax law made by section  eighty-one  of  this
act  shall  not affect the repeal of such provisions and shall be deemed
repealed therewith.

                                 PART B

  Section 1. Subparagraph (iii) of paragraph (a) of  subdivision  14  of
section  425 of the real property tax law, as added by section 1 of part
J of chapter 57 of the laws of 2013, is amended to read as follows:
  (iii) An owner who fails to register by the registration  deadline  so
established  shall be permitted to file a petition with the commissioner
requesting that the commissioner excuse such failure and accept  a  late
registration, provided that such petition shall explain why such failure
occurred  and shall be filed no later than one year after such deadline,
AND PROVIDED FURTHER THAT IF THE COMMISSIONER ACCEPTS A  LATE  REGISTRA-
TION  AFTER HAVING DIRECTED THE REMOVAL OF THE BASIC STAR EXEMPTION FROM
THE PROPERTY TO WHICH THE REGISTRATION PERTAINS, THEN IN LIEU OF DIRECT-
ING THE EXEMPTION TO BE RESTORED, THE COMMISSIONER IS AUTHORIZED IN  HIS
OR  HER DISCRETION TO REMIT DIRECTLY TO THE PROPERTY OWNER OR OWNERS THE
TAX SAVINGS THAT THE EXEMPTION  WOULD  HAVE  YIELDED  HAD  IT  NOT  BEEN
REMOVED,  AND TO FURTHER DIRECT THE ASSESSOR TO RESTORE THE EXEMPTION ON
A PROSPECTIVE BASIS WITHOUT A NEW APPLICATION UNLESS  THE  ASSESSOR  HAS
REASON  TO  BELIEVE  THAT  THE  PROPERTY OWNER IS NO LONGER ELIGIBLE FOR
REASONS OTHER THAN A FAILURE TO REGISTER;
  S 2. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2014.

                                 PART C

  Section  1. Section 2 of chapter 540 of the laws of 1992, amending the
real property tax law relating to oil and gas  charges,  as  amended  by

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section  1  of  part  A of chapter 59 of the laws of 2012, is amended to
read as follows:
  S  2.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 1992; provided,
however that any charges imposed by section 593 of the real property tax
law as added by section one of this act shall first be  due  for  values
for assessment rolls with tentative completion dates after July 1, 1992,
and  provided  further,  that  this  act  shall remain in full force and
effect until March 31, [2015] 2018, at which time  section  593  of  the
real  property  tax  law  as  added  by section one of this act shall be
repealed.
  S 2. This act shall take effect immediately.

                                 PART D

  Section 1. Subdivision 1 of section 236  of  the  racing,  pari-mutuel
wagering and breeding law, as amended by chapter 18 of the laws of 2008,
is amended to read as follows:
  1. Every corporation authorized under this chapter to conduct pari-mu-
tuel  betting at a race meeting on races run thereat, except as provided
in section two hundred thirty-eight of this article with respect to  the
franchised corporation, shall distribute all sums deposited in any pari-
mutuel  pool  to  the holders of winning tickets therein, providing such
tickets be presented for payment before April first of the year  follow-
ing  the  year  of  their purchase, less an amount which shall be estab-
lished and retained by such racing corporation of  between  fourteen  to
twenty  per centum of the total deposits in pools resulting from regular
on-track bets and less sixteen to twenty-two per  centum  of  the  total
deposits  in pools resulting from multiple on-track bets and less twenty
to thirty per centum of the total deposits in pools resulting from exot-
ic on-track bets and less twenty to thirty-six per centum of  the  total
pools  resulting  from  super exotic on-track bets, plus the breaks. The
retention rate to be established is subject to the prior approval of the
[racing and wagering board] COMMISSION.  Such rate may  not  be  changed
more  than once per calendar quarter to be effective on the first day of
the calendar quarter. "Exotic bets" and "multiple bets" shall  have  the
meanings  set forth in section five hundred nineteen of this chapter and
breaks are hereby defined as the odd cents over any multiple of ten,  or
for  exotic  bets  over any multiple of fifty, or for super exotic bets,
over any multiple of one hundred, calculated on the basis of one dollar,
otherwise payable to a patron provided, however,  that  effective  after
October  fifteenth,  nineteen  hundred  ninety-four  breaks  are  hereby
defined as the odd cents over any multiple of five for  payoffs  greater
than one dollar five cents but less than five dollars, over any multiple
of  ten  for payoffs greater than five dollars but less than twenty-five
dollars, over any multiple of twenty-five for payoffs greater than twen-
ty-five dollars but less than two hundred fifty  dollars,  or  over  any
multiple  of  fifty  for  payoffs over two hundred fifty dollars. "Super
exotic bets" shall have the meaning set forth in section  three  hundred
one  of  this  chapter. Of the amount so retained there shall be paid by
such corporation to the department of taxation and finance as a  reason-
able  tax  by  the  state  for  the  privilege of conducting pari-mutuel
betting on the races run at the race meeting held by  such  corporation,
which tax is hereby levied, the following percentages of the total pool,
plus fifty-five per centum of the breaks; the applicable rates for regu-
lar and multiple bets shall be one and one-half per centum; the applica-

S. 6359                            163                           A. 8559

ble  rates for exotic bets shall be six and three-quarter per centum and
the applicable rate for super exotic bets shall be seven and three-quar-
ter per centum. Effective on and after September first, nineteen hundred
ninety-four,  the  applicable  tax  rate  shall be one per centum of all
wagers, provided that,  an  amount  equal  to  one-half  the  difference
between the taxation rate for on-track regular, multiple and exotic bets
as of December thirty-first, nineteen hundred ninety-three and the rates
on such on-track wagers as herein provided shall be used exclusively for
purses. Provided, however, that for any twelve-month period beginning on
April  first in nineteen hundred ninety and any year thereafter, each of
the applicable rates set forth above shall be increased  by  one-quarter
of  one  per  centum on all on-track bets of any such racing corporation
that did not expend an amount equal to at  least  one-half  of  one  per
centum  of  its  on-track bets during the immediately preceding calendar
year for enhancements consisting of capital improvements as  defined  by
section  two  hundred thirty-seven of this article, repairs to its phys-
ical plant, structures, and equipment used in  its  racing  or  wagering
operations as certified by the [state racing and wagering board] COMMIS-
SION  to  the  commissioner of taxation and finance no later than eighty
days after the close of such calendar year, and five special  events  at
each  track  in each calendar year, not otherwise conducted in the ordi-
nary course of business, the purpose of which  shall  be  to  encourage,
attract  and  promote  track  attendance and encourage new and continued
patronage, which events shall be approved by the  [racing  and  wagering
board] COMMISSION for purposes of this subdivision. In the determination
of  the  amounts  expended for such enhancements, the [board] COMMISSION
may consider the immediately preceding twelve month calendar  period  or
the average of the two immediately preceding twelve month calendar peri-
ods.  Provided  further,  however,  that of the portion of the increased
amounts retained by such corporation above  those  amounts  retained  in
nineteen  hundred  eighty-four,  an  amount  of  such  increase shall be
distributed to purses in the same proportion as commissions  and  purses
were distributed during nineteen hundred eighty-four as certified by the
[board]  COMMISSION. Such corporation in the second zone shall receive a
credit against the daily tax imposed by this subdivision  in  an  amount
equal  to  one per centum of total daily pools resulting from the simul-
cast of such corporation's races  to  licensed  facilities  operated  by
regional  off-track  betting corporations in accordance with section one
thousand eight of this chapter, provided however, that sixty per  centum
of the amount of such credit shall be used exclusively to increase purs-
es  for  overnight  races  conducted  by such corporation; and, provided
further, that in no event shall such total daily credit exceed  one  per
centum  of  the total daily pool of such corporation. Provided, however,
that on and after September first,  nineteen  hundred  ninety-four  such
credit  shall be four-tenths percent of total daily pools resulting from
such simulcasting and that in no event shall  such  total  daily  credit
equal four-tenths percent of the total daily pool of such corporation.
  Such corporation shall pay to the New York state thoroughbred breeding
and  development  fund  one-half  of  one  per centum of the total daily
on-track pari-mutuel pools from regular, multiple and exotic  bets,  and
three  per  centum  of  super exotic bets. The corporation shall receive
credit as a reduction of the tax by  the  state  for  the  privilege  of
conducting pari-mutuel betting for the amounts, except amounts paid from
super  exotic  betting  pools,  paid  to the New York state thoroughbred
breeding and development fund  after  January  first,  nineteen  hundred
seventy-eight.

S. 6359                            164                           A. 8559

  Such  corporation  shall distribute to purses an amount equal to fifty
per centum of any compensation it receives  from  simulcasting  or  from
wagering conducted outside the United States. Such corporation shall pay
to the [racing and wagering board] COMMISSION as a regulatory fee, which
fee  is hereby levied, [fifty] SIXTY hundredths of one per centum of the
total daily on-track pari-mutuel pools of such corporation.
  S 2. Paragraph (d) of subdivision 1 of  section  238  of  the  racing,
pari-mutuel  wagering  and breeding law, as amended by chapter 18 of the
laws of 2008, is amended to read as follows:
  (d) The pari-mutuel tax rate  authorized  by  paragraph  (a)  of  this
subdivision shall be effective so long as a franchised corporation noti-
fies  the  [racing and wagering board] COMMISSION by August fifteenth of
each year that such pari-mutuel tax rate is effective of its  intent  to
conduct a race meeting at Aqueduct racetrack during the months of Decem-
ber,  January, February, March and April. For purposes of this paragraph
such race meeting shall consist of not less  than  ninety-five  days  of
racing.  Not later than May first of each year that such pari-mutuel tax
rate  is  effective,  the  [racing  and wagering board] COMMISSION shall
determine whether a race meeting at Aqueduct racetrack consisted of  the
number  of days as required by this paragraph. In determining the number
of race days, cancellation of a race day because of an act of God, which
the [racing and wagering board] COMMISSION approves or because of weath-
er conditions that are unsafe or hazardous which the [racing and  wager-
ing  board]  COMMISSION  approves shall not be construed as a failure to
conduct a race day. Additionally, cancellation of a race day because  of
circumstances  beyond  the  control  of  such franchised corporation for
which the [racing and wagering board] COMMISSION  gives  approval  shall
not  be construed as a failure to conduct a race day. If the [racing and
wagering board] COMMISSION determines that the number of days of  racing
as required by this paragraph have not occurred then the pari-mutuel tax
rate in paragraph (a) of this subdivision shall revert to the pari-mutu-
el  tax rates in effect prior to January first, nineteen hundred ninety-
five. Such franchised corporation shall pay to the [racing and  wagering
board]  COMMISSION  as  a  regulatory  fee,  which fee is hereby levied,
[fifty] SIXTY hundredths of one per centum of the total  daily  on-track
pari-mutuel pools of such franchised corporation.
  S  3. Paragraph d of subdivision 1 of section 318 of the racing, pari-
mutuel wagering and breeding law, as amended by section 3 of part  B  of
chapter 59 of the laws of 2005, is amended to read as follows:
  d.  Every  harness  racing association or corporation shall pay to the
[board] COMMISSION as a regulatory fee,  which  fee  is  hereby  levied,
[fifty]  SIXTY  hundredths  of  one  percent of the total daily on-track
pari-mutuel pools of such association or corporation.
  S 4. The opening paragraph of subdivision 1  of  section  527  of  the
racing,  pari-mutuel wagering and breeding law, as amended by chapter 18
of the laws of 2008, is amended to read as follows:
  The disposition of the retained commission from pools  resulting  from
regular,  multiple or exotic bets, as the case may be, whether placed on
races run within a region or  outside  a  region,  conducted  by  racing
corporations, harness racing associations or corporations, quarter horse
racing associations or corporations or races run outside the state shall
be governed by the tables in paragraphs a and b of this subdivision. The
rate  denominated  "state  tax" shall represent the rate of a reasonable
tax imposed upon the retained commission for the privilege of conducting
off-track pari-mutuel betting, which tax is hereby levied and  shall  be
payable  in the manner set forth in this section. Each off-track betting

S. 6359                            165                           A. 8559

corporation shall pay to the [racing and wagering board] COMMISSION as a
regulatory fee, which fee is hereby levied, [fifty] SIXTY hundredths  of
one  percent  of  the total daily pools of such corporation. Each corpo-
ration  shall also pay twenty per centum of the breaks derived from bets
on harness races and fifty per centum of the breaks derived from bets on
all other races to the agriculture and New York State horse breeding and
development fund and to the thoroughbred breeding and development  fund,
the  total  of  such payments to be apportioned fifty per centum to each
such fund. For the purposes of this section, the New York city, Suffolk,
Nassau, and the Catskill regions shall constitute a  single  region  and
any  thoroughbred track located within the Capital District region shall
be deemed to be within such single region. A  "regional  meeting"  shall
refer to either harness or thoroughbred meetings, or both, except that a
franchised  corporation shall not be a regional track for the purpose of
receiving distributions from bets on thoroughbred races conducted  by  a
thoroughbred  track  in  the Catskill region conducting a mixed meeting.
With the exception of a harness racing association or corporation  first
licensed  to  conduct  pari-mutuel  wagering at a track located in Tioga
county after January first, two thousand five, racing corporations first
licensed to conduct pari-mutuel racing  after  January  first,  nineteen
hundred  eighty-six or a harness racing association or corporation first
licensed to conduct pari-mutuel wagering at a track located  in  Genesee
County  after January first, two thousand five, and quarter horse tracks
shall not be "regional tracks"; if there is more than one harness  track
within  a region, such tracks shall evenly divide payments made pursuant
to the tables in paragraphs a and b of  this  subdivision  when  neither
track  is  running.  In  the event a track elects to reduce its retained
percentage from any or all of its pari-mutuel pools, the payments to the
track holding the race and the regional track required by  paragraphs  a
and  b  of  this  subdivision  shall  be  reduced  in proportion to such
reduction. Nothing in this section shall be construed to  authorize  the
conduct  of off-track betting contrary to the provisions of section five
hundred twenty-three of this article.
  S 5. Paragraph a of subdivision 1 of section 904 of the racing,  pari-
mutuel  wagering  and breeding law, as amended by chapter 18 of the laws
of 2008, is amended to read as follows:
  a. The applicable state tax provided for in  paragraphs  a  and  b  of
subdivision  one  of  section  five hundred twenty-seven of this chapter
shall be one-half per centum for regular, multiple and exotic bets.  Any
harness  racing  or  association  or corporation, or thoroughbred racing
corporation authorized pursuant to this section shall pay to the [racing
and wagering board] COMMISSION as a regulatory fee, which fee is  hereby
levied, [fifty] SIXTY hundredths of one percent of the total daily pari-
mutuel pools.
  S 6. Paragraph g of subdivision 3 of section 1007 of the racing, pari-
mutuel  wagering  and breeding law, as amended by chapter 18 of the laws
of 2008, is amended to read as follows:
  g. Any harness racing or association or corporation,  or  thoroughbred
racing  corporation authorized pursuant to this section shall pay to the
[racing and wagering board] COMMISSION as a regulatory fee, which fee is
hereby levied, [fifty] SIXTY hundredths of  one  percent  of  the  total
daily pari-mutuel pools.
  S 7. Paragraph b of subdivision 3 of section 1008 of the racing, pari-
mutuel  wagering and breeding law, as  amended by section 7 of part B of
chapter 59 of the laws of 2005, is amended to read as follows:

S. 6359                            166                           A. 8559

  b. Of the sums received by the sending track, fifty percent  shall  be
distributed  to  purses  in  addition  to moneys distributed pursuant to
section five hundred twenty-seven of this chapter. The off-track betting
corporation shall pay to the [racing and wagering board] COMMISSION as a
regulatory  fee, which fee is hereby levied, [fifty] SIXTY hundredths of
one percent of the total daily pools.
  S 8. Paragraph d of subdivision 4 of section 1009 of the racing, pari-
mutuel wagering and breeding law, as amended by section 8 of part  B  of
chapter 59 of the laws of 2005, is amended to read as follows:
  d.  The  operator shall pay to the [racing and wagering board] COMMIS-
SION as a regulatory fee, which fee  is  hereby  levied,  [fifty]  SIXTY
hundredths of one percent of the total daily pools.
  S 9. Subparagraph (iv) of paragraph i of subdivision 1 of section 1014
of  the  racing,  pari-mutuel  wagering  and breeding law, as amended by
chapter 18 of the laws of 2008, is amended to read as follows:
  (iv) Any thoroughbred racing corporation or harness racing association
or corporation or off-track betting corporation authorized  pursuant  to
this  section shall pay to the [racing and wagering board] COMMISSION as
a regulatory fee, which fee is hereby levied, [fifty]  SIXTY  hundredths
of one percent of all wagering pools.
  S  10.  Paragraph  e  of  subdivision 3 of section 1015 of the racing,
pari-mutuel wagering and breeding law, as amended by chapter 18  of  the
laws of 2008, is amended to read as follows:
  e.  Any  thoroughbred racing corporation or harness racing association
or corporation or off-track betting corporation authorized  pursuant  to
this  section shall pay to the [racing and wagering board] COMMISSION as
a regulatory fee, which fee is hereby levied, [fifty]  SIXTY  hundredths
of one percent of all wagering pools.
  S  11. Clause (B) of subparagraph 2 of paragraph b of subdivision 1 of
section 1016 of the racing, pari-mutuel wagering and  breeding  law,  as
amended  by  chapter  18  of  the  laws  of  2008, is amended to read as
follows:
  (B) Any harness racing or association or corporation  or  thoroughbred
racing  corporation authorized pursuant to this section shall pay to the
[racing and wagering board] COMMISSION as a regulatory fee, which fee is
hereby levied, [fifty] SIXTY hundredths of  one  percent  of  the  total
daily pari-mutuel pools.
  S  12.  Paragraph  b  of  subdivision 2 of section 1018 of the racing,
pari-mutuel wagering and breeding law, as amended by chapter 18  of  the
laws of 2008, is amended to read as follows:
  b.  Any  thoroughbred racing corporation or harness racing association
or corporation or off-track betting corporation shall pay to the [racing
and wagering board] COMMISSION as a regulatory fee, which fee is  hereby
levied, [fifty] SIXTY hundredths of one percent of all wagering pools.
  S 13. This act shall take effect immediately.

                                 PART E

  Section 1. Subsection (a) of section 653 of the tax law, as amended by
chapter 65 of the laws of 1985, is amended to read as follows:
  (a)  General.  (1) Any return, statement or other document required to
be made pursuant to this article shall  be  signed  in  accordance  with
regulations  or  instructions prescribed by the [tax commission] COMMIS-
SIONER.   The fact that an individual's name  is  signed  to  a  return,
statement,  or  other  document,  shall  be prima facie evidence for all

S. 6359                            167                           A. 8559

purposes that the return,  statement  or  other  document  was  actually
signed by him OR HER.
  (2)  IN  THE  CASE  OF  AN  ELECTRONICALLY FILED INDIVIDUAL'S PERSONAL
INCOME TAX RETURN PREPARED BY A TAX PREPARER, AN AUTHORIZATION  TO  FILE
ANY  RETURN, STATEMENT OR OTHER DOCUMENT REQUIRED TO BE MADE PURSUANT TO
THIS ARTICLE SIGNED BY THE TAXPAYER IN ACCORDANCE WITH  THE  REGULATIONS
OR  INSTRUCTIONS  PRESCRIBED  BY THE COMMISSIONER AND RECEIVED ELECTRON-
ICALLY BY THE TAX PREPARER  SHALL  SATISFY  THE  SIGNATURE  REQUIREMENTS
UNDER THIS ARTICLE.
  S 2. This act shall take effect immediately and shall apply to returns
filed for taxable years beginning on or after January 1, 2014.

                                 PART F

  Section 1. Clause (C) of subparagraph (i) of paragraph (b) of subdivi-
sion  4  of  section  425  of  the  real property tax law, as amended by
section 3 of part E of chapter 83 of the laws of  2002,  is  amended  to
read as follows:
  (C)  For final assessment rolls to be completed in [each ensuing year]
THE YEARS TWO THOUSAND FOUR THROUGH TWO THOUSAND FOURTEEN, the  applica-
ble income tax year, cost-of-living-adjustment percentage and applicable
increase  percentage  shall  all be advanced by one year, and the income
standard shall be the previously-applicable income standard increased by
the new cost-of-living-adjustment percentage. If there should be a  year
for  which  there  is no applicable increase percentage due to a general
benefit increase as defined by subdivision three of  subsection  (i)  of
section  four  hundred  fifteen  of title forty-two of the United States
code, the applicable increase percentage for purposes of  this  computa-
tion  shall be deemed to be the percentage which would have yielded that
general benefit increase. FOR FINAL ASSESSMENT ROLLS TO BE COMPLETED  IN
TWO  THOUSAND  FIFTEEN  AND  THEREAFTER,  THE APPLICABLE INCOME TAX YEAR
SHALL BE  ADVANCED  BY  ONE  YEAR,  AND  ELIGIBILITY  FOR  THE  ENHANCED
EXEMPTION  SHALL  BE  BASED  UPON  THE INCOME STANDARD APPLIED FOR FINAL
ASSESSMENT ROLLS COMPLETED IN TWO THOUSAND FOURTEEN.
  S 2. This act shall take effect immediately and shall apply to assess-
ment rolls completed in 2015 and thereafter.

                                 PART G

  Section 1. Section 2 of part I of chapter 58  of  the  laws  of  2006,
relating  to  providing an enhanced earned income tax credit, as amended
by section 1 of part L of chapter 59 of the laws of 2012, is amended  to
read as follows:
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2006 and before January 1, [2015]
2017.
  S 2. This act shall take effect immediately.

                                 PART H

  Section  1.  The  general  obligations  law is amended by adding a new
section 3-505 to read as follows:
  S 3-505. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH  ELECTRONIC
TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES.
  1. AS USED IN THIS SECTION:

S. 6359                            168                           A. 8559

  A.  "GOVERNMENT  ENTITY"  MEANS  THE  STATE OF NEW YORK, OR ANY OF ITS
AGENCIES, POLITICAL SUBDIVISIONS, INSTRUMENTALITIES, PUBLIC CORPORATIONS
(INCLUDING A PUBLIC CORPORATION CREATED PURSUANT TO AGREEMENT OR COMPACT
WITH ANOTHER STATE OR CANADA), OR COMBINATION THEREOF,  RESPONSIBLE  FOR
DETERMINING WHETHER A LICENSE SHALL BE ISSUED OR RENEWED.
  B.  "ELECTRONIC  LICENSE  APPLICATION"  MEANS ANY ELECTRONIC DATA FORM
THAT MUST BE COMPLETED BY AN APPLICANT TO OBTAIN OR RENEW A LICENSE,  OR
AN ELECTRONIC DATA PROCESS WHICH IS USED BY A GOVERNMENT ENTITY TO PROC-
ESS  DATA  RECEIVED  FROM  AN  APPLICANT  SEEKING  TO RECEIVE OR RENEW A
LICENSE.
  C. "ELECTRONIC TAX CLEARANCE" MEANS AN ELECTRONIC  COMMUNICATION  FROM
THE  DEPARTMENT OF TAXATION AND FINANCE INDICATING THAT AN APPLICANT HAD
NO PAST-DUE TAX LIABILITIES, AS THAT TERM  IS  DEFINED  IN  SECTION  ONE
HUNDRED  SEVENTY-ONE-W OF THE TAX LAW, OR THAT NO CONCLUSIVE MATCH COULD
BE MADE.
  D. "LICENSE" MEANS  ANY  CERTIFICATE,  LICENSE,  PERMIT  OR  GRANT  OF
PERMISSION  REQUIRED  BY LAW OR AGENCY REGULATION AS A CONDITION FOR THE
LAWFUL PRACTICE OF ANY OCCUPATION, EMPLOYMENT,  TRADE,  VOCATION,  BUSI-
NESS, OR PROFESSION, INCLUDING ANY REGISTRATION REQUIRED BY LAW OR AGEN-
CY  REGULATION  AS  A  CONDITION  FOR  SUCH  LAWFUL PRACTICE. THIS SHALL
INCLUDE, BUT IS NOT LIMITED TO, ANY LICENSE GRANTED TO AN INDIVIDUAL  OR
ENTITY  BY  THE  STATE EDUCATION DEPARTMENT, THE DEPARTMENT OF STATE, OR
THE OFFICE OF COURT ADMINISTRATION.  PROVIDED, HOWEVER,  THAT  "LICENSE"
SHALL  NOT,  FOR  THE  PURPOSES  OF THIS SECTION, INCLUDE ANY LICENSE OR
PERMIT TO OWN, POSSESS, CARRY, OR FIRE ANY EXPLOSIVE,  PISTOL,  HANDGUN,
RIFLE, SHOTGUN, OTHER FIREARM OR AMMUNITION.
  2.  NOTWITHSTANDING  ANY  OTHER PROVISION OF LAW, AND WHEN NOT ALREADY
REQUIRED BY ANOTHER PROVISION OF LAW OR REGULATION, ANY GOVERNMENT ENTI-
TY MAY ELECT TO CONDITION THE ISSUANCE OR RENEWAL OF A  LICENSE  ON  THE
ABSENCE  OF  PAST-DUE  TAX  LIABILITIES  AND  TO MAKE SUCH DETERMINATION
THROUGH THE RECEIPT OF AN ELECTRONIC TAX CLEARANCE FROM  THE  DEPARTMENT
OF  TAXATION AND FINANCE AS PROVIDED FOR IN SECTION ONE HUNDRED SEVENTY-
ONE-W OF THE TAX LAW.
  3. ANY APPLICANT FOR A LICENSE SUBJECT  TO  ELECTRONIC  TAX  CLEARANCE
SHALL  BE  REQUIRED  TO  PROVIDE ANY INFORMATION DEEMED NECESSARY BY THE
GOVERNMENT ENTITY AND THE DEPARTMENT OF TAXATION AND  FINANCE  TO  EFFI-
CIENTLY  AND  ACCURATELY  PROVIDE  AN  ELECTRONIC TAX CLEARANCE, AND THE
FAILURE BY THE APPLICANT TO PROVIDE SUCH INFORMATION  SHALL  RENDER  THE
APPLICATION INCOMPLETE.
  4.  THE APPLICATION FOR A LICENSE SUBJECT TO ELECTRONIC TAX CLEARANCE,
OR THE INSTRUCTIONS FOR  SUCH  APPLICATION,  SHALL  CLEARLY  INFORM  THE
APPLICANT  THAT  AN ELECTRONIC TAX CLEARANCE WILL BE PERFORMED AND THAT,
IF THE TAX CLEARANCE IS DENIED, THE APPLICANT MUST CONTACT  THE  DEPART-
MENT  OF  TAXATION  AND  FINANCE TO RESOLVE ANY PAST-DUE TAX LIABILITIES
BEFORE THE APPLICATION FOR A LICENSE OR RENEWAL MAY BE RESUBMITTED.
  5. IF AN ELECTRONIC TAX CLEARANCE IS DENIED BY THE DEPARTMENT OF TAXA-
TION AND FINANCE, THE GOVERNMENT ENTITY SHALL DENY ISSUANCE  OR  RENEWAL
OF  THE  REQUESTED LICENSE AND SHALL ELECTRONICALLY NOTIFY THE APPLICANT
TO CONTACT THE  DEPARTMENT  OF  TAXATION  AND  FINANCE  TO  RESOLVE  THE
PAST-DUE  TAX  LIABILITIES  AND THAT NO LICENSE MAY BE ISSUED OR RENEWED
UNTIL THE TAX LIABILITIES ARE RESOLVED.
  6. ANY TAX CLEARANCE OR RELATED  COMMUNICATIONS  SHALL  BE  BY  SECURE
ELECTRONIC  COMMUNICATION BETWEEN THE DEPARTMENT OF TAXATION AND FINANCE
AND THE REQUESTING GOVERNMENT ENTITY SUCH THAT PROCESSING OF  THE  ELEC-
TRONIC  APPLICATION  IS  NOT  DELAYED IF THE ELECTRONIC TAX CLEARANCE IS
RECEIVED.  NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY,  A  GOVERNMENT

S. 6359                            169                           A. 8559

ENTITY  SHALL  BE  AUTHORIZED TO SHARE ANY APPLICANT DATA OR INFORMATION
WITH THE DEPARTMENT OF TAXATION AND FINANCE THAT IS NECESSARY TO  ENSURE
THE  PROPER  MATCHING  OF THE APPLICANT TO THE TAX RECORDS MAINTAINED BY
THE DEPARTMENT OF TAXATION AND FINANCE.
  7.  NO  FEE  SHALL  BE  CHARGED  TO  THE APPLICANT FOR THE PURPOSES OF
RECEIVING AN ELECTRONIC TAX CLEARANCE.
  S 2. The tax law is amended by adding a new section 171-w to  read  as
follows:
  S  171-W. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH ELECTRONIC
TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES.  1.
IN ACCORDANCE WITH SECTION 3-505 OF THE  GENERAL  OBLIGATIONS  LAW,  THE
COMMISSIONER  SHALL  COOPERATE WITH ANY GOVERNMENT ENTITY THAT ELECTS TO
REQUIRE AN ELECTRONIC TAX CLEARANCE AS A PART OF AN  ELECTRONIC  LICENSE
APPLICATION  PROCESS FOR WHICH THE GOVERNMENT ENTITY IS RESPONSIBLE. FOR
THE PURPOSES OF THIS SECTION, THE TERM "TAX LIABILITIES" SHALL MEAN  ANY
TAX,  SURCHARGE, OR FEE ADMINISTERED BY THE COMMISSIONER, OR ANY PENALTY
OR INTEREST OWED BY AN INDIVIDUAL OR  ENTITY.  THE  TERM  "PAST-DUE  TAX
LIABILITIES"  MEANS  ANY UNPAID TAX LIABILITIES EQUAL TO OR IN EXCESS OF
FIVE HUNDRED DOLLARS WHICH HAVE BECOME FIXED AND  FINAL  SUCH  THAT  THE
TAXPAYER  NO  LONGER HAS ANY RIGHT TO ADMINISTRATIVE OR JUDICIAL REVIEW.
FOR THE PURPOSES OF THIS SECTION, THE TERMS "GOVERNMENT ENTITY,"  "ELEC-
TRONIC  LICENSE  APPLICATION," AND "LICENSE" SHALL HAVE THE SAME MEANING
AS PROVIDED IN SECTION 3-505 OF THE GENERAL OBLIGATIONS LAW.
  2. THE COMMISSIONER, OR HIS OR HER DESIGNEE, SHALL COOPERATE WITH  ANY
GOVERNMENT  ENTITY EXERCISING ITS AUTHORITY PURSUANT TO SECTION 3-505 OF
THE GENERAL OBLIGATIONS LAW TO ESTABLISH PROCEDURES BY WHICH THE DEPART-
MENT SHALL ELECTRONICALLY RECEIVE A TAX CLEARANCE REQUEST  AS  AN  ELEC-
TRONIC  LICENSE  APPLICATION  IS  PROCESSED, AND ELECTRONICALLY TRANSMIT
SUCH TAX CLEARANCE TO THE  GOVERNMENT  ENTITY.  THESE  PROCEDURES  SHALL
INCLUDE  THE  IDENTIFICATION  OF OWNERS, OFFICERS OR RESPONSIBLE PERSONS
SUBJECT TO ELECTRONIC TAX CLEARANCE IN CONJUNCTION WITH  AN  APPLICATION
BY AN ENTITY, AND ANY OTHER PROCEDURES DEEMED NECESSARY TO CARRY OUT THE
PROVISIONS OF THIS SECTION.
  3.  IN ANY INSTANCE WHERE A LICENSE OR LICENSE RENEWAL PROVIDED BY THE
GOVERNMENT ENTITY IS OF A TYPE THAT MAY BE ISSUED ONLY TO AN  INDIVIDUAL
OR  ENTITY THAT IS A PERSON REQUIRED TO REGISTER PURSUANT TO SECTION ONE
THOUSAND ONE HUNDRED THIRTY-FOUR OF THIS CHAPTER, THE  DEPARTMENT  SHALL
ALSO  VERIFY  THAT THE APPLICANT IS REGISTERED PURSUANT TO SUCH SECTION,
AND NO ELECTRONIC TAX CLEARANCE MAY BE ISSUED UNLESS  THE  APPLICANT  IS
REGISTERED PURSUANT TO SUCH SECTION.
  4.  IF A TAX CLEARANCE IS DENIED, THE GOVERNMENT ENTITY PROCESSING THE
APPLICATION SHALL PROVIDE NOTICE TO THE APPLICANT TO CONTACT THE DEPART-
MENT.  WHEN THE APPLICANT CONTACTS THE DEPARTMENT, THE DEPARTMENT  SHALL
INFORM THE APPLICANT (A) WHAT PAST-DUE TAX LIABILITIES ARE AT ISSUE; (B)
THAT AN ELECTRONIC TAX CLEARANCE MAY BE RECEIVED BY FULLY SATISFYING THE
PAST-DUE  TAX LIABILITIES OR BY MAKING PAYMENT ARRANGEMENTS SATISFACTORY
TO THE COMMISSIONER OR, IF THE APPLICANT NEEDS TO REGISTER FOR SALES TAX
PURPOSES, BY REGISTERING PURSUANT TO SECTION ONE  THOUSAND  ONE  HUNDRED
THIRTY-FOUR  OF  THIS  CHAPTER;  AND (C) THE GROUNDS FOR CHALLENGING THE
DENIAL OF AN ELECTRONIC TAX CLEARANCE LISTED IN SUBDIVISION FIVE OF THIS
SECTION. THE GOVERNMENT ENTITY SHALL ALSO INFORM THE APPLICANT  THAT  AN
APPLICATION  MAY  BE  RESUBMITTED  AFTER  PAYMENT  FOR  THE PAST-DUE TAX
LIABILITIES HAS CLEARED, OR, IF A PAYMENT PLAN IS AGREED TO,  AFTER  THE
FIRST PAYMENT PURSUANT TO SUCH PLAN HAS CLEARED.
  5.  (A)  NOTWITHSTANDING  ANY  OTHER  PROVISION  OF LAW, AND EXCEPT AS
SPECIFICALLY PROVIDED HEREIN, AN  APPLICANT  DENIED  AN  ELECTRONIC  TAX

S. 6359                            170                           A. 8559

CLEARANCE  SHALL  HAVE NO RIGHT TO COMMENCE A COURT ACTION OR PROCEEDING
OR SEEK ANY OTHER LEGAL RECOURSE AGAINST THE DEPARTMENT OR  THE  GOVERN-
MENT  ENTITY RELATED TO THE DENIAL OF AN ELECTRONIC TAX CLEARANCE BY THE
DEPARTMENT.  AN APPLICANT MAY CHALLENGE SUCH DENIAL OF AN ELECTRONIC TAX
CLEARANCE ONLY ON THE GROUNDS THAT:
  (I) THE INDIVIDUAL OR ENTITY DENIED THE ELECTRONIC  TAX  CLEARANCE  IS
NOT THE INDIVIDUAL OR ENTITY WITH THE PAST-DUE TAX LIABILITIES AT ISSUE;
(II)  THE PAST-DUE TAX LIABILITIES WERE SATISFIED; (III) THE APPLICANT'S
WAGES ARE BEING GARNISHED FOR THE PAYMENT OF CHILD SUPPORT  OR  COMBINED
CHILD  AND SPOUSAL SUPPORT PURSUANT TO AN INCOME EXECUTION ISSUED PURSU-
ANT TO SECTION FIVE THOUSAND TWO HUNDRED FORTY-ONE OR FIVE THOUSAND  TWO
HUNDRED FORTY-TWO OF THE CIVIL PRACTICE LAW AND RULES OR ANOTHER STATE'S
INCOME WITHHOLDING ORDER AS AUTHORIZED UNDER PART FIVE OF ARTICLE FIVE-B
OF  THE FAMILY COURT ACT, OR GARNISHED BY THE DEPARTMENT FOR THE PAYMENT
OF THE PAST-DUE TAX LIABILITIES AT ISSUE; (IV) THE APPLICANT  IS  MAKING
CHILD  SUPPORT  PAYMENTS  OR COMBINED CHILD AND SPOUSAL SUPPORT PAYMENTS
PURSUANT TO A SATISFACTORY PAYMENT ARRANGEMENT UNDER SECTION ONE HUNDRED
ELEVEN-B OF THE SOCIAL SERVICES LAW WITH A SUPPORT  COLLECTION  UNIT  OR
OTHERWISE  MAKING  PERIODIC  PAYMENTS  IN  ACCORDANCE  WITH SECTION FOUR
HUNDRED FORTY OF THE FAMILY COURT ACT; OR (V) IF THE ONLY BASIS FOR  THE
DENIAL  OF  AN  ELECTRONIC  TAX CLEARANCE WAS THE APPLICANT'S FAILURE TO
REGISTER PURSUANT TO SECTION ONE THOUSAND  ONE  HUNDRED  THIRTY-FOUR  OF
THIS  CHAPTER,  THAT  THE  APPLICANT WAS PROPERLY REGISTERED PURSUANT TO
SUCH SECTION ONE THOUSAND ONE HUNDRED THIRTY-FOUR.
  (B) AN APPLICANT SEEKING TO CHALLENGE THE DENIAL OF AN ELECTRONIC  TAX
CLEARANCE  MUST PROTEST TO THE DEPARTMENT OR THE DIVISION OF TAX APPEALS
NO LATER THAN SIXTY DAYS FROM THE DATE OF THE ELECTRONIC NOTIFICATION TO
THE APPLICANT, PURSUANT TO SUBDIVISION FOUR  OF  SECTION  3-505  OF  THE
GENERAL OBLIGATIONS LAW, THAT THE ELECTRONIC TAX CLEARANCE WAS DENIED.
  (C)  NOTHING  IN  THIS  SUBDIVISION IS INTENDED TO LIMIT ANY APPLICANT
FROM SEEKING RELIEF FROM JOINT AND SEVERAL LIABILITY PURSUANT TO SECTION
SIX HUNDRED FIFTY-FOUR OF THIS CHAPTER, TO THE EXTENT THAT HE OR SHE  IS
ELIGIBLE  PURSUANT  TO  THAT  SECTION, OR ESTABLISHING TO THE DEPARTMENT
THAT THE ENFORCEMENT OF THE UNDERLYING TAX LIABILITIES HAS  BEEN  STAYED
BY  THE  FILING  OF  A  PETITION PURSUANT TO THE BANKRUPTCY CODE OF 1978
(TITLE ELEVEN OF THE UNITED STATES CODE).
  6. NOTWITHSTANDING ANY OTHER PROVISION  OF  LAW,  THE  DEPARTMENT  MAY
EXCHANGE  WITH  A  GOVERNMENT  ENTITY  ANY DATA OR INFORMATION NECESSARY
THAT, IN THE DISCRETION OF THE COMMISSIONER, IS NECESSARY FOR THE IMPLE-
MENTATION OF ANY ELECTRONIC TAX CLEARANCE. HOWEVER, NO OTHER AGENCY  MAY
RE-DISCLOSE  THIS  INFORMATION TO ANY OTHER ENTITY OR PERSON, OTHER THAN
FOR THE PURPOSE OF INFORMING THE APPLICANT THAT THE  APPLICATION  FOR  A
LICENSE  OR THE RENEWAL OF SUCH LICENSE WILL NOT BE PROCESSED DUE TO THE
LACK OF A REQUIRED TAX CLEARANCE AUTHORIZED  BY  ANY  PROVISION  OF  LAW
UNLESS OTHERWISE PERMITTED BY LAW.
  7.  EXCEPT  AS  OTHERWISE  PROVIDED IN THIS SECTION, THE ACTIVITIES TO
COLLECT PAST-DUE TAX LIABILITIES UNDERTAKEN BY THE  DEPARTMENT  PURSUANT
TO  THIS  SECTION  SHALL  NOT  IN  ANY WAY LIMIT, RESTRICT OR IMPAIR THE
DEPARTMENT FROM EXERCISING ANY OTHER AUTHORITY TO COLLECT OR ENFORCE TAX
LIABILITIES UNDER ANY OTHER APPLICABLE PROVISION OF LAW.
  8. EXCEPT AS OTHERWISE PROVIDED IN THIS  SECTION,  THE  PROVISIONS  OF
THIS SECTION ARE NOT APPLICABLE TO THE TAX CLEARANCE REQUIRED BY SECTION
ONE HUNDRED SEVENTY-ONE-V OF THIS CHAPTER.
  S  3. This act shall take effect June 1, 2014; provided, however, that
the department of taxation and finance and any government entity  elect-
ing  to receive an electronic tax clearance from the department of taxa-

S. 6359                            171                           A. 8559

tion and finance may work to execute the necessary procedures and  tech-
nical  changes  to  support  the  electronic  tax  clearance  process as
described in sections  one  and  two  of  this  act  before  that  date;
provided, further, that this effective date will not impact the adminis-
tration  of  any  electronic tax clearance program authorized by another
provision of law.

                                 PART I

  Section 1. Subsection (b) of section 612 of the tax law is amended  by
adding a new paragraph 40 to read as follows:
  (40)  IN  THE  CASE OF A BENEFICIARY OF A NONRESIDENT TRUST OR A TRUST
NOT SUBJECT TO TAX PURSUANT TO SUBPARAGRAPH (D) OF  PARAGRAPH  THREE  OF
SUBSECTION  (B)  OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE (EXCEPT FOR
AN INCOMPLETE GIFT NON-GRANTOR TRUST, AS DEFINED BY PARAGRAPH  FORTY-ONE
OF  THIS  SUBSECTION),  THE  AMOUNT  OF ANY ACCUMULATION DISTRIBUTION AS
DESCRIBED IN SUBSECTION (B) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF  THE
INTERNAL  REVENUE  CODE  FOR  THE TAX YEAR, SUCH AMOUNT TO BE DETERMINED
WITHOUT REGARD TO THE  PENULTIMATE  SENTENCE  OF  SUCH  SUBSECTION  THAT
REFERENCES  SECTION  SIX  HUNDRED  SIXTY-SEVEN OF SUCH CODE, AND WITHOUT
REGARD TO SUBSECTION (C) OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTER-
NAL REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED  IN  FEDERAL  GROSS
INCOME FOR THE TAX YEAR.
  S 2. Subsection (b) of section 612 of the tax law is amended by adding
a new paragraph 41 to read as follows:
  (41)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
DEDUCTIONS  OF  THE  TRUST,  TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
TY-FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
THEREUNDER.
  S 3. Section 621 of the tax law, as added by chapter 272 of  the  laws
of  1963  and  subsection  (a)  as amended by chapter 267 of the laws of
1987, is amended to read as follows:
  S 621. [Credit] CREDITS to trust  beneficiary  receiving  accumulation
distribution.   (a) General. A resident beneficiary of a trust whose New
York adjusted gross income includes  all  or  part  of  an  accumulation
distribution by such trust, as defined in section six hundred sixty-five
of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
MAKE  THE  MODIFICATION REQUIRED BY PARAGRAPH FORTY OF SUBSECTION (B) OF
SECTION SIX HUNDRED TWELVE OF THIS PART, shall be allowed (1)  a  credit
against  the  tax  otherwise due under this article for all or a propor-
tionate part of any tax paid by the trust under this  article  or  under
FORMER article sixteen of this chapter (as such article was in effect on
or before December thirtieth, nineteen hundred sixty), for any preceding
taxable  year which would not have been payable if the trust had in fact
made distributions to its beneficiaries at the times and in the  amounts
specified in section six hundred sixty-six of the internal revenue code;
AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE FOR THE TAXA-

S. 6359                            172                           A. 8559

BLE YEAR FOR ANY INCOME TAX IMPOSED ON THE TRUST FOR THE TAXABLE YEAR OR
ANY  PRIOR  TAXABLE  YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLI-
TICAL SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, UPON INCOME BOTH
DERIVED  THEREFROM  AND SUBJECT TO TAX UNDER THIS ARTICLE, PROVIDED THAT
THE AMOUNT OF THE CREDIT SHALL NOT EXCEED  THE  PERCENTAGE  OF  THE  TAX
OTHERWISE  DUE  UNDER THIS ARTICLE DETERMINED BY DIVIDING THE PORTION OF
THE INCOME THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER  JURISDICTION
AND TAXABLE TO THE BENEFICIARY UNDER THIS ARTICLE BY THE TOTAL AMOUNT OF
THE BENEFICIARY'S NEW YORK INCOME.
  (b)  Limitation.  The  [credit]  CREDITS  under this section shall not
reduce the tax otherwise due from the beneficiary under this article  to
an amount less than would have been due if the accumulation distribution
or  his  part  thereof  were  excluded  from his New York adjusted gross
income.
  S 4. Section 658 of the tax law is amended by adding a new  subsection
(f) to read as follows:
   (F)  (1) EVERY NONRESIDENT TRUST OR A TRUST DESCRIBED BY SUBPARAGRAPH
(D) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE  OF
THIS  ARTICLE SHALL MAKE A RETURN FOR ANY TAXABLE YEAR IN WHICH IT MAKES
AN ACCUMULATION DISTRIBUTION WITHIN THE MEANING OF  SUBDIVISION  (B)  OF
SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE TO A BENEFI-
CIARY  WHO  IS  A  RESIDENT,  WHICH RETURN SHALL INCLUDE (I) INFORMATION
IDENTIFYING SUCH RESIDENT, (II) THE AMOUNT OF SUCH ACCUMULATION DISTRIB-
UTION, AND (III) SUCH OTHER INFORMATION AS THE COMMISSIONER MAY REQUIRE.
  (2) EVERY RESIDENT TRUST THAT DOES NOT FILE  THE  RETURN  REQUIRED  BY
SECTION  SIX HUNDRED FIFTY-ONE OF THIS PART ON THE GROUND THAT IT IS NOT
SUBJECT TO TAX PURSUANT  TO  SUBPARAGRAPH  (D)  OF  PARAGRAPH  THREE  OF
SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE FOR THE TAXA-
BLE  YEAR  SHALL  MAKE A RETURN FOR SUCH TAXABLE YEAR SUBSTANTIATING ITS
ENTITLEMENT TO THAT EXEMPTION AND PROVIDING SUCH  OTHER  INFORMATION  AS
THE COMMISSIONER MAY REQUIRE.
  (3)  THE  RETURNS  REQUIRED  BY  THIS  SUBSECTION SHALL BE FILED ON OR
BEFORE THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF EACH
TAXABLE YEAR. FOR PURPOSES OF THIS PARAGRAPH,  "TAXABLE  YEAR"  MEANS  A
YEAR  OR  A PERIOD WHICH WOULD BE A TAXABLE YEAR OF THE TRUST IF IT WERE
SUBJECT TO TAX UNDER THIS ARTICLE.
  S 5. Paragraph 2 of subsection (h) of section 685 of the tax  law,  as
amended  by  chapter  190  of  the  laws  of 1990, is amended to read as
follows:
  (2) If any partnership [or], S corporation, OR TRUST required to  file
a return or report under subsection (c) OR SUBSECTION (F) of section six
hundred  fifty-eight  or  under  section  six hundred fifty-nine OF THIS
ARTICLE for any taxable year fails to file such return or report at  the
time  prescribed  therefor  (determined  with regard to any extension of
time for filing), or files a return or report which fails  to  show  the
information  required  under  such subsection (c) or section six hundred
fifty-nine OF THIS ARTICLE, unless it is shown that such failure is  due
to  reasonable  cause  and not due to willful neglect, there shall, upon
notice and demand by the commissioner and in the same manner as tax,  be
paid  by  the  partnership or S corporation a penalty for each month (or
fraction thereof) during which such failure continues (but not to exceed
five months). The amount of such penalty for any month is the product of
fifty dollars, multiplied by the number of partners in  the  partnership
or shareholders in the S corporation during any part of the taxable year
who were subject to tax under this article during any part of such taxa-
ble  year,  EXCEPT  THAT,  IN  THE CASE OF A TRUST, THE PENALTY SHALL BE

S. 6359                            173                           A. 8559

EQUAL TO ONE HUNDRED FIFTY DOLLARS A MONTH UP TO A  MAXIMUM  OF  FIFTEEN
HUNDRED DOLLARS PER TAXABLE YEAR.
  S  6. Subdivision (b) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 36 to read  as
follows:
  (36)  IN  THE  CASE OF A BENEFICIARY OF A NONRESIDENT TRUST OR A TRUST
NOT SUBJECT TO TAX PURSUANT TO SUBPARAGRAPH (D) OF  PARAGRAPH  THREE  OF
SUBSECTION  (B) OF SECTION 11-1705 OF THIS CHAPTER (EXCEPT FOR AN INCOM-
PLETE GIFT NON-GRANTOR TRUST, AS DEFINED BY  PARAGRAPH  THIRTY-SEVEN  OF
THIS  SUBDIVISION),  THE  AMOUNT  OF  ANY  ACCUMULATION  DISTRIBUTION AS
DESCRIBED IN SUBSECTION (B) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF  THE
INTERNAL  REVENUE  CODE  FOR  THE TAX YEAR, SUCH AMOUNT TO BE DETERMINED
WITHOUT REGARD TO THE  PENULTIMATE  SENTENCE  OF  SUCH  SUBSECTION  THAT
REFERENCES  SECTION  SIX  HUNDRED  SIXTY-SEVEN  OF SUCH CODE AND WITHOUT
REGARD TO SUBSECTION (C) OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTER-
NAL REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED  IN  FEDERAL  GROSS
INCOME FOR THE TAX YEAR.
  S  7. Subdivision (b) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 37 to read  as
follows:
  (37)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
DEDUCTIONS  OF  SUCH  TRUST, TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
TY FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
THEREUNDER.
  S 8. Section 11-1721 of the administrative code of  the  city  of  New
York, subdivisions (a) and (b) as amended by section 72 and such section
as  renumbered  by  section  43  of  chapter 639 of the laws of 1986, is
amended to read as follows:
  S 11-1721 [Credit] CREDITS to trust beneficiary receiving accumulation
distribution. (a) General. A city resident beneficiary of a trust  whose
city  adjusted  gross  income  includes  all  or part of an accumulation
distribution by such trust, as defined in section six hundred sixty-five
of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
MAKE THE MODIFICATION REQUIRED BY PARAGRAPH  THIRTY-SIX  OF  SUBDIVISION
(B) OF SECTION 11-1712 OF THIS SUBCHAPTER, shall be allowed (1) a credit
against  the  tax  otherwise due under this chapter for all or a propor-
tionate part of any tax paid by the trust under this  chapter  or  under
FORMER  title  T  of chapter forty-six of this code, as it was in effect
prior to September first, nineteen hundred eighty-six, for any preceding
taxable year which would not have been payable if the trust had in  fact
made  distributions to its beneficiaries at the times and in the amounts
specified in section six hundred sixty-six of the internal revenue code;
AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS CHAPTER FOR THE TAXA-
BLE YEAR FOR ANY INCOME TAX IMPOSED FOR THE TAXABLE YEAR  OR  ANY  PRIOR
TAXABLE YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVI-
SION  THEREOF,  OR  THE  DISTRICT  OF COLUMBIA, UPON INCOME BOTH DERIVED
THEREFROM AND SUBJECT TO TAX  UNDER  THIS  CHAPTER,  PROVIDED  THAT  THE

S. 6359                            174                           A. 8559

AMOUNT  OF  THE CREDIT SHALL NOT EXCEED THE PERCENTAGE OF THE TAX OTHER-
WISE DUE UNDER THIS CHAPTER DETERMINED BY DIVIDING THE  PORTION  OF  THE
INCOME  THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION AND
TAXABLE TO THE BENEFICIARY UNDER THIS CHAPTER BY THE TOTAL AMOUNT OF THE
BENEFICIARY'S NEW YORK CITY INCOME.
  (b)  Limitation.  The  [credit]  CREDITS  under this section shall not
reduce the tax otherwise due from the beneficiary under this chapter  to
an amount less than would have been due if the accumulation distribution
or  his  or her part thereof were excluded from his or her city adjusted
gross income.
  S 9. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014, provided that sections  one
and  six  of  this  act  shall not apply to income of an exempt resident
trust paid to a beneficiary before June 1, 2014, and  sections  two  and
seven  of this act shall not apply to income from a trust that is liqui-
dated before June 1, 2014.

                                 PART J

  Section 1. Section 602 of the tax law is REPEALED.
  S 2. Paragraph 4 of subsection (c) and paragraph 4 of  subsection  (d)
of section 606 of the tax law, paragraph 4 of subsection (c) as added by
chapter  309  of  the  laws of 1996 and paragraph 4 of subsection (d) as
amended by chapter 2 of the  laws  of  1995,  are  amended  to  read  as
follows:
  (4) Part-year residents. In the case of a part-year resident taxpayer,
the credit under this subsection shall be allowed against the tax deter-
mined  under  subsections  (a)  through  (d)  of section six hundred one
reduced by the credit permitted under subsection (b)  of  this  section,
and  any  excess  credit after such application shall be allowed against
the [taxes] TAX imposed by [sections six hundred two  and]  SECTION  six
hundred  three.  Any  remaining excess, after such application, shall be
refunded as provided in paragraph two hereof,  provided,  however,  that
any  overpayment  under such paragraph shall be limited to the amount of
the remaining excess multiplied by a fraction, the numerator of which is
federal adjusted gross income for the period of residence,  computed  as
if  the taxable year for federal income tax purposes were limited to the
period of residence, and the denominator of which  is  federal  adjusted
gross income for the taxable year.
  (4) Part-year residents. In the case of a part-year resident taxpayer,
the credit under this subsection shall be allowed against the tax deter-
mined  under  subsections  (a)  through  (d)  of section six hundred one
reduced by the credits permitted under subsections (b), (c) and  (m)  of
this  section,  and  any  excess  credit after such application shall be
allowed against the [taxes] TAX imposed by  [sections  six  hundred  two
and]  SECTION six hundred three. Any remaining excess, after such appli-
cation, shall be refunded as provided in paragraph two hereof, provided,
however, that any overpayment under such paragraph shall be  limited  to
the amount of the remaining excess multiplied by a fraction, the numera-
tor  of  which  is federal adjusted gross income for the period of resi-
dence, computed as if the taxable year for federal income  tax  purposes
were limited to the period of residence, and the denominator of which is
federal adjusted gross income for the taxable year.
  S 3. Section 622 of the tax law is REPEALED.
  S 4. Section 636 of the tax law is REPEALED.

S. 6359                            175                           A. 8559

  S  5.  Subsections  (a), (b) and (c) of section 639 of the tax law, as
added by chapter 170 of the  laws  of  1994,  are  amended  to  read  as
follows:
  (a)  If  an  individual changes status from resident to nonresident he
shall, regardless of his method of accounting, accrue to the  period  of
residence  any  items  of  income,  gain, loss, deduction, [items of tax
preference] or ordinary income portion of a lump sum distribution accru-
ing prior to the change of status, with the applicable modifications and
adjustments to federal adjusted gross income[,] AND itemized  deductions
[and  items  of tax preference] under sections six hundred twelve[,] AND
six hundred fifteen [and six hundred twenty-two], if not otherwise prop-
erly includible or allowable for New York income tax purposes  for  such
period or a prior taxable year under his method of accounting.
  (b)  If  an  individual changes status from nonresident to resident he
shall, regardless of his method of accounting, accrue to the  period  of
nonresidence any items of income, gain, loss or deduction, [items of tax
preference] or ordinary income portion of a lump sum distribution accru-
ing prior to the change of status, with the applicable modifications and
adjustments  to federal adjusted gross income[,] AND itemized deductions
[and items of tax preference] under sections six hundred  twelve[,]  AND
six  hundred  fifteen  [and  six  hundred  twenty-two], other than items
derived from or connected with New York sources, if not otherwise  prop-
erly  includible  or allowable for New York income tax purposes for such
period or for a prior taxable year under his method of accounting.
  (c) No item of income, gain, loss, deduction,  [item  of  tax  prefer-
ence,]  ordinary  income portion of a lump sum distribution or modifica-
tion or adjustment which is accrued under this section  shall  be  taken
into  account  in  determining the tax under this article for any subse-
quent taxable year.
  S 6. Paragraphs 1, 2, 3 and 4 of subsection (a) of section 651 of  the
tax  law,  paragraph  1  as  amended by chapter 333 of the laws of 1987,
paragraph 2 as amended by chapter 28 of the laws of 1987, and paragraphs
3 and 4 as amended by chapter 170 of the laws of 1994,  are  amended  to
read as follows:
  (1)  every  resident  individual (A) required to file a federal income
tax return for the taxable year, or (B) having  federal  adjusted  gross
income  for  the  taxable  year,  increased  by  the modifications under
subsection (b) of section six hundred twelve, in excess of four thousand
dollars, or in excess of his New York standard deduction, if  lower,  or
(C)  [subject  to  tax  under  section  six  hundred two, or (D)] having
received during the taxable year a lump sum distribution any portion  of
which is subject to tax under section six hundred three;
  (2)  every  resident estate or trust required to file a federal income
tax return for the taxable year, or having any New York  taxable  income
for the taxable year, determined under section six hundred eighteen, [or
subject to tax under section six hundred two,] or having received during
the taxable year a lump sum distribution any portion of which is subject
to tax under section six hundred three;
  (3) every nonresident or part-year resident individual having New York
source  income  for  the taxable year, determined under part III of this
article, and having New York adjusted gross income for the taxable year,
determined under part II of this article, in excess  of  the  taxpayer's
New  York  standard  deduction,  [or  subject  to  tax under section six
hundred two,] or having received during the  taxable  year  a  lump  sum
distribution  any  portion  of which is subject to tax under section six
hundred three; and

S. 6359                            176                           A. 8559

  (4) every nonresident estate or  trust  or  part-year  resident  trust
having  New  York  source  income for the taxable year, determined under
part III of this article, and having New York adjusted gross income  for
the  taxable  year, determined under paragraph four of subsection (e) of
section  six  hundred  one, [or subject to tax under section six hundred
two,] or having received during the taxable year a lump sum distribution
any portion of which is subject to tax under section six hundred three.
  S 7. Paragraph 6 of subsection (b) of section 654 of the tax  law,  as
added  by  section  5  of  part Q of chapter 407 of the laws of 1999, is
amended to read as follows:
  (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
"section 1 or 55" shall be read as "section  six  hundred  one  [or  six
hundred two] of this article".
  S 8. Section 659 of the tax law, as amended by chapter 577 of the laws
of 1997, is amended to read as follows:
  S  659.   Report of federal changes, corrections or disallowances.  If
the amount of a taxpayer's federal taxable income, [federal items of tax
preference,] total taxable amount or ordinary income portion of  a  lump
sum  distribution  or includible gain of a trust reported on his federal
income tax return for any taxable year, or the amount  of  a  taxpayer's
earned income credit or credit for employment-related expenses set forth
on  such return, or the amount of any federal foreign tax credit affect-
ing the calculation of the credit for Canadian  provincial  taxes  under
section  six  hundred twenty or six hundred twenty-A of this article, or
the amount of any claim of right adjustment, is changed or corrected  by
the  United States internal revenue service or other competent authority
or as the result of a renegotiation of a contract  or  subcontract  with
the  United  States, or the amount an employer is required to deduct and
withhold from wages for  federal  income  tax  withholding  purposes  is
changed  or  corrected  by  such service or authority or if a taxpayer's
claim for credit or refund of federal income tax is disallowed in  whole
or  in  part,  the  taxpayer  or  employer  shall  report such change or
correction or disallowance within ninety days after the  final  determi-
nation  of such change, correction, renegotiation or disallowance, or as
otherwise required by the commissioner, and shall concede  the  accuracy
of  such  determination or state wherein it is erroneous.  The allowance
of a tentative carryback adjustment based  upon  a  net  operating  loss
carryback  pursuant to section sixty-four hundred eleven of the internal
revenue code shall be treated as a final determination for  purposes  of
this  section.  Any taxpayer filing an amended federal income tax return
and any employer filing an amended federal return of income tax withheld
shall also file within ninety days thereafter an  amended  return  under
this  article,  and  shall give such information as the commissioner may
require.  The commissioner may by regulation prescribe  such  exceptions
to the requirements of this section as he or she deems appropriate.  For
purposes  of this section, (i) the term "taxpayer" shall include a part-
nership having a resident partner or having any income derived from  New
York  sources,  and a corporation with respect to which the taxable year
of such change, correction, disallowance or amendment  is  a  year  with
respect  to which the election provided for in subsection (a) of section
six hundred sixty of this article  is  in  effect,  and  (ii)  the  term
"federal income tax return" shall include the returns of income required
under  sections six thousand thirty-one and six thousand thirty-seven of
the internal revenue code.   In the case of  such  a  corporation,  such
report  shall  also  include  any  change  or  correction  of  the taxes
described in paragraphs two and three of subsection (f) of section thir-

S. 6359                            177                           A. 8559

teen hundred sixty-six of the internal revenue code.  Reports made under
this section by a partnership or corporation shall indicate the  portion
of  the  change in each item of income, gain, loss or deduction (and, in
the case of a corporation, of each change in, or disallowance of a claim
for  credit  or  refund of, a tax referred to in the preceding sentence)
allocable to each partner or shareholder and shall set forth such  iden-
tifying  information  with respect to such partner or shareholder as may
be prescribed by the commissioner.
  S 9. Subsection (d) of section 683 of the tax law, as amended by chap-
ter 170 of the laws of 1994, is amended to read as follows:
  (d) Omission of income, [item of tax preference,] total taxable amount
or ordinary income portion of a lump sum  distribution  on  return.--The
tax  may  be  assessed at any time within six years after the return was
filed if--
  (1) an individual omits from his New York adjusted gross income,  [the
sum  of  his  items  of  tax preference,] or the total taxable amount or
ordinary income portion of a lump sum distribution  an  amount  properly
includible  therein  which  is  in  excess of twenty-five percent of the
amount of New York adjusted gross income, [the sum of the items  of  tax
preference,] or the total taxable amount or ordinary income portion of a
lump sum distribution stated in the return, or
  (2)  an estate or trust omits from its New York adjusted gross income,
[the sum of its items of tax preference,] or the total taxable amount or
ordinary income portion of a lump sum distribution  an  amount  properly
includible  therein  which  is  in  excess of twenty-five percent of the
amount stated in the return of New York adjusted gross income determined
in accordance with paragraph four  of  subsection  (e)  of  section  six
hundred  one,  [or the sum of the items of tax preference,] or the total
taxable amount or ordinary income portion of a  lump  sum  distribution,
respectively.  For  purposes of this subsection there shall not be taken
into account any amount which is omitted in the return if such amount is
disclosed in the return, or in a statement attached to the return, in  a
manner  adequate to apprise the commissioner of the nature and amount of
the item of income, [tax preference,] total taxable amount  or  ordinary
income portion of a lump sum distribution.
  S 10. Subparagraph (B) of paragraph 4 of subsection (c) of section 685
of the tax law, as amended by chapter 28 of the laws of 1987, is amended
to read as follows:
  (B)  Determination  of  annualized income installment.--In the case of
any required installment,  the  annualized  income  installment  is  the
excess,  if  any, of an amount equal to the applicable percentage of the
tax for the taxable year computed by placing on an annualized basis  the
taxable  income  [and  minimum taxable income] for months in the taxable
year ending before the due date for the installment, over the  aggregate
amount  of  any  prior  required  installments for the taxable year. The
applicable percentage of  the  tax  shall  be  twenty-two  and  one-half
percent  in the case of the first installment, forty-five percent in the
case of the second installment, sixty-seven and one-half percent in  the
case  of  the  third  installment  and ninety percent in the case of the
fourth installment, and shall be computed without regard to any increase
in the rates applicable to the taxable year  unless  such  increase  was
enacted at least thirty days prior to the due date of the installment.
  S  11. Paragraphs 2 and 3 of subsection (a) of section 1301 of the tax
law, as amended by chapter 209 of the laws of 2011, are amended to  read
as follows:

S. 6359                            178                           A. 8559

  (2)  [for  taxable years beginning before two thousand fifteen, a city
minimum income tax on such residents, and
  (3)] for taxable years beginning after nineteen hundred seventy-six, a
separate tax on the ordinary income portion of lump sum distributions of
such  residents,  at  the  rates  provided  for herein, such taxes to be
administered, collected and distributed by the commissioner as  provided
for in this article.
  S 12. Section 1301-A of the tax law is REPEALED.
  S  13.  Subsection  (a)  of section 1302 of the tax law, as amended by
chapter 333 of the laws of 1987, is amended to read as follows:
  (a) Imposition of tax. The city personal income tax  (other  than  the
[city  minimum  income  tax  and  the] city separate tax on the ordinary
income portion of  lump  sum  distributions)  imposed  pursuant  to  the
authority  of this article shall be imposed for each taxable year on the
city taxable income of every city resident individual, estate and trust.
A taxpayer's taxable year for purposes of a tax imposed pursuant to  the
authority  of  this  article shall be the same as his taxable year under
article twenty-two of this chapter.
  S 14. The opening paragraph of subsection (a) of section 1304  of  the
tax  law, as amended by section 134 of part A of chapter 389 of the laws
of 1997, is amended to read as follows:
  A tax (other than the [city minimum income tax, the] city separate tax
relating to qualified higher education funds and the city  separate  tax
on the ordinary income portion of lump sum distributions) imposed pursu-
ant  to  the  authority  of section thirteen hundred one of this article
shall be determined as follows:
  S 15. Subsection (c) of section 1307 of the tax  law,  as  amended  by
chapter 712 of the laws of 2004, is amended to read as follows:
  (c)  When  an individual changes his status from city resident to city
nonresident, or from  city  nonresident  to  city  resident,  he  shall,
regardless  of  his  method  of  accounting, accrue any items of income,
gain, loss, deduction[, items of  tax  preference]  or  ordinary  income
portion  of  a  lump  sum  distribution  accruing prior to the change of
status, with the applicable modifications  and  adjustments  to  federal
adjusted gross income[,] AND itemized deductions [and items of tax pref-
erence]  under  sections  six  hundred twelve[,] AND six hundred fifteen
[and six hundred twenty-two], if not otherwise  properly  includible  or
allowable  for  New  York income tax purposes for such period or a prior
taxable year under his method of accounting. Such accruals shall be made
as provided in section six hundred thirty-nine of this chapter.
  S 16. Subsection (a) of section 1306 of the tax  law,  as  amended  by
chapter 333 of the laws of 1987, is amended to read as follows:
  (a)  General.  On  or  before  the  fifteenth  day of the fourth month
following the close of a taxable year, an income tax return under a city
tax imposed pursuant to the authority of this article shall be made  and
filed by or for every city resident individual, estate or trust required
to  file  a  New  York  state  personal income tax (including [a minimum
income tax and] a city separate tax on the ordinary  income  portion  of
lump sum distributions) return for the taxable year.
  S  17.  Section  11-1702 of the administrative code of the city of New
York is REPEALED.
  S 18. Subdivision (a) of section 11-1704 of the administrative code of
the city of New York, as amended by chapter 17 of the laws of  1997,  is
amended to read as follows:
  (a)  In  addition  to the taxes imposed by sections 11-1701[, 11-1702]
and 11-1703, there is hereby imposed for  each  taxable  year  beginning

S. 6359                            179                           A. 8559

after  nineteen  hundred eighty-nine but before nineteen hundred ninety-
nine, a tax surcharge on the city taxable income of every city  resident
individual, estate and trust.
  S 19. Subdivision (c) of section 11-1704 of the administrative code of
the  city of New York, as amended by chapter 271 of the laws of 1991, is
amended to read as follows:
  (c) The tax surcharge imposed pursuant to this section shall be admin-
istered, collected and distributed by the commissioner of  taxation  and
finance  in  the  same  manner as the taxes imposed pursuant to sections
11-1701[, 11-1702] and 11-1703, and all of the provisions of this  chap-
ter, including sections 11-1706, 11-1721 and 11-1773, shall apply to the
tax surcharge imposed by this section.
  S  20.  Section  11-1722 of the administrative code of the city of New
York is REPEALED.
  S 21. Subdivision (a) of section 11-1751 of the administrative code of
the city of New York, as amended by chapter 333 of the laws of 1987,  is
amended to read as follows:
  (a)  General.  On  or  before  the  fifteenth  day of the fourth month
following the close of a taxable year, an income tax return  under  this
chapter  shall  be made and filed by or for every city resident individ-
ual, estate or trust required to file a New York state  personal  income
tax  (including  a [minimum income tax and] separate tax on the ordinary
income portion of lump sum distributions) return for the taxable year.
  S 22. Subdivision (b) of section 11-1754 of the administrative code of
the city of New York, as amended by chapter 712 of the laws of 2004,  is
amended to read as follows:
  (b)  City  taxable  income  [and  city minimum taxable income] as city
resident. The city taxable income [and city minimum taxable income]  for
the  portion of the year during which he or she is a city resident shall
be determined, except as provided in subdivision (c), as if his  or  her
taxable  year for federal income tax purposes were limited to the period
of his or her city resident status.
  S 23. Paragraph 6 of subdivision (b) of section 11-1755 of the  admin-
istrative code of the city of New York, as added by section 17 of part Q
of chapter 407 of the laws of 1999, is amended to read as follows:
  (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
"section 1 or 55" shall be read as "section 11-1701 [or 11-1702] of this
chapter".
  S  24.  Section  11-1759 of the administrative code of the city of New
York, as amended by chapter 577 of the laws of 1997, is amended to  read
as follows:
  S  11-1759 Report of federal changes, corrections or disallowances. If
the amount of a taxpayer's federal taxable income, [federal items of tax
preference,] total taxable amount or ordinary income portion of  a  lump
sum  distribution  or includible gain of a trust reported on his federal
income tax return for any taxable year, or the amount of  any  claim  of
right  adjustment, is changed or corrected by the United States internal
revenue service or other competent authority, or  as  the  result  of  a
renegotiation of a contract or subcontract with the United States or the
amount  an  employer  is  required to deduct and withhold from wages for
federal income tax withholding purposes is changed or corrected by  such
service  or  authority  or if a taxpayer's claim for credit or refund of
federal income tax is disallowed in whole or in part,  the  taxpayer  or
employer  shall  report such change or correction or disallowance within
ninety days after the final determination of  such  change,  correction,
renegotiation,  or disallowance, or as otherwise required by the commis-

S. 6359                            180                           A. 8559

sioner, and shall concede the accuracy of such  determination  or  state
wherein  it is erroneous. The allowance of a tentative carryback adjust-
ment based upon a net  operating  loss  carryback  pursuant  to  section
sixty-four  hundred eleven of the internal revenue code shall be treated
as a final determination for purposes  of  this  section.  Any  taxpayer
filing  an  amended federal income tax return and any employer filing an
amended federal return of income tax withheld  shall  also  file  within
ninety  days  thereafter an amended return under this chapter, and shall
give such information as the commissioner may require. The  commissioner
may  by regulation prescribe such exceptions to the requirements of this
section as he or she deems appropriate. For purposes  of  this  section,
(i)  the  term  "taxpayer" shall include a partnership having a resident
partner or having any income derived from New York sources, and a corpo-
ration  with  respect  to  which  the  taxable  year  of  such   change,
correction,  disallowance  or  amendment is a year with respect to which
the election provided for in subsection (a) of section six hundred sixty
of the tax law is in effect, and  (ii)  the  term  "federal  income  tax
return"  shall include the returns of income required under sections six
thousand thirty-one and six thousand thirty-seven of the internal reven-
ue code. In the case of such  a  corporation,  such  report  shall  also
include  any  change  or correction of the taxes described in paragraphs
two and three of subsection (f) of section thirteen hundred sixty-six of
the internal revenue code. Reports made under this section by a partner-
ship or corporation shall indicate the portion of  the  change  in  each
item  of  income,  gain, loss or deduction (and, in the case of a corpo-
ration, of each change in, or disallowance of  a  claim  for  credit  or
refund  of,  a  tax  referred to in the preceding sentence) allocable to
each partner or shareholder and shall set forth such identifying  infor-
mation  with respect to such partner or shareholder as may be prescribed
by the commissioner.
  S 25. Subdivision (d) of section 11-1783 of the administrative code of
the city of New York, as amended by chapter 170 of the laws of 1994,  is
amended to read as follows:
  (d) Omission of income, [item of tax preference,] total taxable amount
or ordinary income portion of a lump sum distribution on return. The tax
may  be assessed at any time within six years after the return was filed
if:
  (1) an individual omits from his city adjusted gross income[, the  sum
of his items of tax preference, or] the total taxable amount or ordinary
income  portion of a lump sum distribution an amount properly includible
therein which is in excess of twenty-five percent of the amount of  city
adjusted  gross  income[, the sum of the items of tax preference] or the
total taxable amount or ordinary income portion of a lump  sum  distrib-
ution stated in the return, or
  (2) an estate or trust omits from its city adjusted gross income, [the
sum  of  its  items  of  tax preference,] or the total taxable amount or
ordinary income portion of a lump sum distribution  an  amount  properly
includible  therein  which  is  in  excess of twenty-five percent of the
amount stated in the return of city adjusted gross income, [or  the  sum
of the items of tax preference,] or the total taxable amount or ordinary
income portion of a lump sum distribution, respectively. For purposes of
this paragraph, city adjusted gross income means New York adjusted gross
income  as  determined under paragraph four of subsection (e) of section
six hundred one of the tax law.
  For purposes of this subdivision there shall not be taken into account
any amount which is omitted in the return if such amount is disclosed in

S. 6359                            181                           A. 8559

the return, or in a statement  attached  to  the  return,  in  a  manner
adequate  to  apprise  the  commissioner of the nature and amount of the
item of income, [tax preference,] the total taxable amount  or  ordinary
income portion of a lump sum distribution.
  S  26.  Subparagraph  (B) of paragraph 4 of subdivision (c) of section
11-1785 of the administrative code of the city of New York,  as  amended
by chapter 333 of the laws of 1987, is amended to read as follows:
  (B) Determination of annualized income installment. In the case of any
required  installment,  the annualized income installment is the excess,
if any, of an amount equal to the applicable percentage of the  tax  for
the  taxable year computed by placing on an annualized basis the taxable
income [and minimum taxable income]  for  months  in  the  taxable  year
ending  before  the  due  date  for  the installment, over the aggregate
amount of any prior required installments  for  the  taxable  year.  The
applicable  percentage  of  the  tax  shall  be  twenty-two and one-half
percent in the case of the first installment, forty-five percent in  the
case  of the second installment, sixty-seven and one-half percent in the
case of the third installment and ninety percent  in  the  case  of  the
fourth installment, and shall be computed without regard to any increase
in  the  rates  applicable  to the taxable year unless such increase was
enacted at least thirty days prior to the due date of the installment.
  S 27. This act shall take effect  immediately  and  apply  to  taxable
years beginning on or after January 1, 2014.

                                 PART K

  Section  1.  Subsection  (e-1) of section 606 of the tax law is relet-
tered subsection (e-2).
  S 2. Section 606 of the tax law is amended by adding a new  subsection
(e-1) to read as follows:
  (E-1)  ENHANCED  REAL  PROPERTY  TAX  CIRCUIT  BREAKER CREDIT. (1) FOR
PURPOSES OF THIS SUBSECTION:
  (A) "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE  WHO
HAS  OCCUPIED  THE  SAME RESIDENCE FOR SIX MONTHS OR MORE OF THE TAXABLE
YEAR, AND IS REQUIRED OR CHOOSES TO FILE A RETURN UNDER THIS ARTICLE.
  (B) "HOUSEHOLD" OR  "MEMBERS  OF  THE  HOUSEHOLD"  MEANS  A  QUALIFIED
TAXPAYER  AND  ALL  OTHER PERSONS, NOT NECESSARILY RELATED, WHO HAVE THE
SAME RESIDENCE AND SHARE ITS FURNISHINGS, FACILITIES AND ACCOMMODATIONS.
SUCH TERMS SHALL NOT INCLUDE A TENANT, SUBTENANT, ROOMER OR BOARDER  WHO
IS  NOT  RELATED  TO  THE  QUALIFIED TAXPAYER IN ANY DEGREE SPECIFIED IN
PARAGRAPHS ONE THROUGH EIGHT OF SUBSECTION (A) OF  SECTION  ONE  HUNDRED
FIFTY-TWO  OF  THE  INTERNAL REVENUE CODE.  PROVIDED, HOWEVER, NO PERSON
MAY BE A MEMBER OF MORE THAN ONE HOUSEHOLD AT ONE TIME.
  (C) "HOUSEHOLD GROSS INCOME" MEANS THE AGGREGATE ADJUSTED GROSS INCOME
OF ALL MEMBERS OF THE HOUSEHOLD FOR THE TAXABLE  YEAR  AS  REPORTED  FOR
FEDERAL  INCOME  TAX  PURPOSES,  OR  WHICH WOULD BE REPORTED AS ADJUSTED
GROSS INCOME IF A FEDERAL INCOME TAX RETURN WERE REQUIRED TO  BE  FILED,
WITH  THE  MODIFICATIONS IN SUBSECTION (B) OF SECTION SIX HUNDRED TWELVE
OF THIS ARTICLE BUT WITHOUT THE MODIFICATIONS IN SUBSECTION (C) OF  SUCH
SECTION, PLUS ANY PORTION OF THE GAIN FROM THE SALE OR EXCHANGE OF PROP-
ERTY  OTHERWISE  EXCLUDED  FROM  SUCH AMOUNT; EARNED INCOME FROM SOURCES
WITHOUT THE UNITED  STATES  EXCLUDABLE  FROM  FEDERAL  GROSS  INCOME  BY
SECTION  NINE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE; SUPPORT MONEY
NOT INCLUDED IN  ADJUSTED  GROSS  INCOME;  NONTAXABLE  STRIKE  BENEFITS;
SUPPLEMENTAL  SECURITY  INCOME PAYMENTS; THE GROSS AMOUNT OF ANY PENSION
OR ANNUITY BENEFITS TO THE EXTENT NOT INCLUDED IN  SUCH  ADJUSTED  GROSS

S. 6359                            182                           A. 8559

INCOME  (INCLUDING, BUT NOT LIMITED TO, RAILROAD RETIREMENT BENEFITS AND
ALL PAYMENTS RECEIVED UNDER THE FEDERAL SOCIAL SECURITY ACT  AND  VETER-
ANS'  DISABILITY  PENSIONS); NONTAXABLE INTEREST RECEIVED FROM THE STATE
OF  NEW  YORK,  ITS AGENCIES, INSTRUMENTALITIES, PUBLIC CORPORATIONS, OR
POLITICAL SUBDIVISIONS (INCLUDING A PUBLIC CORPORATION CREATED  PURSUANT
TO  AGREEMENT OR COMPACT WITH ANOTHER STATE OR CANADA); WORKERS' COMPEN-
SATION; THE GROSS AMOUNT OF "LOSS-OF-TIME" INSURANCE; AND THE AMOUNT  OF
CASH PUBLIC ASSISTANCE AND RELIEF, OTHER THAN MEDICAL ASSISTANCE FOR THE
NEEDY,  PAID  TO OR FOR THE BENEFIT OF THE QUALIFIED TAXPAYER OR MEMBERS
OF HIS OR HER  HOUSEHOLD.  HOUSEHOLD  GROSS  INCOME  SHALL  NOT  INCLUDE
SURPLUS  FOODS  OR  OTHER RELIEF IN KIND OR PAYMENTS MADE TO INDIVIDUALS
BECAUSE OF THEIR STATUS AS VICTIMS OF NAZI  PERSECUTION  AS  DEFINED  IN
P.L.  103-286.  PROVIDED,  FURTHER,  HOUSEHOLD  GROSS  INCOME SHALL ONLY
INCLUDE ALL SUCH INCOME RECEIVED BY ALL MEMBERS OF THE  HOUSEHOLD  WHILE
MEMBERS  OF SUCH HOUSEHOLD. IN COMPUTING HOUSEHOLD GROSS INCOME, THE NET
AMOUNT OF LOSS REPORTED ON FEDERAL SCHEDULE C, D,  E,  OR  F  SHALL  NOT
EXCEED  THREE THOUSAND DOLLARS PER SCHEDULE. IN ADDITION, THE NET AMOUNT
OF ANY OTHER SEPARATE CATEGORY OF LOSS SHALL NOT EXCEED  THREE  THOUSAND
DOLLARS. THE AGGREGATE AMOUNT OF ALL LOSSES INCLUDED IN COMPUTING HOUSE-
HOLD GROSS INCOME SHALL NOT EXCEED FIFTEEN THOUSAND DOLLARS.
  (D)  "RESIDENCE" MEANS A DWELLING IN THIS STATE OWNED BY THE TAXPAYER,
AND SO MUCH OF THE LAND ABUTTING IT,  NOT  EXCEEDING  ONE  ACRE,  AS  IS
REASONABLY  NECESSARY FOR USE OF THE DWELLING AS A HOME, AND MAY CONSIST
OF A PART OF A MULTI-DWELLING  OR  MULTI-PURPOSE  BUILDING  INCLUDING  A
COOPERATIVE  OR  CONDOMINIUM.    RESIDENCE  INCLUDES A TRAILER OR MOBILE
HOME, USED EXCLUSIVELY FOR RESIDENTIAL  PURPOSES  AND  DEFINED  AS  REAL
PROPERTY  PURSUANT TO PARAGRAPH (G) OF SUBDIVISION TWELVE OF SECTION ONE
HUNDRED TWO OF THE REAL PROPERTY TAX LAW.
  (E) "QUALIFYING REAL PROPERTY TAXES" MEANS ALL  REAL  PROPERTY  TAXES,
SPECIAL  AD  VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE OF PENAL-
TIES AND INTEREST, LEVIED BY A TAXING JURISDICTION WITH A  CAP-COMPLIANT
BUDGET  ON  THE  RESIDENCE  OF  A QUALIFIED TAXPAYER AND PAID DURING THE
TAXABLE YEAR.
  (I) FOR THE PURPOSES OF THIS SUBSECTION, A "CAP-COMPLIANT BUDGET"  FOR
A  SCHOOL DISTRICT SUBJECT TO SECTION TWO THOUSAND TWENTY-THREE-A OF THE
EDUCATION LAW MEANS A BUDGET FOR WHICH THE CHIEF  EXECUTIVE  OFFICER  OF
SUCH  SCHOOL  DISTRICT HAS CERTIFIED, NO LATER THAN THE TWENTY-FIRST DAY
OF THE FISCAL YEAR TO WHICH IT APPLIES, TO THE  STATE  COMPTROLLER,  THE
COMMISSIONER  OF TAXATION AND FINANCE AND THE COMMISSIONER OF EDUCATION,
IN A FORM AND MANNER PRESCRIBED BY THE STATE COMPTROLLER IN CONSULTATION
WITH THE COMMISSIONER OF TAXATION AND FINANCE AND  THE  COMMISSIONER  OF
EDUCATION, THAT THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT
PRESCRIBED BY SUCH SECTION. A "CAP-COMPLIANT BUDGET" FOR A LOCAL GOVERN-
MENT  SUBJECT TO SECTION THREE-C OF THE GENERAL MUNICIPAL LAW SHALL MEAN
A BUDGET FOR WHICH THE CHIEF EXECUTIVE OFFICER OR BUDGET OFFICER OF SUCH
LOCAL GOVERNMENT UNIT HAS CERTIFIED, NO LATER THAN THE TWENTY-FIRST  DAY
OF THE FISCAL YEAR TO WHICH IT APPLIES, TO THE STATE COMPTROLLER AND THE
COMMISSIONER OF TAXATION AND FINANCE, IN A FORM AND MANNER PRESCRIBED BY
THE  STATE COMPTROLLER IN CONSULTATION WITH THE COMMISSIONER OF TAXATION
AND FINANCE, THAT THE ADOPTED BUDGET OF SUCH LOCAL  GOVERNMENT  DID  NOT
REQUIRE AND THE GOVERNING BODY OF SUCH LOCAL GOVERNMENT DID NOT ENACT OR
APPROVE  A  LOCAL  LAW  OR  RESOLUTION  TO  OVERRIDE  THE TAX LEVY LIMIT
PRESCRIBED BY SUCH SECTION, OR, IF  THE  GOVERNING  BODY  OF  THE  LOCAL
GOVERNMENT  DID  ENACT  A  LOCAL LAW OR APPROVE A RESOLUTION TO OVERRIDE
SUCH TAX LEVY LIMIT, THAT SUCH LOCAL LAW OR RESOLUTION WAS  SUBSEQUENTLY
REPEALED.  IF  A  CERTIFICATION REQUIRED BY THIS PARAGRAPH HAS BEEN MADE

S. 6359                            183                           A. 8559

AND THE ACTUAL TAX LEVY OF THE TAXING JURISDICTION EXCEEDS THE  APPLICA-
BLE  TAX  LEVY  LIMIT,  THE EXCESS AMOUNT SHALL BE PLACED IN RESERVE AND
USED IN THE MANNER PRESCRIBED BY  SUBDIVISION  FIVE  OF  SECTION  TWENTY
THOUSAND  TWENTY-THREE-A  OF  THE  EDUCATION  LAW  OR SUBDIVISION SIX OF
SECTION THREE-C OF THE GENERAL MUNICIPAL LAW, WHICHEVER  IS  APPLICABLE,
EVEN IF A TAX LEVY IN EXCESS OF THE TAX LEVY LIMIT HAD BEEN DULY AUTHOR-
IZED FOR THE APPLICABLE FISCAL YEAR IN ACCORDANCE WITH SUCH SECTION.
  (II)  FOR  TAX  YEAR  TWO  THOUSAND FOURTEEN, ONLY REAL PROPERTY TAXES
LEVIED BY SCHOOL DISTRICTS WITH CAP-COMPLIANT BUDGETS CONSTITUTE  QUALI-
FYING REAL PROPERTY TAXES.
  (III)  IN  A  CITY  WITH  A  POPULATION  OF  ONE  MILLION OR MORE, THE
RESTRICTION IN CLAUSE (I) OF THIS SUBPARAGRAPH THAT TAXES MUST BE LEVIED
BY A TAXING JURISDICTION WITH A CAP-COMPLIANT  BUDGET  DOES  NOT  APPLY.
HOWEVER,  REAL  PROPERTY  TAXES,  SPECIAL AD VALOREM LEVIES, AND SPECIAL
ASSESSMENTS LEVIED BY SUCH CITY SHALL CONSTITUTE QUALIFYING REAL PROPER-
TY TAXES ONLY IF TAXES  LEVIED  IN  THE  STATE  OUTSIDE  SUCH  CITY  ARE
REQUIRED  FOR  PURPOSES  OF THIS CREDIT TO BE LEVIED BY TAXING JURISDIC-
TIONS WITH CAP-COMPLIANT BUDGETS.
  (IV) A QUALIFIED TAXPAYER MAY ELECT TO INCLUDE ANY  ADDITIONAL  AMOUNT
THAT  WOULD  HAVE  BEEN  LEVIED IN THE ABSENCE OF AN EXEMPTION FROM REAL
PROPERTY TAXATION PURSUANT TO SECTION FOUR HUNDRED  SIXTY-SEVEN  OF  THE
REAL  PROPERTY  TAX LAW. IF TENANT-STOCKHOLDERS IN A COOPERATIVE HOUSING
CORPORATION HAVE MET THE REQUIREMENTS OF SECTION TWO HUNDRED SIXTEEN  OF
THE INTERNAL REVENUE CODE BY WHICH THEY ARE ALLOWED A DEDUCTION FOR REAL
ESTATE TAXES, THE AMOUNT OF TAXES SO ALLOWABLE, OR WHICH WOULD BE ALLOW-
ABLE  IF THE TAXPAYER HAD FILED RETURNS ON A CASH BASIS, SHALL BE QUALI-
FYING REAL PROPERTY TAXES. IF A RESIDENCE IS OWNED BY TWO OR MORE  INDI-
VIDUALS  AS JOINT TENANTS OR TENANTS IN COMMON, AND ONE OR MORE THAN ONE
INDIVIDUAL IS NOT A MEMBER OF THE HOUSEHOLD,  QUALIFYING  REAL  PROPERTY
TAXES  IS  THAT  PART  OF SUCH TAXES ON THE RESIDENCE WHICH REFLECTS THE
OWNERSHIP PERCENTAGE OF THE QUALIFIED TAXPAYER AND MEMBERS OF HIS OR HER
HOUSEHOLD. IF A RESIDENCE IS AN INTEGRAL PART OF A LARGER UNIT, QUALIFY-
ING REAL PROPERTY TAXES SHALL BE LIMITED TO THAT AMOUNT  OF  SUCH  TAXES
PAID  AS MAY BE REASONABLY APPORTIONED TO SUCH RESIDENCE. IF A HOUSEHOLD
OWNS AND OCCUPIES TWO OR MORE RESIDENCES DURING DIFFERENT PERIODS IN THE
SAME TAXABLE YEAR, QUALIFYING REAL PROPERTY TAXES SHALL BE  THE  SUM  OF
THE  PRORATED  QUALIFYING REAL PROPERTY TAXES ATTRIBUTABLE TO THE HOUSE-
HOLD DURING THE PERIODS SUCH HOUSEHOLD OCCUPIES EACH OF SUCH RESIDENCES.
IF THE HOUSEHOLD OWNS AND OCCUPIES A RESIDENCE FOR PART OF  THE  TAXABLE
YEAR  AND  RENTS  A  RESIDENCE FOR PART OF THE SAME TAXABLE YEAR, IT MAY
INCLUDE THE PRORATION OF QUALIFYING REAL PROPERTY TAXES ON THE RESIDENCE
OWNED.  PROVIDED, HOWEVER, FOR PURPOSES OF THE CREDIT ALLOWED UNDER THIS
SUBSECTION, QUALIFYING REAL PROPERTY TAXES MAY BE INCLUDED BY  A  QUALI-
FIED  TAXPAYER  ONLY  TO  THE EXTENT THAT SUCH TAXPAYER OR THE SPOUSE OF
SUCH TAXPAYER, OCCUPYING SUCH RESIDENCE  FOR  ONE  HUNDRED  EIGHTY-THREE
DAYS  OR  MORE  OF THE TAXABLE YEAR, OWNS OR HAS OWNED THE RESIDENCE AND
PAID SUCH TAXES.
  (2) A QUALIFIED TAXPAYER SHALL BE ALLOWED  A  CREDIT  AS  PROVIDED  IN
PARAGRAPH THREE HEREOF AGAINST THE TAXES IMPOSED BY THIS ARTICLE REDUCED
BY  THE CREDITS PERMITTED BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE TAX
AS SO REDUCED FOR SUCH YEAR UNDER THIS  ARTICLE,  THE  EXCESS  SHALL  BE
TREATED AS AN OVERPAYMENT, TO BE CREDITED OR REFUNDED, WITHOUT INTEREST.
IF  A  QUALIFIED  TAXPAYER  IS NOT REQUIRED TO FILE A RETURN PURSUANT TO
SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE, A QUALIFIED TAXPAYER  MAY
NEVERTHELESS  RECEIVE  THE  FULL  AMOUNT OF THE CREDIT TO BE CREDITED OR
REFUNDED AS AN OVERPAYMENT, WITHOUT INTEREST.

S. 6359                            184                           A. 8559

  (3) DETERMINATION OF CREDIT. (A) FOR TAXABLE YEARS  BEGINNING  IN  TWO
THOUSAND  FOURTEEN,  THE  AMOUNT  OF  THE  CREDIT  ALLOWABLE  UNDER THIS
SUBSECTION SHALL BE DETERMINED AS FOLLOWS:
IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
                        PROPERTY TAXES OVER         EXCESS REAL PROPERTY
                        THE FOLLOWING               TAXES:
                        PERCENTAGE OF
                        HOUSEHOLD GROSS INCOME:
LESS THAN $120,000      2.4%                        6.25%
$120,000 TO LESS
THAN $150,000           3.2%                        4.75%
$150,000 TO LESS
THAN $200,000           4.0%                        3.25%
  NOTWITHSTANDING  THE  FOREGOING  PROVISIONS, THE MAXIMUM CREDIT DETER-
MINED UNDER THIS SUBPARAGRAPH MAY NOT EXCEED FIVE HUNDRED DOLLARS.
  (B) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND FIFTEEN, THE AMOUNT OF
THE CREDIT ALLOWABLE  UNDER  THIS  SUBSECTION  SHALL  BE  DETERMINED  AS
FOLLOWS:
IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
                        PROPERTY TAXES OVER         EXCESS REAL PROPERTY
                        THE FOLLOWING               TAXES:
                        PERCENTAGE OF
                        HOUSEHOLD GROSS INCOME:
LESS THAN $120,000      3.0%                        8.25%
$120,000 TO LESS
THAN $150,000           4.0%                        6.00%
$150,000 TO LESS
THAN $200,000           5.0%                        3.75%
  NOTWITHSTANDING  THE  FOREGOING  PROVISIONS, THE MAXIMUM CREDIT DETER-
MINED UNDER  THIS  SUBPARAGRAPH  MAY  NOT  EXCEED  SEVEN  HUNDRED  FIFTY
DOLLARS.
  (C) FOR TAXABLE YEARS BEGINNING AFTER TWO THOUSAND FIFTEEN, THE AMOUNT
OF  THE  CREDIT  ALLOWABLE  UNDER THIS SUBSECTION SHALL BE DETERMINED AS
FOLLOWS:
IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
                        PROPERTY TAXES OVER         EXCESS REAL PROPERTY
                        THE FOLLOWING               TAXES:
                        PERCENTAGE OF
                        HOUSEHOLD GROSS INCOME:
LESS THAN $120,000      3.0%                        20.0%
$120,000 TO LESS
THAN $150,000           4.0%                        15.0%
$150,000 TO LESS
THAN $200,000           5.0%                        10.0%
  NOTWITHSTANDING THE FOREGOING PROVISIONS, THE  MAXIMUM  CREDIT  DETER-
MINED UNDER THIS SUBPARAGRAPH MAY NOT EXCEED ONE THOUSAND DOLLARS.
  (4)  IF A QUALIFIED TAXPAYER OCCUPIES A RESIDENCE FOR A PERIOD OF LESS
THAN TWELVE MONTHS DURING THE TAXABLE YEAR OR OCCUPIES TWO OR MORE RESI-
DENCES DURING DIFFERENT PERIODS IN SUCH TAXABLE YEAR, THE CREDIT ALLOWED
PURSUANT TO THIS SUBSECTION SHALL BE COMPUTED  IN  SUCH  MANNER  AS  THE

S. 6359                            185                           A. 8559

COMMISSIONER  MAY  PRESCRIBE  IN ORDER TO PROPERLY REFLECT THE CREDIT OR
PORTION THEREOF ATTRIBUTABLE TO SUCH RESIDENCE OR  RESIDENCES  AND  SUCH
PERIOD OR PERIODS.
  (5)  THE  COMMISSIONER  MAY  PRESCRIBE  THAT  THE  CREDIT  UNDER  THIS
SUBSECTION SHALL BE DETERMINED IN WHOLE OR IN PART BY THE USE OF  TABLES
PRESCRIBED  BY SUCH COMMISSIONER. SUCH TABLES SHALL SET FORTH THE CREDIT
TO THE NEAREST DOLLAR.
  (6) ONLY ONE CREDIT PER HOUSEHOLD AND PER QUALIFIED TAXPAYER SHALL  BE
ALLOWED PER TAXABLE YEAR UNDER THIS SUBSECTION. WHEN TWO OR MORE MEMBERS
OF  A  HOUSEHOLD  ARE  ABLE  TO  MEET THE QUALIFICATIONS FOR A QUALIFIED
TAXPAYER, THE CREDIT SHALL BE EQUALLY  DIVIDED  BETWEEN  OR  AMONG  SUCH
INDIVIDUALS UNLESS SUCH INDIVIDUALS FILE WITH THE COMMISSIONER A WRITTEN
AGREEMENT AMONG SUCH INDIVIDUALS SETTING FORTH A DIFFERENT DIVISION.
  (A)  PROVIDED, HOWEVER, WHERE A JOINT INCOME TAX RETURN HAS BEEN FILED
PURSUANT TO THE PROVISIONS OF SECTION  SIX  HUNDRED  FIFTY-ONE  OF  THIS
ARTICLE  BY  A  QUALIFIED  TAXPAYER AND HIS OR HER SPOUSE (OR WHERE BOTH
SPOUSES ARE QUALIFIED TAXPAYERS AND HAVE FILED SUCH JOINT  RETURN),  THE
CREDIT,  OR  THE  PORTION OF THE CREDIT IF DIVIDED, TO WHICH THE SPOUSES
ARE ENTITLED SHALL BE APPLIED AGAINST THE TAX OF BOTH  SPOUSES  AND  ANY
OVERPAYMENT SHALL BE MADE TO BOTH SPOUSES.
  (B)  WHERE  ANY RETURN REQUIRED TO BE FILED PURSUANT TO THE PROVISIONS
OF SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE IS  COMBINED  WITH  ANY
RETURN  OF  TAX IMPOSED PURSUANT TO THE AUTHORITY OF THIS CHAPTER OR ANY
OTHER LAW IF SUCH TAX IS ADMINISTERED BY THE COMMISSIONER, THE CREDIT OR
THE PORTION OF THE CREDIT IF DIVIDED, ALLOWED TO THE QUALIFIED  TAXPAYER
MAY  BE  APPLIED BY THE COMMISSIONER TOWARD ANY LIABILITY FOR THE AFORE-
MENTIONED TAXES.
  (7) NO CREDIT SHALL BE GRANTED UNDER THIS SUBSECTION:
  (A) IF HOUSEHOLD GROSS INCOME FOR THE TAXABLE YEAR EQUALS  OR  EXCEEDS
TWO HUNDRED THOUSAND DOLLARS.
  (B)  TO A PROPERTY OWNER UNLESS: (I) THE PROPERTY IS USED FOR RESIDEN-
TIAL PURPOSES, (II) NOT MORE THAN TWENTY PERCENT OF THE  RENTAL  INCOME,
IF ANY, FROM THE PROPERTY IS FROM RENTAL FOR NONRESIDENTIAL PURPOSES AND
(III) THE PROPERTY IS OCCUPIED AS A RESIDENCE IN WHOLE OR IN PART BY ONE
OR MORE OF THE OWNERS OF THE PROPERTY.
  (C) TO AN INDIVIDUAL WITH RESPECT TO WHOM A DEDUCTION UNDER SUBSECTION
(C)  OF  SECTION  ONE  HUNDRED FIFTY-ONE OF THE INTERNAL REVENUE CODE IS
ALLOWABLE TO ANOTHER TAXPAYER FOR THE TAXABLE YEAR.
  (D) WITH RESPECT TO A RESIDENCE THAT  IS  WHOLLY  EXEMPTED  FROM  REAL
PROPERTY TAXATION.
  (E) TO AN INDIVIDUAL WHO IS NOT A RESIDENT INDIVIDUAL OF THE STATE FOR
THE ENTIRE TAXABLE YEAR.
  (8) THE RIGHT TO CLAIM A CREDIT OR THE PORTION OF A CREDIT, WHERE SUCH
CREDIT  HAS BEEN DIVIDED UNDER THIS SUBSECTION, SHALL BE PERSONAL TO THE
QUALIFIED TAXPAYER AND SHALL NOT SURVIVE HIS  OR  HER  DEATH,  BUT  SUCH
RIGHT MAY BE EXERCISED ON BEHALF OF A CLAIMANT BY HIS OR HER LEGAL GUAR-
DIAN OR ATTORNEY IN FACT DURING HIS OR HER LIFETIME.
  (9)  RETURNS. IF A QUALIFIED TAXPAYER IS NOT REQUIRED TO FILE A RETURN
PURSUANT TO SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE, A CLAIM FOR A
CREDIT MAY BE TAKEN ON A RETURN FILED WITH THE COMMISSIONER WITHIN THREE
YEARS FROM THE TIME IT WOULD HAVE BEEN REQUIRED THAT A RETURN  BE  FILED
PURSUANT  TO  SUCH SECTION HAD THE QUALIFIED TAXPAYER HAD A TAXABLE YEAR
ENDING ON DECEMBER THIRTY-FIRST.  RETURNS UNDER THIS PARAGRAPH SHALL  BE
IN  SUCH FORM AS SHALL BE PRESCRIBED BY THE COMMISSIONER, WHO SHALL MAKE
AVAILABLE SUCH FORMS AND INSTRUCTIONS FOR FILING SUCH RETURNS.

S. 6359                            186                           A. 8559

  (10) PROOF OF CLAIM. THE COMMISSIONER MAY REQUIRE A QUALIFIED TAXPAYER
TO FURNISH THE FOLLOWING INFORMATION IN SUPPORT OF HIS OR HER CLAIM  FOR
CREDIT  UNDER  THIS  SUBSECTION:  HOUSEHOLD  GROSS INCOME, REAL PROPERTY
TAXES LEVIED OR THAT WOULD  HAVE  BEEN  LEVIED  IN  THE  ABSENCE  OF  AN
EXEMPTION  FROM  REAL  PROPERTY  TAX  PURSUANT  TO  SECTION FOUR HUNDRED
SIXTY-SEVEN OF THE REAL PROPERTY TAX LAW, THE NAMES OF  MEMBERS  OF  THE
HOUSEHOLD  AND  OTHER  QUALIFYING TAXPAYERS OCCUPYING THE SAME RESIDENCE
AND THEIR IDENTIFYING NUMBERS INCLUDING SOCIAL SECURITY NUMBERS,  HOUSE-
HOLD  GROSS INCOME, SIZE AND NATURE OF PROPERTY CLAIMED AS RESIDENCE AND
ALL OTHER INFORMATION WHICH MAY  BE  REQUIRED  BY  THE  COMMISSIONER  TO
DETERMINE THE CREDIT.
  (11)  ADMINISTRATION.  THE  PROVISIONS  OF THIS ARTICLE, INCLUDING THE
PROVISIONS OF SECTION SIX HUNDRED FIFTY-THREE, SIX HUNDRED  FIFTY-EIGHT,
AND  SIX HUNDRED FIFTY-NINE AND THE PROVISIONS OF PART SIX OF THIS ARTI-
CLE RELATING TO PROCEDURE AND  ADMINISTRATION,  INCLUDING  THE  JUDICIAL
REVIEW  OF  THE DECISIONS OF THE COMMISSIONER, EXCEPT SO MUCH OF SECTION
SIX HUNDRED EIGHTY-SEVEN WHICH PERMITS A CLAIM FOR CREDIT OR  REFUND  TO
BE  FILED  AFTER  THE  PERIOD  PROVIDED  FOR  IN  PARAGRAPH NINE OF THIS
SUBSECTION AND EXCEPT SECTIONS  SIX  HUNDRED  FIFTY-SEVEN,  SIX  HUNDRED
EIGHTY-EIGHT  AND  SIX HUNDRED NINETY-SIX, SHALL APPLY TO THE PROVISIONS
OF THIS SUBSECTION IN THE SAME MANNER AND WITH THE SAME FORCE AND EFFECT
AS IF THE LANGUAGE OF THOSE PROVISIONS HAD  BEEN  INCORPORATED  IN  FULL
INTO THIS SUBSECTION AND HAD EXPRESSLY REFERRED TO THE CREDIT ALLOWED OR
RETURNS  FILED UNDER THIS SUBSECTION, EXCEPT TO THE EXTENT THAT ANY SUCH
PROVISION IS EITHER INCONSISTENT WITH A PROVISION OF THIS SUBSECTION  OR
IS  NOT  RELEVANT  TO THIS SUBSECTION. AS USED IN SUCH SECTIONS AND SUCH
PART, THE TERM "TAXPAYER" SHALL INCLUDE A QUALIFIED TAXPAYER UNDER  THIS
SUBSECTION  AND,  NOTWITHSTANDING  THE  PROVISIONS  OF SUBSECTION (E) OF
SECTION  SIX  HUNDRED  NINETY-SEVEN,  WHERE  A  QUALIFIED  TAXPAYER  HAS
PROTESTED THE DENIAL OF A CLAIM FOR CREDIT UNDER THIS SUBSECTION AND THE
TIME  TO  FILE  A  PETITION  FOR  REDETERMINATION OF A DEFICIENCY OR FOR
REFUND HAS NOT EXPIRED, HE OR SHE SHALL, SUBJECT TO SUCH  CONDITIONS  AS
MAY  BE  SET  BY  THE COMMISSIONER, RECEIVE SUCH INFORMATION (A) THAT IS
CONTAINED IN ANY RETURN FILED UNDER THIS ARTICLE BY A MEMBER OF  HIS  OR
HER  HOUSEHOLD FOR THE TAXABLE YEAR FOR WHICH THE CREDIT IS CLAIMED, AND
(B) THAT THE COMMISSIONER FINDS IS RELEVANT AND MATERIAL TO THE ISSUE OF
WHETHER SUCH CLAIM WAS PROPERLY DENIED.
  (12) NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE,  THE  CREDIT
ALLOWED  UNDER  THIS  SUBSECTION  SHALL BE DETERMINED AFTER THE DETERMI-
NATION  AND  APPLICATION  OF  ANY  OTHER  CREDITS  PERMITTED  UNDER  THE
PROVISIONS  OF  THIS  ARTICLE.    A TAXPAYER SHALL BE ALLOWED EITHER THE
CREDIT PROVIDED BY THIS SUBSECTION OR  THE  REAL  PROPERTY  TAX  CIRCUIT
BREAKER  CREDIT PROVIDED BY SUBSECTION (E) OF THIS SECTION, WHICHEVER IS
GREATER.
  S 3. Paragraph 14 of subsection (e) of section 606 of the tax  law  is
REPEALED.
  S 4. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

                                 PART L

  Section  1.    Section  606  of the tax law is amended by adding a new
subsection (b-1) to read as follows:
  (B-1) RENTERS' CREDIT.
  (1) FOR THE PURPOSES OF THIS SUBSECTION:

S. 6359                            187                           A. 8559

  (A) "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE  WHO
HAS  OCCUPIED  AND  PAID  RENT  FOR HIS OR HER PRIMARY RESIDENCE IN THIS
STATE FOR SIX MONTHS OR MORE OF THE TAXABLE YEAR, IS REQUIRED OR CHOOSES
TO FILE A RETURN UNDER THIS ARTICLE, AND (I) IS SIXTY-FIVE YEARS OF  AGE
OR  OLDER, (II) IS FILING A JOINT RETURN WITH A SPOUSE WHO IS SIXTY-FIVE
YEARS OF AGE OR OLDER, (III) IS A HEAD OF HOUSEHOLD, (IV) IS  A  MARRIED
INDIVIDUAL  FILING  A  JOINT  RETURN  WITH A SPOUSE AND HAS AT LEAST ONE
DEPENDENT, (V) IS A MARRIED INDIVIDUAL FILING A SEPARATE RETURN AND  HAS
AT  LEAST  ONE DEPENDENT, OR (VI) IS A SURVIVING SPOUSE AND HAS AT LEAST
ONE DEPENDENT. AN INDIVIDUAL CANNOT BE A QUALIFIED TAXPAYER IF HE OR SHE
IS AN INDIVIDUAL WITH RESPECT TO WHOM A DEDUCTION UNDER  SUBSECTION  (C)
OF  SECTION  151  OF  THE  INTERNAL REVENUE CODE IS ALLOWABLE TO ANOTHER
TAXPAYER FOR THE TAXABLE YEAR OR PAYS RENT FOR HIS OR HER PRIMARY  RESI-
DENCE  TO  A FAMILY MEMBER SHARING THE SAME PRIMARY RESIDENCE.  A FAMILY
MEMBER OF AN INDIVIDUAL IS THE  INDIVIDUAL'S  SPOUSE,  BROTHER,  SISTER,
PARENT,  GRANDPARENT,  CHILD, GRANDCHILD, UNCLE, AUNT, NEPHEW, OR NIECE,
RELATED TO THE INDIVIDUAL BY BLOOD, MARRIAGE OR ADOPTION.
  (B) "RESIDENCE" MEANS A DWELLING IN THIS STATE AND MAY  CONSIST  OF  A
PART  OF  A MULTI-DWELLING OR MULTI-PURPOSE BUILDING INCLUDING A COOPER-
ATIVE OR CONDOMINIUM, AND RENTAL UNITS WITHIN A SINGLE  DWELLING.  RESI-
DENCE  INCLUDES  A TRAILER OR MOBILE HOME, USED EXCLUSIVELY FOR RESIDEN-
TIAL PURPOSES AND DEFINED AS REAL PROPERTY PURSUANT TO PARAGRAPH (G)  OF
SUBDIVISION  TWELVE  OF SECTION ONE HUNDRED TWO OF THE REAL PROPERTY TAX
LAW.
  (2) (A) A QUALIFIED TAXPAYER SHALL BE ALLOWED A CREDIT AS PROVIDED  IN
THIS SUBSECTION AGAINST THE TAXES IMPOSED BY THIS ARTICLE REDUCED BY THE
CREDITS  PERMITTED  BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE TAX AS SO
REDUCED FOR SUCH YEAR UNDER THIS ARTICLE, THE EXCESS SHALL BE TREATED AS
AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH  THE
PROVISIONS  OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED,
HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON. IF A QUALIFIED TAXPAYER
IS NOT REQUIRED TO FILE A RETURN PURSUANT TO SECTION SIX HUNDRED  FIFTY-
ONE  OF  THIS  ARTICLE  BUT  OTHERWISE QUALIFIES FOR A CREDIT UNDER THIS
SUBSECTION, A CLAIM FOR A CREDIT MAY BE TAKEN ON A RETURN FILED WITH THE
COMMISSIONER WITHIN THREE YEARS FROM THE TIME THAT A RETURN  WOULD  HAVE
BEEN  REQUIRED  TO  BE FILED PURSUANT TO SUCH SECTION HAD SUCH QUALIFIED
TAXPAYER HAD A TAXABLE YEAR ENDING  ON  DECEMBER  THIRTY-FIRST.  RETURNS
SHALL  BE  IN  SUCH  FORM AS PRESCRIBED BY THE COMMISSIONER. A QUALIFIED
TAXPAYER MUST PROVIDE ANY INFORMATION THE COMMISSIONER  DEEMS  NECESSARY
TO DETERMINE THE CREDIT ALLOWED.
  (B) IF MORE THAN ONE QUALIFIED TAXPAYER PAYS RENT FOR THE SAME PRIMARY
RESIDENCE  AND  HAS  A  FEDERAL ADJUSTED GROSS INCOME FOR WHICH A CREDIT
WOULD OTHERWISE BE DUE, EACH SUCH QUALIFIED TAXPAYER  SHALL  DIVIDE  THE
BASE  AMOUNT  OF  THE  CREDIT ALLOWED FOR HIS OR HER INCOME LEVEL BY THE
TOTAL NUMBER OF INDIVIDUALS OR MARRIED COUPLES FILING A JOINT RETURN WHO
ARE PAYING THE RENT, WHETHER OR NOT ELIGIBLE FOR A CREDIT, TO  DETERMINE
THE  AMOUNT OF CREDIT ALLOWED TO THAT QUALIFIED TAXPAYER. ANY ADDITIONAL
AMOUNT OF CREDIT DETERMINED BASED ON THE NUMBER OF EXEMPTIONS CLAIMED BY
SUCH TAXPAYER SHALL NOT BE SO DIVIDED.
  (C) A QUALIFIED TAXPAYER  SHALL  BE  ALLOWED  THE  CREDIT  UNDER  THIS
SUBSECTION OR THE CREDIT UNDER SUBSECTION (E) OF THIS SECTION, WHICHEVER
IS THE HIGHER AMOUNT.
  (3)  (A)  FOR ANY QUALIFIED TAXPAYER WHO IS SIXTY-FIVE YEARS OF AGE OR
OLDER WITH A FILING STATUS OF SINGLE, THE AMOUNT OF THE  CREDIT  ALLOWED
PURSUANT  TO  THIS  PARAGRAPH SHALL BE DETERMINED IN ACCORDANCE WITH THE
FOLLOWING TABLES:

S. 6359                            188                           A. 8559

FOR TAXABLE YEARS BEGINNING IN 2014,
IF FEDERAL ADJUSTED GROSS INCOME IS:        THE CREDIT SHALL BE:
$25,000 OR LESS                                     $110
OVER $25,000 BUT NOT OVER $40,000                    $90
OVER $40,000 BUT NOT OVER $50,000                    $70

FOR TAXABLE YEARS BEGINNING IN OR
AFTER 2015, IF FEDERAL ADJUSTED GROSS
INCOME IS:                                  THE CREDIT SHALL BE:
$25,000 OR LESS                                     $220
OVER $25,000 BUT NOT OVER $40,000                   $180
OVER $40,000 BUT NOT OVER $50,000                   $140
  (B) FOR ANY OTHER QUALIFIED TAXPAYER, THE AMOUNT OF THE CREDIT ALLOWED
PURSUANT  TO  THIS  PARAGRAPH SHALL BE DETERMINED IN ACCORDANCE WITH THE
FOLLOWING TABLES; PROVIDED, HOWEVER, THAT A QUALIFIED TAXPAYER WHO IS  A
MARRIED  INDIVIDUAL  FILING  A SEPARATE NEW YORK INCOME TAX RETURN SHALL
RECEIVE ONE-HALF OF THE BASE AMOUNT OF THE CREDIT  PLUS  ANY  ADDITIONAL
AMOUNT FOR WHICH SUCH TAXPAYER WOULD BE ELIGIBLE BASED ON THE INCOME AND
NUMBER OF EXEMPTIONS CLAIMED BY SUCH TAXPAYER:

FOR TAXABLE YEARS BEGINNING IN 2014,
IF FEDERAL ADJUSTED GROSS INCOME IS:         THE CREDIT SHALL BE:
$25,000 OR LESS                              $80 PLUS AN AMOUNT
                                             EQUAL TO $35
                                             MULTIPLIED BY A
                                             NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER
                                             (OR IN THE CASE
                                             OF A MARRIED COUPLE
                                             FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED
                                             TO A DEDUCTION FOR THE
                                             TAXABLE YEAR FOR FEDERAL
                                             INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B)
                                             AND (C) OF SECTION 151
                                             OF THE INTERNAL REVENUE CODE

OVER $25,000 BUT NOT OVER $45,000            $65 PLUS AN AMOUNT
                                             EQUAL TO $24
                                             MULTIPLIED BY A NUMBER
                                             WHICH IS ONE LESS THAN
                                             THE NUMBER OF EXEMPTIONS
                                             FOR WHICH THE TAXPAYER
                                             (OR IN THE CASE OF
                                             A MARRIED COUPLE FILING A
                                             JOINT RETURN, TAXPAYERS)
                                             IS ENTITLED TO A
                                             DEDUCTION FOR THE TAXABLE
                                             YEAR FOR FEDERAL INCOME
                                             TAX PURPOSES UNDER
                                             SUBSECTIONS (B) AND (C)
                                             OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE

S. 6359                            189                           A. 8559

OVER $45,000 BUT NOT OVER $65,000            $55 PLUS AN AMOUNT
                                             EQUAL TO $12 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER (OR
                                             IN THE CASE OF A MARRIED
                                             COUPLE FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED
                                             TO A DEDUCTION FOR THE
                                             TAXABLE YEAR FOR FEDERAL
                                             INCOME TAX PURPOSES UNDER
                                             SUBSECTIONS (B) AND (C)
                                             OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE

OVER $65,000 BUT NOT OVER $100,000           $45 PLUS AN AMOUNT
                                             EQUAL TO $12 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR WHICH
                                             THE TAXPAYER (OR IN THE
                                             CASE OF A MARRIED COUPLE
                                             FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED TO
                                             A DEDUCTION FOR THE TAXABLE
                                             YEAR FOR FEDERAL INCOME TAX
                                             PURPOSES UNDER SUBSECTIONS
                                             (B) AND (C) OF SECTION 151
                                             OF THE INTERNAL REVENUE CODE

FOR TAXABLE YEARS BEGINNING IN OR
AFTER 2015, IF FEDERAL ADJUSTED GROSS
INCOME IS:                                   THE CREDIT SHALL BE:
$25,000 OR LESS                              $160 PLUS AN
                                             AMOUNT EQUAL TO $70
                                             MULTIPLIED BY A NUMBER WHICH
                                             IS ONE LESS THAN THE
                                             NUMBER OF EXEMPTIONS
                                             FOR WHICH THE TAXPAYER
                                             (OR IN THE CASE OF A
                                             MARRIED COUPLE FILING A
                                             JOINT RETURN, TAXPAYERS)
                                             IS ENTITLED TO A DEDUCTION
                                             FOR THE TAXABLE YEAR FOR
                                             FEDERAL INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B) AND
                                             (C) OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE

OVER $25,000 BUT NOT OVER $45,000            $130 PLUS AN AMOUNT
                                             EQUAL TO $48
                                             MULTIPLIED BY A NUMBER
                                             WHICH IS ONE LESS THAN
                                             THE NUMBER OF EXEMPTIONS
                                             FOR WHICH THE TAXPAYER

S. 6359                            190                           A. 8559

                                             (OR IN THE CASE OF
                                             A MARRIED COUPLE FILING
                                             A JOINT RETURN, TAXPAYERS)
                                             IS ENTITLED TO A DEDUCTION
                                             FOR THE TAXABLE YEAR FOR
                                             FEDERAL INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B)
                                             AND (C) OF SECTION 151
                                             OF THE INTERNAL REVENUE CODE

OVER $45,000 BUT NOT OVER $65,000            $110 PLUS AN AMOUNT
                                             EQUAL TO $24 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER (OR
                                             IN THE CASE OF A MARRIED
                                             COUPLE FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED TO A
                                             DEDUCTION FOR THE TAXABLE
                                             YEAR FOR FEDERAL INCOME TAX
                                             PURPOSES UNDER SUBSECTIONS
                                             (B) AND (C) OF SECTION 151
                                             OF THE INTERNAL  REVENUE CODE

OVER $65,000 BUT NOT OVER $100,000           $90 PLUS AN AMOUNT
                                             EQUAL TO $24 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER (OR
                                             IN THE CASE OF A MARRIED
                                             COUPLE FILING A JOINT RETURN,
                                             TAXPAYERS) IS
                                             ENTITLED TO A DEDUCTION
                                             FOR THE TAXABLE YEAR FOR
                                             FEDERAL INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B) AND
                                             (C) OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE
  S 2. This act shall take effect immediately.

                                 PART M

  Section  1. Paragraphs 2, 4 and 5 of subsection (vv) of section 606 of
the tax law, as added by section 1 of part CC of chapter 59 of the  laws
of 2013, are amended to read as follows:
  2.  To  be  eligible for the credit, the taxpayer (or taxpayers filing
joint returns) on the personal income tax return filed for  the  taxable
year  [two  years  prior],  must  [have]  (a)  [been] BE a resident, (b)
[claimed] CLAIM one or more dependent children who were under the age of
seventeen on the last day of the taxable year, (c) [had] HAVE  New  York
adjusted  gross income of at least forty thousand dollars but no greater
than three hundred thousand dollars, and (d) [had] HAVE a tax  liability
as  determined  under paragraph three of this subsection of greater than
or equal to zero.

S. 6359                            191                           A. 8559

  4. [For each year  this  credit  is  allowed,  on  or  before  October
fifteenth  of such year, the commissioner shall determine the taxpayer's
eligibility for this credit utilizing the information available  to  the
commissioner  on the taxpayer's personal income tax return filed for the
taxable  year two years prior to the taxable year in which the credit is
allowed. For those taxpayers whom the commissioner has determined eligi-
ble for this credit, the commissioner shall advance a payment  of  three
hundred  fifty  dollars. When a taxpayer files his or her return for the
taxable year, such taxpayer shall properly reconcile that payment on his
or her return.
  5.] If the amount of the credit allowed under  this  subsection  shall
exceed  the  taxpayer's  tax  for  the taxable year, the excess shall be
treated as an overpayment of tax to be credited or refunded  in  accord-
ance with the provisions of SECTION six hundred eighty-six of this arti-
cle, provided, however, that no interest shall be paid thereon.
  S 2. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2015.

                                 PART N

  Section  1.  Paragraph  1  of subsection (a) of section 651 of the tax
law, as amended by chapter 333 of the laws of 1987, is amended  to  read
as follows:
  (1)  every  resident  individual (A) required to file a federal income
tax return for the taxable year, or (B) having  federal  adjusted  gross
income  for  the  taxable  year,  increased  by  the modifications under
subsection (b) of section six hundred twelve OF THIS ARTICLE, in  excess
of [four thousand dollars, or in excess of] his OR HER New York standard
deduction,  [if  lower,] or (C) subject to tax under section six hundred
two OF THIS ARTICLE, or (D) having received during the  taxable  year  a
lump  sum  distribution  any  portion  of  which is subject to tax under
section six hundred three OF THIS ARTICLE;
  S 2. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2014.

                                 PART O

  Section 1. Paragraph 1 of subdivision (a) of section  28  of  the  tax
law,  as  amended  by  section  1 of part I of chapter 59 of the laws of
2012, is amended to read as follows:
  (1) A taxpayer which is a qualified commercial production company,  or
which is a sole proprietor of a qualified commercial production company,
and  which  is subject to tax under article nine-A or twenty-two of this
chapter, shall be allowed a credit against such  tax,  pursuant  to  the
provisions referenced in subdivision (c) of this section, to be computed
as  provided in this section. Provided, however, to be eligible for such
credit, at least seventy-five percent of the production costs (excluding
post production costs) paid or incurred directly  and  predominantly  in
the  actual  filming  or  recording  of the qualified commercial must be
costs incurred in New York state. The tax  credit  allowed  pursuant  to
this  section  shall  apply  to  taxable  years beginning before January
first, two thousand [fifteen] SEVENTEEN.
  S 2. Paragraph (a) of subdivision 38 of section 210 of the tax law, as
amended by section 3 of part I of chapter 59 of the  laws  of  2012,  is
amended to read as follows:

S. 6359                            192                           A. 8559

  (a)  Allowance  of  credit.  A  taxpayer  that is eligible pursuant to
provisions of section twenty-eight of this chapter shall  be  allowed  a
credit  to  be  computed  as  provided  in  such section against the tax
imposed by this article. The tax credit allowed pursuant to this section
shall  apply  to taxable years beginning before January first, two thou-
sand [fifteen] SEVENTEEN.
  S 3. Paragraph 1 of subsection (jj) of section 606 of the tax law,  as
amended  by  section  4  of part I of chapter 59 of the laws of 2012, is
amended to read as follows:
  (1) Allowance of credit. A taxpayer that is eligible pursuant  to  the
provisions  of  section  twenty-eight of this chapter shall be allowed a
credit to be computed as  provided  in  such  section  against  the  tax
imposed by this article. The tax credit allowed pursuant to this section
shall  apply  to taxable years beginning before January first, two thou-
sand [fifteen] SEVENTEEN.
  S 4. This act shall take effect immediately.

                                 PART P

  Section 1. Subdivision 4 of section 22 of the public housing  law,  as
amended  by  section  2  of part J of chapter 59 of the laws of 2012, is
amended to read as follows:
  4. Statewide limitation. The aggregate dollar amount of  credit  which
the  commissioner  may  allocate  to eligible low-income buildings under
this article shall be [forty-eight] FIFTY-SIX million dollars. The limi-
tation provided by this subdivision applies only to  allocation  of  the
aggregate  dollar  amount  of  credit  by the commissioner, and does not
apply to allowance to a taxpayer of the credit with respect to an eligi-
ble low-income building for each year of the credit period.
  S 2. Subdivision 4 of section 22 of the public housing law, as amended
by section one of this act, is amended to read as follows:
  4. Statewide limitation. The aggregate dollar amount of  credit  which
the  commissioner  may  allocate  to eligible low-income buildings under
this article shall be [fifty-six] SIXTY-FOUR million dollars. The  limi-
tation  provided  by  this subdivision applies only to allocation of the
aggregate dollar amount of credit by  the  commissioner,  and  does  not
apply to allowance to a taxpayer of the credit with respect to an eligi-
ble low-income building for each year of the credit period.
  S  3.  This act shall take effect immediately; provided, however, that
section two of this act shall take effect April 1, 2015.

                                 PART Q

  Section 1. Subdivision (b) of section  27-1318  of  the  environmental
conservation  law,  as  amended by section 2 of part E of chapter 577 of
the laws of 2004, is amended to read as follows:
  (b) Within [sixty] ONE HUNDRED EIGHTY  days  of  commencement  of  the
remedial design, the owner of an inactive hazardous waste disposal site,
and/or  any  person  responsible  for implementing a remedial program at
such site, where institutional  or  engineering  controls  are  employed
pursuant to this title, shall execute an environmental easement pursuant
to title thirty-six of article seventy-one of this chapter.
  S  2.  Subdivision 2 of section 27-1405 of the environmental conserva-
tion law, as amended by section 2 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:

S. 6359                            193                           A. 8559

  2.  "Brownfield  site"  or  "site"  shall mean any real property[, the
redevelopment or reuse of which may be complicated by  the  presence  or
potential  presence of] WHERE a contaminant IS PRESENT AT LEVELS EXCEED-
ING THE SOIL CLEANUP OBJECTIVES OR OTHER HEALTH-BASED  OR  ENVIRONMENTAL
STANDARDS PROMULGATED BY THE DEPARTMENT THAT ARE APPLICABLE BASED ON THE
REASONABLY ANTICIPATED USE OF THE PROPERTY, AS DETERMINED BY THE DEPART-
MENT. Such term shall not include real property:
  (a)  listed in the registry of inactive hazardous waste disposal sites
under section 27-1305 of this article at the time of application to this
program and given a classification as described in subparagraph  one  or
two  of  paragraph b of subdivision two of section 27-1305 of this arti-
cle; provided, however [except until July  first,  two  thousand  five],
real  property  listed  in  the  registry  of  inactive  hazardous waste
disposal sites under subparagraph two of paragraph b of subdivision  two
of  section 27-1305 of this article [prior to the effective date of this
article], where such real property is owned  by  a  volunteer  OR  UNDER
CONTRACT  TO  BE  TRANSFERRED  TO A VOLUNTEER AND THE DEPARTMENT HAS NOT
IDENTIFIED ANY RESPONSIBLE PARTIES FOR THAT PROPERTY HAVING THE  ABILITY
TO  PAY  FOR  THE INVESTIGATION OR CLEANUP OF THE PROPERTY, shall not be
deemed ineligible to participate and further provided that the status of
any such site as listed in the registry shall not be  altered  prior  to
the  issuance of a certificate of completion pursuant to section 27-1419
of this title. THE DEPARTMENT'S ASSESSMENT  OF  ELIGIBILITY  UNDER  THIS
PARAGRAPH  SHALL  NOT  CONSTITUTE  A  FINDING  CONCERNING LIABILITY WITH
RESPECT TO THE PROPERTY;
  (b) listed on the national priorities list established under authority
of 42 U.S.C. section 9605;
  (c) subject to an enforcement action under title seven or nine of this
article, [except] OR PERMITTED  AS  a  treatment,  storage  or  disposal
facility  [subject to a permit]; provided, that nothing herein contained
shall be deemed otherwise to exclude from the scope of the term  "brown-
field  site"  a  hazardous waste treatment, storage or disposal facility
having interim  status  according  to  regulations  promulgated  by  the
commissioner;
  (d)  subject to an order for cleanup pursuant to article twelve of the
navigation law or pursuant to title ten of  article  seventeen  of  this
chapter  except  such  property  shall not be deemed ineligible if it is
subject to a stipulation agreement; or
  (e) subject to any  other  on-going  state  or  federal  environmental
enforcement action related to the contamination which is at or emanating
from the site subject to the present application.
  S  3.  Subdivision 1 of section 27-1407 of the environmental conserva-
tion law, as amended by section 3 of part A of chapter 577 of  the  laws
of  2004,  is  amended  and  a  new  subdivision 1-a is added to read as
follows:
  1. A person who seeks to participate in this program  shall  submit  a
request  to  the  department  on a form provided by the department. Such
form shall include information to be determined by the department suffi-
cient to allow the department to determine eligibility and the  current,
intended and reasonably anticipated future land use of the site pursuant
to  section  27-1415  of  this  title.   ANY SUCH PERSON SHALL SUBMIT AN
INVESTIGATION REPORT SUFFICIENT TO DEMONSTRATE THAT  THE  SITE  REQUIRES
REMEDIATION  IN  ORDER  TO MEET THE REMEDIAL REQUIREMENTS OF THIS TITLE;
AND, FOR ANY STRATEGIC SITE LOCATED WITHIN A BROWNFIELD OPPORTUNITY AREA
DESIGNATED BY THE SECRETARY OF STATE PURSUANT TO  SECTION  NINE  HUNDRED
SEVENTY-R  OF THE GENERAL MUNICIPAL LAW, A CERTIFICATION THAT THE DEVEL-

S. 6359                            194                           A. 8559

OPMENT OF THE SITE WILL BE IN CONFORMANCE WITH SUCH BROWNFIELD  OPPORTU-
NITY AREA PLAN.
  1-A.  IF  THE  PERSON IS ALSO SEEKING TO RECEIVE THE TANGIBLE PROPERTY
CREDIT COMPONENT OF THE BROWNFIELD REDEVELOPMENT TAX CREDIT PURSUANT  TO
PARAGRAPH  THREE OF SUBDIVISION (A) OF SECTION TWENTY-ONE OF THE TAX LAW
SUCH PERSON SHALL SUBMIT INFORMATION SUFFICIENT TO DEMONSTRATE THAT  (1)
THE SITE HAS: (I) BEEN A VACANT LOT FOR FIFTEEN OR MORE YEARS, OR (II) A
BUILDING  OR  BUILDINGS THAT HAVE BEEN VACANT FOR FIFTEEN OR MORE YEARS,
OR (III) A LOT OR BUILDINGS HAVE BEEN BOTH VACANT AND TAX DELINQUENT FOR
TEN OR MORE YEARS, (2) THE PROJECTED COST OF THE INVESTIGATION AND REME-
DIATION WHICH IS PROTECTIVE FOR THE ANTICIPATED USE OF THE SITE  EXCEEDS
THE  CERTIFIED  APPRAISED VALUE OF THE PROPERTY ABSENT CONTAMINATION, OR
(3) THE PROJECT IS A PRIORITY ECONOMIC DEVELOPMENT PROJECT AS DETERMINED
BY THE DEPARTMENT OF ECONOMIC DEVELOPMENT THAT HAS RECEIVED A RESOLUTION
FROM THE MUNICIPALITY WITHIN WHICH  THE  SITE  IS  LOCATED  STATING  THE
PROPOSED PROJECT IS CONSISTENT WITH THE MUNICIPALITY'S LOCAL REVITALIZA-
TION OR DEVELOPMENT PLAN.  "PRIORITY ECONOMIC DEVELOPMENT PROJECT" MEANS
(A)  A  MANUFACTURER  CREATING  AT LEAST ONE HUNDRED NET NEW JOBS IN THE
STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT  IN  THE  STATE;  (B)  A
BUSINESS  CREATING  AT  LEAST ONE HUNDRED NET NEW JOBS IN AGRICULTURE IN
THE STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE STATE; (C)  A
FINANCIAL  SERVICES  FIRM, DISTRIBUTION CENTER, OR BACK OFFICE OPERATION
CREATING AT LEAST THREE HUNDRED NET NEW JOBS IN  THE  STATE  AND  MAKING
SIGNIFICANT  CAPITAL  INVESTMENT IN THE STATE; (D) A SCIENTIFIC RESEARCH
AND DEVELOPMENT FIRM CREATING AT LEAST ONE HUNDRED NET NEW JOBS  IN  THE
STATE,  AND  MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE STATE; (E) THE
CORPORATE HEADQUARTERS OF A FIRM CREATING AT LEAST ONE HUNDRED  NET  NEW
JOBS  IN  THE  STATE,  AND  MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE
STATE; OR (F) A SOFTWARE DEVELOPMENT OR NEW MEDIA FIRM CREATING AT LEAST
FIFTY NET NEW JOBS IN THE STATE, AND MAKING SIGNIFICANT CAPITAL  INVEST-
MENT  IN  THE STATE. OTHER BUSINESSES CREATING THREE HUNDRED OR MORE NET
NEW JOBS IN THE STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT  IN  THE
STATE  MAY  BE  CONSIDERED  ELIGIBLE  AS  PRIORITY  ECONOMIC DEVELOPMENT
PROJECT BY THE COMMISSIONER OF ECONOMIC DEVELOPMENT AS WELL.  AN  APPLI-
CANT  MAY  REQUEST  AN  ELIGIBILITY  DETERMINATION FOR TANGIBLE PROPERTY
CREDITS FROM THE COMMISSIONER OF ECONOMIC  DEVELOPMENT  FOR  A  PRIORITY
ECONOMIC  DEVELOPMENT PROJECT WHEN IT CAN DEMONSTRATE THAT IT MEETS SUCH
CRITERIA ANY TIME FROM APPLICATION TO THREE YEARS FROM THE DATE THE SITE
RECEIVES A CERTIFICATE OF COMPLETION PURSUANT TO SECTION 27-1419 OF THIS
TITLE.  THE COMMISSIONER OF ECONOMIC DEVELOPMENT SHALL PROMULGATE  REGU-
LATIONS TO DETERMINE WHAT CONSTITUTES SIGNIFICANT CAPITAL INVESTMENT FOR
EACH  OF  THE  PROJECT CATEGORIES INDICATED IN THIS SUBDIVISION AND WHAT
ADDITIONAL CRITERIA A BUSINESS MUST MEET TO BE ELIGIBLE  AS  A  PRIORITY
ECONOMIC DEVELOPMENT PROJECT.
  SITES  ARE  NOT  ELIGIBLE FOR TANGIBLE PROPERTY TAX CREDITS IF (1) THE
CONTAMINATION IS SOLELY EMANATING FROM  PROPERTY  OTHER  THAN  THE  SITE
SUBJECT TO THE PRESENT APPLICATION; OR (2) THE DEPARTMENT HAS DETERMINED
THAT  THE  PROPERTY  HAS  PREVIOUSLY BEEN REMEDIATED SUCH THAT IT MAY BE
DEVELOPED FOR ITS THEN INTENDED USE.
  S 4. Subdivision 3 of section 27-1407 of the  environmental  conserva-
tion  law,  as amended by section 3 of part A of chapter 577 of the laws
of 2004, is amended to read as follows:
  3. The department shall notify the person requesting participation  in
this  program within [ten] THIRTY days after receiving such request that
such request is either complete or incomplete. In the event the applica-
tion is determined to be incomplete  the  department  shall  specify  in

S. 6359                            195                           A. 8559

writing  the  missing  necessary  information  required pursuant to this
article to complete the  application  and  shall  have  ten  days  after
receipt  of  the missing information to issue a written determination if
the application is complete.
  S  5.  Subdivision 6 of section 27-1407 of the environmental conserva-
tion law, as added by section 1 of part A of chapter 1 of  the  laws  of
2003, is amended to read as follows:
  6.  The  department shall use all best efforts to expeditiously notify
the applicant within forty-five days after receiving [their  request]  A
COMPLETE  APPLICATION  for  participation  that  such  request is either
accepted or rejected, AND, FOR ANY  APPLICANT  SEEKING  TO  RECEIVE  THE
TANGIBLE  PROPERTY  CREDIT COMPONENT OF THE BROWNFIELD REDEVELOPMENT TAX
CREDIT PURSUANT TO PARAGRAPH THREE OF SUBDIVISION (A) OF  SECTION  TWEN-
TY-ONE OF THE TAX LAW, WHETHER THE CRITERIA FOR RECEIVING SUCH COMPONENT
AS SET FORTH IN SUBDIVISION ONE OF THIS SECTION HAVE BEEN MET.
  S  6.  Subdivision 9 of section 27-1407 of the environmental conserva-
tion law is amended by adding a new paragraph (g) to read as follows:
  (G) THE PERSON'S PARTICIPATION  IN  ANY  REMEDIAL  PROGRAM  UNDER  THE
DEPARTMENT'S  OVERSIGHT  WAS  TERMINATED BY THE DEPARTMENT OR BY A COURT
FOR FAILURE TO SUBSTANTIALLY COMPLY WITH AN AGREEMENT OR ORDER.
  S 7. Subdivision 2 of section 27-1409 of the  environmental  conserva-
tion  law,  as amended by section 4 of part A of chapter 577 of the laws
of 2004, is amended to read as follows:
  2. One requiring (A) the [applicant]  PARTICIPANT  to  pay  for  state
costs,  INCLUDING THE RECOVERY OF STATE COSTS INCURRED BEFORE THE EFFEC-
TIVE DATE OF SUCH AGREEMENT; provided, however, that SUCH COSTS  MAY  BE
BASED  ON  A  REASONABLE FLAT-FEE FOR OVERSIGHT, WHICH SHALL REFLECT THE
PROJECTED FUTURE STATE COSTS  INCURRED  IN  NEGOTIATING  AND  OVERSEEING
IMPLEMENTATION OF SUCH AGREEMENT; AND
  (B)  with respect to a brownfield site which the department has deter-
mined constitutes a significant threat to the public health or  environ-
ment  the  department may include a provision requiring the applicant to
provide a technical assistance grant, as described in  subdivision  four
of  section  27-1417  of  this  title and under the conditions described
therein, to an eligible party in accordance with procedures  established
under  such  program, with the cost of such a grant incurred by a volun-
teer serving as an offset against such state costs[. Where the applicant
is a participant, the department shall include  provisions  relating  to
recovery  of  state  costs  incurred  before  the effective date of such
agreement];
  S 8. Section 27-1411 of the environmental conservation law is  amended
by adding two new subdivisions 6 and 7 to read as follows:
  6.  AN APPLICANT SHALL COMMENCE IMPLEMENTATION OF ANY WORK PLAN WITHIN
NINETY DAYS OF APPROVAL OF THE PLAN BY THE DEPARTMENT AND  COMPLETE  THE
ACTIVITIES  PROVIDED FOR IN SUCH WORK PLAN IN ACCORDANCE WITH THE SCHED-
ULE SET FORTH THEREIN, OR AS OTHERWISE APPROVED  BY  THE  DEPARTMENT  IN
WRITING.
  7.  AN  APPLICANT  SHALL  INCLUDE  WITH  EVERY REPORT SUBMITTED TO THE
DEPARTMENT A SCHEDULE FOR THE SUBMISSION OF  ANY  SUBSEQUENT  WORK  PLAN
REQUIRED TO MEET THE REQUIREMENTS OF THIS TITLE.
  S  9.  Subdivision 2 of section 27-1413 of the environmental conserva-
tion law, as amended by section 6 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  2.  For  all  [other]  sites  SEEKING TO RECEIVE THE TANGIBLE PROPERTY
CREDIT COMPONENT PURSUANT TO  PARAGRAPH  THREE  OF  SUBDIVISION  (A)  OF
SECTION TWENTY-ONE OF THE TAX LAW, the applicant shall develop and eval-

S. 6359                            196                           A. 8559

uate  at  least  two remedial alternatives, one of which would achieve a
Track 1 cleanup. The department shall have the discretion to require the
evaluation of additional alternatives at a site that has been determined
to  pose  a  significant threat. The applicant shall submit the alterna-
tives analysis [as a part of the remedial work plan] to  the  department
for review, approval, modification or rejection.
  S  10. Subdivision 4 of section 27-1415 of the environmental conserva-
tion law, as amended by section 7 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  4.  Tracks. The commissioner, in consultation with the commissioner of
health, shall propose within twelve months and thereafter timely promul-
gate regulations which create a multi-track approach for the remediation
of contamination, and, commencing on the effective date  of  such  regu-
lations,  utilize  such  multi-track  approach.  Such  regulations shall
provide that groundwater  use  in  Tracks  2,  3  or  4  can  be  either
restricted or unrestricted. The tracks shall be as follows:
  Track  1: The remedial program shall achieve a cleanup level that will
allow the site to be used for any purpose without restriction and  with-
out reliance on the long-term employment of institutional or engineering
controls,  and shall achieve contaminant-specific remedial action objec-
tives for soil which conform with those contained in the  generic  table
of  contaminant-specific remedial action objectives for unrestricted use
developed pursuant to subdivision six of this section.  Provided, howev-
er, that volunteers whose proposed remedial program [for the remediation
of groundwater] (1)(I) may require the long-term employment of  institu-
tional  or engineering controls FOR THE REMEDIATION OF GROUNDWATER after
the bulk reduction of groundwater contamination to asymptotic levels has
been achieved OR  (II)  MAY  REQUIRE  AN  INSTITUTIONAL  OR  ENGINEERING
CONTROL  FOR MORE THAN FIVE YEARS SOLELY TO ADDRESS SOIL VAPOR INTRUSION
but (2) whose program would  otherwise  conform  with  the  requirements
necessary to qualify for Track 1, shall qualify for Track 1.
  Track  2:  The remedial program may include restrictions on the use of
the site or reliance on the long-term employment of  engineering  and/or
institutional  controls, but shall achieve contaminant-specific remedial
action objectives for soil which conform with those contained in one  of
the generic tables developed pursuant to subdivision six of this section
without  the  use of institutional or engineering controls to reach such
objectives.
  Track 3: The remedial program shall achieve contaminant-specific reme-
dial action objectives for soil which conform with the criteria used  to
develop  the  generic  tables  for such objectives developed pursuant to
subdivision six of this section but may use site specific data to deter-
mine such objectives.
  Track 4: The remedial program shall achieve a cleanup level that  will
be protective for the site's current, intended or reasonably anticipated
residential,  commercial,  or  industrial use with restrictions and with
reliance on the long-term employment  of  institutional  or  engineering
controls  to  achieve  such  level.  The  regulations  shall  include  a
provision requiring that a cleanup level which poses a  risk  in  excee-
dance  of  an  excess cancer risk of one in one million for carcinogenic
end points and a hazard index of one for non-cancer  end  points  for  a
specific  contaminant  at a specific site may be approved by the depart-
ment without requiring the use of institutional or engineering  controls
to  eliminate  exposure only upon a site specific finding by the commis-
sioner, in consultation with the commissioner of health, that such level
shall be protective of public health and environment. Such finding shall

S. 6359                            197                           A. 8559

be included in the draft remedial work  plan  for  the  site  and  fully
described in the notice and fact sheet provided for such work plan.
  S  11. Paragraphs (b), (c) and (d) of subdivision 7 of section 27-1415
of the environmental conservation law are relettered paragraphs (c), (d)
and (e) and a new paragraph (b) is added to read as follows:
  (B) WITHIN ONE HUNDRED EIGHTY DAYS OF  COMMENCEMENT  OF  THE  REMEDIAL
DESIGN  OR  AT  LEAST  THREE MONTHS PRIOR TO THE DATE OF THE ANTICIPATED
ISSUANCE OF THE CERTIFICATE OF COMPLETION, THE  OWNER  OF  A  BROWNFIELD
SITE,  AND/OR ANY PERSON RESPONSIBLE FOR IMPLEMENTING A REMEDIAL PROGRAM
AT SUCH SITE, WHERE INSTITUTIONAL OR ENGINEERING CONTROLS  ARE  EMPLOYED
PURSUANT TO THIS TITLE, SHALL EXECUTE AN ENVIRONMENTAL EASEMENT PURSUANT
TO TITLE THIRTY-SIX OF ARTICLE SEVENTY-ONE OF THIS CHAPTER.
  S  12.  Paragraph (h) of subdivision 3 of section 27-1417 of the envi-
ronmental conservation law is  REPEALED,  paragraph  (i)  is  relettered
paragraph  (h)  and  paragraph (f), as amended by section 8 of part A of
chapter 577 of the laws of 2004, is amended to read as follows:
  (f) Before the department [finalizes]  SELECTS  a  proposed  [remedial
work  plan]  REMEDY  FROM THE ALTERNATIVES SET FORTH IN THE ALTERNATIVES
ANALYSIS AS PRESCRIBED BY SECTION 27-1413  OF  THIS  TITLE  or  makes  a
determination  that  site conditions meet the requirements of this title
without the necessity for remediation pursuant  to  section  27-1411  of
this  title,  the  department,  in consultation with the applicant, must
notify individuals on the brownfield  site  contact  list.  Such  notice
shall  include  a  fact  sheet  describing  such  plan and provide for a
forty-five day public comment period.  The  commissioner  shall  hold  a
public  meeting  if  requested by the affected community and the commis-
sioner has found that the site constitutes a significant threat  to  the
public  health  or  the environment. Further, the affected community may
request a public meeting at sites that do not constitute  a  significant
threat.  (1)  To the extent that the department has determined that site
conditions do not pose a  significant  threat  and  the  site  is  being
addressed by a volunteer, the notice shall state that the department has
determined  that  no  remediation is required for the off-site areas and
that the department's determination of a significant threat  is  subject
to  this  forty-five day comment period. (2) If the [remedial work plan]
REMEDY includes a Track 2, Track 3 or Track 4 remedy at  a  non-signifi-
cant  threat  site, such comment period shall apply both to the approval
of the alternatives analysis by the department, IF APPLICABLE,  and  the
proposed remedy selected by the applicant.
  S  13.  Paragraph  (a)  of  subdivision 2 and subdivision 3 of section
27-1419 of the environmental conservation law, paragraph (a) of subdivi-
sion 2 as added by section 1 of part A of chapter 1 of the laws of 2003,
subdivision 3 as amended by chapter 390 of the laws of 2008, are amended
to read as follows:
  (a) a description of the remediation activities completed pursuant  to
the  remedial work plan AND ANY INTERIM REMEDIAL MEASURES for the brown-
field site AND THE COSTS PAID FOR THOSE ACTIVITIES;
  3. Upon receipt of the final engineering report, the department  shall
review  such  report  and  the data submitted pursuant to the brownfield
site cleanup agreement as well as any other relevant information regard-
ing the brownfield site. Upon satisfaction of the commissioner that  the
remediation  requirements  set  forth in this title have been or will be
achieved in accordance with the timeframes, if any, established  in  the
remedial  work  plan, the commissioner shall issue a written certificate
of completion[, such]. THE certificate shall include such information as
determined by the department of taxation and finance, including but  not

S. 6359                            198                           A. 8559

limited  to  the  brownfield site boundaries included in the final engi-
neering report, the  date  of  the  brownfield  site  CLEANUP  agreement
[pursuant to section 27-1409 of this title], IDENTIFICATION OF THE ENTI-
TY  OR  ENTITIES  ELIGIBLE  FOR CREDITS PURSUANT TO SECTIONS TWENTY-ONE,
TWENTY-TWO OR TWENTY-THREE OF THE TAX LAW, and the  applicable  percent-
ages  available AS OF THE DATE OF THE CERTIFICATE OF COMPLETION for that
site for purposes of section twenty-one  of  the  tax  law[,  with  such
percentages  to  be determined as follows with respect to such qualified
site]. FOR THOSE SITES FOR WHICH THE DEPARTMENT HAS ISSUED A  NOTICE  TO
THE  APPLICANT  ON  OR  AFTER JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS
REQUEST FOR PARTICIPATION HAS BEEN ACCEPTED  UNDER  SUBDIVISION  SIX  OF
SECTION 27-1407 OF THIS TITLE, THE TANGIBLE PROPERTY CREDIT COMPONENT OF
THE  BROWNFIELD  REDEVELOPMENT TAX CREDIT PURSUANT TO PARAGRAPH THREE OF
SUBDIVISION (A) OF SECTION TWENTY-ONE OF  THE  TAX  LAW  SHALL  ONLY  BE
AVAILABLE  TO  THE  TAXPAYER IF THE NOTICE INCLUDES A DETERMINATION THAT
THE CRITERIA FOR RECEIVING SUCH TAX COMPONENT HAVE BEEN MET.  FOR  THOSE
SITES for which the department has issued a notice to the taxpayer after
June twenty-third, two thousand eight that its request for participation
has  been  accepted  under  subdivision  six  of section 27-1407 of this
title[:
  For the purposes of calculating], THE APPLICABLE  PERCENTAGE  FOR  the
site  preparation credit component pursuant to paragraph two of subdivi-
sion (a) of section twenty-one of the tax law, and the on-site groundwa-
ter remediation credit component pursuant to paragraph four of  subdivi-
sion  (a)  of  section  twenty-one  of  the  tax  law[,  the  applicable
percentage] shall be based on the level of cleanup achieved pursuant  to
subdivision  four  of  section  27-1415  of  this title and the level of
cleanup of soils to contaminant-specific soil cleanup objectives promul-
gated pursuant to subdivision six of section 27-1415 of this  title,  up
to a maximum of fifty percent, as follows:
  (a)  soil  cleanup for unrestricted use, the protection of groundwater
or the protection of ecological  resources,  the  applicable  percentage
shall be fifty percent;
  (b)  soil cleanup for residential use, the applicable percentage shall
be forty percent,  except  for  Track  4  which  shall  be  twenty-eight
percent;
  (c)  soil  cleanup for commercial use, the applicable percentage shall
be thirty-three percent, except for Track 4 which shall  be  twenty-five
percent;
  (d)  soil  cleanup for industrial use, the applicable percentage shall
be twenty-seven percent, except for Track 4 which  shall  be  twenty-two
percent.
  S  14. Subdivision 5 of section 27-1419 of the environmental conserva-
tion law, as amended by section 9 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  5.  A certificate of completion issued pursuant to this section may be
transferred [to the applicant's successors or assigns upon  transfer  or
sale  of  the  brownfield site] BY THE APPLICANT OR SUBSEQUENT HOLDER OF
THE CERTIFICATE OF COMPLETION TO A SUCCESSOR TO A REAL  PROPERTY  INTER-
EST,  INCLUDING  LEGAL  TITLE, EQUITABLE TITLE OR LEASEHOLD, IN ALL OR A
PART OF THE BROWNFIELD SITE FOR WHICH THE CERTIFICATE OF COMPLETION  WAS
ISSUED;  PROVIDED,  HOWEVER, ANY TRANSFER OF A CERTIFICATE OF COMPLETION
TO A RESPONSIBLE PARTY SHALL NOT PROVIDE RELIEF FROM LIABILITY. Further,
a certificate of completion may be modified or revoked  by  the  commis-
sioner upon a finding that:

S. 6359                            199                           A. 8559

  (a)  Either  the  applicant, or the applicant's successors or assigns,
has failed to comply with the terms and  conditions  of  the  brownfield
site cleanup agreement;
  (b)  The applicant made a misrepresentation of a material fact tending
to demonstrate that (I) it was qualified as a volunteer OR (II) MET  THE
CRITERIA SET FORTH IN SUBDIVISION ONE-A OF SECTION 27-1407 OF THIS TITLE
FOR  THE  PURPOSE OF RECEIVING THE TANGIBLE PROPERTY CREDIT COMPONENT OF
THE BROWNFIELD REDEVELOPMENT TAX CREDIT PURSUANT TO PARAGRAPH  THREE  OF
SUBDIVISION (A) OF SECTION TWENTY-ONE OF THE TAX LAW;
  (c)  Either  the  applicant, or the applicant's successors or assigns,
made a misrepresentation of a material fact tending to demonstrate  that
the  cleanup  levels identified in the brownfield site cleanup agreement
were reached; [or]
  (d) THE ENVIRONMENTAL EASEMENT CREATED AND RECORDED PURSUANT TO  TITLE
THIRTY-SIX  OF ARTICLE SEVENTY-ONE OF THIS CHAPTER NO LONGER PROVIDES AN
EFFECTIVE OR ENFORCEABLE MEANS OF ENSURING THE  PERFORMANCE  OF  MAINTE-
NANCE,  MONITORING  OR  OPERATING  REQUIREMENTS,  OR THE RESTRICTIONS ON
FUTURE USES, INCLUDING  RESTRICTIONS  ON  DRILLING  FOR  OR  WITHDRAWING
GROUNDWATER; OR
  (E) There is good cause for such modification or revocation.
  S  15.  Section  27-1423  of  the  environmental  conservation  law is
REPEALED.
  S 16. Section  27-1429  of  the  environmental  conservation  law,  as
amended  by  section 13 of part A of chapter 577 of the laws of 2004, is
amended to read as follows:
S 27-1429. Permit waivers.
  The department[, by and through the commissioner,]  shall  be  EXEMPT,
AND  SHALL  BE  authorized  to  exempt  a person from the requirement to
obtain any state or local permit or other authorization for any activity
needed to implement a program for the investigation  and/or  remediation
of  contamination  AT OR EMANATING FROM A BROWNFIELD SITE; provided that
the activity is conducted in a manner which  satisfies  all  substantive
technical requirements applicable to like activity conducted pursuant to
a permit.
  S  17. Subdivision 1 of section 27-1431 of the environmental conserva-
tion law is amended by adding a new paragraph c to read as follows:
  C. TO INSPECT FOR COMPLIANCE WITH THE SITE MANAGEMENT PLAN APPROVED BY
THE DEPARTMENT, INCLUDING (I) INSPECTION OF THE PERFORMANCE  OF  MAINTE-
NANCE,  MONITORING  AND  OPERATIONAL  ACTIVITIES REQUIRED AS PART OF THE
REMEDIAL PROGRAM FOR THE SITE, (II) INSPECTION FOR THE PURPOSE OF ASCER-
TAINING CURRENT USES OF THE SITE, AND (III) TAKING SAMPLES IN ACCORDANCE
WITH PARAGRAPH A OF THIS SUBDIVISION.
  S 17-a. Section 27-1435  of  the  environmental  conservation  law  is
REPEALED.
  S  18.  The  environmental conservation law is amended by adding a new
section 27-1437 to read as follows:
S 27-1437. BCP-EZ PROGRAM.
  1. NOTWITHSTANDING THE PROVISIONS OF THIS TITLE OR ANY OTHER PROVISION
OF LAW, THE DEPARTMENT IS AUTHORIZED TO EXEMPT A VOLUNTEER  FROM  PROCE-
DURAL  REQUIREMENTS  OF THIS TITLE THAT THE DEPARTMENT MAY SPECIFY WHICH
ARE OTHERWISE APPLICABLE TO IMPLEMENTATION OF  AN  INVESTIGATION  AND/OR
REMEDIATION OF CONTAMINATION, PROVIDED THAT:
  (A)  THE  DEPARTMENT  HAS DETERMINED THAT THE BROWNFIELD SITE DOES NOT
POSE A SIGNIFICANT THREAT PURSUANT TO SECTION 27-1411 OF THIS TITLE;

S. 6359                            200                           A. 8559

  (B) THE APPLICANT HAS WAIVED IN WRITING  ANY  CLAIM  FOR  TAX  CREDITS
PURSUANT  TO  SECTION  TWENTY-ONE OF THE TAX LAW ON A FORM PRESCRIBED BY
THE DEPARTMENT; AND
  (C) THE ACTIVITY IS CONDUCTED IN A MANNER WHICH SATISFIES ALL SUBSTAN-
TIVE TECHNICAL REQUIREMENTS APPLICABLE TO LIKE ACTIVITY CONDUCTED PURSU-
ANT TO THIS TITLE.
  2.  WHERE  A  WAIVER  HAS  BEEN  GRANTED, THE APPROVED WORK PLAN FOR A
BROWNFIELD SITE SHALL INCLUDE THE PROCEDURAL REQUIREMENTS THE DEPARTMENT
DETERMINES APPROPRIATE BASED ON SITE SPECIFIC CONSIDERATIONS AND CONSID-
ERATION OF SECTION 27-1417 OF THIS TITLE.
  3. FOR ANY SITE ACCEPTED INTO THE  BCP-EZ  PROGRAM  PURSUANT  TO  THIS
SECTION  WHICH  IS  PURSUING  A TRACK 4 REMEDIATION, IF A CONTAMINANT IS
IDENTIFIED IN SOIL IN EXCESS OF THE REMEDIAL ACTION OBJECTIVES CONTAINED
IN AN APPLICABLE GENERIC TABLE DEVELOPED PURSUANT TO SUBDIVISION SIX  OF
SECTION  27-1415 OF THIS TITLE, THE APPLICANT MAY USE SITE-SPECIFIC DATA
TO DEMONSTRATE TO THE DEPARTMENT THAT THE CONCENTRATION OF  THE  CONTAM-
INANT  IN  THE SOILS REFLECTS BACKGROUND CONDITIONS AND, IN THAT CASE, A
CONTAMINANT-SPECIFIC ACTION OBJECTIVE FOR SUCH CONTAMINANT EQUAL TO SUCH
BACKGROUND CONCENTRATION MAY BE ESTABLISHED.
  S 19. The opening paragraph of subdivision 10 of  section  71-3605  of
the  environmental  conservation law, as added by section 2 of part A of
chapter 1 of the laws of 2003, is amended to read as follows:
  An environmental easement may be enforced in  law  or  equity  by  its
grantor,  by  the  state, or any affected local government as defined in
section 71-3603 of this title. Such easement is enforceable against  the
owner  of  the  burdened property, any lessees, and any person using the
land. Enforcement shall  not  be  defeated  because  of  any  subsequent
adverse  possession,  laches,  estoppel, REVERSION or waiver. No general
law of the state which operates to defeat the enforcement of any  inter-
est  in  real  property  shall  operate to defeat the enforcement of any
environmental easement unless such  general  law  expressly  states  the
intent  to  defeat  the enforcement of such easement or provides for the
exercise of the power of eminent domain. It is  not  a  defense  in  any
action to enforce an environmental easement that:
  S  20. Paragraph 2 of subdivision (a) of section 21 of the tax law, as
amended by section 1 of part H of chapter 577 of the laws  of  2004,  is
amended to read as follows:
  (2)  Site  preparation  credit  component. The site preparation credit
component shall be equal to the applicable percentage of the site prepa-
ration costs paid [or incurred] by the taxpayer with respect to a quali-
fied site. The credit component amount so determined with respect  to  a
site's  qualification  for  a certificate of completion shall be allowed
for the taxable year in which the effective date of the  certificate  of
completion  occurs.  The  credit  component amount determined other than
with respect to such qualification shall be allowed for the taxable year
in which the improvement to which the applicable costs apply  is  placed
in  service  for  up  to  five  taxable years after the issuance of such
certificate of completion.
  S 21. Paragraph 3 of subdivision (a) of section 21 of the tax law,  as
amended  by  chapter  390  of  the  laws  of 2008, is amended to read as
follows:
  (3) Tangible property credit component. The tangible  property  credit
component  shall  be  equal  to the applicable percentage of the cost or
other basis for federal income tax purposes of tangible personal proper-
ty and other  tangible  property,  including  buildings  and  structural
components  of  buildings, which constitute qualified tangible property;

S. 6359                            201                           A. 8559

provided[, however,] that in determining the cost or other basis of such
property, the taxpayer shall exclude the acquisition cost of any item of
property with respect to which a credit under this section was allowable
to  another taxpayer.   WITH RESPECT TO ANY QUALIFIED SITE FOR WHICH THE
DEPARTMENT OF ENVIRONMENTAL CONSERVATION HAS  ISSUED  A  NOTICE  TO  THE
TAXPAYER  ON OR AFTER JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS REQUEST
FOR PARTICIPATION HAS BEEN ACCEPTED UNDER  SUBDIVISION  SIX  OF  SECTION
27-1407  OF  THE  ENVIRONMENTAL  CONSERVATION LAW, THE TAXPAYER MAY ALSO
INCLUDE THE COSTS INCURRED IN CONNECTION WITH PREPARING A SITE  FOR  THE
ERECTION OF A BUILDING OR A COMPONENT OF A BUILDING, SUCH AS THE COST OF
EXCAVATION,  DEMOLITION, TEMPORARY ELECTRIC WIRING, SCAFFOLDING, FENCING
AND SECURITY FACILITIES, TO THE EXTENT THAT SUCH COSTS ARE NOT USED AS A
BASIS FOR COMPUTING THE SITE PREPARATION  COMPONENT  OF  THE  BROWNFIELD
REDEVELOPMENT  TAX CREDIT PURSUANT TO PARAGRAPH TWO OF THIS SUBDIVISION;
AND PROVIDED FURTHER THAT, IN THE CASE OF QUALIFIED SITES  ELIGIBLE  FOR
THE  FIVE  PERCENT AFFORDABLE HOUSING TANGIBLE PROPERTY CREDIT COMPONENT
PURSUANT TO CLAUSE (III) OF SUBPARAGRAPH (B) OF PARAGRAPH FIVE  OF  THIS
SUBDIVISION, THAT PORTION OF THE TANGIBLE PROPERTY CREDIT COMPONENT WILL
BE  DETERMINED BY MULTIPLYING THE TOTAL COSTS QUALIFIED FOR THE TANGIBLE
PROPERTY CREDIT COMPONENT BY A FRACTION, THE NUMERATOR OF WHICH SHALL BE
THE SQUARE FOOTAGE OF SPACE OF THE AFFORDABLE HOUSING UNITS DEDICATED TO
RESIDENTIAL OCCUPANCY AND THE DENOMINATOR OF WHICH SHALL  BE  THE  TOTAL
SQUARE  FOOTAGE  OF  THE SITE. The credit component amount so determined
shall be allowed for the taxable year in which such  qualified  tangible
property  is FIRST placed in service on a qualified site with respect to
which a certificate of completion has been issued to  the  taxpayer,  OR
FOR THE TAXABLE YEAR IN WHICH THE CERTIFICATE OF COMPLETION IS ISSUED IF
THE  QUALIFIED TANGIBLE PROPERTY IS PLACED IN SERVICE PRIOR TO THE ISSU-
ANCE OF THE CERTIFICATE OF COMPLETION, for up to [ten]  FIVE CONSECUTIVE
taxable years [after] FROM THE START OF THE REDEVELOPMENT  OF  THE  SITE
PROVIDED  THAT  THE REDEVELOPMENT STARTS WITHIN TEN YEARS OF the date of
the issuance of such certificate of completion.  The  tangible  property
credit  component  shall be allowed with respect to property leased to a
second party only if such second party is either (i) not a party respon-
sible for the disposal of hazardous waste or the discharge of  petroleum
at  the  site  according to applicable principles of statutory or common
law liability, or (ii) a party responsible according to applicable prin-
ciples of statutory or common law liability if  such  party's  liability
arises  solely  from operation of the site subsequent to the disposal of
hazardous waste or the discharge of petroleum, and is  so  certified  by
the  commissioner  of  environmental  conservation at the request of the
taxpayer, pursuant to section 27-1419 of the environmental  conservation
law.  Notwithstanding any other provision of law to the contrary, in the
case of allowance of credit under this section to  such  a  lessor,  the
commissioner  shall  have  the  authority  to  reveal to such lessor any
information, with respect to the issue of qualified use of  property  by
the  lessee,  which  is the basis for the denial in whole or in part, or
for the recapture, of the credit claimed by such lessor. For purposes of
the tangible property credit component allowed under  this  section  the
taxpayer  to  whom  the certificate of completion is issued, as provided
for under subdivision five  of  section  27-1419  of  the  environmental
conservation  law,  may transfer the benefits and burdens of the certif-
icate of completion, which run with the  land  and  to  the  applicant's
successors  or assigns upon transfer or sale of all or any portion of an
interest or estate in the qualified site. However, the taxpayer to  whom
certificate's benefits and burdens are transferred shall not include the

S. 6359                            202                           A. 8559

cost  of  acquiring  all  or any portion of an interest or estate in the
site and the amounts included in the cost or  other  basis  for  federal
income  tax  purposes  of qualified tangible property already claimed by
the  previous  taxpayer pursuant to this section.  THE TANGIBLE PROPERTY
CREDIT COMPONENT SHALL NOT INCLUDE COSTS PAID  TO  A  RELATED  PARTY  OR
PARTIES, AS SUCH TERM "RELATED PERSON" IS DEFINED IN SUBPARAGRAPH (C) OF
PARAGRAPH THREE OF SUBDIVISION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF
THE  INTERNAL  REVENUE  CODE.  ELIGIBLE  COSTS FOR THE TANGIBLE PROPERTY
CREDIT  COMPONENT  ARE  LIMITED  TO   COSTS   ASSOCIATED   WITH   ACTUAL
CONSTRUCTION  OF  TANGIBLE PROPERTY INCORPORATED AS PART OF THE PHYSICAL
STRUCTURE, AND COSTS ASSOCIATED WITH THE PREPARATION  OF  THE  SITE  FOR
ERECTION OF A BUILDING OR A COMPONENT OF A BUILDING THAT ARE NOT PROPER-
LY INCLUDED IN THE SITE PREPARATION COMPONENT.
  S  22. Subparagraph (A) of paragraph 3-a of subdivision (a) of section
21 of the tax law, as added by chapter 390  of  the  laws  of  2008,  is
amended to read as follows:
  (A)  Notwithstanding  any  other provision of law to the contrary, the
tangible property credit component  available  for  any  qualified  site
pursuant  to  paragraph three of this subdivision shall not exceed thir-
ty-five million dollars or three times the SUM OF THE costs included  in
the calculation of the site preparation credit component and the on-site
groundwater  remediation credit component under paragraphs two and four,
respectively, of this subdivision, AND THE COSTS THAT  WOULD  HAVE  BEEN
INCLUDED  IN  THE  CALCULATION  OF  SUCH COMPONENTS IF NOT TREATED AS AN
EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINETY-EIGHT OF THE
INTERNAL REVENUE CODE, whichever is less; provided, however,  that:  (1)
in  the  case of a qualified site to be used primarily for manufacturing
activities, the tangible property credit  component  available  for  any
qualified site pursuant to paragraph three of this subdivision shall not
exceed  forty-five  million  dollars  or  six times the SUM OF THE costs
included in the calculation of the site preparation credit component and
the on-site groundwater remediation credit  component  under  paragraphs
two  and  four,  respectively,  of  this subdivision, AND THE COSTS THAT
WOULD HAVE BEEN INCLUDED IN THE CALCULATION OF SUCH  COMPONENTS  IF  NOT
TREATED AS AN EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINE-
TY-EIGHT  OF  THE  INTERNAL REVENUE CODE, whichever is less; and (2) the
provisions of this paragraph shall not apply to any qualified  site  for
which  the  department of environmental conservation has issued a notice
to the taxpayer before June twenty-third, two thousand  eight  that  its
request  for  participation  has  been accepted under subdivision six of
section 27-1407 of the environmental conservation law.
  S 23. Subparagraph (D) of paragraph 3-a of subdivision (a) of  section
21  of  the  tax  law,  as  added by chapter 390 of the laws of 2008, is
amended to read as follows:
  (D) [If] WITH RESPECT TO ANY QUALIFIED SITE FOR WHICH  THE  DEPARTMENT
OF ENVIRONMENTAL CONSERVATION HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE
JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS
BEEN  ACCEPTED  UNDER SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRON-
MENTAL CONSERVATION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN ISSUED OR
RECEIVED A CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION
27-1419 OF THE ENVIRONMENTAL CONSERVATION LAW  BEFORE  JULY  FIRST,  TWO
THOUSAND  FOURTEEN,  IF  the  qualifying site is located in a brownfield
opportunity area and is developed in  conformance  with  the  goals  and
priorities  established  for that applicable brownfield opportunity area
as designated pursuant to section nine hundred seventy-r of the  general

S. 6359                            203                           A. 8559

municipal law, the applicable percentage of the tangible property credit
component will be increased by two percent.
  S  24. Paragraph 4 of subdivision (a) of section 21 of the tax law, as
amended by section 1 of part H of chapter 577 of the laws  of  2004,  is
amended to read as follows:
  (4)  On-site  groundwater  remediation  credit  component. The on-site
groundwater remediation credit component shall be equal to the  applica-
ble  percentage  of  the  on-site groundwater remediation costs paid [or
incurred] by the taxpayer with respect  to  a  qualified  site  (to  the
extent  that  such groundwater remediation costs are not included in the
determination of the site preparation credit or the cost or other  basis
included  in  the  determination  of  the tangible property credit). The
credit component so  determined  for  costs  [incurred  and]  paid  with
respect  to  and  prior  to  the issuance of a certificate of completion
shall be allowed for the taxable year in which the effective date of the
issuance of a certificate of completion  occurs.  The  credit  component
amount determined in taxable years after the effective date of the issu-
ance of a certificate of completion shall be allowed in the taxable year
such  qualified  costs  are  [incurred  and] paid for up to five taxable
years after the issuance of such certificate of completion.
  S 25. Paragraph 5 of subdivision (a) of section 21 of the tax law,  as
amended  by  section  1 of part H of chapter 577 of the laws of 2004, is
amended to read as follows:
  (5) Applicable percentage. (A) For  purposes  of  COMPUTING  THE  SITE
PREPARATION AND ON-SITE GROUNDWATER REMEDIATION CREDIT COMPONENTS PURSU-
ANT  TO  paragraphs  two[,  three]  and  four  of this subdivision, WITH
RESPECT TO SUCH QUALIFIED SITES FOR WHICH  THE  DEPARTMENT  OF  ENVIRON-
MENTAL  CONSERVATION  HAS  ISSUED  A  NOTICE TO THE TAXPAYER BEFORE JUNE
TWENTY-THIRD, TWO THOUSAND EIGHT THAT ITS REQUEST FOR PARTICIPATION  HAS
BEEN  ACCEPTED  UNDER SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRON-
MENTAL CONSERVATION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN ISSUED OR
RECEIVED A CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION
27-1419 OF THE ENVIRONMENTAL CONSERVATION LAW BEFORE JUNE  TWENTY-THIRD,
TWO THOUSAND EIGHT, AND, FOR PURPOSES OF COMPUTING THE TANGIBLE PROPERTY
COMPONENT  PURSUANT  TO PARAGRAPH THREE OF THIS SUBDIVISION WITH RESPECT
TO SUCH QUALIFIED  SITES  FOR  WHICH  THE  DEPARTMENT  OF  ENVIRONMENTAL
CONSERVATION  HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE JULY FIRST, TWO
THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS  BEEN  ACCEPTED
UNDER  SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRONMENTAL CONSERVA-
TION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN  ISSUED  OR  RECEIVED  A
CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION 27-1419 OF
THE ENVIRONMENTAL CONSERVATION LAW BEFORE JULY FIRST, TWO THOUSAND FOUR-
TEEN,  the  applicable percentage shall be twelve percent in the case of
credits claimed under article nine, nine-A, thirty-two  or  thirty-three
of  this  chapter,  and ten percent in the case of credits claimed under
article twenty-two of this chapter, except that  where  at  least  fifty
percent  of  the  area  of  the  qualified  site  relating to the credit
provided for in this section is located  in  an  environmental  zone  as
defined  in paragraph six of subdivision (b) of this section, the appli-
cable percentage shall be increased  by  an  additional  eight  percent.
Provided,  however,  as afforded in section 27-1419 of the environmental
conservation law, if the certificate of completion  indicates  that  the
qualified  site has been remediated to Track 1 as that term is described
in subdivision four of section 27-1415 of the environmental conservation
law, the applicable percentage set forth in the first sentence  of  this
paragraph shall be increased by an additional two percent.

S. 6359                            204                           A. 8559

  (B)  WITH  RESPECT  TO SUCH QUALIFIED SITE FOR WHICH THE DEPARTMENT OF
ENVIRONMENTAL CONSERVATION HAS ISSUED A NOTICE TO  THE  TAXPAYER  ON  OR
AFTER  JULY  FIRST,  TWO  THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTIC-
IPATION HAS BEEN ACCEPTED UNDER SUBDIVISION SIX OF  SECTION  27-1407  OF
THE  ENVIRONMENTAL  CONSERVATION  LAW, THE APPLICABLE PERCENTAGE FOR THE
TANGIBLE PROPERTY CREDIT COMPONENT OF THE BROWNFIELD  REDEVELOPMENT  TAX
CREDIT  PURSUANT  TO  PARAGRAPH THREE OF SUBDIVISION (A) OF THIS SECTION
SHALL BE THE SUM OF TEN PERCENT AND THE  FOLLOWING  ADDITIONAL  PERCENT-
AGES, PROVIDED THAT THE TOTAL PERCENTAGE OF THE TANGIBLE PROPERTY CREDIT
COMPONENT  SHALL NOT EXCEED TWENTY-FOUR PERCENT AND IS OTHERWISE SUBJECT
TO THE LIMITATIONS SET FORTH IN PARAGRAPHS THREE AND THREE-A OF SUBDIVI-
SION (A) OF THIS SECTION:
  (I) TEN PERCENT FOR A SITE WITHIN AN ENVIRONMENTAL ZONE;
  (II) FIVE PERCENT FOR A STRATEGIC SITE  LOCATED  WITHIN  A  DESIGNATED
BROWNFIELD  OPPORTUNITY  AREA IF THE PROPOSED DEVELOPMENT OF THE SITE IS
CERTIFIED TO BE IN CONFORMANCE WITH  SUCH  BROWNFIELD  OPPORTUNITY  AREA
PLAN PURSUANT TO SECTION NINE HUNDRED SEVENTY-R OF THE GENERAL MUNICIPAL
LAW; AND
  (III)  FIVE PERCENT FOR SITES DEVELOPED AS AFFORDABLE HOUSING, DEFINED
AS HAVING AT LEAST TWENTY PERCENT OF ITS RESIDENTIAL UNITS SUBJECT TO AN
AGREEMENT WITH A MUNICIPALITY, THE STATE, THE FEDERAL GOVERNMENT, OR  AN
INSTRUMENTALITY  THEREOF,  WHERE  SUCH  AGREEMENT RESTRICTS OCCUPANCY OF
THOSE UNITS TO RESIDENTS WHO QUALIFY IN ACCORDANCE WITH AN INCOME TEST.
  (C) THE TAXPAYER SHALL SUBMIT, IN THE MANNER PRESCRIBED BY THE COMMIS-
SIONER, INFORMATION SUFFICIENT TO DEMONSTRATE THAT  THE  SITE  QUALIFIES
FOR  ANY  CREDIT COMPONENTS AVAILABLE UNDER CLAUSES (I) THROUGH (III) OF
SUBPARAGRAPH (B) OF THIS PARAGRAPH. IF THE SITE IS A  PRIORITY  ECONOMIC
DEVELOPMENT PROJECT, THE TAXPAYER MUST ALSO DEMONSTRATE THAT THE PROJECT
HAS BEEN APPROVED BY THE DEPARTMENT OF ECONOMIC DEVELOPMENT.
  S  26. Paragraph 6 of subdivision (a) of section 21 of the tax law, as
amended by section 1 of part H of chapter 577 of the laws  of  2004,  is
amended to read as follows:
  (6)  Site  preparation costs and on-site groundwater remediation costs
paid [or incurred] by the taxpayer with respect to a qualified site  and
the  cost  or  other  basis  for federal income tax purposes of tangible
personal property and other tangible property, including  buildings  and
structural  components of buildings, which constitute qualified tangible
property shall only include costs paid [or incurred] by the taxpayer  on
or  after  the date of the brownfield site cleanup agreement executed by
the taxpayer and the department of environmental  conservation  pursuant
to section 27-1409 of the environmental conservation law.
  S  27.  Paragraphs  2, 4 and 6 of subdivision (b) of section 21 of the
tax law, as amended by section 1 of part H of chapter 577 of the laws of
2004 and subparagraph (B) and the closing paragraph of  paragraph  6  as
amended  by  section  1 of part G of chapter 62 of the laws of 2006, are
amended to read as follows:
  (2) Site preparation costs. The term "site  preparation  costs"  shall
mean all amounts properly [chargeable] CHARGED to a capital account, (i)
which  are  paid [or incurred] in connection with a site's qualification
for a certificate of completion AND ATTRIBUTABLE TO ACTIVITIES SPECIFIED
IN A DECISION DOCUMENT ISSUED BY THE DEPARTMENT OF ENVIRONMENTAL CONSER-
VATION UNDER SECTION 27-1411 OF THE ENVIRONMENTAL CONSERVATION  LAW  AND
WHICH  MAY INCLUDE COSTS ATTRIBUTABLE TO ACTIVITIES UNDERTAKEN UNDER THE
OVERSIGHT OF THE DEPARTMENT OF HEALTH OR  THE  DEPARTMENT  OF  LABOR  TO
REMEDIATE REGULATED MATERIALS INCLUDING ASBESTOS, LEAD OR POLYCHLORINAT-
ED  BIPHENYLS  IN BUILDINGS WHICH WILL REMAIN ON THE SITE, and (ii) WITH

S. 6359                            205                           A. 8559

RESPECT TO ANY QUALIFIED SITE FOR WHICH THE DEPARTMENT OF  ENVIRONMENTAL
CONSERVATION  HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE JULY FIRST, TWO
THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS  BEEN  ACCEPTED
UNDER  SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRONMENTAL CONSERVA-
TION LAW, all  other  site  preparation  costs  paid  [or  incurred]  in
connection  with  preparing  a  site for the erection of a building or a
component of a building, or otherwise to establish a site as usable  for
its  industrial,  commercial  (including  the  commercial development of
residential housing), recreational or conservation purposes. [Site]  FOR
PURPOSES  OF SUBPARAGRAPH (II) OF THIS PARAGRAPH, SITE preparation costs
shall include, but not be limited to, the costs of excavation, temporary
electric wiring, scaffolding, demolition costs, and the costs of fencing
and security facilities. Site preparation costs shall  not  include  the
cost of acquiring the site and shall not include amounts included in the
cost  or other basis for federal income tax purposes of qualified tangi-
ble property, as described  in  paragraph  three  of  this  subdivision.
"SITE PREPARATION COSTS" SHALL NOT INCLUDE COSTS PAID TO A RELATED PARTY
OR PARTIES, AS SUCH TERM "RELATED PERSON" IS DEFINED IN SUBPARAGRAPH (C)
OF PARAGRAPH THREE OF SUBDIVISION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE
OF  THE  INTERNAL  REVENUE  CODE.    ELIGIBLE SITE PREPARATION COSTS ARE
LIMITED TO COSTS DIRECTLY ASSOCIATED WITH ACTUAL SITE PREPARATION-RELAT-
ED CONSTRUCTION.
  (4) On-site groundwater remediation costs. The term "on-site groundwa-
ter remediation costs" shall  mean  all  amounts  properly  [chargeable]
CHARGED  to  a  capital  account,  (i)  which  are paid [or incurred] in
connection with a site's qualification for a certificate of  completion,
and  (ii)  include costs which are paid [or incurred] in connection with
the remediation of on-site groundwater contamination and [incurred] PAID
to implement a requirement of the remedial work plan or an interim reme-
dial measure work plan for a qualified site which are  imposed  pursuant
to  subdivisions  two  and three of section 27-1411 of the environmental
conservation law.   "ON-SITE GROUNDWATER REMEDIATION  COSTS"  SHALL  NOT
INCLUDE  COSTS PAID TO A RELATED PARTY OR PARTIES, AS SUCH TERM "RELATED
PERSON" IS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF SUBDIVISION
(B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE.  ON
SITE GROUNDWATER REMEDIATION COSTS ARE LIMITED TO COSTS DIRECTLY ASSOCI-
ATED WITH ACTUAL GROUNDWATER REMEDIATION ACTIVITIES.
  (6) Environmental zones (EN-Zones). An "environmental zone" shall mean
an area designated as such by the commissioner of [economic development]
LABOR.  Such areas so designated are areas which are census  tracts  and
block  numbering  areas  which,  as  of  the  [two thousand] MOST RECENT
census, satisfy either of the following criteria:
  (A) areas that have both:
  (i) a poverty rate of at least twenty percent for the  year  to  which
the data relate; and
  (ii)  an  unemployment  rate of at least one and one-quarter times the
statewide unemployment rate for the year to which the data relate, or;
  (B) areas that have a poverty rate of at least two times  the  poverty
rate for the county in which the areas are located for the year to which
the  data relate [provided, however, that a qualified site shall only be
deemed to be located in an environmental zone  under  this  subparagraph
(B)  if such site was the subject of a brownfield site cleanup agreement
pursuant to section 27-1409 of the environmental conservation  law  that
was entered into prior to September first, two thousand ten].
  Such  designation  shall  be made and a list of all such environmental
zones shall be established by the commissioner of [economic development]

S. 6359                            206                           A. 8559

LABOR no later than [December thirty-first, two thousand four  provided,
however,  that a qualified site shall only be deemed to be located in an
environmental zone under subparagraph (B) of this paragraph if such site
was  the  subject  of  a  brownfield  site cleanup agreement pursuant to
section 27-1409 of the environmental conservation law that  was  entered
into  prior  to September first, two thousand ten] NINETY DAYS FOLLOWING
THE OFFICIAL PUBLICATION OF THE MOST RECENT CENSUS.
  S 28. Paragraph 2 of subdivision (b) of section 22 of the tax law,  as
amended  by  section  4 of part H of chapter 577 of the laws of 2004, is
amended to read as follows:
  (2) Amount of credit. The amount of the credit  shall  be  twenty-five
percent  of  the  product  of  (i)  the  benefit period factor, (ii) the
employment number factor, and (iii) the  eligible  real  property  taxes
paid  [or  incurred]  by  the developer of the qualified site during the
taxable year (or the pro rata share of such taxes in the case of a part-
ner in a partnership or a shareholder in  a  New  York  S  corporation),
except  that  if  the  real  property which is the subject of the credit
provided for under this  section  is  attributed  to  a  qualified  site
located  in an environmental zone as defined in paragraph five of subdi-
vision (a) of this section, the amount of the credit shall be the  prod-
uct  of the factors and taxes referred to in subparagraphs (i), (ii) and
(iii) of this paragraph. However, the  amount  of  the  credit  may  not
exceed the credit limitation set forth in paragraph seven of this subdi-
vision.
  S 29. Section 171-r of the tax law is amended by adding a new subdivi-
sion (e) to read as follows:
  (E)  THE  COMMISSIONER, IN CONSULTATION WITH THE COMMISSIONER OF ENVI-
RONMENTAL CONSERVATION, SHALL PUBLISH BY JANUARY THIRTY-FIRST, TWO THOU-
SAND FIFTEEN A SUPPLEMENTAL  BROWNFIELD  CREDIT  REPORT  CONTAINING  THE
INFORMATION  REQUIRED  BY THIS SECTION ABOUT THE CREDITS CLAIMED FOR THE
YEARS TWO THOUSAND FIVE, TWO THOUSAND SIX, AND TWO THOUSAND SEVEN.
  S 30. Section 171-s of the tax law is REPEALED.
  S 31. Section 970-r of the general municipal law is amended by  adding
a new subdivision 10 to read as follows:
  10.  THE SECRETARY SHALL ESTABLISH CRITERIA FOR BROWNFIELD OPPORTUNITY
AREA  CONFORMANCE  DETERMINATIONS FOR PURPOSES OF THE BROWNFIELD CLEANUP
PROGRAM PURSUANT TO TITLE FOURTEEN OF ARTICLE TWENTY-SEVEN OF THE  ENVI-
RONMENTAL  CONSERVATION LAW AND THE BROWNFIELD REDEVELOPMENT TAX CREDITS
PURSUANT TO SECTION TWENTY-ONE OF THE TAX LAW.   IN ESTABLISHING  CRITE-
RIA, THE SECRETARY SHALL BE GUIDED BY, BUT NOT LIMITED TO, THE FOLLOWING
CONSIDERATIONS: HOW THE PROPOSED USE AND DEVELOPMENT ADVANCES THE DESIG-
NATED  BROWNFIELD  OPPORTUNITY  AREA  PLAN'S VISION STATEMENT, GOALS AND
OBJECTIVES FOR REVITALIZATION; HOW THE DENSITY OF DEVELOPMENT AND  ASSO-
CIATED  BUILDINGS AND STRUCTURES ADVANCES THE PLAN'S OBJECTIVES, DESIRED
REDEVELOPMENT  AND  PRIORITIES  FOR  INVESTMENT;  AND  HOW  THE  PROJECT
COMPLIES  WITH  ZONING  AND  OTHER LOCAL LAWS AND STANDARDS TO GUIDE AND
ENSURE APPROPRIATE USE OF THE PROJECT SITE.
  S 32. Section 31 of part H of chapter 1 of the laws of 2003,  amending
the tax law relating to brownfield redevelopment tax credits, remediated
brownfield  credit for real property taxes for qualified sites and envi-
ronmental remediation insurance credits, as amended by  chapter  474  of
the laws of 2012, is amended to read as follows:
  S  31. The tax credits allowed under section [21,] 22 or 23 of the tax
law and the corresponding provisions in articles 9, 9-A, 22, 32  and  33
of the tax law, as added by the provisions of sections one through twen-
ty-nine  of  this act, shall not be applicable [if] TO ANY SITE ACCEPTED

S. 6359                            207                           A. 8559

INTO THE BROWNFIELD CLEANUP PROGRAM ON AND AFTER JULY 1, 2014.  THE  TAX
CREDITS  ALLOWED  UNDER  SECTION 21 OF THE TAX LAW AND THE CORRESPONDING
PROVISIONS IN ARTICLES 9, 9-A, 22, 32 AND 33 OF THE TAX LAW, AS ADDED BY
THE  PROVISIONS  OF  SECTIONS ONE THROUGH TWENTY-NINE OF THIS ACT, SHALL
NOT BE APPLICABLE TO ANY  SITE  ACCEPTED  INTO  THE  BROWNFIELD  CLEANUP
PROGRAM  AFTER  DECEMBER  31,  2022,  PROVIDED,  HOWEVER  THAT ANY SITES
ACCEPTED ON OR BEFORE DECEMBER 31, 2022 MUST HAVE RECEIVED the  [remedi-
ation]  certificate  OF  COMPLETION  required to qualify for any of such
credits [is issued after] BY December 31, [2015] 2025.
  S 33. Any site for which  a  brownfield  cleanup  agreement  with  the
department  of  environmental conservation was entered into (1) prior to
June 23, 2008 and which has not received a certificate of completion  by
December  31, 2015 or (2) on or after June 23, 2008 and prior to July 1,
2014 which has not received a certificate of completion by December  31,
2017, shall be terminated from the brownfield cleanup program. If such a
site  reapplies  for  acceptance into the brownfield cleanup program, it
shall be accepted into the program subject to all  the  requirements  of
title  14  of article 27 of the environmental conservation law in effect
at the time of acceptance.
  S 34. Paragraph c of subdivision 3 of section 27-0923 of the  environ-
mental  conservation  law,  as amended by section 5 of part I of chapter
577 of the laws of 2004, is amended to read as follows:
  c. For the purpose of this  section,  generation  of  hazardous  waste
shall not include retrieval or creation of hazardous waste which must be
disposed  of under an order of or agreement with the department pursuant
to title thirteen or title fourteen of this article or under a  contract
OR  AGREEMENT  with  the  department  pursuant  to title five of article
fifty-six of this chapter OR UNDER AN ORDER OF  OR  AGREEMENT  WITH  THE
UNITED  STATES ENVIRONMENTAL PROTECTION AGENCY OR AN ORDER OF A COURT OF
COMPETENT JURISDICTION, RELATED TO A FACILITY ADDRESSED PURSUANT TO  THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT (42
U.S.C.  9601  ET  SEQ.) OR UNDER A WRITTEN AGREEMENT WITH A MUNICIPALITY
WHICH IS SUBJECT TO  A  MEMORANDUM  OF  AGREEMENT  WITH  THE  DEPARTMENT
RELATED TO THE REMEDIATION OF BROWNFIELD SITES.
  S  35.  Subparagraphs  (i) and (vi) of paragraph d of subdivision 1 of
section 72-0402 of the environmental conservation  law,  as  amended  by
chapter 99 of the laws of 2010, are amended to read as follows:
  (i)  under  a  contract  with the department, or with the department's
written approval and  in  compliance  with  department  regulations,  or
pursuant  to an order of the department, the United States environmental
protection agency or a court OF COMPETENT JURISDICTION, related  to  the
cleanup  or  remediation  of  a  hazardous  materials or hazardous waste
spill, discharge, or surficial cleanup, pursuant to this chapter; or
  (vi) under a brownfield site cleanup  agreement  with  the  department
pursuant to section 27-1409 of this chapter OR UNDER AN AGREEMENT WITH A
MUNICIPALITY  WHICH  IS  SUBJECT  TO  A MEMORANDUM OF AGREEMENT WITH THE
DEPARTMENT RELATED TO THE REMEDIATION OF BROWNFIELD SITES; or
  S 36. Subdivision 1 of section 1285-q of the public  authorities  law,
as  added  by  section  6 of part I of chapter 1 of the laws of 2003, is
amended to read as follows:
  1. Subject to chapter fifty-nine of the  laws  of  two  thousand,  but
notwithstanding any other provisions of law to the contrary, in order to
assist the corporation in undertaking the administration and the financ-
ing  of  hazardous  waste  site  remediation projects for payment of the
state's share of the costs of the remediation of hazardous waste  sites,
in  accordance  with title thirteen of article twenty-seven of the envi-

S. 6359                            208                           A. 8559

ronmental conservation law  and  section  ninety-seven-b  of  the  state
finance  law, and for payment of state costs associated with the remedi-
ation of offsite contamination at significant threat sites  as  provided
in  section 27-1411 of the environmental conservation law, AND FOR ENVI-
RONMENTAL RESTORATION PROJECTS PURSUANT TO TITLE FIVE OF ARTICLE  FIFTY-
SIX  OF THE ENVIRONMENTAL CONSERVATION LAW pursuant to capital appropri-
ations  made  to  the  department  of  environmental  conservation,  the
director  of the division of budget and the corporation are each author-
ized to enter into one or more service contracts, none  of  which  shall
exceed  twenty  years in duration, upon such terms and conditions as the
director and the corporation may agree, so as to annually provide to the
corporation in the aggregate, a  sum  not  to  exceed  the  annual  debt
service  payments  and related expenses required for any bonds and notes
authorized pursuant to section twelve hundred ninety of this title.  Any
service  contract  entered  into  pursuant to this section shall provide
that the obligation of the state to fund or to pay the  amounts  therein
provided for shall not constitute a debt of the state within the meaning
of  any constitutional or statutory provision and shall be deemed execu-
tory only to the extent of moneys available for such  purposes,  subject
to annual appropriation by the legislature. Any such service contract or
any  payments  made or to be made thereunder may be assigned and pledged
by the corporation as security for its bonds and  notes,  as  authorized
pursuant to section twelve hundred ninety of this title.
  S  37. Section 56-0501 of the environmental conservation law, as added
by chapter 413 of the laws of 1996, is amended to read as follows:
S 56-0501. Allocation of moneys.
  1. Of the moneys received by the state from the sale of bonds pursuant
to the Clean Water/Clean Air Bond  Act  of  1996,  two  hundred  million
dollars ($200,000,000) shall be available for disbursements for environ-
mental restoration projects.
  2. ENVIRONMENTAL RESTORATION PROJECTS MAY BE FUNDED USING THE PROCEEDS
OF  BONDS ISSUED PURSUANT TO SECTION TWELVE HUNDRED EIGHTY-FIVE-Q OF THE
PUBLIC AUTHORITIES LAW.
  S 38. Subdivision 6 of section 56-0502 of the environmental  conserva-
tion  law,  as amended by section 2 of part D of chapter 577 of the laws
of 2004, is amended to read as follows:
  6. "State assistance", for purposes of this title, shall mean  in  the
case  of  a contract authorized by subdivision one of section 56-0503 of
this title, payments made to a municipality  to  reimburse  the  munici-
pality  for the state share of the costs incurred by the municipality to
undertake an environmental restoration project OR  IN  THE  CASE  OF  AN
AGREEMENT  AUTHORIZED  BY  SUBDIVISION  THREE OF SECTION 56-0503 OF THIS
TITLE, COSTS INCURRED BY THE STATE TO UNDERTAKE AN ENVIRONMENTAL  RESTO-
RATION PROJECT BUT NOT REIMBURSED BY A MUNICIPALITY.
  S  39.  Paragraph (c) of subdivision 2 of section 56-0503 of the envi-
ronmental conservation law, as amended by section 4 of part D of chapter
1 of the laws of 2003, is amended and a new subdivision 3  is  added  to
read as follows:
  (c)  A  provision  that THE MUNICIPALITY SHALL ASSIST IN IDENTIFYING A
RESPONSIBLE PARTY BY SEARCHING LOCAL  RECORDS,  INCLUDING  PROPERTY  TAX
ROLLS,  OR  DOCUMENT  REVIEWS,  AND  if, in accordance with the required
departmental approval of any settlement with a  responsible  party,  any
responsible party payments become available to the municipality, before,
during  or after the completion of an environmental restoration project,
which were not included when the state share was calculated pursuant  to
this  section, the state assistance share shall be recalculated, and the

S. 6359                            209                           A. 8559

municipality shall pay to the state, for deposit into the  environmental
restoration  project account of the hazardous waste remedial fund estab-
lished under section  ninety-seven-b  of  the  state  finance  law,  the
difference  between the original state assistance payment and the recal-
culated state share. Recalculation of the state share shall be done each
time a payment from a responsible party is received by the municipality;
  3. THE DEPARTMENT MAY UNDERTAKE AN ENVIRONMENTAL  RESTORATION  PROJECT
ON  BEHALF OF A MUNICIPALITY UPON REQUEST.  IF THE DEPARTMENT UNDERTAKES
THE PROJECT ON BEHALF OF THE MUNICIPALITY, THE STATE SHALL ENTER INTO AN
AGREEMENT WITH THE MUNICIPALITY AND  THE  AGREEMENT  SHALL  REQUIRE  THE
MUNICIPALITY  TO  PERIODICALLY  PROVIDE ITS SHARE TO THE STATE FOR COSTS
INCURRED DURING THE PROGRESS OF SUCH PROJECT. THE  MUNICIPALITY'S  SHARE
SHALL  BE  THE  SAME  AS WOULD BE REQUIRED UNDER SUBDIVISION ONE OF THIS
SECTION. THE AGREEMENT SHALL INCLUDE ALL PROVISIONS SPECIFIED IN  SUBDI-
VISION  TWO  OF  THIS SECTION AS APPROPRIATE.   FOR PURPOSES OF PROJECTS
SUBJECT  TO  AGREEMENTS  UNDER  THIS  SUBDIVISION,  ALL  REFERENCES   TO
CONTRACTS IN THIS TITLE SHALL ALSO APPLY TO AGREEMENTS UNDER THIS SUBDI-
VISION AS APPROPRIATE.
  S  40. Subdivision 4 of section 56-0505 of the environmental conserva-
tion law, as amended by section 5 of part D of chapter 1 of the laws  of
2003, is amended to read as follows:
  4.  After  completion  of  such  project, the municipality may use the
property for public purposes or may dispose of it. If  the  municipality
shall  dispose  of  such  property  by sale to a responsible party, such
party shall pay to such municipality, in addition to such other  consid-
eration,  an amount of money constituting the amount of state assistance
provided [to the municipality] under this title  plus  accrued  interest
and transaction costs and the municipality shall deposit that money into
the  environmental  restoration  project  account of the hazardous waste
remedial fund established under  section  ninety-seven-b  of  the  state
finance law.
  S  41.  Subdivisions  3  and 4 of section 56-0508 of the environmental
conservation law, as added by section 7 of part D of chapter  1  of  the
laws of 2003, are amended to read as follows:
  3. such temporary incidents of ownership by such taxing district shall
also qualify it as being the owner of such property [for the purposes of
obtaining]  TO  BE  ELIGIBLE  FOR funding from the state of New York for
such environmental restoration investigation project under this  article
or  for such funding from any source pursuant to any other state, feder-
al, or local law, but such incidents of ownership shall  not  be  suffi-
cient  to  qualify  it as the owner of such property for the purposes of
holding it wholly or partially liable for any damages, past, present, or
future from any release of any hazardous material, substance, or contam-
inant into the air, ground, or water, unless such release was caused  by
such taxing district.
  4.  within thirty days of the completion of the environmental restora-
tion investigation project and the receipt by the taxing jurisdiction of
the final report of such investigation, such taxing  jurisdiction  shall
file  such  report  with  the court on notice to the court and all other
parties of record, and the stay  of  the  foreclosure  shall  be  lifted
(unless  lifted  earlier  by  a prior court order), and all incidents of
temporary ownership of the taxing jurisdiction  that  was  awarded  such
taxing  district, except any right [to receive funding] for the environ-
mental restoration investigation project TO BE FUNDED,  shall  cease  to
exist,  and nothing in this subdivision shall preclude the taxing juris-
diction  that  conducted  the  environmental  restoration  investigation

S. 6359                            210                           A. 8559

project  or  the  taxing  jurisdiction  that  commenced  the foreclosure
action, if it is a different taxing jurisdiction than the taxing  juris-
diction  which  conducted the investigation, from withdrawing the parcel
from  foreclosure pursuant to section eleven hundred thirty-eight of the
real property tax law.
  S 42. Subdivision 2 and paragraph (f) of subdivision 3 of section 97-b
of the state finance law, as amended by section 4 of part I of chapter 1
of the laws of 2003, are amended to read as follows:
  2. Such fund shall consist of all of the following:
  (a) moneys appropriated for transfer to the fund's site  investigation
and  construction  account;  (b) all fines and other sums accumulated in
the fund prior to April first, nineteen hundred eighty-eight pursuant to
section 71-2725 of the environmental conservation law for deposit in the
fund's site investigation  and  construction  account;  (c)  all  moneys
collected or received by the department of taxation and finance pursuant
to  section 27-0923 of the environmental conservation law for deposit in
the fund's industry fee transfer account; (d) all moneys paid  into  the
fund  pursuant  to section 72-0201 of the environmental conservation law
which shall be deposited in the fund's industry  fee  transfer  account;
(e) all moneys paid into the fund pursuant to section one hundred eight-
y-six  of  the  navigation  law  which  shall be deposited in the fund's
industry fee transfer account; (f) [all moneys paid  into  the  fund  by
municipalities  for repayment of landfill closure loans made pursuant to
title five of article fifty-two of the  environmental  conservation  law
for  deposit  in the fund's site investigation and construction account;
(g)] all monies recovered under sections 56-0503, 56-0505 and 56-0507 of
the environmental conservation law into the fund's environmental  resto-
ration  project  account; [(h) all] (G) fees paid into the fund pursuant
to section [72-0403] 72-0402 of the environmental conservation law which
shall be deposited in the fund's industry fee  transfer  account;  [(i)]
(H)  payments  received  for all state costs incurred in negotiating and
overseeing the implementation  of  brownfield  site  cleanup  agreements
pursuant  to title fourteen OF ARTICLE TWENTY-SEVEN of the environmental
conservation law shall be deposited in the hazardous  waste  remediation
oversight and assistance account; and [(j)] (I) other moneys credited or
transferred  thereto  from  any  other fund or source for deposit in the
fund's site investigation and construction account.
  (f) to undertake such remedial measures as the department of  environ-
mental  conservation may determine necessary due to environmental condi-
tions related to the property subject to an agreement [to provide  state
assistance]  OR  CONTRACT  under  title five of article fifty-six of the
environmental conservation law [that were unknown to such department  at
the  time  of its approval of such agreement which indicates that condi-
tions on such property are not sufficiently protective of  human  health
for  its  reasonably anticipated uses or due to information received, in
whole or in part, after such department's approval of  such  agreement's
final  engineering  report and certification], which indicates that such
agreement's remedial activities are not sufficiently protective of human
health for such property's reasonably anticipated uses; and, [respecting
the monies in the environmental restoration project account in excess of
ten million dollars,] shall provide state assistance under title five of
article fifty-six of the environmental conservation law;
  S 43. Severability. If any clause, sentence,  paragraph,  subdivision,
section  or part of this act shall be adjudged by any court of competent
jurisdiction to be invalid, such judgment shall not  affect,  impair  or
invalidate the remainder thereof, but shall be confined in its operation

S. 6359                            211                           A. 8559

to the clause, sentence, paragraph, subdivision, section or part thereof
directly  involved  in the controversy in which such judgment shall have
been rendered. It is hereby declared to be the intent of the legislature
that  this  act  would have been enacted even if such invalid provisions
had not been included herein.
  S 44. This act shall take effect July 1, 2014; provided, however, that
the department of environmental conservation shall not charge volunteers
in the brownfield cleanup program for oversight costs for any  sites  in
the program incurred on or after July 1, 2014.

                                 PART R

  Section  1.  Section 208 of the tax law is amended by adding three new
subdivisions 13, 14 and 15 to read as follows:
  13. THE TERM "MANUFACTURER" MEANS A TAXPAYER OR,  IN  THE  CASE  OF  A
COMBINED  REPORT,  A  COMBINED  GROUP, THAT, DURING THE TAXABLE YEAR, IS
PRINCIPALLY ENGAGED IN MANUFACTURING. A TAXPAYER OR A COMBINED GROUP  IS
PRINCIPALLY  ENGAGED  IN MANUFACTURING IF MORE THAN FIFTY PERCENT OF THE
GROSS RECEIPTS OF THE TAXPAYER  OR  THE  COMBINED  GROUP,  RESPECTIVELY,
DURING  THE  TAXABLE YEAR ARE DERIVED FROM THE SALE OF GOODS PRODUCED BY
MANUFACTURING. IN COMPUTING A COMBINED GROUP'S GROSS RECEIPTS, INTERCOR-
PORATE RECEIPTS SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS  FOR  A
TAXPAYER THAT IS A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN
THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  14.  (A)  THE  TERM  "MANUFACTURING"  MEANS THE PROCESS OF WORKING RAW
MATERIALS INTO WARES SUITABLE FOR USE OR WHICH  GIVES  NEW  SHAPES,  NEW
QUALITY  OR  NEW  COMBINATIONS  TO MATTER WHICH ALREADY HAS GONE THROUGH
SOME ARTIFICIAL PROCESS BY THE USE OF MACHINERY, TOOLS,  APPLIANCES  AND
OTHER SIMILAR EQUIPMENT.
  (B)  NOTWITHSTANDING  THE DEFINITION OF MANUFACTURING IN PARAGRAPH (A)
OF THIS SUBDIVISION:
  (I) THE GENERATION AND DISTRIBUTION OF ELECTRICITY, THE EXTRACTION AND
DISTRIBUTION OF NATURAL GAS, AND THE PRODUCTION OF STEAM ASSOCIATED WITH
THE GENERATION OF ELECTRICITY DOES NOT CONSTITUTE MANUFACTURING.
  (II) THE CREATION, PRODUCTION OR REPRODUCTION OF  A  FILM,  TELEVISION
SHOW OR COMMERCIAL DOES NOT CONSTITUTE MANUFACTURING.
  (III)  THE  BLENDING OF TWO OR MORE FUELS DOES NOT CONSTITUTE MANUFAC-
TURING.
  (IV) THE MASS PRODUCTION OF FOOD  PRODUCTS  FOR  WHOLESALE  COMMERCIAL
DISTRIBUTION AND SALE CONSTITUTES MANUFACTURING.
  15.  THE  TERM  "QUALIFIED NEW YORK MANUFACTURER" MEANS A MANUFACTURER
THAT HAS PROPERTY IN THE STATE THAT IS USED IN MANUFACTURING AND  EITHER
THE  FAIR MARKET VALUE OF THAT PROPERTY AT THE CLOSE OF THE TAXABLE YEAR
IS AT LEAST TEN MILLION DOLLARS OR ALL OF ITS REAL AND PERSONAL PROPERTY
IS LOCATED IN NEW YORK. A TAXPAYER OR, IN THE CASE OF A COMBINED REPORT,
A COMBINED GROUP, THAT DOES NOT  SATISFY  THE  CRITERIA  IN  SUBDIVISION
THIRTEEN OF THIS SECTION MAY BE A QUALIFIED NEW YORK MANUFACTURER IF THE
TAXPAYER  OR THE COMBINED GROUP EMPLOYS DURING THE TAXABLE YEAR AT LEAST
TWO THOUSAND FIVE HUNDRED EMPLOYEES IN MANUFACTURING IN NEW YORK AND THE
TAXPAYER OR THE COMBINED GROUP HAS PROPERTY IN THE STATE USED  IN  MANU-
FACTURING,  THE  ADJUSTED BASIS OF WHICH FOR FEDERAL INCOME TAX PURPOSES
AT THE CLOSE OF THE  TAXABLE  YEAR  IS  AT  LEAST  ONE  HUNDRED  MILLION
DOLLARS.
  S 2. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:

S. 6359                            212                           A. 8559

  48.  REAL  PROPERTY  TAX CREDIT FOR MANUFACTURERS. (A) A QUALIFIED NEW
YORK MANUFACTURER, AS DEFINED IN  SUBDIVISION  FIFTEEN  OF  SECTION  TWO
HUNDRED  EIGHT OF THIS ARTICLE, WILL BE ALLOWED A CREDIT EQUAL TO TWENTY
PERCENT OF THE REAL PROPERTY TAX IT PAID DURING  THE  TAXABLE  YEAR  FOR
REAL  PROPERTY  OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCI-
PALLY USED DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE  EXTENT  NOT
DEDUCTED  IN  DETERMINING  ENTIRE  NET  INCOME.  THIS CREDIT WILL NOT BE
ALLOWED IF THE REAL PROPERTY TAXES THAT ARE THE BASIS  FOR  THIS  CREDIT
ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY-
ER.
  (B) FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX MEANS
A  CHARGE  IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF A COUNTY, CITY,
TOWN, VILLAGE OR  SCHOOL  DISTRICT  FOR  MUNICIPAL  OR  SCHOOL  DISTRICT
PURPOSES,  PROVIDED  THAT  THE  CHARGE  IS LEVIED FOR THE GENERAL PUBLIC
WELFARE BY THE PROPER TAXING AUTHORITIES AT  A  LIKE  RATE  AGAINST  ALL
PROPERTY  OVER  WHICH  SUCH  AUTHORITIES HAVE JURISDICTION, AND PROVIDED
THAT WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN  OF
THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
DETERMINED  FOR  THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED BY SUCH
ARTICLE EIGHTEEN OR NINETEEN, WHICHEVER IS  APPLICABLE.  THE  TERM  REAL
PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
ABLE  TO  MAINTENANCE  OR INTEREST, WHEN (1) THE PROPERTY SUBJECT TO THE
CHARGE IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR  (2)
THE  AMOUNT  OF  THE CHARGE IS DETERMINED BY THE BENEFIT TO THE PROPERTY
ASSESSED, OR (3) THE IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED  TENDS
TO  INCREASE  THE  PROPERTY  VALUE.  THE TERM REAL PROPERTY TAX DOES NOT
INCLUDE A PAYMENT IN LIEU OF  TAXES  MADE  BY  THE  QUALIFIED  NEW  YORK
MANUFACTURER.
  (C)  CREDIT  RECAPTURE. WHERE A QUALIFIED NEW YORK MANUFACTURER'S REAL
PROPERTY TAXES WHICH WERE THE BASIS FOR  THE  ALLOWANCE  OF  THE  CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY  TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK, IN
THE TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF  (1)
THE  AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2) THE
AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY  TAXES.
IF  SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR,
THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION  IS  ATTRIBUTABLE
TO  EACH  YEAR  COVERED  BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF
CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED  FOR  EACH
YEAR BASED ON SUCH REDUCTION.
  (D)  THE  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER,
ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREAT-
ED  AS  AN  OVERPAYMENT  OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS  CHAPTER.
PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOU-
SAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE
PAID THEREON.
  S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is amended by adding a new clause (xxxvii) to read as
follows:

(XXXVII) REAL PROPERTY TAX            AMOUNT OF CREDIT UNDER

S. 6359                            213                           A. 8559

CREDIT FOR MANUFACTURERS UNDER        SUBDIVISION FORTY-EIGHT OF
SUBSECTION (XX)                       SECTION TWO HUNDRED TEN

  S  4.  Subsections  (yy)  and  (zz)  of section 606 of the tax law, as
relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
relettered  subsections  (yyy)  and  (zzz)  and a new subsection (xx) is
added to read as follows:
  (XX) REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (1) A  QUALIFIED  NEW
YORK  MANUFACTURER  WILL  BE ALLOWED A CREDIT EQUAL TO TWENTY PERCENT OF
THE REAL PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR REAL  PROPERTY
OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCIPALLY USED DURING
THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT DEDUCTED IN COMPUT-
ING  FEDERAL  ADJUSTED  GROSS INCOME. THIS CREDIT WILL NOT BE ALLOWED IF
THE REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT ARE  INCLUDED
IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAYER.
  (2)(A)  THE  TERM QUALIFIED NEW YORK MANUFACTURER HAS THE SAME MEANING
AS UNDER SUBPARAGRAPH (B) OF PARAGRAPH TWO OF  SUBSECTION  (A)  OF  THIS
SECTION.
  (B)  THE TERM REAL PROPERTY TAX MEANS A CHARGE IMPOSED UPON REAL PROP-
ERTY BY OR ON BEHALF OF A COUNTY, CITY, TOWN, VILLAGE OR SCHOOL DISTRICT
FOR MUNICIPAL OR SCHOOL DISTRICT PURPOSES, PROVIDED THAT THE  CHARGE  IS
LEVIED  FOR  THE GENERAL PUBLIC WELFARE BY THE PROPER TAXING AUTHORITIES
AT A LIKE RATE AGAINST ALL PROPERTY OVER  WHICH  SUCH  AUTHORITIES  HAVE
JURISDICTION, AND PROVIDED THAT WHERE TAXES ARE LEVIED PURSUANT TO ARTI-
CLE EIGHTEEN OR NINETEEN OF THE REAL PROPERTY TAX LAW, THE PROPERTY MUST
HAVE  BEEN  TAXED  AT  THE  RATE DETERMINED FOR THE CLASS IN WHICH IT IS
CONTAINED, AS PROVIDED BY SUCH ARTICLE EIGHTEEN OR  NINETEEN,  WHICHEVER
IS  APPLICABLE. THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR
LOCAL BENEFITS, INCLUDING ANY PORTION OF THAT CHARGE  THAT  IS  PROPERLY
ALLOCATED TO THE COSTS ATTRIBUTABLE TO MAINTENANCE OR INTEREST, WHEN (I)
THE PROPERTY SUBJECT TO THE CHARGE IS LIMITED TO THE PROPERTY THAT BENE-
FITS  FROM THE CHARGE, OR (II) THE AMOUNT OF THE CHARGE IS DETERMINED BY
THE BENEFIT TO THE PROPERTY ASSESSED, OR (III) THE IMPROVEMENT FOR WHICH
THE CHARGE IS ASSESSED TENDS TO INCREASE THE PROPERTY  VALUE.  THE  TERM
REAL  PROPERTY  TAX  DOES NOT INCLUDE A PAYMENT IN LIEU OF TAXES MADE BY
THE QUALIFIED NEW YORK MANUFACTURER.
  (3) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (I)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (II) THE
AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY  TAXES.
IF  SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR,
THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION  IS  ATTRIBUTABLE
TO  EACH  YEAR  COVERED  BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF
CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED  FOR  EACH
YEAR BASED ON SUCH REDUCTION.
  (4)  IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY
TAXABLE YEAR EXCEEDS THE TAXPAYER'S TAX FOR SUCH YEAR, THE  EXCESS  WILL
BE  TREATED  AS  AN OVERPAYMENT TO BE CREDITED OR REFUNDED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF  THIS  ARTICLE,
PROVIDED HOWEVER, NO INTEREST WILL BE PAID THEREON.
  S 5. Paragraph (b) of subdivision 12 of section 210 of the tax law, as
amended  by chapter 817 of the laws of 1987, subparagraph (i) as amended

S. 6359                            214                           A. 8559

by chapter 637 of the laws of 2008 and clause (E) of  subparagraph  (ii)
as  added  by  chapter  393  of  the laws of 2005, is amended to read as
follows:
  (b)  (i)  A credit shall be allowed under this subdivision TO A QUALI-
FIED NEW YORK MANUFACTURER, A QUALIFIED NEW YORK  AGRICULTURAL  BUSINESS
OR  A  QUALIFIED  NEW  YORK  MINING  BUSINESS  with  respect to tangible
personal property and other tangible property, including  buildings  and
structural  components of buildings, which (A) are[:] depreciable pursu-
ant to section one hundred sixty-seven of the internal revenue code, (B)
have a useful life of four years or more, (C) are acquired  by  purchase
as  defined  in  section  one  hundred  seventy-nine (d) of the internal
revenue code, (D) HAVE NOT BEEN PREVIOUSLY THE SUBJECT OF AN  INVESTMENT
TAX CREDIT OR EMPIRE ZONE INVESTMENT TAX CREDIT ALLOWED UNDER THIS CHAP-
TER  TO  ANOTHER  TAXPAYER,  (E) have a situs in this state, and (F) are
[(A)] principally used by the taxpayer in the production  of  goods  [by
manufacturing,  processing,  assembling,  refining,  mining, extracting,
farming, agriculture, horticulture, floriculture, viticulture or commer-
cial fishing, (B) industrial waste treatment facilities or air pollution
control facilities, used in the taxpayer's trade or business,  (C)]  FOR
SALE  OR ARE research and development property[, (D) principally used in
the ordinary course of the taxpayer's trade or business as a  broker  or
dealer  in connection with the purchase or sale (which shall include but
not be limited to  the  issuance,  entering  into,  assumption,  offset,
assignment,  termination, or transfer) of stocks, bonds or other securi-
ties as defined in section  four  hundred  seventy-five  (c)(2)  of  the
Internal  Revenue  Code,  or  of  commodities as defined in section four
hundred seventy-five (e) of the Internal Revenue Code,  (E)  principally
used  in  the  ordinary  course  of  the taxpayer's trade or business of
providing investment advisory services for a regulated investment compa-
ny as defined in section eight hundred fifty-one of the Internal Revenue
Code, or lending, loan  arrangement  or  loan  origination  services  to
customers  in  connection with the purchase or sale (which shall include
but not be limited to the issuance, entering into,  assumption,  offset,
assignment,  termination,  or  transfer)  of  securities  as  defined in
section four hundred seventy-five (c)(2) of the Internal  Revenue  Code,
(F)  principally  used in the ordinary course of the taxpayer's business
as an exchange registered as a national securities exchange  within  the
meaning  of  sections 3(a)(1) and 6(a) of the Securities Exchange Act of
1934 or a board of trade as defined in section  1410(a)(1)  of  the  New
York Not-for-Profit Corporation Law or as an entity that is wholly owned
by one or more such national securities exchanges or boards of trade and
that  provides  automation or technical services thereto, or (G) princi-
pally used as a qualified film production facility  including  qualified
film  production  facilities having a situs in an empire zone designated
as such pursuant to article eighteen-B of  the  general  municipal  law,
where  the taxpayer is providing three or more services to any qualified
film production company using the facility, including such services as a
studio lighting grid, lighting  and  grip  equipment,  multi-line  phone
service, broadband information technology access, industrial scale elec-
trical  capacity,  food services, security services, and heating, venti-
lation and air conditioning. For purposes of clauses (D), (E) and (F) of
this subparagraph, property purchased by a taxpayer  affiliated  with  a
regulated  broker, dealer, registered investment adviser, national secu-
rities exchange or board of trade, is allowed a credit under this subdi-
vision if the property is used by its affiliated regulated broker, deal-
er, registered investment adviser, national securities exchange or board

S. 6359                            215                           A. 8559

of trade in accordance with this subdivision. For purposes of  determin-
ing  if the property is principally used in qualifying uses, the uses by
the taxpayer described in clauses (D) and (E) of this  subparagraph  may
be  aggregated.  In  addition,  the uses by the taxpayer, its affiliated
regulated broker, dealer, and registered investment adviser under either
or both of those clauses  may  be  aggregated.    Provided,  however,  a
taxpayer  shall  not  be allowed the credit provided by clauses (D), (E)
and (F) of this subparagraph unless (I) eighty percent or  more  of  the
employees  performing the administrative and support functions resulting
from or related to the qualifying uses of such equipment are located  in
this  state  or  (II)  the  average number of employees that perform the
administrative and support functions resulting from or  related  to  the
qualifying  uses  of such equipment and are located in this state during
the taxable year for which the credit is claimed is equal to or  greater
than ninety-five percent of the average number of employees that perform
these  functions  and  are  located  in this state during the thirty-six
months immediately preceding the year for which the credit  is  claimed,
or  (III) the number of employees located in this state during the taxa-
ble year for which the credit is claimed is equal  to  or  greater  than
ninety  percent  of  the  number  of  employees located in this state on
December thirty-first, nineteen hundred ninety-eight or, if the taxpayer
was not a calendar year taxpayer in nineteen hundred  ninety-eight,  the
last  day  of its first taxable year ending after December thirty-first,
nineteen hundred ninety-eight. If the taxpayer becomes subject to tax in
this state after the taxable year beginning in nineteen hundred  ninety-
eight,  then the taxpayer is not required to satisfy the employment test
provided in the preceding sentence of this subparagraph  for  its  first
taxable  year.  For  purposes  of  clause (III) of this subparagraph the
employment test will be based on the number of employees located in this
state on the last day of the first taxable year the taxpayer is  subject
to  tax in this state. If the uses of the property must be aggregated to
determine whether the property is principally used in  qualifying  uses,
then  either each affiliate using the property must satisfy this employ-
ment test or this employment test must be satisfied through  the  aggre-
gation  of  the  employees  of  the  taxpayer,  its affiliated regulated
broker, dealer, and registered investment adviser  using  the  property.
For  purposes  of  this  subdivision, the term "goods" shall not include
electricity].
  (ii) For purposes of this paragraph, the following  definitions  shall
apply--
  (A)  [Manufacturing  shall  mean  the process of working raw materials
into wares suitable for use or which gives new shapes,  new  quality  or
new  combinations  to matter which already has gone through some artifi-
cial process by the use of machinery, tools, appliances and other  simi-
lar  equipment.] Property used in the production of goods FOR SALE shall
include machinery, equipment or other tangible property which is princi-
pally used in the repair and service of other  machinery,  equipment  or
other  tangible property used principally in the production of goods FOR
SALE and shall include all facilities used in the production  operation,
including  storage  of  material  to  be  used  in production and of the
products that are produced.
  (B) Research and development property shall  mean  property  which  is
used  for  purposes  of  research and development in the experimental or
laboratory sense. Such purposes shall not be deemed to include the ordi-
nary testing or inspection of materials or products for quality control,
efficiency surveys, management studies, consumer  surveys,  advertising,

S. 6359                            216                           A. 8559

promotions, or research in connection with literary, historical or simi-
lar projects.
  (C) [Industrial waste treatment facilities shall mean property consti-
tuting  facilities for the treatment, neutralization or stabilization of
industrial waste and other wastes (as the terms "industrial  waste"  and
"other  wastes"  are  defined  in  section  17-0105 of the environmental
conservation law) from a point immediately preceding the point  of  such
treatment,  neutralization  or  stabilization  to the point of disposal,
including the necessary pumping and transmitting facilities, but exclud-
ing such facilities installed for the primary purpose of salvaging mate-
rials which are usable in the manufacturing process or are  marketable.]
A  QUALIFIED NEW YORK AGRICULTURAL BUSINESS SHALL MEAN A TAXPAYER OR, IN
THE CASE OF A COMBINED REPORT, A COMBINED GROUP, PRINCIPALLY ENGAGED  IN
FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMER-
CIAL FISHING IN THE STATE. A TAXPAYER OR A COMBINED GROUP IS PRINCIPALLY
ENGAGED IN FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE
OR  COMMERCIAL  FISHING  IN  THE STATE IF MORE THAN FIFTY PERCENT OF THE
GROSS RECEIPTS OF THE TAXPAYER  OR  THE  COMBINED  GROUP,  RESPECTIVELY,
DURING  THE  TAXABLE YEAR ARE DERIVED FROM THE SALE OF GOODS PRODUCED BY
THE TAXPAYER BY ANY OF THE ACTIVITIES SPECIFIED IN  THIS  SENTENCE  THAT
ARE  CONDUCTED  IN  THE  STATE.  IN  COMPUTING  A COMBINED GROUP'S GROSS
RECEIPTS, INTERCORPORATE RECEIPTS  SHALL  BE  ELIMINATED.  IN  COMPUTING
GROSS  RECEIPTS  FOR  A  TAXPAYER  THAT  IS  A  PARTNER  IN PARTNERSHIP,
INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE
ELIMINATED.
  (D) [Air pollution control facilities shall mean property constituting
facilities which remove, reduce, or render less noxious air contaminants
emitted from an air contamination source (as the terms "air contaminant"
and "air contamination source" are defined in  section  19-0107  of  the
environmental  conservation  law) from a point immediately preceding the
point of such removal, reduction or rendering to the point of  discharge
of  air,  meeting emission standards as established by the department of
environmental conservation, but excluding such facilities installed  for
the primary purpose of salvaging materials which are usable in the manu-
facturing process or are marketable and excluding those facilities which
rely  for  their efficacy on dilution, dispersion or assimilation of air
contaminants in the ambient air after emission. Such term shall  further
include flue gas desulfurization equipment and attendant sludge disposal
facilities,  fluidized  bed boilers, precombustion coal cleaning facili-
ties or other facilities that conform with this  subdivision  and  which
comply  with the provisions of the state acid deposition control act set
forth in title nine of article nineteen of the  environmental  conserva-
tion  law]  A  QUALIFIED  NEW YORK MINING BUSINESS SHALL MEAN A TAXPAYER
PRINCIPALLY ENGAGED IN MINING IN THE STATE. A  TAXPAYER  IS  PRINCIPALLY
ENGAGED  IN  MINING IN THE STATE IF MORE THAN FIFTY PERCENT OF THE GROSS
RECEIPTS OF THE TAXPAYER OR, IN THE  CASE  OF  A  COMBINED  REPORT,  THE
COMBINED  GROUP,  RESPECTIVELY, DURING THE TAXABLE YEAR ARE DERIVED FROM
THE SALE OF GOODS PRODUCED BY THE TAXPAYER BY MINING ACTIVITIES THAT ARE
CONDUCTED IN THE STATE. IN COMPUTING A COMBINED GROUP'S GROSS  RECEIPTS,
INTERCORPORATE RECEIPTS SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS
FOR  A  TAXPAYER THAT IS A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS
BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  [(E) The terms "qualified film  production  facility"  and  "qualified
film production company" shall have the same meaning as in section twen-
ty-four of this chapter.]

S. 6359                            217                           A. 8559

  (iii)  [However,  such  credit shall be allowed with respect to indus-
trial waste treatment facilities and air  pollution  control  facilities
only  on condition that such facilities have been certified by the state
commissioner of environmental conservation or his  designated  represen-
tative,  pursuant  to  subdivision one of section 17-0707 or subdivision
one of section 19-0309 of the environmental conservation law, as comply-
ing with applicable provisions of the  environmental  conservation  law,
the  public  health law, the state sanitary code and codes, rules, regu-
lations, permits or orders issued pursuant thereto.] IN ORDER TO PROPER-
LY ADMINISTER THE CREDIT AUTHORIZED BY THIS SUBDIVISION, THE  DEPARTMENT
MAY  DISCLOSE  INFORMATION ABOUT THE ALLOWANCE TO ANOTHER TAXPAYER OF AN
INVESTMENT TAX CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT UNDER THIS
CHAPTER WITH RESPECT TO THE SAME PROPERTY.
  S 6. Paragraph (d) of subdivision 12 of section 210 of the tax law, as
amended by chapter 637 of the laws  of  2008,  is  amended  to  read  as
follows:
  (d)  A  taxpayer  shall not be allowed a credit under this subdivision
with respect to tangible personal property and other tangible  property,
including  buildings  and  structural  components of buildings, which it
leases to any other person or corporation [except where a taxpayer leas-
es property  to  an  affiliated  regulated  broker,  dealer,  registered
investment  adviser,  national securities exchange or board of trade (or
other entity described in clause (F) of subparagraph  (i)  of  paragraph
(b)  of  this  subdivision)  that  uses such property in accordance with
clause (D), (E) or (F) of subparagraph (i)  of  paragraph  (b)  of  this
subdivision].  For  purposes  of the preceding sentence, any contract or
agreement to lease or rent or for a license to use such  property  shall
be  considered  a  lease.  Provided,  however,  in determining whether a
taxpayer shall be allowed a credit under this subdivision  with  respect
to such property, any election made with respect to such property pursu-
ant  to  the  provisions of paragraph eight of subsection (f) of section
one hundred sixty-eight of the internal revenue code, as such  paragraph
was  in effect for agreements entered into prior to January first, nine-
teen hundred eighty-four, shall be disregarded. [For  purposes  of  this
paragraph,  the  use of a qualified film production facility by a quali-
fied film production company shall not be considered  a  lease  of  such
facility to such company.]
  S  7. Subparagraph 6 of paragraph (g) of subdivision 12 of section 210
of the tax law is REPEALED.
  S 8. Paragraphs (f), (k), (l) and (m) of subdivision 12 of section 210
of the tax law are REPEALED.
  S 9. Paragraph 2 of subsection (a) of section 606 of the tax  law,  as
amended  by chapter 817 of the laws of 1987, subparagraph (A) as amended
by chapter 637 of the laws of 2008 and clause (v) of subparagraph (B) as
added by chapter 393 of the laws of 2005, is amended to read as follows:
  (2)(A) A credit shall be allowed under this subsection TO A  QUALIFIED
NEW  YORK  MANUFACTURER, A QUALIFIED NEW YORK AGRICULTURAL BUSINESS OR A
QUALIFIED NEW YORK MINING BUSINESS with  respect  to  tangible  personal
property and other tangible property, including buildings and structural
components  of  buildings,  which  (I)  are[:]  depreciable  pursuant to
section one hundred sixty-seven of the internal revenue code, (II)  have
a  useful  life of four years or more, (III) are acquired by purchase as
defined in section one hundred seventy-nine (d) of the internal  revenue
code,  (IV)  HAVE  NOT  BEEN PREVIOUSLY THE SUBJECT OF AN INVESTMENT TAX
CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT ALLOWED UNDER THIS  CHAP-
TER  TO  ANOTHER  TAXPAYER, (V) have a situs in this state, and (VI) are

S. 6359                            218                           A. 8559

[(i)] principally used by the taxpayer in the production  of  goods  [by
manufacturing,  processing,  assembling,  refining,  mining, extracting,
farming, agriculture, horticulture, floriculture, viticulture or commer-
cial   fishing,  (ii)  industrial  waste  treatment  facilities  or  air
pollution control facilities, used in the taxpayer's trade or  business,
(iii)]  FOR SALE OR ARE research and development property[, (iv) princi-
pally used in the ordinary course of the taxpayer's trade or business as
a broker or dealer in connection with the purchase or sale (which  shall
include  but  not be limited to the issuance, entering into, assumption,
offset, assignment, termination, or transfer) of stocks, bonds or  other
securities as defined in section four hundred seventy-five (c)(2) of the
Internal Revenue Code, or of commodities as defined in section 475(e) of
the  Internal  Revenue Code, (v) principally used in the ordinary course
of the taxpayer's trade or business  of  providing  investment  advisory
services  for a regulated investment company as defined in section eight
hundred fifty-one  of  the  Internal  Revenue  Code,  or  lending,  loan
arrangement or loan origination services to customers in connection with
the  purchase  or  sale  (which  shall include but not be limited to the
issuance, entering into, assumption, offset, assignment, termination, or
transfer) of securities as defined in section four hundred  seventy-five
(c)(2) of the Internal Revenue Code, or (vi) principally used as a qual-
ified  film  production  facility  including  qualified  film production
facilities having a situs in an empire zone designated as such  pursuant
to  article  eighteen-B of the general municipal law, where the taxpayer
is providing three or more services to  any  qualified  film  production
company using the facility, including such services as a studio lighting
grid,  lighting  and grip equipment, multi-line phone service, broadband
information technology access,  industrial  scale  electrical  capacity,
food  services,  security  services,  and  heating,  ventilation and air
conditioning. For purposes of clauses (iv) and (v) of this subparagraph,
property purchased by a taxpayer affiliated  with  a  regulated  broker,
dealer,  or registered investment adviser is allowed a credit under this
subsection if the property is used by its affiliated  regulated  broker,
dealer   or  registered  investment  adviser  in  accordance  with  this
subsection. For purposes of determining if the property  is  principally
used  in  qualifying uses, the uses by the taxpayer described in clauses
(iv) and (v) of this subparagraph may be aggregated.  In  addition,  the
uses by the taxpayer, its affiliated regulated broker, dealer and regis-
tered  investment  adviser  under either or both of those clauses may be
aggregated. Provided, however, a taxpayer shall not be allowed the cred-
it provided by clauses (iv) and (v)  of  this  subparagraph  unless  (I)
eighty  percent  or  more of the employees performing the administrative
and support functions resulting from or related to the  qualifying  uses
of  such equipment are located in this state, or (II) the average number
of employees that  perform  the  administrative  and  support  functions
resulting  from  or related to the qualifying uses of such equipment and
are located in this state during the taxable year for which  the  credit
is  claimed is equal to or greater than ninety-five percent of the aver-
age number of employees that perform these functions and are located  in
this  state  during the thirty-six months immediately preceding the year
for which the credit is  claimed,  or  (III)  the  number  of  employees
located  in  this  state during the taxable year for which the credit is
claimed is equal to or greater than ninety  percent  of  the  number  of
employees  located  in  this  state  on  December thirty-first, nineteen
hundred ninety-eight or, if the taxpayer was not a calendar year taxpay-
er in nineteen hundred ninety-eight, the last day of its  first  taxable

S. 6359                            219                           A. 8559

year  ending after December thirty-first, nineteen hundred ninety-eight.
If the taxpayer becomes subject to tax in this state after  the  taxable
year  beginning  in  nineteen hundred ninety-eight, then the taxpayer is
not  required  to  satisfy the employment test provided in the preceding
sentence of this subparagraph  for  its  first  taxable  year.  For  the
purposes  of  clause (III) of this subparagraph the employment test will
be based on the number of employees located in this state  on  the  last
day  of  the  first  taxable year the taxpayer is subject to tax in this
state. If the uses of the  property  must  be  aggregated  to  determine
whether the property is principally used in qualifying uses, then either
each  affiliate  using the property must satisfy this employment test or
this employment test must be satisfied through the  aggregation  of  the
employees  of the taxpayer, its affiliated regulated broker, dealer, and
registered investment adviser using the property. For purposes  of  this
subsection, the term "goods" shall not include electricity].
  (B)  For  purposes  of this paragraph, the following definitions shall
apply:
  (i) (I) Manufacturing shall mean the process of working raw  materials
into  wares  suitable  for use or which gives new shapes, new quality or
new combinations to matter which already has gone through  some  artifi-
cial  process by the use of machinery, tools, appliances and other simi-
lar equipment. Property used in the production of goods FOR  SALE  shall
include machinery, equipment or other tangible property which is princi-
pally  used  in  the repair and service of other machinery, equipment or
other tangible property used principally in the production of goods  and
shall include all facilities used in the production operation, including
storage  of  material  to be used in production and of the products that
are produced.
  (II) NOTWITHSTANDING THE DEFINITION OF MANUFACTURING IN  ITEM  (I)  OF
THIS  CLAUSE:  THE  GENERATION  AND  DISTRIBUTION  OF  ELECTRICITY,  THE
EXTRACTION AND DISTRIBUTION OF NATURAL GAS, AND THE PRODUCTION OF  STEAM
ASSOCIATED  WITH THE GENERATION OF ELECTRICITY DOES NOT CONSTITUTE MANU-
FACTURING. THE CREATION, PRODUCTION OR REPRODUCTION  OF  A  FILM,  TELE-
VISION  SHOW OR COMMERCIAL DOES NOT CONSTITUTE MANUFACTURING. THE BLEND-
ING OF TWO OR MORE FUELS DOES NOT  CONSTITUTE  MANUFACTURING.  THE  MASS
PRODUCTION  OF  FOOD  PRODUCTS FOR COMMERCIAL WHOLESALE DISTRIBUTION AND
SALE CONSTITUTES MANUFACTURING.
  (ii) Research and development property shall mean  property  which  is
used  for  purposes  of  research and development in the experimental or
laboratory sense. Such purposes shall not be deemed to include the ordi-
nary testing or inspection of materials or products for quality control,
efficiency surveys, management studies, consumer  surveys,  advertising,
promotions, or research in connection with literary, historical or simi-
lar projects.
  (iii)  [Industrial  waste  treatment  facilities  shall  mean property
constituting facilities for the treatment, neutralization or  stabiliza-
tion  of  industrial  waste  and  other wastes (as the terms "industrial
waste" and "other wastes" are defined in section 17-0105 of the environ-
mental conservation law) from a point immediately preceding the point of
such  treatment,  neutralization  or  stabilization  to  the  point   of
disposal,  including  the necessary pumping and transmitting facilities,
but excluding such facilities  installed  for  the  primary  purpose  of
salvaging materials which are usable in the manufacturing process or are
marketable.]  "MANUFACTURER" SHALL MEAN A TAXPAYER THAT DURING THE TAXA-
BLE YEAR IS PRINCIPALLY ENGAGED IN MANUFACTURING. A TAXPAYER IS  PRINCI-
PALLY  ENGAGED  IN MANUFACTURING IF MORE THAN FIFTY PERCENT OF THE GROSS

S. 6359                            220                           A. 8559

RECEIPTS OF THE TAXPAYER DURING THE TAXABLE YEAR ARE  DERIVED  FROM  THE
SALE OF GOODS PRODUCED BY MANUFACTURING. IN COMPUTING GROSS RECEIPTS FOR
A  TAXPAYER  THAT  IS  A  PARTNER  IN PARTNERSHIP, INTER-ENTITY RECEIPTS
BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  (iv)  [Air pollution control facilities shall mean property constitut-
ing facilities which remove, reduce, or render less noxious air  contam-
inants  emitted  from  an  air  contamination  source (as the terms "air
contaminant" and "air  contamination  source"  are  defined  in  section
19-0107  of the environmental conservation law) from a point immediately
preceding the point of such removal, reduction or rendering to the point
of discharge of air, meeting emission standards as  established  by  the
department  of environmental conservation, but excluding such facilities
installed for the primary  purpose  of  salvaging  materials  which  are
usable  in  the  manufacturing  process  or are marketable and excluding
those facilities which rely for their efficacy on  dilution,  dispersion
or  assimilation  of air contaminants in the ambient air after emission.
Such term shall further include flue gas desulfurization  equipment  and
attendant  sludge  disposal  facilities,  fluidized bed boilers, precom-
bustion coal cleaning facilities or other facilities that  conform  with
this  subsection  and which comply with the provisions of the State Acid
Deposition Control Act set forth in title nine of  article  nineteen  of
the  environmental  conservation law.] "QUALIFIED NEW YORK MANUFACTURER"
SHALL MEAN A MANUFACTURER THAT HAS PROPERTY IN THE STATE THAT IS USED IN
MANUFACTURING AND EITHER THE FAIR MARKET VALUE OF THAT PROPERTY  AT  THE
CLOSE  OF THE TAXABLE YEAR IS AT LEAST TEN MILLION DOLLARS OR ALL OF ITS
REAL AND PERSONAL PROPERTY IS LOCATED IN NEW YORK.
  (v) [For  purposes  of  this  paragraph,  the  terms  "qualified  film
production  facility" and "qualified film production company" shall have
the same meaning as in section twenty-four of this chapter.] A QUALIFIED
NEW YORK AGRICULTURAL BUSINESS SHALL MEAN A TAXPAYER PRINCIPALLY ENGAGED
IN FARMING,  AGRICULTURE,  HORTICULTURE,  FLORICULTURE,  VITICULTURE  OR
COMMERCIAL  FISHING  IN  THE STATE. A TAXPAYER IS PRINCIPALLY ENGAGED IN
FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMER-
CIAL FISHING IN THE STATE IF  MORE  THAN  FIFTY  PERCENT  OF  THE  GROSS
RECEIPTS  OF  THE  TAXPAYER DURING THE TAXABLE YEAR ARE DERIVED FROM THE
SALE OF GOODS PRODUCED BY THE TAXPAYER BY ANY OF THE  ACTIVITIES  SPECI-
FIED  IN  THIS  SENTENCE  THAT ARE CONDUCTED IN THE STATE.  IN COMPUTING
GROSS RECEIPTS  FOR  A  TAXPAYER  THAT  IS  A  PARTNER  IN  PARTNERSHIP,
INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE
ELIMINATED.
  (VI)  A QUALIFIED NEW YORK MINING BUSINESS SHALL MEAN A TAXPAYER PRIN-
CIPALLY ENGAGED IN MINING  IN  THE  STATE.  A  TAXPAYER  IS  PRINCIPALLY
ENGAGED  IN  MINING IN THE STATE IF MORE THAN FIFTY PERCENT OF THE GROSS
RECEIPTS OF THE TAXPAYER DURING THE TAXABLE YEAR ARE  DERIVED  FROM  THE
SALE  OF  GOODS  PRODUCED  BY THE TAXPAYER BY MINING ACTIVITIES THAT ARE
CONDUCTED IN THE STATE. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER  THAT
IS  A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER
AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  (C) [However, such credit shall be allowed with respect to  industrial
waste  treatment facilities and air pollution control facilities only on
condition that such facilities have been certified by the state  commis-
sioner  of  environmental conservation or his designated representative,
pursuant to subdivision one of section 17-0707  or  subdivision  one  of
section 19-0309 of the environmental conservation law, as complying with
applicable  provisions of the environmental conservation law, the public
health law, the state  sanitary  code  and  codes,  rules,  regulations,

S. 6359                            221                           A. 8559

permits  or orders issued pursuant thereto.] IN ORDER TO PROPERLY ADMIN-
ISTER THE CREDIT AUTHORIZED BY  THIS  SUBDIVISION,  THE  DEPARTMENT  MAY
DISCLOSE  INFORMATION  ABOUT  THE  ALLOWANCE  TO  ANOTHER TAXPAYER OF AN
INVESTMENT TAX CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT UNDER THIS
CHAPTER WITH RESPECT TO THE SAME PROPERTY.
  S  10. Paragraph 4 of subsection (a) of section 606 of the tax law, as
amended by chapter 637 of the laws  of  2008,  is  amended  to  read  as
follows:
  (4)  A  taxpayer  shall  not be allowed a credit under this subsection
with respect to tangible personal property and other tangible  property,
including  buildings  and  structural  components of buildings, which it
leases to any other person or corporation [except where a taxpayer leas-
es property to an affiliated regulated  broker,  dealer,  or  registered
investment  adviser  that  uses  such property in accordance with clause
(iv) or (v) of subparagraph (A) of paragraph two  of  this  subsection].
For  purposes  of  the  preceding sentence, any contract or agreement to
lease or rent or for a license to use such property shall be  considered
a  lease.  Provided, however, in determining whether a taxpayer shall be
allowed a credit under this subsection with respect  to  such  property,
any  election  made  with  respect  to  such  property  pursuant  to the
provisions of paragraph eight of subsection (f) of section  one  hundred
sixty-eight  of  the  internal  revenue  code,  as such paragraph was in
effect for agreements entered into  prior  to  January  first,  nineteen
hundred  eighty-four,  shall be disregarded. [For purposes of this para-
graph, the use of a qualified film production facility  by  a  qualified
film production company shall not be considered a lease of such facility
to such company.]
  S  11.  Paragraph 6 of subsection (a) of section 606 of the tax law is
REPEALED.
  S 12. Subparagraph (F) of paragraph 7 of subsection (a) of section 606
of the tax law is REPEALED.
  S 13. Paragraphs 11, 12 and 13 of subsection (a) of section 606 of the
tax law are REPEALED.
  S 14. Subsection (i) of section 1456 of the tax law is REPEALED.
  S 15. Subdivision (q) of section 1511 of the tax law is REPEALED.
  S 16. Subparagraphs (vi) and (vii) of paragraph (a) of  subdivision  1
of section 210 of the tax law, subparagraph (vi) as amended by section 1
of  part  C  of chapter 56 of the laws of 2011 and subparagraph (vii) as
added by section 1 of part Z of chapter 59 of  the  laws  of  2013,  are
amended to read as follows:
  (vi) EXCEPT AS OTHERWISE PROVIDED IN THIS SUBPARAGRAPH OR SUBPARAGRAPH
(VII) OF THIS PARAGRAPH, for taxable years beginning on or after January
thirty-first,  two  thousand  seven, the amount prescribed by this para-
graph for a taxpayer which is a  qualified  New  York  manufacturer,  AS
DEFINED  IN  SUBDIVISION  FIFTEEN  OF  SECTION TWO HUNDRED EIGHT OF THIS
ARTICLE, shall be computed at the rate of six and one-half (6.5) percent
of the taxpayer's entire net income base. For taxable years beginning on
or after January first, two thousand twelve and  before  January  first,
two  thousand  fifteen,  the  amount  prescribed by this paragraph for a
taxpayer which is an eligible qualified New York manufacturer  shall  be
computed  at  the  rate  of  three and one-quarter (3.25) percent of the
taxpayer's entire net income base.  [The term "manufacturer" shall  mean
a  taxpayer  which during the taxable year is principally engaged in the
production of goods by manufacturing, processing, assembling,  refining,
mining,  extracting,  farming,  agriculture, horticulture, floriculture,
viticulture or commercial fishing. However, the generation and  distrib-

S. 6359                            222                           A. 8559

ution   of  electricity,  the  distribution  of  natural  gas,  and  the
production of steam associated with the generation of electricity  shall
not be qualifying activities for a manufacturer under this subparagraph.
Moreover,  the  combined  group shall be considered a "manufacturer" for
purposes of this subparagraph only if  the  combined  group  during  the
taxable  year is principally engaged in the activities set forth in this
paragraph, or any combination thereof. A taxpayer or  a  combined  group
shall  be "principally engaged" in activities described above if, during
the taxable year, more than fifty percent of the gross receipts  of  the
taxpayer or combined group, respectively, are derived from receipts from
the  sale  of goods produced by such activities. In computing a combined
group's gross receipts, intercorporate receipts shall be  eliminated.  A
"qualified  New  York manufacturer" is a manufacturer which has property
in New York which is described in clause  (A)  of  subparagraph  (i)  of
paragraph  (b)  of subdivision twelve of this section and either (I) the
adjusted basis of such property for federal income tax purposes  at  the
close of the taxable year is at least one million dollars or (II) all of
its  real  and  personal property is located in New York. In addition, a
"qualified New York manufacturer" means a taxpayer which is defined as a
qualified emerging technology company under paragraph (c) of subdivision
one of section thirty-one hundred two-e of the  public  authorities  law
regardless  of  the  ten million dollar limitation expressed in subpara-
graph one of such  paragraph  (c).]  The  commissioner  shall  establish
guidelines and criteria that specify requirements by which a manufactur-
er  may  be  classified  as an eligible qualified New York manufacturer.
Criteria may include but not be limited  to  factors  such  as  regional
unemployment,   the  economic  impact  that  manufacturing  has  on  the
surrounding community, population decline within the region  and  median
income within the region in which the manufacturer is located. In estab-
lishing  these  guidelines and criteria, the commissioner shall endeavor
that the total annual cost of the lower rates shall not  exceed  twenty-
five million dollars.
  [(vii)] For a qualified New York manufacturer, as defined in [subpara-
graph (vi) of this paragraph] SUBDIVISION FIFTEEN OF SECTION TWO HUNDRED
EIGHT  OF  THIS ARTICLE, the rate at which the tax is computed in effect
for taxable years beginning on or  after  January  first,  two  thousand
thirteen  and  before January first, two thousand fourteen for qualified
New York manufacturers shall be reduced by nine and  two-tenths  percent
for  taxable  years  commencing  on or after January first, two thousand
fourteen and before January first,  two  thousand  fifteen,  twelve  and
three-tenths  percent  for  taxable years commencing on or after January
first, two thousand fifteen  and  before  January  first,  two  thousand
sixteen, fifteen and four-tenths percent for taxable years commencing on
or  after  January first, two thousand sixteen and before January first,
two thousand eighteen, and twenty-five percent for taxable years  begin-
ning on or after January first, two thousand eighteen.
  (VII)  FOR A QUALIFIED NEW YORK MANUFACTURER THAT HAS AN APPORTIONMENT
FACTOR FOR PURPOSES OF  THE  METROPOLITAN  TRANSPORTATION  BUSINESS  TAX
SURCHARGE  COMPUTED  PURSUANT  TO SUBDIVISION TWO OF SECTION TWO HUNDRED
NINE-B OF THIS ARTICLE EQUAL TO ZERO FOR THE TAXABLE  YEAR,  THE  AMOUNT
PRESCRIBED  BY  THIS  PARAGRAPH  FOR TAXABLE YEARS BEGINNING ON OR AFTER
JANUARY FIRST, TWO THOUSAND FOURTEEN SHALL BE COMPUTED AT  THE  RATE  OF
ZERO PERCENT OF THE TAXPAYER'S ENTIRE NET INCOME BASE.
  S  17.  Subparagraphs  2  and  3  of paragraph (b) of subdivision 1 of
section 210 of the tax law, subparagraph 2 as amended by  section  1  of
part  GG-1 of chapter 57 of the laws of 2008 and subparagraph 3 as added

S. 6359                            223                           A. 8559

by section 2 of part Z of chapter 59 of the laws of 2013, are amended to
read as follows:
  (2)  [For  purposes  of  subparagraph  one of this paragraph, the term
"manufacturer" shall mean a taxpayer which during the  taxable  year  is
principally  engaged  in the production of goods by manufacturing, proc-
essing, assembling, refining, mining, extracting, farming,  agriculture,
horticulture, floriculture, viticulture or commercial fishing. Moreover,
for  purposes  of  computing  the capital base in a combined report, the
combined group shall be considered a "manufacturer" for purposes of this
subparagraph only if the combined group during the taxable year is prin-
cipally engaged in the activities set forth in this subparagraph, or any
combination thereof. A taxpayer or a combined group shall be "principal-
ly engaged" in activities described above if, during the  taxable  year,
more  than  fifty  percent  of  the  gross  receipts  of the taxpayer or
combined group, respectively, are derived from receipts from the sale of
goods produced by such activities. In computing a combined group's gross
receipts, intercorporate receipts shall be eliminated. A "qualified  New
York  manufacturer" is a manufacturer that has property in New York that
is described in clause (A) of  subparagraph  (i)  of  paragraph  (b)  of
subdivision  twelve of this section and either (i) the adjusted basis of
that property for federal income tax purposes at the close of the  taxa-
ble  year  is  at  least one million dollars or (ii) all of its real and
personal property is located in New York. In addition, a "qualified  New
York  manufacturer"  means  a  taxpayer  that  is defined as a qualified
emerging technology company under paragraph (c) of  subdivision  one  of
section  thirty-one  hundred two-e of the public authorities law regard-
less of the ten million dollar limitation expressed in subparagraph  one
of such paragraph.
  (3)]  For  a  qualified New York manufacturer, as defined in [subpara-
graph two of this paragraph] SUBDIVISION FIFTEEN OF SECTION TWO  HUNDRED
EIGHT  OF  THIS ARTICLE, the rate at which the tax is computed in effect
for taxable years beginning on or  after  January  first,  two  thousand
thirteen  and  before  January  first,  two  thousand  fourteen shall be
reduced by nine and two-tenths percent for taxable years  commencing  on
or  after January first, two thousand fourteen and before January first,
two thousand fifteen, twelve and three-tenths percent for taxable  years
commencing  on  or  after January first, two thousand fifteen and before
January first, two thousand sixteen, fifteen and four-tenths percent for
taxable years commencing on or after January first, two thousand sixteen
and before January first, two thousand eighteen, and twenty-five percent
for taxable years beginning on or  after  January  first,  two  thousand
eighteen.
  S  18. Subparagraph (iii) of paragraph (c) of subdivision 1 of section
210 of the tax law, as added by section 3 of part Z of chapter 59 of the
laws of 2013, is amended to read as follows:
  (iii) For a qualified New York manufacturer, as defined  in  [subpara-
graph  (vi) of paragraph (a) of this] subdivision FIFTEEN OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, the rate at which the tax is computed  in
effect  for taxable years beginning on or after January first, two thou-
sand thirteen and before January first, two thousand fourteen for quali-
fied New York manufacturers shall be  reduced  by  nine  and  two-tenths
percent  for  taxable  years  commencing  on or after January first, two
thousand fourteen and before January first, two thousand fifteen, twelve
and three-tenths percent for taxable years commencing on or after  Janu-
ary  first,  two thousand fifteen and before January first, two thousand
sixteen, fifteen and four-tenths percent for taxable years commencing on

S. 6359                            224                           A. 8559

or after January first, two thousand sixteen and before  January  first,
two  thousand eighteen, and twenty-five percent for taxable years begin-
ning on or after January first, two thousand eighteen.
  S  19. Subparagraph 6 of paragraph (d) of subdivision 1 of section 210
of the tax law, as added by section 4 of part Z of  chapter  59  of  the
laws of 2013, is amended to read as follows:
  (6) For a qualified New York manufacturer, as defined in [subparagraph
(vi)  of  paragraph  (a)  of  this]  subdivision  FIFTEEN OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, the amounts prescribed  in  subparagraphs
one  and four of this paragraph in effect for taxable years beginning on
or after January first, two thousand thirteen and before January  first,
two  thousand  fourteen  for  qualified  New York manufacturers shall be
reduced by nine and two-tenths percent for taxable years  commencing  on
or  after January first, two thousand fourteen and before January first,
two thousand fifteen, twelve and three-tenths percent for taxable  years
commencing  on  or  after January first, two thousand fifteen and before
January first, two thousand sixteen, fifteen and four-tenths percent for
taxable years commencing on or after January first, two thousand sixteen
and before January first, two thousand eighteen, and twenty-five percent
for taxable years beginning on or  after  January  first,  two  thousand
eighteen.
  S 20. Subdivision 1 of section 210 of the tax law is amended by adding
a new paragraph (h) to read as follows:
  (H)  FOR  PURPOSES  OF  DETERMINING  WHETHER A TAXPAYER IS AN ELIGIBLE
QUALIFIED NEW  YORK  MANUFACTURER  FOR  PURPOSES  OF  THE  TAX  BENEFITS
PROVIDED  IN  SUBPARAGRAPH  (VI)  OF  PARAGRAPH (A) OF THIS SUBDIVISION,
SUBPARAGRAPH (II) OF PARAGRAPH (C) OF THIS SUBDIVISION, AND SUBPARAGRAPH
FIVE OF PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER SHALL UTILIZE  THE
LAW,  GUIDELINES  AND  CRITERIA  IN EFFECT ON DECEMBER THIRTY-FIRST, TWO
THOUSAND THIRTEEN.
  S 21. Subdivision 2 of section 355 of the economic development law, as
amended by section 4 of part G of chapter 61 of the  laws  of  2011,  is
amended to read as follows:
  2.  Excelsior  investment  tax  credit component. A participant in the
excelsior jobs program shall be eligible to claim a credit on  qualified
investments.  The  credit  shall  be equal to two percent of the cost or
other basis for federal income tax purposes of the qualified investment.
A participant may not claim both the  excelsior  investment  tax  credit
component  and the investment tax credit set forth in subdivision twelve
of section two hundred ten[,] OR subsection (a) of section  six  hundred
six[,  subsection (i) of section fourteen hundred fifty-six, or subdivi-
sion (q) of section fifteen hundred eleven] of the tax law for the  same
property  in  any taxable year, except that a participant may claim both
the excelsior investment tax credit component  and  the  investment  tax
credit  for  research  and development property. In addition, a taxpayer
who or which is qualified to claim the excelsior investment  tax  credit
component and is also qualified to claim the brownfield tangible proper-
ty  credit  component  under section twenty-one of the tax law may claim
either the excelsior investment tax credit component  or  such  tangible
property  credit  component,  but  not  both with regard to a particular
piece of property. A credit may not be claimed until a  business  enter-
prise  has received a certificate of tax credit, provided that qualified
investments made on or after the issuance of the certificate  of  eligi-
bility  but  before the issuance of the certificate of tax credit to the
business enterprise, may be claimed in the first taxable year for  which
the  business  enterprise  is  allowed  to  claim  the  credit. Expenses

S. 6359                            225                           A. 8559

incurred prior to the date the certificate of eligibility is issued  are
not eligible to be included in the calculation of the credit.
  S  22.  Severability.  The  legislature intends by this act to provide
needed tax relief to New York manufacturers.  However,  if  a  court  of
final,  competent  jurisdiction adjudges the tax rates imposed on quali-
fied New York manufacturers to be invalid, qualified New  York  manufac-
turers  shall  be  subject  to the same tax rates as all other taxpayers
subject to tax under article nine-A of the tax law. Provided further, if
a court of final, competent jurisdiction adjudges that the  tax  credits
provided  by this act to qualified New York manufacturers, qualified New
York agricultural businesses and qualified New York mining businesses to
be invalid, such credits shall be deemed repealed and  shall  be  of  no
force and effect as to any taxpayers.
  S  23. This act shall take effect immediately and shall apply to taxa-
ble years beginning on or after January 1, 2014.

                                 PART S

  Section 1. Sections 185, 187-j, 187-k, 187-l, 187-m, 187-q, 187-r  and
187-s of the tax law are REPEALED.
  S  2.  Paragraph  (c)  of subdivision 9 of section 400 of the economic
development law, as added by section 2 of part V of chapter  61  of  the
laws of 2011, is amended to read as follows:
  (c) the business entity must not be substantially similar in ownership
and  operation  to  another taxpayer taxable or previously taxable under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION one hundred eighty-five of  article  nine,  former  section  one
hundred  eighty-six or article nine-A, twenty-two, thirty-two or thirty-
three of the tax law or the income or losses of which is or was includa-
ble under article twenty-two of the tax law;
  S 3. Paragraph (c) of subdivision 6 of section  431  of  the  economic
development  law,  as  added by section 1 of part A of chapter 68 of the
laws of 2013, is amended to read as follows:
  (c) the business is not substantially  similar  in  operation  and  in
ownership  to  a  business  entity  (or entities) taxable, or previously
taxable within the last five taxable years, under  section  one  hundred
eighty-three[,]  OR  one hundred eighty-four, FORMER SECTION one hundred
eighty-five or FORMER SECTION one hundred eighty-six  of  the  tax  law,
article nine-A, thirty-two or thirty-three of the tax law, article twen-
ty-three  of  the  tax law or which would have been subject to tax under
such article twenty-three (as such article  was  in  effect  on  January
first,  nineteen  hundred eighty), or the income (or losses) of which is
(or was) includable under article twenty-two of the tax law; and
  S 4. Paragraph 1 of subdivision (a), subdivision (f), paragraph  1  of
subdivision  (i)  and  subdivisions (j) and (k) of section 14 of the tax
law, paragraph 1 of subdivision (a) as amended by section 3 of  part  V1
of  chapter 109 of the laws of 2006, subdivisions (f) and (j) as amended
by section 10 of part CC of chapter 85 of the laws of 2002, paragraph  1
of  subdivision  (i)  and  subdivision (k) as amended and paragraph 4 of
subdivision (j) as added by section 5 of part A of  chapter  63  of  the
laws  of  2005,  subparagraph  (B)  of paragraph 4 of subdivision (j) as
amended by chapter 161 of the laws of 2005 and paragraph 5  of  subdivi-
sion  (j)  as amended by section 4 of part V1 of chapter 109 of the laws
of 2006, are amended to read as follows:
  (1) except as provided in paragraphs one-a and one-b of this  subdivi-
sion,  for purposes of [section one hundred eighty-seven-j and] articles

S. 6359                            226                           A. 8559

nine-A, twenty-two, thirty-two and thirty-three  of  this  chapter,  for
each  of  the  taxable  years  within the "business tax benefit period,"
which period shall consist of (A) in the case of a  business  enterprise
with a test date occurring on or before December thirty-first, two thou-
sand  one, the first fifteen taxable years beginning on or after January
first, two thousand one, (B) in the case of a business enterprise with a
test date occurring on or after January first,  two  thousand  two,  but
prior  to April first, two thousand five, the fifteen taxable years next
following the business enterprise's test year, and (C) in the case of  a
business enterprise which is first certified under article eighteen-B of
the  general  municipal  law on or after April first, two thousand five,
the ten taxable years starting with the taxable year in which the  busi-
ness  enterprise's  first date of certification under article eighteen-B
of the general municipal law occurs, but only with respect  to  each  of
such  business tax benefit period years for which the employment test is
met,
  (f) Taxable year. The term "taxable year" means the  taxable  year  of
the business enterprise under section one hundred eighty-three[,] OR one
hundred  eighty-four[,  one  hundred  eighty-five] or former section one
hundred eighty-six of article nine, or under article nine-A, twenty-two,
thirty-two or thirty-three of this chapter.  If  a  business  enterprise
does  not  have  a  taxable  year  because it is exempt from taxation or
otherwise not required to file a return under any of  such  sections  of
article  nine or under article nine-A, twenty-two, thirty-two or thirty-
three, then the term "taxable year" means (i) the business  enterprise's
federal taxable year, or, (ii) if the enterprise does not have a federal
taxable year, the calendar year.
  (1)  for  purposes  of  [section one hundred eighty-seven-j of article
nine, and] articles nine-A, twenty-two, thirty-two and  thirty-three  of
this  chapter, on the first day of the taxable year during which revoca-
tion of its certification under article eighteen-B of the general munic-
ipal law occurs, and
  (j) New business. (1) A new business shall  include  any  corporation,
except  a corporation which is substantially similar in operation and in
ownership to a business entity  (or  entities)  taxable,  or  previously
taxable,  under  section  one  hundred eighty-three, one hundred eighty-
four, FORMER SECTION one  hundred  eighty-five  or  FORMER  SECTION  one
hundred  eighty-six  of article nine; article nine-A, article thirty-two
or thirty-three of this chapter; article twenty-three of this chapter or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the income (or losses) of which is (or  was)  includable  under  article
twenty-two of this chapter.
  (2)  For purposes of article twenty-two of this chapter, an individual
who is either a sole proprietor or a member of a partnership shall qual-
ify as an owner of a new business unless the business of which the indi-
vidual is an owner is substantially similar in operation and  in  owner-
ship  to a business entity taxable, or previously taxable, under section
one hundred eighty-three, one hundred eighty-four,  FORMER  SECTION  one
hundred  eighty-five or FORMER SECTION one hundred eighty-six of article
nine; article nine-A, thirty-two or thirty-three of this chapter;  arti-
cle twenty-three of this chapter or which would have been subject to tax
under  such article twenty-three (as such article was in effect on Janu-
ary first, nineteen hundred eighty) or the income (or losses)  of  which
is (or was) includable under article twenty-two.

S. 6359                            227                           A. 8559

  (3)  For purposes of article twenty-two of this chapter, a shareholder
of a New York S corporation shall be treated as the owner of a new busi-
ness with respect to such share if the corporation qualifies  as  a  new
business pursuant to paragraph one of this subdivision.
  (4) (A)(i) Notwithstanding paragraphs one and two of this subdivision,
a new business shall include any corporation which is identical in oper-
ation  and  ownership  to  a business entity (or entities) taxable under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION one hundred eighty-five of article nine; article nine-A, article
thirty-two or thirty-three of this chapter or the income (or losses)  of
which  is  includable under article twenty-two of this chapter, provided
such corporation and such business entity or entities are  operating  in
different counties in the state.
  (ii)  Notwithstanding  paragraphs  one and two of this subdivision, an
individual who is either a sole proprietor or a member of a  partnership
shall qualify as an owner of a new business if the business of which the
individual  is  an owner is identical in operation and in ownership to a
business entity (or entities) taxable under section one hundred  eighty-
three[,] OR one hundred eighty-four or FORMER SECTION one hundred eight-
y-five  of  article  nine; article nine-A, article thirty-two or thirty-
three of this chapter or the income (or losses) of which  is  includable
under  article  twenty-two  of  this chapter, provided such business and
such business entity or entities are operating in different counties  in
the state.
  (iii)  Any  corporation qualifying as a new business or any individual
qualifying as an owner of a new business as a result of  the  provisions
of this subparagraph shall have the same business tax benefit period and
sales  and  use tax benefit period as the business entity to which it is
identical in operation and in ownership.
  (B) Notwithstanding any provisions of this subdivision to the contrary
and notwithstanding subdivision c of section  eighteen  of  part  CC  of
chapter  eighty-five  of  the laws of two thousand two, a corporation or
partnership, which was first certified under article eighteen-B  of  the
general  municipal law before August first, two thousand two, has a base
period of zero years or zero employment for  its  base  period,  and  is
similar  in  operation and in ownership to a business entity or entities
taxable, or previously taxable, under sections  specified  in  paragraph
one  or  two of this subdivision or which would have been subject to tax
under article twenty-three of this  chapter  (as  such  article  was  in
effect on January first, nineteen hundred eighty) or the income or loss-
es  of which is or was includable under article twenty-two of this chap-
ter shall not be deemed a new business if it was not formed for a  valid
business  purpose, as such term is defined in clause (D) of subparagraph
one of paragraph (o) of subdivision nine of section two hundred eight of
this chapter and was formed solely to gain empire zone benefits.
  (5) Notwithstanding any other provision of this  section,  a  business
enterprise which is approved by the commissioner of economic development
as  the owner of a qualified investment project or a significant capital
investment project pursuant to subdivision (w) of section  nine  hundred
fifty-nine of the general municipal law, has a base period of zero years
and  places in service property (or a project that includes such proper-
ty) which comprises such qualified investment project  or  such  signif-
icant  capital  investment project[,], shall be deemed to be a new busi-
ness under this section. Provided, however, to be deemed a new  business
under  this  paragraph,  such  business  enterprise  shall have received

S. 6359                            228                           A. 8559

certification under article eighteen-B of the general  business  law  by
December thirty-first, two thousand seven.
  (k)  If  the  designation of an area as an empire zone is no longer in
effect because section nine hundred sixty-nine of the general  municipal
law  was not amended to extend the effective date of such designation so
that the designations of all empire zones pursuant to article eighteen-B
of the general municipal law have expired, a  business  enterprise  that
was  certified  pursuant  to article eighteen-B of the general municipal
law on the day immediately preceding the day on which  such  designation
expired  shall  be deemed to continue to be certified under such article
eighteen-B for purposes of this section, and sections fifteen,  sixteen,
[section  one  hundred  eighty-seven-j,]  subdivisions  twenty-seven and
twenty-eight of section two hundred ten, subsections (bb)  and  (cc)  of
section six hundred six, subdivision [(z)] (D) of section eleven hundred
[fifteen]  NINETEEN, subsections (o) and (p) of section fourteen hundred
fifty-six, and subdivisions (r) and (s) of section fifteen hundred elev-
en of this chapter. In addition, if the designation of  an  area  as  an
empire  zone  is no longer in effect because section nine hundred sixty-
nine of the general municipal law was not amended to extend  the  effec-
tive  date  of  such  designation so that the designations of all empire
zones pursuant to article eighteen-B of the general municipal  law  have
expired,  all references to empire zones in the provisions of this chap-
ter listed in the previous sentence  shall  be  read  as  meaning  areas
designated  as  empire zones on the day immediately preceding the day on
which such designation expired.
  S 5. Paragraph 1 of subdivision (h) of section 15 of the  tax  law  is
REPEALED.
  S 6. The closing paragraph of subdivision (a) of section 28 of the tax
law,  as added by section 2 of part V of chapter 62 of the laws of 2006,
is amended to read as follows:
  (4) Notwithstanding any provisions of this section to the contrary,  a
corporation  or  partnership,  which  otherwise qualifies as a qualified
commercial production company, and is similar in operation and in owner-
ship to a business entity or entities taxable,  or  previously  taxable,
under  section one hundred eighty-three[,] OR one hundred eighty-four or
FORMER SECTION one hundred eighty-five of article nine; article  nine-A,
article  thirty-two  or thirty-three of this chapter or which would have
been subject to tax under article twenty-three of this chapter (as  such
article  was in effect on January first, nineteen hundred eighty) or the
income or losses of which is or was includable under article  twenty-two
of  this  chapter  shall  not  be deemed a new or separate business, and
therefore shall not be eligible for empire state  commercial  production
benefits,  if  it  was  not formed for a valid business purpose, as such
term is defined in clause (D) of subparagraph one of  paragraph  (o)  of
subdivision  nine  of  section two hundred eight of this chapter and was
formed solely to gain empire state commercial  production  credit  bene-
fits.
  S  7.  Subdivision  (a)  of  section  31 of the tax law, as amended by
section 7 of part G of chapter 61 of the laws of  2011,  is  amended  to
read as follows:
  (a)  General.  A  taxpayer  subject  to tax under [section one hundred
eighty-five,] article nine-A, twenty-two, thirty-two or thirty-three  of
this chapter shall be allowed a credit against such tax, pursuant to the
provisions  referenced in subdivision (g) of this section. The amount of
the credit, allowable for up to ten consecutive taxable  years,  is  the
sum of the following four credit components:

S. 6359                            229                           A. 8559

  (1) the excelsior jobs tax credit component;
  (2) the excelsior investment tax credit component;
  (3) the excelsior research and development tax credit component; and
  (4) the excelsior real property tax credit component.
  S  8.  Paragraph  1 of subdivision (g) of section 31 of the tax law is
REPEALED.
  S 9. The opening paragraph of  paragraph  1  of  subdivision  (a)  and
subparagraph  (C) of paragraph 2 of subdivision (e) of section 35 of the
tax law, as added by section 3 of part V of chapter 61 of  the  laws  of
2011, are amended to read as follows:
  A taxpayer which is a participant or the owner of a participant in the
economic transformation and facility redevelopment program under article
eighteen  of  the  economic development law that is subject to tax under
[section one hundred eighty-five of article nine,  or]  article  nine-A,
twenty-two,  thirty-two or thirty-three of this chapter shall be allowed
the sum of following  components  against  such  tax,  pursuant  to  the
provisions referenced in subdivision (f) of this section.
  (C) the business entity must not be substantially similar in ownership
and  operation  to  another taxpayer taxable or previously taxable under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION one hundred eighty-five of  article  nine,  former  section  one
hundred  eighty-six of this chapter or article nine-A, twenty-two, thir-
ty-two or thirty-three of this chapter or the income or losses of  which
is or was includable under article twenty-two of this chapter;
  S  10. Paragraph 1 of subdivision (f) of section 35 of the tax law, as
added by section 3 of part V of chapter 61  of  the  laws  of  2011,  is
REPEALED.
  S  11. Paragraph 1 of subdivision (e) of section 38 of the tax law, as
added by section 1 of part EE of chapter 59 of  the  laws  of  2013,  is
REPEALED.
  S 12. Subdivision 2 of section 187 of the tax law, as added by chapter
788 of the laws of 1978, is amended to read as follows:
  2.  In  no event shall the credit herein provided for be allowed in an
amount which will reduce the tax payable to  less  than  the  applicable
minimum  tax  fixed  by  section  one hundred eighty-three[, one hundred
eighty-five] or FORMER SECTION one hundred eighty-six. If, however,  the
amount  of  credit  allowable  under  this  section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such taxable year may be carried over to the following year or years and
may be deducted from the taxpayer's tax for such year or years.
  S 13. Subdivision 5 of section 187-a of the tax law, as added by chap-
ter 142 of the laws of 1997, is amended to read as follows:
  5.  Carryover.  In  no  event  shall  the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable  minimum  tax fixed by section one hundred eighty-three[, one
hundred eighty-five] or FORMER SECTION one hundred  eighty-six  of  this
article.  If, however, the amount of credit allowable under this section
for any taxable year reduces the tax to such amount, any amount of cred-
it  not  deductible  in  such  taxable  year  may be carried over to the
following year or years and may be deducted from the taxpayer's tax  for
such year or years.
  S 14. Subdivisions 1 and 4 of section 187-b of the tax law, as amended
by section 1 of part G of chapter 59 of the laws of 2013, are amended to
read as follows:
  1.  General.  A  taxpayer  shall  be  allowed a credit, to be credited
against the taxes imposed under sections one hundred eighty-three[,] AND

S. 6359                            230                           A. 8559

one hundred eighty-four[, and one hundred eighty-five] of this  article.
Such  credit,  to  be computed as hereinafter provided, shall be allowed
for alternative fuel vehicle refueling and electric  vehicle  recharging
property  placed  in service during the taxable year. Provided, however,
that the amount of such credit allowable  against  the  tax  imposed  by
section  one  hundred eighty-four of this article shall be the excess of
the credit allowed by this section over the amount of such credit allow-
able against the tax imposed by section one hundred eighty-three of this
article.
  4. Carryovers. In no event shall the  credit  under  this  section  be
allowed  in an amount which will reduce the tax payable to less than the
applicable minimum tax fixed by section one hundred eighty-three [or one
hundred eighty-five] of this article. If, however, the amount of  credit
allowable  under  this  section  for any taxable year reduces the tax to
such amount, any amount of credit not deductible in  such  taxable  year
may  be  carried over to the following year or years and may be deducted
from the taxpayer's tax for such year or years.
  S 15. Section 187-c of the tax law, as amended by section 2 of part  K
of chapter 59 of the laws of 2012, is amended to read as follows:
  S  187-c.  Biofuel  production  credit.  A taxpayer shall be allowed a
credit to be computed as provided in section twenty-eight of this  chap-
ter, as added by part X of chapter sixty-two of the laws of two thousand
six,  against  the  tax imposed by this article. Provided, however, that
the amount of such credit allowed against the tax imposed by section one
hundred eighty-four of this article shall be the excess of the amount of
such credit over the amount  of  any  credit  allowed  by  this  section
against  the  tax  imposed  by  section one hundred eighty-three of this
article. In no event shall the credit under this section be  allowed  in
an  amount which will reduce the tax payable to less than the applicable
minimum tax fixed by section one hundred eighty-three  [or  one  hundred
eighty-five]  of  this  article.  If,  however, the amount of the credit
allowed under this section for any taxable year reduces the tax to  such
amount, the excess shall be treated as an overpayment of tax to be cred-
ited  or  refunded  in  accordance  with  the  provisions of section six
hundred eighty-six of this chapter. Provided, however, the provisions of
subsection (c) of section one  thousand  eighty-eight  of  this  chapter
notwithstanding,  no  interest  shall  be  paid  thereon. The tax credit
allowed pursuant to this section shall apply to taxable years  beginning
before January first, two thousand twenty.
  S  16.  Section 187-d of the tax law, as added by section 3 of part II
of chapter 63 of the laws of 2000, is amended to read as follows:
  S 187-d. Green building credit. 1. Allowance  of  credit.  A  taxpayer
shall  be  allowed a credit, to be computed as provided in section nine-
teen of this chapter, against the taxes imposed by sections one  hundred
eighty-three,  one  hundred  eighty-four[,  one hundred eighty-five] and
FORMER SECTION one hundred eighty-six of this article. Provided,  howev-
er,  that the amount of such credit allowable against the tax imposed by
section one hundred eighty-four of this article shall be the  excess  of
the  amount of such credit over the amount of any credit allowed by this
section against the tax imposed by section one hundred  eighty-three  of
this article.
  2.  Carryovers.  In  no  event  shall the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable  minimum  tax fixed by section one hundred eighty-three[, one
hundred eighty-five] or FORMER SECTION one hundred  eighty-six  of  this
article.  If, however, the amount of credit allowable under this section

S. 6359                            231                           A. 8559

for any taxable year reduces the tax to such amount, any amount of cred-
it not deductible in such taxable  year  may  be  carried  over  to  the
following  year or years and may be deducted from the taxpayer's tax for
such year or years.
  S  17.  Subdivisions 1 and 2 of section 187-e of the tax law, as added
by section 2 of part I of chapter 63 of the laws of 2000, are amended to
read as follows:
  1. Allowance of credit. A taxpayer shall be allowed a  credit,  to  be
computed  as  provided  in  section  twenty of this chapter, against the
taxes imposed by sections one hundred eighty-three, one hundred  eighty-
four[,  one  hundred eighty-five] and FORMER SECTION one hundred eighty-
six of this article. Provided, however, that the amount of  such  credit
allowable  against the tax imposed by section one hundred eighty-four of
this article shall be the excess of the amount of such credit  over  the
amount  of any credit allowed by this section against the tax imposed by
section one hundred eighty-three of this article.
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed  in  an amount which will reduce the tax payable to
less than the applicable minimum tax fixed by section one hundred eight-
y-three[, one hundred eighty-five] or FORMER SECTION one hundred  eight-
y-six of this article. If, however, the amount of credit allowable under
this  section  for  any taxable year reduces the tax to such amount, any
amount of credit not thus deductible  in  such  taxable  year  shall  be
treated  as  an overpayment of tax to be credited or refunded in accord-
ance with the provisions of section ten hundred eighty-six of this chap-
ter. Provided, however, the provisions of subsection (c) of section  ten
hundred  eighty-eight of this chapter notwithstanding, no interest shall
be paid thereon.
  S 18. Section 187-g of the tax law, as added by section 2 of part H of
chapter 1 of the laws of 2003, is amended to read as follows:
  S 187-g. Brownfield redevelopment tax credit. 1. Allowance of  credit.
A  taxpayer  shall  be  allowed  a credit, to be computed as provided in
section twenty-one  of  this  chapter,  against  the  taxes  imposed  by
sections  one  hundred  eighty-three[,] AND one hundred eighty-four [and
one hundred eighty-five] of this article. Provided,  however,  that  the
amount  of  such credit allowable against the tax imposed by section one
hundred eighty-four of this article shall be the excess of the amount of
such credit over the amount  of  any  credit  allowed  by  this  section
against  the  tax  imposed  by  section one hundred eighty-three of this
article.
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed  in  an amount which will reduce the tax payable to
less than the applicable minimum tax fixed by section one hundred eight-
y-three [or one hundred eighty-five] of this article. If,  however,  the
amount  of  credit  allowable  under  this  section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such  taxable  year  shall  be  treated  as  an overpayment of tax to be
refunded in accordance with the provisions of section ten hundred eight-
y-six of this chapter. Provided, however, the provisions  of  subsection
(c) of section ten hundred eighty-eight of this chapter notwithstanding,
no interest shall be paid thereon.
  S  19.  Section 187-h of the tax law, as added by section 13 of part H
of chapter 1 of the laws of 2003, subdivision 1 as amended by section  5
of  part  H  of  chapter  577 of the laws of 2004, is amended to read as
follows:

S. 6359                            232                           A. 8559

  S 187-h. Remediated brownfield credit  for  real  property  taxes  for
qualified  sites.  1. Allowance of credit. A taxpayer shall be allowed a
credit, to be computed as provided in subdivision (b) of  section  twen-
ty-two  of  this  chapter,  against  the  taxes  imposed by sections one
hundred  eighty-three[,]  AND  one  hundred eighty-four [and one hundred
eighty-five] of this article. Provided, however, that the amount of such
credit allowed against the tax imposed by section  one  hundred  eighty-
four  of  this  article shall be the excess of the amount of such credit
over the amount of any credit allowed by this section  against  the  tax
imposed by section one hundred eighty-three of this article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  [or  one hundred eighty-five] of this article. If, however, the
amount of credit allowed under this section for any taxable year reduces
the tax to such amount, any amount of credit not thus deductible in such
taxable year shall be treated as an overpayment of tax to be credited or
refunded in accordance with the provisions of section ten hundred eight-
y-six of this chapter. Provided, however, the provisions  of  subsection
(c) of section ten hundred eighty-eight of this chapter notwithstanding,
no interest shall be paid thereon.
  S  20.  Section 187-i of the tax law, as added by section 20 of part H
of chapter 1 of the laws of 2003, is amended to read as follows:
  S 187-i. Environmental remediation insurance credit. 1.  Allowance  of
credit. A taxpayer shall be allowed a credit, to be computed as provided
in  section  twenty-three  of this chapter, against the taxes imposed by
sections one hundred eighty-three[,] AND one  hundred  eighty-four  [and
one  hundred  eighty-five]  of this article. Provided, however, that the
amount of such credit allowable against the tax imposed by  section  one
hundred eighty-four of this article shall be the excess of the amount of
such  credit  over  the  amount  of  any  credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less  than  the  applicable  minimum  tax  fixed  by section one hundred
eighty-three [or one hundred eighty-five] of this article. If,  however,
the  amount  of credit allowable under this section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such  taxable  year  shall  be  treated  as  an overpayment of tax to be
refunded in accordance with  the  provisions  of  section  one  thousand
eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
subsection (c) of section one  thousand  eighty-eight  of  this  chapter
notwithstanding, no interest shall be paid thereon.
  S  21.  Subdivision  2  of  section  187-n of the tax law, as added by
chapter 537 of the laws of 2005, is amended to read as follows:
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed  in  an amount which will reduce the tax payable to
less than the applicable  minimum  tax  fixed  by  section  one  hundred
eighty-three  [or one hundred eighty-five] of this article. If, however,
the amount of credit allowable under this section for any  taxable  year
reduces  the  tax to such amount, any amount of credit not deductible in
such taxable year shall be treated  as  an  overpayment  of  tax  to  be
refunded  in  accordance  with  the  provisions  of section one thousand
eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of

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subsection  (c)  of  section  one  thousand eighty-eight of this chapter
notwithstanding, no interest shall be paid thereon.
  S  22.  Subdivisions 1 and 3 of section 187-n of the tax law, subdivi-
sion 1 as amended by section 1 of part C1 of chapter 57 of the  laws  of
2009  and subdivision 3 as added by chapter 446 of the laws of 2005, are
amended to read as follows:
  (1) Allowance of credit. For taxable years  beginning  before  January
first, two thousand nine, a taxpayer whose business is not substantially
engaged  in  the  commercial  generation, distribution, transmission, or
servicing of energy or energy products shall be allowed a credit against
the taxes imposed  by  sections  one  hundred  eighty-three[,]  AND  one
hundred eighty-four [and one hundred eighty-five] of this article, equal
to  its  qualified fuel cell electric generating equipment expenditures.
Provided, however, that the amount of such credit allowable against  the
tax  imposed by section one hundred eighty-four of this article shall be
the excess of the amount of such credit over the amount  of  any  credit
allowed  by  this section against the tax imposed by section one hundred
eighty-three of this article. This credit shall not exceed one  thousand
five  hundred  dollars  per  generating unit with respect to any taxable
year. The credit provided for herein shall be allowed  with  respect  to
the taxable year in which the fuel cell electric generating equipment is
placed in service.
  (3)  Application  of  credit.  In no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  [or  one hundred eighty-five] of this article. If, however, the
amount of credit allowable under  this  section  for  any  taxable  year
reduces  the  tax to such amount, any amount of credit not deductible in
such taxable year may be carried over to the following year or years and
may be deducted from the taxpayer's tax for such year or years.
  S 23. Section 187-o of the tax law, as added by section 3 of part Y of
chapter 57 of the laws of 2010, is amended to read as follows:
  S 187-o. Temporary deferral nonrefundable payout credit. 1.  Allowance
of  credit.  A  taxpayer  shall  be  allowed a credit, to be computed as
provided in subdivision one of  section  thirty-four  of  this  chapter,
against either the taxes imposed by sections one hundred eighty-three[,]
AND  one  hundred eighty-four, [and one hundred eighty-five,] or the tax
imposed by section one hundred eighty-six-a of  this  article.  However,
the amount of such credit against the tax imposed by section one hundred
eighty-four  of  this  article shall be the excess of the amount of that
credit over the amount of any credit allowed by this section against the
tax imposed by section one hundred eighty-three of this article.
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed in an amount which will reduce the tax to less than
the applicable minimum tax fixed by section one hundred eighty-three [or
one hundred eighty-five] of this article. If,  however,  the  amount  of
credit  allowed  under this section for any taxable year reduces the tax
to such amount, any amount of credit not deductible in such taxable year
may be carried over to the following year or years and may  be  deducted
from the taxpayer's tax for such year or years.
  S 24. Section 187-p of the tax law, as added by section 3 of part Y of
chapter 57 of the laws of 2010, is amended to read as follows:
  S  187-p. Temporary deferral refundable payout credit. 1. Allowance of
credit. A taxpayer shall be allowed a credit, to be computed as provided
in subdivision two of section thirty-four of this chapter,  against  the
taxes  imposed  by  sections one hundred eighty-three[,] AND one hundred

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eighty-four [and one hundred eighty-five] of this article,  or  the  tax
imposed  by  section  one hundred eighty-six-a of this article. However,
the amount of such credit against the tax imposed by section one hundred
eighty-four  of  this  article shall be the excess of the amount of that
credit over the amount of any credit allowed by this section against the
tax imposed by section one hundred eighty-three of this article.
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed in an amount which will reduce the tax to less than
the applicable minimum tax fixed by section one hundred eighty-three [or
one hundred eighty-five] of this article. If,  however,  the  amount  of
credit  allowed  under this section for any taxable year reduces the tax
to such amount, any amount of credit not deductible in such taxable year
shall be treated as an overpayment of tax to be refunded  in  accordance
with  the provisions of section one thousand eighty-six of this chapter,
provided however, that no interest shall be paid thereon.
  S 25. Subdivisions 2 and 3 of section 190 of the tax law, as added  by
section  1  of  part E of chapter 63 of the laws of 2000, are amended to
read as follows:
  2. Computation. The credit allowed by  this  section  shall  first  be
deducted  from  the  taxes imposed by section one hundred eighty-three[,
one hundred eighty-five] or FORMER SECTION  one  hundred  eighty-six  of
this  article.  The  amount  of  any such credit remaining shall next be
deducted from the taxes imposed by section one  hundred  eighty-four  of
this article.
  3.  Carryover.  In  no  event shall the amount of credit allowed under
this section reduce the tax payable to less than the minimum  tax  fixed
by section one hundred eighty-three[, one hundred eighty-five] or FORMER
SECTION  one hundred eighty-six of this article. If, however, the amount
of credit allowable under this section for any taxable year reduces  the
tax  to such amount, any amount of credit not deductible in such taxable
year may be carried over to the following  year  or  years  and  may  be
deducted from the taxpayer's tax for such year or years.
  S 26. Subdivision 1 of section 192 of the tax law, as amended by chap-
ter 96 of the laws of 1976, is amended to read as follows:
  1.  Corporations  paying franchise tax. Every corporation, association
or joint-stock company liable to pay a tax  under  section  one  hundred
eighty-three  [or  one hundred eighty-five] of this chapter shall, on or
before March fifteenth in each year, make a written report  to  the  tax
commission  of its condition at the close of its business on the preced-
ing December thirty-first, stating the amount of its authorized  capital
stock, the amount of stock paid in, the date and rate per centum of each
dividend  paid  by  it  during the year ending with such day, the entire
amount of the capital of such corporation, and the capital  employed  by
it in this state during such year.
  S  27.  Subdivision  4  of  section  209 of the tax law, as amended by
section 2 of part FF1 of chapter 57 of the laws of 2008, is  amended  to
read as follows:
  4.  Corporations liable to tax under sections one hundred eighty-three
to one  hundred  [eighty-five]  EIGHTY-FOUR-A,  inclusive,  corporations
taxable  under articles thirty-two and thirty-three of this chapter, any
trust company organized under a law of this state all of  the  stock  of
which  is  owned by not less than twenty savings banks organized under a
law of this state, bank holding companies filing a  combined  return  in
accordance with [subdivision] SUBSECTION (f) of section fourteen hundred
sixty-two  of  this  chapter,  a  captive REIT or a captive RIC filing a
combined return under either [subdivision]  SUBSECTION  (f)  of  section

S. 6359                            235                           A. 8559

fourteen hundred sixty-two or subdivision (f) of section fifteen hundred
fifteen  of  this chapter, and housing companies organized and operating
pursuant to the provisions of article two or article five of the private
housing  finance  law  and  housing development fund companies organized
pursuant to the provisions of article  eleven  of  the  private  housing
finance law shall not be subject to tax under this article.
  S  28.  Section 209 of the tax law is amended by adding a new subdivi-
sion 12 to read as follows:
  12. ALL FARMERS', FRUIT GROWERS' AND OTHER  LIKE  AGRICULTURAL  CORPO-
RATIONS  ORGANIZED AND OPERATED ON A CO-OPERATIVE BASIS FOR THE PURPOSES
EXPRESSED IN AND AS PROVIDED UNDER THE CO-OPERATIVE CORPORATIONS LAW  OF
THE  STATE  OF  NEW  YORK, WHETHER OR NOT SUCH CORPORATIONS HAVE CAPITAL
STOCK, SHALL BE EXEMPT FROM TAXATION UNDER THE PROVISIONS OF THIS  ARTI-
CLE.
  S 29. Paragraphs (b) and (c) of subdivision 1-c, clause (i) of subpar-
agraph 1 of paragraph (b) of subdivision 3, and subparagraphs 1 and 2 of
paragraph (j) of subdivision 12 of section 210 of the tax law, paragraph
(b)  of subdivision 1-c as amended by section 12 of part Y of chapter 63
of the laws of 2000, paragraph (c) of subdivision 1-c and subparagraph 2
of paragraph (j) of subdivision 12 as amended by  chapter  1043  of  the
laws  of 1981, clause (i) of subparagraph 1 of paragraph (b) of subdivi-
sion 3 as amended by chapter 61 of the laws of 1989 and  subparagraph  1
of paragraph (j) of subdivision 12 as amended by section 14 of part Y of
chapter 63 of the laws of 2000, are amended to read as follows:
  (b) is not a corporation over fifty percent of the number of shares of
stock of which entitling the holders thereof to vote for the election of
directors or trustees is owned by a taxpayer which (1) is subject to tax
under  this  article; section one hundred eighty-three[,] OR SECTION one
hundred eighty-four or FORMER SECTION one hundred eighty-five of article
nine; article thirty-two or thirty-three of this chapter, and  (2)  does
not  qualify  as  a  small  business corporation as defined in paragraph
three of subsection (c) of section  twelve  hundred  forty-four  of  the
internal revenue code (without regard to the second sentence of subpara-
graph  (A) thereof) as of the last day of its taxable year ending within
or with the taxable year of the taxpayer,
  (c) is not a corporation which is substantially similar  in  operation
and  in  ownership to a business entity (or entities) taxable, or previ-
ously taxable, under this article; section one hundred eighty-three, one
hundred eighty-four, OR FORMER SECTION one hundred eighty-five or FORMER
SECTION one hundred eighty-six of article nine;  article  thirty-two  or
thirty-three  of  this  chapter; article twenty-three of this chapter or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the income (or losses) of which is (or  was)  includable  under  article
twenty-two of this chapter, and
  (i)  In  the case of an issuer or obligor subject to tax under section
one hundred eighty-three[, one hundred eighty-five]  or  FORMER  SECTION
one  hundred eighty-six of this chapter or under this article or article
thirty-three of this chapter (except for  savings  and  insurance  banks
described  in  subdivision  (b) of section fifteen hundred of this chap-
ter), the issuer's allocation percentage shall be the percentage of  the
appropriate  measure  (as  defined  hereinafter) which is required to be
allocated within the state on the report, if any, required of the issuer
or obligor under this chapter for the preceding  year.  The  appropriate
measure  referred  to in the preceding sentence shall be: in the case of
an issuer or obligor subject to section one hundred eighty-three of this

S. 6359                            236                           A. 8559

chapter, issued capital stock; in the  case  of  an  issuer  or  obligor
[subject  to  section  one  hundred  eighty-five]  EXEMPT FROM TAX UNDER
SUBDIVISION TWELVE  OF  SECTION  TWO  HUNDRED  NINE  of  this  [chapter]
ARTICLE,  issued  capital  stock;  in  the  case of an issuer or obligor
subject to FORMER section one hundred eighty-six of this chapter,  gross
earnings;  in  the case of an issuer or obligor subject to this article,
entire capital; and in the case of an issuer or obligor subject to arti-
cle thirty-three of this chapter, gross direct premiums.
  (1) over fifty percent of the number of shares of stock entitling  the
holders  thereof  to  vote  for the election of directors or trustees is
owned or controlled,  either  directly  or  indirectly,  by  a  taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred eighty-four or FORMER SECTION one hundred eighty-five of article
nine; article thirty-two or thirty-three of this chapter; or
  (2)  is substantially similar in operation and in ownership to a busi-
ness entity (or entities) taxable, or  previously  taxable,  under  this
article;  section  one  hundred  eighty-three,  one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  FORMER  SECTION  one  hundred
eighty-six  of  article nine; article thirty-two or thirty-three of this
chapter; article twenty-three of this chapter or which would  have  been
subject  to  tax under such article twenty-three (as such article was in
effect on January first, nineteen hundred  eighty)  or  the  income  (or
losses) of which is (or was) includable under article twenty-two of this
chapter  whereby  the intent and purpose of this paragraph and paragraph
(e) of this subdivision with respect to refunding of credit to new busi-
ness would be evaded; or
  S 30. Subparagraph (A) of paragraph 10 of subsection  (a)  of  section
606  of the tax law, as amended by section 3 of part CC of chapter 85 of
the laws of 2002, is amended to read as follows:
  (A) the business of which the individual is an owner is  substantially
similar  in  operation and in ownership to a business entity taxable, or
previously taxable, under section one hundred eighty-three, one  hundred
eighty-four,  FORMER  SECTION  one hundred eighty-five or FORMER SECTION
one hundred eighty-six of article nine; article  nine-A,  thirty-two  or
thirty-three  of  this  chapter; article twenty-three of this chapter or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the income (or losses) of which is (or  was)  includable  under  article
twenty-two  of this chapter whereby the intent and purpose of this para-
graph and paragraph five of this subsection with respect to refunding of
credit to new business would be evaded; or
  S 31. Subparagraphs (A) and (B) of paragraph 8 of  subsection  (i)  of
section 1456 of the tax law, as added by section 27 of part A of chapter
56 of the laws of 1998, are amended to read as follows:
  (A)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred eighty-four, FORMER SECTION one hundred  eighty-five  or  FORMER
SECTION  one hundred eighty-six of article nine; article nine-A or arti-
cle thirty-three of this chapter; or
  (B) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable, or previously taxable, under this
article; section one  hundred  eighty-three,  one  hundred  eighty-four,
FORMER  SECTION  one  hundred  eighty-five or FORMER SECTION one hundred
eighty-six of article nine; article nine-A or  article  thirty-three  of

S. 6359                            237                           A. 8559

this  chapter;  article twenty-three of this chapter or which would have
been subject to tax under such article twenty-three (as such article was
in effect on January first, nineteen hundred eighty) or the  income  (or
losses) of which is (or was) includable under article twenty-two of this
chapter  whereby  the intent and purpose of this paragraph and paragraph
five of this subsection with respect to refunding of credit to new busi-
ness would be evaded; or
  S 32. Subparagraph (A) of paragraph 7 of subdivision  (q)  of  section
1511  of  the  tax law, as added by section 1 of part L of chapter 63 of
the laws of 2000, is amended to read as follows:
  (A) over fifty percent of the number of shares of stock entitling  the
holders  thereof  to  vote  for the election of directors or trustees is
owned or controlled,  either  directly  or  indirectly,  by  a  taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred  eighty-four,  FORMER  SECTION one hundred eighty-five or FORMER
SECTION one hundred eighty-six of article nine; article nine-A or  arti-
cle thirty-two of this chapter; or
  S  33.  Subdivision  13  of  section 171 of the transportation law, as
added by chapter 478 of the laws of 1991, is amended to read as follows:
  13. The transportation for compensation performed by  an  agricultural
cooperative  corporation[,  which  corporation  is  subject to tax under
section one hundred eighty-five of the tax law,] for non-members who are
not farmers or cooperative  corporations  when  such  transportation  is
limited  to  that  which  is  incidental to the agricultural cooperative
corporation's primary transportation operation and is necessary for  its
effective  performance. Such transportation shall be provided only after
the agricultural cooperative corporation notifies  the  commissioner  in
writing  of  its  intent  to provide the transportation and it shall not
exceed twenty-five percent of the agricultural cooperative corporation's
total transportation services in each calendar year measured in terms of
tonnage. The commissioner may prescribe the records to be kept  and  the
information to be furnished by all agricultural cooperative corporations
performing transportation pursuant to this subdivision.
  S  34. Subclause 2 of clause (v) of subparagraph (B) of paragraph 1 of
subdivision (o) of section 11-1712 of the  administrative  code  of  the
city  of  New York, such subdivision as relettered by chapter 639 of the
laws of 1986, is amended to read as follows:
  (2) A new business does not include: (i) any  new  business  of  which
twenty-five  percent or more of the number of shares of stock that enti-
tle the holders thereof to vote for the election of directors  or  trus-
tees  is  owned,  directly  or  indirectly, by a taxpayer subject to tax
under section one hundred eighty-three, one hundred eighty-four,  FORMER
SECTION one hundred eighty-five or FORMER SECTION one hundred eighty-six
of  article nine of the tax law, or under article [nine-a] NINE-A, thir-
ty-two or thirty-three of the tax law or (ii) any new business  substan-
tially similar in operation and in ownership, directly or indirectly, to
a  business  entity  (or entities) taxable, or previously taxable, under
such section, such article, article twenty-three of the tax law or which
would have been subject to tax under such article twenty-three (as  such
article  was in effect on January first, nineteen hundred eighty) or the
income (or losses) of which is (or was) includible under  article  twen-
ty-two  of  such  tax law whereby the intent and purpose of this section
would be evaded.
  S 35. Paragraph (iii) of subdivision 9 of section 16-v of section 1 of
chapter 174 of the laws of 1968, constituting the New York  state  urban

S. 6359                            238                           A. 8559

development  corporation act, as added by section 1 of part C of chapter
59 of the laws of 2013, is amended to read as follows:
  (iii) either: (A) any corporation, except a corporation which:
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under the following provisions of the  tax  law:  article
nine-A;  section  one hundred eighty-three[,] OR one hundred eighty-four
or FORMER SECTION one hundred eighty-five of article nine; article thir-
ty-two or article thirty-three; or
  (2) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable  or  previously  taxable under the
following provisions of the tax law: article nine-A; section one hundred
eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
y-five or former section one hundred eighty-six of article nine; article
thirty-two; article thirty-three; article twenty-three,  or  would  have
been subject to tax under such article twenty-three (as such article was
in  effect  on January first, nineteen hundred eighty) or the income (or
losses) of which is (or was) includable under article twenty-two; or
  (B) a sole proprietorship, partnership, limited  partnership,  limited
liability  company,  or  New  York  subchapter S corporation that is not
substantially similar in operation and in ownership to a business entity
(or entities) taxable, or previously taxable, under  article  nine-A  of
the  tax law, section one hundred eighty-three, one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  former  section  one  hundred
eighty-six  of  article nine of the tax law, article thirty-two or thir-
ty-three of the tax law, article twenty-three of the tax  law  or  which
would  have been subject to tax under such article twenty-three (as such
article was in effect on January first, nineteen hundred eighty) or  the
income  (or  losses) of which is (or was) includable under article twen-
ty-two of the tax law; and
  S 36. Notwithstanding the repeal of section 185  of  the  tax  law  by
section  one of this act, all provisions of such section 185, in respect
to the imposition, exemption, assessment, payment, payment over,  deter-
mination,  collection,  and  credit or refund of tax imposed thereunder,
the filing of forms and returns, the preservation  of  records  for  the
purposes  of such tax, the secrecy of returns, the disposition of reven-
ues, and the civil and criminal penalties applicable to the violation of
the provisions of such section 185, shall continue  in  full  force  and
effect with respect to all such tax accrued up to December 31, 2014; all
actions  and  proceedings, civil or criminal, commenced or authorized to
be commenced under or by virtue of any provision of such section 185  so
repealed,  and pending or able to commence prior to the taking effect of
such repeal, may be commenced, prosecuted and defended to  final  effect
in  the  same  manner  as  they  might  if  such  provisions were not so
repealed.
  S 37. This act shall take effect immediately and shall apply to  taxa-
ble years beginning on or after January 1, 2015; provided, however that:
  a.  the  amendments  to  subdivision  9 of section 400 of the economic
development law made by section two of this act  shall  not  affect  the
repeal of such section and shall be deemed repealed therewith; and
  b. the amendments to subdivisions (a) and (e) of section 35 of the tax
law made by section nine of this act shall not affect the repeal of such
section and shall be deemed repealed therewith.

                                 PART T

S. 6359                            239                           A. 8559

  Section 1. Section 39 of the tax law is amended by adding a new subdi-
vision (c-1) to read as follows:
  (C-1) EXCISE TAX ON TELECOMMUNICATION SERVICES. SUCH BUSINESS OR OWNER
OF  A BUSINESS SHALL BE ELIGIBLE FOR A CREDIT OF THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED  EIGHTY-SIX-E  OF
THIS  CHAPTER  THAT  IS PASSED THROUGH TO SUCH BUSINESS, PURSUANT TO THE
PROVISIONS REFERENCED IN SUBDIVISION (K) OF THIS SECTION.
  S 2. Paragraphs 4 and 6 of subdivision (k) of section 39  of  the  tax
law,  as added by section 2 of part A of chapter 68 of the laws of 2013,
are amended to read as follows:
  (4) Article 9-A: section 210, subdivision 47 AND SUBDIVISION 48.
  (6) Article 22: section 606, subsection (ww) AND SUBSECTION (XX).
  S 3. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. THE TAX-FREE NY AREA  EXCISE  TAX  ON  TELECOMMUNICATION  SERVICES
CREDIT.  A  TAXPAYER  THAT  IS A BUSINESS OR OWNER OF A BUSINESS THAT IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED  A  CREDIT  EQUAL  TO  THE
EXCISE  TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED
EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS  DURING
THE  TAXABLE  YEAR  TO  THE  EXTENT  NOT OTHERWISE DEDUCTED IN COMPUTING
ENTIRE NET INCOME. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN  SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX OF THIS CHAPTER. THIS CREDIT MAY BE CLAIMED  ONLY  WHERE  ANY
TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPARATELY
STATED  ON  A  BILL  FROM THE PROVIDER OF TELECOMMUNICATION SERVICES AND
PAID BY SUCH BUSINESS DURING THE TAXABLE YEAR. UNLESS THE TAXPAYER HAS A
TAX-FREE NY AREA ALLOCATION FACTOR OF ONE HUNDRED  PERCENT,  THE  CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX  DUE  FOR  SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH
(D)  OF  SUBDIVISION  ONE  OF  THIS  SECTION.  PROVIDED,  HOWEVER,   THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  S 4. Section 606 of the tax law is amended by adding a new  subsection
(xx) to read as follows:
  (XX)  THE  TAX-FREE  NY  AREA EXCISE TAX ON TELECOMMUNICATION SERVICES
CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF  A  BUSINESS  THAT  IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE  ECONOMIC  DEVELOPMENT  LAW  SHALL  BE ALLOWED A CREDIT EQUAL TO THE
EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED
EIGHTY-SIX-E  OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING
THE TAXABLE YEAR TO THE  EXTENT  NOT  OTHERWISE  DEDUCTED  IN  COMPUTING
FEDERAL  ADJUSTED  GROSS INCOME.   THIS CREDIT MAY BE CLAIMED ONLY WHERE
ANY TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN  SEPA-
RATELY  STATED ON A BILL FROM THE PROVIDER OF TELECOMMUNICATION SERVICES
AND PAID BY SUCH TAXPAYER DURING THE TAXABLE YEAR. IF THE AMOUNT OF  THE
CREDIT  ALLOWED  UNDER  THIS SUBSECTION FOR ANY TAXABLE YEAR EXCEEDS THE
TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS WILL BE TREATED AS AN  OVERPAY-
MENT  TO  BE  CREDITED  OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER,  THAT
NO INTEREST WILL BE PAID THEREON.
  S  5. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new clause  (xxxvii)  to  read  as
follows:

S. 6359                            240                           A. 8559

(XXXVII) TAX FREE NY AREA EXCISE        AMOUNT OF CREDIT UNDER
TAX ON TELECOMMUNICATION SERVICES       SUBDIVISION FORTY-EIGHT
CREDIT UNDER SUBSECTION (XX)            OF SECTION TWO HUNDRED TEN
  S 6. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

                                 PART U

  Section  1.  Paragraph (a) of subdivision 44 of section 210 of the tax
law, as amended by section 2 of part T of chapter  59  of  the  laws  of
2012, is amended to read as follows:
  (a) A taxpayer that has been certified by the commissioner of labor as
a  qualified employer pursuant to section twenty-five-a of the labor law
shall be allowed a credit against the tax imposed by this article  equal
to  (i)  five  hundred  dollars  per month for up to six months for each
qualified employee the employer  employs  in  a  full-time  job  or  two
hundred  fifty dollars per month for up to six months for each qualified
employee the employer employs in a part-time  job  of  at  least  twenty
hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
ENROLLED IN HIGH SCHOOL FULL-TIME, and (ii)  one  thousand  dollars  for
each  qualified  employee who is employed for at least an additional six
months by the qualified employer in a  full-time  job  or  five  hundred
dollars  for  each  qualified  employee  who is employed for at least an
additional six months by the qualified employer in a part-time job of at
least twenty hours per week OR TEN HOURS PER  WEEK  WHEN  THE  QUALIFIED
EMPLOYEE  IS  ENROLLED IN HIGH SCHOOL FULL-TIME, AND (III) AN ADDITIONAL
ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR  AT
LEAST  AN ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOY-
MENT BY THE QUALIFIED EMPLOYER  IN  A  FULL-TIME  JOB  OR  FIVE  HUNDRED
DOLLARS  FOR  EACH  QUALIFIED  EMPLOYEE  WHO IS EMPLOYED FOR AT LEAST AN
ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT LEAST TWENTY HOURS PER  WEEK
OR  TEN  HOURS  PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH
SCHOOL FULL-TIME.  For purposes of this subdivision, the term "qualified
employee" shall have the same meaning as set forth in subdivision (b) of
section twenty-five-a of the  labor  law.  The  portion  of  the  credit
described in subparagraph (i) of this paragraph shall be allowed for the
taxable  year in which the wages are paid to the qualified employee, and
the portion of the credit described in subparagraph (ii) of  this  para-
graph  shall  be allowed in the taxable year in which the additional six
month period ends.
  S 2. Paragraph 1 of subsection (tt) of section 606 of the tax law,  as
amended  by  section  3  of part T of chapter 59 of the laws of 2012, is
amended to read as follows:
  (1) A taxpayer that has been certified by the commissioner of labor as
a qualified employer pursuant to section twenty-five-a of the labor  law
shall  be allowed a credit against the tax imposed by this article equal
to (A) five hundred dollars per month for up  to  six  months  for  each
qualified  employee  the  employer  employs  in  a  full-time job or two
hundred fifty dollars per month for up to six months for each  qualified
employee  the  employer  employs  in  a part-time job of at least twenty
hours per week OR TEN HOURS PER WEEK  WHEN  THE  QUALIFIED  EMPLOYEE  IS
ENROLLED IN HIGH SCHOOL FULL-TIME, and (B) one thousand dollars for each
qualified employee who is employed for at least an additional six months
by the qualified employer in a full-time job or five hundred dollars for
each  qualified  employee who is employed for at least an additional six

S. 6359                            241                           A. 8559

months by the qualified employer in a part-time job of at  least  twenty
hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
ENROLLED IN HIGH SCHOOL FULL-TIME, AND (C) AN  ADDITIONAL  ONE  THOUSAND
DOLLARS  FOR  EACH  QUALIFIED  EMPLOYEE  WHO IS EMPLOYED FOR AT LEAST AN
ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
QUALIFIED EMPLOYER IN A FULL-TIME JOB OR FIVE HUNDRED DOLLARS  FOR  EACH
QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER
THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN
A  PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN HOURS PER WEEK
WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH  SCHOOL  FULL-TIME.    A
taxpayer that is a partner in a partnership, member of a limited liabil-
ity  company  or shareholder in an S corporation that has been certified
by the commissioner of labor as a qualified employer pursuant to section
twenty-five-a of the labor law shall be allowed its pro  rata  share  of
the  credit  earned  by  the partnership, limited liability company or S
corporation. For  purposes  of  this  subsection,  the  term  "qualified
employee" shall have the same meaning as set forth in subdivision (b) of
section  twenty-five-a  of  the  labor  law.  The  portion of the credit
described in subparagraph (A) of this paragraph shall be allowed for the
taxable year in which the wages are paid to the qualified employee,  and
the  portion  of  the credit described in subparagraph (B) of this para-
graph shall be allowed in the taxable year in which the  additional  six
month period ends.
  S  3.  Subdivision (a) of section 25-a of the labor law, as amended by
section 2 of part DD of chapter 59 of the laws of 2013,  is  amended  to
read as follows:
  (a) The commissioner is authorized to establish and administer the New
York youth works tax credit program to provide tax incentives to employ-
ers  for  employing  at risk youth in part-time and full-time positions.
There will be five distinct pools of tax incentives.  Program  one  will
cover  tax incentives allocated for two thousand twelve and two thousand
thirteen. Program two will cover tax incentives allocated in  two  thou-
sand  fourteen to be used in two thousand fourteen and fifteen.  Program
three will cover tax incentives allocated in two thousand fifteen to  be
used  in  two  thousand fifteen and sixteen. Program four will cover tax
incentives allocated in two thousand sixteen to be used in two  thousand
sixteen  and seventeen. Program five will cover tax incentives allocated
in two thousand seventeen to be used in two thousand seventeen and eigh-
teen. The commissioner is  authorized  to  allocate  up  to  twenty-five
million  dollars  of  tax  credits  under program one, [six] TEN million
dollars of tax credits under program two, [six] TEN million  dollars  of
tax  credits  under  program three, [and six] TEN million dollars of tax
credits under program four, and [six] TEN million dollars of tax credits
under program five.
  S 4. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2014.

                                 PART V

  Section 1. Section 19 of Part W-1 of chapter 109 of the laws  of  2006
amending  the  tax  law and other laws relating to providing exemptions,
reimbursements and credits from various taxes  for  certain  alternative
fuels,  as  amended  by section 1 of part D of chapter 59 of the laws of
2012, is amended to read as follows:
  S 19. This act shall take effect immediately; provided, however,  that
sections one through thirteen of this act shall take effect September 1,

S. 6359                            242                           A. 8559

2006  and  shall be deemed repealed on September 1, [2014] 2016 and such
repeal shall  apply  in  accordance  with  the  applicable  transitional
provisions  of sections 1106 and 1217 of the tax law, and shall apply to
sales  made,  fuel  compounded or manufactured, and uses occurring on or
after such date, and with respect to sections seven  through  eleven  of
this  act,  in  accordance  with  applicable  transitional provisions of
sections 1106 and 1217 of the  tax  law;  provided,  however,  that  the
commissioner  of  taxation  and finance shall be authorized on and after
the date this act shall have become a law to adopt and amend  any  rules
or  regulations  and  to  take  any  steps  necessary  to  implement the
provisions of this act; provided further that sections fourteen  through
sixteen  of  this  act  shall take effect immediately and shall apply to
taxable years beginning on or after January 1, 2006.
  S 2. This act shall take effect immediately.

                                 PART W

  Section 1. Section 11 of part EE of chapter 63 of the  laws  of  2000,
amending  the  tax law and other laws relating to modifying the distrib-
ution of funds from the motor vehicle fuel excise  tax,  as  amended  by
section  1  of  part  M of chapter 61 of the laws of 2011, is amended to
read as follows:
  S 11. Notwithstanding any other law, rule or regulation to the contra-
ry, the comptroller is hereby authorized  and  directed  to  deposit  in
equal  monthly installments and distribute pursuant to the provisions of
subdivision (d) of section 301-j of the tax law amounts listed below  to
the  credit of the dedicated highway and bridge trust fund and the dedi-
cated mass transportation trust fund from all motor vehicle receipts now
deposited into the general fund pursuant to provisions  of  the  vehicle
and  traffic  law:    twenty-eight million four hundred thousand dollars
from April 1, 2002 through March  31,  2003,  sixty-seven  million  nine
hundred  thousand dollars from April 1, 2003 through March 31, 2004, one
hundred seventy million one hundred thousand dollars from April 1,  2004
through  March  31,  2005,  and one hundred percent of all motor vehicle
receipts pursuant to provisions of the vehicle and traffic law that  are
not  otherwise directed to be deposited in a fund other than the general
fund from April 1, 2005 through March 31, 2006, and the same amount each
year thereafter UNTIL MARCH 31, 2014. FROM APRIL 1, 2014  THROUGH  MARCH
31, 2015, AND EACH YEAR THEREAFTER, THE COMPTROLLER SHALL, ON A QUARTER-
LY BASIS, CERTIFY AND TRANSFER SIXTEEN MILLION FOUR HUNDRED NINETY-EIGHT
THOUSAND  TWO  HUNDRED  FIFTY-FIVE  DOLLARS TO THE DEDICATED HIGHWAY AND
BRIDGE TRUST FUND AND FIFTEEN MILLION SIX  HUNDRED  SIXTY-FIVE  THOUSAND
TWO  HUNDRED  FORTY-FIVE  DOLLARS  TO  THE DEDICATED MASS TRANSPORTATION
TRUST FUND.
  S 2. Paragraph (f) of subdivision 4 of section 503 of the vehicle  and
traffic  law,  as added by section 1 of part W of chapter 59 of the laws
of 2006, is amended to read as follows:
  (f) Notwithstanding any  other  provision  of  law  to  the  contrary,
commencing  April first, two thousand six and ending March thirty-first,
two thousand [seven] FOURTEEN, IN EACH YEAR,  the  first  forty  million
seven hundred thousand dollars of fees collected pursuant to this subdi-
vision  and  section  eleven hundred ninety-nine of this chapter, in the
aggregate, shall be paid to the state comptroller who shall deposit such
money in the state treasury pursuant to section one  hundred  twenty-one
of  the  state  finance  law to the credit of the general fund. Any such
fees collected in excess of such amount shall be paid to the  credit  of

S. 6359                            243                           A. 8559

the  comptroller  on  account  of the dedicated highway and bridge trust
fund established pursuant to section eighty-nine-b of the state  finance
law.  [Commencing April first, two thousand seven and ending March thir-
ty-first,  two thousand eight, and for each such fiscal year thereafter,
the first forty million seven hundred thousand dollars of fees collected
pursuant to this subdivision and section eleven hundred  ninety-nine  of
this  chapter,  in the aggregate, shall be paid to the state comptroller
who shall deposit such money in the state treasury pursuant  to  section
one  hundred  twenty-one  of  the state finance law to the credit of the
general fund. Any such fees collected in excess of such amount for  each
such  state  fiscal year, shall be paid to the credit of the comptroller
on account of the dedicated highway and bridge  trust  fund  established
pursuant  to section eighty-nine-b of the state finance law.] COMMENCING
APRIL FIRST, TWO THOUSAND FOURTEEN AND FOR EACH SUCH FISCAL YEAR  THERE-
AFTER,  ANY SUCH FEES COLLECTED PURSUANT TO THIS SUBDIVISION AND SECTION
ELEVEN HUNDRED NINETY-NINE OF THIS CHAPTER SHALL BE PAID TO  THE  CREDIT
OF  THE COMPTROLLER ON ACCOUNT OF THE DEDICATED HIGHWAY AND BRIDGE TRUST
FUND ESTABLISHED PURSUANT TO SECTION EIGHTY-NINE-B OF THE STATE  FINANCE
LAW.
  S  3.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 2014.

                                 PART X

  Section 1. Section 951 of the tax law, as amended by chapter 67 of the
laws of 1978, subsection (a) as amended by section 1 of part T of  chap-
ter  57  of  the laws of 2010, subsection (b) as amended by section 5 of
part A of chapter 389 of the laws of 1997 and subsection (c) as added by
chapter 538 of the laws of 2013, is amended to read as follows:
  S 951. Applicable internal revenue code  provisions.--  (a)  [Dates]
GENERAL.    For  purposes of this article, any reference to the internal
revenue code means the United States Internal Revenue Code of 1986, with
all amendments  enacted  on  or  before  [July  twenty-second,  nineteen
hundred  ninety-eight,] JANUARY FIRST, TWO THOUSAND FOURTEEN and, unless
specifically provided otherwise in this article, any reference to Decem-
ber thirty-first, nineteen hundred seventy-six or January  first,  nine-
teen  hundred  seventy-seven  contained  in  the provisions of such code
which are applicable to the determination of the  tax  imposed  by  this
article shall be read as a reference to June thirtieth, nineteen hundred
seventy-eight or July first, nineteen hundred seventy-eight, respective-
ly.  [Notwithstanding  the  foregoing,  the  unified  credit against the
estate tax provided in section two thousand ten of the internal  revenue
code  shall, for purposes of this article, be the amount allowable as if
the federal applicable exclusion amount were one million dollars.]
  (b) [Applicable generation-skipping  transfer  tax  provisions.--Where
any  reference  is  made  in  this  article (or in the provisions of the
internal revenue code which are  made  applicable  by  section  two,  as
amended,  of  chapter  one  thousand  thirteen  of  the laws of nineteen
hundred sixty-two, to the determination of the tax imposed by this arti-
cle and appended thereto) to provisions of  the  internal  revenue  code
contained  in  section  one  thousand  twenty-five of this chapter, such
internal revenue code provisions contained in such section one  thousand
twenty-five  shall  apply  to the provisions of this article in the same
manner and with the same force and effect as if  the  language  of  such
provisions  of  the  internal revenue code had been incorporated in full
into this article except to the extent that any such provision is either

S. 6359                            244                           A. 8559

inconsistent with a provision of this article or is not relevant  there-
to.
  (c)]  Disposition to surviving spouse who is not a United States citi-
zen. In the case of an estate where a federal estate tax return  is  not
required  for  federal estate tax purposes, a disposition to a surviving
spouse that would qualify for the federal estate tax  marital  deduction
under  section  2056 of the internal revenue code if not for the limita-
tion imposed by subsection (d)(1) of such section shall  nonetheless  be
treated  as  qualifying for the federal estate tax marital deduction for
purposes of computing the tax imposed by section nine hundred  fifty-two
of  this  part,  without  requiring  that  such  disposition pass to the
surviving spouse in a qualified domestic trust as required  for  federal
purposes by internal revenue code section 2056(d)(2).
  S  2.  Section  952 of the tax law, as added by section 9 of part A of
chapter 389 of the laws of 1997, subsection (b) as amended by section  3
of  part  I  of  chapter  60  of the laws of 2004, is amended to read as
follows:
  S 952. Tax imposed. (a) A tax is hereby imposed on the transfer of the
New York estate by every deceased individual who at his or her death was
a resident of New York state. [The tax imposed by this subsection  shall
be  an  amount equal to the maximum amount allowable against the federal
estate tax as a credit for state death taxes under section two  thousand
eleven of the internal revenue code.]
  (b)  [If the transfer of any part of the estate of a deceased resident
includes real or tangible  personal  property  having  an  actual  situs
outside  New  York  state,  the  tax  imposed  by subsection (a) of this
section shall be reduced by an  amount  determined  by  multiplying  the
maximum  amount  of  the federal credit for state death taxes by a frac-
tion, the numerator of which is  the  decedent's  federal  gross  estate
reduced by his or her New York gross estate and the denominator of which
is his or her federal gross estate.] COMPUTATION OF TAX. THE TAX IMPOSED
BY  THIS  SECTION  SHALL BE COMPUTED ON THE DECEASED RESIDENT'S NEW YORK
TAXABLE ESTATE AS FOLLOWS:
IN THE CASE OF DECEDENTS DYING ON OR AFTER  APRIL  1,  2014  AND  BEFORE
APRIL 1, 2015
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS OVER
                                        $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS OVER
                                        $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS OVER
                                        $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
                                        OVER $5,100,000
OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS

S. 6359                            245                           A. 8559

                                        OVER $6,100,000
OVER $7,100,000 BUT NOT OVER $8,100,000 $650,800 PLUS 13.6% OF EXCESS
                                        OVER $7,100,000
OVER $8,100,000 BUT NOT OVER $9,100,000 $786,800 PLUS 14.4% OF EXCESS
                                        OVER $8,100,000
OVER $9,100,000                         $930,800 PLUS 14.5% OF EXCESS OVER
                                        $9,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2015 AND BEFORE
APRIL 1, 2016
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS
                                        OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS
                                        OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
                                        OVER $5,100,000
OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS
                                        OVER $6,100,000
OVER $7,100,000                         $650,800 PLUS 13.0% OF EXCESS
                                        OVER $7,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2016 AND BEFORE
APRIL 1, 2017
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS
                                        OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS
                                        OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000                         $402,800 PLUS 11.5% OF EXCESS
                                        OVER $5,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2017

S. 6359                            246                           A. 8559

IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF
                                        EXCESS OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF
                                        EXCESS OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF
                                        EXCESS OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000                         $238,800 PLUS 10.0% OF EXCESS
                                        OVER $3,600,000
  (C)  APPLICABLE  CREDIT  AMOUNT. (1) A CREDIT OF THE APPLICABLE CREDIT
AMOUNT SHALL BE ALLOWED AGAINST THE  TAX  IMPOSED  BY  THIS  SECTION  AS
PROVIDED  IN  THIS  SUBSECTION. IN THE CASE OF A DECEDENT WHOSE NEW YORK
TAXABLE ESTATE IS LESS THAN OR EQUAL TO THE BASIC EXCLUSION AMOUNT,  THE
APPLICABLE  CREDIT  AMOUNT  SHALL BE THE AMOUNT OF TAX THAT WOULD BE DUE
UNDER SUBSECTION (B) OF THIS SECTION ON SUCH DECEDENT'S NEW YORK TAXABLE
ESTATE. IN THE CASE OF A DECEDENT WHOSE NEW YORK TAXABLE ESTATE  EXCEEDS
THE  BASIC  EXCLUSION  AMOUNT BY AN AMOUNT THAT IS LESS THAN OR EQUAL TO
FIVE PERCENT OF SUCH AMOUNT, THE APPLICABLE CREDIT AMOUNT SHALL  BE  THE
AMOUNT  OF TAX THAT WOULD BE DUE UNDER SUBSECTION (B) OF THIS SECTION IF
THE AMOUNT ON WHICH THE TAX IS TO BE COMPUTED WERE EQUAL  TO  THE  BASIC
EXCLUSION  AMOUNT  MULTIPLIED  BY ONE MINUS A FRACTION, THE NUMERATOR OF
WHICH IS THE DECEDENT'S NEW YORK TAXABLE ESTATE MINUS THE  BASIC  EXCLU-
SION  AMOUNT,  AND THE DENOMINATOR OF WHICH IS FIVE PERCENT OF THE BASIC
EXCLUSION AMOUNT.  PROVIDED, HOWEVER, THAT THE CREDIT  ALLOWED  BY  THIS
SUBSECTION  SHALL  NOT  EXCEED  THE  TAX IMPOSED BY THIS SECTION, AND NO
CREDIT SHALL BE ALLOWED TO THE ESTATE OF ANY  DECEDENT  WHOSE  NEW  YORK
TAXABLE  ESTATE  EXCEEDS ONE HUNDRED FIVE PERCENT OF THE BASIC EXCLUSION
AMOUNT.
  (2) (A) FOR PURPOSES OF THIS SECTION, THE BASIC EXCLUSION AMOUNT SHALL
BE AS FOLLOWS:
IN THE CASE OF DECEDENTS DYING ON OR AFTER: THE BASIC  EXCLUSION  AMOUNT
IS:
APRIL 1, 2014 AND BEFORE APRIL 1, 2015       $ 2,062,500
APRIL 1, 2015 AND BEFORE APRIL 1, 2016       3,125,000
APRIL 1, 2016 AND BEFORE APRIL 1, 2017       4,187,500
APRIL 1, 2017 AND BEFORE JANUARY 1, 2019     5,250,000
  (B)  IN  THE CASE OF ANY DECEDENT DYING ON OR AFTER JANUARY FIRST, TWO
THOUSAND NINETEEN AND BEFORE JANUARY FIRST,  TWO  THOUSAND  TWENTY,  THE
BASIC  EXCLUSION  AMOUNT IN SUBPARAGRAPH (A) OF THIS PARAGRAPH FOR DECE-
DENTS DYING ON AND AFTER APRIL FIRST, TWO THOUSAND SEVENTEEN AND  BEFORE
JANUARY  FIRST,  TWO  THOUSAND  NINETEEN SHALL BE INCREASED BY AN AMOUNT
EQUAL TO:
  (I) SUCH DOLLAR AMOUNT, MULTIPLIED BY
  (II) THE COST-OF-LIVING ADJUSTMENT, WHICH SHALL BE THE  PERCENTAGE  BY
WHICH  THE  CONSUMER PRICE INDEX FOR THE PRECEDING CALENDAR YEAR EXCEEDS
THE CONSUMER PRICE INDEX FOR CALENDAR YEAR TWO THOUSAND TWELVE.
  (C) IN THE CASE OF ANY DECEDENT DYING IN A CALENDAR YEAR BEGINNING  ON
OR  AFTER JANUARY FIRST, TWO THOUSAND TWENTY, THE BASIC EXCLUSION AMOUNT

S. 6359                            247                           A. 8559

FOR DECEDENTS DYING IN THE PRECEDING CALENDAR YEAR SHALL BE INCREASED BY
AN AMOUNT EQUAL TO:
  (I) SUCH DOLLAR AMOUNT, MULTIPLIED BY
  (II)  THE  COST-OF-LIVING ADJUSTMENT, WHICH SHALL BE THE PERCENTAGE BY
WHICH THE CONSUMER PRICE INDEX FOR THE PRECEDING CALENDAR  YEAR  EXCEEDS
THE CONSUMER PRICE INDEX FOR CALENDAR YEAR TWO THOUSAND EIGHTEEN.
  (D)  (I)  FOR PURPOSES OF THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS
THE MOST RECENT CONSUMER PRICE INDEX FOR ALL-URBAN  CONSUMERS  PUBLISHED
BY THE UNITED STATES DEPARTMENT OF LABOR.
  (II)  IF ANY AMOUNT ADJUSTED UNDER THIS PARAGRAPH IS NOT A MULTIPLE OF
TEN THOUSAND DOLLARS, SUCH AMOUNT SHALL BE ROUNDED TO THE NEAREST MULTI-
PLE OF TEN THOUSAND DOLLARS.
  S 3. Section 954 of the tax law, as amended by chapter 67 of the  laws
of  1978,  paragraph  1  of  subsection (a) as amended by section 10 and
subsection (b) as amended by section 11 of part A of chapter 389 of  the
laws  of  1997,  subsection (c) as amended by chapter 916 of the laws of
1982, paragraph 1 of subsection (c) as amended by section 3 of part A of
chapter 407 of the laws of 1999 and such subsection (c) as relettered by
section 12 of part A of chapter 389 of the laws of 1997, is  amended  to
read as follows:
  S  954.  Resident's New York gross estate. (a) General.-- The New York
gross estate of a deceased resident  means  his  OR  HER  federal  gross
estate as defined in the internal revenue code (whether or not a federal
estate tax return is required to be filed) modified as follows:
  (1)  Reduced by the value of real or tangible personal property having
an actual situs outside New York state.
  (2) Increased by the amount  determined  under  section  nine  hundred
fifty-seven  OF  THIS  PART  (relating  to limited powers of appointment
created prior to September first, nineteen hundred thirty).
  (3) INCREASED BY THE AMOUNT OF ANY TAXABLE GIFT UNDER SECTION 2503  OF
THE  INTERNAL  REVENUE CODE, ON OR AFTER APRIL FIRST, TWO THOUSAND FOUR-
TEEN, IF THE DECEDENT WAS A RESIDENT OF NEW YORK STATE AT THE TIME  SUCH
GIFT WAS MADE.
  (b)  Valuation. -- (1) The New York gross estate shall be valued as of
the TIME OF THE DECEDENT'S DEATH, EXCEPT THAT IF A  FEDERAL  ESTATE  TAX
RETURN  IS  FILED  AND THE ALTERNATE VALUATION UNDER SECTION 2032 OF THE
INTERNAL REVENUE CODE IS ELECTED FOR FEDERAL ESTATE  TAX  PURPOSES,  THE
NEW YORK GROSS ESTATE SHALL BE VALUED AS OF THE applicable federal valu-
ation date or dates. Any real property qualified under section two thou-
sand thirty-two-A of the internal revenue code shall have the same value
for  purposes  of the New York gross estate as it has for federal estate
tax purposes.
  (2) IF SUCH ALTERNATE VALUATION COULD HAVE BEEN  ELECTED  PURSUANT  TO
PARAGRAPH  ONE  OF  THIS  SUBSECTION,  BUT  FOR THE ABSENCE OF AN ESTATE
SUFFICIENT TO REQUIRE THE FILING OF A FEDERAL RETURN, THE NEW YORK GROSS
ESTATE MAY, UPON THE ELECTION OF THE  EXECUTOR,  BE  VALUED  AS  OF  THE
FEDERAL  VALUATION  DATE  OR DATES WHICH WOULD HAVE APPLIED IF A FEDERAL
RETURN HAD BEEN FILED. HOWEVER, NO ELECTION MAY BE MADE UNDER THIS PARA-
GRAPH UNLESS SUCH ELECTION WILL DECREASE THE VALUE OF THE NEW YORK GROSS
ESTATE AND THE AMOUNT OF TAX IMPOSED BY THIS ARTICLE (REDUCED BY CREDITS
ALLOWABLE AGAINST SUCH TAX). ANY  ELECTION  MADE  UNDER  THIS  PARAGRAPH
SHALL  BE  IRREVOCABLE.  THE ELECTION ALLOWED BY THIS PARAGRAPH SHALL BE
MADE NO LATER THAN THE DATE PRESCRIBED FOR  THE  FILING  OF  THE  RETURN
UNDER  THIS ARTICLE (INCLUDING EXTENSIONS) OR ANY TIME THEREAFTER AS THE
COMMISSIONER MAY PRESCRIBE.

S. 6359                            248                           A. 8559

  (c) Cross references.-- (1) For provisions  of  the  internal  revenue
code defining the federal gross estate, see:
  Sec. 2031. Definition of gross estate.
  Sec. 2032. Alternate valuation.
  Sec. 2032A. Valuation of certain farm, etc., real property.
  Sec. 2033. Property in which the decedent had an interest.
  Sec. 2034. Dower or curtesy interest.
  Sec. 2035. Adjustments for gifts made within three years of decedent's
death.
  Sec. 2036. Transfers with retained life estate.
  Sec. 2037. Transfers taking effect at death.
  Sec. 2038. Revocable transfers.
  Sec. 2039. Annuities.
  Sec. 2040. Joint interests.
  Sec. 2041. Powers of appointment.
  Sec. 2042. Proceeds of life insurance.
  Sec. 2043. Transfers for insufficient consideration.
  Sec. 2044. Certain property for which marital deduction was previously
allowed.
  Sec. 2045. Prior interests.
  Sec. 2046. Disclaimers.
  (2)  FOR  PROVISIONS OF THE INTERNAL REVENUE CODE WHICH, EXCEPT TO THE
EXTENT THEY ARE INCONSISTENT WITH THE PROVISIONS OF  THIS  ARTICLE,  ARE
PERTINENT  TO  THE  COMPUTATION  OF TAXABLE GIFTS AND THE TAX UNDER THIS
ARTICLE, SEE:
  SEC. 2503. TAXABLE GIFTS.
  SEC. 2511. TRANSFERS IN GENERAL.
  SEC. 2512. VALUATION OF GIFTS.
  SEC. 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY.
  SEC. 2514. POWERS OF APPOINTMENT.
  SEC. 2516. CERTAIN PROPERTY SETTLEMENTS.
  SEC. 2518. DISCLAIMERS.
  SEC. 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES.
  SEC. 2522. CHARITABLE AND SIMILAR GIFTS.
  SEC. 2523. GIFT TO SPOUSE.
  SEC. 2524. EXTENT OF DEDUCTIONS.
  SEC. 2701. SPECIAL VALUATION RULES IN CASE  OF  TRANSFERS  OF  CERTAIN
INTERESTS IN CORPORATIONS OR PARTNERSHIPS.
  SEC.  2702.  SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS
IN TRUSTS.
  SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED.
  SEC. 2704. TREATMENT OF CERTAIN LAPSING RIGHTS AND RESTRICTIONS.
  SEC. 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES.
  (3) For effect of federal estate tax determinations, see section  nine
hundred sixty-one of this article.
  S  4.  The  tax  law is amended by adding a new section 955 to read as
follows:
  S 955. RESIDENT'S NEW YORK TAXABLE ESTATE.  (A) GENERAL.--THE  TAXABLE
ESTATE OF A NEW YORK RESIDENT SHALL BE HIS OR HER NEW YORK GROSS ESTATE,
MINUS  THE DEDUCTIONS ALLOWABLE FOR DETERMINING HIS OR HER FEDERAL TAXA-
BLE ESTATE UNDER THE INTERNAL REVENUE CODE (WHETHER  OR  NOT  A  FEDERAL
ESTATE  TAX  RETURN  IS REQUIRED TO BE FILED), EXCEPT TO THE EXTENT THAT
SUCH DEDUCTIONS RELATE TO REAL OR  TANGIBLE  PERSONAL  PROPERTY  SITUSED
OUTSIDE NEW YORK STATE.

S. 6359                            249                           A. 8559

  (B)  WAIVER  OF  DEDUCTIONS.-- IF THE RIGHT TO ANY DEDUCTION OTHERWISE
ALLOWABLE IS WAIVED FOR FEDERAL ESTATE TAX PURPOSES, IT SHALL BE CONSID-
ERED WAIVED FOR NEW YORK ESTATE TAX PURPOSES.
  (C)  QUALIFIED  TERMINABLE  INTEREST  PROPERTY  ELECTION.--  EXCEPT AS
OTHERWISE PROVIDED IN THIS SUBSECTION, THE ELECTION REFERRED TO IN PARA-
GRAPH (7) OF SUBSECTION (B) OF SECTION 2056 OF THE INTERNAL REVENUE CODE
SHALL NOT BE ALLOWED UNDER THIS ARTICLE UNLESS SUCH  ELECTION  WAS  MADE
WITH RESPECT TO THE FEDERAL ESTATE TAX RETURN REQUIRED TO BE FILED UNDER
THE  PROVISIONS  OF THE INTERNAL REVENUE CODE. IF SUCH ELECTION WAS MADE
FOR THE PURPOSES OF THE FEDERAL ESTATE TAX, THEN SUCH ELECTION MUST ALSO
BE MADE BY THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY  THIS  ARTI-
CLE.  WHERE  NO  FEDERAL  ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE
EXECUTOR MAY MAKE THE ELECTION REFERRED TO IN SUCH  PARAGRAPH  (7)  WITH
RESPECT  TO  THE  TAX  IMPOSED  BY THIS ARTICLE ON THE RETURN OF THE TAX
IMPOSED BY THIS ARTICLE. ANY ELECTION MADE UNDER THIS  SUBSECTION  SHALL
BE IRREVOCABLE.
  (D)  CROSS  REFERENCES.--  FOR PROVISIONS OF THE INTERNAL REVENUE CODE
SPECIFYING THE DEDUCTIONS ALLOWABLE FOR  FEDERAL  ESTATE  TAX  PURPOSES,
SEE:
  SEC.2032(B). ALTERNATE VALUATION--SPECIAL RULE FOR DEDUCTIONS.
  SEC.2046. DISCLAIMERS.
  SEC.2053. EXPENSES, INDEBTEDNESS, AND TAXES.
  SEC.2054. LOSSES.
  SEC.2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
  SEC.2056. BEQUESTS, ETC., TO SURVIVING SPOUSE.
  S 5. Subsections (b) and (d) of section 960 of the tax law, subsection
(b)  as amended by section 4 of part I of chapter 60 of the laws of 2004
and subsection (d) as added by section 190  of  the  laws  of  1980  and
relettered  by  section 15 of part A of chapter 389 of the laws of 1997,
are amended to read as follows:
  (b) Computation of tax.--The tax imposed under subsection (a) shall be
the same as the tax that would be due, if the decedent had died a  resi-
dent,  under  subsection  (a)  of section nine hundred fifty-two, except
that for purposes of [allocating] COMPUTING the tax under subsection (b)
of section nine hundred fifty-two, "New York [gross]  TAXABLE  estate"[,
in  the  numerator in subsection (b) of section nine hundred fifty-two,]
shall not include the value of any intangible personal  property  other-
wise  includible in the deceased individual's New York gross estate, AND
SHALL NOT INCLUDE THE AMOUNT OF ANY GIFT UNLESS SUCH  GIFT  CONSISTS  OF
REAL  OR  TANGIBLE  PERSONAL PROPERTY HAVING AN ACTUAL SITUS IN NEW YORK
STATE OR INTANGIBLE PERSONAL PROPERTY EMPLOYED IN A BUSINESS,  TRADE  OR
PROFESSION CARRIED ON IN THIS STATE.
  (d)  Works  of art on loan for exhibition. Notwithstanding the forego-
ing, the tax imposed under subsection (a) OF THIS SECTION on the  trans-
fer,  from  any  deceased  individual  who at his OR HER death was not a
resident of the state of New York, of works  of  art  having  an  actual
situs  in  the state of New York and either (i) includible in his OR HER
federal gross estate or (ii) which would be includible in his OR HER New
York gross estate pursuant to section nine hundred fifty-seven (relating
to certain limited powers of appointment) if he OR SHE were  a  resident
of  the  state  of  New  York, shall [be an amount equal to the transfer
taxes or death taxes of every character in respect of personal  property
which  would  be  imposed  on  such transfer or such works of art if the
actual situs of such works of art were the state  or  territory  of  the
United States of residence of such individual] NOT BE SUBJECT TO THE TAX
IMPOSED  BY THIS SECTION if such works of art are [sited in the state of

S. 6359                            250                           A. 8559

New York solely for exhibition purposes,] loaned [for such] TO A  PUBLIC
GALLERY  LOCATED  WITHIN  THE  STATE  OF  NEW YORK SOLELY FOR EXHIBITION
purposes [to a public gallery or museum (] BUT ONLY IF no  part  of  the
net earnings of [which] SUCH PUBLIC GALLERY OR MUSEUM inure to the bene-
fit of any private stockholder or individual[)], and [(], at the time of
the  death  of such individual[)] SUCH WORKS OF ART ARE on exhibition or
en route to or from exhibition in  such  a  public  gallery  or  museum.
[Provided  however,  that if the state or territory of the United States
of residence of such individual imposes transfer taxes or death taxes on
such works of art which are sited in the  state  of  New  York  for  the
purposes  herein  specified, then such works of art shall not be subject
to the tax imposed by this section.]
  S 6. Subsection (a) of section 971 of the tax law, as added by section
17 of part A of chapter 389 of the laws of 1997, is amended to  read  as
follows:
  (a)  Returns  by executor. (1) Residents. In the case of the estate of
every individual dying on or after [February first, two thousand]  APRIL
FIRST,  TWO THOUSAND FOURTEEN, who at his or her death was a resident of
New York state, [if] his or her executor [is required to file  a  return
with  respect to the federal estate tax (determined as if the limitation
contained in subsection (a) of section nine hundred  fifty-one  of  this
article were applicable in determining whether such executor is required
to  file  such  federal  return), the executor] shall make a return with
respect to the estate tax imposed by section nine hundred  fifty-two  of
this  article  IF  THE DECEDENT'S FEDERAL GROSS ESTATE, INCREASED BY THE
AMOUNT OF ANY GIFT INCLUDIBLE IN HIS  OR  HER  NEW  YORK  GROSS  ESTATE,
EXCEEDS  THE BASIC EXCLUSION AMOUNT APPLICABLE TO THE DECEDENT'S DATE OF
DEATH IN PARAGRAPH TWO OF SUBSECTION (C) OF SECTION NINE HUNDRED  FIFTY-
TWO OF THIS ARTICLE.
  (2)  Nonresidents. In the case of the estate of every individual DYING
ON OR AFTER APRIL FIRST, TWO THOUSAND FOURTEEN, who at his or her  death
was  not  a  resident  of  New  York  state,  [if his or her executor is
required to file a return with respect to the federal estate tax (deter-
mined as if the limitation contained in subsection (a) of  section  nine
hundred fifty-one of this article were applicable in determining whether
such  executor  is  required  to  file such federal return) and] if such
individual's federal gross estate includes  real  or  tangible  personal
property  having  an  actual situs in New York state, the executor shall
make a return with respect to the estate tax  imposed  by  section  nine
hundred  sixty  of  this article IF THE DECEDENT'S FEDERAL GROSS ESTATE,
INCREASED BY THE AMOUNT OF ANY GIFT INCLUDIBLE IN HIS OR  HER  NEW  YORK
GROSS  ESTATE,  EXCEEDS  THE  BASIC  EXCLUSION  AMOUNT APPLICABLE TO THE
DECEDENT'S DATE OF DEATH IN PARAGRAPH TWO OF SUBSECTION (C)  OF  SECTION
NINE HUNDRED FIFTY-TWO OF THIS ARTICLE.
  S  7.  Subsection  (a)  of  section  997 of the tax law, as amended by
section 27 of part A of chapter 389 of the laws of 1997, is  amended  to
read as follows:
  (a)  The  phrase  "adjusted  gross  estate" shall be read as "adjusted
federal gross estate determined  without  reference  to  paragraphs  (1)
[and], (2) AND (3) of subsection (a) of section nine hundred fifty-four"
of this article.
  S 8. Article 26-B of the tax law is REPEALED.
  S  9.  Section  2 of chapter 1013 of the laws of 1962 amending the tax
law relating to imposing a tax on the transfer of estates  of  decedents
dying on or after April first, nineteen hundred sixty-three is REPEALED.

S. 6359                            251                           A. 8559

  S  10. The tax law is amended by adding a new section 999-a to read as
follows:
  S  999-A. APPENDIX TO ARTICLE TWENTY-SIX.  THE FOLLOWING PROVISIONS OF
THE UNITED STATES INTERNAL REVENUE CODE OF  1986,  WITH  ALL  AMENDMENTS
ENACTED  ON  OR BEFORE JANUARY FIRST, TWO THOUSAND FOURTEEN, SHALL APPLY
TO THE TAX IMPOSED BY THIS ARTICLE, TO  THE  EXTENT  SPECIFIED  IN  THIS
ARTICLE.
  S 2031. DEFINITION OF GROSS ESTATE.
  (A)  GENERAL.--THE  VALUE OF THE GROSS ESTATE OF THE DECEDENT SHALL BE
DETERMINED BY INCLUDING TO THE EXTENT PROVIDED FOR  IN  THIS  PART,  THE
VALUE AT THE TIME OF HIS DEATH OF ALL PROPERTY, REAL OR PERSONAL, TANGI-
BLE OR INTANGIBLE, WHEREVER SITUATED.
  (B)  VALUATION OF UNLISTED STOCK AND SECURITIES.--IN THE CASE OF STOCK
AND SECURITIES OF A CORPORATION THE VALUE OF WHICH, BY REASON  OF  THEIR
NOT  BEING  LISTED  ON AN EXCHANGE AND BY REASON OF THE ABSENCE OF SALES
THEREOF, CANNOT BE DETERMINED WITH REFERENCE TO BID AND ASKED PRICES  OR
WITH REFERENCE TO SALES PRICES, THE VALUE THEREOF SHALL BE DETERMINED BY
TAKING  INTO  CONSIDERATION, IN ADDITION TO ALL OTHER FACTORS, THE VALUE
OF STOCK OR SECURITIES OF CORPORATIONS ENGAGED IN THE SAME OR A  SIMILAR
LINE OF BUSINESS WHICH ARE LISTED ON AN EXCHANGE.
  (C)  ESTATE  TAX WITH RESPECT TO LAND SUBJECT TO A QUALIFIED CONSERVA-
TION EASEMENT.--
  (1) IN GENERAL.--IF THE EXECUTOR MAKES THE ELECTION DESCRIBED IN PARA-
GRAPH (6), THEN, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION,  THERE
SHALL BE EXCLUDED FROM THE GROSS ESTATE THE LESSER OF--
  (A) THE APPLICABLE PERCENTAGE OF THE VALUE OF LAND SUBJECT TO A QUALI-
FIED CONSERVATION EASEMENT, REDUCED BY THE AMOUNT OF ANY DEDUCTION UNDER
SECTION 2055(F) WITH RESPECT TO SUCH LAND, OR
  (B) THE EXCLUSION LIMITATION.
  (2)  APPLICABLE  PERCENTAGE.--FOR  PURPOSES OF PARAGRAPH (1), THE TERM
"APPLICABLE PERCENTAGE" MEANS 40 PERCENT REDUCED (BUT NOT BELOW ZERO) BY
2 PERCENTAGE POINTS FOR EACH PERCENTAGE POINT (OR FRACTION  THEREOF)  BY
WHICH  THE  VALUE OF THE QUALIFIED CONSERVATION EASEMENT IS LESS THAN 30
PERCENT OF THE VALUE OF THE LAND (DETERMINED WITHOUT REGARD TO THE VALUE
OF SUCH EASEMENT AND REDUCED BY THE VALUE OF  ANY  RETAINED  DEVELOPMENT
RIGHT (AS DEFINED IN PARAGRAPH (5)). THE VALUES TAKEN INTO ACCOUNT UNDER
THE  PRECEDING  SENTENCE  SHALL  BE  SUCH  VALUES  AS OF THE DATE OF THE
CONTRIBUTION REFERRED TO IN PARAGRAPH (8)(B).
  (3) EXCLUSION LIMITATION.--FOR PURPOSES OF PARAGRAPH (1),  THE  EXCLU-
SION  LIMITATION  IS  THE  LIMITATION  DETERMINED IN ACCORDANCE WITH THE
FOLLOWING TABLE:
IN THE CASE OF ESTATES OF DECEDENTS DYING THE EXCLUSION LIMITATION
DURING:                                   IS:
1998..................................... 100,000
1999..................................... 200,000
2000..................................... 300,000
2001..................................... 400,000
2002 OR THEREAFTER....................... 500,000
  (4) TREATMENT OF CERTAIN INDEBTEDNESS.--
  (A) IN GENERAL.--THE EXCLUSION PROVIDED IN  PARAGRAPH  (1)  SHALL  NOT
APPLY TO THE EXTENT THAT THE LAND IS DEBT-FINANCED PROPERTY.
  (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  DEBT-FINANCED  PROPERTY.--THE TERM "DEBT-FINANCED PROPERTY" MEANS
ANY PROPERTY WITH RESPECT TO WHICH THERE IS AN ACQUISITION  INDEBTEDNESS
(AS DEFINED IN CLAUSE (II)) ON THE DATE OF THE DECEDENT'S DEATH.

S. 6359                            252                           A. 8559

  (II)  ACQUISITION  INDEBTEDNESS.--THE  TERM "ACQUISITION INDEBTEDNESS"
MEANS, WITH RESPECT TO DEBT-FINANCED PROPERTY, THE UNPAID AMOUNT OF--
  (I) THE INDEBTEDNESS INCURRED BY THE DONOR IN ACQUIRING SUCH PROPERTY,
  (II) THE INDEBTEDNESS INCURRED BEFORE THE ACQUISITION OF SUCH PROPERTY
IF  SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH ACQUISI-
TION,
  (III) THE INDEBTEDNESS INCURRED AFTER THE ACQUISITION OF SUCH PROPERTY
IF SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH  ACQUISI-
TION  AND THE INCURRENCE OF SUCH INDEBTEDNESS WAS REASONABLY FORESEEABLE
AT THE TIME OF SUCH ACQUISITION, AND
  (IV) THE EXTENSION, RENEWAL, OR REFINANCING OF AN ACQUISITION  INDEBT-
EDNESS.
  (5) TREATMENT OF RETAINED DEVELOPMENT RIGHT.--
  (A)  IN  GENERAL.--PARAGRAPH  (1)  SHALL NOT APPLY TO THE VALUE OF ANY
DEVELOPMENT RIGHT RETAINED BY THE DONOR IN THE CONVEYANCE OF A QUALIFIED
CONSERVATION EASEMENT.
  (B) TERMINATION OF RETAINED DEVELOPMENT  RIGHT.--IF  EVERY  PERSON  IN
BEING  WHO  HAS  AN  INTEREST (WHETHER OR NOT IN POSSESSION) IN THE LAND
EXECUTES AN AGREEMENT TO EXTINGUISH  PERMANENTLY  SOME  OR  ALL  OF  ANY
DEVELOPMENT  RIGHTS  (AS  DEFINED  IN  SUBPARAGRAPH (D)) RETAINED BY THE
DONOR ON OR BEFORE THE DATE FOR FILING THE RETURN OF THE TAX IMPOSED  BY
SECTION  2001,  THEN  ANY  TAX  IMPOSED BY SECTION 2001 SHALL BE REDUCED
ACCORDINGLY. SUCH AGREEMENT SHALL BE FILED WITH THE RETURN  OF  THE  TAX
IMPOSED  BY  SECTION  2001.  THE  AGREEMENT SHALL BE IN SUCH FORM AS THE
SECRETARY SHALL PRESCRIBE.
  (C) ADDITIONAL TAX.--ANY FAILURE TO IMPLEMENT THE AGREEMENT  DESCRIBED
IN SUBPARAGRAPH (B) NOT LATER THAN THE EARLIER OF--
  (I)  THE DATE WHICH IS 2 YEARS AFTER THE DATE OF THE DECEDENT'S DEATH,
OR
  (II) THE DATE OF THE SALE  OF  SUCH  LAND  SUBJECT  TO  THE  QUALIFIED
CONSERVATION EASEMENT,
  SHALL  RESULT  IN THE IMPOSITION OF AN ADDITIONAL TAX IN THE AMOUNT OF
THE TAX WHICH WOULD HAVE BEEN DUE ON  THE  RETAINED  DEVELOPMENT  RIGHTS
SUBJECT  TO SUCH AGREEMENT. SUCH ADDITIONAL TAX SHALL BE DUE AND PAYABLE
ON THE LAST DAY OF THE 6TH MONTH FOLLOWING SUCH DATE.
  (D) DEVELOPMENT RIGHT DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,  THE
TERM  "DEVELOPMENT RIGHT" MEANS ANY RIGHT TO USE THE LAND SUBJECT TO THE
QUALIFIED CONSERVATION EASEMENT IN WHICH SUCH RIGHT IS RETAINED FOR  ANY
COMMERCIAL  PURPOSE  WHICH IS NOT SUBORDINATE TO AND DIRECTLY SUPPORTIVE
OF THE USE OF SUCH LAND AS A FARM FOR FARMING PURPOSES (WITHIN THE MEAN-
ING OF SECTION 2032A(E)(5)).
  (6) ELECTION.--THE ELECTION UNDER THIS SUBSECTION SHALL BE MADE ON  OR
BEFORE  THE DUE DATE (INCLUDING EXTENSIONS) FOR FILING THE RETURN OF TAX
IMPOSED BY SECTION 2001 AND SHALL  BE  MADE  ON  SUCH  RETURN.  SUCH  AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (7)  CALCULATION  OF  ESTATE TAX DUE.--AN EXECUTOR MAKING THE ELECTION
DESCRIBED IN PARAGRAPH (6) SHALL, FOR PURPOSES OF CALCULATING THE AMOUNT
OF TAX IMPOSED BY SECTION 2001, INCLUDE THE  VALUE  OF  ANY  DEVELOPMENT
RIGHT (AS DEFINED IN PARAGRAPH (5)) RETAINED BY THE DONOR IN THE CONVEY-
ANCE  OF SUCH QUALIFIED CONSERVATION EASEMENT. THE COMPUTATION OF TAX ON
ANY RETAINED DEVELOPMENT RIGHT PRESCRIBED IN  THIS  PARAGRAPH  SHALL  BE
DONE IN SUCH MANNER AND ON SUCH FORMS AS THE SECRETARY SHALL PRESCRIBE.
  (8) DEFINITIONS.--FOR PURPOSES OF THIS SUBSECTION--
  (A) LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.--THE TERM "LAND
SUBJECT TO A QUALIFIED CONSERVATION EASEMENT" MEANS LAND--

S. 6359                            253                           A. 8559

  (I)  WHICH  IS  LOCATED  IN THE UNITED STATES OR ANY POSSESSION OF THE
UNITED STATES,
  (II)  WHICH  WAS  OWNED  BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S
FAMILY AT ALL TIMES DURING THE 3-YEAR PERIOD ENDING ON THE DATE  OF  THE
DECEDENT'S DEATH, AND
  (III) WITH RESPECT TO WHICH A QUALIFIED CONSERVATION EASEMENT HAS BEEN
MADE  BY  AN INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (C), AS OF THE DATE OF
THE ELECTION DESCRIBED IN PARAGRAPH (6).
  (B) QUALIFIED CONSERVATION EASEMENT.--THE TERM "QUALIFIED CONSERVATION
EASEMENT" MEANS A QUALIFIED CONSERVATION  CONTRIBUTION  (AS  DEFINED  IN
SECTION  170(H)(1)) OF A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN
SECTION 170(H)(2)(C)), EXCEPT THAT CLAUSE (IV) OF  SECTION  170(H)(4)(A)
SHALL  NOT  APPLY,  AND  THE  RESTRICTION  ON  THE  USE OF SUCH INTEREST
DESCRIBED IN SECTION 170(H)(2)(C) SHALL INCLUDE A  PROHIBITION  ON  MORE
THAN A DE MINIMIS USE FOR A COMMERCIAL RECREATIONAL ACTIVITY.
  (C) INDIVIDUAL DESCRIBED.--AN INDIVIDUAL IS DESCRIBED IN THIS SUBPARA-
GRAPH IF SUCH INDIVIDUAL IS--
  (I) THE DECEDENT,
  (II) A MEMBER OF THE DECEDENT'S FAMILY,
  (III) THE EXECUTOR OF THE DECEDENT'S ESTATE, OR
  (IV)  THE  TRUSTEE OF A TRUST THE CORPUS OF WHICH INCLUDES THE LAND TO
BE SUBJECT TO THE QUALIFIED CONSERVATION EASEMENT.
  (D) MEMBER OF FAMILY.--THE TERM  "MEMBER  OF  THE  DECEDENT'S  FAMILY"
MEANS  ANY  MEMBER  OF THE FAMILY (AS DEFINED IN SECTION 2032A(E)(2)) OF
THE DECEDENT.
  (9) TREATMENT OF EASEMENTS GRANTED AFTER DEATH.--IN ANY CASE IN  WHICH
THE  QUALIFIED  CONSERVATION  EASEMENT  IS GRANTED AFTER THE DATE OF THE
DECEDENT'S DEATH AND ON OR BEFORE THE DUE  DATE  (INCLUDING  EXTENSIONS)
FOR  FILING  THE  RETURN  OF  TAX IMPOSED BY SECTION 2001, THE DEDUCTION
UNDER SECTION 2055(F) WITH RESPECT TO SUCH EASEMENT SHALL BE ALLOWED  TO
THE  ESTATE BUT ONLY IF NO CHARITABLE DEDUCTION IS ALLOWED UNDER CHAPTER
1 TO ANY PERSON WITH RESPECT TO THE GRANT OF SUCH EASEMENT.
  (10) APPLICATION OF THIS SECTION TO INTERESTS IN PARTNERSHIPS,  CORPO-
RATIONS, AND TRUSTS.--THIS SECTION SHALL APPLY TO AN INTEREST IN A PART-
NERSHIP,  CORPORATION,  OR TRUST IF AT LEAST 30 PERCENT OF THE ENTITY IS
OWNED (DIRECTLY OR INDIRECTLY) BY THE DECEDENT, AS DETERMINED UNDER  THE
RULES DESCRIBED IN SECTION 2057(E)(3).
  (D) CROSS REFERENCE.--
  FOR  EXECUTOR'S RIGHT TO BE FURNISHED ON REQUEST A STATEMENT REGARDING
ANY VALUATION MADE BY THE SECRETARY WITHIN THE GROSS ESTATE, SEE SECTION
7517.
  S 2032. ALTERNATE VALUATION.
  (A) GENERAL.--THE VALUE OF THE GROSS ESTATE MAY BE DETERMINED, IF  THE
EXECUTOR  SO  ELECTS,  BY VALUING ALL THE PROPERTY INCLUDED IN THE GROSS
ESTATE AS FOLLOWS:
  (1) IN THE CASE OF PROPERTY DISTRIBUTED, SOLD, EXCHANGED, OR OTHERWISE
DISPOSED OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S  DEATH  SUCH  PROPERTY
SHALL BE VALUED AS OF THE DATE OF DISTRIBUTION, SALE, EXCHANGE, OR OTHER
DISPOSITION.
  (2)  IN  THE  CASE  OF  PROPERTY  NOT DISTRIBUTED, SOLD, EXCHANGED, OR
OTHERWISE DISPOSED OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S  DEATH  SUCH
PROPERTY  SHALL  BE  VALUED AS OF THE DATE 6 MONTHS AFTER THE DECEDENT'S
DEATH.
  (3) ANY INTEREST OR ESTATE WHICH IS AFFECTED BY  MERE  LAPSE  OF  TIME
SHALL  BE  INCLUDED AT ITS VALUE AS OF THE TIME OF DEATH (INSTEAD OF THE

S. 6359                            254                           A. 8559

LATER DATE) WITH ADJUSTMENT FOR ANY DIFFERENCE IN ITS VALUE  AS  OF  THE
LATER DATE NOT DUE TO MERE LAPSE OF TIME.
  (B)  SPECIAL RULES.--NO DEDUCTION UNDER THIS CHAPTER OF ANY ITEM SHALL
BE ALLOWED IF ALLOWANCE FOR SUCH ITEMS IS IN EFFECT GIVEN BY THE  ALTER-
NATE   VALUATION  PROVIDED  BY  THIS  SECTION.  WHEREVER  IN  ANY  OTHER
SUBSECTION OR SECTION OF THIS CHAPTER REFERENCE IS MADE TO THE VALUE  OF
PROPERTY  AT  THE  TIME OF THE DECEDENT'S DEATH, SUCH REFERENCE SHALL BE
DEEMED TO REFER TO THE VALUE OF SUCH PROPERTY USED  IN  DETERMINING  THE
VALUE  OF  THE GROSS ESTATE. IN CASE OF AN ELECTION MADE BY THE EXECUTOR
UNDER THIS SECTION, THEN--
  (1) FOR PURPOSES OF THE CHARITABLE DEDUCTION  UNDER  SECTION  2055  OR
2106(A)(2), ANY BEQUEST, LEGACY, DEVISE, OR TRANSFER ENUMERATED THEREIN,
AND
  (2)  FOR  THE PURPOSE OF THE MARITAL DEDUCTION UNDER SECTION 2056, ANY
INTEREST IN PROPERTY PASSING TO THE SURVIVING SPOUSE,
  SHALL BE VALUED AS OF THE DATE OF THE DECEDENT'S DEATH WITH ADJUSTMENT
FOR ANY DIFFERENCE IN VALUE (NOT DUE TO MERE LAPSE OF TIME OR THE OCCUR-
RENCE OR NONOCCURRENCE OF A CONTINGENCY) OF THE PROPERTY AS OF THE  DATE
6  MONTHS AFTER THE DECEDENT'S DEATH (SUBSTITUTING, IN THE CASE OF PROP-
ERTY DISTRIBUTED BY THE EXECUTOR OR  TRUSTEE,  OR  SOLD,  EXCHANGED,  OR
OTHERWISE DISPOSED OF, DURING SUCH 6-MONTH PERIOD, THE DATE THEREOF).
  (C)  ELECTION  MUST DECREASE GROSS ESTATE AND ESTATE TAX.--NO ELECTION
MAY BE MADE UNDER THIS SECTION WITH RESPECT TO  AN  ESTATE  UNLESS  SUCH
ELECTION WILL DECREASE--
  (1) THE VALUE OF THE GROSS ESTATE, AND
  (2)  THE SUM OF THE TAX IMPOSED BY THIS CHAPTER AND THE TAX IMPOSED BY
CHAPTER 13 WITH RESPECT TO PROPERTY INCLUDIBLE IN THE  DECEDENT'S  GROSS
ESTATE (REDUCED BY CREDITS ALLOWABLE AGAINST SUCH TAXES).
  (D) ELECTION.--
  (1)  IN  GENERAL.--THE  ELECTION PROVIDED FOR IN THIS SECTION SHALL BE
MADE BY THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY  THIS  CHAPTER.
SUCH ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (2)  EXCEPTION.--NO  ELECTION  MAY  BE MADE UNDER THIS SECTION IF SUCH
RETURN IS FILED MORE THAN 1  YEAR  AFTER  THE  TIME  PRESCRIBED  BY  LAW
(INCLUDING EXTENSIONS) FOR FILING SUCH RETURN.
  S 2032A. VALUATION OF CERTAIN FARM, ETC., REAL PROPERTY.
  (A) VALUE BASED ON USE UNDER WHICH PROPERTY QUALIFIES.--
  (1) GENERAL RULE.--IF--
  (A)  THE DECEDENT WAS (AT THE TIME OF HIS DEATH) A CITIZEN OR RESIDENT
OF THE UNITED STATES, AND
  (B) THE EXECUTOR ELECTS THE APPLICATION OF THIS SECTION AND FILES  THE
AGREEMENT REFERRED TO IN SUBSECTION (D)(2),
  THEN,  FOR PURPOSES OF THIS CHAPTER, THE VALUE OF QUALIFIED REAL PROP-
ERTY SHALL BE ITS VALUE FOR THE USE  UNDER  WHICH  IT  QUALIFIES,  UNDER
SUBSECTION (B), AS QUALIFIED REAL PROPERTY.
  (2)  LIMITATION  ON  AGGREGATE  REDUCTION  IN  FAIR MARKET VALUE.--THE
AGGREGATE DECREASE IN THE VALUE OF QUALIFIED REAL  PROPERTY  TAKEN  INTO
ACCOUNT  FOR PURPOSES OF THIS CHAPTER WHICH RESULTS FROM THE APPLICATION
OF PARAGRAPH (1) WITH RESPECT TO ANY DECEDENT SHALL NOT EXCEED $750,000.
  (3) INFLATION ADJUSTMENT.--IN THE CASE OF ESTATES OF  DECEDENTS  DYING
IN  A  CALENDAR  YEAR AFTER 1998, THE $750,000 AMOUNT CONTAINED IN PARA-
GRAPH (2) SHALL BE INCREASED BY AN AMOUNT EQUAL TO--
  (A) $750,000, MULTIPLIED BY
  (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
SUCH CALENDAR YEAR BY SUBSTITUTING "CALENDAR YEAR  1997"  FOR  "CALENDAR
YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.

S. 6359                            255                           A. 8559

  IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
PLE OF $10,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST MULTIPLE
OF $10,000.
  (B) QUALIFIED REAL PROPERTY.--
  (1)  IN  GENERAL.--FOR  PURPOSES  OF THIS SECTION, THE TERM "QUALIFIED
REAL PROPERTY" MEANS REAL PROPERTY LOCATED IN THE  UNITED  STATES  WHICH
WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR OF THE
DECEDENT  AND WHICH, ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED
FOR A QUALIFIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S  FAMI-
LY, BUT ONLY IF--
  (A)  50  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
CONSISTS OF THE ADJUSTED VALUE OF REAL OR PERSONAL PROPERTY WHICH--
  (I) ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED FOR  A  QUALI-
FIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S FAMILY, AND
  (II) WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR
OF THE DECEDENT.
  (B)  25  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
CONSISTS OF THE ADJUSTED VALUE OF REAL PROPERTY WHICH MEETS THE REQUIRE-
MENTS OF SUBPARAGRAPHS (A)(II) AND (C),
  (C) DURING THE 8-YEAR PERIOD ENDING ON  THE  DATE  OF  THE  DECEDENT'S
DEATH THERE HAVE BEEN PERIODS AGGREGATING 5 YEARS OR MORE DURING WHICH--
  (I)  SUCH  REAL  PROPERTY WAS OWNED BY THE DECEDENT OR A MEMBER OF THE
DECEDENT'S FAMILY AND USED FOR A QUALIFIED USE  BY  THE  DECEDENT  OR  A
MEMBER OF THE DECEDENT'S FAMILY, AND
  (II)  THERE  WAS MATERIAL PARTICIPATION BY THE DECEDENT OR A MEMBER OF
THE DECEDENT'S FAMILY IN THE OPERATION OF THE FARM  OR  OTHER  BUSINESS,
AND
  (D)  SUCH  REAL PROPERTY IS DESIGNATED IN THE AGREEMENT REFERRED TO IN
SUBSECTION (D)(2).
  (2) QUALIFIED USE.--FOR PURPOSES OF THIS SECTION, THE TERM  "QUALIFIED
USE" MEANS THE DEVOTION OF THE PROPERTY TO ANY OF THE FOLLOWING:
  (A) USE AS A FARM FOR FARMING PURPOSES, OR
  (B)  USE  IN  A  TRADE OR BUSINESS OTHER THAN THE TRADE OR BUSINESS OF
FARMING.
  (3) ADJUSTED VALUE.--FOR PURPOSES OF PARAGRAPH (1), THE TERM "ADJUSTED
VALUE" MEANS--
  (A) IN THE CASE OF THE GROSS ESTATE, THE VALUE OF THE GROSS ESTATE FOR
PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD  TO  THIS  SECTION),
REDUCED  BY  ANY AMOUNTS ALLOWABLE AS A DEDUCTION UNDER PARAGRAPH (4) OF
SECTION 2053(A), OR
  (B) IN THE CASE OF ANY REAL OR PERSONAL PROPERTY, THE  VALUE  OF  SUCH
PROPERTY FOR PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD TO THIS
SECTION),  REDUCED BY ANY AMOUNTS ALLOWABLE AS A DEDUCTION IN RESPECT OF
SUCH PROPERTY UNDER PARAGRAPH (4) OF SECTION 2053(A).
  (4) DECEDENTS WHO ARE RETIRED OR DISABLED.--
  (A) IN GENERAL.--IF, ON THE DATE OF THE DECEDENT'S DEATH, THE REQUIRE-
MENTS OF PARAGRAPH (1)(C)(II) WITH RESPECT TO THE DECEDENT FOR ANY PROP-
ERTY ARE NOT MET, AND THE DECEDENT--
  (I) WAS RECEIVING OLD-AGE BENEFITS UNDER TITLE II OF THE SOCIAL  SECU-
RITY ACT FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE, OR
  (II) WAS DISABLED FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE,
  THEN  PARAGRAPH (1)(C)(II) SHALL BE APPLIED WITH RESPECT TO SUCH PROP-
ERTY BY SUBSTITUTING "THE DATE ON WHICH THE LONGER  OF  SUCH  CONTINUOUS
PERIODS  BEGAN"  FOR  "THE  DATE  OF  THE DECEDENT'S DEATH" IN PARAGRAPH
(1)(C).

S. 6359                            256                           A. 8559

  (B) DISABLED DEFINED.--FOR PURPOSES OF SUBPARAGRAPH (A), AN INDIVIDUAL
SHALL BE DISABLED IF SUCH INDIVIDUAL HAS A MENTAL OR PHYSICAL IMPAIRMENT
WHICH RENDERS HIM UNABLE TO MATERIALLY PARTICIPATE IN THE  OPERATION  OF
THE FARM OR OTHER BUSINESS.
  (C)   COORDINATION   WITH   RECAPTURE.--FOR   PURPOSES  OF  SUBSECTION
(C)(6)(B)(I), IF THE REQUIREMENTS OF PARAGRAPH (1)(C)(II) ARE  MET  WITH
RESPECT TO ANY DECEDENT BY REASON OF SUBPARAGRAPH (A), THE PERIOD ENDING
ON  THE  DATE  ON  WHICH  THE CONTINUOUS PERIOD TAKEN INTO ACCOUNT UNDER
SUBPARAGRAPH (A) BEGAN SHALL BE TREATED AS THE PERIOD IMMEDIATELY BEFORE
THE DECEDENT'S DEATH.
  (5) SPECIAL RULES FOR SURVIVING SPOUSES.--
  (A) IN GENERAL.--IF PROPERTY IS QUALIFIED REAL PROPERTY  WITH  RESPECT
TO  A  DECEDENT (HEREINAFTER IN THIS PARAGRAPH REFERRED TO AS THE "FIRST
DECEDENT") AND SUCH PROPERTY WAS ACQUIRED FROM OR PASSED FROM THE  FIRST
DECEDENT  TO THE SURVIVING SPOUSE OF THE FIRST DECEDENT, FOR PURPOSES OF
APPLYING THIS SUBSECTION AND SUBSECTION (C) IN THE CASE OF THE ESTATE OF
SUCH SURVIVING SPOUSE, ACTIVE MANAGEMENT OF THE FARM OR  OTHER  BUSINESS
BY  THE  SURVIVING  SPOUSE SHALL BE TREATED AS MATERIAL PARTICIPATION BY
SUCH SURVIVING SPOUSE IN THE OPERATION OF SUCH FARM OR BUSINESS.
  (B) SPECIAL RULE.--FOR THE PURPOSES OF SUBPARAGRAPH (A), THE  DETERMI-
NATION  OF  WHETHER  PROPERTY IS QUALIFIED REAL PROPERTY WITH RESPECT TO
THE FIRST DECEDENT SHALL BE MADE WITHOUT REGARD TO SUBPARAGRAPH  (D)  OF
PARAGRAPH  (1)  AND  WITHOUT  REGARD  TO  WHETHER AN ELECTION UNDER THIS
SECTION WAS MADE.
  (C) COORDINATION WITH PARAGRAPH (4).--IN ANY CASE IN WHICH  TO  DO  SO
WILL  ENABLE  THE  REQUIREMENTS  OF  PARAGRAPH (1)(C)(II) TO BE MET WITH
RESPECT TO THE SURVIVING SPOUSE,  THIS  SUBSECTION  AND  SUBSECTION  (C)
SHALL  BE  APPLIED  BY  TAKING INTO ACCOUNT ANY APPLICATION OF PARAGRAPH
(4).
  (C) TAX TREATMENT OF DISPOSITIONS AND FAILURES TO  USE  FOR  QUALIFIED
USE.--
  (1)  IMPOSITION  OF  ADDITIONAL ESTATE TAX.--IF, WITHIN 10 YEARS AFTER
THE DECEDENT'S DEATH AND BEFORE THE DEATH OF THE QUALIFIED HEIR--
  (A) THE QUALIFIED HEIR DISPOSES OF  ANY  INTEREST  IN  QUALIFIED  REAL
PROPERTY (OTHER THAN BY A DISPOSITION TO A MEMBER OF HIS FAMILY), OR
  (B)  THE QUALIFIED HEIR CEASES TO USE FOR THE QUALIFIED USE THE QUALI-
FIED REAL PROPERTY WHICH WAS ACQUIRED (OR PASSED) FROM THE DECEDENT,
  THEN, THERE IS HEREBY IMPOSED AN ADDITIONAL ESTATE TAX.
  (2) AMOUNT OF ADDITIONAL TAX.--
  (A) IN GENERAL.--THE AMOUNT OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH
(1) WITH RESPECT TO ANY INTEREST SHALL BE THE AMOUNT EQUAL TO THE LESSER
OF--
  (I) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO SUCH INTEREST, OR
  (II) THE EXCESS OF THE AMOUNT REALIZED WITH RESPECT  TO  THE  INTEREST
(OR, IN ANY CASE OTHER THAN A SALE OR EXCHANGE AT ARM'S LENGTH, THE FAIR
MARKET  VALUE OF THE INTEREST) OVER THE VALUE OF THE INTEREST DETERMINED
UNDER SUBSECTION (A).
  (B) ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO INTEREST.--FOR PURPOSES OF
SUBPARAGRAPH (A), THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO AN  INTER-
EST IS THE AMOUNT WHICH BEARS THE SAME RATIO TO THE ADJUSTED TAX DIFFER-
ENCE WITH RESPECT TO THE ESTATE (DETERMINED UNDER SUBPARAGRAPH (C)) AS--
  (I)  THE  EXCESS  OF  THE  VALUE OF SUCH INTEREST FOR PURPOSES OF THIS
CHAPTER (DETERMINED WITHOUT REGARD TO SUBSECTION (A)) OVER THE VALUE  OF
SUCH INTEREST DETERMINED UNDER SUBSECTION (A), BEARS TO
  (II) A SIMILAR EXCESS DETERMINED FOR ALL QUALIFIED REAL PROPERTY.

S. 6359                            257                           A. 8559

  (C)  ADJUSTED TAX DIFFERENCE WITH RESPECT TO THE ESTATE.--FOR PURPOSES
OF SUBPARAGRAPH (B), THE TERM "ADJUSTED TAX DIFFERENCE WITH  RESPECT  TO
THE  ESTATE"  MEANS  THE  EXCESS  OF WHAT WOULD HAVE BEEN THE ESTATE TAX
LIABILITY BUT FOR SUBSECTION (A) OVER  THE  ESTATE  TAX  LIABILITY.  FOR
PURPOSES OF THIS SUBPARAGRAPH, THE TERM "ESTATE TAX LIABILITY" MEANS THE
TAX  IMPOSED  BY  SECTION  2001 REDUCED BY THE CREDITS ALLOWABLE AGAINST
SUCH TAX.
  (D) PARTIAL DISPOSITIONS.--FOR PURPOSES OF THIS PARAGRAPH,  WHERE  THE
QUALIFIED  HEIR  DISPOSES  OF  A PORTION OF THE INTEREST ACQUIRED BY (OR
PASSING TO) SUCH HEIR (OR A PREDECESSOR QUALIFIED HEIR) OR  THERE  IS  A
CESSATION OF USE OF SUCH A PORTION--
  (I) THE VALUE DETERMINED UNDER SUBSECTION (A) TAKEN INTO ACCOUNT UNDER
SUBPARAGRAPH  (A)(II) WITH RESPECT TO SUCH PORTION SHALL BE ITS PRO RATA
SHARE OF SUCH VALUE OF SUCH INTEREST, AND
  (II) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO  THE  INTEREST  TAKEN
INTO ACCOUNT WITH RESPECT TO THE TRANSACTION INVOLVING THE SECOND OR ANY
SUCCEEDING  PORTION SHALL BE REDUCED BY THE AMOUNT OF THE TAX IMPOSED BY
THIS  SUBSECTION  WITH  RESPECT  TO  ALL  PRIOR  TRANSACTIONS  INVOLVING
PORTIONS OF SUCH INTEREST.
  (E)  SPECIAL RULE FOR DISPOSITION OF TIMBER.--IN THE CASE OF QUALIFIED
WOODLAND TO WHICH AN ELECTION UNDER SUBSECTION  (E)(13)(A)  APPLIES,  IF
THE  QUALIFIED  HEIR DISPOSES OF (OR SEVERS) ANY STANDING TIMBER ON SUCH
QUALIFIED WOODLAND--
  (I) SUCH DISPOSITION (OR SEVERANCE) SHALL BE TREATED AS A  DISPOSITION
OF A PORTION OF THE INTEREST OF THE QUALIFIED HEIR IN SUCH PROPERTY, AND
  (II)  THE  AMOUNT  OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH (1) WITH
RESPECT TO SUCH DISPOSITION SHALL BE AN AMOUNT EQUAL TO THE LESSER OF--
  (I) THE AMOUNT REALIZED ON SUCH DISPOSITION (OR,  IN  ANY  CASE  OTHER
THAN  A  SALE  OR EXCHANGE AT ARM'S LENGTH, THE FAIR MARKET VALUE OF THE
PORTION OF THE INTEREST DISPOSED OR SEVERED), OR
  (II) THE AMOUNT OF ADDITIONAL  TAX  DETERMINED  UNDER  THIS  PARAGRAPH
(WITHOUT  REGARD  TO  THIS  SUBPARAGRAPH)  IF THE ENTIRE INTEREST OF THE
QUALIFIED HEIR IN THE QUALIFIED WOODLAND HAD BEEN DISPOSED OF, LESS  THE
SUM  OF  THE  AMOUNT  OF  THE ADDITIONAL TAX IMPOSED WITH RESPECT TO ALL
PRIOR TRANSACTIONS INVOLVING SUCH WOODLAND TO  WHICH  THIS  SUBPARAGRAPH
APPLIED.
  FOR  PURPOSES OF THE PRECEDING SENTENCE, THE DISPOSITION OF A RIGHT TO
SEVER SHALL BE TREATED AS THE DISPOSITION OF THE  STANDING  TIMBER.  THE
AMOUNT  OF  ADDITIONAL  TAX  IMPOSED  UNDER PARAGRAPH (1) IN ANY CASE IN
WHICH A QUALIFIED HEIR DISPOSES OF HIS ENTIRE INTEREST IN THE  QUALIFIED
WOODLAND  SHALL  BE REDUCED BY ANY AMOUNT DETERMINED UNDER THIS SUBPARA-
GRAPH WITH RESPECT TO SUCH WOODLAND.
  (3) ONLY 1 ADDITIONAL TAX IMPOSED WITH RESPECT TO ANY  1  PORTION.--IN
THE CASE OF AN INTEREST ACQUIRED FROM (OR PASSING FROM) ANY DECEDENT, IF
SUBPARAGRAPH  (A)  OR  (B) OF PARAGRAPH (1) APPLIES TO ANY PORTION OF AN
INTEREST, SUBPARAGRAPH (B) OR (A), AS THE CASE MAY BE, OF PARAGRAPH  (1)
SHALL NOT APPLY WITH RESPECT TO THE SAME PORTION OF SUCH INTEREST.
  (4)  DUE  DATE.--THE  ADDITIONAL  TAX IMPOSED BY THIS SUBSECTION SHALL
BECOME DUE AND PAYABLE ON THE DAY WHICH IS 6 MONTHS AFTER  THE  DATE  OF
THE DISPOSITION OR CESSATION REFERRED TO IN PARAGRAPH (1).
  (5)  LIABILITY  FOR TAX; FURNISHING OF BOND.--THE QUALIFIED HEIR SHALL
BE PERSONALLY LIABLE FOR THE ADDITIONAL TAX IMPOSED BY  THIS  SUBSECTION
WITH  RESPECT  TO  HIS INTEREST UNLESS THE HEIR HAS FURNISHED BOND WHICH
MEETS THE REQUIREMENTS OF SUBSECTION (E)(11).
  (6) CESSATION OF QUALIFIED USE.--FOR  PURPOSES  OF  PARAGRAPH  (1)(B),
REAL PROPERTY SHALL CEASE TO BE USED FOR THE QUALIFIED USE IF--

S. 6359                            258                           A. 8559

  (A) SUCH PROPERTY CEASES TO BE USED FOR THE QUALIFIED USE SET FORTH IN
SUBPARAGRAPH  (A)  OR  (B) OF SUBSECTION (B)(2) UNDER WHICH THE PROPERTY
QUALIFIED UNDER SUBSECTION (B), OR
  (B)  DURING  ANY  PERIOD  OF  8  YEARS  ENDING  AFTER  THE DATE OF THE
DECEDENT'S DEATH AND BEFORE THE DATE OF THE DEATH OF THE QUALIFIED HEIR,
THERE HAD BEEN PERIODS AGGREGATING MORE THAN 3 YEARS DURING WHICH--
  (I) IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD  BY  THE
DECEDENT,  THERE  WAS  NO  MATERIAL PARTICIPATION BY THE DECEDENT OR ANY
MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER BUSINESS, AND
  (II) IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY  ANY
QUALIFIED  HEIR,  THERE  WAS NO MATERIAL PARTICIPATION BY SUCH QUALIFIED
HEIR OR ANY MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM  OR  OTHER
BUSINESS.
  (7) SPECIAL RULES.--
  (A)  NO  TAX  IF  USE BEGINS WITHIN 2 YEARS.--IF THE DATE ON WHICH THE
QUALIFIED HEIR BEGINS TO USE THE QUALIFIED REAL PROPERTY (HEREINAFTER IN
THIS SUBPARAGRAPH REFERRED TO AS THE COMMENCEMENT DATE)  IS  BEFORE  THE
DATE 2 YEARS AFTER THE DECEDENT'S DEATH--
  (I) NO TAX SHALL BE IMPOSED UNDER PARAGRAPH (1) BY REASON OF THE FAIL-
URE  BY  THE QUALIFIED HEIR TO SO USE SUCH PROPERTY BEFORE THE COMMENCE-
MENT DATE, AND
  (II) THE 10-YEAR PERIOD UNDER PARAGRAPH (1) SHALL BE EXTENDED  BY  THE
PERIOD AFTER THE DECEDENT'S DEATH AND BEFORE THE COMMENCEMENT DATE.
  (B)  ACTIVE  MANAGEMENT BY ELIGIBLE QUALIFIED HEIR TREATED AS MATERIAL
PARTICIPATION.--FOR PURPOSES OF PARAGRAPH (6)(B)(II), THE ACTIVE MANAGE-
MENT OF A FARM OR OTHER BUSINESS BY--
  (I) AN ELIGIBLE QUALIFIED HEIR, OR
  (II) A FIDUCIARY OF AN ELIGIBLE QUALIFIED  HEIR  DESCRIBED  IN  CLAUSE
(II) OR (III) OF SUBPARAGRAPH (C),
  SHALL  BE TREATED AS MATERIAL PARTICIPATION BY SUCH ELIGIBLE QUALIFIED
HEIR IN THE OPERATION OF SUCH FARM OR BUSINESS. IN THE CASE OF AN ELIGI-
BLE QUALIFIED HEIR DESCRIBED IN CLAUSE (II), (III), OR (IV) OF  SUBPARA-
GRAPH (C), THE PRECEDING SENTENCE SHALL APPLY ONLY DURING PERIODS DURING
WHICH SUCH HEIR MEETS THE REQUIREMENTS OF SUCH CLAUSE.
  (C) ELIGIBLE QUALIFIED HEIR.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
"ELIGIBLE QUALIFIED HEIR" MEANS A QUALIFIED HEIR WHO--
  (I) IS THE SURVIVING SPOUSE OF THE DECEDENT,
  (II) HAS NOT ATTAINED THE AGE OF 21,
  (III) IS DISABLED (WITHIN THE MEANING OF SUBSECTION (B)(4)(B)), OR
  (IV) IS A STUDENT.
  (D) STUDENT.--FOR PURPOSES OF SUBPARAGRAPH (C), AN INDIVIDUAL SHALL BE
TREATED AS A STUDENT WITH RESPECT TO PERIODS DURING ANY CALENDAR YEAR IF
(AND  ONLY  IF)  SUCH  INDIVIDUAL  IS  A  STUDENT (WITHIN THE MEANING OF
SECTION 152(F)(2)) FOR SUCH CALENDAR YEAR.
  (E) CERTAIN RENTS TREATED AS  QUALIFIED  USE.--FOR  PURPOSES  OF  THIS
SUBSECTION,  A  SURVIVING  SPOUSE  OR  LINEAL DESCENDANT OF THE DECEDENT
SHALL NOT BE TREATED AS FAILING TO USE  QUALIFIED  REAL  PROPERTY  IN  A
QUALIFIED  USE SOLELY BECAUSE SUCH SPOUSE OR DESCENDANT RENTS SUCH PROP-
ERTY TO A MEMBER OF THE FAMILY OF SUCH SPOUSE OR  DESCENDANT  ON  A  NET
CASH  BASIS.  FOR  PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED
CHILD OF AN INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH  INDIVIDUAL
BY BLOOD.
  (8) QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.--A QUAL-
IFIED  CONSERVATION  CONTRIBUTION (AS DEFINED IN SECTION 170(H)) BY GIFT
OR  OTHERWISE  SHALL  NOT  BE  DEEMED  A  DISPOSITION  UNDER  SUBSECTION
(C)(1)(A).

S. 6359                            259                           A. 8559

  (D) ELECTION; AGREEMENT.--
  (1)  ELECTION.--THE  ELECTION  UNDER THIS SECTION SHALL BE MADE ON THE
RETURN OF THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL  BE  MADE
IN  SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (2) AGREEMENT.--THE AGREEMENT REFERRED TO IN THIS PARAGRAPH IS A WRIT-
TEN AGREEMENT SIGNED BY EACH PERSON IN BEING WHO HAS AN INTEREST (WHETH-
ER OR NOT IN POSSESSION) IN ANY PROPERTY DESIGNATED  IN  SUCH  AGREEMENT
CONSENTING  TO  THE  APPLICATION  OF SUBSECTION (C) WITH RESPECT TO SUCH
PROPERTY.
  (3) MODIFICATION OF  ELECTION  AND  AGREEMENT  TO  BE  PERMITTED.--THE
SECRETARY  SHALL  PRESCRIBE PROCEDURES WHICH PROVIDE THAT IN ANY CASE IN
WHICH THE EXECUTOR MAKES AN ELECTION UNDER PARAGRAPH  (1)  (AND  SUBMITS
THE  AGREEMENT  REFERRED TO IN PARAGRAPH (2)) WITHIN THE TIME PRESCRIBED
THEREFOR, BUT--
  (A) THE NOTICE OF ELECTION, AS FILED, DOES NOT  CONTAIN  ALL  REQUIRED
INFORMATION, OR
  (B)  SIGNATURES OF 1 OR MORE PERSONS REQUIRED TO ENTER INTO THE AGREE-
MENT DESCRIBED IN PARAGRAPH (2) ARE NOT INCLUDED  ON  THE  AGREEMENT  AS
FILED, OR THE AGREEMENT DOES NOT CONTAIN ALL REQUIRED INFORMATION,
  THE  EXECUTOR  WILL HAVE A REASONABLE PERIOD OF TIME (NOT EXCEEDING 90
DAYS) AFTER NOTIFICATION OF SUCH FAILURES TO PROVIDE SUCH INFORMATION OR
SIGNATURES.
  (E) DEFINITIONS; SPECIAL RULES.--FOR PURPOSES OF THIS SECTION--
  (1) QUALIFIED HEIR.--THE TERM "QUALIFIED HEIR" MEANS, WITH RESPECT  TO
ANY  PROPERTY, A MEMBER OF THE DECEDENT'S FAMILY WHO ACQUIRED SUCH PROP-
ERTY (OR TO WHOM SUCH PROPERTY PASSED) FROM THE DECEDENT. IF A QUALIFIED
HEIR DISPOSES OF ANY INTEREST IN QUALIFIED REAL PROPERTY TO  ANY  MEMBER
OF  HIS FAMILY, SUCH MEMBER SHALL THEREAFTER BE TREATED AS THE QUALIFIED
HEIR WITH RESPECT TO SUCH INTEREST.
  (2) MEMBER OF FAMILY.--THE TERM "MEMBER OF  THE  FAMILY"  MEANS,  WITH
RESPECT TO ANY INDIVIDUAL, ONLY--
  (A) AN ANCESTOR OF SUCH INDIVIDUAL,
  (B) THE SPOUSE OF SUCH INDIVIDUAL,
  (C)  A  LINEAL  DESCENDANT  OF  SUCH  INDIVIDUAL, OF SUCH INDIVIDUAL'S
SPOUSE, OR OF A PARENT OF SUCH INDIVIDUAL, OR
  (D) THE SPOUSE OF ANY LINEAL DESCENDANT DESCRIBED IN SUBPARAGRAPH (C).
  FOR PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED CHILD OF  AN
INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH INDIVIDUAL BY BLOOD.
  (3)  CERTAIN  REAL  PROPERTY  INCLUDED.--IN  THE CASE OF REAL PROPERTY
WHICH MEETS THE REQUIREMENTS OF SUBPARAGRAPH (C) OF  SUBSECTION  (B)(1),
RESIDENTIAL  BUILDINGS  AND  RELATED  IMPROVEMENTS ON SUCH REAL PROPERTY
OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF SUCH REAL PROPERTY
OR BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR THE PURPOSE OF  OPER-
ATING OR MAINTAINING SUCH REAL PROPERTY, AND ROADS, BUILDINGS, AND OTHER
STRUCTURES  AND  IMPROVEMENTS  FUNCTIONALLY RELATED TO THE QUALIFIED USE
SHALL BE TREATED AS REAL PROPERTY DEVOTED TO THE QUALIFIED USE.
  (4) FARM.--THE TERM "FARM"  INCLUDES  STOCK,  DAIRY,  POULTRY,  FRUIT,
FURBEARING  ANIMAL,  AND  TRUCK  FARMS, PLANTATIONS, RANCHES, NURSERIES,
RANGES, GREENHOUSES OR OTHER SIMILAR STRUCTURES USED PRIMARILY  FOR  THE
RAISING  OF  AGRICULTURAL OR HORTICULTURAL COMMODITIES, AND ORCHARDS AND
WOODLANDS.
  (5) FARMING PURPOSES.--THE TERM "FARMING PURPOSES" MEANS-
  (A) CULTIVATING THE SOIL OR RAISING OR HARVESTING ANY AGRICULTURAL  OR
HORTICULTURAL  COMMODITY  (INCLUDING  THE  RAISING,  SHEARING,  FEEDING,
CARING FOR, TRAINING, AND MANAGEMENT OF ANIMALS) ON A FARM;

S. 6359                            260                           A. 8559

  (B) HANDLING, DRYING, PACKING, GRADING, OR STORING ON A FARM ANY AGRI-
CULTURAL OR HORTICULTURAL COMMODITY IN  ITS  UNMANUFACTURED  STATE,  BUT
ONLY  IF  THE  OWNER, TENANT, OR OPERATOR OF THE FARM REGULARLY PRODUCES
MORE THAN ONE-HALF OF THE COMMODITY SO TREATED; AND
  (C)(I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
  (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
  (6)  MATERIAL  PARTICIPATION.--MATERIAL  PARTICIPATION SHALL BE DETER-
MINED IN A MANNER SIMILAR TO THE MANNER USED FOR PURPOSES  OF  PARAGRAPH
(1) OF SECTION 1402(A) (RELATING TO NET EARNINGS FROM SELF-EMPLOYMENT).
  (7) METHOD OF VALUING FARMS.--
  (A)  IN GENERAL.--EXCEPT AS PROVIDED IN SUBPARAGRAPH (B), THE VALUE OF
A FARM FOR FARMING PURPOSES SHALL BE DETERMINED BY DIVIDING--
  (I) THE EXCESS OF THE AVERAGE ANNUAL GROSS CASH RENTAL FOR  COMPARABLE
LAND  USED FOR FARMING PURPOSES AND LOCATED IN THE LOCALITY OF SUCH FARM
OVER THE AVERAGE ANNUAL STATE AND  LOCAL  REAL  ESTATE  TAXES  FOR  SUCH
COMPARABLE LAND, BY
  (II)  THE  AVERAGE  ANNUAL EFFECTIVE INTEREST RATE FOR ALL NEW FEDERAL
LAND BANK LOANS.
  FOR PURPOSES OF THE PRECEDING SENTENCE, EACH AVERAGE  ANNUAL  COMPUTA-
TION  SHALL  BE  MADE  ON  THE BASIS OF THE 5 MOST RECENT CALENDAR YEARS
ENDING BEFORE THE DATE OF THE DECEDENT'S DEATH.
  (B) VALUE BASED ON NET SHARE RENTAL IN CERTAIN CASES.--
  (I) IN GENERAL.--IF THERE IS NO COMPARABLE LAND FROM WHICH THE AVERAGE
ANNUAL GROSS CASH RENTAL MAY BE DETERMINED BUT THERE IS COMPARABLE  LAND
FROM  WHICH THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED, SUBPARAGRAPH
(A)(I) SHALL BE  APPLIED  BY  SUBSTITUTING  "AVERAGE  ANNUAL  NET  SHARE
RENTAL" FOR "AVERAGE ANNUAL GROSS CASH RENTAL".
  (II)  NET SHARE RENTAL.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM "NET
SHARE RENTAL" MEANS THE EXCESS OF--
  (I) THE VALUE OF THE PRODUCE RECEIVED BY THE LESSOR  OF  THE  LAND  ON
WHICH SUCH PRODUCE IS GROWN, OVER
  (II)  THE CASH OPERATING EXPENSES OF GROWING SUCH PRODUCE WHICH, UNDER
THE LEASE, ARE PAID BY THE LESSOR.
  (C) EXCEPTION.--THE FORMULA PROVIDED BY SUBPARAGRAPH (A) SHALL NOT  BE
USED--
  (I)  WHERE  IT  IS  ESTABLISHED  THAT THERE IS NO COMPARABLE LAND FROM
WHICH THE AVERAGE ANNUAL GROSS CASH RENTAL MAY BE DETERMINED, OR
  (II) WHERE THE EXECUTOR ELECTS TO HAVE THE VALUE OF THE FARM FOR FARM-
ING PURPOSES DETERMINED AND THAT THERE IS NO COMPARABLE LAND FROM  WHICH
THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED UNDER PARAGRAPH (8).
  (8)  METHOD  OF  VALUING CLOSELY HELD BUSINESS INTERESTS, ETC.--IN ANY
CASE TO WHICH PARAGRAPH (7)(A) DOES NOT  APPLY,  THE  FOLLOWING  FACTORS
SHALL APPLY IN DETERMINING THE VALUE OF ANY QUALIFIED REAL PROPERTY:
  (A) THE CAPITALIZATION OF INCOME WHICH THE PROPERTY CAN BE EXPECTED TO
YIELD  FOR  FARMING  OR CLOSELY HELD BUSINESS PURPOSES OVER A REASONABLE
PERIOD OF TIME  UNDER  PRUDENT  MANAGEMENT  USING  TRADITIONAL  CROPPING
PATTERNS  FOR  THE  AREA,  TAKING  INTO  ACCOUNT  SOIL CAPACITY, TERRAIN
CONFIGURATION, AND SIMILAR FACTORS,
  (B) THE CAPITALIZATION OF THE FAIR RENTAL VALUE OF THE LAND FOR  FARM-
LAND OR CLOSELY HELD BUSINESS PURPOSES,
  (C)  ASSESSED  LAND VALUES IN A STATE WHICH PROVIDES A DIFFERENTIAL OR
USE VALUE ASSESSMENT LAW FOR FARMLAND OR CLOSELY HELD BUSINESS,
  (D) COMPARABLE SALES OF OTHER FARM OR CLOSELY HELD  BUSINESS  LAND  IN
THE  SAME  GEOGRAPHICAL  AREA  FAR ENOUGH REMOVED FROM A METROPOLITAN OR
RESORT AREA SO THAT NONAGRICULTURAL USE IS NOT A SIGNIFICANT  FACTOR  IN
THE SALES PRICE, AND

S. 6359                            261                           A. 8559

  (E)  ANY  OTHER  FACTOR  WHICH  FAIRLY VALUES THE FARM OR CLOSELY HELD
BUSINESS VALUE OF THE PROPERTY.
  (9)  PROPERTY ACQUIRED FROM DECEDENT.--PROPERTY SHALL BE CONSIDERED TO
HAVE BEEN ACQUIRED FROM OR TO HAVE PASSED FROM THE DECEDENT IF--
  (A) SUCH PROPERTY IS SO CONSIDERED UNDER SECTION 1014(B) (RELATING  TO
BASIS OF PROPERTY ACQUIRED FROM A DECEDENT),
  (B) SUCH PROPERTY IS ACQUIRED BY ANY PERSON FROM THE ESTATE, OR
  (C)  SUCH  PROPERTY  IS  ACQUIRED  BY  ANY PERSON FROM A TRUST (TO THE
EXTENT SUCH PROPERTY IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT).
  (10) COMMUNITY PROPERTY.--IF THE DECEDENT AND HIS SURVIVING SPOUSE  AT
ANY  TIME HELD QUALIFIED REAL PROPERTY AS COMMUNITY PROPERTY, THE INTER-
EST OF THE SURVIVING SPOUSE IN SUCH PROPERTY SHALL BE TAKEN INTO ACCOUNT
UNDER THIS SECTION TO THE EXTENT NECESSARY TO  PROVIDE  A  RESULT  UNDER
THIS  SECTION WITH RESPECT TO SUCH PROPERTY WHICH IS CONSISTENT WITH THE
RESULT WHICH WOULD HAVE OBTAINED UNDER THIS SECTION IF SUCH PROPERTY HAD
NOT BEEN COMMUNITY PROPERTY.
  (11) BOND IN LIEU OF PERSONAL LIABILITY.--IF THE QUALIFIED HEIR  MAKES
WRITTEN  APPLICATION  TO  THE SECRETARY FOR DETERMINATION OF THE MAXIMUM
AMOUNT OF THE ADDITIONAL TAX WHICH MAY BE IMPOSED BY SUBSECTION (C) WITH
RESPECT TO THE QUALIFIED HEIR'S INTEREST,  THE  SECRETARY  (AS  SOON  AS
POSSIBLE, AND IN ANY EVENT WITHIN 1 YEAR AFTER THE MAKING OF SUCH APPLI-
CATION)  SHALL  NOTIFY  THE  HEIR  OF SUCH MAXIMUM AMOUNT. THE QUALIFIED
HEIR, ON FURNISHING A BOND IN SUCH AMOUNT AND FOR SUCH PERIOD AS MAY  BE
REQUIRED, SHALL BE DISCHARGED FROM PERSONAL LIABILITY FOR ANY ADDITIONAL
TAX  IMPOSED  BY  SUBSECTION  (C)  AND SHALL BE ENTITLED TO A RECEIPT OR
WRITING SHOWING SUCH DISCHARGE.
  (12) ACTIVE MANAGEMENT.--THE TERM "ACTIVE MANAGEMENT" MEANS THE MAKING
OF THE MANAGEMENT DECISIONS OF A BUSINESS (OTHER THAN THE DAILY  OPERAT-
ING DECISIONS).
  (13) SPECIAL RULES FOR WOODLANDS.--
  (A) IN GENERAL.--IN THE CASE OF ANY QUALIFIED WOODLAND WITH RESPECT TO
WHICH THE EXECUTOR ELECTS TO HAVE THIS SUBPARAGRAPH APPLY, TREES GROWING
ON SUCH WOODLAND SHALL NOT BE TREATED AS A CROP.
  (B)  QUALIFIED WOODLAND.--THE TERM "QUALIFIED WOODLAND" MEANS ANY REAL
PROPERTY WHICH--
  (I) IS USED IN TIMBER OPERATIONS, AND
  (II) IS AN IDENTIFIABLE AREA OF LAND SUCH AS AN ACRE OR OTHER AREA FOR
WHICH RECORDS ARE NORMALLY MAINTAINED IN CONDUCTING TIMBER OPERATIONS.
  (C) TIMBER OPERATIONS.--THE TERM "TIMBER OPERATIONS" MEANS--
  (I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
  (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
  (D) ELECTION.--AN ELECTION UNDER SUBPARAGRAPH (A) SHALL BE MADE ON THE
RETURN OF THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL  BE  MADE
IN  SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (14) TREATMENT OF REPLACEMENT PROPERTY ACQUIRED  IN  SECTION  1031  OR
1033 TRANSACTIONS.--
  (A)  IN  GENERAL.--IN  THE CASE OF ANY QUALIFIED REPLACEMENT PROPERTY,
ANY PERIOD DURING WHICH THERE WAS OWNERSHIP, QUALIFIED USE, OR  MATERIAL
PARTICIPATION  WITH  RESPECT TO THE REPLACED PROPERTY BY THE DECEDENT OR
ANY MEMBER OF HIS FAMILY SHALL BE TREATED AS A PERIOD DURING WHICH THERE
WAS SUCH OWNERSHIP, USE, OR MATERIAL PARTICIPATION (AS THE CASE MAY  BE)
WITH RESPECT TO THE QUALIFIED REPLACEMENT PROPERTY.
  (B)  LIMITATION.--SUBPARAGRAPH  (A) SHALL NOT APPLY TO THE EXTENT THAT
THE FAIR MARKET VALUE OF THE QUALIFIED REPLACEMENT PROPERTY (AS  OF  THE

S. 6359                            262                           A. 8559

DATE  OF  ITS ACQUISITION) EXCEEDS THE FAIR MARKET VALUE OF THE REPLACED
PROPERTY (AS OF THE DATE OF ITS DISPOSITION).
  (C) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  QUALIFIED  REPLACEMENT PROPERTY.--THE TERM "QUALIFIED REPLACEMENT
PROPERTY" MEANS ANY REAL PROPERTY WHICH IS--
  (I) ACQUIRED IN AN EXCHANGE WHICH QUALIFIES UNDER SECTION 1031, OR
  (II) THE ACQUISITION OF WHICH RESULTS IN THE  NONRECOGNITION  OF  GAIN
UNDER SECTION 1033.
  SUCH TERM SHALL ONLY INCLUDE PROPERTY WHICH IS USED FOR THE SAME QUAL-
IFIED USE AS THE REPLACED PROPERTY WAS BEING USED BEFORE THE EXCHANGE.
  (II) REPLACED PROPERTY.--THE TERM "REPLACED PROPERTY" MEANS--
  (I)  THE  PROPERTY  TRANSFERRED  IN THE EXCHANGE WHICH QUALIFIES UNDER
SECTION 1031, OR
  (II) THE PROPERTY COMPULSORILY OR INVOLUNTARILY CONVERTED (WITHIN  THE
MEANING OF SECTION 1033).
  (F) STATUTE OF LIMITATIONS.--IF QUALIFIED REAL PROPERTY IS DISPOSED OF
OR CEASES TO BE USED FOR A QUALIFIED USE, THEN--
  (1)  THE  STATUTORY  PERIOD  FOR  THE ASSESSMENT OF ANY ADDITIONAL TAX
UNDER SUBSECTION (C) ATTRIBUTABLE TO SUCH DISPOSITION OR CESSATION SHALL
NOT EXPIRE BEFORE THE EXPIRATION OF 3 YEARS FROM THE DATE THE  SECRETARY
IS  NOTIFIED  (IN  SUCH  MANNER  AS  THE  SECRETARY  MAY  BY REGULATIONS
PRESCRIBE) OF SUCH DISPOSITION OR CESSATION (OR IF LATER IN THE CASE  OF
AN  INVOLUNTARY  CONVERSION  OR  EXCHANGE TO WHICH SUBSECTION (H) OR (I)
APPLIES, 3 YEARS FROM THE DATE THE SECRETARY IS NOTIFIED OF THE REPLACE-
MENT OF THE CONVERTED PROPERTY OR OF AN INTENTION NOT TO REPLACE  OR  OF
THE EXCHANGE OF PROPERTY), AND
  (2)  SUCH ADDITIONAL TAX MAY BE ASSESSED BEFORE THE EXPIRATION OF SUCH
3-YEAR PERIOD NOTWITHSTANDING THE PROVISIONS OF ANY OTHER LAW OR RULE OF
LAW WHICH WOULD OTHERWISE PREVENT SUCH ASSESSMENT.
  (G) APPLICATION OF THIS SECTION AND  SECTION  6324B  TO  INTERESTS  IN
PARTNERSHIPS,  CORPORATIONS,  AND TRUSTS.--THE SECRETARY SHALL PRESCRIBE
REGULATIONS SETTING FORTH THE APPLICATION OF THIS  SECTION  AND  SECTION
6324B IN THE CASE OF AN INTEREST IN A PARTNERSHIP, CORPORATION, OR TRUST
WHICH,  WITH  RESPECT  TO THE DECEDENT, IS AN INTEREST IN A CLOSELY HELD
BUSINESS (WITHIN THE MEANING OF PARAGRAPH (1) OF SECTION  6166(B)).  FOR
PURPOSES OF THE PRECEDING SENTENCE, AN INTEREST IN A DISCRETIONARY TRUST
ALL THE BENEFICIARIES OF WHICH ARE QUALIFIED HEIRS SHALL BE TREATED AS A
PRESENT INTEREST.
  (H)  SPECIAL RULES FOR INVOLUNTARY CONVERSIONS OF QUALIFIED REAL PROP-
ERTY.--
  (1) TREATMENT OF CONVERTED PROPERTY.--
  (A) IN GENERAL.--IF THERE IS AN INVOLUNTARY CONVERSION OF AN  INTEREST
IN QUALIFIED REAL PROPERTY--
  (I)  NO  TAX  SHALL BE IMPOSED BY SUBSECTION (C) ON SUCH CONVERSION IF
THE COST OF THE QUALIFIED REPLACEMENT PROPERTY  EQUALS  OR  EXCEEDS  THE
AMOUNT REALIZED ON SUCH CONVERSION, OR
  (II)  IF  CLAUSE  (I) DOES NOT APPLY, THE AMOUNT OF THE TAX IMPOSED BY
SUBSECTION (C) ON SUCH CONVERSION SHALL BE THE AMOUNT  DETERMINED  UNDER
SUBPARAGRAPH (B).
  (B)  AMOUNT  OF  TAX  WHERE  THERE  IS NOT COMPLETE REINVESTMENT.--THE
AMOUNT DETERMINED UNDER THIS SUBPARAGRAPH WITH RESPECT TO  ANY  INVOLUN-
TARY CONVERSION IS THE AMOUNT OF THE TAX WHICH (BUT FOR THIS SUBSECTION)
WOULD HAVE BEEN IMPOSED ON SUCH CONVERSION REDUCED BY AN AMOUNT WHICH--
  (I) BEARS THE SAME RATIO TO SUCH TAX, AS
  (II)  THE  COST  OF  THE  QUALIFIED  REPLACEMENT PROPERTY BEARS TO THE
AMOUNT REALIZED ON THE CONVERSION.

S. 6359                            263                           A. 8559

  (2) TREATMENT OF REPLACEMENT  PROPERTY.--FOR  PURPOSES  OF  SUBSECTION
(C)--
  (A)  ANY  QUALIFIED  REPLACEMENT PROPERTY SHALL BE TREATED IN THE SAME
MANNER AS IF IT WERE A PORTION OF THE INTEREST IN QUALIFIED REAL PROPER-
TY WHICH WAS INVOLUNTARILY CONVERTED; EXCEPT THAT WITH RESPECT  TO  SUCH
QUALIFIED REPLACEMENT PROPERTY THE 10-YEAR PERIOD UNDER PARAGRAPH (1) OF
SUBSECTION (C) SHALL BE EXTENDED BY ANY PERIOD, BEYOND THE 2-YEAR PERIOD
REFERRED TO IN SECTION 1033(A)(2)(B)(I), DURING WHICH THE QUALIFIED HEIR
WAS ALLOWED TO REPLACE THE QUALIFIED REAL PROPERTY,
  (B)  ANY  TAX  IMPOSED BY SUBSECTION (C) ON THE INVOLUNTARY CONVERSION
SHALL BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
  (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED--
  (I) BY NOT TAKING INTO ACCOUNT PERIODS AFTER THE  INVOLUNTARY  CONVER-
SION  AND  BEFORE THE ACQUISITION OF THE QUALIFIED REPLACEMENT PROPERTY,
AND
  (II) BY TREATING MATERIAL PARTICIPATION WITH RESPECT TO THE  CONVERTED
PROPERTY  AS  MATERIAL  PARTICIPATION  WITH  RESPECT  TO  THE  QUALIFIED
REPLACEMENT PROPERTY.
  (3) DEFINITIONS AND SPECIAL RULES.--FOR PURPOSES OF THIS SUBSECTION--
  (A) INVOLUNTARY CONVERSION.--THE TERM "INVOLUNTARY CONVERSION" MEANS A
COMPULSORY OR INVOLUNTARY CONVERSION WITHIN THE MEANING OF SECTION 1033.
  (B) QUALIFIED REPLACEMENT PROPERTY.--THE TERM  "QUALIFIED  REPLACEMENT
PROPERTY" MEANS--
  (I)  IN  THE  CASE  OF  AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION
1033(A)(1), ANY REAL PROPERTY INTO WHICH THE QUALIFIED REAL PROPERTY  IS
CONVERTED, OR
  (II)  IN  THE  CASE  OF AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION
1033(A)(2), ANY REAL PROPERTY PURCHASED BY THE QUALIFIED HEIR DURING THE
PERIOD SPECIFIED IN SECTION 1033(A)(2)(B) FOR PURPOSES OF REPLACING  THE
QUALIFIED REAL PROPERTY.
  SUCH TERM ONLY INCLUDES PROPERTY WHICH IS TO BE USED FOR THE QUALIFIED
USE  SET  FORTH  IN  SUBPARAGRAPH  (A) OR (B) OF SUBSECTION (B)(2) UNDER
WHICH THE QUALIFIED REAL PROPERTY QUALIFIED UNDER SUBSECTION (A).
  (4) CERTAIN RULES MADE APPLICABLE.--THE RULES OF THE LAST SENTENCE  OF
SECTION 1033(A)(2)(A) SHALL APPLY FOR PURPOSES OF PARAGRAPH (3)(B)(II).
  (I) EXCHANGES OF QUALIFIED REAL PROPERTY.--
  (1) TREATMENT OF PROPERTY EXCHANGED.--
  (A)  EXCHANGES SOLELY FOR QUALIFIED EXCHANGE PROPERTY.--IF AN INTEREST
IN QUALIFIED REAL PROPERTY IS EXCHANGED SOLELY FOR AN INTEREST IN QUALI-
FIED EXCHANGE PROPERTY IN A TRANSACTION WHICH  QUALIFIES  UNDER  SECTION
1031,  NO  TAX  SHALL  BE  IMPOSED  BY  SUBSECTION (C) BY REASON OF SUCH
EXCHANGE.
  (B) EXCHANGES WHERE OTHER PROPERTY RECEIVED.--IF AN INTEREST IN QUALI-
FIED REAL PROPERTY IS EXCHANGED FOR AN INTEREST  IN  QUALIFIED  EXCHANGE
PROPERTY  AND  OTHER  PROPERTY  IN  A  TRANSACTION WHICH QUALIFIES UNDER
SECTION 1031, THE AMOUNT OF THE TAX IMPOSED BY SUBSECTION (C) BY  REASON
OF SUCH EXCHANGE SHALL BE THE AMOUNT OF TAX WHICH (BUT FOR THIS SUBPARA-
GRAPH) WOULD HAVE BEEN IMPOSED ON SUCH EXCHANGE UNDER SUBSECTION (C)(1),
REDUCED BY AN AMOUNT WHICH--
  (I) BEARS THE SAME RATIO TO SUCH TAX, AS
  (II) THE FAIR MARKET VALUE OF THE QUALIFIED EXCHANGE PROPERTY BEARS TO
THE FAIR MARKET VALUE OF THE QUALIFIED REAL PROPERTY EXCHANGED.
  FOR  PURPOSES  OF  CLAUSE  (II) OF THE PRECEDING SENTENCE, FAIR MARKET
VALUE SHALL BE DETERMINED AS OF THE TIME OF THE EXCHANGE.
  (2)  TREATMENT  OF  QUALIFIED  EXCHANGE  PROPERTY.--FOR  PURPOSES   OF
SUBSECTION (C)--

S. 6359                            264                           A. 8559

  (A)  ANY  INTEREST  IN QUALIFIED EXCHANGE PROPERTY SHALL BE TREATED IN
THE SAME MANNER AS IF IT WERE A PORTION OF  THE  INTEREST  IN  QUALIFIED
REAL PROPERTY WHICH WAS EXCHANGED,
  (B)  ANY TAX IMPOSED BY SUBSECTION (C) BY REASON OF THE EXCHANGE SHALL
BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
  (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED BY TREATING MATE-
RIAL PARTICIPATION WITH RESPECT TO THE EXCHANGED  PROPERTY  AS  MATERIAL
PARTICIPATION WITH RESPECT TO THE QUALIFIED EXCHANGE PROPERTY.
  (3) QUALIFIED EXCHANGE PROPERTY.--FOR PURPOSES OF THIS SUBSECTION, THE
TERM  "QUALIFIED  EXCHANGE  PROPERTY" MEANS REAL PROPERTY WHICH IS TO BE
USED FOR THE QUALIFIED USE SET FORTH  IN  SUBPARAGRAPH  (A)  OR  (B)  OF
SUBSECTION  (B)(2)  UNDER  WHICH  THE  REAL  PROPERTY EXCHANGED THEREFOR
ORIGINALLY QUALIFIED UNDER SUBSECTION (A).
  S 2033. PROPERTY IN WHICH THE DECEDENT HAD AN INTEREST. THE  VALUE  OF
THE  GROSS  ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE EXTENT
OF THE INTEREST THEREIN OF THE DECEDENT AT THE TIME OF HIS DEATH.
  S 2034. DOWER OR CURTESY INTERESTS. THE  VALUE  OF  THE  GROSS  ESTATE
SHALL  INCLUDE  THE  VALUE OF ALL PROPERTY TO THE EXTENT OF ANY INTEREST
THEREIN OF THE SURVIVING SPOUSE, EXISTING AT THE TIME OF THE  DECEDENT'S
DEATH  AS DOWER OR CURTESY, OR BY VIRTUE OF A STATUTE CREATING AN ESTATE
IN LIEU OF DOWER OR CURTESY.
  S 2035. ADJUSTMENTS FOR CERTAIN  GIFTS  MADE  WITHIN  THREE  YEARS  OF
DECEDENT'S   DEATH.   (A)   INCLUSION   OF  CERTAIN  PROPERTY  IN  GROSS
ESTATE.--IF--
  (1) THE DECEDENT MADE A TRANSFER (BY TRUST OR OTHERWISE) OF AN  INTER-
EST IN ANY PROPERTY, OR RELINQUISHED A POWER WITH RESPECT TO ANY PROPER-
TY, DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH,
AND
  (2)  THE  VALUE  OF  SUCH PROPERTY (OR AN INTEREST THEREIN) WOULD HAVE
BEEN INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER SECTION  2036,  2037,
2038,  OR  2042  IF  SUCH TRANSFERRED INTEREST OR RELINQUISHED POWER HAD
BEEN RETAINED BY THE DECEDENT ON THE DATE OF HIS DEATH,
  THE VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ANY  PROPERTY
(OR INTEREST THEREIN) WHICH WOULD HAVE BEEN SO INCLUDED.
  (B)  INCLUSION  OF  GIFT  TAX  ON  GIFTS  MADE  DURING  3 YEARS BEFORE
DECEDENT'S DEATH.--THE AMOUNT OF THE GROSS  ESTATE  (DETERMINED  WITHOUT
REGARD  TO  THIS SUBSECTION) SHALL BE INCREASED BY THE AMOUNT OF ANY TAX
PAID UNDER CHAPTER 12 BY THE DECEDENT OR HIS ESTATE ON ANY GIFT MADE  BY
THE  DECEDENT  OR HIS SPOUSE DURING THE 3-YEAR PERIOD ENDING ON THE DATE
OF THE DECEDENT'S DEATH.
  (C) OTHER RULES RELATING TO TRANSFERS WITHIN 3 YEARS OF DEATH.--
  (1) IN GENERAL.--FOR PURPOSES OF--
  (A) SECTION 303(B) (RELATING TO DISTRIBUTIONS IN REDEMPTION  OF  STOCK
TO PAY DEATH TAXES),
  (B)  SECTION  2032A  (RELATING  TO SPECIAL VALUATION OF CERTAIN FARMS,
ETC., REAL PROPERTY), AND
  (C) SUBCHAPTER C OF CHAPTER 64 (RELATING TO LIEN FOR TAXES),
  THE VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL  PROPERTY
TO  THE  EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT HAS AT ANY
TIME MADE A TRANSFER, BY TRUST OR OTHERWISE, DURING  THE  3-YEAR  PERIOD
ENDING ON THE DATE OF THE DECEDENT'S DEATH.
  (2)  COORDINATION  WITH  SECTION  6166.--AN ESTATE SHALL BE TREATED AS
MEETING THE 35 PERCENT OF ADJUSTED GROSS ESTATE REQUIREMENT  OF  SECTION
6166(A)(1) ONLY IF THE ESTATE MEETS SUCH REQUIREMENT BOTH WITH AND WITH-
OUT THE APPLICATION OF SUBSECTION (A).

S. 6359                            265                           A. 8559

  (3) MARITAL AND SMALL TRANSFERS.--PARAGRAPH (1) SHALL NOT APPLY TO ANY
TRANSFER (OTHER THAN A TRANSFER WITH RESPECT TO A LIFE INSURANCE POLICY)
MADE  DURING  A  CALENDAR  YEAR  TO  ANY  DONEE  IF THE DECEDENT WAS NOT
REQUIRED BY SECTION 6019 (OTHER THAN BY REASON OF  SECTION  6019(2))  TO
FILE ANY GIFT TAX RETURN FOR SUCH YEAR WITH RESPECT TO TRANSFERS TO SUCH
DONEE.
  (D)  EXCEPTION.--SUBSECTION  (A)  AND  PARAGRAPH (1) OF SUBSECTION (C)
SHALL NOT APPLY TO ANY BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER-
ATION IN MONEY OR MONEY'S WORTH.
  (E)  TREATMENT  OF  CERTAIN  TRANSFERS  FROM  REVOCABLE   TRUSTS.--FOR
PURPOSES OF THIS SECTION AND SECTION 2038, ANY TRANSFER FROM ANY PORTION
OF A TRUST DURING ANY PERIOD THAT SUCH PORTION WAS TREATED UNDER SECTION
676 AS OWNED BY THE DECEDENT BY REASON OF A POWER IN THE GRANTOR (DETER-
MINED  WITHOUT  REGARD TO SECTION 672(E)) SHALL BE TREATED AS A TRANSFER
MADE DIRECTLY BY THE DECEDENT.
  S 2036. TRANSFERS WITH RETAINED LIFE ESTATE.  (A)  GENERAL  RULE.--THE
VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE
EXTENT  OF  ANY  INTEREST  THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME
MADE A TRANSFER (EXCEPT IN CASE OF A BONA FIDE SALE FOR AN ADEQUATE  AND
FULL  CONSIDERATION  IN  MONEY OR MONEY'S WORTH), BY TRUST OR OTHERWISE,
UNDER WHICH HE HAS RETAINED FOR HIS LIFE OR FOR ANY  PERIOD  NOT  ASCER-
TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
IN FACT END BEFORE HIS DEATH--
  (1)  THE  POSSESSION OR ENJOYMENT OF, OR THE RIGHT TO THE INCOME FROM,
THE PROPERTY, OR
  (2) THE RIGHT, EITHER ALONE OR IN  CONJUNCTION  WITH  ANY  PERSON,  TO
DESIGNATE  THE  PERSONS  WHO  SHALL POSSESS OR ENJOY THE PROPERTY OR THE
INCOME THEREFROM.
  (B) VOTING RIGHTS.--
  (1) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1), THE  RETENTION  OF
THE  RIGHT  TO  VOTE  (DIRECTLY  OR  INDIRECTLY)  SHARES  OF  STOCK OF A
CONTROLLED CORPORATION SHALL BE CONSIDERED TO  BE  A  RETENTION  OF  THE
ENJOYMENT OF TRANSFERRED PROPERTY.
  (2)  CONTROLLED  CORPORATION.--FOR PURPOSES OF PARAGRAPH (1), A CORPO-
RATION SHALL BE TREATED AS A CONTROLLED  CORPORATION  IF,  AT  ANY  TIME
AFTER  THE  TRANSFER OF THE PROPERTY AND DURING THE 3-YEAR PERIOD ENDING
ON THE DATE OF THE DECEDENT'S DEATH, THE DECEDENT OWNED (WITH THE APPLI-
CATION OF SECTION 318), OR HAD THE RIGHT (EITHER ALONE OR IN CONJUNCTION
WITH ANY PERSON) TO VOTE, STOCK POSSESSING AT LEAST 20  PERCENT  OF  THE
TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK.
  (3)  COORDINATION WITH SECTION 2035.--FOR PURPOSES OF APPLYING SECTION
2035 WITH RESPECT TO PARAGRAPH (1), THE RELINQUISHMENT OR  CESSATION  OF
VOTING  RIGHTS  SHALL  BE  TREATED AS A TRANSFER OF PROPERTY MADE BY THE
DECEDENT.
  (C) LIMITATION ON APPLICATION OF GENERAL RULE.--THIS SECTION SHALL NOT
APPLY TO A TRANSFER MADE BEFORE MARCH 4, 1931; NOR TO  A  TRANSFER  MADE
AFTER MARCH 3, 1931, AND BEFORE JUNE 7, 1932, UNLESS THE PROPERTY TRANS-
FERRED  WOULD  HAVE  BEEN  INCLUDIBLE  IN THE DECEDENT'S GROSS ESTATE BY
REASON OF THE AMENDATORY LANGUAGE OF THE JOINT RESOLUTION  OF  MARCH  3,
1931 (46 STAT. 1516).
  S 2037. TRANSFERS TAKING EFFECT AT DEATH. (A) GENERAL RULE.--THE VALUE
OF  THE  GROSS  ESTATE  SHALL  INCLUDE  THE VALUE OF ALL PROPERTY TO THE
EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT  HAS  AT  ANY  TIME
AFTER  SEPTEMBER 7, 1916, MADE A TRANSFER (EXCEPT IN CASE OF A BONA FIDE
SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S  WORTH),
BY TRUST OR OTHERWISE, IF--

S. 6359                            266                           A. 8559

  (1)  POSSESSION OR ENJOYMENT OF THE PROPERTY CAN, THROUGH OWNERSHIP OF
SUCH INTEREST, BE OBTAINED ONLY BY SURVIVING THE DECEDENT, AND
  (2)  THE DECEDENT HAS RETAINED A REVERSIONARY INTEREST IN THE PROPERTY
(BUT IN THE CASE OF A TRANSFER MADE BEFORE OCTOBER 8, 1949, ONLY IF SUCH
REVERSIONARY INTEREST AROSE BY THE EXPRESS TERMS OF  THE  INSTRUMENT  OF
TRANSFER),  AND  THE  VALUE  OF  SUCH  REVERSIONARY INTEREST IMMEDIATELY
BEFORE THE DEATH OF THE DECEDENT EXCEEDS 5 PERCENT OF THE VALUE OF  SUCH
PROPERTY.
  (B) SPECIAL RULES.--FOR PURPOSES OF THIS SECTION, THE TERM "REVERSION-
ARY  INTEREST"  INCLUDES  A POSSIBILITY THAT PROPERTY TRANSFERRED BY THE
DECEDENT--
  (1) MAY RETURN TO HIM OR HIS ESTATE, OR
  (2) MAY BE SUBJECT TO A POWER OF DISPOSITION BY HIM,
  BUT SUCH TERM DOES NOT INCLUDE A POSSIBILITY  THAT  THE  INCOME  ALONE
FROM  SUCH  PROPERTY  MAY  RETURN TO HIM OR BECOME SUBJECT TO A POWER OF
DISPOSITION BY HIM. THE VALUE OF  A  REVERSIONARY  INTEREST  IMMEDIATELY
BEFORE  THE DEATH OF THE DECEDENT SHALL BE DETERMINED (WITHOUT REGARD TO
THE FACT OF THE DECEDENT'S DEATH) BY USUAL METHODS OF VALUATION, INCLUD-
ING THE USE OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, UNDER REGU-
LATIONS PRESCRIBED BY THE SECRETARY.  IN  DETERMINING  THE  VALUE  OF  A
POSSIBILITY  THAT  PROPERTY  MAY BE SUBJECT TO A POWER OF DISPOSITION BY
THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A POSSIBIL-
ITY THAT SUCH PROPERTY  MAY  RETURN  TO  THE  DECEDENT  OR  HIS  ESTATE.
NOTWITHSTANDING  THE  FOREGOING, AN INTEREST SO TRANSFERRED SHALL NOT BE
INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER THIS SECTION IF POSSESSION
OR ENJOYMENT OF THE PROPERTY COULD HAVE BEEN OBTAINED BY ANY BENEFICIARY
DURING THE DECEDENT'S LIFE THROUGH THE EXERCISE OF A  GENERAL  POWER  OF
APPOINTMENT  (AS  DEFINED IN SECTION 2041) WHICH IN FACT WAS EXERCISABLE
IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
  S 2038. REVOCABLE TRANSFERS. (A) IN GENERAL.--THE VALUE OF  THE  GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1)  TRANSFERS  AFTER  JUNE  22,  1936.--TO THE EXTENT OF ANY INTEREST
THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME MADE A TRANSFER (EXCEPT IN
CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY
OR MONEY'S WORTH), BY TRUST OR OTHERWISE, WHERE  THE  ENJOYMENT  THEREOF
WAS  SUBJECT AT THE DATE OF HIS DEATH TO ANY CHANGE THROUGH THE EXERCISE
OF A POWER (IN WHATEVER CAPACITY EXERCISABLE) BY THE DECEDENT  ALONE  OR
BY  THE DECEDENT IN CONJUNCTION WITH ANY OTHER PERSON (WITHOUT REGARD TO
WHEN OR FROM WHAT SOURCE THE DECEDENT ACQUIRED SUCH  POWER),  TO  ALTER,
AMEND,  REVOKE,  OR  TERMINATE,  OR WHERE ANY SUCH POWER IS RELINQUISHED
DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH.
  (2) TRANSFERS ON OR BEFORE JUNE 22, 1936.--TO THE EXTENT OF ANY INTER-
EST THEREIN OF WHICH THE DECEDENT  HAS  AT  ANY  TIME  MADE  A  TRANSFER
(EXCEPT  IN  CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER-
ATION IN MONEY OR MONEY'S WORTH),  BY  TRUST  OR  OTHERWISE,  WHERE  THE
ENJOYMENT  THEREOF  WAS  SUBJECT  AT THE DATE OF HIS DEATH TO ANY CHANGE
THROUGH THE EXERCISE OF A POWER, EITHER BY  THE  DECEDENT  ALONE  OR  IN
CONJUNCTION  WITH  ANY  PERSON, TO ALTER, AMEND, OR REVOKE, OR WHERE THE
DECEDENT RELINQUISHED ANY SUCH POWER DURING THE 3-YEAR PERIOD ENDING  ON
THE  DATE  OF THE DECEDENT'S DEATH. EXCEPT IN THE CASE OF TRANSFERS MADE
AFTER JUNE 22, 1936, NO INTEREST OF THE DECEDENT OF WHICH HE HAS MADE  A
TRANSFER  SHALL  BE  INCLUDED  IN  THE  GROSS ESTATE UNDER PARAGRAPH (1)
UNLESS IT IS INCLUDIBLE UNDER THIS PARAGRAPH.
  (B) DATE OF EXISTENCE OF POWER.--FOR PURPOSES  OF  THIS  SECTION,  THE
POWER TO ALTER, AMEND, REVOKE, OR TERMINATE SHALL BE CONSIDERED TO EXIST
ON  THE  DATE  OF  THE  DECEDENT'S DEATH EVEN THOUGH THE EXERCISE OF THE

S. 6359                            267                           A. 8559

POWER IS SUBJECT TO A PRECEDENT GIVING OF  NOTICE  OR  EVEN  THOUGH  THE
ALTERATION,  AMENDMENT,  REVOCATION, OR TERMINATION TAKES EFFECT ONLY ON
THE EXPIRATION OF A STATED PERIOD  AFTER  THE  EXERCISE  OF  THE  POWER,
WHETHER  OR NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS
BEEN GIVEN OR THE POWER HAS BEEN EXERCISED. IN SUCH CASES PROPER ADJUST-
MENT SHALL BE MADE REPRESENTING THE  INTERESTS  WHICH  WOULD  HAVE  BEEN
EXCLUDED FROM THE POWER IF THE DECEDENT HAD LIVED, AND FOR SUCH PURPOSE,
IF  THE NOTICE HAS NOT BEEN GIVEN OR THE POWER HAS NOT BEEN EXERCISED ON
OR BEFORE THE DATE OF HIS DEATH, SUCH NOTICE SHALL BE CONSIDERED TO HAVE
BEEN GIVEN, OR THE POWER EXERCISED, ON THE DATE OF HIS DEATH.
  S 2039. ANNUITIES. (A) GENERAL.--THE GROSS ESTATE  SHALL  INCLUDE  THE
VALUE  OF  AN  ANNUITY OR OTHER PAYMENT RECEIVABLE BY ANY BENEFICIARY BY
REASON OF SURVIVING THE DECEDENT UNDER ANY FORM OF CONTRACT OR AGREEMENT
ENTERED INTO AFTER MARCH 3, 1931 (OTHER THAN AS INSURANCE UNDER POLICIES
ON THE LIFE OF THE DECEDENT), IF, UNDER SUCH CONTRACT OR  AGREEMENT,  AN
ANNUITY  OR  OTHER  PAYMENT WAS PAYABLE TO THE DECEDENT, OR THE DECEDENT
POSSESSED THE RIGHT TO RECEIVE SUCH ANNUITY OR PAYMENT, EITHER ALONE  OR
IN  CONJUNCTION  WITH  ANOTHER FOR HIS LIFE OR FOR ANY PERIOD NOT ASCER-
TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
IN FACT END BEFORE HIS DEATH.
  (B) AMOUNT INCLUDIBLE.--SUBSECTION (A) SHALL APPLY TO ONLY  SUCH  PART
OF  THE  VALUE  OF  THE  ANNUITY  OR OTHER PAYMENT RECEIVABLE UNDER SUCH
CONTRACT OR AGREEMENT AS IS PROPORTIONATE TO THAT PART OF  THE  PURCHASE
PRICE  THEREFOR  CONTRIBUTED  BY  THE  DECEDENT.  FOR  PURPOSES  OF THIS
SECTION, ANY CONTRIBUTION BY THE DECEDENT'S EMPLOYER OR FORMER  EMPLOYER
TO  THE  PURCHASE PRICE OF SUCH CONTRACT OR AGREEMENT (WHETHER OR NOT TO
AN EMPLOYEE'S TRUST OR FUND FORMING PART OF A PENSION, ANNUITY,  RETIRE-
MENT,  BONUS  OR PROFIT SHARING PLAN) SHALL BE CONSIDERED TO BE CONTRIB-
UTED BY THE DECEDENT IF MADE BY REASON OF HIS EMPLOYMENT.
  S 2040. JOINT INTERESTS. (A) GENERAL RULE.--THE  VALUE  OF  THE  GROSS
ESTATE  SHALL  INCLUDE  THE  VALUE  OF ALL PROPERTY TO THE EXTENT OF THE
INTEREST THEREIN HELD AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP BY THE
DECEDENT AND ANY OTHER PERSON, OR AS TENANTS  BY  THE  ENTIRETY  BY  THE
DECEDENT AND SPOUSE, OR DEPOSITED, WITH ANY PERSON CARRYING ON THE BANK-
ING  BUSINESS,  IN THEIR JOINT NAMES AND PAYABLE TO EITHER OR THE SURVI-
VOR, EXCEPT SUCH PART  THEREOF  AS  MAY  BE  SHOWN  TO  HAVE  ORIGINALLY
BELONGED  TO  SUCH  OTHER  PERSON  AND  NEVER  TO  HAVE BEEN RECEIVED OR
ACQUIRED BY THE LATTER FROM THE DECEDENT FOR LESS THAN AN  ADEQUATE  AND
FULL  CONSIDERATION IN MONEY OR MONEY'S WORTH: PROVIDED, THAT WHERE SUCH
PROPERTY OR ANY PART THEREOF, OR PART OF THE  CONSIDERATION  WITH  WHICH
SUCH  PROPERTY  WAS ACQUIRED, IS SHOWN TO HAVE BEEN AT ANY TIME ACQUIRED
BY SUCH OTHER PERSON FROM THE DECEDENT FOR LESS  THAN  AN  ADEQUATE  AND
FULL  CONSIDERATION  IN  MONEY OR MONEY'S WORTH, THERE SHALL BE EXCEPTED
ONLY SUCH PART OF THE VALUE OF SUCH PROPERTY AS IS PROPORTIONATE TO  THE
CONSIDERATION  FURNISHED  BY  SUCH  OTHER PERSON: PROVIDED FURTHER, THAT
WHERE ANY PROPERTY HAS BEEN ACQUIRED BY GIFT, BEQUEST, DEVISE, OR INHER-
ITANCE, AS A TENANCY BY THE ENTIRETY BY THE DECEDENT AND SPOUSE, THEN TO
THE EXTENT OF ONE-HALF OF THE VALUE THEREOF, OR, WHERE  SO  ACQUIRED  BY
THE  DECEDENT AND ANY OTHER PERSON AS JOINT TENANTS WITH RIGHT OF SURVI-
VORSHIP AND THEIR INTERESTS ARE NOT OTHERWISE SPECIFIED OR FIXED BY LAW,
THEN TO THE EXTENT OF THE VALUE OF A FRACTIONAL PART TO BE DETERMINED BY
DIVIDING THE VALUE OF THE PROPERTY BY THE NUMBER OF JOINT  TENANTS  WITH
RIGHT OF SURVIVORSHIP.
  (B) CERTAIN JOINT INTERESTS OF HUSBAND AND WIFE.--
  (1)  INTERESTS  OF SPOUSE EXCLUDED FROM GROSS ESTATE.--NOTWITHSTANDING
SUBSECTION (A), IN THE CASE OF ANY QUALIFIED JOINT INTEREST,  THE  VALUE

S. 6359                            268                           A. 8559

INCLUDED  IN THE GROSS ESTATE WITH RESPECT TO SUCH INTEREST BY REASON OF
THIS SECTION IS ONE-HALF OF THE VALUE OF SUCH QUALIFIED JOINT INTEREST.
  (2)  QUALIFIED JOINT INTEREST DEFINED.--FOR PURPOSES OF PARAGRAPH (1),
THE TERM "QUALIFIED JOINT INTEREST" MEANS ANY INTEREST IN PROPERTY  HELD
BY THE DECEDENT AND THE DECEDENT'S SPOUSE AS--
  (A) TENANTS BY THE ENTIRETY, OR
  (B) JOINT TENANTS WITH RIGHT OF SURVIVORSHIP, BUT ONLY IF THE DECEDENT
AND THE SPOUSE OF THE DECEDENT ARE THE ONLY JOINT TENANTS.
  S 2041. POWERS OF APPOINTMENT. (A) IN GENERAL.--THE VALUE OF THE GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1)  POWERS  OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942.--TO
THE EXTENT OF ANY PROPERTY WITH RESPECT TO  WHICH  A  GENERAL  POWER  OF
APPOINTMENT  CREATED  ON OR BEFORE OCTOBER 21, 1942, IS EXERCISED BY THE
DECEDENT--
  (A) BY WILL, OR
  (B) BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A  TRANS-
FER OF PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY WOULD BE INCLUDIBLE
IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035 TO 2038, INCLUSIVE;
  BUT  THE  FAILURE  TO EXERCISE SUCH A POWER OR THE COMPLETE RELEASE OF
SUCH A POWER SHALL NOT BE DEEMED AN EXERCISE THEREOF. IF A GENERAL POWER
OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, HAS BEEN PARTIALLY
RELEASED SO THAT IT IS NO LONGER A GENERAL  POWER  OF  APPOINTMENT,  THE
EXERCISE  OF  SUCH  POWER  SHALL  NOT  BE DEEMED TO BE THE EXERCISE OF A
GENERAL POWER OF APPOINTMENT IF--
  (I) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
  (II) THE DONEE OF SUCH POWER WAS UNDER A LEGAL DISABILITY  TO  RELEASE
SUCH  POWER  ON  OCTOBER 21, 1942, AND SUCH PARTIAL RELEASE OCCURRED NOT
LATER THAN 6 MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
  (2) POWERS CREATED AFTER OCTOBER 21, 1942.--TO THE EXTENT OF ANY PROP-
ERTY WITH RESPECT TO WHICH THE DECEDENT HAS AT THE TIME OF HIS  DEATH  A
GENERAL  POWER  OF  APPOINTMENT  CREATED AFTER OCTOBER 21, 1942, OR WITH
RESPECT TO WHICH THE DECEDENT HAS AT ANY TIME EXERCISED OR RELEASED SUCH
A POWER OF APPOINTMENT BY A DISPOSITION WHICH IS OF SUCH NATURE THAT  IF
IT  WERE  A  TRANSFER  OF  PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY
WOULD BE INCLUDIBLE IN THE DECEDENT'S GROSS ESTATE UNDER  SECTIONS  2035
TO  2038,  INCLUSIVE.  FOR  PURPOSES OF THIS PARAGRAPH (2), THE POWER OF
APPOINTMENT SHALL BE CONSIDERED TO EXIST ON THE DATE OF  THE  DECEDENT'S
DEATH  EVEN  THOUGH  THE EXERCISE OF THE POWER IS SUBJECT TO A PRECEDENT
GIVING OF NOTICE OR EVEN THOUGH THE EXERCISE OF THE POWER  TAKES  EFFECT
ONLY ON THE EXPIRATION OF A STATED PERIOD AFTER ITS EXERCISE, WHETHER OR
NOT  ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS BEEN GIVEN
OR THE POWER HAS BEEN EXERCISED.
  (3) CREATION OF ANOTHER POWER IN CERTAIN CASES.--TO THE EXTENT OF  ANY
PROPERTY WITH RESPECT TO WHICH THE DECEDENT--
  (A) BY WILL, OR
  (B)  BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A TRANS-
FER OF PROPERTY OWNED BY THE DECEDENT SUCH PROPERTY WOULD BE  INCLUDIBLE
IN THE DECEDENT'S GROSS ESTATE UNDER SECTION 2035, 2036, OR 2037,
  EXERCISES  A  POWER  OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, BY
CREATING ANOTHER POWER OF APPOINTMENT WHICH UNDER THE  APPLICABLE  LOCAL
LAW CAN BE VALIDLY EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE
OR INTEREST IN SUCH PROPERTY, OR SUSPEND THE ABSOLUTE OWNERSHIP OR POWER
OF  ALIENATION  OF  SUCH  PROPERTY,  FOR  A PERIOD ASCERTAINABLE WITHOUT
REGARD TO THE DATE OF THE CREATION OF THE FIRST POWER.
  (B) DEFINITIONS.--FOR PURPOSES OF SUBSECTION (A)--

S. 6359                            269                           A. 8559

  (1) GENERAL POWER OF APPOINTMENT.--THE TERM "GENERAL POWER OF APPOINT-
MENT" MEANS A POWER WHICH IS EXERCISABLE IN FAVOR OF THE  DECEDENT,  HIS
ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT--
  (A)  A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENE-
FIT OF THE DECEDENT WHICH IS LIMITED BY AN ASCERTAINABLE STANDARD RELAT-
ING TO THE HEALTH, EDUCATION, SUPPORT, OR MAINTENANCE  OF  THE  DECEDENT
SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (B)  A  POWER  OF  APPOINTMENT  CREATED ON OR BEFORE OCTOBER 21, 1942,
WHICH IS EXERCISABLE BY THE DECEDENT ONLY IN  CONJUNCTION  WITH  ANOTHER
PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (C)  IN  THE  CASE OF A POWER OF APPOINTMENT CREATED AFTER OCTOBER 21,
1942, WHICH IS EXERCISABLE BY THE  DECEDENT  ONLY  IN  CONJUNCTION  WITH
ANOTHER PERSON--
  (I) IF THE POWER IS NOT EXERCISABLE BY THE DECEDENT EXCEPT IN CONJUNC-
TION  WITH  THE  CREATOR  OF THE POWER--SUCH POWER SHALL NOT BE DEEMED A
GENERAL POWER OF APPOINTMENT.
  (II) IF THE POWER  IS  NOT  EXERCISABLE  BY  THE  DECEDENT  EXCEPT  IN
CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST IN THE PROPERTY,
SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
OF  THE  DECEDENT--SUCH  POWER  SHALL  NOT  BE DEEMED A GENERAL POWER OF
APPOINTMENT. FOR THE PURPOSES OF THIS CLAUSE A  PERSON  WHO,  AFTER  THE
DEATH  OF THE DECEDENT, MAY BE POSSESSED OF A POWER OF APPOINTMENT (WITH
RESPECT TO THE PROPERTY SUBJECT TO THE DECEDENT'S POWER)  WHICH  HE  MAY
EXERCISE  IN  HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST IN THE
PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH  EXERCISE  OF
THE DECEDENT'S POWER.
  (III)  IF (AFTER THE APPLICATION OF CLAUSES (I) AND (II)) THE POWER IS
A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH OTHER
PERSON--SUCH POWER SHALL BE DEEMED A GENERAL POWER OF  APPOINTMENT  ONLY
IN  RESPECT  OF A FRACTIONAL PART OF THE PROPERTY SUBJECT TO SUCH POWER,
SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY BY THE
NUMBER OF SUCH PERSONS (INCLUDING THE DECEDENT) IN FAVOR  OF  WHOM  SUCH
POWER IS EXERCISABLE.
  FOR  PURPOSES OF CLAUSES (II) AND (III), A POWER SHALL BE DEEMED TO BE
EXERCISABLE IN FAVOR OF A PERSON IF IT IS EXERCISABLE IN FAVOR  OF  SUCH
PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
  (2) LAPSE OF POWER.--THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
SHALL  BE  CONSIDERED  A  RELEASE  OF SUCH POWER. THE PRECEDING SENTENCE
SHALL APPLY WITH RESPECT TO THE LAPSE OF POWERS DURING ANY CALENDAR YEAR
ONLY TO THE EXTENT THAT THE PROPERTY, WHICH COULD HAVE BEEN APPOINTED BY
EXERCISE OF SUCH LAPSED POWERS, EXCEEDED IN VALUE, AT THE TIME  OF  SUCH
LAPSE, THE GREATER OF THE FOLLOWING AMOUNTS:
  (A) $5,000, OR
  (B)  5  PERCENT  OF THE AGGREGATE VALUE, AT THE TIME OF SUCH LAPSE, OF
THE ASSETS OUT OF WHICH, OR THE PROCEEDS OF WHICH, THE EXERCISE  OF  THE
LAPSED POWERS COULD HAVE BEEN SATISFIED.
  (3)  DATE OF CREATION OF POWER.--FOR PURPOSES OF THIS SECTION, A POWER
OF APPOINTMENT CREATED BY A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
  S 2042. PROCEEDS OF LIFE INSURANCE. THE  VALUE  OF  THE  GROSS  ESTATE
SHALL INCLUDE THE VALUE OF ALL PROPERTY--

S. 6359                            270                           A. 8559

  (1)  RECEIVABLE  BY THE EXECUTOR.--TO THE EXTENT OF THE AMOUNT RECEIV-
ABLE BY THE EXECUTOR AS INSURANCE UNDER POLICIES  ON  THE  LIFE  OF  THE
DECEDENT.
  (2)  RECEIVABLE  BY  OTHER BENEFICIARIES.--TO THE EXTENT OF THE AMOUNT
RECEIVABLE BY ALL OTHER BENEFICIARIES AS INSURANCE UNDER POLICIES ON THE
LIFE OF THE DECEDENT WITH RESPECT TO WHICH THE DECEDENT POSSESSED AT HIS
DEATH ANY OF THE INCIDENTS OF OWNERSHIP, EXERCISABLE EITHER ALONE OR  IN
CONJUNCTION  WITH  ANY  OTHER  PERSON.  FOR  PURPOSES  OF  THE PRECEDING
SENTENCE, THE TERM  "INCIDENT  OF  OWNERSHIP"  INCLUDES  A  REVERSIONARY
INTEREST  (WHETHER  ARISING  BY THE EXPRESS TERMS OF THE POLICY OR OTHER
INSTRUMENT OR BY OPERATION OF LAW) ONLY IF THE VALUE OF SUCH  REVERSION-
ARY  INTEREST  EXCEEDED 5 PERCENT OF THE VALUE OF THE POLICY IMMEDIATELY
BEFORE THE DEATH OF THE DECEDENT. AS USED IN THIS  PARAGRAPH,  THE  TERM
"REVERSIONARY  INTEREST"  INCLUDES A POSSIBILITY THAT THE POLICY, OR THE
PROCEEDS OF THE POLICY, MAY RETURN TO THE DECEDENT OR HIS ESTATE, OR MAY
BE SUBJECT TO A POWER OF DISPOSITION BY HIM. THE VALUE OF A REVERSIONARY
INTEREST AT ANY TIME SHALL BE DETERMINED (WITHOUT REGARD TO THE FACT  OF
THE  DECEDENT'S  DEATH) BY USUAL METHODS OF VALUATION, INCLUDING THE USE
OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, PURSUANT TO REGULATIONS
PRESCRIBED BY THE SECRETARY. IN DETERMINING THE VALUE OF  A  POSSIBILITY
THAT  THE POLICY OR PROCEEDS THEREOF MAY BE SUBJECT TO A POWER OF DISPO-
SITION BY THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A
POSSIBILITY THAT SUCH POLICY OR PROCEEDS MAY RETURN TO THE  DECEDENT  OR
HIS ESTATE.
  S  2043. TRANSFERS FOR INSUFFICIENT CONSIDERATION. (A) IN GENERAL.--IF
ANY ONE OF THE TRANSFERS, TRUSTS, INTERESTS, RIGHTS, OR  POWERS  ENUMER-
ATED AND DESCRIBED IN SECTIONS 2035 TO 2038, INCLUSIVE, AND SECTION 2041
IS  MADE,  CREATED,  EXERCISED,  OR  RELINQUISHED FOR A CONSIDERATION IN
MONEY OR MONEY'S WORTH, BUT IS NOT A BONA FIDE SALE FOR AN ADEQUATE  AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH, THERE SHALL BE INCLUDED IN
THE GROSS ESTATE ONLY THE EXCESS OF THE FAIR MARKET VALUE AT THE TIME OF
DEATH OF THE PROPERTY OTHERWISE TO BE INCLUDED ON ACCOUNT OF SUCH TRANS-
ACTION,  OVER  THE  VALUE  OF THE CONSIDERATION RECEIVED THEREFOR BY THE
DECEDENT.
  (B) MARITAL RIGHTS NOT TREATED AS CONSIDERATION.--
  (1) IN GENERAL.--FOR PURPOSES OF THIS  CHAPTER,  A  RELINQUISHMENT  OR
PROMISED  RELINQUISHMENT  OF  DOWER OR CURTESY, OR OF A STATUTORY ESTATE
CREATED IN LIEU OF DOWER OR CURTESY, OR OF OTHER MARITAL RIGHTS  IN  THE
DECEDENT'S  PROPERTY  OR ESTATE, SHALL NOT BE CONSIDERED TO ANY EXTENT A
CONSIDERATION "IN MONEY OR MONEY'S WORTH".
  (2) EXCEPTION.--FOR PURPOSES OF SECTION 2053  (RELATING  TO  EXPENSES,
INDEBTEDNESS,  AND  TAXES),  A  TRANSFER OF PROPERTY WHICH SATISFIES THE
REQUIREMENTS OF PARAGRAPH (1) OF SECTION 2516 (RELATING TO CERTAIN PROP-
ERTY SETTLEMENTS) SHALL BE CONSIDERED TO BE MADE  FOR  AN  ADEQUATE  AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH.
  S  2044.  CERTAIN  PROPERTY FOR WHICH MARITAL DEDUCTION WAS PREVIOUSLY
ALLOWED. (A) GENERAL RULE.--THE VALUE OF THE GROSS ESTATE SHALL  INCLUDE
THE  VALUE  OF  ANY  PROPERTY TO WHICH THIS SECTION APPLIES IN WHICH THE
DECEDENT HAD A QUALIFYING INCOME INTEREST FOR LIFE.
  (B) PROPERTY TO WHICH THIS SECTION APPLIES.--THIS SECTION  APPLIES  TO
ANY PROPERTY IF--
  (1) A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF SUCH PROP-
ERTY TO THE DECEDENT--
  (A) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
  (B) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF, AND

S. 6359                            271                           A. 8559

  (2)  SECTION  2519  (RELATING TO DISPOSITIONS OF CERTAIN LIFE ESTATES)
DID NOT APPLY WITH RESPECT TO A DISPOSITION BY THE DECEDENT OF  PART  OR
ALL OF SUCH PROPERTY.
  (C)  PROPERTY TREATED AS HAVING PASSED FROM DECEDENT.--FOR PURPOSES OF
THIS CHAPTER AND CHAPTER 13, PROPERTY INCLUDIBLE IN THE GROSS ESTATE  OF
THE  DECEDENT  UNDER SUBSECTION (A) SHALL BE TREATED AS PROPERTY PASSING
FROM THE DECEDENT.
  S 2045. PRIOR INTERESTS. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED  BY
LAW,  SECTIONS  2034  TO  2042, INCLUSIVE, SHALL APPLY TO THE TRANSFERS,
TRUSTS,  ESTATES,  INTERESTS,  RIGHTS,  POWERS,  AND  RELINQUISHMENT  OF
POWERS,  AS  SEVERALLY  ENUMERATED AND DESCRIBED THEREIN, WHENEVER MADE,
CREATED, ARISING, EXISTING, EXERCISED, OR RELINQUISHED.
  S 2046. DISCLAIMERS. FOR PROVISIONS RELATING TO THE EFFECT OF A QUALI-
FIED DISCLAIMER FOR PURPOSES OF THIS CHAPTER, SEE SECTION 2518.
  S 2053. EXPENSES, INDEBTEDNESS,  AND  TAXES.  (A)  GENERAL  RULE.--FOR
PURPOSES  OF  THE  TAX IMPOSED BY SECTION 2001, THE VALUE OF THE TAXABLE
ESTATE SHALL BE DETERMINED BY DEDUCTING FROM  THE  VALUE  OF  THE  GROSS
ESTATE SUCH AMOUNTS--
  (1) FOR FUNERAL EXPENSES,
  (2) FOR ADMINISTRATION EXPENSES,
  (3) FOR CLAIMS AGAINST THE ESTATE, AND
  (4)  FOR UNPAID MORTGAGES ON, OR ANY INDEBTEDNESS IN RESPECT OF, PROP-
ERTY WHERE THE VALUE OF THE DECEDENT'S INTEREST THEREIN, UNDIMINISHED BY
SUCH MORTGAGE OR INDEBTEDNESS, IS INCLUDED IN THE  VALUE  OF  THE  GROSS
ESTATE,
  AS  ARE  ALLOWABLE  BY THE LAWS OF THE JURISDICTION, WHETHER WITHIN OR
WITHOUT THE UNITED STATES, UNDER WHICH THE ESTATE IS BEING ADMINISTERED.
  (B) OTHER ADMINISTRATION  EXPENSES.--SUBJECT  TO  THE  LIMITATIONS  IN
PARAGRAPH  (1) OF SUBSECTION (C), THERE SHALL BE DEDUCTED IN DETERMINING
THE TAXABLE ESTATE AMOUNTS REPRESENTING EXPENSES INCURRED IN ADMINISTER-
ING PROPERTY NOT SUBJECT TO CLAIMS WHICH IS INCLUDED IN THE GROSS ESTATE
TO THE SAME EXTENT SUCH AMOUNTS WOULD BE ALLOWABLE AS A DEDUCTION  UNDER
SUBSECTION (A) IF SUCH PROPERTY WERE SUBJECT TO CLAIMS, AND SUCH AMOUNTS
ARE  PAID  BEFORE THE EXPIRATION OF THE PERIOD OF LIMITATION FOR ASSESS-
MENT PROVIDED IN SECTION 6501.
  (C) LIMITATIONS.--
  (1) LIMITATIONS APPLICABLE TO SUBSECTIONS (A) AND (B).--
  (A) CONSIDERATION FOR CLAIMS.--THE DEDUCTION ALLOWED BY  THIS  SECTION
IN  THE  CASE  OF  CLAIMS  AGAINST  THE ESTATE, UNPAID MORTGAGES, OR ANY
INDEBTEDNESS SHALL, WHEN FOUNDED ON A PROMISE OR AGREEMENT,  BE  LIMITED
TO  THE  EXTENT  THAT THEY WERE CONTRACTED BONA FIDE AND FOR AN ADEQUATE
AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH;  EXCEPT  THAT  IN  ANY
CASE IN WHICH ANY SUCH CLAIM IS FOUNDED ON A PROMISE OR AGREEMENT OF THE
DECEDENT  TO  MAKE A CONTRIBUTION OR GIFT TO OR FOR THE USE OF ANY DONEE
DESCRIBED IN SECTION  2055  FOR  THE  PURPOSES  SPECIFIED  THEREIN,  THE
DEDUCTION  FOR SUCH CLAIMS SHALL NOT BE SO LIMITED, BUT SHALL BE LIMITED
TO THE EXTENT THAT IT WOULD BE ALLOWABLE AS A  DEDUCTION  UNDER  SECTION
2055 IF SUCH PROMISE OR AGREEMENT CONSTITUTED A BEQUEST.
  (B)  CERTAIN  TAXES.--ANY  INCOME  TAXES  ON INCOME RECEIVED AFTER THE
DEATH OF THE DECEDENT, OR PROPERTY TAXES NOT ACCRUED BEFORE  HIS  DEATH,
OR  ANY  ESTATE,  SUCCESSION, LEGACY, OR INHERITANCE TAXES, SHALL NOT BE
DEDUCTIBLE UNDER THIS SECTION.
  (C) CERTAIN CLAIMS BY REMAINDERMEN.--NO  DEDUCTION  SHALL  BE  ALLOWED
UNDER  THIS  SECTION  FOR  A  CLAIM AGAINST THE ESTATE BY A REMAINDERMAN
RELATING TO ANY PROPERTY DESCRIBED IN SECTION 2044.

S. 6359                            272                           A. 8559

  (D) SECTION 6166 INTEREST.--NO DEDUCTION SHALL BE ALLOWED  UNDER  THIS
SECTION  FOR  ANY  INTEREST  PAYABLE  UNDER  SECTION  6601 ON ANY UNPAID
PORTION OF THE TAX IMPOSED BY SECTION 2001 FOR THE PERIOD  DURING  WHICH
AN  EXTENSION OF TIME FOR PAYMENT OF SUCH TAX IS IN EFFECT UNDER SECTION
6166.
  (2) LIMITATIONS APPLICABLE ONLY TO SUBSECTION (A).--IN THE CASE OF THE
AMOUNTS  DESCRIBED  IN  SUBSECTION  (A),  THERE  SHALL BE DISALLOWED THE
AMOUNT BY WHICH THE DEDUCTIONS SPECIFIED THEREIN EXCEED  THE  VALUE,  AT
THE  TIME OF THE DECEDENT'S DEATH, OF PROPERTY SUBJECT TO CLAIMS, EXCEPT
TO THE EXTENT THAT SUCH DEDUCTIONS REPRESENT  AMOUNTS  PAID  BEFORE  THE
DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN. FOR PURPOSES OF
THIS  SECTION,  THE  TERM  "PROPERTY  SUBJECT  TO CLAIMS" MEANS PROPERTY
INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT WHICH, OR THE  AVAILS  OF
WHICH, WOULD UNDER THE APPLICABLE LAW, BEAR THE BURDEN OF THE PAYMENT OF
SUCH  DEDUCTIONS  IN  THE FINAL ADJUSTMENT AND SETTLEMENT OF THE ESTATE,
EXCEPT THAT THE VALUE OF THE PROPERTY SHALL BE REDUCED BY THE AMOUNT  OF
THE DEDUCTION UNDER SECTION 2054 ATTRIBUTABLE TO SUCH PROPERTY.
  (D) CERTAIN FOREIGN DEATH TAXES.--
  (1)   IN   GENERAL.--NOTWITHSTANDING   THE  PROVISIONS  OF  SUBSECTION
(C)(1)(B), FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE VALUE OF
THE TAXABLE ESTATE MAY BE DETERMINED, IF THE EXECUTOR SO  ELECTS  BEFORE
THE  EXPIRATION  OF  THE PERIOD OF LIMITATION FOR ASSESSMENT PROVIDED IN
SECTION 6501, BY DEDUCTING FROM THE VALUE OF THE GROSS ESTATE THE AMOUNT
(AS DETERMINED IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY  THE  SECRE-
TARY)  OF  ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX IMPOSED BY
AND ACTUALLY PAID TO ANY FOREIGN COUNTRY, IN  RESPECT  OF  ANY  PROPERTY
SITUATED WITHIN SUCH FOREIGN COUNTRY AND INCLUDED IN THE GROSS ESTATE OF
A CITIZEN OR RESIDENT OF THE UNITED STATES, UPON A TRANSFER BY THE DECE-
DENT  FOR  PUBLIC,  CHARITABLE,  OR  RELIGIOUS USES DESCRIBED IN SECTION
2055. THE DETERMINATION UNDER THIS PARAGRAPH OF THE COUNTRY WITHIN WHICH
PROPERTY IS SITUATED SHALL BE MADE IN ACCORDANCE WITH THE RULES APPLICA-
BLE UNDER SUBCHAPTER B (SEC. 2101 AND FOLLOWING) IN DETERMINING  WHETHER
PROPERTY  IS SITUATED WITHIN OR WITHOUT THE UNITED STATES.  ANY ELECTION
UNDER THIS PARAGRAPH SHALL BE EXERCISED IN ACCORDANCE  WITH  REGULATIONS
PRESCRIBED BY THE SECRETARY.
  (2)  CONDITION  FOR  ALLOWANCE  OF  DEDUCTION.--NO  DEDUCTION SHALL BE
ALLOWED UNDER PARAGRAPH (1) FOR A FOREIGN DEATH  TAX  SPECIFIED  THEREIN
UNLESS  THE  DECREASE  IN  THE TAX IMPOSED BY SECTION 2001 WHICH RESULTS
FROM THE DEDUCTION PROVIDED IN PARAGRAPH (1) WILL INURE SOLELY  FOR  THE
BENEFIT OF THE PUBLIC, CHARITABLE, OR RELIGIOUS TRANSFEREES DESCRIBED IN
SECTION  2055  OR SECTION 2106(A)(2).  IN ANY CASE WHERE THE TAX IMPOSED
BY SECTION 2001 IS EQUITABLY APPORTIONED AMONG ALL  THE  TRANSFEREES  OF
PROPERTY  INCLUDED  IN  THE  GROSS  ESTATE, INCLUDING THOSE DESCRIBED IN
SECTIONS 2055 AND 2106(A)(2) (TAKING INTO ACCOUNT ANY EXEMPTIONS,  CRED-
ITS,  OR  DEDUCTIONS  ALLOWED  BY  THIS  CHAPTER),  IN  DETERMINING SUCH
DECREASE, THERE SHALL BE DISREGARDED ANY DECREASE IN THE FEDERAL  ESTATE
TAX  WHICH  ANY  TRANSFEREES OTHER THAN THOSE DESCRIBED IN SECTIONS 2055
AND 2106(A)(2) ARE REQUIRED TO PAY.
  (3) EFFECT ON CREDIT FOR FOREIGN DEATH TAXES OF DEDUCTION  UNDER  THIS
SUBSECTION.--
  (A)  ELECTION.--AN  ELECTION  UNDER  THIS SUBSECTION SHALL BE DEEMED A
WAIVER OF THE RIGHT TO CLAIM A CREDIT, AGAINST THE FEDERAL  ESTATE  TAX,
UNDER  A  DEATH  TAX  CONVENTION WITH ANY FOREIGN COUNTRY FOR ANY TAX OR
PORTION THEREOF IN RESPECT OF WHICH A  DEDUCTION  IS  TAKEN  UNDER  THIS
SUBSECTION.
  (B) CROSS REFERENCE.--

S. 6359                            273                           A. 8559

  SEE  SECTION  2011(D)  FOR  THE EFFECT OF A DEDUCTION TAKEN UNDER THIS
PARAGRAPH ON THE CREDIT FOR FOREIGN DEATH TAXES.
  (E) MARITAL RIGHTS.--
  FOR  PROVISIONS  TREATING CERTAIN RELINQUISHMENTS OF MARITAL RIGHTS AS
CONSIDERATION IN MONEY OR MONEY'S WORTH, SEE SECTION 2043(B)(2).
  S 2054. LOSSES. FOR PURPOSES OF THE TAX IMPOSED BY SECTION  2001,  THE
VALUE  OF  THE  TAXABLE ESTATE SHALL BE DETERMINED BY DEDUCTING FROM THE
VALUE OF THE GROSS ESTATE  LOSSES  INCURRED  DURING  THE  SETTLEMENT  OF
ESTATES  ARISING FROM FIRES, STORMS, SHIPWRECKS, OR OTHER CASUALTIES, OR
FROM THEFT, WHEN SUCH LOSSES ARE NOT COMPENSATED  FOR  BY  INSURANCE  OR
OTHERWISE.
  S 2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
  (A)  IN GENERAL.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE
VALUE OF THE TAXABLE ESTATE SHALL BE DETERMINED BY  DEDUCTING  FROM  THE
VALUE OF THE GROSS ESTATE THE AMOUNT OF ALL BEQUESTS, LEGACIES, DEVISES,
OR TRANSFERS--
  (1)  TO  OR FOR THE USE OF THE UNITED STATES, ANY STATE, ANY POLITICAL
SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC
PURPOSES;
  (2) TO OR FOR THE USE OF ANY CORPORATION ORGANIZED AND OPERATED EXCLU-
SIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY,  OR  EDUCATIONAL
PURPOSES,  INCLUDING  THE ENCOURAGEMENT OF ART, OR TO FOSTER NATIONAL OR
INTERNATIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF  NO  PART  OF  ITS
ACTIVITIES  INVOLVE  THE PROVISION OF ATHLETIC FACILITIES OR EQUIPMENT),
AND THE PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO PART OF THE NET
EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY  PRIVATE  STOCKHOLDER  OR
INDIVIDUAL,  WHICH  IS  NOT DISQUALIFIED FOR TAX EXEMPTION UNDER SECTION
501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE  LEGISLATION,  AND  WHICH
DOES  NOT  PARTICIPATE  IN, OR INTERVENE IN (INCLUDING THE PUBLISHING OR
DISTRIBUTING OF STATEMENTS), ANY POLITICAL CAMPAIGN ON BEHALF OF (OR  IN
OPPOSITION TO) ANY CANDIDATE FOR PUBLIC OFFICE;
  (3)  TO A TRUSTEE OR TRUSTEES, OR A FRATERNAL SOCIETY, ORDER, OR ASSO-
CIATION OPERATING UNDER THE LODGE SYSTEM, BUT ONLY IF SUCH CONTRIBUTIONS
OR GIFTS ARE TO BE USED BY SUCH TRUSTEE OR TRUSTEES, OR BY SUCH  FRATER-
NAL  SOCIETY, ORDER, OR ASSOCIATION, EXCLUSIVELY FOR RELIGIOUS, CHARITA-
BLE,  SCIENTIFIC,  LITERARY,  OR  EDUCATIONAL  PURPOSES,  OR   FOR   THE
PREVENTION  OF  CRUELTY  TO  CHILDREN  OR ANIMALS, SUCH TRUST, FRATERNAL
SOCIETY, ORDER,  OR  ASSOCIATION  WOULD  NOT  BE  DISQUALIFIED  FOR  TAX
EXEMPTION  UNDER  SECTION 501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE
LEGISLATION, AND SUCH TRUSTEE OR TRUSTEES, OR  SUCH  FRATERNAL  SOCIETY,
ORDER, OR ASSOCIATION, DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO)  ANY  CANDIDATE  FOR  PUBLIC
OFFICE;
  (4)  TO  OR  FOR THE USE OF ANY VETERANS' ORGANIZATION INCORPORATED BY
ACT OF CONGRESS, OR OF ITS DEPARTMENTS OR LOCAL CHAPTERS  OR  POSTS,  NO
PART  OF  THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE
SHAREHOLDER OR INDIVIDUAL; OR
  (5) TO AN EMPLOYEE STOCK OWNERSHIP PLAN IF SUCH TRANSFER QUALIFIES  AS
A  QUALIFIED GRATUITOUS TRANSFER OF QUALIFIED EMPLOYER SECURITIES WITHIN
THE MEANING OF SECTION 664(G).
  FOR PURPOSES OF THIS SUBSECTION, THE COMPLETE TERMINATION  BEFORE  THE
DATE  PRESCRIBED  FOR  THE FILING OF THE ESTATE TAX RETURN OF A POWER TO
CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENEFIT OF AN  INDIVID-
UAL  BEFORE SUCH POWER HAS BEEN EXERCISED BY REASON OF THE DEATH OF SUCH
INDIVIDUAL OR FOR ANY OTHER REASON SHALL BE CONSIDERED AND DEEMED TO  BE

S. 6359                            274                           A. 8559

A  QUALIFIED DISCLAIMER WITH THE SAME FULL FORCE AND EFFECT AS THOUGH HE
HAD FILED SUCH QUALIFIED DISCLAIMER.   RULES SIMILAR  TO  THE  RULES  OF
SECTION 501(J) SHALL APPLY FOR PURPOSES OF PARAGRAPH (2).
  (B)  POWERS  OF  APPOINTMENT.--PROPERTY  INCLUDIBLE  IN THE DECEDENT'S
GROSS ESTATE UNDER SECTION 2041  (RELATING  TO  POWERS  OF  APPOINTMENT)
RECEIVED  BY  A  DONEE  DESCRIBED IN THIS SECTION SHALL, FOR PURPOSES OF
THIS SECTION, BE CONSIDERED A BEQUEST OF SUCH DECEDENT.
  (C) DEATH TAXES PAYABLE  OUT  OF  BEQUESTS.--IF  THE  TAX  IMPOSED  BY
SECTION  2001,  OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAXES,
ARE, EITHER BY THE TERMS OF THE WILL, BY THE  LAW  OF  THE  JURISDICTION
UNDER  WHICH  THE ESTATE IS ADMINISTERED, OR BY THE LAW OF THE JURISDIC-
TION IMPOSING THE PARTICULAR TAX, PAYABLE IN WHOLE OR IN PART OUT OF THE
BEQUESTS, LEGACIES, OR DEVISES OTHERWISE DEDUCTIBLE UNDER THIS  SECTION,
THEN  THE  AMOUNT  DEDUCTIBLE  UNDER THIS SECTION SHALL BE THE AMOUNT OF
SUCH BEQUESTS, LEGACIES, OR DEVISES REDUCED BY THE AMOUNT OF SUCH TAXES.
  (D) LIMITATION ON DEDUCTION.--THE AMOUNT OF THE DEDUCTION  UNDER  THIS
SECTION  FOR  ANY TRANSFER SHALL NOT EXCEED THE VALUE OF THE TRANSFERRED
PROPERTY REQUIRED TO BE INCLUDED IN THE GROSS ESTATE.
  (E) DISALLOWANCE OF DEDUCTIONS IN CERTAIN CASES.--
  (1) NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR A TRANSFER TO
OR FOR THE USE OF AN ORGANIZATION OR TRUST DESCRIBED IN  SECTION  508(D)
OR 4948(C)(4) SUBJECT TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.
  (2) WHERE AN INTEREST IN PROPERTY (OTHER THAN AN INTEREST DESCRIBED IN
SECTION  170(F)(3)(B))  PASSES  OR  HAS  PASSED  FROM  THE DECEDENT TO A
PERSON, OR FOR A USE, DESCRIBED  IN  SUBSECTION  (A),  AND  AN  INTEREST
(OTHER THAN AN INTEREST WHICH IS EXTINGUISHED UPON THE DECEDENT'S DEATH)
IN THE SAME PROPERTY PASSES OR HAS PASSED (FOR LESS THAN AN ADEQUATE AND
FULL  CONSIDERATION  IN  MONEY  OR MONEY'S WORTH) FROM THE DECEDENT TO A
PERSON, OR FOR A USE, NOT DESCRIBED  IN  SUBSECTION  (A),  NO  DEDUCTION
SHALL BE ALLOWED UNDER THIS SECTION FOR THE INTEREST WHICH PASSES OR HAS
PASSED  TO  THE  PERSON,  OR  FOR  THE  USE, DESCRIBED IN SUBSECTION (A)
UNLESS--
  (A) IN THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN  A  TRUST
WHICH  IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE REMAINDER
UNITRUST (DESCRIBED IN SECTION 664) OR A POOLED INCOME  FUND  (DESCRIBED
IN SECTION 642(C)(5)), OR
  (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
A  GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF THE
FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
  (3) REFORMATIONS TO COMPLY WITH PARAGRAPH (2).--
  (A) IN GENERAL.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A)  IN
RESPECT OF ANY QUALIFIED REFORMATION.
  (B)  QUALIFIED  REFORMATION.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
"QUALIFIED REFORMATION" MEANS A CHANGE  OF  A  GOVERNING  INSTRUMENT  BY
REFORMATION,  AMENDMENT,  CONSTRUCTION,  OR  OTHERWISE  WHICH  CHANGES A
REFORMABLE INTEREST INTO A QUALIFIED INTEREST BUT ONLY IF--
  (I) ANY DIFFERENCE BETWEEN--
  (I) THE ACTUARIAL VALUE (DETERMINED AS OF THE DATE OF  THE  DECEDENT'S
DEATH) OF THE QUALIFIED INTEREST, AND
  (II)  THE  ACTUARIAL VALUE (AS SO DETERMINED) OF THE REFORMABLE INTER-
EST,
  DOES NOT EXCEED 5 PERCENT OF THE ACTUARIAL VALUE (AS SO DETERMINED) OF
THE REFORMABLE INTEREST,
  (II) IN THE CASE OF--
  (I) A CHARITABLE REMAINDER INTEREST, THE NONREMAINDER INTEREST (BEFORE
AND AFTER THE QUALIFIED REFORMATION) TERMINATED AT THE SAME TIME, OR

S. 6359                            275                           A. 8559

  (II) ANY OTHER INTEREST, THE REFORMABLE  INTEREST  AND  THE  QUALIFIED
INTEREST ARE FOR THE SAME PERIOD, AND
  (III) SUCH CHANGE IS EFFECTIVE AS OF THE DATE OF THE DECEDENT'S DEATH.
  A  NONREMAINDER  INTEREST  (BEFORE REFORMATION) FOR A TERM OF YEARS IN
EXCESS OF 20 YEARS SHALL BE  TREATED  AS  SATISFYING  SUBCLAUSE  (I)  OF
CLAUSE  (II)  IF  SUCH  INTEREST (AFTER REFORMATION) IS FOR A TERM OF 20
YEARS.
  (C) REFORMABLE INTEREST.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) IN GENERAL.--THE TERM "REFORMABLE INTEREST" MEANS ANY INTEREST FOR
WHICH A DEDUCTION WOULD BE ALLOWABLE UNDER SUBSECTION (A) AT THE TIME OF
THE DECEDENT'S DEATH BUT FOR PARAGRAPH (2).
  (II) BENEFICIARY'S  INTEREST  MUST  BE  FIXED.--THE  TERM  "REFORMABLE
INTEREST"  DOES  NOT  INCLUDE  ANY INTEREST UNLESS, BEFORE THE REMAINDER
VESTS IN POSSESSION, ALL PAYMENTS TO PERSONS OTHER THAN AN  ORGANIZATION
DESCRIBED  IN  SUBSECTION  (A)  ARE EXPRESSED EITHER IN SPECIFIED DOLLAR
AMOUNTS OR A FIXED PERCENTAGE OF THE FAIR MARKET VALUE OF THE  PROPERTY.
FOR PURPOSES OF DETERMINING WHETHER ALL SUCH PAYMENTS ARE EXPRESSED AS A
FIXED  PERCENTAGE  OF  THE  FAIR  MARKET  VALUE OF THE PROPERTY, SECTION
664(D)(3) SHALL BE TAKEN INTO ACCOUNT.
  (III) SPECIAL RULE WHERE TIMELY COMMENCEMENT  OF  REFORMATION.--CLAUSE
(II)  SHALL  NOT  APPLY  TO  ANY  INTEREST  IF  A JUDICIAL PROCEEDING IS
COMMENCED TO CHANGE SUCH INTEREST INTO A QUALIFIED  INTEREST  NOT  LATER
THAN THE 90TH DAY AFTER--
  (I) IF AN ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE
(INCLUDING EXTENSIONS) FOR FILING SUCH RETURN, OR
  (II)  IF  NO  ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE
(INCLUDING EXTENSIONS) FOR FILING THE INCOME  TAX  RETURN  FOR  THE  1ST
TAXABLE  YEAR  FOR  WHICH  SUCH  A RETURN IS REQUIRED TO BE FILED BY THE
TRUST.
  (IV) SPECIAL RULE FOR WILL EXECUTED BEFORE JANUARY 1,  1979,  ETC.--IN
THE CASE OF ANY INTEREST PASSING UNDER A WILL EXECUTED BEFORE JANUARY 1,
1979,  OR  UNDER A TRUST CREATED BEFORE SUCH DATE, CLAUSE (II) SHALL NOT
APPLY.
  (D) QUALIFIED INTEREST.--FOR PURPOSES  OF  THIS  PARAGRAPH,  THE  TERM
"QUALIFIED  INTEREST"  MEANS AN INTEREST FOR WHICH A DEDUCTION IS ALLOW-
ABLE UNDER SUBSECTION (A).
  (E) LIMITATION.--THE DEDUCTION REFERRED TO IN SUBPARAGRAPH  (A)  SHALL
NOT  EXCEED  THE AMOUNT OF THE DEDUCTION WHICH WOULD HAVE BEEN ALLOWABLE
FOR THE REFORMABLE INTEREST BUT FOR PARAGRAPH (2).
  (F) SPECIAL RULE WHERE INCOME BENEFICIARY DIES.--IF (BY REASON OF  THE
DEATH OF ANY INDIVIDUAL, OR BY TERMINATION OR DISTRIBUTION OF A TRUST IN
ACCORDANCE  WITH  THE TERMS OF THE TRUST INSTRUMENT) BY THE DUE DATE FOR
FILING THE ESTATE TAX RETURN (INCLUDING ANY EXTENSION THEREOF) A REFORM-
ABLE INTEREST IS IN A WHOLLY CHARITABLE TRUST OR PASSES  DIRECTLY  TO  A
PERSON  OR  FOR  A USE DESCRIBED IN SUBSECTION (A), A DEDUCTION SHALL BE
ALLOWED FOR SUCH REFORMABLE INTEREST AS IF IT HAD MET  THE  REQUIREMENTS
OF  PARAGRAPH  (2)  ON THE DATE OF THE DECEDENT'S DEATH. FOR PURPOSES OF
THE PRECEDING SENTENCE, THE TERM "WHOLLY CHARITABLE TRUST" MEANS A CHAR-
ITABLE TRUST  WHICH,  UPON  THE  ALLOWANCE  OF  A  DEDUCTION,  WOULD  BE
DESCRIBED IN SECTION 4947(A)(1).
  (G)  STATUTE  OF LIMITATIONS.--THE PERIOD FOR ASSESSING ANY DEFICIENCY
OF ANY TAX ATTRIBUTABLE TO THE APPLICATION OF THIS PARAGRAPH  SHALL  NOT
EXPIRE  BEFORE  THE DATE 1 YEAR AFTER THE DATE ON WHICH THE SECRETARY IS
NOTIFIED THAT SUCH REFORMATION (OR OTHER PROCEEDING PURSUANT TO SUBPARA-
GRAPH (J)1 HAS OCCURRED.

S. 6359                            276                           A. 8559

  (H) REGULATIONS.--THE SECRETARY SHALL PRESCRIBE  SUCH  REGULATIONS  AS
MAY  BE NECESSARY TO CARRY OUT THE PURPOSES OF THIS PARAGRAPH, INCLUDING
REGULATIONS  PROVIDING  SUCH  ADJUSTMENTS  IN  THE  APPLICATION  OF  THE
PROVISIONS OF SECTION 508 (RELATING TO SPECIAL RULES RELATING TO SECTION
501(C)(3)  ORGANIZATIONS),  SUBCHAPTER  J  (RELATING TO ESTATES, TRUSTS,
BENEFICIARIES, AND DECEDENTS), AND CHAPTER 42 (RELATING TO PRIVATE FOUN-
DATIONS) AS MAY BE NECESSARY BY REASON OF THE QUALIFIED REFORMATION.
  (I) REFORMATIONS PERMITTED IN CASE OF REMAINDER INTERESTS IN RESIDENCE
OR FARM, POOLED INCOME FUNDS, ETC.--THE SECRETARY SHALL PRESCRIBE  REGU-
LATIONS  (CONSISTENT  WITH  THE PROVISIONS OF THIS PARAGRAPH) PERMITTING
REFORMATIONS IN THE CASE OF ANY FAILURE--
  (I) TO MEET THE REQUIREMENTS  OF  SECTION  170(F)(3)(B)  (RELATING  TO
REMAINDER INTERESTS IN PERSONAL RESIDENCE OR FARM, ETC.), OR
  (II) TO MEET THE REQUIREMENTS OF SECTION 642(C)(5).
  (J)  VOID  OR REFORMED TRUST IN CASES OF INSUFFICIENT REMAINDER INTER-
ESTS.--IN THE CASE OF A TRUST THAT WOULD QUALIFY (OR COULD  BE  REFORMED
TO  QUALIFY PURSUANT TO SUBPARAGRAPH (B)) BUT FOR FAILURE TO SATISFY THE
REQUIREMENT OF PARAGRAPH (1)(D) OR (2)(D) OF SECTION 664(D), SUCH  TRUST
MAY BE--
  (I) DECLARED NULL AND VOID AB INITIO, OR
  (II)  CHANGED  BY  REFORMATION,  AMENDMENT,  OR OTHERWISE TO MEET SUCH
REQUIREMENT BY REDUCING THE PAYOUT RATE OR THE DURATION (OR BOTH) OF ANY
NONCHARITABLE BENEFICIARY'S INTEREST TO THE EXTENT NECESSARY TO  SATISFY
SUCH REQUIREMENT,
  PURSUANT  TO A PROCEEDING THAT IS COMMENCED WITHIN THE PERIOD REQUIRED
IN SUBPARAGRAPH  (C)(III).  IN  A  CASE  DESCRIBED  IN  CLAUSE  (I),  NO
DEDUCTION  SHALL  BE  ALLOWED  UNDER  THIS TITLE FOR ANY TRANSFER TO THE
TRUST AND ANY TRANSACTIONS ENTERED INTO BY  THE  TRUST  PRIOR  TO  BEING
DECLARED VOID SHALL BE TREATED AS ENTERED INTO BY THE TRANSFEROR.
  (4)  WORKS  OF ART AND THEIR COPYRIGHTS TREATED AS SEPARATE PROPERTIES
IN CERTAIN CASES.--
  (A) IN GENERAL.--IN THE CASE OF A QUALIFIED CONTRIBUTION OF A WORK  OF
ART,  THE  WORK  OF  ART  AND THE COPYRIGHT ON SUCH WORK OF ART SHALL BE
TREATED AS SEPARATE PROPERTIES FOR PURPOSES OF PARAGRAPH (2).
  (B) WORK OF ART DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,  THE  TERM
"WORK OF ART" MEANS ANY TANGIBLE PERSONAL PROPERTY WITH RESPECT TO WHICH
THERE IS A COPYRIGHT UNDER FEDERAL LAW.
  (C)  QUALIFIED  CONTRIBUTION DEFINED.--FOR PURPOSES OF THIS PARAGRAPH,
THE TERM "QUALIFIED CONTRIBUTION" MEANS ANY TRANSFER OF  PROPERTY  TO  A
QUALIFIED ORGANIZATION IF THE USE OF THE PROPERTY BY THE ORGANIZATION IS
RELATED  TO  THE  PURPOSE  OR  FUNCTION  CONSTITUTING  THE BASIS FOR ITS
EXEMPTION UNDER SECTION 501.
  (D) QUALIFIED ORGANIZATION DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,
THE  TERM  "QUALIFIED  ORGANIZATION" MEANS ANY ORGANIZATION DESCRIBED IN
SECTION 501(C)(3) OTHER THAN A PRIVATE FOUNDATION (AS DEFINED IN SECTION
509).  FOR PURPOSES OF THE PRECEDING SENTENCE, A PRIVATE OPERATING FOUN-
DATION (AS DEFINED IN SECTION 4942(J)(3)) SHALL  NOT  BE  TREATED  AS  A
PRIVATE FOUNDATION.
  (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.--A  DEDUCTION OTHERWISE
ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF--
  (A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT--
  (I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR

S. 6359                            277                           A. 8559

  (II) A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN  SECTION
4943(F)(5)(A))  WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT-
ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
  (B)  THE  TAXPAYER  OBTAINS  A  CONTEMPORANEOUS WRITTEN ACKNOWLEDGMENT
(DETERMINED UNDER RULES SIMILAR TO THE RULES  OF  SECTION  170(F)(8)(C))
FROM  THE  SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH DONOR ADVISED
FUND THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE  ASSETS
CONTRIBUTED.
  (F)  SPECIAL  RULE  FOR  IRREVOCABLE  TRANSFERS  OF  EASEMENTS IN REAL
PROPERTY.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN  RESPECT
OF  ANY  TRANSFER  OF  A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN
SECTION 170(H)(2)(C)) WHICH MEETS THE  REQUIREMENTS  OF  SECTION  170(H)
(WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
  (G) CROSS REFERENCES.--
  (1) FOR OPTION AS TO TIME FOR VALUATION FOR PURPOSE OF DEDUCTION UNDER
THIS SECTION, SEE SECTION 2032.
  (2)  FOR  TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD CARE, SEE
SECTION 501(K).
  (3) FOR EXEMPTION OF GIFTS AND BEQUESTS  TO  OR  FOR  THE  BENEFIT  OF
LIBRARY  OF  CONGRESS,  SEE  SECTION  5  OF THE ACT OF MARCH 3, 1925, AS
AMENDED (2 U.S.C. 161).
  (4) FOR TREATMENT OF GIFTS AND BEQUESTS FOR THE BENEFIT OF  THE  NAVAL
HISTORICAL  CENTER  AS GIFTS OR BEQUESTS TO OR FOR THE USE OF THE UNITED
STATES, SEE SECTION 7222 OF TITLE 10, UNITED STATES CODE.
  (5) FOR TREATMENT OF GIFTS AND BEQUESTS  TO  OR  FOR  THE  BENEFIT  OF
NATIONAL  PARK  FOUNDATION AS GIFTS OR BEQUESTS TO OR FOR THE USE OF THE
UNITED STATES, SEE SECTION 8 OF THE ACT OF DECEMBER 18, 1967 (16  U.S.C.
191).
  (6)  FOR  TREATMENT  OF  GIFTS,  DEVISES,  OR BEQUESTS ACCEPTED BY THE
SECRETARY OF STATE, THE  DIRECTOR  OF  THE  INTERNATIONAL  COMMUNICATION
AGENCY,  OR  THE DIRECTOR OF THE UNITED STATES INTERNATIONAL DEVELOPMENT
COOPERATION AGENCY AS GIFTS, DEVISES, OR BEQUESTS TO OR FOR THE  USE  OF
THE UNITED STATES, SEE SECTION 25 OF THE STATE DEPARTMENT BASIC AUTHORI-
TIES ACT OF 1956.
  (7) FOR TREATMENT OF GIFTS OR BEQUESTS OF MONEY ACCEPTED BY THE ATTOR-
NEY  GENERAL  FOR CREDIT TO "COMMISSARY FUNDS, FEDERAL PRISONS" AS GIFTS
OR BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE SECTION 4043  OF
TITLE 18, UNITED STATES CODE.
  (8)  FOR  PAYMENT  OF TAX ON GIFTS AND BEQUESTS OF UNITED STATES OBLI-
GATIONS TO THE UNITED STATES, SEE SECTION 3113(E) OF  TITLE  31,  UNITED
STATES CODE.
  (9) FOR TREATMENT OF GIFTS AND BEQUESTS FOR BENEFIT OF THE NAVAL ACAD-
EMY  AS  GIFTS  OR  BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE
SECTION 6973 OF TITLE 10, UNITED STATES CODE.
  (10) FOR TREATMENT OF GIFTS AND BEQUESTS  FOR  BENEFIT  OF  THE  NAVAL
ACADEMY  MUSEUM  AS  GIFTS  OR  BEQUESTS TO OR FOR THE USE OF THE UNITED
STATES, SEE SECTION 6974 OF TITLE 10, UNITED STATES CODE.
  (11) FOR EXEMPTION OF GIFTS AND BEQUESTS RECEIVED BY NATIONAL ARCHIVES
TRUST FUND BOARD, SEE SECTION 2308 OF TITLE 44, UNITED STATES CODE.
  (12) FOR TREATMENT OF GIFTS AND BEQUESTS TO OR FOR THE USE  OF  INDIAN
TRIBAL GOVERNMENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
  S  2056. BEQUESTS, ETC., TO SURVIVING SPOUSE. (A) ALLOWANCE OF MARITAL
DEDUCTION.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001,  THE  VALUE
OF  THE  TAXABLE  ESTATE  SHALL, EXCEPT AS LIMITED BY SUBSECTION (B), BE
DETERMINED BY DEDUCTING FROM THE VALUE OF THE  GROSS  ESTATE  AN  AMOUNT
EQUAL  TO  THE  VALUE  OF  ANY  INTEREST IN PROPERTY WHICH PASSES OR HAS

S. 6359                            278                           A. 8559

PASSED FROM THE DECEDENT TO HIS SURVIVING SPOUSE, BUT ONLY TO THE EXTENT
THAT SUCH INTEREST IS INCLUDED IN DETERMINING THE  VALUE  OF  THE  GROSS
ESTATE.
  (B)  LIMITATION  IN THE CASE OF LIFE ESTATE OR OTHER TERMINABLE INTER-
EST.--
  (1) GENERAL RULE.--WHERE, ON THE LAPSE OF TIME, ON THE  OCCURRENCE  OF
AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF AN EVENT OR CONTINGENCY TO
OCCUR,  AN  INTEREST  PASSING  TO THE SURVIVING SPOUSE WILL TERMINATE OR
FAIL, NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION WITH  RESPECT  TO
SUCH INTEREST--
  (A)  IF  AN  INTEREST  IN SUCH PROPERTY PASSES OR HAS PASSED (FOR LESS
THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH)  FROM
THE  DECEDENT  TO  ANY  PERSON  OTHER THAN SUCH SURVIVING SPOUSE (OR THE
ESTATE OF SUCH SPOUSE); AND
  (B) IF BY REASON OF SUCH PASSING SUCH PERSON (OR HIS HEIRS OR ASSIGNS)
MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY AFTER SUCH TERMINATION OR
FAILURE OF THE INTEREST SO PASSING TO THE SURVIVING SPOUSE;
  AND NO DEDUCTION SHALL BE ALLOWED WITH RESPECT TO SUCH INTEREST  (EVEN
IF SUCH DEDUCTION IS NOT DISALLOWED UNDER SUBPARAGRAPHS (A) AND (B))--
  (C)  IF  SUCH  INTEREST  IS  TO  BE ACQUIRED FOR THE SURVIVING SPOUSE,
PURSUANT TO DIRECTIONS OF THE DECEDENT, BY HIS EXECUTOR OR BY THE  TRUS-
TEE OF A TRUST.
  FOR PURPOSES OF THIS PARAGRAPH, AN INTEREST SHALL NOT BE CONSIDERED AS
AN INTEREST WHICH WILL TERMINATE OR FAIL MERELY BECAUSE IT IS THE OWNER-
SHIP  OF  A BOND, NOTE, OR SIMILAR CONTRACTUAL OBLIGATION, THE DISCHARGE
OF WHICH WOULD NOT HAVE THE EFFECT OF AN ANNUITY FOR LIFE OR FOR A TERM.
  (2) INTEREST IN UNIDENTIFIED ASSETS.--WHERE THE  ASSETS  (INCLUDED  IN
THE  DECEDENT'S GROSS ESTATE) OUT OF WHICH, OR THE PROCEEDS OF WHICH, AN
INTEREST PASSING TO THE SURVIVING SPOUSE  MAY  BE  SATISFIED  INCLUDE  A
PARTICULAR  ASSET  OR ASSETS WITH RESPECT TO WHICH NO DEDUCTION WOULD BE
ALLOWED IF SUCH ASSET OR ASSETS PASSED FROM THE DECEDENT TO SUCH SPOUSE,
THEN THE VALUE OF SUCH  INTEREST  PASSING  TO  SUCH  SPOUSE  SHALL,  FOR
PURPOSES  OF  SUBSECTION  (A), BE REDUCED BY THE AGGREGATE VALUE OF SUCH
PARTICULAR ASSETS.
  (3)  INTEREST  OF  SPOUSE  CONDITIONAL   ON   SURVIVAL   FOR   LIMITED
PERIOD.--FOR  PURPOSES  OF  THIS  SUBSECTION, AN INTEREST PASSING TO THE
SURVIVING SPOUSE SHALL NOT BE  CONSIDERED  AS  AN  INTEREST  WHICH  WILL
TERMINATE OR FAIL ON THE DEATH OF SUCH SPOUSE IF--
  (A)  SUCH  DEATH  WILL CAUSE A TERMINATION OR FAILURE OF SUCH INTEREST
ONLY IF IT OCCURS WITHIN A PERIOD  NOT  EXCEEDING  6  MONTHS  AFTER  THE
DECEDENT'S  DEATH, OR ONLY IF IT OCCURS AS A RESULT OF A COMMON DISASTER
RESULTING IN THE DEATH OF THE DECEDENT AND THE SURVIVING SPOUSE, OR ONLY
IF IT OCCURS IN THE CASE OF EITHER SUCH EVENT; AND
  (B) SUCH TERMINATION OR FAILURE DOES NOT IN FACT OCCUR.
  (4) VALUATION OF INTEREST PASSING TO SURVIVING SPOUSE.--IN DETERMINING
FOR PURPOSES OF SUBSECTION (A) THE VALUE OF  ANY  INTEREST  IN  PROPERTY
PASSING TO THE SURVIVING SPOUSE FOR WHICH A DEDUCTION IS ALLOWED BY THIS
SECTION--
  (A) THERE SHALL BE TAKEN INTO ACCOUNT THE EFFECT WHICH THE TAX IMPOSED
BY  SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX,
HAS ON THE NET VALUE TO THE SURVIVING SPOUSE OF SUCH INTEREST; AND
  (B) WHERE SUCH INTEREST OR PROPERTY IS ENCUMBERED IN  ANY  MANNER,  OR
WHERE THE SURVIVING SPOUSE INCURS ANY OBLIGATION IMPOSED BY THE DECEDENT
WITH  RESPECT TO THE PASSING OF SUCH INTEREST, SUCH ENCUMBRANCE OR OBLI-
GATION SHALL BE TAKEN INTO ACCOUNT IN THE SAME MANNER AS IF  THE  AMOUNT
OF A GIFT TO SUCH SPOUSE OF SUCH INTEREST WERE BEING DETERMINED.

S. 6359                            279                           A. 8559

  (5) LIFE ESTATE WITH POWER OF APPOINTMENT IN SURVIVING SPOUSE.--IN THE
CASE  OF  AN  INTEREST  IN  PROPERTY  PASSING  FROM THE DECEDENT, IF HIS
SURVIVING SPOUSE IS ENTITLED FOR LIFE TO ALL THE INCOME FROM THE  ENTIRE
INTEREST,  OR  ALL  THE  INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE
ANNUALLY  OR  AT  MORE  FREQUENT  INTERVALS, WITH POWER IN THE SURVIVING
SPOUSE TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC  PORTION  (EXER-
CISABLE  IN  FAVOR  OF  SUCH  SURVIVING SPOUSE, OR OF THE ESTATE OF SUCH
SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER OR NOT IN EACH CASE THE
POWER IS EXERCISABLE IN FAVOR OF OTHERS), AND WITH NO POWER IN ANY OTHER
PERSON TO APPOINT ANY PART OF THE INTEREST, OR SUCH SPECIFIC PORTION, TO
ANY PERSON OTHER THAN THE SURVIVING SPOUSE--
  (A) THE INTEREST  OR  SUCH  PORTION  THEREOF  SO  PASSING  SHALL,  FOR
PURPOSES  OF  SUBSECTION  (A), BE CONSIDERED AS PASSING TO THE SURVIVING
SPOUSE, AND
  (B) NO PART OF THE INTEREST SO PASSING SHALL, FOR  PURPOSES  OF  PARA-
GRAPH  (1)(A),  BE  CONSIDERED  AS  PASSING TO ANY PERSON OTHER THAN THE
SURVIVING SPOUSE.
  THIS PARAGRAPH SHALL APPLY ONLY IF SUCH POWER IN THE SURVIVING  SPOUSE
TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC PORTION THEREOF, WHETH-
ER  EXERCISABLE  BY  WILL  OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE
ALONE AND IN ALL EVENTS.
  (6) LIFE INSURANCE OR ANNUITY PAYMENTS WITH POWER  OF  APPOINTMENT  IN
SURVIVING  SPOUSE.--IN  THE CASE OF AN INTEREST IN PROPERTY PASSING FROM
THE DECEDENT CONSISTING OF PROCEEDS UNDER A LIFE  INSURANCE,  ENDOWMENT,
OR  ANNUITY  CONTRACT,  IF UNDER THE TERMS OF THE CONTRACT SUCH PROCEEDS
ARE PAYABLE IN INSTALLMENTS OR ARE HELD BY THE  INSURER  SUBJECT  TO  AN
AGREEMENT  TO  PAY INTEREST THEREON (WHETHER THE PROCEEDS, ON THE TERMI-
NATION OF ANY INTEREST PAYMENTS, ARE PAYABLE IN A LUMP SUM OR IN  ANNUAL
OR  MORE  FREQUENT  INSTALLMENTS),  AND  SUCH  INSTALLMENT  OR  INTEREST
PAYMENTS ARE PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS,  COMMENCING
NOT LATER THAN 13 MONTHS AFTER THE DECEDENT'S DEATH, AND ALL AMOUNTS, OR
A  SPECIFIC  PORTION OF ALL SUCH AMOUNTS, PAYABLE DURING THE LIFE OF THE
SURVIVING SPOUSE ARE PAYABLE ONLY TO SUCH SPOUSE, AND  SUCH  SPOUSE  HAS
THE  POWER  TO  APPOINT  ALL  AMOUNTS, OR SUCH SPECIFIC PORTION, PAYABLE
UNDER SUCH CONTRACT (EXERCISABLE IN FAVOR OF SUCH SURVIVING  SPOUSE,  OR
OF  THE  ESTATE OF SUCH SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER
OR NOT IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF  OTHERS),  WITH
NO POWER IN ANY OTHER PERSON TO APPOINT SUCH AMOUNTS TO ANY PERSON OTHER
THAN THE SURVIVING SPOUSE--
  (A)  SUCH AMOUNTS SHALL, FOR PURPOSES OF SUBSECTION (A), BE CONSIDERED
AS PASSING TO THE SURVIVING SPOUSE, AND
  (B) NO PART OF SUCH AMOUNTS SHALL, FOR PURPOSES OF  PARAGRAPH  (1)(A),
BE CONSIDERED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
  THIS  PARAGRAPH  SHALL APPLY ONLY IF, UNDER THE TERMS OF THE CONTRACT,
SUCH POWER IN THE SURVIVING SPOUSE  TO  APPOINT  SUCH  AMOUNTS,  WHETHER
EXERCISABLE  BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE ALONE
AND IN ALL EVENTS.
  (7) ELECTION WITH RESPECT TO LIFE ESTATE FOR SURVIVING SPOUSE.--
  (A) IN GENERAL.--IN THE CASE OF QUALIFIED TERMINABLE INTEREST  PROPER-
TY--
  (I)  FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED AS
PASSING TO THE SURVIVING SPOUSE, AND
  (II) FOR PURPOSES OF PARAGRAPH (1)(A), NO PART OF SUCH PROPERTY  SHALL
BE TREATED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
  (B)  QUALIFIED  TERMINABLE INTEREST PROPERTY DEFINED.--FOR PURPOSES OF
THIS PARAGRAPH--

S. 6359                            280                           A. 8559

  (I) IN GENERAL.--THE TERM  "QUALIFIED  TERMINABLE  INTEREST  PROPERTY"
MEANS PROPERTY--
  (I) WHICH PASSES FROM THE DECEDENT,
  (II)  IN  WHICH  THE SURVIVING SPOUSE HAS A QUALIFYING INCOME INTEREST
FOR LIFE, AND
  (III) TO WHICH AN ELECTION UNDER THIS PARAGRAPH APPLIES.
  (II) QUALIFYING INCOME INTEREST FOR LIFE.--THE SURVIVING SPOUSE HAS  A
QUALIFYING INCOME INTEREST FOR LIFE IF--
  (I)  THE SURVIVING SPOUSE IS ENTITLED TO ALL THE INCOME FROM THE PROP-
ERTY, PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, OR HAS A  USUFRUCT
INTEREST FOR LIFE IN THE PROPERTY, AND
  (II)  NO PERSON HAS A POWER TO APPOINT ANY PART OF THE PROPERTY TO ANY
PERSON OTHER THAN THE SURVIVING SPOUSE.
  SUBCLAUSE (II) SHALL NOT APPLY TO A POWER EXERCISABLE ONLY AT OR AFTER
THE DEATH OF THE SURVIVING SPOUSE.  TO  THE  EXTENT  PROVIDED  IN  REGU-
LATIONS,  AN  ANNUITY  SHALL BE TREATED IN A MANNER SIMILAR TO AN INCOME
INTEREST IN PROPERTY (REGARDLESS OF WHETHER THE PROPERTY FROM WHICH  THE
ANNUITY IS PAYABLE CAN BE SEPARATELY IDENTIFIED).
  (III)   PROPERTY   INCLUDES  INTEREST  THEREIN.--THE  TERM  "PROPERTY"
INCLUDES AN INTEREST IN PROPERTY.
  (IV)  SPECIFIC  PORTION  TREATED  AS  SEPARATE  PROPERTY.--A  SPECIFIC
PORTION OF PROPERTY SHALL BE TREATED AS SEPARATE PROPERTY.
  (V)  ELECTION.--AN  ELECTION  UNDER THIS PARAGRAPH WITH RESPECT TO ANY
PROPERTY SHALL BE MADE BY THE EXECUTOR ON THE RETURN OF TAX  IMPOSED  BY
SECTION 2001. SUCH AN ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (C)  TREATMENT  OF  SURVIVOR  ANNUITIES.--IN  THE  CASE  OF AN ANNUITY
INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER SECTION 2039 (OR,  IN
THE  CASE OF AN INTEREST IN AN ANNUITY ARISING UNDER THE COMMUNITY PROP-
ERTY LAWS OF A STATE, INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER
SECTION 2033) WHERE ONLY THE SURVIVING SPOUSE HAS THE RIGHT  TO  RECEIVE
PAYMENTS BEFORE THE DEATH OF SUCH SURVIVING SPOUSE--
  (I) THE INTEREST OF SUCH SURVIVING SPOUSE SHALL BE TREATED AS A QUALI-
FYING INCOME INTEREST FOR LIFE, AND
  (II)  THE  EXECUTOR  SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER
THIS SUBSECTION WITH RESPECT TO SUCH ANNUITY UNLESS THE EXECUTOR  OTHER-
WISE ELECTS ON THE RETURN OF TAX IMPOSED BY SECTION 2001.
  AN ELECTION UNDER CLAUSE (II), ONCE MADE, SHALL BE IRREVOCABLE.
  (8) SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS.--
  (A)  IN  GENERAL.--IF THE SURVIVING SPOUSE OF THE DECEDENT IS THE ONLY
BENEFICIARY OF A QUALIFIED CHARITABLE REMAINDER TRUST WHO IS NOT A CHAR-
ITABLE BENEFICIARY NOR AN ESOP  BENEFICIARY,  PARAGRAPH  (1)  SHALL  NOT
APPLY  TO ANY INTEREST IN SUCH TRUST WHICH PASSES OR HAS PASSED FROM THE
DECEDENT TO SUCH SURVIVING SPOUSE.
  (B) DEFINITIONS.--FOR PURPOSES OF SUBPARAGRAPH (A)--
  (I) CHARITABLE BENEFICIARY.--THE TERM "CHARITABLE  BENEFICIARY"  MEANS
ANY BENEFICIARY WHICH IS AN ORGANIZATION DESCRIBED IN SECTION 170(C).
  (II)  ESOP BENEFICIARY.--THE TERM "ESOP BENEFICIARY" MEANS ANY BENEFI-
CIARY WHICH IS AN EMPLOYEE STOCK OWNERSHIP PLAN (AS DEFINED  IN  SECTION
4975(E)(7))  THAT HOLDS A REMAINDER INTEREST IN QUALIFIED EMPLOYER SECU-
RITIES (AS DEFINED IN SECTION 664(G)(4)) TO BE TRANSFERRED TO SUCH  PLAN
IN A QUALIFIED GRATUITOUS TRANSFER (AS DEFINED IN SECTION 664(G)(1)).
  (III) QUALIFIED CHARITABLE REMAINDER TRUST.--THE TERM "QUALIFIED CHAR-
ITABLE  REMAINDER TRUST" MEANS A CHARITABLE REMAINDER ANNUITY TRUST OR A
CHARITABLE REMAINDER UNITRUST (DESCRIBED IN SECTION 664).
  (9) DENIAL OF DOUBLE DEDUCTION.--NOTHING IN THIS SECTION OR ANY  OTHER
PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-

S. 6359                            281                           A. 8559

ERTY  TO  BE  DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE WITH RESPECT TO
THE SAME DECEDENT.
  (10)  SPECIFIC  PORTION.--FOR  PURPOSES  OF  PARAGRAPHS  (5), (6), AND
(7)(B)(IV), THE TERM "SPECIFIC PORTION" ONLY INCLUDES A  PORTION  DETER-
MINED ON A FRACTIONAL OR PERCENTAGE BASIS.
  (C) DEFINITION.--FOR PURPOSES OF THIS SECTION, AN INTEREST IN PROPERTY
SHALL  BE  CONSIDERED  AS PASSING FROM THE DECEDENT TO ANY PERSON IF AND
ONLY IF--
  (1) SUCH INTEREST IS BEQUEATHED OR DEVISED TO SUCH PERSON BY THE DECE-
DENT;
  (2) SUCH INTEREST IS INHERITED BY SUCH PERSON FROM THE DECEDENT;
  (3) SUCH INTEREST IS THE  DOWER  OR  CURTESY  INTEREST  (OR  STATUTORY
INTEREST  IN  LIEU  THEREOF)  OF  SUCH PERSON AS SURVIVING SPOUSE OF THE
DECEDENT;
  (4) SUCH INTEREST HAS BEEN TRANSFERRED TO SUCH PERSON BY THE  DECEDENT
AT ANY TIME;
  (5)  SUCH  INTEREST  WAS, AT THE TIME OF THE DECEDENT'S DEATH, HELD BY
SUCH PERSON AND THE DECEDENT (OR BY THEM AND ANY OTHER PERSON) IN  JOINT
OWNERSHIP WITH RIGHT OF SURVIVORSHIP;
  (6)  THE DECEDENT HAD A POWER (EITHER ALONE OR IN CONJUNCTION WITH ANY
PERSON) TO APPOINT SUCH INTEREST AND IF HE  APPOINTS  OR  HAS  APPOINTED
SUCH  INTEREST  TO SUCH PERSON, OR IF SUCH PERSON TAKES SUCH INTEREST IN
DEFAULT ON THE RELEASE OR NONEXERCISE OF SUCH POWER; OR
  (7) SUCH INTEREST CONSISTS OF PROCEEDS OF INSURANCE ON THE LIFE OF THE
DECEDENT RECEIVABLE BY SUCH PERSON.
  EXCEPT AS PROVIDED IN PARAGRAPH (5) OR (6) OF SUBSECTION (B), WHERE AT
THE TIME OF THE DECEDENT'S DEATH IT IS NOT  POSSIBLE  TO  ASCERTAIN  THE
PARTICULAR  PERSON  OR  PERSONS TO WHOM AN INTEREST IN PROPERTY MAY PASS
FROM THE DECEDENT, SUCH INTEREST SHALL, FOR  PURPOSES  OF  SUBPARAGRAPHS
(A)  AND  (B)  OF  SUBSECTION  (B)(1), BE CONSIDERED AS PASSING FROM THE
DECEDENT TO A PERSON OTHER THAN THE SURVIVING SPOUSE.
  S 2103. DEFINITION OF GROSS ESTATE. FOR THE PURPOSE OF THE TAX IMPOSED
BY SECTION 2101, THE VALUE OF THE GROSS ESTATE OF EVERY DECEDENT NONRES-
IDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE THAT PART OF HIS GROSS
ESTATE (DETERMINED AS PROVIDED IN SECTION 2031) WHICH AT THE TIME OF HIS
DEATH IS SITUATED IN THE UNITED STATES.
  S 2104. PROPERTY WITHIN THE  UNITED  STATES.  (A)  STOCK  IN  CORPORA-
TION.--FOR PURPOSES OF THIS SUBCHAPTER SHARES OF STOCK OWNED AND HELD BY
A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE DEEMED PROPER-
TY WITHIN THE UNITED STATES ONLY IF ISSUED BY A DOMESTIC CORPORATION.
  (B)  REVOCABLE  TRANSFERS  AND TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR
PURPOSES OF THIS SUBCHAPTER, ANY PROPERTY OF WHICH THE DECEDENT HAS MADE
A TRANSFER, BY TRUST OR OTHERWISE, WITHIN THE MEANING OF  SECTIONS  2035
TO 2038, INCLUSIVE, SHALL BE DEEMED TO BE SITUATED IN THE UNITED STATES,
IF  SO SITUATED EITHER AT THE TIME OF THE TRANSFER OR AT THE TIME OF THE
DECEDENT'S DEATH.
  (C) DEBT OBLIGATIONS.--FOR PURPOSES OF  THIS  SUBCHAPTER,  DEBT  OBLI-
GATIONS OF-
  (1) A UNITED STATES PERSON, OR
  (2)  THE  UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF,
OR THE DISTRICT OF COLUMBIA,
  OWNED AND HELD BY A NONRESIDENT NOT A CITIZEN  OF  THE  UNITED  STATES
SHALL  BE  DEEMED  PROPERTY  WITHIN  THE  UNITED STATES. WITH RESPECT TO
ESTATES OF DECEDENTS DYING AFTER DECEMBER  31,  1969,  DEPOSITS  WITH  A
DOMESTIC  BRANCH  OF A FOREIGN CORPORATION, IF SUCH BRANCH IS ENGAGED IN
THE COMMERCIAL BANKING BUSINESS, SHALL, FOR PURPOSES OF THIS SUBCHAPTER,

S. 6359                            282                           A. 8559

BE DEEMED PROPERTY WITHIN THE UNITED STATES. THIS SUBSECTION  SHALL  NOT
APPLY TO A DEBT OBLIGATION TO WHICH SECTION 2105(B) APPLIES.
  S 2105. PROPERTY WITHOUT THE UNITED STATES. (A) PROCEEDS OF LIFE INSU-
RANCE.--FOR PURPOSES OF THIS SUBCHAPTER, THE AMOUNT RECEIVABLE AS INSUR-
ANCE  ON  THE  LIFE  OF A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES
SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES.
  (B) BANK DEPOSITS AND CERTAIN OTHER DEBT OBLIGATIONS.--FOR PURPOSES OF
THIS SUBCHAPTER, THE FOLLOWING SHALL NOT BE DEEMED PROPERTY  WITHIN  THE
UNITED STATES--
  (1)  AMOUNTS  DESCRIBED  IN SECTION 871(I)(3), IF ANY INTEREST THEREON
WOULD NOT BE SUBJECT TO TAX BY REASON OF  SECTION  871(I)(1)  WERE  SUCH
INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS DEATH,
  (2) DEPOSITS WITH A FOREIGN BRANCH OF A DOMESTIC CORPORATION OR DOMES-
TIC  PARTNERSHIP,  IF  SUCH  BRANCH IS ENGAGED IN THE COMMERCIAL BANKING
BUSINESS,
  (3) DEBT OBLIGATIONS, IF, WITHOUT REGARD TO WHETHER A STATEMENT  MEET-
ING  THE REQUIREMENTS OF SECTION 871(H)(5) HAS BEEN RECEIVED, ANY INTER-
EST THEREON WOULD BE ELIGIBLE FOR THE EXEMPTION FROM TAX  UNDER  SECTION
871(H)(1) WERE SUCH INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS
DEATH, AND
  (4)  OBLIGATIONS WHICH WOULD BE ORIGINAL ISSUE DISCOUNT OBLIGATIONS AS
DEFINED IN SECTION 871(G)(1) BUT FOR SUBPARAGRAPH (B)(I) THEREOF, IF ANY
INTEREST THEREON (WERE SUCH INTEREST RECEIVED BY  THE  DECEDENT  AT  THE
TIME  OF  HIS DEATH) WOULD NOT BE EFFECTIVELY CONNECTED WITH THE CONDUCT
OF A TRADE OR BUSINESS WITHIN THE UNITED STATES.
  NOTWITHSTANDING THE PRECEDING SENTENCE, IF ANY PORTION OF THE INTEREST
ON AN OBLIGATION REFERRED TO IN PARAGRAPH (3) WOULD NOT BE ELIGIBLE  FOR
THE  EXEMPTION  REFERRED  TO  IN  PARAGRAPH  (3)  BY  REASON  OF SECTION
871(H)(4) IF THE INTEREST WERE RECEIVED BY THE DECEDENT AT THE  TIME  OF
HIS  DEATH,  THEN  AN  APPROPRIATE  PORTION  (AS  DETERMINED IN A MANNER
PRESCRIBED BY THE SECRETARY) OF THE VALUE (AS DETERMINED FOR PURPOSES OF
THIS CHAPTER) OF SUCH DEBT OBLIGATION SHALL BE  DEEMED  PROPERTY  WITHIN
THE UNITED STATES.
  (C)  WORKS  OF  ART  ON  LOAN  FOR  EXHIBITION.--FOR  PURPOSES OF THIS
SUBCHAPTER, WORKS OF ART OWNED BY A NONRESIDENT NOT  A  CITIZEN  OF  THE
UNITED  STATES  SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES IF
SUCH WORKS OF ART ARE--
  (1) IMPORTED INTO THE UNITED STATES SOLELY FOR EXHIBITION PURPOSES,
  (2) LOANED FOR SUCH PURPOSES, TO A PUBLIC GALLERY OR MUSEUM,  NO  PART
OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE STOCK-
HOLDER OR INDIVIDUAL, AND
  (3)  AT  THE TIME OF THE DEATH OF THE OWNER, ON EXHIBITION, OR ENROUTE
TO OR FROM EXHIBITION, IN SUCH A PUBLIC GALLERY OR MUSEUM.
  S 2503. (A) GENERAL DEFINITION - THE TERM "TAXABLE  GIFTS"  MEANS  THE
TOTAL  AMOUNT  OF  GIFTS  MADE DURING THE CALENDAR YEAR, LESS DEDUCTIONS
PROVIDED IN SUBCHAPTER C (SECTION 2522 AND FOLLOWING).
  (B) EXCLUSIONS FROM GIFTS. (1)  IN  GENERAL.--IN  THE  CASE  OF  GIFTS
(OTHER THAN GIFTS OF FUTURE INTERESTS IN PROPERTY) MADE TO ANY PERSON BY
THE  DONOR  DURING THE CALENDAR YEAR, THE FIRST $10,000 OF SUCH GIFTS TO
SUCH PERSON SHALL NOT, FOR PURPOSES OF SUBSECTION (A),  BE  INCLUDED  IN
THE  TOTAL AMOUNT OF GIFTS MADE DURING SUCH YEAR. WHERE THERE HAS BEEN A
TRANSFER TO ANY PERSON OF A PRESENT INTEREST IN PROPERTY, THE  POSSIBIL-
ITY  THAT  SUCH  INTEREST  MAY  BE DIMINISHED BY THE EXERCISE OF A POWER
SHALL BE DISREGARDED IN APPLYING THIS SUBSECTION, IF  NO  PART  OF  SUCH
INTEREST WILL AT ANY TIME PASS TO ANY OTHER PERSON.

S. 6359                            283                           A. 8559

  (2)  INFLATION  ADJUSTMENT.--IN  THE  CASE OF GIFTS MADE IN A CALENDAR
YEAR AFTER 1998, THE $10,000 AMOUNT CONTAINED IN PARAGRAPH (1) SHALL  BE
INCREASED BY AN AMOUNT EQUAL TO--
  (A) $10,000, MULTIPLIED BY
  (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
SUCH  CALENDAR  YEAR  BY SUBSTITUTING "CALENDAR YEAR 1997" FOR "CALENDAR
YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.
  IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
PLE OF $1,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST  MULTIPLE
OF $1,000.
  (C)  TRANSFER  FOR  THE  BENEFIT  OF MINOR. -- NO PART OF A GIFT TO AN
INDIVIDUAL WHO HAS NOT ATTAINED THE AGE OF 21 YEARS ON THE DATE OF  SUCH
TRANSFER SHALL BE CONSIDERED A GIFT OF A FUTURE INTEREST IN PROPERTY FOR
PURPOSES OF SUBSECTION (B) IF THE PROPERTY AND THE INCOME THEREFROM-
  (1)  MAY  BE  EXPENDED BY, OR FOR THE BENEFIT OF, THE DONEE BEFORE HIS
ATTAINING THE AGE OF 21 YEARS, AND
  (2) WILL TO THE EXTENT NOT SO EXPENDED-
  (A) PASS TO THE DONEE ON HIS ATTAINING THE AGE OF 21 YEARS, AND
  (B) IN THE EVENT THE DONEE DIES BEFORE ATTAINING THE AGE OF 21  YEARS,
BE  PAYABLE  TO  THE  ESTATE  OF  THE DONEE OR AS HE MAY APPOINT UNDER A
GENERAL POWER OF APPOINTMENT AS DEFINED IN SECTION 2514(C).
  {(D) REPEALED. PUB. L. 97-34, TITLE III, S 311(H)(5), AUG.  13,  1981,
95 STAT.  282}
  (E)  EXCLUSION  FOR  CERTAIN  TRANSFERS  FOR  EDUCATIONAL  EXPENSES OR
MEDICAL EXPENSES. (1) IN GENERAL. ANY QUALIFIED TRANSFER  SHALL  NOT  BE
TREATED AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
  (2)  QUALIFIED  TRANSFER.  FOR  PURPOSES  OF THIS SUBSECTION, THE TERM
"QUALIFIED TRANSFER" MEANS ANY AMOUNT PAID ON BEHALF OF AN INDIVIDUAL-
  (A) AS TUITION TO AN EDUCATIONAL  ORGANIZATION  DESCRIBED  IN  SECTION
170(B)(1)(A)(II) FOR THE EDUCATION OR TRAINING OF SUCH INDIVIDUAL, OR
  (B)  TO  ANY  PERSON  WHO PROVIDES MEDICAL CARE (AS DEFINED IN SECTION
213(D)) WITH RESPECT TO SUCH INDIVIDUAL  AS  PAYMENT  FOR  SUCH  MEDICAL
CARE.
  (F) WAIVER OF CERTAIN PENSION RIGHTS. IF ANY INDIVIDUAL WAIVES, BEFORE
THE DEATH OF A PARTICIPANT, ANY SURVIVOR BENEFIT, OR RIGHT TO SUCH BENE-
FIT,  UNDER  SECTION 401(A)(11) OR 417, SUCH WAIVER SHALL NOT BE TREATED
AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
  (G) TREATMENT OF CERTAIN  LOANS  OF  ARTWORKS.  (1)  IN  GENERAL.  FOR
PURPOSES OF THIS SUBTITLE, ANY LOAN OF A QUALIFIED WORK OF ART SHALL NOT
BE  TREATED  AS  A TRANSFER (AND THE VALUE OF SUCH QUALIFIED WORK OF ART
SHALL BE DETERMINED AS IF SUCH LOAN HAD NOT BEEN MADE) IF-
  (A) SUCH LOAN IS TO AN ORGANIZATION DESCRIBED IN SECTION 501(C)(3) AND
EXEMPT FROM TAX UNDER SECTION 501(C) (OTHER THAN A PRIVATE  FOUNDATION),
AND
  (B)  THE  USE  OF  SUCH  WORK  BY  SUCH ORGANIZATION IS RELATED TO THE
PURPOSE OR FUNCTION CONSTITUTING  THE  BASIS  FOR  ITS  EXEMPTION  UNDER
SECTION 501.
  (2) DEFINITIONS. FOR PURPOSES OF THIS SECTION-
  (A)  QUALIFIED WORK OF ART. THE TERM "QUALIFIED WORK OF ART" MEANS ANY
ARCHAEOLOGICAL, HISTORIC, OR CREATIVE TANGIBLE PERSONAL PROPERTY.
  (B) PRIVATE FOUNDATION. THE TERM "PRIVATE FOUNDATION" HAS THE  MEANING
GIVEN  SUCH TERM BY SECTION 509, EXCEPT THAT SUCH TERM SHALL NOT INCLUDE
ANY PRIVATE OPERATING FOUNDATION (AS DEFINED IN SECTION 4942(J)(3)).
  S 2511. TRANSFERS IN GENERAL. (A) SCOPE. SUBJECT  TO  THE  LIMITATIONS
CONTAINED  IN  THIS CHAPTER, THE TAX IMPOSED BY SECTION 2501 SHALL APPLY
WHETHER THE TRANSFER IS IN TRUST  OR  OTHERWISE,  WHETHER  THE  GIFT  IS

S. 6359                            284                           A. 8559

DIRECT OR INDIRECT, AND WHETHER THE PROPERTY IS REAL OR PERSONAL, TANGI-
BLE OR INTANGIBLE; BUT IN THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
UNITED  STATES,  SHALL APPLY TO A TRANSFER ONLY IF THE PROPERTY IS SITU-
ATED WITHIN THE UNITED STATES.
  (B)  INTANGIBLE PROPERTY. FOR PURPOSES OF THIS CHAPTER, IN THE CASE OF
A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES WHO  IS  EXCEPTED  FROM
THE APPLICATION OF SECTION 2501(A)(2)-
  (1) SHARES OF STOCK ISSUED BY A DOMESTIC CORPORATION, AND
  (2) DEBT OBLIGATIONS OF-
--(A) A UNITED STATES PERSON, OR
--(B)  THE  UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF,
OR THE DISTRICT OF COLUMBIA,
--WHICH ARE OWNED AND HELD BY SUCH NONRESIDENT SHALL  BE  DEEMED  TO  BE
PROPERTY SITUATED WITHIN THE UNITED STATES.
  S  2512.  VALUATION OF GIFTS. (A) IF THE GIFT IS MADE IN PROPERTY, THE
VALUE THEREOF AT THE DATE OF THE GIFT SHALL BE CONSIDERED THE AMOUNT  OF
THE GIFT.
  (B)  WHERE  PROPERTY IS TRANSFERRED FOR LESS THAN AN ADEQUATE AND FULL
CONSIDERATION IN MONEY OR MONEY'S WORTH, THEN THE AMOUNT  BY  WHICH  THE
VALUE  OF  THE PROPERTY EXCEEDED THE VALUE OF THE CONSIDERATION SHALL BE
DEEMED A GIFT, AND SHALL BE INCLUDED IN COMPUTING THE  AMOUNT  OF  GIFTS
MADE DURING THE CALENDAR YEAR.
  S 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY. (A) CONSIDERED AS MADE
ONE-HALF  BY  EACH.  (1)  IN  GENERAL.  A GIFT MADE BY ONE SPOUSE TO ANY
PERSON OTHER THAN HIS SPOUSE SHALL, FOR THE PURPOSES OF THIS CHAPTER, BE
CONSIDERED AS MADE ONE-HALF BY HIM AND ONE-HALF BY HIS SPOUSE, BUT  ONLY
IF  AT  THE TIME OF THE GIFT EACH SPOUSE IS A CITIZEN OR RESIDENT OF THE
UNITED STATES. THIS PARAGRAPH SHALL NOT APPLY WITH RESPECT TO A GIFT  BY
A SPOUSE OF AN INTEREST IN PROPERTY IF HE CREATES IN HIS SPOUSE A GENER-
AL POWER OF APPOINTMENT, AS DEFINED IN SECTION 2514(C), OVER SUCH INTER-
EST.  FOR PURPOSES OF THIS SECTION, AN INDIVIDUAL SHALL BE CONSIDERED AS
THE SPOUSE OF ANOTHER INDIVIDUAL ONLY IF HE IS MARRIED TO SUCH  INDIVID-
UAL AT THE TIME OF THE GIFT AND DOES NOT REMARRY DURING THE REMAINDER OF
THE CALENDAR YEAR.
  (2)  CONSENT  OF  BOTH SPOUSES. PARAGRAPH (1) SHALL APPLY ONLY IF BOTH
SPOUSES HAVE SIGNIFIED (UNDER THE REGULATIONS PROVIDED FOR IN SUBSECTION
(B)) THEIR CONSENT TO THE APPLICATION OF PARAGRAPH (1) IN  THE  CASE  OF
ALL  SUCH GIFTS MADE DURING THE CALENDAR YEAR BY EITHER WHILE MARRIED TO
THE OTHER.
  (B) MANNER AND TIME OF SIGNIFYING CONSENT. (1) MANNER. A CONSENT UNDER
THIS SECTION SHALL BE SIGNIFIED IN SUCH  MANNER  AS  IS  PROVIDED  UNDER
REGULATIONS PRESCRIBED BY THE SECRETARY.
  (2) TIME. SUCH CONSENT MAY BE SO SIGNIFIED AT ANY TIME AFTER THE CLOSE
OF  THE CALENDAR YEAR IN WHICH THE GIFT WAS MADE, SUBJECT TO THE FOLLOW-
ING LIMITATIONS-
--(A) THE CONSENT MAY NOT BE SIGNIFIED  AFTER  THE  15TH  DAY  OF  APRIL
FOLLOWING  THE CLOSE OF SUCH YEAR, UNLESS BEFORE SUCH 15TH DAY NO RETURN
HAS BEEN FILED FOR SUCH YEAR BY EITHER SPOUSE, IN WHICH CASE THE CONSENT
MAY NOT BE SIGNIFIED AFTER A RETURN FOR SUCH YEAR  IS  FILED  BY  EITHER
SPOUSE.
--(B) THE CONSENT MAY NOT BE SIGNIFIED AFTER A NOTICE OF DEFICIENCY WITH
RESPECT  TO  THE  TAX  FOR  SUCH  YEAR HAS BEEN SENT TO EITHER SPOUSE IN
ACCORDANCE WITH SECTION 6212(A).
  (C) REVOCATION OF CONSENT. REVOCATION OF A CONSENT  PREVIOUSLY  SIGNI-
FIED  SHALL  BE  MADE  IN  SUCH  MANNER AS IN PROVIDED UNDER REGULATIONS

S. 6359                            285                           A. 8559

PRESCRIBED BY THE SECRETARY, BUT THE RIGHT TO REVOKE A CONSENT PREVIOUS-
LY SIGNIFIED WITH RESPECT TO A CALENDAR YEAR-
  (1) SHALL NOT EXIST AFTER THE 15TH DAY OF APRIL FOLLOWING THE CLOSE OF
SUCH YEAR IF THE CONSENT WAS SIGNIFIED ON OR BEFORE SUCH 15TH DAY; AND
  (2)  SHALL NOT EXIST IF THE CONSENT WAS NOT SIGNIFIED UNTIL AFTER SUCH
15TH DAY.
  (D) JOINT AND SEVERAL LIABILITY FOR TAX. IF THE  CONSENT  REQUIRED  BY
SUBSECTION (A)(2) IS SIGNIFIED WITH RESPECT TO A GIFT MADE IN ANY CALEN-
DAR  YEAR,  THE LIABILITY WITH RESPECT TO THE ENTIRE TAX IMPOSED BY THIS
CHAPTER OF EACH SPOUSE FOR SUCH YEAR SHALL BE JOINT AND SEVERAL.
  S 2514. POWERS OF APPOINTMENT. (A) POWERS CREATED ON OR BEFORE OCTOBER
21, 1942. AN EXERCISE OF A GENERAL POWER OF APPOINTMENT  CREATED  ON  OR
BEFORE  OCTOBER  21, 1942, SHALL BE DEEMED A TRANSFER OF PROPERTY BY THE
INDIVIDUAL POSSESSING SUCH POWER; BUT THE FAILURE  TO  EXERCISE  SUCH  A
POWER  OR  THE  COMPLETE  RELEASE OF SUCH A POWER SHALL NOT BE DEEMED AN
EXERCISE THEREOF. IF A GENERAL POWER OF APPOINTMENT CREATED ON OR BEFORE
OCTOBER 21, 1942, HAS BEEN PARTIALLY RELEASED SO THAT IT IS NO LONGER  A
GENERAL  POWER  OF  APPOINTMENT,  THE  SUBSEQUENT EXERCISE OF SUCH POWER
SHALL NOT BE DEEMED TO BE THE EXERCISE OF A GENERAL POWER OF APPOINTMENT
IF-
  (1) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
  (2) THE DONEE OF SUCH POWER WAS UNDER A LEGAL  DISABILITY  TO  RELEASE
SUCH  POWER  ON  OCTOBER 21, 1942, AND SUCH PARTIAL RELEASE OCCURRED NOT
LATER THAN SIX MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
  (B) POWERS CREATED AFTER OCTOBER 21, 1942. THE EXERCISE OR RELEASE  OF
A  GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, SHALL BE
DEEMED A TRANSFER OF PROPERTY BY THE INDIVIDUAL POSSESSING SUCH POWER.
  (C) DEFINITION OF GENERAL POWER OF APPOINTMENT. FOR PURPOSES  OF  THIS
SECTION,  THE TERM "GENERAL POWER OF APPOINTMENT" MEANS A POWER WHICH IS
EXERCISABLE IN FAVOR OF THE INDIVIDUAL POSSESSING THE  POWER  (HEREAFTER
IN  THIS  SUBSECTION  REFERRED  TO  AS THE "POSSESSOR"), HIS ESTATE, HIS
CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT-
  (1) A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE  BENE-
FIT  OF  THE  POSSESSOR  WHICH  IS  LIMITED BY AN ASCERTAINABLE STANDARD
RELATING TO THE  HEALTH,  EDUCATION,  SUPPORT,  OR  MAINTENANCE  OF  THE
POSSESSOR SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (2)  A  POWER  OF  APPOINTMENT  CREATED ON OR BEFORE OCTOBER 21, 1942,
WHICH IS EXERCISABLE BY THE POSSESSOR ONLY IN CONJUNCTION  WITH  ANOTHER
PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (3)  IN  THE  CASE OF A POWER OF APPOINTMENT CREATED AFTER OCTOBER 21,
1942, WHICH IS EXERCISABLE BY THE POSSESSOR  ONLY  IN  CONJUNCTION  WITH
ANOTHER PERSON-
--(A)  IF  THE  POWER  IS  NOT  EXERCISABLE  BY  THE POSSESSOR EXCEPT IN
CONJUNCTION WITH THE CREATOR OF THE POWER-SUCH POWER SHALL NOT BE DEEMED
A GENERAL POWER OF APPOINTMENT;
--(B) IF THE POWER  IS  NOT  EXERCISABLE  BY  THE  POSSESSOR  EXCEPT  IN
CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST, IN THE PROPERTY
SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
OF  THE  POSSESSOR-SUCH  POWER  SHALL  NOT  BE DEEMED A GENERAL POWER OF
APPOINTMENT. FOR THE PURPOSES OF THIS SUBPARAGRAPH A PERSON  WHO,  AFTER
THE  DEATH  OF THE POSSESSOR, MAY BE POSSESSED OF A POWER OF APPOINTMENT
(WITH RESPECT TO THE PROPERTY SUBJECT TO THE POSSESSOR'S POWER) WHICH HE
MAY EXERCISE IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN  INTEREST  IN
THE  PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH EXERCISE
OF THE POSSESSOR'S POWER;

S. 6359                            286                           A. 8559

--(C) IF (AFTER THE APPLICATION OF SUBPARAGRAPHS (A) AND (B)) THE  POWER
IS  A  GENERAL  POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH
OTHER PERSON-SUCH POWER SHALL BE DEEMED A GENERAL POWER  OF  APPOINTMENT
ONLY  IN  RESPECT  OF  A FRACTIONAL PART OF THE PROPERTY SUBJECT TO SUCH
POWER, SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY
BY THE NUMBER OF SUCH PERSONS (INCLUDING THE POSSESSOR) IN FAVOR OF WHOM
SUCH POWER IS EXERCISABLE.
--FOR  PURPOSES OF SUBPARAGRAPHS (B) AND (C), A POWER SHALL BE DEEMED TO
BE EXERCISABLE IN FAVOR OF A PERSON IF IT IS  EXERCISABLE  IN  FAVOR  OF
SUCH PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
  (D) CREATION OF ANOTHER POWER IN CERTAIN CASES. IF A POWER OF APPOINT-
MENT  CREATED  AFTER  OCTOBER 21, 1942, IS EXERCISED BY CREATING ANOTHER
POWER OF APPOINTMENT WHICH, UNDER  THE  APPLICABLE  LOCAL  LAW,  CAN  BE
VALIDLY  EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE OR INTER-
EST IN THE PROPERTY WHICH WAS SUBJECT TO THE FIRST POWER, OR SUSPEND THE
ABSOLUTE OWNERSHIP OR POWER OF ALIENATION OF SUCH PROPERTY, FOR A PERIOD
ASCERTAINABLE WITHOUT REGARD TO THE DATE OF THE CREATION  OF  THE  FIRST
POWER,  SUCH  EXERCISE  OF  THE  FIRST POWER SHALL, TO THE EXTENT OF THE
PROPERTY SUBJECT TO THE SECOND POWER, BE DEEMED A TRANSFER  OF  PROPERTY
BY THE INDIVIDUAL POSSESSING SUCH POWER.
  (E)  LAPSE OF POWER. THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
SHALL BE CONSIDERED A RELEASE OF SUCH POWER. THE RULE OF  THE  PRECEDING
SENTENCE  SHALL  APPLY  WITH  RESPECT  TO THE LAPSE OF POWERS DURING ANY
CALENDAR YEAR ONLY TO THE EXTENT THAT THE PROPERTY WHICH COULD HAVE BEEN
APPOINTED BY EXERCISE OF SUCH LAPSED POWERS EXCEEDS IN VALUE THE GREATER
OF THE FOLLOWING AMOUNTS:
  (1) $5,000, OR
  (2) 5 PERCENT OF THE AGGREGATE VALUE OF THE ASSETS OUT  OF  WHICH,  OR
THE PROCEEDS OF WHICH, THE EXERCISE OF THE LAPSED POWERS COULD BE SATIS-
FIED.
  (F) DATE OF CREATION OF POWER. FOR PURPOSES OF THIS SECTION A POWER OF
APPOINTMENT  CREATED  BY  A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
  S 2516. CERTAIN PROPERTY SETTLEMENTS. WHERE A HUSBAND AND  WIFE  ENTER
INTO  A  WRITTEN AGREEMENT RELATIVE TO THEIR MARITAL AND PROPERTY RIGHTS
AND DIVORCE OCCURS WITHIN THE 3-YEAR PERIOD BEGINNING ON THE DATE 1 YEAR
BEFORE SUCH AGREEMENT IS ENTERED INTO (WHETHER OR NOT SUCH AGREEMENT  IS
APPROVED  BY THE DIVORCE DECREE), ANY TRANSFERS OF PROPERTY OR INTERESTS
IN PROPERTY MADE PURSUANT TO SUCH AGREEMENT-
  (1) TO EITHER SPOUSE IN SETTLEMENT OF HIS OR HER MARITAL  OR  PROPERTY
RIGHTS, OR
  (2)  TO PROVIDE A REASONABLE ALLOWANCE FOR THE SUPPORT OF ISSUE OF THE
MARRIAGE DURING MINORITY,
  --SHALL BE DEEMED TO BE TRANSFERS MADE FOR A FULL AND ADEQUATE CONSID-
ERATION IN MONEY OR MONEY'S WORTH.
  S 2518. DISCLAIMERS. (A) GENERAL RULE. - FOR PURPOSES OF  THIS  SUBTI-
TLE, IF A PERSON MAKES A QUALIFIED DISCLAIMER WITH RESPECT TO ANY INTER-
EST IN PROPERTY, THIS SUBTITLE SHALL APPLY WITH RESPECT TO SUCH INTEREST
AS IF THE INTEREST HAD NEVER BEEN TRANSFERRED TO SUCH PERSON.
  (B)  QUALIFIED  DISCLAIMER  DEFINED. - FOR PURPOSES OF SUBSECTION (A),
THE TERM "QUALIFIED DISCLAIMER" MEANS  AN  IRREVOCABLE  AND  UNQUALIFIED
REFUSAL BY A PERSON TO ACCEPT AN INTEREST IN PROPERTY BUT ONLY IF -
  (1) SUCH REFUSAL IS IN WRITING,

S. 6359                            287                           A. 8559

  (2)  SUCH  WRITING  IS RECEIVED BY THE TRANSFEROR OF THE INTEREST, HIS
LEGAL REPRESENTATIVE, OR THE HOLDER OF THE LEGAL TITLE TO  THE  PROPERTY
TO  WHICH THE INTEREST RELATES NOT LATER THAN THE DATE WHICH IS 9 MONTHS
AFTER THE LATER OF -
  (A)  THE  DATE  ON  WHICH  THE  TRANSFER CREATING THE INTEREST IN SUCH
PERSON IS MADE, OR
  (B) THE DAY ON WHICH SUCH PERSON ATTAINS AGE 21,
  (3) SUCH PERSON HAS NOT ACCEPTED THE INTEREST OR ANY OF ITS  BENEFITS,
AND
  (4)  AS  A  RESULT  OF  SUCH  REFUSAL, THE INTEREST PASSES WITHOUT ANY
DIRECTION ON THE PART OF THE PERSON MAKING  THE  DISCLAIMER  AND  PASSES
EITHER -
  (A) TO THE SPOUSE OF THE DECEDENT, OR
  (B) TO A PERSON OTHER THAN THE PERSON MAKING THE DISCLAIMER.
  (C) OTHER RULES. FOR PURPOSES OF SUBSECTION (A)-
  (1)  DISCLAIMER  OF  UNDIVIDED  PORTION OF INTEREST. A DISCLAIMER WITH
RESPECT TO AN UNDIVIDED PORTION OF AN INTEREST WHICH MEETS THE  REQUIRE-
MENTS  OF  THE  PRECEDING  SENTENCE  SHALL  BE  TREATED  AS  A QUALIFIED
DISCLAIMER OF SUCH PORTION OF THE INTEREST.
  (2) POWERS. A POWER WITH RESPECT TO PROPERTY SHALL BE  TREATED  AS  AN
INTEREST IN SUCH PROPERTY.
  (3)  CERTAIN  TRANSFERS  TREATED AS DISCLAIMERS. A WRITTEN TRANSFER OF
THE TRANSFEROR'S ENTIRE INTEREST IN THE PROPERTY-
  (A) WHICH MEETS REQUIREMENTS SIMILAR TO THE REQUIREMENTS OF PARAGRAPHS
(2) AND (3) OF SUBSECTION (B), AND
  (B) WHICH IS TO A PERSON OR PERSONS WHO WOULD HAVE RECEIVED THE  PROP-
ERTY  HAD THE TRANSFEROR MADE A QUALIFIED DISCLAIMER (WITHIN THE MEANING
OF SUBSECTION (B)),
  --SHALL BE TREATED AS A QUALIFIED DISCLAIMER.
  S 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES. (A) GENERAL RULE
  --FOR PURPOSES OF THIS CHAPTER AND CHAPTER 11, ANY DISPOSITION OF  ALL
OR  PART  OF  A  QUALIFYING  INCOME INTEREST FOR LIFE IN ANY PROPERTY TO
WHICH THIS SECTION APPLIES SHALL BE TREATED AS A TRANSFER OF ALL  INTER-
ESTS IN SUCH PROPERTY OTHER THAN THE QUALIFYING INCOME INTEREST.
  (B) PROPERTY TO WHICH THIS SUBSECTION APPLIES. THIS SECTION APPLIES TO
ANY  PROPERTY IF A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF
SUCH PROPERTY TO THE DONOR-
  (1) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
  (2) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF.
  (C) CROSS REFERENCE
--FOR RIGHT OF RECOVERY FOR GIFT TAX IN THE CASE OF PROPERTY TREATED  AS
TRANSFERRED UNDER THIS SECTION, SEE SECTION 2207A(B).
  S  2522.  CHARITABLE  AND SIMILAR GIFTS. (A) CITIZENS OR RESIDENTS. IN
COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR, THERE SHALL BE ALLOWED AS
A DEDUCTION IN THE CASE OF A CITIZEN OR RESIDENT THE AMOUNT OF ALL GIFTS
MADE DURING SUCH YEAR TO OR FOR THE USE OF-
  (1) THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION  THERE-
OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
  (2)  A CORPORATION, OR TRUST, OR COMMUNITY CHEST, FUND, OR FOUNDATION,
ORGANIZED AND OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE,  SCIENTIF-
IC, LITERARY, OR EDUCATIONAL PURPOSES, OR TO FOSTER NATIONAL OR INTERNA-
TIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF NO PART OF ITS ACTIVITIES
INVOLVE  THE  PROVISION  OF ATHLETIC FACILITIES OR EQUIPMENT), INCLUDING
THE ENCOURAGEMENT OF ART AND THE PREVENTION OF CRUELTY  TO  CHILDREN  OR
ANIMALS,  NO  PART OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF
ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALIFIED FOR TAX

S. 6359                            288                           A. 8559

EXEMPTION UNDER SECTION 501(C)(3) BY REASON OF ATTEMPTING  TO  INFLUENCE
LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
CAMPAIGN  ON  BEHALF  OF  (OR IN OPPOSITION TO) ANY CANDIDATE FOR PUBLIC
OFFICE;
  (3) A FRATERNAL SOCIETY, ORDER, OR ASSOCIATION,  OPERATING  UNDER  THE
LODGE  SYSTEM,  BUT  ONLY  IF  SUCH GIFTS ARE TO BE USED EXCLUSIVELY FOR
RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY,  OR  EDUCATIONAL  PURPOSES,
INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND THE PREVENTION OF CRUELTY TO
CHILDREN OR ANIMALS;
  (4) POSTS OR ORGANIZATIONS OF WAR  VETERANS,  OR  AUXILIARY  UNITS  OR
SOCIETIES  OF  ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH POSTS, ORGANIZA-
TIONS, UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY  OF
ITS  POSSESSIONS,  AND  IF  NO PART OF THEIR NET EARNINGS INSURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
  RULES SIMILAR TO THE RULES OF SECTION 501(J) SHALL APPLY FOR  PURPOSES
OF PARAGRAPH (2).
  (B)  NONRESIDENTS.  IN  THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
UNITED STATES, THERE SHALL BE ALLOWED AS A DEDUCTION THE AMOUNT  OF  ALL
GIFTS MADE DURING SUCH YEAR TO OR FOR THE USE OF-
  (1)  THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE-
OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
  (2) A DOMESTIC CORPORATION  ORGANIZED  AND  OPERATED  EXCLUSIVELY  FOR
RELIGIOUS,  CHARITABLE,  SCIENTIFIC,  LITERARY, OR EDUCATIONAL PURPOSES,
INCLUDING THE ENCOURAGEMENT OF ART AND  THE  PREVENTION  OF  CRUELTY  TO
CHILDREN  OR ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALI-
FIED FOR TAX EXEMPTION UNDER SECTION 501(C)(3) BY REASON  OF  ATTEMPTING
TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
PUBLIC OFFICE;
  (3) A TRUST, OR COMMUNITY CHEST, FUND, OR  FOUNDATION,  ORGANIZED  AND
OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO SUBSTANTIAL PART OF THE
ACTIVITIES OF WHICH IS CARRYING ON PROPAGANDA, OR OTHERWISE  ATTEMPTING,
TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
PUBLIC OFFICE; BUT ONLY IF SUCH GIFTS ARE TO BE USED WITHIN  THE  UNITED
STATES EXCLUSIVELY FOR SUCH PURPOSES;
  (4)  A  FRATERNAL  SOCIETY, ORDER, OR ASSOCIATION, OPERATING UNDER THE
LODGE SYSTEM, BUT ONLY IF SUCH GIFTS ARE TO BE USED  WITHIN  THE  UNITED
STATES  EXCLUSIVELY  FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS;
  (5)  POSTS  OR  ORGANIZATIONS  OF  WAR VETERANS, OR AUXILIARY UNITS OR
SOCIETIES OF ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH  POSTS,  ORGANIZA-
TIONS,  UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY OF
ITS POSSESSIONS, AND IF NO PART OF THEIR  NET  EARNINGS  INURES  TO  THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
  (C)  DISALLOWANCE  OF  DEDUCTIONS  IN  CERTAIN CASES. (1) NO DEDUCTION
SHALL BE ALLOWED UNDER THIS SECTION FOR A GIFT TO OF 1 FOR THE USE OF AN
ORGANIZATION OR TRUST DESCRIBED IN SECTION 508(D) OR 4948(C)(4)  SUBJECT
TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.

S. 6359                            289                           A. 8559

  (2)  WHERE  A  DONOR  TRANSFERS AN INTEREST IN PROPERTY (OTHER THAN AN
INTEREST DESCRIBED IN SECTION 170(F)(3)(B)) TO A PERSON, OR FOR  A  USE,
DESCRIBED  IN SUBSECTION (A) OR (B) AND AN INTEREST IN THE SAME PROPERTY
IS RETAINED BY THE DONOR, OR IS TRANSFERRED OR HAS BEEN TRANSFERRED (FOR
LESS  THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH)
FROM THE DONOR TO A PERSON, OR FOR A USE, NOT  DESCRIBED  IN  SUBSECTION
(A)  OR  (B),  NO  DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR THE
INTEREST WHICH IS, OR HAS BEEN TRANSFERRED TO THE  PERSON,  OR  FOR  THE
USE, DESCRIBED IN SUBSECTION (A) OR (B), UNLESS-
  (A)  IN  THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN A TRUST
WHICH IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE  REMAINDER
UNITRUST  (DESCRIBED  IN SECTION 664) OR A POOLED INCOME FUND (DESCRIBED
IN SECTION 642(C)(5)), OR
  (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
A GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF  THE
FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
  (3)  RULES  SIMILAR TO THE RULES OF SECTION 2055(E)(4) SHALL APPLY FOR
PURPOSES OF PARAGRAPH (2).
  (4) REFORMATIONS TO COMPLY WITH PARAGRAPH (2). (A)  IN  GENERAL  --  A
DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF ANY QUALI-
FIED REFORMATION (WITHIN THE MEANING OF SECTION 2055(E)(3)(B)).
  (B)  RULES  SIMILAR  TO SECTION 2055(E)(3) TO APPLY -- FOR PURPOSES OF
THIS PARAGRAPH, RULES SIMILAR TO THE RULES OF SECTION  2055(E)(3)  SHALL
APPLY.
  (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.  A  DEDUCTION OTHERWISE
ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF-
--(A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT-
--(I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR
--(II) A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN  SECTION
4943(F)(5)(A))  WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT-
ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
--(B) THE TAXPAYER  OBTAINS  A  CONTEMPORANEOUS  WRITTEN  ACKNOWLEDGMENT
(DETERMINED  UNDER  RULES  SIMILAR TO THE RULES OF SECTION 170(F)(8)(C))
FROM THE SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH  DONOR  ADVISED
FUND  THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE ASSETS
CONTRIBUTED.
  (D) SPECIAL RULE FOR IRREVOCABLE TRANSFERS OF EASEMENTS IN REAL  PROP-
ERTY.  A  DEDUCTION  SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF
ANY TRANSFER OF A  QUALIFIED  REAL  PROPERTY  INTEREST  (AS  DEFINED  IN
SECTION  170(H)(2)(C))  WHICH  MEETS  THE REQUIREMENTS OF SECTION 170(H)
(WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
  (E) SPECIAL RULES FOR FRACTIONAL GIFTS
  (1) DENIAL OF DEDUCTION IN CERTAIN CASES
  (A) IN GENERAL
--NO DEDUCTION SHALL BE ALLOWED  FOR  A  CONTRIBUTION  OF  AN  UNDIVIDED
PORTION  OF  A  TAXPAYER'S ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY
UNLESS ALL INTERESTS IN THE PROPERTY ARE HELD  IMMEDIATELY  BEFORE  SUCH
CONTRIBUTION BY-
--(I) THE TAXPAYER, OR
--(II) THE TAXPAYER AND THE DONEE.
  (B) EXCEPTIONS
--THE  SECRETARY  MAY, BY REGULATION, PROVIDE FOR EXCEPTIONS TO SUBPARA-
GRAPH (A) IN CASES WHERE ALL PERSONS WHO HOLD AN INTEREST IN THE PROPER-

S. 6359                            290                           A. 8559

TY MAKE PROPORTIONAL CONTRIBUTIONS OF AN UNDIVIDED PORTION OF THE ENTIRE
INTEREST HELD BY SUCH PERSONS.
  (2) RECAPTURE OF DEDUCTION IN CERTAIN CASES; ADDITION TO TAX
  (A)  IN  GENERAL.  THE SECRETARY SHALL PROVIDE FOR THE RECAPTURE OF AN
AMOUNT EQUAL TO ANY DEDUCTION ALLOWED UNDER THIS SECTION (PLUS INTEREST)
WITH RESPECT TO ANY CONTRIBUTION OF AN UNDIVIDED PORTION OF A TAXPAYER'S
ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY-
--(I) IN ANY CASE IN WHICH THE DONOR DOES  NOT  CONTRIBUTE  ALL  OF  THE
REMAINING  INTERESTS IN SUCH PROPERTY TO THE DONEE (OR, IF SUCH DONEE IS
NO LONGER IN EXISTENCE, TO ANY PERSON DESCRIBED IN SECTION 170(C)) ON OR
BEFORE THE EARLIER OF-
--(I) THE DATE THAT IS 10 YEARS AFTER THE DATE OF THE INITIAL FRACTIONAL
CONTRIBUTION, OR
--(II) THE DATE OF THE DEATH OF THE DONOR, AND
--(II) IN ANY CASE IN WHICH THE DONEE HAS NOT, DURING THE PERIOD  BEGIN-
NING  ON  THE  DATE OF THE INITIAL FRACTIONAL CONTRIBUTION AND ENDING ON
THE DATE DESCRIBED IN CLAUSE (I)-
--(I) HAD SUBSTANTIAL PHYSICAL POSSESSION OF THE PROPERTY, AND
--(II) USED THE PROPERTY IN A USE WHICH IS RELATED TO A PURPOSE OR FUNC-
TION CONSTITUTING THE  BASIS  FOR  THE  ORGANIZATIONS'  EXEMPTION  UNDER
SECTION 501.
  (B)  ADDITION TO TAX. THE TAX IMPOSED UNDER THIS CHAPTER FOR ANY TAXA-
BLE YEAR FOR WHICH THERE IS A RECAPTURE UNDER SUBPARAGRAPH (A) SHALL  BE
INCREASED BY 10 PERCENT OF THE AMOUNT SO RECAPTURED.
  (C)  INITIAL  FRACTIONAL CONTRIBUTION. FOR PURPOSES OF THIS PARAGRAPH,
THE TERM "INITIAL FRACTIONAL CONTRIBUTION" MEANS, WITH  RESPECT  TO  ANY
DONOR,  THE  FIRST  GIFT  OF  AN UNDIVIDED PORTION OF THE DONOR'S ENTIRE
INTEREST IN ANY TANGIBLE PERSONAL PROPERTY  FOR  WHICH  A  DEDUCTION  IS
ALLOWED UNDER SUBSECTION (A) OR (B).
  (F) CROSS REFERENCES
--(1)  FOR  TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD CARE, SEE
SECTION 501(K).
--(2) FOR EXEMPTION OF CERTAIN GIFTS TO OR FOR THE BENEFIT OF THE UNITED
STATES AND FOR RULES OF CONSTRUCTION WITH RESPECT TO  CERTAIN  BEQUESTS,
SEE SECTION 2055(F).
--(3)  FOR TREATMENT OF GIFTS TO OR FOR THE USE OF INDIAN TRIBAL GOVERN-
MENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
  S 2523. GIFT TO SPOUSE (A)  ALLOWANCE  OF  DEDUCTION.  WHERE  A  DONOR
TRANSFERS  DURING THE CALENDAR YEAR BY GIFT AN INTEREST IN PROPERTY TO A
DONEE WHO AT THE TIME OF THE GIFT IS THE DONOR'S SPOUSE, THERE SHALL  BE
ALLOWED  AS A DEDUCTION IN COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR
AN AMOUNT WITH RESPECT TO SUCH INTEREST EQUAL TO ITS VALUE.
  (B) LIFE ESTATE OR OTHER TERMINABLE INTEREST. WHERE, ON THE  LAPSE  OF
TIME, ON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF
AN  EVENT  OR  CONTINGENCY  TO  OCCUR,  SUCH INTEREST TRANSFERRED TO THE
SPOUSE WILL TERMINATE OR  FAIL,  NO  DEDUCTION  SHALL  BE  ALLOWED  WITH
RESPECT TO SUCH INTEREST-
  (1)  IF  THE DONOR RETAINS IN HIMSELF, OR TRANSFERS OR HAS TRANSFERRED
(FOR LESS THAN AN ADEQUATE AND FULL CONSIDERATION IN  MONEY  OR  MONEY'S
WORTH) TO ANY PERSON OTHER THAN SUCH DONEE SPOUSE (OR THE ESTATE OF SUCH
SPOUSE),  AN  INTEREST  IN  SUCH  PROPERTY,  AND  IF  BY  REASON OF SUCH
RETENTION OR TRANSFER THE DONOR (OR HIS HEIRS OR ASSIGNS) OR SUCH PERSON
(OR HIS HEIRS OR ASSIGNS) MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY
AFTER SUCH TERMINATION OR FAILURE OF THE  INTEREST  TRANSFERRED  TO  THE
DONEE SPOUSE; OR

S. 6359                            291                           A. 8559

  (2)  IF  THE  DONOR IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE
HAS A POWER TO APPOINT AN INTEREST IN SUCH PROPERTY WHICH HE  CAN  EXER-
CISE  (EITHER  ALONE  OR  IN CONJUNCTION WITH ANY PERSON) IN SUCH MANNER
THAT THE APPOINTEE MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY  AFTER
SUCH  TERMINATION  OR  FAILURE  OF THE INTEREST TRANSFERRED TO THE DONEE
SPOUSE. FOR PURPOSES OF THIS PARAGRAPH, THE DONOR SHALL BE CONSIDERED AS
HAVING IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE SUCH POWER  TO
APPOINT EVEN THOUGH SUCH POWER CANNOT BE EXERCISED UNTIL AFTER THE LAPSE
OF TIME, UPON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAIL-
URE OF AN EVENT OR CONTINGENCY TO OCCUR.
  AN  EXERCISE  OR  RELEASE AT ANY TIME BY THE DONOR, EITHER ALONE OR IN
CONJUNCTION WITH ANY PERSON, OF A POWER TO APPOINT AN INTEREST IN  PROP-
ERTY, EVEN THOUGH NOT OTHERWISE A TRANSFER, SHALL, FOR PURPOSES OF PARA-
GRAPH  (1),  BE  CONSIDERED  AS A TRANSFER BY HIM. EXCEPT AS PROVIDED IN
SUBSECTION (E), WHERE AT THE TIME OF THE TRANSFER IT  IS  IMPOSSIBLE  TO
ASCERTAIN  THE  PARTICULAR  PERSON  OR  PERSONS WHO MAY RECEIVE FROM THE
DONOR AN INTEREST IN PROPERTY  SO  TRANSFERRED  BY  HIM,  SUCH  INTEREST
SHALL,  FOR PURPOSES OF PARAGRAPH (1), BE CONSIDERED AS TRANSFERRED TO A
PERSON OTHER THAN THE DONEE SPOUSE.
  (C) INTEREST IN UNIDENTIFIED ASSETS. WHERE THE ASSETS OUT OF WHICH, OR
THE PROCEEDS OF WHICH, THE INTEREST TRANSFERRED TO THE DONEE SPOUSE  MAY
BE  SATISFIED INCLUDE A PARTICULAR ASSET OR ASSETS WITH RESPECT TO WHICH
NO DEDUCTION WOULD BE ALLOWED IF SUCH ASSET OR ASSETS  WERE  TRANSFERRED
FROM  THE  DONOR  TO  SUCH SPOUSE, THEN THE VALUE OF THE INTEREST TRANS-
FERRED TO SUCH SPOUSE SHALL, FOR PURPOSES OF SUBSECTION (A), BE  REDUCED
BY THE AGGREGATE VALUE OF SUCH PARTICULAR ASSETS.
  (D)  JOINT  INTERESTS.  IF  THE  INTEREST  IS TRANSFERRED TO THE DONEE
SPOUSE AS SOLE JOINT TENANT WITH THE DONOR OR AS TENANT BY THE ENTIRETY,
THE INTEREST OF THE DONOR IN THE PROPERTY WHICH EXISTS SOLELY BY  REASON
OF  THE POSSIBILITY THAT THE DONOR MAY SURVIVE THE DONEE SPOUSE, OR THAT
THERE MAY OCCUR A SEVERANCE OF THE TENANCY, SHALL NOT BE CONSIDERED  FOR
PURPOSES  OF  SUBSECTION  (B)  AS  AN  INTEREST RETAINED BY THE DONOR IN
HIMSELF.
  (E) LIFE ESTATE WITH POWER OF APPOINTMENT IN DONEE SPOUSE.  WHERE  THE
DONOR  TRANSFERS AN INTEREST IN PROPERTY, IF BY SUCH TRANSFER HIS SPOUSE
IS ENTITLED FOR LIFE TO ALL OF THE INCOME FROM THE ENTIRE  INTEREST,  OR
ALL  THE  INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE ANNUALLY OR AT
MORE FREQUENT INTERVALS, WITH POWER IN THE DONEE SPOUSE TO  APPOINT  THE
ENTIRE  INTEREST, OR SUCH SPECIFIC PORTION (EXERCISABLE IN FAVOR OF SUCH
DONEE SPOUSE, OR OF THE ESTATE OF SUCH DONEE  SPOUSE,  OR  IN  FAVOR  OF
EITHER, WHETHER OR NOT IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF
OTHERS),  AND  WITH  NO POWER IN ANY OTHER PERSON TO APPOINT ANY PART OF
SUCH INTEREST, OR SUCH PORTION, TO  ANY  PERSON  OTHER  THAN  THE  DONEE
SPOUSE-
  (1)  THE INTEREST, OR SUCH PORTION, SO TRANSFERRED SHALL, FOR PURPOSES
OF SUBSECTION (A) BE CONSIDERED AS TRANSFERRED TO THE DONEE SPOUSE, AND
  (2) NO PART OF THE INTEREST, OR SUCH PORTION,  SO  TRANSFERRED  SHALL,
FOR  PURPOSES  OF  SUBSECTION  (B)(1),  BE CONSIDERED AS RETAINED IN THE
DONOR OR TRANSFERRED TO ANY PERSON OTHER THAN THE DONEE SPOUSE.
  THIS SUBSECTION SHALL APPLY ONLY IF, BY SUCH TRANSFER, SUCH  POWER  IN
THE DONEE SPOUSE TO APPOINT THE INTEREST, OR SUCH PORTION, WHETHER EXER-
CISABLE  BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE ALONE AND
IN ALL EVENTS.   FOR PURPOSES OF THIS  SUBSECTION,  THE  TERM  "SPECIFIC
PORTION"  ONLY INCLUDES A PORTION DETERMINED ON A FRACTIONAL OR PERCENT-
AGE BASIS.

S. 6359                            292                           A. 8559

  (F) ELECTION WITH RESPECT TO LIFE ESTATE  FOR  DONEE  SPOUSE.  (1)  IN
GENERAL
  IN THE CASE OF QUALIFIED TERMINABLE INTEREST PROPERTY-
  (A)  FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED AS
TRANSFERRED TO THE DONEE SPOUSE, AND
  (B) FOR PURPOSES OF SUBSECTION (B)(1), NO PART OF SUCH PROPERTY  SHALL
BE  CONSIDERED  AS  RETAINED  IN  THE DONOR OR TRANSFERRED TO ANY PERSON
OTHER THAN THE DONEE SPOUSE.
  (2) QUALIFIED TERMINABLE  INTEREST  PROPERTY.  FOR  PURPOSES  OF  THIS
SUBSECTION,  THE TERM "QUALIFIED TERMINABLE INTEREST PROPERTY" MEANS ANY
PROPERTY-
  (A) WHICH IS TRANSFERRED BY THE DONOR SPOUSE,
  (B) IN WHICH THE DONEE SPOUSE HAS A  QUALIFYING  INCOME  INTEREST  FOR
LIFE, AND
  (C) TO WHICH AN ELECTION UNDER THIS SUBSECTION APPLIES.
  (3)  CERTAIN  RULES  MADE APPLICABLE. FOR PURPOSES OF THIS SUBSECTION,
RULES SIMILAR TO THE RULES OF CLAUSES (II), (III), AND (IV)  OF  SECTION
2056(B)(7)(B)  SHALL  APPLY  AND  THE RULES OF SECTION 2056(B)(10) SHALL
APPLY.
  (4) ELECTION. (A) TIME AND MANNER. AN ELECTION UNDER  THIS  SUBSECTION
WITH  RESPECT  TO  ANY  PROPERTY  SHALL  BE  MADE  ON OR BEFORE THE DATE
PRESCRIBED BY SECTION 6075(B) FOR FILING A GIFT TAX RETURN WITH  RESPECT
TO THE TRANSFER (DETERMINED WITHOUT REGARD TO SECTION 6019(2)) AND SHALL
BE MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
  (B)  ELECTION  IRREVOCABLE.  AN  ELECTION  UNDER THIS SUBSECTION, ONCE
MADE, SHALL BE IRREVOCABLE.
  (5) TREATMENT OF INTEREST RETAINED BY DONOR SPOUSE. (A) IN GENERAL. IN
THE CASE OF ANY QUALIFIED TERMINABLE INTEREST PROPERTY-
  (I) SUCH PROPERTY SHALL NOT BE INCLUDIBLE IN THE GROSS ESTATE  OF  THE
DONOR SPOUSE, AND
  (II)  ANY  SUBSEQUENT  TRANSFER  BY THE DONOR SPOUSE OF AN INTEREST IN
SUCH PROPERTY SHALL NOT BE TREATED AS A TRANSFER FOR  PURPOSES  OF  THIS
CHAPTER.
  (B)  SUBPARAGRAPH  (A)  NOT  TO  APPLY AFTER TRANSFER BY DONEE SPOUSE.
SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO ANY PROPERTY AFTER  THE
DONEE  SPOUSE  IS  TREATED  AS  HAVING  TRANSFERRED  SUCH PROPERTY UNDER
SECTION 2519, OR SUCH PROPERTY IS INCLUDIBLE IN THE DONEE SPOUSE'S GROSS
ESTATE UNDER SECTION 2044.
  (6) TREATMENT OF JOINT AND SURVIVOR ANNUITIES. IN THE CASE OF A  JOINT
AND  SURVIVOR  ANNUITY WHERE ONLY THE DONOR SPOUSE AND DONEE SPOUSE HAVE
THE RIGHT TO RECEIVE PAYMENTS BEFORE THE DEATH OF  THE  LAST  SPOUSE  TO
DIE-
--(A)  THE  DONEE  SPOUSE'S  INTEREST  SHALL  BE TREATED AS A QUALIFYING
INCOME INTEREST FOR LIFE,
--(B) THE DONOR SPOUSE SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER
THIS SUBSECTION WITH RESPECT TO SUCH ANNUITY  UNLESS  THE  DONOR  SPOUSE
OTHERWISE ELECTS ON OR BEFORE THE DATE SPECIFIED IN PARAGRAPH (4)(A),
--(C)  PARAGRAPH  (5)  AND  SECTION  2519  SHALL  NOT APPLY TO THE DONOR
SPOUSE'S INTEREST IN THE ANNUITY, AND
--(D) IF THE DONEE SPOUSE DIES BEFORE THE DONOR SPOUSE, NO AMOUNT  SHALL
BE INCLUDIBLE IN THE GROSS ESTATE OF THE DONEE SPOUSE UNDER SECTION 2044
WITH RESPECT TO SUCH ANNUITY.
  AN ELECTION UNDER SUBPARAGRAPH (B), ONCE MADE, SHALL BE IRREVOCABLE.
  (G)  SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS. (1) IN GENERAL. IF,
AFTER THE TRANSFER, THE DONEE SPOUSE IS THE ONLY NONCHARITABLE BENEFICI-
ARY (OTHER THAN THE DONOR) OF A QUALIFIED  CHARITABLE  REMAINDER  TRUST,

S. 6359                            293                           A. 8559

SUBSECTION  (B)  SHALL  NOT APPLY TO THE INTEREST IN SUCH TRUST WHICH IS
TRANSFERRED TO THE DONEE SPOUSE.
  (2)  DEFINITIONS. FOR PURPOSES OF PARAGRAPH (1), THE TERM "NONCHARITA-
BLE BENEFICIARY" AND "QUALIFIED CHARITABLE  REMAINDER  TRUST"  HAVE  THE
MEANINGS GIVEN TO SUCH TERMS BY SECTION 2056(B)(8)(B).
  (H)  DENIAL  OF DOUBLE DEDUCTION. NOTHING IN THIS SECTION OR ANY OTHER
PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-
ERTY TO BE DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE  WITH  RESPECT  TO
THE SAME DONOR.
  S 2524. EXTENT OF DEDUCTIONS. THE DEDUCTIONS PROVIDED IN SECTIONS 2522
AND  2523  SHALL  BE  ALLOWED  ONLY TO THE EXTENT THAT THE GIFTS THEREIN
SPECIFIED ARE INCLUDED  IN  THE  AMOUNT  OF  GIFTS  AGAINST  WHICH  SUCH
DEDUCTIONS ARE APPLIED.
  S 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CERTAIN INTER-
ESTS IN CORPORATIONS OR PARTNERSHIPS. (A) VALUATION RULES. (1) IN GENER-
AL.   SOLELY FOR PURPOSES OF DETERMINING WHETHER A TRANSFER OF AN INTER-
EST IN A CORPORATION OR PARTNERSHIP TO (OR FOR THE BENEFIT OF) A  MEMBER
OF  THE  TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE OF SUCH TRANSFER),
THE VALUE OF ANY RIGHT-
--(A) WHICH IS DESCRIBED  IN  SUBPARAGRAPH  (A)  OR  (B)  OF  SUBSECTION
(B)(1), AND
--(B)  WHICH IS WITH RESPECT TO ANY APPLICABLE RETAINED INTEREST THAT IS
HELD BY THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER IMMEDIATELY  AFTER
THE TRANSFER,
  --SHALL  BE  DETERMINED  UNDER PARAGRAPH (3). THIS PARAGRAPH SHALL NOT
APPLY TO THE TRANSFER OF ANY INTEREST FOR WHICH  MARKET  QUOTATIONS  ARE
READILY AVAILABLE (AS OF THE DATE OF TRANSFER) ON AN ESTABLISHED SECURI-
TIES MARKET.
  (2)  EXCEPTIONS FOR MARKETABLE RETAINED INTERESTS, ETC.  PARAGRAPH (1)
SHALL NOT APPLY TO ANY RIGHT WITH  RESPECT  TO  AN  APPLICABLE  RETAINED
INTEREST IF-
--(A)  MARKET  QUOTATIONS  ARE  READILY AVAILABLE (AS OF THE DATE OF THE
TRANSFER) FOR SUCH INTEREST ON AN ESTABLISHED SECURITIES MARKET,
--(B) SUCH INTEREST IS OF THE SAME CLASS AS THE TRANSFERRED INTEREST, OR
--(C) SUCH INTEREST IS PROPORTIONALLY THE SAME AS THE TRANSFERRED INTER-
EST, WITHOUT REGARD TO NONLAPSING DIFFERENCES IN VOTING POWER (OR, FOR A
PARTNERSHIP, NONLAPSING DIFFERENCES WITH RESPECT TO MANAGEMENT AND LIMI-
TATIONS ON LIABILITY).
--SUBPARAGRAPH (C) SHALL NOT APPLY TO ANY INTEREST IN A  PARTNERSHIP  IF
THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER HAS THE RIGHT TO ALTER THE
LIABILITY  OF  THE  TRANSFEREE  OF  THE  TRANSFERRED PROPERTY. EXCEPT AS
PROVIDED BY THE SECRETARY, ANY DIFFERENCE DESCRIBED IN SUBPARAGRAPH  (C)
WHICH LAPSES BY REASON OF ANY FEDERAL OR STATE LAW SHALL BE TREATED AS A
NONLAPSING DIFFERENCE FOR PURPOSES OF SUCH SUBPARAGRAPH.
  (3)  VALUATION OF RIGHTS TO WHICH PARAGRAPH (1) APPLIES. (A) IN GENER-
AL.  THE VALUE OF ANY RIGHT DESCRIBED IN PARAGRAPH  (1),  OTHER  THAN  A
DISTRIBUTION  RIGHT  WHICH  CONSISTS  OF  A RIGHT TO RECEIVE A QUALIFIED
PAYMENT, SHALL BE TREATED AS BEING ZERO.
  (B) VALUATION OF CERTAIN QUALIFIED PAYMENTS. IF-
--(I) ANY APPLICABLE RETAINED  INTEREST  CONFERS  A  DISTRIBUTION  RIGHT
WHICH CONSISTS OF THE RIGHT TO A QUALIFIED PAYMENT, AND
--(II)  THERE ARE 1 OR MORE LIQUIDATION, PUT, CALL, OR CONVERSION RIGHTS
WITH RESPECT TO SUCH INTEREST, THE VALUE OF ALL  SUCH  RIGHTS  SHALL  BE
DETERMINED  AS  IF EACH LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT WERE
EXERCISED IN THE MANNER RESULTING IN THE LOWEST VALUE  BEING  DETERMINED
FOR ALL SUCH RIGHTS.

S. 6359                            294                           A. 8559

  (C)  VALUATION  OF  QUALIFIED  PAYMENTS  WHERE  NO  LIQUIDATION,  ETC.
RIGHTS. IN  THE  CASE  OF  AN  APPLICABLE  RETAINED  INTEREST  WHICH  IS
DESCRIBED IN SUBPARAGRAPH (B)(I) BUT NOT SUBPARAGRAPH (B)(II), THE VALUE
OF  THE  DISTRIBUTION  RIGHT  SHALL BE DETERMINED WITHOUT REGARD TO THIS
SECTION.
  (4) MINIMUM VALUATION OF JUNIOR EQUITY. (A) IN GENERAL. IN THE CASE OF
A  TRANSFER  DESCRIBED IN PARAGRAPH (1) OF A JUNIOR EQUITY INTEREST IN A
CORPORATION OR PARTNERSHIP, SUCH INTEREST SHALL IN NO EVENT BE VALUED AT
AN AMOUNT LESS THAN THE VALUE WHICH WOULD BE  DETERMINED  IF  THE  TOTAL
VALUE  OF ALL OF THE JUNIOR EQUITY INTERESTS IN THE ENTITY WERE EQUAL TO
10 PERCENT OF THE SUM OF-
--(I) THE TOTAL VALUE OF ALL OF THE EQUITY  INTERESTS  IN  SUCH  ENTITY,
PLUS
--(II) THE TOTAL AMOUNT OF INDEBTEDNESS OF SUCH ENTITY TO THE TRANSFEROR
(OR AN APPLICABLE FAMILY MEMBER).
  (B) DEFINITIONS. FOR PURPOSES OF THIS PARAGRAPH-
  (I)  JUNIOR  EQUITY  INTEREST. THE TERM "JUNIOR EQUITY INTEREST" MEANS
COMMON STOCK OR, IN THE CASE OF A PARTNERSHIP, ANY PARTNERSHIP  INTEREST
UNDER  WHICH  THE  RIGHTS  AS  TO  INCOME AND CAPITAL (OR, TO THE EXTENT
PROVIDED IN REGULATIONS, THE RIGHTS AS TO EITHER INCOME OR CAPITAL)  ARE
JUNIOR TO THE RIGHTS OF ALL OTHER CLASSES OF EQUITY INTERESTS.
  (II)  EQUITY  INTEREST.  THE TERM "EQUITY INTEREST" MEANS STOCK OR ANY
INTEREST AS A PARTNER, AS THE CASE MAY BE.
  (B) APPLICABLE RETAINED INTERESTS. FOR PURPOSES OF THIS SECTION-
  (1) IN GENERAL. THE TERM  "APPLICABLE  RETAINED  INTEREST"  MEANS  ANY
INTEREST IN AN ENTITY WITH RESPECT TO WHICH THERE IS-
--(A) A DISTRIBUTION RIGHT, BUT ONLY IF, IMMEDIATELY BEFORE THE TRANSFER
DESCRIBED  IN  SUBSECTION  (A)(1),  THE TRANSFEROR AND APPLICABLE FAMILY
MEMBERS HOLD (AFTER APPLICATION OF SUBSECTION  (E)(3))  CONTROL  OF  THE
ENTITY, OR
--(B) A LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT.
  (2) CONTROL. FOR PURPOSES OF PARAGRAPH (1)-
  (A)  CORPORATIONS.  IN  THE  CASE OF A CORPORATION, THE TERM "CONTROL"
MEANS THE HOLDING OF AT LEAST 50 PERCENT (BY VOTE OR VALUE) OF THE STOCK
OF THE CORPORATION.
  (B) PARTNERSHIPS. IN THE CASE OF A  PARTNERSHIP,  THE  TERM  "CONTROL"
MEANS-
--(I)  THE  HOLDING  OF  AT  LEAST  50 PERCENT OF THE CAPITAL OR PROFITS
INTERESTS IN THE PARTNERSHIP, OR
--(II) IN THE CASE OF A LIMITED PARTNERSHIP, THE HOLDING OF ANY INTEREST
AS A GENERAL PARTNER.
  (C) APPLICABLE FAMILY MEMBER. FOR PURPOSES  OF  THIS  SUBSECTION,  THE
TERM  "APPLICABLE  FAMILY  MEMBER" INCLUDES ANY LINEAL DESCENDANT OF ANY
PARENT OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE.
  (C) DISTRIBUTION AND OTHER RIGHTS; QUALIFIED PAYMENTS. FOR PURPOSES OF
THIS SECTION-
  (1) DISTRIBUTION RIGHT. (A) IN GENERAL. THE TERM "DISTRIBUTION  RIGHT"
MEANS-
--(I)  A  RIGHT  TO DISTRIBUTIONS FROM A CORPORATION WITH RESPECT TO ITS
STOCK, AND
--(II) A RIGHT TO DISTRIBUTIONS FROM A PARTNERSHIP  WITH  RESPECT  TO  A
PARTNER'S INTEREST IN THE PARTNERSHIP.
  (B) EXCEPTIONS. THE TERM "DISTRIBUTION RIGHT" DOES NOT INCLUDE-
--(I)  A  RIGHT  TO  DISTRIBUTIONS WITH RESPECT TO ANY INTEREST WHICH IS
JUNIOR TO THE RIGHTS OF THE TRANSFERRED INTEREST,
--(II) ANY LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT, OR

S. 6359                            295                           A. 8559

--(III) ANY RIGHT TO RECEIVE ANY GUARANTEED PAYMENT DESCRIBED IN SECTION
707(C) OF A FIXED AMOUNT.
  (2)  LIQUIDATION,  ETC. RIGHTS. (A) IN GENERAL. THE TERM "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" MEANS ANY  LIQUIDATION,  PUT,  CALL,  OR
CONVERSION  RIGHT,  OR ANY SIMILAR RIGHT, THE EXERCISE OR NONEXERCISE OF
WHICH AFFECTS THE VALUE OF THE TRANSFERRED INTEREST.
  (B) EXCEPTION FOR FIXED RIGHTS. (I) IN GENERAL. THE TERM "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH MUST BE
EXERCISED AT A SPECIFIC TIME AND AT A SPECIFIC AMOUNT.
  (II) TREATMENT OF CERTAIN RIGHTS. IF A RIGHT IS ASSUMED  TO  BE  EXER-
CISED  IN  A  PARTICULAR  MANNER  UNDER SUBSECTION (A)(3)(B), SUCH RIGHT
SHALL BE TREATED AS SO EXERCISED FOR PURPOSES OF CLAUSE (I).
  (C) EXCEPTION FOR CERTAIN RIGHTS TO CONVERT.  THE  TERM  "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH-
--(I)  IS A RIGHT TO CONVERT INTO A FIXED NUMBER (OR A FIXED PERCENTAGE)
OF SHARES OF THE SAME CLASS OF STOCK IN A CORPORATION AS THE TRANSFERRED
STOCK IN SUCH CORPORATION UNDER SUBSECTION (A)(1) (OR STOCK WHICH  WOULD
BE OF THE SAME CLASS BUT FOR NONLAPSING DIFFERENCES IN VOTING POWER),
--(II) IS NONLAPSING,
--(III)  IS  SUBJECT  TO  PROPORTIONATE ADJUSTMENTS FOR SPLITS, COMBINA-
TIONS, RECLASSIFICATIONS, AND SIMILAR CHANGES IN THE CAPITAL STOCK, AND
--(IV) IS SUBJECT  TO  ADJUSTMENTS  SIMILAR  TO  THE  ADJUSTMENTS  UNDER
SUBSECTION (D) FOR ACCUMULATED BUT UNPAID DISTRIBUTIONS.
--A  RULE  SIMILAR TO THE RULE OF THE PRECEDING SENTENCE SHALL APPLY FOR
PARTNERSHIPS.
  (3) QUALIFIED PAYMENT. (A) IN GENERAL. EXCEPT AS OTHERWISE PROVIDED IN
THIS PARAGRAPH, THE TERM "QUALIFIED PAYMENT" MEANS ANY DIVIDEND  PAYABLE
ON  A PERIODIC BASIS UNDER ANY CUMULATIVE PREFERRED STOCK (OR A COMPARA-
BLE PAYMENT UNDER ANY PARTNERSHIP INTEREST)  TO  THE  EXTENT  THAT  SUCH
DIVIDEND (OR COMPARABLE PAYMENT) IS DETERMINED AT A FIXED RATE.
  (B)  TREATMENT OF VARIABLE RATE PAYMENTS. FOR PURPOSES OF SUBPARAGRAPH
(A), A PAYMENT SHALL BE TREATED AS FIXED AS TO RATE IF SUCH  PAYMENT  IS
DETERMINED  AT  A  RATE  WHICH BEARS A FIXED RELATIONSHIP TO A SPECIFIED
MARKET INTEREST RATE.
  (C) ELECTIONS. (I) IN GENERAL. PAYMENTS UNDER ANY INTEREST HELD  BY  A
TRANSFEROR  WHICH  (WITHOUT  REGARD  TO THIS SUBPARAGRAPH) ARE QUALIFIED
PAYMENTS SHALL BE TREATED AS QUALIFIED PAYMENTS  UNLESS  THE  TRANSFEROR
ELECTS  NOT  TO  TREAT  SUCH  PAYMENTS  AS  QUALIFIED PAYMENTS. PAYMENTS
DESCRIBED IN THE PRECEDING SENTENCE WHICH  ARE  HELD  BY  AN  APPLICABLE
FAMILY MEMBER SHALL BE TREATED AS QUALIFIED PAYMENTS ONLY IF SUCH MEMBER
ELECTS TO TREAT SUCH PAYMENTS AS QUALIFIED PAYMENTS.
  (II)  ELECTION  TO  HAVE  INTEREST  TREATED  AS  QUALIFIED  PAYMENT. A
TRANSFEROR OR APPLICABLE FAMILY MEMBER HOLDING  ANY  DISTRIBUTION  RIGHT
WHICH  (WITHOUT  REGARD TO THIS SUBPARAGRAPH) IS NOT A QUALIFIED PAYMENT
MAY ELECT TO TREAT SUCH RIGHT AS A QUALIFIED PAYMENT, TO BE PAID IN  THE
AMOUNTS  AND  AT  THE  TIMES  SPECIFIED  IN SUCH ELECTION. THE PRECEDING
SENTENCE SHALL APPLY ONLY TO THE EXTENT THAT THE AMOUNTS  AND  TIMES  SO
SPECIFIED  ARE  NOT  INCONSISTENT  WITH  THE UNDERLYING LEGAL INSTRUMENT
GIVING RISE TO SUCH RIGHT.
  (III) ELECTIONS IRREVOCABLE. ANY ELECTION UNDER THIS SUBPARAGRAPH WITH
RESPECT TO AN INTEREST SHALL, ONCE MADE, BE IRREVOCABLE.
  (D) TRANSFER TAX TREATMENT OF CUMULATIVE BUT UNPAID DISTRIBUTIONS. (1)
IN GENERAL. IF A TAXABLE EVENT OCCURS WITH RESPECT TO  ANY  DISTRIBUTION
RIGHT  TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED, THE FOLLOWING SHALL
BE INCREASED BY THE AMOUNT DETERMINED UNDER PARAGRAPH (2):

S. 6359                            296                           A. 8559

--(A) THE TAXABLE ESTATE OF THE TRANSFEROR IN  THE  CASE  OF  A  TAXABLE
EVENT DESCRIBED IN PARAGRAPH (3)(A)(I).
--(B) THE TAXABLE GIFTS OF THE TRANSFEROR FOR THE CALENDAR YEAR IN WHICH
THE  TAXABLE  EVENT  OCCURS  IN THE CASE OF A TAXABLE EVENT DESCRIBED IN
PARAGRAPH (3)(A)(II) OR (III).
  (2) AMOUNT OF INCREASE. (A) IN GENERAL. THE  AMOUNT  OF  THE  INCREASE
DETERMINED UNDER THIS PARAGRAPH SHALL BE THE EXCESS (IF ANY) OF-
--(I)  THE  VALUE  OF  THE  QUALIFIED PAYMENTS PAYABLE DURING THE PERIOD
BEGINNING ON THE DATE OF THE TRANSFER UNDER SUBSECTION (A)(1) AND ENDING
ON THE DATE OF THE TAXABLE EVENT DETERMINED AS IF-
--(I) ALL SUCH PAYMENTS WERE PAID ON THE DATE PAYMENT WAS DUE, AND
--(II) ALL SUCH PAYMENTS WERE REINVESTED BY THE  TRANSFEROR  AS  OF  THE
DATE  OF PAYMENT AT A YIELD EQUAL TO THE DISCOUNT RATE USED IN DETERMIN-
ING  THE  VALUE  OF  THE  APPLICABLE  RETAINED  INTEREST  DESCRIBED   IN
SUBSECTION (A)(1), OVER
  (II) THE VALUE OF SUCH PAYMENTS PAID DURING SUCH PERIOD COMPUTED UNDER
CLAUSE  (I)  ON  THE  BASIS OF THE TIME WHEN SUCH PAYMENTS WERE ACTUALLY
PAID.
  (B) LIMITATION ON AMOUNT OF INCREASE. (I) IN GENERAL.  THE  AMOUNT  OF
THE  INCREASE  UNDER  SUBPARAGRAPH  (A)  SHALL NOT EXCEED THE APPLICABLE
PERCENTAGE OF THE EXCESS (IF ANY) OF-
--(I) THE VALUE (DETERMINED AS OF THE DATE OF THE TAXABLE EVENT) OF  ALL
EQUITY  INTERESTS  IN  THE  ENTITY  WHICH  ARE  JUNIOR TO THE APPLICABLE
RETAINED INTEREST, OVER
--(II) THE VALUE OF SUCH INTERESTS (DETERMINED AS OF  THE  DATE  OF  THE
TRANSFER TO WHICH SUBSECTION (A)(1) APPLIED).
  (II) APPLICABLE PERCENTAGE. FOR PURPOSES OF CLAUSE (I), THE APPLICABLE
PERCENTAGE IS THE PERCENTAGE DETERMINED BY DIVIDING-
--(I)  THE  NUMBER  OF SHARES IN THE CORPORATION HELD (AS OF THE DATE OF
THE TAXABLE EVENT) BY  THE  TRANSFEROR  WHICH  ARE  APPLICABLE  RETAINED
INTERESTS OF THE SAME CLASS, BY
--(II)  THE TOTAL NUMBER OF SHARES IN SUCH CORPORATION (AS OF SUCH DATE)
WHICH ARE OF THE SAME CLASS AS THE CLASS DESCRIBED IN SUBCLAUSE (I).
--A SIMILAR PERCENTAGE SHALL BE DETERMINED IN THE CASE OF INTERESTS IN A
PARTNERSHIP.
  (III) DEFINITION. FOR PURPOSES OF THIS SUBPARAGRAPH, THE TERM  "EQUITY
INTEREST" HAS THE MEANING GIVEN SUCH TERM BY SUBSECTION (A)(4)(B).
  (C) GRACE PERIOD. FOR PURPOSES OF SUBPARAGRAPH (A), ANY PAYMENT OF ANY
DISTRIBUTION DURING THE 4-YEAR PERIOD BEGINNING ON ITS DUE DATE SHALL BE
TREATED AS HAVING BEEN MADE ON SUCH DUE DATE.
  (3) TAXABLE EVENTS. FOR PURPOSES OF THIS SUBSECTION-
  (A) IN GENERAL. THE TERM "TAXABLE EVENT" MEANS ANY OF THE FOLLOWING:
--(I)  THE  DEATH  OF THE TRANSFEROR IF THE APPLICABLE RETAINED INTEREST
CONFERRING THE DISTRIBUTION RIGHT IS INCLUDIBLE IN  THE  ESTATE  OF  THE
TRANSFEROR.
--(II) THE TRANSFER OF SUCH APPLICABLE RETAINED INTEREST.
--(III)  AT  THE  ELECTION OF THE TAXPAYER, THE PAYMENT OF ANY QUALIFIED
PAYMENT AFTER THE PERIOD DESCRIBED IN PARAGRAPH (2)(C),  BUT  ONLY  WITH
RESPECT TO SUCH PAYMENT.
  (B) EXCEPTION WHERE SPOUSE IS TRANSFEREE. (I) DEATHTIME TRANSFERS
--SUBPARAGRAPH  (A)(I) SHALL NOT APPLY TO ANY INTEREST INCLUDIBLE IN THE
GROSS ESTATE OF THE TRANSFEROR IF  A  DEDUCTION  WITH  RESPECT  TO  SUCH
INTEREST IS ALLOWABLE UNDER SECTION 2056 OR 2106(A)(3).
  (II)  LIFETIME  TRANSFERS.  A TRANSFER TO THE SPOUSE OF THE TRANSFEROR
SHALL NOT BE TREATED AS A TAXABLE EVENT UNDER  SUBPARAGRAPH  (A)(II)  IF
SUCH TRANSFER DOES NOT RESULT IN A TAXABLE GIFT BY REASON OF-

S. 6359                            297                           A. 8559

--(I)  ANY  DEDUCTION ALLOWED UNDER SECTION 2523, OR THE EXCLUSION UNDER
SECTION 2503(B), OR
--(II) CONSIDERATION FOR THE TRANSFER PROVIDED BY THE SPOUSE.
  (III)  SPOUSE  SUCCEEDS TO TREATMENT OF TRANSFEROR. IF AN EVENT IS NOT
TREATED AS A TAXABLE EVENT BY REASON OF THIS SUBPARAGRAPH, THE TRANSFER-
EE SPOUSE OR SURVIVING SPOUSE (AS THE CASE MAY BE) SHALL BE  TREATED  IN
THE  SAME  MANNER  AS  THE  TRANSFEROR  IN APPLYING THIS SUBSECTION WITH
RESPECT TO THE INTEREST INVOLVED.
  (4) SPECIAL RULES FOR APPLICABLE FAMILY  MEMBERS.  (A)  FAMILY  MEMBER
TREATED  IN  SAME MANNER AS TRANSFEROR. FOR PURPOSES OF THIS SUBSECTION,
AN APPLICABLE FAMILY MEMBER SHALL BE TREATED IN THE SAME MANNER  AS  THE
TRANSFEROR WITH RESPECT TO ANY DISTRIBUTION RIGHT RETAINED BY SUCH FAMI-
LY MEMBER TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED.
  (B)  TRANSFER  TO  APPLICABLE  FAMILY MEMBER. IN THE CASE OF A TAXABLE
EVENT DESCRIBED IN PARAGRAPH (3)(A)(II) INVOLVING  THE  TRANSFER  OF  AN
APPLICABLE  RETAINED INTEREST TO AN APPLICABLE FAMILY MEMBER (OTHER THAN
THE SPOUSE OF THE TRANSFEROR), THE APPLICABLE  FAMILY  MEMBER  SHALL  BE
TREATED IN THE SAME MANNER AS THE TRANSFEROR IN APPLYING THIS SUBSECTION
TO  DISTRIBUTIONS  ACCUMULATING WITH RESPECT TO SUCH INTEREST AFTER SUCH
TAXABLE EVENT.
  (C) TRANSFER TO TRANSFERORS. IN THE CASE OF A TAXABLE EVENT  DESCRIBED
IN  PARAGRAPH  (3)(A)(II) INVOLVING A TRANSFER OF AN APPLICABLE RETAINED
INTEREST  FROM  AN  APPLICABLE  FAMILY  MEMBER  TO  A  TRANSFEROR,  THIS
SUBSECTION  SHALL  CONTINUE TO APPLY TO THE TRANSFEROR DURING ANY PERIOD
THE TRANSFEROR HOLDS SUCH INTEREST.
  (5) TRANSFER TO INCLUDE TERMINATION. FOR PURPOSES OF THIS  SUBSECTION,
ANY TERMINATION OF AN INTEREST SHALL BE TREATED AS A TRANSFER.
  (E) OTHER DEFINITIONS AND RULES. FOR PURPOSES OF THIS SECTION-
  (1)  MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS, WITH
RESPECT TO ANY TRANSFEROR-
--(A) THE TRANSFEROR'S SPOUSE,
--(B) A LINEAL DESCENDANT OF THE TRANSFEROR OR THE TRANSFEROR'S  SPOUSE,
AND
--(C) THE SPOUSE OF ANY SUCH DESCENDANT.
  (2)  APPLICABLE  FAMILY  MEMBER.  THE  TERM "APPLICABLE FAMILY MEMBER"
MEANS, WITH RESPECT TO ANY TRANSFEROR-
--(A) THE TRANSFEROR'S SPOUSE,
--(B) AN ANCESTOR OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE, AND
--(C) THE SPOUSE OF ANY SUCH ANCESTOR.
  (3) ATTRIBUTION OF INDIRECT  HOLDINGS  AND  TRANSFERS.  AN  INDIVIDUAL
SHALL  BE TREATED AS HOLDING ANY INTEREST TO THE EXTENT SUCH INTEREST IS
HELD INDIRECTLY BY SUCH INDIVIDUAL THROUGH A  CORPORATION,  PARTNERSHIP,
TRUST,  OR  OTHER  ENTITY.  IF  ANY INDIVIDUAL IS TREATED AS HOLDING ANY
INTEREST BY REASON OF THE PRECEDING SENTENCE, ANY TRANSFER WHICH RESULTS
IN SUCH INTEREST BEING TREATED AS NO  LONGER  HELD  BY  SUCH  INDIVIDUAL
SHALL BE TREATED AS A TRANSFER OF SUCH INTEREST.
  (4)  EFFECT  OF  ADOPTION.  A  RELATIONSHIP BY LEGAL ADOPTION SHALL BE
TREATED AS A RELATIONSHIP BY BLOOD.
  (5) CERTAIN CHANGES TREATED AS TRANSFERS. EXCEPT AS PROVIDED IN  REGU-
LATIONS, A CONTRIBUTION TO CAPITAL OR A REDEMPTION, RECAPITALIZATION, OR
OTHER  CHANGE  IN  THE CAPITAL STRUCTURE OF A CORPORATION OR PARTNERSHIP
SHALL BE TREATED AS A TRANSFER OF AN INTEREST IN SUCH  ENTITY  TO  WHICH
THIS SECTION APPLIES IF THE TAXPAYER OR AN APPLICABLE FAMILY MEMBER-
--(A)  RECEIVES  AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY PURSUANT
TO SUCH TRANSACTION, OR

S. 6359                            298                           A. 8559

--(B) UNDER REGULATIONS, OTHERWISE HOLDS, IMMEDIATELY AFTER SUCH  TRANS-
ACTION, AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY.
--THIS  PARAGRAPH  SHALL  NOT  APPLY  TO  ANY  TRANSACTION (OTHER THAN A
CONTRIBUTION TO CAPITAL) IF THE INTERESTS IN  THE  ENTITY  HELD  BY  THE
TRANSFEROR,  APPLICABLE  FAMILY MEMBERS, AND MEMBERS OF THE TRANSFEROR'S
FAMILY BEFORE AND AFTER THE TRANSACTION ARE SUBSTANTIALLY IDENTICAL.
  (6) ADJUSTMENTS. UNDER REGULATIONS PRESCRIBED  BY  THE  SECRETARY,  IF
THERE  IS  ANY SUBSEQUENT TRANSFER, OR INCLUSION IN THE GROSS ESTATE, OF
ANY APPLICABLE RETAINED INTEREST WHICH WAS VALUED  UNDER  THE  RULES  OF
SUBSECTION  (A),  APPROPRIATE  ADJUSTMENTS SHALL BE MADE FOR PURPOSES OF
CHAPTER 11, 12, OR 13 TO REFLECT THE INCREASE IN THE AMOUNT OF ANY PRIOR
TAXABLE GIFT MADE BY THE TRANSFEROR OR DECEDENT BY REASON OF SUCH  VALU-
ATION OR TO REFLECT THE APPLICATION OF SUBSECTION (D).
  (7)  TREATMENT  AS SEPARATE INTERESTS. THE SECRETARY MAY BY REGULATION
PROVIDE THAT ANY APPLICABLE RETAINED INTEREST SHALL BE TREATED AS  2  OR
MORE SEPARATE INTERESTS FOR PURPOSES OF THIS SECTION.
  S  2702.  SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS IN
TRUSTS.  (A) VALUATION RULES. (1) IN GENERAL.  SOLELY  FOR  PURPOSES  OF
DETERMINING  WHETHER  A  TRANSFER OF AN INTEREST IN TRUST TO (OR FOR THE
BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE
OF SUCH TRANSFER), THE VALUE OF ANY INTEREST IN SUCH TRUST  RETAINED  BY
THE  TRANSFEROR  OR  ANY APPLICABLE FAMILY MEMBER (AS DEFINED IN SECTION
2701(E)(2)) SHALL BE DETERMINED AS PROVIDED IN PARAGRAPH (2).
  (2) VALUATION OF RETAINED INTERESTS. (A) IN GENERAL. THE VALUE OF  ANY
RETAINED  INTEREST WHICH IS NOT A QUALIFIED INTEREST SHALL BE TREATED AS
BEING ZERO.
  (B) VALUATION OF QUALIFIED INTEREST. THE VALUE OF ANY RETAINED  INTER-
EST  WHICH  IS  A  QUALIFIED  INTEREST SHALL BE DETERMINED UNDER SECTION
7520.
  (3) EXCEPTIONS. (A) IN GENERAL. THIS SUBSECTION SHALL NOT APPLY TO ANY
TRANSFER-
--(I) IF SUCH TRANSFER IS AN INCOMPLETE GIFT,
--(II) IF SUCH TRANSFER INVOLVES THE TRANSFER OF AN  INTEREST  IN  TRUST
ALL  THE  PROPERTY  IN  WHICH  CONSISTS  OF  A RESIDENCE TO BE USED AS A
PERSONAL RESIDENCE BY PERSONS HOLDING TERM INTERESTS IN SUCH TRUST, OR
--(III) TO THE EXTENT THAT REGULATIONS PROVIDE THAT SUCH TRANSFER IS NOT
INCONSISTENT WITH THE PURPOSES OF THIS SECTION.
  (B) INCOMPLETE GIFT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A),  THE  TERM
"INCOMPLETE  GIFT"  MEANS  ANY  TRANSFER WHICH WOULD NOT BE TREATED AS A
GIFT WHETHER OR NOT CONSIDERATION WAS RECEIVED FOR SUCH TRANSFER.
  (B) QUALIFIED INTEREST. FOR PURPOSES OF THIS SECTION, THE TERM "QUALI-
FIED INTEREST" MEANS-
  (1) ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE FIXED  AMOUNTS
PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY,
  (2)  ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE AMOUNTS WHICH
ARE PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY AND ARE A FIXED PERCENTAGE
OF THE FAIR MARKET VALUE OF THE PROPERTY IN THE TRUST (DETERMINED  ANNU-
ALLY), AND
  (3) ANY NONCONTINGENT REMAINDER INTEREST IF ALL OF THE OTHER INTERESTS
IN THE TRUST CONSIST OF INTERESTS DESCRIBED IN PARAGRAPH (1) OR (2).
  (C)  CERTAIN  PROPERTY  TREATED AS HELD IN TRUST. FOR PURPOSES OF THIS
SECTION- (1) IN GENERAL. THE TRANSFER OF AN INTEREST  IN  PROPERTY  WITH
RESPECT TO WHICH THERE IS 1 OR MORE TERM INTERESTS SHALL BE TREATED AS A
TRANSFER OF AN INTEREST IN A TRUST.
  (2)  JOINT  PURCHASES. IF 2 OR MORE MEMBERS OF THE SAME FAMILY ACQUIRE
INTERESTS IN ANY PROPERTY DESCRIBED IN PARAGRAPH (1) IN THE SAME  TRANS-

S. 6359                            299                           A. 8559

ACTION  (OR  A  SERIES OF RELATED TRANSACTIONS), THE PERSON (OR PERSONS)
ACQUIRING THE TERM INTERESTS IN SUCH PROPERTY SHALL BE TREATED AS HAVING
ACQUIRED THE ENTIRE PROPERTY AND THEN TRANSFERRED TO THE  OTHER  PERSONS
THE  INTERESTS  ACQUIRED  BY  SUCH  OTHER PERSONS IN THE TRANSACTION (OR
SERIES OF TRANSACTIONS). SUCH TRANSFER  SHALL  BE  TREATED  AS  MADE  IN
EXCHANGE  FOR  THE CONSIDERATION (IF ANY) PROVIDED BY SUCH OTHER PERSONS
FOR THE ACQUISITION OF THEIR INTERESTS IN SUCH PROPERTY.
  (3) TERM INTEREST. THE TERM "TERM INTEREST" MEANS-
  (A) A LIFE INTEREST IN PROPERTY, OR
  (B) AN INTEREST IN PROPERTY FOR A TERM OF YEARS.
  (4) VALUATION RULE FOR CERTAIN TERM INTERESTS. IF THE  NONEXERCISE  OF
RIGHTS  UNDER  A  TERM  INTEREST  IN  TANGIBLE PROPERTY WOULD NOT HAVE A
SUBSTANTIAL EFFECT ON THE VALUATION OF THE REMAINDER  INTEREST  IN  SUCH
PROPERTY-
  (A) SUBPARAGRAPH (A) OF SUBSECTION (A)(2) SHALL NOT APPLY TO SUCH TERM
INTEREST, AND
  (B)  THE  VALUE  OF  SUCH  TERM  INTEREST  FOR  PURPOSES  OF  APPLYING
SUBSECTION (A)(1) SHALL BE THE AMOUNT  WHICH  THE  HOLDER  OF  THE  TERM
INTEREST ESTABLISHES AS THE AMOUNT FOR WHICH SUCH INTEREST COULD BE SOLD
TO AN UNRELATED THIRD PARTY.
  (D)  TREATMENT  OF TRANSFERS OF INTERESTS IN PORTION OF TRUST.  IN THE
CASE OF A TRANSFER OF AN INCOME OR REMAINDER INTEREST WITH RESPECT TO  A
SPECIFIED PORTION OF THE PROPERTY IN A TRUST, ONLY SUCH PORTION SHALL BE
TAKEN INTO ACCOUNT IN APPLYING THIS SECTION TO SUCH TRANSFER.
  (E)  MEMBER  OF  THE  FAMILY.  FOR  PURPOSES OF THIS SECTION, THE TERM
"MEMBER OF THE FAMILY" SHALL HAVE THE MEANING GIVEN SUCH TERM BY SECTION
2704(C)(2).
  S 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED
  (A) GENERAL RULE. FOR PURPOSES OF THIS  SUBTITLE,  THE  VALUE  OF  ANY
PROPERTY SHALL BE DETERMINED WITHOUT REGARD TO-
  (1)  ANY OPTION, AGREEMENT, OR OTHER RIGHT TO ACQUIRE OR USE THE PROP-
ERTY AT A PRICE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY (WITHOUT
REGARD TO SUCH OPTION, AGREEMENT, OR RIGHT), OR
  (2) ANY RESTRICTION ON THE RIGHT TO SELL OR USE SUCH PROPERTY.
  (B) EXCEPTIONS. SUBSECTION (A) SHALL NOT APPLY TO ANY  OPTION,  AGREE-
MENT,  RIGHT,  OR RESTRICTION WHICH MEETS EACH OF THE FOLLOWING REQUIRE-
MENTS:
  (1) IT IS A BONA FIDE BUSINESS ARRANGEMENT.
  (2) IT IS NOT A DEVICE TO TRANSFER SUCH PROPERTY  TO  MEMBERS  OF  THE
DECEDENT'S FAMILY FOR LESS THAN FULL AND ADEQUATE CONSIDERATION IN MONEY
OR MONEY'S WORTH.
  (3)  ITS  TERMS ARE COMPARABLE TO SIMILAR ARRANGEMENTS ENTERED INTO BY
PERSONS IN AN ARMS' LENGTH TRANSACTION
  S 2704. TREATMENT OF CERTAIN LAPSING RIGHTS  AND  RESTRICTIONS.    (A)
TREATMENT  OF  LAPSED  VOTING OR LIQUIDATION RIGHTS. (1) IN GENERAL. FOR
PURPOSES OF THIS SUBTITLE, IF-
--(A) THERE IS A LAPSE OF ANY VOTING OR LIQUIDATION RIGHT  IN  A  CORPO-
RATION OR PARTNERSHIP, AND
--(B) THE INDIVIDUAL HOLDING SUCH RIGHT IMMEDIATELY BEFORE THE LAPSE AND
MEMBERS  OF  SUCH  INDIVIDUAL'S  FAMILY  HOLD, BOTH BEFORE AND AFTER THE
LAPSE, CONTROL OF THE ENTITY,
  SUCH LAPSE SHALL BE TREATED AS A TRANSFER BY SUCH INDIVIDUAL BY  GIFT,
OR  A  TRANSFER WHICH IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT,
WHICHEVER IS APPLICABLE, IN THE AMOUNT DETERMINED UNDER PARAGRAPH (2).
  (2) AMOUNT OF TRANSFER. FOR PURPOSES  OF  PARAGRAPH  (1),  THE  AMOUNT
DETERMINED UNDER THIS PARAGRAPH IS THE EXCESS (IF ANY) OF-

S. 6359                            300                           A. 8559

--(A)  THE  VALUE  OF ALL INTERESTS IN THE ENTITY HELD BY THE INDIVIDUAL
DESCRIBED IN PARAGRAPH (1) IMMEDIATELY BEFORE THE LAPSE  (DETERMINED  AS
IF THE VOTING AND LIQUIDATION RIGHTS WERE NONLAPSING), OVER
--(B) THE VALUE OF SUCH INTERESTS IMMEDIATELY AFTER THE LAPSE.
  (3)  SIMILAR  RIGHTS.  THE  SECRETARY  MAY  BY  REGULATIONS APPLY THIS
SUBSECTION TO RIGHTS SIMILAR TO VOTING AND LIQUIDATION RIGHTS.
  (B) CERTAIN RESTRICTIONS ON LIQUIDATION DISREGARDED. (1)  IN  GENERAL.
FOR PURPOSES OF THIS SUBTITLE, IF-
--(A) THERE IS A TRANSFER OF AN INTEREST IN A CORPORATION OR PARTNERSHIP
TO (OR FOR THE BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY, AND
--(B)  THE TRANSFEROR AND MEMBERS OF THE TRANSFEROR'S FAMILY HOLD, IMME-
DIATELY BEFORE THE TRANSFER, CONTROL OF THE ENTITY,
  --ANY APPLICABLE RESTRICTION SHALL BE DISREGARDED IN  DETERMINING  THE
VALUE OF THE TRANSFERRED INTEREST.
  (2)  APPLICABLE RESTRICTION. FOR PURPOSES OF THIS SUBSECTION, THE TERM
"APPLICABLE RESTRICTION" MEANS ANY RESTRICTION-
  (A) WHICH EFFECTIVELY LIMITS THE ABILITY OF THE CORPORATION  OR  PART-
NERSHIP TO LIQUIDATE, AND
  (B) WITH RESPECT TO WHICH EITHER OF THE FOLLOWING APPLIES:
--(I)  THE  RESTRICTION  LAPSES, IN WHOLE OR IN PART, AFTER THE TRANSFER
REFERRED TO IN PARAGRAPH (1).
--(II) THE TRANSFEROR OR ANY MEMBER OF THE TRANSFEROR'S  FAMILY,  EITHER
ALONE  OR  COLLECTIVELY, HAS THE RIGHT AFTER SUCH TRANSFER TO REMOVE, IN
WHOLE OR IN PART, THE RESTRICTION.
  (3) EXCEPTIONS. THE TERM "APPLICABLE RESTRICTION" SHALL NOT INCLUDE-
--(A) ANY COMMERCIALLY REASONABLE RESTRICTION WHICH ARISES  AS  PART  OF
ANY FINANCING BY THE CORPORATION OR PARTNERSHIP WITH A PERSON WHO IS NOT
RELATED  TO  THE  TRANSFEROR OR TRANSFEREE, OR A MEMBER OF THE FAMILY OF
EITHER, OR
--(B) ANY RESTRICTION IMPOSED, OR REQUIRED TO BE IMPOSED, BY ANY FEDERAL
OR STATE LAW.
  (4) OTHER RESTRICTIONS. THE SECRETARY MAY BY REGULATIONS PROVIDE  THAT
OTHER  RESTRICTIONS SHALL BE DISREGARDED IN DETERMINING THE VALUE OF THE
TRANSFER OF ANY INTEREST IN A CORPORATION OR PARTNERSHIP TO A MEMBER  OF
THE  TRANSFEROR'S  FAMILY IF SUCH RESTRICTION HAS THE EFFECT OF REDUCING
THE VALUE OF THE TRANSFERRED INTEREST FOR PURPOSES OF THIS SUBTITLE  BUT
DOES NOT ULTIMATELY REDUCE THE VALUE OF SUCH INTEREST TO THE TRANSFEREE.
  (C) DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
  (1)  CONTROL.  THE  TERM  "CONTROL" HAS THE MEANING GIVEN SUCH TERM BY
SECTION 2701(B)(2).
  (2) MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS,  WITH
RESPECT TO ANY INDIVIDUAL-
  (A) SUCH INDIVIDUAL'S SPOUSE,
  (B) ANY ANCESTOR OR LINEAL DESCENDANT OF SUCH INDIVIDUAL OR SUCH INDI-
VIDUAL'S SPOUSE,
  (C) ANY BROTHER OR SISTER OF THE INDIVIDUAL, AND
  (D) ANY SPOUSE OF ANY INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (B) OR
(C).
  (3)  ATTRIBUTION.  THE  RULE  OF  SECTION  2701(E)(3)  SHALL APPLY FOR
PURPOSES OF DETERMINING THE INTERESTS HELD BY ANY INDIVIDUAL.
  S 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES
  (A) TREATMENT OF GIFT LOANS AND DEMAND LOANS. (1)  IN  GENERAL.    FOR
PURPOSES  OF  THIS  TITLE, IN THE CASE OF ANY BELOW-MARKET LOAN TO WHICH
THIS SECTION APPLIES AND WHICH IS A GIFT LOAN  OR  A  DEMAND  LOAN,  THE
FORGONE INTEREST SHALL BE TREATED AS-
--(A) TRANSFERRED FROM THE LENDER TO THE BORROWER, AND

S. 6359                            301                           A. 8559

--(B) RETRANSFERRED BY THE BORROWER TO THE LENDER AS INTEREST.
  (2)  TIME  WHEN  TRANSFERS MADE. EXCEPT AS OTHERWISE PROVIDED IN REGU-
LATIONS PRESCRIBED BY THE SECRETARY, ANY FORGONE  INTEREST  ATTRIBUTABLE
TO PERIODS DURING ANY CALENDAR YEAR SHALL BE TREATED AS TRANSFERRED (AND
RETRANSFERRED)  UNDER  PARAGRAPH  (1)  ON  THE LAST DAY OF SUCH CALENDAR
YEAR.
  (B) TREATMENT OF OTHER  BELOW-MARKET  LOANS.  (1)  IN  GENERAL.    FOR
PURPOSES  OF  THIS  TITLE, IN THE CASE OF ANY BELOW-MARKET LOAN TO WHICH
THIS SECTION APPLIES AND TO WHICH SUBSECTION (A)(1) DOES NOT APPLY,  THE
LENDER  SHALL  BE TREATED AS HAVING TRANSFERRED ON THE DATE THE LOAN WAS
MADE (OR, IF LATER, ON THE FIRST DAY ON WHICH THIS  SECTION  APPLIES  TO
SUCH LOAN), AND THE BORROWER SHALL BE TREATED AS HAVING RECEIVED ON SUCH
DATE, CASH IN AN AMOUNT EQUAL TO THE EXCESS OF-
--(A) THE AMOUNT LOANED, OVER
--(B)  THE  PRESENT  VALUE OF ALL PAYMENTS WHICH ARE REQUIRED TO BE MADE
UNDER THE TERMS OF THE LOAN.
  (2) OBLIGATION TREATED AS HAVING ORIGINAL ISSUE DISCOUNT. FOR PURPOSES
OF THIS TITLE-
  (A) IN GENERAL. ANY BELOW-MARKET LOAN TO WHICH PARAGRAPH  (1)  APPLIES
SHALL BE TREATED AS HAVING ORIGINAL ISSUE DISCOUNT IN AN AMOUNT EQUAL TO
THE EXCESS DESCRIBED IN PARAGRAPH (1).
  (B)  AMOUNT IN ADDITION TO OTHER ORIGINAL ISSUE DISCOUNT. ANY ORIGINAL
ISSUE DISCOUNT WHICH A LOAN IS TREATED AS HAVING BY REASON  OF  SUBPARA-
GRAPH  (A)  SHALL BE IN ADDITION TO ANY OTHER ORIGINAL ISSUE DISCOUNT ON
SUCH LOAN (DETERMINED WITHOUT REGARD TO SUBPARAGRAPH (A)).
  (C) BELOW-MARKET LOANS TO  WHICH  SECTION  APPLIES.  (1)  IN  GENERAL.
EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION AND SUBSECTION (G), THIS
SECTION SHALL APPLY TO-
  (A) GIFTS. ANY BELOW-MARKET LOAN WHICH IS A GIFT LOAN.
  (B)  COMPENSATION-RELATED  LOANS.  ANY  BELOW-MARKET  LOAN DIRECTLY OR
INDIRECTLY BETWEEN-
--(I) AN EMPLOYER AND AN EMPLOYEE, OR
--(II) AN INDEPENDENT CONTRACTOR AND A PERSON FOR WHOM SUCH  INDEPENDENT
CONTRACTOR PROVIDES SERVICES.
  (C)  CORPORATION-SHAREHOLDER  LOANS. ANY BELOW-MARKET LOAN DIRECTLY OR
INDIRECTLY BETWEEN A CORPORATION AND  ANY  SHAREHOLDER  OF  SUCH  CORPO-
RATION.
  (D)  TAX  AVOIDANCE  LOANS.  ANY  BELOW-MARKET LOAN 1 OF THE PRINCIPAL
PURPOSES OF THE INTEREST ARRANGEMENTS OF WHICH IS THE AVOIDANCE  OF  ANY
FEDERAL TAX.
  (E)  OTHER  BELOW-MARKET LOANS. TO THE EXTENT PROVIDED IN REGULATIONS,
ANY BELOW-MARKET LOAN WHICH IS NOT DESCRIBED IN SUBPARAGRAPH  (A),  (B),
(C), OR (F) IF THE INTEREST ARRANGEMENTS OF SUCH LOAN HAVE A SIGNIFICANT
EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
  (F)  LOANS  TO  QUALIFIED  CONTINUING CARE FACILITIES. ANY LOAN TO ANY
QUALIFIED  CONTINUING  CARE  FACILITY  PURSUANT  TO  A  CONTINUING  CARE
CONTRACT.
  (2)  $10,000  DE MINIMIS EXCEPTION FOR GIFT LOANS BETWEEN INDIVIDUALS.
(A) IN GENERAL. IN THE CASE OF ANY GIFT LOAN DIRECTLY  BETWEEN  INDIVID-
UALS,  THIS  SECTION  SHALL  NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE
OUTSTANDING AMOUNT OF LOANS BETWEEN SUCH  INDIVIDUALS  DOES  NOT  EXCEED
$10,000.
  (B)  DE MINIMIS EXCEPTION NOT TO APPLY TO LOANS ATTRIBUTABLE TO ACQUI-
SITION OF INCOME-PRODUCING ASSETS.
--SUBPARAGRAPH (A) SHALL NOT APPLY TO ANY GIFT LOAN  DIRECTLY  ATTRIBUT-
ABLE TO THE PURCHASE OR CARRYING OF INCOME-PRODUCING ASSETS.

S. 6359                            302                           A. 8559

  (C)  CROSS  REFERENCE.  FOR  LIMITATION  ON AMOUNT TREATED AS INTEREST
WHERE LOANS DO NOT EXCEED $100,000, SEE SUBSECTION (D)(1).
  (3)  $10,000  DE MINIMIS EXCEPTION FOR COMPENSATION-RELATED AND CORPO-
RATE-SHAREHOLDER LOANS.  (A)  IN  GENERAL.  IN  THE  CASE  OF  ANY  LOAN
DESCRIBED  IN  SUBPARAGRAPH  (B)  OR  (C) OF PARAGRAPH (1), THIS SECTION
SHALL NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE OUTSTANDING AMOUNT  OF
LOANS BETWEEN THE BORROWER AND LENDER DOES NOT EXCEED $10,000.
  (B) EXCEPTION NOT TO APPLY WHERE 1 OF PRINCIPAL PURPOSES IS TAX AVOID-
ANCE.    SUBPARAGRAPH  (A)  SHALL  NOT  APPLY  TO  ANY LOAN THE INTEREST
ARRANGEMENTS OF WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES  THE  AVOID-
ANCE OF ANY FEDERAL TAX.
  (D)  SPECIAL  RULES FOR GIFT LOANS. (1) LIMITATION ON INTEREST ACCRUAL
FOR PURPOSES OF INCOME TAXES WHERE LOANS DO NOT EXCEED $100,000. (A)  IN
GENERAL. FOR PURPOSES OF SUBTITLE A, IN THE CASE OF A GIFT LOAN DIRECTLY
BETWEEN INDIVIDUALS, THE AMOUNT TREATED AS RETRANSFERRED BY THE BORROWER
TO  THE  LENDER AS OF THE CLOSE OF ANY YEAR SHALL NOT EXCEED THE BORROW-
ER'S NET INVESTMENT INCOME FOR SUCH YEAR.
  (B) LIMITATION NOT TO APPLY WHERE  1  OF  PRINCIPAL  PURPOSES  IS  TAX
AVOIDANCE.    SUBPARAGRAPH  (A) SHALL NOT APPLY TO ANY LOAN THE INTEREST
ARRANGEMENTS OF WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES  THE  AVOID-
ANCE OF ANY FEDERAL TAX.
  (C) SPECIAL RULE WHERE MORE THAN 1 GIFT LOAN OUTSTANDING. FOR PURPOSES
OF  SUBPARAGRAPH  (A),  IN  ANY CASE IN WHICH A BORROWER HAS OUTSTANDING
MORE THAN 1 GIFT LOAN, THE NET INVESTMENT INCOME OF SUCH BORROWER  SHALL
BE  ALLOCATED  AMONG  SUCH LOANS IN PROPORTION TO THE RESPECTIVE AMOUNTS
WHICH WOULD BE TREATED AS RETRANSFERRED BY THE BORROWER  WITHOUT  REGARD
TO THIS PARAGRAPH.
  (D)  LIMITATION  NOT  TO  APPLY WHERE AGGREGATE AMOUNT OF LOANS EXCEED
$100,000.  THIS PARAGRAPH SHALL NOT APPLY TO ANY LOAN MADE BY  A  LENDER
TO  A  BORROWER FOR ANY DAY ON WHICH THE AGGREGATE OUTSTANDING AMOUNT OF
LOANS BETWEEN THE BORROWER AND LENDER EXCEEDS $100,000.
  (E) NET INVESTMENT INCOME. FOR PURPOSES OF THIS PARAGRAPH-
  (I) IN GENERAL. THE TERM "NET INVESTMENT INCOME" HAS THE MEANING GIVEN
SUCH TERM BY SECTION 163(D)(4).
  (II) DE MINIMIS RULE. IF THE NET INVESTMENT INCOME OF ANY BORROWER FOR
ANY YEAR DOES NOT EXCEED $1,000,  THE  NET  INVESTMENT  INCOME  OF  SUCH
BORROWER FOR SUCH YEAR SHALL BE TREATED AS ZERO.
  (III)  ADDITIONAL  AMOUNTS TREATED AS INTEREST. IN DETERMINING THE NET
INVESTMENT INCOME OF A PERSON FOR ANY YEAR, ANY AMOUNT  WHICH  WOULD  BE
INCLUDED  IN  THE GROSS INCOME OF SUCH PERSON FOR SUCH YEAR BY REASON OF
SECTION 1272 IF SUCH SECTION APPLIED TO ALL DEFERRED PAYMENT OBLIGATIONS
SHALL BE TREATED AS INTEREST RECEIVED BY SUCH PERSON FOR SUCH YEAR.
  (IV) DEFERRED PAYMENT OBLIGATIONS. THE TERM  "DEFERRED  PAYMENT  OBLI-
GATION" INCLUDES ANY MARKET DISCOUNT BOND, SHORT-TERM OBLIGATION, UNITED
STATES SAVINGS BOND, ANNUITY, OR SIMILAR OBLIGATION.
  (2) SPECIAL RULE FOR GIFT TAX. IN THE CASE OF ANY GIFT LOAN WHICH IS A
TERM  LOAN,  SUBSECTION  (B)(1) (AND NOT SUBSECTION (A)) SHALL APPLY FOR
PURPOSES OF CHAPTER 12.
  (E)  DEFINITIONS  OF  BELOW-MARKET  LOAN  AND  FORGONE  INTEREST.  FOR
PURPOSES OF THIS SECTION-
  (1) BELOW-MARKET LOAN. THE TERM "BELOW-MARKET LOAN" MEANS ANY LOAN IF-
--(A) IN THE CASE OF A DEMAND LOAN, INTEREST IS PAYABLE ON THE LOAN AT A
RATE LESS THAN THE APPLICABLE FEDERAL RATE, OR
--(B)  IN THE CASE OF A TERM LOAN, THE AMOUNT LOANED EXCEEDS THE PRESENT
VALUE OF ALL PAYMENTS DUE UNDER THE LOAN.

S. 6359                            303                           A. 8559

  (2) FORGONE INTEREST. THE TERM "FORGONE INTEREST" MEANS, WITH  RESPECT
TO ANY PERIOD DURING WHICH THE LOAN IS OUTSTANDING, THE EXCESS OF-
--(A)  THE  AMOUNT OF INTEREST WHICH WOULD HAVE BEEN PAYABLE ON THE LOAN
FOR THE PERIOD IF INTEREST ACCRUED ON THE LOAN AT THE APPLICABLE FEDERAL
RATE AND WERE PAYABLE ANNUALLY ON THE  DAY  REFERRED  TO  IN  SUBSECTION
(A)(2), OVER
--(B)  ANY INTEREST PAYABLE ON THE LOAN PROPERLY ALLOCABLE TO SUCH PERI-
OD.
  (F) OTHER DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
  (1) PRESENT VALUE. THE PRESENT VALUE OF ANY PAYMENT  SHALL  BE  DETER-
MINED IN THE MANNER PROVIDED BY REGULATIONS PRESCRIBED BY THE SECRETARY-
--(A) AS OF THE DATE OF THE LOAN, AND
--(B) BY USING A DISCOUNT RATE EQUAL TO THE APPLICABLE FEDERAL RATE.
  (2)  APPLICABLE  FEDERAL RATE. (A) TERM LOANS. IN THE CASE OF ANY TERM
LOAN, THE APPLICABLE FEDERAL RATE SHALL BE THE APPLICABLE  FEDERAL  RATE
IN  EFFECT  UNDER  SECTION  1274(D) (AS OF THE DAY ON WHICH THE LOAN WAS
MADE), COMPOUNDED SEMIANNUALLY.
  (B) DEMAND LOANS. IN THE CASE OF A DEMAND LOAN, THE APPLICABLE FEDERAL
RATE SHALL BE THE  FEDERAL  SHORT-TERM  RATE  IN  EFFECT  UNDER  SECTION
1274(D) FOR THE PERIOD FOR WHICH THE AMOUNT OF FORGONE INTEREST IS BEING
DETERMINED, COMPOUNDED SEMIANNUALLY.
  (3)  GIFT LOAN. THE TERM "GIFT LOAN" MEANS ANY BELOW-MARKET LOAN WHERE
THE FORGOING OF INTEREST IS IN THE NATURE OF A GIFT.
  (4) AMOUNT LOANED. THE TERM "AMOUNT LOANED" MEANS THE AMOUNT  RECEIVED
BY THE BORROWER.
  (5)  DEMAND LOAN. THE TERM "DEMAND LOAN" MEANS ANY LOAN WHICH IS PAYA-
BLE IN FULL AT ANY TIME ON THE DEMAND OF  THE  LENDER.  SUCH  TERM  ALSO
INCLUDES  (FOR  PURPOSES  OTHER  THAN DETERMINING THE APPLICABLE FEDERAL
RATE UNDER PARAGRAPH (2)) ANY LOAN  IF  THE  BENEFITS  OF  THE  INTEREST
ARRANGEMENTS  OF  SUCH  LOAN ARE NOT TRANSFERABLE AND ARE CONDITIONED ON
THE FUTURE PERFORMANCE OF SUBSTANTIAL SERVICES BY AN INDIVIDUAL. TO  THE
EXTENT PROVIDED IN REGULATIONS, SUCH TERM ALSO INCLUDES ANY LOAN WITH AN
INDEFINITE MATURITY.
  (6)  TERM  LOAN.  THE  TERM  "TERM LOAN" MEANS ANY LOAN WHICH IS NOT A
DEMAND LOAN.
  (7) HUSBAND AND WIFE TREATED AS 1 PERSON. A HUSBAND AND WIFE SHALL  BE
TREATED AS 1 PERSON.
  (8)  LOANS TO WHICH SECTION 483, 643(I), OR 1274 APPLIES. THIS SECTION
SHALL NOT APPLY TO ANY LOAN  TO  WHICH  SECTION  483,  643(I),  OR  1274
APPLIES.
  (9)  NO WITHHOLDING. NO AMOUNT SHALL BE WITHHELD UNDER CHAPTER 24 WITH
RESPECT TO-
--(A)  ANY  AMOUNT  TREATED  AS  TRANSFERRED  OR   RETRANSFERRED   UNDER
SUBSECTION (A), AND
--(B) ANY AMOUNT TREATED AS RECEIVED UNDER SUBSECTION (B).
  (10)  SPECIAL RULE FOR TERM LOANS. IF THIS SECTION APPLIES TO ANY TERM
LOAN ON ANY DAY, THIS SECTION SHALL  CONTINUE  TO  APPLY  TO  SUCH  LOAN
NOTWITHSTANDING PARAGRAPHS (2) AND (3) OF SUBSECTION (C). IN THE CASE OF
A  GIFT  LOAN,  THE  PRECEDING SENTENCE SHALL ONLY APPLY FOR PURPOSES OF
CHAPTER 12.
  (11) TIME FOR  DETERMINING  RATE  APPLICABLE  TO  EMPLOYEE  RELOCATION
LOANS.  (A) IN GENERAL. IN THE CASE OF ANY TERM LOAN MADE BY AN EMPLOYER
TO AN EMPLOYEE THE PROCEEDS  OF  WHICH  ARE  USED  BY  THE  EMPLOYEE  TO
PURCHASE  A PRINCIPAL RESIDENCE (WITHIN THE MEANING OF SECTION 121), THE
DETERMINATION OF THE APPLICABLE FEDERAL RATE SHALL BE  MADE  AS  OF  THE
DATE THE WRITTEN CONTRACT TO PURCHASE SUCH RESIDENCE WAS ENTERED INTO.

S. 6359                            304                           A. 8559

  (B)  PARAGRAPH  ONLY  TO  APPLY TO CASES TO WHICH SECTION 217 APPLIES.
SUBPARAGRAPH (A) SHALL ONLY APPLY TO THE PURCHASE OF A  PRINCIPAL  RESI-
DENCE  IN  CONNECTION  WITH THE COMMENCEMENT OF WORK BY AN EMPLOYEE OR A
CHANGE IN THE PRINCIPAL PLACE OF WORK OF AN EMPLOYEE  TO  WHICH  SECTION
217 APPLIES.
  (G)  EXCEPTION  FOR CERTAIN LOANS TO QUALIFIED CONTINUING CARE FACILI-
TIES.  (1) IN GENERAL. THIS SECTION SHALL NOT  APPLY  FOR  ANY  CALENDAR
YEAR TO ANY BELOW-MARKET LOAN MADE BY A LENDER TO A QUALIFIED CONTINUING
CARE  FACILITY  PURSUANT TO A CONTINUING CARE CONTRACT IF THE LENDER (OR
THE LENDER'S SPOUSE) ATTAINS AGE 65 BEFORE THE CLOSE OF SUCH YEAR.
  (2) $90,000 LIMIT. PARAGRAPH (1) SHALL APPLY ONLY TO THE  EXTENT  THAT
THE  AGGREGATE  OUTSTANDING  AMOUNT  OF ANY LOAN TO WHICH SUCH PARAGRAPH
APPLIES (DETERMINED WITHOUT REGARD TO THIS PARAGRAPH), WHEN ADDED TO THE
AGGREGATE OUTSTANDING AMOUNT OF ALL OTHER  PREVIOUS  LOANS  BETWEEN  THE
LENDER (OR THE LENDER'S SPOUSE) AND ANY QUALIFIED CONTINUING CARE FACIL-
ITY TO WHICH PARAGRAPH (1) APPLIES, DOES NOT EXCEED $90,000.
  (3)  CONTINUING  CARE CONTRACT. FOR PURPOSES OF THIS SECTION, THE TERM
"CONTINUING CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN  INDIVID-
UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
--(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
ING CARE FACILITY FOR THEIR LIFE OR LIVES,
--(B) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE-
--(I) WILL FIRST-
--(I)  RESIDE  IN  A  SEPARATE,  INDEPENDENT LIVING UNIT WITH ADDITIONAL
FACILITIES OUTSIDE SUCH UNIT  FOR  THE  PROVIDING  OF  MEALS  AND  OTHER
PERSONAL CARE, AND
--(II) NOT REQUIRE LONG-TERM NURSING CARE, AND
--(II)  THEN  WILL BE PROVIDED LONG-TERM AND SKILLED NURSING CARE AS THE
HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S SPOUSE REQUIRES, AND
--(C) NO ADDITIONAL SUBSTANTIAL PAYMENT IS REQUIRED IF  SUCH  INDIVIDUAL
OR  INDIVIDUAL'S  SPOUSE  REQUIRES  INCREASED  PERSONAL CARE SERVICES OR
LONG-TERM AND SKILLED NURSING CARE.
  (4) QUALIFIED CONTINUING CARE FACILITY. (A) IN GENERAL.  FOR  PURPOSES
OF  THIS  SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY" MEANS 1
OR MORE FACILITIES-
--(I) WHICH ARE DESIGNED  TO  PROVIDE  SERVICES  UNDER  CONTINUING  CARE
CONTRACTS, AND
--(II)  SUBSTANTIALLY  ALL  OF  THE  RESIDENTS  OF  WHICH ARE COVERED BY
CONTINUING CARE CONTRACTS.
  (B) SUBSTANTIALLY ALL FACILITIES MUST BE OWNED OR OPERATED BY  BORROW-
ER.  A  FACILITY  SHALL  NOT  BE  TREATED AS A QUALIFIED CONTINUING CARE
FACILITY UNLESS SUBSTANTIALLY ALL FACILITIES WHICH ARE USED  TO  PROVIDE
SERVICES  WHICH  ARE  REQUIRED  TO  BE  PROVIDED UNDER A CONTINUING CARE
CONTRACT ARE OWNED OR OPERATED BY THE BORROWER.
  (C) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
ITY" SHALL NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH  IS  TRADI-
TIONALLY CONSIDERED A NURSING HOME.
  (5)  ADJUSTMENT OF LIMIT FOR INFLATION. (A) IN GENERAL. IN THE CASE OF
ANY LOAN MADE DURING ANY CALENDAR YEAR AFTER 1986 TO WHICH PARAGRAPH (1)
APPLIES, THE DOLLAR AMOUNT IN PARAGRAPH (2) SHALL BE  INCREASED  BY  THE
INFLATION  ADJUSTMENT  FOR  SUCH  CALENDAR  YEAR. ANY INCREASE UNDER THE
PRECEDING SENTENCE SHALL BE ROUNDED TO THE NEAREST MULTIPLE OF $100 (OR,
IF SUCH INCREASE IS A MULTIPLE OF $50, SUCH INCREASE SHALL BE  INCREASED
TO THE NEAREST MULTIPLE OF $100).

S. 6359                            305                           A. 8559

  (B)  INFLATION  ADJUSTMENT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A), THE
INFLATION ADJUSTMENT FOR ANY CALENDAR YEAR IS THE PERCENTAGE (IF ANY) BY
WHICH-
--(I) THE CPI FOR THE PRECEDING CALENDAR YEAR EXCEEDS
--(II) THE CPI FOR CALENDAR YEAR 1985.
  1.  FOR  PURPOSES  OF THE PRECEDING SENTENCE, THE CPI FOR ANY CALENDAR
YEAR IS THE AVERAGE OF THE CONSUMER PRICE INDEX AS OF THE CLOSE  OF  THE
12-MONTH PERIOD ENDING ON SEPTEMBER 30 OF SUCH CALENDAR YEAR.
  (6)  SUSPENSION  OF APPLICATION. PARAGRAPH (1) SHALL NOT APPLY FOR ANY
CALENDAR YEAR TO WHICH SUBSECTION (H) APPLIES.
  (H) EXCEPTION FOR LOANS TO QUALIFIED CONTINUING CARE  FACILITIES.  (1)
IN  GENERAL.  THIS  SECTION SHALL NOT APPLY FOR ANY CALENDAR YEAR TO ANY
BELOW-MARKET LOAN OWED BY A FACILITY WHICH ON THE LAST DAY OF SUCH  YEAR
IS  A QUALIFIED CONTINUING CARE FACILITY, IF SUCH LOAN WAS MADE PURSUANT
TO A CONTINUING CARE CONTRACT AND IF THE LENDER (OR THE LENDER'S SPOUSE)
ATTAINS AGE 62 BEFORE THE CLOSE OF SUCH YEAR.
  (2) CONTINUING CARE CONTRACT. FOR PURPOSES OF THIS SECTION,  THE  TERM
"CONTINUING  CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN INDIVID-
UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
--(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
ING CARE FACILITY FOR THEIR LIFE OR LIVES,
--(B) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE WILL BE PROVIDED WITH  HOUS-
ING,  AS  APPROPRIATE  FOR THE HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S
SPOUSE-
--(I) IN AN INDEPENDENT LIVING  UNIT  (WHICH  HAS  ADDITIONAL  AVAILABLE
FACILITIES  OUTSIDE  SUCH  UNIT  FOR  THE  PROVISION  OF MEALS AND OTHER
PERSONAL CARE), AND
--(II) IN AN ASSISTED LIVING FACILITY  OR  A  NURSING  FACILITY,  AS  IS
AVAILABLE IN THE CONTINUING CARE FACILITY, AND
--(C)  THE  INDIVIDUAL  OR INDIVIDUAL'S SPOUSE WILL BE PROVIDED ASSISTED
LIVING OR NURSING CARE AS THE HEALTH OF SUCH INDIVIDUAL OR  INDIVIDUAL'S
SPOUSE REQUIRES, AND AS IS AVAILABLE IN THE CONTINUING CARE FACILITY.
--THE SECRETARY SHALL ISSUE GUIDANCE WHICH LIMITS SUCH TERM TO CONTRACTS
WHICH  PROVIDE  ONLY  FACILITIES,  CARE,  AND SERVICES DESCRIBED IN THIS
PARAGRAPH.
  (3) QUALIFIED CONTINUING CARE FACILITY. (A) IN GENERAL.  FOR  PURPOSES
OF  THIS  SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY" MEANS 1
OR MORE FACILITIES-
--(I) WHICH ARE DESIGNED  TO  PROVIDE  SERVICES  UNDER  CONTINUING  CARE
CONTRACTS,
--(II) WHICH INCLUDE AN INDEPENDENT LIVING UNIT, PLUS AN ASSISTED LIVING
OR NURSING FACILITY, OR BOTH, AND
--(III)  SUBSTANTIALLY  ALL  OF THE INDEPENDENT LIVING UNIT RESIDENTS OF
WHICH ARE COVERED BY CONTINUING CARE CONTRACTS.
  (B) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
ITY" SHALL NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH  IS  TRADI-
TIONALLY CONSIDERED A NURSING HOME.
  (I)  REGULATIONS.  (1)  IN GENERAL. THE SECRETARY SHALL PRESCRIBE SUCH
REGULATIONS AS MAY BE NECESSARY OR APPROPRIATE TO CARRY OUT THE PURPOSES
OF THIS SECTION, INCLUDING-
--(A) REGULATIONS PROVIDING THAT WHERE, BY REASON OF  VARYING  RATES  OF
INTEREST,  CONDITIONAL  INTEREST PAYMENTS, WAIVERS OF INTEREST, DISPOSI-
TION OF THE LENDER'S OR  BORROWER'S  INTEREST  IN  THE  LOAN,  OR  OTHER
CIRCUMSTANCES,  THE  PROVISIONS  OF  THIS  SECTION  DO NOT CARRY OUT THE
PURPOSES OF THIS SECTION, ADJUSTMENTS TO THE PROVISIONS OF THIS  SECTION

S. 6359                            306                           A. 8559

WILL  BE  MADE TO THE EXTENT NECESSARY TO CARRY OUT THE PURPOSES OF THIS
SECTION,
--(B)  REGULATIONS FOR THE PURPOSE OF ASSURING THAT THE POSITIONS OF THE
BORROWER AND LENDER ARE CONSISTENT AS TO THE APPLICATION (OR NONAPPLICA-
TION) OF THIS SECTION, AND
--(C) REGULATIONS EXEMPTING FROM THE APPLICATION  OF  THIS  SECTION  ANY
CLASS OF TRANSACTIONS THE INTEREST ARRANGEMENTS OF WHICH HAVE NO SIGNIF-
ICANT EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
  (2)  ESTATE  TAX  COORDINATION.  UNDER  REGULATIONS  PRESCRIBED BY THE
SECRETARY, ANY LOAN WHICH IS MADE WITH DONATIVE INTENT AND  WHICH  IS  A
TERM  LOAN  SHALL  BE TAKEN INTO ACCOUNT FOR PURPOSES OF CHAPTER 11 IN A
MANNER CONSISTENT WITH THE PROVISIONS OF SUBSECTION (B).
  S 6166. EXTENSION OF TIME FOR  PAYMENT  OF  ESTATE  TAX  WHERE  ESTATE
CONSISTS LARGELY OF INTEREST IN CLOSELY HELD BUSINESS. (A) 5-YEAR DEFER-
RAL; 10-YEAR INSTALLMENT PAYMENT.--
  (1)  IN  GENERAL.--IF THE VALUE OF AN INTEREST IN A CLOSELY HELD BUSI-
NESS WHICH IS INCLUDED IN DETERMINING THE GROSS ESTATE OF A DECEDENT WHO
WAS (AT THE DATE OF HIS DEATH) A  CITIZEN  OR  RESIDENT  OF  THE  UNITED
STATES EXCEEDS 35 PERCENT OF THE ADJUSTED GROSS ESTATE, THE EXECUTOR MAY
ELECT TO PAY PART OR ALL OF THE TAX IMPOSED BY SECTION 2001 IN 2 OR MORE
(BUT NOT EXCEEDING 10) EQUAL INSTALLMENTS.
  (2)  LIMITATION.--THE  MAXIMUM  AMOUNT  OF  TAX  WHICH  MAY BE PAID IN
INSTALLMENTS UNDER THIS SUBSECTION SHALL BE AN AMOUNT  WHICH  BEARS  THE
SAME  RATIO  TO  THE TAX IMPOSED BY SECTION 2001 (REDUCED BY THE CREDITS
AGAINST SUCH TAX) AS--
  (A) THE CLOSELY HELD BUSINESS AMOUNT, BEARS TO
  (B) THE AMOUNT OF THE ADJUSTED GROSS ESTATE.
  (3) DATE FOR PAYMENT OF INSTALLMENTS.--IF AN ELECTION  IS  MADE  UNDER
PARAGRAPH (1), THE FIRST INSTALLMENT SHALL BE PAID ON OR BEFORE THE DATE
SELECTED  BY  THE EXECUTOR WHICH IS NOT MORE THAN 5 YEARS AFTER THE DATE
PRESCRIBED BY SECTION 6151(A) FOR PAYMENT OF THE TAX, AND EACH  SUCCEED-
ING  INSTALLMENT  SHALL  BE  PAID  ON OR BEFORE THE DATE WHICH IS 1 YEAR
AFTER THE DATE PRESCRIBED BY THIS PARAGRAPH FOR PAYMENT OF THE PRECEDING
INSTALLMENT.
  (B) DEFINITIONS AND SPECIAL RULES.--
  (1) INTEREST IN CLOSELY HELD BUSINESS.--FOR PURPOSES OF THIS  SECTION,
THE TERM "INTEREST IN A CLOSELY HELD BUSINESS" MEANS--
  (A) AN INTEREST AS A PROPRIETOR IN A TRADE OR BUSINESS CARRIED ON AS A
PROPRIETORSHIP;
  (B)  AN  INTEREST AS A PARTNER IN A PARTNERSHIP CARRYING ON A TRADE OR
BUSINESS, IF--
  (I) 20 PERCENT OR MORE OF THE TOTAL CAPITAL INTEREST IN SUCH  PARTNER-
SHIP IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
  (II) SUCH PARTNERSHIP HAD 45 OR FEWER PARTNERS; OR
  (C) STOCK IN A CORPORATION CARRYING ON A TRADE OR BUSINESS IF--
  (I)  20  PERCENT  OR  MORE IN VALUE OF THE VOTING STOCK OF SUCH CORPO-
RATION IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
  (II) SUCH CORPORATION HAD 45 OR FEWER SHAREHOLDERS.
  (2) RULES FOR APPLYING PARAGRAPH (1).--FOR PURPOSES OF PARAGRAPH (1)--
  (A) TIME FOR TESTING.--DETERMINATIONS SHALL BE MADE  AS  OF  THE  TIME
IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
  (B)  CERTAIN  INTERESTS HELD BY HUSBAND AND WIFE.--STOCK OR A PARTNER-
SHIP INTEREST WHICH--
  (I) IS COMMUNITY PROPERTY OF A HUSBAND AND WIFE (OR  THE  INCOME  FROM
WHICH  IS  COMMUNITY INCOME) UNDER THE APPLICABLE COMMUNITY PROPERTY LAW
OF A STATE, OR

S. 6359                            307                           A. 8559

  (II) IS HELD BY A HUSBAND AND WIFE AS JOINT TENANTS,  TENANTS  BY  THE
ENTIRETY,  OR TENANTS IN COMMON, SHALL BE TREATED AS OWNED BY ONE SHARE-
HOLDER OR ONE PARTNER, AS THE CASE MAY BE.
  (C) INDIRECT OWNERSHIP.--PROPERTY OWNED, DIRECTLY OR INDIRECTLY, BY OR
FOR  A CORPORATION, PARTNERSHIP, ESTATE, OR TRUST SHALL BE CONSIDERED AS
BEING OWNED PROPORTIONATELY BY OR FOR  ITS  SHAREHOLDERS,  PARTNERS,  OR
BENEFICIARIES. FOR PURPOSES OF THE PRECEDING SENTENCE, A PERSON SHALL BE
TREATED  AS A BENEFICIARY OF ANY TRUST ONLY IF SUCH PERSON HAS A PRESENT
INTEREST IN THE TRUST.
  (D) CERTAIN INTERESTS HELD BY MEMBERS OF DECEDENT'S FAMILY.--ALL STOCK
AND ALL PARTNERSHIP INTERESTS HELD BY THE DECEDENT OR BY ANY  MEMBER  OF
HIS FAMILY (WITHIN THE MEANING OF SECTION 267(C)(4)) SHALL BE TREATED AS
OWNED BY THE DECEDENT.
  (3)  FARMHOUSES  AND CERTAIN OTHER STRUCTURES TAKEN INTO ACCOUNT.--FOR
PURPOSES OF THE 35-PERCENT REQUIREMENT OF SUBSECTION (A)(1), AN INTEREST
IN A CLOSELY HELD BUSINESS WHICH IS THE BUSINESS OF FARMING INCLUDES  AN
INTEREST  IN  RESIDENTIAL BUILDINGS AND RELATED IMPROVEMENTS ON THE FARM
WHICH ARE OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF THE FARM
OR BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR PURPOSES OF OPERATING
OR MAINTAINING THE FARM.
  (4) VALUE.--FOR PURPOSES OF THIS SECTION, VALUE SHALL BE VALUE  DETER-
MINED FOR PURPOSES OF CHAPTER 11 (RELATING TO ESTATE TAX).
  (5)  CLOSELY  HELD BUSINESS AMOUNT.--FOR PURPOSES OF THIS SECTION, THE
TERM "CLOSELY HELD BUSINESS AMOUNT" MEANS THE VALUE OF THE INTEREST IN A
CLOSELY HELD BUSINESS WHICH QUALIFIES UNDER SUBSECTION (A)(1).
  (6) ADJUSTED GROSS ESTATE.--FOR PURPOSES OF THIS  SECTION,  THE  TERM,
"ADJUSTED  GROSS  ESTATE" MEANS THE VALUE OF THE GROSS ESTATE REDUCED BY
THE SUM OF THE AMOUNTS ALLOWABLE AS A DEDUCTION UNDER  SECTION  2053  OR
2054. SUCH SUM SHALL BE DETERMINED ON THE BASIS OF THE FACTS AND CIRCUM-
STANCES  IN  EXISTENCE ON THE DATE (INCLUDING EXTENSIONS) FOR FILING THE
RETURN OF TAX IMPOSED BY SECTION 2001 (OR, IF EARLIER, THE DATE ON WHICH
SUCH RETURN IS FILED).
  (7) PARTNERSHIP INTERESTS AND STOCK WHICH IS NOT READILY TRADABLE.--
  (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE BENEFITS OF THIS PARAGRAPH
(AT SUCH TIME AND IN SUCH MANNER AS THE SECRETARY SHALL  BY  REGULATIONS
PRESCRIBE), THEN--
  (I)  FOR  PURPOSES  OF  PARAGRAPH (1)(B)(I) OR (1)(C)(I) (WHICHEVER IS
APPROPRIATE) AND FOR PURPOSES OF SUBSECTION (C), ANY CAPITAL INTEREST IN
A PARTNERSHIP AND ANY NON-READILY-TRADABLE STOCK WHICH (AFTER THE APPLI-
CATION OF PARAGRAPH (2)) IS TREATED AS OWNED BY THE  DECEDENT  SHALL  BE
TREATED  AS  INCLUDED  IN  DETERMINING THE VALUE OF THE DECEDENT'S GROSS
ESTATE,
  (II) THE EXECUTOR SHALL BE TREATED AS HAVING SELECTED UNDER SUBSECTION
(A)(3) THE DATE PRESCRIBED BY SECTION 6151(A), AND
  (III) FOR PURPOSES OF APPLYING SECTION 6601(J), THE 2-PERCENT  PORTION
(AS DEFINED IN SUCH SECTION) SHALL BE TREATED AS BEING ZERO.
  (B)  NON-READILY-TRADABLE  STOCK  DEFINED.--FOR PURPOSES OF THIS PARA-
GRAPH, THE TERM "NON-READILY-TRADABLE STOCK" MEANS STOCK FOR  WHICH,  AT
THE  TIME  OF  THE  DECEDENT'S  DEATH,  THERE  WAS  NO MARKET ON A STOCK
EXCHANGE OR IN AN OVER-THE-COUNTER MARKET.
  (8) STOCK IN HOLDING COMPANY TREATED  AS  BUSINESS  COMPANY  STOCK  IN
CERTAIN CASES.--
  (A)  IN  GENERAL.--IF  THE  EXECUTOR ELECTS THE BENEFITS OF THIS PARA-
GRAPH, THEN--
  (I) HOLDING COMPANY STOCK  TREATED  AS  BUSINESS  COMPANY  STOCK.--FOR
PURPOSES OF THIS SECTION, THE PORTION OF THE STOCK OF ANY HOLDING COMPA-

S. 6359                            308                           A. 8559

NY WHICH REPRESENTS DIRECT OWNERSHIP (OR INDIRECT OWNERSHIP THROUGH 1 OR
MORE  OTHER  HOLDING  COMPANIES)  BY  SUCH COMPANY IN A BUSINESS COMPANY
SHALL BE DEEMED TO BE STOCK IN SUCH BUSINESS COMPANY.
  (II)  5-YEAR  DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE EXECUTOR SHALL
BE  TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE   DATE
PRESCRIBED BY SECTION 6151(A).
  (III)  2-PERCENT INTEREST RATE NOT TO APPLY.--FOR PURPOSES OF APPLYING
SECTION 6601(J), THE 2-PERCENT PORTION  (AS  DEFINED  IN  SUCH  SECTION)
SHALL BE TREATED AS BEING ZERO.
  (B) ALL STOCK MUST BE NON-READILY-TRADABLE STOCK.--
  (I)  IN GENERAL.--NO STOCK SHALL BE TAKEN INTO ACCOUNT FOR PURPOSES OF
APPLYING THIS PARAGRAPH UNLESS IT IS NON-READILY-TRADABLE STOCK
  (WITHIN THE MEANING OF PARAGRAPH (7)(B)).
  (II) SPECIAL APPLICATION WHERE ONLY HOLDING COMPANY STOCK IS NON-READ-
ILY-TRADABLE STOCK.--IF THE REQUIREMENTS OF CLAUSE (I) ARE NOT MET,  BUT
ALL OF THE STOCK OF EACH HOLDING COMPANY TAKEN INTO ACCOUNT IS NON-READ-
ILY-TRADABLE,  THEN  THIS  PARAGRAPH  SHALL APPLY, BUT SUBSECTION (A)(1)
SHALL BE APPLIED BY SUBSTITUTING "5" FOR "10".
  (C)   APPLICATION   OF   VOTING   STOCK   REQUIREMENT   OF   PARAGRAPH
(1)(C)(I).--FOR  PURPOSES  OF CLAUSE (I) OF PARAGRAPH (1)(C), THE DEEMED
STOCK RESULTING FROM THE APPLICATION OF SUBPARAGRAPH (A) SHALL BE TREAT-
ED AS VOTING STOCK TO THE EXTENT THAT VOTING STOCK IN THE HOLDING COMPA-
NY OWNS DIRECTLY (OR THROUGH THE VOTING STOCK OF 1 OR MORE OTHER HOLDING
COMPANIES) VOTING STOCK IN THE BUSINESS COMPANY.
  (D) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) HOLDING COMPANY.--THE TERM "HOLDING COMPANY" MEANS ANY CORPORATION
HOLDING STOCK IN ANOTHER CORPORATION.
  (II) BUSINESS COMPANY.--THE TERM "BUSINESS COMPANY" MEANS  ANY  CORPO-
RATION CARRYING ON A TRADE OR BUSINESS.
  (9) DEFERRAL NOT AVAILABLE FOR PASSIVE ASSETS.--
  (A) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1) AND DETERMINING THE
CLOSELY  HELD  BUSINESS AMOUNT (BUT NOT FOR PURPOSES OF SUBSECTION (G)),
THE VALUE OF ANY INTEREST IN A CLOSELY HELD BUSINESS SHALL  NOT  INCLUDE
THE  VALUE  OF  THAT  PORTION  OF SUCH INTEREST WHICH IS ATTRIBUTABLE TO
PASSIVE ASSETS HELD BY THE BUSINESS.
  (B) PASSIVE ASSET DEFINED.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) IN GENERAL.--THE TERM "PASSIVE ASSET" MEANS ANY ASSET  OTHER  THAN
AN ASSET USED IN CARRYING ON A TRADE OR BUSINESS.
  (II)  STOCK  TREATED  AS  PASSIVE  ASSET.--THE  TERM  "PASSIVE  ASSET"
INCLUDES ANY STOCK IN ANOTHER CORPORATION UNLESS--
  (I) SUCH STOCK IS TREATED AS HELD BY THE  DECEDENT  BY  REASON  OF  AN
ELECTION UNDER PARAGRAPH (8), AND
  (II) SUCH STOCK QUALIFIED UNDER SUBSECTION (A)(1).
  (III) EXCEPTION FOR ACTIVE CORPORATIONS.--IF--
  (I) A CORPORATION OWNS 20 PERCENT OR MORE IN VALUE OF THE VOTING STOCK
OF ANOTHER CORPORATION, OR SUCH OTHER CORPORATION HAS 45 OR FEWER SHARE-
HOLDERS, AND
  (II) 80 PERCENT OR MORE OF THE VALUE OF THE ASSETS OF EACH SUCH CORPO-
RATION  IS  ATTRIBUTABLE  TO ASSETS USED IN CARRYING ON A TRADE OR BUSI-
NESS, THEN SUCH CORPORATIONS SHALL  BE  TREATED  AS  1  CORPORATION  FOR
PURPOSES  OF CLAUSE (II). FOR PURPOSES OF APPLYING SUBCLAUSE (II) TO THE
CORPORATION HOLDING THE STOCK OF THE OTHER CORPORATION, SUCH STOCK SHALL
NOT BE TAKEN INTO ACCOUNT.
  (10) STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS STOCK
IN AN ACTIVE TRADE OR BUSINESS COMPANY.--

S. 6359                            309                           A. 8559

  (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE  BENEFITS  OF  THIS  PARA-
GRAPH, THEN--
  (I)  STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS STOCK
IN AN ACTIVE TRADE OR BUSINESS COMPANY.--FOR PURPOSES OF  THIS  SECTION,
ANY  ASSET  USED  IN  A QUALIFYING LENDING AND FINANCE BUSINESS SHALL BE
TREATED AS AN ASSET WHICH IS USED IN CARRYING ON A TRADE OR BUSINESS.
  (II) 5-YEAR DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE  EXECUTOR  SHALL
BE   TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE  DATE
PRESCRIBED BY SECTION 6151(A).
  (III)  5  EQUAL  INSTALLMENTS  ALLOWED.--FOR  PURPOSES   OF   APPLYING
SUBSECTION
  (A)(1), "5" SHALL BE SUBSTITUTED FOR "10".
  (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  QUALIFYING  LENDING  AND  FINANCE BUSINESS.--THE TERM "QUALIFYING
LENDING AND FINANCE BUSINESS" MEANS A LENDING AND FINANCE BUSINESS, IF--
  (I) BASED ON ALL THE FACTS AND CIRCUMSTANCES  IMMEDIATELY  BEFORE  THE
DATE  OF  THE  DECEDENT'S  DEATH,  THERE  WAS  SUBSTANTIAL ACTIVITY WITH
RESPECT TO THE LENDING AND FINANCE BUSINESS, OR
  (II) DURING AT LEAST 3 OF THE 5 TAXABLE YEARS ENDING BEFORE  THE  DATE
OF THE DECEDENT'S DEATH, SUCH BUSINESS HAD AT LEAST 1 FULL-TIME EMPLOYEE
SUBSTANTIALLY  ALL  OF WHOSE SERVICES WERE THE ACTIVE MANAGEMENT OF SUCH
BUSINESS, 10 FULL-TIME, NONOWNER EMPLOYEES SUBSTANTIALLY  ALL  OF  WHOSE
SERVICES WERE DIRECTLY RELATED TO SUCH BUSINESS, AND $5,000,000 IN GROSS
RECEIPTS FROM ACTIVITIES DESCRIBED IN CLAUSE (II).
  (II)  LENDING  AND  FINANCE  BUSINESS.--THE  TERM "LENDING AND FINANCE
BUSINESS" MEANS A TRADE OR BUSINESS OF--
  (I) MAKING LOANS,
  (II) PURCHASING OR DISCOUNTING ACCOUNTS RECEIVABLE, NOTES, OR INSTALL-
MENT OBLIGATIONS,
  (III) ENGAGING IN RENTAL AND LEASING OF  REAL  AND  TANGIBLE  PERSONAL
PROPERTY,  INCLUDING ENTERING INTO LEASES AND PURCHASING, SERVICING, AND
DISPOSING OF LEASES AND LEASED ASSETS,
  (IV) RENDERING SERVICES OR MAKING FACILITIES AVAILABLE IN THE ORDINARY
COURSE OF A LENDING OR FINANCE BUSINESS, AND
  (V) RENDERING SERVICES OR MAKING FACILITIES  AVAILABLE  IN  CONNECTION
WITH  ACTIVITIES  DESCRIBED IN SUBCLAUSES (I) THROUGH (IV) CARRIED ON BY
THE CORPORATION RENDERING SERVICES OR MAKING  FACILITIES  AVAILABLE,  OR
ANOTHER  CORPORATION  WHICH IS A MEMBER OF THE SAME AFFILIATED GROUP (AS
DEFINED IN SECTION 1504 WITHOUT REGARD TO SECTION 1504(B)(3)).
  (III) LIMITATION.--THE TERM "QUALIFYING LENDING AND FINANCE  BUSINESS"
SHALL  NOT  INCLUDE  ANY  INTEREST IN AN ENTITY, IF THE STOCK OR DEBT OF
SUCH ENTITY OR A CONTROLLED GROUP (AS DEFINED IN SECTION  267(F)(1))  OF
WHICH  SUCH  ENTITY  WAS A MEMBER WAS READILY TRADABLE ON AN ESTABLISHED
SECURITIES MARKET OR SECONDARY MARKET (AS DEFINED BY THE  SECRETARY)  AT
ANY TIME WITHIN 3 YEARS BEFORE THE DATE OF THE DECEDENT'S DEATH.
  (C)  SPECIAL  RULE  FOR  INTEREST  IN 2 OR MORE CLOSELY HELD BUSINESS-
ES.--FOR PURPOSES OF THIS SECTION, INTEREST IN 2 OR  MORE  CLOSELY  HELD
BUSINESSES, WITH RESPECT TO EACH OF WHICH THERE IS INCLUDED IN DETERMIN-
ING  THE  VALUE OF THE DECEDENT'S GROSS ESTATE 20 PERCENT OR MORE OF THE
TOTAL VALUE OF EACH SUCH BUSINESS, SHALL BE TREATED AS AN INTEREST IN  A
SINGLE CLOSELY HELD BUSINESS. FOR PURPOSES OF THE 20-PERCENT REQUIREMENT
OF  THE PRECEDING SENTENCE, AN INTEREST IN A CLOSELY HELD BUSINESS WHICH
REPRESENTS THE SURVIVING SPOUSE'S INTEREST IN PROPERTY HELD BY THE DECE-
DENT AND THE SURVIVING SPOUSE AS COMMUNITY PROPERTY OR AS JOINT TENANTS,
TENANTS BY THE ENTIRETY, OR TENANTS IN COMMON SHALL BE TREATED AS HAVING
BEEN INCLUDED IN DETERMINING THE VALUE OF THE DECEDENT'S GROSS ESTATE.

S. 6359                            310                           A. 8559

  (D) ELECTION.--ANY ELECTION UNDER SUBSECTION (A)  SHALL  BE  MADE  NOT
LATER  THAN THE TIME PRESCRIBED BY SECTION 6075(A) FOR FILING THE RETURN
OF TAX IMPOSED BY SECTION 2001 (INCLUDING EXTENSIONS THEREOF), AND SHALL
BE MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS  PRESCRIBE.
IF  AN  ELECTION  UNDER  SUBSECTION  (A) IS MADE, THE PROVISIONS OF THIS
SUBTITLE SHALL APPLY AS THOUGH THE SECRETARY WERE EXTENDING THE TIME FOR
PAYMENT OF THE TAX.
  (E) PRORATION OF DEFICIENCY TO INSTALLMENTS.--IF AN ELECTION  IS  MADE
UNDER  SUBSECTION (A) TO PAY ANY PART OF THE TAX IMPOSED BY SECTION 2001
IN INSTALLMENTS AND A DEFICIENCY HAS BEEN ASSESSED, THE DEFICIENCY SHALL
(SUBJECT TO THE LIMITATION PROVIDED BY SUBSECTION (A)(2)) BE PRORATED TO
THE INSTALLMENTS PAYABLE UNDER SUBSECTION (A). THE PART OF THE DEFICIEN-
CY SO PRORATED TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS  NOT
ARRIVED  SHALL  BE COLLECTED AT THE SAME TIME AS, AND AS A PART OF, SUCH
INSTALLMENT. THE PART OF THE DEFICIENCY SO PRORATED TO  ANY  INSTALLMENT
THE  DATE FOR PAYMENT OF WHICH HAS ARRIVED SHALL BE PAID UPON NOTICE AND
DEMAND FROM THE SECRETARY. THIS SUBSECTION SHALL NOT APPLY IF THE  DEFI-
CIENCY IS DUE TO NEGLIGENCE, TO INTENTIONAL DISREGARD OF RULES AND REGU-
LATIONS, OR TO FRAUD WITH INTENT TO EVADE TAX.
  (F)  TIME  FOR  PAYMENT  OF  INTEREST.--IF THE TIME FOR PAYMENT OF ANY
AMOUNT OF TAX HAS BEEN EXTENDED UNDER THIS SECTION--
  (1) INTEREST FOR FIRST 5 YEARS.--INTEREST PAYABLE UNDER  SECTION  6601
OF  ANY  UNPAID PORTION OF SUCH AMOUNT ATTRIBUTABLE TO THE FIRST 5 YEARS
AFTER THE DATE PRESCRIBED BY SECTION 6151(A)  FOR  PAYMENT  OF  THE  TAX
SHALL BE PAID ANNUALLY.
  (2)  INTEREST FOR PERIODS AFTER FIRST 5 YEARS.--INTEREST PAYABLE UNDER
SECTION 6601 ON ANY UNPAID PORTION OF SUCH AMOUNT  ATTRIBUTABLE  TO  ANY
PERIOD  AFTER  THE  5-YEAR  PERIOD REFERRED TO IN PARAGRAPH (1) SHALL BE
PAID ANNUALLY AT THE SAME TIME AS, AND AS A PART  OF,  EACH  INSTALLMENT
PAYMENT OF THE TAX.
  (3)  INTEREST  IN  THE CASE OF CERTAIN DEFICIENCIES.--IN THE CASE OF A
DEFICIENCY TO WHICH SUBSECTION (E) APPLIES WHICH IS ASSESSED  AFTER  THE
CLOSE  OF  THE  5-YEAR  PERIOD  REFERRED  TO  IN PARAGRAPH (1), INTEREST
ATTRIBUTABLE TO SUCH 5-YEAR PERIOD, AND INTEREST  ASSIGNED  UNDER  PARA-
GRAPH  (2)  TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS ARRIVED
ON OR BEFORE THE DATE OF THE ASSESSMENT OF THE DEFICIENCY, SHALL BE PAID
UPON NOTICE AND DEMAND FROM THE SECRETARY.
  (4) SELECTION OF SHORTER PERIOD.--IF THE EXECUTOR HAS SELECTED A PERI-
OD SHORTER THAN 5 YEARS UNDER SUBSECTION  (A)(3),  SUCH  SHORTER  PERIOD
SHALL BE SUBSTITUTED FOR 5 YEARS IN PARAGRAPHS (1), (2), AND (3) OF THIS
SUBSECTION.
  (G) ACCELERATION OF PAYMENT.--
  (1) DISPOSITION OF INTEREST; WITHDRAWAL OF FUNDS FROM BUSINESS.--
  (A) IF--
  (I)(I)  ANY  PORTION  OF  AN INTEREST IN A CLOSELY HELD BUSINESS WHICH
QUALIFIES UNDER SUBSECTION (A)(1) IS DISTRIBUTED,  SOLD,  EXCHANGED,  OR
OTHERWISE DISPOSED OF, OR
  (II)  MONEY  AND  OTHER  PROPERTY  ATTRIBUTABLE TO SUCH AN INTEREST IS
WITHDRAWN FROM SUCH TRADE OR BUSINESS, AND
  (II) THE AGGREGATE OF SUCH DISTRIBUTIONS, SALES, EXCHANGES,  OR  OTHER
DISPOSITIONS  AND  WITHDRAWALS EQUALS OR EXCEEDS 50 PERCENT OF THE VALUE
OF SUCH INTEREST, THEN THE EXTENSION OF TIME FOR PAYMENT OF TAX PROVIDED
IN SUBSECTION (A) SHALL CEASE TO APPLY, AND THE UNPAID  PORTION  OF  THE
TAX  PAYABLE  IN  INSTALLMENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM
THE SECRETARY.

S. 6359                            311                           A. 8559

  (B) IN THE CASE OF A DISTRIBUTION IN  REDEMPTION  OF  STOCK  TO  WHICH
SECTION  303  (OR  SO  MUCH  OF  SECTION  304 AS RELATES TO SECTION 303)
APPLIES--
  (I)  THE  REDEMPTION  OF  SUCH  STOCK, AND THE WITHDRAWAL OF MONEY AND
OTHER PROPERTY DISTRIBUTED IN SUCH REDEMPTION, SHALL NOT BE TREATED AS A
DISTRIBUTION OR WITHDRAWAL FOR PURPOSES OF SUBPARAGRAPH (A), AND
  (II) FOR PURPOSES OF SUBPARAGRAPH (A), THE VALUE OF  THE  INTEREST  IN
THE  CLOSELY  HELD BUSINESS SHALL BE CONSIDERED TO BE SUCH VALUE REDUCED
BY THE VALUE OF THE STOCK REDEEMED.
  THIS  SUBPARAGRAPH  SHALL  APPLY  ONLY  IF,  ON  OR  BEFORE  THE  DATE
PRESCRIBED BY SUBSECTION (A)(3) FOR THE PAYMENT OF THE FIRST INSTALLMENT
WHICH BECOMES DUE AFTER THE DATE OF THE DISTRIBUTION (OR, IF EARLIER, ON
OR  BEFORE  THE DAY WHICH IS 1 YEAR AFTER THE DATE OF THE DISTRIBUTION),
THERE IS PAID AN AMOUNT OF THE TAX IMPOSED BY SECTION 2001 NOT LESS THAN
THE AMOUNT OF MONEY AND OTHER PROPERTY DISTRIBUTED.
  (C) SUBPARAGRAPH (A)(I) DOES NOT APPLY TO AN EXCHANGE OF STOCK  PURSU-
ANT  TO  A PLAN OF REORGANIZATION DESCRIBED IN SUBPARAGRAPH (D), (E), OR
(F) OF SECTION 368(A)(1) NOR TO AN EXCHANGE TO WHICH SECTION 355 (OR  SO
MUCH  OF  SECTION  356 AS RELATES TO SECTION 355) APPLIES; BUT ANY STOCK
RECEIVED IN SUCH AN EXCHANGE SHALL BE TREATED FOR PURPOSES  OF  SUBPARA-
GRAPH (A)(I) AS AN INTEREST QUALIFYING UNDER SUBSECTION (A)(1).
  (D)  SUBPARAGRAPH  (A)(I)  DOES NOT APPLY TO A TRANSFER OF PROPERTY OF
THE DECEDENT TO A PERSON ENTITLED BY REASON OF THE DECEDENT'S  DEATH  TO
RECEIVE  SUCH  PROPERTY UNDER THE DECEDENT'S WILL, THE APPLICABLE LAW OF
DESCENT AND DISTRIBUTION, OR A TRUST CREATED BY THE DECEDENT. A  SIMILAR
RULE  SHALL APPLY IN THE CASE OF A SERIES OF SUBSEQUENT TRANSFERS OF THE
PROPERTY BY REASON OF DEATH SO LONG AS EACH TRANSFER IS TO A  MEMBER  OF
THE  FAMILY  (WITHIN THE MEANING OF SECTION 267(C)(4)) OF THE TRANSFEROR
IN SUCH TRANSFER.
  (E) CHANGES IN INTEREST IN HOLDING COMPANY.--IF ANY STOCK IN A HOLDING
COMPANY IS  TREATED  AS  STOCK  IN  A  BUSINESS  COMPANY  BY  REASON  OF
SUBSECTION (B)(8)(A)--
  (I)  ANY  DISPOSITION  OF  ANY  INTEREST IN SUCH STOCK IN SUCH HOLDING
COMPANY WHICH WAS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE  DECE-
DENT, OR
  (II)  ANY  WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM SUCH HOLDING
COMPANY ATTRIBUTABLE TO ANY INTEREST INCLUDED IN DETERMINING  THE  GROSS
ESTATE OF THE DECEDENT,
  SHALL  BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION OF
(OR A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER  SUBSECTION
(A)(1).
  (F)  CHANGES IN INTEREST IN BUSINESS COMPANY.--IF ANY STOCK IN A HOLD-
ING COMPANY IS TREATED AS STOCK IN  A  BUSINESS  COMPANY  BY  REASON  OF
SUBSECTION (B)(8)(A)--
  (I)  ANY  DISPOSITION  OF  ANY  INTEREST IN SUCH STOCK IN THE BUSINESS
COMPANY BY SUCH HOLDING COMPANY, OR
  (II) ANY WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM SUCH  BUSINESS
COMPANY  ATTRIBUTABLE  TO SUCH STOCK BY SUCH HOLDING COMPANY OWNING SUCH
STOCK,
  SHALL BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION  OF
(OR  A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER SUBSECTION
(A)(1).
  (2) UNDISTRIBUTED INCOME OF ESTATE.--
  (A) IF AN ELECTION IS MADE UNDER  THIS  SECTION  AND  THE  ESTATE  HAS
UNDISTRIBUTED NET INCOME FOR ANY TAXABLE YEAR ENDING ON OR AFTER THE DUE
DATE  FOR  THE  FIRST  INSTALLMENT, THE EXECUTOR SHALL, ON OR BEFORE THE

S. 6359                            312                           A. 8559

DATE PRESCRIBED BY LAW FOR FILING THE INCOME TAX RETURN FOR SUCH TAXABLE
YEAR (INCLUDING EXTENSIONS THEREOF), PAY AN AMOUNT EQUAL TO SUCH  UNDIS-
TRIBUTED  NET  INCOME  IN  LIQUIDATION  OF THE UNPAID PORTION OF THE TAX
PAYABLE IN INSTALLMENTS.
  (B)  FOR PURPOSES OF SUBPARAGRAPH (A), THE UNDISTRIBUTED NET INCOME OF
THE ESTATE FOR ANY TAXABLE YEAR IS THE AMOUNT BY WHICH THE DISTRIBUTABLE
NET INCOME OF THE ESTATE FOR SUCH TAXABLE YEAR (AS  DEFINED  IN  SECTION
643) EXCEEDS THE SUM OF--
  (I)  THE AMOUNTS FOR SUCH TAXABLE YEAR SPECIFIED IN PARAGRAPHS (1) AND
(2) OF SECTION 661(A) (RELATING TO DEDUCTIONS FOR DISTRIBUTIONS, ETC.);
  (II) THE AMOUNT OF TAX IMPOSED FOR THE  TAXABLE  YEAR  ON  THE  ESTATE
UNDER CHAPTER 1; AND
  (III)  THE AMOUNT OF THE TAX IMPOSED BY SECTION 2001 (INCLUDING INTER-
EST) PAID BY THE EXECUTOR DURING THE TAXABLE YEAR (OTHER THAN ANY AMOUNT
PAID PURSUANT TO THIS PARAGRAPH).
  (C) FOR PURPOSES OF THIS PARAGRAPH, IF ANY STOCK IN A  CORPORATION  IS
TREATED  AS  STOCK  IN  ANOTHER  CORPORATION  BY  REASON  OF  SUBSECTION
(B)(8)(A), ANY DIVIDENDS PAID BY SUCH OTHER CORPORATION  TO  THE  CORPO-
RATION  SHALL  BE  TREATED  AS PAID TO THE ESTATE OF THE DECEDENT TO THE
EXTENT ATTRIBUTABLE TO THE STOCK QUALIFYING UNDER SUBSECTION (A)(1).
  (3) FAILURE TO MAKE PAYMENT OF PRINCIPAL OR INTEREST.--
  (A) IN GENERAL.--EXCEPT  AS  PROVIDED  IN  SUBPARAGRAPH  (B),  IF  ANY
PAYMENT  OF  PRINCIPAL  OR INTEREST UNDER THIS SECTION IS NOT PAID ON OR
BEFORE THE DATE FIXED FOR ITS PAYMENT BY  THIS  SECTION  (INCLUDING  ANY
EXTENSION  OF  TIME),  THE UNPAID PORTION OF THE TAX PAYABLE IN INSTALL-
MENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM THE SECRETARY.
  (B) PAYMENT WITHIN 6 MONTHS.--IF ANY PAYMENT OF PRINCIPAL OR  INTEREST
UNDER  THIS  SECTION  IS NOT PAID ON OR BEFORE THE DATE DETERMINED UNDER
SUBPARAGRAPH (A) BUT IS PAID WITHIN 6 MONTHS OF SUCH DATE--
  (I) THE PROVISIONS OF SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO
SUCH PAYMENT,
  (II) THE PROVISIONS OF SECTION 6601(J) SHALL NOT APPLY WITH RESPECT TO
THE DETERMINATION OF INTEREST ON SUCH PAYMENT, AND
  (III) THERE IS IMPOSED A PENALTY IN AN AMOUNT  EQUAL  TO  THE  PRODUCT
OF--
  (I) 5 PERCENT OF THE AMOUNT OF SUCH PAYMENT, MULTIPLIED BY
  (II)  THE  NUMBER OF MONTHS (OR FRACTIONS THEREOF) AFTER SUCH DATE AND
BEFORE PAYMENT IS MADE.  THE PENALTY IMPOSED UNDER CLAUSE (III) SHALL BE
TREATED IN THE SAME MANNER AS A PENALTY IMPOSED UNDER  SUBCHAPTER  B  OF
CHAPTER 68.
  (H) ELECTION IN CASE OF CERTAIN DEFICIENCIES.--
  (1) IN GENERAL.--IF--
  (A) A DEFICIENCY IN THE TAX IMPOSED BY SECTION 2001 IS ASSESSED,
  (B) THE ESTATE QUALIFIES UNDER SUBSECTION (A)(1), AND
  (C)  THE  EXECUTOR  HAS NOT MADE AN ELECTION UNDER SUBSECTION (A), THE
EXECUTOR MAY  ELECT  TO  PAY  THE  DEFICIENCY  IN  INSTALLMENTS.    THIS
SUBSECTION  SHALL  NOT  APPLY IF THE DEFICIENCY IS DUE TO NEGLIGENCE, TO
INTENTIONAL DISREGARD OF RULES AND REGULATIONS, OR TO FRAUD WITH  INTENT
TO EVADE TAX.
  (2) TIME OF ELECTION.--AN ELECTION UNDER THIS SUBSECTION SHALL BE MADE
NOT LATER THAN 60 DAYS AFTER ISSUANCE OF NOTICE AND DEMAND BY THE SECRE-
TARY FOR THE PAYMENT OF THE DEFICIENCY, AND SHALL BE MADE IN SUCH MANNER
AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
  (3)  EFFECT OF ELECTION ON PAYMENT.--IF AN ELECTION IS MADE UNDER THIS
SUBSECTION, THE DEFICIENCY SHALL (SUBJECT TO THE LIMITATION PROVIDED  BY
SUBSECTION (A)(2)) BE PRORATED TO THE INSTALLMENTS WHICH WOULD HAVE BEEN

S. 6359                            313                           A. 8559

DUE IF AN ELECTION HAD BEEN TIMELY MADE UNDER SUBSECTION (A) AT THE TIME
THE  ESTATE TAX RETURN WAS FILED. THE PART OF THE DEFICIENCY SO PRORATED
TO ANY INSTALLMENT THE DATE FOR PAYMENT  OF  WHICH  WOULD  HAVE  ARRIVED
SHALL  BE  PAID  AT  THE  TIME  OF THE MAKING OF THE ELECTION UNDER THIS
SUBSECTION. THE PORTION OF THE DEFICIENCY SO  PRORATED  TO  INSTALLMENTS
THE DATE FOR PAYMENT OF WHICH WOULD NOT HAVE SO ARRIVED SHALL BE PAID AT
THE  TIME  SUCH INSTALLMENTS WOULD HAVE BEEN DUE IF SUCH AN ELECTION HAD
BEEN MADE.
  (I) SPECIAL RULE FOR CERTAIN DIRECT  SKIPS.--TO  THE  EXTENT  THAT  AN
INTEREST  IN  A  CLOSELY  HELD  BUSINESS IS THE SUBJECT OF A DIRECT SKIP
(WITHIN THE MEANING OF SECTION 2612(C)) OCCURRING AT THE  SAME  TIME  AS
AND  AS  A  RESULT  OF  THE  DECEDENT'S DEATH, THEN FOR PURPOSES OF THIS
SECTION ANY TAX IMPOSED BY SECTION 2601 ON THE TRANSFER OF SUCH INTEREST
SHALL BE TREATED AS IF IT WERE ADDITIONAL TAX IMPOSED BY SECTION 2001.
  (J) REGULATIONS.--THE SECRETARY SHALL PRESCRIBE  SUCH  REGULATIONS  AS
MAY BE NECESSARY TO THE APPLICATION OF THIS SECTION.
  (K) CROSS REFERENCES.--
  (1)  SECURITY.-- FOR AUTHORITY OF THE SECRETARY TO REQUIRE SECURITY IN
THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6165.
  (2) LIEN.--FOR SPECIAL LIEN (IN LIEU OF BOND) IN THE CASE OF AN EXTEN-
SION UNDER THIS SECTION, SEE SECTION 6324A.
  (3) PERIOD OF LIMITATION.--FOR EXTENSION OF THE PERIOD  OF  LIMITATION
IN THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6503(D).
  (4)  INTEREST.--FOR  PROVISIONS RELATING TO INTEREST ON TAX PAYABLE IN
INSTALLMENTS UNDER THIS SECTION, SEE SUBSECTION (J) OF SECTION 6601.
  (5) TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR SPECIAL RULE FOR  QUALIFY-
ING  AN  ESTATE  UNDER  THIS SECTION WHERE PROPERTY HAS BEEN TRANSFERRED
WITHIN 3 YEARS OF DECEDENT'S DEATH, SEE SECTION 2035(C)(2).
  S 11. This act shall take effect April 1,  2014  and  shall  apply  to
estates  of  decedents  dying on and after that date; provided, however,
that the amendments to subsection (c) of section 951 of the tax law made
by section one  of  this  act  shall  not  affect  the  repeal  of  such
subsection and shall be deemed repealed therewith.

                                 PART Y

  Section 1. Article 19 of the tax law is REPEALED.
  S 2. Section 1820 of the tax law is REPEALED.
  S  3.  Subdivision  1  of  section 171-a of the tax law, as amended by
section 1 of part R of chapter 60 of the laws of  2004,  is  amended  to
read as follows:
  1.  All  taxes,  interest, penalties and fees collected or received by
the commissioner or the commissioner's duly authorized agent under arti-
cles nine (except section one hundred eighty-two-a thereof and except as
otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
twelve-A  (except  as  otherwise provided in section two hundred eighty-
four-d thereof), thirteen, thirteen-A (except as otherwise  provided  in
section  three  hundred  twelve  thereof),  eighteen, [nineteen,] twenty
(except as otherwise provided in section four hundred eighty-two  there-
of),  twenty-one,  twenty-two,  twenty-six,  twenty-six-B,  twenty-eight
(except as otherwise provided in section eleven hundred  two  or  eleven
hundred  three thereof), twenty-eight-A, thirty-one (except as otherwise
provided in section fourteen hundred  twenty-one  thereof),  thirty-two,
thirty-three and thirty-three-A of this chapter shall be deposited daily
in  one  account  with  such  responsible banks, banking houses or trust
companies as may be designated by the comptroller, to the credit of  the

S. 6359                            314                           A. 8559

comptroller.  Such  an account may be established in one or more of such
depositories. Such deposits shall be kept separate and  apart  from  all
other  money in the possession of the comptroller. The comptroller shall
require  adequate  security  from  all  such  depositories. Of the total
revenue collected or received under such articles of this  chapter,  the
comptroller  shall  retain in the comptroller's hands such amount as the
commissioner may determine to be necessary for refunds or reimbursements
under such articles of this chapter and article ten thereof out of which
amount the comptroller shall pay any refunds or reimbursements to  which
taxpayers  shall  be  entitled  under the provisions of such articles of
this chapter and article ten thereof. The  commissioner  and  the  comp-
troller shall maintain a system of accounts showing the amount of reven-
ue  collected  or  received from each of the taxes imposed by such arti-
cles. The comptroller, after reserving the amount to pay such refunds or
reimbursements, shall, on or before the tenth day  of  each  month,  pay
into  the  state  treasury to the credit of the general fund all revenue
deposited under this section during the  preceding  calendar  month  and
remaining  to the comptroller's credit on the last day of such preceding
month, (i) except that the comptroller shall pay to the state department
of social services that amount of overpayments of tax imposed by article
twenty-two of this chapter and the interest  on  such  amount  which  is
certified  to  the  comptroller  by the commissioner as the amount to be
credited against past-due support pursuant to subdivision six of section
one hundred seventy-one-c of this [chapter]  ARTICLE,  (ii)  and  except
that  the  comptroller  shall pay to the New York state higher education
services corporation and the state university of New York  or  the  city
university  of  New York respectively that amount of overpayments of tax
imposed by article twenty-two of this chapter and the interest  on  such
amount  which is certified to the comptroller by the commissioner as the
amount to be credited against the amount of  defaults  in  repayment  of
guaranteed  student  loans and state university loans or city university
loans pursuant to subdivision five of section one hundred  seventy-one-d
and  subdivision six of section one hundred seventy-one-e of this [chap-
ter] ARTICLE, (iii) and except further that,  notwithstanding  any  law,
the  comptroller shall credit to the revenue arrearage account, pursuant
to section ninety-one-a of the state finance law, that amount  of  over-
payment  of  tax  imposed  by  article nine, nine-A, twenty-two, thirty,
thirty-A, thirty-B, thirty-two or thirty-three of this chapter, and  any
interest  thereon,  which is certified to the comptroller by the commis-
sioner as the amount to be credited against a past-due legally enforcea-
ble debt owed to a state agency pursuant to paragraph (a) of subdivision
six of section one hundred  seventy-one-f  of  this  article,  provided,
however, he shall credit to the special offset fiduciary account, pursu-
ant  to  section  ninety-one-c of the state finance law, any such amount
creditable as a liability as set forth in paragraph (b)  of  subdivision
six  of  section  one  hundred  seventy-one-f  of this article, (iv) and
except further that the comptroller shall pay to the city  of  New  York
that amount of overpayment of tax imposed by article nine, nine-A, twen-
ty-two,  thirty, thirty-A, thirty-B, thirty-two, or thirty-three of this
chapter and any interest thereon that is certified to the comptroller by
the commissioner as the amount to be credited against city of  New  York
tax  warrant judgment debt pursuant to section one hundred seventy-one-l
of this article, (v) and except further that the comptroller  shall  pay
to  a  non-obligated spouse that amount of overpayment of tax imposed by
article twenty-two of this chapter and the interest on such amount which
has been credited pursuant to section  one  hundred  seventy-one-c,  one

S. 6359                            315                           A. 8559

hundred  seventy-one-d,  one hundred seventy-one-e, one hundred seventy-
one-f or one hundred seventy-one-l of this article and which  is  certi-
fied  to the comptroller by the commissioner as the amount due such non-
obligated  spouse pursuant to paragraph six of subsection (b) of section
six hundred fifty-one of this chapter; and (vi)  the  comptroller  shall
deduct  a  like amount which the comptroller shall pay into the treasury
to the credit of the general fund from amounts subsequently  payable  to
the department of social services, the state university of New York, the
city  university  of  New  York, or the higher education services corpo-
ration, or the revenue arrearage account  or  special  offset  fiduciary
account  pursuant  to  section ninety-one-a or ninety-one-c of the state
finance law, as the case may be, whichever had been credited the  amount
originally  withheld  from  such  overpayment, and (vii) with respect to
amounts originally withheld from such overpayment  pursuant  to  section
one  hundred  seventy-one-l  of this article and paid to the city of New
York, the comptroller shall collect a like amount from the city  of  New
York.
  S  4.  Section  29  of chapter 912 of the laws of 1920 relating to the
regulation of boxing, sparring and  wrestling  matches,  as  amended  by
chapter  833  of the laws of 1987, the section heading and subdivision 1
as amended by chapter 437 of the laws of 2002, is  amended  to  read  as
follows:
  S 29.  Notice of contest or exhibition[; collection of tax].  1. Every
individual, corporation, association or club holding any professional or
amateur  boxing, sparring or professional wrestling match or exhibition,
for which an admission fee is charged  or  received,  shall  notify  the
athletic  commission ten days in advance of the holding of such contest.
All tickets of admission to any such boxing,  sparring  or  professional
wrestling  match  or  exhibition  shall  be procured from a printer duly
authorized by the state athletic commission to print  such  tickets  and
shall bear clearly upon the face thereof the purchase price and location
of  same.  Any  individual,  corporation, association or club failing to
fully comply with this section shall be subject to a  penalty  of  fifty
dollars  to  be  collected  by  and paid to the department of state. Any
individual, corporation, association or club is prohibited from  operat-
ing  any  shows  or exhibitions until all penalties due pursuant to this
section [and taxes, interest and penalties due pursuant to article nine-
teen of the tax law] have been paid.
  2.   [Pursuant to  direction  by  the  commissioner  of  taxation  and
finance,  employees  or officers of the athletic commission shall act as
agents of the commissioner of taxation and finance to  collect  the  tax
imposed  by  article  nineteen  of the tax law.] The athletic commission
shall provide the commissioner of taxation and finance with such  infor-
mation  and  technical  assistance  as  may  be necessary for the proper
administration of [such tax] STATE AND  LOCAL  SALES  TAXES  IMPOSED  ON
CHARGES  FOR  ADMISSION  TO A PLACE OF AMUSEMENT WHERE ANY SUCH MATCH OR
EXHIBITION WILL BE HELD.
  S 5. Section 30 of chapter 912 of the laws of  1920  relating  to  the
regulation  of  boxing,  sparring  and  wrestling matches, as amended by
chapter 833 of the laws of 1987, is amended to read as follows:
  S 30. Disposition of receipts. All receipts of the commission shall be
paid into the state treasury. [Provided, however, that receipts from the
tax imposed by article nineteen of the tax law  shall  be  deposited  as
provided by section one hundred seventy-one-a of the tax law.]
  S  6. Notwithstanding the repeal of article 19 and section 1820 of the
tax law by this act, all provisions of such article 19 and section 1820,

S. 6359                            316                           A. 8559

in respect to the imposition, exemption,  assessment,  payment,  payment
over,  determination,  collection,  and  credit or refund of tax imposed
thereunder, the filing of forms and returns, the preservation of records
for the purposes of such tax, the secrecy of returns, the disposition of
revenues,  and  the  civil  and  criminal  penalties  applicable  to the
violation of the provisions of such article 19, shall continue  in  full
force and effect with respect to all such tax accrued up to September 1,
2014;  all  actions  and  proceedings,  civil  or criminal, commenced or
authorized to be commenced under or by virtue of any provision  of  such
article 19 so repealed, and pending or able to be commenced prior to the
effective date of this act, may be commenced, prosecuted and defended to
final  effect  in  the same manner as they might if such provisions were
not so repealed.
  S 7. This act shall take effect September 1, 2014 and  the  state  and
local  sales  taxes arising on the date this act shall have taken effect
shall apply to any admission to or the use of facilities of a  place  of
amusement  occurring on or after that date, whether or not the admission
charge has been paid prior to such date, unless the tickets were actual-
ly sold and delivered prior to such date to a person entering such place
of amusement on or after such date.

                                 PART Z

  Section 1. Clause (F) of subparagraph (ii) of paragraph 1 of  subdivi-
sion  b of section 1612 of the tax law, as amended by chapter 174 of the
laws of 2013, is amended to read as follows:
  (F) notwithstanding clauses (A), (B), (C), (D) and (E) of this subpar-
agraph, when a vendor track, is located in Sullivan  county  and  within
sixty  miles  from any gaming facility in a contiguous state such vendor
fee shall, for a period of [six] SEVEN years commencing April first, two
thousand eight, be at a rate of forty-one percent of the  total  revenue
wagered  at  the  vendor  track after payout for prizes pursuant to this
chapter, after which time such rate shall be as for all tracks in clause
(C) of this subparagraph.
  S 2. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2014.

                                 PART AA

  Section  1.  Paragraph  (a)  of  subdivision  1 of section 1003 of the
racing, pari-mutuel wagering and breeding law, as amended by chapter 174
of the laws of 2013, is amended to read as follows:
  (a) Any  racing  association  or  corporation  or  regional  off-track
betting  corporation,  authorized  to conduct pari-mutuel wagering under
this chapter, desiring to display the simulcast of horse races on  which
pari-mutuel  betting shall be permitted in the manner and subject to the
conditions provided for in this article may apply to the commission  for
a  license so to do.  Applications for licenses shall be in such form as
may be prescribed by the commission and shall contain  such  information
or  other material or evidence as the commission may require. No license
shall be issued by the commission authorizing the simulcast transmission
of thoroughbred races from a track located in Suffolk  county.  The  fee
for  such  licenses shall be five hundred dollars per simulcast facility
and for account wagering licensees that do not operate either  a  simul-
cast facility that is open to the public within the state of New York or
a  licensed racetrack within the state, twenty thousand dollars per year

S. 6359                            317                           A. 8559

payable by the licensee to the commission for deposit into  the  general
fund.  Except  as  provided  in  this  section, the commission shall not
approve any application to conduct simulcasting into individual or group
residences,  homes  or  other areas for the purposes of or in connection
with pari-mutuel wagering. The [board] COMMISSION may approve simulcast-
ing into residences, homes or other areas to be conducted jointly by one
or more regional off-track betting corporations and one or more  of  the
following:  a franchised corporation, thoroughbred racing corporation or
a harness racing corporation or association; provided (i) the simulcast-
ing consists only of those races on which pari-mutuel betting is author-
ized by this chapter at one or more simulcast facilities for each of the
contracting off-track betting corporations which  shall  include  wagers
made  in  accordance  with  section  one  thousand fifteen, one thousand
sixteen and one thousand seventeen of  this  article;  provided  further
that  the  contract  provisions or other simulcast arrangements for such
simulcast facility shall be no less favorable than those  in  effect  on
January  first,  two  thousand  five;  (ii)  that each off-track betting
corporation having within its  geographic  boundaries  such  residences,
homes  or  other  areas  technically  capable of receiving the simulcast
signal shall be a contracting party; (iii) the distribution of  revenues
shall  be  subject  to  contractual agreement of the parties except that
statutory payments to  non-contracting  parties,  if  any,  may  not  be
reduced;  provided,  however,  that nothing herein to the contrary shall
prevent a track from televising its races on an irregular basis primari-
ly for promotional or marketing purposes as found by the [board] COMMIS-
SION.  For purposes of this paragraph, the  provisions  of  section  one
thousand thirteen of this article shall not apply. Any agreement author-
izing  an  in-home  simulcasting  experiment  commencing  prior  to  May
fifteenth, nineteen hundred ninety-five, may,  and  all  its  terms,  be
extended   until   June  thirtieth,  two  thousand  [fourteen]  FIFTEEN;
provided, however, that any party to such agreement may elect to  termi-
nate  such  agreement upon conveying written notice to all other parties
of such agreement at least forty-five days prior to the  effective  date
of  the  termination,  via  registered  mail.  Any party to an agreement
receiving such notice of an intent to terminate, may request the [board]
COMMISSION to mediate between the parties new terms and conditions in  a
replacement agreement between the parties as will permit continuation of
an  in-home  experiment  until  June  thirtieth, two thousand [fourteen]
FIFTEEN; and (iv) no in-home simulcasting in  the  thoroughbred  special
betting  district  shall  occur  without  the  approval  of the regional
thoroughbred track.
  S 2. Subparagraph (iii) of paragraph d of  subdivision  3  of  section
1007 of the racing, pari-mutuel wagering and breeding law, as amended by
section  2  of  part  U of chapter 59 of the laws of 2013, is amended to
read as follows:
  (iii) Of the sums retained by a receiving track located in Westchester
county on races received from a franchised corporation, for  the  period
commencing January first, two thousand eight and continuing through June
thirtieth,  two thousand [fourteen] FIFTEEN, the amount used exclusively
for purses to be awarded at races  conducted  by  such  receiving  track
shall  be computed as follows: of the sums so retained, two and one-half
percent of the total pools. Such amount shall be increased or  decreased
in  the  amount  of fifty percent of the difference in total commissions
determined by comparing the total commissions available after July twen-
ty-first, nineteen hundred ninety-five to  the  total  commissions  that

S. 6359                            318                           A. 8559

would  have  been  available  to  such track prior to July twenty-first,
nineteen hundred ninety-five.
  S  3.  The  opening  paragraph of subdivision 1 of section 1014 of the
racing, pari-mutuel wagering and breeding law, as amended by  section  3
of  part  U  of  chapter  59  of the laws of 2013, is amended to read as
follows:
  The provisions of this section shall govern the simulcasting of  races
conducted  at thoroughbred tracks located in another state or country on
any day during which a franchised corporation is conducting a race meet-
ing in Saratoga county at Saratoga  thoroughbred  racetrack  until  June
thirtieth,  two thousand [fourteen] FIFTEEN and on any day regardless of
whether or not a franchised corporation is conducting a race meeting  in
Saratoga county at Saratoga thoroughbred racetrack after June thirtieth,
two  thousand  [fourteen]  FIFTEEN.    On  any day on which a franchised
corporation has not scheduled a racing program but a thoroughbred racing
corporation located within the state is conducting  racing,  every  off-
track  betting corporation branch office and every simulcasting facility
licensed in accordance  with  section  one  thousand  seven  (that  have
entered  into  a  written  agreement with such facility's representative
horsemen's organization, as approved by  the  [board]  COMMISSION),  one
thousand eight, or one thousand nine of this article shall be authorized
to accept wagers and display the live simulcast signal from thoroughbred
tracks  located  in  another  state  or  foreign  country subject to the
following provisions:
  S 4. Subdivision 1 of section 1015 of the racing, pari-mutuel wagering
and breeding law, as amended by section 4 of part U of chapter 59 of the
laws of 2013, is amended to read as follows:
  1. The provisions of this section shall  govern  the  simulcasting  of
races  conducted  at  harness tracks located in another state or country
during the period July first, nineteen hundred ninety-four through  June
thirtieth,  two  thousand [fourteen] FIFTEEN.  This section shall super-
sede all inconsistent provisions of this chapter.
  S 5. The opening paragraph of subdivision 1 of  section  1016  of  the
racing,  pari-mutuel  wagering and breeding law, as amended by section 5
of part U of chapter 59 of the laws of  2013,  is  amended  to  read  as
follows:
  The  provisions of this section shall govern the simulcasting of races
conducted at thoroughbred tracks located in another state or country  on
any  day  during which a franchised corporation is not conducting a race
meeting in Saratoga county at Saratoga thoroughbred racetrack until June
thirtieth, two thousand [fourteen] FIFTEEN.    Every  off-track  betting
corporation  branch  office  and every simulcasting facility licensed in
accordance with section one thousand seven  that  have  entered  into  a
written  agreement with such facility's representative horsemen's organ-
ization as approved by the [board] COMMISSION, one thousand eight or one
thousand nine of this article shall be authorized to accept  wagers  and
display  the  live  full-card  simulcast  signal  of thoroughbred tracks
(which may include quarter horse or mixed  meetings  provided  that  all
such wagering on such races shall be construed to be thoroughbred races)
located  in  another  state or foreign country, subject to the following
provisions; provided,  however,  no  such  written  agreement  shall  be
required of a franchised corporation licensed in accordance with section
one thousand seven of this article:
  S  6. The opening paragraph of section 1018 of the racing, pari-mutuel
wagering and breeding law, as amended by section 6 of part U of  chapter
59 of the laws of 2013, is amended to read as follows:

S. 6359                            319                           A. 8559

  Notwithstanding  any  other  provision of this chapter, for the period
July twenty-fifth, two thousand one through September eighth, two  thou-
sand  [thirteen] FOURTEEN, when a franchised corporation is conducting a
race meeting within the state at Saratoga Race Course,  every  off-track
betting  corporation  branch  office  and  every  simulcasting  facility
licensed in accordance with section one thousand seven (that has entered
into a written agreement with such facility's representative  horsemen's
organization  as approved by the [board] COMMISSION), one thousand eight
or one thousand nine of this  article  shall  be  authorized  to  accept
wagers  and  display  the live simulcast signal from thoroughbred tracks
located in another state,  provided  that  such  facility  shall  accept
wagers  on  races  run  at  all  in-state  thoroughbred tracks which are
conducting  racing  programs  subject  to  the   following   provisions;
provided,  however,  no  such  written  agreement shall be required of a
franchised corporation licensed in accordance with section one  thousand
seven of this article.
  S  7.  Section  32  of  chapter  281 of the laws of 1994, amending the
racing, pari-mutuel wagering and breeding law  and other  laws  relating
to  simulcasting, as amended by section 7 of part U of chapter 59 of the
laws of 2013, is amended to read as follows:
  S 32. This act shall take effect immediately and the  pari-mutuel  tax
reductions  in  section  six  of  this  act  shall  expire and be deemed
repealed on  July  1,  [2014]  2015;  provided,  however,  that  nothing
contained  herein  shall be deemed to affect the application, qualifica-
tion, expiration, or repeal of any  provision  of  law  amended  by  any
section  of  this act, and such provisions shall be applied or qualified
or shall expire or be deemed repealed in the same manner,  to  the  same
extent  and on the same date as the case may be as otherwise provided by
law; provided further, however, that sections twenty-three  and  twenty-
five of this act shall remain in full force and effect only until May 1,
1997 and at such time shall be deemed to be repealed.
  S  8.  Section  54  of  chapter  346 of the laws of 1990, amending the
racing, pari-mutuel wagering and breeding law and other laws relating to
simulcasting and the imposition of certain taxes, as amended by  section
8  of  part  U  of chapter 59 of the laws of 2013, is amended to read as
follows:
  S 54. This act  shall  take  effect  immediately;  provided,  however,
sections  three  through twelve of this act shall take effect on January
1, 1991, and section 1013 of the racing, pari-mutuel wagering and breed-
ing law, as added by section thirty-eight of this act, shall expire  and
be  deemed repealed on July 1, [2014] 2015; and section eighteen of this
act shall take effect on July 1, 2008 and sections fifty-one and  fifty-
two  of this act shall take effect as of the same date as chapter 772 of
the laws of 1989 took effect.
  S 9. Paragraph (a) of subdivision 1 of  section  238  of  the  racing,
pari-mutuel wagering and breeding law, as amended by section 9 of part U
of chapter 59 of the laws of 2013, is amended to read as follows:
  (a)  The  franchised  corporation  authorized  under  this  chapter to
conduct pari-mutuel betting at a race meeting or races run thereat shall
distribute all sums deposited in any pari-mutuel pool to the holders  of
winning  tickets therein, provided such tickets be presented for payment
before April first of the year following the  year  of  their  purchase,
less  an  amount  which  shall be established and retained by such fran-
chised corporation of between twelve to  seventeen  per  centum  of  the
total  deposits in pools resulting from on-track regular bets, and four-
teen to twenty-one per centum of the total deposits in  pools  resulting

S. 6359                            320                           A. 8559

from on-track multiple bets and fifteen to twenty-five per centum of the
total  deposits in pools resulting from on-track exotic bets and fifteen
to thirty-six per centum of the total deposits in pools  resulting  from
on-track  super  exotic  bets, plus the breaks. The retention rate to be
established is subject to the prior approval of the [racing and wagering
board] GAMING COMMISSION. Such rate may not be changed  more  than  once
per  calendar  quarter  to be effective on the first day of the calendar
quarter. "Exotic bets" and "multiple bets" shall have the  meanings  set
forth  in  section five hundred nineteen of this chapter.  "Super exotic
bets" shall have the meaning set forth in section three hundred  one  of
this  chapter. For purposes of this section, a "pick six bet" shall mean
a single bet or wager on the outcomes of six races. The breaks are here-
by defined as the odd cents over any multiple of five for payoffs great-
er than one dollar five cents but  less  than  five  dollars,  over  any
multiple  of  ten  for  payoffs  greater than five dollars but less than
twenty-five dollars, over any multiple of twenty-five for payoffs great-
er than twenty-five dollars but less than two hundred fifty dollars,  or
over  any  multiple of fifty for payoffs over two hundred fifty dollars.
Out of the amount so retained there shall be  paid  by  such  franchised
corporation to the commissioner of taxation and finance, as a reasonable
tax  by the state for the privilege of conducting pari-mutuel betting on
the races run at the race meetings held by such franchised  corporation,
the  following  percentages  of  the total pool for regular and multiple
bets five per centum of regular bets and four  per  centum  of  multiple
bets  plus  twenty per centum of the breaks; for exotic wagers seven and
one-half per centum plus twenty per centum of the breaks, and for  super
exotic  bets  seven and one-half per centum plus fifty per centum of the
breaks. For the period June first, nineteen hundred ninety-five  through
September  ninth,  nineteen  hundred  ninety-nine,  such  tax on regular
wagers shall be three per centum and such tax on multiple  wagers  shall
be  two  and  one-half per centum, plus twenty per centum of the breaks.
For the period September tenth,  nineteen  hundred  ninety-nine  through
March  thirty-first,  two  thousand one, such tax on all wagers shall be
two and six-tenths per centum and for the period April first, two  thou-
sand one through December thirty-first, two thousand [fourteen] FIFTEEN,
such  tax on all wagers shall be one and six-tenths per centum, plus, in
each such period, twenty per centum of the breaks. Payment  to  the  New
York state thoroughbred breeding and development fund by such franchised
corporation  shall be one-half of one per centum of total daily on-track
pari-mutuel pools resulting from regular, multiple and exotic  bets  and
three  per  centum  of super exotic bets provided, however, that for the
period September tenth, nineteen hundred ninety-nine through March thir-
ty-first, two thousand one, such payment shall be six-tenths of one  per
centum  of  regular,  multiple and exotic pools and for the period April
first, two thousand one  through  December  thirty-first,  two  thousand
[fourteen] FIFTEEN, such payment shall be seven-tenths of one per centum
of such pools.
  S 10. This act shall take effect immediately.

                                 PART BB

  Section  1. Clause (H) of subparagraph (ii) of paragraph 1 of subdivi-
sion b of section 1612 of the tax law, as separately amended by chapters
174 and 175 of the laws of 2013, is amended to read as follows:
  (H) notwithstanding clauses (A), (B), (C), (D), (E), (F)  and  (G)  of
this  subparagraph, the track operator of a vendor track shall be eligi-

S. 6359                            321                           A. 8559

ble for a vendor's capital award of up to  four  percent  of  the  total
revenue  wagered at the vendor track after payout for prizes pursuant to
this chapter, which  shall  be  used  exclusively  for  capital  project
investments  to improve the facilities of the vendor track which promote
or encourage increased attendance at the video lottery  gaming  facility
including,  but  not limited to hotels, other lodging facilities, enter-
tainment  facilities,  retail  facilities,  dining  facilities,   events
arenas,  parking  garages  and  other improvements that enhance facility
amenities; provided that such capital investments shall be  approved  by
the  division, in consultation with the state racing and wagering board,
and that such vendor track demonstrates that such  capital  expenditures
will  increase  patronage at such vendor track's facilities and increase
the amount of revenue generated to support state education programs. The
annual amount of such vendor's capital awards that a vendor track  shall
be  eligible  to  receive  shall  be limited to two million five hundred
thousand dollars, except for Aqueduct racetrack, for which  there  shall
be  no  vendor's  capital awards. Except for tracks having less than one
thousand one hundred video gaming machines,  and  except  for  a  vendor
track  located west of State Route 14 from Sodus Point to the Pennsylva-
nia border within New York, each track operator  shall  be  required  to
co-invest  an  amount  of  capital  expenditure  equal to its cumulative
vendor's capital award. For all tracks, except for  Aqueduct  racetrack,
the amount of any vendor's capital award that is not used during any one
year  period  may  be  carried  over into subsequent years ending before
April first, two thousand [fourteen] FIFTEEN.   Any amount  attributable
to  a  capital  expenditure  approved prior to April first, two thousand
[fourteen] FIFTEEN  and  completed  before  April  first,  two  thousand
[sixteen]  SEVENTEEN;  or  approved  prior  to April first, two thousand
[eighteen] NINETEEN and  completed  before  April  first,  two  thousand
[twenty]  TWENTY-ONE  for  a vendor track located west of State Route 14
from Sodus Point to the Pennsylvania border within New  York,  shall  be
eligible  to  receive  the  vendor's  capital award. In the event that a
vendor track's capital expenditures, approved by the division  prior  to
April  first,  two  thousand  [fourteen]  FIFTEEN and completed prior to
April first, two thousand [sixteen] SEVENTEEN, exceed the vendor track's
cumulative capital award during the five year period ending April first,
two thousand [fourteen] FIFTEEN, the vendor shall  continue  to  receive
the  capital  award  after  April first, two thousand [fourteen] FIFTEEN
until such approved capital expenditures are paid to  the  vendor  track
subject  to  any  required  co-investment.  In no event shall any vendor
track that receives a vendor fee pursuant to clause (F) or (G)  of  this
subparagraph  be  eligible  for  a  vendor's  capital  award  under this
section. Any operator of a vendor track which has  received  a  vendor's
capital  award,  choosing to divest the capital improvement toward which
the award was applied, prior to the full  depreciation  of  the  capital
improvement in accordance with generally accepted accounting principles,
shall  reimburse  the  state  in  amounts equal to the total of any such
awards. Any capital award not approved for a capital  expenditure  at  a
video  lottery  gaming  facility by April first, two thousand [fourteen]
FIFTEEN shall be deposited into the state  lottery  fund  for  education
aid; and
  S 2. This act shall take effect immediately.

                                 PART CC

  Section 1. Article 12 of the tax law is REPEALED.

S. 6359                            322                           A. 8559

  S 2. Subdivision fourth of section 171 of the tax law is REPEALED.
  S  3.  Subparagraph (iii) of paragraph (b) of subdivision 1 of section
173-a of the tax law is REPEALED.
  S 4. Section 176 of the tax law, as amended by chapter 267 of the laws
of 1987, is amended to read as follows:
  S 176. Transfer of  the  powers  and  duties  of  the  comptroller  in
relation  to the assessment or collection of certain taxes. On and after
July first, nineteen hundred twenty-one, all the powers and  duties  now
conferred or imposed upon the state comptroller in relation to the taxa-
tion  of corporations under articles nine and nine-A of this chapter, in
relation to the taxation of transfers of property, under article ten  of
this  chapter, [in relation to the taxation of transfers of stock, under
article twelve of this chapter,] and in relation to  taxation  upon  and
with  respect  to personal income, under article sixteen of this chapter
(as such article was in effect on December thirtieth,  nineteen  hundred
sixty),  shall  be  transferred to and thereafter shall be exercised and
performed by the commissioner, except as powers  and  duties  under  any
such  article  are  expressly  conferred  upon or continued in the state
comptroller by acts of the legislature of nineteen  hundred  twenty-one,
enacted  subsequent  to  chapter  ninety of the laws of nineteen hundred
twenty-one.
  S 5. Subparagraph 5 of paragraph (a) and subparagraph 4-a of paragraph
(b) of subdivision 9 of section 208 of the tax law,  subparagraph  5  of
paragraph  (a)  as amended by chapter 61 of the laws of 1989, clause (i)
of subparagraph 5 as amended by section 2 of part C of chapter 25 of the
laws of 2009, and subparagraph 4-a of paragraph (b) of subdivision 9  of
section  208  of  the  tax law, as amended by chapter 760 of the laws of
1992, are amended to read as follows:
  (5) (i) any refund or credit of a  tax  imposed  under  this  article,
article  twenty-three,  or article thirty-two of this chapter, for which
tax no exclusion or deduction was allowed in determining the  taxpayer's
entire  net  income under this article, article twenty-three, or article
thirty-two of this chapter for any prior year,  OR  (ii)  [a  refund  or
credit  of  general  corporation  tax  allowed  by subdivision eleven of
section 11-604 of the administrative code of the city of  New  York,  or
(iii)]  any refund or credit of a tax imposed under sections one hundred
eighty-three, one hundred eighty-three-a, one hundred eighty-four or one
hundred eighty-four-a of this chapter, and
  (4-a)(A) [the entire amount allowable as an exclusion or deduction for
stock transfer taxes imposed by article twelve of this chapter in deter-
mining the entire taxable income  which  the  taxpayer  is  required  to
report  to  the United States treasury department but only to the extent
that such taxes are incurred and paid  in  market  making  transactions,
(B)]  in those instances where a credit for the special additional mort-
gage recording tax credit is allowed under paragraph (a) of  subdivision
seventeen of section two hundred ten of this article, the amount allowed
as an exclusion or deduction for the special additional mortgage record-
ing  tax imposed by subdivision one-a of section two hundred fifty-three
of this chapter in determining  the  entire  taxable  income  which  the
taxpayer is required to report to the United States treasury department,
and  [(C)]  (B) unless the credit allowed pursuant to subdivision seven-
teen of section two hundred ten of this  article  is  reflected  in  the
computation  of  the gain or loss so as to result in an increase in such
gain or decrease of such loss, for federal income tax purposes, from the
sale or other disposition of the property  with  respect  to  which  the
special  additional  mortgage recording tax imposed pursuant to subdivi-

S. 6359                            323                           A. 8559

sion one-a of section two hundred fifty-three of this chapter was  paid,
the  amount  of the special additional mortgage recording tax imposed by
subdivision one-a of section two hundred  fifty-three  of  this  chapter
which was paid and which is reflected in the computation of the basis of
the  property  so as to result in a decrease in such gain or increase in
such loss for federal income tax purposes from the sale or other  dispo-
sition of the property with respect to which such tax was paid.
  S  6. Subdivision 1 of section 472 of the tax law, as amended by chap-
ter 629 of the laws of 1996, and as further amended by  section  104  of
part A of chapter 62 of the laws of 2011, is amended to read as follows:
  1.  The  commissioner  shall  prescribe, prepare and furnish stamps of
such denominations and quantities as may be necessary for the payment of
the tax on cigarettes imposed by this article, and may from time to time
and as often as he deems advisable provide for the issuance  and  exclu-
sive  use  of stamps of a new design and forbid the use of stamps of any
other design[, in the manner and with the effect provided in section two
hundred seventy-four of this chapter]. THE COMMISSIONER MAY MAKE,  ENTER
INTO  AND  EXECUTE  FOR  AND  IN  BEHALF  OF  THE STATE SUCH CONTRACT OR
CONTRACTS FOR DIES, PLATES AND PRINTING NECESSARY FOR THE MANUFACTURE OF
THE STAMPS PROVIDED FOR BY THIS ARTICLE, AND HIRE STAFF AND PROVIDE SUCH
STATIONARY TOGETHER WITH  SUCH  BOOKS  AND  BLANKS  AS  IN  HIS  OR  HER
DISCRETION MAY BE NECESSARY FOR PUTTING INTO OPERATION THE PROVISIONS OF
THIS  ARTICLE;  THE  COMMISSIONER  SHALL BE THE CUSTODIAN OF ALL STAMPS,
DIES, PLATES OR OTHER MATERIAL OR THING FURNISHED AND USED IN THE  MANU-
FACTURE  OF  SUCH  STATE TAX STAMPS, AND ALL EXPENSES INCURRED UNDER THE
COMMISSIONER'S DIRECTION IN CARRYING OUT THE PROVISIONS OF THIS  ARTICLE
SHALL BE PAID TO THE COMMISSIONER BY THE STATE TREASURER FROM ANY MONEYS
APPROPRIATED  FOR  SUCH  PURPOSE. The commissioner shall make provisions
for the sale of such stamps at such places and at such times as  he  may
deem necessary and may license agents for such purpose. The commissioner
may  license  dealers  in  cigarettes, who maintain separate warehousing
facilities for the purpose of receiving and distributing cigarettes  and
conducting  their  business, who have received commitments from at least
two cigarette manufacturers whose aggregate market  share  is  at  least
forty  percent  of  the  New York state cigarette market, and importers,
exporters and manufacturers of cigarettes, and other persons  within  or
without  the state as agents to buy or affix stamps to be used in paying
the tax herein imposed, but an agent shall at all times have  the  right
to  appoint  the  person in his employ who is to affix the stamps to any
cigarettes under the agent's control. The fee for filing  such  applica-
tion  for an agent's license shall be one thousand five hundred dollars,
unless such fee has been paid during the  preceding  twelve  months,  in
which case, the fee for a new license shall be one thousand dollars. All
of  the  provisions of section four hundred eighty relating to wholesale
dealers' licenses, including the procedure for  suspension,  revocation,
refusal  to  license and for hearings, except for paragraphs (c) and (g)
of subdivision one of such  section,  shall  be  applicable  to  agents'
licenses  applied  for  or  granted pursuant to this section, as if such
provisions had been set forth  in  full  in  this  subdivision  and  had
expressly  referred  to  the applicant for, or the holder of, an agent's
license. Whenever the commissioner shall sell and deliver  to  any  such
agent  any  such  stamps,  such  agent  shall  be entitled to receive as
compensation for his services and expenses as such agent in  selling  or
affixing  such stamps, and to retain out of the moneys to be paid by him
for such stamps, a commission on the par value thereof. The commissioner
is hereby authorized to prescribe a schedule of commissions, not exceed-

S. 6359                            324                           A. 8559

ing five per centum, allowable to such agent  for  buying  and  affixing
such  stamps. Such schedule shall be uniform with respect to the differ-
ent types of stamps used, and may be on a graduated scale  with  respect
to  the  number  of  stamps  purchased.  The  commissioner  may,  in his
discretion, permit an agent to pay for such stamps  within  thirty  days
after  the  date of purchase and may require any such agent to file with
the department of taxation and finance a bond issued by a surety company
approved by the superintendent of financial services as to solvency  and
responsibility and authorized to transact business in the state or other
security  acceptable  to the commissioner, in such amount as the commis-
sioner may fix, to secure the payment of any sums due  from  such  agent
pursuant  to this article. If securities are deposited as security under
this subdivision, such securities shall be kept in the  custody  of  the
commissioner and may be sold by the commissioner if it becomes necessary
so  to  do  in order to recover any sums due from such agent pursuant to
this article, but no such sale shall be had until after such agent shall
have had opportunity to litigate the validity of any tax if it elects so
to do. Upon any such sale, the surplus, if any, above the sums due under
this article shall be returned to such agent.
  S 7. Section 463 of the banking law, as added by chapter  608  of  the
laws of 1996, is amended to read as follows:
  S  463. [Exemptions and individual] INDIVIDUAL liability of sharehold-
ers.  [The transfer of the shares of any credit union shall not be taxa-
ble under the provisions of article twelve of the tax law.]
  The shareholders of a credit union shall not  be  individually  liable
for the payment of the credit union's debts.
  S  8.  Subdivision 6 of section 3012 of the public authorities law, as
amended by chapter 868 of the laws  of  1975,  is  amended  to  read  as
follows:
  6.  Anything  in this article ten to the contrary notwithstanding, any
agreement or agreements with the holders of notes or bonds issued by any
municipal assistance corporation created by or pursuant to any title  of
this  article  shall  contain  a  clause  stating  in substance that any
provision in this article or in any such agreement or  agreements  which
relate  to  taxes  imposed  under  [article  twelve  or] sections eleven
hundred seven or eleven hundred eight of the tax law of the state or  to
the funds created by sections ninety-two-b, ninety-two-d or ninety-two-e
of the state finance law shall be deemed executory only to the extent of
the moneys available to the state in such funds from time to time and no
liability  on  account thereof shall be incurred by the state beyond the
moneys available in such funds.
  S 9. Section 92-b of the state finance law is REPEALED.
  S 10. Section 92-i of the state finance law is REPEALED.
  S 11. Subparagraph 6 of paragraph j of subdivision 1 of section 54  of
the state finance law is REPEALED.
  S  12. Subdivision (c) of section 11-503 of the administrative code of
the city of New York is REPEALED.
  S 13. Paragraph 4 of subdivision (b) of section 11-506 of the adminis-
trative code of the city of New York is REPEALED.
  S 14. Subdivision (g) of section 11-512 of the administrative code  of
the city of New York is REPEALED.
  S  15. Subdivision (g) of section 11-514 of the administrative code of
the city of New York is REPEALED.
  S 16. Clause (A) of subparagraph 4-a of paragraph (b) of subdivision 8
of section 11-602 of the administrative code of the city of New York  is
REPEALED.

S. 6359                            325                           A. 8559

  S  17.  Subdivision 11 of section 11-604 of the administrative code of
the city of New York is REPEALED.
  S  18. Paragraph (a) of subdivision 12 of section 11-604 of the admin-
istrative code of the city of New York is amended to read as follows:
  (a) [In addition to the credit allowed by subdivision eleven  of  this
section, a] A taxpayer shall be allowed a credit against the tax imposed
by  this subchapter to be credited or refunded in the manner hereinafter
provided in this section. The amount of such credit shall be the  excess
of (A) the amount of sales and compensating use taxes imposed by section
eleven  hundred  seven of the tax law during the taxpayer's taxable year
which became legally due on or after and  was  paid  on  or  after  July
first,  nineteen  hundred  seventy-seven, less any credits or refunds of
such taxes, with respect to the purchase  or  use  by  the  taxpayer  of
machinery or equipment for use or consumption directly and predominantly
in  the  production  of  tangible  personal  property, gas, electricity,
refrigeration or steam for sale, by manufacturing, processing,  generat-
ing,  assembling,  refining,  mining or extracting, or telephone central
office equipment or station apparatus or comparable telegraph  equipment
for use directly and predominantly in receiving at destination or initi-
ating  and  switching  telephone  or  telegraph  communication,  but not
including parts with a useful life of one  year  or  less  or  tools  or
supplies  used in connection with such machinery, equipment or apparatus
over (B) the amount of any credit for such sales  and  compensating  use
taxes  allowed  or allowable against the taxes imposed by subchapter two
of chapter eleven of this title for  any  periods  embraced  within  the
taxable year of the taxpayer under this subchapter.
  S  19.  Subdivision  3 of section 11-606 of the administrative code of
the city of New York is REPEALED.
  S 20. Subdivision 11 of section 11-608 of the administrative  code  of
the city of New York is REPEALED.
  S  21.  (a) Notwithstanding the repeal of article 12 of the tax law by
this act, all provisions of such article 12 and any regulations  adopted
thereunder,  in respect to the assessment, payment, payment over, deter-
mination, collection and refund of tax imposed thereunder,  the  rebates
provided  for  in  section 280-a of the tax law, the filing of forms and
returns and the preservation of records for  the  purposes  of  the  tax
imposed by article 12, the secrecy of returns, the disposition of reven-
ues, and the civil and criminal penalties applicable to the violation of
the  provisions  of  such  article  12, shall continue in full force and
effect with respect to all such tax accrued up  to  the  date  this  act
takes  effect; all actions and proceedings, civil or criminal, commenced
or authorized to be commenced under or by virtue  of  any  provision  of
such  article  12 so repealed, and pending or able to be commenced prior
to the taking effect of such repeal, may be  commenced,  prosecuted  and
defended  to  final  effect  in  the  same  manner as they might if such
provisions were not so repealed.
  (b) Notwithstanding any provision of law in article 12 of the tax  law
or  subdivision (a) of this section to the contrary, any application for
a rebate of tax paid under such article 12  must  be  filed  within  two
years from the effective date of this act.
  S  22.  This act shall take effect June 1, 2014; provided that section
ten of this act shall take effect January 1, 2016.

                                 PART DD

S. 6359                            326                           A. 8559

  Section 1. Subsection (b) of section 804 of the tax law, as  added  by
section  1  of  part  C of chapter 25 of the laws of 2009, is amended to
read as follows:
  (b)  Individuals  with  net earnings from self-employment. Individuals
with earnings from self-employment must make estimated tax  payments  of
the  tax  imposed by this article for the taxable year on the same dates
specified in [subsection (a) of this section for the quarterly  payments
of the tax imposed on the payroll expense of employers] PARAGRAPH ONE OF
SUBSECTION  (C)  OF SECTION SIX HUNDRED EIGHTY-FIVE OF THIS CHAPTER.  In
addition, these self-employed individuals must file  a  return  for  the
taxable  year  by  the  [thirtieth]  FIFTEENTH  day  of the fourth month
following the close of the taxable year. Paragraph one of subsection (d)
of section six hundred eighty-five of this chapter shall  not  apply  to
the estimated tax payments required by this subsection.
  S  2.  Section  806 of the tax law, as added by section 1 of part C of
chapter 25 of the laws of 2009, is amended to read as follows:
  S 806. Procedural provisions. (A) GENERAL. All provisions  of  article
twenty-two  of this chapter will apply to the provisions of this article
in the same manner and with the same force and effect as if the language
of article twenty-two of this chapter had been incorporated in full into
this article and  had  been  specifically  adjusted  for  and  expressly
referred  to  the tax imposed by this article, except to the extent that
any provision is either inconsistent with a provision of this article or
is not relevant to this article. Notwithstanding the preceding sentence,
no credit against tax in article twenty-two of this chapter can be  used
to offset the tax due under this article.
  (B)  COMBINED  FILINGS.  NOTWITHSTANDING  ANY OTHER PROVISIONS OF THIS
ARTICLE:
  (1) THE COMMISSIONER MAY REQUIRE  THE  FILING  OF  A  COMBINED  RETURN
WHICH,  IN  ADDITION  TO  THE  RETURN  PROVIDED FOR IN SUBSECTION (B) OF
SECTION EIGHT HUNDRED FOUR OF THIS ARTICLE, MAY ALSO INCLUDE ANY OF  THE
RETURNS  REQUIRED TO BE FILED BY A RESIDENT INDIVIDUAL OF NEW YORK STATE
PURSUANT TO THE PROVISIONS OF SECTION  SIX  HUNDRED  FIFTY-ONE  OF  THIS
CHAPTER  AND WHICH MAY BE REQUIRED TO BE FILED BY SUCH INDIVIDUAL PURSU-
ANT TO ANY LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE  THIR-
TY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
  (2)  WHERE  A  COMBINED  RETURN  IS  REQUIRED, AND WITH RESPECT TO THE
PAYMENT OF ESTIMATED TAX, THE COMMISSIONER MAY ALSO REQUIRE THE  PAYMENT
TO  IT  OF  A  SINGLE  AMOUNT WHICH SHALL EQUAL THE TOTAL OF THE AMOUNTS
(TOTAL TAXES LESS ANY CREDITS OR REFUNDS) WHICH WOULD HAVE BEEN REQUIRED
TO BE PAID WITH THE RETURNS OR IN PAYMENT OF ESTIMATED TAX  PURSUANT  TO
THE  PROVISIONS OF THIS ARTICLE, THE PROVISIONS OF ARTICLE TWENTY-TWO OF
THIS CHAPTER, AND THE PROVISIONS OF LOCAL LAWS ENACTED UNDER THE AUTHOR-
ITY OF ARTICLE THIRTY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
  (3) Notwithstanding any other law to the  contrary,  the  commissioner
may require that all filings of forms or returns under this article must
be  filed  electronically and all payments of tax must be paid electron-
ically.
  S 3. The tax law is amended by adding a new section  807  to  read  as
follows:
  S 807. ENFORCEMENT WITH OTHER TAXES. (A) JOINT ASSESSMENT. IF THERE IS
ASSESSED  A  TAX  UNDER  THIS  ARTICLE  AND THERE IS ALSO ASSESSED A TAX
AGAINST THE SAME TAXPAYER PURSUANT TO ARTICLE TWENTY-TWO OF THIS CHAPTER
OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE  THIR-
TY,  ARTICLE  THIRTY-A, OR ARTICLE THIRTY-B OF THIS CHAPTER, AND PAYMENT
OF A SINGLE AMOUNT IS REQUIRED UNDER THE  PROVISIONS  OF  THIS  ARTICLE,

S. 6359                            327                           A. 8559

SUCH PAYMENT SHALL BE DEEMED TO HAVE BEEN MADE WITH RESPECT TO THE TAXES
SO  ASSESSED  IN  PROPORTION TO THE AMOUNTS OF SUCH TAXES DUE, INCLUDING
TAX, PENALTIES, INTERESTED AND ADDITIONS TO TAX.
  (B)  JOINT ACTION. IF THE COMMISSIONER TAKES ACTION UNDER SUCH ARTICLE
TWENTY-TWO OR UNDER A LOCAL LAW ENACTED PURSUANT  TO  THE  AUTHORITY  OF
ARTICLE  THIRTY,  THIRTY-A,  OR THIRTY-B OF THIS CHAPTER WITH RESPECT TO
THE ENFORCEMENT AND COLLECTION OF THE TAX OR TAXES ASSESSED  UNDER  SUCH
ARTICLES,  THE  COMMISSIONER  SHALL,  WHENEVER  POSSIBLE  AND NECESSARY,
ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION  UNDER  SIMILAR  ENFORCEMENT
AND COLLECTION PROVISIONS OF THE TAX IMPOSED BY THIS ARTICLE.
  (C)  APPORTIONMENT  OF  MONEYS  COLLECTED  BY JOINT ACTION. ANY MONEYS
COLLECTED AS A RESULT OF SUCH JOINT ACTION SHALL BE DEEMED TO HAVE  BEEN
COLLECTED  IN  PROPORTION  TO THE AMOUNTS DUE, INCLUDING TAX, PENALTIES,
INTEREST AND ADDITIONS TO TAX, UNDER ARTICLE TWENTY-TWO OF THIS  CHAPTER
OR  UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
TY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER AND THE TAX  IMPOSED  BY  THIS
ARTICLE.
  (D)  JOINT  DEFICIENCY  ACTION.  WHENEVER  THE  COMMISSIONER TAKES ANY
ACTION WITH RESPECT TO A DEFICIENCY OF INCOME TAX UNDER ARTICLE  TWENTY-
TWO OF THIS CHAPTER OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHOR-
ITY OF ARTICLE THIRTY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER, OTHER THAN
THE ACTION SET FORTH IN SUBSECTION (A) OF THIS SECTION, THE COMMISSIONER
MAY IN HIS OR HER DISCRETION ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION
UNDER THIS ARTICLE.
  S 4. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2015.

                                 PART EE

  Section  1. Subdivision 4 of section 97-nnnn of the state finance law,
as added by chapter 174 of the laws of  2013,  is  amended  to  read  as
follows:
  4.  a.  As  used  in this section, the term "base year gaming revenue"
shall mean the sum of all revenue generated to  support  education  from
video  lottery  gaming as defined by section sixteen hundred seventeen-a
of the tax law in the twelve  months  preceding  the  operation  of  any
gaming facility pursuant to either article thirteen of the racing, pari-
mutuel wagering and breeding law or pursuant to paragraph four of SUBDI-
VISION  A  OF  section [one thousand six] SIXTEEN hundred seventeen-a of
the tax law.
  b. Amounts APPROPRIATED OR transferred in any year to support  elemen-
tary and secondary education shall be calculated as follows:
  (i)  an  amount  equal to the positive difference, if any, between the
base year gaming revenue amount and the sum of all revenue generated  to
support  education  from  video  lottery  gaming  as  defined by section
sixteen hundred seventeen-a of the tax law in the  current  fiscal  year
provided  that such positive amount, if any, shall be transferred to the
state lottery fund[;]. FOR THE PURPOSES OF THIS  PARAGRAPH,  THE  CALCU-
LATION  OF  THIS  POSITIVE DIFFERENCE SHALL BE ESTIMATED AND TRANSFERRED
MONTHLY BASED ON THE CUMULATIVE POSITIVE DIFFERENCE, IF ANY, IN THE SAME
CUMULATIVE MONTHS OF THE BASE YEAR AND  THE  CUMULATIVE  MONTHS  OF  THE
CURRENT  FISCAL YEAR TO DATE, LESS AMOUNTS PREVIOUSLY TRANSFERRED IN THE
CURRENT FISCAL YEAR. PROVIDED, HOWEVER, IF THE AMOUNT PREVIOUSLY  TRANS-
FERRED  IN  THE  CURRENT  FISCAL  YEAR  EXCEEDS  THE CUMULATIVE POSITIVE
DIFFERENCE, AN AMOUNT EQUAL TO THE EXCESS TRANSFERRED MAY BE TRANSFERRED
BACK FROM THE STATE LOTTERY FUND; and

S. 6359                            328                           A. 8559

  (ii) the amount of revenue collected [in the prior state fiscal year,]
to be distributed pursuant to paragraph a of subdivision three  of  this
section,  and  in excess of any amounts transferred pursuant to subpara-
graph (i) of this paragraph [in such prior fiscal year], if any.
  c.  Notwithstanding  any  provision  of  law  to the contrary, amounts
appropriated or transferred from  the  commercial  gaming  revenue  fund
pursuant  to  subparagraph  (ii) of this paragraph shall not be included
in: (i) the allowable growth amount computed pursuant to paragraph dd of
subdivision one of section thirty-six hundred two of the education  law,
(ii)  the preliminary growth amount computed pursuant to paragraph ff of
subdivision one of section thirty-six hundred two of the education  law,
and  (iii) the allocable growth amount computed pursuant to paragraph gg
of subdivision one of section thirty-six hundred two  of  the  education
law.
  S  2.  Subdivision  5  of section 97-nnnn of the state finance law, as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  5. Notwithstanding the foregoing, monies received pursuant to:
  a. sections one thousand three hundred  forty-five  and  one  thousand
three  hundred  forty-eight  of  [this  article] THE RACING, PARI-MUTUEL
WAGERING AND BREEDING LAW  shall  be  exclusively  appropriated  to  the
office of alcoholism and substance abuse services to be used for problem
gambling education and treatment purposes.
  b. section one thousand three hundred forty-nine of [this article] THE
RACING,  PARI-MUTUEL  WAGERING  AND  BREEDING  LAW  shall be exclusively
appropriated to the commission for regulatory investigations.
  c. section one thousand three hundred  fifty  of  [this  article]  THE
RACING,  PARI-MUTUEL  WAGERING  AND  BREEDING  LAW  shall be exclusively
appropriated to the commission for costs regulation.
  S 3. Subdivisions (b) and (c) of section 52 of chapter 174 of the laws
of 2013 enacting the upstate New York gaming economic development act of
2013, are amended to read as follows:
  (b) sections six, seven, fourteen and sixteen of this act  shall  take
effect  on  the  same date as the agreement between the Oneida Nation of
New York and the state of New York entered into on the sixteenth day  of
May, 2013 takes effect; provided, further, that the amendments to subdi-
vision 2 of section 99-h of the state finance law made by section six of
this  act  shall  take  effect on the same date as the reversion of such
section as provided in section 2 of chapter 747 of the laws of 2006,  as
amended;  provided,  further,  that  the  amendments to subdivision 3 of
section 99-h of the state finance law made by section seven of this  act
shall  be subject to the expiration and reversion of such subdivision as
provided in section 3 of part W of chapter 60 of the laws  of  2011,  as
amended  when  upon  such date the provisions of section seven-a of this
act shall take effect; provided, further, that the amendments to  subdi-
vision  3  of  section  99-h  of  the  state finance law made by section
seven-a of this act shall be subject to the the expiration and reversion
of such section as provided in section 2 of chapter 747 of the  laws  of
2006,  as amended when upon such date the provisions of section eight of
this act shall take effect; [provided, further, however, that the amend-
ment to section 99-h of the state finance law made by  section  nine  of
this  act  shall  not affect the expiration of such section and shall be
deemed repealed therewith;] provided, further,  that  the  state  gaming
commission  shall  notify  the legislative bill drafting commission upon
the occurrence of such agreement between the Oneida Nation and the state
of New York becoming effective in order that the commission may maintain
an accurate and timely effective data base of the official text  of  the

S. 6359                            329                           A. 8559

laws of the state of New York in furtherance of effecting the provisions
of  section  44  of  the  legislative law and section 70-b of the public
officers law;
  (c) section [1368] 1367 of the racing, pari-mutuel wagering and breed-
ing  law,  as added by section two of this act, shall take effect upon a
change in federal law authorizing the activity permitted by such section
or upon a ruling by a court of competent jurisdiction that such activity
is lawful. The state gaming commission shall notify the legislative bill
drafting commission upon the occurrence of the change in federal law  or
upon  the  ruling of a court of competent jurisdiction in order that the
commission may maintain an accurate and timely effective  data  base  of
the official text of the laws of the state of New York in furtherance of
effecting  the  provisions  of  section  44  of  the legislative law and
section 70-b of the public officers law;
  S 4. Subdivision 3-a of section 99-h of  the  state  finance  law,  as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  3-a.  Ten  percent  of any of the funds actually received by the state
pursuant to the tribal-state compacts and agreements described in subdi-
vision two of this section [that are retained  in  the  fund  after  the
distributions  required by subdivision three of this section, but] prior
to the transfer of unsegregated moneys to the general fund  required  by
such  subdivision,  shall  be distributed to counties in each respective
exclusivity zone provided they do not otherwise receive a share of  said
revenues pursuant to this section. Such distribution shall be made among
such  counties  on  a  per capita basis, excluding the population of any
municipality that receives a distribution pursuant to subdivision  three
of this section.
  S 5. Subdivision g of section 1617-a of the tax law, as added by chap-
ter 174 of the laws of 2013, is amended to read as follows:
  g.  Every  video  lottery  gaming  license, and every renewal license,
shall be valid for a period of five  years,  except  that  video  gaming
licenses  issued  before the effective date of this subdivision shall be
for a term expiring on THE  APPLICANT'S  NEXT  BIRTHDAY  FOLLOWING  June
thirtieth, two thousand fourteen.
  The  gaming  commission  may decline to renew any license after notice
and an opportunity for hearing if it determines that:
  (1) the licensee has violated section one thousand six  hundred  seven
of this article;
  (2)  the  licensee  has  violated any rule, regulation or order of the
gaming commission;
  (3) the applicant or its officers, directors or significant stockhold-
ers, as determined by the gaming commission, have been  convicted  of  a
crime involving moral turpitude; or
  (4)  that  the  character or fitness of the licensee and its officers,
directors, and significant stockholders, as  determined  by  the  gaming
commission  is  such  that  the  participation of the applicant in video
lottery gaming or related activities  would  be  inconsistent  with  the
public  interest, convenience or necessity or with the best interests of
video gaming generally.
  S 6. This act shall take effect immediately;  provided,  that  section
one of this act shall take effect April 1, 2015; provided, further, that
the amendments made to section three of this act shall be deemed to have
taken  effect  on the same date and in the same manner as chapter 174 of
the laws of 2013.

                                 PART FF

S. 6359                            330                           A. 8559

  Section 1. Subsections (yy) and (zz) of section 606 of the tax law, as
relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
relettered  (yyy)  and (zzz) and a new subsection (bbb) is added to read
as follows:
  (BBB) REAL PROPERTY TAX FREEZE CREDIT. (1) AS USED IN THIS SUBSECTION:
  (A)  THE  TERM  "FREEZE-COMPLIANT  BUDGET"  MEANS A BUDGET OF A TAXING
JURISDICTION THAT HAS MET THE REQUIREMENTS OF SECTION TWO THOUSAND TWEN-
TY-THREE-B OF THE EDUCATION LAW OR SECTION THREE-D OF THE GENERAL MUNIC-
IPAL LAW, WHICHEVER IS APPLICABLE.
  (B) THE TERMS "INDEPENDENT SPECIAL  DISTRICT"  AND  "DEPENDENT  SCHOOL
DISTRICT"  HAVE  THE SAME MEANING AS SET FORTH IN SECTION THREE-D OF THE
GENERAL MUNICIPAL LAW.
  (C) THE TERM "STAR EXEMPTION" MEANS THE SCHOOL  TAX  RELIEF  EXEMPTION
AUTHORIZED  BY SECTION FOUR HUNDRED TWENTY-FIVE OF THE REAL PROPERTY TAX
LAW.
  (D) THE  TERM  "TAXING  JURISDICTION"  MEANS  A  COUNTY,  CITY,  TOWN,
VILLAGE, SCHOOL DISTRICT OR AN INDEPENDENT SPECIAL DISTRICT, EXCEPT THAT
SUCH  TERM  SHALL NOT INCLUDE A CITY WITH A POPULATION OF ONE MILLION OR
MORE, NOR SHALL IT INCLUDE A COUNTY WHOLLY LOCATED WITHIN SUCH A CITY.
  (2) AN INDIVIDUAL TAXPAYER WHO MEETS  THE  ELIGIBILITY  STANDARDS  SET
FORTH  IN PARAGRAPH THREE OF THIS SUBSECTION AND WHOSE PRIMARY RESIDENCE
IS LOCATED IN A TAXING JURISDICTION THAT HAS A  FREEZE-COMPLIANT  BUDGET
FOR  THE  FISCAL  YEAR  STARTING  IN TWO THOUSAND FOURTEEN, TWO THOUSAND
FIFTEEN OR TWO THOUSAND  SIXTEEN,  WHICHEVER  IS  APPLICABLE,  SHALL  BE
ALLOWED  A  CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE. SUBJECT TO
THE PROVISIONS OF PARAGRAPH SIX OF THIS SUBSECTION, SUCH CREDIT SHALL BE
DETERMINED AS FOLLOWS:
  (A) IF A SCHOOL DISTRICT OTHER THAN A DEPENDENT SCHOOL DISTRICT HAS  A
FREEZE-COMPLIANT  BUDGET  FOR  ITS  FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN, A CREDIT SHALL BE ALLOWED  FOR  THE  ELIGIBLE  TAXPAYER'S  TWO
THOUSAND  FOURTEEN TAXABLE YEAR IN THE AMOUNT BY WHICH THE REAL PROPERTY
TAXES IMPOSED UPON SUCH  RESIDENCE  BY  OR  ON  BEHALF  OF  THAT  SCHOOL
DISTRICT  FOR  THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN EXCEEDS
THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
THOUSAND THIRTEEN.
  (B)  IF  A TAXING JURISDICTION, OTHER THAN A SCHOOL DISTRICT OR A CITY
WITH A DEPENDENT SCHOOL DISTRICT, HAS A FREEZE-COMPLIANT BUDGET FOR  ITS
FISCAL  YEAR STARTING IN TWO THOUSAND FIFTEEN, A CREDIT SHALL BE ALLOWED
FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND FIFTEEN  TAXABLE  YEAR  IN  THE
AMOUNT  BY  WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY
OR ON BEHALF OF THAT TAXING JURISDICTION FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FIFTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR  THE
FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
  (C)  IF A SCHOOL DISTRICT OTHER THAN A DEPENDENT SCHOOL DISTRICT HAS A
FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR  STARTING  IN  TWO  THOUSAND
FIFTEEN, A CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOU-
SAND FIFTEEN TAXABLE YEAR IN THE AMOUNT BY WHICH THE REAL PROPERTY TAXES
IMPOSED  UPON SUCH RESIDENCE BY OR ON BEHALF OF SUCH SCHOOL DISTRICT FOR
THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS THE REAL  PROP-
ERTY TAXES SO IMPOSED FOR THE FISCAL YEAR IDENTIFIED AS FOLLOWS:
  (I)  IF  THE  SCHOOL DISTRICT'S BUDGET FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN WAS FREEZE-COMPLIANT, THE EXCESS SHALL  BE  DETER-
MINED WITH RESPECT TO THE FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN.
  (II)  IF  THE SCHOOL DISTRICT'S BUDGET FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN WAS NOT  FREEZE-COMPLIANT,  THE  EXCESS  SHALL  BE

S. 6359                            331                           A. 8559

DETERMINED  WITH  RESPECT  TO  THE  FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN.
  (D)  IF  A TAXING JURISDICTION, OTHER THAN A SCHOOL DISTRICT OR A CITY
WITH A DEPENDENT SCHOOL DISTRICT, HAS A FREEZE-COMPLIANT BUDGET FOR  ITS
FISCAL  YEAR STARTING IN TWO THOUSAND SIXTEEN, A CREDIT SHALL BE ALLOWED
FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN  TAXABLE  YEAR  IN  THE
AMOUNT  BY  WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY
OR ON BEHALF OF THAT TAXING JURISDICTION FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND SIXTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR  THE
FISCAL YEAR IDENTIFIED AS FOLLOWS:
  (I)  IF  THE TAXING JURISDICTION'S BUDGET FOR THE FISCAL YEAR STARTING
IN TWO THOUSAND FIFTEEN WAS FREEZE-COMPLIANT, THE EXCESS SHALL BE DETER-
MINED WITH RESPECT TO THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
  (II) IF THE TAXING JURISDICTION'S BUDGET FOR THE FISCAL YEAR  STARTING
IN  TWO  THOUSAND  FIFTEEN WAS NOT FREEZE-COMPLIANT, THE EXCESS SHALL BE
DETERMINED WITH RESPECT TO THE FISCAL  YEAR  STARTING  IN  TWO  THOUSAND
FIFTEEN.
  (E)  IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A FREEZE-COMPLIANT
BUDGET FOR ITS FISCAL YEAR STARTING IN  TWO  THOUSAND  FOURTEEN,  A  TAX
CREDIT  SHALL  BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND FOUR-
TEEN TAXABLE YEAR IN THE AMOUNT EQUIVALENT TO SIXTY-SEVEN PERCENT OF THE
AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
OR  ON  BEHALF OF THAT CITY FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL  YEAR
STARTING IN TWO THOUSAND THIRTEEN.
  (F)  IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A FREEZE-COMPLIANT
BUDGET FOR ITS FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN, A TAX CRED-
IT SHALL BE ALLOWED FOR THE ELIGIBLE  TAXPAYER'S  TWO  THOUSAND  FIFTEEN
TAXABLE YEAR AS FOLLOWS:
  (I)  IF THE CITY'S BUDGET FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN WAS FREEZE-COMPLIANT, A CREDIT SHALL BE ALLOWED FOR THE  ELIGI-
BLE TAXPAYER'S TWO THOUSAND FIFTEEN TAXABLE YEAR IN AN AMOUNT EQUIVALENT
TO  THIRTY-THREE  PERCENT OF THE AMOUNT BY WHICH THE REAL PROPERTY TAXES
IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN, TOGETHER WITH  AN  AMOUNT
EQUIVALENT  TO SIXTY-SEVEN PERCENT OF THE AMOUNT BY WHICH THE REAL PROP-
ERTY TAXES IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL  YEAR
STARTING  IN  TWO  THOUSAND  FIFTEEN  EXCEEDS THE REAL PROPERTY TAXES SO
IMPOSED FOR THE FISCAL YEAR STARTING IN TWO  THOUSAND  THIRTEEN;  AND  A
CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN
TAXABLE  YEAR  IN  AN  AMOUNT  EQUIVALENT TO THIRTY-THREE PERCENT OF THE
AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
THAT  CITY  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS
THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
THOUSAND THIRTEEN.
  (II) IF THE CITY'S BUDGET FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN  WAS  NOT  FREEZE-COMPLIANT,  A CREDIT SHALL BE ALLOWED FOR THE
ELIGIBLE TAXPAYER'S TWO THOUSAND  FIFTEEN  TAXABLE  YEAR  IN  AN  AMOUNT
EQUIVALENT  TO SIXTY-SEVEN PERCENT OF THE AMOUNT BY WHICH THE REAL PROP-
ERTY TAXES IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL  YEAR
STARTING  IN  TWO  THOUSAND  FIFTEEN  EXCEEDS THE REAL PROPERTY TAXES SO
IMPOSED FOR THE FISCAL YEAR STARTING IN TWO  THOUSAND  FOURTEEN;  AND  A
CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN
TAXABLE  YEAR  IN  AN  AMOUNT  EQUIVALENT TO THIRTY-THREE PERCENT OF THE
AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY

S. 6359                            332                           A. 8559

THAT  CITY  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS
THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
THOUSAND FOURTEEN.
  (G)  IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A FREEZE-COMPLIANT
BUDGET FOR ITS FISCAL YEAR STARTING IN TWO THOUSAND  FOURTEEN  BUT  DOES
NOT  HAVE  A FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR STARTING IN TWO
THOUSAND FIFTEEN, A TAX CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAY-
ER'S  TWO  THOUSAND  FIFTEEN  TAXABLE  YEAR   AN   AMOUNT   REPRESENTING
THIRTY-THREE  PERCENT  OF  THE  AMOUNT  BY WHICH THE REAL PROPERTY TAXES
IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN.
  (3) TO BE ELIGIBLE FOR SUCH CREDIT, THE TAXPAYER (OR TAXPAYERS  FILING
JOINT RETURNS) MUST MEET THE FOLLOWING CRITERIA:
  (A) FOR THE TWO THOUSAND FOURTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
RESIDENCE  MUST  HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE TWO THOU-
SAND FOURTEEN--TWO THOUSAND FIFTEEN SCHOOL YEAR, OR WOULD HAVE SO QUALI-
FIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIMELY
MANNER.
  (B) FOR THE TWO THOUSAND FIFTEEN TAXABLE YEAR, THE TAXPAYER'S  PRIMARY
RESIDENCE  MUST  HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE TWO THOU-
SAND FIFTEEN--TWO THOUSAND SIXTEEN SCHOOL YEAR, OR WOULD HAVE SO  QUALI-
FIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIMELY
MANNER.
  (C)  FOR THE TWO THOUSAND SIXTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
RESIDENCE MUST HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE  TWO  THOU-
SAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR, OR WOULD HAVE SO QUAL-
IFIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIME-
LY MANNER.
  (4)  FOR  EACH  YEAR  THIS  CREDIT  IS ALLOWED, THE COMMISSIONER SHALL
DETERMINE THE TAXPAYER'S  ELIGIBILITY  FOR  THIS  CREDIT  UTILIZING  THE
INFORMATION  AVAILABLE  TO  THE  COMMISSIONER. WHEN THE COMMISSIONER HAS
DETERMINED A TAXPAYER TO BE ELIGIBLE FOR THIS CREDIT,  THE  COMMISSIONER
SHALL ADVANCE A PAYMENT OF THE AMOUNT DETERMINED IN ACCORDANCE WITH THIS
SUBSECTION.  THE TAXPAYER SHALL NOT APPLY FOR SUCH CREDIT IN CONJUNCTION
WITH  THE  FILING  OF  HIS  OR  HER RETURN. A TAXPAYER WHO HAS FAILED TO
RECEIVE AN ADVANCE PAYMENT THAT HE OR SHE BELIEVES WAS  DUE  TO  HIM  OR
HER,  OR  WHO HAS RECEIVED AN ADVANCE PAYMENT THAT HE OR SHE BELIEVES IS
LESS THAN THE AMOUNT THAT WAS DUE TO HIM OR HER, MAY REQUEST PAYMENT  OF
THE CLAIMED DEFICIENCY IN A MANNER PRESCRIBED BY THE COMMISSIONER.
  (5) IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION, IF ANY,
SHALL  EXCEED  THE TAXPAYER'S TAX FOR THE TAXABLE YEAR, THE EXCESS SHALL
BE TREATED AS AN OVERPAYMENT OF  TAX  TO  BE  CREDITED  OR  REFUNDED  IN
ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS
ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  (6)  THE  FOLLOWING  PROVISIONS  SHALL APPLY TO THE CALCULATION OF THE
CREDIT PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION:
  (A) IF THE TAX BILL PERTAINING  TO  THE  ELIGIBLE  TAXPAYER'S  PRIMARY
RESIDENCE  INCLUDES  TAXES  LEVIED  BY  OR  ON BEHALF OF MULTIPLE TAXING
JURISDICTIONS, THE CREDIT SHALL BE BASED UPON THE CHANGE IN  THE  AGGRE-
GATE TAX LIABILITY OF SUCH RESIDENCE, PROVIDED THAT ANY TAX APPEARING ON
THE TAX BILL THAT IS NOT ATTRIBUTABLE TO A FREEZE-COMPLIANT BUDGET SHALL
BE  DISREGARDED  WHEN  DETERMINING  THE  AGGREGATE TAX LIABILITY OF SUCH
RESIDENCE.
  (B) IF THE TAX BILL PERTAINING  TO  THE  ELIGIBLE  TAXPAYER'S  PRIMARY
RESIDENCE  INCLUDES  RELEVIED  TAXES OR OTHER TAXES THAT WERE PREVIOUSLY

S. 6359                            333                           A. 8559

BILLED BUT NOT PAID, THOSE TAXES SHALL BE DISREGARDED  WHEN  DETERMINING
THE AGGREGATE TAX LIABILITY OF SUCH RESIDENCE.
  (C)  IF  THE  TAX  BILL  PERTAINING TO THE ELIGIBLE TAXPAYER'S PRIMARY
RESIDENCE INCLUDES USAGE CHARGES, UNIT CHARGES OR OTHER CHARGES THAT ARE
BASED UPON THE CONSUMPTION OF A SERVICE, THOSE CHARGES SHALL  BE  DISRE-
GARDED WHEN DETERMINING THE AGGREGATE TAX LIABILITY OF SUCH RESIDENCE.
  (D)  NOTWITHSTANDING  THE  FOREGOING PROVISIONS OF THIS SUBSECTION, NO
CREDIT SHALL BE ALLOWED TO THE EXTENT THAT  THE  TAX  LIABILITY  OF  THE
ELIGIBLE  TAXPAYER'S  PRIMARY  RESIDENCE INCREASED DUE TO ONE OR MORE OF
THE FOLLOWING EVENTS:
  (I) A PHYSICAL IMPROVEMENT TO THE ELIGIBLE  TAXPAYER'S  PRIMARY  RESI-
DENCE.
  (II) A REMOVAL OR REDUCTION OF AN EXEMPTION ON THE ELIGIBLE TAXPAYER'S
PRIMARY  RESIDENCE,  INCLUDING  A  REDUCTION  OF  THE STAR EXEMPT AMOUNT
CALCULATED  PURSUANT  TO  SUBDIVISION  TWO  OF  SECTION   FOUR   HUNDRED
TWENTY-FIVE OF THE REAL PROPERTY TAX LAW.
  (III) A REVALUATION THAT CAUSED THE ASSESSMENT OF THE ELIGIBLE TAXPAY-
ER'S  PRIMARY RESIDENCE TO INCREASE BY A PERCENTAGE THAT IS GREATER THAN
THE APPLICABLE CHANGE IN LEVEL OF ASSESSMENT. AS USED HEREIN, THE  TERMS
"REVALUATION"  AND  "CHANGE  IN LEVEL OF ASSESSMENT" SHALL HAVE THE SAME
MEANINGS AS SET FORTH IN SECTIONS ONE HUNDRED  TWO  AND  TWELVE  HUNDRED
TWENTY OF THE REAL PROPERTY TAX LAW, RESPECTIVELY.
  (E)  IN  THE  CASE  OF  PROPERTY CONSISTING OF A COOPERATIVE APARTMENT
CORPORATION THAT IS DESCRIBED BY PARAGRAPH (K)  OF  SUBDIVISION  TWO  OF
SECTION FOUR HUNDRED TWENTY-FIVE OF THE REAL PROPERTY TAX LAW, AN ELIGI-
BLE OWNER SHALL BE ALLOWED A CREDIT IN THE AMOUNT EQUAL TO SIXTY PERCENT
OF  THE  AVERAGE  TAX CREDIT IN THAT TAXING JURISDICTION FOR THAT FISCAL
YEAR, AS DETERMINED BY THE COMMISSIONER, OR IN THE CASE OF A COOPERATIVE
APARTMENT CORPORATION THAT IS DESCRIBED BY SUBPARAGRAPH  (IV)  OF  PARA-
GRAPH  (K) OF SUBDIVISION TWO OF SECTION FOUR HUNDRED TWENTY-FIVE OF THE
REAL PROPERTY TAX LAW, A CREDIT OF TWENTY PERCENT OF  SUCH  AVERAGE  TAX
CREDIT.
  (F)  IN  THE  CASE  OF  PROPERTY  CONSISTING  OF A MOBILE HOME THAT IS
DESCRIBED BY PARAGRAPH (L) OF SUBDIVISION TWO OF  SECTION  FOUR  HUNDRED
TWENTY-FIVE  OF  THE  REAL  PROPERTY TAX LAW, AN ELIGIBLE OWNER SHALL BE
ALLOWED A CREDIT IN THE AMOUNT EQUAL TO TWENTY-FIVE PERCENT OF THE AVER-
AGE TAX CREDIT IN THAT TAXING JURISDICTION  FOR  THAT  FISCAL  YEAR,  AS
DETERMINED BY THE COMMISSIONER.
  (G)  IN  THE CASE OF A CITY WITH A DEPENDENT SCHOOL DISTRICT, IT SHALL
BE PRESUMED THAT SIXTY-SEVEN PERCENT OF THE CITY TAX BILL IS FOR  SCHOOL
DISTRICT  PURPOSES  AND  THAT  THIRTY-THREE  PERCENT IS FOR GENERAL CITY
PURPOSES.
  (H) THE AMOUNT OF THE CREDIT SHALL BE ROUNDED TO THE  NEAREST  DOLLAR,
EXCEPT  WHERE  SUCH AMOUNT IS GREATER THAN ZERO AND LESS THAN ONE DOLLAR
AND FIFTY CENTS, IN WHICH CASE THE AMOUNT OF THE CREDIT SHALL BE ROUNDED
UP TO TWO DOLLARS.
  (7) NO CREDIT SHALL BE ALLOWED UNDER THIS SUBSECTION  IN  RELATION  TO
PROPERTY LOCATED WITHIN A CITY WITH A POPULATION OF ONE MILLION OR MORE.
  S  2.  The  education law is amended by adding a new section 2023-b to
read as follows:
  S  2023-B.  CERTIFICATION  OF  COMPLIANCE  WITH  PROPERTY  TAX  FREEZE
REQUIREMENTS.  A  SCHOOL  DISTRICT  THAT IS SUBJECT TO THE PROVISIONS OF
SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART MUST  COMPLY  WITH  THE
REQUIREMENTS  OF  SUBDIVISION TWO OF THIS SECTION IN ORDER TO RENDER ITS
TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT AUTHORIZED BY
SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A  FISCAL

S. 6359                            334                           A. 8559

YEAR  STARTING  IN  TWO  THOUSAND  FOURTEEN.  A  SCHOOL DISTRICT THAT IS
SUBJECT TO THE PROVISIONS OF SECTION TWO THOUSAND TWENTY-THREE-A OF THIS
PART MUST COMPLY WITH THE REQUIREMENTS OF SUBDIVISIONS TWO AND THREE  OF
THIS  SECTION  IN  ORDER  TO  RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL
PROPERTY TAX FREEZE CREDIT AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX
HUNDRED SIX OF THE TAX LAW FOR A FISCAL YEAR STARTING  IN  TWO  THOUSAND
FIFTEEN.
  1. DEFINITIONS.  AS USED IN THIS SECTION:
  A.  "CONSOLIDATION  ACTIONS" MEANS: REORGANIZATIONS OF ELIGIBLE SCHOOL
DISTRICTS PURSUANT TO SECTIONS FIFTEEN  HUNDRED  FIVE,  FIFTEEN  HUNDRED
ELEVEN  THROUGH  FIFTEEN  HUNDRED THIRTEEN, FIFTEEN HUNDRED TWENTY-FOUR,
FIFTEEN HUNDRED TWENTY-SIX, SEVENTEEN HUNDRED FIVE, EIGHTEEN HUNDRED ONE
THROUGH EIGHTEEN HUNDRED THREE, OR TWENTY-TWO HUNDRED  EIGHTEEN  OF  THE
EDUCATION  LAW;  OR  REORGANIZATIONS, CONSOLIDATIONS, OR DISSOLUTIONS OF
ELIGIBLE SCHOOL DISTRICTS IN WHICH ONE OR MORE ELIGIBLE SCHOOL DISTRICTS
ARE TERMINATED AND ANOTHER ELIGIBLE SCHOOL DISTRICT ASSUMES JURISDICTION
OVER THE TERMINATED SCHOOL DISTRICT OR DISTRICTS PURSUANT TO  ANY  OTHER
PROVISION OF LAW.
  B.  "ELIGIBLE SCHOOL DISTRICT" MEANS A SCHOOL DISTRICT THAT IS SUBJECT
TO SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART, BUT SHALL NOT  MEAN
A SCHOOL DISTRICT THAT IS SUBJECT TO ARTICLE FIFTY-TWO OF THIS CHAPTER.
  C.  "EFFICIENCY  PLAN"  MEANS  A  PLAN THAT IDENTIFIES SHARED SERVICES
ACTIONS AND/OR CONSOLIDATION ACTIONS TO  BE  FULLY  IMPLEMENTED  BY  ALL
ELIGIBLE SCHOOL DISTRICTS IN A BOARD OF COOPERATIVE EDUCATIONAL SERVICES
DISTRICT THAT ARE SIGNATORIES TO THE PLAN.
  D. "LEAD DISTRICT" MEANS THE INDEPENDENT SCHOOL DISTRICT IN EACH BOARD
OF  COOPERATIVE  EDUCATIONAL  SERVICES  DISTRICT  WITH THE HIGHEST PUPIL
ENROLLMENT AS REPORTED TO THE STATE EDUCATION  DEPARTMENT  FOR  THE  TWO
THOUSAND THIRTEEN--TWO THOUSAND FOURTEEN SCHOOL YEAR THAT HAS ELECTED TO
PARTICIPATE IN THE PREPARATION OF AN EFFICIENCY PLAN.
  E.  "SHARED SERVICES ACTIONS" MEANS FUNCTIONAL CONSOLIDATIONS BY WHICH
ONE ELIGIBLE SCHOOL DISTRICT COMPLETELY PROVIDES A SERVICE  OR  FUNCTION
FOR  ANOTHER  ELIGIBLE  SCHOOL DISTRICT, WHICH NO LONGER ENGAGES IN THAT
FUNCTION OR SERVICE; SHARED OR COOPERATIVE SERVICES  BETWEEN  AND  AMONG
ELIGIBLE SCHOOL DISTRICTS; AND REGIONALIZED DELIVERY OF SERVICES BETWEEN
AND  AMONG  ELIGIBLE SCHOOL DISTRICTS. THESE SHARED SERVICES ACTIONS MAY
BE FOR SERVICES OR FUNCTIONS INCLUDING BUT NOT LIMITED TO:  PROCUREMENT,
REAL  ESTATE  AND  FACILITY  MANAGEMENT,  FLEET MANAGEMENT, BUSINESS AND
FINANCIAL SERVICES,  ADMINISTRATIVE  SERVICES,  PAYROLL  ADMINISTRATION,
TIME  AND  ATTENDANCE,  BENEFITS  ADMINISTRATION AND OTHER TRANSACTIONAL
HUMAN  RESOURCES  FUNCTIONS,  CONTRACT  MANAGEMENT,  GRANTS  MANAGEMENT,
TRANSPORTATION SERVICES, FACILITIES AND FUNCTIONS, HUMAN SERVICES FACIL-
ITIES  AND  FUNCTIONS,  CUSTOMER  SERVICE  FACILITIES  AND FUNCTIONS AND
INFORMATION TECHNOLOGY INFRASTRUCTURE,  PROCESSES,  SERVICES  AND  FUNC-
TIONS.
  2.  CERTIFICATION  OF  COMPLIANCE  WITH  TAX  LEVY  LIMIT. A. UPON THE
ADOPTION OF THE BUDGET OF AN ELIGIBLE SCHOOL DISTRICT, THE CHIEF  EXECU-
TIVE  OFFICER  OF  SUCH SCHOOL DISTRICT SHALL CERTIFY TO THE STATE COMP-
TROLLER, THE COMMISSIONER OF TAXATION AND FINANCE AND  THE  COMMISSIONER
THAT THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT PRESCRIBED
BY  SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART. SUCH CERTIFICATION
SHALL BE MADE IN A FORM AND MANNER PRESCRIBED BY THE  STATE  COMPTROLLER
IN  CONSULTATION  WITH  THE COMMISSIONER OF TAXATION AND FINANCE AND THE
COMMISSIONER.
  B. IN ORDER FOR SUCH CERTIFICATION TO GIVE RISE TO A REAL PROPERTY TAX
FREEZE CREDIT UNDER SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX  OF  THE

S. 6359                            335                           A. 8559

TAX LAW, SUCH CERTIFICATION SHALL BE MADE NO LATER THAN THE TWENTY-FIRST
DAY OF THE FISCAL YEAR TO WHICH IT APPLIES.
  C.  IF  SUCH  A CERTIFICATION HAS BEEN MADE AND THE ACTUAL TAX LEVY OF
THE SCHOOL DISTRICT EXCEEDS THE APPLICABLE TAX LEVY  LIMIT,  THE  EXCESS
AMOUNT  SHALL  BE PLACED IN RESERVE AND USED IN THE MANNER PRESCRIBED BY
SUBDIVISION FIVE OF SECTION TWO THOUSAND TWENTY-THREE-A  OF  THIS  PART,
EVEN IF A TAX LEVY IN EXCESS OF THE TAX LEVY LIMIT HAD BEEN DULY AUTHOR-
IZED FOR THE APPLICABLE FISCAL YEAR BY THE SCHOOL DISTRICT VOTERS.
  D.  NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, EVERY SCHOOL
DISTRICT THAT IS SUBJECT TO THE PROVISIONS OF SECTION TWO THOUSAND TWEN-
TY-THREE-A OF THIS PART SHALL REPORT BOTH ITS PROPOSED  BUDGET  AND  ITS
ADOPTED  BUDGET  TO  THE OFFICE OF THE STATE COMPTROLLER AND THE COMMIS-
SIONER AT THE TIME AND IN THE MANNER AS THEY MAY PRESCRIBE,  WHETHER  OR
NOT SUCH BUDGET HAS BEEN OR WILL BE CERTIFIED AS PROVIDED BY THIS SUBDI-
VISION.
  3.  SCHOOL  DISTRICT  EFFICIENCY  PLANS. A. THE SUPERINTENDENT OF EACH
LEAD DISTRICT SHALL SUBMIT TO THE SECRETARY OF STATE BY JUNE FIRST,  TWO
THOUSAND  FIFTEEN,  AN  EFFICIENCY  PLAN  THAT IF FULLY IMPLEMENTED WILL
RESULT IN SAVINGS OVER THE AGGREGATE TWO THOUSAND FOURTEEN--TWO THOUSAND
FIFTEEN SCHOOL YEAR TAX LEVIES FOR ALL ELIGIBLE  SCHOOL  DISTRICTS  THAT
ARE  SIGNATORIES  TO  SUCH  PLAN  OF (1) AT LEAST ONE PERCENT IN THE TWO
THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR; (2) AT  LEAST  TWO
PERCENT  IN  THE  TWO  THOUSAND  SEVENTEEN--TWO THOUSAND EIGHTEEN SCHOOL
YEAR; AND (3) AT LEAST THREE PERCENT IN THE TWO  THOUSAND  EIGHTEEN--TWO
THOUSAND NINETEEN SCHOOL YEAR.
  (I)  THE  SUPERINTENDENT  OF  EACH  ELIGIBLE SCHOOL DISTRICT THAT IS A
SIGNATORY TO AN EFFICIENCY PLAN SHALL SUBMIT TO  THE  SUPERINTENDENT  OF
THE LEAD DISTRICT BY JUNE FIRST, TWO THOUSAND FIFTEEN, A WRITTEN CERTIF-
ICATION  THAT  THE ELIGIBLE SCHOOL DISTRICT AGREES TO UNDERTAKE ITS BEST
EFFORTS TO FULLY IMPLEMENT BY THE END OF THE TWO  THOUSAND  SIXTEEN--TWO
THOUSAND  SEVENTEEN  SCHOOL YEAR THE CONSOLIDATION ACTIONS AND/OR SHARED
SERVICES ACTIONS SPECIFIED FOR THE  ELIGIBLE  SCHOOL  DISTRICT  IN  SUCH
PLAN.
  (II) THE CHIEF FINANCIAL OFFICER OF A SCHOOL DISTRICT THAT IS A SIGNA-
TORY  TO  AN  EFFICIENCY  PLAN SHALL SUBMIT TO THE SUPERINTENDENT OF THE
LEAD DISTRICT BY JUNE FIRST, TWO THOUSAND  FIFTEEN,  A  WRITTEN  CERTIF-
ICATION  THAT IN HIS OR HER PROFESSIONAL OPINION, FULL IMPLEMENTATION BY
THE END OF THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL  YEAR
OF THE CONSOLIDATION AND/OR SHARED SERVICES ACTIONS THAT ARE TO BE TAKEN
BY  SUCH SCHOOL DISTRICT ITSELF AS SPECIFIED IN SUCH PLAN WILL RESULT IN
THE SAVINGS SET FORTH IN SUCH PLAN ATTRIBUTABLE TO SUCH SCHOOL DISTRICT.
  (III) THE CHIEF FINANCIAL OFFICER OF  EACH  ELIGIBLE  SCHOOL  DISTRICT
THAT  IS  A  SIGNATORY  TO  AN  EFFICIENCY PLAN SHALL SUBMIT TO THE LEAD
DISTRICT BY JUNE FIRST, TWO THOUSAND FIFTEEN,  A  WRITTEN  CERTIFICATION
THAT  IN  HIS  OR  HER  PROFESSIONAL OPINION, FULL IMPLEMENTATION OF THE
CONSOLIDATION AND/OR SHARED SERVICES ACTIONS AS SPECIFIED FOR ALL OF THE
ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN WILL  RESULT
IN  SAVINGS  OVER  THE  AGGREGATE  TWO  THOUSAND  FOURTEEN--TWO THOUSAND
FIFTEEN SCHOOL YEAR TAX LEVIES FOR ALL ELIGIBLE  SCHOOL  DISTRICTS  THAT
ARE  SIGNATORIES  TO  SUCH  PLAN  OF (1) AT LEAST ONE PERCENT IN THE TWO
THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR; (2) AT  LEAST  TWO
PERCENT  IN  THE  TWO  THOUSAND  SEVENTEEN--TWO THOUSAND EIGHTEEN SCHOOL
YEAR; AND (3) AT LEAST THREE PERCENT IN THE TWO  THOUSAND  EIGHTEEN--TWO
THOUSAND NINETEEN SCHOOL YEAR.
  B.  THE CHIEF FINANCIAL OFFICER OF EACH LEAD DISTRICT SHALL SUBMIT THE
FOLLOWING DOCUMENTS TO THE SECRETARY OF STATE ON OR BEFORE  JULY  FIRST,

S. 6359                            336                           A. 8559

TWO  THOUSAND  FIFTEEN:    (I)  THE  EFFICIENCY PLAN; (II) A LIST OF ALL
ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN;  (III)  ALL
OF  THE  CERTIFICATIONS REQUIRED BY PARAGRAPH A OF THIS SUBDIVISION; AND
(IV)  AN  ANALYSIS  OF THE AGGREGATE AMOUNT OF SAVINGS SET FORTH IN SUCH
PLAN ATTRIBUTABLE TO ALL ELIGIBLE SCHOOL DISTRICTS THAT ARE  SIGNATORIES
TO SUCH PLAN THAT WILL BE ACHIEVED IF THE SHARED SERVICES ACTIONS AND/OR
CONSOLIDATION  ACTIONS  IDENTIFIED IN SUCH PLAN ARE FULLY IMPLEMENTED BY
THE END OF THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR.
THE SECRETARY OF STATE SHALL REVIEW SUCH DOCUMENTS TO DETERMINE  WHETHER
THE  REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT TO EACH
ELIGIBLE SCHOOL DISTRICT THAT IS A SIGNATORY TO THE EFFICIENCY PLAN  AND
SHALL  NOTIFY  THE COMMISSIONER OF TAXATION AND FINANCE OF SUCH DETERMI-
NATIONS NO LATER THAN JULY THIRTY-FIRST, TWO THOUSAND FIFTEEN.
  S 3. The general municipal law is amended by adding a new section  3-d
to read as follows:
  S  3-D.  CERTIFICATION OF COMPLIANCE WITH PROPERTY TAX FREEZE REQUIRE-
MENTS. A MUNICIPAL CORPORATION OR AN INDEPENDENT SPECIAL  DISTRICT  THAT
IS  SUBJECT  TO  THE  PROVISIONS OF SECTION THREE-C OF THIS ARTICLE MUST
COMPLY WITH THE REQUIREMENTS OF SUBDIVISION TWO OF THIS SECTION IN ORDER
TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT
AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW
FOR A FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN. A  MUNICIPAL  CORPO-
RATION  OR  AN  INDEPENDENT  SPECIAL  DISTRICT  THAT  IS  SUBJECT TO THE
PROVISIONS OF SECTION THREE-C OF  THIS  ARTICLE  MUST  COMPLY  WITH  THE
REQUIREMENTS  OF  SUBDIVISIONS TWO AND THREE OF THIS SECTION IN ORDER TO
RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY  TAX  FREEZE  CREDIT
AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW
FOR  A  FISCAL  YEAR STARTING IN TWO THOUSAND SIXTEEN. PROVIDED HOWEVER,
THAT A CITY WITH A  DEPENDENT  SCHOOL  DISTRICT  MUST  COMPLY  WITH  THE
REQUIREMENTS  OF  SUBDIVISION TWO OF THIS SECTION IN ORDER TO RENDER ITS
TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT AUTHORIZED BY
SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A  FISCAL
YEAR  STARTING IN TWO THOUSAND FOURTEEN AND COMPLY WITH THE REQUIREMENTS
OF SUBDIVISION TWO OF THIS SECTION, AND BOTH THE CITY AND ITS  DEPENDENT
SCHOOL  DISTRICT  MUST COMPLY WITH THE REQUIREMENTS OF SUBDIVISION THREE
OF THIS SECTION, IN ORDER TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE  REAL
PROPERTY TAX FREEZE CREDIT AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX
HUNDRED  SIX  OF  THE TAX LAW FOR A FISCAL YEAR STARTING IN TWO THOUSAND
FIFTEEN OR TWO THOUSAND SIXTEEN.
  1. DEFINITIONS.  AS USED IN THIS SECTION:
  (A) "CONSOLIDATION ACTIONS" MEANS: CONSOLIDATIONS OR  DISSOLUTIONS  OF
LOCAL  GOVERNMENT  UNITS  IN ACCORDANCE WITH ARTICLE SEVENTEEN-A OF THIS
ARTICLE OR REORGANIZATIONS, CONSOLIDATIONS,  OR  DISSOLUTIONS  OF  LOCAL
GOVERNMENT  UNITS IN WHICH ONE OR MORE LOCAL GOVERNMENT UNITS ARE TERMI-
NATED AND ANOTHER LOCAL GOVERNMENT UNIT ASSUMES  JURISDICTION  OVER  THE
TERMINATED  LOCAL  GOVERNMENT  UNIT    OR  UNITS  PURSUANT  TO ANY OTHER
PROVISION OF LAW.
  (B) "DEPENDENT SCHOOL  DISTRICT"  MEANS  A  SCHOOL  DISTRICT  THAT  IS
SUBJECT  TO  ARTICLE FIFTY-TWO OF THE EDUCATION LAW AND THAT HAS A POPU-
LATION OF LESS THAN ONE MILLION.
  (C) "EFFICIENCY PLAN" MEANS A PLAN  THAT  IDENTIFIES  SHARED  SERVICES
ACTIONS  AND/OR  CONSOLIDATION  ACTIONS  TO  BE FULLY IMPLEMENTED BY ALL
LOCAL GOVERNMENT UNITS IN A COUNTY THAT ARE SIGNATORIES TO THE PLAN.
  (D) "INDEPENDENT SPECIAL DISTRICT" MEANS A SPECIAL DISTRICT AS DEFINED
BY SECTION ONE HUNDRED TWO OF THE REAL PROPERTY TAX LAW THAT EITHER  (I)
HAS  A  SEPARATE INDEPENDENT ELECTED BOARD, AND EITHER HAS THE AUTHORITY

S. 6359                            337                           A. 8559

TO LEVY A TAX, OR CAN REQUIRE A MUNICIPAL CORPORATION TO LEVY A  TAX  ON
ITS  BEHALF,  OR  (II) HAS A SEPARATE INDEPENDENT BOARD APPOINTED BY THE
GOVERNING BODY OF ANOTHER  MUNICIPAL  CORPORATION  AND  EITHER  HAS  THE
AUTHORITY TO LEVY A TAX OR CAN REQUIRE A MUNICIPAL CORPORATION TO LEVY A
TAX ON ITS BEHALF.
  (E)  "LEAD  LOCAL  GOVERNMENT UNIT" MEANS THE COUNTY, OR IF THE COUNTY
HAS ELECTED NOT TO PARTICIPATE IN THE PREPARATION OF AN EFFICIENCY PLAN,
THE CITY, TOWN, OR VILLAGE WITHIN THE COUNTY WITH THE LARGEST POPULATION
AS OF THE TWO THOUSAND TEN FEDERAL CENSUS THAT HAS  ELECTED  TO  PARTIC-
IPATE IN THE PREPARATION OF AN EFFICIENCY PLAN.
  (F)  "LOCAL GOVERNMENT UNIT" MEANS A MUNICIPAL CORPORATION OR AN INDE-
PENDENT SPECIAL DISTRICT THAT IS SUBJECT TO THE  PROVISIONS  OF  SECTION
THREE-C OF THIS ARTICLE.
  (G) "SHARED SERVICES ACTIONS" MEANS FUNCTIONAL CONSOLIDATIONS BY WHICH
ONE  LOCAL GOVERNMENT UNIT COMPLETELY PROVIDES A SERVICE OR FUNCTION FOR
ANOTHER LOCAL GOVERNMENT UNIT, WHICH NO LONGER ENGAGES IN THAT  FUNCTION
OR  SERVICE;  SHARED  OR  COOPERATIVE  SERVICES  BETWEEN AND AMONG LOCAL
GOVERNMENT UNITS; AND REGIONALIZED  DELIVERY  OF  SERVICES  BETWEEN  AND
AMONG  LOCAL GOVERNMENT UNITS.  THESE SHARED SERVICES ACTIONS MAY BE FOR
SERVICES OR FUNCTIONS INCLUDING BUT NOT LIMITED TO:   PROCUREMENT,  REAL
ESTATE AND FACILITY MANAGEMENT, FLEET MANAGEMENT, BUSINESS AND FINANCIAL
SERVICES,  ADMINISTRATIVE  SERVICES,  PAYROLL  ADMINISTRATION,  TIME AND
ATTENDANCE,  BENEFITS  ADMINISTRATION  AND  OTHER  TRANSACTIONAL   HUMAN
RESOURCES FUNCTIONS, CONTRACT MANAGEMENT, GRANTS MANAGEMENT, TRANSPORTA-
TION  SERVICES,  FACILITIES AND FUNCTIONS, HUMAN SERVICES FACILITIES AND
FUNCTIONS, CUSTOMER SERVICE FACILITIES  AND  FUNCTIONS  AND  INFORMATION
TECHNOLOGY INFRASTRUCTURE, PROCESSES, SERVICES AND FUNCTIONS.
  2.  CERTIFICATION  OF  COMPLIANCE  WITH  TAX  LEVY LIMIT. (A) UPON THE
ADOPTION OF THE BUDGET OF A LOCAL GOVERNMENT UNIT, THE  CHIEF  EXECUTIVE
OFFICER OR BUDGET OFFICER OF SUCH LOCAL GOVERNMENT UNIT SHALL CERTIFY TO
THE  STATE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND FINANCE THAT
THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT  PRESCRIBED  IN
SECTION  THREE-C OF THIS ARTICLE AND, IF THE GOVERNING BODY OF THE LOCAL
GOVERNMENT UNIT DID ENACT A LOCAL LAW OR APPROVE A RESOLUTION  TO  OVER-
RIDE  THE  TAX  LEVY LIMIT, THAT SUCH LOCAL LAW OR RESOLUTION WAS SUBSE-
QUENTLY REPEALED. SUCH CERTIFICATION SHALL BE MADE IN A FORM AND  MANNER
PRESCRIBED BY THE STATE COMPTROLLER IN CONSULTATION WITH THE COMMISSION-
ER OF TAXATION AND FINANCE.
  (B)  IN  ORDER  FOR SUCH CERTIFICATION TO GIVE RISE TO A REAL PROPERTY
TAX FREEZE CREDIT UNDER SUBSECTION (BBB) OF SECTION SIX HUNDRED  SIX  OF
THE  TAX LAW, SUCH CERTIFICATION SHALL BE MADE NO LATER THAN THE TWENTY-
FIRST DAY OF THE FISCAL YEAR TO WHICH IT APPLIES.
  (C) NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY, IF SUCH  A  CERTIF-
ICATION  HAS  BEEN  MADE AND THE ACTUAL TAX LEVY OF THE LOCAL GOVERNMENT
UNIT EXCEEDS THE APPLICABLE TAX LEVY LIMIT, THE EXCESS AMOUNT  SHALL  BE
PLACED  IN  RESERVE AND USED IN THE MANNER PRESCRIBED BY SUBDIVISION SIX
OF SECTION THREE-C OF THIS ARTICLE, EVEN IF A TAX LEVY IN EXCESS OF  THE
TAX  LEVY  LIMIT HAD BEEN AUTHORIZED FOR THE APPLICABLE FISCAL YEAR BY A
DULY ADOPTED LOCAL LAW OR RESOLUTION.
  (D) NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, EVERY  LOCAL
GOVERNMENT  UNIT  SHALL  REPORT BOTH ITS PROPOSED BUDGET AND ITS ADOPTED
BUDGET TO THE OFFICE OF THE STATE COMPTROLLER AT THE  TIME  AND  IN  THE
MANNER  AS  HE OR SHE MAY PRESCRIBE, WHETHER OR NOT SUCH BUDGET HAS BEEN
OR WILL BE CERTIFIED AS PROVIDED BY THIS SUBDIVISION.
  3. LOCAL GOVERNMENT EFFICIENCY PLANS. (A) THE CHIEF EXECUTIVE  OFFICER
OR BUDGET OFFICER OF EACH LEAD LOCAL GOVERNMENT UNIT SHALL SUBMIT TO THE

S. 6359                            338                           A. 8559

SECRETARY  OF  STATE  BY JUNE FIRST, TWO THOUSAND FIFTEEN, AN EFFICIENCY
PLAN THAT IF FULLY IMPLEMENTED WILL RESULT IN SAVINGS OVER THE AGGREGATE
TAX LEVIES FOR FISCAL YEARS BEGINNING IN TWO THOUSAND FOURTEEN  FOR  ALL
LOCAL GOVERNMENT UNITS THAT ARE SIGNATORIES TO SUCH PLAN OF (1) AT LEAST
ONE  PERCENT IN FISCAL YEARS BEGINNING IN TWO THOUSAND SEVENTEEN; (2) AT
LEAST TWO PERCENT IN FISCAL YEARS BEGINNING IN  TWO  THOUSAND  EIGHTEEN;
AND (3) AT LEAST THREE PERCENT IN FISCAL YEARS BEGINNING IN TWO THOUSAND
NINETEEN.
  (I)  THE  CHIEF  EXECUTIVE  OFFICER  OR  BUDGET  OFFICER OF EACH LOCAL
GOVERNMENT UNIT AND DEPENDENT SCHOOL DISTRICT THAT IS A SIGNATORY TO  AN
EFFICIENCY  PLAN  SHALL  SUBMIT TO THE CHIEF EXECUTIVE OFFICER OR BUDGET
OFFICER OF THE LEAD LOCAL GOVERNMENT UNIT BY JUNE  FIRST,  TWO  THOUSAND
FIFTEEN,  A  WRITTEN  CERTIFICATION  THAT  THE  LOCAL GOVERNMENT UNIT OR
DEPENDENT SCHOOL DISTRICT AGREES TO UNDERTAKE ITS BEST EFFORTS TO  FULLY
IMPLEMENT  BY THE END OF THE LOCAL FISCAL YEAR BEGINNING IN TWO THOUSAND
SEVENTEEN THE CONSOLIDATION ACTIONS AND/OR SHARED SERVICES ACTIONS SPEC-
IFIED FOR THE LOCAL GOVERNMENT UNIT OR DEPENDENT SCHOOL DISTRICT IN SUCH
PLAN.
  (II) THE CHIEF FINANCIAL OFFICER OF A LOCAL GOVERNMENT  UNIT  AND  THE
CHIEF  FISCAL OFFICER OF THE DEPENDENT SCHOOL DISTRICT, THAT IS A SIGNA-
TORY TO AN EFFICIENCY PLAN SHALL SUBMIT TO THE CHIEF  EXECUTIVE  OFFICER
OF THE LEAD LOCAL GOVERNMENT UNIT BY JUNE FIRST, TWO THOUSAND FIFTEEN, A
WRITTEN  CERTIFICATION  THAT  IN  HIS  OR HER PROFESSIONAL OPINION, FULL
IMPLEMENTATION BY THE END OF THE LOCAL  FISCAL  YEAR  BEGINNING  IN  TWO
THOUSAND  SEVENTEEN, OF THE CONSOLIDATION AND/OR SHARED SERVICES ACTIONS
THAT ARE TO BE TAKEN BY SUCH LOCAL GOVERNMENT UNIT ITSELF  AS  SPECIFIED
IN SUCH PLAN WILL RESULT IN THE SAVINGS SET FORTH IN THE EFFICIENCY PLAN
ATTRIBUTABLE TO SUCH LOCAL GOVERNMENT UNIT OR DEPENDENT SCHOOL DISTRICT.
  (III)  THE  CHIEF  FINANCIAL OFFICER OF EACH LOCAL GOVERNMENT UNIT AND
DEPENDENT SCHOOL DISTRICT THAT IS A  SIGNATORY  TO  AN  EFFICIENCY  PLAN
SHALL  SUBMIT TO THE LEAD LOCAL GOVERNMENT UNIT BY JUNE FIRST, TWO THOU-
SAND FIFTEEN, A WRITTEN CERTIFICATION THAT IN HIS  OR  HER  PROFESSIONAL
OPINION, FULL IMPLEMENTATION OF THE CONSOLIDATION AND/OR SHARED SERVICES
ACTIONS AS SPECIFIED FOR ALL OF THE LOCAL GOVERNMENT UNITS AND DEPENDENT
SCHOOL  DISTRICTS  THAT  ARE  SIGNATORIES  TO  SUCH  PLAN WILL RESULT IN
SAVINGS OVER THE AGGREGATE TAX LEVIES FOR FISCAL YEARS BEGINNING IN  TWO
THOUSAND FOURTEEN FOR ALL LOCAL GOVERNMENT UNITS THAT ARE SIGNATORIES TO
SUCH  PLAN  OF (1) AT LEAST ONE PERCENT IN FISCAL YEARS BEGINNING IN TWO
THOUSAND SEVENTEEN; (2) AT LEAST TWO PERCENT IN FISCAL  YEARS  BEGINNING
IN TWO THOUSAND EIGHTEEN; AND (3) AT LEAST THREE PERCENT IN FISCAL YEARS
BEGINNING IN TWO THOUSAND NINETEEN.
  (B)  THE  CHIEF  FINANCIAL  OFFICER OF EACH LEAD LOCAL GOVERNMENT UNIT
SHALL SUBMIT THE FOLLOWING DOCUMENTS TO THE SECRETARY  OF  STATE  ON  OR
BEFORE  JULY FIRST, TWO THOUSAND FIFTEEN:  (I) THE EFFICIENCY PLAN; (II)
A LIST OF ALL LOCAL GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT
ARE SIGNATORIES TO SUCH PLAN; (III) ALL OF THE  CERTIFICATIONS  REQUIRED
BY PARAGRAPH (A) OF THIS SUBDIVISION; AND (IV) AN ANALYSIS OF THE AGGRE-
GATE  AMOUNT OF SAVINGS SET FORTH IN SUCH PLAN ATTRIBUTABLE TO ALL LOCAL
GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT ARE SIGNATORIES  TO
SUCH  PLAN  THAT  WILL BE ACHIEVED IF THE SHARED SERVICES ACTIONS AND/OR
CONSOLIDATION ACTIONS IDENTIFIED IN SUCH PLAN ARE FULLY  IMPLEMENTED  BY
THE  END  OF  THE LOCAL FISCAL YEAR BEGINNING IN TWO THOUSAND SEVENTEEN.
THE SECRETARY OF STATE SHALL REVIEW SUCH DOCUMENTS TO DETERMINE  WHETHER
THE  REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT TO EACH
LOCAL GOVERNMENT UNIT AND DEPENDENT SCHOOL DISTRICT THAT IS A  SIGNATORY
TO THE EFFICIENCY PLAN AND SHALL NOTIFY THE COMMISSIONER OF TAXATION AND

S. 6359                            339                           A. 8559

FINANCE  OF  SUCH  DETERMINATIONS  NO  LATER THAN JULY THIRTY-FIRST, TWO
THOUSAND FIFTEEN.
  S  4. Section 1590 of the real property tax law is amended by adding a
new subdivision 3 to read as follows:
  3. EACH MUNICIPAL CORPORATION SHALL SUBMIT  TO  THE  COMMISSIONER  THE
DATA FILES USED TO PREPARE ITS TAX ROLLS AND TAX BILLS NO LATER THAN TEN
DAYS AFTER THE ANNEXATION OF THE WARRANT FOR THE COLLECTION OF TAXES FOR
THE  APPLICABLE  FISCAL  YEAR,  OR  WHERE NO SUCH WARRANT IS ANNEXED, NO
LATER THAN TEN DAYS AFTER THE LAST DATE PRESCRIBED BY LAW FOR  THE  LEVY
OF  TAXES  OF THE APPLICABLE FISCAL YEAR, PROVIDED THAT IF ITS TAX ROLLS
OR TAX BILLS, OR BOTH, ARE PREPARED BY A DIFFERENT GOVERNMENTAL  ENTITY,
THAT  ENTITY  SHALL BE JOINTLY RESPONSIBLE FOR SUBMITTING THE APPLICABLE
DATA FILES TO THE COMMISSIONER.
  S 5. Notwithstanding any other law to the contrary,  the  director  of
the  budget  may  direct the state comptroller to withhold any state aid
payments due to a school district that failed to fully implement by  the
end  of  the 2016--2017 school year or local government unit that failed
to fully implement by the end of the  local  fiscal  year  beginning  in
2017, the consolidation actions and/or shared services actions specified
for  such school district or local government unit in an efficiency plan
prepared pursuant to section 2023-b of the education law or section  3-d
of the general municipal law.
  S  6.  This  act  shall  take  effect  immediately,  provided that the
provisions of subdivision 3 of section 1590 of the real property tax law
as added by section four of this act shall apply to tax  rolls  and  tax
bills  of  school  districts  and cities with a population of 125,000 or
more for fiscal years starting on or after July  1,  2013,  and  to  tax
rolls  and  tax  bills for other municipal corporations for fiscal years
starting on or after January 1, 2014, except that in  the  case  of  tax
rolls and tax bills for fiscal years that started prior to the effective
date of this act, the data files used to prepare tax rolls and tax bills
shall  be submitted to the commissioner of taxation and finance no later
than 60 days after the effective date of this act.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion, section or part of this act shall be  adjudged  by  any  court  of
competent  jurisdiction  to  be invalid, such judgment shall not affect,
impair, or invalidate the remainder thereof, but shall  be  confined  in
its  operation  to the clause, sentence, paragraph, subdivision, section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the legislature that this act would  have  been  enacted  even  if  such
invalid provisions had not been included herein.
  S  3.  This  act shall take effect immediately provided, however, that
the applicable effective date of Parts A through FF of this act shall be
as specifically set forth in the last section of such Parts.

2013-S6359A - Details

See Assembly Version of this Bill:: A8559
Law Section:: Budget Bills
Laws Affected:: Amd Various Laws, generally

2013-S6359A - Summary

2013-S6359A - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

    S. 6359--A                                            A. 8559--A

                      S E N A T E - A S S E M B L Y

                            January 21, 2014
                               ___________

IN  SENATE -- A BUDGET BILL, submitted by the Governor pursuant to arti-
  cle seven of the Constitution -- read twice and ordered  printed,  and
  when  printed to be committed to the Committee on Finance -- committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

IN ASSEMBLY -- A BUDGET BILL, submitted  by  the  Governor  pursuant  to
  article  seven  of  the  Constitution -- read once and referred to the
  Committee on Ways and Means --  committee  discharged,  bill  amended,
  ordered reprinted as amended and recommitted to said committee

AN ACT to amend the tax law, the general municipal law, the urban devel-
  opment  corporation  act,  the  business  corporation law, the general
  associations law, and the administrative code of the city of New York,
  in relation to reforming taxation of  business  corporations;  and  to
  repeal various provisions of the tax law relating thereto (Part A); to
  amend  the real property tax law, in relation to the STAR registration
  program (Part B); to amend chapter 540 of the laws of  1992,  amending
  the real property tax law relating to oil and gas charges, in relation
  to  the  effective date of such chapter (Part C); to amend the racing,
  pari-mutuel wagering and  breeding  law,  in  relation  to  increasing
  racing  regulatory fees (Part D); to amend the tax law, in relation to
  modifying the signature requirement on e-filed returns prepared by tax
  professionals (Part E);  to  amend  the  real  property  tax  law,  in
  relation  to cost of living adjustments for Enhanced STAR (Part F); to
  amend part I of chapter 58 of the laws of 2006, amending the  tax  law
  relating  to  providing  an  enhanced  earned  income  tax  credit, in
  relation to the effectiveness thereof (Part G); to amend  the  general
  obligations law and the tax law, in relation to authorizing electronic
  tax  clearances  for  professional  and business licenses (Part H); to
  amend the tax law and the administrative code of the city of New York,
  in relation to taxing residents who are grantors  of  exempt  resident
  trusts  that  qualify  as  non-grantor  incomplete  gift trusts on the
  income from such trusts and taxing residents who are beneficiaries  of
  all other exempt resident trusts or nonresident trusts on the distrib-
  utions  of accumulated income that they receive from such trusts (Part
  I); to amend the tax law and the administrative code of  the  city  of
  New  York,  in  relation to eliminating the personal income tax add-on

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD12674-03-4

S. 6359--A                          2                         A. 8559--A

  minimum tax; and to repeal certain provisions of  such  laws  relating
  thereto  (Part  J);  to  amend  the  tax law, in relation to adding an
  enhanced real property tax circuit breaker; and to repeal paragraph 14
  of  subsection  (e) of section 606 of the tax law, relating to certain
  reports (Part K); to amend the tax law, in  relation  to  providing  a
  credit  for renters against the personal income tax (Part L); to amend
  the tax law, in relation to the prepayment element of the  family  tax
  relief credit (Part M); to amend the tax law, in relation to eliminat-
  ing the personal income tax filing requirement for residents having no
  liability  because  income  does  not  exceed  the  New  York standard
  deduction if they do not file a federal income tax return (Part N); to
  amend the tax law, in relation to extending the empire  state  commer-
  cial  production tax credit (Part O); to amend the public housing law,
  in relation to extending the credit against income tax for persons  or
  entities  investing in low-income housing (Part P); to amend the envi-
  ronmental conservation law, the tax law and the general municipal law,
  in relation to eligibility for participation in the brownfield cleanup
  program, and assignment of the brownfield redevelopment  tax  credits;
  to amend part H of chapter 1 of the laws of 2003, amending the tax law
  relating  to  brownfield  redevelopment tax credits, remediated brown-
  field credit for real property taxes for qualified sites and  environ-
  mental  remediation  insurance credits, in relation to tax credits for
  certain  sites;  to  amend  the  environmental  conservation  law,  in
  relation  to  hazardous  waste  generator fees and taxes; to amend the
  environmental conservation law, the public  authorities  law  and  the
  state  finance  law,  in  relation  to  the  environmental restoration
  program; and to repeal certain provisions of the environmental conser-
  vation law and the tax law relating thereto (Part Q); to amend the tax
  law, in relation to reforming the investment tax credit, reducing  the
  tax rate for upstate manufacturers and providing a tax credit for real
  property taxes to New York manufacturers; to amend the economic devel-
  opment law, in relation to the excelsior investment tax credit; and to
  repeal  certain  provisions  of  the tax law relating to the financial
  services investment tax credit (Part R); to amend the economic  devel-
  opment  law,  the  tax law, the transportation law, the administrative
  code of the city of New York and the New York state urban  development
  corporation  act,  in relation to repealing the franchise tax on farm-
  ers', fruit growers', and other like agricultural corporations  organ-
  ized  and  operated on a co-operative basis; and to repeal section 185
  of the tax law relating to franchise tax on farmers', fruit  growers',
  and  other  like agricultural corporations organized and operated on a
  co-operative basis; to repeal sections  187-j,  187-k,  187-l,  187-m,
  187-q, 187-r and 187-s of the tax law relating to certain tax credits;
  to repeal paragraph 1 of subdivision (h) of section 15, paragraph 1 of
  subdivision (g) of section 31, and certain other provisions of the tax
  law,  in  relation to making conforming changes (Part S); to amend the
  tax law, in relation to providing a credit for excise tax on  telecom-
  munication  services for businesses located in tax-free NY areas (Part
  T); to amend the tax law, in relation to reducing the number of  hours
  of  part-time  work needed by employees for employer qualification for
  the New York youth works tax credit; and to amend the  labor  law,  in
  relation  to  the  New  York youth works tax credit (Part U); to amend
  chapter 109 of the laws of 2006 amending the tax law  and  other  laws
  relating  to  providing  exemptions,  reimbursements  and credits from
  various taxes for certain alternative fuels, in relation to  extending
  the  alternative fuels tax exemptions for two years (Part V); to amend

S. 6359--A                          3                         A. 8559--A

  chapter 63 of the laws of 2000, amending the tax law  and  other  laws
  relating to modifying the distribution of funds from the motor vehicle
  fuel  excise  tax  and  the  vehicle  and  traffic law, in relation to
  simplifying the methodology for distribution of motor vehicle receipts
  (Part  W);  to  amend  the  tax law, in relation to the estate tax; to
  repeal section 2 of chapter 1013 of the laws of 1962, amending the tax
  law relating to imposing a tax on the transfer of estates of decedents
  dying on or after April first, nineteen hundred sixty-three,  relating
  to  an appendix of applicable internal revenue code provisions, and to
  repeal article 26-B of the tax law, relating to the  generation  skip-
  ping  transfer  tax  (Part X); to amend the tax law and chapter 912 of
  the laws of 1920 relating to the regulation of  boxing,  sparring  and
  wrestling  matches, in relation to making technical corrections there-
  to; to repeal article 19 of the tax law relating to boxing and wrestl-
  ing exhibitions tax; and to repeal section 1820 of the tax law  relat-
  ing  to establishing misdemeanors for certain violations of article 19
  of such law (Part Y); to amend the tax law, in relation to vendor fees
  paid to vendor tracks (Part  Z);  to  amend  the  racing,  pari-mutuel
  wagering  and  breeding  law,  in  relation  to licenses for simulcast
  facilities, sums relating to track  simulcast,  simulcast  of  out-of-
  state  thoroughbred  races,  simulcasting of races run by out-of-state
  harness tracks and distributions of wagers; to amend  chapter  281  of
  the  laws of 1994 amending the racing, pari-mutuel wagering and breed-
  ing law and other laws relating to simulcasting and chapter 346 of the
  laws of 1990 amending the racing, pari-mutuel  wagering  and  breeding
  law  and  other  laws  relating  to simulcasting and the imposition of
  certain taxes, in relation to extending  certain  provisions  thereof;
  and  to  amend  the  racing, pari-mutuel wagering and breeding law, in
  relation to extending certain provisions thereof (Part AA);  to  amend
  the tax law, in relation to capital awards to vendor tracks (Part BB);
  to amend the tax law, the banking law, the public authorities law, and
  the  administrative  code  of the city of New York, in relation to the
  stock transfer tax, and to repeal certain provisions of the  tax  law,
  the  state  finance law and the administrative code of the city of New
  York relating thereto (Part CC); to amend the tax law, in relation  to
  conforming  the due dates for the metropolitan commuter transportation
  mobility tax for taxpayers with income from self-employment  with  the
  due  dates  for  the personal income tax (Part DD); to amend the state
  finance law, the upstate New York gaming economic development  act  of
  2013  and  the  tax  law, in relation to moneys appropriated or trans-
  ferred from the commercial gaming revenue fund (Part EE); and to amend
  the tax law, the education law, the general  municipal  law,  and  the
  real property tax law, in relation to a real property tax freeze (Part
  FF)

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. This act enacts into law major  components  of  legislation
which are necessary to implement the state fiscal plan for the 2014-2015
state  fiscal  year.  Each  component  is wholly contained within a Part
identified as Parts A through FF. The effective date for each particular
provision contained within such Part is set forth in the last section of
such Part. Any provision in any section contained within a Part, includ-
ing the effective date of the Part, which makes a reference to a section

S. 6359--A                          4                         A. 8559--A

"of this act", when used in connection with that  particular  component,
shall  be  deemed  to mean and refer to the corresponding section of the
Part in which it is found. Section three of  this  act  sets  forth  the
general effective date of this act.

                                 PART A

  Section 1. Article 32 of the tax law is REPEALED.
  S 2. Section 180 of the tax law is REPEALED.
  S 3. Section 181 of the tax law is REPEALED.
  S  4.  Section 208 of the tax law, as added by chapter 415 of the laws
of 1944, subdivision 1 as amended by chapter 576 of the  laws  of  1994,
subdivision  1-A as amended by chapter 166 of the laws of 1991, subdivi-
sion 1-B as added by section 45 of part A and paragraph (k) of  subdivi-
sion  9  as  added by section 46 of part A of chapter 389 of the laws of
1997, subdivision 3, the opening paragraph, subparagraphs 6  and  11  of
paragraph (b), and the opening paragraph of paragraph (g) of subdivision
9  as  amended and subdivision 8-B and subparagraph 3-a of paragraph (b)
of subdivision 9 as added by chapter 817 of the laws of  1987,  subdivi-
sion  4  as  amended by section 1, subdivision 6 as amended by section 2
and subparagraph 2 of paragraph (a)  of  subdivision  9  as  amended  by
section  7  of part M of chapter 407 of the laws of 1999, subdivisions 5
and 7, paragraph (a) of subdivision 8-B, subparagraph  10  of  paragraph
(b)  and  paragraph  (j)  of  subdivision 9 as amended, paragraph (d) of
subdivision 8-B and paragraph (c-1) of subdivision 9 as added and  para-
graphs  (e)  and  (f) of subdivision 8-B as relettered by chapter 170 of
the laws of 1994, subdivisions 8 and 10 as amended by chapter 133 of the
laws of 1945, subdivision 8-A as added and subparagraph 1  of  paragraph
(a)  of  subdivision  9  as  amended by chapter 778 of the laws of 1972,
paragraph (b) of subdivision 8-A and paragraph (i) of subdivision  9  as
amended  by chapter 779 of the laws of 1972, subdivision 9 as amended by
chapter 713 of the laws of 1961,  paragraph  (a)  of  subdivision  9  as
amended by chapter 203 of the laws of 1962, subparagraphs 5, 9 and 10 of
paragraph  (a) and subparagraphs 8 and 9 of paragraph (b) of subdivision
9 as amended by chapter 61 of the laws of  1989  and  paragraph  (f)  of
subdivision  9  as separately amended by sections 278 and 347 of chapter
61 of the laws of 1989, clause (i) of subparagraph 5 of paragraph (a) of
subdivision 9 as amended by section 2 and subparagraph 20  of  paragraph
(b)  of  subdivision  9 as added by section 3 of part C of chapter 25 of
the laws of 2009, subparagraph 6 of paragraph (a) of  subdivision  9  as
added  by  chapter  895 of the laws of 1975 and as renumbered by chapter
613 of the laws of 1976, subparagraph 7 of paragraph (a) of  subdivision
9  as  added  by chapter 33 of the laws of 1978, subparagraph 8 of para-
graph (a) and subparagraph 7  of  paragraph  (b)  of  subdivision  9  as
amended by chapter 639 of the laws of 1986, subparagraph 11 of paragraph
(a) of subdivision 9 as added by chapter 15 of the laws of 1983, subpar-
agraph  12  of  paragraph  (a),  subparagraph  4-a  of paragraph (b) and
subparagraph 2 of paragraph (h) of subdivision 9 as amended and subpara-
graph 13 of paragraph (a) of subdivision 9 as added by  chapter  760  of
the  laws  of 1992, subparagraph 14 of paragraph (a) of subdivision 9 as
added by section 101 and paragraphs (l) and  (m)  of  subdivision  9  as
added  by  section  102  of  part  A  of chapter 56 of the laws of 1998,
subparagraph 15 of paragraph (a) of subdivision 9 as amended by  section
1 of part ZZ of chapter 63 of the laws of 2003, subparagraph 16 of para-
graph  (a)  of  subdivision 9 as added by section 1 of part K3, subpara-
graph 16 of paragraph (b) of subdivision 9 as added by section 2 of part

S. 6359--A                          5                         A. 8559--A

K3, subparagraph 17 of paragraph  (b)  of  subdivision  9  as  added  by
section  2  of part O3, and paragraphs (o), (p) and (q) of subdivision 9
as added by section 3 of part O3 of chapter 62  of  the  laws  of  2003,
subparagraph  18 of paragraph (a) of subdivision 9 as added by section 3
of part C and paragraph (o) of subdivision 9 as amended by section 2  of
part  E  of  chapter 59 of the laws of 2013, subparagraph 3 of paragraph
(b) of subdivision 9 as amended by chapter 895  of  the  laws  of  1975,
subparagraph  4  of paragraph (b) and subparagraph 4 of paragraph (f) of
subdivision 9 as amended by chapter 190 of the laws  of  1990,  subpara-
graph  15  of  paragraph (b) of subdivision 9 as added by chapter 309 of
the laws of 1996, subparagraph 18 of paragraph (b) of subdivision  9  as
added by section 21 of part H of chapter 1 of the laws of 2003, subpara-
graph 19 of paragraph (b) of subdivision 9 as added by section 1 of part
HH1  of  chapter  57 of the laws of 2008, subparagraph 20-a of paragraph
(b) of subdivision 9 as added by section 2-a of part T of this act,  and
subparagraph  21  of  paragraph (b) of subdivision 9 as added by section
2-a of part R of this act, paragraphs (c-2) and (c-3) of  subdivision  9
as  added  by  section  10  of part Y of chapter 63 of the laws of 2000,
paragraph (g) of subdivision 9 as added by chapter 178 of  the  laws  of
1965,  subparagraph 1 and clauses (B) and (C) of subparagraph 3 of para-
graph (g) of subdivision 9 as amended by chapter  613  of  the  laws  of
1976,  clause (A) of subparagraph 1 of paragraph (g) of subdivision 9 as
separately amended by chapters 675 and 836 of the laws of  1977,  clause
(B)  of  subparagraph  1, clause (A) of subparagraph 2 and clause (A) of
subparagraph 3 of paragraph (g) of subdivision 9 as amended  by  chapter
675 of the laws of 1977, item 1 of clause (B) of subparagraph 1 of para-
graph  (g)  of  subdivision  9  as amended by chapter 972 of the laws of
1984, clause (B) of subparagraph 2 of paragraph (g) of subdivision 9  as
amended by chapter 365 of the laws of 1979, clause (C) of subparagraph 2
of paragraph (g) of subdivision 9 as amended by chapter 1005 of the laws
of 1970, paragraph (h) of subdivision 9 as amended by chapter 606 of the
laws  of  1984,  paragraph (n) of subdivision 9 as added by section 1 of
part O of chapter 85 of the laws of 2002, subdivision  12  as  added  by
chapter 828 of the laws of 1977, subdivisions 13, 14, and 15 as added by
section  1 of part R of this act, subdivision 19 as added by chapter 681
of the laws of 1997, is amended to read as follows:
  S 208. Definitions. As used in this article:
  1. The term "corporation" includes (a) an association within the mean-
ing of paragraph  three  of  subsection  (a)  of  section  seventy-seven
hundred  one of the internal revenue code (including a limited liability
company), (b) a joint-stock company or association, (c) a publicly trad-
ed partnership treated as a corporation for  purposes  of  the  internal
revenue  code pursuant to section seventy-seven hundred four thereof and
(d) any business conducted by a trustee or trustees wherein interest  or
ownership  is  evidenced  by  certificate  or  other written instrument.
"DISC" and "former DISC" mean any corporation which meets  the  require-
ments of subsection (a) of section nine hundred ninety-two of the inter-
nal revenue code[;].
  1-A.  The  term  "New  York  S corporation" means, with respect to any
taxable year, a corporation subject to tax under this article for  which
an  election  is  in  effect  pursuant  to subsection (a) of section six
hundred sixty of this chapter for such year,  any  such  year  shall  be
denominated  a "New York S year", and such election shall be denominated
a "New York S election". The term "New York C corporation"  means,  with
respect  to  any  taxable  year, a corporation subject to tax under this
article which is not a New York S corporation, and any such  year  shall

S. 6359--A                          6                         A. 8559--A

be  denominated  a  "New York C year". The term "termination year" means
any taxable year of a corporation during which the New York  S  election
terminates  on  a day other than the first day of such year. The portion
of  the  taxable  year ending before the first day for which such termi-
nation is effective shall be denominated the "S  short  year",  and  the
portion  of  such  year beginning on such first day shall be denominated
the "C short year". The term "New York S  termination  year"  means  any
termination  year  which  is  not also an S termination year for federal
purposes.
  1-B. The term "QSSS" means a corporation which is a qualified subchap-
ter S subsidiary as defined in subparagraph (B) of  paragraph  three  of
subsection  (b)  of  section  thirteen hundred sixty-one of the internal
revenue code. The term "exempt QSSS" means a QSSS exempt from tax  under
this  article  as  provided in paragraph (k) of subdivision nine of this
section, or a QSSS described in subclause (i) of clause (B) of  subpara-
graph  two of paragraph (k) of subdivision nine of this section, wherein
the parent corporation of the QSSS is subject to tax under this article,
and the assets, liabilities, income  and  deductions  of  the  QSSS  are
treated  as the assets, liabilities, income and deductions of the parent
corporation. Where a QSSS is an exempt QSSS, then for all purposes under
this article:
  (a) the assets, liabilities, income,  deductions,  property,  payroll,
receipts, capital, credits, and all other tax attributes and elements of
economic  activity of the QSSS shall be deemed to be those of the parent
corporation,
  (b) the stocks, bonds and other securities issued by, and any  indebt-
edness  from, the QSSS shall not be [subsidiary,] investment or business
capital of the parent corporation,
  (c) transactions between the parent corporation and the QSSS,  includ-
ing  the  payment  of  interest  and  dividends, shall not be taken into
account, and
  (d) general executive officers of the  QSSS  shall  be  deemed  to  be
general executive officers of the parent corporation.
  2. The term "taxpayer" means any corporation subject to tax under this
article[;].
  3.  The  term  "subsidiary"  means  a  corporation of which over fifty
percent of the number of shares of stock entitling the  holders  thereof
to  vote  for  the  election  of  directors  or trustees is owned by the
taxpayer[;].
  4. The term ["subsidiary capital" means investments in  the  stock  of
subsidiaries  and  any  indebtedness  from  subsidiaries,  exclusive  of
accounts receivable acquired in the ordinary course of trade or business
for services rendered or for sales of property held primarily  for  sale
to  customers,  whether or not evidenced by written instrument, on which
interest is not claimed and deducted by the subsidiary for  purposes  of
taxation  under article nine-A, thirty-two or thirty-three of this chap-
ter, provided, however, that, in the  discretion  of  the  commissioner,
there  shall  be  deducted from subsidiary capital any liabilities which
are directly or indirectly attributable to subsidiary  capital]  "STOCK"
MEANS  A  DIRECT INTEREST IN A CORPORATION THAT IS TREATED AS EQUITY FOR
FEDERAL INCOME TAX PURPOSES.
  5. (A) The term "investment capital"  means  investments  in  stocks[,
bonds  and  other securities, corporate and governmental,] THAT ARE HELD
BY THE TAXPAYER FOR MORE THAN SIX CONSECUTIVE MONTHS BUT  ARE  not  held
for  sale  to customers in the regular course of business, [exclusive of
subsidiary capital] OR, IF THE TAXPAYER MAKES THE ELECTION PROVIDED  FOR

S. 6359--A                          7                         A. 8559--A

IN SUBPARAGRAPH ONE OF PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION TWO
HUNDRED  TEN-A  OF THIS ARTICLE, ARE NOT QUALIFIED FINANCIAL INSTRUMENTS
AS DESCRIBED IN SUBDIVISION FIVE OF SECTION TWO HUNDRED  TEN-A  OF  THIS
ARTICLE.  STOCK  IN  A CORPORATION THAT IS CONDUCTING A UNITARY BUSINESS
WITH THE TAXPAYER, STOCK IN A CORPORATION THAT IS INCLUDED IN A COMBINED
REPORT WITH THE TAXPAYER PURSUANT TO THE COMMONLY OWNED  GROUP  ELECTION
IN  SUBDIVISION  FIVE  OF SECTION TWO HUNDRED TEN-C OF THIS ARTICLE, and
stock  issued  by  the  taxpayer[,  provided,  however,  that,  in   the
discretion  of  the commissioner, there] SHALL NOT CONSTITUTE INVESTMENT
CAPITAL. FOR PURPOSES OF THIS  SUBDIVISION,  IF  THE  TAXPAYER  OWNS  OR
CONTROLS,  DIRECTLY OR INDIRECTLY, LESS THAN TWENTY PERCENT OF THE STOCK
OF A CORPORATION THAT ENTITLES THE  HOLDERS  THEREOF  TO  VOTE  FOR  THE
ELECTION OF TRUSTEES  OR DIRECTORS, THAT CORPORATION WILL BE PRESUMED TO
BE  CONDUCTING  A  BUSINESS THAT IS NOT UNITARY WITH THE BUSINESS OF THE
TAXPAYER.
  (B) THERE shall be deducted from investment  capital  any  liabilities
which  are  directly  or indirectly attributable to investment capital[;
and provided, further, that investment]. IF THE AMOUNT OF THOSE  LIABIL-
ITIES EXCEEDS THE AMOUNT OF INVESTMENT CAPITAL, THE AMOUNT OF INVESTMENT
CAPITAL WILL BE ZERO.
  (C)  INVESTMENT  capital  shall  not  include any such investments the
income from which is excluded from entire net  income  pursuant  to  the
provisions  of  paragraph (c-1) of subdivision nine of this section, and
that investment capital shall be computed without regard to  liabilities
directly or indirectly attributable to such investments, but only if air
carriers  organized  in  the  United States and operating in the foreign
country or countries in which the taxpayer has its major base  of  oper-
ations  and  in which it is organized, resident or headquartered (if not
in the same country as its major base of operations) are not subject  to
any  tax based on or measured by capital imposed by such foreign country
or countries or any political subdivision  thereof,  or  if  taxed,  are
provided  an exemption, equivalent to that provided for herein, from any
tax based on or measured by capital imposed by such foreign  country  or
countries  and  from  any  such tax imposed by any political subdivision
thereof[;].
  (D) IF A TAXPAYER ACQUIRES STOCK DURING THE SECOND HALF OF ITS TAXABLE
YEAR AND OWNS THAT STOCK ON THE LAST DAY OF THE TAXABLE YEAR, IT WILL BE
PRESUMED THAT THE TAXPAYER HELD THAT STOCK FOR MORE THAN SIX CONSECUTIVE
MONTHS DURING THE TAXABLE YEAR. HOWEVER, IF THE  TAXPAYER  DOES  NOT  IN
FACT  HOLD THAT STOCK FOR MORE THAN SIX CONSECUTIVE MONTHS, THE TAXPAYER
MUST INCREASE ITS TOTAL BUSINESS CAPITAL IN THE  IMMEDIATELY  SUCCEEDING
TAXABLE  YEAR  BY  THE  AMOUNT  INCLUDED  IN INVESTMENT CAPITAL FOR THAT
STOCK, NET OF ANY LIABILITIES ATTRIBUTABLE TO  THAT  STOCK  COMPUTED  AS
PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (E)  WHEN  INCOME  OR  GAIN  FROM  A DEBT OBLIGATION OR OTHER SECURITY
CANNOT BE  APPORTIONED  TO  THE  STATE  USING  THE  BUSINESS  ALLOCATION
PERCENTAGE  AS  A RESULT OF UNITED STATES CONSTITUTIONAL PRINCIPLES, THE
DEBT OBLIGATION OR OTHER SECURITY WILL BE INCLUDED IN  INVESTMENT  CAPI-
TAL.
  6.  (A)  The  term "investment income" means income, including capital
gains in excess of capital  losses,  from  investment  capital,  to  the
extent  included  in  computing  entire  net  income, less, [(a)] in the
discretion of the commissioner, any  INTEREST  deductions  allowable  in
computing  entire  net income which are directly or indirectly attribut-
able to investment capital or investment income[, and (b)  such  portion
of  any  net  operating loss deduction allowable in computing entire net

S. 6359--A                          8                         A. 8559--A

income, as the investment income, before such deduction, bears to entire
net income, before such deduction,] provided, however, that in  no  case
shall  investment  income  exceed  entire net income[;]. IF THE TAXPAYER
ATTRIBUTES  INTEREST  DEDUCTIONS  TO  INVESTMENT  INCOME  AND THE AMOUNT
SUBTRACTED  EXCEEDS  INVESTMENT  INCOME,  THE  EXCESS  OF  THE  INTEREST
DEDUCTIONS  OVER  INVESTMENT  INCOME  MUST  BE  ADDED BACK TO ENTIRE NET
INCOME.
  (B) IN LIEU OF SUBTRACTING FROM INVESTMENT INCOME THE AMOUNT OF  THOSE
INTEREST  DEDUCTIONS, THE TAXPAYER MAY ELECT TO REDUCE ITS TOTAL INVEST-
MENT INCOME BY FORTY PERCENT. IF THE TAXPAYER MAKES THIS  ELECTION,  THE
TAXPAYER MUST ALSO MAKE THE ELECTIONS PROVIDED FOR IN PARAGRAPHS (B) AND
(C) OF SUBDIVISION SIX-A OF THIS SECTION. A TAXPAYER WHICH DOES NOT MAKE
THIS ELECTION BECAUSE IT HAS NO INVESTMENT CAPITAL WILL NOT BE PRECLUDED
FROM MAKING THOSE OTHER ELECTIONS.
  6-A.  (A)  THE  TERM  "OTHER  EXEMPT  INCOME"  MEANS THE SUM OF EXEMPT
SUBPART F INCOME AND EXEMPT UNITARY CORPORATION DIVIDENDS.
  (B) "EXEMPT SUBPART F INCOME" MEANS THE INCOME, AS DEFINED IN  SECTION
952  OF  THE  INTERNAL REVENUE CODE, RECEIVED FROM A CORPORATION THAT IS
CONDUCTING A UNITARY BUSINESS WITH THE TAXPAYER BUT IS NOT INCLUDED IN A
COMBINED REPORT WITH THE  TAXPAYER,  LESS,  IN  THE  DISCRETION  OF  THE
COMMISSIONER,  ANY  INTEREST DEDUCTIONS DIRECTLY OR INDIRECTLY ATTRIBUT-
ABLE TO THAT INCOME.  IN LIEU OF SUBTRACTING FROM ITS EXEMPT  SUBPART  F
INCOME  THE  AMOUNT OF THOSE INTEREST DEDUCTIONS, THE TAXPAYER MAY ELECT
TO REDUCE ITS TOTAL EXEMPT SUBPART F INCOME BY  FORTY  PERCENT.  IF  THE
TAXPAYER  MAKES THIS ELECTION, THE TAXPAYER MUST ALSO MAKE THE ELECTIONS
PROVIDED FOR IN PARAGRAPH (B) OF SUBDIVISION SIX  OF  THIS  SECTION  AND
PARAGRAPH  (C) OF THIS SUBDIVISION.  A TAXPAYER WHICH DOES NOT MAKE THIS
ELECTION BECAUSE IT HAS NO EXEMPT SUBPART F INCOME WILL NOT BE PRECLUDED
FROM MAKING THOSE OTHER ELECTIONS.
  (C) "EXEMPT UNITARY CORPORATION DIVIDENDS" MEANS THOSE DIVIDENDS  FROM
A  CORPORATION  THAT  IS CONDUCTING A UNITARY BUSINESS WITH THE TAXPAYER
BUT IS NOT INCLUDED IN A COMBINED REPORT WITH THE TAXPAYER, LESS, IN THE
DISCRETION OF THE COMMISSIONER,  ANY  INTEREST  DEDUCTIONS  DIRECTLY  OR
INDIRECTLY  ATTRIBUTABLE  TO  SUCH INCOME.   IN LIEU OF SUBTRACTING FROM
THIS DIVIDEND INCOME THOSE INTEREST DEDUCTIONS, THE TAXPAYER  MAY  ELECT
TO  REDUCE THE TOTAL AMOUNT OF THIS DIVIDEND INCOME BY FORTY PERCENT. IF
THE TAXPAYER MAKES THIS  ELECTION,  THE  TAXPAYER  MUST  ALSO  MAKE  THE
ELECTIONS  PROVIDED  FOR  IN  PARAGRAPH  (B)  OF SUBDIVISION SIX OF THIS
SECTION AND PARAGRAPH (B) OF THIS SUBDIVISION. A TAXPAYER WHICH DOES NOT
MAKE THIS ELECTION BECAUSE IT HAS NOT RECEIVED ANY EXEMPT UNITARY CORPO-
RATION  DIVIDENDS  WILL  NOT  BE  PRECLUDED  FROM  MAKING  THOSE   OTHER
ELECTIONS.
  (D)  IF  THE  TAXPAYER  ATTRIBUTES INTEREST DEDUCTIONS TO OTHER EXEMPT
INCOME AND THE AMOUNT SUBTRACTED EXCEEDS OTHER EXEMPT INCOME, THE EXCESS
OF THE INTEREST DEDUCTIONS OVER OTHER EXEMPT INCOME MUST BE  ADDED  BACK
TO ENTIRE NET INCOME. IN NO CASE SHALL OTHER EXEMPT INCOME EXCEED ENTIRE
NET INCOME.
  (E)  OTHER EXEMPT INCOME SHALL NOT INCLUDE ANY AMOUNT TREATED AS DIVI-
DENDS PURSUANT TO SECTION SEVENTY-EIGHT OF THE INTERNAL REVENUE CODE.
  7. (a) The term  "business  capital"  means  all  assets,  other  than
[subsidiary capital,] investment capital and stock issued by the taxpay-
er,  less liabilities not deducted from [subsidiary or] investment capi-
tal [except that cash on hand and on deposit shall be treated as invest-
ment capital  or  as  business  capital  as  the  taxpayer  may  elect].
BUSINESS  CAPITAL  SHALL INCLUDE ONLY THOSE ASSETS THE INCOME OR EXPENSE
OF WHICH ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED

S. 6359--A                          9                         A. 8559--A

IF  NOT  FULLY  DEPRECIATED  OR EXPENSED OR DEPRECIATED OR EXPENSED TO A
NOMINAL AMOUNT) IN THE COMPUTATION OF ENTIRE NET INCOME FOR THE  TAXABLE
YEAR.
  (b)  Provided, however, "business capital" shall not include assets to
the extent employed for  the  purpose  of  generating  income  which  is
excluded  from entire net income pursuant to the provisions of paragraph
(c-1) of subdivision nine of this section and shall be computed  without
regard  to  liabilities  directly  or  indirectly  attributable  to such
assets, but only if air carriers organized  in  the  United  States  and
operating  in the foreign country or countries in which the taxpayer has
its major base of operations and in which it is organized,  resident  or
headquartered  (if  not  in  the same country as its major base of oper-
ations) are not subject to any tax  based  on  or  measured  by  capital
imposed  by  such foreign country or countries or any political subdivi-
sion thereof, or if taxed, are provided an exemption, equivalent to that
provided for herein, from any  tax  based  on  or  measured  by  capital
imposed  by  such  foreign  country  or  countries and from any such tax
imposed by any political subdivision thereof[;].
  8. The term "business income" means entire net income minus investment
income[;] AND OTHER EXEMPT INCOME. IN NO EVENT SHALL THE SUM OF  INVEST-
MENT  INCOME  AND  OTHER  EXEMPT INCOME EXCEED ENTIRE NET INCOME. IF THE
TAXPAYER MAKES THE ELECTION PROVIDED FOR IN SUBPARAGRAPH  ONE  OF  PARA-
GRAPH (A) OF SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS ARTI-
CLE,  THEN ALL INCOME FROM QUALIFIED FINANCIAL INSTRUMENTS SHALL CONSTI-
TUTE BUSINESS INCOME.
  8-A. Provided, however, that with respect to a DISC or a former  DISC,
the following provisions shall apply:
  (a)  investments in the stocks, bonds or other securities of a DISC or
any indebtedness from a DISC shall not be treated as [either  subsidiary
capital  or] investment capital under [subdivisions four or] SUBDIVISION
five of this section,
  (b) any amounts deemed distributed from a DISC or a former DISC  which
are  taxable  as  dividends  pursuant  to subsection (b) of section nine
hundred ninety-five of the internal revenue  code  of  nineteen  hundred
fifty-four  shall be treated as business income, except any such amounts
from a former DISC attributable to amounts includible  in  a  taxpayer's
entire  net  income  for  a prior taxable year under subparagraph (B) of
paragraph (i) of subdivision nine of this section shall be excluded from
entire net income,
  (c) any gain recognized for federal income tax purposes on the  dispo-
sition of stock in a DISC, and any gain recognized on the disposition of
stock  in a former DISC, includible in gross income as a dividend pursu-
ant to subsection (c) of section nine hundred ninety-five of the  inter-
nal  revenue  code  of  nineteen hundred fifty-four, shall be treated as
business income, and
  (d) except as provided in paragraph (i) of subdivision  nine  of  this
section,  any  actual distribution from a DISC or a former DISC shall be
treated as business income  except  an  actual  distribution  which  for
federal  income  tax  purposes is treated as made out of "other earnings
and profits" under section  nine  hundred  ninety-six  of  the  internal
revenue  code  of nineteen hundred fifty-four, in which case such actual
distribution shall be treated as [either subsidiary income  or]  invest-
ment income under this article.
  [8-B.  (a) The term "minimum taxable income" shall mean the entire net
income of the taxpayer for the taxable year:

S. 6359--A                         10                         A. 8559--A

  (1) increased by the amount of the federal items of tax preference set
forth in section fifty-seven of the  internal  revenue  code  (with  the
modifications  set  forth  in  paragraph (b) of this subdivision), which
items of tax preference shall have the same meaning and be  computed  in
the  same  manner  as  under section fifty-seven of the internal revenue
code,
  (2) determined with the federal adjustments described in paragraph (c)
of this subdivision, which adjustments shall have the same  meaning  and
be  computed  in  the same manner as under sections fifty-six and fifty-
eight of the internal revenue code,
  (3) increased by the net operating loss  deduction  otherwise  allowed
under paragraph (f) of subdivision nine of this section, and
  (4)  reduced, for taxable years beginning after nineteen hundred nine-
ty-three, by the alternative net operating loss deduction, as defined in
paragraph (d) of this subdivision.
  (b) The federal items of tax preference referred to hereinabove  shall
be modified by deducting "tax-exempt interest" and "accelerated depreci-
ation or amortization on certain property placed in service before Janu-
ary  1,  1987",  as  determined  under  paragraphs  five  and  seven  of
subsection (a) of section fifty-seven of the internal revenue code.
  (c) The adjustments referred to hereinabove shall be:
  (1) "Depreciation" as determined under paragraph one of subsection (a)
of section fifty-six of the internal revenue code. For purposes of  this
subparagraph,  the  depreciation  item  of  adjustment provided for here
shall not include any amount attributable to property for which the  tax
benefits of the accelerated cost recovery system are not available under
this  article by reason of subparagraph ten of paragraph (b) of subdivi-
sion nine of this section;
  (2) "Mining exploration and development  costs"  as  determined  under
paragraph  two  of  subsection  (a) of section fifty-six of the internal
revenue code;
  (3) "Treatment of certain long-term  contracts"  as  determined  under
paragraph  three  of subsection (a) of section fifty-six of the internal
revenue code;
  (4) "Installment sales of certain property" as determined under  para-
graph six of subsection (a) of section fifty-six of the internal revenue
code;
  (5) "Circulation expenditures of personal holding companies" as deter-
mined  under  subparagraph  (C)  of  paragraph  two of subsection (b) of
section fifty-six of the internal revenue code;
  (6) "Merchant marine capital construction funds" as  determined  under
paragraph  two  of  subsection  (c) of section fifty-six of the internal
revenue code;
  (7) "Disallowance  of  passive  activity  loss"  as  determined  under
subsection (b) of section fifty-eight of the internal revenue code; and
  (8)  "Adjusted  basis", as it appears in paragraph seven of subsection
(a) of section fifty-six of  the  internal  revenue  code,  but  without
taking  into  account  the  references  therein  to  paragraph  five  of
subsection (a) of section fifty-six of the internal revenue code.
  (d) The term "alternative net operating loss deduction" means the  net
operating  loss  deduction  allowed for the taxable year under paragraph
(f) of subdivision nine of this section, except as provided herein.
  (1)(A) The net operating loss for any year  beginning  after  nineteen
hundred  eighty-nine  which  is  included  in determining such deduction
shall be determined with the adjustments provided in subparagraph two of
paragraph (a) of this subdivision, and shall be reduced by the items  of

S. 6359--A                         11                         A. 8559--A

tax  preference  determined  under  subparagraph one of paragraph (a) of
this subdivision, attributable to such year. An item of  tax  preference
shall  be  taken into account only to the extent such item increased the
amount  of  the  net operating loss for the taxable year under paragraph
(f) of subdivision nine of this section.
  (B) In the case of loss years beginning before nineteen hundred  nine-
ty,  the  amount  of the net operating loss which may be carried over to
taxable years beginning after  nineteen  hundred  eighty-nine  shall  be
equal  to an amount which may be carried from the loss year to the first
taxable year of the taxpayer beginning after  nineteen  hundred  eighty-
nine.
  (2)  In  determining  the amount of such deduction, loss carryforwards
and carrybacks shall, subject to the provisions of subparagraph five  of
paragraph  (f)  of  subdivision nine of this section, be computed in the
manner set forth in paragraph two  of  subsection  (b)  of  section  one
hundred  seventy-two  of the internal revenue code, except that, for the
reference therein to taxable income,  there  shall  be  substituted  the
phrase  "ninety  percent  of  minimum  taxable income determined without
regard to the alternative net operating loss deduction".
  (3) The amount of such deduction shall not exceed  ninety  percent  of
minimum  taxable  income  determined  without  regard to such deduction,
provided, however, the term "ninety percent" shall be  read  as  "forty-
five  percent"  with  respect  to  taxable  years  beginning in nineteen
hundred ninety-four.
  (e) The tax commission may, whenever necessary in  order  to  properly
reflect  the  minimum taxable income of any taxpayer, determine the year
or period in which any item of income or deduction  shall  be  included,
without regard to the method of accounting employed by the taxpayer.
  (f) If the period covered by a report under this article is other than
the  period  covered by the report to the United States treasury depart-
ment, the minimum taxable income shall be appropriately modified  pursu-
ant to regulations promulgated by the tax commission.]
  9. The term "entire net income" means total net income from all sourc-
es,  which  shall  be  presumably  the same as the entire taxable income
[(but not alternative minimum taxable income)], WHICH, EXCEPT AS HEREIN-
AFTER PROVIDED IN THIS SUBDIVISION,
  (i) [which] the taxpayer is required to report to  the  United  States
treasury department, or
  (ii)  [which]  the  taxpayer would have been required to report to the
United States treasury department if it had not made an  election  under
subchapter s of chapter one of the internal revenue code, or
  (iii)  [which]  the  taxpayer,  in  the case of a corporation which is
exempt from federal income tax (other than the tax on unrelated business
taxable income imposed under section 511 of the internal  revenue  code)
but which is subject to tax under this article, would have been required
to  report  to  the  United  States  treasury  department  but  for such
exemption, [except as hereinafter provided, and subject to any modifica-
tion required by paragraphs (d) and (e) of subdivision three of  section
two hundred ten of this article] OR
  (IV)  IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAWS OF A COUN-
TRY OTHER THAN THE UNITED STATES,  IS  EFFECTIVELY  CONNECTED  WITH  THE
CONDUCT  OF  A  TRADE OR BUSINESS WITHIN THE UNITED STATES AS DETERMINED
UNDER SECTION 882 OF THE INTERNAL REVENUE CODE,
  (a) Entire net income shall not include:
  [(1) income, gains and losses from subsidiary  capital  which  do  not
include  the  amount of a recovery in respect of any war loss except for

S. 6359--A                         12                         A. 8559--A

such amounts from a former DISC which are  treated  as  business  income
under subdivision eight-A of this section,
  (2)  fifty  percent of dividends (A) other than from subsidiaries, and
(B) other than amounts treated  as  business  income  under  subdivision
eight-A  of  this  section,  on  shares  of  stock  which conform to the
requirements of subsection (c) of section two hundred forty-six  of  the
internal revenue code.]
  (3) bona fide gifts,
  (4) income and deductions with respect to amounts received from school
districts and from corporations and associations, organized and operated
exclusively  for  religious, charitable or educational purposes, no part
of the net earnings of which inures to the benefit of any private share-
holder or individual, for the operation of school buses,
  (5) (i) any refund or credit of a  tax  imposed  under  this  article,
article  twenty-three, or FORMER article thirty-two of this chapter, for
which tax no exclusion or  deduction  was  allowed  in  determining  the
taxpayer's  entire  net income under this article, article twenty-three,
or FORMER article thirty-two of this chapter for any prior year, (ii)  a
refund or credit of general corporation tax allowed by subdivision elev-
en of section 11-604 of the administrative code of the city of New York,
or  (iii)  any  refund  or  credit  of  a tax imposed under sections one
hundred eighty-three, one hundred eighty-three-a,  one  hundred  eighty-
four or one hundred eighty-four-a of this chapter, and
  (6)  any amount treated as dividends pursuant to section seventy-eight
of the internal revenue code and not [otherwise deductible under subpar-
agraphs one and two of this paragraph] TREATED AS  OTHER  EXEMPT  INCOME
UNDER SUBDIVISION SIX-A OF THIS SECTION;
  (7)  that portion of wages and salaries paid or incurred for the taxa-
ble year for which a deduction is not allowed pursuant to the provisions
of section two hundred eighty-C of the internal revenue code.
  [(8) in the case of a taxpayer who is separately or as a partner of  a
partnership  doing  an  insurance  business  as a member of the New York
insurance exchange described in section six thousand two hundred one  of
the  insurance  law, any item of income, gain, loss or deduction of such
business which is the taxpayer's distributive  or  pro  rata  share  for
federal  income  tax  purposes or which the taxpayer is required to take
into account separately for federal income tax purposes.]
  (9) for taxable years beginning after December thirty-first,  nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other
than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine,  any  amount  which  is  included  in  the
taxpayer's federal taxable income solely as a result of an election made
pursuant  to  the provisions of such paragraph eight as it was in effect
for agreements entered into prior to  January  first,  nineteen  hundred
eighty-four;
  (10) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other

S. 6359--A                         13                         A. 8559--A

than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine, any amount which the taxpayer  could  have
excluded  from  federal  taxable  income  had  it  not made the election
provided for in such paragraph eight as it was in effect for  agreements
entered into prior to January first, nineteen hundred eighty-four;
  (11)  the amount deductible pursuant to paragraph (j) of this subdivi-
sion; and
  (12) upon the disposition of property to which paragraph (j)  of  this
subdivision  applies,  the amount, if any, by which the aggregate of the
amounts described in subparagraph ten of paragraph (b) of this  subdivi-
sion  attributable to such property exceeds the aggregate of the amounts
described in paragraph (j) of  this  subdivision  attributable  to  such
property; and
  [(13)  if  the added tax provided for in either (i) former subdivision
two of section one hundred eighty-two of this chapter (relating to  real
estate  corporations)  or  (ii)  former subdivision one-a of section two
hundred nine of this chapter (relating to real estate corporations)  has
been  imposed  upon  the  taxpayer,  any  income  which has been used in
computing such tax.]
  (14) The amount deductible pursuant to paragraph  [(l)]  (I)  of  this
subsection.
  [(15)  In  the  case  of  an attorney-in-fact, with respect to which a
mutual insurance company, which  is  an  interinsurer  or  a  reciprocal
insurer  and  is subject to tax under subdivision (a) of section fifteen
hundred ten of this chapter, has made the election  provided  for  under
section  eight  hundred  thirty-five  of  the  Internal Revenue Code, an
amount equal to the excess, if any, of the amounts paid or  incurred  by
such  interinsurer  or  reciprocal  insurer  in  the taxable year to the
attorney-in-fact over the deduction  allowed  to  such  interinsurer  or
reciprocal insurer with respect to amounts paid or incurred in the taxa-
ble  year  to  the attorney-in-fact under subsection (b) of such section
eight hundred thirty-five of the Internal Revenue Code.]
  (16) In the case of a taxpayer subject to the modification provided by
subparagraph sixteen of paragraph (b) of this  subdivision,  the  amount
required  to  be recaptured pursuant to subsection (d) of section 179 of
the internal revenue code with  respect  to  property  upon  which  such
modification was based.
  (17)  FOR  TAXABLE  YEARS  BEGINNING  AFTER DECEMBER THIRTY-FIRST, TWO
THOUSAND TWO, THE AMOUNT DEDUCTIBLE PURSUANT TO PARAGRAPH (N-1) OF  THIS
SUBDIVISION.
  (18)  the  amount of income or gain included in federal taxable income
of a taxpayer that is a partner in a qualified entity or is a  qualified
entity  that  is  located both within and without a New York state inno-
vation hot spot, to the extent that the income or gain  is  attributable
to  the  operations  of a qualified entity at or as part of the New York
state innovation hot spot as provided in section  thirty-eight  of  this
chapter.
  (19)  THE  AMOUNT  COMPUTED  PURSUANT  TO PARAGRAPH (R) OR (S) OF THIS
SUBDIVISION, BUT NOT BOTH SUCH AMOUNTS.
  (b) Entire net income  shall  be  determined  without  the  exclusion,
deduction or credit of:
  (1) [the amount of any specific exemption or credit allowed in any law
of  the  United  States imposing any tax on or measured by the income of
corporations,] IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAW OF A
COUNTRY OTHER THAN THE UNITED STATES, EXCEPT AS TREATED AS OTHER  EXEMPT

S. 6359--A                         14                         A. 8559--A

INCOME  UNDER  SUBDIVISION  SIX-A  OF  THIS SECTION, (I) ANY PART OF ANY
INCOME FROM DIVIDENDS OR INTEREST ON ANY KIND OF  STOCK,  SECURITIES  OR
INDEBTEDNESS,  BUT  ONLY  IF  SUCH  INCOME  IS  TREATED  AS  EFFECTIVELY
CONNECTED  WITH  THE CONDUCT OF A TRADE OR BUSINESS IN THE UNITED STATES
PURSUANT TO SECTION 864 OF THE INTERNAL REVENUE CODE,  (II)  ANY  INCOME
EXEMPT  FROM  FEDERAL  TAXABLE INCOME UNDER ANY TREATY OBLIGATION OF THE
UNITED STATES, BUT ONLY IF SUCH INCOME WOULD BE TREATED  AS  EFFECTIVELY
CONNECTED  IN  ABSENCE OF SUCH EXEMPTION PROVIDED THAT SUCH TREATY OBLI-
GATION DOES NOT PRECLUDE THE TAXATION OF SUCH  INCOME  BY  A  STATE,  OR
(III) ANY INCOME WHICH WOULD BE TREATED AS EFFECTIVELY CONNECTED IF SUCH
INCOME WERE NOT EXCLUDED FROM GROSS INCOME PURSUANT TO SUBSECTION (A) OF
SECTION 103 OF THE INTERNAL REVENUE CODE;
  (2)  any  part of any income from dividends or interest on any kind of
stock, securities or indebtedness, [except as provided  in  clauses  (1)
and  (2)  of  paragraph (a) hereof] TREATED AS OTHER EXEMPT INCOME UNDER
SUBDIVISION SIX-A OF THIS SECTION,
  (3) taxes on or measured by profits or income paid or accrued  to  the
United States, any of its possessions or to any foreign country, includ-
ing  taxes  in  lieu  of  any of the foregoing taxes otherwise generally
imposed by any foreign country  or  by  any  possession  of  the  United
States,
  (3-a)  taxes  on  or  measured  by profits or income, or which include
profits or income as a measure, paid or accrued to any  other  state  of
the  United  States,  or  any  political  subdivision thereof, or to the
District of Columbia, including taxes expressly in lieu of  any  of  the
foregoing  taxes  otherwise  generally imposed by any other state of the
United States, or any political subdivision thereof, or the District  of
Columbia;
  (4)  taxes  imposed  under  this  article and article thirty-two AS IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN and sections  one
hundred  eighty-three,  one  hundred eighty-three-a, one hundred eighty-
four and one hundred eighty-four-a of this chapter,
  (4-a)(A) [the entire amount allowable as an exclusion or deduction for
stock transfer taxes imposed by article twelve of this chapter in deter-
mining the entire taxable income  which  the  taxpayer  is  required  to
report  to  the United States treasury department but only to the extent
that such taxes are incurred and paid  in  market  making  transactions,
(B)]  in those instances where a credit for the special additional mort-
gage recording tax credit is allowed under [paragraph (a)  of]  subdivi-
sion  [seventeen]  NINE of section two hundred [ten] TEN-B of this arti-
cle, the amount allowed as an exclusion or  deduction  for  the  special
additional  mortgage  recording  tax  imposed  by  subdivision  one-a of
section two hundred fifty-three  of  this  chapter  in  determining  the
entire  taxable  income  which the taxpayer is required to report to the
United States treasury department,  and  [(C)]  (B)  unless  the  credit
allowed  pursuant to subdivision [seventeen] NINE of section two hundred
[ten] TEN-B of this article is reflected in the computation of the  gain
or  loss so as to result in an increase in such gain or decrease of such
loss, for federal income tax purposes, from the sale or  other  disposi-
tion  of the property with respect to which the special additional mort-
gage recording tax imposed pursuant to subdivision one-a of section  two
hundred  fifty-three of this chapter was paid, the amount of the special
additional mortgage  recording  tax  imposed  by  subdivision  one-a  of
section two hundred fifty-three of this chapter which was paid and which
is  reflected  in  the computation of the basis of the property so as to
result in a decrease in such gain or increase in such loss  for  federal

S. 6359--A                         15                         A. 8559--A

income  tax  purposes from the sale or other disposition of the property
with respect to which such tax was paid.
  (6)  [in  the discretion of the tax commission, any amount of interest
directly or indirectly and  any  other  amount  directly  or  indirectly
attributable  as a carrying charge or otherwise to subsidiary capital or
to income, gains or losses from subsidiary capital] ANY  AMOUNT  ALLOWED
AS  A  DEDUCTION  FOR THE TAXABLE YEAR UNDER SECTION 172 OF THE INTERNAL
REVENUE CODE, INCLUDING CARRYOVERS  OF  DEDUCTIONS  FROM  PRIOR  TAXABLE
YEARS.
  [(7)  in the case of a taxpayer who is separately or as a partner of a
partnership doing an insurance business as a  member  of  the  New  York
insurance  exchange described in section six thousand two hundred one of
the insurance law, such taxpayer's distributive or pro rata share of the
allocated entire  net  income  of  such  business  as  determined  under
sections fifteen hundred three and fifteen hundred four of this chapter,
provided  however,  in  the  event such allocated entire net income is a
loss, such taxpayer's distributive or pro rata share of such loss  shall
not  be  subtracted  from federal taxable income in computing entire net
income under this subdivision.]
  (8) for taxable years beginning after December thirty-first,  nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other
than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine, any amount which the taxpayer claimed as a
deduction in computing its federal taxable income solely as a result  of
an  election  made pursuant to the provisions of such paragraph eight as
it was in effect for agreements entered into  prior  to  January  first,
nineteen hundred eighty-four;
  (9)  for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph  eight
of  subsection  (f)  of  section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty of a taxpayer principally engaged in the conduct of  aviation  (other
than  air  freight  forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years  beginning  in
nineteen  hundred  eighty-nine, any amount which the taxpayer would have
been required to include in  the  computation  of  its  federal  taxable
income had it not made the election permitted pursuant to such paragraph
eight  as  it was in effect for agreements entered into prior to January
first, nineteen hundred eighty-four;
  (10) in the case of property placed in service in taxable years begin-
ning before nineteen hundred ninety-four, for  taxable  years  beginning
after  December  thirty-first,  nineteen hundred eighty-one, except with
respect to property subject to the provisions  of  section  two  hundred
eighty-F   of  the  internal  revenue  code,  property  subject  to  the
provisions of section one hundred sixty-eight of  the  internal  revenue
code which is placed in service in this state in taxable years beginning
after  December  thirty-first, nineteen hundred eighty-four and property
of a taxpayer principally engaged in the conduct of aviation (other than
air freight forwarders acting as principal and like indirect air  carri-
ers)  which is placed in service before taxable years beginning in nine-

S. 6359--A                         16                         A. 8559--A

teen  hundred  [eight-nine]  EIGHTY-NINE,  the  amount  allowable  as  a
deduction determined under section one hundred sixty-eight of the inter-
nal revenue code;
  (11)  upon  the disposition of property to which paragraph (j) of this
subdivision applies, the amount, if any, by which the aggregate  of  the
amounts  described  in  such paragraph (j) attributable to such property
exceeds the aggregate of the amounts described in  subparagraph  ten  of
this paragraph attributable to such property.
  (15)  Real  property taxes paid on qualified agricultural property and
deducted in determining federal taxable income, to  the  extent  of  the
amount of the agricultural property tax credit allowed under subdivision
[twenty-two] ELEVEN of section two hundred [ten] TEN-B of this article.
  (16)  In  the  case  of  a taxpayer which is not an eligible farmer as
defined in paragraph (b) of subdivision [twenty-two] ELEVEN  of  section
two  hundred  [ten]  TEN-B  of this article, the amount of any deduction
claimed pursuant to section  179  of  the  internal  revenue  code  with
respect  to  a sport utility vehicle which is not a passenger automobile
as defined in paragraph 5 of subsection  (d)  of  section  280F  of  the
internal revenue code.
  (17)  for  taxable  years  beginning  after December thirty-first, two
thousand two, in the case of qualified property described  in  paragraph
two  of  subsection k of section 168 of the internal revenue code, other
than qualified resurgence zone property described in  paragraph  (q)  of
this subdivision, and other than qualified New York Liberty Zone proper-
ty  described  in  paragraph two of subsection b of section 1400L of the
internal revenue code (without regard to clause (i) of subparagraph  (C)
of  such paragraph), which was placed in service on or after June first,
two thousand three, the amount allowable as a  deduction  under  section
167 of the internal revenue code.
  (18) Premiums paid for environmental remediation insurance, as defined
in  section  twenty-three  of  this chapter, and deducted in determining
federal taxable income, to the extent of the amount of the environmental
remediation insurance credit allowed under such section twenty-three and
subdivision [thirty-five] NINETEEN of section two hundred [ten] TEN-B of
this article.
  (19) The amount of any  deduction  allowed  pursuant  to  section  one
hundred ninety-nine of the internal revenue code.
  (20) The amount of any federal deduction for taxes imposed under arti-
cle twenty-three of this chapter.
  (20-a) The amount of any federal deduction for the excise tax on tele-
communication services to the extent such taxes are used as the basis of
the  calculation of the tax-free NY area excise tax on telecommunication
services credit allowed under subdivision  [forty-eight]  FORTY-FOUR  of
section two hundred [ten] TEN-B of this article.
  (21)  The  amount  of any federal deduction for real property taxes to
the extent such taxes are used as the basis of the  calculation  of  the
real  property  tax  credit  for manufacturers allowed under subdivision
[forty-eight] FORTY-THREE of section two hundred  [ten]  TEN-B  of  this
article.
  [(c)  Entire  net  income  shall include income within and without the
United States;]
  (c-1)(1) Notwithstanding any other provision of this article,  in  the
case  of a taxpayer which is a foreign air carrier holding a foreign air
carrier permit issued by the United States department of  transportation
pursuant  to  section  four  hundred  two of the federal aviation act of
nineteen hundred fifty-eight, as amended, and which is  qualified  under

S. 6359--A                         17                         A. 8559--A

subparagraph two of this paragraph, entire net income shall not include,
and  shall  be  computed  without  the deduction of, amounts directly or
indirectly attributable to, (i) any income  derived  from  the  interna-
tional  operation  of  aircraft  as  described  in  and  subject  to the
provisions of section eight hundred eighty-three of the internal revenue
code, (ii) income without the United States which is  derived  from  the
operation  of aircraft, and (iii) income without the United States which
is of a type described in  subdivision  (a)  of  section  eight  hundred
eighty-one  of  the internal revenue code except that it is derived from
sources without the United  States.  Entire  net  income  shall  include
income  described in clauses (i), (ii) and (iii) of this subparagraph in
the case of taxpayers not described in the previous sentence.
  (2) A taxpayer is qualified under this subparagraph  if  air  carriers
organized  in  the United States and operating in the foreign country or
countries in which the taxpayer has its major base of operations and  in
which  it  is  organized,  resident or headquartered (if not in the same
country as its major base of operations) are not subject to  any  income
tax  or  other tax based on or measured by income or receipts imposed by
such foreign country or countries or any political subdivision  thereof,
or  if  so  subject to such tax, are provided an exemption from such tax
equivalent to that provided for herein.
  (c-2) Adjustments by qualified public utilities. (1) In the case of  a
taxpayer which is a qualified public utility, entire net income shall be
computed with the adjustments set forth in this paragraph.
  (2)  Definitions.  (A)  Qualified  public utility. The term "qualified
public utility" means a taxpayer which: (i)  on  December  thirty-first,
nineteen  hundred ninety-nine, was subject to the ratemaking supervision
of the state department of public service, and (ii) for the year  ending
on  December  thirty-first, nineteen hundred ninety-nine, was subject to
tax under former section one hundred eighty-six of this chapter.
  (B) Transition property. The term "transition property" means property
placed in service by the taxpayer before January  first,  two  thousand,
for  which a depreciation deduction is allowed under section one hundred
sixty-seven of the internal revenue code.
  (3) Federal depreciation disallowed. With respect to transition  prop-
erty,  the  deduction  for  federal income tax purposes for depreciation
shall not be allowed.
  (4) New York depreciation. With  respect  to  transition  property,  a
deduction  shall  be  allowed  for the depreciation expense shown on the
books and records of the taxpayer for the taxable year and determined in
accordance with generally accepted accounting principles.
  (5) Regulatory assets. A deduction shall be allowed for amounts recog-
nized as expense on the books and records of the taxpayer for the  taxa-
ble  year,  which  amounts were recognized as expense for federal income
tax purposes in a taxable year ending  on  or  before  December  thirty-
first,  nineteen  hundred ninety-nine, where: (A) such amounts represent
expenditures which, when made, were charged to a deferred debit  account
or  similar  asset account on the books and records of the taxpayer, and
where (B) the recognition of expense on the books  and  records  of  the
taxpayer  is  matched by revenue stemming from a procedure or adjustment
allowing the recovery of such expenditures, and where (C)  such  revenue
is recognized for federal income tax purposes in the taxable year.
  (6)  Basis for gain or loss. (A) Recognition transactions. (i) General
rule - book basis. Except as provided in subclause (ii) of this  clause,
where  transition property is sold or otherwise disposed of in the taxa-
ble year in a transaction of the type requiring recognition of  gain  or

S. 6359--A                         18                         A. 8559--A

loss  for  federal  income  tax  purposes, the basis for determining the
amount of such gain or loss under this article shall be the cost of  the
property less the accumulated depreciation on the property determined on
the  books  and  records  of  the  taxpayer in accordance with generally
accepted accounting principles.
  (ii) Qualified gain - New York basis.  Where  a  sale  or  disposition
described in subclause (i) of this clause results in recognition of gain
for  federal  income tax purposes, and where either (I) such recognition
occurs in a taxable year ending after nineteen hundred  ninety-nine  and
before  two  thousand ten, or (II) such recognition is with respect to a
nuclear electric generating facility,  the  basis  for  determining  the
amount of such gain under this article shall be the cost of the property
less  the aggregate of the New York depreciation deductions on the prop-
erty determined under subparagraph four of this paragraph.
  (iii) No conversion of gain to loss.  In  the  event  that  the  basis
determined  under subclause (ii) of this clause results in determination
of a loss on the sale or disposition of the property, no  gain  or  loss
shall  be  recognized  under  this  article with respect to such sale or
disposition.
  (B) Nonrecognition transactions. (i) Carryover basis. (I) where  tran-
sition property is disposed of ("original disposition") in a transaction
of  a type requiring deferral of recognition of gain or loss for federal
income tax purposes, and where (II) there is a subsequent recognition of
gain or loss for federal income tax purposes ("clause B gain or  loss"),
the  amount of which is determined by reference, in whole or in part, to
the basis of such transition property  ("underlying  transition  proper-
ty"),  then  (III)  the  amount of such clause B gain or loss under this
article shall be adjusted as provided in subclause (ii) or (iii) of this
clause.
  (ii) General rule - book  basis  adjustment.  Except  as  provided  in
subclause  (iii)  of  this  clause, the amount of clause B gain shall be
reduced, or the amount of clause B loss  increased,  by  the  amount  by
which  the  book basis of the underlying transition property on the date
of original disposition (determined using the  provisions  of  subclause
(i)  of  clause (A) of this subparagraph) exceeds the federal income tax
basis of such property on such date.
  (iii) Qualified gain - New York basis adjustment. Where clause B  gain
either  (I) occurs in a taxable year ending after nineteen hundred nine-
ty-nine and before two thousand ten, or (II) is with respect to a nucle-
ar electric generating facility, the amount  of  such  gain  under  this
article shall be reduced, but not below zero, by the amount by which the
New  York  basis  of  the  underlying transition property on the date of
original disposition (determined using the provisions of subclause  (ii)
of clause (A) of this subparagraph) exceeds the federal income tax basis
of such property on such date.
  (iv)  Application  to  replacement  property and transferee taxpayers.
This clause shall apply whether the clause B gain or loss: (I)  is  with
respect  to either transition property or depreciable property the basis
of which is determined by reference to transition property, or  (II)  is
recognized  by  either a qualified public utility or by a taxpayer which
is a transferee of transition property (whether or not  such  transferee
is  a qualified public utility, notwithstanding subparagraph one of this
paragraph).
  (c-3) Depreciation adjustments by qualified power producers and  pipe-
line  companies.  (1)  In  the  case of a qualified taxpayer, entire net

S. 6359--A                         19                         A. 8559--A

income shall be computed with the depreciation adjustments set forth  in
this paragraph.
  (2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer"
means a qualified power producer or a qualified pipeline.
  (B)  Qualified  power  producer.  The  term "qualified power producer"
means a taxpayer which: (i) on December thirty-first,  nineteen  hundred
ninety-nine,  was not subject to the ratemaking supervision of the state
department of public service, and (ii) for the year ending  on  December
thirty-first,  nineteen  hundred  ninety-nine,  was subject to tax under
former section one hundred eighty-six of this chapter on account of  its
being principally engaged in the business of supplying electricity.
  (C) Qualified pipeline. The term "qualified pipeline" means a taxpayer
which:  (i)  on December thirty-first, nineteen hundred ninety-nine, was
subject to the ratemaking supervision of either the federal energy regu-
latory commission or the state department of public  service,  and  (ii)
for  the  year ending on December thirty-first, nineteen hundred ninety-
nine, was subject to tax under sections one hundred eighty-three and one
hundred eighty-four of this chapter on account of its being  principally
engaged in the business of pipeline transmission.
  (D) Transition property. The term "transition property" means property
placed  in  service  by  a  qualified taxpayer before January first, two
thousand, for which a depreciation deduction is  allowed  under  section
one hundred sixty-seven of the internal revenue code.
  (3)  Federal depreciation disallowed. With respect to transition prop-
erty, the deduction for federal income  tax  purposes  for  depreciation
shall not be allowed.
  (4)  New  York  depreciation.  With  respect to transition property, a
deduction shall be allowed for  the  depreciation  expense  computed  as
provided  in this subparagraph. (A) All transition property shown on the
books and records of the taxpayer on January first, two  thousand  shall
be  treated  as  a  single asset placed in service on such date. The New
York basis for purposes of computing the depreciation deduction on  such
single  asset  shall  be  the net book value of such transition property
determined on the first day of the federal taxable year  ending  in  two
thousand  (or  on  the  date  any such property is placed in service, if
later) adjusted as provided in clause (B) of this subparagraph.
  (B) If transition property is sold or otherwise disposed of,  the  New
York basis of the single asset shall be reduced on the date of such sale
or  disposition  by the amount of the adjusted federal tax basis of such
property on such date.
  (C) The New York depreciation deduction allowed for any  taxable  year
with  respect to such single asset shall be computed using the straight-
line method, a twenty-year life, and a salvage value of zero.
  (D) For purposes of this subparagraph, the term "net book value" means
cost reduced by accumulated depreciation shown on the books and  records
of the taxpayer and determined, in the case of a qualified power produc-
er,  in accordance with generally accepted accounting principles; and in
the case of a qualified pipeline,  in  accordance  with  the  taxpayer's
regulatory  reports  filed with the federal energy regulatory commission
or state department of public service.
  (d) The [tax commission] COMMISSIONER may, whenever necessary in order
properly to reflect the entire net income of any taxpayer, determine the
year or period in which  any  item  of  income  or  deduction  shall  be
included,  without  regard  to  the method of accounting employed by the
taxpayer[;].

S. 6359--A                         20                         A. 8559--A

  (e) The entire net income of any bridge commission created by  act  of
congress  to  construct  a bridge across an international boundary means
its gross income less the expense of maintaining and operating its prop-
erties, the annual interest upon its bonds and  other  obligations,  and
the  annual  charge  for  the retirement of such bonds or obligations at
maturity[;].
  [(f) A net operating loss deduction shall be allowed  which  shall  be
presumably  the  same  as the net operating loss deduction allowed under
section one hundred seventy-two of the internal revenue code,  or  which
would  have  been allowed if the taxpayer had not made an election under
subchapter s of chapter one of the internal revenue code, except that in
every instance where such deduction is allowed under this article:
  (1) any net operating loss  included  in  determining  such  deduction
shall  be  adjusted to reflect the inclusions and exclusions from entire
net income required by paragraphs (a), (b) and (g) hereof,
  (2) such deduction shall not include any net operating loss  sustained
during  any  taxable  year  beginning  prior  to January first, nineteen
hundred sixty-one, or during any taxable year in which the taxpayer  was
not subject to the tax imposed by this article,
  (3) such deduction shall not exceed the deduction for the taxable year
allowed  under  section  one hundred seventy-two of the internal revenue
code, or the deduction for  the  taxable  year  which  would  have  been
allowed  if  the taxpayer had not made an election under subchapter s of
chapter one of the internal revenue code,
  (4) in the case of a New York S corporation, such deduction shall  not
include  any  net  operating  loss sustained during a New York C year or
during a New York S year beginning prior to nineteen hundred ninety, and
in the case of a New  York  C  corporation,  such  deduction  shall  not
include  any  net  operating  loss  sustained  during a New York S year,
provided, however, a New York S year shall be treated as a taxable  year
for  purposes  of determining the number of taxable years to which a net
operating loss may be carried back or carried forward, and
  (5) the net operating loss deduction allowed under section one hundred
seventy-two of the internal revenue code  shall  for  purposes  of  this
paragraph  be  determined  as  if  the  taxpayer  had elected under such
section to relinquish the entire carryback period with  respect  to  net
operating  losses, except with respect to the first ten thousand dollars
of each of such losses, sustained during taxable years ending after June
thirtieth, nineteen hundred eighty-nine.
  (g) For taxable years commencing  prior  to  January  first,  nineteen
hundred eighty-seven, at the election of the taxpayer, a deduction shall
be allowed for expenditures paid or incurred during the taxable year for
the  construction,  reconstruction,  erection  or  improvement of either
industrial waste treatment facilities or air pollution  control  facili-
ties,  or,  with  respect to taxable years beginning on or after January
first, nineteen hundred seventy-seven and before January first, nineteen
hundred eighty-one, industrial waste treatment controlled process facil-
ities or air pollution controlled process facilities.
  (1) (A) (1) The term "industrial  waste  treatment  facilities"  shall
mean  facilities  for  the treatment, neutralization or stabilization of
industrial waste and other wastes (as the terms "industrial  waste"  and
"other  wastes"  are  defined  in  section  17-0105 of the environmental
conservation law) from a point immediately preceding the point  of  such
treatment,  neutralization  or  stabilization  to the point of disposal,
including the necessary pumping and transmitting facilities.

S. 6359--A                         21                         A. 8559--A

  (2) The term "industrial waste treatment controlled process  facility"
shall mean such portion of the cost of an industrial production facility
designed  for  the  purpose  of  obviating the need for industrial waste
treatment facilities as defined in item one  of  this  clause  as  shall
exceed the cost of an industrial production facility of equal production
capacity  which  if constructed would require industrial waste treatment
facilities to meet emission standards in compliance with the  provisions
of the environmental conservation law and the codes, rules, regulations,
permits  or orders issued pursuant thereto but only to the extent of the
cost of such industrial waste treatment facilities.
  (B) (1) The term "air pollution control facilities" shall mean facili-
ties which remove, reduce, or render less noxious air contaminants emit-
ted from an air contamination source (as the terms "air contaminant" and
"air contamination source" are defined in section 19-0107 of  the  envi-
ronmental conservation law) from a point immediately preceding the point
of  such  removal,  reduction  or rendering to the point of discharge of
air, meeting emission standards as  established  by  the  department  of
environmental  conservation, but excluding such facilities installed for
the primary purpose of salvaging materials which are usable in the manu-
facturing process or are marketable and excluding those facilities which
rely for their efficacy on dilution, dispersion or assimilation  of  air
contaminants  in the ambient air after emission. Such term shall further
include flue gas desulfurization equipment and attendant sludge disposal
facilities, fluidized bed boilers, precombustion coal  cleaning  facili-
ties  or  other  facilities that conform with this subdivision and which
comply with the provisions of the state acid deposition control act  set
forth  in  title nine of article nineteen of the environmental conserva-
tion law.
  (2) The term "air pollution controlled process  facility"  shall  mean
such  portion  of the cost of an industrial production facility designed
for the purpose of obviating the need for air pollution control  facili-
ties  as  defined in item one of this clause as shall exceed the cost of
an industrial production facility of equal productive capacity which  if
constructed  would  require  air  pollution  control facilities to inert
emission standards as established pursuant to  title  three  of  article
nineteen of the environmental conservation law but only to the extent of
the cost of such air pollution control facilities.
  (2) However, such deduction shall be allowed only
  (A)  with  respect to tangible property which is depreciable, pursuant
to section one hundred sixty-seven of the internal revenue code,  having
a  situs in this state and used in the taxpayer's trade or business, the
construction, reconstruction, erection or improvement of which,  in  the
case  of industrial waste treatment facilities, is initiated on or after
January first, nineteen hundred sixty-five or which, in the case of  air
pollution  control  facilities,  is initiated on or after January first,
nineteen hundred sixty-six, or which in the  case  of  industrial  waste
treatment  controlled  process  facilities  or  air pollution controlled
process facilities is initiated on and  after  January  first,  nineteen
hundred seventy-seven, and
  (B) on condition that such facilities have been certified by the state
commissioner  of  environmental conservation or his designated represen-
tative, pursuant to section 19-0309 of  the  environmental  conservation
law,  as  complying  with  applicable  provisions  of  the environmental
conservation law, the public health law, the  state  sanitary  code  and
codes,  rules,  regulations,  permits or orders issued pursuant thereto,
and

S. 6359--A                         22                         A. 8559--A

  (C) on condition that entire net income for the taxable year  and  all
succeeding  taxable  years  be  computed without any deductions for such
expenditures or for depreciation or amortization of  the  same  property
other  than  the deductions allowed by this paragraph (g), except to the
extent  that  the  basis  of the property may be attributable to factors
other than such expenditures, or in case a deduction is allowable pursu-
ant to this paragraph for only a part of such expenditures, on condition
that any deduction allowed for federal  income  tax  purposes  for  such
expenditures or for depreciation or amortization of the same property be
proportionately  reduced  in computing entire net income for the taxable
year and all succeeding taxable years, and
  (D) where the election provided for in paragraph  (d)  of  subdivision
three  of section two hundred ten of this chapter has not been exercised
in respect to the same property.
  (3) (A) If expenditures in respect to an  industrial  waste  treatment
facility,  an air pollution control facility, an industrial waste treat-
ment controlled process facility or an air pollution controlled  process
facility  have  been deducted as provided herein and if within ten years
from the end of the taxable year in which  such  deduction  was  allowed
such  property  or  any  part thereof is used for the primary purpose of
salvaging materials which are usable in the manufacturing process or are
marketable, the taxpayer shall report such change of use in  its  report
for  the  first taxable year during which it occurs, and the tax commis-
sion may recompute the  tax  for  the  year  or  years  for  which  such
deduction  was  allowed  and  any  carryback  or carryover year, and may
assess any additional tax resulting from such recomputation  within  the
time  fixed  by  paragraph nine of subsection (c) of section ten hundred
eighty-three of this chapter.
  (B) If a deduction is allowed as herein provided for expenditures paid
or incurred during any taxable year on the basis of a temporary  certif-
icate  of  compliance  issued pursuant to the environmental conservation
law and if the taxpayer fails  to  obtain  a  permanent  certificate  of
compliance  upon completion of the facilities with respect to which such
temporary certificate was issued, the taxpayer shall report such failure
in its report for the taxable year  during  which  such  facilities  are
completed,  and the tax commission may recompute the tax for the year or
years for which such deduction was allowed and any carryback  or  carry-
over  year,  and  may  assess  any additional tax resulting from in such
recomputation within the time fixed by paragraph nine of subsection  (c)
of section ten hundred eighty-three.
  (C) If a deduction is allowed as herein provided for expenditures paid
or  incurred  during  any  taxable  year  in respect to an air pollution
control facility on the basis of  a  certificate  of  compliance  issued
pursuant  to  the  environmental conservation law and the certificate is
revoked pursuant to subdivision three of section 19-0309 of the environ-
mental conservation law, the tax commission may recompute  the  tax  for
the year or years for which the facility is not or was not in compliance
with  the  applicable  provisions of the environmental conservation law,
the state sanitary code or codes, rules, regulations, permits or  orders
promulgated  pursuant thereto, and for which a deduction was allowed, as
well as for any carryback or carryover year to which such deduction  was
carried,  and may assess any additional tax resulting from such recompu-
tation within the time fixed by paragraph  nine  of  subsection  (c)  of
section ten hundred eighty-three.
  (4)  In  any  taxable year when property is sold or otherwise disposed
of, with respect to which a deduction has been allowed pursuant to  this

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paragraph,  such  deduction  shall  be  disregarded in computing gain or
loss, and the gain or loss on the sale  or  other  disposition  of  such
property  shall  be  the  gain  or loss entering into the computation of
entire  taxable  income  which the taxpayer is required to report to the
United States treasury department for such taxable year.]
  (h) If the period covered by a report under this article is other than
the period covered by the report to the United States  treasury  depart-
ment,
  (1)  except  as provided in subparagraph two hereof, entire net income
shall be determined by multiplying the taxable income reported  to  such
department  (as  adjusted pursuant to the provisions of this article) by
the number of calendar months or major  parts  thereof  covered  by  the
report  under this article and dividing by the number of calendar months
or major parts thereof covered by the report to such department.  If  it
shall  appear that such method of determining entire net income does not
properly reflect the taxpayer's income during the period covered by  the
report  under  this  article, the [tax commission] COMMISSIONER shall be
authorized in its discretion to determine such entire net income  solely
on  the  basis of the taxpayer's income during the period covered by its
report under this article[;].
  (2) [in] IN the case of a  New  York  S  termination  year,  an  equal
portion of entire net income shall be assigned to each day of such year.
The  portion  of  such entire net income thereby assigned to the S short
year and the C short year shall be included in  the  respective  reports
for  the  S short year and the C short year under this article. However,
where paragraph three of subsection (s) of section six hundred twelve of
this chapter applies, the portion of such entire net income assigned  to
the  S  short year and the C short year shall be determined under normal
tax accounting rules.
  (i) With respect to a DISC which during any taxable year or  reporting
year  (1)  received  more  than five percent of its gross sales from the
sale of inventory or other property which it purchased from  its  stock-
holders,  (2)  received more than five percent of its gross rentals from
the rental of property which it purchased or rented from its  stockhold-
ers  or  (3) received more than five percent of its total receipts other
than sales and rentals from its stockholders, the  following  provisions
shall apply.
  (A)  For any taxable year in which sub-paragraph (B) of this paragraph
is in effect and not rendered invalid, a DISC  meeting  the  above  test
shall be exempt from all taxes imposed by this article.
  (B)  Supplemental to the provisions of subdivision five of section two
hundred eleven of this article, any taxpayer required to compute  a  tax
under  this  article, which during the taxable year being reported was a
stockholder in any DISC meeting the test prescribed in  this  paragraph,
shall  for any taxable year ending after December thirty-first, nineteen
hundred seventy-one adjust each item of its receipts,  expenses,  assets
and  liabilities,  as  otherwise  computed under this article, by adding
thereto its attributable share of each such DISC's  receipts,  expenses,
assets  and  liabilities  as  reportable by each such DISC to the United
States Treasury Department for its annual reporting period ending during
the current taxable year of such taxpayer; provided, however,  (1)  that
all transactions between the taxpayer and each such DISC shall be elimi-
nated  from  the  taxpayer's  adjusted  receipts,  expenses,  assets and
liabilities; (2) that the taxpayer's  entire  net  income  as  otherwise
computed  under this section, shall be reduced by subtracting the amount
of the deemed distribution of current income, if  any,  from  each  such

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DISC  already  included  in  the  entire  net income of such taxpayer by
virtue of having been included in its entire  taxable  income  for  that
taxable  year  as reported to the United States Treasury Department; and
(3)  that  in  the  event this paragraph should be rendered invalid, all
DISC's and their stockholders taxable hereunder shall be  taxed  instead
under the remaining portions of this article.
  (j)  in the case of property placed in service in taxable years begin-
ning before nineteen hundred ninety-four, for  taxable  years  beginning
after  December  thirty-first,  nineteen hundred eighty-one, except with
respect to property subject to the provisions  of  section  two  hundred
eighty-F  of  the  internal  revenue  code  and  property subject to the
provisions of section one hundred sixty-eight of  the  internal  revenue
code which is placed in service in this state in taxable years beginning
after  December thirty-first, nineteen hundred eighty-four, and provided
a deduction has not been excluded from entire  net  income  pursuant  to
subparagraph  eight  of  paragraph  (b)  of this subdivision, a taxpayer
shall be allowed with respect  to  property  which  is  subject  to  the
provisions  of  section  one hundred sixty-eight of the internal revenue
code the depreciation deduction  allowable  under  section  one  hundred
sixty-seven  of  the  internal  revenue  code as such section would have
applied to property placed in service on December thirty-first, nineteen
hundred eighty. This paragraph shall not apply to property of a taxpayer
principally engaged in the conduct of aviation (other than  air  freight
forwarders  acting as principal and like indirect air carriers) which is
placed in service before taxable years  beginning  in  nineteen  hundred
eighty-nine.
  (k)  QSSS.  (1)  New  York  S corporation. In the case of a New York S
corporation which is the parent of a qualified subchapter  S  subsidiary
(QSSS) with respect to a taxable year:
  (A) where the QSSS is not an excluded corporation,
  (i)  in  determining the entire net income of such parent corporation,
all assets, liabilities, income and deductions  of  the  QSSS  shall  be
treated  as  assets,  liabilities,  income  and deductions of the parent
corporation, and
  (ii) the QSSS shall be exempt from all taxes imposed by this  article,
and
  (B)  where  the QSSS is an excluded corporation, the entire net income
of the parent corporation shall be determined as  if  the  federal  QSSS
election had not been made.
  (2)  New  York  C corporation. In the case of a New York C corporation
which is the parent of a QSSS with respect to a taxable year:
  (A) where the QSSS is a taxpayer,
  (i) in determining the entire net income of such  parent  corporation,
all  assets,  liabilities,  income  and  deductions of the QSSS shall be
treated as assets, liabilities, income  and  deductions  of  the  parent
corporation, and
  (ii)  the QSSS shall be exempt from all taxes imposed by this article,
and
  (B) where the QSSS is not a taxpayer,
  (i) if the QSSS is not an excluded corporation, the parent corporation
may make a QSSS inclusion election to include all  assets,  liabilities,
income  and  deductions  of  the QSSS as assets, liabilities, income and
deductions of the parent corporation, and
  (ii) in the absence of such election, or where the QSSS is an excluded
corporation, the entire net income of the parent  corporation  shall  be
determined as if the federal QSSS election had not been made.

S. 6359--A                         25                         A. 8559--A

  (3)  Non-New  York  S  corporation  not  excluded. In the case of an S
corporation which is not a taxpayer and not an excluded corporation, and
which is the parent of a QSSS which is a taxpayer, the  shareholders  of
the parent corporation shall be entitled to make the New York S election
under subsection (a) of section six hundred sixty of this chapter.
  (A)  For  any  taxable  year for which such election is in effect, the
parent corporation shall be subject to tax under this article as  a  New
York S corporation, and the provisions of clause (A) of subparagraph one
of this paragraph shall apply.
  (B) For any taxable year for which such election is not in effect, the
QSSS shall be a New York C corporation, and the entire net income of the
QSSS  shall  be  determined as if the federal QSSS election had not been
made. For purposes of such determination, the taxable year of the parent
corporation shall constitute the taxable year of  the  QSSS,  excluding,
however, any portion of such year during which the QSSS is not a taxpay-
er.
  (4)  S  corporation excluded. In the case of an S corporation which is
an excluded corporation and which is the parent of a  QSSS  which  is  a
taxpayer,  the QSSS shall be a New York C corporation and the provisions
of clause (B) of subparagraph three of this paragraph shall apply.
  (5) Excluded corporation. The  term  "excluded  corporation"  means  a
corporation  subject  to  tax  under  sections  one hundred eighty-three
through one hundred eighty-six, inclusive, or  article  [thirty-two  or]
thirty-three  of  this  chapter, or a foreign corporation not taxable by
this state which, if it were taxable, would be subject to tax under  any
of such sections or [articles] ARTICLE.
  (6)  Taxpayer.  For  purposes  of  this paragraph, the term "taxpayer"
means a parent corporation or QSSS subject to tax  under  this  article,
determined without regard to the provisions of this paragraph.
  (7)  QSSS  inclusion  election.  The  election  under subclause (i) of
clause (B) of subparagraph two of this paragraph shall be effective  for
the  taxable year for which made and for all succeeding taxable years of
the corporation until such election is terminated. An election or termi-
nation shall be made on such form and in such manner as the commissioner
may prescribe by regulation or instruction.
  (l) Emerging technology investment deferral. In the case of  any  sale
of a qualified emerging technologies investment held for more than thir-
ty-six months and with respect to which the taxpayer elects the applica-
tion  of this paragraph, gain from such sale shall be recognized only to
the extent that the amount realized on such sale exceeds the cost of any
qualified emerging technologies investment  purchased  by  the  taxpayer
during  the three hundred sixty-five-day period beginning on the date of
such sale, reduced by any portion of such  cost  previously  taken  into
account under this paragraph. For purposes of this paragraph the follow-
ing shall apply:
  (1)  A  qualified investment is stock of a corporation or an interest,
other than as a creditor, in a partnership or limited liability  company
that was acquired by the taxpayer as provided in Internal Revenue Code S
1202(c)(1)(B),  except  that  the  reference to the term "stock" in such
section shall be read as "investment," or by the taxpayer from a  person
who had acquired such stock or interest in such a manner.
  (2)  A qualified emerging technology investment is a qualified invest-
ment, that was held by the taxpayer for at least thirty-six months, in a
company defined in paragraph (c) of subdivision one of  section  thirty-
one  hundred  two-e  of the public authorities law or an investment in a
partnership or limited liability company that is taxed as a  partnership

S. 6359--A                         26                         A. 8559--A

to the extent that such partnership or limited liability company invests
in qualified emerging technology companies.
  (3)  For  purposes  of  determining whether the nonrecognition of gain
under this subsection  applies  to  a  qualified  emerging  technologies
investment  that is sold, the taxpayer's holding period for such invest-
ment  and  the  qualified  emerging  technologies  investment  that   is
purchased  shall be determined without regard to Internal Revenue Code S
1223.
  (m) Amounts deferred. The amount deferred under paragraph (l) of  this
subdivision shall be added to entire net income when the reinvestment in
the  New  York  qualified  emerging technology company which qualified a
taxpayer for such deferral is sold.
  [(n) Qualified gas transportation contracts.
  (1) Any tax paid under this article allocable to receipts attributable
to a "qualified gas transportation contract" shall  be  deemed  to  have
been paid under article nine of this chapter for all purposes of law for
taxable  years  commencing  on  or  after  January  first, two thousand,
computed as hereinafter provided, if all of the following conditions are
met:
  (i) For periods ending prior  to  January  first,  two  thousand,  the
taxpayer  paid  the  franchise tax due under section one hundred eighty-
four of this chapter.
  (ii) For the taxable year, all  of  the  receipts  from  the  pipeline
transportation  of natural gas attributable to the taxpayer and included
in the taxpayer's entire net income (without regard to  this  paragraph)
are  solely from the transportation of natural gas for wholesale custom-
ers and commercial retail customers.
  (iii) The taxpayer's franchise tax liability under  this  article  for
the  taxable  year (computed without regard to this paragraph) is deter-
mined under paragraph (a) of subdivision one of section two hundred  ten
of  this  article,  and such tax liability (without regard to this para-
graph) is greater than the liability the taxpayer  would  have  incurred
under  sections  one hundred eighty-three and one hundred eighty-four of
this chapter (as such sections existed on December  thirty-first,  nine-
teen hundred ninety-nine) based on the same taxable period.
  (iv)  The  taxpayer  is  a  party  to  a "qualified gas transportation
contract," as defined herein.
  (2) The provisions of this paragraph shall apply only for the  taxable
years during which such qualified gas transportation contract is in full
force  and  effect, and shall apply only to the receipts of the taxpayer
less any expenses of the taxpayer (but not less than zero),  during  the
taxable  year,  to  the  extent included in entire net income, which are
attributable  to  any  such  qualified  gas  transportation   contracts.
Provided,  further,  in  any event, the characterization hereunder shall
expire and be of no further force and effect for taxable years  commenc-
ing on or after January first, two thousand fifteen.
  (3)  The  term  "qualified  gas  transportation contract" shall mean a
service agreement for the transportation of natural gas for an  end-user
which  is a qualified cogeneration facility with a rated capacity of one
thousand megawatts or more, which (i) was entered  into  before  January
first, two thousand, and was in full force and effect and binding on the
parties  thereto as of such date, (ii) as originally executed, was for a
term of at least twenty years, and (iii) the terms of which prohibit the
pass-through to such customer of the franchise tax  imposed  under  this
article,  while  allowing the recovery of the gross earnings tax imposed
under section one hundred eighty-four of this chapter. A contract  shall

S. 6359--A                         27                         A. 8559--A

not  qualify as a qualified gas transportation contract if there is: (i)
any renewal or extension of an otherwise  qualified  gas  transportation
contract  occurring on or after January first, two thousand, or (ii) any
material amendment to, or supplementation of, an otherwise qualified gas
transportation  contract on or after such date. Such renewal, extension,
or material amendment or supplementation shall have the same  force  and
effect  of terminating the characterization hereunder as if the qualify-
ing contract had expired by its own terms.
  (o)] (N-1) For taxable years beginning  after  December  thirty-first,
two  thousand  two, in the case of qualified property described in para-
graph two of subsection k of section 168 of the internal  revenue  code,
other than qualified resurgence zone property described in paragraph (q)
of  this  subdivision,  and  other  than qualified New York Liberty Zone
property described in paragraph two of subsection b of section 1400L  of
the  internal revenue code (without regard to clause (i) of subparagraph
(C) of such paragraph), which was placed in service  on  or  after  June
first,  two  thousand three, a taxpayer shall be allowed with respect to
such property the depreciation deduction allowable under section 167  of
the  internal  revenue  code  as such section would have applied to such
property had it been acquired by the taxpayer on  September  tenth,  two
thousand one.
  (o)  Related  members  expense  add back. (1) Definitions. (A) Related
member. "Related member" means a related person as defined  in  subpara-
graph  (c)  of paragraph three of subsection (b) of section four hundred
sixty-five of the internal revenue code,  except  that  "fifty  percent"
shall be substituted for "ten percent".
  (B)  Effective  rate  of tax. "Effective rate of tax" means, as to any
state or U.S. possession, the maximum statutory rate of tax  imposed  by
the  state or possession on or measured by a related member's net income
multiplied by the apportionment percentage, if any,  applicable  to  the
related member under the laws of said jurisdiction. For purposes of this
definition, the effective rate of tax as to any state or U.S. possession
is  zero  where  the  related  member's net income tax liability in said
jurisdiction is reported on a combined or consolidated return  including
both the taxpayer and the related member where the reported transactions
between  the  taxpayer  and the related member are eliminated or offset.
Also, for purposes of this definition, when computing the effective rate
of tax for a jurisdiction in which a  related  member's  net  income  is
eliminated or offset by a credit or similar adjustment that is dependent
upon  the related member either maintaining or managing intangible prop-
erty or collecting interest income in  that  jurisdiction,  the  maximum
statutory rate of tax imposed by said jurisdiction shall be decreased to
reflect  the statutory rate of tax that applies to the related member as
effectively reduced by such credit or similar adjustment.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by  the  commissioner,  and  include  amounts  allowable   as   interest
deductions under section one hundred sixty-three of the internal revenue
code  to the extent such amounts are directly or indirectly for, related
to or in connection with the acquisition, use,  maintenance  or  manage-
ment,  ownership,  sale,  exchange  or  disposition  of  such intangible
assets.

S. 6359--A                         28                         A. 8559--A

  (D) Valid Business Purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in a combined report with a related member pursuant to [subdivision four
of]  section two hundred [eleven] TEN-C of this article, for the purpose
of computing entire net income or  other  applicable  taxable  basis,  a
taxpayer  must  add  back  royalty payments directly or indirectly paid,
accrued, or incurred in connection with one or more direct  or  indirect
transactions with one or more related members during the taxable year to
the extent deductible in calculating federal taxable income.
  (B)  Exceptions.  (i)  The adjustment required in this paragraph shall
not apply to the portion of the royalty payment that the taxpayer estab-
lishes, by clear and convincing evidence of the type  and  in  the  form
specified  by the commissioner, meets all of the following requirements:
(I) the related member was subject to tax in this state or another state
or possession of the United States or a foreign nation or some  combina-
tion  thereof  on  a  tax  base  that included the royalty payment paid,
accrued or incurred by the taxpayer; (II) the related member during  the
same  taxable year directly or indirectly paid, accrued or incurred such
portion to a person that is not a related member; and (III)  the  trans-
action  giving  rise to the royalty payment between the taxpayer and the
related member was undertaken for a valid business purpose.
  (ii) The adjustment required in this paragraph shall not apply if  the
taxpayer  establishes,  by clear and convincing evidence of the type and
in the form specified by the commissioner, that: (I) the related  member
was  subject  to  tax  on or measured by its net income in this state or
another state or possession of the United  States  or  some  combination
thereof;  (II)  the  tax  base for said tax included the royalty payment
paid, accrued or incurred by  the  taxpayer;  and  (III)  the  aggregate
effective  rate  of tax applied to the related member in those jurisdic-
tions is no less than eighty percent of the statutory rate of  tax  that
applied  to  the  taxpayer under section two hundred ten of this article
for the taxable year.
  (iii) [The adjustment required in this paragraph shall  not  apply  if
the  taxpayer  establishes, by clear and convincing evidence of the type
and in the form specified by the commissioner,  that:  (I)  the  royalty
payment  was  paid,  accrued  or  incurred to a related member organized
under the laws of a country other  than  the  United  States;  (II)  the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the  related member was subject to tax in a foreign nation on a tax base
that included the royalty payment  paid,  accrued  or  incurred  by  the
taxpayer;  (IV)  the  related  member's  income from the transaction was
taxed in such country at an effective rate of tax at least equal to that
imposed by this state; and (V) the royalty payment was paid, accrued  or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)] The adjustment required in this paragraph shall not apply if the
taxpayer and the commissioner agree in writing to the application or use
of alternative adjustments or computations. The commissioner may, in his

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or  her  discretion,  agree  to  the  application  or use of alternative
adjustments or computations when he or she concludes that in the absence
of such agreement the income of  the  taxpayer  would  not  be  properly
reflected.
  (p) For taxable years beginning after December thirty-first, two thou-
sand  two,  upon  the  disposition  of property to which paragraph [(o)]
(N-1) of this subdivision applies, the amount of any gain or loss inclu-
dible in entire net income shall be adjusted to reflect  the  inclusions
and exclusions from entire net income pursuant to subparagraph seventeen
of  paragraph  (a)  and  subparagraph seventeen of paragraph (b) of this
subdivision attributable to such property.
  (q) For purposes of paragraphs [(o)] (N-1) and (p)  of  this  subdivi-
sion,  qualified  resurgence zone property shall mean qualified property
described in paragraph two of subsection k of section 168 of the  inter-
nal  revenue code substantially all of the use of which is in the resur-
gence zone, as defined below, and is in the active conduct of a trade or
business by the taxpayer in such zone, and the original use of which  in
the  resurgence  zone commences with the taxpayer after December thirty-
first, two thousand two. The resurgence zone shall mean the area of  New
York county bounded on the south by a line running from the intersection
of  the Hudson River with the Holland Tunnel, and running thence east to
Canal Street, then running along the centerline of Canal Street  to  the
intersection  of the Bowery and Canal Street, running thence in a south-
easterly direction diagonally across  Manhattan  Bridge  Plaza,  to  the
Manhattan Bridge and thence along the centerline of the Manhattan Bridge
to  the  point where the centerline of the Manhattan Bridge would inter-
sect with the easterly bank of the East River, and bounded on the  north
by  a  line  running  from the intersection of the Hudson River with the
Holland Tunnel and running thence north along West Avenue to the  inter-
section  of  Clarkson  Street  then running east along the centerline of
Clarkson Street to the intersection of Washington Avenue,  then  running
south  along  the centerline of Washington Avenue to the intersection of
West Houston Street, then east along  the  centerline  of  West  Houston
Street,  then at the intersection of the Avenue of the Americas continu-
ing east along the centerline of East Houston  Street  to  the  easterly
bank of the East River.
  (R)  SUBTRACTION  MODIFICATION  FOR QUALIFIED RESIDENTIAL LOAN PORTFO-
LIOS. (1)(A) A TAXPAYER THAT IS EITHER A THRIFT INSTITUTION  AS  DEFINED
IN SUBPARAGRAPH THREE OF THIS PARAGRAPH OR A QUALIFIED COMMUNITY BANK AS
DEFINED  IN  SUBPARAGRAPH  TWO  OF PARAGRAPH (S) OF THIS SUBDIVISION AND
MAINTAINS A QUALIFIED RESIDENTIAL LOAN PORTFOLIO AS DEFINED IN  SUBPARA-
GRAPH TWO OF THIS PARAGRAPH SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING
ENTIRE NET INCOME THE AMOUNT, IF ANY, BY WHICH (I) THIRTY-TWO PERCENT OF
ITS  ENTIRE  NET  INCOME  DETERMINED  WITHOUT  REGARD  TO THIS PARAGRAPH
EXCEEDS (II) THE AMOUNTS DEDUCTED BY THE TAXPAYER PURSUANT  TO  SECTIONS
166  AND  585  OF THE INTERNAL REVENUE CODE LESS ANY AMOUNTS INCLUDED IN
FEDERAL TAXABLE INCOME AS A RESULT OF A RECOVERY OF A LOAN.
  (B)(I) IF THE TAXPAYER IS IN A COMBINED REPORT, THIS DEDUCTION WILL BE
COMPUTED ON A COMBINED BASIS. IN THAT INSTANCE, THE ENTIRE NET INCOME OF
THE COMBINED GROUP FOR PURPOSES OF THIS PARAGRAPH SHALL BE MULTIPLIED BY
A FRACTION, THE NUMERATOR OF WHICH IS THE AVERAGE TOTAL  ASSETS  OF  ALL
THE  THRIFT  INSTITUTIONS  OR  QUALIFIED COMMUNITY BANKS INCLUDED IN THE
COMBINED REPORT AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS
OF ALL THE CORPORATIONS INCLUDED IN THE COMBINED REPORT.
  (II) MEASUREMENT OF ASSETS FOR PURPOSES  OF  THIS  CLAUSE.  (I)  TOTAL
ASSETS  ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE SHEET,

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COMPUTED IN THE SAME MANNER AS IS REQUIRED BY THE BANKING  REGULATOR  OF
THE TAXPAYERS INCLUDED IN THE COMBINED RETURN.
  (II)  ASSETS  WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH
ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED  IF  NOT
FULLY  DEPRECIATED  OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL
AMOUNT) IN THE COMPUTATION OF THE COMBINED GROUP'S ENTIRE NET INCOME FOR
THE TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTAN-
GIBLE ASSETS IDENTIFIED AS "GOODWILL".
  (III) TANGIBLE REAL AND PERSONAL PROPERTY, SUCH  AS  BUILDINGS,  LAND,
MACHINERY,  AND  EQUIPMENT SHALL BE VALUED AT COST. INTANGIBLE PROPERTY,
SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT BOOK VALUE.
  (IV)  INTERCORPORATE  STOCKHOLDINGS  AND  BILLS,  NOTES  AND  ACCOUNTS
RECEIVABLE,  AND  OTHER  INTERCORPORATE  INDEBTEDNESS BETWEEN THE CORPO-
RATIONS INCLUDED IN THE COMBINED REPORT SHALL BE ELIMINATED.
  (V) AVERAGE ASSETS ARE COMPUTED USING THE ASSETS MEASURED ON THE FIRST
DAY OF THE TAXABLE YEAR, AND ON THE LAST DAY OF EACH SUBSEQUENT  QUARTER
OF THE TAXABLE YEAR.
  (2)  QUALIFIED  RESIDENTIAL LOAN PORTFOLIO. (A) A TAXPAYER MAINTAINS A
QUALIFIED RESIDENTIAL LOAN PORTFOLIO IF AT LEAST SIXTY  PERCENT  OF  THE
AMOUNT  OF  THE  TOTAL  ASSETS  AT  THE CLOSE OF THE TAXABLE YEAR OF THE
THRIFT INSTITUTION OR QUALIFIED COMMUNITY BANK CONSISTS  OF  THE  ASSETS
DESCRIBED  IN  ITEMS (I) THROUGH (XII) OF THIS CLAUSE, WITH THE APPLICA-
TION OF THE RULE IN ITEM (XIII). IF  THE  TAXPAYER  IS  A  MEMBER  OF  A
COMBINED  GROUP, THE DETERMINATION OF WHETHER THERE IS A QUALIFIED RESI-
DENTIAL LOAN PORTFOLIO WILL BE MADE BY AGGREGATING  THE  ASSETS  OF  THE
THRIFT INSTITUTIONS OR QUALIFIED COMMUNITY BANKS THAT ARE MEMBERS OF THE
COMBINED GROUP.
  ASSETS:
  (I) CASH;
  (II)  OBLIGATIONS  OF  THE  UNITED  STATES  OR OF A STATE OR POLITICAL
SUBDIVISION THEREOF, AND STOCK OR OBLIGATIONS OF A CORPORATION WHICH  IS
AN  INSTRUMENTALITY  OR  A GOVERNMENT SPONSORED ENTERPRISE OF THE UNITED
STATES OR OF A STATE OR POLITICAL SUBDIVISION THEREOF;
  (III) LOANS SECURED BY A DEPOSIT OR SHARE OF A MEMBER;
  (IV) LOANS SECURED BY AN INTEREST IN REAL PROPERTY WHICH IS  (OR  FROM
THE PROCEEDS OF THE LOAN, WILL BECOME) RESIDENTIAL REAL PROPERTY OR REAL
PROPERTY USED PRIMARILY FOR CHURCH PURPOSES, LOANS MADE FOR THE IMPROVE-
MENT  OF  RESIDENTIAL  REAL PROPERTY OR REAL PROPERTY USED PRIMARILY FOR
CHURCH PURPOSES, PROVIDED THAT FOR PURPOSES OF  THIS  ITEM,  RESIDENTIAL
REAL PROPERTY SHALL INCLUDE SINGLE OR MULTI-FAMILY DWELLINGS, FACILITIES
IN  RESIDENTIAL DEVELOPMENTS DEDICATED TO PUBLIC USE OR PROPERTY USED ON
A NONPROFIT BASIS FOR RESIDENTS, AND MOBILE HOMES NOT USED  ON  A  TRAN-
SIENT BASIS;
  (V)  PROPERTY  ACQUIRED  THROUGH  THE  LIQUIDATION  OF DEFAULTED LOANS
DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
  (VI) ANY REGULAR OR RESIDUAL INTEREST IN A  REMIC,  AS  SUCH  TERM  IS
DEFINED  IN  SECTION  860D OF THE INTERNAL REVENUE CODE, BUT ONLY IN THE
PROPORTION WHICH THE ASSETS OF SUCH REMIC CONSIST OF PROPERTY  DESCRIBED
IN ANY OF THE PRECEDING ITEMS OF THIS CLAUSE, EXCEPT THAT IF NINETY-FIVE
PERCENT  OR  MORE  OF  THE  ASSETS OF SUCH REMIC ARE ASSETS DESCRIBED IN
ITEMS (I) THROUGH (V) OF THIS CLAUSE, THE ENTIRE INTEREST IN  THE  REMIC
SHALL QUALIFY;
  (VII)  ANY  MORTGAGE-BACKED  SECURITY  WHICH REPRESENTS OWNERSHIP OF A
FRACTIONAL UNDIVIDED INTEREST IN A TRUST, THE ASSETS  OF  WHICH  CONSIST
PRIMARILY  OF  MORTGAGE  LOANS,  PROVIDED  THAT  THE REAL PROPERTY WHICH
SERVES AS SECURITY FOR THE LOANS IS (OR FROM THE PROCEEDS OF  THE  LOAN,

S. 6359--A                         31                         A. 8559--A

WILL  BECOME) THE TYPE OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE
AND ANY COLLATERALIZED  MORTGAGE  OBLIGATION,  THE  SECURITY  FOR  WHICH
CONSISTS  PRIMARILY OF MORTGAGE LOANS THAT MAINTAIN AS SECURITY THE TYPE
OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
  (VIII)  CERTIFICATES  OF  DEPOSIT IN, OR OBLIGATIONS OF, A CORPORATION
ORGANIZED UNDER A STATE LAW WHICH SPECIFICALLY  AUTHORIZES  SUCH  CORPO-
RATION TO INSURE THE DEPOSITS OR SHARE ACCOUNTS OF MEMBER ASSOCIATIONS;
  (IX)  LOANS  SECURED BY AN INTEREST IN EDUCATIONAL, HEALTH, OR WELFARE
INSTITUTIONS OR FACILITIES, INCLUDING STRUCTURES DESIGNED OR USED PRIMA-
RILY FOR RESIDENTIAL PURPOSES FOR STUDENTS, RESIDENTS, AND PERSONS UNDER
CARE, EMPLOYEES, OR MEMBERS OF THE STAFF OF SUCH INSTITUTIONS OR FACILI-
TIES;
  (X) LOANS MADE FOR THE PAYMENT OF EXPENSES OF  COLLEGE  OR  UNIVERSITY
EDUCATION OR VOCATIONAL TRAINING;
  (XI)  PROPERTY  USED  BY  THE  TAXPAYER  IN  SUPPORT OF BUSINESS WHICH
CONSISTS PRINCIPALLY OF ACQUIRING THE SAVINGS OF THE PUBLIC AND  INVEST-
ING IN LOANS; AND
  (XII) LOANS FOR WHICH THE TAXPAYER IS THE CREDITOR AND WHICH ARE WHOL-
LY SECURED BY LOANS DESCRIBED IN ITEM (IV) OF THIS CLAUSE.
  (XIII)  THE  VALUE OF ACCRUED INTEREST RECEIVABLE AND ANY LOSS-SHARING
COMMITMENT OR OTHER LOAN GUARANTY  BY  A  GOVERNMENTAL  AGENCY  WILL  BE
CONSIDERED  PART OF THE BASIS IN THE LOANS TO WHICH THE ACCRUED INTEREST
OR LOSS PROTECTION APPLIES.
  (B) AT THE ELECTION OF  THE  TAXPAYER,  THE  PERCENTAGE  SPECIFIED  IN
CLAUSE  (A)  OF  THIS  SUBPARAGRAPH SHALL BE APPLIED ON THE BASIS OF THE
AVERAGE ASSETS OUTSTANDING DURING THE TAXABLE YEAR, IN LIEU OF THE CLOSE
OF THE TAXABLE YEAR. THE TAXPAYER CAN ELECT TO COMPUTE AN AVERAGE  USING
THE ASSETS MEASURED ON THE FIRST DAY OF THE TAXABLE YEAR AND ON THE LAST
DAY OF EACH SUBSEQUENT QUARTER, OR MONTH OR DAY DURING THE TAXABLE YEAR.
THIS ELECTION MAY BE MADE ANNUALLY.
  (C)  FOR  PURPOSES  OF  THIS  COMPUTATION, THE DEFINITION OF ASSETS IN
CLAUSE (B) OF SUBPARAGRAPH ONE OF THIS PARAGRAPH APPLIES.
  (D) FOR PURPOSES OF ITEM (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH, IF A
MULTIFAMILY STRUCTURE SECURING A LOAN IS USED IN PART FOR NONRESIDENTIAL
USE PURPOSES, THE ENTIRE LOAN IS DEEMED A RESIDENTIAL REAL PROPERTY LOAN
IF THE PLANNED RESIDENTIAL USE EXCEEDS EIGHTY PERCENT OF THE  PROPERTY'S
PLANNED  USE  (MEASURED,  AT  THE  TAXPAYER'S  ELECTION, BY USING SQUARE
FOOTAGE OR GROSS RENTAL REVENUE, AND DETERMINED AS OF THE TIME THE  LOAN
IS MADE).
  (E)  FOR  PURPOSES  OF  ITEM  (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH,
LOANS MADE TO FINANCE THE ACQUISITION OR DEVELOPMENT OF  LAND  SHALL  BE
DEEMED  TO  BE LOANS SECURED BY AN INTEREST IN RESIDENTIAL REAL PROPERTY
IF THERE IS A REASONABLE ASSURANCE THAT THE PROPERTY WILL  BECOME  RESI-
DENTIAL  REAL  PROPERTY  WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF
ACQUISITION OF SUCH LAND; BUT THIS SENTENCE  SHALL  NOT  APPLY  FOR  ANY
TAXABLE  YEAR  UNLESS,  WITHIN SUCH THREE YEAR PERIOD, SUCH LAND BECOMES
RESIDENTIAL REAL PROPERTY.  FOR  PURPOSES  OF  DETERMINING  WHETHER  ANY
INTEREST  IN  A  REMIC  QUALIFIES  UNDER ITEM (VI) OF CLAUSE (A) OF THIS
SUBPARAGRAPH, ANY REGULAR INTEREST IN ANOTHER REMIC HELD BY  SUCH  REMIC
SHALL  BE  TREATED AS A LOAN DESCRIBED IN A PRECEDING ITEM UNDER PRINCI-
PLES SIMILAR TO THE PRINCIPLE OF SUCH ITEM (VI),  EXCEPT  THAT  IS  SUCH
REMICS  ARE  PART  OF  A  TIERED STRUCTURE, THEY SHALL BE TREATED AS ONE
REMIC FOR PURPOSES OF SUCH ITEM (VI).
  (3) FOR PURPOSES OF  THIS  PARAGRAPH,  A  "THRIFT  INSTITUTION"  IS  A
SAVINGS  BANK, A SAVINGS AND LOAN ASSOCIATION, OR OTHER SAVINGS INSTITU-
TION CHARTERED AND SUPERVISED AS SUCH UNDER FEDERAL OR STATE LAW.

S. 6359--A                         32                         A. 8559--A

  (S) SUBTRACTION MODIFICATION FOR COMMUNITY BANKS. (1) A TAXPAYER  THAT
IS  A  QUALIFIED  COMMUNITY  BANK AS DEFINED IN SUBPARAGRAPH TWO OF THIS
PARAGRAPH OR A THRIFT INSTITUTION AS DEFINED IN  SUBPARAGRAPH  THREE  OF
PARAGRAPH  (R)  OF  THIS  SUBDIVISION  SHALL  BE  ALLOWED A DEDUCTION IN
COMPUTING  ENTIRE NET INCOME EQUAL TO THE AMOUNT COMPUTED UNDER SUBPARA-
GRAPH THREE OF THIS PARAGRAPH.
  (2) TO BE A QUALIFIED COMMUNITY BANK,  A  TAXPAYER  MUST  SATISFY  THE
FOLLOWING CONDITIONS.
  (A)  IT  IS  A BANK OR TRUST COMPANY ORGANIZED UNDER OR SUBJECT TO THE
PROVISIONS OF ARTICLE THREE OF THE BANKING LAW OR A COMPARABLE PROVISION
OF THE LAWS OF ANOTHER STATE, OR A NATIONAL BANKING ASSOCIATION.
  (B) THE AVERAGE VALUE DURING THE TAXABLE YEAR OF  THE  ASSETS  OF  THE
TAXPAYER,  OR  THE  ASSETS OF THE AFFILIATED GROUP OF THE TAXPAYER, MUST
NOT EXCEED EIGHT BILLION DOLLARS.  FOR  PURPOSES  OF  THIS  CLAUSE,  THE
AFFILIATED GROUP OF THE TAXPAYER INCLUDES ANY CORPORATION THAT MEETS THE
OWNERSHIP  REQUIREMENTS TO BE INCLUDED IN A COMBINED REPORT SPECIFIED IN
PARAGRAPH (A) OF SUBDIVISION TWO OF SECTION TWO HUNDRED  TEN-C  OF  THIS
ARTICLE.
  (3)(A) THE SUBTRACTION MODIFICATION SHALL BE COMPUTED AS FOLLOWS:
  (I)  MULTIPLY THE TAXPAYER'S NET INTEREST INCOME FROM LOANS DURING THE
TAXABLE YEAR BY A FRACTION, THE NUMERATOR OF WHICH IS THE GROSS INTEREST
INCOME DURING THE TAXABLE YEAR FROM QUALIFYING LOANS AND THE DENOMINATOR
OF WHICH IS THE GROSS INTEREST INCOME DURING THE TAXABLE YEAR  FROM  ALL
LOANS.
  (II)  MULTIPLY  THE  AMOUNT DETERMINED IN CLAUSE (I) BY FORTY PERCENT.
THIS PRODUCT IS THE AMOUNT OF THE DEDUCTION  ALLOWED  UNDER  THIS  PARA-
GRAPH.
  (B)(I) NET INTEREST INCOME FROM LOANS SHALL MEAN GROSS INTEREST INCOME
FROM  LOANS  LESS  GROSS  INTEREST  EXPENSE  FROM  LOANS. GROSS INTEREST
EXPENSE FROM LOANS IS DETERMINED BY MULTIPLYING GROSS  INTEREST  EXPENSE
BY  A  FRACTION,  THE  NUMERATOR  OF WHICH IS THE AVERAGE TOTAL VALUE OF
LOANS OWNED BY THE THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXA-
BLE YEAR AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF THE
THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXABLE YEAR.
  (II) MEASUREMENT OF ASSETS FOR PURPOSES  OF  THIS  CLAUSE.  (I)  TOTAL
ASSETS  ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE SHEET,
COMPUTED IN THE SAME MANNER AS IS REQUIRED BY THE BANKING  REGULATOR  OF
THE TAXPAYERS INCLUDED IN THE COMBINED RETURN.
  (II)  ASSETS  WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH
ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED  IF  NOT
FULLY  DEPRECIATED  OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL
AMOUNT) IN THE COMPUTATION OF THE TAXPAYER'S ENTIRE NET INCOME  FOR  THE
TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTANGIBLE
ASSETS IDENTIFIED AS "GOODWILL".
  (III)  TANGIBLE  REAL  AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND,
MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST.  INTANGIBLE  PROPERTY,
SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT BOOK VALUE.
  (IV)  AVERAGE  ASSETS  ARE  COMPUTED  USING THE ASSETS MEASURED ON THE
FIRST DAY OF THE TAXABLE YEAR, AND ON THE LAST DAY  OF  EACH  SUBSEQUENT
QUARTER OF THE TAXABLE YEAR.
  (C) A QUALIFYING LOAN IS A LOAN THAT MEETS THE CONDITIONS SPECIFIED IN
SUBCLAUSE (I) OF THIS CLAUSE AND SUBCLAUSE (II) OF THIS CLAUSE.
  (I)  THE  LOAN  IS  ORIGINATED OR PURCHASED BY THE QUALIFIED COMMUNITY
BANK  OR  THRIFT  INSTITUTION  IMMEDIATELY  AFTER  ITS  ORIGINATION   IN
CONNECTION  WITH  A COMMITMENT TO PURCHASE MADE BY THE BANK PRIOR TO THE
LOAN'S ORIGINATION.

S. 6359--A                         33                         A. 8559--A

  (II) THE LOAN IS A SMALL BUSINESS LOAN OR A RESIDENTIAL MORTGAGE LOAN,
THE PRINCIPAL AMOUNT OF WHICH LOAN IS ONE MILLION DOLLARS OR  LESS,  AND
EITHER THE BORROWER IS LOCATED IN THIS STATE AS DETERMINED UNDER SECTION
TWO  HUNDRED  TEN-A  OF THIS ARTICLE AND THE LOAN IS NOT SECURED BY REAL
PROPERTY, OR THE LOAN IS SECURED BY REAL PROPERTY LOCATED IN NEW YORK.
  10.  The term "calendar year" means a period of twelve calendar months
(or any shorter period  beginning  on  the  date  the  taxpayer  becomes
subject  to  the tax imposed by this article) ending on the thirty-first
day of December, provided the taxpayer keeps its books on the  basis  of
such  period  or on the basis of any period ending on any day other than
the last day of a calendar month, or provided the taxpayer does not keep
books, and includes, in case the taxpayer  changes  the  period  on  the
basis of which it keeps its books from a fiscal year to a calendar year,
the  period from the close of its last old fiscal year up to and includ-
ing the following December thirty-first. The term "fiscal year" means  a
period of twelve calendar months (or any shorter period beginning on the
date  the  taxpayer  becomes subject to the tax imposed by this article)
ending on the last day of any month other than  December,  provided  the
taxpayer  keeps  its books on the basis of such period, and includes, in
case the taxpayer changes the period on the basis of which it  keeps  it
books  from  a calendar year to a fiscal year or from one fiscal year to
another fiscal year, the period from the close of its last old  calendar
or  fiscal year up to the date designated as the close of its new fiscal
year.
  11. The term "tangible personal  property"  means  corporeal  personal
property,  such  as  machinery,  tools,  implements,  goods,  wares  and
merchandise, and does not mean  money,  deposits  in  banks,  shares  of
stock, bonds, notes, credits or evidences of an interest in property and
evidences of debt.
  12.  The term elected or appointed officer shall include the chairman,
president, vice-president, secretary,  assistant  secretary,  treasurer,
assistant  treasurer, comptroller, and also any other officer, irrespec-
tive of his title, who is charged with and performs any of  the  regular
functions  of  any  such  officer, unless the total compensation of such
officer is derived exclusively from the receipt of commissions. A direc-
tor shall be considered an elected  or  appointed  officer  only  if  he
performs duties ordinarily performed by an officer.
  13.  The  term  "manufacturer"  means  a taxpayer or, in the case of a
combined report, a combined group, that, during  the  taxable  year,  is
principally  engaged in manufacturing. A taxpayer or a combined group is
principally engaged in manufacturing if more than fifty percent  of  the
gross  receipts  of  the  taxpayer  or the combined group, respectively,
during the taxable year are derived from the sale of goods  produced  by
manufacturing. In computing a combined group's gross receipts, intercor-
porate  receipts  shall be eliminated. In computing gross receipts for a
taxpayer that is a partner in partnership, inter-entity receipts between
the taxpayer and such partnership shall be eliminated.
  14. (a) The term "manufacturing" means  the  process  of  working  raw
materials  into  wares  suitable  for use or which gives new shapes, new
quality or new combinations to matter which  already  has  gone  through
some  artificial  process by the use of machinery, tools, appliances and
other similar equipment.
  (b) Notwithstanding the definition of manufacturing in  paragraph  (a)
of this subdivision:

S. 6359--A                         34                         A. 8559--A

  (i) The generation and distribution of electricity, the extraction and
distribution of natural gas, and the production of steam associated with
the generation of electricity does not constitute manufacturing.
  (ii)  The  creation,  production or reproduction of a film, television
show or commercial does not constitute manufacturing.
  (iii) The blending of two or more fuels does not  constitute  manufac-
turing.
  (iv)  The  mass  production  of food products for wholesale commercial
distribution and sale constitutes manufacturing.
  15. The term "qualified New York manufacturer"  means  a  manufacturer
that  has property in the state that is used in manufacturing and either
the fair market value of that property at the close of the taxable  year
is at least ten million dollars or all of its real and personal property
is located in New York. A taxpayer or, in the case of a combined report,
a  combined  group,  that  does  not satisfy the criteria in subdivision
thirteen of this section may be a qualified New York manufacturer if the
taxpayer or the combined group employs during the taxable year at  least
two thousand five hundred employees in manufacturing in New York and the
taxpayer  or  the combined group has property in the state used in manu-
facturing, the adjusted basis of which for federal income  tax  purposes
at  the  close  of  the  taxable  year  is  at least one hundred million
dollars.
  [19. The term "fulfillment services" shall mean any of  the  following
services  performed by an entity on its premises on behalf of a purchas-
er:
  (a) the acceptance of orders electronically  or  by  mail,  telephone,
telefax or internet;
  (b)  responses  to consumer correspondence or inquiries electronically
or by mail, telephone, telefax or internet;
  (c) billing and collection activities; or
  (d) the shipment of orders from an inventory of products  offered  for
sale by the purchaser.]
  S  5.  Subdivisions  1, 2, 2-a, 4, 5, 6, 7 and 8 of section 209 of the
tax law, subdivisions 1 and 6 as amended by chapter 817 of the  laws  of
1987, subdivision 2 as amended by chapter 75 of the laws of 1998, subdi-
vision 2-a as added by chapter 340 of the laws of 1998, subdivision 4 as
amended  by  section  27  of part S of this act, subdivisions 5 and 7 as
amended by section 2 of part FF-1 of chapter 57 of the laws of 2008, and
subdivision 8 as added by section 1 of part O of chapter 61 of the  laws
of 2006, are amended to read as follows:
  1.  (A) For the privilege of exercising its corporate franchise, or of
doing business, or of employing capital, or of owning or leasing proper-
ty in this state in a corporate or organized capacity, or of maintaining
an office in this state, OR OF DERIVING RECEIPTS FROM ACTIVITY  IN  THIS
STATE,  for  all  or  any  part of each of its fiscal or calendar years,
every domestic or foreign corporation, except corporations specified  in
subdivision  four  of  this section, shall annually pay a franchise tax,
upon the basis of its [entire net] BUSINESS income base,  or  upon  such
other  basis  as  may  be  applicable  as hereinafter provided, for such
fiscal or calendar year or part thereof, on  a  report  which  shall  be
filed, except as hereinafter provided, on or before the fifteenth day of
March  next succeeding the close of each such year, or, in the case of a
corporation which reports on the basis of a fiscal year, within two  and
one-half  months  after the close of such fiscal year, and shall be paid
as hereinafter provided.

S. 6359--A                         35                         A. 8559--A

  (B) A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE  IF
IT  HAS RECEIPTS WITHIN THIS STATE OF ONE MILLION DOLLARS OR MORE IN THE
TAXABLE YEAR. FOR PURPOSES OF THIS SECTION, THE  TERM  "RECEIPTS"  MEANS
THE  RECEIPTS  THAT  ARE SUBJECT TO THE APPORTIONMENT RULES SET FORTH IN
SECTION TWO HUNDRED TEN-A OF THIS ARTICLE, AND THE TERM "RECEIPTS WITHIN
THIS  STATE"  MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPOR-
TIONMENT FACTOR DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTI-
CLE. FOR PURPOSES OF THIS PARAGRAPH,  RECEIPTS  FROM  PROCESSING  CREDIT
CARD  TRANSACTIONS FOR MERCHANTS INCLUDE MERCHANT DISCOUNT FEES RECEIVED
BY THE CORPORATION.
  (C) A CORPORATION IS DOING BUSINESS IN THIS STATE IF (I) IT HAS ISSUED
CREDIT CARDS TO ONE THOUSAND  OR  MORE  CUSTOMERS  WHO  HAVE  A  MAILING
ADDRESS  WITHIN  THIS STATE AS OF THE LAST DAY OF ITS TAXABLE YEAR, (II)
IT HAS MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE  TOTAL  NUMBER
OF  LOCATIONS  COVERED  BY  THOSE  CONTRACTS EQUALS ONE THOUSAND OR MORE
LOCATIONS IN THIS STATE TO WHOM THE CORPORATION  REMITTED  PAYMENTS  FOR
CREDIT  CARD  TRANSACTIONS  DURING THE TAXABLE YEAR, OR (III) THE SUM OF
THE NUMBER OF CUSTOMERS DESCRIBED IN SUBPARAGRAPH (I) OF THIS  PARAGRAPH
PLUS  THE  NUMBER  OF  LOCATIONS  COVERED  BY ITS CONTRACTS DESCRIBED IN
SUBPARAGRAPH (II) OF THIS PARAGRAPH EQUALS ONE THOUSAND OR MORE. AS USED
IN THIS SUBDIVISION, THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAV-
EL AND ENTERTAINMENT CARDS.
  (D)(I) A CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT  AT  LEAST
TEN  THOUSAND  DOLLARS  OF  RECEIPTS WITHIN THIS STATE IN A TAXABLE YEAR
THAT IS PART OF A COMBINED REPORTING GROUP  IS  DERIVING  RECEIPTS  FROM
ACTIVITY  IN THIS STATE IF THE RECEIPTS WITHIN THIS STATE OF THE MEMBERS
OF THE COMBINED REPORTING GROUP THAT HAVE AT LEAST TEN THOUSAND  DOLLARS
OF  RECEIPTS  WITHIN  THIS STATE IN THE AGGREGATE MEET THE THRESHOLD SET
FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (II) A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET  FORTH
IN  PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS, OR
LOCATIONS, OR CUSTOMERS AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C)  OF
THIS  SUBDIVISION,  AND  IS  PART OF A COMBINED REPORTING GROUP IS DOING
BUSINESS IN THIS STATE IF THE NUMBER OF CUSTOMERS, LOCATIONS, OR CUSTOM-
ERS AND LOCATIONS, WITHIN THIS STATE OF  THE  MEMBERS  OF  THE  COMBINED
REPORTING  GROUP THAT HAVE AT LEAST TEN CUSTOMERS, LOCATIONS, OR CUSTOM-
ERS AND LOCATIONS, WITHIN THIS STATE IN THE AGGREGATE MEETS ANY  OF  THE
THRESHOLDS SET FORTH IN PARAGRAPH (C) OF THIS SUBDIVISION.
  (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
TIVE  PERCENTAGE  CHANGE  IN  THE CONSUMER PRICE INDEX. THE COMMISSIONER
SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
CONSUMER PRICE INDEX HAS CHANGED BY TEN PERCENT OR  MORE  SINCE  JANUARY
FIRST,  TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS WERE
LAST ADJUSTED UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL  BE  ADJUSTED
TO  REFLECT  THAT  CUMULATIVE  PERCENTAGE  CHANGE  IN THE CONSUMER PRICE
INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
SAND DOLLARS. AS USED IN THIS PARAGRAPH, "CONSUMER  PRICE  INDEX"  MEANS
THE  CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE FORM
THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
ANY ADJUSTMENT SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER  THE  ADJUST-
MENT IS MADE.
  2.  A  foreign  corporation  shall not be deemed to be doing business,
employing capital, owning or leasing property, or maintaining an  office
in this state, OR DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, for the
purposes  of  this  article,  by  reason  of (a) the maintenance of cash
balances with banks or trust companies in this state, or (b) the  owner-

S. 6359--A                         36                         A. 8559--A

ship  of  shares of stock or securities kept in this state, if kept in a
safe deposit box,  safe,  vault  or  other  receptacle  rented  for  the
purpose,  or if pledged as collateral security, or if deposited with one
or more banks or trust companies, or brokers who are members of a recog-
nized  security exchange, in safekeeping or custody accounts, or (c) the
taking of any action by any such bank or trust company or broker,  which
is  incidental  to  the rendering of safekeeping or custodian service to
such corporation, or (d) the maintenance of an office in this  state  by
one or more officers or directors of the corporation who are not employ-
ees  of  the corporation if the corporation otherwise is not doing busi-
ness in this state, and does not employ capital or own or lease property
in this state, or (e) the keeping of books or records of  a  corporation
in this state if such books or records are not kept by employees of such
corporation  and such corporation does not otherwise do business, employ
capital, own or lease property or maintain an office in this  state,  or
(f)  [the  use  of fulfillment services of a person other than an affil-
iated person and the ownership of property stored  on  the  premises  of
such  person  in conjunction with such services, or (g)] any combination
of the foregoing activities. [For purposes of this subdivision,  persons
are  affiliated  persons  with  respect  to each other where one of such
persons has an ownership interest of more  than  five  percent,  whether
direct or indirect, in the other, or where an ownership interest of more
than  five  percent, whether direct or indirect, is held in each of such
persons by another person or by a  group  of  other  persons  which  are
affiliated  persons with respect to each other. The term "person" in the
preceding sentence and in paragraph (f) of this subdivision  shall  have
the  meaning  ascribed  thereto  by  subdivision  (a)  of section eleven
hundred one of this chapter.]
  2-a. An alien corporation shall not be deemed to  be  doing  business,
employing  capital, owning or leasing property, or maintaining an office
in this state, for the purposes of this article, if  its  activities  in
this  state are limited solely to (a) investing or trading in stocks and
securities for its own account within the  meaning  of  clause  (ii)  of
subparagraph  (A)  of  paragraph  (2) of subsection (b) of section eight
hundred sixty-four of the internal revenue  code  or  (b)  investing  or
trading  in commodities for its own account within the meaning of clause
(ii) of subparagraph (B) of paragraph (2) of subsection (b)  of  section
eight  hundred sixty-four of the internal revenue code or (c) any combi-
nation of activities described in paragraphs (a) and (b) of this  subdi-
vision.    AN ALIEN CORPORATION THAT HAS NO EFFECTIVELY CONNECTED INCOME
FOR THE TAXABLE YEAR PURSUANT TO CLAUSE (IV) OF THE OPENING PARAGRAPH OF
SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE SHALL  NOT
BE SUBJECT TO TAX UNDER THIS ARTICLE FOR THAT TAXABLE YEAR. For purposes
of  this  subdivision,  an  alien corporation is a corporation organized
under the laws of a country, or any political subdivision thereof, other
than the United States.
  4. Corporations liable to tax under sections one hundred  eighty-three
to  one  hundred  eighty-four-a,  inclusive,  corporations taxable under
[articles thirty-two and] ARTICLE  thirty-three  of  this  chapter,  any
trust  company  organized  under a law of this state all of the stock of
which is owned by not less than twenty savings banks organized  under  a
law  of  this state, [bank holding companies filing a combined return in
accordance with subsection (f) of section fourteen hundred sixty-two  of
this  chapter,] a captive REIT or a captive RIC filing a combined return
under [either subsection (f) of section fourteen hundred  sixty-two  or]
subdivision  (f) of section fifteen hundred fifteen of this chapter, and

S. 6359--A                         37                         A. 8559--A

housing companies organized and operating pursuant to the provisions  of
article two or article five of the private housing finance law and hous-
ing  development  fund companies organized pursuant to the provisions of
article  eleven  of the private housing finance law shall not be subject
to tax under this article.
  5. For any taxable year of a real estate investment trust  as  defined
in section eight hundred fifty-six of the internal revenue code in which
such  trust  is  subject  to federal income taxation under section eight
hundred fifty-seven of such code, such trust shall be subject to  a  tax
computed under either paragraph (a) [, (c)] or (d) of subdivision one of
section  two  hundred  ten  of  this  chapter,  whichever  is [greatest]
GREATER, and shall not be subject to any tax under  article  [thirty-two
or  article]  thirty-three  of  this  chapter  except for a captive REIT
required to file a combined return under  [subdivision  (f)  of  section
fourteen  hundred  sixty-two  or]  subdivision  (f)  of  section fifteen
hundred fifteen of this chapter. In the  case  of  such  a  real  estate
investment  trust, including a captive REIT as defined in section two of
this chapter, the term "entire net income" means "real estate investment
trust taxable income" as defined in paragraph two of subdivision (b)  of
section  eight hundred fifty-seven (as modified by section eight hundred
fifty-eight) of the internal revenue code plus the amount taxable  under
paragraph  three of subdivision (b) of section eight hundred fifty-seven
of such code, subject to the [modification]  MODIFICATIONS  required  by
subdivision  nine  of  section two hundred eight of this article [(other
than the modification required by  subparagraph  two  of  paragraph  (a)
thereof)  including the modifications required by paragraphs (d) and (e)
of subdivision three of section two hundred ten of this article].
  6. For any taxable year of a DISC, not exempt from tax under paragraph
(i) of subdivision nine of section two hundred eight  of  this  article,
the  taxes  imposed by subdivision one of this section shall be computed
only under either paragraph (b) or (d) of subdivision one of section two
hundred ten of this chapter, whichever is greater[, and paragraph (e) of
such subdivision].
  7. For any taxable year, beginning on or after January first, nineteen
hundred eighty of a regulated investment company, as defined in  section
eight  hundred  fifty-one  of  the  internal revenue code, in which such
company is subject  to  federal  income  taxation  under  section  eight
hundred  fifty-two  of such code, such company shall be subject to a tax
computed under either paragraph (a)[, (c)] or (d) of subdivision one  of
section  two  hundred  ten  of  this  chapter,  whichever  is [greatest]
GREATER, and shall not be subject to any tax under  article  [thirty-two
or  article]  thirty-three  of  this  chapter  except  for a captive RIC
required to file a combined return under  [subdivision  (f)  of  section
fourteen  hundred  sixty-two  or]  subdivision  (f)  of  section fifteen
hundred fifteen of this chapter. In the case of such a regulated invest-
ment company, including a captive RIC as defined in section two of  this
chapter,  the term "entire net income" means "investment company taxable
income" as defined in paragraph two of subdivision (b) of section  eight
hundred  fifty-two,  as modified by section eight hundred fifty-five, of
the internal revenue code plus the amount taxable under paragraph  three
of  subdivision  (b)  of  section  eight  hundred fifty-two of such code
subject to the [modification] MODIFICATIONS required by subdivision nine
of section two hundred eight of this chapter[, other than the  modifica-
tion  required by subparagraph two of paragraph (a) and by paragraph (f)
thereof, including the modification required by paragraphs (d)  and  (e)
of subdivision three of section two hundred ten of this chapter].

S. 6359--A                         38                         A. 8559--A

  8. For any taxable year beginning on or after January first, two thou-
sand  six,  a  corporation  that  is no longer doing business, employing
capital, or owning or leasing property, OR DERIVING RECEIPTS FROM ACTIV-
ITY in this state in a corporate or organized capacity that has filed  a
final  tax return with the department for the last tax year it was doing
business and has no outstanding tax liability for such final tax  return
or  any  tax  return  for prior tax years shall be exempt from all taxes
imposed by paragraph (d) of subdivision one of section two  hundred  ten
of  this  article for tax years following the last year such corporation
was doing business.
  S 6. Section 209-A of the tax law is REPEALED.
  S 7. The section heading and subdivision 1 of section 209-B of the tax
law, the section heading as amended by chapter 11 of the  laws  of  1983
and subdivision 1 as amended by section 4 of part A of chapter 59 of the
laws of 2013, are amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge.  1. (A) For the privilege of exercising its  corporate  fran-
chise,  or  of  doing business, or of employing capital, or of owning or
leasing property in a corporate or organized capacity, or of maintaining
an office, OR OF DERIVING RECEIPTS FROM  ACTIVITY  in  the  metropolitan
commuter  transportation  district,  for  all or any part of its taxable
year, there is hereby imposed on every corporation,  other  than  a  New
York  S  corporation,  subject  to tax under section two hundred nine of
this article, or any receiver, referee, trustee, assignee or other fidu-
ciary, or any officer or agent appointed by any court, who conducts  the
business  of  any such corporation, [for the taxable years commencing on
or after January first, nineteen hundred eighty-two  but  ending  before
December thirty-first, two thousand eighteen,] a tax surcharge, in addi-
tion to the tax imposed under section two hundred nine of this article[,
to  be  computed  at  the rate of eighteen]. SUCH SURCHARGE SHALL BE THE
PRODUCT OF TWENTY-FOUR AND ONE-HALF percent of  the  tax  imposed  under
such section two hundred nine for such taxable years or any part of such
taxable  years  [ending  before  December thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article,  and  at  the rate of seventeen percent of the tax
imposed under such section for such taxable years or any  part  of  such
taxable years ending on or after December thirty-first, nineteen hundred
eighty-three after] BEFORE the deduction of any credits otherwise allow-
able  under  this  article; provided, however, that such [rates] RATE of
tax surcharge shall be applied only to that portion of the  tax  imposed
under  section  two  hundred  nine  of  this  article [after] BEFORE the
deduction of any credits otherwise allowable under this article which is
attributable to the taxpayer's business activity carried on  within  the
metropolitan  commuter  transportation  district; and provided, further,
[that the tax surcharge imposed by this section  shall  not  be  imposed
upon any taxpayer for more than four hundred thirty-two months. Provided
however, that for taxable years commencing on or after July first, nine-
teen  hundred ninety-eight, such surcharge shall be calculated as if the
tax imposed under section two hundred ten of this article  were  imposed
under  the  law  in effect for taxable years commencing on or after July
first, nineteen hundred ninety-seven and  before  July  first,  nineteen
hundred  ninety-eight. Provided however, that for taxable years commenc-
ing on or after January first, two thousand seven, such surcharge  shall
be  calculated  using  the  highest of the tax bases imposed pursuant to
paragraphs (a), (b), (c) or  (d)  of  subdivision  one  of  section  two
hundred  ten  of this article and the amount imposed under paragraph (e)

S. 6359--A                         39                         A. 8559--A

of subdivision one of such section two  hundred  ten,  for  the  taxable
year; and, provided further that, if such highest amount is the tax base
imposed  under  paragraph  (a), (b) or (c) of such subdivision, then the
surcharge  shall  be  computed as if the tax rates and limitations under
such paragraph were the tax rates and limitations under  such  paragraph
in  effect for taxable years commencing on or after July first, nineteen
hundred ninety-seven and before July  first,  nineteen  hundred  ninety-
eight]  THE  SURCHARGE  COMPUTED  ON  A  COMBINED REPORT SHALL INCLUDE A
SURCHARGE ON THE FIXED  DOLLAR  MINIMUM  TAX  FOR  EACH  MEMBER  OF  THE
COMBINED GROUP SUBJECT TO THE SURCHARGE UNDER THIS SUBDIVISION.
  (B)  A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOL-
ITAN COMMUTER TRANSPORTATION DISTRICT IF  IT  HAS  RECEIPTS  WITHIN  THE
METROPOLITAN  COMMUTER TRANSPORTATION DISTRICT OF ONE MILLION DOLLARS OR
MORE IN  A  TAXABLE  YEAR.  FOR  PURPOSES  OF  THIS  SECTION,  THE  TERM
"RECEIPTS"  MEANS  THE  RECEIPTS  THAT  ARE SUBJECT TO THE APPORTIONMENT
RULES SET FORTH IN SECTION TWO HUNDRED TEN-A OF THIS  ARTICLE,  AND  THE
TERM "RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT"
MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FACTOR
DETERMINED  UNDER  SUBDIVISION TWO OF THIS SECTION. FOR PURPOSES OF THIS
PARAGRAPH,  RECEIPTS  FROM  PROCESSING  CREDIT  CARD  TRANSACTIONS   FOR
MERCHANTS INCLUDE MERCHANT DISCOUNT FEES RECEIVED BY THE CORPORATION.
  (C)  A  CORPORATION  IS  DOING  BUSINESS  IN THE METROPOLITAN COMMUTER
TRANSPORTATION DISTRICT IF (I) IT HAS ISSUED CREDIT CARDS TO  ONE  THOU-
SAND  OR  MORE CUSTOMERS WHO HAVE A MAILING ADDRESS WITHIN THE METROPOL-
ITAN COMMUTER TRANSPORTATION DISTRICT AS OF THE LAST DAY OF ITS  TAXABLE
YEAR,  (II)  IT  HAS  MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE
TOTAL NUMBER OF LOCATIONS COVERED BY THOSE CONTRACTS EQUALS ONE THOUSAND
OR MORE LOCATIONS IN THE METROPOLITAN COMMUTER  TRANSPORTATION  DISTRICT
TO  WHOM  THE CORPORATION REMITTED PAYMENTS FOR CREDIT CARD TRANSACTIONS
DURING THE TAXABLE YEAR, OR (III) THE SUM OF  THE  NUMBER  OF  CUSTOMERS
DESCRIBED  IN  SUBPARAGRAPH  (I)  OF  THIS  PARAGRAPH PLUS THE NUMBER OF
LOCATIONS COVERED BY ITS CONTRACTS DESCRIBED  IN  SUBPARAGRAPH  (II)  OF
THIS  PARAGRAPH  EQUALS ONE THOUSAND OR MORE. AS USED IN THIS PARAGRAPH,
THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAVEL  AND  ENTERTAINMENT
CARDS.
  (D)(I)  A  CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT AT LEAST
TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANS-
PORTATION DISTRICT IN A TAXABLE YEAR THAT IS PART OF A COMBINED  REPORT-
ING  GROUP IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOLITAN COMMU-
TER TRANSPORTATION DISTRICT IF  THE  RECEIPTS  WITHIN  THE  METROPOLITAN
COMMUTER  TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY BUSINESS
GROUP THAT HAVE AT LEAST TEN THOUSAND DOLLARS  OF  RECEIPTS  WITHIN  THE
METROPOLITAN  COMMUTER TRANSPORTATION DISTRICT IN THE AGGREGATE MEET THE
THRESHOLD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (II) A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET  FORTH
IN  PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS, OR
LOCATIONS, OR CUSTOMERS AND LOCATIONS, AS DESCRIBED  IN  PARAGRAPH  (C),
AND  IS  PART  OF  A  COMBINED  REPORTING GROUP IS DOING BUSINESS IN THE
METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IF THE NUMBER  OF  CUSTOM-
ERS,  LOCATIONS,  OR  CUSTOMERS  AND  LOCATIONS, WITHIN THE METROPOLITAN
COMMUTER TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY  BUSINESS
GROUP  THAT  HAVE  AT  LEAST  TEN CUSTOMERS, LOCATIONS, OR CUSTOMERS AND
LOCATIONS, WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION  DISTRICT  IN
THE  AGGREGATE MEETS ANY OF THE THRESHOLDS SET FORTH IN PARAGRAPH (C) OF
THIS SUBDIVISION.

S. 6359--A                         40                         A. 8559--A

  (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
TIVE PERCENTAGE CHANGE IN THE CONSUMER  PRICE  INDEX.  THE  COMMISSIONER
SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
CONSUMER  PRICE  INDEX  HAS CHANGED BY TEN PERCENT OR MORE SINCE JANUARY
FIRST,  TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS WERE
LAST ADJUSTED UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL  BE  ADJUSTED
TO  REFLECT  THAT  CUMULATIVE  PERCENTAGE  CHANGE  IN THE CONSUMER PRICE
INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
SAND DOLLARS. AS USED IN THIS PARAGRAPH, "CONSUMER  PRICE  INDEX"  MEANS
THE  CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE FROM
THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
ANY ADJUSTMENT SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER  THE  ADJUST-
MENT IS MADE.
  S  8.  The  opening paragraph of subdivision 2 of section 209-B of the
tax law, as amended by chapter 11 of the laws of  1983,  is  amended  to
read as follows:
  The  portion of the taxpayer's business activity carried on within the
metropolitan commuter transportation district shall  be  determined  [by
multiplying the tax imposed under section two hundred nine of this arti-
cle by a percentage to be determined as follows:] PURSUANT TO THE METHOD
PRESCRIBED  IN SECTION TWO HUNDRED TEN-A OF THIS ARTICLE EXCEPT THAT THE
REFERENCES TO "WITHIN THE STATE" SHALL REFER TO WITHIN THE  METROPOLITAN
COMMUTER  TRANSPORTATION  DISTRICT AND REFERENCES TO "WITHIN AND WITHOUT
THE STATE" SHALL REFER TO WITHIN THE STATE.
  S 9. Paragraphs (a), (b), (c) and (d)  of  subdivision  2  of  section
209-B of the tax law are REPEALED.
  S  10.  Subdivisions  2-a  and 2-b of section 209-B of the tax law are
REPEALED.
  S 11. Subdivisions 3 and 5 of section 209-B of the tax  law,  subdivi-
sion 3 as amended by chapter 11 of the laws of 1983 and subdivision 5 as
amended  by  chapter  166  of  the  laws of 1991, are amended to read as
follows:
  3. A corporation shall not be deemed to be doing  business,  employing
capital, owning or leasing property, or maintaining an office, OR DERIV-
ING  RECEIPTS  FROM ACTIVITY in the metropolitan commuter transportation
district, for the purposes of this section, by reason of (a) the mainte-
nance of cash balances with banks or trust companies in the metropolitan
commuter transportation district, or (b)  the  ownership  of  shares  of
stock  or  securities  kept  in the metropolitan commuter transportation
district, if kept in a safe deposit box, safe, vault or other receptacle
rented for the purpose, or if pledged  as  collateral  security,  or  if
deposited  with one or more banks or trust companies, or brokers who are
members of a recognized security exchange,  in  safekeeping  or  custody
accounts,  or  (c)  the  taking  of any action by any such bank or trust
company or broker, which is incidental to the rendering  of  safekeeping
or  custodian  service to such corporation, or (d) the maintenance of an
office in the metropolitan commuter transportation district  by  one  or
more  officers  or directors of the corporation who are not employees of
the corporation if the corporation otherwise is not  doing  business  in
the  metropolitan  commuter transportation district, and does not employ
capital or own or lease property in the metropolitan commuter  transpor-
tation district, or (e) the keeping of books or records of a corporation
in  the  metropolitan  commuter transportation district if such books or
records are not kept by employees of such corporation  and  such  corpo-
ration  does  not  otherwise  do  business, employ capital, own or lease

S. 6359--A                         41                         A. 8559--A

property or maintain an office in the metropolitan commuter  transporta-
tion district, or (f) any combination of the foregoing activities.
  5.  The  provisions  concerning  reports  under [section] SECTIONS TWO
HUNDRED TEN-C AND  two  hundred  eleven  shall  be  applicable  to  this
section,  except  that  for  purposes  of an automatic extension for six
months for filing a report covering the tax surcharge  imposed  by  this
section,  such  automatic  extension shall be allowed only if a taxpayer
files with the commissioner an application for extension in such form as
said commissioner may prescribe by regulation and pays on or before  the
date of such filing in addition to any other amounts required under this
article,  either  ninety percent of the entire tax surcharge required to
be paid under this section for the applicable period, or not  less  than
the tax surcharge shown on the taxpayer's return for the preceding taxa-
ble  year,  if  such preceding taxable year was a taxable year of twelve
months; provided, however, that in no event shall such  amount  be  less
than  the  product of the following three amounts: (1) the tax surcharge
rate in effect for the taxable year pursuant to subdivision one of  this
section,  (2)  the  fixed  dollar minimum applicable to such taxpayer as
determined under paragraph (d) of subdivision one of section two hundred
ten of this chapter for the taxable year, and (3) the percentage  deter-
mined  under  subdivision  two of this section for the preceding taxable
year, unless the taxpayer was not subject to the tax  surcharge  imposed
pursuant  to  this section with respect to such year, in which case such
percentage shall be deemed to be one hundred percent. The tax  surcharge
imposed  by this section shall be payable to the commissioner in full at
the time the report is required to be filed, and such tax  surcharge  or
the  balance  thereof,  imposed on any taxpayer which ceases to exercise
its franchise or be subject to the tax surcharge imposed by this section
shall be payable to the commissioner at the time the report is  required
to be filed, provided such tax surcharge of a domestic corporation which
continues to possess its franchise shall be subject to adjustment as the
circumstances  may require; all other tax surcharges of any such taxpay-
er, which pursuant to the foregoing provisions  of  this  section  would
otherwise  be  payable subsequent to the time such report is required to
be filed, shall nevertheless  be  payable  at  such  time.  All  of  the
provisions  of  this  article presently applicable are applicable to the
tax surcharge imposed by this section.
  S 12. Subdivision 1 of section 210 of the tax law, as added by chapter
817 of the laws of 1987, the opening paragraph as amended by  section  1
of part D and paragraph (g) as amended by section 2 of part A of chapter
63 of the laws of 2000, paragraph (a) as amended by  section 2 of part N
of  chapter  60  of the laws of 2007, subparagraph 2 of paragraph (b) as
amended by section 17 of part R of this act, subparagraph (ii) of  para-
graph  (c) as amended by section 2 of part C and subparagraph 5 of para-
graph (d) as added by section 3 of part C of chapter 56 of the  laws  of
2011,  subparagraphs  (vi)  and  (vii)  of  paragraph  (a) as amended by
section 16 of part R of this act, subparagraph (iii) of paragraph (c) as
amended by section 18 of part R of this act, and subparagraph 6 of para-
graph (d) as amended by section 19 of part R of this act, paragraph  (b)
as  amended by section 1 of part GG1, subparagraph 3 of paragraph (d) as
amended by section 3 of part AA1, subparagraph 4  of  paragraph  (d)  as
added  by  section  2 of part AA1 and subparagraph 1 of paragraph (g) as
amended by section 4 of part AA1 of chapter 57  of  the  laws  of  2008,
paragraph  (c)  as amended by section 10 of part A and subparagraph 1 of
paragraph (d) as amended by section 12 of part A of chapter  56  of  the
laws  of  1998,  paragraph  (d) as amended by chapter 760 of the laws of

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1992, paragraph (e) as amended by section 1 of part P of chapter 407  of
the  laws  of  1999,  paragraph (f) as amended by section 2 of part E of
chapter 61 of the laws of 2005 and paragraph (h) as added by section  20
of part R of this act, is amended to read as follows:
  1.  The  tax imposed by subdivision one of section two hundred nine of
this chapter shall be: (A) in the case of each taxpayer other than a New
York S corporation or a qualified homeowners association,  the  [sum  of
(1) the] highest of the amounts prescribed in paragraphs (a), (b), [(c)]
and  (d) of this subdivision [and (2) the amount prescribed in paragraph
(e) of this subdivision], (B) in the case of  each  New  York  S  corpo-
ration,  the  amount  prescribed in paragraph [(g)] (D) of this subdivi-
sion, and (C) in the case of a  qualified  homeowners  association,  the
[sum  of (1) the] highest of the amounts prescribed in paragraphs (a)[,]
AND (b) [and (c)] of this subdivision [and (2) the amount prescribed  in
paragraph  (e) of this subdivision]. For purposes of this paragraph, the
term "qualified homeowners association" means a homeowners  association,
as  such term is defined in subsection (c) of section five hundred twen-
ty-eight of the internal revenue code without regard to subparagraph (E)
of paragraph one of such subsection (relating to elections to  be  taxed
pursuant  to  such section), which has no homeowners association taxable
income, as such term is defined  in  subsection  (d)  of  such  section.
Provided,  however, that in the case of a small business taxpayer (other
than a New York S corporation) as  defined  in  paragraph  (f)  of  this
subdivision, FOR TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO THOU-
SAND  SIXTEEN,  if the amount prescribed in such paragraph (b) is higher
than the amount prescribed in such paragraph (a) solely by reason of the
application of the rate applicable to  small  business  taxpayers,  then
with  respect  to  such  taxpayer  the  tax  referred to in the previous
sentence shall be [the sum of (1) the highest]  HIGHER  of  the  amounts
prescribed in paragraphs (a)[, (c)] and (d) of this subdivision [and (2)
the amount prescribed in paragraph (e) of this subdivision].
  (a)  [Entire  net]  BUSINESS income base. [For taxable years beginning
before July first, nineteen hundred ninety-nine, the  amount  prescribed
by  this  paragraph shall be computed at the rate of nine percent of the
taxpayer's entire net income base. For  taxable  years  beginning  after
June  thirtieth, nineteen hundred ninety-nine and before July first, two
thousand, the amount prescribed by this paragraph shall be  computed  at
the  rate  of  eight  and  one-half percent of the taxpayer's entire net
income base. For taxable years beginning after June thirtieth, two thou-
sand and before July first, two thousand one, the amount  prescribed  by
this  paragraph  shall  be  computed at the rate of eight percent of the
taxpayer's entire net income base. For  taxable  years  beginning  after
June  thirtieth, two thousand one and before January first, two thousand
seven, the amount prescribed by this paragraph shall be computed at  the
rate  of  seven and one-half percent of the taxpayer's entire net income
base.] For taxable years beginning [on or after] BEFORE  January  first,
two  thousand  [seven]  SIXTEEN, the amount prescribed by this paragraph
shall be computed at the rate of seven  and  one-tenth  percent  of  the
taxpayer's  [entire  net] BUSINESS income base. FOR TAXABLE YEARS BEGIN-
NING ON OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND  SIXTEEN,  THE  AMOUNT
PRESCRIBED  BY  THIS  PARAGRAPH SHALL BE SIX AND ONE-HALF PERCENT OF THE
TAXPAYER'S BUSINESS INCOME BASE. The taxpayer's  [entire  net]  BUSINESS
income  base shall mean the portion of the taxpayer's [entire net] BUSI-
NESS income allocated within the state as hereinafter provided[, subject
to any modification required by paragraphs (d) and  (e)  of  subdivision
three of this section]. However, in the case of a small business taxpay-

S. 6359--A                         43                         A. 8559--A

er,  as  defined  in  paragraph  (f)  of  this  subdivision,  the amount
prescribed by this paragraph shall be computed pursuant to  subparagraph
(iv)  of this paragraph and in the case of a manufacturer, as defined in
subparagraph (vi) of this paragraph, the amount prescribed by this para-
graph shall be computed pursuant to subparagraph (vi) of this paragraph.
  [(i)  if the entire net income base is not more than two hundred thou-
sand dollars, (1) for taxable years beginning before July  first,  nine-
teen  hundred  ninety-nine,  the  amount  shall  be eight percent of the
entire net income base; (2) for taxable years beginning after June thir-
tieth, nineteen hundred ninety-nine and before July first, two  thousand
three,  the amount shall be seven and one-half percent of the entire net
income base; and (3) for taxable years beginning after  June  thirtieth,
two  thousand  three  and  before  January first, two thousand five, the
amount shall be 6.85 percent of the entire net income base;
  (ii) if the entire net income base is more than two  hundred  thousand
dollars  but not over two hundred ninety thousand dollars, (1) for taxa-
ble years beginning before July first, nineteen hundred ninety-nine, the
amount shall be the sum  of  (a)  sixteen  thousand  dollars,  (b)  nine
percent  of  the  excess  of the entire net income base over two hundred
thousand dollars and (c) five percent of the excess of  the  entire  net
income  base  over  two  hundred fifty thousand dollars; (2) for taxable
years beginning after June thirtieth, nineteen hundred  ninety-nine  and
before  July  first,  two  thousand,  the amount shall be the sum of (a)
fifteen thousand dollars, (b) eight and one-half percent of  the  excess
of  the entire net income base over two hundred thousand dollars and (c)
five percent of the excess of  the  entire  net  income  base  over  two
hundred  fifty  thousand  dollars; (3) for taxable years beginning after
June thirtieth, two thousand and before July first,  two  thousand  one,
the  amount  shall be the sum of (a) fifteen thousand dollars, (b) eight
percent of the excess of the entire net income  base  over  two  hundred
thousand  dollars  and (c) two and one-half percent of the excess of the
entire net income base over two hundred fifty thousand dollars; (4)  for
taxable  years  beginning  after  June  thirtieth,  two thousand one and
before July first, two thousand three, the amount  shall  be  seven  and
one-half  percent  of  the  entire  net income base; and (5) for taxable
years beginning after June thirtieth,  two  thousand  three  and  before
January  first,  two  thousand  five, the amount shall be the sum of (a)
thirteen thousand seven hundred dollars, (b) 7.5 percent of  the  excess
of  the entire net income base over two hundred thousand dollars and (c)
3.25 percent of the excess of  the  entire  net  income  base  over  two
hundred fifty thousand dollars;
  (iii) for taxable years beginning on or after January first, two thou-
sand  five  and  ending before January first, two thousand seven, if the
entire net income base is not more  than  two  hundred  ninety  thousand
dollars  the  amount shall be six and one-half percent of the entire net
income base; if the entire net income base  is  more  than  two  hundred
ninety  thousand  dollars  but  not  over  three hundred ninety thousand
dollars the amount shall be the  sum  of  (1)  eighteen  thousand  eight
hundred  fifty  dollars, (2) seven and one-half percent of the excess of
the entire net income base over two hundred ninety thousand dollars  but
not  over  three  hundred ninety thousand dollars and (3) seven and one-
quarter percent of the excess of the entire net income base  over  three
hundred  fifty  thousand dollars but not over three hundred ninety thou-
sand dollars;]
  (iv) for taxable years beginning [on or after] BEFORE  January  first,
two  thousand  [seven] SIXTEEN, if the [entire net] BUSINESS income base

S. 6359--A                         44                         A. 8559--A

is not more than two hundred ninety thousand dollars the amount shall be
six and one-half percent of the [entire net] BUSINESS  income  base;  if
the  [entire  net]  BUSINESS income base is more than two hundred ninety
thousand  dollars but not over three hundred ninety thousand dollars the
amount shall be the sum of (1) eighteen  thousand  eight  hundred  fifty
dollars,  (2)  seven  and one-tenth percent of the excess of the [entire
net] BUSINESS income base over two hundred ninety thousand  dollars  but
not  over three hundred ninety thousand dollars and (3) four and thirty-
five hundredths percent of the  excess  of  the  [entire  net]  BUSINESS
income base over three hundred fifty thousand dollars but not over three
hundred ninety thousand dollars;
  (v)  if  the  taxable period to which [subparagraphs (i), (ii), (iii),
and] SUBPARAGRAPH (iv) of this paragraph [apply] APPLIES  is  less  than
twelve months, the amount prescribed by this paragraph shall be computed
as follows:
  (A)  Multiply  the [entire net] BUSINESS income base for such taxpayer
by twelve;
  (B) Divide the result obtained in (A) by the number of months  in  the
taxable year;
  (C) Compute an amount pursuant to [subparagraphs (i) and (ii)] SUBPAR-
AGRAPH (IV) as if the result obtained in (B) were the taxpayer's [entire
net] BUSINESS income base;
  (D) Multiply the result obtained in (C) by the number of months in the
taxpayer's taxable year;
  (E) Divide the result obtained in (D) by twelve.
  (vi) except as otherwise provided in this subparagraph or subparagraph
(vii) of this paragraph, for taxable years beginning on or after January
thirty-first,  two  thousand  seven, the amount prescribed by this para-
graph for a taxpayer which is a  qualified  New  York  manufacturer,  as
defined  in  subdivision  fifteen  of  section two hundred eight of this
article, a qualified New  York  agricultural  business,  as  defined  in
clause (C) of subparagraph (ii) of paragraph (b) of subdivision [twelve]
ONE of [this] section TWO HUNDRED TEN-B OF THIS ARTICLE, and a qualified
New  York mining business, as defined in clause (D) of subparagraph (ii)
of paragraph (b) of subdivision  [twelve]  ONE  of  [this]  section  TWO
HUNDRED  TEN-B OF THIS ARTICLE, shall be computed at the rate of six and
one-half (6.5) percent of the taxpayer's [entire  net]  BUSINESS  income
base.  [For taxable years beginning on or after January first, two thou-
sand twelve and before January first, two thousand fifteen,  the  amount
prescribed  by this paragraph for a taxpayer which is an eligible quali-
fied New York manufacturer shall be computed at the rate  of  three  and
one-quarter  (3.25)  percent  of  the taxpayer's entire net income base.
The commissioner shall establish guidelines and  criteria  that  specify
requirements  by  which  a manufacturer may be classified as an eligible
qualified New York manufacturer. Criteria may include but not be limited
to factors such as regional unemployment, the economic impact that manu-
facturing has on the surrounding community,  population  decline  within
the region and median income within the region in which the manufacturer
is  located.  In establishing these guidelines and criteria, the commis-
sioner shall endeavor that the total annual  cost  of  the  lower  rates
shall not exceed twenty-five million dollars.]
  For  a  qualified  New  York  manufacturer,  as defined in subdivision
fifteen of section two hundred eight of this article,  a  qualified  New
York  agricultural  business,  as  defined in clause (C) of subparagraph
(ii) of paragraph (b) of subdivision [twelve] ONE of [this] section  TWO
HUNDRED TEN-B OF THIS ARTICLE, and a qualified New York mining business,

S. 6359--A                         45                         A. 8559--A

as defined in clause (D) of subparagraph (ii) of paragraph (b) of subdi-
vision [twelve] ONE of [this] section TWO HUNDRED TEN-B OF THIS ARTICLE,
the rate at which the tax is computed in effect for taxable years begin-
ning on or after January first, two thousand thirteen and before January
first,  two thousand fourteen for qualified New York manufacturers shall
be reduced by nine and two-tenths percent for taxable  years  commencing
on  or  after  January  first,  two thousand fourteen and before January
first, two thousand fifteen, twelve and three-tenths percent for taxable
years commencing on or after January first,  two  thousand  fifteen  and
before  January  first,  two  thousand  sixteen, fifteen and four-tenths
percent for taxable years commencing on  or  after  January  first,  two
thousand  sixteen  and  before January first, two thousand eighteen, and
twenty-five percent for taxable years  beginning  on  or  after  January
first, two thousand eighteen.
  (vii)  For a qualified New York manufacturer that has an apportionment
factor for purposes of  the  metropolitan  transportation  business  tax
surcharge  computed  pursuant  to subdivision two of section two hundred
nine-B of this article equal to zero for the taxable  year,  the  amount
prescribed  by  this  paragraph  for taxable years beginning on or after
January first, two thousand fourteen shall be computed at  the  rate  of
zero percent of the taxpayer's entire net income base.
  (VIII)  IN  COMPUTING  THE  BUSINESS INCOME BASE, A NET OPERATING LOSS
DEDUCTION SHALL BE ALLOWED. A NET OPERATING LOSS DEDUCTION IS THE AMOUNT
OF NET OPERATING LOSS OR LOSSES FROM ONE OR MORE TAXABLE YEARS THAT  ARE
CARRIED FORWARD TO A PARTICULAR INCOME YEAR. A NET OPERATING LOSS IS THE
AMOUNT  OF  A BUSINESS LOSS INCURRED IN A PARTICULAR TAX YEAR MULTIPLIED
BY THE APPORTIONMENT FACTOR FOR THAT YEAR AS  DETERMINED  UNDER  SECTION
TWO  HUNDRED  TEN-A OF THIS ARTICLE. THE MAXIMUM NET OPERATING DEDUCTION
THAT IS ALLOWED IN A TAXABLE YEAR IS THE AMOUNT THAT REDUCES THE TAXPAY-
ER'S TAX ON ALLOCATED BUSINESS INCOME TO THE HIGHER OF THE  TAX  ON  THE
CAPITAL  BASE  OR  THE FIXED DOLLAR MINIMUM. SUCH DEDUCTION AND LOSS ARE
DETERMINED IN ACCORDANCE WITH THE FOLLOWING:
  (1) SUCH NET OPERATING LOSS DEDUCTION IS NOT  LIMITED  TO  THE  AMOUNT
ALLOWED  UNDER  SECTION  ONE HUNDRED SEVENTY-TWO OF THE INTERNAL REVENUE
CODE OR THE AMOUNT THAT WOULD HAVE BEEN ALLOWED IF THE TAXPAYER HAD  NOT
MADE  AN  ELECTION  UNDER  SUBCHAPTER  S  OF CHAPTER ONE OF THE INTERNAL
REVENUE CODE.
  (2) SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET  OPER-
ATING  LOSS  INCURRED DURING ANY TAXABLE YEAR BEGINNING PRIOR TO JANUARY
FIRST, TWO THOUSAND FIFTEEN, OR DURING ANY TAXABLE  YEAR  IN  WHICH  THE
TAXPAYER WAS NOT SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE.
  (3) A TAXPAYER THAT FILES AS PART OF A FEDERAL CONSOLIDATED RETURN BUT
ON  A  SEPARATE  BASIS  FOR  PURPOSES  OF  THIS ARTICLE MUST COMPUTE ITS
DEDUCTION AND LOSS AS IF IT WERE FILING ON A SEPARATE BASIS FOR  FEDERAL
INCOME TAX PURPOSES.
  (4) A NET OPERATING LOSS MUST BE CARRIED FORWARD TO EACH OF THE TWENTY
TAXABLE  YEARS  FOLLOWING  THE TAXABLE YEAR OF THE LOSS. NO CARRYBACK OF
THE NET OPERATING LOSS IS ALLOWED. A TAXPAYER MUST APPLY BOTH  OF  THESE
LIMITATIONS IN COMPUTING SUCH NET OPERATING LOSS DEDUCTION.
  (5)  SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET OPER-
ATING LOSS INCURRED DURING A NEW YORK S YEAR; PROVIDED, HOWEVER,  A  NEW
YORK  S YEAR MUST BE TREATED AS A TAXABLE YEAR FOR PURPOSES OF DETERMIN-
ING THE NUMBER OF TAXABLE YEARS TO WHICH A NET  OPERATING  LOSS  MAY  BE
CARRIED FORWARD.
  (6)  WHERE  THERE  ARE  TWO OR MORE ALLOCATED NET OPERATING LOSSES, OR
PORTIONS THEREOF, CARRIED FORWARD TO BE DEDUCTED IN ONE  PARTICULAR  TAX

S. 6359--A                         46                         A. 8559--A

YEAR  FROM  ALLOCATED  BUSINESS  INCOME,  THE  EARLIEST  ALLOCATED  LOSS
INCURRED MUST BE APPLIED FIRST.
  (b)  Capital  base.  (1)  The [amount prescribed by this paragraph for
taxable years beginning before January first, two thousand  eight  shall
be  computed  at .178  percent  for  each dollar of the taxpayer's total
business and investment capital, or the portion thereof allocated within
the state as hereinafter provided. For taxable  years  beginning  on  or
after  January first, two thousand eight, the] amount prescribed by this
paragraph shall be computed  at .15  percent  for  each  dollar  of  the
taxpayer's total business [and investment] capital, or the portion ther-
eof  allocated within the state as hereinafter provided. However, in the
case of a cooperative housing corporation as  defined  in  the  internal
revenue  code,  the  applicable  rate shall be .04 percent.  In no event
shall the amount prescribed by this paragraph exceed three hundred fifty
thousand dollars for qualified New York manufacturers and for all  other
taxpayers  [ten] FIVE million dollars [for taxable years beginning on or
after January first, two thousand eight but before  January  first,  two
thousand  eleven  and one million dollars for taxable years beginning on
or after January first, two thousand eleven].
  (2) For a qualified New York manufacturer, as defined  in  subdivision
fifteen  of  section  two hundred eight of this article, a qualified New
York agricultural business, as defined in  clause  (C)  of  subparagraph
(ii)  of paragraph (b) of subdivision [twelve] ONE of [this] section TWO
HUNDRED TEN-B OF THIS ARTICLE, and a qualified New York mining business,
as defined in clause (D) of subparagraph (ii) of paragraph (b) of subdi-
vision [twelve] ONE of [this] section TWO HUNDRED TEN-B OF THIS ARTICLE,
the rate at which the tax is computed in effect for taxable years begin-
ning on or after January first, two thousand thirteen and before January
first, two thousand fourteen shall be reduced  by  nine  and  two-tenths
percent  for  taxable  years  commencing  on or after January first, two
thousand fourteen and before January first, two thousand fifteen, twelve
and three-tenths percent for taxable years commencing on or after  Janu-
ary  first,  two thousand fifteen and before January first, two thousand
sixteen, fifteen and four-tenths percent for taxable years commencing on
or after January first, two thousand sixteen and before  January  first,
two  thousand eighteen, and twenty-five percent for taxable years begin-
ning on or after January first, two thousand eighteen.
  [(c) Minimum taxable income bases. (i)  For  taxable  years  beginning
after  nineteen  hundred  eighty-six and before nineteen hundred eighty-
nine, the amount prescribed by this paragraph shall be computed  at  the
rate  of  three  and  one-half  percent  of  the taxpayer's pre-nineteen
hundred ninety minimum taxable income base. For taxable years  beginning
in nineteen hundred eighty-nine, the amount prescribed by this paragraph
shall  be  computed  at  the rate of five percent of the taxpayer's pre-
nineteen hundred ninety minimum taxable income base. A "taxpayer's  pre-
nineteen  hundred  ninety  minimum  taxable  income base" shall mean the
portion of the taxpayer's entire net income allocated within  the  state
as  hereinafter  provided, subject to any modification required by para-
graphs (d) and (e) of subdivision three of this section;
  (ii) (A) For taxable years beginning on or after  January  first,  two
thousand  seven,  the  amount  prescribed  by  this  paragraph  shall be
computed at the rate of one and one-half percent of the taxpayer's mini-
mum taxable income base. The "taxpayer's minimum  taxable  income  base"
shall  mean  the  portion of the taxpayer's minimum taxable income allo-
cated within the state as hereinafter provided, subject to any modifica-

S. 6359--A                         47                         A. 8559--A

tions required by paragraphs (d) and (e) of subdivision  three  of  this
section.
  (B)  For  taxable years beginning on or after January first, two thou-
sand twelve and before January first, two thousand fifteen,  the  amount
prescribed by this paragraph for an eligible qualified New York manufac-
turer  shall  be  computed  at the rate of seventy-five hundredths (.75)
percent of the taxpayer's minimum taxable income base. For  purposes  of
this  clause,  the term "eligible qualified New York manufacturer" shall
have the same meaning as in subparagraph (vi) of paragraph (a)  of  this
subdivision.
  (iii)  For  a  qualified New York manufacturer, as defined in subpara-
graph (vi) of paragraph (a) of this subdivision, a  qualified  New  York
agricultural  business, as defined in clause (C) of subparagraph (ii) of
paragraph (b) of subdivision twelve of this section, and a qualified New
York mining business, as defined in clause (D) of subparagraph  (ii)  of
paragraph  (b)  of subdivision twelve of this section, the rate at which
the tax is computed in effect for taxable years beginning  on  or  after
January first, two thousand thirteen and before January first, two thou-
sand  fourteen  for qualified New York manufacturers shall be reduced by
nine and two-tenths percent for taxable years  commencing  on  or  after
January first, two thousand fourteen and before January first, two thou-
sand fifteen, twelve and three-tenths percent for taxable years commenc-
ing  on  or after January first, two thousand fifteen and before January
first, two thousand sixteen, fifteen and four-tenths percent for taxable
years commencing on or after January first,  two  thousand  sixteen  and
before January first, two thousand eighteen, and twenty-five percent for
taxable  years  beginning  on or after January first, two thousand eigh-
teen.]
  (d) Fixed dollar minimum. (1) The [amount prescribed by this paragraph
shall be for a taxpayer which during the taxable year has:
  (A) a gross payroll of six million two hundred fifty thousand  dollars
or more, one thousand five hundred dollars;
  (B)  a  gross payroll of less than six million two hundred fifty thou-
sand dollars but more than one million dollars, four hundred twenty-five
dollars;
  (C) a gross payroll of no more than one million dollars but more  than
five hundred thousand dollars, three hundred twenty-five dollars;
  (D)  a gross payroll of no more than five hundred thousand dollars but
more than two hundred fifty thousand dollars,  two  hundred  twenty-five
dollars;
  (E)  a  gross  payroll  of  two hundred fifty thousand dollars or less
(except as prescribed in clause (F) of this subparagraph),  one  hundred
dollars;
  (F)  a  gross  payroll  of  one  thousand  dollars or less, with total
receipts within and without this state of one thousand dollars or  less,
and the average value of the assets of which are one thousand dollars or
less, eight hundred dollars.
  (2) For purposes of this paragraph:
  (A)  gross  payroll shall be the same as the total wages, salaries and
other personal service compensation of  all  the  taxpayer's  employees,
within and without this state, as defined in subparagraph three of para-
graph  (a)  of  subdivision  three  of this section, except that general
executive officers shall not be excluded.
  (B) total receipts shall be the same as receipts  within  and  without
this  state  as defined in subparagraph two of paragraph (a) of subdivi-
sion three of this section.

S. 6359--A                         48                         A. 8559--A

  (C) average value of the assets shall be the  same  as  prescribed  by
subdivision two of this section without reduction for liabilities.
  (3)  If  the  taxable  year  is  less  than  twelve months, the amount
prescribed by this paragraph shall be reduced by twenty-five percent  if
the  period  for  which  the taxpayer is subject to tax is more than six
months but not more than nine months and by fifty percent if the  period
for  which  the  taxpayer is subject to tax is not more than six months.
Provided, however, that in determining the amount of gross  payroll  and
total receipts for purposes of subparagraph one of this paragraph, where
the taxable year is less than twelve months, the amount of each shall be
determined  by  dividing  the amount of each with respect to the taxable
year by the number of months in such taxable year  and  multiplying  the
result  by  twelve.  If the taxable year is less than twelve months, the
amount of New York receipts for purposes of subparagraph  four  of  this
paragraph  is  determined by dividing the amount of the receipts for the
taxable year by the number of months in the taxable year and multiplying
the result by twelve.
  (4) Notwithstanding subparagraphs one and two of this  paragraph,  for
taxable  years  beginning on or after January first, two thousand eight,
the] amount prescribed by this paragraph for  New  York  S  corporations
will be determined in accordance with the following table:

If New York receipts are:                The fixed dollar minimum tax is:
 not more than $100,000                               $   25
 more than $100,000 but not over $250,000             $   50
 more than $250,000 but not over $500,000             $  175
 more than $500,000 but not over $1,000,000           $  300
 more than $1,000,000 but not over $5,000,000         $1,000
 more than $5,000,000 but not over $25,000,000        $3,000
 Over $25,000,000                                     $4,500

[Otherwise the amount prescribed by this paragraph will be determined in
accordance with the following table:]
PROVIDED  FURTHER,  THE AMOUNT PRESCRIBED BY THIS PARAGRAPH FOR A QUALI-
FIED NEW YORK MANUFACTURER, AS DEFINED IN SUBDIVISION FIFTEEN OF SECTION
TWO HUNDRED EIGHT OF THIS ARTICLE, A  QUALIFIED  NEW  YORK  AGRICULTURAL
BUSINESS, AS DEFINED IN CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B)
OF  SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN-B OF THIS ARTICLE, AND A
QUALIFIED NEW YORK MINING BUSINESS, AS DEFINED IN CLAUSE (D) OF SUBPARA-
GRAPH (II) OF PARAGRAPH (B) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
TEN-B OF THIS ARTICLE, WILL BE DETERMINED IN ACCORDANCE WITH THE FOLLOW-
ING TABLES:
FOR  TAX  YEARS BEGINNING ON OR AFTER JANUARY 1, 2014 AND BEFORE JANUARY
1, 2015:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   23
 MORE THAN $100,000 BUT NOT OVER $250,000             $   68
 MORE THAN $250,000 BUT NOT OVER $500,000             $  159
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  454
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,362
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,178
 OVER $25,000,000                                     $4,500

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2015 AND  BEFORE  JANUARY
1, 2016:

S. 6359--A                         49                         A. 8559--A

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   22
 MORE THAN $100,000 BUT NOT OVER $250,000             $   66
 MORE THAN $250,000 BUT NOT OVER $500,000             $  153
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  439
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,316
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,070
 OVER $25,000,000                                     $4,385

FOR  TAX  YEARS BEGINNING ON OR AFTER JANUARY 1, 2016 AND BEFORE JANUARY
1, 2018:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   21
 MORE THAN $100,000 BUT NOT OVER $250,000             $   63
 MORE THAN $250,000 BUT NOT OVER $500,000             $  148
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  423
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,269
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,961
 OVER $25,000,000                                     $4,230

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2018:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   19
 MORE THAN $100,000 BUT NOT OVER $250,000             $   56
 MORE THAN $250,000 BUT NOT OVER $500,000             $  131
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  375
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,125
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,625
 OVER $25,000,000                                     $3,750

OTHERWISE THE AMOUNT PRESCRIBED BY THIS PARAGRAPH WILL BE DETERMINED  IN
ACCORDANCE WITH THE FOLLOWING TABLE:

If New York receipts are:                The fixed dollar minimum tax is:
 not more than $100,000                               $   25
 more than $100,000 but not over $250,000             $   75
 more than $250,000 but not over $500,000             $  175
 more than $500,000 but not over $1,000,000           $  500
 more than $1,000,000 but not over $5,000,000         $1,500
 more than $5,000,000 but not over $25,000,000        $3,500
 [Over] MORE THAN $25,000,000
 BUT NOT OVER $50,000,000                             $5,000
 MORE THAN $50,000,000 BUT NOT OVER $100,000,000      $10,000
 MORE THAN $100,000,000 BUT NOT OVER $250,000,000     $20,000
 MORE THAN $250,000,000 BUT NOT OVER $500,000,000     50,000
 MORE THAN $500,000,000 BUT NOT OVER $1,000,000,000   $100,000
 OVER $1,000,000,000                                  $200,000

For  purposes  of  this  paragraph,  New  York receipts are the receipts
[computed in accordance with subparagraph two of paragraph (a) of subdi-
vision three of this] INCLUDED IN THE  NUMERATOR  OF  THE  APPORTIONMENT
FACTOR DETERMINED UNDER section TWO HUNDRED TEN-A for the taxable year.
  (2)  IF THE TAXABLE YEAR IS LESS THAN TWELVE MONTHS, THE AMOUNT OF NEW
YORK RECEIPTS IS DETERMINED BY DIVIDING THE AMOUNT OF THE  RECEIPTS  FOR

S. 6359--A                         50                         A. 8559--A

THE  TAXABLE YEAR BY THE NUMBER OF MONTHS IN THE TAXABLE YEAR AND MULTI-
PLYING THE RESULT BY TWELVE. IN THE CASE OF A TERMINATION YEAR OF A  NEW
YORK S CORPORATION, THE SUM OF THE TAX COMPUTED UNDER THIS PARAGRAPH FOR
THE  S  SHORT  YEAR  AND FOR THE C SHORT YEAR SHALL NOT BE LESS THAN THE
AMOUNT COMPUTED UNDER THIS PARAGRAPH AS IF THE CORPORATION  WERE  A  NEW
YORK C CORPORATION FOR THE ENTIRE TAXABLE YEAR.
  [(5)  For taxable years beginning on or after January first, two thou-
sand twelve and before January first, two thousand fifteen, the  amounts
prescribed  in subparagraphs one and four of this paragraph as the fixed
dollar minimum tax for an eligible qualified New York manufacturer shall
be one-half of the amounts stated in those subparagraphs.  For  purposes
of  this subparagraph, the term "eligible qualified New York manufactur-
er" shall have the same meaning as in subparagraph (vi) of paragraph (a)
of this subdivision.
  (6) For a qualified New York manufacturer, as defined  in  subdivision
fifteen  of  section  two hundred eight of this article, a qualified New
York agricultural business, as defined in  clause  (C)  of  subparagraph
(ii) of paragraph (b) of subdivision twelve of this section, and a qual-
ified New York mining business, as defined in clause (D) of subparagraph
(ii) of paragraph (b) of subdivision twelve of this section, the amounts
prescribed in subparagraphs one and four of this paragraph in effect for
taxable years beginning on or after January first, two thousand thirteen
and  before  January first, two thousand fourteen for qualified New York
manufacturers shall be reduced by nine and two-tenths percent for  taxa-
ble  years  commencing  on or after January first, two thousand fourteen
and before January first, two thousand fifteen, twelve and  three-tenths
percent  for  taxable  years  commencing  on or after January first, two
thousand fifteen and before January first, two thousand sixteen, fifteen
and four-tenths percent for taxable years commencing on or after January
first, two thousand sixteen and before January first, two thousand eigh-
teen, and twenty-five percent for taxable years beginning  on  or  after
January first, two thousand eighteen.
  (e)  Subsidiary  capital base. (1) The amount prescribed by this para-
graph shall be computed at the rate of nine-tenths of a  mill  for  each
dollar  of  the  portion  of the taxpayer's subsidiary capital allocated
within the state as hereinafter provided.
  (2) For purposes of this paragraph,  the  amount  of  such  subsidiary
capital,  prior  to  allocation,  shall  be  reduced  by  the applicable
percentage of the taxpayer's (i) investments in the stock  of,  and  any
indebtedness from, subsidiaries subject to tax under section one hundred
eighty-six  of this chapter (but only to the extent such indebtedness is
included in subsidiary capital), and (ii) investments in the  stock  of,
and  any  indebtedness  from,  subsidiaries subject to tax under article
thirty-two or thirty-three of this chapter (but only to the extent  such
indebtedness  is included in subsidiary capital). For purposes of clause
(i) of this subparagraph, the  applicable  percentage  shall  be  thirty
percent  for  taxable  years  beginning in two thousand, and one hundred
percent for taxable years beginning after two thousand. For purposes  of
clause (ii) of this subparagraph, the applicable percentage shall be one
hundred percent for taxable years beginning after nineteen hundred nine-
ty-nine.]
  (f)  For  purposes of this section, the term "small business taxpayer"
shall mean a taxpayer (i) which has an entire net  income  of  not  more
than  three  hundred  ninety thousand dollars for the taxable year; (ii)
[which constitutes a small business as defined in section 1244(c)(3)  of
internal revenue code (without regard to the second sentence of subpara-

S. 6359--A                         51                         A. 8559--A

graph (A) thereof) as of the last day of the taxable year] THE AGGREGATE
AMOUNT  OF  MONEY  AND  OTHER  PROPERTY  RECEIVED BY THE CORPORATION FOR
STOCK, AS A CONTRIBUTION TO CAPITAL, AND AS PAID-IN  SURPLUS,  DOES  NOT
EXCEED  ONE  MILLION DOLLARS; [and] (iii) which is not part of an affil-
iated group, as defined in section 1504 of the  internal  revenue  code,
unless  such  group,  if  it  had filed a report under this article on a
combined basis, would have itself qualified as a "small business taxpay-
er" pursuant to this subdivision; AND (IV) WHICH HAS AN  AVERAGE  NUMBER
OF INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE OFFICERS, EMPLOYED FULL-TIME
IN  THE  STATE  DURING THE TAXABLE YEAR OF ONE HUNDRED OR FEWER.  If the
taxable period to which subparagraph (i) of this  paragraph  applies  is
less than twelve months, entire net income under such subparagraph shall
be  placed  on  an  annual basis by multiplying the entire net income by
twelve and dividing the result by the number of months  in  the  period.
FOR  PURPOSES  OF  SUBPARAGRAPH (II) OF THIS PARAGRAPH, THE AMOUNT TAKEN
INTO ACCOUNT WITH RESPECT TO ANY PROPERTY OTHER THAN MONEY SHALL BE  THE
AMOUNT  EQUAL  TO THE ADJUSTED BASIS TO THE CORPORATION OF SUCH PROPERTY
FOR DETERMINING GAIN, REDUCED BY ANY LIABILITY TO WHICH THE PROPERTY WAS
SUBJECT OR WHICH WAS ASSUMED BY THE CORPORATION. THE DETERMINATION UNDER
THE PRECEDING SENTENCE SHALL BE MADE AS OF THE  TIME  THE  PROPERTY  WAS
RECEIVED  BY THE CORPORATION. FOR PURPOSES OF SUBPARAGRAPH (III) OF THIS
SECTION, "AVERAGE NUMBER OF  INDIVIDUALS,  EXCLUDING  GENERAL  EXECUTIVE
OFFICERS,  EMPLOYED  FULL-TIME"  SHALL  BE  COMPUTED BY ASCERTAINING THE
NUMBER OF SUCH INDIVIDUALS EMPLOYED BY THE TAXPAYER ON THE  THIRTY-FIRST
DAY  OF MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER
AND THE THIRTY-FIRST DAY OF DECEMBER DURING EACH TAXABLE YEAR  OR  OTHER
APPLICABLE  PERIOD,  BY  ADDING  TOGETHER THE NUMBER OF SUCH INDIVIDUALS
ASCERTAINED ON EACH OF SUCH DATES AND DIVIDING THE SUM  SO  OBTAINED  BY
THE  NUMBER  OF  SUCH  DATES OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER
APPLICABLE PERIOD. AN INDIVIDUAL EMPLOYED FULL-TIME MEANS AN EMPLOYEE IN
A JOB CONSISTING OF AT LEAST THIRTY-FIVE HOURS PER WEEK, OR TWO OR  MORE
EMPLOYEES  WHO  ARE IN JOBS THAT TOGETHER CONSTITUTE THE EQUIVALENT OF A
JOB  AT  LEAST  THIRTY-FIVE  HOURS  PER  WEEK  (FULL-TIME   EQUIVALENT).
FULL-TIME EQUIVALENT EMPLOYEES IN THE STATE INCLUDES ALL EMPLOYEES REGU-
LARLY CONNECTED WITH OR WORKING OUT OF AN OFFICE OR PLACE OF BUSINESS OF
THE TAXPAYER WITHIN THE STATE.
  (g)  New  York S corporations.   (1) General. The amount prescribed by
this paragraph shall be, in the case of each  New  York  S  corporation,
[(i)  the  higher of the amounts prescribed in paragraphs (a) and (d) of
this subdivision (other than the amount prescribed in the  final  clause
of  subparagraph  one of that paragraph (d)) (ii) reduced by the article
twenty-two tax equivalent;  provided,  however,  that  the  amount  thus
determined  shall  not be less than the lowest of the amounts prescribed
in subparagraph one of that paragraph (d) (applying  the  provisions  of
subparagraph  three  of that paragraph as necessary). Provided, however,
notwithstanding any provision of this paragraph, in taxable years begin-
ning in two thousand three and before two  thousand  eight,  the  amount
prescribed  by this paragraph shall be the amount prescribed in subpara-
graph one of that paragraph (d) (applying the provisions of subparagraph
three of that paragraph as necessary) and applying  the  calculation  of
that  amount  in the case of a termination year as set forth in subpara-
graph four of this paragraph as necessary. In taxable years beginning in
two thousand eight and thereafter, the amount prescribed by  this  para-
graph  is]  the amount prescribed in subparagraph four of that paragraph
(d) [(applying the provisions of subparagraph three of that paragraph as
necessary)] and applying the calculation of that amount in the case of a

S. 6359--A                         52                         A. 8559--A

termination year as set forth in subparagraph four of this paragraph  as
necessary.
  (2)  [Article  twenty-two  tax equivalent. For taxable years beginning
before July first, nineteen hundred ninety-nine, the article  twenty-two
tax equivalent is the amount computed under paragraph (a) of this subdi-
vision  by  substituting for the rate therein the rate of 7.875 percent.
For taxable years beginning after June thirtieth, nineteen hundred nine-
ty-nine and before July first, two thousand, the article twenty-two  tax
equivalent  is  the amount computed under paragraph (a) of this subdivi-
sion by substituting for the rate therein the rate of 7.525 percent. For
taxable years beginning after June thirtieth, two  thousand  and  before
July  first,  two thousand one, the article twenty-two tax equivalent is
the amount computed under paragraph (a) of this subdivision  by  substi-
tuting for the rate therein the rate of 7.175 percent. For taxable years
beginning  after June thirtieth, two thousand one and before July first,
two thousand three, the article twenty-two tax equivalent is the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 6.85 percent. For taxable years beginning after
June  thirtieth,  two  thousand three, the article twenty-two tax equiv-
alent is the amount computed under paragraph (a) of this subdivision  by
substituting for the rate therein the rate of 7.1425 percent.
  (3)  Small  business  taxpayers.  Notwithstanding  the  provisions  of
subparagraphs one and two of this paragraph, in the case of a New York S
corporation which is a small business taxpayer, as defined in  paragraph
(f) of this subdivision, the following provisions shall apply:
  (A)  For  taxable  years beginning before July first, nineteen hundred
ninety-nine,  the  article  twenty-two  tax  equivalent  is  the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.875 percent.
  (B) For taxable years beginning after June thirtieth, nineteen hundred
ninety-nine  and  before  July  first,  two  thousand  three, the amount
computed under paragraph (a) of this  subdivision,  as  referred  to  in
subparagraph  one  of  this paragraph, shall be computed by substituting
for the rate therein the rate of 7.5 percent, and the article twenty-two
tax equivalent under paragraph (a) of this subdivision shall be computed
as follows:
  (i) if the entire net income base is not more than two  hundred  thou-
sand  dollars,  the  article  twenty-two  tax  equivalent  is the amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.45 percent;
  (ii) if the entire net income base is more than two  hundred  thousand
dollars  but  not  over two hundred ninety thousand dollars, the article
twenty-two tax equivalent shall be computed as the sum of  (I)  fourteen
thousand  nine  hundred  dollars,  (II)  six  and eighty-five hundredths
percent of the first fifty thousand dollars in excess of the entire  net
income  base  over  two  hundred  thousand  dollars, and (III) three and
eighty-five hundredths percent of the excess, if any, of the entire  net
income base over two hundred fifty thousand dollars.
  (C)  For  taxable  years  beginning after June thirtieth, two thousand
three, the amount computed under paragraph (a) of this  subdivision,  as
referred  to in subparagraph one of this paragraph, shall be computed by
substituting for the rate therein the rate of 7.5 percent, and the arti-
cle twenty-two tax equivalent under paragraph (a)  of  this  subdivision
shall be computed as follows:
  (i)  if  the entire net income base is not more than two hundred thou-
sand dollars, the  article  twenty-two  tax  equivalent  is  the  amount

S. 6359--A                         53                         A. 8559--A

computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.4725 percent;
  (ii)  if  the entire net income base is more than two hundred thousand
dollars but not over two hundred ninety thousand  dollars,  the  article
twenty-two  tax  equivalent shall be computed as the sum of (I) fourteen
thousand nine hundred forty-five dollars, (II)  7.1425  percent  of  the
first  fifty  thousand  dollars  in excess of the entire net income base
over two hundred thousand dollars,  and  (III)  5.4925  percent  of  the
excess,  if  any,  of  the entire net income base over two hundred fifty
thousand dollars.
  (4)] Termination year. In the case of a termination year, [the tax for
the S short year shall be computed under this paragraph  without  regard
to  the  fixed  dollar  minimum  tax prescribed in paragraph (d) of this
subdivision, and the tax for the C short year shall  be  computed  under
the  opening  paragraph  of this subdivision without regard to the fixed
dollar minimum tax prescribed under such paragraph (d), but in no  event
shall]  the  sum  of  the tax for the S short year and the tax for the C
short year SHALL NOT be less than the fixed  dollar  minimum  tax  under
paragraph  (d) of this subdivision computed as if the corporation were a
New York C corporation for the entire taxable year.
  [(h) For purposes of determining whether a  taxpayer  is  an  eligible
qualified  New  York  manufacturer  for  purposes  of  the  tax benefits
provided in subparagraph (vi) of  paragraph  (a)  of  this  subdivision,
subparagraph (ii) of paragraph (c) of this subdivision, and subparagraph
five  of paragraph (d) of this subdivision, a taxpayer shall utilize the
law, guidelines and criteria in effect  on  December  thirty-first,  two
thousand thirteen.]
  S  13.  Subdivision  1-c  of section 210 of the tax law, as amended by
chapter 1043 of the laws of 1981, the opening  paragraph  and  paragraph
(a)  as amended by chapter 817 of the laws of 1987, and paragraph (b) as
amended by section 12 of part Y of chapter 63 of the laws  of  2000,  is
amended to read as follows:
  1-c. The computations specified in paragraph (b) of subdivision one of
this section shall not apply to the first two taxable years of a taxpay-
er  which,  for  one or both such years, is a small business [concern. A
small business concern:
  (a) is a taxpayer which is a small business corporation as defined  in
paragraph  three  of subsection (c) of section twelve hundred forty-four
of the internal revenue code (without regard to the second  sentence  of
subparagraph (A) thereof) as of the last day of the taxable year,
  (b) is not a corporation over fifty percent of the number of shares of
stock of which entitling the holders thereof to vote for the election of
directors or trustees is owned by a taxpayer which (1) is subject to tax
under this article; section one hundred eighty-three, one hundred eight-
y-four or one hundred eighty-five of article nine; article thirty-two or
thirty-three  of this chapter, and (2) does not qualify as a small busi-
ness corporation as defined in paragraph  three  of  subsection  (c)  of
section  twelve hundred forty-four of the internal revenue code (without
regard to the second sentence of subparagraph (A)  thereof)  as  of  the
last  day  of its taxable year ending within or with the taxable year of
the taxpayer,
  (c) is not a corporation which is substantially similar  in  operation
and  in  ownership to a business entity (or entities) taxable, or previ-
ously taxable, under this article; section one hundred eighty-three, one
hundred eighty-four, one hundred eighty-five or one  hundred  eighty-six
of  article  nine;  article  thirty-two or thirty-three of this chapter;

S. 6359--A                         54                         A. 8559--A

article twenty-three of this chapter or which would have been subject to
tax under such article twenty-three (as such article was  in  effect  on
January  first,  nineteen  hundred  eighty) or the income (or losses) of
which  is  (or was) includable under article twenty-two of this chapter,
and
  (d) at least ninety percent of the assets of such corporation  (valued
at  original  cost)  were  located and employed in this state during the
taxable year and eighty percent of the employees of such corporation (as
ascertained within the meaning and intent of subparagraph three of para-
graph (a)  of  subdivision  three  of  this  section)  were  principally
employed  in  this state during the taxable year] TAXPAYER AS DEFINED IN
PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION.
  S 14. Subdivision 2 of section 210 of the tax law, as amended by chap-
ter 760 of the laws of 1992, is amended to read as follows:
  2. The amount of [subsidiary capital,] investment capital and business
capital shall each be determined by taking  the  average  value  of  the
assets  included therein (less liabilities deductible therefrom pursuant
to the provisions of subdivisions [four,] five and seven of section  two
hundred eight), and, if the period covered by the report is other than a
period  of  twelve  calendar  months,  by  multiplying such value by the
number of calendar months or major parts thereof included in such  peri-
od,  and  dividing  the product thus obtained by twelve. For purposes of
this subdivision, real  property  and  marketable  securities  shall  be
valued  at  fair  market  value and the value of personal property other
than marketable securities shall be the value thereof shown on the books
and records of  the  taxpayer  in  accordance  with  generally  accepted
accounting principles.
  S  15.  Subdivisions 3, 3-a, 4, 5, 6, 7, 8, 9, 10, 11, 12, 12-A, 12-B,
12-C, 12-D, 12-E, 12-F, 12-G, 13, 14, 15, 16, 17, 18, 19, 20, 21,  21-a,
22,  23,  23-a,  24, 25, 25-a, 26, 26-a, 27, 28, 30, 31, 32, 33, 34, 35,
36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, subdivision 48 as  added
by  section  3  of  part  T  of  this act and subdivision 48 as added by
section 2 of part R of this act of  section  210  of  the  tax  law  are
REPEALED.
  S 15-a. Section 210 of the tax law is amended by adding a new subdivi-
sion 3 to read as follows:
  3.  A CORPORATION THAT IS A PARTNER IN A PARTNERSHIP SHALL COMPUTE TAX
UNDER THIS ARTICLE USING THE AGGREGATE METHOD AS DEFINED  IN  THE  REGU-
LATIONS  OF  THE  COMMISSIONER, UNLESS ANOTHER METHOD FOR COMPUTING SUCH
TAX IS REQUIRED OR ALLOWED BY  SUCH  REGULATIONS.  UNDER  THE  AGGREGATE
METHOD,  A  CORPORATION  THAT IS A PARTNER IN A PARTNERSHIP IS VIEWED AS
HAVING AN UNDIVIDED INTEREST IN THE PARTNERSHIP'S  ASSETS,  LIABILITIES,
AND  ITEMS  OF  RECEIPTS,  INCOME,  GAIN,  LOSS AND DEDUCTION. UNDER THE
AGGREGATE METHOD, THE CORPORATION THAT IS A PARTNER IN A PARTNERSHIP  IS
TREATED  AS  PARTICIPATING  IN THE PARTNERSHIP'S TRANSACTIONS AND ACTIV-
ITIES.
  S 16. The tax law is amended by adding a new section 210-A to read  as
follows:
  S  210-A. APPORTIONMENT. 1. GENERAL. BUSINESS INCOME AND CAPITAL SHALL
BE APPORTIONED TO THE  STATE  BY  THE  APPORTIONMENT  FACTOR  DETERMINED
PURSUANT TO THIS SECTION. THE APPORTIONMENT FACTOR IS A FRACTION, DETER-
MINED BY INCLUDING ONLY THOSE RECEIPTS, NET INCOME, NET GAINS, AND OTHER
ITEMS  DESCRIBED IN THIS SECTION THAT ARE INCLUDED IN THE COMPUTATION OF
THE TAXPAYER'S BUSINESS INCOME FOR THE TAXABLE YEAR.   THE NUMERATOR  OF
THE  APPORTIONMENT FRACTION SHALL BE EQUAL TO THE SUM OF ALL THE AMOUNTS
REQUIRED TO BE INCLUDED IN THE NUMERATOR PURSUANT TO THE  PROVISIONS  OF

S. 6359--A                         55                         A. 8559--A

THIS  SECTION AND THE DENOMINATOR OF THE APPORTIONMENT FRACTION SHALL BE
EQUAL TO THE SUM OF ALL THE AMOUNTS  REQUIRED  TO  BE  INCLUDED  IN  THE
DENOMINATOR PURSUANT TO THE PROVISIONS OF THIS SECTION.
  2.  SALES  OF TANGIBLE PERSONAL PROPERTY AND ELECTRICITY. (A) RECEIPTS
FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE  SHIPMENTS  ARE  MADE  TO
POINTS WITHIN THE STATE OR THE DESTINATION OF THE PROPERTY IS A POINT IN
THE  STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION. RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE  SHIPMENTS
ARE  MADE  TO  POINTS WITHIN AND WITHOUT THE STATE OR THE DESTINATION IS
WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE
APPORTIONMENT FRACTION.
  (B) RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN  THE
STATE  SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.
RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN AND  WITH-
OUT  THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT
FRACTION.
  (C) RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY AND  ELECTRICITY
THAT ARE TRADED AS COMMODITIES AS DESCRIBED IN SECTION 475 OF THE INTER-
NAL  REVENUE  CODE ARE INCLUDED IN THE APPORTIONMENT FRACTION IN ACCORD-
ANCE WITH CLAUSE (I) OF SUBPARAGRAPH TWO OF PARAGRAPH (A) OF SUBDIVISION
FIVE OF THIS SECTION.
  3. RENTALS AND ROYALTIES. (A) RECEIPTS FROM RENTALS OF REAL AND TANGI-
BLE PERSONAL PROPERTY LOCATED WITHIN  THE  STATE  ARE  INCLUDED  IN  THE
NUMERATOR  OF  THE APPORTIONMENT FRACTION. RECEIPTS FROM RENTALS OF REAL
AND TANGIBLE PERSONAL PROPERTY LOCATED  WITHIN  AND  WITHOUT  THE  STATE
SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (B)  RECEIPTS OF ROYALTIES FROM THE USE OF PATENTS, COPYRIGHTS, TRADE-
MARKS, AND SIMILAR INTANGIBLE PERSONAL PROPERTY  WITHIN  THE  STATE  ARE
INCLUDED  IN  THE  NUMERATOR  OF THE APPORTIONMENT FRACTION. RECEIPTS OF
ROYALTIES FROM THE USE OF PATENTS, COPYRIGHTS,  TRADEMARKS  AND  SIMILAR
INTANGIBLES WITHIN AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR
OF THE APPORTIONMENT FRACTION. A PATENT, COPYRIGHT, TRADEMARK OR SIMILAR
INTANGIBLE  PROPERTY  IS USED IN THE STATE TO THE EXTENT THAT THE ACTIV-
ITIES THEREUNDER ARE CARRIED ON IN THE STATE.
  (C) RECEIPTS FROM THE SALES OF RIGHTS  FOR  CLOSED-CIRCUIT  AND  CABLE
TELEVISION  TRANSMISSIONS  OF AN EVENT (OTHER THAN EVENTS OCCURRING ON A
REGULARLY SCHEDULED BASIS) TAKING PLACE WITHIN THE STATE AS A RESULT  OF
THE  RENDITION OF SERVICES BY EMPLOYEES OF THE CORPORATION, AS ATHLETES,
ENTERTAINERS OR PERFORMING ARTISTS ARE INCLUDED IN THE NUMERATOR OF  THE
APPORTIONMENT FRACTION TO THE EXTENT THAT SUCH RECEIPTS ARE ATTRIBUTABLE
TO  SUCH  TRANSMISSIONS RECEIVED OR EXHIBITED WITHIN THE STATE. RECEIPTS
FROM ALL SALES OF RIGHTS FOR CLOSED-CIRCUIT AND CABLE TELEVISION  TRANS-
MISSIONS  OF  AN EVENT ARE INCLUDED IN THE DENOMINATOR OF THE APPORTION-
MENT FRACTION.
  4. DIGITAL PRODUCTS. (A) FOR PURPOSES OF DETERMINING THE APPORTIONMENT
FRACTION UNDER THIS SECTION, THE TERM "DIGITAL PRODUCT" MEANS ANY  PROP-
ERTY OR SERVICE, OR COMBINATION THEREOF, OF WHATEVER NATURE DELIVERED TO
THE PURCHASER THROUGH THE USE OF WIRE, CABLE, FIBER-OPTIC, LASER, MICRO-
WAVE,  RADIO WAVE, SATELLITE OR SIMILAR SUCCESSOR MEDIA, OR ANY COMBINA-
TION THEREOF. DIGITAL PRODUCT INCLUDES, BUT IS NOT LIMITED TO, AN  AUDIO
WORK,  AUDIOVISUAL  WORK,  VISUAL  WORK,  BOOK OR LITERARY WORK, GRAPHIC
WORK, GAME, INFORMATION OR ENTERTAINMENT  SERVICE,  STORAGE  OF  DIGITAL
PRODUCTS  AND  COMPUTER  SOFTWARE  BY WHATEVER MEANS DELIVERED. THE TERM
"DELIVERED TO" INCLUDES FURNISHED OR  PROVIDED  TO  OR  ACCESSED  BY.  A
DIGITAL  PRODUCT  DOES NOT INCLUDE LEGAL, MEDICAL, ACCOUNTING, ARCHITEC-

S. 6359--A                         56                         A. 8559--A

TURAL, RESEARCH, ANALYTICAL, ENGINEERING OR CONSULTING SERVICES PROVIDED
BY THE TAXPAYER.
  (B)  RECEIPTS  FROM THE SALE OF, LICENCE TO USE, OR GRANTING OF REMOTE
ACCESS TO DIGITAL PRODUCTS WITHIN THE STATE, DETERMINED ACCORDING TO THE
HIERARCHY OF METHODS SET FORTH IN  SUBPARAGRAPHS  ONE  THROUGH  FOUR  OF
PARAGRAPH (C) OF THIS SUBDIVISION, SHALL BE INCLUDED IN THE NUMERATOR OF
THE  APPORTIONMENT  FRACTION. RECEIPTS FROM THE SALE OF, LICENSE TO USE,
OR GRANTING OF REMOTE ACCESS TO DIGITAL PRODUCTS WITHIN AND WITHOUT  THE
STATE  SHALL  BE  INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC-
TION. THE  TAXPAYER  MUST  EXERCISE  DUE  DILIGENCE  UNDER  EACH  METHOD
DESCRIBED  IN  PARAGRAPH (C) OF THIS SUBDIVISION BEFORE REJECTING IT AND
PROCEEDING TO THE NEXT METHOD IN THE HIERARCHY. IF  THE  RECEIPT  FOR  A
DIGITAL  PRODUCT IS COMPRISED OF A COMBINATION OF PROPERTY AND SERVICES,
IT CANNOT BE DIVIDED INTO SEPARATE COMPONENTS AND IS  CONSIDERED  TO  BE
ONE  RECEIPT  REGARDLESS  OF WHETHER IT IS SEPARATELY STATED FOR BILLING
PURPOSES. THE ENTIRE RECEIPT MUST BE ALLOCATED BY THIS HIERARCHY.
  (C) HIERARCHY OF SOURCING METHODS. (1)  DELIVERY  DESTINATION  OF  THE
DIGITAL  PRODUCT. A DIGITAL PRODUCT IS DEEMED DELIVERED WITHIN THE STATE
IF THE LOCATION FROM WHICH THE PURCHASER OR ITS AUTHORIZED USER ACCESSES
OR USES THE DIGITAL PRODUCT IS IN THE STATE. DESTINATION MAY  BE  DEMON-
STRATED BY INTERNET PROTOCOL ADDRESS OR OTHER SIMILAR OR SUCCESSOR INDI-
CATOR,  THE  GEOGRAPHIC  LOCATION  OF THE EQUIPMENT TO WHICH THE DIGITAL
PRODUCT IS DELIVERED OR FROM WHICH THE DIGITAL PRODUCT IS  ACCESSED,  OR
THE  DELIVERY  DESTINATION  INDICATED  ON  A  BILL OF LADING OR PURCHASE
INVOICE. A DIGITAL PRODUCT ACCESSED OR USED  BY  THE  PURCHASER  OR  ITS
AUTHORIZED USER DURING THE TAXPAYER'S TAXABLE YEAR IN MULTIPLE LOCATIONS
IS  DELIVERED WITHIN THE STATE TO THE EXTENT THAT THE DIGITAL PRODUCT IS
ACCESSED OR USED IN THE STATE;
  (2) BILLING ADDRESS OF THE PURCHASER;
  (3)  ZIP  CODE  OR  OTHER  GEOGRAPHIC  INDICATOR  OF  THE  PURCHASER'S
LOCATION; OR
  (4) THE APPORTIONMENT FRACTION DETERMINED PURSUANT TO THIS SUBDIVISION
FOR  THE  PRECEDING TAXABLE YEAR, OR, IF THE TAXPAYER WAS NOT SUBJECT TO
TAX IN THE PRECEDING TAXABLE YEAR, THEN THE  APPORTIONMENT  FRACTION  IN
THE  CURRENT TAXABLE YEAR FOR THOSE DIGITAL PRODUCTS THAT CAN BE SOURCED
USING THE HIERARCHY OF SOURCING METHODS  IN  SUBPARAGRAPHS  ONE  THROUGH
THREE OF THIS SUBDIVISION.
  5.  FINANCIAL  TRANSACTIONS.  (A)  FINANCIAL  INSTRUMENTS. A FINANCIAL
INSTRUMENT IS A "QUALIFIED FINANCIAL INSTRUMENT"  IF  IT  IS  MARKED  TO
MARKET  UNDER  SECTION 475 OR SECTION 1256 OF THE INTERNAL REVENUE CODE,
PROVIDED THAT LOANS SECURED BY REAL  PROPERTY  SHALL  NOT  BE  QUALIFIED
FINANCIAL  INSTRUMENTS. A FINANCIAL INSTRUMENT IS A "NONQUALIFIED FINAN-
CIAL INSTRUMENT" IF IT IS NOT A QUALIFIED FINANCIAL INSTRUMENT.
  (1) FIXED PERCENTAGE METHOD FOR QUALIFIED  FINANCIAL  INSTRUMENTS.  IN
DETERMINING  THE  INCLUSION  OF  RECEIPTS  AND  NET GAINS FROM QUALIFIED
FINANCIAL INSTRUMENTS IN THE APPORTIONMENT FRACTION, TAXPAYERS MAY ELECT
TO USE THE FIXED PERCENTAGE METHOD DESCRIBED IN  THIS  SUBPARAGRAPH  FOR
QUALIFIED FINANCIAL INSTRUMENTS. THE ELECTION IS IRREVOCABLE, APPLIES TO
ALL QUALIFIED FINANCIAL INSTRUMENTS, AND MUST BE MADE ON AN ANNUAL BASIS
ON  THE TAXPAYER'S ORIGINAL, TIMELY FILED RETURN. IF THE TAXPAYER ELECTS
THE FIXED PERCENTAGE METHOD, THEN ALL INCOME, GAIN OR LOSS, FROM  QUALI-
FIED FINANCIAL INSTRUMENTS CONSTITUTES BUSINESS INCOME, GAIN OR LOSS. IF
THE  TAXPAYER  DOES  NOT  ELECT TO USE THE FIXED PERCENTAGE METHOD, THEN
RECEIPTS AND NET GAINS ARE INCLUDED IN  THE  APPORTIONMENT  FRACTION  IN
ACCORDANCE  WITH  THE CUSTOMER SOURCING METHOD DESCRIBED IN SUBPARAGRAPH
TWO OF THIS PARAGRAPH. UNDER THE FIXED PERCENTAGE METHOD, EIGHT  PERCENT

S. 6359--A                         57                         A. 8559--A

OF  ALL NET INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRU-
MENTS IS INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRACTION.  ALL
NET  INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRUMENTS IS
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (2)  CUSTOMER  SOURCING  METHOD. RECEIPTS AND NET GAINS FROM QUALIFIED
FINANCIAL INSTRUMENTS, IN CASES WHERE THE TAXPAYER DID NOT ELECT TO  USE
THE  FIXED PERCENTAGE METHOD DESCRIBED IN SUBPARAGRAPH ONE OF THIS PARA-
GRAPH, AND FROM NONQUALIFIED FINANCIAL INSTRUMENTS ARE INCLUDED  IN  THE
APPORTIONMENT   FRACTION  IN  ACCORDANCE  WITH  THIS  SUBPARAGRAPH.  FOR
PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL IS DEEMED TO BE LOCATED IN THE
STATE IF HIS OR HER BILLING ADDRESS IS IN THE STATE. A  BUSINESS  ENTITY
IS  DEEMED  TO  BE  LOCATED  IN  THE STATE IF ITS COMMERCIAL DOMICILE IS
LOCATED IN THE STATE.
  (A) LOANS. (I) RECEIPTS CONSTITUTING INTEREST FROM  LOANS  SECURED  BY
REAL  PROPERTY LOCATED WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERA-
TOR OF THE APPORTIONMENT FRACTION. RECEIPTS CONSTITUTING  INTEREST  FROM
LOANS  SECURED  BY  REAL  PROPERTY  LOCATED WITHIN AND WITHOUT THE STATE
SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (II) RECEIPTS CONSTITUTING INTEREST FROM LOANS  NOT  SECURED  BY  REAL
PROPERTY  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION IF THE BORROWER IS LOCATED  IN  THE  STATE.  RECEIPTS  CONSTITUTING
INTEREST  FROM  LOANS NOT SECURED BY REAL PROPERTY, WHETHER THE BORROWER
IS LOCATED WITHIN OR WITHOUT THE STATE, SHALL BE INCLUDED IN THE DENOMI-
NATOR OF THE APPORTIONMENT FRACTION.
  (III) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF  LOANS  SECURED  BY
REAL  PROPERTY  ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION AS PROVIDED IN THIS SUBCLAUSE. THE AMOUNT OF  NET  GAINS  FROM  THE
SALE  OF LOANS SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS  BY  A
FRACTION  THE  NUMERATOR  OF  WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM
SALES OF LOANS SECURED BY REAL PROPERTY LOCATED WITHIN THE STATE AND THE
DENOMINATOR OF WHICH IS THE GROSS PROCEEDS FROM SALES OF  LOANS  SECURED
BY  REAL  PROPERTY WITHIN AND WITHOUT THE STATE. GROSS PROCEEDS SHALL BE
DETERMINED AFTER THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS
BUT SHALL NOT BE LESS THAN ZERO. NET GAINS (NOT  LESS  THAN  ZERO)  FROM
SALES OF LOANS SECURED BY REAL PROPERTY WITHIN AND WITHOUT THE STATE ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (IV) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS NOT SECURED BY
REAL  PROPERTY  ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION AS PROVIDED IN THIS SUBCLAUSE. THE AMOUNT OF  NET  GAINS  FROM  THE
SALE  OF LOANS NOT SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF
THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS BY
A FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS  FROM
SALES OF LOANS NOT SECURED BY REAL PROPERTY TO PURCHASERS LOCATED WITHIN
THE  STATE  AND THE DENOMINATOR OF WHICH IS THE AMOUNT OF GROSS RECEIPTS
FROM SALES OF LOANS NOT SECURED BY REAL PROPERTY TO  PURCHASERS  LOCATED
WITHIN  AND  WITHOUT THE STATE. GROSS PROCEEDS SHALL BE DETERMINED AFTER
THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS BUT SHALL NOT BE
LESS THAN ZERO.  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS  NOT
SECURED  BY  REAL PROPERTY ARE INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION.
  (B) FEDERAL, STATE, AND MUNICIPAL DEBT. RECEIPTS CONSTITUTING INTEREST
AND NET GAINS FROM SALES  OF  DEBT  INSTRUMENTS  ISSUED  BY  THE  UNITED
STATES,  ANY  STATE,  OR  POLITICAL  SUBDIVISION OF A STATE SHALL NOT BE
INCLUDED IN  THE  NUMERATOR  OF  THE  APPORTIONMENT  FRACTION.  RECEIPTS
CONSTITUTING  INTEREST  AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF

S. 6359--A                         58                         A. 8559--A

DEBT INSTRUMENTS ISSUED BY THE UNITED STATES AND THE STATE OF  NEW  YORK
OR  ITS  POLITICAL  SUBDIVISIONS SHALL BE INCLUDED IN THE DENOMINATOR OF
THE APPORTIONMENT FRACTION. FIFTY PERCENT OF THE  RECEIPTS  CONSTITUTING
INTEREST  AND  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF DEBT INSTRU-
MENTS ISSUED BY OTHER STATES OR THEIR POLITICAL  SUBDIVISIONS  SHALL  BE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (C) ASSET BACKED SECURITIES. EIGHT PERCENT OF THE INTEREST INCOME FROM
ASSET  BACKED  SECURITIES, INCLUDING SECURITIES ISSUED BY THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION  (GNMA),  THE  FEDERAL  NATIONAL  MORTGAGE
ASSOCIATION  (FNMA),  OR  THE  FEDERAL  HOME  LOAN  MORTGAGE CORPORATION
(FHLMC), THE SMALL BUSINESS ADMINISTRATION OR  OTHER  GOVERNMENT  AGENCY
SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. EIGHT
PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM SALES OF ASSET BACKED
SECURITIES ISSUED BY GNMA, FNMA, OR FHLMC, THE SMALL  BUSINESS  ADMINIS-
TRATION OR OTHER GOVERNMENT AGENCY AND SALES OF OTHER ASSET BACKED SECU-
RITIES THAT ARE SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEALER OR
THROUGH  A  LICENSED  EXCHANGE SHALL BE INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION. THE AMOUNT OF NET GAINS  (NOT  LESS  THAN  ZERO)
FROM SALES OF OTHER ASSET BACKED SECURITIES INCLUDED IN THE NUMERATOR OF
THE  APPORTIONMENT  FRACTION IS DETERMINED BY MULTIPLYING SUCH NET GAINS
BY A FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT  OF  GROSS  PROCEEDS
FROM  SUCH  SALES TO PURCHASERS LOCATED IN THE STATE AND THE DENOMINATOR
OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM SUCH SALES  TO  PURCHASERS
LOCATED  WITHIN  AND  WITHOUT  THE STATE. RECEIPTS CONSTITUTING INTEREST
FROM ASSET BACKED SECURITIES AND NET GAINS (NOT  LESS  THAN  ZERO)  FROM
SALES  OF ASSET BACKED SECURITIES ARE INCLUDED IN THE DENOMINATOR OF THE
APPORTIONMENT FRACTION. GROSS PROCEEDS SHALL  BE  DETERMINED  AFTER  THE
DEDUCTION  OF  ANY  COST TO ACQUIRE THE SECURITIES BUT SHALL NOT BE LESS
THAN ZERO.
  (D) CORPORATE BONDS. RECEIPTS  CONSTITUTING  INTEREST  FROM  CORPORATE
BONDS ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IF THE
COMMERCIAL  DOMICILE  OF THE ISSUING CORPORATION IS IN THE STATE.  EIGHT
PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM  SALES  OF  CORPORATE
BONDS SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEALER OR THROUGH A
LICENSED  EXCHANGE  IS  INCLUDED  IN  THE NUMERATOR OF THE APPORTIONMENT
FRACTION. THE AMOUNT OF NET GAINS (NOT LESS THAN ZERO) FROM OTHER  SALES
OF  CORPORATE BONDS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION IS DETERMINED BY MULTIPLYING SUCH NET  GAINS  BY  A  FRACTION,  THE
NUMERATOR  OF  WHICH  IS THE AMOUNT OF GROSS PROCEEDS FROM SUCH SALES TO
PURCHASERS LOCATED IN THE STATE AND THE  DENOMINATOR  OF  WHICH  IS  THE
AMOUNT  OF  GROSS  PROCEEDS  FROM SALES TO PURCHASERS LOCATED WITHIN AND
WITHOUT THE STATE. RECEIPTS CONSTITUTING INTEREST FROM CORPORATE  BONDS,
WHETHER THE ISSUING CORPORATION'S COMMERCIAL DOMICILE IS WITHIN OR WITH-
OUT  THE  STATE, AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF CORPO-
RATE BONDS TO PURCHASERS WITHIN AND WITHOUT THE STATE  ARE  INCLUDED  IN
THE  DENOMINATOR  OF THE APPORTIONMENT FRACTION. GROSS PROCEEDS SHALL BE
DETERMINED AFTER THE DEDUCTION OF ANY COST  TO  ACQUIRE  THE  BONDS  BUT
SHALL NOT BE LESS THAN ZERO.
  (E) REVERSE REPURCHASE AGREEMENTS AND SECURITIES BORROWING AGREEMENTS.
EIGHT  PERCENT  OF NET INTEREST INCOME (NOT LESS THAN ZERO) FROM REVERSE
REPURCHASE AGREEMENTS  AND  SECURITIES  BORROWING  AGREEMENTS  SHALL  BE
INCLUDED  IN  THE  NUMERATOR OF THE APPORTIONMENT FRACTION. NET INTEREST
INCOME (NOT LESS THAN ZERO) FROM REVERSE REPURCHASE AGREEMENTS AND SECU-
RITIES BORROWING AGREEMENTS IS INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION. NET INTEREST INCOME FROM  REVERSE  REPURCHASE  AGREE-
MENTS  AND SECURITIES BORROWING AGREEMENTS IS DETERMINED FOR PURPOSES OF

S. 6359--A                         59                         A. 8559--A

THIS SUBDIVISION AFTER THE DEDUCTION OF THE INTEREST  EXPENSE  FROM  THE
TAXPAYER'S  REPURCHASE  AGREEMENTS AND SECURITIES LENDING AGREEMENTS BUT
CANNOT BE LESS THAN ZERO. FOR  THIS  CALCULATION,  THE  AMOUNT  OF  SUCH
INTEREST  EXPENSE IS THE INTEREST EXPENSE ASSOCIATED WITH THE SUM OF THE
VALUE  OF  THE  TAXPAYER'S  REPURCHASE  AGREEMENTS  WHERE  IT   IS   THE
SELLER/BORROWER  PLUS THE VALUE OF THE TAXPAYER'S AND SECURITIES LENDING
AGREEMENTS WHERE IT IS THE  SECURITIES  LENDER,  PROVIDED  SUCH  SUM  IS
LIMITED  TO  THE  SUM  OF THE VALUE OF THE TAXPAYER'S REVERSE REPURCHASE
AGREEMENTS WHERE IT IS THE SELLER/BORROWER AND THE VALUE OF THE  TAXPAY-
ER'S SECURITIES BORROWING AGREEMENTS.
  (F)  FEDERAL  FUNDS.  EIGHT PERCENT OF THE NET INTEREST (NOT LESS THAN
ZERO) FROM FEDERAL FUNDS IS INCLUDED IN THE NUMERATOR OF THE  APPORTION-
MENT  FRACTION. THE NET INTEREST (NOT LESS THAN ZERO) FROM FEDERAL FUNDS
IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INTER-
EST FROM FEDERAL FUNDS IS DETERMINED AFTER DEDUCTION OF INTEREST EXPENSE
FROM FEDERAL FUNDS.
  (G) DIVIDENDS AND NET GAINS FROM SALES OF STOCK OR PARTNERSHIP  INTER-
ESTS. DIVIDENDS FROM STOCK, NET GAINS (NOT LESS THAN ZERO) FROM SALES OF
STOCK  AND  NET  GAINS (NOT LESS THAN ZERO) FROM THE SALE OF PARTNERSHIP
INTERESTS ARE NOT INCLUDED IN EITHER THE NUMERATOR OR DENOMINATOR OF THE
APPORTIONMENT FRACTION UNLESS THE COMMISSIONER  DETERMINES  PURSUANT  TO
SUBDIVISION  ELEVEN OF THIS SECTION THAT INCLUSION OF SUCH DIVIDENDS AND
NET GAINS (NOT LESS THAN ZERO) IS  NECESSARY  TO  PROPERLY  REFLECT  THE
BUSINESS INCOME OR CAPITAL OF THE TAXPAYER.
  (H)  OTHER  FINANCIAL  INSTRUMENTS. (I) RECEIPTS CONSTITUTING INTEREST
FROM OTHER FINANCIAL INSTRUMENTS SHALL BE INCLUDED IN THE  NUMERATOR  OF
THE  APPORTIONMENT  FRACTION  IF  THE  PAYOR  IS  LOCATED  IN THE STATE.
RECEIPTS CONSTITUTING INTEREST FROM OTHER FINANCIAL INSTRUMENTS, WHETHER
THE PAYOR IS WITHIN OR WITHOUT THE STATE, ARE INCLUDED IN THE  DENOMINA-
TOR OF THE APPORTIONMENT FRACTION.
  (II)  NET  GAINS  (NOT  LESS  THAN ZERO) FROM SALES OF OTHER FINANCIAL
INSTRUMENTS AND OTHER INCOME (NOT LESS THAN ZERO) FROM  OTHER  FINANCIAL
INSTRUMENTS  WHERE  THE  PURCHASER  OR PAYOR IS LOCATED IN THE STATE ARE
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION, PROVIDED  THAT,
IF THE PURCHASER OR PAYOR IS A REGISTERED SECURITIES BROKER OR DEALER OR
THE  TRANSACTION IS MADE THROUGH A LICENSED EXCHANGE, THEN EIGHT PERCENT
OF THE NET GAINS (NOT LESS THAN ZERO) OR OTHER  INCOME  (NOT  LESS  THAN
ZERO)  IS  INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. NET
GAINS (NOT LESS THAN ZERO) FROM SALES OF OTHER FINANCIAL INSTRUMENTS AND
OTHER INCOME (NOT LESS THAN ZERO) FROM OTHER FINANCIAL  INSTRUMENTS  ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (I)  PHYSICAL  COMMODITIES. NET INCOME (NOT LESS THAN ZERO) FROM SALES
OF PHYSICAL COMMODITIES ARE INCLUDED IN THE NUMERATOR OF THE  APPORTION-
MENT FRACTION AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF NET INCOME
FROM  SALES  OF  PHYSICAL  COMMODITIES  INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET INCOME  FROM
SALES  OF  PHYSICAL COMMODITIES BY A FRACTION, THE NUMERATOR OF WHICH IS
THE AMOUNT OF RECEIPTS  FROM  SALES  OF  PHYSICAL  COMMODITIES  ACTUALLY
DELIVERED  TO POINTS WITHIN THE STATE OR, IF THERE IS NO ACTUAL DELIVERY
OF THE PHYSICAL COMMODITY, SOLD TO CUSTOMERS LOCATED IN THE  STATE,  AND
THE  DENOMINATOR  OF WHICH IS THE AMOUNT OF RECEIPTS FROM SALES OF PHYS-
ICAL COMMODITIES ACTUALLY DELIVERED TO POINTS  WITHIN  AND  WITHOUT  THE
STATE  OR  SOLD  TO  CUSTOMERS LOCATED WITHIN AND WITHOUT THE STATE. NET
INCOME (NOT LESS THAT  ZERO)  FROM  SALES  OF  PHYSICAL  COMMODITIES  IS
INCLUDED  IN  THE  DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INCOME
(NOT LESS THAN ZERO) FROM SALES OF PHYSICAL  COMMODITIES  IS  DETERMINED

S. 6359--A                         60                         A. 8559--A

AFTER  THE  DEDUCTION  OF  THE  COST  TO ACQUIRE OR PRODUCE THE PHYSICAL
COMMODITIES.
  (B)  OTHER  RECEIPTS  FROM  BROKER OR DEALER ACTIVITIES. RECEIPTS FROM
SECURITIES OR COMMODITIES BROKER OR DEALER ACTIVITIES DESCRIBED IN  THIS
PARAGRAPH  SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE AS DESCRIBED
IN SUBPARAGRAPHS ONE THROUGH EIGHT OF THIS PARAGRAPH. RECEIPTS FROM SUCH
ACTIVITIES GENERATED WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERATOR
OF THE APPORTIONMENT FRACTION. RECEIPTS FROM SUCH  ACTIVITIES  GENERATED
WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE
APPORTIONMENT  FRACTION.  FOR  THE  PURPOSES OF THIS PARAGRAPH, THE TERM
"SECURITIES" SHALL HAVE THE SAME MEANING AS IN SECTION 475(C)(2) OF  THE
INTERNAL  REVENUE  CODE  AND  THE TERM "COMMODITIES" SHALL HAVE THE SAME
MEANING AS IN SECTION 475(E)(2) OF THE INTERNAL REVENUE CODE.
  (1) RECEIPTS  CONSTITUTING  BROKERAGE  COMMISSIONS  DERIVED  FROM  THE
EXECUTION  OF SECURITIES OR COMMODITIES PURCHASE OR SALES ORDERS FOR THE
ACCOUNTS OF CUSTOMERS SHALL BE DEEMED TO BE GENERATED WITHIN  THE  STATE
IF  THE  MAILING  ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE CUSTOMER
WHO IS RESPONSIBLE FOR PAYING SUCH COMMISSIONS IS WITHIN THE STATE.
  (2) RECEIPTS CONSTITUTING MARGIN INTEREST EARNED ON BEHALF OF  BROKER-
AGE  ACCOUNTS  SHALL  BE  DEEMED TO BE GENERATED WITHIN THE STATE IF THE
MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE  CUSTOMER  WHO  IS
RESPONSIBLE FOR PAYING SUCH MARGIN INTEREST IS WITHIN THE STATE.
  (3)(A)  RECEIPTS CONSTITUTING FEES EARNED BY THE TAXPAYER FOR ADVISORY
SERVICES TO A CUSTOMER IN CONNECTION WITH THE UNDERWRITING OF SECURITIES
FOR SUCH CUSTOMER (SUCH CUSTOMER BEING THE ENTITY THAT IS  CONTEMPLATING
ISSUING  OR  IS  ISSUING  SECURITIES) OR FEES EARNED BY THE TAXPAYER FOR
MANAGING AN UNDERWRITING SHALL BE DEEMED  TO  BE  GENERATED  WITHIN  THE
STATE  IF  THE  MAILING  ADDRESS  IN THE RECORDS OF THE TAXPAYER OF SUCH
CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
  (B) RECEIPTS CONSTITUTING THE PRIMARY  SPREAD  OF  SELLING  CONCESSION
FROM  UNDERWRITTEN SECURITIES SHALL BE DEEMED TO BE GENERATED WITHIN THE
STATE TO THE EXTENT THE CUSTOMER IS LOCATED IN THE STATE.
  (C) THE TERM "PRIMARY SPREAD" MEANS THE DIFFERENCE BETWEEN  THE  PRICE
PAID  BY THE TAXPAYER TO THE ISSUER OF THE SECURITIES BEING MARKETED AND
THE PRICE RECEIVED FROM THE SUBSEQUENT SALE OF THE UNDERWRITTEN  SECURI-
TIES  AT  THE INITIAL PUBLIC OFFERING PRICE, LESS ANY SELLING CONCESSION
AND ANY FEES PAID TO THE TAXPAYER FOR ADVISORY SERVICES OR ANY MANAGER'S
FEES, IF SUCH FEES ARE NOT PAID BY THE CUSTOMER TO  THE  TAXPAYER  SEPA-
RATELY.  THE TERM "PUBLIC OFFERING PRICE" MEANS THE PRICE AGREED UPON BY
THE TAXPAYER AND THE ISSUER AT WHICH THE SECURITIES ARE TO BE OFFERED TO
THE PUBLIC. THE TERM "SELLING CONCESSION" MEANS THE AMOUNT PAID  TO  THE
TAXPAYER  FOR  PARTICIPATING IN THE UNDERWRITING OF A SECURITY WHERE THE
TAXPAYER IS NOT THE LEAD UNDERWRITER.
  (4) RECEIPTS CONSTITUTING ACCOUNT MAINTENANCE FEES SHALL BE DEEMED  TO
BE  GENERATED  WITHIN  THE STATE IF THE MAILING ADDRESS IN THE RECORD OF
THE TAXPAYER OF THE CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH  ACCOUNT
MAINTENANCE FEES IS WITHIN THE STATE.
  (5)  RECEIPTS  CONSTITUTING  FEES FOR MANAGEMENT OR ADVISORY SERVICES,
INCLUDING FEES FOR ADVISORY SERVICES IN RELATION TO MERGER  OR  ACQUISI-
TION ACTIVITIES, BUT EXCLUDING FEES PAID FOR SERVICES DESCRIBED IN PARA-
GRAPH  (D)  OF  THIS SUBDIVISION, SHALL BE DEEMED TO BE GENERATED WITHIN
THE STATE IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER  OF  THE
CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
  (6) RECEIPTS CONSTITUTING INTEREST EARNED BY THE TAXPAYER ON LOANS AND
ADVANCES  MADE  BY  THE  TAXPAYER  TO  A CORPORATION AFFILIATED WITH THE
TAXPAYER BUT WITH WHICH THE TAXPAYER IS NOT  PERMITTED  OR  REQUIRED  TO

S. 6359--A                         61                         A. 8559--A

FILE  A  COMBINED  REPORT  PURSUANT TO SECTION TWO HUNDRED TEN-C OF THIS
ARTICLE SHALL BE DEEMED TO ARISE FROM SERVICES PERFORMED AT THE  PRINCI-
PAL PLACE OF BUSINESS OF SUCH AFFILIATED CORPORATION.
  (7) IF THE TAXPAYER RECEIVES ANY OF THE RECEIPTS ENUMERATED IN SUBPAR-
AGRAPHS  ONE  THROUGH FOUR OF THIS PARAGRAPH AS A RESULT OF A SECURITIES
CORRESPONDENT RELATIONSHIP SUCH TAXPAYER  HAS  WITH  ANOTHER  BROKER  OR
DEALER  WITH  THE  TAXPAYER  ACTING IN THIS RELATIONSHIP AS THE CLEARING
FIRM, SUCH RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE  TO
EXTENT  SET  FORTH  IN  EACH  OF  SUCH SUBPARAGRAPHS. THE AMOUNT OF SUCH
RECEIPTS SHALL EXCLUDE THE AMOUNT THE TAXPAYER IS REQUIRED TO PAY TO THE
CORRESPONDENT FIRM FOR SUCH CORRESPONDENT RELATIONSHIP. IF THE  TAXPAYER
RECEIVES  ANY  OF  THE  RECEIPTS ENUMERATED IN SUBPARAGRAPHS ONE THROUGH
FOUR OF THIS PARAGRAPH  AS  AS  RESULT  OF  A  SECURITIES  CORRESPONDENT
RELATIONSHIP  SUCH  TAXPAYER  HAS WITH ANOTHER BROKER OR DEALER WITH THE
TAXPAYER ACTING IN THIS  RELATIONSHIP  AS  THE  INTRODUCING  FIRM,  SUCH
RECEIPTS  SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO THE EXTENT
SET FORTH IN EACH OF SUCH SUBPARAGRAPHS.
  (8) IF, FOR PURPOSES OF SUBPARAGRAPHS ONE, TWO, CLAUSE (A) OF SUBPARA-
GRAPH THREE, FOUR, OR FIVE OF THIS PARAGRAPH THE TAXPAYER IS UNABLE FROM
ITS RECORDS TO DETERMINE THE MAILING  ADDRESS  OF  THE  CUSTOMER,  EIGHT
PERCENT  OF  THE RECEIPTS IS INCLUDED IN THE NUMERATOR OF THE APPORTION-
MENT FRACTION.
  (C) RECEIPTS FROM CREDIT CARD AND SIMILAR ACTIVITIES. RECEIPTS  RELAT-
ING  TO  THE  BANK,  CREDIT,  TRAVEL  AND  ENTERTAINMENT CARD ACTIVITIES
DESCRIBED IN THIS PARAGRAPH SHALL BE DEEMED TO BE GENERATED  WITHIN  THE
STATE AS DESCRIBED IN SUBPARAGRAPHS ONE THROUGH THREE OF THIS PARAGRAPH.
RECEIPTS  FROM  SUCH  ACTIVITIES  GENERATED  WITHIN  THE  STATE SHALL BE
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.  RECEIPTS  FROM
SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED
IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (1)  RECEIPTS  CONSTITUTING  INTEREST,  AND  FEES AND PENALTIES IN THE
NATURE OF INTEREST, FROM BANK, CREDIT,  TRAVEL  AND  ENTERTAINMENT  CARD
RECEIVABLES  SHALL  BE  DEEMED  TO  BE GENERATED WITHIN THE STATE IF THE
MAILING ADDRESS OF THE CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS  IN
THE STATE;
  (2)  RECEIPTS  FROM  SERVICE CHARGES AND FEES FROM SUCH CARDS SHALL BE
DEEMED TO BE GENERATED WITHIN THE STATE IF THE MAILING  ADDRESS  OF  THE
CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS IN THE STATE; AND
  (3)  RECEIPTS  FROM MERCHANT DISCOUNTS SHALL BE DEEMED TO BE GENERATED
WITHIN THE STATE IF THE MERCHANT IS LOCATED WITHIN  THE  STATE.  IN  THE
CASE  OF  A  MERCHANT  WITH  LOCATIONS  BOTH WITHIN AND WITHOUT NEW YORK
STATE, ONLY RECEIPTS FROM MERCHANT DISCOUNTS ATTRIBUTABLE TO SALES  MADE
FROM LOCATIONS WITHIN NEW YORK STATE ARE ALLOCATED TO NEW YORK STATE. IT
SHALL  BE  PRESUMED  THAT THE LOCATION OF THE MERCHANT IS THE ADDRESS OF
THE MERCHANT SHOWN ON THE INVOICE  SUBMITTED  BY  THE  MERCHANT  TO  THE
TAXPAYER.
  (D)  RECEIPTS FROM CERTAIN SERVICES TO INVESTMENT COMPANIES.  RECEIPTS
RECEIVED FROM AN INVESTMENT COMPANY ARISING FROM THE SALE OF MANAGEMENT,
ADMINISTRATION OR DISTRIBUTION SERVICES TO SUCH INVESTMENT  COMPANY  ARE
INCLUDED  IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.  THE PORTION
OF SUCH RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
(SUCH PORTION REFERRED TO HEREIN AS  THE  NEW  YORK  PORTION)  SHALL  BE
DETERMINED AS PROVIDED IN THIS PARAGRAPH.
  (1)  THE  NEW  YORK  PORTION SHALL BE THE PRODUCT OF THE TOTAL OF SUCH
RECEIPTS FROM THE SALE OF SUCH SERVICES AND A FRACTION. THE NUMERATOR OF
THAT FRACTION IS THE SUM OF THE MONTHLY PERCENTAGES (AS DEFINED  HEREIN-

S. 6359--A                         62                         A. 8559--A

AFTER)  DETERMINED  FOR  EACH  MONTH OF THE INVESTMENT COMPANY'S TAXABLE
YEAR FOR FEDERAL INCOME TAX PURPOSES WHICH TAXABLE YEAR ENDS WITHIN  THE
TAXABLE  YEAR  OF THE TAXPAYER (BUT EXCLUDING ANY MONTH DURING WHICH THE
INVESTMENT  COMPANY  HAD  NO OUTSTANDING SHARES). THE MONTHLY PERCENTAGE
FOR EACH SUCH MONTH IS DETERMINED BY DIVIDING THE NUMBER  OF  SHARES  IN
THE  INVESTMENT  COMPANY  THAT ARE OWNED ON THE LAST DAY OF THE MONTH BY
SHAREHOLDERS THAT ARE DOMICILED IN THE STATE  BY  THE  TOTAL  NUMBER  OF
SHARES  IN THE INVESTMENT COMPANY OUTSTANDING ON THAT DATE.  THE DENOMI-
NATOR OF THE FRACTION IS THE NUMBER OF SUCH MONTHLY PERCENTAGES.
  (2)(A) FOR PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL, ESTATE OR  TRUST
IS  DEEMED TO BE LOCATED IN THE STATE IF HIS, HER OR ITS MAILING ADDRESS
ON THE RECORDS OF THE INVESTMENT COMPANY IS IN  THE  STATE.  A  BUSINESS
ENTITY  IS  DEEMED TO BE LOCATED IN THE STATE IF ITS COMMERCIAL DOMICILE
IS LOCATED IN THE STATE.
  (B) FOR PURPOSES OF THIS  PARAGRAPH,  THE  TERM  "INVESTMENT  COMPANY"
MEANS  A  REGULATED INVESTMENT COMPANY, AS DEFINED IN SECTION 851 OF THE
INTERNAL REVENUE CODE, AND A PARTNERSHIP TO WHICH SECTION 7704(A) OF THE
INTERNAL REVENUE CODE APPLIES (BY VIRTUE OF SECTION 7704(C)(3)  OF  SUCH
CODE)  AND  THAT  MEETS THE REQUIREMENTS OF SECTION 851(B) OF SUCH CODE.
THE PRECEDING SENTENCE SHALL BE APPLIED TO THE TAXABLE YEAR FOR  FEDERAL
INCOME  TAX  PURPOSES OF THE BUSINESS ENTITY THAT IS ASSERTED TO CONSTI-
TUTE AN INVESTMENT COMPANY THAT ENDS WITHIN  THE  TAXABLE  YEAR  OF  THE
TAXPAYER.
  (C)  FOR PURPOSES OF THIS PARAGRAPH THE TERM "RECEIPTS FROM AN INVEST-
MENT COMPANY" INCLUDES AMOUNTS  RECEIVED  DIRECTLY  FROM  AN  INVESTMENT
COMPANY  AS  WELL  AS  AMOUNTS  RECEIVED  FROM  THE SHAREHOLDERS IN SUCH
INVESTMENT COMPANY, IN THEIR CAPACITY AS SUCH.
  (D) FOR PURPOSES OF THIS PARAGRAPH,  THE  TERM  "MANAGEMENT  SERVICES"
MEANS  THE  RENDERING  OF  INVESTMENT  ADVICE  TO AN INVESTMENT COMPANY,
MAKING DETERMINATIONS AS TO WHEN SALES AND PURCHASES OF  SECURITIES  ARE
TO  BE  MADE  ON  BEHALF  OF  AN  INVESTMENT  COMPANY, OR THE SELLING OR
PURCHASING OF SECURITIES CONSTITUTING ASSETS OF AN  INVESTMENT  COMPANY,
AND  RELATED  ACTIVITIES, BUT ONLY WHERE SUCH ACTIVITY OR ACTIVITIES ARE
PERFORMED PURSUANT TO A CONTRACT WITH  THE  INVESTMENT  COMPANY  ENTERED
INTO  PURSUANT TO SECTION 15(A) OF THE FEDERAL INVESTMENT COMPANY ACT OF
NINETEEN HUNDRED FORTY, AS AMENDED.
  (E) FOR PURPOSES OF THIS PARAGRAPH, THE TERM  "DISTRIBUTION  SERVICES"
MEANS  THE SERVICES OF ADVERTISING, SERVICING INVESTOR ACCOUNTS (INCLUD-
ING REDEMPTIONS), MARKETING SHARES OR SELLING SHARES  OF  AN  INVESTMENT
COMPANY,  BUT,  IN  THE CASE OF ADVERTISING, SERVICING INVESTOR ACCOUNTS
(INCLUDING REDEMPTIONS) OR MARKETING SHARES, ONLY WHERE SUCH SERVICE  IS
PERFORMED BY A PERSON WHO IS (OR WAS, IN THE CASE OF A CLOSED END COMPA-
NY)  ALSO  ENGAGED IN THE SERVICE OF SELLING SUCH SHARES. IN THE CASE OF
AN OPEN END COMPANY, SUCH SERVICE OF SELLING SHARES  MUST  BE  PERFORMED
PURSUANT  TO  A  CONTRACT  ENTERED INTO PURSUANT TO SECTION 15(B) OF THE
FEDERAL INVESTMENT COMPANY ACT OF NINETEEN HUNDRED FORTY, AS AMENDED.
  (F) FOR PURPOSES OF THIS PARAGRAPH, THE TERM "ADMINISTRATION SERVICES"
INCLUDES CLERICAL, ACCOUNTING, BOOKKEEPING,  DATA  PROCESSING,  INTERNAL
AUDITING, LEGAL AND TAX SERVICES PERFORMED FOR AN INVESTMENT COMPANY BUT
ONLY IF THE PROVIDER OF SUCH SERVICE OR SERVICES DURING THE TAXABLE YEAR
IN  WHICH  SUCH  SERVICE  OR  SERVICES ARE SOLD ALSO SELLS MANAGEMENT OR
DISTRIBUTION SERVICES, AS DEFINED HEREINABOVE, TO SUCH INVESTMENT COMPA-
NY.
  (E) FOR PURPOSES OF THIS SUBDIVISION, A TAXPAYER SHALL USE THE FOLLOW-
ING HIERARCHY TO DETERMINE THE COMMERCIAL DOMICILE OF A BUSINESS ENTITY,
BASED ON THE INFORMATION KNOWN TO THE TAXPAYER: (I) THE LOCATION OF  THE

S. 6359--A                         63                         A. 8559--A

TREASURY  FUNCTION  OF  THE BUSINESS ENTITY; (II) THE SEAT OF MANAGEMENT
AND CONTROL OF THE BUSINESS ENTITY; AND (III) THE BILLING ADDRESS OF THE
BUSINESS ENTITY IN THE TAXPAYER'S RECORDS.  THE TAXPAYER  MUST  EXERCISE
DUE DILIGENCE BEFORE REJECTING A METHOD IN THIS HIERARCHY AND PROCEEDING
TO THE NEXT METHOD.
  (F)  FOR PURPOSES OF THIS SUBDIVISION, THE TERM "REGISTERED SECURITIES
BROKER OR DEALER" MEANS A BROKER OR DEALER REGISTERED  AS  SUCH  BY  THE
SECURITIES  AND  EXCHANGE  COMMISSION OR THE COMMODITIES FUTURES TRADING
COMMISSION, AND SHALL INCLUDE AN OTC DERIVATIVES DEALER AS DEFINED UNDER
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION AT TITLE 17,  PART
240, SECTION 3B-12 OF THE CODE OF FEDERAL REGULATIONS (17 CFR240.3b-12)
  6.  Receipts  from  railroad  and trucking business. Receipts from the
conduct of a railroad business (including surface railroad,  whether  or
not operated by steam, subway railroad, elevated railroad, palace car or
sleeping car business) or a trucking business are included in the numer-
ator  of  the  apportionment fraction as follows. The amount of receipts
from the conduct of a railroad business or a trucking business  included
in  the  numerator of the apportionment fraction is determined by multi-
plying the amount of receipts from such  business  by  a  fraction,  the
numerator of which is the miles in such business within the state during
the period covered by the taxpayer's report and the denominator of which
is  the  miles in such business within and without the state during such
period.  Receipts from the conduct of the railroad business or a  truck-
ing  business are included in the denominator of the apportionment frac-
tion.
  7. Receipts  from  aviation  services.  (a)  Air  freight  forwarding.
Receipts  of  a  taxpayer  from  the  activity of air freight forwarding
acting as principal and like indirect air carrier receipts arising  from
such  activity  shall  be included in the numerator of the apportionment
fraction as follows: one hundred percent of such receipts  if  both  the
pickup  and delivery associated with such receipts are made in the state
and fifty percent of such receipts if  either  the  pickup  or  delivery
associated  with  such  receipts  is made in this state.  Such receipts,
whether the pickup or delivery associated with the receipts is within or
without the state, shall be included in the denominator  of  the  appor-
tionment fraction.
  (b)  Other  aviation  services.  (1)(A)  The  portion of receipts of a
taxpayer from aviation services (other than services described in  para-
graph  (a)  of  this subdivision) to be included in the numerator of the
apportionment fraction shall be determined by multiplying  its  receipts
from such aviation services by a percentage which is equal to the arith-
metic average of the following three percentages:
  (i)  the  percentage  determined  by  dividing  sixty  percent  of the
aircraft arrivals and departures  within  this  state  by  the  taxpayer
during  the  period covered by its report by the total aircraft arrivals
and departures  within  and  without  this  state  during  such  period;
provided,  however,  arrivals  and  departures solely for maintenance or
repair, refueling  (where  no  debarkation  or  embarkation  of  traffic
occurs), arrivals and departures of ferry and personnel training flights
or  arrivals  and  departures in the event of emergency situations shall
not be included in computing  such  arrival  and  departure  percentage;
provided, further, the commissioner may also exempt from such percentage
aircraft  arrivals  and  departures of all non-revenue flights including
flights involving the transportation of officers or employees  receiving
air  transportation  to  perform maintenance or repair services or where
such officers or employees are transported in conjunction with an  emer-

S. 6359--A                         64                         A. 8559--A

gency situation or the investigation of an air disaster (other than on a
scheduled  flight);  provided,  however, that arrivals and departures of
flights transporting officers and employees receiving air transportation
for purposes other than specified above (without regard to remuneration)
shall be included in computing such arrival and departure percentage;
  (ii) the percentage determined by dividing sixty percent of the reven-
ue  tons  handled  by  the taxpayer at airports within this state during
such period by the total revenue tons handled by it at  airports  within
and without this state during such period; and
  (iii)  the  percentage  determined  by  dividing  sixty percent of the
taxpayer's originating revenue within this state for such period by  its
total originating revenue within and without this state for such period.
  (B)  As  used herein the term "aircraft arrivals and departures" means
the number of landings and takeoffs of the aircraft of the taxpayer  and
the number of air pickups and deliveries by the aircraft of such taxpay-
er;  the  term  "originating revenue" means revenue to the taxpayer from
the transportation or revenue  passengers  and  revenue  property  first
received  by the taxpayer either as originating or connecting traffic at
airports; and the  term  "revenue  tons  handled"  by  the  taxpayer  at
airports  means the weight in tons of revenue passengers (at two hundred
pounds per passenger) and revenue cargo first received either as  origi-
nating  or  connecting  traffic or finally discharged by the taxpayer at
airports;
  (2) All such receipts of a taxpayer from aviation  services  described
in  this  paragraph are included in the denominator of the apportionment
fraction.
  8. Receipts from sales of advertising. (a) The amount of receipts from
sales of advertising in newspapers or periodicals included in the numer-
ator of the apportionment fraction  is  determined  by  multiplying  the
total  of  such  receipts  by  a fraction, the numerator of which is the
number of newspapers and periodicals  delivered  to  points  within  the
state and the denominator of which is the number of newspapers and peri-
odicals  delivered  to points within and without the state. The total of
such receipts from sales of advertising in newspapers or periodicals  is
included in the denominator of the apportionment fraction.
  (b)  The amount of receipts from sales of advertising on television or
radio included in the apportionment fraction is determined by  multiply-
ing  the total of such receipts by a fraction, the numerator of which is
the number of viewers or listeners within the state and the  denominator
of  which  is  the number of viewers or listeners within and without the
state. The total of such receipts from sales  of  advertising  on  tele-
vision  and  radio  is  included in the denominator of the apportionment
fraction.
  (c) The amount of receipts from sales of advertising not described  in
paragraph  (a) or (b) of this subdivision that is furnished, provided or
delivered to, or accessed by the viewer or listener through the  use  of
wire,  cable,  fiber-optic,  laser,  microwave, radio wave, satellite or
similar successor media or any  combination  thereof,  included  in  the
numerator of the apportionment fraction is determined by multiplying the
total  of  such  receipts  by  a fraction, the numerator of which is the
number of viewers or listeners within the state and the  denominator  of
which  is  the  number  of  viewers  or listeners within and without the
state. The total of such receipts from sales of advertising described in
this paragraph is included in the denominator of the apportionment frac-
tion.

S. 6359--A                         65                         A. 8559--A

  9. Receipts from transportation or transmission of gas through  pipes.
Receipts  from  the  transportation or transmission of gas through pipes
are included in the numerator of the apportionment fraction as  follows.
The  amount  of  receipts from the transportation or transmission of gas
through pipes included in the numerator of the apportionment fraction is
determined  by  multiplying the total amount of such receipts by a frac-
tion, the numerator of which  is  the  taxpayer's  transportation  units
within  the  state and the denominator of which is the taxpayer's trans-
portation units within and without the state. A transportation  unit  is
the transportation of one cubic foot of gas over a distance of one mile.
The  total amount of receipts from the transportation or transmission of
gas through pipes is included in the denominator  of  the  apportionment
fraction.
  10.  (A)  RECEIPTS  FROM  OTHER  SERVICES AND OTHER BUSINESS RECEIPTS.
RECEIPTS FROM SERVICES NOT ADDRESSED IN SUBDIVISIONS ONE THROUGH NINE OF
THIS SECTION AND OTHER BUSINESS RECEIPTS NOT ADDRESSED IN SUCH  SUBDIVI-
SIONS  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
IF THE LOCATION OF THE CUSTOMER IS WITHIN THE STATE. SUCH RECEIPTS  FROM
CUSTOMERS  WITHIN  AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR
OF THE APPORTIONMENT FRACTION. WHETHER THE RECEIPTS ARE INCLUDED IN  THE
NUMERATOR  OF  THE APPORTIONMENT FRACTION IS DETERMINED ACCORDING TO THE
HIERARCHY OF METHOD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.  THE
TAXPAYER  MUST  EXERCISE  DUE  DILIGENCE  UNDER EACH METHOD DESCRIBED IN
PARAGRAPH (B) BEFORE REJECTING IT AND PROCEEDING TO THE NEXT  METHOD  IN
THE HIERARCHY.
  (B)  HIERARCHY  OF  METHODS.  (1)  DELIVERY  DESTINATION. RECEIPTS FOR
SERVICES PERFORMED FOR A CUSTOMER'S PARTICULAR LOCATION, SUCH AS WHERE A
DELIVERY IS MADE TO THAT LOCATION, AS MAY BE  INDICATED  ON  A  BILL  OF
LADING OR PURCHASE INVOICE, ARE SOURCED TO THAT LOCATION.
  (2) BILLING ADDRESS OF THE CUSTOMER.
  (3) ZIP CODE OR OTHER GEOGRAPHIC INDICATOR OF THE CUSTOMER'S LOCATION.
  (4)  PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE DETERMINED
PURSUANT TO THIS SUBDIVISION FOR THE PRECEDING TAXABLE YEAR OR,  IF  THE
TAXPAYER  WAS NOT SUBJECT TO TAX IN THE PRECEDING TAXABLE YEAR, THEN THE
PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE  IN  THE  CURRENT
TAXABLE YEAR DETERMINED PURSUANT TO THIS SUBDIVISION.
  11.  IF  IT  SHALL  APPEAR  TO THE COMMISSIONER THAT THE APPORTIONMENT
FRACTION DETERMINED PURSUANT TO THIS SECTION DOES NOT RESULT IN A PROPER
REFLECTION OF THE TAXPAYER'S  BUSINESS  INCOME  OR  CAPITAL  WITHIN  THE
STATE, THE COMMISSIONER IS AUTHORIZED IN HIS OR HER DISCRETION TO ADJUST
IT BY (A) EXCLUDING ONE OR MORE ITEMS IN SUCH DETERMINATION, (B) INCLUD-
ING  ONE  OR  MORE  OTHER  ITEMS IN SUCH DETERMINATION, OR (C) ANY OTHER
SIMILAR OR DIFFERENT METHOD CALCULATED  TO  EFFECT  A  FAIR  AND  PROPER
APPORTIONMENT  OF  THE BUSINESS INCOME AND CAPITAL REASONABLY ATTRIBUTED
TO THE STATE.
  S 17. The tax law is amended by adding a new section 210-B to read  as
follows:
  S 210-B. CREDITS. 1. INVESTMENT TAX CREDIT (ITC). (A) A TAXPAYER SHALL
BE ALLOWED A CREDIT, TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE
TAX  IMPOSED  BY  THIS  ARTICLE.  THE  AMOUNT OF THE CREDIT SHALL BE THE
PERCENT PROVIDED FOR HEREINBELOW OF  THE  INVESTMENT  CREDIT  BASE.  THE
INVESTMENT CREDIT BASE IS THE COST OR OTHER BASIS FOR FEDERAL INCOME TAX
PURPOSES  OF  TANGIBLE  PERSONAL  PROPERTY  AND OTHER TANGIBLE PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
PARAGRAPH (B) OF THIS SUBDIVISION, LESS THE AMOUNT OF  THE  NONQUALIFIED
NONRECOURSE  FINANCING  WITH RESPECT TO SUCH PROPERTY TO THE EXTENT SUCH

S. 6359--A                         66                         A. 8559--A

FINANCING WOULD BE EXCLUDIBLE FROM THE CREDIT BASE PURSUANT  TO  SECTION
46(C)(8) OF THE INTERNAL REVENUE CODE (TREATING SUCH PROPERTY AS SECTION
THIRTY-EIGHT  PROPERTY IRRESPECTIVE OF WHETHER OR NOT IT IN FACT CONSTI-
TUTES SECTION THIRTY-EIGHT PROPERTY). IF, AT THE CLOSE OF A TAXABLE YEAR
FOLLOWING THE TAXABLE YEAR IN WHICH SUCH PROPERTY WAS PLACED IN SERVICE,
THERE  IS  A  NET  DECREASE  IN  THE  AMOUNT OF NONQUALIFIED NONRECOURSE
FINANCING WITH RESPECT TO SUCH PROPERTY,  SUCH  NET  DECREASE  SHALL  BE
TREATED  AS  IF IT WERE THE COST OR OTHER BASIS OF PROPERTY DESCRIBED IN
PARAGRAPH (B) OF THIS SUBDIVISION ACQUIRED,  CONSTRUCTED,  RECONSTRUCTED
OR ERECTED DURING THE YEAR OF THE DECREASE IN THE AMOUNT OF NONQUALIFIED
NONRECOURSE FINANCING. IN THE CASE OF A COMBINED REPORT THE TERM INVEST-
MENT  CREDIT  BASE  SHALL  MEAN THE SUM OF THE INVESTMENT CREDIT BASE OF
EACH CORPORATION INCLUDED ON SUCH REPORT. THE PERCENTAGE TO BE  USED  TO
COMPUTE  THE  CREDIT  ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE FIVE
PERCENT WITH RESPECT TO THE FIRST THREE HUNDRED FIFTY MILLION DOLLARS OF
THE INVESTMENT CREDIT BASE, AND FOUR PERCENT WITH RESPECT TO THE INVEST-
MENT CREDIT BASE IN EXCESS  OF  THREE  HUNDRED  FIFTY  MILLION  DOLLARS,
EXCEPT IN THE CASE OF RESEARCH AND DEVELOPMENT PROPERTY AT THE OPTION OF
THE TAXPAYER THE APPLICABLE PERCENTAGE SHALL BE NINE.
  (B)  QUALIFYING  PROPERTY.  (I)  A  CREDIT SHALL BE ALLOWED UNDER THIS
SUBDIVISION TO A QUALIFIED NEW YORK MANUFACTURER, A QUALIFIED  NEW  YORK
AGRICULTURAL  BUSINESS  OR  A  QUALIFIED  NEW  YORK MINING BUSINESS WITH
RESPECT TO  TANGIBLE  PERSONAL  PROPERTY  AND  OTHER  TANGIBLE  PROPERTY
INCLUDING  BUILDINGS  AND  STRUCTURAL COMPONENTS OF BUILDINGS, WHICH (A)
ARE DEPRECIABLE PURSUANT TO  SECTION  ONE  HUNDRED  SIXTY-SEVEN  OF  THE
INTERNAL REVENUE CODE, (B) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, (C)
ARE  ACQUIRED BY PURCHASE AS DEFINED IN SECTION ONE HUNDRED SEVENTY-NINE
(D) OF THE INTERNAL REVENUE CODE,  (D)  HAVE  NOT  BEEN  PREVIOUSLY  THE
SUBJECT  OF  AN  INVESTMENT  TAX CREDIT OR EMPIRE ZONE INVESTMENT CREDIT
ALLOWED TO ANOTHER TAXPAYER, (E) HAVE A SITUS IN THIS STATE AND (F)  ARE
PRINCIPALLY  USED BY THE TAXPAYER IN THE PRODUCTION OF GOODS FOR SALE OR
ARE RESEARCH AND DEVELOPMENT PROPERTY.
  (II) FOR PURPOSES OF THIS PARAGRAPH, THE FOLLOWING  DEFINITIONS  SHALL
APPLY:
  (A)  PROPERTY  USED  IN THE PRODUCTION OF GOODS FOR SALE SHALL INCLUDE
MACHINERY, EQUIPMENT OR OTHER TANGIBLE  PROPERTY  WHICH  IS  PRINCIPALLY
USED  IN  THE  REPAIR AND SERVICE OF OTHER MACHINERY, EQUIPMENT OR OTHER
TANGIBLE PROPERTY USED PRINCIPALLY IN THE PRODUCTION OF GOODS  FOR  SALE
AND  SHALL  INCLUDE  ALL  FACILITIES  USED  IN  THE PRODUCTION OPERATION
INCLUDING STORAGE OF MATERIAL TO  BE  USED  IN  PRODUCTION  AND  OF  THE
PRODUCTS THAT ARE PRODUCED.
  (B)  RESEARCH  AND  DEVELOPMENT  PROPERTY SHALL MEAN PROPERTY WHICH IS
USED FOR PURPOSES OF RESEARCH AND DEVELOPMENT  IN  THE  EXPERIMENTAL  OR
LABORATORY SENSE. SUCH PURPOSES SHALL NOT BE DEEMED TO INCLUDE THE ORDI-
NARY TESTING OR INSPECTION OF MATERIALS OR PRODUCTS FOR QUALITY CONTROL,
EFFICIENCY  SURVEYS,  MANAGEMENT STUDIES, CONSUMER SURVEYS, ADVERTISING,
PROMOTIONS, OR RESEARCH IN CONNECTION WITH LITERARY, HISTORICAL OR SIMI-
LAR PROJECTS.
  (C) A QUALIFIED NEW YORK AGRICULTURAL BUSINESS SHALL MEAN  A  TAXPAYER
OR COMBINED GROUP PRINCIPALLY ENGAGED IN FARMING, AGRICULTURE, HORTICUL-
TURE,  FLORICULTURE,  VITICULTURE  OR COMMERCIAL FISHING IN THE STATE. A
TAXPAYER OR A COMBINED GROUP IS PRINCIPALLY ENGAGED IN FARMING, AGRICUL-
TURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMERCIAL  FISHING  IN
THE  STATE  IF  MORE  THAN  FIFTY  PERCENT  OF THE GROSS RECEIPTS OF THE
TAXPAYER OR THE COMBINED GROUP, RESPECTIVELY, DURING  THE  TAXABLE  YEAR
ARE  DERIVED  FROM  THE  SALE OF GOODS PRODUCED BY ANY OF THE ACTIVITIES

S. 6359--A                         67                         A. 8559--A

SPECIFIED IN THIS SENTENCE THAT ARE CONDUCTED IN NEW YORK. IN  COMPUTING
A  COMBINED  GROUP'S  GROSS  RECEIPTS,  INTERCORPORATE RECEIPTS SHALL BE
ELIMINATED. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER THAT IS A PARTNER
IN  PARTNERSHIP,  INTER-ENTITY  RECEIPTS  BETWEEN  THE TAXPAYER AND SUCH
PARTNERSHIP SHALL BE ELIMINATED.
  (D) A QUALIFIED NEW YORK MINING BUSINESS  SHALL  MEAN  A  TAXPAYER  OR
COMBINED GROUP PRINCIPALLY ENGAGED IN MINING IN THE STATE. A TAXPAYER OR
COMBINED  GROUP  IS  PRINCIPALLY  ENGAGED IN MINING IN THE STATE IF MORE
THAN FIFTY PERCENT OF THE GROSS RECEIPTS OF THE TAXPAYER OR THE COMBINED
GROUP, RESPECTIVELY, DURING THE TAXABLE YEAR ARE DERIVED FROM  THE  SALE
OF  GOODS PRODUCED BY MINING ACTIVITIES THAT ARE CONDUCTED IN THE STATE.
IN COMPUTING A COMBINED GROUP'S GROSS RECEIPTS, INTERCORPORATE  RECEIPTS
SHALL  BE ELIMINATED. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER THAT IS
A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND
SUCH PARTNERSHIP SHALL BE ELIMINATED.
  (III) IN ORDER TO PROPERLY ADMINISTER THE CREDIT  AUTHORIZED  BY  THIS
SUBDIVISION, THE DEPARTMENT MAY DISCLOSE INFORMATION ABOUT THE ALLOWANCE
TO  ANOTHER  TAXPAYER  OF  AN  INVESTMENT  TAX  CREDIT OR AN EMPIRE ZONE
INVESTMENT TAX CREDIT UNDER THIS CHAPTER WITH RESPECT TO THE SAME  PROP-
ERTY.
  (C)  NONQUALIFYING  PROPERTY. A TAXPAYER SHALL NOT BE ALLOWED A CREDIT
UNDER THIS SUBDIVISION WITH RESPECT TO TANGIBLE  PERSONAL  PROPERTY  AND
OTHER  TANGIBLE  PROPERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS
OF BUILDINGS, WHICH IT LEASES TO ANY OTHER PERSON  OR  CORPORATION.  FOR
PURPOSES  OF  THE PRECEDING SENTENCE, ANY CONTRACT OR AGREEMENT TO LEASE
OR RENT OR FOR A LICENSE TO USE SUCH  PROPERTY  SHALL  BE  CONSIDERED  A
LEASE.    PROVIDED,  HOWEVER, IN DETERMINING WHETHER A TAXPAYER SHALL BE
ALLOWED A CREDIT UNDER THIS SUBDIVISION WITH RESPECT TO  SUCH  PROPERTY,
ANY  ELECTION  MADE  WITH  RESPECT  TO  SUCH  PROPERTY  PURSUANT  TO THE
PROVISIONS OF PARAGRAPH EIGHT OF SUBSECTION (F) OF SECTION  ONE  HUNDRED
SIXTY-EIGHT  OF  THE  INTERNAL  REVENUE  CODE,  AS SUCH PARAGRAPH WAS IN
EFFECT FOR AGREEMENTS ENTERED INTO  PRIOR  TO  JANUARY  FIRST,  NINETEEN
HUNDRED EIGHTY-FOUR, SHALL BE DISREGARDED.
  (D)  CARRYOVER.  EXCEPT  AS  OTHERWISE PROVIDED IN THIS PARAGRAPH, THE
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  SHALL  NOT
REDUCE  THE  TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR MINIMUM
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWABLE
UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE  TAX  TO  SUCH
AMOUNT  OR  IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR
MINIMUM AMOUNT, ANY AMOUNT OF CREDIT ALLOWED FOR A TAXABLE YEAR AND  NOT
DEDUCTIBLE IN SUCH YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS
NEXT FOLLOWING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAYER'S
TAX FOR SUCH YEAR OR YEARS. IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER
WHICH  QUALIFIES  AS A NEW BUSINESS UNDER PARAGRAPH (F) OF THIS SUBDIVI-
SION MAY ELECT TO TREAT THE AMOUNT OF SUCH CARRYOVER AS  AN  OVERPAYMENT
OF  TAX  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (E) RECAPTURE. (I) WITH  RESPECT  TO  PROPERTY  WHICH  IS  DEPRECIABLE
PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE
BUT  IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT
OF SUCH CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN  QUALIFIED  USE
PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
THE  AMOUNT  OF  THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED

S. 6359--A                         68                         A. 8559--A

FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE  MONTHS  OF
QUALIFIED  USE  BEAR  TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR  TO  THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT
TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE
YEAR  OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF
OR CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE  FOR
MORE  THAN  TWELVE  CONSECUTIVE  YEARS, IT SHALL NOT BE NECESSARY TO ADD
BACK THE CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT  OF  CREDIT
ALLOWED  FOR  ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL
CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS
OF USEFUL LIFE. FOR PURPOSES OF THIS PARAGRAPH, USEFUL LIFE OF  PROPERTY
SHALL  BE  THE  SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES WHEN
COMPUTING HIS FEDERAL INCOME TAX LIABILITY.
  (II) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH PARAGRAPH  (IV)  OF
THIS  SUBDIVISION  APPLIES,  WITH  RESPECT  TO  THREE-YEAR  PROPERTY, AS
DEFINED IN SUBSECTION (E) OF SECTION  ONE  HUNDRED  SIXTY-EIGHT  OF  THE
INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED
USE  PRIOR  TO  THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE
TAKEN, THE AMOUNT OF THE CREDIT ALLOWED SHALL BE  THAT  PORTION  OF  THE
CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH
THE  MONTHS  OF  QUALIFIED  USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR TO THE END OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN THE CREDIT
TAKEN  AND  THE  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE
YEAR OF DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL  USE  SHALL
BE  DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE
MONTHS OF QUALIFIED USE BEAR TO THIRTY-SIX.
  (III) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH PARAGRAPH (IV)  OF
THIS  SUBDIVISION  APPLIES,  WITH  RESPECT  TO  PROPERTY  SUBJECT TO THE
PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT OF  THE  INTERNAL  REVENUE
CODE,  OTHER  THAN  THREE-YEAR  PROPERTY AS DEFINED IN SUBSECTION (E) OF
SUCH SECTION ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR  CEASES  TO
BE  IN  QUALIFIED  USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS  THE  RATIO
WHICH  THE  MONTHS OF QUALIFIED USE BEAR TO SIXTY.  IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR  TO  THE  END  OF  SIXTY MONTHS, THE DIFFERENCE BETWEEN THE CREDIT
TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE
YEAR  OF  DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL
BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH  THE
MONTHS OF QUALIFIED USE BEAR TO SIXTY.
  (IV)  WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED SIXTY-
EIGHT OF THE INTERNAL REVENUE CODE APPLIES, WHICH IS  A  BUILDING  OR  A
STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO
BE  IN  QUALIFIED  USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS  THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
OF  OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD OVER
WHICH THE TAXPAYER CHOOSES TO DEDUCT THE  PROPERTY  UNDER  THE  INTERNAL
REVENUE  CODE,  THE  DIFFERENCE  BETWEEN THE CREDIT TAKEN AND THE CREDIT
ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE  YEAR  OF  DISPOSITION.

S. 6359--A                         69                         A. 8559--A

PROVIDED,  HOWEVER,  IF  SUCH PROPERTY IS DISPOSED OF OR CEASES TO BE IN
QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR  MORE  THAN  TWELVE
CONSECUTIVE  YEARS,  IT SHALL NOT BE NECESSARY TO ADD BACK THE CREDIT AS
PROVIDED  IN  THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL
USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE.
  (V) FOR PURPOSES OF THIS PARAGRAPH, PROPERTY (I) WHICH IS DESCRIBED IN
SUBPARAGRAPH  (II),  (III)  OR (IV) OF THIS PARAGRAPH, AND (II) WHICH IS
SUBJECT TO SUBPARAGRAPH ELEVEN OF PARAGRAPH (A) OF SUBDIVISION NINE  AND
SUBPARAGRAPH  TEN  OF  PARAGRAPH  (B) OF SUBDIVISION NINE OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, SHALL BE TREATED  AS  PROPERTY  WHICH  IS
DEPRECIABLE  PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL
REVENUE CODE BUT IS NOT SUBJECT TO SECTION ONE  HUNDRED  SIXTY-EIGHT  OF
SUCH CODE.
  (VI)  FOR  EACH  TAXABLE  YEAR,  THE  AMOUNT REQUIRED TO BE ADDED BACK
PURSUANT TO THIS PARAGRAPH SHALL BE AUGMENTED BY AN AMOUNT EQUAL TO  THE
PRODUCT  OF  SUCH  AMOUNT AND THE UNDERPAYMENT RATE OF INTEREST (WITHOUT
REGARD TO COMPOUNDING), SET BY THE COMMISSIONER PURSUANT  TO  SUBSECTION
(E) OF SECTION ONE THOUSAND NINETY-SIX, IN EFFECT ON THE LAST DAY OF THE
TAXABLE YEAR.
  (VII) IF, AS OF THE CLOSE OF THE TAXABLE YEAR, THERE IS A NET INCREASE
WITH  RESPECT  TO THE TAXPAYER IN THE AMOUNT OF NONQUALIFIED NONRECOURSE
FINANCING (WITHIN THE MEANING OF SECTION 46(C)(8) OF THE INTERNAL REVEN-
UE CODE) WITH RESPECT TO ANY PROPERTY WITH RESPECT TO WHICH  THE  CREDIT
UNDER  THIS  SUBDIVISION  WAS LIMITED BASED ON ATTRIBUTABLE NONQUALIFIED
NONRECOURSE FINANCING, THEN AN AMOUNT EQUAL  TO  THE  DECREASE  IN  SUCH
CREDIT  WHICH  WOULD  HAVE RESULTED FROM REDUCING, BY THE AMOUNT OF SUCH
NET INCREASE, THE COST OR OTHER BASIS TAKEN INTO ACCOUNT WITH RESPECT TO
SUCH PROPERTY MUST BE ADDED BACK IN SUCH TAXABLE  YEAR.  THE  AMOUNT  OF
NONQUALIFIED  NONRECOURSE FINANCING SHALL NOT BE TREATED AS INCREASED BY
REASON OF A TRANSFER OF (OR AGREEMENT TO TRANSFER) ANY  EVIDENCE  OF  AN
INDEBTEDNESS IF SUCH TRANSFER OCCURS (OR SUCH AGREEMENT IS ENTERED INTO)
MORE THAN ONE YEAR AFTER THE DATE SUCH INDEBTEDNESS WAS INCURRED.
  (VIII)(A) WHERE PROPERTY WITH RESPECT TO WHICH CREDIT HAS BEEN ALLOWED
UNDER  THIS  SUBDIVISION IS DISPOSED OF BY TRANSFER TO THE TAXPAYER IN A
QUALIFIED TRANSACTION, AND SUCH DISPOSITION REQUIRES, PURSUANT  TO  THIS
PARAGRAPH  (WITHOUT  REGARD  TO  THIS  SUBPARAGRAPH) THAT SUCH CREDIT BE
DECREASED (WHERE THE DISPOSITION OCCURS IN THE TAXABLE YEAR IN WHICH THE
PROPERTY IS PLACED IN SERVICE BY THE TRANSFEROR) OR THAT  A  PORTION  OF
SUCH  CREDIT  BE ADDED BACK BY THE TRANSFEROR, THEN CLAUSE (B) OR CLAUSE
(C) OF THIS SUBPARAGRAPH SHALL APPLY.
  (B) IF THE TAXPAYER AND THE TRANSFEROR JOINTLY ELECT, AT SUCH TIME AND
IN SUCH MANNER AS THE COMMISSIONER MAY PRESCRIBE,  THE  FOLLOWING  SHALL
APPLY:
  (I)  SUCH  PORTION  SHALL  NOT  BE  REQUIRED  TO  BE ADDED BACK BY THE
TRANSFEROR,
  (II) THE AMOUNT OF UNUSED CREDIT SHALL NOT BE DEDUCTED FROM TAX OTHER-
WISE DUE BY THE TRANSFEROR ON ANY RETURN (INCLUDING AN AMENDED  RETURN),
AND  SHALL  NOT  BE  SO  DEDUCTED AS PART OF ANY AUDIT ADJUSTMENT OR ANY
OTHER DETERMINATION, AND
  (III) THE AMOUNT OF UNUSED CREDIT SHALL BE TREATED  AS  AN  AMOUNT  OF
CREDIT  OF  THE  TAXPAYER  UNDER THIS SUBDIVISION CARRIED FORWARD BY THE
TAXPAYER TO ITS TAXABLE YEAR IN WHICH SUCH TRANSFER OCCURRED, AS IF  THE
CREDIT  ALLOWED  TO  THE  TRANSFEROR  WITH  RESPECT TO SUCH PROPERTY HAD

S. 6359--A                         70                         A. 8559--A

ORIGINALLY BEEN ALLOWED TO THE TAXPAYER BOTH AS TO AMOUNT AND FIRST DATE
OF QUALIFIED USE, AND AS IF THE PERIOD OF QUALIFIED USE BY THE  TRANSFE-
ROR PRIOR TO THE TRANSFER HAD BEEN A PERIOD OF SUCH USE BY THE TAXPAYER.
ANY  AMOUNT  OF  CREDIT  TREATED  AS CARRIED FORWARD TO THE TAXABLE YEAR
PURSUANT TO THIS SUBPARAGRAPH SHALL BE APPLIED AS PROVIDED IN CLAUSE (H)
OF THIS SUBPARAGRAPH.
  (C) IF THE TAXPAYER AND  THE  TRANSFEROR  DO  NOT  MAKE  THE  ELECTION
DESCRIBED  IN CLAUSE (B) OF THIS SUBPARAGRAPH, THEN THE AMOUNT OF CREDIT
REQUIRED PURSUANT TO THIS PARAGRAPH TO BE ADDED BACK BY  THE  TRANSFEROR
SHALL  BE  TREATED  AS  AN  AMOUNT  OF CREDIT OF THE TAXPAYER UNDER THIS
SUBDIVISION TO BE CARRIED FORWARD BY THE TAXPAYER TO ITS TAXABLE YEAR IN
WHICH SUCH TRANSFER OCCURRED, AS IF THE CREDIT ALLOWED TO THE TRANSFEROR
WITH RESPECT TO SUCH PROPERTY HAD ORIGINALLY BEEN ALLOWED TO THE TAXPAY-
ER BOTH AS TO AMOUNT AND FIRST DATE OF QUALIFIED  USE,  AND  AS  IF  THE
PERIOD OF QUALIFIED USE BY THE TRANSFEROR PRIOR TO THE TRANSFER HAD BEEN
A  PERIOD  OF  SUCH USE BY THE TAXPAYER. ANY AMOUNT OF CREDIT TREATED AS
CARRIED FORWARD TO THE TAXABLE YEAR PURSUANT TO THIS SUBPARAGRAPH  SHALL
BE APPLIED AS PROVIDED IN CLAUSE (H) OF THIS SUBPARAGRAPH.
  (D) THE TERM "QUALIFIED TRANSACTION" SHALL MEAN A TRANSACTION WHICH IS
A  REORGANIZATION  DESCRIBED  IN  SECTION  368(A)(1)(D)  OF THE INTERNAL
REVENUE CODE, WHEREIN  (I)  SUBSTANTIALLY  ALL  OF  THE  ASSETS  OF  THE
TRANSFEROR  NECESSARY  TO  CONTINUE THE OPERATION OF A DIVISION OR DIVI-
SIONS OF THE TRANSFEROR ARE TRANSFERRED TO THE TAXPAYER IN A TRANSACTION
TO WHICH SECTION 351 OF SUCH CODE APPLIES, AND (II) STOCK OR  SECURITIES
OF  THE  TAXPAYER  HELD  BY  THE  TRANSFEROR ARE DISTRIBUTED PURSUANT TO
SECTION 355 OF SUCH CODE.
  (E) THE TERM "UNUSED CREDIT" SHALL MEAN THE AMOUNT OF CREDIT SHOWN  AS
CARRIED  FORWARD  TO THE TRANSACTION YEAR ON THE TRANSFEROR'S TAX RETURN
FOR ITS TAXABLE YEAR IMMEDIATELY PRECEDING  THE  TRANSACTION  YEAR  WITH
RESPECT TO THE PROPERTY DESCRIBED IN CLAUSE (A) OF THIS SUBPARAGRAPH.
  (F)  THE  TERM  "TRANSACTION YEAR" MEANS THE TAXABLE YEAR IN WHICH THE
QUALIFIED TRANSACTION OCCURS.
  (G) NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, IN THE
CASE OF ALLOWANCE OF CREDIT PURSUANT TO THIS SUBPARAGRAPH TO A  TAXPAYER
THE  COMMISSIONER SHALL HAVE THE AUTHORITY TO REVEAL TO THE TAXPAYER ANY
INFORMATION, WITH RESPECT TO THE CREDIT OF THE TRANSFEROR, WHICH IS  THE
BASIS  FOR  THE DENIAL IN WHOLE OR IN PART OF THE CREDIT CLAIMED BY SUCH
TAXPAYER.
  (H) WHERE A CREDIT IS ALLOWED TO A TAXPAYER PURSUANT TO THIS  SUBPARA-
GRAPH,  THE  TAXPAYER MAY TREAT THE AMOUNT OF SUCH CREDIT AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER,  PROVIDED,  HOWEVER,
THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS  CHAPTER  NOTWITHSTANDING,  NO INTEREST SHALL BE PAID THEREON. SUCH
CREDIT SHALL BE ALLOWED AGAINST THE TAX IMPOSED  BY  THIS  ARTICLE  WITH
RESPECT  TO THE SECOND SUCCEEDING TAXABLE YEAR NEXT FOLLOWING THE TRANS-
ACTION YEAR, PROVIDED THAT NOT MORE THAN ONE-FOURTH  OF  THE  AMOUNT  OF
SUCH CREDIT MAY BE APPLIED BY THE TAXPAYER, WHETHER TO REDUCE TAX OTHER-
WISE  DUE OR TO BE TREATED AS AN OVERPAYMENT TO BE CREDITED OR REFUNDED,
WITH RESPECT TO SUCH SECOND SUCCEEDING TAXABLE YEAR AND EACH OF THE NEXT
THREE TAXABLE YEARS FOLLOWING SUCH SECOND SUCCEEDING TAXABLE YEAR.
  (F) NEW BUSINESS. FOR PURPOSES OF PARAGRAPH (D) OF THIS SUBDIVISION, A
NEW BUSINESS SHALL INCLUDE ANY CORPORATION, EXCEPT A CORPORATION WHICH:
  (I) OVER FIFTY PERCENT OF THE NUMBER OF SHARES OF STOCK ENTITLING  THE
HOLDERS  THEREOF  TO  VOTE  FOR THE ELECTION OF DIRECTORS OR TRUSTEES IS
OWNED OR CONTROLLED,  EITHER  DIRECTLY  OR  INDIRECTLY,  BY  A  TAXPAYER

S. 6359--A                         71                         A. 8559--A

SUBJECT  TO  TAX UNDER THIS ARTICLE; SECTION ONE HUNDRED EIGHTY-THREE OR
ONE HUNDRED EIGHTY-FOUR OF ARTICLE NINE; OR ARTICLE THIRTY-THREE OF THIS
CHAPTER; OR
  (II) IS SUBSTANTIALLY SIMILAR IN OPERATION AND IN OWNERSHIP TO A BUSI-
NESS  ENTITY  (OR  ENTITIES)  TAXABLE, OR PREVIOUSLY TAXABLE, UNDER THIS
ARTICLE; SECTION ONE  HUNDRED  EIGHTY-THREE,  ONE  HUNDRED  EIGHTY-FOUR,
FORMER  SECTION  ONE  HUNDRED  EIGHTY-FIVE OR FORMER SECTION ONE HUNDRED
EIGHTY-SIX OF ARTICLE NINE; ARTICLE THIRTY-TWO OF THIS CHAPTER (AS  SUCH
ARTICLE  WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN);
ARTICLE THIRTY-THREE OF THIS CHAPTER; ARTICLE TWENTY-THREE OF THIS CHAP-
TER OR  WHICH  WOULD  HAVE  BEEN  SUBJECT  TO  TAX  UNDER  SUCH  ARTICLE
TWENTY-THREE  (AS  SUCH ARTICLE WAS IN EFFECT ON JANUARY FIRST, NINETEEN
HUNDRED EIGHTY) OR THE INCOME (OR LOSSES) OF WHICH IS (OR WAS)  INCLUDA-
BLE  UNDER  ARTICLE  TWENTY-TWO  OF  THIS CHAPTER WHEREBY THE INTENT AND
PURPOSE OF THIS PARAGRAPH AND PARAGRAPH (D)  OF  THIS  SUBDIVISION  WITH
RESPECT TO REFUNDING OF CREDIT TO NEW BUSINESS WOULD BE EVADED; OR
  (III) HAS BEEN SUBJECT TO TAX UNDER THIS ARTICLE OR UNDER FORMER ARTI-
CLE THIRTY-TWO OF THIS CHAPTER FOR MORE THAN FIVE TAXABLE YEARS (EXCLUD-
ING SHORT TAXABLE YEARS).
  2.  EMPLOYMENT  INCENTIVE  CREDIT (EIC). (A)(I) APPLICATION OF CREDIT.
WHERE A TAXPAYER IS ALLOWED A  CREDIT  UNDER  SUBDIVISION  ONE  OF  THIS
SECTION,  OTHER  THAN  AT  THE  OPTIONAL RATE APPLICABLE TO RESEARCH AND
DEVELOPMENT PROPERTY, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF
THE TWO YEARS NEXT SUCCEEDING THE TAXABLE  YEAR  FOR  WHICH  THE  CREDIT
UNDER  SUCH  SUBDIVISION  ONE  IS ALLOWED WITH RESPECT TO SUCH PROPERTY,
WHETHER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT  TAXABLE
YEARS  PURSUANT  TO  PARAGRAPH  (D)  OF  SUCH SUBDIVISION ONE. PROVIDED,
HOWEVER, THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY  TAXA-
BLE YEAR SHALL BE ALLOWED ONLY IF THE AVERAGE NUMBER OF EMPLOYEES DURING
SUCH  TAXABLE  YEAR  IS  AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE
NUMBER OF EMPLOYEES DURING THE EMPLOYMENT BASE YEAR. THE EMPLOYMENT BASE
YEAR SHALL BE THE TAXABLE YEAR IMMEDIATELY PRECEDING  THE  TAXABLE  YEAR
FOR  WHICH  THE CREDIT UNDER SUCH SUBDIVISION ONE IS ALLOWED EXCEPT THAT
IF THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A  TAXABLE  YEAR
IMMEDIATELY  PRECEDING  THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER SUCH
SUBDIVISION ONE OF THIS SECTION IS ALLOWED,  THE  EMPLOYMENT  BASE  YEAR
SHALL BE THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION ONE
IS ALLOWED.
  (II)  AMOUNT  OF  CREDIT.  THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS
SUBDIVISION SHALL BE AS SET FORTH IN THE FOLLOWING TABLE:
AVERAGE NUMBER OF EMPLOYEES DURING THE      CREDIT ALLOWED UNDER THIS
TAXABLE YEAR EXPRESSED AS A PERCENTAGE      SUBDIVISION EXPRESSED AS A
OF AVERAGE EMPLOYEES IN EMPLOYMENT          PERCENTAGE OF THE APPLICABLE
BASE YEARS                                  INVESTMENT CREDIT BASIS
LESS THAN 102%                              1.5%
AT LEAST 102% AND LESS THAN 103%            2%
AT LEAST 103%                               2.5%
  (B) AVERAGE NUMBER OF EMPLOYEES. THE AVERAGE NUMBER OF EMPLOYEES IN  A
TAXABLE  YEAR  SHALL BE COMPUTED BY ASCERTAINING THE NUMBER OF EMPLOYEES
WITHIN THE STATE, EXCEPT GENERAL EXECUTIVE  OFFICERS,  EMPLOYED  BY  THE
TAXPAYER  ON  THE  THIRTY-FIRST DAY OF MARCH, THE THIRTIETH DAY OF JUNE,
THE THIRTIETH DAY OF SEPTEMBER AND THE THIRTY-FIRST DAY OF  DECEMBER  IN
THE TAXABLE YEAR, BY ADDING TOGETHER THE NUMBER OF EMPLOYEES ASCERTAINED
ON  EACH OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY THE NUMBER OF
SUCH ABOVE MENTIONED DATES OCCURRING WITHIN THE TAXABLE  YEAR.  HOWEVER,
WITH RESPECT TO THE EMPLOYMENT BASE YEAR, THERE SHALL BE EXCLUDED THERE-

S. 6359--A                         72                         A. 8559--A

FROM  ANY  EMPLOYEE  WITH  RESPECT  TO  WHOM A CREDIT PROVIDED FOR UNDER
SUBDIVISION SIX OF THIS SECTION IS CLAIMED, FOR THE TAXABLE YEAR,  BASED
ON  EMPLOYMENT WITHIN A ZONE EQUIVALENT AREA DESIGNATED AS SUCH PURSUANT
TO ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW.
  (C)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT
OF  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES
THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS  TAX  BASED  ON
THE  FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS IMME-
DIATELY FOLLOWING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAY-
ER'S TAX FOR SUCH YEAR OR YEARS.
  3. EMPIRE ZONE INVESTMENT TAX CREDIT (EZ-ITC). (A) A TAXPAYER SHALL BE
ALLOWED A CREDIT, TO BE COMPUTED AS HEREIN  PROVIDED,  AGAINST  THE  TAX
IMPOSED  BY  THIS ARTICLE IF THE TAXPAYER HAS BEEN CERTIFIED PURSUANT TO
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW. THE AMOUNT OF THE CRED-
IT SHALL BE TEN PERCENT OF THE COST OR OTHER BASIS  FOR  FEDERAL  INCOME
TAX  PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
PARAGRAPH (B) OF THIS SUBDIVISION, WHICH IS  LOCATED  WITHIN  AN  EMPIRE
ZONE  DESIGNATED AS SUCH PURSUANT TO ARTICLE EIGHTEEN-B OF SUCH LAW, BUT
ONLY IF THE ACQUISITION, CONSTRUCTION,  RECONSTRUCTION  OR  ERECTION  OF
SUCH  PROPERTY  OCCURRED  OR  WAS COMMENCED ON OR AFTER THE DATE OF SUCH
DESIGNATION AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT
IN THE CASE OF AN ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR  ERECTION
WHICH WAS COMMENCED DURING SUCH PERIOD AND CONTINUED OR COMPLETED SUBSE-
QUENTLY,  SUCH CREDIT SHALL BE TEN PERCENT OF THE PORTION OF THE COST OR
OTHER BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD,
WHICH PORTION SHALL BE ASCERTAINED BY MULTIPLYING SUCH COST OR BASIS  BY
A  FRACTION  THE  NUMERATOR  OF  WHICH SHALL BE THE EXPENDITURES PAID OR
INCURRED DURING SUCH PERIOD FOR SUCH PURPOSES  AND  THE  DENOMINATOR  OF
WHICH  SHALL  BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED FOR SUCH
ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION.
  (B) QUALIFIED PROPERTY. A CREDIT SHALL BE ALLOWED UNDER THIS  SUBDIVI-
SION WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROP-
ERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH
  (I) ARE DEPRECIABLE PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE
INTERNAL REVENUE CODE,
  (II) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE,
  (III)  ARE  ACQUIRED  BY  PURCHASE  AS  DEFINED IN SECTION ONE HUNDRED
SEVENTY-NINE (D) OF THE INTERNAL REVENUE CODE,
  (IV) HAVE A SITUS IN AN EMPIRE ZONE DESIGNATED  AS  SUCH  PURSUANT  TO
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW, AND
  (V)  ARE  (A)  PRINCIPALLY  USED  BY THE TAXPAYER IN THE PRODUCTION OF
GOODS  BY  MANUFACTURING,  PROCESSING,  ASSEMBLING,  REFINING,   MINING,
EXTRACTING,  FARMING,  AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICUL-
TURE OR COMMERCIAL FISHING,
  (B) INDUSTRIAL WASTE TREATMENT FACILITIES  OR  AIR  POLLUTION  CONTROL
FACILITIES USED IN THE TAXPAYER'S TRADE OR BUSINESS,
  (C) RESEARCH AND DEVELOPMENT PROPERTY,
  (D) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS  AS  A BROKER OR DEALER IN CONNECTION WITH THE PURCHASE OR SALE
(WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING  INTO,
ASSUMPTION,  OFFSET,  ASSIGNMENT,  TERMINATION,  OR TRANSFER) OF STOCKS,

S. 6359--A                         73                         A. 8559--A

BONDS  OR  OTHER  SECURITIES  AS  DEFINED  IN   SECTION   FOUR   HUNDRED
SEVENTY-FIVE  (C)(2)  OF THE INTERNAL REVENUE CODE, OR OF COMMODITIES AS
DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
CODE,
  (E) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS  OF  PROVIDING  INVESTMENT  ADVISORY  SERVICES  FOR A REGULATED
INVESTMENT COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE OF  THE
INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT, OR LOAN ORIGINATION
SERVICES  TO  CUSTOMERS  IN  CONNECTION WITH THE PURCHASE OR SALE (WHICH
SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO, ASSUMP-
TION, OFFSET, ASSIGNMENT, TERMINATION  OR  TRANSFER)  OF  SECURITIES  AS
DEFINED  IN  SECTION  FOUR  HUNDRED  SEVENTY-FIVE (C)(2) OF THE INTERNAL
REVENUE CODE,
  (E-1) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S  TRADE
OR  BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES OR THE SERVICE OF
MANAGING INVESTMENT PORTFOLIOS TO ACHIEVE SPECIFIC INVESTMENT OBJECTIVES
FOR ACCOUNTS OVER ONE MILLION DOLLARS OF ACCREDITED INVESTORS  (AS  THAT
TERM  IS  DEFINED  IN  RULE 501 OF REGULATION D OF THE SECURITIES ACT OF
1933), IF THE TAXPAYER SATISFIES THE FOLLOWING CRITERIA:
  (I) THE TAXPAYER IS A REGULATED BROKER OR DEALER OR AN AFFILIATE OF  A
REGULATED BROKER OR DEALER,
  (II) THE TAXPAYER IS REGISTERED AS AN INVESTMENT ADVISER UNDER SECTION
TWO  HUNDRED  THREE  OF THE INVESTMENT ADVISERS ACT OF 1940, AS AMENDED,
AND
  (III) AT LEAST ONE CLIENT OF THE TAXPAYER IS  A  REGULATED  INVESTMENT
COMPANY  AS  DEFINED  IN SECTION EIGHT HUNDRED FIFTY-ONE OF THE INTERNAL
REVENUE CODE THAT HAS ASSETS OF ONE HUNDRED MILLION DOLLARS, OR
  (F) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S BUSINESS
AS AN EXCHANGE REGISTERED AS A NATIONAL SECURITIES EXCHANGE  WITHIN  THE
MEANING  OF  SECTIONS 3(A)(1) AND 6(A) OF THE SECURITIES EXCHANGE ACT OF
1934 OR A BOARD OF TRADE AS DEFINED IN SUBDIVISION ONE OF PARAGRAPH  (A)
OF SECTION FOURTEEN HUNDRED TEN OF THE NOT-FOR-PROFIT CORPORATION LAW OR
AS  AN  ENTITY THAT IS WHOLLY OWNED BY ONE OR MORE SUCH NATIONAL SECURI-
TIES EXCHANGES OR BOARDS OR TRADE AND THAT PROVIDES AUTOMATION OR  TECH-
NICAL SERVICES THERETO.
  (VI)  FOR  PURPOSES OF CLAUSES (D), (E), (E-1) AND (F) OF SUBPARAGRAPH
(V) OF THIS PARAGRAPH, PROPERTY PURCHASED BY A TAXPAYER AFFILIATED  WITH
A  REGULATED  BROKER,  DEALER,  REGISTERED  INVESTMENT ADVISER, NATIONAL
SECURITIES EXCHANGE OR BOARD OF TRADE IS ALLOWED  A  CREDIT  UNDER  THIS
SUBDIVISION  IF THE PROPERTY IS USED BY ITS AFFILIATED REGULATED BROKER,
DEALER, REGISTERED INVESTMENT ADVISER OR NATIONAL SECURITIES EXCHANGE OR
BOARD OF TRADE IN ACCORDANCE WITH  THIS  SUBDIVISION.  FOR  PURPOSES  OF
DETERMINING  IF THE PROPERTY IS PRINCIPALLY USED IN QUALIFYING USES, THE
USES BY THE TAXPAYER DESCRIBED IN CLAUSES (D), (E) AND (E-1) OF SUBPARA-
GRAPH (V) OF THIS PARAGRAPH MAY BE AGGREGATED. IN ADDITION, THE USES  BY
THE  TAXPAYER,  ITS  AFFILIATED  REGULATED BROKER, DEALER AND REGISTERED
INVESTMENT ADVISER  UNDER  ANY  OF  THOSE  CLAUSES  MAY  BE  AGGREGATED.
PROVIDED,  HOWEVER,  A TAXPAYER SHALL NOT BE ALLOWED THE CREDIT PROVIDED
BY CLAUSES (D), (E), (E-1) AND (F) OF SUBPARAGRAPH (V) OF THIS PARAGRAPH
UNLESS
  (I) EIGHTY PERCENT OR MORE OF THE EMPLOYEES PERFORMING THE ADMINISTRA-
TIVE AND SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO  THE  QUALIFYING
USES OF SUCH EQUIPMENT ARE LOCATED IN THIS STATE, OR
  (II)  THE  AVERAGE NUMBER OF EMPLOYEES THAT PERFORM THE ADMINISTRATIVE
AND SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE  QUALIFYING  USES
OF  SUCH EQUIPMENT AND ARE LOCATED IN THIS STATE DURING THE TAXABLE YEAR

S. 6359--A                         74                         A. 8559--A

FOR WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN  NINETY-FIVE
PERCENT  OF THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM THESE FUNCTIONS
AND ARE LOCATED IN THIS STATE DURING THE THIRTY-SIX  MONTHS  IMMEDIATELY
PRECEDING THE YEAR FOR WHICH THE CREDIT IS CLAIMED, OR
  (III) THE NUMBER OF EMPLOYEES LOCATED IN THIS STATE DURING THE TAXABLE
YEAR  FOR WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN NINETY
PERCENT OF THE NUMBER OF EMPLOYEES LOCATED IN  THIS  STATE  ON  DECEMBER
THIRTY-FIRST,  NINETEEN HUNDRED NINETY-EIGHT OR, IF THE TAXPAYER WAS NOT
A CALENDAR YEAR TAXPAYER IN NINETEEN HUNDRED NINETY-EIGHT, THE LAST  DAY
OF  ITS  FIRST TAXABLE YEAR ENDING AFTER DECEMBER THIRTY-FIRST, NINETEEN
HUNDRED NINETY-EIGHT. IF THE TAXPAYER BECOMES SUBJECT  TO  TAX  IN  THIS
STATE AFTER THE TAXABLE YEAR BEGINNING IN NINETEEN HUNDRED NINETY-EIGHT,
THEN  THE  TAXPAYER  IS  NOT  REQUIRED  TO  SATISFY  THE EMPLOYMENT TEST
PROVIDED IN THE PRECEDING SENTENCE OF THIS SUBPARAGRAPH  FOR  ITS  FIRST
TAXABLE YEAR.
  (VII)  FOR  THE  PURPOSES OF CLAUSE (III) OF SUBPARAGRAPH (VI) OF THIS
PARAGRAPH THE EMPLOYMENT TEST WILL BE BASED ON THE NUMBER  OF  EMPLOYEES
LOCATED  IN  THIS  STATE  ON  THE LAST DAY OF THE FIRST TAXABLE YEAR THE
TAXPAYER IS SUBJECT TO TAX IN THIS STATE. IF THE USES  OF  THE  PROPERTY
MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY IS PRINCIPALLY USED
IN  QUALIFYING  USES, THEN EITHER EACH AFFILIATE USING THE PROPERTY MUST
SATISFY THIS EMPLOYMENT TEST OR THIS EMPLOYMENT TEST MUST  BE  SATISFIED
THROUGH THE AGGREGATION OF THE EMPLOYEES OF THE TAXPAYER, ITS AFFILIATED
REGULATED  BROKER,  DEALER,  AND REGISTERED INVESTMENT ADVISER USING THE
PROPERTY.
  (VIII) FOR THE PURPOSE OF THIS SUBDIVISION, THE TERM "GOODS" SHALL NOT
INCLUDE ELECTRICITY.
  (IX) FOR PURPOSES OF THIS SUBDIVISION, "MANUFACTURING" SHALL MEAN  THE
PROCESS  OF  WORKING  RAW MATERIALS INTO WARES SUITABLE FOR USE OR WHICH
GIVES NEW SHAPES, NEW  QUALITY  OR  NEW  COMBINATIONS  TO  MATTER  WHICH
ALREADY  HAS  GONE THROUGH SOME ARTIFICIAL PROCESS BY THE USE OF MACHIN-
ERY, TOOLS, APPLIANCES AND OTHER SIMILAR EQUIPMENT. PROPERTY USED IN THE
PRODUCTION OF GOODS SHALL INCLUDE MACHINERY, EQUIPMENT OR OTHER TANGIBLE
PROPERTY WHICH IS PRINCIPALLY USED IN THE REPAIR AND  SERVICE  OF  OTHER
MACHINERY,  EQUIPMENT OR OTHER TANGIBLE PROPERTY USED PRINCIPALLY IN THE
PRODUCTION OF GOODS  AND  SHALL  INCLUDE  ALL  FACILITIES  USED  IN  THE
PRODUCTION  OPERATION,  INCLUDING  STORAGE  OF  MATERIAL  TO  BE USED IN
PRODUCTION AND OF THE PRODUCTS THAT ARE PRODUCED. FOR PURPOSES  OF  THIS
SUBDIVISION,  THE TERMS "RESEARCH AND DEVELOPMENT PROPERTY", "INDUSTRIAL
WASTE TREATMENT FACILITIES",  AND  "AIR  POLLUTION  CONTROL  FACILITIES"
SHALL  HAVE  THE  MEANINGS ASCRIBED THERETO BY CLAUSES (B), (C) AND (D),
RESPECTIVELY, OF SUBPARAGRAPH (IV) OF PARAGRAPH (B) OF  SUBDIVISION  ONE
OF  THIS  SECTION,  AND THE PROVISIONS OF SUBPARAGRAPH (V) OF SUCH PARA-
GRAPH (B) SHALL APPLY.
  (C) NONQUALIFIED PROPERTY. A TAXPAYER SHALL NOT BE  ALLOWED  A  CREDIT
UNDER  THIS  SUBDIVISION  WITH RESPECT TO ANY TANGIBLE PERSONAL PROPERTY
AND OTHER TANGIBLE PROPERTY, INCLUDING BUILDINGS AND  STRUCTURAL  COMPO-
NENTS  OF  BUILDINGS, WHICH IT LEASES TO ANY OTHER PERSON OR CORPORATION
EXCEPT WHERE A TAXPAYER  LEASES  PROPERTY  TO  AN  AFFILIATED  REGULATED
BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL  SECURITIES
EXCHANGE OR BOARD OF TRADE OR OTHER ENTITY DESCRIBED IN  CLAUSE  (F)  OF
SUBPARAGRAPH  (V)  OF  PARAGRAPH  (B) OF THIS SUBDIVISION THAT USES SUCH
PROPERTY IN ACCORDANCE WITH CLAUSE (D), (E), (E-1) OR  (F)  OF  SUBPARA-
GRAPH  (V)  OF  PARAGRAPH  (B)  OF THIS SUBDIVISION. FOR PURPOSES OF THE
PRECEDING SENTENCE, ANY CONTRACT OR AGREEMENT TO LEASE OR RENT OR FOR  A
LICENSE  TO  USE  SUCH  PROPERTY SHALL BE CONSIDERED A LEASE.  PROVIDED,

S. 6359--A                         75                         A. 8559--A

HOWEVER, IN DETERMINING WHETHER A TAXPAYER SHALL  BE  ALLOWED  A  CREDIT
UNDER  THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY, ANY ELECTION MADE
WITH RESPECT TO SUCH PROPERTY PURSUANT TO THE  PROVISIONS  OF  PARAGRAPH
EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTER-
NAL REVENUE CODE, AS SUCH PARAGRAPH WAS IN EFFECT FOR AGREEMENTS ENTERED
INTO  PRIOR  TO  JANUARY  FIRST,  NINETEEN HUNDRED EIGHTY-FOUR, SHALL BE
DISREGARDED.
  (D) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER,  THAT
IF  THE  AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED  OVER  TO  THE  FOLLOWING
YEAR  OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR
OR YEARS. IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER  WHICH  QUALIFIES
AS A NEW BUSINESS UNDER PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION
MAY ELECT, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH SUCH
CREDIT  IS  ALLOWED, TO TREAT FIFTY PERCENT OF THE AMOUNT OF SUCH CARRY-
OVER AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE
WITH  THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER.
IN ADDITION, ANY TAXPAYER WHICH IS APPROVED AS THE OWNER OF A  QUALIFIED
INVESTMENT  PROJECT OR A SIGNIFICANT CAPITAL INVESTMENT PROJECT PURSUANT
TO SUBDIVISION (W) OF SECTION NINE HUNDRED  FIFTY-NINE  OF  THE  GENERAL
MUNICIPAL  LAW, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH
SUCH CREDIT IS ALLOWED, IN LIEU OF SUCH CARRYOVER, MAY  ELECT  TO  TREAT
FIFTY  PERCENT  OF THE AMOUNT OF SUCH CARRYOVER WHICH IS ATTRIBUTABLE TO
THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR PROPERTY WHICH IS PART  OF
SUCH  PROJECT  AS  AN  OVERPAYMENT  OF TAX TO BE CREDITED OR REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS CHAPTER. PROVIDED, HOWEVER, SUCH OWNER SHALL BE ALLOWED SUCH REFUND
FOR  A  MAXIMUM  OF  TEN  TAXABLE  YEARS  WITH RESPECT TO SUCH QUALIFIED
INVESTMENT PROJECT AND  EACH  SIGNIFICANT  CAPITAL  INVESTMENT  PROJECT,
STARTING  WITH  THE FIRST TAXABLE YEAR IN WHICH PROPERTY COMPRISING SUCH
PROJECT IS PLACED IN SERVICE. PROVIDED, FURTHER, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (D-1)  ANY  CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL NOT BE
ALLOWED IF AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT  ISSUED  PURSUANT
TO  SUBDIVISION  (W)  OF  SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL
MUNICIPAL LAW TO THE EMPIRE ZONE ENTERPRISE WHICH IS THE  BASIS  OF  THE
CREDIT.
  (E)  AT  THE  OPTION OF THE TAXPAYER, THE TAXPAYER MAY CHOOSE TO CLAIM
THE CREDIT DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION  FOR  PROPERTY
WHICH  ALSO  QUALIFIES  FOR THE CREDIT PROVIDED UNDER SUBDIVISION ONE OF
THIS SECTION. A TAXPAYER SHALL NOT BE ALLOWED A CREDIT UNDER THIS SUBDI-
VISION WITH RESPECT TO ANY PROPERTY DESCRIBED IN PARAGRAPH (A)  OF  THIS
SUBDIVISION  IF  A  CREDIT  IS TAKEN PURSUANT TO SUBDIVISION ONE OF THIS
SECTION.
  (F) RECAPTURE. (I) WITH  RESPECT  TO  PROPERTY  WHICH  IS  DEPRECIABLE
PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE
BUT  IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT
OF SUCH CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN  QUALIFIED  USE
PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
THE  AMOUNT  OF  THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED

S. 6359--A                         76                         A. 8559--A

FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE  MONTHS  OF
QUALIFIED  USE  BEAR  TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR  TO  THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT
TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE
YEAR  OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF
OR CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE  FOR
MORE  THAN  TWELVE  CONSECUTIVE  YEARS, IT SHALL NOT BE NECESSARY TO ADD
BACK THE CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT  OF  CREDIT
ALLOWED  FOR  ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL
CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS
OF USEFUL LIFE. FOR PURPOSES OF THIS SUBPARAGRAPH, USEFUL LIFE OF  PROP-
ERTY  SHALL  BE  THE SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES
WHEN COMPUTING HIS FEDERAL INCOME TAX LIABILITY.
  (II) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH  SUBPARAGRAPH  (IV)
OF  THIS  PARAGRAPH  APPLIES,  WITH  RESPECT  TO THREE-YEAR PROPERTY, AS
DEFINED IN SUBSECTION (E) OF SECTION  ONE  HUNDRED  SIXTY-EIGHT  OF  THE
INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED
USE  PRIOR  TO  THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE
TAKEN, THE AMOUNT OF THE CREDIT SHALL BE  THAT  PORTION  OF  THE  CREDIT
PROVIDED  FOR  IN  THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE
MONTHS OF QUALIFIED USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH  CREDIT
HAS  BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO
THE END OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN  THE  CREDIT  TAKEN
AND  THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF
DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETER-
MINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH  THE  MONTHS
OF QUALIFIED USE BEAR TO THIRTY-SIX.
  (III)  EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH (IV)
OF THIS PARAGRAPH APPLIES, WITH  RESPECT  TO  PROPERTY  SUBJECT  TO  THE
PROVISIONS  OF  SECTION  ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE
CODE OTHER THAN THREE-YEAR PROPERTY AS DEFINED IN SUBSECTION (E) OF SUCH
SECTION ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO BE  IN
QUALIFIED  USE  PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT
IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT  PORTION  OF  THE
CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH
THE  MONTHS  OF QUALIFIED USE BEAR TO SIXTY. IF PROPERTY ON WHICH CREDIT
HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO
THE END OF SIXTY MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND THE
CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSI-
TION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY
MULTIPLYING  THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS OF QUALI-
FIED USE BEAR TO SIXTY.
  (IV) WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED  SIXTY-
EIGHT  OF  THE  INTERNAL  REVENUE CODE APPLIES, WHICH IS A BUILDING OR A
STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO
BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE  TOTAL  NUMBER  OF  MONTHS
OVER  WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER-
NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD  OVER
WHICH  THE  TAXPAYER  CHOOSES  TO DEDUCT THE PROPERTY UNDER THE INTERNAL
REVENUE CODE, THE DIFFERENCE BETWEEN THE CREDIT  TAKEN  AND  THE  CREDIT
ALLOWED  FOR  ACTUAL  USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION.

S. 6359--A                         77                         A. 8559--A

PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES  TO  BE  IN
QUALIFIED  USE  AFTER  IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE
CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE  CREDIT  AS
PROVIDED  IN  THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL
USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE.
  (V) FOR PURPOSES OF THIS PARAGRAPH, DISPOSAL OR CESSATION OF QUALIFIED
USE  SHALL NOT BE DEEMED TO HAVE OCCURRED SOLELY BY REASON OF THE TERMI-
NATION OR EXPIRATION OF AN EMPIRE ZONE'S DESIGNATION AS SUCH.
  (VI)(A) FOR PURPOSES OF THIS PARAGRAPH, THE DECERTIFICATION OF A BUSI-
NESS ENTERPRISE WITH RESPECT  TO  AN  EMPIRE  ZONE  SHALL  CONSTITUTE  A
DISPOSAL  OR  CESSATION  OF  QUALIFIED  USE OF THE PROPERTY ON WHICH THE
CREDIT WAS TAKEN WHICH IS LOCATED IN THE ZONE  TO  WHICH  THE  DECERTIF-
ICATION APPLIES, ON THE EFFECTIVE DATE OF SUCH DECERTIFICATION.
  (B)  WHERE A BUSINESS ENTERPRISE HAS BEEN DECERTIFIED BASED ON A FIND-
ING PURSUANT TO CLAUSE ONE, TWO, OR FIVE OF SUBDIVISION (A)  OF  SECTION
NINE  HUNDRED  FIFTY-NINE  OF  THE  GENERAL  MUNICIPAL  LAW,  THE AMOUNT
REQUIRED TO BE ADDED BACK BY REASON OF THIS PARAGRAPH SHALL BE  (I)  THE
AMOUNT  OF  CREDIT, WITH RESPECT TO THE PROPERTY WHICH IS DISPOSED OF OR
CEASES TO BE IN QUALIFIED USE, WHICH WAS DEDUCTED  FROM  THE  TAXPAYER'S
TAX  OTHERWISE  DUE  UNDER  THIS  ARTICLE  FOR  ALL PRIOR TAXABLE YEARS,
REDUCED (BUT NOT BELOW ZERO) BY (II) THE CREDIT ALLOWED FOR ACTUAL  USE.
FOR  PURPOSES OF THIS SUBPARAGRAPH, THE ATTRIBUTION TO SPECIFIC PROPERTY
OF CREDIT AMOUNTS DEDUCTED FROM TAX SHALL BE ESTABLISHED  IN  ACCORDANCE
WITH  THE  DATE  OF  PLACEMENT IN SERVICE OF SUCH PROPERTY IN THE EMPIRE
ZONE.
  (C) IN NO EVENT SHALL THE AMOUNT OF THE  CREDIT  ALLOWED  PURSUANT  TO
THIS  SUBDIVISION  BE  RENDERED,  SOLELY BY REASON OF CLAUSE (A) OF THIS
SUBPARAGRAPH, LESS THAN THE AMOUNT OF THE CREDIT TO WHICH  THE  TAXPAYER
WOULD OTHERWISE BE ENTITLED UNDER SUBDIVISION ONE OF THIS SECTION.
  (D)  NOTWITHSTANDING  ANY  OTHER PROVISION OF THIS SUBDIVISION, IN THE
CASE OF A BUSINESS ENTERPRISE WHICH HAS BEEN DECERTIFIED, ANY AMOUNT  OF
CREDIT  ALLOWED WITH RESPECT TO THE PROPERTY OF SUCH BUSINESS ENTERPRISE
LOCATED IN THE ZONE  TO  WHICH  THE  DECERTIFICATION  APPLIES  WHICH  IS
CARRIED  OVER PURSUANT TO PARAGRAPH (D) OF THIS SUBDIVISION SHALL NOT BE
CARRIED OVER BEYOND THE SEVENTH TAXABLE YEAR NEXT FOLLOWING THE  TAXABLE
YEAR  WITH  RESPECT TO WHICH THE CREDIT PROVIDED FOR IN THIS SUBDIVISION
WAS ALLOWED.
  (VII) FOR PURPOSES OF THIS PARAGRAPH, WHERE A CREDIT IS  ALLOWED  WITH
RESPECT  TO  AN AIR POLLUTION CONTROL FACILITY ON THE BASIS OF A CERTIF-
ICATE OF COMPLIANCE ISSUED PURSUANT TO  THE  ENVIRONMENTAL  CONSERVATION
LAW  AND  THE  CERTIFICATE  IS  REVOKED PURSUANT TO SUBDIVISION THREE OF
SECTION 19-0309 OF THE ENVIRONMENTAL CONSERVATION LAW,  SUCH  REVOCATION
SHALL  CONSTITUTE  A DISPOSAL OR CESSATION OF QUALIFIED USE, EXCEPT WITH
RESPECT TO PROPERTY CONTAINED IN OR COMPRISING SUCH  FACILITY  WHICH  IS
DESCRIBED  IN  CLAUSE  (A), (B), OR (C) OF SUBPARAGRAPH (V) OF PARAGRAPH
(B) OF THIS SUBDIVISION OTHER THAN AS  PART  OF  OR  COMPRISING  AN  AIR
POLLUTION CONTROL FACILITY. ALSO FOR PURPOSES OF THIS PARAGRAPH, THE USE
OF  AN  AIR  POLLUTION CONTROL FACILITY OR AN INDUSTRIAL WASTE TREATMENT
FACILITY FOR THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH ARE USABLE
IN THE MANUFACTURING PROCESS OR ARE MARKETABLE SHALL CONSTITUTE A CESSA-
TION OF QUALIFIED USE, EXCEPT WITH RESPECT TO PROPERTY CONTAINED  IN  OR
COMPRISING  SUCH  FACILITY  WHICH  IS  DESCRIBED IN CLAUSE (A) OR (C) OF
SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS SUBDIVISION.

S. 6359--A                         78                         A. 8559--A

  (VIII) EXCEPT AS PROVIDED IN THIS SUBPARAGRAPH, THIS  PARAGRAPH  SHALL
NOT  APPLY TO A CREDIT ALLOWED BY THIS SUBDIVISION TO A TAXPAYER THAT IS
A PARTNER IN A  PARTNERSHIP  IN  THE  CASE  OF  MANUFACTURING  PROPERTY;
PROVIDED,  AT THE TIME SUCH PROPERTY WAS PLACED IN SERVICE BY SUCH PART-
NERSHIP  IN AN EMPIRE ZONE THE BASIS FOR FEDERAL INCOME TAX PURPOSES FOR
SUCH PROPERTY (OR A PROJECT THAT  INCLUDES  SUCH  PROPERTY)  EQUALED  OR
EXCEEDED  THREE HUNDRED MILLION DOLLARS AND SUCH PARTNER OWNED ITS PART-
NERSHIP INTEREST FOR AT LEAST THREE YEARS FROM THE  DATE  SUCH  PROPERTY
WAS  PLACED  IN  SERVICE. IF SUCH PROPERTY CEASES TO BE IN QUALIFIED USE
AFTER IT IS PLACED IN SERVICE, THIS PARAGRAPH SHALL APPLY TO SUCH  PART-
NER IN THE YEAR SUCH PROPERTY CEASES TO BE IN QUALIFYING USE.
  (IX)  IF A TAXPAYER, WHICH IS APPROVED BY THE COMMISSIONER OF ECONOMIC
DEVELOPMENT AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A  SIGNIF-
ICANT  CAPITAL INVESTMENT PROJECT PURSUANT TO SUBDIVISION (W) OF SECTION
NINE HUNDRED FIFTY-NINE OF THE  GENERAL  MUNICIPAL  LAW,  FAILS  TO  (A)
CREATE  AT  LEAST THE MINIMUM NUMBER OF JOBS AT SUCH PROJECT AS REQUIRED
BY THE PROVISIONS OF SUBDIVISION (S) OR  (T)  OF  SECTION  NINE  HUNDRED
FIFTY-SEVEN  AND  SUBDIVISION  (W) OF SECTION NINE HUNDRED FIFTY-NINE OF
THE GENERAL MUNICIPAL LAW OR (B) PLACE IN  SERVICE  PROPERTY  COMPRISING
SUCH  QUALIFIED  INVESTMENT  PROJECT  OR  SIGNIFICANT CAPITAL INVESTMENT
PROJECT WITH A BASIS FOR FEDERAL INCOME TAX PURPOSES EQUALING OR EXCEED-
ING THE APPLICABLE MINIMUM REQUIRED BASIS AS PROVIDED IN  SUCH  SUBDIVI-
SION  (S)  OR  (T),  WHICHEVER IS RELEVANT, BY THE LAST DAY OF THE FIFTH
TAXABLE YEAR FOLLOWING THE TAXABLE YEAR  IN  WHICH  A  CREDIT  IS  FIRST
ALLOWED  UNDER  THIS  SUBDIVISION  FOR THE PROPERTY WHICH COMPRISES SUCH
QUALIFIED INVESTMENT PROJECT  OR  SUCH  SIGNIFICANT  CAPITAL  INVESTMENT
PROJECT,  THE  TOTAL AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ALL TAXABLE YEARS WITH RESPECT TO THE PROPERTY WHICH COMPRISES  SUCH
PROJECT  WHICH HAS BEEN REFUNDED TO SUCH TAXPAYER SHALL BE ADDED BACK IN
SUCH TAXABLE YEAR.
  (G) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF  THE  GENERAL  MUNICIPAL LAW, A TAXPAYER THAT IS
CERTIFIED AS A QUALIFIED INVESTMENT PROJECT  PURSUANT  TO  SUCH  ARTICLE
EIGHT-B  ON  THE  DAY  IMMEDIATELY  PRECEDING  THE  DAY THE EMPIRE ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
EIGHTEEN-B FOR PURPOSES OF THIS SUBDIVISION FOR  THE  REMAINDER  OF  THE
TAXABLE  YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT SUCCEED-
ING NINE TAXABLE YEARS. IN ADDITION,  THE  AREAS  DESIGNATED  AS  EMPIRE
ZONES  IN  WHICH  THE  TAXPAYER  IS  CERTIFIED AS A QUALIFIED INVESTMENT
PROJECT ON THE DAY  IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE  ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
THIS  SUBDIVISION  FOR  THE  REMAINDER  OF THE TAXABLE YEAR IN WHICH THE
EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
  (H) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF THE GENERAL MUNICIPAL LAW AND EXCEPT AS PROVIDED
IN PARAGRAPH (G) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
EMPIRE ZONE BUSINESS PURSUANT TO SUCH  ARTICLE  EIGHTEEN-B  ON  THE  DAY
IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE ZONE PROGRAM EXPIRED SHALL
CONTINUE TO BE  DEEMED  CERTIFIED  UNDER  SUCH  ARTICLE  EIGHTEEN-B  FOR
PURPOSES  OF  THIS SUBDIVISION UNTIL APRIL FIRST, TWO THOUSAND FOURTEEN.
IN ADDITION, THE AREAS DESIGNATED AS EMPIRE ZONES IN WHICH THE  TAXPAYER
IS CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING
THE  DAY  THE  EMPIRE  ZONES PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED
EMPIRE ZONES FOR PURPOSES OF THIS SUBDIVISIONS UNTIL  APRIL  FIRST,  TWO
THOUSAND FOURTEEN.

S. 6359--A                         79                         A. 8559--A

  4.  EMPIRE  ZONE EMPLOYMENT INCENTIVE CREDIT (EZ-EIC). (A) APPLICATION
OF CREDIT. WHERE A TAXPAYER IS ALLOWED A CREDIT UNDER SUBDIVISION  THREE
OF  THIS SECTION, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF THE
THREE YEARS NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT  UNDER
SUCH SUBDIVISION THREE IS ALLOWED, WITH RESPECT TO SUCH PROPERTY, WHETH-
ER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT TAXABLE YEARS
PURSUANT  TO  PARAGRAPH (D) OF SUCH SUBDIVISION THREE, OF THIRTY PERCENT
OF THE CREDIT ALLOWABLE UNDER SUCH SUBDIVISION THREE; PROVIDED, HOWEVER,
THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR  ANY  TAXABLE  YEAR
SHALL ONLY BE ALLOWED IF THE AVERAGE NUMBER OF EMPLOYEES EMPLOYED BY THE
TAXPAYER  IN  THE EMPIRE ZONE, DESIGNATED PURSUANT TO ARTICLE EIGHTEEN-B
OF THE GENERAL MUNICIPAL LAW, IN WHICH SUCH PROPERTY IS  LOCATED  DURING
SUCH  TAXABLE  YEAR  IS  AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE
NUMBER OF EMPLOYEES EMPLOYED BY THE TAXPAYER IN SUCH EMPIRE ZONE, DURING
THE TAXABLE YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR  FOR  WHICH  THE
CREDIT  UNDER  SUCH  SUBDIVISION THREE IS ALLOWED AND PROVIDED, FURTHER,
THAT IF THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE  A  TAXABLE
YEAR  IMMEDIATELY  PRECEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER
SUBDIVISION THREE OF THIS SECTION IS ALLOWED, THE CREDIT ALLOWABLE UNDER
THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL BE ALLOWED  IF  THE  AVERAGE
NUMBER OF EMPLOYEES EMPLOYED IN SUCH EMPIRE ZONE IN SUCH TAXABLE YEAR IS
AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE NUMBER OF SUCH EMPLOYEES
DURING THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION THREE
IS ALLOWED.
  (B)  AVERAGE  NUMBER  OF  EMPLOYEES.  THE  AVERAGE NUMBER OF EMPLOYEES
EMPLOYED IN AN EMPIRE ZONE IN A TAXABLE YEAR SHALL BE COMPUTED BY ASCER-
TAINING THE NUMBER OF SUCH EMPLOYEES WITHIN  SUCH  ZONE  EXCEPT  GENERAL
EXECUTIVE  OFFICERS, EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST DAY OF
MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER AND THE
THIRTY-FIRST DAY OF DECEMBER IN THE TAXABLE YEAR, BY ADDING TOGETHER THE
NUMBER OF EMPLOYEES ASCERTAINED ON EACH OF SUCH DATES AND  DIVIDING  THE
SUM  SO  OBTAINED  BY THE NUMBER OF SUCH ABOVE-MENTIONED DATES OCCURRING
WITHIN THE TAXABLE YEAR.
  (C) CARRYOVER. IN NO EVENT SHALL THE CREDIT  HEREIN  PROVIDED  FOR  BE
ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT
IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED  OVER  TO  THE  FOLLOWING
YEAR  OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR
OR YEARS. IN LIEU  OF  SUCH  CARRYOVER,  ANY  SUCH  TAXPAYER,  WHICH  IS
APPROVED AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIFICANT
CAPITAL  INVESTMENT  PROJECT PURSUANT TO SUBDIVISION (V) OF SECTION NINE
HUNDRED FIFTY-NINE OF THE GENERAL  MUNICIPAL  LAW,  MAY  ELECT,  ON  ITS
REPORT  FOR  ITS  TAXABLE  YEAR  WITH  RESPECT  TO  WHICH SUCH CREDIT IS
ALLOWED, TO TREAT FIFTY PERCENT OF THE AMOUNT OF SUCH  CARRYOVER  AS  AN
OVERPAYMENT  OF  TAX  TO  BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER, IN THE CASE OF SUCH OWNER OF A QUALIFIED INVESTMENT PROJECT  OR
A  SIGNIFICANT  CAPITAL  INVESTMENT  PROJECT,  ONLY FIFTY PERCENT OF THE
AMOUNT OF SUCH CARRYOVER WHICH IS ATTRIBUTABLE  TO  THE  CREDIT  ALLOWED
UNDER  THIS  SUBDIVISION  WITH RESPECT TO PROPERTY WHICH IS PART OF SUCH
PROJECT SHALL BE ALLOWED TO BE CREDITED OR REFUNDED AND SUCH OWNER SHALL
BE ALLOWED SUCH CREDIT OR REFUND ONLY FOR THOSE TAXABLE YEARS  IN  WHICH

S. 6359--A                         80                         A. 8559--A

SUCH  OWNER  WOULD  BE  ALLOWED  A  CREDIT  OR REFUND OF THE EMPIRE ZONE
INVESTMENT TAX CREDIT PURSUANT TO PARAGRAPH (D) OF SUBDIVISION THREE  OF
THIS  SECTION.  PROVIDED, FURTHER, HOWEVER, THE PROVISIONS OF SUBSECTION
(C)  OF  SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTAND-
ING, NO INTEREST SHALL BE PAID THEREON.
  (C-1) ANY CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL  NOT  BE
ALLOWED  IF  AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT ISSUED PURSUANT
TO SUBDIVISION (W) OF SECTION NINE HUNDRED  FIFTY-NINE  OF  THE  GENERAL
MUNICIPAL  LAW  TO  THE EMPIRE ZONE ENTERPRISE WHICH IS THE BASIS OF THE
CREDIT.
  (D) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF  THE  GENERAL  MUNICIPAL LAW, A TAXPAYER THAT IS
CERTIFIED AS A QUALIFIED INVESTMENT PROJECT  PURSUANT  TO  SUCH  ARTICLE
EIGHTEEN-B  ON  THE  DAY  IMMEDIATELY PRECEDING THE DAY THE EMPIRE ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
EIGHTEEN-B FOR PURPOSES OF THIS SUBDIVISION FOR  THE  REMAINDER  OF  THE
TAXABLE  YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT SUCCEED-
ING NINE TAXABLE YEARS. IN ADDITION,  THE  AREAS  DESIGNATED  AS  EMPIRE
ZONES  IN  WHICH  THE  TAXPAYER  IS  CERTIFIED AS A QUALIFIED INVESTMENT
PROJECT ON THE DAY  IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE  ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
THIS  SUBDIVISION  FOR  THE  REMAINDER  OF THE TAXABLE YEAR IN WHICH THE
EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
  (E) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF THE GENERAL MUNICIPAL LAW AND EXCEPT AS PROVIDED
IN PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
EMPIRE ZONE BUSINESS PURSUANT TO SUCH  ARTICLE  EIGHTEEN-B  ON  THE  DAY
IMMEDIATELY  PRECEDING  THE  DAY  THE EMPIRE ZONES PROGRAM EXPIRED SHALL
CONTINUE TO BE DEEMED IN THE EMPIRE  ZONE  IN  WHICH  THE  TAXPAYER  WAS
CERTIFIED  AS  AN  EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING
THE DAY THE EMPIRE ZONES PROGRAM EXPIRED FOR EACH  OF  THE  THREE  YEARS
NEXT  SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER SUBDIVISION
THREE OF THIS SECTION IS ALLOWED.
  5. QEZE CREDIT FOR REAL PROPERTY TAXES. (A)  ALLOWANCE  OF  CREDIT.  A
TAXPAYER  WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A
CREDIT FOR ELIGIBLE REAL PROPERTY TAXES, TO BE COMPUTED AS  PROVIDED  IN
SECTION  FIFTEEN  OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS  TAX
BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  6. QEZE TAX REDUCTION CREDIT. (A)  ALLOWANCE  OF  CREDIT.  A  TAXPAYER
WHICH  IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A QEZE TAX
REDUCTION CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION SIXTEEN OF  THIS
CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS

S. 6359--A                         81                         A. 8559--A

THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THIS PARAGRAPH SHALL NOT APPLY TO A TAXPAYER WITH A ZONE ALLO-
CATION FACTOR OF ONE HUNDRED PERCENT.
  7. QUALIFIED EMERGING TECHNOLOGY COMPANY EMPLOYMENT CREDIT. (A) APPLI-
CATION  OF  CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED
AS HEREINAFTER PROVIDED,  AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE,
PROVIDED:
  (I)  THE  TAXPAYER IS A QUALIFIED EMERGING TECHNOLOGY COMPANY PURSUANT
TO THE PROVISIONS OF SECTION THIRTY-ONE  HUNDRED  TWO-E  OF  THE  PUBLIC
AUTHORITIES LAW; AND
  (II)  THE  AVERAGE  NUMBER  OF  INDIVIDUALS  EMPLOYED FULL TIME BY THE
TAXPAYER IN NEW YORK STATE DURING THE  TAXABLE  YEAR  IS  AT  LEAST  ONE
HUNDRED  ONE  PERCENT  OF  THE  TAXPAYER'S BASE YEAR EMPLOYMENT. FOR THE
PURPOSES OF THIS SUBDIVISION, "BASE YEAR EMPLOYMENT" MEANS  THE  AVERAGE
NUMBER  OF  INDIVIDUALS  EMPLOYED FULL-TIME BY THE TAXPAYER IN THE STATE
DURING THE THREE TAXABLE YEARS IMMEDIATELY PRECEDING THE  FIRST  TAXABLE
YEAR  IN  WHICH  THE  CREDIT  IS  CLAIMED.  WHERE  THE TAXPAYER PROVIDED
FULL-TIME EMPLOYMENT WITHIN THE STATE DURING  ONLY  A  PORTION  OF  SUCH
THREE-YEAR PERIOD, THEN THE FIRST EFFECTIVE DATE FOR THE COMPANY TO TAKE
ADVANTAGE OF THIS CREDIT SHALL BE THE NEXT YEAR FOLLOWING THE FIRST FULL
TAXABLE  YEAR  THAT  THE  COMPANY  HAD  FULL-TIME EMPLOYMENT IN NEW YORK
STATE. FOR THE PURPOSES OF THIS PARAGRAPH THE TERM "THREE  YEARS"  SHALL
BE  DEEMED  TO  REFER  INSTEAD  TO THE PRIOR YEAR'S FULL-TIME EMPLOYMENT
AFTER THE FIRST YEAR AND THE AVERAGE OF  THE  FIRST  EIGHT  QUARTERS  OF
EMPLOYMENT AFTER THE FIRST TWO TAXABLE YEARS IN NEW YORK STATE.
  (B)  CREDIT  LIMITATION. THE CREDIT SHALL BE ALLOWED ONLY IN THE FIRST
TAXABLE YEAR IN WHICH THE CREDIT IS CLAIMED AND IN EACH OF THE NEXT  TWO
TAXABLE  YEARS,  PROVIDED  THAT  THE CONDITIONS OF PARAGRAPH (A) OF THIS
SUBDIVISION ARE SATISFIED IN EACH TAXABLE YEAR.
  (C) AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME. FOR THE PURPOSES
OF THIS SUBDIVISION, AVERAGE NUMBER OF  INDIVIDUALS  EMPLOYED  FULL-TIME
SHALL  BE  COMPUTED BY ADDING THE NUMBER OF SUCH INDIVIDUALS EMPLOYED BY
THE TAXPAYER AT THE END OF EACH QUARTER  DURING  EACH  TAXABLE  YEAR  OR
OTHER  APPLICABLE  PERIOD AND DIVIDING THE SUM SO OBTAINED BY THE NUMBER
OF SUCH QUARTERS OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER  APPLICABLE
PERIOD; PROVIDED HOWEVER, EXCEPT THAT IN COMPUTING BASE YEAR EMPLOYMENT,
THERE  SHALL  BE  EXCLUDED THEREFROM ANY EMPLOYEE WITH RESPECT TO WHOM A
CREDIT PROVIDED FOR UNDER SUBDIVISION SIX OF THIS SECTION IS CLAIMED FOR
THE TAXABLE YEAR.
  (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL EQUAL THE PRODUCT
OF ONE  THOUSAND  DOLLARS  TIMES  THE  NUMBER  OF  INDIVIDUALS  EMPLOYED
FULL-TIME  BY THE TAXPAYER IN THE TAXABLE YEAR THAT ARE IN EXCESS OF ONE
HUNDRED PERCENT OF THE TAXPAYER'S BASE YEAR EMPLOYMENT.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT
OF  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES
THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS  TAX  BASED  ON
THE  FIXED  DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCT-
IBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF  TAX  TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.

S. 6359--A                         82                         A. 8559--A

  8.  QUALIFIED  EMERGING  TECHNOLOGY  COMPANY  CAPITAL  TAX CREDIT. (A)
AMOUNT OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST  THE  TAX
IMPOSED  BY THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO ONE
OF THE FOLLOWING PERCENTAGES, PER EACH QUALIFIED INVESTMENT IN A  QUALI-
FIED  EMERGING  TECHNOLOGY  COMPANY  AS  DEFINED  IN  SECTION THIRTY-ONE
HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW,  MADE  DURING  THE  TAXABLE
YEAR, AND CERTIFIED BY THE COMMISSIONER, EITHER:
  (1)  TEN  PERCENT OF QUALIFIED INVESTMENTS IN QUALIFIED EMERGING TECH-
NOLOGY COMPANIES, EXCEPT FOR INVESTMENTS MADE BY  OR  ON  BEHALF  OF  AN
OWNER  OF  THE  BUSINESS,  INCLUDING, BUT NOT LIMITED TO, A STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR  HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
TAXPAYER  CERTIFIES  TO  THE  COMMISSIONER THAT THE QUALIFIED INVESTMENT
WILL NOT BE SOLD, TRANSFERRED, TRADED, OR DISPOSED OF  DURING  THE  FOUR
YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED; OR
  (2)  TWENTY  PERCENT  OF  QUALIFIED  INVESTMENTS IN QUALIFIED EMERGING
TECHNOLOGY COMPANIES, EXCEPT FOR INVESTMENTS MADE BY OR ON BEHALF OF  AN
OWNER  OF  THE  BUSINESS,  INCLUDING, BUT NOT LIMITED TO, A STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR  HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
TAXPAYER  CERTIFIES  TO  THE  COMMISSIONER THAT THE QUALIFIED INVESTMENT
WILL NOT BE SOLD, TRANSFERRED, TRADED, OR DISPOSED OF  DURING  THE  NINE
YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED.
  (B)  QUALIFIED  INVESTMENT.  "QUALIFIED INVESTMENT" MEANS THE CONTRIB-
UTION OF PROPERTY TO A CORPORATION IN EXCHANGE FOR ORIGINAL ISSUE  CAPI-
TAL STOCK OR OTHER OWNERSHIP INTEREST, THE CONTRIBUTION OF PROPERTY TO A
PARTNERSHIP  IN EXCHANGE FOR AN INTEREST IN THE PARTNERSHIP, AND SIMILAR
CONTRIBUTIONS IN THE CASE OF A BUSINESS ENTITY NOT IN CORPORATE OR PART-
NERSHIP FORM IN EXCHANGE FOR AN OWNERSHIP INTEREST IN SUCH ENTITY.   THE
TOTAL  AMOUNT OF CREDIT ALLOWABLE TO A TAXPAYER UNDER THIS PROVISION FOR
ALL YEARS, TAKEN IN THE AGGREGATE, SHALL NOT EXCEED  ONE  HUNDRED  FIFTY
THOUSAND  DOLLARS  IN  THE CASE OF INVESTMENTS MADE PURSUANT TO SUBPARA-
GRAPH ONE OF PARAGRAPH (A) OF THIS  SUBDIVISION  AND  SHALL  NOT  EXCEED
THREE  HUNDRED THOUSAND DOLLARS IN THE CASE OF INVESTMENTS MADE PURSUANT
TO SUBPARAGRAPH TWO OF PARAGRAPH (A) OF THIS SUBDIVISION.
  (C) CARRYOVER. IN NO EVENT SHALL THE  CREDIT  AND  CARRYOVER  OF  SUCH
CREDIT  ALLOWED  UNDER  THIS  SUBDIVISION  FOR  ANY TAXABLE YEAR, IN THE
AGGREGATE, REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  FIXED
DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF  THE  TAXPAYER
OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, OR IF ANY
PART OF THE CREDIT OR CARRYOVERS OF SUCH CREDIT MAY NOT BE DEDUCTED FROM
THE TAX OTHERWISE DUE BY REASON OF THE FINAL SENTENCE OF THIS PARAGRAPH,
ANY AMOUNT OF CREDIT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND
MAY BE DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.  IN  ADDITION,  THE
AMOUNT  OF  SUCH  CREDIT,  AND  CARRYOVERS OF SUCH CREDIT TO THE TAXABLE
YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY  NOT,  IN  THE  AGGREGATE,
EXCEED  FIFTY  PERCENT OF THE TAX IMPOSED UNDER SECTION TWO HUNDRED NINE
OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY CREDIT  PROVIDED  FOR  BY
THIS SECTION.

S. 6359--A                         83                         A. 8559--A

  (D)  RECAPTURE.  (1)  WHERE  A  TAXPAYER SELLS, TRANSFERS OR OTHERWISE
DISPOSES OF CORPORATE STOCK, A PARTNERSHIP INTEREST OR  OTHER  OWNERSHIP
INTEREST ARISING FROM THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE
BASIS, IN WHOLE OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR
UNDER SUBPARAGRAPH ONE OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN
INVESTMENT  WHICH  WAS  THE  BASIS FOR SUCH ALLOWANCE IS, IN WHOLE OR IN
PART, RECOVERED BY SUCH  TAXPAYER,  AND  SUCH  DISPOSITION  OR  RECOVERY
OCCURS  DURING  THE  TAXABLE  YEAR OR WITHIN FORTY-EIGHT MONTHS FROM THE
CLOSE OF THE TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT IS  ALLOWED,
THE  TAXPAYER  SHALL ADD BACK, WITH RESPECT TO THE TAXABLE YEAR IN WHICH
THE DISPOSITION OR  RECOVERY  DESCRIBED  ABOVE  OCCURRED,  THE  REQUIRED
PORTION OF THE CREDIT ORIGINALLY ALLOWED.
  (2)  WHERE A TAXPAYER SELLS, TRANSFERS OR OTHERWISE DISPOSES OF CORPO-
RATE STOCK, A PARTNERSHIP INTEREST OR OTHER OWNERSHIP  INTEREST  ARISING
FROM  THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE BASIS, IN WHOLE
OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR UNDER  SUBPARA-
GRAPH  TWO  OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN INVESTMENT
WHICH WAS THE BASIS FOR SUCH ALLOWANCE IS IN ANY MANNER, IN WHOLE OR  IN
PART,  RECOVERED  BY  SUCH  TAXPAYER,  AND  SUCH DISPOSITION OR RECOVERY
OCCURS DURING THE TAXABLE YEAR OR WITHIN ONE HUNDRED EIGHT  MONTHS  FROM
THE  CLOSE  OF  THE  TAXABLE  YEAR  WITH RESPECT TO WHICH SUCH CREDIT IS
ALLOWED, THE TAXPAYER SHALL ADD BACK, WITH RESPECT TO THE  TAXABLE  YEAR
IN  WHICH  THE  DISPOSITION OR RECOVERY DESCRIBED IN SUBPARAGRAPH ONE OF
THIS PARAGRAPH OCCURRED THE REQUIRED PORTION OF  THE  CREDIT  ORIGINALLY
ALLOWED.
  (3) THE REQUIRED PORTION OF THE CREDIT ORIGINALLY ALLOWED SHALL BE THE
PRODUCT  OF  (A) THE PORTION OF SUCH CREDIT ATTRIBUTABLE TO THE PROPERTY
DISPOSED OF AND (B) THE APPLICABLE PERCENTAGE.
  (4) THE APPLICABLE PERCENTAGE SHALL BE:
  (A) FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)
OF THIS SUBDIVISION:
  (I)  ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS WITHIN
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED  OR  WITHIN
TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
  (II)  SEVENTY-FIVE PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE
THAN TWELVE BUT NOT MORE THAN TWENTY-FOUR MONTHS AFTER THE  END  OF  THE
TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (III)  FIFTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
TWENTY-FOUR MONTHS BUT NOT MORE THAN THIRTY-SIX MONTHS AFTER THE END  OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
  (IV)  TWENTY-FIVE  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE
THAN THIRTY-SIX MONTHS BUT NOT MORE THAN FORTY-EIGHT  MONTHS  AFTER  THE
END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED; OR
  (B)  FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH TWO OF PARAGRAPH (A)
OF THIS SUBDIVISION:
  (I) ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  WITHIN
THE  TAXABLE  YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED OR WITHIN
TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
  (II) EIGHTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  MORE  THAN
TWELVE BUT NOT MORE THAN FORTY-EIGHT MONTHS AFTER THE END OF THE TAXABLE
YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (III)  SIXTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
FORTY-EIGHT MONTHS BUT NOT MORE THAN SEVENTY-TWO MONTHS AFTER THE END OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,

S. 6359--A                         84                         A. 8559--A

  (IV) FORTY PERCENT, IF THE DISPOSITION OR RECOVERY  OCCURS  MORE  THAN
SEVENTY-TWO  MONTHS BUT NOT MORE THAN NINETY-SIX MONTHS AFTER THE END OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
  (V)  TWENTY  PERCENT,  IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
NINETY-SIX MONTHS BUT NOT MORE THAN ONE HUNDRED EIGHT MONTHS  AFTER  THE
END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED.
  9.  CREDIT  FOR  THE  SPECIAL  ADDITIONAL  MORTGAGE RECORDING TAX. (A)
APPLICATION OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE CRED-
ITED AGAINST THE TAX IMPOSED BY THIS ARTICLE, EQUAL TO THE AMOUNT OF THE
SPECIAL ADDITIONAL MORTGAGE RECORDING TAX PAID BY THE TAXPAYER  PURSUANT
TO   THE   PROVISIONS  OF  SUBDIVISION  ONE-A  OF  SECTION  TWO  HUNDRED
FIFTY-THREE OF THIS CHAPTER OR MORTGAGES RECORDED. PROVIDED, HOWEVER, NO
CREDIT SHALL BE ALLOWED WITH RESPECT TO  A  MORTGAGE  OF  REAL  PROPERTY
PRINCIPALLY  IMPROVED  OR  TO  BE  IMPROVED  BY  ONE  OR MORE STRUCTURES
CONTAINING IN THE AGGREGATE  NOT  MORE  THAN  SIX  RESIDENTIAL  DWELLING
UNITS,  EACH  DWELLING  UNIT HAVING ITS OWN SEPARATE COOKING FACILITIES,
WHERE THE REAL PROPERTY IS LOCATED  IN  ONE  OR  MORE  OF  THE  COUNTIES
COMPRISING  THE  METROPOLITAN  COMMUTER  TRANSPORTATION  AREA.  PROVIDED
FURTHER, HOWEVER, NO CREDIT SHALL BE ALLOWED WITH RESPECT TO A  MORTGAGE
OF  REAL  PROPERTY PRINCIPALLY IMPROVED OR TO BE IMPROVED BY ONE OR MORE
STRUCTURES CONTAINING IN THE AGGREGATE NOT  MORE  THAN  SIX  RESIDENTIAL
DWELLING  UNITS,  EACH  DWELLING  UNIT  HAVING  ITS OWN SEPARATE COOKING
FACILITIES, WHERE THE REAL PROPERTY IS LOCATED IN THE COUNTY OF ERIE.
  (B) CARRYOVER. IN NO EVENT SHALL THE CREDIT  HEREIN  PROVIDED  FOR  BE
ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. IF, HOWEVER, THE AMOUNT
OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR, INCLUD-
ING ANY CREDIT CARRIED OVER FROM A PRIOR TAXABLE YEAR, REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXA-
BLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND  MAY  BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  10. CREDIT FOR SERVICING CERTAIN MORTGAGES. (A) GENERAL. EVERY TAXPAY-
ER  MEETING  THE  REQUIREMENTS  OF THE STATE OF NEW YORK MORTGAGE AGENCY
APPLICABLE TO THE SERVICING OF MORTGAGES ACQUIRED BY SUCH AGENCY  PURSU-
ANT  TO  THE  STATE  OF  NEW  YORK MORTGAGE AGENCY ACT, WHICH SHALL HAVE
ENTERED INTO A CONTRACT WITH THE STATE OF NEW YORK  MORTGAGE  AGENCY  TO
SERVICE  MORTGAGES  ACQUIRED BY SUCH AGENCY PURSUANT TO THE STATE OF NEW
YORK MORTGAGE AGENCY ACT, SHALL HAVE CREDITED TO IT ANNUALLY  AN  AMOUNT
EQUAL  TO  TWO  AND  NINETY-THREE ONE HUNDREDTHS PER CENTUM OF THE TOTAL
PRINCIPAL AND INTEREST COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR
ON EACH SUCH MORTGAGE SECURED BY A LIEN ON REAL  ESTATE  IMPROVED  BY  A
ONE-FAMILY  TO  FOUR-FAMILY RESIDENTIAL STRUCTURE AND AN AMOUNT EQUAL TO
THE INTEREST COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR  ON  EACH
SUCH MORTGAGE SECURED BY A LIEN ON REAL PROPERTY IMPROVED BY A STRUCTURE
OCCUPIED  AS THE RESIDENCE OF FIVE OR MORE FAMILIES LIVING INDEPENDENTLY
OF EACH OTHER, MULTIPLIED BY A FRACTION THE DENOMINATOR OF  WHICH  SHALL
BE  THE  INTEREST RATE PAYABLE ON THE MORTGAGE (COMPUTED TO FIVE DECIMAL
PLACES) AND THE NUMERATOR OF WHICH SHALL BE .00125 IN THE CASE OF SUCH A
MORTGAGE ACQUIRED BY SUCH AGENCY FOR LESS THAN ONE MILLION DOLLARS,  AND
.00100  IN  THE  CASE OF SUCH A MORTGAGE ACQUIRED BY SUCH AGENCY FOR ONE
MILLION DOLLARS OR MORE. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER THIS
SUBDIVISION REDUCE THE TAX TO LESS THAN THE FIXED DOLLAR MINIMUM  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS ARTICLE. IN COMPUTING SUCH TAX CREDIT FOR THE  SERVICING  OF

S. 6359--A                         85                         A. 8559--A

MORTGAGES  ON  ONE-FAMILY  TO  FOUR-FAMILY  RESIDENTIAL  STRUCTURES, THE
TAXPAYER SHALL NOT BE ENTITLED TO CREDIT FOR THE COLLECTION OF  CURTAIL-
MENT  OR PAYMENTS IN DISCHARGE OF ANY SUCH MORTGAGE. FOR THE PURPOSES OF
THIS SUBDIVISION,
  (B)(I) A "CURTAILMENT" SHALL MEAN AMOUNTS PAID BY MORTGAGORS
  (A)  IN  EXCESS  OF  THE  MONTHLY  CONSTANT  DUE  DURING  THE MONTH OF
COLLECTION AND
  (B) IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE  MORTGAGE;  IN
THE ABSENCE OF CLEAR EVIDENCE TO THE CONTRARY, AMOUNTS PAID IN EXCESS OF
THE  MONTHLY CONSTANT DUE DURING THE MONTH OF COLLECTION SHALL BE DEEMED
TO BE IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE; AND
  (II) "MONTHLY CONSTANT" SHALL MEAN THE AMOUNT OF PRINCIPAL AND  INTER-
EST WHICH IS DUE AND PAYABLE ACCORDING TO THE MORTGAGE DOCUMENTS ON EACH
PERIODIC PAYMENT DATE.
  11.  AGRICULTURAL  PROPERTY  TAX CREDIT. (A) GENERAL. IN THE CASE OF A
TAXPAYER WHICH IS AN ELIGIBLE FARMER OR AN ELIGIBLE FARMER WHO HAS  PAID
TAXES  PURSUANT  TO A LAND CONTRACT, THERE SHALL BE ALLOWED A CREDIT FOR
THE ALLOWABLE SCHOOL DISTRICT PROPERTY TAXES. THE TERM "ALLOWABLE SCHOOL
DISTRICT PROPERTY TAXES" MEANS THE SCHOOL DISTRICT PROPERTY  TAXES  PAID
DURING  THE  TAXABLE YEAR ON QUALIFIED AGRICULTURAL PROPERTY, SUBJECT TO
THE ACREAGE LIMITATION PROVIDED IN PARAGRAPH (E) OF THIS SUBDIVISION AND
THE INCOME LIMITATION PROVIDED IN PARAGRAPH (F) OF THIS SUBDIVISION.
  (B) ELIGIBLE FARMER.  FOR  PURPOSES  OF  THIS  SUBDIVISION,  THE  TERM
"ELIGIBLE FARMER" MEANS A TAXPAYER WHOSE FEDERAL GROSS INCOME FROM FARM-
ING  FOR THE TAXABLE YEAR IS AT LEAST TWO-THIRDS OF EXCESS FEDERAL GROSS
INCOME. THE TERM "ELIGIBLE FARMER" ALSO  INCLUDES  A  CORPORATION  OTHER
THAN  THE  TAXPAYER  OF RECORD FOR QUALIFIED AGRICULTURAL LAND WHICH HAS
PAID THE SCHOOL DISTRICT PROPERTY TAXES  ON  SUCH  LAND  PURSUANT  TO  A
CONTRACT FOR THE FUTURE PURCHASE OF SUCH LAND; PROVIDED THAT SUCH CORPO-
RATION  HAS  A  FEDERAL  GROSS  INCOME FROM FARMING FOR THE TAXABLE YEAR
WHICH IS AT  LEAST  TWO-THIRDS  OF  EXCESS  FEDERAL  GROSS  INCOME;  AND
PROVIDED FURTHER THAT, IN DETERMINING SUCH INCOME ELIGIBILITY, A TAXPAY-
ER  MAY,  FOR  ANY  TAXABLE  YEAR, USE THE AVERAGE OF SUCH FEDERAL GROSS
INCOME FROM FARMING FOR THAT TAXABLE YEAR AND SUCH INCOME  FOR  THE  TWO
CONSECUTIVE  TAXABLE  YEARS  IMMEDIATELY  PRECEDING  SUCH  TAXABLE YEAR.
EXCESS FEDERAL GROSS INCOME MEANS THE AMOUNT  OF  FEDERAL  GROSS  INCOME
FROM  ALL  SOURCES  FOR  THE  TAXABLE  YEAR IN EXCESS OF THIRTY THOUSAND
DOLLARS. FOR THE PURPOSES OF THIS PARAGRAPH, PAYMENTS FROM  THE  STATE'S
FARMLAND  PROTECTION PROGRAM, ADMINISTERED BY THE DEPARTMENT OF AGRICUL-
TURE AND MARKETS, SHALL BE INCLUDED AS FEDERAL GROSS INCOME FROM FARMING
FOR OTHERWISE ELIGIBLE FARMERS.
  (C) SCHOOL DISTRICT PROPERTY TAXES. FOR PURPOSES OF THIS  SUBDIVISION,
THE  TERM  "SCHOOL  DISTRICT  PROPERTY  TAXES" MEANS ALL PROPERTY TAXES,
SPECIAL AD VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE  OF  PENAL-
TIES  AND INTEREST, LEVIED FOR SCHOOL DISTRICT PURPOSES ON THE QUALIFIED
AGRICULTURAL PROPERTY OWNED BY THE TAXPAYER.
  (D) QUALIFIED AGRICULTURAL PROPERTY. FOR PURPOSES OF THIS SUBDIVISION,
THE TERM "QUALIFIED AGRICULTURAL PROPERTY" MEANS LAND  LOCATED  IN  THIS
STATE  WHICH  IS USED IN AGRICULTURAL PRODUCTION, AND LAND IMPROVEMENTS,
STRUCTURES AND BUILDINGS (EXCLUDING BUILDINGS USED  FOR  THE  TAXPAYER'S
RESIDENTIAL  PURPOSE) LOCATED ON SUCH LAND WHICH ARE USED OR OCCUPIED TO
CARRY OUT SUCH PRODUCTION. QUALIFIED AGRICULTURAL PROPERTY ALSO INCLUDES
LAND SET ASIDE OR RETIRED UNDER A  FEDERAL  SUPPLY  MANAGEMENT  OR  SOIL
CONSERVATION  PROGRAM  OR  LAND THAT AT THE TIME IT BECOMES SUBJECT TO A
CONSERVATION EASEMENT, AS DEFINED UNDER SUBDIVISION TWENTY-EIGHT OF THIS
SECTION, MET THE REQUIREMENTS UNDER THIS PARAGRAPH.

S. 6359--A                         86                         A. 8559--A

  (E) ACREAGE LIMITATION. (I) ELIGIBLE TAXES.  IN  THE  EVENT  THAT  THE
QUALIFIED  AGRICULTURAL  PROPERTY OWNED BY THE TAXPAYER INCLUDES LAND IN
EXCESS OF THE BASE ACREAGE AS PROVIDED IN THIS PARAGRAPH, THE AMOUNT  OF
SCHOOL  DISTRICT  PROPERTY TAXES ELIGIBLE FOR CREDIT UNDER THIS SUBDIVI-
SION  SHALL  BE THAT PORTION OF THE SCHOOL DISTRICT PROPERTY TAXES WHICH
BEARS THE SAME RATIO TO THE TOTAL SCHOOL DISTRICT  PROPERTY  TAXES  PAID
DURING  THE  TAXABLE YEAR, AS THE ACREAGE ALLOWABLE UNDER THIS PARAGRAPH
BEARS TO THE ENTIRE ACREAGE OF SUCH LAND.
  (II) ALLOWABLE ACREAGE. THE ALLOWABLE ACREAGE IS THE SUM OF  THE  BASE
ACREAGE  SET  FORTH  BELOW AND FIFTY PERCENT OF THE INCREMENTAL ACREAGE.
THE INCREMENTAL ACREAGE IS THE EXCESS OF THE ENTIRE ACREAGE OF QUALIFIED
AGRICULTURAL LAND OWNED BY THE TAXPAYER OVER THE BASE ACREAGE. EXCEPT AS
PROVIDED IN SUBPARAGRAPH (III) OF THIS PARAGRAPH, THE  BASE  ACREAGE  IS
THREE HUNDRED FIFTY ACRES.
THE  TOTAL  BASE  ACREAGE  MAY  BE  INCREASED BY ANY ACREAGE ENROLLED OR
PARTICIPATING DURING THE TAXABLE YEAR IN A FEDERAL ENVIRONMENTAL CONSER-
VATION ACREAGE RESERVE PROGRAM PURSUANT TO TITLE THREE  OF  THE  FEDERAL
AGRICULTURE IMPROVEMENT AND REFORM ACT OF NINETEEN HUNDRED NINETY-SIX.
  (III)  BASE  ACREAGE OF RELATED PERSONS. WHERE THE TAXPAYER AND ONE OR
MORE RELATED PERSONS EACH OWN QUALIFIED  AGRICULTURAL  PROPERTY  ON  THE
FIRST DAY OF MARCH OF ANY YEAR, THE BASE ACREAGE UNDER SUBPARAGRAPH (II)
OF  THIS  PARAGRAPH  SHALL  BE  DIVIDED  EQUALLY  AND ALLOTTED AMONG THE
TAXPAYER AND SUCH RELATED PERSONS, AND THE TAXPAYER'S BASE  ACREAGE  FOR
THE TAXABLE YEAR WHICH INCLUDES SUCH MARCH FIRST SHALL BE LIMITED TO ITS
ALLOTTED  SHARE. PROVIDED, HOWEVER, IF THE TAXPAYER AND ALL SUCH RELATED
PERSONS CONSENT (AT SUCH TIME AND IN SUCH MANNER AS THE COMMISSIONER MAY
PRESCRIBE) TO AN UNEQUAL DIVISION, THE TAXPAYER'S BASE ACREAGE FOR  SUCH
TAXABLE  YEAR  SHALL BE LIMITED TO ITS ALLOTTED SHARE UNDER SUCH UNEQUAL
DIVISION.
  (IV) RELATED PERSONS. (A) FOR PURPOSES OF SUBPARAGRAPH (III)  OF  THIS
PARAGRAPH, THE TERM "RELATED PERSON" MEANS:
  (I) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, WHERE THE TAXPAY-
ER  AND  THE  CORPORATION  ARE  MEMBERS OF THE SAME CONTROLLED GROUP, AS
DEFINED IN SECTION 267(F) OF THE INTERNAL REVENUE CODE;
  (II) AN INDIVIDUAL, PARTNERSHIP, ESTATE  OR  TRUST,  WHERE  MORE  THAN
FIFTY  PERCENT  IN  VALUE  OF  THE  OUTSTANDING STOCK OF THE TAXPAYER IS
OWNED, DIRECTLY OR INDIRECTLY, BY OR FOR SUCH  INDIVIDUAL,  PARTNERSHIP,
ESTATE OR TRUST OR BY OR FOR THE GRANTOR OF SUCH TRUST;
  (III)  A  CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, OR A PARTNER-
SHIP, ESTATE OR TRUST, IF THE SAME PERSON OWNS MORE THAN  FIFTY  PERCENT
IN  VALUE  OF  THE OUTSTANDING STOCK OF THE TAXPAYER AND MORE THAN FIFTY
PERCENT IN VALUE OF  THE OUTSTANDING STOCK OF THE CORPORATION,  OR  MORE
THAN  FIFTY  PERCENT  OF THE CAPITAL OR PROFITS INTEREST IN THE PARTNER-
SHIP, OR MORE THAN FIFTY PERCENT  OF  THE  BENEFICIAL  INTEREST  IN  THE
ESTATE OR TRUST;
  (IV)  A  PARTNERSHIP,  ESTATE  OR  TRUST  OF  WHICH THE TAXPAYER OWNS,
DIRECTLY OR INDIRECTLY, MORE THAN FIFTY PERCENT OF THE CAPITAL,  PROFITS
OR BENEFICIAL INTEREST.
  (B)  IN  DETERMINING  WHETHER  A PERSON IS A RELATED PERSON WITHIN THE
MEANING OF THIS SUBPARAGRAPH:
  (I) STOCK OWNED, DIRECTLY OR INDIRECTLY,  BY  OR  FOR  A  CORPORATION,
PARTNERSHIP,  ESTATE OR TRUST SHALL BE CONSIDERED AS BEING OWNED PROPOR-
TIONATELY BY OR FOR ITS SHAREHOLDERS, PARTNERS OR BENEFICIARIES;
  (II) AN INDIVIDUAL SHALL BE CONSIDERED  AS  OWNING  THE  STOCK  OWNED,
DIRECTLY OR INDIRECTLY, BY OR FOR HIS SPOUSE;

S. 6359--A                         87                         A. 8559--A

  (III) STOCK CONSTRUCTIVELY OWNED BY A PERSON BY REASON OF THE APPLICA-
TION  OF ITEM (I) OF THIS CLAUSE SHALL, FOR THE PURPOSE OF APPLYING ITEM
(I) OR (II) OF THIS CLAUSE, BE TREATED AS ACTUALLY OWNED BY SUCH PERSON.
  (F)  INCOME  LIMITATION. (I) IN THE EVENT THAT THE MODIFIED ENTIRE NET
INCOME OF THE TAXPAYER EXCEEDS TWO HUNDRED THOUSAND DOLLARS, THE  ALLOW-
ABLE SCHOOL DISTRICT PROPERTY TAXES UNDER PARAGRAPH (A) OF THIS SUBDIVI-
SION SHALL BE THE ELIGIBLE TAXES UNDER SUBPARAGRAPH (I) OF PARAGRAPH (E)
OF  THIS SUBDIVISION REDUCED BY THE PRODUCT OF THE AMOUNT OF SUCH ELIGI-
BLE TAXES AND A PERCENTAGE, SUCH PERCENTAGE TO BE DETERMINED  BY  MULTI-
PLYING  ONE HUNDRED PERCENT BY A FRACTION, THE NUMERATOR OF WHICH IS THE
LESSER OF ONE HUNDRED THOUSAND DOLLARS OR THE EXCESS OF  THE  TAXPAYER'S
MODIFIED  ENTIRE  NET  INCOME  OVER TWO HUNDRED THOUSAND DOLLARS AND THE
DENOMINATOR OF WHICH IS ONE HUNDRED THOUSAND DOLLARS.  FOR  PURPOSES  OF
THE  PRECEDING  SENTENCE,  THE  TERM "ELIGIBLE TAXES", WHERE THE ACREAGE
LIMITATION OF PARAGRAPH (E) OF THIS SUBDIVISION DOES  NOT  APPLY,  SHALL
MEAN  THE  TOTAL  SCHOOL DISTRICT PROPERTY TAXES PAID DURING THE TAXABLE
YEAR.
  (II) THE TERM "MODIFIED ENTIRE NET INCOME" MEANS THE ENTIRE NET INCOME
FOR THE TAXABLE YEAR REDUCED BY THE AMOUNT OF  PRINCIPAL  PAID  ON  FARM
INDEBTEDNESS DURING THE TAXABLE YEAR. THE TERM "FARM INDEBTEDNESS" MEANS
DEBT INCURRED OR REFINANCED WHICH IS SECURED BY FARM PROPERTY, WHERE THE
PROCEEDS  OF  THE  DEBT  ARE  DISBURSED FOR EXPENDITURES INCURRED IN THE
BUSINESS OF FARMING.
  (G) CARRYOVER. IN NO EVENT SHALL THE CREDIT PROVIDED HEREIN BE ALLOWED
IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS  THAN  THE  FIXED
DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE.  IF,  HOWEVER,  THE  AMOUNT  OF
CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND  MAY
BE  DEDUCTED  FROM  THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. PROVIDED,
HOWEVER, IN LIEU OF CARRYING OVER THE UNUSED PORTION OF SUCH CREDIT, THE
TAXPAYER MAY ELECT TO TREAT SUCH UNUSED PORTION AS AN OVERPAYMENT OF TAX
TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF  SECTION
ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER EXCEPT THAT NO INTEREST SHALL BE
PAID ON SUCH OVERPAYMENT.
  (H)  NONQUALIFIED  USE. (I) NO CREDIT IN CONVERSION YEAR. IN THE EVENT
THAT QUALIFIED AGRICULTURAL PROPERTY IS CONVERTED  BY  THE  TAXPAYER  TO
NONQUALIFIED  USE,  CREDIT  UNDER  THIS SUBDIVISION SHALL NOT BE ALLOWED
WITH RESPECT TO SUCH PROPERTY FOR THE TAXABLE YEAR  OF  CONVERSION  (THE
CONVERSION YEAR).
  (II)  CREDIT RECAPTURE. IF THE CONVERSION BY THE TAXPAYER OF QUALIFIED
AGRICULTURAL PROPERTY TO NONQUALIFIED USE OCCURS DURING  THE  PERIOD  OF
THE  TWO  TAXABLE  YEARS FOLLOWING THE TAXABLE YEAR FOR WHICH THE CREDIT
UNDER THIS SUBDIVISION WAS FIRST CLAIMED WITH RESPECT TO SUCH  PROPERTY,
THE  CREDIT  ALLOWED WITH RESPECT TO SUCH PROPERTY FOR THE TAXABLE YEARS
PRIOR TO THE CONVERSION YEAR MUST BE ADDED BACK IN THE CONVERSION  YEAR.
WHERE  THE PROPERTY CONVERTED INCLUDES LAND, AND WHERE THE CONVERSION IS
OF ONLY A PORTION OF SUCH LAND, THE CREDIT ALLOWED WITH RESPECT  TO  THE
PROPERTY  CONVERTED SHALL BE DETERMINED BY MULTIPLYING THE ENTIRE CREDIT
UNDER THIS SUBDIVISION FOR THE TAXABLE YEARS  PRIOR  TO  THE  CONVERSION
YEAR  BY A FRACTION, THE NUMERATOR OF WHICH IS THE ACREAGE CONVERTED AND
THE DENOMINATOR OF WHICH IS THE ENTIRE ACREAGE OF SUCH LAND OWNED BY THE
TAXPAYER IMMEDIATELY PRIOR TO THE CONVERSION.

S. 6359--A                         88                         A. 8559--A

  (III) EXCEPTION TO RECAPTURE.  SUBPARAGRAPH  (II)  OF  THIS  PARAGRAPH
SHALL NOT APPLY TO THE CONVERSION OF PROPERTY WHERE THE CONVERSION IS BY
REASON  OF  INVOLUNTARY  CONVERSION,  WITHIN  THE MEANING OF SECTION ONE
THOUSAND THIRTY-THREE OF THE INTERNAL REVENUE CODE.
  (IV) CONVERSION TO NONQUALIFIED USE. FOR PURPOSES OF THIS PARAGRAPH, A
SALE OR OTHER DISPOSITION OF QUALIFIED AGRICULTURAL PROPERTY ALONE SHALL
NOT CONSTITUTE A CONVERSION TO A NONQUALIFIED USE.
  (I) SPECIAL RULES. FOR PURPOSES OF THIS SUBDIVISION, THE TERM "FEDERAL
GROSS   INCOME  FROM  FARMING"  SHALL  INCLUDE  GROSS  INCOME  FROM  THE
PRODUCTION OF MAPLE SYRUP, CIDER, CHRISTMAS TREES DERIVED FROM A MANAGED
CHRISTMAS TREE OPERATION WHETHER DUG FOR TRANSPLANTING OR CUT  FROM  THE
STUMP,  OR  FROM  A  COMMERCIAL  HORSE  BOARDING OPERATION AS DEFINED IN
SUBDIVISION THIRTEEN OF SECTION THREE HUNDRED ONE OF THE AGRICULTURE AND
MARKETS LAW, OR FROM THE SALE OF WINE FROM A  LICENSED  FARM  WINERY  AS
PROVIDED  FOR  IN  ARTICLE SIX OF THE ALCOHOLIC BEVERAGE CONTROL LAW, OR
FROM THE SALE OF CIDER FROM A LICENSED FARM CIDERY AS  PROVIDED  FOR  IN
SECTION FIFTY-EIGHT-C OF THE ALCOHOLIC BEVERAGE CONTROL LAW.
  (J)  ELECTION TO DEEM GROSS INCOME OF NEW YORK C CORPORATION TO SHARE-
HOLDERS. FOR PURPOSES OF THIS SUBDIVISION,  FEDERAL  GROSS  INCOME  FROM
FARMING  SHALL  BE ZERO FOR ANY TAXABLE YEAR OF A NEW YORK C CORPORATION
FOR WHICH THE ELECTION UNDER PARAGRAPH NINE OF SUBSECTION (N) OF SECTION
SIX HUNDRED SIX OF THIS CHAPTER IS IN EFFECT.
  12. CREDIT FOR EMPLOYMENT OF PERSONS WITH DISABILITIES. (A)  ALLOWANCE
OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HERE-
INAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, FOR EMPLOYING
WITHIN THE STATE A QUALIFIED EMPLOYEE.
  (B) QUALIFIED EMPLOYEE. A QUALIFIED EMPLOYEE IS AN INDIVIDUAL:
  (1) WHO IS CERTIFIED BY THE EDUCATION DEPARTMENT, OR IN THE CASE OF AN
INDIVIDUAL  WHO  IS  BLIND  OR VISUALLY HANDICAPPED, BY THE STATE AGENCY
RESPONSIBLE FOR PROVISION OF VOCATIONAL REHABILITATION SERVICES  TO  THE
BLIND  AND VISUALLY HANDICAPPED: (I) AS A PERSON WITH A DISABILITY WHICH
CONSTITUTES OR RESULTS IN A SUBSTANTIAL HANDICAP TO EMPLOYMENT AND  (II)
AS  HAVING  COMPLETED  OR  AS RECEIVING SERVICES UNDER AN INDIVIDUALIZED
WRITTEN REHABILITATION PLAN APPROVED  BY  THE  EDUCATION  DEPARTMENT  OR
OTHER  STATE  AGENCY RESPONSIBLE FOR PROVIDING VOCATIONAL REHABILITATION
SERVICES TO SUCH INDIVIDUAL; AND
  (2) WHO HAS WORKED ON A FULL-TIME BASIS FOR THE EMPLOYER WHO IS CLAIM-
ING THE CREDIT FOR AT LEAST ONE HUNDRED  EIGHTY  DAYS  OR  FOUR  HUNDRED
HOURS.
  (C)  AMOUNT  OF  CREDIT.  EXCEPT  AS PROVIDED IN PARAGRAPH (D) OF THIS
SUBDIVISION, THE AMOUNT OF CREDIT SHALL BE THIRTY-FIVE  PERCENT  OF  THE
FIRST  SIX THOUSAND DOLLARS IN QUALIFIED FIRST-YEAR WAGES EARNED BY EACH
QUALIFIED EMPLOYEE. "QUALIFIED FIRST-YEAR WAGES"  MEANS  WAGES  PAID  OR
INCURRED  BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED EMPLOYEES
WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE,  TO  SERVICES
RENDERED  DURING THE ONE-YEAR PERIOD BEGINNING WITH THE DAY THE EMPLOYEE
BEGINS WORK FOR THE TAXPAYER.
  (D) CREDIT WHERE FEDERAL WORK OPPORTUNITY  TAX  CREDIT  APPLIES.  WITH
RESPECT TO ANY QUALIFIED EMPLOYEE WHOSE QUALIFIED FIRST-YEAR WAGES UNDER
PARAGRAPH  (C)  OF THIS SUBDIVISION ALSO CONSTITUTE QUALIFIED FIRST-YEAR
WAGES FOR PURPOSES OF THE WORK OPPORTUNITY  TAX  CREDIT  FOR  VOCATIONAL
REHABILITATION REFERRALS UNDER SECTION FIFTY-ONE OF THE INTERNAL REVENUE
CODE,  THE AMOUNT OF CREDIT UNDER  THIS SUBDIVISION SHALL BE THIRTY-FIVE
PERCENT OF THE FIRST SIX THOUSAND DOLLARS IN QUALIFIED SECOND-YEAR WAGES
EARNED BY EACH SUCH EMPLOYEE. "QUALIFIED SECOND-YEAR WAGES" MEANS  WAGES
PAID  OR  INCURRED  BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED

S. 6359--A                         89                         A. 8559--A

EMPLOYEES WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE,  TO
SERVICES  RENDERED  DURING  THE ONE-YEAR PERIOD BEGINNING ONE YEAR AFTER
THE EMPLOYEE BEGINS WORK FOR THE TAXPAYER.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES
THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON
THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE  IN
SUCH  TAXABLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS,
AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (F)  COORDINATION  WITH  FEDERAL  WORK  OPPORTUNITY  TAX  CREDIT.  THE
PROVISIONS  OF  SECTION  FIFTY-ONE AND FIFTY-TWO OF THE INTERNAL REVENUE
CODE, AS SUCH SECTIONS APPLIED ON OCTOBER FIRST, NINETEEN HUNDRED  NINE-
TY-SIX,  THAT APPLY TO THE FEDERAL WORK OPPORTUNITY TAX CREDIT FOR VOCA-
TIONAL REHABILITATION REFERRALS SHALL APPLY TO  THE  CREDIT  UNDER  THIS
SUBDIVISION  TO  THE  EXTENT  THAT SUCH SECTIONS ARE CONSISTENT WITH THE
SPECIFIC PROVISIONS OF THIS SUBDIVISION, PROVIDED THAT IN THE EVENT OF A
CONFLICT THE PROVISIONS OF THIS SUBDIVISION SHALL CONTROL.
  13. CREDIT FOR PURCHASE OF  AN  AUTOMATED  EXTERNAL  DEFIBRILLATOR.  A
TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS HEREINAFTER
PROVIDED, AGAINST THE TAX IMPOSED BY THIS  ARTICLE,  FOR  THE  PURCHASE,
OTHER  THAN  FOR RESALE, OF AN AUTOMATED EXTERNAL DEFIBRILLATOR, AS SUCH
TERM IS DEFINED IN SECTION THREE THOUSAND-B OF THE  PUBLIC  HEALTH  LAW.
THE  AMOUNT  OF  CREDIT  SHALL  BE THE COST TO THE TAXPAYER OF AUTOMATED
EXTERNAL DEFIBRILLATORS PURCHASED DURING THE TAXABLE YEAR,  SUCH  CREDIT
NOT  TO EXCEED FIVE HUNDRED DOLLARS WITH RESPECT TO EACH UNIT PURCHASED.
THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS CHAPTER.
  14. CREDIT FOR PURCHASE OF LONG-TERM CARE INSURANCE.  (A)  GENERAL.  A
TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE  EQUAL TO TWENTY PERCENT OF THE PREMIUM PAID DURING THE TAXABLE YEAR
FOR LONG-TERM CARE INSURANCE. IN ORDER TO QUALIFY FOR SUCH  CREDIT,  THE
TAXPAYER'S PREMIUM PAYMENT MUST BE FOR THE PURCHASE OF OR FOR CONTINUING
COVERAGE UNDER A LONG-TERM CARE INSURANCE POLICY THAT QUALIFIES FOR SUCH
CREDIT  PURSUANT  TO  SECTION  ONE THOUSAND ONE HUNDRED SEVENTEEN OF THE
INSURANCE LAW.
  (B) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR
MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION
TWO  HUNDRED  TEN  OF  THIS  ARTICLE.  IF, HOWEVER, THE AMOUNT OF CREDIT
ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO
SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX  BASED  ON  THE  FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXA-
BLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  15. LOW-INCOME HOUSING CREDIT. (A) ALLOWANCE  OF  CREDIT.  A  TAXPAYER
SHALL  BE  ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH
RESPECT TO THE OWNERSHIP OF ELIGIBLE LOW-INCOME BUILDINGS,  COMPUTED  AS
PROVIDED IN SECTION EIGHTEEN OF THIS CHAPTER.
  (B)  APPLICATION  OF  CREDIT. THE CREDIT AND CARRYOVERS OF SUCH CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL  NOT,  IN  THE
AGGREGATE,  REDUCE  THE  TAX  DUE  FOR  SUCH YEAR TO LESS THAN THE FIXED

S. 6359--A                         90                         A. 8559--A

DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER
OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY  AMOUNT
OF CREDIT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXA-
BLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE
DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.
  (C) CREDIT RECAPTURE. FOR PROVISIONS REQUIRING  RECAPTURE  OF  CREDIT,
SEE SUBDIVISION (B) OF SECTION EIGHTEEN OF THIS CHAPTER.
  16.  GREEN  BUILDING CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL
BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION  NINETEEN  OF
THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) CARRYOVERS. THE CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED UNDER
THIS  SUBDIVISION  FOR  ANY  TAXABLE  YEAR  SHALL NOT, IN THE AGGREGATE,
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT OR  CARRY-
OVERS  OF  SUCH  CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION FOR ANY
TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE
PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF  CREDIT
OR  CARRYOVERS  OF  SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY  BE  DEDUCTED
FROM THE TAX FOR SUCH YEAR OR YEARS.
  17.  BROWNFIELD  REDEVELOPMENT  TAX CREDIT. (A) ALLOWANCE OF CREDIT. A
TAXPAYER SHALL BE ALLOWED A  CREDIT,  TO  BE  COMPUTED  AS  PROVIDED  IN
SECTION  TWENTY-ONE  OF  THIS  CHAPTER,  AGAINST THE TAX IMPOSED BY THIS
ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDITS ALLOWED UNDER THIS  SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT  THUS
NOT  DEDUCTIBLE  IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT
OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  18. REMEDIATED BROWNFIELD CREDIT FOR REAL PROPERTY TAXES FOR QUALIFIED
SITES.  (A)  ALLOWANCE  OF  CREDIT. A TAXPAYER WHICH IS A DEVELOPER OF A
QUALIFIED SITE SHALL BE ALLOWED A  CREDIT  FOR  ELIGIBLE  REAL  PROPERTY
TAXES,  TO BE COMPUTED AS PROVIDED IN SUBDIVISION (B) OF SECTION TWENTY-
TWO OF THIS CHAPTER, AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE.  FOR
PURPOSES OF THIS SUBDIVISION, THE TERMS "QUALIFIED SITE" AND "DEVELOPER"
SHALL  HAVE  THE  SAME MEANING AS SET FORTH IN PARAGRAPHS TWO AND THREE,
RESPECTIVELY, OF SUBDIVISION (A) OF SECTION TWENTY-TWO OF THIS CHAPTER.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS  TAX
BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF

S. 6359--A                         91                         A. 8559--A

TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  19. ENVIRONMENTAL REMEDIATION INSURANCE CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN
SECTION  TWENTY-THREE  OF  THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS
ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDITS ALLOWED UNDER THIS  SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT  THUS
NOT  DEDUCTIBLE  IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT
OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  20.  EMPIRE  STATE  FILM PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT. A
TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION TWENTY-FOUR OF THIS CHAPTER
SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS  PROVIDED  IN  SUCH  SECTION
TWENTY-FOUR AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI-
SION FOR ANY TAXABLE YEAR REDUCES THE TAX  TO  SUCH  AMOUNT  OR  IF  THE
TAXPAYER  OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT,
THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE  CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  21. SECURITY TRAINING TAX CREDIT. (A) ALLOWANCE OF CREDIT. A  TAXPAYER
SHALL  BE  ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION TWEN-
TY-SIX OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF
THE AMOUNT OF CREDITS ALLOWED UNDER THIS  SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT  THUS
NOT  DEDUCTIBLE  IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT
OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  22.  CONSERVATION EASEMENT TAX CREDIT. (A) CREDIT ALLOWED. IN THE CASE
OF A TAXPAYER WHO OWNS LAND THAT IS SUBJECT TO A  CONSERVATION  EASEMENT
HELD  BY A PUBLIC OR PRIVATE CONSERVATION AGENCY, THERE SHALL BE ALLOWED
A CREDIT FOR TWENTY-FIVE PERCENT OF THE ALLOWABLE SCHOOL DISTRICT, COUN-
TY AND TOWN REAL PROPERTY TAXES ON SUCH LAND. IN NO SUCH CASE SHALL  THE

S. 6359--A                         92                         A. 8559--A

CREDIT  ALLOWED  UNDER  THIS  SUBDIVISION  IN COMBINATION WITH ANY OTHER
CREDIT FOR SUCH SCHOOL DISTRICT, COUNTY AND  TOWN  REAL  PROPERTY  TAXES
UNDER THIS SECTION EXCEED SUCH TAXES.
  (B)  CONSERVATION EASEMENT. FOR PURPOSES OF THIS SUBDIVISION, THE TERM
"CONSERVATION EASEMENT" MEANS A  PERPETUAL  AND  PERMANENT  CONSERVATION
EASEMENT AS DEFINED IN ARTICLE FORTY-NINE OF THE ENVIRONMENTAL CONSERVA-
TION  LAW  THAT SERVES TO PROTECT OPEN SPACE, SCENIC, NATURAL RESOURCES,
BIODIVERSITY,  AGRICULTURAL,  WATERSHED  AND/OR  HISTORIC   PRESERVATION
RESOURCES.  ANY  CONSERVATION EASEMENT FOR WHICH A TAX CREDIT IS CLAIMED
UNDER THIS SUBDIVISION SHALL BE FILED WITH THE  DEPARTMENT  OF  ENVIRON-
MENTAL  CONSERVATION, AS PROVIDED FOR IN ARTICLE FORTY-NINE OF THE ENVI-
RONMENTAL CONSERVATION LAW AND SUCH CONSERVATION EASEMENT  SHALL  COMPLY
WITH  THE  PROVISIONS OF TITLE THREE OF SUCH ARTICLE, AND THE PROVISIONS
OF SUBDIVISION (H) OF SECTION 170 OF THE INTERNAL  REVENUE  CODE.  DEDI-
CATIONS  OF  LAND  FOR  OPEN SPACE THROUGH THE EXECUTION OF CONSERVATION
EASEMENTS FOR THE PURPOSE OF FULFILLING DENSITY REQUIREMENTS  TO  OBTAIN
SUBDIVISION  OR  BUILDING PERMITS SHALL NOT BE CONSIDERED A CONSERVATION
EASEMENT UNDER THIS SUBDIVISION.
  (C) LAND. FOR PURPOSES OF THIS SUBDIVISION, THE TERM  "LAND"  MEANS  A
FEE SIMPLE TITLE TO REAL PROPERTY LOCATED IN THIS STATE, WITH OR WITHOUT
IMPROVEMENTS  THEREON;  RIGHTS  OF WAY; WATER AND RIPARIAN RIGHTS; EASE-
MENTS; PRIVILEGES AND ALL OTHER RIGHTS  OR  INTERESTS  OF  ANY  LAND  OR
DESCRIPTION  IN,  RELATING TO OR CONNECTED WITH REAL PROPERTY, EXCLUDING
BUILDINGS, STRUCTURES, OR IMPROVEMENTS.
  (D) PUBLIC OR PRIVATE CONSERVATION AGENCY. FOR PURPOSES OF THIS SUBDI-
VISION, THE TERM "PUBLIC  OR  PRIVATE  CONSERVATION  AGENCY"  MEANS  ANY
STATE,  LOCAL, OR FEDERAL GOVERNMENTAL BODY; OR ANY PRIVATE NOT-FOR-PRO-
FIT CHARITABLE CORPORATION OR TRUST WHICH IS AUTHORIZED TO  DO  BUSINESS
IN  THE STATE OF NEW YORK, IS ORGANIZED AND OPERATED TO PROTECT LAND FOR
NATURAL RESOURCES, CONSERVATION OR HISTORIC  PRESERVATION  PURPOSES,  IS
EXEMPT  FROM  FEDERAL  INCOME  TAXATION  UNDER  SECTION 501(C)(3) OF THE
INTERNAL REVENUE CODE, AND HAS THE POWER TO ACQUIRE, HOLD  AND  MAINTAIN
LAND AND/OR INTERESTS IN LAND FOR SUCH PURPOSES.
  (E) CREDIT LIMITATION. THE AMOUNT OF THE CREDIT THAT MAY BE CLAIMED BY
A  TAXPAYER  PURSUANT  TO THIS SUBSECTION SHALL NOT EXCEED FIVE THOUSAND
DOLLARS IN ANY GIVEN YEAR.
  (F) APPLICATION OF THE CREDIT. THE CREDIT ALLOWED UNDER THIS  SUBDIVI-
SION  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO
LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE  AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF THE CREDIT
THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER,
EXCEPT THAT, NO INTEREST SHALL BE PAID THEREON.
  23.  EMPIRE STATE COMMERCIAL PRODUCTION CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER THAT IS ELIGIBLE PURSUANT TO PROVISIONS OF SECTION TWEN-
TY-EIGHT OF THIS CHAPTER SHALL BE ALLOWED A CREDIT  TO  BE  COMPUTED  AS
PROVIDED IN SUCH SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI-

S. 6359--A                         93                         A. 8559--A

SION FOR ANY TAXABLE YEAR REDUCES THE TAX  TO  SUCH  AMOUNT  OR  IF  THE
TAXPAYER  OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT,
FIFTY PERCENT OF THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING,  NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF SUCH
CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE CARRIED OVER
TO THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM  THE
TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF CRED-
IT OVER THE TAX FOR SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF  SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,
THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (C) EXPIRATION OF CREDIT. THE CREDIT ALLOWED  UNDER  THIS  SUBDIVISION
SHALL  NOT BE APPLICABLE TO TAXABLE YEARS BEGINNING ON OR AFTER DECEMBER
THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
  24. BIOFUEL PRODUCTION  CREDIT.  (A)  GENERAL.  A  TAXPAYER  SHALL  BE
ALLOWED  A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION TWENTY-EIGHT OF
THIS CHAPTER ADDED AS PART X OF CHAPTER SIXTY-TWO OF  THE  LAWS  OF  TWO
THOUSAND  SIX,  AGAINST  THE  TAX  IMPOSED  BY  THIS ARTICLE. THE CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX DUE FOR SUCH YEAR TO LESS  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS ARTICLE.  HOWEVER, IF THE AMOUNT  OF  CREDIT  ALLOWED  UNDER
THIS  SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR
IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON  THE  FIXED  DOLLAR  MINIMUM
AMOUNT,  ANY  AMOUNT  OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN
ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
INTEREST SHALL BE PAID THEREON. THE TAX CREDIT ALLOWED PURSUANT TO  THIS
SECTION SHALL APPLY TO TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO
THOUSAND TWENTY.
  25.  CLEAN  HEATING  FUEL  CREDIT.  (A)  GENERAL.  A TAXPAYER SHALL BE
ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE.  SUCH  CREDIT,
TO  BE  COMPUTED  AS HEREINAFTER PROVIDED, SHALL BE ALLOWED FOR BIOHEAT,
USED FOR SPACE HEATING OR HOT WATER PRODUCTION FOR RESIDENTIAL  PURPOSES
WITHIN  THIS  STATE  PURCHASED BEFORE JANUARY FIRST, TWO THOUSAND SEVEN-
TEEN. SUCH CREDIT SHALL BE $0.01 PER PERCENT OF BIODIESEL PER GALLON  OF
BIOHEAT,  NOT  TO  EXCEED  TWENTY  CENTS  PER  GALLON, PURCHASED BY SUCH
TAXPAYER.
  (B) DEFINITIONS. FOR PURPOSES OF THIS SUBDIVISION, THE FOLLOWING DEFI-
NITIONS SHALL APPLY:
  (I) "BIODIESEL" SHALL MEAN A FUEL COMPRISED EXCLUSIVELY OF  MONO-ALKYL
ESTERS  OF  LONG CHAIN FATTY ACIDS DERIVED FROM VEGETABLE OILS OR ANIMAL
FATS, DESIGNATED B100, WHICH MEETS THE SPECIFICATIONS OF AMERICAN SOCIE-
TY OF TESTING AND MATERIALS DESIGNATION D 6751.
  (II) "BIOHEAT" SHALL MEAN A FUEL COMPRISED OF BIODIESEL  BLENDED  WITH
CONVENTIONAL  HOME  HEATING  OIL,  WHICH MEETS THE SPECIFICATIONS OF THE
AMERICAN SOCIETY OF TESTING AND MATERIALS DESIGNATION D 396 OR D 975.
  (C) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF

S. 6359--A                         94                         A. 8559--A

SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS  TAX
BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  26. CREDIT FOR REHABILITATION OF HISTORIC PROPERTIES. (A)  APPLICATION
OF  CREDIT.  (I)  FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST,
TWO THOUSAND TEN, AND BEFORE  JANUARY  FIRST,  TWO  THOUSAND  TWENTY,  A
TAXPAYER  SHALL BE ALLOWED A CREDIT AS HEREINAFTER PROVIDED, AGAINST THE
TAX IMPOSED BY THIS ARTICLE, IN AN AMOUNT EQUAL TO ONE  HUNDRED  PERCENT
OF  THE  AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME TAXABLE YEAR
WITH RESPECT TO A CERTIFIED HISTORIC STRUCTURE UNDER  SUBSECTION  (C)(2)
OF  SECTION  47 OF THE INTERNAL REVENUE CODE WITH RESPECT TO A CERTIFIED
HISTORIC STRUCTURE LOCATED WITHIN  THE  STATE.  PROVIDED,  HOWEVER,  THE
CREDIT SHALL NOT EXCEED FIVE MILLION DOLLARS.
  (II)  FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
SAND TWENTY, A  TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT  AS  HEREINAFTER
PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, IN AN AMOUNT EQUAL TO
THIRTY PERCENT OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME
TAXABLE  YEAR  WITH  RESPECT  TO  A  CERTIFIED  HISTORIC STRUCTURE UNDER
SUBSECTION (C)(3) OF SECTION  47  OF  THE  INTERNAL  REVENUE  CODE  WITH
RESPECT  TO  A  CERTIFIED  HISTORIC  STRUCTURE LOCATED WITHIN THE STATE.
PROVIDED, HOWEVER, THE CREDIT SHALL  NOT  EXCEED  ONE  HUNDRED  THOUSAND
DOLLARS.
  (B)  IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP OR A SHAREHOLDER IN
A NEW YORK S CORPORATION, THEN THE CREDIT CAPS IMPOSED  IN  SUBPARAGRAPH
(A)  OF THIS PARAGRAPH SHALL BE APPLIED AT THE ENTITY LEVEL, SO THAT THE
AGGREGATE CREDIT ALLOWED TO ALL THE PARTNERS  OR  SHAREHOLDERS  OF  EACH
SUCH  ENTITY  IN THE TAXABLE YEAR DOES NOT EXCEED THE CREDIT CAP THAT IS
APPLICABLE IN THAT TAXABLE YEAR.
  (B) TAX CREDITS ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE  ALLOWED
IN  THE  TAXABLE  YEAR  THAT  THE  QUALIFIED REHABILITATION IS PLACED IN
SERVICE UNDER SECTION 167 OF THE FEDERAL INTERNAL REVENUE CODE.
  (C) IF THE CREDIT ALLOWED THE TAXPAYER PURSUANT TO SECTION 47  OF  THE
INTERNAL  REVENUE  CODE  WITH  RESPECT  TO A QUALIFIED REHABILITATION IS
RECAPTURED PURSUANT TO SUBSECTION (A) OF  SECTION  50  OF  THE  INTERNAL
REVENUE CODE, A PORTION OF THE CREDIT ALLOWED UNDER THIS SUBSECTION MUST
BE ADDED BACK IN THE SAME TAXABLE YEAR AND IN THE SAME PROPORTION AS THE
FEDERAL CREDIT.
  (D)  THE  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED  UNDER
THIS  SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR
IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON  THE  FIXED  DOLLAR  MINIMUM
AMOUNT,  ANY  AMOUNT  OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE RECREDITED  OR  REFUNDED
IN  ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
INTEREST SHALL BE PAID THEREON.

S. 6359--A                         95                         A. 8559--A

  (E) TO BE ELIGIBLE FOR THE CREDIT ALLOWABLE  UNDER  THIS  SUBDIVISION,
THE REHABILITATION PROJECT SHALL BE IN WHOLE OR IN PART LOCATED WITHIN A
CENSUS  TRACT  WHICH  IS  IDENTIFIED  AS  BEING  AT OR BELOW ONE HUNDRED
PERCENT OF THE STATE MEDIAN FAMILY INCOME AS CALCULATED  AS  OF  JANUARY
FIRST  OF  EACH  YEAR  USING THE MOST RECENT FIVE YEAR ESTIMATE FROM THE
AMERICAN COMMUNITY SURVEY PUBLISHED BY THE UNITED STATES CENSUS BUREAU.
  27. CREDITS OF NEW YORK S CORPORATIONS. (A)  GENERAL.  NOTWITHSTANDING
THE  PROVISIONS  OF  THIS SECTION, NO CARRYOVER OF CREDIT ALLOWABLE IN A
NEW YORK C YEAR SHALL BE DEDUCTED FROM THE TAX OTHERWISE DUE UNDER  THIS
ARTICLE  IN  A  NEW YORK S YEAR, AND NO CREDIT ALLOWABLE IN A NEW YORK S
YEAR, OR CARRYOVER OF SUCH  CREDIT,  SHALL  BE  DEDUCTED  FROM  THE  TAX
IMPOSED BY THIS ARTICLE.  HOWEVER, A NEW YORK S YEAR SHALL BE TREATED AS
A  TAXABLE  YEAR FOR PURPOSES OF DETERMINING THE NUMBER OF TAXABLE YEARS
TO WHICH A CREDIT MAY BE CARRIED OVER UNDER THIS SECTION.  NOTWITHSTAND-
ING  THE FIRST SENTENCE OF THIS SUBDIVISION, HOWEVER, THE CREDIT FOR THE
SPECIAL ADDITIONAL MORTGAGE RECORDING TAX SHALL BE ALLOWED  AS  PROVIDED
IN  SUBDIVISION  FIFTEEN  OF THIS SECTION, AND THE CARRYOVER OF ANY SUCH
CREDIT SHALL BE DETERMINED WITHOUT  REGARD  TO  WHETHER  THE  CREDIT  IS
CARRIED FROM A NEW YORK C YEAR TO A NEW YORK S YEAR OR VICE-VERSA.
  28.  NET  OPERATING LOSS CONVERSION CREDIT. (A) BASE YEAR DESIGNATION.
FOR THE PURPOSES OF THIS SUBDIVISION, THE TERM  "BASE  YEAR"  MEANS  THE
LAST  TAXABLE  YEAR  BEGINNING  ON  OR AFTER JANUARY FIRST, TWO THOUSAND
FOURTEEN AND BEFORE JANUARY FIRST, TWO THOUSAND FIFTEEN.
  (B) ALLOWANCE OF CREDIT. A TAXPAYER WHICH HAS ANY UNABSORBED NET OPER-
ATING LOSS CARRYOVER, REFERRED TO IN THIS SUBDIVISION AS A "NOL",  AFTER
CALCULATING  ITS ENTIRE NET INCOME UNDER ARTICLE NINE-A OR ARTICLE THIR-
TY-TWO FOR THE BASE YEAR SHALL BE  ALLOWED  A  CREDIT  AGAINST  THE  TAX
IMPOSED  BY THIS ARTICLE FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY
FIRST, TWO THOUSAND FIFTEEN.
  (C) CALCULATION OF CREDIT. THE TOTAL  AMOUNT  OF  THE  NOL  CONVERSION
CREDIT SHALL BE THE PRODUCT OF:
  (I)  ANY  UNABSORBED PORTION OF NET OPERATING LOSS AS CALCULATED UNDER
PARAGRAPH (F) OF SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT  OF  THIS
ARTICLE  OR  SUBSECTION (K-1) OF SECTION FOURTEEN HUNDRED FIFTY-THREE OF
ARTICLE THIRTY-TWO, AS SUCH SECTIONS WERE IN EFFECT ON DECEMBER  THIRTY-
FIRST,  TWO THOUSAND FOURTEEN, THAT WAS NOT DEDUCTIBLE IN PREVIOUS TAXA-
BLE YEARS AND WAS ELIGIBLE FOR CARRYOVER ON THE LAST  DAY  OF  THE  BASE
YEAR,  INCLUDING ANY NET OPERATING LOSS SUSTAINED BY THE TAXPAYER DURING
THE BASE YEAR;
  (II) THE TAXPAYER'S BUSINESS ALLOCATION PERCENTAGE AS CALCULATED UNDER
PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION TWO HUNDRED  TEN  OF  THIS
ARTICLE  FOR  THE  BASE YEAR, OR THE TAXPAYER'S ALLOCATION PERCENTAGE AS
CALCULATED UNDER SECTION FOURTEEN HUNDRED FIFTY-FOUR OF ARTICLE  THIRTY-
TWO FOR PURPOSES OF ALLOCATING ENTIRE NET INCOME FOR THE BASE YEAR (SUCH
ALLOCATION  PERCENTAGES  REFERRED  TO  IN THIS SUBDIVISION AS "BAP"), AS
SUCH SECTIONS WERE IN EFFECT  ON  DECEMBER  THIRTY-FIRST,  TWO  THOUSAND
FOURTEEN; AND
  (III)  THE  TAXPAYER'S  TAX RATE FOR THE BASE YEAR AS CALCULATED UNDER
PARAGRAPH (A) OF SUBDIVISION ONE OF SECTION  TWO  HUNDRED  TEN  OF  THIS
ARTICLE  OR  SUBSECTION  (A)  OF  SECTION FOURTEEN HUNDRED FIFTY-FIVE OF
ARTICLE THIRTY-TWO, AS SUCH SECTIONS WERE IN EFFECT ON DECEMBER  THIRTY-
FIRST, TWO THOUSAND FOURTEEN.
  (D)  APPLICATION  OF  CREDIT.  A TAXPAYER, OTHER THAN A SMALL BUSINESS
CORPORATION AS DEFINED IN PARAGRAPH (E) OF THIS SUBDIVISION, IS  ALLOWED
AN  ANNUAL NOL CONVERSION CREDIT THAT IS EQUAL TO ONE-TENTH OF THE TOTAL
NOL CONVERSION CREDIT AS CALCULATED IN PARAGRAPH (C)  OF  THIS  SUBDIVI-

S. 6359--A                         96                         A. 8559--A

SION.  SUCH  CREDIT  SHALL NOT BE ALLOWED AGAINST THE TAX COMPUTED UNDER
PARAGRAPH (B) OR (D) OF SUBDIVISION ONE OF SECTION TWO  HUNDRED  TEN  OF
THIS ARTICLE.
  (E) SMALL BUSINESS PROVISIONS. (I) FOR PURPOSES OF THIS SUBDIVISION, A
SMALL  BUSINESS  CORPORATION IS A CORPORATION DEFINED IN PARAGRAPH THREE
OF SUBSECTION (C) OF SECTION TWELVE HUNDRED FORTY-FOUR OF  THE  INTERNAL
REVENUE  CODE (WITHOUT REGARD TO THE SECOND SENTENCE OF SUBPARAGRAPH (A)
THEREOF) AS OF THE LAST DAY OF THE BASE YEAR.
  (II) APPLICATION OF CREDIT. A SMALL BUSINESS CORPORATION IS ALLOWED TO
CLAIM THE TOTAL NOL CONVERSION CREDIT AS CALCULATED IN PARAGRAPH (C)  OF
THIS  SUBDIVISION  IN  A  TAXABLE YEAR. SUCH CREDIT SHALL NOT BE ALLOWED
AGAINST THE TAX COMPUTED UNDER PARAGRAPH (B) OR (D) OF  SUBDIVISION  ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  (F)  CARRYOVER.  (I)  THE  CREDIT  ALLOWED BY THIS SUBDIVISION FOR ANY
TAXABLE YEAR MAY ONLY REDUCE THE TAX DUE FOR SUCH YEAR TO THE HIGHER  OF
THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (B) OR (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  (II) HOWEVER, IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF  THE  TAXPAYER
OTHERWISE  PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, OR, IF THE
TAXPAYER IS REQUIRED TO PAY A TAX UNDER PARAGRAPH (B) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS  ARTICLE,  ANY  REMAINING  AMOUNT  OF
CREDIT  ALLOWED  FOR  THAT  TAXABLE YEAR MAY BE CARRIED OVER TO THE NEXT
TAXABLE YEAR OR YEARS FOLLOWING SUCH TAXABLE YEAR AND  MAY  BE  DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (G)  COMBINED  GROUPS.  (I)  WHERE A TAXPAYER WAS PROPERLY INCLUDED OR
REQUIRED TO BE INCLUDED IN A COMBINED REPORT FOR THE BASE YEAR  PURSUANT
TO  SUBDIVISION  FOUR OF SECTION TWO HUNDRED ELEVEN OF THIS ARTICLE, THE
COMBINED GROUP SHALL CALCULATE ITS CREDIT  USING  THE  COMBINED  GROUP'S
TOTAL NOL, BAP, AND TAX RATE ACCORDING TO PARAGRAPH (C) OF THIS SUBDIVI-
SION.
  (II) IF THE MEMBERS OF THE COMBINED GROUP IN A COMBINED REPORT FOR THE
BASE  YEAR  ARE  THE  SAME  AS  THE  MEMBERS  OF THE COMBINED GROUP IN A
COMBINED REPORT FOR THE TAXABLE YEAR  IMMEDIATELY  SUCCEEDING  THE  BASE
YEAR, THE CREDIT SHALL BE CALCULATED USING THE COMBINED GROUP'S NOL, BAP
AND  APPLICABLE TAX RATE ACCORDING TO PARAGRAPH (C) OF THIS SUBDIVISION.
IF A TAXPAYER WAS PROPERLY INCLUDED IN A COMBINED REPORT  FOR  THE  BASE
YEAR  AND FILES A SEPARATE REPORT IN A SUBSEQUENT TAXABLE YEAR, THEN THE
AMOUNT OF REMAINING NOL CONVERSION CREDIT ALLOWED TO THE SEPARATE  FILER
SHALL  BE  PROPORTIONATE TO THE AMOUNT THAT SUCH TAXPAYER CONTRIBUTED TO
THE ORIGINAL NOL CONVERSION CREDIT ON A COMBINED BASIS, AND THE  REMAIN-
ING  NOL  CONVERSION  CREDIT  ALLOWED  TO  THE  REMAINING MEMBERS OF THE
COMBINED GROUP SHALL BE REDUCED  BY  THE  AMOUNT  OF  PROPORTIONATE  NOL
CONVERSION  CREDIT ALLOWED TO THE TAXPAYER OR TAXPAYERS FILING SEPARATE-
LY. IF A COMBINED GROUP INCLUDES ADDITIONAL MEMBERS IN THE TAXABLE  YEAR
IMMEDIATELY  SUCCEEDING  THE  BASE  YEAR  WHO  WERE  NOT INCLUDED IN THE
COMBINED GROUP DURING THE BASE YEAR, EACH INDIVIDUAL COMBINED GROUP  AND
SEPARATELY  FILING TAXPAYER SHALL CALCULATE ITS CREDIT FOR THE BASE YEAR
AND THE SUM OF THE CREDITS SHALL BE THE COMBINED NOL  CONVERSION  CREDIT
OF THE COMBINED GROUP.
  (H)  EXPIRATION  OF  CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
SHALL NOT BE APPLICABLE TO TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY
FIRST, TWO THOUSAND THIRTY-FIVE.
  29.  HIRE  A  VET  CREDIT.  (A) ALLOWANCE OF CREDIT. FOR TAXABLE YEARS
BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOUSAND  FIFTEEN  AND  BEFORE
JANUARY  FIRST,  TWO  THOUSAND  SEVENTEEN, A TAXPAYER SHALL BE ALLOWED A

S. 6359--A                         97                         A. 8559--A

CREDIT, TO BE COMPUTED AS PROVIDED IN THIS SUBDIVISION, AGAINST THE  TAX
IMPOSED BY THIS ARTICLE, FOR HIRING AND EMPLOYING, FOR NOT LESS THAN ONE
YEAR  AND  FOR  NOT  LESS  THAN THIRTY-FIVE HOURS EACH WEEK, A QUALIFIED
VETERAN  WITHIN THE STATE. THE TAXPAYER MAY CLAIM THE CREDIT IN THE YEAR
IN WHICH THE QUALIFIED VETERAN COMPLETES ONE YEAR OF EMPLOYMENT  BY  THE
TAXPAYER.  IF THE TAXPAYER CLAIMS THE CREDIT ALLOWED UNDER THIS SUBDIVI-
SION, THE TAXPAYER MAY NOT USE THE HIRING OF A QUALIFIED VETERAN THAT IS
THE BASIS FOR THIS CREDIT IN THE BASIS OF ANY OTHER CREDIT ALLOWED UNDER
THIS ARTICLE.
  (B) QUALIFIED VETERAN. A QUALIFIED VETERAN IS AN INDIVIDUAL:
  (1) WHO SERVED ON ACTIVE DUTY IN THE UNITED  STATES  ARMY,  NAVY,  AIR
FORCE,  MARINE CORPS, COAST GUARD OR THE RESERVES THEREOF, OR WHO SERVED
IN ACTIVE MILITARY SERVICE OF THE UNITED STATES AS A MEMBER OF THE  ARMY
NATIONAL  GUARD,  AIR  NATIONAL  GUARD, NEW YORK GUARD OR NEW YORK NAVAL
MILITIA; WHO WAS RELEASED FROM  ACTIVE  DUTY  BY  GENERAL  OR  HONORABLE
DISCHARGE AFTER SEPTEMBER ELEVENTH, TWO THOUSAND ONE;
  (2)  WHO  COMMENCES  EMPLOYMENT  BY THE QUALIFIED TAXPAYER ON OR AFTER
JANUARY FIRST, TWO THOUSAND FOURTEEN,  AND  BEFORE  JANUARY  FIRST,  TWO
THOUSAND SIXTEEN; AND
  (3)  WHO CERTIFIES BY SIGNED AFFIDAVIT, UNDER PENALTY OF PERJURY, THAT
HE OR SHE HAS NOT BEEN EMPLOYED FOR THIRTY-FIVE OR MORE HOURS DURING ANY
WEEK IN THE ONE HUNDRED EIGHTY DAY PERIOD IMMEDIATELY PRIOR  TO  HIS  OR
HER EMPLOYMENT BY THE TAXPAYER.
  (C)  EMPLOYER PROHIBITION. AN EMPLOYER SHALL NOT DISCHARGE AN EMPLOYEE
AND HIRE A QUALIFYING VETERAN SOLELY FOR THE PURPOSE OF  QUALIFYING  FOR
THIS CREDIT.
  (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL BE TEN PERCENT OF
THE  TOTAL  AMOUNT  OF  WAGES  PAID  TO THE QUALIFIED VETERAN DURING THE
VETERAN'S FIRST FULL YEAR OF EMPLOYMENT. PROVIDED, HOWEVER, THAT, IF THE
QUALIFIED VETERAN IS A DISABLED VETERAN, AS DEFINED IN PARAGRAPH (B)  OF
SUBDIVISION  ONE  OF  SECTION  EIGHTY-FIVE OF THE CIVIL SERVICE LAW, THE
AMOUNT OF THE CREDIT SHALL BE FIFTEEN PERCENT OF  THE  TOTAL  AMOUNT  OF
WAGES PAID TO THE QUALIFIED VETERAN DURING THE VETERAN'S FIRST FULL YEAR
OF EMPLOYMENT. THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION SHALL NOT
EXCEED  IN  ANY  TAXABLE  YEAR,  FIVE THOUSAND DOLLARS FOR ANY QUALIFIED
VETERAN AND FIFTEEN THOUSAND DOLLARS FOR ANY QUALIFIED VETERAN WHO IS  A
DISABLED VETERAN.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWABLE
UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE  TAX  TO  SUCH
AMOUNT  OR  IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR
MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
MAY BE CARRIED OVER TO THE FOLLOWING THREE YEARS  AND  MAY  BE  DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  30. ALTERNATIVE FUELS AND ELECTRIC VEHICLE RECHARGING PROPERTY CREDIT.
(A)  GENERAL.  A  TAXPAYER  SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS
HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE FOR ALTER-
NATIVE FUEL VEHICLE REFUELING AND ELECTRIC VEHICLE  RECHARGING  PROPERTY
PLACED IN SERVICE DURING THE TAXABLE YEAR.
  (B)  ALTERNATIVE  FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE
RECHARGING PROPERTY. THE CREDIT UNDER THIS SUBDIVISION  FOR  ALTERNATIVE
FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE RECHARGING PROPERTY
SHALL  EQUAL  FOR EACH INSTALLATION OF PROPERTY THE LESSER OF FIVE THOU-
SAND DOLLARS OR FIFTY PERCENT OF THE COST OF ANY SUCH PROPERTY:

S. 6359--A                         98                         A. 8559--A

  (I) WHICH IS LOCATED IN THIS STATE;
  (II)  WHICH CONSTITUTES ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY OR
ELECTRIC VEHICLE RECHARGING PROPERTY; AND
  (III) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM  THE  PROCEEDS
OF  GRANTS, INCLUDING GRANTS FROM THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  (C) DEFINITIONS. (I) THE  TERM  "ALTERNATIVE  FUEL  VEHICLE  REFUELING
PROPERTY"  MEANS  ALL  OF  THE  EQUIPMENT NEEDED TO DISPENSE ANY FUEL AT
LEAST EIGHTY-FIVE PERCENT OF THE VOLUME OF WHICH CONSISTS OF ONE OR MORE
OF THE FOLLOWING: NATURAL GAS, LIQUIFIED NATURAL GAS, LIQUIFIED PETROLE-
UM, OR HYDROGEN.
  (II) THE TERM "ELECTRIC VEHICLE RECHARGING PROPERTY" MEANS ALL OF  THE
EQUIPMENT  NEEDED  TO  CONVEY  ELECTRIC  POWER FROM THE ELECTRIC GRID OR
ANOTHER POWER SOURCE TO AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  (D) CARRYOVERS. IN NO EVENT SHALL THE CREDIT UNDER THIS SUBDIVISION BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT IF  THE  AMOUNT  OF
CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND  MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (E)  CREDIT  RECAPTURE. IF, AT ANY TIME BEFORE THE END OF ITS RECOVERY
PERIOD, ALTERNATIVE FUEL VEHICLE REFUELING OR ELECTRIC VEHICLE  RECHARG-
ING  PROPERTY  CEASES  TO BE QUALIFIED, A RECAPTURE AMOUNT MUST BE ADDED
BACK IN THE YEAR IN WHICH SUCH CESSATION OCCURS.
  (I) ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY  OR  ELECTRIC  VEHICLE
RECHARGING PROPERTY CEASES TO BE QUALIFIED IF:
  (I) THE PROPERTY NO LONGER QUALIFIES AS ALTERNATIVE FUEL VEHICLE REFU-
ELING PROPERTY OR ELECTRIC VEHICLE RECHARGING PROPERTY; OR
  (II)  FIFTY  PERCENT  OR  MORE OF THE USE OF THE PROPERTY IN A TAXABLE
YEAR IS OTHER THAN IN A TRADE OR BUSINESS IN THIS STATE; OR
  (III) THE TAXPAYER RECEIVING THE CREDIT UNDER THIS  SUBDIVISION  SELLS
OR  DISPOSES  OF  THE  PROPERTY AND KNOWS OR HAS REASON TO KNOW THAT THE
PROPERTY WILL BE USED IN A MANNER DESCRIBED IN CLAUSES (I) AND  (II)  OF
THIS SUBPARAGRAPH.
  (II)  RECAPTURE  AMOUNT.  THE  RECAPTURE AMOUNT IS EQUAL TO THE CREDIT
ALLOWABLE UNDER THIS SUBDIVISION MULTIPLIED BY A FRACTION, THE NUMERATOR
OF WHICH IS THE TOTAL RECOVERY PERIOD FOR THE PROPERTY MINUS THE  NUMBER
OF  RECOVERY  YEARS PRIOR TO, BUT NOT INCLUDING, THE RECAPTURE YEAR, AND
THE DENOMINATOR OF WHICH IS THE TOTAL RECOVERY PERIOD.
  (F) TERMINATION. THE CREDIT ALLOWED BY PARAGRAPH (B) OF THIS  SUBDIVI-
SION   SHALL  NOT  APPLY  IN  TAXABLE  YEARS  BEGINNING  AFTER  DECEMBER
THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
  31. EXCELSIOR JOBS PROGRAM CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
WILL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION  THIRTY-
ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR

S. 6359--A                         99                         A. 8559--A

REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  32. EMPIRE STATE FILM POST PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT.
A  TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION THIRTY-ONE OF THIS CHAP-
TER SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN SUCH SECTION
THIRTY-ONE AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION  TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT IF THE
AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR  MINIMUM  AMOUNT,  FIFTY  PERCENT  OF  THE
EXCESS  SHALL  BE  TREATED  AS  AN  OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING,  NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF SUCH
CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE A  CARRYOVER
TO  THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM THE
TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT  OF  THE
CREDIT  OVER  THE  TAX  FOR  SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN
OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT-
Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THER-
EON.
  33.  TEMPORARY  DEFERRAL NONREFUNDABLE PAYOUT CREDIT. (A) ALLOWANCE OF
CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
IN SUBDIVISION ONE OF SECTION THIRTY-FOUR OF THIS CHAPTER,  AGAINST  THE
TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR THAT YEAR TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  34. TEMPORARY DEFERRAL REFUNDABLE  PAYOUT  CREDIT.  (A)  ALLOWANCE  OF
CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
IN  SUBDIVISION  TWO OF SECTION THIRTY-FOUR OF THIS CHAPTER, AGAINST THE
TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. IN NO EVENT SHALL  THE  CREDIT  UNDER  THIS
SUBDIVISION  BE  ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION  TWO  HUNDRED  TEN  OF  THIS ARTICLE. IF, HOWEVER, THE AMOUNT OF
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS CHAPTER, PROVIDED HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.

S. 6359--A                         100                        A. 8559--A

  35.  ECONOMIC  TRANSFORMATION  AND  FACILITY REDEVELOPMENT PROGRAM TAX
CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED  A  CREDIT,
TO  BE  COMPUTED  AS  PROVIDED  IN  SECTION THIRTY-FIVE OF THIS CHAPTER,
AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  36.  NEW  YORK  YOUTH  WORKS  TAX CREDIT. (A) A TAXPAYER THAT HAS BEEN
CERTIFIED BY THE COMMISSIONER OF LABOR AS A QUALIFIED EMPLOYER  PURSUANT
TO  SECTION  TWENTY-FIVE-A  OF  THE  LABOR LAW SHALL BE ALLOWED A CREDIT
AGAINST THE TAX IMPOSED BY  THIS  ARTICLE  EQUAL  TO  (I)  FIVE  HUNDRED
DOLLARS  PER  MONTH FOR UP TO SIX MONTHS FOR EACH QUALIFIED EMPLOYEE THE
EMPLOYER EMPLOYS IN A FULL-TIME JOB OR TWO  HUNDRED  FIFTY  DOLLARS  PER
MONTH  FOR  UP  TO  SIX  MONTHS FOR EACH QUALIFIED EMPLOYEE THE EMPLOYER
EMPLOYS IN A PART-TIME JOB OF AT LEAST TWENTY  HOURS  PER  WEEK  OR  TEN
HOURS  PER  WEEK  WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH SCHOOL
FULL-TIME, (II) ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO  IS
EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY THE QUALIFIED EMPLOYER
IN  A  FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE
WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY  THE  QUALIFIED
EMPLOYER  IN  A  PART-TIME  JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN
HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED  IN  HIGH  SCHOOL
FULL-TIME,  AND (III) AN ADDITIONAL ONE THOUSAND DOLLARS FOR EACH QUALI-
FIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER  THE
FIRST  YEAR  OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A
FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS
EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER THE  FIRST  YEAR  OF  THE
EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT
LEAST  TWENTY  HOURS  PER  WEEK OR TEN HOURS PER WEEK WHEN THE QUALIFIED
EMPLOYEE IS ENROLLED IN HIGH SCHOOL  FULL-TIME.  FOR  PURPOSES  OF  THIS
SUBDIVISION,  THE  TERM "QUALIFIED EMPLOYEE" SHALL HAVE THE SAME MEANING
AS SET FORTH IN SUBDIVISION (B) OF SECTION TWENTY-FIVE-A  OF  THE  LABOR
LAW.  THE  PORTION  OF  THE CREDIT DESCRIBED IN SUBPARAGRAPH (I) OF THIS
PARAGRAPH SHALL BE ALLOWED FOR THE TAXABLE YEAR IN WHICH THE  WAGES  ARE
PAID  TO THE QUALIFIED EMPLOYEE, AND THE PORTION OF THE CREDIT DESCRIBED
IN SUBPARAGRAPH (II) OF THIS PARAGRAPH SHALL BE ALLOWED IN  THE  TAXABLE
YEAR IN WHICH THE ADDITIONAL SIX MONTH PERIOD ENDS.
  (B) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR MAY
NOT  REDUCE THE TAX DUE FOR THAT YEAR TO LESS THAN THE AMOUNT PRESCRIBED
IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN  OF  THIS
ARTICLE.  HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDI-
VISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO THAT  AMOUNT  OR  IF  THE
TAXPAYER  OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT,
ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN THAT TAXABLE YEAR WILL BE TREATED
AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH
THE  PROVISIONS  OF  SECTION  ONE  THOUSAND  EIGHTY-SIX OF THIS CHAPTER.
PROVIDED, HOWEVER, NO INTEREST WILL BE PAID THEREON.

S. 6359--A                         101                        A. 8559--A

  (C) THE TAXPAYER MAY BE REQUIRED TO  ATTACH  TO  ITS  TAX  RETURN  ITS
CERTIFICATE  OF ELIGIBILITY ISSUED BY THE COMMISSIONER OF LABOR PURSUANT
TO SECTION TWENTY-FIVE-A OF THE LABOR LAW. IN NO EVENT SHALL THE TAXPAY-
ER BE ALLOWED A CREDIT GREATER THAN THE AMOUNT OF THE CREDIT  LISTED  ON
THE  CERTIFICATE  OF  ELIGIBILITY. NOTWITHSTANDING ANY PROVISION OF THIS
CHAPTER TO THE CONTRARY, THE COMMISSIONER AND THE COMMISSIONER'S  DESIG-
NEES  MAY  RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER CLAIMING THIS
CREDIT AND THE AMOUNT OF THE CREDIT EARNED BY THE TAXPAYER.    PROVIDED,
HOWEVER,  IF  A  TAXPAYER CLAIMS THIS CREDIT BECAUSE IT IS A MEMBER OF A
LIMITED LIABILITY COMPANY OR A PARTNER IN A PARTNERSHIP, ONLY THE AMOUNT
OF CREDIT EARNED BY THE ENTITY AND NOT THE AMOUNT OF CREDIT  CLAIMED  BY
THE TAXPAYER MAY BE RELEASED.
  37. EMPIRE STATE JOBS RETENTION PROGRAM CREDIT. (A) ALLOWANCE OF CRED-
IT.   A TAXPAYER WILL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN
SECTION THIRTY-SIX OF THIS CHAPTER, AGAINST THE TAXES  IMPOSED  BY  THIS
ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR WILL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  38.  CREDIT  FOR  COMPANIES  WHO PROVIDE TRANSPORTATION TO INDIVIDUALS
WITH DISABILITIES. (A) ALLOWANCE AND AMOUNT OF CREDIT. A  TAXPAYER,  WHO
PROVIDES   A   TAXICAB   SERVICE  AS  DEFINED  IN  SECTION  ONE  HUNDRED
FORTY-EIGHT-A OF THE VEHICLE AND TRAFFIC LAW, OR  A  LIVERY  SERVICE  AS
DEFINED  IN  SECTION ONE HUNDRED TWENTY-ONE-E OF THE VEHICLE AND TRAFFIC
LAW, SHALL BE ALLOWED A CREDIT, TO  BE  COMPUTED  AS  PROVIDED  IN  THIS
SUBDIVISION,  AGAINST THE TAX IMPOSED BY THIS ARTICLE. THE AMOUNT OF THE
CREDIT SHALL BE EQUAL TO THE INCREMENTAL COST ASSOCIATED WITH  UPGRADING
A  VEHICLE  SO THAT IT IS ACCESSIBLE BY INDIVIDUALS WITH DISABILITIES AS
DEFINED IN PARAGRAPH (B) OF THIS SUBDIVISION.  PROVIDED,  HOWEVER,  THAT
SUCH  CREDIT  SHALL  NOT  EXCEED  TEN  THOUSAND DOLLARS PER VEHICLE. FOR
PURPOSES OF  THIS  SUBDIVISION,  PURCHASES  OF  NEW  VEHICLES  THAT  ARE
INITIALLY  MANUFACTURED  TO BE ACCESSIBLE FOR INDIVIDUALS WITH DISABILI-
TIES AND FOR WHICH THERE IS NO COMPARABLE MAKE AND MODEL THAT  DOES  NOT
INCLUDE  THE EQUIPMENT NECESSARY TO PROVIDE ACCESSIBILITY TO INDIVIDUALS
WITH DISABILITIES, THE CREDIT SHALL BE TEN THOUSAND DOLLARS PER VEHICLE.
  (B) DEFINITION. THE TERM "ACCESSIBLE BY INDIVIDUALS WITH DISABILITIES"
SHALL, FOR THE PURPOSES OF THIS SUBDIVISION, REFER  TO  A  VEHICLE  THAT
COMPLIES  WITH FEDERAL REGULATIONS PROMULGATED PURSUANT TO THE AMERICANS
WITH DISABILITIES ACT  APPLICABLE  TO  VANS  UNDER  TWENTY-TWO  FEET  IN
LENGTH,  BY THE FEDERAL DEPARTMENT OF TRANSPORTATION, IN CODE OF FEDERAL
REGULATIONS, TITLE 49, PARTS 37 AND 38, AND BY THE FEDERAL  ARCHITECTURE
AND  TRANSPORTATION  BARRIERS COMPLIANCE BOARD, IN CODE OF FEDERAL REGU-
LATIONS, TITLE 36, SECTION 1192.23, AND THE FEDERAL MOTOR VEHICLE SAFETY
STANDARDS, CODE OF FEDERAL REGULATIONS, TITLE 49, PART 57.
  (C) APPLICATION OF CREDIT. IN NO EVENT SHALL THE CREDIT ALLOWED  UNDER
THIS  SUBDIVISION  FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH YEAR
TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF  SUBDIVISION  ONE

S. 6359--A                         102                        A. 8559--A

OF  SECTION  TWO  HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN
SUCH  TAXABLE YEAR SHALL BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS,
AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  39. BEER PRODUCTION CREDIT. A TAXPAYER SHALL BE ALLOWED A  CREDIT,  TO
BE COMPUTED AS PROVIDED IN SECTION THIRTY-SEVEN OF THIS CHAPTER, AGAINST
THE  TAX  IMPOSED  BY THIS ARTICLE. IN NO EVENT SHALL THE CREDIT ALLOWED
UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR  SUCH
YEAR  TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT
OF  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES
THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS  TAX  BASED  ON
THE  FIXED  DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCT-
IBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF  TAX  TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  40.  MINIMUM  WAGE  REIMBURSEMENT  CREDIT.  (A) ALLOWANCE OF CREDIT. A
TAXPAYER SHALL BE ALLOWED A  CREDIT,  TO  BE  COMPUTED  AS  PROVIDED  IN
SECTION  THIRTY-EIGHT  OF  THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS
ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY  TAXABLE  YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED
DOLLAR  MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  41. THE TAX-FREE NY AREA TAX ELIMINATION CREDIT. A TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT  TO  BE COMPUTED AS PROVIDED IN SECTION FORTY OF THIS
CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.  UNLESS  THE  TAXPAYER
HAS  A  TAX-FREE  NY  AREA ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  SHALL  NOT
REDUCE  THE  TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN
PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION  TWO  HUNDRED  TEN  OF  THIS
ARTICLE.  HOWEVER,  ANY  AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF  TAX  TO  BE  CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  42. ALTERNATIVE BASE CREDIT. (A) IF THE TAX IMPOSED ON A  TAXPAYER  BY
SUBDIVISION  ONE  OF  SECTION  TWO  HUNDRED  NINE OF THIS ARTICLE IS THE
AMOUNT PRESCRIBED IN PARAGRAPH (B) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS  ARTICLE,  THE TAXPAYER SHALL BE ALLOWED A CREDIT
AGAINST THE TAX IMPOSED UNDER THIS ARTICLE EQUAL TO THE  AMOUNT  OF  TAX
PAID  TO  ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE TAX BASE
PRESCRIBED IN SUCH PARAGRAPH (B). IF THE TAX IMPOSED ON  A  TAXPAYER  BY

S. 6359--A                         103                        A. 8559--A

SUBDIVISION  ONE  OF  SECTION  TWO  HUNDRED  NINE OF THIS ARTICLE IS THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS  ARTICLE,  THE TAXPAYER SHALL BE ALLOWED A CREDIT
AGAINST  THE  TAX  IMPOSED UNDER THIS ARTICLE EQUAL TO THE AMOUNT OF TAX
PAID TO ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE  TAX  BASE
PRESCRIBED IN SUCH PARAGRAPH (D).
  (B)  IN  NO  EVENT SHALL THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR
ANY TAXABLE YEAR REDUCE THE TAX DUE FOR  SUCH  YEAR  TO  LESS  THAN  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT  OF  CREDIT  ALLOWED
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED  DOLLAR
MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR  SHALL  BE  CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  43. REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (A)  A  QUALIFIED  NEW
YORK  MANUFACTURER,  AS  DEFINED  IN  SUBDIVISION FIFTEEN OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, WILL BE ALLOWED A CREDIT EQUAL TO  TWENTY
PERCENT  OF  THE  REAL  PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR
REAL PROPERTY OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH  WAS  PRINCI-
PALLY  USED  DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT
DEDUCTED IN DETERMINING   ENTIRE NET INCOME. THIS  CREDIT  WILL  NOT  BE
ALLOWED  IF  THE  REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT
ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY-
ER.
  (B) FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX MEANS
A CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF A  COUNTY,  CITY,
TOWN,  VILLAGE  OR  SCHOOL  DISTRICT  FOR  MUNICIPAL  OR SCHOOL DISTRICT
PURPOSES, PROVIDED THAT THE CHARGE IS  LEVIED  FOR  THE  GENERAL  PUBLIC
WELFARE  BY  THE  PROPER  TAXING  AUTHORITIES AT A LIKE RATE AGAINST ALL
PROPERTY OVER WHICH SUCH AUTHORITIES  HAVE  JURISDICTION,  AND  PROVIDED
THAT  WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN OF
THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
DETERMINED FOR THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED  BY  SUCH
ARTICLE  EIGHTEEN  OR  NINETEEN,  WHICHEVER IS APPLICABLE. THE TERM REAL
PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
ABLE TO MAINTENANCE OR INTEREST, WHEN (1) THE PROPERTY  SUBJECT  TO  THE
CHARGE  IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (2)
THE AMOUNT OF THE CHARGE IS DETERMINED BY THE BENEFIT  TO  THE  PROPERTY
ASSESSED,  OR (3) THE IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED TENDS
TO INCREASE THE PROPERTY VALUE. THE TERM  REAL  PROPERTY  TAX  DOES  NOT
INCLUDE  A  PAYMENT  IN  LIEU  OF  TAXES  MADE BY THE QUALIFIED NEW YORK
MANUFACTURER.
  (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (1)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2)  THE
AMOUNT  OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES.
IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE  YEAR,
THE  TAXPAYER  MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE
TO EACH YEAR COVERED BY SUCH FINAL ORDER AND  CALCULATE  THE  AMOUNT  OF

S. 6359--A                         104                        A. 8559--A

CREDIT  WHICH  IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH
YEAR BASED ON SUCH REDUCTION.
  (D)  THE  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS CHAPTER. HOWEVER, ANY AMOUNT OF  CREDIT  NOT  DEDUCTIBLE  IN
SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CRED-
ITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE  THOU-
SAND  EIGHTY-SIX  OF  THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  44.  THE  TAX-FREE  NY  AREA  EXCISE TAX ON TELECOMMUNICATION SERVICES
CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF  A  BUSINESS  THAT  IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE  ECONOMIC  DEVELOPMENT  LAW  SHALL  BE ALLOWED A CREDIT EQUAL TO THE
EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED
EIGHTY-SIX-E  OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING
THE TAXABLE YEAR TO THE  EXTENT  NOT  OTHERWISE  DEDUCTED  IN  COMPUTING
ENTIRE  NET INCOME UNDER THIS ARTICLE. HOWEVER, ANY AMOUNT OF CREDIT NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS  CHAPTER.  THIS  CREDIT  MAY  BE
CLAIMED  ONLY  WHERE  ANY  TAX  IMPOSED  BY  SUCH  SECTION  ONE  HUNDRED
EIGHTY-SIX-E HAS BEEN SEPARATELY STATED ON A BILL FROM THE  PROVIDER  OF
TELECOMMUNICATION  SERVICES  AND  PAID  BY SUCH BUSINESS WITH RESPECT TO
SUCH SERVICES RENDERED WITHIN A TAX-FREE  NY  AREA  DURING  THE  TAXABLE
YEAR.  UNLESS  THE  TAXPAYER HAS A TAX-FREE NY AREA ALLOCATION FACTOR OF
ONE HUNDRED PERCENT, THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY
TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  45. ORDER OF CREDITS. (A) CREDITS ALLOWABLE UNDER THIS  ARTICLE  WHICH
CANNOT  BE  CARRIED  OVER AND WHICH ARE NOT REFUNDABLE SHALL BE DEDUCTED
FIRST. THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION  SHALL
BE  DEDUCTED  IMMEDIATELY  AFTER  THE DEDUCTION OF ALL CREDITS ALLOWABLE
UNDER THIS ARTICLE WHICH CANNOT  BE  CARRIED  OVER  AND  WHICH  ARE  NOT
REFUNDABLE,  WHETHER  OR  NOT  A  PORTION  OF SUCH CREDIT IS REFUNDABLE.
CREDITS ALLOWABLE UNDER THIS ARTICLE WHICH  CAN  BE  CARRIED  OVER,  AND
CARRYOVERS  OF  SUCH CREDITS, SHALL BE DEDUCTED NEXT AFTER THE DEDUCTION
OF THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION, AND AMONG
SUCH CREDITS, THOSE WHOSE CARRYOVER IS  OF  LIMITED  DURATION  SHALL  BE
DEDUCTED  BEFORE THOSE WHOSE CARRYOVER IS OF UNLIMITED DURATION. CREDITS
ALLOWABLE UNDER THIS ARTICLE WHICH ARE REFUNDABLE (OTHER THAN THE CREDIT
ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION) SHALL BE DEDUCTED LAST.
  46. NOTWITHSTANDING THE REPEAL OF THE CREDIT PROVISIONS  CONTAINED  IN
SECTION TWO HUNDRED TEN OF THIS ARTICLE OR IN ARTICLE THIRTY-TWO OF THIS
CHAPTER  AND  THE  ENACTMENT OF THIS SECTION BY A CHAPTER OF THE LAWS OF
TWO THOUSAND FOURTEEN:
  (A) A TAXPAYER SHALL BE ALLOWED TO UTILIZE ANY CARRYFORWARD AMOUNTS OF
CREDITS TO WHICH THE TAXPAYER WAS ENTITLED AS OF THE CLOSE OF THE  TAXA-
BLE  YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN AND
BEFORE JANUARY FIRST, TWO THOUSAND FIFTEEN, OTHER THAN THE  CARRYFORWARD
AMOUNT  OF THE MINIMUM TAX CREDIT PROVIDED UNDER SUBDIVISION THIRTEEN OF

S. 6359--A                         105                        A. 8559--A

SECTION TWO HUNDRED TEN, AS THAT SUBDIVISION WAS IN EFFECT  ON  DECEMBER
THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (B)  A  TAXPAYER  SHALL  BE REQUIRED IN A TAXABLE YEAR BEGINNING ON OR
AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, TO RECAPTURE ALL OR A PORTION
OF A CREDIT ALLOWED UNDER A CREDIT PROVISION IN SECTION TWO HUNDRED  TEN
OR ARTICLE THIRTY-TWO OF THIS CHAPTER FOR A TAXABLE YEAR BEGINNING PRIOR
TO  JANUARY  FIRST,  TWO  THOUSAND  FIFTEEN IF RECAPTURE WOULD HAVE BEEN
REQUIRED UNDER SUCH CREDIT PROVISION.
  47. (A) EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVI-
SION, IN ANY TAXABLE YEAR, A TAXPAYER MUST FIRST CLAIM ANY OF THE  CRED-
ITS  SPECIFIED  IN  THIS SECTION ON ITS ORIGINALLY FILED REPORT FOR SUCH
TAXABLE YEAR. A TAXPAYER SHALL NOT FIRST CLAIM A CREDIT  ON  AN  AMENDED
REPORT.
  (B)  A  TAXPAYER  MAY  FIRST  CLAIM A CREDIT ON AN AMENDED REPORT ONLY
UNDER THE FOLLOWING CIRCUMSTANCES:
  (I) THE TAXPAYER'S ELIGIBILITY FOR THE CREDIT OR  THE  AMOUNT  OF  THE
CREDIT  THE  TAXPAYER  IS  ALLOWED  IS DETERMINED BY A GOVERNMENT AGENCY
OTHER THAN THE DEPARTMENT.
  (II) THE INFORMATION NECESSARY TO DETERMINE THE TAXPAYER'S ELIGIBILITY
FOR A CREDIT OR THE AMOUNT OF THE CREDIT  ALLOWED  IS  CONTAINED  IN  AN
INFORMATION  RETURN  THE TAXPAYER RECEIVES AFTER THE ORIGINAL RETURN FOR
THE TAXABLE YEAR IS FILED.
  (III) THE TAXPAYER IS REQUIRED TO FILE AN AMENDED REPORT FOR A TAXABLE
YEAR PURSUANT TO SUBDIVISION THREE OF SECTION TWO HUNDRED ELEVEN OF THIS
ARTICLE AND THE CHANGES OR CORRECTIONS THAT NECESSITATE  THE  FILING  OF
SUCH  AMENDED  REPORT  IMPACT THE TAXPAYER'S ELIGIBILITY FOR A CREDIT OR
THE AMOUNT OF CREDIT THAT MAY BE CLAIMED IN THAT TAXABLE YEAR.
  S 18. The tax law is amended by adding a new section 210-C to read  as
follows:
  S  210-C. COMBINED REPORTS. 1. TAX. THE TAX ON A COMBINED REPORT SHALL
BE THE HIGHEST OF THE PRODUCTS OF (I) THE COMBINED BUSINESS INCOME  BASE
MULTIPLIED BY THE TAX RATE SPECIFIED IN PARAGRAPH (A) OF SUBDIVISION ONE
OF  SECTION  TWO  HUNDRED TEN OF THIS ARTICLE; (II) THE COMBINED CAPITAL
BASE MULTIPLIED BY THE TAX RATE SPECIFIED IN PARAGRAPH (B)  OF  SUBDIVI-
SION  ONE  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE, BUT NOT EXCEEDING
THE LIMITATION PROVIDED FOR IN THAT PARAGRAPH (B); OR  (III)  THE  FIXED
DOLLAR  MINIMUM  THAT  IS  ATTRIBUTABLE  TO  THE DESIGNATED AGENT OF THE
COMBINED GROUP. IN ADDITION, THE TAX ON A COMBINED REPORT SHALL  INCLUDE
THE  FIXED  DOLLAR MINIMUM TAX SPECIFIED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE FOR EACH  MEMBER  OF  THE
COMBINED GROUP, OTHER THAN THE DESIGNATED AGENT, THAT IS A TAXPAYER.
  (B)  THE  COMBINED  BUSINESS INCOME BASE IS THE AMOUNT OF THE COMBINED
BUSINESS INCOME OF THE COMBINED GROUP THAT IS APPORTIONED TO THE  STATE,
REDUCED BY ANY NET OPERATING LOSS DEDUCTION FOR THE COMBINED GROUP.  THE
COMBINED  CAPITAL  BASE  IS  THE  AMOUNT  OF THE COMBINED CAPITAL OF THE
COMBINED GROUP THAT IS APPORTIONED TO THE STATE.
  2. COMBINED REPORTS REQUIRED. (A) EXCEPT AS PROVIDED IN PARAGRAPH  (C)
OF  THIS  SUBDIVISION,  ANY  TAXPAYER  (I) WHICH OWNS OR CONTROLS EITHER
DIRECTLY OR INDIRECTLY MORE THAN FIFTY PERCENT OF THE CAPITAL  STOCK  OF
ONE  OR  MORE OTHER CORPORATIONS, OR (II) MORE THAN FIFTY PERCENT OF THE
CAPITAL STOCK OF WHICH IS OWNED OR CONTROLLED EITHER DIRECTLY  OR  INDI-
RECTLY  BY  ONE  OR  MORE  OTHER  CORPORATIONS, OR (III) MORE THAN FIFTY
PERCENT OF THE CAPITAL STOCK OF WHICH AND THE CAPITAL STOCK  OF  ONE  OR
MORE OTHER CORPORATIONS, IS OWNED OR CONTROLLED, DIRECTLY OR INDIRECTLY,
BY  THE  SAME  INTERESTS, AND (IV) THAT IS ENGAGED IN A UNITARY BUSINESS

S. 6359--A                         106                        A. 8559--A

WITH THOSE CORPORATIONS, SHALL MAKE A COMBINED REPORT WITH  THOSE  OTHER
CORPORATIONS.
  (B)  A CORPORATION REQUIRED TO MAKE A COMBINED REPORT WITHIN THE MEAN-
ING OF THIS SECTION SHALL ALSO INCLUDE (I) A CAPTIVE REIT AND A  CAPTIVE
RIC IF THE CAPTIVE REIT OR CAPTIVE RIC IS NOT REQUIRED TO BE INCLUDED IN
A  COMBINED  REPORT  UNDER  ARTICLE THIRTY-THREE OF THIS CHAPTER; (II) A
COMBINABLE CAPTIVE INSURANCE COMPANY; AND  (III)  AN  ALIEN  CORPORATION
THAT  SATISFIES  THE  CONDITIONS IN PARAGRAPH (A) OF THIS SUBDIVISION IF
(I) UNDER ANY PROVISION OF THE INTERNAL REVENUE CODE,  THAT  CORPORATION
IS TREATED AS A "DOMESTIC CORPORATION" AS DEFINED IN SECTION SEVEN THOU-
SAND  SEVEN  HUNDRED  ONE  OF  THE INTERNAL REVENUE CODE, OR (II) IT HAS
EFFECTIVELY CONNECTED INCOME FOR THE TAXABLE  YEAR  PURSUANT  TO  CLAUSE
(IV) OF THE OPENING PARAGRAPH OF SUBDIVISION NINE OF SECTION TWO HUNDRED
EIGHT OF THIS ARTICLE.
  (C)  A  CORPORATION  REQUIRED  OR  PERMITTED TO MAKE A COMBINED REPORT
UNDER THIS SECTION DOES NOT INCLUDE (I) A CORPORATION THAT IS SUBJECT TO
FRANCHISE TAX UNDER ARTICLE NINE OR THIRTY-THREE OF THIS CHAPTER; (II) A
REIT THAT IS NOT A CAPTIVE REIT, AND A RIC THAT IS NOT  A  CAPTIVE  RIC;
(III)  A  NEW  YORK S CORPORATION; (IV) A CORPORATION THAT IS SUBJECT TO
TAX UNDER THIS ARTICLE SOLELY AS A RESULT OF ITS OWNERSHIP OF A  LIMITED
PARTNER  INTEREST  IN  A  LIMITED  PARTNERSHIP  THAT  IS DOING BUSINESS,
EMPLOYING CAPITAL, OWNING OR LEASING PROPERTY, MAINTAINING AN OFFICE  IN
THIS  STATE,  OR DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, PROVIDED
THAT THE CORPORATION IS NOT OTHERWISE REQUIRED TO FILE A COMBINED REPORT
PURSUANT TO THIS SECTION; OR (V) AN ALIEN CORPORATION THAT HAS NO EFFEC-
TIVELY CONNECTED INCOME FOR THE TAXABLE YEAR PURSUANT TO CLAUSE (IV)  OF
THE  OPENING  PARAGRAPH OF SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT
OF THIS ARTICLE.
  (D) A COMBINED REPORT SHALL BE FILED BY THE DESIGNATED  AGENT  OF  THE
COMBINED GROUP AS DETERMINED UNDER SUBDIVISION SEVEN OF THIS SECTION.
  3.  COMMONLY  OWNED  GROUP  ELECTION. (A) SUBJECT TO THE PROVISIONS OF
PARAGRAPH (C) OF SUBDIVISION TWO OF THIS SECTION, A TAXPAYER  MAY  ELECT
TO  TREAT AS ITS COMBINED GROUP ALL CORPORATIONS THAT MEET THE OWNERSHIP
REQUIREMENTS DESCRIBED IN PARAGRAPH  (A)  OF  SUBDIVISION  TWO  OF  THIS
SECTION  (SUCH CORPORATIONS COLLECTIVELY REFERRED TO IN THIS SUBDIVISION
AS THE "COMMONLY OWNED GROUP"). IF THAT ELECTION IS MADE,  THE  COMMONLY
OWNED GROUP SHALL CALCULATE THE COMBINED BUSINESS INCOME, COMBINED CAPI-
TAL,  AND  FIXED  DOLLAR  MINIMUM  BASES  OF ALL MEMBERS OF THE GROUP IN
ACCORDANCE WITH PARAGRAPH FOUR OF THIS SUBDIVISION, WHETHER OR NOT  THAT
BUSINESS INCOME OR BUSINESS CAPITAL IS FROM A SINGLE UNITARY BUSINESS.
  (B)  THE ELECTION UNDER THIS SUBDIVISION SHALL BE MADE ON AN ORIGINAL,
TIMELY FILED RETURN OF THE COMBINED GROUP. ANY  CORPORATION  ENTERING  A
COMMONLY  OWNED  GROUP  SUBSEQUENT  TO  THE  YEAR  OF  ELECTION SHALL BE
INCLUDED IN THE COMBINED GROUP AND IS  CONSIDERED  TO  HAVE  WAIVED  ANY
OBJECTION TO ITS INCLUSION IN THE COMBINED GROUP.
  (C)  THE ELECTION SHALL BE IRREVOCABLE, AND BINDING FOR AND APPLICABLE
TO THE TAXABLE YEAR FOR WHICH IT IS MADE AND FOR THE  NEXT  SIX  TAXABLE
YEARS.  THE  ELECTION  WILL  AUTOMATICALLY  BE RENEWED FOR ANOTHER SEVEN
TAXABLE YEARS AFTER IT HAS BEEN IN EFFECT FOR SEVEN TAXABLE YEARS UNLESS
IT IS  AFFIRMATIVELY  REVOKED.  THE  REVOCATION  SHALL  BE  MADE  ON  AN
ORIGINAL,  TIMELY  FILED  RETURN  FOR  THE  FIRST TAXABLE YEAR AFTER THE
COMPLETION OF A SEVEN YEAR PERIOD  FOR  WHICH  AN  ELECTION  UNDER  THIS
SUBDIVISION  WAS  IN  PLACE. IN THE CASE OF A REVOCATION, A NEW ELECTION
UNDER THIS SUBDIVISION SHALL NOT BE PERMITTED IN ANY OF THE  IMMEDIATELY
FOLLOWING  THREE  TAXABLE YEARS. IN DETERMINING THE SEVEN AND THREE YEAR

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PERIODS DESCRIBED IN THIS PARAGRAPH, SHORT TAXABLE YEARS  SHALL  NOT  BE
CONSIDERED OR COUNTED.
  4. COMPUTATION OF TAX BASES ON A COMBINED REPORT. (A) IN COMPUTING THE
TAX  BASES  FOR A COMBINED REPORT, THE COMBINED GROUP SHALL GENERALLY BE
TREATED AS A SINGLE  CORPORATION,  EXCEPT  AS  OTHERWISE  PROVIDED,  AND
SUBJECT TO ANY REGULATIONS OR GUIDANCE ISSUED BY THE COMMISSIONER OR THE
DEPARTMENT.
  (B)(I) IN COMPUTING COMBINED BUSINESS INCOME, ALL INTERCORPORATE DIVI-
DENDS  SHALL  BE  ELIMINATED,  AND ALL OTHER INTERCORPORATE TRANSACTIONS
SHALL BE DEFERRED IN A MANNER SIMILAR  TO  THE  UNITED  STATES  TREASURY
REGULATIONS  RELATING TO INTERCOMPANY TRANSACTIONS UNDER SECTION FIFTEEN
HUNDRED TWO OF THE INTERNAL REVENUE CODE.
  (II) IN COMPUTING COMBINED CAPITAL, ALL INTERCORPORATE  STOCKHOLDINGS,
INTERCORPORATE  BILLS,  INTERCORPORATE  NOTES  RECEIVABLE  AND  PAYABLE,
INTERCORPORATE ACCOUNTS RECEIVABLE AND PAYABLE, AND OTHER INTERCORPORATE
INDEBTEDNESS, SHALL BE ELIMINATED.
  (C) QUALIFICATION FOR  CREDITS,  INCLUDING  ANY  LIMITATIONS  THEREON,
SHALL  BE  DETERMINED SEPARATELY FOR EACH OF THE MEMBERS OF THE COMBINED
GROUP, AND SHALL NOT BE DETERMINED ON A COMBINED GROUP BASIS, EXCEPT  AS
OTHERWISE  PROVIDED.  HOWEVER,  THE CREDITS SHALL BE APPLIED AGAINST THE
COMBINED TAX OF THE GROUP. TO THE EXTENT THAT A PROVISION OF SECTION TWO
HUNDRED TEN-B OF THIS ARTICLE LIMITS A CREDIT TO THE FIXED DOLLAR  MINI-
MUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED  TEN  OF THIS ARTICLE, SUCH FIXED DOLLAR MINIMUM AMOUNT SHALL BE
THE FIXED DOLLAR MINIMUM AMOUNT THAT IS ATTRIBUTABLE TO  THE  DESIGNATED
AGENT OF THE COMBINED GROUP.
  (D)(I)  A  NET  OPERATING  LOSS  DEDUCTION IS ALLOWED IN COMPUTING THE
COMBINED BUSINESS INCOME BASE. SUCH DEDUCTION MAY REDUCE THE TAX ON  THE
COMBINED  BUSINESS  INCOME BASE TO THE HIGHER OF THE TAX ON THE COMBINED
CAPITAL BASE OR THE FIXED DOLLAR MINIMUM. A COMBINED NET OPERATING  LOSS
DEDUCTION IS EQUAL TO THE AMOUNT OF COMBINED NET OPERATING LOSS OR LOSS-
ES  FROM ONE OR MORE TAXABLE YEARS THAT ARE CARRIED FORWARD TO A PARTIC-
ULAR INCOME YEAR. A COMBINED NET OPERATING LOSS IS THE COMBINED BUSINESS
LOSS INCURRED IN A PARTICULAR TAXABLE YEAR MULTIPLIED  BY  THE  COMBINED
APPORTIONMENT FACTOR FOR THAT YEAR DETERMINED AS PROVIDED IN SUBDIVISION
FIVE OF THIS SECTION.
  (II)  THE COMBINED NET OPERATING LOSS DEDUCTION AND COMBINED NET OPER-
ATING LOSS ARE ALSO SUBJECT TO THE PROVISIONS CONTAINED IN  CLAUSES  ONE
THROUGH  SIX  OF SUBPARAGRAPH (VIII) OF PARAGRAPH (A) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  (III) IN THE CASE OF A  CORPORATION  THAT  FILES  A  COMBINED  REPORT,
EITHER  IN THE YEAR THE NET OPERATING LOSS IS INCURRED OR IN THE YEAR IN
WHICH A DEDUCTION IS CLAIMED ON ACCOUNT OF THE LOSS,  THE  COMBINED  NET
OPERATING  LOSS  DEDUCTION  IS  DETERMINED AS IF THE COMBINED GROUP IS A
SINGLE CORPORATION AND IS SUBJECT TO THE  SAME  LIMITATIONS  THAT  WOULD
APPLY  FOR  FEDERAL  INCOME TAX PURPOSES UNDER THE INTERNAL REVENUE CODE
AND THE CODE OF FEDERAL REGULATIONS AS IF SUCH CORPORATION HAD FILED FOR
SUCH TAXABLE YEAR A CONSOLIDATED FEDERAL INCOME TAX RETURN WITH THE SAME
CORPORATIONS INCLUDED IN THE COMBINED REPORT. IF A CORPORATION  FILES  A
COMBINED  REPORT,  REGARDLESS  OF  WHETHER IT FILED A SEPARATE RETURN OR
CONSOLIDATED RETURN FOR FEDERAL INCOME TAX PURPOSES, THE  NET  OPERATING
LOSS  AND  NET  OPERATING  LOSS DEDUCTION FOR THE COMBINED GROUP MUST BE
COMPUTED AS IF THE CORPORATION HAD FILED A CONSOLIDATED RETURN  FOR  THE
SAME CORPORATIONS FOR FEDERAL INCOME TAX PURPOSES.
  (IV) IN GENERAL, ANY NET OPERATING LOSS CARRYOVER FROM A YEAR IN WHICH
A COMBINED REPORT WAS FILED SHALL BE BASED ON THE COMBINED NET OPERATING

S. 6359--A                         108                        A. 8559--A

LOSS OF THE GROUP OF CORPORATIONS FILING SUCH REPORT. THE PORTION OF THE
COMBINED LOSS ATTRIBUTABLE TO ANY MEMBER OF THE GROUP THAT FILES A SEPA-
RATE  REPORT FOR A SUCCEEDING TAXABLE YEAR WILL BE AN AMOUNT BEARING THE
SAME  RELATION  TO  THE  COMBINED LOSS AS THE NET OPERATING LOSS OF SUCH
CORPORATION BEARS TO THE TOTAL NET OPERATING LOSS OF ALL MEMBERS OF  THE
GROUP  HAVING SUCH LOSSES TO THE EXTENT THAT THEY ARE TAKEN INTO ACCOUNT
IN COMPUTING THE COMBINED NET OPERATING LOSS.
  (E) ANY ELECTION MADE PURSUANT TO PARAGRAPH (B)  OF  SUBDIVISION  SIX,
AND  PARAGRAPHS  (B) AND (C) OF SUBDIVISION SIX-A OF SECTION TWO HUNDRED
EIGHT OF THIS ARTICLE SHALL APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
  (F)(I) IN THE CASE OF A CAPTIVE REIT OR  CAPTIVE  RIC  REQUIRED  UNDER
THIS  SECTION  TO  BE  INCLUDED  IN A COMBINED REPORT, ENTIRE NET INCOME
SHALL BE COMPUTED AS REQUIRED UNDER SUBDIVISION FIVE (IN THE CASE  OF  A
CAPTIVE  REIT)  OR  SUBDIVISION  SEVEN (IN THE CASE OF A CAPTIVE RIC) OF
SECTION TWO HUNDRED NINE OF THIS ARTICLE. HOWEVER, THE  DEDUCTION  UNDER
THE  INTERNAL  REVENUE  CODE  FOR  DIVIDENDS PAID BY THE CAPTIVE REIT OR
CAPTIVE RIC TO ANY MEMBER OF THE  AFFILIATED  GROUP  THAT  INCLUDES  THE
CORPORATION  THAT  DIRECTLY OR INDIRECTLY OWNS OVER FIFTY PERCENT OF THE
VOTING STOCK OF THE CAPTIVE REIT OR CAPTIVE RIC SHALL  NOT  BE  ALLOWED.
FOR  PURPOSES  OF  THIS  SUBPARAGRAPH, THE TERM "AFFILIATED GROUP" MEANS
"AFFILIATED GROUP" AS DEFINED IN SECTION FIFTEEN  HUNDRED  FOUR  OF  THE
INTERNAL REVENUE CODE, BUT WITHOUT REGARD TO THE EXCEPTIONS PROVIDED FOR
IN SUBSECTION (B) OF THAT SECTION.
  (II)  IN  THE  CASE OF A COMBINABLE CAPTIVE INSURANCE COMPANY REQUIRED
UNDER THIS SECTION TO BE INCLUDED  IN  A  COMBINED  REPORT,  ENTIRE  NET
INCOME  SHALL BE COMPUTED AS REQUIRED BY SUBDIVISION NINE OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE.
  5. APPORTIONMENT ON A COMBINED REPORT. (A) IN DETERMINING  THE  APPOR-
TIONMENT  FACTOR  FOR  A  COMBINED REPORT, THE RECEIPTS, NET INCOME, NET
GAINS AND OTHER ITEMS OF ALL MEMBERS OF THE COMBINED GROUP,  WHETHER  OR
NOT  THEY  ARE  A  TAXPAYER,  ARE  INCLUDED AND INTERCORPORATE RECEIPTS,
INCOME AND GAINS ARE ELIMINATED. RECEIPTS, NET  INCOME,  NET  GAINS  AND
OTHER ITEMS ARE SOURCED AS PROVIDED IN SECTION TWO HUNDRED TEN-A OF THIS
ARTICLE.
  (B)  AN  ELECTION  MADE  TO APPORTION INCOME AND GAINS FROM QUALIFYING
FINANCIAL INSTRUMENTS PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)  OF
SUBDIVISION  FIVE  OF  SECTION  TWO  HUNDRED TEN-A OF THIS ARTICLE SHALL
APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
  6. LIABILITY OF COMBINED GROUP MEMBERS. EVERY MEMBER OF  THE  COMBINED
GROUP  THAT  IS  SUBJECT  TO TAX UNDER THIS ARTICLE SHALL BE JOINTLY AND
SEVERALLY LIABLE FOR THE TAX DUE PURSUANT TO A COMBINED REPORT.
  7. DESIGNATED AGENT. EACH COMBINED GROUP  SHALL  HAVE  ONE  DESIGNATED
AGENT,  WHICH  SHALL  BE  A TAXPAYER. THE DESIGNATED AGENT IS THE PARENT
CORPORATION OF THE COMBINED GROUP. IF THERE IS  NO  SUCH  PARENT  CORPO-
RATION, OR THE PARENT CORPORATION IS NOT A TAXPAYER, THEN ANOTHER MEMBER
OF  THE COMBINED GROUP THAT IS A TAXPAYER MAY BE APPOINTED AS THE DESIG-
NATED AGENT. ONLY THE DESIGNATED AGENT MAY ACT ON BEHALF OF THE  MEMBERS
OF THE COMBINED GROUP FOR MATTERS RELATING TO THE COMBINED REPORT.
  S  19.  Subdivisions  2-a,  3,  4 and 5 of section 211 of the tax law,
subdivision 2-a as added and subdivision 5 as amended by chapter 817  of
the laws of 1987, subdivision 3 as amended by chapter 770 of the laws of
1992,  subdivision 4 as amended by section 2 of part T of chapter 407 of
the laws of 1999, the opening  paragraph  and  the  second  undesignated
paragraph  of  paragraph  (a)  of subdivision 4 as amended by section 1,
subparagraph 4 of paragraph (a) of subdivision 4 as amended  by  section
2,  and  subparagraph  5 of paragraph (a) of subdivision 4 as amended by

S. 6359--A                         109                        A. 8559--A

section 3 of part J of chapter 60 of the laws of 2007, subparagraph 6 of
paragraph (a) of subdivision 4 as added by section  3  of  part  FF1  of
chapter  57  of  the  laws  of  2008, subparagraph 7 of paragraph (a) of
subdivision  4 as added by section 2 and subparagraph 1 of paragraph (b)
of subdivision 4 as amended by section 3 of part E1 of chapter 57 of the
laws of 2009, are amended to read as follows:
  2-a. The [tax commission] COMMISSIONER may prescribe  regulations  and
instructions  requiring  returns  of information to be made and filed in
conjunction with the reports required to be filed pursuant  to  [section
two  hundred  eleven]  THIS ARTICLE, relating to payments made to share-
holders owning, directly or indirectly, individually or  in  the  aggre-
gate, more than fifty percent of the issued capital stock of the taxpay-
er,  where  such  payments  are  treated  as payments of interest in the
computation of entire net income [or minimum taxable income] reported on
such reports.
  3. If the amount of taxable income  [or  alternative  minimum  taxable
income]  for  any year of any taxpayer (including any taxpayer which has
elected to be taxed under subchapter s of chapter one  of  the  internal
revenue  code),  as returned to the United States treasury department is
changed or corrected by the commissioner of internal  revenue  or  other
officer  of  the  United States or other competent authority, or where a
renegotiation of a  contract  or  subcontract  with  the  United  States
results  in  a  change in taxable income [or alternative minimum taxable
income], such taxpayer shall report such changed  or  corrected  taxable
income  [or  alternative minimum taxable income], or the results of such
renegotiation, within ninety days (or one hundred twenty  days,  in  the
case  of a taxpayer making a combined report under this article for such
year) after the final determination of  such  change  or  correction  or
renegotiation, or as required by the commissioner, and shall concede the
accuracy  of  such  determination  or state wherein it is erroneous. The
allowance of a tentative carryback adjustment based upon a net operating
loss carryback or net capital loss carryback pursuant to section  sixty-
four  hundred  eleven of the internal revenue code, as amended, shall be
treated as a final determination for purposes of this  subdivision.  Any
taxpayer  filing  an amended return with such department shall also file
within ninety days (OR ONE HUNDRED TWENTY DAYS, IN THE CASE OF A TAXPAY-
ER MAKING A COMBINED REPORT UNDER THIS ARTICLE FOR SUCH YEAR) thereafter
an amended report with the commissioner.
  4. [(a) Combined reports permitted or required.  Any  taxpayer,  which
owns  or  controls  either  directly or indirectly substantially all the
capital stock of one or more other corporations,  or  substantially  all
the  capital  stock  of  which is owned or controlled either directly or
indirectly by one or more other corporations or by interests  which  own
or  control  either directly or indirectly substantially all the capital
stock of one or more other corporations,  (hereinafter  referred  to  in
this  paragraph as "related corporations"), shall make a combined report
covering any related corporations if there are  substantial  intercorpo-
rate  transactions  among  the  related  corporations, regardless of the
transfer price for such intercorporate transactions. It is not necessary
that there be substantial intercorporate transactions  between  any  one
corporation and every other related corporation. It is necessary, howev-
er,  that  there  be substantial intercorporate transactions between the
taxpayer and a related corporation or  collectively,  a  group  of  such
related corporations. The report shall set forth such information as the
commissioner may require, subject to the provisions of subparagraphs one
through five of this paragraph.

S. 6359--A                         110                        A. 8559--A

  In  determining  whether  there  are substantial intercorporate trans-
actions, the commissioner shall consider and evaluate all activities and
transactions of the taxpayer and its  related  corporations.  Activities
and  transactions  that  will be considered include, but are not limited
to:  (i)  manufacturing,  acquiring  goods  or  property,  or performing
services, for related corporations; (ii)  selling  goods  acquired  from
related  corporations;  (iii)  financing  sales of related corporations;
(iv) performing related customer services using  common  facilities  and
employees for related corporations; (v) incurring expenses that benefit,
directly  or  indirectly,  one  or  more  related corporations, and (vi)
transferring assets,  including  such  assets  as  accounts  receivable,
patents or trademarks from one or more related corporations.
  (1)  Any  corporation  which owns or controls either directly or indi-
rectly substantially all the capital stock of a DISC not exempt from tax
under paragraph (i) of subdivision nine of section two hundred eight  of
this  article  shall be allowed, at the election of such corporation, to
make a report on a combined basis covering such DISC, but the failure of
such corporation to make such election shall not  prohibit  the  commis-
sioner  from  requiring  a combined report covering such corporation and
such DISC.
  (2)(i) No taxpayer may be permitted to make a  report  on  a  combined
basis  covering  any  such other corporations where such taxpayer or any
such other corporation  allocates  in  accordance  with  clause  (A)  of
subparagraph  seven of paragraph (a) of subdivision three of section two
hundred ten of this article (relating to aviation corporations) and such
taxpayer or any such other corporation does not so allocate, unless such
taxpayer or such other corporation is a qualified air freight  forwarder
with  respect  to such other corporation or such taxpayer, respectively,
and all taxpayers included on such combined report elect, by filing such
combined report,  to  have  such  qualified  air  freight  forwarder  so
included.
  (ii)  A  corporation is a qualified air freight forwarder with respect
to another corporation:
  (A) if it owns or controls either directly or indirectly  all  of  the
capital  stock of such other corporation, or if all of its capital stock
is owned or controlled either  directly  or  indirectly  by  such  other
corporation,  or  if  all  of  the capital stock of both corporations is
owned or controlled either directly or indirectly by the same interests,
  (B) if it is principally  engaged  in  the  business  of  air  freight
forwarding, and
  (C)  if  its air freight forwarding business is carried on principally
with the airline or airlines operated by such other corporation.
  (3) No taxpayer may be permitted to make a report on a combined  basis
covering  any  such  other  corporations where such taxpayer or any such
other corporation allocates in accordance  with  subparagraph  eight  of
paragraph  (a)  of  subdivision three of section two hundred ten of this
article (relating  to  railroad  and  trucking  corporations)  and  such
taxpayer or any such other corporation does not so allocate.
  (4)  Except  as  provided  in the first undesignated paragraph of this
paragraph, no combined report covering any corporation shall be required
unless the commissioner  deems  such  a  report  necessary,  because  of
inter-company transactions or some agreement, understanding, arrangement
or transaction referred to in subdivision five of this section, in order
properly to reflect the tax liability under this article.

S. 6359--A                         111                        A. 8559--A

  (5) A corporation organized under the laws of a country other than the
United  States  shall not be required or permitted to make a report on a
combined basis.
  (6)  (i) For purposes of this subparagraph, the term "closest control-
ling stockholder" means the corporation that indirectly owns or controls
over fifty percent of the voting stock of a captive REIT or captive RIC,
is subject to tax under this article, article thirty-two or thirty-three
of this chapter or otherwise required  to  be  included  in  a  combined
return  or report under this article, article thirty-two or thirty-three
of this chapter, and is the fewest tiers of  corporations  away  in  the
ownership  structure  from the captive REIT or captive RIC.  The commis-
sioner is authorized to prescribe by regulation  or  published  guidance
the criteria for determining the closest controlling stockholder.
  (ii)  A  captive  REIT or a captive RIC must be included in a combined
report with the corporation that directly owns or  controls  over  fifty
percent  of  the voting stock of the captive REIT or captive RIC if that
corporation is subject to tax or required to be included in  a  combined
report under this article.
  (iii)  If  over fifty percent of the voting stock of a captive REIT or
captive RIC is not directly owned or controlled by a corporation that is
subject to tax or required to be included in  a  combined  report  under
this article, then the captive REIT or captive RIC must be included in a
combined  return  or  report  with  the  corporation that is the closest
controlling stockholder of the captive REIT or captive RIC. If the clos-
est controlling stockholder of  the  captive  REIT  or  captive  RIC  is
subject to tax or otherwise required to be included in a combined report
under  this  article,  then  the  captive  REIT  or  captive RIC must be
included in a combined report under this article.
  (iv) If the corporation that directly  owns  or  controls  the  voting
stock  of  the  captive REIT or captive RIC is described in subparagraph
two, three or five of this paragraph as a corporation not  permitted  to
make  a  combined  report,  then  the provisions in clause (iii) of this
subparagraph must be applied  to  determine  the  corporation  in  whose
combined  return  or  report  the  captive REIT or captive RIC should be
included. If, under clause (iii) of this subparagraph,  the  corporation
that  is  the  closest  controlling  stockholder  of the captive REIT or
captive RIC is described in subparagraph two,  three  or  five  of  this
paragraph as a corporation not permitted to make a combined return, then
that  corporation  is deemed to not be in the ownership structure of the
captive REIT or captive RIC, and  the  closest  controlling  stockholder
will be determined without regard to that corporation.
  (v)  If  a  captive REIT owns the stock of a qualified REIT subsidiary
(as defined in paragraph two of subsection (i) of section eight  hundred
fifty-six of the internal revenue code), then the qualified REIT subsid-
iary must be included in a combined report with the captive REIT.
  (vi) If a captive REIT or a captive RIC is required under this subpar-
agraph to be included in a combined report with another corporation, and
that  other  corporation  is  also required to be included in a combined
report with another related corporation or corporations under this para-
graph, then the captive REIT or the captive RIC must be included in that
combined report with those corporations.
  (vii) If a captive REIT or  a  captive  RIC  is  not  required  to  be
included in a combined report with another corporation under clause (ii)
or  (iii)  of  this  subparagraph,  or  in  a  combined return under the
provisions of either subparagraph (v) of paragraph two of subsection (f)
of section fourteen hundred sixty-two or paragraph four  of  subdivision

S. 6359--A                         112                        A. 8559--A

(f) of section fifteen hundred fifteen of this chapter, then the captive
REIT  or  captive RIC is subject to the opening provisions of this para-
graph and the provisions of subparagraph four  of  this  paragraph.  The
captive  REIT or captive RIC must be included in a combined report under
this article with another corporation if either the  substantial  inter-
corporate  transactions  requirement  in  the opening provisions of this
paragraph or the inter-company transactions or agreement, understanding,
arrangement or transaction requirement  of  subparagraph  four  of  this
paragraph  is  satisfied and more than fifty percent of the voting stock
of the captive REIT or the captive RIC  and  substantially  all  of  the
capital  stock  of  that  other  corporation  are  owned and controlled,
directly or indirectly, by the same corporation.
  (7) (i) For purposes of this subparagraph, the term "closest  control-
ling stockholder" means the corporation that indirectly owns or controls
over  fifty  percent  of  the voting stock of an overcapitalized captive
insurance company; is subject to tax under this article or article thir-
ty-two of this chapter, or is otherwise required to  be  included  in  a
combined  return  or  report under this article or article thirty-two of
this chapter; and is the fewest tiers of corporations away in the owner-
ship structure from the overcapitalized captive insurance company.   The
commissioner is authorized to prescribe by regulation or published guid-
ance the criteria for determining the closest controlling stockholder.
  (ii)  An overcapitalized captive insurance company must be included in
a combined report with the corporation that directly  owns  or  controls
over  fifty  percent  of the voting stock of the overcapitalized captive
insurance company if that corporation is subject to tax or  required  to
be included in a combined report under this article.
  (iii)  If over fifty percent of the voting stock of an overcapitalized
captive insurance company is not  directly  owned  or  controlled  by  a
corporation  that  is  subject  to  tax  or required to be included in a
combined report under this article,  then  the  overcapitalized  captive
insurance  company  must be included in a combined return or report with
the corporation that is the closest controlling stockholder of the over-
capitalized captive insurance company. If the closest controlling stock-
holder of the overcapitalized captive insurance company  is  subject  to
tax or otherwise required to be included in a combined report under this
article,  then  the  overcapitalized  captive  insurance company must be
included in a combined report under this article.
  (iv) If the corporation that directly  owns  or  controls  the  voting
stock  of  the overcapitalized captive insurance company is described in
subparagraph two, three, or five of this paragraph as a corporation  not
permitted to make a combined report, then the provisions in clause (iii)
of  this  subparagraph  must  be applied to determine the corporation in
whose combined return or report the  overcapitalized  captive  insurance
company should be included. If, under clause (iii) of this subparagraph,
the corporation that is the closest controlling stockholder of the over-
capitalized  captive insurance company is described in subparagraph two,
three or five of this paragraph as a corporation not permitted to make a
combined return, then that corporation is deemed not to be in the owner-
ship structure of the overcapitalized captive insurance company, and the
closest controlling stockholder will be  determined  without  regard  to
that corporation.
  (v)  If an overcapitalized captive insurance company is required under
this subparagraph to be included  in  a  combined  report  with  another
corporation,  and that other corporation is also required to be included
in a combined report with another related  corporation  or  corporations

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under this paragraph, then the overcapitalized captive insurance company
must be included in that combined report with those corporations.
  (vi)  If  an overcapitalized captive insurance company is not required
to be included in a  combined  report  with  another  corporation  under
clause (ii) or (iii) of this subparagraph, or in a combined return under
the provisions of subparagraph (v) of paragraph two of subsection (f) of
section  fourteen  hundred sixty-two of this chapter, then the overcapi-
talized captive insurance company is subject to the  opening  provisions
of  this paragraph and the provisions of subparagraph four of this para-
graph. The overcapitalized captive insurance company must be included in
a combined report under this article with another corporation if  either
the  substantial  intercorporate transactions requirement in the opening
provisions of this paragraph or the inter-company transactions or agree-
ment, understanding, arrangement or transaction requirement of  subpara-
graph  four  of  this  paragraph  is satisfied, and both more than fifty
percent of the voting stock of  the  overcapitalized  captive  insurance
company  and substantially all of the capital stock of that other corpo-
ration are owned and controlled, directly or  indirectly,  by  the  same
corporation.
  (b) Computation. (1) Tax. (i) In the case of a combined report the tax
shall  be  measured  by the combined entire net income, combined minimum
taxable income, combined pre-nineteen  hundred  ninety  minimum  taxable
income  or  combined  capital,  of  all the corporations included in the
report, including any  captive  REIT,  captive  RIC  or  overcapitalized
captive  insurance company; provided, however, in no event shall the tax
measured by combined capital exceed the limitation provided for in para-
graph (b) of subdivision one of section two hundred ten of this article.
  (ii) In the case of a captive REIT or captive RIC required under  this
subdivision  to be included in a combined report, entire net income must
be computed as required under subdivision five (in the case of a captive
REIT) or subdivision seven (in the case of a captive RIC) of section two
hundred nine of this article. However, the deduction under the  internal
revenue  code  for  dividends paid by the captive REIT or captive RIC to
any member of the affiliated group that includes  the  corporation  that
directly  or  indirectly  owns over fifty percent of the voting stock of
the captive REIT or captive RIC shall not be allowed for  taxable  years
beginning  on  or  after  January  first,  two  thousand eight. The term
"affiliated group"  means  "affiliated  group"  as  defined  in  section
fifteen hundred four of the internal revenue code, but without regard to
the exceptions provided for in subsection (b) of that section.
  (iii)  In  the  case  of  an overcapitalized captive insurance company
required under this subdivision to be included  in  a  combined  report,
entire  net  income  must be computed as required by subdivision nine of
section two hundred eight of this article.
  (2) Tax bases. In computing combined entire net income, combined mini-
mum taxable income or combined pre-nineteen hundred ninety minimum taxa-
ble income intercorporate dividends shall be  eliminated,  in  computing
combined  business  and  investment capital intercorporate stockholdings
and intercorporate bills, notes and accounts receivable and payable  and
other  intercorporate  indebtedness shall be eliminated and in computing
combined subsidiary capital intercorporate stockholdings shall be elimi-
nated, provided, however, that intercorporate dividends from a DISC or a
former DISC not exempt from tax under paragraph (i) of subdivision  nine
of  section two hundred eight of this article which are taxable as busi-
ness income under this article shall not be eliminated.

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  (3) Air freight forwarders: allocation. Notwithstanding any  provision
of law to the contrary, where a combined report includes a qualified air
freight  forwarder  and a corporation described in subparagraph seven of
paragraph (a) of subdivision three of section two hundred  ten  of  this
chapter  (relating  to aviation corporations), in computing the combined
business allocation percentage such subparagraph seven shall be  applied
with  respect  to  such  qualified air freight forwarder] FOR PROVISIONS
RELATING TO COMBINED REPORTS, SEE SECTION  TWO  HUNDRED  TEN-C  OF  THIS
ARTICLE.
  5.  In  case it shall appear to the [tax commission] COMMISSIONER that
any agreement, understanding or arrangement exists between the  taxpayer
and  any  other corporation or any person or firm, whereby the activity,
business, income or capital of the taxpayer within the state is  improp-
erly  or  inaccurately  reflected,  the [tax commission] COMMISSIONER is
authorized and empowered, in [its] THE COMMISSIONER'S discretion and  in
such  manner  as [it] THE COMMISSIONER may determine, to adjust items of
income, deductions and capital, and to eliminate assets in computing any
[allocation] APPORTIONMENT percentage  provided  only  that  any  income
directly  traceable  thereto  be  also  excluded from entire net income,
[minimum taxable income or pre-nineteen hundred ninety  minimum  taxable
income,]  so  as  equitably to determine the tax. Where (a) any taxpayer
conducts its activity or business under any  agreement,  arrangement  or
understanding in such manner as either directly or indirectly to benefit
its  members  or  stockholders, or any of them, or any person or persons
directly or indirectly interested  in  such  activity  or  business,  by
entering  into  any transaction at more or less than a fair price which,
but for such agreement, arrangement or understanding,  might  have  been
paid or received therefor, or (b) any taxpayer, a substantial portion of
whose  capital  stock  is owned either directly or indirectly by another
corporation, enters into any transaction with such other corporation  on
such terms as to create an improper loss or net income, the [tax commis-
sion]  COMMISSIONER may include in the entire net income[, minimum taxa-
ble income or pre-nineteen hundred ninety minimum taxable income] of the
taxpayer the fair profits which, but for such agreement, arrangement  or
understanding,  the  taxpayer  might have derived from such transaction.
WHERE ANY TAXPAYER OWNS, DIRECTLY OR INDIRECTLY, MORE THAN FIFTY PERCENT
OF THE CAPITAL STOCK OF ANOTHER CORPORATION SUBJECT TO TAX UNDER SECTION
FIFTEEN HUNDRED TWO-A OF THIS CHAPTER AND FIFTY PERCENT OR LESS OF WHOSE
GROSS RECEIPTS FOR THE TAXABLE YEAR CONSIST OF PREMIUMS, THE COMMISSION-
ER MAY INCLUDE IN THE ENTIRE NET INCOME OF THE  TAXPAYER,  AS  A  DEEMED
DISTRIBUTION, THE AMOUNT OF THE NET INCOME OF THE OTHER CORPORATION THAT
IS IN EXCESS OF ITS NET PREMIUM INCOME.
  S 19-a. Subdivision 13 of section 211 of the tax law is REPEALED.
  S 20.  Subdivision 11 of section 2 of the tax law, as added by section
1  of  part E-1 of chapter 57 of the laws of 2009, is amended to read as
follows:
  11. The term "[overcapitalized] COMBINABLE captive insurance  company"
means  an  entity  that is treated as an association taxable as a corpo-
ration under the internal revenue code (a) more than  fifty  percent  of
the  voting stock of which is owned or controlled, directly or indirect-
ly, by a single entity that is treated as an association  taxable  as  a
corporation  under the internal revenue code and not exempt from federal
income tax; (b) that is licensed as a captive  insurance  company  under
the  laws  of this state or another jurisdiction; AND (c) whose business
includes providing, directly and indirectly,  insurance  or  reinsurance
covering  the  risks  of  its  parent  and/or  members of its affiliated

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group[; and (d) fifty percent or less of whose gross  receipts  for  the
taxable  year  consist of premiums].   For purposes of this subdivision,
"affiliated group" has the same meaning as that term is given in section
1504  of  the internal revenue code, except that the term "common parent
corporation" in that section is deemed to mean any person, as defined in
section 7701 of the internal revenue code[;] AND references to "at least
eighty percent" in section 1504 of the internal revenue code are  to  be
read  as  "fifty  percent or more;" section 1504 of the internal revenue
code is to be read without regard to  the  exclusions  provided  for  in
subsection (b) of that section[; "premiums" has the same meaning as that
term  is  given  in  paragraph one of subdivision (c) of section fifteen
hundred ten of this chapter, except that it includes  consideration  for
annuity  contracts and excludes any part of the consideration for insur-
ance, reinsurance or annuity contracts that do  not  provide  bona  fide
insurance,   reinsurance  or  annuity  benefits;  and  "gross  receipts"
includes the amounts included in gross receipts for purposes of  section
501(c) (15) of the internal revenue code, except that those amounts also
include all premiums as defined in this subdivision].
  S  21.  Subdivision  (a) of section 1500 of the tax law, as separately
amended by section 1 of part B-1 and section 8 of part E-1 of chapter 57
of the laws of 2009, is amended to read as follows:
  (a) The term "insurance corporation" includes a  corporation,  associ-
ation,  joint stock company or association, person, society, aggregation
or partnership, by whatever name known,  doing  an  insurance  business,
and, notwithstanding the provisions of section fifteen hundred twelve of
this  article,  shall  include  (1) a risk retention group as defined in
subsection (n) of section five thousand nine hundred two of  the  insur-
ance  law,  (2)  the state insurance fund and (3) a corporation, associ-
ation, joint stock company or association, person, society,  aggregation
or  partnership  doing an insurance business as a member of the New York
insurance exchange described in section six thousand two hundred one  of
the  insurance  law.  The  definition  of  the  "state  insurance  fund"
contained in this subdivision shall be limited  in  its  effect  to  the
provisions  of  this  article and the related provisions of this chapter
and shall have no force and effect  other  than  with  respect  to  such
provisions.  The  term  "insurance  corporation"  shall  also  include a
captive insurance company doing a captive insurance business, as defined
in subsections (c) and (b), respectively, of section seven thousand  two
of  the  insurance law; provided, however, "insurance corporation" shall
not include the metropolitan transportation authority, or a public bene-
fit corporation or not-for-profit corporation formed by a  city  with  a
population  of one million or more pursuant to subsection (a) of section
seven thousand five of the insurance law, each  of  which  is  expressly
exempt  from the payment of fees, taxes or assessments, whether state or
local; and provided further "insurance corporation" does not include any
[overcapitalized] COMBINABLE captive insurance company. The term "insur-
ance corporation" shall also include an unauthorized  insurer  operating
from  an  office  within  the  state,  pursuant  to  paragraph  five  of
subsection (b) of section one thousand one hundred  one  and  subsection
(i)  of section two thousand one hundred seventeen of the insurance law.
The term "insurance corporation"  also  includes  a  health  maintenance
organization required to obtain a certificate of authority under article
forty-four of the public health law.
  S  22. Subdivision (a) of section 1502-b of the tax law, as amended by
section 9 of part E-1 of chapter 57 of the laws of 2009 and  as  further

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amended  by  section 104 of part A of chapter 62 of the laws of 2011, is
amended to read as follows:
  (a) In lieu of the taxes and tax surcharge imposed by sections fifteen
hundred  one, fifteen hundred two-a, fifteen hundred five-a, and fifteen
hundred ten of this article, every captive insurance company licensed by
the superintendent of financial services pursuant to the  provisions  of
article seventy of the insurance law, other than the metropolitan trans-
portation  authority  and a public benefit corporation or not-for-profit
corporation formed by a city with a population of one  million  or  more
pursuant  to subsection (a) of section seven thousand five of the insur-
ance law, each of which is expressly exempt from the  payment  of  fees,
taxes or assessments whether state or local, and other than [an overcap-
italized] COMBINABLE captive insurance company, shall, for the privilege
of exercising its corporate franchise, pay a tax on (1) all gross direct
premiums,  less  return  premiums  thereon,  written on risks located or
resident in this state and (2) all assumed  reinsurance  premiums,  less
return  premiums  thereon,  written on risks located or resident in this
state. The rate of the tax imposed on gross  direct  premiums  shall  be
four-tenths  of  one  percent  on  all  or  any part of the first twenty
million dollars of premiums, three-tenths of one percent on all  or  any
part of the second twenty million dollars of premiums, two-tenths of one
percent on all or any part of the third twenty million dollars of premi-
ums,  and  seventy-five  thousandths  of  one  percent on each dollar of
premiums thereafter. The rate of the tax on assumed reinsurance premiums
shall be two hundred twenty-five thousandths of one percent  on  all  or
any  part  of  the first twenty million dollars of premiums, one hundred
and fifty thousandths of one percent on all or any part  of  the  second
twenty  million dollars of premiums, fifty thousandths of one percent on
all or any part of the third twenty  million  dollars  of  premiums  and
twenty-five thousandths of one percent on each dollar of premiums there-
after.  The tax imposed by this section shall be equal to the greater of
(i) the sum of the tax imposed on gross  direct  premiums  and  the  tax
imposed on assumed reinsurance premiums or (ii) five thousand dollars.
  S  23.  Paragraph 4 of subdivision (f) of section 1515 of the tax law,
as amended by section 16 of part FF-1 of chapter 57 of the laws of 2008,
is amended to read as follows:
  (4)(i) For purposes of this paragraph, the term  "closest  controlling
stockholder" means the corporation that indirectly owns or controls over
fifty  percent  of the voting stock of a captive REIT or captive RIC, is
subject to tax under section fifteen hundred one of this  article[,]  OR
article nine-A [or article thirty-two] of this chapter or required to be
included in a combined return or report under this article[,] OR article
nine-A  [or article thirty-two] of this chapter, and is the fewest tiers
of corporations away in the ownership structure from the captive REIT or
captive RIC. The commissioner is authorized to prescribe  by  regulation
or  published guidance the criteria for determining the closest control-
ling stockholder.
  (ii) A captive REIT or a captive RIC must be included  in  a  combined
return  with  the  corporation that directly owns or controls over fifty
percent of the voting stock of the captive REIT or captive RIC  if  that
corporation  is  a  life  insurance corporation and is subject to tax or
required to be included in a combined return under this article.
  (iii) If over fifty percent of the voting stock of a captive  REIT  or
captive  RIC  is  not  directly  owned or controlled by a life insurance
corporation that is subject to tax or  required  to  be  included  in  a
combined  return  under  this article, [then the captive REIT or captive

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RIC must be included in a combined report or return with the corporation
that is the closest controlling  stockholder  of  the  captive  REIT  or
captive  RIC. If] AND the closest controlling stockholder of the captive
REIT  or  captive RIC is a life insurance corporation that is subject to
tax or required to be included in a combined return under this  article,
then  the  captive  REIT  or  captive RIC must be included in a combined
return WITH THE CLOSEST CONTROLLING STOCKHOLDER under this article.
  (iv) If a captive REIT owns the stock of a qualified  REIT  subsidiary
(as  defined in paragraph two of subsection (i) of section eight hundred
fifty-six of the internal revenue code) AND THE CAPTIVE REIT IS REQUIRED
TO BE INCLUDED IN A COMBINED RETURN UNDER SUBPARAGRAPHS (II) OR (III) OF
THIS PARAGRAPH, then the qualified REIT subsidiary must be  included  in
any  combined  return  required to be made by the captive REIT that owns
the stock of the qualified REIT subsidiary.
  (v) If a captive REIT or a captive RIC is required  under  this  para-
graph  to be included in a combined return with another corporation, and
that other corporation is required to be included in a  combined  return
with  another  [related]  corporation  under  this subdivision, then the
captive REIT or the captive RIC must be included in that combined return
with the other [related] corporation.
  S 24. Subdivisions (a), (b) and (c) of section 12 of the tax  law,  as
added  by  chapter  615  of  the  laws  of  1998, are amended to read as
follows:
  (a) For purposes of subdivision (b) of this section, the term "person"
shall mean a corporation, joint stock company or association,  insurance
corporation,  or  banking  corporation,  as  such  terms  are defined in
section one  hundred  eighty-three,  one  hundred  eighty-four,  or  one
hundred  eighty-six,  or in article nine-A[, thirty-two] or thirty-three
of this chapter, imposing tax on such entities.
  (b) No person shall be subject to the taxes imposed under section  one
hundred eighty-three, one hundred eighty-four or one hundred eighty-six,
or  article nine-A[, thirty-two] or thirty-three of this chapter, solely
by reason of (1)  having its advertising stored on  a  server  or  other
computer  equipment  located in this state (other than a server or other
computer equipment owned or leased by such person), or  (2)  having  its
advertising  disseminated  or displayed on the Internet by an individual
or entity subject to tax under section  one  hundred  eighty-three,  one
hundred  eighty-four or one hundred eighty-six, or article nine-A, twen-
ty-two[, thirty-two] or thirty-three of this chapter.
  (c) A person, as such term is defined in subdivision  (a)  of  section
eleven  hundred one of this chapter, shall not be deemed to be a vendor,
for purposes of article twenty-eight of this chapter, solely  by  reason
of  (1)    having  its  advertising stored on a server or other computer
equipment located in this state (other than a server or  other  computer
equipment owned or leased by such person), or (2) having its advertising
disseminated  or  displayed  on  the Internet by an individual or entity
subject to tax under  section  one  hundred  eighty-three,  one  hundred
eighty-four  or  one hundred eighty-six, or article nine-A, twenty-two[,
thirty-two] or thirty-three of this chapter.
  S 25. Paragraph 1 of subdivision (a) of section 14 of the tax law,  as
amended  by  section 3 of part V1 of chapter 109 of the laws of 2006, is
amended to read as follows:
  (1) except as provided in paragraphs one-a and one-b of this  subdivi-
sion,  for  purposes  of section one hundred eighty-seven-j and articles
nine-A, twenty-two[, thirty-two] and thirty-three of this  chapter,  for
each  of  the  taxable  years  within the "business tax benefit period,"

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which period shall consist of (A) in the case of a  business  enterprise
with a test date occurring on or before December thirty-first, two thou-
sand  one, the first fifteen taxable years beginning on or after January
first, two thousand one, (B) in the case of a business enterprise with a
test  date  occurring  on  or after January first, two thousand two, but
prior to April first, two thousand five, the fifteen taxable years  next
following  the business enterprise's test year, and (C) in the case of a
business enterprise which is first certified under article eighteen-B of
the general municipal law on or after April first,  two  thousand  five,
the  ten taxable years starting with the taxable year in which the busi-
ness enterprise's first date of certification under  article  eighteen-B
of  the  general  municipal law occurs, but only with respect to each of
such business tax benefit period years for which the employment test  is
met,
  S  26.  Subdivision  (f)  of  section 14 of the tax law, as amended by
section 10 of part CC of chapter 85 of the laws of 2002, is  amended  to
read as follows:
  (f)  Taxable  year.  The term "taxable year" means the taxable year of
the business enterprise under  section  one  hundred  eighty-three,  one
hundred  eighty-four,  one  hundred  eighty-five  or  former section one
hundred eighty-six of article nine, or  under  article  nine-A,  twenty-
two[,  thirty-two] or thirty-three of this chapter. If a business enter-
prise does not have a taxable year because it is exempt from taxation or
otherwise not required to file a return under any of  such  sections  of
article  nine or under article nine-A, twenty-two[, thirty-two] or thir-
ty-three, then the term "taxable year" means  (i)  the  business  enter-
prise's federal taxable year, or, (ii) if the enterprise does not have a
federal taxable year, the calendar year.
  S  27. Paragraph 1 of subdivision (i) of section 14 of the tax law, as
amended by section 5 of part A of chapter 63 of the  laws  of  2005,  is
amended to read as follows:
  (1)  for  purposes  of  section  one hundred eighty-seven-j of article
nine, and articles nine-A, twenty-two[, thirty-two] and thirty-three  of
this  chapter, on the first day of the taxable year during which revoca-
tion of its certification under article eighteen-B of the general munic-
ipal law occurs, and
  S 28. Paragraphs 1 and 2 of subdivision (j) of section 14 of  the  tax
law,  as  amended  by section 10 of part CC of chapter 85 of the laws of
2002, are amended to read as follows:
  (1) A new business shall include any corporation, except a corporation
which is substantially similar in operation and in ownership to a  busi-
ness  entity (or entities) taxable, or previously taxable, under section
one hundred eighty-three, one hundred eighty-four, one  hundred  eighty-
five or one hundred eighty-six of article nine; article nine-A[, article
thirty-two]  or  thirty-three  of  this chapter; article twenty-three of
this chapter or which would have been subject to tax under such  article
twenty-three  (as  such article was in effect on January first, nineteen
hundred eighty), ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD  HAVE
BEEN  SUBJECT  TO TAX UNDER SUCH ARTICLE THIRTY-TWO (AS SUCH ARTICLE WAS
IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN) or the income
(or losses) of which is (or was) includable under article twenty-two  of
this chapter.
  (2)  For purposes of article twenty-two of this chapter, an individual
who is either a sole proprietor or a member of a partnership shall qual-
ify as an owner of a new business unless the business of which the indi-
vidual is an owner is substantially similar in operation and  in  owner-

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ship  to a business entity taxable, or previously taxable, under section
one hundred eighty-three, one hundred eighty-four, one  hundred  eighty-
five  or  one hundred eighty-six of article nine; article nine-A[, thir-
ty-two] or ARTICLE thirty-three of this chapter; article twenty-three of
this  chapter or which would have been subject to tax under such article
twenty-three (as such article was in effect on January  first,  nineteen
hundred  eighty); ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD HAVE
BEEN SUBJECT TO TAX UNDER SUCH ARTICLE THIRTY-TWO AS SUCH ARTICLE WAS IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN or the income (or
losses) of which is (or was) includable under article twenty-two.
  S 29. Clauses (i) and (ii) of  subparagraph  (A)  of  paragraph  4  of
subdivision  (j)  of section 14 of the tax law, as added by section 5 of
part A of chapter 63 of the  laws  of  2005,  are  amended  to  read  as
follows:
  (i)  Notwithstanding paragraphs one and two of this subdivision, a new
business shall include any corporation which is identical  in  operation
and  ownership  to a business entity (or entities) taxable under section
one hundred eighty-three, one hundred eighty-four or one hundred  eight-
y-five  of article nine; article nine-A[, article thirty-two] or thirty-
three of this chapter or the income (or losses) of which  is  includable
under  article twenty-two of this chapter, provided such corporation and
such business entity or entities are operating in different counties  in
the state.
  (ii)  Notwithstanding  paragraphs  one and two of this subdivision, an
individual who is either a sole proprietor or a member of a  partnership
shall qualify as an owner of a new business if the business of which the
individual  is  an owner is identical in operation and in ownership to a
business entity (or entities) taxable under section one hundred  eighty-
three,  one  hundred  eighty-four  or one hundred eighty-five of article
nine; article nine-A[, article thirty-two] or thirty-three of this chap-
ter or the income (or losses) of which is includable under article twen-
ty-two of this chapter, provided such business and such business  entity
or entities are operating in different counties in the state.
  S 30. Subparagraph (B) of paragraph 4 of subdivision (j) of section 14
of  the  tax  law,  as  amended  by  chapter 161 of the laws of 2005, is
amended to read as follows:
  (B) Notwithstanding any provisions of this subdivision to the contrary
and notwithstanding subdivision c of section  eighteen  of  part  CC  of
chapter  eighty-five  of  the laws of two thousand two, a corporation or
partnership, which was first certified under article eighteen-B  of  the
general  municipal law before August first, two thousand two, has a base
period of zero years or zero employment for  its  base  period,  and  is
similar  in  operation and in ownership to a business entity or entities
taxable, or previously taxable, under sections  specified  in  paragraph
one  or  two of this subdivision or which would have been subject to tax
under article twenty-three of this  chapter  (as  such  article  was  in
effect  on  January  first, nineteen hundred eighty) OR WHICH WOULD HAVE
BEEN SUBJECT TO TAX UNDER ARTICLE THIRTY-TWO OF THIS  CHAPTER  (AS  SUCH
ARTICLE  WAS  IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN)
or the income or losses of which is  or  was  includable  under  article
twenty-two  of this chapter shall not be deemed a new business if it was
not formed for a valid business purpose, as  such  term  is  defined  in
clause  (D)  of subparagraph one of paragraph (o) of subdivision nine of
section two hundred eight of this chapter and was formed solely to  gain
empire zone benefits.

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  S  31.  Subdivision  (k)  of  section 14 of the tax law, as amended by
section 5 of part A of chapter 63 of the laws of  2005,  is  amended  to
read as follows:
  (k)  If  the  designation of an area as an empire zone is no longer in
effect because section nine hundred sixty-nine of the general  municipal
law  was not amended to extend the effective date of such designation so
that the designations of all empire zones pursuant to article eighteen-B
of the general municipal law have expired, a  business  enterprise  that
was  certified  pursuant  to article eighteen-B of the general municipal
law on the day immediately preceding the day on which  such  designation
expired  shall  be deemed to continue to be certified under such article
eighteen-B for purposes of this section, and sections fifteen,  sixteen,
section one hundred eighty-seven-j, subdivisions [twenty-seven] FIVE and
[twenty-eight]  SIX of section two hundred [ten] TEN-B, subsections (bb)
and (cc) of section six hundred six, subdivision (z) of  section  eleven
hundred  fifteen[,  subsections  (o) and (p) of section fourteen hundred
fifty-six,] and subdivisions (r) and  (s)  of  section  fifteen  hundred
eleven of this chapter. In addition, if the designation of an area as an
empire  zone  is no longer in effect because section nine hundred sixty-
nine of the general municipal law was not amended to extend  the  effec-
tive  date  of  such  designation so that the designations of all empire
zones pursuant to article eighteen-B of the general municipal  law  have
expired,  all references to empire zones in the provisions of this chap-
ter listed in the previous sentence  shall  be  read  as  meaning  areas
designated  as  empire zones on the day immediately preceding the day on
which such designation expired.
  S 32. Subdivisions (a) and (h) of  section  15  of  the  tax  law,  as
amended  by  section  5 of part A of chapter 63 of the laws of 2005, are
amended to read as follows:
  (a) Allowance of credit. A taxpayer which is a qualified  empire  zone
enterprise  (QEZE),  or which is a sole proprietor of a QEZE or a member
of a partnership which is a QEZE, and which  is  subject  to  tax  under
article  nine-A,  twenty-two[, thirty-two] or thirty-three of this chap-
ter, shall be allowed  a  credit  against  such  tax,  pursuant  to  the
provisions  referenced  in subdivision (h) of this section, for eligible
real property taxes.
  (h) Definitions and cross-references. For definitions of terms used in
this section see section fourteen of this article.  For  application  of
the credit provided for in this section, see the following provisions of
this chapter:
  (1) Article 9: Section 187-j.
  (2) Article 9-A: Section [210] 210-B: subdivision [27] 5.
  (3) Article 22: Section 606: subsections (i) and (bb).
  (4) [Article 32: Section 1456: subsection (o).
  (5)] Article 33: Section 1511: subdivision (r).
  S  33.  Subdivision  (a)  of  section  16  of the tax law, as added by
section 2 of part GG of chapter 63 of the laws of 2000,  is  amended  to
read as follows:
  (a)  Allowance  of credit. A taxpayer which is a qualified empire zone
enterprise (QEZE), or which is a sole proprietor of a QEZE or  a  member
of  a  partnership  which  is  a QEZE, and which is subject to tax under
article nine-A, twenty-two[, thirty-two] or thirty-three of  this  chap-
ter,  shall  be  allowed  a  credit  against  such  tax, pursuant to the
provisions referenced in subdivision (g) of this section, to be computed
as hereinafter provided.

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  S 34. Paragraph 1, clause (ii) of subparagraph (B) of paragraph 2, and
subparagraph (A) of paragraph 3 of subdivision (f) of section 16 of  the
tax  law,  as amended by section 14 of part CC of chapter 85 of the laws
of 2002, are amended to read as follows:
  (1) General. The tax factor shall be, in the case of article nine-A of
this  chapter,  the [larger of the amounts] AMOUNT of tax determined for
the taxable year under [paragraphs] PARAGRAPH (a) [and (c)] of  subdivi-
sion  one  of  section  two  hundred ten of such article. The tax factor
shall be, in the case of article twenty-two of  this  chapter,  the  tax
determined  for  the  taxable  year under subsections (a) through (d) of
section six hundred one of such article. [The tax factor  shall  be,  in
the  case  of  article  thirty-two  of  this  chapter, the larger of the
amounts of tax determined for the taxable year under subsection (a)  and
paragraph  two  of subsection (b) of section fourteen hundred fifty-five
of such article.] The tax factor shall be, in the case of article  thir-
ty-three  of  this  chapter, the larger of the amounts of tax determined
for the taxable year under paragraphs one and three of  subdivision  (a)
of section fifteen hundred two of such article.
  (ii)  For  purposes of article nine-A[, thirty-two or thirty-three] of
this chapter, the term "partner's income  from  the  partnership"  means
partnership  items  of  income,  gain,  loss and deduction, and New York
modifications thereto, entering  into  [entire  net]  BUSINESS  income[,
minimum  taxable  income,  alternative  entire  net income or entire net
income plus compensation] and the term "partner's entire  income"  means
[entire  net]  BUSINESS  income[,  minimum  taxable  income, alternative
entire net income or entire net  income  plus  compensation,]  allocated
within the state.  FOR PURPOSES OF ARTICLE THIRTY-THREE OF THIS CHAPTER,
THE TERM "PARTNER'S INCOME FROM THE PARTNERSHIP" MEANS PARTNERSHIP ITEMS
OF INCOME, GAIN, LOSS AND DEDUCTION, AND NEW YORK MODIFICATIONS THERETO,
ENTERING  INTO  ENTIRE NET INCOME OR ENTIRE NET INCOME PLUS COMPENSATION
AND THE TERM "PARTNER'S ENTIRE  INCOME"  MEANS  ENTIRE  NET  INCOME,  OR
ENTIRE  NET  INCOME  PLUS  COMPENSATION, ALLOCATED WITHIN THE STATE. For
purposes of article twenty-two of  this  chapter,  the  term  "partner's
income  from  the  partnership" means partnership items of income, gain,
loss and deduction, and New York modifications  thereto,  entering  into
New  York  adjusted gross income, and the term "partner's entire income"
means New York adjusted gross income.
  (A) Where the taxpayer is a qualified empire zone  enterprise  and  is
required  or  permitted  to  make a return or report on a combined basis
under article nine-A[, thirty-two] or ARTICLE thirty-three of this chap-
ter, the taxpayer's tax factor shall be the amount determined  in  para-
graph one of this subdivision which is attributable to the income of the
qualified  empire  zone  enterprise.   Such attribution shall be made in
accordance with the ratio of  the  qualified  empire  zone  enterprise's
income  allocated within the state to the combined group's income, or in
accordance with such other methods as the commissioner may prescribe  as
providing  an apportionment which reasonably reflects the portion of the
combined group's tax attributable to the income of the qualified  empire
zone enterprise. In no event may the ratio so determined exceed 1.0.
  S  35.  Subdivision  (g)  of  section  16  of the tax law, as added by
section 2 of part GG of chapter 63 of the laws of 2000,  is  amended  to
read as follows:
  (g) Definitions and cross-references. For definitions of terms used in
this  section  see  sections  fourteen  and fifteen of this article. For
application of the credit provided for in this section, see the  follow-
ing provisions of this chapter:

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  (1) Article 9-A: Section [210] 210-B:  subdivision [28]6.
  (2) Article 22: Section 606: subsections (i) and (cc).
  (3) [Article 32: Section 1456: subsection (p).
  (4)] Article 33: Section 1511: subdivision (s).
  S  36. Paragraph 1 of subdivision (b) of section 17 of the tax law, as
added by section 43 of part S1 of chapter 57 of the  laws  of  2009,  is
amended to read as follows:
  (1)  The  empire  zones tax benefits report must contain the following
information about the empire zone tax  credits  claimed  under  articles
nine,  nine-A, twenty-two[, thirty-two] and thirty-three of this chapter
during the previous calendar year:
  (A) the name of each taxpayer claiming a credit; and
  (B) the amount of each credit earned by each taxpayer.
  S 37. Subdivisions (a) and (d) of section 18 of the tax law, as  added
by  section  2 of part CC of chapter 63 of the laws of 2000, are amended
to read as follows:
  (a) Allowance of credit. A  taxpayer  subject  to  tax  under  article
nine-A,  twenty-two[,  thirty-two] or thirty-three of this chapter shall
be allowed a credit against such tax, pursuant to the provisions  refer-
enced  in subdivision (d) of this section, with respect to the ownership
of eligible low-income buildings for which an eligibility statement  has
been  issued  by  the commissioner of housing and community renewal. The
amount of the credit shall be the credit amount for each  such  building
allocated  by  such  commissioner  as  provided  in article two-A of the
public housing law. The credit amount shall be allowed for each  of  the
ten  taxable years in the credit period, and any reduction in first-year
credit as provided in subdivision two of section twenty-two of such  law
shall be allowed in the eleventh taxable year.
  (d)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B:  subdivision [30] 15,
  (2) Article 22: Section 606: subsections (i) and (x),
  (3) [Article 32: Section 1456: subsection (l),
  (4)] Article 33: Section 1511: subdivision (n).
  S 38. Subparagraph (A) of paragraph 1 of subdivision (a) and  subdivi-
sion  (f) of section 19 of the tax law, as added by section 2 of part II
of chapter 63 of the laws of 2000, are amended to read as follows:
  (A) Green building credit. A taxpayer subject  to  tax  under  article
nine,  nine-A,  twenty-two[, thirty-two] or thirty-three of this chapter
shall be allowed a green building credit against such tax,  pursuant  to
the  provisions referenced in subdivision (f) of this section. Provided,
however, no credit shall  be  allowed  under  this  section  unless  the
taxpayer  has complied with the applicable requirements of paragraph two
of subdivision (d) of this section (relating to  reports  to  DEC).  The
amount of the credit shall be the sum of the credit components specified
in  paragraphs two through seven of this subdivision. Provided, however,
the amount of each such credit component shall not exceed the limit  set
forth  in  the initial credit component certificate obtained pursuant to
subdivision (c) of this section. In the  determination  of  such  credit
components,  no cost paid or incurred by the taxpayer shall be the basis
for more than one such component.
  (f) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article nine: Section one hundred eighty-seven-d;
  (2)  Article  nine-A:  Subdivision [thirty-one] SIXTEEN of section two
hundred [ten] TEN-B;

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  (3) Article twenty-two: Subsections (i) and (y) of section six hundred
six;
  (4)  [Article  thirty-two:  Subsection (m) of section fourteen hundred
fifty-six;
  (5)] Article thirty-three: Subdivision (o) of section fifteen  hundred
eleven.
  S  39.  Paragraphs 1 and 5 of subdivision (a) of section 21 of the tax
law, as amended by section 1 of part H of chapter 577  of  the  laws  of
2004, are amended to read as follows:
  (1)  General.  A  taxpayer  subject to tax under article nine, nine-A,
twenty-two[, thirty-two]  or  thirty-three  of  this  chapter  shall  be
allowed a credit against such tax, pursuant to the provisions referenced
in  subdivision  (f)  of this section. Such credit shall be allowed with
respect to a qualified site, as such term is defined in paragraph one of
subdivision (b) of this section. The amount of the credit in  a  taxable
year  shall  be the sum of the credit components specified in paragraphs
two, three and four of this subdivision applicable in such year.
  (5) Applicable percentage. For purposes of paragraphs two,  three  and
four  of  this  subdivision,  the  applicable percentage shall be twelve
percent in the case of credits  claimed  under  article  nine,  nine-A[,
thirty-two] or thirty-three of this chapter, and ten percent in the case
of credits claimed under article twenty-two of this chapter, except that
where  at least fifty percent of the area of the qualified site relating
to the credit provided for in this section is  located  in  an  environ-
mental  zone  as  defined  in  paragraph  six of subdivision (b) of this
section, the applicable percentage shall be increased by  an  additional
eight  percent. Provided, however, as afforded in section 27-1419 of the
environmental conservation law, if the certificate of  completion  indi-
cates  that  the  qualified  site has been remediated to Track 1 as that
term is described in subdivision four of section 27-1415 of the environ-
mental conservation law, the applicable  percentage  set  forth  in  the
first sentence of this paragraph shall be increased by an additional two
percent.
  S  39-a.  Subdivisions  (c)  and  (f) of section 21 of the tax law, as
added by section 1 of part H of chapter 1  of  the  laws  of  2003,  are
amended to read as follows:
  (c)  Qualifying  property.  Property  which  qualifies  for the credit
provided for under this section and also for a credit provided  for  (1)
under either subdivision [twelve] ONE or subdivision [twelve-B] THREE of
section  two  hundred  [ten]  TEN-B  of  this  chapter,  or both, OR (2)
subsection (a) or subsection (j) of section  six  hundred  six  of  this
chapter,  or  both[, (3) the credit provided for under subsection (i) of
section fourteen hundred fifty-six of this chapter, or  (4)  the  credit
provided under subdivision (q) of section fifteen hundred eleven of this
chapter]  may be the basis for either the credit provided for under this
section or one of the credits enumerated in paragraph  one[,]  OR  two[,
three or four] of this subdivision, but not both.
  (f)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-g
  (2) Article 9-A: Section [210] 210-B, subdivision [33] 17
  (3) Article 22: Section 606, subsections (i) and (dd)
  (4) [Article 32: Section 1456, subsection (q)
  (5)] Article 33: Section 1511, subdivision (u).

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  S 40. Paragraph 3 of subdivision (a) and paragraphs 1 and 9 of  subdi-
vision (b) of section 22 of the tax law, as amended by section 4 of part
H of chapter 577 of the laws of 2004, are amended to read as follows:
  (3)  Developer.  (i)  A  "developer" is a taxpayer under article nine,
nine-A, twenty-two[, thirty-two] or thirty-three of this chapter who  or
which  either  (I)  has  been  issued  a  certificate of completion with
respect to a qualified site or (II) has purchased or in  any  other  way
has been conveyed all or any portion of a qualified site from a taxpayer
or  any  other  party  who  or  which  has  been issued a certificate of
completion with respect to such site provided, such purchase or  convey-
ance  occurs within seven years of the effective date of the certificate
of completion issued with respect to  such  qualified  site.    Provided
further, that the taxpayer who or which is purchasing all or any portion
of a qualified site and the taxpayer or any other party who or which has
been  issued  a  certificate of completion with respect to such site may
not be related persons, as such term is defined in subparagraph  (C)  of
paragraph  three of subsection (b) of section four hundred sixty-five of
the internal revenue code.
  (ii) Where the entity to whom a certificate  of  completion  has  been
issued  is a partnership, or where the entity which has purchased all or
any portion of a qualified site from a taxpayer who or  which  has  been
issued  a certificate of completion with respect to such site within the
applicable time limit is a partnership, any partner in such  partnership
who  or  which is taxable under article nine, nine-A, twenty-two[, thir-
ty-two] or thirty-three of this chapter shall be a developer under  this
paragraph. Where the entity to whom a certificate of completion has been
issued  is  a  New  York  S  corporation,  or where the entity which has
purchased all or any portion of a qualified site from a taxpayer who  or
which  has  been issued a certificate of completion with respect to such
site within the applicable time limit is a New York S  corporation,  any
shareholder  in  such  New York S corporation shall be a developer under
this paragraph.
  (1) Allowance of credit. A developer of a qualified site who or  which
is  subject  to tax under article nine, nine-A, twenty-two[, thirty-two]
or thirty-three of this chapter, shall be allowed a credit against  such
tax,  pursuant  to  the  provisions referenced in paragraph nine of this
subdivision, for eligible real property taxes imposed on such site.
  (9) Cross-references. For application of the credit  provided  for  in
this subdivision, see the following provisions of this chapter:
  (i) Article 9: Section 187-h.
  (ii) Article 9-A: Section [210] 210-B:  subdivision [34] 18.
  (iii) Article 22: Section 606: subsections (i) and (ee).
  (iv) [Article 32: Section 1456: subsection (r).
  (v)] Article 33: Section 1511: subdivision (v).
  S  41.  Subdivision  (a)  of  section 23 of the tax law, as amended by
section 10 of part H chapter 577 of the laws of 2004, is amended to read
as follows:
  (a) Allowance of credit. General. A  taxpayer  subject  to  tax  under
article  nine,  nine-A, twenty-two[, thirty-two] or thirty-three of this
chapter shall be allowed a credit against  such  tax,  pursuant  to  the
provisions  referenced in subdivision (e) of this section. The amount of
such credit shall be equal to the lesser of thirty thousand  dollars  or
fifty  percent  of  the premiums paid on or after the date of the brown-
field site cleanup agreement executed by the taxpayer and the department
of environmental conservation pursuant to section 27-1409 of  the  envi-

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ronmental conservation law by the taxpayer for environmental remediation
insurance issued with respect to a qualified site.
  S  42.  Subdivision  (e)  of  section  23  of the tax law, as added by
section 19 of part H of chapter 1 of the laws of  2003,  is  amended  to
read as follows:
  (e)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-i
  (2) Article 9-A: Section [210] 210-B, subdivision [35] 19
  (3) Article 22: Section 606, subsections (i) and (ff)
  (4) [Article 32: Section 1456, subsection (s)
  (5)] Article 33: Section 1511, subdivision (w).
  S 43. Paragraphs 1 and 2 of subdivision (a) and clause (i) of subpara-
graph (D) of paragraph 1 of subdivision (b) of section  25  of  the  tax
law,  as added by section 1 of part N of chapter 61 of the laws of 2005,
are amended to read as follows:
  (1) Every taxpayer, or person as defined  in  section  seven  thousand
seven  hundred  one  of  the  internal  revenue code, required to file a
disclosure statement with  the  internal  revenue  service  pursuant  to
section  six  thousand eleven of the internal revenue code, or the regu-
lations promulgated thereunder, related to a reportable transaction or a
listed transaction, as those terms are defined in such section or  regu-
lations,  must  attach  a  duplicate of such disclosure statement to the
return or report required to be filed by such taxpayer or person for the
taxable year under article nine,  nine-A,  twenty-two[,  thirty-two]  or
thirty-three of this chapter, and provide such other information related
to  such  disclosure  as prescribed by the commissioner. Such disclosure
shall be made notwithstanding that one member of an affiliated group, as
defined by section fifteen hundred four of the  internal  revenue  code,
may  file such disclosure statement with the internal revenue service on
behalf of its affiliates including such taxpayer or person.
  (2) Every taxpayer or such person  who  participates  in  a  New  York
reportable  transaction  for  a  taxable year must disclose such partic-
ipation with its return or report required to  be  filed  under  article
nine,  nine-A,  twenty-two[, thirty-two] or thirty-three of this chapter
for the taxable year in a  form  prescribed  by  the  commissioner,  and
provide such other information related to such transaction as prescribed
by  the commissioner. A New York reportable transaction is a transaction
that has the potential to be a tax avoidance transaction  as  determined
by the commissioner.
  (i)  the  list  required  to  be maintained by such person pursuant to
section six thousand one hundred twelve of  the  internal  revenue  code
identifies  or  is  required to identify a taxpayer subject to tax under
article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter, and
  S  44. Subdivisions (a) and (f) of section 26 of the tax law, as added
by chapter 537 of the laws of 2005, are amended to read as follows:
  (a) Allowance of credit. A taxpayer, which is  subject  to  tax  under
article  nine,  nine-A, twenty-two[, thirty-two] or thirty-three of this
chapter and which is a qualified building  owner,  shall  be  allowed  a
credit  against  such tax.   The amount of the credit allowed under this
section shall equal the sum of the number of qualified security officers
providing protection to a building or buildings owned  by  the  taxpayer
multiplied  by  three  thousand  dollars. Provided, however, that in the
case of a worker not so employed for a full year, such amount  shall  be

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prorated  to  reflect the length of such employment under regulations of
the commissioner.
  (f)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9: section 187-n.
  (2) article 9-A: section [210] 210-B:  subdivision [37] 21.
  (3) article 22: section 606: subsection (ii).
  (4) [article 32: section 1456: subsection (t).
  (5)] article 33: section 1511: subdivision (x).
  S 45. Paragraph 3 of subdivision (a) and subdivision (c) of section 28
of the tax law, as added by section 2 of part V of  chapter  62  of  the
laws of 2006, are amended to read as follows:
  (3)  No  qualified  production  costs used by a taxpayer either as the
basis for the allowance of the credit provided for under this section or
used in the calculation of the credit provided for  under  this  section
shall  be used by such taxpayer to claim any other credit allowed pursu-
ant to this chapter.
  Notwithstanding any provisions of this  section  to  the  contrary,  a
corporation  or  partnership,  which  otherwise qualifies as a qualified
commercial production company, and is similar in operation and in owner-
ship to a business entity or entities taxable,  or  previously  taxable,
under  section  one hundred eighty-three, one hundred eighty-four or one
hundred eighty-five of article nine; article  nine-A[,  article  thirty-
two] or thirty-three of this chapter or which would have been subject to
tax  under  article twenty-three of this chapter (as such article was in
effect on January first, nineteen hundred eighty) OR  WHICH  WOULD  HAVE
BEEN  SUBJECT  TO  TAX UNDER ARTICLE THIRTY-TWO OF THIS CHAPTER (AS SUCH
ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO  THOUSAND  FOURTEEN)
or  the  income  or  losses  of which is or was includable under article
twenty-two of this chapter shall not be deemed a new or  separate  busi-
ness,  and  therefore  shall not be eligible for empire state commercial
production benefits, if it was not formed for a valid business  purpose,
as  such  term is defined in clause (D) of subparagraph one of paragraph
(o) of subdivision nine of section two hundred eight of this chapter and
was formed solely to gain  empire  state  commercial  production  credit
benefits.
  (c)  Cross-references.  For  application of the credit provided for in
this section, see the following provision of this chapter:
  (1) article 9-A: section [210] 210-B:  subdivision [38] 23.
  (2) article 22: section 606: subsection (jj).
  S 46. Subdivision (d) of section 28  of  the  tax  law,  as  added  by
section  1  of  part  X of chapter 62 of the laws of 2006, is amended to
read as follows:
  (d) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-c.
  (2) Article 9-A: Section [210] 210-B, subdivision [38] 24.
  (3) Article 22: Section 606, subsections (i) and (jj).
  S  47.  The  opening paragraph of subdivision (a) and subdivisions (c)
and (g) of section 31 of the tax law, the opening paragraph of  subdivi-
sion  (a) and subdivision (g) as amended by section 7 of part G of chap-
ter 61 of the laws of 2011, subdivision (c) as added  by  section  2  of
part  MM  of  chapter  59  of  the  laws of 2010, are amended to read as
follows:
  General. A taxpayer subject to tax under section one  hundred  eighty-
five,  article  nine-A, twenty-two[, thirty-two] or thirty-three of this

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chapter shall be allowed a credit against  such  tax,  pursuant  to  the
provisions  referenced in subdivision (g) of this section. The amount of
the credit, allowable for up to ten consecutive taxable  years,  is  the
sum of the following four credit components:
  (c)  Election of credit. A taxpayer who or which is qualified to claim
the excelsior investment tax credit component and is also  qualified  to
claim  the investment tax credit provided for under subdivision [twelve]
ONE of section two hundred [ten,] TEN-B OR subsection (a) of section six
hundred six[, or subsection (i) of section fourteen  hundred  fifty-six]
of  this  chapter,  may claim either the excelsior investment tax credit
component or the investment tax credit, but not both with  regard  to  a
particular  piece  of  property. In addition, a taxpayer who or which is
qualified to claim the excelsior investment tax credit component and  is
also  qualified  to claim the brownfield tangible property credit compo-
nent under section twenty-one of this article, as added by  chapter  one
of  the  laws  of  two  thousand  three,  may claim either the excelsior
investment tax credit component or such tangible property credit  compo-
nent,  but  not  both with regard to a particular piece of property. The
election to claim the excelsior investment  tax  credit  component,  the
investment  tax credit or the brownfield tangible property credit compo-
nent, with regard to the same property, is irrevocable.
  (g) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) article 9: section 187-q.
  (2) article 9-A: section [210] 210-B: subdivision [41] 31.
  (3) article 22: section 606: subsection (qq).
  (4) [article 32: section 1456: subsection (u).
  (5)] article 33: section 1511: subdivision (y).
  S  48.  Subdivision  (d)  of  section  31  of the tax law, as added by
section 12 of part Q of chapter 57 of the laws of 2010,  is  amended  to
read as follows:
  (d)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9-A: section [210] 210-B: subdivision [41] 32.
  (2) article 22: section 606: subsection (qq).
  S 49. Subdivision 3 of section 34 of the tax law, as added by  section
2  of  part  Y  of chapter 57 of the laws of 2010, is amended to read as
follows:
  3. (a) For application of the temporary deferral nonrefundable  payout
credit, see the following provisions of this chapter:
  (1) Article 9: section 187-0
  (2) Article 9-A: section [210(41)] 210-B(33)
  (3) Article 22: section 606(qq)
  (4) [Article 32: section 1456(v)
  (5)] Article 33: section 1511(y)
  (b)  For application of the temporary deferral refundable payout cred-
it, see the following provisions of this chapter:
  (1) Article 9: section 187-p
  (2) Article 9-A: section [210(42)] 210-B(34)
  (3) Article 22: section 606(rr)
  (4) [Article 32: section 1456(w)
  (5)] Article 33: section 1511(z)
  S 50. The opening paragraph of subdivision (a),  subparagraph  (C)  of
paragraph 2 of subdivision (e), and subdivision (f) of section 35 of the
tax  law,  as  added by section 3 of part V of chapter 61 of the laws of
2011, are amended to read as follows:

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  A taxpayer which is a participant or the owner of a participant in the
economic transformation and facility redevelopment program under article
eighteen of the economic development law that is subject  to  tax  under
section  one  hundred  eighty-five  of  article nine, or article nine-A,
twenty-two[,  thirty-two]  or  thirty-three  of  this  chapter  shall be
allowed the sum of following components against such  tax,  pursuant  to
the provisions referenced in subdivision (f) of this section.
  (C) the business entity must not be substantially similar in ownership
and  operation  to  another taxpayer taxable or previously taxable under
section one hundred eighty-three, one hundred eighty-four or one hundred
eighty-five of article nine, former section one  hundred  eighty-six  of
this chapter or article nine-A, twenty-two[, thirty-two] or thirty-three
of  this  chapter  OR  FORMER  ARTICLE THIRTY-TWO OF THIS CHAPTER or the
income or losses of which is or was includable under article  twenty-two
of this chapter;
  (f)  Cross-references.  For application of the credits provided for in
this section, see the following provisions of this chapter:
  (1) section 185: section 187-r.
  (2) article 9-A: section [210(43)] 210-B(35).
  (3) article 22: section 606 (ss).
  (4) [article 32: section 1456(x).
  (5)] article 33: section 1511 (aa).
  S 51. Subdivisions (a) and (e) of section 36 of the tax law, as  added
by section 2 of part E of chapter 56 of the laws of 2011, are amended to
read as follows:
  (a)  Allowance  of  credit.  A  taxpayer  subject to tax under article
nine-A, twenty-two[, thirty-two] or thirty-three of this  chapter  shall
be  allowed a credit against such tax, pursuant to the provisions refer-
enced in subdivision (e) of this section.  The  amount  of  the  credit,
allowable  for  ten consecutive tax years, is equal to the amount deter-
mined pursuant to section  four  hundred  twenty-five  of  the  economic
development law.
  (e)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9-A: section [210] 210-B, subdivision [44] 37;
  (2) article 22: section 606, subsection (tt);
  (3) [article 32: section 1456, subsection (y);
  (4)] article 33, section 1511, subdivision (bb).
  S 52. Subdivision (c) of section 37 of the tax law, as added by  chap-
ter 109 of the laws of 2012, is amended to read as follows:
  (c)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B, subdivision [45] 39.
  (2) Article 22: Section 606, subsections (i) and (uu).
  S 52-a. Subdivision (c) of section 39 of the tax law is REPEALED.
  S 53. Paragraphs 2, 3 and 4 of subdivision (k) of section  39  of  the
tax  law,  paragraphs 2 and 3 as added by section 2 of part A of chapter
68 of the laws of 2013, paragraph 4 as amended by section 2 of part T of
this act, are amended to read as follows:
  [(2) Article 9: section 180, subdivision 3.
  (3) Article 9: section 181, subdivision 3.]
  (4) Article 9-A: section [210] 210-B, subdivision [47] 41 and subdivi-
sion [48] 44.
  S 54. Subdivision 1 of section 171-a of the tax  law,  as  amended  by
section  1  of  part  R of chapter 60 of the laws of 2004, is amended to
read as follows:

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  1. All taxes, interest, penalties and fees collected  or  received  by
the commissioner or the commissioner's duly authorized agent under arti-
cles nine (except section one hundred eighty-two-a thereof and except as
otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
twelve-A  (except  as  otherwise provided in section two hundred eighty-
four-d thereof), thirteen, thirteen-A (except as otherwise  provided  in
section  three  hundred  twelve  thereof),  eighteen,  nineteen,  twenty
(except as otherwise provided in section four hundred eighty-two  there-
of),  twenty-one,  twenty-two,  twenty-six,  twenty-six-B,  twenty-eight
(except as otherwise provided in section eleven hundred  two  or  eleven
hundred  three thereof), twenty-eight-A, thirty-one (except as otherwise
provided in section fourteen hundred twenty-one thereof),  [thirty-two,]
thirty-three and thirty-three-A of this chapter shall be deposited daily
in  one  account  with  such  responsible banks, banking houses or trust
companies as may be designated by the comptroller, to the credit of  the
comptroller.  Such  an account may be established in one or more of such
depositories. Such deposits shall be kept separate and  apart  from  all
other  money in the possession of the comptroller. The comptroller shall
require adequate security from  all  such  depositories.  Of  the  total
revenue  collected  or received under such articles of this chapter, the
comptroller shall retain in the comptroller's hands such amount  as  the
commissioner may determine to be necessary for refunds or reimbursements
under  such  articles  of  this chapter [and article ten thereof] out of
which amount the comptroller shall pay any refunds or reimbursements  to
which  taxpayers shall be entitled under the provisions of such articles
of this chapter [and article ten  thereof].  The  commissioner  and  the
comptroller  shall  maintain  a system of accounts showing the amount of
revenue collected or received from each of the  taxes  imposed  by  such
articles.  The  comptroller,  after  reserving  the  amount  to pay such
refunds or reimbursements, shall, on or before the  tenth  day  of  each
month, pay into the state treasury to the credit of the general fund all
revenue deposited under this section during the preceding calendar month
and  remaining  to  the  comptroller's  credit  on  the last day of such
preceding month, (i) except that the comptroller shall pay to the  state
department of social services that amount of overpayments of tax imposed
by  article  twenty-two  of this chapter and the interest on such amount
which is certified to the comptroller by the commissioner as the  amount
to  be  credited against past-due support pursuant to subdivision six of
section one hundred seventy-one-c of this [chapter]  ARTICLE,  (ii)  and
except  that  the  comptroller  shall  pay  to the New York state higher
education services corporation and the state university of New  York  or
the city university of New York respectively that amount of overpayments
of tax imposed by article twenty-two of this chapter and the interest on
such amount which is certified to the comptroller by the commissioner as
the amount to be credited against the amount of defaults in repayment of
guaranteed  student  loans and state university loans or city university
loans pursuant to subdivision five of section one hundred  seventy-one-d
and  subdivision six of section one hundred seventy-one-e of this [chap-
ter] ARTICLE, (iii) and except further that,  notwithstanding  any  law,
the  comptroller shall credit to the revenue arrearage account, pursuant
to section ninety-one-a of the state finance law, that amount  of  over-
payment  of  tax  imposed  by  article nine, nine-A, twenty-two, thirty,
thirty-A, thirty-B[, thirty-two] or thirty-three of  this  chapter,  and
any  interest  thereon,  which  is  certified  to the comptroller by the
commissioner as the amount to be credited  against  a  past-due  legally
enforceable  debt  owed  to  a state agency pursuant to paragraph (a) of

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subdivision six of section one hundred seventy-one-f  of  this  article,
provided,  however,  he  shall  credit  to  the special offset fiduciary
account, pursuant to section ninety-one-c of the state finance law,  any
such  amount  creditable as a liability as set forth in paragraph (b) of
subdivision six of section one hundred seventy-one-f  of  this  article,
(iv)  and  except  further that the comptroller shall pay to the city of
New York that amount of overpayment of  tax  imposed  by  article  nine,
nine-A,  twenty-two,  thirty, thirty-A, thirty-B[, thirty-two,] or thir-
ty-three of this chapter and any interest thereon that is  certified  to
the comptroller by the commissioner as the amount to be credited against
city  of  New  York  tax  warrant  judgment debt pursuant to section one
hundred seventy-one-l of this article, (v) and except further  that  the
comptroller  shall pay to a non-obligated spouse that amount of overpay-
ment of tax imposed by article twenty-two of this chapter and the inter-
est on such amount which has  been  credited  pursuant  to  section  one
hundred  seventy-one-c,  one hundred seventy-one-d, one hundred seventy-
one-e, one hundred seventy-one-f or one hundred  seventy-one-l  of  this
article and which is certified to the comptroller by the commissioner as
the  amount  due  such non-obligated spouse pursuant to paragraph six of
subsection (b) of section six hundred fifty-one  of  this  chapter;  and
(vi)  the  comptroller  shall deduct a like amount which the comptroller
shall pay into the treasury to the  credit  of  the  general  fund  from
amounts  subsequently  payable to the department of social services, the
state university of New York, the city university of New  York,  or  the
higher  education services corporation, or the revenue arrearage account
or special offset fiduciary account pursuant to section ninety-one-a  or
ninety-one-c of the state finance law, as the case may be, whichever had
been  credited the amount originally withheld from such overpayment, and
(vii) with respect to amounts originally withheld from such  overpayment
pursuant  to  section one hundred seventy-one-l of this article and paid
to the city of New York, the comptroller shall  collect  a  like  amount
from the city of New York.
  S  55.  Subdivision  2  of section 171-a of the tax law, as amended by
chapter 57 of the laws of 1993, is amended to read as follows:
  2. Notwithstanding subdivision  one  of  this  section  or  any  other
provision of law to the contrary, the taxes imposed pursuant to sections
one  hundred  eighty-three-a,  one  hundred  eighty-four-a, [one hundred
eighty-six-b,] one hundred eighty-six-c,  [one  hundred  eighty-nine-a,]
two  hundred nine-B[, fourteen hundred fifty-five-b] and fifteen hundred
five-a of this chapter, reduced by an amount for  administrative  costs,
shall be deposited to the credit of the metropolitan mass transportation
operating  assistance  account  in  the  mass  transportation  operating
assistance fund, created pursuant to section eighty-eight-a of the state
finance law, as such taxes are received. The amount  for  administrative
costs  shall  be  determined by the commissioner to represent reasonable
costs of the  department  of  taxation  and  finance  in  administering,
collecting, determining and distributing such taxes. Of the total reven-
ue  collected or received under such sections of this chapter, the comp-
troller shall retain in his hands such amount as  the  commissioner  may
determine  to  be  necessary  for  refunds  or reimbursements under such
sections of this chapter out of which amount the comptroller  shall  pay
any refunds or reimbursements to which taxpayers shall be entitled under
provisions  of  such  sections. The tax commissioner and the comptroller
shall maintain a system  of  accounts  showing  the  amount  of  revenue
collected or received from each of the taxes imposed by such sections.

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  S  56. Paragraphs (b) and (c) of subdivision 1 of section 171-f of the
tax law, as amended by chapter 81 of the laws of 1995,  are  amended  to
read as follows:
  (b)  "taxpayer"  shall mean a corporation, association, company, part-
nership, estate, trust, liquidator, fiduciary or other entity  or  indi-
vidual who or which is liable for any tax or other imposition imposed by
or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
ty-B[,  thirty-two,] or thirty-three of this chapter or article two-E of
the general city law, which tax or other imposition is  administered  by
the  commissioner  of  taxation  and finance, or who or which is under a
duty to perform an act under or pursuant  to  such  tax  or  imposition,
excluding  a  state agency, a municipal corporation or a district corpo-
ration; and (c) "overpayment" shall mean an overpayment which  has  been
requested  or determined to be refunded, a refund or a reimbursement, of
a tax or other imposition  imposed  by  or  pursuant  to  article  nine,
nine-A,  twenty-two,  thirty, thirty-A, thirty-B[, thirty-two,] or thir-
ty-three of this chapter or article two-E of the general city law, which
is administered by the commissioner of taxation and finance.
  S 57. Subdivision 2 of section 171-f of the tax law, as added by chap-
ter 55 of the laws of 1992, is amended to read as follows:
  (2) The commissioner of taxation and finance, upon agreement with  the
state  comptroller  and  acting  as  an agent for the state comptroller,
shall set forth the  procedures  for  crediting  any  overpayment  by  a
taxpayer  of  any tax or other imposition imposed by or authorized to be
imposed pursuant to article nine, nine-A, twenty-two, thirty,  thirty-A,
thirty-B[, thirty-two,] or thirty-three of this chapter or article two-E
of  the  general  city law, which is administered by the commissioner of
taxation and finance, and the interest on any such overpayments, against
the amount of a past-due legally enforceable debt owed by such  taxpayer
to  a  state  agency.  An  implementation plan shall be developed by the
division of the budget and the department of taxation and finance  which
shall  provide,  but not be limited to, guidance with respect to coordi-
nation of debt collection pursuant to this section and subdivision twen-
ty-seventh of section one hundred  seventy-one  of  this  article.  This
section  shall  not be deemed to abrogate or limit in any way the powers
and authority of the state comptroller to set off debts owed  the  state
against  payments from the state, under the constitution of the state or
any other law.
  S 58. Paragraphs (a) and (b) of subdivision 1 of section 171-l of  the
tax  law,  as  added by section 6 of part R of chapter 60 of the laws of
2004, are amended to read as follows:
  (a) "taxpayer" shall mean a corporation, association,  company,  part-
nership,  estate,  trust, liquidator, fiduciary or other entity or indi-
vidual who or which is liable for any tax or other imposition imposed by
or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
ty-B[, thirty-two,] or thirty-three of this chapter, which tax or  other
imposition  is administered by the commissioner of taxation and finance,
or who or which is under a duty to perform an act under or  pursuant  to
such  tax  or  imposition,  excluding a state agency, a municipal corpo-
ration or a district corporation;
  (b) "overpayment" shall mean an overpayment which has  been  requested
or  determined  to be refunded, a refund or a reimbursement, of a tax or
other imposition imposed by or pursuant to article nine,  nine-A,  twen-
ty-two,  thirty,  thirty-A,  thirty-B[,  thirty-two,] or thirty-three of
this chapter, which is administered by the commissioner of taxation  and
finance; and

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  S 59. Paragraph (b) of subdivision 1 of section 183 of the tax law, as
amended  by  section  1  of part Y of chapter 63 of the laws of 2000, is
amended to read as follows:
  (b)  For  the  privilege  of exercising its corporate franchise, or of
doing business, or of employing capital, or of owning or leasing proper-
ty in this state in a corporate or organized capacity, or of maintaining
an office in this state, every domestic corporation, joint-stock company
or association formed for or  principally  engaged  in  the  conduct  of
canal, steamboat, ferry (except a ferry company operating between any of
the boroughs of the city of New York under a lease granted by the city),
express,  navigation,  pipe  line,  transfer,  baggage express, omnibus,
taxicab, telegraph, or telephone business, or formed for or  principally
engaged  in  the  conduct  of  two or more of such businesses, and every
domestic corporation, joint-stock company or association formed  for  or
principally  engaged  in the conduct of a railroad, palace car, sleeping
car or trucking business or formed for or  principally  engaged  in  the
conduct of two or more of such businesses and which has made an election
pursuant  to  subdivision  ten of this section, and every other domestic
corporation, joint-stock company or association principally  engaged  in
the  conduct  of  a  transportation  or  transmission business, except a
corporation, joint-stock company or association formed for or principal-
ly engaged in the conduct of a railroad, palace  car,  sleeping  car  or
trucking business or formed for or principally engaged in the conduct of
two  or  more  of  such  businesses  and which has not made the election
provided for in subdivision ten of this section,  and  except  a  corpo-
ration,  joint-stock  company  or association principally engaged in the
conduct of aviation (including air freight forwarders acting as  princi-
pal and like indirect air carriers) and except a corporation principally
engaged  in  providing  telecommunication  services between aircraft and
dispatcher, aircraft and air  traffic  control  or  ground  station  and
ground  station  (or  any combination of the foregoing), at least ninety
percent of the voting stock of which corporation is owned,  directly  or
indirectly,  by  air carriers and which corporation's principal function
is to fulfill the requirements of  (i)  the  federal  aviation  adminis-
tration  (or  the  successor  thereto)  or  (ii) the international civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and air traffic control or ground station and  ground  station  (or  any
combination of the foregoing) for the purposes of air safety and naviga-
tion  [and  except  a  corporation,  joint-stock  company or association
subject to taxation under article thirty-two  of  this  chapter,]  shall
pay,  in  advance,  an  annual  tax to be computed upon the basis of the
amount of its capital stock within this state during the preceding year,
and upon each dollar of such amount. Provided, however,  a  corporation,
joint-stock  company or association formed for or principally engaged in
the transportation, transmission or distribution of gas, electricity  or
steam  shall  not  be  subject  to tax under this section or section one
hundred eighty-four of this article.
  S 60. Subdivision 10 of section 183 of the tax law, as added by  chap-
ter 309 of the laws of 1996, is amended to read as follows:
  10.  Election. [With respect to taxable years beginning after nineteen
hundred ninety-seven, every] EVERY corporation, joint-stock  company  or
association  formed for or principally engaged in the conduct of a rail-
road (including surface railroad, whether  or  not  operated  by  steam,
subway  railroad  or  elevated  railroad),  palace  car, sleeping car or
trucking business or formed for or principally engaged in the conduct of

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two or more of such businesses, which would be subject to article nine-A
[or thirty-two] of this chapter if the election provided for under  this
subdivision  were not made, may elect to be subject to the provisions of
this section and, as applicable, section one hundred eighty-four of this
article,  rather  than the provisions of such article nine-A [or thirty-
two]. [In the case of such a corporation, joint-stock company or associ-
ation subject to the tax imposed under this section and, as  applicable,
section  one  hundred  eighty-four of this article, for the taxable year
ending December thirty-first, nineteen hundred ninety-seven, such corpo-
ration, joint-stock company or association must make such election on or
before March fifteenth, nineteen hundred ninety-eight, and such election
shall apply to the taxable year ending on December  thirty-first,  nine-
teen  hundred  ninety-eight  and  to  succeeding  taxable  years,  until
revoked. In the case of such a corporation, joint-stock company or asso-
ciation which is not subject to the tax imposed under this section  and,
as  applicable,  section one hundred eighty-four of this article for the
taxable year ending December thirty-first, nineteen hundred  ninety-sev-
en,  but  thereafter would be subject to article nine-A or thirty-two of
this chapter if the election provided for under  this  subdivision  were
not  made,  such]  SUCH  corporation, joint-stock company or association
must make such election by the first  day  on  which  such  corporation,
joint-stock company or association would be required to file a return or
report  (without regard to extensions) under this section or section one
hundred eighty-four of this article,  or  section  one  hundred  eighty-
three-a  or  one  hundred[-]eighty-four-a  of  this  article, or article
nine-A [or thirty-two] of this chapter. An  election  made  pursuant  to
this  subdivision  shall  continue  to be in effect until revoked by the
taxpayer. A revocation of the election to be  subject  to  this  section
and,  as  applicable,  section  one hundred eighty-four of this article,
shall be irrevocable. Such election, and a revocation thereof, shall  be
made in the manner prescribed by the commissioner, whether by regulation
or otherwise. Such revocation shall apply as of the first day of January
next  following  the  end  of  a  taxable year with respect to which the
taxpayer had been subject to this section and,  as  applicable,  section
one  hundred  eighty-four of this article, by reason of an election made
pursuant to this subdivision.
  S 61. The section heading and subdivisions 1 and 5 of section 183-a of
the tax law, the section heading as added by chapter 931 of the laws  of
1982,  subdivision  1 as amended by section 1 of part A of chapter 59 of
the laws of 2013 and subdivision 5 as amended by chapter 945 of the laws
of 1990, are amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge  on  transportation  and transmission corporations and associ-
ations.  1. The term "corporation" as used in this section shall include
an association, within the meaning of paragraph three of subsection  (a)
of  section  seventy-seven  hundred  one  of  the  internal revenue code
(including a limited liability company), a publicly  traded  partnership
treated  as  a  corporation  for  purposes  of the internal revenue code
pursuant to section seventy-seven hundred four thereof and any  business
conducted  by  a  trustee  or  trustees wherein interest or ownership is
evidenced by certificates or other  written  instruments.  Every  corpo-
ration,  joint-stock  company  or  association formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease granted by the city), express, navigation,  pipe  line,  transfer,
baggage  express, omnibus, taxicab, telegraph, or telephone business, or

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formed for or principally engaged in the conduct of  two  or  more  such
businesses,  and  every  corporation, joint-stock company or association
formed for or principally engaged in the conduct of a  railroad,  palace
car,  sleeping  car  or  trucking  business or formed for or principally
engaged in the conduct of two or more of such businesses and  which  has
made  an  election  pursuant  to  subdivision ten of section one hundred
eighty-three of this article, and every other  corporation,  joint-stock
company or association principally engaged in the conduct of a transpor-
tation  or  transmission  business,  except  a  corporation, joint-stock
company or association formed for or principally engaged in the  conduct
of  a  railroad, palace car, sleeping car or trucking business or formed
for or principally engaged in the conduct of two or more of  such  busi-
nesses  and  which has not made the election provided for in subdivision
ten of section one hundred eighty-three of this article,  and  except  a
corporation,  joint-stock  company or association principally engaged in
the conduct of aviation (including  air  freight  forwarders  acting  as
principal and like indirect air carriers) and except a corporation prin-
cipally engaged in providing telecommunication services between aircraft
and  dispatcher,  aircraft and air traffic control or ground station and
ground station (or any combination of the foregoing),  at  least  ninety
percent  of  the voting stock of which corporation is owned, directly or
indirectly, by air carriers and which corporation's  principal  function
is  to  fulfill  the  requirements  of (i) the federal aviation adminis-
tration (or the successor  thereto)  or  (ii)  the  international  civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and  air  traffic  control  or ground station and ground station (or any
combination of the foregoing) for the purposes of air safety and naviga-
tion [and except a corporation, joint-stock company or association which
is liable to taxation under article thirty-two of this  chapter],  shall
pay for the privilege of exercising its corporate franchise, or of doing
business,  or  of employing capital, or of owning or leasing property in
the metropolitan commuter transportation district in such  corporate  or
organized  capacity, or of maintaining an office in such district, a tax
surcharge [for all or any part of its years commencing on or after Janu-
ary first, nineteen hundred eighty-two but ending before December  thir-
ty-first,  two  thousand  eighteen], which tax surcharge, in addition to
the tax imposed by section one hundred  eighty-three  of  this  article,
shall  be  computed  at the rate of [eighteen percent of the tax imposed
under such section one hundred eighty-three for such years or  any  part
of  such  years  ending  before  December thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article,  and  at the rate of] seventeen percent of the tax
imposed under such section for such years or  any  part  of  such  years
[ending  on  or  after  December  thirty-first, nineteen hundred eighty-
three] after the deduction of any credits otherwise allowable under this
article; provided, however, that such rates of tax  surcharge  shall  be
applied  only  to  that  portion  of  the  tax imposed under section one
hundred eighty-three of this article after the deduction of any  credits
otherwise  allowable  under  this  article  which is attributable to the
taxpayer's business activity carried on within the metropolitan commuter
transportation district as so determined in the manner prescribed by the
rules and regulations promulgated by the  commissioner[;  and  provided,
further,  that  the  tax  surcharge imposed by this section shall not be
imposed upon any taxpayer for more than four hundred thirty-two months].

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  5. [The report covering the tax surcharge  which  must  be  calculated
pursuant to this section based upon the tax reportable on the report due
by  March  fifteenth,  nineteen  hundred  eighty-two  under  section one
hundred eighty-three of this article shall be filed on or  before  March
fifteenth,  nineteen  hundred  eighty-three. The report covering the tax
surcharge which must be calculated pursuant to this section  based  upon
the  tax  reportable  on  the  report  due  by March fifteenth, nineteen
hundred eighty-three under section  one  hundred  eighty-three  of  this
article  shall  be  filed on or before March fifteenth, nineteen hundred
eighty-four. The report covering the tax surcharge which must be  calcu-
lated  pursuant  to  this  section  based upon the tax reportable on the
report due  by  March  fifteenth,  nineteen  hundred  eighty-four  under
section  one  hundred  eighty-three of this article shall be filed on or
before March fifteenth, nineteen hundred eighty-five. The report  cover-
ing  the tax surcharge which must be calculated pursuant to this section
based upon the tax reportable on the  report  due  by  March  fifteenth,
nineteen  hundred  eighty-five under section one hundred eighty-three of
this article shall be filed  on  or  before  March  fifteenth,  nineteen
hundred  eighty-six. The report covering the tax surcharge which must be
calculated pursuant to this section based upon the tax reportable on the
report due by March fifteenth, nineteen hundred eighty-six under section
one hundred eighty-three of this article shall be  filed  on  or  before
March  fifteenth, nineteen hundred eighty-seven. The report covering the
tax surcharge which must be calculated pursuant to  this  section  based
upon  the  tax reportable on the report due by March fifteenth, nineteen
hundred eighty-seven under section  one  hundred  eighty-three  of  this
article  shall  be  filed on or before March fifteenth, nineteen hundred
eighty-eight. The report covering the tax surcharge which must be calcu-
lated pursuant to this section based upon  the  tax  reportable  on  the
report  due  by  March  fifteenth,  nineteen  hundred eighty-eight under
section one hundred eighty-three of this article shall be  filed  on  or
before  March fifteenth, nineteen hundred eighty-nine. The report cover-
ing the tax surcharge which must be calculated pursuant to this  section
based  upon  the  tax  reportable  on the report due by March fifteenth,
nineteen hundred eighty-nine under section one hundred  eighty-three  of
this  article  shall  be  filed  on  or before March fifteenth, nineteen
hundred ninety.] The report covering the tax  surcharge  which  must  be
calculated pursuant to this section based upon the tax reportable on the
report  due  by  March  fifteenth  of  any  year [subsequent to nineteen
hundred eighty-nine] under section  one  hundred  eighty-three  of  this
article  shall  be  filed  on or before March fifteenth of the year next
succeeding such year. An extension pursuant to section one hundred nine-
ty-three OF THIS ARTICLE shall be allowed only if a taxpayer files  with
the  commissioner  an  application  for  extension  in such form as said
commissioner may prescribe by regulation and pays on or before the  date
of  such  filing  in  addition  to any other amounts required under this
article, either ninety percent of the entire tax surcharge  required  to
be  paid  under this section for the applicable period, or not less than
the tax surcharge shown on the taxpayer's report for the preceding year,
if such preceding year consisted of twelve  months.  The  tax  surcharge
imposed  by this section shall be payable to the commissioner in full at
the time the report is required to be filed, and such tax  surcharge  or
the  balance  thereof,  imposed on any taxpayer which ceases to exercise
its franchise or be subject to the tax surcharge imposed by this section
shall be payable to the commissioner at the time the report is  required
to be filed, provided such tax surcharge of a domestic corporation which

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continues to possess its franchise shall be subject to adjustment as the
circumstances  may require; all other tax surcharges of any such taxpay-
er, which pursuant to the foregoing provisions  of  this  section  would
otherwise  be  payable subsequent to the time such report is required to
be filed, shall nevertheless  be  payable  at  such  time.  All  of  the
provisions  of  this article presently applicable to section one hundred
eighty-three of this article are applicable to the tax surcharge imposed
by this section except for section one hundred ninety-two of this  arti-
cle.
  S  62.  Subdivision  1  of  section  184 of the tax law, as amended by
section 2 of part Y of chapter 63 of the laws of  2000,  is  amended  to
read as follows:
  1.  The  term  "corporation"  as used in this section shall include an
association, within the meaning of paragraph three of subsection (a)  of
section  seventy-seven hundred one of the internal revenue code (includ-
ing a limited liability company), a publicly traded partnership  treated
as  a  corporation for purposes of the internal revenue code pursuant to
section seventy-seven hundred four thereof.
  Every corporation, joint-stock company or association  formed  for  or
principally  engaged in the conduct of canal, steamboat, ferry (except a
ferry company operating between any of the boroughs of the city  of  New
York under a lease granted by the city), express, navigation, pipe line,
transfer,  baggage  express,  omnibus, taxicab, telegraph or local tele-
phone business, or formed for or principally engaged in the  conduct  of
two  or  more  of  such  businesses,  and every corporation, joint-stock
company or association formed for or principally engaged in the  conduct
of  surface railroad, whether or not operated by steam, subway railroad,
elevated railroad, palace car, sleeping  car  or  trucking  business  or
formed  for  or  principally  engaged in the conduct of two or more such
businesses and which has made an election pursuant to subdivision ten of
section one hundred eighty-three of this article, and every other corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged  in  the  conduct  of  a transportation or transmission business
(other than a telephone business),  except  a  corporation,  joint-stock
company  or association formed for or principally engaged in the conduct
of a surface railroad, whether or not operated by  steam,  subway  rail-
road,  elevated  railroad, palace car, sleeping car or trucking business
or formed for or principally engaged in the conduct of two  or  more  of
such  businesses  and  which  has  not made the election provided for in
subdivision ten of section one hundred  eighty-three  of  this  article,
and, except a corporation, joint-stock company or association principal-
ly  engaged in the conduct of aviation (including air freight forwarders
acting as principal and like indirect air carriers) and except a  corpo-
ration  principally  engaged  in  providing  telecommunication  services
between aircraft and dispatcher, aircraft and  air  traffic  control  or
ground station and ground station (or any combination of the foregoing),
at  least  ninety  percent  of  the voting stock of which corporation is
owned, directly or indirectly, by air carriers and  which  corporation's
principal  function  is  to  fulfill the requirements of (i) the federal
aviation administration (or the successor thereto) or (ii) the  interna-
tional  civil aviation organization (or the successor thereto), relating
to  the  existence  of  a  communication  system  between  aircraft  and
dispatcher,  aircraft  and  air  traffic  control  or ground station and
ground station (or any combination of the foregoing) for the purposes of
air safety and navigation and [except a corporation, joint-stock company
or association which is liable to taxation under article  thirty-two  of

S. 6359--A                         137                        A. 8559--A

this  chapter,] for the privilege of exercising its corporate franchise,
or of doing business, or of employing capital, or of owning  or  leasing
property  in  this  state in a corporate or organized capacity, or main-
taining  an  office in this state, shall pay a franchise tax which shall
be equal to [(i) three-quarters of one percent for taxable years  ending
before  two thousand one, provided that for a taxable year ending in two
thousand the rate shall be  reduced  to  three-eighths  of  one  percent
effective  July first, two thousand with the result that for purposes of
implementation of such change in rate the applicable  rate  for  such  a
year shall be nine-sixteenths of one percent, and (ii)] three-eighths of
one  percent  for  taxable years commencing after two thousand, upon its
gross earnings from all sources within this  state;  except  that,  [for
taxable  years  commencing  on  or after January first, nineteen hundred
eighty-five and ending on  or  before  December  thirty-first,  nineteen
hundred  eighty-nine,  every corporation, joint-stock company or associ-
ation formed for or principally engaged in the conduct of  telephone  or
telegraph  business  shall  pay  a franchise tax which shall be equal to
three-tenths of one per centum upon its gross earnings from all  sources
within this state and,] for taxable years commencing on or after January
first,  nineteen  hundred ninety, every corporation, joint-stock company
or association formed for or principally engaged in the conduct of local
telephone business, or telegraph business  shall  pay  a  franchise  tax
which  shall  be equal to [(i) three-quarters of one percent for taxable
years ending before two thousand one, provided that for a  taxable  year
ending in two thousand the rate shall be reduced to three-eighths of one
percent  effective  July  first,  two  thousand with the result that for
purposes of implementation of such change in rate  the  applicable  rate
for  such  a  year  shall  be  nine-sixteenths of one percent, and (ii)]
three-eighths of one percent for  taxable  years  commencing  after  two
thousand,  upon  its  gross earnings from all sources within this state,
except that a corporation, joint-stock company or association formed for
or principally engaged in the conduct  of  a  local  telephone  business
shall  exclude  the  following  earnings  (but not in any event earnings
derived by such taxpayer from the provision of carrier access  services)
derived by such taxpayer from sales for ultimate consumption of telecom-
munications  service  to  its customers (i) thirty percent of separately
charged intra-LATA toll service (which shall  also  include  interregion
regional calling plan service) and (ii) one hundred percent of separate-
ly  charged  inter-LATA,  interstate or international telecommunications
service; and except that [corporations, joint-stock companies or associ-
ations formed for or principally engaged in the conduct of surface rail-
road, whether or not operated by steam, subway railroad, elevated  rail-
road,  palace  car  or  sleeping  car, business or any other corporation
formed for or principally engaged in the conduct of a railroad business,
for taxable years prior to nineteen hundred  ninety-seven,  and]  corpo-
rations, joint-stock companies or associations formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease  granted by the city), navigation or any corporation formed for or
principally engaged in the operation of vessels, shall pay  a  franchise
tax  which  shall  be equal to three-quarters of one per centum upon its
gross earnings from all sources within this  state,  excluding  earnings
derived from business of an interstate or foreign character; except that
for  taxable  years beginning in nineteen hundred ninety-seven or there-
after, in the case of a corporation, joint-stock company or  association
which,  with  respect  to taxable years beginning after nineteen hundred

S. 6359--A                         138                        A. 8559--A

ninety-seven, has made  an  election  pursuant  to  subdivision  ten  of
section one hundred eighty-three of this article and which is formed for
or  principally  engaged  in the conduct of surface railroad, whether or
not  operated  by steam, subway railroad, elevated railroad, palace car,
sleeping car or trucking business or formed for or  principally  engaged
in  the  conduct  of  two  or more of such businesses, such corporation,
joint-stock company or association shall pay a franchise tax which shall
be equal to [(i) six-tenths of one  percent  for  taxable  years  ending
before  two thousand one, provided that for a taxable year ending in two
thousand the rate shall be  reduced  to  three-eighths  of  one  percent
effective  July first, two thousand with the result that for purposes of
implementation of such change in rate the applicable  rate  for  such  a
year  shall  be  thirty-nine eightieths of one percent, and (ii)] three-
eighths of one percent for taxable years commencing after two  thousand,
upon  its  gross  earnings  from all sources within this state, provided
that in the case of a corporation, joint-stock  company  or  association
formed  for  or  principally engaged in the conduct of surface railroad,
whether or not operated by steam, subway  railroad,  elevated  railroad,
palace  car  or  sleeping  car  business,  or  formed for or principally
engaged in the conduct of two or more of  such  businesses,  such  gross
earnings  shall  not include earnings derived from business of an inter-
state or foreign character.
  Provided, however, with respect to railroad, elevated railroad, palace
car or sleeping car business or any  other  corporation  formed  for  or
principally  engaged  in  the  conduct of a railroad business and canal,
steamboat, ferry (except a ferry company operating between  any  of  the
boroughs  of  the  city  of New York under a lease granted by the city),
navigation or any corporation formed for or principally engaged  in  the
operation  of  vessels where the gross earnings from such transportation
business both originating and terminating within this state and travers-
ing both this state and another state or  states  or  country  shall  be
subject  to the franchise tax imposed by this section (except where such
corporation, joint-stock company or association is formed for or princi-
pally engaged in the conduct of a railroad (including surface  railroad,
whether or not operated by steam, subway railroad or elevated railroad),
palace car or sleeping car business or formed for or principally engaged
in  the  conduct of two or more of such businesses, and has not made the
election provided for under  subdivision  ten  of  section  one  hundred
eighty-three  of  this  article) and such earnings shall be allocated to
this state in the same ratio that the mileage within the state bears  to
the  total  mileage  of such business. Provided, further, a corporation,
joint-stock company or association formed for or principally engaged  in
the  transportation, transmission or distribution of gas, electricity or
steam shall not be subject to tax under  this  section  or  section  one
hundred eighty-three of this article.
  The  term "local telephone business" means the provision or furnishing
of telecommunication services for hire wherein the service furnished  by
the  provider  thereof consists of carrier access service or the service
originates and terminates within the same  local  access  and  transport
area  ("LATA"),  a local access and transport area being that geographic
area as established and approved, and as so set and in existence on July
first, nineteen hundred ninety-four, pursuant  to  the  modification  of
final  judgment  in  United  States  v.  Western Electric Company (civil
action no. 82-0192) in the United States district court for the District
of Columbia or within the LATA-like Rochester non-associated independent
area.

S. 6359--A                         139                        A. 8559--A

  The term "telecommunication services" shall have the meaning  ascribed
to such term in section one hundred eighty-six-e of this article.
  S  63.  The section heading and the opening paragraph of subdivision 1
of section 184-a of the tax law, the section heading as added by chapter
931 of the laws of 1982 and the opening paragraph of  subdivision  1  as
amended  by  section  2 of part A of chapter 59 of the laws of 2013, are
amended to read as follows:
  Additional  [temporary]  metropolitan  transportation   business   tax
surcharge  on  transportation  and transmission corporations and associ-
ations services.
  The term "corporation" as used in this section shall include an  asso-
ciation,  within  the  meaning  of  paragraph three of subsection (a) of
section seventy-seven hundred one of the internal revenue code  (includ-
ing  a  limited  liability  company),  and a publicly traded partnership
treated as a corporation for  purposes  of  the  internal  revenue  code
pursuant  to  section  seventy-seven hundred four thereof.  Every corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease  granted  by  the city), express, navigation, pipe line, transfer,
baggage express, omnibus, taxicab, telegraph or  local  telephone  busi-
ness, or formed for or principally engaged in the conduct of two or more
such  businesses,  and every corporation, joint-stock company or associ-
ation formed for or principally engaged in  the  conduct  of  a  surface
railroad,  whether  or  not operated by steam, subway railroad, elevated
railroad, palace car, sleeping car or trucking business  or  principally
engaged in the conduct of two or more such businesses and which has made
an  election  pursuant to subdivision ten of section one hundred eighty-
three of this article, and every other corporation, joint-stock  company
or  association  formed  for  or principally engaged in the conduct of a
transportation or transmission business (other than  a  telephone  busi-
ness)  except  a  corporation, joint-stock company or association formed
for or principally engaged in the conduct of a surface railroad, whether
or not operated by steam, subway  railroad,  elevated  railroad,  palace
car,  sleeping  car  or  trucking business or principally engaged in the
conduct of two or more such  businesses  and  which  has  not  made  the
election  provided for in subdivision ten of section one hundred eighty-
three of this article, and except a corporation, joint-stock company  or
association  principally  engaged  in the conduct of aviation (including
air freight forwarders acting as principal and like indirect air  carri-
ers)  and except a corporation principally engaged in providing telecom-
munication services between aircraft and dispatcher,  aircraft  and  air
traffic control or ground station and ground station (or any combination
of  the foregoing), at least ninety percent of the voting stock of which
corporation is owned, directly or indirectly, by air carriers and  which
corporation's  principal  function is to fulfill the requirements of (i)
the federal aviation administration (or the successor thereto)  or  (ii)
the  international  civil aviation organization (or the successor there-
to), relating  to  the  existence  of  a  communication  system  between
aircraft  and  dispatcher,  aircraft  and  air traffic control or ground
station and ground station (or any combination of the foregoing) for the
purposes of air safety and navigation [and except a corporation,  joint-
stock  company  or association which is liable to taxation under article
thirty-two of this chapter], shall pay for the privilege  of  exercising
its  corporate franchise, or of doing business, or of employing capital,
or of owning or leasing property in the metropolitan commuter  transpor-

S. 6359--A                         140                        A. 8559--A

tation district in such corporate or organized capacity, or of maintain-
ing  an office in such district, a tax surcharge [for all or any part of
its taxable years commencing on or after January first, nineteen hundred
eighty-two,  but ending before December thirty-first, two thousand eigh-
teen], which tax surcharge, in addition to the tax  imposed  by  section
one  hundred  eighty-four of this article, shall be computed at the rate
of [eighteen percent of the tax imposed under such section  one  hundred
eighty-four  for  such  taxable  years or any part of such taxable years
ending before December thirty-first, nineteen hundred eighty-three after
the deduction of any credits otherwise allowable under this article, and
at the rate of] seventeen percent of the tax imposed under such  section
for  such  taxable years or any part of such taxable years [ending on or
after December thirty-first, nineteen hundred  eighty-three]  after  the
deduction  of  any  credits  otherwise  allowable  under  this  article;
provided, however, that such rates of tax  surcharge  shall  be  applied
only to that portion of the tax imposed under section one hundred eight-
y-four  of  this  article  after  the deduction of any credits otherwise
allowable under this article which is  attributable  to  the  taxpayer's
business  activity carried on within the metropolitan commuter transpor-
tation district[; and provided, further, that the tax surcharge  imposed
by  this section on corporations, joint-stock companies and associations
formed for or principally engaged in the conduct of telephone  or  tele-
graph business shall be computed in accordance with this subdivision and
paragraph  (c)  of subdivision two of this section as if the three-quar-
ters of one percent rate of tax  provided  for  in  subdivision  one  of
section  one hundred eighty-four of this article were applicable to such
telephone and telegraph businesses for taxable years  commencing  on  or
after  January  first,  nineteen  hundred  eighty-five  and ending on or
before  December  thirty-first,  nineteen   hundred   eighty-nine;   and
provided,  further, that the tax surcharge imposed by this section shall
not be imposed upon any taxpayer for more than four  hundred  thirty-two
months].    Provided,  however,  that for taxable years beginning in two
thousand and thereafter,  for  purposes  of  this  subdivision  the  tax
imposed  under  section one hundred eighty-four of this article shall be
deemed to have been  imposed  at  the  rate  of  three-quarters  of  one
percent,  except  that in the case of a corporation, joint-stock company
or association which has made an election pursuant to subdivision ten of
section one hundred eighty-three of this article, for purposes  of  this
subdivision  the  tax  imposed  under section one hundred eighty-four of
this article shall be deemed to have been imposed at the  rate  of  six-
tenths of one percent.
  S 64. Subdivision 8 of section 186-a of the tax law is REPEALED.
  S  65.   The section heading and subdivision 1 of section 186-c of the
tax law, the section heading as amended by chapter  2  of  the  laws  of
1995,  subdivision  1 as amended by section 3 of part II-1 of chapter 57
of the laws of 2008, subparagraph 1 of paragraph (a) of subdivision 1 as
amended by section 3 of part A of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on utility services and excise tax  on  sale  of  telecommuni-
cation  services.  1. (a) (1) Every utility doing business in the metro-
politan commuter transportation district shall pay a tax  surcharge,  in
addition  to the tax imposed by section one hundred eighty-six-a of this
article[, for all or any parts of its taxable  years  commencing  on  or
after  January  first,  nineteen  hundred  eighty-two  but ending before
December thirty-first, two thousand eighteen], to be  computed  [at  the

S. 6359--A                         141                        A. 8559--A

rate  of  eighteen  percent of the tax imposed under section one hundred
eighty-six-a of this article for such taxable years or any part of  such
taxable  years  ending  before  December  thirty-first, nineteen hundred
eighty-three  after  the  deduction  of  any credits otherwise allowable
under this article, and] at the rate of seventeen  percent  of  the  tax
imposed  under  such section [for such taxable years or any part of such
taxable years ending on or after December thirty-first, nineteen hundred
eighty-three] after the deduction of credits otherwise  allowable  under
this  article  except  any  utility credit provided for by article thir-
teen-A of this chapter;  provided,  however,  that  such  rates  of  tax
surcharge shall be applied only to that portion of the tax imposed under
section  one hundred eighty-six-a of this article after the deduction of
credits otherwise allowable under this article, except any utility cred-
it provided for by article thirteen-A of this chapter, which is  attrib-
utable  to  the  taxpayer's  gross income or gross operating income from
business activity carried on within the metropolitan commuter  transpor-
tation  district[; and provided, further, that the tax surcharge imposed
by this section shall not be imposed upon any  taxpayer  for  more  than
four hundred thirty-two months].
  (2)  Provided  however, that [commencing January first, two thousand,]
in the case of the tax imposed under paragraph (a) of subdivision one of
section one hundred eighty-six-a of this article (relating to  providers
of  telecommunications  services) such tax surcharge shall be calculated
as if the tax imposed under section one  hundred  eighty-six-a  of  this
article were imposed at a rate of three and one-half percent.
  (b)  In  addition  to  the  surcharge imposed by paragraph (a) of this
subdivision, there is hereby imposed a surcharge on the  gross  receipts
from  telecommunication  services  relating to the metropolitan commuter
transportation district at the rate of seventeen percent  of  the  state
tax rate under section one hundred eighty-six-e of this article [for all
or part of taxable years commencing on and after January first, nineteen
hundred  ninety-five  but ending before December thirty-first, two thou-
sand thirteen]. All the definitions and other provisions of section  one
hundred  eighty-six-e  of this article shall apply to the tax imposed by
this paragraph with such modification and limitation as may be necessary
(including substituting the words "metropolitan commuter  transportation
district"  for "state" where appropriate) in order to adapt the language
of such  section  one  hundred  eighty-six-e  of  this  article  to  the
surcharge  imposed  by  this paragraph within such metropolitan commuter
transportation district so as to include (1) any intra-district telecom-
munication services, except any  telecommunication  services  the  gross
receipts  from  which are subject to tax under subparagraph four of this
paragraph, (2) any inter-district telecommunication services which orig-
inate or terminate in such district and are charged to a service address
therein regardless of where the amounts charged for  such  services  are
billed  or  ultimately  paid, except any telecommunications services the
gross receipts from which are subject to tax under subparagraph four  of
this  paragraph, (3) as apportioned to such district, private telecommu-
nication services,  except  any  telecommunication  services  the  gross
receipts  from  which are subject to tax under subparagraph four of this
paragraph, and (4) mobile telecommunications service provided by a  home
service provider where the place of primary use is within such metropol-
itan  commuter  transportation  district.  Provided however, [commencing
October first, nineteen hundred ninety-eight] such tax  surcharge  shall
be  calculated  as  if the tax imposed under section one hundred eighty-

S. 6359--A                         142                        A. 8559--A

six-e of this article were imposed at  a  rate  of  three  and  one-half
percent.
  S  66.  Clause  (iii) of subparagraph (D) of paragraph 3 of subsection
(b) of section 605 of the tax law, as added by chapter 658 of  the  laws
of 2003, is amended to read as follows:
  (iii)  Provided  further,  that for the purposes of item (I) of clause
(i) of this subparagraph, a trustee which is a  banking  corporation  as
defined  in subsection (a) of section fourteen hundred fifty-two of this
chapter, AS SUCH SECTION WAS IN EFFECT  ON  DECEMBER  THIRTY-FIRST,  TWO
THOUSAND  FOURTEEN, and which is domiciled outside the state of New York
at the time it becomes a trustee of the trust shall be deemed to contin-
ue to be a trustee domiciled outside the state of New York notwithstand-
ing that it thereafter otherwise becomes  a  trustee  domiciled  in  the
state  of New York by virtue of being acquired by, or becoming an office
or branch of, a corporate trustee domiciled  within  the  state  of  New
York.
  S  67.  Subparagraph  (A) of paragraph 10 of subsection (a) of section
606 of the tax law, as amended by section 3 of part CC of chapter 85  of
the laws of 2002, is amended to read as follows:
  (A)  the business of which the individual is an owner is substantially
similar in operation and in ownership to a business entity  taxable,  or
previously  taxable, under section one hundred eighty-three, one hundred
eighty-four[,] OR one hundred eighty-five [or one hundred eighty-six] of
article nine; article nine-A[, thirty-two] or thirty-three of this chap-
ter; article twenty-three of this  chapter  or  which  would  have  been
subject  to  tax under such article twenty-three (as such article was in
effect on January first, nineteen hundred eighty), ARTICLE THIRTY-TWO OF
THIS CHAPTER OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH  ARTICLE
THIRTY-TWO  (AS SUCH ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO
THOUSAND FOURTEEN) or the income  (or  losses)  of  which  is  (or  was)
includable  under  article twenty-two of this chapter whereby the intent
and purpose of this paragraph and paragraph five of this subsection with
respect to refunding of credit to new business would be evaded; or
  S 68. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law, as amended by section 7 of part C-1 of chapter 57 of the
laws of 2009, clause (ix) as amended by section 4 of part G  of  chapter
59  of  the laws of 2013, clause (xxxi) as added by section 5 of part MM
of chapter 59 of the laws of 2010, clause (xxxi) as added by section  14
of  part Q of chapter 57 of the laws of 2010, clause (xxxii) as added by
section 6 of part V of chapter 61 of the laws of 2011,  clause  (xxxiii)
as  added  by  section  4  of  part D of chapter 56 of the laws of 2011,
clause (xxxiii) as added by section 5 of part E of  chapter  56  of  the
laws  of  2011,  clause  (xxxiii) as added by chapter 604 of the laws of
2011, clause (xxxiv) as added by chapter 109 of the laws of 2012, clause
(xxxv) as added by section 2 of part AA of chapter 59  of  the  laws  of
2013,  clause  (xxxv)  as added by section 4 of part EE of chapter 59 of
the laws of 2013 and clause (xxxvi) as added by section 8 of part  A  of
chapter 68 of the laws of 2013, clause (xxxvii) as added by section 3 of
part  R of this act, and clause (xxxvii) as added by section 5 of part T
of this act, is amended to read as follows:
  (B) shall be treated as the owner of a new business  with  respect  to
such  share  if  the corporation qualifies as a new business pursuant to
paragraph [(j)] (F) of subdivision [twelve] ONE of section  two  hundred
[ten] TEN-B of this chapter.

With respect to the following        The corporation's credit base under

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credit under this section:           section two hundred [ten or section
                                     fourteen hundred fifty-six] TEN-B
                                     of this chapter is:

(i) Investment tax credit under      Investment credit base or qualified
subsection (a)                       rehabilitation expenditures under
                                     subdivision [twelve] ONE of section
                                     two hundred [ten] TEN-B

(ii) Empire zone investment          Cost or other basis under
tax credit under subsection (j)      subdivision [twelve-B] THREE
                                     of section two hundred [ten] TEN-B

[(iii) Empire zone wage tax credit   Eligible wages under subdivision
under subsection (k)                 nineteen of section two hundred
                                     ten or subsection (e) of section
                                     fourteen hundred fifty-six

(iv) Empire zone capital tax         Qualified investments and
credit under subsection (l)          contributions under subdivision
                                     twenty of section two hundred ten
                                     or subsection (d) of section
                                     fourteen hundred fifty-six]

(v) Agricultural property tax        Allowable school district property
credit under subsection (n)          taxes under subdivision
                                     [twenty-two] ELEVEN of
                                     section two hundred [ten]
                                     TEN-B

(vi) Credit for employment of        Qualified first-year wages or
persons with disabilities            qualified second-year wages under
under subsection (o)                 subdivision [twenty-three] TWELVE
                                     of section two hundred [ten or
                                     subsection (f) of section
                                     fourteen hundred fifty-six] TEN-B

(vii) Employment incentive credit    Applicable investment credit base
under subsection (a-1)               under subdivision [twelve-D] TWO
                                     of section two hundred [ten]
                                     TEN-B

(viii) Empire zone employment        Applicable investment credit
incentive credit under subsection    under subdivision [twelve-C]
(j-1)                                FOUR of section
                                     two hundred [ten] TEN-B

(ix) Alternative fuels               Amount of credit under subdivision
and electric vehicle                 [twenty-four] THIRTY of section
recharging property                  two hundred [ten] TEN-B
credit under subsection (p)

(x) Qualified emerging technology    Applicable credit base under
company employment credit under      subdivision [twelve-E] SEVEN
subsection (q)                       of section two hundred [ten] TEN-B

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(xi) Qualified emerging technology   Qualified investments under
company capital tax credit under     subdivision [twelve-F] EIGHT
subsection (r)                       of section two hundred [ten] TEN-B

(xii) Credit for purchase of an      Cost of an automated external
automated external defibrillator     defibrillator under subdivision
under subsection (s)                 [twenty-five] THIRTEEN of section
                                     two hundred [ten or subsection
                                     (j) of section fourteen hundred
                                     fifty-six] TEN-B

(xiii) Low-income housing credit     Credit amount under subdivision
under subsection (x)                 [thirty] FIFTEEN of section
                                     two hundred [ten or subsection
                                     (l) of section fourteen
                                     hundred fifty-six] TEN-B

[(xiv) Credit for transportation     For taxable years beginning
improvement contributions under      before January first, two thousand
subsection (z)                       nine, amount of credit under
                                     subdivision thirty-two of
                                     section two hundred ten
                                     or subsection (n) of section
                                     fourteen hundred fifty-six]

(xv) QEZE credit for real property   Amount of credit under subdivision
taxes under subsection (bb)          [twenty-seven] FIVE of
                                     section two hundred [ten
                                     or subsection (o) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xvi) QEZE tax reduction credit      Amount of benefit period factor,
under subsection (cc)                employment increase factor and zone
                                     allocation factor (without regard
                                     to pro ration) under subdivision
                                     [twenty-eight] SIX of
                                     section two hundred [ten
                                     or subsection (p) of section
                                     fourteen hundred fifty-six]
                                     TEN-B and amount
                                     of tax factor as determined under
                                     subdivision (f) of section sixteen

(xvii) Green building credit under   Amount of green building credit
subsection (y)                       under subdivision [thirty-one]
                                     SIXTEEN of section two
                                     hundred [ten or subsection (m)
                                     of section fourteen hundred
                                     fifty-six] TEN-B

(xviii) Credit for long-term care    Qualified costs under subdivision
insurance premiums under subsection  [twenty-five-a] FOURTEEN
(aa)                                 of section two hundred [ten
                                     or subsection (k) of
                                     section fourteen hundred fifty-six]

S. 6359--A                         145                        A. 8559--A

                                     TEN-B

(xix) Brownfield redevelopment       Amount of credit under subdivision
credit under subsection (dd)         [thirty-three] SEVENTEEN
                                     of section two hundred
                                     [ten or subsection (q) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xx) Remediated brownfield credit    Amount of credit under subdivision
for real property taxes for          [thirty-four] EIGHTEEN
qualified sites under subsection     of section two hundred
(ee)                                 [ten of subsection (r) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxi) Environmental remediation      Amount of credit under subdivision
insurance credit under subsection    [thirty-five] NINETEEN
(ff)                                 of section two hundred
                                     [ten or subsection (s) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxii) Empire state film             Amount of credit for qualified
production credit under              production costs in production of a
subsection (gg)                      qualified film under subdivision
                                     [thirty-six] TWENTY of
                                     section two hundred [ten] TEN-B

[(xxiii) Qualified emerging          Qualifying expenditures and
technology company facilities,       development activities under
operations and training credit       subdivision twelve-G of section two
under subsection (nn)                hundred ten]

(xxiv) Security training tax credit  Amount of credit under subdivision
under subsection (ii)                [thirty-seven] TWENTY-ONE
                                     of section two hundred
                                     [ten or under subsection (t) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

[(xxv) Credit for qualified fuel     For taxable years beginning before
cell electric generating             January first, two thousand nine,
equipment expenditures               amount of credit under subdivision
under subsection (g-2)               thirty-seven of section two hundred
                                     ten or subsection (t) of section
                                     fourteen hundred fifty-six]

(xxvi) Empire state commercial       Amount of credit for qualified
production credit under subsection   production costs in production of
(jj)                                 a qualified commercial under
                                     subdivision [thirty-eight]
                                     TWENTY-THREE of
                                     section two hundred [ten]
                                     TEN-B

S. 6359--A                         146                        A. 8559--A

(xxvii) Biofuel production tax       Amount of credit under subdivision
credit under subsection (jj)         [thirty-eight] TWENTY-FOUR
                                     of section two hundred [ten]
                                     TEN-B

(xxviii) Clean heating fuel credit   Amount of credit under subdivision
under subsection (mm)                [thirty-nine] TWENTY-FIVE of
                                     section two hundred [ten]
                                     TEN-B

(xxix) Credit for rehabilitation     Amount of credit under subdivision
of historic properties under         [forty] TWENTY-SIX of
subsection (oo)                      section two hundred [ten]
                                     TEN-B

 (xxxi) Excelsior jobs program tax   Amount of credit under subdivision
credit under subsection (qq)         [forty-one] THIRTY-ONE of
                                     section two hundred [ten
                                     or under subdivision (u) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

(xxxi) Empire state film             Amount of credit for
post production credit under         qualified post production
subsection (qq)                      costs of a qualified film
                                     under subdivision [forty-one]
                                     THIRTY-TWO of section
                                     two hundred [ten] TEN-B

 (xxxii) Economic transformation     Amount of credit under subdivision
and facility redevelopment credit    [forty-three] THIRTY-FIVE
                                     of section [210 or under
                                     subsection (x) of section fourteen
                                     hundred fifty-six] TWO HUNDRED
                                     TEN-B

 (xxxiii) New York youth works       Amount of credit under
tax credit                           subdivision [forty-four] THIRTY-SIX
                                     of section two hundred [ten]
                                     TEN-B

 (xxxiii) Empire state jobs          Amount of credit under
retention program credit             subdivision [forty-four]
                                     THIRTY-SEVEN of section
                                     two hundred [ten or under
                                     subsection (y) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxxiii) Credit for companies who    Amount of credit under
provide transportation to            subdivision [forty-four]
individuals with disabilities        THIRTY-EIGHT of section
under subsection (tt)                two hundred [ten] TEN-B

(xxxiv) Beer production credit       Amount of credit under
under subsection (uu)                [subdivision] subdivision

S. 6359--A                         147                        A. 8559--A

                                     [forty-five] THIRTY-NINE of
                                     section two hundred [ten]
                                     TEN-B

(xxxv) Hire a vet credit             Amount of credit under subdivision
under subsection (a-2)               [twenty-three-a] TWENTY-NINE
                                     of section two hundred [ten
                                     or subsection (e-1) of
                                     of section fourteen hundred
                                     fifty-six] TEN-B

(xxxv) Minimum wage reimbursement    Amount of credit under subdivision
credit under subsection (aaa)        [forty-six] FORTY
                                     of section two hundred
                                     [ten or subsection (z) of
                                     section fourteen hundred
                                     fifty-six] TEN-B

(xxxvi) Tax-free NY area tax         Amount of credit under
elimination credit                   subdivision [forty-seven] FORTY-ONE
                                     of section two hundred [ten]
                                     TEN-B

(xxxvii) Real property tax           Amount of credit under
credit for manufacturers             subdivision [forty-eight]
under subsection (xx)                FORTY-THREE of section
                                     two hundred [ten] TEN-B

(xxxvii) Tax-free NY area            Amount of credit under
excise tax on                        subdivision [forty-eight]
telecommunications services          FORTY-FOUR of section
credit under subsection (xx)         two hundred [ten] TEN-B

  S  69.  Subparagraphs  (A) and (B) of paragraph 3 of subsection (i) of
section 606 of the tax law, as added by chapter 170 of the laws of 1994,
are amended to read as follows:
  (A) Credit carryover. Any excess  credit  under  subparagraph  (A)  of
paragraph  one of this subsection, as it was in effect for taxable years
beginning before nineteen hundred ninety-four, may be  carried  over  to
the  shareholder's following year or years and may be deducted from such
shareholder's tax for such year or years, except that any excess  credit
attributable  to  subdivision  [twelve] ONE of section two hundred [ten]
TEN-B of this chapter shall in no event be carried over beyond  the  ten
taxable years next following the taxable year of origin.
  (B)  Credit  recapture. Any redetermination of credit required by this
subsection as it was in effect for taxable years beginning before  nine-
teen hundred ninety-four, upon disposition or cessation of qualified use
of property pursuant to paragraph [(g)] (E) of subdivision [twelve] ONE,
OR  paragraph  (f) of subdivision [twelve-B or paragraph (f) of subdivi-
sion eighteen] THREE of section two hundred [ten] TEN-B of this  chapter
shall  be  attributed  in  pro  rata shares to the shareholders who were
allowed credit under this subsection with respect to such property,  and
the  reduction  of a shareholder's proportionate stock interest shall be
treated as a disposition of property  for  which  a  redetermination  of
credit under such paragraphs is required with respect to such sharehold-
er.

S. 6359--A                         148                        A. 8559--A

  S  69-a.  Section  606  of  the  tax  law  is  amended by adding a new
subsection (yy-1) to read as follows:
  (YY-1)  (1)  EXCEPT  AS  OTHERWISE  PROVIDED  IN PARAGRAPH TWO OF THIS
SUBSECTION, IN ANY TAXABLE YEAR, A TAXPAYER MUST FIRST CLAIM ANY OF  THE
CREDITS  SPECIFIED  IN  THIS  SECTION ON ITS ORIGINALLY FILED RETURN FOR
SUCH TAXABLE YEAR. A TAXPAYER SHALL NOT  FIRST  CLAIM  A  CREDIT  ON  AN
AMENDED RETURN.
  (2)  A  TAXPAYER  MAY  FIRST  CLAIM A CREDIT ON AN AMENDED RETURN ONLY
UNDER THE FOLLOWING CIRCUMSTANCES:
  (I) THE TAXPAYER'S ELIGIBILITY FOR THE CREDIT OR  THE  AMOUNT  OF  THE
CREDIT THE TAXPAYER IS ALLOWED IS DETERMINED BY A GOVERMENT AGENCY OTHER
THAN THE DEPARTMENT.
  (II) THE INFORMATION NECESSARY TO DETERMINE THE TAXPAYER'S ELIGIBILITY
FOR  A  CREDIT  OR  THE  AMOUNT OF THE CREDIT ALLOWED IS CONTAINED IN AN
INFORMATION RETURN THE TAXPAYER RECEIVES AFTER THE ORIGINAL  RETURN  FOR
THE TAXABLE YEAR IS FILED.
  (III) THE TAXPAYER IS REQUIRED TO FILE AN AMENDED RETURN FOR A TAXABLE
YEAR  PURSUANT TO SECTION SIX HUNDRED FIFTY-NINE OF THIS ARTICLE AND THE
CHANGES OR CORRECTIONS THAT  NECESSITATE  THE  FILING  OF  SUCH  AMENDED
RETURN  IMPACT  THE TAXPAYER'S ELIGIBILITY FOR A CREDIT OR THE AMOUNT OF
CREDIT THAT MAY BE CLAIMED IN THAT TAXABLE YEAR.
  S 70. Subparagraph (B) of paragraph 3 and paragraph 21  of  subsection
(b)  and  paragraph  21 of subsection (c) of section 612 of the tax law,
subparagraph (B) of paragraph 3 of subsection (b) as amended by  section
57,  paragraph  21  of subsection (b) as amended by section 59 and para-
graph 21 of subsection (c) as amended by section 60 of part A of chapter
389 of the laws of 1997, are amended to read as follows:
  (B) Shareholders of S corporations. In the case of a shareholder of an
S corporation, with respect to taxes imposed  upon  or  payable  by  the
corporation,  the  term "income taxes" in subparagraph (A) of this para-
graph shall also include the  taxes  imposed  under  [articles]  ARTICLE
nine-A  [and  thirty-two]  of this chapter, regardless of the measure of
such tax, but shall not otherwise include taxes imposed by this  or  any
other  state  of the United States, or any political subdivision of this
or any other state, or the District of Columbia.
  (21) In relation to the disposition of  stock  or  indebtedness  of  a
corporation  which  elected  under  subchapter  s  of chapter one of the
internal revenue code for any taxable year of  such  corporation  begin-
ning,  in the case of a corporation taxable under article nine-A of this
chapter, after December thirty-first, nineteen hundred eighty,  [and  in
the case of a corporation taxable under article thirty-two of this chap-
ter,  after  December  thirty-first,  nineteen  hundred ninety-six,] the
amount required to be added to federal adjusted gross income pursuant to
subsection (n) of this section.
  (21) In relation to the disposition of  stock  or  indebtedness  of  a
corporation  which  elected  under  subchapter  s  of chapter one of the
internal revenue code for any taxable year of  such  corporation  begin-
ning,  in the case of a corporation taxable under article nine-A of this
chapter, after December thirty-first, nineteen hundred eighty,  [and  in
the case of a corporation taxable under article thirty-two of this chap-
ter,  after  December  thirty-first,  nineteen  hundred ninety-six,] the
amounts required to be subtracted from  federal  adjusted  gross  income
pursuant to subsection (n) of this section.
  S  71. Paragraph 2 of subsection (a) of section 632 of the tax law, as
amended by section 2 of part C of chapter 57 of the  laws  of  2010,  is
amended to read as follows:

S. 6359--A                         149                        A. 8559--A

  (2) In determining New York source income of a nonresident shareholder
of an S corporation where the election provided for in subsection (a) of
section  six  hundred sixty of this article is in effect, there shall be
included only the portion derived from or connected with New York sourc-
es  of  such  shareholder's  pro  rata  share  of items of S corporation
income, loss and deduction entering  into  his  federal  adjusted  gross
income,  increased  by  reductions for taxes described in paragraphs two
and three of subsection (f) of section thirteen hundred sixty-six of the
internal revenue code, as such portion shall be determined  under  regu-
lations  of  the commissioner consistent with the applicable methods and
rules for allocation under article nine-A [or thirty-two] of this  chap-
ter,  regardless of whether or not such item or reduction is included in
entire net income under article nine-A [or thirty-two] for the tax year.
If a nonresident is a shareholder in an S corporation where the election
provided for in subsection (a) of section  six  hundred  sixty  of  this
article  is in effect, and the S corporation has distributed an install-
ment obligation under section 453(h)(1)(A) of the Internal Revenue Code,
then any gain recognized on the receipt of payments from the installment
obligation for federal income tax purposes will be treated as  New  York
source income allocated in a manner consistent with the applicable meth-
ods  and  rules  for  allocation under article nine-A [or thirty-two] of
this chapter in the year that the assets were sold. In addition, if  the
shareholders  of  the  S corporation have made an election under section
338(h)(10) of the Internal Revenue Code, then any gain recognized on the
deemed asset sale for federal income tax purposes will be treated as New
York source income allocated in a manner consistent with the  applicable
methods and rules for allocation under article nine-A [or thirty-two] of
this  chapter  in  the  year  that  the  shareholder  made  the  section
338(h)(10) election. For purposes of a section 338(h)(10) election, when
a nonresident shareholder exchanges his or her S  corporation  stock  as
part  of  the  deemed  liquidation, any gain or loss recognized shall be
treated as the disposition of an intangible asset and will not  increase
or  offset  any gain recognized on the deemed assets sale as a result of
the section 338(h)(10) election.
  S 72. Subparagraph (A) of paragraph 4 of subsection (c) of section 658
of the tax law, as amended by section 1 of part DD of chapter 686 of the
laws of 2003, is amended to read as follows:
  (A) General. Every entity which is a partnership, other than a public-
ly traded partnership as defined in section 7704 of the federal Internal
Revenue Code, subchapter K limited liability company or an S corporation
for which the election provided for in subsection  (a)  of  section  six
hundred  sixty  of this [article] PART is in effect, which has partners,
members or shareholders who  are  nonresident  individuals,  as  defined
under  subsection  (b) of section six hundred five of this article, or C
corporations, and which has any income derived from  New  York  sources,
determined  in  accordance  with  the  applicable  rules  of section six
hundred thirty-one of this article as in the case of a nonresident indi-
vidual, shall pay estimated tax on such income on behalf of  such  part-
ners,  members or shareholders in the manner and at the times prescribed
by subsection (c) of section six hundred eighty-five  of  this  article.
For  purposes  of  this paragraph, the term "estimated tax" shall mean a
partner's, member's or shareholder's  distributive  share  or  pro  rata
share  of the entity income derived from New York sources, multiplied by
the highest rate of tax prescribed by section six hundred  one  of  this
article  for  the taxable year of any partner, member or shareholder who
is an individual taxpayer,  or  paragraph  (a)  of  subdivision  one  of

S. 6359--A                         150                        A. 8559--A

section  two  hundred  ten  of  this chapter for the taxable year of any
partner, member or shareholder which is a C corporation, whether or  not
such  C corporation is subject to tax under article nine, nine-A[, thir-
ty-two,]  or  thirty-three of this chapter, and reduced by the distribu-
tive share or pro rata share of any credits determined under section one
hundred eighty-seven, one  hundred  eighty-seven-a,  six  hundred  six[,
fourteen  hundred  fifty-six] or fifteen hundred eleven of this chapter,
whichever is applicable, derived from the entity.
  S 73. Subsections  (a)  and  (h)  of  section  660  of  the  tax  law,
subsection (a) as amended by section 50 and subsection (h) as amended by
section  66 of part A of chapter 389 of the laws of 1997, are amended to
read as follows:
  (a) Election. If a corporation  is  an  eligible  S  corporation,  the
shareholders  of  the  corporation  may elect in the manner set forth in
subsection (b) of this section to  take  into  account,  to  the  extent
provided for in this article (or in article thirteen of this chapter, in
the case of a shareholder which is a taxpayer under such article), the S
corporation  items  of  income, loss, deduction and reductions for taxes
described in paragraphs two and three of subsection (f) of section thir-
teen hundred sixty-six of the internal revenue code which are taken into
account for federal  income  tax  purposes  for  the  taxable  year.  No
election  under this subsection shall be effective unless all sharehold-
ers of the corporation have so elected. An eligible S corporation is (i)
an S corporation which is subject to tax under article nine-A [or  thir-
ty-two] of this chapter, OR (ii) an S corporation which is the parent of
a qualified subchapter S subsidiary subject to tax under article nine-A,
where  the  shareholders of such parent corporation are entitled to make
the election under this subsection by reason of  subparagraph  three  of
paragraph  (k)  of subdivision nine of section two hundred eight of this
chapter[; or (iii) an S corporation which is the parent of  a  qualified
subchapter  S corporation subject to tax under article thirty-two, where
the shareholders of such parent are entitled to make the election  under
this  subsection  by  reason  of  paragraph  three  of subsection (o) of
section fourteen hundred fifty-three of this chapter].
  (h) Cross reference. For definitions relating to S  corporations,  see
subdivision  one-A of section two hundred eight [and subsections (f) and
(g) of section fourteen hundred fifty] of this chapter.
  S 74. Paragraph 1 of subsection (i) of section 660 of the tax law,  as
added  by  section  1  of  part  L of chapter 60 of the laws of 2007, is
amended to read as follows:
  (1) Notwithstanding the provisions in subsection (a) of this  section,
in  the  case  of an eligible S corporation for which the election under
subsection (a) of this section is not in effect for the current  taxable
year,  the  shareholders of an eligible S corporation are deemed to have
made that election effective for the  eligible  S  corporation's  entire
current  taxable year, if the eligible S corporation's investment income
for the current taxable year is more than fifty percent of  its  federal
gross  income  for  such  year  [provided that this subsection shall not
apply to an eligible S corporation that is subject to tax under  article
thirty-two  of this chapter]. IN DETERMINING AN ELIGIBLE S CORPORATION'S
INVESTMENT INCOME, THE INVESTMENT INCOME OF  A  QUALIFIED  SUBCHAPTER  S
SUBSIDIARY  OWNED  DIRECTLY  OR INDIRECTLY BY THE ELIGIBLE S CORPORATION
SHALL BE INCLUDED.
  S 75. Paragraph 3 of subsection (c) of section 1085 of the tax law, as
amended by section 15 of part Y of chapter 63 of the laws  of  2000,  is
amended to read as follows:

S. 6359--A                         151                        A. 8559--A

  (3)  The  provisions of this subsection and subsections (d) and (e) of
this section shall apply to the failure of a taxpayer to file a declara-
tion of estimated tax surcharge or the failure to pay all or any part of
an amount which is applied as an installment against such estimated  tax
surcharge  pursuant  to sections one hundred ninety-seven-a, one hundred
ninety-seven-b, two hundred thirteen-a, two hundred  thirteen-b,  [four-
teen  hundred  sixty, fourteen hundred sixty-one,] fifteen hundred thir-
teen and fifteen hundred fourteen  of  this  chapter.  For  purposes  of
applying this section and subsections (d) and (e) of this section to the
estimated  tax surcharge, where appropriate the term "tax" shall be read
to mean "tax surcharge," and the terms "amount  required  to  be  paid,"
"amount  which  would  be  required to be paid," and "amount which would
have been required to be paid" shall be computed as the product  of  (1)
such  amount computed without regard to the tax surcharges imposed under
sections  one  hundred  eighty-four-a,  one  hundred  eighty-six-c,  one
hundred  eighty-eight, two hundred nine-A, two hundred nine-B, [fourteen
hundred fifty-five-A, fourteen hundred  fifty-five-B,]  fifteen  hundred
five-a,  and  fifteen  hundred  twenty  of this chapter, and (2) the MTA
percentage. The term "MTA percentage" shall mean the product of (A)  the
tax rate applicable under such sections imposing such surcharges and (B)
the  percentage  utilized  in  determining the portion of the taxpayer's
business activity carried on within the metropolitan commuter  transpor-
tation district under such sections.
  S  76.  The  opening  paragraph  of subparagraph (A) of paragraph 3 of
subsection (d) of section 1085 of the tax law, as amended by chapter 170
of the laws of 1994, is amended to read as follows:
  An amount equal to ninety-one percent of the tax for the taxable  year
computed  on all items entering into the computation of the tax or taxes
of the taxpayer for the taxable year under article nine, nine-A[,  thir-
ty-two]  or  thirty-three of this chapter. For purposes of computing the
tax, all items of receipts, income and expenses shall be  placed  on  an
annualized basis--
  S  77. Clause (i) of subparagraph (A) of paragraph 4 of subsection (d)
of section 1085 of the tax law, as amended by chapter 57 of the laws  of
1993, is amended to read as follows:
  (i)  take  the items entering into the computation of the tax or taxes
of the taxpayer for the taxable year under article nine, nine-A[,  thir-
ty-two] or thirty-three of this chapter, for all months during the taxa-
ble year preceding the filing month,
  S 78. Paragraph 5 of subsection (d) of section 1085 of the tax law, as
added by chapter 61 of the laws of 1989, is amended to read as follows:
  (5)  In the case of any declaration installment, any reduction in such
installment resulting from the application of paragraph three or four of
this subsection shall be recaptured by increasing the amount of the next
installment determined under paragraph one or two of this subsection  or
paragraph  one  of  subsection (c) of this section by the amount of such
reduction (and by increasing subsequent installments to the extent  that
the  reduction has not previously been recaptured under this paragraph).
For purposes of the preceding sentence, a declaration installment  means
any installment of estimated tax other than the mandatory first install-
ment  required  under  paragraph  (a)  of subdivision one of section one
hundred ninety-seven-b, subdivision (a) of  section  two  hundred  thir-
teen-b[, subsection (a) of section fourteen hundred sixty-one] or subdi-
vision (a) of section fifteen hundred fourteen of this chapter.

S. 6359--A                         152                        A. 8559--A

  S 79. Paragraph 1 of subsection (e) of section 1085 of the tax law, as
amended  by  section 28-p of part H-3 of chapter 62 of the laws of 2003,
is amended to read as follows:
  (1) Paragraphs (1) and (2) of subsection (d) of this section shall not
apply  in  the  case of any corporation (or any predecessor corporation)
which had [entire net] BUSINESS income, or the portion thereof allocated
within the state, of one million dollars or more for  any  taxable  year
during  the  three  taxable years immediately preceding the taxable year
involved; provided, however, that in the case of a  corporation  subject
to  tax  under section fifteen hundred two-a of this chapter, paragraphs
(1) and (2) of subsection (d) of this section shall not  apply  if  such
corporation  had  entire  net  income,  or the portion thereof allocated
within the state, of one million dollars or more for any  of  the  three
taxable years immediately preceding the taxable year involved, or if the
direct  premiums  subject  to tax under section fifteen hundred two-a of
this chapter of the corporation for any of such three preceding  taxable
years  beginning on or after January first, two thousand three equals or
exceeds three million seven hundred fifty thousand dollars.
  S 80. Subsections (m) and (o) of section  1085  of  the  tax  law  are
REPEALED.
  S  81.  Clause  (ii)  of subparagraph (B) of paragraph 2 of subsection
(q), paragraph 3 of subsection (s) and the closing  paragraph  of  para-
graph  1  of  subsection (t) of section 1085 of the tax law, as added by
section 10 of part N of chapter 61 of the laws of 2005, are  amended  to
read as follows:
  (ii)  fifty percent of the gross income that the organizer or material
advisor derived with respect to activities that were the basis  for  the
requirement to file, disclose or provide information pursuant to section
six  thousand  eleven  of  the internal revenue code, to the extent such
gross income is attributable to the avoidance of any tax  imposed  under
article nine, nine-A[, thirty-two,] or thirty-three of this chapter.
  (3)  For  purposes  of  this  subsection,  the term "understatement of
liability" means any understatement  of  the  net  amount  payable  with
respect  to any tax imposed under article nine, nine-A[, thirty-two,] or
thirty-three of this chapter or any  overstatement  of  the  net  amount
creditable or refundable with respect to any such tax.
shall  pay,  with respect to each activity described in subparagraph (A)
of this paragraph, a penalty equal to one thousand dollars  or,  if  the
person  establishes  that it is lesser, one hundred percent of the gross
income derived (or to be derived) by such person from such  activity  to
the  extent  such gross income is attributed to the avoidance of any tax
imposed under articles nine, nine-A[,  thirty-two]  or  thirty-three  of
this  chapter;  provided,  however,  that if an activity with respect to
which a penalty imposed  under  this  subsection  involves  a  statement
described  in  clause  (i)  of subparagraph (B) of paragraph one of this
subsection, the penalty shall be equal to fifty  percent  of  the  gross
income derived (or to be derived) from that activity within the state by
the  person on which the penalty is imposed. For purposes of the preced-
ing sentence, activities described in clause (i) of subparagraph (A)  of
this  paragraph  with  respect  to  each  entity or arrangement shall be
treated as a separate activity and participation in each sale  described
in  clause (ii) of subparagraph (A) of this paragraph shall be so treat-
ed.
  S 82. The opening paragraph of subsection (c) of section 1087  of  the
tax  law,  as  separately amended by chapters 760 and 770 of the laws of
1992, is amended to read as follows:

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  If a taxpayer is required by subdivision three of section two  hundred
eleven[,  subsection (e) of section fourteen hundred sixty-two] or para-
graph one of subdivision (e) of section fifteen hundred fifteen OF  THIS
CHAPTER, to file a report or amended return in respect of (i) a decrease
or  increase  in  federal  taxable income or federal alternative minimum
taxable income or federal tax, or (ii) a federal change or correction or
renegotiation, or computation or recomputation of tax, which is  treated
in  the  same manner as if it were an overpayment for federal income tax
purposes, claim for credit or refund of any resulting overpayment of tax
shall be filed by the taxpayer within  two  years  from  the  time  such
report  or amended return was required to be filed with the commissioner
[of taxation and finance]. If the report or amended return  required  by
any  such provision of law is not filed within the period therein speci-
fied, no interest shall be payable on any claim for credit or refund  of
the  overpayment  attributable  to the federal change or correction. The
amount of such credit or refund--
  S 83. Subsection (g) of section 1088 of the tax  law,  as  amended  by
chapter  61 of the laws of 1989 and relettered by chapter 55 of the laws
of 1992, is amended to read as follows:
  (g) Cross-reference.--For provision with  respect  to  interest  after
failure  to  file  a report or amended return under subdivision three of
section two hundred eleven[, subsection (e) of section fourteen  hundred
sixty-two]  or  paragraph  one  of  subdivision  (e)  of section fifteen
hundred fifteen, see subsection (c) of section one thousand  eighty-sev-
en.
  S 84. Paragraph 2 of subsection (b) of section 1096 of the tax law, as
amended  by  chapter  411  of  the  laws  of 1986, is amended to read as
follows:
  (2) The [tax commission] COMMISSIONER may take any action under  para-
graph  one  of  this  subdivision  to  inquire into the commission of an
offense connected with the administration or enforcement of this article
or article nine, [nine-a] NINE-A,  thirteen,  [thirteen-a,  thirty-two,]
THIRTEEN-A  or  thirty-three  of  this  chapter, provided, however, that
notwithstanding the provisions of section one  hundred  seventy-four  of
this  chapter  no  such  action  shall  be  taken when a referral by the
department or the [tax commission] COMMISSIONER to the attorney general,
a district attorney or any other  prosecutorial  agency  is  in  effect.
Provided,  however,  the [tax commission] COMMISSIONER shall have power,
during the period when such referral is in  effect,  to  examine  or  to
cause  to have examined, by any agent or representative designated by it
for that purpose, any books, papers, records or memoranda  bearing  upon
the  matters  required  to  be included in the return, where such books,
papers, records or memoranda are in its possession, or where such books,
papers, records or memoranda are  in  the  possession  of  the  attorney
general,  district  attorney or other prosecutorial agency to which such
referral is made.
  S 85. Paragraph 1 of subsection (e) of section 1096 of the tax law, as
amended by section 8 of subpart D of part V1 of chapter 57 of  the  laws
of 2009, is amended to read as follows:
  (1)  Authority to set interest rates.---The commissioner shall set the
overpayment and underpayment rates of interest to be  paid  pursuant  to
sections  two  hundred  thirteen,  two  hundred  thirteen-b, two hundred
fifty-eight, two hundred sixty-three, two hundred ninety-four, one thou-
sand eighty-four, one thousand eighty-five[,] AND one  thousand  eighty-
eight[,  fourteen hundred sixty-one and fourteen hundred sixty-three] of
this chapter, but if no such rate or rates of  interest  are  set,  such

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overpayment  rate shall be deemed to be set at six percent per annum and
such underpayment rate shall be deemed to be set at seven  and  one-half
percent  per annum. Such overpayment and underpayment rates shall be the
rates  prescribed in paragraph two of this subsection, but the underpay-
ment rate shall not be less than seven and one-half percent  per  annum.
Any  such  rates  set  by  the commissioner shall apply to taxes, or any
portion thereof, which remain or become due or overpaid on or after  the
date  on  which  such  rates  become effective and shall apply only with
respect to interest computed or computable for periods  or  portions  of
periods occurring in the period during which such rates are in effect.
  S  86. Subdivision (b) of section 1201-a of the tax law, as amended by
section 5 of part Y of chapter 62 of the laws of  2006,  is  amended  to
read as follows:
  (b) Empire state film production credit. Any city in this state having
a  population  of one million or more, acting through its local legisla-
tive body, is hereby authorized to adopt and amend local laws to allow a
credit against the general corporation tax and the unincorporated  busi-
ness  tax  imposed  pursuant  to  the authority of chapter seven hundred
seventy-two of the laws of nineteen hundred  sixty-six  which  shall  be
substantially  identical to the credit allowed under section twenty-four
of this chapter, except that (A) the percentage of qualified  production
costs  used to calculate such credit shall be five percent, (B) whenever
such section twenty-four references the state, such words shall be  read
as  referencing  the  city,  (C)  such credit shall be allowed only to a
taxpayer which is a qualified  film  production  company,  and  (D)  the
effective  date  of  such  credit shall be July first, two thousand six.
Such credit shall be applied in a  manner  consistent  with  the  credit
allowed  under  subdivision  [thirty-six]  TWENTY of section two hundred
[ten] TEN-B of this chapter except as may  be  necessary  to  take  into
account differences between the general corporation tax and the unincor-
porated business tax.
  S  87. Subdivision (c) of section 1201-a of the tax law, as amended by
chapter 300 of the laws of 2007, is amended to read as follows:
  (c) Empire state commercial production credit. Any city in this  state
having  a  population  of  one million or more, acting through its local
legislative body, is hereby authorized to adopt and amend local laws  to
allow a credit against the general corporation tax and the unincorporat-
ed  business  tax  imposed  pursuant  to  the authority of chapter seven
hundred seventy-two of the laws  of  nineteen  hundred  sixty-six  which
shall  be  substantially  identical  to  the  credit  allowed  under the
provisions of section twenty-eight of this chapter, except that (A)  the
percentage  of  qualified production costs used to calculate such credit
shall be five percent, (B) whenever such section twenty-eight references
the state, such words shall be read as referencing the  city,  (C)  such
credit  shall  be allowed only to a taxpayer that is a qualified commer-
cial production company, and (D) the effective date of such credit shall
be as provided in local laws. Such credit shall be applied in  a  manner
consistent  with  the  credit  allowed  under subdivision [thirty-eight]
TWENTY-THREE of section two hundred [ten] TEN-B of this  chapter  except
as may be necessary to take into account differences between the general
corporation tax and unincorporated business tax.
  S 88. The section heading and paragraphs 1 and 3 of subdivision (a) of
section  1505-a  of the tax law, the section heading as added by chapter
11 of the laws of 1983 and paragraphs 1 and  3  of  subdivision  (a)  as
amended  by  section  6 of part A of chapter 59 of the laws of 2013, are
amended to read as follows:

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  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on insurance corporations.
  (1)  Every  domestic  insurance corporation and every foreign or alien
insurance corporation, and every life insurance corporation described in
subdivision (b) of section fifteen hundred one of this article, for  the
privilege  of  exercising its corporate franchise, or of doing business,
or of employing capital, or of owning or leasing property in the  metro-
politan  commuter  transportation  district  in a corporate or organized
capacity, or of maintaining  an  office  in  the  metropolitan  commuter
transportation  district,  [for  all  or  any  part of its taxable years
commencing on or after January first, nineteen hundred  eighty-two,  but
ending  before  December  thirty-first,  two  thousand eighteen,] except
corporations specified in subdivision (c)  of  section  fifteen  hundred
twelve  of  this  article,  shall annually pay, in addition to the taxes
otherwise imposed by this article, a tax surcharge on the taxes  imposed
under  this  article after the deduction of any credits otherwise allow-
able under this article as allocated to such district. Such taxes  shall
be  allocated  to  such  district  for  purposes  of  computing such tax
surcharge upon taxpayers subject to tax under subdivision (b) of section
fifteen hundred ten of this article by applying the methodology,  proce-
dures  and computations set forth in subdivisions (a) and (b) of section
fifteen hundred four of this article, except that  references  to  terms
denoting  New York premiums, and total wages, salaries, personal service
compensation and commissions within New York shall be read  as  denoting
within  the  metropolitan  commuter  transportation  district  and terms
denoting total premiums and  total  wages,  salaries,  personal  service
compensation and commissions shall be read as denoting within the state.
If it shall appear to the commissioner that the application of the meth-
odology,  procedures and computations set forth in such subdivisions (a)
and (b) does not properly reflect the activity, business or income of  a
taxpayer  within the metropolitan commuter transportation district, then
the commissioner shall be authorized, in the commissioner's  discretion,
to  adjust such methodology, procedures and computations for the purpose
of allocating such taxes by:
  (A) excluding one or more factors therein;
  (B) including one or more other factors  therein,  such  as  expenses,
purchases,  receipts  other  than  premiums,  real  property or tangible
personal property; or
  (C) any other similar or different method which allocates  such  taxes
by  attributing a fair and proper portion of such taxes to the metropol-
itan commuter transportation district. The  commissioner  from  time  to
time  shall  publish all rulings of general public interest with respect
to any application of the provisions  of  the  preceding  sentence.  The
commissioner  may  promulgate rules and regulations to further implement
the provisions of this section.
  (3) Such tax surcharge shall be computed  at  the  rate  of  [eighteen
percent  of  the  taxes  imposed  under sections fifteen hundred one and
fifteen hundred ten of  this  article  as  limited  by  section  fifteen
hundred  five  of  this article, as allocated to such district, for such
taxable years or any part of such taxable years ending  before  December
thirty-first,  nineteen  hundred eighty-three after the deduction of any
credits otherwise allowable under this article, at the rate of seventeen
percent of the taxes imposed under such sections as limited  by  section
fifteen hundred five of this article, as allocated to such district, for
such  taxable years or any part of such taxable years ending on or after
December thirty-first, nineteen hundred eighty-three and before  January

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first,  two  thousand three after the deduction of any credits otherwise
allowable under this article, and at the rate of] seventeen  percent  of
the  taxes  imposed  under sections fifteen hundred one, fifteen hundred
two-a,  and fifteen hundred ten of this article, as limited or otherwise
determined by subdivision (a) or (b) of section fifteen hundred five  of
this  article, as allocated to such district, [for such taxable years or
any part of such taxable years ending after December  thirty-first,  two
thousand  two]  after  the  deduction of any credits otherwise allowable
under this article[; provided, however, that the tax  surcharge  imposed
by  this  section  shall  not be imposed upon any taxpayer for more than
four hundred thirty-two months].  Provided  however,  that  for  taxable
years  commencing  on or after July first, two thousand, and in the case
of taxpayers subject to tax under section fifteen hundred two-a of  this
article,  for taxable years of such taxpayers beginning on or after July
first, two thousand and before January first, two thousand  three,  such
surcharge  shall  be  calculated  as if (i) the rate of the tax computed
under paragraph one of subdivision (a) of section fifteen hundred two of
this article was nine percent and (ii) the rate of the limitation on tax
set forth in section fifteen hundred five of this article for  domestic,
foreign  and  alien  insurance corporations except life insurance corpo-
rations was two and six-tenths percent.
  S 89. Section 1825 of the tax law, as amended by section 2 of  part  E
of chapter 25 of the laws of 2009, is amended to read as follows:
  S  1825.  Violation  of secrecy provisions of the tax law.--Any person
who violates the provisions of subdivision (b)  of  section  twenty-one,
subdivision one of section two hundred two, subdivision eight of section
two  hundred  eleven, subdivision (a) of section three hundred fourteen,
subdivision one or two of section  four  hundred  thirty-seven,  section
four  hundred  eighty-seven,  subdivision  one  or  two  of section five
hundred fourteen, subsection (e) of section  six  hundred  ninety-seven,
subsection  (a)  of section nine hundred ninety-four, subdivision (a) of
section eleven hundred forty-six, section twelve  hundred  eighty-seven,
subdivision (a) of section fourteen hundred eighteen, [subsection (a) of
section  fourteen  hundred  sixty-seven,]  subdivision  (a)  of  section
fifteen hundred eighteen, subdivision (a)  of  section  fifteen  hundred
fifty-five  of  this  chapter, and subdivision (e) of section 11-1797 of
the administrative code of the city of New York shall  be  guilty  of  a
misdemeanor.
  S 90. Subdivisions (s) and (t) of section 957 of the general municipal
law,  as  amended  by  section 1 of part S1 of chapter 57 of the laws of
2009, are amended to read as follows:
  (s) "Qualified investment project" shall mean a  project  (i)  located
within  an  empire zone, (ii) at which five hundred or more jobs will be
created, provided such jobs are new to the state and are in addition  to
any  other  jobs  previously created by the owner of such project in the
state, and (iii) which will consist of tangible  personal  property  and
other  tangible  property, including buildings and structural components
of buildings, described in subparagraphs  (i),  (ii),  (iii),  (iv)  and
clause  (A)  or  (C) of subparagraph (v) of paragraph (b) of subdivision
[twelve-B] THREE of section two hundred [ten] TEN-B of the tax law,  the
basis  of  which  for  federal  income tax purposes will equal or exceed
seven hundred fifty million dollars. Provided however, the owner of such
project does not employ more than two hundred persons in  the  state  at
the time such project is commenced.
  (t)  "Significant capital investment project" shall mean a project (i)
located within an empire  zone,  (ii)  which  will  be  either  a  newly

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constructed  facility or a newly constructed addition to or expansion of
a qualified investment project, consisting of tangible personal property
and other tangible property, including buildings and  structural  compo-
nents  of  buildings,  described in subparagraphs (i), (ii), (iii), (iv)
and clause (A) or (C) of subparagraph (v) of paragraph (b)  of  subdivi-
sion [twelve-B] THREE of section two hundred [ten] TEN-B of the tax law,
the  basis of which for federal income tax purposes will equal or exceed
seven hundred fifty million dollars, (iii) which  is  constructed  after
the  basis  for  federal  income tax purposes of the property comprising
such qualified investment project equals or exceeds seven hundred  fifty
million  dollars,  and  (iv)  at which five hundred or more jobs will be
created, provided such jobs are new to the state and are in addition  to
any  other  jobs  previously created by the owner of such project in the
state.
  S 91. Subclauses (III) and (IV) of clause (ii) of subparagraph (B)  of
paragraph 6 of subdivision (a) of section 292 of the tax law, as amended
by section 3 of part E of chapter 59 of the laws of 2013, are amended to
read as follows:
  (III)  [The  adjustment  required in this paragraph shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in  the  form  specified by the commissioner, that: (a) the royalty
payment was paid, accrued or incurred  to  a  related  member  organized
under  the  laws  of  a  country  other  than the United States; (b) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United  States;  (c)
the  related member was subject to tax in a foreign nation on a tax base
that included the royalty payment  paid,  accrued  or  incurred  by  the
taxpayer; (d) the related member's income from the transaction was taxed
in  such  country  at  an  effective  rate of tax at least equal to that
imposed by this state; and (e) the royalty payment was paid, accrued  or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (IV)] The adjustment required in this paragraph shall not apply if the
taxpayer and the commissioner agree in writing to the application or use
of alternative adjustments or computations. The commissioner may, in his
or  her  discretion,  agree  to  the  application  or use of alternative
adjustments or computations when he or she concludes that in the absence
of such agreement the income of  the  taxpayer  would  not  be  properly
reflected.
  S  92.  Clauses  (iii)  and (iv) of subparagraph (B) of paragraph 2 of
subsection (r) of section 612 of the tax law, as amended by section 5 of
part E of chapter 59 of the  laws  of  2013,  are  amended  to  read  as
follows:
  (iii)  [The  adjustment required in this subsection shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in  the  form  specified by the commissioner, that: (I) the royalty
payment was paid, accrued or incurred  to  a  related  member  organized
under  the  laws  of  a  country  other than the United States; (II) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the related member was subject to tax in a foreign nation on a tax  base
that  included  the  royalty  payment  paid,  accrued or incurred by the
taxpayer; (IV) the related member's  income  from  the  transaction  was
taxed  in  such  country at an effective tax rate at least equal to that
imposed by this state; and (V) the royalty payment was paid, accrued  or

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incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)]  The  adjustment  required in this subsection shall not apply if
the taxpayer and the commissioner agree in writing to the application or
use of alternative adjustments or computations. The commissioner may, in
his or her discretion, agree to the application or  use  of  alternative
adjustments or computations when he or she concludes that in the absence
of  such  agreement  the  income  of  the taxpayer would not be properly
reflected.
  S 93. Intentionally omitted.
  S 94. Subclauses (III) and (IV) of clause (ii) of subparagraph (B)  of
paragraph  14  of  subdivision  (b)  of  section 1503 of the tax law, as
amended by section 8 of part E of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  (III)  [The  adjustment  required in this paragraph shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in  the  form  specified by the commissioner, that: (a) the royalty
payment was paid, accrued or incurred  to  a  related  member  organized
under  the  laws  of  a  country  other  than the United States; (b) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United  States;  (c)
the  related member was subject to tax in a foreign nation on a tax base
that included the royalty payment  paid,  accrued  or  incurred  by  the
taxpayer; (d) the related member's income from the transaction was taxed
in  such  country  at  an  effective  rate of tax at least equal to that
imposed by this state; and (e) the royalty payment was paid, accrued  or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (IV)] The adjustment required in this paragraph shall not apply if the
taxpayer and the commissioner agree in writing to the application or use
of alternative adjustments or computations. The commissioner may, in his
or  her  discretion,  agree  to  the  application  or use of alternative
adjustments or computations when he or she concludes that in the absence
of such agreement the income of  the  taxpayer  would  not  be  properly
reflected.
  S  95.  Clauses  (iii)  and (iv) of subparagraph (B) of paragraph 2 of
subdivision (e) of section 11-506 of the administrative code of the city
of New York, as amended by section 9 of part E of chapter 59 of the laws
of 2013, are amended to read as follows:
  (iii) [The adjustment required in this subdivision shall not apply  if
the  taxpayer  establishes, by clear and convincing evidence of the type
and in the form specified by the commissioner of finance, that: (I)  the
royalty payment was paid, accrued or incurred to a related member organ-
ized  under the laws of a country other than the United States; (II) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the related member was subject to tax in a foreign nation on a tax  base
that  included  the  royalty  payment  paid,  accrued or incurred by the
taxpayer; (IV) the related member's  income  from  the  transaction  was
taxed in such country at an effective rate of tax at least equal to that
imposed  by  this city; and (V) the royalty payment was paid, accrued or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)] The adjustment required in this subdivision shall not  apply  if
the  taxpayer  and  the  commissioner of finance agree in writing to the
application or use  of  alternative  adjustments  or  computations.  The

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commissioner  of  finance  may,  in  his or her discretion, agree to the
application or use of alternative adjustments or computations when he or
she concludes that in the absence of such agreement the  income  of  the
taxpayer would not be properly reflected.
  S  96.  Subclauses  (iii)  and (iv) of clause (B) of subparagraph 2 of
paragraph (n) of subdivision 8 of section 11-602 of  the  administrative
code  of  the  city  of  New York, as amended by section 10 of part E of
chapter 59 of the laws of 2013, are amended to read as follows:
  (iii) [The adjustment required in this paragraph shall  not  apply  if
the  taxpayer  establishes, by clear and convincing evidence of the type
and in the form specified by the commissioner of finance, that: (I)  the
royalty payment was paid, accrued or incurred to a related member organ-
ized  under the laws of a country other than the United States; (II) the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the related member was subject to tax in a foreign nation on a tax  base
that  included  the  royalty  payment  paid,  accrued or incurred by the
taxpayer; (IV) the related member's  income  from  the  transaction  was
taxed in such country at an effective rate of tax at least equal to that
imposed  by  this city; and (V) the royalty payment was paid, accrued or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)] The adjustment required in this paragraph shall not apply if the
taxpayer and the commissioner of finance agree in writing to the  appli-
cation  or  use  of alternative adjustments or computations. The commis-
sioner of finance may, in his or her discretion, agree to  the  applica-
tion  or  use  of alternative adjustments or computations when he or she
concludes that in the absence  of  such  agreement  the  income  of  the
taxpayer would not be properly reflected.
  S  97.  Clauses  (iii)  and (iv) of subparagraph (B) of paragraph 2 of
subdivision (q) of section 11-641 of the administrative code of the city
of New York, as amended by section 11 of part E of  chapter  59  of  the
laws of 2013, are amended to read as follows:
  (iii)  [The adjustment required in this subdivision shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in the form specified by the commissioner of finance, that: (I) the
royalty payment was paid, accrued or incurred to a related member organ-
ized under the laws of a country other than the United States; (II)  the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the  related member was subject to tax in a foreign nation on a tax base
that included the royalty payment  paid,  accrued  or  incurred  by  the
taxpayer;  (IV)  the  related  member's  income from the transaction was
taxed in such country at an effective rate of tax at least equal to that
imposed by this city; and (V) the royalty payment was paid,  accrued  or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)]  The  adjustment required in this subdivision shall not apply if
the taxpayer and the commissioner of finance agree  in  writing  to  the
application  or  use  of  alternative  adjustments  or computations. The
commissioner of finance may, in his or  her  discretion,  agree  to  the
application or use of alternative adjustments or computations when he or
she  concludes  that  in the absence of such agreement the income of the
taxpayer would not be properly reflected.
  S 98. Clauses (iii) and (iv) of subparagraph (B)  of  paragraph  2  of
subdivision  (t)  of  section  11-1712 of the administrative code of the

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city of New York, as amended by section 12 of part E of  chapter  59  of
the laws of 2013, are amended to read as follows:
  (iii)  [The adjustment required in this subdivision shall not apply if
the taxpayer establishes, by clear and convincing evidence of  the  type
and  in the form specified by the commissioner of finance, that: (I) the
royalty payment was paid, accrued or incurred to a related member organ-
ized under the laws of a country other than the United States; (II)  the
related member's income from the transaction was subject to a comprehen-
sive income tax treaty between such country and the United States; (III)
the  related member was subject to tax in a foreign nation on a tax base
that included the royalty payment  paid,  accrued  or  incurred  by  the
taxpayer;  (IV)  the  related  member's  income from the transaction was
taxed in such country at an effective rate of tax at least equal to that
imposed by this city; and (V) the royalty payment was paid,  accrued  or
incurred pursuant to a transaction that was undertaken for a valid busi-
ness purpose and using terms that reflect an arm's length relationship.
  (iv)]  The  adjustment required in this subdivision shall not apply if
the taxpayer and the commissioner of finance agree  in  writing  to  the
application  or  use  of  alternative  adjustments  or computations. The
commissioner of finance may, in his or  her  discretion,  agree  to  the
application or use of alternative adjustments or computations when he or
she  concludes  that  in the absence of such agreement the income of the
taxpayer would not be properly reflected.
  S 99. Notwithstanding any  provisions  of  law  to  the  contrary  and
notwithstanding  the  repeal of article 32 of the tax law by section one
of this act, the repeal of section 180 of the tax law by section two  of
this  act  and the repeal of section 181 of the tax law by section three
of this act, all provisions  of  such  article  and  such  sections,  in
respect to the imposition, exemption, assessment, payment, payment over,
determination,  collection,  and  credit  or refund of tax, interest and
penalty imposed thereunder, the filing of forms and returns, the preser-
vation of records for the purposes of such tax, the secrecy of  returns,
the disposition of revenues, and the civil and criminal penalties appli-
cable  to  the  violation  of the provisions of such article 32 and such
sections 180 and 181, shall continue  in  full  force  and  effect  with
respect to all such tax accrued for taxable years beginning before Janu-
ary  1,  2015;  and  all  actions  and  proceedings,  civil or criminal,
commenced or authorized to be  commenced  under  or  by  virtue  of  any
provision  of  such  article  32  or  by virtue of any provision of such
section 180 or 181 so repealed, and pending  or  able  to  be  commenced
immediately prior to the taking effect of such repeal, may be commenced,
prosecuted and defended to final effect in the same manner as they might
if such provisions were not so repealed.
  S  100.  Subdivision  1  of  section 187 of the tax law, as amended by
chapter 2 of the laws of 1995, is amended to read as follows:
  1. A taxpayer shall be allowed a credit, to be  credited  against  the
taxes  imposed by this article, other than the taxes and fees imposed by
sections [one hundred  eighty,  one  hundred  eighty-one,]  one  hundred
eighty-six-a and one hundred eighty-six-e of this chapter. The amount of
the  credit  shall  be  the  amount  of  the special additional mortgage
recording tax paid by the taxpayer pursuant to the provisions of  subdi-
vision one-a of section two hundred fifty-three of this chapter on mort-
gages  recorded  on  and  after January first, nineteen hundred seventy-
nine. Provided, however,  that  the  amount  of  such  credit  allowable
against the tax imposed by section one hundred eighty-four of this chap-
ter  shall  be the excess of the amount of such special additional mort-

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gage recording tax paid over the amount of any credit  allowed  by  this
section  against  the tax imposed by section one hundred eighty-three of
this chapter. Provided further, however, no credit shall be allowed with
respect  to  a  mortgage  of real property principally improved or to be
improved by one or more structures containing in the aggregate not  more
than  six  residential dwelling units, each dwelling unit having its own
separate cooking facilities, where the real property is located  in  one
or more of the counties comprising the metropolitan commuter transporta-
tion  district and where the mortgage is recorded on or after May first,
nineteen hundred eighty-seven.  Provided  further,  however,  no  credit
shall be allowed with respect to a mortgage of real property principally
improved  or  to be improved by one or more structures containing in the
aggregate not more than six residential dwelling  units,  each  dwelling
unit having its own separate cooking facilities, where the real property
is  located  in the county of Erie and where the mortgage is recorded on
or after May first, nineteen hundred eighty-seven.
  S 101. Subdivision 1 of section 187-a of the  tax  law,  as  added  by
chapter 142 of the laws of 1997, is amended to read as follows:
  1.    Allowance of credit. A taxpayer shall be allowed a credit, to be
computed as hereinafter provided, against  the  taxes  imposed  by  this
article,  other  than the taxes imposed by sections [one hundred eighty,
one hundred eighty-one,] one hundred eighty-six-a, one  hundred  eighty-
six-e  and one hundred eighty-nine of this article, for employing within
the state a qualified employee. Provided, however, the amount of  credit
allowed  by  this section against the tax imposed by section one hundred
eighty-four of this article shall be the excess of the  credit  computed
under  this  section  over  the amount of credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  S  102.  Subdivision  1  of  section 190 of the tax law, as amended by
section 17 of part B of chapter 58 of the laws of 2004,  is  amended  to
read as follows:
  1.  General.  A  taxpayer  shall  be  allowed a credit against the tax
imposed by this article[, other than  the  taxes  and  fees  imposed  by
sections one hundred eighty and one hundred eighty-one of this article,]
equal  to twenty percent of the premium paid during the taxable year for
long-term care insurance. In order  to  qualify  for  such  credit,  the
taxpayer's premium payment must be for the purchase of or for continuing
coverage under a long-term care insurance policy that qualifies for such
credit  pursuant  to  section  one thousand one hundred seventeen of the
insurance law.
  S 103. Subdivision 5 of section 192 of the tax law is REPEALED.
  S 104. Clauses 1 and 2 of subparagraph (A)  and  subparagraph  (B)  of
paragraph (iii) of subdivision 9 of section 16-v of section 1 of chapter
174  of  the laws of 1968 constituting the urban development corporation
act, as added by section 1 of part C of chapter 59 of the laws of  2013,
is amended to read as follows:
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under the following provisions of the  tax  law:  article
nine-A; section one hundred eighty-three, OR one hundred eighty-four [or
one  hundred eighty-five] of article nine; [article thirty-two] or arti-
cle thirty-three; or
  (2) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable  or  previously  taxable under the

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following provisions of the tax law: article nine-A; section one hundred
eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
y-five or former section one hundred eighty-six of article nine;  FORMER
article thirty-two; article thirty-three; article twenty-three, or would
have  been subject to tax under such article twenty-three (as such arti-
cle was in effect on January first,  nineteen  hundred  eighty)  or  the
income  (or  losses) of which is (or was) includable under article twen-
ty-two; or
  (B) a sole proprietorship, partnership, limited  partnership,  limited
liability  company,  or  New  York  subchapter S corporation that is not
substantially similar in operation and in ownership to a business entity
(or entities) taxable, or previously taxable, under  article  nine-A  of
the  tax law, section one hundred eighty-three, one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  former  section  one  hundred
eighty-six  of article nine of the tax law, FORMER article thirty-two or
ARTICLE thirty-three of the tax law, article twenty-three of the tax law
or which would have been subject to tax under such article  twenty-three
(as  such  article  was  in  effect  on  January first, nineteen hundred
eighty) or the income (or losses) of which is (or was) includable  under
article twenty-two of the tax law; and
  S  105. Section 206 of the tax law, as added by chapter 69 of the laws
of 1978, is amended to read as follows:
  S 206.   Deposit and disposition of  revenue.    The  [license  fees,]
taxes,  percentage,  interest  and other charges imposed by this article
shall be collected and deposited and receipts  therefor  issued  by  the
[tax  commission,  except  that  such  license  fees, taxes, percentage,
interest and other charges imposed by section one hundred eighty of this
chapter shall be collected and deposited and receipts therefor issued by
the proper state officer in accordance with the provisions  of  subdivi-
sion  two  of  section one hundred eighty of this chapter,] COMMISSIONER
and all revenues  so  collected  or  received  shall  be  deposited  and
disposed  of  pursuant to the provisions of section one hundred seventy-
one-a of this chapter.
  S 106. Subsection (a) of section 1080 of the  tax  law,  as  added  by
chapter 188 of the laws of 1964, is amended to read as follows:
  (a)  General.---  The  provisions  of  this article shall apply to the
administration of and the procedures with respect to the  taxes  imposed
by  articles  nine  [(except  section one hundred eighty)], AND nine-a[,
nine-b and nine-c] of this chapter for taxable years or  periods  ending
on or after December thirty-first, nineteen hundred sixty-four.
  S  107.  Subdivisions  (a)  and (c) of section 1809 of the tax law, as
added by section 1 of subpart A of part S of chapter 57 of the  laws  of
2010, are amended to read as follows:
  (a)  Any  person  who, with intent to evade payment of any tax imposed
under article nine [(other than under section one hundred eighty or  one
hundred  eighty-one)],  nine-A,  thirteen, [thirty-two,] thirty-three or
thirty-three-A of this chapter, fails to file a  return  or  report  for
three  consecutive  taxable  years  shall be guilty of a class E felony,
provided that such person had an unpaid tax liability, in excess of  the
threshold  amount  with respect to each of the three consecutive taxable
years. The threshold amount in the case of a taxable year under  article
nine-A  of  this  chapter  ending after June thirtieth, nineteen hundred
eighty-nine is the applicable  fixed  dollar  minimum  prescribed  under
paragraph  (d)  of  subdivision  one  of section two hundred ten of this
chapter. In the event such fixed dollar minimum is less than two hundred
fifty dollars, the threshold amount in the case of such taxable year  is

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two  hundred  fifty  dollars. In all other cases the threshold amount is
two hundred fifty dollars.
  (c)  As  used  in  this section, the terms "return" and "report" shall
mean a return or report required under section one  hundred  ninety-two,
two  hundred  eleven,  two hundred ninety-four, [fourteen hundred sixty-
two,] fifteen hundred fifteen or  fifteen  hundred  fifty-four  of  this
chapter.    It  shall  not  include  any return or report referred to in
section one hundred ninety-seven-a, two  hundred  thirteen-a,  [fourteen
hundred sixty] or fifteen hundred thirteen of this chapter.
  S  108.  Paragraphs (d), (e), (g), (h) and (q) of section 104-A of the
business corporation law, subdivisions (d), (e) and (q)  as  amended  by
chapter 166 of the laws of 1991, subdivision (g) as added by chapter 591
of  the  laws  of 1982, and subdivision (h) as amended by chapter 117 of
the laws of 1986, are amended to read as follows:
  (d) For filing a certificate of incorporation pursuant to section four
hundred two of this chapter, one hundred twenty-five dollars  [plus  the
tax on shares prescribed by section one hundred eighty of the tax law].
  (e)  For  filing  a certificate of amendment pursuant to section eight
hundred five of this chapter, sixty dollars  [plus  the  tax  on  shares
prescribed  by section one hundred eighty of the tax law if such certif-
icate shows a change of shares].
  (g) For filing a restated certificate  of  incorporation  pursuant  to
section eight hundred seven of this chapter, sixty dollars [plus the tax
on  shares  prescribed  by  section one hundred eighty of the tax law if
such certificate shows a change of shares].
  (h) For filing a certificate of merger or  consolidation  pursuant  to
section  nine hundred four of this chapter, or a certificate of exchange
pursuant to section nine hundred thirteen (other than paragraph  (g)  of
section  nine hundred thirteen) of this chapter, sixty dollars [plus the
tax on shares prescribed by section one hundred eighty of the tax law if
such certificate shows a change of shares].
  (q) For filing  a  certificate  of  incorporation  by  a  professional
service  corporation  pursuant  to section fifteen hundred three of this
chapter, one  hundred  twenty-five  dollars  [plus  the  tax  on  shares
prescribed by section one hundred eighty of the tax law].
  S  109.  Subdivision 8 of section 7-a of the general associations law,
as added by chapter 575 of the laws of  1964,  is  amended  to  read  as
follows:
  8. The provisions of section ninety-six of the executive law prescrib-
ing  the  fee  to  be  collected by the department of state for filing a
certificate of incorporation under the business  corporation  law  shall
apply  to  the certificate of incorporation to be filed pursuant to this
section[, and the organization tax payable  under  section  one  hundred
eighty of the tax law in respect of a corporation formed under the busi-
ness  corporation law shall be paid before the department of state shall
file such certificate of incorporation].
  S 110. Severability. If any provision of this act shall for any reason
be finally adjudged by any court of competent jurisdiction to be  inval-
id,  such judgment shall not affect, impair, or invalidate the remainder
of this act, but shall be confined in its  operation  to  the  provision
directly  involved  in the controversy in which such judgment shall have
been rendered. It is hereby declared to be in the intent of the legisla-
ture that this  act  would  have  been  enacted  even  if  such  invalid
provision  had  not  been  included  in this act. Provided further, if a
court of final, competent jurisdiction adjudges the tax rates imposed on
qualified New York manufacturers  to  be  invalid,  qualified  New  York

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manufacturers  shall  be  subject  to  the  same  tax rates as all other
taxpayers subject to tax under article 9-A  of  the  tax  law.  Provided
further,  if  a court of final, competent jurisdiction adjudges that any
of  the  tax  credits provided by this act to be invalid, such credit or
credits shall be deemed repealed and shall be of no force and effect  as
to any taxpayers.
  S  111.  This act shall take effect January 1, 2015 and shall apply to
taxable years commencing on or after such date; provided that the amend-
ments to section 25 of the tax law made by section forty-three  of  this
act  shall  not  affect  the  repeal of such section and shall be deemed
repealed therewith; provided, further, that the amendments to the  open-
ing  paragraph  of  subdivision  (a), subparagraph (C) of paragraph 2 of
subdivision (e) and subdivision (f) of section 35 of the tax law made by
section fifty of this act shall not affect the repeal of such provisions
and shall be deemed repealed  therewith;  provided,  further,  that  the
amendments  to  clause  (xxxii)  of  subparagraph  (B) of paragraph 1 of
subsection (i) of section 606 of the tax law made by section sixty-eight
of this act shall not affect the repeal of  such  clause  and  shall  be
deemed  repealed  therewith;  provided,  further, that the amendments to
clause (xxxiii) of subparagraph (B) of paragraph 1 of subsection (i)  of
section 606 of the tax law made by section sixty-eight of this act shall
not affect the repeal of such clause and shall be deemed repealed there-
with;  and  provided,  further,  that  the  amendments to clause (ii) of
subparagraph (B) of paragraph  2  of  subsection  (q),  paragraph  3  of
subsection  (s)  and  the closing paragraph of paragraph 1 of subsection
(t) of section 1085 of the tax law made by section  eighty-one  of  this
act  shall  not affect the repeal of such provisions and shall be deemed
repealed therewith.

                                 PART B

  Section 1. Subparagraph (iii) of paragraph (a) of  subdivision  14  of
section  425 of the real property tax law, as added by section 1 of part
J of chapter 57 of the laws of 2013, is amended to read as follows:
  (iii) An owner who fails to register by the registration  deadline  so
established  shall be permitted to file a petition with the commissioner
requesting that the commissioner excuse such failure and accept  a  late
registration, provided that such petition shall explain why such failure
occurred  and shall be filed no later than one year after such deadline,
AND PROVIDED FURTHER THAT IF THE COMMISSIONER ACCEPTS A  LATE  REGISTRA-
TION  AFTER HAVING DIRECTED THE REMOVAL OF THE BASIC STAR EXEMPTION FROM
THE PROPERTY TO WHICH THE REGISTRATION PERTAINS, THEN IN LIEU OF DIRECT-
ING THE EXEMPTION TO BE RESTORED, THE COMMISSIONER IS AUTHORIZED IN  HIS
OR  HER DISCRETION TO REMIT DIRECTLY TO THE PROPERTY OWNER OR OWNERS THE
TAX SAVINGS THAT THE EXEMPTION  WOULD  HAVE  YIELDED  HAD  IT  NOT  BEEN
REMOVED,  AND TO FURTHER DIRECT THE ASSESSOR TO RESTORE THE EXEMPTION ON
A PROSPECTIVE BASIS WITHOUT A NEW APPLICATION UNLESS  THE  ASSESSOR  HAS
REASON  TO  BELIEVE  THAT  THE  PROPERTY OWNER IS NO LONGER ELIGIBLE FOR
REASONS OTHER THAN A FAILURE TO REGISTER;
  S 2. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2014.

                                 PART C

  Section  1. Section 2 of chapter 540 of the laws of 1992, amending the
real property tax law relating to oil and gas  charges,  as  amended  by

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section  1  of  part  A of chapter 59 of the laws of 2012, is amended to
read as follows:
  S  2.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 1992; provided,
however that any charges imposed by section 593 of the real property tax
law as added by section one of this act shall first be  due  for  values
for assessment rolls with tentative completion dates after July 1, 1992,
and  provided  further,  that  this  act  shall remain in full force and
effect until March 31, [2015] 2018, at which time  section  593  of  the
real  property  tax  law  as  added  by section one of this act shall be
repealed.
  S 2. This act shall take effect immediately.

                                 PART D

  Section 1. Subdivision 1 of section 236  of  the  racing,  pari-mutuel
wagering and breeding law, as amended by chapter 18 of the laws of 2008,
is amended to read as follows:
  1. Every corporation authorized under this chapter to conduct pari-mu-
tuel  betting at a race meeting on races run thereat, except as provided
in section two hundred thirty-eight of this article with respect to  the
franchised corporation, shall distribute all sums deposited in any pari-
mutuel  pool  to  the holders of winning tickets therein, providing such
tickets be presented for payment before April first of the year  follow-
ing  the  year  of  their purchase, less an amount which shall be estab-
lished and retained by such racing corporation of  between  fourteen  to
twenty  per centum of the total deposits in pools resulting from regular
on-track bets and less sixteen to twenty-two per  centum  of  the  total
deposits  in pools resulting from multiple on-track bets and less twenty
to thirty per centum of the total deposits in pools resulting from exot-
ic on-track bets and less twenty to thirty-six per centum of  the  total
pools  resulting  from  super exotic on-track bets, plus the breaks. The
retention rate to be established is subject to the prior approval of the
[racing and wagering board] COMMISSION.  Such rate may  not  be  changed
more  than once per calendar quarter to be effective on the first day of
the calendar quarter. "Exotic bets" and "multiple bets" shall  have  the
meanings  set forth in section five hundred nineteen of this chapter and
breaks are hereby defined as the odd cents over any multiple of ten,  or
for  exotic  bets  over any multiple of fifty, or for super exotic bets,
over any multiple of one hundred, calculated on the basis of one dollar,
otherwise payable to a patron provided, however,  that  effective  after
October  fifteenth,  nineteen  hundred  ninety-four  breaks  are  hereby
defined as the odd cents over any multiple of five for  payoffs  greater
than one dollar five cents but less than five dollars, over any multiple
of  ten  for payoffs greater than five dollars but less than twenty-five
dollars, over any multiple of twenty-five for payoffs greater than twen-
ty-five dollars but less than two hundred fifty  dollars,  or  over  any
multiple  of  fifty  for  payoffs over two hundred fifty dollars. "Super
exotic bets" shall have the meaning set forth in section  three  hundred
one  of  this  chapter. Of the amount so retained there shall be paid by
such corporation to the department of taxation and finance as a  reason-
able  tax  by  the  state  for  the  privilege of conducting pari-mutuel
betting on the races run at the race meeting held by  such  corporation,
which tax is hereby levied, the following percentages of the total pool,
plus fifty-five per centum of the breaks; the applicable rates for regu-
lar and multiple bets shall be one and one-half per centum; the applica-

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ble  rates for exotic bets shall be six and three-quarter per centum and
the applicable rate for super exotic bets shall be seven and three-quar-
ter per centum. Effective on and after September first, nineteen hundred
ninety-four,  the  applicable  tax  rate  shall be one per centum of all
wagers, provided that,  an  amount  equal  to  one-half  the  difference
between the taxation rate for on-track regular, multiple and exotic bets
as of December thirty-first, nineteen hundred ninety-three and the rates
on such on-track wagers as herein provided shall be used exclusively for
purses. Provided, however, that for any twelve-month period beginning on
April  first in nineteen hundred ninety and any year thereafter, each of
the applicable rates set forth above shall be increased  by  one-quarter
of  one  per  centum on all on-track bets of any such racing corporation
that did not expend an amount equal to at  least  one-half  of  one  per
centum  of  its  on-track bets during the immediately preceding calendar
year for enhancements consisting of capital improvements as  defined  by
section  two  hundred thirty-seven of this article, repairs to its phys-
ical plant, structures, and equipment used in  its  racing  or  wagering
operations as certified by the [state racing and wagering board] COMMIS-
SION  to  the  commissioner of taxation and finance no later than eighty
days after the close of such calendar year, and five special  events  at
each  track  in each calendar year, not otherwise conducted in the ordi-
nary course of business, the purpose of which  shall  be  to  encourage,
attract  and  promote  track  attendance and encourage new and continued
patronage, which events shall be approved by the  [racing  and  wagering
board] COMMISSION for purposes of this subdivision. In the determination
of  the  amounts  expended for such enhancements, the [board] COMMISSION
may consider the immediately preceding twelve month calendar  period  or
the average of the two immediately preceding twelve month calendar peri-
ods.  Provided  further,  however,  that of the portion of the increased
amounts retained by such corporation above  those  amounts  retained  in
nineteen  hundred  eighty-four,  an  amount  of  such  increase shall be
distributed to purses in the same proportion as commissions  and  purses
were distributed during nineteen hundred eighty-four as certified by the
[board]  COMMISSION. Such corporation in the second zone shall receive a
credit against the daily tax imposed by this subdivision  in  an  amount
equal  to  one per centum of total daily pools resulting from the simul-
cast of such corporation's races  to  licensed  facilities  operated  by
regional  off-track  betting corporations in accordance with section one
thousand eight of this chapter, provided however, that sixty per  centum
of the amount of such credit shall be used exclusively to increase purs-
es  for  overnight  races  conducted  by such corporation; and, provided
further, that in no event shall such total daily credit exceed  one  per
centum  of  the total daily pool of such corporation. Provided, however,
that on and after September first,  nineteen  hundred  ninety-four  such
credit  shall be four-tenths percent of total daily pools resulting from
such simulcasting and that in no event shall  such  total  daily  credit
equal four-tenths percent of the total daily pool of such corporation.
  Such corporation shall pay to the New York state thoroughbred breeding
and  development  fund  one-half  of  one  per centum of the total daily
on-track pari-mutuel pools from regular, multiple and exotic  bets,  and
three  per  centum  of  super exotic bets. The corporation shall receive
credit as a reduction of the tax by  the  state  for  the  privilege  of
conducting pari-mutuel betting for the amounts, except amounts paid from
super  exotic  betting  pools,  paid  to the New York state thoroughbred
breeding and development fund  after  January  first,  nineteen  hundred
seventy-eight.

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  Such  corporation  shall distribute to purses an amount equal to fifty
per centum of any compensation it receives  from  simulcasting  or  from
wagering conducted outside the United States. Such corporation shall pay
to the [racing and wagering board] COMMISSION as a regulatory fee, which
fee  is hereby levied, [fifty] SIXTY hundredths of one per centum of the
total daily on-track pari-mutuel pools of such corporation.
  S 2. Paragraph (d) of subdivision 1 of  section  238  of  the  racing,
pari-mutuel  wagering  and breeding law, as amended by chapter 18 of the
laws of 2008, is amended to read as follows:
  (d) The pari-mutuel tax rate  authorized  by  paragraph  (a)  of  this
subdivision shall be effective so long as a franchised corporation noti-
fies  the  [racing and wagering board] COMMISSION by August fifteenth of
each year that such pari-mutuel tax rate is effective of its  intent  to
conduct a race meeting at Aqueduct racetrack during the months of Decem-
ber,  January, February, March and April. For purposes of this paragraph
such race meeting shall consist of not less  than  ninety-five  days  of
racing.  Not later than May first of each year that such pari-mutuel tax
rate  is  effective,  the  [racing  and wagering board] COMMISSION shall
determine whether a race meeting at Aqueduct racetrack consisted of  the
number  of days as required by this paragraph. In determining the number
of race days, cancellation of a race day because of an act of God, which
the [racing and wagering board] COMMISSION approves or because of weath-
er conditions that are unsafe or hazardous which the [racing and  wager-
ing  board]  COMMISSION  approves shall not be construed as a failure to
conduct a race day. Additionally, cancellation of a race day because  of
circumstances  beyond  the  control  of  such franchised corporation for
which the [racing and wagering board] COMMISSION  gives  approval  shall
not  be construed as a failure to conduct a race day. If the [racing and
wagering board] COMMISSION determines that the number of days of  racing
as required by this paragraph have not occurred then the pari-mutuel tax
rate in paragraph (a) of this subdivision shall revert to the pari-mutu-
el  tax rates in effect prior to January first, nineteen hundred ninety-
five. Such franchised corporation shall pay to the [racing and  wagering
board]  COMMISSION  as  a  regulatory  fee,  which fee is hereby levied,
[fifty] SIXTY hundredths of one per centum of the total  daily  on-track
pari-mutuel pools of such franchised corporation.
  S  3. Paragraph d of subdivision 1 of section 318 of the racing, pari-
mutuel wagering and breeding law, as amended by section 3 of part  B  of
chapter 59 of the laws of 2005, is amended to read as follows:
  d.  Every  harness  racing association or corporation shall pay to the
[board] COMMISSION as a regulatory fee,  which  fee  is  hereby  levied,
[fifty]  SIXTY  hundredths  of  one  percent of the total daily on-track
pari-mutuel pools of such association or corporation.
  S 4. The opening paragraph of subdivision 1  of  section  527  of  the
racing,  pari-mutuel wagering and breeding law, as amended by chapter 18
of the laws of 2008, is amended to read as follows:
  The disposition of the retained commission from pools  resulting  from
regular,  multiple or exotic bets, as the case may be, whether placed on
races run within a region or  outside  a  region,  conducted  by  racing
corporations, harness racing associations or corporations, quarter horse
racing associations or corporations or races run outside the state shall
be governed by the tables in paragraphs a and b of this subdivision. The
rate  denominated  "state  tax" shall represent the rate of a reasonable
tax imposed upon the retained commission for the privilege of conducting
off-track pari-mutuel betting, which tax is hereby levied and  shall  be
payable  in the manner set forth in this section. Each off-track betting

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corporation shall pay to the [racing and wagering board] COMMISSION as a
regulatory fee, which fee is hereby levied, [fifty] SIXTY hundredths  of
one  percent  of  the total daily pools of such corporation. Each corpo-
ration  shall also pay twenty per centum of the breaks derived from bets
on harness races and fifty per centum of the breaks derived from bets on
all other races to the agriculture and New York State horse breeding and
development fund and to the thoroughbred breeding and development  fund,
the  total  of  such payments to be apportioned fifty per centum to each
such fund. For the purposes of this section, the New York city, Suffolk,
Nassau, and the Catskill regions shall constitute a  single  region  and
any  thoroughbred track located within the Capital District region shall
be deemed to be within such single region. A  "regional  meeting"  shall
refer to either harness or thoroughbred meetings, or both, except that a
franchised  corporation shall not be a regional track for the purpose of
receiving distributions from bets on thoroughbred races conducted  by  a
thoroughbred  track  in  the Catskill region conducting a mixed meeting.
With the exception of a harness racing association or corporation  first
licensed  to  conduct  pari-mutuel  wagering at a track located in Tioga
county after January first, two thousand five, racing corporations first
licensed to conduct pari-mutuel racing  after  January  first,  nineteen
hundred  eighty-six or a harness racing association or corporation first
licensed to conduct pari-mutuel wagering at a track located  in  Genesee
County  after January first, two thousand five, and quarter horse tracks
shall not be "regional tracks"; if there is more than one harness  track
within  a region, such tracks shall evenly divide payments made pursuant
to the tables in paragraphs a and b of  this  subdivision  when  neither
track  is  running.  In  the event a track elects to reduce its retained
percentage from any or all of its pari-mutuel pools, the payments to the
track holding the race and the regional track required by  paragraphs  a
and  b  of  this  subdivision  shall  be  reduced  in proportion to such
reduction. Nothing in this section shall be construed to  authorize  the
conduct  of off-track betting contrary to the provisions of section five
hundred twenty-three of this article.
  S 5. Paragraph a of subdivision 1 of section 904 of the racing,  pari-
mutuel  wagering  and breeding law, as amended by chapter 18 of the laws
of 2008, is amended to read as follows:
  a. The applicable state tax provided for in  paragraphs  a  and  b  of
subdivision  one  of  section  five hundred twenty-seven of this chapter
shall be one-half per centum for regular, multiple and exotic bets.  Any
harness  racing  or  association  or corporation, or thoroughbred racing
corporation authorized pursuant to this section shall pay to the [racing
and wagering board] COMMISSION as a regulatory fee, which fee is  hereby
levied, [fifty] SIXTY hundredths of one percent of the total daily pari-
mutuel pools.
  S 6. Paragraph g of subdivision 3 of section 1007 of the racing, pari-
mutuel  wagering  and breeding law, as amended by chapter 18 of the laws
of 2008, is amended to read as follows:
  g. Any harness racing or association or corporation,  or  thoroughbred
racing  corporation authorized pursuant to this section shall pay to the
[racing and wagering board] COMMISSION as a regulatory fee, which fee is
hereby levied, [fifty] SIXTY hundredths of  one  percent  of  the  total
daily pari-mutuel pools.
  S 7. Paragraph b of subdivision 3 of section 1008 of the racing, pari-
mutuel  wagering and breeding law, as  amended by section 7 of part B of
chapter 59 of the laws of 2005, is amended to read as follows:

S. 6359--A                         169                        A. 8559--A

  b. Of the sums received by the sending track, fifty percent  shall  be
distributed  to  purses  in  addition  to moneys distributed pursuant to
section five hundred twenty-seven of this chapter. The off-track betting
corporation shall pay to the [racing and wagering board] COMMISSION as a
regulatory  fee, which fee is hereby levied, [fifty] SIXTY hundredths of
one percent of the total daily pools.
  S 8. Paragraph d of subdivision 4 of section 1009 of the racing, pari-
mutuel wagering and breeding law, as amended by section 8 of part  B  of
chapter 59 of the laws of 2005, is amended to read as follows:
  d.  The  operator shall pay to the [racing and wagering board] COMMIS-
SION as a regulatory fee, which fee  is  hereby  levied,  [fifty]  SIXTY
hundredths of one percent of the total daily pools.
  S 9. Subparagraph (iv) of paragraph i of subdivision 1 of section 1014
of  the  racing,  pari-mutuel  wagering  and breeding law, as amended by
chapter 18 of the laws of 2008, is amended to read as follows:
  (iv) Any thoroughbred racing corporation or harness racing association
or corporation or off-track betting corporation authorized  pursuant  to
this  section shall pay to the [racing and wagering board] COMMISSION as
a regulatory fee, which fee is hereby levied, [fifty]  SIXTY  hundredths
of one percent of all wagering pools.
  S  10.  Paragraph  e  of  subdivision 3 of section 1015 of the racing,
pari-mutuel wagering and breeding law, as amended by chapter 18  of  the
laws of 2008, is amended to read as follows:
  e.  Any  thoroughbred racing corporation or harness racing association
or corporation or off-track betting corporation authorized  pursuant  to
this  section shall pay to the [racing and wagering board] COMMISSION as
a regulatory fee, which fee is hereby levied, [fifty]  SIXTY  hundredths
of one percent of all wagering pools.
  S  11. Clause (B) of subparagraph 2 of paragraph b of subdivision 1 of
section 1016 of the racing, pari-mutuel wagering and  breeding  law,  as
amended  by  chapter  18  of  the  laws  of  2008, is amended to read as
follows:
  (B) Any harness racing or association or corporation  or  thoroughbred
racing  corporation authorized pursuant to this section shall pay to the
[racing and wagering board] COMMISSION as a regulatory fee, which fee is
hereby levied, [fifty] SIXTY hundredths of  one  percent  of  the  total
daily pari-mutuel pools.
  S  12.  Paragraph  b  of  subdivision 2 of section 1018 of the racing,
pari-mutuel wagering and breeding law, as amended by chapter 18  of  the
laws of 2008, is amended to read as follows:
  b.  Any  thoroughbred racing corporation or harness racing association
or corporation or off-track betting corporation shall pay to the [racing
and wagering board] COMMISSION as a regulatory fee, which fee is  hereby
levied, [fifty] SIXTY hundredths of one percent of all wagering pools.
  S 13. This act shall take effect immediately.

                                 PART E

  Section 1. Subsection (a) of section 653 of the tax law, as amended by
chapter 65 of the laws of 1985, is amended to read as follows:
  (a)  General.  (1) Any return, statement or other document required to
be made pursuant to this article shall  be  signed  in  accordance  with
regulations  or  instructions prescribed by the [tax commission] COMMIS-
SIONER.   The fact that an individual's name  is  signed  to  a  return,
statement,  or  other  document,  shall  be prima facie evidence for all

S. 6359--A                         170                        A. 8559--A

purposes that the return,  statement  or  other  document  was  actually
signed by him OR HER.
  (2)  IN  THE  CASE  OF  AN  ELECTRONICALLY FILED INDIVIDUAL'S PERSONAL
INCOME TAX RETURN PREPARED BY A TAX PREPARER, AN AUTHORIZATION  TO  FILE
ANY  RETURN, STATEMENT OR OTHER DOCUMENT REQUIRED TO BE MADE PURSUANT TO
THIS ARTICLE SIGNED BY THE TAXPAYER IN ACCORDANCE WITH  THE  REGULATIONS
OR  INSTRUCTIONS  PRESCRIBED  BY THE COMMISSIONER AND RECEIVED ELECTRON-
ICALLY BY THE TAX PREPARER  SHALL  SATISFY  THE  SIGNATURE  REQUIREMENTS
UNDER THIS ARTICLE.
  S 2. This act shall take effect immediately and shall apply to returns
filed for taxable years beginning on or after January 1, 2014.

                                 PART F

  Section 1. Clause (C) of subparagraph (i) of paragraph (b) of subdivi-
sion  4  of  section  425  of  the  real property tax law, as amended by
section 3 of part E of chapter 83 of the laws of  2002,  is  amended  to
read as follows:
  (C)  For final assessment rolls to be completed in [each ensuing year]
THE YEARS TWO THOUSAND FOUR THROUGH TWO THOUSAND FOURTEEN, the  applica-
ble income tax year, cost-of-living-adjustment percentage and applicable
increase  percentage  shall  all be advanced by one year, and the income
standard shall be the previously-applicable income standard increased by
the new cost-of-living-adjustment percentage. If there should be a  year
for  which  there  is no applicable increase percentage due to a general
benefit increase as defined by subdivision three of  subsection  (i)  of
section  four  hundred  fifteen  of title forty-two of the United States
code, the applicable increase percentage for purposes of  this  computa-
tion  shall be deemed to be the percentage which would have yielded that
general benefit increase. FOR FINAL ASSESSMENT ROLLS TO BE COMPLETED  IN
TWO  THOUSAND  FIFTEEN  AND  THEREAFTER,  THE APPLICABLE INCOME TAX YEAR
SHALL BE  ADVANCED  BY  ONE  YEAR,  AND  ELIGIBILITY  FOR  THE  ENHANCED
EXEMPTION  SHALL  BE  BASED  UPON  THE INCOME STANDARD APPLIED FOR FINAL
ASSESSMENT ROLLS COMPLETED IN TWO THOUSAND FOURTEEN.
  S 2. This act shall take effect immediately and shall apply to assess-
ment rolls completed in 2015 and thereafter.

                                 PART G

  Section 1. Section 2 of part I of chapter 58  of  the  laws  of  2006,
relating  to  providing an enhanced earned income tax credit, as amended
by section 1 of part L of chapter 59 of the laws of 2012, is amended  to
read as follows:
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2006 and before January 1, [2015]
2017.
  S 2. This act shall take effect immediately.

                                 PART H

  Section  1.  The  general  obligations  law is amended by adding a new
section 3-505 to read as follows:
  S 3-505. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH  ELECTRONIC
TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES.
  1. AS USED IN THIS SECTION:

S. 6359--A                         171                        A. 8559--A

  A.  "GOVERNMENT  ENTITY"  MEANS  THE  STATE OF NEW YORK, OR ANY OF ITS
AGENCIES, POLITICAL SUBDIVISIONS, INSTRUMENTALITIES, PUBLIC CORPORATIONS
(INCLUDING A PUBLIC CORPORATION CREATED PURSUANT TO AGREEMENT OR COMPACT
WITH ANOTHER STATE OR CANADA), OR COMBINATION THEREOF,  RESPONSIBLE  FOR
DETERMINING WHETHER A LICENSE SHALL BE ISSUED OR RENEWED.
  B.  "ELECTRONIC  LICENSE  APPLICATION"  MEANS ANY ELECTRONIC DATA FORM
THAT MUST BE COMPLETED BY AN APPLICANT TO OBTAIN OR RENEW A LICENSE,  OR
AN ELECTRONIC DATA PROCESS WHICH IS USED BY A GOVERNMENT ENTITY TO PROC-
ESS  DATA  RECEIVED  FROM  AN  APPLICANT  SEEKING  TO RECEIVE OR RENEW A
LICENSE.
  C. "ELECTRONIC TAX CLEARANCE" MEANS AN ELECTRONIC  COMMUNICATION  FROM
THE  DEPARTMENT OF TAXATION AND FINANCE INDICATING THAT AN APPLICANT HAD
NO PAST-DUE TAX LIABILITIES, AS THAT TERM  IS  DEFINED  IN  SECTION  ONE
HUNDRED  SEVENTY-ONE-W OF THE TAX LAW, OR THAT NO CONCLUSIVE MATCH COULD
BE MADE.
  D. "LICENSE" MEANS  ANY  CERTIFICATE,  LICENSE,  PERMIT  OR  GRANT  OF
PERMISSION  REQUIRED  BY LAW OR AGENCY REGULATION AS A CONDITION FOR THE
LAWFUL PRACTICE OF ANY OCCUPATION, EMPLOYMENT,  TRADE,  VOCATION,  BUSI-
NESS, OR PROFESSION, INCLUDING ANY REGISTRATION REQUIRED BY LAW OR AGEN-
CY  REGULATION  AS  A  CONDITION  FOR  SUCH  LAWFUL PRACTICE. THIS SHALL
INCLUDE, BUT IS NOT LIMITED TO, ANY LICENSE GRANTED TO AN INDIVIDUAL  OR
ENTITY  BY  THE  STATE EDUCATION DEPARTMENT, THE DEPARTMENT OF STATE, OR
THE OFFICE OF COURT ADMINISTRATION.  PROVIDED, HOWEVER,  THAT  "LICENSE"
SHALL  NOT,  FOR  THE  PURPOSES  OF THIS SECTION, INCLUDE ANY LICENSE OR
PERMIT TO OWN, POSSESS, CARRY, OR FIRE ANY EXPLOSIVE,  PISTOL,  HANDGUN,
RIFLE, SHOTGUN, OTHER FIREARM OR AMMUNITION.
  2.  NOTWITHSTANDING  ANY  OTHER PROVISION OF LAW, AND WHEN NOT ALREADY
REQUIRED BY ANOTHER PROVISION OF LAW OR REGULATION, ANY GOVERNMENT ENTI-
TY MAY ELECT TO CONDITION THE ISSUANCE OR RENEWAL OF A  LICENSE  ON  THE
ABSENCE  OF  PAST-DUE  TAX  LIABILITIES  AND  TO MAKE SUCH DETERMINATION
THROUGH THE RECEIPT OF AN ELECTRONIC TAX CLEARANCE FROM  THE  DEPARTMENT
OF  TAXATION AND FINANCE AS PROVIDED FOR IN SECTION ONE HUNDRED SEVENTY-
ONE-W OF THE TAX LAW.
  3. ANY APPLICANT FOR A LICENSE SUBJECT  TO  ELECTRONIC  TAX  CLEARANCE
SHALL  BE  REQUIRED  TO  PROVIDE ANY INFORMATION DEEMED NECESSARY BY THE
GOVERNMENT ENTITY AND THE DEPARTMENT OF TAXATION AND  FINANCE  TO  EFFI-
CIENTLY  AND  ACCURATELY  PROVIDE  AN  ELECTRONIC TAX CLEARANCE, AND THE
FAILURE BY THE APPLICANT TO PROVIDE SUCH INFORMATION  SHALL  RENDER  THE
APPLICATION INCOMPLETE.
  4.  THE APPLICATION FOR A LICENSE SUBJECT TO ELECTRONIC TAX CLEARANCE,
OR THE INSTRUCTIONS FOR  SUCH  APPLICATION,  SHALL  CLEARLY  INFORM  THE
APPLICANT  THAT  AN ELECTRONIC TAX CLEARANCE WILL BE PERFORMED AND THAT,
IF THE TAX CLEARANCE IS DENIED, THE APPLICANT MUST CONTACT  THE  DEPART-
MENT  OF  TAXATION  AND  FINANCE TO RESOLVE ANY PAST-DUE TAX LIABILITIES
BEFORE THE APPLICATION FOR A LICENSE OR RENEWAL MAY BE RESUBMITTED.
  5. IF AN ELECTRONIC TAX CLEARANCE IS DENIED BY THE DEPARTMENT OF TAXA-
TION AND FINANCE, THE GOVERNMENT ENTITY SHALL DENY ISSUANCE  OR  RENEWAL
OF  THE  REQUESTED LICENSE AND SHALL ELECTRONICALLY NOTIFY THE APPLICANT
TO CONTACT THE  DEPARTMENT  OF  TAXATION  AND  FINANCE  TO  RESOLVE  THE
PAST-DUE  TAX  LIABILITIES  AND THAT NO LICENSE MAY BE ISSUED OR RENEWED
UNTIL THE TAX LIABILITIES ARE RESOLVED.
  6. ANY TAX CLEARANCE OR RELATED  COMMUNICATIONS  SHALL  BE  BY  SECURE
ELECTRONIC  COMMUNICATION BETWEEN THE DEPARTMENT OF TAXATION AND FINANCE
AND THE REQUESTING GOVERNMENT ENTITY SUCH THAT PROCESSING OF  THE  ELEC-
TRONIC  APPLICATION  IS  NOT  DELAYED IF THE ELECTRONIC TAX CLEARANCE IS
RECEIVED.  NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY,  A  GOVERNMENT

S. 6359--A                         172                        A. 8559--A

ENTITY  SHALL  BE  AUTHORIZED TO SHARE ANY APPLICANT DATA OR INFORMATION
WITH THE DEPARTMENT OF TAXATION AND FINANCE THAT IS NECESSARY TO  ENSURE
THE  PROPER  MATCHING  OF THE APPLICANT TO THE TAX RECORDS MAINTAINED BY
THE DEPARTMENT OF TAXATION AND FINANCE.
  7.  NO  FEE  SHALL  BE  CHARGED  TO  THE APPLICANT FOR THE PURPOSES OF
RECEIVING AN ELECTRONIC TAX CLEARANCE.
  S 2. The tax law is amended by adding a new section 171-w to  read  as
follows:
  S  171-W. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH ELECTRONIC
TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES.  1.
IN ACCORDANCE WITH SECTION 3-505 OF THE  GENERAL  OBLIGATIONS  LAW,  THE
COMMISSIONER  SHALL  COOPERATE WITH ANY GOVERNMENT ENTITY THAT ELECTS TO
REQUIRE AN ELECTRONIC TAX CLEARANCE AS A PART OF AN  ELECTRONIC  LICENSE
APPLICATION  PROCESS FOR WHICH THE GOVERNMENT ENTITY IS RESPONSIBLE. FOR
THE PURPOSES OF THIS SECTION, THE TERM "TAX LIABILITIES" SHALL MEAN  ANY
TAX,  SURCHARGE, OR FEE ADMINISTERED BY THE COMMISSIONER, OR ANY PENALTY
OR INTEREST OWED BY AN INDIVIDUAL OR  ENTITY.  THE  TERM  "PAST-DUE  TAX
LIABILITIES"  MEANS  ANY UNPAID TAX LIABILITIES EQUAL TO OR IN EXCESS OF
FIVE HUNDRED DOLLARS WHICH HAVE BECOME FIXED AND  FINAL  SUCH  THAT  THE
TAXPAYER  NO  LONGER HAS ANY RIGHT TO ADMINISTRATIVE OR JUDICIAL REVIEW.
FOR THE PURPOSES OF THIS SECTION, THE TERMS "GOVERNMENT ENTITY,"  "ELEC-
TRONIC  LICENSE  APPLICATION," AND "LICENSE" SHALL HAVE THE SAME MEANING
AS PROVIDED IN SECTION 3-505 OF THE GENERAL OBLIGATIONS LAW.
  2. THE COMMISSIONER, OR HIS OR HER DESIGNEE, SHALL COOPERATE WITH  ANY
GOVERNMENT  ENTITY EXERCISING ITS AUTHORITY PURSUANT TO SECTION 3-505 OF
THE GENERAL OBLIGATIONS LAW TO ESTABLISH PROCEDURES BY WHICH THE DEPART-
MENT SHALL ELECTRONICALLY RECEIVE A TAX CLEARANCE REQUEST  AS  AN  ELEC-
TRONIC  LICENSE  APPLICATION  IS  PROCESSED, AND ELECTRONICALLY TRANSMIT
SUCH TAX CLEARANCE TO THE  GOVERNMENT  ENTITY.  THESE  PROCEDURES  SHALL
INCLUDE  THE  IDENTIFICATION  OF OWNERS, OFFICERS OR RESPONSIBLE PERSONS
SUBJECT TO ELECTRONIC TAX CLEARANCE IN CONJUNCTION WITH  AN  APPLICATION
BY AN ENTITY, AND ANY OTHER PROCEDURES DEEMED NECESSARY TO CARRY OUT THE
PROVISIONS OF THIS SECTION.
  3.  IN ANY INSTANCE WHERE A LICENSE OR LICENSE RENEWAL PROVIDED BY THE
GOVERNMENT ENTITY IS OF A TYPE THAT MAY BE ISSUED ONLY TO AN  INDIVIDUAL
OR  ENTITY THAT IS A PERSON REQUIRED TO REGISTER PURSUANT TO SECTION ONE
THOUSAND ONE HUNDRED THIRTY-FOUR OF THIS CHAPTER, THE  DEPARTMENT  SHALL
ALSO  VERIFY  THAT THE APPLICANT IS REGISTERED PURSUANT TO SUCH SECTION,
AND NO ELECTRONIC TAX CLEARANCE MAY BE ISSUED UNLESS  THE  APPLICANT  IS
REGISTERED PURSUANT TO SUCH SECTION.
  4.  IF A TAX CLEARANCE IS DENIED, THE GOVERNMENT ENTITY PROCESSING THE
APPLICATION SHALL PROVIDE NOTICE TO THE APPLICANT TO CONTACT THE DEPART-
MENT.  WHEN THE APPLICANT CONTACTS THE DEPARTMENT, THE DEPARTMENT  SHALL
INFORM THE APPLICANT (A) WHAT PAST-DUE TAX LIABILITIES ARE AT ISSUE; (B)
THAT AN ELECTRONIC TAX CLEARANCE MAY BE RECEIVED BY FULLY SATISFYING THE
PAST-DUE  TAX LIABILITIES OR BY MAKING PAYMENT ARRANGEMENTS SATISFACTORY
TO THE COMMISSIONER OR, IF THE APPLICANT NEEDS TO REGISTER FOR SALES TAX
PURPOSES, BY REGISTERING PURSUANT TO SECTION ONE  THOUSAND  ONE  HUNDRED
THIRTY-FOUR  OF  THIS  CHAPTER;  AND (C) THE GROUNDS FOR CHALLENGING THE
DENIAL OF AN ELECTRONIC TAX CLEARANCE LISTED IN SUBDIVISION FIVE OF THIS
SECTION. THE GOVERNMENT ENTITY SHALL ALSO INFORM THE APPLICANT  THAT  AN
APPLICATION  MAY  BE  RESUBMITTED  AFTER  PAYMENT  FOR  THE PAST-DUE TAX
LIABILITIES HAS CLEARED, OR, IF A PAYMENT PLAN IS AGREED TO,  AFTER  THE
FIRST PAYMENT PURSUANT TO SUCH PLAN HAS CLEARED.
  5.  (A)  NOTWITHSTANDING  ANY  OTHER  PROVISION  OF LAW, AND EXCEPT AS
SPECIFICALLY PROVIDED HEREIN, AN  APPLICANT  DENIED  AN  ELECTRONIC  TAX

S. 6359--A                         173                        A. 8559--A

CLEARANCE  SHALL  HAVE NO RIGHT TO COMMENCE A COURT ACTION OR PROCEEDING
OR SEEK ANY OTHER LEGAL RECOURSE AGAINST THE DEPARTMENT OR  THE  GOVERN-
MENT  ENTITY RELATED TO THE DENIAL OF AN ELECTRONIC TAX CLEARANCE BY THE
DEPARTMENT.  AN APPLICANT MAY CHALLENGE SUCH DENIAL OF AN ELECTRONIC TAX
CLEARANCE ONLY ON THE GROUNDS THAT:
  (I) THE INDIVIDUAL OR ENTITY DENIED THE ELECTRONIC  TAX  CLEARANCE  IS
NOT THE INDIVIDUAL OR ENTITY WITH THE PAST-DUE TAX LIABILITIES AT ISSUE;
(II)  THE PAST-DUE TAX LIABILITIES WERE SATISFIED; (III) THE APPLICANT'S
WAGES ARE BEING GARNISHED FOR THE PAYMENT OF CHILD SUPPORT  OR  COMBINED
CHILD  AND SPOUSAL SUPPORT PURSUANT TO AN INCOME EXECUTION ISSUED PURSU-
ANT TO SECTION FIVE THOUSAND TWO HUNDRED FORTY-ONE OR FIVE THOUSAND  TWO
HUNDRED FORTY-TWO OF THE CIVIL PRACTICE LAW AND RULES OR ANOTHER STATE'S
INCOME WITHHOLDING ORDER AS AUTHORIZED UNDER PART FIVE OF ARTICLE FIVE-B
OF  THE FAMILY COURT ACT, OR GARNISHED BY THE DEPARTMENT FOR THE PAYMENT
OF THE PAST-DUE TAX LIABILITIES AT ISSUE; (IV) THE APPLICANT  IS  MAKING
CHILD  SUPPORT  PAYMENTS  OR COMBINED CHILD AND SPOUSAL SUPPORT PAYMENTS
PURSUANT TO A SATISFACTORY PAYMENT ARRANGEMENT UNDER SECTION ONE HUNDRED
ELEVEN-B OF THE SOCIAL SERVICES LAW WITH A SUPPORT  COLLECTION  UNIT  OR
OTHERWISE  MAKING  PERIODIC  PAYMENTS  IN  ACCORDANCE  WITH SECTION FOUR
HUNDRED FORTY OF THE FAMILY COURT ACT; OR (V) IF THE ONLY BASIS FOR  THE
DENIAL  OF  AN  ELECTRONIC  TAX CLEARANCE WAS THE APPLICANT'S FAILURE TO
REGISTER PURSUANT TO SECTION ONE THOUSAND  ONE  HUNDRED  THIRTY-FOUR  OF
THIS  CHAPTER,  THAT  THE  APPLICANT WAS PROPERLY REGISTERED PURSUANT TO
SUCH SECTION ONE THOUSAND ONE HUNDRED THIRTY-FOUR.
  (B) AN APPLICANT SEEKING TO CHALLENGE THE DENIAL OF AN ELECTRONIC  TAX
CLEARANCE  MUST PROTEST TO THE DEPARTMENT OR THE DIVISION OF TAX APPEALS
NO LATER THAN SIXTY DAYS FROM THE DATE OF THE ELECTRONIC NOTIFICATION TO
THE APPLICANT, PURSUANT TO SUBDIVISION FOUR  OF  SECTION  3-505  OF  THE
GENERAL OBLIGATIONS LAW, THAT THE ELECTRONIC TAX CLEARANCE WAS DENIED.
  (C)  NOTHING  IN  THIS  SUBDIVISION IS INTENDED TO LIMIT ANY APPLICANT
FROM SEEKING RELIEF FROM JOINT AND SEVERAL LIABILITY PURSUANT TO SECTION
SIX HUNDRED FIFTY-FOUR OF THIS CHAPTER, TO THE EXTENT THAT HE OR SHE  IS
ELIGIBLE  PURSUANT  TO  THAT  SECTION, OR ESTABLISHING TO THE DEPARTMENT
THAT THE ENFORCEMENT OF THE UNDERLYING TAX LIABILITIES HAS  BEEN  STAYED
BY  THE  FILING  OF  A  PETITION PURSUANT TO THE BANKRUPTCY CODE OF 1978
(TITLE ELEVEN OF THE UNITED STATES CODE).
  6. NOTWITHSTANDING ANY OTHER PROVISION  OF  LAW,  THE  DEPARTMENT  MAY
EXCHANGE  WITH  A  GOVERNMENT  ENTITY  ANY DATA OR INFORMATION NECESSARY
THAT, IN THE DISCRETION OF THE COMMISSIONER, IS NECESSARY FOR THE IMPLE-
MENTATION OF ANY ELECTRONIC TAX CLEARANCE. HOWEVER, NO OTHER AGENCY  MAY
RE-DISCLOSE  THIS  INFORMATION TO ANY OTHER ENTITY OR PERSON, OTHER THAN
FOR THE PURPOSE OF INFORMING THE APPLICANT THAT THE  APPLICATION  FOR  A
LICENSE  OR THE RENEWAL OF SUCH LICENSE WILL NOT BE PROCESSED DUE TO THE
LACK OF A REQUIRED TAX CLEARANCE AUTHORIZED  BY  ANY  PROVISION  OF  LAW
UNLESS OTHERWISE PERMITTED BY LAW.
  7.  EXCEPT  AS  OTHERWISE  PROVIDED IN THIS SECTION, THE ACTIVITIES TO
COLLECT PAST-DUE TAX LIABILITIES UNDERTAKEN BY THE  DEPARTMENT  PURSUANT
TO  THIS  SECTION  SHALL  NOT  IN  ANY WAY LIMIT, RESTRICT OR IMPAIR THE
DEPARTMENT FROM EXERCISING ANY OTHER AUTHORITY TO COLLECT OR ENFORCE TAX
LIABILITIES UNDER ANY OTHER APPLICABLE PROVISION OF LAW.
  8. EXCEPT AS OTHERWISE PROVIDED IN THIS  SECTION,  THE  PROVISIONS  OF
THIS SECTION ARE NOT APPLICABLE TO THE TAX CLEARANCE REQUIRED BY SECTION
ONE HUNDRED SEVENTY-ONE-V OF THIS CHAPTER.
  S  3. This act shall take effect June 1, 2014; provided, however, that
the department of taxation and finance and any government entity  elect-
ing  to receive an electronic tax clearance from the department of taxa-

S. 6359--A                         174                        A. 8559--A

tion and finance may work to execute the necessary procedures and  tech-
nical  changes  to  support  the  electronic  tax  clearance  process as
described in sections  one  and  two  of  this  act  before  that  date;
provided, further, that this effective date will not impact the adminis-
tration  of  any  electronic tax clearance program authorized by another
provision of law.

                                 PART I

  Section 1. Subsection (b) of section 612 of the tax law is amended  by
adding a new paragraph 40 to read as follows:
  (40)  IN  THE  CASE OF A BENEFICIARY OF A NONRESIDENT TRUST OR A TRUST
NOT SUBJECT TO TAX PURSUANT TO SUBPARAGRAPH (D) OF  PARAGRAPH  THREE  OF
SUBSECTION  (B)  OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE (EXCEPT FOR
AN INCOMPLETE GIFT NON-GRANTOR TRUST, AS DEFINED BY PARAGRAPH  FORTY-ONE
OF  THIS  SUBSECTION),  THE  AMOUNT  OF ANY ACCUMULATION DISTRIBUTION AS
DESCRIBED IN SUBSECTION (B) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF  THE
INTERNAL  REVENUE  CODE  FOR  THE TAX YEAR, SUCH AMOUNT TO BE DETERMINED
WITHOUT REGARD TO SUBSECTION (C) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF
THE INTERNAL REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED IN FEDERAL
GROSS  INCOME  FOR THE TAX YEAR, EXCEPT THAT, IN COMPUTING THE AMOUNT TO
BE ADDED UNDER THIS PARAGRAPH, SUCH BENEFICIARY SHALL  DISREGARD  INCOME
EARNED  BY A TRUST IN A TAXABLE YEAR PRIOR TO WHEN THE BENEFICIARY FIRST
BECAME A RESIDENT OF THE STATE OR IN ANY TAXABLE  YEAR  STARTING  BEFORE
JANUARY FIRST, TWO THOUSAND ELEVEN.
  S 2. Subsection (b) of section 612 of the tax law is amended by adding
a new paragraph 41 to read as follows:
  (41)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
DEDUCTIONS  OF  THE  TRUST,  TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
TY-FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
THEREUNDER.
  S 3. Section 621 of the tax law, as added by chapter 272 of  the  laws
of  1963  and  subsection  (a)  as amended by chapter 267 of the laws of
1987, is amended to read as follows:
  S 621. [Credit] CREDITS to trust  beneficiary  receiving  accumulation
distribution.   (a) General. A resident beneficiary of a trust whose New
York adjusted gross income includes  all  or  part  of  an  accumulation
distribution by such trust, as defined in section six hundred sixty-five
of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
MAKE  THE  MODIFICATION REQUIRED BY PARAGRAPH FORTY OF SUBSECTION (B) OF
SECTION SIX HUNDRED TWELVE OF THIS PART, shall be allowed (1)  a  credit
against  the  tax  otherwise due under this article for all or a propor-
tionate part of any tax paid by the trust under this  article  or  under
FORMER article sixteen of this chapter (as such article was in effect on
or before December thirtieth, nineteen hundred sixty), for any preceding
taxable  year which would not have been payable if the trust had in fact
made distributions to its beneficiaries at the times and in the  amounts

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specified in section six hundred sixty-six of the internal revenue code;
AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE FOR THE TAXA-
BLE YEAR FOR ANY INCOME TAX IMPOSED ON THE TRUST FOR THE TAXABLE YEAR OR
ANY  PRIOR  TAXABLE  YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLI-
TICAL SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, UPON INCOME BOTH
DERIVED THEREFROM AND SUBJECT TO TAX UNDER THIS ARTICLE,  PROVIDED  THAT
THE  AMOUNT  OF  THE  CREDIT  SHALL NOT EXCEED THE PERCENTAGE OF THE TAX
OTHERWISE DUE UNDER THIS ARTICLE DETERMINED BY DIVIDING THE  PORTION  OF
THE  INCOME THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION
AND TAXABLE TO THE BENEFICIARY UNDER THIS ARTICLE BY THE TOTAL AMOUNT OF
THE BENEFICIARY'S NEW YORK INCOME.
  (b) Limitation. The [credit] CREDITS  under  this  section  shall  not
reduce  the tax otherwise due from the beneficiary under this article to
an amount less than would have been due if the accumulation distribution
or his part thereof were excluded  from  his  New  York  adjusted  gross
income.
  S  4. Section 658 of the tax law is amended by adding a new subsection
(f) to read as follows:
   (F) (1) EVERY NONRESIDENT TRUST OR A TRUST DESCRIBED BY  SUBPARAGRAPH
(D)  OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF
THIS ARTICLE SHALL MAKE A RETURN FOR ANY TAXABLE YEAR IN WHICH IT  MAKES
AN  ACCUMULATION  DISTRIBUTION  WITHIN THE MEANING OF SUBDIVISION (B) OF
SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE TO A BENEFI-
CIARY WHO IS A RESIDENT, WHICH  RETURN  SHALL  INCLUDE  (I)  INFORMATION
IDENTIFYING SUCH RESIDENT, (II) THE AMOUNT OF SUCH ACCUMULATION DISTRIB-
UTION, AND (III) SUCH OTHER INFORMATION AS THE COMMISSIONER MAY REQUIRE.
  (2)  EVERY  RESIDENT  TRUST  THAT DOES NOT FILE THE RETURN REQUIRED BY
SECTION SIX HUNDRED FIFTY-ONE OF THIS PART ON THE GROUND THAT IT IS  NOT
SUBJECT  TO  TAX  PURSUANT  TO  SUBPARAGRAPH  (D)  OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE FOR THE TAXA-
BLE YEAR SHALL MAKE A RETURN FOR SUCH TAXABLE  YEAR  SUBSTANTIATING  ITS
ENTITLEMENT  TO  THAT  EXEMPTION AND PROVIDING SUCH OTHER INFORMATION AS
THE COMMISSIONER MAY REQUIRE.
  (3) THE RETURNS REQUIRED BY THIS  SUBSECTION  SHALL  BE  FILED  ON  OR
BEFORE THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF EACH
TAXABLE  YEAR.  FOR  PURPOSES  OF THIS PARAGRAPH, "TAXABLE YEAR" MEANS A
YEAR OR A PERIOD WHICH WOULD BE A TAXABLE YEAR OF THE TRUST IF  IT  WERE
SUBJECT TO TAX UNDER THIS ARTICLE.
  S  5.  Paragraph 2 of subsection (h) of section 685 of the tax law, as
amended by chapter 190 of the laws  of  1990,  is  amended  to  read  as
follows:
  (2)  If any partnership [or], S corporation, OR TRUST required to file
a return or report under subsection (c) OR SUBSECTION (F) of section six
hundred fifty-eight or under section  six  hundred  fifty-nine  OF  THIS
ARTICLE  for any taxable year fails to file such return or report at the
time prescribed therefor (determined with regard  to  any  extension  of
time  for  filing),  or files a return or report which fails to show the
information required under such subsection (c) or  section  six  hundred
fifty-nine  OF THIS ARTICLE, unless it is shown that such failure is due
to reasonable cause and not due to willful neglect,  there  shall,  upon
notice  and demand by the commissioner and in the same manner as tax, be
paid by the partnership or S corporation a penalty for  each  month  (or
fraction thereof) during which such failure continues (but not to exceed
five months). The amount of such penalty for any month is the product of
fifty  dollars,  multiplied by the number of partners in the partnership
or shareholders in the S corporation during any part of the taxable year

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who were subject to tax under this article during any part of such taxa-
ble year, EXCEPT THAT, IN THE CASE OF A  TRUST,  THE  PENALTY  SHALL  BE
EQUAL  TO  ONE  HUNDRED FIFTY DOLLARS A MONTH UP TO A MAXIMUM OF FIFTEEN
HUNDRED DOLLARS PER TAXABLE YEAR.
  S  6. Subdivision (b) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 36 to read  as
follows:
  (36)  IN  THE  CASE OF A BENEFICIARY OF A NONRESIDENT TRUST OR A TRUST
NOT SUBJECT TO TAX PURSUANT TO SUBPARAGRAPH (D) OF  PARAGRAPH  THREE  OF
SUBSECTION  (B) OF SECTION 11-1705 OF THIS CHAPTER (EXCEPT FOR AN INCOM-
PLETE GIFT NON-GRANTOR TRUST, AS DEFINED BY  PARAGRAPH  THIRTY-SEVEN  OF
THIS  SUBDIVISION),  THE  AMOUNT  OF  ANY  ACCUMULATION  DISTRIBUTION AS
DESCRIBED IN SUBSECTION (B) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF  THE
INTERNAL  REVENUE  CODE  FOR  THE TAX YEAR, SUCH AMOUNT TO BE DETERMINED
WITHOUT REGARD TO SUBSECTION (C) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF
THE INTERNAL REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED IN FEDERAL
GROSS  INCOME  FOR THE TAX YEAR, EXCEPT THAT, IN COMPUTING THE AMOUNT TO
BE ADDED UNDER THIS PARAGRAPH, SUCH BENEFICIARY SHALL  DISREGARD  INCOME
EARNED  BY A TRUST IN A TAXABLE YEAR PRIOR TO WHEN THE BENEFICIARY FIRST
BECAME A RESIDENT OF THE STATE OR IN ANY TAXABLE  YEAR  STARTING  BEFORE
JANUARY FIRST, TWO THOUSAND ELEVEN.
  S  7. Subdivision (b) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 37 to read  as
follows:
  (37)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
DEDUCTIONS  OF  SUCH  TRUST, TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
TY FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
THEREUNDER.
  S 8. Section 11-1721 of the administrative code of  the  city  of  New
York, subdivisions (a) and (b) as amended by section 72 and such section
as  renumbered  by  section  43  of  chapter 639 of the laws of 1986, is
amended to read as follows:
  S 11-1721 [Credit] CREDITS to trust beneficiary receiving accumulation
distribution. (a) General. A city resident beneficiary of a trust  whose
city  adjusted  gross  income  includes  all  or part of an accumulation
distribution by such trust, as defined in section six hundred sixty-five
of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
MAKE THE MODIFICATION REQUIRED BY PARAGRAPH  THIRTY-SIX  OF  SUBDIVISION
(B) OF SECTION 11-1712 OF THIS SUBCHAPTER, shall be allowed (1) a credit
against  the  tax  otherwise due under this chapter for all or a propor-
tionate part of any tax paid by the trust under this  chapter  or  under
FORMER  title  T  of chapter forty-six of this code, as it was in effect
prior to September first, nineteen hundred eighty-six, for any preceding
taxable year which would not have been payable if the trust had in  fact
made  distributions to its beneficiaries at the times and in the amounts
specified in section six hundred sixty-six of the internal revenue code;
AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS CHAPTER FOR THE TAXA-

S. 6359--A                         177                        A. 8559--A

BLE YEAR FOR ANY INCOME TAX IMPOSED FOR THE TAXABLE YEAR  OR  ANY  PRIOR
TAXABLE YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVI-
SION  THEREOF,  OR  THE  DISTRICT  OF COLUMBIA, UPON INCOME BOTH DERIVED
THEREFROM  AND  SUBJECT  TO  TAX  UNDER  THIS CHAPTER, PROVIDED THAT THE
AMOUNT OF THE CREDIT SHALL NOT EXCEED THE PERCENTAGE OF THE  TAX  OTHER-
WISE  DUE  UNDER  THIS CHAPTER DETERMINED BY DIVIDING THE PORTION OF THE
INCOME THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION  AND
TAXABLE TO THE BENEFICIARY UNDER THIS CHAPTER BY THE TOTAL AMOUNT OF THE
BENEFICIARY'S NEW YORK CITY INCOME.
  (b)  Limitation.  The  [credit]  CREDITS  under this section shall not
reduce the tax otherwise due from the beneficiary under this chapter  to
an amount less than would have been due if the accumulation distribution
or  his  or her part thereof were excluded from his or her city adjusted
gross income.
  S 9. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014, provided that sections  one
and  six of this act shall not apply to income of a nonresident trust or
an exempt resident trust paid to a beneficiary before June 1, 2014,  and
sections  two  and  seven  of  this act shall not apply to income from a
trust that is liquidated before June 1, 2014.

                                 PART J

  Section 1. Section 602 of the tax law is REPEALED.
  S 2. Paragraph 4 of subsection (c) and paragraph 4 of  subsection  (d)
of section 606 of the tax law, paragraph 4 of subsection (c) as added by
chapter  309  of  the  laws of 1996 and paragraph 4 of subsection (d) as
amended by chapter 2 of the  laws  of  1995,  are  amended  to  read  as
follows:
  (4) Part-year residents. In the case of a part-year resident taxpayer,
the credit under this subsection shall be allowed against the tax deter-
mined  under  subsections  (a)  through  (d)  of section six hundred one
reduced by the credit permitted under subsection (b)  of  this  section,
and  any  excess  credit after such application shall be allowed against
the [taxes] TAX imposed by [sections six hundred two  and]  SECTION  six
hundred  three.  Any  remaining excess, after such application, shall be
refunded as provided in paragraph two hereof,  provided,  however,  that
any  overpayment  under such paragraph shall be limited to the amount of
the remaining excess multiplied by a fraction, the numerator of which is
federal adjusted gross income for the period of residence,  computed  as
if  the taxable year for federal income tax purposes were limited to the
period of residence, and the denominator of which  is  federal  adjusted
gross income for the taxable year.
  (4) Part-year residents. In the case of a part-year resident taxpayer,
the credit under this subsection shall be allowed against the tax deter-
mined  under  subsections  (a)  through  (d)  of section six hundred one
reduced by the credits permitted under subsections (b), (c) and  (m)  of
this  section,  and  any  excess  credit after such application shall be
allowed against the [taxes] TAX imposed by  [sections  six  hundred  two
and]  SECTION six hundred three. Any remaining excess, after such appli-
cation, shall be refunded as provided in paragraph two hereof, provided,
however, that any overpayment under such paragraph shall be  limited  to
the amount of the remaining excess multiplied by a fraction, the numera-
tor  of  which  is federal adjusted gross income for the period of resi-
dence, computed as if the taxable year for federal income  tax  purposes

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were limited to the period of residence, and the denominator of which is
federal adjusted gross income for the taxable year.
  S 3. Section 622 of the tax law is REPEALED.
  S 4. Section 636 of the tax law is REPEALED.
  S  5.  Subsections  (a), (b) and (c) of section 639 of the tax law, as
added by chapter 170 of the  laws  of  1994,  are  amended  to  read  as
follows:
  (a)  If  an  individual changes status from resident to nonresident he
shall, regardless of his method of accounting, accrue to the  period  of
residence  any  items  of  income,  gain, loss, deduction, [items of tax
preference] or ordinary income portion of a lump sum distribution accru-
ing prior to the change of status, with the applicable modifications and
adjustments to federal adjusted gross income[,] AND itemized  deductions
[and  items  of tax preference] under sections six hundred twelve[,] AND
six hundred fifteen [and six hundred twenty-two], if not otherwise prop-
erly includible or allowable for New York income tax purposes  for  such
period or a prior taxable year under his method of accounting.
  (b)  If  an  individual changes status from nonresident to resident he
shall, regardless of his method of accounting, accrue to the  period  of
nonresidence any items of income, gain, loss or deduction, [items of tax
preference] or ordinary income portion of a lump sum distribution accru-
ing prior to the change of status, with the applicable modifications and
adjustments  to federal adjusted gross income[,] AND itemized deductions
[and items of tax preference] under sections six hundred  twelve[,]  AND
six  hundred  fifteen  [and  six  hundred  twenty-two], other than items
derived from or connected with New York sources, if not otherwise  prop-
erly  includible  or allowable for New York income tax purposes for such
period or for a prior taxable year under his method of accounting.
  (c) No item of income, gain, loss, deduction,  [item  of  tax  prefer-
ence,]  ordinary  income portion of a lump sum distribution or modifica-
tion or adjustment which is accrued under this section  shall  be  taken
into  account  in  determining the tax under this article for any subse-
quent taxable year.
  S 6. Paragraphs 1, 2, 3 and 4 of subsection (a) of section 651 of  the
tax  law,  paragraph  1  as  amended by chapter 333 of the laws of 1987,
paragraph 2 as amended by chapter 28 of the laws of 1987, and paragraphs
3 and 4 as amended by chapter 170 of the laws of 1994,  are  amended  to
read as follows:
  (1)  every  resident  individual (A) required to file a federal income
tax return for the taxable year, or (B) having  federal  adjusted  gross
income  for  the  taxable  year,  increased  by  the modifications under
subsection (b) of section six hundred twelve, in excess of four thousand
dollars, or in excess of his New York standard deduction, if  lower,  or
(C)  [subject  to  tax  under  section  six  hundred two, or (D)] having
received during the taxable year a lump sum distribution any portion  of
which is subject to tax under section six hundred three;
  (2)  every  resident estate or trust required to file a federal income
tax return for the taxable year, or having any New York  taxable  income
for the taxable year, determined under section six hundred eighteen, [or
subject to tax under section six hundred two,] or having received during
the taxable year a lump sum distribution any portion of which is subject
to tax under section six hundred three;
  (3) every nonresident or part-year resident individual having New York
source  income  for  the taxable year, determined under part III of this
article, and having New York adjusted gross income for the taxable year,
determined under part II of this article, in excess  of  the  taxpayer's

S. 6359--A                         179                        A. 8559--A

New  York  standard  deduction,  [or  subject  to  tax under section six
hundred two,] or having received during the  taxable  year  a  lump  sum
distribution  any  portion  of which is subject to tax under section six
hundred three; and
  (4)  every  nonresident  estate  or  trust or part-year resident trust
having New York source income for the  taxable  year,  determined  under
part  III of this article, and having New York adjusted gross income for
the taxable year, determined under paragraph four of subsection  (e)  of
section  six  hundred  one, [or subject to tax under section six hundred
two,] or having received during the taxable year a lump sum distribution
any portion of which is subject to tax under section six hundred three.
  S 7. Paragraph 6 of subsection (b) of section 654 of the tax  law,  as
added  by  section  5  of  part Q of chapter 407 of the laws of 1999, is
amended to read as follows:
  (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
"section 1 or 55" shall be read as "section  six  hundred  one  [or  six
hundred two] of this article".
  S 8. Section 659 of the tax law, as amended by chapter 577 of the laws
of 1997, is amended to read as follows:
  S  659.   Report of federal changes, corrections or disallowances.  If
the amount of a taxpayer's federal taxable income, [federal items of tax
preference,] total taxable amount or ordinary income portion of  a  lump
sum  distribution  or includible gain of a trust reported on his federal
income tax return for any taxable year, or the amount  of  a  taxpayer's
earned income credit or credit for employment-related expenses set forth
on  such return, or the amount of any federal foreign tax credit affect-
ing the calculation of the credit for Canadian  provincial  taxes  under
section  six  hundred twenty or six hundred twenty-A of this article, or
the amount of any claim of right adjustment, is changed or corrected  by
the  United States internal revenue service or other competent authority
or as the result of a renegotiation of a contract  or  subcontract  with
the  United  States, or the amount an employer is required to deduct and
withhold from wages for  federal  income  tax  withholding  purposes  is
changed  or  corrected  by  such service or authority or if a taxpayer's
claim for credit or refund of federal income tax is disallowed in  whole
or  in  part,  the  taxpayer  or  employer  shall  report such change or
correction or disallowance within ninety days after the  final  determi-
nation  of such change, correction, renegotiation or disallowance, or as
otherwise required by the commissioner, and shall concede  the  accuracy
of  such  determination or state wherein it is erroneous.  The allowance
of a tentative carryback adjustment based  upon  a  net  operating  loss
carryback  pursuant to section sixty-four hundred eleven of the internal
revenue code shall be treated as a final determination for  purposes  of
this  section.  Any taxpayer filing an amended federal income tax return
and any employer filing an amended federal return of income tax withheld
shall also file within ninety days thereafter an  amended  return  under
this  article,  and  shall give such information as the commissioner may
require.  The commissioner may by regulation prescribe  such  exceptions
to the requirements of this section as he or she deems appropriate.  For
purposes  of this section, (i) the term "taxpayer" shall include a part-
nership having a resident partner or having any income derived from  New
York  sources,  and a corporation with respect to which the taxable year
of such change, correction, disallowance or amendment  is  a  year  with
respect  to which the election provided for in subsection (a) of section
six hundred sixty of this article  is  in  effect,  and  (ii)  the  term
"federal income tax return" shall include the returns of income required

S. 6359--A                         180                        A. 8559--A

under  sections six thousand thirty-one and six thousand thirty-seven of
the internal revenue code.   In the case of  such  a  corporation,  such
report  shall  also  include  any  change  or  correction  of  the taxes
described in paragraphs two and three of subsection (f) of section thir-
teen hundred sixty-six of the internal revenue code.  Reports made under
this  section by a partnership or corporation shall indicate the portion
of the change in each item of income, gain, loss or deduction  (and,  in
the case of a corporation, of each change in, or disallowance of a claim
for  credit  or  refund of, a tax referred to in the preceding sentence)
allocable to each partner or shareholder and shall set forth such  iden-
tifying  information  with respect to such partner or shareholder as may
be prescribed by the commissioner.
  S 9. Subsection (d) of section 683 of the tax law, as amended by chap-
ter 170 of the laws of 1994, is amended to read as follows:
  (d) Omission of income, [item of tax preference,] total taxable amount
or ordinary income portion of a lump sum  distribution  on  return.--The
tax  may  be  assessed at any time within six years after the return was
filed if--
  (1) an individual omits from his New York adjusted gross income,  [the
sum  of  his  items  of  tax preference,] or the total taxable amount or
ordinary income portion of a lump sum distribution  an  amount  properly
includible  therein  which  is  in  excess of twenty-five percent of the
amount of New York adjusted gross income, [the sum of the items  of  tax
preference,] or the total taxable amount or ordinary income portion of a
lump sum distribution stated in the return, or
  (2)  an estate or trust omits from its New York adjusted gross income,
[the sum of its items of tax preference,] or the total taxable amount or
ordinary income portion of a lump sum distribution  an  amount  properly
includible  therein  which  is  in  excess of twenty-five percent of the
amount stated in the return of New York adjusted gross income determined
in accordance with paragraph four  of  subsection  (e)  of  section  six
hundred  one,  [or the sum of the items of tax preference,] or the total
taxable amount or ordinary income portion of a  lump  sum  distribution,
respectively.  For  purposes of this subsection there shall not be taken
into account any amount which is omitted in the return if such amount is
disclosed in the return, or in a statement attached to the return, in  a
manner  adequate to apprise the commissioner of the nature and amount of
the item of income, [tax preference,] total taxable amount  or  ordinary
income portion of a lump sum distribution.
  S 10. Subparagraph (B) of paragraph 4 of subsection (c) of section 685
of the tax law, as amended by chapter 28 of the laws of 1987, is amended
to read as follows:
  (B)  Determination  of  annualized income installment.--In the case of
any required installment,  the  annualized  income  installment  is  the
excess,  if  any, of an amount equal to the applicable percentage of the
tax for the taxable year computed by placing on an annualized basis  the
taxable  income  [and  minimum taxable income] for months in the taxable
year ending before the due date for the installment, over the  aggregate
amount  of  any  prior  required  installments for the taxable year. The
applicable percentage of  the  tax  shall  be  twenty-two  and  one-half
percent  in the case of the first installment, forty-five percent in the
case of the second installment, sixty-seven and one-half percent in  the
case  of  the  third  installment  and ninety percent in the case of the
fourth installment, and shall be computed without regard to any increase
in the rates applicable to the taxable year  unless  such  increase  was
enacted at least thirty days prior to the due date of the installment.

S. 6359--A                         181                        A. 8559--A

  S  11. Paragraphs 2 and 3 of subsection (a) of section 1301 of the tax
law, as amended by chapter 209 of the laws of 2011, are amended to  read
as follows:
  (2)  [for  taxable years beginning before two thousand fifteen, a city
minimum income tax on such residents, and
  (3)] for taxable years beginning after nineteen hundred seventy-six, a
separate tax on the ordinary income portion of lump sum distributions of
such residents, at the rates provided  for  herein,  such  taxes  to  be
administered,  collected and distributed by the commissioner as provided
for in this article.
  S 12. Section 1301-A of the tax law is REPEALED.
  S 13. Subsection (a) of section 1302 of the tax  law,  as  amended  by
chapter 333 of the laws of 1987, is amended to read as follows:
  (a)  Imposition  of  tax. The city personal income tax (other than the
[city minimum income tax and the] city  separate  tax  on  the  ordinary
income  portion  of  lump  sum  distributions)  imposed  pursuant to the
authority of this article shall be imposed for each taxable year on  the
city taxable income of every city resident individual, estate and trust.
A  taxpayer's taxable year for purposes of a tax imposed pursuant to the
authority of this article shall be the same as his  taxable  year  under
article twenty-two of this chapter.
  S  14.  The opening paragraph of subsection (a) of section 1304 of the
tax law, as amended by section 134 of part A of chapter 389 of the  laws
of 1997, is amended to read as follows:
  A tax (other than the [city minimum income tax, the] city separate tax
relating  to  qualified higher education funds and the city separate tax
on the ordinary income portion of lump sum distributions) imposed pursu-
ant to the authority of section thirteen hundred  one  of  this  article
shall be determined as follows:
  S  15.  Subsection  (c)  of section 1307 of the tax law, as amended by
chapter 712 of the laws of 2004, is amended to read as follows:
  (c) When an individual changes his status from city resident  to  city
nonresident,  or  from  city  nonresident  to  city  resident, he shall,
regardless of his method of accounting,  accrue  any  items  of  income,
gain,  loss,  deduction[,  items  of  tax preference] or ordinary income
portion of a lump sum distribution  accruing  prior  to  the  change  of
status,  with  the  applicable  modifications and adjustments to federal
adjusted gross income[,] AND itemized deductions [and items of tax pref-
erence] under sections six hundred twelve[,]  AND  six  hundred  fifteen
[and  six  hundred  twenty-two], if not otherwise properly includible or
allowable for New York income tax purposes for such period  or  a  prior
taxable year under his method of accounting. Such accruals shall be made
as provided in section six hundred thirty-nine of this chapter.
  S  16.  Subsection  (a)  of section 1306 of the tax law, as amended by
chapter 333 of the laws of 1987, is amended to read as follows:
  (a) General. On or before  the  fifteenth  day  of  the  fourth  month
following the close of a taxable year, an income tax return under a city
tax  imposed pursuant to the authority of this article shall be made and
filed by or for every city resident individual, estate or trust required
to file a New York state  personal  income  tax  (including  [a  minimum
income  tax  and]  a city separate tax on the ordinary income portion of
lump sum distributions) return for the taxable year.
  S 17. Section 11-1702 of the administrative code of the  city  of  New
York is REPEALED.

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  S 18. Subdivision (a) of section 11-1704 of the administrative code of
the  city  of New York, as amended by chapter 17 of the laws of 1997, is
amended to read as follows:
  (a)  In  addition  to the taxes imposed by sections 11-1701[, 11-1702]
and 11-1703, there is hereby imposed for  each  taxable  year  beginning
after  nineteen  hundred eighty-nine but before nineteen hundred ninety-
nine, a tax surcharge on the city taxable income of every city  resident
individual, estate and trust.
  S 19. Subdivision (c) of section 11-1704 of the administrative code of
the  city of New York, as amended by chapter 271 of the laws of 1991, is
amended to read as follows:
  (c) The tax surcharge imposed pursuant to this section shall be admin-
istered, collected and distributed by the commissioner of  taxation  and
finance  in  the  same  manner as the taxes imposed pursuant to sections
11-1701[, 11-1702] and 11-1703, and all of the provisions of this  chap-
ter, including sections 11-1706, 11-1721 and 11-1773, shall apply to the
tax surcharge imposed by this section.
  S  20.  Section  11-1722 of the administrative code of the city of New
York is REPEALED.
  S 21. Subdivision (a) of section 11-1751 of the administrative code of
the city of New York, as amended by chapter 333 of the laws of 1987,  is
amended to read as follows:
  (a)  General.  On  or  before  the  fifteenth  day of the fourth month
following the close of a taxable year, an income tax return  under  this
chapter  shall  be made and filed by or for every city resident individ-
ual, estate or trust required to file a New York state  personal  income
tax  (including  a [minimum income tax and] separate tax on the ordinary
income portion of lump sum distributions) return for the taxable year.
  S 22. Subdivision (b) of section 11-1754 of the administrative code of
the city of New York, as amended by chapter 712 of the laws of 2004,  is
amended to read as follows:
  (b)  City  taxable  income  [and  city minimum taxable income] as city
resident. The city taxable income [and city minimum taxable income]  for
the  portion of the year during which he or she is a city resident shall
be determined, except as provided in subdivision (c), as if his  or  her
taxable  year for federal income tax purposes were limited to the period
of his or her city resident status.
  S 23. Paragraph 6 of subdivision (b) of section 11-1755 of the  admin-
istrative code of the city of New York, as added by section 17 of part Q
of chapter 407 of the laws of 1999, is amended to read as follows:
  (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
"section 1 or 55" shall be read as "section 11-1701 [or 11-1702] of this
chapter".
  S  24.  Section  11-1759 of the administrative code of the city of New
York, as amended by chapter 577 of the laws of 1997, is amended to  read
as follows:
  S  11-1759 Report of federal changes, corrections or disallowances. If
the amount of a taxpayer's federal taxable income, [federal items of tax
preference,] total taxable amount or ordinary income portion of  a  lump
sum  distribution  or includible gain of a trust reported on his federal
income tax return for any taxable year, or the amount of  any  claim  of
right  adjustment, is changed or corrected by the United States internal
revenue service or other competent authority, or  as  the  result  of  a
renegotiation of a contract or subcontract with the United States or the
amount  an  employer  is  required to deduct and withhold from wages for
federal income tax withholding purposes is changed or corrected by  such

S. 6359--A                         183                        A. 8559--A

service  or  authority  or if a taxpayer's claim for credit or refund of
federal income tax is disallowed in whole or in part,  the  taxpayer  or
employer  shall  report such change or correction or disallowance within
ninety  days  after  the final determination of such change, correction,
renegotiation, or disallowance, or as otherwise required by the  commis-
sioner,  and  shall  concede the accuracy of such determination or state
wherein it is erroneous. The allowance of a tentative carryback  adjust-
ment  based  upon  a  net  operating  loss carryback pursuant to section
sixty-four hundred eleven of the internal revenue code shall be  treated
as  a  final  determination  for  purposes of this section. Any taxpayer
filing an amended federal income tax return and any employer  filing  an
amended  federal  return  of  income tax withheld shall also file within
ninety days thereafter an amended return under this chapter,  and  shall
give  such information as the commissioner may require. The commissioner
may by regulation prescribe such exceptions to the requirements of  this
section  as  he  or she deems appropriate. For purposes of this section,
(i) the term "taxpayer" shall include a partnership  having  a  resident
partner or having any income derived from New York sources, and a corpo-
ration   with  respect  to  which  the  taxable  year  of  such  change,
correction, disallowance or amendment is a year with  respect  to  which
the election provided for in subsection (a) of section six hundred sixty
of  the  tax  law  is  in  effect, and (ii) the term "federal income tax
return" shall include the returns of income required under sections  six
thousand thirty-one and six thousand thirty-seven of the internal reven-
ue  code.  In  the  case  of  such a corporation, such report shall also
include any change or correction of the taxes  described  in  paragraphs
two and three of subsection (f) of section thirteen hundred sixty-six of
the internal revenue code. Reports made under this section by a partner-
ship  or  corporation  shall  indicate the portion of the change in each
item of income, gain, loss or deduction (and, in the case  of  a  corpo-
ration,  of  each  change  in,  or disallowance of a claim for credit or
refund of, a tax referred to in the  preceding  sentence)  allocable  to
each  partner or shareholder and shall set forth such identifying infor-
mation with respect to such partner or shareholder as may be  prescribed
by the commissioner.
  S 25. Subdivision (d) of section 11-1783 of the administrative code of
the  city of New York, as amended by chapter 170 of the laws of 1994, is
amended to read as follows:
  (d) Omission of income, [item of tax preference,] total taxable amount
or ordinary income portion of a lump sum distribution on return. The tax
may be assessed at any time within six years after the return was  filed
if:
  (1)  an individual omits from his city adjusted gross income[, the sum
of his items of tax preference, or] the total taxable amount or ordinary
income portion of a lump sum distribution an amount properly  includible
therein  which is in excess of twenty-five percent of the amount of city
adjusted gross income[, the sum of the items of tax preference]  or  the
total  taxable  amount or ordinary income portion of a lump sum distrib-
ution stated in the return, or
  (2) an estate or trust omits from its city adjusted gross income, [the
sum of its items of tax preference,] or  the  total  taxable  amount  or
ordinary  income  portion  of a lump sum distribution an amount properly
includible therein which is in excess  of  twenty-five  percent  of  the
amount  stated  in the return of city adjusted gross income, [or the sum
of the items of tax preference,] or the total taxable amount or ordinary
income portion of a lump sum distribution, respectively. For purposes of

S. 6359--A                         184                        A. 8559--A

this paragraph, city adjusted gross income means New York adjusted gross
income as determined under paragraph four of subsection (e)  of  section
six hundred one of the tax law.
  For purposes of this subdivision there shall not be taken into account
any amount which is omitted in the return if such amount is disclosed in
the  return,  or  in  a  statement  attached  to the return, in a manner
adequate to apprise the commissioner of the nature  and  amount  of  the
item  of  income, [tax preference,] the total taxable amount or ordinary
income portion of a lump sum distribution.
  S 26. Subparagraph (B) of paragraph 4 of subdivision  (c)  of  section
11-1785  of  the administrative code of the city of New York, as amended
by chapter 333 of the laws of 1987, is amended to read as follows:
  (B) Determination of annualized income installment. In the case of any
required installment, the annualized income installment is  the  excess,
if  any,  of an amount equal to the applicable percentage of the tax for
the taxable year computed by placing on an annualized basis the  taxable
income  [and  minimum  taxable  income]  for  months in the taxable year
ending before the due date  for  the  installment,  over  the  aggregate
amount  of  any  prior  required  installments for the taxable year. The
applicable percentage of  the  tax  shall  be  twenty-two  and  one-half
percent  in the case of the first installment, forty-five percent in the
case of the second installment, sixty-seven and one-half percent in  the
case  of  the  third  installment  and ninety percent in the case of the
fourth installment, and shall be computed without regard to any increase
in the rates applicable to the taxable year  unless  such  increase  was
enacted at least thirty days prior to the due date of the installment.
  S  27.  This  act  shall  take effect immediately and apply to taxable
years beginning on or after January 1, 2014.

                                 PART K

  Section 1. Subsection (e-1) of section 606 of the tax  law  is  relet-
tered subsection (e-2).
  S  2. Section 606 of the tax law is amended by adding a new subsection
(e-1) to read as follows:
  (E-1) ENHANCED REAL PROPERTY  TAX  CIRCUIT  BREAKER  CREDIT.  (1)  FOR
PURPOSES OF THIS SUBSECTION:
  (A)  "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE WHO
HAS OCCUPIED THE SAME RESIDENCE FOR SIX MONTHS OR MORE  OF  THE  TAXABLE
YEAR, AND IS REQUIRED OR CHOOSES TO FILE A RETURN UNDER THIS ARTICLE.
  (B)  "HOUSEHOLD"  OR  "MEMBERS  OF  THE  HOUSEHOLD"  MEANS A QUALIFIED
TAXPAYER AND ALL OTHER PERSONS, NOT NECESSARILY RELATED,  WHO  HAVE  THE
SAME RESIDENCE AND SHARE ITS FURNISHINGS, FACILITIES AND ACCOMMODATIONS.
SUCH  TERMS SHALL NOT INCLUDE A TENANT, SUBTENANT, ROOMER OR BOARDER WHO
IS NOT RELATED TO THE QUALIFIED TAXPAYER  IN  ANY  DEGREE  SPECIFIED  IN
PARAGRAPHS  ONE  THROUGH  EIGHT OF SUBSECTION (A) OF SECTION ONE HUNDRED
FIFTY-TWO OF THE INTERNAL REVENUE CODE.   PROVIDED, HOWEVER,  NO  PERSON
MAY BE A MEMBER OF MORE THAN ONE HOUSEHOLD AT ONE TIME.
  (C) "HOUSEHOLD GROSS INCOME" MEANS THE AGGREGATE ADJUSTED GROSS INCOME
OF  ALL  MEMBERS  OF  THE HOUSEHOLD FOR THE TAXABLE YEAR AS REPORTED FOR
FEDERAL INCOME TAX PURPOSES, OR WHICH  WOULD  BE  REPORTED  AS  ADJUSTED
GROSS  INCOME  IF A FEDERAL INCOME TAX RETURN WERE REQUIRED TO BE FILED,
WITH THE MODIFICATIONS IN SUBSECTION (B) OF SECTION SIX  HUNDRED  TWELVE
OF  THIS ARTICLE BUT WITHOUT THE MODIFICATIONS IN SUBSECTION (C) OF SUCH
SECTION, PLUS ANY PORTION OF THE GAIN FROM THE SALE OR EXCHANGE OF PROP-
ERTY OTHERWISE EXCLUDED FROM SUCH AMOUNT;  EARNED  INCOME  FROM  SOURCES

S. 6359--A                         185                        A. 8559--A

WITHOUT  THE  UNITED  STATES  EXCLUDABLE  FROM  FEDERAL  GROSS INCOME BY
SECTION NINE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE; SUPPORT  MONEY
NOT  INCLUDED  IN  ADJUSTED  GROSS  INCOME;  NONTAXABLE STRIKE BENEFITS;
SUPPLEMENTAL  SECURITY  INCOME PAYMENTS; THE GROSS AMOUNT OF ANY PENSION
OR ANNUITY BENEFITS TO THE EXTENT NOT INCLUDED IN  SUCH  ADJUSTED  GROSS
INCOME  (INCLUDING, BUT NOT LIMITED TO, RAILROAD RETIREMENT BENEFITS AND
ALL PAYMENTS RECEIVED UNDER THE FEDERAL SOCIAL SECURITY ACT  AND  VETER-
ANS'  DISABILITY  PENSIONS); NONTAXABLE INTEREST RECEIVED FROM THE STATE
OF NEW YORK, ITS AGENCIES, INSTRUMENTALITIES,  PUBLIC  CORPORATIONS,  OR
POLITICAL  SUBDIVISIONS (INCLUDING A PUBLIC CORPORATION CREATED PURSUANT
TO AGREEMENT OR COMPACT WITH ANOTHER STATE OR CANADA); WORKERS'  COMPEN-
SATION;  THE GROSS AMOUNT OF "LOSS-OF-TIME" INSURANCE; AND THE AMOUNT OF
CASH PUBLIC ASSISTANCE AND RELIEF, OTHER THAN MEDICAL ASSISTANCE FOR THE
NEEDY, PAID TO OR FOR THE BENEFIT OF THE QUALIFIED TAXPAYER  OR  MEMBERS
OF  HIS  OR  HER  HOUSEHOLD.  HOUSEHOLD  GROSS  INCOME SHALL NOT INCLUDE
SURPLUS FOODS OR OTHER RELIEF IN KIND OR PAYMENTS  MADE  TO  INDIVIDUALS
BECAUSE  OF  THEIR  STATUS  AS VICTIMS OF NAZI PERSECUTION AS DEFINED IN
P.L. 103-286. PROVIDED,  FURTHER,  HOUSEHOLD  GROSS  INCOME  SHALL  ONLY
INCLUDE  ALL  SUCH INCOME RECEIVED BY ALL MEMBERS OF THE HOUSEHOLD WHILE
MEMBERS OF SUCH HOUSEHOLD. IN COMPUTING HOUSEHOLD GROSS INCOME, THE  NET
AMOUNT  OF  LOSS  REPORTED  ON  FEDERAL SCHEDULE C, D, E, OR F SHALL NOT
EXCEED THREE THOUSAND DOLLARS PER SCHEDULE. IN ADDITION, THE NET  AMOUNT
OF  ANY  OTHER SEPARATE CATEGORY OF LOSS SHALL NOT EXCEED THREE THOUSAND
DOLLARS. THE AGGREGATE AMOUNT OF ALL LOSSES INCLUDED IN COMPUTING HOUSE-
HOLD GROSS INCOME SHALL NOT EXCEED FIFTEEN THOUSAND DOLLARS.
  (D) "RESIDENCE" MEANS A DWELLING IN THIS STATE OWNED BY THE  TAXPAYER,
AND  SO  MUCH  OF  THE  LAND  ABUTTING IT, NOT EXCEEDING ONE ACRE, AS IS
REASONABLY NECESSARY FOR USE OF THE DWELLING AS A HOME, AND MAY  CONSIST
OF  A  PART  OF  A  MULTI-DWELLING OR MULTI-PURPOSE BUILDING INCLUDING A
COOPERATIVE OR CONDOMINIUM.   RESIDENCE INCLUDES  A  TRAILER  OR  MOBILE
HOME,  USED  EXCLUSIVELY  FOR  RESIDENTIAL  PURPOSES AND DEFINED AS REAL
PROPERTY PURSUANT TO PARAGRAPH (G) OF SUBDIVISION TWELVE OF SECTION  ONE
HUNDRED TWO OF THE REAL PROPERTY TAX LAW.
  (E)  "QUALIFYING  REAL  PROPERTY TAXES" MEANS ALL REAL PROPERTY TAXES,
SPECIAL AD VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE  OF  PENAL-
TIES  AND INTEREST, LEVIED BY A TAXING JURISDICTION WITH A CAP-COMPLIANT
BUDGET ON THE RESIDENCE OF A QUALIFIED  TAXPAYER  AND  PAID  DURING  THE
TAXABLE YEAR.
  (I)  FOR THE PURPOSES OF THIS SUBSECTION, A "CAP-COMPLIANT BUDGET" FOR
A SCHOOL DISTRICT SUBJECT TO SECTION TWO THOUSAND TWENTY-THREE-A OF  THE
EDUCATION  LAW  MEANS  A BUDGET FOR WHICH THE CHIEF EXECUTIVE OFFICER OF
SUCH SCHOOL DISTRICT HAS CERTIFIED, NO LATER THAN THE  TWENTY-FIRST  DAY
OF  THE  FISCAL  YEAR TO WHICH IT APPLIES, TO THE STATE COMPTROLLER, THE
COMMISSIONER OF TAXATION AND FINANCE AND THE COMMISSIONER OF  EDUCATION,
IN A FORM AND MANNER PRESCRIBED BY THE STATE COMPTROLLER IN CONSULTATION
WITH  THE  COMMISSIONER  OF TAXATION AND FINANCE AND THE COMMISSIONER OF
EDUCATION, THAT THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT
PRESCRIBED BY SUCH SECTION. A "CAP-COMPLIANT BUDGET" FOR A LOCAL GOVERN-
MENT SUBJECT TO SECTION THREE-C OF THE GENERAL MUNICIPAL LAW SHALL  MEAN
A BUDGET FOR WHICH THE CHIEF EXECUTIVE OFFICER OR BUDGET OFFICER OF SUCH
LOCAL  GOVERNMENT UNIT HAS CERTIFIED, NO LATER THAN THE TWENTY-FIRST DAY
OF THE FISCAL YEAR TO WHICH IT APPLIES, TO THE STATE COMPTROLLER AND THE
COMMISSIONER OF TAXATION AND FINANCE, IN A FORM AND MANNER PRESCRIBED BY
THE STATE COMPTROLLER IN CONSULTATION WITH THE COMMISSIONER OF  TAXATION
AND  FINANCE,  THAT  THE ADOPTED BUDGET OF SUCH LOCAL GOVERNMENT DID NOT
REQUIRE AND THE GOVERNING BODY OF SUCH LOCAL GOVERNMENT DID NOT ENACT OR

S. 6359--A                         186                        A. 8559--A

APPROVE A LOCAL LAW  OR  RESOLUTION  TO  OVERRIDE  THE  TAX  LEVY  LIMIT
PRESCRIBED  BY  SUCH  SECTION,  OR,  IF  THE GOVERNING BODY OF THE LOCAL
GOVERNMENT DID ENACT A LOCAL LAW OR APPROVE  A  RESOLUTION  TO  OVERRIDE
SUCH  TAX LEVY LIMIT, THAT SUCH LOCAL LAW OR RESOLUTION WAS SUBSEQUENTLY
REPEALED. IF A CERTIFICATION REQUIRED BY THIS PARAGRAPH  HAS  BEEN  MADE
AND  THE ACTUAL TAX LEVY OF THE TAXING JURISDICTION EXCEEDS THE APPLICA-
BLE TAX LEVY LIMIT, THE EXCESS AMOUNT SHALL BE  PLACED  IN  RESERVE  AND
USED  IN  THE  MANNER  PRESCRIBED  BY SUBDIVISION FIVE OF SECTION TWENTY
THOUSAND TWENTY-THREE-A OF THE  EDUCATION  LAW  OR  SUBDIVISION  SIX  OF
SECTION  THREE-C  OF THE GENERAL MUNICIPAL LAW, WHICHEVER IS APPLICABLE,
EVEN IF A TAX LEVY IN EXCESS OF THE TAX LEVY LIMIT HAD BEEN DULY AUTHOR-
IZED FOR THE APPLICABLE FISCAL YEAR IN ACCORDANCE WITH SUCH SECTION.
  (II) FOR TAX YEAR TWO THOUSAND  FOURTEEN,  ONLY  REAL  PROPERTY  TAXES
LEVIED  BY SCHOOL DISTRICTS WITH CAP-COMPLIANT BUDGETS CONSTITUTE QUALI-
FYING REAL PROPERTY TAXES.
  (III) IN A CITY  WITH  A  POPULATION  OF  ONE  MILLION  OR  MORE,  THE
RESTRICTION IN CLAUSE (I) OF THIS SUBPARAGRAPH THAT TAXES MUST BE LEVIED
BY  A  TAXING  JURISDICTION  WITH A CAP-COMPLIANT BUDGET DOES NOT APPLY.
HOWEVER, REAL PROPERTY TAXES, SPECIAL AD  VALOREM  LEVIES,  AND  SPECIAL
ASSESSMENTS LEVIED BY SUCH CITY SHALL CONSTITUTE QUALIFYING REAL PROPER-
TY  TAXES  ONLY  IF  TAXES  LEVIED  IN  THE  STATE OUTSIDE SUCH CITY ARE
REQUIRED FOR PURPOSES OF THIS CREDIT TO BE LEVIED  BY  TAXING  JURISDIC-
TIONS WITH CAP-COMPLIANT BUDGETS.
  (IV)  A  QUALIFIED TAXPAYER MAY ELECT TO INCLUDE ANY ADDITIONAL AMOUNT
THAT WOULD HAVE BEEN LEVIED IN THE ABSENCE OF  AN  EXEMPTION  FROM  REAL
PROPERTY  TAXATION  PURSUANT  TO SECTION FOUR HUNDRED SIXTY-SEVEN OF THE
REAL PROPERTY TAX LAW. IF TENANT-STOCKHOLDERS IN A  COOPERATIVE  HOUSING
CORPORATION  HAVE MET THE REQUIREMENTS OF SECTION TWO HUNDRED SIXTEEN OF
THE INTERNAL REVENUE CODE BY WHICH THEY ARE ALLOWED A DEDUCTION FOR REAL
ESTATE TAXES, THE AMOUNT OF TAXES SO ALLOWABLE, OR WHICH WOULD BE ALLOW-
ABLE IF THE TAXPAYER HAD FILED RETURNS ON A CASH BASIS, SHALL BE  QUALI-
FYING  REAL PROPERTY TAXES. IF A RESIDENCE IS OWNED BY TWO OR MORE INDI-
VIDUALS AS JOINT TENANTS OR TENANTS IN COMMON, AND ONE OR MORE THAN  ONE
INDIVIDUAL  IS  NOT  A MEMBER OF THE HOUSEHOLD, QUALIFYING REAL PROPERTY
TAXES IS THAT PART OF SUCH TAXES ON THE  RESIDENCE  WHICH  REFLECTS  THE
OWNERSHIP PERCENTAGE OF THE QUALIFIED TAXPAYER AND MEMBERS OF HIS OR HER
HOUSEHOLD. IF A RESIDENCE IS AN INTEGRAL PART OF A LARGER UNIT, QUALIFY-
ING  REAL  PROPERTY  TAXES SHALL BE LIMITED TO THAT AMOUNT OF SUCH TAXES
PAID AS MAY BE REASONABLY APPORTIONED TO SUCH RESIDENCE. IF A  HOUSEHOLD
OWNS AND OCCUPIES TWO OR MORE RESIDENCES DURING DIFFERENT PERIODS IN THE
SAME  TAXABLE  YEAR,  QUALIFYING REAL PROPERTY TAXES SHALL BE THE SUM OF
THE PRORATED QUALIFYING REAL PROPERTY TAXES ATTRIBUTABLE TO  THE  HOUSE-
HOLD DURING THE PERIODS SUCH HOUSEHOLD OCCUPIES EACH OF SUCH RESIDENCES.
IF  THE  HOUSEHOLD OWNS AND OCCUPIES A RESIDENCE FOR PART OF THE TAXABLE
YEAR AND RENTS A RESIDENCE FOR PART OF THE SAME  TAXABLE  YEAR,  IT  MAY
INCLUDE THE PRORATION OF QUALIFYING REAL PROPERTY TAXES ON THE RESIDENCE
OWNED.  PROVIDED, HOWEVER, FOR PURPOSES OF THE CREDIT ALLOWED UNDER THIS
SUBSECTION,  QUALIFYING  REAL PROPERTY TAXES MAY BE INCLUDED BY A QUALI-
FIED TAXPAYER ONLY TO THE EXTENT THAT SUCH TAXPAYER  OR  THE  SPOUSE  OF
SUCH  TAXPAYER,  OCCUPYING  SUCH  RESIDENCE FOR ONE HUNDRED EIGHTY-THREE
DAYS OR MORE OF THE TAXABLE YEAR, OWNS OR HAS OWNED  THE  RESIDENCE  AND
PAID SUCH TAXES.
  (2)  A  QUALIFIED  TAXPAYER  SHALL  BE ALLOWED A CREDIT AS PROVIDED IN
PARAGRAPH THREE HEREOF AGAINST THE TAXES IMPOSED BY THIS ARTICLE REDUCED
BY THE CREDITS PERMITTED BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE  TAX
AS  SO  REDUCED  FOR  SUCH  YEAR UNDER THIS ARTICLE, THE EXCESS SHALL BE

S. 6359--A                         187                        A. 8559--A

TREATED AS AN OVERPAYMENT, TO BE CREDITED OR REFUNDED, WITHOUT INTEREST.
IF A QUALIFIED TAXPAYER IS NOT REQUIRED TO FILE  A  RETURN  PURSUANT  TO
SECTION  SIX HUNDRED FIFTY-ONE OF THIS ARTICLE, A QUALIFIED TAXPAYER MAY
NEVERTHELESS  RECEIVE  THE  FULL  AMOUNT OF THE CREDIT TO BE CREDITED OR
REFUNDED AS AN OVERPAYMENT, WITHOUT INTEREST.
  (3) DETERMINATION OF CREDIT. (A) FOR TAXABLE YEARS  BEGINNING  IN  TWO
THOUSAND  FOURTEEN,  THE  AMOUNT  OF  THE  CREDIT  ALLOWABLE  UNDER THIS
SUBSECTION SHALL BE DETERMINED AS FOLLOWS:
IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
                        PROPERTY TAXES OVER         EXCESS REAL PROPERTY
                        THE FOLLOWING               TAXES:
                        PERCENTAGE OF
                        HOUSEHOLD GROSS INCOME:
LESS THAN $120,000      2.4%                        6.25%
$120,000 TO LESS
THAN $150,000           3.2%                        4.75%
$150,000 TO LESS
THAN $200,000           4.0%                        3.25%
  NOTWITHSTANDING THE FOREGOING PROVISIONS, THE  MAXIMUM  CREDIT  DETER-
MINED UNDER THIS SUBPARAGRAPH MAY NOT EXCEED FIVE HUNDRED DOLLARS.
  (B) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND FIFTEEN, THE AMOUNT OF
THE  CREDIT  ALLOWABLE  UNDER  THIS  SUBSECTION  SHALL  BE DETERMINED AS
FOLLOWS:
IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
                        PROPERTY TAXES OVER         EXCESS REAL PROPERTY
                        THE FOLLOWING               TAXES:
                        PERCENTAGE OF
                        HOUSEHOLD GROSS INCOME:
LESS THAN $120,000      3.0%                        8.25%
$120,000 TO LESS
THAN $150,000           4.0%                        6.00%
$150,000 TO LESS
THAN $200,000           5.0%                        3.75%
  NOTWITHSTANDING THE FOREGOING PROVISIONS, THE  MAXIMUM  CREDIT  DETER-
MINED  UNDER  THIS  SUBPARAGRAPH  MAY  NOT  EXCEED  SEVEN  HUNDRED FIFTY
DOLLARS.
  (C) FOR TAXABLE YEARS BEGINNING AFTER TWO THOUSAND FIFTEEN, THE AMOUNT
OF THE CREDIT ALLOWABLE UNDER THIS SUBSECTION  SHALL  BE  DETERMINED  AS
FOLLOWS:
IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
                        PROPERTY TAXES OVER         EXCESS REAL PROPERTY
                        THE FOLLOWING               TAXES:
                        PERCENTAGE OF
                        HOUSEHOLD GROSS INCOME:
LESS THAN $120,000      3.0%                        20.0%
$120,000 TO LESS
THAN $150,000           4.0%                        15.0%
$150,000 TO LESS
THAN $200,000           5.0%                        10.0%

S. 6359--A                         188                        A. 8559--A

  NOTWITHSTANDING  THE  FOREGOING  PROVISIONS, THE MAXIMUM CREDIT DETER-
MINED UNDER THIS SUBPARAGRAPH MAY NOT EXCEED ONE THOUSAND DOLLARS.
  (4)  IF A QUALIFIED TAXPAYER OCCUPIES A RESIDENCE FOR A PERIOD OF LESS
THAN TWELVE MONTHS DURING THE TAXABLE YEAR OR OCCUPIES TWO OR MORE RESI-
DENCES DURING DIFFERENT PERIODS IN SUCH TAXABLE YEAR, THE CREDIT ALLOWED
PURSUANT TO THIS SUBSECTION SHALL BE COMPUTED  IN  SUCH  MANNER  AS  THE
COMMISSIONER  MAY  PRESCRIBE  IN ORDER TO PROPERLY REFLECT THE CREDIT OR
PORTION THEREOF ATTRIBUTABLE TO SUCH RESIDENCE OR  RESIDENCES  AND  SUCH
PERIOD OR PERIODS.
  (5)  THE  COMMISSIONER  MAY  PRESCRIBE  THAT  THE  CREDIT  UNDER  THIS
SUBSECTION SHALL BE DETERMINED IN WHOLE OR IN PART BY THE USE OF  TABLES
PRESCRIBED  BY SUCH COMMISSIONER. SUCH TABLES SHALL SET FORTH THE CREDIT
TO THE NEAREST DOLLAR.
  (6) ONLY ONE CREDIT PER HOUSEHOLD AND PER QUALIFIED TAXPAYER SHALL  BE
ALLOWED PER TAXABLE YEAR UNDER THIS SUBSECTION. WHEN TWO OR MORE MEMBERS
OF  A  HOUSEHOLD  ARE  ABLE  TO  MEET THE QUALIFICATIONS FOR A QUALIFIED
TAXPAYER, THE CREDIT SHALL BE EQUALLY  DIVIDED  BETWEEN  OR  AMONG  SUCH
INDIVIDUALS UNLESS SUCH INDIVIDUALS FILE WITH THE COMMISSIONER A WRITTEN
AGREEMENT AMONG SUCH INDIVIDUALS SETTING FORTH A DIFFERENT DIVISION.
  (A)  PROVIDED, HOWEVER, WHERE A JOINT INCOME TAX RETURN HAS BEEN FILED
PURSUANT TO THE PROVISIONS OF SECTION  SIX  HUNDRED  FIFTY-ONE  OF  THIS
ARTICLE  BY  A  QUALIFIED  TAXPAYER AND HIS OR HER SPOUSE (OR WHERE BOTH
SPOUSES ARE QUALIFIED TAXPAYERS AND HAVE FILED SUCH JOINT  RETURN),  THE
CREDIT,  OR  THE  PORTION OF THE CREDIT IF DIVIDED, TO WHICH THE SPOUSES
ARE ENTITLED SHALL BE APPLIED AGAINST THE TAX OF BOTH  SPOUSES  AND  ANY
OVERPAYMENT SHALL BE MADE TO BOTH SPOUSES.
  (B)  WHERE  ANY RETURN REQUIRED TO BE FILED PURSUANT TO THE PROVISIONS
OF SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE IS  COMBINED  WITH  ANY
RETURN  OF  TAX IMPOSED PURSUANT TO THE AUTHORITY OF THIS CHAPTER OR ANY
OTHER LAW IF SUCH TAX IS ADMINISTERED BY THE COMMISSIONER, THE CREDIT OR
THE PORTION OF THE CREDIT IF DIVIDED, ALLOWED TO THE QUALIFIED  TAXPAYER
MAY  BE  APPLIED BY THE COMMISSIONER TOWARD ANY LIABILITY FOR THE AFORE-
MENTIONED TAXES.
  (7) NO CREDIT SHALL BE GRANTED UNDER THIS SUBSECTION:
  (A) IF HOUSEHOLD GROSS INCOME FOR THE TAXABLE YEAR EQUALS  OR  EXCEEDS
TWO HUNDRED THOUSAND DOLLARS.
  (B)  TO A PROPERTY OWNER UNLESS: (I) THE PROPERTY IS USED FOR RESIDEN-
TIAL PURPOSES, (II) NOT MORE THAN TWENTY PERCENT OF THE  RENTAL  INCOME,
IF ANY, FROM THE PROPERTY IS FROM RENTAL FOR NONRESIDENTIAL PURPOSES AND
(III) THE PROPERTY IS OCCUPIED AS A RESIDENCE IN WHOLE OR IN PART BY ONE
OR MORE OF THE OWNERS OF THE PROPERTY.
  (C) TO AN INDIVIDUAL WITH RESPECT TO WHOM A DEDUCTION UNDER SUBSECTION
(C)  OF  SECTION  ONE  HUNDRED FIFTY-ONE OF THE INTERNAL REVENUE CODE IS
ALLOWABLE TO ANOTHER TAXPAYER FOR THE TAXABLE YEAR.
  (D) WITH RESPECT TO A RESIDENCE THAT  IS  WHOLLY  EXEMPTED  FROM  REAL
PROPERTY TAXATION.
  (E) TO AN INDIVIDUAL WHO IS NOT A RESIDENT INDIVIDUAL OF THE STATE FOR
THE ENTIRE TAXABLE YEAR.
  (8) THE RIGHT TO CLAIM A CREDIT OR THE PORTION OF A CREDIT, WHERE SUCH
CREDIT  HAS BEEN DIVIDED UNDER THIS SUBSECTION, SHALL BE PERSONAL TO THE
QUALIFIED TAXPAYER AND SHALL NOT SURVIVE HIS  OR  HER  DEATH,  BUT  SUCH
RIGHT MAY BE EXERCISED ON BEHALF OF A CLAIMANT BY HIS OR HER LEGAL GUAR-
DIAN OR ATTORNEY IN FACT DURING HIS OR HER LIFETIME.
  (9)  RETURNS. IF A QUALIFIED TAXPAYER IS NOT REQUIRED TO FILE A RETURN
PURSUANT TO SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE, A CLAIM FOR A
CREDIT MAY BE TAKEN ON A RETURN FILED WITH THE COMMISSIONER WITHIN THREE

S. 6359--A                         189                        A. 8559--A

YEARS FROM THE TIME IT WOULD HAVE BEEN REQUIRED THAT A RETURN  BE  FILED
PURSUANT  TO  SUCH SECTION HAD THE QUALIFIED TAXPAYER HAD A TAXABLE YEAR
ENDING ON DECEMBER THIRTY-FIRST.  RETURNS UNDER THIS PARAGRAPH SHALL  BE
IN  SUCH FORM AS SHALL BE PRESCRIBED BY THE COMMISSIONER, WHO SHALL MAKE
AVAILABLE SUCH FORMS AND INSTRUCTIONS FOR FILING SUCH RETURNS.
  (10) PROOF OF CLAIM. THE COMMISSIONER MAY REQUIRE A QUALIFIED TAXPAYER
TO FURNISH THE FOLLOWING INFORMATION IN SUPPORT OF HIS OR HER CLAIM  FOR
CREDIT  UNDER  THIS  SUBSECTION:  HOUSEHOLD  GROSS INCOME, REAL PROPERTY
TAXES LEVIED OR THAT WOULD  HAVE  BEEN  LEVIED  IN  THE  ABSENCE  OF  AN
EXEMPTION  FROM  REAL  PROPERTY  TAX  PURSUANT  TO  SECTION FOUR HUNDRED
SIXTY-SEVEN OF THE REAL PROPERTY TAX LAW, THE NAMES OF  MEMBERS  OF  THE
HOUSEHOLD  AND  OTHER  QUALIFYING TAXPAYERS OCCUPYING THE SAME RESIDENCE
AND THEIR IDENTIFYING NUMBERS INCLUDING SOCIAL SECURITY NUMBERS,  HOUSE-
HOLD  GROSS INCOME, SIZE AND NATURE OF PROPERTY CLAIMED AS RESIDENCE AND
ALL OTHER INFORMATION WHICH MAY  BE  REQUIRED  BY  THE  COMMISSIONER  TO
DETERMINE THE CREDIT.
  (11)  ADMINISTRATION.  THE  PROVISIONS  OF THIS ARTICLE, INCLUDING THE
PROVISIONS OF SECTION SIX HUNDRED FIFTY-THREE, SIX HUNDRED  FIFTY-EIGHT,
AND  SIX HUNDRED FIFTY-NINE AND THE PROVISIONS OF PART SIX OF THIS ARTI-
CLE RELATING TO PROCEDURE AND  ADMINISTRATION,  INCLUDING  THE  JUDICIAL
REVIEW  OF  THE DECISIONS OF THE COMMISSIONER, EXCEPT SO MUCH OF SECTION
SIX HUNDRED EIGHTY-SEVEN WHICH PERMITS A CLAIM FOR CREDIT OR  REFUND  TO
BE  FILED  AFTER  THE  PERIOD  PROVIDED  FOR  IN  PARAGRAPH NINE OF THIS
SUBSECTION AND EXCEPT SECTIONS  SIX  HUNDRED  FIFTY-SEVEN,  SIX  HUNDRED
EIGHTY-EIGHT  AND  SIX HUNDRED NINETY-SIX, SHALL APPLY TO THE PROVISIONS
OF THIS SUBSECTION IN THE SAME MANNER AND WITH THE SAME FORCE AND EFFECT
AS IF THE LANGUAGE OF THOSE PROVISIONS HAD  BEEN  INCORPORATED  IN  FULL
INTO THIS SUBSECTION AND HAD EXPRESSLY REFERRED TO THE CREDIT ALLOWED OR
RETURNS  FILED UNDER THIS SUBSECTION, EXCEPT TO THE EXTENT THAT ANY SUCH
PROVISION IS EITHER INCONSISTENT WITH A PROVISION OF THIS SUBSECTION  OR
IS  NOT  RELEVANT  TO THIS SUBSECTION. AS USED IN SUCH SECTIONS AND SUCH
PART, THE TERM "TAXPAYER" SHALL INCLUDE A QUALIFIED TAXPAYER UNDER  THIS
SUBSECTION  AND,  NOTWITHSTANDING  THE  PROVISIONS  OF SUBSECTION (E) OF
SECTION  SIX  HUNDRED  NINETY-SEVEN,  WHERE  A  QUALIFIED  TAXPAYER  HAS
PROTESTED THE DENIAL OF A CLAIM FOR CREDIT UNDER THIS SUBSECTION AND THE
TIME  TO  FILE  A  PETITION  FOR  REDETERMINATION OF A DEFICIENCY OR FOR
REFUND HAS NOT EXPIRED, HE OR SHE SHALL, SUBJECT TO SUCH  CONDITIONS  AS
MAY  BE  SET  BY  THE COMMISSIONER, RECEIVE SUCH INFORMATION (A) THAT IS
CONTAINED IN ANY RETURN FILED UNDER THIS ARTICLE BY A MEMBER OF  HIS  OR
HER  HOUSEHOLD FOR THE TAXABLE YEAR FOR WHICH THE CREDIT IS CLAIMED, AND
(B) THAT THE COMMISSIONER FINDS IS RELEVANT AND MATERIAL TO THE ISSUE OF
WHETHER SUCH CLAIM WAS PROPERLY DENIED.
  (12) NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE,  THE  CREDIT
ALLOWED  UNDER  THIS  SUBSECTION  SHALL BE DETERMINED AFTER THE DETERMI-
NATION  AND  APPLICATION  OF  ANY  OTHER  CREDITS  PERMITTED  UNDER  THE
PROVISIONS  OF  THIS  ARTICLE.    A TAXPAYER SHALL BE ALLOWED EITHER THE
CREDIT PROVIDED BY THIS SUBSECTION OR  THE  REAL  PROPERTY  TAX  CIRCUIT
BREAKER  CREDIT PROVIDED BY SUBSECTION (E) OF THIS SECTION, WHICHEVER IS
GREATER.
  S 3. Paragraph 14 of subsection (e) of section 606 of the tax  law  is
REPEALED.
  S 4. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

                                 PART L

S. 6359--A                         190                        A. 8559--A

  Section  1.    Section  606  of the tax law is amended by adding a new
subsection (b-1) to read as follows:
  (B-1) RENTERS' CREDIT.
  (1) FOR THE PURPOSES OF THIS SUBSECTION:
  (A)  "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE WHO
HAS OCCUPIED AND PAID RENT FOR HIS OR  HER  PRIMARY  RESIDENCE  IN  THIS
STATE FOR SIX MONTHS OR MORE OF THE TAXABLE YEAR, IS REQUIRED OR CHOOSES
TO  FILE A RETURN UNDER THIS ARTICLE, AND (I) IS SIXTY-FIVE YEARS OF AGE
OR OLDER, (II) IS FILING A JOINT RETURN WITH A SPOUSE WHO IS  SIXTY-FIVE
YEARS  OF  AGE OR OLDER, (III) IS A HEAD OF HOUSEHOLD, (IV) IS A MARRIED
INDIVIDUAL FILING A JOINT RETURN WITH A SPOUSE  AND  HAS  AT  LEAST  ONE
DEPENDENT,  (V) IS A MARRIED INDIVIDUAL FILING A SEPARATE RETURN AND HAS
AT LEAST ONE DEPENDENT, OR (VI) IS A SURVIVING SPOUSE AND HAS  AT  LEAST
ONE DEPENDENT. AN INDIVIDUAL CANNOT BE A QUALIFIED TAXPAYER IF HE OR SHE
IS  AN  INDIVIDUAL WITH RESPECT TO WHOM A DEDUCTION UNDER SUBSECTION (C)
OF SECTION 151 OF THE INTERNAL REVENUE  CODE  IS  ALLOWABLE  TO  ANOTHER
TAXPAYER  FOR THE TAXABLE YEAR OR PAYS RENT FOR HIS OR HER PRIMARY RESI-
DENCE TO A FAMILY MEMBER SHARING THE SAME PRIMARY RESIDENCE.   A  FAMILY
MEMBER  OF  AN  INDIVIDUAL  IS THE INDIVIDUAL'S SPOUSE, BROTHER, SISTER,
PARENT, GRANDPARENT, CHILD, GRANDCHILD, UNCLE, AUNT, NEPHEW,  OR  NIECE,
RELATED TO THE INDIVIDUAL BY BLOOD, MARRIAGE OR ADOPTION.
  (B)  "RESIDENCE"  MEANS  A DWELLING IN THIS STATE AND MAY CONSIST OF A
PART OF A MULTI-DWELLING OR MULTI-PURPOSE BUILDING INCLUDING  A  COOPER-
ATIVE  OR  CONDOMINIUM, AND RENTAL UNITS WITHIN A SINGLE DWELLING. RESI-
DENCE INCLUDES A TRAILER OR MOBILE HOME, USED EXCLUSIVELY  FOR  RESIDEN-
TIAL  PURPOSES AND DEFINED AS REAL PROPERTY PURSUANT TO PARAGRAPH (G) OF
SUBDIVISION TWELVE OF SECTION ONE HUNDRED TWO OF THE REAL  PROPERTY  TAX
LAW.
  (2)  (A) A QUALIFIED TAXPAYER SHALL BE ALLOWED A CREDIT AS PROVIDED IN
THIS SUBSECTION AGAINST THE TAXES IMPOSED BY THIS ARTICLE REDUCED BY THE
CREDITS PERMITTED BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE TAX  AS  SO
REDUCED FOR SUCH YEAR UNDER THIS ARTICLE, THE EXCESS SHALL BE TREATED AS
AN  OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE,  PROVIDED,
HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON. IF A QUALIFIED TAXPAYER
IS  NOT REQUIRED TO FILE A RETURN PURSUANT TO SECTION SIX HUNDRED FIFTY-
ONE OF THIS ARTICLE BUT OTHERWISE QUALIFIES  FOR  A  CREDIT  UNDER  THIS
SUBSECTION, A CLAIM FOR A CREDIT MAY BE TAKEN ON A RETURN FILED WITH THE
COMMISSIONER  WITHIN  THREE YEARS FROM THE TIME THAT A RETURN WOULD HAVE
BEEN REQUIRED TO BE FILED PURSUANT TO SUCH SECTION  HAD  SUCH  QUALIFIED
TAXPAYER  HAD  A  TAXABLE  YEAR ENDING ON DECEMBER THIRTY-FIRST. RETURNS
SHALL BE IN SUCH FORM AS PRESCRIBED BY  THE  COMMISSIONER.  A  QUALIFIED
TAXPAYER  MUST  PROVIDE ANY INFORMATION THE COMMISSIONER DEEMS NECESSARY
TO DETERMINE THE CREDIT ALLOWED.
  (B) IF MORE THAN ONE QUALIFIED TAXPAYER PAYS RENT FOR THE SAME PRIMARY
RESIDENCE AND HAS A FEDERAL ADJUSTED GROSS INCOME  FOR  WHICH  A  CREDIT
WOULD  OTHERWISE  BE  DUE, EACH SUCH QUALIFIED TAXPAYER SHALL DIVIDE THE
BASE AMOUNT OF THE CREDIT ALLOWED FOR HIS OR HER  INCOME  LEVEL  BY  THE
TOTAL NUMBER OF INDIVIDUALS OR MARRIED COUPLES FILING A JOINT RETURN WHO
ARE  PAYING THE RENT, WHETHER OR NOT ELIGIBLE FOR A CREDIT, TO DETERMINE
THE AMOUNT OF CREDIT ALLOWED TO THAT QUALIFIED TAXPAYER. ANY  ADDITIONAL
AMOUNT OF CREDIT DETERMINED BASED ON THE NUMBER OF EXEMPTIONS CLAIMED BY
SUCH TAXPAYER SHALL NOT BE SO DIVIDED.
  (C)  A  QUALIFIED  TAXPAYER  SHALL  BE  ALLOWED  THE CREDIT UNDER THIS
SUBSECTION OR THE CREDIT UNDER SUBSECTION (E) OF THIS SECTION, WHICHEVER
IS THE HIGHER AMOUNT.

S. 6359--A                         191                        A. 8559--A

  (3) (A) FOR ANY QUALIFIED TAXPAYER WHO IS SIXTY-FIVE YEARS OF  AGE  OR
OLDER  WITH  A FILING STATUS OF SINGLE, THE AMOUNT OF THE CREDIT ALLOWED
PURSUANT TO THIS PARAGRAPH SHALL BE DETERMINED IN  ACCORDANCE  WITH  THE
FOLLOWING TABLES:

FOR TAXABLE YEARS BEGINNING IN 2014,
IF FEDERAL ADJUSTED GROSS INCOME IS:        THE CREDIT SHALL BE:
$25,000 OR LESS                                     $110
OVER $25,000 BUT NOT OVER $40,000                    $90
OVER $40,000 BUT NOT OVER $50,000                    $70

FOR TAXABLE YEARS BEGINNING IN OR
AFTER 2015, IF FEDERAL ADJUSTED GROSS
INCOME IS:                                  THE CREDIT SHALL BE:
$25,000 OR LESS                                     $220
OVER $25,000 BUT NOT OVER $40,000                   $180
OVER $40,000 BUT NOT OVER $50,000                   $140
  (B) FOR ANY OTHER QUALIFIED TAXPAYER, THE AMOUNT OF THE CREDIT ALLOWED
PURSUANT  TO  THIS  PARAGRAPH SHALL BE DETERMINED IN ACCORDANCE WITH THE
FOLLOWING TABLES; PROVIDED, HOWEVER, THAT A QUALIFIED TAXPAYER WHO IS  A
MARRIED  INDIVIDUAL  FILING  A SEPARATE NEW YORK INCOME TAX RETURN SHALL
RECEIVE ONE-HALF OF THE BASE AMOUNT OF THE CREDIT  PLUS  ANY  ADDITIONAL
AMOUNT FOR WHICH SUCH TAXPAYER WOULD BE ELIGIBLE BASED ON THE INCOME AND
NUMBER OF EXEMPTIONS CLAIMED BY SUCH TAXPAYER:

FOR TAXABLE YEARS BEGINNING IN 2014,
IF FEDERAL ADJUSTED GROSS INCOME IS:         THE CREDIT SHALL BE:
$25,000 OR LESS                              $80 PLUS AN AMOUNT
                                             EQUAL TO $35
                                             MULTIPLIED BY A
                                             NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER
                                             (OR IN THE CASE
                                             OF A MARRIED COUPLE
                                             FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED
                                             TO A DEDUCTION FOR THE
                                             TAXABLE YEAR FOR FEDERAL
                                             INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B)
                                             AND (C) OF SECTION 151
                                             OF THE INTERNAL REVENUE CODE

OVER $25,000 BUT NOT OVER $45,000            $65 PLUS AN AMOUNT
                                             EQUAL TO $24
                                             MULTIPLIED BY A NUMBER
                                             WHICH IS ONE LESS THAN
                                             THE NUMBER OF EXEMPTIONS
                                             FOR WHICH THE TAXPAYER
                                             (OR IN THE CASE OF
                                             A MARRIED COUPLE FILING A
                                             JOINT RETURN, TAXPAYERS)
                                             IS ENTITLED TO A
                                             DEDUCTION FOR THE TAXABLE

S. 6359--A                         192                        A. 8559--A

                                             YEAR FOR FEDERAL INCOME
                                             TAX PURPOSES UNDER
                                             SUBSECTIONS (B) AND (C)
                                             OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE

OVER $45,000 BUT NOT OVER $65,000            $55 PLUS AN AMOUNT
                                             EQUAL TO $12 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER (OR
                                             IN THE CASE OF A MARRIED
                                             COUPLE FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED
                                             TO A DEDUCTION FOR THE
                                             TAXABLE YEAR FOR FEDERAL
                                             INCOME TAX PURPOSES UNDER
                                             SUBSECTIONS (B) AND (C)
                                             OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE

OVER $65,000 BUT NOT OVER $100,000           $45 PLUS AN AMOUNT
                                             EQUAL TO $12 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR WHICH
                                             THE TAXPAYER (OR IN THE
                                             CASE OF A MARRIED COUPLE
                                             FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED TO
                                             A DEDUCTION FOR THE TAXABLE
                                             YEAR FOR FEDERAL INCOME TAX
                                             PURPOSES UNDER SUBSECTIONS
                                             (B) AND (C) OF SECTION 151
                                             OF THE INTERNAL REVENUE CODE

FOR TAXABLE YEARS BEGINNING IN OR
AFTER 2015, IF FEDERAL ADJUSTED GROSS
INCOME IS:                                   THE CREDIT SHALL BE:
$25,000 OR LESS                              $160 PLUS AN
                                             AMOUNT EQUAL TO $70
                                             MULTIPLIED BY A NUMBER WHICH
                                             IS ONE LESS THAN THE
                                             NUMBER OF EXEMPTIONS
                                             FOR WHICH THE TAXPAYER
                                             (OR IN THE CASE OF A
                                             MARRIED COUPLE FILING A
                                             JOINT RETURN, TAXPAYERS)
                                             IS ENTITLED TO A DEDUCTION
                                             FOR THE TAXABLE YEAR FOR
                                             FEDERAL INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B) AND
                                             (C) OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE

S. 6359--A                         193                        A. 8559--A

OVER $25,000 BUT NOT OVER $45,000            $130 PLUS AN AMOUNT
                                             EQUAL TO $48
                                             MULTIPLIED BY A NUMBER
                                             WHICH IS ONE LESS THAN
                                             THE NUMBER OF EXEMPTIONS
                                             FOR WHICH THE TAXPAYER
                                             (OR IN THE CASE OF
                                             A MARRIED COUPLE FILING
                                             A JOINT RETURN, TAXPAYERS)
                                             IS ENTITLED TO A DEDUCTION
                                             FOR THE TAXABLE YEAR FOR
                                             FEDERAL INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B)
                                             AND (C) OF SECTION 151
                                             OF THE INTERNAL REVENUE CODE

OVER $45,000 BUT NOT OVER $65,000            $110 PLUS AN AMOUNT
                                             EQUAL TO $24 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER (OR
                                             IN THE CASE OF A MARRIED
                                             COUPLE FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED TO A
                                             DEDUCTION FOR THE TAXABLE
                                             YEAR FOR FEDERAL INCOME TAX
                                             PURPOSES UNDER SUBSECTIONS
                                             (B) AND (C) OF SECTION 151
                                             OF THE INTERNAL  REVENUE CODE

OVER $65,000 BUT NOT OVER $100,000           $90 PLUS AN AMOUNT
                                             EQUAL TO $24 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER (OR
                                             IN THE CASE OF A MARRIED
                                             COUPLE FILING A JOINT RETURN,
                                             TAXPAYERS) IS
                                             ENTITLED TO A DEDUCTION
                                             FOR THE TAXABLE YEAR FOR
                                             FEDERAL INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B) AND
                                             (C) OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE
  S 2. This act shall take effect immediately.

                                 PART M

  Section  1. Paragraphs 2, 4 and 5 of subsection (vv) of section 606 of
the tax law, as added by section 1 of part CC of chapter 59 of the  laws
of 2013, are amended to read as follows:
  2.  To  be  eligible for the credit, the taxpayer (or taxpayers filing
joint returns) on the personal income tax return filed for  the  taxable
year  [two  years  prior],  must  [have]  (a)  [been] BE a resident, (b)

S. 6359--A                         194                        A. 8559--A

[claimed] CLAIM one or more dependent children who were under the age of
seventeen on the last day of the taxable year, (c) [had] HAVE  New  York
adjusted  gross income of at least forty thousand dollars but no greater
than  three hundred thousand dollars, and (d) [had] HAVE a tax liability
as determined under paragraph three of this subsection of  greater  than
or equal to zero.
  4.  [For  each  year  this  credit  is  allowed,  on or before October
fifteenth of such year, the commissioner shall determine the  taxpayer's
eligibility  for  this credit utilizing the information available to the
commissioner on the taxpayer's personal income tax return filed for  the
taxable  year two years prior to the taxable year in which the credit is
allowed. For those taxpayers whom the commissioner has determined eligi-
ble for this credit, the commissioner shall advance a payment  of  three
hundred  fifty  dollars. When a taxpayer files his or her return for the
taxable year, such taxpayer shall properly reconcile that payment on his
or her return.
  5.] If the amount of the credit allowed under  this  subsection  shall
exceed  the  taxpayer's  tax  for  the taxable year, the excess shall be
treated as an overpayment of tax to be credited or refunded  in  accord-
ance with the provisions of SECTION six hundred eighty-six of this arti-
cle, provided, however, that no interest shall be paid thereon.
  S 2. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2015.

                                 PART N

  Section  1.  Paragraph  1  of subsection (a) of section 651 of the tax
law, as amended by chapter 333 of the laws of 1987, is amended  to  read
as follows:
  (1)  every  resident  individual (A) required to file a federal income
tax return for the taxable year, or (B) having  federal  adjusted  gross
income  for  the  taxable  year,  increased  by  the modifications under
subsection (b) of section six hundred twelve OF THIS ARTICLE, in  excess
of [four thousand dollars, or in excess of] his OR HER New York standard
deduction,  [if  lower,] or (C) subject to tax under section six hundred
two OF THIS ARTICLE, or (D) having received during the  taxable  year  a
lump  sum  distribution  any  portion  of  which is subject to tax under
section six hundred three OF THIS ARTICLE;
  S 2. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2014.

                                 PART O

  Section 1. Paragraph 1 of subdivision (a) of section  28  of  the  tax
law,  as  amended  by  section  1 of part I of chapter 59 of the laws of
2012, is amended to read as follows:
  (1) A taxpayer which is a qualified commercial production company,  or
which is a sole proprietor of a qualified commercial production company,
and  which  is subject to tax under article nine-A or twenty-two of this
chapter, shall be allowed a credit against such  tax,  pursuant  to  the
provisions referenced in subdivision (c) of this section, to be computed
as  provided in this section. Provided, however, to be eligible for such
credit, at least seventy-five percent of the production costs (excluding
post production costs) paid or incurred directly  and  predominantly  in
the  actual  filming  or  recording  of the qualified commercial must be
costs incurred in New York state. The tax  credit  allowed  pursuant  to

S. 6359--A                         195                        A. 8559--A

this  section  shall  apply  to  taxable  years beginning before January
first, two thousand [fifteen] SEVENTEEN.
  S 2. Paragraph (a) of subdivision 38 of section 210 of the tax law, as
amended  by  section  3  of part I of chapter 59 of the laws of 2012, is
amended to read as follows:
  (a) Allowance of credit. A  taxpayer  that  is  eligible  pursuant  to
provisions  of  section  twenty-eight of this chapter shall be allowed a
credit to be computed as  provided  in  such  section  against  the  tax
imposed by this article. The tax credit allowed pursuant to this section
shall  apply  to taxable years beginning before January first, two thou-
sand [fifteen] SEVENTEEN.
  S 3. Paragraph 1 of subsection (jj) of section 606 of the tax law,  as
amended  by  section  4  of part I of chapter 59 of the laws of 2012, is
amended to read as follows:
  (1) Allowance of credit. A taxpayer that is eligible pursuant  to  the
provisions  of  section  twenty-eight of this chapter shall be allowed a
credit to be computed as  provided  in  such  section  against  the  tax
imposed by this article. The tax credit allowed pursuant to this section
shall  apply  to taxable years beginning before January first, two thou-
sand [fifteen] SEVENTEEN.
  S 4. This act shall take effect immediately.

                                 PART P

  Section 1. Subdivision 4 of section 22 of the public housing  law,  as
amended  by  section  2  of part J of chapter 59 of the laws of 2012, is
amended to read as follows:
  4. Statewide limitation. The aggregate dollar amount of  credit  which
the  commissioner  may  allocate  to eligible low-income buildings under
this article shall be [forty-eight] FIFTY-SIX million dollars. The limi-
tation provided by this subdivision applies only to  allocation  of  the
aggregate  dollar  amount  of  credit  by the commissioner, and does not
apply to allowance to a taxpayer of the credit with respect to an eligi-
ble low-income building for each year of the credit period.
  S 2. Subdivision 4 of section 22 of the public housing law, as amended
by section one of this act, is amended to read as follows:
  4. Statewide limitation. The aggregate dollar amount of  credit  which
the  commissioner  may  allocate  to eligible low-income buildings under
this article shall be [fifty-six] SIXTY-FOUR million dollars. The  limi-
tation  provided  by  this subdivision applies only to allocation of the
aggregate dollar amount of credit by  the  commissioner,  and  does  not
apply to allowance to a taxpayer of the credit with respect to an eligi-
ble low-income building for each year of the credit period.
  S  3.  This act shall take effect immediately; provided, however, that
section two of this act shall take effect April 1, 2015.

                                 PART Q

  Section 1. Subdivision (b) of section  27-1318  of  the  environmental
conservation  law,  as  amended by section 2 of part E of chapter 577 of
the laws of 2004, is amended to read as follows:
  (b) Within [sixty] ONE HUNDRED EIGHTY  days  of  commencement  of  the
remedial design, the owner of an inactive hazardous waste disposal site,
and/or  any  person  responsible  for implementing a remedial program at
such site, where institutional  or  engineering  controls  are  employed

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pursuant to this title, shall execute an environmental easement pursuant
to title thirty-six of article seventy-one of this chapter.
  S  2.  Subdivision 2 of section 27-1405 of the environmental conserva-
tion law, as amended by section 2 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  2.  "Brownfield  site"  or  "site"  shall mean any real property[, the
redevelopment or reuse of which may be complicated by  the  presence  or
potential  presence of] WHERE a contaminant IS PRESENT AT LEVELS EXCEED-
ING THE SOIL CLEANUP OBJECTIVES OR OTHER HEALTH-BASED  OR  ENVIRONMENTAL
STANDARDS PROMULGATED BY THE DEPARTMENT THAT ARE APPLICABLE BASED ON THE
REASONABLY ANTICIPATED USE OF THE PROPERTY, AS DETERMINED BY THE DEPART-
MENT. Such term shall not include real property:
  (a)  listed in the registry of inactive hazardous waste disposal sites
under section 27-1305 of this article at the time of application to this
program and given a classification as described in subparagraph  one  or
two  of  paragraph b of subdivision two of section 27-1305 of this arti-
cle; provided, however [except until July  first,  two  thousand  five],
real  property  listed  in  the  registry  of  inactive  hazardous waste
disposal sites under subparagraph two of paragraph b of subdivision  two
of  section 27-1305 of this article [prior to the effective date of this
article], where such real property is owned  by  a  volunteer  OR  UNDER
CONTRACT  TO  BE  TRANSFERRED  TO A VOLUNTEER AND THE DEPARTMENT HAS NOT
IDENTIFIED ANY RESPONSIBLE PARTIES FOR THAT PROPERTY HAVING THE  ABILITY
TO  PAY  FOR  THE INVESTIGATION OR CLEANUP OF THE PROPERTY, shall not be
deemed ineligible to participate and further provided that the status of
any such site as listed in the registry shall not be  altered  prior  to
the  issuance of a certificate of completion pursuant to section 27-1419
of this title. THE DEPARTMENT'S ASSESSMENT  OF  ELIGIBILITY  UNDER  THIS
PARAGRAPH  SHALL  NOT  CONSTITUTE  A  FINDING  CONCERNING LIABILITY WITH
RESPECT TO THE PROPERTY;
  (b) listed on the national priorities list established under authority
of 42 U.S.C. section 9605;
  (c) subject to an enforcement action under title seven or nine of this
article, [except] OR PERMITTED  AS  a  treatment,  storage  or  disposal
facility  [subject to a permit]; provided, that nothing herein contained
shall be deemed otherwise to exclude from the scope of the term  "brown-
field  site"  a  hazardous waste treatment, storage or disposal facility
having interim  status  according  to  regulations  promulgated  by  the
commissioner;
  (d)  subject to an order for cleanup pursuant to article twelve of the
navigation law or pursuant to title ten of  article  seventeen  of  this
chapter  except  such  property  shall not be deemed ineligible if it is
subject to a stipulation agreement; or
  (e) subject to any  other  on-going  state  or  federal  environmental
enforcement action related to the contamination which is at or emanating
from the site subject to the present application.
  S  3.  Subdivision 1 of section 27-1407 of the environmental conserva-
tion law, as amended by section 3 of part A of chapter 577 of  the  laws
of  2004,  is  amended  and  a  new  subdivision 1-a is added to read as
follows:
  1. A person who seeks to participate in this program  shall  submit  a
request  to  the  department  on a form provided by the department. Such
form shall include information to be determined by the department suffi-
cient to allow the department to determine eligibility and the  current,
intended and reasonably anticipated future land use of the site pursuant
to  section  27-1415  of  this  title.   ANY SUCH PERSON SHALL SUBMIT AN

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INVESTIGATION REPORT SUFFICIENT TO DEMONSTRATE THAT  THE  SITE  REQUIRES
REMEDIATION  IN  ORDER  TO MEET THE REMEDIAL REQUIREMENTS OF THIS TITLE;
AND, FOR ANY STRATEGIC SITE LOCATED WITHIN A BROWNFIELD OPPORTUNITY AREA
DESIGNATED  BY  THE  SECRETARY OF STATE PURSUANT TO SECTION NINE HUNDRED
SEVENTY-R OF THE GENERAL MUNICIPAL LAW, A CERTIFICATION THAT THE  DEVEL-
OPMENT  OF THE SITE WILL BE IN CONFORMANCE WITH SUCH BROWNFIELD OPPORTU-
NITY AREA PLAN.
  1-A. IF THE PERSON IS ALSO SEEKING TO RECEIVE  THE  TANGIBLE  PROPERTY
CREDIT  COMPONENT OF THE BROWNFIELD REDEVELOPMENT TAX CREDIT PURSUANT TO
PARAGRAPH THREE OF SUBDIVISION (A) OF SECTION TWENTY-ONE OF THE TAX  LAW
SUCH  PERSON SHALL SUBMIT INFORMATION SUFFICIENT TO DEMONSTRATE THAT (1)
THE SITE HAS: (I) BEEN A VACANT LOT FOR FIFTEEN OR MORE YEARS, OR (II) A
BUILDING OR BUILDINGS THAT HAVE BEEN VACANT FOR FIFTEEN OR  MORE  YEARS,
OR (III) A LOT OR BUILDINGS HAVE BEEN BOTH VACANT AND TAX DELINQUENT FOR
TEN OR MORE YEARS, (2) THE PROJECTED COST OF THE INVESTIGATION AND REME-
DIATION  WHICH IS PROTECTIVE FOR THE ANTICIPATED USE OF THE SITE EXCEEDS
THE CERTIFIED APPRAISED VALUE OF THE PROPERTY ABSENT  CONTAMINATION,  OR
(3) THE PROJECT IS A PRIORITY ECONOMIC DEVELOPMENT PROJECT AS DETERMINED
BY THE DEPARTMENT OF ECONOMIC DEVELOPMENT THAT HAS RECEIVED A RESOLUTION
FROM  THE  MUNICIPALITY  WITHIN  WHICH  THE  SITE IS LOCATED STATING THE
PROPOSED PROJECT IS CONSISTENT WITH THE MUNICIPALITY'S LOCAL REVITALIZA-
TION OR DEVELOPMENT PLAN.  "PRIORITY ECONOMIC DEVELOPMENT PROJECT" MEANS
(A) A MANUFACTURER CREATING AT LEAST ONE HUNDRED NET  NEW  JOBS  IN  THE
STATE  AND  MAKING  SIGNIFICANT  CAPITAL  INVESTMENT IN THE STATE; (B) A
BUSINESS CREATING AT LEAST ONE HUNDRED NET NEW JOBS  IN  AGRICULTURE  IN
THE  STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE STATE; (C) A
FINANCIAL SERVICES FIRM, DISTRIBUTION CENTER, OR BACK  OFFICE  OPERATION
CREATING  AT  LEAST  THREE  HUNDRED NET NEW JOBS IN THE STATE AND MAKING
SIGNIFICANT CAPITAL INVESTMENT IN THE STATE; (D) A  SCIENTIFIC  RESEARCH
AND  DEVELOPMENT  FIRM CREATING AT LEAST ONE HUNDRED NET NEW JOBS IN THE
STATE, AND MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE STATE;  (E)  THE
CORPORATE  HEADQUARTERS  OF A FIRM CREATING AT LEAST ONE HUNDRED NET NEW
JOBS IN THE STATE, AND MAKING  SIGNIFICANT  CAPITAL  INVESTMENT  IN  THE
STATE; OR (F) A SOFTWARE DEVELOPMENT OR NEW MEDIA FIRM CREATING AT LEAST
FIFTY  NET NEW JOBS IN THE STATE, AND MAKING SIGNIFICANT CAPITAL INVEST-
MENT IN THE STATE. OTHER BUSINESSES CREATING THREE HUNDRED OR  MORE  NET
NEW  JOBS  IN THE STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE
STATE MAY  BE  CONSIDERED  ELIGIBLE  AS  PRIORITY  ECONOMIC  DEVELOPMENT
PROJECT  BY  THE COMMISSIONER OF ECONOMIC DEVELOPMENT AS WELL. AN APPLI-
CANT MAY REQUEST AN  ELIGIBILITY  DETERMINATION  FOR  TANGIBLE  PROPERTY
CREDITS  FROM  THE  COMMISSIONER  OF ECONOMIC DEVELOPMENT FOR A PRIORITY
ECONOMIC DEVELOPMENT PROJECT WHEN IT CAN DEMONSTRATE THAT IT MEETS  SUCH
CRITERIA ANY TIME FROM APPLICATION TO THREE YEARS FROM THE DATE THE SITE
RECEIVES A CERTIFICATE OF COMPLETION PURSUANT TO SECTION 27-1419 OF THIS
TITLE.   THE COMMISSIONER OF ECONOMIC DEVELOPMENT SHALL PROMULGATE REGU-
LATIONS TO DETERMINE WHAT CONSTITUTES SIGNIFICANT CAPITAL INVESTMENT FOR
EACH OF THE PROJECT CATEGORIES INDICATED IN THIS  SUBDIVISION  AND  WHAT
ADDITIONAL  CRITERIA  A  BUSINESS MUST MEET TO BE ELIGIBLE AS A PRIORITY
ECONOMIC DEVELOPMENT PROJECT.
  SITES ARE NOT ELIGIBLE FOR TANGIBLE PROPERTY TAX CREDITS  IF  (1)  THE
CONTAMINATION  IS  SOLELY  EMANATING  FROM  PROPERTY OTHER THAN THE SITE
SUBJECT TO THE PRESENT APPLICATION; OR (2) THE DEPARTMENT HAS DETERMINED
THAT THE PROPERTY HAS PREVIOUSLY BEEN REMEDIATED SUCH  THAT  IT  MAY  BE
DEVELOPED FOR ITS THEN INTENDED USE.

S. 6359--A                         198                        A. 8559--A

  S  4.  Subdivision 3 of section 27-1407 of the environmental conserva-
tion law, as amended by section 3 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  3.  The department shall notify the person requesting participation in
this program within [ten] THIRTY days after receiving such request  that
such request is either complete or incomplete. In the event the applica-
tion  is  determined  to  be  incomplete the department shall specify in
writing the missing necessary  information  required  pursuant  to  this
article  to  complete  the  application  and  shall  have ten days after
receipt of the missing information to issue a written  determination  if
the application is complete.
  S  5.  Subdivision 6 of section 27-1407 of the environmental conserva-
tion law, as added by section 1 of part A of chapter 1 of  the  laws  of
2003, is amended to read as follows:
  6.  The  department shall use all best efforts to expeditiously notify
the applicant within forty-five days after receiving [their  request]  A
COMPLETE  APPLICATION  for  participation  that  such  request is either
accepted or rejected, AND, FOR ANY  APPLICANT  SEEKING  TO  RECEIVE  THE
TANGIBLE  PROPERTY  CREDIT COMPONENT OF THE BROWNFIELD REDEVELOPMENT TAX
CREDIT PURSUANT TO PARAGRAPH THREE OF SUBDIVISION (A) OF  SECTION  TWEN-
TY-ONE OF THE TAX LAW, WHETHER THE CRITERIA FOR RECEIVING SUCH COMPONENT
AS SET FORTH IN SUBDIVISION ONE OF THIS SECTION HAVE BEEN MET.
  S  6.  Subdivision 9 of section 27-1407 of the environmental conserva-
tion law is amended by adding a new paragraph (g) to read as follows:
  (G) THE PERSON'S PARTICIPATION  IN  ANY  REMEDIAL  PROGRAM  UNDER  THE
DEPARTMENT'S  OVERSIGHT  WAS  TERMINATED BY THE DEPARTMENT OR BY A COURT
FOR FAILURE TO SUBSTANTIALLY COMPLY WITH AN AGREEMENT OR ORDER.
  S 7. Subdivision 2 of section 27-1409 of the  environmental  conserva-
tion  law,  as amended by section 4 of part A of chapter 577 of the laws
of 2004, is amended to read as follows:
  2. One requiring (A) the [applicant]  PARTICIPANT  to  pay  for  state
costs,  INCLUDING THE RECOVERY OF STATE COSTS INCURRED BEFORE THE EFFEC-
TIVE DATE OF SUCH AGREEMENT; provided, however, that SUCH COSTS  MAY  BE
BASED  ON  A  REASONABLE FLAT-FEE FOR OVERSIGHT, WHICH SHALL REFLECT THE
PROJECTED FUTURE STATE COSTS  INCURRED  IN  NEGOTIATING  AND  OVERSEEING
IMPLEMENTATION OF SUCH AGREEMENT; AND
  (B)  with respect to a brownfield site which the department has deter-
mined constitutes a significant threat to the public health or  environ-
ment  the  department may include a provision requiring the applicant to
provide a technical assistance grant, as described in  subdivision  four
of  section  27-1417  of  this  title and under the conditions described
therein, to an eligible party in accordance with procedures  established
under  such  program, with the cost of such a grant incurred by a volun-
teer serving as an offset against such state costs[. Where the applicant
is a participant, the department shall include  provisions  relating  to
recovery  of  state  costs  incurred  before  the effective date of such
agreement];
  S 8. Section 27-1411 of the environmental conservation law is  amended
by adding two new subdivisions 6 and 7 to read as follows:
  6.  AN APPLICANT SHALL COMMENCE IMPLEMENTATION OF ANY WORK PLAN WITHIN
NINETY DAYS OF APPROVAL OF THE PLAN BY THE DEPARTMENT AND  COMPLETE  THE
ACTIVITIES  PROVIDED FOR IN SUCH WORK PLAN IN ACCORDANCE WITH THE SCHED-
ULE SET FORTH THEREIN, OR AS OTHERWISE APPROVED  BY  THE  DEPARTMENT  IN
WRITING.

S. 6359--A                         199                        A. 8559--A

  7.  AN  APPLICANT  SHALL  INCLUDE  WITH  EVERY REPORT SUBMITTED TO THE
DEPARTMENT A SCHEDULE FOR THE SUBMISSION OF  ANY  SUBSEQUENT  WORK  PLAN
REQUIRED TO MEET THE REQUIREMENTS OF THIS TITLE.
  S  9.  Subdivision 2 of section 27-1413 of the environmental conserva-
tion law, as amended by section 6 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  2.  For  all  [other]  sites  SEEKING TO RECEIVE THE TANGIBLE PROPERTY
CREDIT COMPONENT PURSUANT TO  PARAGRAPH  THREE  OF  SUBDIVISION  (A)  OF
SECTION TWENTY-ONE OF THE TAX LAW, the applicant shall develop and eval-
uate  at  least  two remedial alternatives, one of which would achieve a
Track 1 cleanup. The department shall have the discretion to require the
evaluation of additional alternatives at a site that has been determined
to pose a significant threat. The applicant shall  submit  the  alterna-
tives  analysis  [as a part of the remedial work plan] to the department
for review, approval, modification or rejection.
  S 10. Subdivision 4 of section 27-1415 of the environmental  conserva-
tion  law,  as amended by section 7 of part A of chapter 577 of the laws
of 2004, is amended to read as follows:
  4. Tracks. The commissioner, in consultation with the commissioner  of
health, shall propose within twelve months and thereafter timely promul-
gate regulations which create a multi-track approach for the remediation
of  contamination,  and,  commencing on the effective date of such regu-
lations, utilize  such  multi-track  approach.  Such  regulations  shall
provide  that  groundwater  use  in  Tracks  2,  3  or  4  can be either
restricted or unrestricted. The tracks shall be as follows:
  Track 1: The remedial program shall achieve a cleanup level that  will
allow  the site to be used for any purpose without restriction and with-
out reliance on the long-term employment of institutional or engineering
controls, and shall achieve contaminant-specific remedial action  objec-
tives  for  soil which conform with those contained in the generic table
of contaminant-specific remedial action objectives for unrestricted  use
developed pursuant to subdivision six of this section.  Provided, howev-
er, that volunteers whose proposed remedial program [for the remediation
of  groundwater] (1)(I) may require the long-term employment of institu-
tional or engineering controls FOR THE REMEDIATION OF GROUNDWATER  after
the bulk reduction of groundwater contamination to asymptotic levels has
been  achieved  OR  (II)  MAY  REQUIRE  AN  INSTITUTIONAL OR ENGINEERING
CONTROL FOR MORE THAN FIVE YEARS SOLELY TO ADDRESS SOIL VAPOR  INTRUSION
but  (2)  whose  program  would  otherwise conform with the requirements
necessary to qualify for Track 1, shall qualify for Track 1.
  Track 2: The remedial program may include restrictions on the  use  of
the  site  or reliance on the long-term employment of engineering and/or
institutional controls, but shall achieve contaminant-specific  remedial
action  objectives for soil which conform with those contained in one of
the generic tables developed pursuant to subdivision six of this section
without the use of institutional or engineering controls to  reach  such
objectives.
  Track 3: The remedial program shall achieve contaminant-specific reme-
dial  action objectives for soil which conform with the criteria used to
develop the generic tables for such  objectives  developed  pursuant  to
subdivision six of this section but may use site specific data to deter-
mine such objectives.
  Track  4: The remedial program shall achieve a cleanup level that will
be protective for the site's current, intended or reasonably anticipated
residential, commercial, or industrial use with  restrictions  and  with
reliance  on  the  long-term  employment of institutional or engineering

S. 6359--A                         200                        A. 8559--A

controls  to  achieve  such  level.  The  regulations  shall  include  a
provision  requiring  that  a cleanup level which poses a risk in excee-
dance of an excess cancer risk of one in one  million  for  carcinogenic
end  points  and  a  hazard index of one for non-cancer end points for a
specific contaminant at a specific site may be approved by  the  depart-
ment  without requiring the use of institutional or engineering controls
to eliminate exposure only upon a site specific finding by  the  commis-
sioner, in consultation with the commissioner of health, that such level
shall be protective of public health and environment. Such finding shall
be  included  in  the  draft  remedial  work plan for the site and fully
described in the notice and fact sheet provided for such work plan.
  S 11. Paragraphs (b), (c) and (d) of subdivision 7 of section  27-1415
of the environmental conservation law are relettered paragraphs (c), (d)
and (e) and a new paragraph (b) is added to read as follows:
  (B)  WITHIN  ONE  HUNDRED  EIGHTY DAYS OF COMMENCEMENT OF THE REMEDIAL
DESIGN OR AT LEAST THREE MONTHS PRIOR TO THE  DATE  OF  THE  ANTICIPATED
ISSUANCE  OF  THE  CERTIFICATE  OF COMPLETION, THE OWNER OF A BROWNFIELD
SITE, AND/OR ANY PERSON RESPONSIBLE FOR IMPLEMENTING A REMEDIAL  PROGRAM
AT  SUCH  SITE, WHERE INSTITUTIONAL OR ENGINEERING CONTROLS ARE EMPLOYED
PURSUANT TO THIS TITLE, SHALL EXECUTE AN ENVIRONMENTAL EASEMENT PURSUANT
TO TITLE THIRTY-SIX OF ARTICLE SEVENTY-ONE OF THIS CHAPTER.
  S 12. Paragraph (h) of subdivision 3 of section 27-1417 of  the  envi-
ronmental  conservation  law  is  REPEALED,  paragraph (i) is relettered
paragraph (h) and paragraph (f), as amended by section 8 of  part  A  of
chapter 577 of the laws of 2004, is amended to read as follows:
  (f)  Before  the  department  [finalizes] SELECTS a proposed [remedial
work plan] REMEDY FROM THE ALTERNATIVES SET FORTH  IN  THE  ALTERNATIVES
ANALYSIS  AS  PRESCRIBED  BY  SECTION  27-1413  OF THIS TITLE or makes a
determination that site conditions meet the requirements of  this  title
without  the  necessity  for  remediation pursuant to section 27-1411 of
this title, the department, in consultation  with  the  applicant,  must
notify  individuals  on  the  brownfield  site contact list. Such notice
shall include a fact sheet  describing  such  plan  and  provide  for  a
forty-five  day  public  comment  period.  The commissioner shall hold a
public meeting if requested by the affected community  and  the  commis-
sioner  has  found that the site constitutes a significant threat to the
public health or the environment. Further, the  affected  community  may
request  a  public meeting at sites that do not constitute a significant
threat. (1) To the extent that the department has determined  that  site
conditions  do  not  pose  a  significant  threat  and the site is being
addressed by a volunteer, the notice shall state that the department has
determined that no remediation is required for the  off-site  areas  and
that  the  department's determination of a significant threat is subject
to this forty-five day comment period. (2) If the [remedial  work  plan]
REMEDY  includes  a Track 2, Track 3 or Track 4 remedy at a non-signifi-
cant threat site, such comment period shall apply both to  the  approval
of  the  alternatives analysis by the department, IF APPLICABLE, and the
proposed remedy selected by the applicant.
  S 13. Paragraph (a) of subdivision 2  and  subdivision  3  of  section
27-1419 of the environmental conservation law, paragraph (a) of subdivi-
sion 2 as added by section 1 of part A of chapter 1 of the laws of 2003,
subdivision 3 as amended by chapter 390 of the laws of 2008, are amended
to read as follows:
  (a)  a description of the remediation activities completed pursuant to
the remedial work plan AND ANY INTERIM REMEDIAL MEASURES for the  brown-
field site AND THE COSTS PAID FOR THOSE ACTIVITIES;

S. 6359--A                         201                        A. 8559--A

  3.  Upon receipt of the final engineering report, the department shall
review such report and the data submitted  pursuant  to  the  brownfield
site cleanup agreement as well as any other relevant information regard-
ing  the brownfield site. Upon satisfaction of the commissioner that the
remediation  requirements  set  forth in this title have been or will be
achieved in accordance with the timeframes, if any, established  in  the
remedial  work  plan, the commissioner shall issue a written certificate
of completion[, such]. THE certificate shall include such information as
determined by the department of taxation and finance, including but  not
limited  to  the  brownfield site boundaries included in the final engi-
neering report, the  date  of  the  brownfield  site  CLEANUP  agreement
[pursuant to section 27-1409 of this title], IDENTIFICATION OF THE ENTI-
TY  OR  ENTITIES  ELIGIBLE  FOR CREDITS PURSUANT TO SECTIONS TWENTY-ONE,
TWENTY-TWO OR TWENTY-THREE OF THE TAX LAW, and the  applicable  percent-
ages  available AS OF THE DATE OF THE CERTIFICATE OF COMPLETION for that
site for purposes of section twenty-one  of  the  tax  law[,  with  such
percentages  to  be determined as follows with respect to such qualified
site]. FOR THOSE SITES FOR WHICH THE DEPARTMENT HAS ISSUED A  NOTICE  TO
THE  APPLICANT  ON  OR  AFTER JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS
REQUEST FOR PARTICIPATION HAS BEEN ACCEPTED  UNDER  SUBDIVISION  SIX  OF
SECTION 27-1407 OF THIS TITLE, THE TANGIBLE PROPERTY CREDIT COMPONENT OF
THE  BROWNFIELD  REDEVELOPMENT TAX CREDIT PURSUANT TO PARAGRAPH THREE OF
SUBDIVISION (A) OF SECTION TWENTY-ONE OF  THE  TAX  LAW  SHALL  ONLY  BE
AVAILABLE  TO  THE  TAXPAYER IF THE NOTICE INCLUDES A DETERMINATION THAT
THE CRITERIA FOR RECEIVING SUCH TAX COMPONENT HAVE BEEN MET.  FOR  THOSE
SITES for which the department has issued a notice to the taxpayer after
June twenty-third, two thousand eight that its request for participation
has  been  accepted  under  subdivision  six  of section 27-1407 of this
title[:
  For the purposes of calculating], THE APPLICABLE  PERCENTAGE  FOR  the
site  preparation credit component pursuant to paragraph two of subdivi-
sion (a) of section twenty-one of the tax law, and the on-site groundwa-
ter remediation credit component pursuant to paragraph four of  subdivi-
sion  (a)  of  section  twenty-one  of  the  tax  law[,  the  applicable
percentage] shall be based on the level of cleanup achieved pursuant  to
subdivision  four  of  section  27-1415  of  this title and the level of
cleanup of soils to contaminant-specific soil cleanup objectives promul-
gated pursuant to subdivision six of section 27-1415 of this  title,  up
to a maximum of fifty percent, as follows:
  (a)  soil  cleanup for unrestricted use, the protection of groundwater
or the protection of ecological  resources,  the  applicable  percentage
shall be fifty percent;
  (b)  soil cleanup for residential use, the applicable percentage shall
be forty percent,  except  for  Track  4  which  shall  be  twenty-eight
percent;
  (c)  soil  cleanup for commercial use, the applicable percentage shall
be thirty-three percent, except for Track 4 which shall  be  twenty-five
percent;
  (d)  soil  cleanup for industrial use, the applicable percentage shall
be twenty-seven percent, except for Track 4 which  shall  be  twenty-two
percent.
  S  14. Subdivision 5 of section 27-1419 of the environmental conserva-
tion law, as amended by section 9 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  5.  A certificate of completion issued pursuant to this section may be
transferred [to the applicant's successors or assigns upon  transfer  or

S. 6359--A                         202                        A. 8559--A

sale  of  the  brownfield site] BY THE APPLICANT OR SUBSEQUENT HOLDER OF
THE CERTIFICATE OF COMPLETION TO A SUCCESSOR TO A REAL  PROPERTY  INTER-
EST,  INCLUDING  LEGAL  TITLE, EQUITABLE TITLE OR LEASEHOLD, IN ALL OR A
PART  OF THE BROWNFIELD SITE FOR WHICH THE CERTIFICATE OF COMPLETION WAS
ISSUED; PROVIDED, HOWEVER, ANY TRANSFER OF A CERTIFICATE  OF  COMPLETION
TO A RESPONSIBLE PARTY SHALL NOT PROVIDE RELIEF FROM LIABILITY. Further,
a  certificate  of  completion may be modified or revoked by the commis-
sioner upon a finding that:
  (a) Either the applicant, or the applicant's  successors  or  assigns,
has  failed  to  comply  with the terms and conditions of the brownfield
site cleanup agreement;
  (b) The applicant made a misrepresentation of a material fact  tending
to  demonstrate that (I) it was qualified as a volunteer OR (II) MET THE
CRITERIA SET FORTH IN SUBDIVISION ONE-A OF SECTION 27-1407 OF THIS TITLE
FOR THE PURPOSE OF RECEIVING THE TANGIBLE PROPERTY CREDIT  COMPONENT  OF
THE  BROWNFIELD  REDEVELOPMENT TAX CREDIT PURSUANT TO PARAGRAPH THREE OF
SUBDIVISION (A) OF SECTION TWENTY-ONE OF THE TAX LAW;
  (c) Either the applicant, or the applicant's  successors  or  assigns,
made  a misrepresentation of a material fact tending to demonstrate that
the cleanup levels identified in the brownfield site  cleanup  agreement
were reached; [or]
  (d)  THE ENVIRONMENTAL EASEMENT CREATED AND RECORDED PURSUANT TO TITLE
THIRTY-SIX OF ARTICLE SEVENTY-ONE OF THIS CHAPTER NO LONGER PROVIDES  AN
EFFECTIVE  OR  ENFORCEABLE  MEANS OF ENSURING THE PERFORMANCE OF MAINTE-
NANCE, MONITORING OR OPERATING  REQUIREMENTS,  OR  THE  RESTRICTIONS  ON
FUTURE  USES,  INCLUDING  RESTRICTIONS  ON  DRILLING  FOR OR WITHDRAWING
GROUNDWATER; OR
  (E) There is good cause for such modification or revocation.
  S 15.  Section  27-1423  of  the  environmental  conservation  law  is
REPEALED.
  S  16.  Section  27-1429  of  the  environmental  conservation law, as
amended by section 13 of part A of chapter 577 of the laws of  2004,  is
amended to read as follows:
S 27-1429. Permit waivers.
  The  department[,  by  and through the commissioner,] shall be EXEMPT,
AND SHALL BE authorized to exempt  a  person  from  the  requirement  to
obtain any state or local permit or other authorization for any activity
needed  to  implement a program for the investigation and/or remediation
of contamination AT OR EMANATING FROM A BROWNFIELD SITE;  provided  that
the  activity  is  conducted in a manner which satisfies all substantive
technical requirements applicable to like activity conducted pursuant to
a permit.
  S 17. Subdivision 1 of section 27-1431 of the environmental  conserva-
tion law is amended by adding a new paragraph c to read as follows:
  C. TO INSPECT FOR COMPLIANCE WITH THE SITE MANAGEMENT PLAN APPROVED BY
THE  DEPARTMENT,  INCLUDING (I) INSPECTION OF THE PERFORMANCE OF MAINTE-
NANCE, MONITORING AND OPERATIONAL ACTIVITIES REQUIRED  AS  PART  OF  THE
REMEDIAL PROGRAM FOR THE SITE, (II) INSPECTION FOR THE PURPOSE OF ASCER-
TAINING CURRENT USES OF THE SITE, AND (III) TAKING SAMPLES IN ACCORDANCE
WITH PARAGRAPH A OF THIS SUBDIVISION.
  S  17-a.  Section  27-1435  of  the  environmental conservation law is
REPEALED.
  S 18. The environmental conservation law is amended by  adding  a  new
section 27-1437 to read as follows:
S 27-1437. BCP-EZ PROGRAM.

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  1. NOTWITHSTANDING THE PROVISIONS OF THIS TITLE OR ANY OTHER PROVISION
OF  LAW,  THE DEPARTMENT IS AUTHORIZED TO EXEMPT A VOLUNTEER FROM PROCE-
DURAL REQUIREMENTS OF THIS TITLE THAT THE DEPARTMENT MAY  SPECIFY  WHICH
ARE  OTHERWISE  APPLICABLE  TO IMPLEMENTATION OF AN INVESTIGATION AND/OR
REMEDIATION OF CONTAMINATION, PROVIDED THAT:
  (A)  THE  DEPARTMENT  HAS DETERMINED THAT THE BROWNFIELD SITE DOES NOT
POSE A SIGNIFICANT THREAT PURSUANT TO SECTION 27-1411 OF THIS TITLE;
  (B) THE APPLICANT HAS WAIVED IN WRITING  ANY  CLAIM  FOR  TAX  CREDITS
PURSUANT  TO  SECTION  TWENTY-ONE OF THE TAX LAW ON A FORM PRESCRIBED BY
THE DEPARTMENT; AND
  (C) THE ACTIVITY IS CONDUCTED IN A MANNER WHICH SATISFIES ALL SUBSTAN-
TIVE TECHNICAL REQUIREMENTS APPLICABLE TO LIKE ACTIVITY CONDUCTED PURSU-
ANT TO THIS TITLE.
  2. WHERE A WAIVER HAS BEEN GRANTED,  THE  APPROVED  WORK  PLAN  FOR  A
BROWNFIELD SITE SHALL INCLUDE THE PROCEDURAL REQUIREMENTS THE DEPARTMENT
DETERMINES APPROPRIATE BASED ON SITE SPECIFIC CONSIDERATIONS AND CONSID-
ERATION OF SECTION 27-1417 OF THIS TITLE.
  3.  FOR  ANY  SITE  ACCEPTED  INTO THE BCP-EZ PROGRAM PURSUANT TO THIS
SECTION WHICH IS PURSUING A TRACK 4 REMEDIATION,  IF  A  CONTAMINANT  IS
IDENTIFIED IN SOIL IN EXCESS OF THE REMEDIAL ACTION OBJECTIVES CONTAINED
IN  AN APPLICABLE GENERIC TABLE DEVELOPED PURSUANT TO SUBDIVISION SIX OF
SECTION 27-1415 OF THIS TITLE, THE APPLICANT MAY USE SITE-SPECIFIC  DATA
TO  DEMONSTRATE  TO THE DEPARTMENT THAT THE CONCENTRATION OF THE CONTAM-
INANT IN THE SOILS REFLECTS BACKGROUND CONDITIONS AND, IN THAT  CASE,  A
CONTAMINANT-SPECIFIC ACTION OBJECTIVE FOR SUCH CONTAMINANT EQUAL TO SUCH
BACKGROUND CONCENTRATION MAY BE ESTABLISHED.
  S  19.  The  opening paragraph of subdivision 10 of section 71-3605 of
the environmental conservation law, as added by section 2 of part  A  of
chapter 1 of the laws of 2003, is amended to read as follows:
  An  environmental  easement  may  be  enforced in law or equity by its
grantor, by the state, or any affected local government  as  defined  in
section  71-3603 of this title. Such easement is enforceable against the
owner of the burdened property, any lessees, and any  person  using  the
land.  Enforcement  shall  not  be  defeated  because  of any subsequent
adverse possession, laches, estoppel, REVERSION or  waiver.  No  general
law  of the state which operates to defeat the enforcement of any inter-
est in real property shall operate to  defeat  the  enforcement  of  any
environmental  easement  unless  such  general  law expressly states the
intent to defeat the enforcement of such easement or  provides  for  the
exercise  of  the  power  of  eminent domain. It is not a defense in any
action to enforce an environmental easement that:
  S 20. Paragraph 2 of subdivision (a) of section 21 of the tax law,  as
amended  by  section  1 of part H of chapter 577 of the laws of 2004, is
amended to read as follows:
  (2) Site preparation credit component.  The  site  preparation  credit
component shall be equal to the applicable percentage of the site prepa-
ration costs paid [or incurred] by the taxpayer with respect to a quali-
fied  site.  The credit component amount so determined with respect to a
site's qualification for a certificate of completion  shall  be  allowed
for  the  taxable year in which the effective date of the certificate of
completion occurs. The credit component  amount  determined  other  than
with respect to such qualification shall be allowed for the taxable year
in  which  the improvement to which the applicable costs apply is placed
in service for up to five taxable  years  after  the  issuance  of  such
certificate of completion.

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  S  21. Paragraph 3 of subdivision (a) of section 21 of the tax law, as
amended by chapter 390 of the laws  of  2008,  is  amended  to  read  as
follows:
  (3)  Tangible  property credit component. The tangible property credit
component shall be equal to the applicable percentage  of  the  cost  or
other basis for federal income tax purposes of tangible personal proper-
ty  and  other  tangible  property,  including  buildings and structural
components of buildings, which constitute qualified  tangible  property;
provided[, however,] that in determining the cost or other basis of such
property, the taxpayer shall exclude the acquisition cost of any item of
property with respect to which a credit under this section was allowable
to  another  taxpayer.  WITH RESPECT TO ANY QUALIFIED SITE FOR WHICH THE
DEPARTMENT OF ENVIRONMENTAL CONSERVATION HAS  ISSUED  A  NOTICE  TO  THE
TAXPAYER  ON OR AFTER JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS REQUEST
FOR PARTICIPATION HAS BEEN ACCEPTED UNDER  SUBDIVISION  SIX  OF  SECTION
27-1407  OF  THE  ENVIRONMENTAL  CONSERVATION LAW, THE TAXPAYER MAY ALSO
INCLUDE THE COSTS INCURRED IN CONNECTION WITH PREPARING A SITE  FOR  THE
ERECTION OF A BUILDING OR A COMPONENT OF A BUILDING, SUCH AS THE COST OF
EXCAVATION,  DEMOLITION, TEMPORARY ELECTRIC WIRING, SCAFFOLDING, FENCING
AND SECURITY FACILITIES, TO THE EXTENT THAT SUCH COSTS ARE NOT USED AS A
BASIS FOR COMPUTING THE SITE PREPARATION  COMPONENT  OF  THE  BROWNFIELD
REDEVELOPMENT  TAX CREDIT PURSUANT TO PARAGRAPH TWO OF THIS SUBDIVISION;
AND PROVIDED FURTHER THAT, IN THE CASE OF QUALIFIED SITES  ELIGIBLE  FOR
THE  FIVE  PERCENT AFFORDABLE HOUSING TANGIBLE PROPERTY CREDIT COMPONENT
PURSUANT TO CLAUSE (III) OF SUBPARAGRAPH (B) OF PARAGRAPH FIVE  OF  THIS
SUBDIVISION, THAT PORTION OF THE TANGIBLE PROPERTY CREDIT COMPONENT WILL
BE  DETERMINED BY MULTIPLYING THE TOTAL COSTS QUALIFIED FOR THE TANGIBLE
PROPERTY CREDIT COMPONENT BY A FRACTION, THE NUMERATOR OF WHICH SHALL BE
THE SQUARE FOOTAGE OF SPACE OF THE AFFORDABLE HOUSING UNITS DEDICATED TO
RESIDENTIAL OCCUPANCY AND THE DENOMINATOR OF WHICH SHALL  BE  THE  TOTAL
SQUARE  FOOTAGE  OF  THE SITE. The credit component amount so determined
shall be allowed for the taxable year in which such  qualified  tangible
property  is FIRST placed in service on a qualified site with respect to
which a certificate of completion has been issued to  the  taxpayer,  OR
FOR THE TAXABLE YEAR IN WHICH THE CERTIFICATE OF COMPLETION IS ISSUED IF
THE  QUALIFIED TANGIBLE PROPERTY IS PLACED IN SERVICE PRIOR TO THE ISSU-
ANCE OF THE CERTIFICATE OF COMPLETION, for up to [ten] FIVE  CONSECUTIVE
taxable  years  [after]  FROM THE START OF THE REDEVELOPMENT OF THE SITE
PROVIDED THAT ALL CREDITS MUST BE CLAIMED WITHIN TEN YEARS OF  the  date
of the issuance of such certificate of completion. The tangible property
credit  component  shall be allowed with respect to property leased to a
second party only if such second party is either (i) not a party respon-
sible for the disposal of hazardous waste or the discharge of  petroleum
at  the  site  according to applicable principles of statutory or common
law liability, or (ii) a party responsible according to applicable prin-
ciples of statutory or common law liability if  such  party's  liability
arises  solely  from operation of the site subsequent to the disposal of
hazardous waste or the discharge of petroleum, and is  so  certified  by
the  commissioner  of  environmental  conservation at the request of the
taxpayer, pursuant to section 27-1419 of the environmental  conservation
law.  Notwithstanding any other provision of law to the contrary, in the
case of allowance of credit under this section to  such  a  lessor,  the
commissioner  shall  have  the  authority  to  reveal to such lessor any
information, with respect to the issue of qualified use of  property  by
the  lessee,  which  is the basis for the denial in whole or in part, or
for the recapture, of the credit claimed by such lessor. For purposes of

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the tangible property credit component allowed under  this  section  the
taxpayer  to  whom  the certificate of completion is issued, as provided
for under subdivision five  of  section  27-1419  of  the  environmental
conservation  law,  may transfer the benefits and burdens of the certif-
icate of completion, which run with the  land  and  to  the  applicant's
successors  or assigns upon transfer or sale of all or any portion of an
interest or estate in the qualified site. However, the taxpayer to  whom
certificate's benefits and burdens are transferred shall not include the
cost  of  acquiring  all  or any portion of an interest or estate in the
site and the amounts included in the cost or  other  basis  for  federal
income  tax  purposes  of qualified tangible property already claimed by
the previous taxpayer pursuant to this section.   THE TANGIBLE  PROPERTY
CREDIT  COMPONENT  SHALL  NOT  INCLUDE  COSTS PAID TO A RELATED PARTY OR
PARTIES, AS SUCH TERM "RELATED PERSON" IS DEFINED IN SUBPARAGRAPH (C) OF
PARAGRAPH THREE OF SUBDIVISION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF
THE INTERNAL REVENUE CODE. ELIGIBLE  COSTS  FOR  THE  TANGIBLE  PROPERTY
CREDIT   COMPONENT   ARE   LIMITED   TO  COSTS  ASSOCIATED  WITH  ACTUAL
CONSTRUCTION OF TANGIBLE PROPERTY INCORPORATED AS PART OF  THE  PHYSICAL
STRUCTURE,  AND  COSTS  ASSOCIATED  WITH THE PREPARATION OF THE SITE FOR
ERECTION OF A BUILDING OR A COMPONENT OF A BUILDING THAT ARE NOT PROPER-
LY INCLUDED IN THE SITE PREPARATION COMPONENT.
  S 22. Subparagraph (A) of paragraph 3-a of subdivision (a) of  section
21  of  the  tax  law,  as  added by chapter 390 of the laws of 2008, is
amended to read as follows:
  (A) Notwithstanding any other provision of law to  the  contrary,  the
tangible  property  credit  component  available  for any qualified site
pursuant to paragraph three of this subdivision shall not  exceed  thir-
ty-five  million dollars or three times the SUM OF THE costs included in
the calculation of the site preparation credit component and the on-site
groundwater remediation credit component under paragraphs two and  four,
respectively,  of  this  subdivision, AND THE COSTS THAT WOULD HAVE BEEN
INCLUDED IN THE CALCULATION OF SUCH COMPONENTS  IF  NOT  TREATED  AS  AN
EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINETY-EIGHT OF THE
INTERNAL  REVENUE  CODE, whichever is less; provided, however, that: (1)
in the case of a qualified site to be used primarily  for  manufacturing
activities,  the  tangible  property  credit component available for any
qualified site pursuant to paragraph three of this subdivision shall not
exceed forty-five million dollars or six times  the  SUM  OF  THE  costs
included in the calculation of the site preparation credit component and
the  on-site  groundwater  remediation credit component under paragraphs
two and four, respectively, of this  subdivision,  AND  THE  COSTS  THAT
WOULD  HAVE  BEEN  INCLUDED IN THE CALCULATION OF SUCH COMPONENTS IF NOT
TREATED AS AN EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINE-
TY-EIGHT OF THE INTERNAL REVENUE CODE, whichever is less;  and  (2)  the
provisions  of  this paragraph shall not apply to any qualified site for
which the department of environmental conservation has issued  a  notice
to  the  taxpayer  before June twenty-third, two thousand eight that its
request for participation has been accepted  under  subdivision  six  of
section 27-1407 of the environmental conservation law.
  S  23. Subparagraph (D) of paragraph 3-a of subdivision (a) of section
21 of the tax law, as added by chapter 390  of  the  laws  of  2008,  is
amended to read as follows:
  (D)  [If]  WITH RESPECT TO ANY QUALIFIED SITE FOR WHICH THE DEPARTMENT
OF ENVIRONMENTAL CONSERVATION HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE
JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS
BEEN ACCEPTED UNDER SUBDIVISION SIX OF SECTION 27-1407 OF  THE  ENVIRON-

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MENTAL CONSERVATION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN ISSUED OR
RECEIVED A CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION
27-1419  OF  THE  ENVIRONMENTAL  CONSERVATION LAW BEFORE JULY FIRST, TWO
THOUSAND  FOURTEEN,  IF  the  qualifying site is located in a brownfield
opportunity area and is developed in  conformance  with  the  goals  and
priorities  established  for that applicable brownfield opportunity area
as designated pursuant to section nine hundred seventy-r of the  general
municipal law, the applicable percentage of the tangible property credit
component will be increased by two percent.
  S  24. Paragraph 4 of subdivision (a) of section 21 of the tax law, as
amended by section 1 of part H of chapter 577 of the laws  of  2004,  is
amended to read as follows:
  (4)  On-site  groundwater  remediation  credit  component. The on-site
groundwater remediation credit component shall be equal to the  applica-
ble  percentage  of  the  on-site groundwater remediation costs paid [or
incurred] by the taxpayer with respect  to  a  qualified  site  (to  the
extent  that  such groundwater remediation costs are not included in the
determination of the site preparation credit or the cost or other  basis
included  in  the  determination  of  the tangible property credit). The
credit component so  determined  for  costs  [incurred  and]  paid  with
respect  to  and  prior  to  the issuance of a certificate of completion
shall be allowed for the taxable year in which the effective date of the
issuance of a certificate of completion  occurs.  The  credit  component
amount determined in taxable years after the effective date of the issu-
ance of a certificate of completion shall be allowed in the taxable year
such  qualified  costs  are  [incurred  and] paid for up to five taxable
years after the issuance of such certificate of completion.
  S 25. Paragraph 5 of subdivision (a) of section 21 of the tax law,  as
amended  by  section  1 of part H of chapter 577 of the laws of 2004, is
amended to read as follows:
  (5) Applicable percentage. (A) For  purposes  of  COMPUTING  THE  SITE
PREPARATION AND ON-SITE GROUNDWATER REMEDIATION CREDIT COMPONENTS PURSU-
ANT  TO  paragraphs  two[,  three]  and  four  of this subdivision, WITH
RESPECT TO SUCH QUALIFIED SITES FOR WHICH  THE  DEPARTMENT  OF  ENVIRON-
MENTAL  CONSERVATION  HAS  ISSUED  A  NOTICE TO THE TAXPAYER BEFORE JUNE
TWENTY-THIRD, TWO THOUSAND EIGHT THAT ITS REQUEST FOR PARTICIPATION  HAS
BEEN  ACCEPTED  UNDER SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRON-
MENTAL CONSERVATION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN ISSUED OR
RECEIVED A CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION
27-1419 OF THE ENVIRONMENTAL CONSERVATION LAW BEFORE JUNE  TWENTY-THIRD,
TWO THOUSAND EIGHT, AND, FOR PURPOSES OF COMPUTING THE TANGIBLE PROPERTY
COMPONENT  PURSUANT  TO PARAGRAPH THREE OF THIS SUBDIVISION WITH RESPECT
TO SUCH QUALIFIED  SITES  FOR  WHICH  THE  DEPARTMENT  OF  ENVIRONMENTAL
CONSERVATION  HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE JULY FIRST, TWO
THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS  BEEN  ACCEPTED
UNDER  SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRONMENTAL CONSERVA-
TION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN  ISSUED  OR  RECEIVED  A
CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION 27-1419 OF
THE ENVIRONMENTAL CONSERVATION LAW BEFORE JULY FIRST, TWO THOUSAND FOUR-
TEEN,  the  applicable percentage shall be twelve percent in the case of
credits claimed under article nine, nine-A, thirty-two  or  thirty-three
of  this  chapter,  and ten percent in the case of credits claimed under
article twenty-two of this chapter, except that  where  at  least  fifty
percent  of  the  area  of  the  qualified  site  relating to the credit
provided for in this section is located  in  an  environmental  zone  as
defined  in paragraph six of subdivision (b) of this section, the appli-

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cable percentage shall be increased  by  an  additional  eight  percent.
Provided,  however,  as afforded in section 27-1419 of the environmental
conservation law, if the certificate of completion  indicates  that  the
qualified  site has been remediated to Track 1 as that term is described
in subdivision four of section 27-1415 of the environmental conservation
law, the applicable percentage set forth in the first sentence  of  this
paragraph shall be increased by an additional two percent.
  (B)  WITH  RESPECT  TO SUCH QUALIFIED SITE FOR WHICH THE DEPARTMENT OF
ENVIRONMENTAL CONSERVATION HAS ISSUED A NOTICE TO  THE  TAXPAYER  ON  OR
AFTER  JULY  FIRST,  TWO  THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTIC-
IPATION HAS BEEN ACCEPTED UNDER SUBDIVISION SIX OF  SECTION  27-1407  OF
THE  ENVIRONMENTAL  CONSERVATION  LAW, THE APPLICABLE PERCENTAGE FOR THE
TANGIBLE PROPERTY CREDIT COMPONENT OF THE BROWNFIELD  REDEVELOPMENT  TAX
CREDIT  PURSUANT  TO  PARAGRAPH THREE OF SUBDIVISION (A) OF THIS SECTION
SHALL BE THE SUM OF TEN PERCENT AND THE  FOLLOWING  ADDITIONAL  PERCENT-
AGES, PROVIDED THAT THE TOTAL PERCENTAGE OF THE TANGIBLE PROPERTY CREDIT
COMPONENT  SHALL NOT EXCEED TWENTY-FOUR PERCENT AND IS OTHERWISE SUBJECT
TO THE LIMITATIONS SET FORTH IN PARAGRAPHS THREE AND THREE-A OF SUBDIVI-
SION (A) OF THIS SECTION:
  (I) TEN PERCENT FOR A SITE WITHIN AN ENVIRONMENTAL ZONE;
  (II) FIVE PERCENT FOR A STRATEGIC SITE  LOCATED  WITHIN  A  DESIGNATED
BROWNFIELD  OPPORTUNITY  AREA IF THE PROPOSED DEVELOPMENT OF THE SITE IS
CERTIFIED TO BE IN CONFORMANCE WITH  SUCH  BROWNFIELD  OPPORTUNITY  AREA
PLAN PURSUANT TO SECTION NINE HUNDRED SEVENTY-R OF THE GENERAL MUNICIPAL
LAW; AND
  (III)  FIVE PERCENT FOR SITES DEVELOPED AS AFFORDABLE HOUSING, DEFINED
AS HAVING AT LEAST TWENTY PERCENT OF ITS RESIDENTIAL UNITS SUBJECT TO AN
AGREEMENT WITH A MUNICIPALITY, THE STATE, THE FEDERAL GOVERNMENT, OR  AN
INSTRUMENTALITY  THEREOF,  WHERE  SUCH  AGREEMENT RESTRICTS OCCUPANCY OF
THOSE UNITS TO RESIDENTS WHO QUALIFY IN ACCORDANCE WITH AN INCOME TEST.
  (C) THE TAXPAYER SHALL SUBMIT, IN THE MANNER PRESCRIBED BY THE COMMIS-
SIONER, INFORMATION SUFFICIENT TO DEMONSTRATE THAT  THE  SITE  QUALIFIES
FOR  ANY  CREDIT COMPONENTS AVAILABLE UNDER CLAUSES (I) THROUGH (III) OF
SUBPARAGRAPH (B) OF THIS PARAGRAPH. IF THE SITE IS A  PRIORITY  ECONOMIC
DEVELOPMENT PROJECT, THE TAXPAYER MUST ALSO DEMONSTRATE THAT THE PROJECT
HAS BEEN APPROVED BY THE DEPARTMENT OF ECONOMIC DEVELOPMENT.
  S  26. Paragraph 6 of subdivision (a) of section 21 of the tax law, as
amended by section 1 of part H of chapter 577 of the laws  of  2004,  is
amended to read as follows:
  (6)  Site  preparation costs and on-site groundwater remediation costs
paid [or incurred] by the taxpayer with respect to a qualified site  and
the  cost  or  other  basis  for federal income tax purposes of tangible
personal property and other tangible property, including  buildings  and
structural  components of buildings, which constitute qualified tangible
property shall only include costs paid [or incurred] by the taxpayer  on
or  after  the date of the brownfield site cleanup agreement executed by
the taxpayer and the department of environmental  conservation  pursuant
to section 27-1409 of the environmental conservation law.
  S  27.  Paragraphs  2, 4 and 6 of subdivision (b) of section 21 of the
tax law, as amended by section 1 of part H of chapter 577 of the laws of
2004 and subparagraph (B) and the closing paragraph of  paragraph  6  as
amended  by  section  1 of part G of chapter 62 of the laws of 2006, are
amended to read as follows:
  (2) Site preparation costs. The term "site  preparation  costs"  shall
mean all amounts properly [chargeable] CHARGED to a capital account, (i)
which  are  paid [or incurred] in connection with a site's qualification

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for a certificate of completion AND ATTRIBUTABLE TO ACTIVITIES SPECIFIED
IN A DECISION DOCUMENT ISSUED BY THE DEPARTMENT OF ENVIRONMENTAL CONSER-
VATION UNDER SECTION 27-1411 OF THE ENVIRONMENTAL CONSERVATION  LAW  AND
WHICH  MAY INCLUDE COSTS ATTRIBUTABLE TO ACTIVITIES UNDERTAKEN UNDER THE
OVERSIGHT OF THE DEPARTMENT OF HEALTH OR  THE  DEPARTMENT  OF  LABOR  TO
REMEDIATE REGULATED MATERIALS INCLUDING ASBESTOS, LEAD OR POLYCHLORINAT-
ED  BIPHENYLS  IN BUILDINGS WHICH WILL REMAIN ON THE SITE, and (ii) WITH
RESPECT TO ANY QUALIFIED SITE FOR WHICH THE DEPARTMENT OF  ENVIRONMENTAL
CONSERVATION  HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE JULY FIRST, TWO
THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS  BEEN  ACCEPTED
UNDER  SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRONMENTAL CONSERVA-
TION LAW, all  other  site  preparation  costs  paid  [or  incurred]  in
connection  with  preparing  a  site for the erection of a building or a
component of a building, or otherwise to establish a site as usable  for
its  industrial,  commercial  (including  the  commercial development of
residential housing), recreational or conservation purposes. [Site]  FOR
PURPOSES  OF SUBPARAGRAPH (II) OF THIS PARAGRAPH, SITE preparation costs
shall include, but not be limited to, the costs of excavation, temporary
electric wiring, scaffolding, demolition costs, and the costs of fencing
and security facilities. Site preparation costs shall  not  include  the
cost of acquiring the site and shall not include amounts included in the
cost  or other basis for federal income tax purposes of qualified tangi-
ble property, as described  in  paragraph  three  of  this  subdivision.
"SITE PREPARATION COSTS" SHALL NOT INCLUDE COSTS PAID TO A RELATED PARTY
OR PARTIES, AS SUCH TERM "RELATED PERSON" IS DEFINED IN SUBPARAGRAPH (C)
OF PARAGRAPH THREE OF SUBDIVISION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE
OF  THE  INTERNAL  REVENUE  CODE.    ELIGIBLE SITE PREPARATION COSTS ARE
LIMITED TO COSTS DIRECTLY ASSOCIATED WITH ACTUAL SITE PREPARATION-RELAT-
ED CONSTRUCTION.
  (4) On-site groundwater remediation costs. The term "on-site groundwa-
ter remediation costs" shall  mean  all  amounts  properly  [chargeable]
CHARGED  to  a  capital  account,  (i)  which  are paid [or incurred] in
connection with a site's qualification for a certificate of  completion,
and  (ii)  include costs which are paid [or incurred] in connection with
the remediation of on-site groundwater contamination and [incurred] PAID
to implement a requirement of the remedial work plan or an interim reme-
dial measure work plan for a qualified site which are  imposed  pursuant
to  subdivisions  two  and three of section 27-1411 of the environmental
conservation law.   "ON-SITE GROUNDWATER REMEDIATION  COSTS"  SHALL  NOT
INCLUDE  COSTS PAID TO A RELATED PARTY OR PARTIES, AS SUCH TERM "RELATED
PERSON" IS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF SUBDIVISION
(B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE.  ON
SITE GROUNDWATER REMEDIATION COSTS ARE LIMITED TO COSTS DIRECTLY ASSOCI-
ATED WITH ACTUAL GROUNDWATER REMEDIATION ACTIVITIES.
  (6) Environmental zones (EN-Zones). An "environmental zone" shall mean
an area designated as such by the commissioner of [economic development]
LABOR.  Such areas so designated are areas which are census  tracts  and
block  numbering  areas  which,  as  of  the  [two thousand] MOST RECENT
census, satisfy either of the following criteria:
  (A) areas that have both:
  (i) a poverty rate of at least twenty percent for the  year  to  which
the data relate; and
  (ii)  an  unemployment  rate of at least one and one-quarter times the
statewide unemployment rate for the year to which the data relate, or;
  (B) areas that have a poverty rate of at least two times  the  poverty
rate for the county in which the areas are located for the year to which

S. 6359--A                         209                        A. 8559--A

the  data relate [provided, however, that a qualified site shall only be
deemed to be located in an environmental zone  under  this  subparagraph
(B)  if such site was the subject of a brownfield site cleanup agreement
pursuant  to  section 27-1409 of the environmental conservation law that
was entered into prior to September first, two thousand ten].
  Such designation shall be made and a list of  all  such  environmental
zones shall be established by the commissioner of [economic development]
LABOR  no later than [December thirty-first, two thousand four provided,
however, that a qualified site shall only be deemed to be located in  an
environmental zone under subparagraph (B) of this paragraph if such site
was  the  subject  of  a  brownfield  site cleanup agreement pursuant to
section 27-1409 of the environmental conservation law that  was  entered
into  prior  to September first, two thousand ten] NINETY DAYS FOLLOWING
THE OFFICIAL PUBLICATION OF THE MOST RECENT CENSUS.
  S 28. Paragraph 2 of subdivision (b) of section 22 of the tax law,  as
amended  by  section  4 of part H of chapter 577 of the laws of 2004, is
amended to read as follows:
  (2) Amount of credit. The amount of the credit  shall  be  twenty-five
percent  of  the  product  of  (i)  the  benefit period factor, (ii) the
employment number factor, and (iii) the  eligible  real  property  taxes
paid  [or  incurred]  by  the developer of the qualified site during the
taxable year (or the pro rata share of such taxes in the case of a part-
ner in a partnership or a shareholder in  a  New  York  S  corporation),
except  that  if  the  real  property which is the subject of the credit
provided for under this  section  is  attributed  to  a  qualified  site
located  in an environmental zone as defined in paragraph five of subdi-
vision (a) of this section, the amount of the credit shall be the  prod-
uct  of the factors and taxes referred to in subparagraphs (i), (ii) and
(iii) of this paragraph. However, the  amount  of  the  credit  may  not
exceed the credit limitation set forth in paragraph seven of this subdi-
vision.
  S 29. Section 171-r of the tax law is amended by adding a new subdivi-
sion (e) to read as follows:
  (E)  THE  COMMISSIONER, IN CONSULTATION WITH THE COMMISSIONER OF ENVI-
RONMENTAL CONSERVATION, SHALL PUBLISH BY JANUARY THIRTY-FIRST, TWO THOU-
SAND FIFTEEN A SUPPLEMENTAL  BROWNFIELD  CREDIT  REPORT  CONTAINING  THE
INFORMATION  REQUIRED  BY THIS SECTION ABOUT THE CREDITS CLAIMED FOR THE
YEARS TWO THOUSAND FIVE, TWO THOUSAND SIX, AND TWO THOUSAND SEVEN.
  S 30. Section 171-s of the tax law is REPEALED.
  S 31. Section 970-r of the general municipal law is amended by  adding
a new subdivision 10 to read as follows:
  10.  THE SECRETARY SHALL ESTABLISH CRITERIA FOR BROWNFIELD OPPORTUNITY
AREA  CONFORMANCE  DETERMINATIONS FOR PURPOSES OF THE BROWNFIELD CLEANUP
PROGRAM PURSUANT TO TITLE FOURTEEN OF ARTICLE TWENTY-SEVEN OF THE  ENVI-
RONMENTAL  CONSERVATION LAW AND THE BROWNFIELD REDEVELOPMENT TAX CREDITS
PURSUANT TO SECTION TWENTY-ONE OF THE TAX LAW.   IN ESTABLISHING  CRITE-
RIA, THE SECRETARY SHALL BE GUIDED BY, BUT NOT LIMITED TO, THE FOLLOWING
CONSIDERATIONS: HOW THE PROPOSED USE AND DEVELOPMENT ADVANCES THE DESIG-
NATED  BROWNFIELD  OPPORTUNITY  AREA  PLAN'S VISION STATEMENT, GOALS AND
OBJECTIVES FOR REVITALIZATION; HOW THE DENSITY OF DEVELOPMENT AND  ASSO-
CIATED  BUILDINGS AND STRUCTURES ADVANCES THE PLAN'S OBJECTIVES, DESIRED
REDEVELOPMENT  AND  PRIORITIES  FOR  INVESTMENT;  AND  HOW  THE  PROJECT
COMPLIES  WITH  ZONING  AND  OTHER LOCAL LAWS AND STANDARDS TO GUIDE AND
ENSURE APPROPRIATE USE OF THE PROJECT SITE.
  S 32. Section 31 of part H of chapter 1 of the laws of 2003,  amending
the tax law relating to brownfield redevelopment tax credits, remediated

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brownfield  credit for real property taxes for qualified sites and envi-
ronmental remediation insurance credits, as amended by  chapter  474  of
the laws of 2012, is amended to read as follows:
  S  31. The tax credits allowed under section [21,] 22 or 23 of the tax
law and the corresponding provisions in articles 9, 9-A, 22, 32  and  33
of the tax law, as added by the provisions of sections one through twen-
ty-nine  of  this act, shall not be applicable [if] TO ANY SITE ACCEPTED
INTO THE BROWNFIELD CLEANUP PROGRAM ON AND AFTER JULY 1, 2014.  THE  TAX
CREDITS  ALLOWED  UNDER  SECTION 21 OF THE TAX LAW AND THE CORRESPONDING
PROVISIONS IN ARTICLES 9, 9-A, 22, 32 AND 33 OF THE TAX LAW, AS ADDED BY
THE PROVISIONS OF SECTIONS ONE THROUGH TWENTY-NINE OF  THIS  ACT,  SHALL
NOT  BE  APPLICABLE  TO  ANY  SITE  ACCEPTED INTO THE BROWNFIELD CLEANUP
PROGRAM AFTER DECEMBER  31,  2022,  PROVIDED,  HOWEVER  THAT  ANY  SITES
ACCEPTED  ON OR BEFORE DECEMBER 31, 2022 MUST HAVE RECEIVED the [remedi-
ation] certificate OF COMPLETION required to qualify  for  any  of  such
credits [is issued after] BY December 31, [2015] 2025.
  S  33.  Any  site  for  which  a brownfield cleanup agreement with the
department of environmental conservation was entered into (1)  prior  to
June  23, 2008 and which has not received a certificate of completion by
December 31, 2015 or (2) on or after June 23, 2008 and prior to July  1,
2014  which has not received a certificate of completion by December 31,
2017, shall be terminated from the brownfield cleanup program. If such a
site reapplies for acceptance into the brownfield  cleanup  program,  it
shall  be  accepted  into the program subject to all the requirements of
title 14 of article 27 of the environmental conservation law  in  effect
at the time of acceptance.
  S  34. Paragraph c of subdivision 3 of section 27-0923 of the environ-
mental conservation law, as amended by section 5 of part  I  of  chapter
577 of the laws of 2004, is amended to read as follows:
  c.  For  the  purpose  of  this section, generation of hazardous waste
shall not include retrieval or creation of hazardous waste which must be
disposed of under an order of or agreement with the department  pursuant
to  title thirteen or title fourteen of this article or under a contract
OR AGREEMENT with the department  pursuant  to  title  five  of  article
fifty-six  of  this  chapter  OR UNDER AN ORDER OF OR AGREEMENT WITH THE
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY OR AN ORDER OF A COURT  OF
COMPETENT  JURISDICTION, RELATED TO A FACILITY ADDRESSED PURSUANT TO THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT (42
U.S.C. 9601 ET SEQ.) OR UNDER A WRITTEN AGREEMENT  WITH  A  MUNICIPALITY
WHICH  IS  SUBJECT  TO  A  MEMORANDUM  OF  AGREEMENT WITH THE DEPARTMENT
RELATED TO THE REMEDIATION OF BROWNFIELD SITES.
  S 35. Subparagraphs (i) and (vi) of paragraph d of  subdivision  1  of
section  72-0402  of  the  environmental conservation law, as amended by
chapter 99 of the laws of 2010, are amended to read as follows:
  (i) under a contract with the department,  or  with  the  department's
written  approval  and  in  compliance  with  department regulations, or
pursuant to an order of the department, the United States  environmental
protection  agency  or a court OF COMPETENT JURISDICTION, related to the
cleanup or remediation of  a  hazardous  materials  or  hazardous  waste
spill, discharge, or surficial cleanup, pursuant to this chapter; or
  (vi)  under  a  brownfield  site cleanup agreement with the department
pursuant to section 27-1409 of this chapter OR UNDER AN AGREEMENT WITH A
MUNICIPALITY WHICH IS SUBJECT TO A  MEMORANDUM  OF  AGREEMENT  WITH  THE
DEPARTMENT RELATED TO THE REMEDIATION OF BROWNFIELD SITES; or

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  S  36.  Subdivision 1 of section 1285-q of the public authorities law,
as added by section 6 of part I of chapter 1 of the  laws  of  2003,  is
amended to read as follows:
  1.  Subject  to  chapter  fifty-nine  of the laws of two thousand, but
notwithstanding any other provisions of law to the contrary, in order to
assist the corporation in undertaking the administration and the financ-
ing of hazardous waste site remediation  projects  for  payment  of  the
state's  share of the costs of the remediation of hazardous waste sites,
in accordance with title thirteen of article twenty-seven of  the  envi-
ronmental  conservation  law  and  section  ninety-seven-b  of the state
finance law, and for payment of state costs associated with the  remedi-
ation  of  offsite contamination at significant threat sites as provided
in section 27-1411 of the environmental conservation law, AND FOR  ENVI-
RONMENTAL  RESTORATION PROJECTS PURSUANT TO TITLE FIVE OF ARTICLE FIFTY-
SIX OF THE ENVIRONMENTAL CONSERVATION LAW pursuant to capital  appropri-
ations  made  to  the  department  of  environmental  conservation,  the
director of the division of budget and the corporation are each  author-
ized  to  enter  into one or more service contracts, none of which shall
exceed twenty years in duration, upon such terms and conditions  as  the
director and the corporation may agree, so as to annually provide to the
corporation  in  the  aggregate,  a  sum  not  to exceed the annual debt
service payments and related expenses required for any bonds  and  notes
authorized  pursuant to section twelve hundred ninety of this title. Any
service contract entered into pursuant to  this  section  shall  provide
that  the  obligation of the state to fund or to pay the amounts therein
provided for shall not constitute a debt of the state within the meaning
of any constitutional or statutory provision and shall be deemed  execu-
tory  only  to the extent of moneys available for such purposes, subject
to annual appropriation by the legislature. Any such service contract or
any payments made or to be made thereunder may be assigned  and  pledged
by  the  corporation  as security for its bonds and notes, as authorized
pursuant to section twelve hundred ninety of this title.
  S 37. Section 56-0501 of the environmental conservation law, as  added
by chapter 413 of the laws of 1996, is amended to read as follows:
S 56-0501. Allocation of moneys.
  1. Of the moneys received by the state from the sale of bonds pursuant
to  the  Clean  Water/Clean  Air  Bond  Act of 1996, two hundred million
dollars ($200,000,000) shall be available for disbursements for environ-
mental restoration projects.
  2. ENVIRONMENTAL RESTORATION PROJECTS MAY BE FUNDED USING THE PROCEEDS
OF BONDS ISSUED PURSUANT TO SECTION TWELVE HUNDRED EIGHTY-FIVE-Q OF  THE
PUBLIC AUTHORITIES LAW.
  S  38. Subdivision 6 of section 56-0502 of the environmental conserva-
tion law, as amended by section 2 of part D of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  6.  "State  assistance", for purposes of this title, shall mean in the
case of a contract authorized by subdivision one of section  56-0503  of
this  title,  payments  made  to a municipality to reimburse the munici-
pality for the state share of the costs incurred by the municipality  to
undertake  an  environmental  restoration  project  OR IN THE CASE OF AN
AGREEMENT AUTHORIZED BY SUBDIVISION THREE OF  SECTION  56-0503  OF  THIS
TITLE,  COSTS INCURRED BY THE STATE TO UNDERTAKE AN ENVIRONMENTAL RESTO-
RATION PROJECT BUT NOT REIMBURSED BY A MUNICIPALITY.
  S 39. Paragraph (c) of subdivision 2 of section 56-0503 of  the  envi-
ronmental conservation law, as amended by section 4 of part D of chapter

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1  of  the  laws of 2003, is amended and a new subdivision 3 is added to
read as follows:
  (c)  A  provision  that THE MUNICIPALITY SHALL ASSIST IN IDENTIFYING A
RESPONSIBLE PARTY BY SEARCHING LOCAL  RECORDS,  INCLUDING  PROPERTY  TAX
ROLLS,  OR  DOCUMENT  REVIEWS,  AND  if, in accordance with the required
departmental approval of any settlement with a  responsible  party,  any
responsible party payments become available to the municipality, before,
during  or after the completion of an environmental restoration project,
which were not included when the state share was calculated pursuant  to
this  section, the state assistance share shall be recalculated, and the
municipality shall pay to the state, for deposit into the  environmental
restoration  project account of the hazardous waste remedial fund estab-
lished under section  ninety-seven-b  of  the  state  finance  law,  the
difference  between the original state assistance payment and the recal-
culated state share. Recalculation of the state share shall be done each
time a payment from a responsible party is received by the municipality;
  3. THE DEPARTMENT MAY UNDERTAKE AN ENVIRONMENTAL  RESTORATION  PROJECT
ON  BEHALF OF A MUNICIPALITY UPON REQUEST.  IF THE DEPARTMENT UNDERTAKES
THE PROJECT ON BEHALF OF THE MUNICIPALITY, THE STATE SHALL ENTER INTO AN
AGREEMENT WITH THE MUNICIPALITY AND  THE  AGREEMENT  SHALL  REQUIRE  THE
MUNICIPALITY  TO  PERIODICALLY  PROVIDE ITS SHARE TO THE STATE FOR COSTS
INCURRED DURING THE PROGRESS OF SUCH PROJECT. THE  MUNICIPALITY'S  SHARE
SHALL  BE  THE  SAME  AS WOULD BE REQUIRED UNDER SUBDIVISION ONE OF THIS
SECTION. THE AGREEMENT SHALL INCLUDE ALL PROVISIONS SPECIFIED IN  SUBDI-
VISION  TWO  OF  THIS SECTION AS APPROPRIATE.   FOR PURPOSES OF PROJECTS
SUBJECT  TO  AGREEMENTS  UNDER  THIS  SUBDIVISION,  ALL  REFERENCES   TO
CONTRACTS IN THIS TITLE SHALL ALSO APPLY TO AGREEMENTS UNDER THIS SUBDI-
VISION AS APPROPRIATE.
  S  40. Subdivision 4 of section 56-0505 of the environmental conserva-
tion law, as amended by section 5 of part D of chapter 1 of the laws  of
2003, is amended to read as follows:
  4.  After  completion  of  such  project, the municipality may use the
property for public purposes or may dispose of it. If  the  municipality
shall  dispose  of  such  property  by sale to a responsible party, such
party shall pay to such municipality, in addition to such other  consid-
eration,  an amount of money constituting the amount of state assistance
provided [to the municipality] under this title  plus  accrued  interest
and transaction costs and the municipality shall deposit that money into
the  environmental  restoration  project  account of the hazardous waste
remedial fund established under  section  ninety-seven-b  of  the  state
finance law.
  S  41.  Subdivisions  3  and 4 of section 56-0508 of the environmental
conservation law, as added by section 7 of part D of chapter  1  of  the
laws of 2003, are amended to read as follows:
  3. such temporary incidents of ownership by such taxing district shall
also qualify it as being the owner of such property [for the purposes of
obtaining]  TO  BE  ELIGIBLE  FOR funding from the state of New York for
such environmental restoration investigation project under this  article
or  for such funding from any source pursuant to any other state, feder-
al, or local law, but such incidents of ownership shall  not  be  suffi-
cient  to  qualify  it as the owner of such property for the purposes of
holding it wholly or partially liable for any damages, past, present, or
future from any release of any hazardous material, substance, or contam-
inant into the air, ground, or water, unless such release was caused  by
such taxing district.

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  4.  within thirty days of the completion of the environmental restora-
tion investigation project and the receipt by the taxing jurisdiction of
the final report of such investigation, such taxing  jurisdiction  shall
file  such  report  with  the court on notice to the court and all other
parties  of  record,  and  the  stay  of the foreclosure shall be lifted
(unless lifted earlier by a prior court order),  and  all  incidents  of
temporary  ownership  of  the  taxing jurisdiction that was awarded such
taxing district, except any right [to receive funding] for the  environ-
mental  restoration  investigation  project TO BE FUNDED, shall cease to
exist, and nothing in this subdivision shall preclude the taxing  juris-
diction  that  conducted  the  environmental  restoration  investigation
project or  the  taxing  jurisdiction  that  commenced  the  foreclosure
action,  if it is a different taxing jurisdiction than the taxing juris-
diction which conducted the investigation, from withdrawing  the  parcel
from  foreclosure pursuant to section eleven hundred thirty-eight of the
real property tax law.
  S 42. Subdivision 2 and paragraph (f) of subdivision 3 of section 97-b
of the state finance law, as amended by section 4 of part I of chapter 1
of the laws of 2003, are amended to read as follows:
  2. Such fund shall consist of all of the following:
  (a) moneys appropriated for transfer to the fund's site  investigation
and  construction  account;  (b) all fines and other sums accumulated in
the fund prior to April first, nineteen hundred eighty-eight pursuant to
section 71-2725 of the environmental conservation law for deposit in the
fund's site investigation  and  construction  account;  (c)  all  moneys
collected or received by the department of taxation and finance pursuant
to  section 27-0923 of the environmental conservation law for deposit in
the fund's industry fee transfer account; (d) all moneys paid  into  the
fund  pursuant  to section 72-0201 of the environmental conservation law
which shall be deposited in the fund's industry  fee  transfer  account;
(e) all moneys paid into the fund pursuant to section one hundred eight-
y-six  of  the  navigation  law  which  shall be deposited in the fund's
industry fee transfer account; (f) [all moneys paid  into  the  fund  by
municipalities  for repayment of landfill closure loans made pursuant to
title five of article fifty-two of the  environmental  conservation  law
for  deposit  in the fund's site investigation and construction account;
(g)] all monies recovered under sections 56-0503, 56-0505 and 56-0507 of
the environmental conservation law into the fund's environmental  resto-
ration  project  account; [(h) all] (G) fees paid into the fund pursuant
to section [72-0403] 72-0402 of the environmental conservation law which
shall be deposited in the fund's industry fee  transfer  account;  [(i)]
(H)  payments  received  for all state costs incurred in negotiating and
overseeing the implementation  of  brownfield  site  cleanup  agreements
pursuant  to title fourteen OF ARTICLE TWENTY-SEVEN of the environmental
conservation law shall be deposited in the hazardous  waste  remediation
oversight and assistance account; and [(j)] (I) other moneys credited or
transferred  thereto  from  any  other fund or source for deposit in the
fund's site investigation and construction account.
  (f) to undertake such remedial measures as the department of  environ-
mental  conservation may determine necessary due to environmental condi-
tions related to the property subject to an agreement [to provide  state
assistance]  OR  CONTRACT  under  title five of article fifty-six of the
environmental conservation law [that were unknown to such department  at
the  time  of its approval of such agreement which indicates that condi-
tions on such property are not sufficiently protective of  human  health
for  its  reasonably anticipated uses or due to information received, in

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whole or in part, after such department's approval of  such  agreement's
final  engineering  report and certification], which indicates that such
agreement's remedial activities are not sufficiently protective of human
health for such property's reasonably anticipated uses; and, [respecting
the monies in the environmental restoration project account in excess of
ten million dollars,] shall provide state assistance under title five of
article fifty-six of the environmental conservation law;
  S  43.  Severability. If any clause, sentence, paragraph, subdivision,
section or part of this act shall be adjudged by any court of  competent
jurisdiction  to  be  invalid, such judgment shall not affect, impair or
invalidate the remainder thereof, but shall be confined in its operation
to the clause, sentence, paragraph, subdivision, section or part thereof
directly involved in the controversy in which such judgment  shall  have
been rendered. It is hereby declared to be the intent of the legislature
that  this  act  would have been enacted even if such invalid provisions
had not been included herein.
  S 44. This act shall take effect July 1, 2014; provided, however, that
the department of environmental conservation shall not charge volunteers
in the brownfield cleanup program for oversight costs for any  sites  in
the  program  incurred  on or after July 1, 2014; and provided, further,
that the amendments made by section twenty-one of this act  relating  to
the  length  of  time  a taxpayer may claim the tangible property credit
component shall apply only to sites that are accepted  into  the  brown-
field cleanup program on or after July 1, 2014.

                                 PART R

  Section  1.  Section 208 of the tax law is amended by adding three new
subdivisions 13, 14 and 15 to read as follows:
  13. THE TERM "MANUFACTURER" MEANS A TAXPAYER OR,  IN  THE  CASE  OF  A
COMBINED  REPORT,  A  COMBINED  GROUP, THAT, DURING THE TAXABLE YEAR, IS
PRINCIPALLY ENGAGED IN MANUFACTURING. A TAXPAYER OR A COMBINED GROUP  IS
PRINCIPALLY  ENGAGED  IN MANUFACTURING IF MORE THAN FIFTY PERCENT OF THE
GROSS RECEIPTS OF THE TAXPAYER  OR  THE  COMBINED  GROUP,  RESPECTIVELY,
DURING  THE  TAXABLE YEAR ARE DERIVED FROM THE SALE OF GOODS PRODUCED BY
MANUFACTURING. IN COMPUTING A COMBINED GROUP'S GROSS RECEIPTS, INTERCOR-
PORATE RECEIPTS SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS  FOR  A
TAXPAYER THAT IS A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN
THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  14.  (A)  THE  TERM  "MANUFACTURING"  MEANS THE PROCESS OF WORKING RAW
MATERIALS INTO WARES SUITABLE FOR USE OR WHICH  GIVES  NEW  SHAPES,  NEW
QUALITY  OR  NEW  COMBINATIONS  TO MATTER WHICH ALREADY HAS GONE THROUGH
SOME ARTIFICIAL PROCESS BY THE USE OF MACHINERY, TOOLS,  APPLIANCES  AND
OTHER SIMILAR EQUIPMENT.
  (B)  NOTWITHSTANDING  THE DEFINITION OF MANUFACTURING IN PARAGRAPH (A)
OF THIS SUBDIVISION:
  (I) THE GENERATION AND DISTRIBUTION OF ELECTRICITY, THE EXTRACTION AND
DISTRIBUTION OF NATURAL GAS, AND THE PRODUCTION OF STEAM ASSOCIATED WITH
THE GENERATION OF ELECTRICITY DOES NOT CONSTITUTE MANUFACTURING.
  (II) THE CREATION, PRODUCTION OR REPRODUCTION OF  A  FILM,  TELEVISION
SHOW OR COMMERCIAL DOES NOT CONSTITUTE MANUFACTURING.
  (III)  THE  BLENDING OF TWO OR MORE FUELS DOES NOT CONSTITUTE MANUFAC-
TURING.
  (IV) THE MASS PRODUCTION OF FOOD  PRODUCTS  FOR  WHOLESALE  COMMERCIAL
DISTRIBUTION AND SALE CONSTITUTES MANUFACTURING.

S. 6359--A                         215                        A. 8559--A

  15.  THE  TERM  "QUALIFIED NEW YORK MANUFACTURER" MEANS A MANUFACTURER
THAT HAS PROPERTY IN THE STATE THAT IS USED IN MANUFACTURING AND  EITHER
THE  FAIR MARKET VALUE OF THAT PROPERTY AT THE CLOSE OF THE TAXABLE YEAR
IS AT LEAST TEN MILLION DOLLARS OR ALL OF ITS REAL AND PERSONAL PROPERTY
IS LOCATED IN NEW YORK. A TAXPAYER OR, IN THE CASE OF A COMBINED REPORT,
A  COMBINED  GROUP,  THAT  DOES  NOT SATISFY THE CRITERIA IN SUBDIVISION
THIRTEEN OF THIS SECTION MAY BE A QUALIFIED NEW YORK MANUFACTURER IF THE
TAXPAYER OR THE COMBINED GROUP EMPLOYS DURING THE TAXABLE YEAR AT  LEAST
TWO THOUSAND FIVE HUNDRED EMPLOYEES IN MANUFACTURING IN NEW YORK AND THE
TAXPAYER  OR  THE COMBINED GROUP HAS PROPERTY IN THE STATE USED IN MANU-
FACTURING, THE ADJUSTED BASIS OF WHICH FOR FEDERAL INCOME  TAX  PURPOSES
AT  THE  CLOSE  OF  THE  TAXABLE  YEAR  IS  AT LEAST ONE HUNDRED MILLION
DOLLARS.
  S 2. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (A)  A  QUALIFIED  NEW
YORK  MANUFACTURER,  AS  DEFINED  IN  SUBDIVISION FIFTEEN OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, WILL BE ALLOWED A CREDIT EQUAL TO  TWENTY
PERCENT  OF  THE  REAL  PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR
REAL PROPERTY OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH  WAS  PRINCI-
PALLY  USED  DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT
DEDUCTED IN DETERMINING ENTIRE NET  INCOME.  THIS  CREDIT  WILL  NOT  BE
ALLOWED  IF  THE  REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT
ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY-
ER.
  (B) FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX MEANS
A CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF A  COUNTY,  CITY,
TOWN,  VILLAGE  OR  SCHOOL  DISTRICT  FOR  MUNICIPAL  OR SCHOOL DISTRICT
PURPOSES, PROVIDED THAT THE CHARGE IS  LEVIED  FOR  THE  GENERAL  PUBLIC
WELFARE  BY  THE  PROPER  TAXING  AUTHORITIES AT A LIKE RATE AGAINST ALL
PROPERTY OVER WHICH SUCH AUTHORITIES  HAVE  JURISDICTION,  AND  PROVIDED
THAT  WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN OF
THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
DETERMINED FOR THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED  BY  SUCH
ARTICLE  EIGHTEEN  OR  NINETEEN,  WHICHEVER IS APPLICABLE. THE TERM REAL
PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
ABLE TO MAINTENANCE OR INTEREST, WHEN (1) THE PROPERTY  SUBJECT  TO  THE
CHARGE  IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (2)
THE AMOUNT OF THE CHARGE IS DETERMINED BY THE BENEFIT  TO  THE  PROPERTY
ASSESSED,  OR (3) THE IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED TENDS
TO INCREASE THE PROPERTY VALUE. THE TERM  REAL  PROPERTY  TAX  DOES  NOT
INCLUDE  A  PAYMENT  IN  LIEU  OF  TAXES  MADE BY THE QUALIFIED NEW YORK
MANUFACTURER.
  (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (1)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2)  THE
AMOUNT  OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES.
IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE  YEAR,
THE  TAXPAYER  MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE
TO EACH YEAR COVERED BY SUCH FINAL ORDER AND  CALCULATE  THE  AMOUNT  OF

S. 6359--A                         216                        A. 8559--A

CREDIT  WHICH  IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH
YEAR BASED ON SUCH REDUCTION.
  (D)  THE  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER,
ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREAT-
ED  AS  AN  OVERPAYMENT  OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS  CHAPTER.
PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOU-
SAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE
PAID THEREON.
  S 2-a. Paragraph (b) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 21 to read as follows:
  (21) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR REAL  PROPERTY  TAXES  TO
THE  EXTENT  SUCH  TAXES ARE USED AS THE BASIS OF THE CALCULATION OF THE
REAL PROPERTY TAX CREDIT FOR  MANUFACTURERS  ALLOWED  UNDER  SUBDIVISION
FORTY-EIGHT OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  S  3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new clause  (xxxvii)  to  read  as
follows:

(XXXVII) REAL PROPERTY TAX            AMOUNT OF CREDIT UNDER
CREDIT FOR MANUFACTURERS UNDER        SUBDIVISION FORTY-EIGHT OF
SUBSECTION (XX)                       SECTION TWO HUNDRED TEN

  S  4.  Subsections  (yy)  and  (zz)  of section 606 of the tax law, as
relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
relettered  subsections  (yyy)  and  (zzz)  and a new subsection (xx) is
added to read as follows:
  (XX) REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (1) A  QUALIFIED  NEW
YORK  MANUFACTURER  WILL  BE ALLOWED A CREDIT EQUAL TO TWENTY PERCENT OF
THE REAL PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR REAL  PROPERTY
OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCIPALLY USED DURING
THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT DEDUCTED IN COMPUT-
ING  FEDERAL  ADJUSTED  GROSS INCOME. THIS CREDIT WILL NOT BE ALLOWED IF
THE REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT ARE  INCLUDED
IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAYER.
  (2)(A)  THE  TERM QUALIFIED NEW YORK MANUFACTURER HAS THE SAME MEANING
AS UNDER SUBPARAGRAPH (B) OF PARAGRAPH TWO OF  SUBSECTION  (A)  OF  THIS
SECTION.
  (B)  THE TERM REAL PROPERTY TAX MEANS A CHARGE IMPOSED UPON REAL PROP-
ERTY BY OR ON BEHALF OF A COUNTY, CITY, TOWN, VILLAGE OR SCHOOL DISTRICT
FOR MUNICIPAL OR SCHOOL DISTRICT PURPOSES, PROVIDED THAT THE  CHARGE  IS
LEVIED  FOR  THE GENERAL PUBLIC WELFARE BY THE PROPER TAXING AUTHORITIES
AT A LIKE RATE AGAINST ALL PROPERTY OVER  WHICH  SUCH  AUTHORITIES  HAVE
JURISDICTION, AND PROVIDED THAT WHERE TAXES ARE LEVIED PURSUANT TO ARTI-
CLE EIGHTEEN OR NINETEEN OF THE REAL PROPERTY TAX LAW, THE PROPERTY MUST
HAVE  BEEN  TAXED  AT  THE  RATE DETERMINED FOR THE CLASS IN WHICH IT IS
CONTAINED, AS PROVIDED BY SUCH ARTICLE EIGHTEEN OR  NINETEEN,  WHICHEVER
IS  APPLICABLE. THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR
LOCAL BENEFITS, INCLUDING ANY PORTION OF THAT CHARGE  THAT  IS  PROPERLY
ALLOCATED TO THE COSTS ATTRIBUTABLE TO MAINTENANCE OR INTEREST, WHEN (I)
THE PROPERTY SUBJECT TO THE CHARGE IS LIMITED TO THE PROPERTY THAT BENE-
FITS  FROM THE CHARGE, OR (II) THE AMOUNT OF THE CHARGE IS DETERMINED BY
THE BENEFIT TO THE PROPERTY ASSESSED, OR (III) THE IMPROVEMENT FOR WHICH
THE CHARGE IS ASSESSED TENDS TO INCREASE THE PROPERTY  VALUE.  THE  TERM

S. 6359--A                         217                        A. 8559--A

REAL  PROPERTY  TAX  DOES NOT INCLUDE A PAYMENT IN LIEU OF TAXES MADE BY
THE QUALIFIED NEW YORK MANUFACTURER.
  (3)  CREDIT  RECAPTURE. WHERE A QUALIFIED NEW YORK MANUFACTURER'S REAL
PROPERTY TAXES WHICH WERE THE BASIS FOR  THE  ALLOWANCE  OF  THE  CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY  TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK, IN
THE TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF  (I)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (II) THE
AMOUNT  OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES.
IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE  YEAR,
THE  TAXPAYER  MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE
TO EACH YEAR COVERED BY SUCH FINAL ORDER AND  CALCULATE  THE  AMOUNT  OF
CREDIT  WHICH  IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH
YEAR BASED ON SUCH REDUCTION.
  (4) IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR  ANY
TAXABLE  YEAR  EXCEEDS THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS WILL
BE TREATED AS AN OVERPAYMENT TO BE CREDITED OR  REFUNDED  IN  ACCORDANCE
WITH  THE  PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE,
PROVIDED HOWEVER, NO INTEREST WILL BE PAID THEREON.
  S 4-a. Subsection (b) of section 612 of the  tax  law  is  amended  by
adding a new paragraph 40 to read as follows:
  (40)  THE  AMOUNT  OF ANY FEDERAL DEDUCTION FOR REAL PROPERTY TAXES TO
THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF THE  CALCULATION  OF  THE
REAL PROPERTY TAX CREDIT FOR MANUFACTURERS ALLOWED UNDER SUBSECTION (XX)
OF SECTION SIX HUNDRED SIX OF THIS ARTICLE.
  S 5. Paragraph (b) of subdivision 12 of section 210 of the tax law, as
amended  by chapter 817 of the laws of 1987, subparagraph (i) as amended
by chapter 637 of the laws of 2008 and clause (E) of  subparagraph  (ii)
as  added  by  chapter  393  of  the laws of 2005, is amended to read as
follows:
  (b) (i) A credit shall be allowed under this subdivision TO  A  QUALI-
FIED  NEW  YORK MANUFACTURER, A QUALIFIED NEW YORK AGRICULTURAL BUSINESS
OR A QUALIFIED  NEW  YORK  MINING  BUSINESS  with  respect  to  tangible
personal  property  and other tangible property, including buildings and
structural components of buildings, which (A) are[:] depreciable  pursu-
ant to section one hundred sixty-seven of the internal revenue code, (B)
have  a  useful life of four years or more, (C) are acquired by purchase
as defined in section one  hundred  seventy-nine  (d)  of  the  internal
revenue  code, (D) HAVE NOT BEEN PREVIOUSLY THE SUBJECT OF AN INVESTMENT
TAX CREDIT OR EMPIRE ZONE INVESTMENT TAX CREDIT ALLOWED UNDER THIS CHAP-
TER TO ANOTHER TAXPAYER, (E) have a situs in this  state,  and  (F)  are
[(A)]  principally  used  by the taxpayer in the production of goods [by
manufacturing, processing,  assembling,  refining,  mining,  extracting,
farming, agriculture, horticulture, floriculture, viticulture or commer-
cial fishing, (B) industrial waste treatment facilities or air pollution
control  facilities,  used in the taxpayer's trade or business, (C)] FOR
SALE OR ARE research and development property[, (D) principally used  in
the  ordinary  course of the taxpayer's trade or business as a broker or
dealer in connection with the purchase or sale (which shall include  but
not  be  limited  to  the  issuance,  entering into, assumption, offset,
assignment, termination, or transfer) of stocks, bonds or other  securi-
ties  as  defined  in  section  four  hundred seventy-five (c)(2) of the
Internal Revenue Code, or of commodities  as  defined  in  section  four
hundred  seventy-five  (e) of the Internal Revenue Code, (E) principally
used in the ordinary course of  the  taxpayer's  trade  or  business  of

S. 6359--A                         218                        A. 8559--A

providing investment advisory services for a regulated investment compa-
ny as defined in section eight hundred fifty-one of the Internal Revenue
Code,  or  lending,  loan  arrangement  or  loan origination services to
customers  in  connection with the purchase or sale (which shall include
but not be limited to the issuance, entering into,  assumption,  offset,
assignment,  termination,  or  transfer)  of  securities  as  defined in
section four hundred seventy-five (c)(2) of the Internal  Revenue  Code,
(F)  principally  used in the ordinary course of the taxpayer's business
as an exchange registered as a national securities exchange  within  the
meaning  of  sections 3(a)(1) and 6(a) of the Securities Exchange Act of
1934 or a board of trade as defined in section  1410(a)(1)  of  the  New
York Not-for-Profit Corporation Law or as an entity that is wholly owned
by one or more such national securities exchanges or boards of trade and
that  provides  automation or technical services thereto, or (G) princi-
pally used as a qualified film production facility  including  qualified
film  production  facilities having a situs in an empire zone designated
as such pursuant to article eighteen-B of  the  general  municipal  law,
where  the taxpayer is providing three or more services to any qualified
film production company using the facility, including such services as a
studio lighting grid, lighting  and  grip  equipment,  multi-line  phone
service, broadband information technology access, industrial scale elec-
trical  capacity,  food services, security services, and heating, venti-
lation and air conditioning. For purposes of clauses (D), (E) and (F) of
this subparagraph, property purchased by a taxpayer  affiliated  with  a
regulated  broker, dealer, registered investment adviser, national secu-
rities exchange or board of trade, is allowed a credit under this subdi-
vision if the property is used by its affiliated regulated broker, deal-
er, registered investment adviser, national securities exchange or board
of trade in accordance with this subdivision. For purposes of  determin-
ing  if the property is principally used in qualifying uses, the uses by
the taxpayer described in clauses (D) and (E) of this  subparagraph  may
be  aggregated.  In  addition,  the uses by the taxpayer, its affiliated
regulated broker, dealer, and registered investment adviser under either
or both of those clauses  may  be  aggregated.    Provided,  however,  a
taxpayer  shall  not  be allowed the credit provided by clauses (D), (E)
and (F) of this subparagraph unless (I) eighty percent or  more  of  the
employees  performing the administrative and support functions resulting
from or related to the qualifying uses of such equipment are located  in
this  state  or  (II)  the  average number of employees that perform the
administrative and support functions resulting from or  related  to  the
qualifying  uses  of such equipment and are located in this state during
the taxable year for which the credit is claimed is equal to or  greater
than ninety-five percent of the average number of employees that perform
these  functions  and  are  located  in this state during the thirty-six
months immediately preceding the year for which the credit  is  claimed,
or  (III) the number of employees located in this state during the taxa-
ble year for which the credit is claimed is equal  to  or  greater  than
ninety  percent  of  the  number  of  employees located in this state on
December thirty-first, nineteen hundred ninety-eight or, if the taxpayer
was not a calendar year taxpayer in nineteen hundred  ninety-eight,  the
last  day  of its first taxable year ending after December thirty-first,
nineteen hundred ninety-eight. If the taxpayer becomes subject to tax in
this state after the taxable year beginning in nineteen hundred  ninety-
eight,  then the taxpayer is not required to satisfy the employment test
provided in the preceding sentence of this subparagraph  for  its  first
taxable  year.  For  purposes  of  clause (III) of this subparagraph the

S. 6359--A                         219                        A. 8559--A

employment test will be based on the number of employees located in this
state on the last day of the first taxable year the taxpayer is  subject
to  tax in this state. If the uses of the property must be aggregated to
determine  whether  the property is principally used in qualifying uses,
then either each affiliate using the property must satisfy this  employ-
ment  test  or this employment test must be satisfied through the aggre-
gation of the  employees  of  the  taxpayer,  its  affiliated  regulated
broker,  dealer,  and  registered investment adviser using the property.
For purposes of this subdivision, the term  "goods"  shall  not  include
electricity].
  (ii)  For  purposes of this paragraph, the following definitions shall
apply--
  (A) [Manufacturing shall mean the process  of  working  raw  materials
into  wares  suitable  for use or which gives new shapes, new quality or
new combinations to matter which already has gone through  some  artifi-
cial  process by the use of machinery, tools, appliances and other simi-
lar equipment.] Property used in the production of goods FOR SALE  shall
include machinery, equipment or other tangible property which is princi-
pally  used  in  the repair and service of other machinery, equipment or
other tangible property used principally in the production of goods  FOR
SALE  and shall include all facilities used in the production operation,
including storage of material to  be  used  in  production  and  of  the
products that are produced.
  (B)  Research  and  development  property shall mean property which is
used for purposes of research and development  in  the  experimental  or
laboratory sense. Such purposes shall not be deemed to include the ordi-
nary testing or inspection of materials or products for quality control,
efficiency  surveys,  management studies, consumer surveys, advertising,
promotions, or research in connection with literary, historical or simi-
lar projects.
  (C) [Industrial waste treatment facilities shall mean property consti-
tuting facilities for the treatment, neutralization or stabilization  of
industrial  waste  and other wastes (as the terms "industrial waste" and
"other wastes" are defined  in  section  17-0105  of  the  environmental
conservation  law)  from a point immediately preceding the point of such
treatment, neutralization or stabilization to  the  point  of  disposal,
including the necessary pumping and transmitting facilities, but exclud-
ing such facilities installed for the primary purpose of salvaging mate-
rials  which are usable in the manufacturing process or are marketable.]
A QUALIFIED NEW YORK AGRICULTURAL BUSINESS SHALL MEAN A TAXPAYER OR,  IN
THE  CASE OF A COMBINED REPORT, A COMBINED GROUP, PRINCIPALLY ENGAGED IN
FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMER-
CIAL FISHING IN THE STATE. A TAXPAYER OR A COMBINED GROUP IS PRINCIPALLY
ENGAGED IN FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE
OR COMMERCIAL FISHING IN THE STATE IF MORE THAN  FIFTY  PERCENT  OF  THE
GROSS  RECEIPTS  OF  THE  TAXPAYER  OR THE COMBINED GROUP, RESPECTIVELY,
DURING THE TAXABLE YEAR ARE DERIVED FROM THE SALE OF GOODS  PRODUCED  BY
THE  TAXPAYER  BY  ANY OF THE ACTIVITIES SPECIFIED IN THIS SENTENCE THAT
ARE CONDUCTED IN THE  STATE.  IN  COMPUTING  A  COMBINED  GROUP'S  GROSS
RECEIPTS,  INTERCORPORATE  RECEIPTS  SHALL  BE  ELIMINATED. IN COMPUTING
GROSS RECEIPTS  FOR  A  TAXPAYER  THAT  IS  A  PARTNER  IN  PARTNERSHIP,
INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE
ELIMINATED.
  (D) [Air pollution control facilities shall mean property constituting
facilities which remove, reduce, or render less noxious air contaminants
emitted from an air contamination source (as the terms "air contaminant"

S. 6359--A                         220                        A. 8559--A

and  "air  contamination  source"  are defined in section 19-0107 of the
environmental conservation law) from a point immediately  preceding  the
point  of such removal, reduction or rendering to the point of discharge
of  air,  meeting emission standards as established by the department of
environmental conservation, but excluding such facilities installed  for
the primary purpose of salvaging materials which are usable in the manu-
facturing process or are marketable and excluding those facilities which
rely  for  their efficacy on dilution, dispersion or assimilation of air
contaminants in the ambient air after emission. Such term shall  further
include flue gas desulfurization equipment and attendant sludge disposal
facilities,  fluidized  bed boilers, precombustion coal cleaning facili-
ties or other facilities that conform with this  subdivision  and  which
comply  with the provisions of the state acid deposition control act set
forth in title nine of article nineteen of the  environmental  conserva-
tion  law]  A  QUALIFIED  NEW YORK MINING BUSINESS SHALL MEAN A TAXPAYER
PRINCIPALLY ENGAGED IN MINING IN THE STATE. A  TAXPAYER  IS  PRINCIPALLY
ENGAGED  IN  MINING IN THE STATE IF MORE THAN FIFTY PERCENT OF THE GROSS
RECEIPTS OF THE TAXPAYER OR, IN THE  CASE  OF  A  COMBINED  REPORT,  THE
COMBINED  GROUP,  RESPECTIVELY, DURING THE TAXABLE YEAR ARE DERIVED FROM
THE SALE OF GOODS PRODUCED BY THE TAXPAYER BY MINING ACTIVITIES THAT ARE
CONDUCTED IN THE STATE. IN COMPUTING A COMBINED GROUP'S GROSS  RECEIPTS,
INTERCORPORATE RECEIPTS SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS
FOR  A  TAXPAYER THAT IS A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS
BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  [(E) The terms "qualified film  production  facility"  and  "qualified
film production company" shall have the same meaning as in section twen-
ty-four of this chapter.]
  (iii)  [However,  such  credit shall be allowed with respect to indus-
trial waste treatment facilities and air  pollution  control  facilities
only  on condition that such facilities have been certified by the state
commissioner of environmental conservation or his  designated  represen-
tative,  pursuant  to  subdivision one of section 17-0707 or subdivision
one of section 19-0309 of the environmental conservation law, as comply-
ing with applicable provisions of the  environmental  conservation  law,
the  public  health law, the state sanitary code and codes, rules, regu-
lations, permits or orders issued pursuant thereto.] IN ORDER TO PROPER-
LY ADMINISTER THE CREDIT AUTHORIZED BY THIS SUBDIVISION, THE  DEPARTMENT
MAY  DISCLOSE  INFORMATION ABOUT THE ALLOWANCE TO ANOTHER TAXPAYER OF AN
INVESTMENT TAX CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT UNDER THIS
CHAPTER WITH RESPECT TO THE SAME PROPERTY.
  S 6. Paragraph (d) of subdivision 12 of section 210 of the tax law, as
amended by chapter 637 of the laws  of  2008,  is  amended  to  read  as
follows:
  (d)  A  taxpayer  shall not be allowed a credit under this subdivision
with respect to tangible personal property and other tangible  property,
including  buildings  and  structural  components of buildings, which it
leases to any other person or corporation [except where a taxpayer leas-
es property  to  an  affiliated  regulated  broker,  dealer,  registered
investment  adviser,  national securities exchange or board of trade (or
other entity described in clause (F) of subparagraph  (i)  of  paragraph
(b)  of  this  subdivision)  that  uses such property in accordance with
clause (D), (E) or (F) of subparagraph (i)  of  paragraph  (b)  of  this
subdivision].  For  purposes  of the preceding sentence, any contract or
agreement to lease or rent or for a license to use such  property  shall
be  considered  a  lease.  Provided,  however,  in determining whether a
taxpayer shall be allowed a credit under this subdivision  with  respect

S. 6359--A                         221                        A. 8559--A

to such property, any election made with respect to such property pursu-
ant  to  the  provisions of paragraph eight of subsection (f) of section
one hundred sixty-eight of the internal revenue code, as such  paragraph
was  in effect for agreements entered into prior to January first, nine-
teen hundred eighty-four, shall be disregarded. [For  purposes  of  this
paragraph,  the  use of a qualified film production facility by a quali-
fied film production company shall not be considered  a  lease  of  such
facility to such company.]
  S  7. Subparagraph 6 of paragraph (g) of subdivision 12 of section 210
of the tax law is REPEALED.
  S 8. Paragraphs (f), (k), (l) and (m) of subdivision 12 of section 210
of the tax law are REPEALED.
  S 9. Paragraph 2 of subsection (a) of section 606 of the tax  law,  as
amended  by chapter 817 of the laws of 1987, subparagraph (A) as amended
by chapter 637 of the laws of 2008 and clause (v) of subparagraph (B) as
added by chapter 393 of the laws of 2005, is amended to read as follows:
  (2)(A) A credit shall be allowed under this subsection TO A  QUALIFIED
NEW  YORK  MANUFACTURER, A QUALIFIED NEW YORK AGRICULTURAL BUSINESS OR A
QUALIFIED NEW YORK MINING BUSINESS with  respect  to  tangible  personal
property and other tangible property, including buildings and structural
components  of  buildings,  which  (I)  are[:]  depreciable  pursuant to
section one hundred sixty-seven of the internal revenue code, (II)  have
a  useful  life of four years or more, (III) are acquired by purchase as
defined in section one hundred seventy-nine (d) of the internal  revenue
code,  (IV)  HAVE  NOT  BEEN PREVIOUSLY THE SUBJECT OF AN INVESTMENT TAX
CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT ALLOWED UNDER THIS  CHAP-
TER  TO  ANOTHER  TAXPAYER, (V) have a situs in this state, and (VI) are
[(i)] principally used by the taxpayer in the production  of  goods  [by
manufacturing,  processing,  assembling,  refining,  mining, extracting,
farming, agriculture, horticulture, floriculture, viticulture or commer-
cial  fishing,  (ii)  industrial  waste  treatment  facilities  or   air
pollution  control facilities, used in the taxpayer's trade or business,
(iii)] FOR SALE OR ARE research and development property[, (iv)  princi-
pally used in the ordinary course of the taxpayer's trade or business as
a  broker or dealer in connection with the purchase or sale (which shall
include but not be limited to the issuance, entering  into,  assumption,
offset,  assignment, termination, or transfer) of stocks, bonds or other
securities as defined in section four hundred seventy-five (c)(2) of the
Internal Revenue Code, or of commodities as defined in section 475(e) of
the Internal Revenue Code, (v) principally used in the  ordinary  course
of  the  taxpayer's  trade  or business of providing investment advisory
services for a regulated investment company as defined in section  eight
hundred  fifty-one  of  the  Internal  Revenue  Code,  or  lending, loan
arrangement or loan origination services to customers in connection with
the purchase or sale (which shall include but  not  be  limited  to  the
issuance, entering into, assumption, offset, assignment, termination, or
transfer)  of securities as defined in section four hundred seventy-five
(c)(2) of the Internal Revenue Code, or (vi) principally used as a qual-
ified film  production  facility  including  qualified  film  production
facilities  having a situs in an empire zone designated as such pursuant
to article eighteen-B of the general municipal law, where  the  taxpayer
is  providing  three  or  more services to any qualified film production
company using the facility, including such services as a studio lighting
grid, lighting and grip equipment, multi-line phone  service,  broadband
information  technology  access,  industrial  scale electrical capacity,
food services, security  services,  and  heating,  ventilation  and  air

S. 6359--A                         222                        A. 8559--A

conditioning. For purposes of clauses (iv) and (v) of this subparagraph,
property  purchased  by  a  taxpayer affiliated with a regulated broker,
dealer, or registered investment adviser is allowed a credit under  this
subsection  if  the property is used by its affiliated regulated broker,
dealer  or  registered  investment  adviser  in  accordance  with   this
subsection.  For  purposes of determining if the property is principally
used in qualifying uses, the uses by the taxpayer described  in  clauses
(iv)  and  (v)  of this subparagraph may be aggregated. In addition, the
uses by the taxpayer, its affiliated regulated broker, dealer and regis-
tered investment adviser under either or both of those  clauses  may  be
aggregated. Provided, however, a taxpayer shall not be allowed the cred-
it  provided  by  clauses  (iv)  and (v) of this subparagraph unless (I)
eighty percent or more of the employees  performing  the  administrative
and  support  functions resulting from or related to the qualifying uses
of such equipment are located in this state, or (II) the average  number
of  employees  that  perform  the  administrative  and support functions
resulting from or related to the qualifying uses of such  equipment  and
are  located  in this state during the taxable year for which the credit
is claimed is equal to or greater than ninety-five percent of the  aver-
age  number of employees that perform these functions and are located in
this state during the thirty-six months immediately preceding  the  year
for  which  the  credit  is  claimed,  or  (III) the number of employees
located in this state during the taxable year for which  the  credit  is
claimed  is  equal  to  or  greater than ninety percent of the number of
employees located in  this  state  on  December  thirty-first,  nineteen
hundred ninety-eight or, if the taxpayer was not a calendar year taxpay-
er  in  nineteen hundred ninety-eight, the last day of its first taxable
year ending after December thirty-first, nineteen hundred  ninety-eight.
If  the  taxpayer becomes subject to tax in this state after the taxable
year beginning in nineteen hundred ninety-eight, then  the  taxpayer  is
not  required  to  satisfy the employment test provided in the preceding
sentence of this subparagraph  for  its  first  taxable  year.  For  the
purposes  of  clause (III) of this subparagraph the employment test will
be based on the number of employees located in this state  on  the  last
day  of  the  first  taxable year the taxpayer is subject to tax in this
state. If the uses of the  property  must  be  aggregated  to  determine
whether the property is principally used in qualifying uses, then either
each  affiliate  using the property must satisfy this employment test or
this employment test must be satisfied through the  aggregation  of  the
employees  of the taxpayer, its affiliated regulated broker, dealer, and
registered investment adviser using the property. For purposes  of  this
subsection, the term "goods" shall not include electricity].
  (B)  For  purposes  of this paragraph, the following definitions shall
apply:
  (i) (I) Manufacturing shall mean the process of working raw  materials
into  wares  suitable  for use or which gives new shapes, new quality or
new combinations to matter which already has gone through  some  artifi-
cial  process by the use of machinery, tools, appliances and other simi-
lar equipment. Property used in the production of goods FOR  SALE  shall
include machinery, equipment or other tangible property which is princi-
pally  used  in  the repair and service of other machinery, equipment or
other tangible property used principally in the production of goods  and
shall include all facilities used in the production operation, including
storage  of  material  to be used in production and of the products that
are produced.

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  (II) NOTWITHSTANDING THE DEFINITION OF MANUFACTURING IN  ITEM  (I)  OF
THIS  CLAUSE:  THE  GENERATION  AND  DISTRIBUTION  OF  ELECTRICITY,  THE
EXTRACTION AND DISTRIBUTION OF NATURAL GAS, AND THE PRODUCTION OF  STEAM
ASSOCIATED  WITH THE GENERATION OF ELECTRICITY DOES NOT CONSTITUTE MANU-
FACTURING.  THE  CREATION,  PRODUCTION  OR REPRODUCTION OF A FILM, TELE-
VISION SHOW OR COMMERCIAL DOES NOT CONSTITUTE MANUFACTURING. THE  BLEND-
ING  OF  TWO  OR  MORE FUELS DOES NOT CONSTITUTE MANUFACTURING. THE MASS
PRODUCTION OF FOOD PRODUCTS FOR COMMERCIAL  WHOLESALE  DISTRIBUTION  AND
SALE CONSTITUTES MANUFACTURING.
  (ii)  Research  and  development property shall mean property which is
used for purposes of research and development  in  the  experimental  or
laboratory sense. Such purposes shall not be deemed to include the ordi-
nary testing or inspection of materials or products for quality control,
efficiency  surveys,  management studies, consumer surveys, advertising,
promotions, or research in connection with literary, historical or simi-
lar projects.
  (iii) [Industrial  waste  treatment  facilities  shall  mean  property
constituting  facilities for the treatment, neutralization or stabiliza-
tion of industrial waste and other  wastes  (as  the  terms  "industrial
waste" and "other wastes" are defined in section 17-0105 of the environ-
mental conservation law) from a point immediately preceding the point of
such   treatment,  neutralization  or  stabilization  to  the  point  of
disposal, including the necessary pumping and  transmitting  facilities,
but  excluding  such  facilities  installed  for  the primary purpose of
salvaging materials which are usable in the manufacturing process or are
marketable.] "MANUFACTURER" SHALL MEAN A TAXPAYER THAT DURING THE  TAXA-
BLE  YEAR IS PRINCIPALLY ENGAGED IN MANUFACTURING. A TAXPAYER IS PRINCI-
PALLY ENGAGED IN MANUFACTURING IF MORE THAN FIFTY PERCENT OF  THE  GROSS
RECEIPTS  OF  THE  TAXPAYER DURING THE TAXABLE YEAR ARE DERIVED FROM THE
SALE OF GOODS PRODUCED BY MANUFACTURING. IN COMPUTING GROSS RECEIPTS FOR
A TAXPAYER THAT IS  A  PARTNER  IN  PARTNERSHIP,  INTER-ENTITY  RECEIPTS
BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  (iv)  [Air pollution control facilities shall mean property constitut-
ing facilities which remove, reduce, or render less noxious air  contam-
inants  emitted  from  an  air  contamination  source (as the terms "air
contaminant" and "air  contamination  source"  are  defined  in  section
19-0107  of the environmental conservation law) from a point immediately
preceding the point of such removal, reduction or rendering to the point
of discharge of air, meeting emission standards as  established  by  the
department  of environmental conservation, but excluding such facilities
installed for the primary  purpose  of  salvaging  materials  which  are
usable  in  the  manufacturing  process  or are marketable and excluding
those facilities which rely for their efficacy on  dilution,  dispersion
or  assimilation  of air contaminants in the ambient air after emission.
Such term shall further include flue gas desulfurization  equipment  and
attendant  sludge  disposal  facilities,  fluidized bed boilers, precom-
bustion coal cleaning facilities or other facilities that  conform  with
this  subsection  and which comply with the provisions of the State Acid
Deposition Control Act set forth in title nine of  article  nineteen  of
the  environmental  conservation law.] "QUALIFIED NEW YORK MANUFACTURER"
SHALL MEAN A MANUFACTURER THAT HAS PROPERTY IN THE STATE THAT IS USED IN
MANUFACTURING AND EITHER THE FAIR MARKET VALUE OF THAT PROPERTY  AT  THE
CLOSE  OF THE TAXABLE YEAR IS AT LEAST TEN MILLION DOLLARS OR ALL OF ITS
REAL AND PERSONAL PROPERTY IS LOCATED IN NEW YORK.
  (v) [For  purposes  of  this  paragraph,  the  terms  "qualified  film
production  facility" and "qualified film production company" shall have

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the same meaning as in section twenty-four of this chapter.] A QUALIFIED
NEW YORK AGRICULTURAL BUSINESS SHALL MEAN A TAXPAYER PRINCIPALLY ENGAGED
IN FARMING,  AGRICULTURE,  HORTICULTURE,  FLORICULTURE,  VITICULTURE  OR
COMMERCIAL  FISHING  IN  THE STATE. A TAXPAYER IS PRINCIPALLY ENGAGED IN
FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMER-
CIAL FISHING IN THE STATE IF  MORE  THAN  FIFTY  PERCENT  OF  THE  GROSS
RECEIPTS  OF  THE  TAXPAYER DURING THE TAXABLE YEAR ARE DERIVED FROM THE
SALE OF GOODS PRODUCED BY THE TAXPAYER BY ANY OF THE  ACTIVITIES  SPECI-
FIED  IN  THIS  SENTENCE  THAT ARE CONDUCTED IN THE STATE.  IN COMPUTING
GROSS RECEIPTS  FOR  A  TAXPAYER  THAT  IS  A  PARTNER  IN  PARTNERSHIP,
INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE
ELIMINATED.
  (VI)  A QUALIFIED NEW YORK MINING BUSINESS SHALL MEAN A TAXPAYER PRIN-
CIPALLY ENGAGED IN MINING  IN  THE  STATE.  A  TAXPAYER  IS  PRINCIPALLY
ENGAGED  IN  MINING IN THE STATE IF MORE THAN FIFTY PERCENT OF THE GROSS
RECEIPTS OF THE TAXPAYER DURING THE TAXABLE YEAR ARE  DERIVED  FROM  THE
SALE  OF  GOODS  PRODUCED  BY THE TAXPAYER BY MINING ACTIVITIES THAT ARE
CONDUCTED IN THE STATE. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER  THAT
IS  A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER
AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  (C) [However, such credit shall be allowed with respect to  industrial
waste  treatment facilities and air pollution control facilities only on
condition that such facilities have been certified by the state  commis-
sioner  of  environmental conservation or his designated representative,
pursuant to subdivision one of section 17-0707  or  subdivision  one  of
section 19-0309 of the environmental conservation law, as complying with
applicable  provisions of the environmental conservation law, the public
health law, the state  sanitary  code  and  codes,  rules,  regulations,
permits  or orders issued pursuant thereto.] IN ORDER TO PROPERLY ADMIN-
ISTER THE CREDIT AUTHORIZED BY  THIS  SUBDIVISION,  THE  DEPARTMENT  MAY
DISCLOSE  INFORMATION  ABOUT  THE  ALLOWANCE  TO  ANOTHER TAXPAYER OF AN
INVESTMENT TAX CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT UNDER THIS
CHAPTER WITH RESPECT TO THE SAME PROPERTY.
  S 10. Paragraph 4 of subsection (a) of section 606 of the tax law,  as
amended  by  chapter  637  of  the  laws  of 2008, is amended to read as
follows:
  (4) A taxpayer shall not be allowed a  credit  under  this  subsection
with  respect to tangible personal property and other tangible property,
including buildings and structural components  of  buildings,  which  it
leases to any other person or corporation [except where a taxpayer leas-
es  property  to  an  affiliated regulated broker, dealer, or registered
investment adviser that uses such property  in  accordance  with  clause
(iv)  or  (v)  of subparagraph (A) of paragraph two of this subsection].
For purposes of the preceding sentence, any  contract  or  agreement  to
lease  or rent or for a license to use such property shall be considered
a lease. Provided, however, in determining whether a taxpayer  shall  be
allowed  a  credit  under this subsection with respect to such property,
any election  made  with  respect  to  such  property  pursuant  to  the
provisions  of  paragraph eight of subsection (f) of section one hundred
sixty-eight of the internal revenue  code,  as  such  paragraph  was  in
effect  for  agreements  entered  into  prior to January first, nineteen
hundred eighty-four, shall be disregarded. [For purposes of  this  para-
graph,  the  use  of a qualified film production facility by a qualified
film production company shall not be considered a lease of such facility
to such company.]

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  S 11. Paragraph 6 of subsection (a) of section 606 of the tax  law  is
REPEALED.
  S 12. Subparagraph (F) of paragraph 7 of subsection (a) of section 606
of the tax law is REPEALED.
  S 13. Paragraphs 11, 12 and 13 of subsection (a) of section 606 of the
tax law are REPEALED.
  S 14. Subsection (i) of section 1456 of the tax law is REPEALED.
  S 15. Subdivision (q) of section 1511 of the tax law is REPEALED.
  S  16.  Subparagraphs (vi) and (vii) of paragraph (a) of subdivision 1
of section 210 of the tax law, subparagraph (vi) as amended by section 1
of part C of chapter 56 of the laws of 2011 and  subparagraph  (vii)  as
added  by  section  1  of  part Z of chapter 59 of the laws of 2013, are
amended to read as follows:
  (vi) EXCEPT AS OTHERWISE PROVIDED IN THIS SUBPARAGRAPH OR SUBPARAGRAPH
(VII) OF THIS PARAGRAPH, for taxable years beginning on or after January
thirty-first, two thousand seven, the amount prescribed  by  this  para-
graph  for  a  taxpayer  which  is a qualified New York manufacturer, AS
DEFINED IN SUBDIVISION FIFTEEN OF SECTION  TWO  HUNDRED  EIGHT  OF  THIS
ARTICLE,  A  QUALIFIED  NEW  YORK  AGRICULTURAL  BUSINESS, AS DEFINED IN
CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF  SUBDIVISION  TWELVE
OF THIS SECTION, AND A QUALIFIED NEW YORK MINING BUSINESS, AS DEFINED IN
CLAUSE  (D)  OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDIVISION TWELVE
OF THIS SECTION, shall be computed at the rate of six and one-half (6.5)
percent of the taxpayer's entire net  income  base.  For  taxable  years
beginning  on  or  after  January  first, two thousand twelve and before
January first, two thousand fifteen, the amount prescribed by this para-
graph for a taxpayer which is an eligible qualified New York manufactur-
er shall be computed at the rate of three and one-quarter (3.25) percent
of the taxpayer's entire net income  base.    [The  term  "manufacturer"
shall  mean  a  taxpayer  which  during  the taxable year is principally
engaged in the production of goods by manufacturing, processing,  assem-
bling, refining, mining, extracting, farming, agriculture, horticulture,
floriculture, viticulture or commercial fishing. However, the generation
and  distribution  of  electricity, the distribution of natural gas, and
the production of steam associated with the  generation  of  electricity
shall not be qualifying activities for a manufacturer under this subpar-
agraph.  Moreover, the combined group shall be considered a "manufactur-
er" for purposes of this subparagraph only if the combined group  during
the  taxable  year is principally engaged in the activities set forth in
this paragraph, or any combination thereof. A  taxpayer  or  a  combined
group  shall  be "principally engaged" in activities described above if,
during the taxable year, more than fifty percent of the  gross  receipts
of  the  taxpayer  or  combined  group,  respectively,  are derived from
receipts from the sale of goods produced by such activities. In  comput-
ing  a combined group's gross receipts, intercorporate receipts shall be
eliminated. A "qualified New York manufacturer" is a manufacturer  which
has  property  in  New York which is described in clause (A) of subpara-
graph (i) of paragraph (b) of subdivision twelve  of  this  section  and
either  (I)  the  adjusted basis of such property for federal income tax
purposes at the close of the  taxable  year  is  at  least  one  million
dollars  or (II) all of its real and personal property is located in New
York. In addition, a "qualified New York manufacturer" means a  taxpayer
which  is defined as a qualified emerging technology company under para-
graph (c) of subdivision one of section thirty-one hundred two-e of  the
public  authorities  law regardless of the ten million dollar limitation
expressed in subparagraph one of such paragraph (c).]  The  commissioner

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shall  establish  guidelines  and  criteria that specify requirements by
which a manufacturer may be classified as an eligible qualified New York
manufacturer. Criteria may include but not be limited to factors such as
regional unemployment, the economic impact that manufacturing has on the
surrounding  community,  population decline within the region and median
income within the region in which the manufacturer is located. In estab-
lishing these guidelines and criteria, the commissioner  shall  endeavor
that  the  total annual cost of the lower rates shall not exceed twenty-
five million dollars.
  [(vii)] For a qualified New York manufacturer, as defined in [subpara-
graph (vi) of this paragraph] SUBDIVISION FIFTEEN OF SECTION TWO HUNDRED
EIGHT OF THIS ARTICLE, A QUALIFIED NEW YORK  AGRICULTURAL  BUSINESS,  AS
DEFINED  IN CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDIVI-
SION TWELVE OF THIS SECTION, AND A QUALIFIED NEW YORK  MINING  BUSINESS,
AS DEFINED IN CLAUSE (D) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDI-
VISION  TWELVE OF THIS SECTION, the rate at which the tax is computed in
effect for taxable years beginning on or after January first, two  thou-
sand thirteen and before January first, two thousand fourteen for quali-
fied  New  York  manufacturers  shall  be reduced by nine and two-tenths
percent for taxable years commencing on  or  after  January  first,  two
thousand fourteen and before January first, two thousand fifteen, twelve
and  three-tenths percent for taxable years commencing on or after Janu-
ary first, two thousand fifteen and before January first,  two  thousand
sixteen, fifteen and four-tenths percent for taxable years commencing on
or  after  January first, two thousand sixteen and before January first,
two thousand eighteen, and twenty-five percent for taxable years  begin-
ning on or after January first, two thousand eighteen.
  (VII)  FOR A QUALIFIED NEW YORK MANUFACTURER THAT HAS AN APPORTIONMENT
FACTOR FOR PURPOSES OF  THE  METROPOLITAN  TRANSPORTATION  BUSINESS  TAX
SURCHARGE  COMPUTED  PURSUANT  TO SUBDIVISION TWO OF SECTION TWO HUNDRED
NINE-B OF THIS ARTICLE EQUAL TO ZERO FOR THE TAXABLE  YEAR,  THE  AMOUNT
PRESCRIBED  BY  THIS  PARAGRAPH  FOR TAXABLE YEARS BEGINNING ON OR AFTER
JANUARY FIRST, TWO THOUSAND FOURTEEN SHALL BE COMPUTED AT  THE  RATE  OF
ZERO PERCENT OF THE TAXPAYER'S ENTIRE NET INCOME BASE.
  S  17.  Subparagraphs  2  and  3  of paragraph (b) of subdivision 1 of
section 210 of the tax law, subparagraph 2 as amended by  section  1  of
part  GG-1 of chapter 57 of the laws of 2008 and subparagraph 3 as added
by section 2 of part Z of chapter 59 of the laws of 2013, are amended to
read as follows:
  (2) [For purposes of subparagraph one  of  this  paragraph,  the  term
"manufacturer"  shall  mean  a taxpayer which during the taxable year is
principally engaged in the production of goods by  manufacturing,  proc-
essing,  assembling, refining, mining, extracting, farming, agriculture,
horticulture, floriculture, viticulture or commercial fishing. Moreover,
for purposes of computing the capital base in  a  combined  report,  the
combined group shall be considered a "manufacturer" for purposes of this
subparagraph only if the combined group during the taxable year is prin-
cipally engaged in the activities set forth in this subparagraph, or any
combination thereof. A taxpayer or a combined group shall be "principal-
ly  engaged"  in activities described above if, during the taxable year,
more than fifty percent  of  the  gross  receipts  of  the  taxpayer  or
combined group, respectively, are derived from receipts from the sale of
goods produced by such activities. In computing a combined group's gross
receipts,  intercorporate receipts shall be eliminated. A "qualified New
York manufacturer" is a manufacturer that has property in New York  that
is  described  in  clause  (A)  of  subparagraph (i) of paragraph (b) of

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subdivision twelve of this section and either (i) the adjusted basis  of
that  property for federal income tax purposes at the close of the taxa-
ble year is at least one million dollars or (ii) all  of  its  real  and
personal  property is located in New York. In addition, a "qualified New
York manufacturer" means a taxpayer  that  is  defined  as  a  qualified
emerging  technology  company  under paragraph (c) of subdivision one of
section thirty-one hundred two-e of the public authorities  law  regard-
less  of the ten million dollar limitation expressed in subparagraph one
of such paragraph.
  (3)] For a qualified New York manufacturer, as  defined  in  [subpara-
graph  two of this paragraph] SUBDIVISION FIFTEEN OF SECTION TWO HUNDRED
EIGHT OF THIS ARTICLE, A QUALIFIED NEW YORK  AGRICULTURAL  BUSINESS,  AS
DEFINED  IN CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDIVI-
SION TWELVE OF THIS SECTION, AND A QUALIFIED NEW YORK  MINING  BUSINESS,
AS DEFINED IN CLAUSE (D) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDI-
VISION  TWELVE OF THIS SECTION, the rate at which the tax is computed in
effect for taxable years beginning on or after January first, two  thou-
sand  thirteen  and before January first, two thousand fourteen shall be
reduced by nine and two-tenths percent for taxable years  commencing  on
or  after January first, two thousand fourteen and before January first,
two thousand fifteen, twelve and three-tenths percent for taxable  years
commencing  on  or  after January first, two thousand fifteen and before
January first, two thousand sixteen, fifteen and four-tenths percent for
taxable years commencing on or after January first, two thousand sixteen
and before January first, two thousand eighteen, and twenty-five percent
for taxable years beginning on or  after  January  first,  two  thousand
eighteen.
  S  18. Subparagraph (iii) of paragraph (c) of subdivision 1 of section
210 of the tax law, as added by section 3 of part Z of chapter 59 of the
laws of 2013, is amended to read as follows:
  (iii) For a qualified New York manufacturer, as defined  in  [subpara-
graph  (vi) of paragraph (a) of this] subdivision FIFTEEN OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, A QUALIFIED NEW YORK  AGRICULTURAL  BUSI-
NESS,  AS DEFINED IN CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF
SUBDIVISION TWELVE OF THIS SECTION, AND  A  QUALIFIED  NEW  YORK  MINING
BUSINESS, AS DEFINED IN CLAUSE (D) OF SUBPARAGRAPH (II) OF PARAGRAPH (B)
OF  SUBDIVISION  TWELVE  OF  THIS  SECTION, the rate at which the tax is
computed in effect for taxable  years  beginning  on  or  after  January
first,  two  thousand  thirteen  and  before January first, two thousand
fourteen for qualified New York manufacturers shall be reduced  by  nine
and  two-tenths percent for taxable years commencing on or after January
first, two thousand fourteen and  before  January  first,  two  thousand
fifteen, twelve and three-tenths percent for taxable years commencing on
or  after  January first, two thousand fifteen and before January first,
two thousand sixteen, fifteen and four-tenths percent for taxable  years
commencing  on  or  after January first, two thousand sixteen and before
January first, two thousand eighteen, and twenty-five percent for  taxa-
ble years beginning on or after January first, two thousand eighteen.
  S  19. Subparagraph 6 of paragraph (d) of subdivision 1 of section 210
of the tax law, as added by section 4 of part Z of  chapter  59  of  the
laws of 2013, is amended to read as follows:
  (6) For a qualified New York manufacturer, as defined in [subparagraph
(vi)  of  paragraph  (a)  of  this]  subdivision  FIFTEEN OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, A QUALIFIED NEW YORK  AGRICULTURAL  BUSI-
NESS,  AS DEFINED IN CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF
SUBDIVISION TWELVE OF THIS SECTION, AND  A  QUALIFIED  NEW  YORK  MINING

S. 6359--A                         228                        A. 8559--A

BUSINESS, AS DEFINED IN CLAUSE (D) OF SUBPARAGRAPH (II) OF PARAGRAPH (B)
OF SUBDIVISION TWELVE OF THIS SECTION, the amounts prescribed in subpar-
agraphs  one  and  four  of  this  paragraph in effect for taxable years
beginning  on  or  after January first, two thousand thirteen and before
January first, two thousand fourteen for qualified New York  manufactur-
ers  shall  be  reduced by nine and two-tenths percent for taxable years
commencing on or after January first, two thousand fourteen  and  before
January first, two thousand fifteen, twelve and three-tenths percent for
taxable years commencing on or after January first, two thousand fifteen
and  before January first, two thousand sixteen, fifteen and four-tenths
percent for taxable years commencing on  or  after  January  first,  two
thousand  sixteen  and  before January first, two thousand eighteen, and
twenty-five percent for taxable years  beginning  on  or  after  January
first, two thousand eighteen.
  S 20. Subdivision 1 of section 210 of the tax law is amended by adding
a new paragraph (h) to read as follows:
  (H)  FOR  PURPOSES  OF  DETERMINING  WHETHER A TAXPAYER IS AN ELIGIBLE
QUALIFIED NEW  YORK  MANUFACTURER  FOR  PURPOSES  OF  THE  TAX  BENEFITS
PROVIDED  IN  SUBPARAGRAPH  (VI)  OF  PARAGRAPH (A) OF THIS SUBDIVISION,
SUBPARAGRAPH (II) OF PARAGRAPH (C) OF THIS SUBDIVISION, AND SUBPARAGRAPH
FIVE OF PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER SHALL UTILIZE  THE
LAW,  GUIDELINES  AND  CRITERIA  IN EFFECT ON DECEMBER THIRTY-FIRST, TWO
THOUSAND THIRTEEN.
  S 21. Subdivision 2 of section 355 of the economic development law, as
amended by section 4 of part G of chapter 61 of the  laws  of  2011,  is
amended to read as follows:
  2.  Excelsior  investment  tax  credit component. A participant in the
excelsior jobs program shall be eligible to claim a credit on  qualified
investments.  The  credit  shall  be equal to two percent of the cost or
other basis for federal income tax purposes of the qualified investment.
A participant may not claim both the  excelsior  investment  tax  credit
component  and the investment tax credit set forth in subdivision twelve
of section two hundred ten[,] OR subsection (a) of section  six  hundred
six[,  subsection (i) of section fourteen hundred fifty-six, or subdivi-
sion (q) of section fifteen hundred eleven] of the tax law for the  same
property  in  any taxable year, except that a participant may claim both
the excelsior investment tax credit component  and  the  investment  tax
credit  for  research  and development property. In addition, a taxpayer
who or which is qualified to claim the excelsior investment  tax  credit
component and is also qualified to claim the brownfield tangible proper-
ty  credit  component  under section twenty-one of the tax law may claim
either the excelsior investment tax credit component  or  such  tangible
property  credit  component,  but  not  both with regard to a particular
piece of property. A credit may not be claimed until a  business  enter-
prise  has received a certificate of tax credit, provided that qualified
investments made on or after the issuance of the certificate  of  eligi-
bility  but  before the issuance of the certificate of tax credit to the
business enterprise, may be claimed in the first taxable year for  which
the  business  enterprise  is  allowed  to  claim  the  credit. Expenses
incurred prior to the date the certificate of eligibility is issued  are
not eligible to be included in the calculation of the credit.
  S  22.  Severability.  The  legislature intends by this act to provide
needed tax relief to New York manufacturers.  However,  if  a  court  of
final,  competent  jurisdiction adjudges the tax rates imposed on quali-
fied New York manufacturers to be invalid, qualified New  York  manufac-
turers  shall  be  subject  to the same tax rates as all other taxpayers

S. 6359--A                         229                        A. 8559--A

subject to tax under article nine-A of the tax law. Provided further, if
a court of final, competent jurisdiction adjudges that the  tax  credits
provided  by this act to qualified New York manufacturers, qualified New
York agricultural businesses and qualified New York mining businesses to
be  invalid,  such  credits  shall be deemed repealed and shall be of no
force and effect as to any taxpayers.
  S 23. This act shall take effect immediately and shall apply to  taxa-
ble years beginning on or after January 1, 2014.

                                 PART S

  Section  1. Sections 185, 187-j, 187-k, 187-l, 187-m, 187-q, 187-r and
187-s of the tax law are REPEALED.
  S 2. Paragraph (c) of subdivision 9 of section  400  of  the  economic
development  law,  as  added by section 2 of part V of chapter 61 of the
laws of 2011, is amended to read as follows:
  (c) the business entity must not be substantially similar in ownership
and operation to another taxpayer taxable or  previously  taxable  under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION  one  hundred  eighty-five  of  article nine, former section one
hundred eighty-six or article nine-A, twenty-two, thirty-two or  thirty-
three of the tax law or the income or losses of which is or was includa-
ble under article twenty-two of the tax law;
  S  3.  Paragraph  (c)  of subdivision 6 of section 431 of the economic
development law, as added by section 1 of part A of chapter  68  of  the
laws of 2013, is amended to read as follows:
  (c)  the  business  is  not  substantially similar in operation and in
ownership to a business entity  (or  entities)  taxable,  or  previously
taxable  within  the  last five taxable years, under section one hundred
eighty-three[,] OR one hundred eighty-four, FORMER SECTION  one  hundred
eighty-five  or  FORMER  SECTION  one hundred eighty-six of the tax law,
article nine-A, thirty-two or thirty-three of the tax law, article twen-
ty-three of the tax law or which would have been subject  to  tax  under
such  article  twenty-three  (as  such  article was in effect on January
first, nineteen hundred eighty), or the income (or losses) of  which  is
(or was) includable under article twenty-two of the tax law; and
  S  4.  Paragraph 1 of subdivision (a), subdivision (f), paragraph 1 of
subdivision (i) and subdivisions (j) and (k) of section 14  of  the  tax
law,  paragraph  1 of subdivision (a) as amended by section 3 of part V1
of chapter 109 of the laws of 2006, subdivisions (f) and (j) as  amended
by  section 10 of part CC of chapter 85 of the laws of 2002, paragraph 1
of subdivision (i) and subdivision (k) as amended  and  paragraph  4  of
subdivision  (j)  as  added  by section 5 of part A of chapter 63 of the
laws of 2005, subparagraph (B) of paragraph  4  of  subdivision  (j)  as
amended  by  chapter 161 of the laws of 2005 and paragraph 5 of subdivi-
sion (j) as amended by section 4 of part V1 of chapter 109 of  the  laws
of 2006, are amended to read as follows:
  (1)  except as provided in paragraphs one-a and one-b of this subdivi-
sion, for purposes of [section one hundred eighty-seven-j and]  articles
nine-A,  twenty-two,  thirty-two  and  thirty-three of this chapter, for
each of the taxable years within  the  "business  tax  benefit  period,"
which  period  shall consist of (A) in the case of a business enterprise
with a test date occurring on or before December thirty-first, two thou-
sand one, the first fifteen taxable years beginning on or after  January
first, two thousand one, (B) in the case of a business enterprise with a
test  date  occurring  on  or after January first, two thousand two, but

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prior to April first, two thousand five, the fifteen taxable years  next
following  the business enterprise's test year, and (C) in the case of a
business enterprise which is first certified under article eighteen-B of
the  general  municipal  law on or after April first, two thousand five,
the ten taxable years starting with the taxable year in which the  busi-
ness  enterprise's  first date of certification under article eighteen-B
of the general municipal law occurs, but only with respect  to  each  of
such  business tax benefit period years for which the employment test is
met,
  (f) Taxable year. The term "taxable year" means the  taxable  year  of
the business enterprise under section one hundred eighty-three[,] OR one
hundred  eighty-four[,  one  hundred  eighty-five] or former section one
hundred eighty-six of article nine, or under article nine-A, twenty-two,
thirty-two or thirty-three of this chapter.  If  a  business  enterprise
does  not  have  a  taxable  year  because it is exempt from taxation or
otherwise not required to file a return under any of  such  sections  of
article  nine or under article nine-A, twenty-two, thirty-two or thirty-
three, then the term "taxable year" means (i) the business  enterprise's
federal taxable year, or, (ii) if the enterprise does not have a federal
taxable year, the calendar year.
  (1)  for  purposes  of  [section one hundred eighty-seven-j of article
nine, and] articles nine-A, twenty-two, thirty-two and  thirty-three  of
this  chapter, on the first day of the taxable year during which revoca-
tion of its certification under article eighteen-B of the general munic-
ipal law occurs, and
  (j) New business. (1) A new business shall  include  any  corporation,
except  a corporation which is substantially similar in operation and in
ownership to a business entity  (or  entities)  taxable,  or  previously
taxable,  under  section  one  hundred eighty-three, one hundred eighty-
four, FORMER SECTION one  hundred  eighty-five  or  FORMER  SECTION  one
hundred  eighty-six  of article nine; article nine-A, article thirty-two
or thirty-three of this chapter; article twenty-three of this chapter or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the income (or losses) of which is (or  was)  includable  under  article
twenty-two of this chapter.
  (2)  For purposes of article twenty-two of this chapter, an individual
who is either a sole proprietor or a member of a partnership shall qual-
ify as an owner of a new business unless the business of which the indi-
vidual is an owner is substantially similar in operation and  in  owner-
ship  to a business entity taxable, or previously taxable, under section
one hundred eighty-three, one hundred eighty-four,  FORMER  SECTION  one
hundred  eighty-five or FORMER SECTION one hundred eighty-six of article
nine; article nine-A, thirty-two or thirty-three of this chapter;  arti-
cle twenty-three of this chapter or which would have been subject to tax
under  such article twenty-three (as such article was in effect on Janu-
ary first, nineteen hundred eighty) or the income (or losses)  of  which
is (or was) includable under article twenty-two.
  (3)  For purposes of article twenty-two of this chapter, a shareholder
of a New York S corporation shall be treated as the owner of a new busi-
ness with respect to such share if the corporation qualifies  as  a  new
business pursuant to paragraph one of this subdivision.
  (4) (A)(i) Notwithstanding paragraphs one and two of this subdivision,
a new business shall include any corporation which is identical in oper-
ation  and  ownership  to  a business entity (or entities) taxable under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER

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SECTION one hundred eighty-five of article nine; article nine-A, article
thirty-two or thirty-three of this chapter or the income (or losses)  of
which  is  includable under article twenty-two of this chapter, provided
such  corporation  and such business entity or entities are operating in
different counties in the state.
  (ii) Notwithstanding paragraphs one and two of  this  subdivision,  an
individual  who is either a sole proprietor or a member of a partnership
shall qualify as an owner of a new business if the business of which the
individual is an owner is identical in operation and in ownership  to  a
business  entity (or entities) taxable under section one hundred eighty-
three[,] OR one hundred eighty-four or FORMER SECTION one hundred eight-
y-five of article nine; article nine-A, article  thirty-two  or  thirty-
three  of  this chapter or the income (or losses) of which is includable
under article twenty-two of this chapter,  provided  such  business  and
such  business entity or entities are operating in different counties in
the state.
  (iii) Any corporation qualifying as a new business or  any  individual
qualifying  as  an owner of a new business as a result of the provisions
of this subparagraph shall have the same business tax benefit period and
sales and use tax benefit period as the business entity to which  it  is
identical in operation and in ownership.
  (B) Notwithstanding any provisions of this subdivision to the contrary
and  notwithstanding  subdivision  c  of  section eighteen of part CC of
chapter eighty-five of the laws of two thousand two,  a  corporation  or
partnership,  which  was first certified under article eighteen-B of the
general municipal law before August first, two thousand two, has a  base
period  of  zero  years  or  zero employment for its base period, and is
similar in operation and in ownership to a business entity  or  entities
taxable,  or  previously  taxable, under sections specified in paragraph
one or two of this subdivision or which would have been subject  to  tax
under  article  twenty-three  of  this  chapter  (as such article was in
effect on January first, nineteen hundred eighty) or the income or loss-
es of which is or was includable under article twenty-two of this  chap-
ter  shall not be deemed a new business if it was not formed for a valid
business purpose, as such term is defined in clause (D) of  subparagraph
one of paragraph (o) of subdivision nine of section two hundred eight of
this chapter and was formed solely to gain empire zone benefits.
  (5)  Notwithstanding  any  other provision of this section, a business
enterprise which is approved by the commissioner of economic development
as the owner of a qualified investment project or a significant  capital
investment  project  pursuant to subdivision (w) of section nine hundred
fifty-nine of the general municipal law, has a base period of zero years
and places in service property (or a project that includes such  proper-
ty)  which  comprises  such qualified investment project or such signif-
icant capital investment project[,], shall be deemed to be a  new  busi-
ness  under this section. Provided, however, to be deemed a new business
under this paragraph,  such  business  enterprise  shall  have  received
certification  under  article  eighteen-B of the general business law by
December thirty-first, two thousand seven.
  (k) If the designation of an area as an empire zone is  no  longer  in
effect  because section nine hundred sixty-nine of the general municipal
law was not amended to extend the effective date of such designation  so
that the designations of all empire zones pursuant to article eighteen-B
of  the  general  municipal law have expired, a business enterprise that
was certified pursuant to article eighteen-B of  the  general  municipal
law  on  the day immediately preceding the day on which such designation

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expired shall be deemed to continue to be certified under  such  article
eighteen-B  for purposes of this section, and sections fifteen, sixteen,
[section one  hundred  eighty-seven-j,]  subdivisions  twenty-seven  and
twenty-eight  of  section  two hundred ten, subsections (bb) and (cc) of
section six hundred six, subdivision [(z)] (D) of section eleven hundred
[fifteen] NINETEEN, subsections (o) and (p) of section fourteen  hundred
fifty-six, and subdivisions (r) and (s) of section fifteen hundred elev-
en  of  this  chapter.  In addition, if the designation of an area as an
empire zone is no longer in effect because section nine  hundred  sixty-
nine  of  the general municipal law was not amended to extend the effec-
tive date of such designation so that the  designations  of  all  empire
zones  pursuant  to article eighteen-B of the general municipal law have
expired, all references to empire zones in the provisions of this  chap-
ter  listed  in  the  previous  sentence  shall be read as meaning areas
designated as empire zones on the day immediately preceding the  day  on
which such designation expired.
  S  5.  Paragraph  1 of subdivision (h) of section 15 of the tax law is
REPEALED.
  S 6. The closing paragraph of subdivision (a) of section 28 of the tax
law, as added by section 2 of part V of chapter 62 of the laws of  2006,
is amended to read as follows:
  (4)  Notwithstanding any provisions of this section to the contrary, a
corporation or partnership, which otherwise  qualifies  as  a  qualified
commercial production company, and is similar in operation and in owner-
ship  to  a  business entity or entities taxable, or previously taxable,
under section one hundred eighty-three[,] OR one hundred eighty-four  or
FORMER  SECTION one hundred eighty-five of article nine; article nine-A,
article thirty-two or thirty-three of this chapter or which  would  have
been  subject to tax under article twenty-three of this chapter (as such
article was in effect on January first, nineteen hundred eighty) or  the
income  or losses of which is or was includable under article twenty-two
of this chapter shall not be deemed a  new  or  separate  business,  and
therefore  shall  not be eligible for empire state commercial production
benefits, if it was not formed for a valid  business  purpose,  as  such
term  is  defined  in clause (D) of subparagraph one of paragraph (o) of
subdivision nine of section two hundred eight of this  chapter  and  was
formed  solely  to  gain empire state commercial production credit bene-
fits.
  S 7. Subdivision (a) of section 31 of  the  tax  law,  as  amended  by
section  7  of  part  G of chapter 61 of the laws of 2011, is amended to
read as follows:
  (a) General. A taxpayer subject to  tax  under  [section  one  hundred
eighty-five,]  article nine-A, twenty-two, thirty-two or thirty-three of
this chapter shall be allowed a credit against such tax, pursuant to the
provisions referenced in subdivision (g) of this section. The amount  of
the  credit,  allowable  for up to ten consecutive taxable years, is the
sum of the following four credit components:
  (1) the excelsior jobs tax credit component;
  (2) the excelsior investment tax credit component;
  (3) the excelsior research and development tax credit component; and
  (4) the excelsior real property tax credit component.
  S 8. Paragraph 1 of subdivision (g) of section 31 of the  tax  law  is
REPEALED.
  S  9.  The  opening  paragraph  of  paragraph 1 of subdivision (a) and
subparagraph (C) of paragraph 2 of subdivision (e) of section 35 of  the

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tax  law,  as  added by section 3 of part V of chapter 61 of the laws of
2011, are amended to read as follows:
  A taxpayer which is a participant or the owner of a participant in the
economic transformation and facility redevelopment program under article
eighteen  of  the  economic development law that is subject to tax under
[section one hundred eighty-five of article nine,  or]  article  nine-A,
twenty-two,  thirty-two or thirty-three of this chapter shall be allowed
the sum of following  components  against  such  tax,  pursuant  to  the
provisions referenced in subdivision (f) of this section.
  (C) the business entity must not be substantially similar in ownership
and  operation  to  another taxpayer taxable or previously taxable under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION one hundred eighty-five of  article  nine,  former  section  one
hundred  eighty-six of this chapter or article nine-A, twenty-two, thir-
ty-two or thirty-three of this chapter or the income or losses of  which
is or was includable under article twenty-two of this chapter;
  S  10. Paragraph 1 of subdivision (f) of section 35 of the tax law, as
added by section 3 of part V of chapter 61  of  the  laws  of  2011,  is
REPEALED.
  S  11. Paragraph 1 of subdivision (e) of section 38 of the tax law, as
added by section 1 of part EE of chapter 59 of  the  laws  of  2013,  is
REPEALED.
  S 12. Subdivision 2 of section 187 of the tax law, as added by chapter
788 of the laws of 1978, is amended to read as follows:
  2.  In  no event shall the credit herein provided for be allowed in an
amount which will reduce the tax payable to  less  than  the  applicable
minimum  tax  fixed  by  section  one hundred eighty-three[, one hundred
eighty-five] or FORMER SECTION one hundred eighty-six. If, however,  the
amount  of  credit  allowable  under  this  section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such taxable year may be carried over to the following year or years and
may be deducted from the taxpayer's tax for such year or years.
  S 13. Subdivision 5 of section 187-a of the tax law, as added by chap-
ter 142 of the laws of 1997, is amended to read as follows:
  5.  Carryover.  In  no  event  shall  the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable  minimum  tax fixed by section one hundred eighty-three[, one
hundred eighty-five] or FORMER SECTION one hundred  eighty-six  of  this
article.  If, however, the amount of credit allowable under this section
for any taxable year reduces the tax to such amount, any amount of cred-
it  not  deductible  in  such  taxable  year  may be carried over to the
following year or years and may be deducted from the taxpayer's tax  for
such year or years.
  S 14. Subdivisions 1 and 4 of section 187-b of the tax law, as amended
by section 1 of part G of chapter 59 of the laws of 2013, are amended to
read as follows:
  1.  General.  A  taxpayer  shall  be  allowed a credit, to be credited
against the taxes imposed under sections one hundred eighty-three[,] AND
one hundred eighty-four[, and one hundred eighty-five] of this  article.
Such  credit,  to  be computed as hereinafter provided, shall be allowed
for alternative fuel vehicle refueling and electric  vehicle  recharging
property  placed  in service during the taxable year. Provided, however,
that the amount of such credit allowable  against  the  tax  imposed  by
section  one  hundred eighty-four of this article shall be the excess of
the credit allowed by this section over the amount of such credit allow-

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able against the tax imposed by section one hundred eighty-three of this
article.
  4.  Carryovers.  In  no  event  shall the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable minimum tax fixed by section one hundred eighty-three [or one
hundred  eighty-five] of this article. If, however, the amount of credit
allowable under this section for any taxable year  reduces  the  tax  to
such  amount,  any  amount of credit not deductible in such taxable year
may be carried over to the following year or years and may  be  deducted
from the taxpayer's tax for such year or years.
  S  15. Section 187-c of the tax law, as amended by section 2 of part K
of chapter 59 of the laws of 2012, is amended to read as follows:
  S 187-c. Biofuel production credit. A  taxpayer  shall  be  allowed  a
credit  to be computed as provided in section twenty-eight of this chap-
ter, as added by part X of chapter sixty-two of the laws of two thousand
six, against the tax imposed by this article.  Provided,  however,  that
the amount of such credit allowed against the tax imposed by section one
hundred eighty-four of this article shall be the excess of the amount of
such  credit  over  the  amount  of  any  credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.  In  no event shall the credit under this section be allowed in
an amount which will reduce the tax payable to less than the  applicable
minimum  tax  fixed  by section one hundred eighty-three [or one hundred
eighty-five] of this article. If, however,  the  amount  of  the  credit
allowed  under this section for any taxable year reduces the tax to such
amount, the excess shall be treated as an overpayment of tax to be cred-
ited or refunded in  accordance  with  the  provisions  of  section  six
hundred eighty-six of this chapter. Provided, however, the provisions of
subsection  (c)  of  section  one  thousand eighty-eight of this chapter
notwithstanding, no interest shall  be  paid  thereon.  The  tax  credit
allowed  pursuant to this section shall apply to taxable years beginning
before January first, two thousand twenty.
  S 16. Section 187-d of the tax law, as added by section 3 of  part  II
of chapter 63 of the laws of 2000, is amended to read as follows:
  S  187-d.  Green  building  credit. 1. Allowance of credit. A taxpayer
shall be allowed a credit, to be computed as provided in  section  nine-
teen  of this chapter, against the taxes imposed by sections one hundred
eighty-three, one hundred eighty-four[,  one  hundred  eighty-five]  and
FORMER  SECTION one hundred eighty-six of this article. Provided, howev-
er, that the amount of such credit allowable against the tax imposed  by
section  one  hundred eighty-four of this article shall be the excess of
the amount of such credit over the amount of any credit allowed by  this
section  against  the tax imposed by section one hundred eighty-three of
this article.
  2. Carryovers. In no event shall the  credit  under  this  section  be
allowed  in an amount which will reduce the tax payable to less than the
applicable minimum tax fixed by section one hundred  eighty-three[,  one
hundred  eighty-five]  or  FORMER SECTION one hundred eighty-six of this
article. If, however, the amount of credit allowable under this  section
for any taxable year reduces the tax to such amount, any amount of cred-
it  not  deductible  in  such  taxable  year  may be carried over to the
following year or years and may be deducted from the taxpayer's tax  for
such year or years.
  S  17.  Subdivisions 1 and 2 of section 187-e of the tax law, as added
by section 2 of part I of chapter 63 of the laws of 2000, are amended to
read as follows:

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  1. Allowance of credit. A taxpayer shall be allowed a  credit,  to  be
computed  as  provided  in  section  twenty of this chapter, against the
taxes imposed by sections one hundred eighty-three, one hundred  eighty-
four[,  one  hundred eighty-five] and FORMER SECTION one hundred eighty-
six  of  this article. Provided, however, that the amount of such credit
allowable against the tax imposed by section one hundred eighty-four  of
this  article  shall be the excess of the amount of such credit over the
amount of any credit allowed by this section against the tax imposed  by
section one hundred eighty-three of this article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three[,  one hundred eighty-five] or FORMER SECTION one hundred eight-
y-six of this article. If, however, the amount of credit allowable under
this section for any taxable year reduces the tax to  such  amount,  any
amount  of  credit  not  thus  deductible  in such taxable year shall be
treated as an overpayment of tax to be credited or refunded  in  accord-
ance with the provisions of section ten hundred eighty-six of this chap-
ter.  Provided, however, the provisions of subsection (c) of section ten
hundred eighty-eight of this chapter notwithstanding, no interest  shall
be paid thereon.
  S 18. Section 187-g of the tax law, as added by section 2 of part H of
chapter 1 of the laws of 2003, is amended to read as follows:
  S  187-g. Brownfield redevelopment tax credit. 1. Allowance of credit.
A taxpayer shall be allowed a credit, to  be  computed  as  provided  in
section  twenty-one  of  this  chapter,  against  the  taxes  imposed by
sections one hundred eighty-three[,] AND one  hundred  eighty-four  [and
one  hundred  eighty-five]  of this article. Provided, however, that the
amount of such credit allowable against the tax imposed by  section  one
hundred eighty-four of this article shall be the excess of the amount of
such  credit  over  the  amount  of  any  credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  [or  one hundred eighty-five] of this article. If, however, the
amount of credit allowable under  this  section  for  any  taxable  year
reduces  the  tax to such amount, any amount of credit not deductible in
such taxable year shall be treated  as  an  overpayment  of  tax  to  be
refunded in accordance with the provisions of section ten hundred eight-
y-six  of  this chapter. Provided, however, the provisions of subsection
(c) of section ten hundred eighty-eight of this chapter notwithstanding,
no interest shall be paid thereon.
  S 19. Section 187-h of the tax law, as added by section 13 of  part  H
of  chapter 1 of the laws of 2003, subdivision 1 as amended by section 5
of part H of chapter 577 of the laws of 2004,  is  amended  to  read  as
follows:
  S  187-h.  Remediated  brownfield  credit  for real property taxes for
qualified sites. 1. Allowance of credit. A taxpayer shall be  allowed  a
credit,  to  be computed as provided in subdivision (b) of section twen-
ty-two of this chapter,  against  the  taxes  imposed  by  sections  one
hundred  eighty-three[,]  AND  one  hundred eighty-four [and one hundred
eighty-five] of this article. Provided, however, that the amount of such
credit allowed against the tax imposed by section  one  hundred  eighty-
four  of  this  article shall be the excess of the amount of such credit

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over the amount of any credit allowed by this section  against  the  tax
imposed by section one hundred eighty-three of this article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  [or  one hundred eighty-five] of this article. If, however, the
amount of credit allowed under this section for any taxable year reduces
the tax to such amount, any amount of credit not thus deductible in such
taxable year shall be treated as an overpayment of tax to be credited or
refunded in accordance with the provisions of section ten hundred eight-
y-six of this chapter. Provided, however, the provisions  of  subsection
(c) of section ten hundred eighty-eight of this chapter notwithstanding,
no interest shall be paid thereon.
  S  20.  Section 187-i of the tax law, as added by section 20 of part H
of chapter 1 of the laws of 2003, is amended to read as follows:
  S 187-i. Environmental remediation insurance credit. 1.  Allowance  of
credit. A taxpayer shall be allowed a credit, to be computed as provided
in  section  twenty-three  of this chapter, against the taxes imposed by
sections one hundred eighty-three[,] AND one  hundred  eighty-four  [and
one  hundred  eighty-five]  of this article. Provided, however, that the
amount of such credit allowable against the tax imposed by  section  one
hundred eighty-four of this article shall be the excess of the amount of
such  credit  over  the  amount  of  any  credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less  than  the  applicable  minimum  tax  fixed  by section one hundred
eighty-three [or one hundred eighty-five] of this article. If,  however,
the  amount  of credit allowable under this section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such  taxable  year  shall  be  treated  as  an overpayment of tax to be
refunded in accordance with  the  provisions  of  section  one  thousand
eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
subsection (c) of section one  thousand  eighty-eight  of  this  chapter
notwithstanding, no interest shall be paid thereon.
  S  21.  Subdivision  2  of  section  187-n of the tax law, as added by
chapter 537 of the laws of 2005, is amended to read as follows:
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed  in  an amount which will reduce the tax payable to
less than the applicable  minimum  tax  fixed  by  section  one  hundred
eighty-three  [or one hundred eighty-five] of this article. If, however,
the amount of credit allowable under this section for any  taxable  year
reduces  the  tax to such amount, any amount of credit not deductible in
such taxable year shall be treated  as  an  overpayment  of  tax  to  be
refunded  in  accordance  with  the  provisions  of section one thousand
eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
subsection  (c)  of  section  one  thousand eighty-eight of this chapter
notwithstanding, no interest shall be paid thereon.
  S 22.  Subdivisions  1  and  3  of  section  187-n  of  the  tax  law,
subdivision  1  as  amended by section 1 of part C1 of chapter 57 of the
laws of 2009 and subdivision 3 as added by chapter 446 of  the  laws  of
2005, are amended to read as follows:
  (1)  Allowance  of  credit. For taxable years beginning before January
first, two thousand nine, a taxpayer whose business is not substantially
engaged in the commercial  generation,  distribution,  transmission,  or

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servicing of energy or energy products shall be allowed a credit against
the  taxes  imposed  by  sections  one  hundred  eighty-three[,] AND one
hundred eighty-four [and one hundred eighty-five] of this article, equal
to  its  qualified fuel cell electric generating equipment expenditures.
Provided, however, that the amount of such credit allowable against  the
tax  imposed by section one hundred eighty-four of this article shall be
the excess of the amount of such credit over the amount  of  any  credit
allowed  by  this section against the tax imposed by section one hundred
eighty-three of this article. This credit shall not exceed one  thousand
five  hundred  dollars  per  generating unit with respect to any taxable
year. The credit provided for herein shall be allowed  with  respect  to
the taxable year in which the fuel cell electric generating equipment is
placed in service.
  (3)  Application  of  credit.  In no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  [or  one hundred eighty-five] of this article. If, however, the
amount of credit allowable under  this  section  for  any  taxable  year
reduces  the  tax to such amount, any amount of credit not deductible in
such taxable year may be carried over to the following year or years and
may be deducted from the taxpayer's tax for such year or years.
  S 23. Section 187-o of the tax law, as added by section 3 of part Y of
chapter 57 of the laws of 2010, is amended to read as follows:
  S 187-o. Temporary deferral nonrefundable payout credit. 1.  Allowance
of  credit.  A  taxpayer  shall  be  allowed a credit, to be computed as
provided in subdivision one of  section  thirty-four  of  this  chapter,
against either the taxes imposed by sections one hundred eighty-three[,]
AND  one  hundred eighty-four, [and one hundred eighty-five,] or the tax
imposed by section one hundred eighty-six-a of  this  article.  However,
the amount of such credit against the tax imposed by section one hundred
eighty-four  of  this  article shall be the excess of the amount of that
credit over the amount of any credit allowed by this section against the
tax imposed by section one hundred eighty-three of this article.
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed in an amount which will reduce the tax to less than
the applicable minimum tax fixed by section one hundred eighty-three [or
one hundred eighty-five] of this article. If,  however,  the  amount  of
credit  allowed  under this section for any taxable year reduces the tax
to such amount, any amount of credit not deductible in such taxable year
may be carried over to the following year or years and may  be  deducted
from the taxpayer's tax for such year or years.
  S 24. Section 187-p of the tax law, as added by section 3 of part Y of
chapter 57 of the laws of 2010, is amended to read as follows:
  S  187-p. Temporary deferral refundable payout credit. 1. Allowance of
credit. A taxpayer shall be allowed a credit, to be computed as provided
in subdivision two of section thirty-four of this chapter,  against  the
taxes  imposed  by  sections one hundred eighty-three[,] AND one hundred
eighty-four [and one hundred eighty-five] of this article,  or  the  tax
imposed  by  section  one hundred eighty-six-a of this article. However,
the amount of such credit against the tax imposed by section one hundred
eighty-four of this article shall be the excess of the  amount  of  that
credit over the amount of any credit allowed by this section against the
tax imposed by section one hundred eighty-three of this article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce the tax to  less  than
the applicable minimum tax fixed by section one hundred eighty-three [or

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one  hundred  eighty-five]  of  this article. If, however, the amount of
credit allowed under this section for any taxable year reduces  the  tax
to such amount, any amount of credit not deductible in such taxable year
shall  be  treated as an overpayment of tax to be refunded in accordance
with the provisions of section one thousand eighty-six of this  chapter,
provided however, that no interest shall be paid thereon.
  S  25. Subdivisions 2 and 3 of section 190 of the tax law, as added by
section 1 of part E of chapter 63 of the laws of 2000,  are  amended  to
read as follows:
  2.  Computation.  The  credit  allowed  by this section shall first be
deducted from the taxes imposed by section  one  hundred  eighty-three[,
one  hundred  eighty-five]  or  FORMER SECTION one hundred eighty-six of
this article. The amount of any such  credit  remaining  shall  next  be
deducted  from  the  taxes imposed by section one hundred eighty-four of
this article.
  3. Carryover. In no event shall the amount  of  credit  allowed  under
this  section  reduce the tax payable to less than the minimum tax fixed
by section one hundred eighty-three[, one hundred eighty-five] or FORMER
SECTION one hundred eighty-six of this article. If, however, the  amount
of  credit allowable under this section for any taxable year reduces the
tax to such amount, any amount of credit not deductible in such  taxable
year  may  be  carried  over  to  the following year or years and may be
deducted from the taxpayer's tax for such year or years.
  S 26. Subdivision 1 of section 192 of the tax law, as amended by chap-
ter 96 of the laws of 1976, is amended to read as follows:
  1. Corporations paying franchise tax. Every  corporation,  association
or  joint-stock  company  liable  to pay a tax under section one hundred
eighty-three [or one hundred eighty-five] of this chapter shall,  on  or
before  March  fifteenth  in each year, make a written report to the tax
commission of its condition at the close of its business on the  preced-
ing  December thirty-first, stating the amount of its authorized capital
stock, the amount of stock paid in, the date and rate per centum of each
dividend paid by it during the year ending with  such  day,  the  entire
amount  of  the capital of such corporation, and the capital employed by
it in this state during such year.
  S 27. Subdivision 4 of section 209 of  the  tax  law,  as  amended  by
section  2  of part FF1 of chapter 57 of the laws of 2008, is amended to
read as follows:
  4. Corporations liable to tax under sections one hundred  eighty-three
to  one  hundred  [eighty-five]  EIGHTY-FOUR-A,  inclusive, corporations
taxable under articles thirty-two and thirty-three of this chapter,  any
trust  company  organized  under a law of this state all of the stock of
which is owned by not less than twenty savings banks organized  under  a
law  of  this  state, bank holding companies filing a combined return in
accordance with [subdivision] SUBSECTION (f) of section fourteen hundred
sixty-two of this chapter, a captive REIT or  a  captive  RIC  filing  a
combined  return  under  either  [subdivision] SUBSECTION (f) of section
fourteen hundred sixty-two or subdivision (f) of section fifteen hundred
fifteen of this chapter, and housing companies organized  and  operating
pursuant to the provisions of article two or article five of the private
housing  finance  law  and  housing development fund companies organized
pursuant to the provisions of article  eleven  of  the  private  housing
finance law shall not be subject to tax under this article.
  S  28.  Section 209 of the tax law is amended by adding a new subdivi-
sion 12 to read as follows:

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  12. ALL FARMERS', FRUIT GROWERS' AND OTHER  LIKE  AGRICULTURAL  CORPO-
RATIONS  ORGANIZED AND OPERATED ON A CO-OPERATIVE BASIS FOR THE PURPOSES
EXPRESSED IN AND AS PROVIDED UNDER THE CO-OPERATIVE CORPORATIONS LAW  OF
THE  STATE  OF  NEW  YORK, WHETHER OR NOT SUCH CORPORATIONS HAVE CAPITAL
STOCK,  SHALL BE EXEMPT FROM TAXATION UNDER THE PROVISIONS OF THIS ARTI-
CLE.
  S 29. Paragraphs (b) and (c) of subdivision 1-c, clause (i) of subpar-
agraph 1 of paragraph (b) of subdivision 3, and subparagraphs 1 and 2 of
paragraph (j) of subdivision 12 of section 210 of the tax law, paragraph
(b) of subdivision 1-c as amended by section 12 of part Y of chapter  63
of the laws of 2000, paragraph (c) of subdivision 1-c and subparagraph 2
of  paragraph  (j)  of  subdivision 12 as amended by chapter 1043 of the
laws of 1981, clause (i) of subparagraph 1 of paragraph (b) of  subdivi-
sion  3  as amended by chapter 61 of the laws of 1989 and subparagraph 1
of paragraph (j) of subdivision 12 as amended by section 14 of part Y of
chapter 63 of the laws of 2000, are amended to read as follows:
  (b) is not a corporation over fifty percent of the number of shares of
stock of which entitling the holders thereof to vote for the election of
directors or trustees is owned by a taxpayer which (1) is subject to tax
under this article; section one hundred eighty-three[,] OR  SECTION  one
hundred eighty-four or FORMER SECTION one hundred eighty-five of article
nine;  article  thirty-two or thirty-three of this chapter, and (2) does
not qualify as a small business  corporation  as  defined  in  paragraph
three  of  subsection  (c)  of  section twelve hundred forty-four of the
internal revenue code (without regard to the second sentence of subpara-
graph (A) thereof) as of the last day of its taxable year ending  within
or with the taxable year of the taxpayer,
  (c)  is  not a corporation which is substantially similar in operation
and in ownership to a business entity (or entities) taxable,  or  previ-
ously taxable, under this article; section one hundred eighty-three, one
hundred eighty-four, OR FORMER SECTION one hundred eighty-five or FORMER
SECTION  one  hundred  eighty-six of article nine; article thirty-two or
thirty-three of this chapter; article twenty-three of  this  chapter  or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the  income  (or  losses)  of which is (or was) includable under article
twenty-two of this chapter, and
  (i) In the case of an issuer or obligor subject to tax  under  section
one  hundred  eighty-three[,  one hundred eighty-five] or FORMER SECTION
one hundred eighty-six of this chapter or under this article or  article
thirty-three  of  this  chapter  (except for savings and insurance banks
described in subdivision (b) of section fifteen hundred  of  this  chap-
ter),  the issuer's allocation percentage shall be the percentage of the
appropriate measure (as defined hereinafter) which  is  required  to  be
allocated within the state on the report, if any, required of the issuer
or  obligor  under  this chapter for the preceding year. The appropriate
measure referred to in the preceding sentence shall be: in the  case  of
an issuer or obligor subject to section one hundred eighty-three of this
chapter,  issued  capital  stock;  in  the  case of an issuer or obligor
[subject to section one  hundred  eighty-five]  EXEMPT  FROM  TAX  UNDER
SUBDIVISION  TWELVE  OF  SECTION  TWO  HUNDRED  NINE  of  this [chapter]
ARTICLE, issued capital stock; in the  case  of  an  issuer  or  obligor
subject  to FORMER section one hundred eighty-six of this chapter, gross
earnings; in the case of an issuer or obligor subject to  this  article,
entire capital; and in the case of an issuer or obligor subject to arti-
cle thirty-three of this chapter, gross direct premiums.

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  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred eighty-four or FORMER SECTION one hundred eighty-five of article
nine; article thirty-two or thirty-three of this chapter; or
  (2)  is substantially similar in operation and in ownership to a busi-
ness entity (or entities) taxable, or  previously  taxable,  under  this
article;  section  one  hundred  eighty-three,  one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  FORMER  SECTION  one  hundred
eighty-six  of  article nine; article thirty-two or thirty-three of this
chapter; article twenty-three of this chapter or which would  have  been
subject  to  tax under such article twenty-three (as such article was in
effect on January first, nineteen hundred  eighty)  or  the  income  (or
losses) of which is (or was) includable under article twenty-two of this
chapter  whereby  the intent and purpose of this paragraph and paragraph
(e) of this subdivision with respect to refunding of credit to new busi-
ness would be evaded; or
  S 30. Subparagraph (A) of paragraph 10 of subsection  (a)  of  section
606  of the tax law, as amended by section 3 of part CC of chapter 85 of
the laws of 2002, is amended to read as follows:
  (A) the business of which the individual is an owner is  substantially
similar  in  operation and in ownership to a business entity taxable, or
previously taxable, under section one hundred eighty-three, one  hundred
eighty-four,  FORMER  SECTION  one hundred eighty-five or FORMER SECTION
one hundred eighty-six of article nine; article  nine-A,  thirty-two  or
thirty-three  of  this  chapter; article twenty-three of this chapter or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the income (or losses) of which is (or  was)  includable  under  article
twenty-two  of this chapter whereby the intent and purpose of this para-
graph and paragraph five of this subsection with respect to refunding of
credit to new business would be evaded; or
  S 31. Subparagraphs (A) and (B) of paragraph 8 of  subsection  (i)  of
section 1456 of the tax law, as added by section 27 of part A of chapter
56 of the laws of 1998, are amended to read as follows:
  (A)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred eighty-four, FORMER SECTION one hundred  eighty-five  or  FORMER
SECTION  one hundred eighty-six of article nine; article nine-A or arti-
cle thirty-three of this chapter; or
  (B) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable, or previously taxable, under this
article; section one  hundred  eighty-three,  one  hundred  eighty-four,
FORMER  SECTION  one  hundred  eighty-five or FORMER SECTION one hundred
eighty-six of article nine; article nine-A or  article  thirty-three  of
this  chapter;  article twenty-three of this chapter or which would have
been subject to tax under such article twenty-three (as such article was
in effect on January first, nineteen hundred eighty) or the  income  (or
losses) of which is (or was) includable under article twenty-two of this
chapter  whereby  the intent and purpose of this paragraph and paragraph
five of this subsection with respect to refunding of credit to new busi-
ness would be evaded; or

S. 6359--A                         241                        A. 8559--A

  S 32. Subparagraph (A) of paragraph 7 of subdivision  (q)  of  section
1511  of  the  tax law, as added by section 1 of part L of chapter 63 of
the laws of 2000, is amended to read as follows:
  (A)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred eighty-four, FORMER SECTION one hundred  eighty-five  or  FORMER
SECTION  one hundred eighty-six of article nine; article nine-A or arti-
cle thirty-two of this chapter; or
  S 33. Subdivision 13 of section 171  of  the  transportation  law,  as
added by chapter 478 of the laws of 1991, is amended to read as follows:
  13.  The  transportation for compensation performed by an agricultural
cooperative corporation[, which corporation  is  subject  to  tax  under
section one hundred eighty-five of the tax law,] for non-members who are
not  farmers  or  cooperative  corporations  when such transportation is
limited to that which is  incidental  to  the  agricultural  cooperative
corporation's  primary transportation operation and is necessary for its
effective performance. Such transportation shall be provided only  after
the  agricultural  cooperative  corporation notifies the commissioner in
writing of its intent to provide the transportation  and  it  shall  not
exceed twenty-five percent of the agricultural cooperative corporation's
total transportation services in each calendar year measured in terms of
tonnage.  The  commissioner may prescribe the records to be kept and the
information to be furnished by all agricultural cooperative corporations
performing transportation pursuant to this subdivision.
  S 34. Subclause 2 of clause (v) of subparagraph (B) of paragraph 1  of
subdivision  (o)  of  section  11-1712 of the administrative code of the
city of New York, such subdivision as relettered by chapter 639  of  the
laws of 1986, is amended to read as follows:
  (2)  A  new  business  does not include: (i) any new business of which
twenty-five percent or more of the number of shares of stock that  enti-
tle  the  holders thereof to vote for the election of directors or trus-
tees is owned, directly or indirectly, by  a  taxpayer  subject  to  tax
under  section one hundred eighty-three, one hundred eighty-four, FORMER
SECTION one hundred eighty-five or FORMER SECTION one hundred eighty-six
of article nine of the tax law, or under article [nine-a] NINE-A,  thir-
ty-two  or thirty-three of the tax law or (ii) any new business substan-
tially similar in operation and in ownership, directly or indirectly, to
a business entity (or entities) taxable, or  previously  taxable,  under
such section, such article, article twenty-three of the tax law or which
would  have been subject to tax under such article twenty-three (as such
article was in effect on January first, nineteen hundred eighty) or  the
income  (or  losses) of which is (or was) includible under article twen-
ty-two of such tax law whereby the intent and purpose  of  this  section
would be evaded.
  S 35. Paragraph (iii) of subdivision 9 of section 16-v of section 1 of
chapter  174  of the laws of 1968, constituting the New York state urban
development corporation act, as added by section 1 of part C of  chapter
59 of the laws of 2013, is amended to read as follows:
  (iii) either: (A) any corporation, except a corporation which:
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under the following provisions of the  tax  law:  article
nine-A;  section  one hundred eighty-three[,] OR one hundred eighty-four

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or FORMER SECTION one hundred eighty-five of article nine; article thir-
ty-two or article thirty-three; or
  (2)  is substantially similar in operation and in ownership to a busi-
ness entity (or  entities)  taxable  or  previously  taxable  under  the
following provisions of the tax law: article nine-A; section one hundred
eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
y-five or former section one hundred eighty-six of article nine; article
thirty-two;  article  thirty-three;  article twenty-three, or would have
been subject to tax under such article twenty-three (as such article was
in effect on January first, nineteen hundred eighty) or the  income  (or
losses) of which is (or was) includable under article twenty-two; or
  (B)  a  sole proprietorship, partnership, limited partnership, limited
liability company, or New York subchapter  S  corporation  that  is  not
substantially similar in operation and in ownership to a business entity
(or  entities)  taxable,  or previously taxable, under article nine-A of
the tax law, section one hundred eighty-three, one hundred  eighty-four,
FORMER  SECTION  one  hundred  eighty-five or former section one hundred
eighty-six of article nine of the tax law, article thirty-two  or  thir-
ty-three  of  the  tax law, article twenty-three of the tax law or which
would have been subject to tax under such article twenty-three (as  such
article  was in effect on January first, nineteen hundred eighty) or the
income (or losses) of which is (or was) includable under  article  twen-
ty-two of the tax law; and
  S  36.  Notwithstanding  the  repeal  of section 185 of the tax law by
section one of this act, all provisions of such section 185, in  respect
to  the imposition, exemption, assessment, payment, payment over, deter-
mination, collection, and credit or refund of  tax  imposed  thereunder,
the  filing  of  forms  and returns, the preservation of records for the
purposes of such tax, the secrecy of returns, the disposition of  reven-
ues, and the civil and criminal penalties applicable to the violation of
the  provisions  of  such  section 185, shall continue in full force and
effect with respect to all such tax accrued up to December 31, 2014; all
actions and proceedings, civil or criminal, commenced or  authorized  to
be  commenced under or by virtue of any provision of such section 185 so
repealed, and pending or able to commence prior to the taking effect  of
such  repeal,  may be commenced, prosecuted and defended to final effect
in the same manner  as  they  might  if  such  provisions  were  not  so
repealed.
  S  37. This act shall take effect immediately and shall apply to taxa-
ble years beginning on or after January 1, 2015; provided, however that:
  a. the amendments to subdivision 9 of  section  400  of  the  economic
development  law  made  by  section two of this act shall not affect the
repeal of such section and shall be deemed repealed therewith; and
  b. the amendments to subdivisions (a) and (e) of section 35 of the tax
law made by section nine of this act shall not affect the repeal of such
section and shall be deemed repealed therewith.

                                 PART T

  Section 1. Section 39 of the tax law is amended by adding a new subdi-
vision (c-1) to read as follows:
  (C-1) EXCISE TAX ON TELECOMMUNICATION SERVICES. SUCH BUSINESS OR OWNER
OF A BUSINESS SHALL BE ELIGIBLE FOR A CREDIT OF THE EXCISE TAX ON  TELE-
COMMUNICATION  SERVICES  IMPOSED  BY SECTION ONE HUNDRED EIGHTY-SIX-E OF
THIS CHAPTER THAT IS PASSED THROUGH TO SUCH BUSINESS,  PURSUANT  TO  THE
PROVISIONS REFERENCED IN SUBDIVISION (K) OF THIS SECTION.

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  S  2.  Paragraphs  4 and 6 of subdivision (k) of section 39 of the tax
law, as added by section 2 of part A of chapter 68 of the laws of  2013,
are amended to read as follows:
  (4) Article 9-A: section 210, subdivision 47 AND SUBDIVISION 48.
  (6) Article 22: section 606, subsection (ww) AND SUBSECTION (XX).
  S 2-a. Paragraph (b) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 20-a to read as follows:
  (20-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF
THE  CALCULATION OF THE TAX-FREE NY AREA EXCISE TAX ON TELECOMMUNICATION
SERVICES CREDIT ALLOWED UNDER SUBDIVISION  FORTY-EIGHT  OF  SECTION  TWO
HUNDRED TEN OF THIS ARTICLE.
  S 3. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48.  THE  TAX-FREE  NY  AREA  EXCISE TAX ON TELECOMMUNICATION SERVICES
CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF  A  BUSINESS  THAT  IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE  ECONOMIC  DEVELOPMENT  LAW  SHALL  BE ALLOWED A CREDIT EQUAL TO THE
EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED
EIGHTY-SIX-E  OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING
THE TAXABLE YEAR TO THE  EXTENT  NOT  OTHERWISE  DEDUCTED  IN  COMPUTING
ENTIRE  NET INCOME. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER. THIS CREDIT MAY BE CLAIMED ONLY WHERE ANY
TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPARATELY
STATED ON A BILL FROM THE PROVIDER  OF  TELECOMMUNICATION  SERVICES  AND
PAID  BY  SUCH  BUSINESS WITH RESPECT TO SUCH SERVICES RENDERED WITHIN A
TAX-FREE NY AREA DURING THE TAXABLE YEAR.  UNLESS  THE  TAXPAYER  HAS  A
TAX-FREE  NY  AREA  ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT  PRESCRIBED  IN  PARAGRAPH
(D)   OF  SUBDIVISION  ONE  OF  THIS  SECTION.  PROVIDED,  HOWEVER,  THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  S  4. Section 606 of the tax law is amended by adding a new subsection
(xx) to read as follows:
  (XX) THE TAX-FREE NY AREA EXCISE  TAX  ON  TELECOMMUNICATION  SERVICES
CREDIT.  A  TAXPAYER  THAT  IS A BUSINESS OR OWNER OF A BUSINESS THAT IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED  A  CREDIT  EQUAL  TO  THE
EXCISE  TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED
EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS  DURING
THE  TAXABLE  YEAR  TO  THE  EXTENT  NOT OTHERWISE DEDUCTED IN COMPUTING
FEDERAL ADJUSTED GROSS INCOME.  THIS CREDIT MAY BE  CLAIMED  ONLY  WHERE
ANY  TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPA-
RATELY STATED ON A BILL FROM THE PROVIDER OF TELECOMMUNICATION  SERVICES
AND  PAID BY SUCH TAXPAYER WITH RESPECT TO SUCH SERVICES RENDERED WITHIN
A TAX-FREE NY AREA DURING THE TAXABLE YEAR. IF THE AMOUNT OF THE  CREDIT
ALLOWED  UNDER  THIS SUBSECTION FOR ANY TAXABLE YEAR EXCEEDS THE TAXPAY-
ER'S TAX FOR SUCH YEAR, THE EXCESS WILL BE TREATED AS AN OVERPAYMENT  TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX
HUNDRED  EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST
WILL BE PAID THEREON.

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  S 5. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is amended by adding a new clause (xxxvii) to read as
follows:
(XXXVII) TAX FREE NY AREA EXCISE        AMOUNT OF CREDIT UNDER
TAX ON TELECOMMUNICATION SERVICES       SUBDIVISION FORTY-EIGHT
CREDIT UNDER SUBSECTION (XX)            OF SECTION TWO HUNDRED TEN
  S  5-a.  Subsection  (b)  of  section 612 of the tax law is amended by
adding a new paragraph 39-a to read as follows:
  (39-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF
THE CALCULATION OF TAX-FREE NY  AREA  EXCISE  TAX  ON  TELECOMMUNICATION
SERVICES CREDIT ALLOWED UNDER SUBSECTION (XX) OF SECTION SIX HUNDRED SIX
OF THIS ARTICLE.
  S 6. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

                                 PART U

  Section  1.  Paragraph (a) of subdivision 44 of section 210 of the tax
law, as amended by section 2 of part T of chapter  59  of  the  laws  of
2012, is amended to read as follows:
  (a) A taxpayer that has been certified by the commissioner of labor as
a  qualified employer pursuant to section twenty-five-a of the labor law
shall be allowed a credit against the tax imposed by this article  equal
to  (i)  five  hundred  dollars  per month for up to six months for each
qualified employee the employer  employs  in  a  full-time  job  or  two
hundred  fifty dollars per month for up to six months for each qualified
employee the employer employs in a part-time  job  of  at  least  twenty
hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
ENROLLED IN HIGH SCHOOL FULL-TIME, and (ii)  one  thousand  dollars  for
each  qualified  employee who is employed for at least an additional six
months by the qualified employer in a  full-time  job  or  five  hundred
dollars  for  each  qualified  employee  who is employed for at least an
additional six months by the qualified employer in a part-time job of at
least twenty hours per week OR TEN HOURS PER  WEEK  WHEN  THE  QUALIFIED
EMPLOYEE  IS  ENROLLED IN HIGH SCHOOL FULL-TIME, AND (III) AN ADDITIONAL
ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR  AT
LEAST  AN ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOY-
MENT BY THE QUALIFIED EMPLOYER  IN  A  FULL-TIME  JOB  OR  FIVE  HUNDRED
DOLLARS  FOR  EACH  QUALIFIED  EMPLOYEE  WHO IS EMPLOYED FOR AT LEAST AN
ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT LEAST TWENTY HOURS PER  WEEK
OR  TEN  HOURS  PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH
SCHOOL FULL-TIME.  For purposes of this subdivision, the term "qualified
employee" shall have the same meaning as set forth in subdivision (b) of
section twenty-five-a of the  labor  law.  The  portion  of  the  credit
described in subparagraph (i) of this paragraph shall be allowed for the
taxable  year in which the wages are paid to the qualified employee, and
the portion of the credit described in subparagraph (ii) of  this  para-
graph  shall  be allowed in the taxable year in which the additional six
month period ends.
  S 2. Paragraph 1 of subsection (tt) of section 606 of the tax law,  as
amended  by  section  3  of part T of chapter 59 of the laws of 2012, is
amended to read as follows:
  (1) A taxpayer that has been certified by the commissioner of labor as
a qualified employer pursuant to section twenty-five-a of the labor  law

S. 6359--A                         245                        A. 8559--A

shall  be allowed a credit against the tax imposed by this article equal
to (A) five hundred dollars per month for up  to  six  months  for  each
qualified  employee  the  employer  employs  in  a  full-time job or two
hundred  fifty dollars per month for up to six months for each qualified
employee the employer employs in a part-time  job  of  at  least  twenty
hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
ENROLLED IN HIGH SCHOOL FULL-TIME, and (B) one thousand dollars for each
qualified employee who is employed for at least an additional six months
by the qualified employer in a full-time job or five hundred dollars for
each qualified employee who is employed for at least an  additional  six
months  by  the qualified employer in a part-time job of at least twenty
hours per week OR TEN HOURS PER WEEK  WHEN  THE  QUALIFIED  EMPLOYEE  IS
ENROLLED  IN  HIGH  SCHOOL FULL-TIME, AND (C) AN ADDITIONAL ONE THOUSAND
DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS  EMPLOYED  FOR  AT  LEAST  AN
ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
QUALIFIED  EMPLOYER  IN A FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH
QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER
THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN
A PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN HOURS PER  WEEK
WHEN  THE  QUALIFIED  EMPLOYEE  IS ENROLLED IN HIGH SCHOOL FULL-TIME.  A
taxpayer that is a partner in a partnership, member of a limited liabil-
ity company or shareholder in an S corporation that has  been  certified
by the commissioner of labor as a qualified employer pursuant to section
twenty-five-a  of  the  labor law shall be allowed its pro rata share of
the credit earned by the partnership, limited  liability  company  or  S
corporation.  For  purposes  of  this  subsection,  the  term "qualified
employee" shall have the same meaning as set forth in subdivision (b) of
section twenty-five-a of the  labor  law.  The  portion  of  the  credit
described in subparagraph (A) of this paragraph shall be allowed for the
taxable  year in which the wages are paid to the qualified employee, and
the portion of the credit described in subparagraph (B)  of  this  para-
graph  shall  be allowed in the taxable year in which the additional six
month period ends.
  S 3. Subdivision (a) of section 25-a of the labor law, as  amended  by
section  2  of  part DD of chapter 59 of the laws of 2013, is amended to
read as follows:
  (a) The commissioner is authorized to establish and administer the New
York youth works tax credit program to provide tax incentives to employ-
ers for employing at risk youth in part-time  and  full-time  positions.
There  will  be  five distinct pools of tax incentives. Program one will
cover tax incentives allocated for two thousand twelve and two  thousand
thirteen.  Program  two will cover tax incentives allocated in two thou-
sand fourteen to be used in two thousand fourteen and fifteen.   Program
three  will cover tax incentives allocated in two thousand fifteen to be
used in two thousand fifteen and sixteen. Program four  will  cover  tax
incentives  allocated in two thousand sixteen to be used in two thousand
sixteen and seventeen. Program five will cover tax incentives  allocated
in two thousand seventeen to be used in two thousand seventeen and eigh-
teen.  The  commissioner  is  authorized  to  allocate up to twenty-five
million dollars of tax credits under  program  one,  [six]  TEN  million
dollars  of  tax credits under program two, [six] TEN million dollars of
tax credits under program three, [and six] TEN million  dollars  of  tax
credits under program four, and [six] TEN million dollars of tax credits
under program five.
  S 4. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2014.

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                                 PART V

  Section  1.  Section 19 of Part W-1 of chapter 109 of the laws of 2006
amending the tax law and other laws relating  to  providing  exemptions,
reimbursements  and  credits  from various taxes for certain alternative
fuels, as amended by section 1 of part D of chapter 59 of  the  laws  of
2012, is amended to read as follows:
  S  19. This act shall take effect immediately; provided, however, that
sections one through thirteen of this act shall take effect September 1,
2006 and shall be deemed repealed on September 1, [2014] 2016  and  such
repeal  shall  apply  in  accordance  with  the  applicable transitional
provisions of sections 1106 and 1217 of the tax law, and shall apply  to
sales  made,  fuel  compounded or manufactured, and uses occurring on or
after such date, and with respect to sections seven  through  eleven  of
this  act,  in  accordance  with  applicable  transitional provisions of
sections 1106 and 1217 of the  tax  law;  provided,  however,  that  the
commissioner  of  taxation  and finance shall be authorized on and after
the date this act shall have become a law to adopt and amend  any  rules
or  regulations  and  to  take  any  steps  necessary  to  implement the
provisions of this act; provided further that sections fourteen  through
sixteen  of  this  act  shall take effect immediately and shall apply to
taxable years beginning on or after January 1, 2006.
  S 2. This act shall take effect immediately.

                                 PART W

  Section 1. Section 11 of part EE of chapter 63 of the  laws  of  2000,
amending  the  tax law and other laws relating to modifying the distrib-
ution of funds from the motor vehicle fuel excise  tax,  as  amended  by
section  1  of  part  M of chapter 61 of the laws of 2011, is amended to
read as follows:
  S 11. Notwithstanding any other law, rule or regulation to the contra-
ry, the comptroller is hereby authorized  and  directed  to  deposit  in
equal  monthly installments and distribute pursuant to the provisions of
subdivision (d) of section 301-j of the tax law amounts listed below  to
the  credit of the dedicated highway and bridge trust fund and the dedi-
cated mass transportation trust fund from all motor vehicle receipts now
deposited into the general fund pursuant to provisions  of  the  vehicle
and  traffic  law:    twenty-eight million four hundred thousand dollars
from April 1, 2002 through March  31,  2003,  sixty-seven  million  nine
hundred  thousand dollars from April 1, 2003 through March 31, 2004, one
hundred seventy million one hundred thousand dollars from April 1,  2004
through  March  31,  2005,  and one hundred percent of all motor vehicle
receipts pursuant to provisions of the vehicle and traffic law that  are
not  otherwise directed to be deposited in a fund other than the general
fund from April 1, 2005 through March 31, 2006, and the same amount each
year thereafter UNTIL MARCH 31, 2014. FROM APRIL 1, 2014  THROUGH  MARCH
31, 2015, AND EACH YEAR THEREAFTER, THE COMPTROLLER SHALL, ON A QUARTER-
LY BASIS, CERTIFY AND TRANSFER SIXTEEN MILLION FOUR HUNDRED NINETY-EIGHT
THOUSAND  TWO  HUNDRED  FIFTY-FIVE  DOLLARS TO THE DEDICATED HIGHWAY AND
BRIDGE TRUST FUND AND FIFTEEN MILLION SIX  HUNDRED  SIXTY-FIVE  THOUSAND
TWO  HUNDRED  FORTY-FIVE  DOLLARS  TO  THE DEDICATED MASS TRANSPORTATION
TRUST FUND.
  S 2. Paragraph (f) of subdivision 4 of section 503 of the vehicle  and
traffic  law,  as added by section 1 of part W of chapter 59 of the laws
of 2006, is amended to read as follows:

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  (f) Notwithstanding any  other  provision  of  law  to  the  contrary,
commencing  April first, two thousand six and ending March thirty-first,
two thousand [seven] FOURTEEN, IN EACH YEAR,  the  first  forty  million
seven hundred thousand dollars of fees collected pursuant to this subdi-
vision  and  section  eleven hundred ninety-nine of this chapter, in the
aggregate, shall be paid to the state comptroller who shall deposit such
money in the state treasury pursuant to section one  hundred  twenty-one
of  the  state  finance  law to the credit of the general fund. Any such
fees collected in excess of such amount shall be paid to the  credit  of
the  comptroller  on  account  of the dedicated highway and bridge trust
fund established pursuant to section eighty-nine-b of the state  finance
law.  [Commencing April first, two thousand seven and ending March thir-
ty-first, two thousand eight, and for each such fiscal year  thereafter,
the first forty million seven hundred thousand dollars of fees collected
pursuant  to  this subdivision and section eleven hundred ninety-nine of
this chapter, in the aggregate, shall be paid to the  state  comptroller
who  shall  deposit such money in the state treasury pursuant to section
one hundred twenty-one of the state finance law to  the  credit  of  the
general  fund. Any such fees collected in excess of such amount for each
such state fiscal year, shall be paid to the credit of  the  comptroller
on  account  of  the dedicated highway and bridge trust fund established
pursuant to section eighty-nine-b of the state finance law.]  COMMENCING
APRIL  FIRST, TWO THOUSAND FOURTEEN AND FOR EACH SUCH FISCAL YEAR THERE-
AFTER, ANY SUCH FEES COLLECTED PURSUANT TO THIS SUBDIVISION AND  SECTION
ELEVEN  HUNDRED  NINETY-NINE OF THIS CHAPTER SHALL BE PAID TO THE CREDIT
OF THE COMPTROLLER ON ACCOUNT OF THE DEDICATED HIGHWAY AND BRIDGE  TRUST
FUND  ESTABLISHED PURSUANT TO SECTION EIGHTY-NINE-B OF THE STATE FINANCE
LAW.
  S 3. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2014.

                                 PART X

  Section 1. Section 951 of the tax law, as amended by chapter 67 of the
laws  of 1978, subsection (a) as amended by section 1 of part T of chap-
ter 57 of the laws of 2010, subsection (b) as amended by  section  5  of
part A of chapter 389 of the laws of 1997 and subsection (c) as added by
chapter 538 of the laws of 2013, is amended to read as follows:
  S  951.  Applicable  internal  revenue code provisions.-- (a) [Dates]
GENERAL.  For purposes of this article, any reference  to  the  internal
revenue code means the United States Internal Revenue Code of 1986, with
all  amendments  enacted  on  or  before  [July  twenty-second, nineteen
hundred ninety-eight,] JANUARY FIRST, TWO THOUSAND FOURTEEN and,  unless
specifically provided otherwise in this article, any reference to Decem-
ber  thirty-first,  nineteen hundred seventy-six or January first, nine-
teen hundred seventy-seven contained in  the  provisions  of  such  code
which  are  applicable  to  the determination of the tax imposed by this
article shall be read as a reference to June thirtieth, nineteen hundred
seventy-eight or July first, nineteen hundred seventy-eight, respective-
ly. [Notwithstanding the  foregoing,  the  unified  credit  against  the
estate  tax provided in section two thousand ten of the internal revenue
code shall, for purposes of this article, be the amount allowable as  if
the federal applicable exclusion amount were one million dollars.]
  (b)  [Applicable  generation-skipping  transfer tax provisions.--Where
any reference is made in this article  (or  in  the  provisions  of  the
internal  revenue  code  which  are  made  applicable by section two, as

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amended, of chapter one  thousand  thirteen  of  the  laws  of  nineteen
hundred sixty-two, to the determination of the tax imposed by this arti-
cle  and  appended  thereto)  to provisions of the internal revenue code
contained  in  section  one  thousand  twenty-five of this chapter, such
internal revenue code provisions contained in such section one  thousand
twenty-five  shall  apply  to the provisions of this article in the same
manner and with the same force and effect as if  the  language  of  such
provisions  of  the  internal revenue code had been incorporated in full
into this article except to the extent that any such provision is either
inconsistent with a provision of this article or is not relevant  there-
to.
  (c)]  Disposition to surviving spouse who is not a United States citi-
zen. In the case of an estate where a federal estate tax return  is  not
required  for  federal estate tax purposes, a disposition to a surviving
spouse that would qualify for the federal estate tax  marital  deduction
under  section  2056 of the internal revenue code if not for the limita-
tion imposed by subsection (d)(1) of such section shall  nonetheless  be
treated  as  qualifying for the federal estate tax marital deduction for
purposes of computing the tax imposed by section nine hundred  fifty-two
of  this  part,  without  requiring  that  such  disposition pass to the
surviving spouse in a qualified domestic trust as required  for  federal
purposes by internal revenue code section 2056(d)(2).
  S  2.  Section  952 of the tax law, as added by section 9 of part A of
chapter 389 of the laws of 1997, subsection (b) as amended by section  3
of  part  I  of  chapter  60  of the laws of 2004, is amended to read as
follows:
  S 952. Tax imposed. (a) A tax is hereby imposed on the transfer of the
New York estate by every deceased individual who at his or her death was
a resident of New York state. [The tax imposed by this subsection  shall
be  an  amount equal to the maximum amount allowable against the federal
estate tax as a credit for state death taxes under section two  thousand
eleven of the internal revenue code.]
  (b)  [If the transfer of any part of the estate of a deceased resident
includes real or tangible  personal  property  having  an  actual  situs
outside  New  York  state,  the  tax  imposed  by subsection (a) of this
section shall be reduced by an  amount  determined  by  multiplying  the
maximum  amount  of  the federal credit for state death taxes by a frac-
tion, the numerator of which is  the  decedent's  federal  gross  estate
reduced by his or her New York gross estate and the denominator of which
is his or her federal gross estate.] COMPUTATION OF TAX. THE TAX IMPOSED
BY  THIS  SECTION  SHALL BE COMPUTED ON THE DECEASED RESIDENT'S NEW YORK
TAXABLE ESTATE AS FOLLOWS:
IN THE CASE OF DECEDENTS DYING ON OR AFTER  APRIL  1,  2014  AND  BEFORE
APRIL 1, 2015
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS OVER
                                        $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS OVER

S. 6359--A                         249                        A. 8559--A

                                        $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS OVER
                                        $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
                                        OVER $5,100,000
OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS
                                        OVER $6,100,000
OVER $7,100,000 BUT NOT OVER $8,100,000 $650,800 PLUS 13.6% OF EXCESS
                                        OVER $7,100,000
OVER $8,100,000 BUT NOT OVER $9,100,000 $786,800 PLUS 14.4% OF EXCESS
                                        OVER $8,100,000
OVER $9,100,000                         $930,800 PLUS 14.5% OF EXCESS OVER
                                        $9,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2015 AND BEFORE
APRIL 1, 2016
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS
                                        OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS
                                        OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
                                        OVER $5,100,000
OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS
                                        OVER $6,100,000
OVER $7,100,000                         $650,800 PLUS 13.0% OF EXCESS
                                        OVER $7,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2016 AND BEFORE
APRIL 1, 2017
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS
                                        OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS

S. 6359--A                         250                        A. 8559--A

                                        OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000                         $402,800 PLUS 11.5% OF EXCESS
                                        OVER $5,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2017
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF
                                        EXCESS OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF
                                        EXCESS OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF
                                        EXCESS OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000                         $238,800 PLUS 10.0% OF EXCESS
                                        OVER $3,600,000
  (C)  APPLICABLE  CREDIT  AMOUNT. (1) A CREDIT OF THE APPLICABLE CREDIT
AMOUNT SHALL BE ALLOWED AGAINST THE  TAX  IMPOSED  BY  THIS  SECTION  AS
PROVIDED  IN  THIS  SUBSECTION. IN THE CASE OF A DECEDENT WHOSE NEW YORK
TAXABLE ESTATE IS LESS THAN OR EQUAL TO THE BASIC EXCLUSION AMOUNT,  THE
APPLICABLE  CREDIT  AMOUNT  SHALL BE THE AMOUNT OF TAX THAT WOULD BE DUE
UNDER SUBSECTION (B) OF THIS SECTION ON SUCH DECEDENT'S NEW YORK TAXABLE
ESTATE. IN THE CASE OF A DECEDENT WHOSE NEW YORK TAXABLE ESTATE  EXCEEDS
THE  BASIC  EXCLUSION  AMOUNT BY AN AMOUNT THAT IS LESS THAN OR EQUAL TO
FIVE PERCENT OF SUCH AMOUNT, THE APPLICABLE CREDIT AMOUNT SHALL  BE  THE
AMOUNT  OF TAX THAT WOULD BE DUE UNDER SUBSECTION (B) OF THIS SECTION IF
THE AMOUNT ON WHICH THE TAX IS TO BE COMPUTED WERE EQUAL  TO  THE  BASIC
EXCLUSION  AMOUNT  MULTIPLIED  BY ONE MINUS A FRACTION, THE NUMERATOR OF
WHICH IS THE DECEDENT'S NEW YORK TAXABLE ESTATE MINUS THE  BASIC  EXCLU-
SION  AMOUNT,  AND THE DENOMINATOR OF WHICH IS FIVE PERCENT OF THE BASIC
EXCLUSION AMOUNT.  PROVIDED, HOWEVER, THAT THE CREDIT  ALLOWED  BY  THIS
SUBSECTION  SHALL  NOT  EXCEED  THE  TAX IMPOSED BY THIS SECTION, AND NO
CREDIT SHALL BE ALLOWED TO THE ESTATE OF ANY  DECEDENT  WHOSE  NEW  YORK
TAXABLE  ESTATE  EXCEEDS ONE HUNDRED FIVE PERCENT OF THE BASIC EXCLUSION
AMOUNT.
  (2) (A) FOR PURPOSES OF THIS SECTION, THE BASIC EXCLUSION AMOUNT SHALL
BE AS FOLLOWS:
IN THE CASE OF DECEDENTS DYING ON OR AFTER: THE BASIC  EXCLUSION  AMOUNT
IS:
APRIL 1, 2014 AND BEFORE APRIL 1, 2015       $ 2,062,500
APRIL 1, 2015 AND BEFORE APRIL 1, 2016       3,125,000
APRIL 1, 2016 AND BEFORE APRIL 1, 2017       4,187,500
APRIL 1, 2017 AND BEFORE JANUARY 1, 2019     5,250,000
  (B)  IN THE CASE OF ANY DECEDENT DYING IN A CALENDAR YEAR BEGINNING ON
OR AFTER JANUARY FIRST,  TWO  THOUSAND  NINETEEN,  THE  BASIC  EXCLUSION
AMOUNT  FOR DECEDENTS DYING ON OR AFTER APRIL FIRST, TWO THOUSAND SEVEN-

S. 6359--A                         251                        A. 8559--A

TEEN AND BEFORE JANUARY FIRST, TWO THOUSAND NINETEEN SHALL BE  INCREASED
BY AN AMOUNT EQUAL TO:
  (I) SUCH BASIC EXCLUSION AMOUNT, MULTIPLIED BY
  (II)  THE  COST-OF-LIVING ADJUSTMENT, WHICH SHALL BE THE PERCENTAGE BY
WHICH THE CONSUMER PRICE INDEX FOR THE PRECEDING CALENDAR  YEAR  EXCEEDS
THE CONSUMER PRICE INDEX FOR CALENDAR YEAR TWO THOUSAND TWELVE.
  (C)  (I)  FOR PURPOSES OF THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS
THE MOST RECENT CONSUMER PRICE INDEX FOR ALL-URBAN  CONSUMERS  PUBLISHED
BY THE UNITED STATES DEPARTMENT OF LABOR.
  (II)  IF ANY AMOUNT ADJUSTED UNDER THIS PARAGRAPH IS NOT A MULTIPLE OF
TEN THOUSAND DOLLARS, SUCH AMOUNT SHALL BE ROUNDED TO THE NEAREST MULTI-
PLE OF TEN THOUSAND DOLLARS.
  S 3. Section 954 of the tax law, as amended by chapter 67 of the  laws
of  1978,  paragraph  1  of  subsection (a) as amended by section 10 and
subsection (b) as amended by section 11 of part A of chapter 389 of  the
laws  of  1997,  subsection (c) as amended by chapter 916 of the laws of
1982, paragraph 1 of subsection (c) as amended by section 3 of part A of
chapter 407 of the laws of 1999 and such subsection (c) as relettered by
section 12 of part A of chapter 389 of the laws of 1997, is  amended  to
read as follows:
  S  954.  Resident's New York gross estate. (a) General.-- The New York
gross estate of a deceased resident  means  his  OR  HER  federal  gross
estate as defined in the internal revenue code (whether or not a federal
estate tax return is required to be filed) modified as follows:
  (1)  Reduced by the value of real or tangible personal property having
an actual situs outside New York state.
  (2) Increased by the amount  determined  under  section  nine  hundred
fifty-seven  OF  THIS  PART  (relating  to limited powers of appointment
created prior to September first, nineteen hundred thirty).
  (3) INCREASED BY THE AMOUNT OF ANY TAXABLE GIFT UNDER SECTION 2503  OF
THE  INTERNAL  REVENUE CODE, ON OR AFTER APRIL FIRST, TWO THOUSAND FOUR-
TEEN, IF THE DECEDENT WAS A RESIDENT OF NEW YORK STATE AT THE TIME  SUCH
GIFT WAS MADE.
  (b)  Valuation. -- (1) The New York gross estate shall be valued as of
the TIME OF THE DECEDENT'S DEATH, EXCEPT THAT IF A  FEDERAL  ESTATE  TAX
RETURN  IS  FILED  AND THE ALTERNATE VALUATION UNDER SECTION 2032 OF THE
INTERNAL REVENUE CODE IS ELECTED FOR FEDERAL ESTATE  TAX  PURPOSES,  THE
NEW YORK GROSS ESTATE SHALL BE VALUED AS OF THE applicable federal valu-
ation date or dates. Any real property qualified under section two thou-
sand thirty-two-A of the internal revenue code shall have the same value
for  purposes  of the New York gross estate as it has for federal estate
tax purposes.
  (2) IF SUCH ALTERNATE VALUATION COULD HAVE BEEN  ELECTED  PURSUANT  TO
PARAGRAPH  ONE  OF  THIS  SUBSECTION,  BUT  FOR THE ABSENCE OF AN ESTATE
SUFFICIENT TO REQUIRE THE FILING OF A FEDERAL RETURN, THE NEW YORK GROSS
ESTATE MAY, UPON THE ELECTION OF THE  EXECUTOR,  BE  VALUED  AS  OF  THE
FEDERAL  VALUATION  DATE  OR DATES WHICH WOULD HAVE APPLIED IF A FEDERAL
RETURN HAD BEEN FILED. HOWEVER, NO ELECTION MAY BE MADE UNDER THIS PARA-
GRAPH UNLESS SUCH ELECTION WILL DECREASE THE VALUE OF THE NEW YORK GROSS
ESTATE AND THE AMOUNT OF TAX IMPOSED BY THIS ARTICLE (REDUCED BY CREDITS
ALLOWABLE AGAINST SUCH TAX). ANY  ELECTION  MADE  UNDER  THIS  PARAGRAPH
SHALL  BE  IRREVOCABLE.  THE ELECTION ALLOWED BY THIS PARAGRAPH SHALL BE
MADE NO LATER THAN THE DATE PRESCRIBED FOR  THE  FILING  OF  THE  RETURN
UNDER  THIS ARTICLE (INCLUDING EXTENSIONS) OR ANY TIME THEREAFTER AS THE
COMMISSIONER MAY PRESCRIBE.

S. 6359--A                         252                        A. 8559--A

  (c) Cross references.-- (1) For provisions  of  the  internal  revenue
code defining the federal gross estate, see:
  Sec. 2031. Definition of gross estate.
  Sec. 2032. Alternate valuation.
  Sec. 2032A. Valuation of certain farm, etc., real property.
  Sec. 2033. Property in which the decedent had an interest.
  Sec. 2034. Dower or curtesy interest.
  Sec. 2035. Adjustments for gifts made within three years of decedent's
death.
  Sec. 2036. Transfers with retained life estate.
  Sec. 2037. Transfers taking effect at death.
  Sec. 2038. Revocable transfers.
  Sec. 2039. Annuities.
  Sec. 2040. Joint interests.
  Sec. 2041. Powers of appointment.
  Sec. 2042. Proceeds of life insurance.
  Sec. 2043. Transfers for insufficient consideration.
  Sec. 2044. Certain property for which marital deduction was previously
allowed.
  Sec. 2045. Prior interests.
  Sec. 2046. Disclaimers.
  (2)  FOR  PROVISIONS OF THE INTERNAL REVENUE CODE WHICH, EXCEPT TO THE
EXTENT THEY ARE INCONSISTENT WITH THE PROVISIONS OF  THIS  ARTICLE,  ARE
PERTINENT  TO  THE  COMPUTATION  OF TAXABLE GIFTS AND THE TAX UNDER THIS
ARTICLE, SEE:
  SEC. 2503. TAXABLE GIFTS.
  SEC. 2511. TRANSFERS IN GENERAL.
  SEC. 2512. VALUATION OF GIFTS.
  SEC. 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY.
  SEC. 2514. POWERS OF APPOINTMENT.
  SEC. 2516. CERTAIN PROPERTY SETTLEMENTS.
  SEC. 2518. DISCLAIMERS.
  SEC. 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES.
  SEC. 2522. CHARITABLE AND SIMILAR GIFTS.
  SEC. 2523. GIFT TO SPOUSE.
  SEC. 2524. EXTENT OF DEDUCTIONS.
  SEC. 2701. SPECIAL VALUATION RULES IN CASE  OF  TRANSFERS  OF  CERTAIN
INTERESTS IN CORPORATIONS OR PARTNERSHIPS.
  SEC.  2702.  SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS
IN TRUSTS.
  SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED.
  SEC. 2704. TREATMENT OF CERTAIN LAPSING RIGHTS AND RESTRICTIONS.
  SEC. 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES.
  (3) For effect of federal estate tax determinations, see section  nine
hundred sixty-one of this article.
  S  4.  The  tax  law is amended by adding a new section 955 to read as
follows:
  S 955. RESIDENT'S NEW YORK TAXABLE ESTATE.  (A) GENERAL.--THE  TAXABLE
ESTATE OF A NEW YORK RESIDENT SHALL BE HIS OR HER NEW YORK GROSS ESTATE,
MINUS  THE DEDUCTIONS ALLOWABLE FOR DETERMINING HIS OR HER FEDERAL TAXA-
BLE ESTATE UNDER THE INTERNAL REVENUE CODE (WHETHER  OR  NOT  A  FEDERAL
ESTATE  TAX  RETURN  IS REQUIRED TO BE FILED), EXCEPT TO THE EXTENT THAT
SUCH DEDUCTIONS RELATE TO REAL OR  TANGIBLE  PERSONAL  PROPERTY  SITUSED
OUTSIDE NEW YORK STATE.

S. 6359--A                         253                        A. 8559--A

  (B)  WAIVER  OF  DEDUCTIONS.-- IF THE RIGHT TO ANY DEDUCTION OTHERWISE
ALLOWABLE IS WAIVED FOR FEDERAL ESTATE TAX PURPOSES, IT SHALL BE CONSID-
ERED WAIVED FOR NEW YORK ESTATE TAX PURPOSES.
  (C)  QUALIFIED  TERMINABLE  INTEREST  PROPERTY  ELECTION.--  EXCEPT AS
OTHERWISE PROVIDED IN THIS SUBSECTION, THE ELECTION REFERRED TO IN PARA-
GRAPH (7) OF SUBSECTION (B) OF SECTION 2056 OF THE INTERNAL REVENUE CODE
SHALL NOT BE ALLOWED UNDER THIS ARTICLE UNLESS SUCH  ELECTION  WAS  MADE
WITH RESPECT TO THE FEDERAL ESTATE TAX RETURN REQUIRED TO BE FILED UNDER
THE  PROVISIONS  OF THE INTERNAL REVENUE CODE. IF SUCH ELECTION WAS MADE
FOR THE PURPOSES OF THE FEDERAL ESTATE TAX, THEN SUCH ELECTION MUST ALSO
BE MADE BY THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY  THIS  ARTI-
CLE.  WHERE  NO  FEDERAL  ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE
EXECUTOR MAY MAKE THE ELECTION REFERRED TO IN SUCH  PARAGRAPH  (7)  WITH
RESPECT  TO  THE  TAX  IMPOSED  BY THIS ARTICLE ON THE RETURN OF THE TAX
IMPOSED BY THIS ARTICLE. ANY ELECTION MADE UNDER THIS  SUBSECTION  SHALL
BE IRREVOCABLE.
  (D)  CROSS  REFERENCES.--  FOR PROVISIONS OF THE INTERNAL REVENUE CODE
SPECIFYING THE DEDUCTIONS ALLOWABLE FOR  FEDERAL  ESTATE  TAX  PURPOSES,
SEE:
  SEC.2032(B). ALTERNATE VALUATION--SPECIAL RULE FOR DEDUCTIONS.
  SEC.2046. DISCLAIMERS.
  SEC.2053. EXPENSES, INDEBTEDNESS, AND TAXES.
  SEC.2054. LOSSES.
  SEC.2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
  SEC.2056. BEQUESTS, ETC., TO SURVIVING SPOUSE.
  S 5. Subsections (b) and (d) of section 960 of the tax law, subsection
(b)  as amended by section 4 of part I of chapter 60 of the laws of 2004
and subsection (d) as added by section 190  of  the  laws  of  1980  and
relettered  by  section 15 of part A of chapter 389 of the laws of 1997,
are amended to read as follows:
  (b) Computation of tax.--The tax imposed under subsection (a) shall be
the same as the tax that would be due, if the decedent had died a  resi-
dent,  under  subsection  (a)  of section nine hundred fifty-two, except
that for purposes of [allocating] COMPUTING the tax under subsection (b)
of section nine hundred fifty-two, "New York [gross]  TAXABLE  estate"[,
in  the  numerator in subsection (b) of section nine hundred fifty-two,]
shall not include the value of any intangible personal  property  other-
wise  includible in the deceased individual's New York gross estate, AND
SHALL NOT INCLUDE THE AMOUNT OF ANY GIFT UNLESS SUCH  GIFT  CONSISTS  OF
REAL  OR  TANGIBLE  PERSONAL PROPERTY HAVING AN ACTUAL SITUS IN NEW YORK
STATE OR INTANGIBLE PERSONAL PROPERTY EMPLOYED IN A BUSINESS,  TRADE  OR
PROFESSION CARRIED ON IN THIS STATE.
  (d)  Works  of art on loan for exhibition. Notwithstanding the forego-
ing, the tax imposed under subsection (a) OF THIS SECTION on the  trans-
fer,  from  any  deceased  individual  who at his OR HER death was not a
resident of the state of New York, of works  of  art  having  an  actual
situs  in  the state of New York and either (i) includible in his OR HER
federal gross estate or (ii) which would be includible in his OR HER New
York gross estate pursuant to section nine hundred fifty-seven (relating
to certain limited powers of appointment) if he OR SHE were  a  resident
of  the  state  of  New  York, shall [be an amount equal to the transfer
taxes or death taxes of every character in respect of personal  property
which  would  be  imposed  on  such transfer or such works of art if the
actual situs of such works of art were the state  or  territory  of  the
United States of residence of such individual] NOT BE SUBJECT TO THE TAX
IMPOSED  BY THIS SECTION if such works of art are [sited in the state of

S. 6359--A                         254                        A. 8559--A

New York solely for exhibition purposes,] loaned [for such] TO A  PUBLIC
GALLERY  LOCATED  WITHIN  THE  STATE  OF  NEW YORK SOLELY FOR EXHIBITION
purposes [to a public gallery or museum (] BUT ONLY IF no  part  of  the
net earnings of [which] SUCH PUBLIC GALLERY OR MUSEUM inure to the bene-
fit of any private stockholder or individual[)], and [(], at the time of
the  death  of such individual[)] SUCH WORKS OF ART ARE on exhibition or
en route to or from exhibition in  such  a  public  gallery  or  museum.
[Provided  however,  that if the state or territory of the United States
of residence of such individual imposes transfer taxes or death taxes on
such works of art which are sited in the  state  of  New  York  for  the
purposes  herein  specified, then such works of art shall not be subject
to the tax imposed by this section.]
  S 6. Subsection (a) of section 971 of the tax law, as added by section
17 of part A of chapter 389 of the laws of 1997, is amended to  read  as
follows:
  (a)  Returns  by executor. (1) Residents. In the case of the estate of
every individual dying on or after [February first, two thousand]  APRIL
FIRST,  TWO THOUSAND FOURTEEN, who at his or her death was a resident of
New York state, [if] his or her executor [is required to file  a  return
with  respect to the federal estate tax (determined as if the limitation
contained in subsection (a) of section nine hundred  fifty-one  of  this
article were applicable in determining whether such executor is required
to  file  such  federal  return), the executor] shall make a return with
respect to the estate tax imposed by section nine hundred  fifty-two  of
this  article  IF  THE DECEDENT'S FEDERAL GROSS ESTATE, INCREASED BY THE
AMOUNT OF ANY GIFT INCLUDIBLE IN HIS  OR  HER  NEW  YORK  GROSS  ESTATE,
EXCEEDS  THE BASIC EXCLUSION AMOUNT APPLICABLE TO THE DECEDENT'S DATE OF
DEATH IN PARAGRAPH TWO OF SUBSECTION (C) OF SECTION NINE HUNDRED  FIFTY-
TWO OF THIS ARTICLE.
  (2)  Nonresidents. In the case of the estate of every individual DYING
ON OR AFTER APRIL FIRST, TWO THOUSAND FOURTEEN, who at his or her  death
was  not  a  resident  of  New  York  state,  [if his or her executor is
required to file a return with respect to the federal estate tax (deter-
mined as if the limitation contained in subsection (a) of  section  nine
hundred fifty-one of this article were applicable in determining whether
such  executor  is  required  to  file such federal return) and] if such
individual's federal gross estate includes  real  or  tangible  personal
property  having  an  actual situs in New York state, the executor shall
make a return with respect to the estate tax  imposed  by  section  nine
hundred  sixty  of  this article IF THE DECEDENT'S FEDERAL GROSS ESTATE,
INCREASED BY THE AMOUNT OF ANY GIFT INCLUDIBLE IN HIS OR  HER  NEW  YORK
GROSS  ESTATE,  EXCEEDS  THE  BASIC  EXCLUSION  AMOUNT APPLICABLE TO THE
DECEDENT'S DATE OF DEATH IN PARAGRAPH TWO OF SUBSECTION (C)  OF  SECTION
NINE HUNDRED FIFTY-TWO OF THIS ARTICLE.
  S  7.  Subsection  (a)  of  section  997 of the tax law, as amended by
section 27 of part A of chapter 389 of the laws of 1997, is  amended  to
read as follows:
  (a)  The  phrase  "adjusted  gross  estate" shall be read as "adjusted
federal gross estate determined  without  reference  to  paragraphs  (1)
[and], (2) AND (3) of subsection (a) of section nine hundred fifty-four"
of this article.
  S 8. Article 26-B of the tax law is REPEALED.
  S  9.  Section  2 of chapter 1013 of the laws of 1962 amending the tax
law relating to imposing a tax on the transfer of estates  of  decedents
dying on or after April first, nineteen hundred sixty-three is REPEALED.

S. 6359--A                         255                        A. 8559--A

  S  10. The tax law is amended by adding a new section 999-a to read as
follows:
  S  999-A. APPENDIX TO ARTICLE TWENTY-SIX.  THE FOLLOWING PROVISIONS OF
THE UNITED STATES INTERNAL REVENUE CODE OF  1986,  WITH  ALL  AMENDMENTS
ENACTED  ON  OR BEFORE JANUARY FIRST, TWO THOUSAND FOURTEEN, SHALL APPLY
TO THE TAX IMPOSED BY THIS ARTICLE, TO  THE  EXTENT  SPECIFIED  IN  THIS
ARTICLE.
  S 2031. DEFINITION OF GROSS ESTATE.
  (A)  GENERAL.--THE  VALUE OF THE GROSS ESTATE OF THE DECEDENT SHALL BE
DETERMINED BY INCLUDING TO THE EXTENT PROVIDED FOR  IN  THIS  PART,  THE
VALUE AT THE TIME OF HIS DEATH OF ALL PROPERTY, REAL OR PERSONAL, TANGI-
BLE OR INTANGIBLE, WHEREVER SITUATED.
  (B)  VALUATION OF UNLISTED STOCK AND SECURITIES.--IN THE CASE OF STOCK
AND SECURITIES OF A CORPORATION THE VALUE OF WHICH, BY REASON  OF  THEIR
NOT  BEING  LISTED  ON AN EXCHANGE AND BY REASON OF THE ABSENCE OF SALES
THEREOF, CANNOT BE DETERMINED WITH REFERENCE TO BID AND ASKED PRICES  OR
WITH REFERENCE TO SALES PRICES, THE VALUE THEREOF SHALL BE DETERMINED BY
TAKING  INTO  CONSIDERATION, IN ADDITION TO ALL OTHER FACTORS, THE VALUE
OF STOCK OR SECURITIES OF CORPORATIONS ENGAGED IN THE SAME OR A  SIMILAR
LINE OF BUSINESS WHICH ARE LISTED ON AN EXCHANGE.
  (C)  ESTATE  TAX WITH RESPECT TO LAND SUBJECT TO A QUALIFIED CONSERVA-
TION EASEMENT.--
  (1) IN GENERAL.--IF THE EXECUTOR MAKES THE ELECTION DESCRIBED IN PARA-
GRAPH (6), THEN, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION,  THERE
SHALL BE EXCLUDED FROM THE GROSS ESTATE THE LESSER OF--
  (A) THE APPLICABLE PERCENTAGE OF THE VALUE OF LAND SUBJECT TO A QUALI-
FIED CONSERVATION EASEMENT, REDUCED BY THE AMOUNT OF ANY DEDUCTION UNDER
SECTION 2055(F) WITH RESPECT TO SUCH LAND, OR
  (B) THE EXCLUSION LIMITATION.
  (2)  APPLICABLE  PERCENTAGE.--FOR  PURPOSES OF PARAGRAPH (1), THE TERM
"APPLICABLE PERCENTAGE" MEANS 40 PERCENT REDUCED (BUT NOT BELOW ZERO) BY
2 PERCENTAGE POINTS FOR EACH PERCENTAGE POINT (OR FRACTION  THEREOF)  BY
WHICH  THE  VALUE OF THE QUALIFIED CONSERVATION EASEMENT IS LESS THAN 30
PERCENT OF THE VALUE OF THE LAND (DETERMINED WITHOUT REGARD TO THE VALUE
OF SUCH EASEMENT AND REDUCED BY THE VALUE OF  ANY  RETAINED  DEVELOPMENT
RIGHT (AS DEFINED IN PARAGRAPH (5)). THE VALUES TAKEN INTO ACCOUNT UNDER
THE  PRECEDING  SENTENCE  SHALL  BE  SUCH  VALUES  AS OF THE DATE OF THE
CONTRIBUTION REFERRED TO IN PARAGRAPH (8)(B).
  (3) EXCLUSION LIMITATION.--FOR PURPOSES OF PARAGRAPH (1),  THE  EXCLU-
SION  LIMITATION  IS  THE  LIMITATION  DETERMINED IN ACCORDANCE WITH THE
FOLLOWING TABLE:
IN THE CASE OF ESTATES OF DECEDENTS DYING THE EXCLUSION LIMITATION
DURING:                                   IS:
1998..................................... 100,000
1999..................................... 200,000
2000..................................... 300,000
2001..................................... 400,000
2002 OR THEREAFTER....................... 500,000
  (4) TREATMENT OF CERTAIN INDEBTEDNESS.--
  (A) IN GENERAL.--THE EXCLUSION PROVIDED IN  PARAGRAPH  (1)  SHALL  NOT
APPLY TO THE EXTENT THAT THE LAND IS DEBT-FINANCED PROPERTY.
  (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  DEBT-FINANCED  PROPERTY.--THE TERM "DEBT-FINANCED PROPERTY" MEANS
ANY PROPERTY WITH RESPECT TO WHICH THERE IS AN ACQUISITION  INDEBTEDNESS
(AS DEFINED IN CLAUSE (II)) ON THE DATE OF THE DECEDENT'S DEATH.

S. 6359--A                         256                        A. 8559--A

  (II)  ACQUISITION  INDEBTEDNESS.--THE  TERM "ACQUISITION INDEBTEDNESS"
MEANS, WITH RESPECT TO DEBT-FINANCED PROPERTY, THE UNPAID AMOUNT OF--
  (I) THE INDEBTEDNESS INCURRED BY THE DONOR IN ACQUIRING SUCH PROPERTY,
  (II) THE INDEBTEDNESS INCURRED BEFORE THE ACQUISITION OF SUCH PROPERTY
IF  SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH ACQUISI-
TION,
  (III) THE INDEBTEDNESS INCURRED AFTER THE ACQUISITION OF SUCH PROPERTY
IF SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH  ACQUISI-
TION  AND THE INCURRENCE OF SUCH INDEBTEDNESS WAS REASONABLY FORESEEABLE
AT THE TIME OF SUCH ACQUISITION, AND
  (IV) THE EXTENSION, RENEWAL, OR REFINANCING OF AN ACQUISITION  INDEBT-
EDNESS.
  (5) TREATMENT OF RETAINED DEVELOPMENT RIGHT.--
  (A)  IN  GENERAL.--PARAGRAPH  (1)  SHALL NOT APPLY TO THE VALUE OF ANY
DEVELOPMENT RIGHT RETAINED BY THE DONOR IN THE CONVEYANCE OF A QUALIFIED
CONSERVATION EASEMENT.
  (B) TERMINATION OF RETAINED DEVELOPMENT  RIGHT.--IF  EVERY  PERSON  IN
BEING  WHO  HAS  AN  INTEREST (WHETHER OR NOT IN POSSESSION) IN THE LAND
EXECUTES AN AGREEMENT TO EXTINGUISH  PERMANENTLY  SOME  OR  ALL  OF  ANY
DEVELOPMENT  RIGHTS  (AS  DEFINED  IN  SUBPARAGRAPH (D)) RETAINED BY THE
DONOR ON OR BEFORE THE DATE FOR FILING THE RETURN OF THE TAX IMPOSED  BY
SECTION  2001,  THEN  ANY  TAX  IMPOSED BY SECTION 2001 SHALL BE REDUCED
ACCORDINGLY. SUCH AGREEMENT SHALL BE FILED WITH THE RETURN  OF  THE  TAX
IMPOSED  BY  SECTION  2001.  THE  AGREEMENT SHALL BE IN SUCH FORM AS THE
SECRETARY SHALL PRESCRIBE.
  (C) ADDITIONAL TAX.--ANY FAILURE TO IMPLEMENT THE AGREEMENT  DESCRIBED
IN SUBPARAGRAPH (B) NOT LATER THAN THE EARLIER OF--
  (I)  THE DATE WHICH IS 2 YEARS AFTER THE DATE OF THE DECEDENT'S DEATH,
OR
  (II) THE DATE OF THE SALE  OF  SUCH  LAND  SUBJECT  TO  THE  QUALIFIED
CONSERVATION EASEMENT,
  SHALL  RESULT  IN THE IMPOSITION OF AN ADDITIONAL TAX IN THE AMOUNT OF
THE TAX WHICH WOULD HAVE BEEN DUE ON  THE  RETAINED  DEVELOPMENT  RIGHTS
SUBJECT  TO SUCH AGREEMENT. SUCH ADDITIONAL TAX SHALL BE DUE AND PAYABLE
ON THE LAST DAY OF THE 6TH MONTH FOLLOWING SUCH DATE.
  (D) DEVELOPMENT RIGHT DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,  THE
TERM  "DEVELOPMENT RIGHT" MEANS ANY RIGHT TO USE THE LAND SUBJECT TO THE
QUALIFIED CONSERVATION EASEMENT IN WHICH SUCH RIGHT IS RETAINED FOR  ANY
COMMERCIAL  PURPOSE  WHICH IS NOT SUBORDINATE TO AND DIRECTLY SUPPORTIVE
OF THE USE OF SUCH LAND AS A FARM FOR FARMING PURPOSES (WITHIN THE MEAN-
ING OF SECTION 2032A(E)(5)).
  (6) ELECTION.--THE ELECTION UNDER THIS SUBSECTION SHALL BE MADE ON  OR
BEFORE  THE DUE DATE (INCLUDING EXTENSIONS) FOR FILING THE RETURN OF TAX
IMPOSED BY SECTION 2001 AND SHALL  BE  MADE  ON  SUCH  RETURN.  SUCH  AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (7)  CALCULATION  OF  ESTATE TAX DUE.--AN EXECUTOR MAKING THE ELECTION
DESCRIBED IN PARAGRAPH (6) SHALL, FOR PURPOSES OF CALCULATING THE AMOUNT
OF TAX IMPOSED BY SECTION 2001, INCLUDE THE  VALUE  OF  ANY  DEVELOPMENT
RIGHT (AS DEFINED IN PARAGRAPH (5)) RETAINED BY THE DONOR IN THE CONVEY-
ANCE  OF SUCH QUALIFIED CONSERVATION EASEMENT. THE COMPUTATION OF TAX ON
ANY RETAINED DEVELOPMENT RIGHT PRESCRIBED IN  THIS  PARAGRAPH  SHALL  BE
DONE IN SUCH MANNER AND ON SUCH FORMS AS THE SECRETARY SHALL PRESCRIBE.
  (8) DEFINITIONS.--FOR PURPOSES OF THIS SUBSECTION--
  (A) LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.--THE TERM "LAND
SUBJECT TO A QUALIFIED CONSERVATION EASEMENT" MEANS LAND--

S. 6359--A                         257                        A. 8559--A

  (I)  WHICH  IS  LOCATED  IN THE UNITED STATES OR ANY POSSESSION OF THE
UNITED STATES,
  (II)  WHICH  WAS  OWNED  BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S
FAMILY AT ALL TIMES DURING THE 3-YEAR PERIOD ENDING ON THE DATE  OF  THE
DECEDENT'S DEATH, AND
  (III) WITH RESPECT TO WHICH A QUALIFIED CONSERVATION EASEMENT HAS BEEN
MADE  BY  AN INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (C), AS OF THE DATE OF
THE ELECTION DESCRIBED IN PARAGRAPH (6).
  (B) QUALIFIED CONSERVATION EASEMENT.--THE TERM "QUALIFIED CONSERVATION
EASEMENT" MEANS A QUALIFIED CONSERVATION  CONTRIBUTION  (AS  DEFINED  IN
SECTION  170(H)(1)) OF A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN
SECTION 170(H)(2)(C)), EXCEPT THAT CLAUSE (IV) OF  SECTION  170(H)(4)(A)
SHALL  NOT  APPLY,  AND  THE  RESTRICTION  ON  THE  USE OF SUCH INTEREST
DESCRIBED IN SECTION 170(H)(2)(C) SHALL INCLUDE A  PROHIBITION  ON  MORE
THAN A DE MINIMIS USE FOR A COMMERCIAL RECREATIONAL ACTIVITY.
  (C) INDIVIDUAL DESCRIBED.--AN INDIVIDUAL IS DESCRIBED IN THIS SUBPARA-
GRAPH IF SUCH INDIVIDUAL IS--
  (I) THE DECEDENT,
  (II) A MEMBER OF THE DECEDENT'S FAMILY,
  (III) THE EXECUTOR OF THE DECEDENT'S ESTATE, OR
  (IV)  THE  TRUSTEE OF A TRUST THE CORPUS OF WHICH INCLUDES THE LAND TO
BE SUBJECT TO THE QUALIFIED CONSERVATION EASEMENT.
  (D) MEMBER OF FAMILY.--THE TERM  "MEMBER  OF  THE  DECEDENT'S  FAMILY"
MEANS  ANY  MEMBER  OF THE FAMILY (AS DEFINED IN SECTION 2032A(E)(2)) OF
THE DECEDENT.
  (9) TREATMENT OF EASEMENTS GRANTED AFTER DEATH.--IN ANY CASE IN  WHICH
THE  QUALIFIED  CONSERVATION  EASEMENT  IS GRANTED AFTER THE DATE OF THE
DECEDENT'S DEATH AND ON OR BEFORE THE DUE  DATE  (INCLUDING  EXTENSIONS)
FOR  FILING  THE  RETURN  OF  TAX IMPOSED BY SECTION 2001, THE DEDUCTION
UNDER SECTION 2055(F) WITH RESPECT TO SUCH EASEMENT SHALL BE ALLOWED  TO
THE  ESTATE BUT ONLY IF NO CHARITABLE DEDUCTION IS ALLOWED UNDER CHAPTER
1 TO ANY PERSON WITH RESPECT TO THE GRANT OF SUCH EASEMENT.
  (10) APPLICATION OF THIS SECTION TO INTERESTS IN PARTNERSHIPS,  CORPO-
RATIONS, AND TRUSTS.--THIS SECTION SHALL APPLY TO AN INTEREST IN A PART-
NERSHIP,  CORPORATION,  OR TRUST IF AT LEAST 30 PERCENT OF THE ENTITY IS
OWNED (DIRECTLY OR INDIRECTLY) BY THE DECEDENT, AS DETERMINED UNDER  THE
RULES DESCRIBED IN SECTION 2057(E)(3).
  (D) CROSS REFERENCE.--
  FOR  EXECUTOR'S RIGHT TO BE FURNISHED ON REQUEST A STATEMENT REGARDING
ANY VALUATION MADE BY THE SECRETARY WITHIN THE GROSS ESTATE, SEE SECTION
7517.
  S 2032. ALTERNATE VALUATION.
  (A) GENERAL.--THE VALUE OF THE GROSS ESTATE MAY BE DETERMINED, IF  THE
EXECUTOR  SO  ELECTS,  BY VALUING ALL THE PROPERTY INCLUDED IN THE GROSS
ESTATE AS FOLLOWS:
  (1) IN THE CASE OF PROPERTY DISTRIBUTED, SOLD, EXCHANGED, OR OTHERWISE
DISPOSED OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S  DEATH  SUCH  PROPERTY
SHALL BE VALUED AS OF THE DATE OF DISTRIBUTION, SALE, EXCHANGE, OR OTHER
DISPOSITION.
  (2)  IN  THE  CASE  OF  PROPERTY  NOT DISTRIBUTED, SOLD, EXCHANGED, OR
OTHERWISE DISPOSED OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S  DEATH  SUCH
PROPERTY  SHALL  BE  VALUED AS OF THE DATE 6 MONTHS AFTER THE DECEDENT'S
DEATH.
  (3) ANY INTEREST OR ESTATE WHICH IS AFFECTED BY  MERE  LAPSE  OF  TIME
SHALL  BE  INCLUDED AT ITS VALUE AS OF THE TIME OF DEATH (INSTEAD OF THE

S. 6359--A                         258                        A. 8559--A

LATER DATE) WITH ADJUSTMENT FOR ANY DIFFERENCE IN ITS VALUE  AS  OF  THE
LATER DATE NOT DUE TO MERE LAPSE OF TIME.
  (B)  SPECIAL RULES.--NO DEDUCTION UNDER THIS CHAPTER OF ANY ITEM SHALL
BE ALLOWED IF ALLOWANCE FOR SUCH ITEMS IS IN EFFECT GIVEN BY THE  ALTER-
NATE   VALUATION  PROVIDED  BY  THIS  SECTION.  WHEREVER  IN  ANY  OTHER
SUBSECTION OR SECTION OF THIS CHAPTER REFERENCE IS MADE TO THE VALUE  OF
PROPERTY  AT  THE  TIME OF THE DECEDENT'S DEATH, SUCH REFERENCE SHALL BE
DEEMED TO REFER TO THE VALUE OF SUCH PROPERTY USED  IN  DETERMINING  THE
VALUE  OF  THE GROSS ESTATE. IN CASE OF AN ELECTION MADE BY THE EXECUTOR
UNDER THIS SECTION, THEN--
  (1) FOR PURPOSES OF THE CHARITABLE DEDUCTION  UNDER  SECTION  2055  OR
2106(A)(2), ANY BEQUEST, LEGACY, DEVISE, OR TRANSFER ENUMERATED THEREIN,
AND
  (2)  FOR  THE PURPOSE OF THE MARITAL DEDUCTION UNDER SECTION 2056, ANY
INTEREST IN PROPERTY PASSING TO THE SURVIVING SPOUSE,
  SHALL BE VALUED AS OF THE DATE OF THE DECEDENT'S DEATH WITH ADJUSTMENT
FOR ANY DIFFERENCE IN VALUE (NOT DUE TO MERE LAPSE OF TIME OR THE OCCUR-
RENCE OR NONOCCURRENCE OF A CONTINGENCY) OF THE PROPERTY AS OF THE  DATE
6  MONTHS AFTER THE DECEDENT'S DEATH (SUBSTITUTING, IN THE CASE OF PROP-
ERTY DISTRIBUTED BY THE EXECUTOR OR  TRUSTEE,  OR  SOLD,  EXCHANGED,  OR
OTHERWISE DISPOSED OF, DURING SUCH 6-MONTH PERIOD, THE DATE THEREOF).
  (C)  ELECTION  MUST DECREASE GROSS ESTATE AND ESTATE TAX.--NO ELECTION
MAY BE MADE UNDER THIS SECTION WITH RESPECT TO  AN  ESTATE  UNLESS  SUCH
ELECTION WILL DECREASE--
  (1) THE VALUE OF THE GROSS ESTATE, AND
  (2)  THE SUM OF THE TAX IMPOSED BY THIS CHAPTER AND THE TAX IMPOSED BY
CHAPTER 13 WITH RESPECT TO PROPERTY INCLUDIBLE IN THE  DECEDENT'S  GROSS
ESTATE (REDUCED BY CREDITS ALLOWABLE AGAINST SUCH TAXES).
  (D) ELECTION.--
  (1)  IN  GENERAL.--THE  ELECTION PROVIDED FOR IN THIS SECTION SHALL BE
MADE BY THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY  THIS  CHAPTER.
SUCH ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (2)  EXCEPTION.--NO  ELECTION  MAY  BE MADE UNDER THIS SECTION IF SUCH
RETURN IS FILED MORE THAN 1  YEAR  AFTER  THE  TIME  PRESCRIBED  BY  LAW
(INCLUDING EXTENSIONS) FOR FILING SUCH RETURN.
  S 2032A. VALUATION OF CERTAIN FARM, ETC., REAL PROPERTY.
  (A) VALUE BASED ON USE UNDER WHICH PROPERTY QUALIFIES.--
  (1) GENERAL RULE.--IF--
  (A)  THE DECEDENT WAS (AT THE TIME OF HIS DEATH) A CITIZEN OR RESIDENT
OF THE UNITED STATES, AND
  (B) THE EXECUTOR ELECTS THE APPLICATION OF THIS SECTION AND FILES  THE
AGREEMENT REFERRED TO IN SUBSECTION (D)(2),
  THEN,  FOR PURPOSES OF THIS CHAPTER, THE VALUE OF QUALIFIED REAL PROP-
ERTY SHALL BE ITS VALUE FOR THE USE  UNDER  WHICH  IT  QUALIFIES,  UNDER
SUBSECTION (B), AS QUALIFIED REAL PROPERTY.
  (2)  LIMITATION  ON  AGGREGATE  REDUCTION  IN  FAIR MARKET VALUE.--THE
AGGREGATE DECREASE IN THE VALUE OF QUALIFIED REAL  PROPERTY  TAKEN  INTO
ACCOUNT  FOR PURPOSES OF THIS CHAPTER WHICH RESULTS FROM THE APPLICATION
OF PARAGRAPH (1) WITH RESPECT TO ANY DECEDENT SHALL NOT EXCEED $750,000.
  (3) INFLATION ADJUSTMENT.--IN THE CASE OF ESTATES OF  DECEDENTS  DYING
IN  A  CALENDAR  YEAR AFTER 1998, THE $750,000 AMOUNT CONTAINED IN PARA-
GRAPH (2) SHALL BE INCREASED BY AN AMOUNT EQUAL TO--
  (A) $750,000, MULTIPLIED BY
  (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
SUCH CALENDAR YEAR BY SUBSTITUTING "CALENDAR YEAR  1997"  FOR  "CALENDAR
YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.

S. 6359--A                         259                        A. 8559--A

  IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
PLE OF $10,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST MULTIPLE
OF $10,000.
  (B) QUALIFIED REAL PROPERTY.--
  (1)  IN  GENERAL.--FOR  PURPOSES  OF THIS SECTION, THE TERM "QUALIFIED
REAL PROPERTY" MEANS REAL PROPERTY LOCATED IN THE  UNITED  STATES  WHICH
WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR OF THE
DECEDENT  AND WHICH, ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED
FOR A QUALIFIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S  FAMI-
LY, BUT ONLY IF--
  (A)  50  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
CONSISTS OF THE ADJUSTED VALUE OF REAL OR PERSONAL PROPERTY WHICH--
  (I) ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED FOR  A  QUALI-
FIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S FAMILY, AND
  (II) WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR
OF THE DECEDENT.
  (B)  25  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
CONSISTS OF THE ADJUSTED VALUE OF REAL PROPERTY WHICH MEETS THE REQUIRE-
MENTS OF SUBPARAGRAPHS (A)(II) AND (C),
  (C) DURING THE 8-YEAR PERIOD ENDING ON  THE  DATE  OF  THE  DECEDENT'S
DEATH THERE HAVE BEEN PERIODS AGGREGATING 5 YEARS OR MORE DURING WHICH--
  (I)  SUCH  REAL  PROPERTY WAS OWNED BY THE DECEDENT OR A MEMBER OF THE
DECEDENT'S FAMILY AND USED FOR A QUALIFIED USE  BY  THE  DECEDENT  OR  A
MEMBER OF THE DECEDENT'S FAMILY, AND
  (II)  THERE  WAS MATERIAL PARTICIPATION BY THE DECEDENT OR A MEMBER OF
THE DECEDENT'S FAMILY IN THE OPERATION OF THE FARM  OR  OTHER  BUSINESS,
AND
  (D)  SUCH  REAL PROPERTY IS DESIGNATED IN THE AGREEMENT REFERRED TO IN
SUBSECTION (D)(2).
  (2) QUALIFIED USE.--FOR PURPOSES OF THIS SECTION, THE TERM  "QUALIFIED
USE" MEANS THE DEVOTION OF THE PROPERTY TO ANY OF THE FOLLOWING:
  (A) USE AS A FARM FOR FARMING PURPOSES, OR
  (B)  USE  IN  A  TRADE OR BUSINESS OTHER THAN THE TRADE OR BUSINESS OF
FARMING.
  (3) ADJUSTED VALUE.--FOR PURPOSES OF PARAGRAPH (1), THE TERM "ADJUSTED
VALUE" MEANS--
  (A) IN THE CASE OF THE GROSS ESTATE, THE VALUE OF THE GROSS ESTATE FOR
PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD  TO  THIS  SECTION),
REDUCED  BY  ANY AMOUNTS ALLOWABLE AS A DEDUCTION UNDER PARAGRAPH (4) OF
SECTION 2053(A), OR
  (B) IN THE CASE OF ANY REAL OR PERSONAL PROPERTY, THE  VALUE  OF  SUCH
PROPERTY FOR PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD TO THIS
SECTION),  REDUCED BY ANY AMOUNTS ALLOWABLE AS A DEDUCTION IN RESPECT OF
SUCH PROPERTY UNDER PARAGRAPH (4) OF SECTION 2053(A).
  (4) DECEDENTS WHO ARE RETIRED OR DISABLED.--
  (A) IN GENERAL.--IF, ON THE DATE OF THE DECEDENT'S DEATH, THE REQUIRE-
MENTS OF PARAGRAPH (1)(C)(II) WITH RESPECT TO THE DECEDENT FOR ANY PROP-
ERTY ARE NOT MET, AND THE DECEDENT--
  (I) WAS RECEIVING OLD-AGE BENEFITS UNDER TITLE II OF THE SOCIAL  SECU-
RITY ACT FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE, OR
  (II) WAS DISABLED FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE,
  THEN  PARAGRAPH (1)(C)(II) SHALL BE APPLIED WITH RESPECT TO SUCH PROP-
ERTY BY SUBSTITUTING "THE DATE ON WHICH THE LONGER  OF  SUCH  CONTINUOUS
PERIODS  BEGAN"  FOR  "THE  DATE  OF  THE DECEDENT'S DEATH" IN PARAGRAPH
(1)(C).

S. 6359--A                         260                        A. 8559--A

  (B) DISABLED DEFINED.--FOR PURPOSES OF SUBPARAGRAPH (A), AN INDIVIDUAL
SHALL BE DISABLED IF SUCH INDIVIDUAL HAS A MENTAL OR PHYSICAL IMPAIRMENT
WHICH RENDERS HIM UNABLE TO MATERIALLY PARTICIPATE IN THE  OPERATION  OF
THE FARM OR OTHER BUSINESS.
  (C)   COORDINATION   WITH   RECAPTURE.--FOR   PURPOSES  OF  SUBSECTION
(C)(6)(B)(I), IF THE REQUIREMENTS OF PARAGRAPH (1)(C)(II) ARE  MET  WITH
RESPECT TO ANY DECEDENT BY REASON OF SUBPARAGRAPH (A), THE PERIOD ENDING
ON  THE  DATE  ON  WHICH  THE CONTINUOUS PERIOD TAKEN INTO ACCOUNT UNDER
SUBPARAGRAPH (A) BEGAN SHALL BE TREATED AS THE PERIOD IMMEDIATELY BEFORE
THE DECEDENT'S DEATH.
  (5) SPECIAL RULES FOR SURVIVING SPOUSES.--
  (A) IN GENERAL.--IF PROPERTY IS QUALIFIED REAL PROPERTY  WITH  RESPECT
TO  A  DECEDENT (HEREINAFTER IN THIS PARAGRAPH REFERRED TO AS THE "FIRST
DECEDENT") AND SUCH PROPERTY WAS ACQUIRED FROM OR PASSED FROM THE  FIRST
DECEDENT  TO THE SURVIVING SPOUSE OF THE FIRST DECEDENT, FOR PURPOSES OF
APPLYING THIS SUBSECTION AND SUBSECTION (C) IN THE CASE OF THE ESTATE OF
SUCH SURVIVING SPOUSE, ACTIVE MANAGEMENT OF THE FARM OR  OTHER  BUSINESS
BY  THE  SURVIVING  SPOUSE SHALL BE TREATED AS MATERIAL PARTICIPATION BY
SUCH SURVIVING SPOUSE IN THE OPERATION OF SUCH FARM OR BUSINESS.
  (B) SPECIAL RULE.--FOR THE PURPOSES OF SUBPARAGRAPH (A), THE  DETERMI-
NATION  OF  WHETHER  PROPERTY IS QUALIFIED REAL PROPERTY WITH RESPECT TO
THE FIRST DECEDENT SHALL BE MADE WITHOUT REGARD TO SUBPARAGRAPH  (D)  OF
PARAGRAPH  (1)  AND  WITHOUT  REGARD  TO  WHETHER AN ELECTION UNDER THIS
SECTION WAS MADE.
  (C) COORDINATION WITH PARAGRAPH (4).--IN ANY CASE IN WHICH  TO  DO  SO
WILL  ENABLE  THE  REQUIREMENTS  OF  PARAGRAPH (1)(C)(II) TO BE MET WITH
RESPECT TO THE SURVIVING SPOUSE,  THIS  SUBSECTION  AND  SUBSECTION  (C)
SHALL  BE  APPLIED  BY  TAKING INTO ACCOUNT ANY APPLICATION OF PARAGRAPH
(4).
  (C) TAX TREATMENT OF DISPOSITIONS AND FAILURES TO  USE  FOR  QUALIFIED
USE.--
  (1)  IMPOSITION  OF  ADDITIONAL ESTATE TAX.--IF, WITHIN 10 YEARS AFTER
THE DECEDENT'S DEATH AND BEFORE THE DEATH OF THE QUALIFIED HEIR--
  (A) THE QUALIFIED HEIR DISPOSES OF  ANY  INTEREST  IN  QUALIFIED  REAL
PROPERTY (OTHER THAN BY A DISPOSITION TO A MEMBER OF HIS FAMILY), OR
  (B)  THE QUALIFIED HEIR CEASES TO USE FOR THE QUALIFIED USE THE QUALI-
FIED REAL PROPERTY WHICH WAS ACQUIRED (OR PASSED) FROM THE DECEDENT,
  THEN, THERE IS HEREBY IMPOSED AN ADDITIONAL ESTATE TAX.
  (2) AMOUNT OF ADDITIONAL TAX.--
  (A) IN GENERAL.--THE AMOUNT OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH
(1) WITH RESPECT TO ANY INTEREST SHALL BE THE AMOUNT EQUAL TO THE LESSER
OF--
  (I) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO SUCH INTEREST, OR
  (II) THE EXCESS OF THE AMOUNT REALIZED WITH RESPECT  TO  THE  INTEREST
(OR, IN ANY CASE OTHER THAN A SALE OR EXCHANGE AT ARM'S LENGTH, THE FAIR
MARKET  VALUE OF THE INTEREST) OVER THE VALUE OF THE INTEREST DETERMINED
UNDER SUBSECTION (A).
  (B) ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO INTEREST.--FOR PURPOSES OF
SUBPARAGRAPH (A), THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO AN  INTER-
EST IS THE AMOUNT WHICH BEARS THE SAME RATIO TO THE ADJUSTED TAX DIFFER-
ENCE WITH RESPECT TO THE ESTATE (DETERMINED UNDER SUBPARAGRAPH (C)) AS--
  (I)  THE  EXCESS  OF  THE  VALUE OF SUCH INTEREST FOR PURPOSES OF THIS
CHAPTER (DETERMINED WITHOUT REGARD TO SUBSECTION (A)) OVER THE VALUE  OF
SUCH INTEREST DETERMINED UNDER SUBSECTION (A), BEARS TO
  (II) A SIMILAR EXCESS DETERMINED FOR ALL QUALIFIED REAL PROPERTY.

S. 6359--A                         261                        A. 8559--A

  (C)  ADJUSTED TAX DIFFERENCE WITH RESPECT TO THE ESTATE.--FOR PURPOSES
OF SUBPARAGRAPH (B), THE TERM "ADJUSTED TAX DIFFERENCE WITH  RESPECT  TO
THE  ESTATE"  MEANS  THE  EXCESS  OF WHAT WOULD HAVE BEEN THE ESTATE TAX
LIABILITY BUT FOR SUBSECTION (A) OVER  THE  ESTATE  TAX  LIABILITY.  FOR
PURPOSES OF THIS SUBPARAGRAPH, THE TERM "ESTATE TAX LIABILITY" MEANS THE
TAX  IMPOSED  BY  SECTION  2001 REDUCED BY THE CREDITS ALLOWABLE AGAINST
SUCH TAX.
  (D) PARTIAL DISPOSITIONS.--FOR PURPOSES OF THIS PARAGRAPH,  WHERE  THE
QUALIFIED  HEIR  DISPOSES  OF  A PORTION OF THE INTEREST ACQUIRED BY (OR
PASSING TO) SUCH HEIR (OR A PREDECESSOR QUALIFIED HEIR) OR  THERE  IS  A
CESSATION OF USE OF SUCH A PORTION--
  (I) THE VALUE DETERMINED UNDER SUBSECTION (A) TAKEN INTO ACCOUNT UNDER
SUBPARAGRAPH  (A)(II) WITH RESPECT TO SUCH PORTION SHALL BE ITS PRO RATA
SHARE OF SUCH VALUE OF SUCH INTEREST, AND
  (II) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO  THE  INTEREST  TAKEN
INTO ACCOUNT WITH RESPECT TO THE TRANSACTION INVOLVING THE SECOND OR ANY
SUCCEEDING  PORTION SHALL BE REDUCED BY THE AMOUNT OF THE TAX IMPOSED BY
THIS  SUBSECTION  WITH  RESPECT  TO  ALL  PRIOR  TRANSACTIONS  INVOLVING
PORTIONS OF SUCH INTEREST.
  (E)  SPECIAL RULE FOR DISPOSITION OF TIMBER.--IN THE CASE OF QUALIFIED
WOODLAND TO WHICH AN ELECTION UNDER SUBSECTION  (E)(13)(A)  APPLIES,  IF
THE  QUALIFIED  HEIR DISPOSES OF (OR SEVERS) ANY STANDING TIMBER ON SUCH
QUALIFIED WOODLAND--
  (I) SUCH DISPOSITION (OR SEVERANCE) SHALL BE TREATED AS A  DISPOSITION
OF A PORTION OF THE INTEREST OF THE QUALIFIED HEIR IN SUCH PROPERTY, AND
  (II)  THE  AMOUNT  OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH (1) WITH
RESPECT TO SUCH DISPOSITION SHALL BE AN AMOUNT EQUAL TO THE LESSER OF--
  (I) THE AMOUNT REALIZED ON SUCH DISPOSITION (OR,  IN  ANY  CASE  OTHER
THAN  A  SALE  OR EXCHANGE AT ARM'S LENGTH, THE FAIR MARKET VALUE OF THE
PORTION OF THE INTEREST DISPOSED OR SEVERED), OR
  (II) THE AMOUNT OF ADDITIONAL  TAX  DETERMINED  UNDER  THIS  PARAGRAPH
(WITHOUT  REGARD  TO  THIS  SUBPARAGRAPH)  IF THE ENTIRE INTEREST OF THE
QUALIFIED HEIR IN THE QUALIFIED WOODLAND HAD BEEN DISPOSED OF, LESS  THE
SUM  OF  THE  AMOUNT  OF  THE ADDITIONAL TAX IMPOSED WITH RESPECT TO ALL
PRIOR TRANSACTIONS INVOLVING SUCH WOODLAND TO  WHICH  THIS  SUBPARAGRAPH
APPLIED.
  FOR  PURPOSES OF THE PRECEDING SENTENCE, THE DISPOSITION OF A RIGHT TO
SEVER SHALL BE TREATED AS THE DISPOSITION OF THE  STANDING  TIMBER.  THE
AMOUNT  OF  ADDITIONAL  TAX  IMPOSED  UNDER PARAGRAPH (1) IN ANY CASE IN
WHICH A QUALIFIED HEIR DISPOSES OF HIS ENTIRE INTEREST IN THE  QUALIFIED
WOODLAND  SHALL  BE REDUCED BY ANY AMOUNT DETERMINED UNDER THIS SUBPARA-
GRAPH WITH RESPECT TO SUCH WOODLAND.
  (3) ONLY 1 ADDITIONAL TAX IMPOSED WITH RESPECT TO ANY  1  PORTION.--IN
THE CASE OF AN INTEREST ACQUIRED FROM (OR PASSING FROM) ANY DECEDENT, IF
SUBPARAGRAPH  (A)  OR  (B) OF PARAGRAPH (1) APPLIES TO ANY PORTION OF AN
INTEREST, SUBPARAGRAPH (B) OR (A), AS THE CASE MAY BE, OF PARAGRAPH  (1)
SHALL NOT APPLY WITH RESPECT TO THE SAME PORTION OF SUCH INTEREST.
  (4)  DUE  DATE.--THE  ADDITIONAL  TAX IMPOSED BY THIS SUBSECTION SHALL
BECOME DUE AND PAYABLE ON THE DAY WHICH IS 6 MONTHS AFTER  THE  DATE  OF
THE DISPOSITION OR CESSATION REFERRED TO IN PARAGRAPH (1).
  (5)  LIABILITY  FOR TAX; FURNISHING OF BOND.--THE QUALIFIED HEIR SHALL
BE PERSONALLY LIABLE FOR THE ADDITIONAL TAX IMPOSED BY  THIS  SUBSECTION
WITH  RESPECT  TO  HIS INTEREST UNLESS THE HEIR HAS FURNISHED BOND WHICH
MEETS THE REQUIREMENTS OF SUBSECTION (E)(11).
  (6) CESSATION OF QUALIFIED USE.--FOR  PURPOSES  OF  PARAGRAPH  (1)(B),
REAL PROPERTY SHALL CEASE TO BE USED FOR THE QUALIFIED USE IF--

S. 6359--A                         262                        A. 8559--A

  (A) SUCH PROPERTY CEASES TO BE USED FOR THE QUALIFIED USE SET FORTH IN
SUBPARAGRAPH  (A)  OR  (B) OF SUBSECTION (B)(2) UNDER WHICH THE PROPERTY
QUALIFIED UNDER SUBSECTION (B), OR
  (B)  DURING  ANY  PERIOD  OF  8  YEARS  ENDING  AFTER  THE DATE OF THE
DECEDENT'S DEATH AND BEFORE THE DATE OF THE DEATH OF THE QUALIFIED HEIR,
THERE HAD BEEN PERIODS AGGREGATING MORE THAN 3 YEARS DURING WHICH--
  (I) IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD  BY  THE
DECEDENT,  THERE  WAS  NO  MATERIAL PARTICIPATION BY THE DECEDENT OR ANY
MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER BUSINESS, AND
  (II) IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY  ANY
QUALIFIED  HEIR,  THERE  WAS NO MATERIAL PARTICIPATION BY SUCH QUALIFIED
HEIR OR ANY MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM  OR  OTHER
BUSINESS.
  (7) SPECIAL RULES.--
  (A)  NO  TAX  IF  USE BEGINS WITHIN 2 YEARS.--IF THE DATE ON WHICH THE
QUALIFIED HEIR BEGINS TO USE THE QUALIFIED REAL PROPERTY (HEREINAFTER IN
THIS SUBPARAGRAPH REFERRED TO AS THE COMMENCEMENT DATE)  IS  BEFORE  THE
DATE 2 YEARS AFTER THE DECEDENT'S DEATH--
  (I) NO TAX SHALL BE IMPOSED UNDER PARAGRAPH (1) BY REASON OF THE FAIL-
URE  BY  THE QUALIFIED HEIR TO SO USE SUCH PROPERTY BEFORE THE COMMENCE-
MENT DATE, AND
  (II) THE 10-YEAR PERIOD UNDER PARAGRAPH (1) SHALL BE EXTENDED  BY  THE
PERIOD AFTER THE DECEDENT'S DEATH AND BEFORE THE COMMENCEMENT DATE.
  (B)  ACTIVE  MANAGEMENT BY ELIGIBLE QUALIFIED HEIR TREATED AS MATERIAL
PARTICIPATION.--FOR PURPOSES OF PARAGRAPH (6)(B)(II), THE ACTIVE MANAGE-
MENT OF A FARM OR OTHER BUSINESS BY--
  (I) AN ELIGIBLE QUALIFIED HEIR, OR
  (II) A FIDUCIARY OF AN ELIGIBLE QUALIFIED  HEIR  DESCRIBED  IN  CLAUSE
(II) OR (III) OF SUBPARAGRAPH (C),
  SHALL  BE TREATED AS MATERIAL PARTICIPATION BY SUCH ELIGIBLE QUALIFIED
HEIR IN THE OPERATION OF SUCH FARM OR BUSINESS. IN THE CASE OF AN ELIGI-
BLE QUALIFIED HEIR DESCRIBED IN CLAUSE (II), (III), OR (IV) OF  SUBPARA-
GRAPH (C), THE PRECEDING SENTENCE SHALL APPLY ONLY DURING PERIODS DURING
WHICH SUCH HEIR MEETS THE REQUIREMENTS OF SUCH CLAUSE.
  (C) ELIGIBLE QUALIFIED HEIR.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
"ELIGIBLE QUALIFIED HEIR" MEANS A QUALIFIED HEIR WHO--
  (I) IS THE SURVIVING SPOUSE OF THE DECEDENT,
  (II) HAS NOT ATTAINED THE AGE OF 21,
  (III) IS DISABLED (WITHIN THE MEANING OF SUBSECTION (B)(4)(B)), OR
  (IV) IS A STUDENT.
  (D) STUDENT.--FOR PURPOSES OF SUBPARAGRAPH (C), AN INDIVIDUAL SHALL BE
TREATED AS A STUDENT WITH RESPECT TO PERIODS DURING ANY CALENDAR YEAR IF
(AND  ONLY  IF)  SUCH  INDIVIDUAL  IS  A  STUDENT (WITHIN THE MEANING OF
SECTION 152(F)(2)) FOR SUCH CALENDAR YEAR.
  (E) CERTAIN RENTS TREATED AS  QUALIFIED  USE.--FOR  PURPOSES  OF  THIS
SUBSECTION,  A  SURVIVING  SPOUSE  OR  LINEAL DESCENDANT OF THE DECEDENT
SHALL NOT BE TREATED AS FAILING TO USE  QUALIFIED  REAL  PROPERTY  IN  A
QUALIFIED  USE SOLELY BECAUSE SUCH SPOUSE OR DESCENDANT RENTS SUCH PROP-
ERTY TO A MEMBER OF THE FAMILY OF SUCH SPOUSE OR  DESCENDANT  ON  A  NET
CASH  BASIS.  FOR  PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED
CHILD OF AN INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH  INDIVIDUAL
BY BLOOD.
  (8) QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.--A QUAL-
IFIED  CONSERVATION  CONTRIBUTION (AS DEFINED IN SECTION 170(H)) BY GIFT
OR  OTHERWISE  SHALL  NOT  BE  DEEMED  A  DISPOSITION  UNDER  SUBSECTION
(C)(1)(A).

S. 6359--A                         263                        A. 8559--A

  (D) ELECTION; AGREEMENT.--
  (1)  ELECTION.--THE  ELECTION  UNDER THIS SECTION SHALL BE MADE ON THE
RETURN OF THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL  BE  MADE
IN  SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (2) AGREEMENT.--THE AGREEMENT REFERRED TO IN THIS PARAGRAPH IS A WRIT-
TEN AGREEMENT SIGNED BY EACH PERSON IN BEING WHO HAS AN INTEREST (WHETH-
ER OR NOT IN POSSESSION) IN ANY PROPERTY DESIGNATED  IN  SUCH  AGREEMENT
CONSENTING  TO  THE  APPLICATION  OF SUBSECTION (C) WITH RESPECT TO SUCH
PROPERTY.
  (3) MODIFICATION OF  ELECTION  AND  AGREEMENT  TO  BE  PERMITTED.--THE
SECRETARY  SHALL  PRESCRIBE PROCEDURES WHICH PROVIDE THAT IN ANY CASE IN
WHICH THE EXECUTOR MAKES AN ELECTION UNDER PARAGRAPH  (1)  (AND  SUBMITS
THE  AGREEMENT  REFERRED TO IN PARAGRAPH (2)) WITHIN THE TIME PRESCRIBED
THEREFOR, BUT--
  (A) THE NOTICE OF ELECTION, AS FILED, DOES NOT  CONTAIN  ALL  REQUIRED
INFORMATION, OR
  (B)  SIGNATURES OF 1 OR MORE PERSONS REQUIRED TO ENTER INTO THE AGREE-
MENT DESCRIBED IN PARAGRAPH (2) ARE NOT INCLUDED  ON  THE  AGREEMENT  AS
FILED, OR THE AGREEMENT DOES NOT CONTAIN ALL REQUIRED INFORMATION,
  THE  EXECUTOR  WILL HAVE A REASONABLE PERIOD OF TIME (NOT EXCEEDING 90
DAYS) AFTER NOTIFICATION OF SUCH FAILURES TO PROVIDE SUCH INFORMATION OR
SIGNATURES.
  (E) DEFINITIONS; SPECIAL RULES.--FOR PURPOSES OF THIS SECTION--
  (1) QUALIFIED HEIR.--THE TERM "QUALIFIED HEIR" MEANS, WITH RESPECT  TO
ANY  PROPERTY, A MEMBER OF THE DECEDENT'S FAMILY WHO ACQUIRED SUCH PROP-
ERTY (OR TO WHOM SUCH PROPERTY PASSED) FROM THE DECEDENT. IF A QUALIFIED
HEIR DISPOSES OF ANY INTEREST IN QUALIFIED REAL PROPERTY TO  ANY  MEMBER
OF  HIS FAMILY, SUCH MEMBER SHALL THEREAFTER BE TREATED AS THE QUALIFIED
HEIR WITH RESPECT TO SUCH INTEREST.
  (2) MEMBER OF FAMILY.--THE TERM "MEMBER OF  THE  FAMILY"  MEANS,  WITH
RESPECT TO ANY INDIVIDUAL, ONLY--
  (A) AN ANCESTOR OF SUCH INDIVIDUAL,
  (B) THE SPOUSE OF SUCH INDIVIDUAL,
  (C)  A  LINEAL  DESCENDANT  OF  SUCH  INDIVIDUAL, OF SUCH INDIVIDUAL'S
SPOUSE, OR OF A PARENT OF SUCH INDIVIDUAL, OR
  (D) THE SPOUSE OF ANY LINEAL DESCENDANT DESCRIBED IN SUBPARAGRAPH (C).
  FOR PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED CHILD OF  AN
INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH INDIVIDUAL BY BLOOD.
  (3)  CERTAIN  REAL  PROPERTY  INCLUDED.--IN  THE CASE OF REAL PROPERTY
WHICH MEETS THE REQUIREMENTS OF SUBPARAGRAPH (C) OF  SUBSECTION  (B)(1),
RESIDENTIAL  BUILDINGS  AND  RELATED  IMPROVEMENTS ON SUCH REAL PROPERTY
OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF SUCH REAL PROPERTY
OR BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR THE PURPOSE OF  OPER-
ATING OR MAINTAINING SUCH REAL PROPERTY, AND ROADS, BUILDINGS, AND OTHER
STRUCTURES  AND  IMPROVEMENTS  FUNCTIONALLY RELATED TO THE QUALIFIED USE
SHALL BE TREATED AS REAL PROPERTY DEVOTED TO THE QUALIFIED USE.
  (4) FARM.--THE TERM "FARM"  INCLUDES  STOCK,  DAIRY,  POULTRY,  FRUIT,
FURBEARING  ANIMAL,  AND  TRUCK  FARMS, PLANTATIONS, RANCHES, NURSERIES,
RANGES, GREENHOUSES OR OTHER SIMILAR STRUCTURES USED PRIMARILY  FOR  THE
RAISING  OF  AGRICULTURAL OR HORTICULTURAL COMMODITIES, AND ORCHARDS AND
WOODLANDS.
  (5) FARMING PURPOSES.--THE TERM "FARMING PURPOSES" MEANS-
  (A) CULTIVATING THE SOIL OR RAISING OR HARVESTING ANY AGRICULTURAL  OR
HORTICULTURAL  COMMODITY  (INCLUDING  THE  RAISING,  SHEARING,  FEEDING,
CARING FOR, TRAINING, AND MANAGEMENT OF ANIMALS) ON A FARM;

S. 6359--A                         264                        A. 8559--A

  (B) HANDLING, DRYING, PACKING, GRADING, OR STORING ON A FARM ANY AGRI-
CULTURAL OR HORTICULTURAL COMMODITY IN  ITS  UNMANUFACTURED  STATE,  BUT
ONLY  IF  THE  OWNER, TENANT, OR OPERATOR OF THE FARM REGULARLY PRODUCES
MORE THAN ONE-HALF OF THE COMMODITY SO TREATED; AND
  (C)(I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
  (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
  (6)  MATERIAL  PARTICIPATION.--MATERIAL  PARTICIPATION SHALL BE DETER-
MINED IN A MANNER SIMILAR TO THE MANNER USED FOR PURPOSES  OF  PARAGRAPH
(1) OF SECTION 1402(A) (RELATING TO NET EARNINGS FROM SELF-EMPLOYMENT).
  (7) METHOD OF VALUING FARMS.--
  (A)  IN GENERAL.--EXCEPT AS PROVIDED IN SUBPARAGRAPH (B), THE VALUE OF
A FARM FOR FARMING PURPOSES SHALL BE DETERMINED BY DIVIDING--
  (I) THE EXCESS OF THE AVERAGE ANNUAL GROSS CASH RENTAL FOR  COMPARABLE
LAND  USED FOR FARMING PURPOSES AND LOCATED IN THE LOCALITY OF SUCH FARM
OVER THE AVERAGE ANNUAL STATE AND  LOCAL  REAL  ESTATE  TAXES  FOR  SUCH
COMPARABLE LAND, BY
  (II)  THE  AVERAGE  ANNUAL EFFECTIVE INTEREST RATE FOR ALL NEW FEDERAL
LAND BANK LOANS.
  FOR PURPOSES OF THE PRECEDING SENTENCE, EACH AVERAGE  ANNUAL  COMPUTA-
TION  SHALL  BE  MADE  ON  THE BASIS OF THE 5 MOST RECENT CALENDAR YEARS
ENDING BEFORE THE DATE OF THE DECEDENT'S DEATH.
  (B) VALUE BASED ON NET SHARE RENTAL IN CERTAIN CASES.--
  (I) IN GENERAL.--IF THERE IS NO COMPARABLE LAND FROM WHICH THE AVERAGE
ANNUAL GROSS CASH RENTAL MAY BE DETERMINED BUT THERE IS COMPARABLE  LAND
FROM  WHICH THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED, SUBPARAGRAPH
(A)(I) SHALL BE  APPLIED  BY  SUBSTITUTING  "AVERAGE  ANNUAL  NET  SHARE
RENTAL" FOR "AVERAGE ANNUAL GROSS CASH RENTAL".
  (II)  NET SHARE RENTAL.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM "NET
SHARE RENTAL" MEANS THE EXCESS OF--
  (I) THE VALUE OF THE PRODUCE RECEIVED BY THE LESSOR  OF  THE  LAND  ON
WHICH SUCH PRODUCE IS GROWN, OVER
  (II)  THE CASH OPERATING EXPENSES OF GROWING SUCH PRODUCE WHICH, UNDER
THE LEASE, ARE PAID BY THE LESSOR.
  (C) EXCEPTION.--THE FORMULA PROVIDED BY SUBPARAGRAPH (A) SHALL NOT  BE
USED--
  (I)  WHERE  IT  IS  ESTABLISHED  THAT THERE IS NO COMPARABLE LAND FROM
WHICH THE AVERAGE ANNUAL GROSS CASH RENTAL MAY BE DETERMINED, OR
  (II) WHERE THE EXECUTOR ELECTS TO HAVE THE VALUE OF THE FARM FOR FARM-
ING PURPOSES DETERMINED AND THAT THERE IS NO COMPARABLE LAND FROM  WHICH
THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED UNDER PARAGRAPH (8).
  (8)  METHOD  OF  VALUING CLOSELY HELD BUSINESS INTERESTS, ETC.--IN ANY
CASE TO WHICH PARAGRAPH (7)(A) DOES NOT  APPLY,  THE  FOLLOWING  FACTORS
SHALL APPLY IN DETERMINING THE VALUE OF ANY QUALIFIED REAL PROPERTY:
  (A) THE CAPITALIZATION OF INCOME WHICH THE PROPERTY CAN BE EXPECTED TO
YIELD  FOR  FARMING  OR CLOSELY HELD BUSINESS PURPOSES OVER A REASONABLE
PERIOD OF TIME  UNDER  PRUDENT  MANAGEMENT  USING  TRADITIONAL  CROPPING
PATTERNS  FOR  THE  AREA,  TAKING  INTO  ACCOUNT  SOIL CAPACITY, TERRAIN
CONFIGURATION, AND SIMILAR FACTORS,
  (B) THE CAPITALIZATION OF THE FAIR RENTAL VALUE OF THE LAND FOR  FARM-
LAND OR CLOSELY HELD BUSINESS PURPOSES,
  (C)  ASSESSED  LAND VALUES IN A STATE WHICH PROVIDES A DIFFERENTIAL OR
USE VALUE ASSESSMENT LAW FOR FARMLAND OR CLOSELY HELD BUSINESS,
  (D) COMPARABLE SALES OF OTHER FARM OR CLOSELY HELD  BUSINESS  LAND  IN
THE  SAME  GEOGRAPHICAL  AREA  FAR ENOUGH REMOVED FROM A METROPOLITAN OR
RESORT AREA SO THAT NONAGRICULTURAL USE IS NOT A SIGNIFICANT  FACTOR  IN
THE SALES PRICE, AND

S. 6359--A                         265                        A. 8559--A

  (E)  ANY  OTHER  FACTOR  WHICH  FAIRLY VALUES THE FARM OR CLOSELY HELD
BUSINESS VALUE OF THE PROPERTY.
  (9)  PROPERTY ACQUIRED FROM DECEDENT.--PROPERTY SHALL BE CONSIDERED TO
HAVE BEEN ACQUIRED FROM OR TO HAVE PASSED FROM THE DECEDENT IF--
  (A) SUCH PROPERTY IS SO CONSIDERED UNDER SECTION 1014(B) (RELATING  TO
BASIS OF PROPERTY ACQUIRED FROM A DECEDENT),
  (B) SUCH PROPERTY IS ACQUIRED BY ANY PERSON FROM THE ESTATE, OR
  (C)  SUCH  PROPERTY  IS  ACQUIRED  BY  ANY PERSON FROM A TRUST (TO THE
EXTENT SUCH PROPERTY IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT).
  (10) COMMUNITY PROPERTY.--IF THE DECEDENT AND HIS SURVIVING SPOUSE  AT
ANY  TIME HELD QUALIFIED REAL PROPERTY AS COMMUNITY PROPERTY, THE INTER-
EST OF THE SURVIVING SPOUSE IN SUCH PROPERTY SHALL BE TAKEN INTO ACCOUNT
UNDER THIS SECTION TO THE EXTENT NECESSARY TO  PROVIDE  A  RESULT  UNDER
THIS  SECTION WITH RESPECT TO SUCH PROPERTY WHICH IS CONSISTENT WITH THE
RESULT WHICH WOULD HAVE OBTAINED UNDER THIS SECTION IF SUCH PROPERTY HAD
NOT BEEN COMMUNITY PROPERTY.
  (11) BOND IN LIEU OF PERSONAL LIABILITY.--IF THE QUALIFIED HEIR  MAKES
WRITTEN  APPLICATION  TO  THE SECRETARY FOR DETERMINATION OF THE MAXIMUM
AMOUNT OF THE ADDITIONAL TAX WHICH MAY BE IMPOSED BY SUBSECTION (C) WITH
RESPECT TO THE QUALIFIED HEIR'S INTEREST,  THE  SECRETARY  (AS  SOON  AS
POSSIBLE, AND IN ANY EVENT WITHIN 1 YEAR AFTER THE MAKING OF SUCH APPLI-
CATION)  SHALL  NOTIFY  THE  HEIR  OF SUCH MAXIMUM AMOUNT. THE QUALIFIED
HEIR, ON FURNISHING A BOND IN SUCH AMOUNT AND FOR SUCH PERIOD AS MAY  BE
REQUIRED, SHALL BE DISCHARGED FROM PERSONAL LIABILITY FOR ANY ADDITIONAL
TAX  IMPOSED  BY  SUBSECTION  (C)  AND SHALL BE ENTITLED TO A RECEIPT OR
WRITING SHOWING SUCH DISCHARGE.
  (12) ACTIVE MANAGEMENT.--THE TERM "ACTIVE MANAGEMENT" MEANS THE MAKING
OF THE MANAGEMENT DECISIONS OF A BUSINESS (OTHER THAN THE DAILY  OPERAT-
ING DECISIONS).
  (13) SPECIAL RULES FOR WOODLANDS.--
  (A) IN GENERAL.--IN THE CASE OF ANY QUALIFIED WOODLAND WITH RESPECT TO
WHICH THE EXECUTOR ELECTS TO HAVE THIS SUBPARAGRAPH APPLY, TREES GROWING
ON SUCH WOODLAND SHALL NOT BE TREATED AS A CROP.
  (B)  QUALIFIED WOODLAND.--THE TERM "QUALIFIED WOODLAND" MEANS ANY REAL
PROPERTY WHICH--
  (I) IS USED IN TIMBER OPERATIONS, AND
  (II) IS AN IDENTIFIABLE AREA OF LAND SUCH AS AN ACRE OR OTHER AREA FOR
WHICH RECORDS ARE NORMALLY MAINTAINED IN CONDUCTING TIMBER OPERATIONS.
  (C) TIMBER OPERATIONS.--THE TERM "TIMBER OPERATIONS" MEANS--
  (I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
  (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
  (D) ELECTION.--AN ELECTION UNDER SUBPARAGRAPH (A) SHALL BE MADE ON THE
RETURN OF THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL  BE  MADE
IN  SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (14) TREATMENT OF REPLACEMENT PROPERTY ACQUIRED  IN  SECTION  1031  OR
1033 TRANSACTIONS.--
  (A)  IN  GENERAL.--IN  THE CASE OF ANY QUALIFIED REPLACEMENT PROPERTY,
ANY PERIOD DURING WHICH THERE WAS OWNERSHIP, QUALIFIED USE, OR  MATERIAL
PARTICIPATION  WITH  RESPECT TO THE REPLACED PROPERTY BY THE DECEDENT OR
ANY MEMBER OF HIS FAMILY SHALL BE TREATED AS A PERIOD DURING WHICH THERE
WAS SUCH OWNERSHIP, USE, OR MATERIAL PARTICIPATION (AS THE CASE MAY  BE)
WITH RESPECT TO THE QUALIFIED REPLACEMENT PROPERTY.
  (B)  LIMITATION.--SUBPARAGRAPH  (A) SHALL NOT APPLY TO THE EXTENT THAT
THE FAIR MARKET VALUE OF THE QUALIFIED REPLACEMENT PROPERTY (AS  OF  THE

S. 6359--A                         266                        A. 8559--A

DATE  OF  ITS ACQUISITION) EXCEEDS THE FAIR MARKET VALUE OF THE REPLACED
PROPERTY (AS OF THE DATE OF ITS DISPOSITION).
  (C) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  QUALIFIED  REPLACEMENT PROPERTY.--THE TERM "QUALIFIED REPLACEMENT
PROPERTY" MEANS ANY REAL PROPERTY WHICH IS--
  (I) ACQUIRED IN AN EXCHANGE WHICH QUALIFIES UNDER SECTION 1031, OR
  (II) THE ACQUISITION OF WHICH RESULTS IN THE  NONRECOGNITION  OF  GAIN
UNDER SECTION 1033.
  SUCH TERM SHALL ONLY INCLUDE PROPERTY WHICH IS USED FOR THE SAME QUAL-
IFIED USE AS THE REPLACED PROPERTY WAS BEING USED BEFORE THE EXCHANGE.
  (II) REPLACED PROPERTY.--THE TERM "REPLACED PROPERTY" MEANS--
  (I)  THE  PROPERTY  TRANSFERRED  IN THE EXCHANGE WHICH QUALIFIES UNDER
SECTION 1031, OR
  (II) THE PROPERTY COMPULSORILY OR INVOLUNTARILY CONVERTED (WITHIN  THE
MEANING OF SECTION 1033).
  (F) STATUTE OF LIMITATIONS.--IF QUALIFIED REAL PROPERTY IS DISPOSED OF
OR CEASES TO BE USED FOR A QUALIFIED USE, THEN--
  (1)  THE  STATUTORY  PERIOD  FOR  THE ASSESSMENT OF ANY ADDITIONAL TAX
UNDER SUBSECTION (C) ATTRIBUTABLE TO SUCH DISPOSITION OR CESSATION SHALL
NOT EXPIRE BEFORE THE EXPIRATION OF 3 YEARS FROM THE DATE THE  SECRETARY
IS  NOTIFIED  (IN  SUCH  MANNER  AS  THE  SECRETARY  MAY  BY REGULATIONS
PRESCRIBE) OF SUCH DISPOSITION OR CESSATION (OR IF LATER IN THE CASE  OF
AN  INVOLUNTARY  CONVERSION  OR  EXCHANGE TO WHICH SUBSECTION (H) OR (I)
APPLIES, 3 YEARS FROM THE DATE THE SECRETARY IS NOTIFIED OF THE REPLACE-
MENT OF THE CONVERTED PROPERTY OR OF AN INTENTION NOT TO REPLACE  OR  OF
THE EXCHANGE OF PROPERTY), AND
  (2)  SUCH ADDITIONAL TAX MAY BE ASSESSED BEFORE THE EXPIRATION OF SUCH
3-YEAR PERIOD NOTWITHSTANDING THE PROVISIONS OF ANY OTHER LAW OR RULE OF
LAW WHICH WOULD OTHERWISE PREVENT SUCH ASSESSMENT.
  (G) APPLICATION OF THIS SECTION AND  SECTION  6324B  TO  INTERESTS  IN
PARTNERSHIPS,  CORPORATIONS,  AND TRUSTS.--THE SECRETARY SHALL PRESCRIBE
REGULATIONS SETTING FORTH THE APPLICATION OF THIS  SECTION  AND  SECTION
6324B IN THE CASE OF AN INTEREST IN A PARTNERSHIP, CORPORATION, OR TRUST
WHICH,  WITH  RESPECT  TO THE DECEDENT, IS AN INTEREST IN A CLOSELY HELD
BUSINESS (WITHIN THE MEANING OF PARAGRAPH (1) OF SECTION  6166(B)).  FOR
PURPOSES OF THE PRECEDING SENTENCE, AN INTEREST IN A DISCRETIONARY TRUST
ALL THE BENEFICIARIES OF WHICH ARE QUALIFIED HEIRS SHALL BE TREATED AS A
PRESENT INTEREST.
  (H)  SPECIAL RULES FOR INVOLUNTARY CONVERSIONS OF QUALIFIED REAL PROP-
ERTY.--
  (1) TREATMENT OF CONVERTED PROPERTY.--
  (A) IN GENERAL.--IF THERE IS AN INVOLUNTARY CONVERSION OF AN  INTEREST
IN QUALIFIED REAL PROPERTY--
  (I)  NO  TAX  SHALL BE IMPOSED BY SUBSECTION (C) ON SUCH CONVERSION IF
THE COST OF THE QUALIFIED REPLACEMENT PROPERTY  EQUALS  OR  EXCEEDS  THE
AMOUNT REALIZED ON SUCH CONVERSION, OR
  (II)  IF  CLAUSE  (I) DOES NOT APPLY, THE AMOUNT OF THE TAX IMPOSED BY
SUBSECTION (C) ON SUCH CONVERSION SHALL BE THE AMOUNT  DETERMINED  UNDER
SUBPARAGRAPH (B).
  (B)  AMOUNT  OF  TAX  WHERE  THERE  IS NOT COMPLETE REINVESTMENT.--THE
AMOUNT DETERMINED UNDER THIS SUBPARAGRAPH WITH RESPECT TO  ANY  INVOLUN-
TARY CONVERSION IS THE AMOUNT OF THE TAX WHICH (BUT FOR THIS SUBSECTION)
WOULD HAVE BEEN IMPOSED ON SUCH CONVERSION REDUCED BY AN AMOUNT WHICH--
  (I) BEARS THE SAME RATIO TO SUCH TAX, AS
  (II)  THE  COST  OF  THE  QUALIFIED  REPLACEMENT PROPERTY BEARS TO THE
AMOUNT REALIZED ON THE CONVERSION.

S. 6359--A                         267                        A. 8559--A

  (2) TREATMENT OF REPLACEMENT  PROPERTY.--FOR  PURPOSES  OF  SUBSECTION
(C)--
  (A)  ANY  QUALIFIED  REPLACEMENT PROPERTY SHALL BE TREATED IN THE SAME
MANNER AS IF IT WERE A PORTION OF THE INTEREST IN QUALIFIED REAL PROPER-
TY WHICH WAS INVOLUNTARILY CONVERTED; EXCEPT THAT WITH RESPECT  TO  SUCH
QUALIFIED REPLACEMENT PROPERTY THE 10-YEAR PERIOD UNDER PARAGRAPH (1) OF
SUBSECTION (C) SHALL BE EXTENDED BY ANY PERIOD, BEYOND THE 2-YEAR PERIOD
REFERRED TO IN SECTION 1033(A)(2)(B)(I), DURING WHICH THE QUALIFIED HEIR
WAS ALLOWED TO REPLACE THE QUALIFIED REAL PROPERTY,
  (B)  ANY  TAX  IMPOSED BY SUBSECTION (C) ON THE INVOLUNTARY CONVERSION
SHALL BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
  (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED--
  (I) BY NOT TAKING INTO ACCOUNT PERIODS AFTER THE  INVOLUNTARY  CONVER-
SION  AND  BEFORE THE ACQUISITION OF THE QUALIFIED REPLACEMENT PROPERTY,
AND
  (II) BY TREATING MATERIAL PARTICIPATION WITH RESPECT TO THE  CONVERTED
PROPERTY  AS  MATERIAL  PARTICIPATION  WITH  RESPECT  TO  THE  QUALIFIED
REPLACEMENT PROPERTY.
  (3) DEFINITIONS AND SPECIAL RULES.--FOR PURPOSES OF THIS SUBSECTION--
  (A) INVOLUNTARY CONVERSION.--THE TERM "INVOLUNTARY CONVERSION" MEANS A
COMPULSORY OR INVOLUNTARY CONVERSION WITHIN THE MEANING OF SECTION 1033.
  (B) QUALIFIED REPLACEMENT PROPERTY.--THE TERM  "QUALIFIED  REPLACEMENT
PROPERTY" MEANS--
  (I)  IN  THE  CASE  OF  AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION
1033(A)(1), ANY REAL PROPERTY INTO WHICH THE QUALIFIED REAL PROPERTY  IS
CONVERTED, OR
  (II)  IN  THE  CASE  OF AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION
1033(A)(2), ANY REAL PROPERTY PURCHASED BY THE QUALIFIED HEIR DURING THE
PERIOD SPECIFIED IN SECTION 1033(A)(2)(B) FOR PURPOSES OF REPLACING  THE
QUALIFIED REAL PROPERTY.
  SUCH TERM ONLY INCLUDES PROPERTY WHICH IS TO BE USED FOR THE QUALIFIED
USE  SET  FORTH  IN  SUBPARAGRAPH  (A) OR (B) OF SUBSECTION (B)(2) UNDER
WHICH THE QUALIFIED REAL PROPERTY QUALIFIED UNDER SUBSECTION (A).
  (4) CERTAIN RULES MADE APPLICABLE.--THE RULES OF THE LAST SENTENCE  OF
SECTION 1033(A)(2)(A) SHALL APPLY FOR PURPOSES OF PARAGRAPH (3)(B)(II).
  (I) EXCHANGES OF QUALIFIED REAL PROPERTY.--
  (1) TREATMENT OF PROPERTY EXCHANGED.--
  (A)  EXCHANGES SOLELY FOR QUALIFIED EXCHANGE PROPERTY.--IF AN INTEREST
IN QUALIFIED REAL PROPERTY IS EXCHANGED SOLELY FOR AN INTEREST IN QUALI-
FIED EXCHANGE PROPERTY IN A TRANSACTION WHICH  QUALIFIES  UNDER  SECTION
1031,  NO  TAX  SHALL  BE  IMPOSED  BY  SUBSECTION (C) BY REASON OF SUCH
EXCHANGE.
  (B) EXCHANGES WHERE OTHER PROPERTY RECEIVED.--IF AN INTEREST IN QUALI-
FIED REAL PROPERTY IS EXCHANGED FOR AN INTEREST  IN  QUALIFIED  EXCHANGE
PROPERTY  AND  OTHER  PROPERTY  IN  A  TRANSACTION WHICH QUALIFIES UNDER
SECTION 1031, THE AMOUNT OF THE TAX IMPOSED BY SUBSECTION (C) BY  REASON
OF SUCH EXCHANGE SHALL BE THE AMOUNT OF TAX WHICH (BUT FOR THIS SUBPARA-
GRAPH) WOULD HAVE BEEN IMPOSED ON SUCH EXCHANGE UNDER SUBSECTION (C)(1),
REDUCED BY AN AMOUNT WHICH--
  (I) BEARS THE SAME RATIO TO SUCH TAX, AS
  (II) THE FAIR MARKET VALUE OF THE QUALIFIED EXCHANGE PROPERTY BEARS TO
THE FAIR MARKET VALUE OF THE QUALIFIED REAL PROPERTY EXCHANGED.
  FOR  PURPOSES  OF  CLAUSE  (II) OF THE PRECEDING SENTENCE, FAIR MARKET
VALUE SHALL BE DETERMINED AS OF THE TIME OF THE EXCHANGE.
  (2)  TREATMENT  OF  QUALIFIED  EXCHANGE  PROPERTY.--FOR  PURPOSES   OF
SUBSECTION (C)--

S. 6359--A                         268                        A. 8559--A

  (A)  ANY  INTEREST  IN QUALIFIED EXCHANGE PROPERTY SHALL BE TREATED IN
THE SAME MANNER AS IF IT WERE A PORTION OF  THE  INTEREST  IN  QUALIFIED
REAL PROPERTY WHICH WAS EXCHANGED,
  (B)  ANY TAX IMPOSED BY SUBSECTION (C) BY REASON OF THE EXCHANGE SHALL
BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
  (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED BY TREATING MATE-
RIAL PARTICIPATION WITH RESPECT TO THE EXCHANGED  PROPERTY  AS  MATERIAL
PARTICIPATION WITH RESPECT TO THE QUALIFIED EXCHANGE PROPERTY.
  (3) QUALIFIED EXCHANGE PROPERTY.--FOR PURPOSES OF THIS SUBSECTION, THE
TERM  "QUALIFIED  EXCHANGE  PROPERTY" MEANS REAL PROPERTY WHICH IS TO BE
USED FOR THE QUALIFIED USE SET FORTH  IN  SUBPARAGRAPH  (A)  OR  (B)  OF
SUBSECTION  (B)(2)  UNDER  WHICH  THE  REAL  PROPERTY EXCHANGED THEREFOR
ORIGINALLY QUALIFIED UNDER SUBSECTION (A).
  S 2033. PROPERTY IN WHICH THE DECEDENT HAD AN INTEREST. THE  VALUE  OF
THE  GROSS  ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE EXTENT
OF THE INTEREST THEREIN OF THE DECEDENT AT THE TIME OF HIS DEATH.
  S 2034. DOWER OR CURTESY INTERESTS. THE  VALUE  OF  THE  GROSS  ESTATE
SHALL  INCLUDE  THE  VALUE OF ALL PROPERTY TO THE EXTENT OF ANY INTEREST
THEREIN OF THE SURVIVING SPOUSE, EXISTING AT THE TIME OF THE  DECEDENT'S
DEATH  AS DOWER OR CURTESY, OR BY VIRTUE OF A STATUTE CREATING AN ESTATE
IN LIEU OF DOWER OR CURTESY.
  S 2035. ADJUSTMENTS FOR CERTAIN  GIFTS  MADE  WITHIN  THREE  YEARS  OF
DECEDENT'S   DEATH.   (A)   INCLUSION   OF  CERTAIN  PROPERTY  IN  GROSS
ESTATE.--IF--
  (1) THE DECEDENT MADE A TRANSFER (BY TRUST OR OTHERWISE) OF AN  INTER-
EST IN ANY PROPERTY, OR RELINQUISHED A POWER WITH RESPECT TO ANY PROPER-
TY, DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH,
AND
  (2)  THE  VALUE  OF  SUCH PROPERTY (OR AN INTEREST THEREIN) WOULD HAVE
BEEN INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER SECTION  2036,  2037,
2038,  OR  2042  IF  SUCH TRANSFERRED INTEREST OR RELINQUISHED POWER HAD
BEEN RETAINED BY THE DECEDENT ON THE DATE OF HIS DEATH,
  THE VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ANY  PROPERTY
(OR INTEREST THEREIN) WHICH WOULD HAVE BEEN SO INCLUDED.
  (B)  INCLUSION  OF  GIFT  TAX  ON  GIFTS  MADE  DURING  3 YEARS BEFORE
DECEDENT'S DEATH.--THE AMOUNT OF THE GROSS  ESTATE  (DETERMINED  WITHOUT
REGARD  TO  THIS SUBSECTION) SHALL BE INCREASED BY THE AMOUNT OF ANY TAX
PAID UNDER CHAPTER 12 BY THE DECEDENT OR HIS ESTATE ON ANY GIFT MADE  BY
THE  DECEDENT  OR HIS SPOUSE DURING THE 3-YEAR PERIOD ENDING ON THE DATE
OF THE DECEDENT'S DEATH.
  (C) OTHER RULES RELATING TO TRANSFERS WITHIN 3 YEARS OF DEATH.--
  (1) IN GENERAL.--FOR PURPOSES OF--
  (A) SECTION 303(B) (RELATING TO DISTRIBUTIONS IN REDEMPTION  OF  STOCK
TO PAY DEATH TAXES),
  (B)  SECTION  2032A  (RELATING  TO SPECIAL VALUATION OF CERTAIN FARMS,
ETC., REAL PROPERTY), AND
  (C) SUBCHAPTER C OF CHAPTER 64 (RELATING TO LIEN FOR TAXES),
  THE VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL  PROPERTY
TO  THE  EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT HAS AT ANY
TIME MADE A TRANSFER, BY TRUST OR OTHERWISE, DURING  THE  3-YEAR  PERIOD
ENDING ON THE DATE OF THE DECEDENT'S DEATH.
  (2)  COORDINATION  WITH  SECTION  6166.--AN ESTATE SHALL BE TREATED AS
MEETING THE 35 PERCENT OF ADJUSTED GROSS ESTATE REQUIREMENT  OF  SECTION
6166(A)(1) ONLY IF THE ESTATE MEETS SUCH REQUIREMENT BOTH WITH AND WITH-
OUT THE APPLICATION OF SUBSECTION (A).

S. 6359--A                         269                        A. 8559--A

  (3) MARITAL AND SMALL TRANSFERS.--PARAGRAPH (1) SHALL NOT APPLY TO ANY
TRANSFER (OTHER THAN A TRANSFER WITH RESPECT TO A LIFE INSURANCE POLICY)
MADE  DURING  A  CALENDAR  YEAR  TO  ANY  DONEE  IF THE DECEDENT WAS NOT
REQUIRED BY SECTION 6019 (OTHER THAN BY REASON OF  SECTION  6019(2))  TO
FILE ANY GIFT TAX RETURN FOR SUCH YEAR WITH RESPECT TO TRANSFERS TO SUCH
DONEE.
  (D)  EXCEPTION.--SUBSECTION  (A)  AND  PARAGRAPH (1) OF SUBSECTION (C)
SHALL NOT APPLY TO ANY BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER-
ATION IN MONEY OR MONEY'S WORTH.
  (E)  TREATMENT  OF  CERTAIN  TRANSFERS  FROM  REVOCABLE   TRUSTS.--FOR
PURPOSES OF THIS SECTION AND SECTION 2038, ANY TRANSFER FROM ANY PORTION
OF A TRUST DURING ANY PERIOD THAT SUCH PORTION WAS TREATED UNDER SECTION
676 AS OWNED BY THE DECEDENT BY REASON OF A POWER IN THE GRANTOR (DETER-
MINED  WITHOUT  REGARD TO SECTION 672(E)) SHALL BE TREATED AS A TRANSFER
MADE DIRECTLY BY THE DECEDENT.
  S 2036. TRANSFERS WITH RETAINED LIFE ESTATE.  (A)  GENERAL  RULE.--THE
VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE
EXTENT  OF  ANY  INTEREST  THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME
MADE A TRANSFER (EXCEPT IN CASE OF A BONA FIDE SALE FOR AN ADEQUATE  AND
FULL  CONSIDERATION  IN  MONEY OR MONEY'S WORTH), BY TRUST OR OTHERWISE,
UNDER WHICH HE HAS RETAINED FOR HIS LIFE OR FOR ANY  PERIOD  NOT  ASCER-
TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
IN FACT END BEFORE HIS DEATH--
  (1)  THE  POSSESSION OR ENJOYMENT OF, OR THE RIGHT TO THE INCOME FROM,
THE PROPERTY, OR
  (2) THE RIGHT, EITHER ALONE OR IN  CONJUNCTION  WITH  ANY  PERSON,  TO
DESIGNATE  THE  PERSONS  WHO  SHALL POSSESS OR ENJOY THE PROPERTY OR THE
INCOME THEREFROM.
  (B) VOTING RIGHTS.--
  (1) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1), THE  RETENTION  OF
THE  RIGHT  TO  VOTE  (DIRECTLY  OR  INDIRECTLY)  SHARES  OF  STOCK OF A
CONTROLLED CORPORATION SHALL BE CONSIDERED TO  BE  A  RETENTION  OF  THE
ENJOYMENT OF TRANSFERRED PROPERTY.
  (2)  CONTROLLED  CORPORATION.--FOR PURPOSES OF PARAGRAPH (1), A CORPO-
RATION SHALL BE TREATED AS A CONTROLLED  CORPORATION  IF,  AT  ANY  TIME
AFTER  THE  TRANSFER OF THE PROPERTY AND DURING THE 3-YEAR PERIOD ENDING
ON THE DATE OF THE DECEDENT'S DEATH, THE DECEDENT OWNED (WITH THE APPLI-
CATION OF SECTION 318), OR HAD THE RIGHT (EITHER ALONE OR IN CONJUNCTION
WITH ANY PERSON) TO VOTE, STOCK POSSESSING AT LEAST 20  PERCENT  OF  THE
TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK.
  (3)  COORDINATION WITH SECTION 2035.--FOR PURPOSES OF APPLYING SECTION
2035 WITH RESPECT TO PARAGRAPH (1), THE RELINQUISHMENT OR  CESSATION  OF
VOTING  RIGHTS  SHALL  BE  TREATED AS A TRANSFER OF PROPERTY MADE BY THE
DECEDENT.
  (C) LIMITATION ON APPLICATION OF GENERAL RULE.--THIS SECTION SHALL NOT
APPLY TO A TRANSFER MADE BEFORE MARCH 4, 1931; NOR TO  A  TRANSFER  MADE
AFTER MARCH 3, 1931, AND BEFORE JUNE 7, 1932, UNLESS THE PROPERTY TRANS-
FERRED  WOULD  HAVE  BEEN  INCLUDIBLE  IN THE DECEDENT'S GROSS ESTATE BY
REASON OF THE AMENDATORY LANGUAGE OF THE JOINT RESOLUTION  OF  MARCH  3,
1931 (46 STAT. 1516).
  S 2037. TRANSFERS TAKING EFFECT AT DEATH. (A) GENERAL RULE.--THE VALUE
OF  THE  GROSS  ESTATE  SHALL  INCLUDE  THE VALUE OF ALL PROPERTY TO THE
EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT  HAS  AT  ANY  TIME
AFTER  SEPTEMBER 7, 1916, MADE A TRANSFER (EXCEPT IN CASE OF A BONA FIDE
SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S  WORTH),
BY TRUST OR OTHERWISE, IF--

S. 6359--A                         270                        A. 8559--A

  (1)  POSSESSION OR ENJOYMENT OF THE PROPERTY CAN, THROUGH OWNERSHIP OF
SUCH INTEREST, BE OBTAINED ONLY BY SURVIVING THE DECEDENT, AND
  (2)  THE DECEDENT HAS RETAINED A REVERSIONARY INTEREST IN THE PROPERTY
(BUT IN THE CASE OF A TRANSFER MADE BEFORE OCTOBER 8, 1949, ONLY IF SUCH
REVERSIONARY INTEREST AROSE BY THE EXPRESS TERMS OF  THE  INSTRUMENT  OF
TRANSFER),  AND  THE  VALUE  OF  SUCH  REVERSIONARY INTEREST IMMEDIATELY
BEFORE THE DEATH OF THE DECEDENT EXCEEDS 5 PERCENT OF THE VALUE OF  SUCH
PROPERTY.
  (B) SPECIAL RULES.--FOR PURPOSES OF THIS SECTION, THE TERM "REVERSION-
ARY  INTEREST"  INCLUDES  A POSSIBILITY THAT PROPERTY TRANSFERRED BY THE
DECEDENT--
  (1) MAY RETURN TO HIM OR HIS ESTATE, OR
  (2) MAY BE SUBJECT TO A POWER OF DISPOSITION BY HIM,
  BUT SUCH TERM DOES NOT INCLUDE A POSSIBILITY  THAT  THE  INCOME  ALONE
FROM  SUCH  PROPERTY  MAY  RETURN TO HIM OR BECOME SUBJECT TO A POWER OF
DISPOSITION BY HIM. THE VALUE OF  A  REVERSIONARY  INTEREST  IMMEDIATELY
BEFORE  THE DEATH OF THE DECEDENT SHALL BE DETERMINED (WITHOUT REGARD TO
THE FACT OF THE DECEDENT'S DEATH) BY USUAL METHODS OF VALUATION, INCLUD-
ING THE USE OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, UNDER REGU-
LATIONS PRESCRIBED BY THE SECRETARY.  IN  DETERMINING  THE  VALUE  OF  A
POSSIBILITY  THAT  PROPERTY  MAY BE SUBJECT TO A POWER OF DISPOSITION BY
THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A POSSIBIL-
ITY THAT SUCH PROPERTY  MAY  RETURN  TO  THE  DECEDENT  OR  HIS  ESTATE.
NOTWITHSTANDING  THE  FOREGOING, AN INTEREST SO TRANSFERRED SHALL NOT BE
INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER THIS SECTION IF POSSESSION
OR ENJOYMENT OF THE PROPERTY COULD HAVE BEEN OBTAINED BY ANY BENEFICIARY
DURING THE DECEDENT'S LIFE THROUGH THE EXERCISE OF A  GENERAL  POWER  OF
APPOINTMENT  (AS  DEFINED IN SECTION 2041) WHICH IN FACT WAS EXERCISABLE
IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
  S 2038. REVOCABLE TRANSFERS. (A) IN GENERAL.--THE VALUE OF  THE  GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1)  TRANSFERS  AFTER  JUNE  22,  1936.--TO THE EXTENT OF ANY INTEREST
THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME MADE A TRANSFER (EXCEPT IN
CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY
OR MONEY'S WORTH), BY TRUST OR OTHERWISE, WHERE  THE  ENJOYMENT  THEREOF
WAS  SUBJECT AT THE DATE OF HIS DEATH TO ANY CHANGE THROUGH THE EXERCISE
OF A POWER (IN WHATEVER CAPACITY EXERCISABLE) BY THE DECEDENT  ALONE  OR
BY  THE DECEDENT IN CONJUNCTION WITH ANY OTHER PERSON (WITHOUT REGARD TO
WHEN OR FROM WHAT SOURCE THE DECEDENT ACQUIRED SUCH  POWER),  TO  ALTER,
AMEND,  REVOKE,  OR  TERMINATE,  OR WHERE ANY SUCH POWER IS RELINQUISHED
DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH.
  (2) TRANSFERS ON OR BEFORE JUNE 22, 1936.--TO THE EXTENT OF ANY INTER-
EST THEREIN OF WHICH THE DECEDENT  HAS  AT  ANY  TIME  MADE  A  TRANSFER
(EXCEPT  IN  CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER-
ATION IN MONEY OR MONEY'S WORTH),  BY  TRUST  OR  OTHERWISE,  WHERE  THE
ENJOYMENT  THEREOF  WAS  SUBJECT  AT THE DATE OF HIS DEATH TO ANY CHANGE
THROUGH THE EXERCISE OF A POWER, EITHER BY  THE  DECEDENT  ALONE  OR  IN
CONJUNCTION  WITH  ANY  PERSON, TO ALTER, AMEND, OR REVOKE, OR WHERE THE
DECEDENT RELINQUISHED ANY SUCH POWER DURING THE 3-YEAR PERIOD ENDING  ON
THE  DATE  OF THE DECEDENT'S DEATH. EXCEPT IN THE CASE OF TRANSFERS MADE
AFTER JUNE 22, 1936, NO INTEREST OF THE DECEDENT OF WHICH HE HAS MADE  A
TRANSFER  SHALL  BE  INCLUDED  IN  THE  GROSS ESTATE UNDER PARAGRAPH (1)
UNLESS IT IS INCLUDIBLE UNDER THIS PARAGRAPH.
  (B) DATE OF EXISTENCE OF POWER.--FOR PURPOSES  OF  THIS  SECTION,  THE
POWER TO ALTER, AMEND, REVOKE, OR TERMINATE SHALL BE CONSIDERED TO EXIST
ON  THE  DATE  OF  THE  DECEDENT'S DEATH EVEN THOUGH THE EXERCISE OF THE

S. 6359--A                         271                        A. 8559--A

POWER IS SUBJECT TO A PRECEDENT GIVING OF  NOTICE  OR  EVEN  THOUGH  THE
ALTERATION,  AMENDMENT,  REVOCATION, OR TERMINATION TAKES EFFECT ONLY ON
THE EXPIRATION OF A STATED PERIOD  AFTER  THE  EXERCISE  OF  THE  POWER,
WHETHER  OR NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS
BEEN GIVEN OR THE POWER HAS BEEN EXERCISED. IN SUCH CASES PROPER ADJUST-
MENT SHALL BE MADE REPRESENTING THE  INTERESTS  WHICH  WOULD  HAVE  BEEN
EXCLUDED FROM THE POWER IF THE DECEDENT HAD LIVED, AND FOR SUCH PURPOSE,
IF  THE NOTICE HAS NOT BEEN GIVEN OR THE POWER HAS NOT BEEN EXERCISED ON
OR BEFORE THE DATE OF HIS DEATH, SUCH NOTICE SHALL BE CONSIDERED TO HAVE
BEEN GIVEN, OR THE POWER EXERCISED, ON THE DATE OF HIS DEATH.
  S 2039. ANNUITIES. (A) GENERAL.--THE GROSS ESTATE  SHALL  INCLUDE  THE
VALUE  OF  AN  ANNUITY OR OTHER PAYMENT RECEIVABLE BY ANY BENEFICIARY BY
REASON OF SURVIVING THE DECEDENT UNDER ANY FORM OF CONTRACT OR AGREEMENT
ENTERED INTO AFTER MARCH 3, 1931 (OTHER THAN AS INSURANCE UNDER POLICIES
ON THE LIFE OF THE DECEDENT), IF, UNDER SUCH CONTRACT OR  AGREEMENT,  AN
ANNUITY  OR  OTHER  PAYMENT WAS PAYABLE TO THE DECEDENT, OR THE DECEDENT
POSSESSED THE RIGHT TO RECEIVE SUCH ANNUITY OR PAYMENT, EITHER ALONE  OR
IN  CONJUNCTION  WITH  ANOTHER FOR HIS LIFE OR FOR ANY PERIOD NOT ASCER-
TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
IN FACT END BEFORE HIS DEATH.
  (B) AMOUNT INCLUDIBLE.--SUBSECTION (A) SHALL APPLY TO ONLY  SUCH  PART
OF  THE  VALUE  OF  THE  ANNUITY  OR OTHER PAYMENT RECEIVABLE UNDER SUCH
CONTRACT OR AGREEMENT AS IS PROPORTIONATE TO THAT PART OF  THE  PURCHASE
PRICE  THEREFOR  CONTRIBUTED  BY  THE  DECEDENT.  FOR  PURPOSES  OF THIS
SECTION, ANY CONTRIBUTION BY THE DECEDENT'S EMPLOYER OR FORMER  EMPLOYER
TO  THE  PURCHASE PRICE OF SUCH CONTRACT OR AGREEMENT (WHETHER OR NOT TO
AN EMPLOYEE'S TRUST OR FUND FORMING PART OF A PENSION, ANNUITY,  RETIRE-
MENT,  BONUS  OR PROFIT SHARING PLAN) SHALL BE CONSIDERED TO BE CONTRIB-
UTED BY THE DECEDENT IF MADE BY REASON OF HIS EMPLOYMENT.
  S 2040. JOINT INTERESTS. (A) GENERAL RULE.--THE  VALUE  OF  THE  GROSS
ESTATE  SHALL  INCLUDE  THE  VALUE  OF ALL PROPERTY TO THE EXTENT OF THE
INTEREST THEREIN HELD AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP BY THE
DECEDENT AND ANY OTHER PERSON, OR AS TENANTS  BY  THE  ENTIRETY  BY  THE
DECEDENT AND SPOUSE, OR DEPOSITED, WITH ANY PERSON CARRYING ON THE BANK-
ING  BUSINESS,  IN THEIR JOINT NAMES AND PAYABLE TO EITHER OR THE SURVI-
VOR, EXCEPT SUCH PART  THEREOF  AS  MAY  BE  SHOWN  TO  HAVE  ORIGINALLY
BELONGED  TO  SUCH  OTHER  PERSON  AND  NEVER  TO  HAVE BEEN RECEIVED OR
ACQUIRED BY THE LATTER FROM THE DECEDENT FOR LESS THAN AN  ADEQUATE  AND
FULL  CONSIDERATION IN MONEY OR MONEY'S WORTH: PROVIDED, THAT WHERE SUCH
PROPERTY OR ANY PART THEREOF, OR PART OF THE  CONSIDERATION  WITH  WHICH
SUCH  PROPERTY  WAS ACQUIRED, IS SHOWN TO HAVE BEEN AT ANY TIME ACQUIRED
BY SUCH OTHER PERSON FROM THE DECEDENT FOR LESS  THAN  AN  ADEQUATE  AND
FULL  CONSIDERATION  IN  MONEY OR MONEY'S WORTH, THERE SHALL BE EXCEPTED
ONLY SUCH PART OF THE VALUE OF SUCH PROPERTY AS IS PROPORTIONATE TO  THE
CONSIDERATION  FURNISHED  BY  SUCH  OTHER PERSON: PROVIDED FURTHER, THAT
WHERE ANY PROPERTY HAS BEEN ACQUIRED BY GIFT, BEQUEST, DEVISE, OR INHER-
ITANCE, AS A TENANCY BY THE ENTIRETY BY THE DECEDENT AND SPOUSE, THEN TO
THE EXTENT OF ONE-HALF OF THE VALUE THEREOF, OR, WHERE  SO  ACQUIRED  BY
THE  DECEDENT AND ANY OTHER PERSON AS JOINT TENANTS WITH RIGHT OF SURVI-
VORSHIP AND THEIR INTERESTS ARE NOT OTHERWISE SPECIFIED OR FIXED BY LAW,
THEN TO THE EXTENT OF THE VALUE OF A FRACTIONAL PART TO BE DETERMINED BY
DIVIDING THE VALUE OF THE PROPERTY BY THE NUMBER OF JOINT  TENANTS  WITH
RIGHT OF SURVIVORSHIP.
  (B) CERTAIN JOINT INTERESTS OF HUSBAND AND WIFE.--
  (1)  INTERESTS  OF SPOUSE EXCLUDED FROM GROSS ESTATE.--NOTWITHSTANDING
SUBSECTION (A), IN THE CASE OF ANY QUALIFIED JOINT INTEREST,  THE  VALUE

S. 6359--A                         272                        A. 8559--A

INCLUDED  IN THE GROSS ESTATE WITH RESPECT TO SUCH INTEREST BY REASON OF
THIS SECTION IS ONE-HALF OF THE VALUE OF SUCH QUALIFIED JOINT INTEREST.
  (2)  QUALIFIED JOINT INTEREST DEFINED.--FOR PURPOSES OF PARAGRAPH (1),
THE TERM "QUALIFIED JOINT INTEREST" MEANS ANY INTEREST IN PROPERTY  HELD
BY THE DECEDENT AND THE DECEDENT'S SPOUSE AS--
  (A) TENANTS BY THE ENTIRETY, OR
  (B) JOINT TENANTS WITH RIGHT OF SURVIVORSHIP, BUT ONLY IF THE DECEDENT
AND THE SPOUSE OF THE DECEDENT ARE THE ONLY JOINT TENANTS.
  S 2041. POWERS OF APPOINTMENT. (A) IN GENERAL.--THE VALUE OF THE GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1)  POWERS  OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942.--TO
THE EXTENT OF ANY PROPERTY WITH RESPECT TO  WHICH  A  GENERAL  POWER  OF
APPOINTMENT  CREATED  ON OR BEFORE OCTOBER 21, 1942, IS EXERCISED BY THE
DECEDENT--
  (A) BY WILL, OR
  (B) BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A  TRANS-
FER OF PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY WOULD BE INCLUDIBLE
IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035 TO 2038, INCLUSIVE;
  BUT  THE  FAILURE  TO EXERCISE SUCH A POWER OR THE COMPLETE RELEASE OF
SUCH A POWER SHALL NOT BE DEEMED AN EXERCISE THEREOF. IF A GENERAL POWER
OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, HAS BEEN PARTIALLY
RELEASED SO THAT IT IS NO LONGER A GENERAL  POWER  OF  APPOINTMENT,  THE
EXERCISE  OF  SUCH  POWER  SHALL  NOT  BE DEEMED TO BE THE EXERCISE OF A
GENERAL POWER OF APPOINTMENT IF--
  (I) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
  (II) THE DONEE OF SUCH POWER WAS UNDER A LEGAL DISABILITY  TO  RELEASE
SUCH  POWER  ON  OCTOBER 21, 1942, AND SUCH PARTIAL RELEASE OCCURRED NOT
LATER THAN 6 MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
  (2) POWERS CREATED AFTER OCTOBER 21, 1942.--TO THE EXTENT OF ANY PROP-
ERTY WITH RESPECT TO WHICH THE DECEDENT HAS AT THE TIME OF HIS  DEATH  A
GENERAL  POWER  OF  APPOINTMENT  CREATED AFTER OCTOBER 21, 1942, OR WITH
RESPECT TO WHICH THE DECEDENT HAS AT ANY TIME EXERCISED OR RELEASED SUCH
A POWER OF APPOINTMENT BY A DISPOSITION WHICH IS OF SUCH NATURE THAT  IF
IT  WERE  A  TRANSFER  OF  PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY
WOULD BE INCLUDIBLE IN THE DECEDENT'S GROSS ESTATE UNDER  SECTIONS  2035
TO  2038,  INCLUSIVE.  FOR  PURPOSES OF THIS PARAGRAPH (2), THE POWER OF
APPOINTMENT SHALL BE CONSIDERED TO EXIST ON THE DATE OF  THE  DECEDENT'S
DEATH  EVEN  THOUGH  THE EXERCISE OF THE POWER IS SUBJECT TO A PRECEDENT
GIVING OF NOTICE OR EVEN THOUGH THE EXERCISE OF THE POWER  TAKES  EFFECT
ONLY ON THE EXPIRATION OF A STATED PERIOD AFTER ITS EXERCISE, WHETHER OR
NOT  ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS BEEN GIVEN
OR THE POWER HAS BEEN EXERCISED.
  (3) CREATION OF ANOTHER POWER IN CERTAIN CASES.--TO THE EXTENT OF  ANY
PROPERTY WITH RESPECT TO WHICH THE DECEDENT--
  (A) BY WILL, OR
  (B)  BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A TRANS-
FER OF PROPERTY OWNED BY THE DECEDENT SUCH PROPERTY WOULD BE  INCLUDIBLE
IN THE DECEDENT'S GROSS ESTATE UNDER SECTION 2035, 2036, OR 2037,
  EXERCISES  A  POWER  OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, BY
CREATING ANOTHER POWER OF APPOINTMENT WHICH UNDER THE  APPLICABLE  LOCAL
LAW CAN BE VALIDLY EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE
OR INTEREST IN SUCH PROPERTY, OR SUSPEND THE ABSOLUTE OWNERSHIP OR POWER
OF  ALIENATION  OF  SUCH  PROPERTY,  FOR  A PERIOD ASCERTAINABLE WITHOUT
REGARD TO THE DATE OF THE CREATION OF THE FIRST POWER.
  (B) DEFINITIONS.--FOR PURPOSES OF SUBSECTION (A)--

S. 6359--A                         273                        A. 8559--A

  (1) GENERAL POWER OF APPOINTMENT.--THE TERM "GENERAL POWER OF APPOINT-
MENT" MEANS A POWER WHICH IS EXERCISABLE IN FAVOR OF THE  DECEDENT,  HIS
ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT--
  (A)  A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENE-
FIT OF THE DECEDENT WHICH IS LIMITED BY AN ASCERTAINABLE STANDARD RELAT-
ING TO THE HEALTH, EDUCATION, SUPPORT, OR MAINTENANCE  OF  THE  DECEDENT
SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (B)  A  POWER  OF  APPOINTMENT  CREATED ON OR BEFORE OCTOBER 21, 1942,
WHICH IS EXERCISABLE BY THE DECEDENT ONLY IN  CONJUNCTION  WITH  ANOTHER
PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (C)  IN  THE  CASE OF A POWER OF APPOINTMENT CREATED AFTER OCTOBER 21,
1942, WHICH IS EXERCISABLE BY THE  DECEDENT  ONLY  IN  CONJUNCTION  WITH
ANOTHER PERSON--
  (I) IF THE POWER IS NOT EXERCISABLE BY THE DECEDENT EXCEPT IN CONJUNC-
TION  WITH  THE  CREATOR  OF THE POWER--SUCH POWER SHALL NOT BE DEEMED A
GENERAL POWER OF APPOINTMENT.
  (II) IF THE POWER  IS  NOT  EXERCISABLE  BY  THE  DECEDENT  EXCEPT  IN
CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST IN THE PROPERTY,
SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
OF  THE  DECEDENT--SUCH  POWER  SHALL  NOT  BE DEEMED A GENERAL POWER OF
APPOINTMENT. FOR THE PURPOSES OF THIS CLAUSE A  PERSON  WHO,  AFTER  THE
DEATH  OF THE DECEDENT, MAY BE POSSESSED OF A POWER OF APPOINTMENT (WITH
RESPECT TO THE PROPERTY SUBJECT TO THE DECEDENT'S POWER)  WHICH  HE  MAY
EXERCISE  IN  HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST IN THE
PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH  EXERCISE  OF
THE DECEDENT'S POWER.
  (III)  IF (AFTER THE APPLICATION OF CLAUSES (I) AND (II)) THE POWER IS
A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH OTHER
PERSON--SUCH POWER SHALL BE DEEMED A GENERAL POWER OF  APPOINTMENT  ONLY
IN  RESPECT  OF A FRACTIONAL PART OF THE PROPERTY SUBJECT TO SUCH POWER,
SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY BY THE
NUMBER OF SUCH PERSONS (INCLUDING THE DECEDENT) IN FAVOR  OF  WHOM  SUCH
POWER IS EXERCISABLE.
  FOR  PURPOSES OF CLAUSES (II) AND (III), A POWER SHALL BE DEEMED TO BE
EXERCISABLE IN FAVOR OF A PERSON IF IT IS EXERCISABLE IN FAVOR  OF  SUCH
PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
  (2) LAPSE OF POWER.--THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
SHALL  BE  CONSIDERED  A  RELEASE  OF SUCH POWER. THE PRECEDING SENTENCE
SHALL APPLY WITH RESPECT TO THE LAPSE OF POWERS DURING ANY CALENDAR YEAR
ONLY TO THE EXTENT THAT THE PROPERTY, WHICH COULD HAVE BEEN APPOINTED BY
EXERCISE OF SUCH LAPSED POWERS, EXCEEDED IN VALUE, AT THE TIME  OF  SUCH
LAPSE, THE GREATER OF THE FOLLOWING AMOUNTS:
  (A) $5,000, OR
  (B)  5  PERCENT  OF THE AGGREGATE VALUE, AT THE TIME OF SUCH LAPSE, OF
THE ASSETS OUT OF WHICH, OR THE PROCEEDS OF WHICH, THE EXERCISE  OF  THE
LAPSED POWERS COULD HAVE BEEN SATISFIED.
  (3)  DATE OF CREATION OF POWER.--FOR PURPOSES OF THIS SECTION, A POWER
OF APPOINTMENT CREATED BY A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
  S 2042. PROCEEDS OF LIFE INSURANCE. THE  VALUE  OF  THE  GROSS  ESTATE
SHALL INCLUDE THE VALUE OF ALL PROPERTY--

S. 6359--A                         274                        A. 8559--A

  (1)  RECEIVABLE  BY THE EXECUTOR.--TO THE EXTENT OF THE AMOUNT RECEIV-
ABLE BY THE EXECUTOR AS INSURANCE UNDER POLICIES  ON  THE  LIFE  OF  THE
DECEDENT.
  (2)  RECEIVABLE  BY  OTHER BENEFICIARIES.--TO THE EXTENT OF THE AMOUNT
RECEIVABLE BY ALL OTHER BENEFICIARIES AS INSURANCE UNDER POLICIES ON THE
LIFE OF THE DECEDENT WITH RESPECT TO WHICH THE DECEDENT POSSESSED AT HIS
DEATH ANY OF THE INCIDENTS OF OWNERSHIP, EXERCISABLE EITHER ALONE OR  IN
CONJUNCTION  WITH  ANY  OTHER  PERSON.  FOR  PURPOSES  OF  THE PRECEDING
SENTENCE, THE TERM  "INCIDENT  OF  OWNERSHIP"  INCLUDES  A  REVERSIONARY
INTEREST  (WHETHER  ARISING  BY THE EXPRESS TERMS OF THE POLICY OR OTHER
INSTRUMENT OR BY OPERATION OF LAW) ONLY IF THE VALUE OF SUCH  REVERSION-
ARY  INTEREST  EXCEEDED 5 PERCENT OF THE VALUE OF THE POLICY IMMEDIATELY
BEFORE THE DEATH OF THE DECEDENT. AS USED IN THIS  PARAGRAPH,  THE  TERM
"REVERSIONARY  INTEREST"  INCLUDES A POSSIBILITY THAT THE POLICY, OR THE
PROCEEDS OF THE POLICY, MAY RETURN TO THE DECEDENT OR HIS ESTATE, OR MAY
BE SUBJECT TO A POWER OF DISPOSITION BY HIM. THE VALUE OF A REVERSIONARY
INTEREST AT ANY TIME SHALL BE DETERMINED (WITHOUT REGARD TO THE FACT  OF
THE  DECEDENT'S  DEATH) BY USUAL METHODS OF VALUATION, INCLUDING THE USE
OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, PURSUANT TO REGULATIONS
PRESCRIBED BY THE SECRETARY. IN DETERMINING THE VALUE OF  A  POSSIBILITY
THAT  THE POLICY OR PROCEEDS THEREOF MAY BE SUBJECT TO A POWER OF DISPO-
SITION BY THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A
POSSIBILITY THAT SUCH POLICY OR PROCEEDS MAY RETURN TO THE  DECEDENT  OR
HIS ESTATE.
  S  2043. TRANSFERS FOR INSUFFICIENT CONSIDERATION. (A) IN GENERAL.--IF
ANY ONE OF THE TRANSFERS, TRUSTS, INTERESTS, RIGHTS, OR  POWERS  ENUMER-
ATED AND DESCRIBED IN SECTIONS 2035 TO 2038, INCLUSIVE, AND SECTION 2041
IS  MADE,  CREATED,  EXERCISED,  OR  RELINQUISHED FOR A CONSIDERATION IN
MONEY OR MONEY'S WORTH, BUT IS NOT A BONA FIDE SALE FOR AN ADEQUATE  AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH, THERE SHALL BE INCLUDED IN
THE GROSS ESTATE ONLY THE EXCESS OF THE FAIR MARKET VALUE AT THE TIME OF
DEATH OF THE PROPERTY OTHERWISE TO BE INCLUDED ON ACCOUNT OF SUCH TRANS-
ACTION,  OVER  THE  VALUE  OF THE CONSIDERATION RECEIVED THEREFOR BY THE
DECEDENT.
  (B) MARITAL RIGHTS NOT TREATED AS CONSIDERATION.--
  (1) IN GENERAL.--FOR PURPOSES OF THIS  CHAPTER,  A  RELINQUISHMENT  OR
PROMISED  RELINQUISHMENT  OF  DOWER OR CURTESY, OR OF A STATUTORY ESTATE
CREATED IN LIEU OF DOWER OR CURTESY, OR OF OTHER MARITAL RIGHTS  IN  THE
DECEDENT'S  PROPERTY  OR ESTATE, SHALL NOT BE CONSIDERED TO ANY EXTENT A
CONSIDERATION "IN MONEY OR MONEY'S WORTH".
  (2) EXCEPTION.--FOR PURPOSES OF SECTION 2053  (RELATING  TO  EXPENSES,
INDEBTEDNESS,  AND  TAXES),  A  TRANSFER OF PROPERTY WHICH SATISFIES THE
REQUIREMENTS OF PARAGRAPH (1) OF SECTION 2516 (RELATING TO CERTAIN PROP-
ERTY SETTLEMENTS) SHALL BE CONSIDERED TO BE MADE  FOR  AN  ADEQUATE  AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH.
  S  2044.  CERTAIN  PROPERTY FOR WHICH MARITAL DEDUCTION WAS PREVIOUSLY
ALLOWED. (A) GENERAL RULE.--THE VALUE OF THE GROSS ESTATE SHALL  INCLUDE
THE  VALUE  OF  ANY  PROPERTY TO WHICH THIS SECTION APPLIES IN WHICH THE
DECEDENT HAD A QUALIFYING INCOME INTEREST FOR LIFE.
  (B) PROPERTY TO WHICH THIS SECTION APPLIES.--THIS SECTION  APPLIES  TO
ANY PROPERTY IF--
  (1) A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF SUCH PROP-
ERTY TO THE DECEDENT--
  (A) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
  (B) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF, AND

S. 6359--A                         275                        A. 8559--A

  (2)  SECTION  2519  (RELATING TO DISPOSITIONS OF CERTAIN LIFE ESTATES)
DID NOT APPLY WITH RESPECT TO A DISPOSITION BY THE DECEDENT OF  PART  OR
ALL OF SUCH PROPERTY.
  (C)  PROPERTY TREATED AS HAVING PASSED FROM DECEDENT.--FOR PURPOSES OF
THIS CHAPTER AND CHAPTER 13, PROPERTY INCLUDIBLE IN THE GROSS ESTATE  OF
THE  DECEDENT  UNDER SUBSECTION (A) SHALL BE TREATED AS PROPERTY PASSING
FROM THE DECEDENT.
  S 2045. PRIOR INTERESTS. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED  BY
LAW,  SECTIONS  2034  TO  2042, INCLUSIVE, SHALL APPLY TO THE TRANSFERS,
TRUSTS,  ESTATES,  INTERESTS,  RIGHTS,  POWERS,  AND  RELINQUISHMENT  OF
POWERS,  AS  SEVERALLY  ENUMERATED AND DESCRIBED THEREIN, WHENEVER MADE,
CREATED, ARISING, EXISTING, EXERCISED, OR RELINQUISHED.
  S 2046. DISCLAIMERS. FOR PROVISIONS RELATING TO THE EFFECT OF A QUALI-
FIED DISCLAIMER FOR PURPOSES OF THIS CHAPTER, SEE SECTION 2518.
  S 2053. EXPENSES, INDEBTEDNESS,  AND  TAXES.  (A)  GENERAL  RULE.--FOR
PURPOSES  OF  THE  TAX IMPOSED BY SECTION 2001, THE VALUE OF THE TAXABLE
ESTATE SHALL BE DETERMINED BY DEDUCTING FROM  THE  VALUE  OF  THE  GROSS
ESTATE SUCH AMOUNTS--
  (1) FOR FUNERAL EXPENSES,
  (2) FOR ADMINISTRATION EXPENSES,
  (3) FOR CLAIMS AGAINST THE ESTATE, AND
  (4)  FOR UNPAID MORTGAGES ON, OR ANY INDEBTEDNESS IN RESPECT OF, PROP-
ERTY WHERE THE VALUE OF THE DECEDENT'S INTEREST THEREIN, UNDIMINISHED BY
SUCH MORTGAGE OR INDEBTEDNESS, IS INCLUDED IN THE  VALUE  OF  THE  GROSS
ESTATE,
  AS  ARE  ALLOWABLE  BY THE LAWS OF THE JURISDICTION, WHETHER WITHIN OR
WITHOUT THE UNITED STATES, UNDER WHICH THE ESTATE IS BEING ADMINISTERED.
  (B) OTHER ADMINISTRATION  EXPENSES.--SUBJECT  TO  THE  LIMITATIONS  IN
PARAGRAPH  (1) OF SUBSECTION (C), THERE SHALL BE DEDUCTED IN DETERMINING
THE TAXABLE ESTATE AMOUNTS REPRESENTING EXPENSES INCURRED IN ADMINISTER-
ING PROPERTY NOT SUBJECT TO CLAIMS WHICH IS INCLUDED IN THE GROSS ESTATE
TO THE SAME EXTENT SUCH AMOUNTS WOULD BE ALLOWABLE AS A DEDUCTION  UNDER
SUBSECTION (A) IF SUCH PROPERTY WERE SUBJECT TO CLAIMS, AND SUCH AMOUNTS
ARE  PAID  BEFORE THE EXPIRATION OF THE PERIOD OF LIMITATION FOR ASSESS-
MENT PROVIDED IN SECTION 6501.
  (C) LIMITATIONS.--
  (1) LIMITATIONS APPLICABLE TO SUBSECTIONS (A) AND (B).--
  (A) CONSIDERATION FOR CLAIMS.--THE DEDUCTION ALLOWED BY  THIS  SECTION
IN  THE  CASE  OF  CLAIMS  AGAINST  THE ESTATE, UNPAID MORTGAGES, OR ANY
INDEBTEDNESS SHALL, WHEN FOUNDED ON A PROMISE OR AGREEMENT,  BE  LIMITED
TO  THE  EXTENT  THAT THEY WERE CONTRACTED BONA FIDE AND FOR AN ADEQUATE
AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH;  EXCEPT  THAT  IN  ANY
CASE IN WHICH ANY SUCH CLAIM IS FOUNDED ON A PROMISE OR AGREEMENT OF THE
DECEDENT  TO  MAKE A CONTRIBUTION OR GIFT TO OR FOR THE USE OF ANY DONEE
DESCRIBED IN SECTION  2055  FOR  THE  PURPOSES  SPECIFIED  THEREIN,  THE
DEDUCTION  FOR SUCH CLAIMS SHALL NOT BE SO LIMITED, BUT SHALL BE LIMITED
TO THE EXTENT THAT IT WOULD BE ALLOWABLE AS A  DEDUCTION  UNDER  SECTION
2055 IF SUCH PROMISE OR AGREEMENT CONSTITUTED A BEQUEST.
  (B)  CERTAIN  TAXES.--ANY  INCOME  TAXES  ON INCOME RECEIVED AFTER THE
DEATH OF THE DECEDENT, OR PROPERTY TAXES NOT ACCRUED BEFORE  HIS  DEATH,
OR  ANY  ESTATE,  SUCCESSION, LEGACY, OR INHERITANCE TAXES, SHALL NOT BE
DEDUCTIBLE UNDER THIS SECTION.
  (C) CERTAIN CLAIMS BY REMAINDERMEN.--NO  DEDUCTION  SHALL  BE  ALLOWED
UNDER  THIS  SECTION  FOR  A  CLAIM AGAINST THE ESTATE BY A REMAINDERMAN
RELATING TO ANY PROPERTY DESCRIBED IN SECTION 2044.

S. 6359--A                         276                        A. 8559--A

  (D) SECTION 6166 INTEREST.--NO DEDUCTION SHALL BE ALLOWED  UNDER  THIS
SECTION  FOR  ANY  INTEREST  PAYABLE  UNDER  SECTION  6601 ON ANY UNPAID
PORTION OF THE TAX IMPOSED BY SECTION 2001 FOR THE PERIOD  DURING  WHICH
AN  EXTENSION OF TIME FOR PAYMENT OF SUCH TAX IS IN EFFECT UNDER SECTION
6166.
  (2) LIMITATIONS APPLICABLE ONLY TO SUBSECTION (A).--IN THE CASE OF THE
AMOUNTS  DESCRIBED  IN  SUBSECTION  (A),  THERE  SHALL BE DISALLOWED THE
AMOUNT BY WHICH THE DEDUCTIONS SPECIFIED THEREIN EXCEED  THE  VALUE,  AT
THE  TIME OF THE DECEDENT'S DEATH, OF PROPERTY SUBJECT TO CLAIMS, EXCEPT
TO THE EXTENT THAT SUCH DEDUCTIONS REPRESENT  AMOUNTS  PAID  BEFORE  THE
DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN. FOR PURPOSES OF
THIS  SECTION,  THE  TERM  "PROPERTY  SUBJECT  TO CLAIMS" MEANS PROPERTY
INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT WHICH, OR THE  AVAILS  OF
WHICH, WOULD UNDER THE APPLICABLE LAW, BEAR THE BURDEN OF THE PAYMENT OF
SUCH  DEDUCTIONS  IN  THE FINAL ADJUSTMENT AND SETTLEMENT OF THE ESTATE,
EXCEPT THAT THE VALUE OF THE PROPERTY SHALL BE REDUCED BY THE AMOUNT  OF
THE DEDUCTION UNDER SECTION 2054 ATTRIBUTABLE TO SUCH PROPERTY.
  (D) CERTAIN FOREIGN DEATH TAXES.--
  (1)   IN   GENERAL.--NOTWITHSTANDING   THE  PROVISIONS  OF  SUBSECTION
(C)(1)(B), FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE VALUE OF
THE TAXABLE ESTATE MAY BE DETERMINED, IF THE EXECUTOR SO  ELECTS  BEFORE
THE  EXPIRATION  OF  THE PERIOD OF LIMITATION FOR ASSESSMENT PROVIDED IN
SECTION 6501, BY DEDUCTING FROM THE VALUE OF THE GROSS ESTATE THE AMOUNT
(AS DETERMINED IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY  THE  SECRE-
TARY)  OF  ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX IMPOSED BY
AND ACTUALLY PAID TO ANY FOREIGN COUNTRY, IN  RESPECT  OF  ANY  PROPERTY
SITUATED WITHIN SUCH FOREIGN COUNTRY AND INCLUDED IN THE GROSS ESTATE OF
A CITIZEN OR RESIDENT OF THE UNITED STATES, UPON A TRANSFER BY THE DECE-
DENT  FOR  PUBLIC,  CHARITABLE,  OR  RELIGIOUS USES DESCRIBED IN SECTION
2055. THE DETERMINATION UNDER THIS PARAGRAPH OF THE COUNTRY WITHIN WHICH
PROPERTY IS SITUATED SHALL BE MADE IN ACCORDANCE WITH THE RULES APPLICA-
BLE UNDER SUBCHAPTER B (SEC. 2101 AND FOLLOWING) IN DETERMINING  WHETHER
PROPERTY  IS SITUATED WITHIN OR WITHOUT THE UNITED STATES.  ANY ELECTION
UNDER THIS PARAGRAPH SHALL BE EXERCISED IN ACCORDANCE  WITH  REGULATIONS
PRESCRIBED BY THE SECRETARY.
  (2)  CONDITION  FOR  ALLOWANCE  OF  DEDUCTION.--NO  DEDUCTION SHALL BE
ALLOWED UNDER PARAGRAPH (1) FOR A FOREIGN DEATH  TAX  SPECIFIED  THEREIN
UNLESS  THE  DECREASE  IN  THE TAX IMPOSED BY SECTION 2001 WHICH RESULTS
FROM THE DEDUCTION PROVIDED IN PARAGRAPH (1) WILL INURE SOLELY  FOR  THE
BENEFIT OF THE PUBLIC, CHARITABLE, OR RELIGIOUS TRANSFEREES DESCRIBED IN
SECTION  2055  OR SECTION 2106(A)(2).  IN ANY CASE WHERE THE TAX IMPOSED
BY SECTION 2001 IS EQUITABLY APPORTIONED AMONG ALL  THE  TRANSFEREES  OF
PROPERTY  INCLUDED  IN  THE  GROSS  ESTATE, INCLUDING THOSE DESCRIBED IN
SECTIONS 2055 AND 2106(A)(2) (TAKING INTO ACCOUNT ANY EXEMPTIONS,  CRED-
ITS,  OR  DEDUCTIONS  ALLOWED  BY  THIS  CHAPTER),  IN  DETERMINING SUCH
DECREASE, THERE SHALL BE DISREGARDED ANY DECREASE IN THE FEDERAL  ESTATE
TAX  WHICH  ANY  TRANSFEREES OTHER THAN THOSE DESCRIBED IN SECTIONS 2055
AND 2106(A)(2) ARE REQUIRED TO PAY.
  (3) EFFECT ON CREDIT FOR FOREIGN DEATH TAXES OF DEDUCTION  UNDER  THIS
SUBSECTION.--
  (A)  ELECTION.--AN  ELECTION  UNDER  THIS SUBSECTION SHALL BE DEEMED A
WAIVER OF THE RIGHT TO CLAIM A CREDIT, AGAINST THE FEDERAL  ESTATE  TAX,
UNDER  A  DEATH  TAX  CONVENTION WITH ANY FOREIGN COUNTRY FOR ANY TAX OR
PORTION THEREOF IN RESPECT OF WHICH A  DEDUCTION  IS  TAKEN  UNDER  THIS
SUBSECTION.
  (B) CROSS REFERENCE.--

S. 6359--A                         277                        A. 8559--A

  SEE  SECTION  2011(D)  FOR  THE EFFECT OF A DEDUCTION TAKEN UNDER THIS
PARAGRAPH ON THE CREDIT FOR FOREIGN DEATH TAXES.
  (E) MARITAL RIGHTS.--
  FOR  PROVISIONS  TREATING CERTAIN RELINQUISHMENTS OF MARITAL RIGHTS AS
CONSIDERATION IN MONEY OR MONEY'S WORTH, SEE SECTION 2043(B)(2).
  S 2054. LOSSES. FOR PURPOSES OF THE TAX IMPOSED BY SECTION  2001,  THE
VALUE  OF  THE  TAXABLE ESTATE SHALL BE DETERMINED BY DEDUCTING FROM THE
VALUE OF THE GROSS ESTATE  LOSSES  INCURRED  DURING  THE  SETTLEMENT  OF
ESTATES  ARISING FROM FIRES, STORMS, SHIPWRECKS, OR OTHER CASUALTIES, OR
FROM THEFT, WHEN SUCH LOSSES ARE NOT COMPENSATED  FOR  BY  INSURANCE  OR
OTHERWISE.
  S 2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
  (A)  IN GENERAL.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE
VALUE OF THE TAXABLE ESTATE SHALL BE DETERMINED BY  DEDUCTING  FROM  THE
VALUE OF THE GROSS ESTATE THE AMOUNT OF ALL BEQUESTS, LEGACIES, DEVISES,
OR TRANSFERS--
  (1)  TO  OR FOR THE USE OF THE UNITED STATES, ANY STATE, ANY POLITICAL
SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC
PURPOSES;
  (2) TO OR FOR THE USE OF ANY CORPORATION ORGANIZED AND OPERATED EXCLU-
SIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY,  OR  EDUCATIONAL
PURPOSES,  INCLUDING  THE ENCOURAGEMENT OF ART, OR TO FOSTER NATIONAL OR
INTERNATIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF  NO  PART  OF  ITS
ACTIVITIES  INVOLVE  THE PROVISION OF ATHLETIC FACILITIES OR EQUIPMENT),
AND THE PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO PART OF THE NET
EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY  PRIVATE  STOCKHOLDER  OR
INDIVIDUAL,  WHICH  IS  NOT DISQUALIFIED FOR TAX EXEMPTION UNDER SECTION
501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE  LEGISLATION,  AND  WHICH
DOES  NOT  PARTICIPATE  IN, OR INTERVENE IN (INCLUDING THE PUBLISHING OR
DISTRIBUTING OF STATEMENTS), ANY POLITICAL CAMPAIGN ON BEHALF OF (OR  IN
OPPOSITION TO) ANY CANDIDATE FOR PUBLIC OFFICE;
  (3)  TO A TRUSTEE OR TRUSTEES, OR A FRATERNAL SOCIETY, ORDER, OR ASSO-
CIATION OPERATING UNDER THE LODGE SYSTEM, BUT ONLY IF SUCH CONTRIBUTIONS
OR GIFTS ARE TO BE USED BY SUCH TRUSTEE OR TRUSTEES, OR BY SUCH  FRATER-
NAL  SOCIETY, ORDER, OR ASSOCIATION, EXCLUSIVELY FOR RELIGIOUS, CHARITA-
BLE,  SCIENTIFIC,  LITERARY,  OR  EDUCATIONAL  PURPOSES,  OR   FOR   THE
PREVENTION  OF  CRUELTY  TO  CHILDREN  OR ANIMALS, SUCH TRUST, FRATERNAL
SOCIETY, ORDER,  OR  ASSOCIATION  WOULD  NOT  BE  DISQUALIFIED  FOR  TAX
EXEMPTION  UNDER  SECTION 501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE
LEGISLATION, AND SUCH TRUSTEE OR TRUSTEES, OR  SUCH  FRATERNAL  SOCIETY,
ORDER, OR ASSOCIATION, DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO)  ANY  CANDIDATE  FOR  PUBLIC
OFFICE;
  (4)  TO  OR  FOR THE USE OF ANY VETERANS' ORGANIZATION INCORPORATED BY
ACT OF CONGRESS, OR OF ITS DEPARTMENTS OR LOCAL CHAPTERS  OR  POSTS,  NO
PART  OF  THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE
SHAREHOLDER OR INDIVIDUAL; OR
  (5) TO AN EMPLOYEE STOCK OWNERSHIP PLAN IF SUCH TRANSFER QUALIFIES  AS
A  QUALIFIED GRATUITOUS TRANSFER OF QUALIFIED EMPLOYER SECURITIES WITHIN
THE MEANING OF SECTION 664(G).
  FOR PURPOSES OF THIS SUBSECTION, THE COMPLETE TERMINATION  BEFORE  THE
DATE  PRESCRIBED  FOR  THE FILING OF THE ESTATE TAX RETURN OF A POWER TO
CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENEFIT OF AN  INDIVID-
UAL  BEFORE SUCH POWER HAS BEEN EXERCISED BY REASON OF THE DEATH OF SUCH
INDIVIDUAL OR FOR ANY OTHER REASON SHALL BE CONSIDERED AND DEEMED TO  BE

S. 6359--A                         278                        A. 8559--A

A  QUALIFIED DISCLAIMER WITH THE SAME FULL FORCE AND EFFECT AS THOUGH HE
HAD FILED SUCH QUALIFIED DISCLAIMER.   RULES SIMILAR  TO  THE  RULES  OF
SECTION 501(J) SHALL APPLY FOR PURPOSES OF PARAGRAPH (2).
  (B)  POWERS  OF  APPOINTMENT.--PROPERTY  INCLUDIBLE  IN THE DECEDENT'S
GROSS ESTATE UNDER SECTION 2041  (RELATING  TO  POWERS  OF  APPOINTMENT)
RECEIVED  BY  A  DONEE  DESCRIBED IN THIS SECTION SHALL, FOR PURPOSES OF
THIS SECTION, BE CONSIDERED A BEQUEST OF SUCH DECEDENT.
  (C) DEATH TAXES PAYABLE  OUT  OF  BEQUESTS.--IF  THE  TAX  IMPOSED  BY
SECTION  2001,  OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAXES,
ARE, EITHER BY THE TERMS OF THE WILL, BY THE  LAW  OF  THE  JURISDICTION
UNDER  WHICH  THE ESTATE IS ADMINISTERED, OR BY THE LAW OF THE JURISDIC-
TION IMPOSING THE PARTICULAR TAX, PAYABLE IN WHOLE OR IN PART OUT OF THE
BEQUESTS, LEGACIES, OR DEVISES OTHERWISE DEDUCTIBLE UNDER THIS  SECTION,
THEN  THE  AMOUNT  DEDUCTIBLE  UNDER THIS SECTION SHALL BE THE AMOUNT OF
SUCH BEQUESTS, LEGACIES, OR DEVISES REDUCED BY THE AMOUNT OF SUCH TAXES.
  (D) LIMITATION ON DEDUCTION.--THE AMOUNT OF THE DEDUCTION  UNDER  THIS
SECTION  FOR  ANY TRANSFER SHALL NOT EXCEED THE VALUE OF THE TRANSFERRED
PROPERTY REQUIRED TO BE INCLUDED IN THE GROSS ESTATE.
  (E) DISALLOWANCE OF DEDUCTIONS IN CERTAIN CASES.--
  (1) NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR A TRANSFER TO
OR FOR THE USE OF AN ORGANIZATION OR TRUST DESCRIBED IN  SECTION  508(D)
OR 4948(C)(4) SUBJECT TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.
  (2) WHERE AN INTEREST IN PROPERTY (OTHER THAN AN INTEREST DESCRIBED IN
SECTION  170(F)(3)(B))  PASSES  OR  HAS  PASSED  FROM  THE DECEDENT TO A
PERSON, OR FOR A USE, DESCRIBED  IN  SUBSECTION  (A),  AND  AN  INTEREST
(OTHER THAN AN INTEREST WHICH IS EXTINGUISHED UPON THE DECEDENT'S DEATH)
IN THE SAME PROPERTY PASSES OR HAS PASSED (FOR LESS THAN AN ADEQUATE AND
FULL  CONSIDERATION  IN  MONEY  OR MONEY'S WORTH) FROM THE DECEDENT TO A
PERSON, OR FOR A USE, NOT DESCRIBED  IN  SUBSECTION  (A),  NO  DEDUCTION
SHALL BE ALLOWED UNDER THIS SECTION FOR THE INTEREST WHICH PASSES OR HAS
PASSED  TO  THE  PERSON,  OR  FOR  THE  USE, DESCRIBED IN SUBSECTION (A)
UNLESS--
  (A) IN THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN  A  TRUST
WHICH  IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE REMAINDER
UNITRUST (DESCRIBED IN SECTION 664) OR A POOLED INCOME  FUND  (DESCRIBED
IN SECTION 642(C)(5)), OR
  (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
A  GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF THE
FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
  (3) REFORMATIONS TO COMPLY WITH PARAGRAPH (2).--
  (A) IN GENERAL.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A)  IN
RESPECT OF ANY QUALIFIED REFORMATION.
  (B)  QUALIFIED  REFORMATION.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
"QUALIFIED REFORMATION" MEANS A CHANGE  OF  A  GOVERNING  INSTRUMENT  BY
REFORMATION,  AMENDMENT,  CONSTRUCTION,  OR  OTHERWISE  WHICH  CHANGES A
REFORMABLE INTEREST INTO A QUALIFIED INTEREST BUT ONLY IF--
  (I) ANY DIFFERENCE BETWEEN--
  (I) THE ACTUARIAL VALUE (DETERMINED AS OF THE DATE OF  THE  DECEDENT'S
DEATH) OF THE QUALIFIED INTEREST, AND
  (II)  THE  ACTUARIAL VALUE (AS SO DETERMINED) OF THE REFORMABLE INTER-
EST,
  DOES NOT EXCEED 5 PERCENT OF THE ACTUARIAL VALUE (AS SO DETERMINED) OF
THE REFORMABLE INTEREST,
  (II) IN THE CASE OF--
  (I) A CHARITABLE REMAINDER INTEREST, THE NONREMAINDER INTEREST (BEFORE
AND AFTER THE QUALIFIED REFORMATION) TERMINATED AT THE SAME TIME, OR

S. 6359--A                         279                        A. 8559--A

  (II) ANY OTHER INTEREST, THE REFORMABLE  INTEREST  AND  THE  QUALIFIED
INTEREST ARE FOR THE SAME PERIOD, AND
  (III) SUCH CHANGE IS EFFECTIVE AS OF THE DATE OF THE DECEDENT'S DEATH.
  A  NONREMAINDER  INTEREST  (BEFORE REFORMATION) FOR A TERM OF YEARS IN
EXCESS OF 20 YEARS SHALL BE  TREATED  AS  SATISFYING  SUBCLAUSE  (I)  OF
CLAUSE  (II)  IF  SUCH  INTEREST (AFTER REFORMATION) IS FOR A TERM OF 20
YEARS.
  (C) REFORMABLE INTEREST.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) IN GENERAL.--THE TERM "REFORMABLE INTEREST" MEANS ANY INTEREST FOR
WHICH A DEDUCTION WOULD BE ALLOWABLE UNDER SUBSECTION (A) AT THE TIME OF
THE DECEDENT'S DEATH BUT FOR PARAGRAPH (2).
  (II) BENEFICIARY'S  INTEREST  MUST  BE  FIXED.--THE  TERM  "REFORMABLE
INTEREST"  DOES  NOT  INCLUDE  ANY INTEREST UNLESS, BEFORE THE REMAINDER
VESTS IN POSSESSION, ALL PAYMENTS TO PERSONS OTHER THAN AN  ORGANIZATION
DESCRIBED  IN  SUBSECTION  (A)  ARE EXPRESSED EITHER IN SPECIFIED DOLLAR
AMOUNTS OR A FIXED PERCENTAGE OF THE FAIR MARKET VALUE OF THE  PROPERTY.
FOR PURPOSES OF DETERMINING WHETHER ALL SUCH PAYMENTS ARE EXPRESSED AS A
FIXED  PERCENTAGE  OF  THE  FAIR  MARKET  VALUE OF THE PROPERTY, SECTION
664(D)(3) SHALL BE TAKEN INTO ACCOUNT.
  (III) SPECIAL RULE WHERE TIMELY COMMENCEMENT  OF  REFORMATION.--CLAUSE
(II)  SHALL  NOT  APPLY  TO  ANY  INTEREST  IF  A JUDICIAL PROCEEDING IS
COMMENCED TO CHANGE SUCH INTEREST INTO A QUALIFIED  INTEREST  NOT  LATER
THAN THE 90TH DAY AFTER--
  (I) IF AN ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE
(INCLUDING EXTENSIONS) FOR FILING SUCH RETURN, OR
  (II)  IF  NO  ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE
(INCLUDING EXTENSIONS) FOR FILING THE INCOME  TAX  RETURN  FOR  THE  1ST
TAXABLE  YEAR  FOR  WHICH  SUCH  A RETURN IS REQUIRED TO BE FILED BY THE
TRUST.
  (IV) SPECIAL RULE FOR WILL EXECUTED BEFORE JANUARY 1,  1979,  ETC.--IN
THE CASE OF ANY INTEREST PASSING UNDER A WILL EXECUTED BEFORE JANUARY 1,
1979,  OR  UNDER A TRUST CREATED BEFORE SUCH DATE, CLAUSE (II) SHALL NOT
APPLY.
  (D) QUALIFIED INTEREST.--FOR PURPOSES  OF  THIS  PARAGRAPH,  THE  TERM
"QUALIFIED  INTEREST"  MEANS AN INTEREST FOR WHICH A DEDUCTION IS ALLOW-
ABLE UNDER SUBSECTION (A).
  (E) LIMITATION.--THE DEDUCTION REFERRED TO IN SUBPARAGRAPH  (A)  SHALL
NOT  EXCEED  THE AMOUNT OF THE DEDUCTION WHICH WOULD HAVE BEEN ALLOWABLE
FOR THE REFORMABLE INTEREST BUT FOR PARAGRAPH (2).
  (F) SPECIAL RULE WHERE INCOME BENEFICIARY DIES.--IF (BY REASON OF  THE
DEATH OF ANY INDIVIDUAL, OR BY TERMINATION OR DISTRIBUTION OF A TRUST IN
ACCORDANCE  WITH  THE TERMS OF THE TRUST INSTRUMENT) BY THE DUE DATE FOR
FILING THE ESTATE TAX RETURN (INCLUDING ANY EXTENSION THEREOF) A REFORM-
ABLE INTEREST IS IN A WHOLLY CHARITABLE TRUST OR PASSES  DIRECTLY  TO  A
PERSON  OR  FOR  A USE DESCRIBED IN SUBSECTION (A), A DEDUCTION SHALL BE
ALLOWED FOR SUCH REFORMABLE INTEREST AS IF IT HAD MET  THE  REQUIREMENTS
OF  PARAGRAPH  (2)  ON THE DATE OF THE DECEDENT'S DEATH. FOR PURPOSES OF
THE PRECEDING SENTENCE, THE TERM "WHOLLY CHARITABLE TRUST" MEANS A CHAR-
ITABLE TRUST  WHICH,  UPON  THE  ALLOWANCE  OF  A  DEDUCTION,  WOULD  BE
DESCRIBED IN SECTION 4947(A)(1).
  (G)  STATUTE  OF LIMITATIONS.--THE PERIOD FOR ASSESSING ANY DEFICIENCY
OF ANY TAX ATTRIBUTABLE TO THE APPLICATION OF THIS PARAGRAPH  SHALL  NOT
EXPIRE  BEFORE  THE DATE 1 YEAR AFTER THE DATE ON WHICH THE SECRETARY IS
NOTIFIED THAT SUCH REFORMATION (OR OTHER PROCEEDING PURSUANT TO SUBPARA-
GRAPH (J)1 HAS OCCURRED.

S. 6359--A                         280                        A. 8559--A

  (H) REGULATIONS.--THE SECRETARY SHALL PRESCRIBE  SUCH  REGULATIONS  AS
MAY  BE NECESSARY TO CARRY OUT THE PURPOSES OF THIS PARAGRAPH, INCLUDING
REGULATIONS  PROVIDING  SUCH  ADJUSTMENTS  IN  THE  APPLICATION  OF  THE
PROVISIONS OF SECTION 508 (RELATING TO SPECIAL RULES RELATING TO SECTION
501(C)(3)  ORGANIZATIONS),  SUBCHAPTER  J  (RELATING TO ESTATES, TRUSTS,
BENEFICIARIES, AND DECEDENTS), AND CHAPTER 42 (RELATING TO PRIVATE FOUN-
DATIONS) AS MAY BE NECESSARY BY REASON OF THE QUALIFIED REFORMATION.
  (I) REFORMATIONS PERMITTED IN CASE OF REMAINDER INTERESTS IN RESIDENCE
OR FARM, POOLED INCOME FUNDS, ETC.--THE SECRETARY SHALL PRESCRIBE  REGU-
LATIONS  (CONSISTENT  WITH  THE PROVISIONS OF THIS PARAGRAPH) PERMITTING
REFORMATIONS IN THE CASE OF ANY FAILURE--
  (I) TO MEET THE REQUIREMENTS  OF  SECTION  170(F)(3)(B)  (RELATING  TO
REMAINDER INTERESTS IN PERSONAL RESIDENCE OR FARM, ETC.), OR
  (II) TO MEET THE REQUIREMENTS OF SECTION 642(C)(5).
  (J)  VOID  OR REFORMED TRUST IN CASES OF INSUFFICIENT REMAINDER INTER-
ESTS.--IN THE CASE OF A TRUST THAT WOULD QUALIFY (OR COULD  BE  REFORMED
TO  QUALIFY PURSUANT TO SUBPARAGRAPH (B)) BUT FOR FAILURE TO SATISFY THE
REQUIREMENT OF PARAGRAPH (1)(D) OR (2)(D) OF SECTION 664(D), SUCH  TRUST
MAY BE--
  (I) DECLARED NULL AND VOID AB INITIO, OR
  (II)  CHANGED  BY  REFORMATION,  AMENDMENT,  OR OTHERWISE TO MEET SUCH
REQUIREMENT BY REDUCING THE PAYOUT RATE OR THE DURATION (OR BOTH) OF ANY
NONCHARITABLE BENEFICIARY'S INTEREST TO THE EXTENT NECESSARY TO  SATISFY
SUCH REQUIREMENT,
  PURSUANT  TO A PROCEEDING THAT IS COMMENCED WITHIN THE PERIOD REQUIRED
IN SUBPARAGRAPH  (C)(III).  IN  A  CASE  DESCRIBED  IN  CLAUSE  (I),  NO
DEDUCTION  SHALL  BE  ALLOWED  UNDER  THIS TITLE FOR ANY TRANSFER TO THE
TRUST AND ANY TRANSACTIONS ENTERED INTO BY  THE  TRUST  PRIOR  TO  BEING
DECLARED VOID SHALL BE TREATED AS ENTERED INTO BY THE TRANSFEROR.
  (4)  WORKS  OF ART AND THEIR COPYRIGHTS TREATED AS SEPARATE PROPERTIES
IN CERTAIN CASES.--
  (A) IN GENERAL.--IN THE CASE OF A QUALIFIED CONTRIBUTION OF A WORK  OF
ART,  THE  WORK  OF  ART  AND THE COPYRIGHT ON SUCH WORK OF ART SHALL BE
TREATED AS SEPARATE PROPERTIES FOR PURPOSES OF PARAGRAPH (2).
  (B) WORK OF ART DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,  THE  TERM
"WORK OF ART" MEANS ANY TANGIBLE PERSONAL PROPERTY WITH RESPECT TO WHICH
THERE IS A COPYRIGHT UNDER FEDERAL LAW.
  (C)  QUALIFIED  CONTRIBUTION DEFINED.--FOR PURPOSES OF THIS PARAGRAPH,
THE TERM "QUALIFIED CONTRIBUTION" MEANS ANY TRANSFER OF  PROPERTY  TO  A
QUALIFIED ORGANIZATION IF THE USE OF THE PROPERTY BY THE ORGANIZATION IS
RELATED  TO  THE  PURPOSE  OR  FUNCTION  CONSTITUTING  THE BASIS FOR ITS
EXEMPTION UNDER SECTION 501.
  (D) QUALIFIED ORGANIZATION DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,
THE  TERM  "QUALIFIED  ORGANIZATION" MEANS ANY ORGANIZATION DESCRIBED IN
SECTION 501(C)(3) OTHER THAN A PRIVATE FOUNDATION (AS DEFINED IN SECTION
509).  FOR PURPOSES OF THE PRECEDING SENTENCE, A PRIVATE OPERATING FOUN-
DATION (AS DEFINED IN SECTION 4942(J)(3)) SHALL  NOT  BE  TREATED  AS  A
PRIVATE FOUNDATION.
  (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.--A  DEDUCTION OTHERWISE
ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF--
  (A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT--
  (I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR

S. 6359--A                         281                        A. 8559--A

  (II) A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN  SECTION
4943(F)(5)(A))  WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT-
ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
  (B)  THE  TAXPAYER  OBTAINS  A  CONTEMPORANEOUS WRITTEN ACKNOWLEDGMENT
(DETERMINED UNDER RULES SIMILAR TO THE RULES  OF  SECTION  170(F)(8)(C))
FROM  THE  SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH DONOR ADVISED
FUND THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE  ASSETS
CONTRIBUTED.
  (F)  SPECIAL  RULE  FOR  IRREVOCABLE  TRANSFERS  OF  EASEMENTS IN REAL
PROPERTY.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN  RESPECT
OF  ANY  TRANSFER  OF  A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN
SECTION 170(H)(2)(C)) WHICH MEETS THE  REQUIREMENTS  OF  SECTION  170(H)
(WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
  (G) CROSS REFERENCES.--
  (1) FOR OPTION AS TO TIME FOR VALUATION FOR PURPOSE OF DEDUCTION UNDER
THIS SECTION, SEE SECTION 2032.
  (2)  FOR  TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD CARE, SEE
SECTION 501(K).
  (3) FOR EXEMPTION OF GIFTS AND BEQUESTS  TO  OR  FOR  THE  BENEFIT  OF
LIBRARY  OF  CONGRESS,  SEE  SECTION  5  OF THE ACT OF MARCH 3, 1925, AS
AMENDED (2 U.S.C. 161).
  (4) FOR TREATMENT OF GIFTS AND BEQUESTS FOR THE BENEFIT OF  THE  NAVAL
HISTORICAL  CENTER  AS GIFTS OR BEQUESTS TO OR FOR THE USE OF THE UNITED
STATES, SEE SECTION 7222 OF TITLE 10, UNITED STATES CODE.
  (5) FOR TREATMENT OF GIFTS AND BEQUESTS  TO  OR  FOR  THE  BENEFIT  OF
NATIONAL  PARK  FOUNDATION AS GIFTS OR BEQUESTS TO OR FOR THE USE OF THE
UNITED STATES, SEE SECTION 8 OF THE ACT OF DECEMBER 18, 1967 (16  U.S.C.
191).
  (6)  FOR  TREATMENT  OF  GIFTS,  DEVISES,  OR BEQUESTS ACCEPTED BY THE
SECRETARY OF STATE, THE  DIRECTOR  OF  THE  INTERNATIONAL  COMMUNICATION
AGENCY,  OR  THE DIRECTOR OF THE UNITED STATES INTERNATIONAL DEVELOPMENT
COOPERATION AGENCY AS GIFTS, DEVISES, OR BEQUESTS TO OR FOR THE  USE  OF
THE UNITED STATES, SEE SECTION 25 OF THE STATE DEPARTMENT BASIC AUTHORI-
TIES ACT OF 1956.
  (7) FOR TREATMENT OF GIFTS OR BEQUESTS OF MONEY ACCEPTED BY THE ATTOR-
NEY  GENERAL  FOR CREDIT TO "COMMISSARY FUNDS, FEDERAL PRISONS" AS GIFTS
OR BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE SECTION 4043  OF
TITLE 18, UNITED STATES CODE.
  (8)  FOR  PAYMENT  OF TAX ON GIFTS AND BEQUESTS OF UNITED STATES OBLI-
GATIONS TO THE UNITED STATES, SEE SECTION 3113(E) OF  TITLE  31,  UNITED
STATES CODE.
  (9) FOR TREATMENT OF GIFTS AND BEQUESTS FOR BENEFIT OF THE NAVAL ACAD-
EMY  AS  GIFTS  OR  BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE
SECTION 6973 OF TITLE 10, UNITED STATES CODE.
  (10) FOR TREATMENT OF GIFTS AND BEQUESTS  FOR  BENEFIT  OF  THE  NAVAL
ACADEMY  MUSEUM  AS  GIFTS  OR  BEQUESTS TO OR FOR THE USE OF THE UNITED
STATES, SEE SECTION 6974 OF TITLE 10, UNITED STATES CODE.
  (11) FOR EXEMPTION OF GIFTS AND BEQUESTS RECEIVED BY NATIONAL ARCHIVES
TRUST FUND BOARD, SEE SECTION 2308 OF TITLE 44, UNITED STATES CODE.
  (12) FOR TREATMENT OF GIFTS AND BEQUESTS TO OR FOR THE USE  OF  INDIAN
TRIBAL GOVERNMENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
  S  2056. BEQUESTS, ETC., TO SURVIVING SPOUSE. (A) ALLOWANCE OF MARITAL
DEDUCTION.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001,  THE  VALUE
OF  THE  TAXABLE  ESTATE  SHALL, EXCEPT AS LIMITED BY SUBSECTION (B), BE
DETERMINED BY DEDUCTING FROM THE VALUE OF THE  GROSS  ESTATE  AN  AMOUNT
EQUAL  TO  THE  VALUE  OF  ANY  INTEREST IN PROPERTY WHICH PASSES OR HAS

S. 6359--A                         282                        A. 8559--A

PASSED FROM THE DECEDENT TO HIS SURVIVING SPOUSE, BUT ONLY TO THE EXTENT
THAT SUCH INTEREST IS INCLUDED IN DETERMINING THE  VALUE  OF  THE  GROSS
ESTATE.
  (B)  LIMITATION  IN THE CASE OF LIFE ESTATE OR OTHER TERMINABLE INTER-
EST.--
  (1) GENERAL RULE.--WHERE, ON THE LAPSE OF TIME, ON THE  OCCURRENCE  OF
AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF AN EVENT OR CONTINGENCY TO
OCCUR,  AN  INTEREST  PASSING  TO THE SURVIVING SPOUSE WILL TERMINATE OR
FAIL, NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION WITH  RESPECT  TO
SUCH INTEREST--
  (A)  IF  AN  INTEREST  IN SUCH PROPERTY PASSES OR HAS PASSED (FOR LESS
THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH)  FROM
THE  DECEDENT  TO  ANY  PERSON  OTHER THAN SUCH SURVIVING SPOUSE (OR THE
ESTATE OF SUCH SPOUSE); AND
  (B) IF BY REASON OF SUCH PASSING SUCH PERSON (OR HIS HEIRS OR ASSIGNS)
MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY AFTER SUCH TERMINATION OR
FAILURE OF THE INTEREST SO PASSING TO THE SURVIVING SPOUSE;
  AND NO DEDUCTION SHALL BE ALLOWED WITH RESPECT TO SUCH INTEREST  (EVEN
IF SUCH DEDUCTION IS NOT DISALLOWED UNDER SUBPARAGRAPHS (A) AND (B))--
  (C)  IF  SUCH  INTEREST  IS  TO  BE ACQUIRED FOR THE SURVIVING SPOUSE,
PURSUANT TO DIRECTIONS OF THE DECEDENT, BY HIS EXECUTOR OR BY THE  TRUS-
TEE OF A TRUST.
  FOR PURPOSES OF THIS PARAGRAPH, AN INTEREST SHALL NOT BE CONSIDERED AS
AN INTEREST WHICH WILL TERMINATE OR FAIL MERELY BECAUSE IT IS THE OWNER-
SHIP  OF  A BOND, NOTE, OR SIMILAR CONTRACTUAL OBLIGATION, THE DISCHARGE
OF WHICH WOULD NOT HAVE THE EFFECT OF AN ANNUITY FOR LIFE OR FOR A TERM.
  (2) INTEREST IN UNIDENTIFIED ASSETS.--WHERE THE  ASSETS  (INCLUDED  IN
THE  DECEDENT'S GROSS ESTATE) OUT OF WHICH, OR THE PROCEEDS OF WHICH, AN
INTEREST PASSING TO THE SURVIVING SPOUSE  MAY  BE  SATISFIED  INCLUDE  A
PARTICULAR  ASSET  OR ASSETS WITH RESPECT TO WHICH NO DEDUCTION WOULD BE
ALLOWED IF SUCH ASSET OR ASSETS PASSED FROM THE DECEDENT TO SUCH SPOUSE,
THEN THE VALUE OF SUCH  INTEREST  PASSING  TO  SUCH  SPOUSE  SHALL,  FOR
PURPOSES  OF  SUBSECTION  (A), BE REDUCED BY THE AGGREGATE VALUE OF SUCH
PARTICULAR ASSETS.
  (3)  INTEREST  OF  SPOUSE  CONDITIONAL   ON   SURVIVAL   FOR   LIMITED
PERIOD.--FOR  PURPOSES  OF  THIS  SUBSECTION, AN INTEREST PASSING TO THE
SURVIVING SPOUSE SHALL NOT BE  CONSIDERED  AS  AN  INTEREST  WHICH  WILL
TERMINATE OR FAIL ON THE DEATH OF SUCH SPOUSE IF--
  (A)  SUCH  DEATH  WILL CAUSE A TERMINATION OR FAILURE OF SUCH INTEREST
ONLY IF IT OCCURS WITHIN A PERIOD  NOT  EXCEEDING  6  MONTHS  AFTER  THE
DECEDENT'S  DEATH, OR ONLY IF IT OCCURS AS A RESULT OF A COMMON DISASTER
RESULTING IN THE DEATH OF THE DECEDENT AND THE SURVIVING SPOUSE, OR ONLY
IF IT OCCURS IN THE CASE OF EITHER SUCH EVENT; AND
  (B) SUCH TERMINATION OR FAILURE DOES NOT IN FACT OCCUR.
  (4) VALUATION OF INTEREST PASSING TO SURVIVING SPOUSE.--IN DETERMINING
FOR PURPOSES OF SUBSECTION (A) THE VALUE OF  ANY  INTEREST  IN  PROPERTY
PASSING TO THE SURVIVING SPOUSE FOR WHICH A DEDUCTION IS ALLOWED BY THIS
SECTION--
  (A) THERE SHALL BE TAKEN INTO ACCOUNT THE EFFECT WHICH THE TAX IMPOSED
BY  SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX,
HAS ON THE NET VALUE TO THE SURVIVING SPOUSE OF SUCH INTEREST; AND
  (B) WHERE SUCH INTEREST OR PROPERTY IS ENCUMBERED IN  ANY  MANNER,  OR
WHERE THE SURVIVING SPOUSE INCURS ANY OBLIGATION IMPOSED BY THE DECEDENT
WITH  RESPECT TO THE PASSING OF SUCH INTEREST, SUCH ENCUMBRANCE OR OBLI-
GATION SHALL BE TAKEN INTO ACCOUNT IN THE SAME MANNER AS IF  THE  AMOUNT
OF A GIFT TO SUCH SPOUSE OF SUCH INTEREST WERE BEING DETERMINED.

S. 6359--A                         283                        A. 8559--A

  (5) LIFE ESTATE WITH POWER OF APPOINTMENT IN SURVIVING SPOUSE.--IN THE
CASE  OF  AN  INTEREST  IN  PROPERTY  PASSING  FROM THE DECEDENT, IF HIS
SURVIVING SPOUSE IS ENTITLED FOR LIFE TO ALL THE INCOME FROM THE  ENTIRE
INTEREST,  OR  ALL  THE  INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE
ANNUALLY  OR  AT  MORE  FREQUENT  INTERVALS, WITH POWER IN THE SURVIVING
SPOUSE TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC  PORTION  (EXER-
CISABLE  IN  FAVOR  OF  SUCH  SURVIVING SPOUSE, OR OF THE ESTATE OF SUCH
SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER OR NOT IN EACH CASE THE
POWER IS EXERCISABLE IN FAVOR OF OTHERS), AND WITH NO POWER IN ANY OTHER
PERSON TO APPOINT ANY PART OF THE INTEREST, OR SUCH SPECIFIC PORTION, TO
ANY PERSON OTHER THAN THE SURVIVING SPOUSE--
  (A) THE INTEREST  OR  SUCH  PORTION  THEREOF  SO  PASSING  SHALL,  FOR
PURPOSES  OF  SUBSECTION  (A), BE CONSIDERED AS PASSING TO THE SURVIVING
SPOUSE, AND
  (B) NO PART OF THE INTEREST SO PASSING SHALL, FOR  PURPOSES  OF  PARA-
GRAPH  (1)(A),  BE  CONSIDERED  AS  PASSING TO ANY PERSON OTHER THAN THE
SURVIVING SPOUSE.
  THIS PARAGRAPH SHALL APPLY ONLY IF SUCH POWER IN THE SURVIVING  SPOUSE
TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC PORTION THEREOF, WHETH-
ER  EXERCISABLE  BY  WILL  OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE
ALONE AND IN ALL EVENTS.
  (6) LIFE INSURANCE OR ANNUITY PAYMENTS WITH POWER  OF  APPOINTMENT  IN
SURVIVING  SPOUSE.--IN  THE CASE OF AN INTEREST IN PROPERTY PASSING FROM
THE DECEDENT CONSISTING OF PROCEEDS UNDER A LIFE  INSURANCE,  ENDOWMENT,
OR  ANNUITY  CONTRACT,  IF UNDER THE TERMS OF THE CONTRACT SUCH PROCEEDS
ARE PAYABLE IN INSTALLMENTS OR ARE HELD BY THE  INSURER  SUBJECT  TO  AN
AGREEMENT  TO  PAY INTEREST THEREON (WHETHER THE PROCEEDS, ON THE TERMI-
NATION OF ANY INTEREST PAYMENTS, ARE PAYABLE IN A LUMP SUM OR IN  ANNUAL
OR  MORE  FREQUENT  INSTALLMENTS),  AND  SUCH  INSTALLMENT  OR  INTEREST
PAYMENTS ARE PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS,  COMMENCING
NOT LATER THAN 13 MONTHS AFTER THE DECEDENT'S DEATH, AND ALL AMOUNTS, OR
A  SPECIFIC  PORTION OF ALL SUCH AMOUNTS, PAYABLE DURING THE LIFE OF THE
SURVIVING SPOUSE ARE PAYABLE ONLY TO SUCH SPOUSE, AND  SUCH  SPOUSE  HAS
THE  POWER  TO  APPOINT  ALL  AMOUNTS, OR SUCH SPECIFIC PORTION, PAYABLE
UNDER SUCH CONTRACT (EXERCISABLE IN FAVOR OF SUCH SURVIVING  SPOUSE,  OR
OF  THE  ESTATE OF SUCH SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER
OR NOT IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF  OTHERS),  WITH
NO POWER IN ANY OTHER PERSON TO APPOINT SUCH AMOUNTS TO ANY PERSON OTHER
THAN THE SURVIVING SPOUSE--
  (A)  SUCH AMOUNTS SHALL, FOR PURPOSES OF SUBSECTION (A), BE CONSIDERED
AS PASSING TO THE SURVIVING SPOUSE, AND
  (B) NO PART OF SUCH AMOUNTS SHALL, FOR PURPOSES OF  PARAGRAPH  (1)(A),
BE CONSIDERED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
  THIS  PARAGRAPH  SHALL APPLY ONLY IF, UNDER THE TERMS OF THE CONTRACT,
SUCH POWER IN THE SURVIVING SPOUSE  TO  APPOINT  SUCH  AMOUNTS,  WHETHER
EXERCISABLE  BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE ALONE
AND IN ALL EVENTS.
  (7) ELECTION WITH RESPECT TO LIFE ESTATE FOR SURVIVING SPOUSE.--
  (A) IN GENERAL.--IN THE CASE OF QUALIFIED TERMINABLE INTEREST  PROPER-
TY--
  (I)  FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED AS
PASSING TO THE SURVIVING SPOUSE, AND
  (II) FOR PURPOSES OF PARAGRAPH (1)(A), NO PART OF SUCH PROPERTY  SHALL
BE TREATED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
  (B)  QUALIFIED  TERMINABLE INTEREST PROPERTY DEFINED.--FOR PURPOSES OF
THIS PARAGRAPH--

S. 6359--A                         284                        A. 8559--A

  (I) IN GENERAL.--THE TERM  "QUALIFIED  TERMINABLE  INTEREST  PROPERTY"
MEANS PROPERTY--
  (I) WHICH PASSES FROM THE DECEDENT,
  (II)  IN  WHICH  THE SURVIVING SPOUSE HAS A QUALIFYING INCOME INTEREST
FOR LIFE, AND
  (III) TO WHICH AN ELECTION UNDER THIS PARAGRAPH APPLIES.
  (II) QUALIFYING INCOME INTEREST FOR LIFE.--THE SURVIVING SPOUSE HAS  A
QUALIFYING INCOME INTEREST FOR LIFE IF--
  (I)  THE SURVIVING SPOUSE IS ENTITLED TO ALL THE INCOME FROM THE PROP-
ERTY, PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, OR HAS A  USUFRUCT
INTEREST FOR LIFE IN THE PROPERTY, AND
  (II)  NO PERSON HAS A POWER TO APPOINT ANY PART OF THE PROPERTY TO ANY
PERSON OTHER THAN THE SURVIVING SPOUSE.
  SUBCLAUSE (II) SHALL NOT APPLY TO A POWER EXERCISABLE ONLY AT OR AFTER
THE DEATH OF THE SURVIVING SPOUSE.  TO  THE  EXTENT  PROVIDED  IN  REGU-
LATIONS,  AN  ANNUITY  SHALL BE TREATED IN A MANNER SIMILAR TO AN INCOME
INTEREST IN PROPERTY (REGARDLESS OF WHETHER THE PROPERTY FROM WHICH  THE
ANNUITY IS PAYABLE CAN BE SEPARATELY IDENTIFIED).
  (III)   PROPERTY   INCLUDES  INTEREST  THEREIN.--THE  TERM  "PROPERTY"
INCLUDES AN INTEREST IN PROPERTY.
  (IV)  SPECIFIC  PORTION  TREATED  AS  SEPARATE  PROPERTY.--A  SPECIFIC
PORTION OF PROPERTY SHALL BE TREATED AS SEPARATE PROPERTY.
  (V)  ELECTION.--AN  ELECTION  UNDER THIS PARAGRAPH WITH RESPECT TO ANY
PROPERTY SHALL BE MADE BY THE EXECUTOR ON THE RETURN OF TAX  IMPOSED  BY
SECTION 2001. SUCH AN ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (C)  TREATMENT  OF  SURVIVOR  ANNUITIES.--IN  THE  CASE  OF AN ANNUITY
INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER SECTION 2039 (OR,  IN
THE  CASE OF AN INTEREST IN AN ANNUITY ARISING UNDER THE COMMUNITY PROP-
ERTY LAWS OF A STATE, INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER
SECTION 2033) WHERE ONLY THE SURVIVING SPOUSE HAS THE RIGHT  TO  RECEIVE
PAYMENTS BEFORE THE DEATH OF SUCH SURVIVING SPOUSE--
  (I) THE INTEREST OF SUCH SURVIVING SPOUSE SHALL BE TREATED AS A QUALI-
FYING INCOME INTEREST FOR LIFE, AND
  (II)  THE  EXECUTOR  SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER
THIS SUBSECTION WITH RESPECT TO SUCH ANNUITY UNLESS THE EXECUTOR  OTHER-
WISE ELECTS ON THE RETURN OF TAX IMPOSED BY SECTION 2001.
  AN ELECTION UNDER CLAUSE (II), ONCE MADE, SHALL BE IRREVOCABLE.
  (8) SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS.--
  (A)  IN  GENERAL.--IF THE SURVIVING SPOUSE OF THE DECEDENT IS THE ONLY
BENEFICIARY OF A QUALIFIED CHARITABLE REMAINDER TRUST WHO IS NOT A CHAR-
ITABLE BENEFICIARY NOR AN ESOP  BENEFICIARY,  PARAGRAPH  (1)  SHALL  NOT
APPLY  TO ANY INTEREST IN SUCH TRUST WHICH PASSES OR HAS PASSED FROM THE
DECEDENT TO SUCH SURVIVING SPOUSE.
  (B) DEFINITIONS.--FOR PURPOSES OF SUBPARAGRAPH (A)--
  (I) CHARITABLE BENEFICIARY.--THE TERM "CHARITABLE  BENEFICIARY"  MEANS
ANY BENEFICIARY WHICH IS AN ORGANIZATION DESCRIBED IN SECTION 170(C).
  (II)  ESOP BENEFICIARY.--THE TERM "ESOP BENEFICIARY" MEANS ANY BENEFI-
CIARY WHICH IS AN EMPLOYEE STOCK OWNERSHIP PLAN (AS DEFINED  IN  SECTION
4975(E)(7))  THAT HOLDS A REMAINDER INTEREST IN QUALIFIED EMPLOYER SECU-
RITIES (AS DEFINED IN SECTION 664(G)(4)) TO BE TRANSFERRED TO SUCH  PLAN
IN A QUALIFIED GRATUITOUS TRANSFER (AS DEFINED IN SECTION 664(G)(1)).
  (III) QUALIFIED CHARITABLE REMAINDER TRUST.--THE TERM "QUALIFIED CHAR-
ITABLE  REMAINDER TRUST" MEANS A CHARITABLE REMAINDER ANNUITY TRUST OR A
CHARITABLE REMAINDER UNITRUST (DESCRIBED IN SECTION 664).
  (9) DENIAL OF DOUBLE DEDUCTION.--NOTHING IN THIS SECTION OR ANY  OTHER
PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-

S. 6359--A                         285                        A. 8559--A

ERTY  TO  BE  DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE WITH RESPECT TO
THE SAME DECEDENT.
  (10)  SPECIFIC  PORTION.--FOR  PURPOSES  OF  PARAGRAPHS  (5), (6), AND
(7)(B)(IV), THE TERM "SPECIFIC PORTION" ONLY INCLUDES A  PORTION  DETER-
MINED ON A FRACTIONAL OR PERCENTAGE BASIS.
  (C) DEFINITION.--FOR PURPOSES OF THIS SECTION, AN INTEREST IN PROPERTY
SHALL  BE  CONSIDERED  AS PASSING FROM THE DECEDENT TO ANY PERSON IF AND
ONLY IF--
  (1) SUCH INTEREST IS BEQUEATHED OR DEVISED TO SUCH PERSON BY THE DECE-
DENT;
  (2) SUCH INTEREST IS INHERITED BY SUCH PERSON FROM THE DECEDENT;
  (3) SUCH INTEREST IS THE  DOWER  OR  CURTESY  INTEREST  (OR  STATUTORY
INTEREST  IN  LIEU  THEREOF)  OF  SUCH PERSON AS SURVIVING SPOUSE OF THE
DECEDENT;
  (4) SUCH INTEREST HAS BEEN TRANSFERRED TO SUCH PERSON BY THE  DECEDENT
AT ANY TIME;
  (5)  SUCH  INTEREST  WAS, AT THE TIME OF THE DECEDENT'S DEATH, HELD BY
SUCH PERSON AND THE DECEDENT (OR BY THEM AND ANY OTHER PERSON) IN  JOINT
OWNERSHIP WITH RIGHT OF SURVIVORSHIP;
  (6)  THE DECEDENT HAD A POWER (EITHER ALONE OR IN CONJUNCTION WITH ANY
PERSON) TO APPOINT SUCH INTEREST AND IF HE  APPOINTS  OR  HAS  APPOINTED
SUCH  INTEREST  TO SUCH PERSON, OR IF SUCH PERSON TAKES SUCH INTEREST IN
DEFAULT ON THE RELEASE OR NONEXERCISE OF SUCH POWER; OR
  (7) SUCH INTEREST CONSISTS OF PROCEEDS OF INSURANCE ON THE LIFE OF THE
DECEDENT RECEIVABLE BY SUCH PERSON.
  EXCEPT AS PROVIDED IN PARAGRAPH (5) OR (6) OF SUBSECTION (B), WHERE AT
THE TIME OF THE DECEDENT'S DEATH IT IS NOT  POSSIBLE  TO  ASCERTAIN  THE
PARTICULAR  PERSON  OR  PERSONS TO WHOM AN INTEREST IN PROPERTY MAY PASS
FROM THE DECEDENT, SUCH INTEREST SHALL, FOR  PURPOSES  OF  SUBPARAGRAPHS
(A)  AND  (B)  OF  SUBSECTION  (B)(1), BE CONSIDERED AS PASSING FROM THE
DECEDENT TO A PERSON OTHER THAN THE SURVIVING SPOUSE.
  S 2103. DEFINITION OF GROSS ESTATE. FOR THE PURPOSE OF THE TAX IMPOSED
BY SECTION 2101, THE VALUE OF THE GROSS ESTATE OF EVERY DECEDENT NONRES-
IDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE THAT PART OF HIS GROSS
ESTATE (DETERMINED AS PROVIDED IN SECTION 2031) WHICH AT THE TIME OF HIS
DEATH IS SITUATED IN THE UNITED STATES.
  S 2104. PROPERTY WITHIN THE  UNITED  STATES.  (A)  STOCK  IN  CORPORA-
TION.--FOR PURPOSES OF THIS SUBCHAPTER SHARES OF STOCK OWNED AND HELD BY
A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE DEEMED PROPER-
TY WITHIN THE UNITED STATES ONLY IF ISSUED BY A DOMESTIC CORPORATION.
  (B)  REVOCABLE  TRANSFERS  AND TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR
PURPOSES OF THIS SUBCHAPTER, ANY PROPERTY OF WHICH THE DECEDENT HAS MADE
A TRANSFER, BY TRUST OR OTHERWISE, WITHIN THE MEANING OF  SECTIONS  2035
TO 2038, INCLUSIVE, SHALL BE DEEMED TO BE SITUATED IN THE UNITED STATES,
IF  SO SITUATED EITHER AT THE TIME OF THE TRANSFER OR AT THE TIME OF THE
DECEDENT'S DEATH.
  (C) DEBT OBLIGATIONS.--FOR PURPOSES OF  THIS  SUBCHAPTER,  DEBT  OBLI-
GATIONS OF-
  (1) A UNITED STATES PERSON, OR
  (2)  THE  UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF,
OR THE DISTRICT OF COLUMBIA,
  OWNED AND HELD BY A NONRESIDENT NOT A CITIZEN  OF  THE  UNITED  STATES
SHALL  BE  DEEMED  PROPERTY  WITHIN  THE  UNITED STATES. WITH RESPECT TO
ESTATES OF DECEDENTS DYING AFTER DECEMBER  31,  1969,  DEPOSITS  WITH  A
DOMESTIC  BRANCH  OF A FOREIGN CORPORATION, IF SUCH BRANCH IS ENGAGED IN
THE COMMERCIAL BANKING BUSINESS, SHALL, FOR PURPOSES OF THIS SUBCHAPTER,

S. 6359--A                         286                        A. 8559--A

BE DEEMED PROPERTY WITHIN THE UNITED STATES. THIS SUBSECTION  SHALL  NOT
APPLY TO A DEBT OBLIGATION TO WHICH SECTION 2105(B) APPLIES.
  S 2105. PROPERTY WITHOUT THE UNITED STATES. (A) PROCEEDS OF LIFE INSU-
RANCE.--FOR PURPOSES OF THIS SUBCHAPTER, THE AMOUNT RECEIVABLE AS INSUR-
ANCE  ON  THE  LIFE  OF A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES
SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES.
  (B) BANK DEPOSITS AND CERTAIN OTHER DEBT OBLIGATIONS.--FOR PURPOSES OF
THIS SUBCHAPTER, THE FOLLOWING SHALL NOT BE DEEMED PROPERTY  WITHIN  THE
UNITED STATES--
  (1)  AMOUNTS  DESCRIBED  IN SECTION 871(I)(3), IF ANY INTEREST THEREON
WOULD NOT BE SUBJECT TO TAX BY REASON OF  SECTION  871(I)(1)  WERE  SUCH
INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS DEATH,
  (2) DEPOSITS WITH A FOREIGN BRANCH OF A DOMESTIC CORPORATION OR DOMES-
TIC  PARTNERSHIP,  IF  SUCH  BRANCH IS ENGAGED IN THE COMMERCIAL BANKING
BUSINESS,
  (3) DEBT OBLIGATIONS, IF, WITHOUT REGARD TO WHETHER A STATEMENT  MEET-
ING  THE REQUIREMENTS OF SECTION 871(H)(5) HAS BEEN RECEIVED, ANY INTER-
EST THEREON WOULD BE ELIGIBLE FOR THE EXEMPTION FROM TAX  UNDER  SECTION
871(H)(1) WERE SUCH INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS
DEATH, AND
  (4)  OBLIGATIONS WHICH WOULD BE ORIGINAL ISSUE DISCOUNT OBLIGATIONS AS
DEFINED IN SECTION 871(G)(1) BUT FOR SUBPARAGRAPH (B)(I) THEREOF, IF ANY
INTEREST THEREON (WERE SUCH INTEREST RECEIVED BY  THE  DECEDENT  AT  THE
TIME  OF  HIS DEATH) WOULD NOT BE EFFECTIVELY CONNECTED WITH THE CONDUCT
OF A TRADE OR BUSINESS WITHIN THE UNITED STATES.
  NOTWITHSTANDING THE PRECEDING SENTENCE, IF ANY PORTION OF THE INTEREST
ON AN OBLIGATION REFERRED TO IN PARAGRAPH (3) WOULD NOT BE ELIGIBLE  FOR
THE  EXEMPTION  REFERRED  TO  IN  PARAGRAPH  (3)  BY  REASON  OF SECTION
871(H)(4) IF THE INTEREST WERE RECEIVED BY THE DECEDENT AT THE  TIME  OF
HIS  DEATH,  THEN  AN  APPROPRIATE  PORTION  (AS  DETERMINED IN A MANNER
PRESCRIBED BY THE SECRETARY) OF THE VALUE (AS DETERMINED FOR PURPOSES OF
THIS CHAPTER) OF SUCH DEBT OBLIGATION SHALL BE  DEEMED  PROPERTY  WITHIN
THE UNITED STATES.
  (C)  WORKS  OF  ART  ON  LOAN  FOR  EXHIBITION.--FOR  PURPOSES OF THIS
SUBCHAPTER, WORKS OF ART OWNED BY A NONRESIDENT NOT  A  CITIZEN  OF  THE
UNITED  STATES  SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES IF
SUCH WORKS OF ART ARE--
  (1) IMPORTED INTO THE UNITED STATES SOLELY FOR EXHIBITION PURPOSES,
  (2) LOANED FOR SUCH PURPOSES, TO A PUBLIC GALLERY OR MUSEUM,  NO  PART
OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE STOCK-
HOLDER OR INDIVIDUAL, AND
  (3)  AT  THE TIME OF THE DEATH OF THE OWNER, ON EXHIBITION, OR ENROUTE
TO OR FROM EXHIBITION, IN SUCH A PUBLIC GALLERY OR MUSEUM.
  S 2503. (A) GENERAL DEFINITION - THE TERM "TAXABLE  GIFTS"  MEANS  THE
TOTAL  AMOUNT  OF  GIFTS  MADE DURING THE CALENDAR YEAR, LESS DEDUCTIONS
PROVIDED IN SUBCHAPTER C (SECTION 2522 AND FOLLOWING).
  (B) EXCLUSIONS FROM GIFTS. (1)  IN  GENERAL.--IN  THE  CASE  OF  GIFTS
(OTHER THAN GIFTS OF FUTURE INTERESTS IN PROPERTY) MADE TO ANY PERSON BY
THE  DONOR  DURING THE CALENDAR YEAR, THE FIRST $10,000 OF SUCH GIFTS TO
SUCH PERSON SHALL NOT, FOR PURPOSES OF SUBSECTION (A),  BE  INCLUDED  IN
THE  TOTAL AMOUNT OF GIFTS MADE DURING SUCH YEAR. WHERE THERE HAS BEEN A
TRANSFER TO ANY PERSON OF A PRESENT INTEREST IN PROPERTY, THE  POSSIBIL-
ITY  THAT  SUCH  INTEREST  MAY  BE DIMINISHED BY THE EXERCISE OF A POWER
SHALL BE DISREGARDED IN APPLYING THIS SUBSECTION, IF  NO  PART  OF  SUCH
INTEREST WILL AT ANY TIME PASS TO ANY OTHER PERSON.

S. 6359--A                         287                        A. 8559--A

  (2)  INFLATION  ADJUSTMENT.--IN  THE  CASE OF GIFTS MADE IN A CALENDAR
YEAR AFTER 1998, THE $10,000 AMOUNT CONTAINED IN PARAGRAPH (1) SHALL  BE
INCREASED BY AN AMOUNT EQUAL TO--
  (A) $10,000, MULTIPLIED BY
  (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
SUCH  CALENDAR  YEAR  BY SUBSTITUTING "CALENDAR YEAR 1997" FOR "CALENDAR
YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.
  IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
PLE OF $1,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST  MULTIPLE
OF $1,000.
  (C)  TRANSFER  FOR  THE  BENEFIT  OF MINOR. -- NO PART OF A GIFT TO AN
INDIVIDUAL WHO HAS NOT ATTAINED THE AGE OF 21 YEARS ON THE DATE OF  SUCH
TRANSFER SHALL BE CONSIDERED A GIFT OF A FUTURE INTEREST IN PROPERTY FOR
PURPOSES OF SUBSECTION (B) IF THE PROPERTY AND THE INCOME THEREFROM-
  (1)  MAY  BE  EXPENDED BY, OR FOR THE BENEFIT OF, THE DONEE BEFORE HIS
ATTAINING THE AGE OF 21 YEARS, AND
  (2) WILL TO THE EXTENT NOT SO EXPENDED-
  (A) PASS TO THE DONEE ON HIS ATTAINING THE AGE OF 21 YEARS, AND
  (B) IN THE EVENT THE DONEE DIES BEFORE ATTAINING THE AGE OF 21  YEARS,
BE  PAYABLE  TO  THE  ESTATE  OF  THE DONEE OR AS HE MAY APPOINT UNDER A
GENERAL POWER OF APPOINTMENT AS DEFINED IN SECTION 2514(C).
  {(D) REPEALED. PUB. L. 97-34, TITLE III, S 311(H)(5), AUG.  13,  1981,
95 STAT.  282}
  (E)  EXCLUSION  FOR  CERTAIN  TRANSFERS  FOR  EDUCATIONAL  EXPENSES OR
MEDICAL EXPENSES. (1) IN GENERAL. ANY QUALIFIED TRANSFER  SHALL  NOT  BE
TREATED AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
  (2)  QUALIFIED  TRANSFER.  FOR  PURPOSES  OF THIS SUBSECTION, THE TERM
"QUALIFIED TRANSFER" MEANS ANY AMOUNT PAID ON BEHALF OF AN INDIVIDUAL-
  (A) AS TUITION TO AN EDUCATIONAL  ORGANIZATION  DESCRIBED  IN  SECTION
170(B)(1)(A)(II) FOR THE EDUCATION OR TRAINING OF SUCH INDIVIDUAL, OR
  (B)  TO  ANY  PERSON  WHO PROVIDES MEDICAL CARE (AS DEFINED IN SECTION
213(D)) WITH RESPECT TO SUCH INDIVIDUAL  AS  PAYMENT  FOR  SUCH  MEDICAL
CARE.
  (F) WAIVER OF CERTAIN PENSION RIGHTS. IF ANY INDIVIDUAL WAIVES, BEFORE
THE DEATH OF A PARTICIPANT, ANY SURVIVOR BENEFIT, OR RIGHT TO SUCH BENE-
FIT,  UNDER  SECTION 401(A)(11) OR 417, SUCH WAIVER SHALL NOT BE TREATED
AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
  (G) TREATMENT OF CERTAIN  LOANS  OF  ARTWORKS.  (1)  IN  GENERAL.  FOR
PURPOSES OF THIS SUBTITLE, ANY LOAN OF A QUALIFIED WORK OF ART SHALL NOT
BE  TREATED  AS  A TRANSFER (AND THE VALUE OF SUCH QUALIFIED WORK OF ART
SHALL BE DETERMINED AS IF SUCH LOAN HAD NOT BEEN MADE) IF-
  (A) SUCH LOAN IS TO AN ORGANIZATION DESCRIBED IN SECTION 501(C)(3) AND
EXEMPT FROM TAX UNDER SECTION 501(C) (OTHER THAN A PRIVATE  FOUNDATION),
AND
  (B)  THE  USE  OF  SUCH  WORK  BY  SUCH ORGANIZATION IS RELATED TO THE
PURPOSE OR FUNCTION CONSTITUTING  THE  BASIS  FOR  ITS  EXEMPTION  UNDER
SECTION 501.
  (2) DEFINITIONS. FOR PURPOSES OF THIS SECTION-
  (A)  QUALIFIED WORK OF ART. THE TERM "QUALIFIED WORK OF ART" MEANS ANY
ARCHAEOLOGICAL, HISTORIC, OR CREATIVE TANGIBLE PERSONAL PROPERTY.
  (B) PRIVATE FOUNDATION. THE TERM "PRIVATE FOUNDATION" HAS THE  MEANING
GIVEN  SUCH TERM BY SECTION 509, EXCEPT THAT SUCH TERM SHALL NOT INCLUDE
ANY PRIVATE OPERATING FOUNDATION (AS DEFINED IN SECTION 4942(J)(3)).
  S 2511. TRANSFERS IN GENERAL. (A) SCOPE. SUBJECT  TO  THE  LIMITATIONS
CONTAINED  IN  THIS CHAPTER, THE TAX IMPOSED BY SECTION 2501 SHALL APPLY
WHETHER THE TRANSFER IS IN TRUST  OR  OTHERWISE,  WHETHER  THE  GIFT  IS

S. 6359--A                         288                        A. 8559--A

DIRECT OR INDIRECT, AND WHETHER THE PROPERTY IS REAL OR PERSONAL, TANGI-
BLE OR INTANGIBLE; BUT IN THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
UNITED  STATES,  SHALL APPLY TO A TRANSFER ONLY IF THE PROPERTY IS SITU-
ATED WITHIN THE UNITED STATES.
  (B)  INTANGIBLE PROPERTY. FOR PURPOSES OF THIS CHAPTER, IN THE CASE OF
A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES WHO  IS  EXCEPTED  FROM
THE APPLICATION OF SECTION 2501(A)(2)-
  (1) SHARES OF STOCK ISSUED BY A DOMESTIC CORPORATION, AND
  (2) DEBT OBLIGATIONS OF-
--(A) A UNITED STATES PERSON, OR
--(B)  THE  UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF,
OR THE DISTRICT OF COLUMBIA,
--WHICH ARE OWNED AND HELD BY SUCH NONRESIDENT SHALL  BE  DEEMED  TO  BE
PROPERTY SITUATED WITHIN THE UNITED STATES.
  S  2512.  VALUATION OF GIFTS. (A) IF THE GIFT IS MADE IN PROPERTY, THE
VALUE THEREOF AT THE DATE OF THE GIFT SHALL BE CONSIDERED THE AMOUNT  OF
THE GIFT.
  (B)  WHERE  PROPERTY IS TRANSFERRED FOR LESS THAN AN ADEQUATE AND FULL
CONSIDERATION IN MONEY OR MONEY'S WORTH, THEN THE AMOUNT  BY  WHICH  THE
VALUE  OF  THE PROPERTY EXCEEDED THE VALUE OF THE CONSIDERATION SHALL BE
DEEMED A GIFT, AND SHALL BE INCLUDED IN COMPUTING THE  AMOUNT  OF  GIFTS
MADE DURING THE CALENDAR YEAR.
  S 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY. (A) CONSIDERED AS MADE
ONE-HALF  BY  EACH.  (1)  IN  GENERAL.  A GIFT MADE BY ONE SPOUSE TO ANY
PERSON OTHER THAN HIS SPOUSE SHALL, FOR THE PURPOSES OF THIS CHAPTER, BE
CONSIDERED AS MADE ONE-HALF BY HIM AND ONE-HALF BY HIS SPOUSE, BUT  ONLY
IF  AT  THE TIME OF THE GIFT EACH SPOUSE IS A CITIZEN OR RESIDENT OF THE
UNITED STATES. THIS PARAGRAPH SHALL NOT APPLY WITH RESPECT TO A GIFT  BY
A SPOUSE OF AN INTEREST IN PROPERTY IF HE CREATES IN HIS SPOUSE A GENER-
AL POWER OF APPOINTMENT, AS DEFINED IN SECTION 2514(C), OVER SUCH INTER-
EST.  FOR PURPOSES OF THIS SECTION, AN INDIVIDUAL SHALL BE CONSIDERED AS
THE SPOUSE OF ANOTHER INDIVIDUAL ONLY IF HE IS MARRIED TO SUCH  INDIVID-
UAL AT THE TIME OF THE GIFT AND DOES NOT REMARRY DURING THE REMAINDER OF
THE CALENDAR YEAR.
  (2)  CONSENT  OF  BOTH SPOUSES. PARAGRAPH (1) SHALL APPLY ONLY IF BOTH
SPOUSES HAVE SIGNIFIED (UNDER THE REGULATIONS PROVIDED FOR IN SUBSECTION
(B)) THEIR CONSENT TO THE APPLICATION OF PARAGRAPH (1) IN  THE  CASE  OF
ALL  SUCH GIFTS MADE DURING THE CALENDAR YEAR BY EITHER WHILE MARRIED TO
THE OTHER.
  (B) MANNER AND TIME OF SIGNIFYING CONSENT. (1) MANNER. A CONSENT UNDER
THIS SECTION SHALL BE SIGNIFIED IN SUCH  MANNER  AS  IS  PROVIDED  UNDER
REGULATIONS PRESCRIBED BY THE SECRETARY.
  (2) TIME. SUCH CONSENT MAY BE SO SIGNIFIED AT ANY TIME AFTER THE CLOSE
OF  THE CALENDAR YEAR IN WHICH THE GIFT WAS MADE, SUBJECT TO THE FOLLOW-
ING LIMITATIONS-
--(A) THE CONSENT MAY NOT BE SIGNIFIED  AFTER  THE  15TH  DAY  OF  APRIL
FOLLOWING  THE CLOSE OF SUCH YEAR, UNLESS BEFORE SUCH 15TH DAY NO RETURN
HAS BEEN FILED FOR SUCH YEAR BY EITHER SPOUSE, IN WHICH CASE THE CONSENT
MAY NOT BE SIGNIFIED AFTER A RETURN FOR SUCH YEAR  IS  FILED  BY  EITHER
SPOUSE.
--(B) THE CONSENT MAY NOT BE SIGNIFIED AFTER A NOTICE OF DEFICIENCY WITH
RESPECT  TO  THE  TAX  FOR  SUCH  YEAR HAS BEEN SENT TO EITHER SPOUSE IN
ACCORDANCE WITH SECTION 6212(A).
  (C) REVOCATION OF CONSENT. REVOCATION OF A CONSENT  PREVIOUSLY  SIGNI-
FIED  SHALL  BE  MADE  IN  SUCH  MANNER AS IN PROVIDED UNDER REGULATIONS

S. 6359--A                         289                        A. 8559--A

PRESCRIBED BY THE SECRETARY, BUT THE RIGHT TO REVOKE A CONSENT PREVIOUS-
LY SIGNIFIED WITH RESPECT TO A CALENDAR YEAR-
  (1) SHALL NOT EXIST AFTER THE 15TH DAY OF APRIL FOLLOWING THE CLOSE OF
SUCH YEAR IF THE CONSENT WAS SIGNIFIED ON OR BEFORE SUCH 15TH DAY; AND
  (2)  SHALL NOT EXIST IF THE CONSENT WAS NOT SIGNIFIED UNTIL AFTER SUCH
15TH DAY.
  (D) JOINT AND SEVERAL LIABILITY FOR TAX. IF THE  CONSENT  REQUIRED  BY
SUBSECTION (A)(2) IS SIGNIFIED WITH RESPECT TO A GIFT MADE IN ANY CALEN-
DAR  YEAR,  THE LIABILITY WITH RESPECT TO THE ENTIRE TAX IMPOSED BY THIS
CHAPTER OF EACH SPOUSE FOR SUCH YEAR SHALL BE JOINT AND SEVERAL.
  S 2514. POWERS OF APPOINTMENT. (A) POWERS CREATED ON OR BEFORE OCTOBER
21, 1942. AN EXERCISE OF A GENERAL POWER OF APPOINTMENT  CREATED  ON  OR
BEFORE  OCTOBER  21, 1942, SHALL BE DEEMED A TRANSFER OF PROPERTY BY THE
INDIVIDUAL POSSESSING SUCH POWER; BUT THE FAILURE  TO  EXERCISE  SUCH  A
POWER  OR  THE  COMPLETE  RELEASE OF SUCH A POWER SHALL NOT BE DEEMED AN
EXERCISE THEREOF. IF A GENERAL POWER OF APPOINTMENT CREATED ON OR BEFORE
OCTOBER 21, 1942, HAS BEEN PARTIALLY RELEASED SO THAT IT IS NO LONGER  A
GENERAL  POWER  OF  APPOINTMENT,  THE  SUBSEQUENT EXERCISE OF SUCH POWER
SHALL NOT BE DEEMED TO BE THE EXERCISE OF A GENERAL POWER OF APPOINTMENT
IF-
  (1) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
  (2) THE DONEE OF SUCH POWER WAS UNDER A LEGAL  DISABILITY  TO  RELEASE
SUCH  POWER  ON  OCTOBER 21, 1942, AND SUCH PARTIAL RELEASE OCCURRED NOT
LATER THAN SIX MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
  (B) POWERS CREATED AFTER OCTOBER 21, 1942. THE EXERCISE OR RELEASE  OF
A  GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, SHALL BE
DEEMED A TRANSFER OF PROPERTY BY THE INDIVIDUAL POSSESSING SUCH POWER.
  (C) DEFINITION OF GENERAL POWER OF APPOINTMENT. FOR PURPOSES  OF  THIS
SECTION,  THE TERM "GENERAL POWER OF APPOINTMENT" MEANS A POWER WHICH IS
EXERCISABLE IN FAVOR OF THE INDIVIDUAL POSSESSING THE  POWER  (HEREAFTER
IN  THIS  SUBSECTION  REFERRED  TO  AS THE "POSSESSOR"), HIS ESTATE, HIS
CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT-
  (1) A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE  BENE-
FIT  OF  THE  POSSESSOR  WHICH  IS  LIMITED BY AN ASCERTAINABLE STANDARD
RELATING TO THE  HEALTH,  EDUCATION,  SUPPORT,  OR  MAINTENANCE  OF  THE
POSSESSOR SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (2)  A  POWER  OF  APPOINTMENT  CREATED ON OR BEFORE OCTOBER 21, 1942,
WHICH IS EXERCISABLE BY THE POSSESSOR ONLY IN CONJUNCTION  WITH  ANOTHER
PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (3)  IN  THE  CASE OF A POWER OF APPOINTMENT CREATED AFTER OCTOBER 21,
1942, WHICH IS EXERCISABLE BY THE POSSESSOR  ONLY  IN  CONJUNCTION  WITH
ANOTHER PERSON-
--(A)  IF  THE  POWER  IS  NOT  EXERCISABLE  BY  THE POSSESSOR EXCEPT IN
CONJUNCTION WITH THE CREATOR OF THE POWER-SUCH POWER SHALL NOT BE DEEMED
A GENERAL POWER OF APPOINTMENT;
--(B) IF THE POWER  IS  NOT  EXERCISABLE  BY  THE  POSSESSOR  EXCEPT  IN
CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST, IN THE PROPERTY
SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
OF  THE  POSSESSOR-SUCH  POWER  SHALL  NOT  BE DEEMED A GENERAL POWER OF
APPOINTMENT. FOR THE PURPOSES OF THIS SUBPARAGRAPH A PERSON  WHO,  AFTER
THE  DEATH  OF THE POSSESSOR, MAY BE POSSESSED OF A POWER OF APPOINTMENT
(WITH RESPECT TO THE PROPERTY SUBJECT TO THE POSSESSOR'S POWER) WHICH HE
MAY EXERCISE IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN  INTEREST  IN
THE  PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH EXERCISE
OF THE POSSESSOR'S POWER;

S. 6359--A                         290                        A. 8559--A

--(C) IF (AFTER THE APPLICATION OF SUBPARAGRAPHS (A) AND (B)) THE  POWER
IS  A  GENERAL  POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH
OTHER PERSON-SUCH POWER SHALL BE DEEMED A GENERAL POWER  OF  APPOINTMENT
ONLY  IN  RESPECT  OF  A FRACTIONAL PART OF THE PROPERTY SUBJECT TO SUCH
POWER, SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY
BY THE NUMBER OF SUCH PERSONS (INCLUDING THE POSSESSOR) IN FAVOR OF WHOM
SUCH POWER IS EXERCISABLE.
--FOR  PURPOSES OF SUBPARAGRAPHS (B) AND (C), A POWER SHALL BE DEEMED TO
BE EXERCISABLE IN FAVOR OF A PERSON IF IT IS  EXERCISABLE  IN  FAVOR  OF
SUCH PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
  (D) CREATION OF ANOTHER POWER IN CERTAIN CASES. IF A POWER OF APPOINT-
MENT  CREATED  AFTER  OCTOBER 21, 1942, IS EXERCISED BY CREATING ANOTHER
POWER OF APPOINTMENT WHICH, UNDER  THE  APPLICABLE  LOCAL  LAW,  CAN  BE
VALIDLY  EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE OR INTER-
EST IN THE PROPERTY WHICH WAS SUBJECT TO THE FIRST POWER, OR SUSPEND THE
ABSOLUTE OWNERSHIP OR POWER OF ALIENATION OF SUCH PROPERTY, FOR A PERIOD
ASCERTAINABLE WITHOUT REGARD TO THE DATE OF THE CREATION  OF  THE  FIRST
POWER,  SUCH  EXERCISE  OF  THE  FIRST POWER SHALL, TO THE EXTENT OF THE
PROPERTY SUBJECT TO THE SECOND POWER, BE DEEMED A TRANSFER  OF  PROPERTY
BY THE INDIVIDUAL POSSESSING SUCH POWER.
  (E)  LAPSE OF POWER. THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
SHALL BE CONSIDERED A RELEASE OF SUCH POWER. THE RULE OF  THE  PRECEDING
SENTENCE  SHALL  APPLY  WITH  RESPECT  TO THE LAPSE OF POWERS DURING ANY
CALENDAR YEAR ONLY TO THE EXTENT THAT THE PROPERTY WHICH COULD HAVE BEEN
APPOINTED BY EXERCISE OF SUCH LAPSED POWERS EXCEEDS IN VALUE THE GREATER
OF THE FOLLOWING AMOUNTS:
  (1) $5,000, OR
  (2) 5 PERCENT OF THE AGGREGATE VALUE OF THE ASSETS OUT  OF  WHICH,  OR
THE PROCEEDS OF WHICH, THE EXERCISE OF THE LAPSED POWERS COULD BE SATIS-
FIED.
  (F) DATE OF CREATION OF POWER. FOR PURPOSES OF THIS SECTION A POWER OF
APPOINTMENT  CREATED  BY  A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
  S 2516. CERTAIN PROPERTY SETTLEMENTS. WHERE A HUSBAND AND  WIFE  ENTER
INTO  A  WRITTEN AGREEMENT RELATIVE TO THEIR MARITAL AND PROPERTY RIGHTS
AND DIVORCE OCCURS WITHIN THE 3-YEAR PERIOD BEGINNING ON THE DATE 1 YEAR
BEFORE SUCH AGREEMENT IS ENTERED INTO (WHETHER OR NOT SUCH AGREEMENT  IS
APPROVED  BY THE DIVORCE DECREE), ANY TRANSFERS OF PROPERTY OR INTERESTS
IN PROPERTY MADE PURSUANT TO SUCH AGREEMENT-
  (1) TO EITHER SPOUSE IN SETTLEMENT OF HIS OR HER MARITAL  OR  PROPERTY
RIGHTS, OR
  (2)  TO PROVIDE A REASONABLE ALLOWANCE FOR THE SUPPORT OF ISSUE OF THE
MARRIAGE DURING MINORITY,
  --SHALL BE DEEMED TO BE TRANSFERS MADE FOR A FULL AND ADEQUATE CONSID-
ERATION IN MONEY OR MONEY'S WORTH.
  S 2518. DISCLAIMERS. (A) GENERAL RULE. - FOR PURPOSES OF  THIS  SUBTI-
TLE, IF A PERSON MAKES A QUALIFIED DISCLAIMER WITH RESPECT TO ANY INTER-
EST IN PROPERTY, THIS SUBTITLE SHALL APPLY WITH RESPECT TO SUCH INTEREST
AS IF THE INTEREST HAD NEVER BEEN TRANSFERRED TO SUCH PERSON.
  (B)  QUALIFIED  DISCLAIMER  DEFINED. - FOR PURPOSES OF SUBSECTION (A),
THE TERM "QUALIFIED DISCLAIMER" MEANS  AN  IRREVOCABLE  AND  UNQUALIFIED
REFUSAL BY A PERSON TO ACCEPT AN INTEREST IN PROPERTY BUT ONLY IF -
  (1) SUCH REFUSAL IS IN WRITING,

S. 6359--A                         291                        A. 8559--A

  (2)  SUCH  WRITING  IS RECEIVED BY THE TRANSFEROR OF THE INTEREST, HIS
LEGAL REPRESENTATIVE, OR THE HOLDER OF THE LEGAL TITLE TO  THE  PROPERTY
TO  WHICH THE INTEREST RELATES NOT LATER THAN THE DATE WHICH IS 9 MONTHS
AFTER THE LATER OF -
  (A)  THE  DATE  ON  WHICH  THE  TRANSFER CREATING THE INTEREST IN SUCH
PERSON IS MADE, OR
  (B) THE DAY ON WHICH SUCH PERSON ATTAINS AGE 21,
  (3) SUCH PERSON HAS NOT ACCEPTED THE INTEREST OR ANY OF ITS  BENEFITS,
AND
  (4)  AS  A  RESULT  OF  SUCH  REFUSAL, THE INTEREST PASSES WITHOUT ANY
DIRECTION ON THE PART OF THE PERSON MAKING  THE  DISCLAIMER  AND  PASSES
EITHER -
  (A) TO THE SPOUSE OF THE DECEDENT, OR
  (B) TO A PERSON OTHER THAN THE PERSON MAKING THE DISCLAIMER.
  (C) OTHER RULES. FOR PURPOSES OF SUBSECTION (A)-
  (1)  DISCLAIMER  OF  UNDIVIDED  PORTION OF INTEREST. A DISCLAIMER WITH
RESPECT TO AN UNDIVIDED PORTION OF AN INTEREST WHICH MEETS THE  REQUIRE-
MENTS  OF  THE  PRECEDING  SENTENCE  SHALL  BE  TREATED  AS  A QUALIFIED
DISCLAIMER OF SUCH PORTION OF THE INTEREST.
  (2) POWERS. A POWER WITH RESPECT TO PROPERTY SHALL BE  TREATED  AS  AN
INTEREST IN SUCH PROPERTY.
  (3)  CERTAIN  TRANSFERS  TREATED AS DISCLAIMERS. A WRITTEN TRANSFER OF
THE TRANSFEROR'S ENTIRE INTEREST IN THE PROPERTY-
  (A) WHICH MEETS REQUIREMENTS SIMILAR TO THE REQUIREMENTS OF PARAGRAPHS
(2) AND (3) OF SUBSECTION (B), AND
  (B) WHICH IS TO A PERSON OR PERSONS WHO WOULD HAVE RECEIVED THE  PROP-
ERTY  HAD THE TRANSFEROR MADE A QUALIFIED DISCLAIMER (WITHIN THE MEANING
OF SUBSECTION (B)),
  --SHALL BE TREATED AS A QUALIFIED DISCLAIMER.
  S 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES. (A) GENERAL RULE
  --FOR PURPOSES OF THIS CHAPTER AND CHAPTER 11, ANY DISPOSITION OF  ALL
OR  PART  OF  A  QUALIFYING  INCOME INTEREST FOR LIFE IN ANY PROPERTY TO
WHICH THIS SECTION APPLIES SHALL BE TREATED AS A TRANSFER OF ALL  INTER-
ESTS IN SUCH PROPERTY OTHER THAN THE QUALIFYING INCOME INTEREST.
  (B) PROPERTY TO WHICH THIS SUBSECTION APPLIES. THIS SECTION APPLIES TO
ANY  PROPERTY IF A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF
SUCH PROPERTY TO THE DONOR-
  (1) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
  (2) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF.
  (C) CROSS REFERENCE
--FOR RIGHT OF RECOVERY FOR GIFT TAX IN THE CASE OF PROPERTY TREATED  AS
TRANSFERRED UNDER THIS SECTION, SEE SECTION 2207A(B).
  S  2522.  CHARITABLE  AND SIMILAR GIFTS. (A) CITIZENS OR RESIDENTS. IN
COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR, THERE SHALL BE ALLOWED AS
A DEDUCTION IN THE CASE OF A CITIZEN OR RESIDENT THE AMOUNT OF ALL GIFTS
MADE DURING SUCH YEAR TO OR FOR THE USE OF-
  (1) THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION  THERE-
OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
  (2)  A CORPORATION, OR TRUST, OR COMMUNITY CHEST, FUND, OR FOUNDATION,
ORGANIZED AND OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE,  SCIENTIF-
IC, LITERARY, OR EDUCATIONAL PURPOSES, OR TO FOSTER NATIONAL OR INTERNA-
TIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF NO PART OF ITS ACTIVITIES
INVOLVE  THE  PROVISION  OF ATHLETIC FACILITIES OR EQUIPMENT), INCLUDING
THE ENCOURAGEMENT OF ART AND THE PREVENTION OF CRUELTY  TO  CHILDREN  OR
ANIMALS,  NO  PART OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF
ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALIFIED FOR TAX

S. 6359--A                         292                        A. 8559--A

EXEMPTION UNDER SECTION 501(C)(3) BY REASON OF ATTEMPTING  TO  INFLUENCE
LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
CAMPAIGN  ON  BEHALF  OF  (OR IN OPPOSITION TO) ANY CANDIDATE FOR PUBLIC
OFFICE;
  (3) A FRATERNAL SOCIETY, ORDER, OR ASSOCIATION,  OPERATING  UNDER  THE
LODGE  SYSTEM,  BUT  ONLY  IF  SUCH GIFTS ARE TO BE USED EXCLUSIVELY FOR
RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY,  OR  EDUCATIONAL  PURPOSES,
INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND THE PREVENTION OF CRUELTY TO
CHILDREN OR ANIMALS;
  (4) POSTS OR ORGANIZATIONS OF WAR  VETERANS,  OR  AUXILIARY  UNITS  OR
SOCIETIES  OF  ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH POSTS, ORGANIZA-
TIONS, UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY  OF
ITS  POSSESSIONS,  AND  IF  NO PART OF THEIR NET EARNINGS INSURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
  RULES SIMILAR TO THE RULES OF SECTION 501(J) SHALL APPLY FOR  PURPOSES
OF PARAGRAPH (2).
  (B)  NONRESIDENTS.  IN  THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
UNITED STATES, THERE SHALL BE ALLOWED AS A DEDUCTION THE AMOUNT  OF  ALL
GIFTS MADE DURING SUCH YEAR TO OR FOR THE USE OF-
  (1)  THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE-
OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
  (2) A DOMESTIC CORPORATION  ORGANIZED  AND  OPERATED  EXCLUSIVELY  FOR
RELIGIOUS,  CHARITABLE,  SCIENTIFIC,  LITERARY, OR EDUCATIONAL PURPOSES,
INCLUDING THE ENCOURAGEMENT OF ART AND  THE  PREVENTION  OF  CRUELTY  TO
CHILDREN  OR ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALI-
FIED FOR TAX EXEMPTION UNDER SECTION 501(C)(3) BY REASON  OF  ATTEMPTING
TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
PUBLIC OFFICE;
  (3) A TRUST, OR COMMUNITY CHEST, FUND, OR  FOUNDATION,  ORGANIZED  AND
OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO SUBSTANTIAL PART OF THE
ACTIVITIES OF WHICH IS CARRYING ON PROPAGANDA, OR OTHERWISE  ATTEMPTING,
TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
PUBLIC OFFICE; BUT ONLY IF SUCH GIFTS ARE TO BE USED WITHIN  THE  UNITED
STATES EXCLUSIVELY FOR SUCH PURPOSES;
  (4)  A  FRATERNAL  SOCIETY, ORDER, OR ASSOCIATION, OPERATING UNDER THE
LODGE SYSTEM, BUT ONLY IF SUCH GIFTS ARE TO BE USED  WITHIN  THE  UNITED
STATES  EXCLUSIVELY  FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS;
  (5)  POSTS  OR  ORGANIZATIONS  OF  WAR VETERANS, OR AUXILIARY UNITS OR
SOCIETIES OF ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH  POSTS,  ORGANIZA-
TIONS,  UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY OF
ITS POSSESSIONS, AND IF NO PART OF THEIR  NET  EARNINGS  INURES  TO  THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
  (C)  DISALLOWANCE  OF  DEDUCTIONS  IN  CERTAIN CASES. (1) NO DEDUCTION
SHALL BE ALLOWED UNDER THIS SECTION FOR A GIFT TO OF 1 FOR THE USE OF AN
ORGANIZATION OR TRUST DESCRIBED IN SECTION 508(D) OR 4948(C)(4)  SUBJECT
TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.

S. 6359--A                         293                        A. 8559--A

  (2)  WHERE  A  DONOR  TRANSFERS AN INTEREST IN PROPERTY (OTHER THAN AN
INTEREST DESCRIBED IN SECTION 170(F)(3)(B)) TO A PERSON, OR FOR  A  USE,
DESCRIBED  IN SUBSECTION (A) OR (B) AND AN INTEREST IN THE SAME PROPERTY
IS RETAINED BY THE DONOR, OR IS TRANSFERRED OR HAS BEEN TRANSFERRED (FOR
LESS  THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH)
FROM THE DONOR TO A PERSON, OR FOR A USE, NOT  DESCRIBED  IN  SUBSECTION
(A)  OR  (B),  NO  DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR THE
INTEREST WHICH IS, OR HAS BEEN TRANSFERRED TO THE  PERSON,  OR  FOR  THE
USE, DESCRIBED IN SUBSECTION (A) OR (B), UNLESS-
  (A)  IN  THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN A TRUST
WHICH IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE  REMAINDER
UNITRUST  (DESCRIBED  IN SECTION 664) OR A POOLED INCOME FUND (DESCRIBED
IN SECTION 642(C)(5)), OR
  (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
A GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF  THE
FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
  (3)  RULES  SIMILAR TO THE RULES OF SECTION 2055(E)(4) SHALL APPLY FOR
PURPOSES OF PARAGRAPH (2).
  (4) REFORMATIONS TO COMPLY WITH PARAGRAPH (2). (A)  IN  GENERAL  --  A
DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF ANY QUALI-
FIED REFORMATION (WITHIN THE MEANING OF SECTION 2055(E)(3)(B)).
  (B)  RULES  SIMILAR  TO SECTION 2055(E)(3) TO APPLY -- FOR PURPOSES OF
THIS PARAGRAPH, RULES SIMILAR TO THE RULES OF SECTION  2055(E)(3)  SHALL
APPLY.
  (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.  A  DEDUCTION OTHERWISE
ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF-
--(A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT-
--(I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR
--(II) A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN  SECTION
4943(F)(5)(A))  WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT-
ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
--(B) THE TAXPAYER  OBTAINS  A  CONTEMPORANEOUS  WRITTEN  ACKNOWLEDGMENT
(DETERMINED  UNDER  RULES  SIMILAR TO THE RULES OF SECTION 170(F)(8)(C))
FROM THE SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH  DONOR  ADVISED
FUND  THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE ASSETS
CONTRIBUTED.
  (D) SPECIAL RULE FOR IRREVOCABLE TRANSFERS OF EASEMENTS IN REAL  PROP-
ERTY.  A  DEDUCTION  SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF
ANY TRANSFER OF A  QUALIFIED  REAL  PROPERTY  INTEREST  (AS  DEFINED  IN
SECTION  170(H)(2)(C))  WHICH  MEETS  THE REQUIREMENTS OF SECTION 170(H)
(WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
  (E) SPECIAL RULES FOR FRACTIONAL GIFTS
  (1) DENIAL OF DEDUCTION IN CERTAIN CASES
  (A) IN GENERAL
--NO DEDUCTION SHALL BE ALLOWED  FOR  A  CONTRIBUTION  OF  AN  UNDIVIDED
PORTION  OF  A  TAXPAYER'S ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY
UNLESS ALL INTERESTS IN THE PROPERTY ARE HELD  IMMEDIATELY  BEFORE  SUCH
CONTRIBUTION BY-
--(I) THE TAXPAYER, OR
--(II) THE TAXPAYER AND THE DONEE.
  (B) EXCEPTIONS
--THE  SECRETARY  MAY, BY REGULATION, PROVIDE FOR EXCEPTIONS TO SUBPARA-
GRAPH (A) IN CASES WHERE ALL PERSONS WHO HOLD AN INTEREST IN THE PROPER-

S. 6359--A                         294                        A. 8559--A

TY MAKE PROPORTIONAL CONTRIBUTIONS OF AN UNDIVIDED PORTION OF THE ENTIRE
INTEREST HELD BY SUCH PERSONS.
  (2) RECAPTURE OF DEDUCTION IN CERTAIN CASES; ADDITION TO TAX
  (A)  IN  GENERAL.  THE SECRETARY SHALL PROVIDE FOR THE RECAPTURE OF AN
AMOUNT EQUAL TO ANY DEDUCTION ALLOWED UNDER THIS SECTION (PLUS INTEREST)
WITH RESPECT TO ANY CONTRIBUTION OF AN UNDIVIDED PORTION OF A TAXPAYER'S
ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY-
--(I) IN ANY CASE IN WHICH THE DONOR DOES  NOT  CONTRIBUTE  ALL  OF  THE
REMAINING  INTERESTS IN SUCH PROPERTY TO THE DONEE (OR, IF SUCH DONEE IS
NO LONGER IN EXISTENCE, TO ANY PERSON DESCRIBED IN SECTION 170(C)) ON OR
BEFORE THE EARLIER OF-
--(I) THE DATE THAT IS 10 YEARS AFTER THE DATE OF THE INITIAL FRACTIONAL
CONTRIBUTION, OR
--(II) THE DATE OF THE DEATH OF THE DONOR, AND
--(II) IN ANY CASE IN WHICH THE DONEE HAS NOT, DURING THE PERIOD  BEGIN-
NING  ON  THE  DATE OF THE INITIAL FRACTIONAL CONTRIBUTION AND ENDING ON
THE DATE DESCRIBED IN CLAUSE (I)-
--(I) HAD SUBSTANTIAL PHYSICAL POSSESSION OF THE PROPERTY, AND
--(II) USED THE PROPERTY IN A USE WHICH IS RELATED TO A PURPOSE OR FUNC-
TION CONSTITUTING THE  BASIS  FOR  THE  ORGANIZATIONS'  EXEMPTION  UNDER
SECTION 501.
  (B)  ADDITION TO TAX. THE TAX IMPOSED UNDER THIS CHAPTER FOR ANY TAXA-
BLE YEAR FOR WHICH THERE IS A RECAPTURE UNDER SUBPARAGRAPH (A) SHALL  BE
INCREASED BY 10 PERCENT OF THE AMOUNT SO RECAPTURED.
  (C)  INITIAL  FRACTIONAL CONTRIBUTION. FOR PURPOSES OF THIS PARAGRAPH,
THE TERM "INITIAL FRACTIONAL CONTRIBUTION" MEANS, WITH  RESPECT  TO  ANY
DONOR,  THE  FIRST  GIFT  OF  AN UNDIVIDED PORTION OF THE DONOR'S ENTIRE
INTEREST IN ANY TANGIBLE PERSONAL PROPERTY  FOR  WHICH  A  DEDUCTION  IS
ALLOWED UNDER SUBSECTION (A) OR (B).
  (F) CROSS REFERENCES
--(1)  FOR  TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD CARE, SEE
SECTION 501(K).
--(2) FOR EXEMPTION OF CERTAIN GIFTS TO OR FOR THE BENEFIT OF THE UNITED
STATES AND FOR RULES OF CONSTRUCTION WITH RESPECT TO  CERTAIN  BEQUESTS,
SEE SECTION 2055(F).
--(3)  FOR TREATMENT OF GIFTS TO OR FOR THE USE OF INDIAN TRIBAL GOVERN-
MENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
  S 2523. GIFT TO SPOUSE (A)  ALLOWANCE  OF  DEDUCTION.  WHERE  A  DONOR
TRANSFERS  DURING THE CALENDAR YEAR BY GIFT AN INTEREST IN PROPERTY TO A
DONEE WHO AT THE TIME OF THE GIFT IS THE DONOR'S SPOUSE, THERE SHALL  BE
ALLOWED  AS A DEDUCTION IN COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR
AN AMOUNT WITH RESPECT TO SUCH INTEREST EQUAL TO ITS VALUE.
  (B) LIFE ESTATE OR OTHER TERMINABLE INTEREST. WHERE, ON THE  LAPSE  OF
TIME, ON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF
AN  EVENT  OR  CONTINGENCY  TO  OCCUR,  SUCH INTEREST TRANSFERRED TO THE
SPOUSE WILL TERMINATE OR  FAIL,  NO  DEDUCTION  SHALL  BE  ALLOWED  WITH
RESPECT TO SUCH INTEREST-
  (1)  IF  THE DONOR RETAINS IN HIMSELF, OR TRANSFERS OR HAS TRANSFERRED
(FOR LESS THAN AN ADEQUATE AND FULL CONSIDERATION IN  MONEY  OR  MONEY'S
WORTH) TO ANY PERSON OTHER THAN SUCH DONEE SPOUSE (OR THE ESTATE OF SUCH
SPOUSE),  AN  INTEREST  IN  SUCH  PROPERTY,  AND  IF  BY  REASON OF SUCH
RETENTION OR TRANSFER THE DONOR (OR HIS HEIRS OR ASSIGNS) OR SUCH PERSON
(OR HIS HEIRS OR ASSIGNS) MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY
AFTER SUCH TERMINATION OR FAILURE OF THE  INTEREST  TRANSFERRED  TO  THE
DONEE SPOUSE; OR

S. 6359--A                         295                        A. 8559--A

  (2)  IF  THE  DONOR IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE
HAS A POWER TO APPOINT AN INTEREST IN SUCH PROPERTY WHICH HE  CAN  EXER-
CISE  (EITHER  ALONE  OR  IN CONJUNCTION WITH ANY PERSON) IN SUCH MANNER
THAT THE APPOINTEE MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY  AFTER
SUCH  TERMINATION  OR  FAILURE  OF THE INTEREST TRANSFERRED TO THE DONEE
SPOUSE. FOR PURPOSES OF THIS PARAGRAPH, THE DONOR SHALL BE CONSIDERED AS
HAVING IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE SUCH POWER  TO
APPOINT EVEN THOUGH SUCH POWER CANNOT BE EXERCISED UNTIL AFTER THE LAPSE
OF TIME, UPON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAIL-
URE OF AN EVENT OR CONTINGENCY TO OCCUR.
  AN  EXERCISE  OR  RELEASE AT ANY TIME BY THE DONOR, EITHER ALONE OR IN
CONJUNCTION WITH ANY PERSON, OF A POWER TO APPOINT AN INTEREST IN  PROP-
ERTY, EVEN THOUGH NOT OTHERWISE A TRANSFER, SHALL, FOR PURPOSES OF PARA-
GRAPH  (1),  BE  CONSIDERED  AS A TRANSFER BY HIM. EXCEPT AS PROVIDED IN
SUBSECTION (E), WHERE AT THE TIME OF THE TRANSFER IT  IS  IMPOSSIBLE  TO
ASCERTAIN  THE  PARTICULAR  PERSON  OR  PERSONS WHO MAY RECEIVE FROM THE
DONOR AN INTEREST IN PROPERTY  SO  TRANSFERRED  BY  HIM,  SUCH  INTEREST
SHALL,  FOR PURPOSES OF PARAGRAPH (1), BE CONSIDERED AS TRANSFERRED TO A
PERSON OTHER THAN THE DONEE SPOUSE.
  (C) INTEREST IN UNIDENTIFIED ASSETS. WHERE THE ASSETS OUT OF WHICH, OR
THE PROCEEDS OF WHICH, THE INTEREST TRANSFERRED TO THE DONEE SPOUSE  MAY
BE  SATISFIED INCLUDE A PARTICULAR ASSET OR ASSETS WITH RESPECT TO WHICH
NO DEDUCTION WOULD BE ALLOWED IF SUCH ASSET OR ASSETS  WERE  TRANSFERRED
FROM  THE  DONOR  TO  SUCH SPOUSE, THEN THE VALUE OF THE INTEREST TRANS-
FERRED TO SUCH SPOUSE SHALL, FOR PURPOSES OF SUBSECTION (A), BE  REDUCED
BY THE AGGREGATE VALUE OF SUCH PARTICULAR ASSETS.
  (D)  JOINT  INTERESTS.  IF  THE  INTEREST  IS TRANSFERRED TO THE DONEE
SPOUSE AS SOLE JOINT TENANT WITH THE DONOR OR AS TENANT BY THE ENTIRETY,
THE INTEREST OF THE DONOR IN THE PROPERTY WHICH EXISTS SOLELY BY  REASON
OF  THE POSSIBILITY THAT THE DONOR MAY SURVIVE THE DONEE SPOUSE, OR THAT
THERE MAY OCCUR A SEVERANCE OF THE TENANCY, SHALL NOT BE CONSIDERED  FOR
PURPOSES  OF  SUBSECTION  (B)  AS  AN  INTEREST RETAINED BY THE DONOR IN
HIMSELF.
  (E) LIFE ESTATE WITH POWER OF APPOINTMENT IN DONEE SPOUSE.  WHERE  THE
DONOR  TRANSFERS AN INTEREST IN PROPERTY, IF BY SUCH TRANSFER HIS SPOUSE
IS ENTITLED FOR LIFE TO ALL OF THE INCOME FROM THE ENTIRE  INTEREST,  OR
ALL  THE  INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE ANNUALLY OR AT
MORE FREQUENT INTERVALS, WITH POWER IN THE DONEE SPOUSE TO  APPOINT  THE
ENTIRE  INTEREST, OR SUCH SPECIFIC PORTION (EXERCISABLE IN FAVOR OF SUCH
DONEE SPOUSE, OR OF THE ESTATE OF SUCH DONEE  SPOUSE,  OR  IN  FAVOR  OF
EITHER, WHETHER OR NOT IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF
OTHERS),  AND  WITH  NO POWER IN ANY OTHER PERSON TO APPOINT ANY PART OF
SUCH INTEREST, OR SUCH PORTION, TO  ANY  PERSON  OTHER  THAN  THE  DONEE
SPOUSE-
  (1)  THE INTEREST, OR SUCH PORTION, SO TRANSFERRED SHALL, FOR PURPOSES
OF SUBSECTION (A) BE CONSIDERED AS TRANSFERRED TO THE DONEE SPOUSE, AND
  (2) NO PART OF THE INTEREST, OR SUCH PORTION,  SO  TRANSFERRED  SHALL,
FOR  PURPOSES  OF  SUBSECTION  (B)(1),  BE CONSIDERED AS RETAINED IN THE
DONOR OR TRANSFERRED TO ANY PERSON OTHER THAN THE DONEE SPOUSE.
  THIS SUBSECTION SHALL APPLY ONLY IF, BY SUCH TRANSFER, SUCH  POWER  IN
THE DONEE SPOUSE TO APPOINT THE INTEREST, OR SUCH PORTION, WHETHER EXER-
CISABLE  BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE ALONE AND
IN ALL EVENTS.   FOR PURPOSES OF THIS  SUBSECTION,  THE  TERM  "SPECIFIC
PORTION"  ONLY INCLUDES A PORTION DETERMINED ON A FRACTIONAL OR PERCENT-
AGE BASIS.

S. 6359--A                         296                        A. 8559--A

  (F) ELECTION WITH RESPECT TO LIFE ESTATE  FOR  DONEE  SPOUSE.  (1)  IN
GENERAL
  IN THE CASE OF QUALIFIED TERMINABLE INTEREST PROPERTY-
  (A)  FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED AS
TRANSFERRED TO THE DONEE SPOUSE, AND
  (B) FOR PURPOSES OF SUBSECTION (B)(1), NO PART OF SUCH PROPERTY  SHALL
BE  CONSIDERED  AS  RETAINED  IN  THE DONOR OR TRANSFERRED TO ANY PERSON
OTHER THAN THE DONEE SPOUSE.
  (2) QUALIFIED TERMINABLE  INTEREST  PROPERTY.  FOR  PURPOSES  OF  THIS
SUBSECTION,  THE TERM "QUALIFIED TERMINABLE INTEREST PROPERTY" MEANS ANY
PROPERTY-
  (A) WHICH IS TRANSFERRED BY THE DONOR SPOUSE,
  (B) IN WHICH THE DONEE SPOUSE HAS A  QUALIFYING  INCOME  INTEREST  FOR
LIFE, AND
  (C) TO WHICH AN ELECTION UNDER THIS SUBSECTION APPLIES.
  (3)  CERTAIN  RULES  MADE APPLICABLE. FOR PURPOSES OF THIS SUBSECTION,
RULES SIMILAR TO THE RULES OF CLAUSES (II), (III), AND (IV)  OF  SECTION
2056(B)(7)(B)  SHALL  APPLY  AND  THE RULES OF SECTION 2056(B)(10) SHALL
APPLY.
  (4) ELECTION. (A) TIME AND MANNER. AN ELECTION UNDER  THIS  SUBSECTION
WITH  RESPECT  TO  ANY  PROPERTY  SHALL  BE  MADE  ON OR BEFORE THE DATE
PRESCRIBED BY SECTION 6075(B) FOR FILING A GIFT TAX RETURN WITH  RESPECT
TO THE TRANSFER (DETERMINED WITHOUT REGARD TO SECTION 6019(2)) AND SHALL
BE MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
  (B)  ELECTION  IRREVOCABLE.  AN  ELECTION  UNDER THIS SUBSECTION, ONCE
MADE, SHALL BE IRREVOCABLE.
  (5) TREATMENT OF INTEREST RETAINED BY DONOR SPOUSE. (A) IN GENERAL. IN
THE CASE OF ANY QUALIFIED TERMINABLE INTEREST PROPERTY-
  (I) SUCH PROPERTY SHALL NOT BE INCLUDIBLE IN THE GROSS ESTATE  OF  THE
DONOR SPOUSE, AND
  (II)  ANY  SUBSEQUENT  TRANSFER  BY THE DONOR SPOUSE OF AN INTEREST IN
SUCH PROPERTY SHALL NOT BE TREATED AS A TRANSFER FOR  PURPOSES  OF  THIS
CHAPTER.
  (B)  SUBPARAGRAPH  (A)  NOT  TO  APPLY AFTER TRANSFER BY DONEE SPOUSE.
SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO ANY PROPERTY AFTER  THE
DONEE  SPOUSE  IS  TREATED  AS  HAVING  TRANSFERRED  SUCH PROPERTY UNDER
SECTION 2519, OR SUCH PROPERTY IS INCLUDIBLE IN THE DONEE SPOUSE'S GROSS
ESTATE UNDER SECTION 2044.
  (6) TREATMENT OF JOINT AND SURVIVOR ANNUITIES. IN THE CASE OF A  JOINT
AND  SURVIVOR  ANNUITY WHERE ONLY THE DONOR SPOUSE AND DONEE SPOUSE HAVE
THE RIGHT TO RECEIVE PAYMENTS BEFORE THE DEATH OF  THE  LAST  SPOUSE  TO
DIE-
--(A)  THE  DONEE  SPOUSE'S  INTEREST  SHALL  BE TREATED AS A QUALIFYING
INCOME INTEREST FOR LIFE,
--(B) THE DONOR SPOUSE SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER
THIS SUBSECTION WITH RESPECT TO SUCH ANNUITY  UNLESS  THE  DONOR  SPOUSE
OTHERWISE ELECTS ON OR BEFORE THE DATE SPECIFIED IN PARAGRAPH (4)(A),
--(C)  PARAGRAPH  (5)  AND  SECTION  2519  SHALL  NOT APPLY TO THE DONOR
SPOUSE'S INTEREST IN THE ANNUITY, AND
--(D) IF THE DONEE SPOUSE DIES BEFORE THE DONOR SPOUSE, NO AMOUNT  SHALL
BE INCLUDIBLE IN THE GROSS ESTATE OF THE DONEE SPOUSE UNDER SECTION 2044
WITH RESPECT TO SUCH ANNUITY.
  AN ELECTION UNDER SUBPARAGRAPH (B), ONCE MADE, SHALL BE IRREVOCABLE.
  (G)  SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS. (1) IN GENERAL. IF,
AFTER THE TRANSFER, THE DONEE SPOUSE IS THE ONLY NONCHARITABLE BENEFICI-
ARY (OTHER THAN THE DONOR) OF A QUALIFIED  CHARITABLE  REMAINDER  TRUST,

S. 6359--A                         297                        A. 8559--A

SUBSECTION  (B)  SHALL  NOT APPLY TO THE INTEREST IN SUCH TRUST WHICH IS
TRANSFERRED TO THE DONEE SPOUSE.
  (2)  DEFINITIONS. FOR PURPOSES OF PARAGRAPH (1), THE TERM "NONCHARITA-
BLE BENEFICIARY" AND "QUALIFIED CHARITABLE  REMAINDER  TRUST"  HAVE  THE
MEANINGS GIVEN TO SUCH TERMS BY SECTION 2056(B)(8)(B).
  (H)  DENIAL  OF DOUBLE DEDUCTION. NOTHING IN THIS SECTION OR ANY OTHER
PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-
ERTY TO BE DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE  WITH  RESPECT  TO
THE SAME DONOR.
  S 2524. EXTENT OF DEDUCTIONS. THE DEDUCTIONS PROVIDED IN SECTIONS 2522
AND  2523  SHALL  BE  ALLOWED  ONLY TO THE EXTENT THAT THE GIFTS THEREIN
SPECIFIED ARE INCLUDED  IN  THE  AMOUNT  OF  GIFTS  AGAINST  WHICH  SUCH
DEDUCTIONS ARE APPLIED.
  S 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CERTAIN INTER-
ESTS IN CORPORATIONS OR PARTNERSHIPS. (A) VALUATION RULES. (1) IN GENER-
AL.   SOLELY FOR PURPOSES OF DETERMINING WHETHER A TRANSFER OF AN INTER-
EST IN A CORPORATION OR PARTNERSHIP TO (OR FOR THE BENEFIT OF) A  MEMBER
OF  THE  TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE OF SUCH TRANSFER),
THE VALUE OF ANY RIGHT-
--(A) WHICH IS DESCRIBED  IN  SUBPARAGRAPH  (A)  OR  (B)  OF  SUBSECTION
(B)(1), AND
--(B)  WHICH IS WITH RESPECT TO ANY APPLICABLE RETAINED INTEREST THAT IS
HELD BY THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER IMMEDIATELY  AFTER
THE TRANSFER,
  --SHALL  BE  DETERMINED  UNDER PARAGRAPH (3). THIS PARAGRAPH SHALL NOT
APPLY TO THE TRANSFER OF ANY INTEREST FOR WHICH  MARKET  QUOTATIONS  ARE
READILY AVAILABLE (AS OF THE DATE OF TRANSFER) ON AN ESTABLISHED SECURI-
TIES MARKET.
  (2)  EXCEPTIONS FOR MARKETABLE RETAINED INTERESTS, ETC.  PARAGRAPH (1)
SHALL NOT APPLY TO ANY RIGHT WITH  RESPECT  TO  AN  APPLICABLE  RETAINED
INTEREST IF-
--(A)  MARKET  QUOTATIONS  ARE  READILY AVAILABLE (AS OF THE DATE OF THE
TRANSFER) FOR SUCH INTEREST ON AN ESTABLISHED SECURITIES MARKET,
--(B) SUCH INTEREST IS OF THE SAME CLASS AS THE TRANSFERRED INTEREST, OR
--(C) SUCH INTEREST IS PROPORTIONALLY THE SAME AS THE TRANSFERRED INTER-
EST, WITHOUT REGARD TO NONLAPSING DIFFERENCES IN VOTING POWER (OR, FOR A
PARTNERSHIP, NONLAPSING DIFFERENCES WITH RESPECT TO MANAGEMENT AND LIMI-
TATIONS ON LIABILITY).
--SUBPARAGRAPH (C) SHALL NOT APPLY TO ANY INTEREST IN A  PARTNERSHIP  IF
THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER HAS THE RIGHT TO ALTER THE
LIABILITY  OF  THE  TRANSFEREE  OF  THE  TRANSFERRED PROPERTY. EXCEPT AS
PROVIDED BY THE SECRETARY, ANY DIFFERENCE DESCRIBED IN SUBPARAGRAPH  (C)
WHICH LAPSES BY REASON OF ANY FEDERAL OR STATE LAW SHALL BE TREATED AS A
NONLAPSING DIFFERENCE FOR PURPOSES OF SUCH SUBPARAGRAPH.
  (3)  VALUATION OF RIGHTS TO WHICH PARAGRAPH (1) APPLIES. (A) IN GENER-
AL.  THE VALUE OF ANY RIGHT DESCRIBED IN PARAGRAPH  (1),  OTHER  THAN  A
DISTRIBUTION  RIGHT  WHICH  CONSISTS  OF  A RIGHT TO RECEIVE A QUALIFIED
PAYMENT, SHALL BE TREATED AS BEING ZERO.
  (B) VALUATION OF CERTAIN QUALIFIED PAYMENTS. IF-
--(I) ANY APPLICABLE RETAINED  INTEREST  CONFERS  A  DISTRIBUTION  RIGHT
WHICH CONSISTS OF THE RIGHT TO A QUALIFIED PAYMENT, AND
--(II)  THERE ARE 1 OR MORE LIQUIDATION, PUT, CALL, OR CONVERSION RIGHTS
WITH RESPECT TO SUCH INTEREST, THE VALUE OF ALL  SUCH  RIGHTS  SHALL  BE
DETERMINED  AS  IF EACH LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT WERE
EXERCISED IN THE MANNER RESULTING IN THE LOWEST VALUE  BEING  DETERMINED
FOR ALL SUCH RIGHTS.

S. 6359--A                         298                        A. 8559--A

  (C)  VALUATION  OF  QUALIFIED  PAYMENTS  WHERE  NO  LIQUIDATION,  ETC.
RIGHTS. IN  THE  CASE  OF  AN  APPLICABLE  RETAINED  INTEREST  WHICH  IS
DESCRIBED IN SUBPARAGRAPH (B)(I) BUT NOT SUBPARAGRAPH (B)(II), THE VALUE
OF  THE  DISTRIBUTION  RIGHT  SHALL BE DETERMINED WITHOUT REGARD TO THIS
SECTION.
  (4) MINIMUM VALUATION OF JUNIOR EQUITY. (A) IN GENERAL. IN THE CASE OF
A  TRANSFER  DESCRIBED IN PARAGRAPH (1) OF A JUNIOR EQUITY INTEREST IN A
CORPORATION OR PARTNERSHIP, SUCH INTEREST SHALL IN NO EVENT BE VALUED AT
AN AMOUNT LESS THAN THE VALUE WHICH WOULD BE  DETERMINED  IF  THE  TOTAL
VALUE  OF ALL OF THE JUNIOR EQUITY INTERESTS IN THE ENTITY WERE EQUAL TO
10 PERCENT OF THE SUM OF-
--(I) THE TOTAL VALUE OF ALL OF THE EQUITY  INTERESTS  IN  SUCH  ENTITY,
PLUS
--(II) THE TOTAL AMOUNT OF INDEBTEDNESS OF SUCH ENTITY TO THE TRANSFEROR
(OR AN APPLICABLE FAMILY MEMBER).
  (B) DEFINITIONS. FOR PURPOSES OF THIS PARAGRAPH-
  (I)  JUNIOR  EQUITY  INTEREST. THE TERM "JUNIOR EQUITY INTEREST" MEANS
COMMON STOCK OR, IN THE CASE OF A PARTNERSHIP, ANY PARTNERSHIP  INTEREST
UNDER  WHICH  THE  RIGHTS  AS  TO  INCOME AND CAPITAL (OR, TO THE EXTENT
PROVIDED IN REGULATIONS, THE RIGHTS AS TO EITHER INCOME OR CAPITAL)  ARE
JUNIOR TO THE RIGHTS OF ALL OTHER CLASSES OF EQUITY INTERESTS.
  (II)  EQUITY  INTEREST.  THE TERM "EQUITY INTEREST" MEANS STOCK OR ANY
INTEREST AS A PARTNER, AS THE CASE MAY BE.
  (B) APPLICABLE RETAINED INTERESTS. FOR PURPOSES OF THIS SECTION-
  (1) IN GENERAL. THE TERM  "APPLICABLE  RETAINED  INTEREST"  MEANS  ANY
INTEREST IN AN ENTITY WITH RESPECT TO WHICH THERE IS-
--(A) A DISTRIBUTION RIGHT, BUT ONLY IF, IMMEDIATELY BEFORE THE TRANSFER
DESCRIBED  IN  SUBSECTION  (A)(1),  THE TRANSFEROR AND APPLICABLE FAMILY
MEMBERS HOLD (AFTER APPLICATION OF SUBSECTION  (E)(3))  CONTROL  OF  THE
ENTITY, OR
--(B) A LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT.
  (2) CONTROL. FOR PURPOSES OF PARAGRAPH (1)-
  (A)  CORPORATIONS.  IN  THE  CASE OF A CORPORATION, THE TERM "CONTROL"
MEANS THE HOLDING OF AT LEAST 50 PERCENT (BY VOTE OR VALUE) OF THE STOCK
OF THE CORPORATION.
  (B) PARTNERSHIPS. IN THE CASE OF A  PARTNERSHIP,  THE  TERM  "CONTROL"
MEANS-
--(I)  THE  HOLDING  OF  AT  LEAST  50 PERCENT OF THE CAPITAL OR PROFITS
INTERESTS IN THE PARTNERSHIP, OR
--(II) IN THE CASE OF A LIMITED PARTNERSHIP, THE HOLDING OF ANY INTEREST
AS A GENERAL PARTNER.
  (C) APPLICABLE FAMILY MEMBER. FOR PURPOSES  OF  THIS  SUBSECTION,  THE
TERM  "APPLICABLE  FAMILY  MEMBER" INCLUDES ANY LINEAL DESCENDANT OF ANY
PARENT OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE.
  (C) DISTRIBUTION AND OTHER RIGHTS; QUALIFIED PAYMENTS. FOR PURPOSES OF
THIS SECTION-
  (1) DISTRIBUTION RIGHT. (A) IN GENERAL. THE TERM "DISTRIBUTION  RIGHT"
MEANS-
--(I)  A  RIGHT  TO DISTRIBUTIONS FROM A CORPORATION WITH RESPECT TO ITS
STOCK, AND
--(II) A RIGHT TO DISTRIBUTIONS FROM A PARTNERSHIP  WITH  RESPECT  TO  A
PARTNER'S INTEREST IN THE PARTNERSHIP.
  (B) EXCEPTIONS. THE TERM "DISTRIBUTION RIGHT" DOES NOT INCLUDE-
--(I)  A  RIGHT  TO  DISTRIBUTIONS WITH RESPECT TO ANY INTEREST WHICH IS
JUNIOR TO THE RIGHTS OF THE TRANSFERRED INTEREST,
--(II) ANY LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT, OR

S. 6359--A                         299                        A. 8559--A

--(III) ANY RIGHT TO RECEIVE ANY GUARANTEED PAYMENT DESCRIBED IN SECTION
707(C) OF A FIXED AMOUNT.
  (2)  LIQUIDATION,  ETC. RIGHTS. (A) IN GENERAL. THE TERM "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" MEANS ANY  LIQUIDATION,  PUT,  CALL,  OR
CONVERSION  RIGHT,  OR ANY SIMILAR RIGHT, THE EXERCISE OR NONEXERCISE OF
WHICH AFFECTS THE VALUE OF THE TRANSFERRED INTEREST.
  (B) EXCEPTION FOR FIXED RIGHTS. (I) IN GENERAL. THE TERM "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH MUST BE
EXERCISED AT A SPECIFIC TIME AND AT A SPECIFIC AMOUNT.
  (II) TREATMENT OF CERTAIN RIGHTS. IF A RIGHT IS ASSUMED  TO  BE  EXER-
CISED  IN  A  PARTICULAR  MANNER  UNDER SUBSECTION (A)(3)(B), SUCH RIGHT
SHALL BE TREATED AS SO EXERCISED FOR PURPOSES OF CLAUSE (I).
  (C) EXCEPTION FOR CERTAIN RIGHTS TO CONVERT.  THE  TERM  "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH-
--(I)  IS A RIGHT TO CONVERT INTO A FIXED NUMBER (OR A FIXED PERCENTAGE)
OF SHARES OF THE SAME CLASS OF STOCK IN A CORPORATION AS THE TRANSFERRED
STOCK IN SUCH CORPORATION UNDER SUBSECTION (A)(1) (OR STOCK WHICH  WOULD
BE OF THE SAME CLASS BUT FOR NONLAPSING DIFFERENCES IN VOTING POWER),
--(II) IS NONLAPSING,
--(III)  IS  SUBJECT  TO  PROPORTIONATE ADJUSTMENTS FOR SPLITS, COMBINA-
TIONS, RECLASSIFICATIONS, AND SIMILAR CHANGES IN THE CAPITAL STOCK, AND
--(IV) IS SUBJECT  TO  ADJUSTMENTS  SIMILAR  TO  THE  ADJUSTMENTS  UNDER
SUBSECTION (D) FOR ACCUMULATED BUT UNPAID DISTRIBUTIONS.
--A  RULE  SIMILAR TO THE RULE OF THE PRECEDING SENTENCE SHALL APPLY FOR
PARTNERSHIPS.
  (3) QUALIFIED PAYMENT. (A) IN GENERAL. EXCEPT AS OTHERWISE PROVIDED IN
THIS PARAGRAPH, THE TERM "QUALIFIED PAYMENT" MEANS ANY DIVIDEND  PAYABLE
ON  A PERIODIC BASIS UNDER ANY CUMULATIVE PREFERRED STOCK (OR A COMPARA-
BLE PAYMENT UNDER ANY PARTNERSHIP INTEREST)  TO  THE  EXTENT  THAT  SUCH
DIVIDEND (OR COMPARABLE PAYMENT) IS DETERMINED AT A FIXED RATE.
  (B)  TREATMENT OF VARIABLE RATE PAYMENTS. FOR PURPOSES OF SUBPARAGRAPH
(A), A PAYMENT SHALL BE TREATED AS FIXED AS TO RATE IF SUCH  PAYMENT  IS
DETERMINED  AT  A  RATE  WHICH BEARS A FIXED RELATIONSHIP TO A SPECIFIED
MARKET INTEREST RATE.
  (C) ELECTIONS. (I) IN GENERAL. PAYMENTS UNDER ANY INTEREST HELD  BY  A
TRANSFEROR  WHICH  (WITHOUT  REGARD  TO THIS SUBPARAGRAPH) ARE QUALIFIED
PAYMENTS SHALL BE TREATED AS QUALIFIED PAYMENTS  UNLESS  THE  TRANSFEROR
ELECTS  NOT  TO  TREAT  SUCH  PAYMENTS  AS  QUALIFIED PAYMENTS. PAYMENTS
DESCRIBED IN THE PRECEDING SENTENCE WHICH  ARE  HELD  BY  AN  APPLICABLE
FAMILY MEMBER SHALL BE TREATED AS QUALIFIED PAYMENTS ONLY IF SUCH MEMBER
ELECTS TO TREAT SUCH PAYMENTS AS QUALIFIED PAYMENTS.
  (II)  ELECTION  TO  HAVE  INTEREST  TREATED  AS  QUALIFIED  PAYMENT. A
TRANSFEROR OR APPLICABLE FAMILY MEMBER HOLDING  ANY  DISTRIBUTION  RIGHT
WHICH  (WITHOUT  REGARD TO THIS SUBPARAGRAPH) IS NOT A QUALIFIED PAYMENT
MAY ELECT TO TREAT SUCH RIGHT AS A QUALIFIED PAYMENT, TO BE PAID IN  THE
AMOUNTS  AND  AT  THE  TIMES  SPECIFIED  IN SUCH ELECTION. THE PRECEDING
SENTENCE SHALL APPLY ONLY TO THE EXTENT THAT THE AMOUNTS  AND  TIMES  SO
SPECIFIED  ARE  NOT  INCONSISTENT  WITH  THE UNDERLYING LEGAL INSTRUMENT
GIVING RISE TO SUCH RIGHT.
  (III) ELECTIONS IRREVOCABLE. ANY ELECTION UNDER THIS SUBPARAGRAPH WITH
RESPECT TO AN INTEREST SHALL, ONCE MADE, BE IRREVOCABLE.
  (D) TRANSFER TAX TREATMENT OF CUMULATIVE BUT UNPAID DISTRIBUTIONS. (1)
IN GENERAL. IF A TAXABLE EVENT OCCURS WITH RESPECT TO  ANY  DISTRIBUTION
RIGHT  TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED, THE FOLLOWING SHALL
BE INCREASED BY THE AMOUNT DETERMINED UNDER PARAGRAPH (2):

S. 6359--A                         300                        A. 8559--A

--(A) THE TAXABLE ESTATE OF THE TRANSFEROR IN  THE  CASE  OF  A  TAXABLE
EVENT DESCRIBED IN PARAGRAPH (3)(A)(I).
--(B) THE TAXABLE GIFTS OF THE TRANSFEROR FOR THE CALENDAR YEAR IN WHICH
THE  TAXABLE  EVENT  OCCURS  IN THE CASE OF A TAXABLE EVENT DESCRIBED IN
PARAGRAPH (3)(A)(II) OR (III).
  (2) AMOUNT OF INCREASE. (A) IN GENERAL. THE  AMOUNT  OF  THE  INCREASE
DETERMINED UNDER THIS PARAGRAPH SHALL BE THE EXCESS (IF ANY) OF-
--(I)  THE  VALUE  OF  THE  QUALIFIED PAYMENTS PAYABLE DURING THE PERIOD
BEGINNING ON THE DATE OF THE TRANSFER UNDER SUBSECTION (A)(1) AND ENDING
ON THE DATE OF THE TAXABLE EVENT DETERMINED AS IF-
--(I) ALL SUCH PAYMENTS WERE PAID ON THE DATE PAYMENT WAS DUE, AND
--(II) ALL SUCH PAYMENTS WERE REINVESTED BY THE  TRANSFEROR  AS  OF  THE
DATE  OF PAYMENT AT A YIELD EQUAL TO THE DISCOUNT RATE USED IN DETERMIN-
ING  THE  VALUE  OF  THE  APPLICABLE  RETAINED  INTEREST  DESCRIBED   IN
SUBSECTION (A)(1), OVER
  (II) THE VALUE OF SUCH PAYMENTS PAID DURING SUCH PERIOD COMPUTED UNDER
CLAUSE  (I)  ON  THE  BASIS OF THE TIME WHEN SUCH PAYMENTS WERE ACTUALLY
PAID.
  (B) LIMITATION ON AMOUNT OF INCREASE. (I) IN GENERAL.  THE  AMOUNT  OF
THE  INCREASE  UNDER  SUBPARAGRAPH  (A)  SHALL NOT EXCEED THE APPLICABLE
PERCENTAGE OF THE EXCESS (IF ANY) OF-
--(I) THE VALUE (DETERMINED AS OF THE DATE OF THE TAXABLE EVENT) OF  ALL
EQUITY  INTERESTS  IN  THE  ENTITY  WHICH  ARE  JUNIOR TO THE APPLICABLE
RETAINED INTEREST, OVER
--(II) THE VALUE OF SUCH INTERESTS (DETERMINED AS OF  THE  DATE  OF  THE
TRANSFER TO WHICH SUBSECTION (A)(1) APPLIED).
  (II) APPLICABLE PERCENTAGE. FOR PURPOSES OF CLAUSE (I), THE APPLICABLE
PERCENTAGE IS THE PERCENTAGE DETERMINED BY DIVIDING-
--(I)  THE  NUMBER  OF SHARES IN THE CORPORATION HELD (AS OF THE DATE OF
THE TAXABLE EVENT) BY  THE  TRANSFEROR  WHICH  ARE  APPLICABLE  RETAINED
INTERESTS OF THE SAME CLASS, BY
--(II)  THE TOTAL NUMBER OF SHARES IN SUCH CORPORATION (AS OF SUCH DATE)
WHICH ARE OF THE SAME CLASS AS THE CLASS DESCRIBED IN SUBCLAUSE (I).
--A SIMILAR PERCENTAGE SHALL BE DETERMINED IN THE CASE OF INTERESTS IN A
PARTNERSHIP.
  (III) DEFINITION. FOR PURPOSES OF THIS SUBPARAGRAPH, THE TERM  "EQUITY
INTEREST" HAS THE MEANING GIVEN SUCH TERM BY SUBSECTION (A)(4)(B).
  (C) GRACE PERIOD. FOR PURPOSES OF SUBPARAGRAPH (A), ANY PAYMENT OF ANY
DISTRIBUTION DURING THE 4-YEAR PERIOD BEGINNING ON ITS DUE DATE SHALL BE
TREATED AS HAVING BEEN MADE ON SUCH DUE DATE.
  (3) TAXABLE EVENTS. FOR PURPOSES OF THIS SUBSECTION-
  (A) IN GENERAL. THE TERM "TAXABLE EVENT" MEANS ANY OF THE FOLLOWING:
--(I)  THE  DEATH  OF THE TRANSFEROR IF THE APPLICABLE RETAINED INTEREST
CONFERRING THE DISTRIBUTION RIGHT IS INCLUDIBLE IN  THE  ESTATE  OF  THE
TRANSFEROR.
--(II) THE TRANSFER OF SUCH APPLICABLE RETAINED INTEREST.
--(III)  AT  THE  ELECTION OF THE TAXPAYER, THE PAYMENT OF ANY QUALIFIED
PAYMENT AFTER THE PERIOD DESCRIBED IN PARAGRAPH (2)(C),  BUT  ONLY  WITH
RESPECT TO SUCH PAYMENT.
  (B) EXCEPTION WHERE SPOUSE IS TRANSFEREE. (I) DEATHTIME TRANSFERS
--SUBPARAGRAPH  (A)(I) SHALL NOT APPLY TO ANY INTEREST INCLUDIBLE IN THE
GROSS ESTATE OF THE TRANSFEROR IF  A  DEDUCTION  WITH  RESPECT  TO  SUCH
INTEREST IS ALLOWABLE UNDER SECTION 2056 OR 2106(A)(3).
  (II)  LIFETIME  TRANSFERS.  A TRANSFER TO THE SPOUSE OF THE TRANSFEROR
SHALL NOT BE TREATED AS A TAXABLE EVENT UNDER  SUBPARAGRAPH  (A)(II)  IF
SUCH TRANSFER DOES NOT RESULT IN A TAXABLE GIFT BY REASON OF-

S. 6359--A                         301                        A. 8559--A

--(I)  ANY  DEDUCTION ALLOWED UNDER SECTION 2523, OR THE EXCLUSION UNDER
SECTION 2503(B), OR
--(II) CONSIDERATION FOR THE TRANSFER PROVIDED BY THE SPOUSE.
  (III)  SPOUSE  SUCCEEDS TO TREATMENT OF TRANSFEROR. IF AN EVENT IS NOT
TREATED AS A TAXABLE EVENT BY REASON OF THIS SUBPARAGRAPH, THE TRANSFER-
EE SPOUSE OR SURVIVING SPOUSE (AS THE CASE MAY BE) SHALL BE  TREATED  IN
THE  SAME  MANNER  AS  THE  TRANSFEROR  IN APPLYING THIS SUBSECTION WITH
RESPECT TO THE INTEREST INVOLVED.
  (4) SPECIAL RULES FOR APPLICABLE FAMILY  MEMBERS.  (A)  FAMILY  MEMBER
TREATED  IN  SAME MANNER AS TRANSFEROR. FOR PURPOSES OF THIS SUBSECTION,
AN APPLICABLE FAMILY MEMBER SHALL BE TREATED IN THE SAME MANNER  AS  THE
TRANSFEROR WITH RESPECT TO ANY DISTRIBUTION RIGHT RETAINED BY SUCH FAMI-
LY MEMBER TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED.
  (B)  TRANSFER  TO  APPLICABLE  FAMILY MEMBER. IN THE CASE OF A TAXABLE
EVENT DESCRIBED IN PARAGRAPH (3)(A)(II) INVOLVING  THE  TRANSFER  OF  AN
APPLICABLE  RETAINED INTEREST TO AN APPLICABLE FAMILY MEMBER (OTHER THAN
THE SPOUSE OF THE TRANSFEROR), THE APPLICABLE  FAMILY  MEMBER  SHALL  BE
TREATED IN THE SAME MANNER AS THE TRANSFEROR IN APPLYING THIS SUBSECTION
TO  DISTRIBUTIONS  ACCUMULATING WITH RESPECT TO SUCH INTEREST AFTER SUCH
TAXABLE EVENT.
  (C) TRANSFER TO TRANSFERORS. IN THE CASE OF A TAXABLE EVENT  DESCRIBED
IN  PARAGRAPH  (3)(A)(II) INVOLVING A TRANSFER OF AN APPLICABLE RETAINED
INTEREST  FROM  AN  APPLICABLE  FAMILY  MEMBER  TO  A  TRANSFEROR,  THIS
SUBSECTION  SHALL  CONTINUE TO APPLY TO THE TRANSFEROR DURING ANY PERIOD
THE TRANSFEROR HOLDS SUCH INTEREST.
  (5) TRANSFER TO INCLUDE TERMINATION. FOR PURPOSES OF THIS  SUBSECTION,
ANY TERMINATION OF AN INTEREST SHALL BE TREATED AS A TRANSFER.
  (E) OTHER DEFINITIONS AND RULES. FOR PURPOSES OF THIS SECTION-
  (1)  MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS, WITH
RESPECT TO ANY TRANSFEROR-
--(A) THE TRANSFEROR'S SPOUSE,
--(B) A LINEAL DESCENDANT OF THE TRANSFEROR OR THE TRANSFEROR'S  SPOUSE,
AND
--(C) THE SPOUSE OF ANY SUCH DESCENDANT.
  (2)  APPLICABLE  FAMILY  MEMBER.  THE  TERM "APPLICABLE FAMILY MEMBER"
MEANS, WITH RESPECT TO ANY TRANSFEROR-
--(A) THE TRANSFEROR'S SPOUSE,
--(B) AN ANCESTOR OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE, AND
--(C) THE SPOUSE OF ANY SUCH ANCESTOR.
  (3) ATTRIBUTION OF INDIRECT  HOLDINGS  AND  TRANSFERS.  AN  INDIVIDUAL
SHALL  BE TREATED AS HOLDING ANY INTEREST TO THE EXTENT SUCH INTEREST IS
HELD INDIRECTLY BY SUCH INDIVIDUAL THROUGH A  CORPORATION,  PARTNERSHIP,
TRUST,  OR  OTHER  ENTITY.  IF  ANY INDIVIDUAL IS TREATED AS HOLDING ANY
INTEREST BY REASON OF THE PRECEDING SENTENCE, ANY TRANSFER WHICH RESULTS
IN SUCH INTEREST BEING TREATED AS NO  LONGER  HELD  BY  SUCH  INDIVIDUAL
SHALL BE TREATED AS A TRANSFER OF SUCH INTEREST.
  (4)  EFFECT  OF  ADOPTION.  A  RELATIONSHIP BY LEGAL ADOPTION SHALL BE
TREATED AS A RELATIONSHIP BY BLOOD.
  (5) CERTAIN CHANGES TREATED AS TRANSFERS. EXCEPT AS PROVIDED IN  REGU-
LATIONS, A CONTRIBUTION TO CAPITAL OR A REDEMPTION, RECAPITALIZATION, OR
OTHER  CHANGE  IN  THE CAPITAL STRUCTURE OF A CORPORATION OR PARTNERSHIP
SHALL BE TREATED AS A TRANSFER OF AN INTEREST IN SUCH  ENTITY  TO  WHICH
THIS SECTION APPLIES IF THE TAXPAYER OR AN APPLICABLE FAMILY MEMBER-
--(A)  RECEIVES  AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY PURSUANT
TO SUCH TRANSACTION, OR

S. 6359--A                         302                        A. 8559--A

--(B) UNDER REGULATIONS, OTHERWISE HOLDS, IMMEDIATELY AFTER SUCH  TRANS-
ACTION, AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY.
--THIS  PARAGRAPH  SHALL  NOT  APPLY  TO  ANY  TRANSACTION (OTHER THAN A
CONTRIBUTION TO CAPITAL) IF THE INTERESTS IN  THE  ENTITY  HELD  BY  THE
TRANSFEROR,  APPLICABLE  FAMILY MEMBERS, AND MEMBERS OF THE TRANSFEROR'S
FAMILY BEFORE AND AFTER THE TRANSACTION ARE SUBSTANTIALLY IDENTICAL.
  (6) ADJUSTMENTS. UNDER REGULATIONS PRESCRIBED  BY  THE  SECRETARY,  IF
THERE  IS  ANY SUBSEQUENT TRANSFER, OR INCLUSION IN THE GROSS ESTATE, OF
ANY APPLICABLE RETAINED INTEREST WHICH WAS VALUED  UNDER  THE  RULES  OF
SUBSECTION  (A),  APPROPRIATE  ADJUSTMENTS SHALL BE MADE FOR PURPOSES OF
CHAPTER 11, 12, OR 13 TO REFLECT THE INCREASE IN THE AMOUNT OF ANY PRIOR
TAXABLE GIFT MADE BY THE TRANSFEROR OR DECEDENT BY REASON OF SUCH  VALU-
ATION OR TO REFLECT THE APPLICATION OF SUBSECTION (D).
  (7)  TREATMENT  AS SEPARATE INTERESTS. THE SECRETARY MAY BY REGULATION
PROVIDE THAT ANY APPLICABLE RETAINED INTEREST SHALL BE TREATED AS  2  OR
MORE SEPARATE INTERESTS FOR PURPOSES OF THIS SECTION.
  S  2702.  SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS IN
TRUSTS.  (A) VALUATION RULES. (1) IN GENERAL.  SOLELY  FOR  PURPOSES  OF
DETERMINING  WHETHER  A  TRANSFER OF AN INTEREST IN TRUST TO (OR FOR THE
BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE
OF SUCH TRANSFER), THE VALUE OF ANY INTEREST IN SUCH TRUST  RETAINED  BY
THE  TRANSFEROR  OR  ANY APPLICABLE FAMILY MEMBER (AS DEFINED IN SECTION
2701(E)(2)) SHALL BE DETERMINED AS PROVIDED IN PARAGRAPH (2).
  (2) VALUATION OF RETAINED INTERESTS. (A) IN GENERAL. THE VALUE OF  ANY
RETAINED  INTEREST WHICH IS NOT A QUALIFIED INTEREST SHALL BE TREATED AS
BEING ZERO.
  (B) VALUATION OF QUALIFIED INTEREST. THE VALUE OF ANY RETAINED  INTER-
EST  WHICH  IS  A  QUALIFIED  INTEREST SHALL BE DETERMINED UNDER SECTION
7520.
  (3) EXCEPTIONS. (A) IN GENERAL. THIS SUBSECTION SHALL NOT APPLY TO ANY
TRANSFER-
--(I) IF SUCH TRANSFER IS AN INCOMPLETE GIFT,
--(II) IF SUCH TRANSFER INVOLVES THE TRANSFER OF AN  INTEREST  IN  TRUST
ALL  THE  PROPERTY  IN  WHICH  CONSISTS  OF  A RESIDENCE TO BE USED AS A
PERSONAL RESIDENCE BY PERSONS HOLDING TERM INTERESTS IN SUCH TRUST, OR
--(III) TO THE EXTENT THAT REGULATIONS PROVIDE THAT SUCH TRANSFER IS NOT
INCONSISTENT WITH THE PURPOSES OF THIS SECTION.
  (B) INCOMPLETE GIFT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A),  THE  TERM
"INCOMPLETE  GIFT"  MEANS  ANY  TRANSFER WHICH WOULD NOT BE TREATED AS A
GIFT WHETHER OR NOT CONSIDERATION WAS RECEIVED FOR SUCH TRANSFER.
  (B) QUALIFIED INTEREST. FOR PURPOSES OF THIS SECTION, THE TERM "QUALI-
FIED INTEREST" MEANS-
  (1) ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE FIXED  AMOUNTS
PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY,
  (2)  ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE AMOUNTS WHICH
ARE PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY AND ARE A FIXED PERCENTAGE
OF THE FAIR MARKET VALUE OF THE PROPERTY IN THE TRUST (DETERMINED  ANNU-
ALLY), AND
  (3) ANY NONCONTINGENT REMAINDER INTEREST IF ALL OF THE OTHER INTERESTS
IN THE TRUST CONSIST OF INTERESTS DESCRIBED IN PARAGRAPH (1) OR (2).
  (C)  CERTAIN  PROPERTY  TREATED AS HELD IN TRUST. FOR PURPOSES OF THIS
SECTION- (1) IN GENERAL. THE TRANSFER OF AN INTEREST  IN  PROPERTY  WITH
RESPECT TO WHICH THERE IS 1 OR MORE TERM INTERESTS SHALL BE TREATED AS A
TRANSFER OF AN INTEREST IN A TRUST.
  (2)  JOINT  PURCHASES. IF 2 OR MORE MEMBERS OF THE SAME FAMILY ACQUIRE
INTERESTS IN ANY PROPERTY DESCRIBED IN PARAGRAPH (1) IN THE SAME  TRANS-

S. 6359--A                         303                        A. 8559--A

ACTION  (OR  A  SERIES OF RELATED TRANSACTIONS), THE PERSON (OR PERSONS)
ACQUIRING THE TERM INTERESTS IN SUCH PROPERTY SHALL BE TREATED AS HAVING
ACQUIRED THE ENTIRE PROPERTY AND THEN TRANSFERRED TO THE  OTHER  PERSONS
THE  INTERESTS  ACQUIRED  BY  SUCH  OTHER PERSONS IN THE TRANSACTION (OR
SERIES OF TRANSACTIONS). SUCH TRANSFER  SHALL  BE  TREATED  AS  MADE  IN
EXCHANGE  FOR  THE CONSIDERATION (IF ANY) PROVIDED BY SUCH OTHER PERSONS
FOR THE ACQUISITION OF THEIR INTERESTS IN SUCH PROPERTY.
  (3) TERM INTEREST. THE TERM "TERM INTEREST" MEANS-
  (A) A LIFE INTEREST IN PROPERTY, OR
  (B) AN INTEREST IN PROPERTY FOR A TERM OF YEARS.
  (4) VALUATION RULE FOR CERTAIN TERM INTERESTS. IF THE  NONEXERCISE  OF
RIGHTS  UNDER  A  TERM  INTEREST  IN  TANGIBLE PROPERTY WOULD NOT HAVE A
SUBSTANTIAL EFFECT ON THE VALUATION OF THE REMAINDER  INTEREST  IN  SUCH
PROPERTY-
  (A) SUBPARAGRAPH (A) OF SUBSECTION (A)(2) SHALL NOT APPLY TO SUCH TERM
INTEREST, AND
  (B)  THE  VALUE  OF  SUCH  TERM  INTEREST  FOR  PURPOSES  OF  APPLYING
SUBSECTION (A)(1) SHALL BE THE AMOUNT  WHICH  THE  HOLDER  OF  THE  TERM
INTEREST ESTABLISHES AS THE AMOUNT FOR WHICH SUCH INTEREST COULD BE SOLD
TO AN UNRELATED THIRD PARTY.
  (D)  TREATMENT  OF TRANSFERS OF INTERESTS IN PORTION OF TRUST.  IN THE
CASE OF A TRANSFER OF AN INCOME OR REMAINDER INTEREST WITH RESPECT TO  A
SPECIFIED PORTION OF THE PROPERTY IN A TRUST, ONLY SUCH PORTION SHALL BE
TAKEN INTO ACCOUNT IN APPLYING THIS SECTION TO SUCH TRANSFER.
  (E)  MEMBER  OF  THE  FAMILY.  FOR  PURPOSES OF THIS SECTION, THE TERM
"MEMBER OF THE FAMILY" SHALL HAVE THE MEANING GIVEN SUCH TERM BY SECTION
2704(C)(2).
  S 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED
  (A) GENERAL RULE. FOR PURPOSES OF THIS  SUBTITLE,  THE  VALUE  OF  ANY
PROPERTY SHALL BE DETERMINED WITHOUT REGARD TO-
  (1)  ANY OPTION, AGREEMENT, OR OTHER RIGHT TO ACQUIRE OR USE THE PROP-
ERTY AT A PRICE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY (WITHOUT
REGARD TO SUCH OPTION, AGREEMENT, OR RIGHT), OR
  (2) ANY RESTRICTION ON THE RIGHT TO SELL OR USE SUCH PROPERTY.
  (B) EXCEPTIONS. SUBSECTION (A) SHALL NOT APPLY TO ANY  OPTION,  AGREE-
MENT,  RIGHT,  OR RESTRICTION WHICH MEETS EACH OF THE FOLLOWING REQUIRE-
MENTS:
  (1) IT IS A BONA FIDE BUSINESS ARRANGEMENT.
  (2) IT IS NOT A DEVICE TO TRANSFER SUCH PROPERTY  TO  MEMBERS  OF  THE
DECEDENT'S FAMILY FOR LESS THAN FULL AND ADEQUATE CONSIDERATION IN MONEY
OR MONEY'S WORTH.
  (3)  ITS  TERMS ARE COMPARABLE TO SIMILAR ARRANGEMENTS ENTERED INTO BY
PERSONS IN AN ARMS' LENGTH TRANSACTION
  S 2704. TREATMENT OF CERTAIN LAPSING RIGHTS  AND  RESTRICTIONS.    (A)
TREATMENT  OF  LAPSED  VOTING OR LIQUIDATION RIGHTS. (1) IN GENERAL. FOR
PURPOSES OF THIS SUBTITLE, IF-
--(A) THERE IS A LAPSE OF ANY VOTING OR LIQUIDATION RIGHT  IN  A  CORPO-
RATION OR PARTNERSHIP, AND
--(B) THE INDIVIDUAL HOLDING SUCH RIGHT IMMEDIATELY BEFORE THE LAPSE AND
MEMBERS  OF  SUCH  INDIVIDUAL'S  FAMILY  HOLD, BOTH BEFORE AND AFTER THE
LAPSE, CONTROL OF THE ENTITY,
  SUCH LAPSE SHALL BE TREATED AS A TRANSFER BY SUCH INDIVIDUAL BY  GIFT,
OR  A  TRANSFER WHICH IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT,
WHICHEVER IS APPLICABLE, IN THE AMOUNT DETERMINED UNDER PARAGRAPH (2).
  (2) AMOUNT OF TRANSFER. FOR PURPOSES  OF  PARAGRAPH  (1),  THE  AMOUNT
DETERMINED UNDER THIS PARAGRAPH IS THE EXCESS (IF ANY) OF-

S. 6359--A                         304                        A. 8559--A

--(A)  THE  VALUE  OF ALL INTERESTS IN THE ENTITY HELD BY THE INDIVIDUAL
DESCRIBED IN PARAGRAPH (1) IMMEDIATELY BEFORE THE LAPSE  (DETERMINED  AS
IF THE VOTING AND LIQUIDATION RIGHTS WERE NONLAPSING), OVER
--(B) THE VALUE OF SUCH INTERESTS IMMEDIATELY AFTER THE LAPSE.
  (3)  SIMILAR  RIGHTS.  THE  SECRETARY  MAY  BY  REGULATIONS APPLY THIS
SUBSECTION TO RIGHTS SIMILAR TO VOTING AND LIQUIDATION RIGHTS.
  (B) CERTAIN RESTRICTIONS ON LIQUIDATION DISREGARDED. (1)  IN  GENERAL.
FOR PURPOSES OF THIS SUBTITLE, IF-
--(A) THERE IS A TRANSFER OF AN INTEREST IN A CORPORATION OR PARTNERSHIP
TO (OR FOR THE BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY, AND
--(B)  THE TRANSFEROR AND MEMBERS OF THE TRANSFEROR'S FAMILY HOLD, IMME-
DIATELY BEFORE THE TRANSFER, CONTROL OF THE ENTITY,
  --ANY APPLICABLE RESTRICTION SHALL BE DISREGARDED IN  DETERMINING  THE
VALUE OF THE TRANSFERRED INTEREST.
  (2)  APPLICABLE RESTRICTION. FOR PURPOSES OF THIS SUBSECTION, THE TERM
"APPLICABLE RESTRICTION" MEANS ANY RESTRICTION-
  (A) WHICH EFFECTIVELY LIMITS THE ABILITY OF THE CORPORATION  OR  PART-
NERSHIP TO LIQUIDATE, AND
  (B) WITH RESPECT TO WHICH EITHER OF THE FOLLOWING APPLIES:
--(I)  THE  RESTRICTION  LAPSES, IN WHOLE OR IN PART, AFTER THE TRANSFER
REFERRED TO IN PARAGRAPH (1).
--(II) THE TRANSFEROR OR ANY MEMBER OF THE TRANSFEROR'S  FAMILY,  EITHER
ALONE  OR  COLLECTIVELY, HAS THE RIGHT AFTER SUCH TRANSFER TO REMOVE, IN
WHOLE OR IN PART, THE RESTRICTION.
  (3) EXCEPTIONS. THE TERM "APPLICABLE RESTRICTION" SHALL NOT INCLUDE-
--(A) ANY COMMERCIALLY REASONABLE RESTRICTION WHICH ARISES  AS  PART  OF
ANY FINANCING BY THE CORPORATION OR PARTNERSHIP WITH A PERSON WHO IS NOT
RELATED  TO  THE  TRANSFEROR OR TRANSFEREE, OR A MEMBER OF THE FAMILY OF
EITHER, OR
--(B) ANY RESTRICTION IMPOSED, OR REQUIRED TO BE IMPOSED, BY ANY FEDERAL
OR STATE LAW.
  (4) OTHER RESTRICTIONS. THE SECRETARY MAY BY REGULATIONS PROVIDE  THAT
OTHER  RESTRICTIONS SHALL BE DISREGARDED IN DETERMINING THE VALUE OF THE
TRANSFER OF ANY INTEREST IN A CORPORATION OR PARTNERSHIP TO A MEMBER  OF
THE  TRANSFEROR'S  FAMILY IF SUCH RESTRICTION HAS THE EFFECT OF REDUCING
THE VALUE OF THE TRANSFERRED INTEREST FOR PURPOSES OF THIS SUBTITLE  BUT
DOES NOT ULTIMATELY REDUCE THE VALUE OF SUCH INTEREST TO THE TRANSFEREE.
  (C) DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
  (1)  CONTROL.  THE  TERM  "CONTROL" HAS THE MEANING GIVEN SUCH TERM BY
SECTION 2701(B)(2).
  (2) MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS,  WITH
RESPECT TO ANY INDIVIDUAL-
  (A) SUCH INDIVIDUAL'S SPOUSE,
  (B) ANY ANCESTOR OR LINEAL DESCENDANT OF SUCH INDIVIDUAL OR SUCH INDI-
VIDUAL'S SPOUSE,
  (C) ANY BROTHER OR SISTER OF THE INDIVIDUAL, AND
  (D) ANY SPOUSE OF ANY INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (B) OR
(C).
  (3)  ATTRIBUTION.  THE  RULE  OF  SECTION  2701(E)(3)  SHALL APPLY FOR
PURPOSES OF DETERMINING THE INTERESTS HELD BY ANY INDIVIDUAL.
  S 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES
  (A) TREATMENT OF GIFT LOANS AND DEMAND LOANS. (1)  IN  GENERAL.    FOR
PURPOSES  OF  THIS  TITLE, IN THE CASE OF ANY BELOW-MARKET LOAN TO WHICH
THIS SECTION APPLIES AND WHICH IS A GIFT LOAN  OR  A  DEMAND  LOAN,  THE
FORGONE INTEREST SHALL BE TREATED AS-
--(A) TRANSFERRED FROM THE LENDER TO THE BORROWER, AND

S. 6359--A                         305                        A. 8559--A

--(B) RETRANSFERRED BY THE BORROWER TO THE LENDER AS INTEREST.
  (2)  TIME  WHEN  TRANSFERS MADE. EXCEPT AS OTHERWISE PROVIDED IN REGU-
LATIONS PRESCRIBED BY THE SECRETARY, ANY FORGONE  INTEREST  ATTRIBUTABLE
TO PERIODS DURING ANY CALENDAR YEAR SHALL BE TREATED AS TRANSFERRED (AND
RETRANSFERRED)  UNDER  PARAGRAPH  (1)  ON  THE LAST DAY OF SUCH CALENDAR
YEAR.
  (B) TREATMENT OF OTHER  BELOW-MARKET  LOANS.  (1)  IN  GENERAL.    FOR
PURPOSES  OF  THIS  TITLE, IN THE CASE OF ANY BELOW-MARKET LOAN TO WHICH
THIS SECTION APPLIES AND TO WHICH SUBSECTION (A)(1) DOES NOT APPLY,  THE
LENDER  SHALL  BE TREATED AS HAVING TRANSFERRED ON THE DATE THE LOAN WAS
MADE (OR, IF LATER, ON THE FIRST DAY ON WHICH THIS  SECTION  APPLIES  TO
SUCH LOAN), AND THE BORROWER SHALL BE TREATED AS HAVING RECEIVED ON SUCH
DATE, CASH IN AN AMOUNT EQUAL TO THE EXCESS OF-
--(A) THE AMOUNT LOANED, OVER
--(B)  THE  PRESENT  VALUE OF ALL PAYMENTS WHICH ARE REQUIRED TO BE MADE
UNDER THE TERMS OF THE LOAN.
  (2) OBLIGATION TREATED AS HAVING ORIGINAL ISSUE DISCOUNT. FOR PURPOSES
OF THIS TITLE-
  (A) IN GENERAL. ANY BELOW-MARKET LOAN TO WHICH PARAGRAPH  (1)  APPLIES
SHALL BE TREATED AS HAVING ORIGINAL ISSUE DISCOUNT IN AN AMOUNT EQUAL TO
THE EXCESS DESCRIBED IN PARAGRAPH (1).
  (B)  AMOUNT IN ADDITION TO OTHER ORIGINAL ISSUE DISCOUNT. ANY ORIGINAL
ISSUE DISCOUNT WHICH A LOAN IS TREATED AS HAVING BY REASON  OF  SUBPARA-
GRAPH  (A)  SHALL BE IN ADDITION TO ANY OTHER ORIGINAL ISSUE DISCOUNT ON
SUCH LOAN (DETERMINED WITHOUT REGARD TO SUBPARAGRAPH (A)).
  (C) BELOW-MARKET LOANS TO  WHICH  SECTION  APPLIES.  (1)  IN  GENERAL.
EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION AND SUBSECTION (G), THIS
SECTION SHALL APPLY TO-
  (A) GIFTS. ANY BELOW-MARKET LOAN WHICH IS A GIFT LOAN.
  (B)  COMPENSATION-RELATED  LOANS.  ANY  BELOW-MARKET  LOAN DIRECTLY OR
INDIRECTLY BETWEEN-
--(I) AN EMPLOYER AND AN EMPLOYEE, OR
--(II) AN INDEPENDENT CONTRACTOR AND A PERSON FOR WHOM SUCH  INDEPENDENT
CONTRACTOR PROVIDES SERVICES.
  (C)  CORPORATION-SHAREHOLDER  LOANS. ANY BELOW-MARKET LOAN DIRECTLY OR
INDIRECTLY BETWEEN A CORPORATION AND  ANY  SHAREHOLDER  OF  SUCH  CORPO-
RATION.
  (D)  TAX  AVOIDANCE  LOANS.  ANY  BELOW-MARKET LOAN 1 OF THE PRINCIPAL
PURPOSES OF THE INTEREST ARRANGEMENTS OF WHICH IS THE AVOIDANCE  OF  ANY
FEDERAL TAX.
  (E)  OTHER  BELOW-MARKET LOANS. TO THE EXTENT PROVIDED IN REGULATIONS,
ANY BELOW-MARKET LOAN WHICH IS NOT DESCRIBED IN SUBPARAGRAPH  (A),  (B),
(C), OR (F) IF THE INTEREST ARRANGEMENTS OF SUCH LOAN HAVE A SIGNIFICANT
EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
  (F)  LOANS  TO  QUALIFIED  CONTINUING CARE FACILITIES. ANY LOAN TO ANY
QUALIFIED  CONTINUING  CARE  FACILITY  PURSUANT  TO  A  CONTINUING  CARE
CONTRACT.
  (2)  $10,000  DE MINIMIS EXCEPTION FOR GIFT LOANS BETWEEN INDIVIDUALS.
(A) IN GENERAL. IN THE CASE OF ANY GIFT LOAN DIRECTLY  BETWEEN  INDIVID-
UALS,  THIS  SECTION  SHALL  NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE
OUTSTANDING AMOUNT OF LOANS BETWEEN SUCH  INDIVIDUALS  DOES  NOT  EXCEED
$10,000.
  (B)  DE MINIMIS EXCEPTION NOT TO APPLY TO LOANS ATTRIBUTABLE TO ACQUI-
SITION OF INCOME-PRODUCING ASSETS.
--SUBPARAGRAPH (A) SHALL NOT APPLY TO ANY GIFT LOAN  DIRECTLY  ATTRIBUT-
ABLE TO THE PURCHASE OR CARRYING OF INCOME-PRODUCING ASSETS.

S. 6359--A                         306                        A. 8559--A

  (C)  CROSS  REFERENCE.  FOR  LIMITATION  ON AMOUNT TREATED AS INTEREST
WHERE LOANS DO NOT EXCEED $100,000, SEE SUBSECTION (D)(1).
  (3)  $10,000  DE MINIMIS EXCEPTION FOR COMPENSATION-RELATED AND CORPO-
RATE-SHAREHOLDER LOANS.  (A)  IN  GENERAL.  IN  THE  CASE  OF  ANY  LOAN
DESCRIBED  IN  SUBPARAGRAPH  (B)  OR  (C) OF PARAGRAPH (1), THIS SECTION
SHALL NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE OUTSTANDING AMOUNT  OF
LOANS BETWEEN THE BORROWER AND LENDER DOES NOT EXCEED $10,000.
  (B) EXCEPTION NOT TO APPLY WHERE 1 OF PRINCIPAL PURPOSES IS TAX AVOID-
ANCE.    SUBPARAGRAPH  (A)  SHALL  NOT  APPLY  TO  ANY LOAN THE INTEREST
ARRANGEMENTS OF WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES  THE  AVOID-
ANCE OF ANY FEDERAL TAX.
  (D)  SPECIAL  RULES FOR GIFT LOANS. (1) LIMITATION ON INTEREST ACCRUAL
FOR PURPOSES OF INCOME TAXES WHERE LOANS DO NOT EXCEED $100,000. (A)  IN
GENERAL. FOR PURPOSES OF SUBTITLE A, IN THE CASE OF A GIFT LOAN DIRECTLY
BETWEEN INDIVIDUALS, THE AMOUNT TREATED AS RETRANSFERRED BY THE BORROWER
TO  THE  LENDER AS OF THE CLOSE OF ANY YEAR SHALL NOT EXCEED THE BORROW-
ER'S NET INVESTMENT INCOME FOR SUCH YEAR.
  (B) LIMITATION NOT TO APPLY WHERE  1  OF  PRINCIPAL  PURPOSES  IS  TAX
AVOIDANCE.    SUBPARAGRAPH  (A) SHALL NOT APPLY TO ANY LOAN THE INTEREST
ARRANGEMENTS OF WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES  THE  AVOID-
ANCE OF ANY FEDERAL TAX.
  (C) SPECIAL RULE WHERE MORE THAN 1 GIFT LOAN OUTSTANDING. FOR PURPOSES
OF  SUBPARAGRAPH  (A),  IN  ANY CASE IN WHICH A BORROWER HAS OUTSTANDING
MORE THAN 1 GIFT LOAN, THE NET INVESTMENT INCOME OF SUCH BORROWER  SHALL
BE  ALLOCATED  AMONG  SUCH LOANS IN PROPORTION TO THE RESPECTIVE AMOUNTS
WHICH WOULD BE TREATED AS RETRANSFERRED BY THE BORROWER  WITHOUT  REGARD
TO THIS PARAGRAPH.
  (D)  LIMITATION  NOT  TO  APPLY WHERE AGGREGATE AMOUNT OF LOANS EXCEED
$100,000.  THIS PARAGRAPH SHALL NOT APPLY TO ANY LOAN MADE BY  A  LENDER
TO  A  BORROWER FOR ANY DAY ON WHICH THE AGGREGATE OUTSTANDING AMOUNT OF
LOANS BETWEEN THE BORROWER AND LENDER EXCEEDS $100,000.
  (E) NET INVESTMENT INCOME. FOR PURPOSES OF THIS PARAGRAPH-
  (I) IN GENERAL. THE TERM "NET INVESTMENT INCOME" HAS THE MEANING GIVEN
SUCH TERM BY SECTION 163(D)(4).
  (II) DE MINIMIS RULE. IF THE NET INVESTMENT INCOME OF ANY BORROWER FOR
ANY YEAR DOES NOT EXCEED $1,000,  THE  NET  INVESTMENT  INCOME  OF  SUCH
BORROWER FOR SUCH YEAR SHALL BE TREATED AS ZERO.
  (III)  ADDITIONAL  AMOUNTS TREATED AS INTEREST. IN DETERMINING THE NET
INVESTMENT INCOME OF A PERSON FOR ANY YEAR, ANY AMOUNT  WHICH  WOULD  BE
INCLUDED  IN  THE GROSS INCOME OF SUCH PERSON FOR SUCH YEAR BY REASON OF
SECTION 1272 IF SUCH SECTION APPLIED TO ALL DEFERRED PAYMENT OBLIGATIONS
SHALL BE TREATED AS INTEREST RECEIVED BY SUCH PERSON FOR SUCH YEAR.
  (IV) DEFERRED PAYMENT OBLIGATIONS. THE TERM  "DEFERRED  PAYMENT  OBLI-
GATION" INCLUDES ANY MARKET DISCOUNT BOND, SHORT-TERM OBLIGATION, UNITED
STATES SAVINGS BOND, ANNUITY, OR SIMILAR OBLIGATION.
  (2) SPECIAL RULE FOR GIFT TAX. IN THE CASE OF ANY GIFT LOAN WHICH IS A
TERM  LOAN,  SUBSECTION  (B)(1) (AND NOT SUBSECTION (A)) SHALL APPLY FOR
PURPOSES OF CHAPTER 12.
  (E)  DEFINITIONS  OF  BELOW-MARKET  LOAN  AND  FORGONE  INTEREST.  FOR
PURPOSES OF THIS SECTION-
  (1) BELOW-MARKET LOAN. THE TERM "BELOW-MARKET LOAN" MEANS ANY LOAN IF-
--(A) IN THE CASE OF A DEMAND LOAN, INTEREST IS PAYABLE ON THE LOAN AT A
RATE LESS THAN THE APPLICABLE FEDERAL RATE, OR
--(B)  IN THE CASE OF A TERM LOAN, THE AMOUNT LOANED EXCEEDS THE PRESENT
VALUE OF ALL PAYMENTS DUE UNDER THE LOAN.

S. 6359--A                         307                        A. 8559--A

  (2) FORGONE INTEREST. THE TERM "FORGONE INTEREST" MEANS, WITH  RESPECT
TO ANY PERIOD DURING WHICH THE LOAN IS OUTSTANDING, THE EXCESS OF-
--(A)  THE  AMOUNT OF INTEREST WHICH WOULD HAVE BEEN PAYABLE ON THE LOAN
FOR THE PERIOD IF INTEREST ACCRUED ON THE LOAN AT THE APPLICABLE FEDERAL
RATE AND WERE PAYABLE ANNUALLY ON THE  DAY  REFERRED  TO  IN  SUBSECTION
(A)(2), OVER
--(B)  ANY INTEREST PAYABLE ON THE LOAN PROPERLY ALLOCABLE TO SUCH PERI-
OD.
  (F) OTHER DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
  (1) PRESENT VALUE. THE PRESENT VALUE OF ANY PAYMENT  SHALL  BE  DETER-
MINED IN THE MANNER PROVIDED BY REGULATIONS PRESCRIBED BY THE SECRETARY-
--(A) AS OF THE DATE OF THE LOAN, AND
--(B) BY USING A DISCOUNT RATE EQUAL TO THE APPLICABLE FEDERAL RATE.
  (2)  APPLICABLE  FEDERAL RATE. (A) TERM LOANS. IN THE CASE OF ANY TERM
LOAN, THE APPLICABLE FEDERAL RATE SHALL BE THE APPLICABLE  FEDERAL  RATE
IN  EFFECT  UNDER  SECTION  1274(D) (AS OF THE DAY ON WHICH THE LOAN WAS
MADE), COMPOUNDED SEMIANNUALLY.
  (B) DEMAND LOANS. IN THE CASE OF A DEMAND LOAN, THE APPLICABLE FEDERAL
RATE SHALL BE THE  FEDERAL  SHORT-TERM  RATE  IN  EFFECT  UNDER  SECTION
1274(D) FOR THE PERIOD FOR WHICH THE AMOUNT OF FORGONE INTEREST IS BEING
DETERMINED, COMPOUNDED SEMIANNUALLY.
  (3)  GIFT LOAN. THE TERM "GIFT LOAN" MEANS ANY BELOW-MARKET LOAN WHERE
THE FORGOING OF INTEREST IS IN THE NATURE OF A GIFT.
  (4) AMOUNT LOANED. THE TERM "AMOUNT LOANED" MEANS THE AMOUNT  RECEIVED
BY THE BORROWER.
  (5)  DEMAND LOAN. THE TERM "DEMAND LOAN" MEANS ANY LOAN WHICH IS PAYA-
BLE IN FULL AT ANY TIME ON THE DEMAND OF  THE  LENDER.  SUCH  TERM  ALSO
INCLUDES  (FOR  PURPOSES  OTHER  THAN DETERMINING THE APPLICABLE FEDERAL
RATE UNDER PARAGRAPH (2)) ANY LOAN  IF  THE  BENEFITS  OF  THE  INTEREST
ARRANGEMENTS  OF  SUCH  LOAN ARE NOT TRANSFERABLE AND ARE CONDITIONED ON
THE FUTURE PERFORMANCE OF SUBSTANTIAL SERVICES BY AN INDIVIDUAL. TO  THE
EXTENT PROVIDED IN REGULATIONS, SUCH TERM ALSO INCLUDES ANY LOAN WITH AN
INDEFINITE MATURITY.
  (6)  TERM  LOAN.  THE  TERM  "TERM LOAN" MEANS ANY LOAN WHICH IS NOT A
DEMAND LOAN.
  (7) HUSBAND AND WIFE TREATED AS 1 PERSON. A HUSBAND AND WIFE SHALL  BE
TREATED AS 1 PERSON.
  (8)  LOANS TO WHICH SECTION 483, 643(I), OR 1274 APPLIES. THIS SECTION
SHALL NOT APPLY TO ANY LOAN  TO  WHICH  SECTION  483,  643(I),  OR  1274
APPLIES.
  (9)  NO WITHHOLDING. NO AMOUNT SHALL BE WITHHELD UNDER CHAPTER 24 WITH
RESPECT TO-
--(A)  ANY  AMOUNT  TREATED  AS  TRANSFERRED  OR   RETRANSFERRED   UNDER
SUBSECTION (A), AND
--(B) ANY AMOUNT TREATED AS RECEIVED UNDER SUBSECTION (B).
  (10)  SPECIAL RULE FOR TERM LOANS. IF THIS SECTION APPLIES TO ANY TERM
LOAN ON ANY DAY, THIS SECTION SHALL  CONTINUE  TO  APPLY  TO  SUCH  LOAN
NOTWITHSTANDING PARAGRAPHS (2) AND (3) OF SUBSECTION (C). IN THE CASE OF
A  GIFT  LOAN,  THE  PRECEDING SENTENCE SHALL ONLY APPLY FOR PURPOSES OF
CHAPTER 12.
  (11) TIME FOR  DETERMINING  RATE  APPLICABLE  TO  EMPLOYEE  RELOCATION
LOANS.  (A) IN GENERAL. IN THE CASE OF ANY TERM LOAN MADE BY AN EMPLOYER
TO AN EMPLOYEE THE PROCEEDS  OF  WHICH  ARE  USED  BY  THE  EMPLOYEE  TO
PURCHASE  A PRINCIPAL RESIDENCE (WITHIN THE MEANING OF SECTION 121), THE
DETERMINATION OF THE APPLICABLE FEDERAL RATE SHALL BE  MADE  AS  OF  THE
DATE THE WRITTEN CONTRACT TO PURCHASE SUCH RESIDENCE WAS ENTERED INTO.

S. 6359--A                         308                        A. 8559--A

  (B)  PARAGRAPH  ONLY  TO  APPLY TO CASES TO WHICH SECTION 217 APPLIES.
SUBPARAGRAPH (A) SHALL ONLY APPLY TO THE PURCHASE OF A  PRINCIPAL  RESI-
DENCE  IN  CONNECTION  WITH THE COMMENCEMENT OF WORK BY AN EMPLOYEE OR A
CHANGE IN THE PRINCIPAL PLACE OF WORK OF AN EMPLOYEE  TO  WHICH  SECTION
217 APPLIES.
  (G)  EXCEPTION  FOR CERTAIN LOANS TO QUALIFIED CONTINUING CARE FACILI-
TIES.  (1) IN GENERAL. THIS SECTION SHALL NOT  APPLY  FOR  ANY  CALENDAR
YEAR TO ANY BELOW-MARKET LOAN MADE BY A LENDER TO A QUALIFIED CONTINUING
CARE  FACILITY  PURSUANT TO A CONTINUING CARE CONTRACT IF THE LENDER (OR
THE LENDER'S SPOUSE) ATTAINS AGE 65 BEFORE THE CLOSE OF SUCH YEAR.
  (2) $90,000 LIMIT. PARAGRAPH (1) SHALL APPLY ONLY TO THE  EXTENT  THAT
THE  AGGREGATE  OUTSTANDING  AMOUNT  OF ANY LOAN TO WHICH SUCH PARAGRAPH
APPLIES (DETERMINED WITHOUT REGARD TO THIS PARAGRAPH), WHEN ADDED TO THE
AGGREGATE OUTSTANDING AMOUNT OF ALL OTHER  PREVIOUS  LOANS  BETWEEN  THE
LENDER (OR THE LENDER'S SPOUSE) AND ANY QUALIFIED CONTINUING CARE FACIL-
ITY TO WHICH PARAGRAPH (1) APPLIES, DOES NOT EXCEED $90,000.
  (3)  CONTINUING  CARE CONTRACT. FOR PURPOSES OF THIS SECTION, THE TERM
"CONTINUING CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN  INDIVID-
UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
--(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
ING CARE FACILITY FOR THEIR LIFE OR LIVES,
--(B) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE-
--(I) WILL FIRST-
--(I)  RESIDE  IN  A  SEPARATE,  INDEPENDENT LIVING UNIT WITH ADDITIONAL
FACILITIES OUTSIDE SUCH UNIT  FOR  THE  PROVIDING  OF  MEALS  AND  OTHER
PERSONAL CARE, AND
--(II) NOT REQUIRE LONG-TERM NURSING CARE, AND
--(II)  THEN  WILL BE PROVIDED LONG-TERM AND SKILLED NURSING CARE AS THE
HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S SPOUSE REQUIRES, AND
--(C) NO ADDITIONAL SUBSTANTIAL PAYMENT IS REQUIRED IF  SUCH  INDIVIDUAL
OR  INDIVIDUAL'S  SPOUSE  REQUIRES  INCREASED  PERSONAL CARE SERVICES OR
LONG-TERM AND SKILLED NURSING CARE.
  (4) QUALIFIED CONTINUING CARE FACILITY. (A) IN GENERAL.  FOR  PURPOSES
OF  THIS  SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY" MEANS 1
OR MORE FACILITIES-
--(I) WHICH ARE DESIGNED  TO  PROVIDE  SERVICES  UNDER  CONTINUING  CARE
CONTRACTS, AND
--(II)  SUBSTANTIALLY  ALL  OF  THE  RESIDENTS  OF  WHICH ARE COVERED BY
CONTINUING CARE CONTRACTS.
  (B) SUBSTANTIALLY ALL FACILITIES MUST BE OWNED OR OPERATED BY  BORROW-
ER.  A  FACILITY  SHALL  NOT  BE  TREATED AS A QUALIFIED CONTINUING CARE
FACILITY UNLESS SUBSTANTIALLY ALL FACILITIES WHICH ARE USED  TO  PROVIDE
SERVICES  WHICH  ARE  REQUIRED  TO  BE  PROVIDED UNDER A CONTINUING CARE
CONTRACT ARE OWNED OR OPERATED BY THE BORROWER.
  (C) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
ITY" SHALL NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH  IS  TRADI-
TIONALLY CONSIDERED A NURSING HOME.
  (5)  ADJUSTMENT OF LIMIT FOR INFLATION. (A) IN GENERAL. IN THE CASE OF
ANY LOAN MADE DURING ANY CALENDAR YEAR AFTER 1986 TO WHICH PARAGRAPH (1)
APPLIES, THE DOLLAR AMOUNT IN PARAGRAPH (2) SHALL BE  INCREASED  BY  THE
INFLATION  ADJUSTMENT  FOR  SUCH  CALENDAR  YEAR. ANY INCREASE UNDER THE
PRECEDING SENTENCE SHALL BE ROUNDED TO THE NEAREST MULTIPLE OF $100 (OR,
IF SUCH INCREASE IS A MULTIPLE OF $50, SUCH INCREASE SHALL BE  INCREASED
TO THE NEAREST MULTIPLE OF $100).

S. 6359--A                         309                        A. 8559--A

  (B)  INFLATION  ADJUSTMENT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A), THE
INFLATION ADJUSTMENT FOR ANY CALENDAR YEAR IS THE PERCENTAGE (IF ANY) BY
WHICH-
--(I) THE CPI FOR THE PRECEDING CALENDAR YEAR EXCEEDS
--(II) THE CPI FOR CALENDAR YEAR 1985.
  1.  FOR  PURPOSES  OF THE PRECEDING SENTENCE, THE CPI FOR ANY CALENDAR
YEAR IS THE AVERAGE OF THE CONSUMER PRICE INDEX AS OF THE CLOSE  OF  THE
12-MONTH PERIOD ENDING ON SEPTEMBER 30 OF SUCH CALENDAR YEAR.
  (6)  SUSPENSION  OF APPLICATION. PARAGRAPH (1) SHALL NOT APPLY FOR ANY
CALENDAR YEAR TO WHICH SUBSECTION (H) APPLIES.
  (H) EXCEPTION FOR LOANS TO QUALIFIED CONTINUING CARE  FACILITIES.  (1)
IN  GENERAL.  THIS  SECTION SHALL NOT APPLY FOR ANY CALENDAR YEAR TO ANY
BELOW-MARKET LOAN OWED BY A FACILITY WHICH ON THE LAST DAY OF SUCH  YEAR
IS  A QUALIFIED CONTINUING CARE FACILITY, IF SUCH LOAN WAS MADE PURSUANT
TO A CONTINUING CARE CONTRACT AND IF THE LENDER (OR THE LENDER'S SPOUSE)
ATTAINS AGE 62 BEFORE THE CLOSE OF SUCH YEAR.
  (2) CONTINUING CARE CONTRACT. FOR PURPOSES OF THIS SECTION,  THE  TERM
"CONTINUING  CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN INDIVID-
UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
--(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
ING CARE FACILITY FOR THEIR LIFE OR LIVES,
--(B) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE WILL BE PROVIDED WITH  HOUS-
ING,  AS  APPROPRIATE  FOR THE HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S
SPOUSE-
--(I) IN AN INDEPENDENT LIVING  UNIT  (WHICH  HAS  ADDITIONAL  AVAILABLE
FACILITIES  OUTSIDE  SUCH  UNIT  FOR  THE  PROVISION  OF MEALS AND OTHER
PERSONAL CARE), AND
--(II) IN AN ASSISTED LIVING FACILITY  OR  A  NURSING  FACILITY,  AS  IS
AVAILABLE IN THE CONTINUING CARE FACILITY, AND
--(C)  THE  INDIVIDUAL  OR INDIVIDUAL'S SPOUSE WILL BE PROVIDED ASSISTED
LIVING OR NURSING CARE AS THE HEALTH OF SUCH INDIVIDUAL OR  INDIVIDUAL'S
SPOUSE REQUIRES, AND AS IS AVAILABLE IN THE CONTINUING CARE FACILITY.
--THE SECRETARY SHALL ISSUE GUIDANCE WHICH LIMITS SUCH TERM TO CONTRACTS
WHICH  PROVIDE  ONLY  FACILITIES,  CARE,  AND SERVICES DESCRIBED IN THIS
PARAGRAPH.
  (3) QUALIFIED CONTINUING CARE FACILITY. (A) IN GENERAL.  FOR  PURPOSES
OF  THIS  SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY" MEANS 1
OR MORE FACILITIES-
--(I) WHICH ARE DESIGNED  TO  PROVIDE  SERVICES  UNDER  CONTINUING  CARE
CONTRACTS,
--(II) WHICH INCLUDE AN INDEPENDENT LIVING UNIT, PLUS AN ASSISTED LIVING
OR NURSING FACILITY, OR BOTH, AND
--(III)  SUBSTANTIALLY  ALL  OF THE INDEPENDENT LIVING UNIT RESIDENTS OF
WHICH ARE COVERED BY CONTINUING CARE CONTRACTS.
  (B) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
ITY" SHALL NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH  IS  TRADI-
TIONALLY CONSIDERED A NURSING HOME.
  (I)  REGULATIONS.  (1)  IN GENERAL. THE SECRETARY SHALL PRESCRIBE SUCH
REGULATIONS AS MAY BE NECESSARY OR APPROPRIATE TO CARRY OUT THE PURPOSES
OF THIS SECTION, INCLUDING-
--(A) REGULATIONS PROVIDING THAT WHERE, BY REASON OF  VARYING  RATES  OF
INTEREST,  CONDITIONAL  INTEREST PAYMENTS, WAIVERS OF INTEREST, DISPOSI-
TION OF THE LENDER'S OR  BORROWER'S  INTEREST  IN  THE  LOAN,  OR  OTHER
CIRCUMSTANCES,  THE  PROVISIONS  OF  THIS  SECTION  DO NOT CARRY OUT THE
PURPOSES OF THIS SECTION, ADJUSTMENTS TO THE PROVISIONS OF THIS  SECTION

S. 6359--A                         310                        A. 8559--A

WILL  BE  MADE TO THE EXTENT NECESSARY TO CARRY OUT THE PURPOSES OF THIS
SECTION,
--(B)  REGULATIONS FOR THE PURPOSE OF ASSURING THAT THE POSITIONS OF THE
BORROWER AND LENDER ARE CONSISTENT AS TO THE APPLICATION (OR NONAPPLICA-
TION) OF THIS SECTION, AND
--(C) REGULATIONS EXEMPTING FROM THE APPLICATION  OF  THIS  SECTION  ANY
CLASS OF TRANSACTIONS THE INTEREST ARRANGEMENTS OF WHICH HAVE NO SIGNIF-
ICANT EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
  (2)  ESTATE  TAX  COORDINATION.  UNDER  REGULATIONS  PRESCRIBED BY THE
SECRETARY, ANY LOAN WHICH IS MADE WITH DONATIVE INTENT AND  WHICH  IS  A
TERM  LOAN  SHALL  BE TAKEN INTO ACCOUNT FOR PURPOSES OF CHAPTER 11 IN A
MANNER CONSISTENT WITH THE PROVISIONS OF SUBSECTION (B).
  S 6166. EXTENSION OF TIME FOR  PAYMENT  OF  ESTATE  TAX  WHERE  ESTATE
CONSISTS LARGELY OF INTEREST IN CLOSELY HELD BUSINESS. (A) 5-YEAR DEFER-
RAL; 10-YEAR INSTALLMENT PAYMENT.--
  (1)  IN  GENERAL.--IF THE VALUE OF AN INTEREST IN A CLOSELY HELD BUSI-
NESS WHICH IS INCLUDED IN DETERMINING THE GROSS ESTATE OF A DECEDENT WHO
WAS (AT THE DATE OF HIS DEATH) A  CITIZEN  OR  RESIDENT  OF  THE  UNITED
STATES EXCEEDS 35 PERCENT OF THE ADJUSTED GROSS ESTATE, THE EXECUTOR MAY
ELECT TO PAY PART OR ALL OF THE TAX IMPOSED BY SECTION 2001 IN 2 OR MORE
(BUT NOT EXCEEDING 10) EQUAL INSTALLMENTS.
  (2)  LIMITATION.--THE  MAXIMUM  AMOUNT  OF  TAX  WHICH  MAY BE PAID IN
INSTALLMENTS UNDER THIS SUBSECTION SHALL BE AN AMOUNT  WHICH  BEARS  THE
SAME  RATIO  TO  THE TAX IMPOSED BY SECTION 2001 (REDUCED BY THE CREDITS
AGAINST SUCH TAX) AS--
  (A) THE CLOSELY HELD BUSINESS AMOUNT, BEARS TO
  (B) THE AMOUNT OF THE ADJUSTED GROSS ESTATE.
  (3) DATE FOR PAYMENT OF INSTALLMENTS.--IF AN ELECTION  IS  MADE  UNDER
PARAGRAPH (1), THE FIRST INSTALLMENT SHALL BE PAID ON OR BEFORE THE DATE
SELECTED  BY  THE EXECUTOR WHICH IS NOT MORE THAN 5 YEARS AFTER THE DATE
PRESCRIBED BY SECTION 6151(A) FOR PAYMENT OF THE TAX, AND EACH  SUCCEED-
ING  INSTALLMENT  SHALL  BE  PAID  ON OR BEFORE THE DATE WHICH IS 1 YEAR
AFTER THE DATE PRESCRIBED BY THIS PARAGRAPH FOR PAYMENT OF THE PRECEDING
INSTALLMENT.
  (B) DEFINITIONS AND SPECIAL RULES.--
  (1) INTEREST IN CLOSELY HELD BUSINESS.--FOR PURPOSES OF THIS  SECTION,
THE TERM "INTEREST IN A CLOSELY HELD BUSINESS" MEANS--
  (A) AN INTEREST AS A PROPRIETOR IN A TRADE OR BUSINESS CARRIED ON AS A
PROPRIETORSHIP;
  (B)  AN  INTEREST AS A PARTNER IN A PARTNERSHIP CARRYING ON A TRADE OR
BUSINESS, IF--
  (I) 20 PERCENT OR MORE OF THE TOTAL CAPITAL INTEREST IN SUCH  PARTNER-
SHIP IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
  (II) SUCH PARTNERSHIP HAD 45 OR FEWER PARTNERS; OR
  (C) STOCK IN A CORPORATION CARRYING ON A TRADE OR BUSINESS IF--
  (I)  20  PERCENT  OR  MORE IN VALUE OF THE VOTING STOCK OF SUCH CORPO-
RATION IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
  (II) SUCH CORPORATION HAD 45 OR FEWER SHAREHOLDERS.
  (2) RULES FOR APPLYING PARAGRAPH (1).--FOR PURPOSES OF PARAGRAPH (1)--
  (A) TIME FOR TESTING.--DETERMINATIONS SHALL BE MADE  AS  OF  THE  TIME
IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
  (B)  CERTAIN  INTERESTS HELD BY HUSBAND AND WIFE.--STOCK OR A PARTNER-
SHIP INTEREST WHICH--
  (I) IS COMMUNITY PROPERTY OF A HUSBAND AND WIFE (OR  THE  INCOME  FROM
WHICH  IS  COMMUNITY INCOME) UNDER THE APPLICABLE COMMUNITY PROPERTY LAW
OF A STATE, OR

S. 6359--A                         311                        A. 8559--A

  (II) IS HELD BY A HUSBAND AND WIFE AS JOINT TENANTS,  TENANTS  BY  THE
ENTIRETY,  OR TENANTS IN COMMON, SHALL BE TREATED AS OWNED BY ONE SHARE-
HOLDER OR ONE PARTNER, AS THE CASE MAY BE.
  (C) INDIRECT OWNERSHIP.--PROPERTY OWNED, DIRECTLY OR INDIRECTLY, BY OR
FOR  A CORPORATION, PARTNERSHIP, ESTATE, OR TRUST SHALL BE CONSIDERED AS
BEING OWNED PROPORTIONATELY BY OR FOR  ITS  SHAREHOLDERS,  PARTNERS,  OR
BENEFICIARIES. FOR PURPOSES OF THE PRECEDING SENTENCE, A PERSON SHALL BE
TREATED  AS A BENEFICIARY OF ANY TRUST ONLY IF SUCH PERSON HAS A PRESENT
INTEREST IN THE TRUST.
  (D) CERTAIN INTERESTS HELD BY MEMBERS OF DECEDENT'S FAMILY.--ALL STOCK
AND ALL PARTNERSHIP INTERESTS HELD BY THE DECEDENT OR BY ANY  MEMBER  OF
HIS FAMILY (WITHIN THE MEANING OF SECTION 267(C)(4)) SHALL BE TREATED AS
OWNED BY THE DECEDENT.
  (3)  FARMHOUSES  AND CERTAIN OTHER STRUCTURES TAKEN INTO ACCOUNT.--FOR
PURPOSES OF THE 35-PERCENT REQUIREMENT OF SUBSECTION (A)(1), AN INTEREST
IN A CLOSELY HELD BUSINESS WHICH IS THE BUSINESS OF FARMING INCLUDES  AN
INTEREST  IN  RESIDENTIAL BUILDINGS AND RELATED IMPROVEMENTS ON THE FARM
WHICH ARE OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF THE FARM
OR BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR PURPOSES OF OPERATING
OR MAINTAINING THE FARM.
  (4) VALUE.--FOR PURPOSES OF THIS SECTION, VALUE SHALL BE VALUE  DETER-
MINED FOR PURPOSES OF CHAPTER 11 (RELATING TO ESTATE TAX).
  (5)  CLOSELY  HELD BUSINESS AMOUNT.--FOR PURPOSES OF THIS SECTION, THE
TERM "CLOSELY HELD BUSINESS AMOUNT" MEANS THE VALUE OF THE INTEREST IN A
CLOSELY HELD BUSINESS WHICH QUALIFIES UNDER SUBSECTION (A)(1).
  (6) ADJUSTED GROSS ESTATE.--FOR PURPOSES OF THIS  SECTION,  THE  TERM,
"ADJUSTED  GROSS  ESTATE" MEANS THE VALUE OF THE GROSS ESTATE REDUCED BY
THE SUM OF THE AMOUNTS ALLOWABLE AS A DEDUCTION UNDER  SECTION  2053  OR
2054. SUCH SUM SHALL BE DETERMINED ON THE BASIS OF THE FACTS AND CIRCUM-
STANCES  IN  EXISTENCE ON THE DATE (INCLUDING EXTENSIONS) FOR FILING THE
RETURN OF TAX IMPOSED BY SECTION 2001 (OR, IF EARLIER, THE DATE ON WHICH
SUCH RETURN IS FILED).
  (7) PARTNERSHIP INTERESTS AND STOCK WHICH IS NOT READILY TRADABLE.--
  (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE BENEFITS OF THIS PARAGRAPH
(AT SUCH TIME AND IN SUCH MANNER AS THE SECRETARY SHALL  BY  REGULATIONS
PRESCRIBE), THEN--
  (I)  FOR  PURPOSES  OF  PARAGRAPH (1)(B)(I) OR (1)(C)(I) (WHICHEVER IS
APPROPRIATE) AND FOR PURPOSES OF SUBSECTION (C), ANY CAPITAL INTEREST IN
A PARTNERSHIP AND ANY NON-READILY-TRADABLE STOCK WHICH (AFTER THE APPLI-
CATION OF PARAGRAPH (2)) IS TREATED AS OWNED BY THE  DECEDENT  SHALL  BE
TREATED  AS  INCLUDED  IN  DETERMINING THE VALUE OF THE DECEDENT'S GROSS
ESTATE,
  (II) THE EXECUTOR SHALL BE TREATED AS HAVING SELECTED UNDER SUBSECTION
(A)(3) THE DATE PRESCRIBED BY SECTION 6151(A), AND
  (III) FOR PURPOSES OF APPLYING SECTION 6601(J), THE 2-PERCENT  PORTION
(AS DEFINED IN SUCH SECTION) SHALL BE TREATED AS BEING ZERO.
  (B)  NON-READILY-TRADABLE  STOCK  DEFINED.--FOR PURPOSES OF THIS PARA-
GRAPH, THE TERM "NON-READILY-TRADABLE STOCK" MEANS STOCK FOR  WHICH,  AT
THE  TIME  OF  THE  DECEDENT'S  DEATH,  THERE  WAS  NO MARKET ON A STOCK
EXCHANGE OR IN AN OVER-THE-COUNTER MARKET.
  (8) STOCK IN HOLDING COMPANY TREATED  AS  BUSINESS  COMPANY  STOCK  IN
CERTAIN CASES.--
  (A)  IN  GENERAL.--IF  THE  EXECUTOR ELECTS THE BENEFITS OF THIS PARA-
GRAPH, THEN--
  (I) HOLDING COMPANY STOCK  TREATED  AS  BUSINESS  COMPANY  STOCK.--FOR
PURPOSES OF THIS SECTION, THE PORTION OF THE STOCK OF ANY HOLDING COMPA-

S. 6359--A                         312                        A. 8559--A

NY WHICH REPRESENTS DIRECT OWNERSHIP (OR INDIRECT OWNERSHIP THROUGH 1 OR
MORE  OTHER  HOLDING  COMPANIES)  BY  SUCH COMPANY IN A BUSINESS COMPANY
SHALL BE DEEMED TO BE STOCK IN SUCH BUSINESS COMPANY.
  (II)  5-YEAR  DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE EXECUTOR SHALL
BE  TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE   DATE
PRESCRIBED BY SECTION 6151(A).
  (III)  2-PERCENT INTEREST RATE NOT TO APPLY.--FOR PURPOSES OF APPLYING
SECTION 6601(J), THE 2-PERCENT PORTION  (AS  DEFINED  IN  SUCH  SECTION)
SHALL BE TREATED AS BEING ZERO.
  (B) ALL STOCK MUST BE NON-READILY-TRADABLE STOCK.--
  (I)  IN GENERAL.--NO STOCK SHALL BE TAKEN INTO ACCOUNT FOR PURPOSES OF
APPLYING THIS PARAGRAPH UNLESS IT IS NON-READILY-TRADABLE STOCK
  (WITHIN THE MEANING OF PARAGRAPH (7)(B)).
  (II) SPECIAL APPLICATION WHERE ONLY HOLDING COMPANY STOCK IS NON-READ-
ILY-TRADABLE STOCK.--IF THE REQUIREMENTS OF CLAUSE (I) ARE NOT MET,  BUT
ALL OF THE STOCK OF EACH HOLDING COMPANY TAKEN INTO ACCOUNT IS NON-READ-
ILY-TRADABLE,  THEN  THIS  PARAGRAPH  SHALL APPLY, BUT SUBSECTION (A)(1)
SHALL BE APPLIED BY SUBSTITUTING "5" FOR "10".
  (C)   APPLICATION   OF   VOTING   STOCK   REQUIREMENT   OF   PARAGRAPH
(1)(C)(I).--FOR  PURPOSES  OF CLAUSE (I) OF PARAGRAPH (1)(C), THE DEEMED
STOCK RESULTING FROM THE APPLICATION OF SUBPARAGRAPH (A) SHALL BE TREAT-
ED AS VOTING STOCK TO THE EXTENT THAT VOTING STOCK IN THE HOLDING COMPA-
NY OWNS DIRECTLY (OR THROUGH THE VOTING STOCK OF 1 OR MORE OTHER HOLDING
COMPANIES) VOTING STOCK IN THE BUSINESS COMPANY.
  (D) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) HOLDING COMPANY.--THE TERM "HOLDING COMPANY" MEANS ANY CORPORATION
HOLDING STOCK IN ANOTHER CORPORATION.
  (II) BUSINESS COMPANY.--THE TERM "BUSINESS COMPANY" MEANS  ANY  CORPO-
RATION CARRYING ON A TRADE OR BUSINESS.
  (9) DEFERRAL NOT AVAILABLE FOR PASSIVE ASSETS.--
  (A) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1) AND DETERMINING THE
CLOSELY  HELD  BUSINESS AMOUNT (BUT NOT FOR PURPOSES OF SUBSECTION (G)),
THE VALUE OF ANY INTEREST IN A CLOSELY HELD BUSINESS SHALL  NOT  INCLUDE
THE  VALUE  OF  THAT  PORTION  OF SUCH INTEREST WHICH IS ATTRIBUTABLE TO
PASSIVE ASSETS HELD BY THE BUSINESS.
  (B) PASSIVE ASSET DEFINED.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) IN GENERAL.--THE TERM "PASSIVE ASSET" MEANS ANY ASSET  OTHER  THAN
AN ASSET USED IN CARRYING ON A TRADE OR BUSINESS.
  (II)  STOCK  TREATED  AS  PASSIVE  ASSET.--THE  TERM  "PASSIVE  ASSET"
INCLUDES ANY STOCK IN ANOTHER CORPORATION UNLESS--
  (I) SUCH STOCK IS TREATED AS HELD BY THE  DECEDENT  BY  REASON  OF  AN
ELECTION UNDER PARAGRAPH (8), AND
  (II) SUCH STOCK QUALIFIED UNDER SUBSECTION (A)(1).
  (III) EXCEPTION FOR ACTIVE CORPORATIONS.--IF--
  (I) A CORPORATION OWNS 20 PERCENT OR MORE IN VALUE OF THE VOTING STOCK
OF ANOTHER CORPORATION, OR SUCH OTHER CORPORATION HAS 45 OR FEWER SHARE-
HOLDERS, AND
  (II) 80 PERCENT OR MORE OF THE VALUE OF THE ASSETS OF EACH SUCH CORPO-
RATION  IS  ATTRIBUTABLE  TO ASSETS USED IN CARRYING ON A TRADE OR BUSI-
NESS, THEN SUCH CORPORATIONS SHALL  BE  TREATED  AS  1  CORPORATION  FOR
PURPOSES  OF CLAUSE (II). FOR PURPOSES OF APPLYING SUBCLAUSE (II) TO THE
CORPORATION HOLDING THE STOCK OF THE OTHER CORPORATION, SUCH STOCK SHALL
NOT BE TAKEN INTO ACCOUNT.
  (10) STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS STOCK
IN AN ACTIVE TRADE OR BUSINESS COMPANY.--

S. 6359--A                         313                        A. 8559--A

  (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE  BENEFITS  OF  THIS  PARA-
GRAPH, THEN--
  (I)  STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS STOCK
IN AN ACTIVE TRADE OR BUSINESS COMPANY.--FOR PURPOSES OF  THIS  SECTION,
ANY  ASSET  USED  IN  A QUALIFYING LENDING AND FINANCE BUSINESS SHALL BE
TREATED AS AN ASSET WHICH IS USED IN CARRYING ON A TRADE OR BUSINESS.
  (II) 5-YEAR DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE  EXECUTOR  SHALL
BE   TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE  DATE
PRESCRIBED BY SECTION 6151(A).
  (III)  5  EQUAL  INSTALLMENTS  ALLOWED.--FOR  PURPOSES   OF   APPLYING
SUBSECTION
  (A)(1), "5" SHALL BE SUBSTITUTED FOR "10".
  (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  QUALIFYING  LENDING  AND  FINANCE BUSINESS.--THE TERM "QUALIFYING
LENDING AND FINANCE BUSINESS" MEANS A LENDING AND FINANCE BUSINESS, IF--
  (I) BASED ON ALL THE FACTS AND CIRCUMSTANCES  IMMEDIATELY  BEFORE  THE
DATE  OF  THE  DECEDENT'S  DEATH,  THERE  WAS  SUBSTANTIAL ACTIVITY WITH
RESPECT TO THE LENDING AND FINANCE BUSINESS, OR
  (II) DURING AT LEAST 3 OF THE 5 TAXABLE YEARS ENDING BEFORE  THE  DATE
OF THE DECEDENT'S DEATH, SUCH BUSINESS HAD AT LEAST 1 FULL-TIME EMPLOYEE
SUBSTANTIALLY  ALL  OF WHOSE SERVICES WERE THE ACTIVE MANAGEMENT OF SUCH
BUSINESS, 10 FULL-TIME, NONOWNER EMPLOYEES SUBSTANTIALLY  ALL  OF  WHOSE
SERVICES WERE DIRECTLY RELATED TO SUCH BUSINESS, AND $5,000,000 IN GROSS
RECEIPTS FROM ACTIVITIES DESCRIBED IN CLAUSE (II).
  (II)  LENDING  AND  FINANCE  BUSINESS.--THE  TERM "LENDING AND FINANCE
BUSINESS" MEANS A TRADE OR BUSINESS OF--
  (I) MAKING LOANS,
  (II) PURCHASING OR DISCOUNTING ACCOUNTS RECEIVABLE, NOTES, OR INSTALL-
MENT OBLIGATIONS,
  (III) ENGAGING IN RENTAL AND LEASING OF  REAL  AND  TANGIBLE  PERSONAL
PROPERTY,  INCLUDING ENTERING INTO LEASES AND PURCHASING, SERVICING, AND
DISPOSING OF LEASES AND LEASED ASSETS,
  (IV) RENDERING SERVICES OR MAKING FACILITIES AVAILABLE IN THE ORDINARY
COURSE OF A LENDING OR FINANCE BUSINESS, AND
  (V) RENDERING SERVICES OR MAKING FACILITIES  AVAILABLE  IN  CONNECTION
WITH  ACTIVITIES  DESCRIBED IN SUBCLAUSES (I) THROUGH (IV) CARRIED ON BY
THE CORPORATION RENDERING SERVICES OR MAKING  FACILITIES  AVAILABLE,  OR
ANOTHER  CORPORATION  WHICH IS A MEMBER OF THE SAME AFFILIATED GROUP (AS
DEFINED IN SECTION 1504 WITHOUT REGARD TO SECTION 1504(B)(3)).
  (III) LIMITATION.--THE TERM "QUALIFYING LENDING AND FINANCE  BUSINESS"
SHALL  NOT  INCLUDE  ANY  INTEREST IN AN ENTITY, IF THE STOCK OR DEBT OF
SUCH ENTITY OR A CONTROLLED GROUP (AS DEFINED IN SECTION  267(F)(1))  OF
WHICH  SUCH  ENTITY  WAS A MEMBER WAS READILY TRADABLE ON AN ESTABLISHED
SECURITIES MARKET OR SECONDARY MARKET (AS DEFINED BY THE  SECRETARY)  AT
ANY TIME WITHIN 3 YEARS BEFORE THE DATE OF THE DECEDENT'S DEATH.
  (C)  SPECIAL  RULE  FOR  INTEREST  IN 2 OR MORE CLOSELY HELD BUSINESS-
ES.--FOR PURPOSES OF THIS SECTION, INTEREST IN 2 OR  MORE  CLOSELY  HELD
BUSINESSES, WITH RESPECT TO EACH OF WHICH THERE IS INCLUDED IN DETERMIN-
ING  THE  VALUE OF THE DECEDENT'S GROSS ESTATE 20 PERCENT OR MORE OF THE
TOTAL VALUE OF EACH SUCH BUSINESS, SHALL BE TREATED AS AN INTEREST IN  A
SINGLE CLOSELY HELD BUSINESS. FOR PURPOSES OF THE 20-PERCENT REQUIREMENT
OF  THE PRECEDING SENTENCE, AN INTEREST IN A CLOSELY HELD BUSINESS WHICH
REPRESENTS THE SURVIVING SPOUSE'S INTEREST IN PROPERTY HELD BY THE DECE-
DENT AND THE SURVIVING SPOUSE AS COMMUNITY PROPERTY OR AS JOINT TENANTS,
TENANTS BY THE ENTIRETY, OR TENANTS IN COMMON SHALL BE TREATED AS HAVING
BEEN INCLUDED IN DETERMINING THE VALUE OF THE DECEDENT'S GROSS ESTATE.

S. 6359--A                         314                        A. 8559--A

  (D) ELECTION.--ANY ELECTION UNDER SUBSECTION (A)  SHALL  BE  MADE  NOT
LATER  THAN THE TIME PRESCRIBED BY SECTION 6075(A) FOR FILING THE RETURN
OF TAX IMPOSED BY SECTION 2001 (INCLUDING EXTENSIONS THEREOF), AND SHALL
BE MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS  PRESCRIBE.
IF  AN  ELECTION  UNDER  SUBSECTION  (A) IS MADE, THE PROVISIONS OF THIS
SUBTITLE SHALL APPLY AS THOUGH THE SECRETARY WERE EXTENDING THE TIME FOR
PAYMENT OF THE TAX.
  (E) PRORATION OF DEFICIENCY TO INSTALLMENTS.--IF AN ELECTION  IS  MADE
UNDER  SUBSECTION (A) TO PAY ANY PART OF THE TAX IMPOSED BY SECTION 2001
IN INSTALLMENTS AND A DEFICIENCY HAS BEEN ASSESSED, THE DEFICIENCY SHALL
(SUBJECT TO THE LIMITATION PROVIDED BY SUBSECTION (A)(2)) BE PRORATED TO
THE INSTALLMENTS PAYABLE UNDER SUBSECTION (A). THE PART OF THE DEFICIEN-
CY SO PRORATED TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS  NOT
ARRIVED  SHALL  BE COLLECTED AT THE SAME TIME AS, AND AS A PART OF, SUCH
INSTALLMENT. THE PART OF THE DEFICIENCY SO PRORATED TO  ANY  INSTALLMENT
THE  DATE FOR PAYMENT OF WHICH HAS ARRIVED SHALL BE PAID UPON NOTICE AND
DEMAND FROM THE SECRETARY. THIS SUBSECTION SHALL NOT APPLY IF THE  DEFI-
CIENCY IS DUE TO NEGLIGENCE, TO INTENTIONAL DISREGARD OF RULES AND REGU-
LATIONS, OR TO FRAUD WITH INTENT TO EVADE TAX.
  (F)  TIME  FOR  PAYMENT  OF  INTEREST.--IF THE TIME FOR PAYMENT OF ANY
AMOUNT OF TAX HAS BEEN EXTENDED UNDER THIS SECTION--
  (1) INTEREST FOR FIRST 5 YEARS.--INTEREST PAYABLE UNDER  SECTION  6601
OF  ANY  UNPAID PORTION OF SUCH AMOUNT ATTRIBUTABLE TO THE FIRST 5 YEARS
AFTER THE DATE PRESCRIBED BY SECTION 6151(A)  FOR  PAYMENT  OF  THE  TAX
SHALL BE PAID ANNUALLY.
  (2)  INTEREST FOR PERIODS AFTER FIRST 5 YEARS.--INTEREST PAYABLE UNDER
SECTION 6601 ON ANY UNPAID PORTION OF SUCH AMOUNT  ATTRIBUTABLE  TO  ANY
PERIOD  AFTER  THE  5-YEAR  PERIOD REFERRED TO IN PARAGRAPH (1) SHALL BE
PAID ANNUALLY AT THE SAME TIME AS, AND AS A PART  OF,  EACH  INSTALLMENT
PAYMENT OF THE TAX.
  (3)  INTEREST  IN  THE CASE OF CERTAIN DEFICIENCIES.--IN THE CASE OF A
DEFICIENCY TO WHICH SUBSECTION (E) APPLIES WHICH IS ASSESSED  AFTER  THE
CLOSE  OF  THE  5-YEAR  PERIOD  REFERRED  TO  IN PARAGRAPH (1), INTEREST
ATTRIBUTABLE TO SUCH 5-YEAR PERIOD, AND INTEREST  ASSIGNED  UNDER  PARA-
GRAPH  (2)  TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS ARRIVED
ON OR BEFORE THE DATE OF THE ASSESSMENT OF THE DEFICIENCY, SHALL BE PAID
UPON NOTICE AND DEMAND FROM THE SECRETARY.
  (4) SELECTION OF SHORTER PERIOD.--IF THE EXECUTOR HAS SELECTED A PERI-
OD SHORTER THAN 5 YEARS UNDER SUBSECTION  (A)(3),  SUCH  SHORTER  PERIOD
SHALL BE SUBSTITUTED FOR 5 YEARS IN PARAGRAPHS (1), (2), AND (3) OF THIS
SUBSECTION.
  (G) ACCELERATION OF PAYMENT.--
  (1) DISPOSITION OF INTEREST; WITHDRAWAL OF FUNDS FROM BUSINESS.--
  (A) IF--
  (I)(I)  ANY  PORTION  OF  AN INTEREST IN A CLOSELY HELD BUSINESS WHICH
QUALIFIES UNDER SUBSECTION (A)(1) IS DISTRIBUTED,  SOLD,  EXCHANGED,  OR
OTHERWISE DISPOSED OF, OR
  (II)  MONEY  AND  OTHER  PROPERTY  ATTRIBUTABLE TO SUCH AN INTEREST IS
WITHDRAWN FROM SUCH TRADE OR BUSINESS, AND
  (II) THE AGGREGATE OF SUCH DISTRIBUTIONS, SALES, EXCHANGES,  OR  OTHER
DISPOSITIONS  AND  WITHDRAWALS EQUALS OR EXCEEDS 50 PERCENT OF THE VALUE
OF SUCH INTEREST, THEN THE EXTENSION OF TIME FOR PAYMENT OF TAX PROVIDED
IN SUBSECTION (A) SHALL CEASE TO APPLY, AND THE UNPAID  PORTION  OF  THE
TAX  PAYABLE  IN  INSTALLMENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM
THE SECRETARY.

S. 6359--A                         315                        A. 8559--A

  (B) IN THE CASE OF A DISTRIBUTION IN  REDEMPTION  OF  STOCK  TO  WHICH
SECTION  303  (OR  SO  MUCH  OF  SECTION  304 AS RELATES TO SECTION 303)
APPLIES--
  (I)  THE  REDEMPTION  OF  SUCH  STOCK, AND THE WITHDRAWAL OF MONEY AND
OTHER PROPERTY DISTRIBUTED IN SUCH REDEMPTION, SHALL NOT BE TREATED AS A
DISTRIBUTION OR WITHDRAWAL FOR PURPOSES OF SUBPARAGRAPH (A), AND
  (II) FOR PURPOSES OF SUBPARAGRAPH (A), THE VALUE OF  THE  INTEREST  IN
THE  CLOSELY  HELD BUSINESS SHALL BE CONSIDERED TO BE SUCH VALUE REDUCED
BY THE VALUE OF THE STOCK REDEEMED.
  THIS  SUBPARAGRAPH  SHALL  APPLY  ONLY  IF,  ON  OR  BEFORE  THE  DATE
PRESCRIBED BY SUBSECTION (A)(3) FOR THE PAYMENT OF THE FIRST INSTALLMENT
WHICH BECOMES DUE AFTER THE DATE OF THE DISTRIBUTION (OR, IF EARLIER, ON
OR  BEFORE  THE DAY WHICH IS 1 YEAR AFTER THE DATE OF THE DISTRIBUTION),
THERE IS PAID AN AMOUNT OF THE TAX IMPOSED BY SECTION 2001 NOT LESS THAN
THE AMOUNT OF MONEY AND OTHER PROPERTY DISTRIBUTED.
  (C) SUBPARAGRAPH (A)(I) DOES NOT APPLY TO AN EXCHANGE OF STOCK  PURSU-
ANT  TO  A PLAN OF REORGANIZATION DESCRIBED IN SUBPARAGRAPH (D), (E), OR
(F) OF SECTION 368(A)(1) NOR TO AN EXCHANGE TO WHICH SECTION 355 (OR  SO
MUCH  OF  SECTION  356 AS RELATES TO SECTION 355) APPLIES; BUT ANY STOCK
RECEIVED IN SUCH AN EXCHANGE SHALL BE TREATED FOR PURPOSES  OF  SUBPARA-
GRAPH (A)(I) AS AN INTEREST QUALIFYING UNDER SUBSECTION (A)(1).
  (D)  SUBPARAGRAPH  (A)(I)  DOES NOT APPLY TO A TRANSFER OF PROPERTY OF
THE DECEDENT TO A PERSON ENTITLED BY REASON OF THE DECEDENT'S  DEATH  TO
RECEIVE  SUCH  PROPERTY UNDER THE DECEDENT'S WILL, THE APPLICABLE LAW OF
DESCENT AND DISTRIBUTION, OR A TRUST CREATED BY THE DECEDENT. A  SIMILAR
RULE  SHALL APPLY IN THE CASE OF A SERIES OF SUBSEQUENT TRANSFERS OF THE
PROPERTY BY REASON OF DEATH SO LONG AS EACH TRANSFER IS TO A  MEMBER  OF
THE  FAMILY  (WITHIN THE MEANING OF SECTION 267(C)(4)) OF THE TRANSFEROR
IN SUCH TRANSFER.
  (E) CHANGES IN INTEREST IN HOLDING COMPANY.--IF ANY STOCK IN A HOLDING
COMPANY IS  TREATED  AS  STOCK  IN  A  BUSINESS  COMPANY  BY  REASON  OF
SUBSECTION (B)(8)(A)--
  (I)  ANY  DISPOSITION  OF  ANY  INTEREST IN SUCH STOCK IN SUCH HOLDING
COMPANY WHICH WAS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE  DECE-
DENT, OR
  (II)  ANY  WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM SUCH HOLDING
COMPANY ATTRIBUTABLE TO ANY INTEREST INCLUDED IN DETERMINING  THE  GROSS
ESTATE OF THE DECEDENT,
  SHALL  BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION OF
(OR A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER  SUBSECTION
(A)(1).
  (F)  CHANGES IN INTEREST IN BUSINESS COMPANY.--IF ANY STOCK IN A HOLD-
ING COMPANY IS TREATED AS STOCK IN  A  BUSINESS  COMPANY  BY  REASON  OF
SUBSECTION (B)(8)(A)--
  (I)  ANY  DISPOSITION  OF  ANY  INTEREST IN SUCH STOCK IN THE BUSINESS
COMPANY BY SUCH HOLDING COMPANY, OR
  (II) ANY WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM SUCH  BUSINESS
COMPANY  ATTRIBUTABLE  TO SUCH STOCK BY SUCH HOLDING COMPANY OWNING SUCH
STOCK,
  SHALL BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION  OF
(OR  A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER SUBSECTION
(A)(1).
  (2) UNDISTRIBUTED INCOME OF ESTATE.--
  (A) IF AN ELECTION IS MADE UNDER  THIS  SECTION  AND  THE  ESTATE  HAS
UNDISTRIBUTED NET INCOME FOR ANY TAXABLE YEAR ENDING ON OR AFTER THE DUE
DATE  FOR  THE  FIRST  INSTALLMENT, THE EXECUTOR SHALL, ON OR BEFORE THE

S. 6359--A                         316                        A. 8559--A

DATE PRESCRIBED BY LAW FOR FILING THE INCOME TAX RETURN FOR SUCH TAXABLE
YEAR (INCLUDING EXTENSIONS THEREOF), PAY AN AMOUNT EQUAL TO SUCH  UNDIS-
TRIBUTED  NET  INCOME  IN  LIQUIDATION  OF THE UNPAID PORTION OF THE TAX
PAYABLE IN INSTALLMENTS.
  (B)  FOR PURPOSES OF SUBPARAGRAPH (A), THE UNDISTRIBUTED NET INCOME OF
THE ESTATE FOR ANY TAXABLE YEAR IS THE AMOUNT BY WHICH THE DISTRIBUTABLE
NET INCOME OF THE ESTATE FOR SUCH TAXABLE YEAR (AS  DEFINED  IN  SECTION
643) EXCEEDS THE SUM OF--
  (I)  THE AMOUNTS FOR SUCH TAXABLE YEAR SPECIFIED IN PARAGRAPHS (1) AND
(2) OF SECTION 661(A) (RELATING TO DEDUCTIONS FOR DISTRIBUTIONS, ETC.);
  (II) THE AMOUNT OF TAX IMPOSED FOR THE  TAXABLE  YEAR  ON  THE  ESTATE
UNDER CHAPTER 1; AND
  (III)  THE AMOUNT OF THE TAX IMPOSED BY SECTION 2001 (INCLUDING INTER-
EST) PAID BY THE EXECUTOR DURING THE TAXABLE YEAR (OTHER THAN ANY AMOUNT
PAID PURSUANT TO THIS PARAGRAPH).
  (C) FOR PURPOSES OF THIS PARAGRAPH, IF ANY STOCK IN A  CORPORATION  IS
TREATED  AS  STOCK  IN  ANOTHER  CORPORATION  BY  REASON  OF  SUBSECTION
(B)(8)(A), ANY DIVIDENDS PAID BY SUCH OTHER CORPORATION  TO  THE  CORPO-
RATION  SHALL  BE  TREATED  AS PAID TO THE ESTATE OF THE DECEDENT TO THE
EXTENT ATTRIBUTABLE TO THE STOCK QUALIFYING UNDER SUBSECTION (A)(1).
  (3) FAILURE TO MAKE PAYMENT OF PRINCIPAL OR INTEREST.--
  (A) IN GENERAL.--EXCEPT  AS  PROVIDED  IN  SUBPARAGRAPH  (B),  IF  ANY
PAYMENT  OF  PRINCIPAL  OR INTEREST UNDER THIS SECTION IS NOT PAID ON OR
BEFORE THE DATE FIXED FOR ITS PAYMENT BY  THIS  SECTION  (INCLUDING  ANY
EXTENSION  OF  TIME),  THE UNPAID PORTION OF THE TAX PAYABLE IN INSTALL-
MENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM THE SECRETARY.
  (B) PAYMENT WITHIN 6 MONTHS.--IF ANY PAYMENT OF PRINCIPAL OR  INTEREST
UNDER  THIS  SECTION  IS NOT PAID ON OR BEFORE THE DATE DETERMINED UNDER
SUBPARAGRAPH (A) BUT IS PAID WITHIN 6 MONTHS OF SUCH DATE--
  (I) THE PROVISIONS OF SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO
SUCH PAYMENT,
  (II) THE PROVISIONS OF SECTION 6601(J) SHALL NOT APPLY WITH RESPECT TO
THE DETERMINATION OF INTEREST ON SUCH PAYMENT, AND
  (III) THERE IS IMPOSED A PENALTY IN AN AMOUNT  EQUAL  TO  THE  PRODUCT
OF--
  (I) 5 PERCENT OF THE AMOUNT OF SUCH PAYMENT, MULTIPLIED BY
  (II)  THE  NUMBER OF MONTHS (OR FRACTIONS THEREOF) AFTER SUCH DATE AND
BEFORE PAYMENT IS MADE.  THE PENALTY IMPOSED UNDER CLAUSE (III) SHALL BE
TREATED IN THE SAME MANNER AS A PENALTY IMPOSED UNDER  SUBCHAPTER  B  OF
CHAPTER 68.
  (H) ELECTION IN CASE OF CERTAIN DEFICIENCIES.--
  (1) IN GENERAL.--IF--
  (A) A DEFICIENCY IN THE TAX IMPOSED BY SECTION 2001 IS ASSESSED,
  (B) THE ESTATE QUALIFIES UNDER SUBSECTION (A)(1), AND
  (C)  THE  EXECUTOR  HAS NOT MADE AN ELECTION UNDER SUBSECTION (A), THE
EXECUTOR MAY  ELECT  TO  PAY  THE  DEFICIENCY  IN  INSTALLMENTS.    THIS
SUBSECTION  SHALL  NOT  APPLY IF THE DEFICIENCY IS DUE TO NEGLIGENCE, TO
INTENTIONAL DISREGARD OF RULES AND REGULATIONS, OR TO FRAUD WITH  INTENT
TO EVADE TAX.
  (2) TIME OF ELECTION.--AN ELECTION UNDER THIS SUBSECTION SHALL BE MADE
NOT LATER THAN 60 DAYS AFTER ISSUANCE OF NOTICE AND DEMAND BY THE SECRE-
TARY FOR THE PAYMENT OF THE DEFICIENCY, AND SHALL BE MADE IN SUCH MANNER
AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
  (3)  EFFECT OF ELECTION ON PAYMENT.--IF AN ELECTION IS MADE UNDER THIS
SUBSECTION, THE DEFICIENCY SHALL (SUBJECT TO THE LIMITATION PROVIDED  BY
SUBSECTION (A)(2)) BE PRORATED TO THE INSTALLMENTS WHICH WOULD HAVE BEEN

S. 6359--A                         317                        A. 8559--A

DUE IF AN ELECTION HAD BEEN TIMELY MADE UNDER SUBSECTION (A) AT THE TIME
THE  ESTATE TAX RETURN WAS FILED. THE PART OF THE DEFICIENCY SO PRORATED
TO ANY INSTALLMENT THE DATE FOR PAYMENT  OF  WHICH  WOULD  HAVE  ARRIVED
SHALL  BE  PAID  AT  THE  TIME  OF THE MAKING OF THE ELECTION UNDER THIS
SUBSECTION. THE PORTION OF THE DEFICIENCY SO  PRORATED  TO  INSTALLMENTS
THE DATE FOR PAYMENT OF WHICH WOULD NOT HAVE SO ARRIVED SHALL BE PAID AT
THE  TIME  SUCH INSTALLMENTS WOULD HAVE BEEN DUE IF SUCH AN ELECTION HAD
BEEN MADE.
  (I) SPECIAL RULE FOR CERTAIN DIRECT  SKIPS.--TO  THE  EXTENT  THAT  AN
INTEREST  IN  A  CLOSELY  HELD  BUSINESS IS THE SUBJECT OF A DIRECT SKIP
(WITHIN THE MEANING OF SECTION 2612(C)) OCCURRING AT THE  SAME  TIME  AS
AND  AS  A  RESULT  OF  THE  DECEDENT'S DEATH, THEN FOR PURPOSES OF THIS
SECTION ANY TAX IMPOSED BY SECTION 2601 ON THE TRANSFER OF SUCH INTEREST
SHALL BE TREATED AS IF IT WERE ADDITIONAL TAX IMPOSED BY SECTION 2001.
  (J) REGULATIONS.--THE SECRETARY SHALL PRESCRIBE  SUCH  REGULATIONS  AS
MAY BE NECESSARY TO THE APPLICATION OF THIS SECTION.
  (K) CROSS REFERENCES.--
  (1)  SECURITY.-- FOR AUTHORITY OF THE SECRETARY TO REQUIRE SECURITY IN
THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6165.
  (2) LIEN.--FOR SPECIAL LIEN (IN LIEU OF BOND) IN THE CASE OF AN EXTEN-
SION UNDER THIS SECTION, SEE SECTION 6324A.
  (3) PERIOD OF LIMITATION.--FOR EXTENSION OF THE PERIOD  OF  LIMITATION
IN THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6503(D).
  (4)  INTEREST.--FOR  PROVISIONS RELATING TO INTEREST ON TAX PAYABLE IN
INSTALLMENTS UNDER THIS SECTION, SEE SUBSECTION (J) OF SECTION 6601.
  (5) TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR SPECIAL RULE FOR  QUALIFY-
ING  AN  ESTATE  UNDER  THIS SECTION WHERE PROPERTY HAS BEEN TRANSFERRED
WITHIN 3 YEARS OF DECEDENT'S DEATH, SEE SECTION 2035(C)(2).
  S 11. This act shall take effect April 1,  2014  and  shall  apply  to
estates  of  decedents  dying on and after that date; provided, however,
that the amendments to subsection (c) of section 951 of the tax law made
by section one  of  this  act  shall  not  affect  the  repeal  of  such
subsection and shall be deemed repealed therewith.

                                 PART Y

  Section 1. Article 19 of the tax law is REPEALED.
  S 2. Section 1820 of the tax law is REPEALED.
  S  3.  Subdivision  1  of  section 171-a of the tax law, as amended by
section 1 of part R of chapter 60 of the laws of  2004,  is  amended  to
read as follows:
  1.  All  taxes,  interest, penalties and fees collected or received by
the commissioner or the commissioner's duly authorized agent under arti-
cles nine (except section one hundred eighty-two-a thereof and except as
otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
twelve-A  (except  as  otherwise provided in section two hundred eighty-
four-d thereof), thirteen, thirteen-A (except as otherwise  provided  in
section  three  hundred  twelve  thereof),  eighteen, [nineteen,] twenty
(except as otherwise provided in section four hundred eighty-two  there-
of),  twenty-one,  twenty-two,  twenty-six,  twenty-six-B,  twenty-eight
(except as otherwise provided in section eleven hundred  two  or  eleven
hundred  three thereof), twenty-eight-A, thirty-one (except as otherwise
provided in section fourteen hundred  twenty-one  thereof),  thirty-two,
thirty-three and thirty-three-A of this chapter shall be deposited daily
in  one  account  with  such  responsible banks, banking houses or trust
companies as may be designated by the comptroller, to the credit of  the

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comptroller.  Such  an account may be established in one or more of such
depositories. Such deposits shall be kept separate and  apart  from  all
other  money in the possession of the comptroller. The comptroller shall
require  adequate  security  from  all  such  depositories. Of the total
revenue collected or received under such articles of this  chapter,  the
comptroller  shall  retain in the comptroller's hands such amount as the
commissioner may determine to be necessary for refunds or reimbursements
under such articles of this chapter and article ten thereof out of which
amount the comptroller shall pay any refunds or reimbursements to  which
taxpayers  shall  be  entitled  under the provisions of such articles of
this chapter and article ten thereof. The  commissioner  and  the  comp-
troller shall maintain a system of accounts showing the amount of reven-
ue  collected  or  received from each of the taxes imposed by such arti-
cles. The comptroller, after reserving the amount to pay such refunds or
reimbursements, shall, on or before the tenth day  of  each  month,  pay
into  the  state  treasury to the credit of the general fund all revenue
deposited under this section during the  preceding  calendar  month  and
remaining  to the comptroller's credit on the last day of such preceding
month, (i) except that the comptroller shall pay to the state department
of social services that amount of overpayments of tax imposed by article
twenty-two of this chapter and the interest  on  such  amount  which  is
certified  to  the  comptroller  by the commissioner as the amount to be
credited against past-due support pursuant to subdivision six of section
one hundred seventy-one-c of this [chapter]  ARTICLE,  (ii)  and  except
that  the  comptroller  shall pay to the New York state higher education
services corporation and the state university of New York  or  the  city
university  of  New York respectively that amount of overpayments of tax
imposed by article twenty-two of this chapter and the interest  on  such
amount  which is certified to the comptroller by the commissioner as the
amount to be credited against the amount of  defaults  in  repayment  of
guaranteed  student  loans and state university loans or city university
loans pursuant to subdivision five of section one hundred  seventy-one-d
and  subdivision six of section one hundred seventy-one-e of this [chap-
ter] ARTICLE, (iii) and except further that,  notwithstanding  any  law,
the  comptroller shall credit to the revenue arrearage account, pursuant
to section ninety-one-a of the state finance law, that amount  of  over-
payment  of  tax  imposed  by  article nine, nine-A, twenty-two, thirty,
thirty-A, thirty-B, thirty-two or thirty-three of this chapter, and  any
interest  thereon,  which is certified to the comptroller by the commis-
sioner as the amount to be credited against a past-due legally enforcea-
ble debt owed to a state agency pursuant to paragraph (a) of subdivision
six of section one hundred  seventy-one-f  of  this  article,  provided,
however, he shall credit to the special offset fiduciary account, pursu-
ant  to  section  ninety-one-c of the state finance law, any such amount
creditable as a liability as set forth in paragraph (b)  of  subdivision
six  of  section  one  hundred  seventy-one-f  of this article, (iv) and
except further that the comptroller shall pay to the city  of  New  York
that amount of overpayment of tax imposed by article nine, nine-A, twen-
ty-two,  thirty, thirty-A, thirty-B, thirty-two, or thirty-three of this
chapter and any interest thereon that is certified to the comptroller by
the commissioner as the amount to be credited against city of  New  York
tax  warrant judgment debt pursuant to section one hundred seventy-one-l
of this article, (v) and except further that the comptroller  shall  pay
to  a  non-obligated spouse that amount of overpayment of tax imposed by
article twenty-two of this chapter and the interest on such amount which
has been credited pursuant to section  one  hundred  seventy-one-c,  one

S. 6359--A                         319                        A. 8559--A

hundred  seventy-one-d,  one hundred seventy-one-e, one hundred seventy-
one-f or one hundred seventy-one-l of this article and which  is  certi-
fied  to the comptroller by the commissioner as the amount due such non-
obligated  spouse pursuant to paragraph six of subsection (b) of section
six hundred fifty-one of this chapter; and (vi)  the  comptroller  shall
deduct  a  like amount which the comptroller shall pay into the treasury
to the credit of the general fund from amounts subsequently  payable  to
the department of social services, the state university of New York, the
city  university  of  New  York, or the higher education services corpo-
ration, or the revenue arrearage account  or  special  offset  fiduciary
account  pursuant  to  section ninety-one-a or ninety-one-c of the state
finance law, as the case may be, whichever had been credited the  amount
originally  withheld  from  such  overpayment, and (vii) with respect to
amounts originally withheld from such overpayment  pursuant  to  section
one  hundred  seventy-one-l  of this article and paid to the city of New
York, the comptroller shall collect a like amount from the city  of  New
York.
  S  3-a. Paragraph 1 of subdivision (f) of section 1105 of the tax law,
as amended by section 100 of part A of chapter 389 of the laws of  1997,
is amended to read as follows:
  (1)  Any  admission charge where such admission charge is in excess of
ten cents to or for the use of any place  of  amusement  in  the  state,
except  charges  for  admission to (I) race tracks[, boxing, sparring or
wrestling matches or exhibitions] which  charges  are  taxed  under  any
other  law  of  this  state, [or] (II) dramatic or musical arts perform-
ances, [or] (III) live circus performances, or (IV) motion picture thea-
ters, and except charges to a patron for admission to, or use of, facil-
ities  for  sporting  activities  in  which  such  patron  is  to  be  a
participant,  such  as bowling alleys and swimming pools. For any person
having the permanent use or possession of a box or seat or a lease or  a
license,  other  than a season ticket, for the use of a box or seat at a
place of amusement, the tax shall be upon the amount for which a similar
box or seat is sold for each performance or exhibition at which the  box
or seat is used or reserved by the holder, licensee or lessee, and shall
be paid by the holder, licensee or lessee.
  S  4.  Section  29  of chapter 912 of the laws of 1920 relating to the
regulation of boxing, sparring and  wrestling  matches,  as  amended  by
chapter  833  of the laws of 1987, the section heading and subdivision 1
as amended by chapter 437 of the laws of 2002, is  amended  to  read  as
follows:
  S 29.  Notice of contest or exhibition[; collection of tax].  1. Every
individual, corporation, association or club holding any professional or
amateur  boxing, sparring or professional wrestling match or exhibition,
for which an admission fee is charged  or  received,  shall  notify  the
athletic  commission ten days in advance of the holding of such contest.
All tickets of admission to any such boxing,  sparring  or  professional
wrestling  match  or  exhibition  shall  be procured from a printer duly
authorized by the state athletic commission to print  such  tickets  and
shall bear clearly upon the face thereof the purchase price and location
of  same.  Any  individual,  corporation, association or club failing to
fully comply with this section shall be subject to a  penalty  of  fifty
dollars  to  be  collected  by  and paid to the department of state. Any
individual, corporation, association or club is prohibited from  operat-
ing  any  shows  or exhibitions until all penalties due pursuant to this
section [and taxes, interest and penalties due pursuant to article nine-
teen of the tax law] have been paid.

S. 6359--A                         320                        A. 8559--A

  2.   [Pursuant to  direction  by  the  commissioner  of  taxation  and
finance,  employees  or officers of the athletic commission shall act as
agents of the commissioner of taxation and finance to  collect  the  tax
imposed  by  article  nineteen  of the tax law.] The athletic commission
shall  provide the commissioner of taxation and finance with such infor-
mation and technical assistance as  may  be  necessary  for  the  proper
administration  of  [such  tax]  STATE  AND LOCAL SALES TAXES IMPOSED ON
CHARGES FOR ADMISSION TO A PLACE OF AMUSEMENT WHERE ANY  SUCH  MATCH  OR
EXHIBITION WILL BE HELD.
  S  5.  Section  30  of chapter 912 of the laws of 1920 relating to the
regulation of boxing, sparring and  wrestling  matches,  as  amended  by
chapter 833 of the laws of 1987, is amended to read as follows:
  S 30. Disposition of receipts. All receipts of the commission shall be
paid into the state treasury. [Provided, however, that receipts from the
tax  imposed  by  article  nineteen of the tax law shall be deposited as
provided by section one hundred seventy-one-a of the tax law.]
  S 6. Notwithstanding the repeal of article 19 and section 1820 of  the
tax law by this act, all provisions of such article 19 and section 1820,
in  respect  to  the imposition, exemption, assessment, payment, payment
over, determination, collection, and credit or  refund  of  tax  imposed
thereunder, the filing of forms and returns, the preservation of records
for the purposes of such tax, the secrecy of returns, the disposition of
revenues,  and  the  civil  and  criminal  penalties  applicable  to the
violation of the provisions of such article 19, shall continue  in  full
force and effect with respect to all such tax accrued up to September 1,
2014;  all  actions  and  proceedings,  civil  or criminal, commenced or
authorized to be commenced under or by virtue of any provision  of  such
article 19 so repealed, and pending or able to be commenced prior to the
effective date of this act, may be commenced, prosecuted and defended to
final  effect  in  the same manner as they might if such provisions were
not so repealed.
  S 7. This act shall take effect September 1, 2014 and  the  state  and
local  sales  taxes arising on the date this act shall have taken effect
shall apply to any admission to or the use of facilities of a  place  of
amusement  occurring on or after that date, whether or not the admission
charge has been paid prior to such date, unless the tickets were actual-
ly sold and delivered prior to such date to a person entering such place
of amusement on or after such date.

                                 PART Z

  Section 1. Clause (F) of subparagraph (ii) of paragraph 1 of  subdivi-
sion  b of section 1612 of the tax law, as amended by chapter 174 of the
laws of 2013, is amended to read as follows:
  (F) notwithstanding clauses (A), (B), (C), (D) and (E) of this subpar-
agraph, when a vendor track, is located in Sullivan  county  and  within
sixty  miles  from any gaming facility in a contiguous state such vendor
fee shall, for a period of [six] SEVEN years commencing April first, two
thousand eight, be at a rate of forty-one percent of the  total  revenue
wagered  at  the  vendor  track after payout for prizes pursuant to this
chapter, after which time such rate shall be as for all tracks in clause
(C) of this subparagraph.
  S 2. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2014.

                                 PART AA

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  Section  1.  Paragraph  (a)  of  subdivision  1 of section 1003 of the
racing, pari-mutuel wagering and breeding law, as amended by chapter 174
of the laws of 2013, is amended to read as follows:
  (a)  Any  racing  association  or  corporation  or  regional off-track
betting corporation, authorized to conduct  pari-mutuel  wagering  under
this  chapter, desiring to display the simulcast of horse races on which
pari-mutuel betting shall be permitted in the manner and subject to  the
conditions  provided for in this article may apply to the commission for
a license so to do.  Applications for licenses shall be in such form  as
may  be  prescribed by the commission and shall contain such information
or other material or evidence as the commission may require. No  license
shall be issued by the commission authorizing the simulcast transmission
of  thoroughbred  races  from a track located in Suffolk county. The fee
for such licenses shall be five hundred dollars per  simulcast  facility
and  for  account wagering licensees that do not operate either a simul-
cast facility that is open to the public within the state of New York or
a licensed racetrack within the state, twenty thousand dollars per  year
payable  by  the licensee to the commission for deposit into the general
fund. Except as provided in  this  section,  the  commission  shall  not
approve any application to conduct simulcasting into individual or group
residences,  homes  or  other areas for the purposes of or in connection
with pari-mutuel wagering. The [board] COMMISSION may approve simulcast-
ing into residences, homes or other areas to be conducted jointly by one
or more regional off-track betting corporations and one or more  of  the
following:  a franchised corporation, thoroughbred racing corporation or
a harness racing corporation or association; provided (i) the simulcast-
ing consists only of those races on which pari-mutuel betting is author-
ized by this chapter at one or more simulcast facilities for each of the
contracting off-track betting corporations which  shall  include  wagers
made  in  accordance  with  section  one  thousand fifteen, one thousand
sixteen and one thousand seventeen of  this  article;  provided  further
that  the  contract  provisions or other simulcast arrangements for such
simulcast facility shall be no less favorable than those  in  effect  on
January  first,  two  thousand  five;  (ii)  that each off-track betting
corporation having within its  geographic  boundaries  such  residences,
homes  or  other  areas  technically  capable of receiving the simulcast
signal shall be a contracting party; (iii) the distribution of  revenues
shall  be  subject  to  contractual agreement of the parties except that
statutory payments to  non-contracting  parties,  if  any,  may  not  be
reduced;  provided,  however,  that nothing herein to the contrary shall
prevent a track from televising its races on an irregular basis primari-
ly for promotional or marketing purposes as found by the [board] COMMIS-
SION.  For purposes of this paragraph, the  provisions  of  section  one
thousand thirteen of this article shall not apply. Any agreement author-
izing  an  in-home  simulcasting  experiment  commencing  prior  to  May
fifteenth, nineteen hundred ninety-five, may,  and  all  its  terms,  be
extended   until   June  thirtieth,  two  thousand  [fourteen]  FIFTEEN;
provided, however, that any party to such agreement may elect to  termi-
nate  such  agreement upon conveying written notice to all other parties
of such agreement at least forty-five days prior to the  effective  date
of  the  termination,  via  registered  mail.  Any party to an agreement
receiving such notice of an intent to terminate, may request the [board]
COMMISSION to mediate between the parties new terms and conditions in  a
replacement agreement between the parties as will permit continuation of
an  in-home  experiment  until  June  thirtieth, two thousand [fourteen]
FIFTEEN; and (iv) no in-home simulcasting in  the  thoroughbred  special

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betting  district  shall  occur  without  the  approval  of the regional
thoroughbred track.
  S  2.  Subparagraph  (iii)  of paragraph d of subdivision 3 of section
1007 of the racing, pari-mutuel wagering and breeding law, as amended by
section 2 of part U of chapter 59 of the laws of  2013,  is  amended  to
read as follows:
  (iii) Of the sums retained by a receiving track located in Westchester
county  on  races received from a franchised corporation, for the period
commencing January first, two thousand eight and continuing through June
thirtieth, two thousand [fourteen] FIFTEEN, the amount used  exclusively
for  purses  to  be  awarded  at races conducted by such receiving track
shall be computed as follows: of the sums so retained, two and  one-half
percent  of the total pools. Such amount shall be increased or decreased
in the amount of fifty percent of the difference  in  total  commissions
determined by comparing the total commissions available after July twen-
ty-first,  nineteen  hundred  ninety-five  to the total commissions that
would have been available to such  track  prior  to  July  twenty-first,
nineteen hundred ninety-five.
  S  3.  The  opening  paragraph of subdivision 1 of section 1014 of the
racing, pari-mutuel wagering and breeding law, as amended by  section  3
of  part  U  of  chapter  59  of the laws of 2013, is amended to read as
follows:
  The provisions of this section shall govern the simulcasting of  races
conducted  at thoroughbred tracks located in another state or country on
any day during which a franchised corporation is conducting a race meet-
ing in Saratoga county at Saratoga  thoroughbred  racetrack  until  June
thirtieth,  two thousand [fourteen] FIFTEEN and on any day regardless of
whether or not a franchised corporation is conducting a race meeting  in
Saratoga county at Saratoga thoroughbred racetrack after June thirtieth,
two  thousand  [fourteen]  FIFTEEN.    On  any day on which a franchised
corporation has not scheduled a racing program but a thoroughbred racing
corporation located within the state is conducting  racing,  every  off-
track  betting corporation branch office and every simulcasting facility
licensed in accordance  with  section  one  thousand  seven  (that  have
entered  into  a  written  agreement with such facility's representative
horsemen's organization, as approved by  the  [board]  COMMISSION),  one
thousand eight, or one thousand nine of this article shall be authorized
to accept wagers and display the live simulcast signal from thoroughbred
tracks  located  in  another  state  or  foreign  country subject to the
following provisions:
  S 4. Subdivision 1 of section 1015 of the racing, pari-mutuel wagering
and breeding law, as amended by section 4 of part U of chapter 59 of the
laws of 2013, is amended to read as follows:
  1. The provisions of this section shall  govern  the  simulcasting  of
races  conducted  at  harness tracks located in another state or country
during the period July first, nineteen hundred ninety-four through  June
thirtieth,  two  thousand [fourteen] FIFTEEN.  This section shall super-
sede all inconsistent provisions of this chapter.
  S 5. The opening paragraph of subdivision 1 of  section  1016  of  the
racing,  pari-mutuel  wagering and breeding law, as amended by section 5
of part U of chapter 59 of the laws of  2013,  is  amended  to  read  as
follows:
  The  provisions of this section shall govern the simulcasting of races
conducted at thoroughbred tracks located in another state or country  on
any  day  during which a franchised corporation is not conducting a race
meeting in Saratoga county at Saratoga thoroughbred racetrack until June

S. 6359--A                         323                        A. 8559--A

thirtieth, two thousand [fourteen] FIFTEEN.    Every  off-track  betting
corporation  branch  office  and every simulcasting facility licensed in
accordance with section one thousand seven  that  have  entered  into  a
written  agreement with such facility's representative horsemen's organ-
ization as approved by the [board] COMMISSION, one thousand eight or one
thousand nine of this article shall be authorized to accept  wagers  and
display  the  live  full-card  simulcast  signal  of thoroughbred tracks
(which may include quarter horse or mixed  meetings  provided  that  all
such wagering on such races shall be construed to be thoroughbred races)
located  in  another  state or foreign country, subject to the following
provisions; provided,  however,  no  such  written  agreement  shall  be
required of a franchised corporation licensed in accordance with section
one thousand seven of this article:
  S  6. The opening paragraph of section 1018 of the racing, pari-mutuel
wagering and breeding law, as amended by section 6 of part U of  chapter
59 of the laws of 2013, is amended to read as follows:
  Notwithstanding  any  other  provision of this chapter, for the period
July twenty-fifth, two thousand one through September eighth, two  thou-
sand  [thirteen] FOURTEEN, when a franchised corporation is conducting a
race meeting within the state at Saratoga Race Course,  every  off-track
betting  corporation  branch  office  and  every  simulcasting  facility
licensed in accordance with section one thousand seven (that has entered
into a written agreement with such facility's representative  horsemen's
organization  as approved by the [board] COMMISSION), one thousand eight
or one thousand nine of this  article  shall  be  authorized  to  accept
wagers  and  display  the live simulcast signal from thoroughbred tracks
located in another state,  provided  that  such  facility  shall  accept
wagers  on  races  run  at  all  in-state  thoroughbred tracks which are
conducting  racing  programs  subject  to  the   following   provisions;
provided,  however,  no  such  written  agreement shall be required of a
franchised corporation licensed in accordance with section one  thousand
seven of this article.
  S  7.  Section  32  of  chapter  281 of the laws of 1994, amending the
racing, pari-mutuel wagering and breeding law  and other  laws  relating
to  simulcasting, as amended by section 7 of part U of chapter 59 of the
laws of 2013, is amended to read as follows:
  S 32. This act shall take effect immediately and the  pari-mutuel  tax
reductions  in  section  six  of  this  act  shall  expire and be deemed
repealed on  July  1,  [2014]  2015;  provided,  however,  that  nothing
contained  herein  shall be deemed to affect the application, qualifica-
tion, expiration, or repeal of any  provision  of  law  amended  by  any
section  of  this act, and such provisions shall be applied or qualified
or shall expire or be deemed repealed in the same manner,  to  the  same
extent  and on the same date as the case may be as otherwise provided by
law; provided further, however, that sections twenty-three  and  twenty-
five of this act shall remain in full force and effect only until May 1,
1997 and at such time shall be deemed to be repealed.
  S  8.  Section  54  of  chapter  346 of the laws of 1990, amending the
racing, pari-mutuel wagering and breeding law and other laws relating to
simulcasting and the imposition of certain taxes, as amended by  section
8  of  part  U  of chapter 59 of the laws of 2013, is amended to read as
follows:
  S 54. This act  shall  take  effect  immediately;  provided,  however,
sections  three  through twelve of this act shall take effect on January
1, 1991, and section 1013 of the racing, pari-mutuel wagering and breed-
ing law, as added by section thirty-eight of this act, shall expire  and

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be  deemed repealed on July 1, [2014] 2015; and section eighteen of this
act shall take effect on July 1, 2008 and sections fifty-one and  fifty-
two  of this act shall take effect as of the same date as chapter 772 of
the laws of 1989 took effect.
  S  9.  Paragraph  (a)  of  subdivision 1 of section 238 of the racing,
pari-mutuel wagering and breeding law, as amended by section 9 of part U
of chapter 59 of the laws of 2013, is amended to read as follows:
  (a) The  franchised  corporation  authorized  under  this  chapter  to
conduct pari-mutuel betting at a race meeting or races run thereat shall
distribute  all sums deposited in any pari-mutuel pool to the holders of
winning tickets therein, provided such tickets be presented for  payment
before  April  first  of  the year following the year of their purchase,
less an amount which shall be established and  retained  by  such  fran-
chised  corporation  of  between  twelve  to seventeen per centum of the
total deposits in pools resulting from on-track regular bets, and  four-
teen  to  twenty-one per centum of the total deposits in pools resulting
from on-track multiple bets and fifteen to twenty-five per centum of the
total deposits in pools resulting from on-track exotic bets and  fifteen
to  thirty-six  per centum of the total deposits in pools resulting from
on-track super exotic bets, plus the breaks. The retention  rate  to  be
established is subject to the prior approval of the [racing and wagering
board]  GAMING  COMMISSION.  Such rate may not be changed more than once
per calendar quarter to be effective on the first day  of  the  calendar
quarter.  "Exotic  bets" and "multiple bets" shall have the meanings set
forth in section five hundred nineteen of this chapter.   "Super  exotic
bets"  shall  have the meaning set forth in section three hundred one of
this chapter. For purposes of this section, a "pick six bet" shall  mean
a single bet or wager on the outcomes of six races. The breaks are here-
by defined as the odd cents over any multiple of five for payoffs great-
er  than  one  dollar  five  cents  but less than five dollars, over any
multiple of ten for payoffs greater than  five  dollars  but  less  than
twenty-five dollars, over any multiple of twenty-five for payoffs great-
er  than twenty-five dollars but less than two hundred fifty dollars, or
over any multiple of fifty for payoffs over two hundred  fifty  dollars.
Out  of  the  amount  so retained there shall be paid by such franchised
corporation to the commissioner of taxation and finance, as a reasonable
tax by the state for the privilege of conducting pari-mutuel betting  on
the  races run at the race meetings held by such franchised corporation,
the following percentages of the total pool  for  regular  and  multiple
bets  five  per  centum  of regular bets and four per centum of multiple
bets plus twenty per centum of the breaks; for exotic wagers  seven  and
one-half  per centum plus twenty per centum of the breaks, and for super
exotic bets seven and one-half per centum plus fifty per centum  of  the
breaks.  For the period June first, nineteen hundred ninety-five through
September ninth, nineteen  hundred  ninety-nine,  such  tax  on  regular
wagers  shall  be three per centum and such tax on multiple wagers shall
be two and one-half per centum, plus twenty per centum  of  the  breaks.
For  the  period  September  tenth, nineteen hundred ninety-nine through
March thirty-first, two thousand one, such tax on all  wagers  shall  be
two  and six-tenths per centum and for the period April first, two thou-
sand one through December thirty-first, two thousand [fourteen] FIFTEEN,
such tax on all wagers shall be one and six-tenths per centum, plus,  in
each  such  period,  twenty per centum of the breaks. Payment to the New
York state thoroughbred breeding and development fund by such franchised
corporation shall be one-half of one per centum of total daily  on-track
pari-mutuel  pools  resulting from regular, multiple and exotic bets and

S. 6359--A                         325                        A. 8559--A

three per centum of super exotic bets provided, however,  that  for  the
period September tenth, nineteen hundred ninety-nine through March thir-
ty-first,  two thousand one, such payment shall be six-tenths of one per
centum  of  regular,  multiple and exotic pools and for the period April
first, two thousand one  through  December  thirty-first,  two  thousand
[fourteen] FIFTEEN, such payment shall be seven-tenths of one per centum
of such pools.
  S 10. This act shall take effect immediately.

                                 PART BB

  Section  1. Clause (H) of subparagraph (ii) of paragraph 1 of subdivi-
sion b of section 1612 of the tax law, as separately amended by chapters
174 and 175 of the laws of 2013, is amended to read as follows:
  (H) notwithstanding clauses (A), (B), (C), (D), (E), (F)  and  (G)  of
this  subparagraph, the track operator of a vendor track shall be eligi-
ble for a vendor's capital award of up to  four  percent  of  the  total
revenue  wagered at the vendor track after payout for prizes pursuant to
this chapter, which  shall  be  used  exclusively  for  capital  project
investments  to improve the facilities of the vendor track which promote
or encourage increased attendance at the video lottery  gaming  facility
including,  but  not limited to hotels, other lodging facilities, enter-
tainment  facilities,  retail  facilities,  dining  facilities,   events
arenas,  parking  garages  and  other improvements that enhance facility
amenities; provided that such capital investments shall be  approved  by
the  division, in consultation with the state racing and wagering board,
and that such vendor track demonstrates that such  capital  expenditures
will  increase  patronage at such vendor track's facilities and increase
the amount of revenue generated to support state education programs. The
annual amount of such vendor's capital awards that a vendor track  shall
be  eligible  to  receive  shall  be limited to two million five hundred
thousand dollars, except for Aqueduct racetrack, for which  there  shall
be  no  vendor's  capital awards. Except for tracks having less than one
thousand one hundred video gaming machines,  and  except  for  a  vendor
track  located west of State Route 14 from Sodus Point to the Pennsylva-
nia border within New York, each track operator  shall  be  required  to
co-invest  an  amount  of  capital  expenditure  equal to its cumulative
vendor's capital award. For all tracks, except for  Aqueduct  racetrack,
the amount of any vendor's capital award that is not used during any one
year  period  may  be  carried  over into subsequent years ending before
April first, two thousand [fourteen] FIFTEEN.   Any amount  attributable
to  a  capital  expenditure  approved prior to April first, two thousand
[fourteen] FIFTEEN  and  completed  before  April  first,  two  thousand
[sixteen]  SEVENTEEN;  or  approved  prior  to April first, two thousand
[eighteen] NINETEEN and  completed  before  April  first,  two  thousand
[twenty]  TWENTY-ONE  for  a vendor track located west of State Route 14
from Sodus Point to the Pennsylvania border within New  York,  shall  be
eligible  to  receive  the  vendor's  capital award. In the event that a
vendor track's capital expenditures, approved by the division  prior  to
April  first,  two  thousand  [fourteen]  FIFTEEN and completed prior to
April first, two thousand [sixteen] SEVENTEEN, exceed the vendor track's
cumulative capital award during the five year period ending April first,
two thousand [fourteen] FIFTEEN, the vendor shall  continue  to  receive
the  capital  award  after  April first, two thousand [fourteen] FIFTEEN
until such approved capital expenditures are paid to  the  vendor  track
subject  to  any  required  co-investment.  In no event shall any vendor

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track that receives a vendor fee pursuant to clause (F) or (G)  of  this
subparagraph  be  eligible  for  a  vendor's  capital  award  under this
section. Any operator of a vendor track which has  received  a  vendor's
capital  award,  choosing to divest the capital improvement toward which
the award was applied, prior to the full  depreciation  of  the  capital
improvement in accordance with generally accepted accounting principles,
shall  reimburse  the  state  in  amounts equal to the total of any such
awards. Any capital award not approved for a capital  expenditure  at  a
video  lottery  gaming  facility by April first, two thousand [fourteen]
FIFTEEN shall be deposited into the state  lottery  fund  for  education
aid; and
  S 2. This act shall take effect immediately.

                                 PART CC

  Section 1. Article 12 of the tax law is REPEALED.
  S 2. Subdivision fourth of section 171 of the tax law is REPEALED.
  S  3.  Subparagraph (iii) of paragraph (b) of subdivision 1 of section
173-a of the tax law is REPEALED.
  S 4. Section 176 of the tax law, as amended by chapter 267 of the laws
of 1987, is amended to read as follows:
  S 176. Transfer of  the  powers  and  duties  of  the  comptroller  in
relation  to the assessment or collection of certain taxes. On and after
July first, nineteen hundred twenty-one, all the powers and  duties  now
conferred or imposed upon the state comptroller in relation to the taxa-
tion  of corporations under articles nine and nine-A of this chapter, in
relation to the taxation of transfers of property, under article ten  of
this  chapter, [in relation to the taxation of transfers of stock, under
article twelve of this chapter,] and in relation to  taxation  upon  and
with  respect  to personal income, under article sixteen of this chapter
(as such article was in effect on December thirtieth,  nineteen  hundred
sixty),  shall  be  transferred to and thereafter shall be exercised and
performed by the commissioner, except as powers  and  duties  under  any
such  article  are  expressly  conferred  upon or continued in the state
comptroller by acts of the legislature of nineteen  hundred  twenty-one,
enacted  subsequent  to  chapter  ninety of the laws of nineteen hundred
twenty-one.
  S 5. Subparagraph 5 of paragraph (a) and subparagraph 4-a of paragraph
(b) of subdivision 9 of section 208 of the tax law,  subparagraph  5  of
paragraph  (a)  as amended by chapter 61 of the laws of 1989, clause (i)
of subparagraph 5 as amended by section 2 of part C of chapter 25 of the
laws of 2009, and subparagraph 4-a of paragraph (b) of subdivision 9  of
section  208  of  the  tax law, as amended by chapter 760 of the laws of
1992, are amended to read as follows:
  (5) (i) any refund or credit of a  tax  imposed  under  this  article,
article  twenty-three,  or article thirty-two of this chapter, for which
tax no exclusion or deduction was allowed in determining the  taxpayer's
entire  net  income under this article, article twenty-three, or article
thirty-two of this chapter for any prior year,  OR  (ii)  [a  refund  or
credit  of  general  corporation  tax  allowed  by subdivision eleven of
section 11-604 of the administrative code of the city of  New  York,  or
(iii)]  any refund or credit of a tax imposed under sections one hundred
eighty-three, one hundred eighty-three-a, one hundred eighty-four or one
hundred eighty-four-a of this chapter, and
  (4-a)(A) [the entire amount allowable as an exclusion or deduction for
stock transfer taxes imposed by article twelve of this chapter in deter-

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mining the entire taxable income  which  the  taxpayer  is  required  to
report  to  the United States treasury department but only to the extent
that such taxes are incurred and paid  in  market  making  transactions,
(B)]  in those instances where a credit for the special additional mort-
gage recording tax credit is allowed under paragraph (a) of  subdivision
seventeen of section two hundred ten of this article, the amount allowed
as an exclusion or deduction for the special additional mortgage record-
ing  tax imposed by subdivision one-a of section two hundred fifty-three
of this chapter in determining  the  entire  taxable  income  which  the
taxpayer is required to report to the United States treasury department,
and  [(C)]  (B) unless the credit allowed pursuant to subdivision seven-
teen of section two hundred ten of this  article  is  reflected  in  the
computation  of  the gain or loss so as to result in an increase in such
gain or decrease of such loss, for federal income tax purposes, from the
sale or other disposition of the property  with  respect  to  which  the
special  additional  mortgage recording tax imposed pursuant to subdivi-
sion one-a of section two hundred fifty-three of this chapter was  paid,
the  amount  of the special additional mortgage recording tax imposed by
subdivision one-a of section two hundred  fifty-three  of  this  chapter
which was paid and which is reflected in the computation of the basis of
the  property  so as to result in a decrease in such gain or increase in
such loss for federal income tax purposes from the sale or other  dispo-
sition of the property with respect to which such tax was paid.
  S  6. Subdivision 1 of section 472 of the tax law, as amended by chap-
ter 629 of the laws of 1996, and as further amended by  section  104  of
part A of chapter 62 of the laws of 2011, is amended to read as follows:
  1.  The  commissioner  shall  prescribe, prepare and furnish stamps of
such denominations and quantities as may be necessary for the payment of
the tax on cigarettes imposed by this article, and may from time to time
and as often as he deems advisable provide for the issuance  and  exclu-
sive  use  of stamps of a new design and forbid the use of stamps of any
other design[, in the manner and with the effect provided in section two
hundred seventy-four of this chapter]. THE COMMISSIONER MAY MAKE,  ENTER
INTO  AND  EXECUTE  FOR  AND  IN  BEHALF  OF  THE STATE SUCH CONTRACT OR
CONTRACTS FOR DIES, PLATES AND PRINTING NECESSARY FOR THE MANUFACTURE OF
THE STAMPS PROVIDED FOR BY THIS ARTICLE, AND HIRE STAFF AND PROVIDE SUCH
STATIONARY TOGETHER WITH  SUCH  BOOKS  AND  BLANKS  AS  IN  HIS  OR  HER
DISCRETION MAY BE NECESSARY FOR PUTTING INTO OPERATION THE PROVISIONS OF
THIS  ARTICLE;  THE  COMMISSIONER  SHALL BE THE CUSTODIAN OF ALL STAMPS,
DIES, PLATES OR OTHER MATERIAL OR THING FURNISHED AND USED IN THE  MANU-
FACTURE  OF  SUCH  STATE TAX STAMPS, AND ALL EXPENSES INCURRED UNDER THE
COMMISSIONER'S DIRECTION IN CARRYING OUT THE PROVISIONS OF THIS  ARTICLE
SHALL BE PAID TO THE COMMISSIONER BY THE STATE TREASURER FROM ANY MONEYS
APPROPRIATED  FOR  SUCH  PURPOSE. The commissioner shall make provisions
for the sale of such stamps at such places and at such times as  he  may
deem necessary and may license agents for such purpose. The commissioner
may  license  dealers  in  cigarettes, who maintain separate warehousing
facilities for the purpose of receiving and distributing cigarettes  and
conducting  their  business, who have received commitments from at least
two cigarette manufacturers whose aggregate market  share  is  at  least
forty  percent  of  the  New York state cigarette market, and importers,
exporters and manufacturers of cigarettes, and other persons  within  or
without  the state as agents to buy or affix stamps to be used in paying
the tax herein imposed, but an agent shall at all times have  the  right
to  appoint  the  person in his employ who is to affix the stamps to any
cigarettes under the agent's control. The fee for filing  such  applica-

S. 6359--A                         328                        A. 8559--A

tion  for an agent's license shall be one thousand five hundred dollars,
unless such fee has been paid during the  preceding  twelve  months,  in
which case, the fee for a new license shall be one thousand dollars. All
of  the  provisions of section four hundred eighty relating to wholesale
dealers' licenses, including the procedure for  suspension,  revocation,
refusal  to  license and for hearings, except for paragraphs (c) and (g)
of subdivision one of such  section,  shall  be  applicable  to  agents'
licenses  applied  for  or  granted pursuant to this section, as if such
provisions had been set forth  in  full  in  this  subdivision  and  had
expressly  referred  to  the applicant for, or the holder of, an agent's
license. Whenever the commissioner shall sell and deliver  to  any  such
agent  any  such  stamps,  such  agent  shall  be entitled to receive as
compensation for his services and expenses as such agent in  selling  or
affixing  such stamps, and to retain out of the moneys to be paid by him
for such stamps, a commission on the par value thereof. The commissioner
is hereby authorized to prescribe a schedule of commissions, not exceed-
ing five per centum, allowable to such agent  for  buying  and  affixing
such  stamps. Such schedule shall be uniform with respect to the differ-
ent types of stamps used, and may be on a graduated scale  with  respect
to  the  number  of  stamps  purchased.  The  commissioner  may,  in his
discretion, permit an agent to pay for such stamps  within  thirty  days
after  the  date of purchase and may require any such agent to file with
the department of taxation and finance a bond issued by a surety company
approved by the superintendent of financial services as to solvency  and
responsibility and authorized to transact business in the state or other
security  acceptable  to the commissioner, in such amount as the commis-
sioner may fix, to secure the payment of any sums due  from  such  agent
pursuant  to this article. If securities are deposited as security under
this subdivision, such securities shall be kept in the  custody  of  the
commissioner and may be sold by the commissioner if it becomes necessary
so  to  do  in order to recover any sums due from such agent pursuant to
this article, but no such sale shall be had until after such agent shall
have had opportunity to litigate the validity of any tax if it elects so
to do. Upon any such sale, the surplus, if any, above the sums due under
this article shall be returned to such agent.
  S 7. Section 463 of the banking law, as added by chapter  608  of  the
laws of 1996, is amended to read as follows:
  S  463. [Exemptions and individual] INDIVIDUAL liability of sharehold-
ers.  [The transfer of the shares of any credit union shall not be taxa-
ble under the provisions of article twelve of the tax law.]
  The shareholders of a credit union shall not  be  individually  liable
for the payment of the credit union's debts.
  S  8.  Subdivision 6 of section 3012 of the public authorities law, as
amended by chapter 868 of the laws  of  1975,  is  amended  to  read  as
follows:
  6.  Anything  in this article ten to the contrary notwithstanding, any
agreement or agreements with the holders of notes or bonds issued by any
municipal assistance corporation created by or pursuant to any title  of
this  article  shall  contain  a  clause  stating  in substance that any
provision in this article or in any such agreement or  agreements  which
relate  to  taxes  imposed  under  [article  twelve  or] sections eleven
hundred seven or eleven hundred eight of the tax law of the state or  to
the funds created by sections ninety-two-b, ninety-two-d or ninety-two-e
of the state finance law shall be deemed executory only to the extent of
the moneys available to the state in such funds from time to time and no

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liability  on  account thereof shall be incurred by the state beyond the
moneys available in such funds.
  S 9. Section 92-b of the state finance law is REPEALED.
  S 10. Section 92-i of the state finance law is REPEALED.
  S  11. Subparagraph 6 of paragraph j of subdivision 1 of section 54 of
the state finance law is REPEALED.
  S 12. Subdivision (c) of section 11-503 of the administrative code  of
the city of New York is REPEALED.
  S 13. Paragraph 4 of subdivision (b) of section 11-506 of the adminis-
trative code of the city of New York is REPEALED.
  S  14. Subdivision (g) of section 11-512 of the administrative code of
the city of New York is REPEALED.
  S 15. Subdivision (g) of section 11-514 of the administrative code  of
the city of New York is REPEALED.
  S 16. Clause (A) of subparagraph 4-a of paragraph (b) of subdivision 8
of  section 11-602 of the administrative code of the city of New York is
REPEALED.
  S 17. Subdivision 11 of section 11-604 of the administrative  code  of
the city of New York is REPEALED.
  S  18. Paragraph (a) of subdivision 12 of section 11-604 of the admin-
istrative code of the city of New York is amended to read as follows:
  (a) [In addition to the credit allowed by subdivision eleven  of  this
section, a] A taxpayer shall be allowed a credit against the tax imposed
by  this subchapter to be credited or refunded in the manner hereinafter
provided in this section. The amount of such credit shall be the  excess
of (A) the amount of sales and compensating use taxes imposed by section
eleven  hundred  seven of the tax law during the taxpayer's taxable year
which became legally due on or after and  was  paid  on  or  after  July
first,  nineteen  hundred  seventy-seven, less any credits or refunds of
such taxes, with respect to the purchase  or  use  by  the  taxpayer  of
machinery or equipment for use or consumption directly and predominantly
in  the  production  of  tangible  personal  property, gas, electricity,
refrigeration or steam for sale, by manufacturing, processing,  generat-
ing,  assembling,  refining,  mining or extracting, or telephone central
office equipment or station apparatus or comparable telegraph  equipment
for use directly and predominantly in receiving at destination or initi-
ating  and  switching  telephone  or  telegraph  communication,  but not
including parts with a useful life of one  year  or  less  or  tools  or
supplies  used in connection with such machinery, equipment or apparatus
over (B) the amount of any credit for such sales  and  compensating  use
taxes  allowed  or allowable against the taxes imposed by subchapter two
of chapter eleven of this title for  any  periods  embraced  within  the
taxable year of the taxpayer under this subchapter.
  S  19.  Subdivision  3 of section 11-606 of the administrative code of
the city of New York is REPEALED.
  S 20. Subdivision 11 of section 11-608 of the administrative  code  of
the city of New York is REPEALED.
  S  21.  (a) Notwithstanding the repeal of article 12 of the tax law by
this act, all provisions of such article 12 and any regulations  adopted
thereunder,  in respect to the assessment, payment, payment over, deter-
mination, collection and refund of tax imposed thereunder,  the  rebates
provided  for  in  section 280-a of the tax law, the filing of forms and
returns and the preservation of records for  the  purposes  of  the  tax
imposed by article 12, the secrecy of returns, the disposition of reven-
ues, and the civil and criminal penalties applicable to the violation of
the  provisions  of  such  article  12, shall continue in full force and

S. 6359--A                         330                        A. 8559--A

effect with respect to all such tax accrued up  to  the  date  this  act
takes  effect; all actions and proceedings, civil or criminal, commenced
or authorized to be commenced under or by virtue  of  any  provision  of
such  article  12 so repealed, and pending or able to be commenced prior
to the taking effect of such repeal, may be  commenced,  prosecuted  and
defended  to  final  effect  in  the  same  manner as they might if such
provisions were not so repealed.
  (b) Notwithstanding any provision of law in article 12 of the tax  law
or  subdivision (a) of this section to the contrary, any application for
a rebate of tax paid under such article 12  must  be  filed  within  two
years from the effective date of this act.
  S  22.  This act shall take effect June 1, 2014; provided that section
ten of this act shall take effect July 1, 2016.

                                 PART DD

  Section 1. Subsection (b) of section 804 of the tax law, as  added  by
section  1  of  part  C of chapter 25 of the laws of 2009, is amended to
read as follows:
  (b) Individuals with net earnings  from  self-employment.  Individuals
with  earnings  from self-employment must make estimated tax payments of
the tax imposed by this article for the taxable year on the  same  dates
specified  in [subsection (a) of this section for the quarterly payments
of the tax imposed on the payroll expense of employers] PARAGRAPH ONE OF
SUBSECTION (C) OF SECTION SIX HUNDRED EIGHTY-FIVE OF THIS CHAPTER.    In
addition,  these  self-employed  individuals  must file a return for the
taxable year by the  [thirtieth]  FIFTEENTH  day  of  the  fourth  month
following the close of the taxable year. Paragraph one of subsection (d)
of  section  six  hundred eighty-five of this chapter shall not apply to
the estimated tax payments required by this subsection.
  S 2. Section 806 of the tax law, as added by section 1 of  part  C  of
chapter 25 of the laws of 2009, is amended to read as follows:
  S  806.  Procedural provisions. (A) GENERAL. All provisions of article
twenty-two of this chapter will apply to the provisions of this  article
in the same manner and with the same force and effect as if the language
of article twenty-two of this chapter had been incorporated in full into
this  article  and  had  been  specifically  adjusted  for and expressly
referred to the tax imposed by this article, except to the  extent  that
any provision is either inconsistent with a provision of this article or
is not relevant to this article. Notwithstanding the preceding sentence,
no  credit against tax in article twenty-two of this chapter can be used
to offset the tax due under this article.
  (B) COMBINED FILINGS. NOTWITHSTANDING ANY  OTHER  PROVISIONS  OF  THIS
ARTICLE:
  (1)  THE  COMMISSIONER  MAY  REQUIRE  THE  FILING OF A COMBINED RETURN
WHICH, IN ADDITION TO THE RETURN  PROVIDED  FOR  IN  SUBSECTION  (B)  OF
SECTION  EIGHT HUNDRED FOUR OF THIS ARTICLE, MAY ALSO INCLUDE ANY OF THE
RETURNS REQUIRED TO BE FILED BY A RESIDENT INDIVIDUAL OF NEW YORK  STATE
PURSUANT  TO  THE  PROVISIONS  OF  SECTION SIX HUNDRED FIFTY-ONE OF THIS
CHAPTER AND WHICH MAY BE REQUIRED TO BE FILED BY SUCH INDIVIDUAL  PURSU-
ANT  TO ANY LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
TY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
  (2) WHERE A COMBINED RETURN IS  REQUIRED,  AND  WITH  RESPECT  TO  THE
PAYMENT  OF ESTIMATED TAX, THE COMMISSIONER MAY ALSO REQUIRE THE PAYMENT
TO IT OF A SINGLE AMOUNT WHICH SHALL EQUAL  THE  TOTAL  OF  THE  AMOUNTS
(TOTAL TAXES LESS ANY CREDITS OR REFUNDS) WHICH WOULD HAVE BEEN REQUIRED

S. 6359--A                         331                        A. 8559--A

TO  BE  PAID WITH THE RETURNS OR IN PAYMENT OF ESTIMATED TAX PURSUANT TO
THE PROVISIONS OF THIS ARTICLE, THE PROVISIONS OF ARTICLE TWENTY-TWO  OF
THIS CHAPTER, AND THE PROVISIONS OF LOCAL LAWS ENACTED UNDER THE AUTHOR-
ITY OF ARTICLE THIRTY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
  (3)  Notwithstanding  any  other law to the contrary, the commissioner
may require that all filings of forms or returns under this article must
be filed electronically and all payments of tax must be  paid  electron-
ically.
  S  3.  The  tax  law is amended by adding a new section 807 to read as
follows:
  S 807. ENFORCEMENT WITH OTHER TAXES. (A) JOINT ASSESSMENT. IF THERE IS
ASSESSED A TAX UNDER THIS ARTICLE AND  THERE  IS  ALSO  ASSESSED  A  TAX
AGAINST THE SAME TAXPAYER PURSUANT TO ARTICLE TWENTY-TWO OF THIS CHAPTER
OR  UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
TY, ARTICLE THIRTY-A, OR ARTICLE THIRTY-B OF THIS CHAPTER,  AND  PAYMENT
OF  A  SINGLE  AMOUNT  IS REQUIRED UNDER THE PROVISIONS OF THIS ARTICLE,
SUCH PAYMENT SHALL BE DEEMED TO HAVE BEEN MADE WITH RESPECT TO THE TAXES
SO ASSESSED IN PROPORTION TO THE AMOUNTS OF SUCH  TAXES  DUE,  INCLUDING
TAX, PENALTIES, INTERESTED AND ADDITIONS TO TAX.
  (B)  JOINT ACTION. IF THE COMMISSIONER TAKES ACTION UNDER SUCH ARTICLE
TWENTY-TWO OR UNDER A LOCAL LAW ENACTED PURSUANT  TO  THE  AUTHORITY  OF
ARTICLE  THIRTY,  THIRTY-A,  OR THIRTY-B OF THIS CHAPTER WITH RESPECT TO
THE ENFORCEMENT AND COLLECTION OF THE TAX OR TAXES ASSESSED  UNDER  SUCH
ARTICLES,  THE  COMMISSIONER  SHALL,  WHENEVER  POSSIBLE  AND NECESSARY,
ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION  UNDER  SIMILAR  ENFORCEMENT
AND COLLECTION PROVISIONS OF THE TAX IMPOSED BY THIS ARTICLE.
  (C)  APPORTIONMENT  OF  MONEYS  COLLECTED  BY JOINT ACTION. ANY MONEYS
COLLECTED AS A RESULT OF SUCH JOINT ACTION SHALL BE DEEMED TO HAVE  BEEN
COLLECTED  IN  PROPORTION  TO THE AMOUNTS DUE, INCLUDING TAX, PENALTIES,
INTEREST AND ADDITIONS TO TAX, UNDER ARTICLE TWENTY-TWO OF THIS  CHAPTER
OR  UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
TY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER AND THE TAX  IMPOSED  BY  THIS
ARTICLE.
  (D)  JOINT  DEFICIENCY  ACTION.  WHENEVER  THE  COMMISSIONER TAKES ANY
ACTION WITH RESPECT TO A DEFICIENCY OF INCOME TAX UNDER ARTICLE  TWENTY-
TWO OF THIS CHAPTER OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHOR-
ITY OF ARTICLE THIRTY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER, OTHER THAN
THE ACTION SET FORTH IN SUBSECTION (A) OF THIS SECTION, THE COMMISSIONER
MAY IN HIS OR HER DISCRETION ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION
UNDER THIS ARTICLE.
  S 4. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2015.

                                 PART EE

  Section  1. Subdivision 4 of section 97-nnnn of the state finance law,
as added by chapter 174 of the laws of  2013,  is  amended  to  read  as
follows:
  4.  a.  As  used  in this section, the term "base year gaming revenue"
shall mean the sum of all revenue generated to  support  education  from
video  lottery  gaming as defined by section sixteen hundred seventeen-a
of the tax law in the twelve  months  preceding  the  operation  of  any
gaming facility pursuant to either article thirteen of the racing, pari-
mutuel wagering and breeding law or pursuant to paragraph four of SUBDI-
VISION  A  OF  section [one thousand six] SIXTEEN hundred seventeen-a of
the tax law.

S. 6359--A                         332                        A. 8559--A

  b. Amounts APPROPRIATED OR transferred in any year to support  elemen-
tary and secondary education shall be calculated as follows:
  (i)  an  amount  equal to the positive difference, if any, between the
base year gaming revenue amount and the sum of all revenue generated  to
support  education  from  video  lottery  gaming  as  defined by section
sixteen hundred seventeen-a of the tax law in the  current  fiscal  year
provided  that such positive amount, if any, shall be transferred to the
state lottery fund[;]. FOR THE PURPOSES OF THIS  PARAGRAPH,  THE  CALCU-
LATION  OF  THIS  POSITIVE DIFFERENCE SHALL BE ESTIMATED AND TRANSFERRED
MONTHLY BASED ON THE CUMULATIVE POSITIVE DIFFERENCE, IF ANY, IN THE SAME
CUMULATIVE MONTHS OF THE BASE YEAR AND  THE  CUMULATIVE  MONTHS  OF  THE
CURRENT  FISCAL YEAR TO DATE, LESS AMOUNTS PREVIOUSLY TRANSFERRED IN THE
CURRENT FISCAL YEAR. PROVIDED, HOWEVER, IF THE AMOUNT PREVIOUSLY  TRANS-
FERRED  IN  THE  CURRENT  FISCAL  YEAR  EXCEEDS  THE CUMULATIVE POSITIVE
DIFFERENCE, AN AMOUNT EQUAL TO THE EXCESS TRANSFERRED MAY BE TRANSFERRED
BACK FROM THE STATE LOTTERY FUND; and
  (ii) the amount of revenue collected [in the prior state fiscal year,]
to be distributed pursuant to paragraph a of subdivision three  of  this
section,  and  in excess of any amounts transferred pursuant to subpara-
graph (i) of this paragraph [in such prior fiscal year], if any.
  c. Notwithstanding any provision  of  law  to  the  contrary,  amounts
appropriated  or  transferred  from  the  commercial gaming revenue fund
pursuant to subparagraph (ii) of this paragraph shall  not  be  included
in: (i) the allowable growth amount computed pursuant to paragraph dd of
subdivision  one of section thirty-six hundred two of the education law,
(ii) the preliminary growth amount computed pursuant to paragraph ff  of
subdivision  one of section thirty-six hundred two of the education law,
and (iii) the allocable growth amount computed pursuant to paragraph  gg
of  subdivision  one  of section thirty-six hundred two of the education
law.
  S 2. Subdivision 5 of section 97-nnnn of the  state  finance  law,  as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  5. Notwithstanding the foregoing, monies received pursuant to:
  a.  sections  one  thousand  three hundred forty-five and one thousand
three hundred forty-eight of  [this  article]  THE  RACING,  PARI-MUTUEL
WAGERING  AND  BREEDING  LAW  shall  be  exclusively appropriated to the
office of alcoholism and substance abuse services to be used for problem
gambling education and treatment purposes.
  b. section one thousand three hundred forty-nine of [this article] THE
RACING, PARI-MUTUEL WAGERING  AND  BREEDING  LAW  shall  be  exclusively
appropriated to the commission for regulatory investigations.
  c.  section  one  thousand  three  hundred fifty of [this article] THE
RACING, PARI-MUTUEL WAGERING  AND  BREEDING  LAW  shall  be  exclusively
appropriated to the commission for costs regulation.
  S 3. Subdivisions (b) and (c) of section 52 of chapter 174 of the laws
of 2013 enacting the upstate New York gaming economic development act of
2013, are amended to read as follows:
  (b)  sections  six, seven, fourteen and sixteen of this act shall take
effect on the same date as the agreement between the  Oneida  Nation  of
New  York and the state of New York entered into on the sixteenth day of
May, 2013 takes effect; provided, further, that the amendments to subdi-
vision 2 of section 99-h of the state finance law made by section six of
this act shall take effect on the same date as  the  reversion  of  such
section  as provided in section 2 of chapter 747 of the laws of 2006, as
amended; provided, further, that the  amendments  to  subdivision  3  of
section  99-h of the state finance law made by section seven of this act

S. 6359--A                         333                        A. 8559--A

shall be subject to the expiration and reversion of such subdivision  as
provided  in  section  3 of part W of chapter 60 of the laws of 2011, as
amended when upon such date the provisions of section  seven-a  of  this
act  shall take effect; provided, further, that the amendments to subdi-
vision 3 of section 99-h of  the  state  finance  law  made  by  section
seven-a of this act shall be subject to the the expiration and reversion
of  such  section as provided in section 2 of chapter 747 of the laws of
2006, as amended when upon such date the provisions of section eight  of
this act shall take effect; [provided, further, however, that the amend-
ment  to  section  99-h of the state finance law made by section nine of
this act shall not affect the expiration of such section  and  shall  be
deemed  repealed  therewith;]  provided,  further, that the state gaming
commission shall notify the legislative bill  drafting  commission  upon
the occurrence of such agreement between the Oneida Nation and the state
of New York becoming effective in order that the commission may maintain
an  accurate  and timely effective data base of the official text of the
laws of the state of New York in furtherance of effecting the provisions
of section 44 of the legislative law and  section  70-b  of  the  public
officers law;
  (c) section [1368] 1367 of the racing, pari-mutuel wagering and breed-
ing  law,  as added by section two of this act, shall take effect upon a
change in federal law authorizing the activity permitted by such section
or upon a ruling by a court of competent jurisdiction that such activity
is lawful. The state gaming commission shall notify the legislative bill
drafting commission upon the occurrence of the change in federal law  or
upon  the  ruling of a court of competent jurisdiction in order that the
commission may maintain an accurate and timely effective  data  base  of
the official text of the laws of the state of New York in furtherance of
effecting  the  provisions  of  section  44  of  the legislative law and
section 70-b of the public officers law;
  S 4. Subdivision 3-a of section 99-h of  the  state  finance  law,  as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  3-a.  Ten  percent  of any of the funds actually received by the state
pursuant to the tribal-state compacts and agreements described in subdi-
vision two of this section [that are retained  in  the  fund  after  the
distributions  required by subdivision three of this section, but] prior
to the transfer of unsegregated moneys to the general fund  required  by
such  subdivision,  shall  be distributed to counties in each respective
exclusivity zone provided they do not otherwise receive a share of  said
revenues pursuant to this section. Such distribution shall be made among
such  counties  on  a  per capita basis, excluding the population of any
municipality that receives a distribution pursuant to subdivision  three
of this section.
  S 5. Subdivision g of section 1617-a of the tax law, as added by chap-
ter 174 of the laws of 2013, is amended to read as follows:
  g.  Every  video  lottery  gaming  license, and every renewal license,
shall be valid for a period of five  years,  except  that  video  gaming
licenses  issued  before the effective date of this subdivision shall be
for a term expiring on THE  APPLICANT'S  NEXT  BIRTHDAY  FOLLOWING  June
thirtieth, two thousand fourteen.
  The  gaming  commission  may decline to renew any license after notice
and an opportunity for hearing if it determines that:
  (1) the licensee has violated section one thousand six  hundred  seven
of this article;
  (2)  the  licensee  has  violated any rule, regulation or order of the
gaming commission;

S. 6359--A                         334                        A. 8559--A

  (3) the applicant or its officers, directors or significant stockhold-
ers, as determined by the gaming commission, have been  convicted  of  a
crime involving moral turpitude; or
  (4)  that  the  character or fitness of the licensee and its officers,
directors, and significant stockholders, as  determined  by  the  gaming
commission  is  such  that  the  participation of the applicant in video
lottery gaming or related activities  would  be  inconsistent  with  the
public  interest, convenience or necessity or with the best interests of
video gaming generally.
  S 6. This act shall take effect immediately;  provided,  that  section
one of this act shall take effect April 1, 2015; provided, further, that
the amendments made to section three of this act shall be deemed to have
taken  effect  on the same date and in the same manner as chapter 174 of
the laws of 2013.

                                 PART FF

  Section 1. Subsections (yy) and (zz) of section 606 of the tax law, as
relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
relettered  (yyy)  and (zzz) and a new subsection (bbb) is added to read
as follows:
  (BBB) REAL PROPERTY TAX FREEZE CREDIT. (1) AS USED IN THIS SUBSECTION:
  (A) THE TERM "FREEZE-COMPLIANT BUDGET" MEANS  A  BUDGET  OF  A  TAXING
JURISDICTION THAT HAS MET THE REQUIREMENTS OF SECTION TWO THOUSAND TWEN-
TY-THREE-B OF THE EDUCATION LAW OR SECTION THREE-D OF THE GENERAL MUNIC-
IPAL LAW, WHICHEVER IS APPLICABLE.
  (B)  THE  TERMS  "INDEPENDENT  SPECIAL DISTRICT" AND "DEPENDENT SCHOOL
DISTRICT" HAVE THE SAME MEANING AS SET FORTH IN SECTION THREE-D  OF  THE
GENERAL MUNICIPAL LAW.
  (C)  THE  TERM  "STAR EXEMPTION" MEANS THE SCHOOL TAX RELIEF EXEMPTION
AUTHORIZED BY SECTION FOUR HUNDRED TWENTY-FIVE OF THE REAL PROPERTY  TAX
LAW.
  (D)  THE  TERM  "TAXING  JURISDICTION"  MEANS  A  COUNTY,  CITY, TOWN,
VILLAGE, SCHOOL DISTRICT OR AN INDEPENDENT SPECIAL DISTRICT, EXCEPT THAT
SUCH TERM SHALL NOT INCLUDE A CITY WITH A POPULATION OF ONE  MILLION  OR
MORE, NOR SHALL IT INCLUDE A COUNTY WHOLLY LOCATED WITHIN SUCH A CITY.
  (2)  AN  INDIVIDUAL  TAXPAYER  WHO MEETS THE ELIGIBILITY STANDARDS SET
FORTH IN PARAGRAPH THREE OF THIS SUBSECTION AND WHOSE PRIMARY  RESIDENCE
IS  LOCATED  IN A TAXING JURISDICTION THAT HAS A FREEZE-COMPLIANT BUDGET
FOR THE FISCAL YEAR STARTING IN  TWO  THOUSAND  FOURTEEN,  TWO  THOUSAND
FIFTEEN  OR  TWO  THOUSAND  SIXTEEN,  WHICHEVER  IS APPLICABLE, SHALL BE
ALLOWED A CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE.  SUBJECT  TO
THE PROVISIONS OF PARAGRAPH SIX OF THIS SUBSECTION, SUCH CREDIT SHALL BE
DETERMINED AS FOLLOWS:
  (A)  IF A SCHOOL DISTRICT OTHER THAN A DEPENDENT SCHOOL DISTRICT HAS A
FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR  STARTING  IN  TWO  THOUSAND
FOURTEEN,  A  CREDIT  SHALL  BE  ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO
THOUSAND FOURTEEN TAXABLE YEAR IN THE AMOUNT BY WHICH THE REAL  PROPERTY
TAXES  IMPOSED  UPON  SUCH  RESIDENCE  BY  OR  ON  BEHALF OF THAT SCHOOL
DISTRICT FOR THE FISCAL YEAR STARTING IN TWO THOUSAND  FOURTEEN  EXCEEDS
THE  REAL  PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING IN TWO
THOUSAND THIRTEEN.
  (B) IF A TAXING JURISDICTION, OTHER THAN A SCHOOL DISTRICT OR  A  CITY
WITH  A DEPENDENT SCHOOL DISTRICT, HAS A FREEZE-COMPLIANT BUDGET FOR ITS
FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN, A CREDIT SHALL BE  ALLOWED
FOR  THE  ELIGIBLE  TAXPAYER'S  TWO THOUSAND FIFTEEN TAXABLE YEAR IN THE

S. 6359--A                         335                        A. 8559--A

AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
OR ON BEHALF OF THAT TAXING JURISDICTION FOR THE FISCAL YEAR STARTING IN
TWO  THOUSAND FIFTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
  (C)  IF A SCHOOL DISTRICT OTHER THAN A DEPENDENT SCHOOL DISTRICT HAS A
FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR  STARTING  IN  TWO  THOUSAND
FIFTEEN, A CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOU-
SAND FIFTEEN TAXABLE YEAR IN THE AMOUNT BY WHICH THE REAL PROPERTY TAXES
IMPOSED  UPON SUCH RESIDENCE BY OR ON BEHALF OF SUCH SCHOOL DISTRICT FOR
THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS THE REAL  PROP-
ERTY TAXES SO IMPOSED FOR THE FISCAL YEAR IDENTIFIED AS FOLLOWS:
  (I)  IF  THE  SCHOOL DISTRICT'S BUDGET FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN WAS FREEZE-COMPLIANT, THE EXCESS SHALL  BE  DETER-
MINED WITH RESPECT TO THE FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN.
  (II)  IF  THE SCHOOL DISTRICT'S BUDGET FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN WAS NOT  FREEZE-COMPLIANT,  THE  EXCESS  SHALL  BE
DETERMINED  WITH  RESPECT  TO  THE  FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN.
  (D) IF A TAXING JURISDICTION, OTHER THAN A SCHOOL DISTRICT OR  A  CITY
WITH  A DEPENDENT SCHOOL DISTRICT, HAS A FREEZE-COMPLIANT BUDGET FOR ITS
FISCAL YEAR STARTING IN TWO THOUSAND SIXTEEN, A CREDIT SHALL BE  ALLOWED
FOR  THE  ELIGIBLE  TAXPAYER'S  TWO THOUSAND SIXTEEN TAXABLE YEAR IN THE
AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
OR ON BEHALF OF THAT TAXING JURISDICTION FOR THE FISCAL YEAR STARTING IN
TWO  THOUSAND SIXTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL YEAR IDENTIFIED AS FOLLOWS:
  (I) IF THE TAXING JURISDICTION'S BUDGET FOR THE FISCAL  YEAR  STARTING
IN TWO THOUSAND FIFTEEN WAS FREEZE-COMPLIANT, THE EXCESS SHALL BE DETER-
MINED WITH RESPECT TO THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
  (II)  IF THE TAXING JURISDICTION'S BUDGET FOR THE FISCAL YEAR STARTING
IN TWO THOUSAND FIFTEEN WAS NOT FREEZE-COMPLIANT, THE  EXCESS  SHALL  BE
DETERMINED  WITH  RESPECT  TO  THE  FISCAL YEAR STARTING IN TWO THOUSAND
FIFTEEN.
  (E) IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A  FREEZE-COMPLIANT
BUDGET  FOR  ITS  FISCAL  YEAR  STARTING IN TWO THOUSAND FOURTEEN, A TAX
CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO  THOUSAND  FOUR-
TEEN TAXABLE YEAR IN THE AMOUNT EQUIVALENT TO SIXTY-SEVEN PERCENT OF THE
AMOUNT  BY  WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY
OR ON BEHALF OF THAT CITY FOR THE FISCAL YEAR STARTING IN  TWO  THOUSAND
FOURTEEN  EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR
STARTING IN TWO THOUSAND THIRTEEN.
  (F) IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A  FREEZE-COMPLIANT
BUDGET FOR ITS FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN, A TAX CRED-
IT  SHALL  BE  ALLOWED  FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND FIFTEEN
TAXABLE YEAR AS FOLLOWS:
  (I) IF THE CITY'S BUDGET FOR THE FISCAL YEAR STARTING IN TWO  THOUSAND
FOURTEEN  WAS FREEZE-COMPLIANT, A CREDIT SHALL BE ALLOWED FOR THE ELIGI-
BLE TAXPAYER'S TWO THOUSAND FIFTEEN TAXABLE YEAR IN AN AMOUNT EQUIVALENT
TO THIRTY-THREE PERCENT OF THE AMOUNT BY WHICH THE REAL  PROPERTY  TAXES
IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL  YEAR  STARTING IN TWO THOUSAND THIRTEEN, TOGETHER WITH AN AMOUNT
EQUIVALENT TO SIXTY-SEVEN PERCENT OF THE AMOUNT BY WHICH THE REAL  PROP-
ERTY  TAXES IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR
STARTING IN TWO THOUSAND FIFTEEN EXCEEDS  THE  REAL  PROPERTY  TAXES  SO
IMPOSED  FOR  THE  FISCAL  YEAR STARTING IN TWO THOUSAND THIRTEEN; AND A

S. 6359--A                         336                        A. 8559--A

CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN
TAXABLE YEAR IN AN AMOUNT EQUIVALENT  TO  THIRTY-THREE  PERCENT  OF  THE
AMOUNT  BY  WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY
THAT  CITY  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS
THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
THOUSAND THIRTEEN.
  (II) IF THE CITY'S BUDGET FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN  WAS  NOT  FREEZE-COMPLIANT,  A CREDIT SHALL BE ALLOWED FOR THE
ELIGIBLE TAXPAYER'S TWO THOUSAND  FIFTEEN  TAXABLE  YEAR  IN  AN  AMOUNT
EQUIVALENT  TO SIXTY-SEVEN PERCENT OF THE AMOUNT BY WHICH THE REAL PROP-
ERTY TAXES IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL  YEAR
STARTING  IN  TWO  THOUSAND  FIFTEEN  EXCEEDS THE REAL PROPERTY TAXES SO
IMPOSED FOR THE FISCAL YEAR STARTING IN TWO  THOUSAND  FOURTEEN;  AND  A
CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN
TAXABLE  YEAR  IN  AN  AMOUNT  EQUIVALENT TO THIRTY-THREE PERCENT OF THE
AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
THAT  CITY  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS
THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
THOUSAND FOURTEEN.
  (G)  IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A FREEZE-COMPLIANT
BUDGET FOR ITS FISCAL YEAR STARTING IN TWO THOUSAND  FOURTEEN  BUT  DOES
NOT  HAVE  A FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR STARTING IN TWO
THOUSAND FIFTEEN, A TAX CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAY-
ER'S  TWO  THOUSAND  FIFTEEN  TAXABLE  YEAR   AN   AMOUNT   REPRESENTING
THIRTY-THREE  PERCENT  OF  THE  AMOUNT  BY WHICH THE REAL PROPERTY TAXES
IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN.
  (3) TO BE ELIGIBLE FOR SUCH CREDIT, THE TAXPAYER (OR TAXPAYERS  FILING
JOINT RETURNS) MUST MEET THE FOLLOWING CRITERIA:
  (A) FOR THE TWO THOUSAND FOURTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
RESIDENCE  MUST  HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE TWO THOU-
SAND FOURTEEN--TWO THOUSAND FIFTEEN SCHOOL YEAR, OR WOULD HAVE SO QUALI-
FIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIMELY
MANNER.
  (B) FOR THE TWO THOUSAND FIFTEEN TAXABLE YEAR, THE TAXPAYER'S  PRIMARY
RESIDENCE  MUST  HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE TWO THOU-
SAND FIFTEEN--TWO THOUSAND SIXTEEN SCHOOL YEAR, OR WOULD HAVE SO  QUALI-
FIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIMELY
MANNER.
  (C)  FOR THE TWO THOUSAND SIXTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
RESIDENCE MUST HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE  TWO  THOU-
SAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR, OR WOULD HAVE SO QUAL-
IFIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIME-
LY MANNER.
  (4)  FOR  EACH  YEAR  THIS  CREDIT  IS ALLOWED, THE COMMISSIONER SHALL
DETERMINE THE TAXPAYER'S  ELIGIBILITY  FOR  THIS  CREDIT  UTILIZING  THE
INFORMATION  AVAILABLE  TO  THE  COMMISSIONER. WHEN THE COMMISSIONER HAS
DETERMINED A TAXPAYER TO BE ELIGIBLE FOR THIS CREDIT,  THE  COMMISSIONER
SHALL ADVANCE A PAYMENT OF THE AMOUNT DETERMINED IN ACCORDANCE WITH THIS
SUBSECTION.  THE TAXPAYER SHALL NOT APPLY FOR SUCH CREDIT IN CONJUNCTION
WITH  THE  FILING  OF  HIS  OR  HER RETURN. A TAXPAYER WHO HAS FAILED TO
RECEIVE AN ADVANCE PAYMENT THAT HE OR SHE BELIEVES WAS  DUE  TO  HIM  OR
HER,  OR  WHO HAS RECEIVED AN ADVANCE PAYMENT THAT HE OR SHE BELIEVES IS
LESS THAN THE AMOUNT THAT WAS DUE TO HIM OR HER, MAY REQUEST PAYMENT  OF
THE CLAIMED DEFICIENCY IN A MANNER PRESCRIBED BY THE COMMISSIONER.

S. 6359--A                         337                        A. 8559--A

  (5) IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION, IF ANY,
SHALL  EXCEED  THE TAXPAYER'S TAX FOR THE TAXABLE YEAR, THE EXCESS SHALL
BE TREATED AS AN OVERPAYMENT OF  TAX  TO  BE  CREDITED  OR  REFUNDED  IN
ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS
ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  (6)  THE  FOLLOWING  PROVISIONS  SHALL APPLY TO THE CALCULATION OF THE
CREDIT PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION:
  (A) IF THE TAX BILL PERTAINING  TO  THE  ELIGIBLE  TAXPAYER'S  PRIMARY
RESIDENCE  INCLUDES  TAXES  LEVIED  BY  OR  ON BEHALF OF MULTIPLE TAXING
JURISDICTIONS, THE CREDIT SHALL BE BASED UPON THE CHANGE IN  THE  AGGRE-
GATE TAX LIABILITY OF SUCH RESIDENCE, PROVIDED THAT ANY TAX APPEARING ON
THE TAX BILL THAT IS NOT ATTRIBUTABLE TO A FREEZE-COMPLIANT BUDGET SHALL
BE  DISREGARDED  WHEN  DETERMINING  THE  AGGREGATE TAX LIABILITY OF SUCH
RESIDENCE.
  (B) IF THE TAX BILL PERTAINING  TO  THE  ELIGIBLE  TAXPAYER'S  PRIMARY
RESIDENCE  INCLUDES  RELEVIED  TAXES OR OTHER TAXES THAT WERE PREVIOUSLY
BILLED BUT NOT PAID, THOSE TAXES SHALL BE DISREGARDED  WHEN  DETERMINING
THE AGGREGATE TAX LIABILITY OF SUCH RESIDENCE.
  (C)  IF  THE  TAX  BILL  PERTAINING TO THE ELIGIBLE TAXPAYER'S PRIMARY
RESIDENCE INCLUDES USAGE CHARGES, UNIT CHARGES OR OTHER CHARGES THAT ARE
BASED UPON THE CONSUMPTION OF A SERVICE, THOSE CHARGES SHALL  BE  DISRE-
GARDED WHEN DETERMINING THE AGGREGATE TAX LIABILITY OF SUCH RESIDENCE.
  (D)  NOTWITHSTANDING  THE  FOREGOING PROVISIONS OF THIS SUBSECTION, NO
CREDIT SHALL BE ALLOWED TO THE EXTENT THAT  THE  TAX  LIABILITY  OF  THE
ELIGIBLE  TAXPAYER'S  PRIMARY  RESIDENCE INCREASED DUE TO ONE OR MORE OF
THE FOLLOWING EVENTS:
  (I) A PHYSICAL IMPROVEMENT TO THE ELIGIBLE  TAXPAYER'S  PRIMARY  RESI-
DENCE.
  (II) A REMOVAL OR REDUCTION OF AN EXEMPTION ON THE ELIGIBLE TAXPAYER'S
PRIMARY  RESIDENCE,  INCLUDING  A  REDUCTION  OF  THE STAR EXEMPT AMOUNT
CALCULATED  PURSUANT  TO  SUBDIVISION  TWO  OF  SECTION   FOUR   HUNDRED
TWENTY-FIVE OF THE REAL PROPERTY TAX LAW.
  (III) A REVALUATION THAT CAUSED THE ASSESSMENT OF THE ELIGIBLE TAXPAY-
ER'S  PRIMARY RESIDENCE TO INCREASE BY A PERCENTAGE THAT IS GREATER THAN
THE APPLICABLE CHANGE IN LEVEL OF ASSESSMENT. AS USED HEREIN, THE  TERMS
"REVALUATION"  AND  "CHANGE  IN LEVEL OF ASSESSMENT" SHALL HAVE THE SAME
MEANINGS AS SET FORTH IN SECTIONS ONE HUNDRED  TWO  AND  TWELVE  HUNDRED
TWENTY OF THE REAL PROPERTY TAX LAW, RESPECTIVELY.
  (E)  IN  THE  CASE  OF  PROPERTY CONSISTING OF A COOPERATIVE APARTMENT
CORPORATION THAT IS DESCRIBED BY PARAGRAPH (K)  OF  SUBDIVISION  TWO  OF
SECTION FOUR HUNDRED TWENTY-FIVE OF THE REAL PROPERTY TAX LAW, AN ELIGI-
BLE OWNER SHALL BE ALLOWED A CREDIT IN THE AMOUNT EQUAL TO SIXTY PERCENT
OF  THE  AVERAGE  TAX CREDIT IN THAT TAXING JURISDICTION FOR THAT FISCAL
YEAR, AS DETERMINED BY THE COMMISSIONER, OR IN THE CASE OF A COOPERATIVE
APARTMENT CORPORATION THAT IS DESCRIBED BY SUBPARAGRAPH  (IV)  OF  PARA-
GRAPH  (K) OF SUBDIVISION TWO OF SECTION FOUR HUNDRED TWENTY-FIVE OF THE
REAL PROPERTY TAX LAW, A CREDIT OF TWENTY PERCENT OF  SUCH  AVERAGE  TAX
CREDIT.
  (F)  IN  THE  CASE  OF  PROPERTY  CONSISTING  OF A MOBILE HOME THAT IS
DESCRIBED BY PARAGRAPH (L) OF SUBDIVISION TWO OF  SECTION  FOUR  HUNDRED
TWENTY-FIVE  OF  THE  REAL  PROPERTY TAX LAW, AN ELIGIBLE OWNER SHALL BE
ALLOWED A CREDIT IN THE AMOUNT EQUAL TO TWENTY-FIVE PERCENT OF THE AVER-
AGE TAX CREDIT IN THAT TAXING JURISDICTION  FOR  THAT  FISCAL  YEAR,  AS
DETERMINED BY THE COMMISSIONER.
  (G)  IN  THE CASE OF A CITY WITH A DEPENDENT SCHOOL DISTRICT, IT SHALL
BE PRESUMED THAT SIXTY-SEVEN PERCENT OF THE CITY TAX BILL IS FOR  SCHOOL

S. 6359--A                         338                        A. 8559--A

DISTRICT  PURPOSES  AND  THAT  THIRTY-THREE  PERCENT IS FOR GENERAL CITY
PURPOSES.
  (H)  THE  AMOUNT OF THE CREDIT SHALL BE ROUNDED TO THE NEAREST DOLLAR,
EXCEPT WHERE SUCH AMOUNT IS GREATER THAN ZERO AND LESS THAN  ONE  DOLLAR
AND FIFTY CENTS, IN WHICH CASE THE AMOUNT OF THE CREDIT SHALL BE ROUNDED
UP TO TWO DOLLARS.
  (7)  NO  CREDIT  SHALL BE ALLOWED UNDER THIS SUBSECTION IN RELATION TO
PROPERTY LOCATED WITHIN A CITY WITH A POPULATION OF ONE MILLION OR MORE.
  S 2. The education law is amended by adding a new  section  2023-b  to
read as follows:
  S  2023-B.  CERTIFICATION  OF  COMPLIANCE  WITH  PROPERTY  TAX  FREEZE
REQUIREMENTS. A SCHOOL DISTRICT THAT IS SUBJECT  TO  THE  PROVISIONS  OF
SECTION  TWO  THOUSAND  TWENTY-THREE-A OF THIS PART MUST COMPLY WITH THE
REQUIREMENTS OF SUBDIVISION TWO OF THIS SECTION IN ORDER TO  RENDER  ITS
TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT AUTHORIZED BY
SUBSECTION  (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A FISCAL
YEAR STARTING IN TWO  THOUSAND  FOURTEEN.  A  SCHOOL  DISTRICT  THAT  IS
SUBJECT TO THE PROVISIONS OF SECTION TWO THOUSAND TWENTY-THREE-A OF THIS
PART  MUST COMPLY WITH THE REQUIREMENTS OF SUBDIVISIONS TWO AND THREE OF
THIS SECTION IN ORDER TO RENDER ITS  TAXPAYERS  ELIGIBLE  FOR  THE  REAL
PROPERTY TAX FREEZE CREDIT AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX
HUNDRED  SIX  OF  THE TAX LAW FOR A FISCAL YEAR STARTING IN TWO THOUSAND
FIFTEEN.
  1. DEFINITIONS.  AS USED IN THIS SECTION:
  A. "CONSOLIDATION ACTIONS" MEANS: REORGANIZATIONS OF  ELIGIBLE  SCHOOL
DISTRICTS  PURSUANT  TO  SECTIONS  FIFTEEN HUNDRED FIVE, FIFTEEN HUNDRED
ELEVEN THROUGH FIFTEEN HUNDRED THIRTEEN,  FIFTEEN  HUNDRED  TWENTY-FOUR,
FIFTEEN HUNDRED TWENTY-SIX, SEVENTEEN HUNDRED FIVE, EIGHTEEN HUNDRED ONE
THROUGH  EIGHTEEN  HUNDRED  THREE, OR TWENTY-TWO HUNDRED EIGHTEEN OF THE
EDUCATION LAW; OR REORGANIZATIONS, CONSOLIDATIONS,  OR  DISSOLUTIONS  OF
ELIGIBLE SCHOOL DISTRICTS IN WHICH ONE OR MORE ELIGIBLE SCHOOL DISTRICTS
ARE TERMINATED AND ANOTHER ELIGIBLE SCHOOL DISTRICT ASSUMES JURISDICTION
OVER  THE  TERMINATED SCHOOL DISTRICT OR DISTRICTS PURSUANT TO ANY OTHER
PROVISION OF LAW.
  B. "ELIGIBLE SCHOOL DISTRICT" MEANS A SCHOOL DISTRICT THAT IS  SUBJECT
TO  SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART, BUT SHALL NOT MEAN
A SCHOOL DISTRICT THAT IS SUBJECT TO ARTICLE FIFTY-TWO OF THIS CHAPTER.
  C. "EFFICIENCY PLAN" MEANS A  PLAN  THAT  IDENTIFIES  SHARED  SERVICES
ACTIONS  AND/OR  CONSOLIDATION  ACTIONS  TO  BE FULLY IMPLEMENTED BY ALL
ELIGIBLE SCHOOL DISTRICTS IN A BOARD OF COOPERATIVE EDUCATIONAL SERVICES
DISTRICT THAT ARE SIGNATORIES TO THE PLAN.
  D. "LEAD DISTRICT" MEANS THE INDEPENDENT SCHOOL DISTRICT IN EACH BOARD
OF COOPERATIVE EDUCATIONAL SERVICES  DISTRICT  WITH  THE  HIGHEST  PUPIL
ENROLLMENT  AS  REPORTED  TO  THE STATE EDUCATION DEPARTMENT FOR THE TWO
THOUSAND THIRTEEN--TWO THOUSAND FOURTEEN SCHOOL YEAR THAT HAS ELECTED TO
PARTICIPATE IN THE PREPARATION OF AN EFFICIENCY PLAN.
  E. "SHARED SERVICES ACTIONS" MEANS FUNCTIONAL CONSOLIDATIONS BY  WHICH
ONE  ELIGIBLE  SCHOOL DISTRICT COMPLETELY PROVIDES A SERVICE OR FUNCTION
FOR ANOTHER ELIGIBLE SCHOOL DISTRICT, WHICH NO LONGER  ENGAGES  IN  THAT
FUNCTION  OR  SERVICE;  SHARED OR COOPERATIVE SERVICES BETWEEN AND AMONG
ELIGIBLE SCHOOL DISTRICTS; AND REGIONALIZED DELIVERY OF SERVICES BETWEEN
AND AMONG ELIGIBLE SCHOOL DISTRICTS. THESE SHARED SERVICES  ACTIONS  MAY
BE  FOR SERVICES OR FUNCTIONS INCLUDING BUT NOT LIMITED TO: PROCUREMENT,
REAL ESTATE AND FACILITY  MANAGEMENT,  FLEET  MANAGEMENT,  BUSINESS  AND
FINANCIAL  SERVICES,  ADMINISTRATIVE  SERVICES,  PAYROLL ADMINISTRATION,
TIME AND ATTENDANCE, BENEFITS  ADMINISTRATION  AND  OTHER  TRANSACTIONAL

S. 6359--A                         339                        A. 8559--A

HUMAN  RESOURCES  FUNCTIONS,  CONTRACT  MANAGEMENT,  GRANTS  MANAGEMENT,
TRANSPORTATION SERVICES, FACILITIES AND FUNCTIONS, HUMAN SERVICES FACIL-
ITIES AND FUNCTIONS,  CUSTOMER  SERVICE  FACILITIES  AND  FUNCTIONS  AND
INFORMATION  TECHNOLOGY  INFRASTRUCTURE,  PROCESSES,  SERVICES AND FUNC-
TIONS.
  2. CERTIFICATION OF COMPLIANCE  WITH  TAX  LEVY  LIMIT.  A.  UPON  THE
ADOPTION  OF THE BUDGET OF AN ELIGIBLE SCHOOL DISTRICT, THE CHIEF EXECU-
TIVE OFFICER OF SUCH SCHOOL DISTRICT SHALL CERTIFY TO  THE  STATE  COMP-
TROLLER,  THE  COMMISSIONER OF TAXATION AND FINANCE AND THE COMMISSIONER
THAT THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT PRESCRIBED
BY SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART. SUCH  CERTIFICATION
SHALL  BE  MADE IN A FORM AND MANNER PRESCRIBED BY THE STATE COMPTROLLER
IN CONSULTATION WITH THE COMMISSIONER OF TAXATION AND  FINANCE  AND  THE
COMMISSIONER.
  B. IN ORDER FOR SUCH CERTIFICATION TO GIVE RISE TO A REAL PROPERTY TAX
FREEZE  CREDIT  UNDER SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE
TAX LAW, SUCH CERTIFICATION SHALL BE MADE NO LATER THAN THE TWENTY-FIRST
DAY OF THE FISCAL YEAR TO WHICH IT APPLIES.
  C. IF SUCH A CERTIFICATION HAS BEEN MADE AND THE ACTUAL  TAX  LEVY  OF
THE  SCHOOL  DISTRICT  EXCEEDS THE APPLICABLE TAX LEVY LIMIT, THE EXCESS
AMOUNT SHALL BE PLACED IN RESERVE AND USED IN THE MANNER  PRESCRIBED  BY
SUBDIVISION  FIVE  OF  SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART,
EVEN IF A TAX LEVY IN EXCESS OF THE TAX LEVY LIMIT HAD BEEN DULY AUTHOR-
IZED FOR THE APPLICABLE FISCAL YEAR BY THE SCHOOL DISTRICT VOTERS.
  D. NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, EVERY  SCHOOL
DISTRICT THAT IS SUBJECT TO THE PROVISIONS OF SECTION TWO THOUSAND TWEN-
TY-THREE-A  OF  THIS  PART SHALL REPORT BOTH ITS PROPOSED BUDGET AND ITS
ADOPTED BUDGET TO THE OFFICE OF THE STATE COMPTROLLER  AND  THE  COMMIS-
SIONER  AT  THE TIME AND IN THE MANNER AS THEY MAY PRESCRIBE, WHETHER OR
NOT SUCH BUDGET HAS BEEN OR WILL BE CERTIFIED AS PROVIDED BY THIS SUBDI-
VISION.
  3. SCHOOL DISTRICT EFFICIENCY PLANS. A.  THE  SUPERINTENDENT  OF  EACH
LEAD  DISTRICT SHALL SUBMIT TO THE SECRETARY OF STATE BY JUNE FIRST, TWO
THOUSAND FIFTEEN, AN EFFICIENCY PLAN  THAT  IF  FULLY  IMPLEMENTED  WILL
RESULT IN SAVINGS OVER THE AGGREGATE TWO THOUSAND FOURTEEN--TWO THOUSAND
FIFTEEN  SCHOOL  YEAR  TAX LEVIES FOR ALL ELIGIBLE SCHOOL DISTRICTS THAT
ARE SIGNATORIES TO SUCH PLAN OF (1) AT LEAST  ONE  PERCENT  IN  THE  TWO
THOUSAND  SIXTEEN--TWO  THOUSAND SEVENTEEN SCHOOL YEAR; (2) AT LEAST TWO
PERCENT IN THE TWO  THOUSAND  SEVENTEEN--TWO  THOUSAND  EIGHTEEN  SCHOOL
YEAR;  AND  (3) AT LEAST THREE PERCENT IN THE TWO THOUSAND EIGHTEEN--TWO
THOUSAND NINETEEN SCHOOL YEAR.
  (I) THE SUPERINTENDENT OF EACH ELIGIBLE  SCHOOL  DISTRICT  THAT  IS  A
SIGNATORY  TO  AN  EFFICIENCY PLAN SHALL SUBMIT TO THE SUPERINTENDENT OF
THE LEAD DISTRICT BY MAY FIFTEENTH,  TWO  THOUSAND  FIFTEEN,  A  WRITTEN
CERTIFICATION  THAT THE ELIGIBLE SCHOOL DISTRICT AGREES TO UNDERTAKE ITS
BEST EFFORTS TO FULLY IMPLEMENT BY THE END OF THE TWO THOUSAND  SIXTEEN-
-TWO  THOUSAND  SEVENTEEN  SCHOOL  YEAR THE CONSOLIDATION ACTIONS AND/OR
SHARED SERVICES ACTIONS SPECIFIED FOR THE ELIGIBLE  SCHOOL  DISTRICT  IN
SUCH PLAN.
  (II) THE CHIEF FINANCIAL OFFICER OF A SCHOOL DISTRICT THAT IS A SIGNA-
TORY  TO  AN  EFFICIENCY  PLAN SHALL SUBMIT TO THE SUPERINTENDENT OF THE
LEAD DISTRICT BY MAY FIFTEENTH, TWO THOUSAND FIFTEEN, A WRITTEN  CERTIF-
ICATION  THAT IN HIS OR HER PROFESSIONAL OPINION, FULL IMPLEMENTATION BY
THE END OF THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL  YEAR
OF THE CONSOLIDATION AND/OR SHARED SERVICES ACTIONS THAT ARE TO BE TAKEN

S. 6359--A                         340                        A. 8559--A

BY  SUCH SCHOOL DISTRICT ITSELF AS SPECIFIED IN SUCH PLAN WILL RESULT IN
THE SAVINGS SET FORTH IN SUCH PLAN ATTRIBUTABLE TO SUCH SCHOOL DISTRICT.
  (III)  THE  CHIEF  FINANCIAL  OFFICER OF EACH ELIGIBLE SCHOOL DISTRICT
THAT IS A SIGNATORY TO AN EFFICIENCY  PLAN  SHALL  SUBMIT  TO  THE  LEAD
DISTRICT BY MAY FIFTEENTH, TWO THOUSAND FIFTEEN, A WRITTEN CERTIFICATION
THAT  IN  HIS  OR  HER  PROFESSIONAL OPINION, FULL IMPLEMENTATION OF THE
CONSOLIDATION AND/OR SHARED SERVICES ACTIONS AS SPECIFIED FOR ALL OF THE
ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN WILL  RESULT
IN  SAVINGS  OVER  THE  AGGREGATE  TWO  THOUSAND  FOURTEEN--TWO THOUSAND
FIFTEEN SCHOOL YEAR TAX LEVIES FOR ALL ELIGIBLE  SCHOOL  DISTRICTS  THAT
ARE  SIGNATORIES  TO  SUCH  PLAN  OF (1) AT LEAST ONE PERCENT IN THE TWO
THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR; (2) AT  LEAST  TWO
PERCENT  IN  THE  TWO  THOUSAND  SEVENTEEN--TWO THOUSAND EIGHTEEN SCHOOL
YEAR; AND (3) AT LEAST THREE PERCENT IN THE TWO  THOUSAND  EIGHTEEN--TWO
THOUSAND NINETEEN SCHOOL YEAR.
  B.  THE CHIEF FINANCIAL OFFICER OF EACH LEAD DISTRICT SHALL SUBMIT THE
FOLLOWING DOCUMENTS TO THE SECRETARY OF STATE ON OR BEFORE  JUNE  FIRST,
TWO  THOUSAND  FIFTEEN:    (I)  THE  EFFICIENCY PLAN; (II) A LIST OF ALL
ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN;  (III)  ALL
OF  THE  CERTIFICATIONS REQUIRED BY PARAGRAPH A OF THIS SUBDIVISION; AND
(IV) AN ANALYSIS OF THE AGGREGATE AMOUNT OF SAVINGS SET  FORTH  IN  SUCH
PLAN  ATTRIBUTABLE TO ALL ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES
TO SUCH PLAN THAT WILL BE ACHIEVED IF THE SHARED SERVICES ACTIONS AND/OR
CONSOLIDATION ACTIONS IDENTIFIED IN SUCH PLAN ARE FULLY  IMPLEMENTED  BY
THE END OF THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR.
THE  SECRETARY OF STATE SHALL REVIEW SUCH DOCUMENTS TO DETERMINE WHETHER
THE REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT TO  EACH
ELIGIBLE  SCHOOL DISTRICT THAT IS A SIGNATORY TO THE EFFICIENCY PLAN AND
SHALL NOTIFY THE COMMISSIONER OF TAXATION AND FINANCE OF  SUCH  DETERMI-
NATIONS NO LATER THAN JULY THIRTY-FIRST, TWO THOUSAND FIFTEEN.
  S  3. The general municipal law is amended by adding a new section 3-d
to read as follows:
  S 3-D. CERTIFICATION OF COMPLIANCE WITH PROPERTY TAX  FREEZE  REQUIRE-
MENTS.  A  MUNICIPAL CORPORATION OR AN INDEPENDENT SPECIAL DISTRICT THAT
IS SUBJECT TO THE PROVISIONS OF SECTION THREE-C  OF  THIS  ARTICLE  MUST
COMPLY WITH THE REQUIREMENTS OF SUBDIVISION TWO OF THIS SECTION IN ORDER
TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT
AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW
FOR  A  FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN. A MUNICIPAL CORPO-
RATION OR AN  INDEPENDENT  SPECIAL  DISTRICT  THAT  IS  SUBJECT  TO  THE
PROVISIONS  OF  SECTION  THREE-C  OF  THIS  ARTICLE MUST COMPLY WITH THE
REQUIREMENTS OF SUBDIVISIONS TWO AND THREE OF THIS SECTION IN  ORDER  TO
RENDER  ITS  TAXPAYERS  ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT
AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW
FOR A FISCAL YEAR STARTING IN TWO THOUSAND  SIXTEEN.  PROVIDED  HOWEVER,
THAT  A  CITY  WITH  A  DEPENDENT  SCHOOL  DISTRICT MUST COMPLY WITH THE
REQUIREMENTS OF SUBDIVISION TWO OF THIS SECTION IN ORDER TO  RENDER  ITS
TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT AUTHORIZED BY
SUBSECTION  (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A FISCAL
YEAR STARTING IN TWO THOUSAND FOURTEEN AND COMPLY WITH THE  REQUIREMENTS
OF  SUBDIVISION TWO OF THIS SECTION, AND BOTH THE CITY AND ITS DEPENDENT
SCHOOL DISTRICT MUST COMPLY WITH THE REQUIREMENTS OF  SUBDIVISION  THREE
OF  THIS SECTION, IN ORDER TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL
PROPERTY TAX FREEZE CREDIT AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX
HUNDRED SIX OF THE TAX LAW FOR A FISCAL YEAR STARTING  IN  TWO  THOUSAND
FIFTEEN OR TWO THOUSAND SIXTEEN.

S. 6359--A                         341                        A. 8559--A

  1. DEFINITIONS.  AS USED IN THIS SECTION:
  (A)  "CONSOLIDATION  ACTIONS" MEANS: CONSOLIDATIONS OR DISSOLUTIONS OF
LOCAL GOVERNMENT UNITS IN ACCORDANCE WITH ARTICLE  SEVENTEEN-A  OF  THIS
ARTICLE  OR  REORGANIZATIONS,  CONSOLIDATIONS,  OR DISSOLUTIONS OF LOCAL
GOVERNMENT UNITS IN WHICH ONE OR MORE LOCAL GOVERNMENT UNITS ARE  TERMI-
NATED  AND  ANOTHER  LOCAL GOVERNMENT UNIT ASSUMES JURISDICTION OVER THE
TERMINATED LOCAL GOVERNMENT  UNIT    OR  UNITS  PURSUANT  TO  ANY  OTHER
PROVISION OF LAW.
  (B)  "DEPENDENT  SCHOOL  DISTRICT"  MEANS  A  SCHOOL  DISTRICT THAT IS
SUBJECT TO ARTICLE FIFTY-TWO OF THE EDUCATION LAW AND THAT HAS  A  POPU-
LATION OF LESS THAN ONE MILLION.
  (C)  "EFFICIENCY  PLAN"  MEANS  A PLAN THAT IDENTIFIES SHARED SERVICES
ACTIONS AND/OR CONSOLIDATION ACTIONS TO  BE  FULLY  IMPLEMENTED  BY  ALL
LOCAL GOVERNMENT UNITS IN A COUNTY THAT ARE SIGNATORIES TO THE PLAN.
  (D) "INDEPENDENT SPECIAL DISTRICT" MEANS A SPECIAL DISTRICT AS DEFINED
BY  SECTION ONE HUNDRED TWO OF THE REAL PROPERTY TAX LAW THAT EITHER (I)
HAS A SEPARATE INDEPENDENT ELECTED BOARD, AND EITHER HAS  THE  AUTHORITY
TO  LEVY  A TAX, OR CAN REQUIRE A MUNICIPAL CORPORATION TO LEVY A TAX ON
ITS BEHALF, OR (II) HAS A SEPARATE INDEPENDENT BOARD  APPOINTED  BY  THE
GOVERNING  BODY  OF  ANOTHER  MUNICIPAL  CORPORATION  AND EITHER HAS THE
AUTHORITY TO LEVY A TAX OR CAN REQUIRE A MUNICIPAL CORPORATION TO LEVY A
TAX ON ITS BEHALF.
  (E) "LEAD LOCAL GOVERNMENT UNIT" MEANS THE COUNTY, OR  IF  THE  COUNTY
HAS ELECTED NOT TO PARTICIPATE IN THE PREPARATION OF AN EFFICIENCY PLAN,
THE CITY, TOWN, OR VILLAGE WITHIN THE COUNTY WITH THE LARGEST POPULATION
AS  OF  THE  TWO THOUSAND TEN FEDERAL CENSUS THAT HAS ELECTED TO PARTIC-
IPATE IN THE PREPARATION OF AN EFFICIENCY PLAN.
  (F) "LOCAL GOVERNMENT UNIT" MEANS A MUNICIPAL CORPORATION OR AN  INDE-
PENDENT  SPECIAL  DISTRICT  THAT IS SUBJECT TO THE PROVISIONS OF SECTION
THREE-C OF THIS ARTICLE.
  (G) "SHARED SERVICES ACTIONS" MEANS FUNCTIONAL CONSOLIDATIONS BY WHICH
ONE LOCAL GOVERNMENT UNIT COMPLETELY PROVIDES A SERVICE OR FUNCTION  FOR
ANOTHER  LOCAL GOVERNMENT UNIT, WHICH NO LONGER ENGAGES IN THAT FUNCTION
OR SERVICE; SHARED OR  COOPERATIVE  SERVICES  BETWEEN  AND  AMONG  LOCAL
GOVERNMENT  UNITS;  AND  REGIONALIZED  DELIVERY  OF SERVICES BETWEEN AND
AMONG LOCAL GOVERNMENT UNITS.  THESE SHARED SERVICES ACTIONS MAY BE  FOR
SERVICES  OR  FUNCTIONS INCLUDING BUT NOT LIMITED TO:  PROCUREMENT, REAL
ESTATE AND FACILITY MANAGEMENT, FLEET MANAGEMENT, BUSINESS AND FINANCIAL
SERVICES, ADMINISTRATIVE  SERVICES,  PAYROLL  ADMINISTRATION,  TIME  AND
ATTENDANCE,   BENEFITS  ADMINISTRATION  AND  OTHER  TRANSACTIONAL  HUMAN
RESOURCES FUNCTIONS, CONTRACT MANAGEMENT, GRANTS MANAGEMENT, TRANSPORTA-
TION SERVICES, FACILITIES AND FUNCTIONS, HUMAN SERVICES  FACILITIES  AND
FUNCTIONS,  CUSTOMER  SERVICE  FACILITIES  AND FUNCTIONS AND INFORMATION
TECHNOLOGY INFRASTRUCTURE, PROCESSES, SERVICES AND FUNCTIONS.
  2. CERTIFICATION OF COMPLIANCE WITH  TAX  LEVY  LIMIT.  (A)  UPON  THE
ADOPTION  OF  THE BUDGET OF A LOCAL GOVERNMENT UNIT, THE CHIEF EXECUTIVE
OFFICER OR BUDGET OFFICER OF SUCH LOCAL GOVERNMENT UNIT SHALL CERTIFY TO
THE STATE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND FINANCE  THAT
THE  BUDGET  SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT PRESCRIBED IN
SECTION THREE-C OF THIS ARTICLE AND, IF THE GOVERNING BODY OF THE  LOCAL
GOVERNMENT  UNIT  DID ENACT A LOCAL LAW OR APPROVE A RESOLUTION TO OVER-
RIDE THE TAX LEVY LIMIT, THAT SUCH LOCAL LAW OR  RESOLUTION  WAS  SUBSE-
QUENTLY  REPEALED. SUCH CERTIFICATION SHALL BE MADE IN A FORM AND MANNER
PRESCRIBED BY THE STATE COMPTROLLER IN CONSULTATION WITH THE COMMISSION-
ER OF TAXATION AND FINANCE.

S. 6359--A                         342                        A. 8559--A

  (B) IN ORDER FOR SUCH CERTIFICATION TO GIVE RISE TO  A  REAL  PROPERTY
TAX  FREEZE  CREDIT UNDER SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF
THE TAX LAW, SUCH CERTIFICATION SHALL BE MADE NO LATER THAN THE  TWENTY-
FIRST DAY OF THE FISCAL YEAR TO WHICH IT APPLIES.
  (C)  NOTWITHSTANDING  ANY OTHER LAW TO THE CONTRARY, IF SUCH A CERTIF-
ICATION HAS BEEN MADE AND THE ACTUAL TAX LEVY OF  THE  LOCAL  GOVERNMENT
UNIT  EXCEEDS  THE APPLICABLE TAX LEVY LIMIT, THE EXCESS AMOUNT SHALL BE
PLACED IN RESERVE AND USED IN THE MANNER PRESCRIBED BY  SUBDIVISION  SIX
OF  SECTION THREE-C OF THIS ARTICLE, EVEN IF A TAX LEVY IN EXCESS OF THE
TAX LEVY LIMIT HAD BEEN AUTHORIZED FOR THE APPLICABLE FISCAL YEAR  BY  A
DULY ADOPTED LOCAL LAW OR RESOLUTION.
  (D)  NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, EVERY LOCAL
GOVERNMENT UNIT SHALL REPORT BOTH ITS PROPOSED BUDGET  AND  ITS  ADOPTED
BUDGET  TO  THE  OFFICE  OF THE STATE COMPTROLLER AT THE TIME AND IN THE
MANNER AS HE OR SHE MAY PRESCRIBE, WHETHER OR NOT SUCH BUDGET  HAS  BEEN
OR WILL BE CERTIFIED AS PROVIDED BY THIS SUBDIVISION.
  3.  LOCAL GOVERNMENT EFFICIENCY PLANS. (A) THE CHIEF EXECUTIVE OFFICER
OR BUDGET OFFICER OF EACH LEAD LOCAL GOVERNMENT UNIT SHALL SUBMIT TO THE
SECRETARY OF STATE BY JUNE FIRST, TWO THOUSAND  FIFTEEN,  AN  EFFICIENCY
PLAN THAT IF FULLY IMPLEMENTED WILL RESULT IN SAVINGS OVER THE AGGREGATE
TAX  LEVIES  FOR FISCAL YEARS BEGINNING IN TWO THOUSAND FOURTEEN FOR ALL
LOCAL GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT ARE  SIGNATO-
RIES  TO SUCH PLAN OF (1) AT LEAST ONE PERCENT IN FISCAL YEARS BEGINNING
IN TWO THOUSAND SEVENTEEN; (2) AT LEAST  TWO  PERCENT  IN  FISCAL  YEARS
BEGINNING  IN  TWO  THOUSAND EIGHTEEN; AND (3) AT LEAST THREE PERCENT IN
FISCAL YEARS BEGINNING IN TWO THOUSAND NINETEEN.
  (I) THE CHIEF EXECUTIVE  OFFICER  OR  BUDGET  OFFICER  OF  EACH  LOCAL
GOVERNMENT  UNIT AND DEPENDENT SCHOOL DISTRICT THAT IS A SIGNATORY TO AN
EFFICIENCY PLAN SHALL SUBMIT TO THE CHIEF EXECUTIVE  OFFICER  OR  BUDGET
OFFICER OF THE LEAD LOCAL GOVERNMENT UNIT BY MAY FIFTEENTH, TWO THOUSAND
FIFTEEN,  A  WRITTEN  CERTIFICATION  THAT  THE  LOCAL GOVERNMENT UNIT OR
DEPENDENT SCHOOL DISTRICT AGREES TO UNDERTAKE ITS BEST EFFORTS TO  FULLY
IMPLEMENT  BY THE END OF THE LOCAL FISCAL YEAR BEGINNING IN TWO THOUSAND
SEVENTEEN THE CONSOLIDATION ACTIONS AND/OR SHARED SERVICES ACTIONS SPEC-
IFIED FOR THE LOCAL GOVERNMENT UNIT OR DEPENDENT SCHOOL DISTRICT IN SUCH
PLAN.
  (II) THE CHIEF FINANCIAL OFFICER OF A LOCAL GOVERNMENT  UNIT  AND  THE
CHIEF  FISCAL OFFICER OF THE DEPENDENT SCHOOL DISTRICT, THAT IS A SIGNA-
TORY TO AN EFFICIENCY PLAN SHALL SUBMIT TO THE CHIEF  EXECUTIVE  OFFICER
OF  THE  LEAD  LOCAL  GOVERNMENT  UNIT  BY  MAY  FIFTEENTH, TWO THOUSAND
FIFTEEN, A WRITTEN CERTIFICATION THAT IN HIS OR HER  PROFESSIONAL  OPIN-
ION,  FULL  IMPLEMENTATION BY THE END OF THE LOCAL FISCAL YEAR BEGINNING
IN TWO THOUSAND SEVENTEEN, OF THE CONSOLIDATION AND/OR  SHARED  SERVICES
ACTIONS  THAT  ARE  TO  BE TAKEN BY SUCH LOCAL GOVERNMENT UNIT ITSELF AS
SPECIFIED IN SUCH PLAN WILL RESULT IN THE SAVINGS SET FORTH IN THE EFFI-
CIENCY PLAN ATTRIBUTABLE TO SUCH  LOCAL  GOVERNMENT  UNIT  OR  DEPENDENT
SCHOOL DISTRICT.
  (III)  THE  CHIEF  FINANCIAL OFFICER OF EACH LOCAL GOVERNMENT UNIT AND
DEPENDENT SCHOOL DISTRICT THAT IS A  SIGNATORY  TO  AN  EFFICIENCY  PLAN
SHALL  SUBMIT  TO  THE  LEAD LOCAL GOVERNMENT UNIT BY MAY FIFTEENTH, TWO
THOUSAND FIFTEEN, A WRITTEN CERTIFICATION THAT IN  HIS  OR  HER  PROFES-
SIONAL  OPINION,  FULL IMPLEMENTATION OF THE CONSOLIDATION AND/OR SHARED
SERVICES ACTIONS AS SPECIFIED FOR ALL OF THE LOCAL GOVERNMENT UNITS  AND
DEPENDENT SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN WILL RESULT
IN  SAVINGS  OVER THE AGGREGATE TAX LEVIES FOR FISCAL YEARS BEGINNING IN
TWO THOUSAND FOURTEEN FOR ALL LOCAL GOVERNMENT UNITS THAT  ARE  SIGNATO-

S. 6359--A                         343                        A. 8559--A

RIES  TO SUCH PLAN OF (1) AT LEAST ONE PERCENT IN FISCAL YEARS BEGINNING
IN TWO THOUSAND SEVENTEEN; (2) AT LEAST  TWO  PERCENT  IN  FISCAL  YEARS
BEGINNING  IN  TWO  THOUSAND EIGHTEEN; AND (3) AT LEAST THREE PERCENT IN
FISCAL YEARS BEGINNING IN TWO THOUSAND NINETEEN.
  (B)  THE  CHIEF  FINANCIAL  OFFICER OF EACH LEAD LOCAL GOVERNMENT UNIT
SHALL SUBMIT THE FOLLOWING DOCUMENTS TO THE SECRETARY  OF  STATE  ON  OR
BEFORE  JUNE FIRST, TWO THOUSAND FIFTEEN:  (I) THE EFFICIENCY PLAN; (II)
A LIST OF ALL LOCAL GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT
ARE SIGNATORIES TO SUCH PLAN; (III) ALL OF THE  CERTIFICATIONS  REQUIRED
BY PARAGRAPH (A) OF THIS SUBDIVISION; AND (IV) AN ANALYSIS OF THE AGGRE-
GATE  AMOUNT OF SAVINGS SET FORTH IN SUCH PLAN ATTRIBUTABLE TO ALL LOCAL
GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT ARE SIGNATORIES  TO
SUCH  PLAN  THAT  WILL BE ACHIEVED IF THE SHARED SERVICES ACTIONS AND/OR
CONSOLIDATION ACTIONS IDENTIFIED IN SUCH PLAN ARE FULLY  IMPLEMENTED  BY
THE  END  OF  THE LOCAL FISCAL YEAR BEGINNING IN TWO THOUSAND SEVENTEEN.
THE SECRETARY OF STATE SHALL REVIEW SUCH DOCUMENTS TO DETERMINE  WHETHER
THE  REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT TO EACH
LOCAL GOVERNMENT UNIT AND DEPENDENT SCHOOL DISTRICT THAT IS A  SIGNATORY
TO THE EFFICIENCY PLAN AND SHALL NOTIFY THE COMMISSIONER OF TAXATION AND
FINANCE  OF  SUCH  DETERMINATIONS  NO  LATER THAN JULY THIRTY-FIRST, TWO
THOUSAND FIFTEEN.
  S 4. Section 1590 of the real property tax law is amended by adding  a
new subdivision 3 to read as follows:
  3.  EACH  MUNICIPAL  CORPORATION  SHALL SUBMIT TO THE COMMISSIONER THE
DATA FILES USED TO PREPARE ITS TAX ROLLS AND TAX BILLS NO LATER THAN TEN
DAYS AFTER THE ANNEXATION OF THE WARRANT FOR THE COLLECTION OF TAXES FOR
THE APPLICABLE FISCAL YEAR, OR WHERE NO  SUCH  WARRANT  IS  ANNEXED,  NO
LATER  THAN  TEN DAYS AFTER THE LAST DATE PRESCRIBED BY LAW FOR THE LEVY
OF TAXES OF THE APPLICABLE FISCAL YEAR, PROVIDED THAT IF ITS  TAX  ROLLS
OR  TAX BILLS, OR BOTH, ARE PREPARED BY A DIFFERENT GOVERNMENTAL ENTITY,
THAT ENTITY SHALL BE JOINTLY RESPONSIBLE FOR SUBMITTING  THE  APPLICABLE
DATA FILES TO THE COMMISSIONER.
  S  5.  Notwithstanding  any other law to the contrary, the director of
the budget may direct the state comptroller to withhold  any  state  aid
payments  due to a school district that failed to fully implement by the
end of the 2016--2017 school year or local government unit  that  failed
to  fully  implement  by  the  end of the local fiscal year beginning in
2017, the consolidation actions and/or shared services actions specified
for such school district or local government unit in an efficiency  plan
prepared  pursuant to section 2023-b of the education law or section 3-d
of the general municipal law.
  S 6. This  act  shall  take  effect  immediately,  provided  that  the
provisions of subdivision 3 of section 1590 of the real property tax law
as  added  by  section four of this act shall apply to tax rolls and tax
bills of school districts and cities with a  population  of  125,000  or
more  for  fiscal  years  starting  on or after July 1, 2013, and to tax
rolls and tax bills for other municipal corporations  for  fiscal  years
starting  on  or  after  January 1, 2014, except that in the case of tax
rolls and tax bills for fiscal years that started prior to the effective
date of this act, the data files used to prepare tax rolls and tax bills
shall be submitted to the commissioner of taxation and finance no  later
than 60 days after the effective date of this act.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion,  section  or  part  of  this act shall be adjudged by any court of
competent jurisdiction to be invalid, such judgment  shall  not  affect,
impair,  or  invalidate  the remainder thereof, but shall be confined in

S. 6359--A                         344                        A. 8559--A

its operation to the clause, sentence, paragraph,  subdivision,  section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the  legislature  that  this  act  would  have been enacted even if such
invalid provisions had not been included herein.
  S 3. This act shall take effect immediately  provided,  however,  that
the applicable effective date of Parts A through FF of this act shall be
as specifically set forth in the last section of such Parts.

2013-S6359B - Details

See Assembly Version of this Bill:: A8559
Law Section:: Budget Bills
Laws Affected:: Amd Various Laws, generally

2013-S6359B - Summary

2013-S6359B - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

    S. 6359--B                                            A. 8559--B

                      S E N A T E - A S S E M B L Y

                            January 21, 2014
                               ___________

IN  SENATE -- A BUDGET BILL, submitted by the Governor pursuant to arti-
  cle seven of the Constitution -- read twice and ordered  printed,  and
  when  printed to be committed to the Committee on Finance -- committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

IN  ASSEMBLY  --  A  BUDGET  BILL, submitted by the Governor pursuant to
  article seven of the Constitution -- read once  and  referred  to  the
  Committee  on  Ways  and  Means -- committee discharged, bill amended,
  ordered reprinted as amended and  recommitted  to  said  committee  --
  again  reported from said committee with amendments, ordered reprinted
  as amended and recommitted to said committee

AN ACT to amend the tax law, the general municipal law, the urban devel-
  opment corporation act, the  business  corporation  law,  the  general
  associations law, and the administrative code of the city of New York,
  in  relation  to  reforming  taxation of business corporations; and to
  repeal various provisions of the tax law relating thereto (Part A); to
  amend the real property tax law, in relation to the STAR  registration
  program  (Part  B); to amend chapter 540 of the laws of 1992, amending
  the real property tax law relating to oil and gas charges, in relation
  to the effective date of such chapter (Part C); to amend  the  racing,
  pari-mutuel  wagering  and  breeding  law,  in  relation to increasing
  racing regulatory fees (Part D); to amend the tax law, in relation  to
  modifying the signature requirement on e-filed returns prepared by tax
  professionals  (Part  E);  to  amend  the  real  property  tax law, in
  relation to cost of living adjustments for Enhanced STAR (Part F);  to
  amend  part  I of chapter 58 of the laws of 2006, amending the tax law
  relating to  providing  an  enhanced  earned  income  tax  credit,  in
  relation  to  the effectiveness thereof (Part G); to amend the general
  obligations law and the tax law, in relation to authorizing electronic
  tax clearances for professional and business  licenses  (Part  H);  to
  amend the tax law and the administrative code of the city of New York,
  in  relation  to  taxing residents who are grantors of exempt resident
  trusts that qualify as  non-grantor  incomplete  gift  trusts  on  the
  income  from such trusts and taxing residents who are beneficiaries of
  all other exempt resident trusts or nonresident trusts on the distrib-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD12674-04-4

S. 6359--B                          2                         A. 8559--B

  utions of accumulated income that they receive from such trusts  (Part
  I);  to  amend  the tax law and the administrative code of the city of
  New York, in relation to eliminating the personal  income  tax  add-on
  minimum  tax;  and  to repeal certain provisions of such laws relating
  thereto (Part J); to amend the tax  law,  in  relation  to  adding  an
  enhanced real property tax circuit breaker; and to repeal paragraph 14
  of  subsection  (e) of section 606 of the tax law, relating to certain
  reports (Part K); to amend the tax law, in  relation  to  providing  a
  credit  for renters against the personal income tax (Part L); to amend
  the tax law, in relation to the prepayment element of the  family  tax
  relief credit (Part M); to amend the tax law, in relation to eliminat-
  ing the personal income tax filing requirement for residents having no
  liability  because  income  does  not  exceed  the  New  York standard
  deduction if they do not file a federal income tax return (Part N); to
  amend the tax law, in relation to extending the empire  state  commer-
  cial  production tax credit (Part O); to amend the public housing law,
  in relation to extending the credit against income tax for persons  or
  entities  investing in low-income housing (Part P); to amend the envi-
  ronmental conservation law, the tax law and the general municipal law,
  in relation to eligibility for participation in the brownfield cleanup
  program, and assignment of the brownfield redevelopment  tax  credits;
  to amend part H of chapter 1 of the laws of 2003, amending the tax law
  relating  to  brownfield  redevelopment tax credits, remediated brown-
  field credit for real property taxes for qualified sites and  environ-
  mental  remediation  insurance credits, in relation to tax credits for
  certain  sites;  to  amend  the  environmental  conservation  law,  in
  relation  to  hazardous  waste  generator fees and taxes; to amend the
  environmental conservation law, the public  authorities  law  and  the
  state  finance  law,  in  relation  to  the  environmental restoration
  program; and to repeal certain provisions of the environmental conser-
  vation law and the tax law relating thereto (Part Q); to amend the tax
  law, in relation to reforming the investment tax credit, reducing  the
  tax rate for upstate manufacturers and providing a tax credit for real
  property taxes to New York manufacturers; to amend the economic devel-
  opment law, in relation to the excelsior investment tax credit; and to
  repeal  certain  provisions  of  the tax law relating to the financial
  services investment tax credit (Part R); to amend the economic  devel-
  opment  law,  the  tax law, the transportation law, the administrative
  code of the city of New York and the New York state urban  development
  corporation  act,  in relation to repealing the franchise tax on farm-
  ers', fruit growers', and other like agricultural corporations  organ-
  ized  and  operated on a co-operative basis; and to repeal section 185
  of the tax law relating to franchise tax on farmers', fruit  growers',
  and  other  like agricultural corporations organized and operated on a
  co-operative basis; to repeal sections  187-j,  187-k,  187-l,  187-m,
  187-q, 187-r and 187-s of the tax law relating to certain tax credits;
  to repeal paragraph 1 of subdivision (h) of section 15, paragraph 1 of
  subdivision (g) of section 31, and certain other provisions of the tax
  law,  in  relation to making conforming changes (Part S); to amend the
  tax law, in relation to providing a credit for excise tax on  telecom-
  munication  services for businesses located in tax-free NY areas (Part
  T); to amend the tax law, in relation to reducing the number of  hours
  of  part-time  work needed by employees for employer qualification for
  the New York youth works tax credit; and to amend the  labor  law,  in
  relation  to  the  New  York youth works tax credit (Part U); to amend
  chapter 109 of the laws of 2006 amending the tax law  and  other  laws

S. 6359--B                          3                         A. 8559--B

  relating  to  providing  exemptions,  reimbursements  and credits from
  various taxes for certain alternative fuels, in relation to  extending
  the  alternative fuels tax exemptions for two years (Part V); to amend
  chapter  63  of  the laws of 2000, amending the tax law and other laws
  relating to modifying the distribution of funds from the motor vehicle
  fuel excise tax and the  vehicle  and  traffic  law,  in  relation  to
  simplifying the methodology for distribution of motor vehicle receipts
  (Part  W);  to  amend  the  tax law, in relation to the estate tax; to
  repeal section 2 of chapter 1013 of the laws of 1962, amending the tax
  law relating to imposing a tax on the transfer of estates of decedents
  dying on or after April first, nineteen hundred sixty-three,  relating
  to  an appendix of applicable internal revenue code provisions, and to
  repeal article 26-B of the tax law, relating to the  generation  skip-
  ping  transfer  tax  (Part X); to amend the tax law and chapter 912 of
  the laws of 1920 relating to the regulation of  boxing,  sparring  and
  wrestling  matches, in relation to making technical corrections there-
  to; to repeal article 19 of the tax law relating to boxing and wrestl-
  ing exhibitions tax; and to repeal section 1820 of the tax law  relat-
  ing  to establishing misdemeanors for certain violations of article 19
  of such law (Part Y); to amend the tax law, in relation to vendor fees
  paid to vendor tracks (Part  Z);  to  amend  the  racing,  pari-mutuel
  wagering  and  breeding  law,  in  relation  to licenses for simulcast
  facilities, sums relating to track  simulcast,  simulcast  of  out-of-
  state  thoroughbred  races,  simulcasting of races run by out-of-state
  harness tracks and distributions of wagers; to amend  chapter  281  of
  the  laws of 1994 amending the racing, pari-mutuel wagering and breed-
  ing law and other laws relating to simulcasting and chapter 346 of the
  laws of 1990 amending the racing, pari-mutuel  wagering  and  breeding
  law  and  other  laws  relating  to simulcasting and the imposition of
  certain taxes, in relation to extending  certain  provisions  thereof;
  and  to  amend  the  racing, pari-mutuel wagering and breeding law, in
  relation to extending certain provisions thereof (Part AA);  to  amend
  the tax law, in relation to capital awards to vendor tracks (Part BB);
  to amend the tax law, the banking law, the public authorities law, and
  the  administrative  code  of the city of New York, in relation to the
  stock transfer tax, and to repeal certain provisions of the  tax  law,
  the  state  finance law and the administrative code of the city of New
  York relating thereto (Part CC); to amend the tax law, in relation  to
  conforming  the due dates for the metropolitan commuter transportation
  mobility tax for taxpayers with income from self-employment  with  the
  due  dates  for  the personal income tax (Part DD); to amend the state
  finance law, the upstate New York gaming economic development  act  of
  2013  and  the  tax  law, in relation to moneys appropriated or trans-
  ferred from the commercial gaming revenue fund (Part EE); to amend the
  tax law, the education law, the general municipal law,  and  the  real
  property tax law, in relation to a real property tax freeze (Part FF);
  and  to amend the tax law, in relation to the temporary exemption from
  sales and use taxes for premises used for commercial office  space  in
  lower  Manhattan; and to amend part C of chapter 2 of the laws of 2005
  amending the tax law relating to exemptions from sales and use  taxes,
  in  relation  to  the  effectiveness thereof (Subpart A); to amend the
  real property tax law and the administrative code of the city  of  New
  York,  in  relation to extending a real property tax abatement program
  for certain commercial properties in cities having a population of one
  million or more and in relation to extending a special reduction under
  the commercial rent tax in the city of New York (Subpart B); to  amend

S. 6359--B                          4                         A. 8559--B

  the  real  property tax law and the administrative code of the city of
  New York, in relation to applications for tax  abatements  for  indus-
  trial  and commercial construction work on properties in a city of one
  million or more persons (Subpart C); to amend the general city law and
  the  administrative  code  of  the  city  of  New York, in relation to
  extending the relocation and employment  assistance  program  and  the
  Lower  Manhattan relocation and employment assistance program (Subpart
  D); to amend the general city law and the administrative code  of  the
  city  of  New  York,  in relation to extending the special rebates and
  discounts provided pursuant to the energy cost savings program and the
  Lower Manhattan energy program (Subpart E); to amend  the  administra-
  tive  code  of  the  city  of  New  York, in relation to the amount of
  special reduction allowed (Subpart F); and to amend the real  property
  tax law, in relation to  a  real  estate  tax  abatement  program  for
  certain  commercial, industrial and manufacturing properties in a city
  of one million or more persons (Subpart G) (Part GG)

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  This  act enacts into law major components of legislation
which are necessary to implement the state fiscal plan for the 2014-2015
state fiscal year. Each component is  wholly  contained  within  a  Part
identified as Parts A through GG. The effective date for each particular
provision contained within such Part is set forth in the last section of
such Part. Any provision in any section contained within a Part, includ-
ing the effective date of the Part, which makes a reference to a section
"of  this  act", when used in connection with that particular component,
shall be deemed to mean and refer to the corresponding  section  of  the
Part  in  which  it  is  found. Section three of this act sets forth the
general effective date of this act.

                                 PART A

  Section 1. Article 32 of the tax law is REPEALED.
  S 2. Section 180 of the tax law is REPEALED.
  S 3. Section 181 of the tax law is REPEALED.
  S 4. Section 208 of the tax law, as added by chapter 415 of  the  laws
of  1944,  subdivision  1 as amended by chapter 576 of the laws of 1994,
subdivision 1-A as amended by chapter 166 of the laws of 1991,  subdivi-
sion  1-B as added by section 45 of part A and paragraph (k) of subdivi-
sion 9 as added by section 46 of part A of chapter 389 of  the  laws  of
1997,  subdivision  3,  the opening paragraph, subparagraphs 6 and 11 of
paragraph (b), and the opening paragraph of paragraph (g) of subdivision
9 as amended and subdivision 8-B and subparagraph 3-a of  paragraph  (b)
of  subdivision  9 as added by chapter 817 of the laws of 1987, subdivi-
sion 4 as amended by section 1, subdivision 6 as amended  by  section  2
and  subparagraph  2  of  paragraph  (a)  of subdivision 9 as amended by
section 7 of part M of chapter 407 of the laws of 1999,  subdivisions  5
and  7,  paragraph  (a) of subdivision 8-B, subparagraph 10 of paragraph
(b) and paragraph (j) of subdivision 9  as  amended,  paragraph  (d)  of
subdivision  8-B and paragraph (c-1) of subdivision 9 as added and para-
graphs (e) and (f) of subdivision 8-B as relettered by  chapter  170  of
the laws of 1994, subdivisions 8 and 10 as amended by chapter 133 of the
laws  of  1945, subdivision 8-A as added and subparagraph 1 of paragraph

S. 6359--B                          5                         A. 8559--B

(a) of subdivision 9 as amended by chapter 778  of  the  laws  of  1972,
paragraph  (b)  of subdivision 8-A and paragraph (i) of subdivision 9 as
amended by chapter 779 of the laws of 1972, subdivision 9 as amended  by
chapter  713  of  the  laws  of  1961, paragraph (a) of subdivision 9 as
amended by chapter 203 of the laws of 1962, subparagraphs 5, 9 and 10 of
paragraph (a) and subparagraphs 8 and 9 of paragraph (b) of  subdivision
9  as  amended  by  chapter  61 of the laws of 1989 and paragraph (f) of
subdivision 9 as separately amended by sections 278 and 347  of  chapter
61 of the laws of 1989, clause (i) of subparagraph 5 of paragraph (a) of
subdivision  9  as amended by section 2 and subparagraph 20 of paragraph
(b) of subdivision 9 as added by section 3 of part C of  chapter  25  of
the  laws  of  2009, subparagraph 6 of paragraph (a) of subdivision 9 as
added by chapter 895 of the laws of 1975 and as  renumbered  by  chapter
613  of the laws of 1976, subparagraph 7 of paragraph (a) of subdivision
9 as added by chapter 33 of the laws of 1978, subparagraph  8  of  para-
graph  (a)  and  subparagraph  7  of  paragraph  (b) of subdivision 9 as
amended by chapter 639 of the laws of 1986, subparagraph 11 of paragraph
(a) of subdivision 9 as added by chapter 15 of the laws of 1983, subpar-
agraph 12 of paragraph  (a),  subparagraph  4-a  of  paragraph  (b)  and
subparagraph 2 of paragraph (h) of subdivision 9 as amended and subpara-
graph  13  of  paragraph (a) of subdivision 9 as added by chapter 760 of
the laws of 1992, subparagraph 14 of paragraph (a) of subdivision  9  as
added  by  section  101  and  paragraphs (l) and (m) of subdivision 9 as
added by section 102 of part A of  chapter  56  of  the  laws  of  1998,
subparagraph  15 of paragraph (a) of subdivision 9 as amended by section
1 of part ZZ of chapter 63 of the laws of 2003, subparagraph 16 of para-
graph (a) of subdivision 9 as added by section 1 of  part  K3,  subpara-
graph 16 of paragraph (b) of subdivision 9 as added by section 2 of part
K3,  subparagraph  17  of  paragraph  (b)  of  subdivision 9 as added by
section 2 of part O3, and paragraphs (o), (p) and (q) of  subdivision  9
as  added  by  section  3  of part O3 of chapter 62 of the laws of 2003,
subparagraph 18 of paragraph (a) of subdivision 9 as added by section  3
of  part C and paragraph (o) of subdivision 9 as amended by section 2 of
part E of chapter 59 of the laws of 2013, subparagraph  3  of  paragraph
(b)  of  subdivision  9  as  amended by chapter 895 of the laws of 1975,
subparagraph 4 of paragraph (b) and subparagraph 4 of paragraph  (f)  of
subdivision  9  as  amended by chapter 190 of the laws of 1990, subpara-
graph 15 of paragraph (b) of subdivision 9 as added by  chapter  309  of
the  laws  of 1996, subparagraph 18 of paragraph (b) of subdivision 9 as
added by section 21 of part H of chapter 1 of the laws of 2003, subpara-
graph 19 of paragraph (b) of subdivision 9 as added by section 1 of part
HH1 of chapter 57 of the laws of 2008, subparagraph  20-a  of  paragraph
(b)  of subdivision 9 as added by section 2-a of part T of this act, and
subparagraph 21 of paragraph (b) of subdivision 9 as  added  by  section
2-a  of part R of this act, subparagraph 22 of paragraph (b) of subdivi-
sion 9 as added by section 109-b of this act, paragraphs (c-2) and (c-3)
of subdivision 9 as added by section 10 of part Y of chapter 63  of  the
laws  of 2000, paragraph (g) of subdivision 9 as added by chapter 178 of
the laws of 1965, subparagraph 1 and clauses (B) and (C) of subparagraph
3 of paragraph (g) of subdivision 9 as amended by  chapter  613  of  the
laws  of 1976, clause (A) of subparagraph 1 of paragraph (g) of subdivi-
sion 9 as separately amended by chapters 675 and  836  of  the  laws  of
1977,  clause  (B)  of  subparagraph 1, clause (A) of subparagraph 2 and
clause (A) of subparagraph 3  of  paragraph  (g)  of  subdivision  9  as
amended  by  chapter  675  of  the laws of 1977, item 1 of clause (B) of
subparagraph 1 of paragraph (g) of subdivision 9 as amended  by  chapter

S. 6359--B                          6                         A. 8559--B

972  of  the laws of 1984, clause (B) of subparagraph 2 of paragraph (g)
of subdivision 9 as amended by chapter 365 of the laws of  1979,  clause
(C)  of  subparagraph  2 of paragraph (g) of subdivision 9 as amended by
chapter  1005  of  the  laws  of 1970, paragraph (h) of subdivision 9 as
amended by chapter 606 of the laws of 1984, paragraph (n) of subdivision
9 as added by section 1 of part O of chapter 85 of  the  laws  of  2002,
subdivision 12 as added by chapter 828 of the laws of 1977, subdivisions
13,  14, and 15 as added by section 1 of part R of this act, subdivision
19 as added by chapter 681 of the laws of 1997, is amended  to  read  as
follows:
  S 208. Definitions. As used in this article:
  1. The term "corporation" includes (a) an association within the mean-
ing  of  paragraph  three  of  subsection  (a)  of section seventy-seven
hundred one of the internal revenue code (including a limited  liability
company), (b) a joint-stock company or association, (c) a publicly trad-
ed  partnership  treated  as  a corporation for purposes of the internal
revenue code pursuant to section seventy-seven hundred four thereof  and
(d)  any business conducted by a trustee or trustees wherein interest or
ownership is evidenced  by  certificate  or  other  written  instrument.
"DISC"  and  "former DISC" mean any corporation which meets the require-
ments of subsection (a) of section nine hundred ninety-two of the inter-
nal revenue code[;].
  1-A. The term "New York S corporation"  means,  with  respect  to  any
taxable  year, a corporation subject to tax under this article for which
an election is in effect pursuant  to  subsection  (a)  of  section  six
hundred  sixty  of  this  chapter  for such year, any such year shall be
denominated a "New York S year", and such election shall be  denominated
a  "New  York S election". The term "New York C corporation" means, with
respect to any taxable year, a corporation subject  to  tax  under  this
article  which  is not a New York S corporation, and any such year shall
be denominated a "New York C year". The term  "termination  year"  means
any  taxable  year of a corporation during which the New York S election
terminates on a day other than the first day of such year.  The  portion
of  the  taxable  year ending before the first day for which such termi-
nation is effective shall be denominated the "S  short  year",  and  the
portion  of  such  year beginning on such first day shall be denominated
the "C short year". The term "New York S  termination  year"  means  any
termination  year  which  is  not also an S termination year for federal
purposes.
  1-B. The term "QSSS" means a corporation which is a qualified subchap-
ter S subsidiary as defined in subparagraph (B) of  paragraph  three  of
subsection  (b)  of  section  thirteen hundred sixty-one of the internal
revenue code. The term "exempt QSSS" means a QSSS exempt from tax  under
this  article  as  provided in paragraph (k) of subdivision nine of this
section, or a QSSS described in subclause (i) of clause (B) of  subpara-
graph  two of paragraph (k) of subdivision nine of this section, wherein
the parent corporation of the QSSS is subject to tax under this article,
and the assets, liabilities, income  and  deductions  of  the  QSSS  are
treated  as the assets, liabilities, income and deductions of the parent
corporation. Where a QSSS is an exempt QSSS, then for all purposes under
this article:
  (a) the assets, liabilities, income,  deductions,  property,  payroll,
receipts, capital, credits, and all other tax attributes and elements of
economic  activity of the QSSS shall be deemed to be those of the parent
corporation,

S. 6359--B                          7                         A. 8559--B

  (b) the stocks, bonds and other securities issued by, and any  indebt-
edness  from, the QSSS shall not be [subsidiary,] investment or business
capital of the parent corporation,
  (c)  transactions between the parent corporation and the QSSS, includ-
ing the payment of interest and  dividends,  shall  not  be  taken  into
account, and
  (d)  general  executive  officers  of  the  QSSS shall be deemed to be
general executive officers of the parent corporation.
  2. The term "taxpayer" means any corporation subject to tax under this
article[;].
  3. The term "subsidiary" means  a  corporation  of  which  over  fifty
percent  of  the number of shares of stock entitling the holders thereof
to vote for the election of  directors  or  trustees  is  owned  by  the
taxpayer[;].
  4.  The  term  ["subsidiary capital" means investments in the stock of
subsidiaries  and  any  indebtedness  from  subsidiaries,  exclusive  of
accounts receivable acquired in the ordinary course of trade or business
for  services  rendered or for sales of property held primarily for sale
to customers, whether or not evidenced by written instrument,  on  which
interest  is  not claimed and deducted by the subsidiary for purposes of
taxation under article nine-A, thirty-two or thirty-three of this  chap-
ter,  provided,  however,  that,  in the discretion of the commissioner,
there shall be deducted from subsidiary capital  any  liabilities  which
are  directly  or indirectly attributable to subsidiary capital] "STOCK"
MEANS A DIRECT INTEREST IN A CORPORATION THAT IS TREATED AS  EQUITY  FOR
FEDERAL INCOME TAX PURPOSES.
  5.  (A)  The  term  "investment capital" means investments in stocks[,
bonds and other securities, corporate and governmental,] THAT  ARE  HELD
BY  THE  TAXPAYER  FOR MORE THAN SIX CONSECUTIVE MONTHS BUT ARE not held
for sale to customers in the regular course of business,  [exclusive  of
subsidiary  capital] OR, IF THE TAXPAYER MAKES THE ELECTION PROVIDED FOR
IN SUBPARAGRAPH ONE OF PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION TWO
HUNDRED TEN-A OF THIS ARTICLE, ARE NOT QUALIFIED  FINANCIAL  INSTRUMENTS
AS  DESCRIBED  IN  SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS
ARTICLE. STOCK IN A CORPORATION THAT IS CONDUCTING  A  UNITARY  BUSINESS
WITH THE TAXPAYER, STOCK IN A CORPORATION THAT IS INCLUDED IN A COMBINED
REPORT  WITH  THE TAXPAYER PURSUANT TO THE COMMONLY OWNED GROUP ELECTION
IN SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-C OF  THIS  ARTICLE,  and
stock   issued  by  the  taxpayer[,  provided,  however,  that,  in  the
discretion of the commissioner, there] SHALL NOT  CONSTITUTE  INVESTMENT
CAPITAL.  FOR  PURPOSES  OF  THIS  SUBDIVISION,  IF THE TAXPAYER OWNS OR
CONTROLS, DIRECTLY OR INDIRECTLY, LESS THAN TWENTY PERCENT OF THE  STOCK
OF  A  CORPORATION  THAT  ENTITLES  THE  HOLDERS THEREOF TO VOTE FOR THE
ELECTION OF TRUSTEES  OR DIRECTORS, THAT CORPORATION WILL BE PRESUMED TO
BE CONDUCTING A BUSINESS THAT IS NOT UNITARY WITH THE  BUSINESS  OF  THE
TAXPAYER.
  (B)  THERE  shall  be deducted from investment capital any liabilities
which are directly or indirectly attributable  to  investment  capital[;
and  provided, further, that investment]. IF THE AMOUNT OF THOSE LIABIL-
ITIES EXCEEDS THE AMOUNT OF INVESTMENT CAPITAL, THE AMOUNT OF INVESTMENT
CAPITAL WILL BE ZERO.
  (C) INVESTMENT capital shall not  include  any  such  investments  the
income  from  which  is  excluded from entire net income pursuant to the
provisions of paragraph (c-1) of subdivision nine of this  section,  and
that  investment capital shall be computed without regard to liabilities
directly or indirectly attributable to such investments, but only if air

S. 6359--B                          8                         A. 8559--B

carriers organized in the United States and  operating  in  the  foreign
country  or  countries in which the taxpayer has its major base of oper-
ations and in which it is organized, resident or headquartered  (if  not
in  the same country as its major base of operations) are not subject to
any tax based on or measured by capital imposed by such foreign  country
or  countries  or  any  political  subdivision thereof, or if taxed, are
provided an exemption, equivalent to that provided for herein, from  any
tax  based  on or measured by capital imposed by such foreign country or
countries and from any such tax imposed  by  any  political  subdivision
thereof[;].
  (D) IF A TAXPAYER ACQUIRES STOCK DURING THE SECOND HALF OF ITS TAXABLE
YEAR AND OWNS THAT STOCK ON THE LAST DAY OF THE TAXABLE YEAR, IT WILL BE
PRESUMED THAT THE TAXPAYER HELD THAT STOCK FOR MORE THAN SIX CONSECUTIVE
MONTHS  DURING  THE  TAXABLE  YEAR. HOWEVER, IF THE TAXPAYER DOES NOT IN
FACT HOLD THAT STOCK FOR MORE THAN SIX CONSECUTIVE MONTHS, THE  TAXPAYER
MUST  INCREASE  ITS TOTAL BUSINESS CAPITAL IN THE IMMEDIATELY SUCCEEDING
TAXABLE YEAR BY THE AMOUNT  INCLUDED  IN  INVESTMENT  CAPITAL  FOR  THAT
STOCK,  NET  OF  ANY  LIABILITIES ATTRIBUTABLE TO THAT STOCK COMPUTED AS
PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (E) WHEN INCOME OR GAIN FROM  A  DEBT  OBLIGATION  OR  OTHER  SECURITY
CANNOT  BE  APPORTIONED  TO  THE  STATE  USING  THE  BUSINESS ALLOCATION
PERCENTAGE AS A RESULT OF UNITED STATES CONSTITUTIONAL  PRINCIPLES,  THE
DEBT  OBLIGATION  OR OTHER SECURITY WILL BE INCLUDED IN INVESTMENT CAPI-
TAL.
  6. (A) The term "investment income" means  income,  including  capital
gains  in  excess  of  capital  losses,  from investment capital, to the
extent included in computing entire  net  income,  less,  [(a)]  in  the
discretion  of  the  commissioner,  any INTEREST deductions allowable in
computing entire net income which are directly or  indirectly  attribut-
able  to  investment capital or investment income[, and (b) such portion
of any net operating loss deduction allowable in  computing  entire  net
income, as the investment income, before such deduction, bears to entire
net  income,  before such deduction,] provided, however, that in no case
shall investment income exceed entire net  income[;].  IF  THE  TAXPAYER
ATTRIBUTES  INTEREST  DEDUCTIONS  TO  INVESTMENT  INCOME  AND THE AMOUNT
SUBTRACTED  EXCEEDS  INVESTMENT  INCOME,  THE  EXCESS  OF  THE  INTEREST
DEDUCTIONS  OVER  INVESTMENT  INCOME  MUST  BE  ADDED BACK TO ENTIRE NET
INCOME.
  (B) IN LIEU OF SUBTRACTING FROM INVESTMENT INCOME THE AMOUNT OF  THOSE
INTEREST  DEDUCTIONS, THE TAXPAYER MAY ELECT TO REDUCE ITS TOTAL INVEST-
MENT INCOME BY FORTY PERCENT. IF THE TAXPAYER MAKES THIS  ELECTION,  THE
TAXPAYER MUST ALSO MAKE THE ELECTIONS PROVIDED FOR IN PARAGRAPHS (B) AND
(C) OF SUBDIVISION SIX-A OF THIS SECTION. A TAXPAYER WHICH DOES NOT MAKE
THIS ELECTION BECAUSE IT HAS NO INVESTMENT CAPITAL WILL NOT BE PRECLUDED
FROM MAKING THOSE OTHER ELECTIONS.
  (C)  INVESTMENT  INCOME  SHALL NOT INCLUDE ANY AMOUNT TREATED AS DIVI-
DENDS PURSUANT TO SECTION SEVENTY-EIGHT OF THE INTERNAL REVENUE CODE.
  6-A. (A) THE TERM "OTHER  EXEMPT  INCOME"  MEANS  THE  SUM  OF  EXEMPT
SUBPART F INCOME AND EXEMPT UNITARY CORPORATION DIVIDENDS.
  (B)  "EXEMPT SUBPART F INCOME" MEANS THE INCOME, AS DEFINED IN SECTION
952 OF THE INTERNAL REVENUE CODE, RECEIVED FROM A  CORPORATION  THAT  IS
CONDUCTING A UNITARY BUSINESS WITH THE TAXPAYER BUT IS NOT INCLUDED IN A
COMBINED  REPORT  WITH  THE  TAXPAYER,  LESS,  IN  THE DISCRETION OF THE
COMMISSIONER, ANY INTEREST DEDUCTIONS DIRECTLY OR  INDIRECTLY  ATTRIBUT-
ABLE  TO  THAT INCOME.  IN LIEU OF SUBTRACTING FROM ITS EXEMPT SUBPART F
INCOME THE AMOUNT OF THOSE INTEREST DEDUCTIONS, THE TAXPAYER  MAY  ELECT

S. 6359--B                          9                         A. 8559--B

TO  REDUCE  ITS  TOTAL  EXEMPT SUBPART F INCOME BY FORTY PERCENT. IF THE
TAXPAYER MAKES THIS ELECTION, THE TAXPAYER MUST ALSO MAKE THE  ELECTIONS
PROVIDED  FOR  IN  PARAGRAPH  (B) OF SUBDIVISION SIX OF THIS SECTION AND
PARAGRAPH  (C) OF THIS SUBDIVISION.  A TAXPAYER WHICH DOES NOT MAKE THIS
ELECTION BECAUSE IT HAS NO EXEMPT SUBPART F INCOME WILL NOT BE PRECLUDED
FROM MAKING THOSE OTHER ELECTIONS.
  (C) "EXEMPT UNITARY CORPORATION DIVIDENDS" MEANS THOSE DIVIDENDS  FROM
A  CORPORATION  THAT  IS CONDUCTING A UNITARY BUSINESS WITH THE TAXPAYER
BUT IS NOT INCLUDED IN A COMBINED REPORT WITH THE TAXPAYER, LESS, IN THE
DISCRETION OF THE COMMISSIONER,  ANY  INTEREST  DEDUCTIONS  DIRECTLY  OR
INDIRECTLY  ATTRIBUTABLE  TO  SUCH INCOME.   IN LIEU OF SUBTRACTING FROM
THIS DIVIDEND INCOME THOSE INTEREST DEDUCTIONS, THE TAXPAYER  MAY  ELECT
TO  REDUCE THE TOTAL AMOUNT OF THIS DIVIDEND INCOME BY FORTY PERCENT. IF
THE TAXPAYER MAKES THIS  ELECTION,  THE  TAXPAYER  MUST  ALSO  MAKE  THE
ELECTIONS  PROVIDED  FOR  IN  PARAGRAPH  (B)  OF SUBDIVISION SIX OF THIS
SECTION AND PARAGRAPH (B) OF THIS SUBDIVISION. A TAXPAYER WHICH DOES NOT
MAKE THIS ELECTION BECAUSE IT HAS NOT RECEIVED ANY EXEMPT UNITARY CORPO-
RATION  DIVIDENDS  WILL  NOT  BE  PRECLUDED  FROM  MAKING  THOSE   OTHER
ELECTIONS.
  (D)  IF  THE  TAXPAYER  ATTRIBUTES INTEREST DEDUCTIONS TO OTHER EXEMPT
INCOME AND THE AMOUNT SUBTRACTED EXCEEDS OTHER EXEMPT INCOME, THE EXCESS
OF THE INTEREST DEDUCTIONS OVER OTHER EXEMPT INCOME MUST BE  ADDED  BACK
TO ENTIRE NET INCOME. IN NO CASE SHALL OTHER EXEMPT INCOME EXCEED ENTIRE
NET INCOME.
  (E)  OTHER EXEMPT INCOME SHALL NOT INCLUDE ANY AMOUNT TREATED AS DIVI-
DENDS PURSUANT TO SECTION SEVENTY-EIGHT OF THE INTERNAL REVENUE CODE.
  7. (a) The term  "business  capital"  means  all  assets,  other  than
[subsidiary capital,] investment capital and stock issued by the taxpay-
er,  less liabilities not deducted from [subsidiary or] investment capi-
tal [except that cash on hand and on deposit shall be treated as invest-
ment capital  or  as  business  capital  as  the  taxpayer  may  elect].
BUSINESS  CAPITAL  SHALL  INCLUDE  ONLY THOSE ASSETS THE INCOME, LOSS OR
EXPENSE OF WHICH ARE PROPERLY REFLECTED (OR  WOULD  HAVE  BEEN  PROPERLY
REFLECTED  IF  NOT  FULLY  DEPRECIATED  OR  EXPENSED  OR  DEPRECIATED OR
EXPENSED TO A NOMINAL AMOUNT) IN THE COMPUTATION OF  ENTIRE  NET  INCOME
FOR THE TAXABLE YEAR.
  (b)  Provided, however, "business capital" shall not include assets to
the extent employed for  the  purpose  of  generating  income  which  is
excluded  from entire net income pursuant to the provisions of paragraph
(c-1) of subdivision nine of this section and shall be computed  without
regard  to  liabilities  directly  or  indirectly  attributable  to such
assets, but only if air carriers organized  in  the  United  States  and
operating  in the foreign country or countries in which the taxpayer has
its major base of operations and in which it is organized,  resident  or
headquartered  (if  not  in  the same country as its major base of oper-
ations) are not subject to any tax  based  on  or  measured  by  capital
imposed  by  such foreign country or countries or any political subdivi-
sion thereof, or if taxed, are provided an exemption, equivalent to that
provided for herein, from any  tax  based  on  or  measured  by  capital
imposed  by  such  foreign  country  or  countries and from any such tax
imposed by any political subdivision thereof[;].
  8. The term "business income" means entire net income minus investment
income[;] AND OTHER EXEMPT INCOME. IN NO EVENT SHALL THE SUM OF  INVEST-
MENT  INCOME  AND  OTHER  EXEMPT INCOME EXCEED ENTIRE NET INCOME. IF THE
TAXPAYER MAKES THE ELECTION PROVIDED FOR IN SUBPARAGRAPH  ONE  OF  PARA-
GRAPH (A) OF SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS ARTI-

S. 6359--B                         10                         A. 8559--B

CLE,  THEN ALL INCOME FROM QUALIFIED FINANCIAL INSTRUMENTS SHALL CONSTI-
TUTE BUSINESS INCOME.
  8-A.  Provided, however, that with respect to a DISC or a former DISC,
the following provisions shall apply:
  (a) investments in the stocks, bonds or other securities of a DISC  or
any  indebtedness from a DISC shall not be treated as [either subsidiary
capital or] investment capital under [subdivisions four or]  SUBDIVISION
five of this section,
  (b)  any amounts deemed distributed from a DISC or a former DISC which
are taxable as dividends pursuant to  subsection  (b)  of  section  nine
hundred  ninety-five  of  the  internal revenue code of nineteen hundred
fifty-four shall be treated as business income, except any such  amounts
from  a  former  DISC attributable to amounts includible in a taxpayer's
entire net income for a prior taxable year  under  subparagraph  (B)  of
paragraph (i) of subdivision nine of this section shall be excluded from
entire net income,
  (c)  any gain recognized for federal income tax purposes on the dispo-
sition of stock in a DISC, and any gain recognized on the disposition of
stock in a former DISC, includible in gross income as a dividend  pursu-
ant  to subsection (c) of section nine hundred ninety-five of the inter-
nal revenue code of nineteen hundred fifty-four,  shall  be  treated  as
business income, and
  (d)  except  as  provided in paragraph (i) of subdivision nine of this
section, any actual distribution from a DISC or a former DISC  shall  be
treated  as  business  income  except  an  actual distribution which for
federal income tax purposes is treated as made out  of  "other  earnings
and  profits"  under  section  nine  hundred  ninety-six of the internal
revenue code of nineteen hundred fifty-four, in which case  such  actual
distribution  shall  be treated as [either subsidiary income or] invest-
ment income under this article.
  [8-B. (a) The term "minimum taxable income" shall mean the entire  net
income of the taxpayer for the taxable year:
  (1) increased by the amount of the federal items of tax preference set
forth  in  section  fifty-seven  of  the internal revenue code (with the
modifications set forth in paragraph (b)  of  this  subdivision),  which
items  of  tax preference shall have the same meaning and be computed in
the same manner as under section fifty-seven  of  the  internal  revenue
code,
  (2) determined with the federal adjustments described in paragraph (c)
of  this  subdivision, which adjustments shall have the same meaning and
be computed in the same manner as under sections  fifty-six  and  fifty-
eight of the internal revenue code,
  (3)  increased  by  the net operating loss deduction otherwise allowed
under paragraph (f) of subdivision nine of this section, and
  (4) reduced, for taxable years beginning after nineteen hundred  nine-
ty-three, by the alternative net operating loss deduction, as defined in
paragraph (d) of this subdivision.
  (b)  The federal items of tax preference referred to hereinabove shall
be modified by deducting "tax-exempt interest" and "accelerated depreci-
ation or amortization on certain property placed in service before Janu-
ary  1,  1987",  as  determined  under  paragraphs  five  and  seven  of
subsection (a) of section fifty-seven of the internal revenue code.
  (c) The adjustments referred to hereinabove shall be:
  (1) "Depreciation" as determined under paragraph one of subsection (a)
of  section fifty-six of the internal revenue code. For purposes of this
subparagraph, the depreciation item  of  adjustment  provided  for  here

S. 6359--B                         11                         A. 8559--B

shall  not include any amount attributable to property for which the tax
benefits of the accelerated cost recovery system are not available under
this article by reason of subparagraph ten of paragraph (b) of  subdivi-
sion nine of this section;
  (2)  "Mining  exploration  and  development costs" as determined under
paragraph two of subsection (a) of section  fifty-six  of  the  internal
revenue code;
  (3)  "Treatment  of  certain  long-term contracts" as determined under
paragraph three of subsection (a) of section fifty-six of  the  internal
revenue code;
  (4)  "Installment sales of certain property" as determined under para-
graph six of subsection (a) of section fifty-six of the internal revenue
code;
  (5) "Circulation expenditures of personal holding companies" as deter-
mined under subparagraph (C) of  paragraph  two  of  subsection  (b)  of
section fifty-six of the internal revenue code;
  (6)  "Merchant  marine capital construction funds" as determined under
paragraph two of subsection (c) of section  fifty-six  of  the  internal
revenue code;
  (7)  "Disallowance  of  passive  activity  loss"  as  determined under
subsection (b) of section fifty-eight of the internal revenue code; and
  (8) "Adjusted basis", as it appears in paragraph seven  of  subsection
(a)  of  section  fifty-six  of  the  internal revenue code, but without
taking  into  account  the  references  therein  to  paragraph  five  of
subsection (a) of section fifty-six of the internal revenue code.
  (d)  The term "alternative net operating loss deduction" means the net
operating loss deduction allowed for the taxable  year  under  paragraph
(f) of subdivision nine of this section, except as provided herein.
  (1)(A)  The  net  operating loss for any year beginning after nineteen
hundred eighty-nine which is  included  in  determining  such  deduction
shall be determined with the adjustments provided in subparagraph two of
paragraph  (a) of this subdivision, and shall be reduced by the items of
tax preference determined under subparagraph one  of  paragraph  (a)  of
this  subdivision,  attributable to such year. An item of tax preference
shall be taken into account only to the extent such item  increased  the
amount  of  the  net operating loss for the taxable year under paragraph
(f) of subdivision nine of this section.
  (B) In the case of loss years beginning before nineteen hundred  nine-
ty,  the  amount  of the net operating loss which may be carried over to
taxable years beginning after  nineteen  hundred  eighty-nine  shall  be
equal  to an amount which may be carried from the loss year to the first
taxable year of the taxpayer beginning after  nineteen  hundred  eighty-
nine.
  (2)  In  determining  the amount of such deduction, loss carryforwards
and carrybacks shall, subject to the provisions of subparagraph five  of
paragraph  (f)  of  subdivision nine of this section, be computed in the
manner set forth in paragraph two  of  subsection  (b)  of  section  one
hundred  seventy-two  of the internal revenue code, except that, for the
reference therein to taxable income,  there  shall  be  substituted  the
phrase  "ninety  percent  of  minimum  taxable income determined without
regard to the alternative net operating loss deduction".
  (3) The amount of such deduction shall not exceed  ninety  percent  of
minimum  taxable  income  determined  without  regard to such deduction,
provided, however, the term "ninety percent" shall be  read  as  "forty-
five  percent"  with  respect  to  taxable  years  beginning in nineteen
hundred ninety-four.

S. 6359--B                         12                         A. 8559--B

  (e) The tax commission may, whenever necessary in  order  to  properly
reflect  the  minimum taxable income of any taxpayer, determine the year
or period in which any item of income or deduction  shall  be  included,
without regard to the method of accounting employed by the taxpayer.
  (f) If the period covered by a report under this article is other than
the  period  covered by the report to the United States treasury depart-
ment, the minimum taxable income shall be appropriately modified  pursu-
ant to regulations promulgated by the tax commission.]
  9. The term "entire net income" means total net income from all sourc-
es,  which  shall  be  presumably  the same as the entire taxable income
[(but not alternative minimum taxable income)], WHICH, EXCEPT AS HEREIN-
AFTER PROVIDED IN THIS SUBDIVISION,
  (i) [which] the taxpayer is required to report to  the  United  States
treasury department, or
  (ii)  [which]  the  taxpayer would have been required to report to the
United States treasury department if it had not made an  election  under
subchapter s of chapter one of the internal revenue code, or
  (iii)  [which]  the  taxpayer,  in  the case of a corporation which is
exempt from federal income tax (other than the tax on unrelated business
taxable income imposed under section 511 of the internal  revenue  code)
but which is subject to tax under this article, would have been required
to  report  to  the  United  States  treasury  department  but  for such
exemption, [except as hereinafter provided, and subject to any modifica-
tion required by paragraphs (d) and (e) of subdivision three of  section
two hundred ten of this article] OR
  (IV)  IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAWS OF A COUN-
TRY OTHER THAN THE UNITED STATES,  IS  EFFECTIVELY  CONNECTED  WITH  THE
CONDUCT  OF  A  TRADE OR BUSINESS WITHIN THE UNITED STATES AS DETERMINED
UNDER SECTION 882 OF THE INTERNAL REVENUE CODE,
  (a) Entire net income shall not include:
  [(1) income, gains and losses from subsidiary  capital  which  do  not
include  the  amount of a recovery in respect of any war loss except for
such amounts from a former DISC which are  treated  as  business  income
under subdivision eight-A of this section,
  (2)  fifty  percent of dividends (A) other than from subsidiaries, and
(B) other than amounts treated  as  business  income  under  subdivision
eight-A  of  this  section,  on  shares  of  stock  which conform to the
requirements of subsection (c) of section two hundred forty-six  of  the
internal revenue code.]
  (3) bona fide gifts,
  (4) income and deductions with respect to amounts received from school
districts and from corporations and associations, organized and operated
exclusively  for  religious, charitable or educational purposes, no part
of the net earnings of which inures to the benefit of any private share-
holder or individual, for the operation of school buses,
  (5) (i) any refund or credit of a  tax  imposed  under  this  article,
article  twenty-three, or FORMER article thirty-two of this chapter, for
which tax no exclusion or  deduction  was  allowed  in  determining  the
taxpayer's  entire  net income under this article, article twenty-three,
or FORMER article thirty-two of this chapter for any prior year, (ii)  a
refund or credit of general corporation tax allowed by subdivision elev-
en of section 11-604 of the administrative code of the city of New York,
or  (iii)  any  refund  or  credit  of  a tax imposed under sections one
hundred eighty-three, one hundred eighty-three-a,  one  hundred  eighty-
four or one hundred eighty-four-a of this chapter, and

S. 6359--B                         13                         A. 8559--B

  (6)  any amount treated as dividends pursuant to section seventy-eight
of the internal revenue code and not [otherwise deductible under subpar-
agraphs one and two of this paragraph];
  (7)  that portion of wages and salaries paid or incurred for the taxa-
ble year for which a deduction is not allowed pursuant to the provisions
of section two hundred eighty-C of the internal revenue code.
  [(8) in the case of a taxpayer who is separately or as a partner of  a
partnership  doing  an  insurance  business  as a member of the New York
insurance exchange described in section six thousand two hundred one  of
the  insurance  law, any item of income, gain, loss or deduction of such
business which is the taxpayer's distributive  or  pro  rata  share  for
federal  income  tax  purposes or which the taxpayer is required to take
into account separately for federal income tax purposes.]
  (9) for taxable years beginning after December thirty-first,  nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other
than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine,  any  amount  which  is  included  in  the
taxpayer's federal taxable income solely as a result of an election made
pursuant  to  the provisions of such paragraph eight as it was in effect
for agreements entered into prior to  January  first,  nineteen  hundred
eighty-four;
  (10) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other
than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine, any amount which the taxpayer  could  have
excluded  from  federal  taxable  income  had  it  not made the election
provided for in such paragraph eight as it was in effect for  agreements
entered into prior to January first, nineteen hundred eighty-four;
  (11)  the amount deductible pursuant to paragraph (j) of this subdivi-
sion; and
  (12) upon the disposition of property to which paragraph (j)  of  this
subdivision  applies,  the amount, if any, by which the aggregate of the
amounts described in subparagraph ten of paragraph (b) of this  subdivi-
sion  attributable to such property exceeds the aggregate of the amounts
described in paragraph (j) of  this  subdivision  attributable  to  such
property; and
  [(13)  if  the added tax provided for in either (i) former subdivision
two of section one hundred eighty-two of this chapter (relating to  real
estate  corporations)  or  (ii)  former subdivision one-a of section two
hundred nine of this chapter (relating to real estate corporations)  has
been  imposed  upon  the  taxpayer,  any  income  which has been used in
computing such tax.]
  (14) The amount deductible pursuant to paragraph  [(l)]  (I)  of  this
subsection.
  [(15)  In  the  case  of  an attorney-in-fact, with respect to which a
mutual insurance company, which  is  an  interinsurer  or  a  reciprocal

S. 6359--B                         14                         A. 8559--B

insurer  and  is subject to tax under subdivision (a) of section fifteen
hundred ten of this chapter, has made the election  provided  for  under
section  eight  hundred  thirty-five  of  the  Internal Revenue Code, an
amount  equal  to the excess, if any, of the amounts paid or incurred by
such interinsurer or reciprocal insurer  in  the  taxable  year  to  the
attorney-in-fact  over  the  deduction  allowed  to such interinsurer or
reciprocal insurer with respect to amounts paid or incurred in the taxa-
ble year to the attorney-in-fact under subsection (b)  of  such  section
eight hundred thirty-five of the Internal Revenue Code.]
  (16) In the case of a taxpayer subject to the modification provided by
subparagraph  sixteen  of  paragraph (b) of this subdivision, the amount
required to be recaptured pursuant to subsection (d) of section  179  of
the  internal  revenue  code  with  respect  to property upon which such
modification was based.
  (17) FOR TAXABLE YEARS  BEGINNING  AFTER  DECEMBER  THIRTY-FIRST,  TWO
THOUSAND  TWO, THE AMOUNT DEDUCTIBLE PURSUANT TO PARAGRAPH (N-1) OF THIS
SUBDIVISION.
  (18) the amount of income or gain included in federal  taxable  income
of  a taxpayer that is a partner in a qualified entity or is a qualified
entity that is located both within and without a New  York  state  inno-
vation  hot  spot, to the extent that the income or gain is attributable
to the operations of a qualified entity at or as part of  the  New  York
state  innovation  hot  spot as provided in section thirty-eight of this
chapter.
  (19) THE AMOUNT COMPUTED PURSUANT TO PARAGRAPH  (R)  OR  (S)  OF  THIS
SUBDIVISION, BUT NOT BOTH SUCH AMOUNTS.
  (b)  Entire  net  income  shall  be  determined without the exclusion,
deduction or credit of:
  (1) [the amount of any specific exemption or credit allowed in any law
of the United States imposing any tax on or measured by  the  income  of
corporations,] IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAW OF A
COUNTRY  OTHER THAN THE UNITED STATES, EXCEPT AS TREATED AS OTHER EXEMPT
INCOME UNDER SUBDIVISION SIX-A OF THIS SECTION,  (I)  ANY  PART  OF  ANY
INCOME  FROM  DIVIDENDS  OR INTEREST ON ANY KIND OF STOCK, SECURITIES OR
INDEBTEDNESS,  BUT  ONLY  IF  SUCH  INCOME  IS  TREATED  AS  EFFECTIVELY
CONNECTED  WITH  THE CONDUCT OF A TRADE OR BUSINESS IN THE UNITED STATES
PURSUANT TO SECTION 864 OF THE INTERNAL REVENUE CODE,  (II)  ANY  INCOME
EXEMPT  FROM  FEDERAL  TAXABLE INCOME UNDER ANY TREATY OBLIGATION OF THE
UNITED STATES, BUT ONLY IF SUCH INCOME WOULD BE TREATED  AS  EFFECTIVELY
CONNECTED  IN  ABSENCE OF SUCH EXEMPTION PROVIDED THAT SUCH TREATY OBLI-
GATION DOES NOT PRECLUDE THE TAXATION OF SUCH  INCOME  BY  A  STATE,  OR
(III) ANY INCOME WHICH WOULD BE TREATED AS EFFECTIVELY CONNECTED IF SUCH
INCOME WERE NOT EXCLUDED FROM GROSS INCOME PURSUANT TO SUBSECTION (A) OF
SECTION 103 OF THE INTERNAL REVENUE CODE;
  (2)  any  part of any income from dividends or interest on any kind of
stock, securities or indebtedness, [except as provided  in  clauses  (1)
and  (2)  of  paragraph (a) hereof] TREATED AS OTHER EXEMPT INCOME UNDER
SUBDIVISION SIX-A OF THIS SECTION,
  (3) taxes on or measured by profits or income paid or accrued  to  the
United States, any of its possessions or to any foreign country, includ-
ing  taxes  in  lieu  of  any of the foregoing taxes otherwise generally
imposed by any foreign country  or  by  any  possession  of  the  United
States,
  (3-a)  taxes  on  or  measured  by profits or income, or which include
profits or income as a measure, paid or accrued to any  other  state  of
the  United  States,  or  any  political  subdivision thereof, or to the

S. 6359--B                         15                         A. 8559--B

District of Columbia, including taxes expressly in lieu of  any  of  the
foregoing  taxes  otherwise  generally imposed by any other state of the
United States, or any political subdivision thereof, or the District  of
Columbia;
  (4)  taxes  imposed  under  this  article and article thirty-two AS IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN and sections  one
hundred  eighty-three,  one  hundred eighty-three-a, one hundred eighty-
four and one hundred eighty-four-a of this chapter,
  (4-a)(A) [the entire amount allowable as an exclusion or deduction for
stock transfer taxes imposed by article twelve of this chapter in deter-
mining the entire taxable income  which  the  taxpayer  is  required  to
report  to  the United States treasury department but only to the extent
that such taxes are incurred and paid  in  market  making  transactions,
(B)]  in those instances where a credit for the special additional mort-
gage recording tax credit is allowed under [paragraph (a)  of]  subdivi-
sion  [seventeen]  NINE of section two hundred [ten] TEN-B of this arti-
cle, the amount allowed as an exclusion or  deduction  for  the  special
additional  mortgage  recording  tax  imposed  by  subdivision  one-a of
section two hundred fifty-three  of  this  chapter  in  determining  the
entire  taxable  income  which the taxpayer is required to report to the
United States treasury department,  and  [(C)]  (B)  unless  the  credit
allowed  pursuant to subdivision [seventeen] NINE of section two hundred
[ten] TEN-B of this article is reflected in the computation of the  gain
or  loss so as to result in an increase in such gain or decrease of such
loss, for federal income tax purposes, from the sale or  other  disposi-
tion  of the property with respect to which the special additional mort-
gage recording tax imposed pursuant to subdivision one-a of section  two
hundred  fifty-three of this chapter was paid, the amount of the special
additional mortgage  recording  tax  imposed  by  subdivision  one-a  of
section two hundred fifty-three of this chapter which was paid and which
is  reflected  in  the computation of the basis of the property so as to
result in a decrease in such gain or increase in such loss  for  federal
income  tax  purposes from the sale or other disposition of the property
with respect to which such tax was paid.
  (6) [in the discretion of the tax commission, any amount  of  interest
directly  or  indirectly  and  any  other  amount directly or indirectly
attributable as a carrying charge or otherwise to subsidiary capital  or
to  income,  gains or losses from subsidiary capital] ANY AMOUNT ALLOWED
AS A DEDUCTION FOR THE TAXABLE YEAR UNDER SECTION 172  OF  THE  INTERNAL
REVENUE  CODE,  INCLUDING  CARRYOVERS  OF  DEDUCTIONS FROM PRIOR TAXABLE
YEARS.
  [(7) in the case of a taxpayer who is separately or as a partner of  a
partnership  doing  an  insurance  business  as a member of the New York
insurance exchange described in section six thousand two hundred one  of
the insurance law, such taxpayer's distributive or pro rata share of the
allocated  entire  net  income  of  such  business  as  determined under
sections fifteen hundred three and fifteen hundred four of this chapter,
provided however, in the event such allocated entire  net  income  is  a
loss,  such taxpayer's distributive or pro rata share of such loss shall
not be subtracted from federal taxable income in  computing  entire  net
income under this subdivision.]
  (8)  for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph  eight
of  subsection  (f)  of  section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and proper-

S. 6359--B                         16                         A. 8559--B

ty of a taxpayer principally engaged in the conduct of  aviation  (other
than  air  freight  forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years  beginning  in
nineteen hundred eighty-nine, any amount which the taxpayer claimed as a
deduction  in computing its federal taxable income solely as a result of
an election made pursuant to the provisions of such paragraph  eight  as
it  was  in  effect  for agreements entered into prior to January first,
nineteen hundred eighty-four;
  (9) for taxable years beginning after December thirty-first,  nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other
than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine, any amount which the taxpayer  would  have
been  required  to  include  in  the  computation of its federal taxable
income had it not made the election permitted pursuant to such paragraph
eight as it was in effect for agreements entered into prior  to  January
first, nineteen hundred eighty-four;
  (10) in the case of property placed in service in taxable years begin-
ning  before  nineteen  hundred ninety-four, for taxable years beginning
after December thirty-first, nineteen hundred  eighty-one,  except  with
respect  to  property  subject  to the provisions of section two hundred
eighty-F  of  the  internal  revenue  code,  property  subject  to   the
provisions  of  section  one hundred sixty-eight of the internal revenue
code which is placed in service in this state in taxable years beginning
after December thirty-first, nineteen hundred eighty-four  and  property
of a taxpayer principally engaged in the conduct of aviation (other than
air  freight forwarders acting as principal and like indirect air carri-
ers) which is placed in service before taxable years beginning in  nine-
teen  hundred  [eight-nine]  EIGHTY-NINE,  the  amount  allowable  as  a
deduction determined under section one hundred sixty-eight of the inter-
nal revenue code;
  (11) upon the disposition of property to which paragraph (j)  of  this
subdivision  applies,  the amount, if any, by which the aggregate of the
amounts described in such paragraph (j) attributable  to  such  property
exceeds  the  aggregate  of the amounts described in subparagraph ten of
this paragraph attributable to such property.
  (15) Real property taxes paid on qualified agricultural  property  and
deducted  in  determining  federal  taxable income, to the extent of the
amount of the agricultural property tax credit allowed under subdivision
[twenty-two] ELEVEN of section two hundred [ten] TEN-B of this article.
  (16) In the case of a taxpayer which is  not  an  eligible  farmer  as
defined  in  paragraph (b) of subdivision [twenty-two] ELEVEN of section
two hundred [ten] TEN-B of this article, the  amount  of  any  deduction
claimed  pursuant  to  section  179  of  the  internal revenue code with
respect to a sport utility vehicle which is not a  passenger  automobile
as  defined  in  paragraph  5  of  subsection (d) of section 280F of the
internal revenue code.
  (17) for taxable years  beginning  after  December  thirty-first,  two
thousand  two,  in the case of qualified property described in paragraph
two of subsection k of section 168 of the internal revenue  code,  other
than  qualified  resurgence  zone property described in paragraph (q) of
this subdivision, and other than qualified New York Liberty Zone proper-

S. 6359--B                         17                         A. 8559--B

ty described in paragraph two of subsection b of section  1400L  of  the
internal  revenue code (without regard to clause (i) of subparagraph (C)
of such paragraph), which was placed in service on or after June  first,
two  thousand  three,  the amount allowable as a deduction under section
167 of the internal revenue code.
  (18) Premiums paid for environmental remediation insurance, as defined
in section twenty-three of this chapter,  and  deducted  in  determining
federal taxable income, to the extent of the amount of the environmental
remediation insurance credit allowed under such section twenty-three and
subdivision [thirty-five] NINETEEN of section two hundred [ten] TEN-B of
this article.
  (19)  The  amount  of  any  deduction  allowed pursuant to section one
hundred ninety-nine of the internal revenue code.
  (20) The amount of any federal deduction for taxes imposed under arti-
cle twenty-three of this chapter.
  (20-a) The amount of any federal deduction for the excise tax on tele-
communication services to the extent such taxes are used as the basis of
the calculation of the tax-free NY area excise tax on  telecommunication
services  credit  allowed  under subdivision [forty-eight] FORTY-FOUR of
section two hundred [ten] TEN-B of this article.
  (21) The amount of any federal deduction for real  property  taxes  to
the  extent  such  taxes are used as the basis of the calculation of the
real property tax credit for  manufacturers  allowed  under  subdivision
[forty-eight]  FORTY-THREE  of  section  two hundred [ten] TEN-B of this
article.
  (22) The amount of  any  deduction  allowed  for  federal  income  tax
purposes  for  (i)  any amount paid or incurred (whether by suit, agree-
ment, or otherwise) to, or at the direction of, a government or  govern-
mental  entity  in  relation to the violation of any law or the investi-
gation or inquiry by  such  government  or  entity  into  the  potential
violation of any law, other than any amount that constitutes restitution
(including  remediation of property) for damage or harm which was or may
be caused by the violation of any law or the potential violation of  any
law,  or is paid to come into compliance with any law which was violated
or otherwise involved in such investigation or  inquiry,  that  is  paid
directly  to  the aggrieved parties, and is identified as restitution or
as an amount paid to come into compliance with such law, as the case may
be, in the court order or settlement agreement; or (ii) any amount  paid
or  incurred  as reimbursement to the government or entity for the costs
of any investigation or litigation. This subparagraph shall not apply to
any amount paid or incurred by reason of any order of a court in a  suit
in  which  no government or governmental entity is a party or any amount
paid or incurred as taxes due. For purposes of  this  subparagraph,  the
following  nongovernmental  entities  shall  be  treated as governmental
entities any  nongovernmental  entity  which  exercises  self-regulatory
powers  (including  imposing  sanctions)  in connection with a qualified
board or exchange (as defined in  section  1256(g)(7)  of  the  internal
revenue  code or any nongovernmental entity which exercises self-regula-
tory powers (including imposing sanctions)  as  part  of  performing  an
essential governmental function.
  [(c)  Entire  net  income  shall include income within and without the
United States;]
  (c-1)(1) Notwithstanding any other provision of this article,  in  the
case  of a taxpayer which is a foreign air carrier holding a foreign air
carrier permit issued by the United States department of  transportation
pursuant  to  section  four  hundred  two of the federal aviation act of

S. 6359--B                         18                         A. 8559--B

nineteen hundred fifty-eight, as amended, and which is  qualified  under
subparagraph two of this paragraph, entire net income shall not include,
and  shall  be  computed  without  the deduction of, amounts directly or
indirectly  attributable  to,  (i)  any income derived from the interna-
tional operation  of  aircraft  as  described  in  and  subject  to  the
provisions of section eight hundred eighty-three of the internal revenue
code,  (ii)  income  without the United States which is derived from the
operation of aircraft, and (iii) income without the United States  which
is  of  a  type  described  in  subdivision (a) of section eight hundred
eighty-one of the internal revenue code except that it is  derived  from
sources  without  the  United  States.  Entire  net income shall include
income described in clauses (i), (ii) and (iii) of this subparagraph  in
the case of taxpayers not described in the previous sentence.
  (2)  A  taxpayer  is qualified under this subparagraph if air carriers
organized in the United States and operating in the foreign  country  or
countries  in which the taxpayer has its major base of operations and in
which it is organized, resident or headquartered (if  not  in  the  same
country  as  its major base of operations) are not subject to any income
tax or other tax based on or measured by income or receipts  imposed  by
such  foreign country or countries or any political subdivision thereof,
or if so subject to such tax, are provided an exemption  from  such  tax
equivalent to that provided for herein.
  (c-2)  Adjustments by qualified public utilities. (1) In the case of a
taxpayer which is a qualified public utility, entire net income shall be
computed with the adjustments set forth in this paragraph.
  (2) Definitions. (A) Qualified public  utility.  The  term  "qualified
public  utility"  means  a taxpayer which: (i) on December thirty-first,
nineteen hundred ninety-nine, was subject to the ratemaking  supervision
of  the state department of public service, and (ii) for the year ending
on December thirty-first, nineteen hundred ninety-nine, was  subject  to
tax under former section one hundred eighty-six of this chapter.
  (B) Transition property. The term "transition property" means property
placed  in  service  by the taxpayer before January first, two thousand,
for which a depreciation deduction is allowed under section one  hundred
sixty-seven of the internal revenue code.
  (3)  Federal depreciation disallowed. With respect to transition prop-
erty, the deduction for federal income  tax  purposes  for  depreciation
shall not be allowed.
  (4)  New  York  depreciation.  With  respect to transition property, a
deduction shall be allowed for the depreciation  expense  shown  on  the
books and records of the taxpayer for the taxable year and determined in
accordance with generally accepted accounting principles.
  (5) Regulatory assets. A deduction shall be allowed for amounts recog-
nized  as expense on the books and records of the taxpayer for the taxa-
ble year, which amounts were recognized as expense  for  federal  income
tax  purposes  in  a  taxable  year ending on or before December thirty-
first, nineteen hundred ninety-nine, where: (A) such  amounts  represent
expenditures  which, when made, were charged to a deferred debit account
or similar asset account on the books and records of the  taxpayer,  and
where  (B)  the  recognition  of expense on the books and records of the
taxpayer is matched by revenue stemming from a procedure  or  adjustment
allowing  the  recovery of such expenditures, and where (C) such revenue
is recognized for federal income tax purposes in the taxable year.
  (6) Basis for gain or loss. (A) Recognition transactions. (i)  General
rule  - book basis. Except as provided in subclause (ii) of this clause,
where transition property is sold or otherwise disposed of in the  taxa-

S. 6359--B                         19                         A. 8559--B

ble  year  in a transaction of the type requiring recognition of gain or
loss for federal income tax purposes,  the  basis  for  determining  the
amount  of such gain or loss under this article shall be the cost of the
property less the accumulated depreciation on the property determined on
the  books  and  records  of  the  taxpayer in accordance with generally
accepted accounting principles.
  (ii) Qualified gain - New York basis.  Where  a  sale  or  disposition
described in subclause (i) of this clause results in recognition of gain
for  federal  income tax purposes, and where either (I) such recognition
occurs in a taxable year ending after nineteen hundred  ninety-nine  and
before  two  thousand ten, or (II) such recognition is with respect to a
nuclear electric generating facility,  the  basis  for  determining  the
amount of such gain under this article shall be the cost of the property
less  the aggregate of the New York depreciation deductions on the prop-
erty determined under subparagraph four of this paragraph.
  (iii) No conversion of gain to loss.  In  the  event  that  the  basis
determined  under subclause (ii) of this clause results in determination
of a loss on the sale or disposition of the property, no  gain  or  loss
shall  be  recognized  under  this  article with respect to such sale or
disposition.
  (B) Nonrecognition transactions. (i) Carryover basis. (I) where  tran-
sition property is disposed of ("original disposition") in a transaction
of  a type requiring deferral of recognition of gain or loss for federal
income tax purposes, and where (II) there is a subsequent recognition of
gain or loss for federal income tax purposes ("clause B gain or  loss"),
the  amount of which is determined by reference, in whole or in part, to
the basis of such transition property  ("underlying  transition  proper-
ty"),  then  (III)  the  amount of such clause B gain or loss under this
article shall be adjusted as provided in subclause (ii) or (iii) of this
clause.
  (ii) General rule - book  basis  adjustment.  Except  as  provided  in
subclause  (iii)  of  this  clause, the amount of clause B gain shall be
reduced, or the amount of clause B loss  increased,  by  the  amount  by
which  the  book basis of the underlying transition property on the date
of original disposition (determined using the  provisions  of  subclause
(i)  of  clause (A) of this subparagraph) exceeds the federal income tax
basis of such property on such date.
  (iii) Qualified gain - New York basis adjustment. Where clause B  gain
either  (I) occurs in a taxable year ending after nineteen hundred nine-
ty-nine and before two thousand ten, or (II) is with respect to a nucle-
ar electric generating facility, the amount  of  such  gain  under  this
article shall be reduced, but not below zero, by the amount by which the
New  York  basis  of  the  underlying transition property on the date of
original disposition (determined using the provisions of subclause  (ii)
of clause (A) of this subparagraph) exceeds the federal income tax basis
of such property on such date.
  (iv)  Application  to  replacement  property and transferee taxpayers.
This clause shall apply whether the clause B gain or loss: (I)  is  with
respect  to either transition property or depreciable property the basis
of which is determined by reference to transition property, or  (II)  is
recognized  by  either a qualified public utility or by a taxpayer which
is a transferee of transition property (whether or not  such  transferee
is  a qualified public utility, notwithstanding subparagraph one of this
paragraph).
  (c-3) Depreciation adjustments by qualified power producers and  pipe-
line  companies.  (1)  In  the  case of a qualified taxpayer, entire net

S. 6359--B                         20                         A. 8559--B

income shall be computed with the depreciation adjustments set forth  in
this paragraph.
  (2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer"
means a qualified power producer or a qualified pipeline.
  (B)  Qualified  power  producer.  The  term "qualified power producer"
means a taxpayer which: (i) on December thirty-first,  nineteen  hundred
ninety-nine,  was not subject to the ratemaking supervision of the state
department of public service, and (ii) for the year ending  on  December
thirty-first,  nineteen  hundred  ninety-nine,  was subject to tax under
former section one hundred eighty-six of this chapter on account of  its
being principally engaged in the business of supplying electricity.
  (C) Qualified pipeline. The term "qualified pipeline" means a taxpayer
which:  (i)  on December thirty-first, nineteen hundred ninety-nine, was
subject to the ratemaking supervision of either the federal energy regu-
latory commission or the state department of public  service,  and  (ii)
for  the  year ending on December thirty-first, nineteen hundred ninety-
nine, was subject to tax under sections one hundred eighty-three and one
hundred eighty-four of this chapter on account of its being  principally
engaged in the business of pipeline transmission.
  (D) Transition property. The term "transition property" means property
placed  in  service  by  a  qualified taxpayer before January first, two
thousand, for which a depreciation deduction is  allowed  under  section
one hundred sixty-seven of the internal revenue code.
  (3)  Federal depreciation disallowed. With respect to transition prop-
erty, the deduction for federal income  tax  purposes  for  depreciation
shall not be allowed.
  (4)  New  York  depreciation.  With  respect to transition property, a
deduction shall be allowed for  the  depreciation  expense  computed  as
provided  in this subparagraph. (A) All transition property shown on the
books and records of the taxpayer on January first, two  thousand  shall
be  treated  as  a  single asset placed in service on such date. The New
York basis for purposes of computing the depreciation deduction on  such
single  asset  shall  be  the net book value of such transition property
determined on the first day of the federal taxable year  ending  in  two
thousand  (or  on  the  date  any such property is placed in service, if
later) adjusted as provided in clause (B) of this subparagraph.
  (B) If transition property is sold or otherwise disposed of,  the  New
York basis of the single asset shall be reduced on the date of such sale
or  disposition  by the amount of the adjusted federal tax basis of such
property on such date.
  (C) The New York depreciation deduction allowed for any  taxable  year
with  respect to such single asset shall be computed using the straight-
line method, a twenty-year life, and a salvage value of zero.
  (D) For purposes of this subparagraph, the term "net book value" means
cost reduced by accumulated depreciation shown on the books and  records
of the taxpayer and determined, in the case of a qualified power produc-
er,  in accordance with generally accepted accounting principles; and in
the case of a qualified pipeline,  in  accordance  with  the  taxpayer's
regulatory  reports  filed with the federal energy regulatory commission
or state department of public service.
  (d) The [tax commission] COMMISSIONER may, whenever necessary in order
properly to reflect the entire net income of any taxpayer, determine the
year or period in which  any  item  of  income  or  deduction  shall  be
included,  without  regard  to  the method of accounting employed by the
taxpayer[;].

S. 6359--B                         21                         A. 8559--B

  (e) The entire net income of any bridge commission created by  act  of
congress  to  construct  a bridge across an international boundary means
its gross income less the expense of maintaining and operating its prop-
erties, the annual interest upon its bonds and  other  obligations,  and
the  annual  charge  for  the retirement of such bonds or obligations at
maturity[;].
  [(f) A net operating loss deduction shall be allowed  which  shall  be
presumably  the  same  as the net operating loss deduction allowed under
section one hundred seventy-two of the internal revenue code,  or  which
would  have  been allowed if the taxpayer had not made an election under
subchapter s of chapter one of the internal revenue code, except that in
every instance where such deduction is allowed under this article:
  (1) any net operating loss  included  in  determining  such  deduction
shall  be  adjusted to reflect the inclusions and exclusions from entire
net income required by paragraphs (a), (b) and (g) hereof,
  (2) such deduction shall not include any net operating loss  sustained
during  any  taxable  year  beginning  prior  to January first, nineteen
hundred sixty-one, or during any taxable year in which the taxpayer  was
not subject to the tax imposed by this article,
  (3) such deduction shall not exceed the deduction for the taxable year
allowed  under  section  one hundred seventy-two of the internal revenue
code, or the deduction for  the  taxable  year  which  would  have  been
allowed  if  the taxpayer had not made an election under subchapter s of
chapter one of the internal revenue code,
  (4) in the case of a New York S corporation, such deduction shall  not
include  any  net  operating  loss sustained during a New York C year or
during a New York S year beginning prior to nineteen hundred ninety, and
in the case of a New  York  C  corporation,  such  deduction  shall  not
include  any  net  operating  loss  sustained  during a New York S year,
provided, however, a New York S year shall be treated as a taxable  year
for  purposes  of determining the number of taxable years to which a net
operating loss may be carried back or carried forward, and
  (5) the net operating loss deduction allowed under section one hundred
seventy-two of the internal revenue code  shall  for  purposes  of  this
paragraph  be  determined  as  if  the  taxpayer  had elected under such
section to relinquish the entire carryback period with  respect  to  net
operating  losses, except with respect to the first ten thousand dollars
of each of such losses, sustained during taxable years ending after June
thirtieth, nineteen hundred eighty-nine.
  (g) For taxable years commencing  prior  to  January  first,  nineteen
hundred eighty-seven, at the election of the taxpayer, a deduction shall
be allowed for expenditures paid or incurred during the taxable year for
the  construction,  reconstruction,  erection  or  improvement of either
industrial waste treatment facilities or air pollution  control  facili-
ties,  or,  with  respect to taxable years beginning on or after January
first, nineteen hundred seventy-seven and before January first, nineteen
hundred eighty-one, industrial waste treatment controlled process facil-
ities or air pollution controlled process facilities.
  (1) (A) (1) The term "industrial  waste  treatment  facilities"  shall
mean  facilities  for  the treatment, neutralization or stabilization of
industrial waste and other wastes (as the terms "industrial  waste"  and
"other  wastes"  are  defined  in  section  17-0105 of the environmental
conservation law) from a point immediately preceding the point  of  such
treatment,  neutralization  or  stabilization  to the point of disposal,
including the necessary pumping and transmitting facilities.

S. 6359--B                         22                         A. 8559--B

  (2) The term "industrial waste treatment controlled process  facility"
shall mean such portion of the cost of an industrial production facility
designed  for  the  purpose  of  obviating the need for industrial waste
treatment facilities as defined in item one  of  this  clause  as  shall
exceed the cost of an industrial production facility of equal production
capacity  which  if constructed would require industrial waste treatment
facilities to meet emission standards in compliance with the  provisions
of the environmental conservation law and the codes, rules, regulations,
permits  or orders issued pursuant thereto but only to the extent of the
cost of such industrial waste treatment facilities.
  (B) (1) The term "air pollution control facilities" shall mean facili-
ties which remove, reduce, or render less noxious air contaminants emit-
ted from an air contamination source (as the terms "air contaminant" and
"air contamination source" are defined in section 19-0107 of  the  envi-
ronmental conservation law) from a point immediately preceding the point
of  such  removal,  reduction  or rendering to the point of discharge of
air, meeting emission standards as  established  by  the  department  of
environmental  conservation, but excluding such facilities installed for
the primary purpose of salvaging materials which are usable in the manu-
facturing process or are marketable and excluding those facilities which
rely for their efficacy on dilution, dispersion or assimilation  of  air
contaminants  in the ambient air after emission. Such term shall further
include flue gas desulfurization equipment and attendant sludge disposal
facilities, fluidized bed boilers, precombustion coal  cleaning  facili-
ties  or  other  facilities that conform with this subdivision and which
comply with the provisions of the state acid deposition control act  set
forth  in  title nine of article nineteen of the environmental conserva-
tion law.
  (2) The term "air pollution controlled process  facility"  shall  mean
such  portion  of the cost of an industrial production facility designed
for the purpose of obviating the need for air pollution control  facili-
ties  as  defined in item one of this clause as shall exceed the cost of
an industrial production facility of equal productive capacity which  if
constructed  would  require  air  pollution  control facilities to inert
emission standards as established pursuant to  title  three  of  article
nineteen of the environmental conservation law but only to the extent of
the cost of such air pollution control facilities.
  (2) However, such deduction shall be allowed only
  (A)  with  respect to tangible property which is depreciable, pursuant
to section one hundred sixty-seven of the internal revenue code,  having
a  situs in this state and used in the taxpayer's trade or business, the
construction, reconstruction, erection or improvement of which,  in  the
case  of industrial waste treatment facilities, is initiated on or after
January first, nineteen hundred sixty-five or which, in the case of  air
pollution  control  facilities,  is initiated on or after January first,
nineteen hundred sixty-six, or which in the  case  of  industrial  waste
treatment  controlled  process  facilities  or  air pollution controlled
process facilities is initiated on and  after  January  first,  nineteen
hundred seventy-seven, and
  (B) on condition that such facilities have been certified by the state
commissioner  of  environmental conservation or his designated represen-
tative, pursuant to section 19-0309 of  the  environmental  conservation
law,  as  complying  with  applicable  provisions  of  the environmental
conservation law, the public health law, the  state  sanitary  code  and
codes,  rules,  regulations,  permits or orders issued pursuant thereto,
and

S. 6359--B                         23                         A. 8559--B

  (C) on condition that entire net income for the taxable year  and  all
succeeding  taxable  years  be  computed without any deductions for such
expenditures or for depreciation or amortization of  the  same  property
other  than  the deductions allowed by this paragraph (g), except to the
extent  that  the  basis  of the property may be attributable to factors
other than such expenditures, or in case a deduction is allowable pursu-
ant to this paragraph for only a part of such expenditures, on condition
that any deduction allowed for federal  income  tax  purposes  for  such
expenditures or for depreciation or amortization of the same property be
proportionately  reduced  in computing entire net income for the taxable
year and all succeeding taxable years, and
  (D) where the election provided for in paragraph  (d)  of  subdivision
three  of section two hundred ten of this chapter has not been exercised
in respect to the same property.
  (3) (A) If expenditures in respect to an  industrial  waste  treatment
facility,  an air pollution control facility, an industrial waste treat-
ment controlled process facility or an air pollution controlled  process
facility  have  been deducted as provided herein and if within ten years
from the end of the taxable year in which  such  deduction  was  allowed
such  property  or  any  part thereof is used for the primary purpose of
salvaging materials which are usable in the manufacturing process or are
marketable, the taxpayer shall report such change of use in  its  report
for  the  first taxable year during which it occurs, and the tax commis-
sion may recompute the  tax  for  the  year  or  years  for  which  such
deduction  was  allowed  and  any  carryback  or carryover year, and may
assess any additional tax resulting from such recomputation  within  the
time  fixed  by  paragraph nine of subsection (c) of section ten hundred
eighty-three of this chapter.
  (B) If a deduction is allowed as herein provided for expenditures paid
or incurred during any taxable year on the basis of a temporary  certif-
icate  of  compliance  issued pursuant to the environmental conservation
law and if the taxpayer fails  to  obtain  a  permanent  certificate  of
compliance  upon completion of the facilities with respect to which such
temporary certificate was issued, the taxpayer shall report such failure
in its report for the taxable year  during  which  such  facilities  are
completed,  and the tax commission may recompute the tax for the year or
years for which such deduction was allowed and any carryback  or  carry-
over  year,  and  may  assess  any additional tax resulting from in such
recomputation within the time fixed by paragraph nine of subsection  (c)
of section ten hundred eighty-three.
  (C) If a deduction is allowed as herein provided for expenditures paid
or  incurred  during  any  taxable  year  in respect to an air pollution
control facility on the basis of  a  certificate  of  compliance  issued
pursuant  to  the  environmental conservation law and the certificate is
revoked pursuant to subdivision three of section 19-0309 of the environ-
mental conservation law, the tax commission may recompute  the  tax  for
the year or years for which the facility is not or was not in compliance
with  the  applicable  provisions of the environmental conservation law,
the state sanitary code or codes, rules, regulations, permits or  orders
promulgated  pursuant thereto, and for which a deduction was allowed, as
well as for any carryback or carryover year to which such deduction  was
carried,  and may assess any additional tax resulting from such recompu-
tation within the time fixed by paragraph  nine  of  subsection  (c)  of
section ten hundred eighty-three.
  (4)  In  any  taxable year when property is sold or otherwise disposed
of, with respect to which a deduction has been allowed pursuant to  this

S. 6359--B                         24                         A. 8559--B

paragraph,  such  deduction  shall  be  disregarded in computing gain or
loss, and the gain or loss on the sale  or  other  disposition  of  such
property  shall  be  the  gain  or loss entering into the computation of
entire  taxable  income  which the taxpayer is required to report to the
United States treasury department for such taxable year.]
  (h) If the period covered by a report under this article is other than
the period covered by the report to the United States  treasury  depart-
ment,
  (1)  except  as provided in subparagraph two hereof, entire net income
shall be determined by multiplying the taxable income reported  to  such
department  (as  adjusted pursuant to the provisions of this article) by
the number of calendar months or major  parts  thereof  covered  by  the
report  under this article and dividing by the number of calendar months
or major parts thereof covered by the report to such department.  If  it
shall  appear that such method of determining entire net income does not
properly reflect the taxpayer's income during the period covered by  the
report  under  this  article, the [tax commission] COMMISSIONER shall be
authorized in its discretion to determine such entire net income  solely
on  the  basis of the taxpayer's income during the period covered by its
report under this article[;].
  (2) [in] IN the case of a  New  York  S  termination  year,  an  equal
portion of entire net income shall be assigned to each day of such year.
The  portion  of  such entire net income thereby assigned to the S short
year and the C short year shall be included in  the  respective  reports
for  the  S short year and the C short year under this article. However,
where paragraph three of subsection (s) of section six hundred twelve of
this chapter applies, the portion of such entire net income assigned  to
the  S  short year and the C short year shall be determined under normal
tax accounting rules.
  (i) With respect to a DISC which during any taxable year or  reporting
year  (1)  received  more  than five percent of its gross sales from the
sale of inventory or other property which it purchased from  its  stock-
holders,  (2)  received more than five percent of its gross rentals from
the rental of property which it purchased or rented from its  stockhold-
ers  or  (3) received more than five percent of its total receipts other
than sales and rentals from its stockholders, the  following  provisions
shall apply.
  (A)  For any taxable year in which sub-paragraph (B) of this paragraph
is in effect and not rendered invalid, a DISC  meeting  the  above  test
shall be exempt from all taxes imposed by this article.
  (B)  Supplemental to the provisions of subdivision five of section two
hundred eleven of this article, any taxpayer required to compute  a  tax
under  this  article, which during the taxable year being reported was a
stockholder in any DISC meeting the test prescribed in  this  paragraph,
shall  for any taxable year ending after December thirty-first, nineteen
hundred seventy-one adjust each item of its receipts,  expenses,  assets
and  liabilities,  as  otherwise  computed under this article, by adding
thereto its attributable share of each such DISC's  receipts,  expenses,
assets  and  liabilities  as  reportable by each such DISC to the United
States Treasury Department for its annual reporting period ending during
the current taxable year of such taxpayer; provided, however,  (1)  that
all transactions between the taxpayer and each such DISC shall be elimi-
nated  from  the  taxpayer's  adjusted  receipts,  expenses,  assets and
liabilities; (2) that the taxpayer's  entire  net  income  as  otherwise
computed  under this section, shall be reduced by subtracting the amount
of the deemed distribution of current income, if  any,  from  each  such

S. 6359--B                         25                         A. 8559--B

DISC  already  included  in  the  entire  net income of such taxpayer by
virtue of having been included in its entire  taxable  income  for  that
taxable  year  as reported to the United States Treasury Department; and
(3)  that  in  the  event this paragraph should be rendered invalid, all
DISC's and their stockholders taxable hereunder shall be  taxed  instead
under the remaining portions of this article.
  (j)  in the case of property placed in service in taxable years begin-
ning before nineteen hundred ninety-four, for  taxable  years  beginning
after  December  thirty-first,  nineteen hundred eighty-one, except with
respect to property subject to the provisions  of  section  two  hundred
eighty-F  of  the  internal  revenue  code  and  property subject to the
provisions of section one hundred sixty-eight of  the  internal  revenue
code which is placed in service in this state in taxable years beginning
after  December thirty-first, nineteen hundred eighty-four, and provided
a deduction has not been excluded from entire  net  income  pursuant  to
subparagraph  eight  of  paragraph  (b)  of this subdivision, a taxpayer
shall be allowed with respect  to  property  which  is  subject  to  the
provisions  of  section  one hundred sixty-eight of the internal revenue
code the depreciation deduction  allowable  under  section  one  hundred
sixty-seven  of  the  internal  revenue  code as such section would have
applied to property placed in service on December thirty-first, nineteen
hundred eighty. This paragraph shall not apply to property of a taxpayer
principally engaged in the conduct of aviation (other than  air  freight
forwarders  acting as principal and like indirect air carriers) which is
placed in service before taxable years  beginning  in  nineteen  hundred
eighty-nine.
  (k)  QSSS.  (1)  New  York  S corporation. In the case of a New York S
corporation which is the parent of a qualified subchapter  S  subsidiary
(QSSS) with respect to a taxable year:
  (A) where the QSSS is not an excluded corporation,
  (i)  in  determining the entire net income of such parent corporation,
all assets, liabilities, income and deductions  of  the  QSSS  shall  be
treated  as  assets,  liabilities,  income  and deductions of the parent
corporation, and
  (ii) the QSSS shall be exempt from all taxes imposed by this  article,
and
  (B)  where  the QSSS is an excluded corporation, the entire net income
of the parent corporation shall be determined as  if  the  federal  QSSS
election had not been made.
  (2)  New  York  C corporation. In the case of a New York C corporation
which is the parent of a QSSS with respect to a taxable year:
  (A) where the QSSS is a taxpayer,
  (i) in determining the entire net income of such  parent  corporation,
all  assets,  liabilities,  income  and  deductions of the QSSS shall be
treated as assets, liabilities, income  and  deductions  of  the  parent
corporation, and
  (ii)  the QSSS shall be exempt from all taxes imposed by this article,
and
  (B) where the QSSS is not a taxpayer,
  (i) if the QSSS is not an excluded corporation, the parent corporation
may make a QSSS inclusion election to include all  assets,  liabilities,
income  and  deductions  of  the QSSS as assets, liabilities, income and
deductions of the parent corporation, and
  (ii) in the absence of such election, or where the QSSS is an excluded
corporation, the entire net income of the parent  corporation  shall  be
determined as if the federal QSSS election had not been made.

S. 6359--B                         26                         A. 8559--B

  (3)  Non-New  York  S  corporation  not  excluded. In the case of an S
corporation which is not a taxpayer and not an excluded corporation, and
which is the parent of a QSSS which is a taxpayer, the  shareholders  of
the parent corporation shall be entitled to make the New York S election
under subsection (a) of section six hundred sixty of this chapter.
  (A)  For  any  taxable  year for which such election is in effect, the
parent corporation shall be subject to tax under this article as  a  New
York S corporation, and the provisions of clause (A) of subparagraph one
of this paragraph shall apply.
  (B) For any taxable year for which such election is not in effect, the
QSSS shall be a New York C corporation, and the entire net income of the
QSSS  shall  be  determined as if the federal QSSS election had not been
made. For purposes of such determination, the taxable year of the parent
corporation shall constitute the taxable year of  the  QSSS,  excluding,
however, any portion of such year during which the QSSS is not a taxpay-
er.
  (4)  S  corporation excluded. In the case of an S corporation which is
an excluded corporation and which is the parent of a  QSSS  which  is  a
taxpayer,  the QSSS shall be a New York C corporation and the provisions
of clause (B) of subparagraph three of this paragraph shall apply.
  (5) Excluded corporation. The  term  "excluded  corporation"  means  a
corporation  subject  to  tax  under  sections  one hundred eighty-three
through one hundred eighty-six, inclusive, or  article  [thirty-two  or]
thirty-three  of  this  chapter, or a foreign corporation not taxable by
this state which, if it were taxable, would be subject to tax under  any
of such sections or [articles] ARTICLE.
  (6)  Taxpayer.  For  purposes  of  this paragraph, the term "taxpayer"
means a parent corporation or QSSS subject to tax  under  this  article,
determined without regard to the provisions of this paragraph.
  (7)  QSSS  inclusion  election.  The  election  under subclause (i) of
clause (B) of subparagraph two of this paragraph shall be effective  for
the  taxable year for which made and for all succeeding taxable years of
the corporation until such election is terminated. An election or termi-
nation shall be made on such form and in such manner as the commissioner
may prescribe by regulation or instruction.
  (l) Emerging technology investment deferral. In the case of  any  sale
of a qualified emerging technologies investment held for more than thir-
ty-six months and with respect to which the taxpayer elects the applica-
tion  of this paragraph, gain from such sale shall be recognized only to
the extent that the amount realized on such sale exceeds the cost of any
qualified emerging technologies investment  purchased  by  the  taxpayer
during  the three hundred sixty-five-day period beginning on the date of
such sale, reduced by any portion of such  cost  previously  taken  into
account under this paragraph. For purposes of this paragraph the follow-
ing shall apply:
  (1)  A  qualified investment is stock of a corporation or an interest,
other than as a creditor, in a partnership or limited liability  company
that was acquired by the taxpayer as provided in Internal Revenue Code S
1202(c)(1)(B),  except  that  the  reference to the term "stock" in such
section shall be read as "investment," or by the taxpayer from a  person
who had acquired such stock or interest in such a manner.
  (2)  A qualified emerging technology investment is a qualified invest-
ment, that was held by the taxpayer for at least thirty-six months, in a
company defined in paragraph (c) of subdivision one of  section  thirty-
one  hundred  two-e  of the public authorities law or an investment in a
partnership or limited liability company that is taxed as a  partnership

S. 6359--B                         27                         A. 8559--B

to the extent that such partnership or limited liability company invests
in qualified emerging technology companies.
  (3)  For  purposes  of  determining whether the nonrecognition of gain
under this subsection  applies  to  a  qualified  emerging  technologies
investment  that is sold, the taxpayer's holding period for such invest-
ment  and  the  qualified  emerging  technologies  investment  that   is
purchased  shall be determined without regard to Internal Revenue Code S
1223.
  (m) Amounts deferred. The amount deferred under paragraph (l) of  this
subdivision shall be added to entire net income when the reinvestment in
the  New  York  qualified  emerging technology company which qualified a
taxpayer for such deferral is sold.
  [(n) Qualified gas transportation contracts.
  (1) Any tax paid under this article allocable to receipts attributable
to a "qualified gas transportation contract" shall  be  deemed  to  have
been paid under article nine of this chapter for all purposes of law for
taxable  years  commencing  on  or  after  January  first, two thousand,
computed as hereinafter provided, if all of the following conditions are
met:
  (i) For periods ending prior  to  January  first,  two  thousand,  the
taxpayer  paid  the  franchise tax due under section one hundred eighty-
four of this chapter.
  (ii) For the taxable year, all  of  the  receipts  from  the  pipeline
transportation  of natural gas attributable to the taxpayer and included
in the taxpayer's entire net income (without regard to  this  paragraph)
are  solely from the transportation of natural gas for wholesale custom-
ers and commercial retail customers.
  (iii) The taxpayer's franchise tax liability under  this  article  for
the  taxable  year (computed without regard to this paragraph) is deter-
mined under paragraph (a) of subdivision one of section two hundred  ten
of  this  article,  and such tax liability (without regard to this para-
graph) is greater than the liability the taxpayer  would  have  incurred
under  sections  one hundred eighty-three and one hundred eighty-four of
this chapter (as such sections existed on December  thirty-first,  nine-
teen hundred ninety-nine) based on the same taxable period.
  (iv)  The  taxpayer  is  a  party  to  a "qualified gas transportation
contract," as defined herein.
  (2) The provisions of this paragraph shall apply only for the  taxable
years during which such qualified gas transportation contract is in full
force  and  effect, and shall apply only to the receipts of the taxpayer
less any expenses of the taxpayer (but not less than zero),  during  the
taxable  year,  to  the  extent included in entire net income, which are
attributable  to  any  such  qualified  gas  transportation   contracts.
Provided,  further,  in  any event, the characterization hereunder shall
expire and be of no further force and effect for taxable years  commenc-
ing on or after January first, two thousand fifteen.
  (3)  The  term  "qualified  gas  transportation contract" shall mean a
service agreement for the transportation of natural gas for an  end-user
which  is a qualified cogeneration facility with a rated capacity of one
thousand megawatts or more, which (i) was entered  into  before  January
first, two thousand, and was in full force and effect and binding on the
parties  thereto as of such date, (ii) as originally executed, was for a
term of at least twenty years, and (iii) the terms of which prohibit the
pass-through to such customer of the franchise tax  imposed  under  this
article,  while  allowing the recovery of the gross earnings tax imposed
under section one hundred eighty-four of this chapter. A contract  shall

S. 6359--B                         28                         A. 8559--B

not  qualify as a qualified gas transportation contract if there is: (i)
any renewal or extension of an otherwise  qualified  gas  transportation
contract  occurring on or after January first, two thousand, or (ii) any
material amendment to, or supplementation of, an otherwise qualified gas
transportation  contract on or after such date. Such renewal, extension,
or material amendment or supplementation shall have the same  force  and
effect  of terminating the characterization hereunder as if the qualify-
ing contract had expired by its own terms.
  (o)] (N-1) For taxable years beginning  after  December  thirty-first,
two  thousand  two, in the case of qualified property described in para-
graph two of subsection k of section 168 of the internal  revenue  code,
other than qualified resurgence zone property described in paragraph (q)
of  this  subdivision,  and  other  than qualified New York Liberty Zone
property described in paragraph two of subsection b of section 1400L  of
the  internal revenue code (without regard to clause (i) of subparagraph
(C) of such paragraph), which was placed in service  on  or  after  June
first,  two  thousand three, a taxpayer shall be allowed with respect to
such property the depreciation deduction allowable under section 167  of
the  internal  revenue  code  as such section would have applied to such
property had it been acquired by the taxpayer on  September  tenth,  two
thousand one.
  (o)  Related  members  expense  add back. (1) Definitions. (A) Related
member. "Related member" means a related person as defined  in  subpara-
graph  (c)  of paragraph three of subsection (b) of section four hundred
sixty-five of the internal revenue code,  except  that  "fifty  percent"
shall be substituted for "ten percent".
  (B)  Effective  rate  of tax. "Effective rate of tax" means, as to any
state or U.S. possession, the maximum statutory rate of tax  imposed  by
the  state or possession on or measured by a related member's net income
multiplied by the apportionment percentage, if any,  applicable  to  the
related member under the laws of said jurisdiction. For purposes of this
definition, the effective rate of tax as to any state or U.S. possession
is  zero  where  the  related  member's net income tax liability in said
jurisdiction is reported on a combined or consolidated return  including
both the taxpayer and the related member where the reported transactions
between  the  taxpayer  and the related member are eliminated or offset.
Also, for purposes of this definition, when computing the effective rate
of tax for a jurisdiction in which a  related  member's  net  income  is
eliminated or offset by a credit or similar adjustment that is dependent
upon  the related member either maintaining or managing intangible prop-
erty or collecting interest income in  that  jurisdiction,  the  maximum
statutory rate of tax imposed by said jurisdiction shall be decreased to
reflect  the statutory rate of tax that applies to the related member as
effectively reduced by such credit or similar adjustment.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by  the  commissioner,  and  include  amounts  allowable   as   interest
deductions under section one hundred sixty-three of the internal revenue
code  to the extent such amounts are directly or indirectly for, related
to or in connection with the acquisition, use,  maintenance  or  manage-
ment,  ownership,  sale,  exchange  or  disposition  of  such intangible
assets.

S. 6359--B                         29                         A. 8559--B

  (D) Valid Business Purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in a combined report with a related member pursuant to [subdivision four
of]  section two hundred [eleven] TEN-C of this article, for the purpose
of computing entire net income or  other  applicable  taxable  basis,  a
taxpayer  must  add  back  royalty payments directly or indirectly paid,
accrued, or incurred in connection with one or more direct  or  indirect
transactions with one or more related members during the taxable year to
the extent deductible in calculating federal taxable income.
  (B)  Exceptions.  (i)  The adjustment required in this paragraph shall
not apply to the portion of the royalty payment that the taxpayer estab-
lishes, by clear and convincing evidence of the type  and  in  the  form
specified  by the commissioner, meets all of the following requirements:
(I) the related member was subject to tax in this state or another state
or possession of the United States or a foreign nation or some  combina-
tion  thereof  on  a  tax  base  that included the royalty payment paid,
accrued or incurred by the taxpayer; (II) the related member during  the
same  taxable year directly or indirectly paid, accrued or incurred such
portion to a person that is not a related member; and (III)  the  trans-
action  giving  rise to the royalty payment between the taxpayer and the
related member was undertaken for a valid business purpose.
  (ii) The adjustment required in this paragraph shall not apply if  the
taxpayer  establishes,  by clear and convincing evidence of the type and
in the form specified by the commissioner, that: (I) the related  member
was  subject  to  tax  on or measured by its net income in this state or
another state or possession of the United  States  or  some  combination
thereof;  (II)  the  tax  base for said tax included the royalty payment
paid, accrued or incurred by  the  taxpayer;  and  (III)  the  aggregate
effective  rate  of tax applied to the related member in those jurisdic-
tions is no less than eighty percent of the statutory rate of  tax  that
applied  to  the  taxpayer under section two hundred ten of this article
for the taxable year.
  (iii) The adjustment required in this paragraph shall not apply if the
taxpayer establishes, by clear and convincing evidence of the  type  and
in the form specified by the commissioner, that: (I) the royalty payment
was  paid,  accrued  or incurred to a related member organized under the
laws of a country  other  than  the  United  States;  (II)  the  related
member's  income  from  the  transaction  was subject to a comprehensive
income tax treaty between such country and the United States; (III)  the
related member was subject to tax in a foreign nation on a tax base that
included  the royalty payment paid, accrued or incurred by the taxpayer;
(IV) the related member's income from the transaction was taxed in  such
country  at  an  effective rate of tax at least equal to that imposed by
this state; and (V) the royalty payment was paid,  accrued  or  incurred
pursuant  to  a  transaction  that  was  undertaken for a valid business
purpose and using terms that reflect an arm's length relationship.
  (iv) The adjustment required in this paragraph shall not apply if  the
taxpayer and the commissioner agree in writing to the application or use
of alternative adjustments or computations. The commissioner may, in his

S. 6359--B                         30                         A. 8559--B

or  her  discretion,  agree  to  the  application  or use of alternative
adjustments or computations when he or she concludes that in the absence
of such agreement the income of  the  taxpayer  would  not  be  properly
reflected.
  (p) For taxable years beginning after December thirty-first, two thou-
sand  two,  upon  the  disposition  of property to which paragraph [(o)]
(N-1) of this subdivision applies, the amount of any gain or loss inclu-
dible in entire net income shall be adjusted to reflect  the  inclusions
and exclusions from entire net income pursuant to subparagraph seventeen
of  paragraph  (a)  and  subparagraph seventeen of paragraph (b) of this
subdivision attributable to such property.
  (q) For purposes of paragraphs [(o)] (N-1) and (p)  of  this  subdivi-
sion,  qualified  resurgence zone property shall mean qualified property
described in paragraph two of subsection k of section 168 of the  inter-
nal  revenue code substantially all of the use of which is in the resur-
gence zone, as defined below, and is in the active conduct of a trade or
business by the taxpayer in such zone, and the original use of which  in
the  resurgence  zone commences with the taxpayer after December thirty-
first, two thousand two. The resurgence zone shall mean the area of  New
York county bounded on the south by a line running from the intersection
of  the Hudson River with the Holland Tunnel, and running thence east to
Canal Street, then running along the centerline of Canal Street  to  the
intersection  of the Bowery and Canal Street, running thence in a south-
easterly direction diagonally across  Manhattan  Bridge  Plaza,  to  the
Manhattan Bridge and thence along the centerline of the Manhattan Bridge
to  the  point where the centerline of the Manhattan Bridge would inter-
sect with the easterly bank of the East River, and bounded on the  north
by  a  line  running  from the intersection of the Hudson River with the
Holland Tunnel and running thence north along West Avenue to the  inter-
section  of  Clarkson  Street  then running east along the centerline of
Clarkson Street to the intersection of Washington Avenue,  then  running
south  along  the centerline of Washington Avenue to the intersection of
West Houston Street, then east along  the  centerline  of  West  Houston
Street,  then at the intersection of the Avenue of the Americas continu-
ing east along the centerline of East Houston  Street  to  the  easterly
bank of the East River.
  (R)  SUBTRACTION  MODIFICATION  FOR QUALIFIED RESIDENTIAL LOAN PORTFO-
LIOS. (1)(A) A TAXPAYER THAT IS EITHER A THRIFT INSTITUTION  AS  DEFINED
IN SUBPARAGRAPH THREE OF THIS PARAGRAPH OR A QUALIFIED COMMUNITY BANK AS
DEFINED  IN  SUBPARAGRAPH  TWO  OF PARAGRAPH (S) OF THIS SUBDIVISION AND
MAINTAINS A QUALIFIED RESIDENTIAL LOAN PORTFOLIO AS DEFINED IN  SUBPARA-
GRAPH TWO OF THIS PARAGRAPH SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING
ENTIRE NET INCOME THE AMOUNT, IF ANY, BY WHICH (I) THIRTY-TWO PERCENT OF
ITS  ENTIRE  NET  INCOME  DETERMINED  WITHOUT  REGARD  TO THIS PARAGRAPH
EXCEEDS (II) THE AMOUNTS DEDUCTED BY THE TAXPAYER PURSUANT  TO  SECTIONS
166  AND  585  OF THE INTERNAL REVENUE CODE LESS ANY AMOUNTS INCLUDED IN
FEDERAL TAXABLE INCOME AS A RESULT OF A RECOVERY OF A LOAN.
  (B)(I) IF THE TAXPAYER IS IN A COMBINED REPORT, THIS DEDUCTION WILL BE
COMPUTED ON A COMBINED BASIS. IN THAT INSTANCE, THE ENTIRE NET INCOME OF
THE COMBINED GROUP FOR PURPOSES OF THIS PARAGRAPH SHALL BE MULTIPLIED BY
A FRACTION, THE NUMERATOR OF WHICH IS THE AVERAGE TOTAL  ASSETS  OF  ALL
THE  THRIFT  INSTITUTIONS  OR  QUALIFIED COMMUNITY BANKS INCLUDED IN THE
COMBINED REPORT AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS
OF ALL THE CORPORATIONS INCLUDED IN THE COMBINED REPORT.
  (II) MEASUREMENT OF ASSETS FOR PURPOSES  OF  THIS  CLAUSE.  (I)  TOTAL
ASSETS  ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE SHEET,

S. 6359--B                         31                         A. 8559--B

COMPUTED IN THE SAME MANNER AS IS REQUIRED BY THE BANKING  REGULATOR  OF
THE TAXPAYERS INCLUDED IN THE COMBINED RETURN.
  (II)  ASSETS  WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH
ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED  IF  NOT
FULLY  DEPRECIATED  OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL
AMOUNT) IN THE COMPUTATION OF THE COMBINED GROUP'S ENTIRE NET INCOME FOR
THE TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTAN-
GIBLE ASSETS IDENTIFIED AS "GOODWILL".
  (III) TANGIBLE REAL AND PERSONAL PROPERTY, SUCH  AS  BUILDINGS,  LAND,
MACHINERY,  AND  EQUIPMENT SHALL BE VALUED AT COST. INTANGIBLE PROPERTY,
SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT BOOK VALUE.
  (IV)  INTERCORPORATE  STOCKHOLDINGS  AND  BILLS,  NOTES  AND  ACCOUNTS
RECEIVABLE,  AND  OTHER  INTERCORPORATE  INDEBTEDNESS BETWEEN THE CORPO-
RATIONS INCLUDED IN THE COMBINED REPORT SHALL BE ELIMINATED.
  (V) AVERAGE ASSETS ARE COMPUTED USING THE ASSETS MEASURED ON THE FIRST
DAY OF THE TAXABLE YEAR, AND ON THE LAST DAY OF EACH SUBSEQUENT  QUARTER
OF THE TAXABLE YEAR.
  (2)  QUALIFIED  RESIDENTIAL LOAN PORTFOLIO. (A) A TAXPAYER MAINTAINS A
QUALIFIED RESIDENTIAL LOAN PORTFOLIO IF AT LEAST SIXTY  PERCENT  OF  THE
AMOUNT  OF  THE  TOTAL  ASSETS  AT  THE CLOSE OF THE TAXABLE YEAR OF THE
THRIFT INSTITUTION OR QUALIFIED COMMUNITY BANK CONSISTS  OF  THE  ASSETS
DESCRIBED  IN  ITEMS (I) THROUGH (XII) OF THIS CLAUSE, WITH THE APPLICA-
TION OF THE RULE IN ITEM (XIII). IF  THE  TAXPAYER  IS  A  MEMBER  OF  A
COMBINED  GROUP, THE DETERMINATION OF WHETHER THERE IS A QUALIFIED RESI-
DENTIAL LOAN PORTFOLIO WILL BE MADE BY AGGREGATING  THE  ASSETS  OF  THE
THRIFT INSTITUTIONS OR QUALIFIED COMMUNITY BANKS THAT ARE MEMBERS OF THE
COMBINED GROUP.
  ASSETS:
  (I) CASH;
  (II)  OBLIGATIONS  OF  THE  UNITED  STATES  OR OF A STATE OR POLITICAL
SUBDIVISION THEREOF, AND STOCK OR OBLIGATIONS OF A CORPORATION WHICH  IS
AN  INSTRUMENTALITY  OR  A GOVERNMENT SPONSORED ENTERPRISE OF THE UNITED
STATES OR OF A STATE OR POLITICAL SUBDIVISION THEREOF;
  (III) LOANS SECURED BY A DEPOSIT OR SHARE OF A MEMBER;
  (IV) LOANS SECURED BY AN INTEREST IN REAL PROPERTY WHICH IS  (OR  FROM
THE PROCEEDS OF THE LOAN, WILL BECOME) RESIDENTIAL REAL PROPERTY OR REAL
PROPERTY USED PRIMARILY FOR CHURCH PURPOSES, LOANS MADE FOR THE IMPROVE-
MENT  OF  RESIDENTIAL  REAL PROPERTY OR REAL PROPERTY USED PRIMARILY FOR
CHURCH PURPOSES, PROVIDED THAT FOR PURPOSES OF  THIS  ITEM,  RESIDENTIAL
REAL PROPERTY SHALL INCLUDE SINGLE OR MULTI-FAMILY DWELLINGS, FACILITIES
IN  RESIDENTIAL DEVELOPMENTS DEDICATED TO PUBLIC USE OR PROPERTY USED ON
A NONPROFIT BASIS FOR RESIDENTS, AND MOBILE HOMES NOT USED  ON  A  TRAN-
SIENT BASIS;
  (V)  PROPERTY  ACQUIRED  THROUGH  THE  LIQUIDATION  OF DEFAULTED LOANS
DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
  (VI) ANY REGULAR OR RESIDUAL INTEREST IN A  REMIC,  AS  SUCH  TERM  IS
DEFINED  IN  SECTION  860D OF THE INTERNAL REVENUE CODE, BUT ONLY IN THE
PROPORTION WHICH THE ASSETS OF SUCH REMIC CONSIST OF PROPERTY  DESCRIBED
IN ANY OF THE PRECEDING ITEMS OF THIS CLAUSE, EXCEPT THAT IF NINETY-FIVE
PERCENT  OR  MORE  OF  THE  ASSETS OF SUCH REMIC ARE ASSETS DESCRIBED IN
ITEMS (I) THROUGH (V) OF THIS CLAUSE, THE ENTIRE INTEREST IN  THE  REMIC
SHALL QUALIFY;
  (VII)  ANY  MORTGAGE-BACKED  SECURITY  WHICH REPRESENTS OWNERSHIP OF A
FRACTIONAL UNDIVIDED INTEREST IN A TRUST, THE ASSETS  OF  WHICH  CONSIST
PRIMARILY  OF  MORTGAGE  LOANS,  PROVIDED  THAT  THE REAL PROPERTY WHICH
SERVES AS SECURITY FOR THE LOANS IS (OR FROM THE PROCEEDS OF  THE  LOAN,

S. 6359--B                         32                         A. 8559--B

WILL  BECOME) THE TYPE OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE
AND ANY COLLATERALIZED  MORTGAGE  OBLIGATION,  THE  SECURITY  FOR  WHICH
CONSISTS  PRIMARILY OF MORTGAGE LOANS THAT MAINTAIN AS SECURITY THE TYPE
OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
  (VIII)  CERTIFICATES  OF  DEPOSIT IN, OR OBLIGATIONS OF, A CORPORATION
ORGANIZED UNDER A STATE LAW WHICH SPECIFICALLY  AUTHORIZES  SUCH  CORPO-
RATION TO INSURE THE DEPOSITS OR SHARE ACCOUNTS OF MEMBER ASSOCIATIONS;
  (IX)  LOANS  SECURED BY AN INTEREST IN EDUCATIONAL, HEALTH, OR WELFARE
INSTITUTIONS OR FACILITIES, INCLUDING STRUCTURES DESIGNED OR USED PRIMA-
RILY FOR RESIDENTIAL PURPOSES FOR STUDENTS, RESIDENTS, AND PERSONS UNDER
CARE, EMPLOYEES, OR MEMBERS OF THE STAFF OF SUCH INSTITUTIONS OR FACILI-
TIES;
  (X) LOANS MADE FOR THE PAYMENT OF EXPENSES OF  COLLEGE  OR  UNIVERSITY
EDUCATION OR VOCATIONAL TRAINING;
  (XI)  PROPERTY  USED  BY  THE  TAXPAYER  IN  SUPPORT OF BUSINESS WHICH
CONSISTS PRINCIPALLY OF ACQUIRING THE SAVINGS OF THE PUBLIC AND  INVEST-
ING IN LOANS; AND
  (XII) LOANS FOR WHICH THE TAXPAYER IS THE CREDITOR AND WHICH ARE WHOL-
LY SECURED BY LOANS DESCRIBED IN ITEM (IV) OF THIS CLAUSE.
  (XIII)  THE  VALUE OF ACCRUED INTEREST RECEIVABLE AND ANY LOSS-SHARING
COMMITMENT OR OTHER LOAN GUARANTY  BY  A  GOVERNMENTAL  AGENCY  WILL  BE
CONSIDERED  PART OF THE BASIS IN THE LOANS TO WHICH THE ACCRUED INTEREST
OR LOSS PROTECTION APPLIES.
  (B) AT THE ELECTION OF  THE  TAXPAYER,  THE  PERCENTAGE  SPECIFIED  IN
CLAUSE  (A)  OF  THIS  SUBPARAGRAPH SHALL BE APPLIED ON THE BASIS OF THE
AVERAGE ASSETS OUTSTANDING DURING THE TAXABLE YEAR, IN LIEU OF THE CLOSE
OF THE TAXABLE YEAR. THE TAXPAYER CAN ELECT TO COMPUTE AN AVERAGE  USING
THE ASSETS MEASURED ON THE FIRST DAY OF THE TAXABLE YEAR AND ON THE LAST
DAY OF EACH SUBSEQUENT QUARTER, OR MONTH OR DAY DURING THE TAXABLE YEAR.
THIS ELECTION MAY BE MADE ANNUALLY.
  (C)  FOR  PURPOSES  OF  THIS  COMPUTATION, THE DEFINITION OF ASSETS IN
CLAUSE (B) OF SUBPARAGRAPH ONE OF THIS PARAGRAPH APPLIES.
  (D) FOR PURPOSES OF ITEM (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH, IF A
MULTIFAMILY STRUCTURE SECURING A LOAN IS USED IN PART FOR NONRESIDENTIAL
USE PURPOSES, THE ENTIRE LOAN IS DEEMED A RESIDENTIAL REAL PROPERTY LOAN
IF THE PLANNED RESIDENTIAL USE EXCEEDS EIGHTY PERCENT OF THE  PROPERTY'S
PLANNED  USE  (MEASURED,  AT  THE  TAXPAYER'S  ELECTION, BY USING SQUARE
FOOTAGE OR GROSS RENTAL REVENUE, AND DETERMINED AS OF THE TIME THE  LOAN
IS MADE).
  (E)  FOR  PURPOSES  OF  ITEM  (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH,
LOANS MADE TO FINANCE THE ACQUISITION OR DEVELOPMENT OF  LAND  SHALL  BE
DEEMED  TO  BE LOANS SECURED BY AN INTEREST IN RESIDENTIAL REAL PROPERTY
IF THERE IS A REASONABLE ASSURANCE THAT THE PROPERTY WILL  BECOME  RESI-
DENTIAL  REAL  PROPERTY  WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF
ACQUISITION OF SUCH LAND; BUT THIS SENTENCE  SHALL  NOT  APPLY  FOR  ANY
TAXABLE  YEAR  UNLESS,  WITHIN SUCH THREE YEAR PERIOD, SUCH LAND BECOMES
RESIDENTIAL REAL PROPERTY.  FOR  PURPOSES  OF  DETERMINING  WHETHER  ANY
INTEREST  IN  A  REMIC  QUALIFIES  UNDER ITEM (VI) OF CLAUSE (A) OF THIS
SUBPARAGRAPH, ANY REGULAR INTEREST IN ANOTHER REMIC HELD BY  SUCH  REMIC
SHALL  BE  TREATED AS A LOAN DESCRIBED IN A PRECEDING ITEM UNDER PRINCI-
PLES SIMILAR TO THE PRINCIPLE OF SUCH ITEM (VI),  EXCEPT  THAT  IS  SUCH
REMICS  ARE  PART  OF  A  TIERED STRUCTURE, THEY SHALL BE TREATED AS ONE
REMIC FOR PURPOSES OF SUCH ITEM (VI).
  (3) FOR PURPOSES OF  THIS  PARAGRAPH,  A  "THRIFT  INSTITUTION"  IS  A
SAVINGS  BANK, A SAVINGS AND LOAN ASSOCIATION, OR OTHER SAVINGS INSTITU-
TION CHARTERED AND SUPERVISED AS SUCH UNDER FEDERAL OR STATE LAW.

S. 6359--B                         33                         A. 8559--B

  (S) SUBTRACTION MODIFICATION FOR COMMUNITY BANKS  AND  SMALL  THRIFTS.
(1) A TAXPAYER THAT IS A QUALIFIED COMMUNITY BANK AS DEFINED IN SUBPARA-
GRAPH  TWO OF THIS PARAGRAPH OR A SMALL THRIFT INSTITUTION AS DEFINED IN
SUBPARAGRAPH TWO-A OF THIS PARAGRAPH SHALL BE  ALLOWED  A  DEDUCTION  IN
COMPUTING  ENTIRE NET INCOME EQUAL TO THE AMOUNT COMPUTED UNDER SUBPARA-
GRAPH THREE OF THIS PARAGRAPH.
  (2) TO BE A QUALIFIED COMMUNITY BANK,  A  TAXPAYER  MUST  SATISFY  THE
FOLLOWING CONDITIONS.
  (A)  IT  IS  A BANK OR TRUST COMPANY ORGANIZED UNDER OR SUBJECT TO THE
PROVISIONS OF ARTICLE THREE OF THE BANKING LAW OR A COMPARABLE PROVISION
OF THE LAWS OF ANOTHER STATE, OR A NATIONAL BANKING ASSOCIATION.
  (B) THE AVERAGE VALUE DURING THE TAXABLE YEAR OF  THE  ASSETS  OF  THE
TAXPAYER,  OR  THE  ASSETS OF THE AFFILIATED GROUP OF THE TAXPAYER, MUST
NOT EXCEED EIGHT BILLION DOLLARS.  FOR  PURPOSES  OF  THIS  CLAUSE,  THE
AFFILIATED GROUP OF THE TAXPAYER INCLUDES ANY CORPORATION THAT MEETS THE
OWNERSHIP  REQUIREMENTS TO BE INCLUDED IN A COMBINED REPORT SPECIFIED IN
PARAGRAPH (A) OF SUBDIVISION TWO OF SECTION TWO HUNDRED  TEN-C  OF  THIS
ARTICLE.
  (2-A)  TO  BE  A SMALL THRIFT INSTITUTION, A TAXPAYER MUST SATISFY THE
FOLLOWING CONDITIONS.
  (A) IT IS A SAVINGS BANK, A SAVINGS AND  LOAN  ASSOCIATION,  OR  OTHER
SAVINGS  INSTITUTION  CHARTERED  AND SUPERVISED AS SUCH UNDER FEDERAL OR
STATE LAW.
  (B) THE AVERAGE VALUE DURING THE TAXABLE YEAR OF  THE  ASSETS  OF  THE
TAXPAYER,  OR  THE  ASSETS OF THE AFFILIATED GROUP OF THE TAXPAYER, MUST
NOT EXCEED EIGHT BILLION DOLLARS.  FOR  PURPOSES  OF  THIS  CLAUSE,  THE
AFFILIATED GROUP OF THE TAXPAYER INCLUDES ANY CORPORATION THAT MEETS THE
OWNERSHIP  REQUIREMENTS TO BE INCLUDED IN A COMBINED REPORT SPECIFIED IN
PARAGRAPH (A) OF SUBDIVISION TWO OF SECTION TWO HUNDRED  TEN-C  OF  THIS
ARTICLE.
  (3)(A) THE SUBTRACTION MODIFICATION SHALL BE COMPUTED AS FOLLOWS:
  (I)  MULTIPLY THE TAXPAYER'S NET INTEREST INCOME FROM LOANS DURING THE
TAXABLE YEAR BY A FRACTION, THE NUMERATOR OF WHICH IS THE GROSS INTEREST
INCOME DURING THE TAXABLE YEAR FROM QUALIFYING LOANS AND THE DENOMINATOR
OF WHICH IS THE GROSS INTEREST INCOME DURING THE TAXABLE YEAR  FROM  ALL
LOANS.
  (II)  MULTIPLY  THE  AMOUNT DETERMINED IN CLAUSE (I) BY FORTY PERCENT.
THIS PRODUCT IS THE AMOUNT OF THE DEDUCTION  ALLOWED  UNDER  THIS  PARA-
GRAPH.
  (B)(I) NET INTEREST INCOME FROM LOANS SHALL MEAN GROSS INTEREST INCOME
FROM  LOANS  LESS  GROSS  INTEREST  EXPENSE  FROM  LOANS. GROSS INTEREST
EXPENSE FROM LOANS IS DETERMINED BY MULTIPLYING GROSS  INTEREST  EXPENSE
BY  A  FRACTION,  THE  NUMERATOR  OF WHICH IS THE AVERAGE TOTAL VALUE OF
LOANS OWNED BY THE THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXA-
BLE YEAR AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF THE
THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXABLE YEAR.
  (II) MEASUREMENT OF ASSETS FOR PURPOSES  OF  THIS  CLAUSE.  (I)  TOTAL
ASSETS  ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE SHEET,
COMPUTED IN THE SAME MANNER AS IS REQUIRED BY THE BANKING  REGULATOR  OF
THE TAXPAYERS INCLUDED IN THE COMBINED RETURN.
  (II)  ASSETS  WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH
ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED  IF  NOT
FULLY  DEPRECIATED  OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL
AMOUNT) IN THE COMPUTATION OF THE TAXPAYER'S ENTIRE NET INCOME  FOR  THE
TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTANGIBLE
ASSETS IDENTIFIED AS "GOODWILL".

S. 6359--B                         34                         A. 8559--B

  (III)  TANGIBLE  REAL  AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND,
MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST.  INTANGIBLE  PROPERTY,
SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT BOOK VALUE.
  (IV)  AVERAGE  ASSETS  ARE  COMPUTED  USING THE ASSETS MEASURED ON THE
FIRST DAY OF THE TAXABLE YEAR, AND ON THE LAST DAY  OF  EACH  SUBSEQUENT
QUARTER OF THE TAXABLE YEAR.
  (C) A QUALIFYING LOAN IS A LOAN THAT MEETS THE CONDITIONS SPECIFIED IN
SUBCLAUSE (I) OF THIS CLAUSE AND SUBCLAUSE (II) OF THIS CLAUSE.
  (I)  THE  LOAN  IS ORIGINATED BY THE QUALIFIED COMMUNITY BANK OR SMALL
THRIFT INSTITUTION OR OR PURCHASED BY THE QUALIFIED  COMMUNITY  BANK  OR
SMALL THRIFT INSTITUTION IMMEDIATELY AFTER ITS ORIGINATION IN CONNECTION
WITH  A  COMMITMENT  TO  PURCHASE MADE BY THE BANK OR THRIFT INSTITUTION
PRIOR TO THE LOAN'S ORIGINATION.
  (II) THE LOAN IS A SMALL BUSINESS LOAN OR A RESIDENTIAL MORTGAGE LOAN,
THE PRINCIPAL AMOUNT OF WHICH LOAN IS ONE MILLION DOLLARS OR  LESS,  AND
EITHER THE BORROWER IS LOCATED IN THIS STATE AS DETERMINED UNDER SECTION
TWO  HUNDRED  TEN-A  OF THIS ARTICLE AND THE LOAN IS NOT SECURED BY REAL
PROPERTY, OR THE LOAN IS SECURED BY REAL PROPERTY LOCATED IN NEW YORK.
  (III) A LOAN THAT HAS BEEN DETERMINED TO BE A  QUALIFYING  LOAN  IN  A
PRIOR TAXABLE YEAR REMAINS A QUALIFYING LOAN IN TAXABLE YEARS DURING AND
AFTER  WHICH SUCH LOAN IS ACQUIRED BY ANOTHER CORPORATION IN THE TAXPAY-
ER'S COMBINED GROUP.
  10. The term "calendar year" means a period of twelve calendar  months
(or  any  shorter  period  beginning  on  the  date the taxpayer becomes
subject to the tax imposed by this article) ending on  the  thirty-first
day  of  December, provided the taxpayer keeps its books on the basis of
such period or on the basis of any period ending on any day  other  than
the last day of a calendar month, or provided the taxpayer does not keep
books,  and  includes,  in  case  the taxpayer changes the period on the
basis of which it keeps its books from a fiscal year to a calendar year,
the period from the close of its last old fiscal year up to and  includ-
ing  the following December thirty-first. The term "fiscal year" means a
period of twelve calendar months (or any shorter period beginning on the
date the taxpayer becomes subject to the tax imposed  by  this  article)
ending  on  the  last day of any month other than December, provided the
taxpayer keeps its books on the basis of such period, and  includes,  in
case  the  taxpayer changes the period on the basis of which it keeps it
books from a calendar year to a fiscal year or from one fiscal  year  to
another  fiscal year, the period from the close of its last old calendar
or fiscal year up to the date designated as the close of its new  fiscal
year.
  11.  The  term  "tangible  personal property" means corporeal personal
property,  such  as  machinery,  tools,  implements,  goods,  wares  and
merchandise,  and  does  not  mean  money,  deposits in banks, shares of
stock, bonds, notes, credits or evidences of an interest in property and
evidences of debt.
  12. The term elected or appointed officer shall include the  chairman,
president,  vice-president,  secretary,  assistant secretary, treasurer,
assistant treasurer, comptroller, and also any other officer,  irrespec-
tive  of  his title, who is charged with and performs any of the regular
functions of any such officer, unless the  total  compensation  of  such
officer is derived exclusively from the receipt of commissions. A direc-
tor  shall  be  considered  an  elected  or appointed officer only if he
performs duties ordinarily performed by an officer.
  13. The term "manufacturer" means a taxpayer or,  in  the  case  of  a
combined  report,  a  combined  group, that, during the taxable year, is

S. 6359--B                         35                         A. 8559--B

principally engaged in manufacturing. A taxpayer or a combined group  is
principally  engaged  in manufacturing if more than fifty percent of the
gross receipts of the taxpayer  or  the  combined  group,  respectively,
during  the  taxable year are derived from the sale of goods produced by
manufacturing. In computing a combined group's gross receipts, intercor-
porate receipts shall be eliminated. In computing gross receipts  for  a
taxpayer that is a partner in partnership, inter-entity receipts between
the taxpayer and such partnership shall be eliminated.
  14.  (a)  The  term  "manufacturing"  means the process of working raw
materials into wares suitable for use or which  gives  new  shapes,  new
quality  or  new  combinations  to matter which already has gone through
some artificial process by the use of machinery, tools,  appliances  and
other similar equipment.
  (b)  Notwithstanding  the definition of manufacturing in paragraph (a)
of this subdivision:
  (i) The generation and distribution of electricity, the extraction and
distribution of natural gas, and the production of steam associated with
the generation of electricity does not constitute manufacturing.
  (ii) The creation, production or reproduction of  a  film,  television
show or commercial does not constitute manufacturing.
  (iii)  The  blending of two or more fuels does not constitute manufac-
turing.
  (iv) The mass production of food  products  for  wholesale  commercial
distribution and sale constitutes manufacturing.
  15.  The  term  "qualified New York manufacturer" means a manufacturer
that has property in the state that is used in manufacturing and  either
the  fair market value of that property at the close of the taxable year
is at least ten million dollars or all of its real and personal property
is located in New York. A taxpayer or, in the case of a combined report,
a combined group, that does not  satisfy  the  criteria  in  subdivision
thirteen of this section may be a qualified New York manufacturer if the
taxpayer  or the combined group employs during the taxable year at least
two thousand five hundred employees in manufacturing in New York and the
taxpayer or the combined group has property in the state used  in  manu-
facturing,  the  adjusted basis of which for federal income tax purposes
at the close of the  taxable  year  is  at  least  one  hundred  million
dollars.
  [19.  The  term "fulfillment services" shall mean any of the following
services performed by an entity on its premises on behalf of a  purchas-
er:
  (a)  the  acceptance  of  orders electronically or by mail, telephone,
telefax or internet;
  (b) responses to consumer correspondence or  inquiries  electronically
or by mail, telephone, telefax or internet;
  (c) billing and collection activities; or
  (d)  the  shipment of orders from an inventory of products offered for
sale by the purchaser.]
  S 5. Subdivisions 1, 2, 2-a, 4, 5, 6, 7 and 8 of section  209  of  the
tax  law,  subdivisions 1 and 6 as amended by chapter 817 of the laws of
1987, subdivision 2 as amended by chapter 75 of the laws of 1998, subdi-
vision 2-a as added by chapter 340 of the laws of 1998, subdivision 4 as
amended by section 27 of part S of this act, subdivisions  5  and  7  as
amended by section 2 of part FF-1 of chapter 57 of the laws of 2008, and
subdivision  8 as added by section 1 of part O of chapter 61 of the laws
of 2006, are amended to read as follows:

S. 6359--B                         36                         A. 8559--B

  1. (A) For the privilege of exercising its corporate franchise, or  of
doing business, or of employing capital, or of owning or leasing proper-
ty in this state in a corporate or organized capacity, or of maintaining
an  office  in this state, OR OF DERIVING RECEIPTS FROM ACTIVITY IN THIS
STATE,  for  all  or  any  part of each of its fiscal or calendar years,
every domestic or foreign corporation, except corporations specified  in
subdivision  four  of  this section, shall annually pay a franchise tax,
upon the basis of its [entire net] BUSINESS income base,  or  upon  such
other  basis  as  may  be  applicable  as hereinafter provided, for such
fiscal or calendar year or part thereof, on  a  report  which  shall  be
filed, except as hereinafter provided, on or before the fifteenth day of
March  next succeeding the close of each such year, or, in the case of a
corporation which reports on the basis of a fiscal year, within two  and
one-half  months  after the close of such fiscal year, and shall be paid
as hereinafter provided.
  (B) A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE  IF
IT  HAS RECEIPTS WITHIN THIS STATE OF ONE MILLION DOLLARS OR MORE IN THE
TAXABLE YEAR. FOR PURPOSES OF THIS SECTION, THE  TERM  "RECEIPTS"  MEANS
THE  RECEIPTS  THAT  ARE SUBJECT TO THE APPORTIONMENT RULES SET FORTH IN
SECTION TWO HUNDRED TEN-A OF THIS ARTICLE, AND THE TERM "RECEIPTS WITHIN
THIS STATE" MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF  THE  APPOR-
TIONMENT FACTOR DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTI-
CLE.  FOR  PURPOSES  OF  THIS PARAGRAPH, RECEIPTS FROM PROCESSING CREDIT
CARD TRANSACTIONS FOR MERCHANTS INCLUDE MERCHANT DISCOUNT FEES  RECEIVED
BY THE CORPORATION.
  (C) A CORPORATION IS DOING BUSINESS IN THIS STATE IF (I) IT HAS ISSUED
CREDIT  CARDS  TO  ONE  THOUSAND  OR  MORE  CUSTOMERS WHO HAVE A MAILING
ADDRESS WITHIN THIS STATE AS OF THE LAST DAY OF ITS TAXABLE  YEAR,  (II)
IT  HAS  MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE TOTAL NUMBER
OF LOCATIONS COVERED BY THOSE CONTRACTS  EQUALS  ONE  THOUSAND  OR  MORE
LOCATIONS  IN  THIS  STATE TO WHOM THE CORPORATION REMITTED PAYMENTS FOR
CREDIT CARD TRANSACTIONS DURING THE TAXABLE YEAR, OR (III)  THE  SUM  OF
THE  NUMBER OF CUSTOMERS DESCRIBED IN SUBPARAGRAPH (I) OF THIS PARAGRAPH
PLUS THE NUMBER OF LOCATIONS  COVERED  BY  ITS  CONTRACTS  DESCRIBED  IN
SUBPARAGRAPH (II) OF THIS PARAGRAPH EQUALS ONE THOUSAND OR MORE. AS USED
IN THIS SUBDIVISION, THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAV-
EL AND ENTERTAINMENT CARDS.
  (D)(I)  A  CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT AT LEAST
TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THIS STATE  IN  A  TAXABLE  YEAR
THAT  IS  PART  OF  A COMBINED REPORTING GROUP IS DERIVING RECEIPTS FROM
ACTIVITY IN THIS STATE IF THE RECEIPTS WITHIN THIS STATE OF THE  MEMBERS
OF  THE COMBINED REPORTING GROUP THAT HAVE AT LEAST TEN THOUSAND DOLLARS
OF RECEIPTS WITHIN THIS STATE IN THE AGGREGATE MEET  THE  THRESHOLD  SET
FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (II)  A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET FORTH
IN PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS,  OR
LOCATIONS,  OR CUSTOMERS AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C) OF
THIS SUBDIVISION, AND IS PART OF A  COMBINED  REPORTING  GROUP  THAT  IS
DOING  BUSINESS  IN THIS STATE IF THE NUMBER OF CUSTOMERS, LOCATIONS, OR
CUSTOMERS AND LOCATIONS,  WITHIN  THIS  STATE  OF  THE  MEMBERS  OF  THE
COMBINED REPORTING GROUP THAT HAVE AT LEAST TEN CUSTOMERS, LOCATIONS, OR
CUSTOMERS AND LOCATIONS, WITHIN THIS STATE IN THE AGGREGATE MEETS ANY OF
THE THRESHOLDS SET FORTH IN PARAGRAPH (C) OF THIS SUBDIVISION.
  (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
TIVE  PERCENTAGE  CHANGE  IN  THE CONSUMER PRICE INDEX. THE COMMISSIONER
SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE

S. 6359--B                         37                         A. 8559--B

CONSUMER PRICE INDEX HAS CHANGED BY TEN PERCENT OR  MORE  SINCE  JANUARY
FIRST,  TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS WERE
LAST ADJUSTED UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL  BE  ADJUSTED
TO  REFLECT  THAT  CUMULATIVE  PERCENTAGE  CHANGE  IN THE CONSUMER PRICE
INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
SAND DOLLARS. AS USED IN THIS PARAGRAPH, "CONSUMER  PRICE  INDEX"  MEANS
THE  CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE FORM
THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
ANY ADJUSTMENT SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER  THE  ADJUST-
MENT IS MADE.
  (F)  IF  A PARTNERSHIP IS DOING BUSINESS, EMPLOYING CAPITAL, OWNING OR
LEASING PROPERTY IN THIS STATE, MAINTAINING AN OFFICE IN THE  STATE,  OR
DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, ANY CORPORATION THAT IS A
PARTNER  IN  SUCH PARTNERSHIP SHALL BE SUBJECT TO TAX UNDER THIS ARTICLE
AS DESCRIBED IN THE REGULATIONS OF THE COMMISSIONER.
  2. A foreign corporation shall not be deemed  to  be  doing  business,
employing  capital, owning or leasing property, or maintaining an office
in this state, OR DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, for the
purposes of this article, by reason  of  (a)  the  maintenance  of  cash
balances  with banks or trust companies in this state, or (b) the owner-
ship of shares of stock or securities kept in this state, if kept  in  a
safe  deposit  box,  safe,  vault  or  other  receptacle  rented for the
purpose, or if pledged as collateral security, or if deposited with  one
or more banks or trust companies, or brokers who are members of a recog-
nized  security exchange, in safekeeping or custody accounts, or (c) the
taking of any action by any such bank or trust company or broker,  which
is  incidental  to  the rendering of safekeeping or custodian service to
such corporation, or (d) the maintenance of an office in this  state  by
one or more officers or directors of the corporation who are not employ-
ees  of  the corporation if the corporation otherwise is not doing busi-
ness in this state, and does not employ capital or own or lease property
in this state, or (e) the keeping of books or records of  a  corporation
in this state if such books or records are not kept by employees of such
corporation  and such corporation does not otherwise do business, employ
capital, own or lease property or maintain an office in this  state,  or
(f)  [the  use  of fulfillment services of a person other than an affil-
iated person and the ownership of property stored  on  the  premises  of
such  person  in conjunction with such services, or (g)] any combination
of the foregoing activities. [For purposes of this subdivision,  persons
are  affiliated  persons  with  respect  to each other where one of such
persons has an ownership interest of more  than  five  percent,  whether
direct or indirect, in the other, or where an ownership interest of more
than  five  percent, whether direct or indirect, is held in each of such
persons by another person or by a  group  of  other  persons  which  are
affiliated  persons with respect to each other. The term "person" in the
preceding sentence and in paragraph (f) of this subdivision  shall  have
the  meaning  ascribed  thereto  by  subdivision  (a)  of section eleven
hundred one of this chapter.]
  2-a. An alien corporation shall not be deemed to  be  doing  business,
employing  capital, owning or leasing property, or maintaining an office
in this state, for the purposes of this article, if  its  activities  in
this  state are limited solely to (a) investing or trading in stocks and
securities for its own account within the  meaning  of  clause  (ii)  of
subparagraph  (A)  of  paragraph  (2) of subsection (b) of section eight
hundred sixty-four of the internal revenue  code  or  (b)  investing  or
trading  in commodities for its own account within the meaning of clause

S. 6359--B                         38                         A. 8559--B

(ii) of subparagraph (B) of paragraph (2) of subsection (b)  of  section
eight  hundred sixty-four of the internal revenue code or (c) any combi-
nation of activities described in paragraphs (a) and (b) of this  subdi-
vision.    AN ALIEN CORPORATION THAT HAS NO EFFECTIVELY CONNECTED INCOME
FOR THE TAXABLE YEAR PURSUANT TO CLAUSE (IV) OF THE OPENING PARAGRAPH OF
SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE SHALL  NOT
BE SUBJECT TO TAX UNDER THIS ARTICLE FOR THAT TAXABLE YEAR. For purposes
of  this  subdivision,  an  alien corporation is a corporation organized
under the laws of a country, or any political subdivision thereof, other
than the United States.
  4. Corporations liable to tax under sections one hundred  eighty-three
to  one  hundred  eighty-four-a,  inclusive,  corporations taxable under
[articles thirty-two and] ARTICLE  thirty-three  of  this  chapter,  any
trust  company  organized  under a law of this state all of the stock of
which is owned by not less than twenty savings banks organized  under  a
law  of  this state, [bank holding companies filing a combined return in
accordance with subsection (f) of section fourteen hundred sixty-two  of
this  chapter,] a captive REIT or a captive RIC filing a combined return
under [either subsection (f) of section fourteen hundred  sixty-two  or]
subdivision  (f) of section fifteen hundred fifteen of this chapter, and
housing companies organized and operating pursuant to the provisions  of
article two or article five of the private housing finance law and hous-
ing  development  fund companies organized pursuant to the provisions of
article eleven of the private housing finance law shall not  be  subject
to tax under this article.
  5.  For  any taxable year of a real estate investment trust as defined
in section eight hundred fifty-six of the internal revenue code in which
such trust is subject to federal income  taxation  under  section  eight
hundred  fifty-seven  of such code, such trust shall be subject to a tax
computed under either paragraph (a) [, (c)] or (d) of subdivision one of
section two  hundred  ten  of  this  chapter,  whichever  is  [greatest]
GREATER,  and  shall not be subject to any tax under article [thirty-two
or article] thirty-three of this  chapter  except  for  a  captive  REIT
required  to  file  a  combined return under [subdivision (f) of section
fourteen hundred  sixty-two  or]  subdivision  (f)  of  section  fifteen
hundred  fifteen  of  this  chapter.  In  the case of such a real estate
investment trust, including a captive REIT as defined in section two  of
this chapter, the term "entire net income" means "real estate investment
trust  taxable income" as defined in paragraph two of subdivision (b) of
section eight hundred fifty-seven (as modified by section eight  hundred
fifty-eight)  of the internal revenue code plus the amount taxable under
paragraph three of subdivision (b) of section eight hundred  fifty-seven
of  such  code,  subject to the [modification] MODIFICATIONS required by
subdivision nine of section two hundred eight of  this  article  [(other
than  the  modification  required  by  subparagraph two of paragraph (a)
thereof) including the modifications required by paragraphs (d) and  (e)
of subdivision three of section two hundred ten of this article].
  6. For any taxable year of a DISC, not exempt from tax under paragraph
(i)  of  subdivision  nine of section two hundred eight of this article,
the taxes imposed by subdivision one of this section shall  be  computed
only under either paragraph (b) or (d) of subdivision one of section two
hundred ten of this chapter, whichever is greater[, and paragraph (e) of
such subdivision].
  7. For any taxable year, beginning on or after January first, nineteen
hundred  eighty of a regulated investment company, as defined in section
eight hundred fifty-one of the internal  revenue  code,  in  which  such

S. 6359--B                         39                         A. 8559--B

company  is  subject  to  federal  income  taxation  under section eight
hundred fifty-two of such code, such company shall be subject to  a  tax
computed  under either paragraph (a)[, (c)] or (d) of subdivision one of
section  two  hundred  ten  of  this  chapter,  whichever  is [greatest]
GREATER, and shall not be subject to any tax under  article  [thirty-two
or  article]  thirty-three  of  this  chapter  except  for a captive RIC
required to file a combined return under  [subdivision  (f)  of  section
fourteen  hundred  sixty-two  or]  subdivision  (f)  of  section fifteen
hundred fifteen of this chapter. In the case of such a regulated invest-
ment company, including a captive RIC as defined in section two of  this
chapter,  the term "entire net income" means "investment company taxable
income" as defined in paragraph two of subdivision (b) of section  eight
hundred  fifty-two,  as modified by section eight hundred fifty-five, of
the internal revenue code plus the amount taxable under paragraph  three
of  subdivision  (b)  of  section  eight  hundred fifty-two of such code
subject to the [modification] MODIFICATIONS required by subdivision nine
of section two hundred eight of this chapter[, other than the  modifica-
tion  required by subparagraph two of paragraph (a) and by paragraph (f)
thereof, including the modification required by paragraphs (d)  and  (e)
of subdivision three of section two hundred ten of this chapter].
  8. For any taxable year beginning on or after January first, two thou-
sand  six,  a  corporation  that  is no longer doing business, employing
capital, or owning or leasing property, OR DERIVING RECEIPTS FROM ACTIV-
ITY in this state in a corporate or organized capacity that has filed  a
final  tax return with the department for the last tax year it was doing
business and has no outstanding tax liability for such final tax  return
or  any  tax  return  for prior tax years shall be exempt from all taxes
imposed by paragraph (d) of subdivision one of section two  hundred  ten
of  this  article for tax years following the last year such corporation
was doing business.
  S 6. Section 209-A of the tax law is REPEALED.
  S 7. The section heading and subdivision 1 of section 209-B of the tax
law, the section heading as amended by chapter 11 of the  laws  of  1983
and subdivision 1 as amended by section 4 of part A of chapter 59 of the
laws of 2013, are amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge.  1. (A) For the privilege of exercising its  corporate  fran-
chise,  or  of  doing business, or of employing capital, or of owning or
leasing property in a corporate or organized capacity, or of maintaining
an office, OR OF DERIVING RECEIPTS FROM  ACTIVITY  in  the  metropolitan
commuter  transportation  district,  for  all or any part of its taxable
year, there is hereby imposed on every corporation,  other  than  a  New
York  S  corporation,  subject  to tax under section two hundred nine of
this article, or any receiver, referee, trustee, assignee or other fidu-
ciary, or any officer or agent appointed by any court, who conducts  the
business  of  any such corporation, [for the taxable years commencing on
or after January first, nineteen hundred eighty-two  but  ending  before
December thirty-first, two thousand eighteen,] a tax surcharge, in addi-
tion to the tax imposed under section two hundred nine of this article[,
to  be  computed  at  the rate of eighteen]. SUCH SURCHARGE SHALL BE THE
PRODUCT OF TWENTY-FOUR AND ONE-HALF percent of  the  tax  imposed  under
such section two hundred nine for such taxable years or any part of such
taxable  years  [ending  before  December thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article,  and  at  the rate of seventeen percent of the tax
imposed under such section for such taxable years or any  part  of  such

S. 6359--B                         40                         A. 8559--B

taxable years ending on or after December thirty-first, nineteen hundred
eighty-three after] BEFORE the deduction of any credits otherwise allow-
able  under  this  article; provided, however, that such [rates] RATE of
tax  surcharge  shall be applied only to that portion of the tax imposed
under section two hundred  nine  of  this  article  [after]  BEFORE  the
deduction of any credits otherwise allowable under this article which is
attributable  to  the taxpayer's business activity carried on within the
metropolitan commuter transportation district;  and  provided,  further,
[that  the  tax  surcharge  imposed by this section shall not be imposed
upon any taxpayer for more than four hundred thirty-two months. Provided
however, that for taxable years commencing on or after July first, nine-
teen hundred ninety-eight, such surcharge shall be calculated as if  the
tax  imposed  under section two hundred ten of this article were imposed
under the law in effect for taxable years commencing on  or  after  July
first,  nineteen  hundred  ninety-seven  and before July first, nineteen
hundred ninety-eight. Provided however, that for taxable years  commenc-
ing  on or after January first, two thousand seven, such surcharge shall
be calculated using the highest of the tax  bases  imposed  pursuant  to
paragraphs  (a),  (b),  (c)  or  (d)  of  subdivision one of section two
hundred ten of this article and the amount imposed under  paragraph  (e)
of  subdivision  one  of  such  section two hundred ten, for the taxable
year; and, provided further that, if such highest amount is the tax base
imposed under paragraph (a), (b) or (c) of such  subdivision,  then  the
surcharge  shall  be  computed as if the tax rates and limitations under
such paragraph were the tax rates and limitations under  such  paragraph
in  effect for taxable years commencing on or after July first, nineteen
hundred ninety-seven and before July  first,  nineteen  hundred  ninety-
eight]  THE  SURCHARGE  COMPUTED  ON  A  COMBINED REPORT SHALL INCLUDE A
SURCHARGE ON THE FIXED  DOLLAR  MINIMUM  TAX  FOR  EACH  MEMBER  OF  THE
COMBINED GROUP SUBJECT TO THE SURCHARGE UNDER THIS SUBDIVISION.
  (B)  A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOL-
ITAN COMMUTER TRANSPORTATION DISTRICT IF  IT  HAS  RECEIPTS  WITHIN  THE
METROPOLITAN  COMMUTER TRANSPORTATION DISTRICT OF ONE MILLION DOLLARS OR
MORE IN  A  TAXABLE  YEAR.  FOR  PURPOSES  OF  THIS  SECTION,  THE  TERM
"RECEIPTS"  MEANS  THE  RECEIPTS  THAT  ARE SUBJECT TO THE APPORTIONMENT
RULES SET FORTH IN SECTION TWO HUNDRED TEN-A OF THIS  ARTICLE,  AND  THE
TERM "RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT"
MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FACTOR
DETERMINED  UNDER  SUBDIVISION TWO OF THIS SECTION. FOR PURPOSES OF THIS
PARAGRAPH,  RECEIPTS  FROM  PROCESSING  CREDIT  CARD  TRANSACTIONS   FOR
MERCHANTS INCLUDE MERCHANT DISCOUNT FEES RECEIVED BY THE CORPORATION.
  (C)  A  CORPORATION  IS  DOING  BUSINESS  IN THE METROPOLITAN COMMUTER
TRANSPORTATION DISTRICT IF (I) IT HAS ISSUED CREDIT CARDS TO  ONE  THOU-
SAND  OR  MORE CUSTOMERS WHO HAVE A MAILING ADDRESS WITHIN THE METROPOL-
ITAN COMMUTER TRANSPORTATION DISTRICT AS OF THE LAST DAY OF ITS  TAXABLE
YEAR,  (II)  IT  HAS  MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE
TOTAL NUMBER OF LOCATIONS COVERED BY THOSE CONTRACTS EQUALS ONE THOUSAND
OR MORE LOCATIONS IN THE METROPOLITAN COMMUTER  TRANSPORTATION  DISTRICT
TO  WHOM  THE CORPORATION REMITTED PAYMENTS FOR CREDIT CARD TRANSACTIONS
DURING THE TAXABLE YEAR, OR (III) THE SUM OF  THE  NUMBER  OF  CUSTOMERS
DESCRIBED  IN  SUBPARAGRAPH  (I)  OF  THIS  PARAGRAPH PLUS THE NUMBER OF
LOCATIONS COVERED BY ITS CONTRACTS DESCRIBED  IN  SUBPARAGRAPH  (II)  OF
THIS  PARAGRAPH  EQUALS ONE THOUSAND OR MORE. AS USED IN THIS PARAGRAPH,
THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAVEL  AND  ENTERTAINMENT
CARDS.

S. 6359--B                         41                         A. 8559--B

  (D)(I)  A  CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT AT LEAST
TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANS-
PORTATION DISTRICT IN A TAXABLE YEAR THAT IS PART OF A COMBINED  REPORT-
ING  GROUP IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOLITAN COMMU-
TER  TRANSPORTATION  DISTRICT  IF  THE  RECEIPTS WITHIN THE METROPOLITAN
COMMUTER TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY  BUSINESS
GROUP  THAT  HAVE  AT  LEAST TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE
METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN THE AGGREGATE MEET  THE
THRESHOLD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (II)  A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET FORTH
IN PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS,  OR
LOCATIONS,  OR  CUSTOMERS  AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C),
AND IS PART OF A COMBINED REPORTING GROUP THAT IS DOING BUSINESS IN  THE
METROPOLITAN  COMMUTER  TRANSPORTATION DISTRICT IF THE NUMBER OF CUSTOM-
ERS, LOCATIONS, OR CUSTOMERS  AND  LOCATIONS,  WITHIN  THE  METROPOLITAN
COMMUTER  TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY BUSINESS
GROUP THAT HAVE AT LEAST TEN  CUSTOMERS,  LOCATIONS,  OR  CUSTOMERS  AND
LOCATIONS,  WITHIN  THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN
THE AGGREGATE MEETS ANY OF THE THRESHOLDS SET FORTH IN PARAGRAPH (C)  OF
THIS SUBDIVISION.
  (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
TIVE  PERCENTAGE  CHANGE  IN  THE CONSUMER PRICE INDEX. THE COMMISSIONER
SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
CONSUMER PRICE INDEX HAS CHANGED BY TEN PERCENT OR  MORE  SINCE  JANUARY
FIRST,  TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS WERE
LAST ADJUSTED UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL  BE  ADJUSTED
TO  REFLECT  THAT  CUMULATIVE  PERCENTAGE  CHANGE  IN THE CONSUMER PRICE
INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
SAND DOLLARS. AS USED IN THIS PARAGRAPH, "CONSUMER  PRICE  INDEX"  MEANS
THE  CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE FROM
THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
ANY ADJUSTMENT SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER  THE  ADJUST-
MENT IS MADE.
  S  8.  The  opening paragraph of subdivision 2 of section 209-B of the
tax law, as amended by chapter 11 of the laws of  1983,  is  amended  to
read as follows:
  The  portion of the taxpayer's business activity carried on within the
metropolitan commuter transportation district shall  be  determined  [by
multiplying the tax imposed under section two hundred nine of this arti-
cle by a percentage to be determined as follows:] PURSUANT TO THE METHOD
PRESCRIBED  IN SECTION TWO HUNDRED TEN-A OF THIS ARTICLE EXCEPT THAT THE
REFERENCES TO "WITHIN THE STATE" SHALL REFER TO WITHIN THE  METROPOLITAN
COMMUTER  TRANSPORTATION  DISTRICT AND REFERENCES TO "WITHIN AND WITHOUT
THE STATE" SHALL REFER TO WITHIN THE STATE.
  S 9. Paragraphs (a), (b), (c) and (d)  of  subdivision  2  of  section
209-B of the tax law are REPEALED.
  S  10.  Subdivisions  2-a  and 2-b of section 209-B of the tax law are
REPEALED.
  S 11. Subdivisions 3 and 5 of section 209-B of the tax  law,  subdivi-
sion 3 as amended by chapter 11 of the laws of 1983 and subdivision 5 as
amended  by  chapter  166  of  the  laws of 1991, are amended to read as
follows:
  3. A corporation shall not be deemed to be doing  business,  employing
capital, owning or leasing property, or maintaining an office, OR DERIV-
ING  RECEIPTS  FROM ACTIVITY in the metropolitan commuter transportation
district, for the purposes of this section, by reason of (a) the mainte-

S. 6359--B                         42                         A. 8559--B

nance of cash balances with banks or trust companies in the metropolitan
commuter transportation district, or (b)  the  ownership  of  shares  of
stock  or  securities  kept  in the metropolitan commuter transportation
district, if kept in a safe deposit box, safe, vault or other receptacle
rented  for  the  purpose,  or  if pledged as collateral security, or if
deposited with one or more banks or trust companies, or brokers who  are
members  of  a  recognized  security exchange, in safekeeping or custody
accounts, or (c) the taking of any action by  any  such  bank  or  trust
company  or  broker, which is incidental to the rendering of safekeeping
or custodian service to such corporation, or (d) the maintenance  of  an
office  in  the  metropolitan commuter transportation district by one or
more officers or directors of the corporation who are not  employees  of
the  corporation  if  the corporation otherwise is not doing business in
the metropolitan commuter transportation district, and does  not  employ
capital  or own or lease property in the metropolitan commuter transpor-
tation district, or (e) the keeping of books or records of a corporation
in the metropolitan commuter transportation district if  such  books  or
records  are  not  kept by employees of such corporation and such corpo-
ration does not otherwise do business,  employ  capital,  own  or  lease
property  or maintain an office in the metropolitan commuter transporta-
tion district, or (f) any combination of the foregoing activities.
  5. The provisions concerning  reports  under  [section]  SECTIONS  TWO
HUNDRED  TEN-C  AND  two  hundred  eleven  shall  be  applicable to this
section, except that for purposes of  an  automatic  extension  for  six
months  for  filing  a report covering the tax surcharge imposed by this
section, such automatic extension shall be allowed only  if  a  taxpayer
files with the commissioner an application for extension in such form as
said  commissioner may prescribe by regulation and pays on or before the
date of such filing in addition to any other amounts required under this
article, either ninety percent of the entire tax surcharge  required  to
be  paid  under this section for the applicable period, or not less than
the tax surcharge shown on the taxpayer's return for the preceding taxa-
ble year, if such preceding taxable year was a taxable  year  of  twelve
months;  provided,  however,  that in no event shall such amount be less
than the product of the following three amounts: (1) the  tax  surcharge
rate  in effect for the taxable year pursuant to subdivision one of this
section, (2) the fixed dollar minimum applicable  to  such  taxpayer  as
determined under paragraph (d) of subdivision one of section two hundred
ten  of this chapter for the taxable year, and (3) the percentage deter-
mined under subdivision two of this section for  the  preceding  taxable
year,  unless  the taxpayer was not subject to the tax surcharge imposed
pursuant to this section with respect to such year, in which  case  such
percentage  shall be deemed to be one hundred percent. The tax surcharge
imposed by this section shall be payable to the commissioner in full  at
the  time  the report is required to be filed, and such tax surcharge or
the balance thereof, imposed on any taxpayer which  ceases  to  exercise
its franchise or be subject to the tax surcharge imposed by this section
shall  be payable to the commissioner at the time the report is required
to be filed, provided such tax surcharge of a domestic corporation which
continues to possess its franchise shall be subject to adjustment as the
circumstances may require; all other tax surcharges of any such  taxpay-
er,  which  pursuant  to  the foregoing provisions of this section would
otherwise be payable subsequent to the time such report is  required  to
be  filed,  shall  nevertheless  be  payable  at  such  time. All of the
provisions of this article presently applicable are  applicable  to  the
tax surcharge imposed by this section.

S. 6359--B                         43                         A. 8559--B

  S 12. Subdivision 1 of section 210 of the tax law, as added by chapter
817  of  the laws of 1987, the opening paragraph as amended by section 1
of part D and paragraph (g) as amended by section 2 of part A of chapter
63 of the laws of 2000, paragraph (a) as amended by  section 2 of part N
of  chapter  60  of the laws of 2007, subparagraph 2 of paragraph (b) as
amended by section 17 of part R of this act, subparagraph (ii) of  para-
graph  (c) as amended by section 2 of part C and subparagraph 5 of para-
graph (d) as added by section 3 of part C of chapter 56 of the  laws  of
2011,  subparagraphs  (vi)  and  (vii)  of  paragraph  (a) as amended by
section 16 of part R of this act, subparagraph (iii) of paragraph (c) as
amended by section 18 of part R of this act, and subparagraph 6 of para-
graph (d) as amended by section 19 of part R of this act, paragraph  (b)
as  amended by section 1 of part GG1, subparagraph 3 of paragraph (d) as
amended by section 3 of part AA1, subparagraph 4  of  paragraph  (d)  as
added  by  section  2 of part AA1 and subparagraph 1 of paragraph (g) as
amended by section 4 of part AA1 of chapter 57  of  the  laws  of  2008,
paragraph  (c)  as amended by section 10 of part A and subparagraph 1 of
paragraph (d) as amended by section 12 of part A of chapter  56  of  the
laws  of  1998,  paragraph  (d) as amended by chapter 760 of the laws of
1992, paragraph (e) as amended by section 1 of part P of chapter 407  of
the  laws  of  1999,  paragraph (f) as amended by section 2 of part E of
chapter 61 of the laws of 2005 and paragraph (h) as added by section  20
of part R of this act, is amended to read as follows:
  1.  The  tax imposed by subdivision one of section two hundred nine of
this chapter shall be: (A) in the case of each taxpayer other than a New
York S corporation or a qualified homeowners association,  the  [sum  of
(1) the] highest of the amounts prescribed in paragraphs (a), (b), [(c)]
and  (d) of this subdivision [and (2) the amount prescribed in paragraph
(e) of this subdivision], (B) in the case of  each  New  York  S  corpo-
ration,  the  amount  prescribed in paragraph [(g)] (D) of this subdivi-
sion, and (C) in the case of a  qualified  homeowners  association,  the
[sum  of (1) the] highest of the amounts prescribed in paragraphs (a)[,]
AND (b) [and (c)] of this subdivision [and (2) the amount prescribed  in
paragraph  (e) of this subdivision]. For purposes of this paragraph, the
term "qualified homeowners association" means a homeowners  association,
as  such term is defined in subsection (c) of section five hundred twen-
ty-eight of the internal revenue code without regard to subparagraph (E)
of paragraph one of such subsection (relating to elections to  be  taxed
pursuant  to  such section), which has no homeowners association taxable
income, as such term is defined  in  subsection  (d)  of  such  section.
Provided,  however, that in the case of a small business taxpayer (other
than a New York S corporation) as  defined  in  paragraph  (f)  of  this
subdivision, FOR TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO THOU-
SAND  SIXTEEN,  if the amount prescribed in such paragraph (b) is higher
than the amount prescribed in such paragraph (a) solely by reason of the
application of the rate applicable to  small  business  taxpayers,  then
with  respect  to  such  taxpayer  the  tax  referred to in the previous
sentence shall be [the sum of (1) the highest]  HIGHER  of  the  amounts
prescribed in paragraphs (a)[, (c)] and (d) of this subdivision [and (2)
the amount prescribed in paragraph (e) of this subdivision].
  (a)  [Entire  net]  BUSINESS income base. [For taxable years beginning
before July first, nineteen hundred ninety-nine, the  amount  prescribed
by  this  paragraph shall be computed at the rate of nine percent of the
taxpayer's entire net income base. For  taxable  years  beginning  after
June  thirtieth, nineteen hundred ninety-nine and before July first, two
thousand, the amount prescribed by this paragraph shall be  computed  at

S. 6359--B                         44                         A. 8559--B

the  rate  of  eight  and  one-half percent of the taxpayer's entire net
income base. For taxable years beginning after June thirtieth, two thou-
sand and before July first, two thousand one, the amount  prescribed  by
this  paragraph  shall  be  computed at the rate of eight percent of the
taxpayer's entire net income base. For  taxable  years  beginning  after
June  thirtieth, two thousand one and before January first, two thousand
seven, the amount prescribed by this paragraph shall be computed at  the
rate  of  seven and one-half percent of the taxpayer's entire net income
base.] For taxable years beginning [on or after] BEFORE  January  first,
two  thousand  [seven]  SIXTEEN, the amount prescribed by this paragraph
shall be computed at the rate of seven  and  one-tenth  percent  of  the
taxpayer's  [entire  net] BUSINESS income base. FOR TAXABLE YEARS BEGIN-
NING ON OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND  SIXTEEN,  THE  AMOUNT
PRESCRIBED  BY  THIS  PARAGRAPH SHALL BE SIX AND ONE-HALF PERCENT OF THE
TAXPAYER'S BUSINESS INCOME BASE. The taxpayer's  [entire  net]  BUSINESS
income  base shall mean the portion of the taxpayer's [entire net] BUSI-
NESS income allocated within the state as hereinafter provided[, subject
to any modification required by paragraphs (d) and  (e)  of  subdivision
three of this section]. However, in the case of a small business taxpay-
er,  as  defined  in  paragraph  (f)  of  this  subdivision,  the amount
prescribed by this paragraph shall be computed pursuant to  subparagraph
(iv)  of this paragraph and in the case of a manufacturer, as defined in
subparagraph (vi) of this paragraph, the amount prescribed by this para-
graph shall be computed pursuant to subparagraph (vi) of this paragraph.
  [(i) if the entire net income base is not more than two hundred  thou-
sand  dollars,  (1) for taxable years beginning before July first, nine-
teen hundred ninety-nine, the amount  shall  be  eight  percent  of  the
entire net income base; (2) for taxable years beginning after June thir-
tieth,  nineteen hundred ninety-nine and before July first, two thousand
three, the amount shall be seven and one-half percent of the entire  net
income  base;  and (3) for taxable years beginning after June thirtieth,
two thousand three and before January  first,  two  thousand  five,  the
amount shall be 6.85 percent of the entire net income base;
  (ii)  if  the entire net income base is more than two hundred thousand
dollars but not over two hundred ninety thousand dollars, (1) for  taxa-
ble years beginning before July first, nineteen hundred ninety-nine, the
amount  shall  be  the  sum  of  (a)  sixteen thousand dollars, (b) nine
percent of the excess of the entire net income  base  over  two  hundred
thousand  dollars  and  (c) five percent of the excess of the entire net
income base over two hundred fifty thousand  dollars;  (2)  for  taxable
years  beginning  after June thirtieth, nineteen hundred ninety-nine and
before July first, two thousand, the amount shall  be  the  sum  of  (a)
fifteen  thousand  dollars, (b) eight and one-half percent of the excess
of the entire net income base over two hundred thousand dollars and  (c)
five  percent  of  the  excess  of  the  entire net income base over two
hundred fifty thousand dollars; (3) for taxable  years  beginning  after
June  thirtieth,  two  thousand and before July first, two thousand one,
the amount shall be the sum of (a) fifteen thousand dollars,  (b)  eight
percent  of  the  excess  of the entire net income base over two hundred
thousand dollars and (c) two and one-half percent of the excess  of  the
entire  net income base over two hundred fifty thousand dollars; (4) for
taxable years beginning after  June  thirtieth,  two  thousand  one  and
before  July  first,  two  thousand three, the amount shall be seven and
one-half percent of the entire net income  base;  and  (5)  for  taxable
years  beginning  after  June  thirtieth,  two thousand three and before
January first, two thousand five, the amount shall be  the  sum  of  (a)

S. 6359--B                         45                         A. 8559--B

thirteen  thousand  seven hundred dollars, (b) 7.5 percent of the excess
of the entire net income base over two hundred thousand dollars and  (c)
3.25  percent  of  the  excess  of  the  entire net income base over two
hundred fifty thousand dollars;
  (iii) for taxable years beginning on or after January first, two thou-
sand  five  and  ending before January first, two thousand seven, if the
entire net income base is not more  than  two  hundred  ninety  thousand
dollars  the  amount shall be six and one-half percent of the entire net
income base; if the entire net income base  is  more  than  two  hundred
ninety  thousand  dollars  but  not  over  three hundred ninety thousand
dollars the amount shall be the  sum  of  (1)  eighteen  thousand  eight
hundred  fifty  dollars, (2) seven and one-half percent of the excess of
the entire net income base over two hundred ninety thousand dollars  but
not  over  three  hundred ninety thousand dollars and (3) seven and one-
quarter percent of the excess of the entire net income base  over  three
hundred  fifty  thousand dollars but not over three hundred ninety thou-
sand dollars;]
  (iv) for taxable years beginning [on or after] BEFORE  January  first,
two  thousand  [seven] SIXTEEN, if the [entire net] BUSINESS income base
is not more than two hundred ninety thousand dollars the amount shall be
six and one-half percent of the [entire net] BUSINESS  income  base;  if
the  [entire  net]  BUSINESS income base is more than two hundred ninety
thousand dollars but not over three hundred ninety thousand dollars  the
amount  shall  be  the  sum of (1) eighteen thousand eight hundred fifty
dollars, (2) seven and one-tenth percent of the excess  of  the  [entire
net]  BUSINESS  income base over two hundred ninety thousand dollars but
not over three hundred ninety thousand dollars and (3) four and  thirty-
five  hundredths  percent  of  the  excess  of the [entire net] BUSINESS
income base over three hundred fifty thousand dollars but not over three
hundred ninety thousand dollars;
  (v) if the taxable period to which [subparagraphs  (i),  (ii),  (iii),
and]  SUBPARAGRAPH  (iv)  of this paragraph [apply] APPLIES is less than
twelve months, the amount prescribed by this paragraph shall be computed
as follows:
  (A) Multiply the [entire net] BUSINESS income base for  such  taxpayer
by twelve;
  (B)  Divide  the result obtained in (A) by the number of months in the
taxable year;
  (C) Compute an amount pursuant to [subparagraphs (i) and (ii)] SUBPAR-
AGRAPH (IV) as if the result obtained in (B) were the taxpayer's [entire
net] BUSINESS income base;
  (D) Multiply the result obtained in (C) by the number of months in the
taxpayer's taxable year;
  (E) Divide the result obtained in (D) by twelve.
  (vi) except as otherwise provided in this subparagraph or subparagraph
(vii) of this paragraph, for taxable years beginning on or after January
thirty-first, two thousand seven, the amount prescribed  by  this  para-
graph  for  a  taxpayer  which  is a qualified New York manufacturer, as
defined in subdivision fifteen of section  two  hundred  eight  of  this
article,  a  qualified  New  York  agricultural  business, as defined in
clause (C) of subparagraph (ii) of paragraph (b) of subdivision [twelve]
ONE of [this] section TWO HUNDRED TEN-B OF THIS ARTICLE, and a qualified
New York mining business, as defined in clause (D) of subparagraph  (ii)
of  paragraph  (b)  of  subdivision  [twelve]  ONE of [this] section TWO
HUNDRED TEN-B OF THIS ARTICLE, shall be computed at the rate of six  and
one-half  (6.5)  percent  of the taxpayer's [entire net] BUSINESS income

S. 6359--B                         46                         A. 8559--B

base. [For taxable years beginning on or after January first, two  thou-
sand  twelve  and before January first, two thousand fifteen, the amount
prescribed by this paragraph for a taxpayer which is an eligible  quali-
fied  New  York  manufacturer shall be computed at the rate of three and
one-quarter (3.25) percent of the taxpayer's  entire  net  income  base.
The  commissioner  shall  establish guidelines and criteria that specify
requirements by which a manufacturer may be classified  as  an  eligible
qualified New York manufacturer. Criteria may include but not be limited
to factors such as regional unemployment, the economic impact that manu-
facturing  has  on  the surrounding community, population decline within
the region and median income within the region in which the manufacturer
is located. In establishing these guidelines and criteria,  the  commis-
sioner  shall  endeavor  that  the  total annual cost of the lower rates
shall not exceed twenty-five million dollars.]
  For a qualified New  York  manufacturer,  as  defined  in  subdivision
fifteen  of  section  two hundred eight of this article, a qualified New
York agricultural business, as defined in  clause  (C)  of  subparagraph
(ii)  of paragraph (b) of subdivision [twelve] ONE of [this] section TWO
HUNDRED TEN-B OF THIS ARTICLE, and a qualified New York mining business,
as defined in clause (D) of subparagraph (ii) of paragraph (b) of subdi-
vision [twelve] ONE of [this] section TWO HUNDRED TEN-B OF THIS ARTICLE,
the rate at which the tax is computed in effect for taxable years begin-
ning on or after January first, two thousand thirteen and before January
first, two thousand fourteen for qualified New York manufacturers  shall
be  reduced  by nine and two-tenths percent for taxable years commencing
on or after January first, two  thousand  fourteen  and  before  January
first, two thousand fifteen, twelve and three-tenths percent for taxable
years  commencing  on  or  after January first, two thousand fifteen and
before January first, two  thousand  sixteen,  fifteen  and  four-tenths
percent  for  taxable  years  commencing  on or after January first, two
thousand sixteen and before January first, two  thousand  eighteen,  and
twenty-five  percent  for  taxable  years  beginning on or after January
first, two thousand eighteen.
  (vii) For [a qualified] AN UPSTATE New York manufacturer [that has  an
apportionment  factor  for  purposes  of the metropolitan transportation
business tax surcharge computed pursuant to subdivision two  of  section
two  hundred nine-B of this article equal to zero for the taxable year],
the amount prescribed by this paragraph for taxable years  beginning  on
or  after  January first, two thousand fourteen shall be computed at the
rate of zero percent of the taxpayer's  entire  net  income  base.    AN
UPSTATE  NEW YORK MANUFACTURER IS A QUALIFIED NEW YORK MANUFACTURER THAT
DOES NOT OWN OR LEASE ANY TANGIBLE PERSONAL PROPERTY OR REAL PROPERTY IN
THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT AND DOES NOT  PAY  ANY
WAGES,  SALARIES  OR  OTHER  PERSONAL  SERVICE  COMPENSATION WITHIN SUCH
DISTRICT.
  (VIII) (A) IN COMPUTING THE BUSINESS INCOME BASE, TAXPAYERS  SHALL  BE
ALLOWED  BOTH  A  PRIOR  NET OPERATING LOSS CONVERSION SUBTRACTION UNDER
THIS SUBPARAGRAPH AND A NET OPERATING LOSS DEDUCTION UNDER  SUBPARAGRAPH
(IX)  OF  THIS  PARAGRAPH.  THE  PRIOR  NET  OPERATING  LOSS  CONVERSION
SUBTRACTION COMPUTED UNDER THIS SUBPARAGRAPH SHALL  BE  APPLIED  AGAINST
THE  BUSINESS  INCOME  BASE  BEFORE  THE  NET  OPERATING  LOSS DEDUCTION
COMPUTED UNDER SUBPARAGRAPH (IX) OF THIS PARAGRAPH.
  (B) PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION.
  (1) DEFINITIONS.

S. 6359--B                         47                         A. 8559--B

  (I) "BASE YEAR" MEANS THE LAST TAXABLE  YEAR  BEGINNING  ON  OR  AFTER
JANUARY FIRST, TWO THOUSAND FOURTEEN AND BEFORE JANUARY FIRST, TWO THOU-
SAND FIFTEEN.
  (II)  "UNABSORBED  NET OPERATING LOSS" MEANS THE UNABSORBED PORTION OF
NET OPERATING LOSS AS CALCULATED UNDER PARAGRAPH (F) OF SUBDIVISION NINE
OF SECTION TWO HUNDRED EIGHT OF THIS  ARTICLE  OR  SUBSECTION  (K-1)  OF
SECTION  FOURTEEN  HUNDRED  FIFTY-THREE OF THIS CHAPTER AS SUCH SECTIONS
WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN, THAT WAS
NOT DEDUCTIBLE IN PREVIOUS TAXABLE YEARS AND WAS ELIGIBLE FOR  CARRYOVER
ON  THE  LAST  DAY  OF  THE  BASE YEAR, INCLUDING ANY NET OPERATING LOSS
SUSTAINED BY THE TAXPAYER DURING THE BASE YEAR.
  (III)  "BASE  YEAR  BAP"  MEANS  THE  TAXPAYER'S  BUSINESS  ALLOCATION
PERCENTAGE  AS  CALCULATED  UNDER  PARAGRAPH (A) OF SUBDIVISION THREE OF
SECTION TWO HUNDRED TEN OF THIS  ARTICLE  FOR  THE  BASE  YEAR,  OR  THE
TAXPAYER'S  ALLOCATION  PERCENTAGE  AS CALCULATED UNDER SECTION FOURTEEN
HUNDRED FIFTY-FOUR OF THIS CHAPTER FOR PURPOSES  OF  CALCULATING  ENTIRE
NET  INCOME FOR THE BASE YEAR, AS SUCH SECTIONS WERE IN EFFECT ON DECEM-
BER THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (IV) "BASE YEAR TAX RATE" MEANS THE TAXPAYER'S TAX RATE FOR  THE  BASE
YEAR  AS  CALCULATED  UNDER  THIS PARAGRAPH OR SUBSECTION (A) OF SECTION
FOURTEEN HUNDRED FIFTY-FIVE OF THIS CHAPTER, AS SUCH PROVISIONS WERE  IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (2)  THE  PRIOR  NET  OPERATING  LOSS  CONVERSION SUBTRACTION SHALL BE
CALCULATED AS FOLLOWS:
  (I) THE TAXPAYER SHALL FIRST CALCULATE THE TAX VALUE OF ITS UNABSORBED
NET OPERATING LOSS FOR THE BASE YEAR. THE VALUE IS EQUAL TO THE  PRODUCT
OF  (I) THE AMOUNT OF THE TAXPAYER'S UNABSORBED NET OPERATING LOSS, (II)
THE TAXPAYER'S BASE YEAR BAP, AND (III) THE  TAXPAYER'S  BASE  YEAR  TAX
RATE.
  (II)  THE  PRODUCT  DETERMINED  UNDER ITEM I OF THIS SUBCLAUSE IS THEN
DIVIDED BY SIX AND ONE-HALF PERCENT, OR IN THE CASE OF A  QUALIFIED  NEW
YORK  MANUFACTURER,  FIVE  AND  SEVEN  TENTHS PERCENT. THIS RESULT SHALL
EQUAL THE TAXPAYER'S PRIOR NET  OPERATING  LOSS  CONVERSION  SUBTRACTION
POOL.
  (III)  THE  TAXPAYER'S PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION
FOR THE TAXABLE YEAR SHALL EQUAL ONE TENTH OF  ITS  NET  OPERATING  LOSS
CONVERSION  SUBTRACTION POOL PLUS ANY AMOUNT OF UNUSED PRIOR NET OPERAT-
ING LOSS CONVERSION SUBTRACTION FROM PRECEDING TAXABLE YEARS.  PROVIDED,
HOWEVER, THE PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION OF A  SMALL
BUSINESS  CORPORATION,  AS DEFINED IN PARAGRAPH (F) OF THIS SUBDIVISION,
AS OF THE LAST DAY OF THE BASE YEAR, SHALL NOT BE  SUBJECT  TO  THE  ONE
TENTH LIMITATION IN THE PREVIOUS SENTENCE.
  (3)  COMBINED  GROUPS.  (I)  WHERE A TAXPAYER WAS PROPERLY INCLUDED OR
REQUIRED TO BE INCLUDED IN A COMBINED REPORT FOR THE BASE YEAR  PURSUANT
TO SECTION TWO HUNDRED ELEVEN OF THIS ARTICLE OR A COMBINED RETURN UNDER
SECTION  FOURTEEN  HUNDRED  SIXTY-TWO  OF THIS CHAPTER, AS SUCH SECTIONS
WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN, AND  THE
MEMBERS  OF  THE  COMBINED  GROUP  FOR THE BASE YEAR ARE THE SAME AS THE
MEMBERS OF THE COMBINED GROUP FOR THE TAXABLE YEAR IMMEDIATELY  SUCCEED-
ING  THE  BASE  YEAR,  THE  COMBINED GROUP SHALL CALCULATE ITS PRIOR NET
OPERATING LOSS CONVERSION SUBTRACTION POOL USING  THE  COMBINED  GROUP'S
TOTAL  UNABSORBED  NET  OPERATING LOSS, BASE YEAR BAP, AND BASE YEAR TAX
RATE.
  (II) IF A COMBINED GROUP INCLUDES ADDITIONAL MEMBERS  IN  THE  TAXABLE
YEAR  IMMEDIATELY SUCCEEDING THE BASE YEAR THAT WERE NOT INCLUDED IN THE
COMBINED GROUP DURING THE BASE YEAR, EACH BASE YEAR COMBINED  GROUP  AND

S. 6359--B                         48                         A. 8559--B

EACH  TAXPAYER THAT FILED SEPARATELY IN THE BASE YEAR BUT IS INCLUDED IN
THE COMBINED GROUP IN THE TAXABLE YEAR SUCCEEDING THE  BASE  YEAR  SHALL
CALCULATE  ITS PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION POOL, AND
THE  SUM  OF  THE  POOLS  SHALL BE THE COMBINED PRIOR NET OPERATING LOSS
CONVERSION SUBTRACTION POOL OF THE COMBINED GROUP.
  (III) IF A TAXPAYER WAS PROPERLY INCLUDED IN A COMBINED REPORT FOR THE
BASE YEAR AND FILES A SEPARATE REPORT IN A SUBSEQUENT TAXABLE YEAR, THEN
THE AMOUNT OF REMAINING PRIOR NET OPERATING LOSS CONVERSION  SUBTRACTION
ALLOWED  TO  THE  TAXPAYER  FILING SUCH SEPARATE REPORT SHALL BE PROPOR-
TIONATE TO THE AMOUNT THAT SUCH TAXPAYER CONTRIBUTED TO  THE  PRIOR  NET
OPERATING  LOSS CONVERSION SUBTRACTION POOL ON A COMBINED BASIS, AND THE
REMAINING PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION ALLOWED TO THE
REMAINING MEMBERS OF THE COMBINED GROUP SHALL BE REDUCED ACCORDINGLY.
  (4) THE PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION MAY BE USED TO
REDUCE THE TAXPAYER'S TAX ON ALLOCATED BUSINESS INCOME TO THE HIGHER  OF
THE  TAX  ON THE CAPITAL BASE UNDER PARAGRAPH (B) OF THIS SUBDIVISION OR
THE FIXED DOLLAR MINIMUM UNDER PARAGRAPH (D) OF  THIS  SUBDIVISION.  ANY
AMOUNT  OF UNUSED SUBTRACTION SHALL BE CARRIED FORWARD TO SUBSEQUENT TAX
YEAR OR YEARS UNTIL TAX YEARS BEGINNING ON OR AFTER JANUARY  FIRST,  TWO
THOUSAND  THIRTY-SIX,  AND SHALL NOT BE SUBJECT TO THE ONE TENTH LIMITA-
TION IN THE SUBSEQUENT TAX YEAR OR YEARS.
  (IX) NET OPERATING LOSS DEDUCTION.  IN COMPUTING THE  BUSINESS  INCOME
BASE,  A  NET OPERATING LOSS DEDUCTION SHALL BE ALLOWED. A NET OPERATING
LOSS DEDUCTION IS THE AMOUNT OF NET OPERATING LOSS OR LOSSES FROM ONE OR
MORE TAXABLE YEARS THAT ARE CARRIED FORWARD TO A PARTICULAR INCOME YEAR.
A NET OPERATING LOSS IS THE AMOUNT OF A  BUSINESS  LOSS  INCURRED  IN  A
PARTICULAR TAX YEAR MULTIPLIED BY THE APPORTIONMENT FACTOR FOR THAT YEAR
AS DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTICLE. THE MAXI-
MUM  NET  OPERATING  DEDUCTION  THAT IS ALLOWED IN A TAXABLE YEAR IS THE
AMOUNT THAT REDUCES THE TAXPAYER'S TAX ON ALLOCATED BUSINESS  INCOME  TO
THE  HIGHER  OF THE TAX ON THE CAPITAL BASE OR THE FIXED DOLLAR MINIMUM.
SUCH DEDUCTION AND LOSS ARE DETERMINED IN ACCORDANCE WITH THE FOLLOWING:
  (1) SUCH NET OPERATING LOSS DEDUCTION IS NOT  LIMITED  TO  THE  AMOUNT
ALLOWED  UNDER  SECTION  ONE HUNDRED SEVENTY-TWO OF THE INTERNAL REVENUE
CODE OR THE AMOUNT THAT WOULD HAVE BEEN ALLOWED IF THE TAXPAYER HAD  NOT
MADE  AN  ELECTION  UNDER  SUBCHAPTER  S  OF CHAPTER ONE OF THE INTERNAL
REVENUE CODE.
  (2) SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET  OPER-
ATING  LOSS  INCURRED DURING ANY TAXABLE YEAR BEGINNING PRIOR TO JANUARY
FIRST, TWO THOUSAND FIFTEEN, OR DURING ANY TAXABLE  YEAR  IN  WHICH  THE
TAXPAYER WAS NOT SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE.
  (3) A TAXPAYER THAT FILES AS PART OF A FEDERAL CONSOLIDATED RETURN BUT
ON  A  SEPARATE  BASIS  FOR  PURPOSES  OF  THIS ARTICLE MUST COMPUTE ITS
DEDUCTION AND LOSS AS IF IT WERE FILING ON A SEPARATE BASIS FOR  FEDERAL
INCOME TAX PURPOSES.
  (4) A NET OPERATING LOSS MUST BE CARRIED FORWARD TO EACH OF THE TWENTY
TAXABLE  YEARS  FOLLOWING  THE TAXABLE YEAR OF THE LOSS. NO CARRYBACK OF
THE NET OPERATING LOSS IS ALLOWED. A TAXPAYER MUST APPLY BOTH  OF  THESE
LIMITATIONS IN COMPUTING SUCH NET OPERATING LOSS DEDUCTION.
  (5)  SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET OPER-
ATING LOSS INCURRED DURING A NEW YORK S YEAR; PROVIDED, HOWEVER,  A  NEW
YORK  S YEAR MUST BE TREATED AS A TAXABLE YEAR FOR PURPOSES OF DETERMIN-
ING THE NUMBER OF TAXABLE YEARS TO WHICH A NET  OPERATING  LOSS  MAY  BE
CARRIED FORWARD.
  (6)  WHERE  THERE  ARE  TWO OR MORE ALLOCATED NET OPERATING LOSSES, OR
PORTIONS THEREOF, CARRIED FORWARD TO BE DEDUCTED IN ONE  PARTICULAR  TAX

S. 6359--B                         49                         A. 8559--B

YEAR  FROM  ALLOCATED  BUSINESS  INCOME,  THE  EARLIEST  ALLOCATED  LOSS
INCURRED MUST BE APPLIED FIRST.
  (b)  Capital  base.  (1)  The [amount prescribed by this paragraph for
taxable years beginning before January first, two thousand  eight  shall
be  computed  at .178  percent  for  each dollar of the taxpayer's total
business and investment capital, or the portion thereof allocated within
the state as hereinafter provided. For taxable  years  beginning  on  or
after  January first, two thousand eight, the] amount prescribed by this
paragraph shall be computed  at .15  percent  for  each  dollar  of  the
taxpayer's total business [and investment] capital, or the portion ther-
eof  allocated within the state as hereinafter provided. However, in the
case of a cooperative housing corporation as  defined  in  the  internal
revenue  code,  the  applicable  rate shall be .04 percent.  In no event
shall the amount prescribed by this paragraph exceed three hundred fifty
thousand dollars for qualified New York manufacturers and for all  other
taxpayers  [ten] FIVE million dollars [for taxable years beginning on or
after January first, two thousand eight but before  January  first,  two
thousand  eleven  and one million dollars for taxable years beginning on
or after January first, two thousand eleven].
  (2) For a qualified New York manufacturer, as defined  in  subdivision
fifteen  of  section  two hundred eight of this article, a qualified New
York agricultural business, as defined in  clause  (C)  of  subparagraph
(ii)  of paragraph (b) of subdivision [twelve] ONE of [this] section TWO
HUNDRED TEN-B OF THIS ARTICLE, and a qualified New York mining business,
as defined in clause (D) of subparagraph (ii) of paragraph (b) of subdi-
vision [twelve] ONE of [this] section TWO HUNDRED TEN-B OF THIS ARTICLE,
the rate at which the tax is computed in effect for taxable years begin-
ning on or after January first, two thousand thirteen and before January
first, two thousand fourteen shall be reduced  by  nine  and  two-tenths
percent  for  taxable  years  commencing  on or after January first, two
thousand fourteen and before January first, two thousand fifteen, twelve
and three-tenths percent for taxable years commencing on or after  Janu-
ary  first,  two thousand fifteen and before January first, two thousand
sixteen, fifteen and four-tenths percent for taxable years commencing on
or after January first, two thousand sixteen and before  January  first,
two  thousand eighteen, and twenty-five percent for taxable years begin-
ning on or after January first, two thousand eighteen.
  [(c) Minimum taxable income bases. (i)  For  taxable  years  beginning
after  nineteen  hundred  eighty-six and before nineteen hundred eighty-
nine, the amount prescribed by this paragraph shall be computed  at  the
rate  of  three  and  one-half  percent  of  the taxpayer's pre-nineteen
hundred ninety minimum taxable income base. For taxable years  beginning
in nineteen hundred eighty-nine, the amount prescribed by this paragraph
shall  be  computed  at  the rate of five percent of the taxpayer's pre-
nineteen hundred ninety minimum taxable income base. A "taxpayer's  pre-
nineteen  hundred  ninety  minimum  taxable  income base" shall mean the
portion of the taxpayer's entire net income allocated within  the  state
as  hereinafter  provided, subject to any modification required by para-
graphs (d) and (e) of subdivision three of this section;
  (ii) (A) For taxable years beginning on or after  January  first,  two
thousand  seven,  the  amount  prescribed  by  this  paragraph  shall be
computed at the rate of one and one-half percent of the taxpayer's mini-
mum taxable income base. The "taxpayer's minimum  taxable  income  base"
shall  mean  the  portion of the taxpayer's minimum taxable income allo-
cated within the state as hereinafter provided, subject to any modifica-

S. 6359--B                         50                         A. 8559--B

tions required by paragraphs (d) and (e) of subdivision  three  of  this
section.
  (B)  For  taxable years beginning on or after January first, two thou-
sand twelve and before January first, two thousand fifteen,  the  amount
prescribed by this paragraph for an eligible qualified New York manufac-
turer  shall  be  computed  at the rate of seventy-five hundredths (.75)
percent of the taxpayer's minimum taxable income base. For  purposes  of
this  clause,  the term "eligible qualified New York manufacturer" shall
have the same meaning as in subparagraph (vi) of paragraph (a)  of  this
subdivision.
  (iii)  For  a  qualified New York manufacturer, as defined in subpara-
graph (vi) of paragraph (a) of this subdivision, a  qualified  New  York
agricultural  business, as defined in clause (C) of subparagraph (ii) of
paragraph (b) of subdivision twelve of this section, and a qualified New
York mining business, as defined in clause (D) of subparagraph  (ii)  of
paragraph  (b)  of subdivision twelve of this section, the rate at which
the tax is computed in effect for taxable years beginning  on  or  after
January first, two thousand thirteen and before January first, two thou-
sand  fourteen  for qualified New York manufacturers shall be reduced by
nine and two-tenths percent for taxable years  commencing  on  or  after
January first, two thousand fourteen and before January first, two thou-
sand fifteen, twelve and three-tenths percent for taxable years commenc-
ing  on  or after January first, two thousand fifteen and before January
first, two thousand sixteen, fifteen and four-tenths percent for taxable
years commencing on or after January first,  two  thousand  sixteen  and
before January first, two thousand eighteen, and twenty-five percent for
taxable  years  beginning  on or after January first, two thousand eigh-
teen.]
  (d) Fixed dollar minimum. (1) The [amount prescribed by this paragraph
shall be for a taxpayer which during the taxable year has:
  (A) a gross payroll of six million two hundred fifty thousand  dollars
or more, one thousand five hundred dollars;
  (B)  a  gross payroll of less than six million two hundred fifty thou-
sand dollars but more than one million dollars, four hundred twenty-five
dollars;
  (C) a gross payroll of no more than one million dollars but more  than
five hundred thousand dollars, three hundred twenty-five dollars;
  (D)  a gross payroll of no more than five hundred thousand dollars but
more than two hundred fifty thousand dollars,  two  hundred  twenty-five
dollars;
  (E)  a  gross  payroll  of  two hundred fifty thousand dollars or less
(except as prescribed in clause (F) of this subparagraph),  one  hundred
dollars;
  (F)  a  gross  payroll  of  one  thousand  dollars or less, with total
receipts within and without this state of one thousand dollars or  less,
and the average value of the assets of which are one thousand dollars or
less, eight hundred dollars.
  (2) For purposes of this paragraph:
  (A)  gross  payroll shall be the same as the total wages, salaries and
other personal service compensation of  all  the  taxpayer's  employees,
within and without this state, as defined in subparagraph three of para-
graph  (a)  of  subdivision  three  of this section, except that general
executive officers shall not be excluded.
  (B) total receipts shall be the same as receipts  within  and  without
this  state  as defined in subparagraph two of paragraph (a) of subdivi-
sion three of this section.

S. 6359--B                         51                         A. 8559--B

  (C) average value of the assets shall be the  same  as  prescribed  by
subdivision two of this section without reduction for liabilities.
  (3)  If  the  taxable  year  is  less  than  twelve months, the amount
prescribed by this paragraph shall be reduced by twenty-five percent  if
the  period  for  which  the taxpayer is subject to tax is more than six
months but not more than nine months and by fifty percent if the  period
for  which  the  taxpayer is subject to tax is not more than six months.
Provided, however, that in determining the amount of gross  payroll  and
total receipts for purposes of subparagraph one of this paragraph, where
the taxable year is less than twelve months, the amount of each shall be
determined  by  dividing  the amount of each with respect to the taxable
year by the number of months in such taxable year  and  multiplying  the
result  by  twelve.  If the taxable year is less than twelve months, the
amount of New York receipts for purposes of subparagraph  four  of  this
paragraph  is  determined by dividing the amount of the receipts for the
taxable year by the number of months in the taxable year and multiplying
the result by twelve.
  (4) Notwithstanding subparagraphs one and two of this  paragraph,  for
taxable  years  beginning on or after January first, two thousand eight,
the] amount prescribed by this paragraph for  New  York  S  corporations
will be determined in accordance with the following table:

If New York receipts are:                The fixed dollar minimum tax is:
 not more than $100,000                               $   25
 more than $100,000 but not over $250,000             $   50
 more than $250,000 but not over $500,000             $  175
 more than $500,000 but not over $1,000,000           $  300
 more than $1,000,000 but not over $5,000,000         $1,000
 more than $5,000,000 but not over $25,000,000        $3,000
 Over $25,000,000                                     $4,500

[Otherwise the amount prescribed by this paragraph will be determined in
accordance with the following table:]
PROVIDED  FURTHER,  THE AMOUNT PRESCRIBED BY THIS PARAGRAPH FOR A QUALI-
FIED NEW YORK MANUFACTURER, AS DEFINED IN SUBDIVISION FIFTEEN OF SECTION
TWO HUNDRED EIGHT OF THIS ARTICLE, A  QUALIFIED  NEW  YORK  AGRICULTURAL
BUSINESS, AS DEFINED IN CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B)
OF  SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN-B OF THIS ARTICLE, AND A
QUALIFIED NEW YORK MINING BUSINESS, AS DEFINED IN CLAUSE (D) OF SUBPARA-
GRAPH (II) OF PARAGRAPH (B) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
TEN-B OF THIS ARTICLE, WILL BE DETERMINED IN ACCORDANCE WITH THE FOLLOW-
ING TABLES:
FOR  TAX  YEARS BEGINNING ON OR AFTER JANUARY 1, 2014 AND BEFORE JANUARY
1, 2015:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   23
 MORE THAN $100,000 BUT NOT OVER $250,000             $   68
 MORE THAN $250,000 BUT NOT OVER $500,000             $  159
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  454
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,362
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,178
 OVER $25,000,000                                     $4,500

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2015 AND  BEFORE  JANUARY
1, 2016:

S. 6359--B                         52                         A. 8559--B

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   22
 MORE THAN $100,000 BUT NOT OVER $250,000             $   66
 MORE THAN $250,000 BUT NOT OVER $500,000             $  153
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  439
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,316
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,070
 OVER $25,000,000                                     $4,385

FOR  TAX  YEARS BEGINNING ON OR AFTER JANUARY 1, 2016 AND BEFORE JANUARY
1, 2018:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   21
 MORE THAN $100,000 BUT NOT OVER $250,000             $   63
 MORE THAN $250,000 BUT NOT OVER $500,000             $  148
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  423
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,269
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,961
 OVER $25,000,000                                     $4,230

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2018:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   19
 MORE THAN $100,000 BUT NOT OVER $250,000             $   56
 MORE THAN $250,000 BUT NOT OVER $500,000             $  131
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  375
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,125
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,625
 OVER $25,000,000                                     $3,750

OTHERWISE THE AMOUNT PRESCRIBED BY THIS PARAGRAPH WILL BE DETERMINED  IN
ACCORDANCE WITH THE FOLLOWING TABLE:

If New York receipts are:                The fixed dollar minimum tax is:
 not more than $100,000                               $   25
 more than $100,000 but not over $250,000             $   75
 more than $250,000 but not over $500,000             $  175
 more than $500,000 but not over $1,000,000           $  500
 more than $1,000,000 but not over $5,000,000         $1,500
 more than $5,000,000 but not over $25,000,000        $3,500
 [Over] MORE THAN $25,000,000
 BUT NOT OVER $50,000,000                             $5,000
 MORE THAN $50,000,000 BUT NOT OVER $100,000,000      $10,000
 MORE THAN $100,000,000 BUT NOT OVER $250,000,000     $20,000
 MORE THAN $250,000,000 BUT NOT OVER $500,000,000     50,000
 MORE THAN $500,000,000 BUT NOT OVER $1,000,000,000   $100,000
 OVER $1,000,000,000                                  $200,000

For  purposes  of  this  paragraph,  New  York receipts are the receipts
[computed in accordance with subparagraph two of paragraph (a) of subdi-
vision three of this] INCLUDED IN THE  NUMERATOR  OF  THE  APPORTIONMENT
FACTOR DETERMINED UNDER section TWO HUNDRED TEN-A for the taxable year.
  (2)  IF THE TAXABLE YEAR IS LESS THAN TWELVE MONTHS, THE AMOUNT OF NEW
YORK RECEIPTS IS DETERMINED BY DIVIDING THE AMOUNT OF THE  RECEIPTS  FOR

S. 6359--B                         53                         A. 8559--B

THE  TAXABLE YEAR BY THE NUMBER OF MONTHS IN THE TAXABLE YEAR AND MULTI-
PLYING THE RESULT BY TWELVE. IN THE CASE OF A TERMINATION YEAR OF A  NEW
YORK S CORPORATION, THE SUM OF THE TAX COMPUTED UNDER THIS PARAGRAPH FOR
THE  S  SHORT  YEAR  AND FOR THE C SHORT YEAR SHALL NOT BE LESS THAN THE
AMOUNT COMPUTED UNDER THIS PARAGRAPH AS IF THE CORPORATION  WERE  A  NEW
YORK C CORPORATION FOR THE ENTIRE TAXABLE YEAR.
  [(5)  For taxable years beginning on or after January first, two thou-
sand twelve and before January first, two thousand fifteen, the  amounts
prescribed  in subparagraphs one and four of this paragraph as the fixed
dollar minimum tax for an eligible qualified New York manufacturer shall
be one-half of the amounts stated in those subparagraphs.  For  purposes
of  this subparagraph, the term "eligible qualified New York manufactur-
er" shall have the same meaning as in subparagraph (vi) of paragraph (a)
of this subdivision.
  (6) For a qualified New York manufacturer, as defined  in  subdivision
fifteen  of  section  two hundred eight of this article, a qualified New
York agricultural business, as defined in  clause  (C)  of  subparagraph
(ii) of paragraph (b) of subdivision twelve of this section, and a qual-
ified New York mining business, as defined in clause (D) of subparagraph
(ii) of paragraph (b) of subdivision twelve of this section, the amounts
prescribed in subparagraphs one and four of this paragraph in effect for
taxable years beginning on or after January first, two thousand thirteen
and  before  January first, two thousand fourteen for qualified New York
manufacturers shall be reduced by nine and two-tenths percent for  taxa-
ble  years  commencing  on or after January first, two thousand fourteen
and before January first, two thousand fifteen, twelve and  three-tenths
percent  for  taxable  years  commencing  on or after January first, two
thousand fifteen and before January first, two thousand sixteen, fifteen
and four-tenths percent for taxable years commencing on or after January
first, two thousand sixteen and before January first, two thousand eigh-
teen, and twenty-five percent for taxable years beginning  on  or  after
January first, two thousand eighteen.
  (e)  Subsidiary  capital base. (1) The amount prescribed by this para-
graph shall be computed at the rate of nine-tenths of a  mill  for  each
dollar  of  the  portion  of the taxpayer's subsidiary capital allocated
within the state as hereinafter provided.
  (2) For purposes of this paragraph,  the  amount  of  such  subsidiary
capital,  prior  to  allocation,  shall  be  reduced  by  the applicable
percentage of the taxpayer's (i) investments in the stock  of,  and  any
indebtedness from, subsidiaries subject to tax under section one hundred
eighty-six  of this chapter (but only to the extent such indebtedness is
included in subsidiary capital), and (ii) investments in the  stock  of,
and  any  indebtedness  from,  subsidiaries subject to tax under article
thirty-two or thirty-three of this chapter (but only to the extent  such
indebtedness  is included in subsidiary capital). For purposes of clause
(i) of this subparagraph, the  applicable  percentage  shall  be  thirty
percent  for  taxable  years  beginning in two thousand, and one hundred
percent for taxable years beginning after two thousand. For purposes  of
clause (ii) of this subparagraph, the applicable percentage shall be one
hundred percent for taxable years beginning after nineteen hundred nine-
ty-nine.]
  (f)  For  purposes of this section, the term "small business taxpayer"
shall mean a taxpayer (i) which has an entire net  income  of  not  more
than  three  hundred  ninety thousand dollars for the taxable year; (ii)
[which constitutes a small business as defined in section 1244(c)(3)  of
internal revenue code (without regard to the second sentence of subpara-

S. 6359--B                         54                         A. 8559--B

graph (A) thereof) as of the last day of the taxable year] THE AGGREGATE
AMOUNT  OF  MONEY  AND  OTHER  PROPERTY  RECEIVED BY THE CORPORATION FOR
STOCK, AS A CONTRIBUTION TO CAPITAL, AND AS PAID-IN  SURPLUS,  DOES  NOT
EXCEED  ONE  MILLION DOLLARS; [and] (iii) which is not part of an affil-
iated group, as defined in section 1504 of the  internal  revenue  code,
unless  such  group,  if  it  had filed a report under this article on a
combined basis, would have itself qualified as a "small business taxpay-
er" pursuant to this subdivision; AND (IV) WHICH HAS AN  AVERAGE  NUMBER
OF INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE OFFICERS, EMPLOYED FULL-TIME
IN  THE  STATE  DURING THE TAXABLE YEAR OF ONE HUNDRED OR FEWER.  If the
taxable period to which subparagraph (i) of this  paragraph  applies  is
less than twelve months, entire net income under such subparagraph shall
be  placed  on  an  annual basis by multiplying the entire net income by
twelve and dividing the result by the number of months  in  the  period.
FOR  PURPOSES  OF  SUBPARAGRAPH (II) OF THIS PARAGRAPH, THE AMOUNT TAKEN
INTO ACCOUNT WITH RESPECT TO ANY PROPERTY OTHER THAN MONEY SHALL BE  THE
AMOUNT  EQUAL  TO THE ADJUSTED BASIS TO THE CORPORATION OF SUCH PROPERTY
FOR DETERMINING GAIN, REDUCED BY ANY LIABILITY TO WHICH THE PROPERTY WAS
SUBJECT OR WHICH WAS ASSUMED BY THE CORPORATION. THE DETERMINATION UNDER
THE PRECEDING SENTENCE SHALL BE MADE AS OF THE  TIME  THE  PROPERTY  WAS
RECEIVED  BY THE CORPORATION. FOR PURPOSES OF SUBPARAGRAPH (III) OF THIS
SECTION, "AVERAGE NUMBER OF  INDIVIDUALS,  EXCLUDING  GENERAL  EXECUTIVE
OFFICERS,  EMPLOYED  FULL-TIME"  SHALL  BE  COMPUTED BY ASCERTAINING THE
NUMBER OF SUCH INDIVIDUALS EMPLOYED BY THE TAXPAYER ON THE  THIRTY-FIRST
DAY  OF MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER
AND THE THIRTY-FIRST DAY OF DECEMBER DURING EACH TAXABLE YEAR  OR  OTHER
APPLICABLE  PERIOD,  BY  ADDING  TOGETHER THE NUMBER OF SUCH INDIVIDUALS
ASCERTAINED ON EACH OF SUCH DATES AND DIVIDING THE SUM  SO  OBTAINED  BY
THE  NUMBER  OF  SUCH  DATES OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER
APPLICABLE PERIOD. AN INDIVIDUAL EMPLOYED FULL-TIME MEANS AN EMPLOYEE IN
A JOB CONSISTING OF AT LEAST THIRTY-FIVE HOURS PER WEEK, OR TWO OR  MORE
EMPLOYEES  WHO  ARE IN JOBS THAT TOGETHER CONSTITUTE THE EQUIVALENT OF A
JOB  AT  LEAST  THIRTY-FIVE  HOURS  PER  WEEK  (FULL-TIME   EQUIVALENT).
FULL-TIME EQUIVALENT EMPLOYEES IN THE STATE INCLUDES ALL EMPLOYEES REGU-
LARLY CONNECTED WITH OR WORKING OUT OF AN OFFICE OR PLACE OF BUSINESS OF
THE TAXPAYER WITHIN THE STATE.
  (g)  New  York S corporations.   (1) General. The amount prescribed by
this paragraph shall be, in the case of each  New  York  S  corporation,
[(i)  the  higher of the amounts prescribed in paragraphs (a) and (d) of
this subdivision (other than the amount prescribed in the  final  clause
of  subparagraph  one of that paragraph (d)) (ii) reduced by the article
twenty-two tax equivalent;  provided,  however,  that  the  amount  thus
determined  shall  not be less than the lowest of the amounts prescribed
in subparagraph one of that paragraph (d) (applying  the  provisions  of
subparagraph  three  of that paragraph as necessary). Provided, however,
notwithstanding any provision of this paragraph, in taxable years begin-
ning in two thousand three and before two  thousand  eight,  the  amount
prescribed  by this paragraph shall be the amount prescribed in subpara-
graph one of that paragraph (d) (applying the provisions of subparagraph
three of that paragraph as necessary) and applying  the  calculation  of
that  amount  in the case of a termination year as set forth in subpara-
graph four of this paragraph as necessary. In taxable years beginning in
two thousand eight and thereafter, the amount prescribed by  this  para-
graph  is]  the amount prescribed in subparagraph four of that paragraph
(d) [(applying the provisions of subparagraph three of that paragraph as
necessary)] and applying the calculation of that amount in the case of a

S. 6359--B                         55                         A. 8559--B

termination year as set forth in subparagraph four of this paragraph  as
necessary.
  (2)  [Article  twenty-two  tax equivalent. For taxable years beginning
before July first, nineteen hundred ninety-nine, the article  twenty-two
tax equivalent is the amount computed under paragraph (a) of this subdi-
vision  by  substituting for the rate therein the rate of 7.875 percent.
For taxable years beginning after June thirtieth, nineteen hundred nine-
ty-nine and before July first, two thousand, the article twenty-two  tax
equivalent  is  the amount computed under paragraph (a) of this subdivi-
sion by substituting for the rate therein the rate of 7.525 percent. For
taxable years beginning after June thirtieth, two  thousand  and  before
July  first,  two thousand one, the article twenty-two tax equivalent is
the amount computed under paragraph (a) of this subdivision  by  substi-
tuting for the rate therein the rate of 7.175 percent. For taxable years
beginning  after June thirtieth, two thousand one and before July first,
two thousand three, the article twenty-two tax equivalent is the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 6.85 percent. For taxable years beginning after
June  thirtieth,  two  thousand three, the article twenty-two tax equiv-
alent is the amount computed under paragraph (a) of this subdivision  by
substituting for the rate therein the rate of 7.1425 percent.
  (3)  Small  business  taxpayers.  Notwithstanding  the  provisions  of
subparagraphs one and two of this paragraph, in the case of a New York S
corporation which is a small business taxpayer, as defined in  paragraph
(f) of this subdivision, the following provisions shall apply:
  (A)  For  taxable  years beginning before July first, nineteen hundred
ninety-nine,  the  article  twenty-two  tax  equivalent  is  the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.875 percent.
  (B) For taxable years beginning after June thirtieth, nineteen hundred
ninety-nine  and  before  July  first,  two  thousand  three, the amount
computed under paragraph (a) of this  subdivision,  as  referred  to  in
subparagraph  one  of  this paragraph, shall be computed by substituting
for the rate therein the rate of 7.5 percent, and the article twenty-two
tax equivalent under paragraph (a) of this subdivision shall be computed
as follows:
  (i) if the entire net income base is not more than two  hundred  thou-
sand  dollars,  the  article  twenty-two  tax  equivalent  is the amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.45 percent;
  (ii) if the entire net income base is more than two  hundred  thousand
dollars  but  not  over two hundred ninety thousand dollars, the article
twenty-two tax equivalent shall be computed as the sum of  (I)  fourteen
thousand  nine  hundred  dollars,  (II)  six  and eighty-five hundredths
percent of the first fifty thousand dollars in excess of the entire  net
income  base  over  two  hundred  thousand  dollars, and (III) three and
eighty-five hundredths percent of the excess, if any, of the entire  net
income base over two hundred fifty thousand dollars.
  (C)  For  taxable  years  beginning after June thirtieth, two thousand
three, the amount computed under paragraph (a) of this  subdivision,  as
referred  to in subparagraph one of this paragraph, shall be computed by
substituting for the rate therein the rate of 7.5 percent, and the arti-
cle twenty-two tax equivalent under paragraph (a)  of  this  subdivision
shall be computed as follows:
  (i)  if  the entire net income base is not more than two hundred thou-
sand dollars, the  article  twenty-two  tax  equivalent  is  the  amount

S. 6359--B                         56                         A. 8559--B

computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.4725 percent;
  (ii)  if  the entire net income base is more than two hundred thousand
dollars but not over two hundred ninety thousand  dollars,  the  article
twenty-two  tax  equivalent shall be computed as the sum of (I) fourteen
thousand nine hundred forty-five dollars, (II)  7.1425  percent  of  the
first  fifty  thousand  dollars  in excess of the entire net income base
over two hundred thousand dollars,  and  (III)  5.4925  percent  of  the
excess,  if  any,  of  the entire net income base over two hundred fifty
thousand dollars.
  (4)] Termination year. In the case of a termination year, [the tax for
the S short year shall be computed under this paragraph  without  regard
to  the  fixed  dollar  minimum  tax prescribed in paragraph (d) of this
subdivision, and the tax for the C short year shall  be  computed  under
the  opening  paragraph  of this subdivision without regard to the fixed
dollar minimum tax prescribed under such paragraph (d), but in no  event
shall]  the  sum  of  the tax for the S short year and the tax for the C
short year SHALL NOT be less than the fixed  dollar  minimum  tax  under
paragraph  (d) of this subdivision computed as if the corporation were a
New York C corporation for the entire taxable year.
  [(h) For purposes of determining whether a  taxpayer  is  an  eligible
qualified  New  York  manufacturer  for  purposes  of  the  tax benefits
provided in subparagraph (vi) of  paragraph  (a)  of  this  subdivision,
subparagraph (ii) of paragraph (c) of this subdivision, and subparagraph
five  of paragraph (d) of this subdivision, a taxpayer shall utilize the
law, guidelines and criteria in effect  on  December  thirty-first,  two
thousand thirteen.]
  S  13.  Subdivision  1-c  of section 210 of the tax law, as amended by
chapter 1043 of the laws of 1981, the opening  paragraph  and  paragraph
(a)  as amended by chapter 817 of the laws of 1987, and paragraph (b) as
amended by section 12 of part Y of chapter 63 of the laws  of  2000,  is
amended to read as follows:
  1-c. The computations specified in paragraph (b) of subdivision one of
this section shall not apply to the first two taxable years of a taxpay-
er  which,  for  one or both such years, is a small business [concern. A
small business concern:
  (a) is a taxpayer which is a small business corporation as defined  in
paragraph  three  of subsection (c) of section twelve hundred forty-four
of the internal revenue code (without regard to the second  sentence  of
subparagraph (A) thereof) as of the last day of the taxable year,
  (b) is not a corporation over fifty percent of the number of shares of
stock of which entitling the holders thereof to vote for the election of
directors or trustees is owned by a taxpayer which (1) is subject to tax
under this article; section one hundred eighty-three, one hundred eight-
y-four or one hundred eighty-five of article nine; article thirty-two or
thirty-three  of this chapter, and (2) does not qualify as a small busi-
ness corporation as defined in paragraph  three  of  subsection  (c)  of
section  twelve hundred forty-four of the internal revenue code (without
regard to the second sentence of subparagraph (A)  thereof)  as  of  the
last  day  of its taxable year ending within or with the taxable year of
the taxpayer,
  (c) is not a corporation which is substantially similar  in  operation
and  in  ownership to a business entity (or entities) taxable, or previ-
ously taxable, under this article; section one hundred eighty-three, one
hundred eighty-four, one hundred eighty-five or one  hundred  eighty-six
of  article  nine;  article  thirty-two or thirty-three of this chapter;

S. 6359--B                         57                         A. 8559--B

article twenty-three of this chapter or which would have been subject to
tax under such article twenty-three (as such article was  in  effect  on
January  first,  nineteen  hundred  eighty) or the income (or losses) of
which  is  (or was) includable under article twenty-two of this chapter,
and
  (d) at least ninety percent of the assets of such corporation  (valued
at  original  cost)  were  located and employed in this state during the
taxable year and eighty percent of the employees of such corporation (as
ascertained within the meaning and intent of subparagraph three of para-
graph (a)  of  subdivision  three  of  this  section)  were  principally
employed  in  this state during the taxable year] TAXPAYER AS DEFINED IN
PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION.
  S 14. Subdivision 2 of section 210 of the tax law, as amended by chap-
ter 760 of the laws of 1992, is amended to read as follows:
  2. The amount of [subsidiary capital,] investment capital and business
capital shall each be determined by taking  the  average  value  of  the
assets  included therein (less liabilities deductible therefrom pursuant
to the provisions of subdivisions [four,] five and seven of section  two
hundred eight), and, if the period covered by the report is other than a
period  of  twelve  calendar  months,  by  multiplying such value by the
number of calendar months or major parts thereof included in such  peri-
od,  and  dividing  the product thus obtained by twelve. For purposes of
this subdivision, real  property  and  marketable  securities  shall  be
valued  at  fair  market  value and the value of personal property other
than marketable securities shall be the value thereof shown on the books
and records of  the  taxpayer  in  accordance  with  generally  accepted
accounting principles.
  S  15.  Subdivisions 3, 3-a, 4, 5, 6, 7, 8, 9, 10, 11, 12, 12-A, 12-B,
12-C, 12-D, 12-E, 12-F, 12-G, 13, 14, 15, 16, 17, 18, 19, 20, 21,  21-a,
22,  23,  23-a,  24, 25, 25-a, 26, 26-a, 27, 28, 30, 31, 32, 33, 34, 35,
36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, subdivision 48 as  added
by  section  3  of  part  T  of  this act and subdivision 48 as added by
section 2 of part R of this act of  section  210  of  the  tax  law  are
REPEALED.
  S 15-a. Section 210 of the tax law is amended by adding a new subdivi-
sion 3 to read as follows:
  3.  A CORPORATION THAT IS A PARTNER IN A PARTNERSHIP SHALL COMPUTE TAX
UNDER THIS ARTICLE USING THE AGGREGATE METHOD AS DEFINED  IN  THE  REGU-
LATIONS  OF  THE  COMMISSIONER, UNLESS ANOTHER METHOD FOR COMPUTING SUCH
TAX IS REQUIRED OR ALLOWED BY  SUCH  REGULATIONS.  UNDER  THE  AGGREGATE
METHOD,  A  CORPORATION  THAT IS A PARTNER IN A PARTNERSHIP IS VIEWED AS
HAVING AN UNDIVIDED INTEREST IN THE PARTNERSHIP'S  ASSETS,  LIABILITIES,
AND  ITEMS  OF  RECEIPTS,  INCOME,  GAIN,  LOSS AND DEDUCTION. UNDER THE
AGGREGATE METHOD, THE CORPORATION THAT IS A PARTNER IN A PARTNERSHIP  IS
TREATED  AS  PARTICIPATING  IN THE PARTNERSHIP'S TRANSACTIONS AND ACTIV-
ITIES.
  S 16. The tax law is amended by adding a new section 210-A to read  as
follows:
  S  210-A. APPORTIONMENT. 1. GENERAL. BUSINESS INCOME AND CAPITAL SHALL
BE APPORTIONED TO THE  STATE  BY  THE  APPORTIONMENT  FACTOR  DETERMINED
PURSUANT TO THIS SECTION. THE APPORTIONMENT FACTOR IS A FRACTION, DETER-
MINED BY INCLUDING ONLY THOSE RECEIPTS, NET INCOME, NET GAINS, AND OTHER
ITEMS  DESCRIBED IN THIS SECTION THAT ARE INCLUDED IN THE COMPUTATION OF
THE TAXPAYER'S BUSINESS INCOME FOR THE TAXABLE YEAR.   THE NUMERATOR  OF
THE  APPORTIONMENT FRACTION SHALL BE EQUAL TO THE SUM OF ALL THE AMOUNTS
REQUIRED TO BE INCLUDED IN THE NUMERATOR PURSUANT TO THE  PROVISIONS  OF

S. 6359--B                         58                         A. 8559--B

THIS  SECTION AND THE DENOMINATOR OF THE APPORTIONMENT FRACTION SHALL BE
EQUAL TO THE SUM OF ALL THE AMOUNTS  REQUIRED  TO  BE  INCLUDED  IN  THE
DENOMINATOR PURSUANT TO THE PROVISIONS OF THIS SECTION.
  2.  SALES  OF TANGIBLE PERSONAL PROPERTY AND ELECTRICITY. (A) RECEIPTS
FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE  SHIPMENTS  ARE  MADE  TO
POINTS WITHIN THE STATE OR THE DESTINATION OF THE PROPERTY IS A POINT IN
THE  STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION. RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE  SHIPMENTS
ARE  MADE  TO  POINTS WITHIN AND WITHOUT THE STATE OR THE DESTINATION IS
WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE
APPORTIONMENT FRACTION.
  (B) RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN  THE
STATE  SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.
RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN AND  WITH-
OUT  THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT
FRACTION.
  (C) RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY AND  ELECTRICITY
THAT ARE TRADED AS COMMODITIES AS DESCRIBED IN SECTION 475 OF THE INTER-
NAL  REVENUE  CODE ARE INCLUDED IN THE APPORTIONMENT FRACTION IN ACCORD-
ANCE WITH CLAUSE (I) OF SUBPARAGRAPH TWO OF PARAGRAPH (A) OF SUBDIVISION
FIVE OF THIS SECTION.
  3. RENTALS AND ROYALTIES. (A) RECEIPTS FROM RENTALS OF REAL AND TANGI-
BLE PERSONAL PROPERTY LOCATED WITHIN  THE  STATE  ARE  INCLUDED  IN  THE
NUMERATOR  OF  THE APPORTIONMENT FRACTION. RECEIPTS FROM RENTALS OF REAL
AND TANGIBLE PERSONAL PROPERTY LOCATED  WITHIN  AND  WITHOUT  THE  STATE
SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (B)  RECEIPTS OF ROYALTIES FROM THE USE OF PATENTS, COPYRIGHTS, TRADE-
MARKS, AND SIMILAR INTANGIBLE PERSONAL PROPERTY  WITHIN  THE  STATE  ARE
INCLUDED  IN  THE  NUMERATOR  OF THE APPORTIONMENT FRACTION. RECEIPTS OF
ROYALTIES FROM THE USE OF PATENTS, COPYRIGHTS,  TRADEMARKS  AND  SIMILAR
INTANGIBLES WITHIN AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR
OF THE APPORTIONMENT FRACTION. A PATENT, COPYRIGHT, TRADEMARK OR SIMILAR
INTANGIBLE  PROPERTY  IS USED IN THE STATE TO THE EXTENT THAT THE ACTIV-
ITIES THEREUNDER ARE CARRIED ON IN THE STATE.
  (C) RECEIPTS FROM THE SALES OF RIGHTS  FOR  CLOSED-CIRCUIT  AND  CABLE
TELEVISION  TRANSMISSIONS  OF AN EVENT (OTHER THAN EVENTS OCCURRING ON A
REGULARLY SCHEDULED BASIS) TAKING PLACE WITHIN THE STATE AS A RESULT  OF
THE  RENDITION OF SERVICES BY EMPLOYEES OF THE CORPORATION, AS ATHLETES,
ENTERTAINERS OR PERFORMING ARTISTS ARE INCLUDED IN THE NUMERATOR OF  THE
APPORTIONMENT FRACTION TO THE EXTENT THAT SUCH RECEIPTS ARE ATTRIBUTABLE
TO  SUCH  TRANSMISSIONS RECEIVED OR EXHIBITED WITHIN THE STATE. RECEIPTS
FROM ALL SALES OF RIGHTS FOR CLOSED-CIRCUIT AND CABLE TELEVISION  TRANS-
MISSIONS  OF  AN EVENT ARE INCLUDED IN THE DENOMINATOR OF THE APPORTION-
MENT FRACTION.
  4. DIGITAL PRODUCTS. (A) FOR PURPOSES OF DETERMINING THE APPORTIONMENT
FRACTION UNDER THIS SECTION, THE TERM "DIGITAL PRODUCT" MEANS ANY  PROP-
ERTY OR SERVICE, OR COMBINATION THEREOF, OF WHATEVER NATURE DELIVERED TO
THE PURCHASER THROUGH THE USE OF WIRE, CABLE, FIBER-OPTIC, LASER, MICRO-
WAVE,  RADIO WAVE, SATELLITE OR SIMILAR SUCCESSOR MEDIA, OR ANY COMBINA-
TION THEREOF. DIGITAL PRODUCT INCLUDES, BUT IS NOT LIMITED TO, AN  AUDIO
WORK,  AUDIOVISUAL  WORK,  VISUAL  WORK,  BOOK OR LITERARY WORK, GRAPHIC
WORK, GAME, INFORMATION OR ENTERTAINMENT  SERVICE,  STORAGE  OF  DIGITAL
PRODUCTS  AND  COMPUTER  SOFTWARE  BY WHATEVER MEANS DELIVERED. THE TERM
"DELIVERED TO" INCLUDES FURNISHED OR  PROVIDED  TO  OR  ACCESSED  BY.  A
DIGITAL  PRODUCT  DOES NOT INCLUDE LEGAL, MEDICAL, ACCOUNTING, ARCHITEC-

S. 6359--B                         59                         A. 8559--B

TURAL, RESEARCH, ANALYTICAL, ENGINEERING OR CONSULTING SERVICES PROVIDED
BY THE TAXPAYER.
  (B)  RECEIPTS  FROM THE SALE OF, LICENCE TO USE, OR GRANTING OF REMOTE
ACCESS TO DIGITAL PRODUCTS WITHIN THE STATE, DETERMINED ACCORDING TO THE
HIERARCHY OF METHODS SET FORTH IN  SUBPARAGRAPHS  ONE  THROUGH  FOUR  OF
PARAGRAPH (C) OF THIS SUBDIVISION, SHALL BE INCLUDED IN THE NUMERATOR OF
THE  APPORTIONMENT  FRACTION. RECEIPTS FROM THE SALE OF, LICENSE TO USE,
OR GRANTING OF REMOTE ACCESS TO DIGITAL PRODUCTS WITHIN AND WITHOUT  THE
STATE  SHALL  BE  INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC-
TION. THE  TAXPAYER  MUST  EXERCISE  DUE  DILIGENCE  UNDER  EACH  METHOD
DESCRIBED  IN  PARAGRAPH (C) OF THIS SUBDIVISION BEFORE REJECTING IT AND
PROCEEDING TO THE NEXT METHOD IN THE HIERARCHY. IF  THE  RECEIPT  FOR  A
DIGITAL  PRODUCT IS COMPRISED OF A COMBINATION OF PROPERTY AND SERVICES,
IT CANNOT BE DIVIDED INTO SEPARATE COMPONENTS AND IS  CONSIDERED  TO  BE
ONE  RECEIPT  REGARDLESS  OF WHETHER IT IS SEPARATELY STATED FOR BILLING
PURPOSES. THE ENTIRE RECEIPT MUST BE ALLOCATED BY THIS HIERARCHY.
  (C) HIERARCHY OF SOURCING METHODS. (1)  DELIVERY  DESTINATION  OF  THE
DIGITAL  PRODUCT. A DIGITAL PRODUCT IS DEEMED DELIVERED WITHIN THE STATE
IF THE LOCATION FROM WHICH THE PURCHASER OR ITS AUTHORIZED USER ACCESSES
OR USES THE DIGITAL PRODUCT IS IN THE STATE. DESTINATION MAY  BE  DEMON-
STRATED BY INTERNET PROTOCOL ADDRESS OR OTHER SIMILAR OR SUCCESSOR INDI-
CATOR,  THE  GEOGRAPHIC  LOCATION  OF THE EQUIPMENT TO WHICH THE DIGITAL
PRODUCT IS DELIVERED OR FROM WHICH THE DIGITAL PRODUCT IS  ACCESSED,  OR
THE  DELIVERY  DESTINATION  INDICATED  ON  A  BILL OF LADING OR PURCHASE
INVOICE. A DIGITAL PRODUCT ACCESSED OR USED  BY  THE  PURCHASER  OR  ITS
AUTHORIZED USER DURING THE TAXPAYER'S TAXABLE YEAR IN MULTIPLE LOCATIONS
IS  DELIVERED WITHIN THE STATE TO THE EXTENT THAT THE DIGITAL PRODUCT IS
ACCESSED OR USED IN THE STATE;
  (2) BILLING ADDRESS OF THE PURCHASER;
  (3)  ZIP  CODE  OR  OTHER  GEOGRAPHIC  INDICATOR  OF  THE  PURCHASER'S
LOCATION; OR
  (4) THE APPORTIONMENT FRACTION DETERMINED PURSUANT TO THIS SUBDIVISION
FOR  THE  PRECEDING TAXABLE YEAR, OR, IF THE TAXPAYER WAS NOT SUBJECT TO
TAX IN THE PRECEDING TAXABLE YEAR, THEN THE  APPORTIONMENT  FRACTION  IN
THE  CURRENT TAXABLE YEAR FOR THOSE DIGITAL PRODUCTS THAT CAN BE SOURCED
USING THE HIERARCHY OF SOURCING METHODS  IN  SUBPARAGRAPHS  ONE  THROUGH
THREE OF THIS SUBDIVISION.
  5.  FINANCIAL  TRANSACTIONS.  (A)  FINANCIAL  INSTRUMENTS. A FINANCIAL
INSTRUMENT IS A "QUALIFIED FINANCIAL INSTRUMENT"  IF  IT  IS  MARKED  TO
MARKET  UNDER  SECTION 475 OR SECTION 1256 OF THE INTERNAL REVENUE CODE,
PROVIDED THAT LOANS SECURED BY REAL  PROPERTY  SHALL  NOT  BE  QUALIFIED
FINANCIAL  INSTRUMENTS. A FINANCIAL INSTRUMENT IS A "NONQUALIFIED FINAN-
CIAL INSTRUMENT" IF IT IS NOT A QUALIFIED FINANCIAL INSTRUMENT.
  (1) FIXED PERCENTAGE METHOD FOR QUALIFIED  FINANCIAL  INSTRUMENTS.  IN
DETERMINING  THE  INCLUSION  OF  RECEIPTS  AND  NET GAINS FROM QUALIFIED
FINANCIAL INSTRUMENTS IN THE APPORTIONMENT FRACTION, TAXPAYERS MAY ELECT
TO USE THE FIXED PERCENTAGE METHOD DESCRIBED IN  THIS  SUBPARAGRAPH  FOR
QUALIFIED FINANCIAL INSTRUMENTS. THE ELECTION IS IRREVOCABLE, APPLIES TO
ALL QUALIFIED FINANCIAL INSTRUMENTS, AND MUST BE MADE ON AN ANNUAL BASIS
ON  THE TAXPAYER'S ORIGINAL, TIMELY FILED RETURN. IF THE TAXPAYER ELECTS
THE FIXED PERCENTAGE METHOD, THEN ALL INCOME, GAIN OR LOSS, FROM  QUALI-
FIED FINANCIAL INSTRUMENTS CONSTITUTES BUSINESS INCOME, GAIN OR LOSS. IF
THE  TAXPAYER  DOES  NOT  ELECT TO USE THE FIXED PERCENTAGE METHOD, THEN
RECEIPTS AND NET GAINS ARE INCLUDED IN  THE  APPORTIONMENT  FRACTION  IN
ACCORDANCE  WITH  THE CUSTOMER SOURCING METHOD DESCRIBED IN SUBPARAGRAPH
TWO OF THIS PARAGRAPH. UNDER THE FIXED PERCENTAGE METHOD, EIGHT  PERCENT

S. 6359--B                         60                         A. 8559--B

OF  ALL NET INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRU-
MENTS IS INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRACTION.  ALL
NET  INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRUMENTS IS
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (2)  CUSTOMER  SOURCING  METHOD. RECEIPTS AND NET GAINS FROM QUALIFIED
FINANCIAL INSTRUMENTS, IN CASES WHERE THE TAXPAYER DID NOT ELECT TO  USE
THE  FIXED PERCENTAGE METHOD DESCRIBED IN SUBPARAGRAPH ONE OF THIS PARA-
GRAPH, AND FROM NONQUALIFIED FINANCIAL INSTRUMENTS ARE INCLUDED  IN  THE
APPORTIONMENT   FRACTION  IN  ACCORDANCE  WITH  THIS  SUBPARAGRAPH.  FOR
PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL IS DEEMED TO BE LOCATED IN THE
STATE IF HIS OR HER BILLING ADDRESS IS IN THE STATE. A  BUSINESS  ENTITY
IS  DEEMED  TO  BE  LOCATED  IN  THE STATE IF ITS COMMERCIAL DOMICILE IS
LOCATED IN THE STATE.
  (A) LOANS. (I) RECEIPTS CONSTITUTING INTEREST FROM  LOANS  SECURED  BY
REAL  PROPERTY LOCATED WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERA-
TOR OF THE APPORTIONMENT FRACTION. RECEIPTS CONSTITUTING  INTEREST  FROM
LOANS  SECURED  BY  REAL  PROPERTY  LOCATED WITHIN AND WITHOUT THE STATE
SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (II) RECEIPTS CONSTITUTING INTEREST FROM LOANS  NOT  SECURED  BY  REAL
PROPERTY  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION IF THE BORROWER IS LOCATED  IN  THE  STATE.  RECEIPTS  CONSTITUTING
INTEREST  FROM  LOANS NOT SECURED BY REAL PROPERTY, WHETHER THE BORROWER
IS LOCATED WITHIN OR WITHOUT THE STATE, SHALL BE INCLUDED IN THE DENOMI-
NATOR OF THE APPORTIONMENT FRACTION.
  (III) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF  LOANS  SECURED  BY
REAL  PROPERTY  ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION AS PROVIDED IN THIS SUBCLAUSE. THE AMOUNT OF  NET  GAINS  FROM  THE
SALE  OF LOANS SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS  BY  A
FRACTION  THE  NUMERATOR  OF  WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM
SALES OF LOANS SECURED BY REAL PROPERTY LOCATED WITHIN THE STATE AND THE
DENOMINATOR OF WHICH IS THE GROSS PROCEEDS FROM SALES OF  LOANS  SECURED
BY  REAL  PROPERTY WITHIN AND WITHOUT THE STATE. GROSS PROCEEDS SHALL BE
DETERMINED AFTER THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS
BUT SHALL NOT BE LESS THAN ZERO. NET GAINS (NOT  LESS  THAN  ZERO)  FROM
SALES OF LOANS SECURED BY REAL PROPERTY WITHIN AND WITHOUT THE STATE ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (IV) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS NOT SECURED BY
REAL  PROPERTY  ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION AS PROVIDED IN THIS SUBCLAUSE. THE AMOUNT OF  NET  GAINS  FROM  THE
SALE  OF LOANS NOT SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF
THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS BY
A FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS  FROM
SALES OF LOANS NOT SECURED BY REAL PROPERTY TO PURCHASERS LOCATED WITHIN
THE  STATE  AND THE DENOMINATOR OF WHICH IS THE AMOUNT OF GROSS RECEIPTS
FROM SALES OF LOANS NOT SECURED BY REAL PROPERTY TO  PURCHASERS  LOCATED
WITHIN  AND  WITHOUT THE STATE. GROSS PROCEEDS SHALL BE DETERMINED AFTER
THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS BUT SHALL NOT BE
LESS THAN ZERO.  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS  NOT
SECURED  BY  REAL PROPERTY ARE INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION.
  (B) FEDERAL, STATE, AND MUNICIPAL DEBT. RECEIPTS CONSTITUTING INTEREST
AND NET GAINS FROM SALES  OF  DEBT  INSTRUMENTS  ISSUED  BY  THE  UNITED
STATES,  ANY  STATE,  OR  POLITICAL  SUBDIVISION OF A STATE SHALL NOT BE
INCLUDED IN  THE  NUMERATOR  OF  THE  APPORTIONMENT  FRACTION.  RECEIPTS
CONSTITUTING  INTEREST  AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF

S. 6359--B                         61                         A. 8559--B

DEBT INSTRUMENTS ISSUED BY THE UNITED STATES AND THE STATE OF  NEW  YORK
OR  ITS  POLITICAL  SUBDIVISIONS SHALL BE INCLUDED IN THE DENOMINATOR OF
THE APPORTIONMENT FRACTION. FIFTY PERCENT OF THE  RECEIPTS  CONSTITUTING
INTEREST  AND  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF DEBT INSTRU-
MENTS ISSUED BY OTHER STATES OR THEIR POLITICAL  SUBDIVISIONS  SHALL  BE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (C)  ASSET  BACKED SECURITIES AND OTHER GOVERNMENT AGENCY DEBT.  EIGHT
PERCENT OF THE INTEREST INCOME FROM ASSET  BACKED  SECURITIES  OR  OTHER
SECURITIES  ISSUED  BY GOVERNMENT AGENCIES, INCLUDING BUT NOT LIMITED TO
SECURITIES  ISSUED  BY  THE  GOVERNMENT  NATIONAL  MORTGAGE  ASSOCIATION
(GNMA),  THE  FEDERAL  NATIONAL MORTGAGE ASSOCIATION (FNMA), THE FEDERAL
HOME LOAN MORTGAGE CORPORATION (FHLMC), OR THE SMALL  BUSINESS  ADMINIS-
TRATION  SHALL  BE  INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION. EIGHT PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM (I) SALES
OF ASSET BACKED SECURITIES OR  OTHER  SECURITIES  ISSUED  BY  GOVERNMENT
AGENCIES  ISSUED  BY  GNMA,  FNMA, OR FHLMC, THE SMALL BUSINESS ADMINIS-
TRATION OR OTHER GOVERNMENT AGENCY, OR (II) SALES OF OTHER ASSET  BACKED
SECURITIES THAT ARE SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEAL-
ER OR THROUGH A LICENSED EXCHANGE, SHALL BE INCLUDED IN THE NUMERATOR OF
THE APPORTIONMENT FRACTION. THE AMOUNT OF NET GAINS (NOT LESS THAN ZERO)
FROM  SALES  OF  OTHER ASSET BACKED SECURITIES REFERENCED IN CLAUSE (II)
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY
MULTIPLYING SUCH NET GAINS BY A FRACTION, THE NUMERATOR OF WHICH IS  THE
AMOUNT  OF  GROSS  PROCEEDS FROM SUCH SALES TO PURCHASERS LOCATED IN THE
STATE AND THE DENOMINATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS  FROM
SUCH  SALES TO PURCHASERS LOCATED WITHIN AND WITHOUT THE STATE. RECEIPTS
CONSTITUTING INTEREST FROM ASSET BACKED SECURITIES AND  NET  GAINS  (NOT
LESS  THAN  ZERO)  FROM SALES OF ASSET BACKED SECURITIES ARE INCLUDED IN
THE DENOMINATOR OF THE APPORTIONMENT FRACTION. GROSS PROCEEDS  SHALL  BE
DETERMINED AFTER THE DEDUCTION OF ANY COST TO ACQUIRE THE SECURITIES BUT
SHALL NOT BE LESS THAN ZERO.
  (D)  CORPORATE  BONDS.  RECEIPTS  CONSTITUTING INTEREST FROM CORPORATE
BONDS ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IF THE
COMMERCIAL DOMICILE OF THE ISSUING CORPORATION IS IN THE STATE.    EIGHT
PERCENT  OF  THE  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF CORPORATE
BONDS SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEALER OR THROUGH A
LICENSED EXCHANGE IS INCLUDED IN  THE  NUMERATOR  OF  THE  APPORTIONMENT
FRACTION.  THE AMOUNT OF NET GAINS (NOT LESS THAN ZERO) FROM OTHER SALES
OF CORPORATE BONDS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT  FRAC-
TION  IS  DETERMINED  BY  MULTIPLYING  SUCH NET GAINS BY A FRACTION, THE
NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM  SUCH  SALES  TO
PURCHASERS  LOCATED  IN  THE  STATE  AND THE DENOMINATOR OF WHICH IS THE
AMOUNT OF GROSS PROCEEDS FROM SALES TO  PURCHASERS  LOCATED  WITHIN  AND
WITHOUT  THE STATE. RECEIPTS CONSTITUTING INTEREST FROM CORPORATE BONDS,
WHETHER THE ISSUING CORPORATION'S COMMERCIAL DOMICILE IS WITHIN OR WITH-
OUT THE STATE, AND NET GAINS (NOT LESS THAN ZERO) FROM SALES  OF  CORPO-
RATE  BONDS  TO  PURCHASERS WITHIN AND WITHOUT THE STATE ARE INCLUDED IN
THE DENOMINATOR OF THE APPORTIONMENT FRACTION. GROSS PROCEEDS  SHALL  BE
DETERMINED  AFTER  THE  DEDUCTION  OF  ANY COST TO ACQUIRE THE BONDS BUT
SHALL NOT BE LESS THAN ZERO.
  (E) REVERSE REPURCHASE AGREEMENTS AND SECURITIES BORROWING AGREEMENTS.
EIGHT PERCENT OF NET INTEREST INCOME (NOT LESS THAN ZERO)  FROM  REVERSE
REPURCHASE  AGREEMENTS  AND  SECURITIES  BORROWING  AGREEMENTS  SHALL BE
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT  FRACTION.  NET  INTEREST
INCOME (NOT LESS THAN ZERO) FROM REVERSE REPURCHASE AGREEMENTS AND SECU-
RITIES BORROWING AGREEMENTS IS INCLUDED IN THE DENOMINATOR OF THE APPOR-

S. 6359--B                         62                         A. 8559--B

TIONMENT  FRACTION.  NET  INTEREST INCOME FROM REVERSE REPURCHASE AGREE-
MENTS AND SECURITIES BORROWING AGREEMENTS IS DETERMINED FOR PURPOSES  OF
THIS  SUBDIVISION  AFTER  THE DEDUCTION OF THE INTEREST EXPENSE FROM THE
TAXPAYER'S  REPURCHASE  AGREEMENTS AND SECURITIES LENDING AGREEMENTS BUT
CANNOT BE LESS THAN ZERO. FOR  THIS  CALCULATION,  THE  AMOUNT  OF  SUCH
INTEREST  EXPENSE IS THE INTEREST EXPENSE ASSOCIATED WITH THE SUM OF THE
VALUE  OF  THE  TAXPAYER'S  REPURCHASE  AGREEMENTS  WHERE  IT   IS   THE
SELLER/BORROWER  PLUS  THE  VALUE  OF  THE TAXPAYER'S SECURITIES LENDING
AGREEMENTS WHERE IT IS THE  SECURITIES  LENDER,  PROVIDED  SUCH  SUM  IS
LIMITED  TO  THE  SUM  OF THE VALUE OF THE TAXPAYER'S REVERSE REPURCHASE
AGREEMENTS WHERE IT IS THE SELLER/BORROWER AND THE VALUE OF THE  TAXPAY-
ER'S SECURITIES BORROWING AGREEMENTS.
  (F)  FEDERAL  FUNDS.  EIGHT PERCENT OF THE NET INTEREST (NOT LESS THAN
ZERO) FROM FEDERAL FUNDS IS INCLUDED IN THE NUMERATOR OF THE  APPORTION-
MENT  FRACTION. THE NET INTEREST (NOT LESS THAN ZERO) FROM FEDERAL FUNDS
IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INTER-
EST FROM FEDERAL FUNDS IS DETERMINED AFTER DEDUCTION OF INTEREST EXPENSE
FROM FEDERAL FUNDS.
  (G) DIVIDENDS AND NET GAINS FROM SALES OF STOCK OR PARTNERSHIP  INTER-
ESTS. DIVIDENDS FROM STOCK, NET GAINS (NOT LESS THAN ZERO) FROM SALES OF
STOCK  AND  NET  GAINS (NOT LESS THAN ZERO) FROM THE SALE OF PARTNERSHIP
INTERESTS ARE NOT INCLUDED IN EITHER THE NUMERATOR OR DENOMINATOR OF THE
APPORTIONMENT FRACTION UNLESS THE COMMISSIONER  DETERMINES  PURSUANT  TO
SUBDIVISION  ELEVEN OF THIS SECTION THAT INCLUSION OF SUCH DIVIDENDS AND
NET GAINS (NOT LESS THAN ZERO) IS  NECESSARY  TO  PROPERLY  REFLECT  THE
BUSINESS INCOME OR CAPITAL OF THE TAXPAYER.
  (H)  OTHER  FINANCIAL  INSTRUMENTS. (I) RECEIPTS CONSTITUTING INTEREST
FROM OTHER FINANCIAL INSTRUMENTS SHALL BE INCLUDED IN THE  NUMERATOR  OF
THE  APPORTIONMENT  FRACTION  IF  THE  PAYOR  IS  LOCATED  IN THE STATE.
RECEIPTS CONSTITUTING INTEREST FROM OTHER FINANCIAL INSTRUMENTS, WHETHER
THE PAYOR IS WITHIN OR WITHOUT THE STATE, ARE INCLUDED IN THE  DENOMINA-
TOR OF THE APPORTIONMENT FRACTION.
  (II)  NET  GAINS  (NOT  LESS  THAN ZERO) FROM SALES OF OTHER FINANCIAL
INSTRUMENTS AND OTHER INCOME (NOT LESS THAN ZERO) FROM  OTHER  FINANCIAL
INSTRUMENTS  WHERE  THE  PURCHASER  OR PAYOR IS LOCATED IN THE STATE ARE
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION, PROVIDED  THAT,
IF THE PURCHASER OR PAYOR IS A REGISTERED SECURITIES BROKER OR DEALER OR
THE  TRANSACTION IS MADE THROUGH A LICENSED EXCHANGE, THEN EIGHT PERCENT
OF THE NET GAINS (NOT LESS THAN ZERO) OR OTHER  INCOME  (NOT  LESS  THAN
ZERO)  IS  INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. NET
GAINS (NOT LESS THAN ZERO) FROM SALES OF OTHER FINANCIAL INSTRUMENTS AND
OTHER INCOME (NOT LESS THAN ZERO) FROM OTHER FINANCIAL  INSTRUMENTS  ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (I)  PHYSICAL  COMMODITIES. NET INCOME (NOT LESS THAN ZERO) FROM SALES
OF PHYSICAL COMMODITIES ARE INCLUDED IN THE NUMERATOR OF THE  APPORTION-
MENT FRACTION AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF NET INCOME
FROM  SALES  OF  PHYSICAL  COMMODITIES  INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET INCOME  FROM
SALES  OF  PHYSICAL COMMODITIES BY A FRACTION, THE NUMERATOR OF WHICH IS
THE AMOUNT OF RECEIPTS  FROM  SALES  OF  PHYSICAL  COMMODITIES  ACTUALLY
DELIVERED  TO POINTS WITHIN THE STATE OR, IF THERE IS NO ACTUAL DELIVERY
OF THE PHYSICAL COMMODITY, SOLD TO CUSTOMERS LOCATED IN THE  STATE,  AND
THE  DENOMINATOR  OF WHICH IS THE AMOUNT OF RECEIPTS FROM SALES OF PHYS-
ICAL COMMODITIES ACTUALLY DELIVERED TO POINTS  WITHIN  AND  WITHOUT  THE
STATE  OR  SOLD  TO  CUSTOMERS LOCATED WITHIN AND WITHOUT THE STATE. NET
INCOME (NOT LESS THAT  ZERO)  FROM  SALES  OF  PHYSICAL  COMMODITIES  IS

S. 6359--B                         63                         A. 8559--B

INCLUDED  IN  THE  DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INCOME
(NOT LESS THAN ZERO) FROM SALES OF PHYSICAL  COMMODITIES  IS  DETERMINED
AFTER  THE  DEDUCTION  OF  THE  COST  TO ACQUIRE OR PRODUCE THE PHYSICAL
COMMODITIES.
  (B)  OTHER  RECEIPTS  FROM  BROKER OR DEALER ACTIVITIES. RECEIPTS OF A
REGISTERED SECURITIES BROKER OR DEALER FROM  SECURITIES  OR  COMMODITIES
BROKER  OR DEALER ACTIVITIES DESCRIBED IN THIS PARAGRAPH SHALL BE DEEMED
TO BE GENERATED WITHIN THE  STATE  AS  DESCRIBED  IN  SUBPARAGRAPHS  ONE
THROUGH EIGHT OF THIS PARAGRAPH. RECEIPTS FROM SUCH ACTIVITIES GENERATED
WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT
FRACTION. RECEIPTS FROM SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE
STATE  SHALL  BE  INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC-
TION. FOR THE PURPOSES OF THIS PARAGRAPH, THE  TERM  "SECURITIES"  SHALL
HAVE  THE  SAME  MEANING AS IN SECTION 475(C)(2) OF THE INTERNAL REVENUE
CODE AND THE TERM "COMMODITIES"  SHALL  HAVE  THE  SAME  MEANING  AS  IN
SECTION 475(E)(2) OF THE INTERNAL REVENUE CODE.
  (1)  RECEIPTS  CONSTITUTING  BROKERAGE  COMMISSIONS  DERIVED  FROM THE
EXECUTION OF SECURITIES OR COMMODITIES PURCHASE OR SALES ORDERS FOR  THE
ACCOUNTS  OF  CUSTOMERS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE
IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER  OF  THE  CUSTOMER
WHO IS RESPONSIBLE FOR PAYING SUCH COMMISSIONS IS WITHIN THE STATE.
  (2)  RECEIPTS CONSTITUTING MARGIN INTEREST EARNED ON BEHALF OF BROKER-
AGE ACCOUNTS SHALL BE DEEMED TO BE GENERATED WITHIN  THE  STATE  IF  THE
MAILING  ADDRESS  IN  THE RECORDS OF THE TAXPAYER OF THE CUSTOMER WHO IS
RESPONSIBLE FOR PAYING SUCH MARGIN INTEREST IS WITHIN THE STATE.
  (3)(A) RECEIPTS CONSTITUTING FEES EARNED BY THE TAXPAYER FOR  ADVISORY
SERVICES TO A CUSTOMER IN CONNECTION WITH THE UNDERWRITING OF SECURITIES
FOR  SUCH CUSTOMER (SUCH CUSTOMER BEING THE ENTITY THAT IS CONTEMPLATING
ISSUING OR IS ISSUING SECURITIES) OR FEES EARNED  BY  THE  TAXPAYER  FOR
MANAGING  AN  UNDERWRITING  SHALL  BE  DEEMED TO BE GENERATED WITHIN THE
STATE IF THE MAILING ADDRESS IN THE RECORDS  OF  THE  TAXPAYER  OF  SUCH
CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
  (B)  RECEIPTS  CONSTITUTING  THE  PRIMARY SPREAD OF SELLING CONCESSION
FROM UNDERWRITTEN SECURITIES SHALL BE DEEMED TO BE GENERATED WITHIN  THE
STATE TO THE EXTENT THE CUSTOMER IS LOCATED IN THE STATE.
  (C)  THE  TERM "PRIMARY SPREAD" MEANS THE DIFFERENCE BETWEEN THE PRICE
PAID BY THE TAXPAYER TO THE ISSUER OF THE SECURITIES BEING MARKETED  AND
THE  PRICE RECEIVED FROM THE SUBSEQUENT SALE OF THE UNDERWRITTEN SECURI-
TIES AT THE INITIAL PUBLIC OFFERING PRICE, LESS ANY  SELLING  CONCESSION
AND ANY FEES PAID TO THE TAXPAYER FOR ADVISORY SERVICES OR ANY MANAGER'S
FEES,  IF  SUCH  FEES ARE NOT PAID BY THE CUSTOMER TO THE TAXPAYER SEPA-
RATELY. THE TERM "PUBLIC OFFERING PRICE" MEANS THE PRICE AGREED UPON  BY
THE TAXPAYER AND THE ISSUER AT WHICH THE SECURITIES ARE TO BE OFFERED TO
THE  PUBLIC.  THE TERM "SELLING CONCESSION" MEANS THE AMOUNT PAID TO THE
TAXPAYER FOR PARTICIPATING IN THE UNDERWRITING OF A SECURITY  WHERE  THE
TAXPAYER IS NOT THE LEAD UNDERWRITER.
  (4)  RECEIPTS CONSTITUTING ACCOUNT MAINTENANCE FEES SHALL BE DEEMED TO
BE GENERATED WITHIN THE STATE IF THE MAILING ADDRESS IN  THE  RECORD  OF
THE  TAXPAYER OF THE CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH ACCOUNT
MAINTENANCE FEES IS WITHIN THE STATE.
  (5) RECEIPTS CONSTITUTING FEES FOR MANAGEMENT  OR  ADVISORY  SERVICES,
INCLUDING  FEES  FOR ADVISORY SERVICES IN RELATION TO MERGER OR ACQUISI-
TION ACTIVITIES, BUT EXCLUDING FEES PAID FOR SERVICES DESCRIBED IN PARA-
GRAPH (D) OF THIS SUBDIVISION, SHALL BE DEEMED TO  BE  GENERATED  WITHIN
THE  STATE  IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE
CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.

S. 6359--B                         64                         A. 8559--B

  (6) RECEIPTS CONSTITUTING INTEREST EARNED BY THE TAXPAYER ON LOANS AND
ADVANCES MADE BY THE TAXPAYER  TO  A  CORPORATION  AFFILIATED  WITH  THE
TAXPAYER  BUT  WITH  WHICH  THE TAXPAYER IS NOT PERMITTED OR REQUIRED TO
FILE A COMBINED REPORT PURSUANT TO SECTION TWO  HUNDRED  TEN-C  OF  THIS
ARTICLE  SHALL BE DEEMED TO ARISE FROM SERVICES PERFORMED AT THE PRINCI-
PAL PLACE OF BUSINESS OF SUCH AFFILIATED CORPORATION.
  (7) IF THE TAXPAYER RECEIVES ANY OF THE RECEIPTS ENUMERATED IN SUBPAR-
AGRAPHS ONE THROUGH FOUR OF THIS PARAGRAPH AS A RESULT OF  A  SECURITIES
CORRESPONDENT  RELATIONSHIP  SUCH  TAXPAYER  HAS  WITH ANOTHER BROKER OR
DEALER WITH THE TAXPAYER ACTING IN THIS  RELATIONSHIP  AS  THE  CLEARING
FIRM,  SUCH RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO
EXTENT SET FORTH IN EACH OF  SUCH  SUBPARAGRAPHS.  THE  AMOUNT  OF  SUCH
RECEIPTS SHALL EXCLUDE THE AMOUNT THE TAXPAYER IS REQUIRED TO PAY TO THE
CORRESPONDENT  FIRM FOR SUCH CORRESPONDENT RELATIONSHIP. IF THE TAXPAYER
RECEIVES ANY OF THE RECEIPTS ENUMERATED  IN  SUBPARAGRAPHS  ONE  THROUGH
FOUR  OF  THIS  PARAGRAPH  AS  AS  RESULT  OF A SECURITIES CORRESPONDENT
RELATIONSHIP SUCH TAXPAYER HAS WITH ANOTHER BROKER OR  DEALER  WITH  THE
TAXPAYER  ACTING  IN  THIS  RELATIONSHIP  AS  THE INTRODUCING FIRM, SUCH
RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO THE  EXTENT
SET FORTH IN EACH OF SUCH SUBPARAGRAPHS.
  (8) IF, FOR PURPOSES OF SUBPARAGRAPHS ONE, TWO, CLAUSE (A) OF SUBPARA-
GRAPH THREE, FOUR, OR FIVE OF THIS PARAGRAPH THE TAXPAYER IS UNABLE FROM
ITS  RECORDS  TO  DETERMINE  THE  MAILING ADDRESS OF THE CUSTOMER, EIGHT
PERCENT OF THE RECEIPTS IS INCLUDED IN THE NUMERATOR OF  THE  APPORTION-
MENT FRACTION.
  (C)  RECEIPTS FROM CREDIT CARD AND SIMILAR ACTIVITIES. RECEIPTS RELAT-
ING TO THE  BANK,  CREDIT,  TRAVEL  AND  ENTERTAINMENT  CARD  ACTIVITIES
DESCRIBED  IN  THIS PARAGRAPH SHALL BE DEEMED TO BE GENERATED WITHIN THE
STATE AS DESCRIBED IN SUBPARAGRAPHS ONE THROUGH THREE OF THIS PARAGRAPH.
RECEIPTS FROM SUCH  ACTIVITIES  GENERATED  WITHIN  THE  STATE  SHALL  BE
INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.  RECEIPTS FROM
SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED
IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (1) RECEIPTS CONSTITUTING INTEREST, AND  FEES  AND  PENALTIES  IN  THE
NATURE  OF  INTEREST,  FROM  BANK, CREDIT, TRAVEL AND ENTERTAINMENT CARD
RECEIVABLES SHALL BE DEEMED TO BE GENERATED  WITHIN  THE  STATE  IF  THE
MAILING  ADDRESS OF THE CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS IN
THE STATE;
  (2) RECEIPTS FROM SERVICE CHARGES AND FEES FROM SUCH  CARDS  SHALL  BE
DEEMED  TO  BE  GENERATED WITHIN THE STATE IF THE MAILING ADDRESS OF THE
CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS IN THE STATE; AND
  (3) RECEIPTS FROM MERCHANT DISCOUNTS SHALL BE DEEMED TO  BE  GENERATED
WITHIN  THE  STATE  IF  THE MERCHANT IS LOCATED WITHIN THE STATE. IN THE
CASE OF A MERCHANT WITH LOCATIONS  BOTH  WITHIN  AND  WITHOUT  NEW  YORK
STATE,  ONLY RECEIPTS FROM MERCHANT DISCOUNTS ATTRIBUTABLE TO SALES MADE
FROM LOCATIONS WITHIN NEW YORK STATE ARE ALLOCATED TO NEW YORK STATE. IT
SHALL BE PRESUMED THAT THE LOCATION OF THE MERCHANT IS  THE  ADDRESS  OF
THE  MERCHANT  SHOWN  ON  THE  INVOICE  SUBMITTED BY THE MERCHANT TO THE
TAXPAYER.
  (D) RECEIPTS FROM CERTAIN SERVICES TO INVESTMENT COMPANIES.   RECEIPTS
RECEIVED FROM AN INVESTMENT COMPANY ARISING FROM THE SALE OF MANAGEMENT,
ADMINISTRATION  OR  DISTRIBUTION SERVICES TO SUCH INVESTMENT COMPANY ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.  THE  PORTION
OF SUCH RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
(SUCH  PORTION  REFERRED  TO  HEREIN  AS  THE NEW YORK PORTION) SHALL BE
DETERMINED AS PROVIDED IN THIS PARAGRAPH.

S. 6359--B                         65                         A. 8559--B

  (1) THE NEW YORK PORTION SHALL BE THE PRODUCT OF  THE  TOTAL  OF  SUCH
RECEIPTS FROM THE SALE OF SUCH SERVICES AND A FRACTION. THE NUMERATOR OF
THAT  FRACTION IS THE SUM OF THE MONTHLY PERCENTAGES (AS DEFINED HEREIN-
AFTER) DETERMINED FOR EACH MONTH OF  THE  INVESTMENT  COMPANY'S  TAXABLE
YEAR  FOR FEDERAL INCOME TAX PURPOSES WHICH TAXABLE YEAR ENDS WITHIN THE
TAXABLE YEAR OF THE TAXPAYER (BUT EXCLUDING ANY MONTH DURING  WHICH  THE
INVESTMENT  COMPANY  HAD  NO OUTSTANDING SHARES). THE MONTHLY PERCENTAGE
FOR EACH SUCH MONTH IS DETERMINED BY DIVIDING THE NUMBER  OF  SHARES  IN
THE  INVESTMENT  COMPANY  THAT ARE OWNED ON THE LAST DAY OF THE MONTH BY
SHAREHOLDERS THAT ARE DOMICILED IN THE STATE  BY  THE  TOTAL  NUMBER  OF
SHARES  IN THE INVESTMENT COMPANY OUTSTANDING ON THAT DATE.  THE DENOMI-
NATOR OF THE FRACTION IS THE NUMBER OF SUCH MONTHLY PERCENTAGES.
  (2)(A) FOR PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL, ESTATE OR  TRUST
IS  DEEMED TO BE LOCATED IN THE STATE IF HIS, HER OR ITS MAILING ADDRESS
ON THE RECORDS OF THE INVESTMENT COMPANY IS IN  THE  STATE.  A  BUSINESS
ENTITY  IS  DEEMED TO BE LOCATED IN THE STATE IF ITS COMMERCIAL DOMICILE
IS LOCATED IN THE STATE.
  (B) FOR PURPOSES OF THIS  PARAGRAPH,  THE  TERM  "INVESTMENT  COMPANY"
MEANS  A  REGULATED INVESTMENT COMPANY, AS DEFINED IN SECTION 851 OF THE
INTERNAL REVENUE CODE, AND A PARTNERSHIP TO WHICH SECTION 7704(A) OF THE
INTERNAL REVENUE CODE APPLIES (BY VIRTUE OF SECTION 7704(C)(3)  OF  SUCH
CODE)  AND  THAT  MEETS THE REQUIREMENTS OF SECTION 851(B) OF SUCH CODE.
THE PRECEDING SENTENCE SHALL BE APPLIED TO THE TAXABLE YEAR FOR  FEDERAL
INCOME  TAX  PURPOSES OF THE BUSINESS ENTITY THAT IS ASSERTED TO CONSTI-
TUTE AN INVESTMENT COMPANY THAT ENDS WITHIN  THE  TAXABLE  YEAR  OF  THE
TAXPAYER.
  (C)  FOR PURPOSES OF THIS PARAGRAPH THE TERM "RECEIPTS FROM AN INVEST-
MENT COMPANY" INCLUDES AMOUNTS  RECEIVED  DIRECTLY  FROM  AN  INVESTMENT
COMPANY  AS  WELL  AS  AMOUNTS  RECEIVED  FROM  THE SHAREHOLDERS IN SUCH
INVESTMENT COMPANY, IN THEIR CAPACITY AS SUCH.
  (D) FOR PURPOSES OF THIS PARAGRAPH,  THE  TERM  "MANAGEMENT  SERVICES"
MEANS  THE  RENDERING  OF  INVESTMENT  ADVICE  TO AN INVESTMENT COMPANY,
MAKING DETERMINATIONS AS TO WHEN SALES AND PURCHASES OF  SECURITIES  ARE
TO  BE  MADE  ON  BEHALF  OF  AN  INVESTMENT  COMPANY, OR THE SELLING OR
PURCHASING OF SECURITIES CONSTITUTING ASSETS OF AN  INVESTMENT  COMPANY,
AND  RELATED  ACTIVITIES, BUT ONLY WHERE SUCH ACTIVITY OR ACTIVITIES ARE
PERFORMED PURSUANT TO A CONTRACT WITH  THE  INVESTMENT  COMPANY  ENTERED
INTO  PURSUANT TO SECTION 15(A) OF THE FEDERAL INVESTMENT COMPANY ACT OF
NINETEEN HUNDRED FORTY, AS AMENDED.
  (E) FOR PURPOSES OF THIS PARAGRAPH, THE TERM  "DISTRIBUTION  SERVICES"
MEANS  THE SERVICES OF ADVERTISING, SERVICING INVESTOR ACCOUNTS (INCLUD-
ING REDEMPTIONS), MARKETING SHARES OR SELLING SHARES  OF  AN  INVESTMENT
COMPANY,  BUT,  IN  THE CASE OF ADVERTISING, SERVICING INVESTOR ACCOUNTS
(INCLUDING REDEMPTIONS) OR MARKETING SHARES, ONLY WHERE SUCH SERVICE  IS
PERFORMED BY A PERSON WHO IS (OR WAS, IN THE CASE OF A CLOSED END COMPA-
NY)  ALSO  ENGAGED IN THE SERVICE OF SELLING SUCH SHARES. IN THE CASE OF
AN OPEN END COMPANY, SUCH SERVICE OF SELLING SHARES  MUST  BE  PERFORMED
PURSUANT  TO  A  CONTRACT  ENTERED INTO PURSUANT TO SECTION 15(B) OF THE
FEDERAL INVESTMENT COMPANY ACT OF NINETEEN HUNDRED FORTY, AS AMENDED.
  (F) FOR PURPOSES OF THIS PARAGRAPH, THE TERM "ADMINISTRATION SERVICES"
INCLUDES CLERICAL, ACCOUNTING, BOOKKEEPING,  DATA  PROCESSING,  INTERNAL
AUDITING, LEGAL AND TAX SERVICES PERFORMED FOR AN INVESTMENT COMPANY BUT
ONLY IF THE PROVIDER OF SUCH SERVICE OR SERVICES DURING THE TAXABLE YEAR
IN  WHICH  SUCH  SERVICE  OR  SERVICES ARE SOLD ALSO SELLS MANAGEMENT OR
DISTRIBUTION SERVICES, AS DEFINED HEREINABOVE, TO SUCH INVESTMENT COMPA-
NY.

S. 6359--B                         66                         A. 8559--B

  (E) FOR PURPOSES OF THIS SUBDIVISION, A TAXPAYER SHALL USE THE FOLLOW-
ING HIERARCHY TO DETERMINE THE COMMERCIAL DOMICILE OF A BUSINESS ENTITY,
BASED ON THE INFORMATION KNOWN TO THE TAXPAYER OR INFORMATION THAT WOULD
BE KNOWN UPON REASONABLE INQUIRY: (I) THE LOCATION OF THE TREASURY FUNC-
TION  OF THE BUSINESS ENTITY; (II) THE SEAT OF MANAGEMENT AND CONTROL OF
THE BUSINESS ENTITY; AND (III) THE BILLING ADDRESS OF THE BUSINESS ENTI-
TY IN THE TAXPAYER'S RECORDS.  THE TAXPAYER MUST EXERCISE DUE  DILIGENCE
BEFORE  REJECTING  A METHOD IN THIS HIERARCHY AND PROCEEDING TO THE NEXT
METHOD.
  (F) FOR PURPOSES OF THIS SUBDIVISION, THE TERM "REGISTERED  SECURITIES
BROKER  OR  DEALER"  MEANS  A BROKER OR DEALER REGISTERED AS SUCH BY THE
SECURITIES AND EXCHANGE COMMISSION OR A BROKER OR DEALER  REGISTERED  AS
SUCH BY THE COMMODITIES FUTURES TRADING COMMISSION, AND SHALL INCLUDE AN
OTC  DERIVATIVES  DEALER  AS DEFINED UNDER REGULATIONS OF THE SECURITIES
AND EXCHANGE COMMISSION AT TITLE 17, PART 240, SECTION 3B-12 OF THE CODE
OF FEDERAL REGULATIONS (17 CFR240.3b-12)
  6. Receipts from railroad and trucking  business.  Receipts  from  the
conduct  of  a railroad business (including surface railroad, whether or
not operated by steam, subway railroad, elevated railroad, palace car or
sleeping car business) or a trucking business are included in the numer-
ator of the apportionment fraction as follows. The  amount  of  receipts
from  the conduct of a railroad business or a trucking business included
in the numerator of the apportionment fraction is determined  by  multi-
plying  the  amount  of  receipts  from such business by a fraction, the
numerator of which is the miles in such business within the state during
the period covered by the taxpayer's report and the denominator of which
is the miles in such business within and without the state  during  such
period.   Receipts from the conduct of the railroad business or a truck-
ing business are included in the denominator of the apportionment  frac-
tion.
  7.  Receipts  from  aviation  services.  (a)  Air  freight forwarding.
Receipts of a taxpayer from  the  activity  of  air  freight  forwarding
acting  as principal and like indirect air carrier receipts arising from
such activity shall be included in the numerator  of  the  apportionment
fraction  as  follows:  one hundred percent of such receipts if both the
pickup and delivery associated with such receipts are made in the  state
and  fifty  percent  of  such  receipts if either the pickup or delivery
associated with such receipts is made in this  state.    Such  receipts,
whether the pickup or delivery associated with the receipts is within or
without  the  state,  shall be included in the denominator of the appor-
tionment fraction.
  (b) Other aviation services. (1)(A)  The  portion  of  receipts  of  a
taxpayer  from aviation services (other than services described in para-
graph (a) of this subdivision) to be included in the  numerator  of  the
apportionment  fraction  shall be determined by multiplying its receipts
from such aviation services by a percentage which is equal to the arith-
metic average of the following three percentages:
  (i) the  percentage  determined  by  dividing  sixty  percent  of  the
aircraft  arrivals  and  departures  within  this  state by the taxpayer
during the period covered by its report by the total  aircraft  arrivals
and  departures  within  and  without  this  state  during  such period;
provided, however, arrivals and departures  solely  for  maintenance  or
repair,  refueling  (where  no  debarkation  or  embarkation  of traffic
occurs), arrivals and departures of ferry and personnel training flights
or arrivals and departures in the event of  emergency  situations  shall
not  be  included  in  computing  such arrival and departure percentage;

S. 6359--B                         67                         A. 8559--B

provided, further, the commissioner may also exempt from such percentage
aircraft arrivals and departures of all  non-revenue  flights  including
flights  involving the transportation of officers or employees receiving
air  transportation  to  perform maintenance or repair services or where
such officers or employees are transported in conjunction with an  emer-
gency situation or the investigation of an air disaster (other than on a
scheduled  flight);  provided,  however, that arrivals and departures of
flights transporting officers and employees receiving air transportation
for purposes other than specified above (without regard to remuneration)
shall be included in computing such arrival and departure percentage;
  (ii) the percentage determined by dividing sixty percent of the reven-
ue tons handled by the taxpayer at airports  within  this  state  during
such  period  by the total revenue tons handled by it at airports within
and without this state during such period; and
  (iii) the percentage determined  by  dividing  sixty  percent  of  the
taxpayer's  originating revenue within this state for such period by its
total originating revenue within and without this state for such period.
  (B) As used herein the term "aircraft arrivals and  departures"  means
the  number of landings and takeoffs of the aircraft of the taxpayer and
the number of air pickups and deliveries by the aircraft of such taxpay-
er; the term "originating revenue" means revenue to  the  taxpayer  from
the  transportation  or  revenue  passengers  and revenue property first
received by the taxpayer either as originating or connecting traffic  at
airports;  and  the  term  "revenue  tons  handled"  by  the taxpayer at
airports means the weight in tons of revenue passengers (at two  hundred
pounds  per passenger) and revenue cargo first received either as origi-
nating or connecting traffic or finally discharged by  the  taxpayer  at
airports;
  (2)  All  such receipts of a taxpayer from aviation services described
in this paragraph are included in the denominator of  the  apportionment
fraction.
  8. Receipts from sales of advertising. (a) The amount of receipts from
sales of advertising in newspapers or periodicals included in the numer-
ator  of  the  apportionment  fraction  is determined by multiplying the
total of such receipts by a fraction, the  numerator  of  which  is  the
number  of  newspapers  and  periodicals  delivered to points within the
state and the denominator of which is the number of newspapers and peri-
odicals delivered to points within and without the state. The  total  of
such  receipts from sales of advertising in newspapers or periodicals is
included in the denominator of the apportionment fraction.
  (b) The amount of receipts from sales of advertising on television  or
radio  included in the apportionment fraction is determined by multiply-
ing the total of such receipts by a fraction, the numerator of which  is
the  number of viewers or listeners within the state and the denominator
of which is the number of viewers or listeners within  and  without  the
state.  The  total  of  such receipts from sales of advertising on tele-
vision and radio is included in the  denominator  of  the  apportionment
fraction.
  (c)  The amount of receipts from sales of advertising not described in
paragraph (a) or (b) of this subdivision that is furnished, provided  or
delivered  to,  or accessed by the viewer or listener through the use of
wire, cable, fiber-optic, laser, microwave,  radio  wave,  satellite  or
similar  successor  media  or  any  combination thereof, included in the
numerator of the apportionment fraction is determined by multiplying the
total of such receipts by a fraction, the  numerator  of  which  is  the
number  of  viewers or listeners within the state and the denominator of

S. 6359--B                         68                         A. 8559--B

which is the number of viewers  or  listeners  within  and  without  the
state. The total of such receipts from sales of advertising described in
this paragraph is included in the denominator of the apportionment frac-
tion.
  9.  Receipts from transportation or transmission of gas through pipes.
Receipts from the transportation or transmission of  gas  through  pipes
are  included in the numerator of the apportionment fraction as follows.
The amount of receipts from the transportation or  transmission  of  gas
through pipes included in the numerator of the apportionment fraction is
determined  by  multiplying the total amount of such receipts by a frac-
tion, the numerator of which  is  the  taxpayer's  transportation  units
within  the  state and the denominator of which is the taxpayer's trans-
portation units within and without the state. A transportation  unit  is
the transportation of one cubic foot of gas over a distance of one mile.
The  total amount of receipts from the transportation or transmission of
gas through pipes is included in the denominator  of  the  apportionment
fraction.
  10.  (A)  RECEIPTS  FROM  OTHER  SERVICES AND OTHER BUSINESS RECEIPTS.
RECEIPTS FROM SERVICES NOT ADDRESSED IN SUBDIVISIONS ONE THROUGH NINE OF
THIS SECTION AND OTHER BUSINESS RECEIPTS NOT ADDRESSED IN SUCH  SUBDIVI-
SIONS  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
IF THE LOCATION OF THE CUSTOMER IS WITHIN THE STATE. SUCH RECEIPTS  FROM
CUSTOMERS  WITHIN  AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR
OF THE APPORTIONMENT FRACTION. WHETHER THE RECEIPTS ARE INCLUDED IN  THE
NUMERATOR  OF  THE APPORTIONMENT FRACTION IS DETERMINED ACCORDING TO THE
HIERARCHY OF METHOD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.  THE
TAXPAYER  MUST  EXERCISE  DUE  DILIGENCE  UNDER EACH METHOD DESCRIBED IN
PARAGRAPH (B) BEFORE REJECTING IT AND PROCEEDING TO THE NEXT  METHOD  IN
THE HIERARCHY.
  (B)  HIERARCHY  OF  METHODS.  (1)  DELIVERY  DESTINATION. RECEIPTS FOR
SERVICES PERFORMED FOR A CUSTOMER'S PARTICULAR LOCATION, SUCH AS WHERE A
DELIVERY IS MADE TO THAT LOCATION, AS MAY BE  INDICATED  ON  A  BILL  OF
LADING OR PURCHASE INVOICE, ARE SOURCED TO THAT LOCATION.
  (2) BILLING ADDRESS OF THE CUSTOMER.
  (3) ZIP CODE OR OTHER GEOGRAPHIC INDICATOR OF THE CUSTOMER'S LOCATION.
  (4)  PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE DETERMINED
PURSUANT TO THIS SUBDIVISION FOR THE PRECEDING TAXABLE YEAR OR,  IF  THE
TAXPAYER  WAS NOT SUBJECT TO TAX IN THE PRECEDING TAXABLE YEAR, THEN THE
PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE  IN  THE  CURRENT
TAXABLE YEAR DETERMINED PURSUANT TO THIS SUBDIVISION.
  11.  IF  IT  SHALL  APPEAR  TO THE COMMISSIONER THAT THE APPORTIONMENT
FRACTION DETERMINED PURSUANT TO THIS SECTION DOES NOT RESULT IN A PROPER
REFLECTION OF THE TAXPAYER'S  BUSINESS  INCOME  OR  CAPITAL  WITHIN  THE
STATE, THE COMMISSIONER IS AUTHORIZED IN HIS OR HER DISCRETION TO ADJUST
IT BY (A) EXCLUDING ONE OR MORE ITEMS IN SUCH DETERMINATION, (B) INCLUD-
ING  ONE  OR  MORE  OTHER  ITEMS IN SUCH DETERMINATION, OR (C) ANY OTHER
SIMILAR OR DIFFERENT METHOD CALCULATED  TO  EFFECT  A  FAIR  AND  PROPER
APPORTIONMENT  OF  THE BUSINESS INCOME AND CAPITAL REASONABLY ATTRIBUTED
TO THE STATE.
  S 17. The tax law is amended by adding a new section 210-B to read  as
follows:
  S 210-B. CREDITS. 1. INVESTMENT TAX CREDIT (ITC). (A) A TAXPAYER SHALL
BE ALLOWED A CREDIT, TO BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE
TAX  IMPOSED  BY  THIS  ARTICLE.  THE  AMOUNT OF THE CREDIT SHALL BE THE
PERCENT PROVIDED FOR HEREINBELOW OF  THE  INVESTMENT  CREDIT  BASE.  THE
INVESTMENT CREDIT BASE IS THE COST OR OTHER BASIS FOR FEDERAL INCOME TAX

S. 6359--B                         69                         A. 8559--B

PURPOSES  OF  TANGIBLE  PERSONAL  PROPERTY  AND OTHER TANGIBLE PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
PARAGRAPH (B) OF THIS SUBDIVISION, LESS THE AMOUNT OF  THE  NONQUALIFIED
NONRECOURSE  FINANCING  WITH RESPECT TO SUCH PROPERTY TO THE EXTENT SUCH
FINANCING WOULD BE EXCLUDIBLE FROM THE CREDIT BASE PURSUANT  TO  SECTION
46(C)(8) OF THE INTERNAL REVENUE CODE (TREATING SUCH PROPERTY AS SECTION
THIRTY-EIGHT  PROPERTY IRRESPECTIVE OF WHETHER OR NOT IT IN FACT CONSTI-
TUTES SECTION THIRTY-EIGHT PROPERTY). IF, AT THE CLOSE OF A TAXABLE YEAR
FOLLOWING THE TAXABLE YEAR IN WHICH SUCH PROPERTY WAS PLACED IN SERVICE,
THERE IS A NET  DECREASE  IN  THE  AMOUNT  OF  NONQUALIFIED  NONRECOURSE
FINANCING  WITH  RESPECT  TO  SUCH  PROPERTY, SUCH NET DECREASE SHALL BE
TREATED AS IF IT WERE THE COST OR OTHER BASIS OF PROPERTY  DESCRIBED  IN
PARAGRAPH  (B)  OF THIS SUBDIVISION ACQUIRED, CONSTRUCTED, RECONSTRUCTED
OR ERECTED DURING THE YEAR OF THE DECREASE IN THE AMOUNT OF NONQUALIFIED
NONRECOURSE FINANCING. IN THE CASE OF A COMBINED REPORT THE TERM INVEST-
MENT CREDIT BASE SHALL MEAN THE SUM OF THE  INVESTMENT  CREDIT  BASE  OF
EACH  CORPORATION  INCLUDED ON SUCH REPORT. THE PERCENTAGE TO BE USED TO
COMPUTE THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION  SHALL  BE  FIVE
PERCENT WITH RESPECT TO THE FIRST THREE HUNDRED FIFTY MILLION DOLLARS OF
THE INVESTMENT CREDIT BASE, AND FOUR PERCENT WITH RESPECT TO THE INVEST-
MENT  CREDIT  BASE  IN  EXCESS  OF  THREE HUNDRED FIFTY MILLION DOLLARS,
EXCEPT IN THE CASE OF RESEARCH AND DEVELOPMENT PROPERTY AT THE OPTION OF
THE TAXPAYER THE APPLICABLE PERCENTAGE SHALL BE NINE.
  (B) QUALIFYING PROPERTY. (I) A CREDIT  SHALL  BE  ALLOWED  UNDER  THIS
SUBDIVISION  TO  A QUALIFIED NEW YORK MANUFACTURER, A QUALIFIED NEW YORK
AGRICULTURAL BUSINESS OR A  QUALIFIED  NEW  YORK  MINING  BUSINESS  WITH
RESPECT  TO  TANGIBLE  PERSONAL  PROPERTY  AND  OTHER  TANGIBLE PROPERTY
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF  BUILDINGS,  WHICH  (A)
ARE  DEPRECIABLE  PURSUANT  TO  SECTION  ONE  HUNDRED SIXTY-SEVEN OF THE
INTERNAL REVENUE CODE, (B) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, (C)
ARE ACQUIRED BY PURCHASE AS DEFINED IN SECTION ONE HUNDRED  SEVENTY-NINE
(D)  OF  THE  INTERNAL  REVENUE  CODE,  (D) HAVE NOT BEEN PREVIOUSLY THE
SUBJECT OF AN INVESTMENT TAX CREDIT OR  EMPIRE  ZONE  INVESTMENT  CREDIT
ALLOWED  TO ANOTHER TAXPAYER, (E) HAVE A SITUS IN THIS STATE AND (F) ARE
PRINCIPALLY USED BY THE TAXPAYER IN THE PRODUCTION OF GOODS FOR SALE  OR
ARE RESEARCH AND DEVELOPMENT PROPERTY.
  (II)  FOR  PURPOSES OF THIS PARAGRAPH, THE FOLLOWING DEFINITIONS SHALL
APPLY:
  (A) PROPERTY USED IN THE PRODUCTION OF GOODS FOR  SALE  SHALL  INCLUDE
MACHINERY,  EQUIPMENT  OR  OTHER  TANGIBLE PROPERTY WHICH IS PRINCIPALLY
USED IN THE REPAIR AND SERVICE OF OTHER MACHINERY,  EQUIPMENT  OR  OTHER
TANGIBLE  PROPERTY  USED PRINCIPALLY IN THE PRODUCTION OF GOODS FOR SALE
AND SHALL INCLUDE  ALL  FACILITIES  USED  IN  THE  PRODUCTION  OPERATION
INCLUDING  STORAGE  OF  MATERIAL  TO  BE  USED  IN PRODUCTION AND OF THE
PRODUCTS THAT ARE PRODUCED.
  (B) RESEARCH AND DEVELOPMENT PROPERTY SHALL  MEAN  PROPERTY  WHICH  IS
USED  FOR  PURPOSES  OF  RESEARCH AND DEVELOPMENT IN THE EXPERIMENTAL OR
LABORATORY SENSE. SUCH PURPOSES SHALL NOT BE DEEMED TO INCLUDE THE ORDI-
NARY TESTING OR INSPECTION OF MATERIALS OR PRODUCTS FOR QUALITY CONTROL,
EFFICIENCY SURVEYS, MANAGEMENT STUDIES, CONSUMER  SURVEYS,  ADVERTISING,
PROMOTIONS, OR RESEARCH IN CONNECTION WITH LITERARY, HISTORICAL OR SIMI-
LAR PROJECTS.
  (C)  A  QUALIFIED NEW YORK AGRICULTURAL BUSINESS SHALL MEAN A TAXPAYER
OR COMBINED GROUP PRINCIPALLY ENGAGED IN FARMING, AGRICULTURE, HORTICUL-
TURE, FLORICULTURE, VITICULTURE OR COMMERCIAL FISHING IN  THE  STATE.  A
TAXPAYER OR A COMBINED GROUP IS PRINCIPALLY ENGAGED IN FARMING, AGRICUL-

S. 6359--B                         70                         A. 8559--B

TURE,  HORTICULTURE,  FLORICULTURE, VITICULTURE OR COMMERCIAL FISHING IN
THE STATE IF MORE THAN FIFTY  PERCENT  OF  THE  GROSS  RECEIPTS  OF  THE
TAXPAYER  OR  THE  COMBINED GROUP, RESPECTIVELY, DURING THE TAXABLE YEAR
ARE  DERIVED  FROM  THE  SALE OF GOODS PRODUCED BY ANY OF THE ACTIVITIES
SPECIFIED IN THIS SENTENCE THAT ARE CONDUCTED IN NEW YORK. IN  COMPUTING
A  COMBINED  GROUP'S  GROSS  RECEIPTS,  INTERCORPORATE RECEIPTS SHALL BE
ELIMINATED. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER THAT IS A PARTNER
IN PARTNERSHIP, INTER-ENTITY RECEIPTS  BETWEEN  THE  TAXPAYER  AND  SUCH
PARTNERSHIP SHALL BE ELIMINATED.
  (D)  A  QUALIFIED  NEW  YORK  MINING BUSINESS SHALL MEAN A TAXPAYER OR
COMBINED GROUP PRINCIPALLY ENGAGED IN MINING IN THE STATE. A TAXPAYER OR
COMBINED GROUP IS PRINCIPALLY ENGAGED IN MINING IN  THE  STATE  IF  MORE
THAN FIFTY PERCENT OF THE GROSS RECEIPTS OF THE TAXPAYER OR THE COMBINED
GROUP,  RESPECTIVELY,  DURING THE TAXABLE YEAR ARE DERIVED FROM THE SALE
OF GOODS PRODUCED BY MINING ACTIVITIES THAT ARE CONDUCTED IN THE  STATE.
IN  COMPUTING A COMBINED GROUP'S GROSS RECEIPTS, INTERCORPORATE RECEIPTS
SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER THAT  IS
A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND
SUCH PARTNERSHIP SHALL BE ELIMINATED.
  (III)  IN  ORDER  TO PROPERLY ADMINISTER THE CREDIT AUTHORIZED BY THIS
SUBDIVISION, THE DEPARTMENT MAY DISCLOSE INFORMATION ABOUT THE ALLOWANCE
TO ANOTHER TAXPAYER OF AN  INVESTMENT  TAX  CREDIT  OR  AN  EMPIRE  ZONE
INVESTMENT  TAX CREDIT UNDER THIS CHAPTER WITH RESPECT TO THE SAME PROP-
ERTY.
  (C) NONQUALIFYING PROPERTY. A TAXPAYER SHALL NOT BE ALLOWED  A  CREDIT
UNDER  THIS  SUBDIVISION  WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND
OTHER TANGIBLE PROPERTY, INCLUDING BUILDINGS AND  STRUCTURAL  COMPONENTS
OF  BUILDINGS,  WHICH  IT LEASES TO ANY OTHER PERSON OR CORPORATION. FOR
PURPOSES OF THE PRECEDING SENTENCE, ANY CONTRACT OR AGREEMENT  TO  LEASE
OR  RENT  OR  FOR  A  LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED A
LEASE.  PROVIDED, HOWEVER, IN DETERMINING WHETHER A  TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT UNDER THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY,
ANY ELECTION  MADE  WITH  RESPECT  TO  SUCH  PROPERTY  PURSUANT  TO  THE
PROVISIONS  OF  PARAGRAPH EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED
SIXTY-EIGHT OF THE INTERNAL REVENUE  CODE,  AS  SUCH  PARAGRAPH  WAS  IN
EFFECT  FOR  AGREEMENTS  ENTERED  INTO  PRIOR TO JANUARY FIRST, NINETEEN
HUNDRED EIGHTY-FOUR, SHALL BE DISREGARDED.
  (D) CARRYOVER. EXCEPT AS OTHERWISE PROVIDED  IN  THIS  PARAGRAPH,  THE
CREDIT  ALLOWED  UNDER  THIS  SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT  ALLOWABLE
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED  DOLLAR
MINIMUM  AMOUNT, ANY AMOUNT OF CREDIT ALLOWED FOR A TAXABLE YEAR AND NOT
DEDUCTIBLE IN SUCH YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS
NEXT FOLLOWING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAYER'S
TAX FOR SUCH YEAR OR YEARS. IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER
WHICH QUALIFIES AS A NEW BUSINESS UNDER PARAGRAPH (F) OF  THIS  SUBDIVI-
SION  MAY  ELECT TO TREAT THE AMOUNT OF SUCH CARRYOVER AS AN OVERPAYMENT
OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (E)  RECAPTURE.  (I)  WITH  RESPECT  TO  PROPERTY WHICH IS DEPRECIABLE
PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE

S. 6359--B                         71                         A. 8559--B

BUT IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED  SIXTY-EIGHT
OF  SUCH  CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE
PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
THE  AMOUNT  OF  THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED
FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE  MONTHS  OF
QUALIFIED  USE  BEAR  TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR  TO  THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT
TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE
YEAR  OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF
OR CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE  FOR
MORE  THAN  TWELVE  CONSECUTIVE  YEARS, IT SHALL NOT BE NECESSARY TO ADD
BACK THE CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT  OF  CREDIT
ALLOWED  FOR  ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL
CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS
OF USEFUL LIFE. FOR PURPOSES OF THIS PARAGRAPH, USEFUL LIFE OF  PROPERTY
SHALL  BE  THE  SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES WHEN
COMPUTING HIS FEDERAL INCOME TAX LIABILITY.
  (II) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH PARAGRAPH  (IV)  OF
THIS  SUBDIVISION  APPLIES,  WITH  RESPECT  TO  THREE-YEAR  PROPERTY, AS
DEFINED IN SUBSECTION (E) OF SECTION  ONE  HUNDRED  SIXTY-EIGHT  OF  THE
INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED
USE  PRIOR  TO  THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE
TAKEN, THE AMOUNT OF THE CREDIT ALLOWED SHALL BE  THAT  PORTION  OF  THE
CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH
THE  MONTHS  OF  QUALIFIED  USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR TO THE END OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN THE CREDIT
TAKEN  AND  THE  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE
YEAR OF DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL  USE  SHALL
BE  DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE
MONTHS OF QUALIFIED USE BEAR TO THIRTY-SIX.
  (III) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH PARAGRAPH (IV)  OF
THIS  SUBDIVISION  APPLIES,  WITH  RESPECT  TO  PROPERTY  SUBJECT TO THE
PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT OF  THE  INTERNAL  REVENUE
CODE,  OTHER  THAN  THREE-YEAR  PROPERTY AS DEFINED IN SUBSECTION (E) OF
SUCH SECTION ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR  CEASES  TO
BE  IN  QUALIFIED  USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS  THE  RATIO
WHICH  THE  MONTHS OF QUALIFIED USE BEAR TO SIXTY.  IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR  TO  THE  END  OF  SIXTY MONTHS, THE DIFFERENCE BETWEEN THE CREDIT
TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE
YEAR  OF  DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL
BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH  THE
MONTHS OF QUALIFIED USE BEAR TO SIXTY.
  (IV)  WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED SIXTY-
EIGHT OF THE INTERNAL REVENUE CODE APPLIES, WHICH IS  A  BUILDING  OR  A
STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO
BE  IN  QUALIFIED  USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS  THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED

S. 6359--B                         72                         A. 8559--B

OF  OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD OVER
WHICH THE TAXPAYER CHOOSES TO DEDUCT THE  PROPERTY  UNDER  THE  INTERNAL
REVENUE  CODE,  THE  DIFFERENCE  BETWEEN THE CREDIT TAKEN AND THE CREDIT
ALLOWED  FOR  ACTUAL  USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION.
PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES  TO  BE  IN
QUALIFIED  USE  AFTER  IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE
CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE  CREDIT  AS
PROVIDED  IN  THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL
USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE.
  (V) FOR PURPOSES OF THIS PARAGRAPH, PROPERTY (I) WHICH IS DESCRIBED IN
SUBPARAGRAPH  (II),  (III)  OR (IV) OF THIS PARAGRAPH, AND (II) WHICH IS
SUBJECT TO SUBPARAGRAPH ELEVEN OF PARAGRAPH (A) OF SUBDIVISION NINE  AND
SUBPARAGRAPH  TEN  OF  PARAGRAPH  (B) OF SUBDIVISION NINE OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, SHALL BE TREATED  AS  PROPERTY  WHICH  IS
DEPRECIABLE  PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL
REVENUE CODE BUT IS NOT SUBJECT TO SECTION ONE  HUNDRED  SIXTY-EIGHT  OF
SUCH CODE.
  (VI)  FOR  EACH  TAXABLE  YEAR,  THE  AMOUNT REQUIRED TO BE ADDED BACK
PURSUANT TO THIS PARAGRAPH SHALL BE AUGMENTED BY AN AMOUNT EQUAL TO  THE
PRODUCT  OF  SUCH  AMOUNT AND THE UNDERPAYMENT RATE OF INTEREST (WITHOUT
REGARD TO COMPOUNDING), SET BY THE COMMISSIONER PURSUANT  TO  SUBSECTION
(E) OF SECTION ONE THOUSAND NINETY-SIX, IN EFFECT ON THE LAST DAY OF THE
TAXABLE YEAR.
  (VII) IF, AS OF THE CLOSE OF THE TAXABLE YEAR, THERE IS A NET INCREASE
WITH  RESPECT  TO THE TAXPAYER IN THE AMOUNT OF NONQUALIFIED NONRECOURSE
FINANCING (WITHIN THE MEANING OF SECTION 46(C)(8) OF THE INTERNAL REVEN-
UE CODE) WITH RESPECT TO ANY PROPERTY WITH RESPECT TO WHICH  THE  CREDIT
UNDER  THIS  SUBDIVISION  WAS LIMITED BASED ON ATTRIBUTABLE NONQUALIFIED
NONRECOURSE FINANCING, THEN AN AMOUNT EQUAL  TO  THE  DECREASE  IN  SUCH
CREDIT  WHICH  WOULD  HAVE RESULTED FROM REDUCING, BY THE AMOUNT OF SUCH
NET INCREASE, THE COST OR OTHER BASIS TAKEN INTO ACCOUNT WITH RESPECT TO
SUCH PROPERTY MUST BE ADDED BACK IN SUCH TAXABLE  YEAR.  THE  AMOUNT  OF
NONQUALIFIED  NONRECOURSE FINANCING SHALL NOT BE TREATED AS INCREASED BY
REASON OF A TRANSFER OF (OR AGREEMENT TO TRANSFER) ANY  EVIDENCE  OF  AN
INDEBTEDNESS IF SUCH TRANSFER OCCURS (OR SUCH AGREEMENT IS ENTERED INTO)
MORE THAN ONE YEAR AFTER THE DATE SUCH INDEBTEDNESS WAS INCURRED.
  (VIII)(A) WHERE PROPERTY WITH RESPECT TO WHICH CREDIT HAS BEEN ALLOWED
UNDER  THIS  SUBDIVISION IS DISPOSED OF BY TRANSFER TO THE TAXPAYER IN A
QUALIFIED TRANSACTION, AND SUCH DISPOSITION REQUIRES, PURSUANT  TO  THIS
PARAGRAPH  (WITHOUT  REGARD  TO  THIS  SUBPARAGRAPH) THAT SUCH CREDIT BE
DECREASED (WHERE THE DISPOSITION OCCURS IN THE TAXABLE YEAR IN WHICH THE
PROPERTY IS PLACED IN SERVICE BY THE TRANSFEROR) OR THAT  A  PORTION  OF
SUCH  CREDIT  BE ADDED BACK BY THE TRANSFEROR, THEN CLAUSE (B) OR CLAUSE
(C) OF THIS SUBPARAGRAPH SHALL APPLY.
  (B) IF THE TAXPAYER AND THE TRANSFEROR JOINTLY ELECT, AT SUCH TIME AND
IN SUCH MANNER AS THE COMMISSIONER MAY PRESCRIBE,  THE  FOLLOWING  SHALL
APPLY:
  (I)  SUCH  PORTION  SHALL  NOT  BE  REQUIRED  TO  BE ADDED BACK BY THE
TRANSFEROR,
  (II) THE AMOUNT OF UNUSED CREDIT SHALL NOT BE DEDUCTED FROM TAX OTHER-
WISE DUE BY THE TRANSFEROR ON ANY RETURN (INCLUDING AN AMENDED  RETURN),
AND  SHALL  NOT  BE  SO  DEDUCTED AS PART OF ANY AUDIT ADJUSTMENT OR ANY
OTHER DETERMINATION, AND

S. 6359--B                         73                         A. 8559--B

  (III) THE AMOUNT OF UNUSED CREDIT SHALL BE TREATED  AS  AN  AMOUNT  OF
CREDIT  OF  THE  TAXPAYER  UNDER THIS SUBDIVISION CARRIED FORWARD BY THE
TAXPAYER TO ITS TAXABLE YEAR IN WHICH SUCH TRANSFER OCCURRED, AS IF  THE
CREDIT  ALLOWED  TO  THE  TRANSFEROR  WITH  RESPECT TO SUCH PROPERTY HAD
ORIGINALLY BEEN ALLOWED TO THE TAXPAYER BOTH AS TO AMOUNT AND FIRST DATE
OF  QUALIFIED USE, AND AS IF THE PERIOD OF QUALIFIED USE BY THE TRANSFE-
ROR PRIOR TO THE TRANSFER HAD BEEN A PERIOD OF SUCH USE BY THE TAXPAYER.
ANY AMOUNT OF CREDIT TREATED AS CARRIED  FORWARD  TO  THE  TAXABLE  YEAR
PURSUANT TO THIS SUBPARAGRAPH SHALL BE APPLIED AS PROVIDED IN CLAUSE (H)
OF THIS SUBPARAGRAPH.
  (C)  IF  THE  TAXPAYER  AND  THE  TRANSFEROR  DO NOT MAKE THE ELECTION
DESCRIBED IN CLAUSE (B) OF THIS SUBPARAGRAPH, THEN THE AMOUNT OF  CREDIT
REQUIRED  PURSUANT  TO THIS PARAGRAPH TO BE ADDED BACK BY THE TRANSFEROR
SHALL BE TREATED AS AN AMOUNT OF  CREDIT  OF  THE  TAXPAYER  UNDER  THIS
SUBDIVISION TO BE CARRIED FORWARD BY THE TAXPAYER TO ITS TAXABLE YEAR IN
WHICH SUCH TRANSFER OCCURRED, AS IF THE CREDIT ALLOWED TO THE TRANSFEROR
WITH RESPECT TO SUCH PROPERTY HAD ORIGINALLY BEEN ALLOWED TO THE TAXPAY-
ER  BOTH  AS  TO  AMOUNT  AND FIRST DATE OF QUALIFIED USE, AND AS IF THE
PERIOD OF QUALIFIED USE BY THE TRANSFEROR PRIOR TO THE TRANSFER HAD BEEN
A PERIOD OF SUCH USE BY THE TAXPAYER. ANY AMOUNT OF  CREDIT  TREATED  AS
CARRIED  FORWARD TO THE TAXABLE YEAR PURSUANT TO THIS SUBPARAGRAPH SHALL
BE APPLIED AS PROVIDED IN CLAUSE (H) OF THIS SUBPARAGRAPH.
  (D) THE TERM "QUALIFIED TRANSACTION" SHALL MEAN A TRANSACTION WHICH IS
A REORGANIZATION DESCRIBED  IN  SECTION  368(A)(1)(D)  OF  THE  INTERNAL
REVENUE  CODE,  WHEREIN  (I)  SUBSTANTIALLY  ALL  OF  THE  ASSETS OF THE
TRANSFEROR NECESSARY TO CONTINUE THE OPERATION OF A  DIVISION  OR  DIVI-
SIONS OF THE TRANSFEROR ARE TRANSFERRED TO THE TAXPAYER IN A TRANSACTION
TO  WHICH SECTION 351 OF SUCH CODE APPLIES, AND (II) STOCK OR SECURITIES
OF THE TAXPAYER HELD BY  THE  TRANSFEROR  ARE  DISTRIBUTED  PURSUANT  TO
SECTION 355 OF SUCH CODE.
  (E)  THE TERM "UNUSED CREDIT" SHALL MEAN THE AMOUNT OF CREDIT SHOWN AS
CARRIED FORWARD TO THE TRANSACTION YEAR ON THE TRANSFEROR'S  TAX  RETURN
FOR  ITS  TAXABLE  YEAR  IMMEDIATELY PRECEDING THE TRANSACTION YEAR WITH
RESPECT TO THE PROPERTY DESCRIBED IN CLAUSE (A) OF THIS SUBPARAGRAPH.
  (F) THE TERM "TRANSACTION YEAR" MEANS THE TAXABLE YEAR  IN  WHICH  THE
QUALIFIED TRANSACTION OCCURS.
  (G) NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, IN THE
CASE  OF ALLOWANCE OF CREDIT PURSUANT TO THIS SUBPARAGRAPH TO A TAXPAYER
THE COMMISSIONER SHALL HAVE THE AUTHORITY TO REVEAL TO THE TAXPAYER  ANY
INFORMATION,  WITH RESPECT TO THE CREDIT OF THE TRANSFEROR, WHICH IS THE
BASIS FOR THE DENIAL IN WHOLE OR IN PART OF THE CREDIT CLAIMED  BY  SUCH
TAXPAYER.
  (H)  WHERE A CREDIT IS ALLOWED TO A TAXPAYER PURSUANT TO THIS SUBPARA-
GRAPH, THE TAXPAYER MAY TREAT THE AMOUNT OF SUCH CREDIT AS  AN  OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF  SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER,
THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE  PAID  THEREON.  SUCH
CREDIT  SHALL  BE  ALLOWED  AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH
RESPECT TO THE SECOND SUCCEEDING TAXABLE YEAR NEXT FOLLOWING THE  TRANS-
ACTION  YEAR,  PROVIDED  THAT  NOT MORE THAN ONE-FOURTH OF THE AMOUNT OF
SUCH CREDIT MAY BE APPLIED BY THE TAXPAYER, WHETHER TO REDUCE TAX OTHER-
WISE DUE OR TO BE TREATED AS AN OVERPAYMENT TO BE CREDITED OR  REFUNDED,
WITH RESPECT TO SUCH SECOND SUCCEEDING TAXABLE YEAR AND EACH OF THE NEXT
THREE TAXABLE YEARS FOLLOWING SUCH SECOND SUCCEEDING TAXABLE YEAR.

S. 6359--B                         74                         A. 8559--B

  (F) NEW BUSINESS. FOR PURPOSES OF PARAGRAPH (D) OF THIS SUBDIVISION, A
NEW BUSINESS SHALL INCLUDE ANY CORPORATION, EXCEPT A CORPORATION WHICH:
  (I)  OVER FIFTY PERCENT OF THE NUMBER OF SHARES OF STOCK ENTITLING THE
HOLDERS THEREOF TO VOTE FOR THE ELECTION OF  DIRECTORS  OR  TRUSTEES  IS
OWNED  OR  CONTROLLED,  EITHER  DIRECTLY  OR  INDIRECTLY,  BY A TAXPAYER
SUBJECT TO TAX UNDER THIS ARTICLE; SECTION ONE HUNDRED  EIGHTY-THREE  OR
ONE HUNDRED EIGHTY-FOUR OF ARTICLE NINE; OR ARTICLE THIRTY-THREE OF THIS
CHAPTER; OR
  (II) IS SUBSTANTIALLY SIMILAR IN OPERATION AND IN OWNERSHIP TO A BUSI-
NESS  ENTITY  (OR  ENTITIES)  TAXABLE, OR PREVIOUSLY TAXABLE, UNDER THIS
ARTICLE; SECTION ONE  HUNDRED  EIGHTY-THREE,  ONE  HUNDRED  EIGHTY-FOUR,
FORMER  SECTION  ONE  HUNDRED  EIGHTY-FIVE OR FORMER SECTION ONE HUNDRED
EIGHTY-SIX OF ARTICLE NINE; ARTICLE THIRTY-TWO OF THIS CHAPTER (AS  SUCH
ARTICLE  WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN);
ARTICLE THIRTY-THREE OF THIS CHAPTER; ARTICLE TWENTY-THREE OF THIS CHAP-
TER OR  WHICH  WOULD  HAVE  BEEN  SUBJECT  TO  TAX  UNDER  SUCH  ARTICLE
TWENTY-THREE  (AS  SUCH ARTICLE WAS IN EFFECT ON JANUARY FIRST, NINETEEN
HUNDRED EIGHTY) OR THE INCOME (OR LOSSES) OF WHICH IS (OR WAS)  INCLUDA-
BLE  UNDER  ARTICLE  TWENTY-TWO  OF  THIS CHAPTER WHEREBY THE INTENT AND
PURPOSE OF THIS PARAGRAPH AND PARAGRAPH (D)  OF  THIS  SUBDIVISION  WITH
RESPECT TO REFUNDING OF CREDIT TO NEW BUSINESS WOULD BE EVADED; OR
  (III) HAS BEEN SUBJECT TO TAX UNDER THIS ARTICLE OR UNDER FORMER ARTI-
CLE THIRTY-TWO OF THIS CHAPTER FOR MORE THAN FIVE TAXABLE YEARS (EXCLUD-
ING SHORT TAXABLE YEARS).
  2.  EMPLOYMENT  INCENTIVE  CREDIT (EIC). (A)(I) APPLICATION OF CREDIT.
WHERE A TAXPAYER IS ALLOWED A  CREDIT  UNDER  SUBDIVISION  ONE  OF  THIS
SECTION,  OTHER  THAN  AT  THE  OPTIONAL RATE APPLICABLE TO RESEARCH AND
DEVELOPMENT PROPERTY, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF
THE TWO YEARS NEXT SUCCEEDING THE TAXABLE  YEAR  FOR  WHICH  THE  CREDIT
UNDER  SUCH  SUBDIVISION  ONE  IS ALLOWED WITH RESPECT TO SUCH PROPERTY,
WHETHER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT  TAXABLE
YEARS  PURSUANT  TO  PARAGRAPH  (D)  OF  SUCH SUBDIVISION ONE. PROVIDED,
HOWEVER, THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY  TAXA-
BLE YEAR SHALL BE ALLOWED ONLY IF THE AVERAGE NUMBER OF EMPLOYEES DURING
SUCH  TAXABLE  YEAR  IS  AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE
NUMBER OF EMPLOYEES DURING THE EMPLOYMENT BASE YEAR. THE EMPLOYMENT BASE
YEAR SHALL BE THE TAXABLE YEAR IMMEDIATELY PRECEDING  THE  TAXABLE  YEAR
FOR  WHICH  THE CREDIT UNDER SUCH SUBDIVISION ONE IS ALLOWED EXCEPT THAT
IF THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A  TAXABLE  YEAR
IMMEDIATELY  PRECEDING  THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER SUCH
SUBDIVISION ONE OF THIS SECTION IS ALLOWED,  THE  EMPLOYMENT  BASE  YEAR
SHALL BE THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION ONE
IS ALLOWED.
  (II)  AMOUNT  OF  CREDIT.  THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS
SUBDIVISION SHALL BE AS SET FORTH IN THE FOLLOWING TABLE:
AVERAGE NUMBER OF EMPLOYEES DURING THE      CREDIT ALLOWED UNDER THIS
TAXABLE YEAR EXPRESSED AS A PERCENTAGE      SUBDIVISION EXPRESSED AS A
OF AVERAGE EMPLOYEES IN EMPLOYMENT          PERCENTAGE OF THE APPLICABLE
BASE YEARS                                  INVESTMENT CREDIT BASIS
LESS THAN 102%                              1.5%
AT LEAST 102% AND LESS THAN 103%            2%
AT LEAST 103%                               2.5%
  (B) AVERAGE NUMBER OF EMPLOYEES. THE AVERAGE NUMBER OF EMPLOYEES IN  A
TAXABLE  YEAR  SHALL BE COMPUTED BY ASCERTAINING THE NUMBER OF EMPLOYEES
WITHIN THE STATE, EXCEPT GENERAL EXECUTIVE  OFFICERS,  EMPLOYED  BY  THE
TAXPAYER  ON  THE  THIRTY-FIRST DAY OF MARCH, THE THIRTIETH DAY OF JUNE,

S. 6359--B                         75                         A. 8559--B

THE THIRTIETH DAY OF SEPTEMBER AND THE THIRTY-FIRST DAY OF  DECEMBER  IN
THE TAXABLE YEAR, BY ADDING TOGETHER THE NUMBER OF EMPLOYEES ASCERTAINED
ON  EACH OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY THE NUMBER OF
SUCH  ABOVE  MENTIONED DATES OCCURRING WITHIN THE TAXABLE YEAR. HOWEVER,
WITH RESPECT TO THE EMPLOYMENT BASE YEAR, THERE SHALL BE EXCLUDED THERE-
FROM ANY EMPLOYEE WITH RESPECT TO  WHOM  A  CREDIT  PROVIDED  FOR  UNDER
SUBDIVISION  SIX OF THIS SECTION IS CLAIMED, FOR THE TAXABLE YEAR, BASED
ON EMPLOYMENT WITHIN A ZONE EQUIVALENT AREA DESIGNATED AS SUCH  PURSUANT
TO ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW.
  (C)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT
OF  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES
THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS  TAX  BASED  ON
THE  FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS IMME-
DIATELY FOLLOWING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAY-
ER'S TAX FOR SUCH YEAR OR YEARS.
  3. EMPIRE ZONE INVESTMENT TAX CREDIT (EZ-ITC). (A) A TAXPAYER SHALL BE
ALLOWED A CREDIT, TO BE COMPUTED AS HEREIN  PROVIDED,  AGAINST  THE  TAX
IMPOSED  BY  THIS ARTICLE IF THE TAXPAYER HAS BEEN CERTIFIED PURSUANT TO
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW. THE AMOUNT OF THE CRED-
IT SHALL BE TEN PERCENT OF THE COST OR OTHER BASIS  FOR  FEDERAL  INCOME
TAX  PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
PARAGRAPH (B) OF THIS SUBDIVISION, WHICH IS  LOCATED  WITHIN  AN  EMPIRE
ZONE  DESIGNATED AS SUCH PURSUANT TO ARTICLE EIGHTEEN-B OF SUCH LAW, BUT
ONLY IF THE ACQUISITION, CONSTRUCTION,  RECONSTRUCTION  OR  ERECTION  OF
SUCH  PROPERTY  OCCURRED  OR  WAS COMMENCED ON OR AFTER THE DATE OF SUCH
DESIGNATION AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT
IN THE CASE OF AN ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR  ERECTION
WHICH WAS COMMENCED DURING SUCH PERIOD AND CONTINUED OR COMPLETED SUBSE-
QUENTLY,  SUCH CREDIT SHALL BE TEN PERCENT OF THE PORTION OF THE COST OR
OTHER BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD,
WHICH PORTION SHALL BE ASCERTAINED BY MULTIPLYING SUCH COST OR BASIS  BY
A  FRACTION  THE  NUMERATOR  OF  WHICH SHALL BE THE EXPENDITURES PAID OR
INCURRED DURING SUCH PERIOD FOR SUCH PURPOSES  AND  THE  DENOMINATOR  OF
WHICH  SHALL  BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED FOR SUCH
ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION.
  (B) QUALIFIED PROPERTY. A CREDIT SHALL BE ALLOWED UNDER THIS  SUBDIVI-
SION WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROP-
ERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH
  (I) ARE DEPRECIABLE PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE
INTERNAL REVENUE CODE,
  (II) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE,
  (III)  ARE  ACQUIRED  BY  PURCHASE  AS  DEFINED IN SECTION ONE HUNDRED
SEVENTY-NINE (D) OF THE INTERNAL REVENUE CODE,
  (IV) HAVE A SITUS IN AN EMPIRE ZONE DESIGNATED  AS  SUCH  PURSUANT  TO
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW, AND
  (V)  ARE  (A)  PRINCIPALLY  USED  BY THE TAXPAYER IN THE PRODUCTION OF
GOODS  BY  MANUFACTURING,  PROCESSING,  ASSEMBLING,  REFINING,   MINING,
EXTRACTING,  FARMING,  AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICUL-
TURE OR COMMERCIAL FISHING,
  (B) INDUSTRIAL WASTE TREATMENT FACILITIES  OR  AIR  POLLUTION  CONTROL
FACILITIES USED IN THE TAXPAYER'S TRADE OR BUSINESS,

S. 6359--B                         76                         A. 8559--B

  (C) RESEARCH AND DEVELOPMENT PROPERTY,
  (D) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS  AS  A BROKER OR DEALER IN CONNECTION WITH THE PURCHASE OR SALE
(WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING  INTO,
ASSUMPTION,  OFFSET,  ASSIGNMENT,  TERMINATION,  OR TRANSFER) OF STOCKS,
BONDS  OR  OTHER  SECURITIES  AS  DEFINED  IN   SECTION   FOUR   HUNDRED
SEVENTY-FIVE  (C)(2)  OF THE INTERNAL REVENUE CODE, OR OF COMMODITIES AS
DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
CODE,
  (E) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS OF PROVIDING  INVESTMENT  ADVISORY  SERVICES  FOR  A  REGULATED
INVESTMENT  COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE OF THE
INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT, OR LOAN ORIGINATION
SERVICES TO CUSTOMERS IN CONNECTION WITH THE  PURCHASE  OR  SALE  (WHICH
SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO, ASSUMP-
TION,  OFFSET,  ASSIGNMENT,  TERMINATION  OR  TRANSFER) OF SECURITIES AS
DEFINED IN SECTION FOUR HUNDRED  SEVENTY-FIVE  (C)(2)  OF  THE  INTERNAL
REVENUE CODE,
  (E-1)  PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE
OR BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES OR THE SERVICE  OF
MANAGING INVESTMENT PORTFOLIOS TO ACHIEVE SPECIFIC INVESTMENT OBJECTIVES
FOR  ACCOUNTS  OVER ONE MILLION DOLLARS OF ACCREDITED INVESTORS (AS THAT
TERM IS DEFINED IN RULE 501 OF REGULATION D OF  THE  SECURITIES  ACT  OF
1933), IF THE TAXPAYER SATISFIES THE FOLLOWING CRITERIA:
  (I)  THE TAXPAYER IS A REGULATED BROKER OR DEALER OR AN AFFILIATE OF A
REGULATED BROKER OR DEALER,
  (II) THE TAXPAYER IS REGISTERED AS AN INVESTMENT ADVISER UNDER SECTION
TWO HUNDRED THREE OF THE INVESTMENT ADVISERS ACT OF  1940,  AS  AMENDED,
AND
  (III)  AT  LEAST  ONE CLIENT OF THE TAXPAYER IS A REGULATED INVESTMENT
COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE  OF  THE  INTERNAL
REVENUE CODE THAT HAS ASSETS OF ONE HUNDRED MILLION DOLLARS, OR
  (F) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S BUSINESS
AS  AN  EXCHANGE REGISTERED AS A NATIONAL SECURITIES EXCHANGE WITHIN THE
MEANING OF SECTIONS 3(A)(1) AND 6(A) OF THE SECURITIES EXCHANGE  ACT  OF
1934  OR A BOARD OF TRADE AS DEFINED IN SUBDIVISION ONE OF PARAGRAPH (A)
OF SECTION FOURTEEN HUNDRED TEN OF THE NOT-FOR-PROFIT CORPORATION LAW OR
AS AN ENTITY THAT IS WHOLLY OWNED BY ONE OR MORE SUCH  NATIONAL  SECURI-
TIES  EXCHANGES OR BOARDS OR TRADE AND THAT PROVIDES AUTOMATION OR TECH-
NICAL SERVICES THERETO.
  (VI) FOR PURPOSES OF CLAUSES (D), (E), (E-1) AND (F)  OF  SUBPARAGRAPH
(V)  OF THIS PARAGRAPH, PROPERTY PURCHASED BY A TAXPAYER AFFILIATED WITH
A REGULATED BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL
SECURITIES  EXCHANGE  OR  BOARD  OF TRADE IS ALLOWED A CREDIT UNDER THIS
SUBDIVISION IF THE PROPERTY IS USED BY ITS AFFILIATED REGULATED  BROKER,
DEALER, REGISTERED INVESTMENT ADVISER OR NATIONAL SECURITIES EXCHANGE OR
BOARD  OF  TRADE  IN  ACCORDANCE  WITH THIS SUBDIVISION. FOR PURPOSES OF
DETERMINING IF THE PROPERTY IS PRINCIPALLY USED IN QUALIFYING USES,  THE
USES BY THE TAXPAYER DESCRIBED IN CLAUSES (D), (E) AND (E-1) OF SUBPARA-
GRAPH  (V) OF THIS PARAGRAPH MAY BE AGGREGATED. IN ADDITION, THE USES BY
THE TAXPAYER, ITS AFFILIATED REGULATED  BROKER,  DEALER  AND  REGISTERED
INVESTMENT  ADVISER  UNDER  ANY  OF  THOSE  CLAUSES  MAY  BE AGGREGATED.
PROVIDED, HOWEVER, A TAXPAYER SHALL NOT BE ALLOWED THE  CREDIT  PROVIDED
BY CLAUSES (D), (E), (E-1) AND (F) OF SUBPARAGRAPH (V) OF THIS PARAGRAPH
UNLESS

S. 6359--B                         77                         A. 8559--B

  (I) EIGHTY PERCENT OR MORE OF THE EMPLOYEES PERFORMING THE ADMINISTRA-
TIVE  AND  SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING
USES OF SUCH EQUIPMENT ARE LOCATED IN THIS STATE, OR
  (II)  THE  AVERAGE NUMBER OF EMPLOYEES THAT PERFORM THE ADMINISTRATIVE
AND SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE  QUALIFYING  USES
OF  SUCH EQUIPMENT AND ARE LOCATED IN THIS STATE DURING THE TAXABLE YEAR
FOR WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN  NINETY-FIVE
PERCENT  OF THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM THESE FUNCTIONS
AND ARE LOCATED IN THIS STATE DURING THE THIRTY-SIX  MONTHS  IMMEDIATELY
PRECEDING THE YEAR FOR WHICH THE CREDIT IS CLAIMED, OR
  (III) THE NUMBER OF EMPLOYEES LOCATED IN THIS STATE DURING THE TAXABLE
YEAR  FOR WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN NINETY
PERCENT OF THE NUMBER OF EMPLOYEES LOCATED IN  THIS  STATE  ON  DECEMBER
THIRTY-FIRST,  NINETEEN HUNDRED NINETY-EIGHT OR, IF THE TAXPAYER WAS NOT
A CALENDAR YEAR TAXPAYER IN NINETEEN HUNDRED NINETY-EIGHT, THE LAST  DAY
OF  ITS  FIRST TAXABLE YEAR ENDING AFTER DECEMBER THIRTY-FIRST, NINETEEN
HUNDRED NINETY-EIGHT. IF THE TAXPAYER BECOMES SUBJECT  TO  TAX  IN  THIS
STATE AFTER THE TAXABLE YEAR BEGINNING IN NINETEEN HUNDRED NINETY-EIGHT,
THEN  THE  TAXPAYER  IS  NOT  REQUIRED  TO  SATISFY  THE EMPLOYMENT TEST
PROVIDED IN THE PRECEDING SENTENCE OF THIS SUBPARAGRAPH  FOR  ITS  FIRST
TAXABLE YEAR.
  (VII)  FOR  THE  PURPOSES OF CLAUSE (III) OF SUBPARAGRAPH (VI) OF THIS
PARAGRAPH THE EMPLOYMENT TEST WILL BE BASED ON THE NUMBER  OF  EMPLOYEES
LOCATED  IN  THIS  STATE  ON  THE LAST DAY OF THE FIRST TAXABLE YEAR THE
TAXPAYER IS SUBJECT TO TAX IN THIS STATE. IF THE USES  OF  THE  PROPERTY
MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY IS PRINCIPALLY USED
IN  QUALIFYING  USES, THEN EITHER EACH AFFILIATE USING THE PROPERTY MUST
SATISFY THIS EMPLOYMENT TEST OR THIS EMPLOYMENT TEST MUST  BE  SATISFIED
THROUGH THE AGGREGATION OF THE EMPLOYEES OF THE TAXPAYER, ITS AFFILIATED
REGULATED  BROKER,  DEALER,  AND REGISTERED INVESTMENT ADVISER USING THE
PROPERTY.
  (VIII) FOR THE PURPOSE OF THIS SUBDIVISION, THE TERM "GOODS" SHALL NOT
INCLUDE ELECTRICITY.
  (IX) FOR PURPOSES OF THIS SUBDIVISION, "MANUFACTURING" SHALL MEAN  THE
PROCESS  OF  WORKING  RAW MATERIALS INTO WARES SUITABLE FOR USE OR WHICH
GIVES NEW SHAPES, NEW  QUALITY  OR  NEW  COMBINATIONS  TO  MATTER  WHICH
ALREADY  HAS  GONE THROUGH SOME ARTIFICIAL PROCESS BY THE USE OF MACHIN-
ERY, TOOLS, APPLIANCES AND OTHER SIMILAR EQUIPMENT. PROPERTY USED IN THE
PRODUCTION OF GOODS SHALL INCLUDE MACHINERY, EQUIPMENT OR OTHER TANGIBLE
PROPERTY WHICH IS PRINCIPALLY USED IN THE REPAIR AND  SERVICE  OF  OTHER
MACHINERY,  EQUIPMENT OR OTHER TANGIBLE PROPERTY USED PRINCIPALLY IN THE
PRODUCTION OF GOODS  AND  SHALL  INCLUDE  ALL  FACILITIES  USED  IN  THE
PRODUCTION  OPERATION,  INCLUDING  STORAGE  OF  MATERIAL  TO  BE USED IN
PRODUCTION AND OF THE PRODUCTS THAT ARE PRODUCED. FOR PURPOSES  OF  THIS
SUBDIVISION,  THE TERMS "RESEARCH AND DEVELOPMENT PROPERTY", "INDUSTRIAL
WASTE TREATMENT FACILITIES",  AND  "AIR  POLLUTION  CONTROL  FACILITIES"
SHALL  HAVE  THE  MEANINGS ASCRIBED THERETO BY CLAUSES (B), (C) AND (D),
RESPECTIVELY, OF SUBPARAGRAPH (IV) OF PARAGRAPH (B) OF  SUBDIVISION  ONE
OF  THIS  SECTION,  AND THE PROVISIONS OF SUBPARAGRAPH (V) OF SUCH PARA-
GRAPH (B) SHALL APPLY.
  (C) NONQUALIFIED PROPERTY. A TAXPAYER SHALL NOT BE  ALLOWED  A  CREDIT
UNDER  THIS  SUBDIVISION  WITH RESPECT TO ANY TANGIBLE PERSONAL PROPERTY
AND OTHER TANGIBLE PROPERTY, INCLUDING BUILDINGS AND  STRUCTURAL  COMPO-
NENTS  OF  BUILDINGS, WHICH IT LEASES TO ANY OTHER PERSON OR CORPORATION
EXCEPT WHERE A TAXPAYER  LEASES  PROPERTY  TO  AN  AFFILIATED  REGULATED
BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL  SECURITIES

S. 6359--B                         78                         A. 8559--B

EXCHANGE OR BOARD OF TRADE OR OTHER ENTITY DESCRIBED IN  CLAUSE  (F)  OF
SUBPARAGRAPH  (V)  OF  PARAGRAPH  (B) OF THIS SUBDIVISION THAT USES SUCH
PROPERTY IN ACCORDANCE WITH CLAUSE (D), (E), (E-1) OR  (F)  OF  SUBPARA-
GRAPH  (V)  OF  PARAGRAPH  (B)  OF THIS SUBDIVISION. FOR PURPOSES OF THE
PRECEDING SENTENCE, ANY CONTRACT OR AGREEMENT TO LEASE OR RENT OR FOR  A
LICENSE  TO  USE  SUCH  PROPERTY SHALL BE CONSIDERED A LEASE.  PROVIDED,
HOWEVER, IN DETERMINING WHETHER A TAXPAYER SHALL  BE  ALLOWED  A  CREDIT
UNDER  THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY, ANY ELECTION MADE
WITH RESPECT TO SUCH PROPERTY PURSUANT TO THE  PROVISIONS  OF  PARAGRAPH
EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTER-
NAL REVENUE CODE, AS SUCH PARAGRAPH WAS IN EFFECT FOR AGREEMENTS ENTERED
INTO  PRIOR  TO  JANUARY  FIRST,  NINETEEN HUNDRED EIGHTY-FOUR, SHALL BE
DISREGARDED.
  (D) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER,  THAT
IF  THE  AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED  OVER  TO  THE  FOLLOWING
YEAR  OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR
OR YEARS. IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER  WHICH  QUALIFIES
AS A NEW BUSINESS UNDER PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION
MAY ELECT, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH SUCH
CREDIT  IS  ALLOWED, TO TREAT FIFTY PERCENT OF THE AMOUNT OF SUCH CARRY-
OVER AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE
WITH  THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER.
IN ADDITION, ANY TAXPAYER WHICH IS APPROVED AS THE OWNER OF A  QUALIFIED
INVESTMENT  PROJECT OR A SIGNIFICANT CAPITAL INVESTMENT PROJECT PURSUANT
TO SUBDIVISION (W) OF SECTION NINE HUNDRED  FIFTY-NINE  OF  THE  GENERAL
MUNICIPAL  LAW, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH
SUCH CREDIT IS ALLOWED, IN LIEU OF SUCH CARRYOVER, MAY  ELECT  TO  TREAT
FIFTY  PERCENT  OF THE AMOUNT OF SUCH CARRYOVER WHICH IS ATTRIBUTABLE TO
THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR PROPERTY WHICH IS PART  OF
SUCH  PROJECT  AS  AN  OVERPAYMENT  OF TAX TO BE CREDITED OR REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS CHAPTER. PROVIDED, HOWEVER, SUCH OWNER SHALL BE ALLOWED SUCH REFUND
FOR  A  MAXIMUM  OF  TEN  TAXABLE  YEARS  WITH RESPECT TO SUCH QUALIFIED
INVESTMENT PROJECT AND  EACH  SIGNIFICANT  CAPITAL  INVESTMENT  PROJECT,
STARTING  WITH  THE FIRST TAXABLE YEAR IN WHICH PROPERTY COMPRISING SUCH
PROJECT IS PLACED IN SERVICE. PROVIDED, FURTHER, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (D-1)  ANY  CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL NOT BE
ALLOWED IF AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT  ISSUED  PURSUANT
TO  SUBDIVISION  (W)  OF  SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL
MUNICIPAL LAW TO THE EMPIRE ZONE ENTERPRISE WHICH IS THE  BASIS  OF  THE
CREDIT.
  (E)  AT  THE  OPTION OF THE TAXPAYER, THE TAXPAYER MAY CHOOSE TO CLAIM
THE CREDIT DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION  FOR  PROPERTY
WHICH  ALSO  QUALIFIES  FOR THE CREDIT PROVIDED UNDER SUBDIVISION ONE OF
THIS SECTION. A TAXPAYER SHALL NOT BE ALLOWED A CREDIT UNDER THIS SUBDI-
VISION WITH RESPECT TO ANY PROPERTY DESCRIBED IN PARAGRAPH (A)  OF  THIS
SUBDIVISION  IF  A  CREDIT  IS TAKEN PURSUANT TO SUBDIVISION ONE OF THIS
SECTION.

S. 6359--B                         79                         A. 8559--B

  (F) RECAPTURE. (I) WITH  RESPECT  TO  PROPERTY  WHICH  IS  DEPRECIABLE
PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE
BUT  IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT
OF SUCH CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN  QUALIFIED  USE
PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
THE  AMOUNT  OF  THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED
FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE  MONTHS  OF
QUALIFIED  USE  BEAR  TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH
CREDIT HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE  IN  QUALIFIED  USE
PRIOR  TO  THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT
TAKEN AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE
YEAR  OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF
OR CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE  FOR
MORE  THAN  TWELVE  CONSECUTIVE  YEARS, IT SHALL NOT BE NECESSARY TO ADD
BACK THE CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT  OF  CREDIT
ALLOWED  FOR  ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL
CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS
OF USEFUL LIFE. FOR PURPOSES OF THIS SUBPARAGRAPH, USEFUL LIFE OF  PROP-
ERTY  SHALL  BE  THE SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES
WHEN COMPUTING HIS FEDERAL INCOME TAX LIABILITY.
  (II) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH  SUBPARAGRAPH  (IV)
OF  THIS  PARAGRAPH  APPLIES,  WITH  RESPECT  TO THREE-YEAR PROPERTY, AS
DEFINED IN SUBSECTION (E) OF SECTION  ONE  HUNDRED  SIXTY-EIGHT  OF  THE
INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED
USE  PRIOR  TO  THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE
TAKEN, THE AMOUNT OF THE CREDIT SHALL BE  THAT  PORTION  OF  THE  CREDIT
PROVIDED  FOR  IN  THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE
MONTHS OF QUALIFIED USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH  CREDIT
HAS  BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO
THE END OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN  THE  CREDIT  TAKEN
AND  THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF
DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETER-
MINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH  THE  MONTHS
OF QUALIFIED USE BEAR TO THIRTY-SIX.
  (III)  EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH (IV)
OF THIS PARAGRAPH APPLIES, WITH  RESPECT  TO  PROPERTY  SUBJECT  TO  THE
PROVISIONS  OF  SECTION  ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE
CODE OTHER THAN THREE-YEAR PROPERTY AS DEFINED IN SUBSECTION (E) OF SUCH
SECTION ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO BE  IN
QUALIFIED  USE  PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT
IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT  PORTION  OF  THE
CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH
THE  MONTHS  OF QUALIFIED USE BEAR TO SIXTY. IF PROPERTY ON WHICH CREDIT
HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO
THE END OF SIXTY MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND THE
CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSI-
TION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY
MULTIPLYING  THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS OF QUALI-
FIED USE BEAR TO SIXTY.
  (IV) WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED  SIXTY-
EIGHT  OF  THE  INTERNAL  REVENUE CODE APPLIES, WHICH IS A BUILDING OR A
STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO
BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE  TOTAL  NUMBER  OF  MONTHS

S. 6359--B                         80                         A. 8559--B

OVER  WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER-
NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD  OVER
WHICH  THE  TAXPAYER  CHOOSES  TO DEDUCT THE PROPERTY UNDER THE INTERNAL
REVENUE CODE, THE DIFFERENCE BETWEEN THE CREDIT  TAKEN  AND  THE  CREDIT
ALLOWED  FOR  ACTUAL  USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION.
PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES  TO  BE  IN
QUALIFIED  USE  AFTER  IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE
CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE  CREDIT  AS
PROVIDED  IN  THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL
USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE.
  (V) FOR PURPOSES OF THIS PARAGRAPH, DISPOSAL OR CESSATION OF QUALIFIED
USE  SHALL NOT BE DEEMED TO HAVE OCCURRED SOLELY BY REASON OF THE TERMI-
NATION OR EXPIRATION OF AN EMPIRE ZONE'S DESIGNATION AS SUCH.
  (VI)(A) FOR PURPOSES OF THIS PARAGRAPH, THE DECERTIFICATION OF A BUSI-
NESS ENTERPRISE WITH RESPECT  TO  AN  EMPIRE  ZONE  SHALL  CONSTITUTE  A
DISPOSAL  OR  CESSATION  OF  QUALIFIED  USE OF THE PROPERTY ON WHICH THE
CREDIT WAS TAKEN WHICH IS LOCATED IN THE ZONE  TO  WHICH  THE  DECERTIF-
ICATION APPLIES, ON THE EFFECTIVE DATE OF SUCH DECERTIFICATION.
  (B)  WHERE A BUSINESS ENTERPRISE HAS BEEN DECERTIFIED BASED ON A FIND-
ING PURSUANT TO CLAUSE ONE, TWO, OR FIVE OF SUBDIVISION (A)  OF  SECTION
NINE  HUNDRED  FIFTY-NINE  OF  THE  GENERAL  MUNICIPAL  LAW,  THE AMOUNT
REQUIRED TO BE ADDED BACK BY REASON OF THIS PARAGRAPH SHALL BE  (I)  THE
AMOUNT  OF  CREDIT, WITH RESPECT TO THE PROPERTY WHICH IS DISPOSED OF OR
CEASES TO BE IN QUALIFIED USE, WHICH WAS DEDUCTED  FROM  THE  TAXPAYER'S
TAX  OTHERWISE  DUE  UNDER  THIS  ARTICLE  FOR  ALL PRIOR TAXABLE YEARS,
REDUCED (BUT NOT BELOW ZERO) BY (II) THE CREDIT ALLOWED FOR ACTUAL  USE.
FOR  PURPOSES OF THIS SUBPARAGRAPH, THE ATTRIBUTION TO SPECIFIC PROPERTY
OF CREDIT AMOUNTS DEDUCTED FROM TAX SHALL BE ESTABLISHED  IN  ACCORDANCE
WITH  THE  DATE  OF  PLACEMENT IN SERVICE OF SUCH PROPERTY IN THE EMPIRE
ZONE.
  (C) IN NO EVENT SHALL THE AMOUNT OF THE  CREDIT  ALLOWED  PURSUANT  TO
THIS  SUBDIVISION  BE  RENDERED,  SOLELY BY REASON OF CLAUSE (A) OF THIS
SUBPARAGRAPH, LESS THAN THE AMOUNT OF THE CREDIT TO WHICH  THE  TAXPAYER
WOULD OTHERWISE BE ENTITLED UNDER SUBDIVISION ONE OF THIS SECTION.
  (D)  NOTWITHSTANDING  ANY  OTHER PROVISION OF THIS SUBDIVISION, IN THE
CASE OF A BUSINESS ENTERPRISE WHICH HAS BEEN DECERTIFIED, ANY AMOUNT  OF
CREDIT  ALLOWED WITH RESPECT TO THE PROPERTY OF SUCH BUSINESS ENTERPRISE
LOCATED IN THE ZONE  TO  WHICH  THE  DECERTIFICATION  APPLIES  WHICH  IS
CARRIED  OVER PURSUANT TO PARAGRAPH (D) OF THIS SUBDIVISION SHALL NOT BE
CARRIED OVER BEYOND THE SEVENTH TAXABLE YEAR NEXT FOLLOWING THE  TAXABLE
YEAR  WITH  RESPECT TO WHICH THE CREDIT PROVIDED FOR IN THIS SUBDIVISION
WAS ALLOWED.
  (VII) FOR PURPOSES OF THIS PARAGRAPH, WHERE A CREDIT IS  ALLOWED  WITH
RESPECT  TO  AN AIR POLLUTION CONTROL FACILITY ON THE BASIS OF A CERTIF-
ICATE OF COMPLIANCE ISSUED PURSUANT TO  THE  ENVIRONMENTAL  CONSERVATION
LAW  AND  THE  CERTIFICATE  IS  REVOKED PURSUANT TO SUBDIVISION THREE OF
SECTION 19-0309 OF THE ENVIRONMENTAL CONSERVATION LAW,  SUCH  REVOCATION
SHALL  CONSTITUTE  A DISPOSAL OR CESSATION OF QUALIFIED USE, EXCEPT WITH
RESPECT TO PROPERTY CONTAINED IN OR COMPRISING SUCH  FACILITY  WHICH  IS
DESCRIBED  IN  CLAUSE  (A), (B), OR (C) OF SUBPARAGRAPH (V) OF PARAGRAPH
(B) OF THIS SUBDIVISION OTHER THAN AS  PART  OF  OR  COMPRISING  AN  AIR
POLLUTION CONTROL FACILITY. ALSO FOR PURPOSES OF THIS PARAGRAPH, THE USE

S. 6359--B                         81                         A. 8559--B

OF  AN  AIR  POLLUTION CONTROL FACILITY OR AN INDUSTRIAL WASTE TREATMENT
FACILITY FOR THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH ARE USABLE
IN THE MANUFACTURING PROCESS OR ARE MARKETABLE SHALL CONSTITUTE A CESSA-
TION  OF  QUALIFIED USE, EXCEPT WITH RESPECT TO PROPERTY CONTAINED IN OR
COMPRISING SUCH FACILITY WHICH IS DESCRIBED IN  CLAUSE  (A)  OR  (C)  OF
SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS SUBDIVISION.
  (VIII)  EXCEPT  AS PROVIDED IN THIS SUBPARAGRAPH, THIS PARAGRAPH SHALL
NOT APPLY TO A CREDIT ALLOWED BY THIS SUBDIVISION TO A TAXPAYER THAT  IS
A  PARTNER  IN  A  PARTNERSHIP  IN  THE  CASE OF MANUFACTURING PROPERTY;
PROVIDED, AT THE TIME SUCH PROPERTY WAS PLACED IN SERVICE BY SUCH  PART-
NERSHIP  IN AN EMPIRE ZONE THE BASIS FOR FEDERAL INCOME TAX PURPOSES FOR
SUCH PROPERTY (OR A PROJECT THAT  INCLUDES  SUCH  PROPERTY)  EQUALED  OR
EXCEEDED  THREE HUNDRED MILLION DOLLARS AND SUCH PARTNER OWNED ITS PART-
NERSHIP INTEREST FOR AT LEAST THREE YEARS FROM THE  DATE  SUCH  PROPERTY
WAS  PLACED  IN  SERVICE. IF SUCH PROPERTY CEASES TO BE IN QUALIFIED USE
AFTER IT IS PLACED IN SERVICE, THIS PARAGRAPH SHALL APPLY TO SUCH  PART-
NER IN THE YEAR SUCH PROPERTY CEASES TO BE IN QUALIFYING USE.
  (IX)  IF A TAXPAYER, WHICH IS APPROVED BY THE COMMISSIONER OF ECONOMIC
DEVELOPMENT AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A  SIGNIF-
ICANT  CAPITAL INVESTMENT PROJECT PURSUANT TO SUBDIVISION (W) OF SECTION
NINE HUNDRED FIFTY-NINE OF THE  GENERAL  MUNICIPAL  LAW,  FAILS  TO  (A)
CREATE  AT  LEAST THE MINIMUM NUMBER OF JOBS AT SUCH PROJECT AS REQUIRED
BY THE PROVISIONS OF SUBDIVISION (S) OR  (T)  OF  SECTION  NINE  HUNDRED
FIFTY-SEVEN  AND  SUBDIVISION  (W) OF SECTION NINE HUNDRED FIFTY-NINE OF
THE GENERAL MUNICIPAL LAW OR (B) PLACE IN  SERVICE  PROPERTY  COMPRISING
SUCH  QUALIFIED  INVESTMENT  PROJECT  OR  SIGNIFICANT CAPITAL INVESTMENT
PROJECT WITH A BASIS FOR FEDERAL INCOME TAX PURPOSES EQUALING OR EXCEED-
ING THE APPLICABLE MINIMUM REQUIRED BASIS AS PROVIDED IN  SUCH  SUBDIVI-
SION  (S)  OR  (T),  WHICHEVER IS RELEVANT, BY THE LAST DAY OF THE FIFTH
TAXABLE YEAR FOLLOWING THE TAXABLE YEAR  IN  WHICH  A  CREDIT  IS  FIRST
ALLOWED  UNDER  THIS  SUBDIVISION  FOR THE PROPERTY WHICH COMPRISES SUCH
QUALIFIED INVESTMENT PROJECT  OR  SUCH  SIGNIFICANT  CAPITAL  INVESTMENT
PROJECT,  THE  TOTAL AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ALL TAXABLE YEARS WITH RESPECT TO THE PROPERTY WHICH COMPRISES  SUCH
PROJECT  WHICH HAS BEEN REFUNDED TO SUCH TAXPAYER SHALL BE ADDED BACK IN
SUCH TAXABLE YEAR.
  (G) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF  THE  GENERAL  MUNICIPAL LAW, A TAXPAYER THAT IS
CERTIFIED AS A QUALIFIED INVESTMENT PROJECT  PURSUANT  TO  SUCH  ARTICLE
EIGHT-B  ON  THE  DAY  IMMEDIATELY  PRECEDING  THE  DAY THE EMPIRE ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
EIGHTEEN-B FOR PURPOSES OF THIS SUBDIVISION FOR  THE  REMAINDER  OF  THE
TAXABLE  YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT SUCCEED-
ING NINE TAXABLE YEARS. IN ADDITION,  THE  AREAS  DESIGNATED  AS  EMPIRE
ZONES  IN  WHICH  THE  TAXPAYER  IS  CERTIFIED AS A QUALIFIED INVESTMENT
PROJECT ON THE DAY  IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE  ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
THIS  SUBDIVISION  FOR  THE  REMAINDER  OF THE TAXABLE YEAR IN WHICH THE
EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
  (H) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF THE GENERAL MUNICIPAL LAW AND EXCEPT AS PROVIDED
IN PARAGRAPH (G) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
EMPIRE ZONE BUSINESS PURSUANT TO SUCH  ARTICLE  EIGHTEEN-B  ON  THE  DAY
IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE ZONE PROGRAM EXPIRED SHALL
CONTINUE TO BE  DEEMED  CERTIFIED  UNDER  SUCH  ARTICLE  EIGHTEEN-B  FOR
PURPOSES  OF  THIS SUBDIVISION UNTIL APRIL FIRST, TWO THOUSAND FOURTEEN.

S. 6359--B                         82                         A. 8559--B

IN ADDITION, THE AREAS DESIGNATED AS EMPIRE ZONES IN WHICH THE  TAXPAYER
IS CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING
THE  DAY  THE  EMPIRE  ZONES PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED
EMPIRE  ZONES  FOR  PURPOSES OF THIS SUBDIVISIONS UNTIL APRIL FIRST, TWO
THOUSAND FOURTEEN.
  4. EMPIRE ZONE EMPLOYMENT INCENTIVE CREDIT (EZ-EIC).  (A)  APPLICATION
OF  CREDIT. WHERE A TAXPAYER IS ALLOWED A CREDIT UNDER SUBDIVISION THREE
OF THIS SECTION, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF  THE
THREE  YEARS NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER
SUCH SUBDIVISION THREE IS ALLOWED, WITH RESPECT TO SUCH PROPERTY, WHETH-
ER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT TAXABLE YEARS
PURSUANT TO PARAGRAPH (D) OF SUCH SUBDIVISION THREE, OF  THIRTY  PERCENT
OF THE CREDIT ALLOWABLE UNDER SUCH SUBDIVISION THREE; PROVIDED, HOWEVER,
THAT  THE  CREDIT  ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL ONLY BE ALLOWED IF THE AVERAGE NUMBER OF EMPLOYEES EMPLOYED BY THE
TAXPAYER IN THE EMPIRE ZONE, DESIGNATED PURSUANT TO  ARTICLE  EIGHTEEN-B
OF  THE  GENERAL MUNICIPAL LAW, IN WHICH SUCH PROPERTY IS LOCATED DURING
SUCH TAXABLE YEAR IS AT LEAST ONE HUNDRED ONE  PERCENT  OF  THE  AVERAGE
NUMBER OF EMPLOYEES EMPLOYED BY THE TAXPAYER IN SUCH EMPIRE ZONE, DURING
THE  TAXABLE  YEAR  IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE
CREDIT UNDER SUCH SUBDIVISION THREE IS ALLOWED  AND  PROVIDED,  FURTHER,
THAT  IF  THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A TAXABLE
YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR FOR WHICH THE  CREDIT  UNDER
SUBDIVISION THREE OF THIS SECTION IS ALLOWED, THE CREDIT ALLOWABLE UNDER
THIS  SUBDIVISION  FOR  ANY TAXABLE YEAR SHALL BE ALLOWED IF THE AVERAGE
NUMBER OF EMPLOYEES EMPLOYED IN SUCH EMPIRE ZONE IN SUCH TAXABLE YEAR IS
AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE NUMBER OF SUCH EMPLOYEES
DURING THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION THREE
IS ALLOWED.
  (B) AVERAGE NUMBER OF  EMPLOYEES.  THE  AVERAGE  NUMBER  OF  EMPLOYEES
EMPLOYED IN AN EMPIRE ZONE IN A TAXABLE YEAR SHALL BE COMPUTED BY ASCER-
TAINING  THE  NUMBER  OF  SUCH EMPLOYEES WITHIN SUCH ZONE EXCEPT GENERAL
EXECUTIVE OFFICERS, EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST DAY  OF
MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER AND THE
THIRTY-FIRST DAY OF DECEMBER IN THE TAXABLE YEAR, BY ADDING TOGETHER THE
NUMBER  OF  EMPLOYEES ASCERTAINED ON EACH OF SUCH DATES AND DIVIDING THE
SUM SO OBTAINED BY THE NUMBER OF SUCH  ABOVE-MENTIONED  DATES  OCCURRING
WITHIN THE TAXABLE YEAR.
  (C)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER,  THAT
IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF  CREDIT  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING
YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH  YEAR
OR  YEARS.  IN  LIEU  OF  SUCH  CARRYOVER,  ANY  SUCH TAXPAYER, WHICH IS
APPROVED AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIFICANT
CAPITAL INVESTMENT PROJECT PURSUANT TO SUBDIVISION (V) OF  SECTION  NINE
HUNDRED  FIFTY-NINE  OF  THE  GENERAL  MUNICIPAL  LAW, MAY ELECT, ON ITS
REPORT FOR ITS TAXABLE  YEAR  WITH  RESPECT  TO  WHICH  SUCH  CREDIT  IS
ALLOWED,  TO  TREAT  FIFTY PERCENT OF THE AMOUNT OF SUCH CARRYOVER AS AN
OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER,  IN THE CASE OF SUCH OWNER OF A QUALIFIED INVESTMENT PROJECT OR

S. 6359--B                         83                         A. 8559--B

A SIGNIFICANT CAPITAL INVESTMENT PROJECT,  ONLY  FIFTY  PERCENT  OF  THE
AMOUNT  OF  SUCH  CARRYOVER  WHICH IS ATTRIBUTABLE TO THE CREDIT ALLOWED
UNDER THIS SUBDIVISION WITH RESPECT TO PROPERTY WHICH IS  PART  OF  SUCH
PROJECT SHALL BE ALLOWED TO BE CREDITED OR REFUNDED AND SUCH OWNER SHALL
BE  ALLOWED  SUCH CREDIT OR REFUND ONLY FOR THOSE TAXABLE YEARS IN WHICH
SUCH OWNER WOULD BE ALLOWED A  CREDIT  OR  REFUND  OF  THE  EMPIRE  ZONE
INVESTMENT  TAX CREDIT PURSUANT TO PARAGRAPH (D) OF SUBDIVISION THREE OF
THIS SECTION. PROVIDED, FURTHER, HOWEVER, THE PROVISIONS  OF  SUBSECTION
(C)  OF  SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTAND-
ING, NO INTEREST SHALL BE PAID THEREON.
  (C-1) ANY CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL  NOT  BE
ALLOWED  IF  AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT ISSUED PURSUANT
TO SUBDIVISION (W) OF SECTION NINE HUNDRED  FIFTY-NINE  OF  THE  GENERAL
MUNICIPAL  LAW  TO  THE EMPIRE ZONE ENTERPRISE WHICH IS THE BASIS OF THE
CREDIT.
  (D) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF  THE  GENERAL  MUNICIPAL LAW, A TAXPAYER THAT IS
CERTIFIED AS A QUALIFIED INVESTMENT PROJECT  PURSUANT  TO  SUCH  ARTICLE
EIGHTEEN-B  ON  THE  DAY  IMMEDIATELY PRECEDING THE DAY THE EMPIRE ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
EIGHTEEN-B FOR PURPOSES OF THIS SUBDIVISION FOR  THE  REMAINDER  OF  THE
TAXABLE  YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT SUCCEED-
ING NINE TAXABLE YEARS. IN ADDITION,  THE  AREAS  DESIGNATED  AS  EMPIRE
ZONES  IN  WHICH  THE  TAXPAYER  IS  CERTIFIED AS A QUALIFIED INVESTMENT
PROJECT ON THE DAY  IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE  ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
THIS  SUBDIVISION  FOR  THE  REMAINDER  OF THE TAXABLE YEAR IN WHICH THE
EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
  (E) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF THE GENERAL MUNICIPAL LAW AND EXCEPT AS PROVIDED
IN PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
EMPIRE ZONE BUSINESS PURSUANT TO SUCH  ARTICLE  EIGHTEEN-B  ON  THE  DAY
IMMEDIATELY  PRECEDING  THE  DAY  THE EMPIRE ZONES PROGRAM EXPIRED SHALL
CONTINUE TO BE DEEMED IN THE EMPIRE  ZONE  IN  WHICH  THE  TAXPAYER  WAS
CERTIFIED  AS  AN  EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING
THE DAY THE EMPIRE ZONES PROGRAM EXPIRED FOR EACH  OF  THE  THREE  YEARS
NEXT  SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER SUBDIVISION
THREE OF THIS SECTION IS ALLOWED.
  5. QEZE CREDIT FOR REAL PROPERTY TAXES. (A)  ALLOWANCE  OF  CREDIT.  A
TAXPAYER  WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A
CREDIT FOR ELIGIBLE REAL PROPERTY TAXES, TO BE COMPUTED AS  PROVIDED  IN
SECTION  FIFTEEN  OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS  TAX
BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.

S. 6359--B                         84                         A. 8559--B

  6. QEZE TAX REDUCTION CREDIT. (A)  ALLOWANCE  OF  CREDIT.  A  TAXPAYER
WHICH  IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A QEZE TAX
REDUCTION CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION SIXTEEN OF  THIS
CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THIS PARAGRAPH SHALL NOT APPLY TO A TAXPAYER WITH A ZONE ALLO-
CATION FACTOR OF ONE HUNDRED PERCENT.
  7. QUALIFIED EMERGING TECHNOLOGY COMPANY EMPLOYMENT CREDIT. (A) APPLI-
CATION OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO  BE  COMPUTED
AS  HEREINAFTER  PROVIDED,  AGAINST  THE  TAX  IMPOSED  BY THIS ARTICLE,
PROVIDED:
  (I) THE TAXPAYER IS A QUALIFIED EMERGING TECHNOLOGY  COMPANY  PURSUANT
TO  THE  PROVISIONS  OF  SECTION  THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC
AUTHORITIES LAW; AND
  (II) THE AVERAGE NUMBER OF  INDIVIDUALS  EMPLOYED  FULL  TIME  BY  THE
TAXPAYER  IN  NEW  YORK  STATE  DURING  THE TAXABLE YEAR IS AT LEAST ONE
HUNDRED ONE PERCENT OF THE TAXPAYER'S  BASE  YEAR  EMPLOYMENT.  FOR  THE
PURPOSES  OF  THIS SUBDIVISION, "BASE YEAR EMPLOYMENT" MEANS THE AVERAGE
NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME BY THE TAXPAYER  IN  THE  STATE
DURING  THE  THREE TAXABLE YEARS IMMEDIATELY PRECEDING THE FIRST TAXABLE
YEAR IN WHICH  THE  CREDIT  IS  CLAIMED.  WHERE  THE  TAXPAYER  PROVIDED
FULL-TIME  EMPLOYMENT  WITHIN  THE  STATE  DURING ONLY A PORTION OF SUCH
THREE-YEAR PERIOD, THEN THE FIRST EFFECTIVE DATE FOR THE COMPANY TO TAKE
ADVANTAGE OF THIS CREDIT SHALL BE THE NEXT YEAR FOLLOWING THE FIRST FULL
TAXABLE YEAR THAT THE COMPANY  HAD  FULL-TIME  EMPLOYMENT  IN  NEW  YORK
STATE.  FOR  THE PURPOSES OF THIS PARAGRAPH THE TERM "THREE YEARS" SHALL
BE DEEMED TO REFER INSTEAD TO  THE  PRIOR  YEAR'S  FULL-TIME  EMPLOYMENT
AFTER  THE  FIRST  YEAR  AND  THE AVERAGE OF THE FIRST EIGHT QUARTERS OF
EMPLOYMENT AFTER THE FIRST TWO TAXABLE YEARS IN NEW YORK STATE.
  (B) CREDIT LIMITATION. THE CREDIT SHALL BE ALLOWED ONLY IN  THE  FIRST
TAXABLE  YEAR IN WHICH THE CREDIT IS CLAIMED AND IN EACH OF THE NEXT TWO
TAXABLE YEARS, PROVIDED THAT THE CONDITIONS OF  PARAGRAPH  (A)  OF  THIS
SUBDIVISION ARE SATISFIED IN EACH TAXABLE YEAR.
  (C) AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME. FOR THE PURPOSES
OF  THIS  SUBDIVISION,  AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME
SHALL BE COMPUTED BY ADDING THE NUMBER OF SUCH INDIVIDUALS  EMPLOYED  BY
THE  TAXPAYER  AT  THE  END  OF EACH QUARTER DURING EACH TAXABLE YEAR OR
OTHER APPLICABLE PERIOD AND DIVIDING THE SUM SO OBTAINED BY  THE  NUMBER
OF  SUCH QUARTERS OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER APPLICABLE
PERIOD; PROVIDED HOWEVER, EXCEPT THAT IN COMPUTING BASE YEAR EMPLOYMENT,
THERE SHALL BE EXCLUDED THEREFROM ANY EMPLOYEE WITH RESPECT  TO  WHOM  A
CREDIT PROVIDED FOR UNDER SUBDIVISION SIX OF THIS SECTION IS CLAIMED FOR
THE TAXABLE YEAR.
  (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL EQUAL THE PRODUCT
OF  ONE  THOUSAND  DOLLARS  TIMES  THE  NUMBER  OF  INDIVIDUALS EMPLOYED
FULL-TIME BY THE TAXPAYER IN THE TAXABLE YEAR THAT ARE IN EXCESS OF  ONE
HUNDRED PERCENT OF THE TAXPAYER'S BASE YEAR EMPLOYMENT.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  REDUCES
THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON

S. 6359--B                         85                         A. 8559--B

THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCT-
IBLE  IN  SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  8.  QUALIFIED  EMERGING  TECHNOLOGY  COMPANY  CAPITAL  TAX CREDIT. (A)
AMOUNT OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST  THE  TAX
IMPOSED  BY THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO ONE
OF THE FOLLOWING PERCENTAGES, PER EACH QUALIFIED INVESTMENT IN A  QUALI-
FIED  EMERGING  TECHNOLOGY  COMPANY  AS  DEFINED  IN  SECTION THIRTY-ONE
HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW,  MADE  DURING  THE  TAXABLE
YEAR, AND CERTIFIED BY THE COMMISSIONER, EITHER:
  (1)  TEN  PERCENT OF QUALIFIED INVESTMENTS IN QUALIFIED EMERGING TECH-
NOLOGY COMPANIES, EXCEPT FOR INVESTMENTS MADE BY  OR  ON  BEHALF  OF  AN
OWNER  OF  THE  BUSINESS,  INCLUDING, BUT NOT LIMITED TO, A STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR  HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
TAXPAYER  CERTIFIES  TO  THE  COMMISSIONER THAT THE QUALIFIED INVESTMENT
WILL NOT BE SOLD, TRANSFERRED, TRADED, OR DISPOSED OF  DURING  THE  FOUR
YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED; OR
  (2)  TWENTY  PERCENT  OF  QUALIFIED  INVESTMENTS IN QUALIFIED EMERGING
TECHNOLOGY COMPANIES, EXCEPT FOR INVESTMENTS MADE BY OR ON BEHALF OF  AN
OWNER  OF  THE  BUSINESS,  INCLUDING, BUT NOT LIMITED TO, A STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR  HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
TAXPAYER  CERTIFIES  TO  THE  COMMISSIONER THAT THE QUALIFIED INVESTMENT
WILL NOT BE SOLD, TRANSFERRED, TRADED, OR DISPOSED OF  DURING  THE  NINE
YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED.
  (B)  QUALIFIED  INVESTMENT.  "QUALIFIED INVESTMENT" MEANS THE CONTRIB-
UTION OF PROPERTY TO A CORPORATION IN EXCHANGE FOR ORIGINAL ISSUE  CAPI-
TAL STOCK OR OTHER OWNERSHIP INTEREST, THE CONTRIBUTION OF PROPERTY TO A
PARTNERSHIP  IN EXCHANGE FOR AN INTEREST IN THE PARTNERSHIP, AND SIMILAR
CONTRIBUTIONS IN THE CASE OF A BUSINESS ENTITY NOT IN CORPORATE OR PART-
NERSHIP FORM IN EXCHANGE FOR AN OWNERSHIP INTEREST IN SUCH ENTITY.   THE
TOTAL  AMOUNT OF CREDIT ALLOWABLE TO A TAXPAYER UNDER THIS PROVISION FOR
ALL YEARS, TAKEN IN THE AGGREGATE, SHALL NOT EXCEED  ONE  HUNDRED  FIFTY
THOUSAND  DOLLARS  IN  THE CASE OF INVESTMENTS MADE PURSUANT TO SUBPARA-
GRAPH ONE OF PARAGRAPH (A) OF THIS  SUBDIVISION  AND  SHALL  NOT  EXCEED
THREE  HUNDRED THOUSAND DOLLARS IN THE CASE OF INVESTMENTS MADE PURSUANT
TO SUBPARAGRAPH TWO OF PARAGRAPH (A) OF THIS SUBDIVISION.
  (C) CARRYOVER. IN NO EVENT SHALL THE  CREDIT  AND  CARRYOVER  OF  SUCH
CREDIT  ALLOWED  UNDER  THIS  SUBDIVISION  FOR  ANY TAXABLE YEAR, IN THE
AGGREGATE, REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  FIXED
DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF  THE  TAXPAYER
OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, OR IF ANY
PART OF THE CREDIT OR CARRYOVERS OF SUCH CREDIT MAY NOT BE DEDUCTED FROM
THE TAX OTHERWISE DUE BY REASON OF THE FINAL SENTENCE OF THIS PARAGRAPH,
ANY AMOUNT OF CREDIT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND
MAY BE DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.  IN  ADDITION,  THE

S. 6359--B                         86                         A. 8559--B

AMOUNT  OF  SUCH  CREDIT,  AND  CARRYOVERS OF SUCH CREDIT TO THE TAXABLE
YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY  NOT,  IN  THE  AGGREGATE,
EXCEED  FIFTY  PERCENT OF THE TAX IMPOSED UNDER SECTION TWO HUNDRED NINE
OF  THIS  ARTICLE  COMPUTED WITHOUT REGARD TO ANY CREDIT PROVIDED FOR BY
THIS SECTION.
  (D) RECAPTURE. (1) WHERE A  TAXPAYER  SELLS,  TRANSFERS  OR  OTHERWISE
DISPOSES  OF  CORPORATE STOCK, A PARTNERSHIP INTEREST OR OTHER OWNERSHIP
INTEREST ARISING FROM THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE
BASIS, IN WHOLE OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR
UNDER SUBPARAGRAPH ONE OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN
INVESTMENT WHICH WAS THE BASIS FOR SUCH ALLOWANCE IS,  IN  WHOLE  OR  IN
PART,  RECOVERED  BY  SUCH  TAXPAYER,  AND  SUCH DISPOSITION OR RECOVERY
OCCURS DURING THE TAXABLE YEAR OR WITHIN  FORTY-EIGHT  MONTHS  FROM  THE
CLOSE  OF THE TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT IS ALLOWED,
THE TAXPAYER SHALL ADD BACK, WITH RESPECT TO THE TAXABLE YEAR  IN  WHICH
THE  DISPOSITION  OR  RECOVERY  DESCRIBED  ABOVE  OCCURRED, THE REQUIRED
PORTION OF THE CREDIT ORIGINALLY ALLOWED.
  (2) WHERE A TAXPAYER SELLS, TRANSFERS OR OTHERWISE DISPOSES OF  CORPO-
RATE  STOCK,  A PARTNERSHIP INTEREST OR OTHER OWNERSHIP INTEREST ARISING
FROM THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE BASIS, IN  WHOLE
OR  IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR UNDER SUBPARA-
GRAPH TWO OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE  AN  INVESTMENT
WHICH  WAS THE BASIS FOR SUCH ALLOWANCE IS IN ANY MANNER, IN WHOLE OR IN
PART, RECOVERED BY SUCH  TAXPAYER,  AND  SUCH  DISPOSITION  OR  RECOVERY
OCCURS  DURING  THE TAXABLE YEAR OR WITHIN ONE HUNDRED EIGHT MONTHS FROM
THE CLOSE OF THE TAXABLE YEAR WITH  RESPECT  TO  WHICH  SUCH  CREDIT  IS
ALLOWED,  THE  TAXPAYER SHALL ADD BACK, WITH RESPECT TO THE TAXABLE YEAR
IN WHICH THE DISPOSITION OR RECOVERY DESCRIBED IN  SUBPARAGRAPH  ONE  OF
THIS  PARAGRAPH  OCCURRED  THE REQUIRED PORTION OF THE CREDIT ORIGINALLY
ALLOWED.
  (3) THE REQUIRED PORTION OF THE CREDIT ORIGINALLY ALLOWED SHALL BE THE
PRODUCT OF (A) THE PORTION OF SUCH CREDIT ATTRIBUTABLE TO  THE  PROPERTY
DISPOSED OF AND (B) THE APPLICABLE PERCENTAGE.
  (4) THE APPLICABLE PERCENTAGE SHALL BE:
  (A)  FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH (A)
OF THIS SUBDIVISION:
  (I) ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  WITHIN
THE  TAXABLE  YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED OR WITHIN
TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
  (II) SEVENTY-FIVE PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  MORE
THAN  TWELVE  BUT  NOT MORE THAN TWENTY-FOUR MONTHS AFTER THE END OF THE
TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (III) FIFTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  MORE  THAN
TWENTY-FOUR  MONTHS BUT NOT MORE THAN THIRTY-SIX MONTHS AFTER THE END OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
  (IV) TWENTY-FIVE PERCENT, IF THE DISPOSITION OR RECOVERY  OCCURS  MORE
THAN  THIRTY-SIX  MONTHS  BUT NOT MORE THAN FORTY-EIGHT MONTHS AFTER THE
END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED; OR
  (B) FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH TWO OF PARAGRAPH  (A)
OF THIS SUBDIVISION:
  (I)  ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS WITHIN
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED  OR  WITHIN
TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
  (II)  EIGHTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
TWELVE BUT NOT MORE THAN FORTY-EIGHT MONTHS AFTER THE END OF THE TAXABLE
YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,

S. 6359--B                         87                         A. 8559--B

  (III) SIXTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  MORE  THAN
FORTY-EIGHT MONTHS BUT NOT MORE THAN SEVENTY-TWO MONTHS AFTER THE END OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (IV)  FORTY  PERCENT,  IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
SEVENTY-TWO MONTHS BUT NOT MORE THAN NINETY-SIX MONTHS AFTER THE END  OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
  (V)  TWENTY  PERCENT,  IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
NINETY-SIX MONTHS BUT NOT MORE THAN ONE HUNDRED EIGHT MONTHS  AFTER  THE
END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED.
  9.  CREDIT  FOR  THE  SPECIAL  ADDITIONAL  MORTGAGE RECORDING TAX. (A)
APPLICATION OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE CRED-
ITED AGAINST THE TAX IMPOSED BY THIS ARTICLE, EQUAL TO THE AMOUNT OF THE
SPECIAL ADDITIONAL MORTGAGE RECORDING TAX PAID BY THE TAXPAYER  PURSUANT
TO   THE   PROVISIONS  OF  SUBDIVISION  ONE-A  OF  SECTION  TWO  HUNDRED
FIFTY-THREE OF THIS CHAPTER OR MORTGAGES RECORDED. PROVIDED, HOWEVER, NO
CREDIT SHALL BE ALLOWED WITH RESPECT TO  A  MORTGAGE  OF  REAL  PROPERTY
PRINCIPALLY  IMPROVED  OR  TO  BE  IMPROVED  BY  ONE  OR MORE STRUCTURES
CONTAINING IN THE AGGREGATE  NOT  MORE  THAN  SIX  RESIDENTIAL  DWELLING
UNITS,  EACH  DWELLING  UNIT HAVING ITS OWN SEPARATE COOKING FACILITIES,
WHERE THE REAL PROPERTY IS LOCATED  IN  ONE  OR  MORE  OF  THE  COUNTIES
COMPRISING  THE  METROPOLITAN  COMMUTER  TRANSPORTATION  AREA.  PROVIDED
FURTHER, HOWEVER, NO CREDIT SHALL BE ALLOWED WITH RESPECT TO A  MORTGAGE
OF  REAL  PROPERTY PRINCIPALLY IMPROVED OR TO BE IMPROVED BY ONE OR MORE
STRUCTURES CONTAINING IN THE AGGREGATE NOT  MORE  THAN  SIX  RESIDENTIAL
DWELLING  UNITS,  EACH  DWELLING  UNIT  HAVING  ITS OWN SEPARATE COOKING
FACILITIES, WHERE THE REAL PROPERTY IS LOCATED IN THE COUNTY OF ERIE.
  (B) CARRYOVER. IN NO EVENT SHALL THE CREDIT  HEREIN  PROVIDED  FOR  BE
ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. IF, HOWEVER, THE AMOUNT
OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR, INCLUD-
ING ANY CREDIT CARRIED OVER FROM A PRIOR TAXABLE YEAR, REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXA-
BLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND  MAY  BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  10. CREDIT FOR SERVICING CERTAIN MORTGAGES. (A) GENERAL. EVERY TAXPAY-
ER  MEETING  THE  REQUIREMENTS  OF THE STATE OF NEW YORK MORTGAGE AGENCY
APPLICABLE TO THE SERVICING OF MORTGAGES ACQUIRED BY SUCH AGENCY  PURSU-
ANT  TO  THE  STATE  OF  NEW  YORK MORTGAGE AGENCY ACT, WHICH SHALL HAVE
ENTERED INTO A CONTRACT WITH THE STATE OF NEW YORK  MORTGAGE  AGENCY  TO
SERVICE  MORTGAGES  ACQUIRED BY SUCH AGENCY PURSUANT TO THE STATE OF NEW
YORK MORTGAGE AGENCY ACT, SHALL HAVE CREDITED TO IT ANNUALLY  AN  AMOUNT
EQUAL  TO  TWO  AND  NINETY-THREE ONE HUNDREDTHS PER CENTUM OF THE TOTAL
PRINCIPAL AND INTEREST COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR
ON EACH SUCH MORTGAGE SECURED BY A LIEN ON REAL  ESTATE  IMPROVED  BY  A
ONE-FAMILY  TO  FOUR-FAMILY RESIDENTIAL STRUCTURE AND AN AMOUNT EQUAL TO
THE INTEREST COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR  ON  EACH
SUCH MORTGAGE SECURED BY A LIEN ON REAL PROPERTY IMPROVED BY A STRUCTURE
OCCUPIED  AS THE RESIDENCE OF FIVE OR MORE FAMILIES LIVING INDEPENDENTLY
OF EACH OTHER, MULTIPLIED BY A FRACTION THE DENOMINATOR OF  WHICH  SHALL
BE  THE  INTEREST RATE PAYABLE ON THE MORTGAGE (COMPUTED TO FIVE DECIMAL
PLACES) AND THE NUMERATOR OF WHICH SHALL BE .00125 IN THE CASE OF SUCH A
MORTGAGE ACQUIRED BY SUCH AGENCY FOR LESS THAN ONE MILLION DOLLARS,  AND
.00100  IN  THE  CASE OF SUCH A MORTGAGE ACQUIRED BY SUCH AGENCY FOR ONE
MILLION DOLLARS OR MORE. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER THIS

S. 6359--B                         88                         A. 8559--B

SUBDIVISION REDUCE THE TAX TO LESS THAN THE FIXED DOLLAR MINIMUM  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS ARTICLE. IN COMPUTING SUCH TAX CREDIT FOR THE  SERVICING  OF
MORTGAGES  ON  ONE-FAMILY  TO  FOUR-FAMILY  RESIDENTIAL  STRUCTURES, THE
TAXPAYER SHALL NOT BE ENTITLED TO CREDIT FOR THE COLLECTION OF  CURTAIL-
MENT  OR PAYMENTS IN DISCHARGE OF ANY SUCH MORTGAGE. FOR THE PURPOSES OF
THIS SUBDIVISION,
  (B)(I) A "CURTAILMENT" SHALL MEAN AMOUNTS PAID BY MORTGAGORS
  (A) IN EXCESS  OF  THE  MONTHLY  CONSTANT  DUE  DURING  THE  MONTH  OF
COLLECTION AND
  (B)  IN  REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE; IN
THE ABSENCE OF CLEAR EVIDENCE TO THE CONTRARY, AMOUNTS PAID IN EXCESS OF
THE MONTHLY CONSTANT DUE DURING THE MONTH OF COLLECTION SHALL BE  DEEMED
TO BE IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE; AND
  (II)  "MONTHLY CONSTANT" SHALL MEAN THE AMOUNT OF PRINCIPAL AND INTER-
EST WHICH IS DUE AND PAYABLE ACCORDING TO THE MORTGAGE DOCUMENTS ON EACH
PERIODIC PAYMENT DATE.
  11. AGRICULTURAL PROPERTY TAX CREDIT. (A) GENERAL. IN THE  CASE  OF  A
TAXPAYER  WHICH IS AN ELIGIBLE FARMER OR AN ELIGIBLE FARMER WHO HAS PAID
TAXES PURSUANT TO A LAND CONTRACT, THERE SHALL BE ALLOWED A  CREDIT  FOR
THE ALLOWABLE SCHOOL DISTRICT PROPERTY TAXES. THE TERM "ALLOWABLE SCHOOL
DISTRICT  PROPERTY  TAXES" MEANS THE SCHOOL DISTRICT PROPERTY TAXES PAID
DURING THE TAXABLE YEAR ON QUALIFIED AGRICULTURAL PROPERTY,  SUBJECT  TO
THE ACREAGE LIMITATION PROVIDED IN PARAGRAPH (E) OF THIS SUBDIVISION AND
THE INCOME LIMITATION PROVIDED IN PARAGRAPH (F) OF THIS SUBDIVISION.
  (B)  ELIGIBLE  FARMER.  FOR  PURPOSES  OF  THIS  SUBDIVISION, THE TERM
"ELIGIBLE FARMER" MEANS A TAXPAYER WHOSE FEDERAL GROSS INCOME FROM FARM-
ING FOR THE TAXABLE YEAR IS AT LEAST TWO-THIRDS OF EXCESS FEDERAL  GROSS
INCOME.  THE  TERM  "ELIGIBLE  FARMER" ALSO INCLUDES A CORPORATION OTHER
THAN THE TAXPAYER OF RECORD FOR QUALIFIED AGRICULTURAL  LAND  WHICH  HAS
PAID  THE  SCHOOL  DISTRICT  PROPERTY  TAXES  ON SUCH LAND PURSUANT TO A
CONTRACT FOR THE FUTURE PURCHASE OF SUCH LAND; PROVIDED THAT SUCH CORPO-
RATION HAS A FEDERAL GROSS INCOME FROM  FARMING  FOR  THE  TAXABLE  YEAR
WHICH  IS  AT  LEAST  TWO-THIRDS  OF  EXCESS  FEDERAL  GROSS INCOME; AND
PROVIDED FURTHER THAT, IN DETERMINING SUCH INCOME ELIGIBILITY, A TAXPAY-
ER MAY, FOR ANY TAXABLE YEAR, USE THE  AVERAGE  OF  SUCH  FEDERAL  GROSS
INCOME  FROM  FARMING  FOR THAT TAXABLE YEAR AND SUCH INCOME FOR THE TWO
CONSECUTIVE TAXABLE  YEARS  IMMEDIATELY  PRECEDING  SUCH  TAXABLE  YEAR.
EXCESS  FEDERAL  GROSS  INCOME  MEANS THE AMOUNT OF FEDERAL GROSS INCOME
FROM ALL SOURCES FOR THE TAXABLE  YEAR  IN  EXCESS  OF  THIRTY  THOUSAND
DOLLARS.  FOR  THE PURPOSES OF THIS PARAGRAPH, PAYMENTS FROM THE STATE'S
FARMLAND PROTECTION PROGRAM, ADMINISTERED BY THE DEPARTMENT OF  AGRICUL-
TURE AND MARKETS, SHALL BE INCLUDED AS FEDERAL GROSS INCOME FROM FARMING
FOR OTHERWISE ELIGIBLE FARMERS.
  (C)  SCHOOL DISTRICT PROPERTY TAXES. FOR PURPOSES OF THIS SUBDIVISION,
THE TERM "SCHOOL DISTRICT PROPERTY  TAXES"  MEANS  ALL  PROPERTY  TAXES,
SPECIAL  AD  VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE OF PENAL-
TIES AND INTEREST, LEVIED FOR SCHOOL DISTRICT PURPOSES ON THE  QUALIFIED
AGRICULTURAL PROPERTY OWNED BY THE TAXPAYER.
  (D) QUALIFIED AGRICULTURAL PROPERTY. FOR PURPOSES OF THIS SUBDIVISION,
THE  TERM  "QUALIFIED  AGRICULTURAL PROPERTY" MEANS LAND LOCATED IN THIS
STATE WHICH IS USED IN AGRICULTURAL PRODUCTION, AND  LAND  IMPROVEMENTS,
STRUCTURES  AND  BUILDINGS  (EXCLUDING BUILDINGS USED FOR THE TAXPAYER'S
RESIDENTIAL PURPOSE) LOCATED ON SUCH LAND WHICH ARE USED OR OCCUPIED  TO
CARRY OUT SUCH PRODUCTION. QUALIFIED AGRICULTURAL PROPERTY ALSO INCLUDES
LAND  SET  ASIDE  OR  RETIRED  UNDER A FEDERAL SUPPLY MANAGEMENT OR SOIL

S. 6359--B                         89                         A. 8559--B

CONSERVATION PROGRAM OR LAND THAT AT THE TIME IT BECOMES  SUBJECT  TO  A
CONSERVATION EASEMENT, AS DEFINED UNDER SUBDIVISION TWENTY-EIGHT OF THIS
SECTION, MET THE REQUIREMENTS UNDER THIS PARAGRAPH.
  (E)  ACREAGE  LIMITATION.  (I)  ELIGIBLE  TAXES. IN THE EVENT THAT THE
QUALIFIED AGRICULTURAL PROPERTY OWNED BY THE TAXPAYER INCLUDES  LAND  IN
EXCESS  OF THE BASE ACREAGE AS PROVIDED IN THIS PARAGRAPH, THE AMOUNT OF
SCHOOL DISTRICT PROPERTY TAXES ELIGIBLE FOR CREDIT UNDER  THIS  SUBDIVI-
SION  SHALL  BE THAT PORTION OF THE SCHOOL DISTRICT PROPERTY TAXES WHICH
BEARS THE SAME RATIO TO THE TOTAL SCHOOL DISTRICT  PROPERTY  TAXES  PAID
DURING  THE  TAXABLE YEAR, AS THE ACREAGE ALLOWABLE UNDER THIS PARAGRAPH
BEARS TO THE ENTIRE ACREAGE OF SUCH LAND.
  (II) ALLOWABLE ACREAGE. THE ALLOWABLE ACREAGE IS THE SUM OF  THE  BASE
ACREAGE  SET  FORTH  BELOW AND FIFTY PERCENT OF THE INCREMENTAL ACREAGE.
THE INCREMENTAL ACREAGE IS THE EXCESS OF THE ENTIRE ACREAGE OF QUALIFIED
AGRICULTURAL LAND OWNED BY THE TAXPAYER OVER THE BASE ACREAGE. EXCEPT AS
PROVIDED IN SUBPARAGRAPH (III) OF THIS PARAGRAPH, THE  BASE  ACREAGE  IS
THREE HUNDRED FIFTY ACRES.
THE  TOTAL  BASE  ACREAGE  MAY  BE  INCREASED BY ANY ACREAGE ENROLLED OR
PARTICIPATING DURING THE TAXABLE YEAR IN A FEDERAL ENVIRONMENTAL CONSER-
VATION ACREAGE RESERVE PROGRAM PURSUANT TO TITLE THREE  OF  THE  FEDERAL
AGRICULTURE IMPROVEMENT AND REFORM ACT OF NINETEEN HUNDRED NINETY-SIX.
  (III)  BASE  ACREAGE OF RELATED PERSONS. WHERE THE TAXPAYER AND ONE OR
MORE RELATED PERSONS EACH OWN QUALIFIED  AGRICULTURAL  PROPERTY  ON  THE
FIRST DAY OF MARCH OF ANY YEAR, THE BASE ACREAGE UNDER SUBPARAGRAPH (II)
OF  THIS  PARAGRAPH  SHALL  BE  DIVIDED  EQUALLY  AND ALLOTTED AMONG THE
TAXPAYER AND SUCH RELATED PERSONS, AND THE TAXPAYER'S BASE  ACREAGE  FOR
THE TAXABLE YEAR WHICH INCLUDES SUCH MARCH FIRST SHALL BE LIMITED TO ITS
ALLOTTED  SHARE. PROVIDED, HOWEVER, IF THE TAXPAYER AND ALL SUCH RELATED
PERSONS CONSENT (AT SUCH TIME AND IN SUCH MANNER AS THE COMMISSIONER MAY
PRESCRIBE) TO AN UNEQUAL DIVISION, THE TAXPAYER'S BASE ACREAGE FOR  SUCH
TAXABLE  YEAR  SHALL BE LIMITED TO ITS ALLOTTED SHARE UNDER SUCH UNEQUAL
DIVISION.
  (IV) RELATED PERSONS. (A) FOR PURPOSES OF SUBPARAGRAPH (III)  OF  THIS
PARAGRAPH, THE TERM "RELATED PERSON" MEANS:
  (I) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, WHERE THE TAXPAY-
ER  AND  THE  CORPORATION  ARE  MEMBERS OF THE SAME CONTROLLED GROUP, AS
DEFINED IN SECTION 267(F) OF THE INTERNAL REVENUE CODE;
  (II) AN INDIVIDUAL, PARTNERSHIP, ESTATE  OR  TRUST,  WHERE  MORE  THAN
FIFTY  PERCENT  IN  VALUE  OF  THE  OUTSTANDING STOCK OF THE TAXPAYER IS
OWNED, DIRECTLY OR INDIRECTLY, BY OR FOR SUCH  INDIVIDUAL,  PARTNERSHIP,
ESTATE OR TRUST OR BY OR FOR THE GRANTOR OF SUCH TRUST;
  (III)  A  CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, OR A PARTNER-
SHIP, ESTATE OR TRUST, IF THE SAME PERSON OWNS MORE THAN  FIFTY  PERCENT
IN  VALUE  OF  THE OUTSTANDING STOCK OF THE TAXPAYER AND MORE THAN FIFTY
PERCENT IN VALUE OF  THE OUTSTANDING STOCK OF THE CORPORATION,  OR  MORE
THAN  FIFTY  PERCENT  OF THE CAPITAL OR PROFITS INTEREST IN THE PARTNER-
SHIP, OR MORE THAN FIFTY PERCENT  OF  THE  BENEFICIAL  INTEREST  IN  THE
ESTATE OR TRUST;
  (IV)  A  PARTNERSHIP,  ESTATE  OR  TRUST  OF  WHICH THE TAXPAYER OWNS,
DIRECTLY OR INDIRECTLY, MORE THAN FIFTY PERCENT OF THE CAPITAL,  PROFITS
OR BENEFICIAL INTEREST.
  (B)  IN  DETERMINING  WHETHER  A PERSON IS A RELATED PERSON WITHIN THE
MEANING OF THIS SUBPARAGRAPH:
  (I) STOCK OWNED, DIRECTLY OR INDIRECTLY,  BY  OR  FOR  A  CORPORATION,
PARTNERSHIP,  ESTATE OR TRUST SHALL BE CONSIDERED AS BEING OWNED PROPOR-
TIONATELY BY OR FOR ITS SHAREHOLDERS, PARTNERS OR BENEFICIARIES;

S. 6359--B                         90                         A. 8559--B

  (II) AN INDIVIDUAL SHALL BE CONSIDERED  AS  OWNING  THE  STOCK  OWNED,
DIRECTLY OR INDIRECTLY, BY OR FOR HIS SPOUSE;
  (III) STOCK CONSTRUCTIVELY OWNED BY A PERSON BY REASON OF THE APPLICA-
TION  OF ITEM (I) OF THIS CLAUSE SHALL, FOR THE PURPOSE OF APPLYING ITEM
(I) OR (II) OF THIS CLAUSE, BE TREATED AS ACTUALLY OWNED BY SUCH PERSON.
  (F) INCOME LIMITATION. (I) IN THE EVENT THAT THE MODIFIED  ENTIRE  NET
INCOME  OF THE TAXPAYER EXCEEDS TWO HUNDRED THOUSAND DOLLARS, THE ALLOW-
ABLE SCHOOL DISTRICT PROPERTY TAXES UNDER PARAGRAPH (A) OF THIS SUBDIVI-
SION SHALL BE THE ELIGIBLE TAXES UNDER SUBPARAGRAPH (I) OF PARAGRAPH (E)
OF THIS SUBDIVISION REDUCED BY THE PRODUCT OF THE AMOUNT OF SUCH  ELIGI-
BLE  TAXES  AND A PERCENTAGE, SUCH PERCENTAGE TO BE DETERMINED BY MULTI-
PLYING ONE HUNDRED PERCENT BY A FRACTION, THE NUMERATOR OF WHICH IS  THE
LESSER  OF  ONE HUNDRED THOUSAND DOLLARS OR THE EXCESS OF THE TAXPAYER'S
MODIFIED ENTIRE NET INCOME OVER TWO HUNDRED  THOUSAND  DOLLARS  AND  THE
DENOMINATOR  OF  WHICH  IS ONE HUNDRED THOUSAND DOLLARS. FOR PURPOSES OF
THE PRECEDING SENTENCE, THE TERM "ELIGIBLE  TAXES",  WHERE  THE  ACREAGE
LIMITATION  OF  PARAGRAPH  (E) OF THIS SUBDIVISION DOES NOT APPLY, SHALL
MEAN THE TOTAL SCHOOL DISTRICT PROPERTY TAXES PAID  DURING  THE  TAXABLE
YEAR.
  (II) THE TERM "MODIFIED ENTIRE NET INCOME" MEANS THE ENTIRE NET INCOME
FOR  THE  TAXABLE  YEAR  REDUCED BY THE AMOUNT OF PRINCIPAL PAID ON FARM
INDEBTEDNESS DURING THE TAXABLE YEAR. THE TERM "FARM INDEBTEDNESS" MEANS
DEBT INCURRED OR REFINANCED WHICH IS SECURED BY FARM PROPERTY, WHERE THE
PROCEEDS OF THE DEBT ARE DISBURSED  FOR  EXPENDITURES  INCURRED  IN  THE
BUSINESS OF FARMING.
  (G) CARRYOVER. IN NO EVENT SHALL THE CREDIT PROVIDED HEREIN BE ALLOWED
IN  AN  AMOUNT  WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE FIXED
DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE  OF
SECTION  TWO  HUNDRED  TEN  OF  THIS ARTICLE. IF, HOWEVER, THE AMOUNT OF
CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX  BASED  ON  THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR  OR  YEARS.  PROVIDED,
HOWEVER, IN LIEU OF CARRYING OVER THE UNUSED PORTION OF SUCH CREDIT, THE
TAXPAYER MAY ELECT TO TREAT SUCH UNUSED PORTION AS AN OVERPAYMENT OF TAX
TO  BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION
ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER EXCEPT THAT NO INTEREST SHALL BE
PAID ON SUCH OVERPAYMENT.
  (H) NONQUALIFIED USE. (I) NO CREDIT IN CONVERSION YEAR. IN  THE  EVENT
THAT  QUALIFIED  AGRICULTURAL  PROPERTY  IS CONVERTED BY THE TAXPAYER TO
NONQUALIFIED USE, CREDIT UNDER THIS SUBDIVISION  SHALL  NOT  BE  ALLOWED
WITH  RESPECT  TO  SUCH PROPERTY FOR THE TAXABLE YEAR OF CONVERSION (THE
CONVERSION YEAR).
  (II) CREDIT RECAPTURE. IF THE CONVERSION BY THE TAXPAYER OF  QUALIFIED
AGRICULTURAL  PROPERTY  TO  NONQUALIFIED USE OCCURS DURING THE PERIOD OF
THE TWO TAXABLE YEARS FOLLOWING THE TAXABLE YEAR FOR  WHICH  THE  CREDIT
UNDER  THIS SUBDIVISION WAS FIRST CLAIMED WITH RESPECT TO SUCH PROPERTY,
THE CREDIT ALLOWED WITH RESPECT TO SUCH PROPERTY FOR THE  TAXABLE  YEARS
PRIOR  TO THE CONVERSION YEAR MUST BE ADDED BACK IN THE CONVERSION YEAR.
WHERE THE PROPERTY CONVERTED INCLUDES LAND, AND WHERE THE CONVERSION  IS
OF  ONLY  A PORTION OF SUCH LAND, THE CREDIT ALLOWED WITH RESPECT TO THE
PROPERTY CONVERTED SHALL BE DETERMINED BY MULTIPLYING THE ENTIRE  CREDIT
UNDER  THIS  SUBDIVISION  FOR  THE TAXABLE YEARS PRIOR TO THE CONVERSION
YEAR BY A FRACTION, THE NUMERATOR OF WHICH IS THE ACREAGE CONVERTED  AND

S. 6359--B                         91                         A. 8559--B

THE DENOMINATOR OF WHICH IS THE ENTIRE ACREAGE OF SUCH LAND OWNED BY THE
TAXPAYER IMMEDIATELY PRIOR TO THE CONVERSION.
  (III)  EXCEPTION  TO  RECAPTURE.  SUBPARAGRAPH  (II) OF THIS PARAGRAPH
SHALL NOT APPLY TO THE CONVERSION OF PROPERTY WHERE THE CONVERSION IS BY
REASON OF INVOLUNTARY CONVERSION, WITHIN  THE  MEANING  OF  SECTION  ONE
THOUSAND THIRTY-THREE OF THE INTERNAL REVENUE CODE.
  (IV) CONVERSION TO NONQUALIFIED USE. FOR PURPOSES OF THIS PARAGRAPH, A
SALE OR OTHER DISPOSITION OF QUALIFIED AGRICULTURAL PROPERTY ALONE SHALL
NOT CONSTITUTE A CONVERSION TO A NONQUALIFIED USE.
  (I) SPECIAL RULES. FOR PURPOSES OF THIS SUBDIVISION, THE TERM "FEDERAL
GROSS   INCOME  FROM  FARMING"  SHALL  INCLUDE  GROSS  INCOME  FROM  THE
PRODUCTION OF MAPLE SYRUP, CIDER, CHRISTMAS TREES DERIVED FROM A MANAGED
CHRISTMAS TREE OPERATION WHETHER DUG FOR TRANSPLANTING OR CUT  FROM  THE
STUMP,  OR  FROM  A  COMMERCIAL  HORSE  BOARDING OPERATION AS DEFINED IN
SUBDIVISION THIRTEEN OF SECTION THREE HUNDRED ONE OF THE AGRICULTURE AND
MARKETS LAW, OR FROM THE SALE OF WINE FROM A  LICENSED  FARM  WINERY  AS
PROVIDED  FOR  IN  ARTICLE SIX OF THE ALCOHOLIC BEVERAGE CONTROL LAW, OR
FROM THE SALE OF CIDER FROM A LICENSED FARM CIDERY AS  PROVIDED  FOR  IN
SECTION FIFTY-EIGHT-C OF THE ALCOHOLIC BEVERAGE CONTROL LAW.
  (J)  ELECTION TO DEEM GROSS INCOME OF NEW YORK C CORPORATION TO SHARE-
HOLDERS. FOR PURPOSES OF THIS SUBDIVISION,  FEDERAL  GROSS  INCOME  FROM
FARMING  SHALL  BE ZERO FOR ANY TAXABLE YEAR OF A NEW YORK C CORPORATION
FOR WHICH THE ELECTION UNDER PARAGRAPH NINE OF SUBSECTION (N) OF SECTION
SIX HUNDRED SIX OF THIS CHAPTER IS IN EFFECT.
  12. CREDIT FOR EMPLOYMENT OF PERSONS WITH DISABILITIES. (A)  ALLOWANCE
OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HERE-
INAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, FOR EMPLOYING
WITHIN THE STATE A QUALIFIED EMPLOYEE.
  (B) QUALIFIED EMPLOYEE. A QUALIFIED EMPLOYEE IS AN INDIVIDUAL:
  (1) WHO IS CERTIFIED BY THE EDUCATION DEPARTMENT, OR IN THE CASE OF AN
INDIVIDUAL  WHO  IS  BLIND  OR VISUALLY HANDICAPPED, BY THE STATE AGENCY
RESPONSIBLE FOR PROVISION OF VOCATIONAL REHABILITATION SERVICES  TO  THE
BLIND  AND VISUALLY HANDICAPPED: (I) AS A PERSON WITH A DISABILITY WHICH
CONSTITUTES OR RESULTS IN A SUBSTANTIAL HANDICAP TO EMPLOYMENT AND  (II)
AS  HAVING  COMPLETED  OR  AS RECEIVING SERVICES UNDER AN INDIVIDUALIZED
WRITTEN REHABILITATION PLAN APPROVED  BY  THE  EDUCATION  DEPARTMENT  OR
OTHER  STATE  AGENCY RESPONSIBLE FOR PROVIDING VOCATIONAL REHABILITATION
SERVICES TO SUCH INDIVIDUAL; AND
  (2) WHO HAS WORKED ON A FULL-TIME BASIS FOR THE EMPLOYER WHO IS CLAIM-
ING THE CREDIT FOR AT LEAST ONE HUNDRED  EIGHTY  DAYS  OR  FOUR  HUNDRED
HOURS.
  (C)  AMOUNT  OF  CREDIT.  EXCEPT  AS PROVIDED IN PARAGRAPH (D) OF THIS
SUBDIVISION, THE AMOUNT OF CREDIT SHALL BE THIRTY-FIVE  PERCENT  OF  THE
FIRST  SIX THOUSAND DOLLARS IN QUALIFIED FIRST-YEAR WAGES EARNED BY EACH
QUALIFIED EMPLOYEE. "QUALIFIED FIRST-YEAR WAGES"  MEANS  WAGES  PAID  OR
INCURRED  BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED EMPLOYEES
WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE,  TO  SERVICES
RENDERED  DURING THE ONE-YEAR PERIOD BEGINNING WITH THE DAY THE EMPLOYEE
BEGINS WORK FOR THE TAXPAYER.
  (D) CREDIT WHERE FEDERAL WORK OPPORTUNITY  TAX  CREDIT  APPLIES.  WITH
RESPECT TO ANY QUALIFIED EMPLOYEE WHOSE QUALIFIED FIRST-YEAR WAGES UNDER
PARAGRAPH  (C)  OF THIS SUBDIVISION ALSO CONSTITUTE QUALIFIED FIRST-YEAR
WAGES FOR PURPOSES OF THE WORK OPPORTUNITY  TAX  CREDIT  FOR  VOCATIONAL
REHABILITATION REFERRALS UNDER SECTION FIFTY-ONE OF THE INTERNAL REVENUE
CODE,  THE AMOUNT OF CREDIT UNDER  THIS SUBDIVISION SHALL BE THIRTY-FIVE
PERCENT OF THE FIRST SIX THOUSAND DOLLARS IN QUALIFIED SECOND-YEAR WAGES

S. 6359--B                         92                         A. 8559--B

EARNED BY EACH SUCH EMPLOYEE. "QUALIFIED SECOND-YEAR WAGES" MEANS  WAGES
PAID  OR  INCURRED  BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED
EMPLOYEES WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE,  TO
SERVICES  RENDERED  DURING  THE ONE-YEAR PERIOD BEGINNING ONE YEAR AFTER
THE EMPLOYEE BEGINS WORK FOR THE TAXPAYER.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF  THE  AMOUNT
OF  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES
THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS  TAX  BASED  ON
THE  FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING  YEAR  OR  YEARS,
AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (F)  COORDINATION  WITH  FEDERAL  WORK  OPPORTUNITY  TAX  CREDIT.  THE
PROVISIONS OF SECTION FIFTY-ONE AND FIFTY-TWO OF  THE  INTERNAL  REVENUE
CODE,  AS SUCH SECTIONS APPLIED ON OCTOBER FIRST, NINETEEN HUNDRED NINE-
TY-SIX, THAT APPLY TO THE FEDERAL WORK OPPORTUNITY TAX CREDIT FOR  VOCA-
TIONAL  REHABILITATION  REFERRALS  SHALL  APPLY TO THE CREDIT UNDER THIS
SUBDIVISION TO THE EXTENT THAT SUCH SECTIONS  ARE  CONSISTENT  WITH  THE
SPECIFIC PROVISIONS OF THIS SUBDIVISION, PROVIDED THAT IN THE EVENT OF A
CONFLICT THE PROVISIONS OF THIS SUBDIVISION SHALL CONTROL.
  13.  CREDIT  FOR  PURCHASE  OF  AN AUTOMATED EXTERNAL DEFIBRILLATOR. A
TAXPAYER SHALL BE ALLOWED  A  CREDIT,  TO  BE  COMPUTED  AS  HEREINAFTER
PROVIDED,  AGAINST  THE  TAX  IMPOSED BY THIS ARTICLE, FOR THE PURCHASE,
OTHER THAN FOR RESALE, OF AN AUTOMATED EXTERNAL DEFIBRILLATOR,  AS  SUCH
TERM  IS  DEFINED  IN SECTION THREE THOUSAND-B OF THE PUBLIC HEALTH LAW.
THE AMOUNT OF CREDIT SHALL BE THE COST  TO  THE  TAXPAYER  OF  AUTOMATED
EXTERNAL  DEFIBRILLATORS  PURCHASED DURING THE TAXABLE YEAR, SUCH CREDIT
NOT TO EXCEED FIVE HUNDRED DOLLARS WITH RESPECT TO EACH UNIT  PURCHASED.
THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT
REDUCE  THE  TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR MINIMUM
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED TEN OF THIS CHAPTER.
  14.  CREDIT  FOR  PURCHASE OF LONG-TERM CARE INSURANCE. (A) GENERAL. A
TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE EQUAL TO TWENTY PERCENT OF THE PREMIUM PAID DURING THE TAXABLE  YEAR
FOR  LONG-TERM  CARE INSURANCE. IN ORDER TO QUALIFY FOR SUCH CREDIT, THE
TAXPAYER'S PREMIUM PAYMENT MUST BE FOR THE PURCHASE OF OR FOR CONTINUING
COVERAGE UNDER A LONG-TERM CARE INSURANCE POLICY THAT QUALIFIES FOR SUCH
CREDIT PURSUANT TO SECTION ONE THOUSAND ONE  HUNDRED  SEVENTEEN  OF  THE
INSURANCE LAW.
  (B)  CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR
MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION
TWO HUNDRED TEN OF THIS ARTICLE.  IF,  HOWEVER,  THE  AMOUNT  OF  CREDIT
ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO
SUCH  AMOUNT  OR  IF  THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXA-
BLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND  MAY  BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  15.  LOW-INCOME  HOUSING  CREDIT.  (A) ALLOWANCE OF CREDIT. A TAXPAYER
SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS  ARTICLE  WITH
RESPECT  TO  THE OWNERSHIP OF ELIGIBLE LOW-INCOME BUILDINGS, COMPUTED AS
PROVIDED IN SECTION EIGHTEEN OF THIS CHAPTER.

S. 6359--B                         93                         A. 8559--B

  (B) APPLICATION OF CREDIT. THE CREDIT AND CARRYOVERS  OF  SUCH  CREDIT
ALLOWED  UNDER  THIS  SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT, IN THE
AGGREGATE, REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  FIXED
DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER
OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY  AMOUNT
OF CREDIT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXA-
BLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE
DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.
  (C) CREDIT RECAPTURE. FOR PROVISIONS REQUIRING  RECAPTURE  OF  CREDIT,
SEE SUBDIVISION (B) OF SECTION EIGHTEEN OF THIS CHAPTER.
  16.  GREEN  BUILDING CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL
BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION  NINETEEN  OF
THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) CARRYOVERS. THE CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED UNDER
THIS  SUBDIVISION  FOR  ANY  TAXABLE  YEAR  SHALL NOT, IN THE AGGREGATE,
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT OR  CARRY-
OVERS  OF  SUCH  CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION FOR ANY
TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE
PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF  CREDIT
OR  CARRYOVERS  OF  SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY  BE  DEDUCTED
FROM THE TAX FOR SUCH YEAR OR YEARS.
  17.  BROWNFIELD  REDEVELOPMENT  TAX CREDIT. (A) ALLOWANCE OF CREDIT. A
TAXPAYER SHALL BE ALLOWED A  CREDIT,  TO  BE  COMPUTED  AS  PROVIDED  IN
SECTION  TWENTY-ONE  OF  THIS  CHAPTER,  AGAINST THE TAX IMPOSED BY THIS
ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDITS ALLOWED UNDER THIS  SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT  THUS
NOT  DEDUCTIBLE  IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT
OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  18. REMEDIATED BROWNFIELD CREDIT FOR REAL PROPERTY TAXES FOR QUALIFIED
SITES.  (A)  ALLOWANCE  OF  CREDIT. A TAXPAYER WHICH IS A DEVELOPER OF A
QUALIFIED SITE SHALL BE ALLOWED A  CREDIT  FOR  ELIGIBLE  REAL  PROPERTY
TAXES,  TO BE COMPUTED AS PROVIDED IN SUBDIVISION (B) OF SECTION TWENTY-
TWO OF THIS CHAPTER, AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE.  FOR
PURPOSES OF THIS SUBDIVISION, THE TERMS "QUALIFIED SITE" AND "DEVELOPER"
SHALL  HAVE  THE  SAME MEANING AS SET FORTH IN PARAGRAPHS TWO AND THREE,
RESPECTIVELY, OF SUBDIVISION (A) OF SECTION TWENTY-TWO OF THIS CHAPTER.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR

S. 6359--B                         94                         A. 8559--B

REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS  TAX
BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  19. ENVIRONMENTAL REMEDIATION INSURANCE CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN
SECTION TWENTY-THREE OF THIS CHAPTER, AGAINST THE TAX  IMPOSED  BY  THIS
ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE  AMOUNT  OF  CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS
NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT
OF  TAX  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  20. EMPIRE STATE FILM PRODUCTION CREDIT. (A) ALLOWANCE  OF  CREDIT.  A
TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION TWENTY-FOUR OF THIS CHAPTER
SHALL  BE  ALLOWED  A  CREDIT TO BE COMPUTED AS PROVIDED IN SUCH SECTION
TWENTY-FOUR AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED,
HOWEVER, THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS  SUBDIVI-
SION  FOR  ANY  TAXABLE  YEAR  REDUCES  THE TAX TO SUCH AMOUNT OR IF THE
TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED  DOLLAR  MINIMUM  AMOUNT,
THE  EXCESS  SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  21.  SECURITY TRAINING TAX CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN  SECTION  TWEN-
TY-SIX OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER,  IF
THE  AMOUNT  OF  CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS
NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT
OF  TAX  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  22. CONSERVATION EASEMENT TAX CREDIT. (A) CREDIT ALLOWED. IN THE  CASE
OF  A  TAXPAYER WHO OWNS LAND THAT IS SUBJECT TO A CONSERVATION EASEMENT

S. 6359--B                         95                         A. 8559--B

HELD BY A PUBLIC OR PRIVATE CONSERVATION AGENCY, THERE SHALL BE  ALLOWED
A CREDIT FOR TWENTY-FIVE PERCENT OF THE ALLOWABLE SCHOOL DISTRICT, COUN-
TY  AND TOWN REAL PROPERTY TAXES ON SUCH LAND. IN NO SUCH CASE SHALL THE
CREDIT  ALLOWED  UNDER  THIS  SUBDIVISION  IN COMBINATION WITH ANY OTHER
CREDIT FOR SUCH SCHOOL DISTRICT, COUNTY AND  TOWN  REAL  PROPERTY  TAXES
UNDER THIS SECTION EXCEED SUCH TAXES.
  (B)  CONSERVATION EASEMENT. FOR PURPOSES OF THIS SUBDIVISION, THE TERM
"CONSERVATION EASEMENT" MEANS A  PERPETUAL  AND  PERMANENT  CONSERVATION
EASEMENT AS DEFINED IN ARTICLE FORTY-NINE OF THE ENVIRONMENTAL CONSERVA-
TION  LAW  THAT SERVES TO PROTECT OPEN SPACE, SCENIC, NATURAL RESOURCES,
BIODIVERSITY,  AGRICULTURAL,  WATERSHED  AND/OR  HISTORIC   PRESERVATION
RESOURCES.  ANY  CONSERVATION EASEMENT FOR WHICH A TAX CREDIT IS CLAIMED
UNDER THIS SUBDIVISION SHALL BE FILED WITH THE  DEPARTMENT  OF  ENVIRON-
MENTAL  CONSERVATION, AS PROVIDED FOR IN ARTICLE FORTY-NINE OF THE ENVI-
RONMENTAL CONSERVATION LAW AND SUCH CONSERVATION EASEMENT  SHALL  COMPLY
WITH  THE  PROVISIONS OF TITLE THREE OF SUCH ARTICLE, AND THE PROVISIONS
OF SUBDIVISION (H) OF SECTION 170 OF THE INTERNAL  REVENUE  CODE.  DEDI-
CATIONS  OF  LAND  FOR  OPEN SPACE THROUGH THE EXECUTION OF CONSERVATION
EASEMENTS FOR THE PURPOSE OF FULFILLING DENSITY REQUIREMENTS  TO  OBTAIN
SUBDIVISION  OR  BUILDING PERMITS SHALL NOT BE CONSIDERED A CONSERVATION
EASEMENT UNDER THIS SUBDIVISION.
  (C) LAND. FOR PURPOSES OF THIS SUBDIVISION, THE TERM  "LAND"  MEANS  A
FEE SIMPLE TITLE TO REAL PROPERTY LOCATED IN THIS STATE, WITH OR WITHOUT
IMPROVEMENTS  THEREON;  RIGHTS  OF WAY; WATER AND RIPARIAN RIGHTS; EASE-
MENTS; PRIVILEGES AND ALL OTHER RIGHTS  OR  INTERESTS  OF  ANY  LAND  OR
DESCRIPTION  IN,  RELATING TO OR CONNECTED WITH REAL PROPERTY, EXCLUDING
BUILDINGS, STRUCTURES, OR IMPROVEMENTS.
  (D) PUBLIC OR PRIVATE CONSERVATION AGENCY. FOR PURPOSES OF THIS SUBDI-
VISION, THE TERM "PUBLIC  OR  PRIVATE  CONSERVATION  AGENCY"  MEANS  ANY
STATE,  LOCAL, OR FEDERAL GOVERNMENTAL BODY; OR ANY PRIVATE NOT-FOR-PRO-
FIT CHARITABLE CORPORATION OR TRUST WHICH IS AUTHORIZED TO  DO  BUSINESS
IN  THE STATE OF NEW YORK, IS ORGANIZED AND OPERATED TO PROTECT LAND FOR
NATURAL RESOURCES, CONSERVATION OR HISTORIC  PRESERVATION  PURPOSES,  IS
EXEMPT  FROM  FEDERAL  INCOME  TAXATION  UNDER  SECTION 501(C)(3) OF THE
INTERNAL REVENUE CODE, AND HAS THE POWER TO ACQUIRE, HOLD  AND  MAINTAIN
LAND AND/OR INTERESTS IN LAND FOR SUCH PURPOSES.
  (E) CREDIT LIMITATION. THE AMOUNT OF THE CREDIT THAT MAY BE CLAIMED BY
A  TAXPAYER  PURSUANT  TO THIS SUBSECTION SHALL NOT EXCEED FIVE THOUSAND
DOLLARS IN ANY GIVEN YEAR.
  (F) APPLICATION OF THE CREDIT. THE CREDIT ALLOWED UNDER THIS  SUBDIVI-
SION  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO
LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE  AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF THE CREDIT
THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER,
EXCEPT THAT, NO INTEREST SHALL BE PAID THEREON.
  23.  EMPIRE STATE COMMERCIAL PRODUCTION CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER THAT IS ELIGIBLE PURSUANT TO PROVISIONS OF SECTION TWEN-
TY-EIGHT OF THIS CHAPTER SHALL BE ALLOWED A CREDIT  TO  BE  COMPUTED  AS
PROVIDED IN SUCH SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS

S. 6359--B                         96                         A. 8559--B

THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI-
SION  FOR  ANY  TAXABLE  YEAR  REDUCES  THE TAX TO SUCH AMOUNT OR IF THE
TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED  DOLLAR  MINIMUM  AMOUNT,
FIFTY PERCENT OF THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING,  NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF SUCH
CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE CARRIED OVER
TO THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM  THE
TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF CRED-
IT OVER THE TAX FOR SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF  SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,
THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (C) EXPIRATION OF CREDIT. THE CREDIT ALLOWED  UNDER  THIS  SUBDIVISION
SHALL  NOT BE APPLICABLE TO TAXABLE YEARS BEGINNING ON OR AFTER DECEMBER
THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
  24. BIOFUEL PRODUCTION  CREDIT.  (A)  GENERAL.  A  TAXPAYER  SHALL  BE
ALLOWED  A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION TWENTY-EIGHT OF
THIS CHAPTER ADDED AS PART X OF CHAPTER SIXTY-TWO OF  THE  LAWS  OF  TWO
THOUSAND  SIX,  AGAINST  THE  TAX  IMPOSED  BY  THIS ARTICLE. THE CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX DUE FOR SUCH YEAR TO LESS  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS ARTICLE.  HOWEVER, IF THE AMOUNT  OF  CREDIT  ALLOWED  UNDER
THIS  SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR
IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON  THE  FIXED  DOLLAR  MINIMUM
AMOUNT,  ANY  AMOUNT  OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN
ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
INTEREST SHALL BE PAID THEREON. THE TAX CREDIT ALLOWED PURSUANT TO  THIS
SECTION SHALL APPLY TO TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO
THOUSAND TWENTY.
  25.  CLEAN  HEATING  FUEL  CREDIT.  (A)  GENERAL.  A TAXPAYER SHALL BE
ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE.  SUCH  CREDIT,
TO  BE  COMPUTED  AS HEREINAFTER PROVIDED, SHALL BE ALLOWED FOR BIOHEAT,
USED FOR SPACE HEATING OR HOT WATER PRODUCTION FOR RESIDENTIAL  PURPOSES
WITHIN  THIS  STATE  PURCHASED BEFORE JANUARY FIRST, TWO THOUSAND SEVEN-
TEEN. SUCH CREDIT SHALL BE $0.01 PER PERCENT OF BIODIESEL PER GALLON  OF
BIOHEAT,  NOT  TO  EXCEED  TWENTY  CENTS  PER  GALLON, PURCHASED BY SUCH
TAXPAYER.
  (B) DEFINITIONS. FOR PURPOSES OF THIS SUBDIVISION, THE FOLLOWING DEFI-
NITIONS SHALL APPLY:
  (I) "BIODIESEL" SHALL MEAN A FUEL COMPRISED EXCLUSIVELY OF  MONO-ALKYL
ESTERS  OF  LONG CHAIN FATTY ACIDS DERIVED FROM VEGETABLE OILS OR ANIMAL
FATS, DESIGNATED B100, WHICH MEETS THE SPECIFICATIONS OF AMERICAN SOCIE-
TY OF TESTING AND MATERIALS DESIGNATION D 6751.
  (II) "BIOHEAT" SHALL MEAN A FUEL COMPRISED OF BIODIESEL  BLENDED  WITH
CONVENTIONAL  HOME  HEATING  OIL,  WHICH MEETS THE SPECIFICATIONS OF THE
AMERICAN SOCIETY OF TESTING AND MATERIALS DESIGNATION D 396 OR D 975.

S. 6359--B                         97                         A. 8559--B

  (C) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES  THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX
BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  26.  CREDIT FOR REHABILITATION OF HISTORIC PROPERTIES. (A) APPLICATION
OF CREDIT. (I) FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,
TWO  THOUSAND  TEN,  AND  BEFORE  JANUARY  FIRST, TWO THOUSAND TWENTY, A
TAXPAYER SHALL BE ALLOWED A CREDIT AS HEREINAFTER PROVIDED, AGAINST  THE
TAX  IMPOSED  BY THIS ARTICLE, IN AN AMOUNT EQUAL TO ONE HUNDRED PERCENT
OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME  TAXABLE  YEAR
WITH  RESPECT  TO A CERTIFIED HISTORIC STRUCTURE UNDER SUBSECTION (C)(2)
OF SECTION 47 OF THE INTERNAL REVENUE CODE WITH RESPECT TO  A  CERTIFIED
HISTORIC  STRUCTURE  LOCATED  WITHIN  THE  STATE. PROVIDED, HOWEVER, THE
CREDIT SHALL NOT EXCEED FIVE MILLION DOLLARS.
  (II) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOU-
SAND  TWENTY,  A  TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT AS HEREINAFTER
PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, IN AN AMOUNT EQUAL TO
THIRTY PERCENT OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME
TAXABLE YEAR WITH  RESPECT  TO  A  CERTIFIED  HISTORIC  STRUCTURE  UNDER
SUBSECTION  (C)(3)  OF  SECTION  47  OF  THE  INTERNAL REVENUE CODE WITH
RESPECT TO A CERTIFIED HISTORIC  STRUCTURE  LOCATED  WITHIN  THE  STATE.
PROVIDED,  HOWEVER,  THE  CREDIT  SHALL  NOT EXCEED ONE HUNDRED THOUSAND
DOLLARS.
  (B) IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP OR A SHAREHOLDER  IN
A  NEW  YORK S CORPORATION, THEN THE CREDIT CAPS IMPOSED IN SUBPARAGRAPH
(A) OF THIS PARAGRAPH SHALL BE APPLIED AT THE ENTITY LEVEL, SO THAT  THE
AGGREGATE  CREDIT  ALLOWED  TO  ALL THE PARTNERS OR SHAREHOLDERS OF EACH
SUCH ENTITY IN THE TAXABLE YEAR DOES NOT EXCEED THE CREDIT CAP  THAT  IS
APPLICABLE IN THAT TAXABLE YEAR.
  (B)  TAX CREDITS ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE ALLOWED
IN THE TAXABLE YEAR THAT  THE  QUALIFIED  REHABILITATION  IS  PLACED  IN
SERVICE UNDER SECTION 167 OF THE FEDERAL INTERNAL REVENUE CODE.
  (C)  IF  THE CREDIT ALLOWED THE TAXPAYER PURSUANT TO SECTION 47 OF THE
INTERNAL REVENUE CODE WITH RESPECT  TO  A  QUALIFIED  REHABILITATION  IS
RECAPTURED  PURSUANT  TO  SUBSECTION  (A)  OF SECTION 50 OF THE INTERNAL
REVENUE CODE, A PORTION OF THE CREDIT ALLOWED UNDER THIS SUBSECTION MUST
BE ADDED BACK IN THE SAME TAXABLE YEAR AND IN THE SAME PROPORTION AS THE
FEDERAL CREDIT.
  (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR
SHALL  NOT  REDUCE  THE  TAX  DUE  FOR SUCH YEAR TO LESS THAN THE AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
TEN  OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER
THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT  OR
IF  THE  TAXPAYER  OTHERWISE  PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM
AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH  TAXABLE  YEAR
SHALL  BE  TREATED AS AN OVERPAYMENT OF TAX TO BE RECREDITED OR REFUNDED
IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX  OF
THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF SUBSECTION (C) OF

S. 6359--B                         98                         A. 8559--B

SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTANDING,  NO
INTEREST SHALL BE PAID THEREON.
  (E)  TO  BE  ELIGIBLE FOR THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION,
THE REHABILITATION PROJECT SHALL BE IN WHOLE OR IN PART LOCATED WITHIN A
CENSUS TRACT WHICH IS IDENTIFIED  AS  BEING  AT  OR  BELOW  ONE  HUNDRED
PERCENT  OF  THE  STATE MEDIAN FAMILY INCOME AS CALCULATED AS OF JANUARY
FIRST OF EACH YEAR USING THE MOST RECENT FIVE  YEAR  ESTIMATE  FROM  THE
AMERICAN COMMUNITY SURVEY PUBLISHED BY THE UNITED STATES CENSUS BUREAU.
  27.  CREDITS  OF NEW YORK S CORPORATIONS. (A) GENERAL. NOTWITHSTANDING
THE PROVISIONS OF THIS SECTION, NO CARRYOVER OF CREDIT  ALLOWABLE  IN  A
NEW  YORK C YEAR SHALL BE DEDUCTED FROM THE TAX OTHERWISE DUE UNDER THIS
ARTICLE IN A NEW YORK S YEAR, AND NO CREDIT ALLOWABLE IN A  NEW  YORK  S
YEAR,  OR  CARRYOVER  OF  SUCH  CREDIT,  SHALL  BE DEDUCTED FROM THE TAX
IMPOSED BY THIS ARTICLE.  HOWEVER, A NEW YORK S YEAR SHALL BE TREATED AS
A TAXABLE YEAR FOR PURPOSES OF DETERMINING THE NUMBER OF  TAXABLE  YEARS
TO  WHICH A CREDIT MAY BE CARRIED OVER UNDER THIS SECTION. NOTWITHSTAND-
ING THE FIRST SENTENCE OF THIS SUBDIVISION, HOWEVER, THE CREDIT FOR  THE
SPECIAL  ADDITIONAL  MORTGAGE RECORDING TAX SHALL BE ALLOWED AS PROVIDED
IN SUBDIVISION FIFTEEN OF THIS SECTION, AND THE CARRYOVER  OF  ANY  SUCH
CREDIT  SHALL  BE  DETERMINED  WITHOUT  REGARD  TO WHETHER THE CREDIT IS
CARRIED FROM A NEW YORK C YEAR TO A NEW YORK S YEAR OR VICE-VERSA.
  29. HIRE A VET CREDIT. (A) ALLOWANCE  OF  CREDIT.  FOR  TAXABLE  YEARS
BEGINNING  ON  OR  AFTER  JANUARY FIRST, TWO THOUSAND FIFTEEN AND BEFORE
JANUARY FIRST, TWO THOUSAND SEVENTEEN, A TAXPAYER  SHALL  BE  ALLOWED  A
CREDIT,  TO BE COMPUTED AS PROVIDED IN THIS SUBDIVISION, AGAINST THE TAX
IMPOSED BY THIS ARTICLE, FOR HIRING AND EMPLOYING, FOR NOT LESS THAN ONE
YEAR AND FOR NOT LESS THAN THIRTY-FIVE  HOURS  EACH  WEEK,  A  QUALIFIED
VETERAN  WITHIN THE STATE. THE TAXPAYER MAY CLAIM THE CREDIT IN THE YEAR
IN WHICH THE QUALIFIED VETERAN COMPLETES ONE YEAR OF EMPLOYMENT  BY  THE
TAXPAYER.  IF THE TAXPAYER CLAIMS THE CREDIT ALLOWED UNDER THIS SUBDIVI-
SION, THE TAXPAYER MAY NOT USE THE HIRING OF A QUALIFIED VETERAN THAT IS
THE BASIS FOR THIS CREDIT IN THE BASIS OF ANY OTHER CREDIT ALLOWED UNDER
THIS ARTICLE.
  (B) QUALIFIED VETERAN. A QUALIFIED VETERAN IS AN INDIVIDUAL:
  (1) WHO SERVED ON ACTIVE DUTY IN THE UNITED  STATES  ARMY,  NAVY,  AIR
FORCE,  MARINE CORPS, COAST GUARD OR THE RESERVES THEREOF, OR WHO SERVED
IN ACTIVE MILITARY SERVICE OF THE UNITED STATES AS A MEMBER OF THE  ARMY
NATIONAL  GUARD,  AIR  NATIONAL  GUARD, NEW YORK GUARD OR NEW YORK NAVAL
MILITIA; WHO WAS RELEASED FROM  ACTIVE  DUTY  BY  GENERAL  OR  HONORABLE
DISCHARGE AFTER SEPTEMBER ELEVENTH, TWO THOUSAND ONE;
  (2)  WHO  COMMENCES  EMPLOYMENT  BY THE QUALIFIED TAXPAYER ON OR AFTER
JANUARY FIRST, TWO THOUSAND FOURTEEN,  AND  BEFORE  JANUARY  FIRST,  TWO
THOUSAND SIXTEEN; AND
  (3)  WHO CERTIFIES BY SIGNED AFFIDAVIT, UNDER PENALTY OF PERJURY, THAT
HE OR SHE HAS NOT BEEN EMPLOYED FOR THIRTY-FIVE OR MORE HOURS DURING ANY
WEEK IN THE ONE HUNDRED EIGHTY DAY PERIOD IMMEDIATELY PRIOR  TO  HIS  OR
HER EMPLOYMENT BY THE TAXPAYER.
  (C)  EMPLOYER PROHIBITION. AN EMPLOYER SHALL NOT DISCHARGE AN EMPLOYEE
AND HIRE A QUALIFYING VETERAN SOLELY FOR THE PURPOSE OF  QUALIFYING  FOR
THIS CREDIT.
  (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL BE TEN PERCENT OF
THE  TOTAL  AMOUNT  OF  WAGES  PAID  TO THE QUALIFIED VETERAN DURING THE
VETERAN'S FIRST FULL YEAR OF EMPLOYMENT. PROVIDED, HOWEVER, THAT, IF THE
QUALIFIED VETERAN IS A DISABLED VETERAN, AS DEFINED IN PARAGRAPH (B)  OF
SUBDIVISION  ONE  OF  SECTION  EIGHTY-FIVE OF THE CIVIL SERVICE LAW, THE
AMOUNT OF THE CREDIT SHALL BE FIFTEEN PERCENT OF  THE  TOTAL  AMOUNT  OF

S. 6359--B                         99                         A. 8559--B

WAGES PAID TO THE QUALIFIED VETERAN DURING THE VETERAN'S FIRST FULL YEAR
OF EMPLOYMENT. THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION SHALL NOT
EXCEED  IN  ANY  TAXABLE  YEAR,  FIVE THOUSAND DOLLARS FOR ANY QUALIFIED
VETERAN  AND FIFTEEN THOUSAND DOLLARS FOR ANY QUALIFIED VETERAN WHO IS A
DISABLED VETERAN.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT  ALLOWABLE
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED  DOLLAR
MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
MAY  BE  CARRIED  OVER  TO THE FOLLOWING THREE YEARS AND MAY BE DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  30. ALTERNATIVE FUELS AND ELECTRIC VEHICLE RECHARGING PROPERTY CREDIT.
(A) GENERAL. A TAXPAYER SHALL BE ALLOWED A CREDIT,  TO  BE  COMPUTED  AS
HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE FOR ALTER-
NATIVE  FUEL  VEHICLE REFUELING AND ELECTRIC VEHICLE RECHARGING PROPERTY
PLACED IN SERVICE DURING THE TAXABLE YEAR.
  (B) ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY AND  ELECTRIC  VEHICLE
RECHARGING  PROPERTY.  THE CREDIT UNDER THIS SUBDIVISION FOR ALTERNATIVE
FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE RECHARGING PROPERTY
SHALL EQUAL FOR EACH INSTALLATION OF PROPERTY THE LESSER OF  FIVE  THOU-
SAND DOLLARS OR FIFTY PERCENT OF THE COST OF ANY SUCH PROPERTY:
  (I) WHICH IS LOCATED IN THIS STATE;
  (II)  WHICH CONSTITUTES ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY OR
ELECTRIC VEHICLE RECHARGING PROPERTY; AND
  (III) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM  THE  PROCEEDS
OF  GRANTS, INCLUDING GRANTS FROM THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  (C) DEFINITIONS. (I) THE  TERM  "ALTERNATIVE  FUEL  VEHICLE  REFUELING
PROPERTY"  MEANS  ALL  OF  THE  EQUIPMENT NEEDED TO DISPENSE ANY FUEL AT
LEAST EIGHTY-FIVE PERCENT OF THE VOLUME OF WHICH CONSISTS OF ONE OR MORE
OF THE FOLLOWING: NATURAL GAS, LIQUIFIED NATURAL GAS, LIQUIFIED PETROLE-
UM, OR HYDROGEN.
  (II) THE TERM "ELECTRIC VEHICLE RECHARGING PROPERTY" MEANS ALL OF  THE
EQUIPMENT  NEEDED  TO  CONVEY  ELECTRIC  POWER FROM THE ELECTRIC GRID OR
ANOTHER POWER SOURCE TO AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  (D) CARRYOVERS. IN NO EVENT SHALL THE CREDIT UNDER THIS SUBDIVISION BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT IF  THE  AMOUNT  OF
CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND  MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (E)  CREDIT  RECAPTURE. IF, AT ANY TIME BEFORE THE END OF ITS RECOVERY
PERIOD, ALTERNATIVE FUEL VEHICLE REFUELING OR ELECTRIC VEHICLE  RECHARG-
ING  PROPERTY  CEASES  TO BE QUALIFIED, A RECAPTURE AMOUNT MUST BE ADDED
BACK IN THE YEAR IN WHICH SUCH CESSATION OCCURS.
  (I) ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY  OR  ELECTRIC  VEHICLE
RECHARGING PROPERTY CEASES TO BE QUALIFIED IF:
  (I) THE PROPERTY NO LONGER QUALIFIES AS ALTERNATIVE FUEL VEHICLE REFU-
ELING PROPERTY OR ELECTRIC VEHICLE RECHARGING PROPERTY; OR

S. 6359--B                         100                        A. 8559--B

  (II)  FIFTY  PERCENT  OR  MORE OF THE USE OF THE PROPERTY IN A TAXABLE
YEAR IS OTHER THAN IN A TRADE OR BUSINESS IN THIS STATE; OR
  (III)  THE  TAXPAYER RECEIVING THE CREDIT UNDER THIS SUBDIVISION SELLS
OR DISPOSES OF THE PROPERTY AND KNOWS OR HAS REASON  TO  KNOW  THAT  THE
PROPERTY  WILL  BE USED IN A MANNER DESCRIBED IN CLAUSES (I) AND (II) OF
THIS SUBPARAGRAPH.
  (II) RECAPTURE AMOUNT. THE RECAPTURE AMOUNT IS  EQUAL  TO  THE  CREDIT
ALLOWABLE UNDER THIS SUBDIVISION MULTIPLIED BY A FRACTION, THE NUMERATOR
OF  WHICH IS THE TOTAL RECOVERY PERIOD FOR THE PROPERTY MINUS THE NUMBER
OF RECOVERY YEARS PRIOR TO, BUT NOT INCLUDING, THE RECAPTURE  YEAR,  AND
THE DENOMINATOR OF WHICH IS THE TOTAL RECOVERY PERIOD.
  (F)  TERMINATION. THE CREDIT ALLOWED BY PARAGRAPH (B) OF THIS SUBDIVI-
SION  SHALL  NOT  APPLY  IN  TAXABLE  YEARS  BEGINNING  AFTER   DECEMBER
THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
  31. EXCELSIOR JOBS PROGRAM CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
WILL  BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION THIRTY-
ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY  TAXABLE  YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED
DOLLAR  MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  32. EMPIRE STATE FILM POST PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT.
A TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION THIRTY-ONE OF THIS  CHAP-
TER SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN SUCH SECTION
THIRTY-ONE AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT IF  THE
AMOUNT  OF  THE  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED  ON  THE  FIXED  DOLLAR  MINIMUM AMOUNT, FIFTY PERCENT OF THE
EXCESS SHALL BE TREATED AS AN OVERPAYMENT  OF  TAX  TO  BE  CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF  SUCH
CREDIT  NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE A CARRYOVER
TO THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM  THE
TAXPAYER'S  TAX  FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF THE
CREDIT OVER THE TAX FOR SUCH SUCCEEDING YEAR  SHALL  BE  TREATED  AS  AN
OVERPAYMENT  OF  TAX  TO  BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT-
Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THER-
EON.
  33. TEMPORARY DEFERRAL NONREFUNDABLE PAYOUT CREDIT. (A)  ALLOWANCE  OF
CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED

S. 6359--B                         101                        A. 8559--B

IN  SUBDIVISION  ONE OF SECTION THIRTY-FOUR OF THIS CHAPTER, AGAINST THE
TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR THAT YEAR TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  34. TEMPORARY DEFERRAL REFUNDABLE  PAYOUT  CREDIT.  (A)  ALLOWANCE  OF
CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
IN  SUBDIVISION  TWO OF SECTION THIRTY-FOUR OF THIS CHAPTER, AGAINST THE
TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. IN NO EVENT SHALL  THE  CREDIT  UNDER  THIS
SUBDIVISION  BE  ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION  TWO  HUNDRED  TEN  OF  THIS ARTICLE. IF, HOWEVER, THE AMOUNT OF
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS CHAPTER, PROVIDED HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  35.  ECONOMIC  TRANSFORMATION  AND  FACILITY REDEVELOPMENT PROGRAM TAX
CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED  A  CREDIT,
TO  BE  COMPUTED  AS  PROVIDED  IN  SECTION THIRTY-FIVE OF THIS CHAPTER,
AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY  TAXABLE  YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED
DOLLAR  MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  36. NEW YORK YOUTH WORKS TAX CREDIT. (A)  A  TAXPAYER  THAT  HAS  BEEN
CERTIFIED  BY THE COMMISSIONER OF LABOR AS A QUALIFIED EMPLOYER PURSUANT
TO SECTION TWENTY-FIVE-A OF THE LABOR LAW  SHALL  BE  ALLOWED  A  CREDIT
AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE  EQUAL TO (I) FIVE HUNDRED
DOLLARS PER MONTH FOR UP TO SIX MONTHS FOR EACH QUALIFIED  EMPLOYEE  THE
EMPLOYER  EMPLOYS  IN  A  FULL-TIME JOB OR TWO HUNDRED FIFTY DOLLARS PER
MONTH FOR UP TO SIX MONTHS FOR  EACH  QUALIFIED  EMPLOYEE  THE  EMPLOYER
EMPLOYS  IN  A  PART-TIME  JOB  OF AT LEAST TWENTY HOURS PER WEEK OR TEN
HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED  IN  HIGH  SCHOOL
FULL-TIME,  (II) ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS
EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY THE QUALIFIED EMPLOYER
IN A FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH  QUALIFIED  EMPLOYEE
WHO  IS  EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY THE QUALIFIED
EMPLOYER IN A PART-TIME JOB OF AT LEAST TWENTY HOURS  PER  WEEK  OR  TEN
HOURS  PER  WEEK  WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH SCHOOL

S. 6359--B                         102                        A. 8559--B

FULL-TIME, AND (III) AN ADDITIONAL ONE THOUSAND DOLLARS FOR EACH  QUALI-
FIED  EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER THE
FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER  IN  A
FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS
EMPLOYED  FOR  AT  LEAST  AN ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE
EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT
LEAST TWENTY HOURS PER WEEK OR TEN HOURS PER  WEEK  WHEN  THE  QUALIFIED
EMPLOYEE  IS  ENROLLED  IN  HIGH  SCHOOL FULL-TIME. FOR PURPOSES OF THIS
SUBDIVISION, THE TERM "QUALIFIED EMPLOYEE" SHALL HAVE THE  SAME  MEANING
AS  SET  FORTH  IN SUBDIVISION (B) OF SECTION TWENTY-FIVE-A OF THE LABOR
LAW. THE PORTION OF THE CREDIT DESCRIBED IN  SUBPARAGRAPH  (I)  OF  THIS
PARAGRAPH  SHALL  BE ALLOWED FOR THE TAXABLE YEAR IN WHICH THE WAGES ARE
PAID TO THE QUALIFIED EMPLOYEE, AND THE PORTION OF THE CREDIT  DESCRIBED
IN  SUBPARAGRAPH  (II) OF THIS PARAGRAPH SHALL BE ALLOWED IN THE TAXABLE
YEAR IN WHICH THE ADDITIONAL SIX MONTH PERIOD ENDS.
  (B) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR MAY
NOT REDUCE THE TAX DUE FOR THAT YEAR TO LESS THAN THE AMOUNT  PRESCRIBED
IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS
ARTICLE. HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS  SUBDI-
VISION  FOR  ANY  TAXABLE  YEAR REDUCES THE TAX TO THAT AMOUNT OR IF THE
TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED  DOLLAR  MINIMUM  AMOUNT,
ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN THAT TAXABLE YEAR WILL BE TREATED
AS  AN  OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF  THIS  CHAPTER.
PROVIDED, HOWEVER, NO INTEREST WILL BE PAID THEREON.
  (C)  THE  TAXPAYER  MAY  BE  REQUIRED  TO ATTACH TO ITS TAX RETURN ITS
CERTIFICATE OF ELIGIBILITY ISSUED BY THE COMMISSIONER OF LABOR  PURSUANT
TO SECTION TWENTY-FIVE-A OF THE LABOR LAW. IN NO EVENT SHALL THE TAXPAY-
ER  BE  ALLOWED A CREDIT GREATER THAN THE AMOUNT OF THE CREDIT LISTED ON
THE CERTIFICATE OF ELIGIBILITY. NOTWITHSTANDING ANY  PROVISION  OF  THIS
CHAPTER  TO THE CONTRARY, THE COMMISSIONER AND THE COMMISSIONER'S DESIG-
NEES MAY RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER  CLAIMING  THIS
CREDIT  AND  THE AMOUNT OF THE CREDIT EARNED BY THE TAXPAYER.  PROVIDED,
HOWEVER, IF A TAXPAYER CLAIMS THIS CREDIT BECAUSE IT IS A  MEMBER  OF  A
LIMITED LIABILITY COMPANY OR A PARTNER IN A PARTNERSHIP, ONLY THE AMOUNT
OF  CREDIT  EARNED BY THE ENTITY AND NOT THE AMOUNT OF CREDIT CLAIMED BY
THE TAXPAYER MAY BE RELEASED.
  37. EMPIRE STATE JOBS RETENTION PROGRAM CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER WILL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED  IN
SECTION  THIRTY-SIX  OF  THIS CHAPTER, AGAINST THE TAXES IMPOSED BY THIS
ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY  TAXABLE YEAR WILL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED
DOLLAR  MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  38. CREDIT FOR COMPANIES WHO  PROVIDE  TRANSPORTATION  TO  INDIVIDUALS
WITH  DISABILITIES.  (A) ALLOWANCE AND AMOUNT OF CREDIT. A TAXPAYER, WHO
PROVIDES  A  TAXICAB  SERVICE  AS  DEFINED  IN   SECTION   ONE   HUNDRED

S. 6359--B                         103                        A. 8559--B

FORTY-EIGHT-A  OF  THE  VEHICLE  AND TRAFFIC LAW, OR A LIVERY SERVICE AS
DEFINED IN SECTION ONE HUNDRED TWENTY-ONE-E OF THE VEHICLE  AND  TRAFFIC
LAW,  SHALL  BE  ALLOWED  A  CREDIT,  TO BE COMPUTED AS PROVIDED IN THIS
SUBDIVISION,  AGAINST THE TAX IMPOSED BY THIS ARTICLE. THE AMOUNT OF THE
CREDIT SHALL BE EQUAL TO THE INCREMENTAL COST ASSOCIATED WITH  UPGRADING
A  VEHICLE  SO THAT IT IS ACCESSIBLE BY INDIVIDUALS WITH DISABILITIES AS
DEFINED IN PARAGRAPH (B) OF THIS SUBDIVISION.  PROVIDED,  HOWEVER,  THAT
SUCH  CREDIT  SHALL  NOT  EXCEED  TEN  THOUSAND DOLLARS PER VEHICLE. FOR
PURPOSES OF  THIS  SUBDIVISION,  PURCHASES  OF  NEW  VEHICLES  THAT  ARE
INITIALLY  MANUFACTURED  TO BE ACCESSIBLE FOR INDIVIDUALS WITH DISABILI-
TIES AND FOR WHICH THERE IS NO COMPARABLE MAKE AND MODEL THAT  DOES  NOT
INCLUDE  THE EQUIPMENT NECESSARY TO PROVIDE ACCESSIBILITY TO INDIVIDUALS
WITH DISABILITIES, THE CREDIT SHALL BE TEN THOUSAND DOLLARS PER VEHICLE.
  (B) DEFINITION. THE TERM "ACCESSIBLE BY INDIVIDUALS WITH DISABILITIES"
SHALL, FOR THE PURPOSES OF THIS SUBDIVISION, REFER  TO  A  VEHICLE  THAT
COMPLIES  WITH FEDERAL REGULATIONS PROMULGATED PURSUANT TO THE AMERICANS
WITH DISABILITIES ACT  APPLICABLE  TO  VANS  UNDER  TWENTY-TWO  FEET  IN
LENGTH,  BY THE FEDERAL DEPARTMENT OF TRANSPORTATION, IN CODE OF FEDERAL
REGULATIONS, TITLE 49, PARTS 37 AND 38, AND BY THE FEDERAL  ARCHITECTURE
AND  TRANSPORTATION  BARRIERS COMPLIANCE BOARD, IN CODE OF FEDERAL REGU-
LATIONS, TITLE 36, SECTION 1192.23, AND THE FEDERAL MOTOR VEHICLE SAFETY
STANDARDS, CODE OF FEDERAL REGULATIONS, TITLE 49, PART 57.
  (C) APPLICATION OF CREDIT. IN NO EVENT SHALL THE CREDIT ALLOWED  UNDER
THIS  SUBDIVISION  FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH YEAR
TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF  SUBDIVISION  ONE
OF  SECTION  TWO  HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR SHALL BE CARRIED OVER TO THE FOLLOWING YEAR OR  YEARS,
AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  39.  BEER  PRODUCTION CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO
BE COMPUTED AS PROVIDED IN SECTION THIRTY-SEVEN OF THIS CHAPTER, AGAINST
THE TAX IMPOSED BY THIS ARTICLE. IN NO EVENT SHALL  THE  CREDIT  ALLOWED
UNDER  THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH
YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  REDUCES
THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON
THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCT-
IBLE  IN  SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS
OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  40. MINIMUM WAGE REIMBURSEMENT CREDIT.  (A)  ALLOWANCE  OF  CREDIT.  A
TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS PROVIDED IN
SECTION THIRTY-EIGHT OF THIS CHAPTER, AGAINST THE TAX  IMPOSED  BY  THIS
ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH

S. 6359--B                         104                        A. 8559--B

TAXABLE  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  41. THE TAX-FREE NY AREA TAX ELIMINATION CREDIT. A TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT  TO  BE COMPUTED AS PROVIDED IN SECTION FORTY OF THIS
CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.  UNLESS  THE  TAXPAYER
HAS  A  TAX-FREE  NY  AREA ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  SHALL  NOT
REDUCE  THE  TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN
PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION  TWO  HUNDRED  TEN  OF  THIS
ARTICLE.  HOWEVER,  ANY  AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF  TAX  TO  BE  CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  42. ALTERNATIVE BASE CREDIT. (A) IF THE TAX IMPOSED ON A  TAXPAYER  BY
SUBDIVISION  ONE  OF  SECTION  TWO  HUNDRED  NINE OF THIS ARTICLE IS THE
AMOUNT PRESCRIBED IN PARAGRAPH (B) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS  ARTICLE,  THE TAXPAYER SHALL BE ALLOWED A CREDIT
AGAINST THE TAX IMPOSED UNDER THIS ARTICLE EQUAL TO THE  AMOUNT  OF  TAX
PAID  TO  ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE TAX BASE
PRESCRIBED IN SUCH PARAGRAPH (B). IF THE TAX IMPOSED ON  A  TAXPAYER  BY
SUBDIVISION  ONE  OF  SECTION  TWO  HUNDRED  NINE OF THIS ARTICLE IS THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS  ARTICLE,  THE TAXPAYER SHALL BE ALLOWED A CREDIT
AGAINST THE TAX IMPOSED UNDER THIS ARTICLE EQUAL TO THE  AMOUNT  OF  TAX
PAID  TO  ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE TAX BASE
PRESCRIBED IN SUCH PARAGRAPH (D).
  (B) IN NO EVENT SHALL THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION  FOR
ANY  TAXABLE  YEAR  REDUCE  THE  TAX  DUE FOR SUCH YEAR TO LESS THAN THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWED
UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE  TAX  TO  SUCH
AMOUNT  OR  IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR
MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR SHALL BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS,  AND  MAY  BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  43.  REAL  PROPERTY  TAX CREDIT FOR MANUFACTURERS. (A) A QUALIFIED NEW
YORK MANUFACTURER, AS DEFINED IN  SUBDIVISION  FIFTEEN  OF  SECTION  TWO
HUNDRED  EIGHT OF THIS ARTICLE, WILL BE ALLOWED A CREDIT EQUAL TO TWENTY
PERCENT OF THE REAL PROPERTY TAX IT PAID DURING  THE  TAXABLE  YEAR  FOR
REAL  PROPERTY  OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCI-
PALLY USED DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE  EXTENT  NOT
DEDUCTED  IN  DETERMINING    ENTIRE  NET INCOME. THIS CREDIT WILL NOT BE
ALLOWED IF THE REAL PROPERTY TAXES THAT ARE THE BASIS  FOR  THIS  CREDIT
ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY-
ER.
  (B)  (1)  FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX
MEANS A CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF  A  COUNTY,
CITY,  TOWN, VILLAGE OR SCHOOL DISTRICT FOR MUNICIPAL OR SCHOOL DISTRICT
PURPOSES, PROVIDED THAT THE CHARGE IS  LEVIED  FOR  THE  GENERAL  PUBLIC
WELFARE  BY  THE  PROPER  TAXING  AUTHORITIES AT A LIKE RATE AGAINST ALL
PROPERTY OVER WHICH SUCH AUTHORITIES  HAVE  JURISDICTION,  AND  PROVIDED

S. 6359--B                         105                        A. 8559--B

THAT  WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN OF
THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
DETERMINED FOR THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED  BY  SUCH
ARTICLE  EIGHTEEN  OR  NINETEEN,  WHICHEVER IS APPLICABLE. THE TERM REAL
PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
ABLE TO MAINTENANCE OR INTEREST, WHEN (I) THE PROPERTY  SUBJECT  TO  THE
CHARGE IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (II)
THE  AMOUNT  OF  THE CHARGE IS DETERMINED BY THE BENEFIT TO THE PROPERTY
ASSESSED, OR (III) THE IMPROVEMENT FOR  WHICH  THE  CHARGE  IS  ASSESSED
TENDS TO INCREASE THE PROPERTY VALUE.
  (2) IN ADDITION, THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY THE
TAXPAYER  UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR BY
THE TAXPAYER IN MANUFACTURING WHERE THE TAXPAYER LEASES SUCH REAL  PROP-
ERTY  FROM  AN  UNRELATED  THIRD  PARTY  IF THE FOLLOWING CONDITIONS ARE
SATISFIED: (I) THE TAX MUST BE PAID BY THE TAXPAYER AS  LESSEE  PURSUANT
TO  EXPLICIT  REQUIREMENTS  IN A WRITTEN LEASE, AND (II) THE TAXPAYER AS
LESSEE HAS PAID SUCH TAXES DIRECTLY TO  THE  TAXING  AUTHORITY  AND  HAS
RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI-
TY.  IN  THE  CASE  OF A COMBINED GROUP THAT CONSTITUTES A QUALIFIED NEW
YORK MANUFACTURER, THE CONDITIONS IN THE PRECEDING SENTENCE  ARE  SATIS-
FIED  IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND ANOTHER
CORPORATION IN THE COMBINED GROUP  MAKES  THE  PAYMENTS  TO  THE  TAXING
AUTHORITY.
  (3)  THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY THE
TAXPAYER IN CONNECTION WITH AN AGREEMENT FOR  THE  PAYMENT  IN  LIEU  OF
TAXES  ON REAL PROPERTY, WHETHER SUCH PROPERTY IS OWNED OR LEASED BY THE
TAXPAYER.
  (4) THE REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN  THE  YEAR
SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY.
  (C)  CREDIT  RECAPTURE. WHERE A QUALIFIED NEW YORK MANUFACTURER'S REAL
PROPERTY TAXES WHICH WERE THE BASIS FOR  THE  ALLOWANCE  OF  THE  CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY  TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK, IN
THE TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF  (1)
THE  AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2) THE
AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY  TAXES.
IF  SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR,
THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION  IS  ATTRIBUTABLE
TO  EACH  YEAR  COVERED  BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF
CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED  FOR  EACH
YEAR BASED ON SUCH REDUCTION.
  (D)  THE  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS CHAPTER. HOWEVER, ANY AMOUNT OF  CREDIT  NOT  DEDUCTIBLE  IN
SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CRED-
ITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE  THOU-
SAND  EIGHTY-SIX  OF  THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  44.  THE  TAX-FREE  NY  AREA  EXCISE TAX ON TELECOMMUNICATION SERVICES
CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF  A  BUSINESS  THAT  IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE  ECONOMIC  DEVELOPMENT  LAW  SHALL  BE ALLOWED A CREDIT EQUAL TO THE

S. 6359--B                         106                        A. 8559--B

EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED
EIGHTY-SIX-E  OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING
THE TAXABLE YEAR TO THE  EXTENT  NOT  OTHERWISE  DEDUCTED  IN  COMPUTING
ENTIRE  NET INCOME UNDER THIS ARTICLE. HOWEVER, ANY AMOUNT OF CREDIT NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS  CHAPTER.  THIS  CREDIT  MAY  BE
CLAIMED  ONLY  WHERE  ANY  TAX  IMPOSED  BY  SUCH  SECTION  ONE  HUNDRED
EIGHTY-SIX-E HAS BEEN SEPARATELY STATED ON A BILL FROM THE  PROVIDER  OF
TELECOMMUNICATION  SERVICES  AND  PAID  BY SUCH BUSINESS WITH RESPECT TO
SUCH SERVICES RENDERED WITHIN A TAX-FREE  NY  AREA  DURING  THE  TAXABLE
YEAR.  UNLESS  THE  TAXPAYER HAS A TAX-FREE NY AREA ALLOCATION FACTOR OF
ONE HUNDRED PERCENT, THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY
TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  45. ORDER OF CREDITS. (A) CREDITS ALLOWABLE UNDER THIS  ARTICLE  WHICH
CANNOT  BE  CARRIED  OVER AND WHICH ARE NOT REFUNDABLE SHALL BE DEDUCTED
FIRST. THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION  SHALL
BE  DEDUCTED  IMMEDIATELY  AFTER  THE DEDUCTION OF ALL CREDITS ALLOWABLE
UNDER THIS ARTICLE WHICH CANNOT  BE  CARRIED  OVER  AND  WHICH  ARE  NOT
REFUNDABLE,  WHETHER  OR  NOT  A  PORTION  OF SUCH CREDIT IS REFUNDABLE.
CREDITS ALLOWABLE UNDER THIS ARTICLE WHICH  CAN  BE  CARRIED  OVER,  AND
CARRYOVERS  OF  SUCH CREDITS, SHALL BE DEDUCTED NEXT AFTER THE DEDUCTION
OF THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION, AND AMONG
SUCH CREDITS, THOSE WHOSE CARRYOVER IS  OF  LIMITED  DURATION  SHALL  BE
DEDUCTED  BEFORE THOSE WHOSE CARRYOVER IS OF UNLIMITED DURATION. CREDITS
ALLOWABLE UNDER THIS ARTICLE WHICH ARE REFUNDABLE (OTHER THAN THE CREDIT
ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION) SHALL BE DEDUCTED LAST.
  46. NOTWITHSTANDING THE REPEAL OF THE CREDIT PROVISIONS  CONTAINED  IN
SECTION TWO HUNDRED TEN OF THIS ARTICLE OR IN ARTICLE THIRTY-TWO OF THIS
CHAPTER  AND  THE  ENACTMENT OF THIS SECTION BY A CHAPTER OF THE LAWS OF
TWO THOUSAND FOURTEEN:
  (A) A TAXPAYER SHALL BE ALLOWED TO UTILIZE ANY CARRYFORWARD AMOUNTS OF
CREDITS TO WHICH THE TAXPAYER WAS ENTITLED AS OF THE CLOSE OF THE  TAXA-
BLE  YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN AND
BEFORE JANUARY FIRST, TWO THOUSAND FIFTEEN, OTHER THAN THE  CARRYFORWARD
AMOUNT  OF THE MINIMUM TAX CREDIT PROVIDED UNDER SUBDIVISION THIRTEEN OF
SECTION TWO HUNDRED TEN, AS THAT SUBDIVISION WAS IN EFFECT  ON  DECEMBER
THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (B)  A  TAXPAYER  SHALL  BE REQUIRED IN A TAXABLE YEAR BEGINNING ON OR
AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, TO RECAPTURE ALL OR A PORTION
OF A CREDIT ALLOWED UNDER A CREDIT PROVISION IN SECTION TWO HUNDRED  TEN
OR ARTICLE THIRTY-TWO OF THIS CHAPTER FOR A TAXABLE YEAR BEGINNING PRIOR
TO  JANUARY  FIRST,  TWO  THOUSAND  FIFTEEN IF RECAPTURE WOULD HAVE BEEN
REQUIRED UNDER SUCH CREDIT PROVISION.
  47. (A) EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVI-
SION, IN ANY TAXABLE YEAR, A TAXPAYER MUST FIRST CLAIM ANY OF THE  CRED-
ITS  SPECIFIED  IN  THIS SECTION ON ITS ORIGINALLY FILED REPORT FOR SUCH
TAXABLE YEAR. A TAXPAYER SHALL NOT FIRST CLAIM A CREDIT  ON  AN  AMENDED
REPORT.
  (B)  A  TAXPAYER  MAY  FIRST  CLAIM A CREDIT ON AN AMENDED REPORT ONLY
UNDER THE FOLLOWING CIRCUMSTANCES:

S. 6359--B                         107                        A. 8559--B

  (I) THE TAXPAYER'S ELIGIBILITY FOR THE CREDIT OR  THE  AMOUNT  OF  THE
CREDIT  THE  TAXPAYER  IS  ALLOWED  IS DETERMINED BY A GOVERNMENT AGENCY
OTHER THAN THE DEPARTMENT.
  (II) THE INFORMATION NECESSARY TO DETERMINE THE TAXPAYER'S ELIGIBILITY
FOR  A  CREDIT  OR  THE  AMOUNT OF THE CREDIT ALLOWED IS CONTAINED IN AN
INFORMATION RETURN THE TAXPAYER RECEIVES AFTER THE ORIGINAL  RETURN  FOR
THE TAXABLE YEAR IS FILED.
  (III) THE TAXPAYER IS REQUIRED TO FILE AN AMENDED REPORT FOR A TAXABLE
YEAR PURSUANT TO SUBDIVISION THREE OF SECTION TWO HUNDRED ELEVEN OF THIS
ARTICLE  AND  THE  CHANGES OR CORRECTIONS THAT NECESSITATE THE FILING OF
SUCH AMENDED REPORT IMPACT THE TAXPAYER'S ELIGIBILITY FOR  A  CREDIT  OR
THE AMOUNT OF CREDIT THAT MAY BE CLAIMED IN THAT TAXABLE YEAR.
  S  18. The tax law is amended by adding a new section 210-C to read as
follows:
  S 210-C. COMBINED REPORTS. 1. TAX. THE TAX ON A COMBINED REPORT  SHALL
BE  THE HIGHEST OF THE PRODUCTS OF (I) THE COMBINED BUSINESS INCOME BASE
MULTIPLIED BY THE TAX RATE SPECIFIED IN PARAGRAPH (A) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE; (II)  THE  COMBINED  CAPITAL
BASE  MULTIPLIED  BY THE TAX RATE SPECIFIED IN PARAGRAPH (B) OF SUBDIVI-
SION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE, BUT  NOT  EXCEEDING
THE  LIMITATION  PROVIDED  FOR IN THAT PARAGRAPH (B); OR (III) THE FIXED
DOLLAR MINIMUM THAT IS ATTRIBUTABLE  TO  THE  DESIGNATED  AGENT  OF  THE
COMBINED  GROUP. IN ADDITION, THE TAX ON A COMBINED REPORT SHALL INCLUDE
THE FIXED DOLLAR MINIMUM TAX SPECIFIED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF  SECTION  TWO HUNDRED TEN OF THIS ARTICLE FOR EACH MEMBER OF THE
COMBINED GROUP, OTHER THAN THE DESIGNATED AGENT, THAT IS A TAXPAYER.
  (B) THE COMBINED BUSINESS INCOME BASE IS THE AMOUNT  OF  THE  COMBINED
BUSINESS  INCOME OF THE COMBINED GROUP THAT IS APPORTIONED TO THE STATE,
REDUCED BY ANY NET OPERATING LOSS DEDUCTION FOR THE COMBINED GROUP.  THE
COMBINED CAPITAL BASE IS THE AMOUNT  OF  THE  COMBINED  CAPITAL  OF  THE
COMBINED GROUP THAT IS APPORTIONED TO THE STATE.
  2.  COMBINED REPORTS REQUIRED. (A) EXCEPT AS PROVIDED IN PARAGRAPH (C)
OF THIS SUBDIVISION, ANY TAXPAYER (I)  WHICH  OWNS  OR  CONTROLS  EITHER
DIRECTLY  OR  INDIRECTLY MORE THAN FIFTY PERCENT OF THE CAPITAL STOCK OF
ONE OR MORE OTHER CORPORATIONS, OR (II) MORE THAN FIFTY PERCENT  OF  THE
CAPITAL  STOCK  OF WHICH IS OWNED OR CONTROLLED EITHER DIRECTLY OR INDI-
RECTLY BY ONE OR MORE OTHER  CORPORATIONS,  OR  (III)  MORE  THAN  FIFTY
PERCENT  OF  THE  CAPITAL STOCK OF WHICH AND THE CAPITAL STOCK OF ONE OR
MORE OTHER CORPORATIONS, IS OWNED OR CONTROLLED, DIRECTLY OR INDIRECTLY,
BY THE SAME INTERESTS, AND (IV) THAT IS ENGAGED IN  A  UNITARY  BUSINESS
WITH  THOSE  CORPORATIONS, SHALL MAKE A COMBINED REPORT WITH THOSE OTHER
CORPORATIONS.
  (B) A CORPORATION REQUIRED TO MAKE A COMBINED REPORT WITHIN THE  MEAN-
ING  OF THIS SECTION SHALL ALSO INCLUDE (I) A CAPTIVE REIT AND A CAPTIVE
RIC IF THE CAPTIVE REIT OR CAPTIVE RIC IS NOT REQUIRED TO BE INCLUDED IN
A COMBINED REPORT UNDER ARTICLE THIRTY-THREE OF  THIS  CHAPTER;  (II)  A
COMBINABLE  CAPTIVE  INSURANCE  COMPANY;  AND (III) AN ALIEN CORPORATION
THAT SATISFIES THE CONDITIONS IN PARAGRAPH (A) OF  THIS  SUBDIVISION  IF
(I)  UNDER  ANY PROVISION OF THE INTERNAL REVENUE CODE, THAT CORPORATION
IS TREATED AS A "DOMESTIC CORPORATION" AS DEFINED IN SECTION SEVEN THOU-
SAND SEVEN HUNDRED ONE OF THE INTERNAL REVENUE  CODE,  OR  (II)  IT  HAS
EFFECTIVELY  CONNECTED  INCOME  FOR  THE TAXABLE YEAR PURSUANT TO CLAUSE
(IV) OF THE OPENING PARAGRAPH OF SUBDIVISION NINE OF SECTION TWO HUNDRED
EIGHT OF THIS ARTICLE.
  (C) A CORPORATION REQUIRED OR PERMITTED  TO  MAKE  A  COMBINED  REPORT
UNDER THIS SECTION DOES NOT INCLUDE (I) A CORPORATION THAT IS SUBJECT TO

S. 6359--B                         108                        A. 8559--B

FRANCHISE TAX UNDER ARTICLE NINE OR THIRTY-THREE OF THIS CHAPTER; (II) A
REIT  THAT  IS  NOT A CAPTIVE REIT, AND A RIC THAT IS NOT A CAPTIVE RIC;
(III) A NEW YORK S CORPORATION; (IV) A CORPORATION THAT  IS  SUBJECT  TO
TAX  UNDER THIS ARTICLE SOLELY AS A RESULT OF ITS OWNERSHIP OF A LIMITED
PARTNER INTEREST IN  A  LIMITED  PARTNERSHIP  THAT  IS  DOING  BUSINESS,
EMPLOYING  CAPITAL, OWNING OR LEASING PROPERTY, MAINTAINING AN OFFICE IN
THIS STATE, OR DERIVING RECEIPTS FROM ACTIVITY IN THIS  STATE,  PROVIDED
THAT THE CORPORATION IS NOT OTHERWISE REQUIRED TO FILE A COMBINED REPORT
PURSUANT TO THIS SECTION; OR (V) AN ALIEN CORPORATION THAT HAS NO EFFEC-
TIVELY  CONNECTED INCOME FOR THE TAXABLE YEAR PURSUANT TO CLAUSE (IV) OF
THE OPENING PARAGRAPH OF SUBDIVISION NINE OF SECTION TWO  HUNDRED  EIGHT
OF THIS ARTICLE.
  (D)  A  COMBINED  REPORT SHALL BE FILED BY THE DESIGNATED AGENT OF THE
COMBINED GROUP AS DETERMINED UNDER SUBDIVISION SEVEN OF THIS SECTION.
  3. COMMONLY OWNED GROUP ELECTION. (A) SUBJECT  TO  THE  PROVISIONS  OF
PARAGRAPH  (C)  OF SUBDIVISION TWO OF THIS SECTION, A TAXPAYER MAY ELECT
TO TREAT AS ITS COMBINED GROUP ALL CORPORATIONS THAT MEET THE  OWNERSHIP
REQUIREMENTS  DESCRIBED  IN  PARAGRAPH  (A)  OF  SUBDIVISION TWO OF THIS
SECTION (SUCH CORPORATIONS COLLECTIVELY REFERRED TO IN THIS  SUBDIVISION
AS  THE  "COMMONLY OWNED GROUP"). IF THAT ELECTION IS MADE, THE COMMONLY
OWNED GROUP SHALL CALCULATE THE COMBINED BUSINESS INCOME, COMBINED CAPI-
TAL, AND FIXED DOLLAR MINIMUM BASES OF  ALL  MEMBERS  OF  THE  GROUP  IN
ACCORDANCE  WITH PARAGRAPH FOUR OF THIS SUBDIVISION, WHETHER OR NOT THAT
BUSINESS INCOME OR BUSINESS CAPITAL IS FROM A SINGLE UNITARY BUSINESS.
  (B) THE ELECTION UNDER THIS SUBDIVISION SHALL BE MADE ON AN  ORIGINAL,
TIMELY  FILED  RETURN  OF THE COMBINED GROUP. ANY CORPORATION ENTERING A
COMMONLY OWNED GROUP  SUBSEQUENT  TO  THE  YEAR  OF  ELECTION  SHALL  BE
INCLUDED  IN  THE  COMBINED  GROUP  AND IS CONSIDERED TO HAVE WAIVED ANY
OBJECTION TO ITS INCLUSION IN THE COMBINED GROUP.
  (C) THE ELECTION SHALL BE IRREVOCABLE, AND BINDING FOR AND  APPLICABLE
TO  THE  TAXABLE  YEAR FOR WHICH IT IS MADE AND FOR THE NEXT SIX TAXABLE
YEARS. THE ELECTION WILL AUTOMATICALLY  BE  RENEWED  FOR  ANOTHER  SEVEN
TAXABLE YEARS AFTER IT HAS BEEN IN EFFECT FOR SEVEN TAXABLE YEARS UNLESS
IT  IS  AFFIRMATIVELY  REVOKED.  THE  REVOCATION  SHALL  BE  MADE  ON AN
ORIGINAL, TIMELY FILED RETURN FOR  THE  FIRST  TAXABLE  YEAR  AFTER  THE
COMPLETION  OF  A  SEVEN  YEAR  PERIOD  FOR WHICH AN ELECTION UNDER THIS
SUBDIVISION WAS IN PLACE. IN THE CASE OF A REVOCATION,  A  NEW  ELECTION
UNDER  THIS SUBDIVISION SHALL NOT BE PERMITTED IN ANY OF THE IMMEDIATELY
FOLLOWING THREE TAXABLE YEARS. IN DETERMINING THE SEVEN AND  THREE  YEAR
PERIODS  DESCRIBED  IN  THIS PARAGRAPH, SHORT TAXABLE YEARS SHALL NOT BE
CONSIDERED OR COUNTED.
  4. COMPUTATION OF TAX BASES ON A COMBINED REPORT. (A) IN COMPUTING THE
TAX BASES FOR A COMBINED REPORT, THE COMBINED GROUP SHALL  GENERALLY  BE
TREATED  AS  A  SINGLE  CORPORATION,  EXCEPT  AS OTHERWISE PROVIDED, AND
SUBJECT TO ANY REGULATIONS OR GUIDANCE ISSUED BY THE COMMISSIONER OR THE
DEPARTMENT.
  (B)(I) IN COMPUTING COMBINED BUSINESS INCOME, ALL INTERCORPORATE DIVI-
DENDS SHALL BE ELIMINATED, AND  ALL  OTHER  INTERCORPORATE  TRANSACTIONS
SHALL  BE  DEFERRED  IN  A  MANNER SIMILAR TO THE UNITED STATES TREASURY
REGULATIONS RELATING TO INTERCOMPANY TRANSACTIONS UNDER SECTION  FIFTEEN
HUNDRED TWO OF THE INTERNAL REVENUE CODE.
  (II)  IN COMPUTING COMBINED CAPITAL, ALL INTERCORPORATE STOCKHOLDINGS,
INTERCORPORATE  BILLS,  INTERCORPORATE  NOTES  RECEIVABLE  AND  PAYABLE,
INTERCORPORATE ACCOUNTS RECEIVABLE AND PAYABLE, AND OTHER INTERCORPORATE
INDEBTEDNESS, SHALL BE ELIMINATED.

S. 6359--B                         109                        A. 8559--B

  (C)  QUALIFICATION  FOR  CREDITS,  INCLUDING  ANY LIMITATIONS THEREON,
SHALL BE DETERMINED SEPARATELY FOR EACH OF THE MEMBERS OF  THE  COMBINED
GROUP,  AND SHALL NOT BE DETERMINED ON A COMBINED GROUP BASIS, EXCEPT AS
OTHERWISE PROVIDED. HOWEVER, THE CREDITS SHALL BE  APPLIED  AGAINST  THE
COMBINED TAX OF THE GROUP. TO THE EXTENT THAT A PROVISION OF SECTION TWO
HUNDRED  TEN-B OF THIS ARTICLE LIMITS A CREDIT TO THE FIXED DOLLAR MINI-
MUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE, SUCH FIXED DOLLAR MINIMUM AMOUNT  SHALL  BE
THE  FIXED  DOLLAR MINIMUM AMOUNT THAT IS ATTRIBUTABLE TO THE DESIGNATED
AGENT OF THE COMBINED GROUP.
  (D)(I) A NET OPERATING LOSS DEDUCTION  IS  ALLOWED  IN  COMPUTING  THE
COMBINED  BUSINESS INCOME BASE. SUCH DEDUCTION MAY REDUCE THE TAX ON THE
COMBINED BUSINESS INCOME BASE TO THE HIGHER OF THE TAX ON  THE  COMBINED
CAPITAL  BASE OR THE FIXED DOLLAR MINIMUM. A COMBINED NET OPERATING LOSS
DEDUCTION IS EQUAL TO THE AMOUNT OF COMBINED NET OPERATING LOSS OR LOSS-
ES FROM ONE OR MORE TAXABLE YEARS THAT ARE CARRIED FORWARD TO A  PARTIC-
ULAR INCOME YEAR. A COMBINED NET OPERATING LOSS IS THE COMBINED BUSINESS
LOSS  INCURRED  IN  A PARTICULAR TAXABLE YEAR MULTIPLIED BY THE COMBINED
APPORTIONMENT FACTOR FOR THAT YEAR DETERMINED AS PROVIDED IN SUBDIVISION
FIVE OF THIS SECTION.
  (II) THE COMBINED NET OPERATING LOSS DEDUCTION AND COMBINED NET  OPER-
ATING  LOSS  ARE ALSO SUBJECT TO THE PROVISIONS CONTAINED IN CLAUSES ONE
THROUGH SIX OF SUBPARAGRAPH (VIII) OF PARAGRAPH (A) OF  SUBDIVISION  ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  (III)  IN  THE  CASE  OF  A  CORPORATION THAT FILES A COMBINED REPORT,
EITHER IN THE YEAR THE NET OPERATING LOSS IS INCURRED OR IN THE YEAR  IN
WHICH  A  DEDUCTION  IS CLAIMED ON ACCOUNT OF THE LOSS, THE COMBINED NET
OPERATING LOSS DEDUCTION IS DETERMINED AS IF THE  COMBINED  GROUP  IS  A
SINGLE  CORPORATION  AND  IS  SUBJECT TO THE SAME LIMITATIONS THAT WOULD
APPLY FOR FEDERAL INCOME TAX PURPOSES UNDER THE  INTERNAL  REVENUE  CODE
AND THE CODE OF FEDERAL REGULATIONS AS IF SUCH CORPORATION HAD FILED FOR
SUCH TAXABLE YEAR A CONSOLIDATED FEDERAL INCOME TAX RETURN WITH THE SAME
CORPORATIONS  INCLUDED  IN THE COMBINED REPORT. IF A CORPORATION FILES A
COMBINED REPORT, REGARDLESS OF WHETHER IT FILED  A  SEPARATE  RETURN  OR
CONSOLIDATED  RETURN  FOR FEDERAL INCOME TAX PURPOSES, THE NET OPERATING
LOSS AND NET OPERATING LOSS DEDUCTION FOR THE  COMBINED  GROUP  MUST  BE
COMPUTED  AS  IF THE CORPORATION HAD FILED A CONSOLIDATED RETURN FOR THE
SAME CORPORATIONS FOR FEDERAL INCOME TAX PURPOSES.
  (IV) IN GENERAL, ANY NET OPERATING LOSS CARRYOVER FROM A YEAR IN WHICH
A COMBINED REPORT WAS FILED SHALL BE BASED ON THE COMBINED NET OPERATING
LOSS OF THE GROUP OF CORPORATIONS FILING SUCH REPORT. THE PORTION OF THE
COMBINED LOSS ATTRIBUTABLE TO ANY MEMBER OF THE GROUP THAT FILES A SEPA-
RATE REPORT FOR A SUCCEEDING TAXABLE YEAR WILL BE AN AMOUNT BEARING  THE
SAME  RELATION  TO  THE  COMBINED LOSS AS THE NET OPERATING LOSS OF SUCH
CORPORATION BEARS TO THE TOTAL NET OPERATING LOSS OF ALL MEMBERS OF  THE
GROUP  HAVING SUCH LOSSES TO THE EXTENT THAT THEY ARE TAKEN INTO ACCOUNT
IN COMPUTING THE COMBINED NET OPERATING LOSS.
  (E) ANY ELECTION MADE PURSUANT TO PARAGRAPH (B)  OF  SUBDIVISION  SIX,
AND  PARAGRAPHS  (B) AND (C) OF SUBDIVISION SIX-A OF SECTION TWO HUNDRED
EIGHT OF THIS ARTICLE SHALL APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
  (F)(I) IN THE CASE OF A CAPTIVE REIT OR  CAPTIVE  RIC  REQUIRED  UNDER
THIS  SECTION  TO  BE  INCLUDED  IN A COMBINED REPORT, ENTIRE NET INCOME
SHALL BE COMPUTED AS REQUIRED UNDER SUBDIVISION FIVE (IN THE CASE  OF  A
CAPTIVE  REIT)  OR  SUBDIVISION  SEVEN (IN THE CASE OF A CAPTIVE RIC) OF
SECTION TWO HUNDRED NINE OF THIS ARTICLE. HOWEVER, THE  DEDUCTION  UNDER
THE  INTERNAL  REVENUE  CODE  FOR  DIVIDENDS PAID BY THE CAPTIVE REIT OR

S. 6359--B                         110                        A. 8559--B

CAPTIVE RIC TO ANY MEMBER OF THE  AFFILIATED  GROUP  THAT  INCLUDES  THE
CORPORATION  THAT  DIRECTLY OR INDIRECTLY OWNS OVER FIFTY PERCENT OF THE
VOTING STOCK OF THE CAPTIVE REIT OR CAPTIVE RIC SHALL  NOT  BE  ALLOWED.
FOR  PURPOSES  OF  THIS  SUBPARAGRAPH, THE TERM "AFFILIATED GROUP" MEANS
"AFFILIATED GROUP" AS DEFINED IN SECTION FIFTEEN  HUNDRED  FOUR  OF  THE
INTERNAL REVENUE CODE, BUT WITHOUT REGARD TO THE EXCEPTIONS PROVIDED FOR
IN SUBSECTION (B) OF THAT SECTION.
  (II)  IN  THE  CASE OF A COMBINABLE CAPTIVE INSURANCE COMPANY REQUIRED
UNDER THIS SECTION TO BE INCLUDED  IN  A  COMBINED  REPORT,  ENTIRE  NET
INCOME  SHALL BE COMPUTED AS REQUIRED BY SUBDIVISION NINE OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE.
  5. APPORTIONMENT ON A COMBINED REPORT. (A) IN DETERMINING  THE  APPOR-
TIONMENT  FACTOR  FOR  A  COMBINED REPORT, THE RECEIPTS, NET INCOME, NET
GAINS AND OTHER ITEMS OF ALL MEMBERS OF THE COMBINED GROUP,  WHETHER  OR
NOT  THEY  ARE  A  TAXPAYER,  ARE  INCLUDED AND INTERCORPORATE RECEIPTS,
INCOME AND GAINS ARE ELIMINATED. RECEIPTS, NET  INCOME,  NET  GAINS  AND
OTHER ITEMS ARE SOURCED AS PROVIDED IN SECTION TWO HUNDRED TEN-A OF THIS
ARTICLE.
  (B)  AN  ELECTION  MADE  TO APPORTION INCOME AND GAINS FROM QUALIFYING
FINANCIAL INSTRUMENTS PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)  OF
SUBDIVISION  FIVE  OF  SECTION  TWO  HUNDRED TEN-A OF THIS ARTICLE SHALL
APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
  6. LIABILITY OF COMBINED GROUP MEMBERS. EVERY MEMBER OF  THE  COMBINED
GROUP  THAT  IS  SUBJECT  TO TAX UNDER THIS ARTICLE SHALL BE JOINTLY AND
SEVERALLY LIABLE FOR THE TAX DUE PURSUANT TO A COMBINED REPORT.
  7. DESIGNATED AGENT. EACH COMBINED GROUP  SHALL  HAVE  ONE  DESIGNATED
AGENT,  WHICH  SHALL  BE  A TAXPAYER. THE DESIGNATED AGENT IS THE PARENT
CORPORATION OF THE COMBINED GROUP. IF THERE IS  NO  SUCH  PARENT  CORPO-
RATION, OR THE PARENT CORPORATION IS NOT A TAXPAYER, THEN ANOTHER MEMBER
OF  THE COMBINED GROUP THAT IS A TAXPAYER MAY BE APPOINTED AS THE DESIG-
NATED AGENT. ONLY THE DESIGNATED AGENT MAY ACT ON BEHALF OF THE  MEMBERS
OF THE COMBINED GROUP FOR MATTERS RELATING TO THE COMBINED REPORT.
  S  19.  Subdivisions  2-a,  3,  4 and 5 of section 211 of the tax law,
subdivision 2-a as added and subdivision 5 as amended by chapter 817  of
the laws of 1987, subdivision 3 as amended by chapter 770 of the laws of
1992,  subdivision 4 as amended by section 2 of part T of chapter 407 of
the laws of 1999, the opening  paragraph  and  the  second  undesignated
paragraph  of  paragraph  (a)  of subdivision 4 as amended by section 1,
subparagraph 4 of paragraph (a) of subdivision 4 as amended  by  section
2,  and  subparagraph  5 of paragraph (a) of subdivision 4 as amended by
section 3 of part J of chapter 60 of the laws of 2007, subparagraph 6 of
paragraph (a) of subdivision 4 as added by section  3  of  part  FF1  of
chapter  57  of  the  laws  of  2008, subparagraph 7 of paragraph (a) of
subdivision 4 as added by section 2 and subparagraph 1 of paragraph  (b)
of subdivision 4 as amended by section 3 of part E1 of chapter 57 of the
laws of 2009, are amended to read as follows:
  2-a.  The  [tax commission] COMMISSIONER may prescribe regulations and
instructions requiring returns of information to be made  and  filed  in
conjunction  with  the reports required to be filed pursuant to [section
two hundred eleven] THIS ARTICLE, relating to payments  made  to  share-
holders  owning,  directly  or indirectly, individually or in the aggre-
gate, more than fifty percent of the issued capital stock of the taxpay-
er, where such payments are treated  as  payments  of  interest  in  the
computation of entire net income [or minimum taxable income] reported on
such reports.

S. 6359--B                         111                        A. 8559--B

  3.  If  the  amount  of taxable income [or alternative minimum taxable
income] for any year of any taxpayer (including any taxpayer  which  has
elected  to  be  taxed under subchapter s of chapter one of the internal
revenue code), as returned to the United States treasury  department  is
changed  or  corrected  by the commissioner of internal revenue or other
officer of the United States or other competent authority,  or  where  a
renegotiation  of  a  contract  or  subcontract  with  the United States
results in a change in taxable income [or  alternative  minimum  taxable
income],  such  taxpayer  shall report such changed or corrected taxable
income [or alternative minimum taxable income], or the results  of  such
renegotiation,  within  ninety  days (or one hundred twenty days, in the
case of a taxpayer making a combined report under this article for  such
year)  after  the  final  determination  of such change or correction or
renegotiation, or as required by the commissioner, and shall concede the
accuracy of such determination or state wherein  it  is  erroneous.  The
allowance of a tentative carryback adjustment based upon a net operating
loss  carryback or net capital loss carryback pursuant to section sixty-
four hundred eleven of the internal revenue code, as amended,  shall  be
treated  as  a final determination for purposes of this subdivision. Any
taxpayer filing an amended return with such department shall  also  file
within ninety days (OR ONE HUNDRED TWENTY DAYS, IN THE CASE OF A TAXPAY-
ER MAKING A COMBINED REPORT UNDER THIS ARTICLE FOR SUCH YEAR) thereafter
an amended report with the commissioner.
  4.  [(a)  Combined  reports permitted or required. Any taxpayer, which
owns or controls either directly or  indirectly  substantially  all  the
capital  stock  of  one or more other corporations, or substantially all
the capital stock of which is owned or  controlled  either  directly  or
indirectly  by  one or more other corporations or by interests which own
or control either directly or indirectly substantially all  the  capital
stock  of  one  or  more other corporations, (hereinafter referred to in
this paragraph as "related corporations"), shall make a combined  report
covering  any  related corporations if there are substantial intercorpo-
rate transactions among the  related  corporations,  regardless  of  the
transfer price for such intercorporate transactions. It is not necessary
that  there  be  substantial intercorporate transactions between any one
corporation and every other related corporation. It is necessary, howev-
er, that there be substantial intercorporate  transactions  between  the
taxpayer  and  a  related  corporation  or collectively, a group of such
related corporations. The report shall set forth such information as the
commissioner may require, subject to the provisions of subparagraphs one
through five of this paragraph.
  In determining whether there  are  substantial  intercorporate  trans-
actions, the commissioner shall consider and evaluate all activities and
transactions  of  the  taxpayer and its related corporations. Activities
and transactions that will be considered include, but  are  not  limited
to:  (i)  manufacturing,  acquiring  goods  or  property,  or performing
services, for related corporations; (ii)  selling  goods  acquired  from
related  corporations;  (iii)  financing  sales of related corporations;
(iv) performing related customer services using  common  facilities  and
employees for related corporations; (v) incurring expenses that benefit,
directly  or  indirectly,  one  or  more  related corporations, and (vi)
transferring assets,  including  such  assets  as  accounts  receivable,
patents or trademarks from one or more related corporations.
  (1)  Any  corporation  which owns or controls either directly or indi-
rectly substantially all the capital stock of a DISC not exempt from tax
under paragraph (i) of subdivision nine of section two hundred eight  of

S. 6359--B                         112                        A. 8559--B

this  article  shall be allowed, at the election of such corporation, to
make a report on a combined basis covering such DISC, but the failure of
such corporation to make such election shall not  prohibit  the  commis-
sioner  from  requiring  a combined report covering such corporation and
such DISC.
  (2)(i) No taxpayer may be permitted to make a  report  on  a  combined
basis  covering  any  such other corporations where such taxpayer or any
such other corporation  allocates  in  accordance  with  clause  (A)  of
subparagraph  seven of paragraph (a) of subdivision three of section two
hundred ten of this article (relating to aviation corporations) and such
taxpayer or any such other corporation does not so allocate, unless such
taxpayer or such other corporation is a qualified air freight  forwarder
with  respect  to such other corporation or such taxpayer, respectively,
and all taxpayers included on such combined report elect, by filing such
combined report,  to  have  such  qualified  air  freight  forwarder  so
included.
  (ii)  A  corporation is a qualified air freight forwarder with respect
to another corporation:
  (A) if it owns or controls either directly or indirectly  all  of  the
capital  stock of such other corporation, or if all of its capital stock
is owned or controlled either  directly  or  indirectly  by  such  other
corporation,  or  if  all  of  the capital stock of both corporations is
owned or controlled either directly or indirectly by the same interests,
  (B) if it is principally  engaged  in  the  business  of  air  freight
forwarding, and
  (C)  if  its air freight forwarding business is carried on principally
with the airline or airlines operated by such other corporation.
  (3) No taxpayer may be permitted to make a report on a combined  basis
covering  any  such  other  corporations where such taxpayer or any such
other corporation allocates in accordance  with  subparagraph  eight  of
paragraph  (a)  of  subdivision three of section two hundred ten of this
article (relating  to  railroad  and  trucking  corporations)  and  such
taxpayer or any such other corporation does not so allocate.
  (4)  Except  as  provided  in the first undesignated paragraph of this
paragraph, no combined report covering any corporation shall be required
unless the commissioner  deems  such  a  report  necessary,  because  of
inter-company transactions or some agreement, understanding, arrangement
or transaction referred to in subdivision five of this section, in order
properly to reflect the tax liability under this article.
  (5) A corporation organized under the laws of a country other than the
United  States  shall not be required or permitted to make a report on a
combined basis.
  (6) (i) For purposes of this subparagraph, the term "closest  control-
ling stockholder" means the corporation that indirectly owns or controls
over fifty percent of the voting stock of a captive REIT or captive RIC,
is subject to tax under this article, article thirty-two or thirty-three
of  this  chapter  or  otherwise  required  to be included in a combined
return or report under this article, article thirty-two or  thirty-three
of  this  chapter,  and  is the fewest tiers of corporations away in the
ownership structure from the captive REIT or captive RIC.   The  commis-
sioner  is  authorized  to prescribe by regulation or published guidance
the criteria for determining the closest controlling stockholder.
  (ii) A captive REIT or a captive RIC must be included  in  a  combined
report  with  the  corporation that directly owns or controls over fifty
percent of the voting stock of the captive REIT or captive RIC  if  that

S. 6359--B                         113                        A. 8559--B

corporation  is  subject to tax or required to be included in a combined
report under this article.
  (iii)  If  over fifty percent of the voting stock of a captive REIT or
captive RIC is not directly owned or controlled by a corporation that is
subject to tax or required to be included in  a  combined  report  under
this article, then the captive REIT or captive RIC must be included in a
combined  return  or  report  with  the  corporation that is the closest
controlling stockholder of the captive REIT or captive RIC. If the clos-
est controlling stockholder of  the  captive  REIT  or  captive  RIC  is
subject to tax or otherwise required to be included in a combined report
under  this  article,  then  the  captive  REIT  or  captive RIC must be
included in a combined report under this article.
  (iv) If the corporation that directly  owns  or  controls  the  voting
stock  of  the  captive REIT or captive RIC is described in subparagraph
two, three or five of this paragraph as a corporation not  permitted  to
make  a  combined  report,  then  the provisions in clause (iii) of this
subparagraph must be applied  to  determine  the  corporation  in  whose
combined  return  or  report  the  captive REIT or captive RIC should be
included. If, under clause (iii) of this subparagraph,  the  corporation
that  is  the  closest  controlling  stockholder  of the captive REIT or
captive RIC is described in subparagraph two,  three  or  five  of  this
paragraph as a corporation not permitted to make a combined return, then
that  corporation  is deemed to not be in the ownership structure of the
captive REIT or captive RIC, and  the  closest  controlling  stockholder
will be determined without regard to that corporation.
  (v)  If  a  captive REIT owns the stock of a qualified REIT subsidiary
(as defined in paragraph two of subsection (i) of section eight  hundred
fifty-six of the internal revenue code), then the qualified REIT subsid-
iary must be included in a combined report with the captive REIT.
  (vi) If a captive REIT or a captive RIC is required under this subpar-
agraph to be included in a combined report with another corporation, and
that  other  corporation  is  also required to be included in a combined
report with another related corporation or corporations under this para-
graph, then the captive REIT or the captive RIC must be included in that
combined report with those corporations.
  (vii) If a captive REIT or  a  captive  RIC  is  not  required  to  be
included in a combined report with another corporation under clause (ii)
or  (iii)  of  this  subparagraph,  or  in  a  combined return under the
provisions of either subparagraph (v) of paragraph two of subsection (f)
of section fourteen hundred sixty-two or paragraph four  of  subdivision
(f) of section fifteen hundred fifteen of this chapter, then the captive
REIT  or  captive RIC is subject to the opening provisions of this para-
graph and the provisions of subparagraph four  of  this  paragraph.  The
captive  REIT or captive RIC must be included in a combined report under
this article with another corporation if either the  substantial  inter-
corporate  transactions  requirement  in  the opening provisions of this
paragraph or the inter-company transactions or agreement, understanding,
arrangement or transaction requirement  of  subparagraph  four  of  this
paragraph  is  satisfied and more than fifty percent of the voting stock
of the captive REIT or the captive RIC  and  substantially  all  of  the
capital  stock  of  that  other  corporation  are  owned and controlled,
directly or indirectly, by the same corporation.
  (7) (i) For purposes of this subparagraph, the term "closest  control-
ling stockholder" means the corporation that indirectly owns or controls
over  fifty  percent  of  the voting stock of an overcapitalized captive
insurance company; is subject to tax under this article or article thir-

S. 6359--B                         114                        A. 8559--B

ty-two of this chapter, or is otherwise required to  be  included  in  a
combined  return  or  report under this article or article thirty-two of
this chapter; and is the fewest tiers of corporations away in the owner-
ship  structure from the overcapitalized captive insurance company.  The
commissioner is authorized to prescribe by regulation or published guid-
ance the criteria for determining the closest controlling stockholder.
  (ii) An overcapitalized captive insurance company must be included  in
a  combined  report  with the corporation that directly owns or controls
over fifty percent of the voting stock of  the  overcapitalized  captive
insurance  company  if that corporation is subject to tax or required to
be included in a combined report under this article.
  (iii) If over fifty percent of the voting stock of an  overcapitalized
captive  insurance  company  is  not  directly  owned or controlled by a
corporation that is subject to tax or  required  to  be  included  in  a
combined  report  under  this  article, then the overcapitalized captive
insurance company must be included in a combined return or  report  with
the corporation that is the closest controlling stockholder of the over-
capitalized captive insurance company. If the closest controlling stock-
holder  of  the  overcapitalized captive insurance company is subject to
tax or otherwise required to be included in a combined report under this
article, then the overcapitalized  captive  insurance  company  must  be
included in a combined report under this article.
  (iv)  If  the  corporation  that  directly owns or controls the voting
stock of the overcapitalized captive insurance company is  described  in
subparagraph  two, three, or five of this paragraph as a corporation not
permitted to make a combined report, then the provisions in clause (iii)
of this subparagraph must be applied to  determine  the  corporation  in
whose  combined  return  or report the overcapitalized captive insurance
company should be included. If, under clause (iii) of this subparagraph,
the corporation that is the closest controlling stockholder of the over-
capitalized captive insurance company is described in subparagraph  two,
three or five of this paragraph as a corporation not permitted to make a
combined return, then that corporation is deemed not to be in the owner-
ship structure of the overcapitalized captive insurance company, and the
closest  controlling  stockholder  will  be determined without regard to
that corporation.
  (v) If an overcapitalized captive insurance company is required  under
this  subparagraph  to  be  included  in  a combined report with another
corporation, and that other corporation is also required to be  included
in  a  combined  report with another related corporation or corporations
under this paragraph, then the overcapitalized captive insurance company
must be included in that combined report with those corporations.
  (vi) If an overcapitalized captive insurance company is  not  required
to  be  included  in  a  combined  report with another corporation under
clause (ii) or (iii) of this subparagraph, or in a combined return under
the provisions of subparagraph (v) of paragraph two of subsection (f) of
section fourteen hundred sixty-two of this chapter, then  the  overcapi-
talized  captive  insurance company is subject to the opening provisions
of this paragraph and the provisions of subparagraph four of this  para-
graph. The overcapitalized captive insurance company must be included in
a  combined report under this article with another corporation if either
the substantial intercorporate transactions requirement in  the  opening
provisions of this paragraph or the inter-company transactions or agree-
ment,  understanding, arrangement or transaction requirement of subpara-
graph four of this paragraph is satisfied,  and  both  more  than  fifty
percent  of  the  voting  stock of the overcapitalized captive insurance

S. 6359--B                         115                        A. 8559--B

company and substantially all of the capital stock of that other  corpo-
ration  are  owned  and  controlled, directly or indirectly, by the same
corporation.
  (b) Computation. (1) Tax. (i) In the case of a combined report the tax
shall  be  measured  by the combined entire net income, combined minimum
taxable income, combined pre-nineteen  hundred  ninety  minimum  taxable
income  or  combined  capital,  of  all the corporations included in the
report, including any  captive  REIT,  captive  RIC  or  overcapitalized
captive  insurance company; provided, however, in no event shall the tax
measured by combined capital exceed the limitation provided for in para-
graph (b) of subdivision one of section two hundred ten of this article.
  (ii) In the case of a captive REIT or captive RIC required under  this
subdivision  to be included in a combined report, entire net income must
be computed as required under subdivision five (in the case of a captive
REIT) or subdivision seven (in the case of a captive RIC) of section two
hundred nine of this article. However, the deduction under the  internal
revenue  code  for  dividends paid by the captive REIT or captive RIC to
any member of the affiliated group that includes  the  corporation  that
directly  or  indirectly  owns over fifty percent of the voting stock of
the captive REIT or captive RIC shall not be allowed for  taxable  years
beginning  on  or  after  January  first,  two  thousand eight. The term
"affiliated group"  means  "affiliated  group"  as  defined  in  section
fifteen hundred four of the internal revenue code, but without regard to
the exceptions provided for in subsection (b) of that section.
  (iii)  In  the  case  of  an overcapitalized captive insurance company
required under this subdivision to be included  in  a  combined  report,
entire  net  income  must be computed as required by subdivision nine of
section two hundred eight of this article.
  (2) Tax bases. In computing combined entire net income, combined mini-
mum taxable income or combined pre-nineteen hundred ninety minimum taxa-
ble income intercorporate dividends shall be  eliminated,  in  computing
combined  business  and  investment capital intercorporate stockholdings
and intercorporate bills, notes and accounts receivable and payable  and
other  intercorporate  indebtedness shall be eliminated and in computing
combined subsidiary capital intercorporate stockholdings shall be elimi-
nated, provided, however, that intercorporate dividends from a DISC or a
former DISC not exempt from tax under paragraph (i) of subdivision  nine
of  section two hundred eight of this article which are taxable as busi-
ness income under this article shall not be eliminated.
  (3) Air freight forwarders: allocation. Notwithstanding any  provision
of law to the contrary, where a combined report includes a qualified air
freight  forwarder  and a corporation described in subparagraph seven of
paragraph (a) of subdivision three of section two hundred  ten  of  this
chapter  (relating  to aviation corporations), in computing the combined
business allocation percentage such subparagraph seven shall be  applied
with  respect  to  such  qualified air freight forwarder] FOR PROVISIONS
RELATING TO COMBINED REPORTS, SEE SECTION  TWO  HUNDRED  TEN-C  OF  THIS
ARTICLE.
  5.  In  case it shall appear to the [tax commission] COMMISSIONER that
any agreement, understanding or arrangement exists between the  taxpayer
and  any  other corporation or any person or firm, whereby the activity,
business, income or capital of the taxpayer within the state is  improp-
erly  or  inaccurately  reflected,  the [tax commission] COMMISSIONER is
authorized and empowered, in [its] THE COMMISSIONER'S discretion and  in
such  manner  as [it] THE COMMISSIONER may determine, to adjust items of
income, deductions and capital, and to eliminate assets in computing any

S. 6359--B                         116                        A. 8559--B

[allocation] APPORTIONMENT percentage  provided  only  that  any  income
directly  traceable  thereto  be  also  excluded from entire net income,
[minimum taxable income or pre-nineteen hundred ninety  minimum  taxable
income,]  so  as  equitably to determine the tax. Where (a) any taxpayer
conducts its activity or business under any  agreement,  arrangement  or
understanding in such manner as either directly or indirectly to benefit
its  members  or  stockholders, or any of them, or any person or persons
directly or indirectly interested  in  such  activity  or  business,  by
entering  into  any transaction at more or less than a fair price which,
but for such agreement, arrangement or understanding,  might  have  been
paid or received therefor, or (b) any taxpayer, a substantial portion of
whose  capital  stock  is owned either directly or indirectly by another
corporation, enters into any transaction with such other corporation  on
such terms as to create an improper loss or net income, the [tax commis-
sion]  COMMISSIONER may include in the entire net income[, minimum taxa-
ble income or pre-nineteen hundred ninety minimum taxable income] of the
taxpayer the fair profits which, but for such agreement, arrangement  or
understanding,  the  taxpayer  might have derived from such transaction.
WHERE ANY TAXPAYER OWNS, DIRECTLY OR INDIRECTLY, MORE THAN FIFTY PERCENT
OF THE CAPITAL STOCK OF ANOTHER CORPORATION SUBJECT TO TAX UNDER SECTION
FIFTEEN HUNDRED TWO-A OF THIS CHAPTER AND FIFTY PERCENT OR LESS OF WHOSE
GROSS RECEIPTS FOR THE TAXABLE YEAR CONSIST OF PREMIUMS, THE COMMISSION-
ER MAY INCLUDE IN THE ENTIRE NET INCOME OF THE  TAXPAYER,  AS  A  DEEMED
DISTRIBUTION, THE AMOUNT OF THE NET INCOME OF THE OTHER CORPORATION THAT
IS IN EXCESS OF ITS NET PREMIUM INCOME.
  S 19-a. Subdivision 13 of section 211 of the tax law is REPEALED.
  S 20.  Subdivision 11 of section 2 of the tax law, as added by section
1  of  part E-1 of chapter 57 of the laws of 2009, is amended to read as
follows:
  11. The term "[overcapitalized] COMBINABLE captive insurance  company"
means  an  entity  that is treated as an association taxable as a corpo-
ration under the internal revenue code (a) more than  fifty  percent  of
the  voting stock of which is owned or controlled, directly or indirect-
ly, by a single entity that is treated as an association  taxable  as  a
corporation  under the internal revenue code and not exempt from federal
income tax; (b) that is licensed as a captive  insurance  company  under
the  laws  of this state or another jurisdiction; AND (c) whose business
includes providing, directly and indirectly,  insurance  or  reinsurance
covering  the  risks  of  its  parent  and/or  members of its affiliated
group[; and (d) fifty percent or less of whose gross  receipts  for  the
taxable  year  consist of premiums].   For purposes of this subdivision,
"affiliated group" has the same meaning as that term is given in section
1504 of the internal revenue code, except that the term  "common  parent
corporation" in that section is deemed to mean any person, as defined in
section 7701 of the internal revenue code[;] AND references to "at least
eighty  percent"  in section 1504 of the internal revenue code are to be
read as "fifty percent or more;" section 1504 of  the  internal  revenue
code  is  to  be  read  without regard to the exclusions provided for in
subsection (b) of that section[; "premiums" has the same meaning as that
term is given in paragraph one of subdivision  (c)  of  section  fifteen
hundred  ten  of this chapter, except that it includes consideration for
annuity contracts and excludes any part of the consideration for  insur-
ance,  reinsurance  or  annuity  contracts that do not provide bona fide
insurance,  reinsurance  or  annuity  benefits;  and  "gross   receipts"
includes  the amounts included in gross receipts for purposes of section

S. 6359--B                         117                        A. 8559--B

501(c) (15) of the internal revenue code, except that those amounts also
include all premiums as defined in this subdivision].
  S  21.  Subdivision  (a) of section 1500 of the tax law, as separately
amended by section 1 of part B-1 and section 8 of part E-1 of chapter 57
of the laws of 2009, is amended to read as follows:
  (a) The term "insurance corporation" includes a  corporation,  associ-
ation,  joint stock company or association, person, society, aggregation
or partnership, by whatever name known,  doing  an  insurance  business,
and, notwithstanding the provisions of section fifteen hundred twelve of
this  article,  shall  include  (1) a risk retention group as defined in
subsection (n) of section five thousand nine hundred two of  the  insur-
ance  law,  (2)  the state insurance fund and (3) a corporation, associ-
ation, joint stock company or association, person, society,  aggregation
or  partnership  doing an insurance business as a member of the New York
insurance exchange described in section six thousand two hundred one  of
the  insurance  law.  The  definition  of  the  "state  insurance  fund"
contained in this subdivision shall be limited  in  its  effect  to  the
provisions  of  this  article and the related provisions of this chapter
and shall have no force and effect  other  than  with  respect  to  such
provisions.  The  term  "insurance  corporation"  shall  also  include a
captive insurance company doing a captive insurance business, as defined
in subsections (c) and (b), respectively, of section seven thousand  two
of  the  insurance law; provided, however, "insurance corporation" shall
not include the metropolitan transportation authority, or a public bene-
fit corporation or not-for-profit corporation formed by a  city  with  a
population  of one million or more pursuant to subsection (a) of section
seven thousand five of the insurance law, each  of  which  is  expressly
exempt  from the payment of fees, taxes or assessments, whether state or
local; and provided further "insurance corporation" does not include any
[overcapitalized] COMBINABLE captive insurance company. The term "insur-
ance corporation" shall also include an unauthorized  insurer  operating
from  an  office  within  the  state,  pursuant  to  paragraph  five  of
subsection (b) of section one thousand one hundred  one  and  subsection
(i)  of section two thousand one hundred seventeen of the insurance law.
The term "insurance corporation"  also  includes  a  health  maintenance
organization required to obtain a certificate of authority under article
forty-four of the public health law.
  S  22. Subdivision (a) of section 1502-b of the tax law, as amended by
section 9 of part E-1 of chapter 57 of the laws of 2009 and  as  further
amended  by  section 104 of part A of chapter 62 of the laws of 2011, is
amended to read as follows:
  (a) In lieu of the taxes and tax surcharge imposed by sections fifteen
hundred one, fifteen hundred two-a, fifteen hundred five-a, and  fifteen
hundred ten of this article, every captive insurance company licensed by
the  superintendent  of financial services pursuant to the provisions of
article seventy of the insurance law, other than the metropolitan trans-
portation authority and a public benefit corporation  or  not-for-profit
corporation  formed  by  a city with a population of one million or more
pursuant to subsection (a) of section seven thousand five of the  insur-
ance  law,  each  of which is expressly exempt from the payment of fees,
taxes or assessments whether state or local, and other than [an overcap-
italized] COMBINABLE captive insurance company, shall, for the privilege
of exercising its corporate franchise, pay a tax on (1) all gross direct
premiums, less return premiums thereon,  written  on  risks  located  or
resident  in  this  state and (2) all assumed reinsurance premiums, less
return premiums thereon, written on risks located or  resident  in  this

S. 6359--B                         118                        A. 8559--B

state.  The  rate  of  the tax imposed on gross direct premiums shall be
four-tenths of one percent on all  or  any  part  of  the  first  twenty
million  dollars  of premiums, three-tenths of one percent on all or any
part of the second twenty million dollars of premiums, two-tenths of one
percent on all or any part of the third twenty million dollars of premi-
ums,  and  seventy-five  thousandths  of  one  percent on each dollar of
premiums thereafter. The rate of the tax on assumed reinsurance premiums
shall be two hundred twenty-five thousandths of one percent  on  all  or
any  part  of  the first twenty million dollars of premiums, one hundred
and fifty thousandths of one percent on all or any part  of  the  second
twenty  million dollars of premiums, fifty thousandths of one percent on
all or any part of the third twenty  million  dollars  of  premiums  and
twenty-five thousandths of one percent on each dollar of premiums there-
after.  The tax imposed by this section shall be equal to the greater of
(i) the sum of the tax imposed on gross  direct  premiums  and  the  tax
imposed on assumed reinsurance premiums or (ii) five thousand dollars.
  S  23.  Paragraph 4 of subdivision (f) of section 1515 of the tax law,
as amended by section 16 of part FF-1 of chapter 57 of the laws of 2008,
is amended to read as follows:
  (4)(i) For purposes of this paragraph, the term  "closest  controlling
stockholder" means the corporation that indirectly owns or controls over
fifty  percent  of the voting stock of a captive REIT or captive RIC, is
subject to tax under section fifteen hundred one of this  article[,]  OR
article nine-A [or article thirty-two] of this chapter or required to be
included in a combined return or report under this article[,] OR article
nine-A  [or article thirty-two] of this chapter, and is the fewest tiers
of corporations away in the ownership structure from the captive REIT or
captive RIC. The commissioner is authorized to prescribe  by  regulation
or  published guidance the criteria for determining the closest control-
ling stockholder.
  (ii) A captive REIT or a captive RIC must be included  in  a  combined
return  with  the  corporation that directly owns or controls over fifty
percent of the voting stock of the captive REIT or captive RIC  if  that
corporation  is  a  life  insurance corporation and is subject to tax or
required to be included in a combined return under this article.
  (iii) If over fifty percent of the voting stock of a captive  REIT  or
captive  RIC  is  not  directly  owned or controlled by a life insurance
corporation that is subject to tax or  required  to  be  included  in  a
combined  return  under  this article, [then the captive REIT or captive
RIC must be included in a combined report or return with the corporation
that is the closest controlling  stockholder  of  the  captive  REIT  or
captive  RIC. If] AND the closest controlling stockholder of the captive
REIT or captive RIC is a life insurance corporation that is  subject  to
tax  or required to be included in a combined return under this article,
then the captive REIT or captive RIC must  be  included  in  a  combined
return WITH THE CLOSEST CONTROLLING STOCKHOLDER under this article.
  (iv)  If  a captive REIT owns the stock of a qualified REIT subsidiary
(as defined in paragraph two of subsection (i) of section eight  hundred
fifty-six of the internal revenue code) AND THE CAPTIVE REIT IS REQUIRED
TO BE INCLUDED IN A COMBINED RETURN UNDER SUBPARAGRAPHS (II) OR (III) OF
THIS  PARAGRAPH,  then the qualified REIT subsidiary must be included in
any combined return required to be made by the captive  REIT  that  owns
the stock of the qualified REIT subsidiary.
  (v)  If  a  captive REIT or a captive RIC is required under this para-
graph to be included in a combined return with another corporation,  and
that  other  corporation is required to be included in a combined return

S. 6359--B                         119                        A. 8559--B

with another [related] corporation  under  this  subdivision,  then  the
captive REIT or the captive RIC must be included in that combined return
with the other [related] corporation.
  S  24.  Subdivisions (a), (b) and (c) of section 12 of the tax law, as
added by chapter 615 of the  laws  of  1998,  are  amended  to  read  as
follows:
  (a) For purposes of subdivision (b) of this section, the term "person"
shall  mean a corporation, joint stock company or association, insurance
corporation, or banking  corporation,  as  such  terms  are  defined  in
section  one  hundred  eighty-three,  one  hundred  eighty-four,  or one
hundred eighty-six, or in article nine-A[, thirty-two]  or  thirty-three
of this chapter, imposing tax on such entities.
  (b)  No person shall be subject to the taxes imposed under section one
hundred eighty-three, one hundred eighty-four or one hundred eighty-six,
or article nine-A[, thirty-two] or thirty-three of this chapter,  solely
by  reason  of  (1)   having its advertising stored on a server or other
computer equipment located in this state (other than a server  or  other
computer  equipment  owned  or leased by such person), or (2) having its
advertising disseminated or displayed on the Internet by  an  individual
or  entity  subject  to  tax under section one hundred eighty-three, one
hundred eighty-four or one hundred eighty-six, or article nine-A,  twen-
ty-two[, thirty-two] or thirty-three of this chapter.
  (c)  A  person,  as such term is defined in subdivision (a) of section
eleven hundred one of this chapter, shall not be deemed to be a  vendor,
for  purposes  of article twenty-eight of this chapter, solely by reason
of (1)  having its advertising stored on  a  server  or  other  computer
equipment  located  in this state (other than a server or other computer
equipment owned or leased by such person), or (2) having its advertising
disseminated or displayed on the Internet by  an  individual  or  entity
subject  to  tax  under  section  one  hundred eighty-three, one hundred
eighty-four or one hundred eighty-six, or article  nine-A,  twenty-two[,
thirty-two] or thirty-three of this chapter.
  S  25. Paragraph 1 of subdivision (a) of section 14 of the tax law, as
amended by section 3 of part V1 of chapter 109 of the laws of  2006,  is
amended to read as follows:
  (1)  except as provided in paragraphs one-a and one-b of this subdivi-
sion, for purposes of section one hundred  eighty-seven-j  and  articles
nine-A,  twenty-two[,  thirty-two] and thirty-three of this chapter, for
each of the taxable years within  the  "business  tax  benefit  period,"
which  period  shall consist of (A) in the case of a business enterprise
with a test date occurring on or before December thirty-first, two thou-
sand one, the first fifteen taxable years beginning on or after  January
first, two thousand one, (B) in the case of a business enterprise with a
test  date  occurring  on  or after January first, two thousand two, but
prior to April first, two thousand five, the fifteen taxable years  next
following  the business enterprise's test year, and (C) in the case of a
business enterprise which is first certified under article eighteen-B of
the general municipal law on or after April first,  two  thousand  five,
the  ten taxable years starting with the taxable year in which the busi-
ness enterprise's first date of certification under  article  eighteen-B
of  the  general  municipal law occurs, but only with respect to each of
such business tax benefit period years for which the employment test  is
met,
  S  26.  Subdivision  (f)  of  section 14 of the tax law, as amended by
section 10 of part CC of chapter 85 of the laws of 2002, is  amended  to
read as follows:

S. 6359--B                         120                        A. 8559--B

  (f)  Taxable  year.  The term "taxable year" means the taxable year of
the business enterprise under  section  one  hundred  eighty-three,  one
hundred  eighty-four,  one  hundred  eighty-five  or  former section one
hundred eighty-six of article nine, or  under  article  nine-A,  twenty-
two[,  thirty-two] or thirty-three of this chapter. If a business enter-
prise does not have a taxable year because it is exempt from taxation or
otherwise not required to file a return under any of  such  sections  of
article  nine or under article nine-A, twenty-two[, thirty-two] or thir-
ty-three, then the term "taxable year" means  (i)  the  business  enter-
prise's federal taxable year, or, (ii) if the enterprise does not have a
federal taxable year, the calendar year.
  S  27. Paragraph 1 of subdivision (i) of section 14 of the tax law, as
amended by section 5 of part A of chapter 63 of the  laws  of  2005,  is
amended to read as follows:
  (1)  for  purposes  of  section  one hundred eighty-seven-j of article
nine, and articles nine-A, twenty-two[, thirty-two] and thirty-three  of
this  chapter, on the first day of the taxable year during which revoca-
tion of its certification under article eighteen-B of the general munic-
ipal law occurs, and
  S 28. Paragraphs 1 and 2 of subdivision (j) of section 14 of  the  tax
law,  as  amended  by section 10 of part CC of chapter 85 of the laws of
2002, are amended to read as follows:
  (1) A new business shall include any corporation, except a corporation
which is substantially similar in operation and in ownership to a  busi-
ness  entity (or entities) taxable, or previously taxable, under section
one hundred eighty-three, one hundred eighty-four, one  hundred  eighty-
five or one hundred eighty-six of article nine; article nine-A[, article
thirty-two]  or  thirty-three  of  this chapter; article twenty-three of
this chapter or which would have been subject to tax under such  article
twenty-three  (as  such article was in effect on January first, nineteen
hundred eighty), ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD  HAVE
BEEN  SUBJECT  TO TAX UNDER SUCH ARTICLE THIRTY-TWO (AS SUCH ARTICLE WAS
IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN) or the income
(or losses) of which is (or was) includable under article twenty-two  of
this chapter.
  (2)  For purposes of article twenty-two of this chapter, an individual
who is either a sole proprietor or a member of a partnership shall qual-
ify as an owner of a new business unless the business of which the indi-
vidual is an owner is substantially similar in operation and  in  owner-
ship  to a business entity taxable, or previously taxable, under section
one hundred eighty-three, one hundred eighty-four, one  hundred  eighty-
five  or  one hundred eighty-six of article nine; article nine-A[, thir-
ty-two] or ARTICLE thirty-three of this chapter; article twenty-three of
this chapter or which would have been subject to tax under such  article
twenty-three  (as  such article was in effect on January first, nineteen
hundred eighty); ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD  HAVE
BEEN SUBJECT TO TAX UNDER SUCH ARTICLE THIRTY-TWO AS SUCH ARTICLE WAS IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN or the income (or
losses) of which is (or was) includable under article twenty-two.
  S  29.  Clauses  (i)  and  (ii)  of subparagraph (A) of paragraph 4 of
subdivision (j) of section 14 of the tax law, as added by section  5  of
part  A  of  chapter  63  of  the  laws  of 2005, are amended to read as
follows:
  (i) Notwithstanding paragraphs one and two of this subdivision, a  new
business  shall  include any corporation which is identical in operation
and ownership to a business entity (or entities) taxable  under  section

S. 6359--B                         121                        A. 8559--B

one  hundred eighty-three, one hundred eighty-four or one hundred eight-
y-five of article nine; article nine-A[, article thirty-two] or  thirty-
three  of  this chapter or the income (or losses) of which is includable
under  article twenty-two of this chapter, provided such corporation and
such business entity or entities are operating in different counties  in
the state.
  (ii)  Notwithstanding  paragraphs  one and two of this subdivision, an
individual who is either a sole proprietor or a member of a  partnership
shall qualify as an owner of a new business if the business of which the
individual  is  an owner is identical in operation and in ownership to a
business entity (or entities) taxable under section one hundred  eighty-
three,  one  hundred  eighty-four  or one hundred eighty-five of article
nine; article nine-A[, article thirty-two] or thirty-three of this chap-
ter or the income (or losses) of which is includable under article twen-
ty-two of this chapter, provided such business and such business  entity
or entities are operating in different counties in the state.
  S 30. Subparagraph (B) of paragraph 4 of subdivision (j) of section 14
of  the  tax  law,  as  amended  by  chapter 161 of the laws of 2005, is
amended to read as follows:
  (B) Notwithstanding any provisions of this subdivision to the contrary
and notwithstanding subdivision c of section  eighteen  of  part  CC  of
chapter  eighty-five  of  the laws of two thousand two, a corporation or
partnership, which was first certified under article eighteen-B  of  the
general  municipal law before August first, two thousand two, has a base
period of zero years or zero employment for  its  base  period,  and  is
similar  in  operation and in ownership to a business entity or entities
taxable, or previously taxable, under sections  specified  in  paragraph
one  or  two of this subdivision or which would have been subject to tax
under article twenty-three of this  chapter  (as  such  article  was  in
effect  on  January  first, nineteen hundred eighty) OR WHICH WOULD HAVE
BEEN SUBJECT TO TAX UNDER ARTICLE THIRTY-TWO OF THIS  CHAPTER  (AS  SUCH
ARTICLE  WAS  IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN)
or the income or losses of which is  or  was  includable  under  article
twenty-two  of this chapter shall not be deemed a new business if it was
not formed for a valid business purpose, as  such  term  is  defined  in
clause  (D)  of subparagraph one of paragraph (o) of subdivision nine of
section two hundred eight of this chapter and was formed solely to  gain
empire zone benefits.
  S  31.  Subdivision  (k)  of  section 14 of the tax law, as amended by
section 5 of part A of chapter 63 of the laws of  2005,  is  amended  to
read as follows:
  (k)  If  the  designation of an area as an empire zone is no longer in
effect because section nine hundred sixty-nine of the general  municipal
law  was not amended to extend the effective date of such designation so
that the designations of all empire zones pursuant to article eighteen-B
of the general municipal law have expired, a  business  enterprise  that
was  certified  pursuant  to article eighteen-B of the general municipal
law on the day immediately preceding the day on which  such  designation
expired  shall  be deemed to continue to be certified under such article
eighteen-B for purposes of this section, and sections fifteen,  sixteen,
section one hundred eighty-seven-j, subdivisions [twenty-seven] FIVE and
[twenty-eight]  SIX of section two hundred [ten] TEN-B, subsections (bb)
and (cc) of section six hundred six, subdivision (z) of  section  eleven
hundred  fifteen[,  subsections  (o) and (p) of section fourteen hundred
fifty-six,] and subdivisions (r) and  (s)  of  section  fifteen  hundred
eleven of this chapter. In addition, if the designation of an area as an

S. 6359--B                         122                        A. 8559--B

empire  zone  is no longer in effect because section nine hundred sixty-
nine of the general municipal law was not amended to extend  the  effec-
tive  date  of  such  designation so that the designations of all empire
zones  pursuant  to article eighteen-B of the general municipal law have
expired, all references to empire zones in the provisions of this  chap-
ter  listed  in  the  previous  sentence  shall be read as meaning areas
designated as empire zones on the day immediately preceding the  day  on
which such designation expired.
  S  32.  Subdivisions  (a)  and  (h)  of  section 15 of the tax law, as
amended by section 5 of part A of chapter 63 of the laws  of  2005,  are
amended to read as follows:
  (a)  Allowance  of credit. A taxpayer which is a qualified empire zone
enterprise (QEZE), or which is a sole proprietor of a QEZE or  a  member
of  a  partnership  which  is  a QEZE, and which is subject to tax under
article nine-A, twenty-two[, thirty-two] or thirty-three of  this  chap-
ter,  shall  be  allowed  a  credit  against  such  tax, pursuant to the
provisions referenced in subdivision (h) of this section,  for  eligible
real property taxes.
  (h) Definitions and cross-references. For definitions of terms used in
this  section  see  section fourteen of this article. For application of
the credit provided for in this section, see the following provisions of
this chapter:
  (1) Article 9: Section 187-j.
  (2) Article 9-A: Section [210] 210-B: subdivision [27] 5.
  (3) Article 22: Section 606: subsections (i) and (bb).
  (4) [Article 32: Section 1456: subsection (o).
  (5)] Article 33: Section 1511: subdivision (r).
  S 33. Subdivision (a) of section 16  of  the  tax  law,  as  added  by
section  2  of  part GG of chapter 63 of the laws of 2000, is amended to
read as follows:
  (a) Allowance of credit. A taxpayer which is a qualified  empire  zone
enterprise  (QEZE),  or which is a sole proprietor of a QEZE or a member
of a partnership which is a QEZE, and which  is  subject  to  tax  under
article  nine-A,  twenty-two[, thirty-two] or thirty-three of this chap-
ter, shall be allowed  a  credit  against  such  tax,  pursuant  to  the
provisions referenced in subdivision (g) of this section, to be computed
as hereinafter provided.
  S 34. Paragraph 1, clause (ii) of subparagraph (B) of paragraph 2, and
subparagraph  (A) of paragraph 3 of subdivision (f) of section 16 of the
tax law, as amended by section 14 of part CC of chapter 85 of  the  laws
of 2002, are amended to read as follows:
  (1) General. The tax factor shall be, in the case of article nine-A of
this  chapter,  the [larger of the amounts] AMOUNT of tax determined for
the taxable year under [paragraphs] PARAGRAPH (a) [and (c)] of  subdivi-
sion  one  of  section  two  hundred ten of such article. The tax factor
shall be, in the case of article twenty-two of  this  chapter,  the  tax
determined  for  the  taxable  year under subsections (a) through (d) of
section six hundred one of such article. [The tax factor  shall  be,  in
the  case  of  article  thirty-two  of  this  chapter, the larger of the
amounts of tax determined for the taxable year under subsection (a)  and
paragraph  two  of subsection (b) of section fourteen hundred fifty-five
of such article.] The tax factor shall be, in the case of article  thir-
ty-three  of  this  chapter, the larger of the amounts of tax determined
for the taxable year under paragraphs one and three of  subdivision  (a)
of section fifteen hundred two of such article.

S. 6359--B                         123                        A. 8559--B

  (ii)  For  purposes of article nine-A[, thirty-two or thirty-three] of
this chapter, the term "partner's income  from  the  partnership"  means
partnership  items  of  income,  gain,  loss and deduction, and New York
modifications thereto, entering  into  [entire  net]  BUSINESS  income[,
minimum  taxable  income,  alternative  entire  net income or entire net
income plus compensation] and the term "partner's entire  income"  means
[entire  net]  BUSINESS  income[,  minimum  taxable  income, alternative
entire net income or entire net  income  plus  compensation,]  allocated
within the state.  FOR PURPOSES OF ARTICLE THIRTY-THREE OF THIS CHAPTER,
THE TERM "PARTNER'S INCOME FROM THE PARTNERSHIP" MEANS PARTNERSHIP ITEMS
OF INCOME, GAIN, LOSS AND DEDUCTION, AND NEW YORK MODIFICATIONS THERETO,
ENTERING  INTO  ENTIRE NET INCOME OR ENTIRE NET INCOME PLUS COMPENSATION
AND THE TERM "PARTNER'S ENTIRE  INCOME"  MEANS  ENTIRE  NET  INCOME,  OR
ENTIRE  NET  INCOME  PLUS  COMPENSATION, ALLOCATED WITHIN THE STATE. For
purposes of article twenty-two of  this  chapter,  the  term  "partner's
income  from  the  partnership" means partnership items of income, gain,
loss and deduction, and New York modifications  thereto,  entering  into
New  York  adjusted gross income, and the term "partner's entire income"
means New York adjusted gross income.
  (A) Where the taxpayer is a qualified empire zone  enterprise  and  is
required  or  permitted  to  make a return or report on a combined basis
under article nine-A[, thirty-two] or ARTICLE thirty-three of this chap-
ter, the taxpayer's tax factor shall be the amount determined  in  para-
graph one of this subdivision which is attributable to the income of the
qualified  empire  zone  enterprise.   Such attribution shall be made in
accordance with the ratio of  the  qualified  empire  zone  enterprise's
income  allocated within the state to the combined group's income, or in
accordance with such other methods as the commissioner may prescribe  as
providing  an apportionment which reasonably reflects the portion of the
combined group's tax attributable to the income of the qualified  empire
zone enterprise. In no event may the ratio so determined exceed 1.0.
  S  35.  Subdivision  (g)  of  section  16  of the tax law, as added by
section 2 of part GG of chapter 63 of the laws of 2000,  is  amended  to
read as follows:
  (g) Definitions and cross-references. For definitions of terms used in
this  section  see  sections  fourteen  and fifteen of this article. For
application of the credit provided for in this section, see the  follow-
ing provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B:  subdivision [28]6.
  (2) Article 22: Section 606: subsections (i) and (cc).
  (3) [Article 32: Section 1456: subsection (p).
  (4)] Article 33: Section 1511: subdivision (s).
  S  36. Paragraph 1 of subdivision (b) of section 17 of the tax law, as
added by section 43 of part S1 of chapter 57 of the  laws  of  2009,  is
amended to read as follows:
  (1)  The  empire  zones tax benefits report must contain the following
information about the empire zone tax  credits  claimed  under  articles
nine,  nine-A, twenty-two[, thirty-two] and thirty-three of this chapter
during the previous calendar year:
  (A) the name of each taxpayer claiming a credit; and
  (B) the amount of each credit earned by each taxpayer.
  S 37. Subdivisions (a) and (d) of section 18 of the tax law, as  added
by  section  2 of part CC of chapter 63 of the laws of 2000, are amended
to read as follows:
  (a) Allowance of credit. A  taxpayer  subject  to  tax  under  article
nine-A,  twenty-two[,  thirty-two] or thirty-three of this chapter shall

S. 6359--B                         124                        A. 8559--B

be allowed a credit against such tax, pursuant to the provisions  refer-
enced  in subdivision (d) of this section, with respect to the ownership
of eligible low-income buildings for which an eligibility statement  has
been  issued  by  the commissioner of housing and community renewal. The
amount of the credit shall be the credit amount for each  such  building
allocated  by  such  commissioner  as  provided  in article two-A of the
public housing law. The credit amount shall be allowed for each  of  the
ten  taxable years in the credit period, and any reduction in first-year
credit as provided in subdivision two of section twenty-two of such  law
shall be allowed in the eleventh taxable year.
  (d)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B:  subdivision [30] 15,
  (2) Article 22: Section 606: subsections (i) and (x),
  (3) [Article 32: Section 1456: subsection (l),
  (4)] Article 33: Section 1511: subdivision (n).
  S 38. Subparagraph (A) of paragraph 1 of subdivision (a) and  subdivi-
sion  (f) of section 19 of the tax law, as added by section 2 of part II
of chapter 63 of the laws of 2000, are amended to read as follows:
  (A) Green building credit. A taxpayer subject  to  tax  under  article
nine,  nine-A,  twenty-two[, thirty-two] or thirty-three of this chapter
shall be allowed a green building credit against such tax,  pursuant  to
the  provisions referenced in subdivision (f) of this section. Provided,
however, no credit shall  be  allowed  under  this  section  unless  the
taxpayer  has complied with the applicable requirements of paragraph two
of subdivision (d) of this section (relating to  reports  to  DEC).  The
amount of the credit shall be the sum of the credit components specified
in  paragraphs two through seven of this subdivision. Provided, however,
the amount of each such credit component shall not exceed the limit  set
forth  in  the initial credit component certificate obtained pursuant to
subdivision (c) of this section. In the  determination  of  such  credit
components,  no cost paid or incurred by the taxpayer shall be the basis
for more than one such component.
  (f) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article nine: Section one hundred eighty-seven-d;
  (2)  Article  nine-A:  Subdivision [thirty-one] SIXTEEN of section two
hundred [ten] TEN-B;
  (3) Article twenty-two: Subsections (i) and (y) of section six hundred
six;
  (4) [Article thirty-two: Subsection (m) of  section  fourteen  hundred
fifty-six;
  (5)]  Article thirty-three: Subdivision (o) of section fifteen hundred
eleven.
  S 39. Paragraphs 1 and 5 of subdivision (a) of section 21 of  the  tax
law,  as  amended  by  section 1 of part H of chapter 577 of the laws of
2004, are amended to read as follows:
  (1) General. A taxpayer subject to tax  under  article  nine,  nine-A,
twenty-two[,  thirty-two]  or  thirty-three  of  this  chapter  shall be
allowed a credit against such tax, pursuant to the provisions referenced
in subdivision (f) of this section. Such credit shall  be  allowed  with
respect to a qualified site, as such term is defined in paragraph one of
subdivision  (b)  of this section. The amount of the credit in a taxable
year shall be the sum of the credit components specified  in  paragraphs
two, three and four of this subdivision applicable in such year.

S. 6359--B                         125                        A. 8559--B

  (5)  Applicable  percentage. For purposes of paragraphs two, three and
four of this subdivision, the  applicable  percentage  shall  be  twelve
percent  in  the  case  of  credits claimed under article nine, nine-A[,
thirty-two] or thirty-three of this chapter, and ten percent in the case
of credits claimed under article twenty-two of this chapter, except that
where  at least fifty percent of the area of the qualified site relating
to the credit provided for in this section is  located  in  an  environ-
mental  zone  as  defined  in  paragraph  six of subdivision (b) of this
section, the applicable percentage shall be increased by  an  additional
eight  percent. Provided, however, as afforded in section 27-1419 of the
environmental conservation law, if the certificate of  completion  indi-
cates  that  the  qualified  site has been remediated to Track 1 as that
term is described in subdivision four of section 27-1415 of the environ-
mental conservation law, the applicable  percentage  set  forth  in  the
first sentence of this paragraph shall be increased by an additional two
percent.
  S  39-a.  Subdivisions  (c)  and  (f) of section 21 of the tax law, as
added by section 1 of part H of chapter 1  of  the  laws  of  2003,  are
amended to read as follows:
  (c)  Qualifying  property.  Property  which  qualifies  for the credit
provided for under this section and also for a credit provided  for  (1)
under either subdivision [twelve] ONE or subdivision [twelve-B] THREE of
section  two  hundred  [ten]  TEN-B  of  this  chapter,  or both, OR (2)
subsection (a) or subsection (j) of section  six  hundred  six  of  this
chapter,  or  both[, (3) the credit provided for under subsection (i) of
section fourteen hundred fifty-six of this chapter, or  (4)  the  credit
provided under subdivision (q) of section fifteen hundred eleven of this
chapter]  may be the basis for either the credit provided for under this
section or one of the credits enumerated in paragraph  one[,]  OR  two[,
three or four] of this subdivision, but not both.
  (f)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-g
  (2) Article 9-A: Section [210] 210-B, subdivision [33] 17
  (3) Article 22: Section 606, subsections (i) and (dd)
  (4) [Article 32: Section 1456, subsection (q)
  (5)] Article 33: Section 1511, subdivision (u).
  S 40. Paragraph 3 of subdivision (a) and paragraphs 1 and 9 of  subdi-
vision (b) of section 22 of the tax law, as amended by section 4 of part
H of chapter 577 of the laws of 2004, are amended to read as follows:
  (3)  Developer.  (i)  A  "developer" is a taxpayer under article nine,
nine-A, twenty-two[, thirty-two] or thirty-three of this chapter who  or
which  either  (I)  has  been  issued  a  certificate of completion with
respect to a qualified site or (II) has purchased or in  any  other  way
has been conveyed all or any portion of a qualified site from a taxpayer
or  any  other  party  who  or  which  has  been issued a certificate of
completion with respect to such site provided, such purchase or  convey-
ance  occurs within seven years of the effective date of the certificate
of completion issued with respect to  such  qualified  site.    Provided
further, that the taxpayer who or which is purchasing all or any portion
of a qualified site and the taxpayer or any other party who or which has
been  issued  a  certificate of completion with respect to such site may
not be related persons, as such term is defined in subparagraph  (C)  of
paragraph  three of subsection (b) of section four hundred sixty-five of
the internal revenue code.

S. 6359--B                         126                        A. 8559--B

  (ii) Where the entity to whom a certificate  of  completion  has  been
issued  is a partnership, or where the entity which has purchased all or
any portion of a qualified site from a taxpayer who or  which  has  been
issued  a certificate of completion with respect to such site within the
applicable  time limit is a partnership, any partner in such partnership
who or which is taxable under article nine, nine-A,  twenty-two[,  thir-
ty-two]  or thirty-three of this chapter shall be a developer under this
paragraph. Where the entity to whom a certificate of completion has been
issued is a New York S  corporation,  or  where  the  entity  which  has
purchased  all or any portion of a qualified site from a taxpayer who or
which has been issued a certificate of completion with respect  to  such
site  within  the applicable time limit is a New York S corporation, any
shareholder in such New York S corporation shall be  a  developer  under
this paragraph.
  (1)  Allowance of credit. A developer of a qualified site who or which
is subject to tax under article nine, nine-A,  twenty-two[,  thirty-two]
or  thirty-three of this chapter, shall be allowed a credit against such
tax, pursuant to the provisions referenced in  paragraph  nine  of  this
subdivision, for eligible real property taxes imposed on such site.
  (9)  Cross-references.  For  application of the credit provided for in
this subdivision, see the following provisions of this chapter:
  (i) Article 9: Section 187-h.
  (ii) Article 9-A: Section [210] 210-B:  subdivision [34] 18.
  (iii) Article 22: Section 606: subsections (i) and (ee).
  (iv) [Article 32: Section 1456: subsection (r).
  (v)] Article 33: Section 1511: subdivision (v).
  S 41. Subdivision (a) of section 23 of the  tax  law,  as  amended  by
section 10 of part H chapter 577 of the laws of 2004, is amended to read
as follows:
  (a)  Allowance  of  credit.  General.  A taxpayer subject to tax under
article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter  shall  be  allowed  a  credit against such tax, pursuant to the
provisions referenced in subdivision (e) of this section. The amount  of
such  credit  shall be equal to the lesser of thirty thousand dollars or
fifty percent of the premiums paid on or after the date  of  the  brown-
field site cleanup agreement executed by the taxpayer and the department
of  environmental  conservation pursuant to section 27-1409 of the envi-
ronmental conservation law by the taxpayer for environmental remediation
insurance issued with respect to a qualified site.
  S 42. Subdivision (e) of section 23  of  the  tax  law,  as  added  by
section  19  of  part  H of chapter 1 of the laws of 2003, is amended to
read as follows:
  (e) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-i
  (2) Article 9-A: Section [210] 210-B, subdivision [35] 19
  (3) Article 22: Section 606, subsections (i) and (ff)
  (4) [Article 32: Section 1456, subsection (s)
  (5)] Article 33: Section 1511, subdivision (w).
  S 43. Paragraphs 1 and 2 of subdivision (a) and clause (i) of subpara-
graph  (D)  of  paragraph  1 of subdivision (b) of section 25 of the tax
law, as added by section 1 of part N of chapter 61 of the laws of  2005,
are amended to read as follows:
  (1)  Every  taxpayer,  or  person as defined in section seven thousand
seven hundred one of the internal  revenue  code,  required  to  file  a
disclosure  statement  with  the  internal  revenue  service pursuant to

S. 6359--B                         127                        A. 8559--B

section six thousand eleven of the internal revenue code, or  the  regu-
lations promulgated thereunder, related to a reportable transaction or a
listed  transaction, as those terms are defined in such section or regu-
lations,  must  attach  a  duplicate of such disclosure statement to the
return or report required to be filed by such taxpayer or person for the
taxable year under article nine,  nine-A,  twenty-two[,  thirty-two]  or
thirty-three of this chapter, and provide such other information related
to  such  disclosure  as prescribed by the commissioner. Such disclosure
shall be made notwithstanding that one member of an affiliated group, as
defined by section fifteen hundred four of the  internal  revenue  code,
may  file such disclosure statement with the internal revenue service on
behalf of its affiliates including such taxpayer or person.
  (2) Every taxpayer or such person  who  participates  in  a  New  York
reportable  transaction  for  a  taxable year must disclose such partic-
ipation with its return or report required to  be  filed  under  article
nine,  nine-A,  twenty-two[, thirty-two] or thirty-three of this chapter
for the taxable year in a  form  prescribed  by  the  commissioner,  and
provide such other information related to such transaction as prescribed
by  the commissioner. A New York reportable transaction is a transaction
that has the potential to be a tax avoidance transaction  as  determined
by the commissioner.
  (i)  the  list  required  to  be maintained by such person pursuant to
section six thousand one hundred twelve of  the  internal  revenue  code
identifies  or  is  required to identify a taxpayer subject to tax under
article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter, and
  S  44. Subdivisions (a) and (f) of section 26 of the tax law, as added
by chapter 537 of the laws of 2005, are amended to read as follows:
  (a) Allowance of credit. A taxpayer, which is  subject  to  tax  under
article  nine,  nine-A, twenty-two[, thirty-two] or thirty-three of this
chapter and which is a qualified building  owner,  shall  be  allowed  a
credit  against  such tax.   The amount of the credit allowed under this
section shall equal the sum of the number of qualified security officers
providing protection to a building or buildings owned  by  the  taxpayer
multiplied  by  three  thousand  dollars. Provided, however, that in the
case of a worker not so employed for a full year, such amount  shall  be
prorated  to  reflect the length of such employment under regulations of
the commissioner.
  (f) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) article 9: section 187-n.
  (2) article 9-A: section [210] 210-B:  subdivision [37] 21.
  (3) article 22: section 606: subsection (ii).
  (4) [article 32: section 1456: subsection (t).
  (5)] article 33: section 1511: subdivision (x).
  S 45. Paragraph 3 of subdivision (a) and subdivision (c) of section 28
of  the  tax  law,  as added by section 2 of part V of chapter 62 of the
laws of 2006, are amended to read as follows:
  (3) No qualified production costs used by a  taxpayer  either  as  the
basis for the allowance of the credit provided for under this section or
used  in  the  calculation of the credit provided for under this section
shall be used by such taxpayer to claim any other credit allowed  pursu-
ant to this chapter.
  Notwithstanding  any  provisions  of  this  section to the contrary, a
corporation or partnership, which otherwise  qualifies  as  a  qualified
commercial production company, and is similar in operation and in owner-

S. 6359--B                         128                        A. 8559--B

ship  to  a  business entity or entities taxable, or previously taxable,
under section one hundred eighty-three, one hundred eighty-four  or  one
hundred  eighty-five  of  article nine; article nine-A[, article thirty-
two] or thirty-three of this chapter or which would have been subject to
tax  under  article twenty-three of this chapter (as such article was in
effect on January first, nineteen hundred eighty) OR  WHICH  WOULD  HAVE
BEEN  SUBJECT  TO  TAX UNDER ARTICLE THIRTY-TWO OF THIS CHAPTER (AS SUCH
ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO  THOUSAND  FOURTEEN)
or  the  income  or  losses  of which is or was includable under article
twenty-two of this chapter shall not be deemed a new or  separate  busi-
ness,  and  therefore  shall not be eligible for empire state commercial
production benefits, if it was not formed for a valid business  purpose,
as  such  term is defined in clause (D) of subparagraph one of paragraph
(o) of subdivision nine of section two hundred eight of this chapter and
was formed solely to gain  empire  state  commercial  production  credit
benefits.
  (c)  Cross-references.  For  application of the credit provided for in
this section, see the following provision of this chapter:
  (1) article 9-A: section [210] 210-B:  subdivision [38] 23.
  (2) article 22: section 606: subsection (jj).
  S 46. Subdivision (d) of section 28  of  the  tax  law,  as  added  by
section  1  of  part  X of chapter 62 of the laws of 2006, is amended to
read as follows:
  (d) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-c.
  (2) Article 9-A: Section [210] 210-B, subdivision [38] 24.
  (3) Article 22: Section 606, subsections (i) and (jj).
  S  47.  The  opening paragraph of subdivision (a) and subdivisions (c)
and (g) of section 31 of the tax law, the opening paragraph of  subdivi-
sion  (a) and subdivision (g) as amended by section 7 of part G of chap-
ter 61 of the laws of 2011, subdivision (c) as added  by  section  2  of
part  MM  of  chapter  59  of  the  laws of 2010, are amended to read as
follows:
  General. A taxpayer subject to tax under section one  hundred  eighty-
five,  article  nine-A, twenty-two[, thirty-two] or thirty-three of this
chapter shall be allowed a credit against  such  tax,  pursuant  to  the
provisions  referenced in subdivision (g) of this section. The amount of
the credit, allowable for up to ten consecutive taxable  years,  is  the
sum of the following four credit components:
  (c)  Election of credit. A taxpayer who or which is qualified to claim
the excelsior investment tax credit component and is also  qualified  to
claim  the investment tax credit provided for under subdivision [twelve]
ONE of section two hundred [ten,] TEN-B OR subsection (a) of section six
hundred six[, or subsection (i) of section fourteen  hundred  fifty-six]
of  this  chapter,  may claim either the excelsior investment tax credit
component or the investment tax credit, but not both with  regard  to  a
particular  piece  of  property. In addition, a taxpayer who or which is
qualified to claim the excelsior investment tax credit component and  is
also  qualified  to claim the brownfield tangible property credit compo-
nent under section twenty-one of this article, as added by  chapter  one
of  the  laws  of  two  thousand  three,  may claim either the excelsior
investment tax credit component or such tangible property credit  compo-
nent,  but  not  both with regard to a particular piece of property. The
election to claim the excelsior investment  tax  credit  component,  the

S. 6359--B                         129                        A. 8559--B

investment  tax credit or the brownfield tangible property credit compo-
nent, with regard to the same property, is irrevocable.
  (g)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9: section 187-q.
  (2) article 9-A: section [210] 210-B: subdivision [41] 31.
  (3) article 22: section 606: subsection (qq).
  (4) [article 32: section 1456: subsection (u).
  (5)] article 33: section 1511: subdivision (y).
  S 48. Subdivision (d) of section 31  of  the  tax  law,  as  added  by
section  12  of  part Q of chapter 57 of the laws of 2010, is amended to
read as follows:
  (d) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) article 9-A: section [210] 210-B: subdivision [41] 32.
  (2) article 22: section 606: subsection (qq).
  S  49. Subdivision 3 of section 34 of the tax law, as added by section
2 of part Y of chapter 57 of the laws of 2010, is  amended  to  read  as
follows:
  3.  (a) For application of the temporary deferral nonrefundable payout
credit, see the following provisions of this chapter:
  (1) Article 9: section 187-0
  (2) Article 9-A: section [210(41)] 210-B(33)
  (3) Article 22: section 606(qq)
  (4) [Article 32: section 1456(v)
  (5)] Article 33: section 1511(y)
  (b) For application of the temporary deferral refundable payout  cred-
it, see the following provisions of this chapter:
  (1) Article 9: section 187-p
  (2) Article 9-A: section [210(42)] 210-B(34)
  (3) Article 22: section 606(rr)
  (4) [Article 32: section 1456(w)
  (5)] Article 33: section 1511(z)
  S  50.  The  opening paragraph of subdivision (a), subparagraph (C) of
paragraph 2 of subdivision (e), and subdivision (f) of section 35 of the
tax law, as added by section 3 of part V of chapter 61 of  the  laws  of
2011, are amended to read as follows:
  A taxpayer which is a participant or the owner of a participant in the
economic transformation and facility redevelopment program under article
eighteen  of  the  economic development law that is subject to tax under
section one hundred eighty-five of  article  nine,  or  article  nine-A,
twenty-two[,  thirty-two]  or  thirty-three  of  this  chapter  shall be
allowed the sum of following components against such  tax,  pursuant  to
the provisions referenced in subdivision (f) of this section.
  (C) the business entity must not be substantially similar in ownership
and  operation  to  another taxpayer taxable or previously taxable under
section one hundred eighty-three, one hundred eighty-four or one hundred
eighty-five of article nine, former section one  hundred  eighty-six  of
this chapter or article nine-A, twenty-two[, thirty-two] or thirty-three
of  this  chapter  OR  FORMER  ARTICLE THIRTY-TWO OF THIS CHAPTER or the
income or losses of which is or was includable under article  twenty-two
of this chapter;
  (f)  Cross-references.  For application of the credits provided for in
this section, see the following provisions of this chapter:
  (1) section 185: section 187-r.
  (2) article 9-A: section [210(43)] 210-B(35).

S. 6359--B                         130                        A. 8559--B

  (3) article 22: section 606 (ss).
  (4) [article 32: section 1456(x).
  (5)] article 33: section 1511 (aa).
  S  51. Subdivisions (a) and (e) of section 36 of the tax law, as added
by section 2 of part E of chapter 56 of the laws of 2011, are amended to
read as follows:
  (a) Allowance of credit. A  taxpayer  subject  to  tax  under  article
nine-A,  twenty-two[,  thirty-two] or thirty-three of this chapter shall
be allowed a credit against such tax, pursuant to the provisions  refer-
enced  in  subdivision  (e)  of  this section. The amount of the credit,
allowable for ten consecutive tax years, is equal to the  amount  deter-
mined  pursuant  to  section  four  hundred  twenty-five of the economic
development law.
  (e) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) article 9-A: section [210] 210-B, subdivision [44] 37;
  (2) article 22: section 606, subsection (tt);
  (3) [article 32: section 1456, subsection (y);
  (4)] article 33, section 1511, subdivision (bb).
  S  52. Subdivision (c) of section 37 of the tax law, as added by chap-
ter 109 of the laws of 2012, is amended to read as follows:
  (c) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B, subdivision [45] 39.
  (2) Article 22: Section 606, subsections (i) and (uu).
  S 52-a. Subdivision (c) of section 39 of the tax law is REPEALED.
  S  53.  Paragraphs  2, 3 and 4 of subdivision (k) of section 39 of the
tax law, paragraphs 2 and 3 as added by section 2 of part A  of  chapter
68 of the laws of 2013, paragraph 4 as amended by section 2 of part T of
this act, are amended to read as follows:
  [(2) Article 9: section 180, subdivision 3.
  (3) Article 9: section 181, subdivision 3.]
  (4) Article 9-A: section [210] 210-B, subdivision [47] 41 and subdivi-
sion [48] 44.
  S  54.  Subdivision  1  of section 171-a of the tax law, as amended by
section 1 of part R of chapter 60 of the laws of  2004,  is  amended  to
read as follows:
  1.  All  taxes,  interest, penalties and fees collected or received by
the commissioner or the commissioner's duly authorized agent under arti-
cles nine (except section one hundred eighty-two-a thereof and except as
otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
twelve-A  (except  as  otherwise provided in section two hundred eighty-
four-d thereof), thirteen, thirteen-A (except as otherwise  provided  in
section  three  hundred  twelve  thereof),  eighteen,  nineteen,  twenty
(except as otherwise provided in section four hundred eighty-two  there-
of),  twenty-one,  twenty-two,  twenty-six,  twenty-six-B,  twenty-eight
(except as otherwise provided in section eleven hundred  two  or  eleven
hundred  three thereof), twenty-eight-A, thirty-one (except as otherwise
provided in section fourteen hundred twenty-one thereof),  [thirty-two,]
thirty-three and thirty-three-A of this chapter shall be deposited daily
in  one  account  with  such  responsible banks, banking houses or trust
companies as may be designated by the comptroller, to the credit of  the
comptroller.  Such  an account may be established in one or more of such
depositories. Such deposits shall be kept separate and  apart  from  all
other  money in the possession of the comptroller. The comptroller shall
require adequate security from  all  such  depositories.  Of  the  total

S. 6359--B                         131                        A. 8559--B

revenue  collected  or received under such articles of this chapter, the
comptroller shall retain in the comptroller's hands such amount  as  the
commissioner may determine to be necessary for refunds or reimbursements
under  such  articles  of  this chapter [and article ten thereof] out of
which amount the comptroller shall pay any refunds or reimbursements  to
which  taxpayers shall be entitled under the provisions of such articles
of this chapter [and article ten  thereof].  The  commissioner  and  the
comptroller  shall  maintain  a system of accounts showing the amount of
revenue collected or received from each of the  taxes  imposed  by  such
articles.  The  comptroller,  after  reserving  the  amount  to pay such
refunds or reimbursements, shall, on or before the  tenth  day  of  each
month, pay into the state treasury to the credit of the general fund all
revenue deposited under this section during the preceding calendar month
and  remaining  to  the  comptroller's  credit  on  the last day of such
preceding month, (i) except that the comptroller shall pay to the  state
department of social services that amount of overpayments of tax imposed
by  article  twenty-two  of this chapter and the interest on such amount
which is certified to the comptroller by the commissioner as the  amount
to  be  credited against past-due support pursuant to subdivision six of
section one hundred seventy-one-c of this [chapter]  ARTICLE,  (ii)  and
except  that  the  comptroller  shall  pay  to the New York state higher
education services corporation and the state university of New  York  or
the city university of New York respectively that amount of overpayments
of tax imposed by article twenty-two of this chapter and the interest on
such amount which is certified to the comptroller by the commissioner as
the amount to be credited against the amount of defaults in repayment of
guaranteed  student  loans and state university loans or city university
loans pursuant to subdivision five of section one hundred  seventy-one-d
and  subdivision six of section one hundred seventy-one-e of this [chap-
ter] ARTICLE, (iii) and except further that,  notwithstanding  any  law,
the  comptroller shall credit to the revenue arrearage account, pursuant
to section ninety-one-a of the state finance law, that amount  of  over-
payment  of  tax  imposed  by  article nine, nine-A, twenty-two, thirty,
thirty-A, thirty-B[, thirty-two] or thirty-three of  this  chapter,  and
any  interest  thereon,  which  is  certified  to the comptroller by the
commissioner as the amount to be credited  against  a  past-due  legally
enforceable  debt  owed  to  a state agency pursuant to paragraph (a) of
subdivision six of section one hundred seventy-one-f  of  this  article,
provided,  however,  he  shall  credit  to  the special offset fiduciary
account, pursuant to section ninety-one-c of the state finance law,  any
such  amount  creditable as a liability as set forth in paragraph (b) of
subdivision six of section one hundred seventy-one-f  of  this  article,
(iv)  and  except  further that the comptroller shall pay to the city of
New York that amount of overpayment of  tax  imposed  by  article  nine,
nine-A,  twenty-two,  thirty, thirty-A, thirty-B[, thirty-two,] or thir-
ty-three of this chapter and any interest thereon that is  certified  to
the comptroller by the commissioner as the amount to be credited against
city  of  New  York  tax  warrant  judgment debt pursuant to section one
hundred seventy-one-l of this article, (v) and except further  that  the
comptroller  shall pay to a non-obligated spouse that amount of overpay-
ment of tax imposed by article twenty-two of this chapter and the inter-
est on such amount which has  been  credited  pursuant  to  section  one
hundred  seventy-one-c,  one hundred seventy-one-d, one hundred seventy-
one-e, one hundred seventy-one-f or one hundred  seventy-one-l  of  this
article and which is certified to the comptroller by the commissioner as
the  amount  due  such non-obligated spouse pursuant to paragraph six of

S. 6359--B                         132                        A. 8559--B

subsection (b) of section six hundred fifty-one  of  this  chapter;  and
(vi)  the  comptroller  shall deduct a like amount which the comptroller
shall pay into the treasury to the  credit  of  the  general  fund  from
amounts  subsequently  payable to the department of social services, the
state university of New York, the city university of New  York,  or  the
higher  education services corporation, or the revenue arrearage account
or special offset fiduciary account pursuant to section ninety-one-a  or
ninety-one-c of the state finance law, as the case may be, whichever had
been  credited the amount originally withheld from such overpayment, and
(vii) with respect to amounts originally withheld from such  overpayment
pursuant  to  section one hundred seventy-one-l of this article and paid
to the city of New York, the comptroller shall  collect  a  like  amount
from the city of New York.
  S  55.  Subdivision  2  of section 171-a of the tax law, as amended by
chapter 57 of the laws of 1993, is amended to read as follows:
  2. Notwithstanding subdivision  one  of  this  section  or  any  other
provision of law to the contrary, the taxes imposed pursuant to sections
one  hundred  eighty-three-a,  one  hundred  eighty-four-a, [one hundred
eighty-six-b,] one hundred eighty-six-c,  [one  hundred  eighty-nine-a,]
two  hundred nine-B[, fourteen hundred fifty-five-b] and fifteen hundred
five-a of this chapter, reduced by an amount for  administrative  costs,
shall be deposited to the credit of the metropolitan mass transportation
operating  assistance  account  in  the  mass  transportation  operating
assistance fund, created pursuant to section eighty-eight-a of the state
finance law, as such taxes are received. The amount  for  administrative
costs  shall  be  determined by the commissioner to represent reasonable
costs of the  department  of  taxation  and  finance  in  administering,
collecting, determining and distributing such taxes. Of the total reven-
ue  collected or received under such sections of this chapter, the comp-
troller shall retain in his hands such amount as  the  commissioner  may
determine  to  be  necessary  for  refunds  or reimbursements under such
sections of this chapter out of which amount the comptroller  shall  pay
any refunds or reimbursements to which taxpayers shall be entitled under
provisions  of  such  sections. The tax commissioner and the comptroller
shall maintain a system  of  accounts  showing  the  amount  of  revenue
collected or received from each of the taxes imposed by such sections.
  S  56. Paragraphs (b) and (c) of subdivision 1 of section 171-f of the
tax law, as amended by chapter 81 of the laws of 1995,  are  amended  to
read as follows:
  (b)  "taxpayer"  shall mean a corporation, association, company, part-
nership, estate, trust, liquidator, fiduciary or other entity  or  indi-
vidual who or which is liable for any tax or other imposition imposed by
or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
ty-B[,  thirty-two,] or thirty-three of this chapter or article two-E of
the general city law, which tax or other imposition is  administered  by
the  commissioner  of  taxation  and finance, or who or which is under a
duty to perform an act under or pursuant  to  such  tax  or  imposition,
excluding  a  state agency, a municipal corporation or a district corpo-
ration; and (c) "overpayment" shall mean an overpayment which  has  been
requested  or determined to be refunded, a refund or a reimbursement, of
a tax or other imposition  imposed  by  or  pursuant  to  article  nine,
nine-A,  twenty-two,  thirty, thirty-A, thirty-B[, thirty-two,] or thir-
ty-three of this chapter or article two-E of the general city law, which
is administered by the commissioner of taxation and finance.
  S 57. Subdivision 2 of section 171-f of the tax law, as added by chap-
ter 55 of the laws of 1992, is amended to read as follows:

S. 6359--B                         133                        A. 8559--B

  (2) The commissioner of taxation and finance, upon agreement with  the
state  comptroller  and  acting  as  an agent for the state comptroller,
shall set forth the  procedures  for  crediting  any  overpayment  by  a
taxpayer  of  any tax or other imposition imposed by or authorized to be
imposed  pursuant to article nine, nine-A, twenty-two, thirty, thirty-A,
thirty-B[, thirty-two,] or thirty-three of this chapter or article two-E
of the general city law, which is administered by  the  commissioner  of
taxation and finance, and the interest on any such overpayments, against
the  amount of a past-due legally enforceable debt owed by such taxpayer
to a state agency. An implementation plan  shall  be  developed  by  the
division  of the budget and the department of taxation and finance which
shall provide, but not be limited to, guidance with respect  to  coordi-
nation of debt collection pursuant to this section and subdivision twen-
ty-seventh  of  section  one  hundred  seventy-one of this article. This
section shall not be deemed to abrogate or limit in any way  the  powers
and  authority  of the state comptroller to set off debts owed the state
against payments from the state, under the constitution of the state  or
any other law.
  S  58. Paragraphs (a) and (b) of subdivision 1 of section 171-l of the
tax law, as added by section 6 of part R of chapter 60 of  the  laws  of
2004, are amended to read as follows:
  (a)  "taxpayer"  shall mean a corporation, association, company, part-
nership, estate, trust, liquidator, fiduciary or other entity  or  indi-
vidual who or which is liable for any tax or other imposition imposed by
or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
ty-B[,  thirty-two,] or thirty-three of this chapter, which tax or other
imposition is administered by the commissioner of taxation and  finance,
or  who  or which is under a duty to perform an act under or pursuant to
such tax or imposition, excluding a state  agency,  a  municipal  corpo-
ration or a district corporation;
  (b)  "overpayment"  shall mean an overpayment which has been requested
or determined to be refunded, a refund or a reimbursement, of a  tax  or
other  imposition  imposed by or pursuant to article nine, nine-A, twen-
ty-two, thirty, thirty-A, thirty-B[,  thirty-two,]  or  thirty-three  of
this  chapter, which is administered by the commissioner of taxation and
finance; and
  S 59. Paragraph (b) of subdivision 1 of section 183 of the tax law, as
amended by section 1 of part Y of chapter 63 of the  laws  of  2000,  is
amended to read as follows:
  (b)  For  the  privilege  of exercising its corporate franchise, or of
doing business, or of employing capital, or of owning or leasing proper-
ty in this state in a corporate or organized capacity, or of maintaining
an office in this state, every domestic corporation, joint-stock company
or association formed for or  principally  engaged  in  the  conduct  of
canal, steamboat, ferry (except a ferry company operating between any of
the boroughs of the city of New York under a lease granted by the city),
express,  navigation,  pipe  line,  transfer,  baggage express, omnibus,
taxicab, telegraph, or telephone business, or formed for or  principally
engaged  in  the  conduct  of  two or more of such businesses, and every
domestic corporation, joint-stock company or association formed  for  or
principally  engaged  in the conduct of a railroad, palace car, sleeping
car or trucking business or formed for or  principally  engaged  in  the
conduct of two or more of such businesses and which has made an election
pursuant  to  subdivision  ten of this section, and every other domestic
corporation, joint-stock company or association principally  engaged  in
the  conduct  of  a  transportation  or  transmission business, except a

S. 6359--B                         134                        A. 8559--B

corporation, joint-stock company or association formed for or principal-
ly engaged in the conduct of a railroad, palace  car,  sleeping  car  or
trucking business or formed for or principally engaged in the conduct of
two  or  more  of  such  businesses  and which has not made the election
provided for in subdivision ten of this section,  and  except  a  corpo-
ration,  joint-stock  company  or association principally engaged in the
conduct of aviation (including air freight forwarders acting as  princi-
pal and like indirect air carriers) and except a corporation principally
engaged  in  providing  telecommunication  services between aircraft and
dispatcher, aircraft and air  traffic  control  or  ground  station  and
ground  station  (or  any combination of the foregoing), at least ninety
percent of the voting stock of which corporation is owned,  directly  or
indirectly,  by  air carriers and which corporation's principal function
is to fulfill the requirements of  (i)  the  federal  aviation  adminis-
tration  (or  the  successor  thereto)  or  (ii) the international civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and air traffic control or ground station and  ground  station  (or  any
combination of the foregoing) for the purposes of air safety and naviga-
tion  [and  except  a  corporation,  joint-stock  company or association
subject to taxation under article thirty-two  of  this  chapter,]  shall
pay,  in  advance,  an  annual  tax to be computed upon the basis of the
amount of its capital stock within this state during the preceding year,
and upon each dollar of such amount. Provided, however,  a  corporation,
joint-stock  company or association formed for or principally engaged in
the transportation, transmission or distribution of gas, electricity  or
steam  shall  not  be  subject  to tax under this section or section one
hundred eighty-four of this article.
  S 60. Subdivision 10 of section 183 of the tax law, as added by  chap-
ter 309 of the laws of 1996, is amended to read as follows:
  10.  Election. [With respect to taxable years beginning after nineteen
hundred ninety-seven, every] EVERY corporation, joint-stock  company  or
association  formed for or principally engaged in the conduct of a rail-
road (including surface railroad, whether  or  not  operated  by  steam,
subway  railroad  or  elevated  railroad),  palace  car, sleeping car or
trucking business or formed for or principally engaged in the conduct of
two or more of such businesses, which would be subject to article nine-A
[or thirty-two] of this chapter if the election provided for under  this
subdivision  were not made, may elect to be subject to the provisions of
this section and, as applicable, section one hundred eighty-four of this
article, rather than the provisions of such article nine-A  [or  thirty-
two]. [In the case of such a corporation, joint-stock company or associ-
ation  subject to the tax imposed under this section and, as applicable,
section one hundred eighty-four of this article, for  the  taxable  year
ending December thirty-first, nineteen hundred ninety-seven, such corpo-
ration, joint-stock company or association must make such election on or
before March fifteenth, nineteen hundred ninety-eight, and such election
shall  apply  to the taxable year ending on December thirty-first, nine-
teen  hundred  ninety-eight  and  to  succeeding  taxable  years,  until
revoked. In the case of such a corporation, joint-stock company or asso-
ciation  which is not subject to the tax imposed under this section and,
as applicable, section one hundred eighty-four of this article  for  the
taxable  year ending December thirty-first, nineteen hundred ninety-sev-
en, but thereafter would be subject to article nine-A or  thirty-two  of
this  chapter  if  the election provided for under this subdivision were
not made, such] SUCH corporation,  joint-stock  company  or  association

S. 6359--B                         135                        A. 8559--B

must  make  such  election  by  the first day on which such corporation,
joint-stock company or association would be required to file a return or
report (without regard to extensions) under this section or section  one
hundred  eighty-four  of  this  article,  or section one hundred eighty-
three-a or one  hundred[-]eighty-four-a  of  this  article,  or  article
nine-A  [or  thirty-two]  of  this chapter. An election made pursuant to
this subdivision shall continue to be in effect  until  revoked  by  the
taxpayer.  A  revocation  of  the election to be subject to this section
and, as applicable, section one hundred  eighty-four  of  this  article,
shall  be irrevocable. Such election, and a revocation thereof, shall be
made in the manner prescribed by the commissioner, whether by regulation
or otherwise. Such revocation shall apply as of the first day of January
next following the end of a taxable  year  with  respect  to  which  the
taxpayer  had  been  subject to this section and, as applicable, section
one hundred eighty-four of this article, by reason of an  election  made
pursuant to this subdivision.
  S 61. The section heading and subdivisions 1 and 5 of section 183-a of
the  tax law, the section heading as added by chapter 931 of the laws of
1982, subdivision 1 as amended by section 1 of part A of chapter  59  of
the laws of 2013 and subdivision 5 as amended by chapter 945 of the laws
of 1990, are amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on transportation and transmission  corporations  and  associ-
ations.  1. The term "corporation" as used in this section shall include
an  association, within the meaning of paragraph three of subsection (a)
of section seventy-seven  hundred  one  of  the  internal  revenue  code
(including  a  limited liability company), a publicly traded partnership
treated as a corporation for  purposes  of  the  internal  revenue  code
pursuant  to section seventy-seven hundred four thereof and any business
conducted by a trustee or trustees  wherein  interest  or  ownership  is
evidenced  by  certificates  or  other written instruments. Every corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease  granted  by  the city), express, navigation, pipe line, transfer,
baggage express, omnibus, taxicab, telegraph, or telephone business,  or
formed  for  or  principally  engaged in the conduct of two or more such
businesses, and every corporation, joint-stock  company  or  association
formed  for  or principally engaged in the conduct of a railroad, palace
car, sleeping car or trucking business  or  formed  for  or  principally
engaged  in  the conduct of two or more of such businesses and which has
made an election pursuant to subdivision  ten  of  section  one  hundred
eighty-three  of  this article, and every other corporation, joint-stock
company or association principally engaged in the conduct of a transpor-
tation or  transmission  business,  except  a  corporation,  joint-stock
company  or association formed for or principally engaged in the conduct
of a railroad, palace car, sleeping car or trucking business  or  formed
for  or  principally engaged in the conduct of two or more of such busi-
nesses and which has not made the election provided for  in  subdivision
ten  of  section  one hundred eighty-three of this article, and except a
corporation, joint-stock company or association principally  engaged  in
the  conduct  of  aviation  (including  air freight forwarders acting as
principal and like indirect air carriers) and except a corporation prin-
cipally engaged in providing telecommunication services between aircraft
and dispatcher, aircraft and air traffic control or ground  station  and
ground  station  (or  any combination of the foregoing), at least ninety

S. 6359--B                         136                        A. 8559--B

percent of the voting stock of which corporation is owned,  directly  or
indirectly,  by  air carriers and which corporation's principal function
is to fulfill the requirements of  (i)  the  federal  aviation  adminis-
tration  (or  the  successor  thereto)  or  (ii) the international civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and air traffic control or ground station and  ground  station  (or  any
combination of the foregoing) for the purposes of air safety and naviga-
tion [and except a corporation, joint-stock company or association which
is  liable  to taxation under article thirty-two of this chapter], shall
pay for the privilege of exercising its corporate franchise, or of doing
business, or of employing capital, or of owning or leasing  property  in
the  metropolitan  commuter transportation district in such corporate or
organized capacity, or of maintaining an office in such district, a  tax
surcharge [for all or any part of its years commencing on or after Janu-
ary  first, nineteen hundred eighty-two but ending before December thir-
ty-first, two thousand eighteen], which tax surcharge,  in  addition  to
the  tax  imposed  by  section one hundred eighty-three of this article,
shall be computed at the rate of [eighteen percent of  the  tax  imposed
under  such  section one hundred eighty-three for such years or any part
of such years ending  before  December  thirty-first,  nineteen  hundred
eighty-three  after  the  deduction  of  any credits otherwise allowable
under this article, and at the rate of] seventeen  percent  of  the  tax
imposed  under  such  section  for  such years or any part of such years
[ending on or after  December  thirty-first,  nineteen  hundred  eighty-
three] after the deduction of any credits otherwise allowable under this
article;  provided,  however,  that such rates of tax surcharge shall be
applied only to that portion  of  the  tax  imposed  under  section  one
hundred  eighty-three of this article after the deduction of any credits
otherwise allowable under this article  which  is  attributable  to  the
taxpayer's business activity carried on within the metropolitan commuter
transportation district as so determined in the manner prescribed by the
rules  and  regulations  promulgated by the commissioner[; and provided,
further, that the tax surcharge imposed by this  section  shall  not  be
imposed upon any taxpayer for more than four hundred thirty-two months].
  5.  [The  report  covering  the tax surcharge which must be calculated
pursuant to this section based upon the tax reportable on the report due
by March  fifteenth,  nineteen  hundred  eighty-two  under  section  one
hundred  eighty-three  of this article shall be filed on or before March
fifteenth, nineteen hundred eighty-three. The report  covering  the  tax
surcharge  which  must be calculated pursuant to this section based upon
the tax reportable on  the  report  due  by  March  fifteenth,  nineteen
hundred  eighty-three  under  section  one  hundred eighty-three of this
article shall be filed on or before March  fifteenth,  nineteen  hundred
eighty-four.  The report covering the tax surcharge which must be calcu-
lated pursuant to this section based upon  the  tax  reportable  on  the
report  due  by  March  fifteenth,  nineteen  hundred  eighty-four under
section one hundred eighty-three of this article shall be  filed  on  or
before  March fifteenth, nineteen hundred eighty-five. The report cover-
ing the tax surcharge which must be calculated pursuant to this  section
based  upon  the  tax  reportable  on the report due by March fifteenth,
nineteen hundred eighty-five under section one hundred  eighty-three  of
this  article  shall  be  filed  on  or before March fifteenth, nineteen
hundred eighty-six. The report covering the tax surcharge which must  be
calculated pursuant to this section based upon the tax reportable on the
report due by March fifteenth, nineteen hundred eighty-six under section

S. 6359--B                         137                        A. 8559--B

one  hundred  eighty-three  of  this article shall be filed on or before
March fifteenth, nineteen hundred eighty-seven. The report covering  the
tax  surcharge  which  must be calculated pursuant to this section based
upon  the  tax reportable on the report due by March fifteenth, nineteen
hundred eighty-seven under section  one  hundred  eighty-three  of  this
article  shall  be  filed on or before March fifteenth, nineteen hundred
eighty-eight. The report covering the tax surcharge which must be calcu-
lated pursuant to this section based upon  the  tax  reportable  on  the
report  due  by  March  fifteenth,  nineteen  hundred eighty-eight under
section one hundred eighty-three of this article shall be  filed  on  or
before  March fifteenth, nineteen hundred eighty-nine. The report cover-
ing the tax surcharge which must be calculated pursuant to this  section
based  upon  the  tax  reportable  on the report due by March fifteenth,
nineteen hundred eighty-nine under section one hundred  eighty-three  of
this  article  shall  be  filed  on  or before March fifteenth, nineteen
hundred ninety.] The report covering the tax  surcharge  which  must  be
calculated pursuant to this section based upon the tax reportable on the
report  due  by  March  fifteenth  of  any  year [subsequent to nineteen
hundred eighty-nine] under section  one  hundred  eighty-three  of  this
article  shall  be  filed  on or before March fifteenth of the year next
succeeding such year. An extension pursuant to section one hundred nine-
ty-three OF THIS ARTICLE shall be allowed only if a taxpayer files  with
the  commissioner  an  application  for  extension  in such form as said
commissioner may prescribe by regulation and pays on or before the  date
of  such  filing  in  addition  to any other amounts required under this
article, either ninety percent of the entire tax surcharge  required  to
be  paid  under this section for the applicable period, or not less than
the tax surcharge shown on the taxpayer's report for the preceding year,
if such preceding year consisted of twelve  months.  The  tax  surcharge
imposed  by this section shall be payable to the commissioner in full at
the time the report is required to be filed, and such tax  surcharge  or
the  balance  thereof,  imposed on any taxpayer which ceases to exercise
its franchise or be subject to the tax surcharge imposed by this section
shall be payable to the commissioner at the time the report is  required
to be filed, provided such tax surcharge of a domestic corporation which
continues to possess its franchise shall be subject to adjustment as the
circumstances  may require; all other tax surcharges of any such taxpay-
er, which pursuant to the foregoing provisions  of  this  section  would
otherwise  be  payable subsequent to the time such report is required to
be filed, shall nevertheless  be  payable  at  such  time.  All  of  the
provisions  of  this article presently applicable to section one hundred
eighty-three of this article are applicable to the tax surcharge imposed
by this section except for section one hundred ninety-two of this  arti-
cle.
  S  62.  Subdivision  1  of  section  184 of the tax law, as amended by
section 2 of part Y of chapter 63 of the laws of  2000,  is  amended  to
read as follows:
  1.  The  term  "corporation"  as used in this section shall include an
association, within the meaning of paragraph three of subsection (a)  of
section  seventy-seven hundred one of the internal revenue code (includ-
ing a limited liability company), a publicly traded partnership  treated
as  a  corporation for purposes of the internal revenue code pursuant to
section seventy-seven hundred four thereof.
  Every corporation, joint-stock company or association  formed  for  or
principally  engaged in the conduct of canal, steamboat, ferry (except a
ferry company operating between any of the boroughs of the city  of  New

S. 6359--B                         138                        A. 8559--B

York under a lease granted by the city), express, navigation, pipe line,
transfer,  baggage  express,  omnibus, taxicab, telegraph or local tele-
phone business, or formed for or principally engaged in the  conduct  of
two  or  more  of  such  businesses,  and every corporation, joint-stock
company or association formed for or principally engaged in the  conduct
of  surface railroad, whether or not operated by steam, subway railroad,
elevated railroad, palace car, sleeping  car  or  trucking  business  or
formed  for  or  principally  engaged in the conduct of two or more such
businesses and which has made an election pursuant to subdivision ten of
section one hundred eighty-three of this article, and every other corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged  in  the  conduct  of  a transportation or transmission business
(other than a telephone business),  except  a  corporation,  joint-stock
company  or association formed for or principally engaged in the conduct
of a surface railroad, whether or not operated by  steam,  subway  rail-
road,  elevated  railroad, palace car, sleeping car or trucking business
or formed for or principally engaged in the conduct of two  or  more  of
such  businesses  and  which  has  not made the election provided for in
subdivision ten of section one hundred  eighty-three  of  this  article,
and, except a corporation, joint-stock company or association principal-
ly  engaged in the conduct of aviation (including air freight forwarders
acting as principal and like indirect air carriers) and except a  corpo-
ration  principally  engaged  in  providing  telecommunication  services
between aircraft and dispatcher, aircraft and  air  traffic  control  or
ground station and ground station (or any combination of the foregoing),
at  least  ninety  percent  of  the voting stock of which corporation is
owned, directly or indirectly, by air carriers and  which  corporation's
principal  function  is  to  fulfill the requirements of (i) the federal
aviation administration (or the successor thereto) or (ii) the  interna-
tional  civil aviation organization (or the successor thereto), relating
to  the  existence  of  a  communication  system  between  aircraft  and
dispatcher,  aircraft  and  air  traffic  control  or ground station and
ground station (or any combination of the foregoing) for the purposes of
air safety and navigation and [except a corporation, joint-stock company
or association which is liable to taxation under article  thirty-two  of
this  chapter,] for the privilege of exercising its corporate franchise,
or of doing business, or of employing capital, or of owning  or  leasing
property  in  this  state in a corporate or organized capacity, or main-
taining an office in this state, shall pay a franchise tax  which  shall
be  equal to [(i) three-quarters of one percent for taxable years ending
before two thousand one, provided that for a taxable year ending in  two
thousand  the  rate  shall  be  reduced  to three-eighths of one percent
effective July first, two thousand with the result that for purposes  of
implementation  of  such  change  in rate the applicable rate for such a
year shall be nine-sixteenths of one percent, and (ii)] three-eighths of
one percent for taxable years commencing after two  thousand,  upon  its
gross  earnings  from  all  sources within this state; except that, [for
taxable years commencing on or after  January  first,  nineteen  hundred
eighty-five  and  ending  on  or  before December thirty-first, nineteen
hundred eighty-nine, every corporation, joint-stock company  or  associ-
ation  formed  for or principally engaged in the conduct of telephone or
telegraph business shall pay a franchise tax which  shall  be  equal  to
three-tenths  of one per centum upon its gross earnings from all sources
within this state and,] for taxable years commencing on or after January
first, nineteen hundred ninety, every corporation,  joint-stock  company
or association formed for or principally engaged in the conduct of local

S. 6359--B                         139                        A. 8559--B

telephone  business,  or  telegraph  business  shall pay a franchise tax
which shall be equal to [(i) three-quarters of one percent  for  taxable
years  ending  before two thousand one, provided that for a taxable year
ending in two thousand the rate shall be reduced to three-eighths of one
percent  effective  July  first,  two  thousand with the result that for
purposes of implementation of such change in rate  the  applicable  rate
for  such  a  year  shall  be  nine-sixteenths of one percent, and (ii)]
three-eighths of one percent for  taxable  years  commencing  after  two
thousand,  upon  its  gross earnings from all sources within this state,
except that a corporation, joint-stock company or association formed for
or principally engaged in the conduct  of  a  local  telephone  business
shall  exclude  the  following  earnings  (but not in any event earnings
derived by such taxpayer from the provision of carrier access  services)
derived by such taxpayer from sales for ultimate consumption of telecom-
munications  service  to  its customers (i) thirty percent of separately
charged intra-LATA toll service (which shall  also  include  interregion
regional calling plan service) and (ii) one hundred percent of separate-
ly  charged  inter-LATA,  interstate or international telecommunications
service; and except that [corporations, joint-stock companies or associ-
ations formed for or principally engaged in the conduct of surface rail-
road, whether or not operated by steam, subway railroad, elevated  rail-
road,  palace  car  or  sleeping  car, business or any other corporation
formed for or principally engaged in the conduct of a railroad business,
for taxable years prior to nineteen hundred  ninety-seven,  and]  corpo-
rations, joint-stock companies or associations formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease  granted by the city), navigation or any corporation formed for or
principally engaged in the operation of vessels, shall pay  a  franchise
tax  which  shall  be equal to three-quarters of one per centum upon its
gross earnings from all sources within this  state,  excluding  earnings
derived from business of an interstate or foreign character; except that
for  taxable  years beginning in nineteen hundred ninety-seven or there-
after, in the case of a corporation, joint-stock company or  association
which,  with  respect  to taxable years beginning after nineteen hundred
ninety-seven, has made  an  election  pursuant  to  subdivision  ten  of
section one hundred eighty-three of this article and which is formed for
or  principally  engaged  in the conduct of surface railroad, whether or
not operated by steam, subway railroad, elevated railroad,  palace  car,
sleeping  car  or trucking business or formed for or principally engaged
in the conduct of two or more  of  such  businesses,  such  corporation,
joint-stock company or association shall pay a franchise tax which shall
be  equal  to  [(i)  six-tenths  of one percent for taxable years ending
before two thousand one, provided that for a taxable year ending in  two
thousand  the  rate  shall  be  reduced  to three-eighths of one percent
effective July first, two thousand with the result that for purposes  of
implementation  of  such  change  in rate the applicable rate for such a
year shall be thirty-nine eightieths of one percent,  and  (ii)]  three-
eighths  of one percent for taxable years commencing after two thousand,
upon its gross earnings from all sources  within  this  state,  provided
that  in  the  case of a corporation, joint-stock company or association
formed for or principally engaged in the conduct  of  surface  railroad,
whether  or  not  operated by steam, subway railroad, elevated railroad,
palace car or sleeping  car  business,  or  formed  for  or  principally
engaged  in  the  conduct  of two or more of such businesses, such gross

S. 6359--B                         140                        A. 8559--B

earnings shall not include earnings derived from business of  an  inter-
state or foreign character.
  Provided, however, with respect to railroad, elevated railroad, palace
car  or  sleeping  car  business  or any other corporation formed for or
principally engaged in the conduct of a  railroad  business  and  canal,
steamboat,  ferry  (except  a ferry company operating between any of the
boroughs of the city of New York under a lease  granted  by  the  city),
navigation  or  any corporation formed for or principally engaged in the
operation of vessels where the gross earnings from  such  transportation
business both originating and terminating within this state and travers-
ing  both  this  state  and  another state or states or country shall be
subject to the franchise tax imposed by this section (except where  such
corporation, joint-stock company or association is formed for or princi-
pally  engaged in the conduct of a railroad (including surface railroad,
whether or not operated by steam, subway railroad or elevated railroad),
palace car or sleeping car business or formed for or principally engaged
in the conduct of two or more of such businesses, and has not  made  the
election  provided  for  under  subdivision  ten  of section one hundred
eighty-three of this article) and such earnings shall  be  allocated  to
this  state in the same ratio that the mileage within the state bears to
the total mileage of such business. Provided,  further,  a  corporation,
joint-stock  company or association formed for or principally engaged in
the transportation, transmission or distribution of gas, electricity  or
steam  shall  not  be  subject  to tax under this section or section one
hundred eighty-three of this article.
  The term "local telephone business" means the provision or  furnishing
of  telecommunication services for hire wherein the service furnished by
the provider thereof consists of carrier access service or  the  service
originates  and  terminates  within  the same local access and transport
area ("LATA"), a local access and transport area being  that  geographic
area as established and approved, and as so set and in existence on July
first,  nineteen  hundred  ninety-four,  pursuant to the modification of
final judgment in United  States  v.  Western  Electric  Company  (civil
action no. 82-0192) in the United States district court for the District
of Columbia or within the LATA-like Rochester non-associated independent
area.
  The  term "telecommunication services" shall have the meaning ascribed
to such term in section one hundred eighty-six-e of this article.
  S 63. The section heading and the opening paragraph of  subdivision  1
of section 184-a of the tax law, the section heading as added by chapter
931  of  the  laws of 1982 and the opening paragraph of subdivision 1 as
amended by section 2 of part A of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  Additional   [temporary]   metropolitan  transportation  business  tax
surcharge on transportation and transmission  corporations  and  associ-
ations services.
  The  term "corporation" as used in this section shall include an asso-
ciation, within the meaning of paragraph  three  of  subsection  (a)  of
section  seventy-seven hundred one of the internal revenue code (includ-
ing a limited liability company),  and  a  publicly  traded  partnership
treated  as  a  corporation  for  purposes  of the internal revenue code
pursuant to section seventy-seven hundred four thereof.    Every  corpo-
ration,  joint-stock  company  or  association formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease granted by the city), express, navigation,  pipe  line,  transfer,

S. 6359--B                         141                        A. 8559--B

baggage  express,  omnibus,  taxicab, telegraph or local telephone busi-
ness, or formed for or principally engaged in the conduct of two or more
such businesses, and every corporation, joint-stock company  or  associ-
ation  formed  for  or  principally  engaged in the conduct of a surface
railroad, whether or not operated by steam,  subway  railroad,  elevated
railroad,  palace  car, sleeping car or trucking business or principally
engaged in the conduct of two or more such businesses and which has made
an election pursuant to subdivision ten of section one  hundred  eighty-
three  of this article, and every other corporation, joint-stock company
or association formed for or principally engaged in  the  conduct  of  a
transportation  or  transmission  business (other than a telephone busi-
ness) except a corporation, joint-stock company  or  association  formed
for or principally engaged in the conduct of a surface railroad, whether
or  not  operated  by  steam, subway railroad, elevated railroad, palace
car, sleeping car or trucking business or  principally  engaged  in  the
conduct  of  two  or  more  such  businesses  and which has not made the
election provided for in subdivision ten of section one hundred  eighty-
three  of this article, and except a corporation, joint-stock company or
association principally engaged in the conduct  of  aviation  (including
air  freight forwarders acting as principal and like indirect air carri-
ers) and except a corporation principally engaged in providing  telecom-
munication  services  between  aircraft and dispatcher, aircraft and air
traffic control or ground station and ground station (or any combination
of the foregoing), at least ninety percent of the voting stock of  which
corporation  is owned, directly or indirectly, by air carriers and which
corporation's principal function is to fulfill the requirements  of  (i)
the  federal  aviation administration (or the successor thereto) or (ii)
the international civil aviation organization (or the  successor  there-
to),  relating  to  the  existence  of  a  communication  system between
aircraft and dispatcher, aircraft and  air  traffic  control  or  ground
station and ground station (or any combination of the foregoing) for the
purposes  of air safety and navigation [and except a corporation, joint-
stock company or association which is liable to taxation  under  article
thirty-two  of  this chapter], shall pay for the privilege of exercising
its corporate franchise, or of doing business, or of employing  capital,
or  of owning or leasing property in the metropolitan commuter transpor-
tation district in such corporate or organized capacity, or of maintain-
ing an office in such district, a tax surcharge [for all or any part  of
its taxable years commencing on or after January first, nineteen hundred
eighty-two,  but ending before December thirty-first, two thousand eigh-
teen], which tax surcharge, in addition to the tax  imposed  by  section
one  hundred  eighty-four of this article, shall be computed at the rate
of [eighteen percent of the tax imposed under such section  one  hundred
eighty-four  for  such  taxable  years or any part of such taxable years
ending before December thirty-first, nineteen hundred eighty-three after
the deduction of any credits otherwise allowable under this article, and
at the rate of] seventeen percent of the tax imposed under such  section
for  such  taxable years or any part of such taxable years [ending on or
after December thirty-first, nineteen hundred  eighty-three]  after  the
deduction  of  any  credits  otherwise  allowable  under  this  article;
provided, however, that such rates of tax  surcharge  shall  be  applied
only to that portion of the tax imposed under section one hundred eight-
y-four  of  this  article  after  the deduction of any credits otherwise
allowable under this article which is  attributable  to  the  taxpayer's
business  activity carried on within the metropolitan commuter transpor-
tation district[; and provided, further, that the tax surcharge  imposed

S. 6359--B                         142                        A. 8559--B

by  this section on corporations, joint-stock companies and associations
formed for or principally engaged in the conduct of telephone  or  tele-
graph business shall be computed in accordance with this subdivision and
paragraph  (c)  of subdivision two of this section as if the three-quar-
ters of one percent rate of tax  provided  for  in  subdivision  one  of
section  one hundred eighty-four of this article were applicable to such
telephone and telegraph businesses for taxable years  commencing  on  or
after  January  first,  nineteen  hundred  eighty-five  and ending on or
before  December  thirty-first,  nineteen   hundred   eighty-nine;   and
provided,  further, that the tax surcharge imposed by this section shall
not be imposed upon any taxpayer for more than four  hundred  thirty-two
months].    Provided,  however,  that for taxable years beginning in two
thousand and thereafter,  for  purposes  of  this  subdivision  the  tax
imposed  under  section one hundred eighty-four of this article shall be
deemed to have been  imposed  at  the  rate  of  three-quarters  of  one
percent,  except  that in the case of a corporation, joint-stock company
or association which has made an election pursuant to subdivision ten of
section one hundred eighty-three of this article, for purposes  of  this
subdivision  the  tax  imposed  under section one hundred eighty-four of
this article shall be deemed to have been imposed at the  rate  of  six-
tenths of one percent.
  S 64. Subdivision 8 of section 186-a of the tax law is REPEALED.
  S  65.   The section heading and subdivision 1 of section 186-c of the
tax law, the section heading as amended by chapter  2  of  the  laws  of
1995,  subdivision  1 as amended by section 3 of part II-1 of chapter 57
of the laws of 2008, subparagraph 1 of paragraph (a) of subdivision 1 as
amended by section 3 of part A of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on utility services and excise tax  on  sale  of  telecommuni-
cation  services.  1. (a) (1) Every utility doing business in the metro-
politan commuter transportation district shall pay a tax  surcharge,  in
addition  to the tax imposed by section one hundred eighty-six-a of this
article[, for all or any parts of its taxable  years  commencing  on  or
after  January  first,  nineteen  hundred  eighty-two  but ending before
December thirty-first, two thousand eighteen], to be  computed  [at  the
rate  of  eighteen  percent of the tax imposed under section one hundred
eighty-six-a of this article for such taxable years or any part of  such
taxable  years  ending  before  December  thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article,  and]  at the rate of seventeen percent of the tax
imposed under such section [for such taxable years or any part  of  such
taxable years ending on or after December thirty-first, nineteen hundred
eighty-three]  after  the deduction of credits otherwise allowable under
this article except any utility credit provided  for  by  article  thir-
teen-A  of  this  chapter;  provided,  however,  that  such rates of tax
surcharge shall be applied only to that portion of the tax imposed under
section one hundred eighty-six-a of this article after the deduction  of
credits otherwise allowable under this article, except any utility cred-
it  provided for by article thirteen-A of this chapter, which is attrib-
utable to the taxpayer's gross income or  gross  operating  income  from
business  activity carried on within the metropolitan commuter transpor-
tation district[; and provided, further, that the tax surcharge  imposed
by  this  section  shall  not be imposed upon any taxpayer for more than
four hundred thirty-two months].

S. 6359--B                         143                        A. 8559--B

  (2) Provided however, that [commencing January first,  two  thousand,]
in the case of the tax imposed under paragraph (a) of subdivision one of
section  one hundred eighty-six-a of this article (relating to providers
of telecommunications services) such tax surcharge shall  be  calculated
as  if  the  tax  imposed under section one hundred eighty-six-a of this
article were imposed at a rate of three and one-half percent.
  (b) In addition to the surcharge imposed  by  paragraph  (a)  of  this
subdivision,  there  is hereby imposed a surcharge on the gross receipts
from telecommunication services relating to  the  metropolitan  commuter
transportation  district  at  the rate of seventeen percent of the state
tax rate under section one hundred eighty-six-e of this article [for all
or part of taxable years commencing on and after January first, nineteen
hundred ninety-five but ending before December thirty-first,  two  thou-
sand  thirteen]. All the definitions and other provisions of section one
hundred eighty-six-e of this article shall apply to the tax  imposed  by
this paragraph with such modification and limitation as may be necessary
(including  substituting the words "metropolitan commuter transportation
district" for "state" where appropriate) in order to adapt the  language
of  such  section  one  hundred  eighty-six-e  of  this  article  to the
surcharge imposed by this paragraph within  such  metropolitan  commuter
transportation district so as to include (1) any intra-district telecom-
munication  services,  except  any  telecommunication services the gross
receipts from which are subject to tax under subparagraph four  of  this
paragraph, (2) any inter-district telecommunication services which orig-
inate or terminate in such district and are charged to a service address
therein  regardless  of  where the amounts charged for such services are
billed or ultimately paid, except any  telecommunications  services  the
gross  receipts from which are subject to tax under subparagraph four of
this paragraph, (3) as apportioned to such district, private  telecommu-
nication  services,  except  any  telecommunication  services  the gross
receipts from which are subject to tax under subparagraph four  of  this
paragraph,  and (4) mobile telecommunications service provided by a home
service provider where the place of primary use is within such metropol-
itan commuter transportation  district.  Provided  however,  [commencing
October  first,  nineteen hundred ninety-eight] such tax surcharge shall
be calculated as if the tax imposed under section  one  hundred  eighty-
six-e  of  this  article  were  imposed  at a rate of three and one-half
percent.
  S 66. Clause (iii) of subparagraph (D) of paragraph  3  of  subsection
(b)  of  section 605 of the tax law, as added by chapter 658 of the laws
of 2003, is amended to read as follows:
  (iii) Provided further, that for the purposes of item  (I)  of  clause
(i)  of  this  subparagraph, a trustee which is a banking corporation as
defined in subsection (a) of section fourteen hundred fifty-two of  this
chapter,  AS  SUCH  SECTION  WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO
THOUSAND FOURTEEN, and which is domiciled outside the state of New  York
at the time it becomes a trustee of the trust shall be deemed to contin-
ue to be a trustee domiciled outside the state of New York notwithstand-
ing  that  it  thereafter  otherwise  becomes a trustee domiciled in the
state of New York by virtue of being acquired by, or becoming an  office
or  branch  of,  a  corporate  trustee domiciled within the state of New
York.
  S 67. Subparagraph (A) of paragraph 10 of subsection  (a)  of  section
606  of the tax law, as amended by section 3 of part CC of chapter 85 of
the laws of 2002, is amended to read as follows:

S. 6359--B                         144                        A. 8559--B

  (A) the business of which the individual is an owner is  substantially
similar  in  operation and in ownership to a business entity taxable, or
previously taxable, under section one hundred eighty-three, one  hundred
eighty-four[,] OR one hundred eighty-five [or one hundred eighty-six] of
article nine; article nine-A[, thirty-two] or thirty-three of this chap-
ter;  article  twenty-three  of  this  chapter  or which would have been
subject to tax under such article twenty-three (as such article  was  in
effect on January first, nineteen hundred eighty), ARTICLE THIRTY-TWO OF
THIS  CHAPTER OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH ARTICLE
THIRTY-TWO (AS SUCH ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST,  TWO
THOUSAND  FOURTEEN)  or  the  income  (or  losses)  of which is (or was)
includable under article twenty-two of this chapter whereby  the  intent
and purpose of this paragraph and paragraph five of this subsection with
respect to refunding of credit to new business would be evaded; or
  S 68. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law, as amended by section 7 of part C-1 of chapter 57 of the
laws  of  2009, clause (ix) as amended by section 4 of part G of chapter
59 of the laws of 2013, clause (xxxi) as added by section 5 of  part  MM
of  chapter 59 of the laws of 2010, clause (xxxi) as added by section 14
of part Q of chapter 57 of the laws of 2010, clause (xxxii) as added  by
section  6  of part V of chapter 61 of the laws of 2011, clause (xxxiii)
as added by section 4 of part D of chapter  56  of  the  laws  of  2011,
clause  (xxxiii)  as  added  by section 5 of part E of chapter 56 of the
laws of 2011, clause (xxxiii) as added by chapter 604  of  the  laws  of
2011, clause (xxxiv) as added by chapter 109 of the laws of 2012, clause
(xxxv)  as  added  by  section 2 of part AA of chapter 59 of the laws of
2013, clause (xxxv) as added by section 4 of part EE of  chapter  59  of
the  laws  of 2013 and clause (xxxvi) as added by section 8 of part A of
chapter 68 of the laws of 2013, clause (xxxvii) as added by section 3 of
part R of this act, and clause (xxxvii) as added by section 5 of part  T
of this act, is amended to read as follows:
  (B)  shall  be  treated as the owner of a new business with respect to
such share if the corporation qualifies as a new  business  pursuant  to
paragraph  [(j)]  (F) of subdivision [twelve] ONE of section two hundred
[ten] TEN-B of this chapter.

With respect to the following        The corporation's credit base under
credit under this section:           section two hundred [ten or section
                                     fourteen hundred fifty-six] TEN-B
                                     of this chapter is:

(i) Investment tax credit under      Investment credit base or qualified
subsection (a)                       rehabilitation expenditures under
                                     subdivision [twelve] ONE of section
                                     two hundred [ten] TEN-B

(ii) Empire zone investment          Cost or other basis under
tax credit under subsection (j)      subdivision [twelve-B] THREE
                                     of section two hundred [ten] TEN-B

[(iii) Empire zone wage tax credit   Eligible wages under subdivision
under subsection (k)                 nineteen of section two hundred
                                     ten or subsection (e) of section
                                     fourteen hundred fifty-six

(iv) Empire zone capital tax         Qualified investments and

S. 6359--B                         145                        A. 8559--B

credit under subsection (l)          contributions under subdivision
                                     twenty of section two hundred ten
                                     or subsection (d) of section
                                     fourteen hundred fifty-six]

(v) Agricultural property tax        Allowable school district property
credit under subsection (n)          taxes under subdivision
                                     [twenty-two] ELEVEN of
                                     section two hundred [ten]
                                     TEN-B

(vi) Credit for employment of        Qualified first-year wages or
persons with disabilities            qualified second-year wages under
under subsection (o)                 subdivision [twenty-three] TWELVE
                                     of section two hundred [ten or
                                     subsection (f) of section
                                     fourteen hundred fifty-six] TEN-B

(vii) Employment incentive credit    Applicable investment credit base
under subsection (a-1)               under subdivision [twelve-D] TWO
                                     of section two hundred [ten]
                                     TEN-B

(viii) Empire zone employment        Applicable investment credit
incentive credit under subsection    under subdivision [twelve-C]
(j-1)                                FOUR of section
                                     two hundred [ten] TEN-B

(ix) Alternative fuels               Amount of credit under subdivision
and electric vehicle                 [twenty-four] THIRTY of section
recharging property                  two hundred [ten] TEN-B
credit under subsection (p)

(x) Qualified emerging technology    Applicable credit base under
company employment credit under      subdivision [twelve-E] SEVEN
subsection (q)                       of section two hundred [ten] TEN-B

(xi) Qualified emerging technology   Qualified investments under
company capital tax credit under     subdivision [twelve-F] EIGHT
subsection (r)                       of section two hundred [ten] TEN-B

(xii) Credit for purchase of an      Cost of an automated external
automated external defibrillator     defibrillator under subdivision
under subsection (s)                 [twenty-five] THIRTEEN of section
                                     two hundred [ten or subsection
                                     (j) of section fourteen hundred
                                     fifty-six] TEN-B

(xiii) Low-income housing credit     Credit amount under subdivision
under subsection (x)                 [thirty] FIFTEEN of section
                                     two hundred [ten or subsection
                                     (l) of section fourteen
                                     hundred fifty-six] TEN-B

[(xiv) Credit for transportation     For taxable years beginning
improvement contributions under      before January first, two thousand

S. 6359--B                         146                        A. 8559--B

subsection (z)                       nine, amount of credit under
                                     subdivision thirty-two of
                                     section two hundred ten
                                     or subsection (n) of section
                                     fourteen hundred fifty-six]

(xv) QEZE credit for real property   Amount of credit under subdivision
taxes under subsection (bb)          [twenty-seven] FIVE of
                                     section two hundred [ten
                                     or subsection (o) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xvi) QEZE tax reduction credit      Amount of benefit period factor,
under subsection (cc)                employment increase factor and zone
                                     allocation factor (without regard
                                     to pro ration) under subdivision
                                     [twenty-eight] SIX of
                                     section two hundred [ten
                                     or subsection (p) of section
                                     fourteen hundred fifty-six]
                                     TEN-B and amount
                                     of tax factor as determined under
                                     subdivision (f) of section sixteen

(xvii) Green building credit under   Amount of green building credit
subsection (y)                       under subdivision [thirty-one]
                                     SIXTEEN of section two
                                     hundred [ten or subsection (m)
                                     of section fourteen hundred
                                     fifty-six] TEN-B

(xviii) Credit for long-term care    Qualified costs under subdivision
insurance premiums under subsection  [twenty-five-a] FOURTEEN
(aa)                                 of section two hundred [ten
                                     or subsection (k) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

(xix) Brownfield redevelopment       Amount of credit under subdivision
credit under subsection (dd)         [thirty-three] SEVENTEEN
                                     of section two hundred
                                     [ten or subsection (q) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xx) Remediated brownfield credit    Amount of credit under subdivision
for real property taxes for          [thirty-four] EIGHTEEN
qualified sites under subsection     of section two hundred
(ee)                                 [ten of subsection (r) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxi) Environmental remediation      Amount of credit under subdivision
insurance credit under subsection    [thirty-five] NINETEEN
(ff)                                 of section two hundred

S. 6359--B                         147                        A. 8559--B

                                     [ten or subsection (s) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxii) Empire state film             Amount of credit for qualified
production credit under              production costs in production of a
subsection (gg)                      qualified film under subdivision
                                     [thirty-six] TWENTY of
                                     section two hundred [ten] TEN-B

[(xxiii) Qualified emerging          Qualifying expenditures and
technology company facilities,       development activities under
operations and training credit       subdivision twelve-G of section two
under subsection (nn)                hundred ten]

(xxiv) Security training tax credit  Amount of credit under subdivision
under subsection (ii)                [thirty-seven] TWENTY-ONE
                                     of section two hundred
                                     [ten or under subsection (t) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

[(xxv) Credit for qualified fuel     For taxable years beginning before
cell electric generating             January first, two thousand nine,
equipment expenditures               amount of credit under subdivision
under subsection (g-2)               thirty-seven of section two hundred
                                     ten or subsection (t) of section
                                     fourteen hundred fifty-six]

(xxvi) Empire state commercial       Amount of credit for qualified
production credit under subsection   production costs in production of
(jj)                                 a qualified commercial under
                                     subdivision [thirty-eight]
                                     TWENTY-THREE of
                                     section two hundred [ten]
                                     TEN-B

(xxvii) Biofuel production tax       Amount of credit under subdivision
credit under subsection (jj)         [thirty-eight] TWENTY-FOUR
                                     of section two hundred [ten]
                                     TEN-B

(xxviii) Clean heating fuel credit   Amount of credit under subdivision
under subsection (mm)                [thirty-nine] TWENTY-FIVE of
                                     section two hundred [ten]
                                     TEN-B

(xxix) Credit for rehabilitation     Amount of credit under subdivision
of historic properties under         [forty] TWENTY-SIX of
subsection (oo)                      section two hundred [ten]
                                     TEN-B

 (xxxi) Excelsior jobs program tax   Amount of credit under subdivision
credit under subsection (qq)         [forty-one] THIRTY-ONE of
                                     section two hundred [ten
                                     or under subdivision (u) of

S. 6359--B                         148                        A. 8559--B

                                     section fourteen hundred fifty-six]
                                     TEN-B

(xxxi) Empire state film             Amount of credit for
post production credit under         qualified post production
subsection (qq)                      costs of a qualified film
                                     under subdivision [forty-one]
                                     THIRTY-TWO of section
                                     two hundred [ten] TEN-B

 (xxxii) Economic transformation     Amount of credit under subdivision
and facility redevelopment credit    [forty-three] THIRTY-FIVE
                                     of section [210 or under
                                     subsection (x) of section fourteen
                                     hundred fifty-six] TWO HUNDRED
                                     TEN-B

 (xxxiii) New York youth works       Amount of credit under
tax credit                           subdivision [forty-four] THIRTY-SIX
                                     of section two hundred [ten]
                                     TEN-B

 (xxxiii) Empire state jobs          Amount of credit under
retention program credit             subdivision [forty-four]
                                     THIRTY-SEVEN of section
                                     two hundred [ten or under
                                     subsection (y) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxxiii) Credit for companies who    Amount of credit under
provide transportation to            subdivision [forty-four]
individuals with disabilities        THIRTY-EIGHT of section
under subsection (tt)                two hundred [ten] TEN-B

(xxxiv) Beer production credit       Amount of credit under
under subsection (uu)                [subdivision] subdivision
                                     [forty-five] THIRTY-NINE of
                                     section two hundred [ten]
                                     TEN-B

(xxxv) Hire a vet credit             Amount of credit under subdivision
under subsection (a-2)               [twenty-three-a] TWENTY-NINE
                                     of section two hundred [ten
                                     or subsection (e-1) of
                                     of section fourteen hundred
                                     fifty-six] TEN-B

(xxxv) Minimum wage reimbursement    Amount of credit under subdivision
credit under subsection (aaa)        [forty-six] FORTY
                                     of section two hundred
                                     [ten or subsection (z) of
                                     section fourteen hundred
                                     fifty-six] TEN-B

(xxxvi) Tax-free NY area tax         Amount of credit under

S. 6359--B                         149                        A. 8559--B

elimination credit                   subdivision [forty-seven] FORTY-ONE
                                     of section two hundred [ten]
                                     TEN-B

(xxxvii) Real property tax           Amount of credit under
credit for manufacturers             subdivision [forty-eight]
under subsection (xx)                FORTY-THREE of section
                                     two hundred [ten] TEN-B

(xxxvii) Tax-free NY area            Amount of credit under
excise tax on                        subdivision [forty-eight]
telecommunications services          FORTY-FOUR of section
credit under subsection (xx)         two hundred [ten] TEN-B

  S  69.  Subparagraphs  (A) and (B) of paragraph 3 of subsection (i) of
section 606 of the tax law, as added by chapter 170 of the laws of 1994,
are amended to read as follows:
  (A) Credit carryover. Any excess  credit  under  subparagraph  (A)  of
paragraph  one of this subsection, as it was in effect for taxable years
beginning before nineteen hundred ninety-four, may be  carried  over  to
the  shareholder's following year or years and may be deducted from such
shareholder's tax for such year or years, except that any excess  credit
attributable  to  subdivision  [twelve] ONE of section two hundred [ten]
TEN-B of this chapter shall in no event be carried over beyond  the  ten
taxable years next following the taxable year of origin.
  (B)  Credit  recapture. Any redetermination of credit required by this
subsection as it was in effect for taxable years beginning before  nine-
teen hundred ninety-four, upon disposition or cessation of qualified use
of property pursuant to paragraph [(g)] (E) of subdivision [twelve] ONE,
OR  paragraph  (f) of subdivision [twelve-B or paragraph (f) of subdivi-
sion eighteen] THREE of section two hundred [ten] TEN-B of this  chapter
shall  be  attributed  in  pro  rata shares to the shareholders who were
allowed credit under this subsection with respect to such property,  and
the  reduction  of a shareholder's proportionate stock interest shall be
treated as a disposition of property  for  which  a  redetermination  of
credit under such paragraphs is required with respect to such sharehold-
er.
  S  69-a.  Section  606  of  the  tax  law  is  amended by adding a new
subsection (yy-1) to read as follows:
  (YY-1) (1) EXCEPT AS OTHERWISE  PROVIDED  IN  PARAGRAPH  TWO  OF  THIS
SUBSECTION,  IN ANY TAXABLE YEAR, A TAXPAYER MUST FIRST CLAIM ANY OF THE
CREDITS SPECIFIED IN THIS SECTION ON ITS  ORIGINALLY  FILED  RETURN  FOR
SUCH  TAXABLE  YEAR.  A  TAXPAYER  SHALL  NOT FIRST CLAIM A CREDIT ON AN
AMENDED RETURN.
  (2) A TAXPAYER MAY FIRST CLAIM A CREDIT  ON  AN  AMENDED  RETURN  ONLY
UNDER THE FOLLOWING CIRCUMSTANCES:
  (I)  THE  TAXPAYER'S  ELIGIBILITY  FOR THE CREDIT OR THE AMOUNT OF THE
CREDIT THE TAXPAYER IS ALLOWED IS DETERMINED BY A GOVERMENT AGENCY OTHER
THAN THE DEPARTMENT.
  (II) THE INFORMATION NECESSARY TO DETERMINE THE TAXPAYER'S ELIGIBILITY
FOR A CREDIT OR THE AMOUNT OF THE CREDIT  ALLOWED  IS  CONTAINED  IN  AN
INFORMATION  RETURN  THE TAXPAYER RECEIVES AFTER THE ORIGINAL RETURN FOR
THE TAXABLE YEAR IS FILED.
  (III) THE TAXPAYER IS REQUIRED TO FILE AN AMENDED RETURN FOR A TAXABLE
YEAR PURSUANT TO SECTION SIX HUNDRED FIFTY-NINE OF THIS ARTICLE AND  THE
CHANGES  OR  CORRECTIONS  THAT  NECESSITATE  THE  FILING OF SUCH AMENDED

S. 6359--B                         150                        A. 8559--B

RETURN IMPACT THE TAXPAYER'S ELIGIBILITY FOR A CREDIT OR THE  AMOUNT  OF
CREDIT THAT MAY BE CLAIMED IN THAT TAXABLE YEAR.
  S  70.  Subparagraph (B) of paragraph 3 and paragraph 21 of subsection
(b) and paragraph 21 of subsection (c) of section 612 of  the  tax  law,
subparagraph  (B) of paragraph 3 of subsection (b) as amended by section
57, paragraph 21 of subsection (b) as amended by section  59  and  para-
graph 21 of subsection (c) as amended by section 60 of part A of chapter
389 of the laws of 1997, are amended to read as follows:
  (B) Shareholders of S corporations. In the case of a shareholder of an
S  corporation,  with  respect  to  taxes imposed upon or payable by the
corporation, the term "income taxes" in subparagraph (A) of  this  para-
graph  shall  also  include  the  taxes imposed under [articles] ARTICLE
nine-A [and thirty-two] of this chapter, regardless of  the  measure  of
such  tax,  but shall not otherwise include taxes imposed by this or any
other state of the United States, or any political subdivision  of  this
or any other state, or the District of Columbia.
  (21)  In  relation  to  the  disposition of stock or indebtedness of a
corporation which elected under subchapter  s  of  chapter  one  of  the
internal  revenue  code  for any taxable year of such corporation begin-
ning, in the case of a corporation taxable under article nine-A of  this
chapter,  after  December thirty-first, nineteen hundred eighty, [and in
the case of a corporation taxable under article thirty-two of this chap-
ter, after December  thirty-first,  nineteen  hundred  ninety-six,]  the
amount required to be added to federal adjusted gross income pursuant to
subsection (n) of this section.
  (21)  In  relation  to  the  disposition of stock or indebtedness of a
corporation which elected under subchapter  s  of  chapter  one  of  the
internal  revenue  code  for any taxable year of such corporation begin-
ning, in the case of a corporation taxable under article nine-A of  this
chapter,  after  December thirty-first, nineteen hundred eighty, [and in
the case of a corporation taxable under article thirty-two of this chap-
ter, after December  thirty-first,  nineteen  hundred  ninety-six,]  the
amounts  required  to  be  subtracted from federal adjusted gross income
pursuant to subsection (n) of this section.
  S 71. Paragraph 2 of subsection (a) of section 632 of the tax law,  as
amended  by  section  2  of part C of chapter 57 of the laws of 2010, is
amended to read as follows:
  (2) In determining New York source income of a nonresident shareholder
of an S corporation where the election provided for in subsection (a) of
section six hundred sixty of this article is in effect, there  shall  be
included only the portion derived from or connected with New York sourc-
es  of  such  shareholder's  pro  rata  share  of items of S corporation
income, loss and deduction entering  into  his  federal  adjusted  gross
income,  increased  by  reductions for taxes described in paragraphs two
and three of subsection (f) of section thirteen hundred sixty-six of the
internal revenue code, as such portion shall be determined  under  regu-
lations  of  the commissioner consistent with the applicable methods and
rules for allocation under article nine-A [or thirty-two] of this  chap-
ter,  regardless of whether or not such item or reduction is included in
entire net income under article nine-A [or thirty-two] for the tax year.
If a nonresident is a shareholder in an S corporation where the election
provided for in subsection (a) of section  six  hundred  sixty  of  this
article  is in effect, and the S corporation has distributed an install-
ment obligation under section 453(h)(1)(A) of the Internal Revenue Code,
then any gain recognized on the receipt of payments from the installment
obligation for federal income tax purposes will be treated as  New  York

S. 6359--B                         151                        A. 8559--B

source income allocated in a manner consistent with the applicable meth-
ods  and  rules  for  allocation under article nine-A [or thirty-two] of
this chapter in the year that the assets were sold. In addition, if  the
shareholders  of  the  S corporation have made an election under section
338(h)(10) of the Internal Revenue Code, then any gain recognized on the
deemed asset sale for federal income tax purposes will be treated as New
York source income allocated in a manner consistent with the  applicable
methods and rules for allocation under article nine-A [or thirty-two] of
this  chapter  in  the  year  that  the  shareholder  made  the  section
338(h)(10) election. For purposes of a section 338(h)(10) election, when
a nonresident shareholder exchanges his or her S  corporation  stock  as
part  of  the  deemed  liquidation, any gain or loss recognized shall be
treated as the disposition of an intangible asset and will not  increase
or  offset  any gain recognized on the deemed assets sale as a result of
the section 338(h)(10) election.
  S 72. Subparagraph (A) of paragraph 4 of subsection (c) of section 658
of the tax law, as amended by section 1 of part DD of chapter 686 of the
laws of 2003, is amended to read as follows:
  (A) General. Every entity which is a partnership, other than a public-
ly traded partnership as defined in section 7704 of the federal Internal
Revenue Code, subchapter K limited liability company or an S corporation
for which the election provided for in subsection  (a)  of  section  six
hundred  sixty  of this [article] PART is in effect, which has partners,
members or shareholders who  are  nonresident  individuals,  as  defined
under  subsection  (b) of section six hundred five of this article, or C
corporations, and which has any income derived from  New  York  sources,
determined  in  accordance  with  the  applicable  rules  of section six
hundred thirty-one of this article as in the case of a nonresident indi-
vidual, shall pay estimated tax on such income on behalf of  such  part-
ners,  members or shareholders in the manner and at the times prescribed
by subsection (c) of section six hundred eighty-five  of  this  article.
For  purposes  of  this paragraph, the term "estimated tax" shall mean a
partner's, member's or shareholder's  distributive  share  or  pro  rata
share  of the entity income derived from New York sources, multiplied by
the highest rate of tax prescribed by section six hundred  one  of  this
article  for  the taxable year of any partner, member or shareholder who
is an individual taxpayer,  or  paragraph  (a)  of  subdivision  one  of
section  two  hundred  ten  of  this chapter for the taxable year of any
partner, member or shareholder which is a C corporation, whether or  not
such  C corporation is subject to tax under article nine, nine-A[, thir-
ty-two,] or thirty-three of this chapter, and reduced by  the  distribu-
tive share or pro rata share of any credits determined under section one
hundred  eighty-seven,  one  hundred  eighty-seven-a,  six hundred six[,
fourteen hundred fifty-six] or fifteen hundred eleven of  this  chapter,
whichever is applicable, derived from the entity.
  S  73.  Subsections  (a)  and  (h)  of  section  660  of  the tax law,
subsection (a) as amended by section 50 and subsection (h) as amended by
section 66 of part A of chapter 389 of the laws of 1997, are amended  to
read as follows:
  (a)  Election.  If  a  corporation  is  an eligible S corporation, the
shareholders of the corporation may elect in the  manner  set  forth  in
subsection  (b)  of  this  section  to  take into account, to the extent
provided for in this article (or in article thirteen of this chapter, in
the case of a shareholder which is a taxpayer under such article), the S
corporation items of income, loss, deduction and  reductions  for  taxes
described in paragraphs two and three of subsection (f) of section thir-

S. 6359--B                         152                        A. 8559--B

teen hundred sixty-six of the internal revenue code which are taken into
account  for  federal  income  tax  purposes  for  the  taxable year. No
election under this subsection shall be effective unless all  sharehold-
ers of the corporation have so elected. An eligible S corporation is (i)
an  S corporation which is subject to tax under article nine-A [or thir-
ty-two] of this chapter, OR (ii) an S corporation which is the parent of
a qualified subchapter S subsidiary subject to tax under article nine-A,
where the shareholders of such parent corporation are entitled  to  make
the  election  under  this subsection by reason of subparagraph three of
paragraph (k) of subdivision nine of section two hundred eight  of  this
chapter[;  or  (iii) an S corporation which is the parent of a qualified
subchapter S corporation subject to tax under article thirty-two,  where
the  shareholders of such parent are entitled to make the election under
this subsection by reason  of  paragraph  three  of  subsection  (o)  of
section fourteen hundred fifty-three of this chapter].
  (h)  Cross  reference. For definitions relating to S corporations, see
subdivision one-A of section two hundred eight [and subsections (f)  and
(g) of section fourteen hundred fifty] of this chapter.
  S  74. Paragraph 1 of subsection (i) of section 660 of the tax law, as
added by section 1 of part L of chapter 60  of  the  laws  of  2007,  is
amended to read as follows:
  (1)  Notwithstanding the provisions in subsection (a) of this section,
in the case of an eligible S corporation for which  the  election  under
subsection  (a) of this section is not in effect for the current taxable
year, the shareholders of an eligible S corporation are deemed  to  have
made  that  election  effective  for the eligible S corporation's entire
current taxable year, if the eligible S corporation's investment  income
for  the  current taxable year is more than fifty percent of its federal
gross income for such year [provided  that  this  subsection  shall  not
apply  to an eligible S corporation that is subject to tax under article
thirty-two of this chapter]. IN DETERMINING AN ELIGIBLE S  CORPORATION'S
INVESTMENT  INCOME,  THE  INVESTMENT  INCOME OF A QUALIFIED SUBCHAPTER S
SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY THE  ELIGIBLE  S  CORPORATION
SHALL BE INCLUDED.
  S 75. Paragraph 3 of subsection (c) of section 1085 of the tax law, as
amended  by  section  15 of part Y of chapter 63 of the laws of 2000, is
amended to read as follows:
  (3) The provisions of this subsection and subsections (d) and  (e)  of
this section shall apply to the failure of a taxpayer to file a declara-
tion of estimated tax surcharge or the failure to pay all or any part of
an  amount which is applied as an installment against such estimated tax
surcharge pursuant to sections one hundred ninety-seven-a,  one  hundred
ninety-seven-b,  two  hundred thirteen-a, two hundred thirteen-b, [four-
teen hundred sixty, fourteen hundred sixty-one,] fifteen  hundred  thir-
teen  and  fifteen  hundred  fourteen  of  this chapter. For purposes of
applying this section and subsections (d) and (e) of this section to the
estimated tax surcharge, where appropriate the term "tax" shall be  read
to  mean  "tax  surcharge,"  and the terms "amount required to be paid,"
"amount which would be required to be paid,"  and  "amount  which  would
have  been  required to be paid" shall be computed as the product of (1)
such amount computed without regard to the tax surcharges imposed  under
sections  one  hundred  eighty-four-a,  one  hundred  eighty-six-c,  one
hundred eighty-eight, two hundred nine-A, two hundred nine-B,  [fourteen
hundred  fifty-five-A,  fourteen  hundred fifty-five-B,] fifteen hundred
five-a, and fifteen hundred twenty of this  chapter,  and  (2)  the  MTA
percentage.  The term "MTA percentage" shall mean the product of (A) the

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tax rate applicable under such sections imposing such surcharges and (B)
the percentage utilized in determining the  portion  of  the  taxpayer's
business  activity carried on within the metropolitan commuter transpor-
tation district under such sections.
  S  76.  The  opening  paragraph  of subparagraph (A) of paragraph 3 of
subsection (d) of section 1085 of the tax law, as amended by chapter 170
of the laws of 1994, is amended to read as follows:
  An amount equal to ninety-one percent of the tax for the taxable  year
computed  on all items entering into the computation of the tax or taxes
of the taxpayer for the taxable year under article nine, nine-A[,  thir-
ty-two]  or  thirty-three of this chapter. For purposes of computing the
tax, all items of receipts, income and expenses shall be  placed  on  an
annualized basis--
  S  77. Clause (i) of subparagraph (A) of paragraph 4 of subsection (d)
of section 1085 of the tax law, as amended by chapter 57 of the laws  of
1993, is amended to read as follows:
  (i)  take  the items entering into the computation of the tax or taxes
of the taxpayer for the taxable year under article nine, nine-A[,  thir-
ty-two] or thirty-three of this chapter, for all months during the taxa-
ble year preceding the filing month,
  S 78. Paragraph 5 of subsection (d) of section 1085 of the tax law, as
added by chapter 61 of the laws of 1989, is amended to read as follows:
  (5)  In the case of any declaration installment, any reduction in such
installment resulting from the application of paragraph three or four of
this subsection shall be recaptured by increasing the amount of the next
installment determined under paragraph one or two of this subsection  or
paragraph  one  of  subsection (c) of this section by the amount of such
reduction (and by increasing subsequent installments to the extent  that
the  reduction has not previously been recaptured under this paragraph).
For purposes of the preceding sentence, a declaration installment  means
any installment of estimated tax other than the mandatory first install-
ment  required  under  paragraph  (a)  of subdivision one of section one
hundred ninety-seven-b, subdivision (a) of  section  two  hundred  thir-
teen-b[, subsection (a) of section fourteen hundred sixty-one] or subdi-
vision (a) of section fifteen hundred fourteen of this chapter.
  S 79. Paragraph 1 of subsection (e) of section 1085 of the tax law, as
amended  by  section 28-p of part H-3 of chapter 62 of the laws of 2003,
is amended to read as follows:
  (1) Paragraphs (1) and (2) of subsection (d) of this section shall not
apply in the case of any corporation (or  any  predecessor  corporation)
which had [entire net] BUSINESS income, or the portion thereof allocated
within  the  state,  of one million dollars or more for any taxable year
during the three taxable years immediately preceding  the  taxable  year
involved;  provided,  however, that in the case of a corporation subject
to tax under section fifteen hundred two-a of this  chapter,  paragraphs
(1)  and  (2)  of subsection (d) of this section shall not apply if such
corporation had entire net income,  or  the  portion  thereof  allocated
within  the  state,  of one million dollars or more for any of the three
taxable years immediately preceding the taxable year involved, or if the
direct premiums subject to tax under section fifteen  hundred  two-a  of
this  chapter of the corporation for any of such three preceding taxable
years beginning on or after January first, two thousand three equals  or
exceeds three million seven hundred fifty thousand dollars.
  S  80.  Subsections  (m)  and  (o)  of section 1085 of the tax law are
REPEALED.

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  S 81. Clause (ii) of subparagraph (B) of  paragraph  2  of  subsection
(q),  paragraph  3  of subsection (s) and the closing paragraph of para-
graph 1 of subsection (t) of section 1085 of the tax law,  as  added  by
section  10  of part N of chapter 61 of the laws of 2005, are amended to
read as follows:
  (ii)  fifty percent of the gross income that the organizer or material
advisor derived with respect to activities that were the basis  for  the
requirement to file, disclose or provide information pursuant to section
six  thousand  eleven  of  the internal revenue code, to the extent such
gross income is attributable to the avoidance of any tax  imposed  under
article nine, nine-A[, thirty-two,] or thirty-three of this chapter.
  (3)  For  purposes  of  this  subsection,  the term "understatement of
liability" means any understatement  of  the  net  amount  payable  with
respect  to any tax imposed under article nine, nine-A[, thirty-two,] or
thirty-three of this chapter or any  overstatement  of  the  net  amount
creditable or refundable with respect to any such tax.
shall  pay,  with respect to each activity described in subparagraph (A)
of this paragraph, a penalty equal to one thousand dollars  or,  if  the
person  establishes  that it is lesser, one hundred percent of the gross
income derived (or to be derived) by such person from such  activity  to
the  extent  such gross income is attributed to the avoidance of any tax
imposed under articles nine, nine-A[,  thirty-two]  or  thirty-three  of
this  chapter;  provided,  however,  that if an activity with respect to
which a penalty imposed  under  this  subsection  involves  a  statement
described  in  clause  (i)  of subparagraph (B) of paragraph one of this
subsection, the penalty shall be equal to fifty  percent  of  the  gross
income derived (or to be derived) from that activity within the state by
the  person on which the penalty is imposed. For purposes of the preced-
ing sentence, activities described in clause (i) of subparagraph (A)  of
this  paragraph  with  respect  to  each  entity or arrangement shall be
treated as a separate activity and participation in each sale  described
in  clause (ii) of subparagraph (A) of this paragraph shall be so treat-
ed.
  S 82. The opening paragraph of subsection (c) of section 1087  of  the
tax  law,  as  separately amended by chapters 760 and 770 of the laws of
1992, is amended to read as follows:
  If a taxpayer is required by subdivision three of section two  hundred
eleven[,  subsection (e) of section fourteen hundred sixty-two] or para-
graph one of subdivision (e) of section fifteen hundred fifteen OF  THIS
CHAPTER, to file a report or amended return in respect of (i) a decrease
or  increase  in  federal  taxable income or federal alternative minimum
taxable income or federal tax, or (ii) a federal change or correction or
renegotiation, or computation or recomputation of tax, which is  treated
in  the  same manner as if it were an overpayment for federal income tax
purposes, claim for credit or refund of any resulting overpayment of tax
shall be filed by the taxpayer within  two  years  from  the  time  such
report  or amended return was required to be filed with the commissioner
[of taxation and finance]. If the report or amended return  required  by
any  such provision of law is not filed within the period therein speci-
fied, no interest shall be payable on any claim for credit or refund  of
the  overpayment  attributable  to the federal change or correction. The
amount of such credit or refund--
  S 83. Subsection (g) of section 1088 of the tax  law,  as  amended  by
chapter  61 of the laws of 1989 and relettered by chapter 55 of the laws
of 1992, is amended to read as follows:

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  (g) Cross-reference.--For provision with  respect  to  interest  after
failure  to  file  a report or amended return under subdivision three of
section two hundred eleven[, subsection (e) of section fourteen  hundred
sixty-two]  or  paragraph  one  of  subdivision  (e)  of section fifteen
hundred  fifteen, see subsection (c) of section one thousand eighty-sev-
en.
  S 84. Paragraph 2 of subsection (b) of section 1096 of the tax law, as
amended by chapter 411 of the laws  of  1986,  is  amended  to  read  as
follows:
  (2)  The [tax commission] COMMISSIONER may take any action under para-
graph one of this subdivision to  inquire  into  the  commission  of  an
offense connected with the administration or enforcement of this article
or  article  nine,  [nine-a] NINE-A, thirteen, [thirteen-a, thirty-two,]
THIRTEEN-A or thirty-three of  this  chapter,  provided,  however,  that
notwithstanding  the  provisions  of section one hundred seventy-four of
this chapter no such action shall  be  taken  when  a  referral  by  the
department or the [tax commission] COMMISSIONER to the attorney general,
a  district  attorney  or  any  other prosecutorial agency is in effect.
Provided, however, the [tax commission] COMMISSIONER shall  have  power,
during  the  period  when  such  referral is in effect, to examine or to
cause to have examined, by any agent or representative designated by  it
for  that  purpose, any books, papers, records or memoranda bearing upon
the matters required to be included in the  return,  where  such  books,
papers, records or memoranda are in its possession, or where such books,
papers,  records  or  memoranda  are  in  the possession of the attorney
general, district attorney or other prosecutorial agency to  which  such
referral is made.
  S 85. Paragraph 1 of subsection (e) of section 1096 of the tax law, as
amended  by  section 8 of subpart D of part V1 of chapter 57 of the laws
of 2009, is amended to read as follows:
  (1) Authority to set interest rates.---The commissioner shall set  the
overpayment  and  underpayment  rates of interest to be paid pursuant to
sections two hundred  thirteen,  two  hundred  thirteen-b,  two  hundred
fifty-eight, two hundred sixty-three, two hundred ninety-four, one thou-
sand  eighty-four,  one thousand eighty-five[,] AND one thousand eighty-
eight[, fourteen hundred sixty-one and fourteen hundred sixty-three]  of
this  chapter,  but  if  no such rate or rates of interest are set, such
overpayment rate shall be deemed to be set at six percent per annum  and
such  underpayment  rate shall be deemed to be set at seven and one-half
percent per annum. Such overpayment and underpayment rates shall be  the
rates  prescribed in paragraph two of this subsection, but the underpay-
ment rate shall not be less than seven and one-half percent  per  annum.
Any  such  rates  set  by  the commissioner shall apply to taxes, or any
portion thereof, which remain or become due or overpaid on or after  the
date  on  which  such  rates  become effective and shall apply only with
respect to interest computed or computable for periods  or  portions  of
periods occurring in the period during which such rates are in effect.
  S  86. Subdivision (b) of section 1201-a of the tax law, as amended by
section 5 of part Y of chapter 62 of the laws of  2006,  is  amended  to
read as follows:
  (b) Empire state film production credit. Any city in this state having
a  population  of one million or more, acting through its local legisla-
tive body, is hereby authorized to adopt and amend local laws to allow a
credit against the general corporation tax and the unincorporated  busi-
ness  tax  imposed  pursuant  to  the authority of chapter seven hundred
seventy-two of the laws of nineteen hundred  sixty-six  which  shall  be

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substantially  identical to the credit allowed under section twenty-four
of this chapter, except that (A) the percentage of qualified  production
costs  used to calculate such credit shall be five percent, (B) whenever
such  section twenty-four references the state, such words shall be read
as referencing the city, (C) such credit shall  be  allowed  only  to  a
taxpayer  which  is  a  qualified  film  production company, and (D) the
effective date of such credit shall be July  first,  two  thousand  six.
Such  credit  shall  be  applied  in a manner consistent with the credit
allowed under subdivision [thirty-six] TWENTY  of  section  two  hundred
[ten]  TEN-B  of  this  chapter  except as may be necessary to take into
account differences between the general corporation tax and the unincor-
porated business tax.
  S 87. Subdivision (c) of section 1201-a of the tax law, as amended  by
chapter 300 of the laws of 2007, is amended to read as follows:
  (c)  Empire state commercial production credit. Any city in this state
having a population of one million or more,  acting  through  its  local
legislative  body, is hereby authorized to adopt and amend local laws to
allow a credit against the general corporation tax and the unincorporat-
ed business tax imposed pursuant  to  the  authority  of  chapter  seven
hundred  seventy-two  of  the  laws  of nineteen hundred sixty-six which
shall be  substantially  identical  to  the  credit  allowed  under  the
provisions  of section twenty-eight of this chapter, except that (A) the
percentage of qualified production costs used to calculate  such  credit
shall be five percent, (B) whenever such section twenty-eight references
the  state,  such  words shall be read as referencing the city, (C) such
credit shall be allowed only to a taxpayer that is a  qualified  commer-
cial production company, and (D) the effective date of such credit shall
be  as  provided in local laws. Such credit shall be applied in a manner
consistent with the  credit  allowed  under  subdivision  [thirty-eight]
TWENTY-THREE  of  section two hundred [ten] TEN-B of this chapter except
as may be necessary to take into account differences between the general
corporation tax and unincorporated business tax.
  S 88. The section heading and paragraphs 1 and 3 of subdivision (a) of
section 1505-a of the tax law, the section heading as added  by  chapter
11  of  the  laws  of  1983 and paragraphs 1 and 3 of subdivision (a) as
amended by section 6 of part A of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on insurance corporations.
  (1) Every domestic insurance corporation and every  foreign  or  alien
insurance corporation, and every life insurance corporation described in
subdivision  (b) of section fifteen hundred one of this article, for the
privilege of exercising its corporate franchise, or of  doing  business,
or  of employing capital, or of owning or leasing property in the metro-
politan commuter transportation district in  a  corporate  or  organized
capacity,  or  of  maintaining  an  office  in the metropolitan commuter
transportation district, [for all or  any  part  of  its  taxable  years
commencing  on  or after January first, nineteen hundred eighty-two, but
ending before December  thirty-first,  two  thousand  eighteen,]  except
corporations  specified  in  subdivision  (c) of section fifteen hundred
twelve of this article, shall annually pay, in  addition  to  the  taxes
otherwise  imposed by this article, a tax surcharge on the taxes imposed
under this article after the deduction of any credits  otherwise  allow-
able  under this article as allocated to such district. Such taxes shall
be allocated to  such  district  for  purposes  of  computing  such  tax
surcharge upon taxpayers subject to tax under subdivision (b) of section

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fifteen  hundred ten of this article by applying the methodology, proce-
dures and computations set forth in subdivisions (a) and (b) of  section
fifteen  hundred  four  of this article, except that references to terms
denoting  New York premiums, and total wages, salaries, personal service
compensation and commissions within New York shall be read  as  denoting
within  the  metropolitan  commuter  transportation  district  and terms
denoting total premiums and  total  wages,  salaries,  personal  service
compensation and commissions shall be read as denoting within the state.
If it shall appear to the commissioner that the application of the meth-
odology,  procedures and computations set forth in such subdivisions (a)
and (b) does not properly reflect the activity, business or income of  a
taxpayer  within the metropolitan commuter transportation district, then
the commissioner shall be authorized, in the commissioner's  discretion,
to  adjust such methodology, procedures and computations for the purpose
of allocating such taxes by:
  (A) excluding one or more factors therein;
  (B) including one or more other factors  therein,  such  as  expenses,
purchases,  receipts  other  than  premiums,  real  property or tangible
personal property; or
  (C) any other similar or different method which allocates  such  taxes
by  attributing a fair and proper portion of such taxes to the metropol-
itan commuter transportation district. The  commissioner  from  time  to
time  shall  publish all rulings of general public interest with respect
to any application of the provisions  of  the  preceding  sentence.  The
commissioner  may  promulgate rules and regulations to further implement
the provisions of this section.
  (3) Such tax surcharge shall be computed  at  the  rate  of  [eighteen
percent  of  the  taxes  imposed  under sections fifteen hundred one and
fifteen hundred ten of  this  article  as  limited  by  section  fifteen
hundred  five  of  this article, as allocated to such district, for such
taxable years or any part of such taxable years ending  before  December
thirty-first,  nineteen  hundred eighty-three after the deduction of any
credits otherwise allowable under this article, at the rate of seventeen
percent of the taxes imposed under such sections as limited  by  section
fifteen hundred five of this article, as allocated to such district, for
such  taxable years or any part of such taxable years ending on or after
December thirty-first, nineteen hundred eighty-three and before  January
first,  two  thousand three after the deduction of any credits otherwise
allowable under this article, and at the rate of] seventeen  percent  of
the  taxes  imposed  under sections fifteen hundred one, fifteen hundred
two-a, and fifteen hundred ten of this article, as limited or  otherwise
determined  by subdivision (a) or (b) of section fifteen hundred five of
this article, as allocated to such district, [for such taxable years  or
any  part  of such taxable years ending after December thirty-first, two
thousand two] after the deduction of  any  credits  otherwise  allowable
under  this  article[; provided, however, that the tax surcharge imposed
by this section shall not be imposed upon any  taxpayer  for  more  than
four  hundred  thirty-two  months].  Provided  however, that for taxable
years commencing on or after July first, two thousand, and in  the  case
of  taxpayers subject to tax under section fifteen hundred two-a of this
article, for taxable years of such taxpayers beginning on or after  July
first,  two  thousand and before January first, two thousand three, such
surcharge shall be calculated as if (i) the rate  of  the  tax  computed
under paragraph one of subdivision (a) of section fifteen hundred two of
this article was nine percent and (ii) the rate of the limitation on tax
set  forth in section fifteen hundred five of this article for domestic,

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foreign and alien insurance corporations except  life  insurance  corpo-
rations was two and six-tenths percent.
  S  89.  Section 1825 of the tax law, as amended by section 2 of part E
of chapter 25 of the laws of 2009, is amended to read as follows:
  S 1825. Violation of secrecy provisions of the  tax  law.--Any  person
who  violates  the  provisions of subdivision (b) of section twenty-one,
subdivision one of section two hundred two, subdivision eight of section
two hundred eleven, subdivision (a) of section three  hundred  fourteen,
subdivision  one  or  two  of section four hundred thirty-seven, section
four hundred eighty-seven,  subdivision  one  or  two  of  section  five
hundred  fourteen,  subsection  (e) of section six hundred ninety-seven,
subsection (a) of section nine hundred ninety-four, subdivision  (a)  of
section  eleven  hundred forty-six, section twelve hundred eighty-seven,
subdivision (a) of section fourteen hundred eighteen, [subsection (a) of
section  fourteen  hundred  sixty-seven,]  subdivision  (a)  of  section
fifteen  hundred  eighteen,  subdivision  (a) of section fifteen hundred
fifty-five of this chapter, and subdivision (e) of  section  11-1797  of
the  administrative  code  of  the city of New York shall be guilty of a
misdemeanor.
  S 90. Subdivisions (s) and (t) of section 957 of the general municipal
law, as amended by section 1 of part S1 of chapter 57  of  the  laws  of
2009, are amended to read as follows:
  (s)  "Qualified  investment  project" shall mean a project (i) located
within an empire zone, (ii) at which five hundred or more jobs  will  be
created,  provided such jobs are new to the state and are in addition to
any other jobs previously created by the owner of such  project  in  the
state,  and  (iii)  which will consist of tangible personal property and
other tangible property, including buildings and  structural  components
of  buildings,  described  in  subparagraphs  (i), (ii), (iii), (iv) and
clause (A) or (C) of subparagraph (v) of paragraph  (b)  of  subdivision
[twelve-B]  THREE of section two hundred [ten] TEN-B of the tax law, the
basis of which for federal income tax  purposes  will  equal  or  exceed
seven hundred fifty million dollars. Provided however, the owner of such
project  does  not  employ more than two hundred persons in the state at
the time such project is commenced.
  (t) "Significant capital investment project" shall mean a project  (i)
located  within  an  empire  zone,  (ii)  which  will  be either a newly
constructed facility or a newly constructed addition to or expansion  of
a qualified investment project, consisting of tangible personal property
and  other  tangible property, including buildings and structural compo-
nents of buildings, described in subparagraphs (i),  (ii),  (iii),  (iv)
and  clause  (A) or (C) of subparagraph (v) of paragraph (b) of subdivi-
sion [twelve-B] THREE of section two hundred [ten] TEN-B of the tax law,
the basis of which for federal income tax purposes will equal or  exceed
seven  hundred  fifty  million dollars, (iii) which is constructed after
the basis for federal income tax purposes  of  the  property  comprising
such  qualified investment project equals or exceeds seven hundred fifty
million dollars, and (iv) at which five hundred or  more  jobs  will  be
created,  provided such jobs are new to the state and are in addition to
any other jobs previously created by the owner of such  project  in  the
state.
  S  99.  Notwithstanding  any  provisions  of  law  to the contrary and
notwithstanding the repeal of article 32 of the tax law by  section  one
of  this act, the repeal of section 180 of the tax law by section two of
this act and the repeal of section 181 of the tax law by  section  three
of  this  act,  all  provisions  of  such  article and such sections, in

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respect to the imposition, exemption, assessment, payment, payment over,
determination, collection, and credit or refund  of  tax,  interest  and
penalty imposed thereunder, the filing of forms and returns, the preser-
vation  of records for the purposes of such tax, the secrecy of returns,
the disposition of revenues, and the civil and criminal penalties appli-
cable to the violation of the provisions of such  article  32  and  such
sections  180  and  181,  shall  continue  in full force and effect with
respect to all such tax accrued for taxable years beginning before Janu-
ary 1, 2015;  and  all  actions  and  proceedings,  civil  or  criminal,
commenced  or  authorized  to  be  commenced  under  or by virtue of any
provision of such article 32 or by  virtue  of  any  provision  of  such
section  180  or  181  so  repealed, and pending or able to be commenced
immediately prior to the taking effect of such repeal, may be commenced,
prosecuted and defended to final effect in the same manner as they might
if such provisions were not so repealed.
  S 100. Subdivision 1 of section 187 of the  tax  law,  as  amended  by
chapter 2 of the laws of 1995, is amended to read as follows:
  1.  A  taxpayer  shall be allowed a credit, to be credited against the
taxes imposed by this article, other than the taxes and fees imposed  by
sections  [one  hundred  eighty,  one  hundred  eighty-one,] one hundred
eighty-six-a and one hundred eighty-six-e of this chapter. The amount of
the credit shall be  the  amount  of  the  special  additional  mortgage
recording  tax paid by the taxpayer pursuant to the provisions of subdi-
vision one-a of section two hundred fifty-three of this chapter on mort-
gages recorded on and after January  first,  nineteen  hundred  seventy-
nine.  Provided,  however,  that  the  amount  of  such credit allowable
against the tax imposed by section one hundred eighty-four of this chap-
ter shall be the excess of the amount of such special  additional  mort-
gage  recording  tax  paid over the amount of any credit allowed by this
section against the tax imposed by section one hundred  eighty-three  of
this chapter. Provided further, however, no credit shall be allowed with
respect  to  a  mortgage  of real property principally improved or to be
improved by one or more structures containing in the aggregate not  more
than  six  residential dwelling units, each dwelling unit having its own
separate cooking facilities, where the real property is located  in  one
or more of the counties comprising the metropolitan commuter transporta-
tion  district and where the mortgage is recorded on or after May first,
nineteen hundred eighty-seven.  Provided  further,  however,  no  credit
shall be allowed with respect to a mortgage of real property principally
improved  or  to be improved by one or more structures containing in the
aggregate not more than six residential dwelling  units,  each  dwelling
unit having its own separate cooking facilities, where the real property
is  located  in the county of Erie and where the mortgage is recorded on
or after May first, nineteen hundred eighty-seven.
  S 101. Subdivision 1 of section 187-a of the  tax  law,  as  added  by
chapter 142 of the laws of 1997, is amended to read as follows:
  1.    Allowance of credit. A taxpayer shall be allowed a credit, to be
computed as hereinafter provided, against  the  taxes  imposed  by  this
article,  other  than the taxes imposed by sections [one hundred eighty,
one hundred eighty-one,] one hundred eighty-six-a, one  hundred  eighty-
six-e  and one hundred eighty-nine of this article, for employing within
the state a qualified employee. Provided, however, the amount of  credit
allowed  by  this section against the tax imposed by section one hundred
eighty-four of this article shall be the excess of the  credit  computed
under  this  section  over  the amount of credit allowed by this section

S. 6359--B                         160                        A. 8559--B

against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  S  102.  Subdivision  1  of  section 190 of the tax law, as amended by
section 17 of part B of chapter 58 of the laws of 2004,  is  amended  to
read as follows:
  1.  General.  A  taxpayer  shall  be  allowed a credit against the tax
imposed by this article[, other than  the  taxes  and  fees  imposed  by
sections one hundred eighty and one hundred eighty-one of this article,]
equal  to twenty percent of the premium paid during the taxable year for
long-term care insurance. In order  to  qualify  for  such  credit,  the
taxpayer's premium payment must be for the purchase of or for continuing
coverage under a long-term care insurance policy that qualifies for such
credit  pursuant  to  section  one thousand one hundred seventeen of the
insurance law.
  S 103. Subdivision 5 of section 192 of the tax law is REPEALED.
  S 104. Clauses 1 and 2 of subparagraph (A)  and  subparagraph  (B)  of
paragraph (iii) of subdivision 9 of section 16-v of section 1 of chapter
174  of  the laws of 1968 constituting the urban development corporation
act, as added by section 1 of part C of chapter 59 of the laws of  2013,
is amended to read as follows:
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under the following provisions of the  tax  law:  article
nine-A; section one hundred eighty-three, OR one hundred eighty-four [or
one  hundred eighty-five] of article nine; [article thirty-two] or arti-
cle thirty-three; or
  (2) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable  or  previously  taxable under the
following provisions of the tax law: article nine-A; section one hundred
eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
y-five or former section one hundred eighty-six of article nine;  FORMER
article thirty-two; article thirty-three; article twenty-three, or would
have  been subject to tax under such article twenty-three (as such arti-
cle was in effect on January first,  nineteen  hundred  eighty)  or  the
income  (or  losses) of which is (or was) includable under article twen-
ty-two; or
  (B) a sole proprietorship, partnership, limited  partnership,  limited
liability  company,  or  New  York  subchapter S corporation that is not
substantially similar in operation and in ownership to a business entity
(or entities) taxable, or previously taxable, under  article  nine-A  of
the  tax law, section one hundred eighty-three, one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  former  section  one  hundred
eighty-six  of article nine of the tax law, FORMER article thirty-two or
ARTICLE thirty-three of the tax law, article twenty-three of the tax law
or which would have been subject to tax under such article  twenty-three
(as  such  article  was  in  effect  on  January first, nineteen hundred
eighty) or the income (or losses) of which is (or was) includable  under
article twenty-two of the tax law; and
  S  105. Section 206 of the tax law, as added by chapter 69 of the laws
of 1978, is amended to read as follows:
  S 206.   Deposit and disposition of  revenue.    The  [license  fees,]
taxes,  percentage,  interest  and other charges imposed by this article
shall be collected and deposited and receipts  therefor  issued  by  the
[tax  commission,  except  that  such  license  fees, taxes, percentage,
interest and other charges imposed by section one hundred eighty of this

S. 6359--B                         161                        A. 8559--B

chapter shall be collected and deposited and receipts therefor issued by
the proper state officer in accordance with the provisions  of  subdivi-
sion  two  of  section one hundred eighty of this chapter,] COMMISSIONER
and  all  revenues  so  collected  or  received  shall  be deposited and
disposed of pursuant to the provisions of section one  hundred  seventy-
one-a of this chapter.
  S  106.  Subsection  (a)  of  section 1080 of the tax law, as added by
chapter 188 of the laws of 1964, is amended to read as follows:
  (a) General.--- The provisions of this  article  shall  apply  to  the
administration  of  and the procedures with respect to the taxes imposed
by articles nine [(except section one  hundred  eighty)],  AND  nine-a[,
nine-b  and  nine-c] of this chapter for taxable years or periods ending
on or after December thirty-first, nineteen hundred sixty-four.
  S 107. Subdivisions (a) and (c) of section 1809 of  the  tax  law,  as
added  by  section 1 of subpart A of part S of chapter 57 of the laws of
2010, are amended to read as follows:
  (a) Any person who, with intent to evade payment of  any  tax  imposed
under  article nine [(other than under section one hundred eighty or one
hundred eighty-one)], nine-A, thirteen,  [thirty-two,]  thirty-three  or
thirty-three-A  of  this  chapter,  fails to file a return or report for
three consecutive taxable years shall be guilty of  a  class  E  felony,
provided  that such person had an unpaid tax liability, in excess of the
threshold amount with respect to each of the three  consecutive  taxable
years.  The threshold amount in the case of a taxable year under article
nine-A of this chapter ending after  June  thirtieth,  nineteen  hundred
eighty-nine  is  the  applicable  fixed  dollar minimum prescribed under
paragraph (d) of subdivision one of section  two  hundred  ten  of  this
chapter. In the event such fixed dollar minimum is less than two hundred
fifty  dollars, the threshold amount in the case of such taxable year is
two hundred fifty dollars. In all other cases the  threshold  amount  is
two hundred fifty dollars.
  (c)  As  used  in  this section, the terms "return" and "report" shall
mean a return or report required under section one  hundred  ninety-two,
two  hundred  eleven,  two hundred ninety-four, [fourteen hundred sixty-
two,] fifteen hundred fifteen or  fifteen  hundred  fifty-four  of  this
chapter.    It  shall  not  include  any return or report referred to in
section one hundred ninety-seven-a, two  hundred  thirteen-a,  [fourteen
hundred sixty] or fifteen hundred thirteen of this chapter.
  S  108.  Paragraphs (d), (e), (g), (h) and (q) of section 104-A of the
business corporation law, subdivisions (d), (e) and (q)  as  amended  by
chapter 166 of the laws of 1991, subdivision (g) as added by chapter 591
of  the  laws  of 1982, and subdivision (h) as amended by chapter 117 of
the laws of 1986, are amended to read as follows:
  (d) For filing a certificate of incorporation pursuant to section four
hundred two of this chapter, one hundred twenty-five dollars  [plus  the
tax on shares prescribed by section one hundred eighty of the tax law].
  (e)  For  filing  a certificate of amendment pursuant to section eight
hundred five of this chapter, sixty dollars  [plus  the  tax  on  shares
prescribed  by section one hundred eighty of the tax law if such certif-
icate shows a change of shares].
  (g) For filing a restated certificate  of  incorporation  pursuant  to
section eight hundred seven of this chapter, sixty dollars [plus the tax
on  shares  prescribed  by  section one hundred eighty of the tax law if
such certificate shows a change of shares].
  (h) For filing a certificate of merger or  consolidation  pursuant  to
section  nine hundred four of this chapter, or a certificate of exchange

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pursuant to section nine hundred thirteen (other than paragraph  (g)  of
section  nine hundred thirteen) of this chapter, sixty dollars [plus the
tax on shares prescribed by section one hundred eighty of the tax law if
such certificate shows a change of shares].
  (q)  For  filing  a  certificate  of  incorporation  by a professional
service corporation pursuant to section fifteen hundred  three  of  this
chapter,  one  hundred  twenty-five  dollars  [plus  the  tax  on shares
prescribed by section one hundred eighty of the tax law].
  S 109. Subdivision 8 of section 7-a of the general  associations  law,
as  added  by  chapter  575  of  the laws of 1964, is amended to read as
follows:
  8. The provisions of section ninety-six of the executive law prescrib-
ing the fee to be collected by the department  of  state  for  filing  a
certificate  of  incorporation  under the business corporation law shall
apply to the certificate of incorporation to be filed pursuant  to  this
section[,  and  the  organization  tax payable under section one hundred
eighty of the tax law in respect of a corporation formed under the busi-
ness corporation law shall be paid before the department of state  shall
file such certificate of incorporation].
  S 110. Severability. If any provision of this act shall for any reason
be  finally adjudged by any court of competent jurisdiction to be inval-
id, such judgment shall not affect, impair, or invalidate the  remainder
of  this  act,  but  shall be confined in its operation to the provision
directly involved in the controversy in which such judgment  shall  have
been rendered. It is hereby declared to be in the intent of the legisla-
ture  that  this  act  would  have  been  enacted  even  if such invalid
provision had not been included in this  act.  Provided  further,  if  a
court of final, competent jurisdiction adjudges the tax rates imposed on
qualified  New  York  manufacturers  to  be  invalid, qualified New York
manufacturers shall be subject to  the  same  tax  rates  as  all  other
taxpayers  subject  to  tax  under  article 9-A of the tax law. Provided
further, if a court of final, competent jurisdiction adjudges  that  any
of  the  tax  credits provided by this act to be invalid, such credit or
credits shall be deemed repealed and shall be of no force and effect  as
to any taxpayers.
  S  111.  This act shall take effect January 1, 2015 and shall apply to
taxable years commencing on or after such date; provided that the amend-
ments to section 25 of the tax law made by section forty-three  of  this
act  shall  not  affect  the  repeal of such section and shall be deemed
repealed therewith; provided, further, that the amendments to the  open-
ing  paragraph  of  subdivision  (a), subparagraph (C) of paragraph 2 of
subdivision (e) and subdivision (f) of section 35 of the tax law made by
section fifty of this act shall not affect the repeal of such provisions
and shall be deemed repealed  therewith;  provided,  further,  that  the
amendments  to  clause  (xxxii)  of  subparagraph  (B) of paragraph 1 of
subsection (i) of section 606 of the tax law made by section sixty-eight
of this act shall not affect the repeal of  such  clause  and  shall  be
deemed  repealed  therewith;  provided,  further, that the amendments to
clause (xxxiii) of subparagraph (B) of paragraph 1 of subsection (i)  of
section 606 of the tax law made by section sixty-eight of this act shall
not affect the repeal of such clause and shall be deemed repealed there-
with;  and  provided,  further,  that  the  amendments to clause (ii) of
subparagraph (B) of paragraph  2  of  subsection  (q),  paragraph  3  of
subsection  (s)  and  the closing paragraph of paragraph 1 of subsection
(t) of section 1085 of the tax law made by section  eighty-one  of  this

S. 6359--B                         163                        A. 8559--B

act  shall  not affect the repeal of such provisions and shall be deemed
repealed therewith.

                                 PART B

  Section  1.  Subparagraph  (iii) of paragraph (a) of subdivision 14 of
section 425 of the real property tax law, as added by section 1 of  part
J of chapter 57 of the laws of 2013, is amended to read as follows:
  (iii)  An  owner who fails to register by the registration deadline so
established shall be permitted to file a petition with the  commissioner
requesting  that  the commissioner excuse such failure and accept a late
registration, provided that such petition shall explain why such failure
occurred and shall be filed no later than one year after such  deadline,
AND  PROVIDED  FURTHER THAT IF THE COMMISSIONER ACCEPTS A LATE REGISTRA-
TION AFTER HAVING DIRECTED THE REMOVAL OF THE BASIC STAR EXEMPTION  FROM
THE PROPERTY TO WHICH THE REGISTRATION PERTAINS, THEN IN LIEU OF DIRECT-
ING  THE EXEMPTION TO BE RESTORED, THE COMMISSIONER IS AUTHORIZED IN HIS
OR HER DISCRETION TO REMIT DIRECTLY TO THE PROPERTY OWNER OR OWNERS  THE
TAX  SAVINGS  THAT  THE  EXEMPTION  WOULD  HAVE  YIELDED HAD IT NOT BEEN
REMOVED, AND TO FURTHER DIRECT THE ASSESSOR TO RESTORE THE EXEMPTION  ON
A  PROSPECTIVE  BASIS  WITHOUT A NEW APPLICATION UNLESS THE ASSESSOR HAS
REASON TO BELIEVE THAT THE PROPERTY OWNER  IS  NO  LONGER  ELIGIBLE  FOR
REASONS OTHER THAN A FAILURE TO REGISTER;
  S  2.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 2014.

                                 PART C

  Section 1. Section 2 of chapter 540 of the laws of 1992, amending  the
real  property  tax  law  relating to oil and gas charges, as amended by
section 1 of part A of chapter 59 of the laws of  2012,  is  amended  to
read as follows:
  S  2.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 1992; provided,
however that any charges imposed by section 593 of the real property tax
law as added by section one of this act shall first be  due  for  values
for assessment rolls with tentative completion dates after July 1, 1992,
and  provided  further,  that  this  act  shall remain in full force and
effect until March 31, [2015] 2018, at which time  section  593  of  the
real  property  tax  law  as  added  by section one of this act shall be
repealed.
  S 2. This act shall take effect immediately.

                                 PART D

  Section 1. Subdivision 1 of section 236  of  the  racing,  pari-mutuel
wagering and breeding law, as amended by chapter 18 of the laws of 2008,
is amended to read as follows:
  1. Every corporation authorized under this chapter to conduct pari-mu-
tuel  betting at a race meeting on races run thereat, except as provided
in section two hundred thirty-eight of this article with respect to  the
franchised corporation, shall distribute all sums deposited in any pari-
mutuel  pool  to  the holders of winning tickets therein, providing such
tickets be presented for payment before April first of the year  follow-
ing  the  year  of  their purchase, less an amount which shall be estab-
lished and retained by such racing corporation of  between  fourteen  to

S. 6359--B                         164                        A. 8559--B

twenty  per centum of the total deposits in pools resulting from regular
on-track bets and less sixteen to twenty-two per  centum  of  the  total
deposits  in pools resulting from multiple on-track bets and less twenty
to thirty per centum of the total deposits in pools resulting from exot-
ic  on-track  bets and less twenty to thirty-six per centum of the total
pools resulting from super exotic on-track bets, plus  the  breaks.  The
retention rate to be established is subject to the prior approval of the
[racing  and  wagering board] COMMISSION.   Such rate may not be changed
more than once per calendar quarter to be effective on the first day  of
the  calendar  quarter. "Exotic bets" and "multiple bets" shall have the
meanings set forth in section five hundred nineteen of this chapter  and
breaks  are hereby defined as the odd cents over any multiple of ten, or
for exotic bets over any multiple of fifty, or for  super  exotic  bets,
over any multiple of one hundred, calculated on the basis of one dollar,
otherwise  payable  to  a patron provided, however, that effective after
October  fifteenth,  nineteen  hundred  ninety-four  breaks  are  hereby
defined  as  the odd cents over any multiple of five for payoffs greater
than one dollar five cents but less than five dollars, over any multiple
of ten for payoffs greater than five dollars but less  than  twenty-five
dollars, over any multiple of twenty-five for payoffs greater than twen-
ty-five  dollars  but  less  than two hundred fifty dollars, or over any
multiple of fifty for payoffs over two  hundred  fifty  dollars.  "Super
exotic  bets"  shall have the meaning set forth in section three hundred
one of this chapter. Of the amount so retained there shall  be  paid  by
such  corporation to the department of taxation and finance as a reason-
able tax by the  state  for  the  privilege  of  conducting  pari-mutuel
betting  on  the races run at the race meeting held by such corporation,
which tax is hereby levied, the following percentages of the total pool,
plus fifty-five per centum of the breaks; the applicable rates for regu-
lar and multiple bets shall be one and one-half per centum; the applica-
ble rates for exotic bets shall be six and three-quarter per centum  and
the applicable rate for super exotic bets shall be seven and three-quar-
ter per centum. Effective on and after September first, nineteen hundred
ninety-four,  the  applicable  tax  rate  shall be one per centum of all
wagers, provided that,  an  amount  equal  to  one-half  the  difference
between the taxation rate for on-track regular, multiple and exotic bets
as of December thirty-first, nineteen hundred ninety-three and the rates
on such on-track wagers as herein provided shall be used exclusively for
purses. Provided, however, that for any twelve-month period beginning on
April  first in nineteen hundred ninety and any year thereafter, each of
the applicable rates set forth above shall be increased  by  one-quarter
of  one  per  centum on all on-track bets of any such racing corporation
that did not expend an amount equal to at  least  one-half  of  one  per
centum  of  its  on-track bets during the immediately preceding calendar
year for enhancements consisting of capital improvements as  defined  by
section  two  hundred thirty-seven of this article, repairs to its phys-
ical plant, structures, and equipment used in  its  racing  or  wagering
operations as certified by the [state racing and wagering board] COMMIS-
SION  to  the  commissioner of taxation and finance no later than eighty
days after the close of such calendar year, and five special  events  at
each  track  in each calendar year, not otherwise conducted in the ordi-
nary course of business, the purpose of which  shall  be  to  encourage,
attract  and  promote  track  attendance and encourage new and continued
patronage, which events shall be approved by the  [racing  and  wagering
board] COMMISSION for purposes of this subdivision. In the determination
of  the  amounts  expended for such enhancements, the [board] COMMISSION

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may consider the immediately preceding twelve month calendar  period  or
the average of the two immediately preceding twelve month calendar peri-
ods.  Provided  further,  however,  that of the portion of the increased
amounts  retained  by  such  corporation above those amounts retained in
nineteen hundred eighty-four,  an  amount  of  such  increase  shall  be
distributed  to  purses in the same proportion as commissions and purses
were distributed during nineteen hundred eighty-four as certified by the
[board] COMMISSION. Such corporation in the second zone shall receive  a
credit  against  the  daily tax imposed by this subdivision in an amount
equal to one per centum of total daily pools resulting from  the  simul-
cast  of  such  corporation's  races  to licensed facilities operated by
regional off-track betting corporations in accordance with  section  one
thousand  eight of this chapter, provided however, that sixty per centum
of the amount of such credit shall be used exclusively to increase purs-
es for overnight races conducted  by  such  corporation;  and,  provided
further,  that  in no event shall such total daily credit exceed one per
centum of the total daily pool of such corporation.  Provided,  however,
that  on  and  after  September first, nineteen hundred ninety-four such
credit shall be four-tenths percent of total daily pools resulting  from
such  simulcasting  and  that  in no event shall such total daily credit
equal four-tenths percent of the total daily pool of such corporation.
  Such corporation shall pay to the New York state thoroughbred breeding
and development fund one-half of one  per  centum  of  the  total  daily
on-track  pari-mutuel  pools from regular, multiple and exotic bets, and
three per centum of super exotic bets.  The  corporation  shall  receive
credit  as  a  reduction  of  the  tax by the state for the privilege of
conducting pari-mutuel betting for the amounts, except amounts paid from
super exotic betting pools, paid to  the  New  York  state  thoroughbred
breeding  and  development  fund  after  January first, nineteen hundred
seventy-eight.
  Such corporation shall distribute to purses an amount equal  to  fifty
per  centum  of  any  compensation it receives from simulcasting or from
wagering conducted outside the United States. Such corporation shall pay
to the [racing and wagering board] COMMISSION as a regulatory fee, which
fee is hereby levied, [fifty] SIXTY hundredths of one per centum of  the
total daily on-track pari-mutuel pools of such corporation.
  S  2.  Paragraph  (d)  of  subdivision 1 of section 238 of the racing,
pari-mutuel wagering and breeding law, as amended by chapter 18  of  the
laws of 2008, is amended to read as follows:
  (d)  The  pari-mutuel  tax  rate  authorized  by paragraph (a) of this
subdivision shall be effective so long as a franchised corporation noti-
fies the [racing and wagering board] COMMISSION by August  fifteenth  of
each  year  that such pari-mutuel tax rate is effective of its intent to
conduct a race meeting at Aqueduct racetrack during the months of Decem-
ber, January, February, March and April. For purposes of this  paragraph
such  race  meeting  shall  consist of not less than ninety-five days of
racing.  Not later than May first of each year that such pari-mutuel tax
rate is effective, the [racing  and  wagering  board]  COMMISSION  shall
determine  whether a race meeting at Aqueduct racetrack consisted of the
number of days as required by this paragraph. In determining the  number
of race days, cancellation of a race day because of an act of God, which
the [racing and wagering board] COMMISSION approves or because of weath-
er  conditions that are unsafe or hazardous which the [racing and wager-
ing board] COMMISSION approves shall not be construed as  a  failure  to
conduct  a race day. Additionally, cancellation of a race day because of
circumstances beyond the control  of  such  franchised  corporation  for

S. 6359--B                         166                        A. 8559--B

which  the  [racing  and wagering board] COMMISSION gives approval shall
not be construed as a failure to conduct a race day. If the [racing  and
wagering  board] COMMISSION determines that the number of days of racing
as required by this paragraph have not occurred then the pari-mutuel tax
rate in paragraph (a) of this subdivision shall revert to the pari-mutu-
el  tax rates in effect prior to January first, nineteen hundred ninety-
five. Such franchised corporation shall pay to the [racing and  wagering
board]  COMMISSION  as  a  regulatory  fee,  which fee is hereby levied,
[fifty] SIXTY hundredths of one per centum of the total  daily  on-track
pari-mutuel pools of such franchised corporation.
  S  3. Paragraph d of subdivision 1 of section 318 of the racing, pari-
mutuel wagering and breeding law, as amended by section 3 of part  B  of
chapter 59 of the laws of 2005, is amended to read as follows:
  d.  Every  harness  racing association or corporation shall pay to the
[board] COMMISSION as a regulatory fee,  which  fee  is  hereby  levied,
[fifty]  SIXTY  hundredths  of  one  percent of the total daily on-track
pari-mutuel pools of such association or corporation.
  S 4. The opening paragraph of subdivision 1  of  section  527  of  the
racing,  pari-mutuel wagering and breeding law, as amended by chapter 18
of the laws of 2008, is amended to read as follows:
  The disposition of the retained commission from pools  resulting  from
regular,  multiple or exotic bets, as the case may be, whether placed on
races run within a region or  outside  a  region,  conducted  by  racing
corporations, harness racing associations or corporations, quarter horse
racing associations or corporations or races run outside the state shall
be governed by the tables in paragraphs a and b of this subdivision. The
rate  denominated  "state  tax" shall represent the rate of a reasonable
tax imposed upon the retained commission for the privilege of conducting
off-track pari-mutuel betting, which tax is hereby levied and  shall  be
payable  in the manner set forth in this section. Each off-track betting
corporation shall pay to the [racing and wagering board] COMMISSION as a
regulatory fee, which fee is hereby levied, [fifty] SIXTY hundredths  of
one  percent  of  the total daily pools of such corporation. Each corpo-
ration shall also pay twenty per centum of the breaks derived from  bets
on harness races and fifty per centum of the breaks derived from bets on
all other races to the agriculture and New York State horse breeding and
development  fund and to the thoroughbred breeding and development fund,
the total of such payments to be apportioned fifty per  centum  to  each
such fund. For the purposes of this section, the New York city, Suffolk,
Nassau,  and  the  Catskill regions shall constitute a single region and
any thoroughbred track located within the Capital District region  shall
be  deemed  to  be within such single region. A "regional meeting" shall
refer to either harness or thoroughbred meetings, or both, except that a
franchised corporation shall not be a regional track for the purpose  of
receiving  distributions  from bets on thoroughbred races conducted by a
thoroughbred track in the Catskill region conducting  a  mixed  meeting.
With  the exception of a harness racing association or corporation first
licensed to conduct pari-mutuel wagering at a  track  located  in  Tioga
county after January first, two thousand five, racing corporations first
licensed  to  conduct  pari-mutuel  racing after January first, nineteen
hundred eighty-six or a harness racing association or corporation  first
licensed  to  conduct pari-mutuel wagering at a track located in Genesee
County after January first, two thousand five, and quarter horse  tracks
shall  not be "regional tracks"; if there is more than one harness track
within a region, such tracks shall evenly divide payments made  pursuant
to  the  tables  in  paragraphs a and b of this subdivision when neither

S. 6359--B                         167                        A. 8559--B

track is running. In the event a track elects  to  reduce  its  retained
percentage from any or all of its pari-mutuel pools, the payments to the
track  holding  the race and the regional track required by paragraphs a
and  b  of  this  subdivision  shall  be  reduced  in proportion to such
reduction. Nothing in this section shall be construed to  authorize  the
conduct  of off-track betting contrary to the provisions of section five
hundred twenty-three of this article.
  S 5. Paragraph a of subdivision 1 of section 904 of the racing,  pari-
mutuel  wagering  and breeding law, as amended by chapter 18 of the laws
of 2008, is amended to read as follows:
  a. The applicable state tax provided for in  paragraphs  a  and  b  of
subdivision  one  of  section  five hundred twenty-seven of this chapter
shall be one-half per centum for regular, multiple and exotic bets.  Any
harness  racing  or  association  or corporation, or thoroughbred racing
corporation authorized pursuant to this section shall pay to the [racing
and wagering board] COMMISSION as a regulatory fee, which fee is  hereby
levied, [fifty] SIXTY hundredths of one percent of the total daily pari-
mutuel pools.
  S 6. Paragraph g of subdivision 3 of section 1007 of the racing, pari-
mutuel  wagering  and breeding law, as amended by chapter 18 of the laws
of 2008, is amended to read as follows:
  g. Any harness racing or association or corporation,  or  thoroughbred
racing  corporation authorized pursuant to this section shall pay to the
[racing and wagering board] COMMISSION as a regulatory fee, which fee is
hereby levied, [fifty] SIXTY hundredths of  one  percent  of  the  total
daily pari-mutuel pools.
  S 7. Paragraph b of subdivision 3 of section 1008 of the racing, pari-
mutuel  wagering and breeding law, as  amended by section 7 of part B of
chapter 59 of the laws of 2005, is amended to read as follows:
  b. Of the sums received by the sending track, fifty percent  shall  be
distributed  to  purses  in  addition  to moneys distributed pursuant to
section five hundred twenty-seven of this chapter. The off-track betting
corporation shall pay to the [racing and wagering board] COMMISSION as a
regulatory fee, which fee is hereby levied, [fifty] SIXTY hundredths  of
one percent of the total daily pools.
  S 8. Paragraph d of subdivision 4 of section 1009 of the racing, pari-
mutuel  wagering  and breeding law, as amended by section 8 of part B of
chapter 59 of the laws of 2005, is amended to read as follows:
  d. The operator shall pay to the [racing and wagering  board]  COMMIS-
SION  as  a  regulatory  fee,  which fee is hereby levied, [fifty] SIXTY
hundredths of one percent of the total daily pools.
  S 9. Subparagraph (iv) of paragraph i of subdivision 1 of section 1014
of the racing, pari-mutuel wagering and  breeding  law,  as  amended  by
chapter 18 of the laws of 2008, is amended to read as follows:
  (iv) Any thoroughbred racing corporation or harness racing association
or  corporation  or off-track betting corporation authorized pursuant to
this section shall pay to the [racing and wagering board] COMMISSION  as
a  regulatory  fee, which fee is hereby levied, [fifty] SIXTY hundredths
of one percent of all wagering pools.
  S 10. Paragraph e of subdivision 3 of  section  1015  of  the  racing,
pari-mutuel  wagering  and breeding law, as amended by chapter 18 of the
laws of 2008, is amended to read as follows:
  e. Any thoroughbred racing corporation or harness  racing  association
or  corporation  or off-track betting corporation authorized pursuant to
this section shall pay to the [racing and wagering board] COMMISSION  as

S. 6359--B                         168                        A. 8559--B

a  regulatory  fee, which fee is hereby levied, [fifty] SIXTY hundredths
of one percent of all wagering pools.
  S  11. Clause (B) of subparagraph 2 of paragraph b of subdivision 1 of
section 1016 of the racing, pari-mutuel wagering and  breeding  law,  as
amended  by  chapter  18  of  the  laws  of  2008, is amended to read as
follows:
  (B) Any harness racing or association or corporation  or  thoroughbred
racing  corporation authorized pursuant to this section shall pay to the
[racing and wagering board] COMMISSION as a regulatory fee, which fee is
hereby levied, [fifty] SIXTY hundredths of  one  percent  of  the  total
daily pari-mutuel pools.
  S  12.  Paragraph  b  of  subdivision 2 of section 1018 of the racing,
pari-mutuel wagering and breeding law, as amended by chapter 18  of  the
laws of 2008, is amended to read as follows:
  b.  Any  thoroughbred racing corporation or harness racing association
or corporation or off-track betting corporation shall pay to the [racing
and wagering board] COMMISSION as a regulatory fee, which fee is  hereby
levied, [fifty] SIXTY hundredths of one percent of all wagering pools.
  S 13. This act shall take effect immediately.

                                 PART E

  Section 1. Subsection (a) of section 653 of the tax law, as amended by
chapter 65 of the laws of 1985, is amended to read as follows:
  (a)  General.  (1) Any return, statement or other document required to
be made pursuant to this article shall  be  signed  in  accordance  with
regulations  or  instructions prescribed by the [tax commission] COMMIS-
SIONER.   The fact that an individual's name  is  signed  to  a  return,
statement,  or  other  document,  shall  be prima facie evidence for all
purposes that the return,  statement  or  other  document  was  actually
signed by him OR HER.
  (2)  IN  THE  CASE  OF  AN  ELECTRONICALLY FILED INDIVIDUAL'S PERSONAL
INCOME TAX RETURN PREPARED BY A TAX PREPARER, AN AUTHORIZATION  TO  FILE
ANY  RETURN, STATEMENT OR OTHER DOCUMENT REQUIRED TO BE MADE PURSUANT TO
THIS ARTICLE SIGNED BY THE TAXPAYER IN ACCORDANCE WITH  THE  REGULATIONS
OR  INSTRUCTIONS  PRESCRIBED  BY THE COMMISSIONER AND RECEIVED ELECTRON-
ICALLY BY THE TAX PREPARER  SHALL  SATISFY  THE  SIGNATURE  REQUIREMENTS
UNDER THIS ARTICLE.
  S 2. This act shall take effect immediately and shall apply to returns
filed for taxable years beginning on or after January 1, 2014.

                                 PART F

  Section 1. Clause (C) of subparagraph (i) of paragraph (b) of subdivi-
sion  4  of  section  425  of  the  real property tax law, as amended by
section 3 of part E of chapter 83 of the laws of  2002,  is  amended  to
read as follows:
  (C)  For final assessment rolls to be completed in [each ensuing year]
THE YEARS TWO THOUSAND FOUR THROUGH TWO THOUSAND FOURTEEN, the  applica-
ble income tax year, cost-of-living-adjustment percentage and applicable
increase  percentage  shall  all be advanced by one year, and the income
standard shall be the previously-applicable income standard increased by
the new cost-of-living-adjustment percentage. If there should be a  year
for  which  there  is no applicable increase percentage due to a general
benefit increase as defined by subdivision three of  subsection  (i)  of
section  four  hundred  fifteen  of title forty-two of the United States

S. 6359--B                         169                        A. 8559--B

code, the applicable increase percentage for purposes of  this  computa-
tion  shall be deemed to be the percentage which would have yielded that
general benefit increase. FOR FINAL ASSESSMENT ROLLS TO BE COMPLETED  IN
TWO  THOUSAND  FIFTEEN  AND  THEREAFTER,  THE APPLICABLE INCOME TAX YEAR
SHALL BE  ADVANCED  BY  ONE  YEAR,  AND  ELIGIBILITY  FOR  THE  ENHANCED
EXEMPTION  SHALL  BE  BASED  UPON  THE INCOME STANDARD APPLIED FOR FINAL
ASSESSMENT ROLLS COMPLETED IN TWO THOUSAND FOURTEEN.
  S 2. This act shall take effect immediately and shall apply to assess-
ment rolls completed in 2015 and thereafter.

                                 PART G

  Section 1. Section 2 of part I of chapter 58  of  the  laws  of  2006,
relating  to  providing an enhanced earned income tax credit, as amended
by section 1 of part L of chapter 59 of the laws of 2012, is amended  to
read as follows:
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2006 and before January 1, [2015]
2017.
  S 2. This act shall take effect immediately.

                                 PART H

  Section  1.  The  general  obligations  law is amended by adding a new
section 3-505 to read as follows:
  S 3-505. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH  ELECTRONIC
TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES.
  1. AS USED IN THIS SECTION:
  A.  "GOVERNMENT  ENTITY"  MEANS  THE  STATE OF NEW YORK, OR ANY OF ITS
AGENCIES, POLITICAL SUBDIVISIONS, INSTRUMENTALITIES, PUBLIC CORPORATIONS
(INCLUDING A PUBLIC CORPORATION CREATED PURSUANT TO AGREEMENT OR COMPACT
WITH ANOTHER STATE OR CANADA), OR COMBINATION THEREOF,  RESPONSIBLE  FOR
DETERMINING WHETHER A LICENSE SHALL BE ISSUED OR RENEWED.
  B.  "ELECTRONIC  LICENSE  APPLICATION"  MEANS ANY ELECTRONIC DATA FORM
THAT MUST BE COMPLETED BY AN APPLICANT TO OBTAIN OR RENEW A LICENSE,  OR
AN ELECTRONIC DATA PROCESS WHICH IS USED BY A GOVERNMENT ENTITY TO PROC-
ESS  DATA  RECEIVED  FROM  AN  APPLICANT  SEEKING  TO RECEIVE OR RENEW A
LICENSE.
  C. "ELECTRONIC TAX CLEARANCE" MEANS AN ELECTRONIC  COMMUNICATION  FROM
THE  DEPARTMENT OF TAXATION AND FINANCE INDICATING THAT AN APPLICANT HAD
NO PAST-DUE TAX LIABILITIES, AS THAT TERM  IS  DEFINED  IN  SECTION  ONE
HUNDRED  SEVENTY-ONE-W OF THE TAX LAW, OR THAT NO CONCLUSIVE MATCH COULD
BE MADE.
  D. "LICENSE" MEANS  ANY  CERTIFICATE,  LICENSE,  PERMIT  OR  GRANT  OF
PERMISSION  REQUIRED  BY LAW OR AGENCY REGULATION AS A CONDITION FOR THE
LAWFUL PRACTICE OF ANY OCCUPATION, EMPLOYMENT,  TRADE,  VOCATION,  BUSI-
NESS, OR PROFESSION, INCLUDING ANY REGISTRATION REQUIRED BY LAW OR AGEN-
CY  REGULATION  AS  A  CONDITION  FOR  SUCH  LAWFUL PRACTICE. THIS SHALL
INCLUDE, BUT IS NOT LIMITED TO, ANY LICENSE GRANTED TO AN INDIVIDUAL  OR
ENTITY  BY  THE  STATE EDUCATION DEPARTMENT, THE DEPARTMENT OF STATE, OR
THE OFFICE OF COURT ADMINISTRATION.  PROVIDED, HOWEVER,  THAT  "LICENSE"
SHALL  NOT,  FOR  THE  PURPOSES  OF THIS SECTION, INCLUDE ANY LICENSE OR
PERMIT TO OWN, POSSESS, CARRY, OR FIRE ANY EXPLOSIVE,  PISTOL,  HANDGUN,
RIFLE, SHOTGUN, OTHER FIREARM OR AMMUNITION.
  2.  NOTWITHSTANDING  ANY  OTHER PROVISION OF LAW, AND WHEN NOT ALREADY
REQUIRED BY ANOTHER PROVISION OF LAW OR REGULATION, ANY GOVERNMENT ENTI-

S. 6359--B                         170                        A. 8559--B

TY MAY ELECT TO CONDITION THE ISSUANCE OR RENEWAL OF A  LICENSE  ON  THE
ABSENCE  OF  PAST-DUE  TAX  LIABILITIES  AND  TO MAKE SUCH DETERMINATION
THROUGH THE RECEIPT OF AN ELECTRONIC TAX CLEARANCE FROM  THE  DEPARTMENT
OF  TAXATION AND FINANCE AS PROVIDED FOR IN SECTION ONE HUNDRED SEVENTY-
ONE-W OF THE TAX LAW.
  3. ANY APPLICANT FOR A LICENSE SUBJECT  TO  ELECTRONIC  TAX  CLEARANCE
SHALL  BE  REQUIRED  TO  PROVIDE ANY INFORMATION DEEMED NECESSARY BY THE
GOVERNMENT ENTITY AND THE DEPARTMENT OF TAXATION AND  FINANCE  TO  EFFI-
CIENTLY  AND  ACCURATELY  PROVIDE  AN  ELECTRONIC TAX CLEARANCE, AND THE
FAILURE BY THE APPLICANT TO PROVIDE SUCH INFORMATION  SHALL  RENDER  THE
APPLICATION INCOMPLETE.
  4.  THE APPLICATION FOR A LICENSE SUBJECT TO ELECTRONIC TAX CLEARANCE,
OR THE INSTRUCTIONS FOR  SUCH  APPLICATION,  SHALL  CLEARLY  INFORM  THE
APPLICANT  THAT  AN ELECTRONIC TAX CLEARANCE WILL BE PERFORMED AND THAT,
IF THE TAX CLEARANCE IS DENIED, THE APPLICANT MUST CONTACT  THE  DEPART-
MENT  OF  TAXATION  AND  FINANCE TO RESOLVE ANY PAST-DUE TAX LIABILITIES
BEFORE THE APPLICATION FOR A LICENSE OR RENEWAL MAY BE RESUBMITTED.
  5. IF AN ELECTRONIC TAX CLEARANCE IS DENIED BY THE DEPARTMENT OF TAXA-
TION AND FINANCE, THE GOVERNMENT ENTITY SHALL DENY ISSUANCE  OR  RENEWAL
OF  THE  REQUESTED LICENSE AND SHALL ELECTRONICALLY NOTIFY THE APPLICANT
TO CONTACT THE  DEPARTMENT  OF  TAXATION  AND  FINANCE  TO  RESOLVE  THE
PAST-DUE  TAX  LIABILITIES  AND THAT NO LICENSE MAY BE ISSUED OR RENEWED
UNTIL THE TAX LIABILITIES ARE RESOLVED.
  6. ANY TAX CLEARANCE OR RELATED  COMMUNICATIONS  SHALL  BE  BY  SECURE
ELECTRONIC  COMMUNICATION BETWEEN THE DEPARTMENT OF TAXATION AND FINANCE
AND THE REQUESTING GOVERNMENT ENTITY SUCH THAT PROCESSING OF  THE  ELEC-
TRONIC  APPLICATION  IS  NOT  DELAYED IF THE ELECTRONIC TAX CLEARANCE IS
RECEIVED.  NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY,  A  GOVERNMENT
ENTITY  SHALL  BE  AUTHORIZED TO SHARE ANY APPLICANT DATA OR INFORMATION
WITH THE DEPARTMENT OF TAXATION AND FINANCE THAT IS NECESSARY TO  ENSURE
THE  PROPER  MATCHING  OF THE APPLICANT TO THE TAX RECORDS MAINTAINED BY
THE DEPARTMENT OF TAXATION AND FINANCE.
  7. NO FEE SHALL BE CHARGED  TO  THE  APPLICANT  FOR  THE  PURPOSES  OF
RECEIVING AN ELECTRONIC TAX CLEARANCE.
  S  2.  The tax law is amended by adding a new section 171-w to read as
follows:
  S 171-W. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH  ELECTRONIC
TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES.  1.
IN  ACCORDANCE  WITH  SECTION  3-505 OF THE GENERAL OBLIGATIONS LAW, THE
COMMISSIONER SHALL COOPERATE WITH ANY GOVERNMENT ENTITY THAT  ELECTS  TO
REQUIRE  AN  ELECTRONIC TAX CLEARANCE AS A PART OF AN ELECTRONIC LICENSE
APPLICATION PROCESS FOR WHICH THE GOVERNMENT ENTITY IS RESPONSIBLE.  FOR
THE  PURPOSES OF THIS SECTION, THE TERM "TAX LIABILITIES" SHALL MEAN ANY
TAX, SURCHARGE, OR FEE ADMINISTERED BY THE COMMISSIONER, OR ANY  PENALTY
OR  INTEREST  OWED  BY  AN  INDIVIDUAL OR ENTITY. THE TERM "PAST-DUE TAX
LIABILITIES" MEANS ANY UNPAID TAX LIABILITIES EQUAL TO OR IN  EXCESS  OF
FIVE  HUNDRED  DOLLARS  WHICH  HAVE BECOME FIXED AND FINAL SUCH THAT THE
TAXPAYER NO LONGER HAS ANY RIGHT TO ADMINISTRATIVE OR  JUDICIAL  REVIEW.
FOR  THE PURPOSES OF THIS SECTION, THE TERMS "GOVERNMENT ENTITY," "ELEC-
TRONIC LICENSE APPLICATION," AND "LICENSE" SHALL HAVE THE  SAME  MEANING
AS PROVIDED IN SECTION 3-505 OF THE GENERAL OBLIGATIONS LAW.
  2.  THE COMMISSIONER, OR HIS OR HER DESIGNEE, SHALL COOPERATE WITH ANY
GOVERNMENT ENTITY EXERCISING ITS AUTHORITY PURSUANT TO SECTION 3-505  OF
THE GENERAL OBLIGATIONS LAW TO ESTABLISH PROCEDURES BY WHICH THE DEPART-
MENT  SHALL  ELECTRONICALLY  RECEIVE A TAX CLEARANCE REQUEST AS AN ELEC-
TRONIC LICENSE APPLICATION IS  PROCESSED,  AND  ELECTRONICALLY  TRANSMIT

S. 6359--B                         171                        A. 8559--B

SUCH  TAX  CLEARANCE  TO  THE  GOVERNMENT ENTITY. THESE PROCEDURES SHALL
INCLUDE THE IDENTIFICATION OF OWNERS, OFFICERS  OR  RESPONSIBLE  PERSONS
SUBJECT  TO  ELECTRONIC TAX CLEARANCE IN CONJUNCTION WITH AN APPLICATION
BY AN ENTITY, AND ANY OTHER PROCEDURES DEEMED NECESSARY TO CARRY OUT THE
PROVISIONS OF THIS SECTION.
  3.  IN ANY INSTANCE WHERE A LICENSE OR LICENSE RENEWAL PROVIDED BY THE
GOVERNMENT ENTITY IS OF A TYPE THAT MAY BE ISSUED ONLY TO AN  INDIVIDUAL
OR  ENTITY THAT IS A PERSON REQUIRED TO REGISTER PURSUANT TO SECTION ONE
THOUSAND ONE HUNDRED THIRTY-FOUR OF THIS CHAPTER, THE  DEPARTMENT  SHALL
ALSO  VERIFY  THAT THE APPLICANT IS REGISTERED PURSUANT TO SUCH SECTION,
AND NO ELECTRONIC TAX CLEARANCE MAY BE ISSUED UNLESS  THE  APPLICANT  IS
REGISTERED PURSUANT TO SUCH SECTION.
  4.  IF A TAX CLEARANCE IS DENIED, THE GOVERNMENT ENTITY PROCESSING THE
APPLICATION SHALL PROVIDE NOTICE TO THE APPLICANT TO CONTACT THE DEPART-
MENT.  WHEN THE APPLICANT CONTACTS THE DEPARTMENT, THE DEPARTMENT  SHALL
INFORM THE APPLICANT (A) WHAT PAST-DUE TAX LIABILITIES ARE AT ISSUE; (B)
THAT AN ELECTRONIC TAX CLEARANCE MAY BE RECEIVED BY FULLY SATISFYING THE
PAST-DUE  TAX LIABILITIES OR BY MAKING PAYMENT ARRANGEMENTS SATISFACTORY
TO THE COMMISSIONER OR, IF THE APPLICANT NEEDS TO REGISTER FOR SALES TAX
PURPOSES, BY REGISTERING PURSUANT TO SECTION ONE  THOUSAND  ONE  HUNDRED
THIRTY-FOUR  OF  THIS  CHAPTER;  AND (C) THE GROUNDS FOR CHALLENGING THE
DENIAL OF AN ELECTRONIC TAX CLEARANCE LISTED IN SUBDIVISION FIVE OF THIS
SECTION. THE GOVERNMENT ENTITY SHALL ALSO INFORM THE APPLICANT  THAT  AN
APPLICATION  MAY  BE  RESUBMITTED  AFTER  PAYMENT  FOR  THE PAST-DUE TAX
LIABILITIES HAS CLEARED, OR, IF A PAYMENT PLAN IS AGREED TO,  AFTER  THE
FIRST PAYMENT PURSUANT TO SUCH PLAN HAS CLEARED.
  5.  (A)  NOTWITHSTANDING  ANY  OTHER  PROVISION  OF LAW, AND EXCEPT AS
SPECIFICALLY PROVIDED HEREIN, AN  APPLICANT  DENIED  AN  ELECTRONIC  TAX
CLEARANCE  SHALL  HAVE NO RIGHT TO COMMENCE A COURT ACTION OR PROCEEDING
OR SEEK ANY OTHER LEGAL RECOURSE AGAINST THE DEPARTMENT OR  THE  GOVERN-
MENT  ENTITY RELATED TO THE DENIAL OF AN ELECTRONIC TAX CLEARANCE BY THE
DEPARTMENT. AN APPLICANT MAY CHALLENGE SUCH DENIAL OF AN ELECTRONIC  TAX
CLEARANCE ONLY ON THE GROUNDS THAT:
  (I)  THE  INDIVIDUAL  OR ENTITY DENIED THE ELECTRONIC TAX CLEARANCE IS
NOT THE INDIVIDUAL OR ENTITY WITH THE PAST-DUE TAX LIABILITIES AT ISSUE;
(II) THE PAST-DUE TAX LIABILITIES WERE SATISFIED; (III) THE  APPLICANT'S
WAGES  ARE  BEING GARNISHED FOR THE PAYMENT OF CHILD SUPPORT OR COMBINED
CHILD AND SPOUSAL SUPPORT PURSUANT TO AN INCOME EXECUTION ISSUED  PURSU-
ANT  TO SECTION FIVE THOUSAND TWO HUNDRED FORTY-ONE OR FIVE THOUSAND TWO
HUNDRED FORTY-TWO OF THE CIVIL PRACTICE LAW AND RULES OR ANOTHER STATE'S
INCOME WITHHOLDING ORDER AS AUTHORIZED UNDER PART FIVE OF ARTICLE FIVE-B
OF THE FAMILY COURT ACT, OR GARNISHED BY THE DEPARTMENT FOR THE  PAYMENT
OF  THE  PAST-DUE TAX LIABILITIES AT ISSUE; (IV) THE APPLICANT IS MAKING
CHILD SUPPORT PAYMENTS OR COMBINED CHILD AND  SPOUSAL  SUPPORT  PAYMENTS
PURSUANT TO A SATISFACTORY PAYMENT ARRANGEMENT UNDER SECTION ONE HUNDRED
ELEVEN-B  OF  THE  SOCIAL SERVICES LAW WITH A SUPPORT COLLECTION UNIT OR
OTHERWISE MAKING PERIODIC  PAYMENTS  IN  ACCORDANCE  WITH  SECTION  FOUR
HUNDRED  FORTY OF THE FAMILY COURT ACT; OR (V) IF THE ONLY BASIS FOR THE
DENIAL OF AN ELECTRONIC TAX CLEARANCE WAS  THE  APPLICANT'S  FAILURE  TO
REGISTER  PURSUANT  TO  SECTION  ONE THOUSAND ONE HUNDRED THIRTY-FOUR OF
THIS CHAPTER, THAT THE APPLICANT WAS  PROPERLY  REGISTERED  PURSUANT  TO
SUCH SECTION ONE THOUSAND ONE HUNDRED THIRTY-FOUR.
  (B)  AN APPLICANT SEEKING TO CHALLENGE THE DENIAL OF AN ELECTRONIC TAX
CLEARANCE MUST PROTEST TO THE DEPARTMENT OR THE DIVISION OF TAX  APPEALS
NO LATER THAN SIXTY DAYS FROM THE DATE OF THE ELECTRONIC NOTIFICATION TO

S. 6359--B                         172                        A. 8559--B

THE  APPLICANT,  PURSUANT  TO  SUBDIVISION  FOUR OF SECTION 3-505 OF THE
GENERAL OBLIGATIONS LAW, THAT THE ELECTRONIC TAX CLEARANCE WAS DENIED.
  (C)  NOTHING  IN  THIS  SUBDIVISION IS INTENDED TO LIMIT ANY APPLICANT
FROM SEEKING RELIEF FROM JOINT AND SEVERAL LIABILITY PURSUANT TO SECTION
SIX HUNDRED FIFTY-FOUR OF THIS CHAPTER, TO THE EXTENT THAT HE OR SHE  IS
ELIGIBLE  PURSUANT  TO  THAT  SECTION, OR ESTABLISHING TO THE DEPARTMENT
THAT THE ENFORCEMENT OF THE UNDERLYING TAX LIABILITIES HAS  BEEN  STAYED
BY  THE  FILING  OF  A  PETITION PURSUANT TO THE BANKRUPTCY CODE OF 1978
(TITLE ELEVEN OF THE UNITED STATES CODE).
  6. NOTWITHSTANDING ANY OTHER PROVISION  OF  LAW,  THE  DEPARTMENT  MAY
EXCHANGE  WITH  A  GOVERNMENT  ENTITY  ANY DATA OR INFORMATION NECESSARY
THAT, IN THE DISCRETION OF THE COMMISSIONER, IS NECESSARY FOR THE IMPLE-
MENTATION OF ANY ELECTRONIC TAX CLEARANCE. HOWEVER, NO OTHER AGENCY  MAY
RE-DISCLOSE  THIS  INFORMATION TO ANY OTHER ENTITY OR PERSON, OTHER THAN
FOR THE PURPOSE OF INFORMING THE APPLICANT THAT THE  APPLICATION  FOR  A
LICENSE  OR THE RENEWAL OF SUCH LICENSE WILL NOT BE PROCESSED DUE TO THE
LACK OF A REQUIRED TAX CLEARANCE AUTHORIZED  BY  ANY  PROVISION  OF  LAW
UNLESS OTHERWISE PERMITTED BY LAW.
  7.  EXCEPT  AS  OTHERWISE  PROVIDED IN THIS SECTION, THE ACTIVITIES TO
COLLECT PAST-DUE TAX LIABILITIES UNDERTAKEN BY THE  DEPARTMENT  PURSUANT
TO  THIS  SECTION  SHALL  NOT  IN  ANY WAY LIMIT, RESTRICT OR IMPAIR THE
DEPARTMENT FROM EXERCISING ANY OTHER AUTHORITY TO COLLECT OR ENFORCE TAX
LIABILITIES UNDER ANY OTHER APPLICABLE PROVISION OF LAW.
  8. EXCEPT AS OTHERWISE PROVIDED IN THIS  SECTION,  THE  PROVISIONS  OF
THIS SECTION ARE NOT APPLICABLE TO THE TAX CLEARANCE REQUIRED BY SECTION
ONE HUNDRED SEVENTY-ONE-V OF THIS CHAPTER.
  S  3. This act shall take effect June 1, 2014; provided, however, that
the department of taxation and finance and any government entity  elect-
ing  to receive an electronic tax clearance from the department of taxa-
tion and finance may work to execute the necessary procedures and  tech-
nical  changes  to  support  the  electronic  tax  clearance  process as
described in sections  one  and  two  of  this  act  before  that  date;
provided, further, that this effective date will not impact the adminis-
tration  of  any  electronic tax clearance program authorized by another
provision of law.

                                 PART I

  Section 1. Subsection (b) of section 612 of the tax law is amended  by
adding a new paragraph 40 to read as follows:
  (40)  IN  THE  CASE OF A BENEFICIARY OF A NONRESIDENT TRUST OR A TRUST
NOT SUBJECT TO TAX PURSUANT TO SUBPARAGRAPH (D) OF  PARAGRAPH  THREE  OF
SUBSECTION  (B)  OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE (EXCEPT FOR
AN INCOMPLETE GIFT NON-GRANTOR TRUST, AS DEFINED BY PARAGRAPH  FORTY-ONE
OF  THIS  SUBSECTION),  THE  AMOUNT  OF ANY ACCUMULATION DISTRIBUTION AS
DESCRIBED IN SUBSECTION (B) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF  THE
INTERNAL  REVENUE  CODE  FOR  THE TAX YEAR, SUCH AMOUNT TO BE DETERMINED
WITHOUT REGARD TO SUBSECTION (C) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF
THE INTERNAL REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED IN FEDERAL
GROSS  INCOME  FOR THE TAX YEAR, EXCEPT THAT, IN COMPUTING THE AMOUNT TO
BE ADDED UNDER THIS PARAGRAPH, SUCH BENEFICIARY SHALL  DISREGARD  INCOME
EARNED  BY A TRUST IN A TAXABLE YEAR PRIOR TO WHEN THE BENEFICIARY FIRST
BECAME A RESIDENT OF THE STATE OR IN ANY TAXABLE  YEAR  STARTING  BEFORE
JANUARY FIRST, TWO THOUSAND ELEVEN.
  S 2. Subsection (b) of section 612 of the tax law is amended by adding
a new paragraph 41 to read as follows:

S. 6359--B                         173                        A. 8559--B

  (41)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
DEDUCTIONS  OF  THE  TRUST,  TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
TY-FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
THEREUNDER.
  S 3. Section 621 of the tax law, as added by chapter 272 of  the  laws
of  1963  and  subsection  (a)  as amended by chapter 267 of the laws of
1987, is amended to read as follows:
  S 621. [Credit] CREDITS to trust  beneficiary  receiving  accumulation
distribution.   (a) General. A resident beneficiary of a trust whose New
York adjusted gross income includes  all  or  part  of  an  accumulation
distribution by such trust, as defined in section six hundred sixty-five
of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
MAKE  THE  MODIFICATION REQUIRED BY PARAGRAPH FORTY OF SUBSECTION (B) OF
SECTION SIX HUNDRED TWELVE OF THIS PART, shall be allowed (1)  a  credit
against  the  tax  otherwise due under this article for all or a propor-
tionate part of any tax paid by the trust under this  article  or  under
FORMER article sixteen of this chapter (as such article was in effect on
or before December thirtieth, nineteen hundred sixty), for any preceding
taxable  year which would not have been payable if the trust had in fact
made distributions to its beneficiaries at the times and in the  amounts
specified in section six hundred sixty-six of the internal revenue code;
AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE FOR THE TAXA-
BLE YEAR FOR ANY INCOME TAX IMPOSED ON THE TRUST FOR THE TAXABLE YEAR OR
ANY  PRIOR  TAXABLE  YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLI-
TICAL SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, UPON INCOME BOTH
DERIVED THEREFROM AND SUBJECT TO TAX UNDER THIS ARTICLE,  PROVIDED  THAT
THE  AMOUNT  OF  THE  CREDIT  SHALL NOT EXCEED THE PERCENTAGE OF THE TAX
OTHERWISE DUE UNDER THIS ARTICLE DETERMINED BY DIVIDING THE  PORTION  OF
THE  INCOME THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION
AND TAXABLE TO THE BENEFICIARY UNDER THIS ARTICLE BY THE TOTAL AMOUNT OF
THE BENEFICIARY'S NEW YORK INCOME.
  (b) Limitation. The [credit] CREDITS  under  this  section  shall  not
reduce  the tax otherwise due from the beneficiary under this article to
an amount less than would have been due if the accumulation distribution
or his part thereof were excluded  from  his  New  York  adjusted  gross
income.
  S  4. Section 658 of the tax law is amended by adding a new subsection
(f) to read as follows:
   (F) (1) EVERY NONRESIDENT TRUST OR A TRUST DESCRIBED BY  SUBPARAGRAPH
(D)  OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF
THIS ARTICLE SHALL MAKE A RETURN FOR ANY TAXABLE YEAR IN WHICH IT  MAKES
AN  ACCUMULATION  DISTRIBUTION  WITHIN THE MEANING OF SUBDIVISION (B) OF
SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE TO A BENEFI-
CIARY WHO IS A RESIDENT, WHICH  RETURN  SHALL  INCLUDE  (I)  INFORMATION
IDENTIFYING SUCH RESIDENT, (II) THE AMOUNT OF SUCH ACCUMULATION DISTRIB-
UTION, AND (III) SUCH OTHER INFORMATION AS THE COMMISSIONER MAY REQUIRE.

S. 6359--B                         174                        A. 8559--B

  (2)  EVERY  RESIDENT  TRUST  THAT DOES NOT FILE THE RETURN REQUIRED BY
SECTION SIX HUNDRED FIFTY-ONE OF THIS PART ON THE GROUND THAT IT IS  NOT
SUBJECT  TO  TAX  PURSUANT  TO  SUBPARAGRAPH  (D)  OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE FOR THE TAXA-
BLE  YEAR  SHALL  MAKE A RETURN FOR SUCH TAXABLE YEAR SUBSTANTIATING ITS
ENTITLEMENT TO THAT EXEMPTION AND PROVIDING SUCH  OTHER  INFORMATION  AS
THE COMMISSIONER MAY REQUIRE.
  (3)  THE  RETURNS  REQUIRED  BY  THIS  SUBSECTION SHALL BE FILED ON OR
BEFORE THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF EACH
TAXABLE YEAR. FOR PURPOSES OF THIS PARAGRAPH,  "TAXABLE  YEAR"  MEANS  A
YEAR  OR  A PERIOD WHICH WOULD BE A TAXABLE YEAR OF THE TRUST IF IT WERE
SUBJECT TO TAX UNDER THIS ARTICLE.
  S 5. Paragraph 2 of subsection (h) of section 685 of the tax  law,  as
amended  by  chapter  190  of  the  laws  of 1990, is amended to read as
follows:
  (2) If any partnership [or], S corporation, OR TRUST required to  file
a return or report under subsection (c) OR SUBSECTION (F) of section six
hundred  fifty-eight  or  under  section  six hundred fifty-nine OF THIS
ARTICLE for any taxable year fails to file such return or report at  the
time  prescribed  therefor  (determined  with regard to any extension of
time for filing), or files a return or report which fails  to  show  the
information  required  under  such subsection (c) or section six hundred
fifty-nine OF THIS ARTICLE, unless it is shown that such failure is  due
to  reasonable  cause  and not due to willful neglect, there shall, upon
notice and demand by the commissioner and in the same manner as tax,  be
paid  by  the  partnership or S corporation a penalty for each month (or
fraction thereof) during which such failure continues (but not to exceed
five months). The amount of such penalty for any month is the product of
fifty dollars, multiplied by the number of partners in  the  partnership
or shareholders in the S corporation during any part of the taxable year
who were subject to tax under this article during any part of such taxa-
ble  year,  EXCEPT  THAT,  IN  THE CASE OF A TRUST, THE PENALTY SHALL BE
EQUAL TO ONE HUNDRED FIFTY DOLLARS A MONTH UP TO A  MAXIMUM  OF  FIFTEEN
HUNDRED DOLLARS PER TAXABLE YEAR.
  S  6. Subdivision (b) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 36 to read  as
follows:
  (36)  IN  THE  CASE OF A BENEFICIARY OF A NONRESIDENT TRUST OR A TRUST
NOT SUBJECT TO TAX PURSUANT TO SUBPARAGRAPH (D) OF  PARAGRAPH  THREE  OF
SUBSECTION  (B) OF SECTION 11-1705 OF THIS CHAPTER (EXCEPT FOR AN INCOM-
PLETE GIFT NON-GRANTOR TRUST, AS DEFINED BY  PARAGRAPH  THIRTY-SEVEN  OF
THIS  SUBDIVISION),  THE  AMOUNT  OF  ANY  ACCUMULATION  DISTRIBUTION AS
DESCRIBED IN SUBSECTION (B) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF  THE
INTERNAL  REVENUE  CODE  FOR  THE TAX YEAR, SUCH AMOUNT TO BE DETERMINED
WITHOUT REGARD TO SUBSECTION (C) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF
THE INTERNAL REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED IN FEDERAL
GROSS  INCOME  FOR THE TAX YEAR, EXCEPT THAT, IN COMPUTING THE AMOUNT TO
BE ADDED UNDER THIS PARAGRAPH, SUCH BENEFICIARY SHALL  DISREGARD  INCOME
EARNED  BY A TRUST IN A TAXABLE YEAR PRIOR TO WHEN THE BENEFICIARY FIRST
BECAME A RESIDENT OF THE STATE OR IN ANY TAXABLE  YEAR  STARTING  BEFORE
JANUARY FIRST, TWO THOUSAND ELEVEN.
  S  7. Subdivision (b) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 37 to read  as
follows:
  (37)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY

S. 6359--B                         175                        A. 8559--B

DEDUCTIONS  OF  SUCH  TRUST, TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
GRANTOR  TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS PARAGRAPH,
AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
THE FOLLOWING CONDITIONS: (I) THE TRUST DOES NOT QUALIFY  AS  A  GRANTOR
TRUST  UNDER  SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX HUNDRED SEVEN-
TY-NINE OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER  OF
ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
TY FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
THEREUNDER.
  S  8.  Section  11-1721  of the administrative code of the city of New
York, subdivisions (a) and (b) as amended by section 72 and such section
as renumbered by section 43 of chapter 639  of  the  laws  of  1986,  is
amended to read as follows:
  S 11-1721 [Credit] CREDITS to trust beneficiary receiving accumulation
distribution.  (a) General. A city resident beneficiary of a trust whose
city adjusted gross income includes  all  or  part  of  an  accumulation
distribution by such trust, as defined in section six hundred sixty-five
of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
MAKE  THE  MODIFICATION  REQUIRED BY PARAGRAPH THIRTY-SIX OF SUBDIVISION
(B) OF SECTION 11-1712 OF THIS SUBCHAPTER, shall be allowed (1) a credit
against the tax otherwise due under this chapter for all  or  a  propor-
tionate  part  of  any tax paid by the trust under this chapter or under
FORMER title T of chapter forty-six of this code, as it  was  in  effect
prior to September first, nineteen hundred eighty-six, for any preceding
taxable  year which would not have been payable if the trust had in fact
made distributions to its beneficiaries at the times and in the  amounts
specified in section six hundred sixty-six of the internal revenue code;
AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS CHAPTER FOR THE TAXA-
BLE  YEAR  FOR  ANY INCOME TAX IMPOSED FOR THE TAXABLE YEAR OR ANY PRIOR
TAXABLE YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVI-
SION THEREOF, OR THE DISTRICT OF  COLUMBIA,  UPON  INCOME  BOTH  DERIVED
THEREFROM  AND  SUBJECT  TO  TAX  UNDER  THIS CHAPTER, PROVIDED THAT THE
AMOUNT OF THE CREDIT SHALL NOT EXCEED THE PERCENTAGE OF THE  TAX  OTHER-
WISE  DUE  UNDER  THIS CHAPTER DETERMINED BY DIVIDING THE PORTION OF THE
INCOME THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION  AND
TAXABLE TO THE BENEFICIARY UNDER THIS CHAPTER BY THE TOTAL AMOUNT OF THE
BENEFICIARY'S NEW YORK CITY INCOME.
  (b)  Limitation.  The  [credit]  CREDITS  under this section shall not
reduce the tax otherwise due from the beneficiary under this chapter  to
an amount less than would have been due if the accumulation distribution
or  his  or her part thereof were excluded from his or her city adjusted
gross income.
  S 9. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014, provided that sections  one
and  six of this act shall not apply to income of a nonresident trust or
an exempt resident trust paid to a beneficiary before June 1, 2014,  and
sections  two  and  seven  of  this act shall not apply to income from a
trust that is liquidated before June 1, 2014.

                                 PART J

  Section 1. Section 602 of the tax law is REPEALED.
  S 2. Paragraph 4 of subsection (c) and paragraph 4 of  subsection  (d)
of section 606 of the tax law, paragraph 4 of subsection (c) as added by

S. 6359--B                         176                        A. 8559--B

chapter  309  of  the  laws of 1996 and paragraph 4 of subsection (d) as
amended by chapter 2 of the  laws  of  1995,  are  amended  to  read  as
follows:
  (4) Part-year residents. In the case of a part-year resident taxpayer,
the credit under this subsection shall be allowed against the tax deter-
mined  under  subsections  (a)  through  (d)  of section six hundred one
reduced by the credit permitted under subsection (b)  of  this  section,
and  any  excess  credit after such application shall be allowed against
the [taxes] TAX imposed by [sections six hundred two  and]  SECTION  six
hundred  three.  Any  remaining excess, after such application, shall be
refunded as provided in paragraph two hereof,  provided,  however,  that
any  overpayment  under such paragraph shall be limited to the amount of
the remaining excess multiplied by a fraction, the numerator of which is
federal adjusted gross income for the period of residence,  computed  as
if  the taxable year for federal income tax purposes were limited to the
period of residence, and the denominator of which  is  federal  adjusted
gross income for the taxable year.
  (4) Part-year residents. In the case of a part-year resident taxpayer,
the credit under this subsection shall be allowed against the tax deter-
mined  under  subsections  (a)  through  (d)  of section six hundred one
reduced by the credits permitted under subsections (b), (c) and  (m)  of
this  section,  and  any  excess  credit after such application shall be
allowed against the [taxes] TAX imposed by  [sections  six  hundred  two
and]  SECTION six hundred three. Any remaining excess, after such appli-
cation, shall be refunded as provided in paragraph two hereof, provided,
however, that any overpayment under such paragraph shall be  limited  to
the amount of the remaining excess multiplied by a fraction, the numera-
tor  of  which  is federal adjusted gross income for the period of resi-
dence, computed as if the taxable year for federal income  tax  purposes
were limited to the period of residence, and the denominator of which is
federal adjusted gross income for the taxable year.
  S 3. Section 622 of the tax law is REPEALED.
  S 4. Section 636 of the tax law is REPEALED.
  S  5.  Subsections  (a), (b) and (c) of section 639 of the tax law, as
added by chapter 170 of the  laws  of  1994,  are  amended  to  read  as
follows:
  (a)  If  an  individual changes status from resident to nonresident he
shall, regardless of his method of accounting, accrue to the  period  of
residence  any  items  of  income,  gain, loss, deduction, [items of tax
preference] or ordinary income portion of a lump sum distribution accru-
ing prior to the change of status, with the applicable modifications and
adjustments to federal adjusted gross income[,] AND itemized  deductions
[and  items  of tax preference] under sections six hundred twelve[,] AND
six hundred fifteen [and six hundred twenty-two], if not otherwise prop-
erly includible or allowable for New York income tax purposes  for  such
period or a prior taxable year under his method of accounting.
  (b)  If  an  individual changes status from nonresident to resident he
shall, regardless of his method of accounting, accrue to the  period  of
nonresidence any items of income, gain, loss or deduction, [items of tax
preference] or ordinary income portion of a lump sum distribution accru-
ing prior to the change of status, with the applicable modifications and
adjustments  to federal adjusted gross income[,] AND itemized deductions
[and items of tax preference] under sections six hundred  twelve[,]  AND
six  hundred  fifteen  [and  six  hundred  twenty-two], other than items
derived from or connected with New York sources, if not otherwise  prop-

S. 6359--B                         177                        A. 8559--B

erly  includible  or allowable for New York income tax purposes for such
period or for a prior taxable year under his method of accounting.
  (c)  No  item  of  income, gain, loss, deduction, [item of tax prefer-
ence,] ordinary income portion of a lump sum distribution  or  modifica-
tion  or  adjustment  which is accrued under this section shall be taken
into account in determining the tax under this article  for  any  subse-
quent taxable year.
  S  6. Paragraphs 1, 2, 3 and 4 of subsection (a) of section 651 of the
tax law, paragraph 1 as amended by chapter 333  of  the  laws  of  1987,
paragraph 2 as amended by chapter 28 of the laws of 1987, and paragraphs
3  and  4  as amended by chapter 170 of the laws of 1994, are amended to
read as follows:
  (1) every resident individual (A) required to file  a  federal  income
tax  return  for  the taxable year, or (B) having federal adjusted gross
income for the  taxable  year,  increased  by  the  modifications  under
subsection (b) of section six hundred twelve, in excess of four thousand
dollars,  or  in excess of his New York standard deduction, if lower, or
(C) [subject to tax under  section  six  hundred  two,  or  (D)]  having
received  during the taxable year a lump sum distribution any portion of
which is subject to tax under section six hundred three;
  (2) every resident estate or trust required to file a  federal  income
tax  return  for the taxable year, or having any New York taxable income
for the taxable year, determined under section six hundred eighteen, [or
subject to tax under section six hundred two,] or having received during
the taxable year a lump sum distribution any portion of which is subject
to tax under section six hundred three;
  (3) every nonresident or part-year resident individual having New York
source income for the taxable year, determined under part  III  of  this
article, and having New York adjusted gross income for the taxable year,
determined  under  part  II of this article, in excess of the taxpayer's
New York standard deduction,  [or  subject  to  tax  under  section  six
hundred  two,]  or  having  received  during the taxable year a lump sum
distribution any portion of which is subject to tax  under  section  six
hundred three; and
  (4)  every  nonresident  estate  or  trust or part-year resident trust
having New York source income for the  taxable  year,  determined  under
part  III of this article, and having New York adjusted gross income for
the taxable year, determined under paragraph four of subsection  (e)  of
section  six  hundred  one, [or subject to tax under section six hundred
two,] or having received during the taxable year a lump sum distribution
any portion of which is subject to tax under section six hundred three.
  S 7. Paragraph 6 of subsection (b) of section 654 of the tax  law,  as
added  by  section  5  of  part Q of chapter 407 of the laws of 1999, is
amended to read as follows:
  (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
"section 1 or 55" shall be read as "section  six  hundred  one  [or  six
hundred two] of this article".
  S 8. Section 659 of the tax law, as amended by chapter 577 of the laws
of 1997, is amended to read as follows:
  S  659.   Report of federal changes, corrections or disallowances.  If
the amount of a taxpayer's federal taxable income, [federal items of tax
preference,] total taxable amount or ordinary income portion of  a  lump
sum  distribution  or includible gain of a trust reported on his federal
income tax return for any taxable year, or the amount  of  a  taxpayer's
earned income credit or credit for employment-related expenses set forth
on  such return, or the amount of any federal foreign tax credit affect-

S. 6359--B                         178                        A. 8559--B

ing the calculation of the credit for Canadian  provincial  taxes  under
section  six  hundred twenty or six hundred twenty-A of this article, or
the amount of any claim of right adjustment, is changed or corrected  by
the  United States internal revenue service or other competent authority
or as the result of a renegotiation of a contract  or  subcontract  with
the  United  States, or the amount an employer is required to deduct and
withhold from wages for  federal  income  tax  withholding  purposes  is
changed  or  corrected  by  such service or authority or if a taxpayer's
claim for credit or refund of federal income tax is disallowed in  whole
or  in  part,  the  taxpayer  or  employer  shall  report such change or
correction or disallowance within ninety days after the  final  determi-
nation  of such change, correction, renegotiation or disallowance, or as
otherwise required by the commissioner, and shall concede  the  accuracy
of  such  determination or state wherein it is erroneous.  The allowance
of a tentative carryback adjustment based  upon  a  net  operating  loss
carryback  pursuant to section sixty-four hundred eleven of the internal
revenue code shall be treated as a final determination for  purposes  of
this  section.  Any taxpayer filing an amended federal income tax return
and any employer filing an amended federal return of income tax withheld
shall also file within ninety days thereafter an  amended  return  under
this  article,  and  shall give such information as the commissioner may
require.  The commissioner may by regulation prescribe  such  exceptions
to the requirements of this section as he or she deems appropriate.  For
purposes  of this section, (i) the term "taxpayer" shall include a part-
nership having a resident partner or having any income derived from  New
York  sources,  and a corporation with respect to which the taxable year
of such change, correction, disallowance or amendment  is  a  year  with
respect  to which the election provided for in subsection (a) of section
six hundred sixty of this article  is  in  effect,  and  (ii)  the  term
"federal income tax return" shall include the returns of income required
under  sections six thousand thirty-one and six thousand thirty-seven of
the internal revenue code.   In the case of  such  a  corporation,  such
report  shall  also  include  any  change  or  correction  of  the taxes
described in paragraphs two and three of subsection (f) of section thir-
teen hundred sixty-six of the internal revenue code.  Reports made under
this section by a partnership or corporation shall indicate the  portion
of  the  change in each item of income, gain, loss or deduction (and, in
the case of a corporation, of each change in, or disallowance of a claim
for credit or refund of, a tax referred to in  the  preceding  sentence)
allocable  to each partner or shareholder and shall set forth such iden-
tifying information with respect to such partner or shareholder  as  may
be prescribed by the commissioner.
  S 9. Subsection (d) of section 683 of the tax law, as amended by chap-
ter 170 of the laws of 1994, is amended to read as follows:
  (d) Omission of income, [item of tax preference,] total taxable amount
or  ordinary  income  portion of a lump sum distribution on return.--The
tax may be assessed at any time within six years after  the  return  was
filed if--
  (1)  an individual omits from his New York adjusted gross income, [the
sum of his items of tax preference,] or  the  total  taxable  amount  or
ordinary  income  portion  of a lump sum distribution an amount properly
includible therein which is in excess  of  twenty-five  percent  of  the
amount  of  New York adjusted gross income, [the sum of the items of tax
preference,] or the total taxable amount or ordinary income portion of a
lump sum distribution stated in the return, or

S. 6359--B                         179                        A. 8559--B

  (2) an estate or trust omits from its New York adjusted gross  income,
[the sum of its items of tax preference,] or the total taxable amount or
ordinary  income  portion  of a lump sum distribution an amount properly
includible therein which is in excess  of  twenty-five  percent  of  the
amount stated in the return of New York adjusted gross income determined
in  accordance  with  paragraph  four  of  subsection (e) of section six
hundred one, [or the sum of the items of tax preference,] or  the  total
taxable  amount  or  ordinary income portion of a lump sum distribution,
respectively. For purposes of this subsection there shall not  be  taken
into account any amount which is omitted in the return if such amount is
disclosed  in the return, or in a statement attached to the return, in a
manner adequate to apprise the commissioner of the nature and amount  of
the  item  of income, [tax preference,] total taxable amount or ordinary
income portion of a lump sum distribution.
  S 10. Subparagraph (B) of paragraph 4 of subsection (c) of section 685
of the tax law, as amended by chapter 28 of the laws of 1987, is amended
to read as follows:
  (B) Determination of annualized income installment.--In  the  case  of
any  required  installment,  the  annualized  income  installment is the
excess, if any, of an amount equal to the applicable percentage  of  the
tax  for the taxable year computed by placing on an annualized basis the
taxable income [and minimum taxable income] for months  in  the  taxable
year  ending before the due date for the installment, over the aggregate
amount of any prior required installments  for  the  taxable  year.  The
applicable  percentage  of  the  tax  shall  be  twenty-two and one-half
percent in the case of the first installment, forty-five percent in  the
case  of the second installment, sixty-seven and one-half percent in the
case of the third installment and ninety percent  in  the  case  of  the
fourth installment, and shall be computed without regard to any increase
in  the  rates  applicable  to the taxable year unless such increase was
enacted at least thirty days prior to the due date of the installment.
  S 11. Paragraphs 2 and 3 of subsection (a) of section 1301 of the  tax
law,  as amended by chapter 209 of the laws of 2011, are amended to read
as follows:
  (2) [for taxable years beginning before two thousand fifteen,  a  city
minimum income tax on such residents, and
  (3)] for taxable years beginning after nineteen hundred seventy-six, a
separate tax on the ordinary income portion of lump sum distributions of
such  residents,  at  the  rates  provided  for herein, such taxes to be
administered, collected and distributed by the commissioner as  provided
for in this article.
  S 12. Section 1301-A of the tax law is REPEALED.
  S  13.  Subsection  (a)  of section 1302 of the tax law, as amended by
chapter 333 of the laws of 1987, is amended to read as follows:
  (a) Imposition of tax. The city personal income tax  (other  than  the
[city  minimum  income  tax  and  the] city separate tax on the ordinary
income portion of  lump  sum  distributions)  imposed  pursuant  to  the
authority  of this article shall be imposed for each taxable year on the
city taxable income of every city resident individual, estate and trust.
A taxpayer's taxable year for purposes of a tax imposed pursuant to  the
authority  of  this  article shall be the same as his taxable year under
article twenty-two of this chapter.
  S 14. The opening paragraph of subsection (a) of section 1304  of  the
tax  law, as amended by section 134 of part A of chapter 389 of the laws
of 1997, is amended to read as follows:

S. 6359--B                         180                        A. 8559--B

  A tax (other than the [city minimum income tax, the] city separate tax
relating to qualified higher education funds and the city  separate  tax
on the ordinary income portion of lump sum distributions) imposed pursu-
ant  to  the  authority  of section thirteen hundred one of this article
shall be determined as follows:
  S  15.  Subsection  (c)  of section 1307 of the tax law, as amended by
chapter 712 of the laws of 2004, is amended to read as follows:
  (c) When an individual changes his status from city resident  to  city
nonresident,  or  from  city  nonresident  to  city  resident, he shall,
regardless of his method of accounting,  accrue  any  items  of  income,
gain,  loss,  deduction[,  items  of  tax preference] or ordinary income
portion of a lump sum distribution  accruing  prior  to  the  change  of
status,  with  the  applicable  modifications and adjustments to federal
adjusted gross income[,] AND itemized deductions [and items of tax pref-
erence] under sections six hundred twelve[,]  AND  six  hundred  fifteen
[and  six  hundred  twenty-two], if not otherwise properly includible or
allowable for New York income tax purposes for such period  or  a  prior
taxable year under his method of accounting. Such accruals shall be made
as provided in section six hundred thirty-nine of this chapter.
  S  16.  Subsection  (a)  of section 1306 of the tax law, as amended by
chapter 333 of the laws of 1987, is amended to read as follows:
  (a) General. On or before  the  fifteenth  day  of  the  fourth  month
following the close of a taxable year, an income tax return under a city
tax  imposed pursuant to the authority of this article shall be made and
filed by or for every city resident individual, estate or trust required
to file a New York state  personal  income  tax  (including  [a  minimum
income  tax  and]  a city separate tax on the ordinary income portion of
lump sum distributions) return for the taxable year.
  S 17. Section 11-1702 of the administrative code of the  city  of  New
York is REPEALED.
  S 18. Subdivision (a) of section 11-1704 of the administrative code of
the  city  of New York, as amended by chapter 17 of the laws of 1997, is
amended to read as follows:
  (a) In addition to the taxes imposed by  sections  11-1701[,  11-1702]
and  11-1703,  there  is  hereby imposed for each taxable year beginning
after nineteen hundred eighty-nine but before nineteen  hundred  ninety-
nine,  a tax surcharge on the city taxable income of every city resident
individual, estate and trust.
  S 19. Subdivision (c) of section 11-1704 of the administrative code of
the city of New York, as amended by chapter 271 of the laws of 1991,  is
amended to read as follows:
  (c) The tax surcharge imposed pursuant to this section shall be admin-
istered,  collected  and distributed by the commissioner of taxation and
finance in the same manner as the taxes  imposed  pursuant  to  sections
11-1701[,  11-1702] and 11-1703, and all of the provisions of this chap-
ter, including sections 11-1706, 11-1721 and 11-1773, shall apply to the
tax surcharge imposed by this section.
  S 20. Section 11-1722 of the administrative code of the  city  of  New
York is REPEALED.
  S 21. Subdivision (a) of section 11-1751 of the administrative code of
the  city of New York, as amended by chapter 333 of the laws of 1987, is
amended to read as follows:
  (a) General. On or before  the  fifteenth  day  of  the  fourth  month
following  the  close of a taxable year, an income tax return under this
chapter shall be made and filed by or for every city  resident  individ-
ual,  estate  or trust required to file a New York state personal income

S. 6359--B                         181                        A. 8559--B

tax (including a [minimum income tax and] separate tax on  the  ordinary
income portion of lump sum distributions) return for the taxable year.
  S 22. Subdivision (b) of section 11-1754 of the administrative code of
the  city of New York, as amended by chapter 712 of the laws of 2004, is
amended to read as follows:
  (b) City taxable income [and city  minimum  taxable  income]  as  city
resident.  The city taxable income [and city minimum taxable income] for
the portion of the year during which he or she is a city resident  shall
be  determined,  except as provided in subdivision (c), as if his or her
taxable year for federal income tax purposes were limited to the  period
of his or her city resident status.
  S  23. Paragraph 6 of subdivision (b) of section 11-1755 of the admin-
istrative code of the city of New York, as added by section 17 of part Q
of chapter 407 of the laws of 1999, is amended to read as follows:
  (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
"section 1 or 55" shall be read as "section 11-1701 [or 11-1702] of this
chapter".
  S 24. Section 11-1759 of the administrative code of the  city  of  New
York,  as amended by chapter 577 of the laws of 1997, is amended to read
as follows:
  S 11-1759 Report of federal changes, corrections or disallowances.  If
the amount of a taxpayer's federal taxable income, [federal items of tax
preference,]  total  taxable amount or ordinary income portion of a lump
sum distribution or includible gain of a trust reported on  his  federal
income  tax  return  for any taxable year, or the amount of any claim of
right adjustment, is changed or corrected by the United States  internal
revenue  service  or  other  competent  authority, or as the result of a
renegotiation of a contract or subcontract with the United States or the
amount an employer is required to deduct and  withhold  from  wages  for
federal  income tax withholding purposes is changed or corrected by such
service or authority or if a taxpayer's claim for credit  or  refund  of
federal  income  tax  is disallowed in whole or in part, the taxpayer or
employer shall report such change or correction or  disallowance  within
ninety  days  after  the final determination of such change, correction,
renegotiation, or disallowance, or as otherwise required by the  commis-
sioner,  and  shall  concede the accuracy of such determination or state
wherein it is erroneous. The allowance of a tentative carryback  adjust-
ment  based  upon  a  net  operating  loss carryback pursuant to section
sixty-four hundred eleven of the internal revenue code shall be  treated
as  a  final  determination  for  purposes of this section. Any taxpayer
filing an amended federal income tax return and any employer  filing  an
amended  federal  return  of  income tax withheld shall also file within
ninety days thereafter an amended return under this chapter,  and  shall
give  such information as the commissioner may require. The commissioner
may by regulation prescribe such exceptions to the requirements of  this
section  as  he  or she deems appropriate. For purposes of this section,
(i) the term "taxpayer" shall include a partnership  having  a  resident
partner or having any income derived from New York sources, and a corpo-
ration   with  respect  to  which  the  taxable  year  of  such  change,
correction, disallowance or amendment is a year with  respect  to  which
the election provided for in subsection (a) of section six hundred sixty
of  the  tax  law  is  in  effect, and (ii) the term "federal income tax
return" shall include the returns of income required under sections  six
thousand thirty-one and six thousand thirty-seven of the internal reven-
ue  code.  In  the  case  of  such a corporation, such report shall also
include any change or correction of the taxes  described  in  paragraphs

S. 6359--B                         182                        A. 8559--B

two and three of subsection (f) of section thirteen hundred sixty-six of
the internal revenue code. Reports made under this section by a partner-
ship  or  corporation  shall  indicate the portion of the change in each
item  of  income,  gain, loss or deduction (and, in the case of a corpo-
ration, of each change in, or disallowance of  a  claim  for  credit  or
refund  of,  a  tax  referred to in the preceding sentence) allocable to
each partner or shareholder and shall set forth such identifying  infor-
mation  with respect to such partner or shareholder as may be prescribed
by the commissioner.
  S 25. Subdivision (d) of section 11-1783 of the administrative code of
the city of New York, as amended by chapter 170 of the laws of 1994,  is
amended to read as follows:
  (d) Omission of income, [item of tax preference,] total taxable amount
or ordinary income portion of a lump sum distribution on return. The tax
may  be assessed at any time within six years after the return was filed
if:
  (1) an individual omits from his city adjusted gross income[, the  sum
of his items of tax preference, or] the total taxable amount or ordinary
income  portion of a lump sum distribution an amount properly includible
therein which is in excess of twenty-five percent of the amount of  city
adjusted  gross  income[, the sum of the items of tax preference] or the
total taxable amount or ordinary income portion of a lump  sum  distrib-
ution stated in the return, or
  (2) an estate or trust omits from its city adjusted gross income, [the
sum  of  its  items  of  tax preference,] or the total taxable amount or
ordinary income portion of a lump sum distribution  an  amount  properly
includible  therein  which  is  in  excess of twenty-five percent of the
amount stated in the return of city adjusted gross income, [or  the  sum
of the items of tax preference,] or the total taxable amount or ordinary
income portion of a lump sum distribution, respectively. For purposes of
this paragraph, city adjusted gross income means New York adjusted gross
income  as  determined under paragraph four of subsection (e) of section
six hundred one of the tax law.
  For purposes of this subdivision there shall not be taken into account
any amount which is omitted in the return if such amount is disclosed in
the return, or in a statement  attached  to  the  return,  in  a  manner
adequate  to  apprise  the  commissioner of the nature and amount of the
item of income, [tax preference,] the total taxable amount  or  ordinary
income portion of a lump sum distribution.
  S  26.  Subparagraph  (B) of paragraph 4 of subdivision (c) of section
11-1785 of the administrative code of the city of New York,  as  amended
by chapter 333 of the laws of 1987, is amended to read as follows:
  (B) Determination of annualized income installment. In the case of any
required  installment,  the annualized income installment is the excess,
if any, of an amount equal to the applicable percentage of the  tax  for
the  taxable year computed by placing on an annualized basis the taxable
income [and minimum taxable income]  for  months  in  the  taxable  year
ending  before  the  due  date  for  the installment, over the aggregate
amount of any prior required installments  for  the  taxable  year.  The
applicable  percentage  of  the  tax  shall  be  twenty-two and one-half
percent in the case of the first installment, forty-five percent in  the
case  of the second installment, sixty-seven and one-half percent in the
case of the third installment and ninety percent  in  the  case  of  the
fourth installment, and shall be computed without regard to any increase
in  the  rates  applicable  to the taxable year unless such increase was
enacted at least thirty days prior to the due date of the installment.

S. 6359--B                         183                        A. 8559--B

  S 27. This act shall take effect  immediately  and  apply  to  taxable
years beginning on or after January 1, 2014.

                                 PART K

  Section  1.  Subsection  (e-1) of section 606 of the tax law is relet-
tered subsection (e-2).
  S 2. Section 606 of the tax law is amended by adding a new  subsection
(e-1) to read as follows:
  (E-1)  ENHANCED  REAL  PROPERTY  TAX  CIRCUIT  BREAKER CREDIT. (1) FOR
PURPOSES OF THIS SUBSECTION:
  (A) "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE  WHO
HAS  OCCUPIED  THE  SAME RESIDENCE FOR SIX MONTHS OR MORE OF THE TAXABLE
YEAR, AND IS REQUIRED OR CHOOSES TO FILE A RETURN UNDER THIS ARTICLE.
  (B) "HOUSEHOLD" OR  "MEMBERS  OF  THE  HOUSEHOLD"  MEANS  A  QUALIFIED
TAXPAYER  AND  ALL  OTHER PERSONS, NOT NECESSARILY RELATED, WHO HAVE THE
SAME RESIDENCE AND SHARE ITS FURNISHINGS, FACILITIES AND ACCOMMODATIONS.
SUCH TERMS SHALL NOT INCLUDE A TENANT, SUBTENANT, ROOMER OR BOARDER  WHO
IS  NOT  RELATED  TO  THE  QUALIFIED TAXPAYER IN ANY DEGREE SPECIFIED IN
PARAGRAPHS ONE THROUGH EIGHT OF SUBSECTION (A) OF  SECTION  ONE  HUNDRED
FIFTY-TWO  OF  THE  INTERNAL REVENUE CODE.  PROVIDED, HOWEVER, NO PERSON
MAY BE A MEMBER OF MORE THAN ONE HOUSEHOLD AT ONE TIME.
  (C) "HOUSEHOLD GROSS INCOME" MEANS THE AGGREGATE ADJUSTED GROSS INCOME
OF ALL MEMBERS OF THE HOUSEHOLD FOR THE TAXABLE  YEAR  AS  REPORTED  FOR
FEDERAL  INCOME  TAX  PURPOSES,  OR  WHICH WOULD BE REPORTED AS ADJUSTED
GROSS INCOME IF A FEDERAL INCOME TAX RETURN WERE REQUIRED TO  BE  FILED,
WITH  THE  MODIFICATIONS IN SUBSECTION (B) OF SECTION SIX HUNDRED TWELVE
OF THIS ARTICLE BUT WITHOUT THE MODIFICATIONS IN SUBSECTION (C) OF  SUCH
SECTION, PLUS ANY PORTION OF THE GAIN FROM THE SALE OR EXCHANGE OF PROP-
ERTY  OTHERWISE  EXCLUDED  FROM  SUCH AMOUNT; EARNED INCOME FROM SOURCES
WITHOUT THE UNITED  STATES  EXCLUDABLE  FROM  FEDERAL  GROSS  INCOME  BY
SECTION  NINE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE; SUPPORT MONEY
NOT INCLUDED IN  ADJUSTED  GROSS  INCOME;  NONTAXABLE  STRIKE  BENEFITS;
SUPPLEMENTAL  SECURITY  INCOME PAYMENTS; THE GROSS AMOUNT OF ANY PENSION
OR ANNUITY BENEFITS TO THE EXTENT NOT INCLUDED IN  SUCH  ADJUSTED  GROSS
INCOME  (INCLUDING, BUT NOT LIMITED TO, RAILROAD RETIREMENT BENEFITS AND
ALL PAYMENTS RECEIVED UNDER THE FEDERAL SOCIAL SECURITY ACT  AND  VETER-
ANS'  DISABILITY  PENSIONS); NONTAXABLE INTEREST RECEIVED FROM THE STATE
OF NEW YORK, ITS AGENCIES, INSTRUMENTALITIES,  PUBLIC  CORPORATIONS,  OR
POLITICAL  SUBDIVISIONS (INCLUDING A PUBLIC CORPORATION CREATED PURSUANT
TO AGREEMENT OR COMPACT WITH ANOTHER STATE OR CANADA); WORKERS'  COMPEN-
SATION;  THE GROSS AMOUNT OF "LOSS-OF-TIME" INSURANCE; AND THE AMOUNT OF
CASH PUBLIC ASSISTANCE AND RELIEF, OTHER THAN MEDICAL ASSISTANCE FOR THE
NEEDY, PAID TO OR FOR THE BENEFIT OF THE QUALIFIED TAXPAYER  OR  MEMBERS
OF  HIS  OR  HER  HOUSEHOLD.  HOUSEHOLD  GROSS  INCOME SHALL NOT INCLUDE
SURPLUS FOODS OR OTHER RELIEF IN KIND OR PAYMENTS  MADE  TO  INDIVIDUALS
BECAUSE  OF  THEIR  STATUS  AS VICTIMS OF NAZI PERSECUTION AS DEFINED IN
P.L. 103-286. PROVIDED,  FURTHER,  HOUSEHOLD  GROSS  INCOME  SHALL  ONLY
INCLUDE  ALL  SUCH INCOME RECEIVED BY ALL MEMBERS OF THE HOUSEHOLD WHILE
MEMBERS OF SUCH HOUSEHOLD. IN COMPUTING HOUSEHOLD GROSS INCOME, THE  NET
AMOUNT  OF  LOSS  REPORTED  ON  FEDERAL SCHEDULE C, D, E, OR F SHALL NOT
EXCEED THREE THOUSAND DOLLARS PER SCHEDULE. IN ADDITION, THE NET  AMOUNT
OF  ANY  OTHER SEPARATE CATEGORY OF LOSS SHALL NOT EXCEED THREE THOUSAND
DOLLARS. THE AGGREGATE AMOUNT OF ALL LOSSES INCLUDED IN COMPUTING HOUSE-
HOLD GROSS INCOME SHALL NOT EXCEED FIFTEEN THOUSAND DOLLARS.

S. 6359--B                         184                        A. 8559--B

  (D) "RESIDENCE" MEANS A DWELLING IN THIS STATE OWNED BY THE  TAXPAYER,
AND  SO  MUCH  OF  THE  LAND  ABUTTING IT, NOT EXCEEDING ONE ACRE, AS IS
REASONABLY NECESSARY FOR USE OF THE DWELLING AS A HOME, AND MAY  CONSIST
OF  A  PART  OF  A  MULTI-DWELLING OR MULTI-PURPOSE BUILDING INCLUDING A
COOPERATIVE  OR  CONDOMINIUM.    RESIDENCE  INCLUDES A TRAILER OR MOBILE
HOME, USED EXCLUSIVELY FOR RESIDENTIAL  PURPOSES  AND  DEFINED  AS  REAL
PROPERTY  PURSUANT TO PARAGRAPH (G) OF SUBDIVISION TWELVE OF SECTION ONE
HUNDRED TWO OF THE REAL PROPERTY TAX LAW.
  (E) "QUALIFYING REAL PROPERTY TAXES" MEANS ALL  REAL  PROPERTY  TAXES,
SPECIAL  AD  VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE OF PENAL-
TIES AND INTEREST, LEVIED BY A TAXING JURISDICTION WITH A  CAP-COMPLIANT
BUDGET  ON  THE  RESIDENCE  OF  A QUALIFIED TAXPAYER AND PAID DURING THE
TAXABLE YEAR.
  (I) FOR THE PURPOSES OF THIS SUBSECTION, A "CAP-COMPLIANT BUDGET"  FOR
A  SCHOOL DISTRICT SUBJECT TO SECTION TWO THOUSAND TWENTY-THREE-A OF THE
EDUCATION LAW MEANS A BUDGET FOR WHICH THE CHIEF  EXECUTIVE  OFFICER  OF
SUCH  SCHOOL  DISTRICT HAS CERTIFIED, NO LATER THAN THE TWENTY-FIRST DAY
OF THE FISCAL YEAR TO WHICH IT APPLIES, TO THE  STATE  COMPTROLLER,  THE
COMMISSIONER  OF TAXATION AND FINANCE AND THE COMMISSIONER OF EDUCATION,
IN A FORM AND MANNER PRESCRIBED BY THE STATE COMPTROLLER IN CONSULTATION
WITH THE COMMISSIONER OF TAXATION AND FINANCE AND  THE  COMMISSIONER  OF
EDUCATION, THAT THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT
PRESCRIBED BY SUCH SECTION. A "CAP-COMPLIANT BUDGET" FOR A LOCAL GOVERN-
MENT  SUBJECT TO SECTION THREE-C OF THE GENERAL MUNICIPAL LAW SHALL MEAN
A BUDGET FOR WHICH THE CHIEF EXECUTIVE OFFICER OR BUDGET OFFICER OF SUCH
LOCAL GOVERNMENT UNIT HAS CERTIFIED, NO LATER THAN THE TWENTY-FIRST  DAY
OF THE FISCAL YEAR TO WHICH IT APPLIES, TO THE STATE COMPTROLLER AND THE
COMMISSIONER OF TAXATION AND FINANCE, IN A FORM AND MANNER PRESCRIBED BY
THE  STATE COMPTROLLER IN CONSULTATION WITH THE COMMISSIONER OF TAXATION
AND FINANCE, THAT THE ADOPTED BUDGET OF SUCH LOCAL  GOVERNMENT  DID  NOT
REQUIRE AND THE GOVERNING BODY OF SUCH LOCAL GOVERNMENT DID NOT ENACT OR
APPROVE  A  LOCAL  LAW  OR  RESOLUTION  TO  OVERRIDE  THE TAX LEVY LIMIT
PRESCRIBED BY SUCH SECTION, OR, IF  THE  GOVERNING  BODY  OF  THE  LOCAL
GOVERNMENT  DID  ENACT  A  LOCAL LAW OR APPROVE A RESOLUTION TO OVERRIDE
SUCH TAX LEVY LIMIT, THAT SUCH LOCAL LAW OR RESOLUTION WAS  SUBSEQUENTLY
REPEALED.  IF  A  CERTIFICATION REQUIRED BY THIS PARAGRAPH HAS BEEN MADE
AND THE ACTUAL TAX LEVY OF THE TAXING JURISDICTION EXCEEDS THE  APPLICA-
BLE  TAX  LEVY  LIMIT,  THE EXCESS AMOUNT SHALL BE PLACED IN RESERVE AND
USED IN THE MANNER PRESCRIBED BY  SUBDIVISION  FIVE  OF  SECTION  TWENTY
THOUSAND  TWENTY-THREE-A  OF  THE  EDUCATION  LAW  OR SUBDIVISION SIX OF
SECTION THREE-C OF THE GENERAL MUNICIPAL LAW, WHICHEVER  IS  APPLICABLE,
EVEN IF A TAX LEVY IN EXCESS OF THE TAX LEVY LIMIT HAD BEEN DULY AUTHOR-
IZED FOR THE APPLICABLE FISCAL YEAR IN ACCORDANCE WITH SUCH SECTION.
  (II)  FOR  TAX  YEAR  TWO  THOUSAND FOURTEEN, ONLY REAL PROPERTY TAXES
LEVIED BY SCHOOL DISTRICTS WITH CAP-COMPLIANT BUDGETS CONSTITUTE  QUALI-
FYING REAL PROPERTY TAXES.
  (III)  IN  A  CITY  WITH  A  POPULATION  OF  ONE  MILLION OR MORE, THE
RESTRICTION IN CLAUSE (I) OF THIS SUBPARAGRAPH THAT TAXES MUST BE LEVIED
BY A TAXING JURISDICTION WITH A CAP-COMPLIANT  BUDGET  DOES  NOT  APPLY.
HOWEVER,  REAL  PROPERTY  TAXES,  SPECIAL AD VALOREM LEVIES, AND SPECIAL
ASSESSMENTS LEVIED BY SUCH CITY SHALL CONSTITUTE QUALIFYING REAL PROPER-
TY TAXES ONLY IF TAXES  LEVIED  IN  THE  STATE  OUTSIDE  SUCH  CITY  ARE
REQUIRED  FOR  PURPOSES  OF THIS CREDIT TO BE LEVIED BY TAXING JURISDIC-
TIONS WITH CAP-COMPLIANT BUDGETS.
  (IV) A QUALIFIED TAXPAYER MAY ELECT TO INCLUDE ANY  ADDITIONAL  AMOUNT
THAT  WOULD  HAVE  BEEN  LEVIED IN THE ABSENCE OF AN EXEMPTION FROM REAL

S. 6359--B                         185                        A. 8559--B

PROPERTY TAXATION PURSUANT TO SECTION FOUR HUNDRED  SIXTY-SEVEN  OF  THE
REAL  PROPERTY  TAX LAW. IF TENANT-STOCKHOLDERS IN A COOPERATIVE HOUSING
CORPORATION HAVE MET THE REQUIREMENTS OF SECTION TWO HUNDRED SIXTEEN  OF
THE INTERNAL REVENUE CODE BY WHICH THEY ARE ALLOWED A DEDUCTION FOR REAL
ESTATE TAXES, THE AMOUNT OF TAXES SO ALLOWABLE, OR WHICH WOULD BE ALLOW-
ABLE  IF THE TAXPAYER HAD FILED RETURNS ON A CASH BASIS, SHALL BE QUALI-
FYING REAL PROPERTY TAXES. IF A RESIDENCE IS OWNED BY TWO OR MORE  INDI-
VIDUALS  AS JOINT TENANTS OR TENANTS IN COMMON, AND ONE OR MORE THAN ONE
INDIVIDUAL IS NOT A MEMBER OF THE HOUSEHOLD,  QUALIFYING  REAL  PROPERTY
TAXES  IS  THAT  PART  OF SUCH TAXES ON THE RESIDENCE WHICH REFLECTS THE
OWNERSHIP PERCENTAGE OF THE QUALIFIED TAXPAYER AND MEMBERS OF HIS OR HER
HOUSEHOLD. IF A RESIDENCE IS AN INTEGRAL PART OF A LARGER UNIT, QUALIFY-
ING REAL PROPERTY TAXES SHALL BE LIMITED TO THAT AMOUNT  OF  SUCH  TAXES
PAID  AS MAY BE REASONABLY APPORTIONED TO SUCH RESIDENCE. IF A HOUSEHOLD
OWNS AND OCCUPIES TWO OR MORE RESIDENCES DURING DIFFERENT PERIODS IN THE
SAME TAXABLE YEAR, QUALIFYING REAL PROPERTY TAXES SHALL BE  THE  SUM  OF
THE  PRORATED  QUALIFYING REAL PROPERTY TAXES ATTRIBUTABLE TO THE HOUSE-
HOLD DURING THE PERIODS SUCH HOUSEHOLD OCCUPIES EACH OF SUCH RESIDENCES.
IF THE HOUSEHOLD OWNS AND OCCUPIES A RESIDENCE FOR PART OF  THE  TAXABLE
YEAR  AND  RENTS  A  RESIDENCE FOR PART OF THE SAME TAXABLE YEAR, IT MAY
INCLUDE THE PRORATION OF QUALIFYING REAL PROPERTY TAXES ON THE RESIDENCE
OWNED.  PROVIDED, HOWEVER, FOR PURPOSES OF THE CREDIT ALLOWED UNDER THIS
SUBSECTION, QUALIFYING REAL PROPERTY TAXES MAY BE INCLUDED BY  A  QUALI-
FIED  TAXPAYER  ONLY  TO  THE EXTENT THAT SUCH TAXPAYER OR THE SPOUSE OF
SUCH TAXPAYER, OCCUPYING SUCH RESIDENCE  FOR  ONE  HUNDRED  EIGHTY-THREE
DAYS  OR  MORE  OF THE TAXABLE YEAR, OWNS OR HAS OWNED THE RESIDENCE AND
PAID SUCH TAXES.
  (2) A QUALIFIED TAXPAYER SHALL BE ALLOWED  A  CREDIT  AS  PROVIDED  IN
PARAGRAPH THREE HEREOF AGAINST THE TAXES IMPOSED BY THIS ARTICLE REDUCED
BY  THE CREDITS PERMITTED BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE TAX
AS SO REDUCED FOR SUCH YEAR UNDER THIS  ARTICLE,  THE  EXCESS  SHALL  BE
TREATED AS AN OVERPAYMENT, TO BE CREDITED OR REFUNDED, WITHOUT INTEREST.
IF  A  QUALIFIED  TAXPAYER  IS NOT REQUIRED TO FILE A RETURN PURSUANT TO
SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE, A QUALIFIED TAXPAYER  MAY
NEVERTHELESS  RECEIVE  THE  FULL  AMOUNT OF THE CREDIT TO BE CREDITED OR
REFUNDED AS AN OVERPAYMENT, WITHOUT INTEREST.
  (3) DETERMINATION OF CREDIT. (A) FOR TAXABLE YEARS  BEGINNING  IN  TWO
THOUSAND  FOURTEEN,  THE  AMOUNT  OF  THE  CREDIT  ALLOWABLE  UNDER THIS
SUBSECTION SHALL BE DETERMINED AS FOLLOWS:
IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
                        PROPERTY TAXES OVER         EXCESS REAL PROPERTY
                        THE FOLLOWING               TAXES:
                        PERCENTAGE OF
                        HOUSEHOLD GROSS INCOME:
LESS THAN $120,000      2.4%                        6.25%
$120,000 TO LESS
THAN $150,000           3.2%                        4.75%
$150,000 TO LESS
THAN $200,000           4.0%                        3.25%
  NOTWITHSTANDING THE FOREGOING PROVISIONS, THE  MAXIMUM  CREDIT  DETER-
MINED UNDER THIS SUBPARAGRAPH MAY NOT EXCEED FIVE HUNDRED DOLLARS.
  (B) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND FIFTEEN, THE AMOUNT OF
THE  CREDIT  ALLOWABLE  UNDER  THIS  SUBSECTION  SHALL  BE DETERMINED AS
FOLLOWS:

S. 6359--B                         186                        A. 8559--B

IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
                        PROPERTY TAXES OVER         EXCESS REAL PROPERTY
                        THE FOLLOWING               TAXES:
                        PERCENTAGE OF
                        HOUSEHOLD GROSS INCOME:
LESS THAN $120,000      3.0%                        8.25%
$120,000 TO LESS
THAN $150,000           4.0%                        6.00%
$150,000 TO LESS
THAN $200,000           5.0%                        3.75%
  NOTWITHSTANDING  THE  FOREGOING  PROVISIONS, THE MAXIMUM CREDIT DETER-
MINED UNDER  THIS  SUBPARAGRAPH  MAY  NOT  EXCEED  SEVEN  HUNDRED  FIFTY
DOLLARS.
  (C) FOR TAXABLE YEARS BEGINNING AFTER TWO THOUSAND FIFTEEN, THE AMOUNT
OF  THE  CREDIT  ALLOWABLE  UNDER THIS SUBSECTION SHALL BE DETERMINED AS
FOLLOWS:
IF THE HOUSEHOLD        EXCESS REAL PROPERTY        THE CREDIT AMOUNT IS
GROSS INCOME FOR THE    TAXES ARE THE EXCESS        THE FOLLOWING
TAXABLE YEAR IS:        OF QUALIFYING REAL          PERCENTAGE OF THE
                        PROPERTY TAXES OVER         EXCESS REAL PROPERTY
                        THE FOLLOWING               TAXES:
                        PERCENTAGE OF
                        HOUSEHOLD GROSS INCOME:
LESS THAN $120,000      3.0%                        20.0%
$120,000 TO LESS
THAN $150,000           4.0%                        15.0%
$150,000 TO LESS
THAN $200,000           5.0%                        10.0%
  NOTWITHSTANDING THE FOREGOING PROVISIONS, THE  MAXIMUM  CREDIT  DETER-
MINED UNDER THIS SUBPARAGRAPH MAY NOT EXCEED ONE THOUSAND DOLLARS.
  (4)  IF A QUALIFIED TAXPAYER OCCUPIES A RESIDENCE FOR A PERIOD OF LESS
THAN TWELVE MONTHS DURING THE TAXABLE YEAR OR OCCUPIES TWO OR MORE RESI-
DENCES DURING DIFFERENT PERIODS IN SUCH TAXABLE YEAR, THE CREDIT ALLOWED
PURSUANT TO THIS SUBSECTION SHALL BE COMPUTED  IN  SUCH  MANNER  AS  THE
COMMISSIONER  MAY  PRESCRIBE  IN ORDER TO PROPERLY REFLECT THE CREDIT OR
PORTION THEREOF ATTRIBUTABLE TO SUCH RESIDENCE OR  RESIDENCES  AND  SUCH
PERIOD OR PERIODS.
  (5)  THE  COMMISSIONER  MAY  PRESCRIBE  THAT  THE  CREDIT  UNDER  THIS
SUBSECTION SHALL BE DETERMINED IN WHOLE OR IN PART BY THE USE OF  TABLES
PRESCRIBED  BY SUCH COMMISSIONER. SUCH TABLES SHALL SET FORTH THE CREDIT
TO THE NEAREST DOLLAR.
  (6) ONLY ONE CREDIT PER HOUSEHOLD AND PER QUALIFIED TAXPAYER SHALL  BE
ALLOWED PER TAXABLE YEAR UNDER THIS SUBSECTION. WHEN TWO OR MORE MEMBERS
OF  A  HOUSEHOLD  ARE  ABLE  TO  MEET THE QUALIFICATIONS FOR A QUALIFIED
TAXPAYER, THE CREDIT SHALL BE EQUALLY  DIVIDED  BETWEEN  OR  AMONG  SUCH
INDIVIDUALS UNLESS SUCH INDIVIDUALS FILE WITH THE COMMISSIONER A WRITTEN
AGREEMENT AMONG SUCH INDIVIDUALS SETTING FORTH A DIFFERENT DIVISION.
  (A)  PROVIDED, HOWEVER, WHERE A JOINT INCOME TAX RETURN HAS BEEN FILED
PURSUANT TO THE PROVISIONS OF SECTION  SIX  HUNDRED  FIFTY-ONE  OF  THIS
ARTICLE  BY  A  QUALIFIED  TAXPAYER AND HIS OR HER SPOUSE (OR WHERE BOTH
SPOUSES ARE QUALIFIED TAXPAYERS AND HAVE FILED SUCH JOINT  RETURN),  THE
CREDIT,  OR  THE  PORTION OF THE CREDIT IF DIVIDED, TO WHICH THE SPOUSES
ARE ENTITLED SHALL BE APPLIED AGAINST THE TAX OF BOTH  SPOUSES  AND  ANY
OVERPAYMENT SHALL BE MADE TO BOTH SPOUSES.

S. 6359--B                         187                        A. 8559--B

  (B)  WHERE  ANY RETURN REQUIRED TO BE FILED PURSUANT TO THE PROVISIONS
OF SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE IS  COMBINED  WITH  ANY
RETURN  OF  TAX IMPOSED PURSUANT TO THE AUTHORITY OF THIS CHAPTER OR ANY
OTHER LAW IF SUCH TAX IS ADMINISTERED BY THE COMMISSIONER, THE CREDIT OR
THE  PORTION OF THE CREDIT IF DIVIDED, ALLOWED TO THE QUALIFIED TAXPAYER
MAY BE APPLIED BY THE COMMISSIONER TOWARD ANY LIABILITY FOR  THE  AFORE-
MENTIONED TAXES.
  (7) NO CREDIT SHALL BE GRANTED UNDER THIS SUBSECTION:
  (A)  IF  HOUSEHOLD GROSS INCOME FOR THE TAXABLE YEAR EQUALS OR EXCEEDS
TWO HUNDRED THOUSAND DOLLARS.
  (B) TO A PROPERTY OWNER UNLESS: (I) THE PROPERTY IS USED FOR  RESIDEN-
TIAL  PURPOSES,  (II) NOT MORE THAN TWENTY PERCENT OF THE RENTAL INCOME,
IF ANY, FROM THE PROPERTY IS FROM RENTAL FOR NONRESIDENTIAL PURPOSES AND
(III) THE PROPERTY IS OCCUPIED AS A RESIDENCE IN WHOLE OR IN PART BY ONE
OR MORE OF THE OWNERS OF THE PROPERTY.
  (C) TO AN INDIVIDUAL WITH RESPECT TO WHOM A DEDUCTION UNDER SUBSECTION
(C) OF SECTION ONE HUNDRED FIFTY-ONE OF THE  INTERNAL  REVENUE  CODE  IS
ALLOWABLE TO ANOTHER TAXPAYER FOR THE TAXABLE YEAR.
  (D)  WITH  RESPECT  TO  A  RESIDENCE THAT IS WHOLLY EXEMPTED FROM REAL
PROPERTY TAXATION.
  (E) TO AN INDIVIDUAL WHO IS NOT A RESIDENT INDIVIDUAL OF THE STATE FOR
THE ENTIRE TAXABLE YEAR.
  (8) THE RIGHT TO CLAIM A CREDIT OR THE PORTION OF A CREDIT, WHERE SUCH
CREDIT HAS BEEN DIVIDED UNDER THIS SUBSECTION, SHALL BE PERSONAL TO  THE
QUALIFIED  TAXPAYER  AND  SHALL  NOT  SURVIVE HIS OR HER DEATH, BUT SUCH
RIGHT MAY BE EXERCISED ON BEHALF OF A CLAIMANT BY HIS OR HER LEGAL GUAR-
DIAN OR ATTORNEY IN FACT DURING HIS OR HER LIFETIME.
  (9) RETURNS. IF A QUALIFIED TAXPAYER IS NOT REQUIRED TO FILE A  RETURN
PURSUANT TO SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE, A CLAIM FOR A
CREDIT MAY BE TAKEN ON A RETURN FILED WITH THE COMMISSIONER WITHIN THREE
YEARS  FROM  THE TIME IT WOULD HAVE BEEN REQUIRED THAT A RETURN BE FILED
PURSUANT TO SUCH SECTION HAD THE QUALIFIED TAXPAYER HAD A  TAXABLE  YEAR
ENDING  ON DECEMBER THIRTY-FIRST.  RETURNS UNDER THIS PARAGRAPH SHALL BE
IN SUCH FORM AS SHALL BE PRESCRIBED BY THE COMMISSIONER, WHO SHALL  MAKE
AVAILABLE SUCH FORMS AND INSTRUCTIONS FOR FILING SUCH RETURNS.
  (10) PROOF OF CLAIM. THE COMMISSIONER MAY REQUIRE A QUALIFIED TAXPAYER
TO  FURNISH THE FOLLOWING INFORMATION IN SUPPORT OF HIS OR HER CLAIM FOR
CREDIT UNDER THIS SUBSECTION:  HOUSEHOLD  GROSS  INCOME,  REAL  PROPERTY
TAXES  LEVIED  OR  THAT  WOULD  HAVE  BEEN  LEVIED  IN THE ABSENCE OF AN
EXEMPTION FROM REAL  PROPERTY  TAX  PURSUANT  TO  SECTION  FOUR  HUNDRED
SIXTY-SEVEN  OF  THE  REAL PROPERTY TAX LAW, THE NAMES OF MEMBERS OF THE
HOUSEHOLD AND OTHER QUALIFYING TAXPAYERS OCCUPYING  THE  SAME  RESIDENCE
AND  THEIR IDENTIFYING NUMBERS INCLUDING SOCIAL SECURITY NUMBERS, HOUSE-
HOLD GROSS INCOME, SIZE AND NATURE OF PROPERTY CLAIMED AS RESIDENCE  AND
ALL  OTHER  INFORMATION  WHICH  MAY  BE  REQUIRED BY THE COMMISSIONER TO
DETERMINE THE CREDIT.
  (11) ADMINISTRATION. THE PROVISIONS OF  THIS  ARTICLE,  INCLUDING  THE
PROVISIONS  OF SECTION SIX HUNDRED FIFTY-THREE, SIX HUNDRED FIFTY-EIGHT,
AND SIX HUNDRED FIFTY-NINE AND THE PROVISIONS OF PART SIX OF THIS  ARTI-
CLE  RELATING  TO  PROCEDURE  AND ADMINISTRATION, INCLUDING THE JUDICIAL
REVIEW OF THE DECISIONS OF THE COMMISSIONER, EXCEPT SO MUCH  OF  SECTION
SIX  HUNDRED  EIGHTY-SEVEN WHICH PERMITS A CLAIM FOR CREDIT OR REFUND TO
BE FILED AFTER THE  PERIOD  PROVIDED  FOR  IN  PARAGRAPH  NINE  OF  THIS
SUBSECTION  AND  EXCEPT  SECTIONS  SIX  HUNDRED FIFTY-SEVEN, SIX HUNDRED
EIGHTY-EIGHT AND SIX HUNDRED NINETY-SIX, SHALL APPLY TO  THE  PROVISIONS
OF THIS SUBSECTION IN THE SAME MANNER AND WITH THE SAME FORCE AND EFFECT

S. 6359--B                         188                        A. 8559--B

AS  IF  THE  LANGUAGE  OF THOSE PROVISIONS HAD BEEN INCORPORATED IN FULL
INTO THIS SUBSECTION AND HAD EXPRESSLY REFERRED TO THE CREDIT ALLOWED OR
RETURNS FILED UNDER THIS SUBSECTION, EXCEPT TO THE EXTENT THAT ANY  SUCH
PROVISION  IS EITHER INCONSISTENT WITH A PROVISION OF THIS SUBSECTION OR
IS NOT RELEVANT TO THIS SUBSECTION. AS USED IN SUCH  SECTIONS  AND  SUCH
PART,  THE TERM "TAXPAYER" SHALL INCLUDE A QUALIFIED TAXPAYER UNDER THIS
SUBSECTION AND, NOTWITHSTANDING THE  PROVISIONS  OF  SUBSECTION  (E)  OF
SECTION  SIX  HUNDRED  NINETY-SEVEN,  WHERE  A  QUALIFIED  TAXPAYER  HAS
PROTESTED THE DENIAL OF A CLAIM FOR CREDIT UNDER THIS SUBSECTION AND THE
TIME TO FILE A PETITION FOR  REDETERMINATION  OF  A  DEFICIENCY  OR  FOR
REFUND  HAS  NOT EXPIRED, HE OR SHE SHALL, SUBJECT TO SUCH CONDITIONS AS
MAY BE SET BY THE COMMISSIONER, RECEIVE SUCH  INFORMATION  (A)  THAT  IS
CONTAINED  IN  ANY RETURN FILED UNDER THIS ARTICLE BY A MEMBER OF HIS OR
HER HOUSEHOLD FOR THE TAXABLE YEAR FOR WHICH THE CREDIT IS CLAIMED,  AND
(B) THAT THE COMMISSIONER FINDS IS RELEVANT AND MATERIAL TO THE ISSUE OF
WHETHER SUCH CLAIM WAS PROPERLY DENIED.
  (12)  NOTWITHSTANDING  ANY OTHER PROVISION OF THIS ARTICLE, THE CREDIT
ALLOWED UNDER THIS SUBSECTION SHALL BE  DETERMINED  AFTER  THE  DETERMI-
NATION  AND  APPLICATION  OF  ANY  OTHER  CREDITS  PERMITTED  UNDER  THE
PROVISIONS OF THIS ARTICLE.   A TAXPAYER SHALL  BE  ALLOWED  EITHER  THE
CREDIT  PROVIDED  BY  THIS  SUBSECTION  OR THE REAL PROPERTY TAX CIRCUIT
BREAKER CREDIT PROVIDED BY SUBSECTION (E) OF THIS SECTION, WHICHEVER  IS
GREATER.
  S  3.  Paragraph 14 of subsection (e) of section 606 of the tax law is
REPEALED.
  S 4. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

                                 PART L

  Section 1.  Section 606 of the tax law is  amended  by  adding  a  new
subsection (b-1) to read as follows:
  (B-1) RENTERS' CREDIT.
  (1) FOR THE PURPOSES OF THIS SUBSECTION:
  (A)  "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE WHO
HAS OCCUPIED AND PAID RENT FOR HIS OR  HER  PRIMARY  RESIDENCE  IN  THIS
STATE FOR SIX MONTHS OR MORE OF THE TAXABLE YEAR, IS REQUIRED OR CHOOSES
TO  FILE A RETURN UNDER THIS ARTICLE, AND (I) IS SIXTY-FIVE YEARS OF AGE
OR OLDER, (II) IS FILING A JOINT RETURN WITH A SPOUSE WHO IS  SIXTY-FIVE
YEARS  OF  AGE OR OLDER, (III) IS A HEAD OF HOUSEHOLD, (IV) IS A MARRIED
INDIVIDUAL FILING A JOINT RETURN WITH A SPOUSE  AND  HAS  AT  LEAST  ONE
DEPENDENT,  (V) IS A MARRIED INDIVIDUAL FILING A SEPARATE RETURN AND HAS
AT LEAST ONE DEPENDENT, OR (VI) IS A SURVIVING SPOUSE AND HAS  AT  LEAST
ONE DEPENDENT. AN INDIVIDUAL CANNOT BE A QUALIFIED TAXPAYER IF HE OR SHE
IS  AN  INDIVIDUAL WITH RESPECT TO WHOM A DEDUCTION UNDER SUBSECTION (C)
OF SECTION 151 OF THE INTERNAL REVENUE  CODE  IS  ALLOWABLE  TO  ANOTHER
TAXPAYER  FOR THE TAXABLE YEAR OR PAYS RENT FOR HIS OR HER PRIMARY RESI-
DENCE TO A FAMILY MEMBER SHARING THE SAME PRIMARY RESIDENCE.   A  FAMILY
MEMBER  OF  AN  INDIVIDUAL  IS THE INDIVIDUAL'S SPOUSE, BROTHER, SISTER,
PARENT, GRANDPARENT, CHILD, GRANDCHILD, UNCLE, AUNT, NEPHEW,  OR  NIECE,
RELATED TO THE INDIVIDUAL BY BLOOD, MARRIAGE OR ADOPTION.
  (B)  "RESIDENCE"  MEANS  A DWELLING IN THIS STATE AND MAY CONSIST OF A
PART OF A MULTI-DWELLING OR MULTI-PURPOSE BUILDING INCLUDING  A  COOPER-
ATIVE  OR  CONDOMINIUM, AND RENTAL UNITS WITHIN A SINGLE DWELLING. RESI-
DENCE INCLUDES A TRAILER OR MOBILE HOME, USED EXCLUSIVELY  FOR  RESIDEN-
TIAL  PURPOSES AND DEFINED AS REAL PROPERTY PURSUANT TO PARAGRAPH (G) OF

S. 6359--B                         189                        A. 8559--B

SUBDIVISION TWELVE OF SECTION ONE HUNDRED TWO OF THE REAL  PROPERTY  TAX
LAW.
  (2)  (A) A QUALIFIED TAXPAYER SHALL BE ALLOWED A CREDIT AS PROVIDED IN
THIS SUBSECTION AGAINST THE TAXES IMPOSED BY THIS ARTICLE REDUCED BY THE
CREDITS PERMITTED BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE TAX  AS  SO
REDUCED FOR SUCH YEAR UNDER THIS ARTICLE, THE EXCESS SHALL BE TREATED AS
AN  OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE,  PROVIDED,
HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON. IF A QUALIFIED TAXPAYER
IS  NOT REQUIRED TO FILE A RETURN PURSUANT TO SECTION SIX HUNDRED FIFTY-
ONE OF THIS ARTICLE BUT OTHERWISE QUALIFIES  FOR  A  CREDIT  UNDER  THIS
SUBSECTION, A CLAIM FOR A CREDIT MAY BE TAKEN ON A RETURN FILED WITH THE
COMMISSIONER  WITHIN  THREE YEARS FROM THE TIME THAT A RETURN WOULD HAVE
BEEN REQUIRED TO BE FILED PURSUANT TO SUCH SECTION  HAD  SUCH  QUALIFIED
TAXPAYER  HAD  A  TAXABLE  YEAR ENDING ON DECEMBER THIRTY-FIRST. RETURNS
SHALL BE IN SUCH FORM AS PRESCRIBED BY  THE  COMMISSIONER.  A  QUALIFIED
TAXPAYER  MUST  PROVIDE ANY INFORMATION THE COMMISSIONER DEEMS NECESSARY
TO DETERMINE THE CREDIT ALLOWED.
  (B) IF MORE THAN ONE QUALIFIED TAXPAYER PAYS RENT FOR THE SAME PRIMARY
RESIDENCE AND HAS A FEDERAL ADJUSTED GROSS INCOME  FOR  WHICH  A  CREDIT
WOULD  OTHERWISE  BE  DUE, EACH SUCH QUALIFIED TAXPAYER SHALL DIVIDE THE
BASE AMOUNT OF THE CREDIT ALLOWED FOR HIS OR HER  INCOME  LEVEL  BY  THE
TOTAL NUMBER OF INDIVIDUALS OR MARRIED COUPLES FILING A JOINT RETURN WHO
ARE  PAYING THE RENT, WHETHER OR NOT ELIGIBLE FOR A CREDIT, TO DETERMINE
THE AMOUNT OF CREDIT ALLOWED TO THAT QUALIFIED TAXPAYER. ANY  ADDITIONAL
AMOUNT OF CREDIT DETERMINED BASED ON THE NUMBER OF EXEMPTIONS CLAIMED BY
SUCH TAXPAYER SHALL NOT BE SO DIVIDED.
  (C)  A  QUALIFIED  TAXPAYER  SHALL  BE  ALLOWED  THE CREDIT UNDER THIS
SUBSECTION OR THE CREDIT UNDER SUBSECTION (E) OF THIS SECTION, WHICHEVER
IS THE HIGHER AMOUNT.
  (3) (A) FOR ANY QUALIFIED TAXPAYER WHO IS SIXTY-FIVE YEARS OF  AGE  OR
OLDER  WITH  A FILING STATUS OF SINGLE, THE AMOUNT OF THE CREDIT ALLOWED
PURSUANT TO THIS PARAGRAPH SHALL BE DETERMINED IN  ACCORDANCE  WITH  THE
FOLLOWING TABLES:

FOR TAXABLE YEARS BEGINNING IN 2014,
IF FEDERAL ADJUSTED GROSS INCOME IS:        THE CREDIT SHALL BE:
$25,000 OR LESS                                     $110
OVER $25,000 BUT NOT OVER $40,000                    $90
OVER $40,000 BUT NOT OVER $50,000                    $70

FOR TAXABLE YEARS BEGINNING IN OR
AFTER 2015, IF FEDERAL ADJUSTED GROSS
INCOME IS:                                  THE CREDIT SHALL BE:
$25,000 OR LESS                                     $220
OVER $25,000 BUT NOT OVER $40,000                   $180
OVER $40,000 BUT NOT OVER $50,000                   $140
  (B) FOR ANY OTHER QUALIFIED TAXPAYER, THE AMOUNT OF THE CREDIT ALLOWED
PURSUANT  TO  THIS  PARAGRAPH SHALL BE DETERMINED IN ACCORDANCE WITH THE
FOLLOWING TABLES; PROVIDED, HOWEVER, THAT A QUALIFIED TAXPAYER WHO IS  A
MARRIED  INDIVIDUAL  FILING  A SEPARATE NEW YORK INCOME TAX RETURN SHALL
RECEIVE ONE-HALF OF THE BASE AMOUNT OF THE CREDIT  PLUS  ANY  ADDITIONAL
AMOUNT FOR WHICH SUCH TAXPAYER WOULD BE ELIGIBLE BASED ON THE INCOME AND
NUMBER OF EXEMPTIONS CLAIMED BY SUCH TAXPAYER:

S. 6359--B                         190                        A. 8559--B

FOR TAXABLE YEARS BEGINNING IN 2014,
IF FEDERAL ADJUSTED GROSS INCOME IS:         THE CREDIT SHALL BE:
$25,000 OR LESS                              $80 PLUS AN AMOUNT
                                             EQUAL TO $35
                                             MULTIPLIED BY A
                                             NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER
                                             (OR IN THE CASE
                                             OF A MARRIED COUPLE
                                             FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED
                                             TO A DEDUCTION FOR THE
                                             TAXABLE YEAR FOR FEDERAL
                                             INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B)
                                             AND (C) OF SECTION 151
                                             OF THE INTERNAL REVENUE CODE

OVER $25,000 BUT NOT OVER $45,000            $65 PLUS AN AMOUNT
                                             EQUAL TO $24
                                             MULTIPLIED BY A NUMBER
                                             WHICH IS ONE LESS THAN
                                             THE NUMBER OF EXEMPTIONS
                                             FOR WHICH THE TAXPAYER
                                             (OR IN THE CASE OF
                                             A MARRIED COUPLE FILING A
                                             JOINT RETURN, TAXPAYERS)
                                             IS ENTITLED TO A
                                             DEDUCTION FOR THE TAXABLE
                                             YEAR FOR FEDERAL INCOME
                                             TAX PURPOSES UNDER
                                             SUBSECTIONS (B) AND (C)
                                             OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE

OVER $45,000 BUT NOT OVER $65,000            $55 PLUS AN AMOUNT
                                             EQUAL TO $12 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER (OR
                                             IN THE CASE OF A MARRIED
                                             COUPLE FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED
                                             TO A DEDUCTION FOR THE
                                             TAXABLE YEAR FOR FEDERAL
                                             INCOME TAX PURPOSES UNDER
                                             SUBSECTIONS (B) AND (C)
                                             OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE

OVER $65,000 BUT NOT OVER $100,000           $45 PLUS AN AMOUNT
                                             EQUAL TO $12 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE

S. 6359--B                         191                        A. 8559--B

                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR WHICH
                                             THE TAXPAYER (OR IN THE
                                             CASE OF A MARRIED COUPLE
                                             FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED TO
                                             A DEDUCTION FOR THE TAXABLE
                                             YEAR FOR FEDERAL INCOME TAX
                                             PURPOSES UNDER SUBSECTIONS
                                             (B) AND (C) OF SECTION 151
                                             OF THE INTERNAL REVENUE CODE

FOR TAXABLE YEARS BEGINNING IN OR
AFTER 2015, IF FEDERAL ADJUSTED GROSS
INCOME IS:                                   THE CREDIT SHALL BE:
$25,000 OR LESS                              $160 PLUS AN
                                             AMOUNT EQUAL TO $70
                                             MULTIPLIED BY A NUMBER WHICH
                                             IS ONE LESS THAN THE
                                             NUMBER OF EXEMPTIONS
                                             FOR WHICH THE TAXPAYER
                                             (OR IN THE CASE OF A
                                             MARRIED COUPLE FILING A
                                             JOINT RETURN, TAXPAYERS)
                                             IS ENTITLED TO A DEDUCTION
                                             FOR THE TAXABLE YEAR FOR
                                             FEDERAL INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B) AND
                                             (C) OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE

OVER $25,000 BUT NOT OVER $45,000            $130 PLUS AN AMOUNT
                                             EQUAL TO $48
                                             MULTIPLIED BY A NUMBER
                                             WHICH IS ONE LESS THAN
                                             THE NUMBER OF EXEMPTIONS
                                             FOR WHICH THE TAXPAYER
                                             (OR IN THE CASE OF
                                             A MARRIED COUPLE FILING
                                             A JOINT RETURN, TAXPAYERS)
                                             IS ENTITLED TO A DEDUCTION
                                             FOR THE TAXABLE YEAR FOR
                                             FEDERAL INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B)
                                             AND (C) OF SECTION 151
                                             OF THE INTERNAL REVENUE CODE

OVER $45,000 BUT NOT OVER $65,000            $110 PLUS AN AMOUNT
                                             EQUAL TO $24 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER (OR
                                             IN THE CASE OF A MARRIED
                                             COUPLE FILING A JOINT RETURN,
                                             TAXPAYERS) IS ENTITLED TO A

S. 6359--B                         192                        A. 8559--B

                                             DEDUCTION FOR THE TAXABLE
                                             YEAR FOR FEDERAL INCOME TAX
                                             PURPOSES UNDER SUBSECTIONS
                                             (B) AND (C) OF SECTION 151
                                             OF THE INTERNAL  REVENUE CODE

OVER $65,000 BUT NOT OVER $100,000           $90 PLUS AN AMOUNT
                                             EQUAL TO $24 MULTIPLIED
                                             BY A NUMBER WHICH IS ONE
                                             LESS THAN THE NUMBER
                                             OF EXEMPTIONS FOR
                                             WHICH THE TAXPAYER (OR
                                             IN THE CASE OF A MARRIED
                                             COUPLE FILING A JOINT RETURN,
                                             TAXPAYERS) IS
                                             ENTITLED TO A DEDUCTION
                                             FOR THE TAXABLE YEAR FOR
                                             FEDERAL INCOME TAX PURPOSES
                                             UNDER SUBSECTIONS (B) AND
                                             (C) OF SECTION 151 OF THE
                                             INTERNAL REVENUE CODE
  S 2. This act shall take effect immediately.

                                 PART M

  Section  1. Paragraphs 2, 4 and 5 of subsection (vv) of section 606 of
the tax law, as added by section 1 of part CC of chapter 59 of the  laws
of 2013, are amended to read as follows:
  2.  To  be  eligible for the credit, the taxpayer (or taxpayers filing
joint returns) on the personal income tax return filed for  the  taxable
year  [two  years  prior],  must  [have]  (a)  [been] BE a resident, (b)
[claimed] CLAIM one or more dependent children who were under the age of
seventeen on the last day of the taxable year, (c) [had] HAVE  New  York
adjusted  gross income of at least forty thousand dollars but no greater
than three hundred thousand dollars, and (d) [had] HAVE a tax  liability
as  determined  under paragraph three of this subsection of greater than
or equal to zero.
  4. [For each year  this  credit  is  allowed,  on  or  before  October
fifteenth  of such year, the commissioner shall determine the taxpayer's
eligibility for this credit utilizing the information available  to  the
commissioner  on the taxpayer's personal income tax return filed for the
taxable year two years prior to the taxable year in which the credit  is
allowed. For those taxpayers whom the commissioner has determined eligi-
ble  for  this credit, the commissioner shall advance a payment of three
hundred fifty dollars. When a taxpayer files his or her return  for  the
taxable year, such taxpayer shall properly reconcile that payment on his
or her return.
  5.]  If  the  amount of the credit allowed under this subsection shall
exceed the taxpayer's tax for the taxable  year,  the  excess  shall  be
treated  as  an overpayment of tax to be credited or refunded in accord-
ance with the provisions of SECTION six hundred eighty-six of this arti-
cle, provided, however, that no interest shall be paid thereon.
  S 2. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2015.

                                 PART N

S. 6359--B                         193                        A. 8559--B

  Section 1. Paragraph 1 of subsection (a) of section  651  of  the  tax
law,  as  amended by chapter 333 of the laws of 1987, is amended to read
as follows:
  (1)  every  resident  individual (A) required to file a federal income
tax return for the taxable year, or (B) having  federal  adjusted  gross
income  for  the  taxable  year,  increased  by  the modifications under
subsection (b) of section six hundred twelve OF THIS ARTICLE, in  excess
of [four thousand dollars, or in excess of] his OR HER New York standard
deduction,  [if  lower,] or (C) subject to tax under section six hundred
two OF THIS ARTICLE, or (D) having received during the  taxable  year  a
lump  sum  distribution  any  portion  of  which is subject to tax under
section six hundred three OF THIS ARTICLE;
  S 2. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2014.

                                 PART O

  Section 1. Paragraph 1 of subdivision (a) of section  28  of  the  tax
law,  as  amended  by  section  1 of part I of chapter 59 of the laws of
2012, is amended to read as follows:
  (1) A taxpayer which is a qualified commercial production company,  or
which is a sole proprietor of a qualified commercial production company,
and  which  is subject to tax under article nine-A or twenty-two of this
chapter, shall be allowed a credit against such  tax,  pursuant  to  the
provisions referenced in subdivision (c) of this section, to be computed
as  provided in this section. Provided, however, to be eligible for such
credit, at least seventy-five percent of the production costs (excluding
post production costs) paid or incurred directly  and  predominantly  in
the  actual  filming  or  recording  of the qualified commercial must be
costs incurred in New York state. The tax  credit  allowed  pursuant  to
this  section  shall  apply  to  taxable  years beginning before January
first, two thousand [fifteen] SEVENTEEN.
  S 2. Paragraph (a) of subdivision 38 of section 210 of the tax law, as
amended by section 3 of part I of chapter 59 of the  laws  of  2012,  is
amended to read as follows:
  (a)  Allowance  of  credit.  A  taxpayer  that is eligible pursuant to
provisions of section twenty-eight of this chapter shall  be  allowed  a
credit  to  be  computed  as  provided  in  such section against the tax
imposed by this article. The tax credit allowed pursuant to this section
shall apply to taxable years beginning before January first,  two  thou-
sand [fifteen] SEVENTEEN.
  S  3. Paragraph 1 of subsection (jj) of section 606 of the tax law, as
amended by section 4 of part I of chapter 59 of the  laws  of  2012,  is
amended to read as follows:
  (1)  Allowance  of credit. A taxpayer that is eligible pursuant to the
provisions of section twenty-eight of this chapter shall  be  allowed  a
credit  to  be  computed  as  provided  in  such section against the tax
imposed by this article. The tax credit allowed pursuant to this section
shall apply to taxable years beginning before January first,  two  thou-
sand [fifteen] SEVENTEEN.
  S 4. This act shall take effect immediately.

                                 PART P

S. 6359--B                         194                        A. 8559--B

  Section  1.  Subdivision 4 of section 22 of the public housing law, as
amended by section 2 of part J of chapter 59 of the  laws  of  2012,  is
amended to read as follows:
  4.  Statewide  limitation. The aggregate dollar amount of credit which
the commissioner may allocate to  eligible  low-income  buildings  under
this article shall be [forty-eight] FIFTY-SIX million dollars. The limi-
tation  provided  by  this subdivision applies only to allocation of the
aggregate dollar amount of credit by  the  commissioner,  and  does  not
apply to allowance to a taxpayer of the credit with respect to an eligi-
ble low-income building for each year of the credit period.
  S 2. Subdivision 4 of section 22 of the public housing law, as amended
by section one of this act, is amended to read as follows:
  4.  Statewide  limitation. The aggregate dollar amount of credit which
the commissioner may allocate to  eligible  low-income  buildings  under
this  article shall be [fifty-six] SIXTY-FOUR million dollars. The limi-
tation provided by this subdivision applies only to  allocation  of  the
aggregate  dollar  amount  of  credit  by the commissioner, and does not
apply to allowance to a taxpayer of the credit with respect to an eligi-
ble low-income building for each year of the credit period.
  S 3. This act shall take effect immediately; provided,  however,  that
section two of this act shall take effect April 1, 2015.

                                 PART Q

  Section  1.  Subdivision  (b)  of section 27-1318 of the environmental
conservation law, as amended by section 2 of part E of  chapter  577  of
the laws of 2004, is amended to read as follows:
  (b)  Within  [sixty]  ONE  HUNDRED  EIGHTY days of commencement of the
remedial design, the owner of an inactive hazardous waste disposal site,
and/or any person responsible for implementing  a  remedial  program  at
such  site,  where  institutional  or  engineering controls are employed
pursuant to this title, shall execute an environmental easement pursuant
to title thirty-six of article seventy-one of this chapter.
  S 2. Subdivision 2 of section 27-1405 of the  environmental  conserva-
tion  law,  as amended by section 2 of part A of chapter 577 of the laws
of 2004, is amended to read as follows:
  2. "Brownfield site" or "site" shall  mean  any  real  property[,  the
redevelopment  or  reuse  of which may be complicated by the presence or
potential presence of] WHERE a contaminant IS PRESENT AT LEVELS  EXCEED-
ING  THE  SOIL CLEANUP OBJECTIVES OR OTHER HEALTH-BASED OR ENVIRONMENTAL
STANDARDS PROMULGATED BY THE DEPARTMENT THAT ARE APPLICABLE BASED ON THE
REASONABLY ANTICIPATED USE OF THE PROPERTY, AS DETERMINED BY THE DEPART-
MENT. Such term shall not include real property:
  (a) listed in the registry of inactive hazardous waste disposal  sites
under section 27-1305 of this article at the time of application to this
program  and  given a classification as described in subparagraph one or
two of paragraph b of subdivision two of section 27-1305 of  this  arti-
cle;  provided,  however  [except  until July first, two thousand five],
real property  listed  in  the  registry  of  inactive  hazardous  waste
disposal  sites under subparagraph two of paragraph b of subdivision two
of section 27-1305 of this article [prior to the effective date of  this
article],  where  such  real  property  is owned by a volunteer OR UNDER
CONTRACT TO BE TRANSFERRED TO A VOLUNTEER AND  THE  DEPARTMENT  HAS  NOT
IDENTIFIED  ANY RESPONSIBLE PARTIES FOR THAT PROPERTY HAVING THE ABILITY
TO PAY FOR THE INVESTIGATION OR CLEANUP OF THE PROPERTY,  shall  not  be
deemed ineligible to participate and further provided that the status of

S. 6359--B                         195                        A. 8559--B

any  such  site  as listed in the registry shall not be altered prior to
the issuance of a certificate of completion pursuant to section  27-1419
of  this  title.  THE  DEPARTMENT'S ASSESSMENT OF ELIGIBILITY UNDER THIS
PARAGRAPH  SHALL  NOT  CONSTITUTE  A  FINDING  CONCERNING LIABILITY WITH
RESPECT TO THE PROPERTY;
  (b) listed on the national priorities list established under authority
of 42 U.S.C. section 9605;
  (c) subject to an enforcement action under title seven or nine of this
article, [except] OR PERMITTED  AS  a  treatment,  storage  or  disposal
facility  [subject to a permit]; provided, that nothing herein contained
shall be deemed otherwise to exclude from the scope of the term  "brown-
field  site"  a  hazardous waste treatment, storage or disposal facility
having interim  status  according  to  regulations  promulgated  by  the
commissioner;
  (d)  subject to an order for cleanup pursuant to article twelve of the
navigation law or pursuant to title ten of  article  seventeen  of  this
chapter  except  such  property  shall not be deemed ineligible if it is
subject to a stipulation agreement; or
  (e) subject to any  other  on-going  state  or  federal  environmental
enforcement action related to the contamination which is at or emanating
from the site subject to the present application.
  S  3.  Subdivision 1 of section 27-1407 of the environmental conserva-
tion law, as amended by section 3 of part A of chapter 577 of  the  laws
of  2004,  is  amended  and  a  new  subdivision 1-a is added to read as
follows:
  1. A person who seeks to participate in this program  shall  submit  a
request  to  the  department  on a form provided by the department. Such
form shall include information to be determined by the department suffi-
cient to allow the department to determine eligibility and the  current,
intended and reasonably anticipated future land use of the site pursuant
to  section  27-1415  of  this  title.   ANY SUCH PERSON SHALL SUBMIT AN
INVESTIGATION REPORT SUFFICIENT TO DEMONSTRATE THAT  THE  SITE  REQUIRES
REMEDIATION  IN  ORDER  TO MEET THE REMEDIAL REQUIREMENTS OF THIS TITLE;
AND, FOR ANY STRATEGIC SITE LOCATED WITHIN A BROWNFIELD OPPORTUNITY AREA
DESIGNATED BY THE SECRETARY OF STATE PURSUANT TO  SECTION  NINE  HUNDRED
SEVENTY-R  OF THE GENERAL MUNICIPAL LAW, A CERTIFICATION THAT THE DEVEL-
OPMENT OF THE SITE WILL BE IN CONFORMANCE WITH SUCH BROWNFIELD  OPPORTU-
NITY AREA PLAN.
  1-A.  IF  THE  PERSON IS ALSO SEEKING TO RECEIVE THE TANGIBLE PROPERTY
CREDIT COMPONENT OF THE BROWNFIELD REDEVELOPMENT TAX CREDIT PURSUANT  TO
PARAGRAPH  THREE OF SUBDIVISION (A) OF SECTION TWENTY-ONE OF THE TAX LAW
SUCH PERSON SHALL SUBMIT INFORMATION SUFFICIENT TO DEMONSTRATE THAT  (1)
THE SITE HAS: (I) BEEN A VACANT LOT FOR FIFTEEN OR MORE YEARS, OR (II) A
BUILDING  OR  BUILDINGS THAT HAVE BEEN VACANT FOR FIFTEEN OR MORE YEARS,
OR (III) A LOT OR BUILDINGS HAVE BEEN BOTH VACANT AND TAX DELINQUENT FOR
TEN OR MORE YEARS, (2) THE PROJECTED COST OF THE INVESTIGATION AND REME-
DIATION WHICH IS PROTECTIVE FOR THE ANTICIPATED USE OF THE SITE  EXCEEDS
THE  CERTIFIED  APPRAISED VALUE OF THE PROPERTY ABSENT CONTAMINATION, OR
(3) THE PROJECT IS A PRIORITY ECONOMIC DEVELOPMENT PROJECT AS DETERMINED
BY THE DEPARTMENT OF ECONOMIC DEVELOPMENT THAT HAS RECEIVED A RESOLUTION
FROM THE MUNICIPALITY WITHIN WHICH  THE  SITE  IS  LOCATED  STATING  THE
PROPOSED PROJECT IS CONSISTENT WITH THE MUNICIPALITY'S LOCAL REVITALIZA-
TION OR DEVELOPMENT PLAN.  "PRIORITY ECONOMIC DEVELOPMENT PROJECT" MEANS
(A)  A  MANUFACTURER  CREATING  AT LEAST ONE HUNDRED NET NEW JOBS IN THE
STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT  IN  THE  STATE;  (B)  A
BUSINESS  CREATING  AT  LEAST ONE HUNDRED NET NEW JOBS IN AGRICULTURE IN

S. 6359--B                         196                        A. 8559--B

THE STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE STATE; (C)  A
FINANCIAL  SERVICES  FIRM, DISTRIBUTION CENTER, OR BACK OFFICE OPERATION
CREATING AT LEAST THREE HUNDRED NET NEW JOBS IN  THE  STATE  AND  MAKING
SIGNIFICANT  CAPITAL  INVESTMENT IN THE STATE; (D) A SCIENTIFIC RESEARCH
AND DEVELOPMENT FIRM CREATING AT LEAST ONE HUNDRED NET NEW JOBS  IN  THE
STATE,  AND  MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE STATE; (E) THE
CORPORATE HEADQUARTERS OF A FIRM CREATING AT LEAST ONE HUNDRED  NET  NEW
JOBS  IN  THE  STATE,  AND  MAKING SIGNIFICANT CAPITAL INVESTMENT IN THE
STATE; OR (F) A SOFTWARE DEVELOPMENT OR NEW MEDIA FIRM CREATING AT LEAST
FIFTY NET NEW JOBS IN THE STATE, AND MAKING SIGNIFICANT CAPITAL  INVEST-
MENT  IN  THE STATE. OTHER BUSINESSES CREATING THREE HUNDRED OR MORE NET
NEW JOBS IN THE STATE AND MAKING SIGNIFICANT CAPITAL INVESTMENT  IN  THE
STATE  MAY  BE  CONSIDERED  ELIGIBLE  AS  PRIORITY  ECONOMIC DEVELOPMENT
PROJECT BY THE COMMISSIONER OF ECONOMIC DEVELOPMENT AS WELL.  AN  APPLI-
CANT  MAY  REQUEST  AN  ELIGIBILITY  DETERMINATION FOR TANGIBLE PROPERTY
CREDITS FROM THE COMMISSIONER OF ECONOMIC  DEVELOPMENT  FOR  A  PRIORITY
ECONOMIC  DEVELOPMENT PROJECT WHEN IT CAN DEMONSTRATE THAT IT MEETS SUCH
CRITERIA ANY TIME FROM APPLICATION TO THREE YEARS FROM THE DATE THE SITE
RECEIVES A CERTIFICATE OF COMPLETION PURSUANT TO SECTION 27-1419 OF THIS
TITLE.  THE COMMISSIONER OF ECONOMIC DEVELOPMENT SHALL PROMULGATE  REGU-
LATIONS TO DETERMINE WHAT CONSTITUTES SIGNIFICANT CAPITAL INVESTMENT FOR
EACH  OF  THE  PROJECT CATEGORIES INDICATED IN THIS SUBDIVISION AND WHAT
ADDITIONAL CRITERIA A BUSINESS MUST MEET TO BE ELIGIBLE  AS  A  PRIORITY
ECONOMIC DEVELOPMENT PROJECT.
  SITES  ARE  NOT  ELIGIBLE FOR TANGIBLE PROPERTY TAX CREDITS IF (1) THE
CONTAMINATION IS SOLELY EMANATING FROM  PROPERTY  OTHER  THAN  THE  SITE
SUBJECT TO THE PRESENT APPLICATION; OR (2) THE DEPARTMENT HAS DETERMINED
THAT  THE  PROPERTY  HAS  PREVIOUSLY BEEN REMEDIATED SUCH THAT IT MAY BE
DEVELOPED FOR ITS THEN INTENDED USE.
  S 4. Subdivision 3 of section 27-1407 of the  environmental  conserva-
tion  law,  as amended by section 3 of part A of chapter 577 of the laws
of 2004, is amended to read as follows:
  3. The department shall notify the person requesting participation  in
this  program within [ten] THIRTY days after receiving such request that
such request is either complete or incomplete. In the event the applica-
tion is determined to be incomplete  the  department  shall  specify  in
writing  the  missing  necessary  information  required pursuant to this
article to complete the  application  and  shall  have  ten  days  after
receipt  of  the missing information to issue a written determination if
the application is complete.
  S 5. Subdivision 6 of section 27-1407 of the  environmental  conserva-
tion  law,  as  added by section 1 of part A of chapter 1 of the laws of
2003, is amended to read as follows:
  6. The department shall use all best efforts to  expeditiously  notify
the  applicant  within forty-five days after receiving [their request] A
COMPLETE APPLICATION for  participation  that  such  request  is  either
accepted  or  rejected,  AND,  FOR  ANY APPLICANT SEEKING TO RECEIVE THE
TANGIBLE PROPERTY CREDIT COMPONENT OF THE BROWNFIELD  REDEVELOPMENT  TAX
CREDIT  PURSUANT  TO PARAGRAPH THREE OF SUBDIVISION (A) OF SECTION TWEN-
TY-ONE OF THE TAX LAW, WHETHER THE CRITERIA FOR RECEIVING SUCH COMPONENT
AS SET FORTH IN SUBDIVISION ONE OF THIS SECTION HAVE BEEN MET.
  S 6. Subdivision 9 of section 27-1407 of the  environmental  conserva-
tion law is amended by adding a new paragraph (g) to read as follows:
  (G)  THE  PERSON'S  PARTICIPATION  IN  ANY  REMEDIAL PROGRAM UNDER THE
DEPARTMENT'S OVERSIGHT WAS TERMINATED BY THE DEPARTMENT OR  BY  A  COURT
FOR FAILURE TO SUBSTANTIALLY COMPLY WITH AN AGREEMENT OR ORDER.

S. 6359--B                         197                        A. 8559--B

  S  7.  Subdivision 2 of section 27-1409 of the environmental conserva-
tion law, as amended by section 4 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  2.  One  requiring  (A)  the  [applicant] PARTICIPANT to pay for state
costs, INCLUDING THE RECOVERY OF STATE COSTS INCURRED BEFORE THE  EFFEC-
TIVE  DATE  OF SUCH AGREEMENT; provided, however, that SUCH COSTS MAY BE
BASED ON A REASONABLE FLAT-FEE FOR OVERSIGHT, WHICH  SHALL  REFLECT  THE
PROJECTED  FUTURE  STATE  COSTS  INCURRED  IN NEGOTIATING AND OVERSEEING
IMPLEMENTATION OF SUCH AGREEMENT; AND
  (B) with respect to a brownfield site which the department has  deter-
mined  constitutes a significant threat to the public health or environ-
ment the department may include a provision requiring the  applicant  to
provide  a  technical assistance grant, as described in subdivision four
of section 27-1417 of this title  and  under  the  conditions  described
therein,  to an eligible party in accordance with procedures established
under such program, with the cost of such a grant incurred by  a  volun-
teer serving as an offset against such state costs[. Where the applicant
is  a  participant,  the department shall include provisions relating to
recovery of state costs incurred  before  the  effective  date  of  such
agreement];
  S  8. Section 27-1411 of the environmental conservation law is amended
by adding two new subdivisions 6 and 7 to read as follows:
  6. AN APPLICANT SHALL COMMENCE IMPLEMENTATION OF ANY WORK PLAN  WITHIN
NINETY  DAYS  OF APPROVAL OF THE PLAN BY THE DEPARTMENT AND COMPLETE THE
ACTIVITIES PROVIDED FOR IN SUCH WORK PLAN IN ACCORDANCE WITH THE  SCHED-
ULE  SET  FORTH  THEREIN,  OR AS OTHERWISE APPROVED BY THE DEPARTMENT IN
WRITING.
  7. AN APPLICANT SHALL INCLUDE  WITH  EVERY  REPORT  SUBMITTED  TO  THE
DEPARTMENT  A  SCHEDULE  FOR  THE SUBMISSION OF ANY SUBSEQUENT WORK PLAN
REQUIRED TO MEET THE REQUIREMENTS OF THIS TITLE.
  S 9. Subdivision 2 of section 27-1413 of the  environmental  conserva-
tion  law,  as amended by section 6 of part A of chapter 577 of the laws
of 2004, is amended to read as follows:
  2. For all [other] sites SEEKING  TO  RECEIVE  THE  TANGIBLE  PROPERTY
CREDIT  COMPONENT  PURSUANT  TO  PARAGRAPH  THREE  OF SUBDIVISION (A) OF
SECTION TWENTY-ONE OF THE TAX LAW, the applicant shall develop and eval-
uate at least two remedial alternatives, one of which  would  achieve  a
Track 1 cleanup. The department shall have the discretion to require the
evaluation of additional alternatives at a site that has been determined
to  pose  a  significant threat. The applicant shall submit the alterna-
tives analysis [as a part of the remedial work plan] to  the  department
for review, approval, modification or rejection.
  S  10. Subdivision 4 of section 27-1415 of the environmental conserva-
tion law, as amended by section 7 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  4.  Tracks. The commissioner, in consultation with the commissioner of
health, shall propose within twelve months and thereafter timely promul-
gate regulations which create a multi-track approach for the remediation
of contamination, and, commencing on the effective date  of  such  regu-
lations,  utilize  such  multi-track  approach.  Such  regulations shall
provide that groundwater  use  in  Tracks  2,  3  or  4  can  be  either
restricted or unrestricted. The tracks shall be as follows:
  Track  1: The remedial program shall achieve a cleanup level that will
allow the site to be used for any purpose without restriction and  with-
out reliance on the long-term employment of institutional or engineering
controls,  and shall achieve contaminant-specific remedial action objec-

S. 6359--B                         198                        A. 8559--B

tives for soil which conform with those contained in the  generic  table
of  contaminant-specific remedial action objectives for unrestricted use
developed pursuant to subdivision six of this section.  Provided, howev-
er, that volunteers whose proposed remedial program [for the remediation
of  groundwater] (1)(I) may require the long-term employment of institu-
tional or engineering controls FOR THE REMEDIATION OF GROUNDWATER  after
the bulk reduction of groundwater contamination to asymptotic levels has
been  achieved  OR  (II)  MAY  REQUIRE  AN  INSTITUTIONAL OR ENGINEERING
CONTROL FOR MORE THAN FIVE YEARS SOLELY TO ADDRESS SOIL VAPOR  INTRUSION
but  (2)  whose  program  would  otherwise conform with the requirements
necessary to qualify for Track 1, shall qualify for Track 1.
  Track 2: The remedial program may include restrictions on the  use  of
the  site  or reliance on the long-term employment of engineering and/or
institutional controls, but shall achieve contaminant-specific  remedial
action  objectives for soil which conform with those contained in one of
the generic tables developed pursuant to subdivision six of this section
without the use of institutional or engineering controls to  reach  such
objectives.
  Track 3: The remedial program shall achieve contaminant-specific reme-
dial  action objectives for soil which conform with the criteria used to
develop the generic tables for such  objectives  developed  pursuant  to
subdivision six of this section but may use site specific data to deter-
mine such objectives.
  Track  4: The remedial program shall achieve a cleanup level that will
be protective for the site's current, intended or reasonably anticipated
residential, commercial, or industrial use with  restrictions  and  with
reliance  on  the  long-term  employment of institutional or engineering
controls  to  achieve  such  level.  The  regulations  shall  include  a
provision  requiring  that  a cleanup level which poses a risk in excee-
dance of an excess cancer risk of one in one  million  for  carcinogenic
end  points  and  a  hazard index of one for non-cancer end points for a
specific contaminant at a specific site may be approved by  the  depart-
ment  without requiring the use of institutional or engineering controls
to eliminate exposure only upon a site specific finding by  the  commis-
sioner, in consultation with the commissioner of health, that such level
shall be protective of public health and environment. Such finding shall
be  included  in  the  draft  remedial  work plan for the site and fully
described in the notice and fact sheet provided for such work plan.
  S 11. Paragraphs (b), (c) and (d) of subdivision 7 of section  27-1415
of the environmental conservation law are relettered paragraphs (c), (d)
and (e) and a new paragraph (b) is added to read as follows:
  (B)  WITHIN  ONE  HUNDRED  EIGHTY DAYS OF COMMENCEMENT OF THE REMEDIAL
DESIGN OR AT LEAST THREE MONTHS PRIOR TO THE  DATE  OF  THE  ANTICIPATED
ISSUANCE  OF  THE  CERTIFICATE  OF COMPLETION, THE OWNER OF A BROWNFIELD
SITE, AND/OR ANY PERSON RESPONSIBLE FOR IMPLEMENTING A REMEDIAL  PROGRAM
AT  SUCH  SITE, WHERE INSTITUTIONAL OR ENGINEERING CONTROLS ARE EMPLOYED
PURSUANT TO THIS TITLE, SHALL EXECUTE AN ENVIRONMENTAL EASEMENT PURSUANT
TO TITLE THIRTY-SIX OF ARTICLE SEVENTY-ONE OF THIS CHAPTER.
  S 12. Paragraph (h) of subdivision 3 of section 27-1417 of  the  envi-
ronmental  conservation  law  is  REPEALED,  paragraph (i) is relettered
paragraph (h) and paragraph (f), as amended by section 8 of  part  A  of
chapter 577 of the laws of 2004, is amended to read as follows:
  (f)  Before  the  department  [finalizes] SELECTS a proposed [remedial
work plan] REMEDY FROM THE ALTERNATIVES SET FORTH  IN  THE  ALTERNATIVES
ANALYSIS  AS  PRESCRIBED  BY  SECTION  27-1413  OF THIS TITLE or makes a
determination that site conditions meet the requirements of  this  title

S. 6359--B                         199                        A. 8559--B

without  the  necessity  for  remediation pursuant to section 27-1411 of
this title, the department, in consultation  with  the  applicant,  must
notify  individuals  on  the  brownfield  site contact list. Such notice
shall  include  a  fact  sheet  describing  such  plan and provide for a
forty-five day public comment period.  The  commissioner  shall  hold  a
public  meeting  if  requested by the affected community and the commis-
sioner has found that the site constitutes a significant threat  to  the
public  health  or  the environment. Further, the affected community may
request a public meeting at sites that do not constitute  a  significant
threat.  (1)  To the extent that the department has determined that site
conditions do not pose a  significant  threat  and  the  site  is  being
addressed by a volunteer, the notice shall state that the department has
determined  that  no  remediation is required for the off-site areas and
that the department's determination of a significant threat  is  subject
to  this  forty-five day comment period. (2) If the [remedial work plan]
REMEDY includes a Track 2, Track 3 or Track 4 remedy at  a  non-signifi-
cant  threat  site, such comment period shall apply both to the approval
of the alternatives analysis by the department, IF APPLICABLE,  and  the
proposed remedy selected by the applicant.
  S  13.  Paragraph  (a)  of  subdivision 2 and subdivision 3 of section
27-1419 of the environmental conservation law, paragraph (a) of subdivi-
sion 2 as added by section 1 of part A of chapter 1 of the laws of 2003,
subdivision 3 as amended by chapter 390 of the laws of 2008, are amended
to read as follows:
  (a) a description of the remediation activities completed pursuant  to
the  remedial work plan AND ANY INTERIM REMEDIAL MEASURES for the brown-
field site AND THE COSTS PAID FOR THOSE ACTIVITIES;
  3. Upon receipt of the final engineering report, the department  shall
review  such  report  and  the data submitted pursuant to the brownfield
site cleanup agreement as well as any other relevant information regard-
ing the brownfield site. Upon satisfaction of the commissioner that  the
remediation  requirements  set  forth in this title have been or will be
achieved in accordance with the timeframes, if any, established  in  the
remedial  work  plan, the commissioner shall issue a written certificate
of completion[, such]. THE certificate shall include such information as
determined by the department of taxation and finance, including but  not
limited  to  the  brownfield site boundaries included in the final engi-
neering report, the  date  of  the  brownfield  site  CLEANUP  agreement
[pursuant to section 27-1409 of this title], IDENTIFICATION OF THE ENTI-
TY  OR  ENTITIES  ELIGIBLE  FOR CREDITS PURSUANT TO SECTIONS TWENTY-ONE,
TWENTY-TWO OR TWENTY-THREE OF THE TAX LAW, and the  applicable  percent-
ages  available AS OF THE DATE OF THE CERTIFICATE OF COMPLETION for that
site for purposes of section twenty-one  of  the  tax  law[,  with  such
percentages  to  be determined as follows with respect to such qualified
site]. FOR THOSE SITES FOR WHICH THE DEPARTMENT HAS ISSUED A  NOTICE  TO
THE  APPLICANT  ON  OR  AFTER JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS
REQUEST FOR PARTICIPATION HAS BEEN ACCEPTED  UNDER  SUBDIVISION  SIX  OF
SECTION 27-1407 OF THIS TITLE, THE TANGIBLE PROPERTY CREDIT COMPONENT OF
THE  BROWNFIELD  REDEVELOPMENT TAX CREDIT PURSUANT TO PARAGRAPH THREE OF
SUBDIVISION (A) OF SECTION TWENTY-ONE OF  THE  TAX  LAW  SHALL  ONLY  BE
AVAILABLE  TO  THE  TAXPAYER IF THE NOTICE INCLUDES A DETERMINATION THAT
THE CRITERIA FOR RECEIVING SUCH TAX COMPONENT HAVE BEEN MET.  FOR  THOSE
SITES for which the department has issued a notice to the taxpayer after
June twenty-third, two thousand eight that its request for participation
has  been  accepted  under  subdivision  six  of section 27-1407 of this
title[:

S. 6359--B                         200                        A. 8559--B

  For the purposes of calculating], THE APPLICABLE  PERCENTAGE  FOR  the
site  preparation credit component pursuant to paragraph two of subdivi-
sion (a) of section twenty-one of the tax law, and the on-site groundwa-
ter remediation credit component pursuant to paragraph four of  subdivi-
sion  (a)  of  section  twenty-one  of  the  tax  law[,  the  applicable
percentage] shall be based on the level of cleanup achieved pursuant  to
subdivision  four  of  section  27-1415  of  this title and the level of
cleanup of soils to contaminant-specific soil cleanup objectives promul-
gated pursuant to subdivision six of section 27-1415 of this  title,  up
to a maximum of fifty percent, as follows:
  (a)  soil  cleanup for unrestricted use, the protection of groundwater
or the protection of ecological  resources,  the  applicable  percentage
shall be fifty percent;
  (b)  soil cleanup for residential use, the applicable percentage shall
be forty percent,  except  for  Track  4  which  shall  be  twenty-eight
percent;
  (c)  soil  cleanup for commercial use, the applicable percentage shall
be thirty-three percent, except for Track 4 which shall  be  twenty-five
percent;
  (d)  soil  cleanup for industrial use, the applicable percentage shall
be twenty-seven percent, except for Track 4 which  shall  be  twenty-two
percent.
  S  14. Subdivision 5 of section 27-1419 of the environmental conserva-
tion law, as amended by section 9 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  5.  A certificate of completion issued pursuant to this section may be
transferred [to the applicant's successors or assigns upon  transfer  or
sale  of  the  brownfield site] BY THE APPLICANT OR SUBSEQUENT HOLDER OF
THE CERTIFICATE OF COMPLETION TO A SUCCESSOR TO A REAL  PROPERTY  INTER-
EST,  INCLUDING  LEGAL  TITLE, EQUITABLE TITLE OR LEASEHOLD, IN ALL OR A
PART OF THE BROWNFIELD SITE FOR WHICH THE CERTIFICATE OF COMPLETION  WAS
ISSUED;  PROVIDED,  HOWEVER, ANY TRANSFER OF A CERTIFICATE OF COMPLETION
TO A RESPONSIBLE PARTY SHALL NOT PROVIDE RELIEF FROM LIABILITY. Further,
a certificate of completion may be modified or revoked  by  the  commis-
sioner upon a finding that:
  (a)  Either  the  applicant, or the applicant's successors or assigns,
has failed to comply with the terms and  conditions  of  the  brownfield
site cleanup agreement;
  (b)  The applicant made a misrepresentation of a material fact tending
to demonstrate that (I) it was qualified as a volunteer OR (II) MET  THE
CRITERIA SET FORTH IN SUBDIVISION ONE-A OF SECTION 27-1407 OF THIS TITLE
FOR  THE  PURPOSE OF RECEIVING THE TANGIBLE PROPERTY CREDIT COMPONENT OF
THE BROWNFIELD REDEVELOPMENT TAX CREDIT PURSUANT TO PARAGRAPH  THREE  OF
SUBDIVISION (A) OF SECTION TWENTY-ONE OF THE TAX LAW;
  (c)  Either  the  applicant, or the applicant's successors or assigns,
made a misrepresentation of a material fact tending to demonstrate  that
the  cleanup  levels identified in the brownfield site cleanup agreement
were reached; [or]
  (d) THE ENVIRONMENTAL EASEMENT CREATED AND RECORDED PURSUANT TO  TITLE
THIRTY-SIX  OF ARTICLE SEVENTY-ONE OF THIS CHAPTER NO LONGER PROVIDES AN
EFFECTIVE OR ENFORCEABLE MEANS OF ENSURING THE  PERFORMANCE  OF  MAINTE-
NANCE,  MONITORING  OR  OPERATING  REQUIREMENTS,  OR THE RESTRICTIONS ON
FUTURE USES, INCLUDING  RESTRICTIONS  ON  DRILLING  FOR  OR  WITHDRAWING
GROUNDWATER; OR
  (E) There is good cause for such modification or revocation.

S. 6359--B                         201                        A. 8559--B

  S  15.  Section  27-1423  of  the  environmental  conservation  law is
REPEALED.
  S  16.  Section  27-1429  of  the  environmental  conservation law, as
amended by section 13 of part A of chapter 577 of the laws of  2004,  is
amended to read as follows:
S 27-1429. Permit waivers.
  The  department[,  by  and through the commissioner,] shall be EXEMPT,
AND SHALL BE authorized to exempt  a  person  from  the  requirement  to
obtain any state or local permit or other authorization for any activity
needed  to  implement a program for the investigation and/or remediation
of contamination AT OR EMANATING FROM A BROWNFIELD SITE;  provided  that
the  activity  is  conducted in a manner which satisfies all substantive
technical requirements applicable to like activity conducted pursuant to
a permit.
  S 17. Subdivision 1 of section 27-1431 of the environmental  conserva-
tion law is amended by adding a new paragraph c to read as follows:
  C. TO INSPECT FOR COMPLIANCE WITH THE SITE MANAGEMENT PLAN APPROVED BY
THE  DEPARTMENT,  INCLUDING (I) INSPECTION OF THE PERFORMANCE OF MAINTE-
NANCE, MONITORING AND OPERATIONAL ACTIVITIES REQUIRED  AS  PART  OF  THE
REMEDIAL PROGRAM FOR THE SITE, (II) INSPECTION FOR THE PURPOSE OF ASCER-
TAINING CURRENT USES OF THE SITE, AND (III) TAKING SAMPLES IN ACCORDANCE
WITH PARAGRAPH A OF THIS SUBDIVISION.
  S  17-a.  Section  27-1435  of  the  environmental conservation law is
REPEALED.
  S 18. The environmental conservation law is amended by  adding  a  new
section 27-1437 to read as follows:
S 27-1437. BCP-EZ PROGRAM.
  1. NOTWITHSTANDING THE PROVISIONS OF THIS TITLE OR ANY OTHER PROVISION
OF  LAW,  THE DEPARTMENT IS AUTHORIZED TO EXEMPT A VOLUNTEER FROM PROCE-
DURAL REQUIREMENTS OF THIS TITLE THAT THE DEPARTMENT MAY  SPECIFY  WHICH
ARE  OTHERWISE  APPLICABLE  TO IMPLEMENTATION OF AN INVESTIGATION AND/OR
REMEDIATION OF CONTAMINATION, PROVIDED THAT:
  (A) THE DEPARTMENT HAS DETERMINED THAT THE BROWNFIELD  SITE  DOES  NOT
POSE A SIGNIFICANT THREAT PURSUANT TO SECTION 27-1411 OF THIS TITLE;
  (B)  THE  APPLICANT  HAS  WAIVED  IN WRITING ANY CLAIM FOR TAX CREDITS
PURSUANT TO SECTION TWENTY-ONE OF THE TAX LAW ON A  FORM  PRESCRIBED  BY
THE DEPARTMENT; AND
  (C) THE ACTIVITY IS CONDUCTED IN A MANNER WHICH SATISFIES ALL SUBSTAN-
TIVE TECHNICAL REQUIREMENTS APPLICABLE TO LIKE ACTIVITY CONDUCTED PURSU-
ANT TO THIS TITLE.
  2.  WHERE  A  WAIVER  HAS  BEEN  GRANTED, THE APPROVED WORK PLAN FOR A
BROWNFIELD SITE SHALL INCLUDE THE PROCEDURAL REQUIREMENTS THE DEPARTMENT
DETERMINES APPROPRIATE BASED ON SITE SPECIFIC CONSIDERATIONS AND CONSID-
ERATION OF SECTION 27-1417 OF THIS TITLE.
  3. FOR ANY SITE ACCEPTED INTO THE  BCP-EZ  PROGRAM  PURSUANT  TO  THIS
SECTION  WHICH  IS  PURSUING  A TRACK 4 REMEDIATION, IF A CONTAMINANT IS
IDENTIFIED IN SOIL IN EXCESS OF THE REMEDIAL ACTION OBJECTIVES CONTAINED
IN AN APPLICABLE GENERIC TABLE DEVELOPED PURSUANT TO SUBDIVISION SIX  OF
SECTION  27-1415 OF THIS TITLE, THE APPLICANT MAY USE SITE-SPECIFIC DATA
TO DEMONSTRATE TO THE DEPARTMENT THAT THE CONCENTRATION OF  THE  CONTAM-
INANT  IN  THE SOILS REFLECTS BACKGROUND CONDITIONS AND, IN THAT CASE, A
CONTAMINANT-SPECIFIC ACTION OBJECTIVE FOR SUCH CONTAMINANT EQUAL TO SUCH
BACKGROUND CONCENTRATION MAY BE ESTABLISHED.
  S 19. The opening paragraph of subdivision 10 of  section  71-3605  of
the  environmental  conservation law, as added by section 2 of part A of
chapter 1 of the laws of 2003, is amended to read as follows:

S. 6359--B                         202                        A. 8559--B

  An environmental easement may be enforced in  law  or  equity  by  its
grantor,  by  the  state, or any affected local government as defined in
section 71-3603 of this title. Such easement is enforceable against  the
owner  of  the  burdened property, any lessees, and any person using the
land.  Enforcement  shall  not  be  defeated  because  of any subsequent
adverse possession, laches, estoppel, REVERSION or  waiver.  No  general
law  of the state which operates to defeat the enforcement of any inter-
est in real property shall operate to  defeat  the  enforcement  of  any
environmental  easement  unless  such  general  law expressly states the
intent to defeat the enforcement of such easement or  provides  for  the
exercise  of  the  power  of  eminent domain. It is not a defense in any
action to enforce an environmental easement that:
  S 20. Paragraph 2 of subdivision (a) of section 21 of the tax law,  as
amended  by  section  1 of part H of chapter 577 of the laws of 2004, is
amended to read as follows:
  (2) Site preparation credit component.  The  site  preparation  credit
component shall be equal to the applicable percentage of the site prepa-
ration costs paid [or incurred] by the taxpayer with respect to a quali-
fied  site.  The credit component amount so determined with respect to a
site's qualification for a certificate of completion  shall  be  allowed
for  the  taxable year in which the effective date of the certificate of
completion occurs. The credit component  amount  determined  other  than
with respect to such qualification shall be allowed for the taxable year
in  which  the improvement to which the applicable costs apply is placed
in service for up to five taxable  years  after  the  issuance  of  such
certificate of completion.
  S  21. Paragraph 3 of subdivision (a) of section 21 of the tax law, as
amended by chapter 390 of the laws  of  2008,  is  amended  to  read  as
follows:
  (3)  Tangible  property credit component. The tangible property credit
component shall be equal to the applicable percentage  of  the  cost  or
other basis for federal income tax purposes of tangible personal proper-
ty  and  other  tangible  property,  including  buildings and structural
components of buildings, which constitute qualified  tangible  property;
provided[, however,] that in determining the cost or other basis of such
property, the taxpayer shall exclude the acquisition cost of any item of
property with respect to which a credit under this section was allowable
to  another  taxpayer.  WITH RESPECT TO ANY QUALIFIED SITE FOR WHICH THE
DEPARTMENT OF ENVIRONMENTAL CONSERVATION HAS  ISSUED  A  NOTICE  TO  THE
TAXPAYER  ON OR AFTER JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS REQUEST
FOR PARTICIPATION HAS BEEN ACCEPTED UNDER  SUBDIVISION  SIX  OF  SECTION
27-1407  OF  THE  ENVIRONMENTAL  CONSERVATION LAW, THE TAXPAYER MAY ALSO
INCLUDE THE COSTS INCURRED IN CONNECTION WITH PREPARING A SITE  FOR  THE
ERECTION OF A BUILDING OR A COMPONENT OF A BUILDING, SUCH AS THE COST OF
EXCAVATION,  DEMOLITION, TEMPORARY ELECTRIC WIRING, SCAFFOLDING, FENCING
AND SECURITY FACILITIES, TO THE EXTENT THAT SUCH COSTS ARE NOT USED AS A
BASIS FOR COMPUTING THE SITE PREPARATION  COMPONENT  OF  THE  BROWNFIELD
REDEVELOPMENT  TAX CREDIT PURSUANT TO PARAGRAPH TWO OF THIS SUBDIVISION;
AND PROVIDED FURTHER THAT, IN THE CASE OF QUALIFIED SITES  ELIGIBLE  FOR
THE  FIVE  PERCENT AFFORDABLE HOUSING TANGIBLE PROPERTY CREDIT COMPONENT
PURSUANT TO CLAUSE (III) OF SUBPARAGRAPH (B) OF PARAGRAPH FIVE  OF  THIS
SUBDIVISION, THAT PORTION OF THE TANGIBLE PROPERTY CREDIT COMPONENT WILL
BE  DETERMINED BY MULTIPLYING THE TOTAL COSTS QUALIFIED FOR THE TANGIBLE
PROPERTY CREDIT COMPONENT BY A FRACTION, THE NUMERATOR OF WHICH SHALL BE
THE SQUARE FOOTAGE OF SPACE OF THE AFFORDABLE HOUSING UNITS DEDICATED TO
RESIDENTIAL OCCUPANCY AND THE DENOMINATOR OF WHICH SHALL  BE  THE  TOTAL

S. 6359--B                         203                        A. 8559--B

SQUARE  FOOTAGE  OF  THE SITE. The credit component amount so determined
shall be allowed for the taxable year in which such  qualified  tangible
property  is FIRST placed in service on a qualified site with respect to
which  a  certificate  of completion has been issued to the taxpayer, OR
FOR THE TAXABLE YEAR IN WHICH THE CERTIFICATE OF COMPLETION IS ISSUED IF
THE QUALIFIED TANGIBLE PROPERTY IS PLACED IN SERVICE PRIOR TO THE  ISSU-
ANCE  OF THE CERTIFICATE OF COMPLETION, for up to [ten] FIVE CONSECUTIVE
taxable years [after] FROM THE START OF THE REDEVELOPMENT  OF  THE  SITE
PROVIDED  THAT  ALL CREDITS MUST BE CLAIMED WITHIN TEN YEARS OF the date
of the issuance of such certificate of completion. The tangible property
credit component shall be allowed with respect to property leased  to  a
second party only if such second party is either (i) not a party respon-
sible  for the disposal of hazardous waste or the discharge of petroleum
at the site according to applicable principles of  statutory  or  common
law liability, or (ii) a party responsible according to applicable prin-
ciples  of  statutory  or common law liability if such party's liability
arises solely from operation of the site subsequent to the  disposal  of
hazardous  waste  or  the discharge of petroleum, and is so certified by
the commissioner of environmental conservation at  the  request  of  the
taxpayer,  pursuant to section 27-1419 of the environmental conservation
law. Notwithstanding any other provision of law to the contrary, in  the
case  of  allowance  of  credit under this section to such a lessor, the
commissioner shall have the authority  to  reveal  to  such  lessor  any
information,  with  respect to the issue of qualified use of property by
the lessee, which is the basis for the denial in whole or  in  part,  or
for the recapture, of the credit claimed by such lessor. For purposes of
the  tangible  property  credit component allowed under this section the
taxpayer to whom the certificate of completion is  issued,  as  provided
for  under  subdivision  five  of  section  27-1419 of the environmental
conservation law, may transfer the benefits and burdens of  the  certif-
icate  of  completion,  which  run  with the land and to the applicant's
successors or assigns upon transfer or sale of all or any portion of  an
interest  or estate in the qualified site. However, the taxpayer to whom
certificate's benefits and burdens are transferred shall not include the
cost of acquiring all or any portion of an interest  or  estate  in  the
site  and  the  amounts  included in the cost or other basis for federal
income tax purposes of qualified tangible property  already  claimed  by
the  previous  taxpayer pursuant to this section.  THE TANGIBLE PROPERTY
CREDIT COMPONENT SHALL NOT INCLUDE COSTS PAID  TO  A  RELATED  PARTY  OR
PARTIES, AS SUCH TERM "RELATED PERSON" IS DEFINED IN SUBPARAGRAPH (C) OF
PARAGRAPH THREE OF SUBDIVISION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF
THE  INTERNAL  REVENUE  CODE.  ELIGIBLE  COSTS FOR THE TANGIBLE PROPERTY
CREDIT  COMPONENT  ARE  LIMITED  TO   COSTS   ASSOCIATED   WITH   ACTUAL
CONSTRUCTION  OF  TANGIBLE PROPERTY INCORPORATED AS PART OF THE PHYSICAL
STRUCTURE, AND COSTS ASSOCIATED WITH THE PREPARATION  OF  THE  SITE  FOR
ERECTION OF A BUILDING OR A COMPONENT OF A BUILDING THAT ARE NOT PROPER-
LY INCLUDED IN THE SITE PREPARATION COMPONENT.
  S  22. Subparagraph (A) of paragraph 3-a of subdivision (a) of section
21 of the tax law, as added by chapter 390  of  the  laws  of  2008,  is
amended to read as follows:
  (A)  Notwithstanding  any  other provision of law to the contrary, the
tangible property credit component  available  for  any  qualified  site
pursuant  to  paragraph three of this subdivision shall not exceed thir-
ty-five million dollars or three times the SUM OF THE costs included  in
the calculation of the site preparation credit component and the on-site
groundwater  remediation credit component under paragraphs two and four,

S. 6359--B                         204                        A. 8559--B

respectively, of this subdivision, AND THE COSTS THAT  WOULD  HAVE  BEEN
INCLUDED  IN  THE  CALCULATION  OF  SUCH COMPONENTS IF NOT TREATED AS AN
EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINETY-EIGHT OF THE
INTERNAL  REVENUE  CODE, whichever is less; provided, however, that: (1)
in the case of a qualified site to be used primarily  for  manufacturing
activities,  the  tangible  property  credit component available for any
qualified site pursuant to paragraph three of this subdivision shall not
exceed forty-five million dollars or six times  the  SUM  OF  THE  costs
included in the calculation of the site preparation credit component and
the  on-site  groundwater  remediation credit component under paragraphs
two and four, respectively, of this  subdivision,  AND  THE  COSTS  THAT
WOULD  HAVE  BEEN  INCLUDED IN THE CALCULATION OF SUCH COMPONENTS IF NOT
TREATED AS AN EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINE-
TY-EIGHT OF THE INTERNAL REVENUE CODE, whichever is less;  and  (2)  the
provisions  of  this paragraph shall not apply to any qualified site for
which the department of environmental conservation has issued  a  notice
to  the  taxpayer  before June twenty-third, two thousand eight that its
request for participation has been accepted  under  subdivision  six  of
section 27-1407 of the environmental conservation law.
  S  23. Subparagraph (D) of paragraph 3-a of subdivision (a) of section
21 of the tax law, as added by chapter 390  of  the  laws  of  2008,  is
amended to read as follows:
  (D)  [If]  WITH RESPECT TO ANY QUALIFIED SITE FOR WHICH THE DEPARTMENT
OF ENVIRONMENTAL CONSERVATION HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE
JULY FIRST, TWO THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS
BEEN ACCEPTED UNDER SUBDIVISION SIX OF SECTION 27-1407 OF  THE  ENVIRON-
MENTAL CONSERVATION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN ISSUED OR
RECEIVED A CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION
27-1419  OF  THE  ENVIRONMENTAL  CONSERVATION LAW BEFORE JULY FIRST, TWO
THOUSAND FOURTEEN, IF the qualifying site is  located  in  a  brownfield
opportunity  area  and  is  developed  in conformance with the goals and
priorities established for that applicable brownfield  opportunity  area
as  designated pursuant to section nine hundred seventy-r of the general
municipal law, the applicable percentage of the tangible property credit
component will be increased by two percent.
  S 24. Paragraph 4 of subdivision (a) of section 21 of the tax law,  as
amended  by  section  1 of part H of chapter 577 of the laws of 2004, is
amended to read as follows:
  (4) On-site groundwater  remediation  credit  component.  The  on-site
groundwater  remediation credit component shall be equal to the applica-
ble percentage of the on-site groundwater  remediation  costs  paid  [or
incurred]  by  the  taxpayer  with  respect  to a qualified site (to the
extent that such groundwater remediation costs are not included  in  the
determination  of the site preparation credit or the cost or other basis
included in the determination of  the  tangible  property  credit).  The
credit  component  so  determined  for  costs  [incurred  and] paid with
respect to and prior to the issuance  of  a  certificate  of  completion
shall be allowed for the taxable year in which the effective date of the
issuance  of  a  certificate  of completion occurs. The credit component
amount determined in taxable years after the effective date of the issu-
ance of a certificate of completion shall be allowed in the taxable year
such qualified costs are [incurred and] paid  for  up  to  five  taxable
years after the issuance of such certificate of completion.
  S  25. Paragraph 5 of subdivision (a) of section 21 of the tax law, as
amended by section 1 of part H of chapter 577 of the laws  of  2004,  is
amended to read as follows:

S. 6359--B                         205                        A. 8559--B

  (5)  Applicable  percentage.  (A)  For  purposes of COMPUTING THE SITE
PREPARATION AND ON-SITE GROUNDWATER REMEDIATION CREDIT COMPONENTS PURSU-
ANT TO paragraphs two[,  three]  and  four  of  this  subdivision,  WITH
RESPECT  TO  SUCH  QUALIFIED  SITES FOR WHICH THE DEPARTMENT OF ENVIRON-
MENTAL  CONSERVATION  HAS  ISSUED  A  NOTICE TO THE TAXPAYER BEFORE JUNE
TWENTY-THIRD, TWO THOUSAND EIGHT THAT ITS REQUEST FOR PARTICIPATION  HAS
BEEN  ACCEPTED  UNDER SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRON-
MENTAL CONSERVATION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN ISSUED OR
RECEIVED A CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION
27-1419 OF THE ENVIRONMENTAL CONSERVATION LAW BEFORE JUNE  TWENTY-THIRD,
TWO THOUSAND EIGHT, AND, FOR PURPOSES OF COMPUTING THE TANGIBLE PROPERTY
COMPONENT  PURSUANT  TO PARAGRAPH THREE OF THIS SUBDIVISION WITH RESPECT
TO SUCH QUALIFIED  SITES  FOR  WHICH  THE  DEPARTMENT  OF  ENVIRONMENTAL
CONSERVATION  HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE JULY FIRST, TWO
THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS  BEEN  ACCEPTED
UNDER  SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRONMENTAL CONSERVA-
TION LAW, OR WHERE THE TAXPAYER HAS EITHER BEEN  ISSUED  OR  RECEIVED  A
CERTIFICATE OF COMPLETION FROM ANOTHER TAXPAYER UNDER SECTION 27-1419 OF
THE ENVIRONMENTAL CONSERVATION LAW BEFORE JULY FIRST, TWO THOUSAND FOUR-
TEEN,  the  applicable percentage shall be twelve percent in the case of
credits claimed under article nine, nine-A, thirty-two  or  thirty-three
of  this  chapter,  and ten percent in the case of credits claimed under
article twenty-two of this chapter, except that  where  at  least  fifty
percent  of  the  area  of  the  qualified  site  relating to the credit
provided for in this section is located  in  an  environmental  zone  as
defined  in paragraph six of subdivision (b) of this section, the appli-
cable percentage shall be increased  by  an  additional  eight  percent.
Provided,  however,  as afforded in section 27-1419 of the environmental
conservation law, if the certificate of completion  indicates  that  the
qualified  site has been remediated to Track 1 as that term is described
in subdivision four of section 27-1415 of the environmental conservation
law, the applicable percentage set forth in the first sentence  of  this
paragraph shall be increased by an additional two percent.
  (B)  WITH  RESPECT  TO SUCH QUALIFIED SITE FOR WHICH THE DEPARTMENT OF
ENVIRONMENTAL CONSERVATION HAS ISSUED A NOTICE TO  THE  TAXPAYER  ON  OR
AFTER  JULY  FIRST,  TWO  THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTIC-
IPATION HAS BEEN ACCEPTED UNDER SUBDIVISION SIX OF  SECTION  27-1407  OF
THE  ENVIRONMENTAL  CONSERVATION  LAW, THE APPLICABLE PERCENTAGE FOR THE
TANGIBLE PROPERTY CREDIT COMPONENT OF THE BROWNFIELD  REDEVELOPMENT  TAX
CREDIT  PURSUANT  TO  PARAGRAPH THREE OF SUBDIVISION (A) OF THIS SECTION
SHALL BE THE SUM OF TEN PERCENT AND THE  FOLLOWING  ADDITIONAL  PERCENT-
AGES, PROVIDED THAT THE TOTAL PERCENTAGE OF THE TANGIBLE PROPERTY CREDIT
COMPONENT  SHALL NOT EXCEED TWENTY-FOUR PERCENT AND IS OTHERWISE SUBJECT
TO THE LIMITATIONS SET FORTH IN PARAGRAPHS THREE AND THREE-A OF SUBDIVI-
SION (A) OF THIS SECTION:
  (I) TEN PERCENT FOR A SITE WITHIN AN ENVIRONMENTAL ZONE;
  (II) FIVE PERCENT FOR A STRATEGIC SITE  LOCATED  WITHIN  A  DESIGNATED
BROWNFIELD  OPPORTUNITY  AREA IF THE PROPOSED DEVELOPMENT OF THE SITE IS
CERTIFIED TO BE IN CONFORMANCE WITH  SUCH  BROWNFIELD  OPPORTUNITY  AREA
PLAN PURSUANT TO SECTION NINE HUNDRED SEVENTY-R OF THE GENERAL MUNICIPAL
LAW; AND
  (III)  FIVE PERCENT FOR SITES DEVELOPED AS AFFORDABLE HOUSING, DEFINED
AS HAVING AT LEAST TWENTY PERCENT OF ITS RESIDENTIAL UNITS SUBJECT TO AN
AGREEMENT WITH A MUNICIPALITY, THE STATE, THE FEDERAL GOVERNMENT, OR  AN
INSTRUMENTALITY  THEREOF,  WHERE  SUCH  AGREEMENT RESTRICTS OCCUPANCY OF
THOSE UNITS TO RESIDENTS WHO QUALIFY IN ACCORDANCE WITH AN INCOME TEST.

S. 6359--B                         206                        A. 8559--B

  (C) THE TAXPAYER SHALL SUBMIT, IN THE MANNER PRESCRIBED BY THE COMMIS-
SIONER, INFORMATION SUFFICIENT TO DEMONSTRATE THAT  THE  SITE  QUALIFIES
FOR  ANY  CREDIT COMPONENTS AVAILABLE UNDER CLAUSES (I) THROUGH (III) OF
SUBPARAGRAPH (B) OF THIS PARAGRAPH. IF THE SITE IS A  PRIORITY  ECONOMIC
DEVELOPMENT PROJECT, THE TAXPAYER MUST ALSO DEMONSTRATE THAT THE PROJECT
HAS BEEN APPROVED BY THE DEPARTMENT OF ECONOMIC DEVELOPMENT.
  S  26. Paragraph 6 of subdivision (a) of section 21 of the tax law, as
amended by section 1 of part H of chapter 577 of the laws  of  2004,  is
amended to read as follows:
  (6)  Site  preparation costs and on-site groundwater remediation costs
paid [or incurred] by the taxpayer with respect to a qualified site  and
the  cost  or  other  basis  for federal income tax purposes of tangible
personal property and other tangible property, including  buildings  and
structural  components of buildings, which constitute qualified tangible
property shall only include costs paid [or incurred] by the taxpayer  on
or  after  the date of the brownfield site cleanup agreement executed by
the taxpayer and the department of environmental  conservation  pursuant
to section 27-1409 of the environmental conservation law.
  S  27.  Paragraphs  2, 4 and 6 of subdivision (b) of section 21 of the
tax law, as amended by section 1 of part H of chapter 577 of the laws of
2004 and subparagraph (B) and the closing paragraph of  paragraph  6  as
amended  by  section  1 of part G of chapter 62 of the laws of 2006, are
amended to read as follows:
  (2) Site preparation costs. The term "site  preparation  costs"  shall
mean all amounts properly [chargeable] CHARGED to a capital account, (i)
which  are  paid [or incurred] in connection with a site's qualification
for a certificate of completion AND ATTRIBUTABLE TO ACTIVITIES SPECIFIED
IN A DECISION DOCUMENT ISSUED BY THE DEPARTMENT OF ENVIRONMENTAL CONSER-
VATION UNDER SECTION 27-1411 OF THE ENVIRONMENTAL CONSERVATION  LAW  AND
WHICH  MAY INCLUDE COSTS ATTRIBUTABLE TO ACTIVITIES UNDERTAKEN UNDER THE
OVERSIGHT OF THE DEPARTMENT OF HEALTH OR  THE  DEPARTMENT  OF  LABOR  TO
REMEDIATE REGULATED MATERIALS INCLUDING ASBESTOS, LEAD OR POLYCHLORINAT-
ED  BIPHENYLS  IN BUILDINGS WHICH WILL REMAIN ON THE SITE, and (ii) WITH
RESPECT TO ANY QUALIFIED SITE FOR WHICH THE DEPARTMENT OF  ENVIRONMENTAL
CONSERVATION  HAS ISSUED A NOTICE TO THE TAXPAYER BEFORE JULY FIRST, TWO
THOUSAND FOURTEEN THAT ITS REQUEST FOR PARTICIPATION HAS  BEEN  ACCEPTED
UNDER  SUBDIVISION SIX OF SECTION 27-1407 OF THE ENVIRONMENTAL CONSERVA-
TION LAW, all  other  site  preparation  costs  paid  [or  incurred]  in
connection  with  preparing  a  site for the erection of a building or a
component of a building, or otherwise to establish a site as usable  for
its  industrial,  commercial  (including  the  commercial development of
residential housing), recreational or conservation purposes. [Site]  FOR
PURPOSES  OF SUBPARAGRAPH (II) OF THIS PARAGRAPH, SITE preparation costs
shall include, but not be limited to, the costs of excavation, temporary
electric wiring, scaffolding, demolition costs, and the costs of fencing
and security facilities. Site preparation costs shall  not  include  the
cost of acquiring the site and shall not include amounts included in the
cost  or other basis for federal income tax purposes of qualified tangi-
ble property, as described  in  paragraph  three  of  this  subdivision.
"SITE PREPARATION COSTS" SHALL NOT INCLUDE COSTS PAID TO A RELATED PARTY
OR PARTIES, AS SUCH TERM "RELATED PERSON" IS DEFINED IN SUBPARAGRAPH (C)
OF PARAGRAPH THREE OF SUBDIVISION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE
OF  THE  INTERNAL  REVENUE  CODE.    ELIGIBLE SITE PREPARATION COSTS ARE
LIMITED TO COSTS DIRECTLY ASSOCIATED WITH ACTUAL SITE PREPARATION-RELAT-
ED CONSTRUCTION.

S. 6359--B                         207                        A. 8559--B

  (4) On-site groundwater remediation costs. The term "on-site groundwa-
ter remediation costs" shall  mean  all  amounts  properly  [chargeable]
CHARGED  to  a  capital  account,  (i)  which  are paid [or incurred] in
connection with a site's qualification for a certificate of  completion,
and  (ii)  include costs which are paid [or incurred] in connection with
the remediation of on-site groundwater contamination and [incurred] PAID
to implement a requirement of the remedial work plan or an interim reme-
dial measure work plan for a qualified site which are  imposed  pursuant
to  subdivisions  two  and three of section 27-1411 of the environmental
conservation law.   "ON-SITE GROUNDWATER REMEDIATION  COSTS"  SHALL  NOT
INCLUDE  COSTS PAID TO A RELATED PARTY OR PARTIES, AS SUCH TERM "RELATED
PERSON" IS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF SUBDIVISION
(B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE.  ON
SITE GROUNDWATER REMEDIATION COSTS ARE LIMITED TO COSTS DIRECTLY ASSOCI-
ATED WITH ACTUAL GROUNDWATER REMEDIATION ACTIVITIES.
  (6) Environmental zones (EN-Zones). An "environmental zone" shall mean
an area designated as such by the commissioner of [economic development]
LABOR.  Such areas so designated are areas which are census  tracts  and
block  numbering  areas  which,  as  of  the  [two thousand] MOST RECENT
census, satisfy either of the following criteria:
  (A) areas that have both:
  (i) a poverty rate of at least twenty percent for the  year  to  which
the data relate; and
  (ii)  an  unemployment  rate of at least one and one-quarter times the
statewide unemployment rate for the year to which the data relate, or;
  (B) areas that have a poverty rate of at least two times  the  poverty
rate for the county in which the areas are located for the year to which
the  data relate [provided, however, that a qualified site shall only be
deemed to be located in an environmental zone  under  this  subparagraph
(B)  if such site was the subject of a brownfield site cleanup agreement
pursuant to section 27-1409 of the environmental conservation  law  that
was entered into prior to September first, two thousand ten].
  Such  designation  shall  be made and a list of all such environmental
zones shall be established by the commissioner of [economic development]
LABOR no later than [December thirty-first, two thousand four  provided,
however,  that a qualified site shall only be deemed to be located in an
environmental zone under subparagraph (B) of this paragraph if such site
was the subject of a  brownfield  site  cleanup  agreement  pursuant  to
section  27-1409  of the environmental conservation law that was entered
into prior to September first, two thousand ten] NINETY  DAYS  FOLLOWING
THE OFFICIAL PUBLICATION OF THE MOST RECENT CENSUS.
  S  28. Paragraph 2 of subdivision (b) of section 22 of the tax law, as
amended by section 4 of part H of chapter 577 of the laws  of  2004,  is
amended to read as follows:
  (2)  Amount  of  credit. The amount of the credit shall be twenty-five
percent of the product of  (i)  the  benefit  period  factor,  (ii)  the
employment  number  factor,  and  (iii) the eligible real property taxes
paid [or incurred] by the developer of the  qualified  site  during  the
taxable year (or the pro rata share of such taxes in the case of a part-
ner  in  a  partnership  or  a shareholder in a New York S corporation),
except that if the real property which is  the  subject  of  the  credit
provided  for  under  this  section  is  attributed  to a qualified site
located in an environmental zone as defined in paragraph five of  subdi-
vision  (a) of this section, the amount of the credit shall be the prod-
uct of the factors and taxes referred to in subparagraphs (i), (ii)  and
(iii)  of  this  paragraph.  However,  the  amount of the credit may not

S. 6359--B                         208                        A. 8559--B

exceed the credit limitation set forth in paragraph seven of this subdi-
vision.
  S 29. Section 171-r of the tax law is amended by adding a new subdivi-
sion (e) to read as follows:
  (E)  THE  COMMISSIONER, IN CONSULTATION WITH THE COMMISSIONER OF ENVI-
RONMENTAL CONSERVATION, SHALL PUBLISH BY JANUARY THIRTY-FIRST, TWO THOU-
SAND FIFTEEN A SUPPLEMENTAL  BROWNFIELD  CREDIT  REPORT  CONTAINING  THE
INFORMATION  REQUIRED  BY THIS SECTION ABOUT THE CREDITS CLAIMED FOR THE
YEARS TWO THOUSAND FIVE, TWO THOUSAND SIX, AND TWO THOUSAND SEVEN.
  S 30. Section 171-s of the tax law is REPEALED.
  S 31. Section 970-r of the general municipal law is amended by  adding
a new subdivision 10 to read as follows:
  10.  THE SECRETARY SHALL ESTABLISH CRITERIA FOR BROWNFIELD OPPORTUNITY
AREA  CONFORMANCE  DETERMINATIONS FOR PURPOSES OF THE BROWNFIELD CLEANUP
PROGRAM PURSUANT TO TITLE FOURTEEN OF ARTICLE TWENTY-SEVEN OF THE  ENVI-
RONMENTAL  CONSERVATION LAW AND THE BROWNFIELD REDEVELOPMENT TAX CREDITS
PURSUANT TO SECTION TWENTY-ONE OF THE TAX LAW.   IN ESTABLISHING  CRITE-
RIA, THE SECRETARY SHALL BE GUIDED BY, BUT NOT LIMITED TO, THE FOLLOWING
CONSIDERATIONS: HOW THE PROPOSED USE AND DEVELOPMENT ADVANCES THE DESIG-
NATED  BROWNFIELD  OPPORTUNITY  AREA  PLAN'S VISION STATEMENT, GOALS AND
OBJECTIVES FOR REVITALIZATION; HOW THE DENSITY OF DEVELOPMENT AND  ASSO-
CIATED  BUILDINGS AND STRUCTURES ADVANCES THE PLAN'S OBJECTIVES, DESIRED
REDEVELOPMENT  AND  PRIORITIES  FOR  INVESTMENT;  AND  HOW  THE  PROJECT
COMPLIES  WITH  ZONING  AND  OTHER LOCAL LAWS AND STANDARDS TO GUIDE AND
ENSURE APPROPRIATE USE OF THE PROJECT SITE.
  S 32. Section 31 of part H of chapter 1 of the laws of 2003,  amending
the tax law relating to brownfield redevelopment tax credits, remediated
brownfield  credit for real property taxes for qualified sites and envi-
ronmental remediation insurance credits, as amended by  chapter  474  of
the laws of 2012, is amended to read as follows:
  S  31. The tax credits allowed under section [21,] 22 or 23 of the tax
law and the corresponding provisions in articles 9, 9-A, 22, 32  and  33
of the tax law, as added by the provisions of sections one through twen-
ty-nine  of  this act, shall not be applicable [if] TO ANY SITE ACCEPTED
INTO THE BROWNFIELD CLEANUP PROGRAM ON AND AFTER JULY 1, 2014.  THE  TAX
CREDITS  ALLOWED  UNDER  SECTION 21 OF THE TAX LAW AND THE CORRESPONDING
PROVISIONS IN ARTICLES 9, 9-A, 22, 32 AND 33 OF THE TAX LAW, AS ADDED BY
THE PROVISIONS OF SECTIONS ONE THROUGH TWENTY-NINE OF  THIS  ACT,  SHALL
NOT  BE  APPLICABLE  TO  ANY  SITE  ACCEPTED INTO THE BROWNFIELD CLEANUP
PROGRAM AFTER DECEMBER  31,  2022,  PROVIDED,  HOWEVER  THAT  ANY  SITES
ACCEPTED  ON OR BEFORE DECEMBER 31, 2022 MUST HAVE RECEIVED the [remedi-
ation] certificate OF COMPLETION required to qualify  for  any  of  such
credits [is issued after] BY December 31, [2015] 2025.
  S  33.  Any  site  for  which  a brownfield cleanup agreement with the
department of environmental conservation was entered into (1)  prior  to
June  23, 2008 and which has not received a certificate of completion by
December 31, 2015 or (2) on or after June 23, 2008 and prior to July  1,
2014  which has not received a certificate of completion by December 31,
2017, shall be terminated from the brownfield cleanup program. If such a
site reapplies for acceptance into the brownfield  cleanup  program,  it
shall  be  accepted  into the program subject to all the requirements of
title 14 of article 27 of the environmental conservation law  in  effect
at the time of acceptance.
  S  34. Paragraph c of subdivision 3 of section 27-0923 of the environ-
mental conservation law, as amended by section 5 of part  I  of  chapter
577 of the laws of 2004, is amended to read as follows:

S. 6359--B                         209                        A. 8559--B

  c.  For  the  purpose  of  this section, generation of hazardous waste
shall not include retrieval or creation of hazardous waste which must be
disposed of under an order of or agreement with the department  pursuant
to  title thirteen or title fourteen of this article or under a contract
OR  AGREEMENT  with  the  department  pursuant  to title five of article
fifty-six of this chapter OR UNDER AN ORDER OF  OR  AGREEMENT  WITH  THE
UNITED  STATES ENVIRONMENTAL PROTECTION AGENCY OR AN ORDER OF A COURT OF
COMPETENT JURISDICTION, RELATED TO A FACILITY ADDRESSED PURSUANT TO  THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT (42
U.S.C.  9601  ET  SEQ.) OR UNDER A WRITTEN AGREEMENT WITH A MUNICIPALITY
WHICH IS SUBJECT TO  A  MEMORANDUM  OF  AGREEMENT  WITH  THE  DEPARTMENT
RELATED TO THE REMEDIATION OF BROWNFIELD SITES.
  S  35.  Subparagraphs  (i) and (vi) of paragraph d of subdivision 1 of
section 72-0402 of the environmental conservation  law,  as  amended  by
chapter 99 of the laws of 2010, are amended to read as follows:
  (i)  under  a  contract  with the department, or with the department's
written approval and  in  compliance  with  department  regulations,  or
pursuant  to an order of the department, the United States environmental
protection agency or a court OF COMPETENT JURISDICTION, related  to  the
cleanup  or  remediation  of  a  hazardous  materials or hazardous waste
spill, discharge, or surficial cleanup, pursuant to this chapter; or
  (vi) under a brownfield site cleanup  agreement  with  the  department
pursuant to section 27-1409 of this chapter OR UNDER AN AGREEMENT WITH A
MUNICIPALITY  WHICH  IS  SUBJECT  TO  A MEMORANDUM OF AGREEMENT WITH THE
DEPARTMENT RELATED TO THE REMEDIATION OF BROWNFIELD SITES; or
  S 36. Subdivision 1 of section 1285-q of the public  authorities  law,
as  added  by  section  6 of part I of chapter 1 of the laws of 2003, is
amended to read as follows:
  1. Subject to chapter fifty-nine of the  laws  of  two  thousand,  but
notwithstanding any other provisions of law to the contrary, in order to
assist the corporation in undertaking the administration and the financ-
ing  of  hazardous  waste  site  remediation projects for payment of the
state's share of the costs of the remediation of hazardous waste  sites,
in  accordance  with title thirteen of article twenty-seven of the envi-
ronmental conservation law  and  section  ninety-seven-b  of  the  state
finance  law, and for payment of state costs associated with the remedi-
ation of offsite contamination at significant threat sites  as  provided
in  section 27-1411 of the environmental conservation law, AND FOR ENVI-
RONMENTAL RESTORATION PROJECTS PURSUANT TO TITLE FIVE OF ARTICLE  FIFTY-
SIX  OF THE ENVIRONMENTAL CONSERVATION LAW pursuant to capital appropri-
ations  made  to  the  department  of  environmental  conservation,  the
director  of the division of budget and the corporation are each author-
ized to enter into one or more service contracts, none  of  which  shall
exceed  twenty  years in duration, upon such terms and conditions as the
director and the corporation may agree, so as to annually provide to the
corporation in the aggregate, a  sum  not  to  exceed  the  annual  debt
service  payments  and related expenses required for any bonds and notes
authorized pursuant to section twelve hundred ninety of this title.  Any
service  contract  entered  into  pursuant to this section shall provide
that the obligation of the state to fund or to pay the  amounts  therein
provided for shall not constitute a debt of the state within the meaning
of  any constitutional or statutory provision and shall be deemed execu-
tory only to the extent of moneys available for such  purposes,  subject
to annual appropriation by the legislature. Any such service contract or
any  payments  made or to be made thereunder may be assigned and pledged

S. 6359--B                         210                        A. 8559--B

by the corporation as security for its bonds and  notes,  as  authorized
pursuant to section twelve hundred ninety of this title.
  S  37. Section 56-0501 of the environmental conservation law, as added
by chapter 413 of the laws of 1996, is amended to read as follows:
S 56-0501. Allocation of moneys.
  1. Of the moneys received by the state from the sale of bonds pursuant
to the Clean Water/Clean Air Bond  Act  of  1996,  two  hundred  million
dollars ($200,000,000) shall be available for disbursements for environ-
mental restoration projects.
  2. ENVIRONMENTAL RESTORATION PROJECTS MAY BE FUNDED USING THE PROCEEDS
OF  BONDS ISSUED PURSUANT TO SECTION TWELVE HUNDRED EIGHTY-FIVE-Q OF THE
PUBLIC AUTHORITIES LAW.
  S 38. Subdivision 6 of section 56-0502 of the environmental  conserva-
tion  law,  as amended by section 2 of part D of chapter 577 of the laws
of 2004, is amended to read as follows:
  6. "State assistance", for purposes of this title, shall mean  in  the
case  of  a contract authorized by subdivision one of section 56-0503 of
this title, payments made to a municipality  to  reimburse  the  munici-
pality  for the state share of the costs incurred by the municipality to
undertake an environmental restoration project OR  IN  THE  CASE  OF  AN
AGREEMENT  AUTHORIZED  BY  SUBDIVISION  THREE OF SECTION 56-0503 OF THIS
TITLE, COSTS INCURRED BY THE STATE TO UNDERTAKE AN ENVIRONMENTAL  RESTO-
RATION PROJECT BUT NOT REIMBURSED BY A MUNICIPALITY.
  S  39.  Paragraph (c) of subdivision 2 of section 56-0503 of the envi-
ronmental conservation law, as amended by section 4 of part D of chapter
1 of the laws of 2003, is amended and a new subdivision 3  is  added  to
read as follows:
  (c)  A  provision  that THE MUNICIPALITY SHALL ASSIST IN IDENTIFYING A
RESPONSIBLE PARTY BY SEARCHING LOCAL  RECORDS,  INCLUDING  PROPERTY  TAX
ROLLS,  OR  DOCUMENT  REVIEWS,  AND  if, in accordance with the required
departmental approval of any settlement with a  responsible  party,  any
responsible party payments become available to the municipality, before,
during  or after the completion of an environmental restoration project,
which were not included when the state share was calculated pursuant  to
this  section, the state assistance share shall be recalculated, and the
municipality shall pay to the state, for deposit into the  environmental
restoration  project account of the hazardous waste remedial fund estab-
lished under section  ninety-seven-b  of  the  state  finance  law,  the
difference  between the original state assistance payment and the recal-
culated state share. Recalculation of the state share shall be done each
time a payment from a responsible party is received by the municipality;
  3. THE DEPARTMENT MAY UNDERTAKE AN ENVIRONMENTAL  RESTORATION  PROJECT
ON  BEHALF OF A MUNICIPALITY UPON REQUEST.  IF THE DEPARTMENT UNDERTAKES
THE PROJECT ON BEHALF OF THE MUNICIPALITY, THE STATE SHALL ENTER INTO AN
AGREEMENT WITH THE MUNICIPALITY AND  THE  AGREEMENT  SHALL  REQUIRE  THE
MUNICIPALITY  TO  PERIODICALLY  PROVIDE ITS SHARE TO THE STATE FOR COSTS
INCURRED DURING THE PROGRESS OF SUCH PROJECT. THE  MUNICIPALITY'S  SHARE
SHALL  BE  THE  SAME  AS WOULD BE REQUIRED UNDER SUBDIVISION ONE OF THIS
SECTION. THE AGREEMENT SHALL INCLUDE ALL PROVISIONS SPECIFIED IN  SUBDI-
VISION  TWO  OF  THIS SECTION AS APPROPRIATE.   FOR PURPOSES OF PROJECTS
SUBJECT  TO  AGREEMENTS  UNDER  THIS  SUBDIVISION,  ALL  REFERENCES   TO
CONTRACTS IN THIS TITLE SHALL ALSO APPLY TO AGREEMENTS UNDER THIS SUBDI-
VISION AS APPROPRIATE.
  S  40. Subdivision 4 of section 56-0505 of the environmental conserva-
tion law, as amended by section 5 of part D of chapter 1 of the laws  of
2003, is amended to read as follows:

S. 6359--B                         211                        A. 8559--B

  4.  After  completion  of  such  project, the municipality may use the
property for public purposes or may dispose of it. If  the  municipality
shall  dispose  of  such  property  by sale to a responsible party, such
party shall pay to such municipality, in addition to such other  consid-
eration,  an amount of money constituting the amount of state assistance
provided [to the municipality] under this title  plus  accrued  interest
and transaction costs and the municipality shall deposit that money into
the  environmental  restoration  project  account of the hazardous waste
remedial fund established under  section  ninety-seven-b  of  the  state
finance law.
  S  41.  Subdivisions  3  and 4 of section 56-0508 of the environmental
conservation law, as added by section 7 of part D of chapter  1  of  the
laws of 2003, are amended to read as follows:
  3. such temporary incidents of ownership by such taxing district shall
also qualify it as being the owner of such property [for the purposes of
obtaining]  TO  BE  ELIGIBLE  FOR funding from the state of New York for
such environmental restoration investigation project under this  article
or  for such funding from any source pursuant to any other state, feder-
al, or local law, but such incidents of ownership shall  not  be  suffi-
cient  to  qualify  it as the owner of such property for the purposes of
holding it wholly or partially liable for any damages, past, present, or
future from any release of any hazardous material, substance, or contam-
inant into the air, ground, or water, unless such release was caused  by
such taxing district.
  4.  within thirty days of the completion of the environmental restora-
tion investigation project and the receipt by the taxing jurisdiction of
the final report of such investigation, such taxing  jurisdiction  shall
file  such  report  with  the court on notice to the court and all other
parties of record, and the stay  of  the  foreclosure  shall  be  lifted
(unless  lifted  earlier  by  a prior court order), and all incidents of
temporary ownership of the taxing jurisdiction  that  was  awarded  such
taxing  district, except any right [to receive funding] for the environ-
mental restoration investigation project TO BE FUNDED,  shall  cease  to
exist,  and nothing in this subdivision shall preclude the taxing juris-
diction  that  conducted  the  environmental  restoration  investigation
project  or  the  taxing  jurisdiction  that  commenced  the foreclosure
action, if it is a different taxing jurisdiction than the taxing  juris-
diction  which  conducted the investigation, from withdrawing the parcel
from foreclosure pursuant to section eleven hundred thirty-eight of  the
real property tax law.
  S 42. Subdivision 2 and paragraph (f) of subdivision 3 of section 97-b
of the state finance law, as amended by section 4 of part I of chapter 1
of the laws of 2003, are amended to read as follows:
  2. Such fund shall consist of all of the following:
  (a)  moneys appropriated for transfer to the fund's site investigation
and construction account; (b) all fines and other  sums  accumulated  in
the fund prior to April first, nineteen hundred eighty-eight pursuant to
section 71-2725 of the environmental conservation law for deposit in the
fund's  site  investigation  and  construction  account;  (c) all moneys
collected or received by the department of taxation and finance pursuant
to section 27-0923 of the environmental conservation law for deposit  in
the  fund's  industry fee transfer account; (d) all moneys paid into the
fund pursuant to section 72-0201 of the environmental  conservation  law
which  shall  be  deposited in the fund's industry fee transfer account;
(e) all moneys paid into the fund pursuant to section one hundred eight-
y-six of the navigation law which  shall  be  deposited  in  the  fund's

S. 6359--B                         212                        A. 8559--B

industry  fee  transfer  account;  (f) [all moneys paid into the fund by
municipalities for repayment of landfill closure loans made pursuant  to
title  five  of  article fifty-two of the environmental conservation law
for  deposit  in the fund's site investigation and construction account;
(g)] all monies recovered under sections 56-0503, 56-0505 and 56-0507 of
the environmental conservation law into the fund's environmental  resto-
ration  project  account; [(h) all] (G) fees paid into the fund pursuant
to section [72-0403] 72-0402 of the environmental conservation law which
shall be deposited in the fund's industry fee  transfer  account;  [(i)]
(H)  payments  received  for all state costs incurred in negotiating and
overseeing the implementation  of  brownfield  site  cleanup  agreements
pursuant  to title fourteen OF ARTICLE TWENTY-SEVEN of the environmental
conservation law shall be deposited in the hazardous  waste  remediation
oversight and assistance account; and [(j)] (I) other moneys credited or
transferred  thereto  from  any  other fund or source for deposit in the
fund's site investigation and construction account.
  (f) to undertake such remedial measures as the department of  environ-
mental  conservation may determine necessary due to environmental condi-
tions related to the property subject to an agreement [to provide  state
assistance]  OR  CONTRACT  under  title five of article fifty-six of the
environmental conservation law [that were unknown to such department  at
the  time  of its approval of such agreement which indicates that condi-
tions on such property are not sufficiently protective of  human  health
for  its  reasonably anticipated uses or due to information received, in
whole or in part, after such department's approval of  such  agreement's
final  engineering  report and certification], which indicates that such
agreement's remedial activities are not sufficiently protective of human
health for such property's reasonably anticipated uses; and, [respecting
the monies in the environmental restoration project account in excess of
ten million dollars,] shall provide state assistance under title five of
article fifty-six of the environmental conservation law;
  S 43. Severability. If any clause, sentence,  paragraph,  subdivision,
section  or part of this act shall be adjudged by any court of competent
jurisdiction to be invalid, such judgment shall not  affect,  impair  or
invalidate the remainder thereof, but shall be confined in its operation
to the clause, sentence, paragraph, subdivision, section or part thereof
directly  involved  in the controversy in which such judgment shall have
been rendered. It is hereby declared to be the intent of the legislature
that this act would have been enacted even if  such  invalid  provisions
had not been included herein.
  S 44. This act shall take effect July 1, 2014; provided, however, that
the department of environmental conservation shall not charge volunteers
in  the  brownfield cleanup program for oversight costs for any sites in
the program incurred on or after July 1, 2014;  and  provided,  further,
that  the  amendments made by section twenty-one of this act relating to
the length of time a taxpayer may claim  the  tangible  property  credit
component  shall  apply  only to sites that are accepted into the brown-
field cleanup program on or after July 1, 2014.

                                 PART R

  Section 1. Section 208 of the tax law is amended by adding  three  new
subdivisions 13, 14 and 15 to read as follows:
  13.  THE  TERM  "MANUFACTURER"  MEANS  A TAXPAYER OR, IN THE CASE OF A
COMBINED REPORT, A COMBINED GROUP, THAT, DURING  THE  TAXABLE  YEAR,  IS
PRINCIPALLY  ENGAGED IN MANUFACTURING. A TAXPAYER OR A COMBINED GROUP IS

S. 6359--B                         213                        A. 8559--B

PRINCIPALLY ENGAGED IN MANUFACTURING IF MORE THAN FIFTY PERCENT  OF  THE
GROSS  RECEIPTS  OF  THE  TAXPAYER  OR THE COMBINED GROUP, RESPECTIVELY,
DURING THE TAXABLE YEAR ARE DERIVED FROM THE SALE OF GOODS  PRODUCED  BY
MANUFACTURING. IN COMPUTING A COMBINED GROUP'S GROSS RECEIPTS, INTERCOR-
PORATE  RECEIPTS  SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS FOR A
TAXPAYER THAT IS A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN
THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  14. (A) THE TERM "MANUFACTURING" MEANS  THE  PROCESS  OF  WORKING  RAW
MATERIALS  INTO  WARES  SUITABLE  FOR USE OR WHICH GIVES NEW SHAPES, NEW
QUALITY OR NEW COMBINATIONS TO MATTER WHICH  ALREADY  HAS  GONE  THROUGH
SOME  ARTIFICIAL  PROCESS BY THE USE OF MACHINERY, TOOLS, APPLIANCES AND
OTHER SIMILAR EQUIPMENT.
  (B) NOTWITHSTANDING THE DEFINITION OF MANUFACTURING IN  PARAGRAPH  (A)
OF THIS SUBDIVISION:
  (I) THE GENERATION AND DISTRIBUTION OF ELECTRICITY, THE EXTRACTION AND
DISTRIBUTION OF NATURAL GAS, AND THE PRODUCTION OF STEAM ASSOCIATED WITH
THE GENERATION OF ELECTRICITY DOES NOT CONSTITUTE MANUFACTURING.
  (II)  THE  CREATION,  PRODUCTION OR REPRODUCTION OF A FILM, TELEVISION
SHOW OR COMMERCIAL DOES NOT CONSTITUTE MANUFACTURING.
  (III) THE BLENDING OF TWO OR MORE FUELS DOES NOT  CONSTITUTE  MANUFAC-
TURING.
  (IV)  THE  MASS  PRODUCTION  OF FOOD PRODUCTS FOR WHOLESALE COMMERCIAL
DISTRIBUTION AND SALE CONSTITUTES MANUFACTURING.
  15. THE TERM "QUALIFIED NEW YORK MANUFACTURER"  MEANS  A  MANUFACTURER
THAT  HAS PROPERTY IN THE STATE THAT IS USED IN MANUFACTURING AND EITHER
THE FAIR MARKET VALUE OF THAT PROPERTY AT THE CLOSE OF THE TAXABLE  YEAR
IS AT LEAST TEN MILLION DOLLARS OR ALL OF ITS REAL AND PERSONAL PROPERTY
IS LOCATED IN NEW YORK. A TAXPAYER OR, IN THE CASE OF A COMBINED REPORT,
A  COMBINED  GROUP,  THAT  DOES  NOT SATISFY THE CRITERIA IN SUBDIVISION
THIRTEEN OF THIS SECTION MAY BE A QUALIFIED NEW YORK MANUFACTURER IF THE
TAXPAYER OR THE COMBINED GROUP EMPLOYS DURING THE TAXABLE YEAR AT  LEAST
TWO THOUSAND FIVE HUNDRED EMPLOYEES IN MANUFACTURING IN NEW YORK AND THE
TAXPAYER  OR  THE COMBINED GROUP HAS PROPERTY IN THE STATE USED IN MANU-
FACTURING, THE ADJUSTED BASIS OF WHICH FOR FEDERAL INCOME  TAX  PURPOSES
AT  THE  CLOSE  OF  THE  TAXABLE  YEAR  IS  AT LEAST ONE HUNDRED MILLION
DOLLARS.
  S 2. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (A)  A  QUALIFIED  NEW
YORK  MANUFACTURER,  AS  DEFINED  IN  SUBDIVISION FIFTEEN OF SECTION TWO
HUNDRED EIGHT OF THIS ARTICLE, WILL BE ALLOWED A CREDIT EQUAL TO  TWENTY
PERCENT  OF  THE  REAL  PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR
REAL PROPERTY OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH  WAS  PRINCI-
PALLY  USED  DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT
DEDUCTED IN DETERMINING ENTIRE NET  INCOME.  THIS  CREDIT  WILL  NOT  BE
ALLOWED  IF  THE  REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT
ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY-
ER.
  (B) (1) FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL  PROPERTY  TAX
MEANS  A  CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF A COUNTY,
CITY, TOWN, VILLAGE OR SCHOOL DISTRICT FOR MUNICIPAL OR SCHOOL  DISTRICT
PURPOSES,  PROVIDED  THAT  THE  CHARGE  IS LEVIED FOR THE GENERAL PUBLIC
WELFARE BY THE PROPER TAXING AUTHORITIES AT  A  LIKE  RATE  AGAINST  ALL
PROPERTY  OVER  WHICH  SUCH  AUTHORITIES HAVE JURISDICTION, AND PROVIDED
THAT WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN  OF
THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE

S. 6359--B                         214                        A. 8559--B

DETERMINED  FOR  THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED BY SUCH
ARTICLE EIGHTEEN OR NINETEEN, WHICHEVER IS  APPLICABLE.  THE  TERM  REAL
PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
ABLE  TO  MAINTENANCE  OR INTEREST, WHEN (I) THE PROPERTY SUBJECT TO THE
CHARGE IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (II)
THE AMOUNT OF THE CHARGE IS DETERMINED BY THE BENEFIT  TO  THE  PROPERTY
ASSESSED,  OR  (III)  THE  IMPROVEMENT  FOR WHICH THE CHARGE IS ASSESSED
TENDS TO INCREASE THE PROPERTY VALUE.
  (2) IN ADDITION, THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY THE
TAXPAYER UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR  BY
THE  TAXPAYER IN MANUFACTURING WHERE THE TAXPAYER LEASES SUCH REAL PROP-
ERTY FROM AN UNRELATED THIRD  PARTY  IF  THE  FOLLOWING  CONDITIONS  ARE
SATISFIED:  (I)  THE TAX MUST BE PAID BY THE TAXPAYER AS LESSEE PURSUANT
TO EXPLICIT REQUIREMENTS IN A WRITTEN LEASE, AND (II)  THE  TAXPAYER  AS
LESSEE  HAS  PAID  SUCH  TAXES  DIRECTLY TO THE TAXING AUTHORITY AND HAS
RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI-
TY. IN THE CASE OF A COMBINED GROUP THAT  CONSTITUTES  A  QUALIFIED  NEW
YORK  MANUFACTURER,  THE CONDITIONS IN THE PRECEDING SENTENCE ARE SATIS-
FIED IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND  ANOTHER
CORPORATION  IN  THE  COMBINED  GROUP  MAKES  THE PAYMENTS TO THE TAXING
AUTHORITY.
  (3) THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY  THE
TAXPAYER  IN  CONNECTION  WITH  AN  AGREEMENT FOR THE PAYMENT IN LIEU OF
TAXES ON REAL PROPERTY, WHETHER SUCH PROPERTY IS OWNED OR LEASED BY  THE
TAXPAYER.
  (4)  THE  REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE YEAR
SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY.
  (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (1)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2)  THE
AMOUNT  OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES.
IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE  YEAR,
THE  TAXPAYER  MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE
TO EACH YEAR COVERED BY SUCH FINAL ORDER AND  CALCULATE  THE  AMOUNT  OF
CREDIT  WHICH  IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH
YEAR BASED ON SUCH REDUCTION.
  (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR
SHALL  NOT  REDUCE  THE  TAX  DUE  FOR SUCH YEAR TO LESS THAN THE AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER,
ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREAT-
ED AS AN OVERPAYMENT OF TAX TO BE CREDITED  OR  REFUNDED  IN  ACCORDANCE
WITH  THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER.
PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOU-
SAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL  BE
PAID THEREON.
  S 2-a. Paragraph (b) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 21 to read as follows:
  (21)  THE  AMOUNT  OF ANY FEDERAL DEDUCTION FOR REAL PROPERTY TAXES TO
THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF THE  CALCULATION  OF  THE
REAL  PROPERTY  TAX  CREDIT  FOR MANUFACTURERS ALLOWED UNDER SUBDIVISION
FORTY-EIGHT OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.

S. 6359--B                         215                        A. 8559--B

  S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is amended by adding a new clause (xxxvii) to read as
follows:

(XXXVII) REAL PROPERTY TAX            AMOUNT OF CREDIT UNDER
CREDIT FOR MANUFACTURERS UNDER        SUBDIVISION FORTY-EIGHT OF
SUBSECTION (XX)                       SECTION TWO HUNDRED TEN

  S  4.  Subsections  (yy)  and  (zz)  of section 606 of the tax law, as
relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
relettered  subsections  (yyy)  and  (zzz)  and a new subsection (xx) is
added to read as follows:
  (XX) REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (1) A  QUALIFIED  NEW
YORK  MANUFACTURER  WILL  BE ALLOWED A CREDIT EQUAL TO TWENTY PERCENT OF
THE REAL PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR REAL  PROPERTY
OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCIPALLY USED DURING
THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT DEDUCTED IN COMPUT-
ING  FEDERAL  ADJUSTED  GROSS INCOME. THIS CREDIT WILL NOT BE ALLOWED IF
THE REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT ARE  INCLUDED
IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAYER.
  (2)(A)  THE  TERM QUALIFIED NEW YORK MANUFACTURER HAS THE SAME MEANING
AS UNDER SUBPARAGRAPH (B) OF PARAGRAPH TWO OF  SUBSECTION  (A)  OF  THIS
SECTION.
  (B)  (I)  THE  TERM REAL PROPERTY TAX MEANS A CHARGE IMPOSED UPON REAL
PROPERTY BY OR ON BEHALF OF A COUNTY,  CITY,  TOWN,  VILLAGE  OR  SCHOOL
DISTRICT  FOR  MUNICIPAL  OR SCHOOL DISTRICT PURPOSES, PROVIDED THAT THE
CHARGE IS LEVIED FOR THE GENERAL PUBLIC WELFARE  BY  THE  PROPER  TAXING
AUTHORITIES AT A LIKE RATE AGAINST ALL PROPERTY OVER WHICH SUCH AUTHORI-
TIES  HAVE JURISDICTION, AND PROVIDED THAT WHERE TAXES ARE LEVIED PURSU-
ANT TO ARTICLE EIGHTEEN OR NINETEEN OF THE REAL PROPERTY  TAX  LAW,  THE
PROPERTY  MUST  HAVE  BEEN TAXED AT THE RATE DETERMINED FOR THE CLASS IN
WHICH IT IS CONTAINED, AS PROVIDED BY SUCH ARTICLE EIGHTEEN OR NINETEEN,
WHICHEVER IS APPLICABLE. THE TERM REAL PROPERTY TAX DOES NOT  INCLUDE  A
CHARGE  FOR LOCAL BENEFITS, INCLUDING ANY PORTION OF THAT CHARGE THAT IS
PROPERLY ALLOCATED TO THE COSTS ATTRIBUTABLE TO MAINTENANCE OR INTEREST,
WHEN (I) THE PROPERTY SUBJECT TO THE CHARGE IS LIMITED TO  THE  PROPERTY
THAT  BENEFITS  FROM  THE  CHARGE,  OR  (II) THE AMOUNT OF THE CHARGE IS
DETERMINED BY THE  BENEFIT  TO  THE  PROPERTY  ASSESSED,  OR  (III)  THE
IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED TENDS TO INCREASE THE PROP-
ERTY VALUE.
  (II)  IN  ADDITION,  THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY
THE TAXPAYER UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR
BY THE TAXPAYER IN MANUFACTURING WHERE THE  TAXPAYER  LEASES  SUCH  REAL
PROPERTY  FROM  AN UNRELATED THIRD PARTY IF THE FOLLOWING CONDITIONS ARE
SATISFIED: (I) THE TAX MUST BE PAID BY THE TAXPAYER AS  LESSEE  PURSUANT
TO  EXPLICIT  REQUIREMENTS  IN A WRITTEN LEASE, AND (II) THE TAXPAYER AS
LESSEE HAS PAID SUCH TAXES DIRECTLY TO  THE  TAXING  AUTHORITY  AND  HAS
RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI-
TY.  IN  THE  CASE  OF A COMBINED GROUP THAT CONSTITUTES A QUALIFIED NEW
YORK MANUFACTURER, THE CONDITIONS IN THE PRECEDING SENTENCE  ARE  SATIS-
FIED  IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND ANOTHER
CORPORATION IN THE COMBINED GROUP  MAKES  THE  PAYMENTS  TO  THE  TAXING
AUTHORITY.
  (III)  THE  TERM  REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY
THE TAXPAYER IN CONNECTION WITH AN AGREEMENT FOR THE PAYMENT IN LIEU  OF

S. 6359--B                         216                        A. 8559--B

TAXES  ON REAL PROPERTY, WHETHER SUCH PROPERTY IS OWNED OR LEASED BY THE
TAXPAYER.
  (IV)  THE REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE YEAR
SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY.
  (3) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (I)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (II) THE
AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY  TAXES.
IF  SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR,
THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION  IS  ATTRIBUTABLE
TO  EACH  YEAR  COVERED  BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF
CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED  FOR  EACH
YEAR BASED ON SUCH REDUCTION.
  (4)  IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY
TAXABLE YEAR EXCEEDS THE TAXPAYER'S TAX FOR SUCH YEAR, THE  EXCESS  WILL
BE  TREATED  AS  AN OVERPAYMENT TO BE CREDITED OR REFUNDED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF  THIS  ARTICLE,
PROVIDED HOWEVER, NO INTEREST WILL BE PAID THEREON.
  S  4-a.  Subsection  (b)  of  section 612 of the tax law is amended by
adding a new paragraph 40 to read as follows:
  (40) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR REAL  PROPERTY  TAXES  TO
THE  EXTENT  SUCH  TAXES ARE USED AS THE BASIS OF THE CALCULATION OF THE
REAL PROPERTY TAX CREDIT FOR MANUFACTURERS ALLOWED UNDER SUBSECTION (XX)
OF SECTION SIX HUNDRED SIX OF THIS ARTICLE.
  S 5. Paragraph (b) of subdivision 12 of section 210 of the tax law, as
amended by chapter 817 of the laws of 1987, subparagraph (i) as  amended
by  chapter  637 of the laws of 2008 and clause (E) of subparagraph (ii)
as added by chapter 393 of the laws of  2005,  is  amended  to  read  as
follows:
  (b)  (i)  A credit shall be allowed under this subdivision TO A QUALI-
FIED NEW YORK MANUFACTURER, A QUALIFIED NEW YORK  AGRICULTURAL  BUSINESS
OR  A  QUALIFIED  NEW  YORK  MINING  BUSINESS  with  respect to tangible
personal property and other tangible property, including  buildings  and
structural  components of buildings, which (A) are[:] depreciable pursu-
ant to section one hundred sixty-seven of the internal revenue code, (B)
have a useful life of four years or more, (C) are acquired  by  purchase
as  defined  in  section  one  hundred  seventy-nine (d) of the internal
revenue code, (D) HAVE NOT BEEN PREVIOUSLY THE SUBJECT OF AN  INVESTMENT
TAX CREDIT OR EMPIRE ZONE INVESTMENT TAX CREDIT ALLOWED UNDER THIS CHAP-
TER  TO  ANOTHER  TAXPAYER,  (E) have a situs in this state, and (F) are
[(A)] principally used by the taxpayer in the production  of  goods  [by
manufacturing,  processing,  assembling,  refining,  mining, extracting,
farming, agriculture, horticulture, floriculture, viticulture or commer-
cial fishing, (B) industrial waste treatment facilities or air pollution
control facilities, used in the taxpayer's trade or business,  (C)]  FOR
SALE  OR ARE research and development property[, (D) principally used in
the ordinary course of the taxpayer's trade or business as a  broker  or
dealer  in connection with the purchase or sale (which shall include but
not be limited to  the  issuance,  entering  into,  assumption,  offset,
assignment,  termination, or transfer) of stocks, bonds or other securi-
ties as defined in section  four  hundred  seventy-five  (c)(2)  of  the
Internal  Revenue  Code,  or  of  commodities as defined in section four

S. 6359--B                         217                        A. 8559--B

hundred seventy-five (e) of the Internal Revenue Code,  (E)  principally
used  in  the  ordinary  course  of  the taxpayer's trade or business of
providing investment advisory services for a regulated investment compa-
ny as defined in section eight hundred fifty-one of the Internal Revenue
Code,  or  lending,  loan  arrangement  or  loan origination services to
customers in connection with the purchase or sale (which  shall  include
but  not  be limited to the issuance, entering into, assumption, offset,
assignment, termination,  or  transfer)  of  securities  as  defined  in
section  four  hundred seventy-five (c)(2) of the Internal Revenue Code,
(F) principally used in the ordinary course of the  taxpayer's  business
as  an  exchange registered as a national securities exchange within the
meaning of sections 3(a)(1) and 6(a) of the Securities Exchange  Act  of
1934  or  a  board  of trade as defined in section 1410(a)(1) of the New
York Not-for-Profit Corporation Law or as an entity that is wholly owned
by one or more such national securities exchanges or boards of trade and
that provides automation or technical services thereto, or  (G)  princi-
pally  used  as a qualified film production facility including qualified
film production facilities having a situs in an empire  zone  designated
as  such  pursuant  to  article eighteen-B of the general municipal law,
where the taxpayer is providing three or more services to any  qualified
film production company using the facility, including such services as a
studio  lighting  grid,  lighting  and  grip equipment, multi-line phone
service, broadband information technology access, industrial scale elec-
trical capacity, food services, security services, and  heating,  venti-
lation and air conditioning. For purposes of clauses (D), (E) and (F) of
this  subparagraph,  property  purchased by a taxpayer affiliated with a
regulated broker, dealer, registered investment adviser, national  secu-
rities exchange or board of trade, is allowed a credit under this subdi-
vision if the property is used by its affiliated regulated broker, deal-
er, registered investment adviser, national securities exchange or board
of  trade in accordance with this subdivision. For purposes of determin-
ing if the property is principally used in qualifying uses, the uses  by
the  taxpayer  described in clauses (D) and (E) of this subparagraph may
be aggregated. In addition, the uses by  the  taxpayer,  its  affiliated
regulated broker, dealer, and registered investment adviser under either
or  both  of  those  clauses  may  be aggregated.   Provided, however, a
taxpayer shall not be allowed the credit provided by  clauses  (D),  (E)
and  (F)  of  this subparagraph unless (I) eighty percent or more of the
employees performing the administrative and support functions  resulting
from  or related to the qualifying uses of such equipment are located in
this state or (II) the average number  of  employees  that  perform  the
administrative  and  support  functions resulting from or related to the
qualifying uses of such equipment and are located in this  state  during
the  taxable year for which the credit is claimed is equal to or greater
than ninety-five percent of the average number of employees that perform
these functions and are located in  this  state  during  the  thirty-six
months  immediately  preceding the year for which the credit is claimed,
or (III) the number of employees located in this state during the  taxa-
ble  year  for  which  the credit is claimed is equal to or greater than
ninety percent of the number of  employees  located  in  this  state  on
December thirty-first, nineteen hundred ninety-eight or, if the taxpayer
was  not  a calendar year taxpayer in nineteen hundred ninety-eight, the
last day of its first taxable year ending after  December  thirty-first,
nineteen hundred ninety-eight. If the taxpayer becomes subject to tax in
this  state after the taxable year beginning in nineteen hundred ninety-
eight, then the taxpayer is not required to satisfy the employment  test

S. 6359--B                         218                        A. 8559--B

provided  in  the  preceding sentence of this subparagraph for its first
taxable year. For purposes of clause  (III)  of  this  subparagraph  the
employment test will be based on the number of employees located in this
state  on the last day of the first taxable year the taxpayer is subject
to tax in this state. If the uses of the property must be aggregated  to
determine  whether  the property is principally used in qualifying uses,
then either each affiliate using the property must satisfy this  employ-
ment  test  or this employment test must be satisfied through the aggre-
gation of the  employees  of  the  taxpayer,  its  affiliated  regulated
broker,  dealer,  and  registered investment adviser using the property.
For purposes of this subdivision, the term  "goods"  shall  not  include
electricity].
  (ii)  For  purposes of this paragraph, the following definitions shall
apply--
  (A) [Manufacturing shall mean the process  of  working  raw  materials
into  wares  suitable  for use or which gives new shapes, new quality or
new combinations to matter which already has gone through  some  artifi-
cial  process by the use of machinery, tools, appliances and other simi-
lar equipment.] Property used in the production of goods FOR SALE  shall
include machinery, equipment or other tangible property which is princi-
pally  used  in  the repair and service of other machinery, equipment or
other tangible property used principally in the production of goods  FOR
SALE  and shall include all facilities used in the production operation,
including storage of material to  be  used  in  production  and  of  the
products that are produced.
  (B)  Research  and  development  property shall mean property which is
used for purposes of research and development  in  the  experimental  or
laboratory sense. Such purposes shall not be deemed to include the ordi-
nary testing or inspection of materials or products for quality control,
efficiency  surveys,  management studies, consumer surveys, advertising,
promotions, or research in connection with literary, historical or simi-
lar projects.
  (C) [Industrial waste treatment facilities shall mean property consti-
tuting facilities for the treatment, neutralization or stabilization  of
industrial  waste  and other wastes (as the terms "industrial waste" and
"other wastes" are defined  in  section  17-0105  of  the  environmental
conservation  law)  from a point immediately preceding the point of such
treatment, neutralization or stabilization to  the  point  of  disposal,
including the necessary pumping and transmitting facilities, but exclud-
ing such facilities installed for the primary purpose of salvaging mate-
rials  which are usable in the manufacturing process or are marketable.]
A QUALIFIED NEW YORK AGRICULTURAL BUSINESS SHALL MEAN A TAXPAYER OR,  IN
THE  CASE OF A COMBINED REPORT, A COMBINED GROUP, PRINCIPALLY ENGAGED IN
FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMER-
CIAL FISHING IN THE STATE. A TAXPAYER OR A COMBINED GROUP IS PRINCIPALLY
ENGAGED IN FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE
OR COMMERCIAL FISHING IN THE STATE IF MORE THAN  FIFTY  PERCENT  OF  THE
GROSS  RECEIPTS  OF  THE  TAXPAYER  OR THE COMBINED GROUP, RESPECTIVELY,
DURING THE TAXABLE YEAR ARE DERIVED FROM THE SALE OF GOODS  PRODUCED  BY
THE  TAXPAYER  BY  ANY OF THE ACTIVITIES SPECIFIED IN THIS SENTENCE THAT
ARE CONDUCTED IN THE  STATE.  IN  COMPUTING  A  COMBINED  GROUP'S  GROSS
RECEIPTS,  INTERCORPORATE  RECEIPTS  SHALL  BE  ELIMINATED. IN COMPUTING
GROSS RECEIPTS  FOR  A  TAXPAYER  THAT  IS  A  PARTNER  IN  PARTNERSHIP,
INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE
ELIMINATED.

S. 6359--B                         219                        A. 8559--B

  (D) [Air pollution control facilities shall mean property constituting
facilities which remove, reduce, or render less noxious air contaminants
emitted from an air contamination source (as the terms "air contaminant"
and  "air  contamination  source"  are defined in section 19-0107 of the
environmental  conservation  law) from a point immediately preceding the
point of such removal, reduction or rendering to the point of  discharge
of  air,  meeting emission standards as established by the department of
environmental conservation, but excluding such facilities installed  for
the primary purpose of salvaging materials which are usable in the manu-
facturing process or are marketable and excluding those facilities which
rely  for  their efficacy on dilution, dispersion or assimilation of air
contaminants in the ambient air after emission. Such term shall  further
include flue gas desulfurization equipment and attendant sludge disposal
facilities,  fluidized  bed boilers, precombustion coal cleaning facili-
ties or other facilities that conform with this  subdivision  and  which
comply  with the provisions of the state acid deposition control act set
forth in title nine of article nineteen of the  environmental  conserva-
tion  law]  A  QUALIFIED  NEW YORK MINING BUSINESS SHALL MEAN A TAXPAYER
PRINCIPALLY ENGAGED IN MINING IN THE STATE. A  TAXPAYER  IS  PRINCIPALLY
ENGAGED  IN  MINING IN THE STATE IF MORE THAN FIFTY PERCENT OF THE GROSS
RECEIPTS OF THE TAXPAYER OR, IN THE  CASE  OF  A  COMBINED  REPORT,  THE
COMBINED  GROUP,  RESPECTIVELY, DURING THE TAXABLE YEAR ARE DERIVED FROM
THE SALE OF GOODS PRODUCED BY THE TAXPAYER BY MINING ACTIVITIES THAT ARE
CONDUCTED IN THE STATE. IN COMPUTING A COMBINED GROUP'S GROSS  RECEIPTS,
INTERCORPORATE RECEIPTS SHALL BE ELIMINATED. IN COMPUTING GROSS RECEIPTS
FOR  A  TAXPAYER THAT IS A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS
BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  [(E) The terms "qualified film  production  facility"  and  "qualified
film production company" shall have the same meaning as in section twen-
ty-four of this chapter.]
  (iii)  [However,  such  credit shall be allowed with respect to indus-
trial waste treatment facilities and air  pollution  control  facilities
only  on condition that such facilities have been certified by the state
commissioner of environmental conservation or his  designated  represen-
tative,  pursuant  to  subdivision one of section 17-0707 or subdivision
one of section 19-0309 of the environmental conservation law, as comply-
ing with applicable provisions of the  environmental  conservation  law,
the  public  health law, the state sanitary code and codes, rules, regu-
lations, permits or orders issued pursuant thereto.] IN ORDER TO PROPER-
LY ADMINISTER THE CREDIT AUTHORIZED BY THIS SUBDIVISION, THE  DEPARTMENT
MAY  DISCLOSE  INFORMATION ABOUT THE ALLOWANCE TO ANOTHER TAXPAYER OF AN
INVESTMENT TAX CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT UNDER THIS
CHAPTER WITH RESPECT TO THE SAME PROPERTY.
  S 6. Paragraph (d) of subdivision 12 of section 210 of the tax law, as
amended by chapter 637 of the laws  of  2008,  is  amended  to  read  as
follows:
  (d)  A  taxpayer  shall not be allowed a credit under this subdivision
with respect to tangible personal property and other tangible  property,
including  buildings  and  structural  components of buildings, which it
leases to any other person or corporation [except where a taxpayer leas-
es property  to  an  affiliated  regulated  broker,  dealer,  registered
investment  adviser,  national securities exchange or board of trade (or
other entity described in clause (F) of subparagraph  (i)  of  paragraph
(b)  of  this  subdivision)  that  uses such property in accordance with
clause (D), (E) or (F) of subparagraph (i)  of  paragraph  (b)  of  this
subdivision].  For  purposes  of the preceding sentence, any contract or

S. 6359--B                         220                        A. 8559--B

agreement to lease or rent or for a license to use such  property  shall
be  considered  a  lease.  Provided,  however,  in determining whether a
taxpayer shall be allowed a credit under this subdivision  with  respect
to such property, any election made with respect to such property pursu-
ant  to  the  provisions of paragraph eight of subsection (f) of section
one hundred sixty-eight of the internal revenue code, as such  paragraph
was  in effect for agreements entered into prior to January first, nine-
teen hundred eighty-four, shall be disregarded. [For  purposes  of  this
paragraph,  the  use of a qualified film production facility by a quali-
fied film production company shall not be considered  a  lease  of  such
facility to such company.]
  S  7. Subparagraph 6 of paragraph (g) of subdivision 12 of section 210
of the tax law is REPEALED.
  S 8. Paragraphs (f), (k), (l) and (m) of subdivision 12 of section 210
of the tax law are REPEALED.
  S 9. Paragraph 2 of subsection (a) of section 606 of the tax  law,  as
amended  by chapter 817 of the laws of 1987, subparagraph (A) as amended
by chapter 637 of the laws of 2008 and clause (v) of subparagraph (B) as
added by chapter 393 of the laws of 2005, is amended to read as follows:
  (2)(A) A credit shall be allowed under this subsection TO A  QUALIFIED
NEW  YORK  MANUFACTURER, A QUALIFIED NEW YORK AGRICULTURAL BUSINESS OR A
QUALIFIED NEW YORK MINING BUSINESS with  respect  to  tangible  personal
property and other tangible property, including buildings and structural
components  of  buildings,  which  (I)  are[:]  depreciable  pursuant to
section one hundred sixty-seven of the internal revenue code, (II)  have
a  useful  life of four years or more, (III) are acquired by purchase as
defined in section one hundred seventy-nine (d) of the internal  revenue
code,  (IV)  HAVE  NOT  BEEN PREVIOUSLY THE SUBJECT OF AN INVESTMENT TAX
CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT ALLOWED UNDER THIS  CHAP-
TER  TO  ANOTHER  TAXPAYER, (V) have a situs in this state, and (VI) are
[(i)] principally used by the taxpayer in the production  of  goods  [by
manufacturing,  processing,  assembling,  refining,  mining, extracting,
farming, agriculture, horticulture, floriculture, viticulture or commer-
cial  fishing,  (ii)  industrial  waste  treatment  facilities  or   air
pollution  control facilities, used in the taxpayer's trade or business,
(iii)] FOR SALE OR ARE research and development property[, (iv)  princi-
pally used in the ordinary course of the taxpayer's trade or business as
a  broker or dealer in connection with the purchase or sale (which shall
include but not be limited to the issuance, entering  into,  assumption,
offset,  assignment, termination, or transfer) of stocks, bonds or other
securities as defined in section four hundred seventy-five (c)(2) of the
Internal Revenue Code, or of commodities as defined in section 475(e) of
the Internal Revenue Code, (v) principally used in the  ordinary  course
of  the  taxpayer's  trade  or business of providing investment advisory
services for a regulated investment company as defined in section  eight
hundred  fifty-one  of  the  Internal  Revenue  Code,  or  lending, loan
arrangement or loan origination services to customers in connection with
the purchase or sale (which shall include but  not  be  limited  to  the
issuance, entering into, assumption, offset, assignment, termination, or
transfer)  of securities as defined in section four hundred seventy-five
(c)(2) of the Internal Revenue Code, or (vi) principally used as a qual-
ified film  production  facility  including  qualified  film  production
facilities  having a situs in an empire zone designated as such pursuant
to article eighteen-B of the general municipal law, where  the  taxpayer
is  providing  three  or  more services to any qualified film production
company using the facility, including such services as a studio lighting

S. 6359--B                         221                        A. 8559--B

grid, lighting and grip equipment, multi-line phone  service,  broadband
information  technology  access,  industrial  scale electrical capacity,
food services, security  services,  and  heating,  ventilation  and  air
conditioning. For purposes of clauses (iv) and (v) of this subparagraph,
property  purchased  by  a  taxpayer affiliated with a regulated broker,
dealer, or registered investment adviser is allowed a credit under  this
subsection  if  the property is used by its affiliated regulated broker,
dealer  or  registered  investment  adviser  in  accordance  with   this
subsection.  For  purposes of determining if the property is principally
used in qualifying uses, the uses by the taxpayer described  in  clauses
(iv)  and  (v)  of this subparagraph may be aggregated. In addition, the
uses by the taxpayer, its affiliated regulated broker, dealer and regis-
tered investment adviser under either or both of those  clauses  may  be
aggregated. Provided, however, a taxpayer shall not be allowed the cred-
it  provided  by  clauses  (iv)  and (v) of this subparagraph unless (I)
eighty percent or more of the employees  performing  the  administrative
and  support  functions resulting from or related to the qualifying uses
of such equipment are located in this state, or (II) the average  number
of  employees  that  perform  the  administrative  and support functions
resulting from or related to the qualifying uses of such  equipment  and
are  located  in this state during the taxable year for which the credit
is claimed is equal to or greater than ninety-five percent of the  aver-
age  number of employees that perform these functions and are located in
this state during the thirty-six months immediately preceding  the  year
for  which  the  credit  is  claimed,  or  (III) the number of employees
located in this state during the taxable year for which  the  credit  is
claimed  is  equal  to  or  greater than ninety percent of the number of
employees located in  this  state  on  December  thirty-first,  nineteen
hundred ninety-eight or, if the taxpayer was not a calendar year taxpay-
er  in  nineteen hundred ninety-eight, the last day of its first taxable
year ending after December thirty-first, nineteen hundred  ninety-eight.
If  the  taxpayer becomes subject to tax in this state after the taxable
year beginning in nineteen hundred ninety-eight, then  the  taxpayer  is
not  required  to  satisfy the employment test provided in the preceding
sentence of this subparagraph  for  its  first  taxable  year.  For  the
purposes  of  clause (III) of this subparagraph the employment test will
be based on the number of employees located in this state  on  the  last
day  of  the  first  taxable year the taxpayer is subject to tax in this
state. If the uses of the  property  must  be  aggregated  to  determine
whether the property is principally used in qualifying uses, then either
each  affiliate  using the property must satisfy this employment test or
this employment test must be satisfied through the  aggregation  of  the
employees  of the taxpayer, its affiliated regulated broker, dealer, and
registered investment adviser using the property. For purposes  of  this
subsection, the term "goods" shall not include electricity].
  (B)  For  purposes  of this paragraph, the following definitions shall
apply:
  (i) (I) Manufacturing shall mean the process of working raw  materials
into  wares  suitable  for use or which gives new shapes, new quality or
new combinations to matter which already has gone through  some  artifi-
cial  process by the use of machinery, tools, appliances and other simi-
lar equipment. Property used in the production of goods FOR  SALE  shall
include machinery, equipment or other tangible property which is princi-
pally  used  in  the repair and service of other machinery, equipment or
other tangible property used principally in the production of goods  and
shall include all facilities used in the production operation, including

S. 6359--B                         222                        A. 8559--B

storage  of  material  to be used in production and of the products that
are produced.
  (II)  NOTWITHSTANDING  THE  DEFINITION OF MANUFACTURING IN ITEM (I) OF
THIS  CLAUSE:  THE  GENERATION  AND  DISTRIBUTION  OF  ELECTRICITY,  THE
EXTRACTION  AND DISTRIBUTION OF NATURAL GAS, AND THE PRODUCTION OF STEAM
ASSOCIATED WITH THE GENERATION OF ELECTRICITY DOES NOT CONSTITUTE  MANU-
FACTURING.  THE  CREATION,  PRODUCTION  OR REPRODUCTION OF A FILM, TELE-
VISION SHOW OR COMMERCIAL DOES NOT CONSTITUTE MANUFACTURING. THE  BLEND-
ING  OF  TWO  OR  MORE FUELS DOES NOT CONSTITUTE MANUFACTURING. THE MASS
PRODUCTION OF FOOD PRODUCTS FOR COMMERCIAL  WHOLESALE  DISTRIBUTION  AND
SALE CONSTITUTES MANUFACTURING.
  (ii)  Research  and  development property shall mean property which is
used for purposes of research and development  in  the  experimental  or
laboratory sense. Such purposes shall not be deemed to include the ordi-
nary testing or inspection of materials or products for quality control,
efficiency  surveys,  management studies, consumer surveys, advertising,
promotions, or research in connection with literary, historical or simi-
lar projects.
  (iii) [Industrial  waste  treatment  facilities  shall  mean  property
constituting  facilities for the treatment, neutralization or stabiliza-
tion of industrial waste and other  wastes  (as  the  terms  "industrial
waste" and "other wastes" are defined in section 17-0105 of the environ-
mental conservation law) from a point immediately preceding the point of
such   treatment,  neutralization  or  stabilization  to  the  point  of
disposal, including the necessary pumping and  transmitting  facilities,
but  excluding  such  facilities  installed  for  the primary purpose of
salvaging materials which are usable in the manufacturing process or are
marketable.] "MANUFACTURER" SHALL MEAN A TAXPAYER THAT DURING THE  TAXA-
BLE  YEAR IS PRINCIPALLY ENGAGED IN MANUFACTURING. A TAXPAYER IS PRINCI-
PALLY ENGAGED IN MANUFACTURING IF MORE THAN FIFTY PERCENT OF  THE  GROSS
RECEIPTS  OF  THE  TAXPAYER DURING THE TAXABLE YEAR ARE DERIVED FROM THE
SALE OF GOODS PRODUCED BY MANUFACTURING. IN COMPUTING GROSS RECEIPTS FOR
A TAXPAYER THAT IS  A  PARTNER  IN  PARTNERSHIP,  INTER-ENTITY  RECEIPTS
BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  (iv)  [Air pollution control facilities shall mean property constitut-
ing facilities which remove, reduce, or render less noxious air  contam-
inants  emitted  from  an  air  contamination  source (as the terms "air
contaminant" and "air  contamination  source"  are  defined  in  section
19-0107  of the environmental conservation law) from a point immediately
preceding the point of such removal, reduction or rendering to the point
of discharge of air, meeting emission standards as  established  by  the
department  of environmental conservation, but excluding such facilities
installed for the primary  purpose  of  salvaging  materials  which  are
usable  in  the  manufacturing  process  or are marketable and excluding
those facilities which rely for their efficacy on  dilution,  dispersion
or  assimilation  of air contaminants in the ambient air after emission.
Such term shall further include flue gas desulfurization  equipment  and
attendant  sludge  disposal  facilities,  fluidized bed boilers, precom-
bustion coal cleaning facilities or other facilities that  conform  with
this  subsection  and which comply with the provisions of the State Acid
Deposition Control Act set forth in title nine of  article  nineteen  of
the  environmental  conservation law.] "QUALIFIED NEW YORK MANUFACTURER"
SHALL MEAN A MANUFACTURER THAT HAS PROPERTY IN THE STATE THAT IS USED IN
MANUFACTURING AND EITHER THE FAIR MARKET VALUE OF THAT PROPERTY  AT  THE
CLOSE  OF THE TAXABLE YEAR IS AT LEAST TEN MILLION DOLLARS OR ALL OF ITS
REAL AND PERSONAL PROPERTY IS LOCATED IN NEW YORK.

S. 6359--B                         223                        A. 8559--B

  (v) [For  purposes  of  this  paragraph,  the  terms  "qualified  film
production  facility" and "qualified film production company" shall have
the same meaning as in section twenty-four of this chapter.] A QUALIFIED
NEW YORK AGRICULTURAL BUSINESS SHALL MEAN A TAXPAYER PRINCIPALLY ENGAGED
IN  FARMING,  AGRICULTURE,  HORTICULTURE,  FLORICULTURE,  VITICULTURE OR
COMMERCIAL FISHING IN THE STATE. A TAXPAYER IS  PRINCIPALLY  ENGAGED  IN
FARMING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR COMMER-
CIAL  FISHING  IN  THE  STATE  IF  MORE  THAN FIFTY PERCENT OF THE GROSS
RECEIPTS OF THE TAXPAYER DURING THE TAXABLE YEAR ARE  DERIVED  FROM  THE
SALE  OF  GOODS PRODUCED BY THE TAXPAYER BY ANY OF THE ACTIVITIES SPECI-
FIED IN THIS SENTENCE THAT ARE CONDUCTED IN THE  STATE.    IN  COMPUTING
GROSS  RECEIPTS  FOR  A  TAXPAYER  THAT  IS  A  PARTNER  IN PARTNERSHIP,
INTER-ENTITY RECEIPTS BETWEEN THE TAXPAYER AND SUCH PARTNERSHIP SHALL BE
ELIMINATED.
  (VI) A QUALIFIED NEW YORK MINING BUSINESS SHALL MEAN A TAXPAYER  PRIN-
CIPALLY  ENGAGED  IN  MINING  IN  THE  STATE.  A TAXPAYER IS PRINCIPALLY
ENGAGED IN MINING IN THE STATE IF MORE THAN FIFTY PERCENT OF  THE  GROSS
RECEIPTS  OF  THE  TAXPAYER DURING THE TAXABLE YEAR ARE DERIVED FROM THE
SALE OF GOODS PRODUCED BY THE TAXPAYER BY  MINING  ACTIVITIES  THAT  ARE
CONDUCTED  IN THE STATE. IN COMPUTING GROSS RECEIPTS FOR A TAXPAYER THAT
IS A PARTNER IN PARTNERSHIP, INTER-ENTITY RECEIPTS BETWEEN THE  TAXPAYER
AND SUCH PARTNERSHIP SHALL BE ELIMINATED.
  (C)  [However, such credit shall be allowed with respect to industrial
waste treatment facilities and air pollution control facilities only  on
condition  that such facilities have been certified by the state commis-
sioner of environmental conservation or his  designated  representative,
pursuant  to  subdivision  one  of section 17-0707 or subdivision one of
section 19-0309 of the environmental conservation law, as complying with
applicable provisions of the environmental conservation law, the  public
health  law,  the  state  sanitary  code  and codes, rules, regulations,
permits or orders issued pursuant thereto.] IN ORDER TO PROPERLY  ADMIN-
ISTER  THE  CREDIT  AUTHORIZED  BY  THIS SUBDIVISION, THE DEPARTMENT MAY
DISCLOSE INFORMATION ABOUT THE  ALLOWANCE  TO  ANOTHER  TAXPAYER  OF  AN
INVESTMENT TAX CREDIT OR AN EMPIRE ZONE INVESTMENT TAX CREDIT UNDER THIS
CHAPTER WITH RESPECT TO THE SAME PROPERTY.
  S  10. Paragraph 4 of subsection (a) of section 606 of the tax law, as
amended by chapter 637 of the laws  of  2008,  is  amended  to  read  as
follows:
  (4)  A  taxpayer  shall  not be allowed a credit under this subsection
with respect to tangible personal property and other tangible  property,
including  buildings  and  structural  components of buildings, which it
leases to any other person or corporation [except where a taxpayer leas-
es property to an affiliated regulated  broker,  dealer,  or  registered
investment  adviser  that  uses  such property in accordance with clause
(iv) or (v) of subparagraph (A) of paragraph two  of  this  subsection].
For  purposes  of  the  preceding sentence, any contract or agreement to
lease or rent or for a license to use such property shall be  considered
a  lease.  Provided, however, in determining whether a taxpayer shall be
allowed a credit under this subsection with respect  to  such  property,
any  election  made  with  respect  to  such  property  pursuant  to the
provisions of paragraph eight of subsection (f) of section  one  hundred
sixty-eight  of  the  internal  revenue  code,  as such paragraph was in
effect for agreements entered into  prior  to  January  first,  nineteen
hundred  eighty-four,  shall be disregarded. [For purposes of this para-
graph, the use of a qualified film production facility  by  a  qualified

S. 6359--B                         224                        A. 8559--B

film production company shall not be considered a lease of such facility
to such company.]
  S  11.  Paragraph 6 of subsection (a) of section 606 of the tax law is
REPEALED.
  S 12. Subparagraph (F) of paragraph 7 of subsection (a) of section 606
of the tax law is REPEALED.
  S 13. Paragraphs 11, 12 and 13 of subsection (a) of section 606 of the
tax law are REPEALED.
  S 14. Subsection (i) of section 1456 of the tax law is REPEALED.
  S 15. Subdivision (q) of section 1511 of the tax law is REPEALED.
  S 16. Subparagraphs (vi) and (vii) of paragraph (a) of  subdivision  1
of section 210 of the tax law, subparagraph (vi) as amended by section 1
of  part  C  of chapter 56 of the laws of 2011 and subparagraph (vii) as
added by section 1 of part Z of chapter 59 of  the  laws  of  2013,  are
amended to read as follows:
  (vi) EXCEPT AS OTHERWISE PROVIDED IN THIS SUBPARAGRAPH OR SUBPARAGRAPH
(VII) OF THIS PARAGRAPH, for taxable years beginning on or after January
thirty-first,  two  thousand  seven, the amount prescribed by this para-
graph for a taxpayer which is a  qualified  New  York  manufacturer,  AS
DEFINED  IN  SUBDIVISION  FIFTEEN  OF  SECTION TWO HUNDRED EIGHT OF THIS
ARTICLE, A QUALIFIED NEW  YORK  AGRICULTURAL  BUSINESS,  AS  DEFINED  IN
CLAUSE  (C)  OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDIVISION TWELVE
OF THIS SECTION, AND A QUALIFIED NEW YORK MINING BUSINESS, AS DEFINED IN
CLAUSE (D) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF  SUBDIVISION  TWELVE
OF THIS SECTION, shall be computed at the rate of six and one-half (6.5)
percent  of  the  taxpayer's  entire  net income base. For taxable years
beginning on or after January first,  two  thousand  twelve  and  before
January first, two thousand fifteen, the amount prescribed by this para-
graph for a taxpayer which is an eligible qualified New York manufactur-
er shall be computed at the rate of three and one-quarter (3.25) percent
of  the  taxpayer's  entire  net income base.   [The term "manufacturer"
shall mean a taxpayer which  during  the  taxable  year  is  principally
engaged  in the production of goods by manufacturing, processing, assem-
bling, refining, mining, extracting, farming, agriculture, horticulture,
floriculture, viticulture or commercial fishing. However, the generation
and distribution of electricity, the distribution of  natural  gas,  and
the  production  of  steam associated with the generation of electricity
shall not be qualifying activities for a manufacturer under this subpar-
agraph. Moreover, the combined group shall be considered a  "manufactur-
er"  for purposes of this subparagraph only if the combined group during
the taxable year is principally engaged in the activities set  forth  in
this  paragraph,  or  any  combination thereof. A taxpayer or a combined
group shall be "principally engaged" in activities described  above  if,
during  the  taxable year, more than fifty percent of the gross receipts
of the taxpayer  or  combined  group,  respectively,  are  derived  from
receipts  from the sale of goods produced by such activities. In comput-
ing a combined group's gross receipts, intercorporate receipts shall  be
eliminated.  A "qualified New York manufacturer" is a manufacturer which
has property in New York which is described in clause  (A)  of  subpara-
graph  (i)  of  paragraph  (b) of subdivision twelve of this section and
either (I) the adjusted basis of such property for  federal  income  tax
purposes  at  the  close  of  the  taxable  year is at least one million
dollars or (II) all of its real and personal property is located in  New
York.  In addition, a "qualified New York manufacturer" means a taxpayer
which is defined as a qualified emerging technology company under  para-
graph  (c) of subdivision one of section thirty-one hundred two-e of the

S. 6359--B                         225                        A. 8559--B

public authorities law regardless of the ten million  dollar  limitation
expressed  in  subparagraph one of such paragraph (c).] The commissioner
shall establish guidelines and criteria  that  specify  requirements  by
which a manufacturer may be classified as an eligible qualified New York
manufacturer. Criteria may include but not be limited to factors such as
regional unemployment, the economic impact that manufacturing has on the
surrounding  community,  population decline within the region and median
income within the region in which the manufacturer is located. In estab-
lishing these guidelines and criteria, the commissioner  shall  endeavor
that  the  total annual cost of the lower rates shall not exceed twenty-
five million dollars.
  [(vii)] For a qualified New York manufacturer, as defined in [subpara-
graph (vi) of this paragraph] SUBDIVISION FIFTEEN OF SECTION TWO HUNDRED
EIGHT OF THIS ARTICLE, A QUALIFIED NEW YORK  AGRICULTURAL  BUSINESS,  AS
DEFINED  IN CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDIVI-
SION TWELVE OF THIS SECTION, AND A QUALIFIED NEW YORK  MINING  BUSINESS,
AS DEFINED IN CLAUSE (D) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDI-
VISION  TWELVE OF THIS SECTION, the rate at which the tax is computed in
effect for taxable years beginning on or after January first, two  thou-
sand thirteen and before January first, two thousand fourteen for quali-
fied  New  York  manufacturers  shall  be reduced by nine and two-tenths
percent for taxable years commencing on  or  after  January  first,  two
thousand fourteen and before January first, two thousand fifteen, twelve
and  three-tenths percent for taxable years commencing on or after Janu-
ary first, two thousand fifteen and before January first,  two  thousand
sixteen, fifteen and four-tenths percent for taxable years commencing on
or  after  January first, two thousand sixteen and before January first,
two thousand eighteen, and twenty-five percent for taxable years  begin-
ning on or after January first, two thousand eighteen.
  (VII)  FOR  AN UPSTATE NEW YORK MANUFACTURER, THE AMOUNT PRESCRIBED BY
THIS PARAGRAPH FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,
TWO  THOUSAND  FOURTEEN SHALL BE COMPUTED AT THE RATE OF ZERO PERCENT OF
THE TAXPAYER'S ENTIRE NET INCOME BASE.  AN UPSTATE NEW YORK MANUFACTURER
IS A QUALIFIED NEW YORK MANUFACTURER THAT DOES  NOT  OWN  OR  LEASE  ANY
TANGIBLE PERSONAL PROPERTY OR REAL PROPERTY IN THE METROPOLITAN COMMUTER
TRANSPORTATION  DISTRICT  AND  DOES NOT PAY ANY WAGES, SALARIES OR OTHER
PERSONAL SERVICE COMPENSATION WITHIN SUCH DISTRICT.
  S 17. Subparagraphs 2 and 3 of  paragraph  (b)  of  subdivision  1  of
section  210  of  the tax law, subparagraph 2 as amended by section 1 of
part GG-1 of chapter 57 of the laws of 2008 and subparagraph 3 as  added
by section 2 of part Z of chapter 59 of the laws of 2013, are amended to
read as follows:
  (2)  [For  purposes  of  subparagraph  one of this paragraph, the term
"manufacturer" shall mean a taxpayer which during the  taxable  year  is
principally  engaged  in the production of goods by manufacturing, proc-
essing, assembling, refining, mining, extracting, farming,  agriculture,
horticulture, floriculture, viticulture or commercial fishing. Moreover,
for  purposes  of  computing  the capital base in a combined report, the
combined group shall be considered a "manufacturer" for purposes of this
subparagraph only if the combined group during the taxable year is prin-
cipally engaged in the activities set forth in this subparagraph, or any
combination thereof. A taxpayer or a combined group shall be "principal-
ly engaged" in activities described above if, during the  taxable  year,
more  than  fifty  percent  of  the  gross  receipts  of the taxpayer or
combined group, respectively, are derived from receipts from the sale of
goods produced by such activities. In computing a combined group's gross

S. 6359--B                         226                        A. 8559--B

receipts, intercorporate receipts shall be eliminated. A "qualified  New
York  manufacturer" is a manufacturer that has property in New York that
is described in clause (A) of  subparagraph  (i)  of  paragraph  (b)  of
subdivision  twelve of this section and either (i) the adjusted basis of
that property for federal income tax purposes at the close of the  taxa-
ble  year  is  at  least one million dollars or (ii) all of its real and
personal property is located in New York. In addition, a "qualified  New
York  manufacturer"  means  a  taxpayer  that  is defined as a qualified
emerging technology company under paragraph (c) of  subdivision  one  of
section  thirty-one  hundred two-e of the public authorities law regard-
less of the ten million dollar limitation expressed in subparagraph  one
of such paragraph.
  (3)]  For  a  qualified New York manufacturer, as defined in [subpara-
graph two of this paragraph] SUBDIVISION FIFTEEN OF SECTION TWO  HUNDRED
EIGHT  OF  THIS  ARTICLE, A QUALIFIED NEW YORK AGRICULTURAL BUSINESS, AS
DEFINED IN CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF  SUBDIVI-
SION  TWELVE  OF THIS SECTION, AND A QUALIFIED NEW YORK MINING BUSINESS,
AS DEFINED IN CLAUSE (D) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDI-
VISION TWELVE OF THIS SECTION, the rate at which the tax is computed  in
effect  for taxable years beginning on or after January first, two thou-
sand thirteen and before January first, two thousand fourteen  shall  be
reduced  by  nine and two-tenths percent for taxable years commencing on
or after January first, two thousand fourteen and before January  first,
two  thousand fifteen, twelve and three-tenths percent for taxable years
commencing on or after January first, two thousand  fifteen  and  before
January first, two thousand sixteen, fifteen and four-tenths percent for
taxable years commencing on or after January first, two thousand sixteen
and before January first, two thousand eighteen, and twenty-five percent
for  taxable  years  beginning  on  or after January first, two thousand
eighteen.
  S 18. Subparagraph (iii) of paragraph (c) of subdivision 1 of  section
210 of the tax law, as added by section 3 of part Z of chapter 59 of the
laws of 2013, is amended to read as follows:
  (iii)  For  a qualified New York manufacturer, as defined in [subpara-
graph (vi) of paragraph (a) of this] subdivision FIFTEEN OF SECTION  TWO
HUNDRED  EIGHT  OF THIS ARTICLE, A QUALIFIED NEW YORK AGRICULTURAL BUSI-
NESS, AS DEFINED IN CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B)  OF
SUBDIVISION  TWELVE  OF  THIS  SECTION,  AND A QUALIFIED NEW YORK MINING
BUSINESS, AS DEFINED IN CLAUSE (D) OF SUBPARAGRAPH (II) OF PARAGRAPH (B)
OF SUBDIVISION TWELVE OF THIS SECTION, the rate  at  which  the  tax  is
computed  in  effect  for  taxable  years  beginning on or after January
first, two thousand thirteen and  before  January  first,  two  thousand
fourteen  for  qualified New York manufacturers shall be reduced by nine
and two-tenths percent for taxable years commencing on or after  January
first,  two  thousand  fourteen  and  before January first, two thousand
fifteen, twelve and three-tenths percent for taxable years commencing on
or after January first, two thousand fifteen and before  January  first,
two  thousand sixteen, fifteen and four-tenths percent for taxable years
commencing on or after January first, two thousand  sixteen  and  before
January  first, two thousand eighteen, and twenty-five percent for taxa-
ble years beginning on or after January first, two thousand eighteen.
  S 19. Subparagraph 6 of paragraph (d) of subdivision 1 of section  210
of  the  tax  law,  as added by section 4 of part Z of chapter 59 of the
laws of 2013, is amended to read as follows:
  (6) For a qualified New York manufacturer, as defined in [subparagraph
(vi) of paragraph (a)  of  this]  subdivision  FIFTEEN  OF  SECTION  TWO

S. 6359--B                         227                        A. 8559--B

HUNDRED  EIGHT  OF THIS ARTICLE, A QUALIFIED NEW YORK AGRICULTURAL BUSI-
NESS, AS DEFINED IN CLAUSE (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B)  OF
SUBDIVISION  TWELVE  OF  THIS  SECTION,  AND A QUALIFIED NEW YORK MINING
BUSINESS, AS DEFINED IN CLAUSE (D) OF SUBPARAGRAPH (II) OF PARAGRAPH (B)
OF SUBDIVISION TWELVE OF THIS SECTION, the amounts prescribed in subpar-
agraphs  one  and  four  of  this  paragraph in effect for taxable years
beginning on or after January first, two thousand  thirteen  and  before
January  first, two thousand fourteen for qualified New York manufactur-
ers shall be reduced by nine and two-tenths percent  for  taxable  years
commencing  on  or after January first, two thousand fourteen and before
January first, two thousand fifteen, twelve and three-tenths percent for
taxable years commencing on or after January first, two thousand fifteen
and before January first, two thousand sixteen, fifteen and  four-tenths
percent  for  taxable  years  commencing  on or after January first, two
thousand sixteen and before January first, two  thousand  eighteen,  and
twenty-five  percent  for  taxable  years  beginning on or after January
first, two thousand eighteen.
  S 20. Subdivision 1 of section 210 of the tax law is amended by adding
a new paragraph (h) to read as follows:
  (H) FOR PURPOSES OF DETERMINING WHETHER  A  TAXPAYER  IS  AN  ELIGIBLE
QUALIFIED  NEW  YORK  MANUFACTURER  FOR  PURPOSES  OF  THE  TAX BENEFITS
PROVIDED IN SUBPARAGRAPH (VI) OF  PARAGRAPH  (A)  OF  THIS  SUBDIVISION,
SUBPARAGRAPH (II) OF PARAGRAPH (C) OF THIS SUBDIVISION, AND SUBPARAGRAPH
FIVE  OF PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER SHALL UTILIZE THE
LAW, GUIDELINES AND CRITERIA IN EFFECT  ON  DECEMBER  THIRTY-FIRST,  TWO
THOUSAND THIRTEEN.
  S 21. Subdivision 2 of section 355 of the economic development law, as
amended  by  section  4  of part G of chapter 61 of the laws of 2011, is
amended to read as follows:
  2. Excelsior investment tax credit component.  A  participant  in  the
excelsior  jobs program shall be eligible to claim a credit on qualified
investments. The credit shall be equal to two percent  of  the  cost  or
other basis for federal income tax purposes of the qualified investment.
A  participant  may  not  claim both the excelsior investment tax credit
component and the investment tax credit set forth in subdivision  twelve
of  section  two hundred ten[,] OR subsection (a) of section six hundred
six[, subsection (i) of section fourteen hundred fifty-six, or  subdivi-
sion  (q) of section fifteen hundred eleven] of the tax law for the same
property in any taxable year, except that a participant may  claim  both
the  excelsior  investment  tax  credit component and the investment tax
credit for research and development property. In  addition,  a  taxpayer
who  or  which is qualified to claim the excelsior investment tax credit
component and is also qualified to claim the brownfield tangible proper-
ty credit component under section twenty-one of the tax  law  may  claim
either  the  excelsior  investment tax credit component or such tangible
property credit component, but not both  with  regard  to  a  particular
piece  of  property. A credit may not be claimed until a business enter-
prise has received a certificate of tax credit, provided that  qualified
investments  made  on or after the issuance of the certificate of eligi-
bility but before the issuance of the certificate of tax credit  to  the
business  enterprise, may be claimed in the first taxable year for which
the business  enterprise  is  allowed  to  claim  the  credit.  Expenses
incurred  prior to the date the certificate of eligibility is issued are
not eligible to be included in the calculation of the credit.
  S 22. Severability. The legislature intends by  this  act  to  provide
needed  tax  relief  to  New  York manufacturers. However, if a court of

S. 6359--B                         228                        A. 8559--B

final, competent jurisdiction adjudges the tax rates imposed  on  quali-
fied  New  York manufacturers to be invalid, qualified New York manufac-
turers shall be subject to the same tax rates  as  all  other  taxpayers
subject to tax under article nine-A of the tax law. Provided further, if
a  court  of final, competent jurisdiction adjudges that the tax credits
provided by this act to qualified New York manufacturers, qualified  New
York agricultural businesses and qualified New York mining businesses to
be  invalid,  such  credits  shall be deemed repealed and shall be of no
force and effect as to any taxpayers.
  S 23.  Notwithstanding  the  repeal  of  the  investment  tax  credits
provided  in  clauses (D), (E), (F) and (G) of subparagraph (i) of para-
graph (b) of subdivision twelve of section two hundred ten  of  the  tax
law  by section five of this act, clauses (iv), (v) and (vi) of subpara-
graph A of paragraph 2 of subsection (a) of section 606 of the  tax  law
by  section 9 of this act, subsection (i) of section 1456 of the tax law
by section 14 of this act and subdivision (q) of section 1511 of the tax
law by section 15 of this act, a taxpayer shall be  allowed  to  utilize
any  carryforward  amounts of credits to which the taxpayer was entitled
as of the close of the taxable year beginning on or after January first,
two thousand thirteen and before January first, two  thousand  fourteen.
Notwithstanding  such  repeal, a taxpayer shall be required in a taxable
year beginning on or after January  first,  two  thousand  fourteen,  to
recapture  all  or  a portion of such investment tax credit if recapture
would have been otherwise required.
  S 24. This act shall take effect immediately and shall apply to  taxa-
ble years beginning on or after January 1, 2014.

                                 PART S

  Section  1. Sections 185, 187-j, 187-k, 187-l, 187-m, 187-q, 187-r and
187-s of the tax law are REPEALED.
  S 2. Paragraph (c) of subdivision 9 of section  400  of  the  economic
development  law,  as  added by section 2 of part V of chapter 61 of the
laws of 2011, is amended to read as follows:
  (c) the business entity must not be substantially similar in ownership
and operation to another taxpayer taxable or  previously  taxable  under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION  one  hundred  eighty-five  of  article nine, former section one
hundred eighty-six or article nine-A, twenty-two, thirty-two or  thirty-
three of the tax law or the income or losses of which is or was includa-
ble under article twenty-two of the tax law;
  S  3.  Paragraph  (c)  of subdivision 6 of section 431 of the economic
development law, as added by section 1 of part A of chapter  68  of  the
laws of 2013, is amended to read as follows:
  (c)  the  business  is  not  substantially similar in operation and in
ownership to a business entity  (or  entities)  taxable,  or  previously
taxable  within  the  last five taxable years, under section one hundred
eighty-three[,] OR one hundred eighty-four, FORMER SECTION  one  hundred
eighty-five  or  FORMER  SECTION  one hundred eighty-six of the tax law,
article nine-A, thirty-two or thirty-three of the tax law, article twen-
ty-three of the tax law or which would have been subject  to  tax  under
such  article  twenty-three  (as  such  article was in effect on January
first, nineteen hundred eighty), or the income (or losses) of  which  is
(or was) includable under article twenty-two of the tax law; and
  S  4.  Paragraph 1 of subdivision (a), subdivision (f), paragraph 1 of
subdivision (i) and subdivisions (j) and (k) of section 14  of  the  tax

S. 6359--B                         229                        A. 8559--B

law,  paragraph  1 of subdivision (a) as amended by section 3 of part V1
of chapter 109 of the laws of 2006, subdivisions (f) and (j) as  amended
by  section 10 of part CC of chapter 85 of the laws of 2002, paragraph 1
of  subdivision  (i)  and  subdivision (k) as amended and paragraph 4 of
subdivision (j) as added by section 5 of part A of  chapter  63  of  the
laws  of  2005,  subparagraph  (B)  of paragraph 4 of subdivision (j) as
amended by chapter 161 of the laws of 2005 and paragraph 5  of  subdivi-
sion  (j)  as amended by section 4 of part V1 of chapter 109 of the laws
of 2006, are amended to read as follows:
  (1) except as provided in paragraphs one-a and one-b of this  subdivi-
sion,  for purposes of [section one hundred eighty-seven-j and] articles
nine-A, twenty-two, thirty-two and thirty-three  of  this  chapter,  for
each  of  the  taxable  years  within the "business tax benefit period,"
which period shall consist of (A) in the case of a  business  enterprise
with a test date occurring on or before December thirty-first, two thou-
sand  one, the first fifteen taxable years beginning on or after January
first, two thousand one, (B) in the case of a business enterprise with a
test date occurring on or after January first,  two  thousand  two,  but
prior  to April first, two thousand five, the fifteen taxable years next
following the business enterprise's test year, and (C) in the case of  a
business enterprise which is first certified under article eighteen-B of
the  general  municipal  law on or after April first, two thousand five,
the ten taxable years starting with the taxable year in which the  busi-
ness  enterprise's  first date of certification under article eighteen-B
of the general municipal law occurs, but only with respect  to  each  of
such  business tax benefit period years for which the employment test is
met,
  (f) Taxable year. The term "taxable year" means the  taxable  year  of
the business enterprise under section one hundred eighty-three[,] OR one
hundred  eighty-four[,  one  hundred  eighty-five] or former section one
hundred eighty-six of article nine, or under article nine-A, twenty-two,
thirty-two or thirty-three of this chapter.  If  a  business  enterprise
does  not  have  a  taxable  year  because it is exempt from taxation or
otherwise not required to file a return under any of  such  sections  of
article  nine or under article nine-A, twenty-two, thirty-two or thirty-
three, then the term "taxable year" means (i) the business  enterprise's
federal taxable year, or, (ii) if the enterprise does not have a federal
taxable year, the calendar year.
  (1)  for  purposes  of  [section one hundred eighty-seven-j of article
nine, and] articles nine-A, twenty-two, thirty-two and  thirty-three  of
this  chapter, on the first day of the taxable year during which revoca-
tion of its certification under article eighteen-B of the general munic-
ipal law occurs, and
  (j) New business. (1) A new business shall  include  any  corporation,
except  a corporation which is substantially similar in operation and in
ownership to a business entity  (or  entities)  taxable,  or  previously
taxable,  under  section  one  hundred eighty-three, one hundred eighty-
four, FORMER SECTION one  hundred  eighty-five  or  FORMER  SECTION  one
hundred  eighty-six  of article nine; article nine-A, article thirty-two
or thirty-three of this chapter; article twenty-three of this chapter or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the income (or losses) of which is (or  was)  includable  under  article
twenty-two of this chapter.
  (2)  For purposes of article twenty-two of this chapter, an individual
who is either a sole proprietor or a member of a partnership shall qual-

S. 6359--B                         230                        A. 8559--B

ify as an owner of a new business unless the business of which the indi-
vidual is an owner is substantially similar in operation and  in  owner-
ship  to a business entity taxable, or previously taxable, under section
one  hundred  eighty-three,  one hundred eighty-four, FORMER SECTION one
hundred eighty-five or FORMER SECTION one hundred eighty-six of  article
nine;  article nine-A, thirty-two or thirty-three of this chapter; arti-
cle twenty-three of this chapter or which would have been subject to tax
under such article twenty-three (as such article was in effect on  Janu-
ary  first,  nineteen hundred eighty) or the income (or losses) of which
is (or was) includable under article twenty-two.
  (3) For purposes of article twenty-two of this chapter, a  shareholder
of a New York S corporation shall be treated as the owner of a new busi-
ness  with  respect  to such share if the corporation qualifies as a new
business pursuant to paragraph one of this subdivision.
  (4) (A)(i) Notwithstanding paragraphs one and two of this subdivision,
a new business shall include any corporation which is identical in oper-
ation and ownership to a business entity  (or  entities)  taxable  under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION one hundred eighty-five of article nine; article nine-A, article
thirty-two  or thirty-three of this chapter or the income (or losses) of
which is includable under article twenty-two of this  chapter,  provided
such  corporation  and such business entity or entities are operating in
different counties in the state.
  (ii) Notwithstanding paragraphs one and two of  this  subdivision,  an
individual  who is either a sole proprietor or a member of a partnership
shall qualify as an owner of a new business if the business of which the
individual is an owner is identical in operation and in ownership  to  a
business  entity (or entities) taxable under section one hundred eighty-
three[,] OR one hundred eighty-four or FORMER SECTION one hundred eight-
y-five of article nine; article nine-A, article  thirty-two  or  thirty-
three  of  this chapter or the income (or losses) of which is includable
under article twenty-two of this chapter,  provided  such  business  and
such  business entity or entities are operating in different counties in
the state.
  (iii) Any corporation qualifying as a new business or  any  individual
qualifying  as  an owner of a new business as a result of the provisions
of this subparagraph shall have the same business tax benefit period and
sales and use tax benefit period as the business entity to which  it  is
identical in operation and in ownership.
  (B) Notwithstanding any provisions of this subdivision to the contrary
and  notwithstanding  subdivision  c  of  section eighteen of part CC of
chapter eighty-five of the laws of two thousand two,  a  corporation  or
partnership,  which  was first certified under article eighteen-B of the
general municipal law before August first, two thousand two, has a  base
period  of  zero  years  or  zero employment for its base period, and is
similar in operation and in ownership to a business entity  or  entities
taxable,  or  previously  taxable, under sections specified in paragraph
one or two of this subdivision or which would have been subject  to  tax
under  article  twenty-three  of  this  chapter  (as such article was in
effect on January first, nineteen hundred eighty) or the income or loss-
es of which is or was includable under article twenty-two of this  chap-
ter  shall not be deemed a new business if it was not formed for a valid
business purpose, as such term is defined in clause (D) of  subparagraph
one of paragraph (o) of subdivision nine of section two hundred eight of
this chapter and was formed solely to gain empire zone benefits.

S. 6359--B                         231                        A. 8559--B

  (5)  Notwithstanding  any  other provision of this section, a business
enterprise which is approved by the commissioner of economic development
as the owner of a qualified investment project or a significant  capital
investment  project  pursuant to subdivision (w) of section nine hundred
fifty-nine of the general municipal law, has a base period of zero years
and  places in service property (or a project that includes such proper-
ty) which comprises such qualified investment project  or  such  signif-
icant  capital  investment project[,], shall be deemed to be a new busi-
ness under this section. Provided, however, to be deemed a new  business
under  this  paragraph,  such  business  enterprise  shall have received
certification under article eighteen-B of the general  business  law  by
December thirty-first, two thousand seven.
  (k)  If  the  designation of an area as an empire zone is no longer in
effect because section nine hundred sixty-nine of the general  municipal
law  was not amended to extend the effective date of such designation so
that the designations of all empire zones pursuant to article eighteen-B
of the general municipal law have expired, a  business  enterprise  that
was  certified  pursuant  to article eighteen-B of the general municipal
law on the day immediately preceding the day on which  such  designation
expired  shall  be deemed to continue to be certified under such article
eighteen-B for purposes of this section, and sections fifteen,  sixteen,
[section  one  hundred  eighty-seven-j,]  subdivisions  twenty-seven and
twenty-eight of section two hundred ten, subsections (bb)  and  (cc)  of
section six hundred six, subdivision [(z)] (D) of section eleven hundred
[fifteen]  NINETEEN, subsections (o) and (p) of section fourteen hundred
fifty-six, and subdivisions (r) and (s) of section fifteen hundred elev-
en of this chapter. In addition, if the designation of  an  area  as  an
empire  zone  is no longer in effect because section nine hundred sixty-
nine of the general municipal law was not amended to extend  the  effec-
tive  date  of  such  designation so that the designations of all empire
zones pursuant to article eighteen-B of the general municipal  law  have
expired,  all references to empire zones in the provisions of this chap-
ter listed in the previous sentence  shall  be  read  as  meaning  areas
designated  as  empire zones on the day immediately preceding the day on
which such designation expired.
  S 5. Paragraph 1 of subdivision (h) of section 15 of the  tax  law  is
REPEALED.
  S 6. The closing paragraph of subdivision (a) of section 28 of the tax
law,  as added by section 2 of part V of chapter 62 of the laws of 2006,
is amended to read as follows:
  (4) Notwithstanding any provisions of this section to the contrary,  a
corporation  or  partnership,  which  otherwise qualifies as a qualified
commercial production company, and is similar in operation and in owner-
ship to a business entity or entities taxable,  or  previously  taxable,
under  section one hundred eighty-three[,] OR one hundred eighty-four or
FORMER SECTION one hundred eighty-five of article nine; article  nine-A,
article  thirty-two  or thirty-three of this chapter or which would have
been subject to tax under article twenty-three of this chapter (as  such
article  was in effect on January first, nineteen hundred eighty) or the
income or losses of which is or was includable under article  twenty-two
of  this  chapter  shall  not  be deemed a new or separate business, and
therefore shall not be eligible for empire state  commercial  production
benefits,  if  it  was  not formed for a valid business purpose, as such
term is defined in clause (D) of subparagraph one of  paragraph  (o)  of
subdivision  nine  of  section two hundred eight of this chapter and was

S. 6359--B                         232                        A. 8559--B

formed solely to gain empire state commercial  production  credit  bene-
fits.
  S  7.  Subdivision  (a)  of  section  31 of the tax law, as amended by
section 7 of part G of chapter 61 of the laws of  2011,  is  amended  to
read as follows:
  (a)  General.  A  taxpayer  subject  to tax under [section one hundred
eighty-five,] article nine-A, twenty-two, thirty-two or thirty-three  of
this chapter shall be allowed a credit against such tax, pursuant to the
provisions  referenced in subdivision (g) of this section. The amount of
the credit, allowable for up to ten consecutive taxable  years,  is  the
sum of the following four credit components:
  (1) the excelsior jobs tax credit component;
  (2) the excelsior investment tax credit component;
  (3) the excelsior research and development tax credit component; and
  (4) the excelsior real property tax credit component.
  S  8.  Paragraph  1 of subdivision (g) of section 31 of the tax law is
REPEALED.
  S 9. The opening paragraph of  paragraph  1  of  subdivision  (a)  and
subparagraph  (C) of paragraph 2 of subdivision (e) of section 35 of the
tax law, as added by section 3 of part V of chapter 61 of  the  laws  of
2011, are amended to read as follows:
  A taxpayer which is a participant or the owner of a participant in the
economic transformation and facility redevelopment program under article
eighteen  of  the  economic development law that is subject to tax under
[section one hundred eighty-five of article nine,  or]  article  nine-A,
twenty-two,  thirty-two or thirty-three of this chapter shall be allowed
the sum of following  components  against  such  tax,  pursuant  to  the
provisions referenced in subdivision (f) of this section.
  (C) the business entity must not be substantially similar in ownership
and  operation  to  another taxpayer taxable or previously taxable under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION one hundred eighty-five of  article  nine,  former  section  one
hundred  eighty-six of this chapter or article nine-A, twenty-two, thir-
ty-two or thirty-three of this chapter or the income or losses of  which
is or was includable under article twenty-two of this chapter;
  S  10. Paragraph 1 of subdivision (f) of section 35 of the tax law, as
added by section 3 of part V of chapter 61  of  the  laws  of  2011,  is
REPEALED.
  S  11. Paragraph 1 of subdivision (e) of section 38 of the tax law, as
added by section 1 of part EE of chapter 59 of  the  laws  of  2013,  is
REPEALED.
  S 12. Subdivision 2 of section 187 of the tax law, as added by chapter
788 of the laws of 1978, is amended to read as follows:
  2.  In  no event shall the credit herein provided for be allowed in an
amount which will reduce the tax payable to  less  than  the  applicable
minimum  tax  fixed  by  section  one hundred eighty-three[, one hundred
eighty-five] or FORMER SECTION one hundred eighty-six. If, however,  the
amount  of  credit  allowable  under  this  section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such taxable year may be carried over to the following year or years and
may be deducted from the taxpayer's tax for such year or years.
  S 13. Subdivision 5 of section 187-a of the tax law, as added by chap-
ter 142 of the laws of 1997, is amended to read as follows:
  5.  Carryover.  In  no  event  shall  the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable  minimum  tax fixed by section one hundred eighty-three[, one

S. 6359--B                         233                        A. 8559--B

hundred eighty-five] or FORMER SECTION one hundred  eighty-six  of  this
article.  If, however, the amount of credit allowable under this section
for any taxable year reduces the tax to such amount, any amount of cred-
it  not  deductible  in  such  taxable  year  may be carried over to the
following year or years and may be deducted from the taxpayer's tax  for
such year or years.
  S 14. Subdivisions 1 and 4 of section 187-b of the tax law, as amended
by section 1 of part G of chapter 59 of the laws of 2013, are amended to
read as follows:
  1.  General.  A  taxpayer  shall  be  allowed a credit, to be credited
against the taxes imposed under sections one hundred eighty-three[,] AND
one hundred eighty-four[, and one hundred eighty-five] of this  article.
Such  credit,  to  be computed as hereinafter provided, shall be allowed
for alternative fuel vehicle refueling and electric  vehicle  recharging
property  placed  in service during the taxable year. Provided, however,
that the amount of such credit allowable  against  the  tax  imposed  by
section  one  hundred eighty-four of this article shall be the excess of
the credit allowed by this section over the amount of such credit allow-
able against the tax imposed by section one hundred eighty-three of this
article.
  4. Carryovers. In no event shall the  credit  under  this  section  be
allowed  in an amount which will reduce the tax payable to less than the
applicable minimum tax fixed by section one hundred eighty-three [or one
hundred eighty-five] of this article. If, however, the amount of  credit
allowable  under  this  section  for any taxable year reduces the tax to
such amount, any amount of credit not deductible in  such  taxable  year
may  be  carried over to the following year or years and may be deducted
from the taxpayer's tax for such year or years.
  S 15. Section 187-c of the tax law, as amended by section 2 of part  K
of chapter 59 of the laws of 2012, is amended to read as follows:
  S  187-c.  Biofuel  production  credit.  A taxpayer shall be allowed a
credit to be computed as provided in section twenty-eight of this  chap-
ter, as added by part X of chapter sixty-two of the laws of two thousand
six,  against  the  tax imposed by this article. Provided, however, that
the amount of such credit allowed against the tax imposed by section one
hundred eighty-four of this article shall be the excess of the amount of
such credit over the amount  of  any  credit  allowed  by  this  section
against  the  tax  imposed  by  section one hundred eighty-three of this
article. In no event shall the credit under this section be  allowed  in
an  amount which will reduce the tax payable to less than the applicable
minimum tax fixed by section one hundred eighty-three  [or  one  hundred
eighty-five]  of  this  article.  If,  however, the amount of the credit
allowed under this section for any taxable year reduces the tax to  such
amount, the excess shall be treated as an overpayment of tax to be cred-
ited  or  refunded  in  accordance  with  the  provisions of section six
hundred eighty-six of this chapter. Provided, however, the provisions of
subsection (c) of section one  thousand  eighty-eight  of  this  chapter
notwithstanding,  no  interest  shall  be  paid  thereon. The tax credit
allowed pursuant to this section shall apply to taxable years  beginning
before January first, two thousand twenty.
  S  16.  Section 187-d of the tax law, as added by section 3 of part II
of chapter 63 of the laws of 2000, is amended to read as follows:
  S 187-d. Green building credit. 1. Allowance  of  credit.  A  taxpayer
shall  be  allowed a credit, to be computed as provided in section nine-
teen of this chapter, against the taxes imposed by sections one  hundred
eighty-three,  one  hundred  eighty-four[,  one hundred eighty-five] and

S. 6359--B                         234                        A. 8559--B

FORMER SECTION one hundred eighty-six of this article. Provided,  howev-
er,  that the amount of such credit allowable against the tax imposed by
section one hundred eighty-four of this article shall be the  excess  of
the  amount of such credit over the amount of any credit allowed by this
section against the tax imposed by section one hundred  eighty-three  of
this article.
  2.  Carryovers.  In  no  event  shall the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable  minimum  tax fixed by section one hundred eighty-three[, one
hundred eighty-five] or FORMER SECTION one hundred  eighty-six  of  this
article.  If, however, the amount of credit allowable under this section
for any taxable year reduces the tax to such amount, any amount of cred-
it not deductible in such taxable  year  may  be  carried  over  to  the
following  year or years and may be deducted from the taxpayer's tax for
such year or years.
  S 17. Subdivisions 1 and 2 of section 187-e of the tax law,  as  added
by section 2 of part I of chapter 63 of the laws of 2000, are amended to
read as follows:
  1.  Allowance  of  credit. A taxpayer shall be allowed a credit, to be
computed as provided in section twenty  of  this  chapter,  against  the
taxes  imposed by sections one hundred eighty-three, one hundred eighty-
four[, one hundred eighty-five] and FORMER SECTION one  hundred  eighty-
six  of  this article. Provided, however, that the amount of such credit
allowable against the tax imposed by section one hundred eighty-four  of
this  article  shall be the excess of the amount of such credit over the
amount of any credit allowed by this section against the tax imposed  by
section one hundred eighty-three of this article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three[,  one hundred eighty-five] or FORMER SECTION one hundred eight-
y-six of this article. If, however, the amount of credit allowable under
this section for any taxable year reduces the tax to  such  amount,  any
amount  of  credit  not  thus  deductible  in such taxable year shall be
treated as an overpayment of tax to be credited or refunded  in  accord-
ance with the provisions of section ten hundred eighty-six of this chap-
ter.  Provided, however, the provisions of subsection (c) of section ten
hundred eighty-eight of this chapter notwithstanding, no interest  shall
be paid thereon.
  S 18. Section 187-g of the tax law, as added by section 2 of part H of
chapter 1 of the laws of 2003, is amended to read as follows:
  S  187-g. Brownfield redevelopment tax credit. 1. Allowance of credit.
A taxpayer shall be allowed a credit, to  be  computed  as  provided  in
section  twenty-one  of  this  chapter,  against  the  taxes  imposed by
sections one hundred eighty-three[,] AND one  hundred  eighty-four  [and
one  hundred  eighty-five]  of this article. Provided, however, that the
amount of such credit allowable against the tax imposed by  section  one
hundred eighty-four of this article shall be the excess of the amount of
such  credit  over  the  amount  of  any  credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  [or  one hundred eighty-five] of this article. If, however, the
amount of credit allowable under  this  section  for  any  taxable  year

S. 6359--B                         235                        A. 8559--B

reduces  the  tax to such amount, any amount of credit not deductible in
such taxable year shall be treated  as  an  overpayment  of  tax  to  be
refunded in accordance with the provisions of section ten hundred eight-
y-six  of  this chapter. Provided, however, the provisions of subsection
(c) of section ten hundred eighty-eight of this chapter notwithstanding,
no interest shall be paid thereon.
  S 19. Section 187-h of the tax law, as added by section 13 of  part  H
of  chapter 1 of the laws of 2003, subdivision 1 as amended by section 5
of part H of chapter 577 of the laws of 2004,  is  amended  to  read  as
follows:
  S  187-h.  Remediated  brownfield  credit  for real property taxes for
qualified sites. 1. Allowance of credit. A taxpayer shall be  allowed  a
credit,  to  be computed as provided in subdivision (b) of section twen-
ty-two of this chapter,  against  the  taxes  imposed  by  sections  one
hundred  eighty-three[,]  AND  one  hundred eighty-four [and one hundred
eighty-five] of this article. Provided, however, that the amount of such
credit allowed against the tax imposed by section  one  hundred  eighty-
four  of  this  article shall be the excess of the amount of such credit
over the amount of any credit allowed by this section  against  the  tax
imposed by section one hundred eighty-three of this article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  [or  one hundred eighty-five] of this article. If, however, the
amount of credit allowed under this section for any taxable year reduces
the tax to such amount, any amount of credit not thus deductible in such
taxable year shall be treated as an overpayment of tax to be credited or
refunded in accordance with the provisions of section ten hundred eight-
y-six of this chapter. Provided, however, the provisions  of  subsection
(c) of section ten hundred eighty-eight of this chapter notwithstanding,
no interest shall be paid thereon.
  S  20.  Section 187-i of the tax law, as added by section 20 of part H
of chapter 1 of the laws of 2003, is amended to read as follows:
  S 187-i. Environmental remediation insurance credit. 1.  Allowance  of
credit. A taxpayer shall be allowed a credit, to be computed as provided
in  section  twenty-three  of this chapter, against the taxes imposed by
sections one hundred eighty-three[,] AND one  hundred  eighty-four  [and
one  hundred  eighty-five]  of this article. Provided, however, that the
amount of such credit allowable against the tax imposed by  section  one
hundred eighty-four of this article shall be the excess of the amount of
such  credit  over  the  amount  of  any  credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less  than  the  applicable  minimum  tax  fixed  by section one hundred
eighty-three [or one hundred eighty-five] of this article. If,  however,
the  amount  of credit allowable under this section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such  taxable  year  shall  be  treated  as  an overpayment of tax to be
refunded in accordance with  the  provisions  of  section  one  thousand
eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
subsection (c) of section one  thousand  eighty-eight  of  this  chapter
notwithstanding, no interest shall be paid thereon.
  S  21.  Subdivision  2  of  section  187-n of the tax law, as added by
chapter 537 of the laws of 2005, is amended to read as follows:

S. 6359--B                         236                        A. 8559--B

  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed  in  an amount which will reduce the tax payable to
less than the applicable  minimum  tax  fixed  by  section  one  hundred
eighty-three  [or one hundred eighty-five] of this article. If, however,
the  amount  of credit allowable under this section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such  taxable  year  shall  be  treated  as  an overpayment of tax to be
refunded in accordance with  the  provisions  of  section  one  thousand
eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
subsection (c) of section one  thousand  eighty-eight  of  this  chapter
notwithstanding, no interest shall be paid thereon.
  S  22.  Subdivisions 1 and 3 of section 187-n of the tax law, subdivi-
sion 1 as amended by section 1 of part C1 of chapter 57 of the  laws  of
2009  and subdivision 3 as added by chapter 446 of the laws of 2005, are
amended to read as follows:
  (1) Allowance of credit. For taxable years  beginning  before  January
first, two thousand nine, a taxpayer whose business is not substantially
engaged  in  the  commercial  generation, distribution, transmission, or
servicing of energy or energy products shall be allowed a credit against
the taxes imposed  by  sections  one  hundred  eighty-three[,]  AND  one
hundred eighty-four [and one hundred eighty-five] of this article, equal
to  its  qualified fuel cell electric generating equipment expenditures.
Provided, however, that the amount of such credit allowable against  the
tax  imposed by section one hundred eighty-four of this article shall be
the excess of the amount of such credit over the amount  of  any  credit
allowed  by  this section against the tax imposed by section one hundred
eighty-three of this article. This credit shall not exceed one  thousand
five  hundred  dollars  per  generating unit with respect to any taxable
year. The credit provided for herein shall be allowed  with  respect  to
the taxable year in which the fuel cell electric generating equipment is
placed in service.
  (3)  Application  of  credit.  In no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  [or  one hundred eighty-five] of this article. If, however, the
amount of credit allowable under  this  section  for  any  taxable  year
reduces  the  tax to such amount, any amount of credit not deductible in
such taxable year may be carried over to the following year or years and
may be deducted from the taxpayer's tax for such year or years.
  S 23. Section 187-o of the tax law, as added by section 3 of part Y of
chapter 57 of the laws of 2010, is amended to read as follows:
  S 187-o. Temporary deferral nonrefundable payout credit. 1.  Allowance
of  credit.  A  taxpayer  shall  be  allowed a credit, to be computed as
provided in subdivision one of  section  thirty-four  of  this  chapter,
against either the taxes imposed by sections one hundred eighty-three[,]
AND  one  hundred eighty-four, [and one hundred eighty-five,] or the tax
imposed by section one hundred eighty-six-a of  this  article.  However,
the amount of such credit against the tax imposed by section one hundred
eighty-four  of  this  article shall be the excess of the amount of that
credit over the amount of any credit allowed by this section against the
tax imposed by section one hundred eighty-three of this article.
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed in an amount which will reduce the tax to less than
the applicable minimum tax fixed by section one hundred eighty-three [or
one hundred eighty-five] of this article. If,  however,  the  amount  of
credit  allowed  under this section for any taxable year reduces the tax

S. 6359--B                         237                        A. 8559--B

to such amount, any amount of credit not deductible in such taxable year
may be carried over to the following year or years and may  be  deducted
from the taxpayer's tax for such year or years.
  S 24. Section 187-p of the tax law, as added by section 3 of part Y of
chapter 57 of the laws of 2010, is amended to read as follows:
  S  187-p. Temporary deferral refundable payout credit. 1. Allowance of
credit. A taxpayer shall be allowed a credit, to be computed as provided
in subdivision two of section thirty-four of this chapter,  against  the
taxes  imposed  by  sections one hundred eighty-three[,] AND one hundred
eighty-four [and one hundred eighty-five] of this article,  or  the  tax
imposed  by  section  one hundred eighty-six-a of this article. However,
the amount of such credit against the tax imposed by section one hundred
eighty-four of this article shall be the excess of the  amount  of  that
credit over the amount of any credit allowed by this section against the
tax imposed by section one hundred eighty-three of this article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce the tax to  less  than
the applicable minimum tax fixed by section one hundred eighty-three [or
one  hundred  eighty-five]  of  this article. If, however, the amount of
credit allowed under this section for any taxable year reduces  the  tax
to such amount, any amount of credit not deductible in such taxable year
shall  be  treated as an overpayment of tax to be refunded in accordance
with the provisions of section one thousand eighty-six of this  chapter,
provided however, that no interest shall be paid thereon.
  S  25. Subdivisions 2 and 3 of section 190 of the tax law, as added by
section 1 of part E of chapter 63 of the laws of 2000,  are  amended  to
read as follows:
  2.  Computation.  The  credit  allowed  by this section shall first be
deducted from the taxes imposed by section  one  hundred  eighty-three[,
one  hundred  eighty-five]  or  FORMER SECTION one hundred eighty-six of
this article. The amount of any such  credit  remaining  shall  next  be
deducted  from  the  taxes imposed by section one hundred eighty-four of
this article.
  3. Carryover. In no event shall the amount  of  credit  allowed  under
this  section  reduce the tax payable to less than the minimum tax fixed
by section one hundred eighty-three[, one hundred eighty-five] or FORMER
SECTION one hundred eighty-six of this article. If, however, the  amount
of  credit allowable under this section for any taxable year reduces the
tax to such amount, any amount of credit not deductible in such  taxable
year  may  be  carried  over  to  the following year or years and may be
deducted from the taxpayer's tax for such year or years.
  S 26. Subdivision 1 of section 192 of the tax law, as amended by chap-
ter 96 of the laws of 1976, is amended to read as follows:
  1. Corporations paying franchise tax. Every  corporation,  association
or  joint-stock  company  liable  to pay a tax under section one hundred
eighty-three [or one hundred eighty-five] of this chapter shall,  on  or
before  March  fifteenth  in each year, make a written report to the tax
commission of its condition at the close of its business on the  preced-
ing  December thirty-first, stating the amount of its authorized capital
stock, the amount of stock paid in, the date and rate per centum of each
dividend paid by it during the year ending with  such  day,  the  entire
amount  of  the capital of such corporation, and the capital employed by
it in this state during such year.
  S 27. Subdivision 4 of section 209 of  the  tax  law,  as  amended  by
section  2  of part FF1 of chapter 57 of the laws of 2008, is amended to
read as follows:

S. 6359--B                         238                        A. 8559--B

  4. Corporations liable to tax under sections one hundred  eighty-three
to  one  hundred  [eighty-five]  EIGHTY-FOUR-A,  inclusive, corporations
taxable under articles thirty-two and thirty-three of this chapter,  any
trust  company  organized  under a law of this state all of the stock of
which  is  owned by not less than twenty savings banks organized under a
law of this state, bank holding companies filing a  combined  return  in
accordance with [subdivision] SUBSECTION (f) of section fourteen hundred
sixty-two  of  this  chapter,  a  captive REIT or a captive RIC filing a
combined return under either [subdivision]  SUBSECTION  (f)  of  section
fourteen hundred sixty-two or subdivision (f) of section fifteen hundred
fifteen  of  this chapter, and housing companies organized and operating
pursuant to the provisions of article two or article five of the private
housing finance law and housing  development  fund  companies  organized
pursuant  to  the  provisions  of  article eleven of the private housing
finance law shall not be subject to tax under this article.
  S 28. Section 209 of the tax law is amended by adding a  new  subdivi-
sion 12 to read as follows:
  12.  ALL  FARMERS',  FRUIT GROWERS' AND OTHER LIKE AGRICULTURAL CORPO-
RATIONS ORGANIZED AND OPERATED ON A CO-OPERATIVE BASIS FOR THE  PURPOSES
EXPRESSED  IN AND AS PROVIDED UNDER THE CO-OPERATIVE CORPORATIONS LAW OF
THE STATE OF NEW YORK, WHETHER OR NOT  SUCH  CORPORATIONS  HAVE  CAPITAL
STOCK,  SHALL BE EXEMPT FROM TAXATION UNDER THE PROVISIONS OF THIS ARTI-
CLE.
  S 29. Paragraphs (b) and (c) of subdivision 1-c, clause (i) of subpar-
agraph 1 of paragraph (b) of subdivision 3, and subparagraphs 1 and 2 of
paragraph (j) of subdivision 12 of section 210 of the tax law, paragraph
(b) of subdivision 1-c as amended by section 12 of part Y of chapter  63
of the laws of 2000, paragraph (c) of subdivision 1-c and subparagraph 2
of  paragraph  (j)  of  subdivision 12 as amended by chapter 1043 of the
laws of 1981, clause (i) of subparagraph 1 of paragraph (b) of  subdivi-
sion  3  as amended by chapter 61 of the laws of 1989 and subparagraph 1
of paragraph (j) of subdivision 12 as amended by section 14 of part Y of
chapter 63 of the laws of 2000, are amended to read as follows:
  (b) is not a corporation over fifty percent of the number of shares of
stock of which entitling the holders thereof to vote for the election of
directors or trustees is owned by a taxpayer which (1) is subject to tax
under this article; section one hundred eighty-three[,] OR  SECTION  one
hundred eighty-four or FORMER SECTION one hundred eighty-five of article
nine;  article  thirty-two or thirty-three of this chapter, and (2) does
not qualify as a small business  corporation  as  defined  in  paragraph
three  of  subsection  (c)  of  section twelve hundred forty-four of the
internal revenue code (without regard to the second sentence of subpara-
graph (A) thereof) as of the last day of its taxable year ending  within
or with the taxable year of the taxpayer,
  (c)  is  not a corporation which is substantially similar in operation
and in ownership to a business entity (or entities) taxable,  or  previ-
ously taxable, under this article; section one hundred eighty-three, one
hundred eighty-four, OR FORMER SECTION one hundred eighty-five or FORMER
SECTION  one  hundred  eighty-six of article nine; article thirty-two or
thirty-three of this chapter; article twenty-three of  this  chapter  or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the  income  (or  losses)  of which is (or was) includable under article
twenty-two of this chapter, and
  (i) In the case of an issuer or obligor subject to tax  under  section
one  hundred  eighty-three[,  one hundred eighty-five] or FORMER SECTION

S. 6359--B                         239                        A. 8559--B

one hundred eighty-six of this chapter or under this article or  article
thirty-three  of  this  chapter  (except for savings and insurance banks
described in subdivision (b) of section fifteen hundred  of  this  chap-
ter),  the issuer's allocation percentage shall be the percentage of the
appropriate measure (as defined hereinafter) which  is  required  to  be
allocated within the state on the report, if any, required of the issuer
or  obligor  under  this chapter for the preceding year. The appropriate
measure referred to in the preceding sentence shall be: in the  case  of
an issuer or obligor subject to section one hundred eighty-three of this
chapter,  issued  capital  stock;  in  the  case of an issuer or obligor
[subject to section one  hundred  eighty-five]  EXEMPT  FROM  TAX  UNDER
SUBDIVISION  TWELVE  OF  SECTION  TWO  HUNDRED  NINE  of  this [chapter]
ARTICLE, issued capital stock; in the  case  of  an  issuer  or  obligor
subject  to FORMER section one hundred eighty-six of this chapter, gross
earnings; in the case of an issuer or obligor subject to  this  article,
entire capital; and in the case of an issuer or obligor subject to arti-
cle thirty-three of this chapter, gross direct premiums.
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred eighty-four or FORMER SECTION one hundred eighty-five of article
nine; article thirty-two or thirty-three of this chapter; or
  (2) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable, or previously taxable, under this
article; section one  hundred  eighty-three,  one  hundred  eighty-four,
FORMER  SECTION  one  hundred  eighty-five or FORMER SECTION one hundred
eighty-six of article nine; article thirty-two or thirty-three  of  this
chapter;  article  twenty-three of this chapter or which would have been
subject to tax under such article twenty-three (as such article  was  in
effect  on  January  first,  nineteen  hundred eighty) or the income (or
losses) of which is (or was) includable under article twenty-two of this
chapter whereby the intent and purpose of this paragraph  and  paragraph
(e) of this subdivision with respect to refunding of credit to new busi-
ness would be evaded; or
  S  30.  Subparagraph  (A) of paragraph 10 of subsection (a) of section
606 of the tax law, as amended by section 3 of part CC of chapter 85  of
the laws of 2002, is amended to read as follows:
  (A)  the business of which the individual is an owner is substantially
similar in operation and in ownership to a business entity  taxable,  or
previously  taxable, under section one hundred eighty-three, one hundred
eighty-four, FORMER SECTION one hundred eighty-five  or  FORMER  SECTION
one  hundred  eighty-six  of article nine; article nine-A, thirty-two or
thirty-three of this chapter; article twenty-three of  this  chapter  or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the  income  (or  losses)  of which is (or was) includable under article
twenty-two of this chapter whereby the intent and purpose of this  para-
graph and paragraph five of this subsection with respect to refunding of
credit to new business would be evaded; or
  S  31.  Subparagraphs  (A) and (B) of paragraph 8 of subsection (i) of
section 1456 of the tax law, as added by section 27 of part A of chapter
56 of the laws of 1998, are amended to read as follows:
  (A) over fifty percent of the number of shares of stock entitling  the
holders  thereof  to  vote  for the election of directors or trustees is
owned or controlled,  either  directly  or  indirectly,  by  a  taxpayer

S. 6359--B                         240                        A. 8559--B

subject to tax under this article; section one hundred eighty-three, one
hundred  eighty-four,  FORMER  SECTION one hundred eighty-five or FORMER
SECTION one hundred eighty-six of article nine; article nine-A or  arti-
cle thirty-three of this chapter; or
  (B)  is substantially similar in operation and in ownership to a busi-
ness entity (or entities) taxable, or  previously  taxable,  under  this
article;  section  one  hundred  eighty-three,  one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  FORMER  SECTION  one  hundred
eighty-six  of  article  nine; article nine-A or article thirty-three of
this chapter; article twenty-three of this chapter or which  would  have
been subject to tax under such article twenty-three (as such article was
in  effect  on January first, nineteen hundred eighty) or the income (or
losses) of which is (or was) includable under article twenty-two of this
chapter whereby the intent and purpose of this paragraph  and  paragraph
five of this subsection with respect to refunding of credit to new busi-
ness would be evaded; or
  S  32.  Subparagraph  (A) of paragraph 7 of subdivision (q) of section
1511 of the tax law, as added by section 1 of part L of  chapter  63  of
the laws of 2000, is amended to read as follows:
  (A)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred eighty-four, FORMER SECTION one hundred  eighty-five  or  FORMER
SECTION  one hundred eighty-six of article nine; article nine-A or arti-
cle thirty-two of this chapter; or
  S 33. Subdivision 13 of section 171  of  the  transportation  law,  as
added by chapter 478 of the laws of 1991, is amended to read as follows:
  13.  The  transportation for compensation performed by an agricultural
cooperative corporation[, which corporation  is  subject  to  tax  under
section one hundred eighty-five of the tax law,] for non-members who are
not  farmers  or  cooperative  corporations  when such transportation is
limited to that which is  incidental  to  the  agricultural  cooperative
corporation's  primary transportation operation and is necessary for its
effective performance. Such transportation shall be provided only  after
the  agricultural  cooperative  corporation notifies the commissioner in
writing of its intent to provide the transportation  and  it  shall  not
exceed twenty-five percent of the agricultural cooperative corporation's
total transportation services in each calendar year measured in terms of
tonnage.  The  commissioner may prescribe the records to be kept and the
information to be furnished by all agricultural cooperative corporations
performing transportation pursuant to this subdivision.
  S 34. Subclause 2 of clause (v) of subparagraph (B) of paragraph 1  of
subdivision  (o)  of  section  11-1712 of the administrative code of the
city of New York, such subdivision as relettered by chapter 639  of  the
laws of 1986, is amended to read as follows:
  (2)  A  new  business  does not include: (i) any new business of which
twenty-five percent or more of the number of shares of stock that  enti-
tle  the  holders thereof to vote for the election of directors or trus-
tees is owned, directly or indirectly, by  a  taxpayer  subject  to  tax
under  section one hundred eighty-three, one hundred eighty-four, FORMER
SECTION one hundred eighty-five or FORMER SECTION one hundred eighty-six
of article nine of the tax law, or under article [nine-a] NINE-A,  thir-
ty-two  or thirty-three of the tax law or (ii) any new business substan-
tially similar in operation and in ownership, directly or indirectly, to
a business entity (or entities) taxable, or  previously  taxable,  under

S. 6359--B                         241                        A. 8559--B

such section, such article, article twenty-three of the tax law or which
would  have been subject to tax under such article twenty-three (as such
article was in effect on January first, nineteen hundred eighty) or  the
income  (or  losses) of which is (or was) includible under article twen-
ty-two of such tax law whereby the intent and purpose  of  this  section
would be evaded.
  S 35. Paragraph (iii) of subdivision 9 of section 16-v of section 1 of
chapter  174  of the laws of 1968, constituting the New York state urban
development corporation act, as added by section 1 of part C of  chapter
59 of the laws of 2013, is amended to read as follows:
  (iii) either: (A) any corporation, except a corporation which:
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under the following provisions of the  tax  law:  article
nine-A;  section  one hundred eighty-three[,] OR one hundred eighty-four
or FORMER SECTION one hundred eighty-five of article nine; article thir-
ty-two or article thirty-three; or
  (2) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable  or  previously  taxable under the
following provisions of the tax law: article nine-A; section one hundred
eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
y-five or former section one hundred eighty-six of article nine; article
thirty-two; article thirty-three; article twenty-three,  or  would  have
been subject to tax under such article twenty-three (as such article was
in  effect  on January first, nineteen hundred eighty) or the income (or
losses) of which is (or was) includable under article twenty-two; or
  (B) a sole proprietorship, partnership, limited  partnership,  limited
liability  company,  or  New  York  subchapter S corporation that is not
substantially similar in operation and in ownership to a business entity
(or entities) taxable, or previously taxable, under  article  nine-A  of
the  tax law, section one hundred eighty-three, one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  former  section  one  hundred
eighty-six  of  article nine of the tax law, article thirty-two or thir-
ty-three of the tax law, article twenty-three of the tax  law  or  which
would  have been subject to tax under such article twenty-three (as such
article was in effect on January first, nineteen hundred eighty) or  the
income  (or  losses) of which is (or was) includable under article twen-
ty-two of the tax law; and
  S 36. Notwithstanding the repeal of section 185  of  the  tax  law  by
section  one of this act, all provisions of such section 185, in respect
to the imposition, exemption, assessment, payment, payment over,  deter-
mination,  collection,  and  credit or refund of tax imposed thereunder,
the filing of forms and returns, the preservation  of  records  for  the
purposes  of such tax, the secrecy of returns, the disposition of reven-
ues, and the civil and criminal penalties applicable to the violation of
the provisions of such section 185, shall continue  in  full  force  and
effect with respect to all such tax accrued up to December 31, 2014; all
actions  and  proceedings, civil or criminal, commenced or authorized to
be commenced under or by virtue of any provision of such section 185  so
repealed,  and pending or able to commence prior to the taking effect of
such repeal, may be commenced, prosecuted and defended to  final  effect
in  the  same  manner  as  they  might  if  such  provisions were not so
repealed.
  S 37. This act shall take effect immediately and shall apply to  taxa-
ble years beginning on or after January 1, 2015; provided, however that:

S. 6359--B                         242                        A. 8559--B

  a.  the  amendments  to  subdivision  9 of section 400 of the economic
development law made by section two of this act  shall  not  affect  the
repeal of such section and shall be deemed repealed therewith; and
  b. the amendments to subdivisions (a) and (e) of section 35 of the tax
law made by section nine of this act shall not affect the repeal of such
section and shall be deemed repealed therewith.

                                 PART T

  Section 1. Section 39 of the tax law is amended by adding a new subdi-
vision (c-1) to read as follows:
  (C-1) EXCISE TAX ON TELECOMMUNICATION SERVICES. SUCH BUSINESS OR OWNER
OF  A BUSINESS SHALL BE ELIGIBLE FOR A CREDIT OF THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED  EIGHTY-SIX-E  OF
THIS  CHAPTER  THAT  IS PASSED THROUGH TO SUCH BUSINESS, PURSUANT TO THE
PROVISIONS REFERENCED IN SUBDIVISION (K) OF THIS SECTION.
  S 2. Paragraphs 4 and 6 of subdivision (k) of section 39  of  the  tax
law,  as added by section 2 of part A of chapter 68 of the laws of 2013,
are amended to read as follows:
  (4) Article 9-A: section 210, subdivision 47 AND SUBDIVISION 48.
  (6) Article 22: section 606, subsection (ww) AND SUBSECTION (XX).
  S 2-a. Paragraph (b) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 20-a to read as follows:
  (20-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF
THE CALCULATION OF THE TAX-FREE NY AREA EXCISE TAX ON  TELECOMMUNICATION
SERVICES  CREDIT  ALLOWED  UNDER  SUBDIVISION FORTY-EIGHT OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE.
  S 3. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. THE TAX-FREE NY AREA  EXCISE  TAX  ON  TELECOMMUNICATION  SERVICES
CREDIT.  A  TAXPAYER  THAT  IS A BUSINESS OR OWNER OF A BUSINESS THAT IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED  A  CREDIT  EQUAL  TO  THE
EXCISE  TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED
EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS  DURING
THE  TAXABLE  YEAR  TO  THE  EXTENT  NOT OTHERWISE DEDUCTED IN COMPUTING
ENTIRE NET INCOME. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN  SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX OF THIS CHAPTER. THIS CREDIT MAY BE CLAIMED  ONLY  WHERE  ANY
TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPARATELY
STATED  ON  A  BILL  FROM THE PROVIDER OF TELECOMMUNICATION SERVICES AND
PAID BY SUCH BUSINESS WITH RESPECT TO SUCH SERVICES  RENDERED  WITHIN  A
TAX-FREE  NY  AREA  DURING  THE  TAXABLE YEAR. UNLESS THE TAXPAYER HAS A
TAX-FREE NY AREA ALLOCATION FACTOR OF ONE HUNDRED  PERCENT,  THE  CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX  DUE  FOR  SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH
(D)  OF  SUBDIVISION  ONE  OF  THIS  SECTION.  PROVIDED,  HOWEVER,   THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  S 4. Section 606 of the tax law is amended by adding a new  subsection
(xx) to read as follows:
  (XX)  THE  TAX-FREE  NY  AREA EXCISE TAX ON TELECOMMUNICATION SERVICES
CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF  A  BUSINESS  THAT  IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF

S. 6359--B                         243                        A. 8559--B

THE  ECONOMIC  DEVELOPMENT  LAW  SHALL  BE ALLOWED A CREDIT EQUAL TO THE
EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED
EIGHTY-SIX-E  OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING
THE  TAXABLE  YEAR  TO  THE  EXTENT  NOT OTHERWISE DEDUCTED IN COMPUTING
FEDERAL ADJUSTED GROSS INCOME.  THIS CREDIT MAY BE  CLAIMED  ONLY  WHERE
ANY  TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPA-
RATELY STATED ON A BILL FROM THE PROVIDER OF TELECOMMUNICATION  SERVICES
AND  PAID BY SUCH TAXPAYER WITH RESPECT TO SUCH SERVICES RENDERED WITHIN
A TAX-FREE NY AREA DURING THE TAXABLE YEAR. IF THE AMOUNT OF THE  CREDIT
ALLOWED  UNDER  THIS SUBSECTION FOR ANY TAXABLE YEAR EXCEEDS THE TAXPAY-
ER'S TAX FOR SUCH YEAR, THE EXCESS WILL BE TREATED AS AN OVERPAYMENT  TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX
HUNDRED  EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST
WILL BE PAID THEREON.
  S 5. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is amended by adding a new clause (xxxvii) to read as
follows:
(XXXVII) TAX FREE NY AREA EXCISE        AMOUNT OF CREDIT UNDER
TAX ON TELECOMMUNICATION SERVICES       SUBDIVISION FORTY-EIGHT
CREDIT UNDER SUBSECTION (XX)            OF SECTION TWO HUNDRED TEN
  S 5-a. Subsection (b) of section 612 of the  tax  law  is  amended  by
adding a new paragraph 39-a to read as follows:
  (39-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF
THE  CALCULATION  OF  TAX-FREE  NY  AREA EXCISE TAX ON TELECOMMUNICATION
SERVICES CREDIT ALLOWED UNDER SUBSECTION (XX) OF SECTION SIX HUNDRED SIX
OF THIS ARTICLE.
  S 6. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

                                 PART U

  Section 1. Paragraph (a) of subdivision 44 of section 210 of  the  tax
law,  as  amended  by  section  2 of part T of chapter 59 of the laws of
2012, is amended to read as follows:
  (a) A taxpayer that has been certified by the commissioner of labor as
a qualified employer pursuant to section twenty-five-a of the labor  law
shall  be allowed a credit against the tax imposed by this article equal
to (i) five hundred dollars per month for up  to  six  months  for  each
qualified  employee  the  employer  employs  in  a  full-time job or two
hundred fifty dollars per month for up to six months for each  qualified
employee  the  employer  employs  in  a part-time job of at least twenty
hours per week OR TEN HOURS PER WEEK  WHEN  THE  QUALIFIED  EMPLOYEE  IS
ENROLLED  IN  HIGH  SCHOOL  FULL-TIME, and (ii) one thousand dollars for
each qualified employee who is employed for at least an  additional  six
months  by  the  qualified  employer  in a full-time job or five hundred
dollars for each qualified employee who is  employed  for  at  least  an
additional six months by the qualified employer in a part-time job of at
least  twenty  hours  per  week OR TEN HOURS PER WEEK WHEN THE QUALIFIED
EMPLOYEE IS ENROLLED IN HIGH SCHOOL FULL-TIME, AND (III)  AN  ADDITIONAL
ONE  THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT
LEAST AN ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S  EMPLOY-
MENT  BY  THE  QUALIFIED  EMPLOYER  IN  A  FULL-TIME JOB OR FIVE HUNDRED
DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS  EMPLOYED  FOR  AT  LEAST  AN
ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
QUALIFIED  EMPLOYER IN A PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK

S. 6359--B                         244                        A. 8559--B

OR TEN HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS  ENROLLED  IN  HIGH
SCHOOL FULL-TIME.  For purposes of this subdivision, the term "qualified
employee" shall have the same meaning as set forth in subdivision (b) of
section  twenty-five-a  of  the  labor  law.  The  portion of the credit
described in subparagraph (i) of this paragraph shall be allowed for the
taxable year in which the wages are paid to the qualified employee,  and
the  portion  of the credit described in subparagraph (ii) of this para-
graph shall be allowed in the taxable year in which the  additional  six
month period ends.
  S  2. Paragraph 1 of subsection (tt) of section 606 of the tax law, as
amended by section 3 of part T of chapter 59 of the  laws  of  2012,  is
amended to read as follows:
  (1) A taxpayer that has been certified by the commissioner of labor as
a  qualified employer pursuant to section twenty-five-a of the labor law
shall be allowed a credit against the tax imposed by this article  equal
to  (A)  five  hundred  dollars  per month for up to six months for each
qualified employee the employer  employs  in  a  full-time  job  or  two
hundred  fifty dollars per month for up to six months for each qualified
employee the employer employs in a part-time  job  of  at  least  twenty
hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
ENROLLED IN HIGH SCHOOL FULL-TIME, and (B) one thousand dollars for each
qualified employee who is employed for at least an additional six months
by the qualified employer in a full-time job or five hundred dollars for
each qualified employee who is employed for at least an  additional  six
months  by  the qualified employer in a part-time job of at least twenty
hours per week OR TEN HOURS PER WEEK  WHEN  THE  QUALIFIED  EMPLOYEE  IS
ENROLLED  IN  HIGH  SCHOOL FULL-TIME, AND (C) AN ADDITIONAL ONE THOUSAND
DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS  EMPLOYED  FOR  AT  LEAST  AN
ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
QUALIFIED  EMPLOYER  IN A FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH
QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER
THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN
A PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN HOURS PER  WEEK
WHEN  THE  QUALIFIED  EMPLOYEE  IS ENROLLED IN HIGH SCHOOL FULL-TIME.  A
taxpayer that is a partner in a partnership, member of a limited liabil-
ity company or shareholder in an S corporation that has  been  certified
by the commissioner of labor as a qualified employer pursuant to section
twenty-five-a  of  the  labor law shall be allowed its pro rata share of
the credit earned by the partnership, limited  liability  company  or  S
corporation.  For  purposes  of  this  subsection,  the  term "qualified
employee" shall have the same meaning as set forth in subdivision (b) of
section twenty-five-a of the  labor  law.  The  portion  of  the  credit
described in subparagraph (A) of this paragraph shall be allowed for the
taxable  year in which the wages are paid to the qualified employee, and
the portion of the credit described in subparagraph (B)  of  this  para-
graph  shall  be allowed in the taxable year in which the additional six
month period ends.
  S 3. Subdivision (a) of section 25-a of the labor law, as  amended  by
section  2  of  part DD of chapter 59 of the laws of 2013, is amended to
read as follows:
  (a) The commissioner is authorized to establish and administer the New
York youth works tax credit program to provide tax incentives to employ-
ers for employing at risk youth in part-time  and  full-time  positions.
There  will  be  five distinct pools of tax incentives. Program one will
cover tax incentives allocated for two thousand twelve and two  thousand
thirteen.  Program  two will cover tax incentives allocated in two thou-

S. 6359--B                         245                        A. 8559--B

sand fourteen to be used in two thousand fourteen and fifteen.   Program
three  will cover tax incentives allocated in two thousand fifteen to be
used in two thousand fifteen and sixteen. Program four  will  cover  tax
incentives  allocated in two thousand sixteen to be used in two thousand
sixteen and seventeen. Program five will cover tax incentives  allocated
in two thousand seventeen to be used in two thousand seventeen and eigh-
teen.  The  commissioner  is  authorized  to  allocate up to twenty-five
million dollars of tax credits under  program  one,  [six]  TEN  million
dollars  of  tax credits under program two, [six] TEN million dollars of
tax credits under program three, [and six] TEN million  dollars  of  tax
credits under program four, and [six] TEN million dollars of tax credits
under program five.
  S 4. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2014.

                                 PART V

  Section  1.  Section 19 of Part W-1 of chapter 109 of the laws of 2006
amending the tax law and other laws relating  to  providing  exemptions,
reimbursements  and  credits  from various taxes for certain alternative
fuels, as amended by section 1 of part D of chapter 59 of  the  laws  of
2012, is amended to read as follows:
  S  19. This act shall take effect immediately; provided, however, that
sections one through thirteen of this act shall take effect September 1,
2006 and shall be deemed repealed on September 1, [2014] 2016  and  such
repeal  shall  apply  in  accordance  with  the  applicable transitional
provisions of sections 1106 and 1217 of the tax law, and shall apply  to
sales  made,  fuel  compounded or manufactured, and uses occurring on or
after such date, and with respect to sections seven  through  eleven  of
this  act,  in  accordance  with  applicable  transitional provisions of
sections 1106 and 1217 of the  tax  law;  provided,  however,  that  the
commissioner  of  taxation  and finance shall be authorized on and after
the date this act shall have become a law to adopt and amend  any  rules
or  regulations  and  to  take  any  steps  necessary  to  implement the
provisions of this act; provided further that sections fourteen  through
sixteen  of  this  act  shall take effect immediately and shall apply to
taxable years beginning on or after January 1, 2006.
  S 2. This act shall take effect immediately.

                                 PART W

  Section 1. Section 11 of part EE of chapter 63 of the  laws  of  2000,
amending  the  tax law and other laws relating to modifying the distrib-
ution of funds from the motor vehicle fuel excise  tax,  as  amended  by
section  1  of  part  M of chapter 61 of the laws of 2011, is amended to
read as follows:
  S 11. Notwithstanding any other law, rule or regulation to the contra-
ry, the comptroller is hereby authorized  and  directed  to  deposit  in
equal  monthly installments and distribute pursuant to the provisions of
subdivision (d) of section 301-j of the tax law amounts listed below  to
the  credit of the dedicated highway and bridge trust fund and the dedi-
cated mass transportation trust fund from all motor vehicle receipts now
deposited into the general fund pursuant to provisions  of  the  vehicle
and  traffic  law:    twenty-eight million four hundred thousand dollars
from April 1, 2002 through March  31,  2003,  sixty-seven  million  nine
hundred  thousand dollars from April 1, 2003 through March 31, 2004, one

S. 6359--B                         246                        A. 8559--B

hundred seventy million one hundred thousand dollars from April 1,  2004
through  March  31,  2005,  and one hundred percent of all motor vehicle
receipts pursuant to provisions of the vehicle and traffic law that  are
not  otherwise directed to be deposited in a fund other than the general
fund from April 1, 2005 through March 31, 2006, and the same amount each
year thereafter UNTIL MARCH 31, 2014. FROM APRIL 1, 2014  THROUGH  MARCH
31, 2015, AND EACH YEAR THEREAFTER, THE COMPTROLLER SHALL, ON A QUARTER-
LY BASIS, CERTIFY AND TRANSFER SIXTEEN MILLION FOUR HUNDRED NINETY-EIGHT
THOUSAND  TWO  HUNDRED  FIFTY-FIVE  DOLLARS TO THE DEDICATED HIGHWAY AND
BRIDGE TRUST FUND AND FIFTEEN MILLION SIX  HUNDRED  SIXTY-FIVE  THOUSAND
TWO  HUNDRED  FORTY-FIVE  DOLLARS  TO  THE DEDICATED MASS TRANSPORTATION
TRUST FUND.
  S 2. Paragraph (f) of subdivision 4 of section 503 of the vehicle  and
traffic  law,  as added by section 1 of part W of chapter 59 of the laws
of 2006, is amended to read as follows:
  (f) Notwithstanding any  other  provision  of  law  to  the  contrary,
commencing  April first, two thousand six and ending March thirty-first,
two thousand [seven] FOURTEEN, IN EACH YEAR,  the  first  forty  million
seven hundred thousand dollars of fees collected pursuant to this subdi-
vision  and  section  eleven hundred ninety-nine of this chapter, in the
aggregate, shall be paid to the state comptroller who shall deposit such
money in the state treasury pursuant to section one  hundred  twenty-one
of  the  state  finance  law to the credit of the general fund. Any such
fees collected in excess of such amount shall be paid to the  credit  of
the  comptroller  on  account  of the dedicated highway and bridge trust
fund established pursuant to section eighty-nine-b of the state  finance
law.  [Commencing April first, two thousand seven and ending March thir-
ty-first, two thousand eight, and for each such fiscal year  thereafter,
the first forty million seven hundred thousand dollars of fees collected
pursuant  to  this subdivision and section eleven hundred ninety-nine of
this chapter, in the aggregate, shall be paid to the  state  comptroller
who  shall  deposit such money in the state treasury pursuant to section
one hundred twenty-one of the state finance law to  the  credit  of  the
general  fund. Any such fees collected in excess of such amount for each
such state fiscal year, shall be paid to the credit of  the  comptroller
on  account  of  the dedicated highway and bridge trust fund established
pursuant to section eighty-nine-b of the state finance law.]  COMMENCING
APRIL  FIRST, TWO THOUSAND FOURTEEN AND FOR EACH SUCH FISCAL YEAR THERE-
AFTER, ANY SUCH FEES COLLECTED PURSUANT TO THIS SUBDIVISION AND  SECTION
ELEVEN  HUNDRED  NINETY-NINE OF THIS CHAPTER SHALL BE PAID TO THE CREDIT
OF THE COMPTROLLER ON ACCOUNT OF THE DEDICATED HIGHWAY AND BRIDGE  TRUST
FUND  ESTABLISHED PURSUANT TO SECTION EIGHTY-NINE-B OF THE STATE FINANCE
LAW.
  S 3. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2014.

                                 PART X

  Section 1. Section 951 of the tax law, as amended by chapter 67 of the
laws  of 1978, subsection (a) as amended by section 1 of part T of chap-
ter 57 of the laws of 2010, subsection (b) as amended by  section  5  of
part A of chapter 389 of the laws of 1997 and subsection (c) as added by
chapter 538 of the laws of 2013, is amended to read as follows:
  S  951.  Applicable  internal  revenue code provisions.-- (a) [Dates]
GENERAL.  For purposes of this article, any reference  to  the  internal
revenue code means the United States Internal Revenue Code of 1986, with

S. 6359--B                         247                        A. 8559--B

all  amendments  enacted  on  or  before  [July  twenty-second, nineteen
hundred ninety-eight,] JANUARY FIRST, TWO THOUSAND FOURTEEN and,  unless
specifically provided otherwise in this article, any reference to Decem-
ber  thirty-first,  nineteen hundred seventy-six or January first, nine-
teen hundred seventy-seven contained in  the  provisions  of  such  code
which  are  applicable  to  the determination of the tax imposed by this
article shall be read as a reference to June thirtieth, nineteen hundred
seventy-eight or July first, nineteen hundred seventy-eight, respective-
ly. [Notwithstanding the  foregoing,  the  unified  credit  against  the
estate  tax provided in section two thousand ten of the internal revenue
code shall, for purposes of this article, be the amount allowable as  if
the federal applicable exclusion amount were one million dollars.]
  (b)  [Applicable  generation-skipping  transfer tax provisions.--Where
any reference is made in this article  (or  in  the  provisions  of  the
internal  revenue  code  which  are  made  applicable by section two, as
amended, of chapter one  thousand  thirteen  of  the  laws  of  nineteen
hundred sixty-two, to the determination of the tax imposed by this arti-
cle  and  appended  thereto)  to provisions of the internal revenue code
contained in section one thousand  twenty-five  of  this  chapter,  such
internal  revenue code provisions contained in such section one thousand
twenty-five shall apply to the provisions of this article  in  the  same
manner  and  with  the  same force and effect as if the language of such
provisions of the internal revenue code had been  incorporated  in  full
into this article except to the extent that any such provision is either
inconsistent  with a provision of this article or is not relevant there-
to.
  (c)] Disposition to surviving spouse who is not a United States  citi-
zen.  In  the case of an estate where a federal estate tax return is not
required for federal estate tax purposes, a disposition to  a  surviving
spouse  that  would qualify for the federal estate tax marital deduction
under section 2056 of the internal revenue code if not for  the  limita-
tion  imposed  by subsection (d)(1) of such section shall nonetheless be
treated as qualifying for the federal estate tax marital  deduction  for
purposes  of computing the tax imposed by section nine hundred fifty-two
of this part, without  requiring  that  such  disposition  pass  to  the
surviving  spouse  in a qualified domestic trust as required for federal
purposes by internal revenue code section 2056(d)(2).
  S 2. Section 952 of the tax law, as added by section 9 of  part  A  of
chapter  389 of the laws of 1997, subsection (b) as amended by section 3
of part I of chapter 60 of the laws of  2004,  is  amended  to  read  as
follows:
  S 952. Tax imposed. (a) A tax is hereby imposed on the transfer of the
New York estate by every deceased individual who at his or her death was
a  resident of New York state. [The tax imposed by this subsection shall
be an amount equal to the maximum amount allowable against  the  federal
estate  tax as a credit for state death taxes under section two thousand
eleven of the internal revenue code.]
  (b) [If the transfer of any part of the estate of a deceased  resident
includes  real  or  tangible  personal  property  having an actual situs
outside New York state, the  tax  imposed  by  subsection  (a)  of  this
section  shall  be  reduced  by  an amount determined by multiplying the
maximum amount of the federal credit for state death taxes  by  a  frac-
tion,  the  numerator  of  which  is the decedent's federal gross estate
reduced by his or her New York gross estate and the denominator of which
is his or her federal gross estate.] COMPUTATION OF TAX. THE TAX IMPOSED

S. 6359--B                         248                        A. 8559--B

BY THIS SECTION SHALL BE COMPUTED ON THE DECEASED  RESIDENT'S  NEW  YORK
TAXABLE ESTATE AS FOLLOWS:
IN  THE  CASE  OF  DECEDENTS  DYING ON OR AFTER APRIL 1, 2014 AND BEFORE
APRIL 1, 2015
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS OVER
                                        $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS OVER
                                        $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS OVER
                                        $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
                                        OVER $5,100,000
OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS
                                        OVER $6,100,000
OVER $7,100,000 BUT NOT OVER $8,100,000 $650,800 PLUS 13.6% OF EXCESS
                                        OVER $7,100,000
OVER $8,100,000 BUT NOT OVER $9,100,000 $786,800 PLUS 14.4% OF EXCESS
                                        OVER $8,100,000
OVER $9,100,000                         $930,800 PLUS 14.5% OF EXCESS OVER
                                        $9,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2015 AND BEFORE
APRIL 1, 2016
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS
                                        OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS
                                        OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
                                        OVER $5,100,000
OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS

S. 6359--B                         249                        A. 8559--B

                                        OVER $6,100,000
OVER $7,100,000                         $650,800 PLUS 13.0% OF EXCESS
                                        OVER $7,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2016 AND BEFORE
APRIL 1, 2017
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS
                                        OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS
                                        OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000                         $402,800 PLUS 11.5% OF EXCESS
                                        OVER $5,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2017
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF
                                        EXCESS OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF
                                        EXCESS OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF
                                        EXCESS OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000                         $238,800 PLUS 10.0% OF EXCESS
                                        OVER $3,600,000
  (C)  APPLICABLE  CREDIT  AMOUNT. (1) A CREDIT OF THE APPLICABLE CREDIT
AMOUNT SHALL BE ALLOWED AGAINST THE  TAX  IMPOSED  BY  THIS  SECTION  AS
PROVIDED  IN  THIS  SUBSECTION. IN THE CASE OF A DECEDENT WHOSE NEW YORK
TAXABLE ESTATE IS LESS THAN OR EQUAL TO THE BASIC EXCLUSION AMOUNT,  THE
APPLICABLE  CREDIT  AMOUNT  SHALL BE THE AMOUNT OF TAX THAT WOULD BE DUE
UNDER SUBSECTION (B) OF THIS SECTION ON SUCH DECEDENT'S NEW YORK TAXABLE
ESTATE. IN THE CASE OF A DECEDENT WHOSE NEW YORK TAXABLE ESTATE  EXCEEDS
THE  BASIC  EXCLUSION  AMOUNT BY AN AMOUNT THAT IS LESS THAN OR EQUAL TO
FIVE PERCENT OF SUCH AMOUNT, THE APPLICABLE CREDIT AMOUNT SHALL  BE  THE
AMOUNT  OF TAX THAT WOULD BE DUE UNDER SUBSECTION (B) OF THIS SECTION IF
THE AMOUNT ON WHICH THE TAX IS TO BE COMPUTED WERE EQUAL  TO  THE  BASIC
EXCLUSION  AMOUNT  MULTIPLIED  BY ONE MINUS A FRACTION, THE NUMERATOR OF
WHICH IS THE DECEDENT'S NEW YORK TAXABLE ESTATE MINUS THE  BASIC  EXCLU-
SION  AMOUNT,  AND THE DENOMINATOR OF WHICH IS FIVE PERCENT OF THE BASIC

S. 6359--B                         250                        A. 8559--B

EXCLUSION AMOUNT.  PROVIDED, HOWEVER, THAT THE CREDIT  ALLOWED  BY  THIS
SUBSECTION  SHALL  NOT  EXCEED  THE  TAX IMPOSED BY THIS SECTION, AND NO
CREDIT SHALL BE ALLOWED TO THE ESTATE OF ANY  DECEDENT  WHOSE  NEW  YORK
TAXABLE  ESTATE  EXCEEDS ONE HUNDRED FIVE PERCENT OF THE BASIC EXCLUSION
AMOUNT.
  (2) (A) FOR PURPOSES OF THIS SECTION, THE BASIC EXCLUSION AMOUNT SHALL
BE AS FOLLOWS:
IN THE CASE OF DECEDENTS DYING ON OR AFTER: THE BASIC  EXCLUSION  AMOUNT
IS:
APRIL 1, 2014 AND BEFORE APRIL 1, 2015       $ 2,062,500
APRIL 1, 2015 AND BEFORE APRIL 1, 2016       3,125,000
APRIL 1, 2016 AND BEFORE APRIL 1, 2017       4,187,500
APRIL 1, 2017 AND BEFORE JANUARY 1, 2019     5,250,000
  (B)  IN THE CASE OF ANY DECEDENT DYING IN A CALENDAR YEAR BEGINNING ON
OR AFTER JANUARY FIRST,  TWO  THOUSAND  NINETEEN,  THE  BASIC  EXCLUSION
AMOUNT  FOR DECEDENTS DYING ON OR AFTER APRIL FIRST, TWO THOUSAND SEVEN-
TEEN AND BEFORE JANUARY FIRST, TWO THOUSAND NINETEEN SHALL BE  INCREASED
BY AN AMOUNT EQUAL TO:
  (I) SUCH BASIC EXCLUSION AMOUNT, MULTIPLIED BY
  (II)  THE  COST-OF-LIVING ADJUSTMENT, WHICH SHALL BE THE PERCENTAGE BY
WHICH THE CONSUMER PRICE INDEX FOR THE PRECEDING CALENDAR  YEAR  EXCEEDS
THE CONSUMER PRICE INDEX FOR CALENDAR YEAR TWO THOUSAND TWELVE.
  (C)  (I)  FOR PURPOSES OF THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS
THE MOST RECENT CONSUMER PRICE INDEX FOR ALL-URBAN  CONSUMERS  PUBLISHED
BY THE UNITED STATES DEPARTMENT OF LABOR.
  (II)  IF ANY AMOUNT ADJUSTED UNDER THIS PARAGRAPH IS NOT A MULTIPLE OF
TEN THOUSAND DOLLARS, SUCH AMOUNT SHALL BE ROUNDED TO THE NEAREST MULTI-
PLE OF TEN THOUSAND DOLLARS.
  S 3. Section 954 of the tax law, as amended by chapter 67 of the  laws
of  1978,  paragraph  1  of  subsection (a) as amended by section 10 and
subsection (b) as amended by section 11 of part A of chapter 389 of  the
laws  of  1997,  subsection (c) as amended by chapter 916 of the laws of
1982, paragraph 1 of subsection (c) as amended by section 3 of part A of
chapter 407 of the laws of 1999 and such subsection (c) as relettered by
section 12 of part A of chapter 389 of the laws of 1997, is  amended  to
read as follows:
  S  954.  Resident's New York gross estate. (a) General.-- The New York
gross estate of a deceased resident  means  his  OR  HER  federal  gross
estate as defined in the internal revenue code (whether or not a federal
estate tax return is required to be filed) modified as follows:
  (1)  Reduced by the value of real or tangible personal property having
an actual situs outside New York state.
  (2) Increased by the amount  determined  under  section  nine  hundred
fifty-seven  OF  THIS  PART  (relating  to limited powers of appointment
created prior to September first, nineteen hundred thirty).
  (3) INCREASED BY THE AMOUNT OF ANY TAXABLE GIFT UNDER SECTION 2503  OF
THE  INTERNAL  REVENUE CODE, ON OR AFTER APRIL FIRST, TWO THOUSAND FOUR-
TEEN, IF THE DECEDENT WAS A RESIDENT OF NEW YORK STATE AT THE TIME  SUCH
GIFT WAS MADE.
  (b)  Valuation. -- (1) The New York gross estate shall be valued as of
the TIME OF THE DECEDENT'S DEATH, EXCEPT THAT IF A  FEDERAL  ESTATE  TAX
RETURN  IS  FILED  AND THE ALTERNATE VALUATION UNDER SECTION 2032 OF THE
INTERNAL REVENUE CODE IS ELECTED FOR FEDERAL ESTATE  TAX  PURPOSES,  THE
NEW YORK GROSS ESTATE SHALL BE VALUED AS OF THE applicable federal valu-
ation date or dates. Any real property qualified under section two thou-
sand thirty-two-A of the internal revenue code shall have the same value

S. 6359--B                         251                        A. 8559--B

for  purposes  of the New York gross estate as it has for federal estate
tax purposes.
  (2)  IF  SUCH  ALTERNATE VALUATION COULD HAVE BEEN ELECTED PURSUANT TO
PARAGRAPH ONE OF THIS SUBSECTION, BUT  FOR  THE  ABSENCE  OF  AN  ESTATE
SUFFICIENT TO REQUIRE THE FILING OF A FEDERAL RETURN, THE NEW YORK GROSS
ESTATE  MAY,  UPON  THE  ELECTION  OF  THE EXECUTOR, BE VALUED AS OF THE
FEDERAL VALUATION DATE OR DATES WHICH WOULD HAVE APPLIED  IF  A  FEDERAL
RETURN HAD BEEN FILED. HOWEVER, NO ELECTION MAY BE MADE UNDER THIS PARA-
GRAPH UNLESS SUCH ELECTION WILL DECREASE THE VALUE OF THE NEW YORK GROSS
ESTATE AND THE AMOUNT OF TAX IMPOSED BY THIS ARTICLE (REDUCED BY CREDITS
ALLOWABLE  AGAINST  SUCH  TAX).  ANY  ELECTION MADE UNDER THIS PARAGRAPH
SHALL BE IRREVOCABLE. THE ELECTION ALLOWED BY THIS  PARAGRAPH  SHALL  BE
MADE  NO  LATER  THAN  THE  DATE PRESCRIBED FOR THE FILING OF THE RETURN
UNDER THIS ARTICLE (INCLUDING EXTENSIONS) OR ANY TIME THEREAFTER AS  THE
COMMISSIONER MAY PRESCRIBE.
  (c)  Cross  references.--  (1)  For provisions of the internal revenue
code defining the federal gross estate, see:
  Sec. 2031. Definition of gross estate.
  Sec. 2032. Alternate valuation.
  Sec. 2032A. Valuation of certain farm, etc., real property.
  Sec. 2033. Property in which the decedent had an interest.
  Sec. 2034. Dower or curtesy interest.
  Sec. 2035. Adjustments for gifts made within three years of decedent's
death.
  Sec. 2036. Transfers with retained life estate.
  Sec. 2037. Transfers taking effect at death.
  Sec. 2038. Revocable transfers.
  Sec. 2039. Annuities.
  Sec. 2040. Joint interests.
  Sec. 2041. Powers of appointment.
  Sec. 2042. Proceeds of life insurance.
  Sec. 2043. Transfers for insufficient consideration.
  Sec. 2044. Certain property for which marital deduction was previously
allowed.
  Sec. 2045. Prior interests.
  Sec. 2046. Disclaimers.
  (2) FOR PROVISIONS OF THE INTERNAL REVENUE CODE WHICH, EXCEPT  TO  THE
EXTENT  THEY  ARE  INCONSISTENT WITH THE PROVISIONS OF THIS ARTICLE, ARE
PERTINENT TO THE COMPUTATION OF TAXABLE GIFTS AND  THE  TAX  UNDER  THIS
ARTICLE, SEE:
  SEC. 2503. TAXABLE GIFTS.
  SEC. 2511. TRANSFERS IN GENERAL.
  SEC. 2512. VALUATION OF GIFTS.
  SEC. 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY.
  SEC. 2514. POWERS OF APPOINTMENT.
  SEC. 2516. CERTAIN PROPERTY SETTLEMENTS.
  SEC. 2518. DISCLAIMERS.
  SEC. 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES.
  SEC. 2522. CHARITABLE AND SIMILAR GIFTS.
  SEC. 2523. GIFT TO SPOUSE.
  SEC. 2524. EXTENT OF DEDUCTIONS.
  SEC.  2701.  SPECIAL  VALUATION  RULES IN CASE OF TRANSFERS OF CERTAIN
INTERESTS IN CORPORATIONS OR PARTNERSHIPS.
  SEC. 2702. SPECIAL VALUATION RULES IN CASE OF TRANSFERS  OF  INTERESTS
IN TRUSTS.
  SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED.

S. 6359--B                         252                        A. 8559--B

  SEC. 2704. TREATMENT OF CERTAIN LAPSING RIGHTS AND RESTRICTIONS.
  SEC. 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES.
  (3)  For effect of federal estate tax determinations, see section nine
hundred sixty-one of this article.
  S 4. The tax law is amended by adding a new section  955  to  read  as
follows:
  S  955. RESIDENT'S NEW YORK TAXABLE ESTATE.  (A) GENERAL.--THE TAXABLE
ESTATE OF A NEW YORK RESIDENT SHALL BE HIS OR HER NEW YORK GROSS ESTATE,
MINUS THE DEDUCTIONS ALLOWABLE FOR DETERMINING HIS OR HER FEDERAL  TAXA-
BLE  ESTATE  UNDER  THE  INTERNAL REVENUE CODE (WHETHER OR NOT A FEDERAL
ESTATE TAX RETURN IS REQUIRED TO BE FILED), EXCEPT TO  THE  EXTENT  THAT
SUCH  DEDUCTIONS  RELATE  TO  REAL OR TANGIBLE PERSONAL PROPERTY SITUSED
OUTSIDE NEW YORK STATE.
  (B) WAIVER OF DEDUCTIONS.-- IF THE RIGHT TO  ANY  DEDUCTION  OTHERWISE
ALLOWABLE IS WAIVED FOR FEDERAL ESTATE TAX PURPOSES, IT SHALL BE CONSID-
ERED WAIVED FOR NEW YORK ESTATE TAX PURPOSES.
  (C)  QUALIFIED  TERMINABLE  INTEREST  PROPERTY  ELECTION.--  EXCEPT AS
OTHERWISE PROVIDED IN THIS SUBSECTION, THE ELECTION REFERRED TO IN PARA-
GRAPH (7) OF SUBSECTION (B) OF SECTION 2056 OF THE INTERNAL REVENUE CODE
SHALL NOT BE ALLOWED UNDER THIS ARTICLE UNLESS SUCH  ELECTION  WAS  MADE
WITH RESPECT TO THE FEDERAL ESTATE TAX RETURN REQUIRED TO BE FILED UNDER
THE  PROVISIONS  OF THE INTERNAL REVENUE CODE. IF SUCH ELECTION WAS MADE
FOR THE PURPOSES OF THE FEDERAL ESTATE TAX, THEN SUCH ELECTION MUST ALSO
BE MADE BY THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY  THIS  ARTI-
CLE.  WHERE  NO  FEDERAL  ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE
EXECUTOR MAY MAKE THE ELECTION REFERRED TO IN SUCH  PARAGRAPH  (7)  WITH
RESPECT  TO  THE  TAX  IMPOSED  BY THIS ARTICLE ON THE RETURN OF THE TAX
IMPOSED BY THIS ARTICLE. ANY ELECTION MADE UNDER THIS  SUBSECTION  SHALL
BE IRREVOCABLE.
  (D)  CROSS  REFERENCES.--  FOR PROVISIONS OF THE INTERNAL REVENUE CODE
SPECIFYING THE DEDUCTIONS ALLOWABLE FOR  FEDERAL  ESTATE  TAX  PURPOSES,
SEE:
  SEC.2032(B). ALTERNATE VALUATION--SPECIAL RULE FOR DEDUCTIONS.
  SEC.2046. DISCLAIMERS.
  SEC.2053. EXPENSES, INDEBTEDNESS, AND TAXES.
  SEC.2054. LOSSES.
  SEC.2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
  SEC.2056. BEQUESTS, ETC., TO SURVIVING SPOUSE.
  S 5. Subsections (b) and (d) of section 960 of the tax law, subsection
(b)  as amended by section 4 of part I of chapter 60 of the laws of 2004
and subsection (d) as added by section 190  of  the  laws  of  1980  and
relettered  by  section 15 of part A of chapter 389 of the laws of 1997,
are amended to read as follows:
  (b) Computation of tax.--The tax imposed under subsection (a) shall be
the same as the tax that would be due, if the decedent had died a  resi-
dent,  under  subsection  (a)  of section nine hundred fifty-two, except
that for purposes of [allocating] COMPUTING the tax under subsection (b)
of section nine hundred fifty-two, "New York [gross]  TAXABLE  estate"[,
in  the  numerator in subsection (b) of section nine hundred fifty-two,]
shall not include the value of any intangible personal  property  other-
wise  includible in the deceased individual's New York gross estate, AND
SHALL NOT INCLUDE THE AMOUNT OF ANY GIFT UNLESS SUCH  GIFT  CONSISTS  OF
REAL  OR  TANGIBLE  PERSONAL PROPERTY HAVING AN ACTUAL SITUS IN NEW YORK
STATE OR INTANGIBLE PERSONAL PROPERTY EMPLOYED IN A BUSINESS,  TRADE  OR
PROFESSION CARRIED ON IN THIS STATE.

S. 6359--B                         253                        A. 8559--B

  (d)  Works  of art on loan for exhibition. Notwithstanding the forego-
ing, the tax imposed under subsection (a) OF THIS SECTION on the  trans-
fer,  from  any  deceased  individual  who at his OR HER death was not a
resident of the state of New York, of works  of  art  having  an  actual
situs  in  the state of New York and either (i) includible in his OR HER
federal gross estate or (ii) which would be includible in his OR HER New
York gross estate pursuant to section nine hundred fifty-seven (relating
to certain limited powers of appointment) if he OR SHE were  a  resident
of  the  state  of  New  York, shall [be an amount equal to the transfer
taxes or death taxes of every character in respect of personal  property
which  would  be  imposed  on  such transfer or such works of art if the
actual situs of such works of art were the state  or  territory  of  the
United States of residence of such individual] NOT BE SUBJECT TO THE TAX
IMPOSED  BY THIS SECTION if such works of art are [sited in the state of
New York solely for exhibition purposes,] loaned [for such] TO A  PUBLIC
GALLERY  LOCATED  WITHIN  THE  STATE  OF  NEW YORK SOLELY FOR EXHIBITION
purposes [to a public gallery or museum (] BUT ONLY IF no  part  of  the
net earnings of [which] SUCH PUBLIC GALLERY OR MUSEUM inure to the bene-
fit of any private stockholder or individual[)], and [(], at the time of
the  death  of such individual[)] SUCH WORKS OF ART ARE on exhibition or
en route to or from exhibition in  such  a  public  gallery  or  museum.
[Provided  however,  that if the state or territory of the United States
of residence of such individual imposes transfer taxes or death taxes on
such works of art which are sited in the  state  of  New  York  for  the
purposes  herein  specified, then such works of art shall not be subject
to the tax imposed by this section.]
  S 6. Subsection (a) of section 971 of the tax law, as added by section
17 of part A of chapter 389 of the laws of 1997, is amended to  read  as
follows:
  (a)  Returns  by executor. (1) Residents. In the case of the estate of
every individual dying on or after [February first, two thousand]  APRIL
FIRST,  TWO THOUSAND FOURTEEN, who at his or her death was a resident of
New York state, [if] his or her executor [is required to file  a  return
with  respect to the federal estate tax (determined as if the limitation
contained in subsection (a) of section nine hundred  fifty-one  of  this
article were applicable in determining whether such executor is required
to  file  such  federal  return), the executor] shall make a return with
respect to the estate tax imposed by section nine hundred  fifty-two  of
this  article  IF  THE DECEDENT'S FEDERAL GROSS ESTATE, INCREASED BY THE
AMOUNT OF ANY GIFT INCLUDIBLE IN HIS  OR  HER  NEW  YORK  GROSS  ESTATE,
EXCEEDS  THE BASIC EXCLUSION AMOUNT APPLICABLE TO THE DECEDENT'S DATE OF
DEATH IN PARAGRAPH TWO OF SUBSECTION (C) OF SECTION NINE HUNDRED  FIFTY-
TWO OF THIS ARTICLE.
  (2)  Nonresidents. In the case of the estate of every individual DYING
ON OR AFTER APRIL FIRST, TWO THOUSAND FOURTEEN, who at his or her  death
was  not  a  resident  of  New  York  state,  [if his or her executor is
required to file a return with respect to the federal estate tax (deter-
mined as if the limitation contained in subsection (a) of  section  nine
hundred fifty-one of this article were applicable in determining whether
such  executor  is  required  to  file such federal return) and] if such
individual's federal gross estate includes  real  or  tangible  personal
property  having  an  actual situs in New York state, the executor shall
make a return with respect to the estate tax  imposed  by  section  nine
hundred  sixty  of  this article IF THE DECEDENT'S FEDERAL GROSS ESTATE,
INCREASED BY THE AMOUNT OF ANY GIFT INCLUDIBLE IN HIS OR  HER  NEW  YORK
GROSS  ESTATE,  EXCEEDS  THE  BASIC  EXCLUSION  AMOUNT APPLICABLE TO THE

S. 6359--B                         254                        A. 8559--B

DECEDENT'S DATE OF DEATH IN PARAGRAPH TWO OF SUBSECTION (C)  OF  SECTION
NINE HUNDRED FIFTY-TWO OF THIS ARTICLE.
  S  7.  Subsection  (a)  of  section  997 of the tax law, as amended by
section 27 of part A of chapter 389 of the laws of 1997, is  amended  to
read as follows:
  (a)  The  phrase  "adjusted  gross  estate" shall be read as "adjusted
federal gross estate determined  without  reference  to  paragraphs  (1)
[and], (2) AND (3) of subsection (a) of section nine hundred fifty-four"
of this article.
  S 8. Article 26-B of the tax law is REPEALED.
  S  9.  Section  2 of chapter 1013 of the laws of 1962 amending the tax
law relating to imposing a tax on the transfer of estates  of  decedents
dying on or after April first, nineteen hundred sixty-three is REPEALED.
  S  10. The tax law is amended by adding a new section 999-a to read as
follows:
  S 999-A. APPENDIX TO ARTICLE TWENTY-SIX.  THE FOLLOWING PROVISIONS  OF
THE  UNITED  STATES  INTERNAL  REVENUE CODE OF 1986, WITH ALL AMENDMENTS
ENACTED ON OR BEFORE JANUARY FIRST, TWO THOUSAND FOURTEEN,  SHALL  APPLY
TO  THE  TAX  IMPOSED  BY  THIS ARTICLE, TO THE EXTENT SPECIFIED IN THIS
ARTICLE.
  S 2031. DEFINITION OF GROSS ESTATE.
  (A) GENERAL.--THE VALUE OF THE GROSS ESTATE OF THE DECEDENT  SHALL  BE
DETERMINED  BY  INCLUDING  TO  THE EXTENT PROVIDED FOR IN THIS PART, THE
VALUE AT THE TIME OF HIS DEATH OF ALL PROPERTY, REAL OR PERSONAL, TANGI-
BLE OR INTANGIBLE, WHEREVER SITUATED.
  (B) VALUATION OF UNLISTED STOCK AND SECURITIES.--IN THE CASE OF  STOCK
AND  SECURITIES  OF A CORPORATION THE VALUE OF WHICH, BY REASON OF THEIR
NOT BEING LISTED ON AN EXCHANGE AND BY REASON OF THE  ABSENCE  OF  SALES
THEREOF,  CANNOT BE DETERMINED WITH REFERENCE TO BID AND ASKED PRICES OR
WITH REFERENCE TO SALES PRICES, THE VALUE THEREOF SHALL BE DETERMINED BY
TAKING INTO CONSIDERATION, IN ADDITION TO ALL OTHER FACTORS,  THE  VALUE
OF  STOCK OR SECURITIES OF CORPORATIONS ENGAGED IN THE SAME OR A SIMILAR
LINE OF BUSINESS WHICH ARE LISTED ON AN EXCHANGE.
  (C) ESTATE TAX WITH RESPECT TO LAND SUBJECT TO A  QUALIFIED  CONSERVA-
TION EASEMENT.--
  (1) IN GENERAL.--IF THE EXECUTOR MAKES THE ELECTION DESCRIBED IN PARA-
GRAPH  (6), THEN, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION, THERE
SHALL BE EXCLUDED FROM THE GROSS ESTATE THE LESSER OF--
  (A) THE APPLICABLE PERCENTAGE OF THE VALUE OF LAND SUBJECT TO A QUALI-
FIED CONSERVATION EASEMENT, REDUCED BY THE AMOUNT OF ANY DEDUCTION UNDER
SECTION 2055(F) WITH RESPECT TO SUCH LAND, OR
  (B) THE EXCLUSION LIMITATION.
  (2) APPLICABLE PERCENTAGE.--FOR PURPOSES OF PARAGRAPH  (1),  THE  TERM
"APPLICABLE PERCENTAGE" MEANS 40 PERCENT REDUCED (BUT NOT BELOW ZERO) BY
2  PERCENTAGE  POINTS FOR EACH PERCENTAGE POINT (OR FRACTION THEREOF) BY
WHICH THE VALUE OF THE QUALIFIED CONSERVATION EASEMENT IS LESS  THAN  30
PERCENT OF THE VALUE OF THE LAND (DETERMINED WITHOUT REGARD TO THE VALUE
OF  SUCH  EASEMENT  AND REDUCED BY THE VALUE OF ANY RETAINED DEVELOPMENT
RIGHT (AS DEFINED IN PARAGRAPH (5)). THE VALUES TAKEN INTO ACCOUNT UNDER
THE PRECEDING SENTENCE SHALL BE SUCH  VALUES  AS  OF  THE  DATE  OF  THE
CONTRIBUTION REFERRED TO IN PARAGRAPH (8)(B).
  (3)  EXCLUSION  LIMITATION.--FOR PURPOSES OF PARAGRAPH (1), THE EXCLU-
SION LIMITATION IS THE LIMITATION  DETERMINED  IN  ACCORDANCE  WITH  THE
FOLLOWING TABLE:
IN THE CASE OF ESTATES OF DECEDENTS DYING THE EXCLUSION LIMITATION
DURING:                                   IS:

S. 6359--B                         255                        A. 8559--B

1998..................................... 100,000
1999..................................... 200,000
2000..................................... 300,000
2001..................................... 400,000
2002 OR THEREAFTER....................... 500,000
  (4) TREATMENT OF CERTAIN INDEBTEDNESS.--
  (A)  IN  GENERAL.--THE  EXCLUSION  PROVIDED IN PARAGRAPH (1) SHALL NOT
APPLY TO THE EXTENT THAT THE LAND IS DEBT-FINANCED PROPERTY.
  (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) DEBT-FINANCED PROPERTY.--THE TERM "DEBT-FINANCED  PROPERTY"  MEANS
ANY  PROPERTY WITH RESPECT TO WHICH THERE IS AN ACQUISITION INDEBTEDNESS
(AS DEFINED IN CLAUSE (II)) ON THE DATE OF THE DECEDENT'S DEATH.
  (II) ACQUISITION INDEBTEDNESS.--THE  TERM  "ACQUISITION  INDEBTEDNESS"
MEANS, WITH RESPECT TO DEBT-FINANCED PROPERTY, THE UNPAID AMOUNT OF--
  (I) THE INDEBTEDNESS INCURRED BY THE DONOR IN ACQUIRING SUCH PROPERTY,
  (II) THE INDEBTEDNESS INCURRED BEFORE THE ACQUISITION OF SUCH PROPERTY
IF  SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH ACQUISI-
TION,
  (III) THE INDEBTEDNESS INCURRED AFTER THE ACQUISITION OF SUCH PROPERTY
IF SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH  ACQUISI-
TION  AND THE INCURRENCE OF SUCH INDEBTEDNESS WAS REASONABLY FORESEEABLE
AT THE TIME OF SUCH ACQUISITION, AND
  (IV) THE EXTENSION, RENEWAL, OR REFINANCING OF AN ACQUISITION  INDEBT-
EDNESS.
  (5) TREATMENT OF RETAINED DEVELOPMENT RIGHT.--
  (A)  IN  GENERAL.--PARAGRAPH  (1)  SHALL NOT APPLY TO THE VALUE OF ANY
DEVELOPMENT RIGHT RETAINED BY THE DONOR IN THE CONVEYANCE OF A QUALIFIED
CONSERVATION EASEMENT.
  (B) TERMINATION OF RETAINED DEVELOPMENT  RIGHT.--IF  EVERY  PERSON  IN
BEING  WHO  HAS  AN  INTEREST (WHETHER OR NOT IN POSSESSION) IN THE LAND
EXECUTES AN AGREEMENT TO EXTINGUISH  PERMANENTLY  SOME  OR  ALL  OF  ANY
DEVELOPMENT  RIGHTS  (AS  DEFINED  IN  SUBPARAGRAPH (D)) RETAINED BY THE
DONOR ON OR BEFORE THE DATE FOR FILING THE RETURN OF THE TAX IMPOSED  BY
SECTION  2001,  THEN  ANY  TAX  IMPOSED BY SECTION 2001 SHALL BE REDUCED
ACCORDINGLY. SUCH AGREEMENT SHALL BE FILED WITH THE RETURN  OF  THE  TAX
IMPOSED  BY  SECTION  2001.  THE  AGREEMENT SHALL BE IN SUCH FORM AS THE
SECRETARY SHALL PRESCRIBE.
  (C) ADDITIONAL TAX.--ANY FAILURE TO IMPLEMENT THE AGREEMENT  DESCRIBED
IN SUBPARAGRAPH (B) NOT LATER THAN THE EARLIER OF--
  (I)  THE DATE WHICH IS 2 YEARS AFTER THE DATE OF THE DECEDENT'S DEATH,
OR
  (II) THE DATE OF THE SALE  OF  SUCH  LAND  SUBJECT  TO  THE  QUALIFIED
CONSERVATION EASEMENT,
  SHALL  RESULT  IN THE IMPOSITION OF AN ADDITIONAL TAX IN THE AMOUNT OF
THE TAX WHICH WOULD HAVE BEEN DUE ON  THE  RETAINED  DEVELOPMENT  RIGHTS
SUBJECT  TO SUCH AGREEMENT. SUCH ADDITIONAL TAX SHALL BE DUE AND PAYABLE
ON THE LAST DAY OF THE 6TH MONTH FOLLOWING SUCH DATE.
  (D) DEVELOPMENT RIGHT DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,  THE
TERM  "DEVELOPMENT RIGHT" MEANS ANY RIGHT TO USE THE LAND SUBJECT TO THE
QUALIFIED CONSERVATION EASEMENT IN WHICH SUCH RIGHT IS RETAINED FOR  ANY
COMMERCIAL  PURPOSE  WHICH IS NOT SUBORDINATE TO AND DIRECTLY SUPPORTIVE
OF THE USE OF SUCH LAND AS A FARM FOR FARMING PURPOSES (WITHIN THE MEAN-
ING OF SECTION 2032A(E)(5)).
  (6) ELECTION.--THE ELECTION UNDER THIS SUBSECTION SHALL BE MADE ON  OR
BEFORE  THE DUE DATE (INCLUDING EXTENSIONS) FOR FILING THE RETURN OF TAX

S. 6359--B                         256                        A. 8559--B

IMPOSED BY SECTION 2001 AND SHALL  BE  MADE  ON  SUCH  RETURN.  SUCH  AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (7)  CALCULATION  OF  ESTATE TAX DUE.--AN EXECUTOR MAKING THE ELECTION
DESCRIBED IN PARAGRAPH (6) SHALL, FOR PURPOSES OF CALCULATING THE AMOUNT
OF TAX IMPOSED BY SECTION 2001, INCLUDE THE  VALUE  OF  ANY  DEVELOPMENT
RIGHT (AS DEFINED IN PARAGRAPH (5)) RETAINED BY THE DONOR IN THE CONVEY-
ANCE  OF SUCH QUALIFIED CONSERVATION EASEMENT. THE COMPUTATION OF TAX ON
ANY RETAINED DEVELOPMENT RIGHT PRESCRIBED IN  THIS  PARAGRAPH  SHALL  BE
DONE IN SUCH MANNER AND ON SUCH FORMS AS THE SECRETARY SHALL PRESCRIBE.
  (8) DEFINITIONS.--FOR PURPOSES OF THIS SUBSECTION--
  (A) LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.--THE TERM "LAND
SUBJECT TO A QUALIFIED CONSERVATION EASEMENT" MEANS LAND--
  (I)  WHICH  IS  LOCATED  IN THE UNITED STATES OR ANY POSSESSION OF THE
UNITED STATES,
  (II) WHICH WAS OWNED BY THE DECEDENT OR A  MEMBER  OF  THE  DECEDENT'S
FAMILY  AT  ALL TIMES DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE
DECEDENT'S DEATH, AND
  (III) WITH RESPECT TO WHICH A QUALIFIED CONSERVATION EASEMENT HAS BEEN
MADE BY AN INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (C), AS OF THE  DATE  OF
THE ELECTION DESCRIBED IN PARAGRAPH (6).
  (B) QUALIFIED CONSERVATION EASEMENT.--THE TERM "QUALIFIED CONSERVATION
EASEMENT"  MEANS  A  QUALIFIED  CONSERVATION CONTRIBUTION (AS DEFINED IN
SECTION 170(H)(1)) OF A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED  IN
SECTION  170(H)(2)(C)),  EXCEPT THAT CLAUSE (IV) OF SECTION 170(H)(4)(A)
SHALL NOT APPLY, AND  THE  RESTRICTION  ON  THE  USE  OF  SUCH  INTEREST
DESCRIBED  IN  SECTION  170(H)(2)(C) SHALL INCLUDE A PROHIBITION ON MORE
THAN A DE MINIMIS USE FOR A COMMERCIAL RECREATIONAL ACTIVITY.
  (C) INDIVIDUAL DESCRIBED.--AN INDIVIDUAL IS DESCRIBED IN THIS SUBPARA-
GRAPH IF SUCH INDIVIDUAL IS--
  (I) THE DECEDENT,
  (II) A MEMBER OF THE DECEDENT'S FAMILY,
  (III) THE EXECUTOR OF THE DECEDENT'S ESTATE, OR
  (IV) THE TRUSTEE OF A TRUST THE CORPUS OF WHICH INCLUDES THE  LAND  TO
BE SUBJECT TO THE QUALIFIED CONSERVATION EASEMENT.
  (D)  MEMBER  OF  FAMILY.--THE  TERM  "MEMBER OF THE DECEDENT'S FAMILY"
MEANS ANY MEMBER OF THE FAMILY (AS DEFINED IN  SECTION  2032A(E)(2))  OF
THE DECEDENT.
  (9)  TREATMENT OF EASEMENTS GRANTED AFTER DEATH.--IN ANY CASE IN WHICH
THE QUALIFIED CONSERVATION EASEMENT IS GRANTED AFTER  THE  DATE  OF  THE
DECEDENT'S  DEATH  AND  ON OR BEFORE THE DUE DATE (INCLUDING EXTENSIONS)
FOR FILING THE RETURN OF TAX IMPOSED  BY  SECTION  2001,  THE  DEDUCTION
UNDER  SECTION 2055(F) WITH RESPECT TO SUCH EASEMENT SHALL BE ALLOWED TO
THE ESTATE BUT ONLY IF NO CHARITABLE DEDUCTION IS ALLOWED UNDER  CHAPTER
1 TO ANY PERSON WITH RESPECT TO THE GRANT OF SUCH EASEMENT.
  (10)  APPLICATION OF THIS SECTION TO INTERESTS IN PARTNERSHIPS, CORPO-
RATIONS, AND TRUSTS.--THIS SECTION SHALL APPLY TO AN INTEREST IN A PART-
NERSHIP, CORPORATION, OR TRUST IF AT LEAST 30 PERCENT OF THE  ENTITY  IS
OWNED  (DIRECTLY OR INDIRECTLY) BY THE DECEDENT, AS DETERMINED UNDER THE
RULES DESCRIBED IN SECTION 2057(E)(3).
  (D) CROSS REFERENCE.--
  FOR EXECUTOR'S RIGHT TO BE FURNISHED ON REQUEST A STATEMENT  REGARDING
ANY VALUATION MADE BY THE SECRETARY WITHIN THE GROSS ESTATE, SEE SECTION
7517.
  S 2032. ALTERNATE VALUATION.

S. 6359--B                         257                        A. 8559--B

  (A)  GENERAL.--THE VALUE OF THE GROSS ESTATE MAY BE DETERMINED, IF THE
EXECUTOR SO ELECTS, BY VALUING ALL THE PROPERTY INCLUDED  IN  THE  GROSS
ESTATE AS FOLLOWS:
  (1) IN THE CASE OF PROPERTY DISTRIBUTED, SOLD, EXCHANGED, OR OTHERWISE
DISPOSED  OF,  WITHIN  6 MONTHS AFTER THE DECEDENT'S DEATH SUCH PROPERTY
SHALL BE VALUED AS OF THE DATE OF DISTRIBUTION, SALE, EXCHANGE, OR OTHER
DISPOSITION.
  (2) IN THE CASE OF  PROPERTY  NOT  DISTRIBUTED,  SOLD,  EXCHANGED,  OR
OTHERWISE  DISPOSED  OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S DEATH SUCH
PROPERTY SHALL BE VALUED AS OF THE DATE 6 MONTHS  AFTER  THE  DECEDENT'S
DEATH.
  (3)  ANY  INTEREST  OR  ESTATE WHICH IS AFFECTED BY MERE LAPSE OF TIME
SHALL BE INCLUDED AT ITS VALUE AS OF THE TIME OF DEATH (INSTEAD  OF  THE
LATER  DATE)  WITH  ADJUSTMENT FOR ANY DIFFERENCE IN ITS VALUE AS OF THE
LATER DATE NOT DUE TO MERE LAPSE OF TIME.
  (B) SPECIAL RULES.--NO DEDUCTION UNDER THIS CHAPTER OF ANY ITEM  SHALL
BE  ALLOWED IF ALLOWANCE FOR SUCH ITEMS IS IN EFFECT GIVEN BY THE ALTER-
NATE  VALUATION  PROVIDED  BY  THIS  SECTION.  WHEREVER  IN  ANY   OTHER
SUBSECTION  OR SECTION OF THIS CHAPTER REFERENCE IS MADE TO THE VALUE OF
PROPERTY AT THE TIME OF THE DECEDENT'S DEATH, SUCH  REFERENCE  SHALL  BE
DEEMED  TO  REFER  TO THE VALUE OF SUCH PROPERTY USED IN DETERMINING THE
VALUE OF THE GROSS ESTATE. IN CASE OF AN ELECTION MADE BY  THE  EXECUTOR
UNDER THIS SECTION, THEN--
  (1)  FOR  PURPOSES  OF  THE CHARITABLE DEDUCTION UNDER SECTION 2055 OR
2106(A)(2), ANY BEQUEST, LEGACY, DEVISE, OR TRANSFER ENUMERATED THEREIN,
AND
  (2) FOR THE PURPOSE OF THE MARITAL DEDUCTION UNDER SECTION  2056,  ANY
INTEREST IN PROPERTY PASSING TO THE SURVIVING SPOUSE,
  SHALL BE VALUED AS OF THE DATE OF THE DECEDENT'S DEATH WITH ADJUSTMENT
FOR ANY DIFFERENCE IN VALUE (NOT DUE TO MERE LAPSE OF TIME OR THE OCCUR-
RENCE  OR NONOCCURRENCE OF A CONTINGENCY) OF THE PROPERTY AS OF THE DATE
6 MONTHS AFTER THE DECEDENT'S DEATH (SUBSTITUTING, IN THE CASE OF  PROP-
ERTY  DISTRIBUTED  BY  THE  EXECUTOR  OR TRUSTEE, OR SOLD, EXCHANGED, OR
OTHERWISE DISPOSED OF, DURING SUCH 6-MONTH PERIOD, THE DATE THEREOF).
  (C) ELECTION MUST DECREASE GROSS ESTATE AND ESTATE  TAX.--NO  ELECTION
MAY  BE  MADE  UNDER  THIS SECTION WITH RESPECT TO AN ESTATE UNLESS SUCH
ELECTION WILL DECREASE--
  (1) THE VALUE OF THE GROSS ESTATE, AND
  (2) THE SUM OF THE TAX IMPOSED BY THIS CHAPTER AND THE TAX IMPOSED  BY
CHAPTER  13  WITH RESPECT TO PROPERTY INCLUDIBLE IN THE DECEDENT'S GROSS
ESTATE (REDUCED BY CREDITS ALLOWABLE AGAINST SUCH TAXES).
  (D) ELECTION.--
  (1) IN GENERAL.--THE ELECTION PROVIDED FOR IN THIS  SECTION  SHALL  BE
MADE  BY  THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY THIS CHAPTER.
SUCH ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (2) EXCEPTION.--NO ELECTION MAY BE MADE UNDER  THIS  SECTION  IF  SUCH
RETURN  IS  FILED  MORE  THAN  1  YEAR  AFTER THE TIME PRESCRIBED BY LAW
(INCLUDING EXTENSIONS) FOR FILING SUCH RETURN.
  S 2032A. VALUATION OF CERTAIN FARM, ETC., REAL PROPERTY.
  (A) VALUE BASED ON USE UNDER WHICH PROPERTY QUALIFIES.--
  (1) GENERAL RULE.--IF--
  (A) THE DECEDENT WAS (AT THE TIME OF HIS DEATH) A CITIZEN OR  RESIDENT
OF THE UNITED STATES, AND
  (B)  THE EXECUTOR ELECTS THE APPLICATION OF THIS SECTION AND FILES THE
AGREEMENT REFERRED TO IN SUBSECTION (D)(2),

S. 6359--B                         258                        A. 8559--B

  THEN, FOR PURPOSES OF THIS CHAPTER, THE VALUE OF QUALIFIED REAL  PROP-
ERTY  SHALL  BE  ITS  VALUE  FOR THE USE UNDER WHICH IT QUALIFIES, UNDER
SUBSECTION (B), AS QUALIFIED REAL PROPERTY.
  (2)  LIMITATION  ON  AGGREGATE  REDUCTION  IN  FAIR MARKET VALUE.--THE
AGGREGATE DECREASE IN THE VALUE OF QUALIFIED REAL  PROPERTY  TAKEN  INTO
ACCOUNT  FOR PURPOSES OF THIS CHAPTER WHICH RESULTS FROM THE APPLICATION
OF PARAGRAPH (1) WITH RESPECT TO ANY DECEDENT SHALL NOT EXCEED $750,000.
  (3) INFLATION ADJUSTMENT.--IN THE CASE OF ESTATES OF  DECEDENTS  DYING
IN  A  CALENDAR  YEAR AFTER 1998, THE $750,000 AMOUNT CONTAINED IN PARA-
GRAPH (2) SHALL BE INCREASED BY AN AMOUNT EQUAL TO--
  (A) $750,000, MULTIPLIED BY
  (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
SUCH CALENDAR YEAR BY SUBSTITUTING "CALENDAR YEAR  1997"  FOR  "CALENDAR
YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.
  IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
PLE OF $10,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST MULTIPLE
OF $10,000.
  (B) QUALIFIED REAL PROPERTY.--
  (1)  IN  GENERAL.--FOR  PURPOSES  OF THIS SECTION, THE TERM "QUALIFIED
REAL PROPERTY" MEANS REAL PROPERTY LOCATED IN THE  UNITED  STATES  WHICH
WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR OF THE
DECEDENT  AND WHICH, ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED
FOR A QUALIFIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S  FAMI-
LY, BUT ONLY IF--
  (A)  50  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
CONSISTS OF THE ADJUSTED VALUE OF REAL OR PERSONAL PROPERTY WHICH--
  (I) ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED FOR  A  QUALI-
FIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S FAMILY, AND
  (II) WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR
OF THE DECEDENT.
  (B)  25  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
CONSISTS OF THE ADJUSTED VALUE OF REAL PROPERTY WHICH MEETS THE REQUIRE-
MENTS OF SUBPARAGRAPHS (A)(II) AND (C),
  (C) DURING THE 8-YEAR PERIOD ENDING ON  THE  DATE  OF  THE  DECEDENT'S
DEATH THERE HAVE BEEN PERIODS AGGREGATING 5 YEARS OR MORE DURING WHICH--
  (I)  SUCH  REAL  PROPERTY WAS OWNED BY THE DECEDENT OR A MEMBER OF THE
DECEDENT'S FAMILY AND USED FOR A QUALIFIED USE  BY  THE  DECEDENT  OR  A
MEMBER OF THE DECEDENT'S FAMILY, AND
  (II)  THERE  WAS MATERIAL PARTICIPATION BY THE DECEDENT OR A MEMBER OF
THE DECEDENT'S FAMILY IN THE OPERATION OF THE FARM  OR  OTHER  BUSINESS,
AND
  (D)  SUCH  REAL PROPERTY IS DESIGNATED IN THE AGREEMENT REFERRED TO IN
SUBSECTION (D)(2).
  (2) QUALIFIED USE.--FOR PURPOSES OF THIS SECTION, THE TERM  "QUALIFIED
USE" MEANS THE DEVOTION OF THE PROPERTY TO ANY OF THE FOLLOWING:
  (A) USE AS A FARM FOR FARMING PURPOSES, OR
  (B)  USE  IN  A  TRADE OR BUSINESS OTHER THAN THE TRADE OR BUSINESS OF
FARMING.
  (3) ADJUSTED VALUE.--FOR PURPOSES OF PARAGRAPH (1), THE TERM "ADJUSTED
VALUE" MEANS--
  (A) IN THE CASE OF THE GROSS ESTATE, THE VALUE OF THE GROSS ESTATE FOR
PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD  TO  THIS  SECTION),
REDUCED  BY  ANY AMOUNTS ALLOWABLE AS A DEDUCTION UNDER PARAGRAPH (4) OF
SECTION 2053(A), OR
  (B) IN THE CASE OF ANY REAL OR PERSONAL PROPERTY, THE  VALUE  OF  SUCH
PROPERTY FOR PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD TO THIS

S. 6359--B                         259                        A. 8559--B

SECTION),  REDUCED BY ANY AMOUNTS ALLOWABLE AS A DEDUCTION IN RESPECT OF
SUCH PROPERTY UNDER PARAGRAPH (4) OF SECTION 2053(A).
  (4) DECEDENTS WHO ARE RETIRED OR DISABLED.--
  (A) IN GENERAL.--IF, ON THE DATE OF THE DECEDENT'S DEATH, THE REQUIRE-
MENTS OF PARAGRAPH (1)(C)(II) WITH RESPECT TO THE DECEDENT FOR ANY PROP-
ERTY ARE NOT MET, AND THE DECEDENT--
  (I)  WAS RECEIVING OLD-AGE BENEFITS UNDER TITLE II OF THE SOCIAL SECU-
RITY ACT FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE, OR
  (II) WAS DISABLED FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE,
  THEN PARAGRAPH (1)(C)(II) SHALL BE APPLIED WITH RESPECT TO SUCH  PROP-
ERTY  BY  SUBSTITUTING  "THE DATE ON WHICH THE LONGER OF SUCH CONTINUOUS
PERIODS BEGAN" FOR "THE DATE  OF  THE  DECEDENT'S  DEATH"  IN  PARAGRAPH
(1)(C).
  (B) DISABLED DEFINED.--FOR PURPOSES OF SUBPARAGRAPH (A), AN INDIVIDUAL
SHALL BE DISABLED IF SUCH INDIVIDUAL HAS A MENTAL OR PHYSICAL IMPAIRMENT
WHICH  RENDERS  HIM UNABLE TO MATERIALLY PARTICIPATE IN THE OPERATION OF
THE FARM OR OTHER BUSINESS.
  (C)  COORDINATION  WITH   RECAPTURE.--FOR   PURPOSES   OF   SUBSECTION
(C)(6)(B)(I),  IF  THE REQUIREMENTS OF PARAGRAPH (1)(C)(II) ARE MET WITH
RESPECT TO ANY DECEDENT BY REASON OF SUBPARAGRAPH (A), THE PERIOD ENDING
ON THE DATE ON WHICH THE CONTINUOUS  PERIOD  TAKEN  INTO  ACCOUNT  UNDER
SUBPARAGRAPH (A) BEGAN SHALL BE TREATED AS THE PERIOD IMMEDIATELY BEFORE
THE DECEDENT'S DEATH.
  (5) SPECIAL RULES FOR SURVIVING SPOUSES.--
  (A)  IN  GENERAL.--IF PROPERTY IS QUALIFIED REAL PROPERTY WITH RESPECT
TO A DECEDENT (HEREINAFTER IN THIS PARAGRAPH REFERRED TO AS  THE  "FIRST
DECEDENT")  AND SUCH PROPERTY WAS ACQUIRED FROM OR PASSED FROM THE FIRST
DECEDENT TO THE SURVIVING SPOUSE OF THE FIRST DECEDENT, FOR PURPOSES  OF
APPLYING THIS SUBSECTION AND SUBSECTION (C) IN THE CASE OF THE ESTATE OF
SUCH  SURVIVING  SPOUSE, ACTIVE MANAGEMENT OF THE FARM OR OTHER BUSINESS
BY THE SURVIVING SPOUSE SHALL BE TREATED AS  MATERIAL  PARTICIPATION  BY
SUCH SURVIVING SPOUSE IN THE OPERATION OF SUCH FARM OR BUSINESS.
  (B)  SPECIAL RULE.--FOR THE PURPOSES OF SUBPARAGRAPH (A), THE DETERMI-
NATION OF WHETHER PROPERTY IS QUALIFIED REAL PROPERTY  WITH  RESPECT  TO
THE  FIRST  DECEDENT SHALL BE MADE WITHOUT REGARD TO SUBPARAGRAPH (D) OF
PARAGRAPH (1) AND WITHOUT REGARD  TO  WHETHER  AN  ELECTION  UNDER  THIS
SECTION WAS MADE.
  (C)  COORDINATION  WITH  PARAGRAPH (4).--IN ANY CASE IN WHICH TO DO SO
WILL ENABLE THE REQUIREMENTS OF PARAGRAPH  (1)(C)(II)  TO  BE  MET  WITH
RESPECT  TO  THE  SURVIVING  SPOUSE,  THIS SUBSECTION AND SUBSECTION (C)
SHALL BE APPLIED BY TAKING INTO ACCOUNT  ANY  APPLICATION  OF  PARAGRAPH
(4).
  (C)  TAX  TREATMENT  OF DISPOSITIONS AND FAILURES TO USE FOR QUALIFIED
USE.--
  (1) IMPOSITION OF ADDITIONAL ESTATE TAX.--IF, WITHIN  10  YEARS  AFTER
THE DECEDENT'S DEATH AND BEFORE THE DEATH OF THE QUALIFIED HEIR--
  (A)  THE  QUALIFIED  HEIR  DISPOSES  OF ANY INTEREST IN QUALIFIED REAL
PROPERTY (OTHER THAN BY A DISPOSITION TO A MEMBER OF HIS FAMILY), OR
  (B) THE QUALIFIED HEIR CEASES TO USE FOR THE QUALIFIED USE THE  QUALI-
FIED REAL PROPERTY WHICH WAS ACQUIRED (OR PASSED) FROM THE DECEDENT,
  THEN, THERE IS HEREBY IMPOSED AN ADDITIONAL ESTATE TAX.
  (2) AMOUNT OF ADDITIONAL TAX.--
  (A) IN GENERAL.--THE AMOUNT OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH
(1) WITH RESPECT TO ANY INTEREST SHALL BE THE AMOUNT EQUAL TO THE LESSER
OF--
  (I) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO SUCH INTEREST, OR

S. 6359--B                         260                        A. 8559--B

  (II)  THE  EXCESS  OF THE AMOUNT REALIZED WITH RESPECT TO THE INTEREST
(OR, IN ANY CASE OTHER THAN A SALE OR EXCHANGE AT ARM'S LENGTH, THE FAIR
MARKET VALUE OF THE INTEREST) OVER THE VALUE OF THE INTEREST  DETERMINED
UNDER SUBSECTION (A).
  (B) ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO INTEREST.--FOR PURPOSES OF
SUBPARAGRAPH  (A), THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO AN INTER-
EST IS THE AMOUNT WHICH BEARS THE SAME RATIO TO THE ADJUSTED TAX DIFFER-
ENCE WITH RESPECT TO THE ESTATE (DETERMINED UNDER SUBPARAGRAPH (C)) AS--
  (I) THE EXCESS OF THE VALUE OF SUCH  INTEREST  FOR  PURPOSES  OF  THIS
CHAPTER  (DETERMINED WITHOUT REGARD TO SUBSECTION (A)) OVER THE VALUE OF
SUCH INTEREST DETERMINED UNDER SUBSECTION (A), BEARS TO
  (II) A SIMILAR EXCESS DETERMINED FOR ALL QUALIFIED REAL PROPERTY.
  (C) ADJUSTED TAX DIFFERENCE WITH RESPECT TO THE ESTATE.--FOR  PURPOSES
OF  SUBPARAGRAPH  (B), THE TERM "ADJUSTED TAX DIFFERENCE WITH RESPECT TO
THE ESTATE" MEANS THE EXCESS OF WHAT WOULD  HAVE  BEEN  THE  ESTATE  TAX
LIABILITY  BUT  FOR  SUBSECTION  (A)  OVER THE ESTATE TAX LIABILITY. FOR
PURPOSES OF THIS SUBPARAGRAPH, THE TERM "ESTATE TAX LIABILITY" MEANS THE
TAX IMPOSED BY SECTION 2001 REDUCED BY  THE  CREDITS  ALLOWABLE  AGAINST
SUCH TAX.
  (D)  PARTIAL  DISPOSITIONS.--FOR PURPOSES OF THIS PARAGRAPH, WHERE THE
QUALIFIED HEIR DISPOSES OF A PORTION OF THE  INTEREST  ACQUIRED  BY  (OR
PASSING  TO)  SUCH  HEIR (OR A PREDECESSOR QUALIFIED HEIR) OR THERE IS A
CESSATION OF USE OF SUCH A PORTION--
  (I) THE VALUE DETERMINED UNDER SUBSECTION (A) TAKEN INTO ACCOUNT UNDER
SUBPARAGRAPH (A)(II) WITH RESPECT TO SUCH PORTION SHALL BE ITS PRO  RATA
SHARE OF SUCH VALUE OF SUCH INTEREST, AND
  (II)  THE  ADJUSTED  TAX DIFFERENCE ATTRIBUTABLE TO THE INTEREST TAKEN
INTO ACCOUNT WITH RESPECT TO THE TRANSACTION INVOLVING THE SECOND OR ANY
SUCCEEDING PORTION SHALL BE REDUCED BY THE AMOUNT OF THE TAX IMPOSED  BY
THIS  SUBSECTION  WITH  RESPECT  TO  ALL  PRIOR  TRANSACTIONS  INVOLVING
PORTIONS OF SUCH INTEREST.
  (E) SPECIAL RULE FOR DISPOSITION OF TIMBER.--IN THE CASE OF  QUALIFIED
WOODLAND  TO  WHICH  AN ELECTION UNDER SUBSECTION (E)(13)(A) APPLIES, IF
THE QUALIFIED HEIR DISPOSES OF (OR SEVERS) ANY STANDING TIMBER  ON  SUCH
QUALIFIED WOODLAND--
  (I)  SUCH DISPOSITION (OR SEVERANCE) SHALL BE TREATED AS A DISPOSITION
OF A PORTION OF THE INTEREST OF THE QUALIFIED HEIR IN SUCH PROPERTY, AND
  (II) THE AMOUNT OF THE ADDITIONAL TAX IMPOSED BY  PARAGRAPH  (1)  WITH
RESPECT TO SUCH DISPOSITION SHALL BE AN AMOUNT EQUAL TO THE LESSER OF--
  (I)  THE  AMOUNT  REALIZED  ON SUCH DISPOSITION (OR, IN ANY CASE OTHER
THAN A SALE OR EXCHANGE AT ARM'S LENGTH, THE FAIR MARKET  VALUE  OF  THE
PORTION OF THE INTEREST DISPOSED OR SEVERED), OR
  (II)  THE  AMOUNT  OF  ADDITIONAL  TAX DETERMINED UNDER THIS PARAGRAPH
(WITHOUT REGARD TO THIS SUBPARAGRAPH) IF  THE  ENTIRE  INTEREST  OF  THE
QUALIFIED  HEIR IN THE QUALIFIED WOODLAND HAD BEEN DISPOSED OF, LESS THE
SUM OF THE AMOUNT OF THE ADDITIONAL TAX  IMPOSED  WITH  RESPECT  TO  ALL
PRIOR  TRANSACTIONS  INVOLVING  SUCH WOODLAND TO WHICH THIS SUBPARAGRAPH
APPLIED.
  FOR PURPOSES OF THE PRECEDING SENTENCE, THE DISPOSITION OF A RIGHT  TO
SEVER  SHALL  BE  TREATED AS THE DISPOSITION OF THE STANDING TIMBER. THE
AMOUNT OF ADDITIONAL TAX IMPOSED UNDER PARAGRAPH  (1)  IN  ANY  CASE  IN
WHICH  A QUALIFIED HEIR DISPOSES OF HIS ENTIRE INTEREST IN THE QUALIFIED
WOODLAND SHALL BE REDUCED BY ANY AMOUNT DETERMINED UNDER  THIS  SUBPARA-
GRAPH WITH RESPECT TO SUCH WOODLAND.
  (3)  ONLY  1 ADDITIONAL TAX IMPOSED WITH RESPECT TO ANY 1 PORTION.--IN
THE CASE OF AN INTEREST ACQUIRED FROM (OR PASSING FROM) ANY DECEDENT, IF

S. 6359--B                         261                        A. 8559--B

SUBPARAGRAPH (A) OR (B) OF PARAGRAPH (1) APPLIES TO ANY  PORTION  OF  AN
INTEREST,  SUBPARAGRAPH (B) OR (A), AS THE CASE MAY BE, OF PARAGRAPH (1)
SHALL NOT APPLY WITH RESPECT TO THE SAME PORTION OF SUCH INTEREST.
  (4)  DUE  DATE.--THE  ADDITIONAL  TAX IMPOSED BY THIS SUBSECTION SHALL
BECOME DUE AND PAYABLE ON THE DAY WHICH IS 6 MONTHS AFTER  THE  DATE  OF
THE DISPOSITION OR CESSATION REFERRED TO IN PARAGRAPH (1).
  (5)  LIABILITY  FOR TAX; FURNISHING OF BOND.--THE QUALIFIED HEIR SHALL
BE PERSONALLY LIABLE FOR THE ADDITIONAL TAX IMPOSED BY  THIS  SUBSECTION
WITH  RESPECT  TO  HIS INTEREST UNLESS THE HEIR HAS FURNISHED BOND WHICH
MEETS THE REQUIREMENTS OF SUBSECTION (E)(11).
  (6) CESSATION OF QUALIFIED USE.--FOR  PURPOSES  OF  PARAGRAPH  (1)(B),
REAL PROPERTY SHALL CEASE TO BE USED FOR THE QUALIFIED USE IF--
  (A) SUCH PROPERTY CEASES TO BE USED FOR THE QUALIFIED USE SET FORTH IN
SUBPARAGRAPH  (A)  OR  (B) OF SUBSECTION (B)(2) UNDER WHICH THE PROPERTY
QUALIFIED UNDER SUBSECTION (B), OR
  (B) DURING ANY PERIOD  OF  8  YEARS  ENDING  AFTER  THE  DATE  OF  THE
DECEDENT'S DEATH AND BEFORE THE DATE OF THE DEATH OF THE QUALIFIED HEIR,
THERE HAD BEEN PERIODS AGGREGATING MORE THAN 3 YEARS DURING WHICH--
  (I)  IN  THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY THE
DECEDENT, THERE WAS NO MATERIAL PARTICIPATION BY  THE  DECEDENT  OR  ANY
MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER BUSINESS, AND
  (II)  IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY ANY
QUALIFIED HEIR, THERE WAS NO MATERIAL PARTICIPATION  BY  SUCH  QUALIFIED
HEIR  OR  ANY MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER
BUSINESS.
  (7) SPECIAL RULES.--
  (A) NO TAX IF USE BEGINS WITHIN 2 YEARS.--IF THE  DATE  ON  WHICH  THE
QUALIFIED HEIR BEGINS TO USE THE QUALIFIED REAL PROPERTY (HEREINAFTER IN
THIS  SUBPARAGRAPH  REFERRED  TO AS THE COMMENCEMENT DATE) IS BEFORE THE
DATE 2 YEARS AFTER THE DECEDENT'S DEATH--
  (I) NO TAX SHALL BE IMPOSED UNDER PARAGRAPH (1) BY REASON OF THE FAIL-
URE BY THE QUALIFIED HEIR TO SO USE SUCH PROPERTY BEFORE  THE  COMMENCE-
MENT DATE, AND
  (II)  THE  10-YEAR PERIOD UNDER PARAGRAPH (1) SHALL BE EXTENDED BY THE
PERIOD AFTER THE DECEDENT'S DEATH AND BEFORE THE COMMENCEMENT DATE.
  (B) ACTIVE MANAGEMENT BY ELIGIBLE QUALIFIED HEIR TREATED  AS  MATERIAL
PARTICIPATION.--FOR PURPOSES OF PARAGRAPH (6)(B)(II), THE ACTIVE MANAGE-
MENT OF A FARM OR OTHER BUSINESS BY--
  (I) AN ELIGIBLE QUALIFIED HEIR, OR
  (II)  A  FIDUCIARY  OF  AN ELIGIBLE QUALIFIED HEIR DESCRIBED IN CLAUSE
(II) OR (III) OF SUBPARAGRAPH (C),
  SHALL BE TREATED AS MATERIAL PARTICIPATION BY SUCH ELIGIBLE  QUALIFIED
HEIR IN THE OPERATION OF SUCH FARM OR BUSINESS. IN THE CASE OF AN ELIGI-
BLE  QUALIFIED HEIR DESCRIBED IN CLAUSE (II), (III), OR (IV) OF SUBPARA-
GRAPH (C), THE PRECEDING SENTENCE SHALL APPLY ONLY DURING PERIODS DURING
WHICH SUCH HEIR MEETS THE REQUIREMENTS OF SUCH CLAUSE.
  (C) ELIGIBLE QUALIFIED HEIR.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
"ELIGIBLE QUALIFIED HEIR" MEANS A QUALIFIED HEIR WHO--
  (I) IS THE SURVIVING SPOUSE OF THE DECEDENT,
  (II) HAS NOT ATTAINED THE AGE OF 21,
  (III) IS DISABLED (WITHIN THE MEANING OF SUBSECTION (B)(4)(B)), OR
  (IV) IS A STUDENT.
  (D) STUDENT.--FOR PURPOSES OF SUBPARAGRAPH (C), AN INDIVIDUAL SHALL BE
TREATED AS A STUDENT WITH RESPECT TO PERIODS DURING ANY CALENDAR YEAR IF
(AND ONLY IF) SUCH INDIVIDUAL  IS  A  STUDENT  (WITHIN  THE  MEANING  OF
SECTION 152(F)(2)) FOR SUCH CALENDAR YEAR.

S. 6359--B                         262                        A. 8559--B

  (E)  CERTAIN  RENTS  TREATED  AS  QUALIFIED USE.--FOR PURPOSES OF THIS
SUBSECTION, A SURVIVING SPOUSE OR  LINEAL  DESCENDANT  OF  THE  DECEDENT
SHALL  NOT  BE  TREATED  AS  FAILING TO USE QUALIFIED REAL PROPERTY IN A
QUALIFIED USE SOLELY BECAUSE SUCH SPOUSE OR DESCENDANT RENTS SUCH  PROP-
ERTY  TO  A  MEMBER  OF THE FAMILY OF SUCH SPOUSE OR DESCENDANT ON A NET
CASH BASIS. FOR PURPOSES OF THE PRECEDING SENTENCE,  A  LEGALLY  ADOPTED
CHILD  OF AN INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH INDIVIDUAL
BY BLOOD.
  (8) QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.--A QUAL-
IFIED CONSERVATION CONTRIBUTION (AS DEFINED IN SECTION 170(H))  BY  GIFT
OR  OTHERWISE  SHALL  NOT  BE  DEEMED  A  DISPOSITION  UNDER  SUBSECTION
(C)(1)(A).
  (D) ELECTION; AGREEMENT.--
  (1) ELECTION.--THE ELECTION UNDER THIS SECTION SHALL BE  MADE  ON  THE
RETURN  OF  THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL BE MADE
IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH  AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (2) AGREEMENT.--THE AGREEMENT REFERRED TO IN THIS PARAGRAPH IS A WRIT-
TEN AGREEMENT SIGNED BY EACH PERSON IN BEING WHO HAS AN INTEREST (WHETH-
ER  OR  NOT  IN POSSESSION) IN ANY PROPERTY DESIGNATED IN SUCH AGREEMENT
CONSENTING TO THE APPLICATION OF SUBSECTION (C)  WITH  RESPECT  TO  SUCH
PROPERTY.
  (3)  MODIFICATION  OF  ELECTION  AND  AGREEMENT  TO BE PERMITTED.--THE
SECRETARY SHALL PRESCRIBE PROCEDURES WHICH PROVIDE THAT IN ANY  CASE  IN
WHICH  THE  EXECUTOR  MAKES AN ELECTION UNDER PARAGRAPH (1) (AND SUBMITS
THE AGREEMENT REFERRED TO IN PARAGRAPH (2)) WITHIN THE  TIME  PRESCRIBED
THEREFOR, BUT--
  (A)  THE  NOTICE  OF ELECTION, AS FILED, DOES NOT CONTAIN ALL REQUIRED
INFORMATION, OR
  (B) SIGNATURES OF 1 OR MORE PERSONS REQUIRED TO ENTER INTO THE  AGREE-
MENT  DESCRIBED  IN  PARAGRAPH  (2) ARE NOT INCLUDED ON THE AGREEMENT AS
FILED, OR THE AGREEMENT DOES NOT CONTAIN ALL REQUIRED INFORMATION,
  THE EXECUTOR WILL HAVE A REASONABLE PERIOD OF TIME (NOT  EXCEEDING  90
DAYS) AFTER NOTIFICATION OF SUCH FAILURES TO PROVIDE SUCH INFORMATION OR
SIGNATURES.
  (E) DEFINITIONS; SPECIAL RULES.--FOR PURPOSES OF THIS SECTION--
  (1)  QUALIFIED HEIR.--THE TERM "QUALIFIED HEIR" MEANS, WITH RESPECT TO
ANY PROPERTY, A MEMBER OF THE DECEDENT'S FAMILY WHO ACQUIRED SUCH  PROP-
ERTY (OR TO WHOM SUCH PROPERTY PASSED) FROM THE DECEDENT. IF A QUALIFIED
HEIR  DISPOSES  OF ANY INTEREST IN QUALIFIED REAL PROPERTY TO ANY MEMBER
OF HIS FAMILY, SUCH MEMBER SHALL THEREAFTER BE TREATED AS THE  QUALIFIED
HEIR WITH RESPECT TO SUCH INTEREST.
  (2)  MEMBER  OF  FAMILY.--THE  TERM "MEMBER OF THE FAMILY" MEANS, WITH
RESPECT TO ANY INDIVIDUAL, ONLY--
  (A) AN ANCESTOR OF SUCH INDIVIDUAL,
  (B) THE SPOUSE OF SUCH INDIVIDUAL,
  (C) A LINEAL DESCENDANT  OF  SUCH  INDIVIDUAL,  OF  SUCH  INDIVIDUAL'S
SPOUSE, OR OF A PARENT OF SUCH INDIVIDUAL, OR
  (D) THE SPOUSE OF ANY LINEAL DESCENDANT DESCRIBED IN SUBPARAGRAPH (C).
  FOR  PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED CHILD OF AN
INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH INDIVIDUAL BY BLOOD.
  (3) CERTAIN REAL PROPERTY INCLUDED.--IN  THE  CASE  OF  REAL  PROPERTY
WHICH  MEETS  THE REQUIREMENTS OF SUBPARAGRAPH (C) OF SUBSECTION (B)(1),
RESIDENTIAL BUILDINGS AND RELATED IMPROVEMENTS  ON  SUCH  REAL  PROPERTY
OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF SUCH REAL PROPERTY
OR  BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR THE PURPOSE OF OPER-

S. 6359--B                         263                        A. 8559--B

ATING OR MAINTAINING SUCH REAL PROPERTY, AND ROADS, BUILDINGS, AND OTHER
STRUCTURES AND IMPROVEMENTS FUNCTIONALLY RELATED TO  THE  QUALIFIED  USE
SHALL BE TREATED AS REAL PROPERTY DEVOTED TO THE QUALIFIED USE.
  (4)  FARM.--THE  TERM  "FARM"  INCLUDES  STOCK, DAIRY, POULTRY, FRUIT,
FURBEARING ANIMAL, AND TRUCK  FARMS,  PLANTATIONS,  RANCHES,  NURSERIES,
RANGES,  GREENHOUSES  OR OTHER SIMILAR STRUCTURES USED PRIMARILY FOR THE
RAISING OF AGRICULTURAL OR HORTICULTURAL COMMODITIES, AND  ORCHARDS  AND
WOODLANDS.
  (5) FARMING PURPOSES.--THE TERM "FARMING PURPOSES" MEANS-
  (A)  CULTIVATING THE SOIL OR RAISING OR HARVESTING ANY AGRICULTURAL OR
HORTICULTURAL  COMMODITY  (INCLUDING  THE  RAISING,  SHEARING,  FEEDING,
CARING FOR, TRAINING, AND MANAGEMENT OF ANIMALS) ON A FARM;
  (B) HANDLING, DRYING, PACKING, GRADING, OR STORING ON A FARM ANY AGRI-
CULTURAL  OR  HORTICULTURAL  COMMODITY  IN ITS UNMANUFACTURED STATE, BUT
ONLY IF THE OWNER, TENANT, OR OPERATOR OF THE  FARM  REGULARLY  PRODUCES
MORE THAN ONE-HALF OF THE COMMODITY SO TREATED; AND
  (C)(I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
  (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
  (6)  MATERIAL  PARTICIPATION.--MATERIAL  PARTICIPATION SHALL BE DETER-
MINED IN A MANNER SIMILAR TO THE MANNER USED FOR PURPOSES  OF  PARAGRAPH
(1) OF SECTION 1402(A) (RELATING TO NET EARNINGS FROM SELF-EMPLOYMENT).
  (7) METHOD OF VALUING FARMS.--
  (A)  IN GENERAL.--EXCEPT AS PROVIDED IN SUBPARAGRAPH (B), THE VALUE OF
A FARM FOR FARMING PURPOSES SHALL BE DETERMINED BY DIVIDING--
  (I) THE EXCESS OF THE AVERAGE ANNUAL GROSS CASH RENTAL FOR  COMPARABLE
LAND  USED FOR FARMING PURPOSES AND LOCATED IN THE LOCALITY OF SUCH FARM
OVER THE AVERAGE ANNUAL STATE AND  LOCAL  REAL  ESTATE  TAXES  FOR  SUCH
COMPARABLE LAND, BY
  (II)  THE  AVERAGE  ANNUAL EFFECTIVE INTEREST RATE FOR ALL NEW FEDERAL
LAND BANK LOANS.
  FOR PURPOSES OF THE PRECEDING SENTENCE, EACH AVERAGE  ANNUAL  COMPUTA-
TION  SHALL  BE  MADE  ON  THE BASIS OF THE 5 MOST RECENT CALENDAR YEARS
ENDING BEFORE THE DATE OF THE DECEDENT'S DEATH.
  (B) VALUE BASED ON NET SHARE RENTAL IN CERTAIN CASES.--
  (I) IN GENERAL.--IF THERE IS NO COMPARABLE LAND FROM WHICH THE AVERAGE
ANNUAL GROSS CASH RENTAL MAY BE DETERMINED BUT THERE IS COMPARABLE  LAND
FROM  WHICH THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED, SUBPARAGRAPH
(A)(I) SHALL BE  APPLIED  BY  SUBSTITUTING  "AVERAGE  ANNUAL  NET  SHARE
RENTAL" FOR "AVERAGE ANNUAL GROSS CASH RENTAL".
  (II)  NET SHARE RENTAL.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM "NET
SHARE RENTAL" MEANS THE EXCESS OF--
  (I) THE VALUE OF THE PRODUCE RECEIVED BY THE LESSOR  OF  THE  LAND  ON
WHICH SUCH PRODUCE IS GROWN, OVER
  (II)  THE CASH OPERATING EXPENSES OF GROWING SUCH PRODUCE WHICH, UNDER
THE LEASE, ARE PAID BY THE LESSOR.
  (C) EXCEPTION.--THE FORMULA PROVIDED BY SUBPARAGRAPH (A) SHALL NOT  BE
USED--
  (I)  WHERE  IT  IS  ESTABLISHED  THAT THERE IS NO COMPARABLE LAND FROM
WHICH THE AVERAGE ANNUAL GROSS CASH RENTAL MAY BE DETERMINED, OR
  (II) WHERE THE EXECUTOR ELECTS TO HAVE THE VALUE OF THE FARM FOR FARM-
ING PURPOSES DETERMINED AND THAT THERE IS NO COMPARABLE LAND FROM  WHICH
THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED UNDER PARAGRAPH (8).
  (8)  METHOD  OF  VALUING CLOSELY HELD BUSINESS INTERESTS, ETC.--IN ANY
CASE TO WHICH PARAGRAPH (7)(A) DOES NOT  APPLY,  THE  FOLLOWING  FACTORS
SHALL APPLY IN DETERMINING THE VALUE OF ANY QUALIFIED REAL PROPERTY:

S. 6359--B                         264                        A. 8559--B

  (A) THE CAPITALIZATION OF INCOME WHICH THE PROPERTY CAN BE EXPECTED TO
YIELD  FOR  FARMING  OR CLOSELY HELD BUSINESS PURPOSES OVER A REASONABLE
PERIOD OF TIME  UNDER  PRUDENT  MANAGEMENT  USING  TRADITIONAL  CROPPING
PATTERNS  FOR  THE  AREA,  TAKING  INTO  ACCOUNT  SOIL CAPACITY, TERRAIN
CONFIGURATION, AND SIMILAR FACTORS,
  (B)  THE CAPITALIZATION OF THE FAIR RENTAL VALUE OF THE LAND FOR FARM-
LAND OR CLOSELY HELD BUSINESS PURPOSES,
  (C) ASSESSED LAND VALUES IN A STATE WHICH PROVIDES A  DIFFERENTIAL  OR
USE VALUE ASSESSMENT LAW FOR FARMLAND OR CLOSELY HELD BUSINESS,
  (D)  COMPARABLE  SALES  OF OTHER FARM OR CLOSELY HELD BUSINESS LAND IN
THE SAME GEOGRAPHICAL AREA FAR ENOUGH REMOVED  FROM  A  METROPOLITAN  OR
RESORT  AREA  SO THAT NONAGRICULTURAL USE IS NOT A SIGNIFICANT FACTOR IN
THE SALES PRICE, AND
  (E) ANY OTHER FACTOR WHICH FAIRLY VALUES  THE  FARM  OR  CLOSELY  HELD
BUSINESS VALUE OF THE PROPERTY.
  (9)  PROPERTY ACQUIRED FROM DECEDENT.--PROPERTY SHALL BE CONSIDERED TO
HAVE BEEN ACQUIRED FROM OR TO HAVE PASSED FROM THE DECEDENT IF--
  (A) SUCH PROPERTY IS SO CONSIDERED UNDER SECTION 1014(B) (RELATING  TO
BASIS OF PROPERTY ACQUIRED FROM A DECEDENT),
  (B) SUCH PROPERTY IS ACQUIRED BY ANY PERSON FROM THE ESTATE, OR
  (C)  SUCH  PROPERTY  IS  ACQUIRED  BY  ANY PERSON FROM A TRUST (TO THE
EXTENT SUCH PROPERTY IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT).
  (10) COMMUNITY PROPERTY.--IF THE DECEDENT AND HIS SURVIVING SPOUSE  AT
ANY  TIME HELD QUALIFIED REAL PROPERTY AS COMMUNITY PROPERTY, THE INTER-
EST OF THE SURVIVING SPOUSE IN SUCH PROPERTY SHALL BE TAKEN INTO ACCOUNT
UNDER THIS SECTION TO THE EXTENT NECESSARY TO  PROVIDE  A  RESULT  UNDER
THIS  SECTION WITH RESPECT TO SUCH PROPERTY WHICH IS CONSISTENT WITH THE
RESULT WHICH WOULD HAVE OBTAINED UNDER THIS SECTION IF SUCH PROPERTY HAD
NOT BEEN COMMUNITY PROPERTY.
  (11) BOND IN LIEU OF PERSONAL LIABILITY.--IF THE QUALIFIED HEIR  MAKES
WRITTEN  APPLICATION  TO  THE SECRETARY FOR DETERMINATION OF THE MAXIMUM
AMOUNT OF THE ADDITIONAL TAX WHICH MAY BE IMPOSED BY SUBSECTION (C) WITH
RESPECT TO THE QUALIFIED HEIR'S INTEREST,  THE  SECRETARY  (AS  SOON  AS
POSSIBLE, AND IN ANY EVENT WITHIN 1 YEAR AFTER THE MAKING OF SUCH APPLI-
CATION)  SHALL  NOTIFY  THE  HEIR  OF SUCH MAXIMUM AMOUNT. THE QUALIFIED
HEIR, ON FURNISHING A BOND IN SUCH AMOUNT AND FOR SUCH PERIOD AS MAY  BE
REQUIRED, SHALL BE DISCHARGED FROM PERSONAL LIABILITY FOR ANY ADDITIONAL
TAX  IMPOSED  BY  SUBSECTION  (C)  AND SHALL BE ENTITLED TO A RECEIPT OR
WRITING SHOWING SUCH DISCHARGE.
  (12) ACTIVE MANAGEMENT.--THE TERM "ACTIVE MANAGEMENT" MEANS THE MAKING
OF THE MANAGEMENT DECISIONS OF A BUSINESS (OTHER THAN THE DAILY  OPERAT-
ING DECISIONS).
  (13) SPECIAL RULES FOR WOODLANDS.--
  (A) IN GENERAL.--IN THE CASE OF ANY QUALIFIED WOODLAND WITH RESPECT TO
WHICH THE EXECUTOR ELECTS TO HAVE THIS SUBPARAGRAPH APPLY, TREES GROWING
ON SUCH WOODLAND SHALL NOT BE TREATED AS A CROP.
  (B)  QUALIFIED WOODLAND.--THE TERM "QUALIFIED WOODLAND" MEANS ANY REAL
PROPERTY WHICH--
  (I) IS USED IN TIMBER OPERATIONS, AND
  (II) IS AN IDENTIFIABLE AREA OF LAND SUCH AS AN ACRE OR OTHER AREA FOR
WHICH RECORDS ARE NORMALLY MAINTAINED IN CONDUCTING TIMBER OPERATIONS.
  (C) TIMBER OPERATIONS.--THE TERM "TIMBER OPERATIONS" MEANS--
  (I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
  (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
  (D) ELECTION.--AN ELECTION UNDER SUBPARAGRAPH (A) SHALL BE MADE ON THE
RETURN OF THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL  BE  MADE

S. 6359--B                         265                        A. 8559--B

IN  SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (14)  TREATMENT  OF  REPLACEMENT  PROPERTY ACQUIRED IN SECTION 1031 OR
1033 TRANSACTIONS.--
  (A) IN GENERAL.--IN THE CASE OF ANY  QUALIFIED  REPLACEMENT  PROPERTY,
ANY  PERIOD DURING WHICH THERE WAS OWNERSHIP, QUALIFIED USE, OR MATERIAL
PARTICIPATION WITH RESPECT TO THE REPLACED PROPERTY BY THE  DECEDENT  OR
ANY MEMBER OF HIS FAMILY SHALL BE TREATED AS A PERIOD DURING WHICH THERE
WAS  SUCH OWNERSHIP, USE, OR MATERIAL PARTICIPATION (AS THE CASE MAY BE)
WITH RESPECT TO THE QUALIFIED REPLACEMENT PROPERTY.
  (B) LIMITATION.--SUBPARAGRAPH (A) SHALL NOT APPLY TO THE  EXTENT  THAT
THE  FAIR  MARKET VALUE OF THE QUALIFIED REPLACEMENT PROPERTY (AS OF THE
DATE OF ITS ACQUISITION) EXCEEDS THE FAIR MARKET VALUE OF  THE  REPLACED
PROPERTY (AS OF THE DATE OF ITS DISPOSITION).
  (C) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  QUALIFIED  REPLACEMENT PROPERTY.--THE TERM "QUALIFIED REPLACEMENT
PROPERTY" MEANS ANY REAL PROPERTY WHICH IS--
  (I) ACQUIRED IN AN EXCHANGE WHICH QUALIFIES UNDER SECTION 1031, OR
  (II) THE ACQUISITION OF WHICH RESULTS IN THE  NONRECOGNITION  OF  GAIN
UNDER SECTION 1033.
  SUCH TERM SHALL ONLY INCLUDE PROPERTY WHICH IS USED FOR THE SAME QUAL-
IFIED USE AS THE REPLACED PROPERTY WAS BEING USED BEFORE THE EXCHANGE.
  (II) REPLACED PROPERTY.--THE TERM "REPLACED PROPERTY" MEANS--
  (I)  THE  PROPERTY  TRANSFERRED  IN THE EXCHANGE WHICH QUALIFIES UNDER
SECTION 1031, OR
  (II) THE PROPERTY COMPULSORILY OR INVOLUNTARILY CONVERTED (WITHIN  THE
MEANING OF SECTION 1033).
  (F) STATUTE OF LIMITATIONS.--IF QUALIFIED REAL PROPERTY IS DISPOSED OF
OR CEASES TO BE USED FOR A QUALIFIED USE, THEN--
  (1)  THE  STATUTORY  PERIOD  FOR  THE ASSESSMENT OF ANY ADDITIONAL TAX
UNDER SUBSECTION (C) ATTRIBUTABLE TO SUCH DISPOSITION OR CESSATION SHALL
NOT EXPIRE BEFORE THE EXPIRATION OF 3 YEARS FROM THE DATE THE  SECRETARY
IS  NOTIFIED  (IN  SUCH  MANNER  AS  THE  SECRETARY  MAY  BY REGULATIONS
PRESCRIBE) OF SUCH DISPOSITION OR CESSATION (OR IF LATER IN THE CASE  OF
AN  INVOLUNTARY  CONVERSION  OR  EXCHANGE TO WHICH SUBSECTION (H) OR (I)
APPLIES, 3 YEARS FROM THE DATE THE SECRETARY IS NOTIFIED OF THE REPLACE-
MENT OF THE CONVERTED PROPERTY OR OF AN INTENTION NOT TO REPLACE  OR  OF
THE EXCHANGE OF PROPERTY), AND
  (2)  SUCH ADDITIONAL TAX MAY BE ASSESSED BEFORE THE EXPIRATION OF SUCH
3-YEAR PERIOD NOTWITHSTANDING THE PROVISIONS OF ANY OTHER LAW OR RULE OF
LAW WHICH WOULD OTHERWISE PREVENT SUCH ASSESSMENT.
  (G) APPLICATION OF THIS SECTION AND  SECTION  6324B  TO  INTERESTS  IN
PARTNERSHIPS,  CORPORATIONS,  AND TRUSTS.--THE SECRETARY SHALL PRESCRIBE
REGULATIONS SETTING FORTH THE APPLICATION OF THIS  SECTION  AND  SECTION
6324B IN THE CASE OF AN INTEREST IN A PARTNERSHIP, CORPORATION, OR TRUST
WHICH,  WITH  RESPECT  TO THE DECEDENT, IS AN INTEREST IN A CLOSELY HELD
BUSINESS (WITHIN THE MEANING OF PARAGRAPH (1) OF SECTION  6166(B)).  FOR
PURPOSES OF THE PRECEDING SENTENCE, AN INTEREST IN A DISCRETIONARY TRUST
ALL THE BENEFICIARIES OF WHICH ARE QUALIFIED HEIRS SHALL BE TREATED AS A
PRESENT INTEREST.
  (H)  SPECIAL RULES FOR INVOLUNTARY CONVERSIONS OF QUALIFIED REAL PROP-
ERTY.--
  (1) TREATMENT OF CONVERTED PROPERTY.--
  (A) IN GENERAL.--IF THERE IS AN INVOLUNTARY CONVERSION OF AN  INTEREST
IN QUALIFIED REAL PROPERTY--

S. 6359--B                         266                        A. 8559--B

  (I)  NO  TAX  SHALL BE IMPOSED BY SUBSECTION (C) ON SUCH CONVERSION IF
THE COST OF THE QUALIFIED REPLACEMENT PROPERTY  EQUALS  OR  EXCEEDS  THE
AMOUNT REALIZED ON SUCH CONVERSION, OR
  (II)  IF  CLAUSE  (I) DOES NOT APPLY, THE AMOUNT OF THE TAX IMPOSED BY
SUBSECTION (C) ON SUCH CONVERSION SHALL BE THE AMOUNT  DETERMINED  UNDER
SUBPARAGRAPH (B).
  (B)  AMOUNT  OF  TAX  WHERE  THERE  IS NOT COMPLETE REINVESTMENT.--THE
AMOUNT DETERMINED UNDER THIS SUBPARAGRAPH WITH RESPECT TO  ANY  INVOLUN-
TARY CONVERSION IS THE AMOUNT OF THE TAX WHICH (BUT FOR THIS SUBSECTION)
WOULD HAVE BEEN IMPOSED ON SUCH CONVERSION REDUCED BY AN AMOUNT WHICH--
  (I) BEARS THE SAME RATIO TO SUCH TAX, AS
  (II)  THE  COST  OF  THE  QUALIFIED  REPLACEMENT PROPERTY BEARS TO THE
AMOUNT REALIZED ON THE CONVERSION.
  (2) TREATMENT OF REPLACEMENT  PROPERTY.--FOR  PURPOSES  OF  SUBSECTION
(C)--
  (A)  ANY  QUALIFIED  REPLACEMENT PROPERTY SHALL BE TREATED IN THE SAME
MANNER AS IF IT WERE A PORTION OF THE INTEREST IN QUALIFIED REAL PROPER-
TY WHICH WAS INVOLUNTARILY CONVERTED; EXCEPT THAT WITH RESPECT  TO  SUCH
QUALIFIED REPLACEMENT PROPERTY THE 10-YEAR PERIOD UNDER PARAGRAPH (1) OF
SUBSECTION (C) SHALL BE EXTENDED BY ANY PERIOD, BEYOND THE 2-YEAR PERIOD
REFERRED TO IN SECTION 1033(A)(2)(B)(I), DURING WHICH THE QUALIFIED HEIR
WAS ALLOWED TO REPLACE THE QUALIFIED REAL PROPERTY,
  (B)  ANY  TAX  IMPOSED BY SUBSECTION (C) ON THE INVOLUNTARY CONVERSION
SHALL BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
  (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED--
  (I) BY NOT TAKING INTO ACCOUNT PERIODS AFTER THE  INVOLUNTARY  CONVER-
SION  AND  BEFORE THE ACQUISITION OF THE QUALIFIED REPLACEMENT PROPERTY,
AND
  (II) BY TREATING MATERIAL PARTICIPATION WITH RESPECT TO THE  CONVERTED
PROPERTY  AS  MATERIAL  PARTICIPATION  WITH  RESPECT  TO  THE  QUALIFIED
REPLACEMENT PROPERTY.
  (3) DEFINITIONS AND SPECIAL RULES.--FOR PURPOSES OF THIS SUBSECTION--
  (A) INVOLUNTARY CONVERSION.--THE TERM "INVOLUNTARY CONVERSION" MEANS A
COMPULSORY OR INVOLUNTARY CONVERSION WITHIN THE MEANING OF SECTION 1033.
  (B) QUALIFIED REPLACEMENT PROPERTY.--THE TERM  "QUALIFIED  REPLACEMENT
PROPERTY" MEANS--
  (I)  IN  THE  CASE  OF  AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION
1033(A)(1), ANY REAL PROPERTY INTO WHICH THE QUALIFIED REAL PROPERTY  IS
CONVERTED, OR
  (II)  IN  THE  CASE  OF AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION
1033(A)(2), ANY REAL PROPERTY PURCHASED BY THE QUALIFIED HEIR DURING THE
PERIOD SPECIFIED IN SECTION 1033(A)(2)(B) FOR PURPOSES OF REPLACING  THE
QUALIFIED REAL PROPERTY.
  SUCH TERM ONLY INCLUDES PROPERTY WHICH IS TO BE USED FOR THE QUALIFIED
USE  SET  FORTH  IN  SUBPARAGRAPH  (A) OR (B) OF SUBSECTION (B)(2) UNDER
WHICH THE QUALIFIED REAL PROPERTY QUALIFIED UNDER SUBSECTION (A).
  (4) CERTAIN RULES MADE APPLICABLE.--THE RULES OF THE LAST SENTENCE  OF
SECTION 1033(A)(2)(A) SHALL APPLY FOR PURPOSES OF PARAGRAPH (3)(B)(II).
  (I) EXCHANGES OF QUALIFIED REAL PROPERTY.--
  (1) TREATMENT OF PROPERTY EXCHANGED.--
  (A)  EXCHANGES SOLELY FOR QUALIFIED EXCHANGE PROPERTY.--IF AN INTEREST
IN QUALIFIED REAL PROPERTY IS EXCHANGED SOLELY FOR AN INTEREST IN QUALI-
FIED EXCHANGE PROPERTY IN A TRANSACTION WHICH  QUALIFIES  UNDER  SECTION
1031,  NO  TAX  SHALL  BE  IMPOSED  BY  SUBSECTION (C) BY REASON OF SUCH
EXCHANGE.

S. 6359--B                         267                        A. 8559--B

  (B) EXCHANGES WHERE OTHER PROPERTY RECEIVED.--IF AN INTEREST IN QUALI-
FIED REAL PROPERTY IS EXCHANGED FOR AN INTEREST  IN  QUALIFIED  EXCHANGE
PROPERTY  AND  OTHER  PROPERTY  IN  A  TRANSACTION WHICH QUALIFIES UNDER
SECTION 1031, THE AMOUNT OF THE TAX IMPOSED BY SUBSECTION (C) BY  REASON
OF SUCH EXCHANGE SHALL BE THE AMOUNT OF TAX WHICH (BUT FOR THIS SUBPARA-
GRAPH) WOULD HAVE BEEN IMPOSED ON SUCH EXCHANGE UNDER SUBSECTION (C)(1),
REDUCED BY AN AMOUNT WHICH--
  (I) BEARS THE SAME RATIO TO SUCH TAX, AS
  (II) THE FAIR MARKET VALUE OF THE QUALIFIED EXCHANGE PROPERTY BEARS TO
THE FAIR MARKET VALUE OF THE QUALIFIED REAL PROPERTY EXCHANGED.
  FOR  PURPOSES  OF  CLAUSE  (II) OF THE PRECEDING SENTENCE, FAIR MARKET
VALUE SHALL BE DETERMINED AS OF THE TIME OF THE EXCHANGE.
  (2)  TREATMENT  OF  QUALIFIED  EXCHANGE  PROPERTY.--FOR  PURPOSES   OF
SUBSECTION (C)--
  (A)  ANY  INTEREST  IN QUALIFIED EXCHANGE PROPERTY SHALL BE TREATED IN
THE SAME MANNER AS IF IT WERE A PORTION OF  THE  INTEREST  IN  QUALIFIED
REAL PROPERTY WHICH WAS EXCHANGED,
  (B)  ANY TAX IMPOSED BY SUBSECTION (C) BY REASON OF THE EXCHANGE SHALL
BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
  (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED BY TREATING MATE-
RIAL PARTICIPATION WITH RESPECT TO THE EXCHANGED  PROPERTY  AS  MATERIAL
PARTICIPATION WITH RESPECT TO THE QUALIFIED EXCHANGE PROPERTY.
  (3) QUALIFIED EXCHANGE PROPERTY.--FOR PURPOSES OF THIS SUBSECTION, THE
TERM  "QUALIFIED  EXCHANGE  PROPERTY" MEANS REAL PROPERTY WHICH IS TO BE
USED FOR THE QUALIFIED USE SET FORTH  IN  SUBPARAGRAPH  (A)  OR  (B)  OF
SUBSECTION  (B)(2)  UNDER  WHICH  THE  REAL  PROPERTY EXCHANGED THEREFOR
ORIGINALLY QUALIFIED UNDER SUBSECTION (A).
  S 2033. PROPERTY IN WHICH THE DECEDENT HAD AN INTEREST. THE  VALUE  OF
THE  GROSS  ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE EXTENT
OF THE INTEREST THEREIN OF THE DECEDENT AT THE TIME OF HIS DEATH.
  S 2034. DOWER OR CURTESY INTERESTS. THE  VALUE  OF  THE  GROSS  ESTATE
SHALL  INCLUDE  THE  VALUE OF ALL PROPERTY TO THE EXTENT OF ANY INTEREST
THEREIN OF THE SURVIVING SPOUSE, EXISTING AT THE TIME OF THE  DECEDENT'S
DEATH  AS DOWER OR CURTESY, OR BY VIRTUE OF A STATUTE CREATING AN ESTATE
IN LIEU OF DOWER OR CURTESY.
  S 2035. ADJUSTMENTS FOR CERTAIN  GIFTS  MADE  WITHIN  THREE  YEARS  OF
DECEDENT'S   DEATH.   (A)   INCLUSION   OF  CERTAIN  PROPERTY  IN  GROSS
ESTATE.--IF--
  (1) THE DECEDENT MADE A TRANSFER (BY TRUST OR OTHERWISE) OF AN  INTER-
EST IN ANY PROPERTY, OR RELINQUISHED A POWER WITH RESPECT TO ANY PROPER-
TY, DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH,
AND
  (2)  THE  VALUE  OF  SUCH PROPERTY (OR AN INTEREST THEREIN) WOULD HAVE
BEEN INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER SECTION  2036,  2037,
2038,  OR  2042  IF  SUCH TRANSFERRED INTEREST OR RELINQUISHED POWER HAD
BEEN RETAINED BY THE DECEDENT ON THE DATE OF HIS DEATH,
  THE VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ANY  PROPERTY
(OR INTEREST THEREIN) WHICH WOULD HAVE BEEN SO INCLUDED.
  (B)  INCLUSION  OF  GIFT  TAX  ON  GIFTS  MADE  DURING  3 YEARS BEFORE
DECEDENT'S DEATH.--THE AMOUNT OF THE GROSS  ESTATE  (DETERMINED  WITHOUT
REGARD  TO  THIS SUBSECTION) SHALL BE INCREASED BY THE AMOUNT OF ANY TAX
PAID UNDER CHAPTER 12 BY THE DECEDENT OR HIS ESTATE ON ANY GIFT MADE  BY
THE  DECEDENT  OR HIS SPOUSE DURING THE 3-YEAR PERIOD ENDING ON THE DATE
OF THE DECEDENT'S DEATH.
  (C) OTHER RULES RELATING TO TRANSFERS WITHIN 3 YEARS OF DEATH.--
  (1) IN GENERAL.--FOR PURPOSES OF--

S. 6359--B                         268                        A. 8559--B

  (A) SECTION 303(B) (RELATING TO DISTRIBUTIONS IN REDEMPTION  OF  STOCK
TO PAY DEATH TAXES),
  (B)  SECTION  2032A  (RELATING  TO SPECIAL VALUATION OF CERTAIN FARMS,
ETC., REAL PROPERTY), AND
  (C) SUBCHAPTER C OF CHAPTER 64 (RELATING TO LIEN FOR TAXES),
  THE VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL  PROPERTY
TO  THE  EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT HAS AT ANY
TIME MADE A TRANSFER, BY TRUST OR OTHERWISE, DURING  THE  3-YEAR  PERIOD
ENDING ON THE DATE OF THE DECEDENT'S DEATH.
  (2)  COORDINATION  WITH  SECTION  6166.--AN ESTATE SHALL BE TREATED AS
MEETING THE 35 PERCENT OF ADJUSTED GROSS ESTATE REQUIREMENT  OF  SECTION
6166(A)(1) ONLY IF THE ESTATE MEETS SUCH REQUIREMENT BOTH WITH AND WITH-
OUT THE APPLICATION OF SUBSECTION (A).
  (3) MARITAL AND SMALL TRANSFERS.--PARAGRAPH (1) SHALL NOT APPLY TO ANY
TRANSFER (OTHER THAN A TRANSFER WITH RESPECT TO A LIFE INSURANCE POLICY)
MADE  DURING  A  CALENDAR  YEAR  TO  ANY  DONEE  IF THE DECEDENT WAS NOT
REQUIRED BY SECTION 6019 (OTHER THAN BY REASON OF  SECTION  6019(2))  TO
FILE ANY GIFT TAX RETURN FOR SUCH YEAR WITH RESPECT TO TRANSFERS TO SUCH
DONEE.
  (D)  EXCEPTION.--SUBSECTION  (A)  AND  PARAGRAPH (1) OF SUBSECTION (C)
SHALL NOT APPLY TO ANY BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER-
ATION IN MONEY OR MONEY'S WORTH.
  (E)  TREATMENT  OF  CERTAIN  TRANSFERS  FROM  REVOCABLE   TRUSTS.--FOR
PURPOSES OF THIS SECTION AND SECTION 2038, ANY TRANSFER FROM ANY PORTION
OF A TRUST DURING ANY PERIOD THAT SUCH PORTION WAS TREATED UNDER SECTION
676 AS OWNED BY THE DECEDENT BY REASON OF A POWER IN THE GRANTOR (DETER-
MINED  WITHOUT  REGARD TO SECTION 672(E)) SHALL BE TREATED AS A TRANSFER
MADE DIRECTLY BY THE DECEDENT.
  S 2036. TRANSFERS WITH RETAINED LIFE ESTATE.  (A)  GENERAL  RULE.--THE
VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE
EXTENT  OF  ANY  INTEREST  THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME
MADE A TRANSFER (EXCEPT IN CASE OF A BONA FIDE SALE FOR AN ADEQUATE  AND
FULL  CONSIDERATION  IN  MONEY OR MONEY'S WORTH), BY TRUST OR OTHERWISE,
UNDER WHICH HE HAS RETAINED FOR HIS LIFE OR FOR ANY  PERIOD  NOT  ASCER-
TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
IN FACT END BEFORE HIS DEATH--
  (1)  THE  POSSESSION OR ENJOYMENT OF, OR THE RIGHT TO THE INCOME FROM,
THE PROPERTY, OR
  (2) THE RIGHT, EITHER ALONE OR IN  CONJUNCTION  WITH  ANY  PERSON,  TO
DESIGNATE  THE  PERSONS  WHO  SHALL POSSESS OR ENJOY THE PROPERTY OR THE
INCOME THEREFROM.
  (B) VOTING RIGHTS.--
  (1) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1), THE  RETENTION  OF
THE  RIGHT  TO  VOTE  (DIRECTLY  OR  INDIRECTLY)  SHARES  OF  STOCK OF A
CONTROLLED CORPORATION SHALL BE CONSIDERED TO  BE  A  RETENTION  OF  THE
ENJOYMENT OF TRANSFERRED PROPERTY.
  (2)  CONTROLLED  CORPORATION.--FOR PURPOSES OF PARAGRAPH (1), A CORPO-
RATION SHALL BE TREATED AS A CONTROLLED  CORPORATION  IF,  AT  ANY  TIME
AFTER  THE  TRANSFER OF THE PROPERTY AND DURING THE 3-YEAR PERIOD ENDING
ON THE DATE OF THE DECEDENT'S DEATH, THE DECEDENT OWNED (WITH THE APPLI-
CATION OF SECTION 318), OR HAD THE RIGHT (EITHER ALONE OR IN CONJUNCTION
WITH ANY PERSON) TO VOTE, STOCK POSSESSING AT LEAST 20  PERCENT  OF  THE
TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK.
  (3)  COORDINATION WITH SECTION 2035.--FOR PURPOSES OF APPLYING SECTION
2035 WITH RESPECT TO PARAGRAPH (1), THE RELINQUISHMENT OR  CESSATION  OF

S. 6359--B                         269                        A. 8559--B

VOTING  RIGHTS  SHALL  BE  TREATED AS A TRANSFER OF PROPERTY MADE BY THE
DECEDENT.
  (C) LIMITATION ON APPLICATION OF GENERAL RULE.--THIS SECTION SHALL NOT
APPLY  TO  A  TRANSFER MADE BEFORE MARCH 4, 1931; NOR TO A TRANSFER MADE
AFTER MARCH 3, 1931, AND BEFORE JUNE 7, 1932, UNLESS THE PROPERTY TRANS-
FERRED WOULD HAVE BEEN INCLUDIBLE IN  THE  DECEDENT'S  GROSS  ESTATE  BY
REASON  OF  THE  AMENDATORY LANGUAGE OF THE JOINT RESOLUTION OF MARCH 3,
1931 (46 STAT. 1516).
  S 2037. TRANSFERS TAKING EFFECT AT DEATH. (A) GENERAL RULE.--THE VALUE
OF THE GROSS ESTATE SHALL INCLUDE THE  VALUE  OF  ALL  PROPERTY  TO  THE
EXTENT  OF  ANY  INTEREST  THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME
AFTER SEPTEMBER 7, 1916, MADE A TRANSFER (EXCEPT IN CASE OF A BONA  FIDE
SALE  FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH),
BY TRUST OR OTHERWISE, IF--
  (1) POSSESSION OR ENJOYMENT OF THE PROPERTY CAN, THROUGH OWNERSHIP  OF
SUCH INTEREST, BE OBTAINED ONLY BY SURVIVING THE DECEDENT, AND
  (2)  THE DECEDENT HAS RETAINED A REVERSIONARY INTEREST IN THE PROPERTY
(BUT IN THE CASE OF A TRANSFER MADE BEFORE OCTOBER 8, 1949, ONLY IF SUCH
REVERSIONARY INTEREST AROSE BY THE EXPRESS TERMS OF  THE  INSTRUMENT  OF
TRANSFER),  AND  THE  VALUE  OF  SUCH  REVERSIONARY INTEREST IMMEDIATELY
BEFORE THE DEATH OF THE DECEDENT EXCEEDS 5 PERCENT OF THE VALUE OF  SUCH
PROPERTY.
  (B) SPECIAL RULES.--FOR PURPOSES OF THIS SECTION, THE TERM "REVERSION-
ARY  INTEREST"  INCLUDES  A POSSIBILITY THAT PROPERTY TRANSFERRED BY THE
DECEDENT--
  (1) MAY RETURN TO HIM OR HIS ESTATE, OR
  (2) MAY BE SUBJECT TO A POWER OF DISPOSITION BY HIM,
  BUT SUCH TERM DOES NOT INCLUDE A POSSIBILITY  THAT  THE  INCOME  ALONE
FROM  SUCH  PROPERTY  MAY  RETURN TO HIM OR BECOME SUBJECT TO A POWER OF
DISPOSITION BY HIM. THE VALUE OF  A  REVERSIONARY  INTEREST  IMMEDIATELY
BEFORE  THE DEATH OF THE DECEDENT SHALL BE DETERMINED (WITHOUT REGARD TO
THE FACT OF THE DECEDENT'S DEATH) BY USUAL METHODS OF VALUATION, INCLUD-
ING THE USE OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, UNDER REGU-
LATIONS PRESCRIBED BY THE SECRETARY.  IN  DETERMINING  THE  VALUE  OF  A
POSSIBILITY  THAT  PROPERTY  MAY BE SUBJECT TO A POWER OF DISPOSITION BY
THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A POSSIBIL-
ITY THAT SUCH PROPERTY  MAY  RETURN  TO  THE  DECEDENT  OR  HIS  ESTATE.
NOTWITHSTANDING  THE  FOREGOING, AN INTEREST SO TRANSFERRED SHALL NOT BE
INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER THIS SECTION IF POSSESSION
OR ENJOYMENT OF THE PROPERTY COULD HAVE BEEN OBTAINED BY ANY BENEFICIARY
DURING THE DECEDENT'S LIFE THROUGH THE EXERCISE OF A  GENERAL  POWER  OF
APPOINTMENT  (AS  DEFINED IN SECTION 2041) WHICH IN FACT WAS EXERCISABLE
IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
  S 2038. REVOCABLE TRANSFERS. (A) IN GENERAL.--THE VALUE OF  THE  GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1)  TRANSFERS  AFTER  JUNE  22,  1936.--TO THE EXTENT OF ANY INTEREST
THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME MADE A TRANSFER (EXCEPT IN
CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY
OR MONEY'S WORTH), BY TRUST OR OTHERWISE, WHERE  THE  ENJOYMENT  THEREOF
WAS  SUBJECT AT THE DATE OF HIS DEATH TO ANY CHANGE THROUGH THE EXERCISE
OF A POWER (IN WHATEVER CAPACITY EXERCISABLE) BY THE DECEDENT  ALONE  OR
BY  THE DECEDENT IN CONJUNCTION WITH ANY OTHER PERSON (WITHOUT REGARD TO
WHEN OR FROM WHAT SOURCE THE DECEDENT ACQUIRED SUCH  POWER),  TO  ALTER,
AMEND,  REVOKE,  OR  TERMINATE,  OR WHERE ANY SUCH POWER IS RELINQUISHED
DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH.

S. 6359--B                         270                        A. 8559--B

  (2) TRANSFERS ON OR BEFORE JUNE 22, 1936.--TO THE EXTENT OF ANY INTER-
EST THEREIN OF WHICH THE DECEDENT  HAS  AT  ANY  TIME  MADE  A  TRANSFER
(EXCEPT  IN  CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER-
ATION IN MONEY OR MONEY'S WORTH),  BY  TRUST  OR  OTHERWISE,  WHERE  THE
ENJOYMENT  THEREOF  WAS  SUBJECT  AT THE DATE OF HIS DEATH TO ANY CHANGE
THROUGH THE EXERCISE OF A POWER, EITHER BY  THE  DECEDENT  ALONE  OR  IN
CONJUNCTION  WITH  ANY  PERSON, TO ALTER, AMEND, OR REVOKE, OR WHERE THE
DECEDENT RELINQUISHED ANY SUCH POWER DURING THE 3-YEAR PERIOD ENDING  ON
THE  DATE  OF THE DECEDENT'S DEATH. EXCEPT IN THE CASE OF TRANSFERS MADE
AFTER JUNE 22, 1936, NO INTEREST OF THE DECEDENT OF WHICH HE HAS MADE  A
TRANSFER  SHALL  BE  INCLUDED  IN  THE  GROSS ESTATE UNDER PARAGRAPH (1)
UNLESS IT IS INCLUDIBLE UNDER THIS PARAGRAPH.
  (B) DATE OF EXISTENCE OF POWER.--FOR PURPOSES  OF  THIS  SECTION,  THE
POWER TO ALTER, AMEND, REVOKE, OR TERMINATE SHALL BE CONSIDERED TO EXIST
ON  THE  DATE  OF  THE  DECEDENT'S DEATH EVEN THOUGH THE EXERCISE OF THE
POWER IS SUBJECT TO A PRECEDENT GIVING OF  NOTICE  OR  EVEN  THOUGH  THE
ALTERATION,  AMENDMENT,  REVOCATION, OR TERMINATION TAKES EFFECT ONLY ON
THE EXPIRATION OF A STATED PERIOD  AFTER  THE  EXERCISE  OF  THE  POWER,
WHETHER  OR NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS
BEEN GIVEN OR THE POWER HAS BEEN EXERCISED. IN SUCH CASES PROPER ADJUST-
MENT SHALL BE MADE REPRESENTING THE  INTERESTS  WHICH  WOULD  HAVE  BEEN
EXCLUDED FROM THE POWER IF THE DECEDENT HAD LIVED, AND FOR SUCH PURPOSE,
IF  THE NOTICE HAS NOT BEEN GIVEN OR THE POWER HAS NOT BEEN EXERCISED ON
OR BEFORE THE DATE OF HIS DEATH, SUCH NOTICE SHALL BE CONSIDERED TO HAVE
BEEN GIVEN, OR THE POWER EXERCISED, ON THE DATE OF HIS DEATH.
  S 2039. ANNUITIES. (A) GENERAL.--THE GROSS ESTATE  SHALL  INCLUDE  THE
VALUE  OF  AN  ANNUITY OR OTHER PAYMENT RECEIVABLE BY ANY BENEFICIARY BY
REASON OF SURVIVING THE DECEDENT UNDER ANY FORM OF CONTRACT OR AGREEMENT
ENTERED INTO AFTER MARCH 3, 1931 (OTHER THAN AS INSURANCE UNDER POLICIES
ON THE LIFE OF THE DECEDENT), IF, UNDER SUCH CONTRACT OR  AGREEMENT,  AN
ANNUITY  OR  OTHER  PAYMENT WAS PAYABLE TO THE DECEDENT, OR THE DECEDENT
POSSESSED THE RIGHT TO RECEIVE SUCH ANNUITY OR PAYMENT, EITHER ALONE  OR
IN  CONJUNCTION  WITH  ANOTHER FOR HIS LIFE OR FOR ANY PERIOD NOT ASCER-
TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
IN FACT END BEFORE HIS DEATH.
  (B) AMOUNT INCLUDIBLE.--SUBSECTION (A) SHALL APPLY TO ONLY  SUCH  PART
OF  THE  VALUE  OF  THE  ANNUITY  OR OTHER PAYMENT RECEIVABLE UNDER SUCH
CONTRACT OR AGREEMENT AS IS PROPORTIONATE TO THAT PART OF  THE  PURCHASE
PRICE  THEREFOR  CONTRIBUTED  BY  THE  DECEDENT.  FOR  PURPOSES  OF THIS
SECTION, ANY CONTRIBUTION BY THE DECEDENT'S EMPLOYER OR FORMER  EMPLOYER
TO  THE  PURCHASE PRICE OF SUCH CONTRACT OR AGREEMENT (WHETHER OR NOT TO
AN EMPLOYEE'S TRUST OR FUND FORMING PART OF A PENSION, ANNUITY,  RETIRE-
MENT,  BONUS  OR PROFIT SHARING PLAN) SHALL BE CONSIDERED TO BE CONTRIB-
UTED BY THE DECEDENT IF MADE BY REASON OF HIS EMPLOYMENT.
  S 2040. JOINT INTERESTS. (A) GENERAL RULE.--THE  VALUE  OF  THE  GROSS
ESTATE  SHALL  INCLUDE  THE  VALUE  OF ALL PROPERTY TO THE EXTENT OF THE
INTEREST THEREIN HELD AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP BY THE
DECEDENT AND ANY OTHER PERSON, OR AS TENANTS  BY  THE  ENTIRETY  BY  THE
DECEDENT AND SPOUSE, OR DEPOSITED, WITH ANY PERSON CARRYING ON THE BANK-
ING  BUSINESS,  IN THEIR JOINT NAMES AND PAYABLE TO EITHER OR THE SURVI-
VOR, EXCEPT SUCH PART  THEREOF  AS  MAY  BE  SHOWN  TO  HAVE  ORIGINALLY
BELONGED  TO  SUCH  OTHER  PERSON  AND  NEVER  TO  HAVE BEEN RECEIVED OR
ACQUIRED BY THE LATTER FROM THE DECEDENT FOR LESS THAN AN  ADEQUATE  AND
FULL  CONSIDERATION IN MONEY OR MONEY'S WORTH: PROVIDED, THAT WHERE SUCH
PROPERTY OR ANY PART THEREOF, OR PART OF THE  CONSIDERATION  WITH  WHICH
SUCH  PROPERTY  WAS ACQUIRED, IS SHOWN TO HAVE BEEN AT ANY TIME ACQUIRED

S. 6359--B                         271                        A. 8559--B

BY SUCH OTHER PERSON FROM THE DECEDENT FOR LESS  THAN  AN  ADEQUATE  AND
FULL  CONSIDERATION  IN  MONEY OR MONEY'S WORTH, THERE SHALL BE EXCEPTED
ONLY SUCH PART OF THE VALUE OF SUCH PROPERTY AS IS PROPORTIONATE TO  THE
CONSIDERATION  FURNISHED  BY  SUCH  OTHER PERSON: PROVIDED FURTHER, THAT
WHERE ANY PROPERTY HAS BEEN ACQUIRED BY GIFT, BEQUEST, DEVISE, OR INHER-
ITANCE, AS A TENANCY BY THE ENTIRETY BY THE DECEDENT AND SPOUSE, THEN TO
THE EXTENT OF ONE-HALF OF THE VALUE THEREOF, OR, WHERE  SO  ACQUIRED  BY
THE  DECEDENT AND ANY OTHER PERSON AS JOINT TENANTS WITH RIGHT OF SURVI-
VORSHIP AND THEIR INTERESTS ARE NOT OTHERWISE SPECIFIED OR FIXED BY LAW,
THEN TO THE EXTENT OF THE VALUE OF A FRACTIONAL PART TO BE DETERMINED BY
DIVIDING THE VALUE OF THE PROPERTY BY THE NUMBER OF JOINT  TENANTS  WITH
RIGHT OF SURVIVORSHIP.
  (B) CERTAIN JOINT INTERESTS OF HUSBAND AND WIFE.--
  (1)  INTERESTS  OF SPOUSE EXCLUDED FROM GROSS ESTATE.--NOTWITHSTANDING
SUBSECTION (A), IN THE CASE OF ANY QUALIFIED JOINT INTEREST,  THE  VALUE
INCLUDED  IN THE GROSS ESTATE WITH RESPECT TO SUCH INTEREST BY REASON OF
THIS SECTION IS ONE-HALF OF THE VALUE OF SUCH QUALIFIED JOINT INTEREST.
  (2) QUALIFIED JOINT INTEREST DEFINED.--FOR PURPOSES OF PARAGRAPH  (1),
THE  TERM "QUALIFIED JOINT INTEREST" MEANS ANY INTEREST IN PROPERTY HELD
BY THE DECEDENT AND THE DECEDENT'S SPOUSE AS--
  (A) TENANTS BY THE ENTIRETY, OR
  (B) JOINT TENANTS WITH RIGHT OF SURVIVORSHIP, BUT ONLY IF THE DECEDENT
AND THE SPOUSE OF THE DECEDENT ARE THE ONLY JOINT TENANTS.
  S 2041. POWERS OF APPOINTMENT. (A) IN GENERAL.--THE VALUE OF THE GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1) POWERS OF APPOINTMENT CREATED ON OR BEFORE OCTOBER  21,  1942.--TO
THE  EXTENT  OF  ANY  PROPERTY  WITH RESPECT TO WHICH A GENERAL POWER OF
APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, IS EXERCISED  BY  THE
DECEDENT--
  (A) BY WILL, OR
  (B)  BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A TRANS-
FER OF PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY WOULD BE INCLUDIBLE
IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035 TO 2038, INCLUSIVE;
  BUT THE FAILURE TO EXERCISE SUCH A POWER OR THE  COMPLETE  RELEASE  OF
SUCH A POWER SHALL NOT BE DEEMED AN EXERCISE THEREOF. IF A GENERAL POWER
OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, HAS BEEN PARTIALLY
RELEASED  SO  THAT  IT  IS NO LONGER A GENERAL POWER OF APPOINTMENT, THE
EXERCISE OF SUCH POWER SHALL NOT BE DEEMED  TO  BE  THE  EXERCISE  OF  A
GENERAL POWER OF APPOINTMENT IF--
  (I) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
  (II)  THE  DONEE OF SUCH POWER WAS UNDER A LEGAL DISABILITY TO RELEASE
SUCH POWER ON OCTOBER 21, 1942, AND SUCH PARTIAL  RELEASE  OCCURRED  NOT
LATER THAN 6 MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
  (2) POWERS CREATED AFTER OCTOBER 21, 1942.--TO THE EXTENT OF ANY PROP-
ERTY  WITH  RESPECT TO WHICH THE DECEDENT HAS AT THE TIME OF HIS DEATH A
GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER  21,  1942,  OR  WITH
RESPECT TO WHICH THE DECEDENT HAS AT ANY TIME EXERCISED OR RELEASED SUCH
A  POWER OF APPOINTMENT BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF
IT WERE A TRANSFER OF PROPERTY OWNED  BY  THE  DECEDENT,  SUCH  PROPERTY
WOULD  BE  INCLUDIBLE IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035
TO 2038, INCLUSIVE. FOR PURPOSES OF THIS PARAGRAPH  (2),  THE  POWER  OF
APPOINTMENT  SHALL  BE CONSIDERED TO EXIST ON THE DATE OF THE DECEDENT'S
DEATH EVEN THOUGH THE EXERCISE OF THE POWER IS SUBJECT  TO  A  PRECEDENT
GIVING  OF  NOTICE OR EVEN THOUGH THE EXERCISE OF THE POWER TAKES EFFECT
ONLY ON THE EXPIRATION OF A STATED PERIOD AFTER ITS EXERCISE, WHETHER OR

S. 6359--B                         272                        A. 8559--B

NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS BEEN  GIVEN
OR THE POWER HAS BEEN EXERCISED.
  (3)  CREATION OF ANOTHER POWER IN CERTAIN CASES.--TO THE EXTENT OF ANY
PROPERTY WITH RESPECT TO WHICH THE DECEDENT--
  (A) BY WILL, OR
  (B) BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A  TRANS-
FER  OF PROPERTY OWNED BY THE DECEDENT SUCH PROPERTY WOULD BE INCLUDIBLE
IN THE DECEDENT'S GROSS ESTATE UNDER SECTION 2035, 2036, OR 2037,
  EXERCISES A POWER OF APPOINTMENT CREATED AFTER OCTOBER  21,  1942,  BY
CREATING  ANOTHER  POWER OF APPOINTMENT WHICH UNDER THE APPLICABLE LOCAL
LAW CAN BE VALIDLY EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE
OR INTEREST IN SUCH PROPERTY, OR SUSPEND THE ABSOLUTE OWNERSHIP OR POWER
OF ALIENATION OF SUCH  PROPERTY,  FOR  A  PERIOD  ASCERTAINABLE  WITHOUT
REGARD TO THE DATE OF THE CREATION OF THE FIRST POWER.
  (B) DEFINITIONS.--FOR PURPOSES OF SUBSECTION (A)--
  (1) GENERAL POWER OF APPOINTMENT.--THE TERM "GENERAL POWER OF APPOINT-
MENT"  MEANS  A POWER WHICH IS EXERCISABLE IN FAVOR OF THE DECEDENT, HIS
ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT--
  (A) A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE  BENE-
FIT OF THE DECEDENT WHICH IS LIMITED BY AN ASCERTAINABLE STANDARD RELAT-
ING  TO  THE  HEALTH, EDUCATION, SUPPORT, OR MAINTENANCE OF THE DECEDENT
SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (B) A POWER OF APPOINTMENT CREATED ON  OR  BEFORE  OCTOBER  21,  1942,
WHICH  IS  EXERCISABLE  BY THE DECEDENT ONLY IN CONJUNCTION WITH ANOTHER
PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (C) IN THE CASE OF A POWER OF APPOINTMENT CREATED  AFTER  OCTOBER  21,
1942,  WHICH  IS  EXERCISABLE  BY  THE DECEDENT ONLY IN CONJUNCTION WITH
ANOTHER PERSON--
  (I) IF THE POWER IS NOT EXERCISABLE BY THE DECEDENT EXCEPT IN CONJUNC-
TION WITH THE CREATOR OF THE POWER--SUCH POWER SHALL  NOT  BE  DEEMED  A
GENERAL POWER OF APPOINTMENT.
  (II)  IF  THE  POWER  IS  NOT  EXERCISABLE  BY  THE DECEDENT EXCEPT IN
CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST IN THE PROPERTY,
SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
OF THE DECEDENT--SUCH POWER SHALL NOT  BE  DEEMED  A  GENERAL  POWER  OF
APPOINTMENT.  FOR  THE  PURPOSES  OF THIS CLAUSE A PERSON WHO, AFTER THE
DEATH OF THE DECEDENT, MAY BE POSSESSED OF A POWER OF APPOINTMENT  (WITH
RESPECT  TO  THE  PROPERTY SUBJECT TO THE DECEDENT'S POWER) WHICH HE MAY
EXERCISE IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST  IN  THE
PROPERTY  AND  SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH EXERCISE OF
THE DECEDENT'S POWER.
  (III) IF (AFTER THE APPLICATION OF CLAUSES (I) AND (II)) THE POWER  IS
A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH OTHER
PERSON--SUCH  POWER  SHALL BE DEEMED A GENERAL POWER OF APPOINTMENT ONLY
IN RESPECT OF A FRACTIONAL PART OF THE PROPERTY SUBJECT TO  SUCH  POWER,
SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY BY THE
NUMBER  OF  SUCH  PERSONS (INCLUDING THE DECEDENT) IN FAVOR OF WHOM SUCH
POWER IS EXERCISABLE.
  FOR PURPOSES OF CLAUSES (II) AND (III), A POWER SHALL BE DEEMED TO  BE
EXERCISABLE  IN  FAVOR OF A PERSON IF IT IS EXERCISABLE IN FAVOR OF SUCH
PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
  (2) LAPSE OF POWER.--THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
SHALL BE CONSIDERED A RELEASE OF  SUCH  POWER.  THE  PRECEDING  SENTENCE
SHALL APPLY WITH RESPECT TO THE LAPSE OF POWERS DURING ANY CALENDAR YEAR
ONLY TO THE EXTENT THAT THE PROPERTY, WHICH COULD HAVE BEEN APPOINTED BY

S. 6359--B                         273                        A. 8559--B

EXERCISE  OF  SUCH LAPSED POWERS, EXCEEDED IN VALUE, AT THE TIME OF SUCH
LAPSE, THE GREATER OF THE FOLLOWING AMOUNTS:
  (A) $5,000, OR
  (B)  5  PERCENT  OF THE AGGREGATE VALUE, AT THE TIME OF SUCH LAPSE, OF
THE ASSETS OUT OF WHICH, OR THE PROCEEDS OF WHICH, THE EXERCISE  OF  THE
LAPSED POWERS COULD HAVE BEEN SATISFIED.
  (3)  DATE OF CREATION OF POWER.--FOR PURPOSES OF THIS SECTION, A POWER
OF APPOINTMENT CREATED BY A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
  S 2042. PROCEEDS OF LIFE INSURANCE. THE  VALUE  OF  THE  GROSS  ESTATE
SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1)  RECEIVABLE  BY THE EXECUTOR.--TO THE EXTENT OF THE AMOUNT RECEIV-
ABLE BY THE EXECUTOR AS INSURANCE UNDER POLICIES  ON  THE  LIFE  OF  THE
DECEDENT.
  (2)  RECEIVABLE  BY  OTHER BENEFICIARIES.--TO THE EXTENT OF THE AMOUNT
RECEIVABLE BY ALL OTHER BENEFICIARIES AS INSURANCE UNDER POLICIES ON THE
LIFE OF THE DECEDENT WITH RESPECT TO WHICH THE DECEDENT POSSESSED AT HIS
DEATH ANY OF THE INCIDENTS OF OWNERSHIP, EXERCISABLE EITHER ALONE OR  IN
CONJUNCTION  WITH  ANY  OTHER  PERSON.  FOR  PURPOSES  OF  THE PRECEDING
SENTENCE, THE TERM  "INCIDENT  OF  OWNERSHIP"  INCLUDES  A  REVERSIONARY
INTEREST  (WHETHER  ARISING  BY THE EXPRESS TERMS OF THE POLICY OR OTHER
INSTRUMENT OR BY OPERATION OF LAW) ONLY IF THE VALUE OF SUCH  REVERSION-
ARY  INTEREST  EXCEEDED 5 PERCENT OF THE VALUE OF THE POLICY IMMEDIATELY
BEFORE THE DEATH OF THE DECEDENT. AS USED IN THIS  PARAGRAPH,  THE  TERM
"REVERSIONARY  INTEREST"  INCLUDES A POSSIBILITY THAT THE POLICY, OR THE
PROCEEDS OF THE POLICY, MAY RETURN TO THE DECEDENT OR HIS ESTATE, OR MAY
BE SUBJECT TO A POWER OF DISPOSITION BY HIM. THE VALUE OF A REVERSIONARY
INTEREST AT ANY TIME SHALL BE DETERMINED (WITHOUT REGARD TO THE FACT  OF
THE  DECEDENT'S  DEATH) BY USUAL METHODS OF VALUATION, INCLUDING THE USE
OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, PURSUANT TO REGULATIONS
PRESCRIBED BY THE SECRETARY. IN DETERMINING THE VALUE OF  A  POSSIBILITY
THAT  THE POLICY OR PROCEEDS THEREOF MAY BE SUBJECT TO A POWER OF DISPO-
SITION BY THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A
POSSIBILITY THAT SUCH POLICY OR PROCEEDS MAY RETURN TO THE  DECEDENT  OR
HIS ESTATE.
  S  2043. TRANSFERS FOR INSUFFICIENT CONSIDERATION. (A) IN GENERAL.--IF
ANY ONE OF THE TRANSFERS, TRUSTS, INTERESTS, RIGHTS, OR  POWERS  ENUMER-
ATED AND DESCRIBED IN SECTIONS 2035 TO 2038, INCLUSIVE, AND SECTION 2041
IS  MADE,  CREATED,  EXERCISED,  OR  RELINQUISHED FOR A CONSIDERATION IN
MONEY OR MONEY'S WORTH, BUT IS NOT A BONA FIDE SALE FOR AN ADEQUATE  AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH, THERE SHALL BE INCLUDED IN
THE GROSS ESTATE ONLY THE EXCESS OF THE FAIR MARKET VALUE AT THE TIME OF
DEATH OF THE PROPERTY OTHERWISE TO BE INCLUDED ON ACCOUNT OF SUCH TRANS-
ACTION,  OVER  THE  VALUE  OF THE CONSIDERATION RECEIVED THEREFOR BY THE
DECEDENT.
  (B) MARITAL RIGHTS NOT TREATED AS CONSIDERATION.--
  (1) IN GENERAL.--FOR PURPOSES OF THIS  CHAPTER,  A  RELINQUISHMENT  OR
PROMISED  RELINQUISHMENT  OF  DOWER OR CURTESY, OR OF A STATUTORY ESTATE
CREATED IN LIEU OF DOWER OR CURTESY, OR OF OTHER MARITAL RIGHTS  IN  THE
DECEDENT'S  PROPERTY  OR ESTATE, SHALL NOT BE CONSIDERED TO ANY EXTENT A
CONSIDERATION "IN MONEY OR MONEY'S WORTH".
  (2) EXCEPTION.--FOR PURPOSES OF SECTION 2053  (RELATING  TO  EXPENSES,
INDEBTEDNESS,  AND  TAXES),  A  TRANSFER OF PROPERTY WHICH SATISFIES THE
REQUIREMENTS OF PARAGRAPH (1) OF SECTION 2516 (RELATING TO CERTAIN PROP-

S. 6359--B                         274                        A. 8559--B

ERTY SETTLEMENTS) SHALL BE CONSIDERED TO BE MADE  FOR  AN  ADEQUATE  AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH.
  S  2044.  CERTAIN  PROPERTY FOR WHICH MARITAL DEDUCTION WAS PREVIOUSLY
ALLOWED. (A) GENERAL RULE.--THE VALUE OF THE GROSS ESTATE SHALL  INCLUDE
THE  VALUE  OF  ANY  PROPERTY TO WHICH THIS SECTION APPLIES IN WHICH THE
DECEDENT HAD A QUALIFYING INCOME INTEREST FOR LIFE.
  (B) PROPERTY TO WHICH THIS SECTION APPLIES.--THIS SECTION  APPLIES  TO
ANY PROPERTY IF--
  (1) A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF SUCH PROP-
ERTY TO THE DECEDENT--
  (A) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
  (B) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF, AND
  (2)  SECTION  2519  (RELATING TO DISPOSITIONS OF CERTAIN LIFE ESTATES)
DID NOT APPLY WITH RESPECT TO A DISPOSITION BY THE DECEDENT OF  PART  OR
ALL OF SUCH PROPERTY.
  (C)  PROPERTY TREATED AS HAVING PASSED FROM DECEDENT.--FOR PURPOSES OF
THIS CHAPTER AND CHAPTER 13, PROPERTY INCLUDIBLE IN THE GROSS ESTATE  OF
THE  DECEDENT  UNDER SUBSECTION (A) SHALL BE TREATED AS PROPERTY PASSING
FROM THE DECEDENT.
  S 2045. PRIOR INTERESTS. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED  BY
LAW,  SECTIONS  2034  TO  2042, INCLUSIVE, SHALL APPLY TO THE TRANSFERS,
TRUSTS,  ESTATES,  INTERESTS,  RIGHTS,  POWERS,  AND  RELINQUISHMENT  OF
POWERS,  AS  SEVERALLY  ENUMERATED AND DESCRIBED THEREIN, WHENEVER MADE,
CREATED, ARISING, EXISTING, EXERCISED, OR RELINQUISHED.
  S 2046. DISCLAIMERS. FOR PROVISIONS RELATING TO THE EFFECT OF A QUALI-
FIED DISCLAIMER FOR PURPOSES OF THIS CHAPTER, SEE SECTION 2518.
  S 2053. EXPENSES, INDEBTEDNESS,  AND  TAXES.  (A)  GENERAL  RULE.--FOR
PURPOSES  OF  THE  TAX IMPOSED BY SECTION 2001, THE VALUE OF THE TAXABLE
ESTATE SHALL BE DETERMINED BY DEDUCTING FROM  THE  VALUE  OF  THE  GROSS
ESTATE SUCH AMOUNTS--
  (1) FOR FUNERAL EXPENSES,
  (2) FOR ADMINISTRATION EXPENSES,
  (3) FOR CLAIMS AGAINST THE ESTATE, AND
  (4)  FOR UNPAID MORTGAGES ON, OR ANY INDEBTEDNESS IN RESPECT OF, PROP-
ERTY WHERE THE VALUE OF THE DECEDENT'S INTEREST THEREIN, UNDIMINISHED BY
SUCH MORTGAGE OR INDEBTEDNESS, IS INCLUDED IN THE  VALUE  OF  THE  GROSS
ESTATE,
  AS  ARE  ALLOWABLE  BY THE LAWS OF THE JURISDICTION, WHETHER WITHIN OR
WITHOUT THE UNITED STATES, UNDER WHICH THE ESTATE IS BEING ADMINISTERED.
  (B) OTHER ADMINISTRATION  EXPENSES.--SUBJECT  TO  THE  LIMITATIONS  IN
PARAGRAPH  (1) OF SUBSECTION (C), THERE SHALL BE DEDUCTED IN DETERMINING
THE TAXABLE ESTATE AMOUNTS REPRESENTING EXPENSES INCURRED IN ADMINISTER-
ING PROPERTY NOT SUBJECT TO CLAIMS WHICH IS INCLUDED IN THE GROSS ESTATE
TO THE SAME EXTENT SUCH AMOUNTS WOULD BE ALLOWABLE AS A DEDUCTION  UNDER
SUBSECTION (A) IF SUCH PROPERTY WERE SUBJECT TO CLAIMS, AND SUCH AMOUNTS
ARE  PAID  BEFORE THE EXPIRATION OF THE PERIOD OF LIMITATION FOR ASSESS-
MENT PROVIDED IN SECTION 6501.
  (C) LIMITATIONS.--
  (1) LIMITATIONS APPLICABLE TO SUBSECTIONS (A) AND (B).--
  (A) CONSIDERATION FOR CLAIMS.--THE DEDUCTION ALLOWED BY  THIS  SECTION
IN  THE  CASE  OF  CLAIMS  AGAINST  THE ESTATE, UNPAID MORTGAGES, OR ANY
INDEBTEDNESS SHALL, WHEN FOUNDED ON A PROMISE OR AGREEMENT,  BE  LIMITED
TO  THE  EXTENT  THAT THEY WERE CONTRACTED BONA FIDE AND FOR AN ADEQUATE
AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH;  EXCEPT  THAT  IN  ANY
CASE IN WHICH ANY SUCH CLAIM IS FOUNDED ON A PROMISE OR AGREEMENT OF THE
DECEDENT  TO  MAKE A CONTRIBUTION OR GIFT TO OR FOR THE USE OF ANY DONEE

S. 6359--B                         275                        A. 8559--B

DESCRIBED IN SECTION  2055  FOR  THE  PURPOSES  SPECIFIED  THEREIN,  THE
DEDUCTION  FOR SUCH CLAIMS SHALL NOT BE SO LIMITED, BUT SHALL BE LIMITED
TO THE EXTENT THAT IT WOULD BE ALLOWABLE AS A  DEDUCTION  UNDER  SECTION
2055 IF SUCH PROMISE OR AGREEMENT CONSTITUTED A BEQUEST.
  (B)  CERTAIN  TAXES.--ANY  INCOME  TAXES  ON INCOME RECEIVED AFTER THE
DEATH OF THE DECEDENT, OR PROPERTY TAXES NOT ACCRUED BEFORE  HIS  DEATH,
OR  ANY  ESTATE,  SUCCESSION, LEGACY, OR INHERITANCE TAXES, SHALL NOT BE
DEDUCTIBLE UNDER THIS SECTION.
  (C) CERTAIN CLAIMS BY REMAINDERMEN.--NO  DEDUCTION  SHALL  BE  ALLOWED
UNDER  THIS  SECTION  FOR  A  CLAIM AGAINST THE ESTATE BY A REMAINDERMAN
RELATING TO ANY PROPERTY DESCRIBED IN SECTION 2044.
  (D) SECTION 6166 INTEREST.--NO DEDUCTION SHALL BE ALLOWED  UNDER  THIS
SECTION  FOR  ANY  INTEREST  PAYABLE  UNDER  SECTION  6601 ON ANY UNPAID
PORTION OF THE TAX IMPOSED BY SECTION 2001 FOR THE PERIOD  DURING  WHICH
AN  EXTENSION OF TIME FOR PAYMENT OF SUCH TAX IS IN EFFECT UNDER SECTION
6166.
  (2) LIMITATIONS APPLICABLE ONLY TO SUBSECTION (A).--IN THE CASE OF THE
AMOUNTS DESCRIBED IN SUBSECTION  (A),  THERE  SHALL  BE  DISALLOWED  THE
AMOUNT  BY  WHICH  THE DEDUCTIONS SPECIFIED THEREIN EXCEED THE VALUE, AT
THE TIME OF THE DECEDENT'S DEATH, OF PROPERTY SUBJECT TO CLAIMS,  EXCEPT
TO  THE  EXTENT  THAT  SUCH DEDUCTIONS REPRESENT AMOUNTS PAID BEFORE THE
DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN. FOR PURPOSES OF
THIS SECTION, THE TERM  "PROPERTY  SUBJECT  TO  CLAIMS"  MEANS  PROPERTY
INCLUDIBLE  IN  THE GROSS ESTATE OF THE DECEDENT WHICH, OR THE AVAILS OF
WHICH, WOULD UNDER THE APPLICABLE LAW, BEAR THE BURDEN OF THE PAYMENT OF
SUCH DEDUCTIONS IN THE FINAL ADJUSTMENT AND SETTLEMENT  OF  THE  ESTATE,
EXCEPT  THAT THE VALUE OF THE PROPERTY SHALL BE REDUCED BY THE AMOUNT OF
THE DEDUCTION UNDER SECTION 2054 ATTRIBUTABLE TO SUCH PROPERTY.
  (D) CERTAIN FOREIGN DEATH TAXES.--
  (1)  IN  GENERAL.--NOTWITHSTANDING  THE   PROVISIONS   OF   SUBSECTION
(C)(1)(B), FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE VALUE OF
THE  TAXABLE  ESTATE MAY BE DETERMINED, IF THE EXECUTOR SO ELECTS BEFORE
THE EXPIRATION OF THE PERIOD OF LIMITATION FOR  ASSESSMENT  PROVIDED  IN
SECTION 6501, BY DEDUCTING FROM THE VALUE OF THE GROSS ESTATE THE AMOUNT
(AS  DETERMINED  IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE SECRE-
TARY) OF ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX  IMPOSED  BY
AND  ACTUALLY  PAID  TO  ANY FOREIGN COUNTRY, IN RESPECT OF ANY PROPERTY
SITUATED WITHIN SUCH FOREIGN COUNTRY AND INCLUDED IN THE GROSS ESTATE OF
A CITIZEN OR RESIDENT OF THE UNITED STATES, UPON A TRANSFER BY THE DECE-
DENT FOR PUBLIC, CHARITABLE, OR  RELIGIOUS  USES  DESCRIBED  IN  SECTION
2055. THE DETERMINATION UNDER THIS PARAGRAPH OF THE COUNTRY WITHIN WHICH
PROPERTY IS SITUATED SHALL BE MADE IN ACCORDANCE WITH THE RULES APPLICA-
BLE  UNDER SUBCHAPTER B (SEC. 2101 AND FOLLOWING) IN DETERMINING WHETHER
PROPERTY IS SITUATED WITHIN OR WITHOUT THE UNITED STATES.  ANY  ELECTION
UNDER  THIS  PARAGRAPH SHALL BE EXERCISED IN ACCORDANCE WITH REGULATIONS
PRESCRIBED BY THE SECRETARY.
  (2) CONDITION FOR  ALLOWANCE  OF  DEDUCTION.--NO  DEDUCTION  SHALL  BE
ALLOWED  UNDER  PARAGRAPH  (1) FOR A FOREIGN DEATH TAX SPECIFIED THEREIN
UNLESS THE DECREASE IN THE TAX IMPOSED BY  SECTION  2001  WHICH  RESULTS
FROM  THE  DEDUCTION PROVIDED IN PARAGRAPH (1) WILL INURE SOLELY FOR THE
BENEFIT OF THE PUBLIC, CHARITABLE, OR RELIGIOUS TRANSFEREES DESCRIBED IN
SECTION 2055 OR SECTION 2106(A)(2).  IN ANY CASE WHERE THE  TAX  IMPOSED
BY  SECTION  2001  IS EQUITABLY APPORTIONED AMONG ALL THE TRANSFEREES OF
PROPERTY INCLUDED IN THE GROSS  ESTATE,  INCLUDING  THOSE  DESCRIBED  IN
SECTIONS  2055 AND 2106(A)(2) (TAKING INTO ACCOUNT ANY EXEMPTIONS, CRED-
ITS, OR  DEDUCTIONS  ALLOWED  BY  THIS  CHAPTER),  IN  DETERMINING  SUCH

S. 6359--B                         276                        A. 8559--B

DECREASE,  THERE SHALL BE DISREGARDED ANY DECREASE IN THE FEDERAL ESTATE
TAX WHICH ANY TRANSFEREES OTHER THAN THOSE DESCRIBED  IN  SECTIONS  2055
AND 2106(A)(2) ARE REQUIRED TO PAY.
  (3)  EFFECT  ON CREDIT FOR FOREIGN DEATH TAXES OF DEDUCTION UNDER THIS
SUBSECTION.--
  (A) ELECTION.--AN ELECTION UNDER THIS SUBSECTION  SHALL  BE  DEEMED  A
WAIVER  OF  THE RIGHT TO CLAIM A CREDIT, AGAINST THE FEDERAL ESTATE TAX,
UNDER A DEATH TAX CONVENTION WITH ANY FOREIGN COUNTRY  FOR  ANY  TAX  OR
PORTION  THEREOF  IN  RESPECT  OF  WHICH A DEDUCTION IS TAKEN UNDER THIS
SUBSECTION.
  (B) CROSS REFERENCE.--
  SEE SECTION 2011(D) FOR THE EFFECT OF A  DEDUCTION  TAKEN  UNDER  THIS
PARAGRAPH ON THE CREDIT FOR FOREIGN DEATH TAXES.
  (E) MARITAL RIGHTS.--
  FOR  PROVISIONS  TREATING CERTAIN RELINQUISHMENTS OF MARITAL RIGHTS AS
CONSIDERATION IN MONEY OR MONEY'S WORTH, SEE SECTION 2043(B)(2).
  S 2054. LOSSES. FOR PURPOSES OF THE TAX IMPOSED BY SECTION  2001,  THE
VALUE  OF  THE  TAXABLE ESTATE SHALL BE DETERMINED BY DEDUCTING FROM THE
VALUE OF THE GROSS ESTATE  LOSSES  INCURRED  DURING  THE  SETTLEMENT  OF
ESTATES  ARISING FROM FIRES, STORMS, SHIPWRECKS, OR OTHER CASUALTIES, OR
FROM THEFT, WHEN SUCH LOSSES ARE NOT COMPENSATED  FOR  BY  INSURANCE  OR
OTHERWISE.
  S 2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
  (A)  IN GENERAL.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE
VALUE OF THE TAXABLE ESTATE SHALL BE DETERMINED BY  DEDUCTING  FROM  THE
VALUE OF THE GROSS ESTATE THE AMOUNT OF ALL BEQUESTS, LEGACIES, DEVISES,
OR TRANSFERS--
  (1)  TO  OR FOR THE USE OF THE UNITED STATES, ANY STATE, ANY POLITICAL
SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC
PURPOSES;
  (2) TO OR FOR THE USE OF ANY CORPORATION ORGANIZED AND OPERATED EXCLU-
SIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY,  OR  EDUCATIONAL
PURPOSES,  INCLUDING  THE ENCOURAGEMENT OF ART, OR TO FOSTER NATIONAL OR
INTERNATIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF  NO  PART  OF  ITS
ACTIVITIES  INVOLVE  THE PROVISION OF ATHLETIC FACILITIES OR EQUIPMENT),
AND THE PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO PART OF THE NET
EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY  PRIVATE  STOCKHOLDER  OR
INDIVIDUAL,  WHICH  IS  NOT DISQUALIFIED FOR TAX EXEMPTION UNDER SECTION
501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE  LEGISLATION,  AND  WHICH
DOES  NOT  PARTICIPATE  IN, OR INTERVENE IN (INCLUDING THE PUBLISHING OR
DISTRIBUTING OF STATEMENTS), ANY POLITICAL CAMPAIGN ON BEHALF OF (OR  IN
OPPOSITION TO) ANY CANDIDATE FOR PUBLIC OFFICE;
  (3)  TO A TRUSTEE OR TRUSTEES, OR A FRATERNAL SOCIETY, ORDER, OR ASSO-
CIATION OPERATING UNDER THE LODGE SYSTEM, BUT ONLY IF SUCH CONTRIBUTIONS
OR GIFTS ARE TO BE USED BY SUCH TRUSTEE OR TRUSTEES, OR BY SUCH  FRATER-
NAL  SOCIETY, ORDER, OR ASSOCIATION, EXCLUSIVELY FOR RELIGIOUS, CHARITA-
BLE,  SCIENTIFIC,  LITERARY,  OR  EDUCATIONAL  PURPOSES,  OR   FOR   THE
PREVENTION  OF  CRUELTY  TO  CHILDREN  OR ANIMALS, SUCH TRUST, FRATERNAL
SOCIETY, ORDER,  OR  ASSOCIATION  WOULD  NOT  BE  DISQUALIFIED  FOR  TAX
EXEMPTION  UNDER  SECTION 501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE
LEGISLATION, AND SUCH TRUSTEE OR TRUSTEES, OR  SUCH  FRATERNAL  SOCIETY,
ORDER, OR ASSOCIATION, DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO)  ANY  CANDIDATE  FOR  PUBLIC
OFFICE;

S. 6359--B                         277                        A. 8559--B

  (4)  TO  OR  FOR THE USE OF ANY VETERANS' ORGANIZATION INCORPORATED BY
ACT OF CONGRESS, OR OF ITS DEPARTMENTS OR LOCAL CHAPTERS  OR  POSTS,  NO
PART  OF  THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE
SHAREHOLDER OR INDIVIDUAL; OR
  (5)  TO AN EMPLOYEE STOCK OWNERSHIP PLAN IF SUCH TRANSFER QUALIFIES AS
A QUALIFIED GRATUITOUS TRANSFER OF QUALIFIED EMPLOYER SECURITIES  WITHIN
THE MEANING OF SECTION 664(G).
  FOR  PURPOSES  OF THIS SUBSECTION, THE COMPLETE TERMINATION BEFORE THE
DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN OF  A  POWER  TO
CONSUME,  INVADE, OR APPROPRIATE PROPERTY FOR THE BENEFIT OF AN INDIVID-
UAL BEFORE SUCH POWER HAS BEEN EXERCISED BY REASON OF THE DEATH OF  SUCH
INDIVIDUAL  OR FOR ANY OTHER REASON SHALL BE CONSIDERED AND DEEMED TO BE
A QUALIFIED DISCLAIMER WITH THE SAME FULL FORCE AND EFFECT AS THOUGH  HE
HAD  FILED  SUCH  QUALIFIED  DISCLAIMER.   RULES SIMILAR TO THE RULES OF
SECTION 501(J) SHALL APPLY FOR PURPOSES OF PARAGRAPH (2).
  (B) POWERS OF  APPOINTMENT.--PROPERTY  INCLUDIBLE  IN  THE  DECEDENT'S
GROSS  ESTATE  UNDER  SECTION  2041  (RELATING TO POWERS OF APPOINTMENT)
RECEIVED BY A DONEE DESCRIBED IN THIS SECTION  SHALL,  FOR  PURPOSES  OF
THIS SECTION, BE CONSIDERED A BEQUEST OF SUCH DECEDENT.
  (C)  DEATH  TAXES  PAYABLE  OUT  OF  BEQUESTS.--IF  THE TAX IMPOSED BY
SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR  INHERITANCE  TAXES,
ARE,  EITHER  BY  THE  TERMS OF THE WILL, BY THE LAW OF THE JURISDICTION
UNDER WHICH THE ESTATE IS ADMINISTERED, OR BY THE LAW OF  THE  JURISDIC-
TION IMPOSING THE PARTICULAR TAX, PAYABLE IN WHOLE OR IN PART OUT OF THE
BEQUESTS,  LEGACIES, OR DEVISES OTHERWISE DEDUCTIBLE UNDER THIS SECTION,
THEN THE AMOUNT DEDUCTIBLE UNDER THIS SECTION SHALL  BE  THE  AMOUNT  OF
SUCH BEQUESTS, LEGACIES, OR DEVISES REDUCED BY THE AMOUNT OF SUCH TAXES.
  (D)  LIMITATION  ON DEDUCTION.--THE AMOUNT OF THE DEDUCTION UNDER THIS
SECTION FOR ANY TRANSFER SHALL NOT EXCEED THE VALUE OF  THE  TRANSFERRED
PROPERTY REQUIRED TO BE INCLUDED IN THE GROSS ESTATE.
  (E) DISALLOWANCE OF DEDUCTIONS IN CERTAIN CASES.--
  (1) NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR A TRANSFER TO
OR  FOR  THE USE OF AN ORGANIZATION OR TRUST DESCRIBED IN SECTION 508(D)
OR 4948(C)(4) SUBJECT TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.
  (2) WHERE AN INTEREST IN PROPERTY (OTHER THAN AN INTEREST DESCRIBED IN
SECTION 170(F)(3)(B)) PASSES OR  HAS  PASSED  FROM  THE  DECEDENT  TO  A
PERSON,  OR  FOR  A  USE,  DESCRIBED  IN SUBSECTION (A), AND AN INTEREST
(OTHER THAN AN INTEREST WHICH IS EXTINGUISHED UPON THE DECEDENT'S DEATH)
IN THE SAME PROPERTY PASSES OR HAS PASSED (FOR LESS THAN AN ADEQUATE AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH) FROM  THE  DECEDENT  TO  A
PERSON,  OR  FOR  A  USE,  NOT DESCRIBED IN SUBSECTION (A), NO DEDUCTION
SHALL BE ALLOWED UNDER THIS SECTION FOR THE INTEREST WHICH PASSES OR HAS
PASSED TO THE PERSON, OR  FOR  THE  USE,  DESCRIBED  IN  SUBSECTION  (A)
UNLESS--
  (A)  IN  THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN A TRUST
WHICH IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE  REMAINDER
UNITRUST  (DESCRIBED  IN SECTION 664) OR A POOLED INCOME FUND (DESCRIBED
IN SECTION 642(C)(5)), OR
  (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
A GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF  THE
FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
  (3) REFORMATIONS TO COMPLY WITH PARAGRAPH (2).--
  (A)  IN GENERAL.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN
RESPECT OF ANY QUALIFIED REFORMATION.
  (B) QUALIFIED REFORMATION.--FOR PURPOSES OF THIS PARAGRAPH,  THE  TERM
"QUALIFIED  REFORMATION"  MEANS  A  CHANGE  OF A GOVERNING INSTRUMENT BY

S. 6359--B                         278                        A. 8559--B

REFORMATION, AMENDMENT,  CONSTRUCTION,  OR  OTHERWISE  WHICH  CHANGES  A
REFORMABLE INTEREST INTO A QUALIFIED INTEREST BUT ONLY IF--
  (I) ANY DIFFERENCE BETWEEN--
  (I)  THE  ACTUARIAL VALUE (DETERMINED AS OF THE DATE OF THE DECEDENT'S
DEATH) OF THE QUALIFIED INTEREST, AND
  (II) THE ACTUARIAL VALUE (AS SO DETERMINED) OF THE  REFORMABLE  INTER-
EST,
  DOES NOT EXCEED 5 PERCENT OF THE ACTUARIAL VALUE (AS SO DETERMINED) OF
THE REFORMABLE INTEREST,
  (II) IN THE CASE OF--
  (I) A CHARITABLE REMAINDER INTEREST, THE NONREMAINDER INTEREST (BEFORE
AND AFTER THE QUALIFIED REFORMATION) TERMINATED AT THE SAME TIME, OR
  (II)  ANY  OTHER  INTEREST,  THE REFORMABLE INTEREST AND THE QUALIFIED
INTEREST ARE FOR THE SAME PERIOD, AND
  (III) SUCH CHANGE IS EFFECTIVE AS OF THE DATE OF THE DECEDENT'S DEATH.
  A NONREMAINDER INTEREST (BEFORE REFORMATION) FOR A TERM  OF  YEARS  IN
EXCESS  OF  20  YEARS  SHALL  BE  TREATED AS SATISFYING SUBCLAUSE (I) OF
CLAUSE (II) IF SUCH INTEREST (AFTER REFORMATION) IS FOR  A  TERM  OF  20
YEARS.
  (C) REFORMABLE INTEREST.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) IN GENERAL.--THE TERM "REFORMABLE INTEREST" MEANS ANY INTEREST FOR
WHICH A DEDUCTION WOULD BE ALLOWABLE UNDER SUBSECTION (A) AT THE TIME OF
THE DECEDENT'S DEATH BUT FOR PARAGRAPH (2).
  (II)  BENEFICIARY'S  INTEREST  MUST  BE  FIXED.--THE  TERM "REFORMABLE
INTEREST" DOES NOT INCLUDE ANY INTEREST  UNLESS,  BEFORE  THE  REMAINDER
VESTS  IN POSSESSION, ALL PAYMENTS TO PERSONS OTHER THAN AN ORGANIZATION
DESCRIBED IN SUBSECTION (A) ARE EXPRESSED  EITHER  IN  SPECIFIED  DOLLAR
AMOUNTS  OR A FIXED PERCENTAGE OF THE FAIR MARKET VALUE OF THE PROPERTY.
FOR PURPOSES OF DETERMINING WHETHER ALL SUCH PAYMENTS ARE EXPRESSED AS A
FIXED PERCENTAGE OF THE FAIR  MARKET  VALUE  OF  THE  PROPERTY,  SECTION
664(D)(3) SHALL BE TAKEN INTO ACCOUNT.
  (III)  SPECIAL  RULE WHERE TIMELY COMMENCEMENT OF REFORMATION.--CLAUSE
(II) SHALL NOT APPLY  TO  ANY  INTEREST  IF  A  JUDICIAL  PROCEEDING  IS
COMMENCED  TO  CHANGE  SUCH INTEREST INTO A QUALIFIED INTEREST NOT LATER
THAN THE 90TH DAY AFTER--
  (I) IF AN ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE
(INCLUDING EXTENSIONS) FOR FILING SUCH RETURN, OR
  (II) IF NO ESTATE TAX RETURN IS REQUIRED TO BE FILED,  THE  LAST  DATE
(INCLUDING  EXTENSIONS)  FOR  FILING  THE  INCOME TAX RETURN FOR THE 1ST
TAXABLE YEAR FOR WHICH SUCH A RETURN IS REQUIRED  TO  BE  FILED  BY  THE
TRUST.
  (IV)  SPECIAL  RULE FOR WILL EXECUTED BEFORE JANUARY 1, 1979, ETC.--IN
THE CASE OF ANY INTEREST PASSING UNDER A WILL EXECUTED BEFORE JANUARY 1,
1979, OR UNDER A TRUST CREATED BEFORE SUCH DATE, CLAUSE (II)  SHALL  NOT
APPLY.
  (D)  QUALIFIED  INTEREST.--FOR  PURPOSES  OF  THIS PARAGRAPH, THE TERM
"QUALIFIED INTEREST" MEANS AN INTEREST FOR WHICH A DEDUCTION  IS  ALLOW-
ABLE UNDER SUBSECTION (A).
  (E)  LIMITATION.--THE  DEDUCTION REFERRED TO IN SUBPARAGRAPH (A) SHALL
NOT EXCEED THE AMOUNT OF THE DEDUCTION WHICH WOULD HAVE  BEEN  ALLOWABLE
FOR THE REFORMABLE INTEREST BUT FOR PARAGRAPH (2).
  (F)  SPECIAL RULE WHERE INCOME BENEFICIARY DIES.--IF (BY REASON OF THE
DEATH OF ANY INDIVIDUAL, OR BY TERMINATION OR DISTRIBUTION OF A TRUST IN
ACCORDANCE WITH THE TERMS OF THE TRUST INSTRUMENT) BY THE DUE  DATE  FOR
FILING THE ESTATE TAX RETURN (INCLUDING ANY EXTENSION THEREOF) A REFORM-
ABLE  INTEREST  IS  IN A WHOLLY CHARITABLE TRUST OR PASSES DIRECTLY TO A

S. 6359--B                         279                        A. 8559--B

PERSON OR FOR A USE DESCRIBED IN SUBSECTION (A), A  DEDUCTION  SHALL  BE
ALLOWED  FOR  SUCH REFORMABLE INTEREST AS IF IT HAD MET THE REQUIREMENTS
OF PARAGRAPH (2) ON THE DATE OF THE DECEDENT'S DEATH.  FOR  PURPOSES  OF
THE PRECEDING SENTENCE, THE TERM "WHOLLY CHARITABLE TRUST" MEANS A CHAR-
ITABLE  TRUST  WHICH,  UPON  THE  ALLOWANCE  OF  A  DEDUCTION,  WOULD BE
DESCRIBED IN SECTION 4947(A)(1).
  (G) STATUTE OF LIMITATIONS.--THE PERIOD FOR ASSESSING  ANY  DEFICIENCY
OF  ANY  TAX ATTRIBUTABLE TO THE APPLICATION OF THIS PARAGRAPH SHALL NOT
EXPIRE BEFORE THE DATE 1 YEAR AFTER THE DATE ON WHICH THE  SECRETARY  IS
NOTIFIED THAT SUCH REFORMATION (OR OTHER PROCEEDING PURSUANT TO SUBPARA-
GRAPH (J)1 HAS OCCURRED.
  (H)  REGULATIONS.--THE  SECRETARY  SHALL PRESCRIBE SUCH REGULATIONS AS
MAY BE NECESSARY TO CARRY OUT THE PURPOSES OF THIS PARAGRAPH,  INCLUDING
REGULATIONS  PROVIDING  SUCH  ADJUSTMENTS  IN  THE  APPLICATION  OF  THE
PROVISIONS OF SECTION 508 (RELATING TO SPECIAL RULES RELATING TO SECTION
501(C)(3) ORGANIZATIONS), SUBCHAPTER J  (RELATING  TO  ESTATES,  TRUSTS,
BENEFICIARIES, AND DECEDENTS), AND CHAPTER 42 (RELATING TO PRIVATE FOUN-
DATIONS) AS MAY BE NECESSARY BY REASON OF THE QUALIFIED REFORMATION.
  (I) REFORMATIONS PERMITTED IN CASE OF REMAINDER INTERESTS IN RESIDENCE
OR  FARM, POOLED INCOME FUNDS, ETC.--THE SECRETARY SHALL PRESCRIBE REGU-
LATIONS (CONSISTENT WITH THE PROVISIONS OF  THIS  PARAGRAPH)  PERMITTING
REFORMATIONS IN THE CASE OF ANY FAILURE--
  (I)  TO  MEET  THE  REQUIREMENTS  OF SECTION 170(F)(3)(B) (RELATING TO
REMAINDER INTERESTS IN PERSONAL RESIDENCE OR FARM, ETC.), OR
  (II) TO MEET THE REQUIREMENTS OF SECTION 642(C)(5).
  (J) VOID OR REFORMED TRUST IN CASES OF INSUFFICIENT  REMAINDER  INTER-
ESTS.--IN  THE  CASE OF A TRUST THAT WOULD QUALIFY (OR COULD BE REFORMED
TO QUALIFY PURSUANT TO SUBPARAGRAPH (B)) BUT FOR FAILURE TO SATISFY  THE
REQUIREMENT  OF PARAGRAPH (1)(D) OR (2)(D) OF SECTION 664(D), SUCH TRUST
MAY BE--
  (I) DECLARED NULL AND VOID AB INITIO, OR
  (II) CHANGED BY REFORMATION, AMENDMENT,  OR  OTHERWISE  TO  MEET  SUCH
REQUIREMENT BY REDUCING THE PAYOUT RATE OR THE DURATION (OR BOTH) OF ANY
NONCHARITABLE  BENEFICIARY'S INTEREST TO THE EXTENT NECESSARY TO SATISFY
SUCH REQUIREMENT,
  PURSUANT TO A PROCEEDING THAT IS COMMENCED WITHIN THE PERIOD  REQUIRED
IN  SUBPARAGRAPH  (C)(III).  IN  A  CASE  DESCRIBED  IN  CLAUSE  (I), NO
DEDUCTION SHALL BE ALLOWED UNDER THIS TITLE  FOR  ANY  TRANSFER  TO  THE
TRUST  AND  ANY  TRANSACTIONS  ENTERED  INTO BY THE TRUST PRIOR TO BEING
DECLARED VOID SHALL BE TREATED AS ENTERED INTO BY THE TRANSFEROR.
  (4) WORKS OF ART AND THEIR COPYRIGHTS TREATED AS  SEPARATE  PROPERTIES
IN CERTAIN CASES.--
  (A)  IN GENERAL.--IN THE CASE OF A QUALIFIED CONTRIBUTION OF A WORK OF
ART, THE WORK OF ART AND THE COPYRIGHT ON SUCH  WORK  OF  ART  SHALL  BE
TREATED AS SEPARATE PROPERTIES FOR PURPOSES OF PARAGRAPH (2).
  (B)  WORK  OF  ART  DEFINED.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
"WORK OF ART" MEANS ANY TANGIBLE PERSONAL PROPERTY WITH RESPECT TO WHICH
THERE IS A COPYRIGHT UNDER FEDERAL LAW.
  (C) QUALIFIED CONTRIBUTION DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,
THE  TERM  "QUALIFIED  CONTRIBUTION" MEANS ANY TRANSFER OF PROPERTY TO A
QUALIFIED ORGANIZATION IF THE USE OF THE PROPERTY BY THE ORGANIZATION IS
RELATED TO THE PURPOSE  OR  FUNCTION  CONSTITUTING  THE  BASIS  FOR  ITS
EXEMPTION UNDER SECTION 501.
  (D)  QUALIFIED  ORGANIZATION DEFINED.--FOR PURPOSES OF THIS PARAGRAPH,
THE TERM "QUALIFIED ORGANIZATION" MEANS ANY  ORGANIZATION  DESCRIBED  IN
SECTION 501(C)(3) OTHER THAN A PRIVATE FOUNDATION (AS DEFINED IN SECTION

S. 6359--B                         280                        A. 8559--B

509).  FOR PURPOSES OF THE PRECEDING SENTENCE, A PRIVATE OPERATING FOUN-
DATION  (AS  DEFINED  IN  SECTION  4942(J)(3)) SHALL NOT BE TREATED AS A
PRIVATE FOUNDATION.
  (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.--A  DEDUCTION OTHERWISE
ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF--
  (A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT--
  (I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR
  (II) A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN  SECTION
4943(F)(5)(A))  WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT-
ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
  (B) THE TAXPAYER  OBTAINS  A  CONTEMPORANEOUS  WRITTEN  ACKNOWLEDGMENT
(DETERMINED  UNDER  RULES  SIMILAR TO THE RULES OF SECTION 170(F)(8)(C))
FROM THE SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH  DONOR  ADVISED
FUND  THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE ASSETS
CONTRIBUTED.
  (F) SPECIAL RULE  FOR  IRREVOCABLE  TRANSFERS  OF  EASEMENTS  IN  REAL
PROPERTY.--A  DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT
OF ANY TRANSFER OF A QUALIFIED REAL PROPERTY  INTEREST  (AS  DEFINED  IN
SECTION  170(H)(2)(C))  WHICH  MEETS  THE REQUIREMENTS OF SECTION 170(H)
(WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
  (G) CROSS REFERENCES.--
  (1) FOR OPTION AS TO TIME FOR VALUATION FOR PURPOSE OF DEDUCTION UNDER
THIS SECTION, SEE SECTION 2032.
  (2) FOR TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD  CARE,  SEE
SECTION 501(K).
  (3)  FOR  EXEMPTION  OF  GIFTS  AND  BEQUESTS TO OR FOR THE BENEFIT OF
LIBRARY OF CONGRESS, SEE SECTION 5 OF THE  ACT  OF  MARCH  3,  1925,  AS
AMENDED (2 U.S.C. 161).
  (4)  FOR  TREATMENT OF GIFTS AND BEQUESTS FOR THE BENEFIT OF THE NAVAL
HISTORICAL CENTER AS GIFTS OR BEQUESTS TO OR FOR THE USE OF  THE  UNITED
STATES, SEE SECTION 7222 OF TITLE 10, UNITED STATES CODE.
  (5)  FOR  TREATMENT  OF  GIFTS  AND  BEQUESTS TO OR FOR THE BENEFIT OF
NATIONAL PARK FOUNDATION AS GIFTS OR BEQUESTS TO OR FOR THE USE  OF  THE
UNITED  STATES, SEE SECTION 8 OF THE ACT OF DECEMBER 18, 1967 (16 U.S.C.
191).
  (6) FOR TREATMENT OF GIFTS,  DEVISES,  OR  BEQUESTS  ACCEPTED  BY  THE
SECRETARY  OF  STATE,  THE  DIRECTOR  OF THE INTERNATIONAL COMMUNICATION
AGENCY, OR THE DIRECTOR OF THE UNITED STATES  INTERNATIONAL  DEVELOPMENT
COOPERATION  AGENCY  AS GIFTS, DEVISES, OR BEQUESTS TO OR FOR THE USE OF
THE UNITED STATES, SEE SECTION 25 OF THE STATE DEPARTMENT BASIC AUTHORI-
TIES ACT OF 1956.
  (7) FOR TREATMENT OF GIFTS OR BEQUESTS OF MONEY ACCEPTED BY THE ATTOR-
NEY GENERAL FOR CREDIT TO "COMMISSARY FUNDS, FEDERAL PRISONS"  AS  GIFTS
OR  BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE SECTION 4043 OF
TITLE 18, UNITED STATES CODE.
  (8) FOR PAYMENT OF TAX ON GIFTS AND BEQUESTS OF  UNITED  STATES  OBLI-
GATIONS  TO  THE  UNITED STATES, SEE SECTION 3113(E) OF TITLE 31, UNITED
STATES CODE.
  (9) FOR TREATMENT OF GIFTS AND BEQUESTS FOR BENEFIT OF THE NAVAL ACAD-
EMY AS GIFTS OR BEQUESTS TO OR FOR THE USE OF  THE  UNITED  STATES,  SEE
SECTION 6973 OF TITLE 10, UNITED STATES CODE.
  (10)  FOR  TREATMENT  OF  GIFTS  AND BEQUESTS FOR BENEFIT OF THE NAVAL
ACADEMY MUSEUM AS GIFTS OR BEQUESTS TO OR FOR  THE  USE  OF  THE  UNITED
STATES, SEE SECTION 6974 OF TITLE 10, UNITED STATES CODE.

S. 6359--B                         281                        A. 8559--B

  (11) FOR EXEMPTION OF GIFTS AND BEQUESTS RECEIVED BY NATIONAL ARCHIVES
TRUST FUND BOARD, SEE SECTION 2308 OF TITLE 44, UNITED STATES CODE.
  (12)  FOR  TREATMENT OF GIFTS AND BEQUESTS TO OR FOR THE USE OF INDIAN
TRIBAL GOVERNMENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
  S 2056. BEQUESTS, ETC., TO SURVIVING SPOUSE. (A) ALLOWANCE OF  MARITAL
DEDUCTION.--FOR  PURPOSES  OF THE TAX IMPOSED BY SECTION 2001, THE VALUE
OF THE TAXABLE ESTATE SHALL, EXCEPT AS LIMITED  BY  SUBSECTION  (B),  BE
DETERMINED  BY  DEDUCTING  FROM  THE VALUE OF THE GROSS ESTATE AN AMOUNT
EQUAL TO THE VALUE OF ANY INTEREST  IN  PROPERTY  WHICH  PASSES  OR  HAS
PASSED FROM THE DECEDENT TO HIS SURVIVING SPOUSE, BUT ONLY TO THE EXTENT
THAT  SUCH  INTEREST  IS  INCLUDED IN DETERMINING THE VALUE OF THE GROSS
ESTATE.
  (B) LIMITATION IN THE CASE OF LIFE ESTATE OR OTHER  TERMINABLE  INTER-
EST.--
  (1)  GENERAL  RULE.--WHERE, ON THE LAPSE OF TIME, ON THE OCCURRENCE OF
AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF AN EVENT OR CONTINGENCY TO
OCCUR, AN INTEREST PASSING TO THE SURVIVING  SPOUSE  WILL  TERMINATE  OR
FAIL,  NO  DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION WITH RESPECT TO
SUCH INTEREST--
  (A) IF AN INTEREST IN SUCH PROPERTY PASSES OR  HAS  PASSED  (FOR  LESS
THAN  AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH) FROM
THE DECEDENT TO ANY PERSON OTHER THAN  SUCH  SURVIVING  SPOUSE  (OR  THE
ESTATE OF SUCH SPOUSE); AND
  (B) IF BY REASON OF SUCH PASSING SUCH PERSON (OR HIS HEIRS OR ASSIGNS)
MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY AFTER SUCH TERMINATION OR
FAILURE OF THE INTEREST SO PASSING TO THE SURVIVING SPOUSE;
  AND  NO DEDUCTION SHALL BE ALLOWED WITH RESPECT TO SUCH INTEREST (EVEN
IF SUCH DEDUCTION IS NOT DISALLOWED UNDER SUBPARAGRAPHS (A) AND (B))--
  (C) IF SUCH INTEREST IS TO  BE  ACQUIRED  FOR  THE  SURVIVING  SPOUSE,
PURSUANT  TO DIRECTIONS OF THE DECEDENT, BY HIS EXECUTOR OR BY THE TRUS-
TEE OF A TRUST.
  FOR PURPOSES OF THIS PARAGRAPH, AN INTEREST SHALL NOT BE CONSIDERED AS
AN INTEREST WHICH WILL TERMINATE OR FAIL MERELY BECAUSE IT IS THE OWNER-
SHIP OF A BOND, NOTE, OR SIMILAR CONTRACTUAL OBLIGATION,  THE  DISCHARGE
OF WHICH WOULD NOT HAVE THE EFFECT OF AN ANNUITY FOR LIFE OR FOR A TERM.
  (2)  INTEREST  IN  UNIDENTIFIED ASSETS.--WHERE THE ASSETS (INCLUDED IN
THE DECEDENT'S GROSS ESTATE) OUT OF WHICH, OR THE PROCEEDS OF WHICH,  AN
INTEREST  PASSING  TO  THE  SURVIVING  SPOUSE MAY BE SATISFIED INCLUDE A
PARTICULAR ASSET OR ASSETS WITH RESPECT TO WHICH NO DEDUCTION  WOULD  BE
ALLOWED IF SUCH ASSET OR ASSETS PASSED FROM THE DECEDENT TO SUCH SPOUSE,
THEN  THE  VALUE  OF  SUCH  INTEREST  PASSING  TO SUCH SPOUSE SHALL, FOR
PURPOSES OF SUBSECTION (A), BE REDUCED BY THE AGGREGATE  VALUE  OF  SUCH
PARTICULAR ASSETS.
  (3)   INTEREST   OF   SPOUSE   CONDITIONAL  ON  SURVIVAL  FOR  LIMITED
PERIOD.--FOR PURPOSES OF THIS SUBSECTION, AN  INTEREST  PASSING  TO  THE
SURVIVING  SPOUSE  SHALL  NOT  BE  CONSIDERED  AS AN INTEREST WHICH WILL
TERMINATE OR FAIL ON THE DEATH OF SUCH SPOUSE IF--
  (A) SUCH DEATH WILL CAUSE A TERMINATION OR FAILURE  OF  SUCH  INTEREST
ONLY  IF  IT  OCCURS  WITHIN  A  PERIOD NOT EXCEEDING 6 MONTHS AFTER THE
DECEDENT'S DEATH, OR ONLY IF IT OCCURS AS A RESULT OF A COMMON  DISASTER
RESULTING IN THE DEATH OF THE DECEDENT AND THE SURVIVING SPOUSE, OR ONLY
IF IT OCCURS IN THE CASE OF EITHER SUCH EVENT; AND
  (B) SUCH TERMINATION OR FAILURE DOES NOT IN FACT OCCUR.
  (4) VALUATION OF INTEREST PASSING TO SURVIVING SPOUSE.--IN DETERMINING
FOR  PURPOSES  OF  SUBSECTION  (A) THE VALUE OF ANY INTEREST IN PROPERTY

S. 6359--B                         282                        A. 8559--B

PASSING TO THE SURVIVING SPOUSE FOR WHICH A DEDUCTION IS ALLOWED BY THIS
SECTION--
  (A) THERE SHALL BE TAKEN INTO ACCOUNT THE EFFECT WHICH THE TAX IMPOSED
BY  SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX,
HAS ON THE NET VALUE TO THE SURVIVING SPOUSE OF SUCH INTEREST; AND
  (B) WHERE SUCH INTEREST OR PROPERTY IS ENCUMBERED IN  ANY  MANNER,  OR
WHERE THE SURVIVING SPOUSE INCURS ANY OBLIGATION IMPOSED BY THE DECEDENT
WITH  RESPECT TO THE PASSING OF SUCH INTEREST, SUCH ENCUMBRANCE OR OBLI-
GATION SHALL BE TAKEN INTO ACCOUNT IN THE SAME MANNER AS IF  THE  AMOUNT
OF A GIFT TO SUCH SPOUSE OF SUCH INTEREST WERE BEING DETERMINED.
  (5) LIFE ESTATE WITH POWER OF APPOINTMENT IN SURVIVING SPOUSE.--IN THE
CASE  OF  AN  INTEREST  IN  PROPERTY  PASSING  FROM THE DECEDENT, IF HIS
SURVIVING SPOUSE IS ENTITLED FOR LIFE TO ALL THE INCOME FROM THE  ENTIRE
INTEREST,  OR  ALL  THE  INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE
ANNUALLY OR AT MORE FREQUENT INTERVALS,  WITH  POWER  IN  THE  SURVIVING
SPOUSE  TO  APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC PORTION (EXER-
CISABLE IN FAVOR OF SUCH SURVIVING SPOUSE, OR  OF  THE  ESTATE  OF  SUCH
SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER OR NOT IN EACH CASE THE
POWER IS EXERCISABLE IN FAVOR OF OTHERS), AND WITH NO POWER IN ANY OTHER
PERSON TO APPOINT ANY PART OF THE INTEREST, OR SUCH SPECIFIC PORTION, TO
ANY PERSON OTHER THAN THE SURVIVING SPOUSE--
  (A)  THE  INTEREST  OR  SUCH  PORTION  THEREOF  SO  PASSING SHALL, FOR
PURPOSES OF SUBSECTION (A), BE CONSIDERED AS PASSING  TO  THE  SURVIVING
SPOUSE, AND
  (B)  NO  PART  OF THE INTEREST SO PASSING SHALL, FOR PURPOSES OF PARA-
GRAPH (1)(A), BE CONSIDERED AS PASSING TO  ANY  PERSON  OTHER  THAN  THE
SURVIVING SPOUSE.
  THIS  PARAGRAPH SHALL APPLY ONLY IF SUCH POWER IN THE SURVIVING SPOUSE
TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC PORTION THEREOF, WHETH-
ER EXERCISABLE BY WILL OR DURING LIFE, IS  EXERCISABLE  BY  SUCH  SPOUSE
ALONE AND IN ALL EVENTS.
  (6)  LIFE  INSURANCE  OR ANNUITY PAYMENTS WITH POWER OF APPOINTMENT IN
SURVIVING SPOUSE.--IN THE CASE OF AN INTEREST IN PROPERTY  PASSING  FROM
THE  DECEDENT  CONSISTING OF PROCEEDS UNDER A LIFE INSURANCE, ENDOWMENT,
OR ANNUITY CONTRACT, IF UNDER THE TERMS OF THE  CONTRACT  SUCH  PROCEEDS
ARE  PAYABLE  IN  INSTALLMENTS  OR ARE HELD BY THE INSURER SUBJECT TO AN
AGREEMENT TO PAY INTEREST THEREON (WHETHER THE PROCEEDS, ON  THE  TERMI-
NATION  OF ANY INTEREST PAYMENTS, ARE PAYABLE IN A LUMP SUM OR IN ANNUAL
OR  MORE  FREQUENT  INSTALLMENTS),  AND  SUCH  INSTALLMENT  OR  INTEREST
PAYMENTS  ARE PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, COMMENCING
NOT LATER THAN 13 MONTHS AFTER THE DECEDENT'S DEATH, AND ALL AMOUNTS, OR
A SPECIFIC PORTION OF ALL SUCH AMOUNTS, PAYABLE DURING THE LIFE  OF  THE
SURVIVING  SPOUSE  ARE  PAYABLE ONLY TO SUCH SPOUSE, AND SUCH SPOUSE HAS
THE POWER TO APPOINT ALL AMOUNTS,  OR  SUCH  SPECIFIC  PORTION,  PAYABLE
UNDER  SUCH  CONTRACT (EXERCISABLE IN FAVOR OF SUCH SURVIVING SPOUSE, OR
OF THE ESTATE OF SUCH SURVIVING SPOUSE, OR IN FAVOR OF  EITHER,  WHETHER
OR  NOT  IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF OTHERS), WITH
NO POWER IN ANY OTHER PERSON TO APPOINT SUCH AMOUNTS TO ANY PERSON OTHER
THAN THE SURVIVING SPOUSE--
  (A) SUCH AMOUNTS SHALL, FOR PURPOSES OF SUBSECTION (A), BE  CONSIDERED
AS PASSING TO THE SURVIVING SPOUSE, AND
  (B)  NO  PART OF SUCH AMOUNTS SHALL, FOR PURPOSES OF PARAGRAPH (1)(A),
BE CONSIDERED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
  THIS PARAGRAPH SHALL APPLY ONLY IF, UNDER THE TERMS OF  THE  CONTRACT,
SUCH  POWER  IN  THE  SURVIVING  SPOUSE TO APPOINT SUCH AMOUNTS, WHETHER

S. 6359--B                         283                        A. 8559--B

EXERCISABLE BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE  ALONE
AND IN ALL EVENTS.
  (7) ELECTION WITH RESPECT TO LIFE ESTATE FOR SURVIVING SPOUSE.--
  (A)  IN GENERAL.--IN THE CASE OF QUALIFIED TERMINABLE INTEREST PROPER-
TY--
  (I) FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED  AS
PASSING TO THE SURVIVING SPOUSE, AND
  (II)  FOR PURPOSES OF PARAGRAPH (1)(A), NO PART OF SUCH PROPERTY SHALL
BE TREATED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
  (B) QUALIFIED TERMINABLE INTEREST PROPERTY DEFINED.--FOR  PURPOSES  OF
THIS PARAGRAPH--
  (I)  IN  GENERAL.--THE  TERM  "QUALIFIED TERMINABLE INTEREST PROPERTY"
MEANS PROPERTY--
  (I) WHICH PASSES FROM THE DECEDENT,
  (II) IN WHICH THE SURVIVING SPOUSE HAS A  QUALIFYING  INCOME  INTEREST
FOR LIFE, AND
  (III) TO WHICH AN ELECTION UNDER THIS PARAGRAPH APPLIES.
  (II)  QUALIFYING INCOME INTEREST FOR LIFE.--THE SURVIVING SPOUSE HAS A
QUALIFYING INCOME INTEREST FOR LIFE IF--
  (I) THE SURVIVING SPOUSE IS ENTITLED TO ALL THE INCOME FROM THE  PROP-
ERTY,  PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, OR HAS A USUFRUCT
INTEREST FOR LIFE IN THE PROPERTY, AND
  (II) NO PERSON HAS A POWER TO APPOINT ANY PART OF THE PROPERTY TO  ANY
PERSON OTHER THAN THE SURVIVING SPOUSE.
  SUBCLAUSE (II) SHALL NOT APPLY TO A POWER EXERCISABLE ONLY AT OR AFTER
THE  DEATH  OF  THE  SURVIVING  SPOUSE.  TO THE EXTENT PROVIDED IN REGU-
LATIONS, AN ANNUITY SHALL BE TREATED IN A MANNER SIMILAR  TO  AN  INCOME
INTEREST  IN PROPERTY (REGARDLESS OF WHETHER THE PROPERTY FROM WHICH THE
ANNUITY IS PAYABLE CAN BE SEPARATELY IDENTIFIED).
  (III)  PROPERTY  INCLUDES  INTEREST  THEREIN.--THE   TERM   "PROPERTY"
INCLUDES AN INTEREST IN PROPERTY.
  (IV)  SPECIFIC  PORTION  TREATED  AS  SEPARATE  PROPERTY.--A  SPECIFIC
PORTION OF PROPERTY SHALL BE TREATED AS SEPARATE PROPERTY.
  (V) ELECTION.--AN ELECTION UNDER THIS PARAGRAPH WITH  RESPECT  TO  ANY
PROPERTY  SHALL  BE MADE BY THE EXECUTOR ON THE RETURN OF TAX IMPOSED BY
SECTION 2001. SUCH AN ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (C) TREATMENT OF  SURVIVOR  ANNUITIES.--IN  THE  CASE  OF  AN  ANNUITY
INCLUDED  IN THE GROSS ESTATE OF THE DECEDENT UNDER SECTION 2039 (OR, IN
THE CASE OF AN INTEREST IN AN ANNUITY ARISING UNDER THE COMMUNITY  PROP-
ERTY LAWS OF A STATE, INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER
SECTION  2033)  WHERE ONLY THE SURVIVING SPOUSE HAS THE RIGHT TO RECEIVE
PAYMENTS BEFORE THE DEATH OF SUCH SURVIVING SPOUSE--
  (I) THE INTEREST OF SUCH SURVIVING SPOUSE SHALL BE TREATED AS A QUALI-
FYING INCOME INTEREST FOR LIFE, AND
  (II) THE EXECUTOR SHALL BE TREATED AS HAVING MADE  AN  ELECTION  UNDER
THIS  SUBSECTION WITH RESPECT TO SUCH ANNUITY UNLESS THE EXECUTOR OTHER-
WISE ELECTS ON THE RETURN OF TAX IMPOSED BY SECTION 2001.
  AN ELECTION UNDER CLAUSE (II), ONCE MADE, SHALL BE IRREVOCABLE.
  (8) SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS.--
  (A) IN GENERAL.--IF THE SURVIVING SPOUSE OF THE DECEDENT IS  THE  ONLY
BENEFICIARY OF A QUALIFIED CHARITABLE REMAINDER TRUST WHO IS NOT A CHAR-
ITABLE  BENEFICIARY  NOR  AN  ESOP  BENEFICIARY, PARAGRAPH (1) SHALL NOT
APPLY TO ANY INTEREST IN SUCH TRUST WHICH PASSES OR HAS PASSED FROM  THE
DECEDENT TO SUCH SURVIVING SPOUSE.
  (B) DEFINITIONS.--FOR PURPOSES OF SUBPARAGRAPH (A)--

S. 6359--B                         284                        A. 8559--B

  (I)  CHARITABLE  BENEFICIARY.--THE TERM "CHARITABLE BENEFICIARY" MEANS
ANY BENEFICIARY WHICH IS AN ORGANIZATION DESCRIBED IN SECTION 170(C).
  (II)  ESOP BENEFICIARY.--THE TERM "ESOP BENEFICIARY" MEANS ANY BENEFI-
CIARY WHICH IS AN EMPLOYEE STOCK OWNERSHIP PLAN (AS DEFINED  IN  SECTION
4975(E)(7))  THAT HOLDS A REMAINDER INTEREST IN QUALIFIED EMPLOYER SECU-
RITIES (AS DEFINED IN SECTION 664(G)(4)) TO BE TRANSFERRED TO SUCH  PLAN
IN A QUALIFIED GRATUITOUS TRANSFER (AS DEFINED IN SECTION 664(G)(1)).
  (III) QUALIFIED CHARITABLE REMAINDER TRUST.--THE TERM "QUALIFIED CHAR-
ITABLE  REMAINDER TRUST" MEANS A CHARITABLE REMAINDER ANNUITY TRUST OR A
CHARITABLE REMAINDER UNITRUST (DESCRIBED IN SECTION 664).
  (9) DENIAL OF DOUBLE DEDUCTION.--NOTHING IN THIS SECTION OR ANY  OTHER
PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-
ERTY  TO  BE  DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE WITH RESPECT TO
THE SAME DECEDENT.
  (10) SPECIFIC PORTION.--FOR  PURPOSES  OF  PARAGRAPHS  (5),  (6),  AND
(7)(B)(IV),  THE  TERM "SPECIFIC PORTION" ONLY INCLUDES A PORTION DETER-
MINED ON A FRACTIONAL OR PERCENTAGE BASIS.
  (C) DEFINITION.--FOR PURPOSES OF THIS SECTION, AN INTEREST IN PROPERTY
SHALL BE CONSIDERED AS PASSING FROM THE DECEDENT TO ANY  PERSON  IF  AND
ONLY IF--
  (1) SUCH INTEREST IS BEQUEATHED OR DEVISED TO SUCH PERSON BY THE DECE-
DENT;
  (2) SUCH INTEREST IS INHERITED BY SUCH PERSON FROM THE DECEDENT;
  (3)  SUCH  INTEREST  IS  THE  DOWER  OR CURTESY INTEREST (OR STATUTORY
INTEREST IN LIEU THEREOF) OF SUCH PERSON  AS  SURVIVING  SPOUSE  OF  THE
DECEDENT;
  (4)  SUCH INTEREST HAS BEEN TRANSFERRED TO SUCH PERSON BY THE DECEDENT
AT ANY TIME;
  (5) SUCH INTEREST WAS, AT THE TIME OF THE DECEDENT'S  DEATH,  HELD  BY
SUCH  PERSON AND THE DECEDENT (OR BY THEM AND ANY OTHER PERSON) IN JOINT
OWNERSHIP WITH RIGHT OF SURVIVORSHIP;
  (6) THE DECEDENT HAD A POWER (EITHER ALONE OR IN CONJUNCTION WITH  ANY
PERSON)  TO  APPOINT  SUCH  INTEREST AND IF HE APPOINTS OR HAS APPOINTED
SUCH INTEREST TO SUCH PERSON, OR IF SUCH PERSON TAKES SUCH  INTEREST  IN
DEFAULT ON THE RELEASE OR NONEXERCISE OF SUCH POWER; OR
  (7) SUCH INTEREST CONSISTS OF PROCEEDS OF INSURANCE ON THE LIFE OF THE
DECEDENT RECEIVABLE BY SUCH PERSON.
  EXCEPT AS PROVIDED IN PARAGRAPH (5) OR (6) OF SUBSECTION (B), WHERE AT
THE  TIME  OF  THE  DECEDENT'S DEATH IT IS NOT POSSIBLE TO ASCERTAIN THE
PARTICULAR PERSON OR PERSONS TO WHOM AN INTEREST IN  PROPERTY  MAY  PASS
FROM  THE  DECEDENT,  SUCH INTEREST SHALL, FOR PURPOSES OF SUBPARAGRAPHS
(A) AND (B) OF SUBSECTION (B)(1), BE  CONSIDERED  AS  PASSING  FROM  THE
DECEDENT TO A PERSON OTHER THAN THE SURVIVING SPOUSE.
  S 2103. DEFINITION OF GROSS ESTATE. FOR THE PURPOSE OF THE TAX IMPOSED
BY SECTION 2101, THE VALUE OF THE GROSS ESTATE OF EVERY DECEDENT NONRES-
IDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE THAT PART OF HIS GROSS
ESTATE (DETERMINED AS PROVIDED IN SECTION 2031) WHICH AT THE TIME OF HIS
DEATH IS SITUATED IN THE UNITED STATES.
  S  2104.  PROPERTY  WITHIN  THE  UNITED  STATES. (A) STOCK IN CORPORA-
TION.--FOR PURPOSES OF THIS SUBCHAPTER SHARES OF STOCK OWNED AND HELD BY
A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE DEEMED PROPER-
TY WITHIN THE UNITED STATES ONLY IF ISSUED BY A DOMESTIC CORPORATION.
  (B) REVOCABLE TRANSFERS AND TRANSFERS WITHIN 3  YEARS  OF  DEATH.--FOR
PURPOSES OF THIS SUBCHAPTER, ANY PROPERTY OF WHICH THE DECEDENT HAS MADE
A  TRANSFER,  BY TRUST OR OTHERWISE, WITHIN THE MEANING OF SECTIONS 2035
TO 2038, INCLUSIVE, SHALL BE DEEMED TO BE SITUATED IN THE UNITED STATES,

S. 6359--B                         285                        A. 8559--B

IF SO SITUATED EITHER AT THE TIME OF THE TRANSFER OR AT THE TIME OF  THE
DECEDENT'S DEATH.
  (C)  DEBT  OBLIGATIONS.--FOR  PURPOSES  OF THIS SUBCHAPTER, DEBT OBLI-
GATIONS OF-
  (1) A UNITED STATES PERSON, OR
  (2) THE UNITED STATES, A STATE OR ANY POLITICAL  SUBDIVISION  THEREOF,
OR THE DISTRICT OF COLUMBIA,
  OWNED  AND  HELD  BY  A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES
SHALL BE DEEMED PROPERTY WITHIN  THE  UNITED  STATES.  WITH  RESPECT  TO
ESTATES  OF  DECEDENTS  DYING  AFTER  DECEMBER 31, 1969, DEPOSITS WITH A
DOMESTIC BRANCH OF A FOREIGN CORPORATION, IF SUCH BRANCH IS  ENGAGED  IN
THE COMMERCIAL BANKING BUSINESS, SHALL, FOR PURPOSES OF THIS SUBCHAPTER,
BE  DEEMED  PROPERTY WITHIN THE UNITED STATES. THIS SUBSECTION SHALL NOT
APPLY TO A DEBT OBLIGATION TO WHICH SECTION 2105(B) APPLIES.
  S 2105. PROPERTY WITHOUT THE UNITED STATES. (A) PROCEEDS OF LIFE INSU-
RANCE.--FOR PURPOSES OF THIS SUBCHAPTER, THE AMOUNT RECEIVABLE AS INSUR-
ANCE ON THE LIFE OF A NONRESIDENT NOT A CITIZEN  OF  THE  UNITED  STATES
SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES.
  (B) BANK DEPOSITS AND CERTAIN OTHER DEBT OBLIGATIONS.--FOR PURPOSES OF
THIS  SUBCHAPTER,  THE FOLLOWING SHALL NOT BE DEEMED PROPERTY WITHIN THE
UNITED STATES--
  (1) AMOUNTS DESCRIBED IN SECTION 871(I)(3), IF  ANY  INTEREST  THEREON
WOULD  NOT  BE  SUBJECT  TO TAX BY REASON OF SECTION 871(I)(1) WERE SUCH
INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS DEATH,
  (2) DEPOSITS WITH A FOREIGN BRANCH OF A DOMESTIC CORPORATION OR DOMES-
TIC PARTNERSHIP, IF SUCH BRANCH IS ENGAGED  IN  THE  COMMERCIAL  BANKING
BUSINESS,
  (3)  DEBT OBLIGATIONS, IF, WITHOUT REGARD TO WHETHER A STATEMENT MEET-
ING THE REQUIREMENTS OF SECTION 871(H)(5) HAS BEEN RECEIVED, ANY  INTER-
EST  THEREON  WOULD BE ELIGIBLE FOR THE EXEMPTION FROM TAX UNDER SECTION
871(H)(1) WERE SUCH INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS
DEATH, AND
  (4) OBLIGATIONS WHICH WOULD BE ORIGINAL ISSUE DISCOUNT OBLIGATIONS  AS
DEFINED IN SECTION 871(G)(1) BUT FOR SUBPARAGRAPH (B)(I) THEREOF, IF ANY
INTEREST  THEREON  (WERE  SUCH  INTEREST RECEIVED BY THE DECEDENT AT THE
TIME OF HIS DEATH) WOULD NOT BE EFFECTIVELY CONNECTED WITH  THE  CONDUCT
OF A TRADE OR BUSINESS WITHIN THE UNITED STATES.
  NOTWITHSTANDING THE PRECEDING SENTENCE, IF ANY PORTION OF THE INTEREST
ON  AN OBLIGATION REFERRED TO IN PARAGRAPH (3) WOULD NOT BE ELIGIBLE FOR
THE EXEMPTION  REFERRED  TO  IN  PARAGRAPH  (3)  BY  REASON  OF  SECTION
871(H)(4)  IF  THE INTEREST WERE RECEIVED BY THE DECEDENT AT THE TIME OF
HIS DEATH, THEN AN  APPROPRIATE  PORTION  (AS  DETERMINED  IN  A  MANNER
PRESCRIBED BY THE SECRETARY) OF THE VALUE (AS DETERMINED FOR PURPOSES OF
THIS  CHAPTER)  OF  SUCH DEBT OBLIGATION SHALL BE DEEMED PROPERTY WITHIN
THE UNITED STATES.
  (C) WORKS OF  ART  ON  LOAN  FOR  EXHIBITION.--FOR  PURPOSES  OF  THIS
SUBCHAPTER,  WORKS  OF  ART  OWNED BY A NONRESIDENT NOT A CITIZEN OF THE
UNITED STATES SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED  STATES  IF
SUCH WORKS OF ART ARE--
  (1) IMPORTED INTO THE UNITED STATES SOLELY FOR EXHIBITION PURPOSES,
  (2)  LOANED  FOR SUCH PURPOSES, TO A PUBLIC GALLERY OR MUSEUM, NO PART
OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE STOCK-
HOLDER OR INDIVIDUAL, AND
  (3) AT THE TIME OF THE DEATH OF THE OWNER, ON EXHIBITION,  OR  ENROUTE
TO OR FROM EXHIBITION, IN SUCH A PUBLIC GALLERY OR MUSEUM.

S. 6359--B                         286                        A. 8559--B

  S  2503.  (A)  GENERAL DEFINITION - THE TERM "TAXABLE GIFTS" MEANS THE
TOTAL AMOUNT OF GIFTS MADE DURING THE  CALENDAR  YEAR,  LESS  DEDUCTIONS
PROVIDED IN SUBCHAPTER C (SECTION 2522 AND FOLLOWING).
  (B)  EXCLUSIONS  FROM  GIFTS.  (1)  IN  GENERAL.--IN THE CASE OF GIFTS
(OTHER THAN GIFTS OF FUTURE INTERESTS IN PROPERTY) MADE TO ANY PERSON BY
THE DONOR DURING THE CALENDAR YEAR, THE FIRST $10,000 OF SUCH  GIFTS  TO
SUCH  PERSON  SHALL  NOT, FOR PURPOSES OF SUBSECTION (A), BE INCLUDED IN
THE TOTAL AMOUNT OF GIFTS MADE DURING SUCH YEAR. WHERE THERE HAS BEEN  A
TRANSFER  TO ANY PERSON OF A PRESENT INTEREST IN PROPERTY, THE POSSIBIL-
ITY THAT SUCH INTEREST MAY BE DIMINISHED BY  THE  EXERCISE  OF  A  POWER
SHALL  BE  DISREGARDED  IN  APPLYING THIS SUBSECTION, IF NO PART OF SUCH
INTEREST WILL AT ANY TIME PASS TO ANY OTHER PERSON.
  (2) INFLATION ADJUSTMENT.--IN THE CASE OF GIFTS  MADE  IN  A  CALENDAR
YEAR  AFTER 1998, THE $10,000 AMOUNT CONTAINED IN PARAGRAPH (1) SHALL BE
INCREASED BY AN AMOUNT EQUAL TO--
  (A) $10,000, MULTIPLIED BY
  (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
SUCH CALENDAR YEAR BY SUBSTITUTING "CALENDAR YEAR  1997"  FOR  "CALENDAR
YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.
  IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
PLE  OF $1,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST MULTIPLE
OF $1,000.
  (C) TRANSFER FOR THE BENEFIT OF MINOR. -- NO PART  OF  A  GIFT  TO  AN
INDIVIDUAL  WHO HAS NOT ATTAINED THE AGE OF 21 YEARS ON THE DATE OF SUCH
TRANSFER SHALL BE CONSIDERED A GIFT OF A FUTURE INTEREST IN PROPERTY FOR
PURPOSES OF SUBSECTION (B) IF THE PROPERTY AND THE INCOME THEREFROM-
  (1) MAY BE EXPENDED BY, OR FOR THE BENEFIT OF, THE  DONEE  BEFORE  HIS
ATTAINING THE AGE OF 21 YEARS, AND
  (2) WILL TO THE EXTENT NOT SO EXPENDED-
  (A) PASS TO THE DONEE ON HIS ATTAINING THE AGE OF 21 YEARS, AND
  (B)  IN THE EVENT THE DONEE DIES BEFORE ATTAINING THE AGE OF 21 YEARS,
BE PAYABLE TO THE ESTATE OF THE DONEE OR  AS  HE  MAY  APPOINT  UNDER  A
GENERAL POWER OF APPOINTMENT AS DEFINED IN SECTION 2514(C).
  {(D)  REPEALED.  PUB. L. 97-34, TITLE III, S 311(H)(5), AUG. 13, 1981,
95 STAT.  282}
  (E) EXCLUSION  FOR  CERTAIN  TRANSFERS  FOR  EDUCATIONAL  EXPENSES  OR
MEDICAL  EXPENSES.  (1)  IN GENERAL. ANY QUALIFIED TRANSFER SHALL NOT BE
TREATED AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
  (2) QUALIFIED TRANSFER. FOR PURPOSES  OF  THIS  SUBSECTION,  THE  TERM
"QUALIFIED TRANSFER" MEANS ANY AMOUNT PAID ON BEHALF OF AN INDIVIDUAL-
  (A)  AS  TUITION  TO  AN EDUCATIONAL ORGANIZATION DESCRIBED IN SECTION
170(B)(1)(A)(II) FOR THE EDUCATION OR TRAINING OF SUCH INDIVIDUAL, OR
  (B) TO ANY PERSON WHO PROVIDES MEDICAL CARE  (AS  DEFINED  IN  SECTION
213(D))  WITH  RESPECT  TO  SUCH  INDIVIDUAL AS PAYMENT FOR SUCH MEDICAL
CARE.
  (F) WAIVER OF CERTAIN PENSION RIGHTS. IF ANY INDIVIDUAL WAIVES, BEFORE
THE DEATH OF A PARTICIPANT, ANY SURVIVOR BENEFIT, OR RIGHT TO SUCH BENE-
FIT, UNDER SECTION 401(A)(11) OR 417, SUCH WAIVER SHALL NOT  BE  TREATED
AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
  (G)  TREATMENT  OF  CERTAIN  LOANS  OF  ARTWORKS.  (1) IN GENERAL. FOR
PURPOSES OF THIS SUBTITLE, ANY LOAN OF A QUALIFIED WORK OF ART SHALL NOT
BE TREATED AS A TRANSFER (AND THE VALUE OF SUCH QUALIFIED  WORK  OF  ART
SHALL BE DETERMINED AS IF SUCH LOAN HAD NOT BEEN MADE) IF-
  (A) SUCH LOAN IS TO AN ORGANIZATION DESCRIBED IN SECTION 501(C)(3) AND
EXEMPT  FROM TAX UNDER SECTION 501(C) (OTHER THAN A PRIVATE FOUNDATION),
AND

S. 6359--B                         287                        A. 8559--B

  (B) THE USE OF SUCH WORK  BY  SUCH  ORGANIZATION  IS  RELATED  TO  THE
PURPOSE  OR  FUNCTION  CONSTITUTING  THE  BASIS  FOR ITS EXEMPTION UNDER
SECTION 501.
  (2) DEFINITIONS. FOR PURPOSES OF THIS SECTION-
  (A)  QUALIFIED WORK OF ART. THE TERM "QUALIFIED WORK OF ART" MEANS ANY
ARCHAEOLOGICAL, HISTORIC, OR CREATIVE TANGIBLE PERSONAL PROPERTY.
  (B) PRIVATE FOUNDATION. THE TERM "PRIVATE FOUNDATION" HAS THE  MEANING
GIVEN  SUCH TERM BY SECTION 509, EXCEPT THAT SUCH TERM SHALL NOT INCLUDE
ANY PRIVATE OPERATING FOUNDATION (AS DEFINED IN SECTION 4942(J)(3)).
  S 2511. TRANSFERS IN GENERAL. (A) SCOPE. SUBJECT  TO  THE  LIMITATIONS
CONTAINED  IN  THIS CHAPTER, THE TAX IMPOSED BY SECTION 2501 SHALL APPLY
WHETHER THE TRANSFER IS IN TRUST  OR  OTHERWISE,  WHETHER  THE  GIFT  IS
DIRECT OR INDIRECT, AND WHETHER THE PROPERTY IS REAL OR PERSONAL, TANGI-
BLE OR INTANGIBLE; BUT IN THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
UNITED  STATES,  SHALL APPLY TO A TRANSFER ONLY IF THE PROPERTY IS SITU-
ATED WITHIN THE UNITED STATES.
  (B) INTANGIBLE PROPERTY. FOR PURPOSES OF THIS CHAPTER, IN THE CASE  OF
A  NONRESIDENT  NOT  A CITIZEN OF THE UNITED STATES WHO IS EXCEPTED FROM
THE APPLICATION OF SECTION 2501(A)(2)-
  (1) SHARES OF STOCK ISSUED BY A DOMESTIC CORPORATION, AND
  (2) DEBT OBLIGATIONS OF-
--(A) A UNITED STATES PERSON, OR
--(B) THE UNITED STATES, A STATE OR ANY POLITICAL  SUBDIVISION  THEREOF,
OR THE DISTRICT OF COLUMBIA,
--WHICH  ARE  OWNED  AND  HELD BY SUCH NONRESIDENT SHALL BE DEEMED TO BE
PROPERTY SITUATED WITHIN THE UNITED STATES.
  S 2512. VALUATION OF GIFTS. (A) IF THE GIFT IS MADE IN  PROPERTY,  THE
VALUE  THEREOF AT THE DATE OF THE GIFT SHALL BE CONSIDERED THE AMOUNT OF
THE GIFT.
  (B) WHERE PROPERTY IS TRANSFERRED FOR LESS THAN AN ADEQUATE  AND  FULL
CONSIDERATION  IN  MONEY  OR MONEY'S WORTH, THEN THE AMOUNT BY WHICH THE
VALUE OF THE PROPERTY EXCEEDED THE VALUE OF THE CONSIDERATION  SHALL  BE
DEEMED  A  GIFT,  AND SHALL BE INCLUDED IN COMPUTING THE AMOUNT OF GIFTS
MADE DURING THE CALENDAR YEAR.
  S 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY. (A) CONSIDERED AS MADE
ONE-HALF BY EACH. (1) IN GENERAL. A GIFT  MADE  BY  ONE  SPOUSE  TO  ANY
PERSON OTHER THAN HIS SPOUSE SHALL, FOR THE PURPOSES OF THIS CHAPTER, BE
CONSIDERED  AS MADE ONE-HALF BY HIM AND ONE-HALF BY HIS SPOUSE, BUT ONLY
IF AT THE TIME OF THE GIFT EACH SPOUSE IS A CITIZEN OR RESIDENT  OF  THE
UNITED  STATES. THIS PARAGRAPH SHALL NOT APPLY WITH RESPECT TO A GIFT BY
A SPOUSE OF AN INTEREST IN PROPERTY IF HE CREATES IN HIS SPOUSE A GENER-
AL POWER OF APPOINTMENT, AS DEFINED IN SECTION 2514(C), OVER SUCH INTER-
EST. FOR PURPOSES OF THIS SECTION, AN INDIVIDUAL SHALL BE CONSIDERED  AS
THE  SPOUSE OF ANOTHER INDIVIDUAL ONLY IF HE IS MARRIED TO SUCH INDIVID-
UAL AT THE TIME OF THE GIFT AND DOES NOT REMARRY DURING THE REMAINDER OF
THE CALENDAR YEAR.
  (2) CONSENT OF BOTH SPOUSES. PARAGRAPH (1) SHALL APPLY  ONLY  IF  BOTH
SPOUSES HAVE SIGNIFIED (UNDER THE REGULATIONS PROVIDED FOR IN SUBSECTION
(B))  THEIR  CONSENT  TO THE APPLICATION OF PARAGRAPH (1) IN THE CASE OF
ALL SUCH GIFTS MADE DURING THE CALENDAR YEAR BY EITHER WHILE MARRIED  TO
THE OTHER.
  (B) MANNER AND TIME OF SIGNIFYING CONSENT. (1) MANNER. A CONSENT UNDER
THIS  SECTION  SHALL  BE  SIGNIFIED  IN SUCH MANNER AS IS PROVIDED UNDER
REGULATIONS PRESCRIBED BY THE SECRETARY.

S. 6359--B                         288                        A. 8559--B

  (2) TIME. SUCH CONSENT MAY BE SO SIGNIFIED AT ANY TIME AFTER THE CLOSE
OF THE CALENDAR YEAR IN WHICH THE GIFT WAS MADE, SUBJECT TO THE  FOLLOW-
ING LIMITATIONS-
--(A)  THE  CONSENT  MAY  NOT  BE  SIGNIFIED AFTER THE 15TH DAY OF APRIL
FOLLOWING THE CLOSE OF SUCH YEAR, UNLESS BEFORE SUCH 15TH DAY NO  RETURN
HAS BEEN FILED FOR SUCH YEAR BY EITHER SPOUSE, IN WHICH CASE THE CONSENT
MAY  NOT  BE  SIGNIFIED  AFTER A RETURN FOR SUCH YEAR IS FILED BY EITHER
SPOUSE.
--(B) THE CONSENT MAY NOT BE SIGNIFIED AFTER A NOTICE OF DEFICIENCY WITH
RESPECT TO THE TAX FOR SUCH YEAR HAS  BEEN  SENT  TO  EITHER  SPOUSE  IN
ACCORDANCE WITH SECTION 6212(A).
  (C)  REVOCATION  OF CONSENT. REVOCATION OF A CONSENT PREVIOUSLY SIGNI-
FIED SHALL BE MADE IN SUCH  MANNER  AS  IN  PROVIDED  UNDER  REGULATIONS
PRESCRIBED BY THE SECRETARY, BUT THE RIGHT TO REVOKE A CONSENT PREVIOUS-
LY SIGNIFIED WITH RESPECT TO A CALENDAR YEAR-
  (1) SHALL NOT EXIST AFTER THE 15TH DAY OF APRIL FOLLOWING THE CLOSE OF
SUCH YEAR IF THE CONSENT WAS SIGNIFIED ON OR BEFORE SUCH 15TH DAY; AND
  (2)  SHALL NOT EXIST IF THE CONSENT WAS NOT SIGNIFIED UNTIL AFTER SUCH
15TH DAY.
  (D) JOINT AND SEVERAL LIABILITY FOR TAX. IF THE  CONSENT  REQUIRED  BY
SUBSECTION (A)(2) IS SIGNIFIED WITH RESPECT TO A GIFT MADE IN ANY CALEN-
DAR  YEAR,  THE LIABILITY WITH RESPECT TO THE ENTIRE TAX IMPOSED BY THIS
CHAPTER OF EACH SPOUSE FOR SUCH YEAR SHALL BE JOINT AND SEVERAL.
  S 2514. POWERS OF APPOINTMENT. (A) POWERS CREATED ON OR BEFORE OCTOBER
21, 1942. AN EXERCISE OF A GENERAL POWER OF APPOINTMENT  CREATED  ON  OR
BEFORE  OCTOBER  21, 1942, SHALL BE DEEMED A TRANSFER OF PROPERTY BY THE
INDIVIDUAL POSSESSING SUCH POWER; BUT THE FAILURE  TO  EXERCISE  SUCH  A
POWER  OR  THE  COMPLETE  RELEASE OF SUCH A POWER SHALL NOT BE DEEMED AN
EXERCISE THEREOF. IF A GENERAL POWER OF APPOINTMENT CREATED ON OR BEFORE
OCTOBER 21, 1942, HAS BEEN PARTIALLY RELEASED SO THAT IT IS NO LONGER  A
GENERAL  POWER  OF  APPOINTMENT,  THE  SUBSEQUENT EXERCISE OF SUCH POWER
SHALL NOT BE DEEMED TO BE THE EXERCISE OF A GENERAL POWER OF APPOINTMENT
IF-
  (1) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
  (2) THE DONEE OF SUCH POWER WAS UNDER A LEGAL  DISABILITY  TO  RELEASE
SUCH  POWER  ON  OCTOBER 21, 1942, AND SUCH PARTIAL RELEASE OCCURRED NOT
LATER THAN SIX MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
  (B) POWERS CREATED AFTER OCTOBER 21, 1942. THE EXERCISE OR RELEASE  OF
A  GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, SHALL BE
DEEMED A TRANSFER OF PROPERTY BY THE INDIVIDUAL POSSESSING SUCH POWER.
  (C) DEFINITION OF GENERAL POWER OF APPOINTMENT. FOR PURPOSES  OF  THIS
SECTION,  THE TERM "GENERAL POWER OF APPOINTMENT" MEANS A POWER WHICH IS
EXERCISABLE IN FAVOR OF THE INDIVIDUAL POSSESSING THE  POWER  (HEREAFTER
IN  THIS  SUBSECTION  REFERRED  TO  AS THE "POSSESSOR"), HIS ESTATE, HIS
CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT-
  (1) A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE  BENE-
FIT  OF  THE  POSSESSOR  WHICH  IS  LIMITED BY AN ASCERTAINABLE STANDARD
RELATING TO THE  HEALTH,  EDUCATION,  SUPPORT,  OR  MAINTENANCE  OF  THE
POSSESSOR SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (2)  A  POWER  OF  APPOINTMENT  CREATED ON OR BEFORE OCTOBER 21, 1942,
WHICH IS EXERCISABLE BY THE POSSESSOR ONLY IN CONJUNCTION  WITH  ANOTHER
PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (3)  IN  THE  CASE OF A POWER OF APPOINTMENT CREATED AFTER OCTOBER 21,
1942, WHICH IS EXERCISABLE BY THE POSSESSOR  ONLY  IN  CONJUNCTION  WITH
ANOTHER PERSON-

S. 6359--B                         289                        A. 8559--B

--(A)  IF  THE  POWER  IS  NOT  EXERCISABLE  BY  THE POSSESSOR EXCEPT IN
CONJUNCTION WITH THE CREATOR OF THE POWER-SUCH POWER SHALL NOT BE DEEMED
A GENERAL POWER OF APPOINTMENT;
--(B)  IF  THE  POWER  IS  NOT  EXERCISABLE  BY  THE POSSESSOR EXCEPT IN
CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST, IN THE PROPERTY
SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
OF THE POSSESSOR-SUCH POWER SHALL NOT  BE  DEEMED  A  GENERAL  POWER  OF
APPOINTMENT.  FOR  THE PURPOSES OF THIS SUBPARAGRAPH A PERSON WHO, AFTER
THE DEATH OF THE POSSESSOR, MAY BE POSSESSED OF A POWER  OF  APPOINTMENT
(WITH RESPECT TO THE PROPERTY SUBJECT TO THE POSSESSOR'S POWER) WHICH HE
MAY  EXERCISE  IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST IN
THE PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH  EXERCISE
OF THE POSSESSOR'S POWER;
--(C)  IF (AFTER THE APPLICATION OF SUBPARAGRAPHS (A) AND (B)) THE POWER
IS A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN  FAVOR  OF  SUCH
OTHER  PERSON-SUCH  POWER SHALL BE DEEMED A GENERAL POWER OF APPOINTMENT
ONLY IN RESPECT OF A FRACTIONAL PART OF THE  PROPERTY  SUBJECT  TO  SUCH
POWER, SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY
BY THE NUMBER OF SUCH PERSONS (INCLUDING THE POSSESSOR) IN FAVOR OF WHOM
SUCH POWER IS EXERCISABLE.
--FOR  PURPOSES OF SUBPARAGRAPHS (B) AND (C), A POWER SHALL BE DEEMED TO
BE EXERCISABLE IN FAVOR OF A PERSON IF IT IS  EXERCISABLE  IN  FAVOR  OF
SUCH PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
  (D) CREATION OF ANOTHER POWER IN CERTAIN CASES. IF A POWER OF APPOINT-
MENT  CREATED  AFTER  OCTOBER 21, 1942, IS EXERCISED BY CREATING ANOTHER
POWER OF APPOINTMENT WHICH, UNDER  THE  APPLICABLE  LOCAL  LAW,  CAN  BE
VALIDLY  EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE OR INTER-
EST IN THE PROPERTY WHICH WAS SUBJECT TO THE FIRST POWER, OR SUSPEND THE
ABSOLUTE OWNERSHIP OR POWER OF ALIENATION OF SUCH PROPERTY, FOR A PERIOD
ASCERTAINABLE WITHOUT REGARD TO THE DATE OF THE CREATION  OF  THE  FIRST
POWER,  SUCH  EXERCISE  OF  THE  FIRST POWER SHALL, TO THE EXTENT OF THE
PROPERTY SUBJECT TO THE SECOND POWER, BE DEEMED A TRANSFER  OF  PROPERTY
BY THE INDIVIDUAL POSSESSING SUCH POWER.
  (E)  LAPSE OF POWER. THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
SHALL BE CONSIDERED A RELEASE OF SUCH POWER. THE RULE OF  THE  PRECEDING
SENTENCE  SHALL  APPLY  WITH  RESPECT  TO THE LAPSE OF POWERS DURING ANY
CALENDAR YEAR ONLY TO THE EXTENT THAT THE PROPERTY WHICH COULD HAVE BEEN
APPOINTED BY EXERCISE OF SUCH LAPSED POWERS EXCEEDS IN VALUE THE GREATER
OF THE FOLLOWING AMOUNTS:
  (1) $5,000, OR
  (2) 5 PERCENT OF THE AGGREGATE VALUE OF THE ASSETS OUT  OF  WHICH,  OR
THE PROCEEDS OF WHICH, THE EXERCISE OF THE LAPSED POWERS COULD BE SATIS-
FIED.
  (F) DATE OF CREATION OF POWER. FOR PURPOSES OF THIS SECTION A POWER OF
APPOINTMENT  CREATED  BY  A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
  S 2516. CERTAIN PROPERTY SETTLEMENTS. WHERE A HUSBAND AND  WIFE  ENTER
INTO  A  WRITTEN AGREEMENT RELATIVE TO THEIR MARITAL AND PROPERTY RIGHTS
AND DIVORCE OCCURS WITHIN THE 3-YEAR PERIOD BEGINNING ON THE DATE 1 YEAR
BEFORE SUCH AGREEMENT IS ENTERED INTO (WHETHER OR NOT SUCH AGREEMENT  IS
APPROVED  BY THE DIVORCE DECREE), ANY TRANSFERS OF PROPERTY OR INTERESTS
IN PROPERTY MADE PURSUANT TO SUCH AGREEMENT-

S. 6359--B                         290                        A. 8559--B

  (1) TO EITHER SPOUSE IN SETTLEMENT OF HIS OR HER MARITAL  OR  PROPERTY
RIGHTS, OR
  (2)  TO PROVIDE A REASONABLE ALLOWANCE FOR THE SUPPORT OF ISSUE OF THE
MARRIAGE DURING MINORITY,
  --SHALL BE DEEMED TO BE TRANSFERS MADE FOR A FULL AND ADEQUATE CONSID-
ERATION IN MONEY OR MONEY'S WORTH.
  S 2518. DISCLAIMERS. (A) GENERAL RULE. - FOR PURPOSES OF  THIS  SUBTI-
TLE, IF A PERSON MAKES A QUALIFIED DISCLAIMER WITH RESPECT TO ANY INTER-
EST IN PROPERTY, THIS SUBTITLE SHALL APPLY WITH RESPECT TO SUCH INTEREST
AS IF THE INTEREST HAD NEVER BEEN TRANSFERRED TO SUCH PERSON.
  (B)  QUALIFIED  DISCLAIMER  DEFINED. - FOR PURPOSES OF SUBSECTION (A),
THE TERM "QUALIFIED DISCLAIMER" MEANS  AN  IRREVOCABLE  AND  UNQUALIFIED
REFUSAL BY A PERSON TO ACCEPT AN INTEREST IN PROPERTY BUT ONLY IF -
  (1) SUCH REFUSAL IS IN WRITING,
  (2)  SUCH  WRITING  IS RECEIVED BY THE TRANSFEROR OF THE INTEREST, HIS
LEGAL REPRESENTATIVE, OR THE HOLDER OF THE LEGAL TITLE TO  THE  PROPERTY
TO  WHICH THE INTEREST RELATES NOT LATER THAN THE DATE WHICH IS 9 MONTHS
AFTER THE LATER OF -
  (A) THE DATE ON WHICH THE  TRANSFER  CREATING  THE  INTEREST  IN  SUCH
PERSON IS MADE, OR
  (B) THE DAY ON WHICH SUCH PERSON ATTAINS AGE 21,
  (3)  SUCH PERSON HAS NOT ACCEPTED THE INTEREST OR ANY OF ITS BENEFITS,
AND
  (4) AS A RESULT OF SUCH  REFUSAL,  THE  INTEREST  PASSES  WITHOUT  ANY
DIRECTION  ON  THE  PART  OF THE PERSON MAKING THE DISCLAIMER AND PASSES
EITHER -
  (A) TO THE SPOUSE OF THE DECEDENT, OR
  (B) TO A PERSON OTHER THAN THE PERSON MAKING THE DISCLAIMER.
  (C) OTHER RULES. FOR PURPOSES OF SUBSECTION (A)-
  (1) DISCLAIMER OF UNDIVIDED PORTION OF  INTEREST.  A  DISCLAIMER  WITH
RESPECT  TO AN UNDIVIDED PORTION OF AN INTEREST WHICH MEETS THE REQUIRE-
MENTS OF  THE  PRECEDING  SENTENCE  SHALL  BE  TREATED  AS  A  QUALIFIED
DISCLAIMER OF SUCH PORTION OF THE INTEREST.
  (2)  POWERS.  A  POWER WITH RESPECT TO PROPERTY SHALL BE TREATED AS AN
INTEREST IN SUCH PROPERTY.
  (3) CERTAIN TRANSFERS TREATED AS DISCLAIMERS. A  WRITTEN  TRANSFER  OF
THE TRANSFEROR'S ENTIRE INTEREST IN THE PROPERTY-
  (A) WHICH MEETS REQUIREMENTS SIMILAR TO THE REQUIREMENTS OF PARAGRAPHS
(2) AND (3) OF SUBSECTION (B), AND
  (B)  WHICH IS TO A PERSON OR PERSONS WHO WOULD HAVE RECEIVED THE PROP-
ERTY HAD THE TRANSFEROR MADE A QUALIFIED DISCLAIMER (WITHIN THE  MEANING
OF SUBSECTION (B)),
  --SHALL BE TREATED AS A QUALIFIED DISCLAIMER.
  S 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES. (A) GENERAL RULE
  --FOR  PURPOSES OF THIS CHAPTER AND CHAPTER 11, ANY DISPOSITION OF ALL
OR PART OF A QUALIFYING INCOME INTEREST FOR  LIFE  IN  ANY  PROPERTY  TO
WHICH  THIS SECTION APPLIES SHALL BE TREATED AS A TRANSFER OF ALL INTER-
ESTS IN SUCH PROPERTY OTHER THAN THE QUALIFYING INCOME INTEREST.
  (B) PROPERTY TO WHICH THIS SUBSECTION APPLIES. THIS SECTION APPLIES TO
ANY PROPERTY IF A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER  OF
SUCH PROPERTY TO THE DONOR-
  (1) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
  (2) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF.
  (C) CROSS REFERENCE
--FOR  RIGHT OF RECOVERY FOR GIFT TAX IN THE CASE OF PROPERTY TREATED AS
TRANSFERRED UNDER THIS SECTION, SEE SECTION 2207A(B).

S. 6359--B                         291                        A. 8559--B

  S 2522. CHARITABLE AND SIMILAR GIFTS. (A) CITIZENS  OR  RESIDENTS.  IN
COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR, THERE SHALL BE ALLOWED AS
A DEDUCTION IN THE CASE OF A CITIZEN OR RESIDENT THE AMOUNT OF ALL GIFTS
MADE DURING SUCH YEAR TO OR FOR THE USE OF-
  (1)  THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE-
OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
  (2) A CORPORATION, OR TRUST, OR COMMUNITY CHEST, FUND, OR  FOUNDATION,
ORGANIZED  AND OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIF-
IC, LITERARY, OR EDUCATIONAL PURPOSES, OR TO FOSTER NATIONAL OR INTERNA-
TIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF NO PART OF ITS ACTIVITIES
INVOLVE THE PROVISION OF ATHLETIC FACILITIES  OR  EQUIPMENT),  INCLUDING
THE  ENCOURAGEMENT  OF  ART AND THE PREVENTION OF CRUELTY TO CHILDREN OR
ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE  BENEFIT  OF
ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALIFIED FOR TAX
EXEMPTION  UNDER  SECTION 501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE
LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
CAMPAIGN  ON  BEHALF  OF  (OR IN OPPOSITION TO) ANY CANDIDATE FOR PUBLIC
OFFICE;
  (3) A FRATERNAL SOCIETY, ORDER, OR ASSOCIATION,  OPERATING  UNDER  THE
LODGE  SYSTEM,  BUT  ONLY  IF  SUCH GIFTS ARE TO BE USED EXCLUSIVELY FOR
RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY,  OR  EDUCATIONAL  PURPOSES,
INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND THE PREVENTION OF CRUELTY TO
CHILDREN OR ANIMALS;
  (4) POSTS OR ORGANIZATIONS OF WAR  VETERANS,  OR  AUXILIARY  UNITS  OR
SOCIETIES  OF  ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH POSTS, ORGANIZA-
TIONS, UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY  OF
ITS  POSSESSIONS,  AND  IF  NO PART OF THEIR NET EARNINGS INSURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
  RULES SIMILAR TO THE RULES OF SECTION 501(J) SHALL APPLY FOR  PURPOSES
OF PARAGRAPH (2).
  (B)  NONRESIDENTS.  IN  THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
UNITED STATES, THERE SHALL BE ALLOWED AS A DEDUCTION THE AMOUNT  OF  ALL
GIFTS MADE DURING SUCH YEAR TO OR FOR THE USE OF-
  (1)  THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE-
OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
  (2) A DOMESTIC CORPORATION  ORGANIZED  AND  OPERATED  EXCLUSIVELY  FOR
RELIGIOUS,  CHARITABLE,  SCIENTIFIC,  LITERARY, OR EDUCATIONAL PURPOSES,
INCLUDING THE ENCOURAGEMENT OF ART AND  THE  PREVENTION  OF  CRUELTY  TO
CHILDREN  OR ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALI-
FIED FOR TAX EXEMPTION UNDER SECTION 501(C)(3) BY REASON  OF  ATTEMPTING
TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
PUBLIC OFFICE;
  (3) A TRUST, OR COMMUNITY CHEST, FUND, OR  FOUNDATION,  ORGANIZED  AND
OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO SUBSTANTIAL PART OF THE
ACTIVITIES OF WHICH IS CARRYING ON PROPAGANDA, OR OTHERWISE  ATTEMPTING,
TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
PUBLIC OFFICE; BUT ONLY IF SUCH GIFTS ARE TO BE USED WITHIN  THE  UNITED
STATES EXCLUSIVELY FOR SUCH PURPOSES;

S. 6359--B                         292                        A. 8559--B

  (4)  A  FRATERNAL  SOCIETY, ORDER, OR ASSOCIATION, OPERATING UNDER THE
LODGE SYSTEM, BUT ONLY IF SUCH GIFTS ARE TO BE USED  WITHIN  THE  UNITED
STATES  EXCLUSIVELY  FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS;
  (5)  POSTS  OR  ORGANIZATIONS  OF  WAR VETERANS, OR AUXILIARY UNITS OR
SOCIETIES OF ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH  POSTS,  ORGANIZA-
TIONS,  UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY OF
ITS POSSESSIONS, AND IF NO PART OF THEIR  NET  EARNINGS  INURES  TO  THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
  (C)  DISALLOWANCE  OF  DEDUCTIONS  IN  CERTAIN CASES. (1) NO DEDUCTION
SHALL BE ALLOWED UNDER THIS SECTION FOR A GIFT TO OF 1 FOR THE USE OF AN
ORGANIZATION OR TRUST DESCRIBED IN SECTION 508(D) OR 4948(C)(4)  SUBJECT
TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.
  (2)  WHERE  A  DONOR  TRANSFERS AN INTEREST IN PROPERTY (OTHER THAN AN
INTEREST DESCRIBED IN SECTION 170(F)(3)(B)) TO A PERSON, OR FOR  A  USE,
DESCRIBED  IN SUBSECTION (A) OR (B) AND AN INTEREST IN THE SAME PROPERTY
IS RETAINED BY THE DONOR, OR IS TRANSFERRED OR HAS BEEN TRANSFERRED (FOR
LESS THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S  WORTH)
FROM  THE  DONOR  TO A PERSON, OR FOR A USE, NOT DESCRIBED IN SUBSECTION
(A) OR (B), NO DEDUCTION SHALL BE ALLOWED UNDER  THIS  SECTION  FOR  THE
INTEREST  WHICH  IS,  OR  HAS BEEN TRANSFERRED TO THE PERSON, OR FOR THE
USE, DESCRIBED IN SUBSECTION (A) OR (B), UNLESS-
  (A) IN THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN  A  TRUST
WHICH  IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE REMAINDER
UNITRUST (DESCRIBED IN SECTION 664) OR A POOLED INCOME  FUND  (DESCRIBED
IN SECTION 642(C)(5)), OR
  (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
A  GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF THE
FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
  (3) RULES SIMILAR TO THE RULES OF SECTION 2055(E)(4) SHALL  APPLY  FOR
PURPOSES OF PARAGRAPH (2).
  (4)  REFORMATIONS  TO  COMPLY  WITH PARAGRAPH (2). (A) IN GENERAL -- A
DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF ANY QUALI-
FIED REFORMATION (WITHIN THE MEANING OF SECTION 2055(E)(3)(B)).
  (B) RULES SIMILAR TO SECTION 2055(E)(3) TO APPLY --  FOR  PURPOSES  OF
THIS  PARAGRAPH,  RULES SIMILAR TO THE RULES OF SECTION 2055(E)(3) SHALL
APPLY.
  (5) CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.  A  DEDUCTION  OTHERWISE
ALLOWED  UNDER  SUBSECTION  (A)  FOR ANY CONTRIBUTION TO A DONOR ADVISED
FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF-
--(A) THE SPONSORING ORGANIZATION (AS  DEFINED  IN  SECTION  4966(D)(1))
WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT-
--(I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR
--(II)  A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN SECTION
4943(F)(5)(A)) WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III  SUPPORT-
ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
--(B)  THE  TAXPAYER  OBTAINS  A  CONTEMPORANEOUS WRITTEN ACKNOWLEDGMENT
(DETERMINED UNDER RULES SIMILAR TO THE RULES  OF  SECTION  170(F)(8)(C))
FROM  THE  SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH DONOR ADVISED
FUND THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE  ASSETS
CONTRIBUTED.
  (D)  SPECIAL RULE FOR IRREVOCABLE TRANSFERS OF EASEMENTS IN REAL PROP-
ERTY. A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A)  IN  RESPECT  OF
ANY  TRANSFER  OF  A  QUALIFIED  REAL  PROPERTY  INTEREST (AS DEFINED IN

S. 6359--B                         293                        A. 8559--B

SECTION 170(H)(2)(C)) WHICH MEETS THE  REQUIREMENTS  OF  SECTION  170(H)
(WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
  (E) SPECIAL RULES FOR FRACTIONAL GIFTS
  (1) DENIAL OF DEDUCTION IN CERTAIN CASES
  (A) IN GENERAL
--NO  DEDUCTION  SHALL  BE  ALLOWED  FOR  A CONTRIBUTION OF AN UNDIVIDED
PORTION OF A TAXPAYER'S ENTIRE INTEREST IN  TANGIBLE  PERSONAL  PROPERTY
UNLESS  ALL  INTERESTS  IN THE PROPERTY ARE HELD IMMEDIATELY BEFORE SUCH
CONTRIBUTION BY-
--(I) THE TAXPAYER, OR
--(II) THE TAXPAYER AND THE DONEE.
  (B) EXCEPTIONS
--THE SECRETARY MAY, BY REGULATION, PROVIDE FOR EXCEPTIONS  TO  SUBPARA-
GRAPH (A) IN CASES WHERE ALL PERSONS WHO HOLD AN INTEREST IN THE PROPER-
TY MAKE PROPORTIONAL CONTRIBUTIONS OF AN UNDIVIDED PORTION OF THE ENTIRE
INTEREST HELD BY SUCH PERSONS.
  (2) RECAPTURE OF DEDUCTION IN CERTAIN CASES; ADDITION TO TAX
  (A)  IN  GENERAL.  THE SECRETARY SHALL PROVIDE FOR THE RECAPTURE OF AN
AMOUNT EQUAL TO ANY DEDUCTION ALLOWED UNDER THIS SECTION (PLUS INTEREST)
WITH RESPECT TO ANY CONTRIBUTION OF AN UNDIVIDED PORTION OF A TAXPAYER'S
ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY-
--(I) IN ANY CASE IN WHICH THE DONOR DOES  NOT  CONTRIBUTE  ALL  OF  THE
REMAINING  INTERESTS IN SUCH PROPERTY TO THE DONEE (OR, IF SUCH DONEE IS
NO LONGER IN EXISTENCE, TO ANY PERSON DESCRIBED IN SECTION 170(C)) ON OR
BEFORE THE EARLIER OF-
--(I) THE DATE THAT IS 10 YEARS AFTER THE DATE OF THE INITIAL FRACTIONAL
CONTRIBUTION, OR
--(II) THE DATE OF THE DEATH OF THE DONOR, AND
--(II) IN ANY CASE IN WHICH THE DONEE HAS NOT, DURING THE PERIOD  BEGIN-
NING  ON  THE  DATE OF THE INITIAL FRACTIONAL CONTRIBUTION AND ENDING ON
THE DATE DESCRIBED IN CLAUSE (I)-
--(I) HAD SUBSTANTIAL PHYSICAL POSSESSION OF THE PROPERTY, AND
--(II) USED THE PROPERTY IN A USE WHICH IS RELATED TO A PURPOSE OR FUNC-
TION CONSTITUTING THE  BASIS  FOR  THE  ORGANIZATIONS'  EXEMPTION  UNDER
SECTION 501.
  (B)  ADDITION TO TAX. THE TAX IMPOSED UNDER THIS CHAPTER FOR ANY TAXA-
BLE YEAR FOR WHICH THERE IS A RECAPTURE UNDER SUBPARAGRAPH (A) SHALL  BE
INCREASED BY 10 PERCENT OF THE AMOUNT SO RECAPTURED.
  (C)  INITIAL  FRACTIONAL CONTRIBUTION. FOR PURPOSES OF THIS PARAGRAPH,
THE TERM "INITIAL FRACTIONAL CONTRIBUTION" MEANS, WITH  RESPECT  TO  ANY
DONOR,  THE  FIRST  GIFT  OF  AN UNDIVIDED PORTION OF THE DONOR'S ENTIRE
INTEREST IN ANY TANGIBLE PERSONAL PROPERTY  FOR  WHICH  A  DEDUCTION  IS
ALLOWED UNDER SUBSECTION (A) OR (B).
  (F) CROSS REFERENCES
--(1)  FOR  TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD CARE, SEE
SECTION 501(K).
--(2) FOR EXEMPTION OF CERTAIN GIFTS TO OR FOR THE BENEFIT OF THE UNITED
STATES AND FOR RULES OF CONSTRUCTION WITH RESPECT TO  CERTAIN  BEQUESTS,
SEE SECTION 2055(F).
--(3)  FOR TREATMENT OF GIFTS TO OR FOR THE USE OF INDIAN TRIBAL GOVERN-
MENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
  S 2523. GIFT TO SPOUSE (A)  ALLOWANCE  OF  DEDUCTION.  WHERE  A  DONOR
TRANSFERS  DURING THE CALENDAR YEAR BY GIFT AN INTEREST IN PROPERTY TO A
DONEE WHO AT THE TIME OF THE GIFT IS THE DONOR'S SPOUSE, THERE SHALL  BE
ALLOWED  AS A DEDUCTION IN COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR
AN AMOUNT WITH RESPECT TO SUCH INTEREST EQUAL TO ITS VALUE.

S. 6359--B                         294                        A. 8559--B

  (B) LIFE ESTATE OR OTHER TERMINABLE INTEREST. WHERE, ON THE  LAPSE  OF
TIME, ON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF
AN  EVENT  OR  CONTINGENCY  TO  OCCUR,  SUCH INTEREST TRANSFERRED TO THE
SPOUSE WILL TERMINATE OR  FAIL,  NO  DEDUCTION  SHALL  BE  ALLOWED  WITH
RESPECT TO SUCH INTEREST-
  (1)  IF  THE DONOR RETAINS IN HIMSELF, OR TRANSFERS OR HAS TRANSFERRED
(FOR LESS THAN AN ADEQUATE AND FULL CONSIDERATION IN  MONEY  OR  MONEY'S
WORTH) TO ANY PERSON OTHER THAN SUCH DONEE SPOUSE (OR THE ESTATE OF SUCH
SPOUSE),  AN  INTEREST  IN  SUCH  PROPERTY,  AND  IF  BY  REASON OF SUCH
RETENTION OR TRANSFER THE DONOR (OR HIS HEIRS OR ASSIGNS) OR SUCH PERSON
(OR HIS HEIRS OR ASSIGNS) MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY
AFTER SUCH TERMINATION OR FAILURE OF THE  INTEREST  TRANSFERRED  TO  THE
DONEE SPOUSE; OR
  (2)  IF  THE  DONOR IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE
HAS A POWER TO APPOINT AN INTEREST IN SUCH PROPERTY WHICH HE  CAN  EXER-
CISE  (EITHER  ALONE  OR  IN CONJUNCTION WITH ANY PERSON) IN SUCH MANNER
THAT THE APPOINTEE MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY  AFTER
SUCH  TERMINATION  OR  FAILURE  OF THE INTEREST TRANSFERRED TO THE DONEE
SPOUSE. FOR PURPOSES OF THIS PARAGRAPH, THE DONOR SHALL BE CONSIDERED AS
HAVING IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE SUCH POWER  TO
APPOINT EVEN THOUGH SUCH POWER CANNOT BE EXERCISED UNTIL AFTER THE LAPSE
OF TIME, UPON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAIL-
URE OF AN EVENT OR CONTINGENCY TO OCCUR.
  AN  EXERCISE  OR  RELEASE AT ANY TIME BY THE DONOR, EITHER ALONE OR IN
CONJUNCTION WITH ANY PERSON, OF A POWER TO APPOINT AN INTEREST IN  PROP-
ERTY, EVEN THOUGH NOT OTHERWISE A TRANSFER, SHALL, FOR PURPOSES OF PARA-
GRAPH  (1),  BE  CONSIDERED  AS A TRANSFER BY HIM. EXCEPT AS PROVIDED IN
SUBSECTION (E), WHERE AT THE TIME OF THE TRANSFER IT  IS  IMPOSSIBLE  TO
ASCERTAIN  THE  PARTICULAR  PERSON  OR  PERSONS WHO MAY RECEIVE FROM THE
DONOR AN INTEREST IN PROPERTY  SO  TRANSFERRED  BY  HIM,  SUCH  INTEREST
SHALL,  FOR PURPOSES OF PARAGRAPH (1), BE CONSIDERED AS TRANSFERRED TO A
PERSON OTHER THAN THE DONEE SPOUSE.
  (C) INTEREST IN UNIDENTIFIED ASSETS. WHERE THE ASSETS OUT OF WHICH, OR
THE PROCEEDS OF WHICH, THE INTEREST TRANSFERRED TO THE DONEE SPOUSE  MAY
BE  SATISFIED INCLUDE A PARTICULAR ASSET OR ASSETS WITH RESPECT TO WHICH
NO DEDUCTION WOULD BE ALLOWED IF SUCH ASSET OR ASSETS  WERE  TRANSFERRED
FROM  THE  DONOR  TO  SUCH SPOUSE, THEN THE VALUE OF THE INTEREST TRANS-
FERRED TO SUCH SPOUSE SHALL, FOR PURPOSES OF SUBSECTION (A), BE  REDUCED
BY THE AGGREGATE VALUE OF SUCH PARTICULAR ASSETS.
  (D)  JOINT  INTERESTS.  IF  THE  INTEREST  IS TRANSFERRED TO THE DONEE
SPOUSE AS SOLE JOINT TENANT WITH THE DONOR OR AS TENANT BY THE ENTIRETY,
THE INTEREST OF THE DONOR IN THE PROPERTY WHICH EXISTS SOLELY BY  REASON
OF  THE POSSIBILITY THAT THE DONOR MAY SURVIVE THE DONEE SPOUSE, OR THAT
THERE MAY OCCUR A SEVERANCE OF THE TENANCY, SHALL NOT BE CONSIDERED  FOR
PURPOSES  OF  SUBSECTION  (B)  AS  AN  INTEREST RETAINED BY THE DONOR IN
HIMSELF.
  (E) LIFE ESTATE WITH POWER OF APPOINTMENT IN DONEE SPOUSE.  WHERE  THE
DONOR  TRANSFERS AN INTEREST IN PROPERTY, IF BY SUCH TRANSFER HIS SPOUSE
IS ENTITLED FOR LIFE TO ALL OF THE INCOME FROM THE ENTIRE  INTEREST,  OR
ALL  THE  INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE ANNUALLY OR AT
MORE FREQUENT INTERVALS, WITH POWER IN THE DONEE SPOUSE TO  APPOINT  THE
ENTIRE  INTEREST, OR SUCH SPECIFIC PORTION (EXERCISABLE IN FAVOR OF SUCH
DONEE SPOUSE, OR OF THE ESTATE OF SUCH DONEE  SPOUSE,  OR  IN  FAVOR  OF
EITHER, WHETHER OR NOT IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF
OTHERS),  AND  WITH  NO POWER IN ANY OTHER PERSON TO APPOINT ANY PART OF

S. 6359--B                         295                        A. 8559--B

SUCH INTEREST, OR SUCH PORTION, TO  ANY  PERSON  OTHER  THAN  THE  DONEE
SPOUSE-
  (1)  THE INTEREST, OR SUCH PORTION, SO TRANSFERRED SHALL, FOR PURPOSES
OF SUBSECTION (A) BE CONSIDERED AS TRANSFERRED TO THE DONEE SPOUSE, AND
  (2) NO PART OF THE INTEREST, OR SUCH PORTION,  SO  TRANSFERRED  SHALL,
FOR  PURPOSES  OF  SUBSECTION  (B)(1),  BE CONSIDERED AS RETAINED IN THE
DONOR OR TRANSFERRED TO ANY PERSON OTHER THAN THE DONEE SPOUSE.
  THIS SUBSECTION SHALL APPLY ONLY IF, BY SUCH TRANSFER, SUCH  POWER  IN
THE DONEE SPOUSE TO APPOINT THE INTEREST, OR SUCH PORTION, WHETHER EXER-
CISABLE  BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE ALONE AND
IN ALL EVENTS.   FOR PURPOSES OF THIS  SUBSECTION,  THE  TERM  "SPECIFIC
PORTION"  ONLY INCLUDES A PORTION DETERMINED ON A FRACTIONAL OR PERCENT-
AGE BASIS.
  (F) ELECTION WITH RESPECT TO LIFE ESTATE  FOR  DONEE  SPOUSE.  (1)  IN
GENERAL
  IN THE CASE OF QUALIFIED TERMINABLE INTEREST PROPERTY-
  (A)  FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED AS
TRANSFERRED TO THE DONEE SPOUSE, AND
  (B) FOR PURPOSES OF SUBSECTION (B)(1), NO PART OF SUCH PROPERTY  SHALL
BE  CONSIDERED  AS  RETAINED  IN  THE DONOR OR TRANSFERRED TO ANY PERSON
OTHER THAN THE DONEE SPOUSE.
  (2) QUALIFIED TERMINABLE  INTEREST  PROPERTY.  FOR  PURPOSES  OF  THIS
SUBSECTION,  THE TERM "QUALIFIED TERMINABLE INTEREST PROPERTY" MEANS ANY
PROPERTY-
  (A) WHICH IS TRANSFERRED BY THE DONOR SPOUSE,
  (B) IN WHICH THE DONEE SPOUSE HAS A  QUALIFYING  INCOME  INTEREST  FOR
LIFE, AND
  (C) TO WHICH AN ELECTION UNDER THIS SUBSECTION APPLIES.
  (3)  CERTAIN  RULES  MADE APPLICABLE. FOR PURPOSES OF THIS SUBSECTION,
RULES SIMILAR TO THE RULES OF CLAUSES (II), (III), AND (IV)  OF  SECTION
2056(B)(7)(B)  SHALL  APPLY  AND  THE RULES OF SECTION 2056(B)(10) SHALL
APPLY.
  (4) ELECTION. (A) TIME AND MANNER. AN ELECTION UNDER  THIS  SUBSECTION
WITH  RESPECT  TO  ANY  PROPERTY  SHALL  BE  MADE  ON OR BEFORE THE DATE
PRESCRIBED BY SECTION 6075(B) FOR FILING A GIFT TAX RETURN WITH  RESPECT
TO THE TRANSFER (DETERMINED WITHOUT REGARD TO SECTION 6019(2)) AND SHALL
BE MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
  (B)  ELECTION  IRREVOCABLE.  AN  ELECTION  UNDER THIS SUBSECTION, ONCE
MADE, SHALL BE IRREVOCABLE.
  (5) TREATMENT OF INTEREST RETAINED BY DONOR SPOUSE. (A) IN GENERAL. IN
THE CASE OF ANY QUALIFIED TERMINABLE INTEREST PROPERTY-
  (I) SUCH PROPERTY SHALL NOT BE INCLUDIBLE IN THE GROSS ESTATE  OF  THE
DONOR SPOUSE, AND
  (II)  ANY  SUBSEQUENT  TRANSFER  BY THE DONOR SPOUSE OF AN INTEREST IN
SUCH PROPERTY SHALL NOT BE TREATED AS A TRANSFER FOR  PURPOSES  OF  THIS
CHAPTER.
  (B)  SUBPARAGRAPH  (A)  NOT  TO  APPLY AFTER TRANSFER BY DONEE SPOUSE.
SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO ANY PROPERTY AFTER  THE
DONEE  SPOUSE  IS  TREATED  AS  HAVING  TRANSFERRED  SUCH PROPERTY UNDER
SECTION 2519, OR SUCH PROPERTY IS INCLUDIBLE IN THE DONEE SPOUSE'S GROSS
ESTATE UNDER SECTION 2044.
  (6) TREATMENT OF JOINT AND SURVIVOR ANNUITIES. IN THE CASE OF A  JOINT
AND  SURVIVOR  ANNUITY WHERE ONLY THE DONOR SPOUSE AND DONEE SPOUSE HAVE
THE RIGHT TO RECEIVE PAYMENTS BEFORE THE DEATH OF  THE  LAST  SPOUSE  TO
DIE-

S. 6359--B                         296                        A. 8559--B

--(A)  THE  DONEE  SPOUSE'S  INTEREST  SHALL  BE TREATED AS A QUALIFYING
INCOME INTEREST FOR LIFE,
--(B) THE DONOR SPOUSE SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER
THIS  SUBSECTION  WITH  RESPECT  TO SUCH ANNUITY UNLESS THE DONOR SPOUSE
OTHERWISE ELECTS ON OR BEFORE THE DATE SPECIFIED IN PARAGRAPH (4)(A),
--(C) PARAGRAPH (5) AND SECTION  2519  SHALL  NOT  APPLY  TO  THE  DONOR
SPOUSE'S INTEREST IN THE ANNUITY, AND
--(D)  IF THE DONEE SPOUSE DIES BEFORE THE DONOR SPOUSE, NO AMOUNT SHALL
BE INCLUDIBLE IN THE GROSS ESTATE OF THE DONEE SPOUSE UNDER SECTION 2044
WITH RESPECT TO SUCH ANNUITY.
  AN ELECTION UNDER SUBPARAGRAPH (B), ONCE MADE, SHALL BE IRREVOCABLE.
  (G) SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS. (1) IN GENERAL.  IF,
AFTER THE TRANSFER, THE DONEE SPOUSE IS THE ONLY NONCHARITABLE BENEFICI-
ARY  (OTHER  THAN  THE DONOR) OF A QUALIFIED CHARITABLE REMAINDER TRUST,
SUBSECTION (B) SHALL NOT APPLY TO THE INTEREST IN SUCH  TRUST  WHICH  IS
TRANSFERRED TO THE DONEE SPOUSE.
  (2)  DEFINITIONS. FOR PURPOSES OF PARAGRAPH (1), THE TERM "NONCHARITA-
BLE BENEFICIARY" AND "QUALIFIED CHARITABLE  REMAINDER  TRUST"  HAVE  THE
MEANINGS GIVEN TO SUCH TERMS BY SECTION 2056(B)(8)(B).
  (H)  DENIAL  OF DOUBLE DEDUCTION. NOTHING IN THIS SECTION OR ANY OTHER
PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-
ERTY TO BE DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE  WITH  RESPECT  TO
THE SAME DONOR.
  S 2524. EXTENT OF DEDUCTIONS. THE DEDUCTIONS PROVIDED IN SECTIONS 2522
AND  2523  SHALL  BE  ALLOWED  ONLY TO THE EXTENT THAT THE GIFTS THEREIN
SPECIFIED ARE INCLUDED  IN  THE  AMOUNT  OF  GIFTS  AGAINST  WHICH  SUCH
DEDUCTIONS ARE APPLIED.
  S 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CERTAIN INTER-
ESTS IN CORPORATIONS OR PARTNERSHIPS. (A) VALUATION RULES. (1) IN GENER-
AL.   SOLELY FOR PURPOSES OF DETERMINING WHETHER A TRANSFER OF AN INTER-
EST IN A CORPORATION OR PARTNERSHIP TO (OR FOR THE BENEFIT OF) A  MEMBER
OF  THE  TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE OF SUCH TRANSFER),
THE VALUE OF ANY RIGHT-
--(A) WHICH IS DESCRIBED  IN  SUBPARAGRAPH  (A)  OR  (B)  OF  SUBSECTION
(B)(1), AND
--(B)  WHICH IS WITH RESPECT TO ANY APPLICABLE RETAINED INTEREST THAT IS
HELD BY THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER IMMEDIATELY  AFTER
THE TRANSFER,
  --SHALL  BE  DETERMINED  UNDER PARAGRAPH (3). THIS PARAGRAPH SHALL NOT
APPLY TO THE TRANSFER OF ANY INTEREST FOR WHICH  MARKET  QUOTATIONS  ARE
READILY AVAILABLE (AS OF THE DATE OF TRANSFER) ON AN ESTABLISHED SECURI-
TIES MARKET.
  (2)  EXCEPTIONS FOR MARKETABLE RETAINED INTERESTS, ETC.  PARAGRAPH (1)
SHALL NOT APPLY TO ANY RIGHT WITH  RESPECT  TO  AN  APPLICABLE  RETAINED
INTEREST IF-
--(A)  MARKET  QUOTATIONS  ARE  READILY AVAILABLE (AS OF THE DATE OF THE
TRANSFER) FOR SUCH INTEREST ON AN ESTABLISHED SECURITIES MARKET,
--(B) SUCH INTEREST IS OF THE SAME CLASS AS THE TRANSFERRED INTEREST, OR
--(C) SUCH INTEREST IS PROPORTIONALLY THE SAME AS THE TRANSFERRED INTER-
EST, WITHOUT REGARD TO NONLAPSING DIFFERENCES IN VOTING POWER (OR, FOR A
PARTNERSHIP, NONLAPSING DIFFERENCES WITH RESPECT TO MANAGEMENT AND LIMI-
TATIONS ON LIABILITY).
--SUBPARAGRAPH (C) SHALL NOT APPLY TO ANY INTEREST IN A  PARTNERSHIP  IF
THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER HAS THE RIGHT TO ALTER THE
LIABILITY  OF  THE  TRANSFEREE  OF  THE  TRANSFERRED PROPERTY. EXCEPT AS
PROVIDED BY THE SECRETARY, ANY DIFFERENCE DESCRIBED IN SUBPARAGRAPH  (C)

S. 6359--B                         297                        A. 8559--B

WHICH LAPSES BY REASON OF ANY FEDERAL OR STATE LAW SHALL BE TREATED AS A
NONLAPSING DIFFERENCE FOR PURPOSES OF SUCH SUBPARAGRAPH.
  (3)  VALUATION OF RIGHTS TO WHICH PARAGRAPH (1) APPLIES. (A) IN GENER-
AL.  THE VALUE OF ANY RIGHT DESCRIBED IN PARAGRAPH  (1),  OTHER  THAN  A
DISTRIBUTION  RIGHT  WHICH  CONSISTS  OF  A RIGHT TO RECEIVE A QUALIFIED
PAYMENT, SHALL BE TREATED AS BEING ZERO.
  (B) VALUATION OF CERTAIN QUALIFIED PAYMENTS. IF-
--(I) ANY APPLICABLE RETAINED  INTEREST  CONFERS  A  DISTRIBUTION  RIGHT
WHICH CONSISTS OF THE RIGHT TO A QUALIFIED PAYMENT, AND
--(II)  THERE ARE 1 OR MORE LIQUIDATION, PUT, CALL, OR CONVERSION RIGHTS
WITH RESPECT TO SUCH INTEREST, THE VALUE OF ALL  SUCH  RIGHTS  SHALL  BE
DETERMINED  AS  IF EACH LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT WERE
EXERCISED IN THE MANNER RESULTING IN THE LOWEST VALUE  BEING  DETERMINED
FOR ALL SUCH RIGHTS.
  (C)  VALUATION  OF  QUALIFIED  PAYMENTS  WHERE  NO  LIQUIDATION,  ETC.
RIGHTS. IN  THE  CASE  OF  AN  APPLICABLE  RETAINED  INTEREST  WHICH  IS
DESCRIBED IN SUBPARAGRAPH (B)(I) BUT NOT SUBPARAGRAPH (B)(II), THE VALUE
OF  THE  DISTRIBUTION  RIGHT  SHALL BE DETERMINED WITHOUT REGARD TO THIS
SECTION.
  (4) MINIMUM VALUATION OF JUNIOR EQUITY. (A) IN GENERAL. IN THE CASE OF
A TRANSFER DESCRIBED IN PARAGRAPH (1) OF A JUNIOR EQUITY INTEREST  IN  A
CORPORATION OR PARTNERSHIP, SUCH INTEREST SHALL IN NO EVENT BE VALUED AT
AN  AMOUNT  LESS  THAN  THE VALUE WHICH WOULD BE DETERMINED IF THE TOTAL
VALUE OF ALL OF THE JUNIOR EQUITY INTERESTS IN THE ENTITY WERE EQUAL  TO
10 PERCENT OF THE SUM OF-
--(I)  THE  TOTAL  VALUE  OF ALL OF THE EQUITY INTERESTS IN SUCH ENTITY,
PLUS
--(II) THE TOTAL AMOUNT OF INDEBTEDNESS OF SUCH ENTITY TO THE TRANSFEROR
(OR AN APPLICABLE FAMILY MEMBER).
  (B) DEFINITIONS. FOR PURPOSES OF THIS PARAGRAPH-
  (I) JUNIOR EQUITY INTEREST. THE TERM "JUNIOR  EQUITY  INTEREST"  MEANS
COMMON  STOCK OR, IN THE CASE OF A PARTNERSHIP, ANY PARTNERSHIP INTEREST
UNDER WHICH THE RIGHTS AS TO INCOME  AND  CAPITAL  (OR,  TO  THE  EXTENT
PROVIDED  IN REGULATIONS, THE RIGHTS AS TO EITHER INCOME OR CAPITAL) ARE
JUNIOR TO THE RIGHTS OF ALL OTHER CLASSES OF EQUITY INTERESTS.
  (II) EQUITY INTEREST. THE TERM "EQUITY INTEREST" MEANS  STOCK  OR  ANY
INTEREST AS A PARTNER, AS THE CASE MAY BE.
  (B) APPLICABLE RETAINED INTERESTS. FOR PURPOSES OF THIS SECTION-
  (1)  IN  GENERAL.  THE  TERM  "APPLICABLE RETAINED INTEREST" MEANS ANY
INTEREST IN AN ENTITY WITH RESPECT TO WHICH THERE IS-
--(A) A DISTRIBUTION RIGHT, BUT ONLY IF, IMMEDIATELY BEFORE THE TRANSFER
DESCRIBED IN SUBSECTION (A)(1), THE  TRANSFEROR  AND  APPLICABLE  FAMILY
MEMBERS  HOLD  (AFTER  APPLICATION  OF SUBSECTION (E)(3)) CONTROL OF THE
ENTITY, OR
--(B) A LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT.
  (2) CONTROL. FOR PURPOSES OF PARAGRAPH (1)-
  (A) CORPORATIONS. IN THE CASE OF A  CORPORATION,  THE  TERM  "CONTROL"
MEANS THE HOLDING OF AT LEAST 50 PERCENT (BY VOTE OR VALUE) OF THE STOCK
OF THE CORPORATION.
  (B)  PARTNERSHIPS.  IN  THE  CASE OF A PARTNERSHIP, THE TERM "CONTROL"
MEANS-
--(I) THE HOLDING OF AT LEAST 50  PERCENT  OF  THE  CAPITAL  OR  PROFITS
INTERESTS IN THE PARTNERSHIP, OR
--(II) IN THE CASE OF A LIMITED PARTNERSHIP, THE HOLDING OF ANY INTEREST
AS A GENERAL PARTNER.

S. 6359--B                         298                        A. 8559--B

  (C)  APPLICABLE  FAMILY  MEMBER.  FOR PURPOSES OF THIS SUBSECTION, THE
TERM "APPLICABLE FAMILY MEMBER" INCLUDES ANY LINEAL  DESCENDANT  OF  ANY
PARENT OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE.
  (C) DISTRIBUTION AND OTHER RIGHTS; QUALIFIED PAYMENTS. FOR PURPOSES OF
THIS SECTION-
  (1)  DISTRIBUTION RIGHT. (A) IN GENERAL. THE TERM "DISTRIBUTION RIGHT"
MEANS-
--(I) A RIGHT TO DISTRIBUTIONS FROM A CORPORATION WITH  RESPECT  TO  ITS
STOCK, AND
--(II)  A  RIGHT  TO  DISTRIBUTIONS FROM A PARTNERSHIP WITH RESPECT TO A
PARTNER'S INTEREST IN THE PARTNERSHIP.
  (B) EXCEPTIONS. THE TERM "DISTRIBUTION RIGHT" DOES NOT INCLUDE-
--(I) A RIGHT TO DISTRIBUTIONS WITH RESPECT TO  ANY  INTEREST  WHICH  IS
JUNIOR TO THE RIGHTS OF THE TRANSFERRED INTEREST,
--(II) ANY LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT, OR
--(III) ANY RIGHT TO RECEIVE ANY GUARANTEED PAYMENT DESCRIBED IN SECTION
707(C) OF A FIXED AMOUNT.
  (2)  LIQUIDATION,  ETC. RIGHTS. (A) IN GENERAL. THE TERM "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" MEANS ANY  LIQUIDATION,  PUT,  CALL,  OR
CONVERSION  RIGHT,  OR ANY SIMILAR RIGHT, THE EXERCISE OR NONEXERCISE OF
WHICH AFFECTS THE VALUE OF THE TRANSFERRED INTEREST.
  (B) EXCEPTION FOR FIXED RIGHTS. (I) IN GENERAL. THE TERM "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH MUST BE
EXERCISED AT A SPECIFIC TIME AND AT A SPECIFIC AMOUNT.
  (II) TREATMENT OF CERTAIN RIGHTS. IF A RIGHT IS ASSUMED  TO  BE  EXER-
CISED  IN  A  PARTICULAR  MANNER  UNDER SUBSECTION (A)(3)(B), SUCH RIGHT
SHALL BE TREATED AS SO EXERCISED FOR PURPOSES OF CLAUSE (I).
  (C) EXCEPTION FOR CERTAIN RIGHTS TO CONVERT.  THE  TERM  "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH-
--(I)  IS A RIGHT TO CONVERT INTO A FIXED NUMBER (OR A FIXED PERCENTAGE)
OF SHARES OF THE SAME CLASS OF STOCK IN A CORPORATION AS THE TRANSFERRED
STOCK IN SUCH CORPORATION UNDER SUBSECTION (A)(1) (OR STOCK WHICH  WOULD
BE OF THE SAME CLASS BUT FOR NONLAPSING DIFFERENCES IN VOTING POWER),
--(II) IS NONLAPSING,
--(III)  IS  SUBJECT  TO  PROPORTIONATE ADJUSTMENTS FOR SPLITS, COMBINA-
TIONS, RECLASSIFICATIONS, AND SIMILAR CHANGES IN THE CAPITAL STOCK, AND
--(IV) IS SUBJECT  TO  ADJUSTMENTS  SIMILAR  TO  THE  ADJUSTMENTS  UNDER
SUBSECTION (D) FOR ACCUMULATED BUT UNPAID DISTRIBUTIONS.
--A  RULE  SIMILAR TO THE RULE OF THE PRECEDING SENTENCE SHALL APPLY FOR
PARTNERSHIPS.
  (3) QUALIFIED PAYMENT. (A) IN GENERAL. EXCEPT AS OTHERWISE PROVIDED IN
THIS PARAGRAPH, THE TERM "QUALIFIED PAYMENT" MEANS ANY DIVIDEND  PAYABLE
ON  A PERIODIC BASIS UNDER ANY CUMULATIVE PREFERRED STOCK (OR A COMPARA-
BLE PAYMENT UNDER ANY PARTNERSHIP INTEREST)  TO  THE  EXTENT  THAT  SUCH
DIVIDEND (OR COMPARABLE PAYMENT) IS DETERMINED AT A FIXED RATE.
  (B)  TREATMENT OF VARIABLE RATE PAYMENTS. FOR PURPOSES OF SUBPARAGRAPH
(A), A PAYMENT SHALL BE TREATED AS FIXED AS TO RATE IF SUCH  PAYMENT  IS
DETERMINED  AT  A  RATE  WHICH BEARS A FIXED RELATIONSHIP TO A SPECIFIED
MARKET INTEREST RATE.
  (C) ELECTIONS. (I) IN GENERAL. PAYMENTS UNDER ANY INTEREST HELD  BY  A
TRANSFEROR  WHICH  (WITHOUT  REGARD  TO THIS SUBPARAGRAPH) ARE QUALIFIED
PAYMENTS SHALL BE TREATED AS QUALIFIED PAYMENTS  UNLESS  THE  TRANSFEROR
ELECTS  NOT  TO  TREAT  SUCH  PAYMENTS  AS  QUALIFIED PAYMENTS. PAYMENTS
DESCRIBED IN THE PRECEDING SENTENCE WHICH  ARE  HELD  BY  AN  APPLICABLE
FAMILY MEMBER SHALL BE TREATED AS QUALIFIED PAYMENTS ONLY IF SUCH MEMBER
ELECTS TO TREAT SUCH PAYMENTS AS QUALIFIED PAYMENTS.

S. 6359--B                         299                        A. 8559--B

  (II)  ELECTION  TO  HAVE  INTEREST  TREATED  AS  QUALIFIED  PAYMENT. A
TRANSFEROR OR APPLICABLE FAMILY MEMBER HOLDING  ANY  DISTRIBUTION  RIGHT
WHICH  (WITHOUT  REGARD TO THIS SUBPARAGRAPH) IS NOT A QUALIFIED PAYMENT
MAY ELECT TO TREAT SUCH RIGHT AS A QUALIFIED PAYMENT, TO BE PAID IN  THE
AMOUNTS  AND  AT  THE  TIMES  SPECIFIED  IN SUCH ELECTION. THE PRECEDING
SENTENCE SHALL APPLY ONLY TO THE EXTENT THAT THE AMOUNTS  AND  TIMES  SO
SPECIFIED  ARE  NOT  INCONSISTENT  WITH  THE UNDERLYING LEGAL INSTRUMENT
GIVING RISE TO SUCH RIGHT.
  (III) ELECTIONS IRREVOCABLE. ANY ELECTION UNDER THIS SUBPARAGRAPH WITH
RESPECT TO AN INTEREST SHALL, ONCE MADE, BE IRREVOCABLE.
  (D) TRANSFER TAX TREATMENT OF CUMULATIVE BUT UNPAID DISTRIBUTIONS. (1)
IN GENERAL. IF A TAXABLE EVENT OCCURS WITH RESPECT TO  ANY  DISTRIBUTION
RIGHT  TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED, THE FOLLOWING SHALL
BE INCREASED BY THE AMOUNT DETERMINED UNDER PARAGRAPH (2):
--(A) THE TAXABLE ESTATE OF THE TRANSFEROR IN  THE  CASE  OF  A  TAXABLE
EVENT DESCRIBED IN PARAGRAPH (3)(A)(I).
--(B) THE TAXABLE GIFTS OF THE TRANSFEROR FOR THE CALENDAR YEAR IN WHICH
THE  TAXABLE  EVENT  OCCURS  IN THE CASE OF A TAXABLE EVENT DESCRIBED IN
PARAGRAPH (3)(A)(II) OR (III).
  (2) AMOUNT OF INCREASE. (A) IN GENERAL. THE  AMOUNT  OF  THE  INCREASE
DETERMINED UNDER THIS PARAGRAPH SHALL BE THE EXCESS (IF ANY) OF-
--(I)  THE  VALUE  OF  THE  QUALIFIED PAYMENTS PAYABLE DURING THE PERIOD
BEGINNING ON THE DATE OF THE TRANSFER UNDER SUBSECTION (A)(1) AND ENDING
ON THE DATE OF THE TAXABLE EVENT DETERMINED AS IF-
--(I) ALL SUCH PAYMENTS WERE PAID ON THE DATE PAYMENT WAS DUE, AND
--(II) ALL SUCH PAYMENTS WERE REINVESTED BY THE  TRANSFEROR  AS  OF  THE
DATE  OF PAYMENT AT A YIELD EQUAL TO THE DISCOUNT RATE USED IN DETERMIN-
ING  THE  VALUE  OF  THE  APPLICABLE  RETAINED  INTEREST  DESCRIBED   IN
SUBSECTION (A)(1), OVER
  (II) THE VALUE OF SUCH PAYMENTS PAID DURING SUCH PERIOD COMPUTED UNDER
CLAUSE  (I)  ON  THE  BASIS OF THE TIME WHEN SUCH PAYMENTS WERE ACTUALLY
PAID.
  (B) LIMITATION ON AMOUNT OF INCREASE. (I) IN GENERAL.  THE  AMOUNT  OF
THE  INCREASE  UNDER  SUBPARAGRAPH  (A)  SHALL NOT EXCEED THE APPLICABLE
PERCENTAGE OF THE EXCESS (IF ANY) OF-
--(I) THE VALUE (DETERMINED AS OF THE DATE OF THE TAXABLE EVENT) OF  ALL
EQUITY  INTERESTS  IN  THE  ENTITY  WHICH  ARE  JUNIOR TO THE APPLICABLE
RETAINED INTEREST, OVER
--(II) THE VALUE OF SUCH INTERESTS (DETERMINED AS OF  THE  DATE  OF  THE
TRANSFER TO WHICH SUBSECTION (A)(1) APPLIED).
  (II) APPLICABLE PERCENTAGE. FOR PURPOSES OF CLAUSE (I), THE APPLICABLE
PERCENTAGE IS THE PERCENTAGE DETERMINED BY DIVIDING-
--(I)  THE  NUMBER  OF SHARES IN THE CORPORATION HELD (AS OF THE DATE OF
THE TAXABLE EVENT) BY  THE  TRANSFEROR  WHICH  ARE  APPLICABLE  RETAINED
INTERESTS OF THE SAME CLASS, BY
--(II)  THE TOTAL NUMBER OF SHARES IN SUCH CORPORATION (AS OF SUCH DATE)
WHICH ARE OF THE SAME CLASS AS THE CLASS DESCRIBED IN SUBCLAUSE (I).
--A SIMILAR PERCENTAGE SHALL BE DETERMINED IN THE CASE OF INTERESTS IN A
PARTNERSHIP.
  (III) DEFINITION. FOR PURPOSES OF THIS SUBPARAGRAPH, THE TERM  "EQUITY
INTEREST" HAS THE MEANING GIVEN SUCH TERM BY SUBSECTION (A)(4)(B).
  (C) GRACE PERIOD. FOR PURPOSES OF SUBPARAGRAPH (A), ANY PAYMENT OF ANY
DISTRIBUTION DURING THE 4-YEAR PERIOD BEGINNING ON ITS DUE DATE SHALL BE
TREATED AS HAVING BEEN MADE ON SUCH DUE DATE.
  (3) TAXABLE EVENTS. FOR PURPOSES OF THIS SUBSECTION-
  (A) IN GENERAL. THE TERM "TAXABLE EVENT" MEANS ANY OF THE FOLLOWING:

S. 6359--B                         300                        A. 8559--B

--(I)  THE  DEATH  OF THE TRANSFEROR IF THE APPLICABLE RETAINED INTEREST
CONFERRING THE DISTRIBUTION RIGHT IS INCLUDIBLE IN  THE  ESTATE  OF  THE
TRANSFEROR.
--(II) THE TRANSFER OF SUCH APPLICABLE RETAINED INTEREST.
--(III)  AT  THE  ELECTION OF THE TAXPAYER, THE PAYMENT OF ANY QUALIFIED
PAYMENT AFTER THE PERIOD DESCRIBED IN PARAGRAPH (2)(C),  BUT  ONLY  WITH
RESPECT TO SUCH PAYMENT.
  (B) EXCEPTION WHERE SPOUSE IS TRANSFEREE. (I) DEATHTIME TRANSFERS
--SUBPARAGRAPH  (A)(I) SHALL NOT APPLY TO ANY INTEREST INCLUDIBLE IN THE
GROSS ESTATE OF THE TRANSFEROR IF  A  DEDUCTION  WITH  RESPECT  TO  SUCH
INTEREST IS ALLOWABLE UNDER SECTION 2056 OR 2106(A)(3).
  (II)  LIFETIME  TRANSFERS.  A TRANSFER TO THE SPOUSE OF THE TRANSFEROR
SHALL NOT BE TREATED AS A TAXABLE EVENT UNDER  SUBPARAGRAPH  (A)(II)  IF
SUCH TRANSFER DOES NOT RESULT IN A TAXABLE GIFT BY REASON OF-
--(I)  ANY  DEDUCTION ALLOWED UNDER SECTION 2523, OR THE EXCLUSION UNDER
SECTION 2503(B), OR
--(II) CONSIDERATION FOR THE TRANSFER PROVIDED BY THE SPOUSE.
  (III) SPOUSE SUCCEEDS TO TREATMENT OF TRANSFEROR. IF AN EVENT  IS  NOT
TREATED AS A TAXABLE EVENT BY REASON OF THIS SUBPARAGRAPH, THE TRANSFER-
EE  SPOUSE  OR SURVIVING SPOUSE (AS THE CASE MAY BE) SHALL BE TREATED IN
THE SAME MANNER AS THE  TRANSFEROR  IN  APPLYING  THIS  SUBSECTION  WITH
RESPECT TO THE INTEREST INVOLVED.
  (4)  SPECIAL  RULES  FOR  APPLICABLE FAMILY MEMBERS. (A) FAMILY MEMBER
TREATED IN SAME MANNER AS TRANSFEROR. FOR PURPOSES OF  THIS  SUBSECTION,
AN  APPLICABLE  FAMILY MEMBER SHALL BE TREATED IN THE SAME MANNER AS THE
TRANSFEROR WITH RESPECT TO ANY DISTRIBUTION RIGHT RETAINED BY SUCH FAMI-
LY MEMBER TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED.
  (B) TRANSFER TO APPLICABLE FAMILY MEMBER. IN THE  CASE  OF  A  TAXABLE
EVENT  DESCRIBED  IN  PARAGRAPH  (3)(A)(II) INVOLVING THE TRANSFER OF AN
APPLICABLE RETAINED INTEREST TO AN APPLICABLE FAMILY MEMBER (OTHER  THAN
THE  SPOUSE  OF  THE  TRANSFEROR), THE APPLICABLE FAMILY MEMBER SHALL BE
TREATED IN THE SAME MANNER AS THE TRANSFEROR IN APPLYING THIS SUBSECTION
TO DISTRIBUTIONS ACCUMULATING WITH RESPECT TO SUCH INTEREST  AFTER  SUCH
TAXABLE EVENT.
  (C)  TRANSFER TO TRANSFERORS. IN THE CASE OF A TAXABLE EVENT DESCRIBED
IN PARAGRAPH (3)(A)(II) INVOLVING A TRANSFER OF AN  APPLICABLE  RETAINED
INTEREST  FROM  AN  APPLICABLE  FAMILY  MEMBER  TO  A  TRANSFEROR,  THIS
SUBSECTION SHALL CONTINUE TO APPLY TO THE TRANSFEROR DURING  ANY  PERIOD
THE TRANSFEROR HOLDS SUCH INTEREST.
  (5)  TRANSFER TO INCLUDE TERMINATION. FOR PURPOSES OF THIS SUBSECTION,
ANY TERMINATION OF AN INTEREST SHALL BE TREATED AS A TRANSFER.
  (E) OTHER DEFINITIONS AND RULES. FOR PURPOSES OF THIS SECTION-
  (1) MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS,  WITH
RESPECT TO ANY TRANSFEROR-
--(A) THE TRANSFEROR'S SPOUSE,
--(B)  A LINEAL DESCENDANT OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE,
AND
--(C) THE SPOUSE OF ANY SUCH DESCENDANT.
  (2) APPLICABLE FAMILY MEMBER.  THE  TERM  "APPLICABLE  FAMILY  MEMBER"
MEANS, WITH RESPECT TO ANY TRANSFEROR-
--(A) THE TRANSFEROR'S SPOUSE,
--(B) AN ANCESTOR OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE, AND
--(C) THE SPOUSE OF ANY SUCH ANCESTOR.
  (3)  ATTRIBUTION  OF  INDIRECT  HOLDINGS  AND TRANSFERS. AN INDIVIDUAL
SHALL BE TREATED AS HOLDING ANY INTEREST TO THE EXTENT SUCH INTEREST  IS
HELD  INDIRECTLY  BY SUCH INDIVIDUAL THROUGH A CORPORATION, PARTNERSHIP,

S. 6359--B                         301                        A. 8559--B

TRUST, OR OTHER ENTITY. IF ANY INDIVIDUAL  IS  TREATED  AS  HOLDING  ANY
INTEREST BY REASON OF THE PRECEDING SENTENCE, ANY TRANSFER WHICH RESULTS
IN  SUCH  INTEREST  BEING  TREATED  AS NO LONGER HELD BY SUCH INDIVIDUAL
SHALL BE TREATED AS A TRANSFER OF SUCH INTEREST.
  (4)  EFFECT  OF  ADOPTION.  A  RELATIONSHIP BY LEGAL ADOPTION SHALL BE
TREATED AS A RELATIONSHIP BY BLOOD.
  (5) CERTAIN CHANGES TREATED AS TRANSFERS. EXCEPT AS PROVIDED IN  REGU-
LATIONS, A CONTRIBUTION TO CAPITAL OR A REDEMPTION, RECAPITALIZATION, OR
OTHER  CHANGE  IN  THE CAPITAL STRUCTURE OF A CORPORATION OR PARTNERSHIP
SHALL BE TREATED AS A TRANSFER OF AN INTEREST IN SUCH  ENTITY  TO  WHICH
THIS SECTION APPLIES IF THE TAXPAYER OR AN APPLICABLE FAMILY MEMBER-
--(A)  RECEIVES  AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY PURSUANT
TO SUCH TRANSACTION, OR
--(B) UNDER REGULATIONS, OTHERWISE HOLDS, IMMEDIATELY AFTER SUCH  TRANS-
ACTION, AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY.
--THIS  PARAGRAPH  SHALL  NOT  APPLY  TO  ANY  TRANSACTION (OTHER THAN A
CONTRIBUTION TO CAPITAL) IF THE INTERESTS IN  THE  ENTITY  HELD  BY  THE
TRANSFEROR,  APPLICABLE  FAMILY MEMBERS, AND MEMBERS OF THE TRANSFEROR'S
FAMILY BEFORE AND AFTER THE TRANSACTION ARE SUBSTANTIALLY IDENTICAL.
  (6) ADJUSTMENTS. UNDER REGULATIONS PRESCRIBED  BY  THE  SECRETARY,  IF
THERE  IS  ANY SUBSEQUENT TRANSFER, OR INCLUSION IN THE GROSS ESTATE, OF
ANY APPLICABLE RETAINED INTEREST WHICH WAS VALUED  UNDER  THE  RULES  OF
SUBSECTION  (A),  APPROPRIATE  ADJUSTMENTS SHALL BE MADE FOR PURPOSES OF
CHAPTER 11, 12, OR 13 TO REFLECT THE INCREASE IN THE AMOUNT OF ANY PRIOR
TAXABLE GIFT MADE BY THE TRANSFEROR OR DECEDENT BY REASON OF SUCH  VALU-
ATION OR TO REFLECT THE APPLICATION OF SUBSECTION (D).
  (7)  TREATMENT  AS SEPARATE INTERESTS. THE SECRETARY MAY BY REGULATION
PROVIDE THAT ANY APPLICABLE RETAINED INTEREST SHALL BE TREATED AS  2  OR
MORE SEPARATE INTERESTS FOR PURPOSES OF THIS SECTION.
  S  2702.  SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS IN
TRUSTS.  (A) VALUATION RULES. (1) IN GENERAL.  SOLELY  FOR  PURPOSES  OF
DETERMINING  WHETHER  A  TRANSFER OF AN INTEREST IN TRUST TO (OR FOR THE
BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE
OF SUCH TRANSFER), THE VALUE OF ANY INTEREST IN SUCH TRUST  RETAINED  BY
THE  TRANSFEROR  OR  ANY APPLICABLE FAMILY MEMBER (AS DEFINED IN SECTION
2701(E)(2)) SHALL BE DETERMINED AS PROVIDED IN PARAGRAPH (2).
  (2) VALUATION OF RETAINED INTERESTS. (A) IN GENERAL. THE VALUE OF  ANY
RETAINED  INTEREST WHICH IS NOT A QUALIFIED INTEREST SHALL BE TREATED AS
BEING ZERO.
  (B) VALUATION OF QUALIFIED INTEREST. THE VALUE OF ANY RETAINED  INTER-
EST  WHICH  IS  A  QUALIFIED  INTEREST SHALL BE DETERMINED UNDER SECTION
7520.
  (3) EXCEPTIONS. (A) IN GENERAL. THIS SUBSECTION SHALL NOT APPLY TO ANY
TRANSFER-
--(I) IF SUCH TRANSFER IS AN INCOMPLETE GIFT,
--(II) IF SUCH TRANSFER INVOLVES THE TRANSFER OF AN  INTEREST  IN  TRUST
ALL  THE  PROPERTY  IN  WHICH  CONSISTS  OF  A RESIDENCE TO BE USED AS A
PERSONAL RESIDENCE BY PERSONS HOLDING TERM INTERESTS IN SUCH TRUST, OR
--(III) TO THE EXTENT THAT REGULATIONS PROVIDE THAT SUCH TRANSFER IS NOT
INCONSISTENT WITH THE PURPOSES OF THIS SECTION.
  (B) INCOMPLETE GIFT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A),  THE  TERM
"INCOMPLETE  GIFT"  MEANS  ANY  TRANSFER WHICH WOULD NOT BE TREATED AS A
GIFT WHETHER OR NOT CONSIDERATION WAS RECEIVED FOR SUCH TRANSFER.
  (B) QUALIFIED INTEREST. FOR PURPOSES OF THIS SECTION, THE TERM "QUALI-
FIED INTEREST" MEANS-

S. 6359--B                         302                        A. 8559--B

  (1) ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE FIXED  AMOUNTS
PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY,
  (2)  ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE AMOUNTS WHICH
ARE PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY AND ARE A FIXED PERCENTAGE
OF THE FAIR MARKET VALUE OF THE PROPERTY IN THE TRUST (DETERMINED  ANNU-
ALLY), AND
  (3) ANY NONCONTINGENT REMAINDER INTEREST IF ALL OF THE OTHER INTERESTS
IN THE TRUST CONSIST OF INTERESTS DESCRIBED IN PARAGRAPH (1) OR (2).
  (C)  CERTAIN  PROPERTY  TREATED AS HELD IN TRUST. FOR PURPOSES OF THIS
SECTION- (1) IN GENERAL. THE TRANSFER OF AN INTEREST  IN  PROPERTY  WITH
RESPECT TO WHICH THERE IS 1 OR MORE TERM INTERESTS SHALL BE TREATED AS A
TRANSFER OF AN INTEREST IN A TRUST.
  (2)  JOINT  PURCHASES. IF 2 OR MORE MEMBERS OF THE SAME FAMILY ACQUIRE
INTERESTS IN ANY PROPERTY DESCRIBED IN PARAGRAPH (1) IN THE SAME  TRANS-
ACTION  (OR  A  SERIES OF RELATED TRANSACTIONS), THE PERSON (OR PERSONS)
ACQUIRING THE TERM INTERESTS IN SUCH PROPERTY SHALL BE TREATED AS HAVING
ACQUIRED THE ENTIRE PROPERTY AND THEN TRANSFERRED TO THE  OTHER  PERSONS
THE  INTERESTS  ACQUIRED  BY  SUCH  OTHER PERSONS IN THE TRANSACTION (OR
SERIES OF TRANSACTIONS). SUCH TRANSFER  SHALL  BE  TREATED  AS  MADE  IN
EXCHANGE  FOR  THE CONSIDERATION (IF ANY) PROVIDED BY SUCH OTHER PERSONS
FOR THE ACQUISITION OF THEIR INTERESTS IN SUCH PROPERTY.
  (3) TERM INTEREST. THE TERM "TERM INTEREST" MEANS-
  (A) A LIFE INTEREST IN PROPERTY, OR
  (B) AN INTEREST IN PROPERTY FOR A TERM OF YEARS.
  (4) VALUATION RULE FOR CERTAIN TERM INTERESTS. IF THE  NONEXERCISE  OF
RIGHTS  UNDER  A  TERM  INTEREST  IN  TANGIBLE PROPERTY WOULD NOT HAVE A
SUBSTANTIAL EFFECT ON THE VALUATION OF THE REMAINDER  INTEREST  IN  SUCH
PROPERTY-
  (A) SUBPARAGRAPH (A) OF SUBSECTION (A)(2) SHALL NOT APPLY TO SUCH TERM
INTEREST, AND
  (B)  THE  VALUE  OF  SUCH  TERM  INTEREST  FOR  PURPOSES  OF  APPLYING
SUBSECTION (A)(1) SHALL BE THE AMOUNT  WHICH  THE  HOLDER  OF  THE  TERM
INTEREST ESTABLISHES AS THE AMOUNT FOR WHICH SUCH INTEREST COULD BE SOLD
TO AN UNRELATED THIRD PARTY.
  (D)  TREATMENT  OF TRANSFERS OF INTERESTS IN PORTION OF TRUST.  IN THE
CASE OF A TRANSFER OF AN INCOME OR REMAINDER INTEREST WITH RESPECT TO  A
SPECIFIED PORTION OF THE PROPERTY IN A TRUST, ONLY SUCH PORTION SHALL BE
TAKEN INTO ACCOUNT IN APPLYING THIS SECTION TO SUCH TRANSFER.
  (E)  MEMBER  OF  THE  FAMILY.  FOR  PURPOSES OF THIS SECTION, THE TERM
"MEMBER OF THE FAMILY" SHALL HAVE THE MEANING GIVEN SUCH TERM BY SECTION
2704(C)(2).
  S 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED
  (A) GENERAL RULE. FOR PURPOSES OF THIS  SUBTITLE,  THE  VALUE  OF  ANY
PROPERTY SHALL BE DETERMINED WITHOUT REGARD TO-
  (1)  ANY OPTION, AGREEMENT, OR OTHER RIGHT TO ACQUIRE OR USE THE PROP-
ERTY AT A PRICE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY (WITHOUT
REGARD TO SUCH OPTION, AGREEMENT, OR RIGHT), OR
  (2) ANY RESTRICTION ON THE RIGHT TO SELL OR USE SUCH PROPERTY.
  (B) EXCEPTIONS. SUBSECTION (A) SHALL NOT APPLY TO ANY  OPTION,  AGREE-
MENT,  RIGHT,  OR RESTRICTION WHICH MEETS EACH OF THE FOLLOWING REQUIRE-
MENTS:
  (1) IT IS A BONA FIDE BUSINESS ARRANGEMENT.
  (2) IT IS NOT A DEVICE TO TRANSFER SUCH PROPERTY  TO  MEMBERS  OF  THE
DECEDENT'S FAMILY FOR LESS THAN FULL AND ADEQUATE CONSIDERATION IN MONEY
OR MONEY'S WORTH.

S. 6359--B                         303                        A. 8559--B

  (3)  ITS  TERMS ARE COMPARABLE TO SIMILAR ARRANGEMENTS ENTERED INTO BY
PERSONS IN AN ARMS' LENGTH TRANSACTION
  S  2704.  TREATMENT  OF  CERTAIN LAPSING RIGHTS AND RESTRICTIONS.  (A)
TREATMENT OF LAPSED VOTING OR LIQUIDATION RIGHTS. (1)  IN  GENERAL.  FOR
PURPOSES OF THIS SUBTITLE, IF-
--(A)  THERE  IS  A LAPSE OF ANY VOTING OR LIQUIDATION RIGHT IN A CORPO-
RATION OR PARTNERSHIP, AND
--(B) THE INDIVIDUAL HOLDING SUCH RIGHT IMMEDIATELY BEFORE THE LAPSE AND
MEMBERS OF SUCH INDIVIDUAL'S FAMILY HOLD,  BOTH  BEFORE  AND  AFTER  THE
LAPSE, CONTROL OF THE ENTITY,
  SUCH  LAPSE SHALL BE TREATED AS A TRANSFER BY SUCH INDIVIDUAL BY GIFT,
OR A TRANSFER WHICH IS INCLUDIBLE IN THE GROSS ESTATE OF  THE  DECEDENT,
WHICHEVER IS APPLICABLE, IN THE AMOUNT DETERMINED UNDER PARAGRAPH (2).
  (2)  AMOUNT  OF  TRANSFER.  FOR  PURPOSES OF PARAGRAPH (1), THE AMOUNT
DETERMINED UNDER THIS PARAGRAPH IS THE EXCESS (IF ANY) OF-
--(A) THE VALUE OF ALL INTERESTS IN THE ENTITY HELD  BY  THE  INDIVIDUAL
DESCRIBED  IN  PARAGRAPH (1) IMMEDIATELY BEFORE THE LAPSE (DETERMINED AS
IF THE VOTING AND LIQUIDATION RIGHTS WERE NONLAPSING), OVER
--(B) THE VALUE OF SUCH INTERESTS IMMEDIATELY AFTER THE LAPSE.
  (3) SIMILAR RIGHTS.  THE  SECRETARY  MAY  BY  REGULATIONS  APPLY  THIS
SUBSECTION TO RIGHTS SIMILAR TO VOTING AND LIQUIDATION RIGHTS.
  (B)  CERTAIN  RESTRICTIONS ON LIQUIDATION DISREGARDED. (1) IN GENERAL.
FOR PURPOSES OF THIS SUBTITLE, IF-
--(A) THERE IS A TRANSFER OF AN INTEREST IN A CORPORATION OR PARTNERSHIP
TO (OR FOR THE BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY, AND
--(B) THE TRANSFEROR AND MEMBERS OF THE TRANSFEROR'S FAMILY HOLD,  IMME-
DIATELY BEFORE THE TRANSFER, CONTROL OF THE ENTITY,
  --ANY  APPLICABLE  RESTRICTION SHALL BE DISREGARDED IN DETERMINING THE
VALUE OF THE TRANSFERRED INTEREST.
  (2) APPLICABLE RESTRICTION. FOR PURPOSES OF THIS SUBSECTION, THE  TERM
"APPLICABLE RESTRICTION" MEANS ANY RESTRICTION-
  (A)  WHICH  EFFECTIVELY LIMITS THE ABILITY OF THE CORPORATION OR PART-
NERSHIP TO LIQUIDATE, AND
  (B) WITH RESPECT TO WHICH EITHER OF THE FOLLOWING APPLIES:
--(I) THE RESTRICTION LAPSES, IN WHOLE OR IN PART,  AFTER  THE  TRANSFER
REFERRED TO IN PARAGRAPH (1).
--(II)  THE  TRANSFEROR OR ANY MEMBER OF THE TRANSFEROR'S FAMILY, EITHER
ALONE OR COLLECTIVELY, HAS THE RIGHT AFTER SUCH TRANSFER TO  REMOVE,  IN
WHOLE OR IN PART, THE RESTRICTION.
  (3) EXCEPTIONS. THE TERM "APPLICABLE RESTRICTION" SHALL NOT INCLUDE-
--(A)  ANY  COMMERCIALLY  REASONABLE RESTRICTION WHICH ARISES AS PART OF
ANY FINANCING BY THE CORPORATION OR PARTNERSHIP WITH A PERSON WHO IS NOT
RELATED TO THE TRANSFEROR OR TRANSFEREE, OR A MEMBER OF  THE  FAMILY  OF
EITHER, OR
--(B) ANY RESTRICTION IMPOSED, OR REQUIRED TO BE IMPOSED, BY ANY FEDERAL
OR STATE LAW.
  (4)  OTHER RESTRICTIONS. THE SECRETARY MAY BY REGULATIONS PROVIDE THAT
OTHER RESTRICTIONS SHALL BE DISREGARDED IN DETERMINING THE VALUE OF  THE
TRANSFER  OF ANY INTEREST IN A CORPORATION OR PARTNERSHIP TO A MEMBER OF
THE TRANSFEROR'S FAMILY IF SUCH RESTRICTION HAS THE EFFECT  OF  REDUCING
THE  VALUE OF THE TRANSFERRED INTEREST FOR PURPOSES OF THIS SUBTITLE BUT
DOES NOT ULTIMATELY REDUCE THE VALUE OF SUCH INTEREST TO THE TRANSFEREE.
  (C) DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
  (1) CONTROL. THE TERM "CONTROL" HAS THE MEANING  GIVEN  SUCH  TERM  BY
SECTION 2701(B)(2).

S. 6359--B                         304                        A. 8559--B

  (2)  MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS, WITH
RESPECT TO ANY INDIVIDUAL-
  (A) SUCH INDIVIDUAL'S SPOUSE,
  (B) ANY ANCESTOR OR LINEAL DESCENDANT OF SUCH INDIVIDUAL OR SUCH INDI-
VIDUAL'S SPOUSE,
  (C) ANY BROTHER OR SISTER OF THE INDIVIDUAL, AND
  (D) ANY SPOUSE OF ANY INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (B) OR
(C).
  (3)  ATTRIBUTION.  THE  RULE  OF  SECTION  2701(E)(3)  SHALL APPLY FOR
PURPOSES OF DETERMINING THE INTERESTS HELD BY ANY INDIVIDUAL.
  S 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES
  (A) TREATMENT OF GIFT LOANS AND DEMAND LOANS. (1)  IN  GENERAL.    FOR
PURPOSES  OF  THIS  TITLE, IN THE CASE OF ANY BELOW-MARKET LOAN TO WHICH
THIS SECTION APPLIES AND WHICH IS A GIFT LOAN  OR  A  DEMAND  LOAN,  THE
FORGONE INTEREST SHALL BE TREATED AS-
--(A) TRANSFERRED FROM THE LENDER TO THE BORROWER, AND
--(B) RETRANSFERRED BY THE BORROWER TO THE LENDER AS INTEREST.
  (2)  TIME  WHEN  TRANSFERS MADE. EXCEPT AS OTHERWISE PROVIDED IN REGU-
LATIONS PRESCRIBED BY THE SECRETARY, ANY FORGONE  INTEREST  ATTRIBUTABLE
TO PERIODS DURING ANY CALENDAR YEAR SHALL BE TREATED AS TRANSFERRED (AND
RETRANSFERRED)  UNDER  PARAGRAPH  (1)  ON  THE LAST DAY OF SUCH CALENDAR
YEAR.
  (B) TREATMENT OF OTHER  BELOW-MARKET  LOANS.  (1)  IN  GENERAL.    FOR
PURPOSES  OF  THIS  TITLE, IN THE CASE OF ANY BELOW-MARKET LOAN TO WHICH
THIS SECTION APPLIES AND TO WHICH SUBSECTION (A)(1) DOES NOT APPLY,  THE
LENDER  SHALL  BE TREATED AS HAVING TRANSFERRED ON THE DATE THE LOAN WAS
MADE (OR, IF LATER, ON THE FIRST DAY ON WHICH THIS  SECTION  APPLIES  TO
SUCH LOAN), AND THE BORROWER SHALL BE TREATED AS HAVING RECEIVED ON SUCH
DATE, CASH IN AN AMOUNT EQUAL TO THE EXCESS OF-
--(A) THE AMOUNT LOANED, OVER
--(B)  THE  PRESENT  VALUE OF ALL PAYMENTS WHICH ARE REQUIRED TO BE MADE
UNDER THE TERMS OF THE LOAN.
  (2) OBLIGATION TREATED AS HAVING ORIGINAL ISSUE DISCOUNT. FOR PURPOSES
OF THIS TITLE-
  (A) IN GENERAL. ANY BELOW-MARKET LOAN TO WHICH PARAGRAPH  (1)  APPLIES
SHALL BE TREATED AS HAVING ORIGINAL ISSUE DISCOUNT IN AN AMOUNT EQUAL TO
THE EXCESS DESCRIBED IN PARAGRAPH (1).
  (B)  AMOUNT IN ADDITION TO OTHER ORIGINAL ISSUE DISCOUNT. ANY ORIGINAL
ISSUE DISCOUNT WHICH A LOAN IS TREATED AS HAVING BY REASON  OF  SUBPARA-
GRAPH  (A)  SHALL BE IN ADDITION TO ANY OTHER ORIGINAL ISSUE DISCOUNT ON
SUCH LOAN (DETERMINED WITHOUT REGARD TO SUBPARAGRAPH (A)).
  (C) BELOW-MARKET LOANS TO  WHICH  SECTION  APPLIES.  (1)  IN  GENERAL.
EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION AND SUBSECTION (G), THIS
SECTION SHALL APPLY TO-
  (A) GIFTS. ANY BELOW-MARKET LOAN WHICH IS A GIFT LOAN.
  (B)  COMPENSATION-RELATED  LOANS.  ANY  BELOW-MARKET  LOAN DIRECTLY OR
INDIRECTLY BETWEEN-
--(I) AN EMPLOYER AND AN EMPLOYEE, OR
--(II) AN INDEPENDENT CONTRACTOR AND A PERSON FOR WHOM SUCH  INDEPENDENT
CONTRACTOR PROVIDES SERVICES.
  (C)  CORPORATION-SHAREHOLDER  LOANS. ANY BELOW-MARKET LOAN DIRECTLY OR
INDIRECTLY BETWEEN A CORPORATION AND  ANY  SHAREHOLDER  OF  SUCH  CORPO-
RATION.
  (D)  TAX  AVOIDANCE  LOANS.  ANY  BELOW-MARKET LOAN 1 OF THE PRINCIPAL
PURPOSES OF THE INTEREST ARRANGEMENTS OF WHICH IS THE AVOIDANCE  OF  ANY
FEDERAL TAX.

S. 6359--B                         305                        A. 8559--B

  (E)  OTHER  BELOW-MARKET LOANS. TO THE EXTENT PROVIDED IN REGULATIONS,
ANY BELOW-MARKET LOAN WHICH IS NOT DESCRIBED IN SUBPARAGRAPH  (A),  (B),
(C), OR (F) IF THE INTEREST ARRANGEMENTS OF SUCH LOAN HAVE A SIGNIFICANT
EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
  (F)  LOANS  TO  QUALIFIED  CONTINUING CARE FACILITIES. ANY LOAN TO ANY
QUALIFIED  CONTINUING  CARE  FACILITY  PURSUANT  TO  A  CONTINUING  CARE
CONTRACT.
  (2)  $10,000  DE MINIMIS EXCEPTION FOR GIFT LOANS BETWEEN INDIVIDUALS.
(A) IN GENERAL. IN THE CASE OF ANY GIFT LOAN DIRECTLY  BETWEEN  INDIVID-
UALS,  THIS  SECTION  SHALL  NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE
OUTSTANDING AMOUNT OF LOANS BETWEEN SUCH  INDIVIDUALS  DOES  NOT  EXCEED
$10,000.
  (B)  DE MINIMIS EXCEPTION NOT TO APPLY TO LOANS ATTRIBUTABLE TO ACQUI-
SITION OF INCOME-PRODUCING ASSETS.
--SUBPARAGRAPH (A) SHALL NOT APPLY TO ANY GIFT LOAN  DIRECTLY  ATTRIBUT-
ABLE TO THE PURCHASE OR CARRYING OF INCOME-PRODUCING ASSETS.
  (C)  CROSS  REFERENCE.  FOR  LIMITATION  ON AMOUNT TREATED AS INTEREST
WHERE LOANS DO NOT EXCEED $100,000, SEE SUBSECTION (D)(1).
  (3) $10,000 DE MINIMIS EXCEPTION FOR COMPENSATION-RELATED  AND  CORPO-
RATE-SHAREHOLDER  LOANS.  (A)  IN  GENERAL.  IN  THE  CASE  OF  ANY LOAN
DESCRIBED IN SUBPARAGRAPH (B) OR (C)  OF  PARAGRAPH  (1),  THIS  SECTION
SHALL  NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE OUTSTANDING AMOUNT OF
LOANS BETWEEN THE BORROWER AND LENDER DOES NOT EXCEED $10,000.
  (B) EXCEPTION NOT TO APPLY WHERE 1 OF PRINCIPAL PURPOSES IS TAX AVOID-
ANCE.   SUBPARAGRAPH (A) SHALL  NOT  APPLY  TO  ANY  LOAN  THE  INTEREST
ARRANGEMENTS  OF  WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES THE AVOID-
ANCE OF ANY FEDERAL TAX.
  (D) SPECIAL RULES FOR GIFT LOANS. (1) LIMITATION ON  INTEREST  ACCRUAL
FOR  PURPOSES OF INCOME TAXES WHERE LOANS DO NOT EXCEED $100,000. (A) IN
GENERAL. FOR PURPOSES OF SUBTITLE A, IN THE CASE OF A GIFT LOAN DIRECTLY
BETWEEN INDIVIDUALS, THE AMOUNT TREATED AS RETRANSFERRED BY THE BORROWER
TO THE LENDER AS OF THE CLOSE OF ANY YEAR SHALL NOT EXCEED  THE  BORROW-
ER'S NET INVESTMENT INCOME FOR SUCH YEAR.
  (B)  LIMITATION  NOT  TO  APPLY  WHERE  1 OF PRINCIPAL PURPOSES IS TAX
AVOIDANCE.  SUBPARAGRAPH (A) SHALL NOT APPLY TO ANY  LOAN  THE  INTEREST
ARRANGEMENTS  OF  WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES THE AVOID-
ANCE OF ANY FEDERAL TAX.
  (C) SPECIAL RULE WHERE MORE THAN 1 GIFT LOAN OUTSTANDING. FOR PURPOSES
OF SUBPARAGRAPH (A), IN ANY CASE IN WHICH  A  BORROWER  HAS  OUTSTANDING
MORE  THAN 1 GIFT LOAN, THE NET INVESTMENT INCOME OF SUCH BORROWER SHALL
BE ALLOCATED AMONG SUCH LOANS IN PROPORTION TO  THE  RESPECTIVE  AMOUNTS
WHICH  WOULD  BE TREATED AS RETRANSFERRED BY THE BORROWER WITHOUT REGARD
TO THIS PARAGRAPH.
  (D) LIMITATION NOT TO APPLY WHERE AGGREGATE  AMOUNT  OF  LOANS  EXCEED
$100,000.    THIS PARAGRAPH SHALL NOT APPLY TO ANY LOAN MADE BY A LENDER
TO A BORROWER FOR ANY DAY ON WHICH THE AGGREGATE OUTSTANDING  AMOUNT  OF
LOANS BETWEEN THE BORROWER AND LENDER EXCEEDS $100,000.
  (E) NET INVESTMENT INCOME. FOR PURPOSES OF THIS PARAGRAPH-
  (I) IN GENERAL. THE TERM "NET INVESTMENT INCOME" HAS THE MEANING GIVEN
SUCH TERM BY SECTION 163(D)(4).
  (II) DE MINIMIS RULE. IF THE NET INVESTMENT INCOME OF ANY BORROWER FOR
ANY  YEAR  DOES  NOT  EXCEED  $1,000,  THE NET INVESTMENT INCOME OF SUCH
BORROWER FOR SUCH YEAR SHALL BE TREATED AS ZERO.
  (III) ADDITIONAL AMOUNTS TREATED AS INTEREST. IN DETERMINING  THE  NET
INVESTMENT  INCOME  OF  A PERSON FOR ANY YEAR, ANY AMOUNT WHICH WOULD BE
INCLUDED IN THE GROSS INCOME OF SUCH PERSON FOR SUCH YEAR BY  REASON  OF

S. 6359--B                         306                        A. 8559--B

SECTION 1272 IF SUCH SECTION APPLIED TO ALL DEFERRED PAYMENT OBLIGATIONS
SHALL BE TREATED AS INTEREST RECEIVED BY SUCH PERSON FOR SUCH YEAR.
  (IV)  DEFERRED  PAYMENT  OBLIGATIONS. THE TERM "DEFERRED PAYMENT OBLI-
GATION" INCLUDES ANY MARKET DISCOUNT BOND, SHORT-TERM OBLIGATION, UNITED
STATES SAVINGS BOND, ANNUITY, OR SIMILAR OBLIGATION.
  (2) SPECIAL RULE FOR GIFT TAX. IN THE CASE OF ANY GIFT LOAN WHICH IS A
TERM LOAN, SUBSECTION (B)(1) (AND NOT SUBSECTION (A))  SHALL  APPLY  FOR
PURPOSES OF CHAPTER 12.
  (E)  DEFINITIONS  OF  BELOW-MARKET  LOAN  AND  FORGONE  INTEREST.  FOR
PURPOSES OF THIS SECTION-
  (1) BELOW-MARKET LOAN. THE TERM "BELOW-MARKET LOAN" MEANS ANY LOAN IF-
--(A) IN THE CASE OF A DEMAND LOAN, INTEREST IS PAYABLE ON THE LOAN AT A
RATE LESS THAN THE APPLICABLE FEDERAL RATE, OR
--(B) IN THE CASE OF A TERM LOAN, THE AMOUNT LOANED EXCEEDS THE  PRESENT
VALUE OF ALL PAYMENTS DUE UNDER THE LOAN.
  (2)  FORGONE INTEREST. THE TERM "FORGONE INTEREST" MEANS, WITH RESPECT
TO ANY PERIOD DURING WHICH THE LOAN IS OUTSTANDING, THE EXCESS OF-
--(A) THE AMOUNT OF INTEREST WHICH WOULD HAVE BEEN PAYABLE ON  THE  LOAN
FOR THE PERIOD IF INTEREST ACCRUED ON THE LOAN AT THE APPLICABLE FEDERAL
RATE  AND  WERE  PAYABLE  ANNUALLY  ON THE DAY REFERRED TO IN SUBSECTION
(A)(2), OVER
--(B) ANY INTEREST PAYABLE ON THE LOAN PROPERLY ALLOCABLE TO SUCH  PERI-
OD.
  (F) OTHER DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
  (1)  PRESENT  VALUE.  THE PRESENT VALUE OF ANY PAYMENT SHALL BE DETER-
MINED IN THE MANNER PROVIDED BY REGULATIONS PRESCRIBED BY THE SECRETARY-
--(A) AS OF THE DATE OF THE LOAN, AND
--(B) BY USING A DISCOUNT RATE EQUAL TO THE APPLICABLE FEDERAL RATE.
  (2) APPLICABLE FEDERAL RATE. (A) TERM LOANS. IN THE CASE OF  ANY  TERM
LOAN,  THE  APPLICABLE FEDERAL RATE SHALL BE THE APPLICABLE FEDERAL RATE
IN EFFECT UNDER SECTION 1274(D) (AS OF THE DAY ON  WHICH  THE  LOAN  WAS
MADE), COMPOUNDED SEMIANNUALLY.
  (B) DEMAND LOANS. IN THE CASE OF A DEMAND LOAN, THE APPLICABLE FEDERAL
RATE  SHALL  BE  THE  FEDERAL  SHORT-TERM  RATE  IN EFFECT UNDER SECTION
1274(D) FOR THE PERIOD FOR WHICH THE AMOUNT OF FORGONE INTEREST IS BEING
DETERMINED, COMPOUNDED SEMIANNUALLY.
  (3) GIFT LOAN. THE TERM "GIFT LOAN" MEANS ANY BELOW-MARKET LOAN  WHERE
THE FORGOING OF INTEREST IS IN THE NATURE OF A GIFT.
  (4)  AMOUNT LOANED. THE TERM "AMOUNT LOANED" MEANS THE AMOUNT RECEIVED
BY THE BORROWER.
  (5) DEMAND LOAN. THE TERM "DEMAND LOAN" MEANS ANY LOAN WHICH IS  PAYA-
BLE  IN  FULL  AT  ANY  TIME ON THE DEMAND OF THE LENDER. SUCH TERM ALSO
INCLUDES (FOR PURPOSES OTHER THAN  DETERMINING  THE  APPLICABLE  FEDERAL
RATE  UNDER  PARAGRAPH  (2))  ANY  LOAN  IF THE BENEFITS OF THE INTEREST
ARRANGEMENTS OF SUCH LOAN ARE NOT TRANSFERABLE AND  ARE  CONDITIONED  ON
THE  FUTURE PERFORMANCE OF SUBSTANTIAL SERVICES BY AN INDIVIDUAL. TO THE
EXTENT PROVIDED IN REGULATIONS, SUCH TERM ALSO INCLUDES ANY LOAN WITH AN
INDEFINITE MATURITY.
  (6) TERM LOAN. THE TERM "TERM LOAN" MEANS ANY  LOAN  WHICH  IS  NOT  A
DEMAND LOAN.
  (7)  HUSBAND AND WIFE TREATED AS 1 PERSON. A HUSBAND AND WIFE SHALL BE
TREATED AS 1 PERSON.
  (8) LOANS TO WHICH SECTION 483, 643(I), OR 1274 APPLIES. THIS  SECTION
SHALL  NOT  APPLY  TO  ANY  LOAN  TO  WHICH SECTION 483, 643(I), OR 1274
APPLIES.

S. 6359--B                         307                        A. 8559--B

  (9) NO WITHHOLDING. NO AMOUNT SHALL BE WITHHELD UNDER CHAPTER 24  WITH
RESPECT TO-
--(A)   ANY   AMOUNT  TREATED  AS  TRANSFERRED  OR  RETRANSFERRED  UNDER
SUBSECTION (A), AND
--(B) ANY AMOUNT TREATED AS RECEIVED UNDER SUBSECTION (B).
  (10) SPECIAL RULE FOR TERM LOANS. IF THIS SECTION APPLIES TO ANY  TERM
LOAN  ON  ANY  DAY,  THIS  SECTION  SHALL CONTINUE TO APPLY TO SUCH LOAN
NOTWITHSTANDING PARAGRAPHS (2) AND (3) OF SUBSECTION (C). IN THE CASE OF
A GIFT LOAN, THE PRECEDING SENTENCE SHALL ONLY  APPLY  FOR  PURPOSES  OF
CHAPTER 12.
  (11)  TIME  FOR  DETERMINING  RATE  APPLICABLE  TO EMPLOYEE RELOCATION
LOANS. (A) IN GENERAL. IN THE CASE OF ANY TERM LOAN MADE BY AN  EMPLOYER
TO  AN  EMPLOYEE  THE  PROCEEDS  OF  WHICH  ARE  USED BY THE EMPLOYEE TO
PURCHASE A PRINCIPAL RESIDENCE (WITHIN THE MEANING OF SECTION 121),  THE
DETERMINATION  OF  THE  APPLICABLE  FEDERAL RATE SHALL BE MADE AS OF THE
DATE THE WRITTEN CONTRACT TO PURCHASE SUCH RESIDENCE WAS ENTERED INTO.
  (B) PARAGRAPH ONLY TO APPLY TO CASES TO  WHICH  SECTION  217  APPLIES.
SUBPARAGRAPH  (A)  SHALL ONLY APPLY TO THE PURCHASE OF A PRINCIPAL RESI-
DENCE IN CONNECTION WITH THE COMMENCEMENT OF WORK BY AN  EMPLOYEE  OR  A
CHANGE  IN  THE  PRINCIPAL PLACE OF WORK OF AN EMPLOYEE TO WHICH SECTION
217 APPLIES.
  (G) EXCEPTION FOR CERTAIN LOANS TO QUALIFIED CONTINUING  CARE  FACILI-
TIES.    (1)  IN  GENERAL. THIS SECTION SHALL NOT APPLY FOR ANY CALENDAR
YEAR TO ANY BELOW-MARKET LOAN MADE BY A LENDER TO A QUALIFIED CONTINUING
CARE FACILITY PURSUANT TO A CONTINUING CARE CONTRACT IF THE  LENDER  (OR
THE LENDER'S SPOUSE) ATTAINS AGE 65 BEFORE THE CLOSE OF SUCH YEAR.
  (2)  $90,000  LIMIT. PARAGRAPH (1) SHALL APPLY ONLY TO THE EXTENT THAT
THE AGGREGATE OUTSTANDING AMOUNT OF ANY LOAN  TO  WHICH  SUCH  PARAGRAPH
APPLIES (DETERMINED WITHOUT REGARD TO THIS PARAGRAPH), WHEN ADDED TO THE
AGGREGATE  OUTSTANDING  AMOUNT  OF  ALL OTHER PREVIOUS LOANS BETWEEN THE
LENDER (OR THE LENDER'S SPOUSE) AND ANY QUALIFIED CONTINUING CARE FACIL-
ITY TO WHICH PARAGRAPH (1) APPLIES, DOES NOT EXCEED $90,000.
  (3) CONTINUING CARE CONTRACT. FOR PURPOSES OF THIS SECTION,  THE  TERM
"CONTINUING  CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN INDIVID-
UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
--(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
ING CARE FACILITY FOR THEIR LIFE OR LIVES,
--(B) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE-
--(I) WILL FIRST-
--(I) RESIDE IN A SEPARATE,  INDEPENDENT  LIVING  UNIT  WITH  ADDITIONAL
FACILITIES  OUTSIDE  SUCH  UNIT  FOR  THE  PROVIDING  OF MEALS AND OTHER
PERSONAL CARE, AND
--(II) NOT REQUIRE LONG-TERM NURSING CARE, AND
--(II) THEN WILL BE PROVIDED LONG-TERM AND SKILLED NURSING CARE  AS  THE
HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S SPOUSE REQUIRES, AND
--(C)  NO  ADDITIONAL SUBSTANTIAL PAYMENT IS REQUIRED IF SUCH INDIVIDUAL
OR INDIVIDUAL'S SPOUSE REQUIRES  INCREASED  PERSONAL  CARE  SERVICES  OR
LONG-TERM AND SKILLED NURSING CARE.
  (4)  QUALIFIED  CONTINUING CARE FACILITY. (A) IN GENERAL. FOR PURPOSES
OF THIS SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY"  MEANS  1
OR MORE FACILITIES-
--(I)  WHICH  ARE  DESIGNED  TO  PROVIDE  SERVICES UNDER CONTINUING CARE
CONTRACTS, AND
--(II) SUBSTANTIALLY ALL OF  THE  RESIDENTS  OF  WHICH  ARE  COVERED  BY
CONTINUING CARE CONTRACTS.

S. 6359--B                         308                        A. 8559--B

  (B)  SUBSTANTIALLY ALL FACILITIES MUST BE OWNED OR OPERATED BY BORROW-
ER. A FACILITY SHALL NOT BE  TREATED  AS  A  QUALIFIED  CONTINUING  CARE
FACILITY  UNLESS  SUBSTANTIALLY ALL FACILITIES WHICH ARE USED TO PROVIDE
SERVICES WHICH ARE REQUIRED TO  BE  PROVIDED  UNDER  A  CONTINUING  CARE
CONTRACT ARE OWNED OR OPERATED BY THE BORROWER.
  (C) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
ITY"  SHALL  NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH IS TRADI-
TIONALLY CONSIDERED A NURSING HOME.
  (5) ADJUSTMENT OF LIMIT FOR INFLATION. (A) IN GENERAL. IN THE CASE  OF
ANY LOAN MADE DURING ANY CALENDAR YEAR AFTER 1986 TO WHICH PARAGRAPH (1)
APPLIES,  THE  DOLLAR  AMOUNT IN PARAGRAPH (2) SHALL BE INCREASED BY THE
INFLATION ADJUSTMENT FOR SUCH CALENDAR  YEAR.  ANY  INCREASE  UNDER  THE
PRECEDING SENTENCE SHALL BE ROUNDED TO THE NEAREST MULTIPLE OF $100 (OR,
IF  SUCH INCREASE IS A MULTIPLE OF $50, SUCH INCREASE SHALL BE INCREASED
TO THE NEAREST MULTIPLE OF $100).
  (B) INFLATION  ADJUSTMENT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A),  THE
INFLATION ADJUSTMENT FOR ANY CALENDAR YEAR IS THE PERCENTAGE (IF ANY) BY
WHICH-
--(I) THE CPI FOR THE PRECEDING CALENDAR YEAR EXCEEDS
--(II) THE CPI FOR CALENDAR YEAR 1985.
  1.  FOR  PURPOSES  OF THE PRECEDING SENTENCE, THE CPI FOR ANY CALENDAR
YEAR IS THE AVERAGE OF THE CONSUMER PRICE INDEX AS OF THE CLOSE  OF  THE
12-MONTH PERIOD ENDING ON SEPTEMBER 30 OF SUCH CALENDAR YEAR.
  (6)  SUSPENSION  OF APPLICATION. PARAGRAPH (1) SHALL NOT APPLY FOR ANY
CALENDAR YEAR TO WHICH SUBSECTION (H) APPLIES.
  (H) EXCEPTION FOR LOANS TO QUALIFIED CONTINUING CARE  FACILITIES.  (1)
IN  GENERAL.  THIS  SECTION SHALL NOT APPLY FOR ANY CALENDAR YEAR TO ANY
BELOW-MARKET LOAN OWED BY A FACILITY WHICH ON THE LAST DAY OF SUCH  YEAR
IS  A QUALIFIED CONTINUING CARE FACILITY, IF SUCH LOAN WAS MADE PURSUANT
TO A CONTINUING CARE CONTRACT AND IF THE LENDER (OR THE LENDER'S SPOUSE)
ATTAINS AGE 62 BEFORE THE CLOSE OF SUCH YEAR.
  (2) CONTINUING CARE CONTRACT. FOR PURPOSES OF THIS SECTION,  THE  TERM
"CONTINUING  CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN INDIVID-
UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
--(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
ING CARE FACILITY FOR THEIR LIFE OR LIVES,
--(B) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE WILL BE PROVIDED WITH  HOUS-
ING,  AS  APPROPRIATE  FOR THE HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S
SPOUSE-
--(I) IN AN INDEPENDENT LIVING  UNIT  (WHICH  HAS  ADDITIONAL  AVAILABLE
FACILITIES  OUTSIDE  SUCH  UNIT  FOR  THE  PROVISION  OF MEALS AND OTHER
PERSONAL CARE), AND
--(II) IN AN ASSISTED LIVING FACILITY  OR  A  NURSING  FACILITY,  AS  IS
AVAILABLE IN THE CONTINUING CARE FACILITY, AND
--(C)  THE  INDIVIDUAL  OR INDIVIDUAL'S SPOUSE WILL BE PROVIDED ASSISTED
LIVING OR NURSING CARE AS THE HEALTH OF SUCH INDIVIDUAL OR  INDIVIDUAL'S
SPOUSE REQUIRES, AND AS IS AVAILABLE IN THE CONTINUING CARE FACILITY.
--THE SECRETARY SHALL ISSUE GUIDANCE WHICH LIMITS SUCH TERM TO CONTRACTS
WHICH  PROVIDE  ONLY  FACILITIES,  CARE,  AND SERVICES DESCRIBED IN THIS
PARAGRAPH.
  (3) QUALIFIED CONTINUING CARE FACILITY. (A) IN GENERAL.  FOR  PURPOSES
OF  THIS  SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY" MEANS 1
OR MORE FACILITIES-
--(I) WHICH ARE DESIGNED  TO  PROVIDE  SERVICES  UNDER  CONTINUING  CARE
CONTRACTS,

S. 6359--B                         309                        A. 8559--B

--(II) WHICH INCLUDE AN INDEPENDENT LIVING UNIT, PLUS AN ASSISTED LIVING
OR NURSING FACILITY, OR BOTH, AND
--(III)  SUBSTANTIALLY  ALL  OF THE INDEPENDENT LIVING UNIT RESIDENTS OF
WHICH ARE COVERED BY CONTINUING CARE CONTRACTS.
  (B) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
ITY" SHALL NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH  IS  TRADI-
TIONALLY CONSIDERED A NURSING HOME.
  (I)  REGULATIONS.  (1)  IN GENERAL. THE SECRETARY SHALL PRESCRIBE SUCH
REGULATIONS AS MAY BE NECESSARY OR APPROPRIATE TO CARRY OUT THE PURPOSES
OF THIS SECTION, INCLUDING-
--(A) REGULATIONS PROVIDING THAT WHERE, BY REASON OF  VARYING  RATES  OF
INTEREST,  CONDITIONAL  INTEREST PAYMENTS, WAIVERS OF INTEREST, DISPOSI-
TION OF THE LENDER'S OR  BORROWER'S  INTEREST  IN  THE  LOAN,  OR  OTHER
CIRCUMSTANCES,  THE  PROVISIONS  OF  THIS  SECTION  DO NOT CARRY OUT THE
PURPOSES OF THIS SECTION, ADJUSTMENTS TO THE PROVISIONS OF THIS  SECTION
WILL  BE  MADE TO THE EXTENT NECESSARY TO CARRY OUT THE PURPOSES OF THIS
SECTION,
--(B) REGULATIONS FOR THE PURPOSE OF ASSURING THAT THE POSITIONS OF  THE
BORROWER AND LENDER ARE CONSISTENT AS TO THE APPLICATION (OR NONAPPLICA-
TION) OF THIS SECTION, AND
--(C)  REGULATIONS  EXEMPTING  FROM  THE APPLICATION OF THIS SECTION ANY
CLASS OF TRANSACTIONS THE INTEREST ARRANGEMENTS OF WHICH HAVE NO SIGNIF-
ICANT EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
  (2) ESTATE TAX  COORDINATION.  UNDER  REGULATIONS  PRESCRIBED  BY  THE
SECRETARY,  ANY  LOAN  WHICH IS MADE WITH DONATIVE INTENT AND WHICH IS A
TERM LOAN SHALL BE TAKEN INTO ACCOUNT FOR PURPOSES OF CHAPTER  11  IN  A
MANNER CONSISTENT WITH THE PROVISIONS OF SUBSECTION (B).
  S  6166.  EXTENSION  OF  TIME  FOR  PAYMENT OF ESTATE TAX WHERE ESTATE
CONSISTS LARGELY OF INTEREST IN CLOSELY HELD BUSINESS. (A) 5-YEAR DEFER-
RAL; 10-YEAR INSTALLMENT PAYMENT.--
  (1) IN GENERAL.--IF THE VALUE OF AN INTEREST IN A CLOSELY  HELD  BUSI-
NESS WHICH IS INCLUDED IN DETERMINING THE GROSS ESTATE OF A DECEDENT WHO
WAS  (AT  THE  DATE  OF  HIS  DEATH) A CITIZEN OR RESIDENT OF THE UNITED
STATES EXCEEDS 35 PERCENT OF THE ADJUSTED GROSS ESTATE, THE EXECUTOR MAY
ELECT TO PAY PART OR ALL OF THE TAX IMPOSED BY SECTION 2001 IN 2 OR MORE
(BUT NOT EXCEEDING 10) EQUAL INSTALLMENTS.
  (2) LIMITATION.--THE MAXIMUM AMOUNT  OF  TAX  WHICH  MAY  BE  PAID  IN
INSTALLMENTS  UNDER  THIS  SUBSECTION SHALL BE AN AMOUNT WHICH BEARS THE
SAME RATIO TO THE TAX IMPOSED BY SECTION 2001 (REDUCED  BY  THE  CREDITS
AGAINST SUCH TAX) AS--
  (A) THE CLOSELY HELD BUSINESS AMOUNT, BEARS TO
  (B) THE AMOUNT OF THE ADJUSTED GROSS ESTATE.
  (3)  DATE  FOR  PAYMENT OF INSTALLMENTS.--IF AN ELECTION IS MADE UNDER
PARAGRAPH (1), THE FIRST INSTALLMENT SHALL BE PAID ON OR BEFORE THE DATE
SELECTED BY THE EXECUTOR WHICH IS NOT MORE THAN 5 YEARS AFTER  THE  DATE
PRESCRIBED  BY SECTION 6151(A) FOR PAYMENT OF THE TAX, AND EACH SUCCEED-
ING INSTALLMENT SHALL BE PAID ON OR BEFORE THE  DATE  WHICH  IS  1  YEAR
AFTER THE DATE PRESCRIBED BY THIS PARAGRAPH FOR PAYMENT OF THE PRECEDING
INSTALLMENT.
  (B) DEFINITIONS AND SPECIAL RULES.--
  (1)  INTEREST IN CLOSELY HELD BUSINESS.--FOR PURPOSES OF THIS SECTION,
THE TERM "INTEREST IN A CLOSELY HELD BUSINESS" MEANS--
  (A) AN INTEREST AS A PROPRIETOR IN A TRADE OR BUSINESS CARRIED ON AS A
PROPRIETORSHIP;
  (B) AN INTEREST AS A PARTNER IN A PARTNERSHIP CARRYING ON A  TRADE  OR
BUSINESS, IF--

S. 6359--B                         310                        A. 8559--B

  (I)  20 PERCENT OR MORE OF THE TOTAL CAPITAL INTEREST IN SUCH PARTNER-
SHIP IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
  (II) SUCH PARTNERSHIP HAD 45 OR FEWER PARTNERS; OR
  (C) STOCK IN A CORPORATION CARRYING ON A TRADE OR BUSINESS IF--
  (I)  20  PERCENT  OR  MORE IN VALUE OF THE VOTING STOCK OF SUCH CORPO-
RATION IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
  (II) SUCH CORPORATION HAD 45 OR FEWER SHAREHOLDERS.
  (2) RULES FOR APPLYING PARAGRAPH (1).--FOR PURPOSES OF PARAGRAPH (1)--
  (A) TIME FOR TESTING.--DETERMINATIONS SHALL BE MADE  AS  OF  THE  TIME
IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
  (B)  CERTAIN  INTERESTS HELD BY HUSBAND AND WIFE.--STOCK OR A PARTNER-
SHIP INTEREST WHICH--
  (I) IS COMMUNITY PROPERTY OF A HUSBAND AND WIFE (OR  THE  INCOME  FROM
WHICH  IS  COMMUNITY INCOME) UNDER THE APPLICABLE COMMUNITY PROPERTY LAW
OF A STATE, OR
  (II) IS HELD BY A HUSBAND AND WIFE AS JOINT TENANTS,  TENANTS  BY  THE
ENTIRETY,  OR TENANTS IN COMMON, SHALL BE TREATED AS OWNED BY ONE SHARE-
HOLDER OR ONE PARTNER, AS THE CASE MAY BE.
  (C) INDIRECT OWNERSHIP.--PROPERTY OWNED, DIRECTLY OR INDIRECTLY, BY OR
FOR A CORPORATION, PARTNERSHIP, ESTATE, OR TRUST SHALL BE CONSIDERED  AS
BEING  OWNED  PROPORTIONATELY  BY  OR FOR ITS SHAREHOLDERS, PARTNERS, OR
BENEFICIARIES. FOR PURPOSES OF THE PRECEDING SENTENCE, A PERSON SHALL BE
TREATED AS A BENEFICIARY OF ANY TRUST ONLY IF SUCH PERSON HAS A  PRESENT
INTEREST IN THE TRUST.
  (D) CERTAIN INTERESTS HELD BY MEMBERS OF DECEDENT'S FAMILY.--ALL STOCK
AND  ALL  PARTNERSHIP INTERESTS HELD BY THE DECEDENT OR BY ANY MEMBER OF
HIS FAMILY (WITHIN THE MEANING OF SECTION 267(C)(4)) SHALL BE TREATED AS
OWNED BY THE DECEDENT.
  (3) FARMHOUSES AND CERTAIN OTHER STRUCTURES TAKEN  INTO  ACCOUNT.--FOR
PURPOSES OF THE 35-PERCENT REQUIREMENT OF SUBSECTION (A)(1), AN INTEREST
IN  A CLOSELY HELD BUSINESS WHICH IS THE BUSINESS OF FARMING INCLUDES AN
INTEREST IN RESIDENTIAL BUILDINGS AND RELATED IMPROVEMENTS ON  THE  FARM
WHICH ARE OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF THE FARM
OR BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR PURPOSES OF OPERATING
OR MAINTAINING THE FARM.
  (4)  VALUE.--FOR PURPOSES OF THIS SECTION, VALUE SHALL BE VALUE DETER-
MINED FOR PURPOSES OF CHAPTER 11 (RELATING TO ESTATE TAX).
  (5) CLOSELY HELD BUSINESS AMOUNT.--FOR PURPOSES OF THIS  SECTION,  THE
TERM "CLOSELY HELD BUSINESS AMOUNT" MEANS THE VALUE OF THE INTEREST IN A
CLOSELY HELD BUSINESS WHICH QUALIFIES UNDER SUBSECTION (A)(1).
  (6)  ADJUSTED  GROSS  ESTATE.--FOR PURPOSES OF THIS SECTION, THE TERM,
"ADJUSTED GROSS ESTATE" MEANS THE VALUE OF THE GROSS ESTATE  REDUCED  BY
THE  SUM  OF  THE AMOUNTS ALLOWABLE AS A DEDUCTION UNDER SECTION 2053 OR
2054. SUCH SUM SHALL BE DETERMINED ON THE BASIS OF THE FACTS AND CIRCUM-
STANCES IN EXISTENCE ON THE DATE (INCLUDING EXTENSIONS) FOR  FILING  THE
RETURN OF TAX IMPOSED BY SECTION 2001 (OR, IF EARLIER, THE DATE ON WHICH
SUCH RETURN IS FILED).
  (7) PARTNERSHIP INTERESTS AND STOCK WHICH IS NOT READILY TRADABLE.--
  (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE BENEFITS OF THIS PARAGRAPH
(AT  SUCH  TIME AND IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS
PRESCRIBE), THEN--
  (I) FOR PURPOSES OF PARAGRAPH (1)(B)(I)  OR  (1)(C)(I)  (WHICHEVER  IS
APPROPRIATE) AND FOR PURPOSES OF SUBSECTION (C), ANY CAPITAL INTEREST IN
A PARTNERSHIP AND ANY NON-READILY-TRADABLE STOCK WHICH (AFTER THE APPLI-
CATION  OF  PARAGRAPH  (2)) IS TREATED AS OWNED BY THE DECEDENT SHALL BE

S. 6359--B                         311                        A. 8559--B

TREATED AS INCLUDED IN DETERMINING THE VALUE  OF  THE  DECEDENT'S  GROSS
ESTATE,
  (II) THE EXECUTOR SHALL BE TREATED AS HAVING SELECTED UNDER SUBSECTION
(A)(3) THE DATE PRESCRIBED BY SECTION 6151(A), AND
  (III)  FOR PURPOSES OF APPLYING SECTION 6601(J), THE 2-PERCENT PORTION
(AS DEFINED IN SUCH SECTION) SHALL BE TREATED AS BEING ZERO.
  (B) NON-READILY-TRADABLE STOCK DEFINED.--FOR PURPOSES  OF  THIS  PARA-
GRAPH,  THE  TERM "NON-READILY-TRADABLE STOCK" MEANS STOCK FOR WHICH, AT
THE TIME OF THE DECEDENT'S  DEATH,  THERE  WAS  NO  MARKET  ON  A  STOCK
EXCHANGE OR IN AN OVER-THE-COUNTER MARKET.
  (8)  STOCK  IN  HOLDING  COMPANY  TREATED AS BUSINESS COMPANY STOCK IN
CERTAIN CASES.--
  (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE  BENEFITS  OF  THIS  PARA-
GRAPH, THEN--
  (I)  HOLDING  COMPANY  STOCK  TREATED  AS BUSINESS COMPANY STOCK.--FOR
PURPOSES OF THIS SECTION, THE PORTION OF THE STOCK OF ANY HOLDING COMPA-
NY WHICH REPRESENTS DIRECT OWNERSHIP (OR INDIRECT OWNERSHIP THROUGH 1 OR
MORE OTHER HOLDING COMPANIES) BY SUCH  COMPANY  IN  A  BUSINESS  COMPANY
SHALL BE DEEMED TO BE STOCK IN SUCH BUSINESS COMPANY.
  (II)  5-YEAR  DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE EXECUTOR SHALL
BE  TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE   DATE
PRESCRIBED BY SECTION 6151(A).
  (III)  2-PERCENT INTEREST RATE NOT TO APPLY.--FOR PURPOSES OF APPLYING
SECTION 6601(J), THE 2-PERCENT PORTION  (AS  DEFINED  IN  SUCH  SECTION)
SHALL BE TREATED AS BEING ZERO.
  (B) ALL STOCK MUST BE NON-READILY-TRADABLE STOCK.--
  (I)  IN GENERAL.--NO STOCK SHALL BE TAKEN INTO ACCOUNT FOR PURPOSES OF
APPLYING THIS PARAGRAPH UNLESS IT IS NON-READILY-TRADABLE STOCK
  (WITHIN THE MEANING OF PARAGRAPH (7)(B)).
  (II) SPECIAL APPLICATION WHERE ONLY HOLDING COMPANY STOCK IS NON-READ-
ILY-TRADABLE STOCK.--IF THE REQUIREMENTS OF CLAUSE (I) ARE NOT MET,  BUT
ALL OF THE STOCK OF EACH HOLDING COMPANY TAKEN INTO ACCOUNT IS NON-READ-
ILY-TRADABLE,  THEN  THIS  PARAGRAPH  SHALL APPLY, BUT SUBSECTION (A)(1)
SHALL BE APPLIED BY SUBSTITUTING "5" FOR "10".
  (C)   APPLICATION   OF   VOTING   STOCK   REQUIREMENT   OF   PARAGRAPH
(1)(C)(I).--FOR  PURPOSES  OF CLAUSE (I) OF PARAGRAPH (1)(C), THE DEEMED
STOCK RESULTING FROM THE APPLICATION OF SUBPARAGRAPH (A) SHALL BE TREAT-
ED AS VOTING STOCK TO THE EXTENT THAT VOTING STOCK IN THE HOLDING COMPA-
NY OWNS DIRECTLY (OR THROUGH THE VOTING STOCK OF 1 OR MORE OTHER HOLDING
COMPANIES) VOTING STOCK IN THE BUSINESS COMPANY.
  (D) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) HOLDING COMPANY.--THE TERM "HOLDING COMPANY" MEANS ANY CORPORATION
HOLDING STOCK IN ANOTHER CORPORATION.
  (II) BUSINESS COMPANY.--THE TERM "BUSINESS COMPANY" MEANS  ANY  CORPO-
RATION CARRYING ON A TRADE OR BUSINESS.
  (9) DEFERRAL NOT AVAILABLE FOR PASSIVE ASSETS.--
  (A) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1) AND DETERMINING THE
CLOSELY  HELD  BUSINESS AMOUNT (BUT NOT FOR PURPOSES OF SUBSECTION (G)),
THE VALUE OF ANY INTEREST IN A CLOSELY HELD BUSINESS SHALL  NOT  INCLUDE
THE  VALUE  OF  THAT  PORTION  OF SUCH INTEREST WHICH IS ATTRIBUTABLE TO
PASSIVE ASSETS HELD BY THE BUSINESS.
  (B) PASSIVE ASSET DEFINED.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) IN GENERAL.--THE TERM "PASSIVE ASSET" MEANS ANY ASSET  OTHER  THAN
AN ASSET USED IN CARRYING ON A TRADE OR BUSINESS.
  (II)  STOCK  TREATED  AS  PASSIVE  ASSET.--THE  TERM  "PASSIVE  ASSET"
INCLUDES ANY STOCK IN ANOTHER CORPORATION UNLESS--

S. 6359--B                         312                        A. 8559--B

  (I) SUCH STOCK IS TREATED AS HELD BY THE  DECEDENT  BY  REASON  OF  AN
ELECTION UNDER PARAGRAPH (8), AND
  (II) SUCH STOCK QUALIFIED UNDER SUBSECTION (A)(1).
  (III) EXCEPTION FOR ACTIVE CORPORATIONS.--IF--
  (I) A CORPORATION OWNS 20 PERCENT OR MORE IN VALUE OF THE VOTING STOCK
OF ANOTHER CORPORATION, OR SUCH OTHER CORPORATION HAS 45 OR FEWER SHARE-
HOLDERS, AND
  (II) 80 PERCENT OR MORE OF THE VALUE OF THE ASSETS OF EACH SUCH CORPO-
RATION  IS  ATTRIBUTABLE  TO ASSETS USED IN CARRYING ON A TRADE OR BUSI-
NESS, THEN SUCH CORPORATIONS SHALL  BE  TREATED  AS  1  CORPORATION  FOR
PURPOSES  OF CLAUSE (II). FOR PURPOSES OF APPLYING SUBCLAUSE (II) TO THE
CORPORATION HOLDING THE STOCK OF THE OTHER CORPORATION, SUCH STOCK SHALL
NOT BE TAKEN INTO ACCOUNT.
  (10) STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS STOCK
IN AN ACTIVE TRADE OR BUSINESS COMPANY.--
  (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE  BENEFITS  OF  THIS  PARA-
GRAPH, THEN--
  (I)  STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS STOCK
IN AN ACTIVE TRADE OR BUSINESS COMPANY.--FOR PURPOSES OF  THIS  SECTION,
ANY  ASSET  USED  IN  A QUALIFYING LENDING AND FINANCE BUSINESS SHALL BE
TREATED AS AN ASSET WHICH IS USED IN CARRYING ON A TRADE OR BUSINESS.
  (II) 5-YEAR DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE  EXECUTOR  SHALL
BE   TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE  DATE
PRESCRIBED BY SECTION 6151(A).
  (III)  5  EQUAL  INSTALLMENTS  ALLOWED.--FOR  PURPOSES   OF   APPLYING
SUBSECTION
  (A)(1), "5" SHALL BE SUBSTITUTED FOR "10".
  (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  QUALIFYING  LENDING  AND  FINANCE BUSINESS.--THE TERM "QUALIFYING
LENDING AND FINANCE BUSINESS" MEANS A LENDING AND FINANCE BUSINESS, IF--
  (I) BASED ON ALL THE FACTS AND CIRCUMSTANCES  IMMEDIATELY  BEFORE  THE
DATE  OF  THE  DECEDENT'S  DEATH,  THERE  WAS  SUBSTANTIAL ACTIVITY WITH
RESPECT TO THE LENDING AND FINANCE BUSINESS, OR
  (II) DURING AT LEAST 3 OF THE 5 TAXABLE YEARS ENDING BEFORE  THE  DATE
OF THE DECEDENT'S DEATH, SUCH BUSINESS HAD AT LEAST 1 FULL-TIME EMPLOYEE
SUBSTANTIALLY  ALL  OF WHOSE SERVICES WERE THE ACTIVE MANAGEMENT OF SUCH
BUSINESS, 10 FULL-TIME, NONOWNER EMPLOYEES SUBSTANTIALLY  ALL  OF  WHOSE
SERVICES WERE DIRECTLY RELATED TO SUCH BUSINESS, AND $5,000,000 IN GROSS
RECEIPTS FROM ACTIVITIES DESCRIBED IN CLAUSE (II).
  (II)  LENDING  AND  FINANCE  BUSINESS.--THE  TERM "LENDING AND FINANCE
BUSINESS" MEANS A TRADE OR BUSINESS OF--
  (I) MAKING LOANS,
  (II) PURCHASING OR DISCOUNTING ACCOUNTS RECEIVABLE, NOTES, OR INSTALL-
MENT OBLIGATIONS,
  (III) ENGAGING IN RENTAL AND LEASING OF  REAL  AND  TANGIBLE  PERSONAL
PROPERTY,  INCLUDING ENTERING INTO LEASES AND PURCHASING, SERVICING, AND
DISPOSING OF LEASES AND LEASED ASSETS,
  (IV) RENDERING SERVICES OR MAKING FACILITIES AVAILABLE IN THE ORDINARY
COURSE OF A LENDING OR FINANCE BUSINESS, AND
  (V) RENDERING SERVICES OR MAKING FACILITIES  AVAILABLE  IN  CONNECTION
WITH  ACTIVITIES  DESCRIBED IN SUBCLAUSES (I) THROUGH (IV) CARRIED ON BY
THE CORPORATION RENDERING SERVICES OR MAKING  FACILITIES  AVAILABLE,  OR
ANOTHER  CORPORATION  WHICH IS A MEMBER OF THE SAME AFFILIATED GROUP (AS
DEFINED IN SECTION 1504 WITHOUT REGARD TO SECTION 1504(B)(3)).
  (III) LIMITATION.--THE TERM "QUALIFYING LENDING AND FINANCE  BUSINESS"
SHALL  NOT  INCLUDE  ANY  INTEREST IN AN ENTITY, IF THE STOCK OR DEBT OF

S. 6359--B                         313                        A. 8559--B

SUCH ENTITY OR A CONTROLLED GROUP (AS DEFINED IN SECTION  267(F)(1))  OF
WHICH  SUCH  ENTITY  WAS A MEMBER WAS READILY TRADABLE ON AN ESTABLISHED
SECURITIES MARKET OR SECONDARY MARKET (AS DEFINED BY THE  SECRETARY)  AT
ANY TIME WITHIN 3 YEARS BEFORE THE DATE OF THE DECEDENT'S DEATH.
  (C)  SPECIAL  RULE  FOR  INTEREST  IN 2 OR MORE CLOSELY HELD BUSINESS-
ES.--FOR PURPOSES OF THIS SECTION, INTEREST IN 2 OR  MORE  CLOSELY  HELD
BUSINESSES, WITH RESPECT TO EACH OF WHICH THERE IS INCLUDED IN DETERMIN-
ING  THE  VALUE OF THE DECEDENT'S GROSS ESTATE 20 PERCENT OR MORE OF THE
TOTAL VALUE OF EACH SUCH BUSINESS, SHALL BE TREATED AS AN INTEREST IN  A
SINGLE CLOSELY HELD BUSINESS. FOR PURPOSES OF THE 20-PERCENT REQUIREMENT
OF  THE PRECEDING SENTENCE, AN INTEREST IN A CLOSELY HELD BUSINESS WHICH
REPRESENTS THE SURVIVING SPOUSE'S INTEREST IN PROPERTY HELD BY THE DECE-
DENT AND THE SURVIVING SPOUSE AS COMMUNITY PROPERTY OR AS JOINT TENANTS,
TENANTS BY THE ENTIRETY, OR TENANTS IN COMMON SHALL BE TREATED AS HAVING
BEEN INCLUDED IN DETERMINING THE VALUE OF THE DECEDENT'S GROSS ESTATE.
  (D) ELECTION.--ANY ELECTION UNDER SUBSECTION (A)  SHALL  BE  MADE  NOT
LATER  THAN THE TIME PRESCRIBED BY SECTION 6075(A) FOR FILING THE RETURN
OF TAX IMPOSED BY SECTION 2001 (INCLUDING EXTENSIONS THEREOF), AND SHALL
BE MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS  PRESCRIBE.
IF  AN  ELECTION  UNDER  SUBSECTION  (A) IS MADE, THE PROVISIONS OF THIS
SUBTITLE SHALL APPLY AS THOUGH THE SECRETARY WERE EXTENDING THE TIME FOR
PAYMENT OF THE TAX.
  (E) PRORATION OF DEFICIENCY TO INSTALLMENTS.--IF AN ELECTION  IS  MADE
UNDER  SUBSECTION (A) TO PAY ANY PART OF THE TAX IMPOSED BY SECTION 2001
IN INSTALLMENTS AND A DEFICIENCY HAS BEEN ASSESSED, THE DEFICIENCY SHALL
(SUBJECT TO THE LIMITATION PROVIDED BY SUBSECTION (A)(2)) BE PRORATED TO
THE INSTALLMENTS PAYABLE UNDER SUBSECTION (A). THE PART OF THE DEFICIEN-
CY SO PRORATED TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS  NOT
ARRIVED  SHALL  BE COLLECTED AT THE SAME TIME AS, AND AS A PART OF, SUCH
INSTALLMENT. THE PART OF THE DEFICIENCY SO PRORATED TO  ANY  INSTALLMENT
THE  DATE FOR PAYMENT OF WHICH HAS ARRIVED SHALL BE PAID UPON NOTICE AND
DEMAND FROM THE SECRETARY. THIS SUBSECTION SHALL NOT APPLY IF THE  DEFI-
CIENCY IS DUE TO NEGLIGENCE, TO INTENTIONAL DISREGARD OF RULES AND REGU-
LATIONS, OR TO FRAUD WITH INTENT TO EVADE TAX.
  (F)  TIME  FOR  PAYMENT  OF  INTEREST.--IF THE TIME FOR PAYMENT OF ANY
AMOUNT OF TAX HAS BEEN EXTENDED UNDER THIS SECTION--
  (1) INTEREST FOR FIRST 5 YEARS.--INTEREST PAYABLE UNDER  SECTION  6601
OF  ANY  UNPAID PORTION OF SUCH AMOUNT ATTRIBUTABLE TO THE FIRST 5 YEARS
AFTER THE DATE PRESCRIBED BY SECTION 6151(A)  FOR  PAYMENT  OF  THE  TAX
SHALL BE PAID ANNUALLY.
  (2)  INTEREST FOR PERIODS AFTER FIRST 5 YEARS.--INTEREST PAYABLE UNDER
SECTION 6601 ON ANY UNPAID PORTION OF SUCH AMOUNT  ATTRIBUTABLE  TO  ANY
PERIOD  AFTER  THE  5-YEAR  PERIOD REFERRED TO IN PARAGRAPH (1) SHALL BE
PAID ANNUALLY AT THE SAME TIME AS, AND AS A PART  OF,  EACH  INSTALLMENT
PAYMENT OF THE TAX.
  (3)  INTEREST  IN  THE CASE OF CERTAIN DEFICIENCIES.--IN THE CASE OF A
DEFICIENCY TO WHICH SUBSECTION (E) APPLIES WHICH IS ASSESSED  AFTER  THE
CLOSE  OF  THE  5-YEAR  PERIOD  REFERRED  TO  IN PARAGRAPH (1), INTEREST
ATTRIBUTABLE TO SUCH 5-YEAR PERIOD, AND INTEREST  ASSIGNED  UNDER  PARA-
GRAPH  (2)  TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS ARRIVED
ON OR BEFORE THE DATE OF THE ASSESSMENT OF THE DEFICIENCY, SHALL BE PAID
UPON NOTICE AND DEMAND FROM THE SECRETARY.
  (4) SELECTION OF SHORTER PERIOD.--IF THE EXECUTOR HAS SELECTED A PERI-
OD SHORTER THAN 5 YEARS UNDER SUBSECTION  (A)(3),  SUCH  SHORTER  PERIOD
SHALL BE SUBSTITUTED FOR 5 YEARS IN PARAGRAPHS (1), (2), AND (3) OF THIS
SUBSECTION.

S. 6359--B                         314                        A. 8559--B

  (G) ACCELERATION OF PAYMENT.--
  (1) DISPOSITION OF INTEREST; WITHDRAWAL OF FUNDS FROM BUSINESS.--
  (A) IF--
  (I)(I)  ANY  PORTION  OF  AN INTEREST IN A CLOSELY HELD BUSINESS WHICH
QUALIFIES UNDER SUBSECTION (A)(1) IS DISTRIBUTED,  SOLD,  EXCHANGED,  OR
OTHERWISE DISPOSED OF, OR
  (II)  MONEY  AND  OTHER  PROPERTY  ATTRIBUTABLE TO SUCH AN INTEREST IS
WITHDRAWN FROM SUCH TRADE OR BUSINESS, AND
  (II) THE AGGREGATE OF SUCH DISTRIBUTIONS, SALES, EXCHANGES,  OR  OTHER
DISPOSITIONS  AND  WITHDRAWALS EQUALS OR EXCEEDS 50 PERCENT OF THE VALUE
OF SUCH INTEREST, THEN THE EXTENSION OF TIME FOR PAYMENT OF TAX PROVIDED
IN SUBSECTION (A) SHALL CEASE TO APPLY, AND THE UNPAID  PORTION  OF  THE
TAX  PAYABLE  IN  INSTALLMENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM
THE SECRETARY.
  (B) IN THE CASE OF A DISTRIBUTION IN  REDEMPTION  OF  STOCK  TO  WHICH
SECTION  303  (OR  SO  MUCH  OF  SECTION  304 AS RELATES TO SECTION 303)
APPLIES--
  (I) THE REDEMPTION OF SUCH STOCK, AND  THE  WITHDRAWAL  OF  MONEY  AND
OTHER PROPERTY DISTRIBUTED IN SUCH REDEMPTION, SHALL NOT BE TREATED AS A
DISTRIBUTION OR WITHDRAWAL FOR PURPOSES OF SUBPARAGRAPH (A), AND
  (II)  FOR  PURPOSES  OF SUBPARAGRAPH (A), THE VALUE OF THE INTEREST IN
THE CLOSELY HELD BUSINESS SHALL BE CONSIDERED TO BE SUCH  VALUE  REDUCED
BY THE VALUE OF THE STOCK REDEEMED.
  THIS  SUBPARAGRAPH  SHALL  APPLY  ONLY  IF,  ON  OR  BEFORE  THE  DATE
PRESCRIBED BY SUBSECTION (A)(3) FOR THE PAYMENT OF THE FIRST INSTALLMENT
WHICH BECOMES DUE AFTER THE DATE OF THE DISTRIBUTION (OR, IF EARLIER, ON
OR BEFORE THE DAY WHICH IS 1 YEAR AFTER THE DATE OF  THE  DISTRIBUTION),
THERE IS PAID AN AMOUNT OF THE TAX IMPOSED BY SECTION 2001 NOT LESS THAN
THE AMOUNT OF MONEY AND OTHER PROPERTY DISTRIBUTED.
  (C)  SUBPARAGRAPH (A)(I) DOES NOT APPLY TO AN EXCHANGE OF STOCK PURSU-
ANT TO A PLAN OF REORGANIZATION DESCRIBED IN SUBPARAGRAPH (D),  (E),  OR
(F)  OF SECTION 368(A)(1) NOR TO AN EXCHANGE TO WHICH SECTION 355 (OR SO
MUCH OF SECTION 356 AS RELATES TO SECTION 355) APPLIES;  BUT  ANY  STOCK
RECEIVED  IN  SUCH AN EXCHANGE SHALL BE TREATED FOR PURPOSES OF SUBPARA-
GRAPH (A)(I) AS AN INTEREST QUALIFYING UNDER SUBSECTION (A)(1).
  (D) SUBPARAGRAPH (A)(I) DOES NOT APPLY TO A TRANSFER  OF  PROPERTY  OF
THE  DECEDENT  TO A PERSON ENTITLED BY REASON OF THE DECEDENT'S DEATH TO
RECEIVE SUCH PROPERTY UNDER THE DECEDENT'S WILL, THE APPLICABLE  LAW  OF
DESCENT  AND DISTRIBUTION, OR A TRUST CREATED BY THE DECEDENT. A SIMILAR
RULE SHALL APPLY IN THE CASE OF A SERIES OF SUBSEQUENT TRANSFERS OF  THE
PROPERTY  BY  REASON OF DEATH SO LONG AS EACH TRANSFER IS TO A MEMBER OF
THE FAMILY (WITHIN THE MEANING OF SECTION 267(C)(4)) OF  THE  TRANSFEROR
IN SUCH TRANSFER.
  (E) CHANGES IN INTEREST IN HOLDING COMPANY.--IF ANY STOCK IN A HOLDING
COMPANY  IS  TREATED  AS  STOCK  IN  A  BUSINESS  COMPANY  BY  REASON OF
SUBSECTION (B)(8)(A)--
  (I) ANY DISPOSITION OF ANY INTEREST IN  SUCH  STOCK  IN  SUCH  HOLDING
COMPANY  WHICH WAS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECE-
DENT, OR
  (II) ANY WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM  SUCH  HOLDING
COMPANY  ATTRIBUTABLE  TO ANY INTEREST INCLUDED IN DETERMINING THE GROSS
ESTATE OF THE DECEDENT,
  SHALL BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION  OF
(OR  A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER SUBSECTION
(A)(1).

S. 6359--B                         315                        A. 8559--B

  (F) CHANGES IN INTEREST IN BUSINESS COMPANY.--IF ANY STOCK IN A  HOLD-
ING  COMPANY  IS  TREATED  AS  STOCK  IN A BUSINESS COMPANY BY REASON OF
SUBSECTION (B)(8)(A)--
  (I)  ANY  DISPOSITION  OF  ANY  INTEREST IN SUCH STOCK IN THE BUSINESS
COMPANY BY SUCH HOLDING COMPANY, OR
  (II) ANY WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM SUCH  BUSINESS
COMPANY  ATTRIBUTABLE  TO SUCH STOCK BY SUCH HOLDING COMPANY OWNING SUCH
STOCK,
  SHALL BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION  OF
(OR  A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER SUBSECTION
(A)(1).
  (2) UNDISTRIBUTED INCOME OF ESTATE.--
  (A) IF AN ELECTION IS MADE UNDER  THIS  SECTION  AND  THE  ESTATE  HAS
UNDISTRIBUTED NET INCOME FOR ANY TAXABLE YEAR ENDING ON OR AFTER THE DUE
DATE  FOR  THE  FIRST  INSTALLMENT, THE EXECUTOR SHALL, ON OR BEFORE THE
DATE PRESCRIBED BY LAW FOR FILING THE INCOME TAX RETURN FOR SUCH TAXABLE
YEAR (INCLUDING EXTENSIONS THEREOF), PAY AN AMOUNT EQUAL TO SUCH  UNDIS-
TRIBUTED  NET  INCOME  IN  LIQUIDATION  OF THE UNPAID PORTION OF THE TAX
PAYABLE IN INSTALLMENTS.
  (B) FOR PURPOSES OF SUBPARAGRAPH (A), THE UNDISTRIBUTED NET INCOME  OF
THE ESTATE FOR ANY TAXABLE YEAR IS THE AMOUNT BY WHICH THE DISTRIBUTABLE
NET  INCOME  OF  THE ESTATE FOR SUCH TAXABLE YEAR (AS DEFINED IN SECTION
643) EXCEEDS THE SUM OF--
  (I) THE AMOUNTS FOR SUCH TAXABLE YEAR SPECIFIED IN PARAGRAPHS (1)  AND
(2) OF SECTION 661(A) (RELATING TO DEDUCTIONS FOR DISTRIBUTIONS, ETC.);
  (II)  THE  AMOUNT  OF  TAX  IMPOSED FOR THE TAXABLE YEAR ON THE ESTATE
UNDER CHAPTER 1; AND
  (III) THE AMOUNT OF THE TAX IMPOSED BY SECTION 2001 (INCLUDING  INTER-
EST) PAID BY THE EXECUTOR DURING THE TAXABLE YEAR (OTHER THAN ANY AMOUNT
PAID PURSUANT TO THIS PARAGRAPH).
  (C)  FOR  PURPOSES OF THIS PARAGRAPH, IF ANY STOCK IN A CORPORATION IS
TREATED  AS  STOCK  IN  ANOTHER  CORPORATION  BY  REASON  OF  SUBSECTION
(B)(8)(A),  ANY  DIVIDENDS  PAID BY SUCH OTHER CORPORATION TO THE CORPO-
RATION SHALL BE TREATED AS PAID TO THE ESTATE OF  THE  DECEDENT  TO  THE
EXTENT ATTRIBUTABLE TO THE STOCK QUALIFYING UNDER SUBSECTION (A)(1).
  (3) FAILURE TO MAKE PAYMENT OF PRINCIPAL OR INTEREST.--
  (A)  IN  GENERAL.--EXCEPT  AS  PROVIDED  IN  SUBPARAGRAPH  (B), IF ANY
PAYMENT OF PRINCIPAL OR INTEREST UNDER THIS SECTION IS NOT  PAID  ON  OR
BEFORE  THE  DATE  FIXED  FOR ITS PAYMENT BY THIS SECTION (INCLUDING ANY
EXTENSION OF TIME), THE UNPAID PORTION OF THE TAX  PAYABLE  IN  INSTALL-
MENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM THE SECRETARY.
  (B)  PAYMENT WITHIN 6 MONTHS.--IF ANY PAYMENT OF PRINCIPAL OR INTEREST
UNDER THIS SECTION IS NOT PAID ON OR BEFORE THE  DATE  DETERMINED  UNDER
SUBPARAGRAPH (A) BUT IS PAID WITHIN 6 MONTHS OF SUCH DATE--
  (I) THE PROVISIONS OF SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO
SUCH PAYMENT,
  (II) THE PROVISIONS OF SECTION 6601(J) SHALL NOT APPLY WITH RESPECT TO
THE DETERMINATION OF INTEREST ON SUCH PAYMENT, AND
  (III)  THERE  IS  IMPOSED  A PENALTY IN AN AMOUNT EQUAL TO THE PRODUCT
OF--
  (I) 5 PERCENT OF THE AMOUNT OF SUCH PAYMENT, MULTIPLIED BY
  (II) THE NUMBER OF MONTHS (OR FRACTIONS THEREOF) AFTER SUCH  DATE  AND
BEFORE PAYMENT IS MADE.  THE PENALTY IMPOSED UNDER CLAUSE (III) SHALL BE
TREATED  IN  THE  SAME MANNER AS A PENALTY IMPOSED UNDER SUBCHAPTER B OF
CHAPTER 68.
  (H) ELECTION IN CASE OF CERTAIN DEFICIENCIES.--

S. 6359--B                         316                        A. 8559--B

  (1) IN GENERAL.--IF--
  (A) A DEFICIENCY IN THE TAX IMPOSED BY SECTION 2001 IS ASSESSED,
  (B) THE ESTATE QUALIFIES UNDER SUBSECTION (A)(1), AND
  (C)  THE  EXECUTOR  HAS NOT MADE AN ELECTION UNDER SUBSECTION (A), THE
EXECUTOR MAY  ELECT  TO  PAY  THE  DEFICIENCY  IN  INSTALLMENTS.    THIS
SUBSECTION  SHALL  NOT  APPLY IF THE DEFICIENCY IS DUE TO NEGLIGENCE, TO
INTENTIONAL DISREGARD OF RULES AND REGULATIONS, OR TO FRAUD WITH  INTENT
TO EVADE TAX.
  (2) TIME OF ELECTION.--AN ELECTION UNDER THIS SUBSECTION SHALL BE MADE
NOT LATER THAN 60 DAYS AFTER ISSUANCE OF NOTICE AND DEMAND BY THE SECRE-
TARY FOR THE PAYMENT OF THE DEFICIENCY, AND SHALL BE MADE IN SUCH MANNER
AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
  (3)  EFFECT OF ELECTION ON PAYMENT.--IF AN ELECTION IS MADE UNDER THIS
SUBSECTION, THE DEFICIENCY SHALL (SUBJECT TO THE LIMITATION PROVIDED  BY
SUBSECTION (A)(2)) BE PRORATED TO THE INSTALLMENTS WHICH WOULD HAVE BEEN
DUE IF AN ELECTION HAD BEEN TIMELY MADE UNDER SUBSECTION (A) AT THE TIME
THE  ESTATE TAX RETURN WAS FILED. THE PART OF THE DEFICIENCY SO PRORATED
TO ANY INSTALLMENT THE DATE FOR PAYMENT  OF  WHICH  WOULD  HAVE  ARRIVED
SHALL  BE  PAID  AT  THE  TIME  OF THE MAKING OF THE ELECTION UNDER THIS
SUBSECTION. THE PORTION OF THE DEFICIENCY SO  PRORATED  TO  INSTALLMENTS
THE DATE FOR PAYMENT OF WHICH WOULD NOT HAVE SO ARRIVED SHALL BE PAID AT
THE  TIME  SUCH INSTALLMENTS WOULD HAVE BEEN DUE IF SUCH AN ELECTION HAD
BEEN MADE.
  (I) SPECIAL RULE FOR CERTAIN DIRECT  SKIPS.--TO  THE  EXTENT  THAT  AN
INTEREST  IN  A  CLOSELY  HELD  BUSINESS IS THE SUBJECT OF A DIRECT SKIP
(WITHIN THE MEANING OF SECTION 2612(C)) OCCURRING AT THE  SAME  TIME  AS
AND  AS  A  RESULT  OF  THE  DECEDENT'S DEATH, THEN FOR PURPOSES OF THIS
SECTION ANY TAX IMPOSED BY SECTION 2601 ON THE TRANSFER OF SUCH INTEREST
SHALL BE TREATED AS IF IT WERE ADDITIONAL TAX IMPOSED BY SECTION 2001.
  (J) REGULATIONS.--THE SECRETARY SHALL PRESCRIBE  SUCH  REGULATIONS  AS
MAY BE NECESSARY TO THE APPLICATION OF THIS SECTION.
  (K) CROSS REFERENCES.--
  (1)  SECURITY.-- FOR AUTHORITY OF THE SECRETARY TO REQUIRE SECURITY IN
THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6165.
  (2) LIEN.--FOR SPECIAL LIEN (IN LIEU OF BOND) IN THE CASE OF AN EXTEN-
SION UNDER THIS SECTION, SEE SECTION 6324A.
  (3) PERIOD OF LIMITATION.--FOR EXTENSION OF THE PERIOD  OF  LIMITATION
IN THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6503(D).
  (4)  INTEREST.--FOR  PROVISIONS RELATING TO INTEREST ON TAX PAYABLE IN
INSTALLMENTS UNDER THIS SECTION, SEE SUBSECTION (J) OF SECTION 6601.
  (5) TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR SPECIAL RULE FOR  QUALIFY-
ING  AN  ESTATE  UNDER  THIS SECTION WHERE PROPERTY HAS BEEN TRANSFERRED
WITHIN 3 YEARS OF DECEDENT'S DEATH, SEE SECTION 2035(C)(2).
  S 11. This act shall take effect April 1,  2014  and  shall  apply  to
estates  of  decedents  dying on and after that date; provided, however,
that the amendments to subsection (c) of section 951 of the tax law made
by section one  of  this  act  shall  not  affect  the  repeal  of  such
subsection and shall be deemed repealed therewith.

                                 PART Y

  Section 1. Article 19 of the tax law is REPEALED.
  S 2. Section 1820 of the tax law is REPEALED.
  S  3.  Subdivision  1  of  section 171-a of the tax law, as amended by
section 1 of part R of chapter 60 of the laws of  2004,  is  amended  to
read as follows:

S. 6359--B                         317                        A. 8559--B

  1.  All  taxes,  interest, penalties and fees collected or received by
the commissioner or the commissioner's duly authorized agent under arti-
cles nine (except section one hundred eighty-two-a thereof and except as
otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
twelve-A  (except  as  otherwise provided in section two hundred eighty-
four-d thereof), thirteen, thirteen-A (except as otherwise  provided  in
section  three  hundred  twelve  thereof),  eighteen, [nineteen,] twenty
(except as otherwise provided in section four hundred eighty-two  there-
of),  twenty-one,  twenty-two,  twenty-six,  twenty-six-B,  twenty-eight
(except as otherwise provided in section eleven hundred  two  or  eleven
hundred  three thereof), twenty-eight-A, thirty-one (except as otherwise
provided in section fourteen hundred  twenty-one  thereof),  thirty-two,
thirty-three and thirty-three-A of this chapter shall be deposited daily
in  one  account  with  such  responsible banks, banking houses or trust
companies as may be designated by the comptroller, to the credit of  the
comptroller.  Such  an account may be established in one or more of such
depositories. Such deposits shall be kept separate and  apart  from  all
other  money in the possession of the comptroller. The comptroller shall
require adequate security from  all  such  depositories.  Of  the  total
revenue  collected  or received under such articles of this chapter, the
comptroller shall retain in the comptroller's hands such amount  as  the
commissioner may determine to be necessary for refunds or reimbursements
under such articles of this chapter and article ten thereof out of which
amount  the comptroller shall pay any refunds or reimbursements to which
taxpayers shall be entitled under the provisions  of  such  articles  of
this  chapter  and  article  ten thereof. The commissioner and the comp-
troller shall maintain a system of accounts showing the amount of reven-
ue collected or received from each of the taxes imposed  by  such  arti-
cles. The comptroller, after reserving the amount to pay such refunds or
reimbursements,  shall,  on  or  before the tenth day of each month, pay
into the state treasury to the credit of the general  fund  all  revenue
deposited  under  this  section  during the preceding calendar month and
remaining to the comptroller's credit on the last day of such  preceding
month, (i) except that the comptroller shall pay to the state department
of social services that amount of overpayments of tax imposed by article
twenty-two  of  this  chapter  and  the interest on such amount which is
certified to the comptroller by the commissioner as  the  amount  to  be
credited against past-due support pursuant to subdivision six of section
one  hundred  seventy-one-c  of  this [chapter] ARTICLE, (ii) and except
that the comptroller shall pay to the New York  state  higher  education
services  corporation  and  the state university of New York or the city
university of New York respectively that amount of overpayments  of  tax
imposed  by  article twenty-two of this chapter and the interest on such
amount which is certified to the comptroller by the commissioner as  the
amount  to  be  credited  against the amount of defaults in repayment of
guaranteed student loans and state university loans or  city  university
loans  pursuant to subdivision five of section one hundred seventy-one-d
and subdivision six of section one hundred seventy-one-e of this  [chap-
ter]  ARTICLE,  (iii)  and except further that, notwithstanding any law,
the comptroller shall credit to the revenue arrearage account,  pursuant
to  section  ninety-one-a of the state finance law, that amount of over-
payment of tax imposed by  article  nine,  nine-A,  twenty-two,  thirty,
thirty-A,  thirty-B, thirty-two or thirty-three of this chapter, and any
interest thereon, which is certified to the comptroller by  the  commis-
sioner as the amount to be credited against a past-due legally enforcea-
ble debt owed to a state agency pursuant to paragraph (a) of subdivision

S. 6359--B                         318                        A. 8559--B

six  of  section  one  hundred  seventy-one-f of this article, provided,
however, he shall credit to the special offset fiduciary account, pursu-
ant to section ninety-one-c of the state finance law,  any  such  amount
creditable  as  a liability as set forth in paragraph (b) of subdivision
six of section one hundred  seventy-one-f  of  this  article,  (iv)  and
except  further  that  the comptroller shall pay to the city of New York
that amount of overpayment of tax imposed by article nine, nine-A, twen-
ty-two, thirty, thirty-A, thirty-B, thirty-two, or thirty-three of  this
chapter and any interest thereon that is certified to the comptroller by
the  commissioner  as the amount to be credited against city of New York
tax warrant judgment debt pursuant to section one hundred  seventy-one-l
of  this  article, (v) and except further that the comptroller shall pay
to a non-obligated spouse that amount of overpayment of tax  imposed  by
article twenty-two of this chapter and the interest on such amount which
has  been  credited  pursuant  to section one hundred seventy-one-c, one
hundred seventy-one-d, one hundred seventy-one-e, one  hundred  seventy-
one-f  or  one hundred seventy-one-l of this article and which is certi-
fied to the comptroller by the commissioner as the amount due such  non-
obligated  spouse pursuant to paragraph six of subsection (b) of section
six hundred fifty-one of this chapter; and (vi)  the  comptroller  shall
deduct  a  like amount which the comptroller shall pay into the treasury
to the credit of the general fund from amounts subsequently  payable  to
the department of social services, the state university of New York, the
city  university  of  New  York, or the higher education services corpo-
ration, or the revenue arrearage account  or  special  offset  fiduciary
account  pursuant  to  section ninety-one-a or ninety-one-c of the state
finance law, as the case may be, whichever had been credited the  amount
originally  withheld  from  such  overpayment, and (vii) with respect to
amounts originally withheld from such overpayment  pursuant  to  section
one  hundred  seventy-one-l  of this article and paid to the city of New
York, the comptroller shall collect a like amount from the city  of  New
York.
  S  3-a. Paragraph 1 of subdivision (f) of section 1105 of the tax law,
as amended by section 100 of part A of chapter 389 of the laws of  1997,
is amended to read as follows:
  (1)  Any  admission charge where such admission charge is in excess of
ten cents to or for the use of any place  of  amusement  in  the  state,
except  charges  for  admission to (I) race tracks[, boxing, sparring or
wrestling matches or exhibitions] which  charges  are  taxed  under  any
other  law  of  this  state, [or] (II) dramatic or musical arts perform-
ances, [or] (III) live circus performances, or (IV) motion picture thea-
ters, and except charges to a patron for admission to, or use of, facil-
ities  for  sporting  activities  in  which  such  patron  is  to  be  a
participant,  such  as bowling alleys and swimming pools. For any person
having the permanent use or possession of a box or seat or a lease or  a
license,  other  than a season ticket, for the use of a box or seat at a
place of amusement, the tax shall be upon the amount for which a similar
box or seat is sold for each performance or exhibition at which the  box
or seat is used or reserved by the holder, licensee or lessee, and shall
be paid by the holder, licensee or lessee.
  S  4.  Section  29  of chapter 912 of the laws of 1920 relating to the
regulation of boxing, sparring and  wrestling  matches,  as  amended  by
chapter  833  of the laws of 1987, the section heading and subdivision 1
as amended by chapter 437 of the laws of 2002, is  amended  to  read  as
follows:

S. 6359--B                         319                        A. 8559--B

  S 29.  Notice of contest or exhibition[; collection of tax].  1. Every
individual, corporation, association or club holding any professional or
amateur  boxing, sparring or professional wrestling match or exhibition,
for which an admission fee is charged  or  received,  shall  notify  the
athletic  commission ten days in advance of the holding of such contest.
All tickets of admission to any such boxing,  sparring  or  professional
wrestling  match  or  exhibition  shall  be procured from a printer duly
authorized by the state athletic commission to print  such  tickets  and
shall bear clearly upon the face thereof the purchase price and location
of  same.  Any  individual,  corporation, association or club failing to
fully comply with this section shall be subject to a  penalty  of  fifty
dollars  to  be  collected  by  and paid to the department of state. Any
individual, corporation, association or club is prohibited from  operat-
ing  any  shows  or exhibitions until all penalties due pursuant to this
section [and taxes, interest and penalties due pursuant to article nine-
teen of the tax law] have been paid.
  2.   [Pursuant to  direction  by  the  commissioner  of  taxation  and
finance,  employees  or officers of the athletic commission shall act as
agents of the commissioner of taxation and finance to  collect  the  tax
imposed  by  article  nineteen  of the tax law.] The athletic commission
shall provide the commissioner of taxation and finance with such  infor-
mation  and  technical  assistance  as  may  be necessary for the proper
administration of [such tax] STATE AND  LOCAL  SALES  TAXES  IMPOSED  ON
CHARGES  FOR  ADMISSION  TO A PLACE OF AMUSEMENT WHERE ANY SUCH MATCH OR
EXHIBITION WILL BE HELD.
  S 5. Section 30 of chapter 912 of the laws of  1920  relating  to  the
regulation  of  boxing,  sparring  and  wrestling matches, as amended by
chapter 833 of the laws of 1987, is amended to read as follows:
  S 30. Disposition of receipts. All receipts of the commission shall be
paid into the state treasury. [Provided, however, that receipts from the
tax imposed by article nineteen of the tax law  shall  be  deposited  as
provided by section one hundred seventy-one-a of the tax law.]
  S  6. Notwithstanding the repeal of article 19 and section 1820 of the
tax law by this act, all provisions of such article 19 and section 1820,
in respect to the imposition, exemption,  assessment,  payment,  payment
over,  determination,  collection,  and  credit or refund of tax imposed
thereunder, the filing of forms and returns, the preservation of records
for the purposes of such tax, the secrecy of returns, the disposition of
revenues, and  the  civil  and  criminal  penalties  applicable  to  the
violation  of  the provisions of such article 19, shall continue in full
force and effect with respect to all such tax accrued up to September 1,
2014; all actions and  proceedings,  civil  or  criminal,  commenced  or
authorized  to  be commenced under or by virtue of any provision of such
article 19 so repealed, and pending or able to be commenced prior to the
effective date of this act, may be commenced, prosecuted and defended to
final effect in the same manner as they might if  such  provisions  were
not so repealed.
  S  7.  This  act shall take effect September 1, 2014 and the state and
local sales taxes arising on the date this act shall have  taken  effect
shall  apply  to any admission to or the use of facilities of a place of
amusement occurring on or after that date, whether or not the  admission
charge has been paid prior to such date, unless the tickets were actual-
ly sold and delivered prior to such date to a person entering such place
of amusement on or after such date.

                                 PART Z

S. 6359--B                         320                        A. 8559--B

  Section  1. Clause (F) of subparagraph (ii) of paragraph 1 of subdivi-
sion b of section 1612 of the tax law, as amended by chapter 174 of  the
laws of 2013, is amended to read as follows:
  (F) notwithstanding clauses (A), (B), (C), (D) and (E) of this subpar-
agraph,  when  a  vendor track, is located in Sullivan county and within
sixty miles from any gaming facility in a contiguous state  such  vendor
fee shall, for a period of [six] SEVEN years commencing April first, two
thousand  eight,  be at a rate of forty-one percent of the total revenue
wagered at the vendor track after payout for  prizes  pursuant  to  this
chapter, after which time such rate shall be as for all tracks in clause
(C) of this subparagraph.
  S  2.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 2014.

                                 PART AA

  Section 1. Paragraph (a) of subdivision  1  of  section  1003  of  the
racing, pari-mutuel wagering and breeding law, as amended by chapter 174
of the laws of 2013, is amended to read as follows:
  (a)  Any  racing  association  or  corporation  or  regional off-track
betting corporation, authorized to conduct  pari-mutuel  wagering  under
this  chapter, desiring to display the simulcast of horse races on which
pari-mutuel betting shall be permitted in the manner and subject to  the
conditions  provided for in this article may apply to the commission for
a license so to do.  Applications for licenses shall be in such form  as
may  be  prescribed by the commission and shall contain such information
or other material or evidence as the commission may require. No  license
shall be issued by the commission authorizing the simulcast transmission
of  thoroughbred  races  from a track located in Suffolk county. The fee
for such licenses shall be five hundred dollars per  simulcast  facility
and  for  account wagering licensees that do not operate either a simul-
cast facility that is open to the public within the state of New York or
a licensed racetrack within the state, twenty thousand dollars per  year
payable  by  the licensee to the commission for deposit into the general
fund. Except as provided in  this  section,  the  commission  shall  not
approve any application to conduct simulcasting into individual or group
residences,  homes  or  other areas for the purposes of or in connection
with pari-mutuel wagering. The [board] COMMISSION may approve simulcast-
ing into residences, homes or other areas to be conducted jointly by one
or more regional off-track betting corporations and one or more  of  the
following:  a franchised corporation, thoroughbred racing corporation or
a harness racing corporation or association; provided (i) the simulcast-
ing consists only of those races on which pari-mutuel betting is author-
ized by this chapter at one or more simulcast facilities for each of the
contracting off-track betting corporations which  shall  include  wagers
made  in  accordance  with  section  one  thousand fifteen, one thousand
sixteen and one thousand seventeen of  this  article;  provided  further
that  the  contract  provisions or other simulcast arrangements for such
simulcast facility shall be no less favorable than those  in  effect  on
January  first,  two  thousand  five;  (ii)  that each off-track betting
corporation having within its  geographic  boundaries  such  residences,
homes  or  other  areas  technically  capable of receiving the simulcast
signal shall be a contracting party; (iii) the distribution of  revenues
shall  be  subject  to  contractual agreement of the parties except that
statutory payments to  non-contracting  parties,  if  any,  may  not  be
reduced;  provided,  however,  that nothing herein to the contrary shall

S. 6359--B                         321                        A. 8559--B

prevent a track from televising its races on an irregular basis primari-
ly for promotional or marketing purposes as found by the [board] COMMIS-
SION.  For purposes of this paragraph, the  provisions  of  section  one
thousand thirteen of this article shall not apply. Any agreement author-
izing  an  in-home  simulcasting  experiment  commencing  prior  to  May
fifteenth, nineteen hundred ninety-five, may,  and  all  its  terms,  be
extended   until   June  thirtieth,  two  thousand  [fourteen]  FIFTEEN;
provided, however, that any party to such agreement may elect to  termi-
nate  such  agreement upon conveying written notice to all other parties
of such agreement at least forty-five days prior to the  effective  date
of  the  termination,  via  registered  mail.  Any party to an agreement
receiving such notice of an intent to terminate, may request the [board]
COMMISSION to mediate between the parties new terms and conditions in  a
replacement agreement between the parties as will permit continuation of
an  in-home  experiment  until  June  thirtieth, two thousand [fourteen]
FIFTEEN; and (iv) no in-home simulcasting in  the  thoroughbred  special
betting  district  shall  occur  without  the  approval  of the regional
thoroughbred track.
  S 2. Subparagraph (iii) of paragraph d of  subdivision  3  of  section
1007 of the racing, pari-mutuel wagering and breeding law, as amended by
section  2  of  part  U of chapter 59 of the laws of 2013, is amended to
read as follows:
  (iii) Of the sums retained by a receiving track located in Westchester
county on races received from a franchised corporation, for  the  period
commencing January first, two thousand eight and continuing through June
thirtieth,  two thousand [fourteen] FIFTEEN, the amount used exclusively
for purses to be awarded at races  conducted  by  such  receiving  track
shall  be computed as follows: of the sums so retained, two and one-half
percent of the total pools. Such amount shall be increased or  decreased
in  the  amount  of fifty percent of the difference in total commissions
determined by comparing the total commissions available after July twen-
ty-first, nineteen hundred ninety-five to  the  total  commissions  that
would  have  been  available  to  such track prior to July twenty-first,
nineteen hundred ninety-five.
  S 3. The opening paragraph of subdivision 1 of  section  1014  of  the
racing,  pari-mutuel  wagering and breeding law, as amended by section 3
of part U of chapter 59 of the laws of  2013,  is  amended  to  read  as
follows:
  The  provisions of this section shall govern the simulcasting of races
conducted at thoroughbred tracks located in another state or country  on
any day during which a franchised corporation is conducting a race meet-
ing  in  Saratoga  county  at Saratoga thoroughbred racetrack until June
thirtieth, two thousand [fourteen] FIFTEEN and on any day regardless  of
whether  or not a franchised corporation is conducting a race meeting in
Saratoga county at Saratoga thoroughbred racetrack after June thirtieth,
two thousand [fourteen] FIFTEEN.   On any  day  on  which  a  franchised
corporation has not scheduled a racing program but a thoroughbred racing
corporation  located  within  the state is conducting racing, every off-
track betting corporation branch office and every simulcasting  facility
licensed  in  accordance  with  section  one  thousand  seven (that have
entered into a written agreement  with  such  facility's  representative
horsemen's  organization,  as  approved  by the [board] COMMISSION), one
thousand eight, or one thousand nine of this article shall be authorized
to accept wagers and display the live simulcast signal from thoroughbred
tracks located in another  state  or  foreign  country  subject  to  the
following provisions:

S. 6359--B                         322                        A. 8559--B

  S 4. Subdivision 1 of section 1015 of the racing, pari-mutuel wagering
and breeding law, as amended by section 4 of part U of chapter 59 of the
laws of 2013, is amended to read as follows:
  1.  The  provisions  of  this section shall govern the simulcasting of
races conducted at harness tracks located in another  state  or  country
during  the period July first, nineteen hundred ninety-four through June
thirtieth, two thousand [fourteen] FIFTEEN.  This section  shall  super-
sede all inconsistent provisions of this chapter.
  S  5.  The  opening  paragraph of subdivision 1 of section 1016 of the
racing, pari-mutuel wagering and breeding law, as amended by  section  5
of  part  U  of  chapter  59  of the laws of 2013, is amended to read as
follows:
  The provisions of this section shall govern the simulcasting of  races
conducted  at thoroughbred tracks located in another state or country on
any day during which a franchised corporation is not conducting  a  race
meeting in Saratoga county at Saratoga thoroughbred racetrack until June
thirtieth,  two  thousand  [fourteen] FIFTEEN.   Every off-track betting
corporation branch office and every simulcasting  facility  licensed  in
accordance  with  section  one  thousand  seven that have entered into a
written agreement with such facility's representative horsemen's  organ-
ization as approved by the [board] COMMISSION, one thousand eight or one
thousand  nine  of this article shall be authorized to accept wagers and
display the live  full-card  simulcast  signal  of  thoroughbred  tracks
(which  may  include  quarter  horse or mixed meetings provided that all
such wagering on such races shall be construed to be thoroughbred races)
located in another state or foreign country, subject  to  the  following
provisions;  provided,  however,  no  such  written  agreement  shall be
required of a franchised corporation licensed in accordance with section
one thousand seven of this article:
  S 6. The opening paragraph of section 1018 of the racing,  pari-mutuel
wagering  and breeding law, as amended by section 6 of part U of chapter
59 of the laws of 2013, is amended to read as follows:
  Notwithstanding any other provision of this chapter,  for  the  period
July  twenty-fifth, two thousand one through September eighth, two thou-
sand [thirteen] FOURTEEN, when a franchised corporation is conducting  a
race  meeting  within the state at Saratoga Race Course, every off-track
betting  corporation  branch  office  and  every  simulcasting  facility
licensed in accordance with section one thousand seven (that has entered
into  a written agreement with such facility's representative horsemen's
organization as approved by the [board] COMMISSION), one thousand  eight
or  one  thousand  nine  of  this  article shall be authorized to accept
wagers and display the live simulcast signal  from  thoroughbred  tracks
located  in  another  state,  provided  that  such facility shall accept
wagers on races run  at  all  in-state  thoroughbred  tracks  which  are
conducting   racing   programs  subject  to  the  following  provisions;
provided, however, no such written agreement  shall  be  required  of  a
franchised  corporation licensed in accordance with section one thousand
seven of this article.
  S 7. Section 32 of chapter 281 of  the  laws  of  1994,  amending  the
racing,  pari-mutuel  wagering and breeding law  and other laws relating
to simulcasting, as amended by section 7 of part U of chapter 59 of  the
laws of 2013, is amended to read as follows:
  S  32.  This act shall take effect immediately and the pari-mutuel tax
reductions in section six  of  this  act  shall  expire  and  be  deemed
repealed  on  July  1,  [2014]  2015;  provided,  however,  that nothing
contained herein shall be deemed to affect the  application,  qualifica-

S. 6359--B                         323                        A. 8559--B

tion,  expiration,  or  repeal  of  any  provision of law amended by any
section of this act, and such provisions shall be applied  or  qualified
or  shall  expire  or be deemed repealed in the same manner, to the same
extent  and on the same date as the case may be as otherwise provided by
law; provided further, however, that sections twenty-three  and  twenty-
five of this act shall remain in full force and effect only until May 1,
1997 and at such time shall be deemed to be repealed.
  S  8.  Section  54  of  chapter  346 of the laws of 1990, amending the
racing, pari-mutuel wagering and breeding law and other laws relating to
simulcasting and the imposition of certain taxes, as amended by  section
8  of  part  U  of chapter 59 of the laws of 2013, is amended to read as
follows:
  S 54. This act  shall  take  effect  immediately;  provided,  however,
sections  three  through twelve of this act shall take effect on January
1, 1991, and section 1013 of the racing, pari-mutuel wagering and breed-
ing law, as added by section thirty-eight of this act, shall expire  and
be  deemed repealed on July 1, [2014] 2015; and section eighteen of this
act shall take effect on July 1, 2008 and sections fifty-one and  fifty-
two  of this act shall take effect as of the same date as chapter 772 of
the laws of 1989 took effect.
  S 9. Paragraph (a) of subdivision 1 of  section  238  of  the  racing,
pari-mutuel wagering and breeding law, as amended by section 9 of part U
of chapter 59 of the laws of 2013, is amended to read as follows:
  (a)  The  franchised  corporation  authorized  under  this  chapter to
conduct pari-mutuel betting at a race meeting or races run thereat shall
distribute all sums deposited in any pari-mutuel pool to the holders  of
winning  tickets therein, provided such tickets be presented for payment
before April first of the year following the  year  of  their  purchase,
less  an  amount  which  shall be established and retained by such fran-
chised corporation of between twelve to  seventeen  per  centum  of  the
total  deposits in pools resulting from on-track regular bets, and four-
teen to twenty-one per centum of the total deposits in  pools  resulting
from on-track multiple bets and fifteen to twenty-five per centum of the
total  deposits in pools resulting from on-track exotic bets and fifteen
to thirty-six per centum of the total deposits in pools  resulting  from
on-track  super  exotic  bets, plus the breaks. The retention rate to be
established is subject to the prior approval of the [racing and wagering
board] GAMING COMMISSION. Such rate may not be changed  more  than  once
per  calendar  quarter  to be effective on the first day of the calendar
quarter. "Exotic bets" and "multiple bets" shall have the  meanings  set
forth  in  section five hundred nineteen of this chapter.  "Super exotic
bets" shall have the meaning set forth in section three hundred  one  of
this  chapter. For purposes of this section, a "pick six bet" shall mean
a single bet or wager on the outcomes of six races. The breaks are here-
by defined as the odd cents over any multiple of five for payoffs great-
er than one dollar five cents but  less  than  five  dollars,  over  any
multiple  of  ten  for  payoffs  greater than five dollars but less than
twenty-five dollars, over any multiple of twenty-five for payoffs great-
er than twenty-five dollars but less than two hundred fifty dollars,  or
over  any  multiple of fifty for payoffs over two hundred fifty dollars.
Out of the amount so retained there shall be  paid  by  such  franchised
corporation to the commissioner of taxation and finance, as a reasonable
tax  by the state for the privilege of conducting pari-mutuel betting on
the races run at the race meetings held by such franchised  corporation,
the  following  percentages  of  the total pool for regular and multiple
bets five per centum of regular bets and four  per  centum  of  multiple

S. 6359--B                         324                        A. 8559--B

bets  plus  twenty per centum of the breaks; for exotic wagers seven and
one-half per centum plus twenty per centum of the breaks, and for  super
exotic  bets  seven and one-half per centum plus fifty per centum of the
breaks.  For the period June first, nineteen hundred ninety-five through
September ninth, nineteen  hundred  ninety-nine,  such  tax  on  regular
wagers  shall  be three per centum and such tax on multiple wagers shall
be two and one-half per centum, plus twenty per centum  of  the  breaks.
For  the  period  September  tenth, nineteen hundred ninety-nine through
March thirty-first, two thousand one, such tax on all  wagers  shall  be
two  and six-tenths per centum and for the period April first, two thou-
sand one through December thirty-first, two thousand [fourteen] FIFTEEN,
such tax on all wagers shall be one and six-tenths per centum, plus,  in
each  such  period,  twenty per centum of the breaks. Payment to the New
York state thoroughbred breeding and development fund by such franchised
corporation shall be one-half of one per centum of total daily  on-track
pari-mutuel  pools  resulting from regular, multiple and exotic bets and
three per centum of super exotic bets provided, however,  that  for  the
period September tenth, nineteen hundred ninety-nine through March thir-
ty-first,  two thousand one, such payment shall be six-tenths of one per
centum of regular, multiple and exotic pools and for  the  period  April
first,  two  thousand  one  through  December thirty-first, two thousand
[fourteen] FIFTEEN, such payment shall be seven-tenths of one per centum
of such pools.
  S 10. This act shall take effect immediately.

                                 PART BB

  Section 1. Clause (H) of subparagraph (ii) of paragraph 1 of  subdivi-
sion b of section 1612 of the tax law, as separately amended by chapters
174 and 175 of the laws of 2013, is amended to read as follows:
  (H)  notwithstanding  clauses  (A), (B), (C), (D), (E), (F) and (G) of
this subparagraph, the track operator of a vendor track shall be  eligi-
ble  for  a  vendor's  capital  award of up to four percent of the total
revenue wagered at the vendor track after payout for prizes pursuant  to
this  chapter,  which  shall  be  used  exclusively  for capital project
investments to improve the facilities of the vendor track which  promote
or  encourage  increased attendance at the video lottery gaming facility
including, but not limited to hotels, other lodging  facilities,  enter-
tainment   facilities,  retail  facilities,  dining  facilities,  events
arenas, parking garages and other  improvements  that  enhance  facility
amenities;  provided  that such capital investments shall be approved by
the division, in consultation with the state racing and wagering  board,
and  that  such vendor track demonstrates that such capital expenditures
will increase patronage at such vendor track's facilities  and  increase
the amount of revenue generated to support state education programs. The
annual  amount of such vendor's capital awards that a vendor track shall
be eligible to receive shall be limited  to  two  million  five  hundred
thousand  dollars,  except for Aqueduct racetrack, for which there shall
be no vendor's capital awards. Except for tracks having  less  than  one
thousand  one  hundred  video  gaming  machines, and except for a vendor
track located west of State Route 14 from Sodus Point to the  Pennsylva-
nia  border  within  New  York, each track operator shall be required to
co-invest an amount of  capital  expenditure  equal  to  its  cumulative
vendor's  capital  award. For all tracks, except for Aqueduct racetrack,
the amount of any vendor's capital award that is not used during any one
year period may be carried over  into  subsequent  years  ending  before

S. 6359--B                         325                        A. 8559--B

April  first,  two thousand [fourteen] FIFTEEN.  Any amount attributable
to a capital expenditure approved prior to  April  first,  two  thousand
[fourteen]  FIFTEEN  and  completed  before  April  first,  two thousand
[sixteen]  SEVENTEEN;  or  approved  prior  to April first, two thousand
[eighteen] NINETEEN and  completed  before  April  first,  two  thousand
[twenty]  TWENTY-ONE  for  a vendor track located west of State Route 14
from Sodus Point to the Pennsylvania border within New  York,  shall  be
eligible  to  receive  the  vendor's  capital award. In the event that a
vendor track's capital expenditures, approved by the division  prior  to
April  first,  two  thousand  [fourteen]  FIFTEEN and completed prior to
April first, two thousand [sixteen] SEVENTEEN, exceed the vendor track's
cumulative capital award during the five year period ending April first,
two thousand [fourteen] FIFTEEN, the vendor shall  continue  to  receive
the  capital  award  after  April first, two thousand [fourteen] FIFTEEN
until such approved capital expenditures are paid to  the  vendor  track
subject  to  any  required  co-investment.  In no event shall any vendor
track that receives a vendor fee pursuant to clause (F) or (G)  of  this
subparagraph  be  eligible  for  a  vendor's  capital  award  under this
section. Any operator of a vendor track which has  received  a  vendor's
capital  award,  choosing to divest the capital improvement toward which
the award was applied, prior to the full  depreciation  of  the  capital
improvement in accordance with generally accepted accounting principles,
shall  reimburse  the  state  in  amounts equal to the total of any such
awards. Any capital award not approved for a capital  expenditure  at  a
video  lottery  gaming  facility by April first, two thousand [fourteen]
FIFTEEN shall be deposited into the state  lottery  fund  for  education
aid; and
  S 2. This act shall take effect immediately.

                                 PART CC

  Section 1. Article 12 of the tax law is REPEALED.
  S 2. Subdivision fourth of section 171 of the tax law is REPEALED.
  S  3.  Subparagraph (iii) of paragraph (b) of subdivision 1 of section
173-a of the tax law is REPEALED.
  S 4. Section 176 of the tax law, as amended by chapter 267 of the laws
of 1987, is amended to read as follows:
  S 176. Transfer of  the  powers  and  duties  of  the  comptroller  in
relation  to the assessment or collection of certain taxes. On and after
July first, nineteen hundred twenty-one, all the powers and  duties  now
conferred or imposed upon the state comptroller in relation to the taxa-
tion  of corporations under articles nine and nine-A of this chapter, in
relation to the taxation of transfers of property, under article ten  of
this  chapter, [in relation to the taxation of transfers of stock, under
article twelve of this chapter,] and in relation to  taxation  upon  and
with  respect  to personal income, under article sixteen of this chapter
(as such article was in effect on December thirtieth,  nineteen  hundred
sixty),  shall  be  transferred to and thereafter shall be exercised and
performed by the commissioner, except as powers  and  duties  under  any
such  article  are  expressly  conferred  upon or continued in the state
comptroller by acts of the legislature of nineteen  hundred  twenty-one,
enacted  subsequent  to  chapter  ninety of the laws of nineteen hundred
twenty-one.
  S 5. Subparagraph 5 of paragraph (a) and subparagraph 4-a of paragraph
(b) of subdivision 9 of section 208 of the tax law,  subparagraph  5  of
paragraph  (a)  as amended by chapter 61 of the laws of 1989, clause (i)

S. 6359--B                         326                        A. 8559--B

of subparagraph 5 as amended by section 2 of part C of chapter 25 of the
laws of 2009, and subparagraph 4-a of paragraph (b) of subdivision 9  of
section  208  of  the  tax law, as amended by chapter 760 of the laws of
1992, are amended to read as follows:
  (5)  (i)  any  refund  or  credit of a tax imposed under this article,
article twenty-three, or article thirty-two of this chapter,  for  which
tax  no exclusion or deduction was allowed in determining the taxpayer's
entire net income under this article, article twenty-three,  or  article
thirty-two  of  this  chapter  for  any prior year, OR (ii) [a refund or
credit of general corporation  tax  allowed  by  subdivision  eleven  of
section  11-604  of  the administrative code of the city of New York, or
(iii)] any refund or credit of a tax imposed under sections one  hundred
eighty-three, one hundred eighty-three-a, one hundred eighty-four or one
hundred eighty-four-a of this chapter, and
  (4-a)(A) [the entire amount allowable as an exclusion or deduction for
stock transfer taxes imposed by article twelve of this chapter in deter-
mining  the  entire  taxable  income  which  the taxpayer is required to
report to the United States treasury department but only to  the  extent
that  such  taxes  are  incurred and paid in market making transactions,
(B)] in those instances where a credit for the special additional  mort-
gage  recording tax credit is allowed under paragraph (a) of subdivision
seventeen of section two hundred ten of this article, the amount allowed
as an exclusion or deduction for the special additional mortgage record-
ing tax imposed by subdivision one-a of section two hundred  fifty-three
of  this  chapter  in  determining  the  entire taxable income which the
taxpayer is required to report to the United States treasury department,
and [(C)] (B) unless the credit allowed pursuant to  subdivision  seven-
teen  of  section  two  hundred  ten of this article is reflected in the
computation of the gain or loss so as to result in an increase  in  such
gain or decrease of such loss, for federal income tax purposes, from the
sale  or  other  disposition  of  the property with respect to which the
special additional mortgage recording tax imposed pursuant  to  subdivi-
sion  one-a of section two hundred fifty-three of this chapter was paid,
the amount of the special additional mortgage recording tax  imposed  by
subdivision  one-a  of  section  two hundred fifty-three of this chapter
which was paid and which is reflected in the computation of the basis of
the property so as to result in a decrease in such gain or  increase  in
such  loss for federal income tax purposes from the sale or other dispo-
sition of the property with respect to which such tax was paid.
  S 6. Subdivision 1 of section 472 of the tax law, as amended by  chap-
ter  629  of  the laws of 1996, and as further amended by section 104 of
part A of chapter 62 of the laws of 2011, is amended to read as follows:
  1. The commissioner shall prescribe, prepare  and  furnish  stamps  of
such denominations and quantities as may be necessary for the payment of
the tax on cigarettes imposed by this article, and may from time to time
and  as  often as he deems advisable provide for the issuance and exclu-
sive use of stamps of a new design and forbid the use of stamps  of  any
other design[, in the manner and with the effect provided in section two
hundred  seventy-four of this chapter]. THE COMMISSIONER MAY MAKE, ENTER
INTO AND EXECUTE FOR AND  IN  BEHALF  OF  THE  STATE  SUCH  CONTRACT  OR
CONTRACTS FOR DIES, PLATES AND PRINTING NECESSARY FOR THE MANUFACTURE OF
THE STAMPS PROVIDED FOR BY THIS ARTICLE, AND HIRE STAFF AND PROVIDE SUCH
STATIONARY  TOGETHER  WITH  SUCH  BOOKS  AND  BLANKS  AS  IN  HIS OR HER
DISCRETION MAY BE NECESSARY FOR PUTTING INTO OPERATION THE PROVISIONS OF
THIS ARTICLE; THE COMMISSIONER SHALL BE THE  CUSTODIAN  OF  ALL  STAMPS,
DIES,  PLATES OR OTHER MATERIAL OR THING FURNISHED AND USED IN THE MANU-

S. 6359--B                         327                        A. 8559--B

FACTURE OF SUCH STATE TAX STAMPS, AND ALL EXPENSES  INCURRED  UNDER  THE
COMMISSIONER'S  DIRECTION IN CARRYING OUT THE PROVISIONS OF THIS ARTICLE
SHALL BE PAID TO THE COMMISSIONER BY THE STATE TREASURER FROM ANY MONEYS
APPROPRIATED  FOR  SUCH  PURPOSE. The commissioner shall make provisions
for the sale of such stamps at such places and at such times as  he  may
deem necessary and may license agents for such purpose. The commissioner
may  license  dealers  in  cigarettes, who maintain separate warehousing
facilities for the purpose of receiving and distributing cigarettes  and
conducting  their  business, who have received commitments from at least
two cigarette manufacturers whose aggregate market  share  is  at  least
forty  percent  of  the  New York state cigarette market, and importers,
exporters and manufacturers of cigarettes, and other persons  within  or
without  the state as agents to buy or affix stamps to be used in paying
the tax herein imposed, but an agent shall at all times have  the  right
to  appoint  the  person in his employ who is to affix the stamps to any
cigarettes under the agent's control. The fee for filing  such  applica-
tion  for an agent's license shall be one thousand five hundred dollars,
unless such fee has been paid during the  preceding  twelve  months,  in
which case, the fee for a new license shall be one thousand dollars. All
of  the  provisions of section four hundred eighty relating to wholesale
dealers' licenses, including the procedure for  suspension,  revocation,
refusal  to  license and for hearings, except for paragraphs (c) and (g)
of subdivision one of such  section,  shall  be  applicable  to  agents'
licenses  applied  for  or  granted pursuant to this section, as if such
provisions had been set forth  in  full  in  this  subdivision  and  had
expressly  referred  to  the applicant for, or the holder of, an agent's
license. Whenever the commissioner shall sell and deliver  to  any  such
agent  any  such  stamps,  such  agent  shall  be entitled to receive as
compensation for his services and expenses as such agent in  selling  or
affixing  such stamps, and to retain out of the moneys to be paid by him
for such stamps, a commission on the par value thereof. The commissioner
is hereby authorized to prescribe a schedule of commissions, not exceed-
ing five per centum, allowable to such agent  for  buying  and  affixing
such  stamps. Such schedule shall be uniform with respect to the differ-
ent types of stamps used, and may be on a graduated scale  with  respect
to  the  number  of  stamps  purchased.  The  commissioner  may,  in his
discretion, permit an agent to pay for such stamps  within  thirty  days
after  the  date of purchase and may require any such agent to file with
the department of taxation and finance a bond issued by a surety company
approved by the superintendent of financial services as to solvency  and
responsibility and authorized to transact business in the state or other
security  acceptable  to the commissioner, in such amount as the commis-
sioner may fix, to secure the payment of any sums due  from  such  agent
pursuant  to this article. If securities are deposited as security under
this subdivision, such securities shall be kept in the  custody  of  the
commissioner and may be sold by the commissioner if it becomes necessary
so  to  do  in order to recover any sums due from such agent pursuant to
this article, but no such sale shall be had until after such agent shall
have had opportunity to litigate the validity of any tax if it elects so
to do. Upon any such sale, the surplus, if any, above the sums due under
this article shall be returned to such agent.
  S 7. Section 463 of the banking law, as added by chapter  608  of  the
laws of 1996, is amended to read as follows:
  S  463. [Exemptions and individual] INDIVIDUAL liability of sharehold-
ers.  [The transfer of the shares of any credit union shall not be taxa-
ble under the provisions of article twelve of the tax law.]

S. 6359--B                         328                        A. 8559--B

  The shareholders of a credit union shall not  be  individually  liable
for the payment of the credit union's debts.
  S  8.  Subdivision 6 of section 3012 of the public authorities law, as
amended by chapter 868 of the laws  of  1975,  is  amended  to  read  as
follows:
  6.  Anything  in this article ten to the contrary notwithstanding, any
agreement or agreements with the holders of notes or bonds issued by any
municipal assistance corporation created by or pursuant to any title  of
this  article  shall  contain  a  clause  stating  in substance that any
provision in this article or in any such agreement or  agreements  which
relate  to  taxes  imposed  under  [article  twelve  or] sections eleven
hundred seven or eleven hundred eight of the tax law of the state or  to
the funds created by sections ninety-two-b, ninety-two-d or ninety-two-e
of the state finance law shall be deemed executory only to the extent of
the moneys available to the state in such funds from time to time and no
liability  on  account thereof shall be incurred by the state beyond the
moneys available in such funds.
  S 9. Section 92-b of the state finance law is REPEALED.
  S 10. Section 92-i of the state finance law is REPEALED.
  S 11. Subparagraph 6 of paragraph j of subdivision 1 of section 54  of
the state finance law is REPEALED.
  S  12. Subdivision (c) of section 11-503 of the administrative code of
the city of New York is REPEALED.
  S 13. Paragraph 4 of subdivision (b) of section 11-506 of the adminis-
trative code of the city of New York is REPEALED.
  S 14. Subdivision (g) of section 11-512 of the administrative code  of
the city of New York is REPEALED.
  S  15. Subdivision (g) of section 11-514 of the administrative code of
the city of New York is REPEALED.
  S 16. Clause (A) of subparagraph 4-a of paragraph (b) of subdivision 8
of section 11-602 of the administrative code of the city of New York  is
REPEALED.
  S  17.  Subdivision 11 of section 11-604 of the administrative code of
the city of New York is REPEALED.
  S 18. Paragraph (a) of subdivision 12 of section 11-604 of the  admin-
istrative code of the city of New York is amended to read as follows:
  (a)  [In  addition to the credit allowed by subdivision eleven of this
section, a] A taxpayer shall be allowed a credit against the tax imposed
by this subchapter to be credited or refunded in the manner  hereinafter
provided  in this section. The amount of such credit shall be the excess
of (A) the amount of sales and compensating use taxes imposed by section
eleven hundred seven of the tax law during the taxpayer's  taxable  year
which  became  legally  due  on  or  after and was paid on or after July
first, nineteen hundred seventy-seven, less any credits  or  refunds  of
such  taxes,  with  respect  to  the  purchase or use by the taxpayer of
machinery or equipment for use or consumption directly and predominantly
in the production  of  tangible  personal  property,  gas,  electricity,
refrigeration  or steam for sale, by manufacturing, processing, generat-
ing, assembling, refining, mining or extracting,  or  telephone  central
office  equipment or station apparatus or comparable telegraph equipment
for use directly and predominantly in receiving at destination or initi-
ating and  switching  telephone  or  telegraph  communication,  but  not
including  parts  with  a  useful  life  of one year or less or tools or
supplies used in connection with such machinery, equipment or  apparatus
over  (B)  the  amount of any credit for such sales and compensating use
taxes allowed or allowable against the taxes imposed by  subchapter  two

S. 6359--B                         329                        A. 8559--B

of  chapter  eleven  of  this  title for any periods embraced within the
taxable year of the taxpayer under this subchapter.
  S  19.  Subdivision  3 of section 11-606 of the administrative code of
the city of New York is REPEALED.
  S 20. Subdivision 11 of section 11-608 of the administrative  code  of
the city of New York is REPEALED.
  S  21.  (a) Notwithstanding the repeal of article 12 of the tax law by
this act, all provisions of such article 12 and any regulations  adopted
thereunder,  in respect to the assessment, payment, payment over, deter-
mination, collection and refund of tax imposed thereunder,  the  rebates
provided  for  in  section 280-a of the tax law, the filing of forms and
returns and the preservation of records for  the  purposes  of  the  tax
imposed by article 12, the secrecy of returns, the disposition of reven-
ues, and the civil and criminal penalties applicable to the violation of
the  provisions  of  such  article  12, shall continue in full force and
effect with respect to all such tax accrued up  to  the  date  this  act
takes  effect; all actions and proceedings, civil or criminal, commenced
or authorized to be commenced under or by virtue  of  any  provision  of
such  article  12 so repealed, and pending or able to be commenced prior
to the taking effect of such repeal, may be  commenced,  prosecuted  and
defended  to  final  effect  in  the  same  manner as they might if such
provisions were not so repealed.
  (b) Notwithstanding any provision of law in article 12 of the tax  law
or  subdivision (a) of this section to the contrary, any application for
a rebate of tax paid under such article 12  must  be  filed  within  two
years from the effective date of this act.
  S  22.  This act shall take effect June 1, 2014; provided that section
ten of this act shall take effect July 1, 2016.

                                 PART DD

  Section 1. Subsection (b) of section 804 of the tax law, as  added  by
section  1  of  part  C of chapter 25 of the laws of 2009, is amended to
read as follows:
  (b) Individuals with net earnings  from  self-employment.  Individuals
with  earnings  from self-employment must make estimated tax payments of
the tax imposed by this article for the taxable year on the  same  dates
specified  in [subsection (a) of this section for the quarterly payments
of the tax imposed on the payroll expense of employers] PARAGRAPH ONE OF
SUBSECTION (C) OF SECTION SIX HUNDRED EIGHTY-FIVE OF THIS CHAPTER.    In
addition,  these  self-employed  individuals  must file a return for the
taxable year by the  [thirtieth]  FIFTEENTH  day  of  the  fourth  month
following the close of the taxable year. Paragraph one of subsection (d)
of  section  six  hundred eighty-five of this chapter shall not apply to
the estimated tax payments required by this subsection.
  S 2. Section 806 of the tax law, as added by section 1 of  part  C  of
chapter 25 of the laws of 2009, is amended to read as follows:
  S  806.  Procedural provisions. (A) GENERAL. All provisions of article
twenty-two of this chapter will apply to the provisions of this  article
in the same manner and with the same force and effect as if the language
of article twenty-two of this chapter had been incorporated in full into
this  article  and  had  been  specifically  adjusted  for and expressly
referred to the tax imposed by this article, except to the  extent  that
any provision is either inconsistent with a provision of this article or
is not relevant to this article. Notwithstanding the preceding sentence,

S. 6359--B                         330                        A. 8559--B

no  credit against tax in article twenty-two of this chapter can be used
to offset the tax due under this article.
  (B)  COMBINED  FILINGS.  NOTWITHSTANDING  ANY OTHER PROVISIONS OF THIS
ARTICLE:
  (1) THE COMMISSIONER MAY REQUIRE  THE  FILING  OF  A  COMBINED  RETURN
WHICH,  IN  ADDITION  TO  THE  RETURN  PROVIDED FOR IN SUBSECTION (B) OF
SECTION EIGHT HUNDRED FOUR OF THIS ARTICLE, MAY ALSO INCLUDE ANY OF  THE
RETURNS  REQUIRED TO BE FILED BY A RESIDENT INDIVIDUAL OF NEW YORK STATE
PURSUANT TO THE PROVISIONS OF SECTION  SIX  HUNDRED  FIFTY-ONE  OF  THIS
CHAPTER  AND WHICH MAY BE REQUIRED TO BE FILED BY SUCH INDIVIDUAL PURSU-
ANT TO ANY LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE  THIR-
TY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
  (2)  WHERE  A  COMBINED  RETURN  IS  REQUIRED, AND WITH RESPECT TO THE
PAYMENT OF ESTIMATED TAX, THE COMMISSIONER MAY ALSO REQUIRE THE  PAYMENT
TO  IT  OF  A  SINGLE  AMOUNT WHICH SHALL EQUAL THE TOTAL OF THE AMOUNTS
(TOTAL TAXES LESS ANY CREDITS OR REFUNDS) WHICH WOULD HAVE BEEN REQUIRED
TO BE PAID WITH THE RETURNS OR IN PAYMENT OF ESTIMATED TAX  PURSUANT  TO
THE  PROVISIONS OF THIS ARTICLE, THE PROVISIONS OF ARTICLE TWENTY-TWO OF
THIS CHAPTER, AND THE PROVISIONS OF LOCAL LAWS ENACTED UNDER THE AUTHOR-
ITY OF ARTICLE THIRTY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
  (3) Notwithstanding any other law to the  contrary,  the  commissioner
may require that all filings of forms or returns under this article must
be  filed  electronically and all payments of tax must be paid electron-
ically.
  S 3. The tax law is amended by adding a new section  807  to  read  as
follows:
  S 807. ENFORCEMENT WITH OTHER TAXES. (A) JOINT ASSESSMENT. IF THERE IS
ASSESSED  A  TAX  UNDER  THIS  ARTICLE  AND THERE IS ALSO ASSESSED A TAX
AGAINST THE SAME TAXPAYER PURSUANT TO ARTICLE TWENTY-TWO OF THIS CHAPTER
OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE  THIR-
TY,  ARTICLE  THIRTY-A, OR ARTICLE THIRTY-B OF THIS CHAPTER, AND PAYMENT
OF A SINGLE AMOUNT IS REQUIRED UNDER THE  PROVISIONS  OF  THIS  ARTICLE,
SUCH PAYMENT SHALL BE DEEMED TO HAVE BEEN MADE WITH RESPECT TO THE TAXES
SO  ASSESSED  IN  PROPORTION TO THE AMOUNTS OF SUCH TAXES DUE, INCLUDING
TAX, PENALTIES, INTERESTED AND ADDITIONS TO TAX.
  (B) JOINT ACTION. IF THE COMMISSIONER TAKES ACTION UNDER SUCH  ARTICLE
TWENTY-TWO  OR  UNDER  A  LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF
ARTICLE THIRTY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER  WITH  RESPECT  TO
THE  ENFORCEMENT  AND COLLECTION OF THE TAX OR TAXES ASSESSED UNDER SUCH
ARTICLES, THE  COMMISSIONER  SHALL,  WHENEVER  POSSIBLE  AND  NECESSARY,
ACCOMPANY  SUCH  ACTION  WITH A SIMILAR ACTION UNDER SIMILAR ENFORCEMENT
AND COLLECTION PROVISIONS OF THE TAX IMPOSED BY THIS ARTICLE.
  (C) APPORTIONMENT OF MONEYS COLLECTED  BY  JOINT  ACTION.  ANY  MONEYS
COLLECTED  AS A RESULT OF SUCH JOINT ACTION SHALL BE DEEMED TO HAVE BEEN
COLLECTED IN PROPORTION TO THE AMOUNTS DUE,  INCLUDING  TAX,  PENALTIES,
INTEREST  AND ADDITIONS TO TAX, UNDER ARTICLE TWENTY-TWO OF THIS CHAPTER
OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE  THIR-
TY,  THIRTY-A,  OR  THIRTY-B OF THIS CHAPTER AND THE TAX IMPOSED BY THIS
ARTICLE.
  (D) JOINT DEFICIENCY  ACTION.  WHENEVER  THE  COMMISSIONER  TAKES  ANY
ACTION  WITH RESPECT TO A DEFICIENCY OF INCOME TAX UNDER ARTICLE TWENTY-
TWO OF THIS CHAPTER OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHOR-
ITY OF ARTICLE THIRTY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER, OTHER THAN
THE ACTION SET FORTH IN SUBSECTION (A) OF THIS SECTION, THE COMMISSIONER
MAY IN HIS OR HER DISCRETION ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION
UNDER THIS ARTICLE.

S. 6359--B                         331                        A. 8559--B

  S 4. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2015.

                                 PART EE

  Section  1. Subdivision 4 of section 97-nnnn of the state finance law,
as added by chapter 174 of the laws of  2013,  is  amended  to  read  as
follows:
  4.  a.  As  used  in this section, the term "base year gaming revenue"
shall mean the sum of all revenue generated to  support  education  from
video  lottery  gaming as defined by section sixteen hundred seventeen-a
of the tax law in the twelve  months  preceding  the  operation  of  any
gaming facility pursuant to either article thirteen of the racing, pari-
mutuel wagering and breeding law or pursuant to paragraph four of SUBDI-
VISION  A  OF  section [one thousand six] SIXTEEN hundred seventeen-a of
the tax law.
  b. Amounts APPROPRIATED OR transferred in any year to support  elemen-
tary and secondary education shall be calculated as follows:
  (i)  an  amount  equal to the positive difference, if any, between the
base year gaming revenue amount and the sum of all revenue generated  to
support  education  from  video  lottery  gaming  as  defined by section
sixteen hundred seventeen-a of the tax law in the  current  fiscal  year
provided  that such positive amount, if any, shall be transferred to the
state lottery fund[;]. FOR THE PURPOSES OF THIS  PARAGRAPH,  THE  CALCU-
LATION  OF  THIS  POSITIVE DIFFERENCE SHALL BE ESTIMATED AND TRANSFERRED
MONTHLY BASED ON THE CUMULATIVE POSITIVE DIFFERENCE, IF ANY, IN THE SAME
CUMULATIVE MONTHS OF THE BASE YEAR AND  THE  CUMULATIVE  MONTHS  OF  THE
CURRENT  FISCAL YEAR TO DATE, LESS AMOUNTS PREVIOUSLY TRANSFERRED IN THE
CURRENT FISCAL YEAR. PROVIDED, HOWEVER, IF THE AMOUNT PREVIOUSLY  TRANS-
FERRED  IN  THE  CURRENT  FISCAL  YEAR  EXCEEDS  THE CUMULATIVE POSITIVE
DIFFERENCE, AN AMOUNT EQUAL TO THE EXCESS TRANSFERRED MAY BE TRANSFERRED
BACK FROM THE STATE LOTTERY FUND; and
  (ii) the amount of revenue collected [in the prior state fiscal year,]
to be distributed pursuant to paragraph a of subdivision three  of  this
section,  and  in excess of any amounts transferred pursuant to subpara-
graph (i) of this paragraph [in such prior fiscal year], if any.
  c. Notwithstanding any provision  of  law  to  the  contrary,  amounts
appropriated  or  transferred  from  the  commercial gaming revenue fund
pursuant to subparagraph (ii) of this paragraph shall  not  be  included
in: (i) the allowable growth amount computed pursuant to paragraph dd of
subdivision  one of section thirty-six hundred two of the education law,
(ii) the preliminary growth amount computed pursuant to paragraph ff  of
subdivision  one of section thirty-six hundred two of the education law,
and (iii) the allocable growth amount computed pursuant to paragraph  gg
of  subdivision  one  of section thirty-six hundred two of the education
law.
  S 2. Subdivision 5 of section 97-nnnn of the  state  finance  law,  as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  5. Notwithstanding the foregoing, monies received pursuant to:
  a.  sections  one  thousand  three hundred forty-five and one thousand
three hundred forty-eight of  [this  article]  THE  RACING,  PARI-MUTUEL
WAGERING  AND  BREEDING  LAW  shall  be  exclusively appropriated to the
office of alcoholism and substance abuse services to be used for problem
gambling education and treatment purposes.

S. 6359--B                         332                        A. 8559--B

  b. section one thousand three hundred forty-nine of [this article] THE
RACING, PARI-MUTUEL WAGERING  AND  BREEDING  LAW  shall  be  exclusively
appropriated to the commission for regulatory investigations.
  c.  section  one  thousand  three  hundred fifty of [this article] THE
RACING, PARI-MUTUEL WAGERING  AND  BREEDING  LAW  shall  be  exclusively
appropriated to the commission for costs regulation.
  S 3. Subdivisions (b) and (c) of section 52 of chapter 174 of the laws
of 2013 enacting the upstate New York gaming economic development act of
2013, are amended to read as follows:
  (b)  sections  six, seven, fourteen and sixteen of this act shall take
effect on the same date as the agreement between the  Oneida  Nation  of
New  York and the state of New York entered into on the sixteenth day of
May, 2013 takes effect; provided, further, that the amendments to subdi-
vision 2 of section 99-h of the state finance law made by section six of
this act shall take effect on the same date as  the  reversion  of  such
section  as provided in section 2 of chapter 747 of the laws of 2006, as
amended; provided, further, that the  amendments  to  subdivision  3  of
section  99-h of the state finance law made by section seven of this act
shall be subject to the expiration and reversion of such subdivision  as
provided  in  section  3 of part W of chapter 60 of the laws of 2011, as
amended when upon such date the provisions of section  seven-a  of  this
act  shall take effect; provided, further, that the amendments to subdi-
vision 3 of section 99-h of  the  state  finance  law  made  by  section
seven-a of this act shall be subject to the the expiration and reversion
of  such  section as provided in section 2 of chapter 747 of the laws of
2006, as amended when upon such date the provisions of section eight  of
this act shall take effect; [provided, further, however, that the amend-
ment  to  section  99-h of the state finance law made by section nine of
this act shall not affect the expiration of such section  and  shall  be
deemed  repealed  therewith;]  provided,  further, that the state gaming
commission shall notify the legislative bill  drafting  commission  upon
the occurrence of such agreement between the Oneida Nation and the state
of New York becoming effective in order that the commission may maintain
an  accurate  and timely effective data base of the official text of the
laws of the state of New York in furtherance of effecting the provisions
of section 44 of the legislative law and  section  70-b  of  the  public
officers law;
  (c) section [1368] 1367 of the racing, pari-mutuel wagering and breed-
ing  law,  as added by section two of this act, shall take effect upon a
change in federal law authorizing the activity permitted by such section
or upon a ruling by a court of competent jurisdiction that such activity
is lawful. The state gaming commission shall notify the legislative bill
drafting commission upon the occurrence of the change in federal law  or
upon  the  ruling of a court of competent jurisdiction in order that the
commission may maintain an accurate and timely effective  data  base  of
the official text of the laws of the state of New York in furtherance of
effecting  the  provisions  of  section  44  of  the legislative law and
section 70-b of the public officers law;
  S 4. Subdivision 3-a of section 99-h of  the  state  finance  law,  as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  3-a.  Ten  percent  of any of the funds actually received by the state
pursuant to the tribal-state compacts and agreements described in subdi-
vision two of this section [that are retained  in  the  fund  after  the
distributions  required by subdivision three of this section, but] prior
to the transfer of unsegregated moneys to the general fund  required  by
such  subdivision,  shall  be distributed to counties in each respective

S. 6359--B                         333                        A. 8559--B

exclusivity zone provided they do not otherwise receive a share of  said
revenues pursuant to this section. Such distribution shall be made among
such  counties  on  a  per capita basis, excluding the population of any
municipality  that receives a distribution pursuant to subdivision three
of this section.
  S 5. Subdivision g of section 1617-a of the tax law, as added by chap-
ter 174 of the laws of 2013, is amended to read as follows:
  g. Every video lottery gaming  license,  and  every  renewal  license,
shall  be  valid  for  a  period of five years, except that video gaming
licenses issued before the effective date of this subdivision  shall  be
for  a  term  expiring  on  THE APPLICANT'S NEXT BIRTHDAY FOLLOWING June
thirtieth, two thousand fourteen.
  The gaming commission may decline to renew any  license  after  notice
and an opportunity for hearing if it determines that:
  (1)  the  licensee has violated section one thousand six hundred seven
of this article;
  (2) the licensee has violated any rule, regulation  or  order  of  the
gaming commission;
  (3) the applicant or its officers, directors or significant stockhold-
ers,  as  determined  by the gaming commission, have been convicted of a
crime involving moral turpitude; or
  (4) that the character or fitness of the licensee  and  its  officers,
directors,  and  significant  stockholders,  as determined by the gaming
commission is such that the participation  of  the  applicant  in  video
lottery  gaming  or  related  activities  would be inconsistent with the
public interest, convenience or necessity or with the best interests  of
video gaming generally.
  S  6.  This  act shall take effect immediately; provided, that section
one of this act shall take effect April 1, 2015; provided, further, that
the amendments made to section three of this act shall be deemed to have
taken effect on the same date and in the same manner as chapter  174  of
the laws of 2013.

                                 PART FF

  Section 1. Subsections (yy) and (zz) of section 606 of the tax law, as
relettered  by section 5 of part H of chapter 1 of the laws of 2003, are
relettered (yyy) and (zzz) and a new subsection (bbb) is added  to  read
as follows:
  (BBB) REAL PROPERTY TAX FREEZE CREDIT. (1) AS USED IN THIS SUBSECTION:
  (A)  THE  TERM  "FREEZE-COMPLIANT  BUDGET"  MEANS A BUDGET OF A TAXING
JURISDICTION THAT HAS MET THE REQUIREMENTS OF SECTION TWO THOUSAND TWEN-
TY-THREE-B OF THE EDUCATION LAW OR SECTION THREE-D OF THE GENERAL MUNIC-
IPAL LAW, WHICHEVER IS APPLICABLE.
  (B) THE TERMS "INDEPENDENT SPECIAL  DISTRICT"  AND  "DEPENDENT  SCHOOL
DISTRICT"  HAVE  THE SAME MEANING AS SET FORTH IN SECTION THREE-D OF THE
GENERAL MUNICIPAL LAW.
  (C) THE TERM "STAR EXEMPTION" MEANS THE SCHOOL  TAX  RELIEF  EXEMPTION
AUTHORIZED  BY SECTION FOUR HUNDRED TWENTY-FIVE OF THE REAL PROPERTY TAX
LAW.
  (D) THE  TERM  "TAXING  JURISDICTION"  MEANS  A  COUNTY,  CITY,  TOWN,
VILLAGE, SCHOOL DISTRICT OR AN INDEPENDENT SPECIAL DISTRICT, EXCEPT THAT
SUCH  TERM  SHALL NOT INCLUDE A CITY WITH A POPULATION OF ONE MILLION OR
MORE, NOR SHALL IT INCLUDE A COUNTY WHOLLY LOCATED WITHIN SUCH A CITY.
  (2) AN INDIVIDUAL TAXPAYER WHO MEETS  THE  ELIGIBILITY  STANDARDS  SET
FORTH  IN PARAGRAPH THREE OF THIS SUBSECTION AND WHOSE PRIMARY RESIDENCE

S. 6359--B                         334                        A. 8559--B

IS LOCATED IN A TAXING JURISDICTION THAT HAS A  FREEZE-COMPLIANT  BUDGET
FOR  THE  FISCAL  YEAR  STARTING  IN TWO THOUSAND FOURTEEN, TWO THOUSAND
FIFTEEN OR TWO THOUSAND  SIXTEEN,  WHICHEVER  IS  APPLICABLE,  SHALL  BE
ALLOWED  A  CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE. SUBJECT TO
THE PROVISIONS OF PARAGRAPH SIX OF THIS SUBSECTION, SUCH CREDIT SHALL BE
DETERMINED AS FOLLOWS:
  (A) IF A SCHOOL DISTRICT OTHER THAN A DEPENDENT SCHOOL DISTRICT HAS  A
FREEZE-COMPLIANT  BUDGET  FOR  ITS  FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN, A CREDIT SHALL BE ALLOWED  FOR  THE  ELIGIBLE  TAXPAYER'S  TWO
THOUSAND  FOURTEEN TAXABLE YEAR IN THE AMOUNT BY WHICH THE REAL PROPERTY
TAXES IMPOSED UPON SUCH  RESIDENCE  BY  OR  ON  BEHALF  OF  THAT  SCHOOL
DISTRICT  FOR  THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN EXCEEDS
THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
THOUSAND THIRTEEN.
  (B)  IF  A TAXING JURISDICTION, OTHER THAN A SCHOOL DISTRICT OR A CITY
WITH A DEPENDENT SCHOOL DISTRICT, HAS A FREEZE-COMPLIANT BUDGET FOR  ITS
FISCAL  YEAR STARTING IN TWO THOUSAND FIFTEEN, A CREDIT SHALL BE ALLOWED
FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND FIFTEEN  TAXABLE  YEAR  IN  THE
AMOUNT  BY  WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY
OR ON BEHALF OF THAT TAXING JURISDICTION FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FIFTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR  THE
FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
  (C)  IF A SCHOOL DISTRICT OTHER THAN A DEPENDENT SCHOOL DISTRICT HAS A
FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR  STARTING  IN  TWO  THOUSAND
FIFTEEN, A CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOU-
SAND FIFTEEN TAXABLE YEAR IN THE AMOUNT BY WHICH THE REAL PROPERTY TAXES
IMPOSED  UPON SUCH RESIDENCE BY OR ON BEHALF OF SUCH SCHOOL DISTRICT FOR
THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS THE REAL  PROP-
ERTY TAXES SO IMPOSED FOR THE FISCAL YEAR IDENTIFIED AS FOLLOWS:
  (I)  IF  THE  SCHOOL DISTRICT'S BUDGET FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN WAS FREEZE-COMPLIANT, THE EXCESS SHALL  BE  DETER-
MINED WITH RESPECT TO THE FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN.
  (II)  IF  THE SCHOOL DISTRICT'S BUDGET FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN WAS NOT  FREEZE-COMPLIANT,  THE  EXCESS  SHALL  BE
DETERMINED  WITH  RESPECT  TO  THE  FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN.
  (D) IF A TAXING JURISDICTION, OTHER THAN A SCHOOL DISTRICT OR  A  CITY
WITH  A DEPENDENT SCHOOL DISTRICT, HAS A FREEZE-COMPLIANT BUDGET FOR ITS
FISCAL YEAR STARTING IN TWO THOUSAND SIXTEEN, A CREDIT SHALL BE  ALLOWED
FOR  THE  ELIGIBLE  TAXPAYER'S  TWO THOUSAND SIXTEEN TAXABLE YEAR IN THE
AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
OR ON BEHALF OF THAT TAXING JURISDICTION FOR THE FISCAL YEAR STARTING IN
TWO  THOUSAND SIXTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL YEAR IDENTIFIED AS FOLLOWS:
  (I) IF THE TAXING JURISDICTION'S BUDGET FOR THE FISCAL  YEAR  STARTING
IN TWO THOUSAND FIFTEEN WAS FREEZE-COMPLIANT, THE EXCESS SHALL BE DETER-
MINED WITH RESPECT TO THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
  (II)  IF THE TAXING JURISDICTION'S BUDGET FOR THE FISCAL YEAR STARTING
IN TWO THOUSAND FIFTEEN WAS NOT FREEZE-COMPLIANT, THE  EXCESS  SHALL  BE
DETERMINED  WITH  RESPECT  TO  THE  FISCAL YEAR STARTING IN TWO THOUSAND
FIFTEEN.
  (E) IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A  FREEZE-COMPLIANT
BUDGET  FOR  ITS  FISCAL  YEAR  STARTING IN TWO THOUSAND FOURTEEN, A TAX
CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO  THOUSAND  FOUR-
TEEN TAXABLE YEAR IN THE AMOUNT EQUIVALENT TO SIXTY-SEVEN PERCENT OF THE
AMOUNT  BY  WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY

S. 6359--B                         335                        A. 8559--B

OR ON BEHALF OF THAT CITY FOR THE FISCAL YEAR STARTING IN  TWO  THOUSAND
FOURTEEN  EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR
STARTING IN TWO THOUSAND THIRTEEN.
  (F)  IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A FREEZE-COMPLIANT
BUDGET FOR ITS FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN, A TAX CRED-
IT SHALL BE ALLOWED FOR THE ELIGIBLE  TAXPAYER'S  TWO  THOUSAND  FIFTEEN
TAXABLE YEAR AS FOLLOWS:
  (I)  IF THE CITY'S BUDGET FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN WAS FREEZE-COMPLIANT, A CREDIT SHALL BE ALLOWED FOR THE  ELIGI-
BLE TAXPAYER'S TWO THOUSAND FIFTEEN TAXABLE YEAR IN AN AMOUNT EQUIVALENT
TO  THIRTY-THREE  PERCENT OF THE AMOUNT BY WHICH THE REAL PROPERTY TAXES
IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN, TOGETHER WITH  AN  AMOUNT
EQUIVALENT  TO SIXTY-SEVEN PERCENT OF THE AMOUNT BY WHICH THE REAL PROP-
ERTY TAXES IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL  YEAR
STARTING  IN  TWO  THOUSAND  FIFTEEN  EXCEEDS THE REAL PROPERTY TAXES SO
IMPOSED FOR THE FISCAL YEAR STARTING IN TWO  THOUSAND  THIRTEEN;  AND  A
CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN
TAXABLE  YEAR  IN  AN  AMOUNT  EQUIVALENT TO THIRTY-THREE PERCENT OF THE
AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
THAT  CITY  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS
THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
THOUSAND THIRTEEN.
  (II) IF THE CITY'S BUDGET FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN  WAS  NOT  FREEZE-COMPLIANT,  A CREDIT SHALL BE ALLOWED FOR THE
ELIGIBLE TAXPAYER'S TWO THOUSAND  FIFTEEN  TAXABLE  YEAR  IN  AN  AMOUNT
EQUIVALENT  TO SIXTY-SEVEN PERCENT OF THE AMOUNT BY WHICH THE REAL PROP-
ERTY TAXES IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL  YEAR
STARTING  IN  TWO  THOUSAND  FIFTEEN  EXCEEDS THE REAL PROPERTY TAXES SO
IMPOSED FOR THE FISCAL YEAR STARTING IN TWO  THOUSAND  FOURTEEN;  AND  A
CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN
TAXABLE  YEAR  IN  AN  AMOUNT  EQUIVALENT TO THIRTY-THREE PERCENT OF THE
AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESIDENCE  BY
THAT  CITY  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS
THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
THOUSAND FOURTEEN.
  (G)  IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A FREEZE-COMPLIANT
BUDGET FOR ITS FISCAL YEAR STARTING IN TWO THOUSAND  FOURTEEN  BUT  DOES
NOT  HAVE  A FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR STARTING IN TWO
THOUSAND FIFTEEN, A TAX CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAY-
ER'S  TWO  THOUSAND  FIFTEEN  TAXABLE  YEAR   AN   AMOUNT   REPRESENTING
THIRTY-THREE  PERCENT  OF  THE  AMOUNT  BY WHICH THE REAL PROPERTY TAXES
IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL YEAR STARTING IN TWO THOUSAND THIRTEEN.
  (3) TO BE ELIGIBLE FOR SUCH CREDIT, THE TAXPAYER (OR TAXPAYERS  FILING
JOINT RETURNS) MUST MEET THE FOLLOWING CRITERIA:
  (A) FOR THE TWO THOUSAND FOURTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
RESIDENCE  MUST  HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE TWO THOU-
SAND FOURTEEN--TWO THOUSAND FIFTEEN SCHOOL YEAR, OR WOULD HAVE SO QUALI-
FIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIMELY
MANNER.
  (B) FOR THE TWO THOUSAND FIFTEEN TAXABLE YEAR, THE TAXPAYER'S  PRIMARY
RESIDENCE  MUST  HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE TWO THOU-
SAND FIFTEEN--TWO THOUSAND SIXTEEN SCHOOL YEAR, OR WOULD HAVE SO  QUALI-

S. 6359--B                         336                        A. 8559--B

FIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIMELY
MANNER.
  (C)  FOR THE TWO THOUSAND SIXTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
RESIDENCE MUST HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE  TWO  THOU-
SAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR, OR WOULD HAVE SO QUAL-
IFIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIME-
LY MANNER.
  (4)  FOR  EACH  YEAR  THIS  CREDIT  IS ALLOWED, THE COMMISSIONER SHALL
DETERMINE THE TAXPAYER'S  ELIGIBILITY  FOR  THIS  CREDIT  UTILIZING  THE
INFORMATION  AVAILABLE  TO  THE  COMMISSIONER. WHEN THE COMMISSIONER HAS
DETERMINED A TAXPAYER TO BE ELIGIBLE FOR THIS CREDIT,  THE  COMMISSIONER
SHALL ADVANCE A PAYMENT OF THE AMOUNT DETERMINED IN ACCORDANCE WITH THIS
SUBSECTION.  THE TAXPAYER SHALL NOT APPLY FOR SUCH CREDIT IN CONJUNCTION
WITH  THE  FILING  OF  HIS  OR  HER RETURN. A TAXPAYER WHO HAS FAILED TO
RECEIVE AN ADVANCE PAYMENT THAT HE OR SHE BELIEVES WAS  DUE  TO  HIM  OR
HER,  OR  WHO HAS RECEIVED AN ADVANCE PAYMENT THAT HE OR SHE BELIEVES IS
LESS THAN THE AMOUNT THAT WAS DUE TO HIM OR HER, MAY REQUEST PAYMENT  OF
THE CLAIMED DEFICIENCY IN A MANNER PRESCRIBED BY THE COMMISSIONER.
  (5) IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION, IF ANY,
SHALL  EXCEED  THE TAXPAYER'S TAX FOR THE TAXABLE YEAR, THE EXCESS SHALL
BE TREATED AS AN OVERPAYMENT OF  TAX  TO  BE  CREDITED  OR  REFUNDED  IN
ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS
ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  (6)  THE  FOLLOWING  PROVISIONS  SHALL APPLY TO THE CALCULATION OF THE
CREDIT PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION:
  (A) IF THE TAX BILL PERTAINING  TO  THE  ELIGIBLE  TAXPAYER'S  PRIMARY
RESIDENCE  INCLUDES  TAXES  LEVIED  BY  OR  ON BEHALF OF MULTIPLE TAXING
JURISDICTIONS, THE CREDIT SHALL BE BASED UPON THE CHANGE IN  THE  AGGRE-
GATE TAX LIABILITY OF SUCH RESIDENCE, PROVIDED THAT ANY TAX APPEARING ON
THE TAX BILL THAT IS NOT ATTRIBUTABLE TO A FREEZE-COMPLIANT BUDGET SHALL
BE  DISREGARDED  WHEN  DETERMINING  THE  AGGREGATE TAX LIABILITY OF SUCH
RESIDENCE.
  (B) IF THE TAX BILL PERTAINING  TO  THE  ELIGIBLE  TAXPAYER'S  PRIMARY
RESIDENCE  INCLUDES  RELEVIED  TAXES OR OTHER TAXES THAT WERE PREVIOUSLY
BILLED BUT NOT PAID, THOSE TAXES SHALL BE DISREGARDED  WHEN  DETERMINING
THE AGGREGATE TAX LIABILITY OF SUCH RESIDENCE.
  (C)  IF  THE  TAX  BILL  PERTAINING TO THE ELIGIBLE TAXPAYER'S PRIMARY
RESIDENCE INCLUDES USAGE CHARGES, UNIT CHARGES OR OTHER CHARGES THAT ARE
BASED UPON THE CONSUMPTION OF A SERVICE, THOSE CHARGES SHALL  BE  DISRE-
GARDED WHEN DETERMINING THE AGGREGATE TAX LIABILITY OF SUCH RESIDENCE.
  (D)  NOTWITHSTANDING  THE  FOREGOING PROVISIONS OF THIS SUBSECTION, NO
CREDIT SHALL BE ALLOWED TO THE EXTENT THAT  THE  TAX  LIABILITY  OF  THE
ELIGIBLE  TAXPAYER'S  PRIMARY  RESIDENCE INCREASED DUE TO ONE OR MORE OF
THE FOLLOWING EVENTS:
  (I) A PHYSICAL IMPROVEMENT TO THE ELIGIBLE  TAXPAYER'S  PRIMARY  RESI-
DENCE.
  (II) A REMOVAL OR REDUCTION OF AN EXEMPTION ON THE ELIGIBLE TAXPAYER'S
PRIMARY  RESIDENCE,  INCLUDING  A  REDUCTION  OF  THE STAR EXEMPT AMOUNT
CALCULATED  PURSUANT  TO  SUBDIVISION  TWO  OF  SECTION   FOUR   HUNDRED
TWENTY-FIVE OF THE REAL PROPERTY TAX LAW.
  (III) A REVALUATION THAT CAUSED THE ASSESSMENT OF THE ELIGIBLE TAXPAY-
ER'S  PRIMARY RESIDENCE TO INCREASE BY A PERCENTAGE THAT IS GREATER THAN
THE APPLICABLE CHANGE IN LEVEL OF ASSESSMENT. AS USED HEREIN, THE  TERMS
"REVALUATION"  AND  "CHANGE  IN LEVEL OF ASSESSMENT" SHALL HAVE THE SAME
MEANINGS AS SET FORTH IN SECTIONS ONE HUNDRED  TWO  AND  TWELVE  HUNDRED
TWENTY OF THE REAL PROPERTY TAX LAW, RESPECTIVELY.

S. 6359--B                         337                        A. 8559--B

  (E)  IN  THE  CASE  OF  PROPERTY CONSISTING OF A COOPERATIVE APARTMENT
CORPORATION THAT IS DESCRIBED BY PARAGRAPH (K)  OF  SUBDIVISION  TWO  OF
SECTION FOUR HUNDRED TWENTY-FIVE OF THE REAL PROPERTY TAX LAW, AN ELIGI-
BLE OWNER SHALL BE ALLOWED A CREDIT IN THE AMOUNT EQUAL TO SIXTY PERCENT
OF  THE  AVERAGE  TAX CREDIT IN THAT TAXING JURISDICTION FOR THAT FISCAL
YEAR, AS DETERMINED BY THE COMMISSIONER, OR IN THE CASE OF A COOPERATIVE
APARTMENT CORPORATION THAT IS DESCRIBED BY SUBPARAGRAPH  (IV)  OF  PARA-
GRAPH  (K) OF SUBDIVISION TWO OF SECTION FOUR HUNDRED TWENTY-FIVE OF THE
REAL PROPERTY TAX LAW, A CREDIT OF TWENTY PERCENT OF  SUCH  AVERAGE  TAX
CREDIT.
  (F)  IN  THE  CASE  OF  PROPERTY  CONSISTING  OF A MOBILE HOME THAT IS
DESCRIBED BY PARAGRAPH (L) OF SUBDIVISION TWO OF  SECTION  FOUR  HUNDRED
TWENTY-FIVE  OF  THE  REAL  PROPERTY TAX LAW, AN ELIGIBLE OWNER SHALL BE
ALLOWED A CREDIT IN THE AMOUNT EQUAL TO TWENTY-FIVE PERCENT OF THE AVER-
AGE TAX CREDIT IN THAT TAXING JURISDICTION  FOR  THAT  FISCAL  YEAR,  AS
DETERMINED BY THE COMMISSIONER.
  (G)  IN  THE CASE OF A CITY WITH A DEPENDENT SCHOOL DISTRICT, IT SHALL
BE PRESUMED THAT SIXTY-SEVEN PERCENT OF THE CITY TAX BILL IS FOR  SCHOOL
DISTRICT  PURPOSES  AND  THAT  THIRTY-THREE  PERCENT IS FOR GENERAL CITY
PURPOSES.
  (H) THE AMOUNT OF THE CREDIT SHALL BE ROUNDED TO THE  NEAREST  DOLLAR,
EXCEPT  WHERE  SUCH AMOUNT IS GREATER THAN ZERO AND LESS THAN ONE DOLLAR
AND FIFTY CENTS, IN WHICH CASE THE AMOUNT OF THE CREDIT SHALL BE ROUNDED
UP TO TWO DOLLARS.
  (7) NO CREDIT SHALL BE ALLOWED UNDER THIS SUBSECTION  IN  RELATION  TO
PROPERTY LOCATED WITHIN A CITY WITH A POPULATION OF ONE MILLION OR MORE.
  S  2.  The  education law is amended by adding a new section 2023-b to
read as follows:
  S  2023-B.  CERTIFICATION  OF  COMPLIANCE  WITH  PROPERTY  TAX  FREEZE
REQUIREMENTS.  A  SCHOOL  DISTRICT  THAT IS SUBJECT TO THE PROVISIONS OF
SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART MUST  COMPLY  WITH  THE
REQUIREMENTS  OF  SUBDIVISION TWO OF THIS SECTION IN ORDER TO RENDER ITS
TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT AUTHORIZED BY
SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A  FISCAL
YEAR  STARTING  IN  TWO  THOUSAND  FOURTEEN.  A  SCHOOL DISTRICT THAT IS
SUBJECT TO THE PROVISIONS OF SECTION TWO THOUSAND TWENTY-THREE-A OF THIS
PART MUST COMPLY WITH THE REQUIREMENTS OF SUBDIVISIONS TWO AND THREE  OF
THIS  SECTION  IN  ORDER  TO  RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL
PROPERTY TAX FREEZE CREDIT AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX
HUNDRED SIX OF THE TAX LAW FOR A FISCAL YEAR STARTING  IN  TWO  THOUSAND
FIFTEEN.
  1. DEFINITIONS.  AS USED IN THIS SECTION:
  A.  "CONSOLIDATION  ACTIONS" MEANS: REORGANIZATIONS OF ELIGIBLE SCHOOL
DISTRICTS PURSUANT TO SECTIONS FIFTEEN  HUNDRED  FIVE,  FIFTEEN  HUNDRED
ELEVEN  THROUGH  FIFTEEN  HUNDRED THIRTEEN, FIFTEEN HUNDRED TWENTY-FOUR,
FIFTEEN HUNDRED TWENTY-SIX, SEVENTEEN HUNDRED FIVE, EIGHTEEN HUNDRED ONE
THROUGH EIGHTEEN HUNDRED THREE, OR TWENTY-TWO HUNDRED  EIGHTEEN  OF  THE
EDUCATION  LAW;  OR  REORGANIZATIONS, CONSOLIDATIONS, OR DISSOLUTIONS OF
ELIGIBLE SCHOOL DISTRICTS IN WHICH ONE OR MORE ELIGIBLE SCHOOL DISTRICTS
ARE TERMINATED AND ANOTHER ELIGIBLE SCHOOL DISTRICT ASSUMES JURISDICTION
OVER THE TERMINATED SCHOOL DISTRICT OR DISTRICTS PURSUANT TO  ANY  OTHER
PROVISION OF LAW.
  B.  "ELIGIBLE SCHOOL DISTRICT" MEANS A SCHOOL DISTRICT THAT IS SUBJECT
TO SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART, BUT SHALL NOT  MEAN
A SCHOOL DISTRICT THAT IS SUBJECT TO ARTICLE FIFTY-TWO OF THIS CHAPTER.

S. 6359--B                         338                        A. 8559--B

  C.  "EFFICIENCY  PLAN"  MEANS  A  PLAN THAT IDENTIFIES SHARED SERVICES
ACTIONS AND/OR CONSOLIDATION ACTIONS TO  BE  FULLY  IMPLEMENTED  BY  ALL
ELIGIBLE SCHOOL DISTRICTS IN A BOARD OF COOPERATIVE EDUCATIONAL SERVICES
DISTRICT THAT ARE SIGNATORIES TO THE PLAN.
  D. "LEAD DISTRICT" MEANS THE INDEPENDENT SCHOOL DISTRICT IN EACH BOARD
OF  COOPERATIVE  EDUCATIONAL  SERVICES  DISTRICT  WITH THE HIGHEST PUPIL
ENROLLMENT AS REPORTED TO THE STATE EDUCATION  DEPARTMENT  FOR  THE  TWO
THOUSAND THIRTEEN--TWO THOUSAND FOURTEEN SCHOOL YEAR THAT HAS ELECTED TO
PARTICIPATE IN THE PREPARATION OF AN EFFICIENCY PLAN.
  E.  "SHARED SERVICES ACTIONS" MEANS FUNCTIONAL CONSOLIDATIONS BY WHICH
ONE ELIGIBLE SCHOOL DISTRICT COMPLETELY PROVIDES A SERVICE  OR  FUNCTION
FOR  ANOTHER  ELIGIBLE  SCHOOL DISTRICT, WHICH NO LONGER ENGAGES IN THAT
FUNCTION OR SERVICE; SHARED OR COOPERATIVE SERVICES  BETWEEN  AND  AMONG
ELIGIBLE SCHOOL DISTRICTS; AND REGIONALIZED DELIVERY OF SERVICES BETWEEN
AND  AMONG  ELIGIBLE SCHOOL DISTRICTS. THESE SHARED SERVICES ACTIONS MAY
BE FOR SERVICES OR FUNCTIONS INCLUDING BUT NOT LIMITED TO:  PROCUREMENT,
REAL  ESTATE  AND  FACILITY  MANAGEMENT,  FLEET MANAGEMENT, BUSINESS AND
FINANCIAL SERVICES,  ADMINISTRATIVE  SERVICES,  PAYROLL  ADMINISTRATION,
TIME  AND  ATTENDANCE,  BENEFITS  ADMINISTRATION AND OTHER TRANSACTIONAL
HUMAN  RESOURCES  FUNCTIONS,  CONTRACT  MANAGEMENT,  GRANTS  MANAGEMENT,
TRANSPORTATION SERVICES, FACILITIES AND FUNCTIONS, HUMAN SERVICES FACIL-
ITIES  AND  FUNCTIONS,  CUSTOMER  SERVICE  FACILITIES  AND FUNCTIONS AND
INFORMATION TECHNOLOGY INFRASTRUCTURE,  PROCESSES,  SERVICES  AND  FUNC-
TIONS.
  2.  CERTIFICATION  OF  COMPLIANCE  WITH  TAX  LEVY  LIMIT. A. UPON THE
ADOPTION OF THE BUDGET OF AN ELIGIBLE SCHOOL DISTRICT, THE CHIEF  EXECU-
TIVE  OFFICER  OF  SUCH SCHOOL DISTRICT SHALL CERTIFY TO THE STATE COMP-
TROLLER, THE COMMISSIONER OF TAXATION AND FINANCE AND  THE  COMMISSIONER
THAT THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT PRESCRIBED
BY  SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART. SUCH CERTIFICATION
SHALL BE MADE IN A FORM AND MANNER PRESCRIBED BY THE  STATE  COMPTROLLER
IN  CONSULTATION  WITH  THE COMMISSIONER OF TAXATION AND FINANCE AND THE
COMMISSIONER.
  B. IN ORDER FOR SUCH CERTIFICATION TO GIVE RISE TO A REAL PROPERTY TAX
FREEZE CREDIT UNDER SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX  OF  THE
TAX LAW, SUCH CERTIFICATION SHALL BE MADE NO LATER THAN THE TWENTY-FIRST
DAY OF THE FISCAL YEAR TO WHICH IT APPLIES.
  C.  IF  SUCH  A CERTIFICATION HAS BEEN MADE AND THE ACTUAL TAX LEVY OF
THE SCHOOL DISTRICT EXCEEDS THE APPLICABLE TAX LEVY  LIMIT,  THE  EXCESS
AMOUNT  SHALL  BE PLACED IN RESERVE AND USED IN THE MANNER PRESCRIBED BY
SUBDIVISION FIVE OF SECTION TWO THOUSAND TWENTY-THREE-A  OF  THIS  PART,
EVEN IF A TAX LEVY IN EXCESS OF THE TAX LEVY LIMIT HAD BEEN DULY AUTHOR-
IZED FOR THE APPLICABLE FISCAL YEAR BY THE SCHOOL DISTRICT VOTERS.
  D.  NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, EVERY SCHOOL
DISTRICT THAT IS SUBJECT TO THE PROVISIONS OF SECTION TWO THOUSAND TWEN-
TY-THREE-A OF THIS PART SHALL REPORT BOTH ITS PROPOSED  BUDGET  AND  ITS
ADOPTED  BUDGET  TO  THE OFFICE OF THE STATE COMPTROLLER AND THE COMMIS-
SIONER AT THE TIME AND IN THE MANNER AS THEY MAY PRESCRIBE,  WHETHER  OR
NOT SUCH BUDGET HAS BEEN OR WILL BE CERTIFIED AS PROVIDED BY THIS SUBDI-
VISION.
  3.  SCHOOL  DISTRICT  EFFICIENCY  PLANS. A. THE SUPERINTENDENT OF EACH
LEAD DISTRICT SHALL SUBMIT TO THE SECRETARY OF STATE BY JUNE FIRST,  TWO
THOUSAND  FIFTEEN,  AN  EFFICIENCY  PLAN  THAT IF FULLY IMPLEMENTED WILL
RESULT IN SAVINGS OVER THE AGGREGATE TWO THOUSAND FOURTEEN--TWO THOUSAND
FIFTEEN SCHOOL YEAR TAX LEVIES FOR ALL ELIGIBLE  SCHOOL  DISTRICTS  THAT
ARE  SIGNATORIES  TO  SUCH  PLAN  OF (1) AT LEAST ONE PERCENT IN THE TWO

S. 6359--B                         339                        A. 8559--B

THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR; (2) AT  LEAST  TWO
PERCENT  IN  THE  TWO  THOUSAND  SEVENTEEN--TWO THOUSAND EIGHTEEN SCHOOL
YEAR; AND (3) AT LEAST THREE PERCENT IN THE TWO  THOUSAND  EIGHTEEN--TWO
THOUSAND NINETEEN SCHOOL YEAR.
  (I)  THE  SUPERINTENDENT  OF  EACH  ELIGIBLE SCHOOL DISTRICT THAT IS A
SIGNATORY TO AN EFFICIENCY PLAN SHALL SUBMIT TO  THE  SUPERINTENDENT  OF
THE  LEAD  DISTRICT  BY  MAY  FIFTEENTH, TWO THOUSAND FIFTEEN, A WRITTEN
CERTIFICATION THAT THE ELIGIBLE SCHOOL DISTRICT AGREES TO UNDERTAKE  ITS
BEST  EFFORTS TO FULLY IMPLEMENT BY THE END OF THE TWO THOUSAND SIXTEEN-
-TWO THOUSAND SEVENTEEN SCHOOL YEAR  THE  CONSOLIDATION  ACTIONS  AND/OR
SHARED  SERVICES  ACTIONS  SPECIFIED FOR THE ELIGIBLE SCHOOL DISTRICT IN
SUCH PLAN.
  (II) THE CHIEF FINANCIAL OFFICER OF A SCHOOL DISTRICT THAT IS A SIGNA-
TORY TO AN EFFICIENCY PLAN SHALL SUBMIT TO  THE  SUPERINTENDENT  OF  THE
LEAD  DISTRICT BY MAY FIFTEENTH, TWO THOUSAND FIFTEEN, A WRITTEN CERTIF-
ICATION THAT IN HIS OR HER PROFESSIONAL OPINION, FULL IMPLEMENTATION  BY
THE  END OF THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR
OF THE CONSOLIDATION AND/OR SHARED SERVICES ACTIONS THAT ARE TO BE TAKEN
BY SUCH SCHOOL DISTRICT ITSELF AS SPECIFIED IN SUCH PLAN WILL RESULT  IN
THE SAVINGS SET FORTH IN SUCH PLAN ATTRIBUTABLE TO SUCH SCHOOL DISTRICT.
  (III)  THE  CHIEF  FINANCIAL  OFFICER OF EACH ELIGIBLE SCHOOL DISTRICT
THAT IS A SIGNATORY TO AN EFFICIENCY  PLAN  SHALL  SUBMIT  TO  THE  LEAD
DISTRICT BY MAY FIFTEENTH, TWO THOUSAND FIFTEEN, A WRITTEN CERTIFICATION
THAT  IN  HIS  OR  HER  PROFESSIONAL OPINION, FULL IMPLEMENTATION OF THE
CONSOLIDATION AND/OR SHARED SERVICES ACTIONS AS SPECIFIED FOR ALL OF THE
ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN WILL  RESULT
IN  SAVINGS  OVER  THE  AGGREGATE  TWO  THOUSAND  FOURTEEN--TWO THOUSAND
FIFTEEN SCHOOL YEAR TAX LEVIES FOR ALL ELIGIBLE  SCHOOL  DISTRICTS  THAT
ARE  SIGNATORIES  TO  SUCH  PLAN  OF (1) AT LEAST ONE PERCENT IN THE TWO
THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR; (2) AT  LEAST  TWO
PERCENT  IN  THE  TWO  THOUSAND  SEVENTEEN--TWO THOUSAND EIGHTEEN SCHOOL
YEAR; AND (3) AT LEAST THREE PERCENT IN THE TWO  THOUSAND  EIGHTEEN--TWO
THOUSAND NINETEEN SCHOOL YEAR.
  B.  THE CHIEF FINANCIAL OFFICER OF EACH LEAD DISTRICT SHALL SUBMIT THE
FOLLOWING DOCUMENTS TO THE SECRETARY OF STATE ON OR BEFORE  JUNE  FIRST,
TWO  THOUSAND  FIFTEEN:    (I)  THE  EFFICIENCY PLAN; (II) A LIST OF ALL
ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN;  (III)  ALL
OF  THE  CERTIFICATIONS REQUIRED BY PARAGRAPH A OF THIS SUBDIVISION; AND
(IV) AN ANALYSIS OF THE AGGREGATE AMOUNT OF SAVINGS SET  FORTH  IN  SUCH
PLAN  ATTRIBUTABLE TO ALL ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES
TO SUCH PLAN THAT WILL BE ACHIEVED IF THE SHARED SERVICES ACTIONS AND/OR
CONSOLIDATION ACTIONS IDENTIFIED IN SUCH PLAN ARE FULLY  IMPLEMENTED  BY
THE END OF THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR.
THE  SECRETARY OF STATE SHALL REVIEW SUCH DOCUMENTS TO DETERMINE WHETHER
THE REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT TO  EACH
ELIGIBLE  SCHOOL DISTRICT THAT IS A SIGNATORY TO THE EFFICIENCY PLAN AND
SHALL NOTIFY THE COMMISSIONER OF TAXATION AND FINANCE OF  SUCH  DETERMI-
NATIONS NO LATER THAN JULY THIRTY-FIRST, TWO THOUSAND FIFTEEN.
  S  3. The general municipal law is amended by adding a new section 3-d
to read as follows:
  S 3-D. CERTIFICATION OF COMPLIANCE WITH PROPERTY TAX  FREEZE  REQUIRE-
MENTS.  A  MUNICIPAL CORPORATION OR AN INDEPENDENT SPECIAL DISTRICT THAT
IS SUBJECT TO THE PROVISIONS OF SECTION THREE-C  OF  THIS  ARTICLE  MUST
COMPLY WITH THE REQUIREMENTS OF SUBDIVISION TWO OF THIS SECTION IN ORDER
TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT
AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW

S. 6359--B                         340                        A. 8559--B

FOR  A  FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN. A MUNICIPAL CORPO-
RATION OR AN  INDEPENDENT  SPECIAL  DISTRICT  THAT  IS  SUBJECT  TO  THE
PROVISIONS  OF  SECTION  THREE-C  OF  THIS  ARTICLE MUST COMPLY WITH THE
REQUIREMENTS  OF  SUBDIVISIONS TWO AND THREE OF THIS SECTION IN ORDER TO
RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY  TAX  FREEZE  CREDIT
AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW
FOR  A  FISCAL  YEAR STARTING IN TWO THOUSAND SIXTEEN. PROVIDED HOWEVER,
THAT A CITY WITH A  DEPENDENT  SCHOOL  DISTRICT  MUST  COMPLY  WITH  THE
REQUIREMENTS  OF  SUBDIVISION TWO OF THIS SECTION IN ORDER TO RENDER ITS
TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT AUTHORIZED BY
SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A  FISCAL
YEAR  STARTING IN TWO THOUSAND FOURTEEN AND COMPLY WITH THE REQUIREMENTS
OF SUBDIVISION TWO OF THIS SECTION, AND BOTH THE CITY AND ITS  DEPENDENT
SCHOOL  DISTRICT  MUST COMPLY WITH THE REQUIREMENTS OF SUBDIVISION THREE
OF THIS SECTION, IN ORDER TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE  REAL
PROPERTY TAX FREEZE CREDIT AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX
HUNDRED  SIX  OF  THE TAX LAW FOR A FISCAL YEAR STARTING IN TWO THOUSAND
FIFTEEN OR TWO THOUSAND SIXTEEN.
  1. DEFINITIONS.  AS USED IN THIS SECTION:
  (A) "CONSOLIDATION ACTIONS" MEANS: CONSOLIDATIONS OR  DISSOLUTIONS  OF
LOCAL  GOVERNMENT  UNITS  IN ACCORDANCE WITH ARTICLE SEVENTEEN-A OF THIS
ARTICLE OR REORGANIZATIONS, CONSOLIDATIONS,  OR  DISSOLUTIONS  OF  LOCAL
GOVERNMENT  UNITS IN WHICH ONE OR MORE LOCAL GOVERNMENT UNITS ARE TERMI-
NATED AND ANOTHER LOCAL GOVERNMENT UNIT ASSUMES  JURISDICTION  OVER  THE
TERMINATED  LOCAL  GOVERNMENT  UNIT    OR  UNITS  PURSUANT  TO ANY OTHER
PROVISION OF LAW.
  (B) "DEPENDENT SCHOOL  DISTRICT"  MEANS  A  SCHOOL  DISTRICT  THAT  IS
SUBJECT  TO  ARTICLE FIFTY-TWO OF THE EDUCATION LAW AND THAT HAS A POPU-
LATION OF LESS THAN ONE MILLION.
  (C) "EFFICIENCY PLAN" MEANS A PLAN  THAT  IDENTIFIES  SHARED  SERVICES
ACTIONS  AND/OR  CONSOLIDATION  ACTIONS  TO  BE FULLY IMPLEMENTED BY ALL
LOCAL GOVERNMENT UNITS IN A COUNTY THAT ARE SIGNATORIES TO THE PLAN.
  (D) "INDEPENDENT SPECIAL DISTRICT" MEANS A SPECIAL DISTRICT AS DEFINED
BY SECTION ONE HUNDRED TWO OF THE REAL PROPERTY TAX LAW THAT EITHER  (I)
HAS  A  SEPARATE INDEPENDENT ELECTED BOARD, AND EITHER HAS THE AUTHORITY
TO LEVY A TAX, OR CAN REQUIRE A MUNICIPAL CORPORATION TO LEVY A  TAX  ON
ITS  BEHALF,  OR  (II) HAS A SEPARATE INDEPENDENT BOARD APPOINTED BY THE
GOVERNING BODY OF ANOTHER  MUNICIPAL  CORPORATION  AND  EITHER  HAS  THE
AUTHORITY TO LEVY A TAX OR CAN REQUIRE A MUNICIPAL CORPORATION TO LEVY A
TAX ON ITS BEHALF.
  (E)  "LEAD  LOCAL  GOVERNMENT UNIT" MEANS THE COUNTY, OR IF THE COUNTY
HAS ELECTED NOT TO PARTICIPATE IN THE PREPARATION OF AN EFFICIENCY PLAN,
THE CITY, TOWN, OR VILLAGE WITHIN THE COUNTY WITH THE LARGEST POPULATION
AS OF THE TWO THOUSAND TEN FEDERAL CENSUS THAT HAS  ELECTED  TO  PARTIC-
IPATE IN THE PREPARATION OF AN EFFICIENCY PLAN.
  (F)  "LOCAL GOVERNMENT UNIT" MEANS A MUNICIPAL CORPORATION OR AN INDE-
PENDENT SPECIAL DISTRICT THAT IS SUBJECT TO THE  PROVISIONS  OF  SECTION
THREE-C OF THIS ARTICLE.
  (G) "SHARED SERVICES ACTIONS" MEANS FUNCTIONAL CONSOLIDATIONS BY WHICH
ONE  LOCAL GOVERNMENT UNIT COMPLETELY PROVIDES A SERVICE OR FUNCTION FOR
ANOTHER LOCAL GOVERNMENT UNIT, WHICH NO LONGER ENGAGES IN THAT  FUNCTION
OR  SERVICE;  SHARED  OR  COOPERATIVE  SERVICES  BETWEEN AND AMONG LOCAL
GOVERNMENT UNITS; AND REGIONALIZED  DELIVERY  OF  SERVICES  BETWEEN  AND
AMONG  LOCAL GOVERNMENT UNITS.  THESE SHARED SERVICES ACTIONS MAY BE FOR
SERVICES OR FUNCTIONS INCLUDING BUT NOT LIMITED TO:   PROCUREMENT,  REAL
ESTATE AND FACILITY MANAGEMENT, FLEET MANAGEMENT, BUSINESS AND FINANCIAL

S. 6359--B                         341                        A. 8559--B

SERVICES,  ADMINISTRATIVE  SERVICES,  PAYROLL  ADMINISTRATION,  TIME AND
ATTENDANCE,  BENEFITS  ADMINISTRATION  AND  OTHER  TRANSACTIONAL   HUMAN
RESOURCES FUNCTIONS, CONTRACT MANAGEMENT, GRANTS MANAGEMENT, TRANSPORTA-
TION  SERVICES,  FACILITIES AND FUNCTIONS, HUMAN SERVICES FACILITIES AND
FUNCTIONS, CUSTOMER SERVICE FACILITIES  AND  FUNCTIONS  AND  INFORMATION
TECHNOLOGY INFRASTRUCTURE, PROCESSES, SERVICES AND FUNCTIONS.
  2.  CERTIFICATION  OF  COMPLIANCE  WITH  TAX  LEVY LIMIT. (A) UPON THE
ADOPTION OF THE BUDGET OF A LOCAL GOVERNMENT UNIT, THE  CHIEF  EXECUTIVE
OFFICER OR BUDGET OFFICER OF SUCH LOCAL GOVERNMENT UNIT SHALL CERTIFY TO
THE  STATE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND FINANCE THAT
THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT  PRESCRIBED  IN
SECTION  THREE-C OF THIS ARTICLE AND, IF THE GOVERNING BODY OF THE LOCAL
GOVERNMENT UNIT DID ENACT A LOCAL LAW OR APPROVE A RESOLUTION  TO  OVER-
RIDE  THE  TAX  LEVY LIMIT, THAT SUCH LOCAL LAW OR RESOLUTION WAS SUBSE-
QUENTLY REPEALED. SUCH CERTIFICATION SHALL BE MADE IN A FORM AND  MANNER
PRESCRIBED BY THE STATE COMPTROLLER IN CONSULTATION WITH THE COMMISSION-
ER OF TAXATION AND FINANCE.
  (B)  IN  ORDER  FOR SUCH CERTIFICATION TO GIVE RISE TO A REAL PROPERTY
TAX FREEZE CREDIT UNDER SUBSECTION (BBB) OF SECTION SIX HUNDRED  SIX  OF
THE  TAX LAW, SUCH CERTIFICATION SHALL BE MADE NO LATER THAN THE TWENTY-
FIRST DAY OF THE FISCAL YEAR TO WHICH IT APPLIES.
  (C) NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY, IF SUCH  A  CERTIF-
ICATION  HAS  BEEN  MADE AND THE ACTUAL TAX LEVY OF THE LOCAL GOVERNMENT
UNIT EXCEEDS THE APPLICABLE TAX LEVY LIMIT, THE EXCESS AMOUNT  SHALL  BE
PLACED  IN  RESERVE AND USED IN THE MANNER PRESCRIBED BY SUBDIVISION SIX
OF SECTION THREE-C OF THIS ARTICLE, EVEN IF A TAX LEVY IN EXCESS OF  THE
TAX  LEVY  LIMIT HAD BEEN AUTHORIZED FOR THE APPLICABLE FISCAL YEAR BY A
DULY ADOPTED LOCAL LAW OR RESOLUTION.
  (D) NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, EVERY  LOCAL
GOVERNMENT  UNIT  SHALL  REPORT BOTH ITS PROPOSED BUDGET AND ITS ADOPTED
BUDGET TO THE OFFICE OF THE STATE COMPTROLLER AT THE  TIME  AND  IN  THE
MANNER  AS  HE OR SHE MAY PRESCRIBE, WHETHER OR NOT SUCH BUDGET HAS BEEN
OR WILL BE CERTIFIED AS PROVIDED BY THIS SUBDIVISION.
  3. LOCAL GOVERNMENT EFFICIENCY PLANS. (A) THE CHIEF EXECUTIVE  OFFICER
OR BUDGET OFFICER OF EACH LEAD LOCAL GOVERNMENT UNIT SHALL SUBMIT TO THE
SECRETARY  OF  STATE  BY JUNE FIRST, TWO THOUSAND FIFTEEN, AN EFFICIENCY
PLAN THAT IF FULLY IMPLEMENTED WILL RESULT IN SAVINGS OVER THE AGGREGATE
TAX LEVIES FOR FISCAL YEARS BEGINNING IN TWO THOUSAND FOURTEEN  FOR  ALL
LOCAL  GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT ARE SIGNATO-
RIES TO SUCH PLAN OF (1) AT LEAST ONE PERCENT IN FISCAL YEARS  BEGINNING
IN  TWO  THOUSAND  SEVENTEEN;  (2)  AT LEAST TWO PERCENT IN FISCAL YEARS
BEGINNING IN TWO THOUSAND EIGHTEEN; AND (3) AT LEAST  THREE  PERCENT  IN
FISCAL YEARS BEGINNING IN TWO THOUSAND NINETEEN.
  (I)  THE  CHIEF  EXECUTIVE  OFFICER  OR  BUDGET  OFFICER OF EACH LOCAL
GOVERNMENT UNIT AND DEPENDENT SCHOOL DISTRICT THAT IS A SIGNATORY TO  AN
EFFICIENCY  PLAN  SHALL  SUBMIT TO THE CHIEF EXECUTIVE OFFICER OR BUDGET
OFFICER OF THE LEAD LOCAL GOVERNMENT UNIT BY MAY FIFTEENTH, TWO THOUSAND
FIFTEEN, A WRITTEN CERTIFICATION  THAT  THE  LOCAL  GOVERNMENT  UNIT  OR
DEPENDENT  SCHOOL DISTRICT AGREES TO UNDERTAKE ITS BEST EFFORTS TO FULLY
IMPLEMENT BY THE END OF THE LOCAL FISCAL YEAR BEGINNING IN TWO  THOUSAND
SEVENTEEN THE CONSOLIDATION ACTIONS AND/OR SHARED SERVICES ACTIONS SPEC-
IFIED FOR THE LOCAL GOVERNMENT UNIT OR DEPENDENT SCHOOL DISTRICT IN SUCH
PLAN.
  (II)  THE  CHIEF  FINANCIAL OFFICER OF A LOCAL GOVERNMENT UNIT AND THE
CHIEF FISCAL OFFICER OF THE DEPENDENT SCHOOL DISTRICT, THAT IS A  SIGNA-
TORY  TO  AN EFFICIENCY PLAN SHALL SUBMIT TO THE CHIEF EXECUTIVE OFFICER

S. 6359--B                         342                        A. 8559--B

OF THE LEAD  LOCAL  GOVERNMENT  UNIT  BY  MAY  FIFTEENTH,  TWO  THOUSAND
FIFTEEN,  A  WRITTEN CERTIFICATION THAT IN HIS OR HER PROFESSIONAL OPIN-
ION, FULL IMPLEMENTATION BY THE END OF THE LOCAL FISCAL  YEAR  BEGINNING
IN  TWO  THOUSAND SEVENTEEN, OF THE CONSOLIDATION AND/OR SHARED SERVICES
ACTIONS THAT ARE TO BE TAKEN BY SUCH LOCAL  GOVERNMENT  UNIT  ITSELF  AS
SPECIFIED IN SUCH PLAN WILL RESULT IN THE SAVINGS SET FORTH IN THE EFFI-
CIENCY  PLAN  ATTRIBUTABLE  TO  SUCH  LOCAL GOVERNMENT UNIT OR DEPENDENT
SCHOOL DISTRICT.
  (III) THE CHIEF FINANCIAL OFFICER OF EACH LOCAL  GOVERNMENT  UNIT  AND
DEPENDENT  SCHOOL  DISTRICT  THAT  IS  A SIGNATORY TO AN EFFICIENCY PLAN
SHALL SUBMIT TO THE LEAD LOCAL GOVERNMENT UNIT  BY  MAY  FIFTEENTH,  TWO
THOUSAND  FIFTEEN,  A  WRITTEN  CERTIFICATION THAT IN HIS OR HER PROFES-
SIONAL OPINION, FULL IMPLEMENTATION OF THE CONSOLIDATION  AND/OR  SHARED
SERVICES  ACTIONS AS SPECIFIED FOR ALL OF THE LOCAL GOVERNMENT UNITS AND
DEPENDENT SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN WILL RESULT
IN SAVINGS OVER THE AGGREGATE TAX LEVIES FOR FISCAL YEARS  BEGINNING  IN
TWO  THOUSAND  FOURTEEN FOR ALL LOCAL GOVERNMENT UNITS THAT ARE SIGNATO-
RIES TO SUCH PLAN OF (1) AT LEAST ONE PERCENT IN FISCAL YEARS  BEGINNING
IN  TWO  THOUSAND  SEVENTEEN;  (2)  AT LEAST TWO PERCENT IN FISCAL YEARS
BEGINNING IN TWO THOUSAND EIGHTEEN; AND (3) AT LEAST  THREE  PERCENT  IN
FISCAL YEARS BEGINNING IN TWO THOUSAND NINETEEN.
  (B)  THE  CHIEF  FINANCIAL  OFFICER OF EACH LEAD LOCAL GOVERNMENT UNIT
SHALL SUBMIT THE FOLLOWING DOCUMENTS TO THE SECRETARY  OF  STATE  ON  OR
BEFORE  JUNE FIRST, TWO THOUSAND FIFTEEN:  (I) THE EFFICIENCY PLAN; (II)
A LIST OF ALL LOCAL GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT
ARE SIGNATORIES TO SUCH PLAN; (III) ALL OF THE  CERTIFICATIONS  REQUIRED
BY PARAGRAPH (A) OF THIS SUBDIVISION; AND (IV) AN ANALYSIS OF THE AGGRE-
GATE  AMOUNT OF SAVINGS SET FORTH IN SUCH PLAN ATTRIBUTABLE TO ALL LOCAL
GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT ARE SIGNATORIES  TO
SUCH  PLAN  THAT  WILL BE ACHIEVED IF THE SHARED SERVICES ACTIONS AND/OR
CONSOLIDATION ACTIONS IDENTIFIED IN SUCH PLAN ARE FULLY  IMPLEMENTED  BY
THE  END  OF  THE LOCAL FISCAL YEAR BEGINNING IN TWO THOUSAND SEVENTEEN.
THE SECRETARY OF STATE SHALL REVIEW SUCH DOCUMENTS TO DETERMINE  WHETHER
THE  REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT TO EACH
LOCAL GOVERNMENT UNIT AND DEPENDENT SCHOOL DISTRICT THAT IS A  SIGNATORY
TO THE EFFICIENCY PLAN AND SHALL NOTIFY THE COMMISSIONER OF TAXATION AND
FINANCE  OF  SUCH  DETERMINATIONS  NO  LATER THAN JULY THIRTY-FIRST, TWO
THOUSAND FIFTEEN.
  S 4. Section 1590 of the real property tax law is amended by adding  a
new subdivision 3 to read as follows:
  3.  EACH  MUNICIPAL  CORPORATION  SHALL SUBMIT TO THE COMMISSIONER THE
DATA FILES USED TO PREPARE ITS TAX ROLLS AND TAX BILLS NO LATER THAN TEN
DAYS AFTER THE ANNEXATION OF THE WARRANT FOR THE COLLECTION OF TAXES FOR
THE APPLICABLE FISCAL YEAR, OR WHERE NO  SUCH  WARRANT  IS  ANNEXED,  NO
LATER  THAN  TEN DAYS AFTER THE LAST DATE PRESCRIBED BY LAW FOR THE LEVY
OF TAXES OF THE APPLICABLE FISCAL YEAR, PROVIDED THAT IF ITS  TAX  ROLLS
OR  TAX BILLS, OR BOTH, ARE PREPARED BY A DIFFERENT GOVERNMENTAL ENTITY,
THAT ENTITY SHALL BE JOINTLY RESPONSIBLE FOR SUBMITTING  THE  APPLICABLE
DATA FILES TO THE COMMISSIONER.
  S  5.  Notwithstanding  any other law to the contrary, the director of
the budget may direct the state comptroller to withhold  any  state  aid
payments  due to a school district that failed to fully implement by the
end of the 2016--2017 school year or local government unit  that  failed
to  fully  implement  by  the  end of the local fiscal year beginning in
2017, the consolidation actions and/or shared services actions specified
for such school district or local government unit in an efficiency  plan

S. 6359--B                         343                        A. 8559--B

prepared  pursuant to section 2023-b of the education law or section 3-d
of the general municipal law.
  S  6.  This  act  shall  take  effect  immediately,  provided that the
provisions of subdivision 3 of section 1590 of the real property tax law
as added by section four of this act shall apply to tax  rolls  and  tax
bills  of  school  districts  and cities with a population of 125,000 or
more for fiscal years starting on or after July  1,  2013,  and  to  tax
rolls  and  tax  bills for other municipal corporations for fiscal years
starting on or after January 1, 2014, except that in  the  case  of  tax
rolls and tax bills for fiscal years that started prior to the effective
date of this act, the data files used to prepare tax rolls and tax bills
shall  be submitted to the commissioner of taxation and finance no later
than 60 days after the effective date of this act.

                                 PART GG

  Section 1. This act enacts into law major  components  of  legislation
relating  to lower Manhattan.  Each component is wholly contained within
a Subpart identified as Subparts A through G.  The  effective  date  for
each  particular provision contained within such Subpart is set forth in
the last section  of  such  Subpart.    Any  provision  in  any  section
contained within a Subpart, including the effective date of the Subpart,
which  makes  a  reference  to  a  section  "of  this act", when used in
connection with that particular component, shall be deemed to  mean  and
refer  to the corresponding section of the Subpart in which it is found.
Section three of this act sets forth the general effective date of  this
act.

                                SUBPART A

  Section  1.  Subparagraph  (A)  of  paragraph 7 of subdivision (ee) of
section 1115 of the tax law, as amended by section 2 of chapter  203  of
the laws of 2009, is amended to read as follows:
  (A)  "Tenant" means a person who, as lessee, enters into a space lease
with a landlord for a term of ten years or more commencing on  or  after
September first, two thousand five, but not later than, in the case of a
space lease with respect to leased premises located in eligible areas as
defined  in  clause (i) of subparagraph (D) of this paragraph, September
first, two thousand [thirteen] FIFTEEN and, in the case of a space lease
with respect to leased premises located in eligible areas as defined  in
clause (ii) of subparagraph (D) of this paragraph not later than Septem-
ber  first,  two  thousand  [fifteen]  SEVENTEEN, of premises for use as
commercial office space in buildings located or to  be  located  in  the
eligible  areas.  A  person  who  currently occupies premises for use as
commercial office space under an existing lease in  a  building  in  the
eligible  areas  shall not be eligible for exemption under this subdivi-
sion unless such existing lease, in the  case  of  a  space  lease  with
respect  to  leased  premises  located  in  eligible areas as defined in
clause (i) of subparagraph (D) of this paragraph  expires  according  to
its  terms  before  September  first, two thousand [thirteen] FIFTEEN or
such existing lease, in the case of a space lease with respect to leased
premises located in eligible areas as defined in clause (ii) of subpara-
graph (D) of this paragraph and such person enters into a  space  lease,
for  a term of ten years or more commencing on or after September first,
two thousand five, of premises for use as commercial office space  in  a
building  located  or to be located in the eligible areas, provided that

S. 6359--B                         344                        A. 8559--B

such space lease with respect to leased  premises  located  in  eligible
areas  as  defined  in  clause (i) of subparagraph (D) of this paragraph
commences  no  later  than  September  first,  two  thousand  [thirteen]
FIFTEEN, and provided that such space lease with respect to leased prem-
ises located in eligible areas as defined in clause (ii) of subparagraph
(D) of this paragraph commences no later than September first, two thou-
sand  [fifteen]  SEVENTEEN  and provided, further, that such space lease
shall expire no earlier than ten  years  after  the  expiration  of  the
original lease.
  S  2.    Section 2 of part C of chapter 2 of the laws of 2005 amending
the tax law relating to exemptions from sales and use taxes, as  amended
by chapter 203 of the laws of 2009, is amended to read as follows:
  S 2. This act shall take effect September 1, 2005 and shall expire and
be  deemed repealed on December 1, [2016] 2018, and shall apply to sales
made, uses occurring and services rendered on or  after  such  effective
date,  in  accordance  with  the  applicable  transitional provisions of
sections 1106 and 1217 of the tax law; except that clause (i) of subpar-
agraph (D) of paragraph seven of subdivision (ee) of section 1115 of the
tax law, as added by section one of this act, shall expire and be deemed
repealed December 1, [2014] 2016.
  S 3. This act shall take effect immediately; provided,  however,  that
the amendments to subparagraph (A) of paragraph 7 of subdivision (ee) of
section  1115  of  the tax law made by section one of this act shall not
affect the repeal of such subdivision and shall be deemed repealed ther-
ewith.

                                SUBPART B

  Section 1. Subdivisions 5 and 9 of section 499-a of the real  property
tax  law,  as  amended by chapter 22 of the laws of 2010, are amended to
read as follows:
  5. "Benefit period." The period commencing with the first day  of  the
month  immediately  following the rent commencement date and terminating
no later than sixty months  thereafter,  provided,  however,  that  with
respect  to a lease commencing on or after April first, nineteen hundred
ninety-seven with an initial lease term of less than five years, but not
less than three years, the period commencing with the first day  of  the
month  immediately  following the rent commencement date and terminating
no later than thirty-six months thereafter. Notwithstanding the  forego-
ing  sentence, a benefit period shall expire no later than March thirty-
first, two thousand [twenty] TWENTY-TWO.
  9. "Eligibility period." The period commencing April  first,  nineteen
hundred  ninety-five  and  terminating  March thirty-first, two thousand
[fourteen] SIXTEEN.
  S 2. Paragraph (a) of subdivision 3 of section 499-c of the real prop-
erty tax law, as amended by chapter 22 of the laws of 2010,  is  amended
to read as follows:
  (a)  For  purposes  of  determining whether the amount of expenditures
required by subdivision one of this section have been satisfied, expend-
itures on improvements to the common areas of an eligible building shall
be included only if work on such improvements commenced and the expendi-
tures are made on or after April first, nineteen hundred ninety-five and
on or before  September  thirtieth,  two  thousand  [fourteen]  SIXTEEN;
provided, however, that expenditures on improvements to the common areas
of  an  eligible  building  made  prior  to three years before the lease
commencement date shall not be included.

S. 6359--B                         345                        A. 8559--B

  S 3. Subdivision 8 of section 499-d of the real property tax  law,  as
amended  by  chapter  22  of  the  laws  of  2010, is amended to read as
follows:
  8.  Leases  commencing on or after April first, nineteen hundred nine-
ty-seven shall be subject to the provisions of this title as amended  by
chapter  six hundred twenty-nine of the laws of nineteen hundred ninety-
seven, chapter one hundred eighteen of the laws  of  two  thousand  one,
chapter  four  hundred  forty of the laws of two thousand three, chapter
sixty of the laws of two thousand seven [and the], chapter TWENTY-TWO of
the laws of two thousand ten [that added this phrase] AND THE CHAPTER OF
THE LAWS OF TWO THOUSAND FOURTEEN THAT ADDED THIS PHRASE.  Notwithstand-
ing  any  other provision of law to the contrary, with respect to leases
commencing on or after April first, nineteen  hundred  ninety-seven,  an
application  for  a  certificate of abatement shall be considered timely
filed if filed within  one  hundred  eighty  days  following  the  lease
commencement  date  or  within sixty days following the date chapter six
hundred twenty-nine of the laws of nineteen hundred ninety-seven  became
a law, whichever is later.
  S  4.  Subparagraph  (a)  of  paragraph  2 of subdivision i of section
11-704 of the administrative code of the city of New York, as amended by
chapter 22 of the laws of 2010, is amended to read as follows:
  (a) An eligible tenant of eligible taxable premises shall be allowed a
special reduction in determining the taxable base rent for such eligible
taxable premises. Such special reduction shall be allowed  with  respect
to  the rent for such eligible taxable premises for a period not exceed-
ing sixty months or, with respect to a  lease  commencing  on  or  after
April first, nineteen hundred ninety-seven with an initial lease term of
less  than  five  years, but not less than three years, for a period not
exceeding thirty-six months, commencing on the  rent  commencement  date
applicable to such eligible taxable premises, provided, however, that in
no event shall any special reduction be allowed for any period beginning
after  March  thirty-first,  two  thousand  [twenty]  TWENTY-TWO.    For
purposes of applying such special reduction, the base rent for the  base
year  shall,  where  necessary  to  determine  the amount of the special
reduction allowable with respect to any number of months falling  within
a tax period, be prorated by dividing the base rent for the base year by
twelve and multiplying the result by such number of months.
  S 5. This act shall take effect immediately.

                                SUBPART C

  Section 1. Paragraph (a) of subdivision 1 of section 489-dddddd of the
real  property tax law, as amended by chapter 28 of the laws of 2011, is
amended to read as follows:
  (a) Application for benefits pursuant to this title may be made  imme-
diately  following the effective date of a local law enacted pursuant to
this title and continuing until  March  first,  two  thousand  [fifteen]
SEVENTEEN.
  S  2.    Subdivision  3 of section 489-dddddd of the real property tax
law, as added by chapter 28 of the laws of 2011, is amended to  read  as
follows:
  3.  (a)  No  benefits  pursuant  to  this  title  shall be granted for
construction work performed pursuant to a building permit  issued  after
April first, two thousand [fifteen] SEVENTEEN.

S. 6359--B                         346                        A. 8559--B

  (b)  If  no building permit was required, then no benefits pursuant to
this title shall be granted for  construction  work  that  is  commenced
after April first, two thousand [fifteen] SEVENTEEN.
  S  3.   Paragraph 1 of subdivision a of section 11-271 of the adminis-
trative code of the city of New York, as amended by chapter  28  of  the
laws of 2011, is amended to read as follows:
  (1)  Application  for benefits pursuant to this part may be made imme-
diately following the effective date of the local law  that  added  this
section  and continuing until March first, two thousand [fifteen] SEVEN-
TEEN.
  S 4.  Subdivision c of section 11-271 of the  administrative  code  of
the  city  of  New  York, as added by chapter 28 of the laws of 2011, is
amended to read as follows:
  c. (1) No  benefits  pursuant  to  this  part  shall  be  granted  for
construction  work  performed pursuant to a building permit issued after
April first, two thousand [fifteen] SEVENTEEN.
  (2) If no building permit was required, then no benefits  pursuant  to
this part shall be granted for construction work that is commenced after
April first, two thousand [fifteen] SEVENTEEN.
  S 5.  This act shall take effect immediately.

                                SUBPART D

  Section 1. Subdivision (b) of section 25-z of the general city law, as
amended  by  chapter  131  of  the  laws  of 2008, is amended to read as
follows:
  (b) No eligible business shall be authorized to receive a credit under
any local law enacted pursuant to this article until the  premises  with
respect  to which it is claiming the credit meet the requirements in the
definition of eligible premises and until  it  has  obtained  a  certif-
ication  of  eligibility from the mayor of such city or an agency desig-
nated by such mayor, and an annual certification from such mayor  or  an
agency  designated  by such mayor as to the number of eligible aggregate
employment shares maintained by such eligible business that may  qualify
for  obtaining a tax credit for the eligible business' taxable year. Any
written documentation submitted to such mayor or such agency or agencies
in order to obtain any such certification  shall  be  deemed  a  written
instrument  for  purposes of section 175.00 of the penal law. Such local
law may provide for application fees to be determined by such  mayor  or
such  agency  or agencies. No such certification of eligibility shall be
issued under any local law enacted pursuant to this article to an eligi-
ble business on or after July first,  two  thousand  [thirteen]  FIFTEEN
unless:
  (1)  prior to such date such business has purchased, leased or entered
into a contract to purchase or lease particular premises or a parcel  on
which  will  be constructed such premises or already owned such premises
or parcel;
  (2) prior to such date improvements have been commenced on such  prem-
ises  or parcel, which improvements will meet the requirements of subdi-
vision (e) of section twenty-five-y of this article relating to expendi-
tures for improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such particular  premises;
and

S. 6359--B                         347                        A. 8559--B

  (4) such business relocates to such particular premises not later than
thirty-six  months  or, in a case in which the expenditures made for the
improvements specified in paragraph  two  of  this  subdivision  are  in
excess  of fifty million dollars within seventy-two months from the date
of submission of such preliminary application.
  S  2.  Subdivision  (b)  of  section 25-ee of the general city law, as
amended by chapter 131 of the laws  of  2008,  is  amended  to  read  as
follows:
  (b) No eligible business or special eligible business shall be author-
ized  to receive a credit against tax under any local law enacted pursu-
ant to this article until the premises  with  respect  to  which  it  is
claiming  the credit meet the requirements in the definition of eligible
premises and until it has obtained a certification of  eligibility  from
the  mayor  of  such city or any agency designated by such mayor, and an
annual certification from such mayor or an  agency  designated  by  such
mayor  as  to  the  number of eligible aggregate employment shares main-
tained by such eligible business or such special eligible business  that
may  qualify for obtaining a tax credit for the eligible business' taxa-
ble year. No special eligible business shall be authorized to receive  a
credit  against  tax  under  the  provisions  of this article unless the
number of relocated employee base shares calculated pursuant to subdivi-
sion (o) of section twenty-five-dd of this article is equal to or great-
er than the lesser of twenty-five percent of the number of New York city
base shares calculated pursuant to subdivision (p) of such  section  and
two hundred fifty employment shares. Any written documentation submitted
to  such  mayor  or  such agency or agencies in order to obtain any such
certification shall be deemed  a  written  instrument  for  purposes  of
section 175.00 of the penal law. Such local law may provide for applica-
tion  fees to be determined by such mayor or such agency or agencies. No
certification of eligibility shall be issued under any local law enacted
pursuant to this article to an eligible business on or after July first,
two thousand [thirteen] FIFTEEN unless:
  (1) prior to such date such business has purchased, leased or  entered
into  a  contract  to  purchase  or lease premises in the eligible Lower
Manhattan area or a parcel on which will be constructed such premises;
  (2) prior to such date improvements have been commenced on such  prem-
ises  or parcel, which improvements will meet the requirements of subdi-
vision (e) of section twenty-five-dd of this article relating to expend-
itures for improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such premises; and
  (4) such business relocates to such premises as provided  in  subdivi-
sion  (j) of section twenty-five-dd of this article not later than thir-
ty-six months or, in a case in  which  the  expenditures  made  for  the
improvements  specified  in  paragraph  two  of  this subdivision are in
excess of fifty million dollars within seventy-two months from the  date
of submission of such preliminary application.
  S  3.  Subdivision (b) of section 22-622 of the administrative code of
the city of New York, as amended by chapter 131 of the laws of 2008,  is
amended to read as follows:
  (b)  No  eligible  business  shall  be  authorized to receive a credit
against tax or a reduction  in  base  rent  subject  to  tax  under  the
provisions of this chapter, and of title eleven of the code as described
in  subdivision  (a) of this section, until the premises with respect to
which it is claiming the credit meet the requirements in the  definition

S. 6359--B                         348                        A. 8559--B

of eligible premises and until it has obtained a certification of eligi-
bility from the mayor or an agency designated by the mayor, and an annu-
al  certification from the mayor or an agency designated by the mayor as
to the number of eligible aggregate employment shares maintained by such
eligible  business  that  may qualify for obtaining a tax credit for the
eligible business' taxable year. Any written documentation submitted  to
the mayor or such agency or agencies in order to obtain any such certif-
ication  shall  be  deemed  a written instrument for purposes of section
175.00 of the penal law. Application fees for such certifications  shall
be  determined by the mayor or such agency or agencies. No certification
of eligibility shall be issued to an eligible business on or after  July
first, two thousand [thirteen] FIFTEEN unless:
  (1)  prior to such date such business has purchased, leased or entered
into a contract to purchase or lease particular premises or a parcel  on
which  will  be constructed such premises or already owned such premises
or parcel;
  (2) prior to such date improvements have been commenced on such  prem-
ises or parcel which improvements will meet the requirements of subdivi-
sion  (e) of section 22-621 of this chapter relating to expenditures for
improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such particular  premises;
and
  (4) such business relocates to such particular premises not later than
thirty-six  months  or,  in  a  case  in which the expenditures made for
improvements specified in paragraph  two  of  this  subdivision  are  in
excess  of fifty million dollars within seventy-two months from the date
of submission of such preliminary application.
  S 4. Subdivision (b) of section 22-624 of the administrative  code  of
the  city of New York, as amended by chapter 131 of the laws of 2008, is
amended to read as follows:
  (b) No eligible business or special eligible business shall be author-
ized to receive a credit against tax under the provisions of this  chap-
ter,  and of title eleven of the code as described in subdivision (a) of
this section, until the premises with respect to which  it  is  claiming
the  credit meet the requirements in the definition of eligible premises
and until it has obtained a certification of eligibility from the  mayor
or  an  agency designated by the mayor, and an annual certification from
the mayor or an agency designated by the  mayor  as  to  the  number  of
eligible  aggregate  employment shares maintained by such eligible busi-
ness or special eligible business that may qualify for obtaining  a  tax
credit  for  the  eligible  business'  taxable year. No special eligible
business shall be authorized to receive a credit against tax  under  the
provisions  of  this  chapter and of title eleven of the code unless the
number of relocated employee base shares calculated pursuant to subdivi-
sion (o) of section 22-623 of this chapter is equal to or  greater  than
the  lesser  of  twenty-five percent of the number of New York city base
shares calculated pursuant to subdivision (p) of  such  section  22-623,
and  two  hundred  fifty  employment  shares.  Any written documentation
submitted to the mayor or such agency or agencies in order to obtain any
such certification shall be deemed a written instrument for purposes  of
section  175.00  of  the  penal  law.  Application fees for such certif-
ications shall be determined by the mayor or such agency or agencies. No
certification of eligibility shall be issued to an eligible business  on
or after July first, two thousand [thirteen] FIFTEEN unless:

S. 6359--B                         349                        A. 8559--B

  (1)  prior to such date such business has purchased, leased or entered
into a contract to purchase or lease  premises  in  the  eligible  Lower
Manhattan area or a parcel on which will be constructed such premises;
  (2)  prior to such date improvements have been commenced on such prem-
ises or parcel, which improvements will meet the requirements of  subdi-
vision  (e)  of  section 22-623 of this chapter relating to expenditures
for improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such premises; and
  (4) such business relocates to such premises not later than thirty-six
months or, in a case in which the expenditures made for the improvements
specified in paragraph two of this subdivision are in  excess  of  fifty
million dollars within seventy-two months from the date of submission of
such preliminary application.
  S 5. This act shall take effect immediately.

                                SUBPART E

  Section  1.  Paragraph  1  of  subdivision  (b) of section 25-s of the
general city law, as amended by chapter 406 of  the  laws  of  2010,  is
amended to read as follows:
  (1)  non-residential  premises  that  are wholly contained in property
that is eligible to obtain benefits under title two-D or two-F of  arti-
cle  four  of the real property tax law, or would be eligible to receive
benefits under such article except that such  property  is  exempt  from
real property taxation and the requirements of paragraph (b) of subdivi-
sion seven of section four hundred eighty-nine-dddd of such title two-D,
or the requirements of subparagraph (ii) of paragraph (b) of subdivision
five  of  section  four  hundred eighty-nine-cccccc of such title two-F,
whichever is applicable, have not been satisfied, provided that applica-
tion for such benefits was made after May third, nineteen hundred eight-
y-five and prior to July first, two thousand  [thirteen]  FIFTEEN,  that
construction or renovation of such premises was described in such appli-
cation,  that  such  premises  have  been substantially improved by such
construction or renovation  so  described,  that  the  minimum  required
expenditure as defined in such title two-D or two-F, whichever is appli-
cable,  has  been  made,  and  that  such real property is located in an
eligible area; or
  S 2. Paragraph 3 of subdivision (b) of section  25-s  of  the  general
city  law,  as amended by chapter 406 of the laws of 2010, is amended to
read as follows:
  (3) non-residential premises that are wholly contained in real proper-
ty that has obtained approval after October thirty-first,  two  thousand
and  prior  to July first, two thousand [thirteen] FIFTEEN for financing
by an industrial development  agency  established  pursuant  to  article
eighteen-A  of  the  general municipal law, provided that such financing
has been used in whole or in part to substantially improve such premises
(by construction or renovation), and that expenditures  have  been  made
for  improvements  to  such real property in excess of ten per centum of
the value at which such real property was assessed for tax purposes  for
the  tax  year  in which such improvements commenced, that such expendi-
tures have been made within thirty-six months after the earlier  of  (i)
the  issuance  by  such  agency of bonds for such financing, or (ii) the
conveyance of title to such property to such agency, and that such  real
property is located in an eligible area; or

S. 6359--B                         350                        A. 8559--B

  S  3.  Paragraph  5  of subdivision (b) of section 25-s of the general
city law, as amended by chapter 406 of the laws of 2010, is  amended  to
read as follows:
  (5) non-residential premises that are wholly contained in real proper-
ty  owned  by  such  city or the New York state urban development corpo-
ration, or a subsidiary thereof, a  lease  for  which  was  approved  in
accordance with the applicable provisions of the charter of such city or
by  the  board  of  directors of such corporation, and such approval was
obtained after October thirty-first, two  thousand  and  prior  to  July
first,  two  thousand  [thirteen]  FIFTEEN, provided, however, that such
premises were constructed or renovated subsequent to such approval, that
expenditures have been made subsequent to such approval for improvements
to such real property (by construction or renovation) in excess  of  ten
per centum of the value at which such real property was assessed for tax
purposes  for  the  tax  year in which such improvements commenced, that
such expenditures have been made  within  thirty-six  months  after  the
effective  date of such lease, and that such real property is located in
an eligible area; or
  S 4. Paragraph 2 of subdivision (c) of section  25-t  of  the  general
city  law,  as amended by chapter 406 of the laws of 2010, is amended to
read as follows:
  (2) No eligible energy user, qualified eligible energy  user,  on-site
cogenerator,  or clean on-site cogenerator shall receive a rebate pursu-
ant to this article until it  has  obtained  a  certification  from  the
appropriate  city agency in accordance with a local law enacted pursuant
to this section. No such certification for a qualified  eligible  energy
user  shall  be issued on or after November first, two thousand. No such
certification of any other eligible energy user, on-site cogenerator, or
clean on-site cogenerator shall be issued on or after  July  first,  two
thousand [thirteen] FIFTEEN.
  S  5.  Paragraph  1 of subdivision (a) of section 25-aa of the general
city law, as amended by chapter 406 of the laws of 2010, is  amended  to
read as follows:
  (1) is eligible to obtain benefits under title two-D or two-F of arti-
cle  four  of the real property tax law, or would be eligible to receive
benefits under such title except that such property is exempt from  real
property  taxation  and the requirements of paragraph (b) of subdivision
seven of section four hundred eighty-nine-dddd of such title  two-D,  or
the  requirements  of  subparagraph (ii) of paragraph (b) of subdivision
five of section four hundred eighty-nine-cccccc  of  such  title  two-F,
whichever  is  applicable,  of  the  real property tax law have not been
satisfied, provided that application for such benefits  was  made  after
the  thirtieth  day of June, nineteen hundred ninety-five and before the
first day of July, two thousand [thirteen] FIFTEEN, that construction or
renovation of such building or structure was described in such  applica-
tion, that such building or structure has been substantially improved by
such  construction  or  renovation,  and  (i)  that the minimum required
expenditure as defined in such title has been made, or (ii) where  there
is   no  applicable  minimum  required  expenditure,  the  building  was
constructed within such period or periods of time established  by  title
two-D  or  two-F,  whichever  is applicable, of article four of the real
property tax law for construction of a new building or structure; or
  S 6. Paragraphs 2 and 3 of subdivision (a) of  section  25-aa  of  the
general  city  law,  as  amended by chapter 406 of the laws of 2010, are
amended to read as follows:

S. 6359--B                         351                        A. 8559--B

  (2) has obtained approval after the thirtieth day  of  June,  nineteen
hundred  ninety-five  and  before  the  first  day of July, two thousand
[thirteen] FIFTEEN, for financing by an  industrial  development  agency
established pursuant to article eighteen-A of the general municipal law,
provided  that  such  financing  has  been  used  in whole or in part to
substantially improve such building  or  structure  by  construction  or
renovation,  that  expenditures  have been made for improvements to such
real property in excess of twenty per centum of the value at which  such
real  property  was  assessed for tax purposes for the tax year in which
such improvements commenced, and that such expenditures have  been  made
within  thirty-six  months after the earlier of (i) the issuance by such
agency of bonds for such financing, or (ii) the conveyance of  title  to
such building or structure to such agency; or
  (3)  is  owned  by  the  city  of New York or the New York state urban
development corporation, or a subsidiary corporation  thereof,  a  lease
for  which  was approved in accordance with the applicable provisions of
the charter of such city or by the board of  directors  of  such  corpo-
ration,  as  the  case  may be, and such approval was obtained after the
thirtieth day of June, nineteen hundred ninety-five and before the first
day of July, two thousand [thirteen] FIFTEEN, provided that expenditures
have been made for improvements to such real property in excess of twen-
ty per centum of the value at which such real property was assessed  for
tax  purposes for the tax year in which such improvements commenced, and
that such expenditures have been made within thirty-six months after the
effective date of such lease; or
  S 7. Subdivision (f) of section 25-bb of  the  general  city  law,  as
amended  by  chapter  406  of  the  laws  of 2010, is amended to read as
follows:
  (f) Application and certification. An owner or lessee of a building or
structure located in an eligible revitalization area,  or  an  agent  of
such  owner  or  lessee,  may apply to such department of small business
services for certification that such building or structure is an  eligi-
ble  building  or  targeted  eligible  building  meeting the criteria of
subdivision (a) or  (q)  of  section  twenty-five-aa  of  this  article.
Application for such certification must be filed after the thirtieth day
of  June,  nineteen  hundred ninety-five and before a building permit is
issued for the construction or renovation required by such  subdivisions
and  before  the  first  day  of  July, two thousand [thirteen] FIFTEEN,
provided that no certification for a targeted eligible building shall be
issued after October thirty-first, two thousand. Such application  shall
identify expenditures to be made that will affect eligibility under such
subdivision  (a) or (q). Upon completion of such expenditures, an appli-
cant shall supplement such application to provide information (i) estab-
lishing that the criteria of such subdivision (a) or (q) have been  met;
(ii) establishing a basis for determining the amount of special rebates,
including a basis for an allocation of the special rebate among eligible
revitalization area energy users purchasing or otherwise receiving ener-
gy  services  from  an  eligible  redistributor of energy or a qualified
eligible redistributor of energy; and (iii) supporting an allocation  of
charges  for energy services between eligible charges and other charges.
Such department shall certify a building or  structure  as  an  eligible
building  or targeted eligible building after receipt and review of such
information and upon a determination that such  information  establishes
that  the  building  or  structure  qualifies as an eligible building or
targeted eligible building. Such  department  shall  mail  such  certif-
ication  or  notice thereof to the applicant upon issuance. Such certif-

S. 6359--B                         352                        A. 8559--B

ication shall remain in effect provided the  eligible  redistributor  of
energy or qualified eligible redistributor of energy reports any changes
that  materially affect the amount of the special rebates to which it is
entitled  or the amount of reduction required by subdivision (c) of this
section in an energy services bill of an  eligible  revitalization  area
energy  user  and otherwise complies with the requirements of this arti-
cle. Such department shall notify the private utility or public  utility
service  required  to make a special rebate to such redistributor of the
amount of such special rebate established at the time  of  certification
and any changes in such amount and any suspension or termination by such
department  of certification under this subdivision. Such department may
require some or all of the information required as part of  an  applica-
tion or other report be provided by a licensed engineer.
  S  8. Paragraph 1 of subdivision (i) of section 22-601 of the adminis-
trative code of the city of New York, as amended by chapter 406  of  the
laws of 2010, is amended to read as follows:
  (1)  Non-residential  premises  that  are wholly contained in property
that is eligible to obtain benefits under part  four  or  part  five  of
subchapter  two of chapter two of title eleven of this code, or would be
eligible to receive benefits under such chapter except that such proper-
ty is exempt from real property taxation and the requirements  of  para-
graph  two  of  subdivision  g  of  section  11-259 of this code, or the
requirements of subparagraph (b) of paragraph two of  subdivision  e  of
section  11-270  of  this  code,  whichever is applicable, have not been
satisfied, provided that application for such benefits  was  made  after
May  third,  nineteen  hundred  eighty-five and prior to July first, two
thousand [thirteen] FIFTEEN, that construction  or  renovation  of  such
premises was described in such application, that such premises have been
substantially  improved by such construction or renovation so described,
that the minimum required expenditure as defined in such  part  four  or
part  five,  whichever  is applicable, has been made, and that such real
property is located in an eligible area; or
  S 9. Paragraph 3 of subdivision (i) of section 22-601 of the  adminis-
trative  code  of the city of New York, as amended by chapter 406 of the
laws of 2010, is amended to read as follows:
  (3) non-residential premises that are wholly contained in real proper-
ty that has obtained approval after October thirty-first,  two  thousand
and  prior  to July first, two thousand [thirteen] FIFTEEN for financing
by an industrial development  agency  established  pursuant  to  article
eighteen-A  of  the  general municipal law, provided that such financing
has been used in whole or in part to substantially improve such premises
(by construction or renovation), and that expenditures  have  been  made
for  improvements  to  such real property in excess of ten per centum of
the value at which such real property was assessed for tax purposes  for
the  tax  year  in which such improvements commenced, that such expendi-
tures have been made within thirty-six months after the earlier  of  (i)
the  issuance  by  such  agency of bonds for such financing, or (ii) the
conveyance of title to such property to such agency, and that such  real
property is located in an eligible area; or
  S 10. Paragraph 5 of subdivision (i) of section 22-601 of the adminis-
trative  code  of the city of New York, as amended by chapter 406 of the
laws of 2010, is amended to read as follows:
  (5) non-residential premises that are wholly contained in real proper-
ty owned by such city or the New York  state  urban  development  corpo-
ration,  or  a  subsidiary  thereof,  a  lease for which was approved in
accordance with the applicable provisions of the charter of such city or

S. 6359--B                         353                        A. 8559--B

by the board of directors of such corporation,  and  such  approval  was
obtained  after  October  thirty-first,  two  thousand and prior to July
first, two thousand [thirteen] FIFTEEN,  provided,  however,  that  such
premises were constructed or renovated subsequent to such approval, that
expenditures have been made subsequent to such approval for improvements
to  such  real property (by construction or renovation) in excess of ten
per centum of the value at which such real property was assessed for tax
purposes for the tax year in which  such  improvements  commenced,  that
such  expenditures  have  been  made  within thirty-six months after the
effective date of such lease, and that such real property is located  in
an eligible area; or
  S 11. Paragraph 1 of subdivision (c) of section 22-602 of the adminis-
trative  code  of the city of New York, as amended by chapter 406 of the
laws of 2010, is amended to read as follows:
  (1) No eligible energy user, qualified eligible energy  user,  on-site
cogenerator,  clean  on-site cogenerator or special eligible energy user
shall receive a rebate pursuant to this chapter until it has obtained  a
certification  as  an  eligible  energy  user, qualified eligible energy
user, on-site cogenerator, clean on-site cogenerator or special eligible
energy user, respectively,  from  the  commissioner  of  small  business
services.  No  such  certification  for a qualified eligible energy user
shall be issued on or after July first,  two  thousand  three.  No  such
certification  of any other eligible energy user, on-site cogenerator or
clean on-site cogenerator shall be issued on or after  July  first,  two
thousand   [thirteen]   FIFTEEN.  The  commissioner  of  small  business
services, after notice and hearing, may revoke  a  certification  issued
pursuant to this subdivision where it is found that eligibility criteria
have  not  been  met  or  that  compliance with conditions for continued
eligibility has not been maintained. The corporation counsel  may  main-
tain a civil action to recover an amount equal to any benefits improper-
ly obtained.
  S 12. This act shall take effect immediately.

                                SUBPART F

  Section  1.  Subparagraph  (b-2)  of  paragraph  2 of subdivision i of
section 11-704 of the administrative code of the city of  New  York,  as
amended  by  chapter  203  of  the  laws  of 2009, is amended to read as
follows:
  (b-2) The amount of the special reduction allowed by this  subdivision
with  respect  to  a lease other than a sublease commencing between July
first, two thousand five and June  thirtieth,  two  thousand  [thirteen]
FIFTEEN  with  an  initial  or renewal lease term of at least five years
shall be determined as follows:
  (i) For the base year the amount of such special  reduction  shall  be
equal to the base rent for the base year.
  (ii)  For  the  first,  second,  third and fourth twelve-month periods
following the base year the amount of such special  reduction  shall  be
equal  to  the  lesser  of  (A) the base rent for each such twelve-month
period or (B) the base rent for the base year.
  S 2. This act shall take effect immediately.

                                SUBPART G

S. 6359--B                         354                        A. 8559--B

  Section 1. Subdivision 9 of section 499-aa of the   real property  tax
law,  as  amended by chapter 306 of the laws of 2010, is amended to read
as follows:
  9.  "Eligibility  period." The period commencing April first, nineteen
hundred ninety-five and terminating  March  thirty-first,  two  thousand
one,  provided,  however, that with respect to eligible premises defined
in subparagraph (i) of paragraph (b) of subdivision ten of this section,
the period commencing July first,  two  thousand  and  terminating  June
thirtieth,  two  thousand  [fourteen]  SIXTEEN,  and  provided, further,
however, that with respect to eligible premises defined in  subparagraph
(ii)  of  paragraph  (b)  or  paragraph  (c)  of subdivision ten of this
section, the period commencing July first, two thousand five and  termi-
nating June thirtieth, two thousand [fourteen] SIXTEEN.
  S  2.  Subparagraph (iii) of paragraph (a) of subdivision 3 of section
499-cc of the real property tax law, as amended by chapter  306  of  the
laws of 2010, is amended to read as follows:
  (iii)  With  respect  to the eligible premises defined in subparagraph
(ii) of paragraph (b) or paragraph (c) of  subdivision  ten  of  section
four  hundred ninety-nine-aa of this title and for purposes of determin-
ing whether the amount of expenditures required by  subdivision  one  of
this  section  have  been satisfied, expenditures on improvements to the
common areas of an eligible building shall be included only if  work  on
such  improvements  commenced  and the expenditures are made on or after
July first, two thousand five and on or  before  December  thirty-first,
two thousand [fourteen] SIXTEEN; provided, however, that expenditures on
improvements  to  the common areas of an eligible building made prior to
three years before the lease commencement date shall not be included.
  S 3. This act shall take effect immediately.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion, section or part of this act shall be  adjudged  by  any  court  of
competent  jurisdiction  to  be invalid, such judgment shall not affect,
impair, or invalidate the remainder thereof, but shall  be  confined  in
its  operation  to the clause, sentence, paragraph, subdivision, section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the legislature that this act would  have  been  enacted  even  if  such
invalid provisions had not been included herein.
  S  3.  This  act shall take effect immediately provided, however, that
the applicable effective date of Subparts A through G of this act  shall
be as specifically set forth in the last section of such Subparts.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion,  section  or  part  of  this act shall be adjudged by any court of
competent jurisdiction to be invalid, such judgment  shall  not  affect,
impair,  or  invalidate  the remainder thereof, but shall be confined in
its operation to the clause, sentence, paragraph,  subdivision,  section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the  legislature  that  this  act  would  have been enacted even if such
invalid provisions had not been included herein.
  S 3. This act shall take effect immediately  provided,  however,  that
the applicable effective date of Parts A through GG of this act shall be
as specifically set forth in the last section of such Parts.

2013-S6359C - Details

See Assembly Version of this Bill:: A8559
Law Section:: Budget Bills
Laws Affected:: Amd Various Laws, generally

2013-S6359C - Summary

2013-S6359C - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 6359--C

                            I N  S E N A T E

                            January 21, 2014
                               ___________

A  BUDGET  BILL,  submitted by the Governor pursuant to article seven of
  the Constitution -- read twice and ordered printed, and  when  printed
  to  be  committed to the Committee on Finance -- committee discharged,
  bill amended, ordered reprinted as amended  and  recommitted  to  said
  committee  -- committee discharged, bill amended, ordered reprinted as
  amended and recommitted to said  committee  --  committee  discharged,
  bill  amended,  ordered  reprinted  as amended and recommitted to said
  committee

AN ACT to amend the tax law, the general municipal law, the urban devel-
  opment corporation act, the business corporation law, and the  general
  associations law, in relation to reforming taxation of business corpo-
  rations;  to amend the administrative code of the city of New York, in
  relation to transitional provisions  relating  to  the  enactment  and
  implementation  of  the  federal Gramm-Leach-Bliley act; and to repeal
  various provisions of the tax law relating thereto (Part A); to  amend
  the  real  property  tax  law,  in  relation  to the STAR registration
  program (Part B); to amend chapter 540 of the laws of  1992,  amending
  the real property tax law relating to oil and gas charges, in relation
  to  the effective date of such chapter (Part C); intentionally omitted
  (Part D); to amend the tax law, in relation to modifying the signature
  requirement on e-filed returns prepared by tax professionals (Part E);
  intentionally omitted (Part F); to amend part I of chapter 58  of  the
  laws  of  2006, amending the tax law relating to providing an enhanced
  earned income tax credit, in relation  to  the  effectiveness  thereof
  (Part  G);  to  amend  the general obligations law and the tax law, in
  relation to authorizing electronic tax clearances for professional and
  business licenses (Part H); to amend the tax law and  the  administra-
  tive code of the city of New York, in relation to taxing residents who
  are  grantors  of  exempt  resident trusts that qualify as non-grantor
  incomplete gift trusts on the income from such trusts and taxing resi-
  dents who are beneficiaries of all other  exempt  resident  trusts  or
  nonresident  trusts  on  the  distributions of accumulated income that
  they receive from such trusts (Part I); to amend the tax law  and  the
  administrative  code of the city of New York, in relation to eliminat-
  ing the personal income tax add-on minimum tax; and to repeal  certain
  provisions of such laws relating thereto (Part J); intentionally omit-
  ted (Part K); intentionally omitted (Part L); to amend the tax law, in

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD12674-06-4

S. 6359--C                          2

  relation  to  the  family tax relief credit (Part M); to amend the tax
  law, in  relation  to  eliminating  the  personal  income  tax  filing
  requirement  for residents having no liability because income does not
  exceed  the  New York standard deduction if they do not file a federal
  income tax return (Part N); to amend  the  tax  law,  in  relation  to
  extending  the empire state commercial production tax credit (Part O);
  to amend the public housing law, in relation to extending  the  credit
  against  income  tax  for  persons or entities investing in low-income
  housing (Part P); to amend the environmental conservation law, the tax
  law, the economic development law and the general  municipal  law,  in
  relation  to  eligibility  for participation in the brownfield cleanup
  program, and assignment of the brownfield redevelopment  tax  credits;
  to amend part H of chapter 1 of the laws of 2003, amending the tax law
  relating  to  brownfield  redevelopment tax credits, remediated brown-
  field credit for real property taxes for qualified sites and  environ-
  mental  remediation  insurance credits, in relation to tax credits for
  certain  sites;  to  amend  the  environmental  conservation  law,  in
  relation  to  hazardous  waste  generator fees and taxes; to amend the
  environmental conservation law, the public  authorities  law  and  the
  state  finance  law,  in  relation  to  the  environmental restoration
  program; and to repeal certain provisions of the environmental conser-
  vation law and the tax law relating thereto (Subpart A); and to  amend
  the  navigation  law, in relation to responsible parties for petroleum
  contaminated sites and incentives to parties who are willing to  reme-
  diate  petroleum contaminated sites (Subpart B) (Part Q); to amend the
  tax law, in relation to providing a tax credit for real property taxes
  to New York manufacturers; and providing for  the  repeal  of  certain
  provisions  upon  expiration  thereof  (Part R); intentionally omitted
  (Part S); to amend the tax law, in relation to providing a credit  for
  excise  tax  on  telecommunication  services for businesses located in
  tax-free NY areas (Part T); to amend  the  tax  law,  in  relation  to
  reducing the number of hours of part-time work needed by employees for
  employer qualification for the New York youth works tax credit; and to
  amend the labor law, in relation to the New York youth works tax cred-
  it (Part U); to amend chapter 109 of the laws of 2006 amending the tax
  law  and  other  laws relating to providing exemptions, reimbursements
  and credits from various  taxes  for  certain  alternative  fuels,  in
  relation  to  extending  the  alternative fuels tax exemptions for two
  years (Part V); to amend chapter 63 of the laws of 2000, amending  the
  tax law and other laws relating to modifying the distribution of funds
  from  the  motor  vehicle  fuel excise tax and the vehicle and traffic
  law, in relation to simplifying the methodology  for  distribution  of
  motor  vehicle receipts (Part W); to amend the tax law, in relation to
  the estate tax; to repeal section 2 of chapter 1013  of  the  laws  of
  1962,  amending the tax law relating to imposing a tax on the transfer
  of estates of decedents  dying  on  or  after  April  first,  nineteen
  hundred  sixty-three,  relating  to an appendix of applicable internal
  revenue code provisions, and to repeal article 26-B of  the  tax  law,
  relating  to  the  generation  skipping  transfer tax (Part X); inten-
  tionally omitted (Part Y); to amend the tax law, in relation to vendor
  fees paid to vendor tracks (Part Z); to amend the racing,  pari-mutuel
  wagering  and  breeding  law,  in  relation  to licenses for simulcast
  facilities, sums relating to track  simulcast,  simulcast  of  out-of-
  state  thoroughbred  races,  simulcasting of races run by out-of-state
  harness tracks and distributions of wagers; to amend  chapter  281  of
  the  laws of 1994 amending the racing, pari-mutuel wagering and breed-

S. 6359--C                          3

  ing law and other laws relating to simulcasting and chapter 346 of the
  laws of 1990 amending the racing, pari-mutuel  wagering  and  breeding
  law  and  other  laws  relating  to simulcasting and the imposition of
  certain  taxes,  in  relation to extending certain provisions thereof;
  and to amend the racing, pari-mutuel wagering  and  breeding  law,  in
  relation  to  extending certain provisions thereof (Part AA); to amend
  the tax law, in relation to capital awards to vendor tracks (Part BB);
  to amend the tax law, the banking law, the public authorities law, and
  the administrative code of the city of New York, in  relation  to  the
  stock  transfer  tax, and to repeal certain provisions of the tax law,
  the state finance law and the administrative code of the city  of  New
  York  relating thereto (Part CC); to amend the tax law, in relation to
  conforming the due dates for the metropolitan commuter  transportation
  mobility  tax  for taxpayers with income from self-employment with the
  due dates for the personal income tax (Part DD); to  amend  the  state
  finance  law,  the upstate New York gaming economic development act of
  2013 and the tax law, in relation to  moneys  appropriated  or  trans-
  ferred  from  the  commercial  gaming  revenue  fund (Part EE); inten-
  tionally omitted (Part FF); to amend the tax law, in relation  to  the
  temporary  exemption  from  sales  and use taxes for premises used for
  commercial office space in lower Manhattan; and to  amend  part  C  of
  chapter  2  of  the  laws  of  2005  amending  the tax law relating to
  exemptions from sales and use taxes, in relation to the  effectiveness
  thereof (Subpart A); to amend the real property tax law and the admin-
  istrative  code  of  the  city of New York, in relation to extending a
  real property tax abatement program for certain commercial  properties
  in  cities  having a population of one million or more and in relation
  to extending a special reduction under the commercial rent tax in  the
  city  of  New York (Subpart B); to amend the real property tax law and
  the administrative code of the city of New York, in relation to appli-
  cations for tax abatements for industrial and commercial  construction
  work  on  properties in a city of one million or more persons (Subpart
  C); to amend the general city law and the administrative code  of  the
  city  of New York, in relation to extending the relocation and employ-
  ment assistance program and the Lower Manhattan relocation and employ-
  ment assistance program (Subpart D); to amend the general city law and
  the administrative code of the  city  of  New  York,  in  relation  to
  extending  the  special rebates and discounts provided pursuant to the
  energy cost savings program and the  Lower  Manhattan  energy  program
  (Subpart E); to amend the administrative code of the city of New York,
  in  relation  to  the amount of special reduction allowed (Subpart F);
  and to amend the real  property tax law, in relation to a real  estate
  tax  abatement program for certain commercial, industrial and manufac-
  turing properties in a city of one million or more persons (Subpart G)
  (Part GG); to amend the state finance law, in relation to establishing
  a spending cap and establishing a tax freedom fund (Part HH); to amend
  the tax law, in relation to simple personal income tax (Part  II);  to
  amend  the tax law, in relation to the cost of living adjustment (Part
  JJ); to amend the general municipal law and the tax law,  in  relation
  to  establishing  an  angel  tax  credit for investments made in small
  businesses (Part KK); to amend the tax law, in relation  to  exempting
  the  proceeds  from  service award programs for volunteer firefighters
  and ambulance workers from personal income taxes (Part LL);  to  amend
  the  tax  law,  in relation to establishing the public safety communi-
  cations surcharge  on  prepaid  wireless  telecommunications  services
  (Part  MM);  to  amend  the  tax law, in relation to the prepayment of

S. 6359--C                          4

  sales tax on motor fuel and diesel  motor  fuel  and  in  relation  to
  increasing  the  amount  of  tax  required to be prepaid on motor fuel
  (Part NN); to amend the tax law, in relation to the exemption of poli-
  tical  subdivisions  from  the imposition of the metropolitan commuter
  transportation mobility tax (Part  OO);  to  amend  the  tax  law,  in
  relation  to increasing the maximum award available under the historic
  preservation  tax  credit;  and  providing  for  the  repeal  of  such
  provisions upon expiration thereof (Part PP); to amend the civil prac-
  tice law and rules, in relation to the undertaking required during the
  pendency  of a stay of enforcement of a judgment against a participat-
  ing or non-participating  manufacturer  under  the  master  settlement
  agreement  (Part QQ); to amend the tax law, in relation to eliminating
  sales tax on transportation services; and to repeal certain provisions
  of such law relating thereto (Part RR);  to  amend  the  tax  law,  in
  relation  to  the  sale of food and beverages through vending machines
  (Part SS); to amend the tax law, in relation to establishing  business
  franchise  and  personal  income  tax  credits for certain musical and
  theatrical production expenses (Part TT); to amend  the  tax  law,  in
  relation to establishing a credit against income tax for the rehabili-
  tation of distressed commercial properties (Part UU); to amend chapter
  912 of the laws of 1920 relating to the regulation of boxing, sparring
  and  wrestling,  in  relation  to establishing protocols for combative
  sports and authorizing mixed martial arts events  in  this  state;  to
  amend the tax law, in relation to the imposition of a tax on the gross
  receipts  of  any  person  holding any professional or amateur boxing,
  sparring or wrestling match or exhibition, or  professional  combative
  sports  match  or  exhibition;  and  to  amend  the alcoholic beverage
  control law, in relation to allowing matches  or  exhibitions  on  the
  premises  of  certain  licensees  (Part  VV); to amend the tax law, in
  relation to providing an asbestos remediation tax credit (Part WW); to
  amend the tax law, in relation to exempting from sales and  compensat-
  ing use taxes the purchase of general aviation aircraft; and providing
  for  the  repeal  of  certain provisions upon expiration thereof (Part
  XX); to amend the tax law, in relation to  biofuel  production  credit
  for  production of cellulosic ethanol (Part YY); to amend the tax law,
  in relation to establishing a business franchise and  personal  income
  tax  credit  for natural resources improvement projects upon farmlands
  and forestlands (Part ZZ); to  amend  the  tax  law,  in  relation  to
  contributions  made to a farm reserve account (Part AAA); to amend the
  racing, pari-mutuel wagering and breeding  law,  in  relation  to  the
  simulcasting  of  races;  and repealing certain provisions of such law
  relating thereto (Part BBB); to amend the  tax  law,  in  relation  to
  video  lottery gaming (Part CCC); to amend the tax law, in relation to
  increasing the percentage New York  shall  receive  from  a  marketing
  allowance on the total revenue from vendor tracks (Part DDD); to amend
  the tax law, in relation to allowing vendor tracks to receive revenues
  when  located  within  certain development zone regions (Part EEE); to
  amend the tax law, in relation to the  disposition  of  revenues  from
  video  lottery  gaming  (Part  FFF);  to amend the racing, pari-mutuel
  wagering and breeding law, in relation to simulcasting of out-of-state
  thoroughbred races (Part GGG); to amend the tax law,  in  relation  to
  monetary  reporting  (Part  HHH); to amend the tax law, in relation to
  providing that the low income housing credit shall be  treated  as  an
  overpayment  of  taxes (Part III); to amend the tax law and the educa-
  tion law, in relation to enacting the "education investment incentives
  act" (Part JJJ); to amend the labor law and the tax law,  in  relation

S. 6359--C                          5

  to  the  creation  of the workers with disabilities tax credit program
  (Part KKK); to amend the tax law, in relation to authorizing advertis-
  ing during quick draw and authorizing the gaming  commission  to  sell
  advertising  space  on  lottery tickets (Part LLL); in relation to the
  definition of "equipment" when used in certain  circumstances  related
  to  empire  zones  (Part MMM); to amend the environmental conservation
  law, in relation to pre-installation review and certification of green
  roof materials; and to amend the tax law, in relation to  establishing
  a  green roof installation credit (Part NNN); to amend the tax law and
  the state finance law, in relation to establishing the study and  stay
  program  (Part OOO); to amend the tax law, in relation to establishing
  a gift for eliminating  the  stigma  relating  to  mental  illness  on
  personal  income  tax  returns;  to  amend  the  state finance law, in
  relation to establishing a mental illness  anti-stigma  fund;  and  to
  amend  the  mental hygiene law, in relation to directing the office of
  mental health to provide grants to organizations dedicated  to  elimi-
  nating  the  stigma attached to mental illness and persons with mental
  health needs (Part PPP); to amend the state finance law,  in  relation
  to requiring the department of health to submit certain reports to the
  legislature;  and  to  amend  the  tax  law,  in relation to gifts for
  prostate and testicular cancer research and education (Part  QQQ);  to
  amend the tax law, in relation to establishing tax credits for taxpay-
  ers  which  provide  their  employees with access to federal qualified
  transportation fringe benefits (Part RRR); to amend the  tax  law,  in
  relation  to  the  exemption  of  libraries from the imposition of the
  metropolitan commuter transportation mobility tax (Part SSS); to amend
  the tax law, in relation to providing a tax credit to farmers who sell
  or rent their agricultural land to a young farmer (Part TTT); to amend
  the tax law, in relation to  providing  a  tax  credit  for  allowable
  college  expenses  (Part  UUU);  to  amend the tax law, in relation to
  sales and compensating use taxes (Part VVV);  to  amend  the  economic
  development  law,  the  urban  development  corporation act, the state
  finance law and the tax law, in relation to establishing the New  York
  state  digital game development and incentive act (Part WWW); to amend
  the urban development corporation act, the  tax  law  and  the  public
  service  law,  in  relation  to New York state incubators and hotspots
  (Part XXX); and to amend the public housing law and the  tax  law,  in
  relation to providing certain tax credits for construction or rehabil-
  itation of middle-income housing (Part YYY)

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. This act enacts into law major  components  of  legislation
which are necessary to implement the state fiscal plan for the 2014-2015
state  fiscal  year.  Each  component  is wholly contained within a Part
identified as Parts A through YYY. The effective date for  each  partic-
ular  provision  contained  within  such  Part  is set forth in the last
section of such Part. Any provision in any section  contained  within  a
Part,  including the effective date of the Part, which makes a reference
to a section "of this act", when used in connection with that particular
component, shall be deemed  to  mean  and  refer  to  the  corresponding
section of the Part in which it is found. Section three of this act sets
forth the general effective date of this act.

S. 6359--C                          6

                                 PART A

  Section 1. Article 32 of the tax law is REPEALED.
  S 2. Section 180 of the tax law is REPEALED.
  S 3. Section 181 of the tax law is REPEALED.
  S  4.  Section 208 of the tax law, as added by chapter 415 of the laws
of 1944, subdivision 1 as amended by chapter 576 of the  laws  of  1994,
subdivision  1-A as amended by chapter 166 of the laws of 1991, subdivi-
sion 1-B as added by section 45 of part A and paragraph (k) of  subdivi-
sion  9  as  added by section 46 of part A of chapter 389 of the laws of
1997, subdivision 3, the opening paragraph, subparagraphs 6  and  11  of
paragraph (b), and the opening paragraph of paragraph (g) of subdivision
9  as  amended and subdivision 8-B and subparagraph 3-a of paragraph (b)
of subdivision 9 as added by chapter 817 of the laws of  1987,  subdivi-
sion  4  as  amended by section 1, subdivision 6 as amended by section 2
and subparagraph 2 of paragraph (a)  of  subdivision  9  as  amended  by
section  7  of part M of chapter 407 of the laws of 1999, subdivisions 5
and 7, paragraph (a) of subdivision 8-B, subparagraph  10  of  paragraph
(b)  and  paragraph  (j)  of  subdivision 9 as amended, paragraph (d) of
subdivision 8-B and paragraph (c-1) of subdivision 9 as added and  para-
graphs  (e)  and  (f) of subdivision 8-B as relettered by chapter 170 of
the laws of 1994, subdivisions 8 and 10 as amended by chapter 133 of the
laws of 1945, subdivision 8-A as added and subparagraph 1  of  paragraph
(a)  of  subdivision  9  as  amended by chapter 778 of the laws of 1972,
paragraph (b) of subdivision 8-A and paragraph (i) of subdivision  9  as
amended  by chapter 779 of the laws of 1972, subdivision 9 as amended by
chapter 713 of the laws of 1961,  paragraph  (a)  of  subdivision  9  as
amended by chapter 203 of the laws of 1962, subparagraphs 5, 9 and 10 of
paragraph  (a) and subparagraphs 8 and 9 of paragraph (b) of subdivision
9 as amended by chapter 61 of the laws of  1989  and  paragraph  (f)  of
subdivision  9  as separately amended by sections 278 and 347 of chapter
61 of the laws of 1989, clause (i) of subparagraph 5 of paragraph (a) of
subdivision 9 as amended by section 2 and subparagraph 20  of  paragraph
(b)  of  subdivision  9 as added by section 3 of part C of chapter 25 of
the laws of 2009, subparagraph 6 of paragraph (a) of  subdivision  9  as
added  by  chapter  895 of the laws of 1975 and as renumbered by chapter
613 of the laws of 1976, subparagraph 7 of paragraph (a) of  subdivision
9  as  added  by chapter 33 of the laws of 1978, subparagraph 8 of para-
graph (a) and subparagraph 7  of  paragraph  (b)  of  subdivision  9  as
amended by chapter 639 of the laws of 1986, subparagraph 11 of paragraph
(a) of subdivision 9 as added by chapter 15 of the laws of 1983, subpar-
agraph  12  of  paragraph  (a),  subparagraph  4-a  of paragraph (b) and
subparagraph 2 of paragraph (h) of subdivision 9 as amended and subpara-
graph 13 of paragraph (a) of subdivision 9 as added by  chapter  760  of
the  laws  of 1992, subparagraph 14 of paragraph (a) of subdivision 9 as
added by section 101 and paragraphs (l) and  (m)  of  subdivision  9  as
added  by  section  102  of  part  A  of chapter 56 of the laws of 1998,
subparagraph 15 of paragraph (a) of subdivision 9 as amended by  section
1 of part ZZ of chapter 63 of the laws of 2003, subparagraph 16 of para-
graph  (a)  of  subdivision 9 as added by section 1 of part K3, subpara-
graph 16 of paragraph (b) of subdivision 9 as added by section 2 of part
K3, subparagraph 17 of paragraph  (b)  of  subdivision  9  as  added  by
section  2  of part O3, and paragraphs (o), (p) and (q) of subdivision 9
as added by section 3 of part O3 of chapter 62  of  the  laws  of  2003,
subparagraph  18 of paragraph (a) of subdivision 9 as added by section 3
of part C and paragraph (o) of subdivision 9 as amended by section 2  of

S. 6359--C                          7

part  E  of  chapter 59 of the laws of 2013, subparagraph 3 of paragraph
(b) of subdivision 9 as amended by chapter 895  of  the  laws  of  1975,
subparagraph  4  of paragraph (b) and subparagraph 4 of paragraph (f) of
subdivision  9  as  amended by chapter 190 of the laws of 1990, subpara-
graph 15 of paragraph (b) of subdivision 9 as added by  chapter  309  of
the  laws  of 1996, subparagraph 18 of paragraph (b) of subdivision 9 as
added by section 21 of part H of chapter 1 of the laws of 2003, subpara-
graph 19 of paragraph (b) of subdivision 9 as added by section 1 of part
HH1 of chapter 57 of the laws of 2008, subparagraph  20-a  of  paragraph
(b)  of subdivision 9 as added by section 2-a of part T of this act, and
paragraphs (c-2) and (c-3) of subdivision 9 as added by  section  10  of
part Y of chapter 63 of the laws of 2000, paragraph (g) of subdivision 9
as  added by chapter 178 of the laws of 1965, subparagraph 1 and clauses
(B) and (C) of subparagraph 3 of  paragraph  (g)  of  subdivision  9  as
amended by chapter 613 of the laws of 1976, clause (A) of subparagraph 1
of  paragraph (g) of subdivision 9 as separately amended by chapters 675
and 836 of the laws of 1977, clause (B) of subparagraph 1, clause (A) of
subparagraph 2 and clause (A) of subparagraph  3  of  paragraph  (g)  of
subdivision  9  as amended by chapter 675 of the laws of 1977, item 1 of
clause (B) of subparagraph 1  of  paragraph  (g)  of  subdivision  9  as
amended by chapter 972 of the laws of 1984, clause (B) of subparagraph 2
of  paragraph (g) of subdivision 9 as amended by chapter 365 of the laws
of 1979, clause (C) of subparagraph 2 of paragraph (g) of subdivision  9
as  amended by chapter 1005 of the laws of 1970, paragraph (h) of subdi-
vision 9 as amended by chapter 606 of the laws of 1984, paragraph (n) of
subdivision 9 as added by section 1 of part O of chapter 85 of the  laws
of  2002,  subdivision  12  as added by chapter 828 of the laws of 1977,
subdivision 19 as added by chapter 681 of the laws of 1997,  is  amended
to read as follows:
  S 208. Definitions. As used in this article:
  1. The term "corporation" includes (a) an association within the mean-
ing  of  paragraph  three  of  subsection  (a)  of section seventy-seven
hundred one of the internal revenue code (including a limited  liability
company), (b) a joint-stock company or association, (c) a publicly trad-
ed  partnership  treated  as  a corporation for purposes of the internal
revenue code pursuant to section seventy-seven hundred four thereof  and
(d)  any business conducted by a trustee or trustees wherein interest or
ownership is evidenced  by  certificate  or  other  written  instrument.
"DISC"  and  "former DISC" mean any corporation which meets the require-
ments of subsection (a) of section nine hundred ninety-two of the inter-
nal revenue code[;].
  1-A. The term "New York S corporation"  means,  with  respect  to  any
taxable  year, a corporation subject to tax under this article for which
an election is in effect pursuant  to  subsection  (a)  of  section  six
hundred  sixty  of  this  chapter  for such year, any such year shall be
denominated a "New York S year", and such election shall be  denominated
a  "New  York S election". The term "New York C corporation" means, with
respect to any taxable year, a corporation subject  to  tax  under  this
article  which  is not a New York S corporation, and any such year shall
be denominated a "New York C year". The term  "termination  year"  means
any  taxable  year of a corporation during which the New York S election
terminates on a day other than the first day of such year.  The  portion
of  the  taxable  year ending before the first day for which such termi-
nation is effective shall be denominated the "S  short  year",  and  the
portion  of  such  year beginning on such first day shall be denominated
the "C short year". The term "New York S  termination  year"  means  any

S. 6359--C                          8

termination  year  which  is  not also an S termination year for federal
purposes.
  1-B. The term "QSSS" means a corporation which is a qualified subchap-
ter  S  subsidiary  as defined in subparagraph (B) of paragraph three of
subsection (b) of section thirteen hundred  sixty-one  of  the  internal
revenue  code. The term "exempt QSSS" means a QSSS exempt from tax under
this article as provided in paragraph (k) of subdivision  nine  of  this
section,  or a QSSS described in subclause (i) of clause (B) of subpara-
graph two of paragraph (k) of subdivision nine of this section,  wherein
the parent corporation of the QSSS is subject to tax under this article,
and  the  assets,  liabilities,  income  and  deductions of the QSSS are
treated as the assets, liabilities, income and deductions of the  parent
corporation. Where a QSSS is an exempt QSSS, then for all purposes under
this article:
  (a)  the  assets,  liabilities, income, deductions, property, payroll,
receipts, capital, credits, and all other tax attributes and elements of
economic activity of the QSSS shall be deemed to be those of the  parent
corporation,
  (b)  the stocks, bonds and other securities issued by, and any indebt-
edness from, the QSSS shall not be [subsidiary,] investment or  business
capital of the parent corporation,
  (c)  transactions between the parent corporation and the QSSS, includ-
ing the payment of interest and  dividends,  shall  not  be  taken  into
account, and
  (d)  general  executive  officers  of  the  QSSS shall be deemed to be
general executive officers of the parent corporation.
  2. The term "taxpayer" means any corporation subject to tax under this
article[;].
  3. The term "subsidiary" means  a  corporation  of  which  over  fifty
percent  of  the number of shares of stock entitling the holders thereof
to vote for the election of  directors  or  trustees  is  owned  by  the
taxpayer[;].
  4.  The  term  ["subsidiary capital" means investments in the stock of
subsidiaries  and  any  indebtedness  from  subsidiaries,  exclusive  of
accounts receivable acquired in the ordinary course of trade or business
for  services  rendered or for sales of property held primarily for sale
to customers, whether or not evidenced by written instrument,  on  which
interest  is  not claimed and deducted by the subsidiary for purposes of
taxation under article nine-A, thirty-two or thirty-three of this  chap-
ter,  provided,  however,  that,  in the discretion of the commissioner,
there shall be deducted from subsidiary capital  any  liabilities  which
are  directly  or indirectly attributable to subsidiary capital] "STOCK"
MEANS A DIRECT INTEREST IN A CORPORATION THAT IS TREATED AS  EQUITY  FOR
FEDERAL INCOME TAX PURPOSES.
  5.  (A)  The  term  "investment capital" means investments in stocks[,
bonds and other securities, corporate and governmental,] THAT  ARE  HELD
BY  THE  TAXPAYER  FOR MORE THAN SIX CONSECUTIVE MONTHS BUT ARE not held
for sale to customers in the regular course of business,  [exclusive  of
subsidiary  capital] OR, IF THE TAXPAYER MAKES THE ELECTION PROVIDED FOR
IN SUBPARAGRAPH ONE OF PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION TWO
HUNDRED TEN-A OF THIS ARTICLE, ARE NOT QUALIFIED  FINANCIAL  INSTRUMENTS
AS  DESCRIBED  IN  SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS
ARTICLE. STOCK IN A CORPORATION THAT IS CONDUCTING  A  UNITARY  BUSINESS
WITH THE TAXPAYER, STOCK IN A CORPORATION THAT IS INCLUDED IN A COMBINED
REPORT  WITH  THE TAXPAYER PURSUANT TO THE COMMONLY OWNED GROUP ELECTION
IN SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-C OF  THIS  ARTICLE,  and

S. 6359--C                          9

stock   issued  by  the  taxpayer[,  provided,  however,  that,  in  the
discretion of the commissioner, there] SHALL NOT  CONSTITUTE  INVESTMENT
CAPITAL.  FOR  PURPOSES  OF  THIS  SUBDIVISION,  IF THE TAXPAYER OWNS OR
CONTROLS,  DIRECTLY OR INDIRECTLY, LESS THAN TWENTY PERCENT OF THE STOCK
OF A CORPORATION THAT ENTITLES THE  HOLDERS  THEREOF  TO  VOTE  FOR  THE
ELECTION OF TRUSTEES  OR DIRECTORS, THAT CORPORATION WILL BE PRESUMED TO
BE  CONDUCTING  A  BUSINESS THAT IS NOT UNITARY WITH THE BUSINESS OF THE
TAXPAYER.
  (B) THERE shall be deducted from investment  capital  any  liabilities
which  are  directly  or indirectly attributable to investment capital[;
and provided, further, that investment]. IF THE AMOUNT OF THOSE  LIABIL-
ITIES EXCEEDS THE AMOUNT OF INVESTMENT CAPITAL, THE AMOUNT OF INVESTMENT
CAPITAL WILL BE ZERO.
  (C)  INVESTMENT  capital  shall  not  include any such investments the
income from which is excluded from entire net  income  pursuant  to  the
provisions  of  paragraph (c-1) of subdivision nine of this section, and
that investment capital shall be computed without regard to  liabilities
directly or indirectly attributable to such investments, but only if air
carriers  organized  in  the  United States and operating in the foreign
country or countries in which the taxpayer has its major base  of  oper-
ations  and  in which it is organized, resident or headquartered (if not
in the same country as its major base of operations) are not subject  to
any  tax based on or measured by capital imposed by such foreign country
or countries or any political subdivision  thereof,  or  if  taxed,  are
provided  an exemption, equivalent to that provided for herein, from any
tax based on or measured by capital imposed by such foreign  country  or
countries  and  from  any  such tax imposed by any political subdivision
thereof[;].
  (D) IF A TAXPAYER ACQUIRES STOCK DURING THE SECOND HALF OF ITS TAXABLE
YEAR AND OWNS THAT STOCK ON THE LAST DAY OF THE TAXABLE YEAR, IT WILL BE
PRESUMED THAT THE TAXPAYER HELD THAT STOCK FOR MORE THAN SIX CONSECUTIVE
MONTHS DURING THE TAXABLE YEAR. HOWEVER, IF THE  TAXPAYER  DOES  NOT  IN
FACT  HOLD THAT STOCK FOR MORE THAN SIX CONSECUTIVE MONTHS, THE TAXPAYER
MUST INCREASE ITS TOTAL BUSINESS CAPITAL IN THE  IMMEDIATELY  SUCCEEDING
TAXABLE  YEAR  BY  THE  AMOUNT  INCLUDED  IN INVESTMENT CAPITAL FOR THAT
STOCK, NET OF ANY LIABILITIES ATTRIBUTABLE TO  THAT  STOCK  COMPUTED  AS
PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (E)  WHEN  INCOME  OR  GAIN  FROM  A DEBT OBLIGATION OR OTHER SECURITY
CANNOT BE  APPORTIONED  TO  THE  STATE  USING  THE  BUSINESS  ALLOCATION
PERCENTAGE  AS  A RESULT OF UNITED STATES CONSTITUTIONAL PRINCIPLES, THE
DEBT OBLIGATION OR OTHER SECURITY WILL BE INCLUDED IN  INVESTMENT  CAPI-
TAL.
  6.  (A)  The  term "investment income" means income, including capital
gains in excess of capital  losses,  from  investment  capital,  to  the
extent  included  in  computing  entire  net  income, less, [(a)] in the
discretion of the commissioner, any  INTEREST  deductions  allowable  in
computing  entire  net income which are directly or indirectly attribut-
able to investment capital or investment income[, and (b)  such  portion
of  any  net  operating loss deduction allowable in computing entire net
income, as the investment income, before such deduction, bears to entire
net income, before such deduction,] provided, however, that in  no  case
shall  investment  income  exceed  entire net income[;]. IF THE TAXPAYER
ATTRIBUTES INTEREST DEDUCTIONS  TO  INVESTMENT  INCOME  AND  THE  AMOUNT
SUBTRACTED  EXCEEDS  INVESTMENT  INCOME,  THE  EXCESS  OF  THE  INTEREST
DEDUCTIONS OVER INVESTMENT INCOME MUST  BE  ADDED  BACK  TO  ENTIRE  NET
INCOME.

S. 6359--C                         10

  (B)  IN LIEU OF SUBTRACTING FROM INVESTMENT INCOME THE AMOUNT OF THOSE
INTEREST DEDUCTIONS, THE TAXPAYER MAY ELECT TO REDUCE ITS TOTAL  INVEST-
MENT  INCOME  BY FORTY PERCENT. IF THE TAXPAYER MAKES THIS ELECTION, THE
TAXPAYER MUST ALSO MAKE THE ELECTIONS PROVIDED FOR IN PARAGRAPHS (B) AND
(C) OF SUBDIVISION SIX-A OF THIS SECTION. A TAXPAYER WHICH DOES NOT MAKE
THIS ELECTION BECAUSE IT HAS NO INVESTMENT CAPITAL WILL NOT BE PRECLUDED
FROM MAKING THOSE OTHER ELECTIONS.
  (C)  INVESTMENT  INCOME  SHALL NOT INCLUDE ANY AMOUNT TREATED AS DIVI-
DENDS PURSUANT TO SECTION SEVENTY-EIGHT OF THE INTERNAL REVENUE CODE.
  6-A. (A) THE TERM "OTHER  EXEMPT  INCOME"  MEANS  THE  SUM  OF  EXEMPT
SUBPART F INCOME AND EXEMPT UNITARY CORPORATION DIVIDENDS.
  (B)  "EXEMPT SUBPART F INCOME" MEANS THE INCOME, AS DEFINED IN SECTION
952 OF THE INTERNAL REVENUE CODE, RECEIVED FROM A  CORPORATION  THAT  IS
CONDUCTING A UNITARY BUSINESS WITH THE TAXPAYER BUT IS NOT INCLUDED IN A
COMBINED  REPORT  WITH  THE  TAXPAYER,  LESS,  IN  THE DISCRETION OF THE
COMMISSIONER, ANY INTEREST DEDUCTIONS DIRECTLY OR  INDIRECTLY  ATTRIBUT-
ABLE  TO  THAT INCOME.  IN LIEU OF SUBTRACTING FROM ITS EXEMPT SUBPART F
INCOME THE AMOUNT OF THOSE INTEREST DEDUCTIONS, THE TAXPAYER  MAY  ELECT
TO  REDUCE  ITS  TOTAL  EXEMPT SUBPART F INCOME BY FORTY PERCENT. IF THE
TAXPAYER MAKES THIS ELECTION, THE TAXPAYER MUST ALSO MAKE THE  ELECTIONS
PROVIDED  FOR  IN  PARAGRAPH  (B) OF SUBDIVISION SIX OF THIS SECTION AND
PARAGRAPH (C) OF THIS SUBDIVISION.  A TAXPAYER WHICH DOES NOT MAKE  THIS
ELECTION BECAUSE IT HAS NO EXEMPT SUBPART F INCOME WILL NOT BE PRECLUDED
FROM MAKING THOSE OTHER ELECTIONS.
  (C)  "EXEMPT UNITARY CORPORATION DIVIDENDS" MEANS THOSE DIVIDENDS FROM
A CORPORATION THAT IS CONDUCTING A UNITARY BUSINESS  WITH  THE  TAXPAYER
BUT IS NOT INCLUDED IN A COMBINED REPORT WITH THE TAXPAYER, LESS, IN THE
DISCRETION  OF  THE  COMMISSIONER,  ANY  INTEREST DEDUCTIONS DIRECTLY OR
INDIRECTLY ATTRIBUTABLE TO SUCH INCOME.   IN LIEU  OF  SUBTRACTING  FROM
THIS DIVIDEND INCOME THOSE INTEREST DEDUCTIONS, THE TAXPAYER, OTHER THAN
TAXPAYERS  THAT  ARE OR WOULD BE TAXABLE IF DOING BUSINESS IN THIS STATE
UNDER ARTICLE NINE OR ARTICLE THIRTY-THREE OF THIS CHAPTER MAY ELECT  TO
REDUCE THE TOTAL AMOUNT OF THIS DIVIDEND INCOME BY FORTY PERCENT. IF THE
TAXPAYER  MAKES THIS ELECTION, THE TAXPAYER MUST ALSO MAKE THE ELECTIONS
PROVIDED FOR IN PARAGRAPH (B) OF SUBDIVISION SIX  OF  THIS  SECTION  AND
PARAGRAPH  (B)  OF THIS SUBDIVISION. A TAXPAYER WHICH DOES NOT MAKE THIS
ELECTION BECAUSE IT HAS NOT  RECEIVED  ANY  EXEMPT  UNITARY  CORPORATION
DIVIDENDS WILL NOT BE PRECLUDED FROM MAKING THOSE OTHER ELECTIONS.
  (D)  IF  THE  TAXPAYER  ATTRIBUTES INTEREST DEDUCTIONS TO OTHER EXEMPT
INCOME AND THE AMOUNT SUBTRACTED EXCEEDS OTHER EXEMPT INCOME, THE EXCESS
OF THE INTEREST DEDUCTIONS OVER OTHER EXEMPT INCOME MUST BE  ADDED  BACK
TO ENTIRE NET INCOME. IN NO CASE SHALL OTHER EXEMPT INCOME EXCEED ENTIRE
NET INCOME.
  (E)  OTHER EXEMPT INCOME SHALL NOT INCLUDE ANY AMOUNT TREATED AS DIVI-
DENDS PURSUANT TO SECTION SEVENTY-EIGHT OF THE INTERNAL REVENUE CODE.
  7. (a) The term  "business  capital"  means  all  assets,  other  than
[subsidiary capital,] investment capital and stock issued by the taxpay-
er,  less liabilities not deducted from [subsidiary or] investment capi-
tal [except that cash on hand and on deposit shall be treated as invest-
ment capital  or  as  business  capital  as  the  taxpayer  may  elect].
BUSINESS  CAPITAL  SHALL  INCLUDE  ONLY THOSE ASSETS THE INCOME, LOSS OR
EXPENSE OF WHICH ARE PROPERLY REFLECTED (OR  WOULD  HAVE  BEEN  PROPERLY
REFLECTED  IF  NOT  FULLY  DEPRECIATED  OR  EXPENSED  OR  DEPRECIATED OR
EXPENSED TO A NOMINAL AMOUNT) IN THE COMPUTATION OF  ENTIRE  NET  INCOME
FOR THE TAXABLE YEAR.

S. 6359--C                         11

  (b)  Provided, however, "business capital" shall not include assets to
the extent employed for  the  purpose  of  generating  income  which  is
excluded  from entire net income pursuant to the provisions of paragraph
(c-1) of subdivision nine of this section and shall be computed  without
regard  to  liabilities  directly  or  indirectly  attributable  to such
assets, but only if air carriers organized  in  the  United  States  and
operating  in the foreign country or countries in which the taxpayer has
its major base of operations and in which it is organized,  resident  or
headquartered  (if  not  in  the same country as its major base of oper-
ations) are not subject to any tax  based  on  or  measured  by  capital
imposed  by  such foreign country or countries or any political subdivi-
sion thereof, or if taxed, are provided an exemption, equivalent to that
provided for herein, from any  tax  based  on  or  measured  by  capital
imposed  by  such  foreign  country  or  countries and from any such tax
imposed by any political subdivision thereof[;].
  8. The term "business income" means entire net income minus investment
income[;] AND OTHER EXEMPT INCOME. IN NO EVENT SHALL THE SUM OF  INVEST-
MENT  INCOME  AND  OTHER  EXEMPT INCOME EXCEED ENTIRE NET INCOME. IF THE
TAXPAYER MAKES THE ELECTION PROVIDED FOR IN SUBPARAGRAPH  ONE  OF  PARA-
GRAPH (A) OF SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS ARTI-
CLE,  THEN ALL INCOME FROM QUALIFIED FINANCIAL INSTRUMENTS SHALL CONSTI-
TUTE BUSINESS INCOME.
  8-A. Provided, however, that with respect to a DISC or a former  DISC,
the following provisions shall apply:
  (a)  investments in the stocks, bonds or other securities of a DISC or
any indebtedness from a DISC shall not be treated as [either  subsidiary
capital  or] investment capital under [subdivisions four or] SUBDIVISION
five of this section,
  (b) any amounts deemed distributed from a DISC or a former DISC  which
are  taxable  as  dividends  pursuant  to subsection (b) of section nine
hundred ninety-five of the internal revenue  code  of  nineteen  hundred
fifty-four  shall be treated as business income, except any such amounts
from a former DISC attributable to amounts includible  in  a  taxpayer's
entire  net  income  for  a prior taxable year under subparagraph (B) of
paragraph (i) of subdivision nine of this section shall be excluded from
entire net income,
  (c) any gain recognized for federal income tax purposes on the  dispo-
sition of stock in a DISC, and any gain recognized on the disposition of
stock  in a former DISC, includible in gross income as a dividend pursu-
ant to subsection (c) of section nine hundred ninety-five of the  inter-
nal  revenue  code  of  nineteen hundred fifty-four, shall be treated as
business income, and
  (d) except as provided in paragraph (i) of subdivision  nine  of  this
section,  any  actual distribution from a DISC or a former DISC shall be
treated as business income  except  an  actual  distribution  which  for
federal  income  tax  purposes is treated as made out of "other earnings
and profits" under section  nine  hundred  ninety-six  of  the  internal
revenue  code  of nineteen hundred fifty-four, in which case such actual
distribution shall be treated as [either subsidiary income  or]  invest-
ment income under this article.
  [8-B.  (a) The term "minimum taxable income" shall mean the entire net
income of the taxpayer for the taxable year:
  (1) increased by the amount of the federal items of tax preference set
forth in section fifty-seven of the  internal  revenue  code  (with  the
modifications  set  forth  in  paragraph (b) of this subdivision), which
items of tax preference shall have the same meaning and be  computed  in

S. 6359--C                         12

the  same  manner  as  under section fifty-seven of the internal revenue
code,
  (2) determined with the federal adjustments described in paragraph (c)
of  this  subdivision, which adjustments shall have the same meaning and
be computed in the same manner as under sections  fifty-six  and  fifty-
eight of the internal revenue code,
  (3)  increased  by  the net operating loss deduction otherwise allowed
under paragraph (f) of subdivision nine of this section, and
  (4) reduced, for taxable years beginning after nineteen hundred  nine-
ty-three, by the alternative net operating loss deduction, as defined in
paragraph (d) of this subdivision.
  (b)  The federal items of tax preference referred to hereinabove shall
be modified by deducting "tax-exempt interest" and "accelerated depreci-
ation or amortization on certain property placed in service before Janu-
ary  1,  1987",  as  determined  under  paragraphs  five  and  seven  of
subsection (a) of section fifty-seven of the internal revenue code.
  (c) The adjustments referred to hereinabove shall be:
  (1) "Depreciation" as determined under paragraph one of subsection (a)
of  section fifty-six of the internal revenue code. For purposes of this
subparagraph, the depreciation item  of  adjustment  provided  for  here
shall  not include any amount attributable to property for which the tax
benefits of the accelerated cost recovery system are not available under
this article by reason of subparagraph ten of paragraph (b) of  subdivi-
sion nine of this section;
  (2)  "Mining  exploration  and  development costs" as determined under
paragraph two of subsection (a) of section  fifty-six  of  the  internal
revenue code;
  (3)  "Treatment  of  certain  long-term contracts" as determined under
paragraph three of subsection (a) of section fifty-six of  the  internal
revenue code;
  (4)  "Installment sales of certain property" as determined under para-
graph six of subsection (a) of section fifty-six of the internal revenue
code;
  (5) "Circulation expenditures of personal holding companies" as deter-
mined under subparagraph (C) of  paragraph  two  of  subsection  (b)  of
section fifty-six of the internal revenue code;
  (6)  "Merchant  marine capital construction funds" as determined under
paragraph two of subsection (c) of section  fifty-six  of  the  internal
revenue code;
  (7)  "Disallowance  of  passive  activity  loss"  as  determined under
subsection (b) of section fifty-eight of the internal revenue code; and
  (8) "Adjusted basis", as it appears in paragraph seven  of  subsection
(a)  of  section  fifty-six  of  the  internal revenue code, but without
taking  into  account  the  references  therein  to  paragraph  five  of
subsection (a) of section fifty-six of the internal revenue code.
  (d)  The term "alternative net operating loss deduction" means the net
operating loss deduction allowed for the taxable  year  under  paragraph
(f) of subdivision nine of this section, except as provided herein.
  (1)(A)  The  net  operating loss for any year beginning after nineteen
hundred eighty-nine which is  included  in  determining  such  deduction
shall be determined with the adjustments provided in subparagraph two of
paragraph  (a) of this subdivision, and shall be reduced by the items of
tax preference determined under subparagraph one  of  paragraph  (a)  of
this  subdivision,  attributable to such year. An item of tax preference
shall be taken into account only to the extent such item  increased  the

S. 6359--C                         13

amount  of  the  net operating loss for the taxable year under paragraph
(f) of subdivision nine of this section.
  (B)  In the case of loss years beginning before nineteen hundred nine-
ty, the amount of the net operating loss which may be  carried  over  to
taxable  years  beginning  after  nineteen  hundred eighty-nine shall be
equal to an amount which may be carried from the loss year to the  first
taxable  year  of  the taxpayer beginning after nineteen hundred eighty-
nine.
  (2) In determining the amount of such  deduction,  loss  carryforwards
and  carrybacks shall, subject to the provisions of subparagraph five of
paragraph (f) of subdivision nine of this section, be  computed  in  the
manner  set  forth  in  paragraph  two  of subsection (b) of section one
hundred seventy-two of the internal revenue code, except that,  for  the
reference  therein  to  taxable  income,  there shall be substituted the
phrase "ninety percent of  minimum  taxable  income  determined  without
regard to the alternative net operating loss deduction".
  (3)  The  amount  of such deduction shall not exceed ninety percent of
minimum taxable income determined  without  regard  to  such  deduction,
provided,  however,  the  term "ninety percent" shall be read as "forty-
five percent" with  respect  to  taxable  years  beginning  in  nineteen
hundred ninety-four.
  (e)  The  tax  commission may, whenever necessary in order to properly
reflect the minimum taxable income of any taxpayer, determine  the  year
or  period  in  which any item of income or deduction shall be included,
without regard to the method of accounting employed by the taxpayer.
  (f) If the period covered by a report under this article is other than
the period covered by the report to the United States  treasury  depart-
ment,  the minimum taxable income shall be appropriately modified pursu-
ant to regulations promulgated by the tax commission.]
  9. The term "entire net income" means total net income from all sourc-
es, which shall be presumably the same  as  the  entire  taxable  income
[(but not alternative minimum taxable income)], WHICH, EXCEPT AS HEREIN-
AFTER PROVIDED IN THIS SUBDIVISION,
  (i)  [which]  the  taxpayer is required to report to the United States
treasury department, or
  (ii) [which] the taxpayer would have been required to  report  to  the
United  States  treasury department if it had not made an election under
subchapter s of chapter one of the internal revenue code, or
  (iii) [which] the taxpayer, in the case  of  a  corporation  which  is
exempt from federal income tax (other than the tax on unrelated business
taxable  income  imposed under section 511 of the internal revenue code)
but which is subject to tax under this article, would have been required
to report  to  the  United  States  treasury  department  but  for  such
exemption, [except as hereinafter provided, and subject to any modifica-
tion  required by paragraphs (d) and (e) of subdivision three of section
two hundred ten of this article] OR
  (IV) IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAWS OF A  COUN-
TRY  OTHER  THAN  THE  UNITED  STATES, IS EFFECTIVELY CONNECTED WITH THE
CONDUCT OF A TRADE OR BUSINESS WITHIN THE UNITED  STATES  AS  DETERMINED
UNDER SECTION 882 OF THE INTERNAL REVENUE CODE,
  (a) Entire net income shall not include:
  [(1)  income,  gains  and  losses from subsidiary capital which do not
include the amount of a recovery in respect of any war loss  except  for
such  amounts  from  a  former DISC which are treated as business income
under subdivision eight-A of this section,

S. 6359--C                         14

  (2) fifty percent of dividends (A) other than from  subsidiaries,  and
(B)  other  than  amounts  treated  as business income under subdivision
eight-A of this section,  on  shares  of  stock  which  conform  to  the
requirements  of  subsection (c) of section two hundred forty-six of the
internal revenue code.]
  (3) bona fide gifts,
  (4) income and deductions with respect to amounts received from school
districts and from corporations and associations, organized and operated
exclusively  for  religious, charitable or educational purposes, no part
of the net earnings of which inures to the benefit of any private share-
holder or individual, for the operation of school buses,
  (5) (i) any refund or credit of a  tax  imposed  under  this  article,
article  twenty-three, or FORMER article thirty-two of this chapter, for
which tax no exclusion or  deduction  was  allowed  in  determining  the
taxpayer's  entire  net income under this article, article twenty-three,
or FORMER article thirty-two of this chapter for any prior year, (ii)  a
refund or credit of general corporation tax allowed by subdivision elev-
en of section 11-604 of the administrative code of the city of New York,
or  (iii)  any  refund  or  credit  of  a tax imposed under sections one
hundred eighty-three, one hundred eighty-three-a,  one  hundred  eighty-
four or one hundred eighty-four-a of this chapter, and
  (6)  any amount treated as dividends pursuant to section seventy-eight
of the internal revenue code [and not otherwise deductible under subpar-
agraphs one and two of this paragraph];
  (7) that portion of wages and salaries paid or incurred for the  taxa-
ble year for which a deduction is not allowed pursuant to the provisions
of section two hundred eighty-C of the internal revenue code.
  [(8)  in the case of a taxpayer who is separately or as a partner of a
partnership doing an insurance business as a  member  of  the  New  York
insurance  exchange described in section six thousand two hundred one of
the insurance law, any item of income, gain, loss or deduction  of  such
business  which  is  the  taxpayer's  distributive or pro rata share for
federal income tax purposes or which the taxpayer is  required  to  take
into account separately for federal income tax purposes.]
  (9)  for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph  eight
of  subsection  (f)  of  section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty of a taxpayer principally engaged in the conduct of  aviation  (other
than  air  freight  forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years  beginning  in
nineteen  hundred  eighty-nine,  any  amount  which  is  included in the
taxpayer's federal taxable income solely as a result of an election made
pursuant to the provisions of such paragraph eight as it was  in  effect
for  agreements  entered  into  prior to January first, nineteen hundred
eighty-four;
  (10) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph  eight
of  subsection  (f)  of  section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty of a taxpayer principally engaged in the conduct of  aviation  (other
than  air  freight  forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years  beginning  in
nineteen  hundred  eighty-nine, any amount which the taxpayer could have

S. 6359--C                         15

excluded from federal taxable  income  had  it  not  made  the  election
provided  for in such paragraph eight as it was in effect for agreements
entered into prior to January first, nineteen hundred eighty-four;
  (11)  the amount deductible pursuant to paragraph (j) of this subdivi-
sion; and
  (12) upon the disposition of property to which paragraph (j)  of  this
subdivision  applies,  the amount, if any, by which the aggregate of the
amounts described in subparagraph ten of paragraph (b) of this  subdivi-
sion  attributable to such property exceeds the aggregate of the amounts
described in paragraph (j) of  this  subdivision  attributable  to  such
property; and
  [(13)  if  the added tax provided for in either (i) former subdivision
two of section one hundred eighty-two of this chapter (relating to  real
estate  corporations)  or  (ii)  former subdivision one-a of section two
hundred nine of this chapter (relating to real estate corporations)  has
been  imposed  upon  the  taxpayer,  any  income  which has been used in
computing such tax.]
  (14) The amount deductible pursuant to paragraph  [(l)]  (I)  of  this
subsection.
  [(15)  In  the  case  of  an attorney-in-fact, with respect to which a
mutual insurance company, which  is  an  interinsurer  or  a  reciprocal
insurer  and  is subject to tax under subdivision (a) of section fifteen
hundred ten of this chapter, has made the election  provided  for  under
section  eight  hundred  thirty-five  of  the  Internal Revenue Code, an
amount equal to the excess, if any, of the amounts paid or  incurred  by
such  interinsurer  or  reciprocal  insurer  in  the taxable year to the
attorney-in-fact over the deduction  allowed  to  such  interinsurer  or
reciprocal insurer with respect to amounts paid or incurred in the taxa-
ble  year  to  the attorney-in-fact under subsection (b) of such section
eight hundred thirty-five of the Internal Revenue Code.]
  (16) In the case of a taxpayer subject to the modification provided by
subparagraph sixteen of paragraph (b) of this  subdivision,  the  amount
required  to  be recaptured pursuant to subsection (d) of section 179 of
the internal revenue code with  respect  to  property  upon  which  such
modification was based.
  (17)  FOR  TAXABLE  YEARS  BEGINNING  AFTER DECEMBER THIRTY-FIRST, TWO
THOUSAND TWO, THE AMOUNT DEDUCTIBLE PURSUANT TO PARAGRAPH (N-1) OF  THIS
SUBDIVISION.
  (18)  the  amount of income or gain included in federal taxable income
of a taxpayer that is a partner in a qualified entity or is a  qualified
entity  that  is  located both within and without a New York state inno-
vation hot spot, to the extent that the income or gain  is  attributable
to  the  operations  of a qualified entity at or as part of the New York
state innovation hot spot as provided in section  thirty-eight  of  this
chapter.
  (19)  THE  AMOUNT  COMPUTED  PURSUANT  TO PARAGRAPH (R) OR (S) OF THIS
SUBDIVISION, BUT NOT BOTH SUCH AMOUNTS.
  (b) Entire net income  shall  be  determined  without  the  exclusion,
deduction or credit of:
  (1) [the amount of any specific exemption or credit allowed in any law
of  the  United  States imposing any tax on or measured by the income of
corporations,] IN THE CASE OF A CORPORATION ORGANIZED UNDER THE LAW OF A
COUNTRY OTHER THAN THE UNITED STATES, EXCEPT AS TREATED AS OTHER  EXEMPT
INCOME  UNDER  SUBDIVISION  SIX-A  OF  THIS SECTION, (I) ANY PART OF ANY
INCOME FROM DIVIDENDS OR INTEREST ON ANY KIND OF  STOCK,  SECURITIES  OR
INDEBTEDNESS,  BUT  ONLY  IF  SUCH  INCOME  IS  TREATED  AS  EFFECTIVELY

S. 6359--C                         16

CONNECTED WITH THE CONDUCT OF A TRADE OR BUSINESS IN THE  UNITED  STATES
PURSUANT  TO  SECTION  864 OF THE INTERNAL REVENUE CODE, (II) ANY INCOME
EXEMPT FROM FEDERAL TAXABLE INCOME UNDER ANY TREATY  OBLIGATION  OF  THE
UNITED  STATES,  BUT ONLY IF SUCH INCOME WOULD BE TREATED AS EFFECTIVELY
CONNECTED IN ABSENCE OF SUCH EXEMPTION PROVIDED THAT SUCH  TREATY  OBLI-
GATION  DOES  NOT  PRECLUDE  THE  TAXATION OF SUCH INCOME BY A STATE, OR
(III) ANY INCOME WHICH WOULD BE TREATED AS EFFECTIVELY CONNECTED IF SUCH
INCOME WERE NOT EXCLUDED FROM GROSS INCOME PURSUANT TO SUBSECTION (A) OF
SECTION 103 OF THE INTERNAL REVENUE CODE;
  (2) any part of any income from dividends or interest on any  kind  of
stock,  securities  or  indebtedness, [except as provided in clauses (1)
and (2) of paragraph (a) hereof] TREATED AS OTHER  EXEMPT  INCOME  UNDER
SUBDIVISION SIX-A OF THIS SECTION,
  (3)  taxes  on or measured by profits or income paid or accrued to the
United States, any of its possessions or to any foreign country, includ-
ing taxes in lieu of any of  the  foregoing  taxes  otherwise  generally
imposed  by  any  foreign  country  or  by  any possession of the United
States,
  (3-a) taxes on or measured by profits  or  income,  or  which  include
profits  or  income  as a measure, paid or accrued to any other state of
the United States, or any  political  subdivision  thereof,  or  to  the
District  of  Columbia,  including taxes expressly in lieu of any of the
foregoing taxes otherwise generally imposed by any other  state  of  the
United  States, or any political subdivision thereof, or the District of
Columbia;
  (4) taxes imposed under this article  and  article  thirty-two  AS  IN
EFFECT  ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN and sections one
hundred eighty-three, one hundred eighty-three-a,  one  hundred  eighty-
four and one hundred eighty-four-a of this chapter,
  (4-a)(A) [the entire amount allowable as an exclusion or deduction for
stock transfer taxes imposed by article twelve of this chapter in deter-
mining  the  entire  taxable  income  which  the taxpayer is required to
report to the United States treasury department but only to  the  extent
that  such  taxes  are  incurred and paid in market making transactions,
(B)] in those instances where a credit for the special additional  mort-
gage  recording  tax credit is allowed under [paragraph (a) of] subdivi-
sion [seventeen] NINE of section two hundred [ten] TEN-B of  this  arti-
cle,  the  amount  allowed  as an exclusion or deduction for the special
additional mortgage  recording  tax  imposed  by  subdivision  one-a  of
section  two  hundred  fifty-three  of  this  chapter in determining the
entire taxable income which the taxpayer is required to  report  to  the
United  States  treasury  department,  and  [(C)]  (B) unless the credit
allowed pursuant to subdivision [seventeen] NINE of section two  hundred
[ten]  TEN-B of this article is reflected in the computation of the gain
or loss so as to result in an increase in such gain or decrease of  such
loss,  for  federal income tax purposes, from the sale or other disposi-
tion of the property with respect to which the special additional  mort-
gage  recording tax imposed pursuant to subdivision one-a of section two
hundred fifty-three of this chapter was paid, the amount of the  special
additional  mortgage  recording  tax  imposed  by  subdivision  one-a of
section two hundred fifty-three of this chapter which was paid and which
is reflected in the computation of the basis of the property  so  as  to
result  in  a decrease in such gain or increase in such loss for federal
income tax purposes from the sale or other disposition of  the  property
with respect to which such tax was paid.

S. 6359--C                         17

  (6)  [in  the discretion of the tax commission, any amount of interest
directly or indirectly and  any  other  amount  directly  or  indirectly
attributable  as a carrying charge or otherwise to subsidiary capital or
to income, gains or losses from subsidiary capital] ANY  AMOUNT  ALLOWED
AS  A  DEDUCTION  FOR THE TAXABLE YEAR UNDER SECTION 172 OF THE INTERNAL
REVENUE CODE, INCLUDING CARRYOVERS  OF  DEDUCTIONS  FROM  PRIOR  TAXABLE
YEARS.
  [(7)  in the case of a taxpayer who is separately or as a partner of a
partnership doing an insurance business as a  member  of  the  New  York
insurance  exchange described in section six thousand two hundred one of
the insurance law, such taxpayer's distributive or pro rata share of the
allocated entire  net  income  of  such  business  as  determined  under
sections fifteen hundred three and fifteen hundred four of this chapter,
provided  however,  in  the  event such allocated entire net income is a
loss, such taxpayer's distributive or pro rata share of such loss  shall
not  be  subtracted  from federal taxable income in computing entire net
income under this subdivision.]
  (8) for taxable years beginning after December thirty-first,  nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other
than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine, any amount which the taxpayer claimed as a
deduction in computing its federal taxable income solely as a result  of
an  election  made pursuant to the provisions of such paragraph eight as
it was in effect for agreements entered into  prior  to  January  first,
nineteen hundred eighty-four;
  (9)  for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph  eight
of  subsection  (f)  of  section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty of a taxpayer principally engaged in the conduct of  aviation  (other
than  air  freight  forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years  beginning  in
nineteen  hundred  eighty-nine, any amount which the taxpayer would have
been required to include in  the  computation  of  its  federal  taxable
income had it not made the election permitted pursuant to such paragraph
eight  as  it was in effect for agreements entered into prior to January
first, nineteen hundred eighty-four;
  (10) in the case of property placed in service in taxable years begin-
ning before nineteen hundred ninety-four, for  taxable  years  beginning
after  December  thirty-first,  nineteen hundred eighty-one, except with
respect to property subject to the provisions  of  section  two  hundred
eighty-F   of  the  internal  revenue  code,  property  subject  to  the
provisions of section one hundred sixty-eight of  the  internal  revenue
code which is placed in service in this state in taxable years beginning
after  December  thirty-first, nineteen hundred eighty-four and property
of a taxpayer principally engaged in the conduct of aviation (other than
air freight forwarders acting as principal and like indirect air  carri-
ers)  which is placed in service before taxable years beginning in nine-
teen  hundred  [eight-nine]  EIGHTY-NINE,  the  amount  allowable  as  a

S. 6359--C                         18

deduction determined under section one hundred sixty-eight of the inter-
nal revenue code;
  (11)  upon  the disposition of property to which paragraph (j) of this
subdivision applies, the amount, if any, by which the aggregate  of  the
amounts  described  in  such paragraph (j) attributable to such property
exceeds the aggregate of the amounts described in  subparagraph  ten  of
this paragraph attributable to such property.
  (15)  Real  property taxes paid on qualified agricultural property and
deducted in determining federal taxable income, to  the  extent  of  the
amount of the agricultural property tax credit allowed under subdivision
[twenty-two] ELEVEN of section two hundred [ten] TEN-B of this article.
  (16)  In  the  case  of  a taxpayer which is not an eligible farmer as
defined in paragraph (b) of subdivision [twenty-two] ELEVEN  of  section
two  hundred  [ten]  TEN-B  of this article, the amount of any deduction
claimed pursuant to section  179  of  the  internal  revenue  code  with
respect  to  a sport utility vehicle which is not a passenger automobile
as defined in paragraph 5 of subsection  (d)  of  section  280F  of  the
internal revenue code.
  (17)  for  taxable  years  beginning  after December thirty-first, two
thousand two, in the case of qualified property described  in  paragraph
two  of  subsection k of section 168 of the internal revenue code, other
than qualified resurgence zone property described in  paragraph  (q)  of
this subdivision, and other than qualified New York Liberty Zone proper-
ty  described  in  paragraph two of subsection b of section 1400L of the
internal revenue code (without regard to clause (i) of subparagraph  (C)
of  such paragraph), which was placed in service on or after June first,
two thousand three, the amount allowable as a  deduction  under  section
167 of the internal revenue code.
  (18) Premiums paid for environmental remediation insurance, as defined
in  section  twenty-three  of  this chapter, and deducted in determining
federal taxable income, to the extent of the amount of the environmental
remediation insurance credit allowed under such section twenty-three and
subdivision [thirty-five] NINETEEN of section two hundred [ten] TEN-B of
this article.
  (19) The amount of any  deduction  allowed  pursuant  to  section  one
hundred ninety-nine of the internal revenue code.
  (20) The amount of any federal deduction for taxes imposed under arti-
cle twenty-three of this chapter.
  (20-a) The amount of any federal deduction for the excise tax on tele-
communication services to the extent such taxes are used as the basis of
the  calculation of the tax-free NY area excise tax on telecommunication
services credit allowed under subdivision [forty-eight]  FORTY-THREE  of
section two hundred [ten] TEN-B of this article.
  [(c)  Entire  net  income  shall include income within and without the
United States;] (21) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR REAL  PROP-
ERTY  TAXES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF THE CALCU-
LATION OF THE REAL PROPERTY TAX CREDIT FOR MANUFACTURERS  ALLOWED  UNDER
SUBDIVISION FORTY-FOUR OF SECTION TWO HUNDRED TEN-B OF THIS ARTICLE.
  (c-1)(1)  Notwithstanding  any other provision of this article, in the
case of a taxpayer which is a foreign air carrier holding a foreign  air
carrier  permit issued by the United States department of transportation
pursuant to section four hundred two of  the  federal  aviation  act  of
nineteen  hundred  fifty-eight, as amended, and which is qualified under
subparagraph two of this paragraph, entire net income shall not include,
and shall be computed without the  deduction  of,  amounts  directly  or
indirectly  attributable  to,  (i)  any income derived from the interna-

S. 6359--C                         19

tional operation  of  aircraft  as  described  in  and  subject  to  the
provisions of section eight hundred eighty-three of the internal revenue
code,  (ii)  income  without the United States which is derived from the
operation  of aircraft, and (iii) income without the United States which
is of a type described in  subdivision  (a)  of  section  eight  hundred
eighty-one  of  the internal revenue code except that it is derived from
sources without the United  States.  Entire  net  income  shall  include
income  described in clauses (i), (ii) and (iii) of this subparagraph in
the case of taxpayers not described in the previous sentence.
  (2) A taxpayer is qualified under this subparagraph  if  air  carriers
organized  in  the United States and operating in the foreign country or
countries in which the taxpayer has its major base of operations and  in
which  it  is  organized,  resident or headquartered (if not in the same
country as its major base of operations) are not subject to  any  income
tax  or  other tax based on or measured by income or receipts imposed by
such foreign country or countries or any political subdivision  thereof,
or  if  so  subject to such tax, are provided an exemption from such tax
equivalent to that provided for herein.
  (c-2) Adjustments by qualified public utilities. (1) In the case of  a
taxpayer which is a qualified public utility, entire net income shall be
computed with the adjustments set forth in this paragraph.
  (2)  Definitions.  (A)  Qualified  public utility. The term "qualified
public utility" means a taxpayer which: (i)  on  December  thirty-first,
nineteen  hundred ninety-nine, was subject to the ratemaking supervision
of the state department of public service, and (ii) for the year  ending
on  December  thirty-first, nineteen hundred ninety-nine, was subject to
tax under former section one hundred eighty-six of this chapter.
  (B) Transition property. The term "transition property" means property
placed in service by the taxpayer before January  first,  two  thousand,
for  which a depreciation deduction is allowed under section one hundred
sixty-seven of the internal revenue code.
  (3) Federal depreciation disallowed. With respect to transition  prop-
erty,  the  deduction  for  federal income tax purposes for depreciation
shall not be allowed.
  (4) New York depreciation. With  respect  to  transition  property,  a
deduction  shall  be  allowed  for the depreciation expense shown on the
books and records of the taxpayer for the taxable year and determined in
accordance with generally accepted accounting principles.
  (5) Regulatory assets. A deduction shall be allowed for amounts recog-
nized as expense on the books and records of the taxpayer for the  taxa-
ble  year,  which  amounts were recognized as expense for federal income
tax purposes in a taxable year ending  on  or  before  December  thirty-
first,  nineteen  hundred ninety-nine, where: (A) such amounts represent
expenditures which, when made, were charged to a deferred debit  account
or  similar  asset account on the books and records of the taxpayer, and
where (B) the recognition of expense on the books  and  records  of  the
taxpayer  is  matched by revenue stemming from a procedure or adjustment
allowing the recovery of such expenditures, and where (C)  such  revenue
is recognized for federal income tax purposes in the taxable year.
  (6)  Basis for gain or loss. (A) Recognition transactions. (i) General
rule - book basis. Except as provided in subclause (ii) of this  clause,
where  transition property is sold or otherwise disposed of in the taxa-
ble year in a transaction of the type requiring recognition of  gain  or
loss  for  federal  income  tax  purposes, the basis for determining the
amount of such gain or loss under this article shall be the cost of  the
property less the accumulated depreciation on the property determined on

S. 6359--C                         20

the  books  and  records  of  the  taxpayer in accordance with generally
accepted accounting principles.
  (ii)  Qualified  gain  -  New  York basis. Where a sale or disposition
described in subclause (i) of this clause results in recognition of gain
for federal income tax purposes, and where either (I)  such  recognition
occurs  in  a taxable year ending after nineteen hundred ninety-nine and
before two thousand ten, or (II) such recognition is with respect  to  a
nuclear  electric  generating  facility,  the  basis for determining the
amount of such gain under this article shall be the cost of the property
less the aggregate of the New York depreciation deductions on the  prop-
erty determined under subparagraph four of this paragraph.
  (iii)  No  conversion  of  gain  to  loss. In the event that the basis
determined under subclause (ii) of this clause results in  determination
of  a  loss  on the sale or disposition of the property, no gain or loss
shall be recognized under this article with  respect  to  such  sale  or
disposition.
  (B)  Nonrecognition transactions. (i) Carryover basis. (I) where tran-
sition property is disposed of ("original disposition") in a transaction
of a type requiring deferral of recognition of gain or loss for  federal
income tax purposes, and where (II) there is a subsequent recognition of
gain  or loss for federal income tax purposes ("clause B gain or loss"),
the amount of which is determined by reference, in whole or in part,  to
the  basis  of  such transition property ("underlying transition proper-
ty"), then (III) the amount of such clause B gain  or  loss  under  this
article shall be adjusted as provided in subclause (ii) or (iii) of this
clause.
  (ii)  General  rule  -  book  basis  adjustment. Except as provided in
subclause (iii) of this clause, the amount of clause  B  gain  shall  be
reduced,  or  the  amount  of  clause B loss increased, by the amount by
which the book basis of the underlying transition property on  the  date
of  original  disposition  (determined using the provisions of subclause
(i) of clause (A) of this subparagraph) exceeds the federal  income  tax
basis of such property on such date.
  (iii)  Qualified gain - New York basis adjustment. Where clause B gain
either (I) occurs in a taxable year ending after nineteen hundred  nine-
ty-nine and before two thousand ten, or (II) is with respect to a nucle-
ar  electric  generating  facility,  the  amount of such gain under this
article shall be reduced, but not below zero, by the amount by which the
New York basis of the underlying transition  property  on  the  date  of
original  disposition (determined using the provisions of subclause (ii)
of clause (A) of this subparagraph) exceeds the federal income tax basis
of such property on such date.
  (iv) Application to replacement  property  and  transferee  taxpayers.
This  clause  shall apply whether the clause B gain or loss: (I) is with
respect to either transition property or depreciable property the  basis
of  which  is determined by reference to transition property, or (II) is
recognized by either a qualified public utility or by a  taxpayer  which
is  a  transferee of transition property (whether or not such transferee
is a qualified public utility, notwithstanding subparagraph one of  this
paragraph).
  (c-3)  Depreciation adjustments by qualified power producers and pipe-
line companies. (1) In the case of  a  qualified  taxpayer,  entire  net
income  shall be computed with the depreciation adjustments set forth in
this paragraph.
  (2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer"
means a qualified power producer or a qualified pipeline.

S. 6359--C                         21

  (B) Qualified power producer.  The  term  "qualified  power  producer"
means  a  taxpayer which: (i) on December thirty-first, nineteen hundred
ninety-nine, was not subject to the ratemaking supervision of the  state
department  of  public service, and (ii) for the year ending on December
thirty-first,  nineteen  hundred  ninety-nine,  was subject to tax under
former section one hundred eighty-six of this chapter on account of  its
being principally engaged in the business of supplying electricity.
  (C) Qualified pipeline. The term "qualified pipeline" means a taxpayer
which:  (i)  on December thirty-first, nineteen hundred ninety-nine, was
subject to the ratemaking supervision of either the federal energy regu-
latory commission or the state department of public  service,  and  (ii)
for  the  year ending on December thirty-first, nineteen hundred ninety-
nine, was subject to tax under sections one hundred eighty-three and one
hundred eighty-four of this chapter on account of its being  principally
engaged in the business of pipeline transmission.
  (D) Transition property. The term "transition property" means property
placed  in  service  by  a  qualified taxpayer before January first, two
thousand, for which a depreciation deduction is  allowed  under  section
one hundred sixty-seven of the internal revenue code.
  (3)  Federal depreciation disallowed. With respect to transition prop-
erty, the deduction for federal income  tax  purposes  for  depreciation
shall not be allowed.
  (4)  New  York  depreciation.  With  respect to transition property, a
deduction shall be allowed for  the  depreciation  expense  computed  as
provided  in this subparagraph. (A) All transition property shown on the
books and records of the taxpayer on January first, two  thousand  shall
be  treated  as  a  single asset placed in service on such date. The New
York basis for purposes of computing the depreciation deduction on  such
single  asset  shall  be  the net book value of such transition property
determined on the first day of the federal taxable year  ending  in  two
thousand  (or  on  the  date  any such property is placed in service, if
later) adjusted as provided in clause (B) of this subparagraph.
  (B) If transition property is sold or otherwise disposed of,  the  New
York basis of the single asset shall be reduced on the date of such sale
or  disposition  by the amount of the adjusted federal tax basis of such
property on such date.
  (C) The New York depreciation deduction allowed for any  taxable  year
with  respect to such single asset shall be computed using the straight-
line method, a twenty-year life, and a salvage value of zero.
  (D) For purposes of this subparagraph, the term "net book value" means
cost reduced by accumulated depreciation shown on the books and  records
of the taxpayer and determined, in the case of a qualified power produc-
er,  in accordance with generally accepted accounting principles; and in
the case of a qualified pipeline,  in  accordance  with  the  taxpayer's
regulatory  reports  filed with the federal energy regulatory commission
or state department of public service.
  (d) The [tax commission] COMMISSIONER may, whenever necessary in order
properly to reflect the entire net income of any taxpayer, determine the
year or period in which  any  item  of  income  or  deduction  shall  be
included,  without  regard  to  the method of accounting employed by the
taxpayer[;].
  (e) The entire net income of any bridge commission created by  act  of
congress  to  construct  a bridge across an international boundary means
its gross income less the expense of maintaining and operating its prop-
erties, the annual interest upon its bonds and  other  obligations,  and

S. 6359--C                         22

the  annual  charge  for  the retirement of such bonds or obligations at
maturity[;].
  [(f)  A  net  operating loss deduction shall be allowed which shall be
presumably the same as the net operating loss  deduction  allowed  under
section  one  hundred seventy-two of the internal revenue code, or which
would have been allowed if the taxpayer had not made an  election  under
subchapter s of chapter one of the internal revenue code, except that in
every instance where such deduction is allowed under this article:
  (1)  any  net  operating  loss  included in determining such deduction
shall be adjusted to reflect the inclusions and exclusions  from  entire
net income required by paragraphs (a), (b) and (g) hereof,
  (2)  such deduction shall not include any net operating loss sustained
during any taxable year  beginning  prior  to  January  first,  nineteen
hundred  sixty-one, or during any taxable year in which the taxpayer was
not subject to the tax imposed by this article,
  (3) such deduction shall not exceed the deduction for the taxable year
allowed under section one hundred seventy-two of  the  internal  revenue
code,  or  the  deduction  for  the  taxable  year which would have been
allowed if the taxpayer had not made an election under subchapter  s  of
chapter one of the internal revenue code,
  (4)  in the case of a New York S corporation, such deduction shall not
include any net operating loss sustained during a New  York  C  year  or
during a New York S year beginning prior to nineteen hundred ninety, and
in  the  case  of  a  New  York  C corporation, such deduction shall not
include any net operating loss sustained  during  a  New  York  S  year,
provided,  however, a New York S year shall be treated as a taxable year
for purposes of determining the number of taxable years to which  a  net
operating loss may be carried back or carried forward, and
  (5) the net operating loss deduction allowed under section one hundred
seventy-two  of  the  internal  revenue  code shall for purposes of this
paragraph be determined as  if  the  taxpayer  had  elected  under  such
section  to  relinquish  the entire carryback period with respect to net
operating losses, except with respect to the first ten thousand  dollars
of each of such losses, sustained during taxable years ending after June
thirtieth, nineteen hundred eighty-nine.
  (g)  For  taxable  years  commencing  prior to January first, nineteen
hundred eighty-seven, at the election of the taxpayer, a deduction shall
be allowed for expenditures paid or incurred during the taxable year for
the construction, reconstruction,  erection  or  improvement  of  either
industrial  waste  treatment facilities or air pollution control facili-
ties, or, with respect to taxable years beginning on  or  after  January
first, nineteen hundred seventy-seven and before January first, nineteen
hundred eighty-one, industrial waste treatment controlled process facil-
ities or air pollution controlled process facilities.
  (1)  (A)  (1)  The  term "industrial waste treatment facilities" shall
mean facilities for the treatment, neutralization  or  stabilization  of
industrial  waste  and other wastes (as the terms "industrial waste" and
"other wastes" are defined  in  section  17-0105  of  the  environmental
conservation  law)  from a point immediately preceding the point of such
treatment, neutralization or stabilization to  the  point  of  disposal,
including the necessary pumping and transmitting facilities.
  (2)  The term "industrial waste treatment controlled process facility"
shall mean such portion of the cost of an industrial production facility
designed for the purpose of obviating  the  need  for  industrial  waste
treatment  facilities  as  defined  in  item one of this clause as shall
exceed the cost of an industrial production facility of equal production

S. 6359--C                         23

capacity which if constructed would require industrial  waste  treatment
facilities  to meet emission standards in compliance with the provisions
of the environmental conservation law and the codes, rules, regulations,
permits  or orders issued pursuant thereto but only to the extent of the
cost of such industrial waste treatment facilities.
  (B) (1) The term "air pollution control facilities" shall mean facili-
ties which remove, reduce, or render less noxious air contaminants emit-
ted from an air contamination source (as the terms "air contaminant" and
"air contamination source" are defined in section 19-0107 of  the  envi-
ronmental conservation law) from a point immediately preceding the point
of  such  removal,  reduction  or rendering to the point of discharge of
air, meeting emission standards as  established  by  the  department  of
environmental  conservation, but excluding such facilities installed for
the primary purpose of salvaging materials which are usable in the manu-
facturing process or are marketable and excluding those facilities which
rely for their efficacy on dilution, dispersion or assimilation  of  air
contaminants  in the ambient air after emission. Such term shall further
include flue gas desulfurization equipment and attendant sludge disposal
facilities, fluidized bed boilers, precombustion coal  cleaning  facili-
ties  or  other  facilities that conform with this subdivision and which
comply with the provisions of the state acid deposition control act  set
forth  in  title nine of article nineteen of the environmental conserva-
tion law.
  (2) The term "air pollution controlled process  facility"  shall  mean
such  portion  of the cost of an industrial production facility designed
for the purpose of obviating the need for air pollution control  facili-
ties  as  defined in item one of this clause as shall exceed the cost of
an industrial production facility of equal productive capacity which  if
constructed  would  require  air  pollution  control facilities to inert
emission standards as established pursuant to  title  three  of  article
nineteen of the environmental conservation law but only to the extent of
the cost of such air pollution control facilities.
  (2) However, such deduction shall be allowed only
  (A)  with  respect to tangible property which is depreciable, pursuant
to section one hundred sixty-seven of the internal revenue code,  having
a  situs in this state and used in the taxpayer's trade or business, the
construction, reconstruction, erection or improvement of which,  in  the
case  of industrial waste treatment facilities, is initiated on or after
January first, nineteen hundred sixty-five or which, in the case of  air
pollution  control  facilities,  is initiated on or after January first,
nineteen hundred sixty-six, or which in the  case  of  industrial  waste
treatment  controlled  process  facilities  or  air pollution controlled
process facilities is initiated on and  after  January  first,  nineteen
hundred seventy-seven, and
  (B) on condition that such facilities have been certified by the state
commissioner  of  environmental conservation or his designated represen-
tative, pursuant to section 19-0309 of  the  environmental  conservation
law,  as  complying  with  applicable  provisions  of  the environmental
conservation law, the public health law, the  state  sanitary  code  and
codes,  rules,  regulations,  permits or orders issued pursuant thereto,
and
  (C) on condition that entire net income for the taxable year  and  all
succeeding  taxable  years  be  computed without any deductions for such
expenditures or for depreciation or amortization of  the  same  property
other  than  the deductions allowed by this paragraph (g), except to the
extent that the basis of the property may  be  attributable  to  factors

S. 6359--C                         24

other than such expenditures, or in case a deduction is allowable pursu-
ant to this paragraph for only a part of such expenditures, on condition
that  any  deduction  allowed  for  federal income tax purposes for such
expenditures or for depreciation or amortization of the same property be
proportionately  reduced  in computing entire net income for the taxable
year and all succeeding taxable years, and
  (D) where the election provided for in paragraph  (d)  of  subdivision
three  of section two hundred ten of this chapter has not been exercised
in respect to the same property.
  (3) (A) If expenditures in respect to an  industrial  waste  treatment
facility,  an air pollution control facility, an industrial waste treat-
ment controlled process facility or an air pollution controlled  process
facility  have  been deducted as provided herein and if within ten years
from the end of the taxable year in which  such  deduction  was  allowed
such  property  or  any  part thereof is used for the primary purpose of
salvaging materials which are usable in the manufacturing process or are
marketable, the taxpayer shall report such change of use in  its  report
for  the  first taxable year during which it occurs, and the tax commis-
sion may recompute the  tax  for  the  year  or  years  for  which  such
deduction  was  allowed  and  any  carryback  or carryover year, and may
assess any additional tax resulting from such recomputation  within  the
time  fixed  by  paragraph nine of subsection (c) of section ten hundred
eighty-three of this chapter.
  (B) If a deduction is allowed as herein provided for expenditures paid
or incurred during any taxable year on the basis of a temporary  certif-
icate  of  compliance  issued pursuant to the environmental conservation
law and if the taxpayer fails  to  obtain  a  permanent  certificate  of
compliance  upon completion of the facilities with respect to which such
temporary certificate was issued, the taxpayer shall report such failure
in its report for the taxable year  during  which  such  facilities  are
completed,  and the tax commission may recompute the tax for the year or
years for which such deduction was allowed and any carryback  or  carry-
over  year,  and  may  assess  any additional tax resulting from in such
recomputation within the time fixed by paragraph nine of subsection  (c)
of section ten hundred eighty-three.
  (C) If a deduction is allowed as herein provided for expenditures paid
or  incurred  during  any  taxable  year  in respect to an air pollution
control facility on the basis of  a  certificate  of  compliance  issued
pursuant  to  the  environmental conservation law and the certificate is
revoked pursuant to subdivision three of section 19-0309 of the environ-
mental conservation law, the tax commission may recompute  the  tax  for
the year or years for which the facility is not or was not in compliance
with  the  applicable  provisions of the environmental conservation law,
the state sanitary code or codes, rules, regulations, permits or  orders
promulgated  pursuant thereto, and for which a deduction was allowed, as
well as for any carryback or carryover year to which such deduction  was
carried,  and may assess any additional tax resulting from such recompu-
tation within the time fixed by paragraph  nine  of  subsection  (c)  of
section ten hundred eighty-three.
  (4)  In  any  taxable year when property is sold or otherwise disposed
of, with respect to which a deduction has been allowed pursuant to  this
paragraph,  such  deduction  shall  be  disregarded in computing gain or
loss, and the gain or loss on the sale  or  other  disposition  of  such
property  shall  be  the  gain  or loss entering into the computation of
entire taxable income which the taxpayer is required to  report  to  the
United States treasury department for such taxable year.]

S. 6359--C                         25

  (h) If the period covered by a report under this article is other than
the  period  covered by the report to the United States treasury depart-
ment,
  (1)  except  as provided in subparagraph two hereof, entire net income
shall be determined by multiplying the taxable income reported  to  such
department  (as  adjusted pursuant to the provisions of this article) by
the number of calendar months or major  parts  thereof  covered  by  the
report  under this article and dividing by the number of calendar months
or major parts thereof covered by the report to such department.  If  it
shall  appear that such method of determining entire net income does not
properly reflect the taxpayer's income during the period covered by  the
report  under  this  article, the [tax commission] COMMISSIONER shall be
authorized in its discretion to determine such entire net income  solely
on  the  basis of the taxpayer's income during the period covered by its
report under this article[;].
  (2) [in] IN the case of a  New  York  S  termination  year,  an  equal
portion of entire net income shall be assigned to each day of such year.
The  portion  of  such entire net income thereby assigned to the S short
year and the C short year shall be included in  the  respective  reports
for  the  S short year and the C short year under this article. However,
where paragraph three of subsection (s) of section six hundred twelve of
this chapter applies, the portion of such entire net income assigned  to
the  S  short year and the C short year shall be determined under normal
tax accounting rules.
  (i) With respect to a DISC which during any taxable year or  reporting
year  (1)  received  more  than five percent of its gross sales from the
sale of inventory or other property which it purchased from  its  stock-
holders,  (2)  received more than five percent of its gross rentals from
the rental of property which it purchased or rented from its  stockhold-
ers  or  (3) received more than five percent of its total receipts other
than sales and rentals from its stockholders, the  following  provisions
shall apply.
  (A)  For any taxable year in which sub-paragraph (B) of this paragraph
is in effect and not rendered invalid, a DISC  meeting  the  above  test
shall be exempt from all taxes imposed by this article.
  (B)  Supplemental to the provisions of subdivision five of section two
hundred eleven of this article, any taxpayer required to compute  a  tax
under  this  article, which during the taxable year being reported was a
stockholder in any DISC meeting the test prescribed in  this  paragraph,
shall  for any taxable year ending after December thirty-first, nineteen
hundred seventy-one adjust each item of its receipts,  expenses,  assets
and  liabilities,  as  otherwise  computed under this article, by adding
thereto its attributable share of each such DISC's  receipts,  expenses,
assets  and  liabilities  as  reportable by each such DISC to the United
States Treasury Department for its annual reporting period ending during
the current taxable year of such taxpayer; provided, however,  (1)  that
all transactions between the taxpayer and each such DISC shall be elimi-
nated  from  the  taxpayer's  adjusted  receipts,  expenses,  assets and
liabilities; (2) that the taxpayer's  entire  net  income  as  otherwise
computed  under this section, shall be reduced by subtracting the amount
of the deemed distribution of current income, if  any,  from  each  such
DISC  already  included  in  the  entire  net income of such taxpayer by
virtue of having been included in its entire  taxable  income  for  that
taxable  year  as reported to the United States Treasury Department; and
(3) that in the event this paragraph should  be  rendered  invalid,  all

S. 6359--C                         26

DISC's  and  their stockholders taxable hereunder shall be taxed instead
under the remaining portions of this article.
  (j)  in the case of property placed in service in taxable years begin-
ning before nineteen hundred ninety-four, for  taxable  years  beginning
after  December  thirty-first,  nineteen hundred eighty-one, except with
respect to property subject to the provisions  of  section  two  hundred
eighty-F  of  the  internal  revenue  code  and  property subject to the
provisions of section one hundred sixty-eight of  the  internal  revenue
code which is placed in service in this state in taxable years beginning
after  December thirty-first, nineteen hundred eighty-four, and provided
a deduction has not been excluded from entire  net  income  pursuant  to
subparagraph  eight  of  paragraph  (b)  of this subdivision, a taxpayer
shall be allowed with respect  to  property  which  is  subject  to  the
provisions  of  section  one hundred sixty-eight of the internal revenue
code the depreciation deduction  allowable  under  section  one  hundred
sixty-seven  of  the  internal  revenue  code as such section would have
applied to property placed in service on December thirty-first, nineteen
hundred eighty. This paragraph shall not apply to property of a taxpayer
principally engaged in the conduct of aviation (other than  air  freight
forwarders  acting as principal and like indirect air carriers) which is
placed in service before taxable years  beginning  in  nineteen  hundred
eighty-nine.
  (k)  QSSS.  (1)  New  York  S corporation. In the case of a New York S
corporation which is the parent of a qualified subchapter  S  subsidiary
(QSSS) with respect to a taxable year:
  (A) where the QSSS is not an excluded corporation,
  (i)  in  determining the entire net income of such parent corporation,
all assets, liabilities, income and deductions  of  the  QSSS  shall  be
treated  as  assets,  liabilities,  income  and deductions of the parent
corporation, and
  (ii) the QSSS shall be exempt from all taxes imposed by this  article,
and
  (B)  where  the QSSS is an excluded corporation, the entire net income
of the parent corporation shall be determined as  if  the  federal  QSSS
election had not been made.
  (2)  New  York  C corporation. In the case of a New York C corporation
which is the parent of a QSSS with respect to a taxable year:
  (A) where the QSSS is a taxpayer,
  (i) in determining the entire net income of such  parent  corporation,
all  assets,  liabilities,  income  and  deductions of the QSSS shall be
treated as assets, liabilities, income  and  deductions  of  the  parent
corporation, and
  (ii)  the QSSS shall be exempt from all taxes imposed by this article,
and
  (B) where the QSSS is not a taxpayer,
  (i) if the QSSS is not an excluded corporation, the parent corporation
may make a QSSS inclusion election to include all  assets,  liabilities,
income  and  deductions  of  the QSSS as assets, liabilities, income and
deductions of the parent corporation, and
  (ii) in the absence of such election, or where the QSSS is an excluded
corporation, the entire net income of the parent  corporation  shall  be
determined as if the federal QSSS election had not been made.
  (3)  Non-New  York  S  corporation  not  excluded. In the case of an S
corporation which is not a taxpayer and not an excluded corporation, and
which is the parent of a QSSS which is a taxpayer, the  shareholders  of

S. 6359--C                         27

the parent corporation shall be entitled to make the New York S election
under subsection (a) of section six hundred sixty of this chapter.
  (A)  For  any  taxable  year for which such election is in effect, the
parent corporation shall be subject to tax under this article as  a  New
York S corporation, and the provisions of clause (A) of subparagraph one
of this paragraph shall apply.
  (B) For any taxable year for which such election is not in effect, the
QSSS shall be a New York C corporation, and the entire net income of the
QSSS  shall  be  determined as if the federal QSSS election had not been
made. For purposes of such determination, the taxable year of the parent
corporation shall constitute the taxable year of  the  QSSS,  excluding,
however, any portion of such year during which the QSSS is not a taxpay-
er.
  (4)  S  corporation excluded. In the case of an S corporation which is
an excluded corporation and which is the parent of a  QSSS  which  is  a
taxpayer,  the QSSS shall be a New York C corporation and the provisions
of clause (B) of subparagraph three of this paragraph shall apply.
  (5) Excluded corporation. The  term  "excluded  corporation"  means  a
corporation  subject  to  tax  under  sections  one hundred eighty-three
through one hundred eighty-six, inclusive, or  article  [thirty-two  or]
thirty-three  of  this  chapter, or a foreign corporation not taxable by
this state which, if it were taxable, would be subject to tax under  any
of such sections or [articles] ARTICLE.
  (6)  Taxpayer.  For  purposes  of  this paragraph, the term "taxpayer"
means a parent corporation or QSSS subject to tax  under  this  article,
determined without regard to the provisions of this paragraph.
  (7)  QSSS  inclusion  election.  The  election  under subclause (i) of
clause (B) of subparagraph two of this paragraph shall be effective  for
the  taxable year for which made and for all succeeding taxable years of
the corporation until such election is terminated. An election or termi-
nation shall be made on such form and in such manner as the commissioner
may prescribe by regulation or instruction.
  (l) Emerging technology investment deferral. In the case of  any  sale
of a qualified emerging technologies investment held for more than thir-
ty-six months and with respect to which the taxpayer elects the applica-
tion  of this paragraph, gain from such sale shall be recognized only to
the extent that the amount realized on such sale exceeds the cost of any
qualified emerging technologies investment  purchased  by  the  taxpayer
during  the three hundred sixty-five-day period beginning on the date of
such sale, reduced by any portion of such  cost  previously  taken  into
account under this paragraph. For purposes of this paragraph the follow-
ing shall apply:
  (1)  A  qualified investment is stock of a corporation or an interest,
other than as a creditor, in a partnership or limited liability  company
that was acquired by the taxpayer as provided in Internal Revenue Code S
1202(c)(1)(B),  except  that  the  reference to the term "stock" in such
section shall be read as "investment," or by the taxpayer from a  person
who had acquired such stock or interest in such a manner.
  (2)  A qualified emerging technology investment is a qualified invest-
ment, that was held by the taxpayer for at least thirty-six months, in a
company defined in paragraph (c) of subdivision one of  section  thirty-
one  hundred  two-e  of the public authorities law or an investment in a
partnership or limited liability company that is taxed as a  partnership
to the extent that such partnership or limited liability company invests
in qualified emerging technology companies.

S. 6359--C                         28

  (3)  For  purposes  of  determining whether the nonrecognition of gain
under this subsection  applies  to  a  qualified  emerging  technologies
investment  that is sold, the taxpayer's holding period for such invest-
ment  and  the  qualified  emerging  technologies  investment  that   is
purchased  shall be determined without regard to Internal Revenue Code S
1223.
  (m) Amounts deferred. The amount deferred under paragraph (l) of  this
subdivision shall be added to entire net income when the reinvestment in
the  New  York  qualified  emerging technology company which qualified a
taxpayer for such deferral is sold.
  [(n) Qualified gas transportation contracts.
  (1) Any tax paid under this article allocable to receipts attributable
to a "qualified gas transportation contract" shall  be  deemed  to  have
been paid under article nine of this chapter for all purposes of law for
taxable  years  commencing  on  or  after  January  first, two thousand,
computed as hereinafter provided, if all of the following conditions are
met:
  (i) For periods ending prior  to  January  first,  two  thousand,  the
taxpayer  paid  the  franchise tax due under section one hundred eighty-
four of this chapter.
  (ii) For the taxable year, all  of  the  receipts  from  the  pipeline
transportation  of natural gas attributable to the taxpayer and included
in the taxpayer's entire net income (without regard to  this  paragraph)
are  solely from the transportation of natural gas for wholesale custom-
ers and commercial retail customers.
  (iii) The taxpayer's franchise tax liability under  this  article  for
the  taxable  year (computed without regard to this paragraph) is deter-
mined under paragraph (a) of subdivision one of section two hundred  ten
of  this  article,  and such tax liability (without regard to this para-
graph) is greater than the liability the taxpayer  would  have  incurred
under  sections  one hundred eighty-three and one hundred eighty-four of
this chapter (as such sections existed on December  thirty-first,  nine-
teen hundred ninety-nine) based on the same taxable period.
  (iv)  The  taxpayer  is  a  party  to  a "qualified gas transportation
contract," as defined herein.
  (2) The provisions of this paragraph shall apply only for the  taxable
years during which such qualified gas transportation contract is in full
force  and  effect, and shall apply only to the receipts of the taxpayer
less any expenses of the taxpayer (but not less than zero),  during  the
taxable  year,  to  the  extent included in entire net income, which are
attributable  to  any  such  qualified  gas  transportation   contracts.
Provided,  further,  in  any event, the characterization hereunder shall
expire and be of no further force and effect for taxable years  commenc-
ing on or after January first, two thousand fifteen.
  (3)  The  term  "qualified  gas  transportation contract" shall mean a
service agreement for the transportation of natural gas for an  end-user
which  is a qualified cogeneration facility with a rated capacity of one
thousand megawatts or more, which (i) was entered  into  before  January
first, two thousand, and was in full force and effect and binding on the
parties  thereto as of such date, (ii) as originally executed, was for a
term of at least twenty years, and (iii) the terms of which prohibit the
pass-through to such customer of the franchise tax  imposed  under  this
article,  while  allowing the recovery of the gross earnings tax imposed
under section one hundred eighty-four of this chapter. A contract  shall
not  qualify as a qualified gas transportation contract if there is: (i)
any renewal or extension of an otherwise  qualified  gas  transportation

S. 6359--C                         29

contract  occurring on or after January first, two thousand, or (ii) any
material amendment to, or supplementation of, an otherwise qualified gas
transportation contract on or after such date. Such renewal,  extension,
or  material  amendment or supplementation shall have the same force and
effect of terminating the characterization hereunder as if the  qualify-
ing contract had expired by its own terms.
  (o)]  (N-1)  For  taxable years beginning after December thirty-first,
two thousand two, in the case of qualified property described  in  para-
graph  two  of subsection k of section 168 of the internal revenue code,
other than qualified resurgence zone property described in paragraph (q)
of this subdivision, and other than  qualified  New  York  Liberty  Zone
property  described in paragraph two of subsection b of section 1400L of
the internal revenue code (without regard to clause (i) of  subparagraph
(C)  of  such  paragraph),  which was placed in service on or after June
first, two thousand three, a taxpayer shall be allowed with  respect  to
such  property the depreciation deduction allowable under section 167 of
the internal revenue code as such section would  have  applied  to  such
property  had  it  been acquired by the taxpayer on September tenth, two
thousand one.
  (o) Related members expense add back.  (1)  Definitions.  (A)  Related
member.  "Related  member" means a related person as defined in subpara-
graph (c) of paragraph three of subsection (b) of section  four  hundred
sixty-five  of  the  internal  revenue code, except that "fifty percent"
shall be substituted for "ten percent".
  (B) Effective rate of tax. "Effective rate of tax" means,  as  to  any
state  or  U.S. possession, the maximum statutory rate of tax imposed by
the state or possession on or measured by a related member's net  income
multiplied  by  the  apportionment percentage, if any, applicable to the
related member under the laws of said jurisdiction. For purposes of this
definition, the effective rate of tax as to any state or U.S. possession
is zero where the related member's net  income  tax  liability  in  said
jurisdiction  is reported on a combined or consolidated return including
both the taxpayer and the related member where the reported transactions
between the taxpayer and the related member are  eliminated  or  offset.
Also, for purposes of this definition, when computing the effective rate
of  tax  for  a  jurisdiction  in which a related member's net income is
eliminated or offset by a credit or similar adjustment that is dependent
upon the related member either maintaining or managing intangible  prop-
erty  or  collecting  interest  income in that jurisdiction, the maximum
statutory rate of tax imposed by said jurisdiction shall be decreased to
reflect the statutory rate of tax that applies to the related member  as
effectively reduced by such credit or similar adjustment.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by   the   commissioner,  and  include  amounts  allowable  as  interest
deductions under section one hundred sixty-three of the internal revenue
code to the extent such amounts are directly or indirectly for,  related
to  or  in  connection with the acquisition, use, maintenance or manage-
ment, ownership,  sale,  exchange  or  disposition  of  such  intangible
assets.
  (D)  Valid  Business  Purpose. A valid business purpose is one or more
business purposes, other than the avoidance or  reduction  of  taxation,
which alone or in combination constitute the primary motivation for some

S. 6359--C                         30

business  activity or transaction, which activity or transaction changes
in a meaningful way, apart from tax effects, the  economic  position  of
the taxpayer. The economic position of the taxpayer includes an increase
in  the  market share of the taxpayer, or the entry by the taxpayer into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in a combined report with a related member pursuant to [subdivision four
of] section two hundred [eleven] TEN-C of this article, for the  purpose
of  computing  entire  net  income  or other applicable taxable basis, a
taxpayer must add back royalty payments  directly  or  indirectly  paid,
accrued,  or  incurred in connection with one or more direct or indirect
transactions with one or more related members during the taxable year to
the extent deductible in calculating federal taxable income.
  (B) Exceptions. (i) The adjustment required in  this  paragraph  shall
not apply to the portion of the royalty payment that the taxpayer estab-
lishes,  by  clear  and  convincing evidence of the type and in the form
specified by the commissioner, meets all of the following  requirements:
(I) the related member was subject to tax in this state or another state
or  possession of the United States or a foreign nation or some combina-
tion thereof on a tax base  that  included  the  royalty  payment  paid,
accrued  or incurred by the taxpayer; (II) the related member during the
same taxable year directly or indirectly paid, accrued or incurred  such
portion  to  a person that is not a related member; and (III) the trans-
action giving rise to the royalty payment between the taxpayer  and  the
related member was undertaken for a valid business purpose.
  (ii)  The adjustment required in this paragraph shall not apply if the
taxpayer establishes, by clear and convincing evidence of the  type  and
in  the form specified by the commissioner, that: (I) the related member
was subject to tax on or measured by its net income  in  this  state  or
another  state  or  possession  of the United States or some combination
thereof; (II) the tax base for said tax  included  the  royalty  payment
paid,  accrued  or  incurred  by  the  taxpayer; and (III) the aggregate
effective rate of tax applied to the related member in  those  jurisdic-
tions  is  no less than eighty percent of the statutory rate of tax that
applied to the taxpayer under section two hundred ten  of  this  article
for the taxable year.
  (iii) The adjustment required in this paragraph shall not apply if the
taxpayer  establishes,  by clear and convincing evidence of the type and
in the form specified by the commissioner, that: (I) the royalty payment
was paid, accrued or incurred to a related member  organized  under  the
laws  of  a  country  other  than  the  United  States; (II) the related
member's income from the transaction  was  subject  to  a  comprehensive
income  tax treaty between such country and the United States; (III) the
related member was subject to tax in a foreign nation on a tax base that
included the royalty payment paid, accrued or incurred by the  taxpayer;
(IV)  the related member's income from the transaction was taxed in such
country at an effective rate of tax at least equal to  that  imposed  by
this  state;  and  (V) the royalty payment was paid, accrued or incurred
pursuant to a transaction that  was  undertaken  for  a  valid  business
purpose and using terms that reflect an arm's length relationship.
  (iv)  The adjustment required in this paragraph shall not apply if the
taxpayer and the commissioner agree in writing to the application or use
of alternative adjustments or computations. The commissioner may, in his
or her discretion, agree  to  the  application  or  use  of  alternative
adjustments or computations when he or she concludes that in the absence

S. 6359--C                         31

of  such  agreement  the  income  of  the taxpayer would not be properly
reflected.
  (p) For taxable years beginning after December thirty-first, two thou-
sand  two,  upon  the  disposition  of property to which paragraph [(o)]
(N-1) of this subdivision applies, the amount of any gain or loss inclu-
dible in entire net income shall be adjusted to reflect  the  inclusions
and exclusions from entire net income pursuant to subparagraph seventeen
of  paragraph  (a)  and  subparagraph seventeen of paragraph (b) of this
subdivision attributable to such property.
  (q) For purposes of paragraphs [(o)] (N-1) and (p)  of  this  subdivi-
sion,  qualified  resurgence zone property shall mean qualified property
described in paragraph two of subsection k of section 168 of the  inter-
nal  revenue code substantially all of the use of which is in the resur-
gence zone, as defined below, and is in the active conduct of a trade or
business by the taxpayer in such zone, and the original use of which  in
the  resurgence  zone commences with the taxpayer after December thirty-
first, two thousand two. The resurgence zone shall mean the area of  New
York county bounded on the south by a line running from the intersection
of  the Hudson River with the Holland Tunnel, and running thence east to
Canal Street, then running along the centerline of Canal Street  to  the
intersection  of the Bowery and Canal Street, running thence in a south-
easterly direction diagonally across  Manhattan  Bridge  Plaza,  to  the
Manhattan Bridge and thence along the centerline of the Manhattan Bridge
to  the  point where the centerline of the Manhattan Bridge would inter-
sect with the easterly bank of the East River, and bounded on the  north
by  a  line  running  from the intersection of the Hudson River with the
Holland Tunnel and running thence north along West Avenue to the  inter-
section  of  Clarkson  Street  then running east along the centerline of
Clarkson Street to the intersection of Washington Avenue,  then  running
south  along  the centerline of Washington Avenue to the intersection of
West Houston Street, then east along  the  centerline  of  West  Houston
Street,  then at the intersection of the Avenue of the Americas continu-
ing east along the centerline of East Houston  Street  to  the  easterly
bank of the East River.
  (R)  SUBTRACTION  MODIFICATION  FOR QUALIFIED RESIDENTIAL LOAN PORTFO-
LIOS. (1)(A) A TAXPAYER THAT IS EITHER A THRIFT INSTITUTION  AS  DEFINED
IN SUBPARAGRAPH THREE OF THIS PARAGRAPH OR A QUALIFIED COMMUNITY BANK AS
DEFINED  IN  SUBPARAGRAPH  TWO  OF PARAGRAPH (S) OF THIS SUBDIVISION AND
MAINTAINS A QUALIFIED RESIDENTIAL LOAN PORTFOLIO AS DEFINED IN  SUBPARA-
GRAPH TWO OF THIS PARAGRAPH SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING
ENTIRE NET INCOME THE AMOUNT, IF ANY, BY WHICH (I) THIRTY-TWO PERCENT OF
ITS  ENTIRE  NET  INCOME  DETERMINED  WITHOUT  REGARD  TO THIS PARAGRAPH
EXCEEDS (II) THE AMOUNTS DEDUCTED BY THE TAXPAYER PURSUANT  TO  SECTIONS
166  AND  585  OF THE INTERNAL REVENUE CODE LESS ANY AMOUNTS INCLUDED IN
FEDERAL TAXABLE INCOME AS A RESULT OF A RECOVERY OF A LOAN.
  (B)(I) IF THE TAXPAYER IS IN A COMBINED REPORT, THIS DEDUCTION WILL BE
COMPUTED ON A COMBINED BASIS. IN THAT INSTANCE, THE ENTIRE NET INCOME OF
THE COMBINED GROUP FOR PURPOSES OF THIS PARAGRAPH SHALL BE MULTIPLIED BY
A FRACTION, THE NUMERATOR OF WHICH IS THE AVERAGE TOTAL  ASSETS  OF  ALL
THE  THRIFT  INSTITUTIONS  OR  QUALIFIED COMMUNITY BANKS INCLUDED IN THE
COMBINED REPORT AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS
OF ALL THE CORPORATIONS INCLUDED IN THE COMBINED REPORT.
  (II) MEASUREMENT OF ASSETS FOR PURPOSES  OF  THIS  CLAUSE.  (I)  TOTAL
ASSETS  ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE SHEET,
COMPUTED IN THE SAME MANNER AS IS REQUIRED BY THE BANKING  REGULATOR  OF
THE TAXPAYERS INCLUDED IN THE COMBINED RETURN.

S. 6359--C                         32

  (II)  ASSETS  WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH
ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED  IF  NOT
FULLY  DEPRECIATED  OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL
AMOUNT) IN THE COMPUTATION OF THE COMBINED GROUP'S ENTIRE NET INCOME FOR
THE TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTAN-
GIBLE ASSETS IDENTIFIED AS "GOODWILL".
  (III)  TANGIBLE  REAL  AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND,
MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST. LEASED ASSETS WILL  BE
VALUED  AT  THE  ANNUAL  LEASE PAYMENT MULTIPLIED BY EIGHT.   INTANGIBLE
PROPERTY, SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT  BOOK  VALUE
EXCLUSIVE OF ANY RESERVES.
  (IV)  INTERCORPORATE  STOCKHOLDINGS  AND  BILLS,  NOTES  AND  ACCOUNTS
RECEIVABLE, AND OTHER INTERCORPORATE  INDEBTEDNESS  BETWEEN  THE  CORPO-
RATIONS INCLUDED IN THE COMBINED REPORT SHALL BE ELIMINATED.
  (V) AVERAGE ASSETS ARE COMPUTED USING THE ASSETS MEASURED ON THE FIRST
DAY  OF THE TAXABLE YEAR, AND ON THE LAST DAY OF EACH SUBSEQUENT QUARTER
OF THE TAXABLE YEAR.
  (2) QUALIFIED RESIDENTIAL LOAN PORTFOLIO. (A) A TAXPAYER  MAINTAINS  A
QUALIFIED  RESIDENTIAL  LOAN  PORTFOLIO IF AT LEAST SIXTY PERCENT OF THE
AMOUNT OF THE TOTAL ASSETS AT THE CLOSE  OF  THE  TAXABLE  YEAR  OF  THE
THRIFT  INSTITUTION  OR  QUALIFIED COMMUNITY BANK CONSISTS OF THE ASSETS
DESCRIBED IN ITEMS (I) THROUGH (XII) OF THIS CLAUSE, WITH  THE  APPLICA-
TION  OF  THE  RULE  IN  ITEM  (XIII).  IF THE TAXPAYER IS A MEMBER OF A
COMBINED GROUP, THE DETERMINATION OF WHETHER THERE IS A QUALIFIED  RESI-
DENTIAL  LOAN  PORTFOLIO  WILL  BE MADE BY AGGREGATING THE ASSETS OF THE
THRIFT INSTITUTIONS OR QUALIFIED COMMUNITY BANKS THAT ARE MEMBERS OF THE
COMBINED GROUP.
  ASSETS:
  (I) CASH; WHICH INCLUDES CASH  AND  CASH  EQUIVALENTS  INCLUDING  CASH
ITEMS  IN THE PROCESS OF COLLECTION, DEPOSIT WITH OTHER FINANCIAL INSTI-
TUTIONS,  INCLUDING  CORPORATE  CREDIT  UNIONS,  BALANCES  WITH  FEDERAL
RESERVE  BANKS AND FEDERAL HOME LOAN BANKS, FEDERAL FUNDS SOLD, AND CASH
AND CASH EQUIVALENTS ON HAND. CASH SHALL NOT INCLUDE ANY BALANCES  SERV-
ING AS COLLATERAL FOR SECURITIES LENDING TRANSACTIONS;
  (II)  OBLIGATIONS  OF  THE  UNITED  STATES  OR OF A STATE OR POLITICAL
SUBDIVISION THEREOF, AND STOCK OR OBLIGATIONS OF A CORPORATION WHICH  IS
AN  INSTRUMENTALITY  OR  A GOVERNMENT SPONSORED ENTERPRISE OF THE UNITED
STATES OR OF A STATE OR POLITICAL SUBDIVISION THEREOF;
  (III) LOANS SECURED BY A DEPOSIT OR SHARE OF A MEMBER;
  (IV) LOANS SECURED BY AN INTEREST IN REAL PROPERTY WHICH IS  (OR  FROM
THE PROCEEDS OF THE LOAN, WILL BECOME) RESIDENTIAL REAL PROPERTY OR REAL
PROPERTY USED PRIMARILY FOR CHURCH PURPOSES, LOANS MADE FOR THE IMPROVE-
MENT  OF  RESIDENTIAL  REAL PROPERTY OR REAL PROPERTY USED PRIMARILY FOR
CHURCH PURPOSES, PROVIDED THAT FOR PURPOSES OF  THIS  ITEM,  RESIDENTIAL
REAL PROPERTY SHALL INCLUDE SINGLE OR MULTI-FAMILY DWELLINGS, FACILITIES
IN  RESIDENTIAL DEVELOPMENTS DEDICATED TO PUBLIC USE OR PROPERTY USED ON
A NONPROFIT BASIS FOR RESIDENTS, AND MOBILE HOMES NOT USED  ON  A  TRAN-
SIENT BASIS;
  (V)  PROPERTY  ACQUIRED  THROUGH  THE  LIQUIDATION  OF DEFAULTED LOANS
DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
  (VI) ANY REGULAR OR RESIDUAL INTEREST IN A  REMIC,  AS  SUCH  TERM  IS
DEFINED  IN  SECTION  860D OF THE INTERNAL REVENUE CODE, BUT ONLY IN THE
PROPORTION WHICH THE ASSETS OF SUCH REMIC CONSIST OF PROPERTY  DESCRIBED
IN ANY OF THE PRECEDING ITEMS OF THIS CLAUSE, EXCEPT THAT IF NINETY-FIVE
PERCENT  OR  MORE  OF  THE  ASSETS OF SUCH REMIC ARE ASSETS DESCRIBED IN

S. 6359--C                         33

ITEMS (I) THROUGH (V) OF THIS CLAUSE, THE ENTIRE INTEREST IN  THE  REMIC
SHALL QUALIFY;
  (VII)  ANY  MORTGAGE-BACKED  SECURITY  WHICH REPRESENTS OWNERSHIP OF A
FRACTIONAL UNDIVIDED INTEREST IN A TRUST, THE ASSETS  OF  WHICH  CONSIST
PRIMARILY  OF  MORTGAGE  LOANS,  PROVIDED  THAT  THE REAL PROPERTY WHICH
SERVES AS SECURITY FOR THE LOANS IS (OR FROM THE PROCEEDS OF  THE  LOAN,
WILL  BECOME) THE TYPE OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE
AND ANY COLLATERALIZED  MORTGAGE  OBLIGATION,  THE  SECURITY  FOR  WHICH
CONSISTS  PRIMARILY OF MORTGAGE LOANS THAT MAINTAIN AS SECURITY THE TYPE
OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
  (VIII) CERTIFICATES OF DEPOSIT IN, OR OBLIGATIONS  OF,  A  CORPORATION
ORGANIZED  UNDER  A  STATE LAW WHICH SPECIFICALLY AUTHORIZES SUCH CORPO-
RATION TO INSURE THE DEPOSITS OR SHARE ACCOUNTS OF MEMBER ASSOCIATIONS;
  (IX) LOANS SECURED BY AN INTEREST IN EDUCATIONAL, HEALTH,  OR  WELFARE
INSTITUTIONS OR FACILITIES, INCLUDING STRUCTURES DESIGNED OR USED PRIMA-
RILY FOR RESIDENTIAL PURPOSES FOR STUDENTS, RESIDENTS, AND PERSONS UNDER
CARE, EMPLOYEES, OR MEMBERS OF THE STAFF OF SUCH INSTITUTIONS OR FACILI-
TIES;
  (X)  LOANS  MADE  FOR THE PAYMENT OF EXPENSES OF COLLEGE OR UNIVERSITY
EDUCATION OR VOCATIONAL TRAINING;
  (XI) PROPERTY USED BY  THE  TAXPAYER  IN  SUPPORT  OF  BUSINESS  WHICH
CONSISTS  PRINCIPALLY OF ACQUIRING THE SAVINGS OF THE PUBLIC AND INVEST-
ING IN LOANS; AND
  (XII) LOANS FOR WHICH THE TAXPAYER IS THE CREDITOR AND WHICH ARE WHOL-
LY SECURED BY LOANS DESCRIBED IN ITEM (IV) OF THIS CLAUSE.
  (XIII) THE VALUE OF ACCRUED INTEREST RECEIVABLE AND  ANY  LOSS-SHARING
COMMITMENT  OR  OTHER  LOAN  GUARANTY  BY  A GOVERNMENTAL AGENCY WILL BE
CONSIDERED PART OF THE BASIS IN THE LOANS TO WHICH THE ACCRUED  INTEREST
OR LOSS PROTECTION APPLIES.
  (B)  AT  THE  ELECTION  OF  THE  TAXPAYER, THE PERCENTAGE SPECIFIED IN
CLAUSE (A) OF THIS SUBPARAGRAPH SHALL BE APPLIED ON  THE  BASIS  OF  THE
AVERAGE ASSETS OUTSTANDING DURING THE TAXABLE YEAR, IN LIEU OF THE CLOSE
OF  THE TAXABLE YEAR. THE TAXPAYER CAN ELECT TO COMPUTE AN AVERAGE USING
THE ASSETS MEASURED ON THE FIRST DAY OF THE TAXABLE YEAR AND ON THE LAST
DAY OF EACH SUBSEQUENT QUARTER, OR MONTH OR DAY DURING THE TAXABLE YEAR.
THIS ELECTION MAY BE MADE ANNUALLY.
  (C) FOR PURPOSES OF THIS COMPUTATION,  THE  DEFINITION  OF  ASSETS  IN
CLAUSE (B) OF SUBPARAGRAPH ONE OF THIS PARAGRAPH APPLIES.
  (D) FOR PURPOSES OF ITEM (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH, IF A
MULTIFAMILY STRUCTURE SECURING A LOAN IS USED IN PART FOR NONRESIDENTIAL
USE PURPOSES, THE ENTIRE LOAN IS DEEMED A RESIDENTIAL REAL PROPERTY LOAN
IF  THE PLANNED RESIDENTIAL USE EXCEEDS EIGHTY PERCENT OF THE PROPERTY'S
PLANNED USE (MEASURED, AT  THE  TAXPAYER'S  ELECTION,  BY  USING  SQUARE
FOOTAGE  OR GROSS RENTAL REVENUE, AND DETERMINED AS OF THE TIME THE LOAN
IS MADE).
  (E) FOR PURPOSES OF ITEM (IV) OF  CLAUSE  (A)  OF  THIS  SUBPARAGRAPH,
LOANS  MADE  TO  FINANCE THE ACQUISITION OR DEVELOPMENT OF LAND SHALL BE
DEEMED TO BE LOANS SECURED BY AN INTEREST IN RESIDENTIAL  REAL  PROPERTY
IF  THERE  IS A REASONABLE ASSURANCE THAT THE PROPERTY WILL BECOME RESI-
DENTIAL REAL PROPERTY WITHIN A PERIOD OF THREE YEARS FROM  THE  DATE  OF
ACQUISITION  OF  SUCH  LAND;  BUT  THIS SENTENCE SHALL NOT APPLY FOR ANY
TAXABLE YEAR UNLESS, WITHIN SUCH THREE YEAR PERIOD,  SUCH  LAND  BECOMES
RESIDENTIAL  REAL  PROPERTY.  FOR  PURPOSES  OF  DETERMINING WHETHER ANY
INTEREST IN A REMIC QUALIFIES UNDER ITEM (VI)  OF  CLAUSE  (A)  OF  THIS
SUBPARAGRAPH,  ANY  REGULAR INTEREST IN ANOTHER REMIC HELD BY SUCH REMIC
SHALL BE TREATED AS A LOAN DESCRIBED IN A PRECEDING ITEM  UNDER  PRINCI-

S. 6359--C                         34

PLES  SIMILAR  TO  THE  PRINCIPLE OF SUCH ITEM (VI), EXCEPT THAT IS SUCH
REMICS ARE PART OF A TIERED STRUCTURE, THEY  SHALL  BE  TREATED  AS  ONE
REMIC FOR PURPOSES OF SUCH ITEM (VI).
  (3)  FOR  PURPOSES  OF  THIS  PARAGRAPH,  A  "THRIFT INSTITUTION" IS A
SAVINGS BANK, A SAVINGS AND LOAN ASSOCIATION, OR OTHER SAVINGS  INSTITU-
TION CHARTERED AND SUPERVISED AS SUCH UNDER FEDERAL OR STATE LAW.
  (S)  SUBTRACTION  MODIFICATION  FOR COMMUNITY BANKS AND SMALL THRIFTS.
(1) A TAXPAYER THAT IS A QUALIFIED COMMUNITY BANK AS DEFINED IN SUBPARA-
GRAPH TWO OF THIS PARAGRAPH OR A SMALL THRIFT INSTITUTION AS DEFINED  IN
SUBPARAGRAPH  TWO-A  OF  THIS  PARAGRAPH SHALL BE ALLOWED A DEDUCTION IN
COMPUTING ENTIRE NET INCOME EQUAL TO THE AMOUNT COMPUTED UNDER  SUBPARA-
GRAPH THREE OF THIS PARAGRAPH.
  (2)  TO  BE  A  QUALIFIED  COMMUNITY BANK, A TAXPAYER MUST SATISFY THE
FOLLOWING CONDITIONS.
  (A) IT IS A BANK OR TRUST COMPANY ORGANIZED UNDER OR  SUBJECT  TO  THE
PROVISIONS OF ARTICLE THREE OF THE BANKING LAW OR A COMPARABLE PROVISION
OF THE LAWS OF ANOTHER STATE, OR A NATIONAL BANKING ASSOCIATION.
  (B)  THE  AVERAGE  VALUE  DURING THE TAXABLE YEAR OF THE ASSETS OF THE
TAXPAYER, OR THE ASSETS OF THE AFFILIATED GROUP OF  THE  TAXPAYER,  MUST
NOT  EXCEED  EIGHT  BILLION  DOLLARS.  FOR  PURPOSES OF THIS CLAUSE, THE
AFFILIATED GROUP OF THE TAXPAYER INCLUDES ANY CORPORATION THAT MEETS THE
OWNERSHIP REQUIREMENTS TO BE INCLUDED IN A COMBINED REPORT SPECIFIED  IN
PARAGRAPH  (A)  OF  SUBDIVISION TWO OF SECTION TWO HUNDRED TEN-C OF THIS
ARTICLE.
  (2-A) TO BE A SMALL THRIFT INSTITUTION, A TAXPAYER  MUST  SATISFY  THE
FOLLOWING CONDITIONS.
  (A)  IT  IS  A  SAVINGS BANK, A SAVINGS AND LOAN ASSOCIATION, OR OTHER
SAVINGS INSTITUTION CHARTERED AND SUPERVISED AS SUCH  UNDER  FEDERAL  OR
STATE LAW.
  (B)  THE  AVERAGE  VALUE  DURING THE TAXABLE YEAR OF THE ASSETS OF THE
TAXPAYER, OR THE ASSETS OF THE AFFILIATED GROUP OF  THE  TAXPAYER,  MUST
NOT  EXCEED  EIGHT  BILLION  DOLLARS.  FOR  PURPOSES OF THIS CLAUSE, THE
AFFILIATED GROUP OF THE TAXPAYER INCLUDES ANY CORPORATION THAT MEETS THE
OWNERSHIP REQUIREMENTS TO BE INCLUDED IN A COMBINED REPORT SPECIFIED  IN
PARAGRAPH  (A)  OF  SUBDIVISION TWO OF SECTION TWO HUNDRED TEN-C OF THIS
ARTICLE.
  (3)(A) THE SUBTRACTION MODIFICATION SHALL BE COMPUTED AS FOLLOWS:
  (I) MULTIPLY THE TAXPAYER'S NET INTEREST INCOME FROM LOANS DURING  THE
TAXABLE YEAR BY A FRACTION, THE NUMERATOR OF WHICH IS THE GROSS INTEREST
INCOME DURING THE TAXABLE YEAR FROM QUALIFYING LOANS AND THE DENOMINATOR
OF  WHICH  IS THE GROSS INTEREST INCOME DURING THE TAXABLE YEAR FROM ALL
LOANS.
  (II) MULTIPLY THE AMOUNT DETERMINED IN CLAUSE (I)  BY  FIFTY  PERCENT.
THIS  PRODUCT  IS  THE  AMOUNT OF THE DEDUCTION ALLOWED UNDER THIS PARA-
GRAPH.
  (B)(I) NET INTEREST INCOME FROM LOANS SHALL MEAN GROSS INTEREST INCOME
FROM LOANS LESS  GROSS  INTEREST  EXPENSE  FROM  LOANS.  GROSS  INTEREST
EXPENSE  FROM  LOANS IS DETERMINED BY MULTIPLYING GROSS INTEREST EXPENSE
BY A FRACTION, THE NUMERATOR OF WHICH IS  THE  AVERAGE  TOTAL  VALUE  OF
LOANS OWNED BY THE THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXA-
BLE YEAR AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF THE
THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXABLE YEAR.
  (II)  MEASUREMENT  OF  ASSETS  FOR  PURPOSES OF THIS CLAUSE. (I) TOTAL
ASSETS ARE THOSE ASSETS THAT ARE PROPERLY REFLECTED ON A BALANCE  SHEET,
COMPUTED  IN  THE SAME MANNER AS IS REQUIRED BY THE BANKING REGULATOR OF
THE TAXPAYERS INCLUDED IN THE COMBINED RETURN.

S. 6359--C                         35

  (II) ASSETS WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES  OF  WHICH
ARE  PROPERLY  REFLECTED  (OR  WOULD HAVE BEEN PROPERLY REFLECTED IF NOT
FULLY DEPRECIATED OR EXPENSED, OR DEPRECIATED OR EXPENSED TO  A  NOMINAL
AMOUNT)  IN  THE COMPUTATION OF THE TAXPAYER'S ENTIRE NET INCOME FOR THE
TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTANGIBLE
ASSETS IDENTIFIED AS "GOODWILL".
  (III)  TANGIBLE  REAL  AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND,
MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST. LEASED ASSETS WILL  BE
VALUED AT THE ANNUAL LEASE PAYMENT MULTIPLIED BY EIGHT. INTANGIBLE PROP-
ERTY,  SUCH  AS  LOANS  AND  INVESTMENTS,  SHALL BE VALUED AT BOOK VALUE
EXCLUSIVE OF ANY RESERVES.
  (IV) AVERAGE ASSETS ARE COMPUTED USING  THE  ASSETS  MEASURED  ON  THE
FIRST  DAY  OF  THE TAXABLE YEAR, AND ON THE LAST DAY OF EACH SUBSEQUENT
QUARTER OF THE TAXABLE YEAR OR MONTH OR DAY DURING THE TAXABLE YEAR.
  (C) A QUALIFYING LOAN IS A LOAN THAT MEETS THE CONDITIONS SPECIFIED IN
SUBCLAUSE (I) OF THIS CLAUSE AND SUBCLAUSE (II) OF THIS CLAUSE.
  (I) THE LOAN IS ORIGINATED BY THE QUALIFIED COMMUNITY  BANK  OR  SMALL
THRIFT INSTITUTION OR PURCHASED BY THE QUALIFIED COMMUNITY BANK OR SMALL
THRIFT  INSTITUTION IMMEDIATELY AFTER ITS ORIGINATION IN CONNECTION WITH
A COMMITMENT TO PURCHASE MADE BY THE BANK OR THRIFT INSTITUTION PRIOR TO
THE LOAN'S ORIGINATION.
  (II) THE LOAN IS A SMALL BUSINESS LOAN OR A RESIDENTIAL MORTGAGE LOAN,
THE PRINCIPAL AMOUNT OF WHICH LOAN DOES NOT EXCEED THE MAXIMUM PRINCIPAL
AMOUNT ESTABLISHED BY THE UNITED STATES  SMALL  BUSINESS  ADMINISTRATION
FOR  THE  7(C)  GUARANTY LOAN PROGRAM AT THE TIME THE LOAN IS ORIGINATED
BUT NOT LESS THAN FIVE  MILLION  DOLLARS  AND  EITHER  THE  BORROWER  IS
LOCATED  IN  THIS STATE AS DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF
THIS ARTICLE AND THE LOAN IS NOT SECURED BY REAL PROPERTY, OR  THE  LOAN
IS SECURED BY REAL PROPERTY LOCATED IN NEW YORK.
  (III)  A  LOAN  THAT  HAS BEEN DETERMINED TO BE A QUALIFYING LOAN IN A
PRIOR TAXABLE YEAR REMAINS A QUALIFYING LOAN IN TAXABLE YEARS DURING AND
AFTER WHICH SUCH LOAN IS ACQUIRED BY ANOTHER CORPORATION IN THE  TAXPAY-
ER'S COMBINED GROUP.
  (T)  NOTWITHSTANDING  ANY  OTHER  TREATMENT PROVIDED IN THIS ARTICLE A
SMALL THRIFT INSTITUTION OR A QUALIFIED COMMUNITY BANK THAT MAINTAINS  A
CAPTIVE  REIT  ON  THE  EFFECTIVE  DATE  OF THIS PARAGRAPH MAY CHOOSE TO
UTILIZE  THE  REIT  SUBTRACTION  AS  DESCRIBED  HEREIN  OR  EITHER   THE
SUBTRACTION FOR QUALIFIED RESIDENTIAL LOAN PORTFOLIOS OR THE SUBTRACTION
FOR THE NET INTEREST INCOME FROM SMALL BUSINESS AND RESIDENTIAL MORTGAGE
LOANS.  THE REIT SUBTRACTION WILL BE EQUAL TO SIXTY PERCENT OF THE DIVI-
DENDS PAID DEDUCTION ALLOWED TO THE CAPTIVE REIT FOR THE  TAX  YEAR  FOR
FEDERAL  INCOME  TAX  PURPOSES.  NOTWITHSTANDING  ANY  TREATMENT  TO THE
CONTRARY UNDER THIS ARTICLE, THE CAPTIVE REIT WILL BE ALLOWED  THE  SAME
DEDUCTION FOR DIVIDENDS PAID AS ALLOWED FOR FEDERAL INCOME TAX PURPOSES.
THE  TAX  BEFORE  CREDITS  FOR A SMALL THRIFT INSTITUTION OR A QUALIFIED
COMMUNITY BANK THAT UTILIZES THIS REIT SUBTRACTION MAY NOT BE LESS  THAN
THE  TAX  BEFORE  CREDITS FOR ITS TAX YEAR BEGINNING ON OR AFTER JANUARY
FIRST, TWO THOUSAND THIRTEEN.
  10. The term "calendar year" means a period of twelve calendar  months
(or  any  shorter  period  beginning  on  the  date the taxpayer becomes
subject to the tax imposed by this article) ending on  the  thirty-first
day  of  December, provided the taxpayer keeps its books on the basis of
such period or on the basis of any period ending on any day  other  than
the last day of a calendar month, or provided the taxpayer does not keep
books,  and  includes,  in  case  the taxpayer changes the period on the
basis of which it keeps its books from a fiscal year to a calendar year,

S. 6359--C                         36

the period from the close of its last old fiscal year up to and  includ-
ing  the following December thirty-first. The term "fiscal year" means a
period of twelve calendar months (or any shorter period beginning on the
date  the  taxpayer  becomes subject to the tax imposed by this article)
ending on the last day of any month other than  December,  provided  the
taxpayer  keeps  its books on the basis of such period, and includes, in
case the taxpayer changes the period on the basis of which it  keeps  it
books  from  a calendar year to a fiscal year or from one fiscal year to
another fiscal year, the period from the close of its last old  calendar
or  fiscal year up to the date designated as the close of its new fiscal
year.
  11. The term "tangible personal  property"  means  corporeal  personal
property,  such  as  machinery,  tools,  implements,  goods,  wares  and
merchandise, and does not mean  money,  deposits  in  banks,  shares  of
stock, bonds, notes, credits or evidences of an interest in property and
evidences of debt.
  12.  The term elected or appointed officer shall include the chairman,
president, vice-president, secretary,  assistant  secretary,  treasurer,
assistant  treasurer, comptroller, and also any other officer, irrespec-
tive of his title, who is charged with and performs any of  the  regular
functions  of  any  such  officer, unless the total compensation of such
officer is derived exclusively from the receipt of commissions. A direc-
tor shall be considered an elected  or  appointed  officer  only  if  he
performs duties ordinarily performed by an officer.
  [19.  The  term "fulfillment services" shall mean any of the following
services performed by an entity on its premises on behalf of a  purchas-
er:
  (a)  the  acceptance  of  orders electronically or by mail, telephone,
telefax or internet;
  (b) responses to consumer correspondence or  inquiries  electronically
or by mail, telephone, telefax or internet;
  (c) billing and collection activities; or
  (d)  the  shipment of orders from an inventory of products offered for
sale by the purchaser.]
  S 5. Subdivisions 1, 2, 2-a, 4, 5, 6, 7 and 8 of section  209  of  the
tax  law,  subdivisions 1 and 6 as amended by chapter 817 of the laws of
1987, subdivision 2 as amended by chapter 75 of the laws of 1998, subdi-
vision 2-a as added by chapter 340 of the laws of 1998, subdivision 4 as
amended by section 27 of part S of this act, subdivisions  5  and  7  as
amended by section 2 of part FF-1 of chapter 57 of the laws of 2008, and
subdivision  8 as added by section 1 of part O of chapter 61 of the laws
of 2006, are amended to read as follows:
  1. (A) For the privilege of exercising its corporate franchise, or  of
doing business, or of employing capital, or of owning or leasing proper-
ty in this state in a corporate or organized capacity, or of maintaining
an  office  in this state, OR OF DERIVING RECEIPTS FROM ACTIVITY IN THIS
STATE, for all or any part of each of  its  fiscal  or  calendar  years,
every  domestic or foreign corporation, except corporations specified in
subdivision four of this section, shall annually pay  a  franchise  tax,
upon  the  basis  of its [entire net] BUSINESS income base, or upon such
other basis as may be  applicable  as  hereinafter  provided,  for  such
fiscal  or  calendar  year  or  part thereof, on a report which shall be
filed, except as hereinafter provided, on or before the fifteenth day of
March next succeeding the close of each such year, or, in the case of  a
corporation  which reports on the basis of a fiscal year, within two and

S. 6359--C                         37

one-half months after the close of such fiscal year, and shall  be  paid
as hereinafter provided.
  (B)  A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE IF
IT HAS RECEIPTS WITHIN THIS STATE OF ONE MILLION DOLLARS OR MORE IN  THE
TAXABLE  YEAR.  FOR  PURPOSES OF THIS SECTION, THE TERM "RECEIPTS" MEANS
THE RECEIPTS THAT ARE SUBJECT TO THE APPORTIONMENT RULES  SET  FORTH  IN
SECTION TWO HUNDRED TEN-A OF THIS ARTICLE, AND THE TERM "RECEIPTS WITHIN
THIS  STATE"  MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPOR-
TIONMENT FACTOR DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTI-
CLE. FOR PURPOSES OF THIS PARAGRAPH,  RECEIPTS  FROM  PROCESSING  CREDIT
CARD  TRANSACTIONS FOR MERCHANTS INCLUDE MERCHANT DISCOUNT FEES RECEIVED
BY THE CORPORATION.
  (C) A CORPORATION IS DOING BUSINESS IN THIS STATE IF (I) IT HAS ISSUED
CREDIT CARDS TO ONE THOUSAND  OR  MORE  CUSTOMERS  WHO  HAVE  A  MAILING
ADDRESS  WITHIN  THIS STATE AS OF THE LAST DAY OF ITS TAXABLE YEAR, (II)
IT HAS MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE  TOTAL  NUMBER
OF  LOCATIONS  COVERED  BY  THOSE  CONTRACTS EQUALS ONE THOUSAND OR MORE
LOCATIONS IN THIS STATE TO WHOM THE CORPORATION  REMITTED  PAYMENTS  FOR
CREDIT  CARD  TRANSACTIONS  DURING THE TAXABLE YEAR, OR (III) THE SUM OF
THE NUMBER OF CUSTOMERS DESCRIBED IN SUBPARAGRAPH (I) OF THIS  PARAGRAPH
PLUS  THE  NUMBER  OF  LOCATIONS  COVERED  BY ITS CONTRACTS DESCRIBED IN
SUBPARAGRAPH (II) OF THIS PARAGRAPH EQUALS ONE THOUSAND OR MORE. AS USED
IN THIS SUBDIVISION, THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAV-
EL AND ENTERTAINMENT CARDS.
  (D)(I) A CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT  AT  LEAST
TEN  THOUSAND  DOLLARS  OF  RECEIPTS WITHIN THIS STATE IN A TAXABLE YEAR
THAT IS PART OF A COMBINED REPORTING GROUP  IS  DERIVING  RECEIPTS  FROM
ACTIVITY  IN THIS STATE IF THE RECEIPTS WITHIN THIS STATE OF THE MEMBERS
OF THE COMBINED REPORTING GROUP THAT HAVE AT LEAST TEN THOUSAND  DOLLARS
OF  RECEIPTS  WITHIN  THIS STATE IN THE AGGREGATE MEET THE THRESHOLD SET
FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (II) A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET  FORTH
IN  PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS, OR
LOCATIONS, OR CUSTOMERS AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C)  OF
THIS  SUBDIVISION,  AND  IS  PART  OF A COMBINED REPORTING GROUP THAT IS
DOING BUSINESS IN THIS STATE IF THE NUMBER OF CUSTOMERS,  LOCATIONS,  OR
CUSTOMERS  AND  LOCATIONS,  WITHIN  THIS  STATE  OF  THE  MEMBERS OF THE
COMBINED REPORTING GROUP THAT HAVE AT LEAST TEN CUSTOMERS, LOCATIONS, OR
CUSTOMERS AND LOCATIONS, WITHIN THIS STATE IN THE AGGREGATE MEETS ANY OF
THE THRESHOLDS SET FORTH IN PARAGRAPH (C) OF THIS SUBDIVISION.
  (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
TIVE PERCENTAGE CHANGE IN THE CONSUMER  PRICE  INDEX.  THE  COMMISSIONER
SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
CONSUMER  PRICE  INDEX  HAS CHANGED BY TEN PERCENT OR MORE SINCE JANUARY
FIRST, TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS  WERE
LAST  ADJUSTED  UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL BE ADJUSTED
TO REFLECT THAT CUMULATIVE  PERCENTAGE  CHANGE  IN  THE  CONSUMER  PRICE
INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
SAND  DOLLARS.  AS  USED IN THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE  FORM
THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
ANY  ADJUSTMENT  SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER THE ADJUST-
MENT IS MADE.
  (F) IF A PARTNERSHIP IS DOING BUSINESS, EMPLOYING CAPITAL,  OWNING  OR
LEASING  PROPERTY  IN THIS STATE, MAINTAINING AN OFFICE IN THE STATE, OR
DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, ANY CORPORATION THAT IS A

S. 6359--C                         38

PARTNER IN SUCH PARTNERSHIP SHALL BE SUBJECT TO TAX UNDER  THIS  ARTICLE
AS DESCRIBED IN THE REGULATIONS OF THE COMMISSIONER.
  2.  A  foreign  corporation  shall not be deemed to be doing business,
employing capital, owning or leasing property, or maintaining an  office
in this state, OR DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, for the
purposes  of  this  article,  by  reason  of (a) the maintenance of cash
balances with banks or trust companies in this state, or (b) the  owner-
ship  of  shares of stock or securities kept in this state, if kept in a
safe deposit box,  safe,  vault  or  other  receptacle  rented  for  the
purpose,  or if pledged as collateral security, or if deposited with one
or more banks or trust companies, or brokers who are members of a recog-
nized security exchange, in safekeeping or custody accounts, or (c)  the
taking  of any action by any such bank or trust company or broker, which
is incidental to the rendering of safekeeping or  custodian  service  to
such  corporation,  or (d) the maintenance of an office in this state by
one or more officers or directors of the corporation who are not employ-
ees of the corporation if the corporation otherwise is not  doing  busi-
ness in this state, and does not employ capital or own or lease property
in  this  state, or (e) the keeping of books or records of a corporation
in this state if such books or records are not kept by employees of such
corporation and such corporation does not otherwise do business,  employ
capital,  own  or lease property or maintain an office in this state, or
(f) [the use of fulfillment services of a person other  than  an  affil-
iated  person  and  the  ownership of property stored on the premises of
such person in conjunction with such services, or (g)]  any  combination
of  the foregoing activities. [For purposes of this subdivision, persons
are affiliated persons with respect to each  other  where  one  of  such
persons  has  an  ownership  interest of more than five percent, whether
direct or indirect, in the other, or where an ownership interest of more
than five percent, whether direct or indirect, is held in each  of  such
persons  by  another  person  or  by  a group of other persons which are
affiliated persons with respect to each other. The term "person" in  the
preceding  sentence  and in paragraph (f) of this subdivision shall have
the meaning ascribed  thereto  by  subdivision  (a)  of  section  eleven
hundred one of this chapter.]
  2-a.  An  alien  corporation shall not be deemed to be doing business,
employing capital, owning or leasing property, or maintaining an  office
in  this  state,  for the purposes of this article, if its activities in
this state are limited solely to (a) investing or trading in stocks  and
securities  for  its  own  account  within the meaning of clause (ii) of
subparagraph (A) of paragraph (2) of subsection  (b)  of  section  eight
hundred  sixty-four  of  the  internal  revenue code or (b) investing or
trading in commodities for its own account within the meaning of  clause
(ii)  of  subparagraph (B) of paragraph (2) of subsection (b) of section
eight hundred sixty-four of the internal revenue code or (c) any  combi-
nation  of activities described in paragraphs (a) and (b) of this subdi-
vision.  AN ALIEN CORPORATION THAT HAS NO EFFECTIVELY  CONNECTED  INCOME
FOR THE TAXABLE YEAR PURSUANT TO CLAUSE (IV) OF THE OPENING PARAGRAPH OF
SUBDIVISION  NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE SHALL NOT
BE SUBJECT TO TAX UNDER THIS ARTICLE FOR THAT TAXABLE YEAR. For purposes
of this subdivision, an alien corporation  is  a  corporation  organized
under the laws of a country, or any political subdivision thereof, other
than the United States.
  4.  Corporations liable to tax under sections one hundred eighty-three
to one hundred  eighty-four-a,  inclusive,  corporations  taxable  under
[articles  thirty-two  and]  ARTICLE  thirty-three  of this chapter, any

S. 6359--C                         39

trust company organized under a law of this state all of  the  stock  of
which  is  owned by not less than twenty savings banks organized under a
law of this state, [bank holding companies filing a combined  return  in
accordance  with subsection (f) of section fourteen hundred sixty-two of
this chapter,] a captive REIT or a captive RIC filing a combined  return
under  [either  subsection (f) of section fourteen hundred sixty-two or]
subdivision (f) of section fifteen hundred fifteen of this chapter,  and
housing  companies organized and operating pursuant to the provisions of
article two or article five of the private housing finance law and hous-
ing development fund companies organized pursuant to the  provisions  of
article  eleven  of the private housing finance law shall not be subject
to tax under this article.
  5. For any taxable year of a real estate investment trust  as  defined
in section eight hundred fifty-six of the internal revenue code in which
such  trust  is  subject  to federal income taxation under section eight
hundred fifty-seven of such code, such trust shall be subject to  a  tax
computed under either paragraph (a) [, (c)] or (d) of subdivision one of
section  two  hundred  ten  of  this  chapter,  whichever  is [greatest]
GREATER, and shall not be subject to any tax under  article  [thirty-two
or  article]  thirty-three  of  this  chapter  except for a captive REIT
required to file a combined return under  [subdivision  (f)  of  section
fourteen  hundred  sixty-two  or]  subdivision  (f)  of  section fifteen
hundred fifteen of this chapter. In the  case  of  such  a  real  estate
investment  trust, including a captive REIT as defined in section two of
this chapter, the term "entire net income" means "real estate investment
trust taxable income" as defined in paragraph two of subdivision (b)  of
section  eight hundred fifty-seven (as modified by section eight hundred
fifty-eight) of the internal revenue code plus the amount taxable  under
paragraph  three of subdivision (b) of section eight hundred fifty-seven
of such code, subject to the [modification]  MODIFICATIONS  required  by
subdivision  nine  of  section two hundred eight of this article [(other
than the modification required by  subparagraph  two  of  paragraph  (a)
thereof)  including the modifications required by paragraphs (d) and (e)
of subdivision three of section two hundred ten of this article].
  6. For any taxable year of a DISC, not exempt from tax under paragraph
(i) of subdivision nine of section two hundred eight  of  this  article,
the  taxes  imposed by subdivision one of this section shall be computed
only under either paragraph (b) or (d) of subdivision one of section two
hundred ten of this chapter, whichever is greater[, and paragraph (e) of
such subdivision].
  7. For any taxable year, beginning on or after January first, nineteen
hundred eighty of a regulated investment company, as defined in  section
eight  hundred  fifty-one  of  the  internal revenue code, in which such
company is subject  to  federal  income  taxation  under  section  eight
hundred  fifty-two  of such code, such company shall be subject to a tax
computed under either paragraph (a)[, (c)] or (d) of subdivision one  of
section  two  hundred  ten  of  this  chapter,  whichever  is [greatest]
GREATER, and shall not be subject to any tax under  article  [thirty-two
or  article]  thirty-three  of  this  chapter  except  for a captive RIC
required to file a combined return under  [subdivision  (f)  of  section
fourteen  hundred  sixty-two  or]  subdivision  (f)  of  section fifteen
hundred fifteen of this chapter. In the case of such a regulated invest-
ment company, including a captive RIC as defined in section two of  this
chapter,  the term "entire net income" means "investment company taxable
income" as defined in paragraph two of subdivision (b) of section  eight
hundred  fifty-two,  as modified by section eight hundred fifty-five, of

S. 6359--C                         40

the internal revenue code plus the amount taxable under paragraph  three
of  subdivision  (b)  of  section  eight  hundred fifty-two of such code
subject to the [modification] MODIFICATIONS required by subdivision nine
of  section two hundred eight of this chapter[, other than the modifica-
tion required by subparagraph two of paragraph (a) and by paragraph  (f)
thereof,  including  the modification required by paragraphs (d) and (e)
of subdivision three of section two hundred ten of this chapter].
  8. For any taxable year beginning on or after January first, two thou-
sand six, a corporation that is  no  longer  doing  business,  employing
capital, or owning or leasing property, OR DERIVING RECEIPTS FROM ACTIV-
ITY  in this state in a corporate or organized capacity that has filed a
final tax return with the department for the last tax year it was  doing
business  and has no outstanding tax liability for such final tax return
or any tax return for prior tax years shall be  exempt  from  all  taxes
imposed  by  paragraph (d) of subdivision one of section two hundred ten
of this article for tax years following the last year  such  corporation
was doing business.
  S 6. Section 209-A of the tax law is REPEALED.
  S 7. The section heading and subdivision 1 of section 209-B of the tax
law,  the  section  heading as amended by chapter 11 of the laws of 1983
and subdivision 1 as amended by section 4 of part A of chapter 59 of the
laws of 2013, are amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge.    1. (A) For the privilege of exercising its corporate fran-
chise, or of doing business, or of employing capital, or  of  owning  or
leasing property in a corporate or organized capacity, or of maintaining
an  office,  OR  OF  DERIVING RECEIPTS FROM ACTIVITY in the metropolitan
commuter transportation district, for all or any  part  of  its  taxable
year,  there  is  hereby  imposed on every corporation, other than a New
York S corporation, subject to tax under section  two  hundred  nine  of
this article, or any receiver, referee, trustee, assignee or other fidu-
ciary,  or any officer or agent appointed by any court, who conducts the
business of any such corporation, [for the taxable years  commencing  on
or  after  January  first, nineteen hundred eighty-two but ending before
December thirty-first, two thousand eighteen,] a tax surcharge, in addi-
tion to the tax imposed under section two hundred nine of this article[,
to be computed at the rate of eighteen]. SUCH  SURCHARGE  SHALL  BE  THE
PRODUCT  OF  SEVENTEEN percent of the tax imposed under such section two
hundred nine for such taxable years or any part of  such  taxable  years
[ending  before  December  thirty-first,  nineteen  hundred eighty-three
after the deduction of any credits otherwise allowable under this  arti-
cle,  and at the rate of seventeen percent of the tax imposed under such
section for such taxable years or any part of such taxable years  ending
on  or after December thirty-first, nineteen hundred eighty-three after]
BEFORE the deduction of any credits otherwise allowable under this arti-
cle; provided, however, that such [rates] RATE of tax surcharge shall be
applied only to that portion  of  the  tax  imposed  under  section  two
hundred nine of this article [after] BEFORE the deduction of any credits
otherwise  allowable  under  this  article  which is attributable to the
taxpayer's business activity carried on within the metropolitan commuter
transportation district; and provided, further, [that the tax  surcharge
imposed  by this section shall not be imposed upon any taxpayer for more
than four hundred thirty-two months. Provided however, that for  taxable
years  commencing on or after July first, nineteen hundred ninety-eight,
such surcharge shall be calculated as if the tax imposed  under  section
two hundred ten of this article were imposed under the law in effect for

S. 6359--C                         41

taxable  years commencing on or after July first, nineteen hundred nine-
ty-seven and before July first, nineteen hundred ninety-eight.  Provided
however,  that  for  taxable years commencing on or after January first,
two thousand seven, such surcharge shall be calculated using the highest
of  the tax bases imposed pursuant to paragraphs (a), (b), (c) or (d) of
subdivision one of section two hundred  ten  of  this  article  and  the
amount  imposed  under  paragraph (e) of subdivision one of such section
two hundred ten, for the taxable year; and, provided  further  that,  if
such  highest amount is the tax base imposed under paragraph (a), (b) or
(c) of such subdivision, then the surcharge shall be computed as if  the
tax  rates  and  limitations under such paragraph were the tax rates and
limitations under such paragraph in effect for taxable years  commencing
on  or  after  July first, nineteen hundred ninety-seven and before July
first, nineteen  hundred  ninety-eight]  THE  SURCHARGE  COMPUTED  ON  A
COMBINED  REPORT  SHALL  INCLUDE A SURCHARGE ON THE FIXED DOLLAR MINIMUM
TAX FOR EACH MEMBER OF THE COMBINED GROUP SUBJECT TO THE SURCHARGE UNDER
THIS SUBDIVISION. HOWEVER, IF  THE  TOTAL  LIABILITY  OF  THE  SURCHARGE
IMPOSED  BY  THIS  PARAGRAPH  FOR  THE TAXABLE YEAR BEGINNING ON JANUARY
FIRST, TWO THOUSAND FIFTEEN SHOULD BE MORE  THAN  THREE  AND  SIX-TENTHS
PERCENT  HIGHER  THAN  THE  SUM  OF THE TOTAL LIABILITY OF THE SURCHARGE
IMPOSED BY THIS PARAGRAPH AND  THE  TOTAL  LIABILITY  OF  THE  SURCHARGE
IMPOSED BY SECTION FOURTEEN HUNDRED FIFTY-FIVE-B OF THIS CHAPTER FOR THE
TAXABLE YEAR BEGINNING ON JANUARY FIRST, TWO THOUSAND FOURTEEN, THEN FOR
TAXABLE  YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND SIXTEEN
THE SURCHARGE PERCENTAGE SHALL BE REDUCED BY A PERCENTAGE EQUAL  TO  THE
DIFFERENCE  BETWEEN THE RATE OF GROWTH IN THE TOTAL LIABILITY FROM TAXA-
BLE YEAR TWO THOUSAND FOURTEEN TO TAXABLE YEAR TWO THOUSAND FIFTEEN  AND
THREE AND SIX-TENTHS PERCENT.
  (B)  A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOL-
ITAN COMMUTER TRANSPORTATION DISTRICT IF  IT  HAS  RECEIPTS  WITHIN  THE
METROPOLITAN  COMMUTER TRANSPORTATION DISTRICT OF ONE MILLION DOLLARS OR
MORE IN  A  TAXABLE  YEAR.  FOR  PURPOSES  OF  THIS  SECTION,  THE  TERM
"RECEIPTS"  MEANS  THE  RECEIPTS  THAT  ARE SUBJECT TO THE APPORTIONMENT
RULES SET FORTH IN SECTION TWO HUNDRED TEN-A OF THIS  ARTICLE,  AND  THE
TERM "RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT"
MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FACTOR
DETERMINED  UNDER  SUBDIVISION TWO OF THIS SECTION. FOR PURPOSES OF THIS
PARAGRAPH,  RECEIPTS  FROM  PROCESSING  CREDIT  CARD  TRANSACTIONS   FOR
MERCHANTS INCLUDE MERCHANT DISCOUNT FEES RECEIVED BY THE CORPORATION.
  (C)  A  CORPORATION  IS  DOING  BUSINESS  IN THE METROPOLITAN COMMUTER
TRANSPORTATION DISTRICT IF (I) IT HAS ISSUED CREDIT CARDS TO  ONE  THOU-
SAND  OR  MORE CUSTOMERS WHO HAVE A MAILING ADDRESS WITHIN THE METROPOL-
ITAN COMMUTER TRANSPORTATION DISTRICT AS OF THE LAST DAY OF ITS  TAXABLE
YEAR,  (II)  IT  HAS  MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE
TOTAL NUMBER OF LOCATIONS COVERED BY THOSE CONTRACTS EQUALS ONE THOUSAND
OR MORE LOCATIONS IN THE METROPOLITAN COMMUTER  TRANSPORTATION  DISTRICT
TO  WHOM  THE CORPORATION REMITTED PAYMENTS FOR CREDIT CARD TRANSACTIONS
DURING THE TAXABLE YEAR, OR (III) THE SUM OF  THE  NUMBER  OF  CUSTOMERS
DESCRIBED  IN  SUBPARAGRAPH  (I)  OF  THIS  PARAGRAPH PLUS THE NUMBER OF
LOCATIONS COVERED BY ITS CONTRACTS DESCRIBED  IN  SUBPARAGRAPH  (II)  OF
THIS  PARAGRAPH  EQUALS ONE THOUSAND OR MORE. AS USED IN THIS PARAGRAPH,
THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAVEL  AND  ENTERTAINMENT
CARDS.
  (D)(I)  A  CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT AT LEAST
TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANS-
PORTATION DISTRICT IN A TAXABLE YEAR THAT IS PART OF A COMBINED  REPORT-

S. 6359--C                         42

ING  GROUP IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOLITAN COMMU-
TER TRANSPORTATION DISTRICT IF  THE  RECEIPTS  WITHIN  THE  METROPOLITAN
COMMUTER  TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY BUSINESS
GROUP  THAT  HAVE  AT  LEAST TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE
METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN THE AGGREGATE MEET  THE
THRESHOLD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (II)  A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET FORTH
IN PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS,  OR
LOCATIONS,  OR  CUSTOMERS  AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C),
AND IS PART OF A COMBINED REPORTING GROUP THAT IS DOING BUSINESS IN  THE
METROPOLITAN  COMMUTER  TRANSPORTATION DISTRICT IF THE NUMBER OF CUSTOM-
ERS, LOCATIONS, OR CUSTOMERS  AND  LOCATIONS,  WITHIN  THE  METROPOLITAN
COMMUTER  TRANSPORTATION DISTRICT OF THE MEMBERS OF THE UNITARY BUSINESS
GROUP THAT HAVE AT LEAST TEN  CUSTOMERS,  LOCATIONS,  OR  CUSTOMERS  AND
LOCATIONS,  WITHIN  THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN
THE AGGREGATE MEETS ANY OF THE THRESHOLDS SET FORTH IN PARAGRAPH (C)  OF
THIS SUBDIVISION.
  (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
TIVE  PERCENTAGE  CHANGE  IN  THE CONSUMER PRICE INDEX. THE COMMISSIONER
SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
CONSUMER PRICE INDEX HAS CHANGED BY TEN PERCENT OR  MORE  SINCE  JANUARY
FIRST,  TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS WERE
LAST ADJUSTED UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL  BE  ADJUSTED
TO  REFLECT  THAT  CUMULATIVE  PERCENTAGE  CHANGE  IN THE CONSUMER PRICE
INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
SAND DOLLARS. AS USED IN THIS PARAGRAPH, "CONSUMER  PRICE  INDEX"  MEANS
THE  CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE FROM
THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
ANY ADJUSTMENT SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER  THE  ADJUST-
MENT IS MADE.
  S  8.  Paragraph  (a)  and  the  opening paragraph of paragraph (b) of
subdivision 2 of section 209-B of the tax law, paragraph (a) as  amended
by  chapter  760 of the laws of 1992, and the opening paragraph of para-
graph (b) as amended by chapter 11 of the laws of 1983, are  amended  to
read as follows:
  (a) ascertaining the percentage which the average value of the taxpay-
er's real and tangible personal property, whether owned or rented to it,
within  the  metropolitan  commuter  transportation  district during the
period covered by its report bears to  the  average  value  of  all  the
taxpayer's  real and tangible personal property, whether owned or rented
to it, within the state during  such  period;  provided  that  the  term
"value  of  the  taxpayer's  real  and tangible personal property" shall
[have the same meaning as is ascribed to that term by  subparagraph  one
of  paragraph  (a) of subdivision three of section two hundred ten] MEAN
THE FAIR MARKET VALUE OF SUCH PROPERTIES FOR FEDERAL INCOME TAX PURPOSES
(EXCEPT THAT IN THE CASE OF RENTED PROPERTY SUCH VALUE  SHALL  MEAN  THE
PRODUCT  OF (I) EIGHT AND (II) THE GROSS RENTS PAYABLE FOR THE RENTAL OF
SUCH PROPERTY DURING THE TAXABLE YEAR);
  ascertaining the percentage which the receipts  of  the  taxpayer,  AS
DETERMINED  IN  SECTION  210-A  OF  THIS ARTICLE computed on the cash or
accrual basis according to the method of accounting used in the computa-
tion of its entire net income, arising during such period from:
  S 9. Intentionally omitted.
  S 10. Subdivisions 2-a and 2-b of section 209-B of  the  tax  law  are
REPEALED.

S. 6359--C                         43

  S  11.  Subdivisions 3 and 5 of section 209-B of the tax law, subdivi-
sion 3 as amended by chapter 11 of the laws of 1983 and subdivision 5 as
amended by chapter 166 of the laws of  1991,  are  amended  to  read  as
follows:
  3.  A  corporation shall not be deemed to be doing business, employing
capital, owning or leasing property, or maintaining an office, OR DERIV-
ING RECEIPTS FROM ACTIVITY in the metropolitan  commuter  transportation
district, for the purposes of this section, by reason of (a) the mainte-
nance of cash balances with banks or trust companies in the metropolitan
commuter  transportation  district,  or  (b)  the ownership of shares of
stock or securities kept in  the  metropolitan  commuter  transportation
district, if kept in a safe deposit box, safe, vault or other receptacle
rented  for  the  purpose,  or  if pledged as collateral security, or if
deposited with one or more banks or trust companies, or brokers who  are
members  of  a  recognized  security exchange, in safekeeping or custody
accounts, or (c) the taking of any action by  any  such  bank  or  trust
company  or  broker, which is incidental to the rendering of safekeeping
or custodian service to such corporation, or (d) the maintenance  of  an
office  in  the  metropolitan commuter transportation district by one or
more officers or directors of the corporation who are not  employees  of
the  corporation  if  the corporation otherwise is not doing business in
the metropolitan commuter transportation district, and does  not  employ
capital  or own or lease property in the metropolitan commuter transpor-
tation district, or (e) the keeping of books or records of a corporation
in the metropolitan commuter transportation district if  such  books  or
records  are  not  kept by employees of such corporation and such corpo-
ration does not otherwise do business,  employ  capital,  own  or  lease
property  or maintain an office in the metropolitan commuter transporta-
tion district, or (f) any combination of the foregoing activities.
  5. The provisions concerning  reports  under  [section]  SECTIONS  TWO
HUNDRED  TEN-C  AND  two  hundred  eleven  shall  be  applicable to this
section, except that for purposes of  an  automatic  extension  for  six
months  for  filing  a report covering the tax surcharge imposed by this
section, such automatic extension shall be allowed only  if  a  taxpayer
files with the commissioner an application for extension in such form as
said  commissioner may prescribe by regulation and pays on or before the
date of such filing in addition to any other amounts required under this
article, either ninety percent of the entire tax surcharge  required  to
be  paid  under this section for the applicable period, or not less than
the tax surcharge shown on the taxpayer's return for the preceding taxa-
ble year, if such preceding taxable year was a taxable  year  of  twelve
months;  provided,  however,  that in no event shall such amount be less
than the product of the following three amounts: (1) the  tax  surcharge
rate  in effect for the taxable year pursuant to subdivision one of this
section, (2) the fixed dollar minimum applicable  to  such  taxpayer  as
determined under paragraph (d) of subdivision one of section two hundred
ten  of this chapter for the taxable year, and (3) the percentage deter-
mined under subdivision two of this section for  the  preceding  taxable
year,  unless  the taxpayer was not subject to the tax surcharge imposed
pursuant to this section with respect to such year, in which  case  such
percentage  shall be deemed to be one hundred percent. The tax surcharge
imposed by this section shall be payable to the commissioner in full  at
the  time  the report is required to be filed, and such tax surcharge or
the balance thereof, imposed on any taxpayer which  ceases  to  exercise
its franchise or be subject to the tax surcharge imposed by this section
shall  be payable to the commissioner at the time the report is required

S. 6359--C                         44

to be filed, provided such tax surcharge of a domestic corporation which
continues to possess its franchise shall be subject to adjustment as the
circumstances may require; all other tax surcharges of any such  taxpay-
er,  which  pursuant  to  the foregoing provisions of this section would
otherwise be payable subsequent to the time such report is  required  to
be  filed,  shall  nevertheless  be  payable  at  such  time. All of the
provisions of this article presently applicable are  applicable  to  the
tax surcharge imposed by this section.
  S 12. Subdivision 1 of section 210 of the tax law, as added by chapter
817  of  the laws of 1987, the opening paragraph as amended by section 1
of part D and paragraph (g) as amended by section 2 of part A of chapter
63 of the laws of 2000, paragraph (a) as amended by  section 2 of part N
of chapter 60 of the laws of 2007, subparagraph 2 of  paragraph  (b)  as
amended  by  section  1  of part GG-1 of chapter 57 of the laws of 2008,
subparagraph 3 of paragraph (b) as added by section 2 of part Z of chap-
ter 59 of the laws of  2013,  subparagraph  (ii)  of  paragraph  (c)  as
amended  by  section  2 of part C and subparagraph 5 of paragraph (d) as
added by section 3 of part C of chapter 56 of the laws of 2011, subpara-
graph (vi) of paragraph (a) as amended by section 1 of part C of chapter
56 of the laws of 2011, subparagraph (vii) of paragraph (a) as added  by
section  1  of  part  Z  of chapter 59 of the laws of 2013, subparagraph
(iii) of paragraph (c) as added by section 3 of part Z of chapter 59  of
the  laws  of  2013,  and  subparagraph  6  of paragraph (d) as added by
section 4 of part Z of chapter 59 of the laws of 2013, paragraph (b)  as
amended  by  section  1  of part GG1, subparagraph 3 of paragraph (d) as
amended by section 3 of part AA1, subparagraph 4  of  paragraph  (d)  as
added  by  section  2 of part AA1 and subparagraph 1 of paragraph (g) as
amended by section 4 of part AA1 of chapter 57  of  the  laws  of  2008,
paragraph  (c)  as amended by section 10 of part A and subparagraph 1 of
paragraph (d) as amended by section 12 of part A of chapter  56  of  the
laws  of  1998,  paragraph  (d) as amended by chapter 760 of the laws of
1992, paragraph (e) as amended by section 1 of part P of chapter 407  of
the laws of 1999, and paragraph (f) as amended by section 2 of part E of
chapter 61 of the laws of 2005, is amended to read as follows:
  1.  The  tax imposed by subdivision one of section two hundred nine of
this chapter shall be: (A) in the case of each taxpayer other than a New
York S corporation or a qualified homeowners association,  the  [sum  of
(1) the] highest of the amounts prescribed in paragraphs (a), (b), [(c)]
and  (d) of this subdivision [and (2) the amount prescribed in paragraph
(e) of this subdivision], (B) in the case of  each  New  York  S  corpo-
ration,  the  amount  prescribed in paragraph [(g)] (D) of this subdivi-
sion, and (C) in the case of a  qualified  homeowners  association,  the
[sum  of (1) the] highest of the amounts prescribed in paragraphs (a)[,]
AND (b) [and (c)] of this subdivision [and (2) the amount prescribed  in
paragraph  (e) of this subdivision]. For purposes of this paragraph, the
term "qualified homeowners association" means a homeowners  association,
as  such term is defined in subsection (c) of section five hundred twen-
ty-eight of the internal revenue code without regard to subparagraph (E)
of paragraph one of such subsection (relating to elections to  be  taxed
pursuant  to  such section), which has no homeowners association taxable
income, as such term is defined  in  subsection  (d)  of  such  section.
Provided,  however, that in the case of a small business taxpayer (other
than a New York S corporation) as  defined  in  paragraph  (f)  of  this
subdivision, FOR TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO THOU-
SAND  SIXTEEN,  if the amount prescribed in such paragraph (b) is higher
than the amount prescribed in such paragraph (a) solely by reason of the

S. 6359--C                         45

application of the rate applicable to  small  business  taxpayers,  then
with  respect  to  such  taxpayer  the  tax  referred to in the previous
sentence shall be [the sum of (1) the highest]  HIGHER  of  the  amounts
prescribed in paragraphs (a)[, (c)] and (d) of this subdivision [and (2)
the amount prescribed in paragraph (e) of this subdivision].
  (a)  [Entire  net]  BUSINESS income base. [For taxable years beginning
before July first, nineteen hundred ninety-nine, the  amount  prescribed
by  this  paragraph shall be computed at the rate of nine percent of the
taxpayer's entire net income base. For  taxable  years  beginning  after
June  thirtieth, nineteen hundred ninety-nine and before July first, two
thousand, the amount prescribed by this paragraph shall be  computed  at
the  rate  of  eight  and  one-half percent of the taxpayer's entire net
income base. For taxable years beginning after June thirtieth, two thou-
sand and before July first, two thousand one, the amount  prescribed  by
this  paragraph  shall  be  computed at the rate of eight percent of the
taxpayer's entire net income base. For  taxable  years  beginning  after
June  thirtieth, two thousand one and before January first, two thousand
seven, the amount prescribed by this paragraph shall be computed at  the
rate  of  seven and one-half percent of the taxpayer's entire net income
base.] For taxable years beginning [on or after] BEFORE  January  first,
two  thousand  [seven]  SIXTEEN, the amount prescribed by this paragraph
shall be computed at the rate of seven  and  one-tenth  percent  of  the
taxpayer's  [entire  net] BUSINESS income base. FOR TAXABLE YEARS BEGIN-
NING ON OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND  SIXTEEN,  THE  AMOUNT
PRESCRIBED  BY  THIS  PARAGRAPH SHALL BE SIX AND ONE-HALF PERCENT OF THE
TAXPAYER'S BUSINESS INCOME BASE. The taxpayer's  [entire  net]  BUSINESS
income  base shall mean the portion of the taxpayer's [entire net] BUSI-
NESS income allocated within the state as hereinafter provided[, subject
to any modification required by paragraphs (d) and  (e)  of  subdivision
three of this section]. However, in the case of a small business taxpay-
er,  as  defined  in  paragraph  (f)  of  this  subdivision,  the amount
prescribed by this paragraph shall be computed pursuant to  subparagraph
(iv)  of this paragraph and in the case of a manufacturer, as defined in
subparagraph (vi) of this paragraph, the amount prescribed by this para-
graph shall be computed pursuant to subparagraph (vi) of this paragraph.
  [(i) if the entire net income base is not more than two hundred  thou-
sand  dollars,  (1) for taxable years beginning before July first, nine-
teen hundred ninety-nine, the amount  shall  be  eight  percent  of  the
entire net income base; (2) for taxable years beginning after June thir-
tieth,  nineteen hundred ninety-nine and before July first, two thousand
three, the amount shall be seven and one-half percent of the entire  net
income  base;  and (3) for taxable years beginning after June thirtieth,
two thousand three and before January  first,  two  thousand  five,  the
amount shall be 6.85 percent of the entire net income base;
  (ii)  if  the entire net income base is more than two hundred thousand
dollars but not over two hundred ninety thousand dollars, (1) for  taxa-
ble years beginning before July first, nineteen hundred ninety-nine, the
amount  shall  be  the  sum  of  (a)  sixteen thousand dollars, (b) nine
percent of the excess of the entire net income  base  over  two  hundred
thousand  dollars  and  (c) five percent of the excess of the entire net
income base over two hundred fifty thousand  dollars;  (2)  for  taxable
years  beginning  after June thirtieth, nineteen hundred ninety-nine and
before July first, two thousand, the amount shall  be  the  sum  of  (a)
fifteen  thousand  dollars, (b) eight and one-half percent of the excess
of the entire net income base over two hundred thousand dollars and  (c)
five  percent  of  the  excess  of  the  entire net income base over two

S. 6359--C                         46

hundred fifty thousand dollars; (3) for taxable  years  beginning  after
June  thirtieth,  two  thousand and before July first, two thousand one,
the amount shall be the sum of (a) fifteen thousand dollars,  (b)  eight
percent  of  the  excess  of the entire net income base over two hundred
thousand dollars and (c) two and one-half percent of the excess  of  the
entire  net income base over two hundred fifty thousand dollars; (4) for
taxable years beginning after  June  thirtieth,  two  thousand  one  and
before  July  first,  two  thousand three, the amount shall be seven and
one-half percent of the entire net income  base;  and  (5)  for  taxable
years  beginning  after  June  thirtieth,  two thousand three and before
January first, two thousand five, the amount shall be  the  sum  of  (a)
thirteen  thousand  seven hundred dollars, (b) 7.5 percent of the excess
of the entire net income base over two hundred thousand dollars and  (c)
3.25  percent  of  the  excess  of  the  entire net income base over two
hundred fifty thousand dollars;
  (iii) for taxable years beginning on or after January first, two thou-
sand five and ending before January first, two thousand  seven,  if  the
entire  net  income  base  is  not more than two hundred ninety thousand
dollars the amount shall be six and one-half percent of the  entire  net
income  base;  if  the  entire  net income base is more than two hundred
ninety thousand dollars but  not  over  three  hundred  ninety  thousand
dollars  the  amount  shall  be  the  sum of (1) eighteen thousand eight
hundred fifty dollars, (2) seven and one-half percent of the  excess  of
the  entire net income base over two hundred ninety thousand dollars but
not over three hundred ninety thousand dollars and (3)  seven  and  one-
quarter  percent  of the excess of the entire net income base over three
hundred fifty thousand dollars but not over three hundred  ninety  thou-
sand dollars;]
  (iv)  for  taxable years beginning [on or after] BEFORE January first,
two thousand [seven] SIXTEEN, if the [entire net] BUSINESS  income  base
is not more than two hundred ninety thousand dollars the amount shall be
six  and  one-half  percent of the [entire net] BUSINESS income base; if
the [entire net] BUSINESS income base is more than  two  hundred  ninety
thousand  dollars but not over three hundred ninety thousand dollars the
amount shall be the sum of (1) eighteen  thousand  eight  hundred  fifty
dollars,  (2)  seven  and one-tenth percent of the excess of the [entire
net] BUSINESS income base over two hundred ninety thousand  dollars  but
not  over three hundred ninety thousand dollars and (3) four and thirty-
five hundredths percent of the  excess  of  the  [entire  net]  BUSINESS
income base over three hundred fifty thousand dollars but not over three
hundred ninety thousand dollars;
  (v)  if  the  taxable period to which [subparagraphs (i), (ii), (iii),
and] SUBPARAGRAPH (iv) of this paragraph [apply] APPLIES  is  less  than
twelve months, the amount prescribed by this paragraph shall be computed
as follows:
  (A)  Multiply  the [entire net] BUSINESS income base for such taxpayer
by twelve;
  (B) Divide the result obtained in (A) by the number of months  in  the
taxable year;
  (C) Compute an amount pursuant to [subparagraphs (i) and (ii)] SUBPAR-
AGRAPH (IV) as if the result obtained in (B) were the taxpayer's [entire
net] BUSINESS income base;
  (D) Multiply the result obtained in (C) by the number of months in the
taxpayer's taxable year;
  (E) Divide the result obtained in (D) by twelve.

S. 6359--C                         47

  (vi) for taxable years beginning on or after January thirty-first, two
thousand  seven,  the amount prescribed by this paragraph for a taxpayer
which is a qualified New York manufacturer, shall  be  computed  at  the
rate  of  six  and one-half (6.5) percent of the taxpayer's [entire net]
BUSINESS  income  base. [For taxable years beginning on or after January
first, two thousand  twelve  and  before  January  first,  two  thousand
fifteen, the amount prescribed by this paragraph for a taxpayer which is
an  eligible  qualified  New  York manufacturer shall be computed at the
rate of three and one-quarter (3.25) percent of  the  taxpayer's  entire
net  income  base.]  The term "manufacturer" shall mean a taxpayer which
during the taxable year is principally  engaged  in  the  production  of
goods   by  manufacturing,  processing,  assembling,  refining,  mining,
extracting, farming, agriculture, horticulture,  floriculture,  viticul-
ture  or commercial fishing. However, the generation and distribution of
electricity, the distribution of natural  gas,  and  the  production  of
steam  associated with the generation of electricity shall not be quali-
fying activities for a manufacturer under this  subparagraph.  Moreover,
the  combined group shall be considered a "manufacturer" for purposes of
this subparagraph only if the combined group during the taxable year  is
principally  engaged  in  the activities set forth in this paragraph, or
any combination thereof. A taxpayer or a combined group shall be  "prin-
cipally  engaged"  in  activities described above if, during the taxable
year, more than fifty percent of the gross receipts of the  taxpayer  or
combined group, respectively, are derived from receipts from the sale of
goods produced by such activities. In computing a combined group's gross
receipts,  intercorporate receipts shall be eliminated. A "qualified New
York manufacturer" is a manufacturer which  has  property  in  New  York
which  is  described in [clause (A) of subparagraph (i) of paragraph (b)
of] subdivision [twelve of this section]  ONE  OF  SECTION  TWO  HUNDRED
TEN-B OF THIS ARTICLE and either (I) the adjusted basis of such property
for  federal  income tax purposes at the close of the taxable year is at
least one million dollars or (II) all of its real and personal  property
is located in New York. In addition, a "qualified New York manufacturer"
means  a  taxpayer  which  is defined as a qualified emerging technology
company under paragraph (c) of subdivision  one  of  section  thirty-one
hundred  two-e  of  the  public  authorities  law  regardless of the ten
million dollar limitation expressed in subparagraph one  of  such  para-
graph  (c).  [The  commissioner  shall establish guidelines and criteria
that specify requirements by which a manufacturer may be  classified  as
an  eligible  qualified  New York manufacturer. Criteria may include but
not be limited to factors such as regional  unemployment,  the  economic
impact  that  manufacturing has on the surrounding community, population
decline within the region and median income within the region  in  which
the manufacturer is located. In establishing these guidelines and crite-
ria,  the  commissioner shall endeavor that the total annual cost of the
lower rates shall not exceed twenty-five million  dollars.]  A  TAXPAYER
OR,  IN  THE  CASE OF A COMBINED REPORT, A COMBINED GROUP, THAT DOES NOT
SATISFY THE CRITERIA IN SUBDIVISION THIRTEEN OF THIS SECTION  MAY  BE  A
QUALIFIED  NEW  YORK  MANUFACTURER IF THE TAXPAYER OR THE COMBINED GROUP
EMPLOYS DURING THE TAXABLE YEAR  AT  LEAST  TWO  THOUSAND  FIVE  HUNDRED
EMPLOYEES  IN MANUFACTURING IN NEW YORK AND THE TAXPAYER OR THE COMBINED
GROUP HAS PROPERTY IN THE STATE  USED  IN  MANUFACTURING,  THE  ADJUSTED
BASIS OF WHICH FOR FEDERAL INCOME TAX PURPOSES AT THE CLOSE OF THE TAXA-
BLE YEAR IS AT LEAST ONE HUNDRED MILLION DOLLARS.
  (vii)  For  a  qualified New York manufacturer, as defined in subpara-
graph (vi) of this paragraph, the rate at which the tax is computed  [in

S. 6359--C                         48

effect  for taxable years beginning on or after January first, two thou-
sand thirteen and before January first, two thousand fourteen for quali-
fied New York manufacturers shall be  reduced  by  nine  and  two-tenths
percent  for  taxable  years  commencing  on or after January first, two
thousand fourteen and before January first, two thousand fifteen, twelve
and three-tenths percent for taxable years commencing on or after  Janu-
ary  first,  two thousand fifteen and before January first, two thousand
sixteen, fifteen and four-tenths percent for taxable years commencing on
or after January first, two thousand sixteen and before  January  first,
two  thousand eighteen, and twenty-five percent for taxable years begin-
ning on or after January first, two thousand  eighteen]  SHALL  BE  ZERO
PERCENT OF THE TAXPAYER'S BUSINESS INCOME  BASE.
  (VIII)  (A)  IN COMPUTING THE BUSINESS INCOME BASE, TAXPAYERS SHALL BE
ALLOWED BOTH A PRIOR NET OPERATING  LOSS  CONVERSION  SUBTRACTION  UNDER
THIS  SUBPARAGRAPH AND A NET OPERATING LOSS DEDUCTION UNDER SUBPARAGRAPH
(IX)  OF  THIS  PARAGRAPH.  THE  PRIOR  NET  OPERATING  LOSS  CONVERSION
SUBTRACTION  COMPUTED  UNDER  THIS SUBPARAGRAPH SHALL BE APPLIED AGAINST
THE BUSINESS  INCOME  BASE  BEFORE  THE  NET  OPERATING  LOSS  DEDUCTION
COMPUTED UNDER SUBPARAGRAPH (IX) OF THIS PARAGRAPH.
  (B) PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION.
  (1) DEFINITIONS.
  (I)  "BASE  YEAR"  MEANS  THE  LAST TAXABLE YEAR BEGINNING ON OR AFTER
JANUARY FIRST, TWO THOUSAND FOURTEEN AND BEFORE JANUARY FIRST, TWO THOU-
SAND FIFTEEN.
  (II) "UNABSORBED NET OPERATING LOSS" MEANS THE UNABSORBED  PORTION  OF
NET OPERATING LOSS AS CALCULATED UNDER PARAGRAPH (F) OF SUBDIVISION NINE
OF  SECTION  TWO  HUNDRED  EIGHT  OF THIS ARTICLE OR SUBSECTION (K-1) OF
SECTION FOURTEEN HUNDRED FIFTY-THREE OF THIS CHAPTER  AS  SUCH  SECTIONS
WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN, THAT WAS
NOT  DEDUCTIBLE IN PREVIOUS TAXABLE YEARS AND WAS ELIGIBLE FOR CARRYOVER
ON THE LAST DAY OF THE BASE  YEAR,  INCLUDING  ANY  NET  OPERATING  LOSS
SUSTAINED BY THE TAXPAYER DURING THE BASE YEAR.
  (III)  "BASE  YEAR  BAP"  MEANS  THE  TAXPAYER'S  BUSINESS  ALLOCATION
PERCENTAGE AS CALCULATED UNDER PARAGRAPH (A)  OF  SUBDIVISION  THREE  OF
THIS  SECTION FOR THE BASE YEAR, OR THE TAXPAYER'S ALLOCATION PERCENTAGE
AS CALCULATED UNDER SECTION FOURTEEN HUNDRED FIFTY-FOUR OF THIS  CHAPTER
FOR PURPOSES OF CALCULATING ENTIRE NET INCOME FOR THE BASE YEAR, AS SUCH
SECTIONS WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (IV)  "BASE  YEAR TAX RATE" MEANS THE TAXPAYER'S TAX RATE FOR THE BASE
YEAR AS CALCULATED UNDER THIS PARAGRAPH OR  SUBSECTION  (A)  OF  SECTION
FOURTEEN  HUNDRED FIFTY-FIVE OF THIS CHAPTER, AS SUCH PROVISIONS WERE IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (2) THE PRIOR NET  OPERATING  LOSS  CONVERSION  SUBTRACTION  SHALL  BE
CALCULATED AS FOLLOWS:
  (I) THE TAXPAYER SHALL FIRST CALCULATE THE TAX VALUE OF ITS UNABSORBED
NET  OPERATING LOSS FOR THE BASE YEAR. THE VALUE IS EQUAL TO THE PRODUCT
OF (I) THE AMOUNT OF THE TAXPAYER'S UNABSORBED NET OPERATING LOSS,  (II)
THE  TAXPAYER'S  BASE  YEAR  BAP, AND (III) THE TAXPAYER'S BASE YEAR TAX
RATE.
  (II) THE PRODUCT DETERMINED UNDER ITEM (I) OF THIS SUBCLAUSE  IS  THEN
DIVIDED  BY  SIX AND ONE-HALF PERCENT, OR IN THE CASE OF A QUALIFIED NEW
YORK MANUFACTURER, FIVE AND  SEVEN-TENTHS  PERCENT.  THIS  RESULT  SHALL
EQUAL  THE  TAXPAYER'S  PRIOR  NET OPERATING LOSS CONVERSION SUBTRACTION
POOL.
  (III) THE TAXPAYER'S PRIOR NET OPERATING LOSS  CONVERSION  SUBTRACTION
FOR  THE  TAXABLE YEAR SHALL EQUAL ONE-HALF FOR NO MORE THAN TWO CONSEC-

S. 6359--C                         49

UTIVE TAX YEARS OR  ONE-TENTH  OF  ITS  NET  OPERATING  LOSS  CONVERSION
SUBTRACTION  POOL  PLUS  ANY  AMOUNT  OF UNUSED PRIOR NET OPERATING LOSS
CONVERSION SUBTRACTION FROM PRECEDING TAXABLE YEARS.  PROVIDED, HOWEVER,
THE  PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION OF A SMALL BUSINESS
CORPORATION, AS DEFINED IN PARAGRAPH (F) OF THIS SUBDIVISION, AS OF  THE
LAST DAY OF THE BASE YEAR, SHALL NOT BE SUBJECT TO THE ONE-TENTH LIMITA-
TION IN THE PREVIOUS SENTENCE.
  (3)  COMBINED  GROUPS.  (I)  WHERE A TAXPAYER WAS PROPERLY INCLUDED OR
REQUIRED TO BE INCLUDED IN A COMBINED REPORT FOR THE BASE YEAR  PURSUANT
TO SECTION TWO HUNDRED ELEVEN OF THIS ARTICLE OR A COMBINED RETURN UNDER
SECTION  FOURTEEN  HUNDRED  SIXTY-TWO  OF THIS CHAPTER, AS SUCH SECTIONS
WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN, AND  THE
MEMBERS  OF  THE  COMBINED  GROUP  FOR THE BASE YEAR ARE THE SAME AS THE
MEMBERS OF THE COMBINED GROUP FOR THE TAXABLE YEAR IMMEDIATELY  SUCCEED-
ING  THE  BASE  YEAR,  THE  COMBINED GROUP SHALL CALCULATE ITS PRIOR NET
OPERATING LOSS CONVERSION SUBTRACTION POOL USING  THE  COMBINED  GROUP'S
TOTAL  UNABSORBED  NET  OPERATING LOSS, BASE YEAR BAP, AND BASE YEAR TAX
RATE.
  (II) IF A COMBINED GROUP INCLUDES ADDITIONAL MEMBERS  IN  THE  TAXABLE
YEAR  IMMEDIATELY SUCCEEDING THE BASE YEAR THAT WERE NOT INCLUDED IN THE
COMBINED GROUP DURING THE BASE YEAR, EACH BASE YEAR COMBINED  GROUP  AND
EACH  TAXPAYER THAT FILED SEPARATELY IN THE BASE YEAR BUT IS INCLUDED IN
THE COMBINED GROUP IN THE TAXABLE YEAR SUCCEEDING THE  BASE  YEAR  SHALL
CALCULATE  ITS PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION POOL, AND
THE SUM OF THE POOLS SHALL BE THE  COMBINED  PRIOR  NET  OPERATING  LOSS
CONVERSION SUBTRACTION POOL OF THE COMBINED GROUP.
  (III) IF A TAXPAYER WAS PROPERLY INCLUDED IN A COMBINED REPORT FOR THE
BASE YEAR AND FILES A SEPARATE REPORT IN A SUBSEQUENT TAXABLE YEAR, THEN
THE  AMOUNT OF REMAINING PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION
ALLOWED TO THE TAXPAYER FILING SUCH SEPARATE  REPORT  SHALL  BE  PROPOR-
TIONATE  TO  THE  AMOUNT THAT SUCH TAXPAYER CONTRIBUTED TO THE PRIOR NET
OPERATING LOSS CONVERSION SUBTRACTION POOL ON A COMBINED BASIS, AND  THE
REMAINING PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION ALLOWED TO THE
REMAINING MEMBERS OF THE COMBINED GROUP SHALL BE REDUCED ACCORDINGLY.
  (4) THE PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION MAY BE USED TO
REDUCE  THE TAXPAYER'S TAX ON ALLOCATED BUSINESS INCOME TO THE HIGHER OF
THE TAX ON THE CAPITAL BASE UNDER PARAGRAPH (B) OF THIS  SUBDIVISION  OR
THE  FIXED  DOLLAR  MINIMUM UNDER PARAGRAPH (D) OF THIS SUBDIVISION. ANY
AMOUNT OF UNUSED SUBTRACTION SHALL BE CARRIED FORWARD TO SUBSEQUENT  TAX
YEAR  OR  YEARS UNTIL TAX YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO
THOUSAND THIRTY-SIX, AND SHALL NOT BE SUBJECT TO THE  ONE-TENTH  LIMITA-
TION IN THE SUBSEQUENT TAX YEAR OR YEARS.
  (IX)  NET  OPERATING LOSS DEDUCTION.  IN COMPUTING THE BUSINESS INCOME
BASE, A NET OPERATING LOSS DEDUCTION SHALL BE ALLOWED. A  NET  OPERATING
LOSS DEDUCTION IS THE AMOUNT OF NET OPERATING LOSS OR LOSSES FROM ONE OR
MORE TAXABLE YEARS THAT ARE CARRIED FORWARD TO A PARTICULAR INCOME YEAR.
A  NET  OPERATING  LOSS  IS  THE AMOUNT OF A BUSINESS LOSS INCURRED IN A
PARTICULAR TAX YEAR MULTIPLIED BY THE APPORTIONMENT FACTOR FOR THAT YEAR
AS DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTICLE. THE MAXI-
MUM NET OPERATING DEDUCTION THAT IS ALLOWED IN A  TAXABLE  YEAR  IS  THE
AMOUNT  THAT  REDUCES THE TAXPAYER'S TAX ON ALLOCATED BUSINESS INCOME TO
THE HIGHER OF THE TAX ON THE CAPITAL BASE OR THE FIXED  DOLLAR  MINIMUM.
SUCH DEDUCTION AND LOSS ARE DETERMINED IN ACCORDANCE WITH THE FOLLOWING:
  (1)  SUCH  NET  OPERATING  LOSS DEDUCTION IS NOT LIMITED TO THE AMOUNT
ALLOWED UNDER SECTION ONE HUNDRED SEVENTY-TWO OF  THE  INTERNAL  REVENUE
CODE  OR THE AMOUNT THAT WOULD HAVE BEEN ALLOWED IF THE TAXPAYER HAD NOT

S. 6359--C                         50

MADE AN ELECTION UNDER SUBCHAPTER S  OF  CHAPTER  ONE  OF  THE  INTERNAL
REVENUE CODE.
  (2)  SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET OPER-
ATING LOSS INCURRED DURING ANY TAXABLE YEAR BEGINNING PRIOR  TO  JANUARY
FIRST,  TWO  THOUSAND  FIFTEEN,  OR DURING ANY TAXABLE YEAR IN WHICH THE
TAXPAYER WAS NOT SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE.
  (3) A TAXPAYER THAT FILES AS PART OF A FEDERAL CONSOLIDATED RETURN BUT
ON A SEPARATE BASIS FOR  PURPOSES  OF  THIS  ARTICLE  MUST  COMPUTE  ITS
DEDUCTION  AND LOSS AS IF IT WERE FILING ON A SEPARATE BASIS FOR FEDERAL
INCOME TAX PURPOSES.
  (4) A NET OPERATING LOSS MUST BE CARRIED FORWARD TO EACH OF THE TWENTY
TAXABLE YEARS FOLLOWING THE TAXABLE YEAR OF THE LOSS.  NO  CARRYBACK  OF
THE  NET  OPERATING LOSS IS ALLOWED. A TAXPAYER MUST APPLY BOTH OF THESE
LIMITATIONS IN COMPUTING SUCH NET OPERATING LOSS DEDUCTION.
  (5) SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET  OPER-
ATING  LOSS  INCURRED DURING A NEW YORK S YEAR; PROVIDED, HOWEVER, A NEW
YORK S YEAR MUST BE TREATED AS A TAXABLE YEAR FOR PURPOSES OF  DETERMIN-
ING  THE  NUMBER  OF  TAXABLE YEARS TO WHICH A NET OPERATING LOSS MAY BE
CARRIED FORWARD.
  (6) WHERE THERE ARE TWO OR MORE ALLOCATED  NET  OPERATING  LOSSES,  OR
PORTIONS  THEREOF,  CARRIED FORWARD TO BE DEDUCTED IN ONE PARTICULAR TAX
YEAR  FROM  ALLOCATED  BUSINESS  INCOME,  THE  EARLIEST  ALLOCATED  LOSS
INCURRED MUST BE APPLIED FIRST.
  (b)  Capital  base.  (1)  The [amount prescribed by this paragraph for
taxable years beginning before January first, two thousand  eight  shall
be  computed  at .178  percent  for  each dollar of the taxpayer's total
business and investment capital, or the portion thereof allocated within
the state as hereinafter provided. For taxable  years  beginning  on  or
after  January first, two thousand eight, the] amount prescribed by this
paragraph shall be computed  at .15  percent  for  each  dollar  of  the
taxpayer's total business [and investment] capital, or the portion ther-
eof  allocated within the state as hereinafter provided. However, in the
case of a cooperative housing corporation as  defined  in  the  internal
revenue  code,  the  applicable  rate shall be .04 percent.  In no event
shall the amount prescribed by this paragraph exceed three hundred fifty
thousand dollars for qualified New York manufacturers and for all  other
taxpayers  [ten] FIVE million dollars [for taxable years beginning on or
after January first, two thousand eight but before  January  first,  two
thousand  eleven  and one million dollars for taxable years beginning on
or after January first, two thousand eleven].
  (2) For purposes of subparagraph  one  of  this  paragraph,  the  term
"manufacturer"  shall  mean  a taxpayer which during the taxable year is
principally engaged in the production of goods by  manufacturing,  proc-
essing,  assembling, refining, mining, extracting, farming, agriculture,
horticulture, floriculture, viticulture or commercial fishing. Moreover,
for purposes of computing the capital base in  a  combined  report,  the
combined group shall be considered a "manufacturer" for purposes of this
subparagraph only if the combined group during the taxable year is prin-
cipally engaged in the activities set forth in this subparagraph, or any
combination thereof. A taxpayer or a combined group shall be "principal-
ly  engaged"  in activities described above if, during the taxable year,
more than fifty percent  of  the  gross  receipts  of  the  taxpayer  or
combined group, respectively, are derived from receipts from the sale of
goods produced by such activities. In computing a combined group's gross
receipts,  intercorporate receipts shall be eliminated. A "qualified New
York manufacturer" is a manufacturer that has property in New York  that

S. 6359--C                         51

is  described  in  [clause  (A) of subparagraph (i) of paragraph (b) of]
subdivision [twelve of this section] ONE OF SECTION TWO HUNDRED TEN-B OF
THIS ARTICLE and either (i) the adjusted  basis  of  that  property  for
federal income tax purposes at the close of the taxable year is at least
one  million  dollars  or  (ii) all of its real and personal property is
located in New York. In addition, a "qualified  New  York  manufacturer"
means  a  taxpayer  that  is  defined as a qualified emerging technology
company under paragraph (c) of subdivision  one  of  section  thirty-one
hundred  two-e  of  the  public  authorities  law  regardless of the ten
million dollar limitation expressed in subparagraph one  of  such  para-
graph.
  (3)  For a qualified New York manufacturer, as defined in subparagraph
two of this paragraph, the rate at which the tax is computed  in  effect
for  taxable  years  beginning  on  or after January first, two thousand
thirteen and before  January  first,  two  thousand  fourteen  shall  be
reduced  by  nine and two-tenths percent for taxable years commencing on
or after January first, two thousand fourteen and before January  first,
two  thousand fifteen, twelve and three-tenths percent for taxable years
commencing on or after January first, two thousand  fifteen  and  before
January first, two thousand sixteen, fifteen and four-tenths percent for
taxable years commencing on or after January first, two thousand sixteen
and before January first, two thousand eighteen, and twenty-five percent
for  taxable  years  beginning  on  or after January first, two thousand
eighteen.
  (c) [Minimum taxable income bases. (i)  For  taxable  years  beginning
after  nineteen  hundred  eighty-six and before nineteen hundred eighty-
nine, the amount prescribed by this paragraph shall be computed  at  the
rate  of  three  and  one-half  percent  of  the taxpayer's pre-nineteen
hundred ninety minimum taxable income base. For taxable years  beginning
in nineteen hundred eighty-nine, the amount prescribed by this paragraph
shall  be  computed  at  the rate of five percent of the taxpayer's pre-
nineteen hundred ninety minimum taxable income base. A "taxpayer's  pre-
nineteen  hundred  ninety  minimum  taxable  income base" shall mean the
portion of the taxpayer's entire net income allocated within  the  state
as  hereinafter  provided, subject to any modification required by para-
graphs (d) and (e) of subdivision three of this section;
  (ii) (A) For taxable years beginning on or after  January  first,  two
thousand  seven,  the  amount  prescribed  by  this  paragraph  shall be
computed at the rate of one and one-half percent of the taxpayer's mini-
mum taxable income base. The "taxpayer's minimum  taxable  income  base"
shall  mean  the  portion of the taxpayer's minimum taxable income allo-
cated within the state as hereinafter provided, subject to any modifica-
tions required by paragraphs (d) and (e) of subdivision  three  of  this
section.
  (B)  For  taxable years beginning on or after January first, two thou-
sand twelve and before January first, two thousand fifteen,  the  amount
prescribed by this paragraph for an eligible qualified New York manufac-
turer  shall  be  computed  at the rate of seventy-five hundredths (.75)
percent of the taxpayer's minimum taxable income base. For  purposes  of
this  clause,  the term "eligible qualified New York manufacturer" shall
have the same meaning as in subparagraph (vi) of paragraph (a)  of  this
subdivision.
  (iii)  For  a  qualified New York manufacturer, as defined in subpara-
graph (vi) of paragraph (a) of this subdivision, the rate at  which  the
tax  is computed in effect for taxable years beginning on or after Janu-
ary first, two thousand thirteen and before January first, two  thousand

S. 6359--C                         52

fourteen  for  qualified New York manufacturers shall be reduced by nine
and two-tenths percent for taxable years commencing on or after  January
first,  two  thousand  fourteen  and  before January first, two thousand
fifteen, twelve and three-tenths percent for taxable years commencing on
or  after  January first, two thousand fifteen and before January first,
two thousand sixteen, fifteen and four-tenths percent for taxable  years
commencing  on  or  after January first, two thousand sixteen and before
January first, two thousand eighteen, and twenty-five percent for  taxa-
ble years beginning on or after January first, two thousand eighteen.]
  (d) Fixed dollar minimum. (1) The [amount prescribed by this paragraph
shall be for a taxpayer which during the taxable year has:
  (A)  a gross payroll of six million two hundred fifty thousand dollars
or more, one thousand five hundred dollars;
  (B) a gross payroll of less than six million two hundred  fifty  thou-
sand dollars but more than one million dollars, four hundred twenty-five
dollars;
  (C)  a gross payroll of no more than one million dollars but more than
five hundred thousand dollars, three hundred twenty-five dollars;
  (D) a gross payroll of no more than five hundred thousand dollars  but
more  than  two  hundred fifty thousand dollars, two hundred twenty-five
dollars;
  (E) a gross payroll of two hundred  fifty  thousand  dollars  or  less
(except  as  prescribed in clause (F) of this subparagraph), one hundred
dollars;
  (F) a gross payroll of  one  thousand  dollars  or  less,  with  total
receipts  within and without this state of one thousand dollars or less,
and the average value of the assets of which are one thousand dollars or
less, eight hundred dollars.
  (2) For purposes of this paragraph:
  (A) gross payroll shall be the same as the total wages,  salaries  and
other  personal  service  compensation  of all the taxpayer's employees,
within and without this state, as defined in subparagraph three of para-
graph (a) of subdivision three of  this  section,  except  that  general
executive officers shall not be excluded.
  (B)  total  receipts  shall be the same as receipts within and without
this state as defined in subparagraph two of paragraph (a)  of  subdivi-
sion three of this section.
  (C)  average  value  of  the assets shall be the same as prescribed by
subdivision two of this section without reduction for liabilities.
  (3) If the taxable  year  is  less  than  twelve  months,  the  amount
prescribed  by this paragraph shall be reduced by twenty-five percent if
the period for which the taxpayer is subject to tax  is  more  than  six
months  but not more than nine months and by fifty percent if the period
for which the taxpayer is subject to tax is not more  than  six  months.
Provided,  however,  that in determining the amount of gross payroll and
total receipts for purposes of subparagraph one of this paragraph, where
the taxable year is less than twelve months, the amount of each shall be
determined by dividing the amount of each with respect  to  the  taxable
year  by  the  number of months in such taxable year and multiplying the
result by twelve. If the taxable year is less than  twelve  months,  the
amount  of  New  York receipts for purposes of subparagraph four of this
paragraph is determined by dividing the amount of the receipts  for  the
taxable year by the number of months in the taxable year and multiplying
the result by twelve.
  (4)  Notwithstanding  subparagraphs one and two of this paragraph, for
taxable years beginning on or after January first, two  thousand  eight,

S. 6359--C                         53

the]  amount  prescribed  by  this paragraph for New York S corporations
will be determined in accordance with the following table:

If New York receipts are:                The fixed dollar minimum tax is:
 not more than $100,000                               $   25
 more than $100,000 but not over $250,000             $   50
 more than $250,000 but not over $500,000             $  175
 more than $500,000 but not over $1,000,000           $  300
 more than $1,000,000 but not over $5,000,000         $1,000
 more than $5,000,000 but not over $25,000,000        $3,000
 Over $25,000,000                                     $4,500

[Otherwise the amount prescribed by this paragraph will be determined in
accordance with the following table:]
PROVIDED  FURTHER,  THE AMOUNT PRESCRIBED BY THIS PARAGRAPH FOR A QUALI-
FIED NEW YORK MANUFACTURER, AS DEFINED IN SUBPARAGRAPH (VI) OF PARAGRAPH
(A) OF THIS SUBDIVISION, WILL  BE  DETERMINED  IN  ACCORDANCE  WITH  THE
FOLLOWING TABLES:
FOR  TAX  YEARS BEGINNING ON OR AFTER JANUARY 1, 2014 AND BEFORE JANUARY
1, 2015:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   23
 MORE THAN $100,000 BUT NOT OVER $250,000             $   68
 MORE THAN $250,000 BUT NOT OVER $500,000             $  159
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  454
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,362
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,178
 OVER $25,000,000                                     $4,500

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2015 AND  BEFORE  JANUARY
1, 2016:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   22
 MORE THAN $100,000 BUT NOT OVER $250,000             $   66
 MORE THAN $250,000 BUT NOT OVER $500,000             $  153
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  439
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,316
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,070
 OVER $25,000,000                                     $4,385

FOR  TAX  YEARS BEGINNING ON OR AFTER JANUARY 1, 2016 AND BEFORE JANUARY
1, 2018:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   21
 MORE THAN $100,000 BUT NOT OVER $250,000             $   63
 MORE THAN $250,000 BUT NOT OVER $500,000             $  148
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  423
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,269
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,961
 OVER $25,000,000                                     $4,230

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2018:

S. 6359--C                         54

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   19
 MORE THAN $100,000 BUT NOT OVER $250,000             $   56
 MORE THAN $250,000 BUT NOT OVER $500,000             $  131
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  375
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,125
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,625
 OVER $25,000,000                                     $3,750

OTHERWISE  THE AMOUNT PRESCRIBED BY THIS PARAGRAPH WILL BE DETERMINED IN
ACCORDANCE WITH THE FOLLOWING TABLE:

If New York receipts are:                The fixed dollar minimum tax is:
 not more than $100,000                               $   25
 more than $100,000 but not over $250,000             $   75
 more than $250,000 but not over $500,000             $  175
 more than $500,000 but not over $1,000,000           $  500
 more than $1,000,000 but not over $5,000,000         $1,500
 more than $5,000,000 but not over $25,000,000        $3,500
 Over $25,000,000                                     $5,000

For purposes of this paragraph,  New  York  receipts  are  the  receipts
[computed in accordance with subparagraph two of paragraph (a) of subdi-
vision  three  of  this]  INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT
FACTOR DETERMINED UNDER section TWO HUNDRED TEN-A for the taxable year.
  (2) IF THE TAXABLE YEAR IS LESS THAN TWELVE MONTHS, THE AMOUNT OF  NEW
YORK  RECEIPTS  IS DETERMINED BY DIVIDING THE AMOUNT OF THE RECEIPTS FOR
THE TAXABLE YEAR BY THE NUMBER OF MONTHS IN THE TAXABLE YEAR AND  MULTI-
PLYING  THE RESULT BY TWELVE. IN THE CASE OF A TERMINATION YEAR OF A NEW
YORK S CORPORATION, THE SUM OF THE TAX COMPUTED UNDER THIS PARAGRAPH FOR
THE S SHORT YEAR AND FOR THE C SHORT YEAR SHALL NOT  BE  LESS  THAN  THE
AMOUNT  COMPUTED  UNDER  THIS PARAGRAPH AS IF THE CORPORATION WERE A NEW
YORK C CORPORATION FOR THE ENTIRE TAXABLE YEAR.
  [(5) For taxable years beginning on or after January first, two  thou-
sand  twelve and before January first, two thousand fifteen, the amounts
prescribed in subparagraphs one and four of this paragraph as the  fixed
dollar minimum tax for an eligible qualified New York manufacturer shall
be  one-half  of the amounts stated in those subparagraphs. For purposes
of this subparagraph, the term "eligible qualified New York  manufactur-
er" shall have the same meaning as in subparagraph (vi) of paragraph (a)
of this subdivision.
  (6)  For a qualified New York manufacturer, as defined in subparagraph
(vi) of paragraph (a) of this subdivision,  the  amounts  prescribed  in
subparagraphs one and four of this paragraph in effect for taxable years
beginning  on  or  after January first, two thousand thirteen and before
January first, two thousand fourteen for qualified New York  manufactur-
ers  shall  be  reduced by nine and two-tenths percent for taxable years
commencing on or after January first, two thousand fourteen  and  before
January first, two thousand fifteen, twelve and three-tenths percent for
taxable years commencing on or after January first, two thousand fifteen
and  before January first, two thousand sixteen, fifteen and four-tenths
percent for taxable years commencing on  or  after  January  first,  two
thousand  sixteen  and  before January first, two thousand eighteen, and
twenty-five percent for taxable years  beginning  on  or  after  January
first, two thousand eighteen.]

S. 6359--C                         55

  (e)  [Subsidiary capital base. (1) The amount prescribed by this para-
graph shall be computed at the rate of nine-tenths of a  mill  for  each
dollar  of  the  portion  of the taxpayer's subsidiary capital allocated
within the state as hereinafter provided.
  (2)  For  purposes  of  this  paragraph, the amount of such subsidiary
capital, prior  to  allocation,  shall  be  reduced  by  the  applicable
percentage  of  the  taxpayer's (i) investments in the stock of, and any
indebtedness from, subsidiaries subject to tax under section one hundred
eighty-six of this chapter (but only to the extent such indebtedness  is
included  in  subsidiary capital), and (ii) investments in the stock of,
and any indebtedness from, subsidiaries subject  to  tax  under  article
thirty-two  or thirty-three of this chapter (but only to the extent such
indebtedness is included in subsidiary capital). For purposes of  clause
(i)  of  this  subparagraph,  the  applicable percentage shall be thirty
percent for taxable years beginning in two  thousand,  and  one  hundred
percent  for taxable years beginning after two thousand. For purposes of
clause (ii) of this subparagraph, the applicable percentage shall be one
hundred percent for taxable years beginning after nineteen hundred nine-
ty-nine.]
  (f) For purposes of this section, the term "small  business  taxpayer"
shall  mean  a  taxpayer  (i) which has an entire net income of not more
than three hundred ninety thousand dollars for the  taxable  year;  (ii)
[which  constitutes a small business as defined in section 1244(c)(3) of
internal revenue code (without regard to the second sentence of subpara-
graph (A) thereof) as of the last day of the taxable year] THE AGGREGATE
AMOUNT OF MONEY AND OTHER  PROPERTY  RECEIVED  BY  THE  CORPORATION  FOR
STOCK,  AS  A  CONTRIBUTION TO CAPITAL, AND AS PAID-IN SURPLUS, DOES NOT
EXCEED ONE MILLION DOLLARS; [and] (iii) which is not part of  an  affil-
iated  group,  as  defined in section 1504 of the internal revenue code,
unless such group, if it had filed a report  under  this  article  on  a
combined basis, would have itself qualified as a "small business taxpay-
er"  pursuant  to this subdivision; AND (IV) WHICH HAS AN AVERAGE NUMBER
OF INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE OFFICERS, EMPLOYED FULL-TIME
IN THE STATE DURING THE TAXABLE YEAR OF ONE HUNDRED OR FEWER.    If  the
taxable  period  to  which subparagraph (i) of this paragraph applies is
less than twelve months, entire net income under such subparagraph shall
be placed on an annual basis by multiplying the  entire  net  income  by
twelve  and  dividing  the result by the number of months in the period.
FOR PURPOSES OF SUBPARAGRAPH (II) OF THIS PARAGRAPH,  THE  AMOUNT  TAKEN
INTO  ACCOUNT WITH RESPECT TO ANY PROPERTY OTHER THAN MONEY SHALL BE THE
AMOUNT EQUAL TO THE ADJUSTED BASIS TO THE CORPORATION OF  SUCH  PROPERTY
FOR DETERMINING GAIN, REDUCED BY ANY LIABILITY TO WHICH THE PROPERTY WAS
SUBJECT OR WHICH WAS ASSUMED BY THE CORPORATION. THE DETERMINATION UNDER
THE  PRECEDING  SENTENCE  SHALL  BE MADE AS OF THE TIME THE PROPERTY WAS
RECEIVED BY THE CORPORATION. FOR PURPOSES OF SUBPARAGRAPH (III) OF  THIS
SECTION,  "AVERAGE  NUMBER  OF  INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE
OFFICERS, EMPLOYED FULL-TIME" SHALL  BE  COMPUTED  BY  ASCERTAINING  THE
NUMBER  OF SUCH INDIVIDUALS EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST
DAY OF MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF  SEPTEMBER
AND  THE  THIRTY-FIRST DAY OF DECEMBER DURING EACH TAXABLE YEAR OR OTHER
APPLICABLE PERIOD, BY ADDING TOGETHER THE  NUMBER  OF  SUCH  INDIVIDUALS
ASCERTAINED  ON  EACH  OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY
THE NUMBER OF SUCH DATES OCCURRING WITHIN SUCH  TAXABLE  YEAR  OR  OTHER
APPLICABLE PERIOD. AN INDIVIDUAL EMPLOYED FULL-TIME MEANS AN EMPLOYEE IN
A  JOB CONSISTING OF AT LEAST THIRTY-FIVE HOURS PER WEEK, OR TWO OR MORE
EMPLOYEES WHO ARE IN JOBS THAT TOGETHER CONSTITUTE THE EQUIVALENT  OF  A

S. 6359--C                         56

JOB   AT  LEAST  THIRTY-FIVE  HOURS  PER  WEEK  (FULL-TIME  EQUIVALENT).
FULL-TIME EQUIVALENT EMPLOYEES IN THE STATE INCLUDES ALL EMPLOYEES REGU-
LARLY CONNECTED WITH OR WORKING OUT OF AN OFFICE OR PLACE OF BUSINESS OF
THE TAXPAYER WITHIN THE STATE.
  (g)  New  York S corporations.   (1) General. The amount prescribed by
this paragraph shall be, in the case of each  New  York  S  corporation,
[(i)  the  higher of the amounts prescribed in paragraphs (a) and (d) of
this subdivision (other than the amount prescribed in the  final  clause
of  subparagraph  one of that paragraph (d)) (ii) reduced by the article
twenty-two tax equivalent;  provided,  however,  that  the  amount  thus
determined  shall  not be less than the lowest of the amounts prescribed
in subparagraph one of that paragraph (d) (applying  the  provisions  of
subparagraph  three  of that paragraph as necessary). Provided, however,
notwithstanding any provision of this paragraph, in taxable years begin-
ning in two thousand three and before two  thousand  eight,  the  amount
prescribed  by this paragraph shall be the amount prescribed in subpara-
graph one of that paragraph (d) (applying the provisions of subparagraph
three of that paragraph as necessary) and applying  the  calculation  of
that  amount  in the case of a termination year as set forth in subpara-
graph four of this paragraph as necessary. In taxable years beginning in
two thousand eight and thereafter, the amount prescribed by  this  para-
graph  is]  the amount prescribed in subparagraph four of that paragraph
(d) [(applying the provisions of subparagraph three of that paragraph as
necessary)] and applying the calculation of that amount in the case of a
termination year as set forth in subparagraph four of this paragraph  as
necessary.
  (2)  [Article  twenty-two  tax equivalent. For taxable years beginning
before July first, nineteen hundred ninety-nine, the article  twenty-two
tax equivalent is the amount computed under paragraph (a) of this subdi-
vision  by  substituting for the rate therein the rate of 7.875 percent.
For taxable years beginning after June thirtieth, nineteen hundred nine-
ty-nine and before July first, two thousand, the article twenty-two  tax
equivalent  is  the amount computed under paragraph (a) of this subdivi-
sion by substituting for the rate therein the rate of 7.525 percent. For
taxable years beginning after June thirtieth, two  thousand  and  before
July  first,  two thousand one, the article twenty-two tax equivalent is
the amount computed under paragraph (a) of this subdivision  by  substi-
tuting for the rate therein the rate of 7.175 percent. For taxable years
beginning  after June thirtieth, two thousand one and before July first,
two thousand three, the article twenty-two tax equivalent is the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 6.85 percent. For taxable years beginning after
June  thirtieth,  two  thousand three, the article twenty-two tax equiv-
alent is the amount computed under paragraph (a) of this subdivision  by
substituting for the rate therein the rate of 7.1425 percent.
  (3)  Small  business  taxpayers.  Notwithstanding  the  provisions  of
subparagraphs one and two of this paragraph, in the case of a New York S
corporation which is a small business taxpayer, as defined in  paragraph
(f) of this subdivision, the following provisions shall apply:
  (A)  For  taxable  years beginning before July first, nineteen hundred
ninety-nine,  the  article  twenty-two  tax  equivalent  is  the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.875 percent.
  (B) For taxable years beginning after June thirtieth, nineteen hundred
ninety-nine  and  before  July  first,  two  thousand  three, the amount
computed under paragraph (a) of this  subdivision,  as  referred  to  in

S. 6359--C                         57

subparagraph  one  of  this paragraph, shall be computed by substituting
for the rate therein the rate of 7.5 percent, and the article twenty-two
tax equivalent under paragraph (a) of this subdivision shall be computed
as follows:
  (i)  if  the entire net income base is not more than two hundred thou-
sand dollars, the  article  twenty-two  tax  equivalent  is  the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.45 percent;
  (ii)  if  the entire net income base is more than two hundred thousand
dollars but not over two hundred ninety thousand  dollars,  the  article
twenty-two  tax  equivalent shall be computed as the sum of (I) fourteen
thousand nine hundred  dollars,  (II)  six  and  eighty-five  hundredths
percent  of the first fifty thousand dollars in excess of the entire net
income base over two hundred  thousand  dollars,  and  (III)  three  and
eighty-five  hundredths percent of the excess, if any, of the entire net
income base over two hundred fifty thousand dollars.
  (C) For taxable years beginning after  June  thirtieth,  two  thousand
three,  the  amount computed under paragraph (a) of this subdivision, as
referred to in subparagraph one of this paragraph, shall be computed  by
substituting for the rate therein the rate of 7.5 percent, and the arti-
cle  twenty-two  tax  equivalent under paragraph (a) of this subdivision
shall be computed as follows:
  (i) if the entire net income base is not more than two  hundred  thou-
sand  dollars,  the  article  twenty-two  tax  equivalent  is the amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.4725 percent;
  (ii) if the entire net income base is more than two  hundred  thousand
dollars  but  not  over two hundred ninety thousand dollars, the article
twenty-two tax equivalent shall be computed as the sum of  (I)  fourteen
thousand  nine  hundred  forty-five  dollars, (II) 7.1425 percent of the
first fifty thousand dollars in excess of the  entire  net  income  base
over  two  hundred  thousand  dollars,  and  (III) 5.4925 percent of the
excess, if any, of the entire net income base  over  two  hundred  fifty
thousand dollars.
  (4)] Termination year. In the case of a termination year, [the tax for
the  S  short year shall be computed under this paragraph without regard
to the fixed dollar minimum tax prescribed  in  paragraph  (d)  of  this
subdivision,  and  the  tax for the C short year shall be computed under
the opening paragraph of this subdivision without regard  to  the  fixed
dollar  minimum tax prescribed under such paragraph (d), but in no event
shall] the sum of the tax for the S short year and the  tax  for  the  C
short  year  SHALL  NOT  be less than the fixed dollar minimum tax under
paragraph (d) of this subdivision computed as if the corporation were  a
New York C corporation for the entire taxable year.
  S  13.  Subdivision  1-c  of section 210 of the tax law, as amended by
chapter 1043 of the laws of 1981, the opening  paragraph  and  paragraph
(a)  as amended by chapter 817 of the laws of 1987, and paragraph (b) as
amended by section 12 of part Y of chapter 63 of the laws  of  2000,  is
amended to read as follows:
  1-c. The computations specified in paragraph (b) of subdivision one of
this section shall not apply to the first two taxable years of a taxpay-
er  which,  for  one or both such years, is a small business [concern. A
small business concern:
  (a) is a taxpayer which is a small business corporation as defined  in
paragraph  three  of subsection (c) of section twelve hundred forty-four

S. 6359--C                         58

of the internal revenue code (without regard to the second  sentence  of
subparagraph (A) thereof) as of the last day of the taxable year,
  (b) is not a corporation over fifty percent of the number of shares of
stock of which entitling the holders thereof to vote for the election of
directors or trustees is owned by a taxpayer which (1) is subject to tax
under this article; section one hundred eighty-three, one hundred eight-
y-four or one hundred eighty-five of article nine; article thirty-two or
thirty-three  of this chapter, and (2) does not qualify as a small busi-
ness corporation as defined in paragraph  three  of  subsection  (c)  of
section  twelve hundred forty-four of the internal revenue code (without
regard to the second sentence of subparagraph (A)  thereof)  as  of  the
last  day  of its taxable year ending within or with the taxable year of
the taxpayer,
  (c) is not a corporation which is substantially similar  in  operation
and  in  ownership to a business entity (or entities) taxable, or previ-
ously taxable, under this article; section one hundred eighty-three, one
hundred eighty-four, one hundred eighty-five or one  hundred  eighty-six
of  article  nine;  article  thirty-two or thirty-three of this chapter;
article twenty-three of this chapter or which would have been subject to
tax under such article twenty-three (as such article was  in  effect  on
January  first,  nineteen  hundred  eighty) or the income (or losses) of
which is (or was) includable under article twenty-two of  this  chapter,
and
  (d)  at least ninety percent of the assets of such corporation (valued
at original cost) were located and employed in  this  state  during  the
taxable year and eighty percent of the employees of such corporation (as
ascertained within the meaning and intent of subparagraph three of para-
graph  (a)  of  subdivision  three  of  this  section)  were principally
employed in this state during the taxable year] TAXPAYER AS  DEFINED  IN
PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION.
  S 14. Subdivision 2 of section 210 of the tax law, as amended by chap-
ter 760 of the laws of 1992, is amended to read as follows:
  2. The amount of [subsidiary capital,] investment capital and business
capital  shall  each  be  determined  by taking the average value of the
assets included therein (less liabilities deductible therefrom  pursuant
to  the provisions of subdivisions [four,] five and seven of section two
hundred eight), and, if the period covered by the report is other than a
period of twelve calendar months,  by  multiplying  such  value  by  the
number  of calendar months or major parts thereof included in such peri-
od, and dividing the product thus obtained by twelve.  For  purposes  of
this  subdivision,  real  property  and  marketable  securities shall be
valued at fair market value and the value  of  personal  property  other
than marketable securities shall be the value thereof shown on the books
and  records  of  the  taxpayer  in  accordance  with generally accepted
accounting principles.
  S 15. Subdivisions 3, 3-a, 4, 5, 6, 7, 8, 9, 10, 11, 12,  12-A,  12-B,
12-C,  12-D, 12-E, 12-F, 12-G, 13, 14, 15, 16, 17, 18, 19, 20, 21, 21-a,
22, 23, 23-a, 24, 25, 25-a, 26, 26-a, 27, 28, 30, 31, 32,  33,  34,  35,
36,  37,  38,  39, 40, 41, 42, 43, 44, 45, 46, 47, and subdivision 48 as
added by section 3 of part T of this act of section 210 of the  tax  law
are REPEALED.
  S 15-a. Section 210 of the tax law is amended by adding a new subdivi-
sion 3 to read as follows:
  3.  A CORPORATION THAT IS A PARTNER IN A PARTNERSHIP SHALL COMPUTE TAX
UNDER THIS ARTICLE USING THE AGGREGATE METHOD AS DEFINED  IN  THE  REGU-
LATIONS  OF  THE  COMMISSIONER, UNLESS ANOTHER METHOD FOR COMPUTING SUCH

S. 6359--C                         59

TAX IS REQUIRED OR ALLOWED BY  SUCH  REGULATIONS.  UNDER  THE  AGGREGATE
METHOD,  A  CORPORATION  THAT IS A PARTNER IN A PARTNERSHIP IS VIEWED AS
HAVING AN UNDIVIDED INTEREST IN THE PARTNERSHIP'S  ASSETS,  LIABILITIES,
AND  ITEMS  OF  RECEIPTS,  INCOME,  GAIN,  LOSS AND DEDUCTION. UNDER THE
AGGREGATE METHOD, THE CORPORATION THAT IS A PARTNER IN A PARTNERSHIP  IS
TREATED  AS  PARTICIPATING  IN THE PARTNERSHIP'S TRANSACTIONS AND ACTIV-
ITIES.
  S 16. The tax law is amended by adding a new section 210-A to read  as
follows:
  S  210-A. APPORTIONMENT. 1. GENERAL. BUSINESS INCOME AND CAPITAL SHALL
BE APPORTIONED TO THE  STATE  BY  THE  APPORTIONMENT  FACTOR  DETERMINED
PURSUANT TO THIS SECTION. THE APPORTIONMENT FACTOR IS A FRACTION, DETER-
MINED BY INCLUDING ONLY THOSE RECEIPTS, NET INCOME, NET GAINS, AND OTHER
ITEMS  DESCRIBED IN THIS SECTION THAT ARE INCLUDED IN THE COMPUTATION OF
THE TAXPAYER'S BUSINESS INCOME FOR THE TAXABLE YEAR.   THE NUMERATOR  OF
THE  APPORTIONMENT FRACTION SHALL BE EQUAL TO THE SUM OF ALL THE AMOUNTS
REQUIRED TO BE INCLUDED IN THE NUMERATOR PURSUANT TO THE  PROVISIONS  OF
THIS  SECTION AND THE DENOMINATOR OF THE APPORTIONMENT FRACTION SHALL BE
EQUAL TO THE SUM OF ALL THE AMOUNTS  REQUIRED  TO  BE  INCLUDED  IN  THE
DENOMINATOR PURSUANT TO THE PROVISIONS OF THIS SECTION.
  2.  SALES  OF TANGIBLE PERSONAL PROPERTY AND ELECTRICITY. (A) RECEIPTS
FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE  SHIPMENTS  ARE  MADE  TO
POINTS WITHIN THE STATE OR THE DESTINATION OF THE PROPERTY IS A POINT IN
THE  STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION. RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE  SHIPMENTS
ARE  MADE  TO  POINTS WITHIN AND WITHOUT THE STATE OR THE DESTINATION IS
WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE
APPORTIONMENT FRACTION.
  (B) RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN  THE
STATE  SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.
RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN AND  WITH-
OUT  THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT
FRACTION.
  (C) RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY AND  ELECTRICITY
THAT ARE TRADED AS COMMODITIES AS DESCRIBED IN SECTION 475 OF THE INTER-
NAL  REVENUE  CODE ARE INCLUDED IN THE APPORTIONMENT FRACTION IN ACCORD-
ANCE WITH CLAUSE (I) OF SUBPARAGRAPH TWO OF PARAGRAPH (A) OF SUBDIVISION
FIVE OF THIS SECTION.
  3. RENTALS AND ROYALTIES. (A) RECEIPTS FROM RENTALS OF REAL AND TANGI-
BLE PERSONAL PROPERTY LOCATED WITHIN  THE  STATE  ARE  INCLUDED  IN  THE
NUMERATOR  OF  THE APPORTIONMENT FRACTION. RECEIPTS FROM RENTALS OF REAL
AND TANGIBLE PERSONAL PROPERTY LOCATED  WITHIN  AND  WITHOUT  THE  STATE
SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (B)  RECEIPTS OF ROYALTIES FROM THE USE OF PATENTS, COPYRIGHTS, TRADE-
MARKS, AND SIMILAR INTANGIBLE PERSONAL PROPERTY  WITHIN  THE  STATE  ARE
INCLUDED  IN  THE  NUMERATOR  OF THE APPORTIONMENT FRACTION. RECEIPTS OF
ROYALTIES FROM THE USE OF PATENTS, COPYRIGHTS,  TRADEMARKS  AND  SIMILAR
INTANGIBLES WITHIN AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR
OF THE APPORTIONMENT FRACTION. A PATENT, COPYRIGHT, TRADEMARK OR SIMILAR
INTANGIBLE  PROPERTY  IS USED IN THE STATE TO THE EXTENT THAT THE ACTIV-
ITIES THEREUNDER ARE CARRIED ON IN THE STATE.
  (C) RECEIPTS FROM THE SALES OF RIGHTS  FOR  CLOSED-CIRCUIT  AND  CABLE
TELEVISION  TRANSMISSIONS  OF AN EVENT (OTHER THAN EVENTS OCCURRING ON A
REGULARLY SCHEDULED BASIS) TAKING PLACE WITHIN THE STATE AS A RESULT  OF
THE  RENDITION OF SERVICES BY EMPLOYEES OF THE CORPORATION, AS ATHLETES,
ENTERTAINERS OR PERFORMING ARTISTS ARE INCLUDED IN THE NUMERATOR OF  THE

S. 6359--C                         60

APPORTIONMENT FRACTION TO THE EXTENT THAT SUCH RECEIPTS ARE ATTRIBUTABLE
TO  SUCH  TRANSMISSIONS RECEIVED OR EXHIBITED WITHIN THE STATE. RECEIPTS
FROM ALL SALES OF RIGHTS FOR CLOSED-CIRCUIT AND CABLE TELEVISION  TRANS-
MISSIONS  OF  AN EVENT ARE INCLUDED IN THE DENOMINATOR OF THE APPORTION-
MENT FRACTION.
  4. DIGITAL PRODUCTS. (A) FOR PURPOSES OF DETERMINING THE APPORTIONMENT
FRACTION UNDER THIS SECTION, THE TERM "DIGITAL PRODUCT" MEANS ANY  PROP-
ERTY OR SERVICE, OR COMBINATION THEREOF, OF WHATEVER NATURE DELIVERED TO
THE PURCHASER THROUGH THE USE OF WIRE, CABLE, FIBER-OPTIC, LASER, MICRO-
WAVE,  RADIO WAVE, SATELLITE OR SIMILAR SUCCESSOR MEDIA, OR ANY COMBINA-
TION THEREOF. DIGITAL PRODUCT INCLUDES, BUT IS NOT LIMITED TO, AN  AUDIO
WORK,  AUDIOVISUAL  WORK,  VISUAL  WORK,  BOOK OR LITERARY WORK, GRAPHIC
WORK, GAME, INFORMATION OR ENTERTAINMENT  SERVICE,  STORAGE  OF  DIGITAL
PRODUCTS  AND  COMPUTER  SOFTWARE  BY WHATEVER MEANS DELIVERED. THE TERM
"DELIVERED TO" INCLUDES FURNISHED OR  PROVIDED  TO  OR  ACCESSED  BY.  A
DIGITAL  PRODUCT  DOES NOT INCLUDE LEGAL, MEDICAL, ACCOUNTING, ARCHITEC-
TURAL, RESEARCH, ANALYTICAL, ENGINEERING OR CONSULTING SERVICES PROVIDED
BY THE TAXPAYER.
  (B) RECEIPTS FROM THE SALE OF, LICENCE TO USE, OR GRANTING  OF  REMOTE
ACCESS TO DIGITAL PRODUCTS WITHIN THE STATE, DETERMINED ACCORDING TO THE
HIERARCHY  OF  METHODS  SET  FORTH  IN SUBPARAGRAPHS ONE THROUGH FOUR OF
PARAGRAPH (C) OF THIS SUBDIVISION, SHALL BE INCLUDED IN THE NUMERATOR OF
THE APPORTIONMENT FRACTION. RECEIPTS FROM THE SALE OF, LICENSE  TO  USE,
OR  GRANTING OF REMOTE ACCESS TO DIGITAL PRODUCTS WITHIN AND WITHOUT THE
STATE SHALL BE INCLUDED IN THE DENOMINATOR OF  THE  APPORTIONMENT  FRAC-
TION.  THE  TAXPAYER  MUST  EXERCISE  DUE  DILIGENCE  UNDER  EACH METHOD
DESCRIBED IN PARAGRAPH (C) OF THIS SUBDIVISION BEFORE REJECTING  IT  AND
PROCEEDING  TO  THE  NEXT  METHOD IN THE HIERARCHY. IF THE RECEIPT FOR A
DIGITAL PRODUCT IS COMPRISED OF A COMBINATION OF PROPERTY AND  SERVICES,
IT  CANNOT  BE  DIVIDED INTO SEPARATE COMPONENTS AND IS CONSIDERED TO BE
ONE RECEIPT REGARDLESS OF WHETHER IT IS SEPARATELY  STATED  FOR  BILLING
PURPOSES. THE ENTIRE RECEIPT MUST BE ALLOCATED BY THIS HIERARCHY.
  (C)  HIERARCHY  OF  SOURCING  METHODS. (1) DELIVERY DESTINATION OF THE
DIGITAL PRODUCT. A DIGITAL PRODUCT IS DEEMED DELIVERED WITHIN THE  STATE
IF THE LOCATION FROM WHICH THE PURCHASER OR ITS AUTHORIZED USER ACCESSES
OR  USES  THE DIGITAL PRODUCT IS IN THE STATE. DESTINATION MAY BE DEMON-
STRATED BY INTERNET PROTOCOL ADDRESS OR OTHER SIMILAR OR SUCCESSOR INDI-
CATOR, THE GEOGRAPHIC LOCATION OF THE EQUIPMENT  TO  WHICH  THE  DIGITAL
PRODUCT  IS  DELIVERED OR FROM WHICH THE DIGITAL PRODUCT IS ACCESSED, OR
THE DELIVERY DESTINATION INDICATED ON  A  BILL  OF  LADING  OR  PURCHASE
INVOICE.  A  DIGITAL  PRODUCT  ACCESSED  OR USED BY THE PURCHASER OR ITS
AUTHORIZED USER DURING THE TAXPAYER'S TAXABLE YEAR IN MULTIPLE LOCATIONS
IS DELIVERED WITHIN THE STATE TO THE EXTENT THAT THE DIGITAL PRODUCT  IS
ACCESSED OR USED IN THE STATE;
  (2) BILLING ADDRESS OF THE PURCHASER;
  (3)  ZIP  CODE  OR  OTHER  GEOGRAPHIC  INDICATOR  OF  THE  PURCHASER'S
LOCATION; OR
  (4) THE APPORTIONMENT FRACTION DETERMINED PURSUANT TO THIS SUBDIVISION
FOR THE PRECEDING TAXABLE YEAR, OR, IF THE TAXPAYER WAS NOT  SUBJECT  TO
TAX  IN  THE  PRECEDING TAXABLE YEAR, THEN THE APPORTIONMENT FRACTION IN
THE CURRENT TAXABLE YEAR FOR THOSE DIGITAL PRODUCTS THAT CAN BE  SOURCED
USING  THE  HIERARCHY  OF  SOURCING METHODS IN SUBPARAGRAPHS ONE THROUGH
THREE OF THIS SUBDIVISION.
  5. FINANCIAL TRANSACTIONS.  (A)  FINANCIAL  INSTRUMENTS.  A  FINANCIAL
INSTRUMENT  IS  A  "QUALIFIED  FINANCIAL  INSTRUMENT" IF IT IS MARKED TO
MARKET UNDER SECTION 475 OR SECTION 1256 OF THE INTERNAL  REVENUE  CODE,

S. 6359--C                         61

PROVIDED  THAT  LOANS  SECURED  BY  REAL PROPERTY SHALL NOT BE QUALIFIED
FINANCIAL INSTRUMENTS. A FINANCIAL INSTRUMENT IS A "NONQUALIFIED  FINAN-
CIAL INSTRUMENT" IF IT IS NOT A QUALIFIED FINANCIAL INSTRUMENT.
  (1)  FIXED  PERCENTAGE  METHOD FOR QUALIFIED FINANCIAL INSTRUMENTS. IN
DETERMINING THE INCLUSION OF  RECEIPTS  AND  NET  GAINS  FROM  QUALIFIED
FINANCIAL INSTRUMENTS IN THE APPORTIONMENT FRACTION, TAXPAYERS MAY ELECT
TO  USE  THE  FIXED PERCENTAGE METHOD DESCRIBED IN THIS SUBPARAGRAPH FOR
QUALIFIED FINANCIAL INSTRUMENTS. THE ELECTION IS IRREVOCABLE, APPLIES TO
ALL QUALIFIED FINANCIAL INSTRUMENTS, AND MUST BE MADE ON AN ANNUAL BASIS
ON THE TAXPAYER'S ORIGINAL, TIMELY FILED RETURN. IF THE TAXPAYER  ELECTS
THE  FIXED PERCENTAGE METHOD, THEN ALL INCOME, GAIN OR LOSS, FROM QUALI-
FIED FINANCIAL INSTRUMENTS CONSTITUTES BUSINESS INCOME, GAIN OR LOSS. IF
THE TAXPAYER DOES NOT ELECT TO USE THE  FIXED  PERCENTAGE  METHOD,  THEN
RECEIPTS  AND  NET  GAINS  ARE INCLUDED IN THE APPORTIONMENT FRACTION IN
ACCORDANCE WITH THE CUSTOMER SOURCING METHOD DESCRIBED  IN  SUBPARAGRAPH
TWO  OF THIS PARAGRAPH. UNDER THE FIXED PERCENTAGE METHOD, EIGHT PERCENT
OF ALL NET INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL  INSTRU-
MENTS  IS  INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. ALL
NET INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRUMENTS  IS
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (2)  CUSTOMER  SOURCING  METHOD. RECEIPTS AND NET GAINS FROM QUALIFIED
FINANCIAL INSTRUMENTS, IN CASES WHERE THE TAXPAYER DID NOT ELECT TO  USE
THE  FIXED PERCENTAGE METHOD DESCRIBED IN SUBPARAGRAPH ONE OF THIS PARA-
GRAPH, AND FROM NONQUALIFIED FINANCIAL INSTRUMENTS ARE INCLUDED  IN  THE
APPORTIONMENT   FRACTION  IN  ACCORDANCE  WITH  THIS  SUBPARAGRAPH.  FOR
PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL IS DEEMED TO BE LOCATED IN THE
STATE IF HIS OR HER BILLING ADDRESS IS IN THE STATE. A  BUSINESS  ENTITY
IS  DEEMED  TO  BE  LOCATED  IN  THE STATE IF ITS COMMERCIAL DOMICILE IS
LOCATED IN THE STATE.
  (A) LOANS. (I) RECEIPTS CONSTITUTING INTEREST FROM  LOANS  SECURED  BY
REAL  PROPERTY LOCATED WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERA-
TOR OF THE APPORTIONMENT FRACTION. RECEIPTS CONSTITUTING  INTEREST  FROM
LOANS  SECURED  BY  REAL  PROPERTY  LOCATED WITHIN AND WITHOUT THE STATE
SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (II) RECEIPTS CONSTITUTING INTEREST FROM LOANS  NOT  SECURED  BY  REAL
PROPERTY  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION IF THE BORROWER IS LOCATED  IN  THE  STATE.  RECEIPTS  CONSTITUTING
INTEREST  FROM  LOANS NOT SECURED BY REAL PROPERTY, WHETHER THE BORROWER
IS LOCATED WITHIN OR WITHOUT THE STATE, SHALL BE INCLUDED IN THE DENOMI-
NATOR OF THE APPORTIONMENT FRACTION.
  (III) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF  LOANS  SECURED  BY
REAL  PROPERTY  ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION AS PROVIDED IN THIS SUBCLAUSE. THE AMOUNT OF  NET  GAINS  FROM  THE
SALE  OF LOANS SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS  BY  A
FRACTION  THE  NUMERATOR  OF  WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM
SALES OF LOANS SECURED BY REAL PROPERTY LOCATED WITHIN THE STATE AND THE
DENOMINATOR OF WHICH IS THE GROSS PROCEEDS FROM SALES OF  LOANS  SECURED
BY  REAL  PROPERTY WITHIN AND WITHOUT THE STATE. GROSS PROCEEDS SHALL BE
DETERMINED AFTER THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS
BUT SHALL NOT BE LESS THAN ZERO. NET GAINS (NOT  LESS  THAN  ZERO)  FROM
SALES OF LOANS SECURED BY REAL PROPERTY WITHIN AND WITHOUT THE STATE ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (IV) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS NOT SECURED BY
REAL  PROPERTY  ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION AS PROVIDED IN THIS SUBCLAUSE. THE AMOUNT OF  NET  GAINS  FROM  THE

S. 6359--C                         62

SALE  OF LOANS NOT SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF
THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS BY
A FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS  FROM
SALES OF LOANS NOT SECURED BY REAL PROPERTY TO PURCHASERS LOCATED WITHIN
THE  STATE  AND THE DENOMINATOR OF WHICH IS THE AMOUNT OF GROSS RECEIPTS
FROM SALES OF LOANS NOT SECURED BY REAL PROPERTY TO  PURCHASERS  LOCATED
WITHIN  AND  WITHOUT THE STATE. GROSS PROCEEDS SHALL BE DETERMINED AFTER
THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS BUT SHALL NOT BE
LESS THAN ZERO.  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS  NOT
SECURED  BY  REAL PROPERTY ARE INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION.
  (B) FEDERAL, STATE, AND MUNICIPAL DEBT. RECEIPTS CONSTITUTING INTEREST
AND NET GAINS FROM SALES  OF  DEBT  INSTRUMENTS  ISSUED  BY  THE  UNITED
STATES,  ANY  STATE,  OR  POLITICAL  SUBDIVISION OF A STATE SHALL NOT BE
INCLUDED IN  THE  NUMERATOR  OF  THE  APPORTIONMENT  FRACTION.  RECEIPTS
CONSTITUTING  INTEREST  AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF
DEBT INSTRUMENTS ISSUED BY THE UNITED STATES AND THE STATE OF  NEW  YORK
OR  ITS  POLITICAL  SUBDIVISIONS SHALL BE INCLUDED IN THE DENOMINATOR OF
THE APPORTIONMENT FRACTION. FIFTY PERCENT OF THE  RECEIPTS  CONSTITUTING
INTEREST  AND  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF DEBT INSTRU-
MENTS ISSUED BY OTHER STATES OR THEIR POLITICAL  SUBDIVISIONS  SHALL  BE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (C)  ASSET  BACKED SECURITIES AND OTHER GOVERNMENT AGENCY DEBT.  EIGHT
PERCENT OF THE INTEREST INCOME FROM ASSET  BACKED  SECURITIES  OR  OTHER
SECURITIES  ISSUED  BY GOVERNMENT AGENCIES, INCLUDING BUT NOT LIMITED TO
SECURITIES  ISSUED  BY  THE  GOVERNMENT  NATIONAL  MORTGAGE  ASSOCIATION
(GNMA),  THE  FEDERAL  NATIONAL MORTGAGE ASSOCIATION (FNMA), THE FEDERAL
HOME LOAN MORTGAGE CORPORATION (FHLMC), OR THE SMALL  BUSINESS  ADMINIS-
TRATION  SHALL  BE  INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION. EIGHT PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM (I) SALES
OF ASSET BACKED SECURITIES OR  OTHER  SECURITIES  ISSUED  BY  GOVERNMENT
AGENCIES  ISSUED  BY  GNMA,  FNMA, OR FHLMC, THE SMALL BUSINESS ADMINIS-
TRATION OR OTHER GOVERNMENT AGENCY, OR (II) SALES OF OTHER ASSET  BACKED
SECURITIES THAT ARE SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEAL-
ER OR THROUGH A LICENSED EXCHANGE, SHALL BE INCLUDED IN THE NUMERATOR OF
THE APPORTIONMENT FRACTION. THE AMOUNT OF NET GAINS (NOT LESS THAN ZERO)
FROM  SALES  OF  OTHER ASSET BACKED SECURITIES REFERENCED IN CLAUSE (II)
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY
MULTIPLYING SUCH NET GAINS BY A FRACTION, THE NUMERATOR OF WHICH IS  THE
AMOUNT  OF  GROSS  PROCEEDS FROM SUCH SALES TO PURCHASERS LOCATED IN THE
STATE AND THE DENOMINATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS  FROM
SUCH  SALES TO PURCHASERS LOCATED WITHIN AND WITHOUT THE STATE. RECEIPTS
CONSTITUTING INTEREST FROM ASSET BACKED SECURITIES AND  NET  GAINS  (NOT
LESS  THAN  ZERO)  FROM SALES OF ASSET BACKED SECURITIES ARE INCLUDED IN
THE DENOMINATOR OF THE APPORTIONMENT FRACTION. GROSS PROCEEDS  SHALL  BE
DETERMINED AFTER THE DEDUCTION OF ANY COST TO ACQUIRE THE SECURITIES BUT
SHALL NOT BE LESS THAN ZERO.
  (D)  CORPORATE  BONDS.  RECEIPTS  CONSTITUTING INTEREST FROM CORPORATE
BONDS ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IF THE
COMMERCIAL DOMICILE OF THE ISSUING CORPORATION IS IN THE STATE.    EIGHT
PERCENT  OF  THE  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF CORPORATE
BONDS SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEALER OR THROUGH A
LICENSED EXCHANGE IS INCLUDED IN  THE  NUMERATOR  OF  THE  APPORTIONMENT
FRACTION.  THE AMOUNT OF NET GAINS (NOT LESS THAN ZERO) FROM OTHER SALES
OF CORPORATE BONDS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT  FRAC-
TION  IS  DETERMINED  BY  MULTIPLYING  SUCH NET GAINS BY A FRACTION, THE

S. 6359--C                         63

NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM  SUCH  SALES  TO
PURCHASERS  LOCATED  IN  THE  STATE  AND THE DENOMINATOR OF WHICH IS THE
AMOUNT OF GROSS PROCEEDS FROM SALES TO  PURCHASERS  LOCATED  WITHIN  AND
WITHOUT  THE STATE. RECEIPTS CONSTITUTING INTEREST FROM CORPORATE BONDS,
WHETHER THE ISSUING CORPORATION'S COMMERCIAL DOMICILE IS WITHIN OR WITH-
OUT THE STATE, AND NET GAINS (NOT LESS THAN ZERO) FROM SALES  OF  CORPO-
RATE  BONDS  TO  PURCHASERS WITHIN AND WITHOUT THE STATE ARE INCLUDED IN
THE DENOMINATOR OF THE APPORTIONMENT FRACTION. GROSS PROCEEDS  SHALL  BE
DETERMINED  AFTER  THE  DEDUCTION  OF  ANY COST TO ACQUIRE THE BONDS BUT
SHALL NOT BE LESS THAN ZERO.
  (E) REVERSE REPURCHASE AGREEMENTS AND SECURITIES BORROWING AGREEMENTS.
EIGHT PERCENT OF NET INTEREST INCOME (NOT LESS THAN ZERO)  FROM  REVERSE
REPURCHASE  AGREEMENTS  AND  SECURITIES  BORROWING  AGREEMENTS  SHALL BE
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT  FRACTION.  NET  INTEREST
INCOME (NOT LESS THAN ZERO) FROM REVERSE REPURCHASE AGREEMENTS AND SECU-
RITIES BORROWING AGREEMENTS IS INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT  FRACTION.  NET  INTEREST INCOME FROM REVERSE REPURCHASE AGREE-
MENTS AND SECURITIES BORROWING AGREEMENTS IS DETERMINED FOR PURPOSES  OF
THIS  SUBDIVISION  AFTER  THE DEDUCTION OF THE INTEREST EXPENSE FROM THE
TAXPAYER'S REPURCHASE AGREEMENTS AND SECURITIES LENDING  AGREEMENTS  BUT
CANNOT  BE  LESS  THAN  ZERO.  FOR  THIS CALCULATION, THE AMOUNT OF SUCH
INTEREST EXPENSE IS THE INTEREST EXPENSE ASSOCIATED WITH THE SUM OF  THE
VALUE   OF   THE  TAXPAYER'S  REPURCHASE  AGREEMENTS  WHERE  IT  IS  THE
SELLER/BORROWER PLUS THE VALUE  OF  THE  TAXPAYER'S  SECURITIES  LENDING
AGREEMENTS  WHERE  IT  IS  THE  SECURITIES  LENDER, PROVIDED SUCH SUM IS
LIMITED TO THE SUM OF THE VALUE OF  THE  TAXPAYER'S  REVERSE  REPURCHASE
AGREEMENTS  WHERE IT IS THE SELLER/BORROWER AND THE VALUE OF THE TAXPAY-
ER'S SECURITIES BORROWING AGREEMENTS.
  (F) FEDERAL FUNDS. EIGHT PERCENT OF THE NET INTEREST  (NOT  LESS  THAN
ZERO)  FROM FEDERAL FUNDS IS INCLUDED IN THE NUMERATOR OF THE APPORTION-
MENT FRACTION. THE NET INTEREST (NOT LESS THAN ZERO) FROM FEDERAL  FUNDS
IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INTER-
EST FROM FEDERAL FUNDS IS DETERMINED AFTER DEDUCTION OF INTEREST EXPENSE
FROM FEDERAL FUNDS.
  (G)  DIVIDENDS AND NET GAINS FROM SALES OF STOCK OR PARTNERSHIP INTER-
ESTS. DIVIDENDS FROM STOCK, NET GAINS (NOT LESS THAN ZERO) FROM SALES OF
STOCK AND NET GAINS (NOT LESS THAN ZERO) FROM THE  SALE  OF  PARTNERSHIP
INTERESTS ARE NOT INCLUDED IN EITHER THE NUMERATOR OR DENOMINATOR OF THE
APPORTIONMENT  FRACTION  UNLESS  THE COMMISSIONER DETERMINES PURSUANT TO
SUBDIVISION ELEVEN OF THIS SECTION THAT INCLUSION OF SUCH DIVIDENDS  AND
NET  GAINS  (NOT  LESS  THAN  ZERO) IS NECESSARY TO PROPERLY REFLECT THE
BUSINESS INCOME OR CAPITAL OF THE TAXPAYER.
  (H) OTHER FINANCIAL INSTRUMENTS. (I)  RECEIPTS  CONSTITUTING  INTEREST
FROM  OTHER  FINANCIAL INSTRUMENTS SHALL BE INCLUDED IN THE NUMERATOR OF
THE APPORTIONMENT FRACTION  IF  THE  PAYOR  IS  LOCATED  IN  THE  STATE.
RECEIPTS CONSTITUTING INTEREST FROM OTHER FINANCIAL INSTRUMENTS, WHETHER
THE  PAYOR IS WITHIN OR WITHOUT THE STATE, ARE INCLUDED IN THE DENOMINA-
TOR OF THE APPORTIONMENT FRACTION.
  (II) NET GAINS (NOT LESS THAN ZERO)  FROM  SALES  OF  OTHER  FINANCIAL
INSTRUMENTS  AND  OTHER INCOME (NOT LESS THAN ZERO) FROM OTHER FINANCIAL
INSTRUMENTS WHERE THE PURCHASER OR PAYOR IS LOCATED  IN  THE  STATE  ARE
INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION, PROVIDED THAT,
IF THE PURCHASER OR PAYOR IS A REGISTERED SECURITIES BROKER OR DEALER OR
THE TRANSACTION IS MADE THROUGH A LICENSED EXCHANGE, THEN EIGHT  PERCENT
OF  THE  NET  GAINS  (NOT LESS THAN ZERO) OR OTHER INCOME (NOT LESS THAN
ZERO) IS INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRACTION.  NET

S. 6359--C                         64

GAINS (NOT LESS THAN ZERO) FROM SALES OF OTHER FINANCIAL INSTRUMENTS AND
OTHER  INCOME  (NOT LESS THAN ZERO) FROM OTHER FINANCIAL INSTRUMENTS ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (I)  PHYSICAL  COMMODITIES. NET INCOME (NOT LESS THAN ZERO) FROM SALES
OF PHYSICAL COMMODITIES ARE INCLUDED IN THE NUMERATOR OF THE  APPORTION-
MENT FRACTION AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF NET INCOME
FROM  SALES  OF  PHYSICAL  COMMODITIES  INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET INCOME  FROM
SALES  OF  PHYSICAL COMMODITIES BY A FRACTION, THE NUMERATOR OF WHICH IS
THE AMOUNT OF RECEIPTS  FROM  SALES  OF  PHYSICAL  COMMODITIES  ACTUALLY
DELIVERED  TO POINTS WITHIN THE STATE OR, IF THERE IS NO ACTUAL DELIVERY
OF THE PHYSICAL COMMODITY, SOLD TO CUSTOMERS LOCATED IN THE  STATE,  AND
THE  DENOMINATOR  OF WHICH IS THE AMOUNT OF RECEIPTS FROM SALES OF PHYS-
ICAL COMMODITIES ACTUALLY DELIVERED TO POINTS  WITHIN  AND  WITHOUT  THE
STATE  OR  SOLD  TO  CUSTOMERS LOCATED WITHIN AND WITHOUT THE STATE. NET
INCOME (NOT LESS THAT  ZERO)  FROM  SALES  OF  PHYSICAL  COMMODITIES  IS
INCLUDED  IN  THE  DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INCOME
(NOT LESS THAN ZERO) FROM SALES OF PHYSICAL  COMMODITIES  IS  DETERMINED
AFTER  THE  DEDUCTION  OF  THE  COST  TO ACQUIRE OR PRODUCE THE PHYSICAL
COMMODITIES.
  (B) OTHER RECEIPTS FROM BROKER OR DEALER  ACTIVITIES.  RECEIPTS  OF  A
REGISTERED  SECURITIES  BROKER  OR DEALER FROM SECURITIES OR COMMODITIES
BROKER OR DEALER ACTIVITIES DESCRIBED IN THIS PARAGRAPH SHALL BE  DEEMED
TO  BE  GENERATED  WITHIN  THE  STATE  AS DESCRIBED IN SUBPARAGRAPHS ONE
THROUGH EIGHT OF THIS PARAGRAPH. RECEIPTS FROM SUCH ACTIVITIES GENERATED
WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT
FRACTION. RECEIPTS FROM SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE
STATE SHALL BE INCLUDED IN THE DENOMINATOR OF  THE  APPORTIONMENT  FRAC-
TION.  FOR  THE  PURPOSES OF THIS PARAGRAPH, THE TERM "SECURITIES" SHALL
HAVE THE SAME MEANING AS IN SECTION 475(C)(2) OF  THE  INTERNAL  REVENUE
CODE  AND  THE  TERM  "COMMODITIES"  SHALL  HAVE  THE SAME MEANING AS IN
SECTION 475(E)(2) OF THE INTERNAL REVENUE CODE.
  (1) RECEIPTS  CONSTITUTING  BROKERAGE  COMMISSIONS  DERIVED  FROM  THE
EXECUTION  OF SECURITIES OR COMMODITIES PURCHASE OR SALES ORDERS FOR THE
ACCOUNTS OF CUSTOMERS SHALL BE DEEMED TO BE GENERATED WITHIN  THE  STATE
IF  THE  MAILING  ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE CUSTOMER
WHO IS RESPONSIBLE FOR PAYING SUCH COMMISSIONS IS WITHIN THE STATE.
  (2) RECEIPTS CONSTITUTING MARGIN INTEREST EARNED ON BEHALF OF  BROKER-
AGE  ACCOUNTS  SHALL  BE  DEEMED TO BE GENERATED WITHIN THE STATE IF THE
MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE  CUSTOMER  WHO  IS
RESPONSIBLE FOR PAYING SUCH MARGIN INTEREST IS WITHIN THE STATE.
  (3)(A)  RECEIPTS CONSTITUTING FEES EARNED BY THE TAXPAYER FOR ADVISORY
SERVICES TO A CUSTOMER IN CONNECTION WITH THE UNDERWRITING OF SECURITIES
FOR SUCH CUSTOMER (SUCH CUSTOMER BEING THE ENTITY THAT IS  CONTEMPLATING
ISSUING  OR  IS  ISSUING  SECURITIES) OR FEES EARNED BY THE TAXPAYER FOR
MANAGING AN UNDERWRITING SHALL BE DEEMED  TO  BE  GENERATED  WITHIN  THE
STATE  IF  THE  MAILING  ADDRESS  IN THE RECORDS OF THE TAXPAYER OF SUCH
CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
  (B) RECEIPTS CONSTITUTING THE PRIMARY  SPREAD  OF  SELLING  CONCESSION
FROM  UNDERWRITTEN SECURITIES SHALL BE DEEMED TO BE GENERATED WITHIN THE
STATE TO THE EXTENT THE CUSTOMER IS LOCATED IN THE STATE.
  (C) THE TERM "PRIMARY SPREAD" MEANS THE DIFFERENCE BETWEEN  THE  PRICE
PAID  BY THE TAXPAYER TO THE ISSUER OF THE SECURITIES BEING MARKETED AND
THE PRICE RECEIVED FROM THE SUBSEQUENT SALE OF THE UNDERWRITTEN  SECURI-
TIES  AT  THE INITIAL PUBLIC OFFERING PRICE, LESS ANY SELLING CONCESSION
AND ANY FEES PAID TO THE TAXPAYER FOR ADVISORY SERVICES OR ANY MANAGER'S

S. 6359--C                         65

FEES, IF SUCH FEES ARE NOT PAID BY THE CUSTOMER TO  THE  TAXPAYER  SEPA-
RATELY.  THE TERM "PUBLIC OFFERING PRICE" MEANS THE PRICE AGREED UPON BY
THE TAXPAYER AND THE ISSUER AT WHICH THE SECURITIES ARE TO BE OFFERED TO
THE  PUBLIC.  THE TERM "SELLING CONCESSION" MEANS THE AMOUNT PAID TO THE
TAXPAYER FOR PARTICIPATING IN THE UNDERWRITING OF A SECURITY  WHERE  THE
TAXPAYER IS NOT THE LEAD UNDERWRITER.
  (4)  RECEIPTS CONSTITUTING ACCOUNT MAINTENANCE FEES SHALL BE DEEMED TO
BE GENERATED WITHIN THE STATE IF THE MAILING ADDRESS IN  THE  RECORD  OF
THE  TAXPAYER OF THE CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH ACCOUNT
MAINTENANCE FEES IS WITHIN THE STATE.
  (5) RECEIPTS CONSTITUTING FEES FOR MANAGEMENT  OR  ADVISORY  SERVICES,
INCLUDING  FEES  FOR ADVISORY SERVICES IN RELATION TO MERGER OR ACQUISI-
TION ACTIVITIES, BUT EXCLUDING FEES PAID FOR SERVICES DESCRIBED IN PARA-
GRAPH (D) OF THIS SUBDIVISION, SHALL BE DEEMED TO  BE  GENERATED  WITHIN
THE  STATE  IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE
CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
  (6) RECEIPTS CONSTITUTING INTEREST EARNED BY THE TAXPAYER ON LOANS AND
ADVANCES MADE BY THE TAXPAYER  TO  A  CORPORATION  AFFILIATED  WITH  THE
TAXPAYER  BUT  WITH  WHICH  THE TAXPAYER IS NOT PERMITTED OR REQUIRED TO
FILE A COMBINED REPORT PURSUANT TO SECTION TWO  HUNDRED  TEN-C  OF  THIS
ARTICLE  SHALL BE DEEMED TO ARISE FROM SERVICES PERFORMED AT THE PRINCI-
PAL PLACE OF BUSINESS OF SUCH AFFILIATED CORPORATION.
  (7) IF THE TAXPAYER RECEIVES ANY OF THE RECEIPTS ENUMERATED IN SUBPAR-
AGRAPHS ONE THROUGH FOUR OF THIS PARAGRAPH AS A RESULT OF  A  SECURITIES
CORRESPONDENT  RELATIONSHIP  SUCH  TAXPAYER  HAS  WITH ANOTHER BROKER OR
DEALER WITH THE TAXPAYER ACTING IN THIS  RELATIONSHIP  AS  THE  CLEARING
FIRM,  SUCH RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO
EXTENT SET FORTH IN EACH OF  SUCH  SUBPARAGRAPHS.  THE  AMOUNT  OF  SUCH
RECEIPTS SHALL EXCLUDE THE AMOUNT THE TAXPAYER IS REQUIRED TO PAY TO THE
CORRESPONDENT  FIRM FOR SUCH CORRESPONDENT RELATIONSHIP. IF THE TAXPAYER
RECEIVES ANY OF THE RECEIPTS ENUMERATED  IN  SUBPARAGRAPHS  ONE  THROUGH
FOUR  OF  THIS  PARAGRAPH  AS  AS  RESULT  OF A SECURITIES CORRESPONDENT
RELATIONSHIP SUCH TAXPAYER HAS WITH ANOTHER BROKER OR  DEALER  WITH  THE
TAXPAYER  ACTING  IN  THIS  RELATIONSHIP  AS  THE INTRODUCING FIRM, SUCH
RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO THE  EXTENT
SET FORTH IN EACH OF SUCH SUBPARAGRAPHS.
  (8) IF, FOR PURPOSES OF SUBPARAGRAPHS ONE, TWO, CLAUSE (A) OF SUBPARA-
GRAPH THREE, FOUR, OR FIVE OF THIS PARAGRAPH THE TAXPAYER IS UNABLE FROM
ITS  RECORDS  TO  DETERMINE  THE  MAILING ADDRESS OF THE CUSTOMER, EIGHT
PERCENT OF THE RECEIPTS IS INCLUDED IN THE NUMERATOR OF  THE  APPORTION-
MENT FRACTION.
  (C)  RECEIPTS FROM CREDIT CARD AND SIMILAR ACTIVITIES. RECEIPTS RELAT-
ING TO THE  BANK,  CREDIT,  TRAVEL  AND  ENTERTAINMENT  CARD  ACTIVITIES
DESCRIBED  IN  THIS PARAGRAPH SHALL BE DEEMED TO BE GENERATED WITHIN THE
STATE AS DESCRIBED IN SUBPARAGRAPHS ONE THROUGH THREE OF THIS PARAGRAPH.
RECEIPTS FROM SUCH  ACTIVITIES  GENERATED  WITHIN  THE  STATE  SHALL  BE
INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.  RECEIPTS FROM
SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED
IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (1) RECEIPTS CONSTITUTING INTEREST, AND  FEES  AND  PENALTIES  IN  THE
NATURE  OF  INTEREST,  FROM  BANK, CREDIT, TRAVEL AND ENTERTAINMENT CARD
RECEIVABLES SHALL BE DEEMED TO BE GENERATED  WITHIN  THE  STATE  IF  THE
MAILING  ADDRESS OF THE CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS IN
THE STATE;

S. 6359--C                         66

  (2) RECEIPTS FROM SERVICE CHARGES AND FEES FROM SUCH  CARDS  SHALL  BE
DEEMED  TO  BE  GENERATED WITHIN THE STATE IF THE MAILING ADDRESS OF THE
CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS IN THE STATE; AND
  (3)  RECEIPTS  FROM MERCHANT DISCOUNTS SHALL BE DEEMED TO BE GENERATED
WITHIN THE STATE IF THE MERCHANT IS LOCATED WITHIN  THE  STATE.  IN  THE
CASE  OF  A  MERCHANT  WITH  LOCATIONS  BOTH WITHIN AND WITHOUT NEW YORK
STATE, ONLY RECEIPTS FROM MERCHANT DISCOUNTS ATTRIBUTABLE TO SALES  MADE
FROM LOCATIONS WITHIN NEW YORK STATE ARE ALLOCATED TO NEW YORK STATE. IT
SHALL  BE  PRESUMED  THAT THE LOCATION OF THE MERCHANT IS THE ADDRESS OF
THE MERCHANT SHOWN ON THE INVOICE  SUBMITTED  BY  THE  MERCHANT  TO  THE
TAXPAYER.
  (D)  RECEIPTS FROM CERTAIN SERVICES TO INVESTMENT COMPANIES.  RECEIPTS
RECEIVED FROM AN INVESTMENT COMPANY ARISING FROM THE SALE OF MANAGEMENT,
ADMINISTRATION OR DISTRIBUTION SERVICES TO SUCH INVESTMENT  COMPANY  ARE
INCLUDED  IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.  THE PORTION
OF SUCH RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
(SUCH PORTION REFERRED TO HEREIN AS  THE  NEW  YORK  PORTION)  SHALL  BE
DETERMINED AS PROVIDED IN THIS PARAGRAPH.
  (1)  THE  NEW  YORK  PORTION SHALL BE THE PRODUCT OF THE TOTAL OF SUCH
RECEIPTS FROM THE SALE OF SUCH SERVICES AND A FRACTION. THE NUMERATOR OF
THAT FRACTION IS THE SUM OF THE MONTHLY PERCENTAGES (AS DEFINED  HEREIN-
AFTER)  DETERMINED  FOR  EACH  MONTH OF THE INVESTMENT COMPANY'S TAXABLE
YEAR FOR FEDERAL INCOME TAX PURPOSES WHICH TAXABLE YEAR ENDS WITHIN  THE
TAXABLE  YEAR  OF THE TAXPAYER (BUT EXCLUDING ANY MONTH DURING WHICH THE
INVESTMENT COMPANY HAD NO OUTSTANDING SHARES).  THE  MONTHLY  PERCENTAGE
FOR  EACH  SUCH  MONTH IS DETERMINED BY DIVIDING THE NUMBER OF SHARES IN
THE INVESTMENT COMPANY THAT ARE OWNED ON THE LAST DAY OF  THE  MONTH  BY
SHAREHOLDERS  THAT  ARE  DOMICILED  IN  THE STATE BY THE TOTAL NUMBER OF
SHARES IN THE INVESTMENT COMPANY OUTSTANDING ON THAT DATE.  THE  DENOMI-
NATOR OF THE FRACTION IS THE NUMBER OF SUCH MONTHLY PERCENTAGES.
  (2)(A)  FOR PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL, ESTATE OR TRUST
IS DEEMED TO BE LOCATED IN THE STATE IF HIS, HER OR ITS MAILING  ADDRESS
ON  THE  RECORDS  OF  THE INVESTMENT COMPANY IS IN THE STATE. A BUSINESS
ENTITY IS DEEMED TO BE LOCATED IN THE STATE IF ITS  COMMERCIAL  DOMICILE
IS LOCATED IN THE STATE.
  (B)  FOR  PURPOSES  OF  THIS  PARAGRAPH, THE TERM "INVESTMENT COMPANY"
MEANS A REGULATED INVESTMENT COMPANY, AS DEFINED IN SECTION 851  OF  THE
INTERNAL REVENUE CODE, AND A PARTNERSHIP TO WHICH SECTION 7704(A) OF THE
INTERNAL  REVENUE  CODE APPLIES (BY VIRTUE OF SECTION 7704(C)(3) OF SUCH
CODE) AND THAT MEETS THE REQUIREMENTS OF SECTION 851(B)  OF  SUCH  CODE.
THE  PRECEDING SENTENCE SHALL BE APPLIED TO THE TAXABLE YEAR FOR FEDERAL
INCOME TAX PURPOSES OF THE BUSINESS ENTITY THAT IS ASSERTED  TO  CONSTI-
TUTE  AN  INVESTMENT  COMPANY  THAT  ENDS WITHIN THE TAXABLE YEAR OF THE
TAXPAYER.
  (C) FOR PURPOSES OF THIS PARAGRAPH THE TERM "RECEIPTS FROM AN  INVEST-
MENT  COMPANY"  INCLUDES  AMOUNTS  RECEIVED  DIRECTLY FROM AN INVESTMENT
COMPANY AS WELL AS  AMOUNTS  RECEIVED  FROM  THE  SHAREHOLDERS  IN  SUCH
INVESTMENT COMPANY, IN THEIR CAPACITY AS SUCH.
  (D)  FOR  PURPOSES  OF  THIS PARAGRAPH, THE TERM "MANAGEMENT SERVICES"
MEANS THE RENDERING OF  INVESTMENT  ADVICE  TO  AN  INVESTMENT  COMPANY,
MAKING  DETERMINATIONS  AS TO WHEN SALES AND PURCHASES OF SECURITIES ARE
TO BE MADE ON BEHALF  OF  AN  INVESTMENT  COMPANY,  OR  THE  SELLING  OR
PURCHASING  OF  SECURITIES CONSTITUTING ASSETS OF AN INVESTMENT COMPANY,
AND RELATED ACTIVITIES, BUT ONLY WHERE SUCH ACTIVITY OR  ACTIVITIES  ARE
PERFORMED  PURSUANT  TO  A  CONTRACT WITH THE INVESTMENT COMPANY ENTERED

S. 6359--C                         67

INTO PURSUANT TO SECTION 15(A) OF THE FEDERAL INVESTMENT COMPANY ACT  OF
NINETEEN HUNDRED FORTY, AS AMENDED.
  (E)  FOR  PURPOSES OF THIS PARAGRAPH, THE TERM "DISTRIBUTION SERVICES"
MEANS THE SERVICES OF ADVERTISING, SERVICING INVESTOR ACCOUNTS  (INCLUD-
ING  REDEMPTIONS),  MARKETING  SHARES OR SELLING SHARES OF AN INVESTMENT
COMPANY, BUT, IN THE CASE OF ADVERTISING,  SERVICING  INVESTOR  ACCOUNTS
(INCLUDING  REDEMPTIONS) OR MARKETING SHARES, ONLY WHERE SUCH SERVICE IS
PERFORMED BY A PERSON WHO IS (OR WAS, IN THE CASE OF A CLOSED END COMPA-
NY) ALSO ENGAGED IN THE SERVICE OF SELLING SUCH SHARES. IN THE  CASE  OF
AN  OPEN  END  COMPANY, SUCH SERVICE OF SELLING SHARES MUST BE PERFORMED
PURSUANT TO A CONTRACT ENTERED INTO PURSUANT TO  SECTION  15(B)  OF  THE
FEDERAL INVESTMENT COMPANY ACT OF NINETEEN HUNDRED FORTY, AS AMENDED.
  (F) FOR PURPOSES OF THIS PARAGRAPH, THE TERM "ADMINISTRATION SERVICES"
INCLUDES  CLERICAL,  ACCOUNTING,  BOOKKEEPING, DATA PROCESSING, INTERNAL
AUDITING, LEGAL AND TAX SERVICES PERFORMED FOR AN INVESTMENT COMPANY BUT
ONLY IF THE PROVIDER OF SUCH SERVICE OR SERVICES DURING THE TAXABLE YEAR
IN WHICH SUCH SERVICE OR SERVICES ARE  SOLD  ALSO  SELLS  MANAGEMENT  OR
DISTRIBUTION SERVICES, AS DEFINED HEREINABOVE, TO SUCH INVESTMENT COMPA-
NY.
  (E) FOR PURPOSES OF THIS SUBDIVISION, A TAXPAYER SHALL USE THE FOLLOW-
ING HIERARCHY TO DETERMINE THE COMMERCIAL DOMICILE OF A BUSINESS ENTITY,
BASED ON THE INFORMATION KNOWN TO THE TAXPAYER OR INFORMATION THAT WOULD
BE KNOWN UPON REASONABLE INQUIRY: (I) THE LOCATION OF THE TREASURY FUNC-
TION  OF THE BUSINESS ENTITY; (II) THE SEAT OF MANAGEMENT AND CONTROL OF
THE BUSINESS ENTITY; AND (III) THE BILLING ADDRESS OF THE BUSINESS ENTI-
TY IN THE TAXPAYER'S RECORDS.  THE TAXPAYER MUST EXERCISE DUE  DILIGENCE
BEFORE  REJECTING  A METHOD IN THIS HIERARCHY AND PROCEEDING TO THE NEXT
METHOD.
  (F) FOR PURPOSES OF THIS SUBDIVISION, THE TERM "REGISTERED  SECURITIES
BROKER  OR  DEALER"  MEANS  A BROKER OR DEALER REGISTERED AS SUCH BY THE
SECURITIES AND EXCHANGE COMMISSION OR A BROKER OR DEALER  REGISTERED  AS
SUCH BY THE COMMODITIES FUTURES TRADING COMMISSION, AND SHALL INCLUDE AN
OTC  DERIVATIVES  DEALER  AS DEFINED UNDER REGULATIONS OF THE SECURITIES
AND EXCHANGE COMMISSION AT TITLE 17, PART 240, SECTION 3B-12 OF THE CODE
OF FEDERAL REGULATIONS (17 CFR 240.3B-12).
  6. RECEIPTS FROM RAILROAD AND TRUCKING  BUSINESS.  RECEIPTS  FROM  THE
CONDUCT  OF  A RAILROAD BUSINESS (INCLUDING SURFACE RAILROAD, WHETHER OR
NOT OPERATED BY STEAM, SUBWAY RAILROAD, ELEVATED RAILROAD, PALACE CAR OR
SLEEPING CAR BUSINESS) OR A TRUCKING BUSINESS ARE INCLUDED IN THE NUMER-
ATOR OF THE APPORTIONMENT FRACTION AS FOLLOWS. THE  AMOUNT  OF  RECEIPTS
FROM  THE CONDUCT OF A RAILROAD BUSINESS OR A TRUCKING BUSINESS INCLUDED
IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED  BY  MULTI-
PLYING  THE  AMOUNT  OF  RECEIPTS  FROM SUCH BUSINESS BY A FRACTION, THE
NUMERATOR OF WHICH IS THE MILES IN SUCH BUSINESS WITHIN THE STATE DURING
THE PERIOD COVERED BY THE TAXPAYER'S REPORT AND THE DENOMINATOR OF WHICH
IS THE MILES IN SUCH BUSINESS WITHIN AND WITHOUT THE STATE  DURING  SUCH
PERIOD.   RECEIPTS FROM THE CONDUCT OF THE RAILROAD BUSINESS OR A TRUCK-
ING BUSINESS ARE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT  FRAC-
TION.
  7.  RECEIPTS  FROM  AVIATION  SERVICES.  (A)  AIR  FREIGHT FORWARDING.
RECEIPTS OF A TAXPAYER FROM  THE  ACTIVITY  OF  AIR  FREIGHT  FORWARDING
ACTING  AS PRINCIPAL AND LIKE INDIRECT AIR CARRIER RECEIPTS ARISING FROM
SUCH ACTIVITY SHALL BE INCLUDED IN THE NUMERATOR  OF  THE  APPORTIONMENT
FRACTION  AS  FOLLOWS:  ONE HUNDRED PERCENT OF SUCH RECEIPTS IF BOTH THE
PICKUP AND DELIVERY ASSOCIATED WITH SUCH RECEIPTS ARE MADE IN THE  STATE
AND  FIFTY  PERCENT  OF  SUCH  RECEIPTS IF EITHER THE PICKUP OR DELIVERY

S. 6359--C                         68

ASSOCIATED WITH SUCH RECEIPTS IS MADE IN THIS  STATE.    SUCH  RECEIPTS,
WHETHER THE PICKUP OR DELIVERY ASSOCIATED WITH THE RECEIPTS IS WITHIN OR
WITHOUT  THE  STATE,  SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION.
  (B)  OTHER  AVIATION  SERVICES.  (1)(A)  THE  PORTION OF RECEIPTS OF A
TAXPAYER FROM AVIATION SERVICES (OTHER THAN SERVICES DESCRIBED IN  PARA-
GRAPH  (A)  OF  THIS SUBDIVISION) TO BE INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION SHALL BE DETERMINED BY MULTIPLYING  ITS  RECEIPTS
FROM SUCH AVIATION SERVICES BY A PERCENTAGE WHICH IS EQUAL TO THE ARITH-
METIC AVERAGE OF THE FOLLOWING THREE PERCENTAGES:
  (I)  THE  PERCENTAGE  DETERMINED  BY  DIVIDING  SIXTY  PERCENT  OF THE
AIRCRAFT ARRIVALS AND DEPARTURES  WITHIN  THIS  STATE  BY  THE  TAXPAYER
DURING  THE  PERIOD COVERED BY ITS REPORT BY THE TOTAL AIRCRAFT ARRIVALS
AND DEPARTURES  WITHIN  AND  WITHOUT  THIS  STATE  DURING  SUCH  PERIOD;
PROVIDED,  HOWEVER,  ARRIVALS  AND  DEPARTURES SOLELY FOR MAINTENANCE OR
REPAIR, REFUELING  (WHERE  NO  DEBARKATION  OR  EMBARKATION  OF  TRAFFIC
OCCURS), ARRIVALS AND DEPARTURES OF FERRY AND PERSONNEL TRAINING FLIGHTS
OR  ARRIVALS  AND  DEPARTURES IN THE EVENT OF EMERGENCY SITUATIONS SHALL
NOT BE INCLUDED IN COMPUTING  SUCH  ARRIVAL  AND  DEPARTURE  PERCENTAGE;
PROVIDED, FURTHER, THE COMMISSIONER MAY ALSO EXEMPT FROM SUCH PERCENTAGE
AIRCRAFT  ARRIVALS  AND  DEPARTURES OF ALL NON-REVENUE FLIGHTS INCLUDING
FLIGHTS INVOLVING THE TRANSPORTATION OF OFFICERS OR EMPLOYEES  RECEIVING
AIR  TRANSPORTATION  TO  PERFORM MAINTENANCE OR REPAIR SERVICES OR WHERE
SUCH OFFICERS OR EMPLOYEES ARE TRANSPORTED IN CONJUNCTION WITH AN  EMER-
GENCY SITUATION OR THE INVESTIGATION OF AN AIR DISASTER (OTHER THAN ON A
SCHEDULED  FLIGHT);  PROVIDED,  HOWEVER, THAT ARRIVALS AND DEPARTURES OF
FLIGHTS TRANSPORTING OFFICERS AND EMPLOYEES RECEIVING AIR TRANSPORTATION
FOR PURPOSES OTHER THAN SPECIFIED ABOVE (WITHOUT REGARD TO REMUNERATION)
SHALL BE INCLUDED IN COMPUTING SUCH ARRIVAL AND DEPARTURE PERCENTAGE;
  (II) THE PERCENTAGE DETERMINED BY DIVIDING SIXTY PERCENT OF THE REVEN-
UE TONS HANDLED BY THE TAXPAYER AT AIRPORTS  WITHIN  THIS  STATE  DURING
SUCH  PERIOD  BY THE TOTAL REVENUE TONS HANDLED BY IT AT AIRPORTS WITHIN
AND WITHOUT THIS STATE DURING SUCH PERIOD; AND
  (III) THE PERCENTAGE DETERMINED  BY  DIVIDING  SIXTY  PERCENT  OF  THE
TAXPAYER'S  ORIGINATING REVENUE WITHIN THIS STATE FOR SUCH PERIOD BY ITS
TOTAL ORIGINATING REVENUE WITHIN AND WITHOUT THIS STATE FOR SUCH PERIOD.
  (B) AS USED HEREIN THE TERM "AIRCRAFT ARRIVALS AND  DEPARTURES"  MEANS
THE  NUMBER OF LANDINGS AND TAKEOFFS OF THE AIRCRAFT OF THE TAXPAYER AND
THE NUMBER OF AIR PICKUPS AND DELIVERIES BY THE AIRCRAFT OF SUCH TAXPAY-
ER; THE TERM "ORIGINATING REVENUE" MEANS REVENUE TO  THE  TAXPAYER  FROM
THE  TRANSPORTATION  OR  REVENUE  PASSENGERS  AND REVENUE PROPERTY FIRST
RECEIVED BY THE TAXPAYER EITHER AS ORIGINATING OR CONNECTING TRAFFIC  AT
AIRPORTS;  AND  THE  TERM  "REVENUE  TONS  HANDLED"  BY  THE TAXPAYER AT
AIRPORTS MEANS THE WEIGHT IN TONS OF REVENUE PASSENGERS (AT TWO  HUNDRED
POUNDS  PER PASSENGER) AND REVENUE CARGO FIRST RECEIVED EITHER AS ORIGI-
NATING OR CONNECTING TRAFFIC OR FINALLY DISCHARGED BY  THE  TAXPAYER  AT
AIRPORTS;
  (2)  ALL  SUCH RECEIPTS OF A TAXPAYER FROM AVIATION SERVICES DESCRIBED
IN THIS PARAGRAPH ARE INCLUDED IN THE DENOMINATOR OF  THE  APPORTIONMENT
FRACTION.
  8. RECEIPTS FROM SALES OF ADVERTISING. (A) THE AMOUNT OF RECEIPTS FROM
SALES OF ADVERTISING IN NEWSPAPERS OR PERIODICALS INCLUDED IN THE NUMER-
ATOR  OF  THE  APPORTIONMENT  FRACTION  IS DETERMINED BY MULTIPLYING THE
TOTAL OF SUCH RECEIPTS BY A FRACTION, THE  NUMERATOR  OF  WHICH  IS  THE
NUMBER  OF  NEWSPAPERS  AND  PERIODICALS  DELIVERED TO POINTS WITHIN THE
STATE AND THE DENOMINATOR OF WHICH IS THE NUMBER OF NEWSPAPERS AND PERI-

S. 6359--C                         69

ODICALS DELIVERED TO POINTS WITHIN AND WITHOUT THE STATE. THE  TOTAL  OF
SUCH  RECEIPTS FROM SALES OF ADVERTISING IN NEWSPAPERS OR PERIODICALS IS
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (B)  THE AMOUNT OF RECEIPTS FROM SALES OF ADVERTISING ON TELEVISION OR
RADIO INCLUDED IN THE APPORTIONMENT FRACTION IS DETERMINED BY  MULTIPLY-
ING  THE TOTAL OF SUCH RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH IS
THE NUMBER OF VIEWERS OR LISTENERS WITHIN THE STATE AND THE  DENOMINATOR
OF  WHICH  IS  THE NUMBER OF VIEWERS OR LISTENERS WITHIN AND WITHOUT THE
STATE. THE TOTAL OF SUCH RECEIPTS FROM SALES  OF  ADVERTISING  ON  TELE-
VISION  AND  RADIO  IS  INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT
FRACTION.
  (C) THE AMOUNT OF RECEIPTS FROM SALES OF ADVERTISING NOT DESCRIBED  IN
PARAGRAPH  (A) OR (B) OF THIS SUBDIVISION THAT IS FURNISHED, PROVIDED OR
DELIVERED TO, OR ACCESSED BY THE VIEWER OR LISTENER THROUGH THE  USE  OF
WIRE,  CABLE,  FIBER-OPTIC,  LASER,  MICROWAVE, RADIO WAVE, SATELLITE OR
SIMILAR SUCCESSOR MEDIA OR ANY  COMBINATION  THEREOF,  INCLUDED  IN  THE
NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE
TOTAL  OF  SUCH  RECEIPTS  BY  A FRACTION, THE NUMERATOR OF WHICH IS THE
NUMBER OF VIEWERS OR LISTENERS WITHIN THE STATE AND THE  DENOMINATOR  OF
WHICH  IS  THE  NUMBER  OF  VIEWERS  OR LISTENERS WITHIN AND WITHOUT THE
STATE. THE TOTAL OF SUCH RECEIPTS FROM SALES OF ADVERTISING DESCRIBED IN
THIS PARAGRAPH IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC-
TION.
  9. RECEIPTS FROM TRANSPORTATION OR TRANSMISSION OF GAS THROUGH  PIPES.
RECEIPTS  FROM  THE  TRANSPORTATION OR TRANSMISSION OF GAS THROUGH PIPES
ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION AS  FOLLOWS.
THE  AMOUNT  OF  RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION OF GAS
THROUGH PIPES INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IS
DETERMINED BY MULTIPLYING THE TOTAL AMOUNT OF SUCH RECEIPTS BY  A  FRAC-
TION,  THE  NUMERATOR  OF  WHICH  IS THE TAXPAYER'S TRANSPORTATION UNITS
WITHIN THE STATE AND THE DENOMINATOR OF WHICH IS THE  TAXPAYER'S  TRANS-
PORTATION  UNITS  WITHIN AND WITHOUT THE STATE. A TRANSPORTATION UNIT IS
THE TRANSPORTATION OF ONE CUBIC FOOT OF GAS OVER A DISTANCE OF ONE MILE.
THE TOTAL AMOUNT OF RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION  OF
GAS  THROUGH  PIPES  IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT
FRACTION.
  10. (A) RECEIPTS FROM OTHER  SERVICES  AND  OTHER  BUSINESS  RECEIPTS.
RECEIPTS FROM SERVICES NOT ADDRESSED IN SUBDIVISIONS ONE THROUGH NINE OF
THIS  SECTION AND OTHER BUSINESS RECEIPTS NOT ADDRESSED IN SUCH SUBDIVI-
SIONS SHALL BE INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRACTION
IF  THE LOCATION OF THE CUSTOMER IS WITHIN THE STATE. SUCH RECEIPTS FROM
CUSTOMERS WITHIN AND WITHOUT THE STATE ARE INCLUDED IN  THE  DENOMINATOR
OF  THE APPORTIONMENT FRACTION. WHETHER THE RECEIPTS ARE INCLUDED IN THE
NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED ACCORDING  TO  THE
HIERARCHY  OF METHOD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION. THE
TAXPAYER MUST EXERCISE DUE DILIGENCE  UNDER  EACH  METHOD  DESCRIBED  IN
PARAGRAPH  (B)  BEFORE REJECTING IT AND PROCEEDING TO THE NEXT METHOD IN
THE HIERARCHY.
  (B) HIERARCHY OF  METHODS.  (1)  DELIVERY  DESTINATION.  RECEIPTS  FOR
SERVICES PERFORMED FOR A CUSTOMER'S PARTICULAR LOCATION, SUCH AS WHERE A
DELIVERY  IS  MADE  TO  THAT  LOCATION, AS MAY BE INDICATED ON A BILL OF
LADING OR PURCHASE INVOICE, ARE SOURCED TO THAT LOCATION.
  (2) BILLING ADDRESS OF THE CUSTOMER.
  (3) ZIP CODE OR OTHER GEOGRAPHIC INDICATOR OF THE CUSTOMER'S LOCATION.
  (4) PERCENTAGE OF THE TAXPAYER'S RECEIPTS WITHIN THE STATE  DETERMINED
PURSUANT  TO  THIS SUBDIVISION FOR THE PRECEDING TAXABLE YEAR OR, IF THE

S. 6359--C                         70

TAXPAYER WAS NOT SUBJECT TO TAX IN THE PRECEDING TAXABLE YEAR, THEN  THE
PERCENTAGE  OF  THE  TAXPAYER'S RECEIPTS WITHIN THE STATE IN THE CURRENT
TAXABLE YEAR DETERMINED PURSUANT TO THIS SUBDIVISION.
  11.  IF  IT  SHALL  APPEAR  TO THE COMMISSIONER THAT THE APPORTIONMENT
FRACTION DETERMINED PURSUANT TO THIS SECTION DOES NOT RESULT IN A PROPER
REFLECTION OF THE TAXPAYER'S  BUSINESS  INCOME  OR  CAPITAL  WITHIN  THE
STATE, THE COMMISSIONER IS AUTHORIZED IN HIS OR HER DISCRETION TO ADJUST
IT BY (A) EXCLUDING ONE OR MORE ITEMS IN SUCH DETERMINATION, (B) INCLUD-
ING  ONE  OR  MORE  OTHER  ITEMS IN SUCH DETERMINATION, OR (C) ANY OTHER
SIMILAR OR DIFFERENT METHOD CALCULATED  TO  EFFECT  A  FAIR  AND  PROPER
APPORTIONMENT  OF  THE BUSINESS INCOME AND CAPITAL REASONABLY ATTRIBUTED
TO THE STATE.
  S 17. The tax law is amended by adding a new section 210-B to read  as
follows:
  S  210-B.  CREDITS.  1.  INVESTMENT TAX CREDIT (ITC).   (A) A TAXPAYER
SHALL BE ALLOWED A CREDIT,  TO  BE  COMPUTED  AS  HEREINAFTER  PROVIDED,
AGAINST  THE TAX IMPOSED BY THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL
BE THE PERCENT PROVIDED FOR HEREINBELOW OF THE INVESTMENT  CREDIT  BASE.
THE INVESTMENT CREDIT BASE IS THE COST OR OTHER BASIS FOR FEDERAL INCOME
TAX  PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
PARAGRAPH (B) OF THIS SUBDIVISION, LESS THE AMOUNT OF  THE  NONQUALIFIED
NONRECOURSE  FINANCING  WITH RESPECT TO SUCH PROPERTY TO THE EXTENT SUCH
FINANCING WOULD BE EXCLUDIBLE FROM THE CREDIT BASE PURSUANT  TO  SECTION
46(C)(8) OF THE INTERNAL REVENUE CODE (TREATING SUCH PROPERTY AS SECTION
THIRTY-EIGHT  PROPERTY IRRESPECTIVE OF WHETHER OR NOT IT IN FACT CONSTI-
TUTES SECTION THIRTY-EIGHT PROPERTY). IF, AT THE CLOSE OF A TAXABLE YEAR
FOLLOWING THE TAXABLE YEAR IN WHICH SUCH PROPERTY WAS PLACED IN SERVICE,
THERE IS A NET  DECREASE  IN  THE  AMOUNT  OF  NONQUALIFIED  NONRECOURSE
FINANCING  WITH  RESPECT  TO  SUCH  PROPERTY, SUCH NET DECREASE SHALL BE
TREATED AS IF IT WERE THE COST OR OTHER BASIS OF PROPERTY  DESCRIBED  IN
PARAGRAPH  (B)  OF THIS SUBDIVISION ACQUIRED, CONSTRUCTED, RECONSTRUCTED
OR ERECTED DURING THE YEAR OF THE DECREASE IN THE AMOUNT OF NONQUALIFIED
NONRECOURSE FINANCING. IN THE CASE OF A COMBINED REPORT THE TERM INVEST-
MENT CREDIT BASE SHALL MEAN THE SUM OF THE  INVESTMENT  CREDIT  BASE  OF
EACH  CORPORATION  INCLUDED ON SUCH REPORT. THE PERCENTAGE TO BE USED TO
COMPUTE THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION  SHALL  BE  FIVE
PERCENT WITH RESPECT TO THE FIRST THREE HUNDRED FIFTY MILLION DOLLARS OF
THE INVESTMENT CREDIT BASE, AND FOUR PERCENT WITH RESPECT TO THE INVEST-
MENT  CREDIT  BASE  IN  EXCESS  OF  THREE HUNDRED FIFTY MILLION DOLLARS,
EXCEPT THAT IN THE CASE OF RESEARCH  AND  DEVELOPMENT  PROPERTY  AT  THE
OPTION OF THE TAXPAYER THE APPLICABLE PERCENTAGE SHALL BE NINE.
  (B)  (I) A CREDIT SHALL BE ALLOWED UNDER THIS SUBDIVISION WITH RESPECT
TO TANGIBLE PERSONAL PROPERTY AND  OTHER  TANGIBLE  PROPERTY,  INCLUDING
BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH ARE: DEPRECIABLE
PURSUANT  TO  SECTION  ONE  HUNDRED  SIXTY-SEVEN OF THE INTERNAL REVENUE
CODE, HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, ARE ACQUIRED BY PURCHASE
AS DEFINED IN SECTION ONE  HUNDRED  SEVENTY-NINE  (D)  OF  THE  INTERNAL
REVENUE CODE, HAVE A SITUS IN THIS STATE AND ARE (A) PRINCIPALLY USED BY
THE  TAXPAYER  IN  THE PRODUCTION OF GOODS BY MANUFACTURING, PROCESSING,
ASSEMBLING, REFINING, MINING, EXTRACTING, FARMING,  AGRICULTURE,  HORTI-
CULTURE, FLORICULTURE, VITICULTURE OR COMMERCIAL FISHING, (B) INDUSTRIAL
WASTE  TREATMENT FACILITIES OR AIR POLLUTION CONTROL FACILITIES, USED IN
THE TAXPAYER'S TRADE OR BUSINESS, (C) RESEARCH AND DEVELOPMENT PROPERTY,
OR (D) PRINCIPALLY USED AS A QUALIFIED FILM PRODUCTION FACILITY  INCLUD-
ING  QUALIFIED  FILM  PRODUCTION  FACILITIES HAVING A SITUS IN AN EMPIRE

S. 6359--C                         71

ZONE DESIGNATED AS SUCH PURSUANT TO ARTICLE EIGHTEEN-B  OF  THE  GENERAL
MUNICIPAL LAW, WHERE THE TAXPAYER IS PROVIDING THREE OR MORE SERVICES TO
ANY QUALIFIED FILM PRODUCTION COMPANY USING THE FACILITY, INCLUDING SUCH
SERVICES  AS A STUDIO LIGHTING GRID, LIGHTING AND GRIP EQUIPMENT, MULTI-
LINE PHONE SERVICE, BROADBAND INFORMATION TECHNOLOGY ACCESS,  INDUSTRIAL
SCALE  ELECTRICAL  CAPACITY, FOOD SERVICES, SECURITY SERVICES, AND HEAT-
ING, VENTILATION AND AIR CONDITIONING.   FOR PURPOSES OF  THIS  SUBDIVI-
SION, THE TERM "GOODS" SHALL NOT INCLUDE ELECTRICITY.
  (II)  FOR  PURPOSES OF THIS PARAGRAPH, THE FOLLOWING DEFINITIONS SHALL
APPLY--
  (A) MANUFACTURING SHALL MEAN THE PROCESS OF WORKING RAW MATERIALS INTO
WARES SUITABLE FOR USE OR WHICH GIVES NEW SHAPES,  NEW  QUALITY  OR  NEW
COMBINATIONS  TO  MATTER  WHICH ALREADY HAS GONE THROUGH SOME ARTIFICIAL
PROCESS BY THE USE OF MACHINERY, TOOLS,  APPLIANCES  AND  OTHER  SIMILAR
EQUIPMENT.  PROPERTY  USED  IN  THE  PRODUCTION  OF  GOODS SHALL INCLUDE
MACHINERY, EQUIPMENT OR OTHER TANGIBLE  PROPERTY  WHICH  IS  PRINCIPALLY
USED  IN  THE  REPAIR AND SERVICE OF OTHER MACHINERY, EQUIPMENT OR OTHER
TANGIBLE PROPERTY USED PRINCIPALLY IN THE PRODUCTION OF GOODS AND  SHALL
INCLUDE ALL FACILITIES USED IN THE PRODUCTION OPERATION, INCLUDING STOR-
AGE  OF  MATERIAL  TO BE USED IN PRODUCTION AND OF THE PRODUCTS THAT ARE
PRODUCED.
  (B) RESEARCH AND DEVELOPMENT PROPERTY SHALL  MEAN  PROPERTY  WHICH  IS
USED  FOR  PURPOSES  OF  RESEARCH AND DEVELOPMENT IN THE EXPERIMENTAL OR
LABORATORY SENSE. SUCH PURPOSES SHALL NOT BE DEEMED TO INCLUDE THE ORDI-
NARY TESTING OR INSPECTION OF MATERIALS OR PRODUCTS FOR QUALITY CONTROL,
EFFICIENCY SURVEYS, MANAGEMENT STUDIES, CONSUMER  SURVEYS,  ADVERTISING,
PROMOTIONS, OR RESEARCH IN CONNECTION WITH LITERARY, HISTORICAL OR SIMI-
LAR PROJECTS.
  (C)  INDUSTRIAL WASTE TREATMENT FACILITIES SHALL MEAN PROPERTY CONSTI-
TUTING FACILITIES FOR THE TREATMENT, NEUTRALIZATION OR STABILIZATION  OF
INDUSTRIAL  WASTE  AND OTHER WASTES (AS THE TERMS "INDUSTRIAL WASTE" AND
"OTHER WASTES" ARE DEFINED  IN  SECTION  17-0105  OF  THE  ENVIRONMENTAL
CONSERVATION  LAW)  FROM A POINT IMMEDIATELY PRECEDING THE POINT OF SUCH
TREATMENT, NEUTRALIZATION OR STABILIZATION TO  THE  POINT  OF  DISPOSAL,
INCLUDING THE NECESSARY PUMPING AND TRANSMITTING FACILITIES, BUT EXCLUD-
ING SUCH FACILITIES INSTALLED FOR THE PRIMARY PURPOSE OF SALVAGING MATE-
RIALS WHICH ARE USABLE IN THE MANUFACTURING PROCESS OR ARE MARKETABLE.
  (D)  AIR POLLUTION CONTROL FACILITIES SHALL MEAN PROPERTY CONSTITUTING
FACILITIES WHICH REMOVE, REDUCE, OR RENDER LESS NOXIOUS AIR CONTAMINANTS
EMITTED FROM AN AIR CONTAMINATION SOURCE (AS THE TERMS "AIR CONTAMINANT"
AND "AIR CONTAMINATION SOURCE" ARE DEFINED IN  SECTION  19-0107  OF  THE
ENVIRONMENTAL  CONSERVATION  LAW) FROM A POINT IMMEDIATELY PRECEDING THE
POINT OF SUCH REMOVAL, REDUCTION OR RENDERING TO THE POINT OF  DISCHARGE
OF  AIR,  MEETING EMISSION STANDARDS AS ESTABLISHED BY THE DEPARTMENT OF
ENVIRONMENTAL CONSERVATION, BUT EXCLUDING SUCH FACILITIES INSTALLED  FOR
THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH ARE USABLE IN THE MANU-
FACTURING PROCESS OR ARE MARKETABLE AND EXCLUDING THOSE FACILITIES WHICH
RELY  FOR  THEIR EFFICACY ON DILUTION, DISPERSION OR ASSIMILATION OF AIR
CONTAMINANTS IN THE AMBIENT AIR AFTER EMISSION. SUCH TERM SHALL  FURTHER
INCLUDE FLUE GAS DESULFURIZATION EQUIPMENT AND ATTENDANT SLUDGE DISPOSAL
FACILITIES,  FLUIDIZED  BED BOILERS, PRECOMBUSTION COAL CLEANING FACILI-
TIES OR OTHER FACILITIES THAT CONFORM WITH THIS  SUBDIVISION  AND  WHICH
COMPLY  WITH THE PROVISIONS OF THE STATE ACID DEPOSITION CONTROL ACT SET
FORTH IN TITLE NINE OF ARTICLE NINETEEN OF THE  ENVIRONMENTAL  CONSERVA-
TION LAW.

S. 6359--C                         72

  (E) THE TERMS "QUALIFIED FILM PRODUCTION FACILITY" AND "QUALIFIED FILM
PRODUCTION   COMPANY"   SHALL  HAVE  THE  SAME  MEANING  AS  IN  SECTION
TWENTY-FOUR OF THIS CHAPTER.
  (III) HOWEVER, SUCH CREDIT SHALL BE ALLOWED WITH RESPECT TO INDUSTRIAL
WASTE  TREATMENT FACILITIES AND AIR POLLUTION CONTROL FACILITIES ONLY ON
CONDITION THAT SUCH FACILITIES HAVE BEEN CERTIFIED BY THE STATE  COMMIS-
SIONER  OF  ENVIRONMENTAL CONSERVATION OR HIS DESIGNATED REPRESENTATIVE,
PURSUANT TO SUBDIVISION ONE OF SECTION 17-0707  OR  SUBDIVISION  ONE  OF
SECTION 19-0309 OF THE ENVIRONMENTAL CONSERVATION LAW, AS COMPLYING WITH
APPLICABLE  PROVISIONS OF THE ENVIRONMENTAL CONSERVATION LAW, THE PUBLIC
HEALTH LAW, THE STATE  SANITARY  CODE  AND  CODES,  RULES,  REGULATIONS,
PERMITS OR ORDERS ISSUED PURSUANT THERETO.
  (C)
  (D)  A  TAXPAYER  SHALL NOT BE ALLOWED A CREDIT UNDER THIS SUBDIVISION
WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE  PROPERTY,
INCLUDING  BUILDINGS  AND  STRUCTURAL  COMPONENTS OF BUILDINGS, WHICH IT
LEASES TO ANY OTHER PERSON OR CORPORATION.  FOR PURPOSES OF THE  PRECED-
ING  SENTENCE,  ANY  CONTRACT  OR  AGREEMENT  TO  LEASE OR RENT OR FOR A
LICENSE TO USE SUCH PROPERTY SHALL  BE  CONSIDERED  A  LEASE.  PROVIDED,
HOWEVER,  IN  DETERMINING  WHETHER  A TAXPAYER SHALL BE ALLOWED A CREDIT
UNDER THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY, ANY ELECTION  MADE
WITH  RESPECT  TO  SUCH PROPERTY PURSUANT TO THE PROVISIONS OF PARAGRAPH
EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTER-
NAL REVENUE CODE, AS SUCH PARAGRAPH WAS IN EFFECT FOR AGREEMENTS ENTERED
INTO PRIOR TO JANUARY FIRST,  NINETEEN  HUNDRED  EIGHTY-FOUR,  SHALL  BE
DISREGARDED. FOR PURPOSES OF THIS PARAGRAPH, THE USE OF A QUALIFIED FILM
PRODUCTION  FACILITY BY A QUALIFIED FILM PRODUCTION COMPANY SHALL NOT BE
CONSIDERED A LEASE OF SUCH FACILITY TO SUCH COMPANY.
  (E) EXCEPT AS OTHERWISE PROVIDED IN THIS PARAGRAPH, THE CREDIT ALLOWED
UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE
FOR SUCH YEAR TO LESS THAN THE HIGHER OF THE AMOUNTS PRESCRIBED IN PARA-
GRAPHS (C) AND (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER,  IF  THE
AMOUNT  OF  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT ALLOWED FOR A TAXA-
BLE YEAR COMMENCING PRIOR TO JANUARY FIRST, NINETEEN HUNDRED EIGHTY-SEV-
EN AND NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED  OVER  TO  THE
FOLLOWING  YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR
SUCH YEAR OR YEARS BUT IN NO EVENT SHALL SUCH CREDIT BE CARRIED OVER  TO
TAXABLE  YEARS  COMMENCING  ON OR AFTER JANUARY FIRST, TWO THOUSAND TWO,
AND ANY AMOUNT OF CREDIT ALLOWED FOR A TAXABLE  YEAR  COMMENCING  ON  OR
AFTER JANUARY FIRST, NINETEEN HUNDRED EIGHTY-SEVEN AND NOT DEDUCTIBLE IN
SUCH  YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS NEXT FOLLOW-
ING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE  TAXPAYER'S  TAX  FOR
SUCH  YEAR  OR YEARS. IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER WHICH
QUALIFIES AS A NEW BUSINESS UNDER PARAGRAPH (J) OF THIS SUBDIVISION  MAY
ELECT  TO TREAT THE AMOUNT OF SUCH CARRYOVER AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION TEN
HUNDRED EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER, THE PROVISIONS OF
SUBSECTION (C) OF SECTION  TEN  HUNDRED  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (F)  AT  THE  OPTION OF THE TAXPAYER AN ELIGIBLE BUSINESS FACILITY FOR
WHICH A CREDIT IS ALLOWED UNDER SUBDIVISION ELEVEN OF THIS SECTION,  OR,
FOR  TAXABLE  YEARS  COMMENCING PRIOR TO JANUARY FIRST, NINETEEN HUNDRED
EIGHTY-SEVEN, AIR OR  WATER  POLLUTION  CONTROL  OR  CONTROLLED  PROCESS
FACILITIES  WHICH QUALIFY FOR ELECTIVE DEDUCTIONS UNDER PARAGRAPH (G) OF
SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT, MAY BE TREATED AS PROPER-

S. 6359--C                         73

TY PRINCIPALLY USED BY THE TAXPAYER IN THE PRODUCTION OF GOODS BY  MANU-
FACTURING,  PROCESSING,  ASSEMBLING, REFINING, MINING, EXTRACTING, FARM-
ING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR  COMMERCIAL
FISHING,  PROVIDED  THE PROPERTY OTHERWISE QUALIFIES UNDER PARAGRAPH (B)
OF THIS SUBDIVISION, IN WHICH EVENT, A DEDUCTION SHALL  NOT  BE  ALLOWED
UNDER SUCH PARAGRAPH (G).
  (G)  (1)  WITH  RESPECT  TO  PROPERTY WHICH IS DEPRECIABLE PURSUANT TO
SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE BUT IS  NOT
SUBJECT  TO  THE  PROVISIONS  OF SECTION ONE HUNDRED SIXTY-EIGHT OF SUCH
CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO
THE  END  OF  THE  TAXABLE  YEAR IN WHICH THE CREDIT IS TO BE TAKEN, THE
AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED FOR IN
THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE MONTHS  OF  QUALI-
FIED  USE BEAR TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH CREDIT
HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO
THE  END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND
THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE  YEAR  OF
DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEAS-
ES  TO  BE  IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR MORE
THAN TWELVE CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE
CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT  OF  CREDIT  ALLOWED
FOR ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY
THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS OF USEFUL
LIFE.  FOR  PURPOSES OF THIS SUBPARAGRAPH, USEFUL LIFE OF PROPERTY SHALL
BE THE SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES WHEN  COMPUT-
ING HIS FEDERAL INCOME TAX LIABILITY.
  (2) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH FOUR OF
THIS  PARAGRAPH APPLIES, WITH RESPECT TO THREE-YEAR PROPERTY, AS DEFINED
IN SUBSECTION (E) OF SECTION ONE HUNDRED  SIXTY-EIGHT  OF  THE  INTERNAL
REVENUE  CODE,  WHICH  IS  DISPOSED  OF OR CEASES TO BE IN QUALIFIED USE
PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF  THE  CREDIT  PROVIDED
FOR  IN  THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE MONTHS OF
QUALIFIED USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH CREDIT  HAS  BEEN
TAKEN  IS  DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END
OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN THE CREDIT  TAKEN  AND  THE
CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSI-
TION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY
MULTIPLYING  THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS OF QUALI-
FIED USE BEAR TO THIRTY-SIX.
  (3) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH FOUR OF
THIS  PARAGRAPH  APPLIES,  WITH  RESPECT  TO  PROPERTY  SUBJECT  TO  THE
PROVISIONS  OF  SECTION  ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE
CODE, OTHER THAN THREE-YEAR PROPERTY AS DEFINED  IN  SUBSECTION  (E)  OF
SUCH  SECTION  ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO
BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO SIXTY. IF  PROPERTY  ON  WHICH
CREDIT  HAS  BEEN  TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE
PRIOR TO THE END OF SIXTY MONTHS,  THE  DIFFERENCE  BETWEEN  THE  CREDIT
TAKEN  AND  THE  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE
YEAR OF DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL  USE  SHALL
BE  DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE
MONTHS OF QUALIFIED USE BEAR TO SIXTY.

S. 6359--C                         74

  (4) WITH  RESPECT  TO  ANY  PROPERTY  TO  WHICH  SECTION  ONE  HUNDRED
SIXTY-EIGHT OF THE INTERNAL REVENUE CODE APPLIES, WHICH IS A BUILDING OR
A  STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES
TO BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE  TOTAL  NUMBER  OF  MONTHS
OVER  WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER-
NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD  OVER
WHICH  THE  TAXPAYER  CHOOSES  TO DEDUCT THE PROPERTY UNDER THE INTERNAL
REVENUE CODE, THE DIFFERENCE BETWEEN THE CREDIT  TAKEN  AND  THE  CREDIT
ALLOWED  FOR  ACTUAL  USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION.
PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES  TO  BE  IN
QUALIFIED  USE  AFTER  IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE
CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE  CREDIT  AS
PROVIDED  IN  THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL
USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE.
  (5) FOR PURPOSES OF THIS PARAGRAPH, PROPERTY (I) WHICH IS DESCRIBED IN
SUBPARAGRAPH  TWO,  THREE  OR  FOUR OF THIS PARAGRAPH, AND (II) WHICH IS
SUBJECT TO SUBPARAGRAPH ELEVEN OF PARAGRAPH (A) OF SUBDIVISION NINE  AND
SUBPARAGRAPH  TEN  OF  PARAGRAPH  (B) OF SUBDIVISION NINE OF SECTION TWO
HUNDRED EIGHT OF THIS CHAPTER, SHALL BE TREATED  AS  PROPERTY  WHICH  IS
DEPRECIABLE  PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL
REVENUE CODE BUT IS NOT SUBJECT TO SECTION ONE  HUNDRED  SIXTY-EIGHT  OF
SUCH CODE.
  (6)  FOR  PURPOSES  OF  THIS PARAGRAPH, WHERE A CREDIT IS ALLOWED WITH
RESPECT TO AN AIR POLLUTION CONTROL FACILITY ON THE BASIS OF  A  CERTIF-
ICATE  OF  COMPLIANCE  ISSUED PURSUANT TO THE ENVIRONMENTAL CONSERVATION
LAW AND THE CERTIFICATE IS REVOKED  PURSUANT  TO  SUBDIVISION  THREE  OF
SECTION  19-0309  OF THE ENVIRONMENTAL CONSERVATION LAW, SUCH REVOCATION
SHALL CONSTITUTE A DISPOSAL OR CESSATION OF QUALIFIED USE,  UNLESS  SUCH
FACILITY IS DESCRIBED IN CLAUSE (A) OR (C) OF SUBPARAGRAPH (II) OF PARA-
GRAPH  (B)  OF THIS SUBDIVISION. ALSO FOR PURPOSES OF THIS SUBPARAGRAPH,
THE USE OF AN AIR POLLUTION CONTROL  FACILITY  OR  AN  INDUSTRIAL  WASTE
TREATMENT  FACILITY FOR THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH
ARE USABLE IN THE MANUFACTURING PROCESS OR ARE MARKETABLE SHALL  CONSTI-
TUTE  A CESSATION OF QUALIFIED USE, UNLESS SUCH FACILITY IS DESCRIBED IN
CLAUSE (A) OR (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF THIS SUBDIVI-
SION.
  (7) FOR TAXABLE YEARS COMMENCING ON OR AFTER JANUARY  FIRST,  NINETEEN
HUNDRED  EIGHTY-SEVEN,  THE AMOUNT REQUIRED TO BE ADDED BACK PURSUANT TO
THIS PARAGRAPH SHALL BE AUGMENTED BY AN AMOUNT EQUAL TO THE  PRODUCT  OF
SUCH  AMOUNT  AND  THE  UNDERPAYMENT RATE OF INTEREST (WITHOUT REGARD TO
COMPOUNDING), SET BY THE COMMISSIONER OF TAXATION AND  FINANCE  PURSUANT
TO  SUBSECTION  (E) OF SECTION ONE THOUSAND NINETY-SIX, IN EFFECT ON THE
LAST DAY OF THE TAXABLE YEAR.
  (8) IF, AS OF THE CLOSE OF THE TAXABLE YEAR, THERE IS A  NET  INCREASE
WITH  RESPECT  TO THE TAXPAYER IN THE AMOUNT OF NONQUALIFIED NONRECOURSE
FINANCING (WITHIN THE MEANING OF  SECTION  46(C)  (8)  OF  THE  INTERNAL
REVENUE  CODE)  WITH  RESPECT  TO ANY PROPERTY WITH RESPECT TO WHICH THE
CREDIT UNDER THIS SUBDIVISION WAS LIMITED BASED ON ATTRIBUTABLE NONQUAL-
IFIED NONRECOURSE FINANCING, THEN AN AMOUNT EQUAL  TO  THE  DECREASE  IN

S. 6359--C                         75

SUCH  CREDIT  WHICH  WOULD HAVE RESULTED FROM REDUCING, BY THE AMOUNT OF
SUCH NET INCREASE, THE COST OR  OTHER  BASIS  TAKEN  INTO  ACCOUNT  WITH
RESPECT  TO  SUCH  PROPERTY MUST BE ADDED BACK IN SUCH TAXABLE YEAR. THE
AMOUNT  OF  NONQUALIFIED  NONRECOURSE  FINANCING SHALL NOT BE TREATED AS
INCREASED BY REASON OF A TRANSFER OF  (OR  AGREEMENT  TO  TRANSFER)  ANY
EVIDENCE  OF  AN INDEBTEDNESS IF SUCH TRANSFER OCCURS (OR SUCH AGREEMENT
IS ENTERED INTO) MORE THAN ONE YEAR AFTER THE DATE SUCH INDEBTEDNESS WAS
INCURRED.
  (11) (A) WHERE PROPERTY WITH RESPECT TO WHICH CREDIT HAS BEEN  ALLOWED
UNDER  THIS  SUBDIVISION IS DISPOSED OF BY TRANSFER TO THE TAXPAYER IN A
QUALIFIED TRANSACTION, AND SUCH DISPOSITION REQUIRES, PURSUANT  TO  THIS
PARAGRAPH  (WITHOUT  REGARD  TO  THIS  SUBPARAGRAPH) THAT SUCH CREDIT BE
DECREASED (WHERE THE DISPOSITION OCCURS IN THE TAXABLE YEAR IN WHICH THE
PROPERTY IS PLACED IN SERVICE BY THE TRANSFEROR) OR THAT  A  PORTION  OF
SUCH  CREDIT  BE ADDED BACK BY THE TRANSFEROR, THEN CLAUSE (B) OR CLAUSE
(C) OF THIS SUBPARAGRAPH SHALL APPLY.
  (B) IF THE TAXPAYER AND THE TRANSFEROR JOINTLY ELECT, AT SUCH TIME AND
IN SUCH MANNER AS THE COMMISSIONER MAY PRESCRIBE,  THE  FOLLOWING  SHALL
APPLY:
  (I)  SUCH  PORTION  SHALL  NOT  BE  REQUIRED  TO  BE ADDED BACK BY THE
TRANSFEROR,
  (II) THE AMOUNT OF UNUSED CREDIT SHALL NOT BE DEDUCTED FROM TAX OTHER-
WISE DUE BY THE TRANSFEROR ON ANY RETURN (INCLUDING AN AMENDED  RETURN),
AND  SHALL  NOT  BE  SO  DEDUCTED AS PART OF ANY AUDIT ADJUSTMENT OR ANY
OTHER DETERMINATION, AND
  (III) THE AMOUNT OF UNUSED CREDIT SHALL BE TREATED  AS  AN  AMOUNT  OF
CREDIT  OF  THE  TAXPAYER  UNDER THIS SUBDIVISION CARRIED FORWARD BY THE
TAXPAYER TO ITS TAXABLE YEAR IN WHICH SUCH TRANSFER OCCURRED, AS IF  THE
CREDIT  ALLOWED  TO  THE  TRANSFEROR  WITH  RESPECT TO SUCH PROPERTY HAD
ORIGINALLY BEEN ALLOWED TO THE TAXPAYER BOTH AS TO AMOUNT AND FIRST DATE
OF QUALIFIED USE, AND AS IF THE PERIOD OF QUALIFIED USE BY THE  TRANSFE-
ROR PRIOR TO THE TRANSFER HAD BEEN A PERIOD OF SUCH USE BY THE TAXPAYER.
ANY  AMOUNT  OF  CREDIT  TREATED  AS CARRIED FORWARD TO THE TAXABLE YEAR
PURSUANT TO THIS SUBPARAGRAPH SHALL BE APPLIED AS PROVIDED IN CLAUSE (H)
OF THIS SUBPARAGRAPH.
  (C) IF THE TAXPAYER AND  THE  TRANSFEROR  DO  NOT  MAKE  THE  ELECTION
DESCRIBED  IN CLAUSE (B) OF THIS SUBPARAGRAPH, THEN THE AMOUNT OF CREDIT
REQUIRED PURSUANT TO THIS PARAGRAPH TO BE ADDED BACK BY  THE  TRANSFEROR
SHALL  BE  TREATED  AS  AN  AMOUNT  OF CREDIT OF THE TAXPAYER UNDER THIS
SUBDIVISION TO BE CARRIED FORWARD BY THE TAXPAYER TO ITS TAXABLE YEAR IN
WHICH SUCH TRANSFER OCCURRED, AS IF THE CREDIT ALLOWED TO THE TRANSFEROR
WITH RESPECT TO SUCH PROPERTY HAD ORIGINALLY BEEN ALLOWED TO THE TAXPAY-
ER BOTH AS TO AMOUNT AND FIRST DATE OF QUALIFIED  USE,  AND  AS  IF  THE
PERIOD OF QUALIFIED USE BY THE TRANSFEROR PRIOR TO THE TRANSFER HAD BEEN
A  PERIOD  OF  SUCH USE BY THE TAXPAYER. ANY AMOUNT OF CREDIT TREATED AS
CARRIED FORWARD TO THE TAXABLE YEAR PURSUANT TO THIS SUBPARAGRAPH  SHALL
BE APPLIED AS PROVIDED IN CLAUSE (H) OF THIS SUBPARAGRAPH.
  (D) THE TERM "QUALIFIED TRANSACTION" SHALL MEAN A TRANSACTION WHICH IS
A  REORGANIZATION  DESCRIBED  IN  SECTION  368(A)(1)(D)  OF THE INTERNAL
REVENUE CODE, WHEREIN  (I)  SUBSTANTIALLY  ALL  OF  THE  ASSETS  OF  THE
TRANSFEROR  NECESSARY  TO  CONTINUE THE OPERATION OF A DIVISION OR DIVI-
SIONS OF THE TRANSFEROR ARE TRANSFERRED TO THE TAXPAYER IN A TRANSACTION
TO WHICH SECTION 351 OF SUCH CODE APPLIES, AND (II) STOCK OR  SECURITIES
OF  THE  TAXPAYER  HELD  BY  THE  TRANSFEROR ARE DISTRIBUTED PURSUANT TO
SECTION 355 OF SUCH CODE.

S. 6359--C                         76

  (E) THE TERM "UNUSED CREDIT" SHALL MEAN THE AMOUNT OF CREDIT SHOWN  AS
CARRIED  FORWARD  TO THE TRANSACTION YEAR ON THE TRANSFEROR'S TAX RETURN
FOR ITS TAXABLE YEAR IMMEDIATELY PRECEDING  THE  TRANSACTION  YEAR  WITH
RESPECT TO THE PROPERTY DESCRIBED IN CLAUSE (A) OF THIS SUBPARAGRAPH.
  (F)  THE  TERM  "TRANSACTION YEAR" MEANS THE TAXABLE YEAR IN WHICH THE
QUALIFIED TRANSACTION OCCURS.
  (G) NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, IN THE
CASE OF ALLOWANCE OF CREDIT PURSUANT TO THIS SUBPARAGRAPH TO A  TAXPAYER
THE  COMMISSIONER SHALL HAVE THE AUTHORITY TO REVEAL TO THE TAXPAYER ANY
INFORMATION, WITH RESPECT TO THE CREDIT OF THE TRANSFEROR, WHICH IS  THE
BASIS  FOR  THE DENIAL IN WHOLE OR IN PART OF THE CREDIT CLAIMED BY SUCH
TAXPAYER.
  (H) WHERE A CREDIT IS ALLOWED TO A TAXPAYER PURSUANT TO THIS  SUBPARA-
GRAPH,  THE  TAXPAYER MAY TREAT THE AMOUNT OF SUCH CREDIT AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF SECTION TEN HUNDRED EIGHTY-SIX OF THIS  CHAPTER,  PROVIDED,  HOWEVER,
THE  PROVISIONS OF SUBSECTION (C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE  PAID  THEREON.  SUCH
CREDIT  SHALL  BE  ALLOWED  AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH
RESPECT TO THE SECOND SUCCEEDING TAXABLE YEAR NEXT FOLLOWING THE  TRANS-
ACTION  YEAR,  PROVIDED  THAT  NOT MORE THAN ONE-FOURTH OF THE AMOUNT OF
SUCH CREDIT MAY BE APPLIED BY THE TAXPAYER, WHETHER TO REDUCE TAX OTHER-
WISE DUE OR TO BE TREATED AS AN OVERPAYMENT TO BE CREDITED OR  REFUNDED,
WITH RESPECT TO SUCH SECOND SUCCEEDING TAXABLE YEAR AND EACH OF THE NEXT
THREE TAXABLE YEARS FOLLOWING SUCH SECOND SUCCEEDING TAXABLE YEAR.
  (J)  FOR PURPOSES OF PARAGRAPH (E) OF THIS SUBDIVISION, A NEW BUSINESS
SHALL INCLUDE ANY CORPORATION, EXCEPT A CORPORATION WHICH:
  (1) OVER FIFTY PERCENT OF THE NUMBER OF SHARES OF STOCK ENTITLING  THE
HOLDERS  THEREOF  TO  VOTE  FOR THE ELECTION OF DIRECTORS OR TRUSTEES IS
OWNED OR CONTROLLED,  EITHER  DIRECTLY  OR  INDIRECTLY,  BY  A  TAXPAYER
SUBJECT TO TAX UNDER THIS ARTICLE; SECTION ONE HUNDRED EIGHTY-THREE, ONE
HUNDRED EIGHTY-FOUR OR ONE HUNDRED EIGHTY-FIVE OF ARTICLE NINE; OR ARTI-
CLE THIRTY-THREE OF THIS CHAPTER; OR
  (2)  IS SUBSTANTIALLY SIMILAR IN OPERATION AND IN OWNERSHIP TO A BUSI-
NESS ENTITY (OR ENTITIES) TAXABLE, OR  PREVIOUSLY  TAXABLE,  UNDER  THIS
ARTICLE;  SECTION  ONE  HUNDRED  EIGHTY-THREE,  ONE HUNDRED EIGHTY-FOUR,
FORMER SECTION ONE HUNDRED EIGHTY-FIVE OR  FORMER  SECTION  ONE  HUNDRED
EIGHTY-SIX  OF  ARTICLE NINE; ARTICLE THIRTY-TWO OF THIS CHAPTER AS SUCH
ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO  THOUSAND  FOURTEEN;
ARTICLE THIRTY-THREE OF THIS CHAPTER; ARTICLE TWENTY-THREE OF THIS CHAP-
TER  OR  WHICH  WOULD  HAVE  BEEN  SUBJECT  TO  TAX  UNDER  SUCH ARTICLE
TWENTY-THREE (AS SUCH ARTICLE WAS IN EFFECT ON JANUARY  FIRST,  NINETEEN
HUNDRED  EIGHTY) OR THE INCOME (OR LOSSES) OF WHICH IS (OR WAS) INCLUDA-
BLE UNDER ARTICLE TWENTY-TWO OF THIS  CHAPTER  WHEREBY  THE  INTENT  AND
PURPOSE  OF  THIS  PARAGRAPH  AND PARAGRAPH (E) OF THIS SUBDIVISION WITH
RESPECT TO REFUNDING OF CREDIT TO NEW BUSINESS WOULD BE EVADED; OR
  (3) HAS BEEN SUBJECT TO TAX UNDER THIS ARTICLE OR FORMER ARTICLE THIR-
TY-TWO OF THIS CHAPTER FOR MORE THAN FIVE TAXABLE YEARS (EXCLUDING SHORT
TAXABLE YEARS).
  2. EMPLOYMENT INCENTIVE CREDIT (EIC). (A)(I)  APPLICATION  OF  CREDIT.
WHERE  A  TAXPAYER  IS  ALLOWED  A  CREDIT UNDER SUBDIVISION ONE OF THIS
SECTION, OTHER THAN AT THE OPTIONAL  RATE  APPLICABLE  TO  RESEARCH  AND
DEVELOPMENT PROPERTY, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF
THE  TWO  YEARS  NEXT  SUCCEEDING  THE TAXABLE YEAR FOR WHICH THE CREDIT
UNDER SUCH SUBDIVISION ONE IS ALLOWED WITH  RESPECT  TO  SUCH  PROPERTY,
WHETHER  OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT TAXABLE

S. 6359--C                         77

YEARS PURSUANT TO PARAGRAPH  (D)  OF  SUCH  SUBDIVISION  ONE.  PROVIDED,
HOWEVER,  THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL BE ALLOWED ONLY IF THE AVERAGE NUMBER OF EMPLOYEES DURING
SUCH  TAXABLE  YEAR  IS  AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE
NUMBER OF EMPLOYEES DURING THE EMPLOYMENT BASE YEAR. THE EMPLOYMENT BASE
YEAR SHALL BE THE TAXABLE YEAR IMMEDIATELY PRECEDING  THE  TAXABLE  YEAR
FOR  WHICH  THE CREDIT UNDER SUCH SUBDIVISION ONE IS ALLOWED EXCEPT THAT
IF THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A  TAXABLE  YEAR
IMMEDIATELY  PRECEDING  THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER SUCH
SUBDIVISION ONE OF THIS SECTION IS ALLOWED,  THE  EMPLOYMENT  BASE  YEAR
SHALL BE THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION ONE
IS ALLOWED.
  (II)  AMOUNT  OF  CREDIT.  THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS
SUBDIVISION SHALL BE AS SET FORTH IN THE FOLLOWING TABLE:
AVERAGE NUMBER OF EMPLOYEES DURING THE      CREDIT ALLOWED UNDER THIS
TAXABLE YEAR EXPRESSED AS A PERCENTAGE      SUBDIVISION EXPRESSED AS A
OF AVERAGE EMPLOYEES IN EMPLOYMENT          PERCENTAGE OF THE APPLICABLE
BASE YEARS                                  INVESTMENT CREDIT BASIS
LESS THAN 102%                              1.5%
AT LEAST 102% AND LESS THAN 103%            2%
AT LEAST 103%                               2.5%
  (B) AVERAGE NUMBER OF EMPLOYEES. THE AVERAGE NUMBER OF EMPLOYEES IN  A
TAXABLE  YEAR  SHALL BE COMPUTED BY ASCERTAINING THE NUMBER OF EMPLOYEES
WITHIN THE STATE, EXCEPT GENERAL EXECUTIVE  OFFICERS,  EMPLOYED  BY  THE
TAXPAYER  ON  THE  THIRTY-FIRST DAY OF MARCH, THE THIRTIETH DAY OF JUNE,
THE THIRTIETH DAY OF SEPTEMBER AND THE THIRTY-FIRST DAY OF  DECEMBER  IN
THE TAXABLE YEAR, BY ADDING TOGETHER THE NUMBER OF EMPLOYEES ASCERTAINED
ON  EACH OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY THE NUMBER OF
SUCH ABOVE MENTIONED DATES OCCURRING WITHIN THE TAXABLE  YEAR.  HOWEVER,
WITH RESPECT TO THE EMPLOYMENT BASE YEAR, THERE SHALL BE EXCLUDED THERE-
FROM  ANY  EMPLOYEE  WITH  RESPECT  TO  WHOM A CREDIT PROVIDED FOR UNDER
SUBDIVISION SIX OF THIS SECTION IS CLAIMED, FOR THE TAXABLE YEAR,  BASED
ON  EMPLOYMENT WITHIN A ZONE EQUIVALENT AREA DESIGNATED AS SUCH PURSUANT
TO ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW.
  (C) CARRYOVER. IN NO EVENT SHALL THE CREDIT  HEREIN  PROVIDED  FOR  BE
ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES
THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON
THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE  IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS IMME-
DIATELY FOLLOWING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAY-
ER'S TAX FOR SUCH YEAR OR YEARS.
  3. EMPIRE ZONE INVESTMENT TAX CREDIT (EZ-ITC). (A) A TAXPAYER SHALL BE
ALLOWED  A  CREDIT,  TO  BE COMPUTED AS HEREIN PROVIDED, AGAINST THE TAX
IMPOSED BY THIS ARTICLE IF THE TAXPAYER HAS BEEN CERTIFIED  PURSUANT  TO
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW. THE AMOUNT OF THE CRED-
IT  SHALL  BE  TEN PERCENT OF THE COST OR OTHER BASIS FOR FEDERAL INCOME
TAX PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE  PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
PARAGRAPH  (B)  OF  THIS  SUBDIVISION, WHICH IS LOCATED WITHIN AN EMPIRE
ZONE DESIGNATED AS SUCH PURSUANT TO ARTICLE EIGHTEEN-B OF SUCH LAW,  BUT
ONLY  IF  THE  ACQUISITION,  CONSTRUCTION, RECONSTRUCTION OR ERECTION OF
SUCH PROPERTY OCCURRED OR WAS COMMENCED ON OR AFTER  THE  DATE  OF  SUCH
DESIGNATION AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT

S. 6359--C                         78

IN  THE CASE OF AN ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION
WHICH WAS COMMENCED DURING SUCH PERIOD AND CONTINUED OR COMPLETED SUBSE-
QUENTLY, SUCH CREDIT SHALL BE TEN PERCENT OF THE PORTION OF THE COST  OR
OTHER BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD,
WHICH  PORTION SHALL BE ASCERTAINED BY MULTIPLYING SUCH COST OR BASIS BY
A FRACTION THE NUMERATOR OF WHICH SHALL  BE  THE  EXPENDITURES  PAID  OR
INCURRED  DURING  SUCH  PERIOD  FOR SUCH PURPOSES AND THE DENOMINATOR OF
WHICH SHALL BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED  FOR  SUCH
ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION.
  (B)  QUALIFIED PROPERTY. A CREDIT SHALL BE ALLOWED UNDER THIS SUBDIVI-
SION WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROP-
ERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH
  (I) ARE DEPRECIABLE PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE
INTERNAL REVENUE CODE,
  (II) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE,
  (III) ARE ACQUIRED BY PURCHASE  AS  DEFINED  IN  SECTION  ONE  HUNDRED
SEVENTY-NINE (D) OF THE INTERNAL REVENUE CODE,
  (IV)  HAVE  A  SITUS  IN AN EMPIRE ZONE DESIGNATED AS SUCH PURSUANT TO
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW, AND
  (V) ARE (A) PRINCIPALLY USED BY THE  TAXPAYER  IN  THE  PRODUCTION  OF
GOODS   BY  MANUFACTURING,  PROCESSING,  ASSEMBLING,  REFINING,  MINING,
EXTRACTING, FARMING, AGRICULTURE, HORTICULTURE,  FLORICULTURE,  VITICUL-
TURE OR COMMERCIAL FISHING,
  (B)  INDUSTRIAL  WASTE  TREATMENT  FACILITIES OR AIR POLLUTION CONTROL
FACILITIES USED IN THE TAXPAYER'S TRADE OR BUSINESS,
  (C) RESEARCH AND DEVELOPMENT PROPERTY,
  (D) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS AS A BROKER OR DEALER IN CONNECTION WITH THE PURCHASE  OR  SALE
(WHICH  SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO,
ASSUMPTION, OFFSET, ASSIGNMENT, TERMINATION,  OR  TRANSFER)  OF  STOCKS,
BONDS   OR   OTHER   SECURITIES  AS  DEFINED  IN  SECTION  FOUR  HUNDRED
SEVENTY-FIVE (C)(2) OF THE INTERNAL REVENUE CODE, OR OF  COMMODITIES  AS
DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
CODE,
  (E) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS  OF  PROVIDING  INVESTMENT  ADVISORY  SERVICES  FOR A REGULATED
INVESTMENT COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE OF  THE
INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT, OR LOAN ORIGINATION
SERVICES  TO  CUSTOMERS  IN  CONNECTION WITH THE PURCHASE OR SALE (WHICH
SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO, ASSUMP-
TION, OFFSET, ASSIGNMENT, TERMINATION  OR  TRANSFER)  OF  SECURITIES  AS
DEFINED  IN  SECTION  FOUR  HUNDRED  SEVENTY-FIVE (C)(2) OF THE INTERNAL
REVENUE CODE,
  (E-1) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S  TRADE
OR  BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES OR THE SERVICE OF
MANAGING INVESTMENT PORTFOLIOS TO ACHIEVE SPECIFIC INVESTMENT OBJECTIVES
FOR ACCOUNTS OVER ONE MILLION DOLLARS OF ACCREDITED INVESTORS  (AS  THAT
TERM  IS  DEFINED  IN  RULE 501 OF REGULATION D OF THE SECURITIES ACT OF
1933), IF THE TAXPAYER SATISFIES THE FOLLOWING CRITERIA:
  (I) THE TAXPAYER IS A REGULATED BROKER OR DEALER OR AN AFFILIATE OF  A
REGULATED BROKER OR DEALER,
  (II) THE TAXPAYER IS REGISTERED AS AN INVESTMENT ADVISER UNDER SECTION
TWO  HUNDRED  THREE  OF THE INVESTMENT ADVISERS ACT OF 1940, AS AMENDED,
AND

S. 6359--C                         79

  (III) AT LEAST ONE CLIENT OF THE TAXPAYER IS  A  REGULATED  INVESTMENT
COMPANY  AS  DEFINED  IN SECTION EIGHT HUNDRED FIFTY-ONE OF THE INTERNAL
REVENUE CODE THAT HAS ASSETS OF ONE HUNDRED MILLION DOLLARS, OR
  (F) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S BUSINESS
AS  AN  EXCHANGE REGISTERED AS A NATIONAL SECURITIES EXCHANGE WITHIN THE
MEANING OF SECTIONS 3(A)(1) AND 6(A) OF THE SECURITIES EXCHANGE  ACT  OF
1934  OR A BOARD OF TRADE AS DEFINED IN SUBDIVISION ONE OF PARAGRAPH (A)
OF SECTION FOURTEEN HUNDRED TEN OF THE NOT-FOR-PROFIT CORPORATION LAW OR
AS AN ENTITY THAT IS WHOLLY OWNED BY ONE OR MORE SUCH  NATIONAL  SECURI-
TIES  EXCHANGES OR BOARDS OR TRADE AND THAT PROVIDES AUTOMATION OR TECH-
NICAL SERVICES THERETO.
  (VI) FOR PURPOSES OF CLAUSES (D), (E), (E-1) AND (F)  OF  SUBPARAGRAPH
(V)  OF THIS PARAGRAPH, PROPERTY PURCHASED BY A TAXPAYER AFFILIATED WITH
A REGULATED BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL
SECURITIES  EXCHANGE  OR  BOARD  OF TRADE IS ALLOWED A CREDIT UNDER THIS
SUBDIVISION IF THE PROPERTY IS USED BY ITS AFFILIATED REGULATED  BROKER,
DEALER, REGISTERED INVESTMENT ADVISER OR NATIONAL SECURITIES EXCHANGE OR
BOARD  OF  TRADE  IN  ACCORDANCE  WITH THIS SUBDIVISION. FOR PURPOSES OF
DETERMINING IF THE PROPERTY IS PRINCIPALLY USED IN QUALIFYING USES,  THE
USES BY THE TAXPAYER DESCRIBED IN CLAUSES (D), (E) AND (E-1) OF SUBPARA-
GRAPH  (V) OF THIS PARAGRAPH MAY BE AGGREGATED. IN ADDITION, THE USES BY
THE TAXPAYER, ITS AFFILIATED REGULATED  BROKER,  DEALER  AND  REGISTERED
INVESTMENT  ADVISER  UNDER  ANY  OF  THOSE  CLAUSES  MAY  BE AGGREGATED.
PROVIDED, HOWEVER, A TAXPAYER SHALL NOT BE ALLOWED THE  CREDIT  PROVIDED
BY CLAUSES (D), (E), (E-1) AND (F) OF SUBPARAGRAPH (V) OF THIS PARAGRAPH
UNLESS
  (I) EIGHTY PERCENT OR MORE OF THE EMPLOYEES PERFORMING THE ADMINISTRA-
TIVE  AND  SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING
USES OF SUCH EQUIPMENT ARE LOCATED IN THIS STATE, OR
  (II) THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM  THE  ADMINISTRATIVE
AND  SUPPORT  FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING USES
OF SUCH EQUIPMENT AND ARE LOCATED IN THIS STATE DURING THE TAXABLE  YEAR
FOR  WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN NINETY-FIVE
PERCENT OF THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM THESE  FUNCTIONS
AND  ARE  LOCATED IN THIS STATE DURING THE THIRTY-SIX MONTHS IMMEDIATELY
PRECEDING THE YEAR FOR WHICH THE CREDIT IS CLAIMED, OR
  (III) THE NUMBER OF EMPLOYEES LOCATED IN THIS STATE DURING THE TAXABLE
YEAR FOR WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN  NINETY
PERCENT  OF  THE  NUMBER  OF EMPLOYEES LOCATED IN THIS STATE ON DECEMBER
THIRTY-FIRST, NINETEEN HUNDRED NINETY-EIGHT OR, IF THE TAXPAYER WAS  NOT
A  CALENDAR YEAR TAXPAYER IN NINETEEN HUNDRED NINETY-EIGHT, THE LAST DAY
OF ITS FIRST TAXABLE YEAR ENDING AFTER DECEMBER  THIRTY-FIRST,  NINETEEN
HUNDRED  NINETY-EIGHT.  IF  THE  TAXPAYER BECOMES SUBJECT TO TAX IN THIS
STATE AFTER THE TAXABLE YEAR BEGINNING IN NINETEEN HUNDRED NINETY-EIGHT,
THEN THE TAXPAYER  IS  NOT  REQUIRED  TO  SATISFY  THE  EMPLOYMENT  TEST
PROVIDED  IN  THE  PRECEDING SENTENCE OF THIS SUBPARAGRAPH FOR ITS FIRST
TAXABLE YEAR.
  (VII) FOR THE PURPOSES OF CLAUSE (III) OF SUBPARAGRAPH  (VI)  OF  THIS
PARAGRAPH  THE  EMPLOYMENT TEST WILL BE BASED ON THE NUMBER OF EMPLOYEES
LOCATED IN THIS STATE ON THE LAST DAY OF  THE  FIRST  TAXABLE  YEAR  THE
TAXPAYER  IS  SUBJECT  TO TAX IN THIS STATE. IF THE USES OF THE PROPERTY
MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY IS PRINCIPALLY USED
IN QUALIFYING USES, THEN EITHER EACH AFFILIATE USING THE  PROPERTY  MUST
SATISFY  THIS  EMPLOYMENT TEST OR THIS EMPLOYMENT TEST MUST BE SATISFIED
THROUGH THE AGGREGATION OF THE EMPLOYEES OF THE TAXPAYER, ITS AFFILIATED

S. 6359--C                         80

REGULATED BROKER, DEALER, AND REGISTERED INVESTMENT  ADVISER  USING  THE
PROPERTY.
  (VIII) FOR THE PURPOSE OF THIS SUBDIVISION, THE TERM "GOODS" SHALL NOT
INCLUDE ELECTRICITY.
  (IX)  FOR PURPOSES OF THIS SUBDIVISION, "MANUFACTURING" SHALL MEAN THE
PROCESS OF WORKING RAW MATERIALS INTO WARES SUITABLE FOR  USE  OR  WHICH
GIVES  NEW  SHAPES,  NEW  QUALITY  OR  NEW  COMBINATIONS TO MATTER WHICH
ALREADY HAS GONE THROUGH SOME ARTIFICIAL PROCESS BY THE USE  OF  MACHIN-
ERY, TOOLS, APPLIANCES AND OTHER SIMILAR EQUIPMENT. PROPERTY USED IN THE
PRODUCTION OF GOODS SHALL INCLUDE MACHINERY, EQUIPMENT OR OTHER TANGIBLE
PROPERTY  WHICH  IS  PRINCIPALLY USED IN THE REPAIR AND SERVICE OF OTHER
MACHINERY, EQUIPMENT OR OTHER TANGIBLE PROPERTY USED PRINCIPALLY IN  THE
PRODUCTION  OF  GOODS  AND  SHALL  INCLUDE  ALL  FACILITIES  USED IN THE
PRODUCTION OPERATION, INCLUDING  STORAGE  OF  MATERIAL  TO  BE  USED  IN
PRODUCTION  AND  OF THE PRODUCTS THAT ARE PRODUCED. FOR PURPOSES OF THIS
SUBDIVISION, THE TERMS "RESEARCH AND DEVELOPMENT PROPERTY",  "INDUSTRIAL
WASTE  TREATMENT  FACILITIES",  AND  "AIR  POLLUTION CONTROL FACILITIES"
SHALL HAVE THE MEANINGS ASCRIBED THERETO BY CLAUSES (B),  (C)  AND  (D),
RESPECTIVELY,  OF  SUBPARAGRAPH (IV) OF PARAGRAPH (B) OF SUBDIVISION ONE
OF THIS SECTION, AND THE PROVISIONS OF SUBPARAGRAPH (V)  OF  SUCH  PARA-
GRAPH (B) SHALL APPLY.
  (C)  NONQUALIFIED  PROPERTY.  A TAXPAYER SHALL NOT BE ALLOWED A CREDIT
UNDER THIS SUBDIVISION WITH RESPECT TO ANY  TANGIBLE  PERSONAL  PROPERTY
AND  OTHER  TANGIBLE PROPERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPO-
NENTS OF BUILDINGS, WHICH IT LEASES TO ANY OTHER PERSON  OR  CORPORATION
EXCEPT  WHERE  A  TAXPAYER  LEASES  PROPERTY  TO AN AFFILIATED REGULATED
BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL  SECURITIES
EXCHANGE  OR  BOARD  OF TRADE OR OTHER ENTITY DESCRIBED IN CLAUSE (F) OF
SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS  SUBDIVISION  THAT  USES  SUCH
PROPERTY  IN  ACCORDANCE  WITH CLAUSE (D), (E), (E-1) OR (F) OF SUBPARA-
GRAPH (V) OF PARAGRAPH (B) OF THIS  SUBDIVISION.  FOR  PURPOSES  OF  THE
PRECEDING  SENTENCE, ANY CONTRACT OR AGREEMENT TO LEASE OR RENT OR FOR A
LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED  A  LEASE.    PROVIDED,
HOWEVER,  IN  DETERMINING  WHETHER  A TAXPAYER SHALL BE ALLOWED A CREDIT
UNDER THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY, ANY ELECTION  MADE
WITH  RESPECT  TO  SUCH PROPERTY PURSUANT TO THE PROVISIONS OF PARAGRAPH
EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTER-
NAL REVENUE CODE, AS SUCH PARAGRAPH WAS IN EFFECT FOR AGREEMENTS ENTERED
INTO PRIOR TO JANUARY FIRST,  NINETEEN  HUNDRED  EIGHTY-FOUR,  SHALL  BE
DISREGARDED.
  (D) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT
IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF  CREDIT  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING
YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH  YEAR
OR  YEARS.  IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER WHICH QUALIFIES
AS A NEW BUSINESS UNDER PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION
MAY ELECT, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH SUCH
CREDIT IS ALLOWED, TO TREAT FIFTY PERCENT OF THE AMOUNT OF  SUCH  CARRY-
OVER  AS  AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS  CHAPTER.
IN  ADDITION, ANY TAXPAYER WHICH IS APPROVED AS THE OWNER OF A QUALIFIED

S. 6359--C                         81

INVESTMENT PROJECT OR A SIGNIFICANT CAPITAL INVESTMENT PROJECT  PURSUANT
TO  SUBDIVISION  (W)  OF  SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL
MUNICIPAL LAW, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO  WHICH
SUCH  CREDIT  IS  ALLOWED, IN LIEU OF SUCH CARRYOVER, MAY ELECT TO TREAT
FIFTY PERCENT OF THE AMOUNT OF SUCH CARRYOVER WHICH IS  ATTRIBUTABLE  TO
THE  CREDIT ALLOWED UNDER THIS SUBDIVISION FOR PROPERTY WHICH IS PART OF
SUCH PROJECT AS AN OVERPAYMENT OF TAX TO  BE  CREDITED  OR  REFUNDED  IN
ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, SUCH OWNER SHALL BE ALLOWED SUCH REFUND
FOR A MAXIMUM OF TEN  TAXABLE  YEARS  WITH  RESPECT  TO  SUCH  QUALIFIED
INVESTMENT  PROJECT  AND  EACH  SIGNIFICANT  CAPITAL INVESTMENT PROJECT,
STARTING WITH THE FIRST TAXABLE YEAR IN WHICH PROPERTY  COMPRISING  SUCH
PROJECT IS PLACED IN SERVICE. PROVIDED, FURTHER, HOWEVER, THE PROVISIONS
OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (D-1) ANY CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL  NOT  BE
ALLOWED  IF  AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT ISSUED PURSUANT
TO SUBDIVISION (W) OF SECTION NINE HUNDRED  FIFTY-NINE  OF  THE  GENERAL
MUNICIPAL  LAW  TO  THE EMPIRE ZONE ENTERPRISE WHICH IS THE BASIS OF THE
CREDIT.
  (E) AT THE OPTION OF THE TAXPAYER, THE TAXPAYER MAY  CHOOSE  TO  CLAIM
THE  CREDIT  DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION FOR PROPERTY
WHICH ALSO QUALIFIES FOR THE CREDIT PROVIDED UNDER  SUBDIVISION  ONE  OF
THIS SECTION. A TAXPAYER SHALL NOT BE ALLOWED A CREDIT UNDER THIS SUBDI-
VISION  WITH  RESPECT TO ANY PROPERTY DESCRIBED IN PARAGRAPH (A) OF THIS
SUBDIVISION IF A CREDIT IS TAKEN PURSUANT TO  SUBDIVISION  ONE  OF  THIS
SECTION.
  (F)  RECAPTURE.  (I)  WITH  RESPECT  TO  PROPERTY WHICH IS DEPRECIABLE
PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE
BUT IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED  SIXTY-EIGHT
OF  SUCH  CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE
PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF  THE  CREDIT  PROVIDED
FOR  IN  THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE MONTHS OF
QUALIFIED USE BEAR TO THE MONTHS OF USEFUL LIFE. IF  PROPERTY  ON  WHICH
CREDIT  HAS  BEEN  TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE
PRIOR TO THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN  THE  CREDIT
TAKEN  AND  THE  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE
YEAR OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED  OF
OR  CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR
MORE THAN TWELVE CONSECUTIVE YEARS, IT SHALL NOT  BE  NECESSARY  TO  ADD
BACK  THE  CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT
ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING  THE  ORIGINAL
CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS
OF  USEFUL LIFE. FOR PURPOSES OF THIS SUBPARAGRAPH, USEFUL LIFE OF PROP-
ERTY SHALL BE THE SAME AS THE TAXPAYER USES  FOR  DEPRECIATION  PURPOSES
WHEN COMPUTING HIS FEDERAL INCOME TAX LIABILITY.
  (II)  EXCEPT  WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH (IV)
OF THIS PARAGRAPH APPLIES,  WITH  RESPECT  TO  THREE-YEAR  PROPERTY,  AS
DEFINED  IN  SUBSECTION  (E)  OF  SECTION ONE HUNDRED SIXTY-EIGHT OF THE
INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED
USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT  IS  TO  BE
TAKEN,  THE  AMOUNT  OF  THE  CREDIT SHALL BE THAT PORTION OF THE CREDIT
PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE  RATIO  WHICH  THE
MONTHS  OF QUALIFIED USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH CREDIT
HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO

S. 6359--C                         82

THE  END  OF  THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN
AND THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR  OF
DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETER-
MINED  BY  MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS
OF QUALIFIED USE BEAR TO THIRTY-SIX.
  (III) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH  (IV)
OF  THIS  PARAGRAPH  APPLIES,  WITH  RESPECT  TO PROPERTY SUBJECT TO THE
PROVISIONS OF SECTION ONE HUNDRED SIXTY-EIGHT OF  THE  INTERNAL  REVENUE
CODE OTHER THAN THREE-YEAR PROPERTY AS DEFINED IN SUBSECTION (E) OF SUCH
SECTION  ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO BE IN
QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH  THE  CREDIT
IS  TO  BE  TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF THE
CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH
THE MONTHS OF QUALIFIED USE BEAR TO SIXTY. IF PROPERTY ON  WHICH  CREDIT
HAS  BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO
THE END OF SIXTY MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND THE
CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSI-
TION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY
MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS OF  QUALI-
FIED USE BEAR TO SIXTY.
  (IV)  WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED SIXTY-
EIGHT OF THE INTERNAL REVENUE CODE APPLIES, WHICH IS  A  BUILDING  OR  A
STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO
BE  IN  QUALIFIED  USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS  THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
OF  OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD OVER
WHICH THE TAXPAYER CHOOSES TO DEDUCT THE  PROPERTY  UNDER  THE  INTERNAL
REVENUE  CODE,  THE  DIFFERENCE  BETWEEN THE CREDIT TAKEN AND THE CREDIT
ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE  YEAR  OF  DISPOSITION.
PROVIDED,  HOWEVER,  IF  SUCH PROPERTY IS DISPOSED OF OR CEASES TO BE IN
QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR  MORE  THAN  TWELVE
CONSECUTIVE  YEARS,  IT SHALL NOT BE NECESSARY TO ADD BACK THE CREDIT AS
PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED  FOR  ACTUAL
USE  SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE  TOTAL  NUMBER  OF  MONTHS
OVER  WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER-
NAL REVENUE CODE.
  (V) FOR PURPOSES OF THIS PARAGRAPH, DISPOSAL OR CESSATION OF QUALIFIED
USE SHALL NOT BE DEEMED TO HAVE OCCURRED SOLELY BY REASON OF THE  TERMI-
NATION OR EXPIRATION OF AN EMPIRE ZONE'S DESIGNATION AS SUCH.
  (VI)(A) FOR PURPOSES OF THIS PARAGRAPH, THE DECERTIFICATION OF A BUSI-
NESS  ENTERPRISE  WITH  RESPECT  TO  AN  EMPIRE  ZONE SHALL CONSTITUTE A
DISPOSAL OR CESSATION OF QUALIFIED USE OF  THE  PROPERTY  ON  WHICH  THE
CREDIT  WAS  TAKEN  WHICH  IS LOCATED IN THE ZONE TO WHICH THE DECERTIF-
ICATION APPLIES, ON THE EFFECTIVE DATE OF SUCH DECERTIFICATION.
  (B) WHERE A BUSINESS ENTERPRISE HAS BEEN DECERTIFIED BASED ON A  FIND-
ING  PURSUANT  TO CLAUSE ONE, TWO, OR FIVE OF SUBDIVISION (A) OF SECTION
NINE HUNDRED  FIFTY-NINE  OF  THE  GENERAL  MUNICIPAL  LAW,  THE  AMOUNT
REQUIRED  TO  BE ADDED BACK BY REASON OF THIS PARAGRAPH SHALL BE (I) THE
AMOUNT OF CREDIT, WITH RESPECT TO THE PROPERTY WHICH IS DISPOSED  OF  OR
CEASES  TO  BE  IN QUALIFIED USE, WHICH WAS DEDUCTED FROM THE TAXPAYER'S
TAX OTHERWISE DUE UNDER  THIS  ARTICLE  FOR  ALL  PRIOR  TAXABLE  YEARS,

S. 6359--C                         83

REDUCED  (BUT NOT BELOW ZERO) BY (II) THE CREDIT ALLOWED FOR ACTUAL USE.
FOR PURPOSES OF THIS SUBPARAGRAPH, THE ATTRIBUTION TO SPECIFIC  PROPERTY
OF  CREDIT  AMOUNTS DEDUCTED FROM TAX SHALL BE ESTABLISHED IN ACCORDANCE
WITH  THE  DATE  OF  PLACEMENT IN SERVICE OF SUCH PROPERTY IN THE EMPIRE
ZONE.
  (C) IN NO EVENT SHALL THE AMOUNT OF THE  CREDIT  ALLOWED  PURSUANT  TO
THIS  SUBDIVISION  BE  RENDERED,  SOLELY BY REASON OF CLAUSE (A) OF THIS
SUBPARAGRAPH, LESS THAN THE AMOUNT OF THE CREDIT TO WHICH  THE  TAXPAYER
WOULD OTHERWISE BE ENTITLED UNDER SUBDIVISION ONE OF THIS SECTION.
  (D)  NOTWITHSTANDING  ANY  OTHER PROVISION OF THIS SUBDIVISION, IN THE
CASE OF A BUSINESS ENTERPRISE WHICH HAS BEEN DECERTIFIED, ANY AMOUNT  OF
CREDIT  ALLOWED WITH RESPECT TO THE PROPERTY OF SUCH BUSINESS ENTERPRISE
LOCATED IN THE ZONE  TO  WHICH  THE  DECERTIFICATION  APPLIES  WHICH  IS
CARRIED  OVER PURSUANT TO PARAGRAPH (D) OF THIS SUBDIVISION SHALL NOT BE
CARRIED OVER BEYOND THE SEVENTH TAXABLE YEAR NEXT FOLLOWING THE  TAXABLE
YEAR  WITH  RESPECT TO WHICH THE CREDIT PROVIDED FOR IN THIS SUBDIVISION
WAS ALLOWED.
  (VII) FOR PURPOSES OF THIS PARAGRAPH, WHERE A CREDIT IS  ALLOWED  WITH
RESPECT  TO  AN AIR POLLUTION CONTROL FACILITY ON THE BASIS OF A CERTIF-
ICATE OF COMPLIANCE ISSUED PURSUANT TO  THE  ENVIRONMENTAL  CONSERVATION
LAW  AND  THE  CERTIFICATE  IS  REVOKED PURSUANT TO SUBDIVISION THREE OF
SECTION 19-0309 OF THE ENVIRONMENTAL CONSERVATION LAW,  SUCH  REVOCATION
SHALL  CONSTITUTE  A DISPOSAL OR CESSATION OF QUALIFIED USE, EXCEPT WITH
RESPECT TO PROPERTY CONTAINED IN OR COMPRISING SUCH  FACILITY  WHICH  IS
DESCRIBED  IN  CLAUSE  (A), (B), OR (C) OF SUBPARAGRAPH (V) OF PARAGRAPH
(B) OF THIS SUBDIVISION OTHER THAN AS  PART  OF  OR  COMPRISING  AN  AIR
POLLUTION CONTROL FACILITY. ALSO FOR PURPOSES OF THIS PARAGRAPH, THE USE
OF  AN  AIR  POLLUTION CONTROL FACILITY OR AN INDUSTRIAL WASTE TREATMENT
FACILITY FOR THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH ARE USABLE
IN THE MANUFACTURING PROCESS OR ARE MARKETABLE SHALL CONSTITUTE A CESSA-
TION OF QUALIFIED USE, EXCEPT WITH RESPECT TO PROPERTY CONTAINED  IN  OR
COMPRISING  SUCH  FACILITY  WHICH  IS  DESCRIBED IN CLAUSE (A) OR (C) OF
SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS SUBDIVISION.
  (VIII) EXCEPT AS PROVIDED IN THIS SUBPARAGRAPH, THIS  PARAGRAPH  SHALL
NOT  APPLY TO A CREDIT ALLOWED BY THIS SUBDIVISION TO A TAXPAYER THAT IS
A PARTNER IN A  PARTNERSHIP  IN  THE  CASE  OF  MANUFACTURING  PROPERTY;
PROVIDED,  AT THE TIME SUCH PROPERTY WAS PLACED IN SERVICE BY SUCH PART-
NERSHIP IN AN EMPIRE ZONE THE BASIS FOR FEDERAL INCOME TAX PURPOSES  FOR
SUCH  PROPERTY  (OR  A  PROJECT  THAT INCLUDES SUCH PROPERTY) EQUALED OR
EXCEEDED THREE HUNDRED MILLION DOLLARS AND SUCH PARTNER OWNED ITS  PART-
NERSHIP  INTEREST  FOR  AT LEAST THREE YEARS FROM THE DATE SUCH PROPERTY
WAS PLACED IN SERVICE. IF SUCH PROPERTY CEASES TO BE  IN  QUALIFIED  USE
AFTER  IT IS PLACED IN SERVICE, THIS PARAGRAPH SHALL APPLY TO SUCH PART-
NER IN THE YEAR SUCH PROPERTY CEASES TO BE IN QUALIFYING USE.
  (IX) IF A TAXPAYER, WHICH IS APPROVED BY THE COMMISSIONER OF  ECONOMIC
DEVELOPMENT  AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIF-
ICANT CAPITAL INVESTMENT PROJECT PURSUANT TO SUBDIVISION (W) OF  SECTION
NINE  HUNDRED  FIFTY-NINE  OF  THE  GENERAL  MUNICIPAL LAW, FAILS TO (A)
CREATE AT LEAST THE MINIMUM NUMBER OF JOBS AT SUCH PROJECT  AS  REQUIRED
BY  THE  PROVISIONS  OF  SUBDIVISION  (S) OR (T) OF SECTION NINE HUNDRED
FIFTY-SEVEN AND SUBDIVISION (W) OF SECTION NINE  HUNDRED  FIFTY-NINE  OF
THE  GENERAL  MUNICIPAL  LAW OR (B) PLACE IN SERVICE PROPERTY COMPRISING
SUCH QUALIFIED INVESTMENT  PROJECT  OR  SIGNIFICANT  CAPITAL  INVESTMENT
PROJECT WITH A BASIS FOR FEDERAL INCOME TAX PURPOSES EQUALING OR EXCEED-
ING  THE  APPLICABLE MINIMUM REQUIRED BASIS AS PROVIDED IN SUCH SUBDIVI-
SION (S) OR (T), WHICHEVER IS RELEVANT, BY THE LAST  DAY  OF  THE  FIFTH

S. 6359--C                         84

TAXABLE  YEAR  FOLLOWING  THE  TAXABLE  YEAR  IN WHICH A CREDIT IS FIRST
ALLOWED UNDER THIS SUBDIVISION FOR THE  PROPERTY  WHICH  COMPRISES  SUCH
QUALIFIED  INVESTMENT  PROJECT  OR  SUCH  SIGNIFICANT CAPITAL INVESTMENT
PROJECT,  THE  TOTAL AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ALL TAXABLE YEARS WITH RESPECT TO THE PROPERTY WHICH COMPRISES  SUCH
PROJECT  WHICH HAS BEEN REFUNDED TO SUCH TAXPAYER SHALL BE ADDED BACK IN
SUCH TAXABLE YEAR.
  (G) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF  THE  GENERAL  MUNICIPAL LAW, A TAXPAYER THAT IS
CERTIFIED AS A QUALIFIED INVESTMENT PROJECT  PURSUANT  TO  SUCH  ARTICLE
EIGHT-B  ON  THE  DAY  IMMEDIATELY  PRECEDING  THE  DAY THE EMPIRE ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
EIGHTEEN-B FOR PURPOSES OF THIS SUBDIVISION FOR  THE  REMAINDER  OF  THE
TAXABLE  YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT SUCCEED-
ING NINE TAXABLE YEARS. IN ADDITION,  THE  AREAS  DESIGNATED  AS  EMPIRE
ZONES  IN  WHICH  THE  TAXPAYER  IS  CERTIFIED AS A QUALIFIED INVESTMENT
PROJECT ON THE DAY  IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE  ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
THIS  SUBDIVISION  FOR  THE  REMAINDER  OF THE TAXABLE YEAR IN WHICH THE
EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
  (H) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF THE GENERAL MUNICIPAL LAW AND EXCEPT AS PROVIDED
IN PARAGRAPH (G) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
EMPIRE ZONE BUSINESS PURSUANT TO SUCH  ARTICLE  EIGHTEEN-B  ON  THE  DAY
IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE ZONE PROGRAM EXPIRED SHALL
CONTINUE TO BE  DEEMED  CERTIFIED  UNDER  SUCH  ARTICLE  EIGHTEEN-B  FOR
PURPOSES  OF  THIS SUBDIVISION UNTIL APRIL FIRST, TWO THOUSAND FOURTEEN.
IN ADDITION, THE AREAS DESIGNATED AS EMPIRE ZONES IN WHICH THE  TAXPAYER
IS CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING
THE  DAY  THE  EMPIRE  ZONES PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED
EMPIRE ZONES FOR PURPOSES OF THIS SUBDIVISIONS UNTIL  APRIL  FIRST,  TWO
THOUSAND FOURTEEN.
  4.  EMPIRE  ZONE EMPLOYMENT INCENTIVE CREDIT (EZ-EIC). (A) APPLICATION
OF CREDIT. WHERE A TAXPAYER IS ALLOWED A CREDIT UNDER SUBDIVISION  THREE
OF  THIS SECTION, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF THE
THREE YEARS NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT  UNDER
SUCH SUBDIVISION THREE IS ALLOWED, WITH RESPECT TO SUCH PROPERTY, WHETH-
ER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT TAXABLE YEARS
PURSUANT  TO  PARAGRAPH (D) OF SUCH SUBDIVISION THREE, OF THIRTY PERCENT
OF THE CREDIT ALLOWABLE UNDER SUCH SUBDIVISION THREE; PROVIDED, HOWEVER,
THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR  ANY  TAXABLE  YEAR
SHALL ONLY BE ALLOWED IF THE AVERAGE NUMBER OF EMPLOYEES EMPLOYED BY THE
TAXPAYER  IN  THE EMPIRE ZONE, DESIGNATED PURSUANT TO ARTICLE EIGHTEEN-B
OF THE GENERAL MUNICIPAL LAW, IN WHICH SUCH PROPERTY IS  LOCATED  DURING
SUCH  TAXABLE  YEAR  IS  AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE
NUMBER OF EMPLOYEES EMPLOYED BY THE TAXPAYER IN SUCH EMPIRE ZONE, DURING
THE TAXABLE YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR  FOR  WHICH  THE
CREDIT  UNDER  SUCH  SUBDIVISION THREE IS ALLOWED AND PROVIDED, FURTHER,
THAT IF THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE  A  TAXABLE
YEAR  IMMEDIATELY  PRECEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER
SUBDIVISION THREE OF THIS SECTION IS ALLOWED, THE CREDIT ALLOWABLE UNDER
THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL BE ALLOWED  IF  THE  AVERAGE
NUMBER OF EMPLOYEES EMPLOYED IN SUCH EMPIRE ZONE IN SUCH TAXABLE YEAR IS
AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE NUMBER OF SUCH EMPLOYEES
DURING THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION THREE
IS ALLOWED.

S. 6359--C                         85

  (B)  AVERAGE  NUMBER  OF  EMPLOYEES.  THE  AVERAGE NUMBER OF EMPLOYEES
EMPLOYED IN AN EMPIRE ZONE IN A TAXABLE YEAR SHALL BE COMPUTED BY ASCER-
TAINING THE NUMBER OF SUCH EMPLOYEES WITHIN  SUCH  ZONE  EXCEPT  GENERAL
EXECUTIVE  OFFICERS, EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST DAY OF
MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER AND THE
THIRTY-FIRST DAY OF DECEMBER IN THE TAXABLE YEAR, BY ADDING TOGETHER THE
NUMBER  OF  EMPLOYEES ASCERTAINED ON EACH OF SUCH DATES AND DIVIDING THE
SUM SO OBTAINED BY THE NUMBER OF SUCH  ABOVE-MENTIONED  DATES  OCCURRING
WITHIN THE TAXABLE YEAR.
  (C)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER,  THAT
IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF  CREDIT  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING
YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH  YEAR
OR  YEARS.  IN  LIEU  OF  SUCH  CARRYOVER,  ANY  SUCH TAXPAYER, WHICH IS
APPROVED AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIFICANT
CAPITAL INVESTMENT PROJECT PURSUANT TO SUBDIVISION (V) OF  SECTION  NINE
HUNDRED  FIFTY-NINE  OF  THE  GENERAL  MUNICIPAL  LAW, MAY ELECT, ON ITS
REPORT FOR ITS TAXABLE  YEAR  WITH  RESPECT  TO  WHICH  SUCH  CREDIT  IS
ALLOWED,  TO  TREAT  FIFTY PERCENT OF THE AMOUNT OF SUCH CARRYOVER AS AN
OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER,  IN THE CASE OF SUCH OWNER OF A QUALIFIED INVESTMENT PROJECT OR
A SIGNIFICANT CAPITAL INVESTMENT PROJECT,  ONLY  FIFTY  PERCENT  OF  THE
AMOUNT  OF  SUCH  CARRYOVER  WHICH IS ATTRIBUTABLE TO THE CREDIT ALLOWED
UNDER THIS SUBDIVISION WITH RESPECT TO PROPERTY WHICH IS  PART  OF  SUCH
PROJECT SHALL BE ALLOWED TO BE CREDITED OR REFUNDED AND SUCH OWNER SHALL
BE  ALLOWED  SUCH CREDIT OR REFUND ONLY FOR THOSE TAXABLE YEARS IN WHICH
SUCH OWNER WOULD BE ALLOWED A  CREDIT  OR  REFUND  OF  THE  EMPIRE  ZONE
INVESTMENT  TAX CREDIT PURSUANT TO PARAGRAPH (D) OF SUBDIVISION THREE OF
THIS SECTION. PROVIDED, FURTHER, HOWEVER, THE PROVISIONS  OF  SUBSECTION
(C)  OF  SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTAND-
ING, NO INTEREST SHALL BE PAID THEREON.
  (C-1) ANY CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL  NOT  BE
ALLOWED  IF  AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT ISSUED PURSUANT
TO SUBDIVISION (W) OF SECTION NINE HUNDRED  FIFTY-NINE  OF  THE  GENERAL
MUNICIPAL  LAW  TO  THE EMPIRE ZONE ENTERPRISE WHICH IS THE BASIS OF THE
CREDIT.
  (D) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF  THE  GENERAL  MUNICIPAL LAW, A TAXPAYER THAT IS
CERTIFIED AS A QUALIFIED INVESTMENT PROJECT  PURSUANT  TO  SUCH  ARTICLE
EIGHTEEN-B  ON  THE  DAY  IMMEDIATELY PRECEDING THE DAY THE EMPIRE ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
EIGHTEEN-B FOR PURPOSES OF THIS SUBDIVISION FOR  THE  REMAINDER  OF  THE
TAXABLE  YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT SUCCEED-
ING NINE TAXABLE YEARS. IN ADDITION,  THE  AREAS  DESIGNATED  AS  EMPIRE
ZONES  IN  WHICH  THE  TAXPAYER  IS  CERTIFIED AS A QUALIFIED INVESTMENT
PROJECT ON THE DAY  IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE  ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
THIS  SUBDIVISION  FOR  THE  REMAINDER  OF THE TAXABLE YEAR IN WHICH THE
EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.

S. 6359--C                         86

  (E) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF THE GENERAL MUNICIPAL LAW AND EXCEPT AS PROVIDED
IN PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
EMPIRE ZONE BUSINESS PURSUANT TO SUCH  ARTICLE  EIGHTEEN-B  ON  THE  DAY
IMMEDIATELY  PRECEDING  THE  DAY  THE EMPIRE ZONES PROGRAM EXPIRED SHALL
CONTINUE TO BE DEEMED IN THE EMPIRE  ZONE  IN  WHICH  THE  TAXPAYER  WAS
CERTIFIED  AS  AN  EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING
THE DAY THE EMPIRE ZONES PROGRAM EXPIRED FOR EACH  OF  THE  THREE  YEARS
NEXT  SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER SUBDIVISION
THREE OF THIS SECTION IS ALLOWED.
  5. QEZE CREDIT FOR REAL PROPERTY TAXES. (A)  ALLOWANCE  OF  CREDIT.  A
TAXPAYER  WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A
CREDIT FOR ELIGIBLE REAL PROPERTY TAXES, TO BE COMPUTED AS  PROVIDED  IN
SECTION  FIFTEEN  OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS  TAX
BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF
TAX  TO  BE  CREDITED  OR  REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  6. QEZE TAX REDUCTION CREDIT. (A)  ALLOWANCE  OF  CREDIT.  A  TAXPAYER
WHICH  IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A QEZE TAX
REDUCTION CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION SIXTEEN OF  THIS
CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THIS PARAGRAPH SHALL NOT APPLY TO A TAXPAYER WITH A ZONE ALLO-
CATION FACTOR OF ONE HUNDRED PERCENT.
  7. QUALIFIED EMERGING TECHNOLOGY COMPANY EMPLOYMENT CREDIT. (A) APPLI-
CATION OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO  BE  COMPUTED
AS  HEREINAFTER  PROVIDED,  AGAINST  THE  TAX  IMPOSED  BY THIS ARTICLE,
PROVIDED:
  (I) THE TAXPAYER IS A QUALIFIED EMERGING TECHNOLOGY  COMPANY  PURSUANT
TO  THE  PROVISIONS  OF  SECTION  THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC
AUTHORITIES LAW; AND
  (II) THE AVERAGE NUMBER OF  INDIVIDUALS  EMPLOYED  FULL  TIME  BY  THE
TAXPAYER  IN  NEW  YORK  STATE  DURING  THE TAXABLE YEAR IS AT LEAST ONE
HUNDRED ONE PERCENT OF THE TAXPAYER'S  BASE  YEAR  EMPLOYMENT.  FOR  THE
PURPOSES  OF  THIS SUBDIVISION, "BASE YEAR EMPLOYMENT" MEANS THE AVERAGE
NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME BY THE TAXPAYER  IN  THE  STATE
DURING  THE  THREE TAXABLE YEARS IMMEDIATELY PRECEDING THE FIRST TAXABLE
YEAR IN WHICH  THE  CREDIT  IS  CLAIMED.  WHERE  THE  TAXPAYER  PROVIDED
FULL-TIME  EMPLOYMENT  WITHIN  THE  STATE  DURING ONLY A PORTION OF SUCH
THREE-YEAR PERIOD, THEN THE FIRST EFFECTIVE DATE FOR THE COMPANY TO TAKE
ADVANTAGE OF THIS CREDIT SHALL BE THE NEXT YEAR FOLLOWING THE FIRST FULL
TAXABLE YEAR THAT THE COMPANY  HAD  FULL-TIME  EMPLOYMENT  IN  NEW  YORK
STATE.  FOR  THE PURPOSES OF THIS PARAGRAPH THE TERM "THREE YEARS" SHALL

S. 6359--C                         87

BE DEEMED TO REFER INSTEAD TO  THE  PRIOR  YEAR'S  FULL-TIME  EMPLOYMENT
AFTER  THE  FIRST  YEAR  AND  THE AVERAGE OF THE FIRST EIGHT QUARTERS OF
EMPLOYMENT AFTER THE FIRST TWO TAXABLE YEARS IN NEW YORK STATE.
  (B)  CREDIT  LIMITATION. THE CREDIT SHALL BE ALLOWED ONLY IN THE FIRST
TAXABLE YEAR IN WHICH THE CREDIT IS CLAIMED AND IN EACH OF THE NEXT  TWO
TAXABLE  YEARS,  PROVIDED  THAT  THE CONDITIONS OF PARAGRAPH (A) OF THIS
SUBDIVISION ARE SATISFIED IN EACH TAXABLE YEAR.
  (C) AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME. FOR THE PURPOSES
OF THIS SUBDIVISION, AVERAGE NUMBER OF  INDIVIDUALS  EMPLOYED  FULL-TIME
SHALL  BE  COMPUTED BY ADDING THE NUMBER OF SUCH INDIVIDUALS EMPLOYED BY
THE TAXPAYER AT THE END OF EACH QUARTER  DURING  EACH  TAXABLE  YEAR  OR
OTHER  APPLICABLE  PERIOD AND DIVIDING THE SUM SO OBTAINED BY THE NUMBER
OF SUCH QUARTERS OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER  APPLICABLE
PERIOD; PROVIDED HOWEVER, EXCEPT THAT IN COMPUTING BASE YEAR EMPLOYMENT,
THERE  SHALL  BE  EXCLUDED THEREFROM ANY EMPLOYEE WITH RESPECT TO WHOM A
CREDIT PROVIDED FOR UNDER SUBDIVISION SIX OF THIS SECTION IS CLAIMED FOR
THE TAXABLE YEAR.
  (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL EQUAL THE PRODUCT
OF ONE  THOUSAND  DOLLARS  TIMES  THE  NUMBER  OF  INDIVIDUALS  EMPLOYED
FULL-TIME  BY THE TAXPAYER IN THE TAXABLE YEAR THAT ARE IN EXCESS OF ONE
HUNDRED PERCENT OF THE TAXPAYER'S BASE YEAR EMPLOYMENT.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT
OF  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES
THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS  TAX  BASED  ON
THE  FIXED  DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCT-
IBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF  TAX  TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  8.  QUALIFIED  EMERGING  TECHNOLOGY  COMPANY  CAPITAL  TAX CREDIT. (A)
AMOUNT OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST  THE  TAX
IMPOSED  BY THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO ONE
OF THE FOLLOWING PERCENTAGES, PER EACH QUALIFIED INVESTMENT IN A  QUALI-
FIED  EMERGING  TECHNOLOGY  COMPANY  AS  DEFINED  IN  SECTION THIRTY-ONE
HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW,  MADE  DURING  THE  TAXABLE
YEAR, AND CERTIFIED BY THE COMMISSIONER, EITHER:
  (1)  TEN  PERCENT OF QUALIFIED INVESTMENTS IN QUALIFIED EMERGING TECH-
NOLOGY COMPANIES, EXCEPT FOR INVESTMENTS MADE BY  OR  ON  BEHALF  OF  AN
OWNER  OF  THE  BUSINESS,  INCLUDING, BUT NOT LIMITED TO, A STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR  HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
TAXPAYER  CERTIFIES  TO  THE  COMMISSIONER THAT THE QUALIFIED INVESTMENT
WILL NOT BE SOLD, TRANSFERRED, TRADED, OR DISPOSED OF  DURING  THE  FOUR
YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED; OR
  (2)  TWENTY  PERCENT  OF  QUALIFIED  INVESTMENTS IN QUALIFIED EMERGING
TECHNOLOGY COMPANIES, EXCEPT FOR INVESTMENTS MADE BY OR ON BEHALF OF  AN
OWNER  OF  THE  BUSINESS,  INCLUDING, BUT NOT LIMITED TO, A STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR  HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
TAXPAYER  CERTIFIES  TO  THE  COMMISSIONER THAT THE QUALIFIED INVESTMENT

S. 6359--C                         88

WILL NOT BE SOLD, TRANSFERRED, TRADED, OR DISPOSED OF  DURING  THE  NINE
YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED.
  (B)  QUALIFIED  INVESTMENT.  "QUALIFIED INVESTMENT" MEANS THE CONTRIB-
UTION OF PROPERTY TO A CORPORATION IN EXCHANGE FOR ORIGINAL ISSUE  CAPI-
TAL STOCK OR OTHER OWNERSHIP INTEREST, THE CONTRIBUTION OF PROPERTY TO A
PARTNERSHIP  IN EXCHANGE FOR AN INTEREST IN THE PARTNERSHIP, AND SIMILAR
CONTRIBUTIONS IN THE CASE OF A BUSINESS ENTITY NOT IN CORPORATE OR PART-
NERSHIP FORM IN EXCHANGE FOR AN OWNERSHIP INTEREST IN SUCH ENTITY.   THE
TOTAL  AMOUNT OF CREDIT ALLOWABLE TO A TAXPAYER UNDER THIS PROVISION FOR
ALL YEARS, TAKEN IN THE AGGREGATE, SHALL NOT EXCEED  ONE  HUNDRED  FIFTY
THOUSAND  DOLLARS  IN  THE CASE OF INVESTMENTS MADE PURSUANT TO SUBPARA-
GRAPH ONE OF PARAGRAPH (A) OF THIS  SUBDIVISION  AND  SHALL  NOT  EXCEED
THREE  HUNDRED THOUSAND DOLLARS IN THE CASE OF INVESTMENTS MADE PURSUANT
TO SUBPARAGRAPH TWO OF PARAGRAPH (A) OF THIS SUBDIVISION.
  (C) CARRYOVER. IN NO EVENT SHALL THE  CREDIT  AND  CARRYOVER  OF  SUCH
CREDIT  ALLOWED  UNDER  THIS  SUBDIVISION  FOR  ANY TAXABLE YEAR, IN THE
AGGREGATE, REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  FIXED
DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF  THE  TAXPAYER
OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, OR IF ANY
PART OF THE CREDIT OR CARRYOVERS OF SUCH CREDIT MAY NOT BE DEDUCTED FROM
THE TAX OTHERWISE DUE BY REASON OF THE FINAL SENTENCE OF THIS PARAGRAPH,
ANY AMOUNT OF CREDIT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND
MAY BE DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.  IN  ADDITION,  THE
AMOUNT  OF  SUCH  CREDIT,  AND  CARRYOVERS OF SUCH CREDIT TO THE TAXABLE
YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY  NOT,  IN  THE  AGGREGATE,
EXCEED  FIFTY  PERCENT OF THE TAX IMPOSED UNDER SECTION TWO HUNDRED NINE
OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY CREDIT  PROVIDED  FOR  BY
THIS SECTION.
  (D)  RECAPTURE.  (1)  WHERE  A  TAXPAYER SELLS, TRANSFERS OR OTHERWISE
DISPOSES OF CORPORATE STOCK, A PARTNERSHIP INTEREST OR  OTHER  OWNERSHIP
INTEREST ARISING FROM THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE
BASIS, IN WHOLE OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR
UNDER SUBPARAGRAPH ONE OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN
INVESTMENT  WHICH  WAS  THE  BASIS FOR SUCH ALLOWANCE IS, IN WHOLE OR IN
PART, RECOVERED BY SUCH  TAXPAYER,  AND  SUCH  DISPOSITION  OR  RECOVERY
OCCURS  DURING  THE  TAXABLE  YEAR OR WITHIN FORTY-EIGHT MONTHS FROM THE
CLOSE OF THE TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT IS  ALLOWED,
THE  TAXPAYER  SHALL ADD BACK, WITH RESPECT TO THE TAXABLE YEAR IN WHICH
THE DISPOSITION OR  RECOVERY  DESCRIBED  ABOVE  OCCURRED,  THE  REQUIRED
PORTION OF THE CREDIT ORIGINALLY ALLOWED.
  (2)  WHERE A TAXPAYER SELLS, TRANSFERS OR OTHERWISE DISPOSES OF CORPO-
RATE STOCK, A PARTNERSHIP INTEREST OR OTHER OWNERSHIP  INTEREST  ARISING
FROM  THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE BASIS, IN WHOLE
OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR UNDER  SUBPARA-
GRAPH  TWO  OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN INVESTMENT
WHICH WAS THE BASIS FOR SUCH ALLOWANCE IS IN ANY MANNER, IN WHOLE OR  IN
PART,  RECOVERED  BY  SUCH  TAXPAYER,  AND  SUCH DISPOSITION OR RECOVERY
OCCURS DURING THE TAXABLE YEAR OR WITHIN ONE HUNDRED EIGHT  MONTHS  FROM
THE  CLOSE  OF  THE  TAXABLE  YEAR  WITH RESPECT TO WHICH SUCH CREDIT IS
ALLOWED, THE TAXPAYER SHALL ADD BACK, WITH RESPECT TO THE  TAXABLE  YEAR
IN  WHICH  THE  DISPOSITION OR RECOVERY DESCRIBED IN SUBPARAGRAPH ONE OF

S. 6359--C                         89

THIS PARAGRAPH OCCURRED THE REQUIRED PORTION OF  THE  CREDIT  ORIGINALLY
ALLOWED.
  (3) THE REQUIRED PORTION OF THE CREDIT ORIGINALLY ALLOWED SHALL BE THE
PRODUCT  OF  (A) THE PORTION OF SUCH CREDIT ATTRIBUTABLE TO THE PROPERTY
DISPOSED OF AND (B) THE APPLICABLE PERCENTAGE.
  (4) THE APPLICABLE PERCENTAGE SHALL BE:
  (A) FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)
OF THIS SUBDIVISION:
  (I)  ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS WITHIN
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED  OR  WITHIN
TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
  (II)  SEVENTY-FIVE PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE
THAN TWELVE BUT NOT MORE THAN TWENTY-FOUR MONTHS AFTER THE  END  OF  THE
TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (III)  FIFTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
TWENTY-FOUR MONTHS BUT NOT MORE THAN THIRTY-SIX MONTHS AFTER THE END  OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
  (IV)  TWENTY-FIVE  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE
THAN THIRTY-SIX MONTHS BUT NOT MORE THAN FORTY-EIGHT  MONTHS  AFTER  THE
END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED; OR
  (B)  FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH TWO OF PARAGRAPH (A)
OF THIS SUBDIVISION:
  (I) ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  WITHIN
THE  TAXABLE  YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED OR WITHIN
TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
  (II) EIGHTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  MORE  THAN
TWELVE BUT NOT MORE THAN FORTY-EIGHT MONTHS AFTER THE END OF THE TAXABLE
YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (III)  SIXTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
FORTY-EIGHT MONTHS BUT NOT MORE THAN SEVENTY-TWO MONTHS AFTER THE END OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (IV) FORTY PERCENT, IF THE DISPOSITION OR RECOVERY  OCCURS  MORE  THAN
SEVENTY-TWO  MONTHS BUT NOT MORE THAN NINETY-SIX MONTHS AFTER THE END OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
  (V) TWENTY PERCENT, IF THE DISPOSITION OR RECOVERY  OCCURS  MORE  THAN
NINETY-SIX  MONTHS  BUT NOT MORE THAN ONE HUNDRED EIGHT MONTHS AFTER THE
END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED.
  9. CREDIT FOR THE  SPECIAL  ADDITIONAL  MORTGAGE  RECORDING  TAX.  (A)
APPLICATION OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE CRED-
ITED AGAINST THE TAX IMPOSED BY THIS ARTICLE, EQUAL TO THE AMOUNT OF THE
SPECIAL  ADDITIONAL MORTGAGE RECORDING TAX PAID BY THE TAXPAYER PURSUANT
TO  THE  PROVISIONS  OF  SUBDIVISION  ONE-A  OF  SECTION   TWO   HUNDRED
FIFTY-THREE OF THIS CHAPTER OR MORTGAGES RECORDED. PROVIDED, HOWEVER, NO
CREDIT  SHALL  BE  ALLOWED  WITH  RESPECT TO A MORTGAGE OF REAL PROPERTY
PRINCIPALLY IMPROVED OR  TO  BE  IMPROVED  BY  ONE  OR  MORE  STRUCTURES
CONTAINING  IN  THE  AGGREGATE  NOT  MORE  THAN SIX RESIDENTIAL DWELLING
UNITS, EACH DWELLING UNIT HAVING ITS OWN  SEPARATE  COOKING  FACILITIES,
WHERE  THE  REAL  PROPERTY  IS  LOCATED  IN  ONE OR MORE OF THE COUNTIES
COMPRISING  THE  METROPOLITAN  COMMUTER  TRANSPORTATION  AREA.  PROVIDED
FURTHER,  HOWEVER, NO CREDIT SHALL BE ALLOWED WITH RESPECT TO A MORTGAGE
OF REAL PROPERTY PRINCIPALLY IMPROVED OR TO BE IMPROVED BY ONE  OR  MORE
STRUCTURES  CONTAINING  IN  THE  AGGREGATE NOT MORE THAN SIX RESIDENTIAL
DWELLING UNITS, EACH DWELLING  UNIT  HAVING  ITS  OWN  SEPARATE  COOKING
FACILITIES, WHERE THE REAL PROPERTY IS LOCATED IN THE COUNTY OF ERIE.
  (B)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE

S. 6359--C                         90

FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. IF, HOWEVER, THE  AMOUNT
OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR, INCLUD-
ING  ANY  CREDIT CARRIED OVER FROM A PRIOR TAXABLE YEAR, REDUCES THE TAX
TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXA-
BLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  10. CREDIT FOR SERVICING CERTAIN MORTGAGES. (A) GENERAL. EVERY TAXPAY-
ER MEETING THE REQUIREMENTS OF THE STATE OF  NEW  YORK  MORTGAGE  AGENCY
APPLICABLE  TO THE SERVICING OF MORTGAGES ACQUIRED BY SUCH AGENCY PURSU-
ANT TO THE STATE OF NEW YORK  MORTGAGE  AGENCY  ACT,  WHICH  SHALL  HAVE
ENTERED  INTO  A  CONTRACT WITH THE STATE OF NEW YORK MORTGAGE AGENCY TO
SERVICE MORTGAGES ACQUIRED BY SUCH AGENCY PURSUANT TO THE STATE  OF  NEW
YORK  MORTGAGE  AGENCY ACT, SHALL HAVE CREDITED TO IT ANNUALLY AN AMOUNT
EQUAL TO TWO AND NINETY-THREE ONE HUNDREDTHS PER  CENTUM  OF  THE  TOTAL
PRINCIPAL AND INTEREST COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR
ON  EACH  SUCH  MORTGAGE  SECURED BY A LIEN ON REAL ESTATE IMPROVED BY A
ONE-FAMILY TO FOUR-FAMILY RESIDENTIAL STRUCTURE AND AN AMOUNT  EQUAL  TO
THE  INTEREST  COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR ON EACH
SUCH MORTGAGE SECURED BY A LIEN ON REAL PROPERTY IMPROVED BY A STRUCTURE
OCCUPIED AS THE RESIDENCE OF FIVE OR MORE FAMILIES LIVING  INDEPENDENTLY
OF  EACH  OTHER, MULTIPLIED BY A FRACTION THE DENOMINATOR OF WHICH SHALL
BE THE INTEREST RATE PAYABLE ON THE MORTGAGE (COMPUTED TO  FIVE  DECIMAL
PLACES) AND THE NUMERATOR OF WHICH SHALL BE .00125 IN THE CASE OF SUCH A
MORTGAGE  ACQUIRED BY SUCH AGENCY FOR LESS THAN ONE MILLION DOLLARS, AND
.00100 IN THE CASE OF SUCH A MORTGAGE ACQUIRED BY SUCH  AGENCY  FOR  ONE
MILLION DOLLARS OR MORE. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER THIS
SUBDIVISION  REDUCE THE TAX TO LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
TEN  OF  THIS ARTICLE. IN COMPUTING SUCH TAX CREDIT FOR THE SERVICING OF
MORTGAGES ON  ONE-FAMILY  TO  FOUR-FAMILY  RESIDENTIAL  STRUCTURES,  THE
TAXPAYER  SHALL NOT BE ENTITLED TO CREDIT FOR THE COLLECTION OF CURTAIL-
MENT OR PAYMENTS IN DISCHARGE OF ANY SUCH MORTGAGE. FOR THE PURPOSES  OF
THIS SUBDIVISION,
  (B)(I) A "CURTAILMENT" SHALL MEAN AMOUNTS PAID BY MORTGAGORS
  (A)  IN  EXCESS  OF  THE  MONTHLY  CONSTANT  DUE  DURING  THE MONTH OF
COLLECTION AND
  (B) IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE  MORTGAGE;  IN
THE ABSENCE OF CLEAR EVIDENCE TO THE CONTRARY, AMOUNTS PAID IN EXCESS OF
THE  MONTHLY CONSTANT DUE DURING THE MONTH OF COLLECTION SHALL BE DEEMED
TO BE IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE; AND
  (II) "MONTHLY CONSTANT" SHALL MEAN THE AMOUNT OF PRINCIPAL AND  INTER-
EST WHICH IS DUE AND PAYABLE ACCORDING TO THE MORTGAGE DOCUMENTS ON EACH
PERIODIC PAYMENT DATE.
  11.  AGRICULTURAL  PROPERTY  TAX CREDIT. (A) GENERAL. IN THE CASE OF A
TAXPAYER WHICH IS AN ELIGIBLE FARMER OR AN ELIGIBLE FARMER WHO HAS  PAID
TAXES  PURSUANT  TO A LAND CONTRACT, THERE SHALL BE ALLOWED A CREDIT FOR
THE ALLOWABLE SCHOOL DISTRICT PROPERTY TAXES. THE TERM "ALLOWABLE SCHOOL
DISTRICT PROPERTY TAXES" MEANS THE SCHOOL DISTRICT PROPERTY  TAXES  PAID
DURING  THE  TAXABLE YEAR ON QUALIFIED AGRICULTURAL PROPERTY, SUBJECT TO
THE ACREAGE LIMITATION PROVIDED IN PARAGRAPH (E) OF THIS SUBDIVISION AND
THE INCOME LIMITATION PROVIDED IN PARAGRAPH (F) OF THIS SUBDIVISION.
  (B) ELIGIBLE FARMER.  FOR  PURPOSES  OF  THIS  SUBDIVISION,  THE  TERM
"ELIGIBLE FARMER" MEANS A TAXPAYER WHOSE FEDERAL GROSS INCOME FROM FARM-
ING  FOR THE TAXABLE YEAR IS AT LEAST TWO-THIRDS OF EXCESS FEDERAL GROSS

S. 6359--C                         91

INCOME. THE TERM "ELIGIBLE FARMER" ALSO  INCLUDES  A  CORPORATION  OTHER
THAN  THE  TAXPAYER  OF RECORD FOR QUALIFIED AGRICULTURAL LAND WHICH HAS
PAID THE SCHOOL DISTRICT PROPERTY TAXES  ON  SUCH  LAND  PURSUANT  TO  A
CONTRACT FOR THE FUTURE PURCHASE OF SUCH LAND; PROVIDED THAT SUCH CORPO-
RATION  HAS  A  FEDERAL  GROSS  INCOME FROM FARMING FOR THE TAXABLE YEAR
WHICH IS AT  LEAST  TWO-THIRDS  OF  EXCESS  FEDERAL  GROSS  INCOME;  AND
PROVIDED FURTHER THAT, IN DETERMINING SUCH INCOME ELIGIBILITY, A TAXPAY-
ER  MAY,  FOR  ANY  TAXABLE  YEAR, USE THE AVERAGE OF SUCH FEDERAL GROSS
INCOME FROM FARMING FOR THAT TAXABLE YEAR AND SUCH INCOME  FOR  THE  TWO
CONSECUTIVE  TAXABLE  YEARS  IMMEDIATELY  PRECEDING  SUCH  TAXABLE YEAR.
EXCESS FEDERAL GROSS INCOME MEANS THE AMOUNT  OF  FEDERAL  GROSS  INCOME
FROM  ALL  SOURCES  FOR  THE  TAXABLE  YEAR IN EXCESS OF THIRTY THOUSAND
DOLLARS. FOR THE PURPOSES OF THIS PARAGRAPH, PAYMENTS FROM  THE  STATE'S
FARMLAND  PROTECTION PROGRAM, ADMINISTERED BY THE DEPARTMENT OF AGRICUL-
TURE AND MARKETS, SHALL BE INCLUDED AS FEDERAL GROSS INCOME FROM FARMING
FOR OTHERWISE ELIGIBLE FARMERS.
  (C) SCHOOL DISTRICT PROPERTY TAXES. FOR PURPOSES OF THIS  SUBDIVISION,
THE  TERM  "SCHOOL  DISTRICT  PROPERTY  TAXES" MEANS ALL PROPERTY TAXES,
SPECIAL AD VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE  OF  PENAL-
TIES  AND INTEREST, LEVIED FOR SCHOOL DISTRICT PURPOSES ON THE QUALIFIED
AGRICULTURAL PROPERTY OWNED BY THE TAXPAYER.
  (D) QUALIFIED AGRICULTURAL PROPERTY. FOR PURPOSES OF THIS SUBDIVISION,
THE TERM "QUALIFIED AGRICULTURAL PROPERTY" MEANS LAND  LOCATED  IN  THIS
STATE  WHICH  IS USED IN AGRICULTURAL PRODUCTION, AND LAND IMPROVEMENTS,
STRUCTURES AND BUILDINGS (EXCLUDING BUILDINGS USED  FOR  THE  TAXPAYER'S
RESIDENTIAL  PURPOSE) LOCATED ON SUCH LAND WHICH ARE USED OR OCCUPIED TO
CARRY OUT SUCH PRODUCTION. QUALIFIED AGRICULTURAL PROPERTY ALSO INCLUDES
LAND SET ASIDE OR RETIRED UNDER A  FEDERAL  SUPPLY  MANAGEMENT  OR  SOIL
CONSERVATION  PROGRAM  OR  LAND THAT AT THE TIME IT BECOMES SUBJECT TO A
CONSERVATION EASEMENT MET THE REQUIREMENTS UNDER THIS PARAGRAPH.
  (E) ACREAGE LIMITATION. (I) ELIGIBLE TAXES.  IN  THE  EVENT  THAT  THE
QUALIFIED  AGRICULTURAL  PROPERTY OWNED BY THE TAXPAYER INCLUDES LAND IN
EXCESS OF THE BASE ACREAGE AS PROVIDED IN THIS PARAGRAPH, THE AMOUNT  OF
SCHOOL  DISTRICT  PROPERTY TAXES ELIGIBLE FOR CREDIT UNDER THIS SUBDIVI-
SION SHALL BE THAT PORTION OF THE SCHOOL DISTRICT PROPERTY  TAXES  WHICH
BEARS  THE  SAME  RATIO TO THE TOTAL SCHOOL DISTRICT PROPERTY TAXES PAID
DURING THE TAXABLE YEAR, AS THE ACREAGE ALLOWABLE UNDER  THIS  PARAGRAPH
BEARS TO THE ENTIRE ACREAGE OF SUCH LAND.
  (II)  ALLOWABLE  ACREAGE. THE ALLOWABLE ACREAGE IS THE SUM OF THE BASE
ACREAGE SET FORTH BELOW AND FIFTY PERCENT OF  THE  INCREMENTAL  ACREAGE.
THE INCREMENTAL ACREAGE IS THE EXCESS OF THE ENTIRE ACREAGE OF QUALIFIED
AGRICULTURAL LAND OWNED BY THE TAXPAYER OVER THE BASE ACREAGE. EXCEPT AS
PROVIDED  IN  SUBPARAGRAPH  (III) OF THIS PARAGRAPH, THE BASE ACREAGE IS
THREE HUNDRED FIFTY ACRES.
THE TOTAL BASE ACREAGE MAY BE  INCREASED  BY  ANY  ACREAGE  ENROLLED  OR
PARTICIPATING DURING THE TAXABLE YEAR IN A FEDERAL ENVIRONMENTAL CONSER-
VATION  ACREAGE  RESERVE  PROGRAM PURSUANT TO TITLE THREE OF THE FEDERAL
AGRICULTURE IMPROVEMENT AND REFORM ACT OF NINETEEN HUNDRED NINETY-SIX.
  (III) BASE ACREAGE OF RELATED PERSONS. WHERE THE TAXPAYER AND  ONE  OR
MORE  RELATED  PERSONS  EACH  OWN QUALIFIED AGRICULTURAL PROPERTY ON THE
FIRST DAY OF MARCH OF ANY YEAR, THE BASE ACREAGE UNDER SUBPARAGRAPH (II)
OF THIS PARAGRAPH SHALL  BE  DIVIDED  EQUALLY  AND  ALLOTTED  AMONG  THE
TAXPAYER  AND  SUCH RELATED PERSONS, AND THE TAXPAYER'S BASE ACREAGE FOR
THE TAXABLE YEAR WHICH INCLUDES SUCH MARCH FIRST SHALL BE LIMITED TO ITS
ALLOTTED SHARE. PROVIDED, HOWEVER, IF THE TAXPAYER AND ALL SUCH  RELATED
PERSONS CONSENT (AT SUCH TIME AND IN SUCH MANNER AS THE COMMISSIONER MAY

S. 6359--C                         92

PRESCRIBE)  TO AN UNEQUAL DIVISION, THE TAXPAYER'S BASE ACREAGE FOR SUCH
TAXABLE YEAR SHALL BE LIMITED TO ITS ALLOTTED SHARE UNDER  SUCH  UNEQUAL
DIVISION.
  (IV)  RELATED  PERSONS. (A) FOR PURPOSES OF SUBPARAGRAPH (III) OF THIS
PARAGRAPH, THE TERM "RELATED PERSON" MEANS:
  (I) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, WHERE THE TAXPAY-
ER AND THE CORPORATION ARE MEMBERS OF  THE  SAME  CONTROLLED  GROUP,  AS
DEFINED IN SECTION 267(F) OF THE INTERNAL REVENUE CODE;
  (II)  AN  INDIVIDUAL,  PARTNERSHIP,  ESTATE  OR TRUST, WHERE MORE THAN
FIFTY PERCENT IN VALUE OF THE  OUTSTANDING  STOCK  OF  THE  TAXPAYER  IS
OWNED,  DIRECTLY  OR INDIRECTLY, BY OR FOR SUCH INDIVIDUAL, PARTNERSHIP,
ESTATE OR TRUST OR BY OR FOR THE GRANTOR OF SUCH TRUST;
  (III) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, OR  A  PARTNER-
SHIP,  ESTATE  OR TRUST, IF THE SAME PERSON OWNS MORE THAN FIFTY PERCENT
IN VALUE OF THE OUTSTANDING STOCK OF THE TAXPAYER AND  MORE  THAN  FIFTY
PERCENT  IN  VALUE OF  THE OUTSTANDING STOCK OF THE CORPORATION, OR MORE
THAN FIFTY PERCENT OF THE CAPITAL OR PROFITS INTEREST  IN  THE  PARTNER-
SHIP,  OR  MORE  THAN  FIFTY  PERCENT  OF THE BENEFICIAL INTEREST IN THE
ESTATE OR TRUST;
  (IV) A PARTNERSHIP, ESTATE  OR  TRUST  OF  WHICH  THE  TAXPAYER  OWNS,
DIRECTLY  OR INDIRECTLY, MORE THAN FIFTY PERCENT OF THE CAPITAL, PROFITS
OR BENEFICIAL INTEREST.
  (B) IN DETERMINING WHETHER A PERSON IS A  RELATED  PERSON  WITHIN  THE
MEANING OF THIS SUBPARAGRAPH:
  (I)  STOCK  OWNED,  DIRECTLY  OR  INDIRECTLY, BY OR FOR A CORPORATION,
PARTNERSHIP, ESTATE OR TRUST SHALL BE CONSIDERED AS BEING OWNED  PROPOR-
TIONATELY BY OR FOR ITS SHAREHOLDERS, PARTNERS OR BENEFICIARIES;
  (II)  AN  INDIVIDUAL  SHALL  BE  CONSIDERED AS OWNING THE STOCK OWNED,
DIRECTLY OR INDIRECTLY, BY OR FOR HIS SPOUSE;
  (III) STOCK CONSTRUCTIVELY OWNED BY A PERSON BY REASON OF THE APPLICA-
TION OF ITEM (I) OF THIS CLAUSE SHALL, FOR THE PURPOSE OF APPLYING  ITEM
(I) OR (II) OF THIS CLAUSE, BE TREATED AS ACTUALLY OWNED BY SUCH PERSON.
  (F)  INCOME  LIMITATION. (I) IN THE EVENT THAT THE MODIFIED ENTIRE NET
INCOME OF THE TAXPAYER EXCEEDS TWO HUNDRED THOUSAND DOLLARS, THE  ALLOW-
ABLE SCHOOL DISTRICT PROPERTY TAXES UNDER PARAGRAPH (A) OF THIS SUBDIVI-
SION SHALL BE THE ELIGIBLE TAXES UNDER SUBPARAGRAPH (I) OF PARAGRAPH (E)
OF  THIS SUBDIVISION REDUCED BY THE PRODUCT OF THE AMOUNT OF SUCH ELIGI-
BLE TAXES AND A PERCENTAGE, SUCH PERCENTAGE TO BE DETERMINED  BY  MULTI-
PLYING  ONE HUNDRED PERCENT BY A FRACTION, THE NUMERATOR OF WHICH IS THE
LESSER OF ONE HUNDRED THOUSAND DOLLARS OR THE EXCESS OF  THE  TAXPAYER'S
MODIFIED  ENTIRE  NET  INCOME  OVER TWO HUNDRED THOUSAND DOLLARS AND THE
DENOMINATOR OF WHICH IS ONE HUNDRED THOUSAND DOLLARS.  FOR  PURPOSES  OF
THE  PRECEDING  SENTENCE,  THE  TERM "ELIGIBLE TAXES", WHERE THE ACREAGE
LIMITATION OF PARAGRAPH (E) OF THIS SUBDIVISION DOES  NOT  APPLY,  SHALL
MEAN  THE  TOTAL  SCHOOL DISTRICT PROPERTY TAXES PAID DURING THE TAXABLE
YEAR.
  (II) THE TERM "MODIFIED ENTIRE NET INCOME" MEANS THE ENTIRE NET INCOME
FOR THE TAXABLE YEAR REDUCED BY THE AMOUNT OF  PRINCIPAL  PAID  ON  FARM
INDEBTEDNESS DURING THE TAXABLE YEAR. THE TERM "FARM INDEBTEDNESS" MEANS
DEBT INCURRED OR REFINANCED WHICH IS SECURED BY FARM PROPERTY, WHERE THE
PROCEEDS  OF  THE  DEBT  ARE  DISBURSED FOR EXPENDITURES INCURRED IN THE
BUSINESS OF FARMING.
  (G) CARRYOVER. IN NO EVENT SHALL THE CREDIT PROVIDED HEREIN BE ALLOWED
IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS  THAN  THE  FIXED
DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE.  IF,  HOWEVER,  THE  AMOUNT  OF

S. 6359--C                         93

CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR  OR  YEARS.  PROVIDED,
HOWEVER, IN LIEU OF CARRYING OVER THE UNUSED PORTION OF SUCH CREDIT, THE
TAXPAYER MAY ELECT TO TREAT SUCH UNUSED PORTION AS AN OVERPAYMENT OF TAX
TO  BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION
ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER EXCEPT THAT NO INTEREST SHALL BE
PAID ON SUCH OVERPAYMENT.
  (H) NONQUALIFIED USE. (I) NO CREDIT IN CONVERSION YEAR. IN  THE  EVENT
THAT  QUALIFIED  AGRICULTURAL  PROPERTY  IS CONVERTED BY THE TAXPAYER TO
NONQUALIFIED USE, CREDIT UNDER THIS SUBDIVISION  SHALL  NOT  BE  ALLOWED
WITH  RESPECT  TO  SUCH PROPERTY FOR THE TAXABLE YEAR OF CONVERSION (THE
CONVERSION YEAR).
  (II) CREDIT RECAPTURE. IF THE CONVERSION BY THE TAXPAYER OF  QUALIFIED
AGRICULTURAL  PROPERTY  TO  NONQUALIFIED USE OCCURS DURING THE PERIOD OF
THE TWO TAXABLE YEARS FOLLOWING THE TAXABLE YEAR FOR  WHICH  THE  CREDIT
UNDER  THIS SUBDIVISION WAS FIRST CLAIMED WITH RESPECT TO SUCH PROPERTY,
THE CREDIT ALLOWED WITH RESPECT TO SUCH PROPERTY FOR THE  TAXABLE  YEARS
PRIOR  TO THE CONVERSION YEAR MUST BE ADDED BACK IN THE CONVERSION YEAR.
WHERE THE PROPERTY CONVERTED INCLUDES LAND, AND WHERE THE CONVERSION  IS
OF  ONLY  A PORTION OF SUCH LAND, THE CREDIT ALLOWED WITH RESPECT TO THE
PROPERTY CONVERTED SHALL BE DETERMINED BY MULTIPLYING THE ENTIRE  CREDIT
UNDER  THIS  SUBDIVISION  FOR  THE TAXABLE YEARS PRIOR TO THE CONVERSION
YEAR BY A FRACTION, THE NUMERATOR OF WHICH IS THE ACREAGE CONVERTED  AND
THE DENOMINATOR OF WHICH IS THE ENTIRE ACREAGE OF SUCH LAND OWNED BY THE
TAXPAYER IMMEDIATELY PRIOR TO THE CONVERSION.
  (III)  EXCEPTION  TO  RECAPTURE.  SUBPARAGRAPH  (II) OF THIS PARAGRAPH
SHALL NOT APPLY TO THE CONVERSION OF PROPERTY WHERE THE CONVERSION IS BY
REASON OF INVOLUNTARY CONVERSION, WITHIN  THE  MEANING  OF  SECTION  ONE
THOUSAND THIRTY-THREE OF THE INTERNAL REVENUE CODE.
  (IV) CONVERSION TO NONQUALIFIED USE. FOR PURPOSES OF THIS PARAGRAPH, A
SALE OR OTHER DISPOSITION OF QUALIFIED AGRICULTURAL PROPERTY ALONE SHALL
NOT CONSTITUTE A CONVERSION TO A NONQUALIFIED USE.
  (I) SPECIAL RULES. FOR PURPOSES OF THIS SUBDIVISION, THE TERM "FEDERAL
GROSS   INCOME  FROM  FARMING"  SHALL  INCLUDE  GROSS  INCOME  FROM  THE
PRODUCTION OF MAPLE SYRUP, CIDER, CHRISTMAS TREES DERIVED FROM A MANAGED
CHRISTMAS TREE OPERATION WHETHER DUG FOR TRANSPLANTING OR CUT  FROM  THE
STUMP,  OR  FROM  A  COMMERCIAL  HORSE  BOARDING OPERATION AS DEFINED IN
SUBDIVISION THIRTEEN OF SECTION THREE HUNDRED ONE OF THE AGRICULTURE AND
MARKETS LAW, OR FROM THE SALE OF WINE FROM A  LICENSED  FARM  WINERY  AS
PROVIDED  FOR  IN  ARTICLE SIX OF THE ALCOHOLIC BEVERAGE CONTROL LAW, OR
FROM THE SALE OF CIDER FROM A LICENSED FARM CIDERY AS  PROVIDED  FOR  IN
SECTION FIFTY-EIGHT-C OF THE ALCOHOLIC BEVERAGE CONTROL LAW.
  (J)  ELECTION TO DEEM GROSS INCOME OF NEW YORK C CORPORATION TO SHARE-
HOLDERS. FOR PURPOSES OF THIS SUBDIVISION,  FEDERAL  GROSS  INCOME  FROM
FARMING  SHALL  BE ZERO FOR ANY TAXABLE YEAR OF A NEW YORK C CORPORATION
FOR WHICH THE ELECTION UNDER PARAGRAPH NINE OF SUBSECTION (N) OF SECTION
SIX HUNDRED SIX OF THIS CHAPTER IS IN EFFECT.
  12. CREDIT FOR EMPLOYMENT OF PERSONS WITH DISABILITIES. (A)  ALLOWANCE
OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HERE-
INAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, FOR EMPLOYING
WITHIN THE STATE A QUALIFIED EMPLOYEE.
  (B) QUALIFIED EMPLOYEE. A QUALIFIED EMPLOYEE IS AN INDIVIDUAL:

S. 6359--C                         94

  (1) WHO IS CERTIFIED BY THE EDUCATION DEPARTMENT, OR IN THE CASE OF AN
INDIVIDUAL  WHO  IS  BLIND  OR VISUALLY HANDICAPPED, BY THE STATE AGENCY
RESPONSIBLE FOR PROVISION OF VOCATIONAL REHABILITATION SERVICES  TO  THE
BLIND  AND VISUALLY HANDICAPPED: (I) AS A PERSON WITH A DISABILITY WHICH
CONSTITUTES  OR RESULTS IN A SUBSTANTIAL HANDICAP TO EMPLOYMENT AND (II)
AS HAVING COMPLETED OR AS RECEIVING  SERVICES  UNDER  AN  INDIVIDUALIZED
WRITTEN  REHABILITATION  PLAN  APPROVED  BY  THE EDUCATION DEPARTMENT OR
OTHER STATE AGENCY RESPONSIBLE FOR PROVIDING  VOCATIONAL  REHABILITATION
SERVICES TO SUCH INDIVIDUAL; AND
  (2) WHO HAS WORKED ON A FULL-TIME BASIS FOR THE EMPLOYER WHO IS CLAIM-
ING  THE  CREDIT  FOR  AT  LEAST ONE HUNDRED EIGHTY DAYS OR FOUR HUNDRED
HOURS.
  (C) AMOUNT OF CREDIT. EXCEPT AS PROVIDED  IN  PARAGRAPH  (D)  OF  THIS
SUBDIVISION,  THE  AMOUNT  OF CREDIT SHALL BE THIRTY-FIVE PERCENT OF THE
FIRST SIX THOUSAND DOLLARS IN QUALIFIED FIRST-YEAR WAGES EARNED BY  EACH
QUALIFIED  EMPLOYEE.  "QUALIFIED  FIRST-YEAR  WAGES" MEANS WAGES PAID OR
INCURRED BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED  EMPLOYEES
WHICH  ARE  ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE, TO SERVICES
RENDERED DURING THE ONE-YEAR PERIOD BEGINNING WITH THE DAY THE  EMPLOYEE
BEGINS WORK FOR THE TAXPAYER.
  (D)  CREDIT  WHERE  FEDERAL  WORK OPPORTUNITY TAX CREDIT APPLIES. WITH
RESPECT TO ANY QUALIFIED EMPLOYEE WHOSE QUALIFIED FIRST-YEAR WAGES UNDER
PARAGRAPH (C) OF THIS SUBDIVISION ALSO CONSTITUTE  QUALIFIED  FIRST-YEAR
WAGES  FOR  PURPOSES  OF  THE WORK OPPORTUNITY TAX CREDIT FOR VOCATIONAL
REHABILITATION REFERRALS UNDER SECTION FIFTY-ONE OF THE INTERNAL REVENUE
CODE, THE AMOUNT OF CREDIT UNDER  THIS SUBDIVISION SHALL BE  THIRTY-FIVE
PERCENT OF THE FIRST SIX THOUSAND DOLLARS IN QUALIFIED SECOND-YEAR WAGES
EARNED  BY EACH SUCH EMPLOYEE. "QUALIFIED SECOND-YEAR WAGES" MEANS WAGES
PAID OR INCURRED BY THE TAXPAYER DURING THE TAXABLE  YEAR  TO  QUALIFIED
EMPLOYEES  WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE, TO
SERVICES RENDERED DURING THE ONE-YEAR PERIOD BEGINNING  ONE  YEAR  AFTER
THE EMPLOYEE BEGINS WORK FOR THE TAXPAYER.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES
THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON
THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE  IN
SUCH  TAXABLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS,
AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (F)  COORDINATION  WITH  FEDERAL  WORK  OPPORTUNITY  TAX  CREDIT.  THE
PROVISIONS  OF  SECTION  FIFTY-ONE AND FIFTY-TWO OF THE INTERNAL REVENUE
CODE, AS SUCH SECTIONS APPLIED ON OCTOBER FIRST, NINETEEN HUNDRED  NINE-
TY-SIX,  THAT APPLY TO THE FEDERAL WORK OPPORTUNITY TAX CREDIT FOR VOCA-
TIONAL REHABILITATION REFERRALS SHALL APPLY TO  THE  CREDIT  UNDER  THIS
SUBDIVISION  TO  THE  EXTENT  THAT SUCH SECTIONS ARE CONSISTENT WITH THE
SPECIFIC PROVISIONS OF THIS SUBDIVISION, PROVIDED THAT IN THE EVENT OF A
CONFLICT THE PROVISIONS OF THIS SUBDIVISION SHALL CONTROL.
  13. CREDIT FOR PURCHASE OF  AN  AUTOMATED  EXTERNAL  DEFIBRILLATOR.  A
TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS HEREINAFTER
PROVIDED, AGAINST THE TAX IMPOSED BY THIS  ARTICLE,  FOR  THE  PURCHASE,
OTHER  THAN  FOR RESALE, OF AN AUTOMATED EXTERNAL DEFIBRILLATOR, AS SUCH
TERM IS DEFINED IN SECTION THREE THOUSAND-B OF THE  PUBLIC  HEALTH  LAW.
THE  AMOUNT  OF  CREDIT  SHALL  BE THE COST TO THE TAXPAYER OF AUTOMATED
EXTERNAL DEFIBRILLATORS PURCHASED DURING THE TAXABLE YEAR,  SUCH  CREDIT

S. 6359--C                         95

NOT  TO EXCEED FIVE HUNDRED DOLLARS WITH RESPECT TO EACH UNIT PURCHASED.
THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS CHAPTER.
  14. CREDIT FOR PURCHASE OF LONG-TERM CARE INSURANCE.  (A)  GENERAL.  A
TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE  EQUAL TO TWENTY PERCENT OF THE PREMIUM PAID DURING THE TAXABLE YEAR
FOR LONG-TERM CARE INSURANCE. IN ORDER TO QUALIFY FOR SUCH  CREDIT,  THE
TAXPAYER'S PREMIUM PAYMENT MUST BE FOR THE PURCHASE OF OR FOR CONTINUING
COVERAGE UNDER A LONG-TERM CARE INSURANCE POLICY THAT QUALIFIES FOR SUCH
CREDIT  PURSUANT  TO  SECTION  ONE THOUSAND ONE HUNDRED SEVENTEEN OF THE
INSURANCE LAW.
  (B) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR
MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION
TWO  HUNDRED  TEN  OF  THIS  ARTICLE.  IF, HOWEVER, THE AMOUNT OF CREDIT
ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO
SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX  BASED  ON  THE  FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXA-
BLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  15. LOW-INCOME HOUSING CREDIT. (A) ALLOWANCE  OF  CREDIT.  A  TAXPAYER
SHALL  BE  ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH
RESPECT TO THE OWNERSHIP OF ELIGIBLE LOW-INCOME BUILDINGS,  COMPUTED  AS
PROVIDED IN SECTION EIGHTEEN OF THIS CHAPTER.
  (B)  APPLICATION  OF  CREDIT. THE CREDIT AND CARRYOVERS OF SUCH CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL  NOT,  IN  THE
AGGREGATE,  REDUCE  THE  TAX  DUE  FOR  SUCH YEAR TO LESS THAN THE FIXED
DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER
OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY  AMOUNT
OF CREDIT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXA-
BLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE
DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.
  (C) CREDIT RECAPTURE. FOR PROVISIONS REQUIRING  RECAPTURE  OF  CREDIT,
SEE SUBDIVISION (B) OF SECTION EIGHTEEN OF THIS CHAPTER.
  16.  GREEN  BUILDING CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL
BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION  NINETEEN  OF
THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) CARRYOVERS. THE CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED UNDER
THIS  SUBDIVISION  FOR  ANY  TAXABLE  YEAR  SHALL NOT, IN THE AGGREGATE,
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT OR  CARRY-
OVERS  OF  SUCH  CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION FOR ANY
TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE
PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF  CREDIT
OR  CARRYOVERS  OF  SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY  BE  DEDUCTED
FROM THE TAX FOR SUCH YEAR OR YEARS.
  17.  BROWNFIELD  REDEVELOPMENT  TAX CREDIT. (A) ALLOWANCE OF CREDIT. A
TAXPAYER SHALL BE ALLOWED A  CREDIT,  TO  BE  COMPUTED  AS  PROVIDED  IN

S. 6359--C                         96

SECTION  TWENTY-ONE  OF  THIS  CHAPTER,  AGAINST THE TAX IMPOSED BY THIS
ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE  AMOUNT  OF  CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS
NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT
OF  TAX  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  18. REMEDIATED BROWNFIELD CREDIT FOR REAL PROPERTY TAXES FOR QUALIFIED
SITES. (A) ALLOWANCE OF CREDIT. A TAXPAYER WHICH IS  A  DEVELOPER  OF  A
QUALIFIED  SITE  SHALL  BE  ALLOWED  A CREDIT FOR ELIGIBLE REAL PROPERTY
TAXES, TO BE COMPUTED AS PROVIDED IN SUBDIVISION (B) OF SECTION  TWENTY-
TWO  OF  THIS  CHAPTER,  AGAINST  THE  TAX  IMPOSED BY THIS ARTICLE. FOR
PURPOSES OF THIS SUBDIVISION, THE TERMS "QUALIFIED SITE" AND "DEVELOPER"
SHALL HAVE THE SAME MEANING AS SET FORTH IN PARAGRAPHS  TWO  AND  THREE,
RESPECTIVELY, OF SUBDIVISION (A) OF SECTION TWENTY-TWO OF THIS CHAPTER.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES  THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX
BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  19. ENVIRONMENTAL REMEDIATION INSURANCE CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN
SECTION  TWENTY-THREE  OF  THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS
ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDITS ALLOWED UNDER THIS  SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT  THUS
NOT  DEDUCTIBLE  IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT
OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  20.  EMPIRE  STATE  FILM PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT. A
TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION TWENTY-FOUR OF THIS CHAPTER
SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS  PROVIDED  IN  SUCH  SECTION
TWENTY-FOUR AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS

S. 6359--C                         97

THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI-
SION  FOR  ANY  TAXABLE  YEAR  REDUCES  THE TAX TO SUCH AMOUNT OR IF THE
TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED  DOLLAR  MINIMUM  AMOUNT,
THE  EXCESS  SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  21.  SECURITY TRAINING TAX CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN  SECTION  TWEN-
TY-SIX OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER,  IF
THE  AMOUNT  OF  CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS
NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT
OF  TAX  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  22. CONSERVATION EASEMENT TAX CREDIT. (A) CREDIT ALLOWED. IN THE  CASE
OF  A  TAXPAYER WHO OWNS LAND THAT IS SUBJECT TO A CONSERVATION EASEMENT
HELD BY A PUBLIC OR PRIVATE CONSERVATION AGENCY, THERE SHALL BE  ALLOWED
A CREDIT FOR TWENTY-FIVE PERCENT OF THE ALLOWABLE SCHOOL DISTRICT, COUN-
TY  AND TOWN REAL PROPERTY TAXES ON SUCH LAND. IN NO SUCH CASE SHALL THE
CREDIT ALLOWED UNDER THIS SUBDIVISION  IN  COMBINATION  WITH  ANY  OTHER
CREDIT  FOR  SUCH  SCHOOL  DISTRICT, COUNTY AND TOWN REAL PROPERTY TAXES
UNDER THIS SECTION EXCEED SUCH TAXES.
  (B) CONSERVATION EASEMENT. FOR PURPOSES OF THIS SUBDIVISION, THE  TERM
"CONSERVATION  EASEMENT"  MEANS  A  PERPETUAL AND PERMANENT CONSERVATION
EASEMENT AS DEFINED IN ARTICLE FORTY-NINE OF THE ENVIRONMENTAL CONSERVA-
TION LAW THAT SERVES TO PROTECT OPEN SPACE, SCENIC,  NATURAL  RESOURCES,
BIODIVERSITY,   AGRICULTURAL,  WATERSHED  AND/OR  HISTORIC  PRESERVATION
RESOURCES. ANY CONSERVATION EASEMENT FOR WHICH A TAX CREDIT  IS  CLAIMED
UNDER  THIS  SUBDIVISION  SHALL BE FILED WITH THE DEPARTMENT OF ENVIRON-
MENTAL CONSERVATION, AS PROVIDED FOR IN ARTICLE FORTY-NINE OF THE  ENVI-
RONMENTAL  CONSERVATION  LAW AND SUCH CONSERVATION EASEMENT SHALL COMPLY
WITH THE PROVISIONS OF TITLE THREE OF SUCH ARTICLE, AND  THE  PROVISIONS
OF  SUBDIVISION  (H)  OF SECTION 170 OF THE INTERNAL REVENUE CODE. DEDI-
CATIONS OF LAND FOR OPEN SPACE THROUGH  THE  EXECUTION  OF  CONSERVATION
EASEMENTS  FOR  THE PURPOSE OF FULFILLING DENSITY REQUIREMENTS TO OBTAIN
SUBDIVISION OR BUILDING PERMITS SHALL NOT BE CONSIDERED  A  CONSERVATION
EASEMENT UNDER THIS SUBDIVISION.
  (C)  LAND.  FOR  PURPOSES OF THIS SUBDIVISION, THE TERM "LAND" MEANS A
FEE SIMPLE TITLE TO REAL PROPERTY LOCATED IN THIS STATE, WITH OR WITHOUT
IMPROVEMENTS THEREON; RIGHTS OF WAY; WATER AND  RIPARIAN  RIGHTS;  EASE-
MENTS;  PRIVILEGES  AND  ALL  OTHER  RIGHTS  OR INTERESTS OF ANY LAND OR
DESCRIPTION IN, RELATING TO OR CONNECTED WITH REAL  PROPERTY,  EXCLUDING
BUILDINGS, STRUCTURES, OR IMPROVEMENTS.
  (D) PUBLIC OR PRIVATE CONSERVATION AGENCY. FOR PURPOSES OF THIS SUBDI-
VISION,  THE  TERM  "PUBLIC  OR  PRIVATE  CONSERVATION AGENCY" MEANS ANY

S. 6359--C                         98

STATE, LOCAL, OR FEDERAL GOVERNMENTAL BODY; OR ANY PRIVATE  NOT-FOR-PRO-
FIT  CHARITABLE  CORPORATION OR TRUST WHICH IS AUTHORIZED TO DO BUSINESS
IN THE STATE OF NEW YORK, IS ORGANIZED AND OPERATED TO PROTECT LAND  FOR
NATURAL  RESOURCES,  CONSERVATION  OR HISTORIC PRESERVATION PURPOSES, IS
EXEMPT FROM FEDERAL INCOME  TAXATION  UNDER  SECTION  501(C)(3)  OF  THE
INTERNAL  REVENUE  CODE, AND HAS THE POWER TO ACQUIRE, HOLD AND MAINTAIN
LAND AND/OR INTERESTS IN LAND FOR SUCH PURPOSES.
  (E) CREDIT LIMITATION. THE AMOUNT OF THE CREDIT THAT MAY BE CLAIMED BY
A TAXPAYER PURSUANT TO THIS SUBSECTION SHALL NOT  EXCEED  FIVE  THOUSAND
DOLLARS IN ANY GIVEN YEAR.
  (F)  APPLICATION OF THE CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVI-
SION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO
LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF  THE  CREDIT
THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF  SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER,
EXCEPT THAT, NO INTEREST SHALL BE PAID THEREON.
  23. EMPIRE STATE COMMERCIAL PRODUCTION CREDIT. (A) ALLOWANCE OF  CRED-
IT.  A TAXPAYER THAT IS ELIGIBLE PURSUANT TO PROVISIONS OF SECTION TWEN-
TY-EIGHT  OF  THIS  CHAPTER  SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS
PROVIDED IN SUCH SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED,
HOWEVER, THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS  SUBDIVI-
SION  FOR  ANY  TAXABLE  YEAR  REDUCES  THE TAX TO SUCH AMOUNT OR IF THE
TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED  DOLLAR  MINIMUM  AMOUNT,
FIFTY PERCENT OF THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND  EIGHTY-SIX  OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF  THIS  CHAPTER
NOTWITHSTANDING,  NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF SUCH
CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE CARRIED OVER
TO THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM  THE
TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF CRED-
IT OVER THE TAX FOR SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF  SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,
THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (C) EXPIRATION OF CREDIT. THE CREDIT ALLOWED  UNDER  THIS  SUBDIVISION
SHALL  NOT BE APPLICABLE TO TAXABLE YEARS BEGINNING ON OR AFTER DECEMBER
THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
  24. BIOFUEL PRODUCTION  CREDIT.  (A)  GENERAL.  A  TAXPAYER  SHALL  BE
ALLOWED  A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION TWENTY-EIGHT OF
THIS CHAPTER ADDED AS PART X OF CHAPTER SIXTY-TWO OF  THE  LAWS  OF  TWO
THOUSAND  SIX,  AGAINST  THE  TAX  IMPOSED  BY  THIS ARTICLE. THE CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX DUE FOR SUCH YEAR TO LESS  THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS ARTICLE.  HOWEVER, IF THE AMOUNT  OF  CREDIT  ALLOWED  UNDER

S. 6359--C                         99

THIS  SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR
IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON  THE  FIXED  DOLLAR  MINIMUM
AMOUNT,  ANY  AMOUNT  OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
SHALL  BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF SUBSECTION (C) OF
SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTANDING,  NO
INTEREST  SHALL BE PAID THEREON. THE TAX CREDIT ALLOWED PURSUANT TO THIS
SECTION SHALL APPLY TO TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO
THOUSAND TWENTY.
  25. CLEAN HEATING FUEL  CREDIT.  (A)  GENERAL.  A  TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE. SUCH CREDIT,
TO BE COMPUTED AS HEREINAFTER PROVIDED, SHALL BE  ALLOWED  FOR  BIOHEAT,
USED  FOR SPACE HEATING OR HOT WATER PRODUCTION FOR RESIDENTIAL PURPOSES
WITHIN THIS STATE PURCHASED BEFORE JANUARY FIRST,  TWO  THOUSAND  SEVEN-
TEEN.  SUCH CREDIT SHALL BE $0.01 PER PERCENT OF BIODIESEL PER GALLON OF
BIOHEAT, NOT TO EXCEED  TWENTY  CENTS  PER  GALLON,  PURCHASED  BY  SUCH
TAXPAYER.
  (B) DEFINITIONS. FOR PURPOSES OF THIS SUBDIVISION, THE FOLLOWING DEFI-
NITIONS SHALL APPLY:
  (I)  "BIODIESEL" SHALL MEAN A FUEL COMPRISED EXCLUSIVELY OF MONO-ALKYL
ESTERS OF LONG CHAIN FATTY ACIDS DERIVED FROM VEGETABLE OILS  OR  ANIMAL
FATS, DESIGNATED B100, WHICH MEETS THE SPECIFICATIONS OF AMERICAN SOCIE-
TY OF TESTING AND MATERIALS DESIGNATION D 6751.
  (II)  "BIOHEAT"  SHALL MEAN A FUEL COMPRISED OF BIODIESEL BLENDED WITH
CONVENTIONAL HOME HEATING OIL, WHICH MEETS  THE  SPECIFICATIONS  OF  THE
AMERICAN SOCIETY OF TESTING AND MATERIALS DESIGNATION D 396 OR D 975.
  (C)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES  THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX
BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  26.  CREDIT FOR REHABILITATION OF HISTORIC PROPERTIES. (A) APPLICATION
OF CREDIT. (I) FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,
TWO  THOUSAND  TEN,  AND  BEFORE  JANUARY  FIRST, TWO THOUSAND TWENTY, A
TAXPAYER SHALL BE ALLOWED A CREDIT AS HEREINAFTER PROVIDED, AGAINST  THE
TAX  IMPOSED  BY THIS ARTICLE, IN AN AMOUNT EQUAL TO ONE HUNDRED PERCENT
OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME  TAXABLE  YEAR
WITH  RESPECT  TO A CERTIFIED HISTORIC STRUCTURE UNDER SUBSECTION (C)(2)
OF SECTION 47 OF THE INTERNAL REVENUE CODE WITH RESPECT TO  A  CERTIFIED
HISTORIC  STRUCTURE  LOCATED  WITHIN  THE  STATE. PROVIDED, HOWEVER, THE
CREDIT SHALL NOT EXCEED FIVE MILLION DOLLARS.
  (II) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOU-
SAND  TWENTY,  A  TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT AS HEREINAFTER
PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, IN AN AMOUNT EQUAL TO
THIRTY PERCENT OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME
TAXABLE YEAR WITH  RESPECT  TO  A  CERTIFIED  HISTORIC  STRUCTURE  UNDER
SUBSECTION  (C)(3)  OF  SECTION  47  OF  THE  INTERNAL REVENUE CODE WITH
RESPECT TO A CERTIFIED HISTORIC  STRUCTURE  LOCATED  WITHIN  THE  STATE.

S. 6359--C                         100

PROVIDED,  HOWEVER,  THE  CREDIT  SHALL  NOT EXCEED ONE HUNDRED THOUSAND
DOLLARS.
  (B)  IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP OR A SHAREHOLDER IN
A NEW YORK S CORPORATION, THEN THE CREDIT CAPS IMPOSED  IN  SUBPARAGRAPH
(A)  OF THIS PARAGRAPH SHALL BE APPLIED AT THE ENTITY LEVEL, SO THAT THE
AGGREGATE CREDIT ALLOWED TO ALL THE PARTNERS  OR  SHAREHOLDERS  OF  EACH
SUCH  ENTITY  IN THE TAXABLE YEAR DOES NOT EXCEED THE CREDIT CAP THAT IS
APPLICABLE IN THAT TAXABLE YEAR.
  (B) TAX CREDITS ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE  ALLOWED
IN  THE  TAXABLE  YEAR  THAT  THE  QUALIFIED REHABILITATION IS PLACED IN
SERVICE UNDER SECTION 167 OF THE FEDERAL INTERNAL REVENUE CODE.
  (C) IF THE CREDIT ALLOWED THE TAXPAYER PURSUANT TO SECTION 47  OF  THE
INTERNAL  REVENUE  CODE  WITH  RESPECT  TO A QUALIFIED REHABILITATION IS
RECAPTURED PURSUANT TO SUBSECTION (A) OF  SECTION  50  OF  THE  INTERNAL
REVENUE CODE, A PORTION OF THE CREDIT ALLOWED UNDER THIS SUBSECTION MUST
BE ADDED BACK IN THE SAME TAXABLE YEAR AND IN THE SAME PROPORTION AS THE
FEDERAL CREDIT.
  (D)  THE  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED  UNDER
THIS  SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR
IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON  THE  FIXED  DOLLAR  MINIMUM
AMOUNT,  ANY  AMOUNT  OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE RECREDITED  OR  REFUNDED
IN  ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
INTEREST SHALL BE PAID THEREON.
  (E) TO BE ELIGIBLE FOR THE CREDIT ALLOWABLE  UNDER  THIS  SUBDIVISION,
THE REHABILITATION PROJECT SHALL BE IN WHOLE OR IN PART LOCATED WITHIN A
CENSUS  TRACT  WHICH  IS  IDENTIFIED  AS  BEING  AT OR BELOW ONE HUNDRED
PERCENT OF THE STATE MEDIAN FAMILY INCOME AS CALCULATED  AS  OF  JANUARY
FIRST  OF  EACH  YEAR  USING THE MOST RECENT FIVE YEAR ESTIMATE FROM THE
AMERICAN COMMUNITY SURVEY PUBLISHED BY THE UNITED STATES CENSUS BUREAU.
  27. CREDITS OF NEW YORK S CORPORATIONS. (A)  GENERAL.  NOTWITHSTANDING
THE  PROVISIONS  OF  THIS SECTION, NO CARRYOVER OF CREDIT ALLOWABLE IN A
NEW YORK C YEAR SHALL BE DEDUCTED FROM THE TAX OTHERWISE DUE UNDER  THIS
ARTICLE  IN  A  NEW YORK S YEAR, AND NO CREDIT ALLOWABLE IN A NEW YORK S
YEAR, OR CARRYOVER OF SUCH  CREDIT,  SHALL  BE  DEDUCTED  FROM  THE  TAX
IMPOSED BY THIS ARTICLE.  HOWEVER, A NEW YORK S YEAR SHALL BE TREATED AS
A  TAXABLE  YEAR FOR PURPOSES OF DETERMINING THE NUMBER OF TAXABLE YEARS
TO WHICH A CREDIT MAY BE CARRIED OVER UNDER THIS SECTION.  NOTWITHSTAND-
ING  THE FIRST SENTENCE OF THIS SUBDIVISION, HOWEVER, THE CREDIT FOR THE
SPECIAL ADDITIONAL MORTGAGE RECORDING TAX SHALL BE ALLOWED  AS  PROVIDED
IN  SUBDIVISION  FIFTEEN  OF THIS SECTION, AND THE CARRYOVER OF ANY SUCH
CREDIT SHALL BE DETERMINED WITHOUT  REGARD  TO  WHETHER  THE  CREDIT  IS
CARRIED FROM A NEW YORK C YEAR TO A NEW YORK S YEAR OR VICE-VERSA.
  29.  HIRE  A  VET  CREDIT.  (A) ALLOWANCE OF CREDIT. FOR TAXABLE YEARS
BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOUSAND  FIFTEEN  AND  BEFORE
JANUARY  FIRST,  TWO  THOUSAND  SEVENTEEN, A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS PROVIDED IN THIS SUBDIVISION, AGAINST THE  TAX
IMPOSED BY THIS ARTICLE, FOR HIRING AND EMPLOYING, FOR NOT LESS THAN ONE
YEAR  AND  FOR  NOT  LESS  THAN THIRTY-FIVE HOURS EACH WEEK, A QUALIFIED
VETERAN WITHIN THE STATE. THE TAXPAYER MAY CLAIM THE CREDIT IN THE  YEAR
IN  WHICH  THE QUALIFIED VETERAN COMPLETES ONE YEAR OF EMPLOYMENT BY THE

S. 6359--C                         101

TAXPAYER. IF THE TAXPAYER CLAIMS THE CREDIT ALLOWED UNDER THIS  SUBDIVI-
SION, THE TAXPAYER MAY NOT USE THE HIRING OF A QUALIFIED VETERAN THAT IS
THE BASIS FOR THIS CREDIT IN THE BASIS OF ANY OTHER CREDIT ALLOWED UNDER
THIS ARTICLE.
  (B) QUALIFIED VETERAN. A QUALIFIED VETERAN IS AN INDIVIDUAL:
  (1)  WHO  SERVED  ON  ACTIVE DUTY IN THE UNITED STATES ARMY, NAVY, AIR
FORCE, MARINE CORPS, COAST GUARD OR THE RESERVES THEREOF, OR WHO  SERVED
IN  ACTIVE MILITARY SERVICE OF THE UNITED STATES AS A MEMBER OF THE ARMY
NATIONAL GUARD, AIR NATIONAL GUARD, NEW YORK GUARD  OR  NEW  YORK  NAVAL
MILITIA;  WHO  WAS  RELEASED  FROM  ACTIVE  DUTY BY GENERAL OR HONORABLE
DISCHARGE AFTER SEPTEMBER ELEVENTH, TWO THOUSAND ONE;
  (2) WHO COMMENCES EMPLOYMENT BY THE QUALIFIED  TAXPAYER  ON  OR  AFTER
JANUARY  FIRST,  TWO  THOUSAND  FOURTEEN,  AND BEFORE JANUARY FIRST, TWO
THOUSAND SIXTEEN; AND
  (3) WHO CERTIFIES BY SIGNED AFFIDAVIT, UNDER PENALTY OF PERJURY,  THAT
HE OR SHE HAS NOT BEEN EMPLOYED FOR THIRTY-FIVE OR MORE HOURS DURING ANY
WEEK  IN  THE  ONE HUNDRED EIGHTY DAY PERIOD IMMEDIATELY PRIOR TO HIS OR
HER EMPLOYMENT BY THE TAXPAYER.
  (C) EMPLOYER PROHIBITION. AN EMPLOYER SHALL NOT DISCHARGE AN  EMPLOYEE
AND  HIRE  A QUALIFYING VETERAN SOLELY FOR THE PURPOSE OF QUALIFYING FOR
THIS CREDIT.
  (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL BE TEN PERCENT OF
THE TOTAL AMOUNT OF WAGES PAID  TO  THE  QUALIFIED  VETERAN  DURING  THE
VETERAN'S FIRST FULL YEAR OF EMPLOYMENT. PROVIDED, HOWEVER, THAT, IF THE
QUALIFIED  VETERAN IS A DISABLED VETERAN, AS DEFINED IN PARAGRAPH (B) OF
SUBDIVISION ONE OF SECTION EIGHTY-FIVE OF THE  CIVIL  SERVICE  LAW,  THE
AMOUNT  OF  THE  CREDIT  SHALL BE FIFTEEN PERCENT OF THE TOTAL AMOUNT OF
WAGES PAID TO THE QUALIFIED VETERAN DURING THE VETERAN'S FIRST FULL YEAR
OF EMPLOYMENT. THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION SHALL NOT
EXCEED IN ANY TAXABLE YEAR, FIVE  THOUSAND  DOLLARS  FOR  ANY  QUALIFIED
VETERAN  AND FIFTEEN THOUSAND DOLLARS FOR ANY QUALIFIED VETERAN WHO IS A
DISABLED VETERAN.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT  ALLOWABLE
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED  DOLLAR
MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
MAY  BE  CARRIED  OVER  TO THE FOLLOWING THREE YEARS AND MAY BE DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  30. ALTERNATIVE FUELS AND ELECTRIC VEHICLE RECHARGING PROPERTY CREDIT.
(A) GENERAL. A TAXPAYER SHALL BE ALLOWED A CREDIT,  TO  BE  COMPUTED  AS
HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE FOR ALTER-
NATIVE  FUEL  VEHICLE REFUELING AND ELECTRIC VEHICLE RECHARGING PROPERTY
PLACED IN SERVICE DURING THE TAXABLE YEAR.
  (B) ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY AND  ELECTRIC  VEHICLE
RECHARGING  PROPERTY.  THE CREDIT UNDER THIS SUBDIVISION FOR ALTERNATIVE
FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE RECHARGING PROPERTY
SHALL EQUAL FOR EACH INSTALLATION OF PROPERTY THE LESSER OF  FIVE  THOU-
SAND DOLLARS OR FIFTY PERCENT OF THE COST OF ANY SUCH PROPERTY:
  (I) WHICH IS LOCATED IN THIS STATE;
  (II)  WHICH CONSTITUTES ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY OR
ELECTRIC VEHICLE RECHARGING PROPERTY; AND

S. 6359--C                         102

  (III) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM  THE  PROCEEDS
OF  GRANTS, INCLUDING GRANTS FROM THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  (C)  DEFINITIONS.  (I)  THE  TERM  "ALTERNATIVE FUEL VEHICLE REFUELING
PROPERTY" MEANS ALL OF THE EQUIPMENT NEEDED  TO  DISPENSE  ANY  FUEL  AT
LEAST EIGHTY-FIVE PERCENT OF THE VOLUME OF WHICH CONSISTS OF ONE OR MORE
OF THE FOLLOWING: NATURAL GAS, LIQUIFIED NATURAL GAS, LIQUIFIED PETROLE-
UM, OR HYDROGEN.
  (II)  THE TERM "ELECTRIC VEHICLE RECHARGING PROPERTY" MEANS ALL OF THE
EQUIPMENT NEEDED TO CONVEY ELECTRIC POWER  FROM  THE  ELECTRIC  GRID  OR
ANOTHER POWER SOURCE TO AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  (D) CARRYOVERS. IN NO EVENT SHALL THE CREDIT UNDER THIS SUBDIVISION BE
ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS ARTICLE. PROVIDED, HOWEVER, THAT IF THE AMOUNT OF
CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX  BASED  ON  THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (E) CREDIT RECAPTURE. IF, AT ANY TIME BEFORE THE END OF  ITS  RECOVERY
PERIOD,  ALTERNATIVE FUEL VEHICLE REFUELING OR ELECTRIC VEHICLE RECHARG-
ING PROPERTY CEASES TO BE QUALIFIED, A RECAPTURE AMOUNT  MUST  BE  ADDED
BACK IN THE YEAR IN WHICH SUCH CESSATION OCCURS.
  (I)  ALTERNATIVE  FUEL  VEHICLE REFUELING PROPERTY OR ELECTRIC VEHICLE
RECHARGING PROPERTY CEASES TO BE QUALIFIED IF:
  (I) THE PROPERTY NO LONGER QUALIFIES AS ALTERNATIVE FUEL VEHICLE REFU-
ELING PROPERTY OR ELECTRIC VEHICLE RECHARGING PROPERTY; OR
  (II) FIFTY PERCENT OR MORE OF THE USE OF THE  PROPERTY  IN  A  TAXABLE
YEAR IS OTHER THAN IN A TRADE OR BUSINESS IN THIS STATE; OR
  (III)  THE  TAXPAYER RECEIVING THE CREDIT UNDER THIS SUBDIVISION SELLS
OR DISPOSES OF THE PROPERTY AND KNOWS OR HAS REASON  TO  KNOW  THAT  THE
PROPERTY  WILL  BE USED IN A MANNER DESCRIBED IN CLAUSES (I) AND (II) OF
THIS SUBPARAGRAPH.
  (II) RECAPTURE AMOUNT. THE RECAPTURE AMOUNT IS  EQUAL  TO  THE  CREDIT
ALLOWABLE UNDER THIS SUBDIVISION MULTIPLIED BY A FRACTION, THE NUMERATOR
OF  WHICH IS THE TOTAL RECOVERY PERIOD FOR THE PROPERTY MINUS THE NUMBER
OF RECOVERY YEARS PRIOR TO, BUT NOT INCLUDING, THE RECAPTURE  YEAR,  AND
THE DENOMINATOR OF WHICH IS THE TOTAL RECOVERY PERIOD.
  (F)  TERMINATION. THE CREDIT ALLOWED BY PARAGRAPH (B) OF THIS SUBDIVI-
SION  SHALL  NOT  APPLY  IN  TAXABLE  YEARS  BEGINNING  AFTER   DECEMBER
THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
  31. EXCELSIOR JOBS PROGRAM CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
WILL  BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION THIRTY-
ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY  TAXABLE  YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED
DOLLAR  MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF

S. 6359--C                         103

SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  32. EMPIRE STATE FILM POST PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT.
A  TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION THIRTY-ONE OF THIS CHAP-
TER SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN SUCH SECTION
THIRTY-ONE AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION  TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT IF THE
AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR  MINIMUM  AMOUNT,  FIFTY  PERCENT  OF  THE
EXCESS  SHALL  BE  TREATED  AS  AN  OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING,  NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF SUCH
CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE A  CARRYOVER
TO  THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM THE
TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT  OF  THE
CREDIT  OVER  THE  TAX  FOR  SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN
OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT-
Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THER-
EON.
  33.  TEMPORARY  DEFERRAL NONREFUNDABLE PAYOUT CREDIT. (A) ALLOWANCE OF
CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
IN SUBDIVISION ONE OF SECTION THIRTY-FOUR OF THIS CHAPTER,  AGAINST  THE
TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR THAT YEAR TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  34. TEMPORARY DEFERRAL REFUNDABLE  PAYOUT  CREDIT.  (A)  ALLOWANCE  OF
CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
IN  SUBDIVISION  TWO OF SECTION THIRTY-FOUR OF THIS CHAPTER, AGAINST THE
TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. IN NO EVENT SHALL  THE  CREDIT  UNDER  THIS
SUBDIVISION  BE  ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION  TWO  HUNDRED  TEN  OF  THIS ARTICLE. IF, HOWEVER, THE AMOUNT OF
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS CHAPTER, PROVIDED HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  35.  ECONOMIC  TRANSFORMATION  AND  FACILITY REDEVELOPMENT PROGRAM TAX
CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED  A  CREDIT,

S. 6359--C                         104

TO  BE  COMPUTED  AS  PROVIDED  IN  SECTION THIRTY-FIVE OF THIS CHAPTER,
AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  36.  NEW  YORK  YOUTH  WORKS  TAX CREDIT. (A) A TAXPAYER THAT HAS BEEN
CERTIFIED BY THE COMMISSIONER OF LABOR AS A QUALIFIED EMPLOYER  PURSUANT
TO  SECTION  TWENTY-FIVE-A  OF  THE  LABOR LAW SHALL BE ALLOWED A CREDIT
AGAINST THE TAX IMPOSED BY  THIS  ARTICLE  EQUAL  TO  (I)  FIVE  HUNDRED
DOLLARS  PER  MONTH FOR UP TO SIX MONTHS FOR EACH QUALIFIED EMPLOYEE THE
EMPLOYER EMPLOYS IN A FULL-TIME JOB OR TWO  HUNDRED  FIFTY  DOLLARS  PER
MONTH  FOR  UP  TO  SIX  MONTHS FOR EACH QUALIFIED EMPLOYEE THE EMPLOYER
EMPLOYS IN A PART-TIME JOB OF AT LEAST TWENTY  HOURS  PER  WEEK  OR  TEN
HOURS  PER  WEEK  WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH SCHOOL
FULL-TIME, (II) ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO  IS
EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY THE QUALIFIED EMPLOYER
IN  A  FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE
WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY  THE  QUALIFIED
EMPLOYER  IN  A  PART-TIME  JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN
HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED  IN  HIGH  SCHOOL
FULL-TIME,  AND (III) AN ADDITIONAL ONE THOUSAND DOLLARS FOR EACH QUALI-
FIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER  THE
FIRST  YEAR  OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A
FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS
EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER THE  FIRST  YEAR  OF  THE
EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT
LEAST  TWENTY  HOURS  PER  WEEK OR TEN HOURS PER WEEK WHEN THE QUALIFIED
EMPLOYEE IS ENROLLED IN HIGH SCHOOL  FULL-TIME.  FOR  PURPOSES  OF  THIS
SUBDIVISION,  THE  TERM "QUALIFIED EMPLOYEE" SHALL HAVE THE SAME MEANING
AS SET FORTH IN SUBDIVISION (B) OF SECTION TWENTY-FIVE-A  OF  THE  LABOR
LAW.  THE  PORTION  OF  THE CREDIT DESCRIBED IN SUBPARAGRAPH (I) OF THIS
PARAGRAPH SHALL BE ALLOWED FOR THE TAXABLE YEAR IN WHICH THE  WAGES  ARE
PAID  TO THE QUALIFIED EMPLOYEE, AND THE PORTION OF THE CREDIT DESCRIBED
IN SUBPARAGRAPH (II) OF THIS PARAGRAPH SHALL BE ALLOWED IN  THE  TAXABLE
YEAR IN WHICH THE ADDITIONAL SIX MONTH PERIOD ENDS.
  (B) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR MAY
NOT  REDUCE THE TAX DUE FOR THAT YEAR TO LESS THAN THE AMOUNT PRESCRIBED
IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN  OF  THIS
ARTICLE.  HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDI-
VISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO THAT  AMOUNT  OR  IF  THE
TAXPAYER  OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT,
ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN THAT TAXABLE YEAR WILL BE TREATED
AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH
THE  PROVISIONS  OF  SECTION  ONE  THOUSAND  EIGHTY-SIX OF THIS CHAPTER.
PROVIDED, HOWEVER, NO INTEREST WILL BE PAID THEREON.
  (C) THE TAXPAYER MAY BE REQUIRED TO  ATTACH  TO  ITS  TAX  RETURN  ITS
CERTIFICATE  OF ELIGIBILITY ISSUED BY THE COMMISSIONER OF LABOR PURSUANT

S. 6359--C                         105

TO SECTION TWENTY-FIVE-A OF THE LABOR LAW. IN NO EVENT SHALL THE TAXPAY-
ER BE ALLOWED A CREDIT GREATER THAN THE AMOUNT OF THE CREDIT  LISTED  ON
THE  CERTIFICATE  OF  ELIGIBILITY. NOTWITHSTANDING ANY PROVISION OF THIS
CHAPTER  TO THE CONTRARY, THE COMMISSIONER AND THE COMMISSIONER'S DESIG-
NEES MAY RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER  CLAIMING  THIS
CREDIT  AND  THE AMOUNT OF THE CREDIT EARNED BY THE TAXPAYER.  PROVIDED,
HOWEVER, IF A TAXPAYER CLAIMS THIS CREDIT BECAUSE IT IS A  MEMBER  OF  A
LIMITED LIABILITY COMPANY OR A PARTNER IN A PARTNERSHIP, ONLY THE AMOUNT
OF  CREDIT  EARNED BY THE ENTITY AND NOT THE AMOUNT OF CREDIT CLAIMED BY
THE TAXPAYER MAY BE RELEASED.
  37. EMPIRE STATE JOBS RETENTION PROGRAM CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER WILL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED  IN
SECTION  THIRTY-SIX  OF  THIS CHAPTER, AGAINST THE TAXES IMPOSED BY THIS
ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY  TAXABLE YEAR WILL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED
DOLLAR  MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  38. CREDIT FOR COMPANIES WHO  PROVIDE  TRANSPORTATION  TO  INDIVIDUALS
WITH  DISABILITIES.  (A) ALLOWANCE AND AMOUNT OF CREDIT. A TAXPAYER, WHO
PROVIDES  A  TAXICAB  SERVICE  AS  DEFINED  IN   SECTION   ONE   HUNDRED
FORTY-EIGHT-A  OF  THE  VEHICLE  AND TRAFFIC LAW, OR A LIVERY SERVICE AS
DEFINED IN SECTION ONE HUNDRED TWENTY-ONE-E OF THE VEHICLE  AND  TRAFFIC
LAW,  SHALL  BE  ALLOWED  A  CREDIT,  TO BE COMPUTED AS PROVIDED IN THIS
SUBDIVISION, AGAINST THE TAX IMPOSED BY THIS ARTICLE. THE AMOUNT OF  THE
CREDIT  SHALL BE EQUAL TO THE INCREMENTAL COST ASSOCIATED WITH UPGRADING
A VEHICLE SO THAT IT IS ACCESSIBLE BY INDIVIDUALS WITH  DISABILITIES  AS
DEFINED  IN  PARAGRAPH  (B) OF THIS SUBDIVISION. PROVIDED, HOWEVER, THAT
SUCH CREDIT SHALL NOT EXCEED  TEN  THOUSAND  DOLLARS  PER  VEHICLE.  FOR
PURPOSES  OF  THIS  SUBDIVISION,  PURCHASES  OF  NEW  VEHICLES  THAT ARE
INITIALLY MANUFACTURED TO BE ACCESSIBLE FOR INDIVIDUALS  WITH  DISABILI-
TIES  AND  FOR WHICH THERE IS NO COMPARABLE MAKE AND MODEL THAT DOES NOT
INCLUDE THE EQUIPMENT NECESSARY TO PROVIDE ACCESSIBILITY TO  INDIVIDUALS
WITH DISABILITIES, THE CREDIT SHALL BE TEN THOUSAND DOLLARS PER VEHICLE.
  (B) DEFINITION. THE TERM "ACCESSIBLE BY INDIVIDUALS WITH DISABILITIES"
SHALL,  FOR  THE  PURPOSES  OF THIS SUBDIVISION, REFER TO A VEHICLE THAT
COMPLIES WITH FEDERAL REGULATIONS PROMULGATED PURSUANT TO THE  AMERICANS
WITH  DISABILITIES  ACT  APPLICABLE  TO  VANS  UNDER  TWENTY-TWO FEET IN
LENGTH, BY THE FEDERAL DEPARTMENT OF TRANSPORTATION, IN CODE OF  FEDERAL
REGULATIONS,  TITLE 49, PARTS 37 AND 38, AND BY THE FEDERAL ARCHITECTURE
AND TRANSPORTATION BARRIERS COMPLIANCE BOARD, IN CODE OF  FEDERAL  REGU-
LATIONS, TITLE 36, SECTION 1192.23, AND THE FEDERAL MOTOR VEHICLE SAFETY
STANDARDS, CODE OF FEDERAL REGULATIONS, TITLE 49, PART 57.
  (C)  APPLICATION OF CREDIT. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER
THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR  SUCH  YEAR
TO  LESS  THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT  OF
CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE

S. 6359--C                         106

TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX  BASED  ON  THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN
SUCH  TAXABLE YEAR SHALL BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS,
AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  39.  BEER  PRODUCTION CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO
BE COMPUTED AS PROVIDED IN SECTION THIRTY-SEVEN OF THIS CHAPTER, AGAINST
THE TAX IMPOSED BY THIS ARTICLE. IN NO EVENT SHALL  THE  CREDIT  ALLOWED
UNDER  THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH
YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  REDUCES
THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON
THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCT-
IBLE  IN  SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS
OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  40. MINIMUM WAGE REIMBURSEMENT CREDIT.  (A)  ALLOWANCE  OF  CREDIT.  A
TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS PROVIDED IN
SECTION THIRTY-EIGHT OF THIS CHAPTER, AGAINST THE TAX  IMPOSED  BY  THIS
ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  41.  THE  TAX-FREE NY AREA TAX ELIMINATION CREDIT. A TAXPAYER SHALL BE
ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN  SECTION  FORTY  OF  THIS
CHAPTER,  AGAINST  THE  TAX IMPOSED BY THIS ARTICLE. UNLESS THE TAXPAYER
HAS A TAX-FREE NY AREA ALLOCATION FACTOR OF  ONE  HUNDRED  PERCENT,  THE
CREDIT  ALLOWED  UNDER  THIS  SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT  PRESCRIBED  IN
PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF SECTION TWO HUNDRED TEN OF THIS
ARTICLE. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE  IN  SUCH  TAXABLE
YEAR  SHALL  BE  TREATED  AS  AN  OVERPAYMENT  OF  TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  42.  ALTERNATIVE  BASE CREDIT. (A) IF THE TAX IMPOSED ON A TAXPAYER BY
SUBDIVISION ONE OF SECTION TWO HUNDRED  NINE  OF  THIS  ARTICLE  IS  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (B) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE, THE TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT
AGAINST  THE  TAX  IMPOSED UNDER THIS ARTICLE EQUAL TO THE AMOUNT OF TAX
PAID TO ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE  TAX  BASE
PRESCRIBED  IN  SUCH  PARAGRAPH (B). IF THE TAX IMPOSED ON A TAXPAYER BY
SUBDIVISION ONE OF SECTION TWO HUNDRED  NINE  OF  THIS  ARTICLE  IS  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO

S. 6359--C                         107

HUNDRED TEN OF THIS ARTICLE, THE TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT
AGAINST  THE  TAX  IMPOSED UNDER THIS ARTICLE EQUAL TO THE AMOUNT OF TAX
PAID TO ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE  TAX  BASE
PRESCRIBED IN SUCH PARAGRAPH (D).
  (B)  IN  NO  EVENT SHALL THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR
ANY TAXABLE YEAR REDUCE THE TAX DUE FOR  SUCH  YEAR  TO  LESS  THAN  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT  OF  CREDIT  ALLOWED
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED  DOLLAR
MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR  SHALL  BE  CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  43. THE TAX-FREE NY AREA  EXCISE  TAX  ON  TELECOMMUNICATION  SERVICES
CREDIT.  A  TAXPAYER  THAT  IS A BUSINESS OR OWNER OF A BUSINESS THAT IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED  A  CREDIT  EQUAL  TO  THE
EXCISE  TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED
EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS  DURING
THE  TAXABLE  YEAR  TO  THE  EXTENT  NOT OTHERWISE DEDUCTED IN COMPUTING
ENTIRE NET INCOME UNDER THIS ARTICLE. HOWEVER, ANY AMOUNT OF CREDIT  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  ONE  THOUSAND  EIGHTY-SIX  OF  THIS CHAPTER. THIS CREDIT MAY BE
CLAIMED  ONLY  WHERE  ANY  TAX  IMPOSED  BY  SUCH  SECTION  ONE  HUNDRED
EIGHTY-SIX-E  HAS  BEEN SEPARATELY STATED ON A BILL FROM THE PROVIDER OF
TELECOMMUNICATION SERVICES AND PAID BY SUCH  BUSINESS  WITH  RESPECT  TO
SUCH  SERVICES  RENDERED  WITHIN  A  TAX-FREE NY AREA DURING THE TAXABLE
YEAR. UNLESS THE TAXPAYER HAS A TAX-FREE NY AREA  ALLOCATION  FACTOR  OF
ONE  HUNDRED  PERCENT, THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY
TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  44.  REAL  PROPERTY  TAX CREDIT FOR MANUFACTURERS. (A) A QUALIFIED NEW
YORK MANUFACTURER, AS DEFINED IN SUBPARAGRAPH (VI) OF PARAGRAPH  (A)  OF
SUBDIVISION  ONE  OF  SECTION  TWO  HUNDRED TEN OF THIS ARTICLE, WILL BE
ALLOWED A CREDIT EQUAL TO TWENTY PERCENT OF THE  REAL  PROPERTY  TAX  IT
PAID DURING THE TAXABLE YEAR FOR REAL PROPERTY OWNED BY SUCH MANUFACTUR-
ER  IN  NEW  YORK WHICH WAS PRINCIPALLY USED DURING THE TAXABLE YEAR FOR
MANUFACTURING TO THE EXTENT NOT DEDUCTED  IN  DETERMINING    ENTIRE  NET
INCOME.  THIS CREDIT WILL NOT BE ALLOWED IF THE REAL PROPERTY TAXES THAT
ARE THE BASIS FOR THIS CREDIT ARE INCLUDED IN THE CALCULATION OF ANOTHER
CREDIT CLAIMED BY THE TAXPAYER.
  (B) (1) FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL  PROPERTY  TAX
MEANS  A  CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF A COUNTY,
CITY, TOWN, VILLAGE OR SCHOOL DISTRICT FOR MUNICIPAL OR SCHOOL  DISTRICT
PURPOSES,  PROVIDED  THAT  THE  CHARGE  IS LEVIED FOR THE GENERAL PUBLIC
WELFARE BY THE PROPER TAXING AUTHORITIES AT  A  LIKE  RATE  AGAINST  ALL
PROPERTY  OVER  WHICH  SUCH  AUTHORITIES HAVE JURISDICTION, AND PROVIDED
THAT WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN  OF
THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
DETERMINED  FOR  THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED BY SUCH
ARTICLE EIGHTEEN OR NINETEEN, WHICHEVER IS  APPLICABLE.  THE  TERM  REAL
PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY

S. 6359--C                         108

PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
ABLE  TO  MAINTENANCE  OR INTEREST, WHEN (I) THE PROPERTY SUBJECT TO THE
CHARGE IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (II)
THE  AMOUNT  OF  THE CHARGE IS DETERMINED BY THE BENEFIT TO THE PROPERTY
ASSESSED, OR (III) THE IMPROVEMENT FOR  WHICH  THE  CHARGE  IS  ASSESSED
TENDS TO INCREASE THE PROPERTY VALUE.
  (2) IN ADDITION, THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY THE
TAXPAYER  UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR BY
THE TAXPAYER IN MANUFACTURING WHERE THE TAXPAYER LEASES SUCH REAL  PROP-
ERTY  FROM  AN  UNRELATED  THIRD  PARTY  IF THE FOLLOWING CONDITIONS ARE
SATISFIED: (I) THE TAX MUST BE PAID BY THE TAXPAYER AS  LESSEE  PURSUANT
TO  EXPLICIT  REQUIREMENTS  IN A WRITTEN LEASE, AND (II) THE TAXPAYER AS
LESSEE HAS PAID SUCH TAXES DIRECTLY TO  THE  TAXING  AUTHORITY  AND  HAS
RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI-
TY.  IN  THE  CASE  OF A COMBINED GROUP THAT CONSTITUTES A QUALIFIED NEW
YORK MANUFACTURER, THE CONDITIONS IN THE PRECEDING SENTENCE  ARE  SATIS-
FIED  IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND ANOTHER
CORPORATION IN THE COMBINED GROUP  MAKES  THE  PAYMENTS  TO  THE  TAXING
AUTHORITY.
  (3)  THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY THE
TAXPAYER IN CONNECTION WITH AN AGREEMENT FOR  THE  PAYMENT  IN  LIEU  OF
TAXES  ON  REAL  PROPERTY AS DEFINED IN SUBDIVISION SEVENTEEN OF SECTION
EIGHT HUNDRED FIFTY-FOUR OF THE  GENERAL  MUNICIPAL  LAW,  WHETHER  SUCH
PROPERTY  IS OWNED OR LEASED BY THE TAXPAYER, UNLESS THE PAYMENT IN LIEU
OF TAXES WAS MADE PURSUANT TO A PAYMENT IN LIEU OF  TAX  AGREEMENT  THAT
WAS  ENTERED INTO IN CONJUNCTION WITH THE SETTLEMENT OF A TAX CERTIORARI
PROCEEDING COMMENCED PURSUANT TO ARTICLE SEVEN OF THE REAL PROPERTY  TAX
LAW.
  (4)  THE  REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE YEAR
SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY.
  (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (1)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2)  THE
AMOUNT  OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES.
IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE  YEAR,
THE  TAXPAYER  MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE
TO EACH YEAR COVERED BY SUCH FINAL ORDER AND  CALCULATE  THE  AMOUNT  OF
CREDIT  WHICH  IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH
YEAR BASED ON SUCH REDUCTION.
  (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR
SHALL  NOT  REDUCE  THE  TAX  DUE  FOR SUCH YEAR TO LESS THAN THE AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
TEN  OF  THIS  CHAPTER.  HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE  CRED-
ITED  OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOU-
SAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  45. ORDER OF CREDITS. (A) CREDITS ALLOWABLE UNDER THIS  ARTICLE  WHICH
CANNOT  BE  CARRIED  OVER AND WHICH ARE NOT REFUNDABLE SHALL BE DEDUCTED
FIRST. THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION  SHALL
BE  DEDUCTED  IMMEDIATELY  AFTER  THE DEDUCTION OF ALL CREDITS ALLOWABLE

S. 6359--C                         109

UNDER THIS ARTICLE WHICH CANNOT  BE  CARRIED  OVER  AND  WHICH  ARE  NOT
REFUNDABLE,  WHETHER  OR  NOT  A  PORTION  OF SUCH CREDIT IS REFUNDABLE.
CREDITS ALLOWABLE UNDER THIS ARTICLE WHICH  CAN  BE  CARRIED  OVER,  AND
CARRYOVERS  OF  SUCH CREDITS, SHALL BE DEDUCTED NEXT AFTER THE DEDUCTION
OF THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION, AND AMONG
SUCH CREDITS, THOSE WHOSE CARRYOVER IS  OF  LIMITED  DURATION  SHALL  BE
DEDUCTED  BEFORE THOSE WHOSE CARRYOVER IS OF UNLIMITED DURATION. CREDITS
ALLOWABLE UNDER THIS ARTICLE WHICH ARE REFUNDABLE (OTHER THAN THE CREDIT
ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION) SHALL BE DEDUCTED LAST.
  46. NOTWITHSTANDING THE REPEAL OF THE CREDIT PROVISIONS  CONTAINED  IN
SECTION TWO HUNDRED TEN OF THIS ARTICLE OR IN ARTICLE THIRTY-TWO OF THIS
CHAPTER  AND  THE  ENACTMENT OF THIS SECTION BY A CHAPTER OF THE LAWS OF
TWO THOUSAND FOURTEEN:
  (A) A TAXPAYER SHALL BE ALLOWED TO UTILIZE ANY CARRYFORWARD AMOUNTS OF
CREDITS TO WHICH THE TAXPAYER WAS ENTITLED AS OF THE CLOSE OF THE  TAXA-
BLE  YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN AND
BEFORE JANUARY FIRST, TWO THOUSAND FIFTEEN, OTHER THAN THE  CARRYFORWARD
AMOUNT  OF THE MINIMUM TAX CREDIT PROVIDED UNDER SUBDIVISION THIRTEEN OF
SECTION TWO HUNDRED TEN, AS THAT SUBDIVISION WAS IN EFFECT  ON  DECEMBER
THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (B)  A  TAXPAYER  SHALL  BE REQUIRED IN A TAXABLE YEAR BEGINNING ON OR
AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, TO RECAPTURE ALL OR A PORTION
OF A CREDIT ALLOWED UNDER A CREDIT PROVISION IN SECTION TWO HUNDRED  TEN
OR ARTICLE THIRTY-TWO OF THIS CHAPTER FOR A TAXABLE YEAR BEGINNING PRIOR
TO  JANUARY  FIRST,  TWO  THOUSAND  FIFTEEN IF RECAPTURE WOULD HAVE BEEN
REQUIRED UNDER SUCH CREDIT PROVISION.
  S 18. The tax law is amended by adding a new section 210-C to read  as
follows:
  S  210-C. COMBINED REPORTS. 1. TAX. THE TAX ON A COMBINED REPORT SHALL
BE THE HIGHEST OF THE PRODUCTS OF (I) THE COMBINED BUSINESS INCOME  BASE
MULTIPLIED BY THE TAX RATE SPECIFIED IN PARAGRAPH (A) OF SUBDIVISION ONE
OF  SECTION  TWO  HUNDRED TEN OF THIS ARTICLE; (II) THE COMBINED CAPITAL
BASE MULTIPLIED BY THE TAX RATE SPECIFIED IN PARAGRAPH (B)  OF  SUBDIVI-
SION  ONE  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE, BUT NOT EXCEEDING
THE LIMITATION PROVIDED FOR IN THAT PARAGRAPH (B); OR  (III)  THE  FIXED
DOLLAR  MINIMUM  THAT  IS  ATTRIBUTABLE  TO  THE DESIGNATED AGENT OF THE
COMBINED GROUP. IN ADDITION, THE TAX ON A COMBINED REPORT SHALL  INCLUDE
THE  FIXED  DOLLAR MINIMUM TAX SPECIFIED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE FOR EACH  MEMBER  OF  THE
COMBINED GROUP, OTHER THAN THE DESIGNATED AGENT, THAT IS A TAXPAYER.
  (B)  THE  COMBINED  BUSINESS INCOME BASE IS THE AMOUNT OF THE COMBINED
BUSINESS INCOME OF THE COMBINED GROUP THAT IS APPORTIONED TO THE  STATE,
REDUCED BY ANY NET OPERATING LOSS DEDUCTION FOR THE COMBINED GROUP.  THE
COMBINED  CAPITAL  BASE  IS  THE  AMOUNT  OF THE COMBINED CAPITAL OF THE
COMBINED GROUP THAT IS APPORTIONED TO THE STATE.
  2. COMBINED REPORTS REQUIRED. (A) EXCEPT AS PROVIDED IN PARAGRAPH  (C)
OF  THIS  SUBDIVISION,  ANY  TAXPAYER  (I) WHICH OWNS OR CONTROLS EITHER
DIRECTLY OR INDIRECTLY MORE THAN FIFTY PERCENT OF THE CAPITAL  STOCK  OF
ONE  OR  MORE OTHER CORPORATIONS, OR (II) MORE THAN FIFTY PERCENT OF THE
CAPITAL STOCK OF WHICH IS OWNED OR CONTROLLED EITHER DIRECTLY  OR  INDI-
RECTLY  BY  ONE  OR  MORE  OTHER  CORPORATIONS, OR (III) MORE THAN FIFTY
PERCENT OF THE CAPITAL STOCK OF WHICH AND THE CAPITAL STOCK  OF  ONE  OR
MORE OTHER CORPORATIONS, IS OWNED OR CONTROLLED, DIRECTLY OR INDIRECTLY,
BY  THE  SAME  INTERESTS, AND (IV) THAT IS ENGAGED IN A UNITARY BUSINESS
WITH THOSE CORPORATIONS, SHALL MAKE A COMBINED REPORT WITH  THOSE  OTHER
CORPORATIONS.

S. 6359--C                         110

  (B)  A CORPORATION REQUIRED TO MAKE A COMBINED REPORT WITHIN THE MEAN-
ING OF THIS SECTION SHALL ALSO INCLUDE (I) A CAPTIVE REIT AND A  CAPTIVE
RIC IF THE CAPTIVE REIT OR CAPTIVE RIC IS NOT REQUIRED TO BE INCLUDED IN
A  COMBINED  REPORT  UNDER ARTICLE THIRTY-THREE OF THIS CHAPTER; (II) AN
OVERCAPITALIZED  CAPTIVE  INSURANCE  COMPANY;  AND (III) AN ALIEN CORPO-
RATION THAT SATISFIES THE CONDITIONS IN PARAGRAPH (A) OF  THIS  SUBDIVI-
SION  IF  (I)  UNDER  ANY  PROVISION  OF THE INTERNAL REVENUE CODE, THAT
CORPORATION IS TREATED AS A "DOMESTIC CORPORATION" AS DEFINED IN SECTION
SEVEN THOUSAND SEVEN HUNDRED ONE OF THE INTERNAL REVENUE CODE,  OR  (II)
IT  HAS  EFFECTIVELY  CONNECTED  INCOME FOR THE TAXABLE YEAR PURSUANT TO
CLAUSE (IV) OF THE OPENING PARAGRAPH OF SUBDIVISION NINE OF SECTION  TWO
HUNDRED EIGHT OF THIS ARTICLE.
  (C)  A  CORPORATION  REQUIRED  OR  PERMITTED TO MAKE A COMBINED REPORT
UNDER THIS SECTION DOES NOT INCLUDE (I) A CORPORATION THAT IS SUBJECT TO
FRANCHISE TAX, OR WOULD BE IF DOING BUSINESS IN THIS STATE UNDER ARTICLE
NINE OR THIRTY-THREE OF THIS CHAPTER; (II) A REIT THAT IS NOT A  CAPTIVE
REIT,  AND  A  RIC  THAT IS NOT A CAPTIVE RIC; (III) A NEW YORK S CORPO-
RATION; (IV) A CORPORATION THAT IS SUBJECT TO  TAX  UNDER  THIS  ARTICLE
SOLELY  AS  A RESULT OF ITS OWNERSHIP OF A LIMITED PARTNER INTEREST IN A
LIMITED PARTNERSHIP THAT IS DOING BUSINESS, EMPLOYING CAPITAL, OWNING OR
LEASING PROPERTY, MAINTAINING AN  OFFICE  IN  THIS  STATE,  OR  DERIVING
RECEIPTS  FROM  ACTIVITY IN THIS STATE, PROVIDED THAT THE CORPORATION IS
NOT OTHERWISE REQUIRED TO  FILE  A  COMBINED  REPORT  PURSUANT  TO  THIS
SECTION;  OR  (V) AN ALIEN CORPORATION THAT HAS NO EFFECTIVELY CONNECTED
INCOME FOR THE TAXABLE YEAR PURSUANT TO CLAUSE (IV) OF THE OPENING PARA-
GRAPH OF SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE.
  (D) A COMBINED REPORT SHALL BE FILED BY THE DESIGNATED  AGENT  OF  THE
COMBINED GROUP AS DETERMINED UNDER SUBDIVISION SEVEN OF THIS SECTION.
  3.  COMMONLY  OWNED  GROUP  ELECTION. (A) SUBJECT TO THE PROVISIONS OF
PARAGRAPH (C) OF SUBDIVISION TWO OF THIS SECTION, A TAXPAYER  MAY  ELECT
TO  TREAT AS ITS COMBINED GROUP ALL CORPORATIONS THAT MEET THE OWNERSHIP
REQUIREMENTS DESCRIBED IN PARAGRAPH  (A)  OF  SUBDIVISION  TWO  OF  THIS
SECTION  (SUCH CORPORATIONS COLLECTIVELY REFERRED TO IN THIS SUBDIVISION
AS THE "COMMONLY OWNED GROUP"). IF THAT ELECTION IS MADE,  THE  COMMONLY
OWNED GROUP SHALL CALCULATE THE COMBINED BUSINESS INCOME, COMBINED CAPI-
TAL,  AND  FIXED  DOLLAR  MINIMUM  BASES  OF ALL MEMBERS OF THE GROUP IN
ACCORDANCE WITH PARAGRAPH FOUR OF THIS SUBDIVISION, WHETHER OR NOT  THAT
BUSINESS INCOME OR BUSINESS CAPITAL IS FROM A SINGLE UNITARY BUSINESS.
  (B)  THE ELECTION UNDER THIS SUBDIVISION SHALL BE MADE ON AN ORIGINAL,
TIMELY FILED RETURN OF THE COMBINED GROUP. ANY  CORPORATION  ENTERING  A
COMMONLY  OWNED  GROUP  SUBSEQUENT  TO  THE  YEAR  OF  ELECTION SHALL BE
INCLUDED IN THE COMBINED GROUP AND IS  CONSIDERED  TO  HAVE  WAIVED  ANY
OBJECTION TO ITS INCLUSION IN THE COMBINED GROUP.
  (C)  THE ELECTION SHALL BE IRREVOCABLE, AND BINDING FOR AND APPLICABLE
TO THE TAXABLE YEAR FOR WHICH IT IS MADE AND FOR THE  NEXT  SIX  TAXABLE
YEARS.  THE  ELECTION  WILL  AUTOMATICALLY  BE RENEWED FOR ANOTHER SEVEN
TAXABLE YEARS AFTER IT HAS BEEN IN EFFECT FOR SEVEN TAXABLE YEARS UNLESS
IT IS  AFFIRMATIVELY  REVOKED.  THE  REVOCATION  SHALL  BE  MADE  ON  AN
ORIGINAL,  TIMELY  FILED  RETURN  FOR  THE  FIRST TAXABLE YEAR AFTER THE
COMPLETION OF A SEVEN YEAR PERIOD  FOR  WHICH  AN  ELECTION  UNDER  THIS
SUBDIVISION  WAS  IN  PLACE. IN THE CASE OF A REVOCATION, A NEW ELECTION
UNDER THIS SUBDIVISION SHALL NOT BE PERMITTED IN ANY OF THE  IMMEDIATELY
FOLLOWING  THREE  TAXABLE YEARS. IN DETERMINING THE SEVEN AND THREE YEAR
PERIODS DESCRIBED IN THIS PARAGRAPH, SHORT TAXABLE YEARS  SHALL  NOT  BE
CONSIDERED OR COUNTED.

S. 6359--C                         111

  (D)  NOTWITHSTANDING  PARAGRAPH  (A)  OF  THIS SUBDIVISION FOR TAXABLE
YEARS COMMENCING ON OR AFTER JANUARY FIRST, TWO  THOUSAND  FOURTEEN  BUT
ENDING  BEFORE  JANUARY  FIRST,  TWO  THOUSAND SEVENTEEN, A TAXPAYER MAY
ELECT TO TREAT AS ITS COMBINED GROUP ALL CORPORATIONS THAT ARE  INCLUDED
IN  A  TAXPAYERS  FEDERAL  TAX  RETURN  CONSOLIDATED GROUP AS ALLOWED BY
INTERNAL REVENUE CODE SECTION 1501 AND AS DEFINED  BY  INTERNAL  REVENUE
CODE SECTION 1504.
  4. COMPUTATION OF TAX BASES ON A COMBINED REPORT. (A) IN COMPUTING THE
TAX  BASES  FOR A COMBINED REPORT, THE COMBINED GROUP SHALL GENERALLY BE
TREATED AS A SINGLE  CORPORATION,  EXCEPT  AS  OTHERWISE  PROVIDED,  AND
SUBJECT TO ANY REGULATIONS OR GUIDANCE ISSUED BY THE COMMISSIONER OR THE
DEPARTMENT.
  (B)(I) IN COMPUTING COMBINED BUSINESS INCOME, ALL INTERCORPORATE DIVI-
DENDS  SHALL  BE  ELIMINATED,  AND ALL OTHER INTERCORPORATE TRANSACTIONS
SHALL BE DEFERRED IN A MANNER SIMILAR  TO  THE  UNITED  STATES  TREASURY
REGULATIONS  RELATING TO INTERCOMPANY TRANSACTIONS UNDER SECTION FIFTEEN
HUNDRED TWO OF THE INTERNAL REVENUE CODE.  AN INCOME,  DEDUCTION,  GAIN,
OR LOSS RECOGNITION OR CREDIT RECAPTURE EVENT THAT WOULD OTHERWISE OCCUR
PURSUANT  TO  SUCH  RULES WHEN A CORPORATION JOINS A CONSOLIDATED RETURN
GROUP SHALL BE DEEMED NOT TO OCCUR WHEN SUCH  RECOGNITION  OR  RECAPTURE
EVENT  RESULTS  FROM  A  CORPORATION FILING A COMBINED REPORT UNDER THIS
ARTICLE FOR ITS FIRST TAXABLE YEAR COMMENCING ON OR AFTER JANUARY FIRST,
TWO THOUSAND FIFTEEN, WITH  ANOTHER  CORPORATION  OR  CORPORATIONS  WITH
WHICH  IT  COULD NOT HAVE FILED COMBINED REPORTS FOR PRIOR TAXABLE YEARS
OR FROM A CORPORATION NOT FILING A COMBINED REPORT FOR ITS FIRST TAXABLE
YEAR COMMENCING ON OR AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, WITH  A
CORPORATION  OR  CORPORATIONS  WITH WHICH IT FILED A COMBINED REPORT FOR
THE IMMEDIATELY PRECEDING TAXABLE YEAR.
  (II) IN COMPUTING COMBINED CAPITAL, ALL INTERCORPORATE  STOCKHOLDINGS,
INTERCORPORATE  BILLS,  INTERCORPORATE  NOTES  RECEIVABLE  AND  PAYABLE,
INTERCORPORATE ACCOUNTS RECEIVABLE AND PAYABLE, AND OTHER INTERCORPORATE
INDEBTEDNESS, SHALL BE ELIMINATED.
  (C) QUALIFICATION FOR  CREDITS,  INCLUDING  ANY  LIMITATIONS  THEREON,
SHALL  BE  DETERMINED SEPARATELY FOR EACH OF THE MEMBERS OF THE COMBINED
GROUP, AND SHALL NOT BE DETERMINED ON A COMBINED GROUP BASIS, EXCEPT  AS
OTHERWISE  PROVIDED.  HOWEVER,  THE CREDITS SHALL BE APPLIED AGAINST THE
COMBINED TAX OF THE GROUP. TO THE EXTENT THAT A PROVISION OF SECTION TWO
HUNDRED TEN-B OF THIS ARTICLE LIMITS A CREDIT TO THE FIXED DOLLAR  MINI-
MUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED  TEN  OF THIS ARTICLE, SUCH FIXED DOLLAR MINIMUM AMOUNT SHALL BE
THE FIXED DOLLAR MINIMUM AMOUNT THAT IS ATTRIBUTABLE TO  THE  DESIGNATED
AGENT OF THE COMBINED GROUP.
  (D)(I)  A  NET  OPERATING  LOSS  DEDUCTION IS ALLOWED IN COMPUTING THE
COMBINED BUSINESS INCOME BASE. SUCH DEDUCTION MAY REDUCE THE TAX ON  THE
COMBINED  BUSINESS  INCOME BASE TO THE HIGHER OF THE TAX ON THE COMBINED
CAPITAL BASE OR THE FIXED DOLLAR MINIMUM. A COMBINED NET OPERATING  LOSS
DEDUCTION IS EQUAL TO THE AMOUNT OF COMBINED NET OPERATING LOSS OR LOSS-
ES  FROM ONE OR MORE TAXABLE YEARS THAT ARE CARRIED FORWARD TO A PARTIC-
ULAR INCOME YEAR. A COMBINED NET OPERATING LOSS IS THE COMBINED BUSINESS
LOSS INCURRED IN A PARTICULAR TAXABLE YEAR MULTIPLIED  BY  THE  COMBINED
APPORTIONMENT FACTOR FOR THAT YEAR DETERMINED AS PROVIDED IN SUBDIVISION
FIVE OF THIS SECTION.
  (II)  THE COMBINED NET OPERATING LOSS DEDUCTION AND COMBINED NET OPER-
ATING LOSS ARE ALSO SUBJECT TO THE PROVISIONS CONTAINED IN  CLAUSES  ONE
THROUGH  SIX  OF SUBPARAGRAPH (VIII) OF PARAGRAPH (A) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.

S. 6359--C                         112

  (III) IN THE CASE OF A  CORPORATION  THAT  FILES  A  COMBINED  REPORT,
EITHER  IN THE YEAR THE NET OPERATING LOSS IS INCURRED OR IN THE YEAR IN
WHICH A DEDUCTION IS CLAIMED ON ACCOUNT OF THE LOSS,  THE  COMBINED  NET
OPERATING  LOSS  DEDUCTION  IS  DETERMINED AS IF THE COMBINED GROUP IS A
SINGLE  CORPORATION  AND  IS  SUBJECT TO THE SAME LIMITATIONS THAT WOULD
APPLY FOR FEDERAL INCOME TAX PURPOSES UNDER THE  INTERNAL  REVENUE  CODE
AND THE CODE OF FEDERAL REGULATIONS AS IF SUCH CORPORATION HAD FILED FOR
SUCH TAXABLE YEAR A CONSOLIDATED FEDERAL INCOME TAX RETURN WITH THE SAME
CORPORATIONS  INCLUDED  IN THE COMBINED REPORT. IF A CORPORATION FILES A
COMBINED REPORT, REGARDLESS OF WHETHER IT FILED  A  SEPARATE  RETURN  OR
CONSOLIDATED  RETURN  FOR FEDERAL INCOME TAX PURPOSES, THE NET OPERATING
LOSS AND NET OPERATING LOSS DEDUCTION FOR THE  COMBINED  GROUP  MUST  BE
COMPUTED  AS  IF THE CORPORATION HAD FILED A CONSOLIDATED RETURN FOR THE
SAME CORPORATIONS FOR FEDERAL INCOME TAX PURPOSES.
  (IV) IN GENERAL, ANY NET OPERATING LOSS CARRYOVER FROM A YEAR IN WHICH
A COMBINED REPORT WAS FILED SHALL BE BASED ON THE COMBINED NET OPERATING
LOSS OF THE GROUP OF CORPORATIONS FILING SUCH REPORT. THE PORTION OF THE
COMBINED LOSS ATTRIBUTABLE TO ANY MEMBER OF THE GROUP THAT FILES A SEPA-
RATE REPORT FOR A SUCCEEDING TAXABLE YEAR WILL BE AN AMOUNT BEARING  THE
SAME  RELATION  TO  THE  COMBINED LOSS AS THE NET OPERATING LOSS OF SUCH
CORPORATION BEARS TO THE TOTAL NET OPERATING LOSS OF ALL MEMBERS OF  THE
GROUP  HAVING SUCH LOSSES TO THE EXTENT THAT THEY ARE TAKEN INTO ACCOUNT
IN COMPUTING THE COMBINED NET OPERATING LOSS.
  (E) ANY ELECTION MADE PURSUANT TO PARAGRAPH (B)  OF  SUBDIVISION  SIX,
AND  PARAGRAPHS  (B) AND (C) OF SUBDIVISION SIX-A OF SECTION TWO HUNDRED
EIGHT OF THIS ARTICLE SHALL APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
  (F)(I) IN THE CASE OF A CAPTIVE REIT OR  CAPTIVE  RIC  REQUIRED  UNDER
THIS  SECTION  TO  BE  INCLUDED  IN A COMBINED REPORT, ENTIRE NET INCOME
SHALL BE COMPUTED AS REQUIRED UNDER SUBDIVISION FIVE (IN THE CASE  OF  A
CAPTIVE  REIT)  OR  SUBDIVISION  SEVEN (IN THE CASE OF A CAPTIVE RIC) OF
SECTION TWO HUNDRED NINE OF THIS ARTICLE. HOWEVER, THE  DEDUCTION  UNDER
THE  INTERNAL  REVENUE  CODE  FOR  DIVIDENDS PAID BY THE CAPTIVE REIT OR
CAPTIVE RIC TO ANY MEMBER OF THE  AFFILIATED  GROUP  THAT  INCLUDES  THE
CORPORATION  THAT  DIRECTLY OR INDIRECTLY OWNS OVER FIFTY PERCENT OF THE
VOTING STOCK OF THE CAPTIVE REIT OR CAPTIVE RIC SHALL  NOT  BE  ALLOWED.
FOR  PURPOSES  OF  THIS  SUBPARAGRAPH, THE TERM "AFFILIATED GROUP" MEANS
"AFFILIATED GROUP" AS DEFINED IN SECTION FIFTEEN  HUNDRED  FOUR  OF  THE
INTERNAL REVENUE CODE, BUT WITHOUT REGARD TO THE EXCEPTIONS PROVIDED FOR
IN SUBSECTION (B) OF THAT SECTION.
  (II)  IN  THE  CASE  OF  AN  OVERCAPITALIZED CAPTIVE INSURANCE COMPANY
REQUIRED UNDER THIS SECTION TO BE INCLUDED IN A COMBINED REPORT,  ENTIRE
NET  INCOME SHALL BE COMPUTED AS REQUIRED BY SUBDIVISION NINE OF SECTION
TWO HUNDRED EIGHT OF THIS ARTICLE.
  5. APPORTIONMENT ON A COMBINED REPORT. (A) IN DETERMINING  THE  APPOR-
TIONMENT  FACTOR  FOR  A  COMBINED REPORT, THE RECEIPTS, NET INCOME, NET
GAINS AND OTHER ITEMS OF ALL MEMBERS OF THE COMBINED GROUP,  WHETHER  OR
NOT  THEY  ARE  A  TAXPAYER,  ARE  INCLUDED AND INTERCORPORATE RECEIPTS,
INCOME AND GAINS ARE ELIMINATED. RECEIPTS, NET  INCOME,  NET  GAINS  AND
OTHER ITEMS ARE SOURCED AS PROVIDED IN SECTION TWO HUNDRED TEN-A OF THIS
ARTICLE.
  (B)  AN  ELECTION  MADE  TO APPORTION INCOME AND GAINS FROM QUALIFYING
FINANCIAL INSTRUMENTS PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)  OF
SUBDIVISION  FIVE  OF  SECTION  TWO  HUNDRED TEN-A OF THIS ARTICLE SHALL
APPLY TO ALL MEMBERS OF THE COMBINED GROUP.

S. 6359--C                         113

  6. LIABILITY OF COMBINED GROUP MEMBERS. EVERY MEMBER OF  THE  COMBINED
GROUP  THAT  IS  SUBJECT  TO TAX UNDER THIS ARTICLE SHALL BE JOINTLY AND
SEVERALLY LIABLE FOR THE TAX DUE PURSUANT TO A COMBINED REPORT.
  7.  DESIGNATED  AGENT.  EACH  COMBINED GROUP SHALL HAVE ONE DESIGNATED
AGENT, WHICH SHALL BE A TAXPAYER. THE DESIGNATED  AGENT  IS  THE  PARENT
CORPORATION  OF  THE  COMBINED  GROUP. IF THERE IS NO SUCH PARENT CORPO-
RATION, OR THE PARENT CORPORATION IS NOT A TAXPAYER, THEN ANOTHER MEMBER
OF THE COMBINED GROUP THAT IS A TAXPAYER MAY BE APPOINTED AS THE  DESIG-
NATED  AGENT. ONLY THE DESIGNATED AGENT MAY ACT ON BEHALF OF THE MEMBERS
OF THE COMBINED GROUP FOR MATTERS RELATING TO THE COMBINED REPORT.
  S 19. Subdivisions 2-a, 3, 4 and 5 of section  211  of  the  tax  law,
subdivision  2-a as added and subdivision 5 as amended by chapter 817 of
the laws of 1987, subdivision 3 as amended by chapter 770 of the laws of
1992, subdivision 4 as amended by section 2 of part T of chapter 407  of
the  laws  of  1999,  the  opening paragraph and the second undesignated
paragraph of paragraph (a) of subdivision 4 as  amended  by  section  1,
subparagraph  4  of paragraph (a) of subdivision 4 as amended by section
2, and subparagraph 5 of paragraph (a) of subdivision 4  as  amended  by
section 3 of part J of chapter 60 of the laws of 2007, subparagraph 6 of
paragraph  (a)  of  subdivision  4  as added by section 3 of part FF1 of
chapter 57 of the laws of 2008,  subparagraph  7  of  paragraph  (a)  of
subdivision  4 as added by section 2 and subparagraph 1 of paragraph (b)
of subdivision 4 as amended by section 3 of part E1 of chapter 57 of the
laws of 2009, are amended to read as follows:
  2-a. The [tax commission] COMMISSIONER may prescribe  regulations  and
instructions  requiring  returns  of information to be made and filed in
conjunction with the reports required to be filed pursuant  to  [section
two  hundred  eleven]  THIS ARTICLE, relating to payments made to share-
holders owning, directly or indirectly, individually or  in  the  aggre-
gate, more than fifty percent of the issued capital stock of the taxpay-
er,  where  such  payments  are  treated  as payments of interest in the
computation of entire net income [or minimum taxable income] reported on
such reports.
  3. If the amount of taxable income  [or  alternative  minimum  taxable
income]  for  any year of any taxpayer (including any taxpayer which has
elected to be taxed under subchapter s of chapter one  of  the  internal
revenue  code),  as returned to the United States treasury department is
changed or corrected by the commissioner of internal  revenue  or  other
officer  of  the  United States or other competent authority, or where a
renegotiation of a  contract  or  subcontract  with  the  United  States
results  in  a  change in taxable income [or alternative minimum taxable
income], such taxpayer shall report such changed  or  corrected  taxable
income  [or  alternative minimum taxable income], or the results of such
renegotiation, within ninety days (or one hundred twenty  days,  in  the
case  of a taxpayer making a combined report under this article for such
year) after the final determination of  such  change  or  correction  or
renegotiation, or as required by the commissioner, and shall concede the
accuracy  of  such  determination  or state wherein it is erroneous. The
allowance of a tentative carryback adjustment based upon a net operating
loss carryback or net capital loss carryback pursuant to section  sixty-
four  hundred  eleven of the internal revenue code, as amended, shall be
treated as a final determination for purposes of this  subdivision.  Any
taxpayer  filing  an amended return with such department shall also file
within ninety days (OR ONE HUNDRED TWENTY DAYS, IN THE CASE OF A TAXPAY-
ER MAKING A COMBINED REPORT UNDER THIS ARTICLE FOR SUCH YEAR) thereafter
an amended report with the commissioner.

S. 6359--C                         114

  4. [(a) Combined reports permitted or required.  Any  taxpayer,  which
owns  or  controls  either  directly or indirectly substantially all the
capital stock of one or more other corporations,  or  substantially  all
the  capital  stock  of  which is owned or controlled either directly or
indirectly  by  one or more other corporations or by interests which own
or control either directly or indirectly substantially all  the  capital
stock  of  one  or  more other corporations, (hereinafter referred to in
this paragraph as "related corporations"), shall make a combined  report
covering  any  related corporations if there are substantial intercorpo-
rate transactions among the  related  corporations,  regardless  of  the
transfer price for such intercorporate transactions. It is not necessary
that  there  be  substantial intercorporate transactions between any one
corporation and every other related corporation. It is necessary, howev-
er, that there be substantial intercorporate  transactions  between  the
taxpayer  and  a  related  corporation  or collectively, a group of such
related corporations. The report shall set forth such information as the
commissioner may require, subject to the provisions of subparagraphs one
through five of this paragraph.
  In determining whether there  are  substantial  intercorporate  trans-
actions, the commissioner shall consider and evaluate all activities and
transactions  of  the  taxpayer and its related corporations. Activities
and transactions that will be considered include, but  are  not  limited
to:  (i)  manufacturing,  acquiring  goods  or  property,  or performing
services, for related corporations; (ii)  selling  goods  acquired  from
related  corporations;  (iii)  financing  sales of related corporations;
(iv) performing related customer services using  common  facilities  and
employees for related corporations; (v) incurring expenses that benefit,
directly  or  indirectly,  one  or  more  related corporations, and (vi)
transferring assets,  including  such  assets  as  accounts  receivable,
patents or trademarks from one or more related corporations.
  (1)  Any  corporation  which owns or controls either directly or indi-
rectly substantially all the capital stock of a DISC not exempt from tax
under paragraph (i) of subdivision nine of section two hundred eight  of
this  article  shall be allowed, at the election of such corporation, to
make a report on a combined basis covering such DISC, but the failure of
such corporation to make such election shall not  prohibit  the  commis-
sioner  from  requiring  a combined report covering such corporation and
such DISC.
  (2)(i) No taxpayer may be permitted to make a  report  on  a  combined
basis  covering  any  such other corporations where such taxpayer or any
such other corporation  allocates  in  accordance  with  clause  (A)  of
subparagraph  seven of paragraph (a) of subdivision three of section two
hundred ten of this article (relating to aviation corporations) and such
taxpayer or any such other corporation does not so allocate, unless such
taxpayer or such other corporation is a qualified air freight  forwarder
with  respect  to such other corporation or such taxpayer, respectively,
and all taxpayers included on such combined report elect, by filing such
combined report,  to  have  such  qualified  air  freight  forwarder  so
included.
  (ii)  A  corporation is a qualified air freight forwarder with respect
to another corporation:
  (A) if it owns or controls either directly or indirectly  all  of  the
capital  stock of such other corporation, or if all of its capital stock
is owned or controlled either  directly  or  indirectly  by  such  other
corporation,  or  if  all  of  the capital stock of both corporations is
owned or controlled either directly or indirectly by the same interests,

S. 6359--C                         115

  (B) if it is principally  engaged  in  the  business  of  air  freight
forwarding, and
  (C)  if  its air freight forwarding business is carried on principally
with the airline or airlines operated by such other corporation.
  (3) No taxpayer may be permitted to make a report on a combined  basis
covering  any  such  other  corporations where such taxpayer or any such
other corporation allocates in accordance  with  subparagraph  eight  of
paragraph  (a)  of  subdivision three of section two hundred ten of this
article (relating  to  railroad  and  trucking  corporations)  and  such
taxpayer or any such other corporation does not so allocate.
  (4)  Except  as  provided  in the first undesignated paragraph of this
paragraph, no combined report covering any corporation shall be required
unless the commissioner  deems  such  a  report  necessary,  because  of
inter-company transactions or some agreement, understanding, arrangement
or transaction referred to in subdivision five of this section, in order
properly to reflect the tax liability under this article.
  (5) A corporation organized under the laws of a country other than the
United  States  shall not be required or permitted to make a report on a
combined basis.
  (6) (i) For purposes of this subparagraph, the term "closest  control-
ling stockholder" means the corporation that indirectly owns or controls
over fifty percent of the voting stock of a captive REIT or captive RIC,
is subject to tax under this article, article thirty-two or thirty-three
of  this  chapter  or  otherwise  required  to be included in a combined
return or report under this article, article thirty-two or  thirty-three
of  this  chapter,  and  is the fewest tiers of corporations away in the
ownership structure from the captive REIT or captive RIC.   The  commis-
sioner  is  authorized  to prescribe by regulation or published guidance
the criteria for determining the closest controlling stockholder.
  (ii) A captive REIT or a captive RIC must be included  in  a  combined
report  with  the  corporation that directly owns or controls over fifty
percent of the voting stock of the captive REIT or captive RIC  if  that
corporation  is  subject to tax or required to be included in a combined
report under this article.
  (iii) If over fifty percent of the voting stock of a captive  REIT  or
captive RIC is not directly owned or controlled by a corporation that is
subject  to  tax  or  required to be included in a combined report under
this article, then the captive REIT or captive RIC must be included in a
combined return or report with  the  corporation  that  is  the  closest
controlling stockholder of the captive REIT or captive RIC. If the clos-
est  controlling  stockholder  of  the  captive  REIT  or captive RIC is
subject to tax or otherwise required to be included in a combined report
under this article, then  the  captive  REIT  or  captive  RIC  must  be
included in a combined report under this article.
  (iv)  If  the  corporation  that  directly owns or controls the voting
stock of the captive REIT or captive RIC is  described  in  subparagraph
two,  three  or five of this paragraph as a corporation not permitted to
make a combined report, then the provisions  in  clause  (iii)  of  this
subparagraph  must  be  applied  to  determine  the corporation in whose
combined return or report the captive REIT  or  captive  RIC  should  be
included.  If,  under clause (iii) of this subparagraph, the corporation
that is the closest controlling  stockholder  of  the  captive  REIT  or
captive  RIC  is  described  in  subparagraph two, three or five of this
paragraph as a corporation not permitted to make a combined return, then
that corporation is deemed to not be in the ownership structure  of  the

S. 6359--C                         116

captive  REIT  or  captive  RIC, and the closest controlling stockholder
will be determined without regard to that corporation.
  (v)  If  a  captive REIT owns the stock of a qualified REIT subsidiary
(as defined in paragraph two of subsection (i) of section eight  hundred
fifty-six of the internal revenue code), then the qualified REIT subsid-
iary must be included in a combined report with the captive REIT.
  (vi) If a captive REIT or a captive RIC is required under this subpar-
agraph to be included in a combined report with another corporation, and
that  other  corporation  is  also required to be included in a combined
report with another related corporation or corporations under this para-
graph, then the captive REIT or the captive RIC must be included in that
combined report with those corporations.
  (vii) If a captive REIT or  a  captive  RIC  is  not  required  to  be
included in a combined report with another corporation under clause (ii)
or  (iii)  of  this  subparagraph,  or  in  a  combined return under the
provisions of either subparagraph (v) of paragraph two of subsection (f)
of section fourteen hundred sixty-two or paragraph four  of  subdivision
(f) of section fifteen hundred fifteen of this chapter, then the captive
REIT  or  captive RIC is subject to the opening provisions of this para-
graph and the provisions of subparagraph four  of  this  paragraph.  The
captive  REIT or captive RIC must be included in a combined report under
this article with another corporation if either the  substantial  inter-
corporate  transactions  requirement  in  the opening provisions of this
paragraph or the inter-company transactions or agreement, understanding,
arrangement or transaction requirement  of  subparagraph  four  of  this
paragraph  is  satisfied and more than fifty percent of the voting stock
of the captive REIT or the captive RIC  and  substantially  all  of  the
capital  stock  of  that  other  corporation  are  owned and controlled,
directly or indirectly, by the same corporation.
  (7) (i) For purposes of this subparagraph, the term "closest  control-
ling stockholder" means the corporation that indirectly owns or controls
over  fifty  percent  of  the voting stock of an overcapitalized captive
insurance company; is subject to tax under this article or article thir-
ty-two of this chapter, or is otherwise required to  be  included  in  a
combined  return  or  report under this article or article thirty-two of
this chapter; and is the fewest tiers of corporations away in the owner-
ship structure from the overcapitalized captive insurance company.   The
commissioner is authorized to prescribe by regulation or published guid-
ance the criteria for determining the closest controlling stockholder.
  (ii)  An overcapitalized captive insurance company must be included in
a combined report with the corporation that directly  owns  or  controls
over  fifty  percent  of the voting stock of the overcapitalized captive
insurance company if that corporation is subject to tax or  required  to
be included in a combined report under this article.
  (iii)  If over fifty percent of the voting stock of an overcapitalized
captive insurance company is not  directly  owned  or  controlled  by  a
corporation  that  is  subject  to  tax  or required to be included in a
combined report under this article,  then  the  overcapitalized  captive
insurance  company  must be included in a combined return or report with
the corporation that is the closest controlling stockholder of the over-
capitalized captive insurance company. If the closest controlling stock-
holder of the overcapitalized captive insurance company  is  subject  to
tax or otherwise required to be included in a combined report under this
article,  then  the  overcapitalized  captive  insurance company must be
included in a combined report under this article.

S. 6359--C                         117

  (iv) If the corporation that directly  owns  or  controls  the  voting
stock  of  the overcapitalized captive insurance company is described in
subparagraph two, three, or five of this paragraph as a corporation  not
permitted to make a combined report, then the provisions in clause (iii)
of  this  subparagraph  must  be applied to determine the corporation in
whose combined return or report the  overcapitalized  captive  insurance
company should be included. If, under clause (iii) of this subparagraph,
the corporation that is the closest controlling stockholder of the over-
capitalized  captive insurance company is described in subparagraph two,
three or five of this paragraph as a corporation not permitted to make a
combined return, then that corporation is deemed not to be in the owner-
ship structure of the overcapitalized captive insurance company, and the
closest controlling stockholder will be  determined  without  regard  to
that corporation.
  (v)  If an overcapitalized captive insurance company is required under
this subparagraph to be included  in  a  combined  report  with  another
corporation,  and that other corporation is also required to be included
in a combined report with another related  corporation  or  corporations
under this paragraph, then the overcapitalized captive insurance company
must be included in that combined report with those corporations.
  (vi)  If  an overcapitalized captive insurance company is not required
to be included in a  combined  report  with  another  corporation  under
clause (ii) or (iii) of this subparagraph, or in a combined return under
the provisions of subparagraph (v) of paragraph two of subsection (f) of
section  fourteen  hundred sixty-two of this chapter, then the overcapi-
talized captive insurance company is subject to the  opening  provisions
of  this paragraph and the provisions of subparagraph four of this para-
graph. The overcapitalized captive insurance company must be included in
a combined report under this article with another corporation if  either
the  substantial  intercorporate transactions requirement in the opening
provisions of this paragraph or the inter-company transactions or agree-
ment, understanding, arrangement or transaction requirement of  subpara-
graph  four  of  this  paragraph  is satisfied, and both more than fifty
percent of the voting stock of  the  overcapitalized  captive  insurance
company  and substantially all of the capital stock of that other corpo-
ration are owned and controlled, directly or  indirectly,  by  the  same
corporation.
  (b) Computation. (1) Tax. (i) In the case of a combined report the tax
shall  be  measured  by the combined entire net income, combined minimum
taxable income, combined pre-nineteen  hundred  ninety  minimum  taxable
income  or  combined  capital,  of  all the corporations included in the
report, including any  captive  REIT,  captive  RIC  or  overcapitalized
captive  insurance company; provided, however, in no event shall the tax
measured by combined capital exceed the limitation provided for in para-
graph (b) of subdivision one of section two hundred ten of this article.
  (ii) In the case of a captive REIT or captive RIC required under  this
subdivision  to be included in a combined report, entire net income must
be computed as required under subdivision five (in the case of a captive
REIT) or subdivision seven (in the case of a captive RIC) of section two
hundred nine of this article. However, the deduction under the  internal
revenue  code  for  dividends paid by the captive REIT or captive RIC to
any member of the affiliated group that includes  the  corporation  that
directly  or  indirectly  owns over fifty percent of the voting stock of
the captive REIT or captive RIC shall not be allowed for  taxable  years
beginning  on  or  after  January  first,  two  thousand eight. The term
"affiliated group"  means  "affiliated  group"  as  defined  in  section

S. 6359--C                         118

fifteen hundred four of the internal revenue code, but without regard to
the exceptions provided for in subsection (b) of that section.
  (iii)  In  the  case  of  an overcapitalized captive insurance company
required under this subdivision to be included  in  a  combined  report,
entire  net  income  must be computed as required by subdivision nine of
section two hundred eight of this article.
  (2) Tax bases. In computing combined entire net income, combined mini-
mum taxable income or combined pre-nineteen hundred ninety minimum taxa-
ble income intercorporate dividends shall be  eliminated,  in  computing
combined  business  and  investment capital intercorporate stockholdings
and intercorporate bills, notes and accounts receivable and payable  and
other  intercorporate  indebtedness shall be eliminated and in computing
combined subsidiary capital intercorporate stockholdings shall be elimi-
nated, provided, however, that intercorporate dividends from a DISC or a
former DISC not exempt from tax under paragraph (i) of subdivision  nine
of  section two hundred eight of this article which are taxable as busi-
ness income under this article shall not be eliminated.
  (3) Air freight forwarders: allocation. Notwithstanding any  provision
of law to the contrary, where a combined report includes a qualified air
freight  forwarder  and a corporation described in subparagraph seven of
paragraph (a) of subdivision three of section two hundred  ten  of  this
chapter  (relating  to aviation corporations), in computing the combined
business allocation percentage such subparagraph seven shall be  applied
with  respect  to  such  qualified air freight forwarder] FOR PROVISIONS
RELATING TO COMBINED REPORTS, SEE SECTION  TWO  HUNDRED  TEN-C  OF  THIS
ARTICLE.
  5.  In  case it shall appear to the [tax commission] COMMISSIONER that
any agreement, understanding or arrangement exists between the  taxpayer
and  any  other corporation or any person or firm, whereby the activity,
business, income or capital of the taxpayer within the state is  improp-
erly  or  inaccurately  reflected,  the [tax commission] COMMISSIONER is
authorized and empowered, in [its] THE COMMISSIONER'S discretion and  in
such  manner  as [it] THE COMMISSIONER may determine, to adjust items of
income, deductions and capital, and to eliminate assets in computing any
[allocation] APPORTIONMENT percentage  provided  only  that  any  income
directly  traceable  thereto  be  also  excluded from entire net income,
[minimum taxable income or pre-nineteen hundred ninety  minimum  taxable
income,]  so  as  equitably to determine the tax. Where (a) any taxpayer
conducts its activity or business under any  agreement,  arrangement  or
understanding in such manner as either directly or indirectly to benefit
its  members  or  stockholders, or any of them, or any person or persons
directly or indirectly interested  in  such  activity  or  business,  by
entering  into  any transaction at more or less than a fair price which,
but for such agreement, arrangement or understanding,  might  have  been
paid or received therefor, or (b) any taxpayer, a substantial portion of
whose  capital  stock  is owned either directly or indirectly by another
corporation, enters into any transaction with such other corporation  on
such terms as to create an improper loss or net income, the [tax commis-
sion]  COMMISSIONER may include in the entire net income[, minimum taxa-
ble income or pre-nineteen hundred ninety minimum taxable income] of the
taxpayer the fair profits which, but for such agreement, arrangement  or
understanding,  the  taxpayer  might have derived from such transaction.
WHERE ANY TAXPAYER OWNS, DIRECTLY OR INDIRECTLY, MORE THAN FIFTY PERCENT
OF THE CAPITAL STOCK OF ANOTHER CORPORATION SUBJECT TO TAX UNDER SECTION
FIFTEEN HUNDRED TWO-A OF THIS CHAPTER AND FIFTY PERCENT OR LESS OF WHOSE
GROSS RECEIPTS FOR THE TAXABLE YEAR CONSIST OF PREMIUMS, THE COMMISSION-

S. 6359--C                         119

ER MAY INCLUDE IN THE ENTIRE NET INCOME OF THE  TAXPAYER,  AS  A  DEEMED
DISTRIBUTION, THE AMOUNT OF THE NET INCOME OF THE OTHER CORPORATION THAT
IS IN EXCESS OF ITS NET PREMIUM INCOME.
  S 19-a. Subdivision 13 of section 211 of the tax law is REPEALED.
  S 20.  Intentionally omitted.
  S 21.  Intentionally omitted.
  S 22.  Intentionally omitted.
  S  23.  Paragraph 4 of subdivision (f) of section 1515 of the tax law,
as amended by section 16 of part FF-1 of chapter 57 of the laws of 2008,
is amended to read as follows:
  (4)(i) For purposes of this paragraph, the term  "closest  controlling
stockholder" means the corporation that indirectly owns or controls over
fifty  percent  of the voting stock of a captive REIT or captive RIC, is
subject to tax under section fifteen hundred one of this  article[,]  OR
article nine-A [or article thirty-two] of this chapter or required to be
included in a combined return or report under this article[,] OR article
nine-A  [or article thirty-two] of this chapter, and is the fewest tiers
of corporations away in the ownership structure from the captive REIT or
captive RIC. The commissioner is authorized to prescribe  by  regulation
or  published guidance the criteria for determining the closest control-
ling stockholder.
  (ii) A captive REIT or a captive RIC must be included  in  a  combined
return  with  the  corporation that directly owns or controls over fifty
percent of the voting stock of the captive REIT or captive RIC  if  that
corporation  is  a  life  insurance corporation and is subject to tax or
required to be included in a combined return under this article.
  (iii) If over fifty percent of the voting stock of a captive  REIT  or
captive  RIC  is  not  directly  owned or controlled by a life insurance
corporation that is subject to tax or  required  to  be  included  in  a
combined  return  under  this article, [then the captive REIT or captive
RIC must be included in a combined report or return with the corporation
that is the closest controlling  stockholder  of  the  captive  REIT  or
captive  RIC. If] AND the closest controlling stockholder of the captive
REIT or captive RIC is a life insurance corporation that is  subject  to
tax  or required to be included in a combined return under this article,
then the captive REIT or captive RIC must  be  included  in  a  combined
return WITH THE CLOSEST CONTROLLING STOCKHOLDER under this article.
  (iv)  If  a captive REIT owns the stock of a qualified REIT subsidiary
(as defined in paragraph two of subsection (i) of section eight  hundred
fifty-six of the internal revenue code) AND THE CAPTIVE REIT IS REQUIRED
TO BE INCLUDED IN A COMBINED RETURN UNDER SUBPARAGRAPHS (II) OR (III) OF
THIS  PARAGRAPH,  then the qualified REIT subsidiary must be included in
any combined return required to be made by the captive  REIT  that  owns
the stock of the qualified REIT subsidiary.
  (v)  If  a  captive REIT or a captive RIC is required under this para-
graph to be included in a combined return with another corporation,  and
that  other  corporation is required to be included in a combined return
with another [related] corporation  under  this  subdivision,  then  the
captive REIT or the captive RIC must be included in that combined return
with the other [related] corporation.
  S  24.  Subdivisions (a), (b) and (c) of section 12 of the tax law, as
added by chapter 615 of the  laws  of  1998,  are  amended  to  read  as
follows:
  (a) For purposes of subdivision (b) of this section, the term "person"
shall  mean a corporation, joint stock company or association, insurance
corporation, or banking  corporation,  as  such  terms  are  defined  in

S. 6359--C                         120

section  one  hundred  eighty-three,  one  hundred  eighty-four,  or one
hundred eighty-six, or in article nine-A[, thirty-two]  or  thirty-three
of this chapter, imposing tax on such entities.
  (b)  No person shall be subject to the taxes imposed under section one
hundred eighty-three, one hundred eighty-four or one hundred eighty-six,
or article nine-A[, thirty-two] or thirty-three of this chapter,  solely
by  reason  of  (1)   having its advertising stored on a server or other
computer equipment located in this state (other than a server  or  other
computer  equipment  owned  or leased by such person), or (2) having its
advertising disseminated or displayed on the Internet by  an  individual
or  entity  subject  to  tax under section one hundred eighty-three, one
hundred eighty-four or one hundred eighty-six, or article nine-A,  twen-
ty-two[, thirty-two] or thirty-three of this chapter.
  (c)  A  person,  as such term is defined in subdivision (a) of section
eleven hundred one of this chapter, shall not be deemed to be a  vendor,
for  purposes  of article twenty-eight of this chapter, solely by reason
of (1)  having its advertising stored on  a  server  or  other  computer
equipment  located  in this state (other than a server or other computer
equipment owned or leased by such person), or (2) having its advertising
disseminated or displayed on the Internet by  an  individual  or  entity
subject  to  tax  under  section  one  hundred eighty-three, one hundred
eighty-four or one hundred eighty-six, or article  nine-A,  twenty-two[,
thirty-two] or thirty-three of this chapter.
  S  25. Paragraph 1 of subdivision (a) of section 14 of the tax law, as
amended by section 3 of part V1 of chapter 109 of the laws of  2006,  is
amended to read as follows:
  (1)  except as provided in paragraphs one-a and one-b of this subdivi-
sion, for purposes of section one hundred  eighty-seven-j  and  articles
nine-A,  twenty-two[,  thirty-two] and thirty-three of this chapter, for
each of the taxable years within  the  "business  tax  benefit  period,"
which  period  shall consist of (A) in the case of a business enterprise
with a test date occurring on or before December thirty-first, two thou-
sand one, the first fifteen taxable years beginning on or after  January
first, two thousand one, (B) in the case of a business enterprise with a
test  date  occurring  on  or after January first, two thousand two, but
prior to April first, two thousand five, the fifteen taxable years  next
following  the business enterprise's test year, and (C) in the case of a
business enterprise which is first certified under article eighteen-B of
the general municipal law on or after April first,  two  thousand  five,
the  ten taxable years starting with the taxable year in which the busi-
ness enterprise's first date of certification under  article  eighteen-B
of  the  general  municipal law occurs, but only with respect to each of
such business tax benefit period years for which the employment test  is
met,
  S  26.  Subdivision  (f)  of  section 14 of the tax law, as amended by
section 10 of part CC of chapter 85 of the laws of 2002, is  amended  to
read as follows:
  (f)  Taxable  year.  The term "taxable year" means the taxable year of
the business enterprise under  section  one  hundred  eighty-three,  one
hundred  eighty-four,  one  hundred  eighty-five  or  former section one
hundred eighty-six of article nine, or  under  article  nine-A,  twenty-
two[,  thirty-two] or thirty-three of this chapter. If a business enter-
prise does not have a taxable year because it is exempt from taxation or
otherwise not required to file a return under any of  such  sections  of
article  nine or under article nine-A, twenty-two[, thirty-two] or thir-
ty-three, then the term "taxable year" means  (i)  the  business  enter-

S. 6359--C                         121

prise's federal taxable year, or, (ii) if the enterprise does not have a
federal taxable year, the calendar year.
  S  27. Paragraph 1 of subdivision (i) of section 14 of the tax law, as
amended by section 5 of part A of chapter 63 of the  laws  of  2005,  is
amended to read as follows:
  (1)  for  purposes  of  section  one hundred eighty-seven-j of article
nine, and articles nine-A, twenty-two[, thirty-two] and thirty-three  of
this  chapter, on the first day of the taxable year during which revoca-
tion of its certification under article eighteen-B of the general munic-
ipal law occurs, and
  S 28. Paragraphs 1 and 2 of subdivision (j) of section 14 of  the  tax
law,  as  amended  by section 10 of part CC of chapter 85 of the laws of
2002, are amended to read as follows:
  (1) A new business shall include any corporation, except a corporation
which is substantially similar in operation and in ownership to a  busi-
ness  entity (or entities) taxable, or previously taxable, under section
one hundred eighty-three, one hundred eighty-four, one  hundred  eighty-
five or one hundred eighty-six of article nine; article nine-A[, article
thirty-two]  or  thirty-three  of  this chapter; article twenty-three of
this chapter or which would have been subject to tax under such  article
twenty-three  (as  such article was in effect on January first, nineteen
hundred eighty), ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD  HAVE
BEEN  SUBJECT  TO TAX UNDER SUCH ARTICLE THIRTY-TWO (AS SUCH ARTICLE WAS
IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN) or the income
(or losses) of which is (or was) includable under article twenty-two  of
this chapter.
  (2)  For purposes of article twenty-two of this chapter, an individual
who is either a sole proprietor or a member of a partnership shall qual-
ify as an owner of a new business unless the business of which the indi-
vidual is an owner is substantially similar in operation and  in  owner-
ship  to a business entity taxable, or previously taxable, under section
one hundred eighty-three, one hundred eighty-four, one  hundred  eighty-
five  or  one hundred eighty-six of article nine; article nine-A[, thir-
ty-two] or ARTICLE thirty-three of this chapter; article twenty-three of
this chapter or which would have been subject to tax under such  article
twenty-three  (as  such article was in effect on January first, nineteen
hundred eighty); ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD  HAVE
BEEN SUBJECT TO TAX UNDER SUCH ARTICLE THIRTY-TWO AS SUCH ARTICLE WAS IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN or the income (or
losses) of which is (or was) includable under article twenty-two.
  S  29.  Clauses  (i)  and  (ii)  of subparagraph (A) of paragraph 4 of
subdivision (j) of section 14 of the tax law, as added by section  5  of
part  A  of  chapter  63  of  the  laws  of 2005, are amended to read as
follows:
  (i) Notwithstanding paragraphs one and two of this subdivision, a  new
business  shall  include any corporation which is identical in operation
and ownership to a business entity (or entities) taxable  under  section
one  hundred eighty-three, one hundred eighty-four or one hundred eight-
y-five of article nine; article nine-A[, article thirty-two] or  thirty-
three  of  this chapter or the income (or losses) of which is includable
under article twenty-two of this chapter, provided such corporation  and
such  business entity or entities are operating in different counties in
the state.
  (ii) Notwithstanding paragraphs one and two of  this  subdivision,  an
individual  who is either a sole proprietor or a member of a partnership
shall qualify as an owner of a new business if the business of which the

S. 6359--C                         122

individual is an owner is identical in operation and in ownership  to  a
business  entity (or entities) taxable under section one hundred eighty-
three, one hundred eighty-four or one  hundred  eighty-five  of  article
nine; article nine-A[, article thirty-two] or thirty-three of this chap-
ter or the income (or losses) of which is includable under article twen-
ty-two  of this chapter, provided such business and such business entity
or entities are operating in different counties in the state.
  S 30. Subparagraph (B) of paragraph 4 of subdivision (j) of section 14
of the tax law, as amended by chapter  161  of  the  laws  of  2005,  is
amended to read as follows:
  (B) Notwithstanding any provisions of this subdivision to the contrary
and  notwithstanding  subdivision  c  of  section eighteen of part CC of
chapter eighty-five of the laws of two thousand two,  a  corporation  or
partnership,  which  was first certified under article eighteen-B of the
general municipal law before August first, two thousand two, has a  base
period  of  zero  years  or  zero employment for its base period, and is
similar in operation and in ownership to a business entity  or  entities
taxable,  or  previously  taxable, under sections specified in paragraph
one or two of this subdivision or which would have been subject  to  tax
under  article  twenty-three  of  this  chapter  (as such article was in
effect on January first, nineteen hundred eighty) OR  WHICH  WOULD  HAVE
BEEN  SUBJECT  TO  TAX UNDER ARTICLE THIRTY-TWO OF THIS CHAPTER (AS SUCH
ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO  THOUSAND  FOURTEEN)
or  the  income  or  losses  of which is or was includable under article
twenty-two of this chapter shall not be deemed a new business if it  was
not  formed  for  a  valid  business purpose, as such term is defined in
clause (D) of subparagraph one of paragraph (o) of subdivision  nine  of
section  two hundred eight of this chapter and was formed solely to gain
empire zone benefits.
  S 31. Subdivision (k) of section 14 of the  tax  law,  as  amended  by
section  5  of  part  A of chapter 63 of the laws of 2005, is amended to
read as follows:
  (k) If the designation of an area as an empire zone is  no  longer  in
effect  because section nine hundred sixty-nine of the general municipal
law was not amended to extend the effective date of such designation  so
that the designations of all empire zones pursuant to article eighteen-B
of  the  general  municipal law have expired, a business enterprise that
was certified pursuant to article eighteen-B of  the  general  municipal
law  on  the day immediately preceding the day on which such designation
expired shall be deemed to continue to be certified under  such  article
eighteen-B  for purposes of this section, and sections fifteen, sixteen,
section one hundred eighty-seven-j, subdivisions [twenty-seven] FIVE and
[twenty-eight] SIX of section two hundred [ten] TEN-B, subsections  (bb)
and  (cc)  of section six hundred six, subdivision (z) of section eleven
hundred fifteen[, subsections (o) and (p) of  section  fourteen  hundred
fifty-six,]  and  subdivisions  (r)  and  (s) of section fifteen hundred
eleven of this chapter. In addition, if the designation of an area as an
empire zone is no longer in effect because section nine  hundred  sixty-
nine  of  the general municipal law was not amended to extend the effec-
tive date of such designation so that the  designations  of  all  empire
zones  pursuant  to article eighteen-B of the general municipal law have
expired, all references to empire zones in the provisions of this  chap-
ter  listed  in  the  previous  sentence  shall be read as meaning areas
designated as empire zones on the day immediately preceding the  day  on
which such designation expired.

S. 6359--C                         123

  S  32.  Subdivisions  (a)  and  (h)  of  section 15 of the tax law, as
amended by section 5 of part A of chapter 63 of the laws  of  2005,  are
amended to read as follows:
  (a)  Allowance  of credit. A taxpayer which is a qualified empire zone
enterprise (QEZE), or which is a sole proprietor of a QEZE or  a  member
of  a  partnership  which  is  a QEZE, and which is subject to tax under
article nine-A, twenty-two[, thirty-two] or thirty-three of  this  chap-
ter,  shall  be  allowed  a  credit  against  such  tax, pursuant to the
provisions referenced in subdivision (h) of this section,  for  eligible
real property taxes.
  (h) Definitions and cross-references. For definitions of terms used in
this  section  see  section fourteen of this article. For application of
the credit provided for in this section, see the following provisions of
this chapter:
  (1) Article 9: Section 187-j.
  (2) Article 9-A: Section [210] 210-B: subdivision [27] 5.
  (3) Article 22: Section 606: subsections (i) and (bb).
  (4) [Article 32: Section 1456: subsection (o).
  (5)] Article 33: Section 1511: subdivision (r).
  S 33. Subdivision (a) of section 16  of  the  tax  law,  as  added  by
section  2  of  part GG of chapter 63 of the laws of 2000, is amended to
read as follows:
  (a) Allowance of credit. A taxpayer which is a qualified  empire  zone
enterprise  (QEZE),  or which is a sole proprietor of a QEZE or a member
of a partnership which is a QEZE, and which  is  subject  to  tax  under
article  nine-A,  twenty-two[, thirty-two] or thirty-three of this chap-
ter, shall be allowed  a  credit  against  such  tax,  pursuant  to  the
provisions referenced in subdivision (g) of this section, to be computed
as hereinafter provided.
  S 34. Paragraph 1, clause (ii) of subparagraph (B) of paragraph 2, and
subparagraph  (A) of paragraph 3 of subdivision (f) of section 16 of the
tax law, as amended by section 14 of part CC of chapter 85 of  the  laws
of 2002, are amended to read as follows:
  (1) General. The tax factor shall be, in the case of article nine-A of
this  chapter,  the [larger of the amounts] AMOUNT of tax determined for
the taxable year under [paragraphs] PARAGRAPH (a) [and (c)] of  subdivi-
sion  one  of  section  two  hundred ten of such article. The tax factor
shall be, in the case of article twenty-two of  this  chapter,  the  tax
determined  for  the  taxable  year under subsections (a) through (d) of
section six hundred one of such article. [The tax factor  shall  be,  in
the  case  of  article  thirty-two  of  this  chapter, the larger of the
amounts of tax determined for the taxable year under subsection (a)  and
paragraph  two  of subsection (b) of section fourteen hundred fifty-five
of such article.] The tax factor shall be, in the case of article  thir-
ty-three  of  this  chapter, the larger of the amounts of tax determined
for the taxable year under paragraphs one and three of  subdivision  (a)
of section fifteen hundred two of such article.
  (ii)  For  purposes of article nine-A[, thirty-two or thirty-three] of
this chapter, the term "partner's income  from  the  partnership"  means
partnership  items  of  income,  gain,  loss and deduction, and New York
modifications thereto, entering  into  [entire  net]  BUSINESS  income[,
minimum  taxable  income,  alternative  entire  net income or entire net
income plus compensation] and the term "partner's entire  income"  means
[entire  net]  BUSINESS  income[,  minimum  taxable  income, alternative
entire net income or entire net  income  plus  compensation,]  allocated
within the state.  FOR PURPOSES OF ARTICLE THIRTY-THREE OF THIS CHAPTER,

S. 6359--C                         124

THE TERM "PARTNER'S INCOME FROM THE PARTNERSHIP" MEANS PARTNERSHIP ITEMS
OF INCOME, GAIN, LOSS AND DEDUCTION, AND NEW YORK MODIFICATIONS THERETO,
ENTERING  INTO  ENTIRE NET INCOME OR ENTIRE NET INCOME PLUS COMPENSATION
AND  THE  TERM  "PARTNER'S  ENTIRE  INCOME"  MEANS ENTIRE NET INCOME, OR
ENTIRE NET INCOME PLUS COMPENSATION, ALLOCATED  WITHIN  THE  STATE.  For
purposes  of  article  twenty-two  of  this chapter, the term "partner's
income from the partnership" means partnership items  of  income,  gain,
loss  and  deduction,  and New York modifications thereto, entering into
New York adjusted gross income, and the term "partner's  entire  income"
means New York adjusted gross income.
  (A)  Where  the  taxpayer is a qualified empire zone enterprise and is
required or permitted to make a return or report  on  a  combined  basis
under article nine-A[, thirty-two] or ARTICLE thirty-three of this chap-
ter,  the  taxpayer's tax factor shall be the amount determined in para-
graph one of this subdivision which is attributable to the income of the
qualified empire zone enterprise.   Such attribution shall  be  made  in
accordance  with  the  ratio  of  the qualified empire zone enterprise's
income allocated within the state to the combined group's income, or  in
accordance  with such other methods as the commissioner may prescribe as
providing an apportionment which reasonably reflects the portion of  the
combined  group's tax attributable to the income of the qualified empire
zone enterprise. In no event may the ratio so determined exceed 1.0.
  S 35. Subdivision (g) of section 16  of  the  tax  law,  as  added  by
section  2  of  part GG of chapter 63 of the laws of 2000, is amended to
read as follows:
  (g) Definitions and cross-references. For definitions of terms used in
this section see sections fourteen and  fifteen  of  this  article.  For
application  of the credit provided for in this section, see the follow-
ing provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B:  subdivision [28]6.
  (2) Article 22: Section 606: subsections (i) and (cc).
  (3) [Article 32: Section 1456: subsection (p).
  (4)] Article 33: Section 1511: subdivision (s).
  S 36. Paragraph 1 of subdivision (b) of section 17 of the tax law,  as
added  by  section  43  of part S1 of chapter 57 of the laws of 2009, is
amended to read as follows:
  (1) The empire zones tax benefits report must  contain  the  following
information  about  the  empire  zone tax credits claimed under articles
nine, nine-A, twenty-two[, thirty-two] and thirty-three of this  chapter
during the previous calendar year:
  (A) the name of each taxpayer claiming a credit; and
  (B) the amount of each credit earned by each taxpayer.
  S  37. Subdivisions (a) and (d) of section 18 of the tax law, as added
by section 2 of part CC of chapter 63 of the laws of 2000,  are  amended
to read as follows:
  (a)  Allowance  of  credit.  A  taxpayer  subject to tax under article
nine-A, twenty-two[, thirty-two] or thirty-three of this  chapter  shall
be  allowed a credit against such tax, pursuant to the provisions refer-
enced in subdivision (d) of this section, with respect to the  ownership
of  eligible low-income buildings for which an eligibility statement has
been issued by the commissioner of housing and  community  renewal.  The
amount  of  the credit shall be the credit amount for each such building
allocated by such commissioner as  provided  in  article  two-A  of  the
public  housing  law. The credit amount shall be allowed for each of the
ten taxable years in the credit period, and any reduction in  first-year

S. 6359--C                         125

credit  as provided in subdivision two of section twenty-two of such law
shall be allowed in the eleventh taxable year.
  (d)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B:  subdivision [30] 15,
  (2) Article 22: Section 606: subsections (i) and (x),
  (3) [Article 32: Section 1456: subsection (l),
  (4)] Article 33: Section 1511: subdivision (n).
  S 38. Subparagraph (A) of paragraph 1 of subdivision (a) and  subdivi-
sion  (f) of section 19 of the tax law, as added by section 2 of part II
of chapter 63 of the laws of 2000, are amended to read as follows:
  (A) Green building credit. A taxpayer subject  to  tax  under  article
nine,  nine-A,  twenty-two[, thirty-two] or thirty-three of this chapter
shall be allowed a green building credit against such tax,  pursuant  to
the  provisions referenced in subdivision (f) of this section. Provided,
however, no credit shall  be  allowed  under  this  section  unless  the
taxpayer  has complied with the applicable requirements of paragraph two
of subdivision (d) of this section (relating to  reports  to  DEC).  The
amount of the credit shall be the sum of the credit components specified
in  paragraphs two through seven of this subdivision. Provided, however,
the amount of each such credit component shall not exceed the limit  set
forth  in  the initial credit component certificate obtained pursuant to
subdivision (c) of this section. In the  determination  of  such  credit
components,  no cost paid or incurred by the taxpayer shall be the basis
for more than one such component.
  (f) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article nine: Section one hundred eighty-seven-d;
  (2)  Article  nine-A:  Subdivision [thirty-one] SIXTEEN of section two
hundred [ten] TEN-B;
  (3) Article twenty-two: Subsections (i) and (y) of section six hundred
six;
  (4) [Article thirty-two: Subsection (m) of  section  fourteen  hundred
fifty-six;
  (5)]  Article thirty-three: Subdivision (o) of section fifteen hundred
eleven.
  S 39. Paragraphs 1 and 5 of subdivision (a) of section 21 of  the  tax
law,  as  amended  by  section 1 of part H of chapter 577 of the laws of
2004, are amended to read as follows:
  (1) General. A taxpayer subject to tax  under  article  nine,  nine-A,
twenty-two[,  thirty-two]  or  thirty-three  of  this  chapter  shall be
allowed a credit against such tax, pursuant to the provisions referenced
in subdivision (f) of this section. Such credit shall  be  allowed  with
respect to a qualified site, as such term is defined in paragraph one of
subdivision  (b)  of this section. The amount of the credit in a taxable
year shall be the sum of the credit components specified  in  paragraphs
two, three and four of this subdivision applicable in such year.
  (5)  Applicable  percentage. For purposes of paragraphs two, three and
four of this subdivision, the  applicable  percentage  shall  be  twelve
percent  in  the  case  of  credits claimed under article nine, nine-A[,
thirty-two] or thirty-three of this chapter, and ten percent in the case
of credits claimed under article twenty-two of this chapter, except that
where at least fifty percent of the area of the qualified site  relating
to  the  credit  provided  for in this section is located in an environ-
mental zone as defined in paragraph  six  of  subdivision  (b)  of  this
section,  the  applicable percentage shall be increased by an additional

S. 6359--C                         126

eight percent. Provided, however, as afforded in section 27-1419 of  the
environmental  conservation  law, if the certificate of completion indi-
cates that the qualified site has been remediated to  Track  1  as  that
term is described in subdivision four of section 27-1415 of the environ-
mental  conservation  law,  the  applicable  percentage set forth in the
first sentence of this paragraph shall be increased by an additional two
percent.
  S 39-a. Subdivisions (c) and (f) of section 21  of  the  tax  law,  as
added  by  section  1  of  part  H of chapter 1 of the laws of 2003, are
amended to read as follows:
  (c) Qualifying property.  Property  which  qualifies  for  the  credit
provided  for  under this section and also for a credit provided for (1)
under either subdivision [twelve] ONE or subdivision [twelve-B] THREE of
section two hundred [ten]  TEN-B  of  this  chapter,  or  both,  OR  (2)
subsection  (a)  or  subsection  (j)  of section six hundred six of this
chapter, or both[, (3) the credit provided for under subsection  (i)  of
section  fourteen  hundred  fifty-six of this chapter, or (4) the credit
provided under subdivision (q) of section fifteen hundred eleven of this
chapter] may be the basis for either the credit provided for under  this
section  or  one  of the credits enumerated in paragraph one[,] OR two[,
three or four] of this subdivision, but not both.
  (f) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-g
  (2) Article 9-A: Section [210] 210-B, subdivision [33] 17
  (3) Article 22: Section 606, subsections (i) and (dd)
  (4) [Article 32: Section 1456, subsection (q)
  (5)] Article 33: Section 1511, subdivision (u).
  S  40. Paragraph 3 of subdivision (a) and paragraphs 1 and 9 of subdi-
vision (b) of section 22 of the tax law, as amended by section 4 of part
H of chapter 577 of the laws of 2004, are amended to read as follows:
  (3) Developer. (i) A "developer" is a  taxpayer  under  article  nine,
nine-A,  twenty-two[, thirty-two] or thirty-three of this chapter who or
which either (I) has  been  issued  a  certificate  of  completion  with
respect  to  a  qualified site or (II) has purchased or in any other way
has been conveyed all or any portion of a qualified site from a taxpayer
or any other party who  or  which  has  been  issued  a  certificate  of
completion  with respect to such site provided, such purchase or convey-
ance occurs within seven years of the effective date of the  certificate
of  completion  issued  with  respect to such qualified site.   Provided
further, that the taxpayer who or which is purchasing all or any portion
of a qualified site and the taxpayer or any other party who or which has
been issued a certificate of completion with respect to  such  site  may
not  be  related persons, as such term is defined in subparagraph (C) of
paragraph three of subsection (b) of section four hundred sixty-five  of
the internal revenue code.
  (ii)  Where  the  entity  to whom a certificate of completion has been
issued is a partnership, or where the entity which has purchased all  or
any  portion  of  a qualified site from a taxpayer who or which has been
issued a certificate of completion with respect to such site within  the
applicable  time limit is a partnership, any partner in such partnership
who or which is taxable under article nine, nine-A,  twenty-two[,  thir-
ty-two]  or thirty-three of this chapter shall be a developer under this
paragraph. Where the entity to whom a certificate of completion has been
issued is a New York S  corporation,  or  where  the  entity  which  has
purchased  all or any portion of a qualified site from a taxpayer who or

S. 6359--C                         127

which has been issued a certificate of completion with respect  to  such
site  within  the applicable time limit is a New York S corporation, any
shareholder in such New York S corporation shall be  a  developer  under
this paragraph.
  (1)  Allowance of credit. A developer of a qualified site who or which
is subject to tax under article nine, nine-A,  twenty-two[,  thirty-two]
or  thirty-three of this chapter, shall be allowed a credit against such
tax, pursuant to the provisions referenced in  paragraph  nine  of  this
subdivision, for eligible real property taxes imposed on such site.
  (9)  Cross-references.  For  application of the credit provided for in
this subdivision, see the following provisions of this chapter:
  (i) Article 9: Section 187-h.
  (ii) Article 9-A: Section [210] 210-B:  subdivision [34] 18.
  (iii) Article 22: Section 606: subsections (i) and (ee).
  (iv) [Article 32: Section 1456: subsection (r).
  (v)] Article 33: Section 1511: subdivision (v).
  S 41. Subdivision (a) of section 23 of the  tax  law,  as  amended  by
section 10 of part H chapter 577 of the laws of 2004, is amended to read
as follows:
  (a)  Allowance  of  credit.  General.  A taxpayer subject to tax under
article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter  shall  be  allowed  a  credit against such tax, pursuant to the
provisions referenced in subdivision (e) of this section. The amount  of
such  credit  shall be equal to the lesser of thirty thousand dollars or
fifty percent of the premiums paid on or after the date  of  the  brown-
field site cleanup agreement executed by the taxpayer and the department
of  environmental  conservation pursuant to section 27-1409 of the envi-
ronmental conservation law by the taxpayer for environmental remediation
insurance issued with respect to a qualified site.
  S 42. Subdivision (e) of section 23  of  the  tax  law,  as  added  by
section  19  of  part  H of chapter 1 of the laws of 2003, is amended to
read as follows:
  (e) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-i
  (2) Article 9-A: Section [210] 210-B, subdivision [35] 19
  (3) Article 22: Section 606, subsections (i) and (ff)
  (4) [Article 32: Section 1456, subsection (s)
  (5)] Article 33: Section 1511, subdivision (w).
  S 43. Paragraphs 1 and 2 of subdivision (a) and clause (i) of subpara-
graph  (D)  of  paragraph  1 of subdivision (b) of section 25 of the tax
law, as added by section 1 of part N of chapter 61 of the laws of  2005,
are amended to read as follows:
  (1)  Every  taxpayer,  or  person as defined in section seven thousand
seven hundred one of the internal  revenue  code,  required  to  file  a
disclosure  statement  with  the  internal  revenue  service pursuant to
section six thousand eleven of the internal revenue code, or  the  regu-
lations promulgated thereunder, related to a reportable transaction or a
listed  transaction, as those terms are defined in such section or regu-
lations, must attach a duplicate of such  disclosure  statement  to  the
return or report required to be filed by such taxpayer or person for the
taxable  year  under  article  nine, nine-A, twenty-two[, thirty-two] or
thirty-three of this chapter, and provide such other information related
to such disclosure as prescribed by the  commissioner.  Such  disclosure
shall be made notwithstanding that one member of an affiliated group, as
defined  by  section  fifteen hundred four of the internal revenue code,

S. 6359--C                         128

may file such disclosure statement with the internal revenue service  on
behalf of its affiliates including such taxpayer or person.
  (2)  Every  taxpayer  or  such  person  who participates in a New York
reportable transaction for a taxable year  must  disclose  such  partic-
ipation  with  its  return  or report required to be filed under article
nine, nine-A, twenty-two[, thirty-two] or thirty-three of  this  chapter
for  the  taxable  year  in  a  form prescribed by the commissioner, and
provide such other information related to such transaction as prescribed
by the commissioner. A New York reportable transaction is a  transaction
that  has  the potential to be a tax avoidance transaction as determined
by the commissioner.
  (i) the list required to be maintained  by  such  person  pursuant  to
section  six  thousand  one  hundred twelve of the internal revenue code
identifies or is required to identify a taxpayer subject  to  tax  under
article  nine,  nine-A, twenty-two[, thirty-two] or thirty-three of this
chapter, and
  S 44. Subdivisions (a) and (f) of section 26 of the tax law, as  added
by chapter 537 of the laws of 2005, are amended to read as follows:
  (a)  Allowance  of  credit.  A taxpayer, which is subject to tax under
article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter  and  which  is  a  qualified building owner, shall be allowed a
credit against such tax.  The amount of the credit  allowed  under  this
section shall equal the sum of the number of qualified security officers
providing  protection  to  a building or buildings owned by the taxpayer
multiplied by three thousand dollars. Provided,  however,  that  in  the
case  of  a worker not so employed for a full year, such amount shall be
prorated to reflect the length of such employment under  regulations  of
the commissioner.
  (f)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9: section 187-n.
  (2) article 9-A: section [210] 210-B:  subdivision [37] 21.
  (3) article 22: section 606: subsection (ii).
  (4) [article 32: section 1456: subsection (t).
  (5)] article 33: section 1511: subdivision (x).
  S 45. Paragraph 3 of subdivision (a) and subdivision (c) of section 28
of the tax law, as added by section 2 of part V of  chapter  62  of  the
laws of 2006, are amended to read as follows:
  (3)  No  qualified  production  costs used by a taxpayer either as the
basis for the allowance of the credit provided for under this section or
used in the calculation of the credit provided for  under  this  section
shall  be used by such taxpayer to claim any other credit allowed pursu-
ant to this chapter.
  Notwithstanding any provisions of this  section  to  the  contrary,  a
corporation  or  partnership,  which  otherwise qualifies as a qualified
commercial production company, and is similar in operation and in owner-
ship to a business entity or entities taxable,  or  previously  taxable,
under  section  one hundred eighty-three, one hundred eighty-four or one
hundred eighty-five of article nine; article  nine-A[,  article  thirty-
two] or thirty-three of this chapter or which would have been subject to
tax  under  article twenty-three of this chapter (as such article was in
effect on January first, nineteen hundred eighty) OR  WHICH  WOULD  HAVE
BEEN  SUBJECT  TO  TAX UNDER ARTICLE THIRTY-TWO OF THIS CHAPTER (AS SUCH
ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO  THOUSAND  FOURTEEN)
or  the  income  or  losses  of which is or was includable under article
twenty-two of this chapter shall not be deemed a new or  separate  busi-

S. 6359--C                         129

ness,  and  therefore  shall not be eligible for empire state commercial
production benefits, if it was not formed for a valid business  purpose,
as  such  term is defined in clause (D) of subparagraph one of paragraph
(o) of subdivision nine of section two hundred eight of this chapter and
was  formed  solely  to  gain  empire state commercial production credit
benefits.
  (c) Cross-references. For application of the credit  provided  for  in
this section, see the following provision of this chapter:
  (1) article 9-A: section [210] 210-B:  subdivision [38] 23.
  (2) article 22: section 606: subsection (jj).
  S  46.  Subdivision  (d)  of  section  28  of the tax law, as added by
section 1 of part X of chapter 62 of the laws of  2006,  is  amended  to
read as follows:
  (d)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-c.
  (2) Article 9-A: Section [210] 210-B, subdivision [38] 24.
  (3) Article 22: Section 606, subsections (i) and (jj).
  S 47. The opening paragraph of subdivision (a)  and  subdivisions  (c)
and  (g) of section 31 of the tax law, the opening paragraph of subdivi-
sion (a) and subdivision (g) as amended by section 7 of part G of  chap-
ter  61  of  the  laws of 2011, subdivision (c) as added by section 2 of
part MM of chapter 59 of the laws  of  2010,  are  amended  to  read  as
follows:
  General.  A  taxpayer subject to tax under section one hundred eighty-
five, article nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter  shall  be  allowed  a  credit against such tax, pursuant to the
provisions referenced in subdivision (g) of this section. The amount  of
the  credit,  allowable  for up to ten consecutive taxable years, is the
sum of the following four credit components:
  (c) Election of credit. A taxpayer who or which is qualified to  claim
the  excelsior  investment tax credit component and is also qualified to
claim the investment tax credit provided for under subdivision  [twelve]
ONE of section two hundred [ten,] TEN-B OR subsection (a) of section six
hundred  six[,  or subsection (i) of section fourteen hundred fifty-six]
of this chapter, may claim either the excelsior  investment  tax  credit
component  or  the  investment tax credit, but not both with regard to a
particular piece of property. In addition, a taxpayer who  or  which  is
qualified  to claim the excelsior investment tax credit component and is
also qualified to claim the brownfield tangible property  credit  compo-
nent  under  section twenty-one of this article, as added by chapter one
of the laws of two  thousand  three,  may  claim  either  the  excelsior
investment  tax credit component or such tangible property credit compo-
nent, but not both with regard to a particular piece  of  property.  The
election  to  claim  the  excelsior investment tax credit component, the
investment tax credit or the brownfield tangible property credit  compo-
nent, with regard to the same property, is irrevocable.
  (g)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9: section 187-q.
  (2) article 9-A: section [210] 210-B: subdivision [41] 31.
  (3) article 22: section 606: subsection (qq).
  (4) [article 32: section 1456: subsection (u).
  (5)] article 33: section 1511: subdivision (y).

S. 6359--C                         130

  S 48. Subdivision (d) of section 31  of  the  tax  law,  as  added  by
section  12  of  part Q of chapter 57 of the laws of 2010, is amended to
read as follows:
  (d)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9-A: section [210] 210-B: subdivision [41] 32.
  (2) article 22: section 606: subsection (qq).
  S 49. Subdivision 3 of section 34 of the tax law, as added by  section
2  of  part  Y  of chapter 57 of the laws of 2010, is amended to read as
follows:
  3. (a) For application of the temporary deferral nonrefundable  payout
credit, see the following provisions of this chapter:
  (1) Article 9: section 187-0
  (2) Article 9-A: section [210(41)] 210-B(33)
  (3) Article 22: section 606(qq)
  (4) [Article 32: section 1456(v)
  (5)] Article 33: section 1511(y)
  (b)  For application of the temporary deferral refundable payout cred-
it, see the following provisions of this chapter:
  (1) Article 9: section 187-p
  (2) Article 9-A: section [210(42)] 210-B(34)
  (3) Article 22: section 606(rr)
  (4) [Article 32: section 1456(w)
  (5)] Article 33: section 1511(z)
  S 50. The opening paragraph of subdivision (a),  subparagraph  (C)  of
paragraph 2 of subdivision (e), and subdivision (f) of section 35 of the
tax  law,  as  added by section 3 of part V of chapter 61 of the laws of
2011, are amended to read as follows:
  A taxpayer which is a participant or the owner of a participant in the
economic transformation and facility redevelopment program under article
eighteen of the economic development law that is subject  to  tax  under
section  one  hundred  eighty-five  of  article nine, or article nine-A,
twenty-two[, thirty-two]  or  thirty-three  of  this  chapter  shall  be
allowed  the  sum  of following components against such tax, pursuant to
the provisions referenced in subdivision (f) of this section.
  (C) the business entity must not be substantially similar in ownership
and operation to another taxpayer taxable or  previously  taxable  under
section one hundred eighty-three, one hundred eighty-four or one hundred
eighty-five  of  article  nine, former section one hundred eighty-six of
this chapter or article nine-A, twenty-two[, thirty-two] or thirty-three
of this chapter OR FORMER ARTICLE THIRTY-TWO  OF  THIS  CHAPTER  or  the
income  or losses of which is or was includable under article twenty-two
of this chapter;
  (f) Cross-references. For application of the credits provided  for  in
this section, see the following provisions of this chapter:
  (1) section 185: section 187-r.
  (2) article 9-A: section [210(43)] 210-B(35).
  (3) article 22: section 606 (ss).
  (4) [article 32: section 1456(x).
  (5)] article 33: section 1511 (aa).
  S  51. Subdivisions (a) and (e) of section 36 of the tax law, as added
by section 2 of part E of chapter 56 of the laws of 2011, are amended to
read as follows:
  (a) Allowance of credit. A  taxpayer  subject  to  tax  under  article
nine-A,  twenty-two[,  thirty-two] or thirty-three of this chapter shall
be allowed a credit against such tax, pursuant to the provisions  refer-

S. 6359--C                         131

enced  in  subdivision  (e)  of  this section. The amount of the credit,
allowable for ten consecutive tax years, is equal to the  amount  deter-
mined  pursuant  to  section  four  hundred  twenty-five of the economic
development law.
  (e)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9-A: section [210] 210-B, subdivision [44] 37;
  (2) article 22: section 606, subsection (tt);
  (3) [article 32: section 1456, subsection (y);
  (4)] article 33, section 1511, subdivision (bb).
  S 52. Subdivision (c) of section 37 of the tax law, as added by  chap-
ter 109 of the laws of 2012, is amended to read as follows:
  (c)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B, subdivision [45] 39.
  (2) Article 22: Section 606, subsections (i) and (uu).
  S 52-a. Subdivision (c) of section 39 of the tax law is REPEALED.
  S 53. Paragraphs 2, 3 and 4 of subdivision (k) of section  39  of  the
tax  law,  paragraphs 2 and 3 as added by section 2 of part A of chapter
68 of the laws of 2013, paragraph 4 as amended by section 2 of part T of
this act, are amended to read as follows:
  [(2) Article 9: section 180, subdivision 3.
  (3) Article 9: section 181, subdivision 3.]
  (4) Article 9-A: section [210] 210-B, subdivision [47] 41 and subdivi-
sion [48] 43.
  S 54. Subdivision 1 of section 171-a of the tax  law,  as  amended  by
section  1  of  part  R of chapter 60 of the laws of 2004, is amended to
read as follows:
  1. All taxes, interest, penalties and fees collected  or  received  by
the commissioner or the commissioner's duly authorized agent under arti-
cles nine (except section one hundred eighty-two-a thereof and except as
otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
twelve-A (except as otherwise provided in section  two  hundred  eighty-
four-d  thereof),  thirteen, thirteen-A (except as otherwise provided in
section  three  hundred  twelve  thereof),  eighteen,  nineteen,  twenty
(except  as otherwise provided in section four hundred eighty-two there-
of),  twenty-one,  twenty-two,  twenty-six,  twenty-six-B,  twenty-eight
(except  as  otherwise  provided in section eleven hundred two or eleven
hundred three thereof), twenty-eight-A, thirty-one (except as  otherwise
provided  in section fourteen hundred twenty-one thereof), [thirty-two,]
thirty-three and thirty-three-A of this chapter shall be deposited daily
in one account with such responsible  banks,  banking  houses  or  trust
companies  as may be designated by the comptroller, to the credit of the
comptroller. Such an account may be established in one or more  of  such
depositories.  Such  deposits  shall be kept separate and apart from all
other money in the possession of the comptroller. The comptroller  shall
require  adequate  security  from  all  such  depositories. Of the total
revenue collected or received under such articles of this  chapter,  the
comptroller  shall  retain in the comptroller's hands such amount as the
commissioner may determine to be necessary for refunds or reimbursements
under such articles of this chapter [and article  ten  thereof]  out  of
which  amount the comptroller shall pay any refunds or reimbursements to
which taxpayers shall be entitled under the provisions of such  articles
of  this  chapter  [and  article  ten thereof]. The commissioner and the
comptroller shall maintain a system of accounts showing  the  amount  of
revenue  collected  or  received  from each of the taxes imposed by such

S. 6359--C                         132

articles. The comptroller,  after  reserving  the  amount  to  pay  such
refunds  or  reimbursements,  shall,  on or before the tenth day of each
month, pay into the state treasury to the credit of the general fund all
revenue deposited under this section during the preceding calendar month
and  remaining  to  the  comptroller's  credit  on  the last day of such
preceding month, (i) except that the comptroller shall pay to the  state
department of social services that amount of overpayments of tax imposed
by  article  twenty-two  of this chapter and the interest on such amount
which is certified to the comptroller by the commissioner as the  amount
to  be  credited against past-due support pursuant to subdivision six of
section one hundred seventy-one-c of this [chapter]  ARTICLE,  (ii)  and
except  that  the  comptroller  shall  pay  to the New York state higher
education services corporation and the state university of New  York  or
the city university of New York respectively that amount of overpayments
of tax imposed by article twenty-two of this chapter and the interest on
such amount which is certified to the comptroller by the commissioner as
the amount to be credited against the amount of defaults in repayment of
guaranteed  student  loans and state university loans or city university
loans pursuant to subdivision five of section one hundred  seventy-one-d
and  subdivision six of section one hundred seventy-one-e of this [chap-
ter] ARTICLE, (iii) and except further that,  notwithstanding  any  law,
the  comptroller shall credit to the revenue arrearage account, pursuant
to section ninety-one-a of the state finance law, that amount  of  over-
payment  of  tax  imposed  by  article nine, nine-A, twenty-two, thirty,
thirty-A, thirty-B[, thirty-two] or thirty-three of  this  chapter,  and
any  interest  thereon,  which  is  certified  to the comptroller by the
commissioner as the amount to be credited  against  a  past-due  legally
enforceable  debt  owed  to  a state agency pursuant to paragraph (a) of
subdivision six of section one hundred seventy-one-f  of  this  article,
provided,  however,  he  shall  credit  to  the special offset fiduciary
account, pursuant to section ninety-one-c of the state finance law,  any
such  amount  creditable as a liability as set forth in paragraph (b) of
subdivision six of section one hundred seventy-one-f  of  this  article,
(iv)  and  except  further that the comptroller shall pay to the city of
New York that amount of overpayment of  tax  imposed  by  article  nine,
nine-A,  twenty-two,  thirty, thirty-A, thirty-B[, thirty-two,] or thir-
ty-three of this chapter and any interest thereon that is  certified  to
the comptroller by the commissioner as the amount to be credited against
city  of  New  York  tax  warrant  judgment debt pursuant to section one
hundred seventy-one-l of this article, (v) and except further  that  the
comptroller  shall pay to a non-obligated spouse that amount of overpay-
ment of tax imposed by article twenty-two of this chapter and the inter-
est on such amount which has  been  credited  pursuant  to  section  one
hundred  seventy-one-c,  one hundred seventy-one-d, one hundred seventy-
one-e, one hundred seventy-one-f or one hundred  seventy-one-l  of  this
article and which is certified to the comptroller by the commissioner as
the  amount  due  such non-obligated spouse pursuant to paragraph six of
subsection (b) of section six hundred fifty-one  of  this  chapter;  and
(vi)  the  comptroller  shall deduct a like amount which the comptroller
shall pay into the treasury to the  credit  of  the  general  fund  from
amounts  subsequently  payable to the department of social services, the
state university of New York, the city university of New  York,  or  the
higher  education services corporation, or the revenue arrearage account
or special offset fiduciary account pursuant to section ninety-one-a  or
ninety-one-c of the state finance law, as the case may be, whichever had
been  credited the amount originally withheld from such overpayment, and

S. 6359--C                         133

(vii) with respect to amounts originally withheld from such  overpayment
pursuant  to  section one hundred seventy-one-l of this article and paid
to the city of New York, the comptroller shall  collect  a  like  amount
from the city of New York.
  S  55.  Subdivision  2  of section 171-a of the tax law, as amended by
chapter 57 of the laws of 1993, is amended to read as follows:
  2. Notwithstanding subdivision  one  of  this  section  or  any  other
provision of law to the contrary, the taxes imposed pursuant to sections
one  hundred  eighty-three-a,  one  hundred  eighty-four-a, [one hundred
eighty-six-b,] one hundred eighty-six-c,  [one  hundred  eighty-nine-a,]
two  hundred nine-B[, fourteen hundred fifty-five-b] and fifteen hundred
five-a of this chapter, reduced by an amount for  administrative  costs,
shall be deposited to the credit of the metropolitan mass transportation
operating  assistance  account  in  the  mass  transportation  operating
assistance fund, created pursuant to section eighty-eight-a of the state
finance law, as such taxes are received. The amount  for  administrative
costs  shall  be  determined by the commissioner to represent reasonable
costs of the  department  of  taxation  and  finance  in  administering,
collecting, determining and distributing such taxes. Of the total reven-
ue  collected or received under such sections of this chapter, the comp-
troller shall retain in his hands such amount as  the  commissioner  may
determine  to  be  necessary  for  refunds  or reimbursements under such
sections of this chapter out of which amount the comptroller  shall  pay
any refunds or reimbursements to which taxpayers shall be entitled under
provisions  of  such  sections. The tax commissioner and the comptroller
shall maintain a system  of  accounts  showing  the  amount  of  revenue
collected or received from each of the taxes imposed by such sections.
  S  56. Paragraphs (b) and (c) of subdivision 1 of section 171-f of the
tax law, as amended by chapter 81 of the laws of 1995,  are  amended  to
read as follows:
  (b)  "taxpayer"  shall mean a corporation, association, company, part-
nership, estate, trust, liquidator, fiduciary or other entity  or  indi-
vidual who or which is liable for any tax or other imposition imposed by
or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
ty-B[,  thirty-two,] or thirty-three of this chapter or article two-E of
the general city law, which tax or other imposition is  administered  by
the  commissioner  of  taxation  and finance, or who or which is under a
duty to perform an act under or pursuant  to  such  tax  or  imposition,
excluding  a  state agency, a municipal corporation or a district corpo-
ration; and (c) "overpayment" shall mean an overpayment which  has  been
requested  or determined to be refunded, a refund or a reimbursement, of
a tax or other imposition  imposed  by  or  pursuant  to  article  nine,
nine-A,  twenty-two,  thirty, thirty-A, thirty-B[, thirty-two,] or thir-
ty-three of this chapter or article two-E of the general city law, which
is administered by the commissioner of taxation and finance.
  S 57. Subdivision 2 of section 171-f of the tax law, as added by chap-
ter 55 of the laws of 1992, is amended to read as follows:
  (2) The commissioner of taxation and finance, upon agreement with  the
state  comptroller  and  acting  as  an agent for the state comptroller,
shall set forth the  procedures  for  crediting  any  overpayment  by  a
taxpayer  of  any tax or other imposition imposed by or authorized to be
imposed pursuant to article nine, nine-A, twenty-two, thirty,  thirty-A,
thirty-B[, thirty-two,] or thirty-three of this chapter or article two-E
of  the  general  city law, which is administered by the commissioner of
taxation and finance, and the interest on any such overpayments, against
the amount of a past-due legally enforceable debt owed by such  taxpayer

S. 6359--C                         134

to  a  state  agency.  An  implementation plan shall be developed by the
division of the budget and the department of taxation and finance  which
shall  provide,  but not be limited to, guidance with respect to coordi-
nation of debt collection pursuant to this section and subdivision twen-
ty-seventh  of  section  one  hundred  seventy-one of this article. This
section shall not be deemed to abrogate or limit in any way  the  powers
and  authority  of the state comptroller to set off debts owed the state
against payments from the state, under the constitution of the state  or
any other law.
  S  58. Paragraphs (a) and (b) of subdivision 1 of section 171-l of the
tax law, as added by section 6 of part R of chapter 60 of  the  laws  of
2004, are amended to read as follows:
  (a)  "taxpayer"  shall mean a corporation, association, company, part-
nership, estate, trust, liquidator, fiduciary or other entity  or  indi-
vidual who or which is liable for any tax or other imposition imposed by
or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
ty-B[,  thirty-two,] or thirty-three of this chapter, which tax or other
imposition is administered by the commissioner of taxation and  finance,
or  who  or which is under a duty to perform an act under or pursuant to
such tax or imposition, excluding a state  agency,  a  municipal  corpo-
ration or a district corporation;
  (b)  "overpayment"  shall mean an overpayment which has been requested
or determined to be refunded, a refund or a reimbursement, of a  tax  or
other  imposition  imposed by or pursuant to article nine, nine-A, twen-
ty-two, thirty, thirty-A, thirty-B[,  thirty-two,]  or  thirty-three  of
this  chapter, which is administered by the commissioner of taxation and
finance; and
  S 59. Paragraph (b) of subdivision 1 of section 183 of the tax law, as
amended by section 1 of part Y of chapter 63 of the  laws  of  2000,  is
amended to read as follows:
  (b)  For  the  privilege  of exercising its corporate franchise, or of
doing business, or of employing capital, or of owning or leasing proper-
ty in this state in a corporate or organized capacity, or of maintaining
an office in this state, every domestic corporation, joint-stock company
or association formed for or  principally  engaged  in  the  conduct  of
canal, steamboat, ferry (except a ferry company operating between any of
the boroughs of the city of New York under a lease granted by the city),
express,  navigation,  pipe  line,  transfer,  baggage express, omnibus,
taxicab, telegraph, or telephone business, or formed for or  principally
engaged  in  the  conduct  of  two or more of such businesses, and every
domestic corporation, joint-stock company or association formed  for  or
principally  engaged  in the conduct of a railroad, palace car, sleeping
car or trucking business or formed for or  principally  engaged  in  the
conduct of two or more of such businesses and which has made an election
pursuant  to  subdivision  ten of this section, and every other domestic
corporation, joint-stock company or association principally  engaged  in
the  conduct  of  a  transportation  or  transmission business, except a
corporation, joint-stock company or association formed for or principal-
ly engaged in the conduct of a railroad, palace  car,  sleeping  car  or
trucking business or formed for or principally engaged in the conduct of
two  or  more  of  such  businesses  and which has not made the election
provided for in subdivision ten of this section,  and  except  a  corpo-
ration,  joint-stock  company  or association principally engaged in the
conduct of aviation (including air freight forwarders acting as  princi-
pal and like indirect air carriers) and except a corporation principally
engaged  in  providing  telecommunication  services between aircraft and

S. 6359--C                         135

dispatcher, aircraft and air  traffic  control  or  ground  station  and
ground  station  (or  any combination of the foregoing), at least ninety
percent of the voting stock of which corporation is owned,  directly  or
indirectly,  by  air carriers and which corporation's principal function
is to fulfill the requirements of  (i)  the  federal  aviation  adminis-
tration  (or  the  successor  thereto)  or  (ii) the international civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and air traffic control or ground station and  ground  station  (or  any
combination of the foregoing) for the purposes of air safety and naviga-
tion  [and  except  a  corporation,  joint-stock  company or association
subject to taxation under article thirty-two  of  this  chapter,]  shall
pay,  in  advance,  an  annual  tax to be computed upon the basis of the
amount of its capital stock within this state during the preceding year,
and upon each dollar of such amount. Provided, however,  a  corporation,
joint-stock  company or association formed for or principally engaged in
the transportation, transmission or distribution of gas, electricity  or
steam  shall  not  be  subject  to tax under this section or section one
hundred eighty-four of this article.
  S 60. Subdivision 10 of section 183 of the tax law, as added by  chap-
ter 309 of the laws of 1996, is amended to read as follows:
  10.  Election. [With respect to taxable years beginning after nineteen
hundred ninety-seven, every] EVERY corporation, joint-stock  company  or
association  formed for or principally engaged in the conduct of a rail-
road (including surface railroad, whether  or  not  operated  by  steam,
subway  railroad  or  elevated  railroad),  palace  car, sleeping car or
trucking business or formed for or principally engaged in the conduct of
two or more of such businesses, which would be subject to article nine-A
[or thirty-two] of this chapter if the election provided for under  this
subdivision  were not made, may elect to be subject to the provisions of
this section and, as applicable, section one hundred eighty-four of this
article, rather than the provisions of such article nine-A  [or  thirty-
two]. [In the case of such a corporation, joint-stock company or associ-
ation  subject to the tax imposed under this section and, as applicable,
section one hundred eighty-four of this article, for  the  taxable  year
ending December thirty-first, nineteen hundred ninety-seven, such corpo-
ration, joint-stock company or association must make such election on or
before March fifteenth, nineteen hundred ninety-eight, and such election
shall  apply  to the taxable year ending on December thirty-first, nine-
teen  hundred  ninety-eight  and  to  succeeding  taxable  years,  until
revoked. In the case of such a corporation, joint-stock company or asso-
ciation  which is not subject to the tax imposed under this section and,
as applicable, section one hundred eighty-four of this article  for  the
taxable  year ending December thirty-first, nineteen hundred ninety-sev-
en, but thereafter would be subject to article nine-A or  thirty-two  of
this  chapter  if  the election provided for under this subdivision were
not made, such] SUCH corporation,  joint-stock  company  or  association
must  make  such  election  by  the first day on which such corporation,
joint-stock company or association would be required to file a return or
report (without regard to extensions) under this section or section  one
hundred  eighty-four  of  this  article,  or section one hundred eighty-
three-a or one  hundred[-]eighty-four-a  of  this  article,  or  article
nine-A  [or  thirty-two]  of  this chapter. An election made pursuant to
this subdivision shall continue to be in effect  until  revoked  by  the
taxpayer.  A  revocation  of  the election to be subject to this section
and, as applicable, section one hundred  eighty-four  of  this  article,

S. 6359--C                         136

shall  be irrevocable. Such election, and a revocation thereof, shall be
made in the manner prescribed by the commissioner, whether by regulation
or otherwise. Such revocation shall apply as of the first day of January
next  following  the  end  of  a  taxable year with respect to which the
taxpayer had been subject to this section and,  as  applicable,  section
one  hundred  eighty-four of this article, by reason of an election made
pursuant to this subdivision.
  S 61. The section heading and subdivisions 1 and 5 of section 183-a of
the tax law, the section heading as added by chapter 931 of the laws  of
1982,  subdivision  1 as amended by section 1 of part A of chapter 59 of
the laws of 2013 and subdivision 5 as amended by chapter 945 of the laws
of 1990, are amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge  on  transportation  and transmission corporations and associ-
ations.  1. The term "corporation" as used in this section shall include
an association, within the meaning of paragraph three of subsection  (a)
of  section  seventy-seven  hundred  one  of  the  internal revenue code
(including a limited liability company), a publicly  traded  partnership
treated  as  a  corporation  for  purposes  of the internal revenue code
pursuant to section seventy-seven hundred four thereof and any  business
conducted  by  a  trustee  or  trustees wherein interest or ownership is
evidenced by certificates or other  written  instruments.  Every  corpo-
ration,  joint-stock  company  or  association formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease granted by the city), express, navigation,  pipe  line,  transfer,
baggage  express, omnibus, taxicab, telegraph, or telephone business, or
formed for or principally engaged in the conduct of  two  or  more  such
businesses,  and  every  corporation, joint-stock company or association
formed for or principally engaged in the conduct of a  railroad,  palace
car,  sleeping  car  or  trucking  business or formed for or principally
engaged in the conduct of two or more of such businesses and  which  has
made  an  election  pursuant  to  subdivision ten of section one hundred
eighty-three of this article, and every other  corporation,  joint-stock
company or association principally engaged in the conduct of a transpor-
tation  or  transmission  business,  except  a  corporation, joint-stock
company or association formed for or principally engaged in the  conduct
of  a  railroad, palace car, sleeping car or trucking business or formed
for or principally engaged in the conduct of two or more of  such  busi-
nesses  and  which has not made the election provided for in subdivision
ten of section one hundred eighty-three of this article,  and  except  a
corporation,  joint-stock  company or association principally engaged in
the conduct of aviation (including  air  freight  forwarders  acting  as
principal and like indirect air carriers) and except a corporation prin-
cipally engaged in providing telecommunication services between aircraft
and  dispatcher,  aircraft and air traffic control or ground station and
ground station (or any combination of the foregoing),  at  least  ninety
percent  of  the voting stock of which corporation is owned, directly or
indirectly, by air carriers and which corporation's  principal  function
is  to  fulfill  the  requirements  of (i) the federal aviation adminis-
tration (or the successor  thereto)  or  (ii)  the  international  civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and  air  traffic  control  or ground station and ground station (or any
combination of the foregoing) for the purposes of air safety and naviga-
tion [and except a corporation, joint-stock company or association which

S. 6359--C                         137

is liable to taxation under article thirty-two of this  chapter],  shall
pay for the privilege of exercising its corporate franchise, or of doing
business,  or  of employing capital, or of owning or leasing property in
the  metropolitan  commuter transportation district in such corporate or
organized capacity, or of maintaining an office in such district, a  tax
surcharge [for all or any part of its years commencing on or after Janu-
ary  first, nineteen hundred eighty-two but ending before December thir-
ty-first, two thousand eighteen], which tax surcharge,  in  addition  to
the  tax  imposed  by  section one hundred eighty-three of this article,
shall be computed at the rate of [eighteen percent of  the  tax  imposed
under  such  section one hundred eighty-three for such years or any part
of such years ending  before  December  thirty-first,  nineteen  hundred
eighty-three  after  the  deduction  of  any credits otherwise allowable
under this article, and at the rate of] seventeen  percent  of  the  tax
imposed  under  such  section  for  such years or any part of such years
[ending on or after  December  thirty-first,  nineteen  hundred  eighty-
three] after the deduction of any credits otherwise allowable under this
article;  provided,  however,  that such rates of tax surcharge shall be
applied only to that portion  of  the  tax  imposed  under  section  one
hundred  eighty-three of this article after the deduction of any credits
otherwise allowable under this article  which  is  attributable  to  the
taxpayer's business activity carried on within the metropolitan commuter
transportation district as so determined in the manner prescribed by the
rules  and  regulations  promulgated by the commissioner[; and provided,
further, that the tax surcharge imposed by this  section  shall  not  be
imposed upon any taxpayer for more than four hundred thirty-two months].
  5.  [The  report  covering  the tax surcharge which must be calculated
pursuant to this section based upon the tax reportable on the report due
by March  fifteenth,  nineteen  hundred  eighty-two  under  section  one
hundred  eighty-three  of this article shall be filed on or before March
fifteenth, nineteen hundred eighty-three. The report  covering  the  tax
surcharge  which  must be calculated pursuant to this section based upon
the tax reportable on  the  report  due  by  March  fifteenth,  nineteen
hundred  eighty-three  under  section  one  hundred eighty-three of this
article shall be filed on or before March  fifteenth,  nineteen  hundred
eighty-four.  The report covering the tax surcharge which must be calcu-
lated pursuant to this section based upon  the  tax  reportable  on  the
report  due  by  March  fifteenth,  nineteen  hundred  eighty-four under
section one hundred eighty-three of this article shall be  filed  on  or
before  March fifteenth, nineteen hundred eighty-five. The report cover-
ing the tax surcharge which must be calculated pursuant to this  section
based  upon  the  tax  reportable  on the report due by March fifteenth,
nineteen hundred eighty-five under section one hundred  eighty-three  of
this  article  shall  be  filed  on  or before March fifteenth, nineteen
hundred eighty-six. The report covering the tax surcharge which must  be
calculated pursuant to this section based upon the tax reportable on the
report due by March fifteenth, nineteen hundred eighty-six under section
one  hundred  eighty-three  of  this article shall be filed on or before
March fifteenth, nineteen hundred eighty-seven. The report covering  the
tax  surcharge  which  must be calculated pursuant to this section based
upon the tax reportable on the report due by March  fifteenth,  nineteen
hundred  eighty-seven  under  section  one  hundred eighty-three of this
article shall be filed on or before March  fifteenth,  nineteen  hundred
eighty-eight. The report covering the tax surcharge which must be calcu-
lated  pursuant  to  this  section  based upon the tax reportable on the
report due by  March  fifteenth,  nineteen  hundred  eighty-eight  under

S. 6359--C                         138

section  one  hundred  eighty-three of this article shall be filed on or
before March fifteenth, nineteen hundred eighty-nine. The report  cover-
ing  the tax surcharge which must be calculated pursuant to this section
based  upon  the  tax  reportable  on the report due by March fifteenth,
nineteen hundred eighty-nine under section one hundred  eighty-three  of
this  article  shall  be  filed  on  or before March fifteenth, nineteen
hundred ninety.] The report covering the tax  surcharge  which  must  be
calculated pursuant to this section based upon the tax reportable on the
report  due  by  March  fifteenth  of  any  year [subsequent to nineteen
hundred eighty-nine] under section  one  hundred  eighty-three  of  this
article  shall  be  filed  on or before March fifteenth of the year next
succeeding such year. An extension pursuant to section one hundred nine-
ty-three OF THIS ARTICLE shall be allowed only if a taxpayer files  with
the  commissioner  an  application  for  extension  in such form as said
commissioner may prescribe by regulation and pays on or before the  date
of  such  filing  in  addition  to any other amounts required under this
article, either ninety percent of the entire tax surcharge  required  to
be  paid  under this section for the applicable period, or not less than
the tax surcharge shown on the taxpayer's report for the preceding year,
if such preceding year consisted of twelve  months.  The  tax  surcharge
imposed  by this section shall be payable to the commissioner in full at
the time the report is required to be filed, and such tax  surcharge  or
the  balance  thereof,  imposed on any taxpayer which ceases to exercise
its franchise or be subject to the tax surcharge imposed by this section
shall be payable to the commissioner at the time the report is  required
to be filed, provided such tax surcharge of a domestic corporation which
continues to possess its franchise shall be subject to adjustment as the
circumstances  may require; all other tax surcharges of any such taxpay-
er, which pursuant to the foregoing provisions  of  this  section  would
otherwise  be  payable subsequent to the time such report is required to
be filed, shall nevertheless  be  payable  at  such  time.  All  of  the
provisions  of  this article presently applicable to section one hundred
eighty-three of this article are applicable to the tax surcharge imposed
by this section except for section one hundred ninety-two of this  arti-
cle.
  S  62.  Subdivision  1  of  section  184 of the tax law, as amended by
section 2 of part Y of chapter 63 of the laws of  2000,  is  amended  to
read as follows:
  1.  The  term  "corporation"  as used in this section shall include an
association, within the meaning of paragraph three of subsection (a)  of
section  seventy-seven hundred one of the internal revenue code (includ-
ing a limited liability company), a publicly traded partnership  treated
as  a  corporation for purposes of the internal revenue code pursuant to
section seventy-seven hundred four thereof.
  Every corporation, joint-stock company or association  formed  for  or
principally  engaged in the conduct of canal, steamboat, ferry (except a
ferry company operating between any of the boroughs of the city  of  New
York under a lease granted by the city), express, navigation, pipe line,
transfer,  baggage  express,  omnibus, taxicab, telegraph or local tele-
phone business, or formed for or principally engaged in the  conduct  of
two  or  more  of  such  businesses,  and every corporation, joint-stock
company or association formed for or principally engaged in the  conduct
of  surface railroad, whether or not operated by steam, subway railroad,
elevated railroad, palace car, sleeping  car  or  trucking  business  or
formed  for  or  principally  engaged in the conduct of two or more such
businesses and which has made an election pursuant to subdivision ten of

S. 6359--C                         139

section one hundred eighty-three of this article, and every other corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged  in  the  conduct  of  a transportation or transmission business
(other  than  a  telephone  business), except a corporation, joint-stock
company or association formed for or principally engaged in the  conduct
of  a  surface  railroad, whether or not operated by steam, subway rail-
road, elevated railroad, palace car, sleeping car or  trucking  business
or  formed  for  or principally engaged in the conduct of two or more of
such businesses and which has not made  the  election  provided  for  in
subdivision  ten  of  section  one hundred eighty-three of this article,
and, except a corporation, joint-stock company or association principal-
ly engaged in the conduct of aviation (including air freight  forwarders
acting  as principal and like indirect air carriers) and except a corpo-
ration  principally  engaged  in  providing  telecommunication  services
between  aircraft  and  dispatcher,  aircraft and air traffic control or
ground station and ground station (or any combination of the foregoing),
at least ninety percent of the voting  stock  of  which  corporation  is
owned,  directly  or indirectly, by air carriers and which corporation's
principal function is to fulfill the requirements  of  (i)  the  federal
aviation  administration (or the successor thereto) or (ii) the interna-
tional civil aviation organization (or the successor thereto),  relating
to  the  existence  of  a  communication  system  between  aircraft  and
dispatcher, aircraft and air  traffic  control  or  ground  station  and
ground station (or any combination of the foregoing) for the purposes of
air safety and navigation and [except a corporation, joint-stock company
or  association  which is liable to taxation under article thirty-two of
this chapter,] for the privilege of exercising its corporate  franchise,
or  of  doing business, or of employing capital, or of owning or leasing
property in this state in a corporate or organized  capacity,  or  main-
taining  an  office in this state, shall pay a franchise tax which shall
be equal to [(i) three-quarters of one percent for taxable years  ending
before  two thousand one, provided that for a taxable year ending in two
thousand the rate shall be  reduced  to  three-eighths  of  one  percent
effective  July first, two thousand with the result that for purposes of
implementation of such change in rate the applicable  rate  for  such  a
year shall be nine-sixteenths of one percent, and (ii)] three-eighths of
one  percent  for  taxable years commencing after two thousand, upon its
gross earnings from all sources within this  state;  except  that,  [for
taxable  years  commencing  on  or after January first, nineteen hundred
eighty-five and ending on  or  before  December  thirty-first,  nineteen
hundred  eighty-nine,  every corporation, joint-stock company or associ-
ation formed for or principally engaged in the conduct of  telephone  or
telegraph  business  shall  pay  a franchise tax which shall be equal to
three-tenths of one per centum upon its gross earnings from all  sources
within this state and,] for taxable years commencing on or after January
first,  nineteen  hundred ninety, every corporation, joint-stock company
or association formed for or principally engaged in the conduct of local
telephone business, or telegraph business  shall  pay  a  franchise  tax
which  shall  be equal to [(i) three-quarters of one percent for taxable
years ending before two thousand one, provided that for a  taxable  year
ending in two thousand the rate shall be reduced to three-eighths of one
percent  effective  July  first,  two  thousand with the result that for
purposes of implementation of such change in rate  the  applicable  rate
for  such  a  year  shall  be  nine-sixteenths of one percent, and (ii)]
three-eighths of one percent for  taxable  years  commencing  after  two
thousand,  upon  its  gross earnings from all sources within this state,

S. 6359--C                         140

except that a corporation, joint-stock company or association formed for
or principally engaged in the conduct  of  a  local  telephone  business
shall  exclude  the  following  earnings  (but not in any event earnings
derived  by such taxpayer from the provision of carrier access services)
derived by such taxpayer from sales for ultimate consumption of telecom-
munications service to its customers (i) thirty  percent  of  separately
charged  intra-LATA  toll  service (which shall also include interregion
regional calling plan service) and (ii) one hundred percent of separate-
ly charged inter-LATA, interstate  or  international  telecommunications
service; and except that [corporations, joint-stock companies or associ-
ations formed for or principally engaged in the conduct of surface rail-
road,  whether or not operated by steam, subway railroad, elevated rail-
road, palace car or sleeping car,  business  or  any  other  corporation
formed for or principally engaged in the conduct of a railroad business,
for  taxable  years  prior to nineteen hundred ninety-seven, and] corpo-
rations, joint-stock companies or associations formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease granted by the city), navigation or any corporation formed for  or
principally  engaged  in the operation of vessels, shall pay a franchise
tax which shall be equal to three-quarters of one per  centum  upon  its
gross  earnings  from  all sources within this state, excluding earnings
derived from business of an interstate or foreign character; except that
for taxable years beginning in nineteen hundred ninety-seven  or  there-
after,  in the case of a corporation, joint-stock company or association
which, with respect to taxable years beginning  after  nineteen  hundred
ninety-seven,  has  made  an  election  pursuant  to  subdivision ten of
section one hundred eighty-three of this article and which is formed for
or principally engaged in the conduct of surface  railroad,  whether  or
not  operated  by steam, subway railroad, elevated railroad, palace car,
sleeping car or trucking business or formed for or  principally  engaged
in  the  conduct  of  two  or more of such businesses, such corporation,
joint-stock company or association shall pay a franchise tax which shall
be equal to [(i) six-tenths of one  percent  for  taxable  years  ending
before  two thousand one, provided that for a taxable year ending in two
thousand the rate shall be  reduced  to  three-eighths  of  one  percent
effective  July first, two thousand with the result that for purposes of
implementation of such change in rate the applicable  rate  for  such  a
year  shall  be  thirty-nine eightieths of one percent, and (ii)] three-
eighths of one percent for taxable years commencing after two  thousand,
upon  its  gross  earnings  from all sources within this state, provided
that in the case of a corporation, joint-stock  company  or  association
formed  for  or  principally engaged in the conduct of surface railroad,
whether or not operated by steam, subway  railroad,  elevated  railroad,
palace  car  or  sleeping  car  business,  or  formed for or principally
engaged in the conduct of two or more of  such  businesses,  such  gross
earnings  shall  not include earnings derived from business of an inter-
state or foreign character.
  Provided, however, with respect to railroad, elevated railroad, palace
car or sleeping car business or any  other  corporation  formed  for  or
principally  engaged  in  the  conduct of a railroad business and canal,
steamboat, ferry (except a ferry company operating between  any  of  the
boroughs  of  the  city  of New York under a lease granted by the city),
navigation or any corporation formed for or principally engaged  in  the
operation  of  vessels where the gross earnings from such transportation
business both originating and terminating within this state and travers-

S. 6359--C                         141

ing both this state and another state or  states  or  country  shall  be
subject  to the franchise tax imposed by this section (except where such
corporation, joint-stock company or association is formed for or princi-
pally  engaged in the conduct of a railroad (including surface railroad,
whether or not operated by steam, subway railroad or elevated railroad),
palace car or sleeping car business or formed for or principally engaged
in the conduct of two or more of such businesses, and has not  made  the
election  provided  for  under  subdivision  ten  of section one hundred
eighty-three of this article) and such earnings shall  be  allocated  to
this  state in the same ratio that the mileage within the state bears to
the total mileage of such business. Provided,  further,  a  corporation,
joint-stock  company or association formed for or principally engaged in
the transportation, transmission or distribution of gas, electricity  or
steam  shall  not  be  subject  to tax under this section or section one
hundred eighty-three of this article.
  The term "local telephone business" means the provision or  furnishing
of  telecommunication services for hire wherein the service furnished by
the provider thereof consists of carrier access service or  the  service
originates  and  terminates  within  the same local access and transport
area ("LATA"), a local access and transport area being  that  geographic
area as established and approved, and as so set and in existence on July
first,  nineteen  hundred  ninety-four,  pursuant to the modification of
final judgment in United  States  v.  Western  Electric  Company  (civil
action no. 82-0192) in the United States district court for the District
of Columbia or within the LATA-like Rochester non-associated independent
area.
  The  term "telecommunication services" shall have the meaning ascribed
to such term in section one hundred eighty-six-e of this article.
  S 63. The section heading and the opening paragraph of  subdivision  1
of section 184-a of the tax law, the section heading as added by chapter
931  of  the  laws of 1982 and the opening paragraph of subdivision 1 as
amended by section 2 of part A of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  Additional   [temporary]   metropolitan  transportation  business  tax
surcharge on transportation and transmission  corporations  and  associ-
ations services.
  The  term "corporation" as used in this section shall include an asso-
ciation, within the meaning of paragraph  three  of  subsection  (a)  of
section  seventy-seven hundred one of the internal revenue code (includ-
ing a limited liability company),  and  a  publicly  traded  partnership
treated  as  a  corporation  for  purposes  of the internal revenue code
pursuant to section seventy-seven hundred four thereof.    Every  corpo-
ration,  joint-stock  company  or  association formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease granted by the city), express, navigation,  pipe  line,  transfer,
baggage  express,  omnibus,  taxicab, telegraph or local telephone busi-
ness, or formed for or principally engaged in the conduct of two or more
such businesses, and every corporation, joint-stock company  or  associ-
ation  formed  for  or  principally  engaged in the conduct of a surface
railroad, whether or not operated by steam,  subway  railroad,  elevated
railroad,  palace  car, sleeping car or trucking business or principally
engaged in the conduct of two or more such businesses and which has made
an election pursuant to subdivision ten of section one  hundred  eighty-
three  of this article, and every other corporation, joint-stock company
or association formed for or principally engaged in  the  conduct  of  a

S. 6359--C                         142

transportation  or  transmission  business (other than a telephone busi-
ness) except a corporation, joint-stock company  or  association  formed
for or principally engaged in the conduct of a surface railroad, whether
or  not  operated  by  steam, subway railroad, elevated railroad, palace
car, sleeping car or trucking business or  principally  engaged  in  the
conduct  of  two  or  more  such  businesses  and which has not made the
election provided for in subdivision ten of section one hundred  eighty-
three  of this article, and except a corporation, joint-stock company or
association principally engaged in the conduct  of  aviation  (including
air  freight forwarders acting as principal and like indirect air carri-
ers) and except a corporation principally engaged in providing  telecom-
munication  services  between  aircraft and dispatcher, aircraft and air
traffic control or ground station and ground station (or any combination
of the foregoing), at least ninety percent of the voting stock of  which
corporation  is owned, directly or indirectly, by air carriers and which
corporation's principal function is to fulfill the requirements  of  (i)
the  federal  aviation administration (or the successor thereto) or (ii)
the international civil aviation organization (or the  successor  there-
to),  relating  to  the  existence  of  a  communication  system between
aircraft and dispatcher, aircraft and  air  traffic  control  or  ground
station and ground station (or any combination of the foregoing) for the
purposes  of air safety and navigation [and except a corporation, joint-
stock company or association which is liable to taxation  under  article
thirty-two  of  this chapter], shall pay for the privilege of exercising
its corporate franchise, or of doing business, or of employing  capital,
or  of owning or leasing property in the metropolitan commuter transpor-
tation district in such corporate or organized capacity, or of maintain-
ing an office in such district, a tax surcharge [for all or any part  of
its taxable years commencing on or after January first, nineteen hundred
eighty-two,  but ending before December thirty-first, two thousand eigh-
teen], which tax surcharge, in addition to the tax  imposed  by  section
one  hundred  eighty-four of this article, shall be computed at the rate
of [eighteen percent of the tax imposed under such section  one  hundred
eighty-four  for  such  taxable  years or any part of such taxable years
ending before December thirty-first, nineteen hundred eighty-three after
the deduction of any credits otherwise allowable under this article, and
at the rate of] seventeen percent of the tax imposed under such  section
for  such  taxable years or any part of such taxable years [ending on or
after December thirty-first, nineteen hundred  eighty-three]  after  the
deduction  of  any  credits  otherwise  allowable  under  this  article;
provided, however, that such rates of tax  surcharge  shall  be  applied
only to that portion of the tax imposed under section one hundred eight-
y-four  of  this  article  after  the deduction of any credits otherwise
allowable under this article which is  attributable  to  the  taxpayer's
business  activity carried on within the metropolitan commuter transpor-
tation district[; and provided, further, that the tax surcharge  imposed
by  this section on corporations, joint-stock companies and associations
formed for or principally engaged in the conduct of telephone  or  tele-
graph business shall be computed in accordance with this subdivision and
paragraph  (c)  of subdivision two of this section as if the three-quar-
ters of one percent rate of tax  provided  for  in  subdivision  one  of
section  one hundred eighty-four of this article were applicable to such
telephone and telegraph businesses for taxable years  commencing  on  or
after  January  first,  nineteen  hundred  eighty-five  and ending on or
before  December  thirty-first,  nineteen   hundred   eighty-nine;   and
provided,  further, that the tax surcharge imposed by this section shall

S. 6359--C                         143

not be imposed upon any taxpayer for more than four  hundred  thirty-two
months].    Provided,  however,  that for taxable years beginning in two
thousand and thereafter,  for  purposes  of  this  subdivision  the  tax
imposed  under  section one hundred eighty-four of this article shall be
deemed to have been  imposed  at  the  rate  of  three-quarters  of  one
percent,  except  that in the case of a corporation, joint-stock company
or association which has made an election pursuant to subdivision ten of
section one hundred eighty-three of this article, for purposes  of  this
subdivision  the  tax  imposed  under section one hundred eighty-four of
this article shall be deemed to have been imposed at the  rate  of  six-
tenths of one percent.
  S 64. Subdivision 8 of section 186-a of the tax law is REPEALED.
  S  65.   The section heading and subdivision 1 of section 186-c of the
tax law, the section heading as amended by chapter  2  of  the  laws  of
1995,  subdivision  1 as amended by section 3 of part II-1 of chapter 57
of the laws of 2008, subparagraph 1 of paragraph (a) of subdivision 1 as
amended by section 3 of part A of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on utility services and excise tax  on  sale  of  telecommuni-
cation  services.  1. (a) (1) Every utility doing business in the metro-
politan commuter transportation district shall pay a tax  surcharge,  in
addition  to the tax imposed by section one hundred eighty-six-a of this
article[, for all or any parts of its taxable  years  commencing  on  or
after  January  first,  nineteen  hundred  eighty-two  but ending before
December thirty-first, two thousand eighteen], to be  computed  [at  the
rate  of  eighteen  percent of the tax imposed under section one hundred
eighty-six-a of this article for such taxable years or any part of  such
taxable  years  ending  before  December  thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article,  and]  at the rate of seventeen percent of the tax
imposed under such section [for such taxable years or any part  of  such
taxable years ending on or after December thirty-first, nineteen hundred
eighty-three]  after  the deduction of credits otherwise allowable under
this article except any utility credit provided  for  by  article  thir-
teen-A  of  this  chapter;  provided,  however,  that  such rates of tax
surcharge shall be applied only to that portion of the tax imposed under
section one hundred eighty-six-a of this article after the deduction  of
credits otherwise allowable under this article, except any utility cred-
it  provided for by article thirteen-A of this chapter, which is attrib-
utable to the taxpayer's gross income or  gross  operating  income  from
business  activity carried on within the metropolitan commuter transpor-
tation district[; and provided, further, that the tax surcharge  imposed
by  this  section  shall  not be imposed upon any taxpayer for more than
four hundred thirty-two months].
  (2) Provided however, that [commencing January first,  two  thousand,]
in the case of the tax imposed under paragraph (a) of subdivision one of
section  one hundred eighty-six-a of this article (relating to providers
of telecommunications services) such tax surcharge shall  be  calculated
as  if  the  tax  imposed under section one hundred eighty-six-a of this
article were imposed at a rate of three and one-half percent.
  (b) In addition to the surcharge imposed  by  paragraph  (a)  of  this
subdivision,  there  is hereby imposed a surcharge on the gross receipts
from telecommunication services relating to  the  metropolitan  commuter
transportation  district  at  the rate of seventeen percent of the state
tax rate under section one hundred eighty-six-e of this article [for all

S. 6359--C                         144

or part of taxable years commencing on and after January first, nineteen
hundred ninety-five but ending before December thirty-first,  two  thou-
sand  thirteen]. All the definitions and other provisions of section one
hundred  eighty-six-e  of this article shall apply to the tax imposed by
this paragraph with such modification and limitation as may be necessary
(including substituting the words "metropolitan commuter  transportation
district"  for "state" where appropriate) in order to adapt the language
of such  section  one  hundred  eighty-six-e  of  this  article  to  the
surcharge  imposed  by  this paragraph within such metropolitan commuter
transportation district so as to include (1) any intra-district telecom-
munication services, except any  telecommunication  services  the  gross
receipts  from  which are subject to tax under subparagraph four of this
paragraph, (2) any inter-district telecommunication services which orig-
inate or terminate in such district and are charged to a service address
therein regardless of where the amounts charged for  such  services  are
billed  or  ultimately  paid, except any telecommunications services the
gross receipts from which are subject to tax under subparagraph four  of
this  paragraph, (3) as apportioned to such district, private telecommu-
nication services,  except  any  telecommunication  services  the  gross
receipts  from  which are subject to tax under subparagraph four of this
paragraph, and (4) mobile telecommunications service provided by a  home
service provider where the place of primary use is within such metropol-
itan  commuter  transportation  district.  Provided however, [commencing
October first, nineteen hundred ninety-eight] such tax  surcharge  shall
be  calculated  as  if the tax imposed under section one hundred eighty-
six-e of this article were imposed at  a  rate  of  three  and  one-half
percent.
  S  66.  Clause  (iii) of subparagraph (D) of paragraph 3 of subsection
(b) of section 605 of the tax law, as added by chapter 658 of  the  laws
of 2003, is amended to read as follows:
  (iii)  Provided  further,  that for the purposes of item (I) of clause
(i) of this subparagraph, a trustee which is a  banking  corporation  as
defined  in subsection (a) of section fourteen hundred fifty-two of this
chapter, AS SUCH SECTION WAS IN EFFECT  ON  DECEMBER  THIRTY-FIRST,  TWO
THOUSAND  FOURTEEN, and which is domiciled outside the state of New York
at the time it becomes a trustee of the trust shall be deemed to contin-
ue to be a trustee domiciled outside the state of New York notwithstand-
ing that it thereafter otherwise becomes  a  trustee  domiciled  in  the
state  of New York by virtue of being acquired by, or becoming an office
or branch of, a corporate trustee domiciled  within  the  state  of  New
York.
  S  67.  Subparagraph  (A) of paragraph 10 of subsection (a) of section
606 of the tax law, as amended by section 3 of part CC of chapter 85  of
the laws of 2002, is amended to read as follows:
  (A)  the business of which the individual is an owner is substantially
similar in operation and in ownership to a business entity  taxable,  or
previously  taxable, under section one hundred eighty-three, one hundred
eighty-four[,] OR one hundred eighty-five [or one hundred eighty-six] of
article nine; article nine-A[, thirty-two] or thirty-three of this chap-
ter; article twenty-three of this  chapter  or  which  would  have  been
subject  to  tax under such article twenty-three (as such article was in
effect on January first, nineteen hundred eighty), ARTICLE THIRTY-TWO OF
THIS CHAPTER OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH  ARTICLE
THIRTY-TWO  (AS SUCH ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO
THOUSAND FOURTEEN) or the income  (or  losses)  of  which  is  (or  was)
includable  under  article twenty-two of this chapter whereby the intent

S. 6359--C                         145

and purpose of this paragraph and paragraph five of this subsection with
respect to refunding of credit to new business would be evaded; or
  S 68. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law, as amended by section 7 of part C-1 of chapter 57 of the
laws  of  2009, clause (ix) as amended by section 4 of part G of chapter
59 of the laws of 2013, clause (xxxi) as added by section 5 of  part  MM
of  chapter 59 of the laws of 2010, clause (xxxi) as added by section 14
of part Q of chapter 57 of the laws of 2010, clause (xxxii) as added  by
section  6  of part V of chapter 61 of the laws of 2011, clause (xxxiii)
as added by section 4 of part D of chapter  56  of  the  laws  of  2011,
clause  (xxxiii)  as  added  by section 5 of part E of chapter 56 of the
laws of 2011, clause (xxxiii) as added by chapter 604  of  the  laws  of
2011, clause (xxxiv) as added by chapter 109 of the laws of 2012, clause
(xxxv)  as  added  by  section 2 of part AA of chapter 59 of the laws of
2013, and clause (xxxvi) as added by section 8 of part A of  chapter  68
of the laws of 2013, and clause (xxxvii) as added by section 5 of part T
of this act, is amended to read as follows:
  (B)  shall  be  treated as the owner of a new business with respect to
such share if the corporation qualifies as a new  business  pursuant  to
paragraph  [(j)]  (F) of subdivision [twelve] ONE of section two hundred
[ten] TEN-B of this chapter.

With respect to the following        The corporation's credit base under
credit under this section:           section two hundred [ten or section
                                     fourteen hundred fifty-six] TEN-B
                                     of this chapter is:

(i) Investment tax credit under      Investment credit base or qualified
subsection (a)                       rehabilitation expenditures under
                                     subdivision [twelve] ONE of section
                                     two hundred [ten] TEN-B

(ii) Empire zone investment          Cost or other basis under
tax credit under subsection (j)      subdivision [twelve-B] THREE
                                     of section two hundred [ten] TEN-B

[(iii) Empire zone wage tax credit   Eligible wages under subdivision
under subsection (k)                 nineteen of section two hundred
                                     ten or subsection (e) of section
                                     fourteen hundred fifty-six

(iv) Empire zone capital tax         Qualified investments and
credit under subsection (l)          contributions under subdivision
                                     twenty of section two hundred ten
                                     or subsection (d) of section
                                     fourteen hundred fifty-six]

(v) Agricultural property tax        Allowable school district property
credit under subsection (n)          taxes under subdivision
                                     [twenty-two] ELEVEN of
                                     section two hundred [ten]
                                     TEN-B

(vi) Credit for employment of        Qualified first-year wages or
persons with disabilities            qualified second-year wages under
under subsection (o)                 subdivision [twenty-three] TWELVE

S. 6359--C                         146

                                     of section two hundred [ten or
                                     subsection (f) of section
                                     fourteen hundred fifty-six] TEN-B

(vii) Employment incentive credit    Applicable investment credit base
under subsection (a-1)               under subdivision [twelve-D] TWO
                                     of section two hundred [ten]
                                     TEN-B

(viii) Empire zone employment        Applicable investment credit
incentive credit under subsection    under subdivision [twelve-C]
(j-1)                                FOUR of section
                                     two hundred [ten] TEN-B

(ix) Alternative fuels               Amount of credit under subdivision
and electric vehicle                 [twenty-four] THIRTY of section
recharging property                  two hundred [ten] TEN-B
credit under subsection (p)

(x) Qualified emerging technology    Applicable credit base under
company employment credit under      subdivision [twelve-E] SEVEN
subsection (q)                       of section two hundred [ten] TEN-B

(xi) Qualified emerging technology   Qualified investments under
company capital tax credit under     subdivision [twelve-F] EIGHT
subsection (r)                       of section two hundred [ten] TEN-B

(xii) Credit for purchase of an      Cost of an automated external
automated external defibrillator     defibrillator under subdivision
under subsection (s)                 [twenty-five] THIRTEEN of section
                                     two hundred [ten or subsection
                                     (j) of section fourteen hundred
                                     fifty-six] TEN-B

(xiii) Low-income housing credit     Credit amount under subdivision
under subsection (x)                 [thirty] FIFTEEN of section
                                     two hundred [ten or subsection
                                     (l) of section fourteen
                                     hundred fifty-six] TEN-B

[(xiv) Credit for transportation     For taxable years beginning
improvement contributions under      before January first, two thousand
subsection (z)                       nine, amount of credit under
                                     subdivision thirty-two of
                                     section two hundred ten
                                     or subsection (n) of section
                                     fourteen hundred fifty-six]

(xv) QEZE credit for real property   Amount of credit under subdivision
taxes under subsection (bb)          [twenty-seven] FIVE of
                                     section two hundred [ten
                                     or subsection (o) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xvi) QEZE tax reduction credit      Amount of benefit period factor,

S. 6359--C                         147

under subsection (cc)                employment increase factor and zone
                                     allocation factor (without regard
                                     to pro ration) under subdivision
                                     [twenty-eight] SIX of
                                     section two hundred [ten
                                     or subsection (p) of section
                                     fourteen hundred fifty-six]
                                     TEN-B and amount
                                     of tax factor as determined under
                                     subdivision (f) of section sixteen

(xvii) Green building credit under   Amount of green building credit
subsection (y)                       under subdivision [thirty-one]
                                     SIXTEEN of section two
                                     hundred [ten or subsection (m)
                                     of section fourteen hundred
                                     fifty-six] TEN-B

(xviii) Credit for long-term care    Qualified costs under subdivision
insurance premiums under subsection  [twenty-five-a] FOURTEEN
(aa)                                 of section two hundred [ten
                                     or subsection (k) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

(xix) Brownfield redevelopment       Amount of credit under subdivision
credit under subsection (dd)         [thirty-three] SEVENTEEN
                                     of section two hundred
                                     [ten or subsection (q) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xx) Remediated brownfield credit    Amount of credit under subdivision
for real property taxes for          [thirty-four] EIGHTEEN
qualified sites under subsection     of section two hundred
(ee)                                 [ten of subsection (r) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxi) Environmental remediation      Amount of credit under subdivision
insurance credit under subsection    [thirty-five] NINETEEN
(ff)                                 of section two hundred
                                     [ten or subsection (s) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxii) Empire state film             Amount of credit for qualified
production credit under              production costs in production of a
subsection (gg)                      qualified film under subdivision
                                     [thirty-six] TWENTY of
                                     section two hundred [ten] TEN-B

[(xxiii) Qualified emerging          Qualifying expenditures and
technology company facilities,       development activities under
operations and training credit       subdivision twelve-G of section two
under subsection (nn)                hundred ten]

S. 6359--C                         148

(xxiv) Security training tax credit  Amount of credit under subdivision
under subsection (ii)                [thirty-seven] TWENTY-ONE
                                     of section two hundred
                                     [ten or under subsection (t) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

[(xxv) Credit for qualified fuel     For taxable years beginning before
cell electric generating             January first, two thousand nine,
equipment expenditures               amount of credit under subdivision
under subsection (g-2)               thirty-seven of section two hundred
                                     ten or subsection (t) of section
                                     fourteen hundred fifty-six]

(xxvi) Empire state commercial       Amount of credit for qualified
production credit under subsection   production costs in production of
(jj)                                 a qualified commercial under
                                     subdivision [thirty-eight]
                                     TWENTY-THREE of
                                     section two hundred [ten]
                                     TEN-B

(xxvii) Biofuel production tax       Amount of credit under subdivision
credit under subsection (jj)         [thirty-eight] TWENTY-FOUR
                                     of section two hundred [ten]
                                     TEN-B

(xxviii) Clean heating fuel credit   Amount of credit under subdivision
under subsection (mm)                [thirty-nine] TWENTY-FIVE of
                                     section two hundred [ten]
                                     TEN-B

(xxix) Credit for rehabilitation     Amount of credit under subdivision
of historic properties under         [forty] TWENTY-SIX of
subsection (oo)                      section two hundred [ten]
                                     TEN-B

 (xxxi) Excelsior jobs program tax   Amount of credit under subdivision
credit under subsection (qq)         [forty-one] THIRTY-ONE of
                                     section two hundred [ten
                                     or under subdivision (u) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

(xxxi) Empire state film             Amount of credit for
post production credit under         qualified post production
subsection (qq)                      costs of a qualified film
                                     under subdivision [forty-one]
                                     THIRTY-TWO of section
                                     two hundred [ten] TEN-B

 (xxxii) Economic transformation     Amount of credit under subdivision
and facility redevelopment credit    [forty-three] THIRTY-FIVE
                                     of section [210 or under
                                     subsection (x) of section fourteen
                                     hundred fifty-six] TWO HUNDRED

S. 6359--C                         149

                                     TEN-B

 (xxxiii) New York youth works       Amount of credit under
tax credit                           subdivision [forty-four] THIRTY-SIX
                                     of section two hundred [ten]
                                     TEN-B

 (xxxiii) Empire state jobs          Amount of credit under
retention program credit             subdivision [forty-four]
                                     THIRTY-SEVEN of section
                                     two hundred [ten or under
                                     subsection (y) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxxiii) Credit for companies who    Amount of credit under
provide transportation to            subdivision [forty-four]
individuals with disabilities        THIRTY-EIGHT of section
under subsection (tt)                two hundred [ten] TEN-B

(xxxiv) Beer production credit       Amount of credit under
under subsection (uu)                [subdivision] subdivision
                                     [forty-five] THIRTY-NINE of
                                     section two hundred [ten]
                                     TEN-B

(xxxv) Hire a vet credit             Amount of credit under subdivision
under subsection (a-2)               [twenty-three-a] TWENTY-NINE
                                     of section two hundred [ten
                                     or subsection (e-1) of
                                     of section fourteen hundred
                                     fifty-six] TEN-B

(xxxv) Minimum wage reimbursement    Amount of credit under subdivision
credit under subsection (aaa)        [forty-six] FORTY
                                     of section two hundred
                                     [ten or subsection (z) of
                                     section fourteen hundred
                                     fifty-six] TEN-B

(xxxvi) Tax-free NY area tax         Amount of credit under
elimination credit                   subdivision [forty-seven] FORTY-ONE
                                     of section two hundred [ten]
                                     TEN-B

(xxxvii) Tax-free NY area            Amount of credit under
excise tax on                        subdivision [forty-eight]
telecommunications services          FORTY-THREE of section
credit under subsection (xx)         two hundred [ten] TEN-B

(XXXVIII) REAL PROPERTY TAX          AMOUNT OF CREDIT UNDER
CREDIT FOR MANUFACTURERS             SUBDIVISION FORTY-FOUR
UNDER SUBSECTION (YY)                OF SECTION
                                     TWO HUNDRED TEN-B

S. 6359--C                         150

  S  69.  Subparagraphs  (A) and (B) of paragraph 3 of subsection (i) of
section 606 of the tax law, as added by chapter 170 of the laws of 1994,
are amended to read as follows:
  (A)  Credit  carryover.  Any  excess  credit under subparagraph (A) of
paragraph one of this subsection, as it was in effect for taxable  years
beginning  before  nineteen  hundred ninety-four, may be carried over to
the shareholder's following year or years and may be deducted from  such
shareholder's  tax for such year or years, except that any excess credit
attributable to subdivision [twelve] ONE of section  two  hundred  [ten]
TEN-B  of  this chapter shall in no event be carried over beyond the ten
taxable years next following the taxable year of origin.
  (B) Credit recapture. Any redetermination of credit required  by  this
subsection  as it was in effect for taxable years beginning before nine-
teen hundred ninety-four, upon disposition or cessation of qualified use
of property pursuant to paragraph [(g)] (E) of subdivision [twelve] ONE,
OR paragraph (f) of subdivision [twelve-B or paragraph (f)  of  subdivi-
sion  eighteen] THREE of section two hundred [ten] TEN-B of this chapter
shall be attributed in pro rata shares  to  the  shareholders  who  were
allowed  credit under this subsection with respect to such property, and
the reduction of a shareholder's proportionate stock interest  shall  be
treated  as  a  disposition  of  property for which a redetermination of
credit under such paragraphs is required with respect to such sharehold-
er.
  S 69-a.  Intentionally omitted.
  S 70. Subparagraph (B) of paragraph 3 and paragraph 21  of  subsection
(b)  and  paragraph  21 of subsection (c) of section 612 of the tax law,
subparagraph (B) of paragraph 3 of subsection (b) as amended by  section
57,  paragraph  21  of subsection (b) as amended by section 59 and para-
graph 21 of subsection (c) as amended by section 60 of part A of chapter
389 of the laws of 1997, are amended to read as follows:
  (B) Shareholders of S corporations. In the case of a shareholder of an
S corporation, with respect to taxes imposed  upon  or  payable  by  the
corporation,  the  term "income taxes" in subparagraph (A) of this para-
graph shall also include the  taxes  imposed  under  [articles]  ARTICLE
nine-A  [and  thirty-two]  of this chapter, regardless of the measure of
such tax, but shall not otherwise include taxes imposed by this  or  any
other  state  of the United States, or any political subdivision of this
or any other state, or the District of Columbia.
  (21) In relation to the disposition of  stock  or  indebtedness  of  a
corporation  which  elected  under  subchapter  s  of chapter one of the
internal revenue code for any taxable year of  such  corporation  begin-
ning,  in the case of a corporation taxable under article nine-A of this
chapter, after December thirty-first, nineteen hundred eighty,  [and  in
the case of a corporation taxable under article thirty-two of this chap-
ter,  after  December  thirty-first,  nineteen  hundred ninety-six,] the
amount required to be added to federal adjusted gross income pursuant to
subsection (n) of this section.
  (21) In relation to the disposition of  stock  or  indebtedness  of  a
corporation  which  elected  under  subchapter  s  of chapter one of the
internal revenue code for any taxable year of  such  corporation  begin-
ning,  in the case of a corporation taxable under article nine-A of this
chapter, after December thirty-first, nineteen hundred eighty,  [and  in
the case of a corporation taxable under article thirty-two of this chap-
ter,  after  December  thirty-first,  nineteen  hundred ninety-six,] the
amounts required to be subtracted from  federal  adjusted  gross  income
pursuant to subsection (n) of this section.

S. 6359--C                         151

  S  71. Paragraph 2 of subsection (a) of section 632 of the tax law, as
amended by section 2 of part C of chapter 57 of the  laws  of  2010,  is
amended to read as follows:
  (2) In determining New York source income of a nonresident shareholder
of an S corporation where the election provided for in subsection (a) of
section  six  hundred sixty of this article is in effect, there shall be
included only the portion derived from or connected with New York sourc-
es of such shareholder's pro  rata  share  of  items  of  S  corporation
income,  loss  and  deduction  entering  into his federal adjusted gross
income, increased by reductions for taxes described  in  paragraphs  two
and three of subsection (f) of section thirteen hundred sixty-six of the
internal  revenue  code, as such portion shall be determined under regu-
lations of the commissioner consistent with the applicable  methods  and
rules  for allocation under article nine-A [or thirty-two] of this chap-
ter, regardless of whether or not such item or reduction is included  in
entire net income under article nine-A [or thirty-two] for the tax year.
If a nonresident is a shareholder in an S corporation where the election
provided  for  in  subsection  (a)  of section six hundred sixty of this
article is in effect, and the S corporation has distributed an  install-
ment obligation under section 453(h)(1)(A) of the Internal Revenue Code,
then any gain recognized on the receipt of payments from the installment
obligation  for  federal income tax purposes will be treated as New York
source income allocated in a manner consistent with the applicable meth-
ods and rules for allocation under article  nine-A  [or  thirty-two]  of
this  chapter in the year that the assets were sold. In addition, if the
shareholders of the S corporation have made an  election  under  section
338(h)(10) of the Internal Revenue Code, then any gain recognized on the
deemed asset sale for federal income tax purposes will be treated as New
York  source income allocated in a manner consistent with the applicable
methods and rules for allocation under article nine-A [or thirty-two] of
this  chapter  in  the  year  that  the  shareholder  made  the  section
338(h)(10) election. For purposes of a section 338(h)(10) election, when
a  nonresident  shareholder  exchanges his or her S corporation stock as
part of the deemed liquidation, any gain or  loss  recognized  shall  be
treated  as the disposition of an intangible asset and will not increase
or offset any gain recognized on the deemed assets sale as a  result  of
the section 338(h)(10) election.
  S 72. Subparagraph (A) of paragraph 4 of subsection (c) of section 658
of the tax law, as amended by section 1 of part DD of chapter 686 of the
laws of 2003, is amended to read as follows:
  (A) General. Every entity which is a partnership, other than a public-
ly traded partnership as defined in section 7704 of the federal Internal
Revenue Code, subchapter K limited liability company or an S corporation
for  which  the  election  provided for in subsection (a) of section six
hundred sixty of this [article] PART is in effect, which  has  partners,
members  or  shareholders  who  are  nonresident individuals, as defined
under subsection (b) of section six hundred five of this article,  or  C
corporations,  and  which  has any income derived from New York sources,
determined in accordance  with  the  applicable  rules  of  section  six
hundred thirty-one of this article as in the case of a nonresident indi-
vidual,  shall  pay estimated tax on such income on behalf of such part-
ners, members or shareholders in the manner and at the times  prescribed
by  subsection  (c)  of section six hundred eighty-five of this article.
For purposes of this paragraph, the term "estimated tax"  shall  mean  a
partner's,  member's  or  shareholder's  distributive  share or pro rata
share of the entity income derived from New York sources, multiplied  by

S. 6359--C                         152

the  highest  rate  of tax prescribed by section six hundred one of this
article for the taxable year of any partner, member or  shareholder  who
is  an  individual  taxpayer,  or  paragraph  (a)  of subdivision one of
section  two  hundred  ten  of  this chapter for the taxable year of any
partner, member or shareholder which is a C corporation, whether or  not
such  C corporation is subject to tax under article nine, nine-A[, thir-
ty-two,] or thirty-three of this chapter, and reduced by  the  distribu-
tive share or pro rata share of any credits determined under section one
hundred  eighty-seven,  one  hundred  eighty-seven-a,  six hundred six[,
fourteen hundred fifty-six] or fifteen hundred eleven of  this  chapter,
whichever is applicable, derived from the entity.
  S  73.  Subsections  (a)  and  (h)  of  section  660  of  the tax law,
subsection (a) as amended by section 50 and subsection (h) as amended by
section 66 of part A of chapter 389 of the laws of 1997, are amended  to
read as follows:
  (a)  Election.  If  a  corporation  is  an eligible S corporation, the
shareholders of the corporation may elect in the  manner  set  forth  in
subsection  (b)  of  this  section  to  take into account, to the extent
provided for in this article (or in article thirteen of this chapter, in
the case of a shareholder which is a taxpayer under such article), the S
corporation items of income, loss, deduction and  reductions  for  taxes
described in paragraphs two and three of subsection (f) of section thir-
teen hundred sixty-six of the internal revenue code which are taken into
account  for  federal  income  tax  purposes  for  the  taxable year. No
election under this subsection shall be effective unless all  sharehold-
ers of the corporation have so elected. An eligible S corporation is (i)
an  S corporation which is subject to tax under article nine-A [or thir-
ty-two] of this chapter, OR (ii) an S corporation which is the parent of
a qualified subchapter S subsidiary subject to tax under article nine-A,
where the shareholders of such parent corporation are entitled  to  make
the  election  under  this subsection by reason of subparagraph three of
paragraph (k) of subdivision nine of section two hundred eight  of  this
chapter[;  or  (iii) an S corporation which is the parent of a qualified
subchapter S corporation subject to tax under article thirty-two,  where
the  shareholders of such parent are entitled to make the election under
this subsection by reason  of  paragraph  three  of  subsection  (o)  of
section fourteen hundred fifty-three of this chapter].
  (h)  Cross  reference. For definitions relating to S corporations, see
subdivision one-A of section two hundred eight [and subsections (f)  and
(g) of section fourteen hundred fifty] of this chapter.
  S  74. Paragraph 1 of subsection (i) of section 660 of the tax law, as
added by section 1 of part L of chapter 60  of  the  laws  of  2007,  is
amended to read as follows:
  (1)  Notwithstanding the provisions in subsection (a) of this section,
in the case of an eligible S corporation for which  the  election  under
subsection  (a) of this section is not in effect for the current taxable
year, the shareholders of an eligible S corporation are deemed  to  have
made  that  election  effective  for the eligible S corporation's entire
current taxable year, if the eligible S corporation's investment  income
for  the  current taxable year is more than fifty percent of its federal
gross income for such year [provided  that  this  subsection  shall  not
apply  to an eligible S corporation that is subject to tax under article
thirty-two of this chapter]. IN DETERMINING AN ELIGIBLE S  CORPORATION'S
INVESTMENT  INCOME,  THE  INVESTMENT  INCOME OF A QUALIFIED SUBCHAPTER S
SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY THE  ELIGIBLE  S  CORPORATION
SHALL BE INCLUDED.

S. 6359--C                         153

  S 75. Paragraph 3 of subsection (c) of section 1085 of the tax law, as
amended  by  section  15 of part Y of chapter 63 of the laws of 2000, is
amended to read as follows:
  (3)  The  provisions of this subsection and subsections (d) and (e) of
this section shall apply to the failure of a taxpayer to file a declara-
tion of estimated tax surcharge or the failure to pay all or any part of
an amount which is applied as an installment against such estimated  tax
surcharge  pursuant  to sections one hundred ninety-seven-a, one hundred
ninety-seven-b, two hundred thirteen-a, two hundred  thirteen-b,  [four-
teen  hundred  sixty, fourteen hundred sixty-one,] fifteen hundred thir-
teen and fifteen hundred fourteen  of  this  chapter.  For  purposes  of
applying this section and subsections (d) and (e) of this section to the
estimated  tax surcharge, where appropriate the term "tax" shall be read
to mean "tax surcharge," and the terms "amount  required  to  be  paid,"
"amount  which  would  be  required to be paid," and "amount which would
have been required to be paid" shall be computed as the product  of  (1)
such  amount computed without regard to the tax surcharges imposed under
sections  one  hundred  eighty-four-a,  one  hundred  eighty-six-c,  one
hundred  eighty-eight, two hundred nine-A, two hundred nine-B, [fourteen
hundred fifty-five-A, fourteen hundred  fifty-five-B,]  fifteen  hundred
five-a,  and  fifteen  hundred  twenty  of this chapter, and (2) the MTA
percentage. The term "MTA percentage" shall mean the product of (A)  the
tax rate applicable under such sections imposing such surcharges and (B)
the  percentage  utilized  in  determining the portion of the taxpayer's
business activity carried on within the metropolitan commuter  transpor-
tation district under such sections.
  S  76.  The  opening  paragraph  of subparagraph (A) of paragraph 3 of
subsection (d) of section 1085 of the tax law, as amended by chapter 170
of the laws of 1994, is amended to read as follows:
  An amount equal to ninety-one percent of the tax for the taxable  year
computed  on all items entering into the computation of the tax or taxes
of the taxpayer for the taxable year under article nine, nine-A[,  thir-
ty-two]  or  thirty-three of this chapter. For purposes of computing the
tax, all items of receipts, income and expenses shall be  placed  on  an
annualized basis--
  S  77. Clause (i) of subparagraph (A) of paragraph 4 of subsection (d)
of section 1085 of the tax law, as amended by chapter 57 of the laws  of
1993, is amended to read as follows:
  (i)  take  the items entering into the computation of the tax or taxes
of the taxpayer for the taxable year under article nine, nine-A[,  thir-
ty-two] or thirty-three of this chapter, for all months during the taxa-
ble year preceding the filing month,
  S 78. Paragraph 5 of subsection (d) of section 1085 of the tax law, as
added by chapter 61 of the laws of 1989, is amended to read as follows:
  (5)  In the case of any declaration installment, any reduction in such
installment resulting from the application of paragraph three or four of
this subsection shall be recaptured by increasing the amount of the next
installment determined under paragraph one or two of this subsection  or
paragraph  one  of  subsection (c) of this section by the amount of such
reduction (and by increasing subsequent installments to the extent  that
the  reduction has not previously been recaptured under this paragraph).
For purposes of the preceding sentence, a declaration installment  means
any installment of estimated tax other than the mandatory first install-
ment  required  under  paragraph  (a)  of subdivision one of section one
hundred ninety-seven-b, subdivision (a) of  section  two  hundred  thir-

S. 6359--C                         154

teen-b[, subsection (a) of section fourteen hundred sixty-one] or subdi-
vision (a) of section fifteen hundred fourteen of this chapter.
  S 79. Paragraph 1 of subsection (e) of section 1085 of the tax law, as
amended  by  section 28-p of part H-3 of chapter 62 of the laws of 2003,
is amended to read as follows:
  (1) Paragraphs (1) and (2) of subsection (d) of this section shall not
apply in the case of any corporation (or  any  predecessor  corporation)
which had [entire net] BUSINESS income, or the portion thereof allocated
within  the  state,  of one million dollars or more for any taxable year
during the three taxable years immediately preceding  the  taxable  year
involved;  provided,  however, that in the case of a corporation subject
to tax under section fifteen hundred two-a of this  chapter,  paragraphs
(1)  and  (2)  of subsection (d) of this section shall not apply if such
corporation had entire net income,  or  the  portion  thereof  allocated
within  the  state,  of one million dollars or more for any of the three
taxable years immediately preceding the taxable year involved, or if the
direct premiums subject to tax under section fifteen  hundred  two-a  of
this  chapter of the corporation for any of such three preceding taxable
years beginning on or after January first, two thousand three equals  or
exceeds three million seven hundred fifty thousand dollars.
  S  80.  Subsections  (m)  and  (o)  of section 1085 of the tax law are
REPEALED.
  S 81. Clause (ii) of subparagraph (B) of  paragraph  2  of  subsection
(q),  paragraph  3  of subsection (s) and the closing paragraph of para-
graph 1 of subsection (t) of section 1085 of the tax law,  as  added  by
section  10  of part N of chapter 61 of the laws of 2005, are amended to
read as follows:
  (ii) fifty percent of the gross income that the organizer or  material
advisor  derived  with respect to activities that were the basis for the
requirement to file, disclose or provide information pursuant to section
six thousand eleven of the internal revenue code,  to  the  extent  such
gross  income  is attributable to the avoidance of any tax imposed under
article nine, nine-A[, thirty-two,] or thirty-three of this chapter.
  (3) For purposes of  this  subsection,  the  term  "understatement  of
liability"  means  any  understatement  of  the  net amount payable with
respect to any tax imposed under article nine, nine-A[, thirty-two,]  or
thirty-three  of  this  chapter  or  any overstatement of the net amount
creditable or refundable with respect to any such tax.
shall pay, with respect to each activity described in  subparagraph  (A)
of  this  paragraph,  a penalty equal to one thousand dollars or, if the
person establishes that it is lesser, one hundred percent of  the  gross
income  derived  (or to be derived) by such person from such activity to
the extent such gross income is attributed to the avoidance of  any  tax
imposed  under  articles  nine,  nine-A[, thirty-two] or thirty-three of
this chapter; provided, however, that if an  activity  with  respect  to
which  a  penalty  imposed  under  this  subsection involves a statement
described in clause (i) of subparagraph (B) of  paragraph  one  of  this
subsection,  the  penalty  shall  be equal to fifty percent of the gross
income derived (or to be derived) from that activity within the state by
the person on which the penalty is imposed. For purposes of the  preced-
ing  sentence, activities described in clause (i) of subparagraph (A) of
this paragraph with respect to  each  entity  or  arrangement  shall  be
treated  as a separate activity and participation in each sale described
in clause (ii) of subparagraph (A) of this paragraph shall be so  treat-
ed.

S. 6359--C                         155

  S  82.  The opening paragraph of subsection (c) of section 1087 of the
tax law, as separately amended by chapters 760 and 770 of  the  laws  of
1992, is amended to read as follows:
  If  a taxpayer is required by subdivision three of section two hundred
eleven[, subsection (e) of section fourteen hundred sixty-two] or  para-
graph  one of subdivision (e) of section fifteen hundred fifteen OF THIS
CHAPTER, to file a report or amended return in respect of (i) a decrease
or increase in federal taxable income  or  federal  alternative  minimum
taxable income or federal tax, or (ii) a federal change or correction or
renegotiation,  or computation or recomputation of tax, which is treated
in the same manner as if it were an overpayment for federal  income  tax
purposes, claim for credit or refund of any resulting overpayment of tax
shall  be  filed  by  the  taxpayer  within two years from the time such
report or amended return was required to be filed with the  commissioner
[of  taxation  and finance]. If the report or amended return required by
any such provision of law is not filed within the period therein  speci-
fied,  no interest shall be payable on any claim for credit or refund of
the overpayment attributable to the federal change  or  correction.  The
amount of such credit or refund--
  S  83.  Subsection  (g)  of section 1088 of the tax law, as amended by
chapter 61 of the laws of 1989 and relettered by chapter 55 of the  laws
of 1992, is amended to read as follows:
  (g)  Cross-reference.--For  provision  with  respect to interest after
failure to file a report or amended return under  subdivision  three  of
section  two hundred eleven[, subsection (e) of section fourteen hundred
sixty-two] or paragraph  one  of  subdivision  (e)  of  section  fifteen
hundred  fifteen, see subsection (c) of section one thousand eighty-sev-
en.
  S 84. Paragraph 2 of subsection (b) of section 1096 of the tax law, as
amended by chapter 411 of the laws  of  1986,  is  amended  to  read  as
follows:
  (2)  The [tax commission] COMMISSIONER may take any action under para-
graph one of this subdivision to  inquire  into  the  commission  of  an
offense connected with the administration or enforcement of this article
or  article  nine,  [nine-a] NINE-A, thirteen, [thirteen-a, thirty-two,]
THIRTEEN-A or thirty-three of  this  chapter,  provided,  however,  that
notwithstanding  the  provisions  of section one hundred seventy-four of
this chapter no such action shall  be  taken  when  a  referral  by  the
department or the [tax commission] COMMISSIONER to the attorney general,
a  district  attorney  or  any  other prosecutorial agency is in effect.
Provided, however, the [tax commission] COMMISSIONER shall  have  power,
during  the  period  when  such  referral is in effect, to examine or to
cause to have examined, by any agent or representative designated by  it
for  that  purpose, any books, papers, records or memoranda bearing upon
the matters required to be included in the  return,  where  such  books,
papers, records or memoranda are in its possession, or where such books,
papers,  records  or  memoranda  are  in  the possession of the attorney
general, district attorney or other prosecutorial agency to  which  such
referral is made.
  S 85. Paragraph 1 of subsection (e) of section 1096 of the tax law, as
amended  by  section 8 of subpart D of part V1 of chapter 57 of the laws
of 2009, is amended to read as follows:
  (1) Authority to set interest rates.---The commissioner shall set  the
overpayment  and  underpayment  rates of interest to be paid pursuant to
sections two hundred  thirteen,  two  hundred  thirteen-b,  two  hundred
fifty-eight, two hundred sixty-three, two hundred ninety-four, one thou-

S. 6359--C                         156

sand  eighty-four,  one thousand eighty-five[,] AND one thousand eighty-
eight[, fourteen hundred sixty-one and fourteen hundred sixty-three]  of
this  chapter,  but  if  no such rate or rates of interest are set, such
overpayment  rate shall be deemed to be set at six percent per annum and
such underpayment rate shall be deemed to be set at seven  and  one-half
percent  per annum. Such overpayment and underpayment rates shall be the
rates prescribed in paragraph two of this subsection, but the  underpay-
ment  rate  shall not be less than seven and one-half percent per annum.
Any such rates set by the commissioner shall  apply  to  taxes,  or  any
portion  thereof, which remain or become due or overpaid on or after the
date on which such rates become effective  and  shall  apply  only  with
respect  to  interest  computed or computable for periods or portions of
periods occurring in the period during which such rates are in effect.
  S 86. Subdivision (b) of section 1201-a of the tax law, as amended  by
section  5  of  part  Y of chapter 62 of the laws of 2006, is amended to
read as follows:
  (b) Empire state film production credit. Any city in this state having
a population of one million or more, acting through its  local  legisla-
tive body, is hereby authorized to adopt and amend local laws to allow a
credit  against the general corporation tax and the unincorporated busi-
ness tax imposed pursuant to the  authority  of  chapter  seven  hundred
seventy-two  of  the  laws  of nineteen hundred sixty-six which shall be
substantially identical to the credit allowed under section  twenty-four
of  this chapter, except that (A) the percentage of qualified production
costs used to calculate such credit shall be five percent, (B)  whenever
such  section twenty-four references the state, such words shall be read
as referencing the city, (C) such credit shall  be  allowed  only  to  a
taxpayer  which  is  a  qualified  film  production company, and (D) the
effective date of such credit shall be July  first,  two  thousand  six.
Such  credit  shall  be  applied  in a manner consistent with the credit
allowed under subdivision [thirty-six] TWENTY  of  section  two  hundred
[ten]  TEN-B  of  this  chapter  except as may be necessary to take into
account differences between the general corporation tax and the unincor-
porated business tax.
  S 87. Subdivision (c) of section 1201-a of the tax law, as amended  by
chapter 300 of the laws of 2007, is amended to read as follows:
  (c)  Empire state commercial production credit. Any city in this state
having a population of one million or more,  acting  through  its  local
legislative  body, is hereby authorized to adopt and amend local laws to
allow a credit against the general corporation tax and the unincorporat-
ed business tax imposed pursuant  to  the  authority  of  chapter  seven
hundred  seventy-two  of  the  laws  of nineteen hundred sixty-six which
shall be  substantially  identical  to  the  credit  allowed  under  the
provisions  of section twenty-eight of this chapter, except that (A) the
percentage of qualified production costs used to calculate  such  credit
shall be five percent, (B) whenever such section twenty-eight references
the  state,  such  words shall be read as referencing the city, (C) such
credit shall be allowed only to a taxpayer that is a  qualified  commer-
cial production company, and (D) the effective date of such credit shall
be  as  provided in local laws. Such credit shall be applied in a manner
consistent with the  credit  allowed  under  subdivision  [thirty-eight]
TWENTY-THREE  of  section two hundred [ten] TEN-B of this chapter except
as may be necessary to take into account differences between the general
corporation tax and unincorporated business tax.
  S 88. The section heading and paragraphs 1 and 3 of subdivision (a) of
section 1505-a of the tax law, the section heading as added  by  chapter

S. 6359--C                         157

11  of  the  laws  of  1983 and paragraphs 1 and 3 of subdivision (a) as
amended by section 6 of part A of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on insurance corporations.
  (1) Every domestic insurance corporation and every  foreign  or  alien
insurance corporation, and every life insurance corporation described in
subdivision  (b) of section fifteen hundred one of this article, for the
privilege of exercising its corporate franchise, or of  doing  business,
or  of employing capital, or of owning or leasing property in the metro-
politan commuter transportation district in  a  corporate  or  organized
capacity,  or  of  maintaining  an  office  in the metropolitan commuter
transportation district, [for all or  any  part  of  its  taxable  years
commencing  on  or after January first, nineteen hundred eighty-two, but
ending before December  thirty-first,  two  thousand  eighteen,]  except
corporations  specified  in  subdivision  (c) of section fifteen hundred
twelve of this article, shall annually pay, in  addition  to  the  taxes
otherwise  imposed by this article, a tax surcharge on the taxes imposed
under this article after the deduction of any credits  otherwise  allow-
able  under this article as allocated to such district. Such taxes shall
be allocated to  such  district  for  purposes  of  computing  such  tax
surcharge upon taxpayers subject to tax under subdivision (b) of section
fifteen  hundred ten of this article by applying the methodology, proce-
dures and computations set forth in subdivisions (a) and (b) of  section
fifteen  hundred  four  of this article, except that references to terms
denoting New York premiums, and total wages, salaries, personal  service
compensation  and  commissions within New York shall be read as denoting
within the  metropolitan  commuter  transportation  district  and  terms
denoting  total  premiums  and  total  wages, salaries, personal service
compensation and commissions shall be read as denoting within the state.
If it shall appear to the commissioner that the application of the meth-
odology, procedures and computations set forth in such subdivisions  (a)
and  (b) does not properly reflect the activity, business or income of a
taxpayer within the metropolitan commuter transportation district,  then
the  commissioner shall be authorized, in the commissioner's discretion,
to adjust such methodology, procedures and computations for the  purpose
of allocating such taxes by:
  (A) excluding one or more factors therein;
  (B)  including  one  or  more other factors therein, such as expenses,
purchases, receipts other  than  premiums,  real  property  or  tangible
personal property; or
  (C)  any  other similar or different method which allocates such taxes
by attributing a fair and proper portion of such taxes to the  metropol-
itan  commuter  transportation  district.  The commissioner from time to
time shall publish all rulings of general public interest  with  respect
to  any  application  of  the  provisions of the preceding sentence. The
commissioner may promulgate rules and regulations to  further  implement
the provisions of this section.
  (3)  Such  tax  surcharge  shall  be computed at the rate of [eighteen
percent of the taxes imposed under  sections  fifteen  hundred  one  and
fifteen  hundred  ten  of  this  article  as  limited by section fifteen
hundred five of this article, as allocated to such  district,  for  such
taxable  years  or any part of such taxable years ending before December
thirty-first, nineteen hundred eighty-three after the deduction  of  any
credits otherwise allowable under this article, at the rate of seventeen
percent  of  the taxes imposed under such sections as limited by section

S. 6359--C                         158

fifteen hundred five of this article, as allocated to such district, for
such taxable years or any part of such taxable years ending on or  after
December  thirty-first, nineteen hundred eighty-three and before January
first,  two  thousand three after the deduction of any credits otherwise
allowable under this article, and at the rate of] seventeen  percent  of
the  taxes  imposed  under sections fifteen hundred one, fifteen hundred
two-a, and fifteen hundred ten of this article, as limited or  otherwise
determined  by subdivision (a) or (b) of section fifteen hundred five of
this article, as allocated to such district, [for such taxable years  or
any  part  of such taxable years ending after December thirty-first, two
thousand two] after the deduction of  any  credits  otherwise  allowable
under  this  article[; provided, however, that the tax surcharge imposed
by this section shall not be imposed upon any  taxpayer  for  more  than
four  hundred  thirty-two  months].  Provided  however, that for taxable
years commencing on or after July first, two thousand, and in  the  case
of  taxpayers subject to tax under section fifteen hundred two-a of this
article, for taxable years of such taxpayers beginning on or after  July
first,  two  thousand and before January first, two thousand three, such
surcharge shall be calculated as if (i) the rate  of  the  tax  computed
under paragraph one of subdivision (a) of section fifteen hundred two of
this article was nine percent and (ii) the rate of the limitation on tax
set  forth in section fifteen hundred five of this article for domestic,
foreign and alien insurance corporations except  life  insurance  corpo-
rations was two and six-tenths percent.
  S  89.  Section 1825 of the tax law, as amended by section 2 of part E
of chapter 25 of the laws of 2009, is amended to read as follows:
  S 1825. Violation of secrecy provisions of the  tax  law.--Any  person
who  violates  the  provisions of subdivision (b) of section twenty-one,
subdivision one of section two hundred two, subdivision eight of section
two hundred eleven, subdivision (a) of section three  hundred  fourteen,
subdivision  one  or  two  of section four hundred thirty-seven, section
four hundred eighty-seven,  subdivision  one  or  two  of  section  five
hundred  fourteen,  subsection  (e) of section six hundred ninety-seven,
subsection (a) of section nine hundred ninety-four, subdivision  (a)  of
section  eleven  hundred forty-six, section twelve hundred eighty-seven,
subdivision (a) of section fourteen hundred eighteen, [subsection (a) of
section  fourteen  hundred  sixty-seven,]  subdivision  (a)  of  section
fifteen  hundred  eighteen,  subdivision  (a) of section fifteen hundred
fifty-five of this chapter, and subdivision (e) of  section  11-1797  of
the  administrative  code  of  the city of New York shall be guilty of a
misdemeanor.
  S 90. Subdivisions (s) and (t) of section 957 of the general municipal
law, as amended by section 1 of part S1 of chapter 57  of  the  laws  of
2009, are amended to read as follows:
  (s)  "Qualified  investment  project" shall mean a project (i) located
within an empire zone, (ii) at which five hundred or more jobs  will  be
created,  provided such jobs are new to the state and are in addition to
any other jobs previously created by the owner of such  project  in  the
state,  and  (iii)  which will consist of tangible personal property and
other tangible property, including buildings and  structural  components
of  buildings,  described  in  subparagraphs  (i), (ii), (iii), (iv) and
clause (A) or (C) of subparagraph (v) of paragraph  (b)  of  subdivision
[twelve-B]  THREE of section two hundred [ten] TEN-B of the tax law, the
basis of which for federal income tax  purposes  will  equal  or  exceed
seven hundred fifty million dollars. Provided however, the owner of such

S. 6359--C                         159

project  does  not  employ more than two hundred persons in the state at
the time such project is commenced.
  (t)  "Significant capital investment project" shall mean a project (i)
located within an empire  zone,  (ii)  which  will  be  either  a  newly
constructed  facility or a newly constructed addition to or expansion of
a qualified investment project, consisting of tangible personal property
and other tangible property, including buildings and  structural  compo-
nents  of  buildings,  described in subparagraphs (i), (ii), (iii), (iv)
and clause (A) or (C) of subparagraph (v) of paragraph (b)  of  subdivi-
sion [twelve-B] THREE of section two hundred [ten] TEN-B of the tax law,
the  basis of which for federal income tax purposes will equal or exceed
seven hundred fifty million dollars, (iii) which  is  constructed  after
the  basis  for  federal  income tax purposes of the property comprising
such qualified investment project equals or exceeds seven hundred  fifty
million  dollars,  and  (iv)  at which five hundred or more jobs will be
created, provided such jobs are new to the state and are in addition  to
any  other  jobs  previously created by the owner of such project in the
state.
  S 91. Intentionally omitted.
  S 92. Intentionally omitted.
  S 93. Intentionally omitted.
  S 94. Intentionally omitted.
  S 95. Intentionally omitted.
  S 96. Intentionally omitted.
  S 97. Intentionally omitted.
  S 98. Intentionally omitted.
  S 99. Notwithstanding any  provisions  of  law  to  the  contrary  and
notwithstanding  the  repeal of article 32 of the tax law by section one
of this act, the repeal of section 180 of the tax law by section two  of
this  act  and the repeal of section 181 of the tax law by section three
of this act, all provisions  of  such  article  and  such  sections,  in
respect to the imposition, exemption, assessment, payment, payment over,
determination,  collection,  and  credit  or refund of tax, interest and
penalty imposed thereunder, the filing of forms and returns, the preser-
vation of records for the purposes of such tax, the secrecy of  returns,
the disposition of revenues, and the civil and criminal penalties appli-
cable  to  the  violation  of the provisions of such article 32 and such
sections 180 and 181, shall continue  in  full  force  and  effect  with
respect to all such tax accrued for taxable years beginning before Janu-
ary  1,  2015;  and  all  actions  and  proceedings,  civil or criminal,
commenced or authorized to be  commenced  under  or  by  virtue  of  any
provision  of  such  article  32  or  by virtue of any provision of such
section 180 or 181 so repealed, and pending  or  able  to  be  commenced
immediately prior to the taking effect of such repeal, may be commenced,
prosecuted and defended to final effect in the same manner as they might
if such provisions were not so repealed.
  S  100.  Subdivision  1  of  section 187 of the tax law, as amended by
chapter 2 of the laws of 1995, is amended to read as follows:
  1. A taxpayer shall be allowed a credit, to be  credited  against  the
taxes  imposed by this article, other than the taxes and fees imposed by
sections [one hundred  eighty,  one  hundred  eighty-one,]  one  hundred
eighty-six-a and one hundred eighty-six-e of this chapter. The amount of
the  credit  shall  be  the  amount  of  the special additional mortgage
recording tax paid by the taxpayer pursuant to the provisions of  subdi-
vision one-a of section two hundred fifty-three of this chapter on mort-
gages  recorded  on  and  after January first, nineteen hundred seventy-

S. 6359--C                         160

nine. Provided, however,  that  the  amount  of  such  credit  allowable
against the tax imposed by section one hundred eighty-four of this chap-
ter  shall  be the excess of the amount of such special additional mort-
gage  recording  tax  paid over the amount of any credit allowed by this
section against the tax imposed by section one hundred  eighty-three  of
this chapter. Provided further, however, no credit shall be allowed with
respect  to  a  mortgage  of real property principally improved or to be
improved by one or more structures containing in the aggregate not  more
than  six  residential dwelling units, each dwelling unit having its own
separate cooking facilities, where the real property is located  in  one
or more of the counties comprising the metropolitan commuter transporta-
tion  district and where the mortgage is recorded on or after May first,
nineteen hundred eighty-seven.  Provided  further,  however,  no  credit
shall be allowed with respect to a mortgage of real property principally
improved  or  to be improved by one or more structures containing in the
aggregate not more than six residential dwelling  units,  each  dwelling
unit having its own separate cooking facilities, where the real property
is  located  in the county of Erie and where the mortgage is recorded on
or after May first, nineteen hundred eighty-seven.
  S 101. Subdivision 1 of section 187-a of the  tax  law,  as  added  by
chapter 142 of the laws of 1997, is amended to read as follows:
  1.    Allowance of credit. A taxpayer shall be allowed a credit, to be
computed as hereinafter provided, against  the  taxes  imposed  by  this
article,  other  than the taxes imposed by sections [one hundred eighty,
one hundred eighty-one,] one hundred eighty-six-a, one  hundred  eighty-
six-e  and one hundred eighty-nine of this article, for employing within
the state a qualified employee. Provided, however, the amount of  credit
allowed  by  this section against the tax imposed by section one hundred
eighty-four of this article shall be the excess of the  credit  computed
under  this  section  over  the amount of credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  S  102.  Subdivision  1  of  section 190 of the tax law, as amended by
section 17 of part B of chapter 58 of the laws of 2004,  is  amended  to
read as follows:
  1.  General.  A  taxpayer  shall  be  allowed a credit against the tax
imposed by this article[, other than  the  taxes  and  fees  imposed  by
sections one hundred eighty and one hundred eighty-one of this article,]
equal  to twenty percent of the premium paid during the taxable year for
long-term care insurance. In order  to  qualify  for  such  credit,  the
taxpayer's premium payment must be for the purchase of or for continuing
coverage under a long-term care insurance policy that qualifies for such
credit  pursuant  to  section  one thousand one hundred seventeen of the
insurance law.
  S 103. Subdivision 5 of section 192 of the tax law is REPEALED.
  S 104. Clauses 1 and 2 of subparagraph (A)  and  subparagraph  (B)  of
paragraph (iii) of subdivision 9 of section 16-v of section 1 of chapter
174  of  the laws of 1968 constituting the urban development corporation
act, as added by section 1 of part C of chapter 59 of the laws of  2013,
is amended to read as follows:
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under the following provisions of the  tax  law:  article
nine-A; section one hundred eighty-three, OR one hundred eighty-four [or

S. 6359--C                         161

one  hundred eighty-five] of article nine; [article thirty-two] or arti-
cle thirty-three; or
  (2)  is substantially similar in operation and in ownership to a busi-
ness entity (or  entities)  taxable  or  previously  taxable  under  the
following provisions of the tax law: article nine-A; section one hundred
eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
y-five  or former section one hundred eighty-six of article nine; FORMER
article thirty-two; article thirty-three; article twenty-three, or would
have been subject to tax under such article twenty-three (as such  arti-
cle  was  in  effect  on  January first, nineteen hundred eighty) or the
income (or losses) of which is (or was) includable under  article  twen-
ty-two; or
  (B)  a  sole proprietorship, partnership, limited partnership, limited
liability company, or New York subchapter  S  corporation  that  is  not
substantially similar in operation and in ownership to a business entity
(or  entities)  taxable,  or previously taxable, under article nine-A of
the tax law, section one hundred eighty-three, one hundred  eighty-four,
FORMER  SECTION  one  hundred  eighty-five or former section one hundred
eighty-six of article nine of the tax law, FORMER article thirty-two  or
ARTICLE thirty-three of the tax law, article twenty-three of the tax law
or  which would have been subject to tax under such article twenty-three
(as such article was  in  effect  on  January  first,  nineteen  hundred
eighty)  or the income (or losses) of which is (or was) includable under
article twenty-two of the tax law; and
  S 105. Section 206 of the tax law, as added by chapter 69 of the  laws
of 1978, is amended to read as follows:
  S  206.    Deposit  and  disposition of revenue.   The [license fees,]
taxes, percentage, interest and other charges imposed  by  this  article
shall  be  collected  and  deposited and receipts therefor issued by the
[tax commission, except  that  such  license  fees,  taxes,  percentage,
interest and other charges imposed by section one hundred eighty of this
chapter shall be collected and deposited and receipts therefor issued by
the  proper  state officer in accordance with the provisions of subdivi-
sion two of section one hundred eighty of  this  chapter,]  COMMISSIONER
and  all  revenues  so  collected  or  received  shall  be deposited and
disposed of pursuant to the provisions of section one  hundred  seventy-
one-a of this chapter.
  S  106.  Subsection  (a)  of  section 1080 of the tax law, as added by
chapter 188 of the laws of 1964, is amended to read as follows:
  (a) General.--- The provisions of this  article  shall  apply  to  the
administration  of  and the procedures with respect to the taxes imposed
by articles nine [(except section one  hundred  eighty)],  AND  nine-a[,
nine-b  and  nine-c] of this chapter for taxable years or periods ending
on or after December thirty-first, nineteen hundred sixty-four.
  S 107. Subdivisions (a) and (c) of section 1809 of  the  tax  law,  as
added  by  section 1 of subpart A of part S of chapter 57 of the laws of
2010, are amended to read as follows:
  (a) Any person who, with intent to evade payment of  any  tax  imposed
under  article nine [(other than under section one hundred eighty or one
hundred eighty-one)], nine-A, thirteen,  [thirty-two,]  thirty-three  or
thirty-three-A  of  this  chapter,  fails to file a return or report for
three consecutive taxable years shall be guilty of  a  class  E  felony,
provided  that such person had an unpaid tax liability, in excess of the
threshold amount with respect to each of the three  consecutive  taxable
years.  The threshold amount in the case of a taxable year under article
nine-A of this chapter ending after  June  thirtieth,  nineteen  hundred

S. 6359--C                         162

eighty-nine  is  the  applicable  fixed  dollar minimum prescribed under
paragraph (d) of subdivision one of section  two  hundred  ten  of  this
chapter. In the event such fixed dollar minimum is less than two hundred
fifty  dollars, the threshold amount in the case of such taxable year is
two hundred fifty dollars. In all other cases the  threshold  amount  is
two hundred fifty dollars.
  (c)  As  used  in  this section, the terms "return" and "report" shall
mean a return or report required under section one  hundred  ninety-two,
two  hundred  eleven,  two hundred ninety-four, [fourteen hundred sixty-
two,] fifteen hundred fifteen or  fifteen  hundred  fifty-four  of  this
chapter.    It  shall  not  include  any return or report referred to in
section one hundred ninety-seven-a, two  hundred  thirteen-a,  [fourteen
hundred sixty] or fifteen hundred thirteen of this chapter.
  S  108.  Paragraphs (d), (e), (g), (h) and (q) of section 104-A of the
business corporation law, subdivisions (d), (e) and (q)  as  amended  by
chapter 166 of the laws of 1991, subdivision (g) as added by chapter 591
of  the  laws  of 1982, and subdivision (h) as amended by chapter 117 of
the laws of 1986, are amended to read as follows:
  (d) For filing a certificate of incorporation pursuant to section four
hundred two of this chapter, one hundred twenty-five dollars  [plus  the
tax on shares prescribed by section one hundred eighty of the tax law].
  (e)  For  filing  a certificate of amendment pursuant to section eight
hundred five of this chapter, sixty dollars  [plus  the  tax  on  shares
prescribed  by section one hundred eighty of the tax law if such certif-
icate shows a change of shares].
  (g) For filing a restated certificate  of  incorporation  pursuant  to
section eight hundred seven of this chapter, sixty dollars [plus the tax
on  shares  prescribed  by  section one hundred eighty of the tax law if
such certificate shows a change of shares].
  (h) For filing a certificate of merger or  consolidation  pursuant  to
section  nine hundred four of this chapter, or a certificate of exchange
pursuant to section nine hundred thirteen (other than paragraph  (g)  of
section  nine hundred thirteen) of this chapter, sixty dollars [plus the
tax on shares prescribed by section one hundred eighty of the tax law if
such certificate shows a change of shares].
  (q) For filing  a  certificate  of  incorporation  by  a  professional
service  corporation  pursuant  to section fifteen hundred three of this
chapter, one  hundred  twenty-five  dollars  [plus  the  tax  on  shares
prescribed by section one hundred eighty of the tax law].
  S  109.  Subdivision 8 of section 7-a of the general associations law,
as added by chapter 575 of the laws of  1964,  is  amended  to  read  as
follows:
  8. The provisions of section ninety-six of the executive law prescrib-
ing  the  fee  to  be  collected by the department of state for filing a
certificate of incorporation under the business  corporation  law  shall
apply  to  the certificate of incorporation to be filed pursuant to this
section[, and the organization tax payable  under  section  one  hundred
eighty of the tax law in respect of a corporation formed under the busi-
ness  corporation law shall be paid before the department of state shall
file such certificate of incorporation].
  S 110.  Paragraph 1 of subdivision (a) of section 1502 of the tax law,
as amended by section 4 of part N of chapter 60 of the laws of 2007,  is
amended to read as follows:
  (1)  for taxable years beginning before July first, two thousand, nine
percent of the taxpayer's entire net income, or  portion  thereof  allo-
cated  within  this state, for the taxable year, or part thereof, except

S. 6359--C                         163

that for taxable  years  beginning  prior  to  January  first,  nineteen
hundred  seventy-eight,  the rate shall be four and five-tenths percent;
for taxable years beginning  after  June  thirtieth,  two  thousand  and
before  July  first, two thousand one, eight and one-half percent of the
taxpayer's entire net income, or portion thereof allocated  within  this
state,  for  the taxable year, or part thereof; for taxable years begin-
ning after June thirtieth, two thousand one and before July  first,  two
thousand  two,  eight  percent  of  the taxpayer's entire net income, or
portion thereof allocated within this state, for the  taxable  year,  or
part  thereof;  for  taxable  years  beginning after June thirtieth, two
thousand two and before January first, two  thousand  seven,  seven  and
one-half percent of the taxpayer's entire net income, or portion thereof
allocated  within  this  state,  for  the taxable year, or part thereof;
[and] for taxable years beginning on or after January first,  two  thou-
sand seven AND BEFORE DECEMBER THIRTY-FIRST, TWO THOUSAND FIFTEEN, seven
and  one-tenth  percent  of the taxpayer's entire net income, or portion
thereof allocated within this state, for the taxable year, or part ther-
eof; AND FOR TAXABLE YEARS BEGINNING ON  OR  AFTER  JANUARY  FIRST,  TWO
THOUSAND  SIXTEEN, SIX AND ONE-HALF PERCENT OF THE TAXPAYER'S ENTIRE NET
INCOME, OR PORTION THEREOF ALLOCATED WITHIN THIS STATE, FOR THE  TAXABLE
YEAR, OR PART THEREOF; or
  S  111. Paragraphs 1 and 2 of subdivision (l) of section 11-640 of the
administrative code of the city of New York, as amended by section 3  of
part R of chapter 59 of the laws of 2012, is amended to read as follows:
  (1) Notwithstanding anything to the contrary contained in this section
other  than  subdivision  (m) of this section, a corporation that was in
existence before January first, two thousand [twelve] FOURTEEN  and  was
subject to tax under subchapter two of this chapter for its last taxable
year  beginning  before  January  first, two thousand [twelve] FOURTEEN,
shall continue to be taxable under such subchapter for all taxable years
beginning on or after January first, two thousand [twelve] FOURTEEN  and
before  January  first, two thousand [fifteen] SEVENTEEN.  The preceding
sentence shall not apply to any taxable year during  which  such  corpo-
ration  is  a  banking  corporation  described in paragraphs one through
eight of subdivision (a) of this section.   Notwithstanding anything  to
the  contrary  contained  in  this section other than subdivision (m) of
this section, a banking corporation or corporation that was in existence
before January first, two thousand [twelve] FOURTEEN and was subject  to
tax  under  this  subchapter  for its last taxable year beginning before
January first, two thousand [twelve]  FOURTEEN,  shall  continue  to  be
taxable  under  this  subchapter  for  all taxable years beginning on or
after January first, two thousand [twelve] FOURTEEN and  before  January
first,  two  thousand  [fifteen]  SEVENTEEN only if the corporation is a
banking corporation as defined in subdivision (a) of this section or the
corporation satisfies the requirements for a corporation to elect to  be
taxable  under  this  subchapter. Provided further, that nothing in this
subdivision shall prohibit a corporation that elected pursuant to subdi-
vision (d) of this section to be taxable under subchapter  two  of  this
chapter  from  revoking that election in accordance with subdivision (d)
of this section. For purposes of this paragraph, a corporation shall  be
considered to be subject to tax under subchapter two of this chapter for
a  taxable  year if such corporation was not a taxpayer but was properly
included in a combined report filed  pursuant  to  subdivision  four  of
section  11-605  of this chapter for such taxable year and a corporation
shall be considered to be subject to tax under  this  subchapter  for  a
taxable  year  if  such  corporation was not a taxpayer but was properly

S. 6359--C                         164

included in a combined report filed pursuant to subdivision (f)  or  (g)
of section 11-646 of this part for such taxable year. A corporation that
was  in  existence  before January first, two thousand [twelve] FOURTEEN
but  first  becomes  a  taxpayer in a taxable year beginning on or after
January first, two thousand [twelve] FOURTEEN and before January  first,
two  thousand  [fifteen]  SEVENTEEN, shall be considered for purposes of
this paragraph to have been subject to tax under subchapter two of  this
chapter  for  its  last taxable year beginning before January first, two
thousand [twelve] FOURTEEN if such corporation would have  been  subject
to  tax  under  such  subchapter  for such taxable year if it had been a
taxpayer during such taxable year. A corporation that was  in  existence
before January first, two thousand [twelve] FOURTEEN but first becomes a
taxpayer  in  a  taxable  year  beginning on or after January first, two
thousand [twelve]  FOURTEEN  and  before  January  first,  two  thousand
[fifteen]  SEVENTEEN, shall be considered for purposes of this paragraph
to have been subject to tax under this subchapter for its  last  taxable
year  beginning  before January first, two thousand [twelve] FOURTEEN if
such corporation would have been subject to tax  under  this  subchapter
for  such  taxable  year  if  it had been a taxpayer during such taxable
year.
  (2) Notwithstanding anything to the contrary contained in this section
other than subdivision (m) of this section, a corporation formed  on  or
after  January  first, two thousand [twelve] FOURTEEN and before January
first, two thousand [fifteen] SEVENTEEN may elect to be subject  to  tax
under  this  subchapter  or under subchapter two of this chapter for its
first taxable year beginning on or after  January  first,  two  thousand
[twelve]  FOURTEEN  and  before  January  first,  two thousand [fifteen]
SEVENTEEN in which either (i) sixty-five percent or more of  its  voting
stock  is  owned  or  controlled,  directly or indirectly by a financial
holding company, provided the corporation whose voting stock is so owned
or controlled is principally engaged in activities that are described in
section 4(k)(4) or 4(k)(5) of the federal bank holding  company  act  of
nineteen  hundred  fifty-six, as amended and the regulations promulgated
pursuant to the authority of such section or  (ii)  it  is  a  financial
subsidiary. An election under this paragraph may not be made by a corpo-
ration  described  in paragraphs one through eight of subdivision (a) of
this section or in subdivision (e) of  this  section.  In  addition,  an
election under this paragraph may not be made by a corporation that is a
party  to  a reorganization, as defined in subsection (a) of section 368
of the internal revenue code of  1986,  as  amended,  of  a  corporation
described in paragraph one of this subdivision if both corporations were
sixty-five  percent  or more owned or controlled, directly or indirectly
by the same interests at the time of the reorganization.
  An election under this paragraph must be made by the  taxpayer  on  or
before  the  due  date  for filing its return (determined with regard to
extensions of time for filing) for  the  applicable  taxable  year.  The
election  to be taxed under subchapter two of this chapter shall be made
by the taxpayer by filing the return required  pursuant  to  subdivision
one of section 11-605 of this chapter and the election to be taxed under
this  subchapter  shall  be  made  by  the taxpayer by filing the return
required pursuant to subdivision (a) of section 11-646 of this part. Any
election made pursuant to this paragraph shall be irrevocable and  shall
apply  to  each  subsequent  taxable  year beginning on or after January
first, two thousand [twelve] FOURTEEN  and  before  January  first,  two
thousand  [fifteen]  SEVENTEEN,  provided  that  the stock ownership and
activities requirements described in subparagraph (i) of this  paragraph

S. 6359--C                         165

are met or such corporation described in subparagraph (ii) of this para-
graph continues as a financial subsidiary.
  S  112. Subparagraph (iv) of paragraph 2 of subdivision (f) of section
11-646 of the administrative code of the city of New York, as amended by
section 4 of part R of chapter 59 of the laws of  2012,  is  amended  to
read as follows:
  (iv)  (A)  Notwithstanding  any  provision of this paragraph, any bank
holding company exercising its corporate franchise or doing business  in
the  city  may  make  a  return  on a combined basis without seeking the
permission of the commissioner with any banking  corporation  exercising
its  corporate franchise or doing business in the city in a corporate or
organized capacity sixty-five percent or more of whose voting  stock  is
owned or controlled, directly or indirectly, by such bank holding compa-
ny,  for the first taxable year beginning on or after January first, two
thousand and before January  first,  two  thousand  [fifteen]  SEVENTEEN
during  which  such  bank  holding  company registers for the first time
under the federal bank holding company act, as amended, and also  elects
to  be  a  financial  holding  company. In addition, for each subsequent
taxable year beginning after January  first,  two  thousand  and  before
January  first,  two thousand [fifteen] SEVENTEEN, any such bank holding
company may file on a combined basis without seeking the  permission  of
the  commissioner  with  any  banking corporation that is exercising its
corporate franchise or doing business in the city and sixty-five percent
or more of whose voting stock is owned or controlled, directly or  indi-
rectly,  by such bank holding company if either such banking corporation
is exercising its corporate franchise or doing business in the city in a
corporate or organized capacity for the first time  during  such  subse-
quent taxable year, or sixty-five percent or more of the voting stock of
such banking corporation is owned or controlled, directly or indirectly,
by  such  bank holding company for the first time during such subsequent
taxable year.  Provided however, for each subsequent taxable year begin-
ning after January first, two thousand and  before  January  first,  two
thousand  [fifteen] SEVENTEEN, a banking corporation described in either
of the two preceding sentences which filed on a combined basis with  any
such  bank  holding company in a previous taxable year, must continue to
file on a combined basis with such bank holding company if such  banking
corporation,  during such subsequent taxable year, continues to exercise
its corporate franchise or do business in the city  in  a  corporate  or
organized capacity and sixty-five percent or more of such banking corpo-
ration's  voting  stock continues to be owned or controlled, directly or
indirectly, by such bank holding company, unless the permission  of  the
commissioner  has  been  obtained  to  file on a separate basis for such
subsequent taxable year. Provided further, however, for each  subsequent
taxable  year  beginning  after  January  first, two thousand and before
January first, two thousand [fifteen] SEVENTEEN, a  banking  corporation
described  in either of the first two sentences of this clause which did
not file on a combined basis with any such bank  holding  company  in  a
previous  taxable  year, may not file on a combined basis with such bank
holding company during any  such  subsequent  taxable  year  unless  the
permission  of  the commissioner has been obtained to file on a combined
basis for such subsequent taxable year.
  (B) Notwithstanding any provision of this paragraph other than  clause
(A)  of this subparagraph, the commissioner may not require a bank hold-
ing company which, during a taxable year beginning on or  after  January
first,  two  thousand  and  before January first, two thousand [fifteen]
SEVENTEEN, registers for the first time during such taxable  year  under

S. 6359--C                         166

the  federal bank holding company act, as amended, and also elects to be
a financial holding company, to make a return on a  combined  basis  for
any  taxable  year beginning on or after January first, two thousand and
before  January  first,  two thousand [fifteen] SEVENTEEN with a banking
corporation sixty-five percent or more of whose voting stock is owned or
controlled, directly or indirectly, by such bank holding company.
  S 113.   Severability. If any provision of  this  act  shall  for  any
reason  be finally adjudged by any court of competent jurisdiction to be
invalid, such judgment shall  not  affect,  impair,  or  invalidate  the
remainder  of  this  act,  but shall be confined in its operation to the
provision directly involved in the controversy in  which  such  judgment
shall  have  been rendered. It is hereby declared to be in the intent of
the legislature that this act would  have  been  enacted  even  if  such
invalid  provision  had not been included in this act. Provided further,
if a court of final,  competent  jurisdiction  adjudges  the  tax  rates
imposed on qualified New York manufacturers to be invalid, qualified New
York  manufacturers  shall be subject to the same tax rates as all other
taxpayers subject to tax under article 9-A  of  the  tax  law.  Provided
further,  if  a court of final, competent jurisdiction adjudges that any
of the tax credits provided by this act to be invalid,  such  credit  or
credits  shall be deemed repealed and shall be of no force and effect as
to any taxpayers.
  S 114. This act shall take effect January 1, 2015 and shall  apply  to
taxable years commencing on or after such date; provided that the amend-
ments  to  section 25 of the tax law made by section forty-three of this
act shall not affect the repeal of such  section  and  shall  be  deemed
repealed  therewith; provided, further, that the amendments to the open-
ing paragraph of subdivision (a), subparagraph (C)  of  paragraph  2  of
subdivision (e) and subdivision (f) of section 35 of the tax law made by
section fifty of this act shall not affect the repeal of such provisions
and  shall  be  deemed  repealed  therewith; provided, further, that the
amendments to clause (xxxii) of  subparagraph  (B)  of  paragraph  1  of
subsection (i) of section 606 of the tax law made by section sixty-eight
of  this  act  shall  not  affect the repeal of such clause and shall be
deemed repealed therewith; provided, further,  that  the  amendments  to
clause  (xxxiii) of subparagraph (B) of paragraph 1 of subsection (i) of
section 606 of the tax law made by section sixty-eight of this act shall
not affect the repeal of such clause and shall be deemed repealed there-
with; and provided, further, that  the  amendments  to  clause  (ii)  of
subparagraph  (B)  of  paragraph  2  of  subsection  (q), paragraph 3 of
subsection (s) and the closing paragraph of paragraph  1  of  subsection
(t)  of  section  1085 of the tax law made by section eighty-one of this
act shall not affect the repeal of such provisions and shall  be  deemed
repealed therewith.

                                 PART B

  Section  1.  Subparagraph  (iii) of paragraph (a) of subdivision 14 of
section 425 of the real property tax law, as added by section 1 of  part
J of chapter 57 of the laws of 2013, is amended to read as follows:
  (iii)  An  owner who fails to register by the registration deadline so
established shall be permitted to file a petition with the  commissioner
requesting  that  the commissioner excuse such failure and accept a late
registration, provided that such petition shall explain why such failure
occurred and shall be filed no later than one year after such  deadline,
AND  PROVIDED  FURTHER THAT IF THE COMMISSIONER ACCEPTS A LATE REGISTRA-

S. 6359--C                         167

TION AFTER HAVING DIRECTED THE REMOVAL OF THE BASIC STAR EXEMPTION  FROM
THE PROPERTY TO WHICH THE REGISTRATION PERTAINS, THEN IN LIEU OF DIRECT-
ING  THE EXEMPTION TO BE RESTORED, THE COMMISSIONER IS AUTHORIZED IN HIS
OR  HER DISCRETION TO REMIT DIRECTLY TO THE PROPERTY OWNER OR OWNERS THE
TAX SAVINGS THAT THE EXEMPTION  WOULD  HAVE  YIELDED  HAD  IT  NOT  BEEN
REMOVED,  AND TO FURTHER DIRECT THE ASSESSOR TO RESTORE THE EXEMPTION ON
A PROSPECTIVE BASIS WITHOUT A NEW APPLICATION UNLESS  THE  ASSESSOR  HAS
REASON  TO  BELIEVE  THAT  THE  PROPERTY OWNER IS NO LONGER ELIGIBLE FOR
REASONS OTHER THAN A FAILURE TO REGISTER;
  S 2. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2014.

                                 PART C

  Section  1. Section 2 of chapter 540 of the laws of 1992, amending the
real property tax law relating to oil and gas  charges,  as  amended  by
section  1  of  part  A of chapter 59 of the laws of 2012, is amended to
read as follows:
  S 2. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 1992; provided,
however that any charges imposed by section 593 of the real property tax
law  as  added  by section one of this act shall first be due for values
for assessment rolls with tentative completion dates after July 1, 1992,
and provided further, that this act  shall  remain  in  full  force  and
effect  until  March  31,  [2015] 2018, at which time section 593 of the
real property tax law as added by section  one  of  this  act  shall  be
repealed.
  S 2. This act shall take effect immediately.

                                 PART D

                          Intentionally Omitted

                                 PART E

  Section 1. Subsection (a) of section 653 of the tax law, as amended by
chapter 65 of the laws of 1985, is amended to read as follows:
  (a)  General.  (1) Any return, statement or other document required to
be made pursuant to this article shall  be  signed  in  accordance  with
regulations  or  instructions prescribed by the [tax commission] COMMIS-
SIONER.   The fact that an individual's name  is  signed  to  a  return,
statement,  or  other  document,  shall  be prima facie evidence for all
purposes that the return,  statement  or  other  document  was  actually
signed by him OR HER.
  (2)  IN  THE  CASE  OF  AN  ELECTRONICALLY FILED INDIVIDUAL'S PERSONAL
INCOME TAX RETURN PREPARED BY A TAX PREPARER, AN AUTHORIZATION  TO  FILE
ANY  RETURN, STATEMENT OR OTHER DOCUMENT REQUIRED TO BE MADE PURSUANT TO
THIS ARTICLE SIGNED BY THE TAXPAYER IN ACCORDANCE WITH  THE  REGULATIONS
OR  INSTRUCTIONS  PRESCRIBED  BY THE COMMISSIONER AND RECEIVED ELECTRON-
ICALLY BY THE TAX PREPARER  SHALL  SATISFY  THE  SIGNATURE  REQUIREMENTS
UNDER THIS ARTICLE.
  S 2. This act shall take effect immediately and shall apply to returns
filed for taxable years beginning on or after January 1, 2014.

                                 PART F

S. 6359--C                         168

                          Intentionally Omitted

                                 PART G

  Section  1.  Section  2  of  part I of chapter 58 of the laws of 2006,
relating to providing an enhanced earned income tax credit,  as  amended
by  section 1 of part L of chapter 59 of the laws of 2012, is amended to
read as follows:
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2006 and before January 1, [2015]
2017.
  S 2. This act shall take effect immediately.

                                 PART H

  Section 1. The general obligations law is  amended  by  adding  a  new
section 3-505 to read as follows:
  S  3-505. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH ELECTRONIC
TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES.
  1. AS USED IN THIS SECTION:
  A. "GOVERNMENT ENTITY" MEANS THE STATE OF NEW  YORK,  OR  ANY  OF  ITS
AGENCIES, POLITICAL SUBDIVISIONS, INSTRUMENTALITIES, PUBLIC CORPORATIONS
(INCLUDING A PUBLIC CORPORATION CREATED PURSUANT TO AGREEMENT OR COMPACT
WITH  ANOTHER  STATE OR CANADA), OR COMBINATION THEREOF, RESPONSIBLE FOR
DETERMINING WHETHER A LICENSE SHALL BE ISSUED OR RENEWED.
  B. "ELECTRONIC LICENSE APPLICATION" MEANS  ANY  ELECTRONIC  DATA  FORM
THAT  MUST BE COMPLETED BY AN APPLICANT TO OBTAIN OR RENEW A LICENSE, OR
AN ELECTRONIC DATA PROCESS WHICH IS USED BY A GOVERNMENT ENTITY TO PROC-
ESS DATA RECEIVED FROM AN  APPLICANT  SEEKING  TO  RECEIVE  OR  RENEW  A
LICENSE.
  C.  "ELECTRONIC  TAX CLEARANCE" MEANS AN ELECTRONIC COMMUNICATION FROM
THE DEPARTMENT OF TAXATION AND FINANCE INDICATING THAT AN APPLICANT  HAD
NO  PAST-DUE  TAX  LIABILITIES,  AS  THAT TERM IS DEFINED IN SECTION ONE
HUNDRED SEVENTY-ONE-W OF THE TAX LAW, OR THAT NO CONCLUSIVE MATCH  COULD
BE MADE.
  D.  "LICENSE"  MEANS  ANY  CERTIFICATE,  LICENSE,  PERMIT  OR GRANT OF
PERMISSION REQUIRED BY LAW OR AGENCY REGULATION AS A CONDITION  FOR  THE
LAWFUL  PRACTICE  OF  ANY OCCUPATION, EMPLOYMENT, TRADE, VOCATION, BUSI-
NESS, OR PROFESSION, INCLUDING ANY REGISTRATION REQUIRED BY LAW OR AGEN-
CY REGULATION AS A  CONDITION  FOR  SUCH  LAWFUL  PRACTICE.  THIS  SHALL
INCLUDE,  BUT IS NOT LIMITED TO, ANY LICENSE GRANTED TO AN INDIVIDUAL OR
ENTITY BY THE STATE EDUCATION DEPARTMENT, THE DEPARTMENT  OF  STATE,  OR
THE  OFFICE  OF COURT ADMINISTRATION.  PROVIDED, HOWEVER, THAT "LICENSE"
SHALL NOT, FOR THE PURPOSES OF THIS  SECTION,  INCLUDE  ANY  LICENSE  OR
PERMIT  TO  OWN, POSSESS, CARRY, OR FIRE ANY EXPLOSIVE, PISTOL, HANDGUN,
RIFLE, SHOTGUN, OTHER FIREARM OR AMMUNITION.
  2. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, AND  WHEN  NOT  ALREADY
REQUIRED BY ANOTHER PROVISION OF LAW OR REGULATION, ANY GOVERNMENT ENTI-
TY  MAY  ELECT  TO CONDITION THE ISSUANCE OR RENEWAL OF A LICENSE ON THE
ABSENCE OF PAST-DUE TAX  LIABILITIES  AND  TO  MAKE  SUCH  DETERMINATION
THROUGH  THE  RECEIPT OF AN ELECTRONIC TAX CLEARANCE FROM THE DEPARTMENT
OF TAXATION AND FINANCE AS PROVIDED FOR IN SECTION ONE HUNDRED  SEVENTY-
ONE-W OF THE TAX LAW.
  3.  ANY  APPLICANT  FOR  A LICENSE SUBJECT TO ELECTRONIC TAX CLEARANCE
SHALL BE REQUIRED TO PROVIDE ANY INFORMATION  DEEMED  NECESSARY  BY  THE

S. 6359--C                         169

GOVERNMENT  ENTITY  AND  THE DEPARTMENT OF TAXATION AND FINANCE TO EFFI-
CIENTLY AND ACCURATELY PROVIDE AN  ELECTRONIC  TAX  CLEARANCE,  AND  THE
FAILURE  BY  THE  APPLICANT TO PROVIDE SUCH INFORMATION SHALL RENDER THE
APPLICATION INCOMPLETE.
  4.  THE APPLICATION FOR A LICENSE SUBJECT TO ELECTRONIC TAX CLEARANCE,
OR THE INSTRUCTIONS FOR  SUCH  APPLICATION,  SHALL  CLEARLY  INFORM  THE
APPLICANT  THAT  AN ELECTRONIC TAX CLEARANCE WILL BE PERFORMED AND THAT,
IF THE TAX CLEARANCE IS DENIED, THE APPLICANT MUST CONTACT  THE  DEPART-
MENT  OF  TAXATION  AND  FINANCE TO RESOLVE ANY PAST-DUE TAX LIABILITIES
BEFORE THE APPLICATION FOR A LICENSE OR RENEWAL MAY BE RESUBMITTED.
  5. IF AN ELECTRONIC TAX CLEARANCE IS DENIED BY THE DEPARTMENT OF TAXA-
TION AND FINANCE, THE GOVERNMENT ENTITY SHALL DENY ISSUANCE  OR  RENEWAL
OF  THE  REQUESTED LICENSE AND SHALL ELECTRONICALLY NOTIFY THE APPLICANT
TO CONTACT THE  DEPARTMENT  OF  TAXATION  AND  FINANCE  TO  RESOLVE  THE
PAST-DUE  TAX  LIABILITIES  AND THAT NO LICENSE MAY BE ISSUED OR RENEWED
UNTIL THE TAX LIABILITIES ARE RESOLVED.
  6. ANY TAX CLEARANCE OR RELATED  COMMUNICATIONS  SHALL  BE  BY  SECURE
ELECTRONIC  COMMUNICATION BETWEEN THE DEPARTMENT OF TAXATION AND FINANCE
AND THE REQUESTING GOVERNMENT ENTITY SUCH THAT PROCESSING OF  THE  ELEC-
TRONIC  APPLICATION  IS  NOT  DELAYED IF THE ELECTRONIC TAX CLEARANCE IS
RECEIVED.  NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY,  A  GOVERNMENT
ENTITY  SHALL  BE  AUTHORIZED TO SHARE ANY APPLICANT DATA OR INFORMATION
WITH THE DEPARTMENT OF TAXATION AND FINANCE THAT IS NECESSARY TO  ENSURE
THE  PROPER  MATCHING  OF THE APPLICANT TO THE TAX RECORDS MAINTAINED BY
THE DEPARTMENT OF TAXATION AND FINANCE.
  7. NO FEE SHALL BE CHARGED  TO  THE  APPLICANT  FOR  THE  PURPOSES  OF
RECEIVING AN ELECTRONIC TAX CLEARANCE.
  S  2.  The tax law is amended by adding a new section 171-w to read as
follows:
  S 171-W. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH  ELECTRONIC
TAX CLEARANCES FOR OCCUPATIONAL, PROFESSIONAL AND BUSINESS LICENSES.  1.
IN  ACCORDANCE  WITH  SECTION  3-505 OF THE GENERAL OBLIGATIONS LAW, THE
COMMISSIONER SHALL COOPERATE WITH ANY GOVERNMENT ENTITY THAT  ELECTS  TO
REQUIRE  AN  ELECTRONIC TAX CLEARANCE AS A PART OF AN ELECTRONIC LICENSE
APPLICATION PROCESS FOR WHICH THE GOVERNMENT ENTITY IS RESPONSIBLE.  FOR
THE  PURPOSES OF THIS SECTION, THE TERM "TAX LIABILITIES" SHALL MEAN ANY
TAX, SURCHARGE, OR FEE ADMINISTERED BY THE COMMISSIONER, OR ANY  PENALTY
OR  INTEREST  OWED  BY  AN  INDIVIDUAL OR ENTITY. THE TERM "PAST-DUE TAX
LIABILITIES" MEANS ANY UNPAID TAX LIABILITIES EQUAL TO OR IN  EXCESS  OF
TEN  THOUSAND  DOLLARS  WHICH  HAVE BECOME FIXED AND FINAL SUCH THAT THE
TAXPAYER NO LONGER HAS ANY RIGHT TO ADMINISTRATIVE OR  JUDICIAL  REVIEW.
FOR  THE PURPOSES OF THIS SECTION, THE TERMS "GOVERNMENT ENTITY," "ELEC-
TRONIC LICENSE APPLICATION," AND "LICENSE" SHALL HAVE THE  SAME  MEANING
AS PROVIDED IN SECTION 3-505 OF THE GENERAL OBLIGATIONS LAW.
  2.  THE COMMISSIONER, OR HIS OR HER DESIGNEE, SHALL COOPERATE WITH ANY
GOVERNMENT ENTITY EXERCISING ITS AUTHORITY PURSUANT TO SECTION 3-505  OF
THE GENERAL OBLIGATIONS LAW TO ESTABLISH PROCEDURES BY WHICH THE DEPART-
MENT  SHALL  ELECTRONICALLY  RECEIVE A TAX CLEARANCE REQUEST AS AN ELEC-
TRONIC LICENSE APPLICATION IS  PROCESSED,  AND  ELECTRONICALLY  TRANSMIT
SUCH  TAX  CLEARANCE  TO  THE  GOVERNMENT ENTITY. THESE PROCEDURES SHALL
INCLUDE THE IDENTIFICATION OF OWNERS, OFFICERS  OR  RESPONSIBLE  PERSONS
SUBJECT  TO  ELECTRONIC TAX CLEARANCE IN CONJUNCTION WITH AN APPLICATION
BY AN ENTITY, AND ANY OTHER PROCEDURES DEEMED NECESSARY TO CARRY OUT THE
PROVISIONS OF THIS SECTION.
  3. IN ANY INSTANCE WHERE A LICENSE OR LICENSE RENEWAL PROVIDED BY  THE
GOVERNMENT  ENTITY IS OF A TYPE THAT MAY BE ISSUED ONLY TO AN INDIVIDUAL

S. 6359--C                         170

OR ENTITY THAT IS A PERSON REQUIRED TO REGISTER PURSUANT TO SECTION  ONE
THOUSAND  ONE  HUNDRED THIRTY-FOUR OF THIS CHAPTER, THE DEPARTMENT SHALL
ALSO VERIFY THAT THE APPLICANT IS REGISTERED PURSUANT TO  SUCH  SECTION,
AND  NO  ELECTRONIC  TAX CLEARANCE MAY BE ISSUED UNLESS THE APPLICANT IS
REGISTERED PURSUANT TO SUCH SECTION.
  4. IF A TAX CLEARANCE IS DENIED, THE GOVERNMENT ENTITY PROCESSING  THE
APPLICATION SHALL PROVIDE NOTICE TO THE APPLICANT TO CONTACT THE DEPART-
MENT.   WHEN THE APPLICANT CONTACTS THE DEPARTMENT, THE DEPARTMENT SHALL
INFORM THE APPLICANT (A) WHAT PAST-DUE TAX LIABILITIES ARE AT ISSUE; (B)
THAT AN ELECTRONIC TAX CLEARANCE MAY BE RECEIVED BY FULLY SATISFYING THE
PAST-DUE TAX LIABILITIES OR BY MAKING PAYMENT ARRANGEMENTS  SATISFACTORY
TO THE COMMISSIONER OR, IF THE APPLICANT NEEDS TO REGISTER FOR SALES TAX
PURPOSES,  BY  REGISTERING  PURSUANT TO SECTION ONE THOUSAND ONE HUNDRED
THIRTY-FOUR OF THIS CHAPTER; AND (C) THE  GROUNDS  FOR  CHALLENGING  THE
DENIAL OF AN ELECTRONIC TAX CLEARANCE LISTED IN SUBDIVISION FIVE OF THIS
SECTION.  THE  GOVERNMENT ENTITY SHALL ALSO INFORM THE APPLICANT THAT AN
APPLICATION MAY BE  RESUBMITTED  AFTER  PAYMENT  FOR  THE  PAST-DUE  TAX
LIABILITIES  HAS  CLEARED, OR, IF A PAYMENT PLAN IS AGREED TO, AFTER THE
FIRST PAYMENT PURSUANT TO SUCH PLAN HAS CLEARED.
  5. (A) NOTWITHSTANDING ANY OTHER  PROVISION  OF  LAW,  AND  EXCEPT  AS
SPECIFICALLY  PROVIDED  HEREIN,  AN  APPLICANT  DENIED AN ELECTRONIC TAX
CLEARANCE SHALL HAVE NO RIGHT TO COMMENCE A COURT ACTION  OR  PROCEEDING
OR  SEEK  ANY OTHER LEGAL RECOURSE AGAINST THE DEPARTMENT OR THE GOVERN-
MENT ENTITY RELATED TO THE DENIAL OF AN ELECTRONIC TAX CLEARANCE BY  THE
DEPARTMENT.  AN APPLICANT MAY CHALLENGE SUCH DENIAL OF AN ELECTRONIC TAX
CLEARANCE ONLY ON THE GROUNDS THAT:
  (I) THE INDIVIDUAL OR ENTITY DENIED THE ELECTRONIC  TAX  CLEARANCE  IS
NOT THE INDIVIDUAL OR ENTITY WITH THE PAST-DUE TAX LIABILITIES AT ISSUE;
(II)  THE PAST-DUE TAX LIABILITIES WERE SATISFIED; (III) THE APPLICANT'S
WAGES ARE BEING GARNISHED FOR THE PAYMENT OF CHILD SUPPORT  OR  COMBINED
CHILD  AND SPOUSAL SUPPORT PURSUANT TO AN INCOME EXECUTION ISSUED PURSU-
ANT TO SECTION FIVE THOUSAND TWO HUNDRED FORTY-ONE OR FIVE THOUSAND  TWO
HUNDRED FORTY-TWO OF THE CIVIL PRACTICE LAW AND RULES OR ANOTHER STATE'S
INCOME WITHHOLDING ORDER AS AUTHORIZED UNDER PART FIVE OF ARTICLE FIVE-B
OF  THE FAMILY COURT ACT, OR GARNISHED BY THE DEPARTMENT FOR THE PAYMENT
OF THE PAST-DUE TAX LIABILITIES AT ISSUE; (IV) THE APPLICANT  IS  MAKING
CHILD  SUPPORT  PAYMENTS  OR COMBINED CHILD AND SPOUSAL SUPPORT PAYMENTS
PURSUANT TO A SATISFACTORY PAYMENT ARRANGEMENT UNDER SECTION ONE HUNDRED
ELEVEN-B OF THE SOCIAL SERVICES LAW WITH A SUPPORT  COLLECTION  UNIT  OR
OTHERWISE  MAKING  PERIODIC  PAYMENTS  IN  ACCORDANCE  WITH SECTION FOUR
HUNDRED FORTY OF THE FAMILY COURT ACT; OR (V) IF THE ONLY BASIS FOR  THE
DENIAL  OF  AN  ELECTRONIC  TAX CLEARANCE WAS THE APPLICANT'S FAILURE TO
REGISTER PURSUANT TO SECTION ONE THOUSAND  ONE  HUNDRED  THIRTY-FOUR  OF
THIS  CHAPTER,  THAT  THE  APPLICANT WAS PROPERLY REGISTERED PURSUANT TO
SUCH SECTION ONE THOUSAND ONE HUNDRED THIRTY-FOUR.
  (B) AN APPLICANT SEEKING TO CHALLENGE THE DENIAL OF AN ELECTRONIC  TAX
CLEARANCE  MUST PROTEST TO THE DEPARTMENT OR THE DIVISION OF TAX APPEALS
NO LATER THAN SIXTY DAYS FROM THE DATE OF THE ELECTRONIC NOTIFICATION TO
THE APPLICANT, PURSUANT TO SUBDIVISION FOUR  OF  SECTION  3-505  OF  THE
GENERAL OBLIGATIONS LAW, THAT THE ELECTRONIC TAX CLEARANCE WAS DENIED.
  (C)  NOTHING  IN  THIS  SUBDIVISION IS INTENDED TO LIMIT ANY APPLICANT
FROM SEEKING RELIEF FROM JOINT AND SEVERAL LIABILITY PURSUANT TO SECTION
SIX HUNDRED FIFTY-FOUR OF THIS CHAPTER, TO THE EXTENT THAT HE OR SHE  IS
ELIGIBLE  PURSUANT  TO  THAT  SECTION, OR ESTABLISHING TO THE DEPARTMENT
THAT THE ENFORCEMENT OF THE UNDERLYING TAX LIABILITIES HAS  BEEN  STAYED

S. 6359--C                         171

BY  THE  FILING  OF  A  PETITION PURSUANT TO THE BANKRUPTCY CODE OF 1978
(TITLE ELEVEN OF THE UNITED STATES CODE).
  6.  NOTWITHSTANDING  ANY  OTHER  PROVISION  OF LAW, THE DEPARTMENT MAY
EXCHANGE WITH A GOVERNMENT ENTITY  ANY  DATA  OR  INFORMATION  NECESSARY
THAT, IN THE DISCRETION OF THE COMMISSIONER, IS NECESSARY FOR THE IMPLE-
MENTATION  OF ANY ELECTRONIC TAX CLEARANCE. HOWEVER, NO OTHER AGENCY MAY
RE-DISCLOSE THIS INFORMATION TO ANY OTHER ENTITY OR PERSON,  OTHER  THAN
FOR  THE  PURPOSE  OF INFORMING THE APPLICANT THAT THE APPLICATION FOR A
LICENSE OR THE RENEWAL OF SUCH LICENSE WILL NOT BE PROCESSED DUE TO  THE
LACK  OF  A  REQUIRED  TAX  CLEARANCE AUTHORIZED BY ANY PROVISION OF LAW
UNLESS OTHERWISE PERMITTED BY LAW.
  7. EXCEPT AS OTHERWISE PROVIDED IN THIS  SECTION,  THE  ACTIVITIES  TO
COLLECT  PAST-DUE  TAX LIABILITIES UNDERTAKEN BY THE DEPARTMENT PURSUANT
TO THIS SECTION SHALL NOT IN ANY  WAY  LIMIT,  RESTRICT  OR  IMPAIR  THE
DEPARTMENT FROM EXERCISING ANY OTHER AUTHORITY TO COLLECT OR ENFORCE TAX
LIABILITIES UNDER ANY OTHER APPLICABLE PROVISION OF LAW.
  8.  EXCEPT  AS  OTHERWISE  PROVIDED IN THIS SECTION, THE PROVISIONS OF
THIS SECTION ARE NOT APPLICABLE TO THE TAX CLEARANCE REQUIRED BY SECTION
ONE HUNDRED SEVENTY-ONE-V OF THIS CHAPTER.
  S 3. This act shall take effect June 1, 2014; provided, however,  that
the  department of taxation and finance and any government entity elect-
ing to receive an electronic tax clearance from the department of  taxa-
tion  and finance may work to execute the necessary procedures and tech-
nical changes  to  support  the  electronic  tax  clearance  process  as
described  in  sections  one  and  two  of  this  act  before that date;
provided, further, that this effective date will not impact the adminis-
tration of any electronic tax clearance program  authorized  by  another
provision of law.

                                 PART I

  Section  1. Subsection (b) of section 612 of the tax law is amended by
adding a new paragraph 40 to read as follows:
  (40) IN THE CASE OF A BENEFICIARY OF A TRUST NOT SUBJECT TO TAX PURSU-
ANT TO SUBPARAGRAPH (D) OF PARAGRAPH THREE OF SUBSECTION (B) OF  SECTION
SIX  HUNDRED  FIVE  OF  THIS  ARTICLE  (EXCEPT  FOR  AN  INCOMPLETE GIFT
NON-GRANTOR  TRUST,  AS  DEFINED  BY   PARAGRAPH   FORTY-ONE   OF   THIS
SUBSECTION), THE AMOUNT OF ANY ACCUMULATION DISTRIBUTION AS DESCRIBED IN
SUBSECTION (B) OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE
CODE  FOR  THE  TAX  YEAR  NOT TO EXCEED THE UNDISTRIBUTED NET INCOME AS
DESCRIBED IN SUBSECTION (A) OF SECTION SIX  HUNDRED  SIXTY-FIVE  OF  THE
INTERNAL REVENUE CODE FOR APPLICABLE YEARS, SUCH AMOUNT TO BE DETERMINED
WITHOUT  REGARD  TO  SUBSECTION (C) OF SECTION SIX HUNDRED SIXTY-FIVE OF
THE INTERNAL REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED IN FEDERAL
GROSS INCOME FOR THE TAX YEAR, EXCEPT THAT, IN COMPUTING THE  AMOUNT  TO
BE  ADDED  UNDER THIS PARAGRAPH, SUCH BENEFICIARY SHALL DISREGARD INCOME
EARNED BY A TRUST IN A TAXABLE YEAR STARTING BEFORE JANUARY  FIRST,  TWO
THOUSAND  FOURTEEN AND IN ANY TAXABLE YEAR IN WHICH ANY OF THE FOLLOWING
CONDITIONS EXIST: (I) SUCH BENEFICIARY WAS NOT A RESIDENT OF  THE  STATE
DURING  SUCH  TAXABLE YEAR; (II) THE INCOME ACCUMULATED BY THE TRUST WAS
ACCUMULATED PRIOR TO THE BIRTH OF THE BENEFICIARY; OR (III)  THE  INCOME
ACCUMULATED  BY  THE  TRUST  WAS  ACCUMULATED PRIOR TO THE BENEFICIARY'S
TWENTY-FIRST BIRTHDAY. FOR PURPOSES OF  THIS  PARAGRAPH,  A  BENEFICIARY
SHALL  BE DEFINED AS A NEW YORK RESIDENT WHO, BUT FOR THE EXCEPTIONS SET
FORTH ABOVE IN SUBPARAGRAPHS (I), (II) AND (III) OF THIS  PARAGRAPH,  IS

S. 6359--C                         172

ELIGIBLE  TO  RECEIVE  A  DISTRIBUTION  DURING THE TAX YEAR IN WHICH THE
DISTRIBUTION FIRST COULD HAVE BEEN MADE.
  S 2. Subsection (b) of section 612 of the tax law is amended by adding
a new paragraph 41 to read as follows:
  (41)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
DEDUCTIONS  OF  THE  TRUST,  TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
TY-FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
THEREUNDER.
  S 3. Section 621 of the tax law, as added by chapter 272 of  the  laws
of  1963  and  subsection  (a)  as amended by chapter 267 of the laws of
1987, is amended to read as follows:
  S 621. [Credit] CREDITS to trust  beneficiary  receiving  accumulation
distribution.   (a) General. A resident beneficiary of a trust whose New
York adjusted gross income includes  all  or  part  of  an  accumulation
distribution by such trust, as defined in section six hundred sixty-five
of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
MAKE  THE  MODIFICATION REQUIRED BY PARAGRAPH FORTY OF SUBSECTION (B) OF
SECTION SIX HUNDRED TWELVE OF THIS PART, shall be allowed (1)  a  credit
against  the  tax  otherwise due under this article for all or a propor-
tionate part of any tax paid by the trust under this  article  or  under
FORMER article sixteen of this chapter (as such article was in effect on
or before December thirtieth, nineteen hundred sixty), for any preceding
taxable  year which would not have been payable if the trust had in fact
made distributions to its beneficiaries at the times and in the  amounts
specified in section six hundred sixty-six of the internal revenue code;
AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE FOR THE TAXA-
BLE YEAR FOR ANY INCOME TAX IMPOSED ON THE TRUST FOR THE TAXABLE YEAR OR
ANY  PRIOR  TAXABLE  YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLI-
TICAL SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, UPON INCOME BOTH
DERIVED THEREFROM AND SUBJECT TO TAX UNDER THIS ARTICLE,  PROVIDED  THAT
THE  AMOUNT  OF  THE  CREDIT  SHALL NOT EXCEED THE PERCENTAGE OF THE TAX
OTHERWISE DUE UNDER THIS ARTICLE DETERMINED BY DIVIDING THE  PORTION  OF
THE  INCOME THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION
AND TAXABLE TO THE BENEFICIARY UNDER THIS ARTICLE BY THE TOTAL AMOUNT OF
THE BENEFICIARY'S NEW YORK INCOME.
  (b) Limitation. The [credit] CREDITS  under  this  section  shall  not
reduce  the tax otherwise due from the beneficiary under this article to
an amount less than would have been due if the accumulation distribution
or his part thereof were excluded  from  his  New  York  adjusted  gross
income.
  S  4. Section 658 of the tax law is amended by adding a new subsection
(f) to read as follows:
   (F) (1) EVERY NONRESIDENT TRUST OR A TRUST DESCRIBED BY  SUBPARAGRAPH
(D)  OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF
THIS ARTICLE SHALL MAKE A RETURN FOR ANY TAXABLE YEAR IN WHICH IT  MAKES
AN  ACCUMULATION  DISTRIBUTION  WITHIN THE MEANING OF SUBDIVISION (B) OF
SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE TO A BENEFI-

S. 6359--C                         173

CIARY WHO IS A RESIDENT, WHICH  RETURN  SHALL  INCLUDE  (I)  INFORMATION
IDENTIFYING SUCH RESIDENT, (II) THE AMOUNT OF SUCH ACCUMULATION DISTRIB-
UTION, AND (III) SUCH OTHER INFORMATION AS THE COMMISSIONER MAY REQUIRE.
  (2)  EVERY  RESIDENT  TRUST  THAT DOES NOT FILE THE RETURN REQUIRED BY
SECTION SIX HUNDRED FIFTY-ONE OF THIS PART ON THE GROUND THAT IT IS  NOT
SUBJECT  TO  TAX  PURSUANT  TO  SUBPARAGRAPH  (D)  OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE FOR THE TAXA-
BLE YEAR SHALL MAKE A RETURN FOR SUCH TAXABLE  YEAR  SUBSTANTIATING  ITS
ENTITLEMENT  TO  THAT  EXEMPTION AND PROVIDING SUCH OTHER INFORMATION AS
THE COMMISSIONER MAY REQUIRE.
  (3) THE RETURNS REQUIRED BY THIS  SUBSECTION  SHALL  BE  FILED  ON  OR
BEFORE THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF EACH
TAXABLE  YEAR.  FOR  PURPOSES  OF THIS PARAGRAPH, "TAXABLE YEAR" MEANS A
YEAR OR A PERIOD WHICH WOULD BE A TAXABLE YEAR OF THE TRUST IF  IT  WERE
SUBJECT TO TAX UNDER THIS ARTICLE.
  S  5.  Paragraph 2 of subsection (h) of section 685 of the tax law, as
amended by chapter 190 of the laws  of  1990,  is  amended  to  read  as
follows:
  (2)  If any partnership [or], S corporation, OR TRUST required to file
a return or report under subsection (c) OR SUBSECTION (F) of section six
hundred fifty-eight or under section  six  hundred  fifty-nine  OF  THIS
ARTICLE  for any taxable year fails to file such return or report at the
time prescribed therefor (determined with regard  to  any  extension  of
time  for  filing),  or files a return or report which fails to show the
information required under such subsection (c) or  section  six  hundred
fifty-nine  OF THIS ARTICLE, unless it is shown that such failure is due
to reasonable cause and not due to willful neglect,  there  shall,  upon
notice  and demand by the commissioner and in the same manner as tax, be
paid by the partnership or S corporation a penalty for  each  month  (or
fraction thereof) during which such failure continues (but not to exceed
five months). The amount of such penalty for any month is the product of
fifty  dollars,  multiplied by the number of partners in the partnership
or shareholders in the S corporation during any part of the taxable year
who were subject to tax under this article during any part of such taxa-
ble year, EXCEPT THAT, IN THE CASE OF A  TRUST,  THE  PENALTY  SHALL  BE
EQUAL  TO  ONE  HUNDRED FIFTY DOLLARS A MONTH UP TO A MAXIMUM OF FIFTEEN
HUNDRED DOLLARS PER TAXABLE YEAR.
  S 6. Subdivision (b) of section 11-1712 of the administrative code  of
the  city of New York is amended by adding a new paragraph 36 to read as
follows:
  (36) IN THE CASE OF A BENEFICIARY OF A TRUST NOT SUBJECT TO TAX PURSU-
ANT TO SUBPARAGRAPH (D) OF PARAGRAPH THREE OF SUBSECTION (B) OF  SECTION
11-1705  OF  THIS  CHAPTER  (EXCEPT  FOR  AN INCOMPLETE GIFT NON-GRANTOR
TRUST, AS DEFINED BY PARAGRAPH THIRTY-SEVEN OF  THIS  SUBDIVISION),  THE
AMOUNT  OF  ANY ACCUMULATION DISTRIBUTION AS DESCRIBED IN SUBSECTION (B)
OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE  FOR  THE
TAX  YEAR  NOT  TO  EXCEED  THE UNDISTRIBUTED NET INCOME AS DESCRIBED IN
SUBSECTION (A) OF SECTION SIX HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE
CODE FOR APPLICABLE YEARS, SUCH AMOUNT TO BE DETERMINED  WITHOUT  REGARD
TO  SUBSECTION  (C)  OF  SECTION  SIX HUNDRED SIXTY-FIVE OF THE INTERNAL
REVENUE CODE, TO THE EXTENT NOT ALREADY INCLUDED IN FEDERAL GROSS INCOME
FOR THE TAX YEAR, EXCEPT THAT, IN COMPUTING THE AMOUNT TO BE ADDED UNDER
THIS PARAGRAPH, SUCH BENEFICIARY SHALL  DISREGARD  INCOME  EARNED  BY  A
TRUST  IN  A  TAXABLE  YEAR  STARTING BEFORE JANUARY FIRST, TWO THOUSAND
FOURTEEN AND IN ANY TAXABLE YEAR IN WHICH ANY OF  THE  FOLLOWING  CONDI-
TIONS EXIST: (I) SUCH BENEFICIARY WAS NOT A RESIDENT OF THE STATE DURING

S. 6359--C                         174

SUCH  TAXABLE YEAR; (II) THE INCOME ACCUMULATED BY THE TRUST WAS ACCUMU-
LATED PRIOR TO THE BIRTH OF THE BENEFICIARY; OR (III) THE INCOME ACCUMU-
LATED  BY  THE  TRUST  WAS  ACCUMULATED  PRIOR  TO   THE   BENEFICIARY'S
TWENTY-FIRST  BIRTHDAY.  FOR  PURPOSES  OF THIS PARAGRAPH, A BENEFICIARY
SHALL BE DEFINED AS A NEW YORK RESIDENT WHO, BUT FOR THE EXCEPTIONS  SET
FORTH  ABOVE  IN SUBPARAGRAPHS (I), (II) AND (III) OF THIS PARAGRAPH, IS
ELIGIBLE TO RECEIVE A DISTRIBUTION DURING THE  TAX  YEAR  IN  WHICH  THE
DISTRIBUTION FIRST COULD HAVE BEEN MADE.
  S  7. Subdivision (b) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 37 to read  as
follows:
  (37)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
DEDUCTIONS  OF  SUCH  TRUST, TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
TY FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
THEREUNDER.
  S 8. Section 11-1721 of the administrative code of  the  city  of  New
York, subdivisions (a) and (b) as amended by section 72 and such section
as  renumbered  by  section  43  of  chapter 639 of the laws of 1986, is
amended to read as follows:
  S 11-1721 [Credit] CREDITS to trust beneficiary receiving accumulation
distribution. (a) General. A city resident beneficiary of a trust  whose
city  adjusted  gross  income  includes  all  or part of an accumulation
distribution by such trust, as defined in section six hundred sixty-five
of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
MAKE THE MODIFICATION REQUIRED BY PARAGRAPH  THIRTY-SIX  OF  SUBDIVISION
(B) OF SECTION 11-1712 OF THIS SUBCHAPTER, shall be allowed (1) a credit
against  the  tax  otherwise due under this chapter for all or a propor-
tionate part of any tax paid by the trust under this  chapter  or  under
FORMER  title  T  of chapter forty-six of this code, as it was in effect
prior to September first, nineteen hundred eighty-six, for any preceding
taxable year which would not have been payable if the trust had in  fact
made  distributions to its beneficiaries at the times and in the amounts
specified in section six hundred sixty-six of the internal revenue code;
AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS CHAPTER FOR THE TAXA-
BLE YEAR FOR ANY INCOME TAX IMPOSED FOR THE TAXABLE YEAR  OR  ANY  PRIOR
TAXABLE YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVI-
SION  THEREOF,  OR  THE  DISTRICT  OF COLUMBIA, UPON INCOME BOTH DERIVED
THEREFROM AND SUBJECT TO TAX  UNDER  THIS  CHAPTER,  PROVIDED  THAT  THE
AMOUNT  OF  THE CREDIT SHALL NOT EXCEED THE PERCENTAGE OF THE TAX OTHER-
WISE DUE UNDER THIS CHAPTER DETERMINED BY DIVIDING THE  PORTION  OF  THE
INCOME  THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION AND
TAXABLE TO THE BENEFICIARY UNDER THIS CHAPTER BY THE TOTAL AMOUNT OF THE
BENEFICIARY'S NEW YORK CITY INCOME.
  (b) Limitation. The [credit] CREDITS  under  this  section  shall  not
reduce  the tax otherwise due from the beneficiary under this chapter to
an amount less than would have been due if the accumulation distribution

S. 6359--C                         175

or his or her part thereof were excluded from his or her  city  adjusted
gross income.
  S 9. This act shall take effect immediately and shall apply to taxable
years  beginning on or after January 1, 2014, provided that sections one
and six of this act shall not apply to income of a nonresident trust  or
an  exempt resident trust paid to a beneficiary before June 1, 2014, and
sections two and seven of this act shall not  apply  to  income  from  a
trust that is liquidated before June 1, 2014.

                                 PART J

  Section 1. Section 602 of the tax law is REPEALED.
  S  2.  Paragraph 4 of subsection (c) and paragraph 4 of subsection (d)
of section 606 of the tax law, paragraph 4 of subsection (c) as added by
chapter 309 of the laws of 1996 and paragraph 4  of  subsection  (d)  as
amended  by  chapter  2  of  the  laws  of  1995, are amended to read as
follows:
  (4) Part-year residents. In the case of a part-year resident taxpayer,
the credit under this subsection shall be allowed against the tax deter-
mined under subsections (a) through  (d)  of  section  six  hundred  one
reduced  by  the  credit permitted under subsection (b) of this section,
and any excess credit after such application shall  be  allowed  against
the  [taxes]  TAX  imposed by [sections six hundred two and] SECTION six
hundred three. Any remaining excess, after such  application,  shall  be
refunded  as  provided  in paragraph two hereof, provided, however, that
any overpayment under such paragraph shall be limited to the  amount  of
the remaining excess multiplied by a fraction, the numerator of which is
federal  adjusted  gross income for the period of residence, computed as
if the taxable year for federal income tax purposes were limited to  the
period  of  residence,  and the denominator of which is federal adjusted
gross income for the taxable year.
  (4) Part-year residents. In the case of a part-year resident taxpayer,
the credit under this subsection shall be allowed against the tax deter-
mined under subsections (a) through  (d)  of  section  six  hundred  one
reduced  by  the credits permitted under subsections (b), (c) and (m) of
this section, and any excess credit  after  such  application  shall  be
allowed  against  the  [taxes]  TAX imposed by [sections six hundred two
and] SECTION six hundred three. Any remaining excess, after such  appli-
cation, shall be refunded as provided in paragraph two hereof, provided,
however,  that  any overpayment under such paragraph shall be limited to
the amount of the remaining excess multiplied by a fraction, the numera-
tor of which is federal adjusted gross income for the  period  of  resi-
dence,  computed  as if the taxable year for federal income tax purposes
were limited to the period of residence, and the denominator of which is
federal adjusted gross income for the taxable year.
  S 3. Section 622 of the tax law is REPEALED.
  S 4. Section 636 of the tax law is REPEALED.
  S 5. Subsections (a), (b) and (c) of section 639 of the  tax  law,  as
added  by  chapter  170  of  the  laws  of  1994, are amended to read as
follows:
  (a) If an individual changes status from resident  to  nonresident  he
shall,  regardless  of his method of accounting, accrue to the period of
residence any items of income, gain,  loss,  deduction,  [items  of  tax
preference] or ordinary income portion of a lump sum distribution accru-
ing prior to the change of status, with the applicable modifications and
adjustments  to federal adjusted gross income[,] AND itemized deductions

S. 6359--C                         176

[and items of tax preference] under sections six hundred  twelve[,]  AND
six hundred fifteen [and six hundred twenty-two], if not otherwise prop-
erly  includible  or allowable for New York income tax purposes for such
period or a prior taxable year under his method of accounting.
  (b)  If  an  individual changes status from nonresident to resident he
shall, regardless of his method of accounting, accrue to the  period  of
nonresidence any items of income, gain, loss or deduction, [items of tax
preference] or ordinary income portion of a lump sum distribution accru-
ing prior to the change of status, with the applicable modifications and
adjustments  to federal adjusted gross income[,] AND itemized deductions
[and items of tax preference] under sections six hundred  twelve[,]  AND
six  hundred  fifteen  [and  six  hundred  twenty-two], other than items
derived from or connected with New York sources, if not otherwise  prop-
erly  includible  or allowable for New York income tax purposes for such
period or for a prior taxable year under his method of accounting.
  (c) No item of income, gain, loss, deduction,  [item  of  tax  prefer-
ence,]  ordinary  income portion of a lump sum distribution or modifica-
tion or adjustment which is accrued under this section  shall  be  taken
into  account  in  determining the tax under this article for any subse-
quent taxable year.
  S 6. Paragraphs 1, 2, 3 and 4 of subsection (a) of section 651 of  the
tax  law,  paragraph  1  as  amended by chapter 333 of the laws of 1987,
paragraph 2 as amended by chapter 28 of the laws of 1987, and paragraphs
3 and 4 as amended by chapter 170 of the laws of 1994,  are  amended  to
read as follows:
  (1)  every  resident  individual (A) required to file a federal income
tax return for the taxable year, or (B) having  federal  adjusted  gross
income  for  the  taxable  year,  increased  by  the modifications under
subsection (b) of section six hundred twelve, in excess of four thousand
dollars, or in excess of his New York standard deduction, if  lower,  or
(C)  [subject  to  tax  under  section  six  hundred two, or (D)] having
received during the taxable year a lump sum distribution any portion  of
which is subject to tax under section six hundred three;
  (2)  every  resident estate or trust required to file a federal income
tax return for the taxable year, or having any New York  taxable  income
for the taxable year, determined under section six hundred eighteen, [or
subject to tax under section six hundred two,] or having received during
the taxable year a lump sum distribution any portion of which is subject
to tax under section six hundred three;
  (3) every nonresident or part-year resident individual having New York
source  income  for  the taxable year, determined under part III of this
article, and having New York adjusted gross income for the taxable year,
determined under part II of this article, in excess  of  the  taxpayer's
New  York  standard  deduction,  [or  subject  to  tax under section six
hundred two,] or having received during the  taxable  year  a  lump  sum
distribution  any  portion  of which is subject to tax under section six
hundred three; and
  (4) every nonresident estate or  trust  or  part-year  resident  trust
having  New  York  source  income for the taxable year, determined under
part III of this article, and having New York adjusted gross income  for
the  taxable  year, determined under paragraph four of subsection (e) of
section six hundred one, [or subject to tax under  section  six  hundred
two,] or having received during the taxable year a lump sum distribution
any portion of which is subject to tax under section six hundred three.

S. 6359--C                         177

  S  7.  Paragraph 6 of subsection (b) of section 654 of the tax law, as
added by section 5 of part Q of chapter 407 of  the  laws  of  1999,  is
amended to read as follows:
  (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
"section  1  or  55"  shall  be read as "section six hundred one [or six
hundred two] of this article".
  S 8. Section 659 of the tax law, as amended by chapter 577 of the laws
of 1997, is amended to read as follows:
  S 659.  Report of federal changes, corrections or disallowances.    If
the amount of a taxpayer's federal taxable income, [federal items of tax
preference,]  total  taxable amount or ordinary income portion of a lump
sum distribution or includible gain of a trust reported on  his  federal
income  tax  return  for any taxable year, or the amount of a taxpayer's
earned income credit or credit for employment-related expenses set forth
on such return, or the amount of any federal foreign tax credit  affect-
ing  the  calculation  of the credit for Canadian provincial taxes under
section six hundred twenty or six hundred twenty-A of this  article,  or
the  amount of any claim of right adjustment, is changed or corrected by
the United States internal revenue service or other competent  authority
or  as  the  result of a renegotiation of a contract or subcontract with
the United States, or the amount an employer is required to  deduct  and
withhold  from  wages  for  federal  income  tax withholding purposes is
changed or corrected by such service or authority  or  if  a  taxpayer's
claim  for credit or refund of federal income tax is disallowed in whole
or in part, the  taxpayer  or  employer  shall  report  such  change  or
correction  or  disallowance within ninety days after the final determi-
nation of such change, correction, renegotiation or disallowance, or  as
otherwise  required  by the commissioner, and shall concede the accuracy
of such determination or state wherein it is erroneous.   The  allowance
of  a  tentative  carryback  adjustment  based upon a net operating loss
carryback pursuant to section sixty-four hundred eleven of the  internal
revenue  code  shall be treated as a final determination for purposes of
this section.  Any taxpayer filing an amended federal income tax  return
and any employer filing an amended federal return of income tax withheld
shall  also  file  within ninety days thereafter an amended return under
this article, and shall give such information as  the  commissioner  may
require.    The commissioner may by regulation prescribe such exceptions
to the requirements of this section as he or she deems appropriate.  For
purposes of this section, (i) the term "taxpayer" shall include a  part-
nership  having a resident partner or having any income derived from New
York sources, and a corporation with respect to which the  taxable  year
of  such  change,  correction,  disallowance or amendment is a year with
respect to which the election provided for in subsection (a) of  section
six  hundred  sixty  of  this  article  is  in effect, and (ii) the term
"federal income tax return" shall include the returns of income required
under sections six thousand thirty-one and six thousand thirty-seven  of
the  internal  revenue  code.    In the case of such a corporation, such
report shall  also  include  any  change  or  correction  of  the  taxes
described in paragraphs two and three of subsection (f) of section thir-
teen hundred sixty-six of the internal revenue code.  Reports made under
this  section by a partnership or corporation shall indicate the portion
of the change in each item of income, gain, loss or deduction  (and,  in
the case of a corporation, of each change in, or disallowance of a claim
for  credit  or  refund of, a tax referred to in the preceding sentence)
allocable to each partner or shareholder and shall set forth such  iden-

S. 6359--C                         178

tifying  information  with respect to such partner or shareholder as may
be prescribed by the commissioner.
  S 9. Subsection (d) of section 683 of the tax law, as amended by chap-
ter 170 of the laws of 1994, is amended to read as follows:
  (d) Omission of income, [item of tax preference,] total taxable amount
or  ordinary  income  portion of a lump sum distribution on return.--The
tax may be assessed at any time within six years after  the  return  was
filed if--
  (1)  an individual omits from his New York adjusted gross income, [the
sum of his items of tax preference,] or  the  total  taxable  amount  or
ordinary  income  portion  of a lump sum distribution an amount properly
includible therein which is in excess  of  twenty-five  percent  of  the
amount  of  New York adjusted gross income, [the sum of the items of tax
preference,] or the total taxable amount or ordinary income portion of a
lump sum distribution stated in the return, or
  (2) an estate or trust omits from its New York adjusted gross  income,
[the sum of its items of tax preference,] or the total taxable amount or
ordinary  income  portion  of a lump sum distribution an amount properly
includible therein which is in excess  of  twenty-five  percent  of  the
amount stated in the return of New York adjusted gross income determined
in  accordance  with  paragraph  four  of  subsection (e) of section six
hundred one, [or the sum of the items of tax preference,] or  the  total
taxable  amount  or  ordinary income portion of a lump sum distribution,
respectively. For purposes of this subsection there shall not  be  taken
into account any amount which is omitted in the return if such amount is
disclosed  in the return, or in a statement attached to the return, in a
manner adequate to apprise the commissioner of the nature and amount  of
the  item  of income, [tax preference,] total taxable amount or ordinary
income portion of a lump sum distribution.
  S 10. Subparagraph (B) of paragraph 4 of subsection (c) of section 685
of the tax law, as amended by chapter 28 of the laws of 1987, is amended
to read as follows:
  (B) Determination of annualized income installment.--In  the  case  of
any  required  installment,  the  annualized  income  installment is the
excess, if any, of an amount equal to the applicable percentage  of  the
tax  for the taxable year computed by placing on an annualized basis the
taxable income [and minimum taxable income] for months  in  the  taxable
year  ending before the due date for the installment, over the aggregate
amount of any prior required installments  for  the  taxable  year.  The
applicable  percentage  of  the  tax  shall  be  twenty-two and one-half
percent in the case of the first installment, forty-five percent in  the
case  of the second installment, sixty-seven and one-half percent in the
case of the third installment and ninety percent  in  the  case  of  the
fourth installment, and shall be computed without regard to any increase
in  the  rates  applicable  to the taxable year unless such increase was
enacted at least thirty days prior to the due date of the installment.
  S 11. Paragraphs 2 and 3 of subsection (a) of section 1301 of the  tax
law,  as amended by chapter 209 of the laws of 2011, are amended to read
as follows:
  (2) [for taxable years beginning before two thousand fifteen,  a  city
minimum income tax on such residents, and
  (3)] for taxable years beginning after nineteen hundred seventy-six, a
separate tax on the ordinary income portion of lump sum distributions of
such  residents,  at  the  rates  provided  for herein, such taxes to be
administered, collected and distributed by the commissioner as  provided
for in this article.

S. 6359--C                         179

  S 12. Section 1301-A of the tax law is REPEALED.
  S  13.  Subsection  (a)  of section 1302 of the tax law, as amended by
chapter 333 of the laws of 1987, is amended to read as follows:
  (a) Imposition of tax. The city personal income tax  (other  than  the
[city  minimum  income  tax  and  the] city separate tax on the ordinary
income portion of  lump  sum  distributions)  imposed  pursuant  to  the
authority  of this article shall be imposed for each taxable year on the
city taxable income of every city resident individual, estate and trust.
A taxpayer's taxable year for purposes of a tax imposed pursuant to  the
authority  of  this  article shall be the same as his taxable year under
article twenty-two of this chapter.
  S 14. The opening paragraph of subsection (a) of section 1304  of  the
tax  law, as amended by section 134 of part A of chapter 389 of the laws
of 1997, is amended to read as follows:
  A tax (other than the [city minimum income tax, the] city separate tax
relating to qualified higher education funds and the city  separate  tax
on the ordinary income portion of lump sum distributions) imposed pursu-
ant  to  the  authority  of section thirteen hundred one of this article
shall be determined as follows:
  S 15. Subsection (c) of section 1307 of the tax  law,  as  amended  by
chapter 712 of the laws of 2004, is amended to read as follows:
  (c)  When  an individual changes his status from city resident to city
nonresident, or from  city  nonresident  to  city  resident,  he  shall,
regardless  of  his  method  of  accounting, accrue any items of income,
gain, loss, deduction[, items of  tax  preference]  or  ordinary  income
portion  of  a  lump  sum  distribution  accruing prior to the change of
status, with the applicable modifications  and  adjustments  to  federal
adjusted gross income[,] AND itemized deductions [and items of tax pref-
erence]  under  sections  six  hundred twelve[,] AND six hundred fifteen
[and six hundred twenty-two], if not otherwise  properly  includible  or
allowable  for  New  York income tax purposes for such period or a prior
taxable year under his method of accounting. Such accruals shall be made
as provided in section six hundred thirty-nine of this chapter.
  S 16. Subsection (a) of section 1306 of the tax  law,  as  amended  by
chapter 333 of the laws of 1987, is amended to read as follows:
  (a)  General.  On  or  before  the  fifteenth  day of the fourth month
following the close of a taxable year, an income tax return under a city
tax imposed pursuant to the authority of this article shall be made  and
filed by or for every city resident individual, estate or trust required
to  file  a  New  York  state  personal income tax (including [a minimum
income tax and] a city separate tax on the ordinary  income  portion  of
lump sum distributions) return for the taxable year.
  S  17.  Section  11-1702 of the administrative code of the city of New
York is REPEALED.
  S 18. Subdivision (a) of section 11-1704 of the administrative code of
the city of New York, as amended by chapter 17 of the laws of  1997,  is
amended to read as follows:
  (a)  In  addition  to the taxes imposed by sections 11-1701[, 11-1702]
and 11-1703, there is hereby imposed for  each  taxable  year  beginning
after  nineteen  hundred eighty-nine but before nineteen hundred ninety-
nine, a tax surcharge on the city taxable income of every city  resident
individual, estate and trust.
  S 19. Subdivision (c) of section 11-1704 of the administrative code of
the  city of New York, as amended by chapter 271 of the laws of 1991, is
amended to read as follows:

S. 6359--C                         180

  (c) The tax surcharge imposed pursuant to this section shall be admin-
istered, collected and distributed by the commissioner of  taxation  and
finance  in  the  same  manner as the taxes imposed pursuant to sections
11-1701[, 11-1702] and 11-1703, and all of the provisions of this  chap-
ter, including sections 11-1706, 11-1721 and 11-1773, shall apply to the
tax surcharge imposed by this section.
  S  20.  Section  11-1722 of the administrative code of the city of New
York is REPEALED.
  S 21. Subdivision (a) of section 11-1751 of the administrative code of
the city of New York, as amended by chapter 333 of the laws of 1987,  is
amended to read as follows:
  (a)  General.  On  or  before  the  fifteenth  day of the fourth month
following the close of a taxable year, an income tax return  under  this
chapter  shall  be made and filed by or for every city resident individ-
ual, estate or trust required to file a New York state  personal  income
tax  (including  a [minimum income tax and] separate tax on the ordinary
income portion of lump sum distributions) return for the taxable year.
  S 22. Subdivision (b) of section 11-1754 of the administrative code of
the city of New York, as amended by chapter 712 of the laws of 2004,  is
amended to read as follows:
  (b)  City  taxable  income  [and  city minimum taxable income] as city
resident. The city taxable income [and city minimum taxable income]  for
the  portion of the year during which he or she is a city resident shall
be determined, except as provided in subdivision (c), as if his  or  her
taxable  year for federal income tax purposes were limited to the period
of his or her city resident status.
  S 23. Paragraph 6 of subdivision (b) of section 11-1755 of the  admin-
istrative code of the city of New York, as added by section 17 of part Q
of chapter 407 of the laws of 1999, is amended to read as follows:
  (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
"section 1 or 55" shall be read as "section 11-1701 [or 11-1702] of this
chapter".
  S  24.  Section  11-1759 of the administrative code of the city of New
York, as amended by chapter 577 of the laws of 1997, is amended to  read
as follows:
  S  11-1759 Report of federal changes, corrections or disallowances. If
the amount of a taxpayer's federal taxable income, [federal items of tax
preference,] total taxable amount or ordinary income portion of  a  lump
sum  distribution  or includible gain of a trust reported on his federal
income tax return for any taxable year, or the amount of  any  claim  of
right  adjustment, is changed or corrected by the United States internal
revenue service or other competent authority, or  as  the  result  of  a
renegotiation of a contract or subcontract with the United States or the
amount  an  employer  is  required to deduct and withhold from wages for
federal income tax withholding purposes is changed or corrected by  such
service  or  authority  or if a taxpayer's claim for credit or refund of
federal income tax is disallowed in whole or in part,  the  taxpayer  or
employer  shall  report such change or correction or disallowance within
ninety days after the final determination of  such  change,  correction,
renegotiation,  or disallowance, or as otherwise required by the commis-
sioner, and shall concede the accuracy of such  determination  or  state
wherein  it is erroneous. The allowance of a tentative carryback adjust-
ment based upon a net  operating  loss  carryback  pursuant  to  section
sixty-four  hundred eleven of the internal revenue code shall be treated
as a final determination for purposes  of  this  section.  Any  taxpayer
filing  an  amended federal income tax return and any employer filing an

S. 6359--C                         181

amended federal return of income tax withheld  shall  also  file  within
ninety  days  thereafter an amended return under this chapter, and shall
give such information as the commissioner may require. The  commissioner
may  by regulation prescribe such exceptions to the requirements of this
section as he or she deems appropriate. For purposes  of  this  section,
(i)  the  term  "taxpayer" shall include a partnership having a resident
partner or having any income derived from New York sources, and a corpo-
ration  with  respect  to  which  the  taxable  year  of  such   change,
correction,  disallowance  or  amendment is a year with respect to which
the election provided for in subsection (a) of section six hundred sixty
of the tax law is in effect, and  (ii)  the  term  "federal  income  tax
return"  shall include the returns of income required under sections six
thousand thirty-one and six thousand thirty-seven of the internal reven-
ue code. In the case of such  a  corporation,  such  report  shall  also
include  any  change  or correction of the taxes described in paragraphs
two and three of subsection (f) of section thirteen hundred sixty-six of
the internal revenue code. Reports made under this section by a partner-
ship or corporation shall indicate the portion of  the  change  in  each
item  of  income,  gain, loss or deduction (and, in the case of a corpo-
ration, of each change in, or disallowance of  a  claim  for  credit  or
refund  of,  a  tax  referred to in the preceding sentence) allocable to
each partner or shareholder and shall set forth such identifying  infor-
mation  with respect to such partner or shareholder as may be prescribed
by the commissioner.
  S 25. Subdivision (d) of section 11-1783 of the administrative code of
the city of New York, as amended by chapter 170 of the laws of 1994,  is
amended to read as follows:
  (d) Omission of income, [item of tax preference,] total taxable amount
or ordinary income portion of a lump sum distribution on return. The tax
may  be assessed at any time within six years after the return was filed
if:
  (1) an individual omits from his city adjusted gross income[, the  sum
of his items of tax preference, or] the total taxable amount or ordinary
income  portion of a lump sum distribution an amount properly includible
therein which is in excess of twenty-five percent of the amount of  city
adjusted  gross  income[, the sum of the items of tax preference] or the
total taxable amount or ordinary income portion of a lump  sum  distrib-
ution stated in the return, or
  (2) an estate or trust omits from its city adjusted gross income, [the
sum  of  its  items  of  tax preference,] or the total taxable amount or
ordinary income portion of a lump sum distribution  an  amount  properly
includible  therein  which  is  in  excess of twenty-five percent of the
amount stated in the return of city adjusted gross income, [or  the  sum
of the items of tax preference,] or the total taxable amount or ordinary
income portion of a lump sum distribution, respectively. For purposes of
this paragraph, city adjusted gross income means New York adjusted gross
income  as  determined under paragraph four of subsection (e) of section
six hundred one of the tax law.
  For purposes of this subdivision there shall not be taken into account
any amount which is omitted in the return if such amount is disclosed in
the return, or in a statement  attached  to  the  return,  in  a  manner
adequate  to  apprise  the  commissioner of the nature and amount of the
item of income, [tax preference,] the total taxable amount  or  ordinary
income portion of a lump sum distribution.

S. 6359--C                         182

  S  26.  Subparagraph  (B) of paragraph 4 of subdivision (c) of section
11-1785 of the administrative code of the city of New York,  as  amended
by chapter 333 of the laws of 1987, is amended to read as follows:
  (B) Determination of annualized income installment. In the case of any
required  installment,  the annualized income installment is the excess,
if any, of an amount equal to the applicable percentage of the  tax  for
the  taxable year computed by placing on an annualized basis the taxable
income [and minimum taxable income]  for  months  in  the  taxable  year
ending  before  the  due  date  for  the installment, over the aggregate
amount of any prior required installments  for  the  taxable  year.  The
applicable  percentage  of  the  tax  shall  be  twenty-two and one-half
percent in the case of the first installment, forty-five percent in  the
case  of the second installment, sixty-seven and one-half percent in the
case of the third installment and ninety percent  in  the  case  of  the
fourth installment, and shall be computed without regard to any increase
in  the  rates  applicable  to the taxable year unless such increase was
enacted at least thirty days prior to the due date of the installment.
  S 27. This act shall take effect  immediately  and  apply  to  taxable
years beginning on or after January 1, 2014.

                                 PART K

                          Intentionally Omitted

                                 PART L

                          Intentionally Omitted

                                 PART M

  Section 1. Paragraphs 1 and 4 of subsection (vv) of section 606 of the
tax  law,  as added by section 1 of part CC of chapter 59 of the laws of
2013, are amended to read as follows:
  1. An individual taxpayer who meets the eligibility standards in para-
graph two of this subsection shall be allowed a credit against the taxes
imposed by this article of three hundred fifty dollars  per  return  for
tax  [years]  YEAR two thousand fourteen[, two thousand fifteen, and two
thousand sixteen].
  4. For [each] THE year this credit is allowed, on  or  before  October
fifteenth  of such year, the commissioner shall determine the taxpayer's
eligibility for this credit utilizing the information available  to  the
commissioner  on the taxpayer's personal income tax return filed for the
taxable year two years prior to the taxable year in which the credit  is
allowed. For those taxpayers whom the commissioner has determined eligi-
ble  for  this credit, the commissioner shall advance a payment of three
hundred fifty dollars. When a taxpayer files his or her return  for  the
taxable year, such taxpayer shall properly reconcile that payment on his
or her return.
  S 2. This act shall take effect immediately.

                                 PART N

S. 6359--C                         183

  Section  1.  Paragraph  1  of subsection (a) of section 651 of the tax
law, as amended by chapter 333 of the laws of 1987, is amended  to  read
as follows:
  (1)  every  resident  individual (A) required to file a federal income
tax return for the taxable year, or (B) having  federal  adjusted  gross
income  for  the  taxable  year,  increased  by  the modifications under
subsection (b) of section six hundred twelve OF THIS ARTICLE, in  excess
of [four thousand dollars, or in excess of] his OR HER New York standard
deduction,  [if  lower,] or (C) subject to tax under section six hundred
two OF THIS ARTICLE, or (D) having received during the  taxable  year  a
lump  sum  distribution  any  portion  of  which is subject to tax under
section six hundred three OF THIS ARTICLE;
  S 2. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2014.

                                 PART O

  Section 1. Paragraph 1 of subdivision (a) of section  28  of  the  tax
law,  as  amended  by  section  1 of part I of chapter 59 of the laws of
2012, is amended to read as follows:
  (1) A taxpayer which is a qualified commercial production company,  or
which is a sole proprietor of a qualified commercial production company,
and  which  is subject to tax under article nine-A or twenty-two of this
chapter, shall be allowed a credit against such  tax,  pursuant  to  the
provisions referenced in subdivision (c) of this section, to be computed
as  provided in this section. Provided, however, to be eligible for such
credit, at least seventy-five percent of the production costs (excluding
post production costs) paid or incurred directly  and  predominantly  in
the  actual  filming  or  recording  of the qualified commercial must be
costs incurred in New York state. The tax  credit  allowed  pursuant  to
this  section  shall  apply  to  taxable  years beginning before January
first, two thousand [fifteen] SEVENTEEN.
  S 2.  Subparagraph (iii) of paragraph 2 of subdivision (a) of  section
28  of  the  tax law, as amended by section 2 of part I of chapter 59 of
the laws of 2012, is amended to read as follows:
  (iii) The state annually will disburse  three  million  of  the  total
seven  million  in  tax credits to all eligible production companies who
film or record a qualified commercial outside of the metropolitan commu-
ter transportation district as defined in section twelve hundred  sixty-
two  of  the  public  authorities law; provided, however, that if, after
JULY THIRTY-FIRST the  state  reviews  all  applications  from  eligible
production  companies  who film or record a qualified commercial outside
of the metropolitan commuter district for  a  given  year,  tax  credits
remain  unallocated  under  this  subparagraph,  those  credits shall be
allotted to the credits set forth in subparagraph (i) of this  paragraph
for use consistent with the purposes of such subparagraph. The amount of
the  credit  shall  be the product (or pro rata share of the product, in
the case of a member of a partnership) of five percent of the  qualified
production  costs  paid  or  incurred  in  the production of a qualified
commercial,  provided  that  the  qualified  production  costs  paid  or
incurred  are  attributable  to  the  use  of  tangible  property or the
performance of services within the state in the production of such qual-
ified commercial. To be eligible for said  credit  the  total  qualified
production  costs of a qualified production company must be greater than
[two] ONE hundred thousand dollars in the aggregate during the  calendar

S. 6359--C                         184

year.  Such credit will be applied to qualified production costs exceed-
ing [two] ONE hundred thousand dollars in a calendar year.
  S  3.   Paragraph (a) of subdivision 38 of section 210 of the tax law,
as amended by section 3 of part I of chapter 59 of the laws of 2012,  is
amended to read as follows:
  (a)  Allowance  of  credit.  A  taxpayer  that is eligible pursuant to
provisions of section twenty-eight of this chapter shall  be  allowed  a
credit  to  be  computed  as  provided  in  such section against the tax
imposed by this article. The tax credit allowed pursuant to this section
shall apply to taxable years beginning before January first,  two  thou-
sand [fifteen] SEVENTEEN.
  S  4. Paragraph 1 of subsection (jj) of section 606 of the tax law, as
amended by section 4 of part I of chapter 59 of the  laws  of  2012,  is
amended to read as follows:
  (1)  Allowance  of credit. A taxpayer that is eligible pursuant to the
provisions of section twenty-eight of this chapter shall  be  allowed  a
credit  to  be  computed  as  provided  in  such section against the tax
imposed by this article. The tax credit allowed pursuant to this section
shall apply to taxable years beginning before January first,  two  thou-
sand [fifteen] SEVENTEEN.
  S 5. This act shall take effect immediately.

                                 PART P

  Section  1.  Subdivision 4 of section 22 of the public housing law, as
amended by section 2 of part J of chapter 59 of the  laws  of  2012,  is
amended to read as follows:
  4.  Statewide  limitation. The aggregate dollar amount of credit which
the commissioner may allocate to  eligible  low-income  buildings  under
this article shall be [forty-eight] FIFTY-SIX million dollars. The limi-
tation  provided  by  this subdivision applies only to allocation of the
aggregate dollar amount of credit by  the  commissioner,  and  does  not
apply to allowance to a taxpayer of the credit with respect to an eligi-
ble low-income building for each year of the credit period.
  S 2. Subdivision 4 of section 22 of the public housing law, as amended
by section one of this act, is amended to read as follows:
  4.  Statewide  limitation. The aggregate dollar amount of credit which
the commissioner may allocate to  eligible  low-income  buildings  under
this  article shall be [fifty-six] SIXTY-FOUR million dollars. The limi-
tation provided by this subdivision applies only to  allocation  of  the
aggregate  dollar  amount  of  credit  by the commissioner, and does not
apply to allowance to a taxpayer of the credit with respect to an eligi-
ble low-income building for each year of the credit period.
  S 3. This act shall take effect immediately; provided,  however,  that
section two of this act shall take effect April 1, 2015.

                                 PART Q

  Section  1.  This  act enacts into law components of legislation which
are necessary to implement the provisions relating to brownfields.  Each
component  is wholly contained within a Subpart identified as Subparts A
through B. The effective date for each  particular  provision  contained
within  such  Subpart is set forth in the last section of such Part. Any
provision in any section  contained  within  a  Subpart,  including  the
effective  date of the Subpart, which makes a reference to a section "of
this act", when used in connection with that particular component, shall

S. 6359--C                         185

be deemed to mean and refer to the corresponding section of the  Subpart
in  which  it is found. Section three of this act sets forth the general
effective date of this act.

                                SUBPART A

  Section  1.  Subdivision  (b)  of section 27-1318 of the environmental
conservation law, as amended by section 2 of part E of  chapter  577  of
the laws of 2004, is amended to read as follows:
  (b)  Within  [sixty]  ONE  HUNDRED  EIGHTY days of commencement of the
remedial design, the owner of an inactive hazardous waste disposal site,
and/or any person responsible for implementing  a  remedial  program  at
such  site,  where  institutional  or  engineering controls are employed
pursuant to this title, shall execute an environmental easement pursuant
to title thirty-six of article seventy-one of this chapter.
  S 2. Subdivisions 2 and 7-a of section 27-1405  of  the  environmental
conservation  law, subdivision 2 as amended and subdivision 7-a as added
by section 2 of part A of chapter 577 of the laws of 2004,  are  amended
and  four new subdivisions 14-a, 14-b, 20-a, and 29 are added to read as
follows:
  2. "Brownfield site" or "site" shall  mean  any  real  property[,  the
redevelopment  or  reuse  of which may be complicated by the presence or
potential presence of] WHERE a contaminant OR CONTAMINANTS, DO NOT OVER-
WHELMINGLY CONSIST OF HISTORICAL FILL, AND EXCEED AT MORE  THAN  MINIMAL
LEVELS  THE  SOIL CLEANUP OBJECTIVES ESTABLISHED PURSUANT TO SUBDIVISION
SIX OF SECTION 27-1415 OF THIS TITLE OR OTHER HEALTH-BASED  OR  ENVIRON-
MENTAL STANDARDS PROMULGATED BY THE DEPARTMENT THAT ARE APPLICABLE BASED
ON  THE REASONABLY ANTICIPATED USE OF THE PROPERTY, AS DETERMINED BY THE
APPLICANT,  WHICH  CONTAMINATION  IS  DEMONSTRATED  BY  COMPLETION   AND
SUBMISSION  OF  AN  ASTM PHASE II ENVIRONMENTAL ASSESSMENT REPORT WITHIN
NINETY DAYS OF APPLICATION SUBMISSION, AND, IN ADDITION,  IS  CHARACTER-
IZED  BY ANY OR ALL OF THE FOLLOWING: (I) A CURRENT LEGACY OF VACANCY OR
ABANDONMENT FROM PREVIOUS  INDUSTRIAL  OR  COMMERCIAL  ACTIVITY  OR  TAX
DELINQUENCY  FOR  AT LEAST ONE YEAR PRIOR TO THE DATE OF APPLICATION; OR
(II) A CURRENT AND HISTORICAL LEGACY OF SEVERE  ECONOMIC  OR  FUNCTIONAL
UNDERUTILIZATION  INCLUDING  USE  OF  SUCH  SITE AS A HAZARDOUS WASTE OR
SOLID WASTE FACILITY; OR (III) IN  THE  CASE  OF  A  SITE  CHARACTERIZED
PRIMARILY  BY  FORMER  INDUSTRIAL  ACTIVITY, FUNCTIONAL OBSOLESCENCE; OR
(IV) THE PROJECTED COST OF THE INVESTIGATION AND  REMEDIATION  BASED  ON
THE  REASONABLY  ANTICIPATED  USE  OF  THE PROPERTY AS DETERMINED BY THE
APPLICANT EXCEEDS FIFTY PERCENT OF THE CERTIFIED APPRAISED VALUE OF  THE
PROPERTY ABSENT CONTAMINATION; OR (V) THE SITE HAS BEEN CERTIFIED BY THE
MUNICIPALITY  IN  WHICH THE SITE IS LOCATED AS MEETING ANY OF THE CONDI-
TIONS SET FORTH  IN  THIS  OPENING  PARAGRAPH.  [Such  term]  EXCEPT  AS
PROVIDED  IN  PARAGRAPH (F) OF THIS SUBDIVISION, BROWNFIELD SITE OR SITE
shall not include real property:
  (a) listed in the registry of inactive hazardous waste disposal  sites
under section 27-1305 of this article at the time of application to this
program  and  given a classification as described in subparagraph one or
two of paragraph b of subdivision two of section 27-1305 of  this  arti-
cle; [provided, however except until July first, two thousand five, real
property  listed  in  the  registry of inactive hazardous waste disposal
sites under subparagraph two  of  paragraph  b  of  subdivision  two  of
section  27-1305  of  this  article  prior to the effective date of this
article, where such real property is owned by a volunteer shall  not  be
deemed ineligible to participate and further provided that the status of

S. 6359--C                         186

any  such  site  as listed in the registry shall not be altered prior to
the issuance of a certificate of completion pursuant to section  27-1419
of  this  title].  THE DEPARTMENT'S ASSESSMENT OF ELIGIBILITY UNDER THIS
PARAGRAPH  SHALL  NOT  CONSTITUTE  A  FINDING  CONCERNING LIABILITY WITH
RESPECT TO THE PROPERTY;
  (b) listed on the national priorities list established under authority
of 42 U.S.C. section 9605;
  (c) subject to an enforcement action under title seven or nine of this
article, [except] OR PERMITTED  AS  a  treatment,  storage  or  disposal
facility  [subject to a permit]; provided, that nothing herein contained
shall be deemed otherwise to exclude from the scope of the term  "brown-
field  site"  a  hazardous waste treatment, storage or disposal facility
having interim  status  according  to  regulations  promulgated  by  the
commissioner;
  (d)  subject to an order for cleanup pursuant to article twelve of the
navigation law or pursuant to title ten of  article  seventeen  of  this
chapter  except  such  property  shall not be deemed ineligible if it is
subject to a stipulation agreement; or
  (e) subject to any  other  on-going  state  or  federal  environmental
enforcement action related to the contamination which is at or emanating
from the site subject to the present application.
  (F)  IF A VOLUNTEER SUBMITS A REQUEST FOR PARTICIPATION FOR REAL PROP-
ERTY THAT WOULD OTHERWISE BE DEEMED EXCLUDED FROM  CLASSIFICATION  AS  A
BROWNFIELD  SITE  PURSUANT  TO  PARAGRAPH  (A), (C), (D), OR (E) OF THIS
SUBDIVISION, SUCH REAL PROPERTY SHALL NOT BE EXCLUDED, REGARDLESS OF THE
STATUS OF ANY REMEDIAL PROGRAM AT THE SITE, EVEN IF THE PROPERTY  IS  IN
THE OPERATION, MAINTENANCE AND MONITORING PHASE, PROVIDED THERE IS STILL
CONTAMINATION  ON  THE  PROPERTY  TO REMEDIATE, AND FURTHER PROVIDED THE
VOLUNTEER ENTERS INTO A BROWNFIELD SITE CLEANUP AGREEMENT IN  ACCORDANCE
WITH  SECTION  27-1409 OF THIS TITLE REQUIRING THE VOLUNTEER TO COMPLETE
THE REQUIRED REMEDIATION TO IMPLEMENT A REDEVELOPMENT PROJECT. IF A SITE
IS ADMITTED INTO THE PROGRAM, THE RELEVANT STATUTES AND  REGULATIONS  OF
THE  PROGRAM  SHALL  SERVE AS THE PRIMARY GUIDANCE TO THE DEPARTMENT FOR
THE DEPARTMENT'S OVERSIGHT AND OTHER RESPONSIBILITIES  TOWARD  THE  SITE
AND THE SITE'S APPLICANTS. ANY ON-GOING STATE REMEDIAL PROGRAM, ENFORCE-
MENT  ACTION  OR  ORDER  WITH  REGARD TO THE SITE SHALL BE STAYED BY THE
BROWNFIELD SITE CLEANUP AGREEMENT, AND SHALL TERMINATE WHEN  THE  VOLUN-
TEER RECEIVES A CERTIFICATE OF COMPLETION PURSUANT TO SECTION 27-1419 OF
THIS  TITLE,  EXCEPT  TO THE EXTENT THE ON-GOING STATE REMEDIAL PROGRAM,
ENFORCEMENT ACTION OR ORDER IS SEEKING TO REQUIRE AN OWNER OF  THE  SITE
AT  THE  TIME  OF THE DISPOSAL, OR OTHER PERSON RESPONSIBLE ACCORDING TO
APPLICABLE PRINCIPLES OF STATUTORY OR COMMON LAW LIABILITY,  TO  ADDRESS
AN  IMMINENT  AND SUBSTANTIAL THREAT TO PUBLIC HEALTH OR THE ENVIRONMENT
OR PAY PENALTIES OR RESPONSE COSTS, IN WHICH  CASE  THE  DEPARTMENT  CAN
CONTINUE  TO  SEEK  ENFORCEMENT  AGAINST THE RESPONSIBLE PARTIES. IN THE
EVENT THE BROWNFIELD SITE CLEANUP AGREEMENT IS TERMINATED, OR THE VOLUN-
TEER OR SUBSEQUENT SITE OWNER OR OPERATOR FAIL TO COMPLY WITH THE  TERMS
OF  AN  ENVIRONMENTAL EASEMENT IF ONE HAS BEEN CREATED PURSUANT TO TITLE
THIRTY-SIX OF ARTICLE SEVENTY-ONE OF THIS CHAPTER,  ANY  STATE  REMEDIAL
PROGRAM,  ENFORCEMENT ACTION OR ORDER MAY RESUME OR BE RECOMMENCED AFTER
TIMELY NOTICE TO ALL CONCERNED PARTIES.  IF THE PROPERTY  IS  LISTED  IN
THE  REGISTRY  OF  INACTIVE HAZARDOUS WASTE DISPOSAL SITES UNDER SECTION
27-1305 OF THIS ARTICLE, IT SHALL CEASE TO BE CLASSIFIED IN THE REGISTRY
UPON ISSUANCE OF THE CERTIFICATE OF COMPLETION PERTAINING TO THE CURRENT
AND FUTURE STATUS OF THE PROPERTY, UNLESS SUCH  CERTIFICATE  IS  REVOKED
FOR GOOD CAUSE.

S. 6359--C                         187

  7-a. "Contaminant" shall mean hazardous waste, HISTORIC FILL MATERIAL,
and/or petroleum as such terms are defined in this section.
  14-A.  "SEVERE ECONOMIC OR FUNCTIONAL UNDERUTILIZATION" SHALL MEAN THE
BROWNFIELD SITE AND ANY IMPROVEMENTS: (A) ON WHICH A BUILDING OR  BUILD-
INGS CONTAINING NO MORE THAN FIFTY PERCENT OF THE PERMISSIBLE FLOOR AREA
UNDER  APPLICABLE  ZONING IS BEING UTILIZED; OR (B) HAS A VALUE OF EQUAL
TO OR LESS THAN SEVENTY PERCENT OF THE FLOOR AREA OF THE  AVERAGE  VALU-
ATION OF LAND IN THE COUNTY OR CITY IN WHICH THE LAND IS LOCATED, EXCEPT
IN  A  CITY HAVING A POPULATION OF ONE MILLION OR MORE INHABITANTS WHERE
THE AVERAGE VALUATION SHALL BE BASED ON THE COUNTY IN WHICH THE LAND  IS
LOCATED.
  14-B. "FUNCTIONAL OBSOLESCENCE" SHALL MEAN THE BROWNFIELD SITE AND ANY
IMPROVEMENTS  THEREON THAT: (A) CAN NO LONGER BE FUNCTIONALLY OR ECONOM-
ICALLY UTILIZED IN THE  CAPACITY  IN  WHICH  IT  WAS  FORMERLY  UTILIZED
BECAUSE  OF:  (I) THE CONFIGURATION OF THE BUILDING; OR (II) SUBSTANTIAL
STRUCTURAL DEFECTS NOT BROUGHT ABOUT BY DEFERRED  MAINTENANCE  PRACTICES
OR  INTENTIONAL CONDUCT; OR (B) THE ENTIRE SITE OR A SIGNIFICANT PORTION
THEREOF, WITH OR WITHOUT IMPROVEMENTS IS USED IRREGULARLY  OR  INTERMIT-
TENTLY; OR (C) THE FUNCTIONALITY OF THE EQUIPMENT INSIDE THE BUILDING OR
BUILDINGS  IS  OBSOLETE  FOR  A  MODERN DAY APPLICATION; OR (D) HAS BEEN
CERTIFIED BY THE MUNICIPALITY IN WHICH THE SITE IS LOCATED AS  UNDERUTI-
LIZED PURSUANT TO THE CRITERIA IN THIS SUBDIVISION.
  20-A. "MINIMALLY CONTAMINATED SITE" SHALL MEAN ANY REAL PROPERTY WHERE
A  CONTAMINANT  IS PRESENT AT LEVELS THAT ONLY MINIMALLY EXCEED THE SOIL
CLEANUP OBJECTIVES ESTABLISHED PURSUANT TO SUBDIVISION  SIX  OF  SECTION
27-1415  OF  THIS  TITLE OR OTHER APPLICABLE OR RELEVANT AND APPROPRIATE
REQUIREMENTS.
  29. "HISTORIC FILL MATERIAL" MEANS NON-INDIGENOUS MATERIAL,  DEPOSITED
OR  DISPOSED  OF  TO  RAISE  THE TOPOGRAPHIC ELEVATION OF REAL PROPERTY,
WHICH MATERIAL MAY HAVE BEEN CONTAMINATED PRIOR  TO  EMPLACEMENT,  WHICH
CONTAINS  CONTAMINANTS  SIGNIFICANTLY  ABOVE THE RESTRICTED SOIL CLEANUP
OBJECTIVES ESTABLISHED PURSUANT TO SUBDIVISION SIX OF SECTION 27-1415 OF
THIS TITLE BASED ON THE REASONABLY ANTICIPATED USE OF THE  PROPERTY,  AS
DETERMINED  BY THE APPLICANT, AND IS IN NO WAY CONNECTED WITH THE SUBSE-
QUENT OPERATIONS AT THE LOCATION OF THE EMPLACEMENT AND WHICH  INCLUDES,
WITHOUT  LIMITATION, CONSTRUCTION AND DEMOLITION DEBRIS INCLUDING UNCON-
TAMINATED SOLID  WASTE  RESULTING  FROM  THE  CONSTRUCTION,  REMODELING,
REPAIR AND DEMOLITION OF UTILITIES, STRUCTURES, LAND CLEARING AND ROADS.
HISTORIC  FILL  MATERIAL  MAY INCLUDE COAL, COAL ASH, COAL RESIDUE, WOOD
ASH, MUNICIPAL SOLID WASTE INCINERATOR ASH, CONSTRUCTION AND  DEMOLITION
DEBRIS,  DREDGED  SEDIMENTS,  RAILROAD  BALLAST,  REFUSE,  LAND CLEARING
DEBRIS, SOIL, SLAG, AND SOLID WASTE. IT MAY  ALSO  INCLUDE  SOLID  WASTE
RESULTING  FROM  DREDGE  SPOILS, INCINERATOR RESIDUE, DEMOLITION DEBRIS,
COAL ASH, FLY ASH, AND NONHAZARDOUS WASTE. HISTORIC FILL  MATERIAL  DOES
NOT  INCLUDE  ANY  MATERIAL  WHICH IS CHEMICAL PRODUCTION WASTE OR WASTE
FROM PROCESSING OF METAL OR MINERAL ORES, RESIDUES, SLAG OR TAILINGS. IN
ADDITION, HISTORIC FILL MATERIAL DOES NOT INCLUDE ANY MATERIAL CONNECTED
WITH  A  MUNICIPAL  SOLID  WASTE  SITE  BUILT  AFTER  NINETEEN   HUNDRED
SIXTY-TWO.
  S  3.  Subdivision  1  and  paragraph  (a) of subdivision 8 of section
27-1407 of the environmental conservation law, as amended by  section  3
of  part  A  of  chapter 577 of the laws of 2004, are amended to read as
follows:
  1. A person who seeks to participate in this program  shall  submit  a
request  to  the  department  on a form provided by the department. Such
form shall include information to be determined by the department suffi-

S. 6359--C                         188

cient to allow the department to determine eligibility and the  current,
intended and reasonably anticipated future land use of the site pursuant
to  section 27-1415 of this title.  ANY SUCH PERSON SHALL SUBMIT AN ASTM
PHASE  II ENVIRONMENTAL SITE INVESTIGATION REPORT WITH AN APPLICATION OR
WITHIN NINETY DAYS OF SUBMISSION OF THE APPLICATION TO DEMONSTRATE  THAT
THE  SITE  MEETS THE CONTAMINATION CRITERIA IN THE BROWNFIELD SITE DEFI-
NITION OF THIS TITLE.
  (a) the department determines that the request is  for  real  property
which  does not meet the requirements of a brownfield site as defined in
this title, BUT SUCH REJECTION, IN AND BY ITSELF, DOES NOT PROHIBIT  THE
SITE FROM QUALIFYING FOR THE NY RAPID PROGRAM IN SECTION 27-1437 OF THIS
TITLE; or
  S 4. Intentionally omitted.
  S  5.  Subdivision 6 of section 27-1407 of the environmental conserva-
tion law, as added by section 1 of part A of chapter 1 of  the  laws  of
2003, is amended to read as follows:
  6.  The  department shall use all best efforts to expeditiously notify
the applicant within forty-five days after receiving their  request  for
participation  WHETHER THE SITE MEETS THE BROWNFIELD SITE DEFINITION AND
that such request is either accepted or rejected.   FOR APPLICANTS  THAT
DO  NOT  SUBMIT  AN  ASTM PHASE II ENVIRONMENT SITE INVESTIGATION REPORT
WITH THEIR APPLICATION, THE FORTY-FIVE DAY ACCEPTANCE  OR  REJECTION  OF
THEIR  APPLICATION  IS DEFERRED UNTIL THE DATE PROOF OF CONTAMINATION IS
RECEIVED, WHICH SHALL BE  RECEIVED  NO  LATER  THAN  NINETY  DAYS  AFTER
SUBMISSION  OF  THE APPLICATION. FOR APPLICANTS THAT MEET THE BROWNFIELD
SITE DEFINITION CONTAMINATION CRITERIA  BUT  THE  DEPARTMENT  DETERMINES
HAVE  NOT DEMONSTRATED ONE OF THE OTHER BROWNFIELD SITE CHARACTERIZATION
CRITERIA, THE APPLICANT IS ENTITLED  TO  PARTICIPATE  IN  THE  NY  RAPID
PROGRAM  PURSUANT  TO  SECTION  27-1437  OF THIS TITLE. IF THE APPLICANT
CONTENDS THAT A PROPER DEMONSTRATION OF  THE  CHARACTERIZATION  CRITERIA
HAS  BEEN  MADE,  BUT THE DEPARTMENT HAS REJECTED THE DEMONSTRATION, THE
APPLICANT MAY ELECT TO COMMENCE THE DISPUTE RESOLUTION PROCESS  PURSUANT
TO SUBDIVISION THREE OF SECTION 27-1409 OF THIS TITLE.
  S  6.  Subdivision 9 of section 27-1407 of the environmental conserva-
tion law is amended by adding a new paragraph (g) to read as follows:
  (G) THE PERSON'S PARTICIPATION  IN  ANY  REMEDIAL  PROGRAM  UNDER  THE
DEPARTMENT'S  OVERSIGHT  WAS  TERMINATED BY THE DEPARTMENT OR BY A COURT
FOR FAILURE TO SUBSTANTIALLY COMPLY WITH AN AGREEMENT  OR  ORDER  WITHIN
THE LAST FORTY-TWO MONTHS.
  S  7.  Subdivisions 2, 3 and 7 of section 27-1409 of the environmental
conservation law, as amended by section 4 of part A of  chapter  577  of
the laws of 2004, are amended to read as follows:
  2.  One  requiring  (A)  the  [applicant] PARTICIPANT to pay for state
costs, INCLUDING THE RECOVERY OF STATE COSTS INCURRED BEFORE THE  EFFEC-
TIVE  DATE  OF SUCH AGREEMENT; provided, however, that SUCH COSTS MAY BE
BASED ON A REASONABLE FLAT-FEE FOR OVERSIGHT, WHICH  SHALL  REFLECT  THE
PROJECTED  FUTURE  STATE  COSTS  INCURRED  IN NEGOTIATING AND OVERSEEING
IMPLEMENTATION OF SUCH AGREEMENT; AND
  (B) with respect to a brownfield site which the department has  deter-
mined  constitutes a significant threat to the public health or environ-
ment the department may include a provision requiring the  applicant  to
provide  a  technical assistance grant, as described in subdivision four
of section 27-1417 of this title  and  under  the  conditions  described
therein,  to an eligible party in accordance with procedures established
under such program, with the cost of such a grant incurred by  a  volun-
teer  serving  as an offset against such state costs[.  Where the appli-

S. 6359--C                         189

cant is a participant, the department shall include provisions  relating
to  recovery  of  state costs incurred before the effective date of such
agreement];
  3. One setting forth a process for resolving disputes arising from the
DEMONSTRATION  OF  PROOF  SUBMITTED  TO  QUALIFY FOR THE BROWNFIELD SITE
DEFINITION, OR AN evaluation, analysis, and oversight of the implementa-
tion of the REPORT OR work plan as described;
  7. One stating that the [department]  STATE  shall  not  consider  the
applicant  an  operator  of  such  brownfield  site  based  solely  upon
execution or implementation of such brownfield  site  cleanup  agreement
for purposes of remediation liability;
  S 8. Intentionally omitted.
  S  9.  Subdivision 2 of section 27-1413 of the environmental conserva-
tion law, as amended by section 6 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  2.  For  all [other] sites NOT ELIGIBLE TO PARTICIPATE IN THE NY RAPID
PROGRAM PURSUANT TO SECTION 27-1437 OF THIS TITLE, the  applicant  shall
develop  and  evaluate  at least two remedial alternatives, one of which
would  achieve  a  Track  1  cleanup.  The  department  shall  have  the
discretion  to  require  the  evaluation of additional alternatives at a
site that has been determined to pose a significant threat.  The  appli-
cant  shall  submit the alternatives analysis [as a part of the remedial
work plan] to the  department  for  review,  approval,  modification  or
rejection.
  S  10. Subdivision 4 of section 27-1415 of the environmental conserva-
tion law, as amended by section 7 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  4.  Tracks. The commissioner, in consultation with the commissioner of
health, shall propose within twelve months and thereafter timely promul-
gate regulations which create a multi-track approach for the remediation
of contamination, and, commencing on the effective date  of  such  regu-
lations,  utilize  such  multi-track  approach.  Such  regulations shall
provide that groundwater  use  in  Tracks  2,  3  or  4  can  be  either
restricted or unrestricted. The tracks shall be as follows:
  Track  1: The remedial program shall achieve a cleanup level that will
allow the site to be used for any purpose without restriction and  with-
out reliance on the long-term employment of institutional or engineering
controls,  and shall achieve contaminant-specific remedial action objec-
tives for soil which conform with those contained in the  generic  table
of  contaminant-specific remedial action objectives for unrestricted use
developed pursuant to subdivision six of this section.  Provided, howev-
er, that volunteers whose proposed remedial program [for the remediation
of groundwater] (1)(I) may require the long-term employment of  institu-
tional  or engineering controls FOR THE REMEDIATION OF GROUNDWATER after
the bulk reduction of groundwater contamination to asymptotic levels has
been achieved OR  (II)  MAY  REQUIRE  AN  INSTITUTIONAL  OR  ENGINEERING
CONTROL  FOR MORE THAN FIVE YEARS SOLELY TO ADDRESS SOIL VAPOR INTRUSION
FROM THEIR OWN SITE OR LONGER TO ADDRESS  OFF-SITE  VAPOR  ENTERING  THE
SITE;  but  (2)  whose program would otherwise conform with the require-
ments necessary to qualify for Track 1, shall qualify for Track 1.
  Track 2: The remedial program may include restrictions on the  use  of
the  site  or reliance on the long-term employment of engineering and/or
institutional controls, but shall achieve contaminant-specific  remedial
action  objectives for soil which conform with those contained in one of
the generic tables developed pursuant to subdivision six of this section

S. 6359--C                         190

without the use of institutional or engineering controls to  reach  such
objectives.
  Track 3: The remedial program shall achieve contaminant-specific reme-
dial  action objectives for soil which conform with the criteria used to
develop the generic tables for such  objectives  developed  pursuant  to
subdivision six of this section but may use site specific data to deter-
mine such objectives.
  Track  4: The remedial program shall achieve a cleanup level that will
be protective for the site's current, intended or reasonably anticipated
residential, commercial, or industrial use with  restrictions  and  with
reliance  on  the  long-term  employment of institutional or engineering
controls  to  achieve  such  level.  The  regulations  shall  include  a
provision  requiring  that  a cleanup level which poses a risk in excee-
dance of an excess cancer risk of one in one  million  for  carcinogenic
end  points  and  a  hazard index of one for non-cancer end points for a
specific contaminant at a specific site may be approved by  the  depart-
ment  without requiring the use of institutional or engineering controls
to eliminate exposure only upon a site specific finding by  the  commis-
sioner, in consultation with the commissioner of health, that such level
shall be protective of public health and environment. Such finding shall
be  included  in  the  draft  remedial  work plan for the site and fully
described in the notice and fact sheet provided for such work plan.
  S 11. Intentionally omitted.
  S 12. Paragraph (h) of subdivision 3 of section 27-1417 of  the  envi-
ronmental  conservation  law  is  REPEALED,  paragraph (i) is relettered
paragraph (h) and paragraph (f), as amended by section 8 of  part  A  of
chapter 577 of the laws of 2004, is amended to read as follows:
  (f)  Before  the  department  [finalizes] SELECTS a proposed [remedial
work plan] REMEDY FROM THE ALTERNATIVES SET FORTH  IN  THE  ALTERNATIVES
ANALYSIS  AS  PRESCRIBED  BY  SECTION  27-1413  OF THIS TITLE or makes a
determination that site conditions meet the requirements of  this  title
without  the  necessity  for  remediation pursuant to section 27-1411 of
this title, the department, in consultation  with  the  applicant,  must
notify  individuals  on  the  brownfield  site contact list. Such notice
shall include a fact sheet  describing  such  plan  and  provide  for  a
forty-five  day  public  comment  period.  The commissioner shall hold a
public meeting if requested by the affected community  and  the  commis-
sioner  has  found that the site constitutes a significant threat to the
public health or the environment. Further, the  affected  community  may
request  a  public meeting at sites that do not constitute a significant
threat. (1) To the extent that the department has determined  that  site
conditions  do  not  pose  a  significant  threat  and the site is being
addressed by a volunteer, the notice shall state that the department has
determined that no remediation is required for the  off-site  areas  and
that  the  department's determination of a significant threat is subject
to this forty-five day comment period. (2) If the [remedial  work  plan]
REMEDY  includes  a Track 2, Track 3 or Track 4 remedy at a non-signifi-
cant threat site, such comment period shall apply both to  the  approval
of  the  alternatives analysis by the department, IF APPLICABLE, and the
proposed remedy selected by the applicant.
  S 13. Paragraph (a) of subdivision 2  and  subdivision  3  of  section
27-1419 of the environmental conservation law, paragraph (a) of subdivi-
sion  2 as added by section 1 of part A of chapter 1 of the laws of 2003
and subdivision 3 as amended by chapter 390 of the  laws  of  2008,  are
amended to read as follows:

S. 6359--C                         191

  (a)  a description of the remediation activities completed pursuant to
the remedial work plan AND ANY INTERIM REMEDIAL MEASURES for the  brown-
field site;
  3.  Upon receipt of the final engineering report, the department shall
review such report and the data submitted  pursuant  to  the  brownfield
site cleanup agreement as well as any other relevant information regard-
ing  the brownfield site. Upon satisfaction of the commissioner that the
remediation requirements set forth in this title have been  or  will  be
achieved  in  accordance with the timeframes, if any, established in the
remedial work plan, the commissioner shall issue a  written  certificate
of completion[, such]. THE certificate shall include such information as
determined  by the department of taxation and finance, including but not
limited to the brownfield site boundaries included in  the  final  engi-
neering  report,  the  date  of  the  brownfield  site CLEANUP agreement
[pursuant to section 27-1409 of this title,] and the applicable percent-
ages available AS OF THE DATE OF THE CERTIFICATE OF COMPLETION for  that
site  for  purposes  of  section  twenty-one  of the tax law[, with such
percentages to be determined as follows with respect to  such  qualified
site] for which the department has issued a notice to the taxpayer after
June twenty-third, two thousand eight that its request for participation
has  been  accepted  under  subdivision  six  of section 27-1407 of this
title[:
  For the purposes of calculating], THE APPLICABLE  PERCENTAGE  FOR  the
site  preparation credit component pursuant to paragraph two of subdivi-
sion (a) of section twenty-one of the tax law, and the on-site groundwa-
ter remediation credit component pursuant to paragraph four of  subdivi-
sion  (a)  of  section  twenty-one  of  the  tax  law[,  the  applicable
percentage] shall be based on the level of cleanup achieved pursuant  to
subdivision  four  of  section  27-1415  of  this title and the level of
cleanup of soils to contaminant-specific soil cleanup objectives promul-
gated pursuant to subdivision six of section 27-1415 of this  title,  up
to a maximum of fifty percent, as follows:
  (a)  soil  cleanup for unrestricted use, the protection of groundwater
or the protection of ecological  resources,  the  applicable  percentage
shall be fifty percent;
  (b)  soil cleanup for residential use, the applicable percentage shall
be forty percent,  except  for  Track  4  which  shall  be  twenty-eight
percent;
  (c)  soil  cleanup for commercial use, the applicable percentage shall
be thirty-three percent, except for Track 4 which shall  be  twenty-five
percent;
  (d)  soil  cleanup for industrial use, the applicable percentage shall
be twenty-seven percent, except for Track 4 which  shall  be  twenty-two
percent.
  NOTWITHSTANDING  ANY  OTHER PROVISION OF LAW TO THE CONTRARY, THE SITE
PREPARATION COMPONENT CREDIT AVAILABLE FOR ANY QUALIFIED  SITE  PURSUANT
TO THIS SUBDIVISION SHALL NOT EXCEED FIFTEEN MILLION DOLLARS.
  S  14. Subdivision 5 of section 27-1419 of the environmental conserva-
tion law, as amended by section 9 of part A of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  5.  A certificate of completion issued pursuant to this section may be
transferred [to the applicant's successors or assigns upon  transfer  or
sale  of  the  brownfield site] BY THE APPLICANT OR SUBSEQUENT HOLDER OF
THE CERTIFICATE OF COMPLETION TO A SUCCESSOR TO A REAL  PROPERTY  INTER-
EST,  INCLUDING  LEGAL  TITLE, EQUITABLE TITLE OR LEASEHOLD, IN ALL OR A
PART OF THE BROWNFIELD SITE FOR WHICH THE CERTIFICATE OF COMPLETION  WAS

S. 6359--C                         192

ISSUED.  Further, a certificate of completion may be modified or revoked
by the commissioner upon a finding that:
  (a)  Either  the  applicant, or the applicant's successors or assigns,
has failed to comply with the terms and  conditions  of  the  brownfield
site cleanup agreement;
  (b)  The applicant made a misrepresentation of a material fact tending
to demonstrate that it was qualified as a volunteer;
  (c) Either the applicant, or the applicant's  successors  or  assigns,
made  a misrepresentation of a material fact tending to demonstrate that
the cleanup levels identified in the brownfield site  cleanup  agreement
were reached; [or]
  (d)  THE ENVIRONMENTAL EASEMENT CREATED AND RECORDED PURSUANT TO TITLE
THIRTY-SIX OF ARTICLE SEVENTY-ONE OF THIS CHAPTER NO LONGER PROVIDES  AN
EFFECTIVE  OR  ENFORCEABLE  MEANS OF ENSURING THE PERFORMANCE OF MAINTE-
NANCE, MONITORING OR OPERATING  REQUIREMENTS,  OR  THE  RESTRICTIONS  ON
FUTURE  USES,  INCLUDING  RESTRICTIONS  ON  DRILLING  FOR OR WITHDRAWING
GROUNDWATER; OR
  (E) There is good cause for such modification or revocation.
  S 15.  Section  27-1423  of  the  environmental  conservation  law  is
REPEALED.
  S  16.  Section  27-1429  of  the  environmental  conservation law, as
amended by section 13 of part A of chapter 577 of the laws of  2004,  is
amended to read as follows:
S 27-1429. Permit waivers.
  The  department[,  by  and through the commissioner,] shall be EXEMPT,
AND SHALL BE authorized to exempt  a  person  from  the  requirement  to
obtain any state or local permit or other authorization for any activity
needed  to  implement a program for the investigation and/or remediation
of contamination AT OR EMANATING FROM A BROWNFIELD SITE;  provided  that
the  activity  is  conducted in a manner which satisfies all substantive
technical requirements applicable to like activity conducted pursuant to
a permit.
  S 17. Subdivision 1 of section 27-1431 of the environmental  conserva-
tion law is amended by adding a new paragraph c to read as follows:
  C. TO INSPECT FOR COMPLIANCE WITH THE SITE MANAGEMENT PLAN APPROVED BY
THE  DEPARTMENT,  INCLUDING (I) INSPECTION OF THE PERFORMANCE OF MAINTE-
NANCE, MONITORING AND OPERATIONAL ACTIVITIES REQUIRED  AS  PART  OF  THE
REMEDIAL  PROGRAM  FOR  THE  SITE, AND (II) TAKING SAMPLES IN ACCORDANCE
WITH PARAGRAPH A OF THIS SUBDIVISION.
  S 17-a. Section 27-1435  of  the  environmental  conservation  law  is
REPEALED.
  S  18.  The  environmental conservation law is amended by adding a new
section 27-1437 to read as follows:
S 27-1437. NY RAPID PROGRAM.
  1. NOTWITHSTANDING THE PROVISIONS OF THIS TITLE OR ANY OTHER PROVISION
OF LAW, THE DEPARTMENT SHALL PROMULGATE REGULATIONS TO ESTABLISH THE NEW
YORK REMEDIATION  ACCELERATED  PERFORMANCE  INTERIM  DESIGN  (NY  RAPID)
PROGRAM THAT WILL OFFER AN EXPEDITED PROCESS AND GRANT A LIABILITY WAIV-
ER  TO  VOLUNTEERS  THAT  SUCCESSFULLY  REMEDIATE MINIMALLY CONTAMINATED
SITES OR A SITE WHERE CONTAMINATION IS OVERWHELMINGLY THE RESULT OF  THE
USE OR PLACEMENT OF HISTORIC FILL MATERIAL ON OR UNDER THE SITE.
  2.  VOLUNTEERS MAY APPLY AND BE ACCEPTED FOR ENTRANCE INTO NY RAPID IF
THE SITE MEETS THE FOLLOWING REQUIREMENTS:
  A. CONTAMINATION IS PRESENT BUT OTHERWISE  DOES  NOT  MEET  THE  DEFI-
NITIONS APPLICABLE TO SUBDIVISION TWO OF SECTION 27-1405 OF THIS TITLE.
  B. THE REDEVELOPMENT OF SUCH SITE IS COMPLICATED BY:

S. 6359--C                         193

  (I)  THE  PRESENCE  OF  HISTORIC  FILL  IS  THE OVERWHELMING SOURCE OF
CONTAMINATION; OR
  (II)  LEVELS  OF  CONTAMINATION  THAT ARE AT OR NEAR THE LEVELS ESTAB-
LISHED BY THE APPLICABLE SOIL CLEAN-UP OBJECTIVES PURSUANT  TO  SUBDIVI-
SION  SIX OF SECTION 27-1415 OF THIS TITLE; PROVIDED, HOWEVER, SUCH SITE
SHALL NOT INCLUDE REAL PROPERTY  WITH  LEVELS  OF  CONTAMINATION  FOR  A
SINGLE  OR  MULTIPLE  CONTAMINATES,  THE SOURCES OF SUCH LEVELS ARE FROM
HISTORICAL FILL, THAT ARE SIGNIFICANTLY GREATER THAN THE APPLICABLE SOIL
CLEAN-UP OBJECTIVES PURSUANT TO SUBDIVISION SIX OF  SECTION  27-1415  OF
THIS TITLE.
  3.  SITES  THAT  HAVE RECEIVED A NOTICE OF COMPLETION FROM THE CITY OF
NEW YORK UNDER THE LOCAL BROWNFIELD CLEANUP PROGRAM SHALL BE ELIGIBLE.
  4. THE APPLICANT SHALL WAIVE IN WRITING  ANY  CLAIM  FOR  TAX  CREDITS
PURSUANT  TO  SECTION  TWENTY-ONE OF THE TAX LAW ON A FORM PRESCRIBED BY
THE DEPARTMENT.
  5. THE DEPARTMENT SHALL EXEMPT A VOLUNTEER  FROM  PROCEDURAL  REQUIRE-
MENTS  OF THIS TITLE THAT THE DEPARTMENT MAY SPECIFY WHICH ARE OTHERWISE
APPLICABLE TO IMPLEMENTATION OF AN INVESTIGATION AND/OR  REMEDIATION  OF
CONTAMINATION, PROVIDED THAT THE ACTIVITY IS CONDUCTED IN A MANNER WHICH
SATISFIES  ALL  SUBSTANTIVE  TECHNICAL  REQUIREMENTS  APPLICABLE TO LIKE
ACTIVITY CONDUCTED PURSUANT TO THIS TITLE. THE APPROVED WORK PLAN FOR  A
BROWNFIELD SITE SHALL INCLUDE THE PROCEDURAL REQUIREMENTS THE DEPARTMENT
DETERMINES  ARE  APPROPRIATE  BASED  ON SITE SPECIFIC CONSIDERATIONS AND
CONSIDERATION OF SECTION 27-1417 OF THIS TITLE.
  6. A. UPON RECEIPT OF THE FINAL ENGINEERING REPORT PURSUANT TO  SUBDI-
VISION TWO OF SECTION 27-1419 OF THIS TITLE, THE DEPARTMENT SHALL REVIEW
SUCH  REPORT  AND THE DATA SUBMITTED PURSUANT TO A NY RAPID SITE CLEANUP
AGREEMENT AS WELL AS ANY OTHER RELEVANT  INFORMATION  REGARDING  THE  NY
RAPID  SITE.  UPON SATISFACTION OF THE COMMISSIONER THAT THE REMEDIATION
REQUIREMENTS SET FORTH IN THIS TITLE HAVE BEEN OR WILL  BE  ACHIEVED  IN
ACCORDANCE WITH THE TIMEFRAMES, IF ANY, ESTABLISHED IN THE REMEDIAL WORK
PLAN,  THE COMMISSIONER SHALL ISSUE A WRITTEN CERTIFICATE OF COMPLETION.
SUCH CERTIFICATE SHALL INCLUDE, BUT NOT BE LIMITED  TO,  THE  BROWNFIELD
SITE BOUNDARIES INCLUDED IN THE FINAL ENGINEERING REPORT.
  B.  PARAGRAPHS  FOUR,  FIVE, SIX, SEVEN, AND EIGHT OF SECTIONS 27-1419
AND 27-1421 OF THIS TITLE SHALL  APPLY  TO  CERTIFICATES  OF  COMPLETION
ISSUED TO NY RAPID PROGRAM PARTICIPANTS.
  S  19.  The  opening paragraph of subdivision 10 of section 71-3605 of
the environmental conservation law, as added by section 2 of part  A  of
chapter 1 of the laws of 2003, is amended to read as follows:
  An  environmental  easement  may  be  enforced in law or equity by its
grantor, by the state, or any affected local government  as  defined  in
section  71-3603 of this title. Such easement is enforceable against the
owner of the burdened property, any lessees, and any  person  using  the
land.  Enforcement  shall  not  be  defeated  because  of any subsequent
adverse possession, laches, estoppel, REVERSION or  waiver.  No  general
law  of the state which operates to defeat the enforcement of any inter-
est in real property shall operate to  defeat  the  enforcement  of  any
environmental  easement  unless  such  general  law expressly states the
intent to defeat the enforcement of such easement or  provides  for  the
exercise  of  the  power  of  eminent domain. It is not a defense in any
action to enforce an environmental easement that:
  S 20. Intentionally omitted.
  S 21. Paragraph 3 of subdivision (a) of section 21 of the tax law,  as
amended  by  chapter  390  of  the  laws  of 2008, is amended to read as
follows:

S. 6359--C                         194

  (3) Tangible property credit component. The tangible  property  credit
component  shall  be  equal  to the applicable percentage of the cost or
other basis for federal income tax purposes of tangible personal proper-
ty and other  tangible  property,  including  buildings  and  structural
components  of  buildings, which constitute qualified tangible property;
provided[, however,] that in determining the cost or other basis of such
property, the taxpayer shall exclude the acquisition cost of any item of
property with respect to which a credit under this section was allowable
to another taxpayer. The credit component amount so determined shall  be
allowed  for  the taxable year in which such qualified tangible property
is placed in service; PROVIDED, HOWEVER, THAT  SUCH  PROPERTY  SHALL  BE
PLACED IN SERVICE DURING THE ONE HUNDRED TWENTY MONTH PERIOD THAT BEGINS
WITH THE FIRST DAY OF THE FIRST TAXABLE YEAR IN WHICH QUALIFIED TANGIBLE
PROPERTY IS PLACED IN SERVICE on a qualified site [with respect to which
a  certificate  of  completion has been issued to the taxpayer for up to
ten taxable years after the date of the issuance of such certificate  of
completion].  The  tangible  property  credit component shall be allowed
with respect to property leased to a second party only  if  such  second
party  is either (i) not a party responsible for the disposal of hazard-
ous waste or the discharge of petroleum at the site according to  appli-
cable  principles  of statutory or common law liability, or (ii) a party
responsible according to applicable principles of  statutory  or  common
law  liability if such party's liability arises solely from operation of
the site subsequent to the disposal of hazardous waste or the  discharge
of  petroleum,  and is so certified by the commissioner of environmental
conservation at the request of the taxpayer, pursuant to section 27-1419
of  the  environmental  conservation  law.  Notwithstanding  any   other
provision  of  law  to  the contrary, in the case of allowance of credit
under this section to such a lessor, the  commissioner  shall  have  the
authority  to reveal to such lessor any information, with respect to the
issue of qualified use of property by the lessee, which is the basis for
the denial in whole or in part, or for  the  recapture,  of  the  credit
claimed  by  such  lessor.  For purposes of the tangible property credit
component allowed under this section the taxpayer to  whom  the  certif-
icate of completion is issued, as provided for under subdivision five of
section  27-1419 of the environmental conservation law, may transfer the
benefits and burdens of the certificate of completion,  which  run  with
the  land  and to the applicant's successors or assigns upon transfer or
sale of all or any portion of an interest or  estate  in  the  qualified
site.  However,  the taxpayer to whom certificate's benefits and burdens
are transferred shall not include the  cost  of  acquiring  all  or  any
portion of an interest or estate in the site and the amounts included in
the  cost  or  other  basis for federal income tax purposes of qualified
tangible property already claimed by the previous taxpayer  pursuant  to
this section.
  S  22. Subparagraph (A) of paragraph 3-a of subdivision (a) of section
21 of the tax law, as added by chapter 390  of  the  laws  of  2008,  is
amended to read as follows:
  (A)  Notwithstanding  any  other provision of law to the contrary, the
tangible property credit component  available  for  any  qualified  site
pursuant  to  paragraph three of this subdivision shall not exceed thir-
ty-five million dollars or three times the SUM OF THE costs included  in
the calculation of the site preparation credit component and the on-site
groundwater  remediation credit component under paragraphs two and four,
respectively, of this subdivision, AND THE COSTS THAT  WOULD  HAVE  BEEN
INCLUDED  IN  THE  CALCULATION  OF  SUCH COMPONENTS IF NOT TREATED AS AN

S. 6359--C                         195

EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINETY-EIGHT OF THE
INTERNAL REVENUE CODE, whichever is less; provided, however,  that:  (1)
in  the  case of a qualified site to be used primarily for manufacturing
activities,  the  tangible  property  credit component available for any
qualified site pursuant to paragraph three of this subdivision shall not
exceed forty-five million dollars or six times  the  SUM  OF  THE  costs
included in the calculation of the site preparation credit component and
the  on-site  groundwater  remediation credit component under paragraphs
two and four, respectively, of this  subdivision,  AND  THE  COSTS  THAT
WOULD  HAVE  BEEN  INCLUDED IN THE CALCULATION OF SUCH COMPONENTS IF NOT
TREATED AS AN EXPENSE AND DEDUCTED PURSUANT TO SECTION ONE HUNDRED NINE-
TY-EIGHT OF THE INTERNAL REVENUE CODE, whichever is less;  and  (2)  the
provisions  of  this paragraph shall not apply to any qualified site for
which the department of environmental conservation has issued  a  notice
to  the  taxpayer  before June twenty-third, two thousand eight that its
request for participation has been accepted  under  subdivision  six  of
section 27-1407 of the environmental conservation law.
  S  23. Subparagraph (D) of paragraph 3-a of subdivision (a) of section
21 of the tax law, as added by chapter 390  of  the  laws  of  2008,  is
amended to read as follows:
  (D) If the qualifying site is located in a brownfield opportunity area
and  is  developed  in  conformance with the goals and priorities estab-
lished for that applicable brownfield  opportunity  area  as  designated
pursuant to section nine hundred seventy-r of the general municipal law,
the applicable percentage of the tangible property credit component will
be increased by [two] FOUR percent.
  S 24. Subdivision 2 of section 355 of the economic development law, as
amended  by  section  4  of part G of chapter 61 of the laws of 2011, is
amended to read as follows:
  2. Excelsior investment tax credit component.  A  participant  in  the
excelsior  jobs program shall be eligible to claim a credit on qualified
investments. The credit shall be equal to two percent  of  the  cost  or
other basis for federal income tax purposes of the qualified investment.
A  participant  may  not  claim both the excelsior investment tax credit
component and the investment tax credit set forth in subdivision  twelve
of  section  two hundred ten, subsection (a) of section six hundred six,
subsection (i) of section fourteen hundred fifty-six, or subdivision (q)
of section fifteen hundred eleven of the tax law for the  same  property
in  any  taxable  year,  except  that  a  participant may claim both the
excelsior investment tax credit component and the investment tax  credit
for  research  and development property. [In addition, a taxpayer who or
which is qualified to claim the excelsior investment tax  credit  compo-
nent  and  is  also  qualified to claim the brownfield tangible property
credit component under section twenty-one  of  the  tax  law  may  claim
either  the  excelsior  investment tax credit component or such tangible
property credit component, but not both  with  regard  to  a  particular
piece  of property.] A credit may not be claimed until a business enter-
prise has received a certificate of tax credit, provided that  qualified
investments  made  on or after the issuance of the certificate of eligi-
bility but before the issuance of the certificate of tax credit  to  the
business  enterprise, may be claimed in the first taxable year for which
the business  enterprise  is  allowed  to  claim  the  credit.  Expenses
incurred  prior to the date the certificate of eligibility is issued are
not eligible to be included in the calculation of the credit.

S. 6359--C                         196

  S 25. Paragraph 5 of subdivision (a) of section 21 of the tax law,  as
amended  by  section  1 of part H of chapter 577 of the laws of 2004, is
amended to read as follows:
  (5)  Applicable  percentage. For purposes of paragraphs two, three and
four of this subdivision, the  applicable  percentage  shall  be  twelve
percent  [in  the  case  of  credits claimed under article nine, nine-A,
thirty-two or thirty-three of this chapter, and ten percent in the  case
of  credits  claimed  under  article twenty-two of this chapter,] except
that where at least fifty percent of the  area  of  the  qualified  site
relating  to  the  credit  provided for in this section is located in an
environmental zone as defined in paragraph six  of  subdivision  (b)  of
this  section,  the applicable percentage shall be increased by an addi-
tional eight percent. Provided, however, as afforded in section  27-1419
of  the environmental conservation law, if the certificate of completion
indicates that the qualified site has been remediated to Track 1 as that
term is described in subdivision four of section 27-1415 of the environ-
mental conservation law, the applicable  percentage  set  forth  in  the
first sentence of this paragraph shall be increased by an additional two
percent.
  S 26. Section 22 of the tax law is REPEALED.
  S  27.  Paragraphs  2, 4 and 6 of subdivision (b) of section 21 of the
tax law, as amended by section 1 of part H of chapter 577 of the laws of
2004, subparagraph (B) and the  closing  paragraph  of  paragraph  6  as
amended  by  section  1 of part G of chapter 62 of the laws of 2006, are
amended to read as follows:
  (2) Site preparation costs. The term "site  preparation  costs"  shall
mean all amounts properly [chargeable] CHARGED to a capital account, (i)
which are paid or incurred in connection with a site's qualification for
a certificate of completion, AND WHICH MAY INCLUDE COSTS ATTRIBUTABLE TO
ACTIVITIES UNDERTAKEN UNDER THE OVERSIGHT OF THE DEPARTMENT OF HEALTH OR
THE  DEPARTMENT  OF  LABOR  TO  REMEDIATE  REGULATED MATERIALS INCLUDING
ASBESTOS, LEAD OR POLYCHLORINATED  BIPHENYLS  IN  BUILDINGS  WHICH  WILL
REMAIN  ON  THE  SITE, and (ii) all other site preparation costs paid or
incurred in connection with preparing a  site  for  the  erection  of  a
building  or a component of a building, or otherwise to establish a site
as usable for  its  industrial,  commercial  (including  the  commercial
development   of  residential  housing),  recreational  or  conservation
purposes. Site preparation costs shall include, but not be  limited  to,
the costs of excavation, temporary electric wiring, scaffolding, demoli-
tion costs, and the costs of fencing and security facilities. Site prep-
aration costs shall not include the cost of acquiring the site and shall
not  include  amounts  included  in  the cost or other basis for federal
income tax purposes of qualified  tangible  property,  as  described  in
paragraph three of this subdivision.
  (4) On-site groundwater remediation costs. The term "on-site groundwa-
ter  remediation  costs"  shall  mean  all amounts properly [chargeable]
CHARGED to a  capital  account,  (i)  which  are  paid  or  incurred  in
connection  with a site's qualification for a certificate of completion,
and (ii) include costs which are paid or incurred in connection with the
remediation of on-site groundwater contamination and PAID OR incurred to
implement a requirement of the remedial work plan or an interim remedial
measure work plan for a qualified site which  are  imposed  pursuant  to
subdivisions  two  and  three  of  section  27-1411 of the environmental
conservation law.
  (6) Environmental zones (EN-Zones). An "environmental zone" shall mean
an area designated as such by the commissioner of [economic development]

S. 6359--C                         197

LABOR.  Such areas so designated are areas which are census  tracts  and
block  numbering  areas  which,  as  of  the  [two thousand] MOST RECENT
census, satisfy either of the following criteria:
  (A) areas that have both:
  (i)  a  poverty  rate of at least twenty percent for the year to which
the data relate; and
  (ii) an unemployment rate of at least one and  one-quarter  times  the
statewide unemployment rate for the year to which the data relate, or;
  (B)  areas  that have a poverty rate of at least two times the poverty
rate for the county in which the areas are located for the year to which
the data relate [provided, however, that a qualified site shall only  be
deemed  to  be  located in an environmental zone under this subparagraph
(B) if such site was the subject of a brownfield site cleanup  agreement
pursuant  to  section 27-1409 of the environmental conservation law that
was entered into prior to September first, two thousand ten].
  Such designation shall be made and a list of  all  such  environmental
zones shall be established by the commissioner of [economic development]
LABOR  no later than [December thirty-first, two thousand four provided,
however, that a qualified site shall only be deemed to be located in  an
environmental zone under subparagraph (B) of this paragraph if such site
was  the  subject  of  a  brownfield  site cleanup agreement pursuant to
section 27-1409 of the environmental conservation law that  was  entered
into  prior  to September first, two thousand ten] NINETY DAYS FOLLOWING
THE OFFICIAL PUBLICATION OF THE MOST RECENT CENSUS.
  S 28. Subdivision (a) of section 23 of the  tax  law,  as  amended  by
section  10  of part H of chapter 577 of the laws of 2004, is amended to
read as follows:
  (a) Allowance of credit. General. A  taxpayer  subject  to  tax  under
article  nine,  nine-A,  twenty-two,  thirty-two or thirty-three of this
chapter shall be allowed a credit against  such  tax,  pursuant  to  the
provisions  referenced in subdivision (e) of this section. The amount of
such credit shall be equal to the lesser  of  [thirty]  NINETY  thousand
dollars  or  fifty  percent of the premiums paid on or after the date of
the brownfield site cleanup agreement executed by the taxpayer  and  the
department  of environmental conservation pursuant to section 27-1409 of
the environmental conservation law by  the  taxpayer  for  environmental
remediation insurance issued with respect to a qualified site.
  S 29. Section 171-r of the tax law is amended by adding a new subdivi-
sion (e) to read as follows:
  (E)  THE  COMMISSIONER, IN CONSULTATION WITH THE COMMISSIONER OF ENVI-
RONMENTAL CONSERVATION, SHALL PUBLISH BY JANUARY THIRTY-FIRST, TWO THOU-
SAND FIFTEEN A SUPPLEMENTAL  BROWNFIELD  CREDIT  REPORT  CONTAINING  THE
INFORMATION  REQUIRED  BY THIS SECTION ABOUT THE CREDITS CLAIMED FOR THE
YEARS TWO THOUSAND FIVE, TWO THOUSAND SIX, AND TWO THOUSAND SEVEN.
  S 30. Section 171-s of the tax law is REPEALED.
  S 31. Paragraph (d) of subdivision 7 of section 27-1415 of  the  envi-
ronmental conservation law, as added by section 1 of part A of chapter 1
of the laws of 2003, is amended to read as follows:
  (d)  The  commissioner  shall  create, update, and maintain a database
system for public information purposes and  to  monitor  and  track  all
brownfield  sites  subject  to  this  title. Data incorporated into such
system for each site for which information has been  collected  pursuant
to  this title shall include, but shall not be limited to, a site summa-
ry, name of site owner, location,  status  of  site  remedial  activity,
WHETHER  THE SITE IS LOCATED IN A BROWNFIELD OPPORTUNITY AREA AS DEFINED
IN SECTION NINE HUNDRED SEVENTY-R OF THE GENERAL MUNICIPAL LAW, and,  if

S. 6359--C                         198

one has been created pursuant to title thirty-six of article seventy-one
of  this  chapter,  a  copy of the environmental easement, and a contact
number to obtain additional information. Sites shall be  added  to  such
system  upon the execution of a brownfield site cleanup agreement pursu-
ant to section 27-1409 of this title. If and when an environmental ease-
ment is modified or extinguished, the copy of the environmental easement
contained in the database shall be updated  accordingly.  Such  database
shall  be  in  such a format that it can be readily searched by affected
local governments and the public for purposes including but not  limited
to determining whether an environmental easement has been recorded for a
site  pursuant  to title thirty-six of article seventy-one of this chap-
ter. The database shall be available electronically.   Information  from
this  database  shall  be  incorporated  into the geographic information
system created and maintained by  the  department  pursuant  to  section
3-0315 of this chapter.
  S  31-a.  Paragraph b of subdivision 2 of section 970-r of the general
municipal law, as added by section 1 of part F of chapter 1 of the  laws
of 2003, is amended to read as follows:
  b.  Activities  eligible to receive such assistance shall include, but
are not limited to, the assembly and development  of  basic  information
about:
  (1) the borders of the [proposed] brownfield opportunity area;
  (2) the number and size of brownfield sites;
  (3)  current  and anticipated uses of the properties in the [proposed]
BROWNFIELD OPPORTUNITY area;
  (4) current and anticipated future conditions of  groundwater  in  the
[proposed] BROWNFIELD OPPORTUNITY area;
  (5) known data about the environmental conditions of the properties in
the [proposed] BROWNFIELD OPPORTUNITY area;
  (6)  ownership of the properties in the [proposed] BROWNFIELD OPPORTU-
NITY area AND WHETHER THE OWNERS WOULD LIKE TO PARTICIPATE  DIRECTLY  IN
THE BROWNFIELD OPPORTUNITY PLANNING PROCESS; and
  (7) preliminary descriptions of possible remediation strategies, reuse
opportunities, necessary infrastructure improvements and other public or
private measures needed to stimulate investment, promote revitalization,
and enhance community health and environmental conditions.
  S  31-b.  Paragraph a of subdivision 3 of section 970-r of the general
municipal law, as amended by chapter 390 of the laws of 2008, is amended
to read as follows:
  a. Within the limits of  appropriations  therefor,  the  secretary  is
authorized  to  provide, on a competitive basis, financial assistance to
municipalities, to community based organizations, to  community  boards,
or to municipalities and community based organizations acting in cooper-
ation  to  prepare a nomination for designation of a brownfield opportu-
nity area. Such financial assistance shall not exceed ninety percent  of
the costs of such nomination for any such area.  A NOMINATION STUDY MUST
INCLUDE  SUFFICIENT  INFORMATION TO DESIGNATE THE BROWNFIELD OPPORTUNITY
AREA DISTRICT. THE CONTENTS OF THE NOMINATION STUDY SHALL  BE  DEVELOPED
BASED  ON  PRE-NOMINATION  STUDY  INFORMATION,  WHICH  SHALL PRINCIPALLY
CONSIST OF AN AREA-WIDE  ASTM  PHASE  I  ENVIRONMENTAL  SITE  ASSESSMENT
STUDY,  OR  A PRE-EXISTING AREA-WIDE ASTM PHASE I SITE ASSESSMENT STUDY,
DOCUMENTING THE HISTORIC BROWNFIELD USES IN THE DISTRICT.  A  NOMINATION
STUDY  IS NOT INTENDED TO BE EQUIVALENT TO OR TO SERVE AS A MASTER PLAN,
COMPREHENSIVE PLAN, OR OTHER EQUIVALENT LAND USE STUDY,  BUT  RATHER  IS
INTENDED  TO BE A BASIC PLAN FOR DESIGNATION OF THE AREA AS A BROWNFIELD
OPPORTUNITY DISTRICT BASED ON HISTORIC BROWNFIELD  USE  INFORMATION  AND

S. 6359--C                         199

THE  COMMUNITY  PARTICIPATION  REQUIRED  IN THIS SECTION. A MASTER PLAN,
COMPREHENSIVE PLAN OR EQUIVALENT LAND USE STUDY MAY BE SEPARATELY DEVEL-
OPED UNDER THIS PROGRAM AS AN  IMPLEMENTATION  STRATEGY  FOR  THE  FINAL
BROWNFIELD OPPORTUNITY AREA PLAN. SINCE A NOMINATION STUDY IS NOT EQUIV-
ALENT  TO A FINAL LAND USE PLAN, THE PREPARATION OF THE NOMINATION STUDY
DOES NOT REQUIRE REVIEW UNDER THE STATE ENVIRONMENTAL QUALITY REVIEW ACT
PURSUANT TO ARTICLE EIGHT OF THE ENVIRONMENTAL CONSERVATION LAW,  AND  A
BROWNFIELD  OPPORTUNITY  AREA  CAN  BE DESIGNATED BASED EXCLUSIVELY ON A
NOMINATION STUDY. IN THE EVENT THE MUNICIPALITY AND/OR  COMMUNITY  BASED
ORGANIZATION  ELECT  TO DEVELOP IMPLEMENTATION STRATEGIES, INCLUDING BUT
NOT LIMITED TO A MASTER PLAN, COMPREHENSIVE PLAN OR URBAN RENEWAL  PLAN,
REVIEW  UNDER  THE  STATE ENVIRONMENTAL QUALITY REVIEW ACT UNDER ARTICLE
EIGHT OF THE ENVIRONMENTAL CONSERVATION LAW IS REQUIRED. NO  SUCH  NOMI-
NATION  STUDY SHALL SUPERSEDE AN EXISTING MASTER PLAN OR EQUIVALENT LAND
USE STUDY.
  S 31-c. Subdivision 4 of section 970-r of the general  municipal  law,
as  amended  by  chapter  390 of the laws of 2008, is amended to read as
follows:
  4. Designation of brownfield opportunity area.   [Upon completion  of]
A.  WITHIN  THIRTY-SIX  MONTHS  OF  THE SUBMISSION OF AN APPLICATION FOR
STATE ASSISTANCE PURSUANT TO SUBDIVISION  THREE  OF  THIS  SECTION,  THE
APPLICANT  SHALL  COMPLETE  AND SUBMIT a nomination for designation of a
brownfield opportunity area[, it].   THE COMPLETED NOMINATION  shall  be
forwarded by the applicant to the secretary, who shall determine whether
it  is  consistent with the provisions of this section. If the secretary
determines that the nomination [is consistent] PLAN PROPERLY  DESIGNATES
THE  BROWNFIELD OPPORTUNITY AREA AND HAS COMPLIED with the provisions of
this section, the brownfield opportunity area shall be designated AND NO
FURTHER STUDIES OR PLANS ARE REQUIRED TO FINALIZE THE DESIGNATION OF THE
BROWNFIELD OPPORTUNITY AREA DISTRICT. THE SECRETARY SHALL MAKE A  DETER-
MINATION  OF  WHETHER  THE NOMINATED PLAN SHOULD BE FINALIZED AND DESIG-
NATED WITHIN NINETY DAYS OF RECEIPT OF SUCH NOMINATION. IF THE APPLICANT
HAS ELECTED TO PREPARE A FINAL BROWNFIELD  OPPORTUNITY  PLAN,  INCLUDING
IMPLEMENTATION STRATEGIES SUCH AS SPECIFIC FUNDING REQUESTS FROM CERTAIN
STATE AGENCIES TO ENHANCE DEVELOPMENT OF THE PLAN OR DEVELOPMENT OF MORE
FORMAL  LAND  USE PLANS SUCH AS A MASTER PLAN, COMPREHENSIVE PLAN AND/OR
URBAN RENEWAL PLAN, UPON RECEIPT OF ONE OR  MORE  OF  THESE  PLANS,  THE
SECRETARY, IN CONSULTATION WITH ANY OTHER INVOLVED AGENCIES AND/OR OTHER
AGENCY  FROM  WHICH  A  FUNDING REQUEST HAS BEEN MADE, SHALL REVIEW SUCH
PLAN OR PLANS, AND IF  REQUIRED,  THE  ASSOCIATED  ENVIRONMENTAL  IMPACT
REVIEW  ANALYSIS  PURSUANT TO THE STATE ENVIRONMENTAL QUALITY REVIEW ACT
UNDER ARTICLE EIGHT OF THE ENVIRONMENTAL CONSERVATION LAW. If the secre-
tary determines that the nomination [is not consistent] PLAN AND/OR  THE
FINAL BROWNFIELD OPPORTUNITY AREA PLAN DO NOT COMPLY with the provisions
of  this section, the secretary shall make recommendations in writing to
the applicant of the manner and nature in which the nomination  PLAN  OR
THE  FINAL  BROWNFIELD  OPPORTUNITY AREA PLAN should be amended TO BE IN
COMPLIANCE. THE APPLICANT SHALL HAVE THIRTY DAYS TO AMEND THE NOMINATION
TO BRING THE PLAN INTO COMPLIANCE. IF THE SECRETARY DETERMINES THAT  THE
AMENDED  NOMINATION  STILL  IS NOT IN COMPLIANCE, THE APPLICANT SHALL BE
INELIGIBLE FOR ANY ADDITIONAL STATE ASSISTANCE OFFERED UNDER THIS  ARTI-
CLE UNTIL SUCH NOMINATION IS DEEMED TO BE IN COMPLIANCE.
  (B)  THE  SECRETARY SHALL PROVIDE ASSISTANCE TO APPLICANTS WHO REQUEST
ASSISTANCE ON THE CONTENTS OF LAND USE PLANS, BUT  MUNICIPAL  APPLICANTS
HAVE  FINAL  AUTHORITY  ON  THE CONTENTS OF LAND USE PLANS PROVIDED SUCH
PLANS ARE CONSISTENT WITH THIS SECTION PURSUANT TO SECTION  TWO  HUNDRED

S. 6359--C                         200

SIXTY-ONE  OF  THE  TOWN LAW, SECTION SEVEN-SEVEN HUNDRED OF THE VILLAGE
LAW, SUBDIVISIONS TWENTY-FOUR AND TWENTY-FIVE OF SECTION TWENTY  OF  THE
GENERAL CITY LAW, SECTION TEN OF THE MUNICIPAL HOME RULE LAW AND SECTION
TEN OF THE STATUTE OF LOCAL GOVERNMENTS.
  S  32. Section 31 of part H of chapter 1 of the laws of 2003, amending
the tax law relating to brownfield redevelopment tax credits, remediated
brownfield credit for real property taxes for qualified sites and  envi-
ronmental  remediation  insurance  credits, as amended by chapter 474 of
the laws of 2012, is amended to read as follows:
  S 31. The tax credits allowed under section 21, 22 or 23  of  the  tax
law  and  the corresponding provisions in articles 9, 9-A, 22, 32 and 33
of the tax law, as added by the provisions of sections one through twen-
ty-nine of this act,  shall  not  be  applicable  if  the  [remediation]
certificate OF COMPLETION required to qualify for any of such credits is
issued after December 31, [2015] 2025.
  S 33. Intentionally omitted.
  S  34. Paragraph c of subdivision 3 of section 27-0923 of the environ-
mental conservation law, as amended by section 5 of part  I  of  chapter
577 of the laws of 2004, is amended to read as follows:
  c.  For  the  purpose  of  this section, generation of hazardous waste
shall not include retrieval or creation of hazardous waste which must be
disposed of under an order of or agreement with the department  pursuant
to  title thirteen or title fourteen of this article or under a contract
OR AGREEMENT with the department  pursuant  to  title  five  of  article
fifty-six  of  this  chapter  OR UNDER AN ORDER OF OR AGREEMENT WITH THE
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY OR AN ORDER OF A COURT  OF
COMPETENT  JURISDICTION, RELATED TO A FACILITY ADDRESSED PURSUANT TO THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT (42
U.S.C. 9601 ET SEQ.) OR UNDER A WRITTEN AGREEMENT  WITH  A  MUNICIPALITY
WHICH  IS  SUBJECT  TO  A  MEMORANDUM  OF  AGREEMENT WITH THE DEPARTMENT
RELATED TO THE REMEDIATION OF BROWNFIELD SITES.
  S 35. Subparagraphs (i) and (vi) of paragraph d of  subdivision  1  of
section  72-0402  of  the  environmental conservation law, as amended by
chapter 99 of the laws of 2010, are amended to read as follows:
  (i) under a contract with the department,  or  with  the  department's
written  approval  and  in  compliance  with  department regulations, or
pursuant to an order of the department, the United States  environmental
protection  agency  or a court OF COMPETENT JURISDICTION, related to the
cleanup or remediation of  a  hazardous  materials  or  hazardous  waste
spill, discharge, or surficial cleanup, pursuant to this chapter; or
  (vi)  under  a  brownfield  site cleanup agreement with the department
pursuant to section 27-1409 of this chapter  OR UNDER AN AGREEMENT  WITH
A  MUNICIPALITY  WHICH  IS SUBJECT TO A MEMORANDUM OF AGREEMENT WITH THE
DEPARTMENT RELATED TO THE REMEDIATION OF BROWNFIELD SITES; or
  S 36. Subdivision 1 of section 1285-q of the public  authorities  law,
as  added  by  section  6 of part I of chapter 1 of the laws of 2003, is
amended to read as follows:
  1. Subject to chapter fifty-nine of the  laws  of  two  thousand,  but
notwithstanding any other provisions of law to the contrary, in order to
assist the corporation in undertaking the administration and the financ-
ing  of  hazardous  waste  site  remediation projects for payment of the
state's share of the costs of the remediation of hazardous waste  sites,
in  accordance  with title thirteen of article twenty-seven of the envi-
ronmental conservation law  and  section  ninety-seven-b  of  the  state
finance  law, and for payment of state costs associated with the remedi-
ation of offsite contamination at significant threat sites  as  provided

S. 6359--C                         201

in  section 27-1411 of the environmental conservation law, AND FOR ENVI-
RONMENTAL RESTORATION PROJECTS PURSUANT TO TITLE FIVE OF ARTICLE  FIFTY-
SIX  OF THE ENVIRONMENTAL CONSERVATION LAW pursuant to capital appropri-
ations  made  to  the  department  of  environmental  conservation,  the
director of the division of budget and the corporation are each  author-
ized  to  enter  into one or more service contracts, none of which shall
exceed twenty years in duration, upon such terms and conditions  as  the
director and the corporation may agree, so as to annually provide to the
corporation  in  the  aggregate,  a  sum  not  to exceed the annual debt
service payments and related expenses required for any bonds  and  notes
authorized  pursuant to section twelve hundred ninety of this title. Any
service contract entered into pursuant to  this  section  shall  provide
that  the  obligation of the state to fund or to pay the amounts therein
provided for shall not constitute a debt of the state within the meaning
of any constitutional or statutory provision and shall be deemed  execu-
tory  only  to the extent of moneys available for such purposes, subject
to annual appropriation by the legislature. Any such service contract or
any payments made or to be made thereunder may be assigned  and  pledged
by  the  corporation  as security for its bonds and notes, as authorized
pursuant to section twelve hundred ninety of this title.
  S 37. Section 56-0501 of the environmental conservation law, as  added
by chapter 413 of the laws of 1996, is amended to read as follows:
S 56-0501. Allocation of moneys.
  1. Of the moneys received by the state from the sale of bonds pursuant
to  the  Clean  Water/Clean  Air  Bond  Act of 1996, two hundred million
dollars ($200,000,000) shall be available for disbursements for environ-
mental restoration projects.
  2. ENVIRONMENTAL RESTORATION PROJECTS MAY BE FUNDED USING THE PROCEEDS
OF BONDS ISSUED PURSUANT TO SECTION TWELVE HUNDRED EIGHTY-FIVE-Q OF  THE
PUBLIC AUTHORITIES LAW.
  S  38. Subdivision 6 of section 56-0502 of the environmental conserva-
tion law, as amended by section 2 of part D of chapter 577 of  the  laws
of 2004, is amended to read as follows:
  6.  "State  assistance", for purposes of this title, shall mean in the
case of a contract authorized by subdivision one of section  56-0503  of
this  title,  payments  made  to a municipality to reimburse the munici-
pality for the state share of the costs incurred by the municipality  to
undertake  an  environmental  restoration  project  OR IN THE CASE OF AN
AGREEMENT AUTHORIZED BY SUBDIVISION THREE OF  SECTION  56-0503  OF  THIS
TITLE,  COSTS INCURRED BY THE STATE TO UNDERTAKE AN ENVIRONMENTAL RESTO-
RATION PROJECT BUT NOT REIMBURSED BY A MUNICIPALITY.
  S 39. Paragraph (c) of subdivision 2 of section 56-0503 of  the  envi-
ronmental conservation law, as amended by section 4 of part D of chapter
1  of  the  laws of 2003, is amended and a new subdivision 3 is added to
read as follows:
  (c) A provision that THE MUNICIPALITY SHALL ASSIST  IN  IDENTIFYING  A
RESPONSIBLE  PARTY  BY  SEARCHING  LOCAL RECORDS, INCLUDING PROPERTY TAX
ROLLS, OR DOCUMENT REVIEWS, AND if,  in  accordance  with  the  required
departmental  approval  of  any settlement with a responsible party, any
responsible party payments become available to the municipality, before,
during or after the completion of an environmental restoration  project,
which  were not included when the state share was calculated pursuant to
this section, the state assistance share shall be recalculated, and  the
municipality  shall pay to the state, for deposit into the environmental
restoration project account of the hazardous waste remedial fund  estab-
lished  under  section  ninety-seven-b  of  the  state  finance law, the

S. 6359--C                         202

difference between the original state assistance payment and the  recal-
culated state share. Recalculation of the state share shall be done each
time a payment from a responsible party is received by the municipality;
  3.  THE  DEPARTMENT MAY UNDERTAKE AN ENVIRONMENTAL RESTORATION PROJECT
ON BEHALF OF A MUNICIPALITY UPON REQUEST. IF THE  DEPARTMENT  UNDERTAKES
THE PROJECT ON BEHALF OF THE MUNICIPALITY, THE STATE SHALL ENTER INTO AN
AGREEMENT  WITH  THE  MUNICIPALITY  AND  THE AGREEMENT SHALL REQUIRE THE
MUNICIPALITY TO PERIODICALLY PROVIDE ITS SHARE TO THE  STATE  FOR  COSTS
INCURRED  DURING  THE PROGRESS OF SUCH PROJECT. THE MUNICIPALITY'S SHARE
SHALL BE THE SAME AS WOULD BE REQUIRED UNDER  SUBDIVISION  ONE  OF  THIS
SECTION.  THE AGREEMENT SHALL INCLUDE ALL PROVISIONS SPECIFIED IN SUBDI-
VISION TWO OF THIS SECTION AS APPROPRIATE.   FOR  PURPOSES  OF  PROJECTS
SUBJECT   TO  AGREEMENTS  UNDER  THIS  SUBDIVISION,  ALL  REFERENCES  TO
CONTRACTS IN THIS TITLE SHALL ALSO APPLY TO AGREEMENTS UNDER THIS SUBDI-
VISION AS APPROPRIATE.
  S 40. Subdivision 4 of section 56-0505 of the environmental  conserva-
tion  law, as amended by section 5 of part D of chapter 1 of the laws of
2003, is amended to read as follows:
  4. After completion of such project,  the  municipality  may  use  the
property  for  public purposes or may dispose of it. If the municipality
shall dispose of such property by sale  to  a  responsible  party,  such
party  shall pay to such municipality, in addition to such other consid-
eration, an amount of money constituting the amount of state  assistance
provided  [to  the  municipality] under this title plus accrued interest
and transaction costs and the municipality shall deposit that money into
the environmental restoration project account  of  the  hazardous  waste
remedial  fund  established  under  section  ninety-seven-b of the state
finance law.
  S 41. Subdivisions 3 and 4 of section  56-0508  of  the  environmental
conservation  law,  as  added by section 7 of part D of chapter 1 of the
laws of 2003, are amended to read as follows:
  3. such temporary incidents of ownership by such taxing district shall
also qualify it as being the owner of such property [for the purposes of
obtaining] TO BE ELIGIBLE FOR funding from the state  of  New  York  for
such  environmental restoration investigation project under this article
or for such funding from any source pursuant to any other state,  feder-
al,  or  local  law, but such incidents of ownership shall not be suffi-
cient to qualify it as the owner of such property for  the  purposes  of
holding it wholly or partially liable for any damages, past, present, or
future from any release of any hazardous material, substance, or contam-
inant  into the air, ground, or water, unless such release was caused by
such taxing district.
  4. within thirty days of the completion of the environmental  restora-
tion investigation project and the receipt by the taxing jurisdiction of
the  final  report of such investigation, such taxing jurisdiction shall
file such report with the court on notice to the  court  and  all  other
parties  of  record,  and  the  stay  of the foreclosure shall be lifted
(unless lifted earlier by a prior court order),  and  all  incidents  of
temporary  ownership  of  the  taxing jurisdiction that was awarded such
taxing district, except any right [to receive funding] for the  environ-
mental  restoration  investigation  project TO BE FUNDED, shall cease to
exist, and nothing in this subdivision shall preclude the taxing  juris-
diction  that  conducted  the  environmental  restoration  investigation
project or  the  taxing  jurisdiction  that  commenced  the  foreclosure
action,  if it is a different taxing jurisdiction than the taxing juris-
diction which conducted the investigation, from withdrawing  the  parcel

S. 6359--C                         203

from  foreclosure pursuant to section eleven hundred thirty-eight of the
real property tax law.
  S 42. Subdivision 2 and paragraph (f) of subdivision 3 of section 97-b
of the state finance law, as amended by section 4 of part I of chapter 1
of the laws of 2003, are amended to read as follows:
  2. Such fund shall consist of all of the following:
  (a)  moneys appropriated for transfer to the fund's site investigation
and construction account; (b) all fines and other  sums  accumulated  in
the fund prior to April first, nineteen hundred eighty-eight pursuant to
section 71-2725 of the environmental conservation law for deposit in the
fund's  site  investigation  and  construction  account;  (c) all moneys
collected or received by the department of taxation and finance pursuant
to section 27-0923 of the environmental conservation law for deposit  in
the  fund's  industry fee transfer account; (d) all moneys paid into the
fund pursuant to section 72-0201 of the environmental  conservation  law
which  shall  be  deposited in the fund's industry fee transfer account;
(e) all moneys paid into the fund pursuant to section one hundred eight-
y-six of the navigation law which  shall  be  deposited  in  the  fund's
industry  fee  transfer  account;  (f) [all moneys paid into the fund by
municipalities for repayment of landfill closure loans made pursuant  to
title  five  of  article fifty-two of the environmental conservation law
for deposit in the fund's site investigation and  construction  account;
(g)] all monies recovered under sections 56-0503, 56-0505 and 56-0507 of
the  environmental conservation law into the fund's environmental resto-
ration project account; [(h) all] (G) fees paid into the  fund  pursuant
to section [72-0403] 72-0402 of the environmental conservation law which
shall  be  deposited  in the fund's industry fee transfer account; [(i)]
(H) payments received for all state costs incurred  in  negotiating  and
overseeing  the  implementation  of  brownfield  site cleanup agreements
pursuant to title fourteen OF ARTICLE TWENTY-SEVEN of the  environmental
conservation  law  shall be deposited in the hazardous waste remediation
oversight and assistance account; and [(j)] (I) other moneys credited or
transferred thereto from any other fund or source  for  deposit  in  the
fund's site investigation and construction account.
  (f)  to undertake such remedial measures as the department of environ-
mental conservation may determine necessary due to environmental  condi-
tions  related to the property subject to an agreement [to provide state
assistance] OR CONTRACT under title five of  article  fifty-six  of  the
environmental  conservation law [that were unknown to such department at
the time of its approval of such agreement which indicates  that  condi-
tions  on  such property are not sufficiently protective of human health
for its reasonably anticipated uses or due to information  received,  in
whole  or  in part, after such department's approval of such agreement's
final engineering report and certification], which indicates  that  such
agreement's remedial activities are not sufficiently protective of human
health for such property's reasonably anticipated uses; and, [respecting
the monies in the environmental restoration project account in excess of
ten million dollars,] shall provide state assistance under title five of
article fifty-six of the environmental conservation law;
  S  43.  Severability. If any clause, sentence, paragraph, subdivision,
section or part of this act shall be adjudged by any court of  competent
jurisdiction  to  be  invalid, such judgment shall not affect, impair or
invalidate the remainder thereof, but shall be confined in its operation
to the clause, sentence, paragraph, subdivision, section or part thereof
directly involved in the controversy in which such judgment  shall  have
been rendered. It is hereby declared to be the intent of the legislature

S. 6359--C                         204

that  this  act  would have been enacted even if such invalid provisions
had not been included herein.
  S  44. This act shall take effect immediately and shall apply to sites
that submit an application for acceptance into  the  brownfield  cleanup
program on or after July 1, 2014; provided, however, that the department
of  environmental conservation shall not charge volunteers in the brown-
field cleanup program for oversight costs for any sites in  the  program
incurred  on  or after July 1, 2014; and provided further, however, that
section twenty-four of this act shall apply to any site where a  certif-
icate of completion has been issued on or after June 30, 2008.

                                SUBPART B

  Section 1.  Paragraph (a) of subdivision 2 of section 176 of the navi-
gation law, as amended by chapter 584 of the laws of 1992, is amended to
read as follows:
  (a)  Upon  the  occurrence of a discharge of petroleum, the department
shall respond promptly and proceed to cleanup and remove  the  discharge
in  accordance  with environmental priorities or may, at its discretion,
direct the discharger to promptly cleanup and remove the discharge.   IF
A  PERSON THE DEPARTMENT DEEMS A DISCHARGER, AND THUS DIRECTS TO CLEANUP
AND REMOVE THE DISCHARGE PURSUANT TO THIS SECTION PRESENTS  THE  DEPART-
MENT  WITH  EVIDENCE  THAT  A  THIRD PARTY IS SOLELY RESPONSIBLE FOR THE
DISCHARGE AND REQUESTS THE DEPARTMENT TO DETERMINE WHETHER THE  EVIDENCE
ESTABLISHES  THE  THIRD PARTY IS IN FACT SOLELY RESPONSIBLE, THE DEPART-
MENT SHALL, WITHIN THIRTY DAYS OF RECEIPT OF SUCH REQUEST, DETERMINE  IN
WRITING EITHER THAT THE THIRD PARTY: (I) SHALL BE DEEMED A DISCHARGER BY
THE  DEPARTMENT,  AND  SHALL  BE  DIRECTED  TO UNDERTAKE THE CLEANUP AND
REMOVAL OF THE DISCHARGE; OR (II) WILL NOT BE DEEMED A DISCHARGER BY THE
DEPARTMENT BECAUSE THE INFORMATION  PRESENTED  DOES  NOT  ESTABLISH  THE
RESPONSIBILITY OF THE THIRD PARTY BY A PREPONDERANCE OF THE EVIDENCE. IF
THE DEPARTMENT DETERMINES THAT THE PERSON THE DEPARTMENT INITIALLY DEEMS
A  DISCHARGER  AND  THE THIRD PARTY ARE BOTH DISCHARGERS, THE DEPARTMENT
SHALL, WITHIN THIRTY DAYS OF SUCH REQUEST, ADVISE EACH  OF  THE  PARTIES
THAT  THEY  ARE DEEMED DISCHARGERS SUBJECT TO APPORTIONMENT OF LIABILITY
FOR THE DISCHARGE PURSUANT TO SUBDIVISIONS ONE AND TWO  OF  SECTION  ONE
HUNDRED  EIGHTY OF THIS ARTICLE. The department shall be responsible for
cleanup and removal or as the case may  be,  for  retaining  agents  and
contractors who shall operate under the direction of that department for
such  purposes.  Implementation  of cleanup and removal procedures after
each discharge shall  be  conducted  in  accordance  with  environmental
priorities and procedures established by the department.
  S  2.  Subdivision 8 of section 176 of the navigation law, as added by
chapter 712 of the laws of 1989, is amended and a new subdivision  9  is
added to read as follows:
  8. Notwithstanding any other provision of law to the contrary, includ-
ing  but not limited to SUBDIVISION (C) OF section 15-108 of the general
obligations law, every person providing cleanup, removal of discharge of
petroleum or relocation of persons pursuant to  this  section  shall  be
entitled to contribution from any other responsible party.
  9.  THE FOLLOWING SHALL NOT BE DEEMED A FINAL AGENCY ACTION SUBJECT TO
REVIEW PURSUANT TO ARTICLE SEVENTY-EIGHT OF THE CIVIL PRACTICE  LAW  AND
RULES,  AND  SHALL  NOT HAVE A BINDING EFFECT ON ANY PARTY IN PENDING OR
FUTURE PROCEEDINGS REGARDING  THE  DISCHARGE:  (A)  A  DETERMINATION  OR
ACTION  OF  THE DEPARTMENT PURSUANT TO SUBDIVISION ONE, TWO, OR THREE OF
THIS SECTION, INCLUDING BUT NOT  LIMITED  TO,  A  DETERMINATION  OF  THE

S. 6359--C                         205

REASONABLENESS  OF  ANY COSTS INCURRED; (B) A DETERMINATION OR ACTION OF
THE ADMINISTRATOR PURSUANT TO SECTION ONE HUNDRED  EIGHTY,  ONE  HUNDRED
EIGHTY-ONE-A, OR ONE HUNDRED EIGHTY-THREE OF THIS ARTICLE, INCLUDING THE
FILING OF AN ENVIRONMENTAL LIEN.
  S 3. Subdivisions 1 and 2 of section 180 of the navigation law, subdi-
vision  1  as added by chapter 845 of the laws of 1977 and subdivision 2
as amended by chapter 672 of the laws of 1991, are amended  to  read  as
follows:
  1.  To  represent the state in meetings with the alleged discharger OR
DISCHARGERS and claimants concerning liability  for  the  discharge  and
amount  of  the  claims,  AND, IF THERE IS MORE THAN ONE DISCHARGER IN A
MEETING, TO APPORTION LIABILITY FOR THE DISCHARGE;
  2. To determine if hearings are needed  to  settle  particular  claims
filed  by  injured  persons AND TO APPORTION LIABILITY BETWEEN AND AMONG
DISCHARGERS;
  S 4. Subdivision 1 of section 181 of the navigation law, as amended by
chapter 712 of the laws of 1989, is amended and a new subdivision  7  is
added to read as follows:
  1.  (A)  Any  person  who  has  discharged petroleum shall be strictly
liable, without regard to fault, for all cleanup and removal  costs  and
all direct and indirect damages, no matter by whom sustained, as defined
in  this  section,  UNLESS  THE  LIABILITY LIMITATION AS DESCRIBED UNDER
PARAGRAPH (B) OF THIS SUBDIVISION APPLIES.  In addition to  cleanup  and
removal  costs  and  damages,  any  such  person who is notified of such
release and who did not undertake relocation of persons residing in  the
area  of  the  discharge in accordance with paragraph (c) of subdivision
seven of section one hundred  seventy-six  of  this  article,  shall  be
liable  to  the  fund  for  an  amount equal to two times the actual and
necessary expense incurred by the fund for such relocation  pursuant  to
section one hundred seventy-seven-a of this article.
  (B) (I) ANY PERSON WHO AGREES TO REMEDIATE THE DISCHARGE TO THE SATIS-
FACTION  OF  THE DEPARTMENT, AND IN CONFORMANCE WITH THIS ARTICLE, SHALL
BE ENTITLED TO RECEIVE LIABILITY LIMITATION.  SUCH  AGREEMENT  SHALL  BE
CALLED  THE  LIABILITY  LIMITATION  AGREEMENT  AND  SHALL BE WRITTEN AND
EXECUTED BY BOTH THE DEPARTMENT AND SUCH PERSON. AFTER EXECUTION OF  THE
LIABILITY  LIMITATION  AGREEMENT, SUCH PERSON SHALL NOT BE LIABLE TO THE
STATE UPON ANY STATUTORY OR COMMON LAW CAUSE OF ACTION, ARISING  OUT  OF
THE  PRESENCE  OF  ANY  CONTAMINATION IN, ON, OR EMANATING FROM THE SITE
THAT WAS THE SUBJECT OF  THE  LIABILITY  LIMITATION,  EXCEPT  THAT  SUCH
PERSON SHALL NOT RECEIVE A RELEASE FOR NATURAL RESOURCE DAMAGES THAT MAY
BE  AVAILABLE  UNDER  LAW.   THE LIABILITY LIMITATION SHALL APPLY TO ALL
SUCCESSORS IN OWNERSHIP OF THE PROPERTY AND TO ALL PERSONS WHO LEASE THE
PROPERTY OR WHO ENGAGE IN OPERATIONS ON THE PROPERTY, PROVIDED THAT SUCH
PERSONS ACT WITH DUE CARE AND IN GOOD FAITH TO ADHERE  TO  THE  REQUIRE-
MENTS OF THE LIABILITY LIMITATION AGREEMENT.
  (II)  A  LIABILITY LIMITATION AGREEMENT AND THE PROTECTIONS IT AFFORDS
SHALL NOT APPLY TO ANY DISCHARGE THAT OCCURS SUBSEQUENT TO THE EXECUTION
OF THE LIABILITY LIMITATION AGREEMENT, NOR SHALL A LIABILITY  LIMITATION
AGREEMENT AND THE PROTECTIONS IT AFFORDS RELIEVE ANY PERSON OF THE OBLI-
GATIONS  TO  COMPLY  IN  THE FUTURE WITH LAWS AND REGULATIONS. THE STATE
NONETHELESS SHALL RESERVE ALL OF ITS RIGHTS CONCERNING, AND SUCH LIABIL-
ITY LIMITATION SHALL NOT EXTEND TO,  ANY  FURTHER  INVESTIGATION  AND/OR
REMEDIATION  THE  DEPARTMENT DEEMS NECESSARY DUE TO FRAUD, NONCOMPLIANCE
WITH THE TERMS THAT FORMED THE  LIABILITY  LIMITATION  AGREEMENT,  OR  A
WRITTEN  FINDING  BY  THE  DEPARTMENT  THAT A CHANGE IN AN ENVIRONMENTAL
STANDARD, FACTOR, OR  CRITERION  UPON  WHICH  THE  LIABILITY  LIMITATION

S. 6359--C                         206

AGREEMENT  WAS  BASED  WOULD  RENDER  REMEDIATION  ACTIVITIES  NO LONGER
PROTECTIVE OF PUBLIC HEALTH OR THE ENVIRONMENT. NOTHING IN THIS  SECTION
SHALL  AFFECT  THE LIABILITY OF THE PERSON RESPONSIBLE FOR SUCH PERSON'S
OWN ACTS OR OMISSIONS CAUSING WRONGFUL DEATH OR PERSONAL INJURY. NOTHING
IN THIS SECTION SHALL AFFECT THE LIABILITY OF ANY PERSON WITH RESPECT TO
ANY CIVIL ACTION BROUGHT BY A PARTY OTHER THAN THE STATE. THE PROVISIONS
OF THIS SECTION SHALL NOT AFFECT AN ACTION OR A CLAIM, INCLUDING A STAT-
UTORY OR COMMON LAW CLAIM FOR CONTRIBUTION OR INDEMNIFICATION, THAT SUCH
PERSON HAS OR MAY HAVE AGAINST A THIRD PARTY.
  7.  NOTWITHSTANDING  ANY  OTHER  PROVISION  OF  THIS SECTION, A PUBLIC
CORPORATION SHALL NOT BE LIABLE FOR THE DISCHARGE OF PETROLEUM AT A SITE
IF SUCH PUBLIC CORPORATION ACQUIRED SUCH SITE  INVOLUNTARILY,  AND  SUCH
PUBLIC  CORPORATION  RETAINED  SUCH  SITE  WITHOUT  PARTICIPATING IN THE
DEVELOPMENT OF SUCH SITE. THIS EXEMPTION SHALL NOT APPLY TO  ANY  PUBLIC
CORPORATION  THAT  HAS  (A)  CAUSED  OR  CONTRIBUTED TO THE DISCHARGE OF
PETROLEUM FROM OR AT THE SITE,  (B)  PURCHASED,  SOLD,  REFINED,  TRANS-
PORTED,  OR DISCHARGED PETROLEUM FROM OR AT SUCH SITE, OR (C) CAUSED THE
PURCHASE, SALE, REFINEMENT, TRANSPORTATION, OR  DISCHARGE  OF  PETROLEUM
FROM  OR AT SUCH SITE. THE TERMS "PARTICIPATION IN DEVELOPMENT," "PUBLIC
CORPORATION" AND "INVOLUNTARY ACQUISITION OF OWNERSHIP OR CONTROL" SHALL
HAVE THE SAME MEANING AS THOSE TERMS ARE DEFINED IN PARAGRAPHS (C),  (D)
AND  (E)  OF  SUBDIVISION  TWO  OF  SECTION 27-1323 OF THE ENVIRONMENTAL
CONSERVATION LAW. HOWEVER,  "PARTICIPATION  IN  DEVELOPMENT"  SHALL  NOT
INCLUDE  IMPROVEMENTS  WHICH  ARE  PART  OF  A  CLEANUP AND REMOVAL OF A
DISCHARGE OF PETROLEUM PURSUANT TO THIS ARTICLE.
  S 5. Section 183 of the navigation law, as added by chapter 845 of the
laws of 1977, is amended to read as follows:
  S 183. Settlements. The administrator shall  attempt  to  promote  and
arrange  a  settlement  between  the  claimant and the person OR PERSONS
responsible for the discharge. If the source of  the  discharge  can  be
determined  and  liability  is  conceded,  the  claimant and the alleged
discharger OR DISCHARGERS may agree to a settlement which shall be final
and binding upon the parties and which will waive all  recourse  against
the  fund.  TO THE EXTENT AN ALLEGED DISCHARGER PRESENTS EVIDENCE TO THE
ADMINISTRATOR THAT ANOTHER PARTY IS WHOLLY OR PARTIALLY RESPONSIBLE  FOR
THE  CLAIM,  AND  REQUESTS  THE  ADMINISTRATOR  TO CONSIDER WHETHER SUCH
INFORMATION PRESENTED ESTABLISHES BY A  PREPONDERANCE  OF  THE  EVIDENCE
THAT  THE  THIRD  PARTY  IS IN FACT WHOLLY OR PARTIALLY RESPONSIBLE, THE
ADMINISTRATOR WITHIN THIRTY DAYS OF RECEIPT OF SUCH REQUEST SHALL EITHER
DETERMINE: (1) IN WRITING, IF THE THIRD PARTY SHALL BE DEEMED  AN  ADDI-
TIONAL  DISCHARGER  TO  ANY  PENDING  OR  ANTICIPATED CLAIM OR (2) IF AN
ADMINISTRATIVE HEARING AS TO LIABILITY IS NECESSARY.
  S 6. This act shall take effect immediately.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion, section or part of this act shall be adjudged by a court of compe-
tent jurisdiction to be invalid, such judgment shall not affect,  impair
or invalidate the remainder thereof, but shall be confined in its opera-
tion  to  the  clause, sentence, paragraph, subdivision, section or part
thereof directly involved in the  controversy  in  which  such  judgment
shall  have been rendered. It is hereby declared to be the intent of the
legislature that this act would have been enacted even if  such  invalid
provisions had not been included herein.
  S  3.  This  act shall take effect immediately provided, however, that
the applicable effective date of Subparts A through B of this act  shall
be as specifically set forth in the last section of such Subparts.

S. 6359--C                         207

                                 PART R

  Section  1.  Section  210  of  the  tax law is amended by adding a new
subdivision 49 to read as follows:
  49. REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (A)  A  QUALIFIED  NEW
YORK  MANUFACTURER  AS  DEFINED IN SUBPARAGRAPH (VI) OF PARAGRAPH (A) OF
SUBDIVISION ONE OF THIS SECTION WILL BE ALLOWED A CREDIT EQUAL TO TWENTY
PERCENT OF THE REAL PROPERTY TAX IT PAID DURING  THE  TAXABLE  YEAR  FOR
REAL  PROPERTY  OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCI-
PALLY USED DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE  EXTENT  NOT
DEDUCTED  IN  DETERMINING  ENTIRE  NET  INCOME.  THIS CREDIT WILL NOT BE
ALLOWED IF THE REAL PROPERTY TAXES THAT ARE THE BASIS  FOR  THIS  CREDIT
ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY-
ER.
  (B)  (1)  FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX
MEANS A CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF  A  COUNTY,
CITY,  TOWN, VILLAGE OR SCHOOL DISTRICT FOR MUNICIPAL OR SCHOOL DISTRICT
PURPOSES, PROVIDED THAT THE CHARGE IS  LEVIED  FOR  THE  GENERAL  PUBLIC
WELFARE  BY  THE  PROPER  TAXING  AUTHORITIES AT A LIKE RATE AGAINST ALL
PROPERTY OVER WHICH SUCH AUTHORITIES  HAVE  JURISDICTION,  AND  PROVIDED
THAT  WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN OF
THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
DETERMINED FOR THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED  BY  SUCH
ARTICLE  EIGHTEEN  OR  NINETEEN,  WHICHEVER IS APPLICABLE. THE TERM REAL
PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
ABLE TO MAINTENANCE OR INTEREST, WHEN (I) THE PROPERTY  SUBJECT  TO  THE
CHARGE IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (II)
THE  AMOUNT  OF  THE CHARGE IS DETERMINED BY THE BENEFIT TO THE PROPERTY
ASSESSED, OR (III) THE IMPROVEMENT FOR  WHICH  THE  CHARGE  IS  ASSESSED
TENDS TO INCREASE THE PROPERTY VALUE.
  (2) IN ADDITION, THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY THE
TAXPAYER  UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR BY
THE TAXPAYER IN MANUFACTURING WHERE THE TAXPAYER LEASES SUCH REAL  PROP-
ERTY  FROM  AN  UNRELATED  THIRD  PARTY  IF THE FOLLOWING CONDITIONS ARE
SATISFIED: (I) THE TAX MUST BE PAID BY THE TAXPAYER AS  LESSEE  PURSUANT
TO  EXPLICIT  REQUIREMENTS  IN A WRITTEN LEASE, AND (II) THE TAXPAYER AS
LESSEE HAS PAID SUCH TAXES DIRECTLY TO  THE  TAXING  AUTHORITY  AND  HAS
RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI-
TY.  IN  THE  CASE  OF A COMBINED GROUP THAT CONSTITUTES A QUALIFIED NEW
YORK MANUFACTURER, THE CONDITIONS IN THE PRECEDING SENTENCE  ARE  SATIS-
FIED  IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND ANOTHER
CORPORATION IN THE COMBINED GROUP  MAKES  THE  PAYMENTS  TO  THE  TAXING
AUTHORITY.
  (3)  THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY THE
TAXPAYER IN CONNECTION WITH AN AGREEMENT FOR  THE  PAYMENT  IN  LIEU  OF
TAXES  ON  REAL  PROPERTY AS DEFINED IN SUBDIVISION SEVENTEEN OF SECTION
EIGHT HUNDRED FIFTY-FOUR OF THE  GENERAL  MUNICIPAL  LAW,  WHETHER  SUCH
PROPERTY  IS OWNED OR LEASED BY THE TAXPAYER, UNLESS THE PAYMENT IN LIEU
OF TAXES WAS MADE PURSUANT TO A PAYMENT IN LIEU OF  TAX  AGREEMENT  THAT
WAS  ENTERED INTO IN CONJUNCTION WITH THE SETTLEMENT OF A TAX CERTIORARI
PROCEEDING COMMENCED PURSUANT TO ARTICLE SEVEN OF THE REAL PROPERTY  TAX
LAW.
  (4)  THE  REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE YEAR
SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY.

S. 6359--C                         208

  (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY  TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK, IN
THE TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF  (1)
THE  AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2) THE
AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY  TAXES.
IF  SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR,
THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION  IS  ATTRIBUTABLE
TO  EACH  YEAR  COVERED  BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF
CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED  FOR  EACH
YEAR BASED ON SUCH REDUCTION.
  (D)  THE  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER,
ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREAT-
ED  AS  AN  OVERPAYMENT  OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS  CHAPTER.
PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOU-
SAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE
PAID THEREON.
  S 2. Paragraph (b) of subdivision 9 of section 208 of the tax  law  is
amended by adding a new subparagraph 21 to read as follows:
  (21)  THE  AMOUNT  OF ANY FEDERAL DEDUCTION FOR REAL PROPERTY TAXES TO
THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF THE  CALCULATION  OF  THE
REAL  PROPERTY  TAX  CREDIT  FOR MANUFACTURERS ALLOWED UNDER SUBDIVISION
FORTY-NINE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law is amended by adding a new clause (xxxviii) to read as
follows:

(XXXVIII) REAL PROPERTY TAX           AMOUNT OF CREDIT UNDER
CREDIT FOR MANUFACTURERS UNDER        SUBDIVISION FORTY-NINE OF
SUBSECTION (YY)                       SECTION TWO HUNDRED TEN

  S 4. Subsections (yy) and (zz) of section  606  of  the  tax  law,  as
relettered  by section 5 of part H of chapter 1 of the laws of 2003, are
relettered subsections (yyy) and (zzz) and  a  new  subsection  (yy)  is
added to read as follows:
  (YY)  REAL  PROPERTY TAX CREDIT FOR MANUFACTURERS. (1) A QUALIFIED NEW
YORK MANUFACTURER WILL BE ALLOWED A CREDIT EQUAL TO  TWENTY  PERCENT  OF
THE  REAL PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR REAL PROPERTY
OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCIPALLY USED DURING
THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT DEDUCTED IN COMPUT-
ING FEDERAL ADJUSTED GROSS INCOME. THIS CREDIT WILL NOT  BE  ALLOWED  IF
THE  REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT ARE INCLUDED
IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAYER.
  (2)(A) THE TERM QUALIFIED NEW YORK MANUFACTURER HAS THE  SAME  MEANING
AS  UNDER  SUBPARAGRAPH  (VI)  OF  PARAGRAPH  (A)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS CHAPTER.
  (B) (I) THE TERM REAL PROPERTY TAX MEANS A CHARGE  IMPOSED  UPON  REAL
PROPERTY  BY  OR  ON  BEHALF  OF A COUNTY, CITY, TOWN, VILLAGE OR SCHOOL
DISTRICT FOR MUNICIPAL OR SCHOOL DISTRICT PURPOSES,  PROVIDED  THAT  THE
CHARGE  IS  LEVIED  FOR  THE GENERAL PUBLIC WELFARE BY THE PROPER TAXING
AUTHORITIES AT A LIKE RATE AGAINST ALL PROPERTY OVER WHICH SUCH AUTHORI-

S. 6359--C                         209

TIES HAVE JURISDICTION, AND PROVIDED THAT WHERE TAXES ARE LEVIED  PURSU-
ANT  TO  ARTICLE  EIGHTEEN OR NINETEEN OF THE REAL PROPERTY TAX LAW, THE
PROPERTY MUST HAVE BEEN TAXED AT THE RATE DETERMINED FOR  THE  CLASS  IN
WHICH IT IS CONTAINED, AS PROVIDED BY SUCH ARTICLE EIGHTEEN OR NINETEEN,
WHICHEVER  IS  APPLICABLE. THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A
CHARGE FOR LOCAL BENEFITS, INCLUDING ANY PORTION OF THAT CHARGE THAT  IS
PROPERLY ALLOCATED TO THE COSTS ATTRIBUTABLE TO MAINTENANCE OR INTEREST,
WHEN  (I)  THE PROPERTY SUBJECT TO THE CHARGE IS LIMITED TO THE PROPERTY
THAT BENEFITS FROM THE CHARGE, OR (II)  THE  AMOUNT  OF  THE  CHARGE  IS
DETERMINED  BY  THE  BENEFIT  TO  THE  PROPERTY  ASSESSED,  OR (III) THE
IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED TENDS TO INCREASE THE PROP-
ERTY VALUE.
  (II) IN ADDITION, THE TERM REAL PROPERTY TAX INCLUDES  TAXES  PAID  BY
THE TAXPAYER UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR
BY  THE  TAXPAYER  IN  MANUFACTURING WHERE THE TAXPAYER LEASES SUCH REAL
PROPERTY FROM AN UNRELATED THIRD PARTY IF THE FOLLOWING  CONDITIONS  ARE
SATISFIED:  (I)  THE TAX MUST BE PAID BY THE TAXPAYER AS LESSEE PURSUANT
TO EXPLICIT REQUIREMENTS IN A WRITTEN LEASE, AND (II)  THE  TAXPAYER  AS
LESSEE  HAS  PAID  SUCH  TAXES  DIRECTLY TO THE TAXING AUTHORITY AND HAS
RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI-
TY. IN THE CASE OF A COMBINED GROUP THAT  CONSTITUTES  A  QUALIFIED  NEW
YORK  MANUFACTURER,  THE CONDITIONS IN THE PRECEDING SENTENCE ARE SATIS-
FIED IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND  ANOTHER
CORPORATION  IN  THE  COMBINED  GROUP  MAKES  THE PAYMENTS TO THE TAXING
AUTHORITY.
  (III) THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A  PAYMENT  MADE  BY
THE  TAXPAYER IN CONNECTION WITH AN AGREEMENT FOR THE PAYMENT IN LIEU OF
TAXES ON REAL PROPERTY AS DEFINED IN SUBDIVISION  SEVENTEEN  OF  SECTION
EIGHT  HUNDRED  FIFTY-FOUR  OF  THE  GENERAL MUNICIPAL LAW, WHETHER SUCH
PROPERTY IS OWNED OR LEASED BY THE TAXPAYER, UNLESS THE PAYMENT IN  LIEU
OF  TAXES  WAS  MADE PURSUANT TO A PAYMENT IN LIEU OF TAX AGREEMENT THAT
WAS ENTERED INTO IN CONJUNCTION WITH THE SETTLEMENT OF A TAX  CERTIORARI
PROCEEDING  COMMENCED PURSUANT TO ARTICLE SEVEN OF THE REAL PROPERTY TAX
LAW.
  (IV) THE REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE  YEAR
SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY.
  (3)  CREDIT  RECAPTURE. WHERE A QUALIFIED NEW YORK MANUFACTURER'S REAL
PROPERTY TAXES WHICH WERE THE BASIS FOR  THE  ALLOWANCE  OF  THE  CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY  TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK, IN
THE TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF  (I)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (II) THE
AMOUNT  OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES.
IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE  YEAR,
THE  TAXPAYER  MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE
TO EACH YEAR COVERED BY SUCH FINAL ORDER AND  CALCULATE  THE  AMOUNT  OF
CREDIT  WHICH  IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH
YEAR BASED ON SUCH REDUCTION.
  (4) IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR  ANY
TAXABLE  YEAR  EXCEEDS THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS WILL
BE TREATED AS AN OVERPAYMENT TO BE CREDITED OR  REFUNDED  IN  ACCORDANCE
WITH  THE  PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE,
PROVIDED HOWEVER, NO INTEREST WILL BE PAID THEREON.
  S 4-a. Subsection (b) of section 612 of the  tax  law  is  amended  by
adding a new paragraph 40 to read as follows:

S. 6359--C                         210

  (40)  THE  AMOUNT  OF ANY FEDERAL DEDUCTION FOR REAL PROPERTY TAXES TO
THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF THE  CALCULATION  OF  THE
REAL PROPERTY TAX CREDIT FOR MANUFACTURERS ALLOWED UNDER SUBSECTION (YY)
OF SECTION SIX HUNDRED SIX OF THIS ARTICLE.
  S  5.  Subparagraph (vii) of paragraph (a) of subdivision 1 of section
210 of the tax law, as added by section 1 of part Z of chapter 59 of the
laws of 2013, is amended to read as follows:
  (vii) For a qualified New York manufacturer, as  defined  in  subpara-
graph  (vi) of this paragraph, the rate at which the tax is computed [in
effect for taxable years beginning on or after January first, two  thou-
sand thirteen and before January first, two thousand fourteen for quali-
fied  New  York  manufacturers  shall  be reduced by nine and two-tenths
percent for taxable years commencing on  or  after  January  first,  two
thousand fourteen and before January first, two thousand fifteen, twelve
and  three-tenths percent for taxable years commencing on or after Janu-
ary first, two thousand fifteen and before January first,  two  thousand
sixteen, fifteen and four-tenths percent for taxable years commencing on
or  after  January first, two thousand sixteen and before January first,
two thousand eighteen, and twenty-five percent for taxable years  begin-
ning  on  or  after  January first, two thousand eighteen] SHALL BE ZERO
PERCENT OF THE TAXPAYER'S BUSINESS INCOME BASE.
  S 6. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014; provided that sections one,
two, three and five of this act shall expire December 31, 2014 when upon
such date such provisions shall be deemed repealed.

                                 PART S

                          Intentionally Omitted

                                 PART T

  Section 1. Section 39 of the tax law is amended by adding a new subdi-
vision (c-1) to read as follows:
  (C-1) EXCISE TAX ON TELECOMMUNICATION SERVICES. SUCH BUSINESS OR OWNER
OF A BUSINESS SHALL BE ELIGIBLE FOR A CREDIT OF THE EXCISE TAX ON  TELE-
COMMUNICATION  SERVICES  IMPOSED  BY SECTION ONE HUNDRED EIGHTY-SIX-E OF
THIS CHAPTER THAT IS PASSED THROUGH TO SUCH BUSINESS,  PURSUANT  TO  THE
PROVISIONS REFERENCED IN SUBDIVISION (K) OF THIS SECTION.
  S  2.  Paragraphs  4 and 6 of subdivision (k) of section 39 of the tax
law, as added by section 2 of part A of chapter 68 of the laws of  2013,
are amended to read as follows:
  (4) Article 9-A: section 210, subdivision 47 AND SUBDIVISION 48.
  (6) Article 22: section 606, subsection (ww) AND SUBSECTION (XX).
  S 2-a. Paragraph (b) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 20-a to read as follows:
  (20-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF
THE  CALCULATION OF THE TAX-FREE NY AREA EXCISE TAX ON TELECOMMUNICATION
SERVICES CREDIT ALLOWED UNDER SUBDIVISION  FORTY-EIGHT  OF  SECTION  TWO
HUNDRED TEN OF THIS ARTICLE.
  S 3. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48.  THE  TAX-FREE  NY  AREA  EXCISE TAX ON TELECOMMUNICATION SERVICES
CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF  A  BUSINESS  THAT  IS

S. 6359--C                         211

LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE  ECONOMIC  DEVELOPMENT  LAW  SHALL  BE ALLOWED A CREDIT EQUAL TO THE
EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED
EIGHTY-SIX-E  OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING
THE TAXABLE YEAR TO THE  EXTENT  NOT  OTHERWISE  DEDUCTED  IN  COMPUTING
ENTIRE  NET INCOME. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER. THIS CREDIT MAY BE CLAIMED ONLY WHERE ANY
TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPARATELY
STATED ON A BILL FROM THE PROVIDER  OF  TELECOMMUNICATION  SERVICES  AND
PAID  BY  SUCH  BUSINESS WITH RESPECT TO SUCH SERVICES RENDERED WITHIN A
TAX-FREE NY AREA DURING THE TAXABLE YEAR.  UNLESS  THE  TAXPAYER  HAS  A
TAX-FREE  NY  AREA  ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT  PRESCRIBED  IN  PARAGRAPH
(D)   OF  SUBDIVISION  ONE  OF  THIS  SECTION.  PROVIDED,  HOWEVER,  THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  S  4. Section 606 of the tax law is amended by adding a new subsection
(xx) to read as follows:
  (XX) THE TAX-FREE NY AREA EXCISE  TAX  ON  TELECOMMUNICATION  SERVICES
CREDIT.  A  TAXPAYER  THAT  IS A BUSINESS OR OWNER OF A BUSINESS THAT IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED  A  CREDIT  EQUAL  TO  THE
EXCISE  TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED
EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS  DURING
THE  TAXABLE  YEAR  TO  THE  EXTENT  NOT OTHERWISE DEDUCTED IN COMPUTING
FEDERAL ADJUSTED GROSS INCOME.  THIS CREDIT MAY BE  CLAIMED  ONLY  WHERE
ANY  TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPA-
RATELY STATED ON A BILL FROM THE PROVIDER OF TELECOMMUNICATION  SERVICES
AND  PAID BY SUCH TAXPAYER WITH RESPECT TO SUCH SERVICES RENDERED WITHIN
A TAX-FREE NY AREA DURING THE TAXABLE YEAR. IF THE AMOUNT OF THE  CREDIT
ALLOWED  UNDER  THIS SUBSECTION FOR ANY TAXABLE YEAR EXCEEDS THE TAXPAY-
ER'S TAX FOR SUCH YEAR, THE EXCESS WILL BE TREATED AS AN OVERPAYMENT  TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX
HUNDRED  EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST
WILL BE PAID THEREON.
  S 5. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is amended by adding a new clause (xxxvii) to read as
follows:
(XXXVII) TAX FREE NY AREA EXCISE        AMOUNT OF CREDIT UNDER
TAX ON TELECOMMUNICATION SERVICES       SUBDIVISION FORTY-EIGHT
CREDIT UNDER SUBSECTION (XX)            OF SECTION TWO HUNDRED TEN
  S 5-a. Subsection (b) of section 612 of the  tax  law  is  amended  by
adding a new paragraph 39-a to read as follows:
  (39-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF
THE  CALCULATION  OF  TAX-FREE  NY  AREA EXCISE TAX ON TELECOMMUNICATION
SERVICES CREDIT ALLOWED UNDER SUBSECTION (XX) OF SECTION SIX HUNDRED SIX
OF THIS ARTICLE.
  S 6. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

                                 PART U

S. 6359--C                         212

  Section 1. Paragraph (a) of subdivision 44 of section 210 of  the  tax
law,  as  amended  by  section  2 of part T of chapter 59 of the laws of
2012, is amended to read as follows:
  (a) A taxpayer that has been certified by the commissioner of labor as
a  qualified employer pursuant to section twenty-five-a of the labor law
shall be allowed a credit against the tax imposed by this article  equal
to  (i)  five  hundred  dollars  per month for up to six months for each
qualified employee the employer  employs  in  a  full-time  job  or  two
hundred  fifty dollars per month for up to six months for each qualified
employee the employer employs in a part-time  job  of  at  least  twenty
hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
ENROLLED IN HIGH SCHOOL FULL-TIME, and (ii)  one  thousand  dollars  for
each  qualified  employee who is employed for at least an additional six
months by the qualified employer in a  full-time  job  or  five  hundred
dollars  for  each  qualified  employee  who is employed for at least an
additional six months by the qualified employer in a part-time job of at
least twenty hours per week OR TEN HOURS PER  WEEK  WHEN  THE  QUALIFIED
EMPLOYEE  IS  ENROLLED IN HIGH SCHOOL FULL-TIME, AND (III) AN ADDITIONAL
ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR  AT
LEAST  AN ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOY-
MENT BY THE QUALIFIED EMPLOYER  IN  A  FULL-TIME  JOB  OR  FIVE  HUNDRED
DOLLARS  FOR  EACH  QUALIFIED  EMPLOYEE  WHO IS EMPLOYED FOR AT LEAST AN
ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT LEAST TWENTY HOURS PER  WEEK
OR  TEN  HOURS  PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH
SCHOOL FULL-TIME.  For purposes of this subdivision, the term "qualified
employee" shall have the same meaning as set forth in subdivision (b) of
section twenty-five-a of the  labor  law.  The  portion  of  the  credit
described in subparagraph (i) of this paragraph shall be allowed for the
taxable  year in which the wages are paid to the qualified employee, and
the portion of the credit described in subparagraph (ii) of  this  para-
graph  shall  be allowed in the taxable year in which the additional six
month period ends.
  S 2. Paragraph 1 of subsection (tt) of section 606 of the tax law,  as
amended  by  section  3  of part T of chapter 59 of the laws of 2012, is
amended to read as follows:
  (1) A taxpayer that has been certified by the commissioner of labor as
a qualified employer pursuant to section twenty-five-a of the labor  law
shall  be allowed a credit against the tax imposed by this article equal
to (A) five hundred dollars per month for up  to  six  months  for  each
qualified  employee  the  employer  employs  in  a  full-time job or two
hundred fifty dollars per month for up to six months for each  qualified
employee  the  employer  employs  in  a part-time job of at least twenty
hours per week OR TEN HOURS PER WEEK  WHEN  THE  QUALIFIED  EMPLOYEE  IS
ENROLLED IN HIGH SCHOOL FULL-TIME, and (B) one thousand dollars for each
qualified employee who is employed for at least an additional six months
by the qualified employer in a full-time job or five hundred dollars for
each  qualified  employee who is employed for at least an additional six
months by the qualified employer in a part-time job of at  least  twenty
hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
ENROLLED IN HIGH SCHOOL FULL-TIME, AND (C) AN  ADDITIONAL  ONE  THOUSAND
DOLLARS  FOR  EACH  QUALIFIED  EMPLOYEE  WHO IS EMPLOYED FOR AT LEAST AN
ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
QUALIFIED EMPLOYER IN A FULL-TIME JOB OR FIVE HUNDRED DOLLARS  FOR  EACH
QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER
THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN

S. 6359--C                         213

A  PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN HOURS PER WEEK
WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH  SCHOOL  FULL-TIME.    A
taxpayer that is a partner in a partnership, member of a limited liabil-
ity  company  or shareholder in an S corporation that has been certified
by the commissioner of labor as a qualified employer pursuant to section
twenty-five-a of the labor law shall be allowed its pro  rata  share  of
the  credit  earned  by  the partnership, limited liability company or S
corporation. For  purposes  of  this  subsection,  the  term  "qualified
employee" shall have the same meaning as set forth in subdivision (b) of
section  twenty-five-a  of  the  labor  law.  The  portion of the credit
described in subparagraph (A) of this paragraph shall be allowed for the
taxable year in which the wages are paid to the qualified employee,  and
the  portion  of  the credit described in subparagraph (B) of this para-
graph shall be allowed in the taxable year in which the  additional  six
month period ends.
  S  3.  Subdivision (a) of section 25-a of the labor law, as amended by
section 2 of part DD of chapter 59 of the laws of 2013,  is  amended  to
read as follows:
  (a) The commissioner is authorized to establish and administer the New
York youth works tax credit program to provide tax incentives to employ-
ers  for  employing  at risk youth in part-time and full-time positions.
There will be five distinct pools of tax incentives.  Program  one  will
cover  tax incentives allocated for two thousand twelve and two thousand
thirteen. Program two will cover tax incentives allocated in  two  thou-
sand  fourteen to be used in two thousand fourteen and fifteen.  Program
three will cover tax incentives allocated in two thousand fifteen to  be
used  in  two  thousand fifteen and sixteen. Program four will cover tax
incentives allocated in two thousand sixteen to be used in two  thousand
sixteen  and seventeen. Program five will cover tax incentives allocated
in two thousand seventeen to be used in two thousand seventeen and eigh-
teen. The commissioner is  authorized  to  allocate  up  to  twenty-five
million  dollars  of  tax  credits  under program one, [six] TEN million
dollars of tax credits under program two, [six] TEN million  dollars  of
tax  credits  under  program three, [and six] TEN million dollars of tax
credits under program four, and [six] TEN million dollars of tax credits
under program five.
  S 4. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2014.

                                 PART V

  Section 1. Section 19 of Part W-1 of chapter 109 of the laws  of  2006
amending  the  tax  law and other laws relating to providing exemptions,
reimbursements and credits from various taxes  for  certain  alternative
fuels,  as  amended  by section 1 of part D of chapter 59 of the laws of
2012, is amended to read as follows:
  S 19. This act shall take effect immediately; provided, however,  that
sections one through thirteen of this act shall take effect September 1,
2006  and  shall be deemed repealed on September 1, [2014] 2016 and such
repeal shall  apply  in  accordance  with  the  applicable  transitional
provisions  of sections 1106 and 1217 of the tax law, and shall apply to
sales made, fuel compounded or manufactured, and uses  occurring  on  or
after  such  date,  and with respect to sections seven through eleven of
this act, in  accordance  with  applicable  transitional  provisions  of
sections  1106  and  1217  of  the  tax law; provided, however, that the
commissioner of taxation and finance shall be authorized  on  and  after

S. 6359--C                         214

the  date  this act shall have become a law to adopt and amend any rules
or regulations  and  to  take  any  steps  necessary  to  implement  the
provisions  of this act; provided further that sections fourteen through
sixteen  of  this  act  shall take effect immediately and shall apply to
taxable years beginning on or after January 1, 2006.
  S 2. This act shall take effect immediately.

                                 PART W

  Section 1. Section 11 of part EE of chapter 63 of the  laws  of  2000,
amending  the  tax law and other laws relating to modifying the distrib-
ution of funds from the motor vehicle fuel excise  tax,  as  amended  by
section  1  of  part  M of chapter 61 of the laws of 2011, is amended to
read as follows:
  S 11. Notwithstanding any other law, rule or regulation to the contra-
ry, the comptroller is hereby authorized  and  directed  to  deposit  in
equal  monthly installments and distribute pursuant to the provisions of
subdivision (d) of section 301-j of the tax law amounts listed below  to
the  credit of the dedicated highway and bridge trust fund and the dedi-
cated mass transportation trust fund from all motor vehicle receipts now
deposited into the general fund pursuant to provisions  of  the  vehicle
and  traffic  law:    twenty-eight million four hundred thousand dollars
from April 1, 2002 through March  31,  2003,  sixty-seven  million  nine
hundred  thousand dollars from April 1, 2003 through March 31, 2004, one
hundred seventy million one hundred thousand dollars from April 1,  2004
through  March  31,  2005,  and one hundred percent of all motor vehicle
receipts pursuant to provisions of the vehicle and traffic law that  are
not  otherwise directed to be deposited in a fund other than the general
fund from April 1, 2005 through March 31, 2006, and the same amount each
year thereafter UNTIL MARCH 31, 2014. FROM APRIL 1, 2014  THROUGH  MARCH
31, 2015, AND EACH YEAR THEREAFTER, THE COMPTROLLER SHALL, ON A QUARTER-
LY BASIS, CERTIFY AND TRANSFER SIXTEEN MILLION FOUR HUNDRED NINETY-EIGHT
THOUSAND  TWO  HUNDRED  FIFTY-FIVE  DOLLARS TO THE DEDICATED HIGHWAY AND
BRIDGE TRUST FUND AND FIFTEEN MILLION SIX  HUNDRED  SIXTY-FIVE  THOUSAND
TWO  HUNDRED  FORTY-FIVE  DOLLARS  TO  THE DEDICATED MASS TRANSPORTATION
TRUST FUND.
  S 2. Paragraph (f) of subdivision 4 of section 503 of the vehicle  and
traffic  law,  as added by section 1 of part W of chapter 59 of the laws
of 2006, is amended to read as follows:
  (f) Notwithstanding any  other  provision  of  law  to  the  contrary,
commencing  April first, two thousand six and ending March thirty-first,
two thousand [seven] FOURTEEN, IN EACH YEAR,  the  first  forty  million
seven hundred thousand dollars of fees collected pursuant to this subdi-
vision  and  section  eleven hundred ninety-nine of this chapter, in the
aggregate, shall be paid to the state comptroller who shall deposit such
money in the state treasury pursuant to section one  hundred  twenty-one
of  the  state  finance  law to the credit of the general fund. Any such
fees collected in excess of such amount shall be paid to the  credit  of
the  comptroller  on  account  of the dedicated highway and bridge trust
fund established pursuant to section eighty-nine-b of the state  finance
law.  [Commencing April first, two thousand seven and ending March thir-
ty-first, two thousand eight, and for each such fiscal year  thereafter,
the first forty million seven hundred thousand dollars of fees collected
pursuant  to  this subdivision and section eleven hundred ninety-nine of
this chapter, in the aggregate, shall be paid to the  state  comptroller
who  shall  deposit such money in the state treasury pursuant to section

S. 6359--C                         215

one hundred twenty-one of the state finance law to  the  credit  of  the
general  fund. Any such fees collected in excess of such amount for each
such state fiscal year, shall be paid to the credit of  the  comptroller
on  account  of  the dedicated highway and bridge trust fund established
pursuant to section eighty-nine-b of the state finance law.]  COMMENCING
APRIL  FIRST, TWO THOUSAND FOURTEEN AND FOR EACH SUCH FISCAL YEAR THERE-
AFTER, ANY SUCH FEES COLLECTED PURSUANT TO THIS SUBDIVISION AND  SECTION
ELEVEN  HUNDRED  NINETY-NINE OF THIS CHAPTER SHALL BE PAID TO THE CREDIT
OF THE COMPTROLLER ON ACCOUNT OF THE DEDICATED HIGHWAY AND BRIDGE  TRUST
FUND  ESTABLISHED PURSUANT TO SECTION EIGHTY-NINE-B OF THE STATE FINANCE
LAW.
  S 3. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2014.

                                 PART X

  Section 1. Section 951 of the tax law, as amended by chapter 67 of the
laws  of 1978, subsection (a) as amended by section 1 of part T of chap-
ter 57 of the laws of 2010, subsection (b) as amended by  section  5  of
part A of chapter 389 of the laws of 1997 and subsection (c) as added by
chapter 538 of the laws of 2013, is amended to read as follows:
  S  951.  Applicable  internal  revenue code provisions.-- (a) [Dates]
GENERAL.  For purposes of this article, any reference  to  the  internal
revenue code means the United States Internal Revenue Code of 1986, with
all  amendments  enacted  on  or  before  [July  twenty-second, nineteen
hundred ninety-eight,] JANUARY FIRST, TWO THOUSAND FOURTEEN and,  unless
specifically provided otherwise in this article, any reference to Decem-
ber  thirty-first,  nineteen hundred seventy-six or January first, nine-
teen hundred seventy-seven contained in  the  provisions  of  such  code
which  are  applicable  to  the determination of the tax imposed by this
article shall be read as a reference to June thirtieth, nineteen hundred
seventy-eight or July first, nineteen hundred seventy-eight, respective-
ly. [Notwithstanding the  foregoing,  the  unified  credit  against  the
estate  tax provided in section two thousand ten of the internal revenue
code shall, for purposes of this article, be the amount allowable as  if
the federal applicable exclusion amount were one million dollars.]
  (b)  [Applicable  generation-skipping  transfer tax provisions.--Where
any reference is made in this article  (or  in  the  provisions  of  the
internal  revenue  code  which  are  made  applicable by section two, as
amended, of chapter one  thousand  thirteen  of  the  laws  of  nineteen
hundred sixty-two, to the determination of the tax imposed by this arti-
cle  and  appended  thereto)  to provisions of the internal revenue code
contained in section one thousand  twenty-five  of  this  chapter,  such
internal  revenue code provisions contained in such section one thousand
twenty-five shall apply to the provisions of this article  in  the  same
manner  and  with  the  same force and effect as if the language of such
provisions of the internal revenue code had been  incorporated  in  full
into this article except to the extent that any such provision is either
inconsistent  with a provision of this article or is not relevant there-
to.
  (c)] Disposition to surviving spouse who is not a United States  citi-
zen.  In  the case of an estate where a federal estate tax return is not
required for federal estate tax purposes, a disposition to  a  surviving
spouse  that  would qualify for the federal estate tax marital deduction
under section 2056 of the internal revenue code if not for  the  limita-
tion  imposed  by subsection (d)(1) of such section shall nonetheless be

S. 6359--C                         216

treated as qualifying for the federal estate tax marital  deduction  for
purposes  of computing the tax imposed by section nine hundred fifty-two
of this part, without  requiring  that  such  disposition  pass  to  the
surviving  spouse  in a qualified domestic trust as required for federal
purposes by internal revenue code section 2056(d)(2).
  S 2. Section 952 of the tax law, as added by section 9 of  part  A  of
chapter  389 of the laws of 1997, subsection (b) as amended by section 3
of part I of chapter 60 of the laws of  2004,  is  amended  to  read  as
follows:
  S 952. Tax imposed. (a) A tax is hereby imposed on the transfer of the
New York estate by every deceased individual who at his or her death was
a  resident of New York state. [The tax imposed by this subsection shall
be an amount equal to the maximum amount allowable against  the  federal
estate  tax as a credit for state death taxes under section two thousand
eleven of the internal revenue code.]
  (b) [If the transfer of any part of the estate of a deceased  resident
includes  real  or  tangible  personal  property  having an actual situs
outside New York state, the  tax  imposed  by  subsection  (a)  of  this
section  shall  be  reduced  by  an amount determined by multiplying the
maximum amount of the federal credit for state death taxes  by  a  frac-
tion,  the  numerator  of  which  is the decedent's federal gross estate
reduced by his or her New York gross estate and the denominator of which
is his or her federal gross estate.] COMPUTATION OF TAX. THE TAX IMPOSED
BY THIS SECTION SHALL BE COMPUTED ON THE DECEASED  RESIDENT'S  NEW  YORK
TAXABLE ESTATE AS FOLLOWS:
IN  THE  CASE  OF  DECEDENTS  DYING ON OR AFTER APRIL 1, 2014 AND BEFORE
APRIL 1, 2015
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS OVER
                                        $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS OVER
                                        $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS OVER
                                        $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
                                        OVER $5,100,000
OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS
                                        OVER $6,100,000
OVER $7,100,000 BUT NOT OVER $8,100,000 $650,800 PLUS 13.6% OF EXCESS
                                        OVER $7,100,000
OVER $8,100,000 BUT NOT OVER $9,100,000 $786,800 PLUS 14.4% OF EXCESS
                                        OVER $8,100,000
OVER $9,100,000                         $930,800 PLUS 14.5% OF EXCESS OVER
                                        $9,100,000

S. 6359--C                         217

IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2015 AND BEFORE
APRIL 1, 2016
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS
                                        OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS
                                        OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
                                        OVER $5,100,000
OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS
                                        OVER $6,100,000
OVER $7,100,000                         $650,800 PLUS 13.0% OF EXCESS
                                        OVER $7,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2016 AND BEFORE
APRIL 1, 2017
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS
                                        OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS
                                        OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000                         $402,800 PLUS 11.5% OF EXCESS
                                        OVER $5,100,000
IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2017
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF

S. 6359--C                         218

                                        EXCESS OVER $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF
                                        EXCESS OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF
                                        EXCESS OVER $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS
                                        OVER $3,100,000
OVER $3,600,000                         $238,800 PLUS 10.0% OF EXCESS
                                        OVER $3,600,000
  (C)  APPLICABLE  CREDIT  AMOUNT. (1) A CREDIT OF THE APPLICABLE CREDIT
AMOUNT SHALL BE ALLOWED AGAINST THE  TAX  IMPOSED  BY  THIS  SECTION  AS
PROVIDED  IN  THIS  SUBSECTION. IN THE CASE OF A DECEDENT WHOSE NEW YORK
TAXABLE ESTATE IS LESS THAN OR EQUAL TO THE BASIC EXCLUSION AMOUNT,  THE
APPLICABLE  CREDIT  AMOUNT  SHALL BE THE AMOUNT OF TAX THAT WOULD BE DUE
UNDER SUBSECTION (B) OF THIS SECTION ON SUCH DECEDENT'S NEW YORK TAXABLE
ESTATE. IN THE CASE OF A DECEDENT WHOSE NEW YORK TAXABLE ESTATE  EXCEEDS
THE  BASIC  EXCLUSION  AMOUNT BY AN AMOUNT THAT IS LESS THAN OR EQUAL TO
FIVE PERCENT OF SUCH AMOUNT, THE APPLICABLE CREDIT AMOUNT SHALL  BE  THE
AMOUNT  OF TAX THAT WOULD BE DUE UNDER SUBSECTION (B) OF THIS SECTION IF
THE AMOUNT ON WHICH THE TAX IS TO BE COMPUTED WERE EQUAL  TO  THE  BASIC
EXCLUSION  AMOUNT  MULTIPLIED  BY ONE MINUS A FRACTION, THE NUMERATOR OF
WHICH IS THE DECEDENT'S NEW YORK TAXABLE ESTATE MINUS THE  BASIC  EXCLU-
SION  AMOUNT,  AND THE DENOMINATOR OF WHICH IS FIVE PERCENT OF THE BASIC
EXCLUSION AMOUNT.  PROVIDED, HOWEVER, THAT THE CREDIT  ALLOWED  BY  THIS
SUBSECTION  SHALL  NOT  EXCEED  THE  TAX IMPOSED BY THIS SECTION, AND NO
CREDIT SHALL BE ALLOWED TO THE ESTATE OF ANY  DECEDENT  WHOSE  NEW  YORK
TAXABLE  ESTATE  EXCEEDS ONE HUNDRED FIVE PERCENT OF THE BASIC EXCLUSION
AMOUNT.
  (2) (A) FOR PURPOSES OF THIS SECTION, THE BASIC EXCLUSION AMOUNT SHALL
BE AS FOLLOWS:
IN THE CASE OF DECEDENTS DYING ON OR AFTER: THE BASIC  EXCLUSION  AMOUNT
IS:
APRIL 1, 2014 AND BEFORE APRIL 1, 2015       $ 2,062,500
APRIL 1, 2015 AND BEFORE APRIL 1, 2016       3,125,000
APRIL 1, 2016 AND BEFORE APRIL 1, 2017       4,187,500
APRIL 1, 2017 AND BEFORE JANUARY 1, 2019     5,250,000
  (B)  IN THE CASE OF ANY DECEDENT DYING IN A CALENDAR YEAR BEGINNING ON
OR AFTER JANUARY FIRST,  TWO  THOUSAND  NINETEEN,  THE  BASIC  EXCLUSION
AMOUNT  FOR DECEDENTS DYING ON OR AFTER APRIL FIRST, TWO THOUSAND SEVEN-
TEEN AND BEFORE JANUARY FIRST, TWO THOUSAND NINETEEN SHALL BE  INCREASED
BY AN AMOUNT EQUAL TO:
  (I) SUCH BASIC EXCLUSION AMOUNT, MULTIPLIED BY
  (II)  THE  COST-OF-LIVING ADJUSTMENT, WHICH SHALL BE THE PERCENTAGE BY
WHICH THE CONSUMER PRICE INDEX FOR THE PRECEDING CALENDAR  YEAR  EXCEEDS
THE CONSUMER PRICE INDEX FOR CALENDAR YEAR TWO THOUSAND TWELVE.
  (C)  (I)  FOR PURPOSES OF THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS
THE MOST RECENT CONSUMER PRICE INDEX FOR ALL-URBAN  CONSUMERS  PUBLISHED
BY THE UNITED STATES DEPARTMENT OF LABOR.
  (II)  IF ANY AMOUNT ADJUSTED UNDER THIS PARAGRAPH IS NOT A MULTIPLE OF
TEN THOUSAND DOLLARS, SUCH AMOUNT SHALL BE ROUNDED TO THE NEAREST MULTI-
PLE OF TEN THOUSAND DOLLARS.
  S 3. Section 954 of the tax law, as amended by chapter 67 of the  laws
of  1978,  paragraph  1  of  subsection (a) as amended by section 10 and
subsection (b) as amended by section 11 of part A of chapter 389 of  the
laws  of  1997,  subsection (c) as amended by chapter 916 of the laws of
1982, paragraph 1 of subsection (c) as amended by section 3 of part A of

S. 6359--C                         219

chapter 407 of the laws of 1999 and such subsection (c) as relettered by
section 12 of part A of chapter 389 of the laws of 1997, is  amended  to
read as follows:
  S  954.  Resident's New York gross estate. (a) General.-- The New York
gross estate of a deceased resident  means  his  OR  HER  federal  gross
estate as defined in the internal revenue code (whether or not a federal
estate tax return is required to be filed) modified as follows:
  (1)  Reduced by the value of real or tangible personal property having
an actual situs outside New York state.
  (2) Increased by the amount  determined  under  section  nine  hundred
fifty-seven  OF  THIS  PART  (relating  to limited powers of appointment
created prior to September first, nineteen hundred thirty).
  (b) Valuation. -- (1) The New York gross estate shall be valued as  of
the  TIME  OF  THE DECEDENT'S DEATH, EXCEPT THAT IF A FEDERAL ESTATE TAX
RETURN IS FILED AND THE ALTERNATE VALUATION UNDER SECTION  2032  OF  THE
INTERNAL  REVENUE  CODE  IS ELECTED FOR FEDERAL ESTATE TAX PURPOSES, THE
NEW YORK GROSS ESTATE SHALL BE VALUED AS OF THE applicable federal valu-
ation date or dates. Any real property qualified under section two thou-
sand thirty-two-A of the internal revenue code shall have the same value
for purposes of the New York gross estate as it has for  federal  estate
tax purposes.
  (2)  IF  SUCH  ALTERNATE VALUATION COULD HAVE BEEN ELECTED PURSUANT TO
PARAGRAPH ONE OF THIS SUBSECTION, BUT  FOR  THE  ABSENCE  OF  AN  ESTATE
SUFFICIENT TO REQUIRE THE FILING OF A FEDERAL RETURN, THE NEW YORK GROSS
ESTATE  MAY,  UPON  THE  ELECTION  OF  THE EXECUTOR, BE VALUED AS OF THE
FEDERAL VALUATION DATE OR DATES WHICH WOULD HAVE APPLIED  IF  A  FEDERAL
RETURN HAD BEEN FILED. HOWEVER, NO ELECTION MAY BE MADE UNDER THIS PARA-
GRAPH UNLESS SUCH ELECTION WILL DECREASE THE VALUE OF THE NEW YORK GROSS
ESTATE AND THE AMOUNT OF TAX IMPOSED BY THIS ARTICLE (REDUCED BY CREDITS
ALLOWABLE  AGAINST  SUCH  TAX).  ANY  ELECTION MADE UNDER THIS PARAGRAPH
SHALL BE IRREVOCABLE. THE ELECTION ALLOWED BY THIS  PARAGRAPH  SHALL  BE
MADE  NO  LATER  THAN  THE  DATE PRESCRIBED FOR THE FILING OF THE RETURN
UNDER THIS ARTICLE (INCLUDING EXTENSIONS) OR ANY TIME THEREAFTER AS  THE
COMMISSIONER MAY PRESCRIBE.
  (c)  Cross  references.--  (1)  For provisions of the internal revenue
code defining the federal gross estate, see:
  Sec. 2031. Definition of gross estate.
  Sec. 2032. Alternate valuation.
  Sec. 2032A. Valuation of certain farm, etc., real property.
  Sec. 2033. Property in which the decedent had an interest.
  Sec. 2034. Dower or curtesy interest.
  Sec. 2035. Adjustments for gifts made within three years of decedent's
death.
  Sec. 2036. Transfers with retained life estate.
  Sec. 2037. Transfers taking effect at death.
  Sec. 2038. Revocable transfers.
  Sec. 2039. Annuities.
  Sec. 2040. Joint interests.
  Sec. 2041. Powers of appointment.
  Sec. 2042. Proceeds of life insurance.
  Sec. 2043. Transfers for insufficient consideration.
  Sec. 2044. Certain property for which marital deduction was previously
allowed.
  Sec. 2045. Prior interests.
  Sec. 2046. Disclaimers.

S. 6359--C                         220

  (2) FOR PROVISIONS OF THE INTERNAL REVENUE CODE WHICH, EXCEPT  TO  THE
EXTENT  THEY  ARE  INCONSISTENT WITH THE PROVISIONS OF THIS ARTICLE, ARE
PERTINENT TO THE COMPUTATION OF TAXABLE GIFTS AND  THE  TAX  UNDER  THIS
ARTICLE, SEE:
  SEC. 2503. TAXABLE GIFTS.
  SEC. 2511. TRANSFERS IN GENERAL.
  SEC. 2512. VALUATION OF GIFTS.
  SEC. 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY.
  SEC. 2514. POWERS OF APPOINTMENT.
  SEC. 2516. CERTAIN PROPERTY SETTLEMENTS.
  SEC. 2518. DISCLAIMERS.
  SEC. 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES.
  SEC. 2522. CHARITABLE AND SIMILAR GIFTS.
  SEC. 2523. GIFT TO SPOUSE.
  SEC. 2524. EXTENT OF DEDUCTIONS.
  SEC.  2701.  SPECIAL  VALUATION  RULES IN CASE OF TRANSFERS OF CERTAIN
INTERESTS IN CORPORATIONS OR PARTNERSHIPS.
  SEC. 2702. SPECIAL VALUATION RULES IN CASE OF TRANSFERS  OF  INTERESTS
IN TRUSTS.
  SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED.
  SEC. 2704. TREATMENT OF CERTAIN LAPSING RIGHTS AND RESTRICTIONS.
  SEC. 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES.
  (3)  For effect of federal estate tax determinations, see section nine
hundred sixty-one of this article.
  S 4. The tax law is amended by adding a new section  955  to  read  as
follows:
  S  955. RESIDENT'S NEW YORK TAXABLE ESTATE.  (A) GENERAL.--THE TAXABLE
ESTATE OF A NEW YORK RESIDENT SHALL BE HIS OR HER NEW YORK GROSS ESTATE,
MINUS THE DEDUCTIONS ALLOWABLE FOR DETERMINING HIS OR HER FEDERAL  TAXA-
BLE  ESTATE  UNDER  THE  INTERNAL REVENUE CODE (WHETHER OR NOT A FEDERAL
ESTATE TAX RETURN IS REQUIRED TO BE FILED), EXCEPT TO  THE  EXTENT  THAT
SUCH  DEDUCTIONS  RELATE  TO  REAL OR TANGIBLE PERSONAL PROPERTY SITUSED
OUTSIDE NEW YORK STATE.
  (B) WAIVER OF DEDUCTIONS.-- IF THE RIGHT TO  ANY  DEDUCTION  OTHERWISE
ALLOWABLE IS WAIVED FOR FEDERAL ESTATE TAX PURPOSES, IT SHALL BE CONSID-
ERED WAIVED FOR NEW YORK ESTATE TAX PURPOSES.
  (C)  QUALIFIED  TERMINABLE  INTEREST  PROPERTY  ELECTION.--  EXCEPT AS
OTHERWISE PROVIDED IN THIS SUBSECTION, THE ELECTION REFERRED TO IN PARA-
GRAPH (7) OF SUBSECTION (B) OF SECTION 2056 OF THE INTERNAL REVENUE CODE
SHALL NOT BE ALLOWED UNDER THIS ARTICLE UNLESS SUCH  ELECTION  WAS  MADE
WITH RESPECT TO THE FEDERAL ESTATE TAX RETURN REQUIRED TO BE FILED UNDER
THE PROVISIONS OF THE INTERNAL REVENUE CODE BECAUSE THE DECEDENT'S GROSS
ESTATE AND ADJUSTED TAXABLE GIFTS, UNDER PARAGRAPH (2) OF SUBSECTION (B)
OF SECTION 2001 OF THE INTERNAL REVENUE CODE, EXCEED THE BASIC EXCLUSION
AMOUNT,  UNDER  PARAGRAPH  3  OF  SUBSECTION  (C) OF SECTION 2010 OF THE
INTERNAL REVENUE CODE, THAT IS IN EFFECT AT THE DECEDENT'S DEATH.  WHERE
A FEDERAL ESTATE TAX RETURN IS ONLY REQUIRED TO BE FILED FOR PURPOSES OF
ELECTING THE DECEASED SPOUSAL UNUSED EXCLUSION AMOUNT  UNDER  PARAGRAPHS
(4)  AND  (5)  OF SUBSECTION (C) OF SECTION 2010 OF THE INTERNAL REVENUE
CODE, THE EXECUTOR MAY MAKE THE ELECTION REFERRED TO IN  SUCH  PARAGRAPH
(7) WITH RESPECT TO THE TAX IMPOSED BY THIS ARTICLE ON THE RETURN OF THE
TAX IMPOSED BY THIS ARTICLE, IRRESPECTIVE OF WHETHER SUCH FEDERAL RETURN
IS FILED. ANY ELECTION MADE UNDER THIS SUBSECTION SHALL BE IRREVOCABLE.
  (D)  CROSS  REFERENCES.--  FOR PROVISIONS OF THE INTERNAL REVENUE CODE
SPECIFYING THE DEDUCTIONS ALLOWABLE FOR  FEDERAL  ESTATE  TAX  PURPOSES,
SEE:

S. 6359--C                         221

  SEC.2032(B). ALTERNATE VALUATION--SPECIAL RULE FOR DEDUCTIONS.
  SEC.2046. DISCLAIMERS.
  SEC.2053. EXPENSES, INDEBTEDNESS, AND TAXES.
  SEC.2054. LOSSES.
  SEC.2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
  SEC.2056. BEQUESTS, ETC., TO SURVIVING SPOUSE.
  S 5. Subsections (b) and (d) of section 960 of the tax law, subsection
(b)  as amended by section 4 of part I of chapter 60 of the laws of 2004
and subsection (d) as added by section 190  of  the  laws  of  1980  and
relettered  by  section 15 of part A of chapter 389 of the laws of 1997,
are amended to read as follows:
  (b) Computation of tax.--The tax imposed under subsection (a) shall be
the same as the tax that would be due, if the decedent had died a  resi-
dent,  under  subsection  (a)  of section nine hundred fifty-two, except
that for purposes of [allocating] COMPUTING the tax under subsection (b)
of section nine hundred fifty-two, "New York [gross]  TAXABLE  estate"[,
in  the  numerator in subsection (b) of section nine hundred fifty-two,]
shall not include the value of any intangible personal  property  other-
wise  includible in the deceased individual's New York gross estate, AND
SHALL NOT INCLUDE THE AMOUNT OF ANY GIFT UNLESS SUCH  GIFT  CONSISTS  OF
REAL  OR  TANGIBLE  PERSONAL PROPERTY HAVING AN ACTUAL SITUS IN NEW YORK
STATE OR INTANGIBLE PERSONAL PROPERTY EMPLOYED IN A BUSINESS,  TRADE  OR
PROFESSION CARRIED ON IN THIS STATE.
  (d)  Works  of art on loan for exhibition. Notwithstanding the forego-
ing, the tax imposed under subsection (a) OF THIS SECTION on the  trans-
fer,  from  any  deceased  individual  who at his OR HER death was not a
resident of the state of New York, of works  of  art  having  an  actual
situs  in  the state of New York and either (i) includible in his OR HER
federal gross estate or (ii) which would be includible in his OR HER New
York gross estate pursuant to section nine hundred fifty-seven (relating
to certain limited powers of appointment) if he OR SHE were  a  resident
of  the  state  of  New  York, shall [be an amount equal to the transfer
taxes or death taxes of every character in respect of personal  property
which  would  be  imposed  on  such transfer or such works of art if the
actual situs of such works of art were the state  or  territory  of  the
United States of residence of such individual] NOT BE SUBJECT TO THE TAX
IMPOSED  BY THIS SECTION if such works of art are [sited in the state of
New York solely for exhibition purposes,] loaned [for such] TO A  PUBLIC
GALLERY  LOCATED  WITHIN  THE  STATE  OF  NEW YORK SOLELY FOR EXHIBITION
purposes [to a public gallery or museum (] BUT ONLY IF no  part  of  the
net earnings of [which] SUCH PUBLIC GALLERY OR MUSEUM inure to the bene-
fit of any private stockholder or individual[)], and [(], at the time of
the  death  of such individual[)] SUCH WORKS OF ART ARE on exhibition or
en route to or from exhibition in  such  a  public  gallery  or  museum.
[Provided  however,  that if the state or territory of the United States
of residence of such individual imposes transfer taxes or death taxes on
such works of art which are sited in the  state  of  New  York  for  the
purposes  herein  specified, then such works of art shall not be subject
to the tax imposed by this section.]
  S 6. Subsection (a) of section 971 of the tax law, as added by section
17 of part A of chapter 389 of the laws of 1997, is amended to  read  as
follows:
  (a)  Returns  by executor. (1) Residents. In the case of the estate of
every individual dying on or after [February first, two thousand]  APRIL
FIRST,  TWO THOUSAND FOURTEEN, who at his or her death was a resident of
New York state, [if] his or her executor [is required to file  a  return

S. 6359--C                         222

with  respect to the federal estate tax (determined as if the limitation
contained in subsection (a) of section nine hundred  fifty-one  of  this
article were applicable in determining whether such executor is required
to  file  such  federal  return), the executor] shall make a return with
respect to the estate tax imposed by section nine hundred  fifty-two  of
this  article  IF  THE DECEDENT'S FEDERAL GROSS ESTATE, INCREASED BY THE
AMOUNT OF ANY GIFT INCLUDIBLE IN HIS  OR  HER  NEW  YORK  GROSS  ESTATE,
EXCEEDS  THE BASIC EXCLUSION AMOUNT APPLICABLE TO THE DECEDENT'S DATE OF
DEATH IN PARAGRAPH TWO OF SUBSECTION (C) OF SECTION NINE HUNDRED  FIFTY-
TWO OF THIS ARTICLE.
  (2)  Nonresidents. In the case of the estate of every individual DYING
ON OR AFTER APRIL FIRST, TWO THOUSAND FOURTEEN, who at his or her  death
was  not  a  resident  of  New  York  state,  [if his or her executor is
required to file a return with respect to the federal estate tax (deter-
mined as if the limitation contained in subsection (a) of  section  nine
hundred fifty-one of this article were applicable in determining whether
such  executor  is  required  to  file such federal return) and] if such
individual's federal gross estate includes  real  or  tangible  personal
property  having  an  actual situs in New York state, the executor shall
make a return with respect to the estate tax  imposed  by  section  nine
hundred  sixty  of  this article IF THE DECEDENT'S FEDERAL GROSS ESTATE,
INCREASED BY THE AMOUNT OF ANY GIFT INCLUDIBLE IN HIS OR  HER  NEW  YORK
GROSS  ESTATE,  EXCEEDS  THE  BASIC  EXCLUSION  AMOUNT APPLICABLE TO THE
DECEDENT'S DATE OF DEATH IN PARAGRAPH TWO OF SUBSECTION (C)  OF  SECTION
NINE HUNDRED FIFTY-TWO OF THIS ARTICLE.
  S  7.  Subsection  (a)  of  section  997 of the tax law, as amended by
section 27 of part A of chapter 389 of the laws of 1997, is  amended  to
read as follows:
  (a)  The  phrase  "adjusted  gross  estate" shall be read as "adjusted
federal gross estate determined  without  reference  to  paragraphs  (1)
[and], (2) AND (3) of subsection (a) of section nine hundred fifty-four"
of this article.
  S 8. Article 26-B of the tax law is REPEALED.
  S  9.  Section  2 of chapter 1013 of the laws of 1962 amending the tax
law relating to imposing a tax on the transfer of estates  of  decedents
dying on or after April first, nineteen hundred sixty-three is REPEALED.
  S  10. The tax law is amended by adding a new section 999-a to read as
follows:
  S 999-A. APPENDIX TO ARTICLE TWENTY-SIX.  THE FOLLOWING PROVISIONS  OF
THE  UNITED  STATES  INTERNAL  REVENUE CODE OF 1986, WITH ALL AMENDMENTS
ENACTED ON OR BEFORE JANUARY FIRST, TWO THOUSAND FOURTEEN,  SHALL  APPLY
TO  THE  TAX  IMPOSED  BY  THIS ARTICLE, TO THE EXTENT SPECIFIED IN THIS
ARTICLE.
  S 2031. DEFINITION OF GROSS ESTATE.
  (A) GENERAL.--THE VALUE OF THE GROSS ESTATE OF THE DECEDENT  SHALL  BE
DETERMINED  BY  INCLUDING  TO  THE EXTENT PROVIDED FOR IN THIS PART, THE
VALUE AT THE TIME OF HIS DEATH OF ALL PROPERTY, REAL OR PERSONAL, TANGI-
BLE OR INTANGIBLE, WHEREVER SITUATED.
  (B) VALUATION OF UNLISTED STOCK AND SECURITIES.--IN THE CASE OF  STOCK
AND  SECURITIES  OF A CORPORATION THE VALUE OF WHICH, BY REASON OF THEIR
NOT BEING LISTED ON AN EXCHANGE AND BY REASON OF THE  ABSENCE  OF  SALES
THEREOF,  CANNOT BE DETERMINED WITH REFERENCE TO BID AND ASKED PRICES OR
WITH REFERENCE TO SALES PRICES, THE VALUE THEREOF SHALL BE DETERMINED BY
TAKING INTO CONSIDERATION, IN ADDITION TO ALL OTHER FACTORS,  THE  VALUE
OF  STOCK OR SECURITIES OF CORPORATIONS ENGAGED IN THE SAME OR A SIMILAR
LINE OF BUSINESS WHICH ARE LISTED ON AN EXCHANGE.

S. 6359--C                         223

  (C) ESTATE TAX WITH RESPECT TO LAND SUBJECT TO A  QUALIFIED  CONSERVA-
TION EASEMENT.--
  (1) IN GENERAL.--IF THE EXECUTOR MAKES THE ELECTION DESCRIBED IN PARA-
GRAPH  (6), THEN, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION, THERE
SHALL BE EXCLUDED FROM THE GROSS ESTATE THE LESSER OF--
  (A) THE APPLICABLE PERCENTAGE OF THE VALUE OF LAND SUBJECT TO A QUALI-
FIED CONSERVATION EASEMENT, REDUCED BY THE AMOUNT OF ANY DEDUCTION UNDER
SECTION 2055(F) WITH RESPECT TO SUCH LAND, OR
  (B) THE EXCLUSION LIMITATION.
  (2) APPLICABLE PERCENTAGE.--FOR PURPOSES OF PARAGRAPH  (1),  THE  TERM
"APPLICABLE PERCENTAGE" MEANS 40 PERCENT REDUCED (BUT NOT BELOW ZERO) BY
2  PERCENTAGE  POINTS FOR EACH PERCENTAGE POINT (OR FRACTION THEREOF) BY
WHICH THE VALUE OF THE QUALIFIED CONSERVATION EASEMENT IS LESS  THAN  30
PERCENT OF THE VALUE OF THE LAND (DETERMINED WITHOUT REGARD TO THE VALUE
OF  SUCH  EASEMENT  AND REDUCED BY THE VALUE OF ANY RETAINED DEVELOPMENT
RIGHT (AS DEFINED IN PARAGRAPH (5)). THE VALUES TAKEN INTO ACCOUNT UNDER
THE PRECEDING SENTENCE SHALL BE SUCH  VALUES  AS  OF  THE  DATE  OF  THE
CONTRIBUTION REFERRED TO IN PARAGRAPH (8)(B).
  (3)  EXCLUSION  LIMITATION.--FOR PURPOSES OF PARAGRAPH (1), THE EXCLU-
SION LIMITATION IS THE LIMITATION  DETERMINED  IN  ACCORDANCE  WITH  THE
FOLLOWING TABLE:
IN THE CASE OF ESTATES OF DECEDENTS DYING THE EXCLUSION LIMITATION
DURING:                                   IS:
1998..................................... 100,000
1999..................................... 200,000
2000..................................... 300,000
2001..................................... 400,000
2002 OR THEREAFTER....................... 500,000
  (4) TREATMENT OF CERTAIN INDEBTEDNESS.--
  (A)  IN  GENERAL.--THE  EXCLUSION  PROVIDED IN PARAGRAPH (1) SHALL NOT
APPLY TO THE EXTENT THAT THE LAND IS DEBT-FINANCED PROPERTY.
  (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) DEBT-FINANCED PROPERTY.--THE TERM "DEBT-FINANCED  PROPERTY"  MEANS
ANY  PROPERTY WITH RESPECT TO WHICH THERE IS AN ACQUISITION INDEBTEDNESS
(AS DEFINED IN CLAUSE (II)) ON THE DATE OF THE DECEDENT'S DEATH.
  (II) ACQUISITION INDEBTEDNESS.--THE  TERM  "ACQUISITION  INDEBTEDNESS"
MEANS, WITH RESPECT TO DEBT-FINANCED PROPERTY, THE UNPAID AMOUNT OF--
  (I) THE INDEBTEDNESS INCURRED BY THE DONOR IN ACQUIRING SUCH PROPERTY,
  (II) THE INDEBTEDNESS INCURRED BEFORE THE ACQUISITION OF SUCH PROPERTY
IF  SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH ACQUISI-
TION,
  (III) THE INDEBTEDNESS INCURRED AFTER THE ACQUISITION OF SUCH PROPERTY
IF SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH  ACQUISI-
TION  AND THE INCURRENCE OF SUCH INDEBTEDNESS WAS REASONABLY FORESEEABLE
AT THE TIME OF SUCH ACQUISITION, AND
  (IV) THE EXTENSION, RENEWAL, OR REFINANCING OF AN ACQUISITION  INDEBT-
EDNESS.
  (5) TREATMENT OF RETAINED DEVELOPMENT RIGHT.--
  (A)  IN  GENERAL.--PARAGRAPH  (1)  SHALL NOT APPLY TO THE VALUE OF ANY
DEVELOPMENT RIGHT RETAINED BY THE DONOR IN THE CONVEYANCE OF A QUALIFIED
CONSERVATION EASEMENT.
  (B) TERMINATION OF RETAINED DEVELOPMENT  RIGHT.--IF  EVERY  PERSON  IN
BEING  WHO  HAS  AN  INTEREST (WHETHER OR NOT IN POSSESSION) IN THE LAND
EXECUTES AN AGREEMENT TO EXTINGUISH  PERMANENTLY  SOME  OR  ALL  OF  ANY
DEVELOPMENT  RIGHTS  (AS  DEFINED  IN  SUBPARAGRAPH (D)) RETAINED BY THE
DONOR ON OR BEFORE THE DATE FOR FILING THE RETURN OF THE TAX IMPOSED  BY

S. 6359--C                         224

SECTION  2001,  THEN  ANY  TAX  IMPOSED BY SECTION 2001 SHALL BE REDUCED
ACCORDINGLY. SUCH AGREEMENT SHALL BE FILED WITH THE RETURN  OF  THE  TAX
IMPOSED  BY  SECTION  2001.  THE  AGREEMENT SHALL BE IN SUCH FORM AS THE
SECRETARY SHALL PRESCRIBE.
  (C)  ADDITIONAL TAX.--ANY FAILURE TO IMPLEMENT THE AGREEMENT DESCRIBED
IN SUBPARAGRAPH (B) NOT LATER THAN THE EARLIER OF--
  (I) THE DATE WHICH IS 2 YEARS AFTER THE DATE OF THE DECEDENT'S  DEATH,
OR
  (II)  THE  DATE  OF  THE  SALE  OF  SUCH LAND SUBJECT TO THE QUALIFIED
CONSERVATION EASEMENT,
  SHALL RESULT IN THE IMPOSITION OF AN ADDITIONAL TAX IN THE  AMOUNT  OF
THE  TAX  WHICH  WOULD  HAVE BEEN DUE ON THE RETAINED DEVELOPMENT RIGHTS
SUBJECT TO SUCH AGREEMENT. SUCH ADDITIONAL TAX SHALL BE DUE AND  PAYABLE
ON THE LAST DAY OF THE 6TH MONTH FOLLOWING SUCH DATE.
  (D)  DEVELOPMENT  RIGHT  DEFINED.--FOR PURPOSES OF THIS PARAGRAPH, THE
TERM "DEVELOPMENT RIGHT" MEANS ANY RIGHT TO USE THE LAND SUBJECT TO  THE
QUALIFIED  CONSERVATION EASEMENT IN WHICH SUCH RIGHT IS RETAINED FOR ANY
COMMERCIAL PURPOSE WHICH IS NOT SUBORDINATE TO AND  DIRECTLY  SUPPORTIVE
OF THE USE OF SUCH LAND AS A FARM FOR FARMING PURPOSES (WITHIN THE MEAN-
ING OF SECTION 2032A(E)(5)).
  (6)  ELECTION.--THE ELECTION UNDER THIS SUBSECTION SHALL BE MADE ON OR
BEFORE THE DUE DATE (INCLUDING EXTENSIONS) FOR FILING THE RETURN OF  TAX
IMPOSED  BY  SECTION  2001  AND  SHALL  BE  MADE ON SUCH RETURN. SUCH AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (7) CALCULATION OF ESTATE TAX DUE.--AN EXECUTOR  MAKING  THE  ELECTION
DESCRIBED IN PARAGRAPH (6) SHALL, FOR PURPOSES OF CALCULATING THE AMOUNT
OF  TAX  IMPOSED  BY  SECTION 2001, INCLUDE THE VALUE OF ANY DEVELOPMENT
RIGHT (AS DEFINED IN PARAGRAPH (5)) RETAINED BY THE DONOR IN THE CONVEY-
ANCE OF SUCH QUALIFIED CONSERVATION EASEMENT. THE COMPUTATION OF TAX  ON
ANY  RETAINED  DEVELOPMENT  RIGHT  PRESCRIBED IN THIS PARAGRAPH SHALL BE
DONE IN SUCH MANNER AND ON SUCH FORMS AS THE SECRETARY SHALL PRESCRIBE.
  (8) DEFINITIONS.--FOR PURPOSES OF THIS SUBSECTION--
  (A) LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.--THE TERM "LAND
SUBJECT TO A QUALIFIED CONSERVATION EASEMENT" MEANS LAND--
  (I) WHICH IS LOCATED IN THE UNITED STATES OR  ANY  POSSESSION  OF  THE
UNITED STATES,
  (II)  WHICH  WAS  OWNED  BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S
FAMILY AT ALL TIMES DURING THE 3-YEAR PERIOD ENDING ON THE DATE  OF  THE
DECEDENT'S DEATH, AND
  (III) WITH RESPECT TO WHICH A QUALIFIED CONSERVATION EASEMENT HAS BEEN
MADE  BY  AN INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (C), AS OF THE DATE OF
THE ELECTION DESCRIBED IN PARAGRAPH (6).
  (B) QUALIFIED CONSERVATION EASEMENT.--THE TERM "QUALIFIED CONSERVATION
EASEMENT" MEANS A QUALIFIED CONSERVATION  CONTRIBUTION  (AS  DEFINED  IN
SECTION  170(H)(1)) OF A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN
SECTION 170(H)(2)(C)), EXCEPT THAT CLAUSE (IV) OF  SECTION  170(H)(4)(A)
SHALL  NOT  APPLY,  AND  THE  RESTRICTION  ON  THE  USE OF SUCH INTEREST
DESCRIBED IN SECTION 170(H)(2)(C) SHALL INCLUDE A  PROHIBITION  ON  MORE
THAN A DE MINIMIS USE FOR A COMMERCIAL RECREATIONAL ACTIVITY.
  (C) INDIVIDUAL DESCRIBED.--AN INDIVIDUAL IS DESCRIBED IN THIS SUBPARA-
GRAPH IF SUCH INDIVIDUAL IS--
  (I) THE DECEDENT,
  (II) A MEMBER OF THE DECEDENT'S FAMILY,
  (III) THE EXECUTOR OF THE DECEDENT'S ESTATE, OR
  (IV)  THE  TRUSTEE OF A TRUST THE CORPUS OF WHICH INCLUDES THE LAND TO
BE SUBJECT TO THE QUALIFIED CONSERVATION EASEMENT.

S. 6359--C                         225

  (D) MEMBER OF FAMILY.--THE TERM  "MEMBER  OF  THE  DECEDENT'S  FAMILY"
MEANS  ANY  MEMBER  OF THE FAMILY (AS DEFINED IN SECTION 2032A(E)(2)) OF
THE DECEDENT.
  (9)  TREATMENT OF EASEMENTS GRANTED AFTER DEATH.--IN ANY CASE IN WHICH
THE QUALIFIED CONSERVATION EASEMENT IS GRANTED AFTER  THE  DATE  OF  THE
DECEDENT'S  DEATH  AND  ON OR BEFORE THE DUE DATE (INCLUDING EXTENSIONS)
FOR FILING THE RETURN OF TAX IMPOSED  BY  SECTION  2001,  THE  DEDUCTION
UNDER  SECTION 2055(F) WITH RESPECT TO SUCH EASEMENT SHALL BE ALLOWED TO
THE ESTATE BUT ONLY IF NO CHARITABLE DEDUCTION IS ALLOWED UNDER  CHAPTER
1 TO ANY PERSON WITH RESPECT TO THE GRANT OF SUCH EASEMENT.
  (10)  APPLICATION OF THIS SECTION TO INTERESTS IN PARTNERSHIPS, CORPO-
RATIONS, AND TRUSTS.--THIS SECTION SHALL APPLY TO AN INTEREST IN A PART-
NERSHIP, CORPORATION, OR TRUST IF AT LEAST 30 PERCENT OF THE  ENTITY  IS
OWNED  (DIRECTLY OR INDIRECTLY) BY THE DECEDENT, AS DETERMINED UNDER THE
RULES DESCRIBED IN SECTION 2057(E)(3).
  (D) CROSS REFERENCE.--
  FOR EXECUTOR'S RIGHT TO BE FURNISHED ON REQUEST A STATEMENT  REGARDING
ANY VALUATION MADE BY THE SECRETARY WITHIN THE GROSS ESTATE, SEE SECTION
7517.
  S 2032. ALTERNATE VALUATION.
  (A)  GENERAL.--THE VALUE OF THE GROSS ESTATE MAY BE DETERMINED, IF THE
EXECUTOR SO ELECTS, BY VALUING ALL THE PROPERTY INCLUDED  IN  THE  GROSS
ESTATE AS FOLLOWS:
  (1) IN THE CASE OF PROPERTY DISTRIBUTED, SOLD, EXCHANGED, OR OTHERWISE
DISPOSED  OF,  WITHIN  6 MONTHS AFTER THE DECEDENT'S DEATH SUCH PROPERTY
SHALL BE VALUED AS OF THE DATE OF DISTRIBUTION, SALE, EXCHANGE, OR OTHER
DISPOSITION.
  (2) IN THE CASE OF  PROPERTY  NOT  DISTRIBUTED,  SOLD,  EXCHANGED,  OR
OTHERWISE  DISPOSED  OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S DEATH SUCH
PROPERTY SHALL BE VALUED AS OF THE DATE 6 MONTHS  AFTER  THE  DECEDENT'S
DEATH.
  (3)  ANY  INTEREST  OR  ESTATE WHICH IS AFFECTED BY MERE LAPSE OF TIME
SHALL BE INCLUDED AT ITS VALUE AS OF THE TIME OF DEATH (INSTEAD  OF  THE
LATER  DATE)  WITH  ADJUSTMENT FOR ANY DIFFERENCE IN ITS VALUE AS OF THE
LATER DATE NOT DUE TO MERE LAPSE OF TIME.
  (B) SPECIAL RULES.--NO DEDUCTION UNDER THIS CHAPTER OF ANY ITEM  SHALL
BE  ALLOWED IF ALLOWANCE FOR SUCH ITEMS IS IN EFFECT GIVEN BY THE ALTER-
NATE  VALUATION  PROVIDED  BY  THIS  SECTION.  WHEREVER  IN  ANY   OTHER
SUBSECTION  OR SECTION OF THIS CHAPTER REFERENCE IS MADE TO THE VALUE OF
PROPERTY AT THE TIME OF THE DECEDENT'S DEATH, SUCH  REFERENCE  SHALL  BE
DEEMED  TO  REFER  TO THE VALUE OF SUCH PROPERTY USED IN DETERMINING THE
VALUE OF THE GROSS ESTATE. IN CASE OF AN ELECTION MADE BY  THE  EXECUTOR
UNDER THIS SECTION, THEN--
  (1)  FOR  PURPOSES  OF  THE CHARITABLE DEDUCTION UNDER SECTION 2055 OR
2106(A)(2), ANY BEQUEST, LEGACY, DEVISE, OR TRANSFER ENUMERATED THEREIN,
AND
  (2) FOR THE PURPOSE OF THE MARITAL DEDUCTION UNDER SECTION  2056,  ANY
INTEREST IN PROPERTY PASSING TO THE SURVIVING SPOUSE,
  SHALL BE VALUED AS OF THE DATE OF THE DECEDENT'S DEATH WITH ADJUSTMENT
FOR ANY DIFFERENCE IN VALUE (NOT DUE TO MERE LAPSE OF TIME OR THE OCCUR-
RENCE  OR NONOCCURRENCE OF A CONTINGENCY) OF THE PROPERTY AS OF THE DATE
6 MONTHS AFTER THE DECEDENT'S DEATH (SUBSTITUTING, IN THE CASE OF  PROP-
ERTY  DISTRIBUTED  BY  THE  EXECUTOR  OR TRUSTEE, OR SOLD, EXCHANGED, OR
OTHERWISE DISPOSED OF, DURING SUCH 6-MONTH PERIOD, THE DATE THEREOF).

S. 6359--C                         226

  (C) ELECTION MUST DECREASE GROSS ESTATE AND ESTATE  TAX.--NO  ELECTION
MAY  BE  MADE  UNDER  THIS SECTION WITH RESPECT TO AN ESTATE UNLESS SUCH
ELECTION WILL DECREASE--
  (1) THE VALUE OF THE GROSS ESTATE, AND
  (2)  THE SUM OF THE TAX IMPOSED BY THIS CHAPTER AND THE TAX IMPOSED BY
CHAPTER 13 WITH RESPECT TO PROPERTY INCLUDIBLE IN THE  DECEDENT'S  GROSS
ESTATE (REDUCED BY CREDITS ALLOWABLE AGAINST SUCH TAXES).
  (D) ELECTION.--
  (1)  IN  GENERAL.--THE  ELECTION PROVIDED FOR IN THIS SECTION SHALL BE
MADE BY THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY  THIS  CHAPTER.
SUCH ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (2)  EXCEPTION.--NO  ELECTION  MAY  BE MADE UNDER THIS SECTION IF SUCH
RETURN IS FILED MORE THAN 1  YEAR  AFTER  THE  TIME  PRESCRIBED  BY  LAW
(INCLUDING EXTENSIONS) FOR FILING SUCH RETURN.
  S 2032A. VALUATION OF CERTAIN FARM, ETC., REAL PROPERTY.
  (A) VALUE BASED ON USE UNDER WHICH PROPERTY QUALIFIES.--
  (1) GENERAL RULE.--IF--
  (A)  THE DECEDENT WAS (AT THE TIME OF HIS DEATH) A CITIZEN OR RESIDENT
OF THE UNITED STATES, AND
  (B) THE EXECUTOR ELECTS THE APPLICATION OF THIS SECTION AND FILES  THE
AGREEMENT REFERRED TO IN SUBSECTION (D)(2),
  THEN,  FOR PURPOSES OF THIS CHAPTER, THE VALUE OF QUALIFIED REAL PROP-
ERTY SHALL BE ITS VALUE FOR THE USE  UNDER  WHICH  IT  QUALIFIES,  UNDER
SUBSECTION (B), AS QUALIFIED REAL PROPERTY.
  (2)  LIMITATION  ON  AGGREGATE  REDUCTION  IN  FAIR MARKET VALUE.--THE
AGGREGATE DECREASE IN THE VALUE OF QUALIFIED REAL  PROPERTY  TAKEN  INTO
ACCOUNT  FOR PURPOSES OF THIS CHAPTER WHICH RESULTS FROM THE APPLICATION
OF PARAGRAPH (1) WITH RESPECT TO ANY DECEDENT SHALL NOT EXCEED $750,000.
  (3) INFLATION ADJUSTMENT.--IN THE CASE OF ESTATES OF  DECEDENTS  DYING
IN  A  CALENDAR  YEAR AFTER 1998, THE $750,000 AMOUNT CONTAINED IN PARA-
GRAPH (2) SHALL BE INCREASED BY AN AMOUNT EQUAL TO--
  (A) $750,000, MULTIPLIED BY
  (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
SUCH CALENDAR YEAR BY SUBSTITUTING "CALENDAR YEAR  1997"  FOR  "CALENDAR
YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.
  IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
PLE OF $10,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST MULTIPLE
OF $10,000.
  (B) QUALIFIED REAL PROPERTY.--
  (1)  IN  GENERAL.--FOR  PURPOSES  OF THIS SECTION, THE TERM "QUALIFIED
REAL PROPERTY" MEANS REAL PROPERTY LOCATED IN THE  UNITED  STATES  WHICH
WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR OF THE
DECEDENT  AND WHICH, ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED
FOR A QUALIFIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S  FAMI-
LY, BUT ONLY IF--
  (A)  50  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
CONSISTS OF THE ADJUSTED VALUE OF REAL OR PERSONAL PROPERTY WHICH--
  (I) ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED FOR  A  QUALI-
FIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S FAMILY, AND
  (II) WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR
OF THE DECEDENT.
  (B)  25  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
CONSISTS OF THE ADJUSTED VALUE OF REAL PROPERTY WHICH MEETS THE REQUIRE-
MENTS OF SUBPARAGRAPHS (A)(II) AND (C),
  (C) DURING THE 8-YEAR PERIOD ENDING ON  THE  DATE  OF  THE  DECEDENT'S
DEATH THERE HAVE BEEN PERIODS AGGREGATING 5 YEARS OR MORE DURING WHICH--

S. 6359--C                         227

  (I)  SUCH  REAL  PROPERTY WAS OWNED BY THE DECEDENT OR A MEMBER OF THE
DECEDENT'S FAMILY AND USED FOR A QUALIFIED USE  BY  THE  DECEDENT  OR  A
MEMBER OF THE DECEDENT'S FAMILY, AND
  (II)  THERE  WAS MATERIAL PARTICIPATION BY THE DECEDENT OR A MEMBER OF
THE DECEDENT'S FAMILY IN THE OPERATION OF THE FARM  OR  OTHER  BUSINESS,
AND
  (D)  SUCH  REAL PROPERTY IS DESIGNATED IN THE AGREEMENT REFERRED TO IN
SUBSECTION (D)(2).
  (2) QUALIFIED USE.--FOR PURPOSES OF THIS SECTION, THE TERM  "QUALIFIED
USE" MEANS THE DEVOTION OF THE PROPERTY TO ANY OF THE FOLLOWING:
  (A) USE AS A FARM FOR FARMING PURPOSES, OR
  (B)  USE  IN  A  TRADE OR BUSINESS OTHER THAN THE TRADE OR BUSINESS OF
FARMING.
  (3) ADJUSTED VALUE.--FOR PURPOSES OF PARAGRAPH (1), THE TERM "ADJUSTED
VALUE" MEANS--
  (A) IN THE CASE OF THE GROSS ESTATE, THE VALUE OF THE GROSS ESTATE FOR
PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD  TO  THIS  SECTION),
REDUCED  BY  ANY AMOUNTS ALLOWABLE AS A DEDUCTION UNDER PARAGRAPH (4) OF
SECTION 2053(A), OR
  (B) IN THE CASE OF ANY REAL OR PERSONAL PROPERTY, THE  VALUE  OF  SUCH
PROPERTY FOR PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD TO THIS
SECTION),  REDUCED BY ANY AMOUNTS ALLOWABLE AS A DEDUCTION IN RESPECT OF
SUCH PROPERTY UNDER PARAGRAPH (4) OF SECTION 2053(A).
  (4) DECEDENTS WHO ARE RETIRED OR DISABLED.--
  (A) IN GENERAL.--IF, ON THE DATE OF THE DECEDENT'S DEATH, THE REQUIRE-
MENTS OF PARAGRAPH (1)(C)(II) WITH RESPECT TO THE DECEDENT FOR ANY PROP-
ERTY ARE NOT MET, AND THE DECEDENT--
  (I) WAS RECEIVING OLD-AGE BENEFITS UNDER TITLE II OF THE SOCIAL  SECU-
RITY ACT FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE, OR
  (II) WAS DISABLED FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE,
  THEN  PARAGRAPH (1)(C)(II) SHALL BE APPLIED WITH RESPECT TO SUCH PROP-
ERTY BY SUBSTITUTING "THE DATE ON WHICH THE LONGER  OF  SUCH  CONTINUOUS
PERIODS  BEGAN"  FOR  "THE  DATE  OF  THE DECEDENT'S DEATH" IN PARAGRAPH
(1)(C).
  (B) DISABLED DEFINED.--FOR PURPOSES OF SUBPARAGRAPH (A), AN INDIVIDUAL
SHALL BE DISABLED IF SUCH INDIVIDUAL HAS A MENTAL OR PHYSICAL IMPAIRMENT
WHICH RENDERS HIM UNABLE TO MATERIALLY PARTICIPATE IN THE  OPERATION  OF
THE FARM OR OTHER BUSINESS.
  (C)   COORDINATION   WITH   RECAPTURE.--FOR   PURPOSES  OF  SUBSECTION
(C)(6)(B)(I), IF THE REQUIREMENTS OF PARAGRAPH (1)(C)(II) ARE  MET  WITH
RESPECT TO ANY DECEDENT BY REASON OF SUBPARAGRAPH (A), THE PERIOD ENDING
ON  THE  DATE  ON  WHICH  THE CONTINUOUS PERIOD TAKEN INTO ACCOUNT UNDER
SUBPARAGRAPH (A) BEGAN SHALL BE TREATED AS THE PERIOD IMMEDIATELY BEFORE
THE DECEDENT'S DEATH.
  (5) SPECIAL RULES FOR SURVIVING SPOUSES.--
  (A) IN GENERAL.--IF PROPERTY IS QUALIFIED REAL PROPERTY  WITH  RESPECT
TO  A  DECEDENT (HEREINAFTER IN THIS PARAGRAPH REFERRED TO AS THE "FIRST
DECEDENT") AND SUCH PROPERTY WAS ACQUIRED FROM OR PASSED FROM THE  FIRST
DECEDENT  TO THE SURVIVING SPOUSE OF THE FIRST DECEDENT, FOR PURPOSES OF
APPLYING THIS SUBSECTION AND SUBSECTION (C) IN THE CASE OF THE ESTATE OF
SUCH SURVIVING SPOUSE, ACTIVE MANAGEMENT OF THE FARM OR  OTHER  BUSINESS
BY  THE  SURVIVING  SPOUSE SHALL BE TREATED AS MATERIAL PARTICIPATION BY
SUCH SURVIVING SPOUSE IN THE OPERATION OF SUCH FARM OR BUSINESS.
  (B) SPECIAL RULE.--FOR THE PURPOSES OF SUBPARAGRAPH (A), THE  DETERMI-
NATION  OF  WHETHER  PROPERTY IS QUALIFIED REAL PROPERTY WITH RESPECT TO
THE FIRST DECEDENT SHALL BE MADE WITHOUT REGARD TO SUBPARAGRAPH  (D)  OF

S. 6359--C                         228

PARAGRAPH  (1)  AND  WITHOUT  REGARD  TO  WHETHER AN ELECTION UNDER THIS
SECTION WAS MADE.
  (C)  COORDINATION  WITH  PARAGRAPH (4).--IN ANY CASE IN WHICH TO DO SO
WILL ENABLE THE REQUIREMENTS OF PARAGRAPH  (1)(C)(II)  TO  BE  MET  WITH
RESPECT  TO  THE  SURVIVING  SPOUSE,  THIS SUBSECTION AND SUBSECTION (C)
SHALL BE APPLIED BY TAKING INTO ACCOUNT  ANY  APPLICATION  OF  PARAGRAPH
(4).
  (C)  TAX  TREATMENT  OF DISPOSITIONS AND FAILURES TO USE FOR QUALIFIED
USE.--
  (1) IMPOSITION OF ADDITIONAL ESTATE TAX.--IF, WITHIN  10  YEARS  AFTER
THE DECEDENT'S DEATH AND BEFORE THE DEATH OF THE QUALIFIED HEIR--
  (A)  THE  QUALIFIED  HEIR  DISPOSES  OF ANY INTEREST IN QUALIFIED REAL
PROPERTY (OTHER THAN BY A DISPOSITION TO A MEMBER OF HIS FAMILY), OR
  (B) THE QUALIFIED HEIR CEASES TO USE FOR THE QUALIFIED USE THE  QUALI-
FIED REAL PROPERTY WHICH WAS ACQUIRED (OR PASSED) FROM THE DECEDENT,
  THEN, THERE IS HEREBY IMPOSED AN ADDITIONAL ESTATE TAX.
  (2) AMOUNT OF ADDITIONAL TAX.--
  (A) IN GENERAL.--THE AMOUNT OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH
(1) WITH RESPECT TO ANY INTEREST SHALL BE THE AMOUNT EQUAL TO THE LESSER
OF--
  (I) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO SUCH INTEREST, OR
  (II)  THE  EXCESS  OF THE AMOUNT REALIZED WITH RESPECT TO THE INTEREST
(OR, IN ANY CASE OTHER THAN A SALE OR EXCHANGE AT ARM'S LENGTH, THE FAIR
MARKET VALUE OF THE INTEREST) OVER THE VALUE OF THE INTEREST  DETERMINED
UNDER SUBSECTION (A).
  (B) ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO INTEREST.--FOR PURPOSES OF
SUBPARAGRAPH  (A), THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO AN INTER-
EST IS THE AMOUNT WHICH BEARS THE SAME RATIO TO THE ADJUSTED TAX DIFFER-
ENCE WITH RESPECT TO THE ESTATE (DETERMINED UNDER SUBPARAGRAPH (C)) AS--
  (I) THE EXCESS OF THE VALUE OF SUCH  INTEREST  FOR  PURPOSES  OF  THIS
CHAPTER  (DETERMINED WITHOUT REGARD TO SUBSECTION (A)) OVER THE VALUE OF
SUCH INTEREST DETERMINED UNDER SUBSECTION (A), BEARS TO
  (II) A SIMILAR EXCESS DETERMINED FOR ALL QUALIFIED REAL PROPERTY.
  (C) ADJUSTED TAX DIFFERENCE WITH RESPECT TO THE ESTATE.--FOR  PURPOSES
OF  SUBPARAGRAPH  (B), THE TERM "ADJUSTED TAX DIFFERENCE WITH RESPECT TO
THE ESTATE" MEANS THE EXCESS OF WHAT WOULD  HAVE  BEEN  THE  ESTATE  TAX
LIABILITY  BUT  FOR  SUBSECTION  (A)  OVER THE ESTATE TAX LIABILITY. FOR
PURPOSES OF THIS SUBPARAGRAPH, THE TERM "ESTATE TAX LIABILITY" MEANS THE
TAX IMPOSED BY SECTION 2001 REDUCED BY  THE  CREDITS  ALLOWABLE  AGAINST
SUCH TAX.
  (D)  PARTIAL  DISPOSITIONS.--FOR PURPOSES OF THIS PARAGRAPH, WHERE THE
QUALIFIED HEIR DISPOSES OF A PORTION OF THE  INTEREST  ACQUIRED  BY  (OR
PASSING  TO)  SUCH  HEIR (OR A PREDECESSOR QUALIFIED HEIR) OR THERE IS A
CESSATION OF USE OF SUCH A PORTION--
  (I) THE VALUE DETERMINED UNDER SUBSECTION (A) TAKEN INTO ACCOUNT UNDER
SUBPARAGRAPH (A)(II) WITH RESPECT TO SUCH PORTION SHALL BE ITS PRO  RATA
SHARE OF SUCH VALUE OF SUCH INTEREST, AND
  (II)  THE  ADJUSTED  TAX DIFFERENCE ATTRIBUTABLE TO THE INTEREST TAKEN
INTO ACCOUNT WITH RESPECT TO THE TRANSACTION INVOLVING THE SECOND OR ANY
SUCCEEDING PORTION SHALL BE REDUCED BY THE AMOUNT OF THE TAX IMPOSED  BY
THIS  SUBSECTION  WITH  RESPECT  TO  ALL  PRIOR  TRANSACTIONS  INVOLVING
PORTIONS OF SUCH INTEREST.
  (E) SPECIAL RULE FOR DISPOSITION OF TIMBER.--IN THE CASE OF  QUALIFIED
WOODLAND  TO  WHICH  AN ELECTION UNDER SUBSECTION (E)(13)(A) APPLIES, IF
THE QUALIFIED HEIR DISPOSES OF (OR SEVERS) ANY STANDING TIMBER  ON  SUCH
QUALIFIED WOODLAND--

S. 6359--C                         229

  (I)  SUCH DISPOSITION (OR SEVERANCE) SHALL BE TREATED AS A DISPOSITION
OF A PORTION OF THE INTEREST OF THE QUALIFIED HEIR IN SUCH PROPERTY, AND
  (II)  THE  AMOUNT  OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH (1) WITH
RESPECT TO SUCH DISPOSITION SHALL BE AN AMOUNT EQUAL TO THE LESSER OF--
  (I) THE AMOUNT REALIZED ON SUCH DISPOSITION (OR,  IN  ANY  CASE  OTHER
THAN  A  SALE  OR EXCHANGE AT ARM'S LENGTH, THE FAIR MARKET VALUE OF THE
PORTION OF THE INTEREST DISPOSED OR SEVERED), OR
  (II) THE AMOUNT OF ADDITIONAL  TAX  DETERMINED  UNDER  THIS  PARAGRAPH
(WITHOUT  REGARD  TO  THIS  SUBPARAGRAPH)  IF THE ENTIRE INTEREST OF THE
QUALIFIED HEIR IN THE QUALIFIED WOODLAND HAD BEEN DISPOSED OF, LESS  THE
SUM  OF  THE  AMOUNT  OF  THE ADDITIONAL TAX IMPOSED WITH RESPECT TO ALL
PRIOR TRANSACTIONS INVOLVING SUCH WOODLAND TO  WHICH  THIS  SUBPARAGRAPH
APPLIED.
  FOR  PURPOSES OF THE PRECEDING SENTENCE, THE DISPOSITION OF A RIGHT TO
SEVER SHALL BE TREATED AS THE DISPOSITION OF THE  STANDING  TIMBER.  THE
AMOUNT  OF  ADDITIONAL  TAX  IMPOSED  UNDER PARAGRAPH (1) IN ANY CASE IN
WHICH A QUALIFIED HEIR DISPOSES OF HIS ENTIRE INTEREST IN THE  QUALIFIED
WOODLAND  SHALL  BE REDUCED BY ANY AMOUNT DETERMINED UNDER THIS SUBPARA-
GRAPH WITH RESPECT TO SUCH WOODLAND.
  (3) ONLY 1 ADDITIONAL TAX IMPOSED WITH RESPECT TO ANY  1  PORTION.--IN
THE CASE OF AN INTEREST ACQUIRED FROM (OR PASSING FROM) ANY DECEDENT, IF
SUBPARAGRAPH  (A)  OR  (B) OF PARAGRAPH (1) APPLIES TO ANY PORTION OF AN
INTEREST, SUBPARAGRAPH (B) OR (A), AS THE CASE MAY BE, OF PARAGRAPH  (1)
SHALL NOT APPLY WITH RESPECT TO THE SAME PORTION OF SUCH INTEREST.
  (4)  DUE  DATE.--THE  ADDITIONAL  TAX IMPOSED BY THIS SUBSECTION SHALL
BECOME DUE AND PAYABLE ON THE DAY WHICH IS 6 MONTHS AFTER  THE  DATE  OF
THE DISPOSITION OR CESSATION REFERRED TO IN PARAGRAPH (1).
  (5)  LIABILITY  FOR TAX; FURNISHING OF BOND.--THE QUALIFIED HEIR SHALL
BE PERSONALLY LIABLE FOR THE ADDITIONAL TAX IMPOSED BY  THIS  SUBSECTION
WITH  RESPECT  TO  HIS INTEREST UNLESS THE HEIR HAS FURNISHED BOND WHICH
MEETS THE REQUIREMENTS OF SUBSECTION (E)(11).
  (6) CESSATION OF QUALIFIED USE.--FOR  PURPOSES  OF  PARAGRAPH  (1)(B),
REAL PROPERTY SHALL CEASE TO BE USED FOR THE QUALIFIED USE IF--
  (A) SUCH PROPERTY CEASES TO BE USED FOR THE QUALIFIED USE SET FORTH IN
SUBPARAGRAPH  (A)  OR  (B) OF SUBSECTION (B)(2) UNDER WHICH THE PROPERTY
QUALIFIED UNDER SUBSECTION (B), OR
  (B) DURING ANY PERIOD  OF  8  YEARS  ENDING  AFTER  THE  DATE  OF  THE
DECEDENT'S DEATH AND BEFORE THE DATE OF THE DEATH OF THE QUALIFIED HEIR,
THERE HAD BEEN PERIODS AGGREGATING MORE THAN 3 YEARS DURING WHICH--
  (I)  IN  THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY THE
DECEDENT, THERE WAS NO MATERIAL PARTICIPATION BY  THE  DECEDENT  OR  ANY
MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER BUSINESS, AND
  (II)  IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY ANY
QUALIFIED HEIR, THERE WAS NO MATERIAL PARTICIPATION  BY  SUCH  QUALIFIED
HEIR  OR  ANY MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER
BUSINESS.
  (7) SPECIAL RULES.--
  (A) NO TAX IF USE BEGINS WITHIN 2 YEARS.--IF THE  DATE  ON  WHICH  THE
QUALIFIED HEIR BEGINS TO USE THE QUALIFIED REAL PROPERTY (HEREINAFTER IN
THIS  SUBPARAGRAPH  REFERRED  TO AS THE COMMENCEMENT DATE) IS BEFORE THE
DATE 2 YEARS AFTER THE DECEDENT'S DEATH--
  (I) NO TAX SHALL BE IMPOSED UNDER PARAGRAPH (1) BY REASON OF THE FAIL-
URE BY THE QUALIFIED HEIR TO SO USE SUCH PROPERTY BEFORE  THE  COMMENCE-
MENT DATE, AND
  (II)  THE  10-YEAR PERIOD UNDER PARAGRAPH (1) SHALL BE EXTENDED BY THE
PERIOD AFTER THE DECEDENT'S DEATH AND BEFORE THE COMMENCEMENT DATE.

S. 6359--C                         230

  (B) ACTIVE MANAGEMENT BY ELIGIBLE QUALIFIED HEIR TREATED  AS  MATERIAL
PARTICIPATION.--FOR PURPOSES OF PARAGRAPH (6)(B)(II), THE ACTIVE MANAGE-
MENT OF A FARM OR OTHER BUSINESS BY--
  (I) AN ELIGIBLE QUALIFIED HEIR, OR
  (II)  A  FIDUCIARY  OF  AN ELIGIBLE QUALIFIED HEIR DESCRIBED IN CLAUSE
(II) OR (III) OF SUBPARAGRAPH (C),
  SHALL BE TREATED AS MATERIAL PARTICIPATION BY SUCH ELIGIBLE  QUALIFIED
HEIR IN THE OPERATION OF SUCH FARM OR BUSINESS. IN THE CASE OF AN ELIGI-
BLE  QUALIFIED HEIR DESCRIBED IN CLAUSE (II), (III), OR (IV) OF SUBPARA-
GRAPH (C), THE PRECEDING SENTENCE SHALL APPLY ONLY DURING PERIODS DURING
WHICH SUCH HEIR MEETS THE REQUIREMENTS OF SUCH CLAUSE.
  (C) ELIGIBLE QUALIFIED HEIR.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
"ELIGIBLE QUALIFIED HEIR" MEANS A QUALIFIED HEIR WHO--
  (I) IS THE SURVIVING SPOUSE OF THE DECEDENT,
  (II) HAS NOT ATTAINED THE AGE OF 21,
  (III) IS DISABLED (WITHIN THE MEANING OF SUBSECTION (B)(4)(B)), OR
  (IV) IS A STUDENT.
  (D) STUDENT.--FOR PURPOSES OF SUBPARAGRAPH (C), AN INDIVIDUAL SHALL BE
TREATED AS A STUDENT WITH RESPECT TO PERIODS DURING ANY CALENDAR YEAR IF
(AND ONLY IF) SUCH INDIVIDUAL  IS  A  STUDENT  (WITHIN  THE  MEANING  OF
SECTION 152(F)(2)) FOR SUCH CALENDAR YEAR.
  (E)  CERTAIN  RENTS  TREATED  AS  QUALIFIED USE.--FOR PURPOSES OF THIS
SUBSECTION, A SURVIVING SPOUSE OR  LINEAL  DESCENDANT  OF  THE  DECEDENT
SHALL  NOT  BE  TREATED  AS  FAILING TO USE QUALIFIED REAL PROPERTY IN A
QUALIFIED USE SOLELY BECAUSE SUCH SPOUSE OR DESCENDANT RENTS SUCH  PROP-
ERTY  TO  A  MEMBER  OF THE FAMILY OF SUCH SPOUSE OR DESCENDANT ON A NET
CASH BASIS. FOR PURPOSES OF THE PRECEDING SENTENCE,  A  LEGALLY  ADOPTED
CHILD  OF AN INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH INDIVIDUAL
BY BLOOD.
  (8) QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.--A QUAL-
IFIED CONSERVATION CONTRIBUTION (AS DEFINED IN SECTION 170(H))  BY  GIFT
OR  OTHERWISE  SHALL  NOT  BE  DEEMED  A  DISPOSITION  UNDER  SUBSECTION
(C)(1)(A).
  (D) ELECTION; AGREEMENT.--
  (1) ELECTION.--THE ELECTION UNDER THIS SECTION SHALL BE  MADE  ON  THE
RETURN  OF  THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL BE MADE
IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH  AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (2) AGREEMENT.--THE AGREEMENT REFERRED TO IN THIS PARAGRAPH IS A WRIT-
TEN AGREEMENT SIGNED BY EACH PERSON IN BEING WHO HAS AN INTEREST (WHETH-
ER  OR  NOT  IN POSSESSION) IN ANY PROPERTY DESIGNATED IN SUCH AGREEMENT
CONSENTING TO THE APPLICATION OF SUBSECTION (C)  WITH  RESPECT  TO  SUCH
PROPERTY.
  (3)  MODIFICATION  OF  ELECTION  AND  AGREEMENT  TO BE PERMITTED.--THE
SECRETARY SHALL PRESCRIBE PROCEDURES WHICH PROVIDE THAT IN ANY  CASE  IN
WHICH  THE  EXECUTOR  MAKES AN ELECTION UNDER PARAGRAPH (1) (AND SUBMITS
THE AGREEMENT REFERRED TO IN PARAGRAPH (2)) WITHIN THE  TIME  PRESCRIBED
THEREFOR, BUT--
  (A)  THE  NOTICE  OF ELECTION, AS FILED, DOES NOT CONTAIN ALL REQUIRED
INFORMATION, OR
  (B) SIGNATURES OF 1 OR MORE PERSONS REQUIRED TO ENTER INTO THE  AGREE-
MENT  DESCRIBED  IN  PARAGRAPH  (2) ARE NOT INCLUDED ON THE AGREEMENT AS
FILED, OR THE AGREEMENT DOES NOT CONTAIN ALL REQUIRED INFORMATION,
  THE EXECUTOR WILL HAVE A REASONABLE PERIOD OF TIME (NOT  EXCEEDING  90
DAYS) AFTER NOTIFICATION OF SUCH FAILURES TO PROVIDE SUCH INFORMATION OR
SIGNATURES.

S. 6359--C                         231

  (E) DEFINITIONS; SPECIAL RULES.--FOR PURPOSES OF THIS SECTION--
  (1)  QUALIFIED HEIR.--THE TERM "QUALIFIED HEIR" MEANS, WITH RESPECT TO
ANY PROPERTY, A MEMBER OF THE DECEDENT'S FAMILY WHO ACQUIRED SUCH  PROP-
ERTY (OR TO WHOM SUCH PROPERTY PASSED) FROM THE DECEDENT. IF A QUALIFIED
HEIR  DISPOSES  OF ANY INTEREST IN QUALIFIED REAL PROPERTY TO ANY MEMBER
OF HIS FAMILY, SUCH MEMBER SHALL THEREAFTER BE TREATED AS THE  QUALIFIED
HEIR WITH RESPECT TO SUCH INTEREST.
  (2)  MEMBER  OF  FAMILY.--THE  TERM "MEMBER OF THE FAMILY" MEANS, WITH
RESPECT TO ANY INDIVIDUAL, ONLY--
  (A) AN ANCESTOR OF SUCH INDIVIDUAL,
  (B) THE SPOUSE OF SUCH INDIVIDUAL,
  (C) A LINEAL DESCENDANT  OF  SUCH  INDIVIDUAL,  OF  SUCH  INDIVIDUAL'S
SPOUSE, OR OF A PARENT OF SUCH INDIVIDUAL, OR
  (D) THE SPOUSE OF ANY LINEAL DESCENDANT DESCRIBED IN SUBPARAGRAPH (C).
  FOR  PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED CHILD OF AN
INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH INDIVIDUAL BY BLOOD.
  (3) CERTAIN REAL PROPERTY INCLUDED.--IN  THE  CASE  OF  REAL  PROPERTY
WHICH  MEETS  THE REQUIREMENTS OF SUBPARAGRAPH (C) OF SUBSECTION (B)(1),
RESIDENTIAL BUILDINGS AND RELATED IMPROVEMENTS  ON  SUCH  REAL  PROPERTY
OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF SUCH REAL PROPERTY
OR  BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR THE PURPOSE OF OPER-
ATING OR MAINTAINING SUCH REAL PROPERTY, AND ROADS, BUILDINGS, AND OTHER
STRUCTURES AND IMPROVEMENTS FUNCTIONALLY RELATED TO  THE  QUALIFIED  USE
SHALL BE TREATED AS REAL PROPERTY DEVOTED TO THE QUALIFIED USE.
  (4)  FARM.--THE  TERM  "FARM"  INCLUDES  STOCK, DAIRY, POULTRY, FRUIT,
FURBEARING ANIMAL, AND TRUCK  FARMS,  PLANTATIONS,  RANCHES,  NURSERIES,
RANGES,  GREENHOUSES  OR OTHER SIMILAR STRUCTURES USED PRIMARILY FOR THE
RAISING OF AGRICULTURAL OR HORTICULTURAL COMMODITIES, AND  ORCHARDS  AND
WOODLANDS.
  (5) FARMING PURPOSES.--THE TERM "FARMING PURPOSES" MEANS-
  (A)  CULTIVATING THE SOIL OR RAISING OR HARVESTING ANY AGRICULTURAL OR
HORTICULTURAL  COMMODITY  (INCLUDING  THE  RAISING,  SHEARING,  FEEDING,
CARING FOR, TRAINING, AND MANAGEMENT OF ANIMALS) ON A FARM;
  (B) HANDLING, DRYING, PACKING, GRADING, OR STORING ON A FARM ANY AGRI-
CULTURAL  OR  HORTICULTURAL  COMMODITY  IN ITS UNMANUFACTURED STATE, BUT
ONLY IF THE OWNER, TENANT, OR OPERATOR OF THE  FARM  REGULARLY  PRODUCES
MORE THAN ONE-HALF OF THE COMMODITY SO TREATED; AND
  (C)(I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
  (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
  (6)  MATERIAL  PARTICIPATION.--MATERIAL  PARTICIPATION SHALL BE DETER-
MINED IN A MANNER SIMILAR TO THE MANNER USED FOR PURPOSES  OF  PARAGRAPH
(1) OF SECTION 1402(A) (RELATING TO NET EARNINGS FROM SELF-EMPLOYMENT).
  (7) METHOD OF VALUING FARMS.--
  (A)  IN GENERAL.--EXCEPT AS PROVIDED IN SUBPARAGRAPH (B), THE VALUE OF
A FARM FOR FARMING PURPOSES SHALL BE DETERMINED BY DIVIDING--
  (I) THE EXCESS OF THE AVERAGE ANNUAL GROSS CASH RENTAL FOR  COMPARABLE
LAND  USED FOR FARMING PURPOSES AND LOCATED IN THE LOCALITY OF SUCH FARM
OVER THE AVERAGE ANNUAL STATE AND  LOCAL  REAL  ESTATE  TAXES  FOR  SUCH
COMPARABLE LAND, BY
  (II)  THE  AVERAGE  ANNUAL EFFECTIVE INTEREST RATE FOR ALL NEW FEDERAL
LAND BANK LOANS.
  FOR PURPOSES OF THE PRECEDING SENTENCE, EACH AVERAGE  ANNUAL  COMPUTA-
TION  SHALL  BE  MADE  ON  THE BASIS OF THE 5 MOST RECENT CALENDAR YEARS
ENDING BEFORE THE DATE OF THE DECEDENT'S DEATH.
  (B) VALUE BASED ON NET SHARE RENTAL IN CERTAIN CASES.--

S. 6359--C                         232

  (I) IN GENERAL.--IF THERE IS NO COMPARABLE LAND FROM WHICH THE AVERAGE
ANNUAL GROSS CASH RENTAL MAY BE DETERMINED BUT THERE IS COMPARABLE  LAND
FROM  WHICH THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED, SUBPARAGRAPH
(A)(I) SHALL BE  APPLIED  BY  SUBSTITUTING  "AVERAGE  ANNUAL  NET  SHARE
RENTAL" FOR "AVERAGE ANNUAL GROSS CASH RENTAL".
  (II)  NET SHARE RENTAL.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM "NET
SHARE RENTAL" MEANS THE EXCESS OF--
  (I) THE VALUE OF THE PRODUCE RECEIVED BY THE LESSOR  OF  THE  LAND  ON
WHICH SUCH PRODUCE IS GROWN, OVER
  (II)  THE CASH OPERATING EXPENSES OF GROWING SUCH PRODUCE WHICH, UNDER
THE LEASE, ARE PAID BY THE LESSOR.
  (C) EXCEPTION.--THE FORMULA PROVIDED BY SUBPARAGRAPH (A) SHALL NOT  BE
USED--
  (I)  WHERE  IT  IS  ESTABLISHED  THAT THERE IS NO COMPARABLE LAND FROM
WHICH THE AVERAGE ANNUAL GROSS CASH RENTAL MAY BE DETERMINED, OR
  (II) WHERE THE EXECUTOR ELECTS TO HAVE THE VALUE OF THE FARM FOR FARM-
ING PURPOSES DETERMINED AND THAT THERE IS NO COMPARABLE LAND FROM  WHICH
THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED UNDER PARAGRAPH (8).
  (8)  METHOD  OF  VALUING CLOSELY HELD BUSINESS INTERESTS, ETC.--IN ANY
CASE TO WHICH PARAGRAPH (7)(A) DOES NOT  APPLY,  THE  FOLLOWING  FACTORS
SHALL APPLY IN DETERMINING THE VALUE OF ANY QUALIFIED REAL PROPERTY:
  (A) THE CAPITALIZATION OF INCOME WHICH THE PROPERTY CAN BE EXPECTED TO
YIELD  FOR  FARMING  OR CLOSELY HELD BUSINESS PURPOSES OVER A REASONABLE
PERIOD OF TIME  UNDER  PRUDENT  MANAGEMENT  USING  TRADITIONAL  CROPPING
PATTERNS  FOR  THE  AREA,  TAKING  INTO  ACCOUNT  SOIL CAPACITY, TERRAIN
CONFIGURATION, AND SIMILAR FACTORS,
  (B) THE CAPITALIZATION OF THE FAIR RENTAL VALUE OF THE LAND FOR  FARM-
LAND OR CLOSELY HELD BUSINESS PURPOSES,
  (C)  ASSESSED  LAND VALUES IN A STATE WHICH PROVIDES A DIFFERENTIAL OR
USE VALUE ASSESSMENT LAW FOR FARMLAND OR CLOSELY HELD BUSINESS,
  (D) COMPARABLE SALES OF OTHER FARM OR CLOSELY HELD  BUSINESS  LAND  IN
THE  SAME  GEOGRAPHICAL  AREA  FAR ENOUGH REMOVED FROM A METROPOLITAN OR
RESORT AREA SO THAT NONAGRICULTURAL USE IS NOT A SIGNIFICANT  FACTOR  IN
THE SALES PRICE, AND
  (E)  ANY  OTHER  FACTOR  WHICH  FAIRLY VALUES THE FARM OR CLOSELY HELD
BUSINESS VALUE OF THE PROPERTY.
  (9) PROPERTY ACQUIRED FROM DECEDENT.--PROPERTY SHALL BE CONSIDERED  TO
HAVE BEEN ACQUIRED FROM OR TO HAVE PASSED FROM THE DECEDENT IF--
  (A)  SUCH PROPERTY IS SO CONSIDERED UNDER SECTION 1014(B) (RELATING TO
BASIS OF PROPERTY ACQUIRED FROM A DECEDENT),
  (B) SUCH PROPERTY IS ACQUIRED BY ANY PERSON FROM THE ESTATE, OR
  (C) SUCH PROPERTY IS ACQUIRED BY ANY  PERSON  FROM  A  TRUST  (TO  THE
EXTENT SUCH PROPERTY IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT).
  (10)  COMMUNITY PROPERTY.--IF THE DECEDENT AND HIS SURVIVING SPOUSE AT
ANY TIME HELD QUALIFIED REAL PROPERTY AS COMMUNITY PROPERTY, THE  INTER-
EST OF THE SURVIVING SPOUSE IN SUCH PROPERTY SHALL BE TAKEN INTO ACCOUNT
UNDER  THIS  SECTION  TO  THE EXTENT NECESSARY TO PROVIDE A RESULT UNDER
THIS SECTION WITH RESPECT TO SUCH PROPERTY WHICH IS CONSISTENT WITH  THE
RESULT WHICH WOULD HAVE OBTAINED UNDER THIS SECTION IF SUCH PROPERTY HAD
NOT BEEN COMMUNITY PROPERTY.
  (11)  BOND IN LIEU OF PERSONAL LIABILITY.--IF THE QUALIFIED HEIR MAKES
WRITTEN APPLICATION TO THE SECRETARY FOR DETERMINATION  OF  THE  MAXIMUM
AMOUNT OF THE ADDITIONAL TAX WHICH MAY BE IMPOSED BY SUBSECTION (C) WITH
RESPECT  TO  THE  QUALIFIED  HEIR'S  INTEREST, THE SECRETARY (AS SOON AS
POSSIBLE, AND IN ANY EVENT WITHIN 1 YEAR AFTER THE MAKING OF SUCH APPLI-
CATION) SHALL NOTIFY THE HEIR OF  SUCH  MAXIMUM  AMOUNT.  THE  QUALIFIED

S. 6359--C                         233

HEIR,  ON FURNISHING A BOND IN SUCH AMOUNT AND FOR SUCH PERIOD AS MAY BE
REQUIRED, SHALL BE DISCHARGED FROM PERSONAL LIABILITY FOR ANY ADDITIONAL
TAX IMPOSED BY SUBSECTION (C) AND SHALL BE  ENTITLED  TO  A  RECEIPT  OR
WRITING SHOWING SUCH DISCHARGE.
  (12) ACTIVE MANAGEMENT.--THE TERM "ACTIVE MANAGEMENT" MEANS THE MAKING
OF  THE MANAGEMENT DECISIONS OF A BUSINESS (OTHER THAN THE DAILY OPERAT-
ING DECISIONS).
  (13) SPECIAL RULES FOR WOODLANDS.--
  (A) IN GENERAL.--IN THE CASE OF ANY QUALIFIED WOODLAND WITH RESPECT TO
WHICH THE EXECUTOR ELECTS TO HAVE THIS SUBPARAGRAPH APPLY, TREES GROWING
ON SUCH WOODLAND SHALL NOT BE TREATED AS A CROP.
  (B) QUALIFIED WOODLAND.--THE TERM "QUALIFIED WOODLAND" MEANS ANY  REAL
PROPERTY WHICH--
  (I) IS USED IN TIMBER OPERATIONS, AND
  (II) IS AN IDENTIFIABLE AREA OF LAND SUCH AS AN ACRE OR OTHER AREA FOR
WHICH RECORDS ARE NORMALLY MAINTAINED IN CONDUCTING TIMBER OPERATIONS.
  (C) TIMBER OPERATIONS.--THE TERM "TIMBER OPERATIONS" MEANS--
  (I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
  (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
  (D) ELECTION.--AN ELECTION UNDER SUBPARAGRAPH (A) SHALL BE MADE ON THE
RETURN  OF  THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL BE MADE
IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH  AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (14)  TREATMENT  OF  REPLACEMENT  PROPERTY ACQUIRED IN SECTION 1031 OR
1033 TRANSACTIONS.--
  (A) IN GENERAL.--IN THE CASE OF ANY  QUALIFIED  REPLACEMENT  PROPERTY,
ANY  PERIOD DURING WHICH THERE WAS OWNERSHIP, QUALIFIED USE, OR MATERIAL
PARTICIPATION WITH RESPECT TO THE REPLACED PROPERTY BY THE  DECEDENT  OR
ANY MEMBER OF HIS FAMILY SHALL BE TREATED AS A PERIOD DURING WHICH THERE
WAS  SUCH OWNERSHIP, USE, OR MATERIAL PARTICIPATION (AS THE CASE MAY BE)
WITH RESPECT TO THE QUALIFIED REPLACEMENT PROPERTY.
  (B) LIMITATION.--SUBPARAGRAPH (A) SHALL NOT APPLY TO THE  EXTENT  THAT
THE  FAIR  MARKET VALUE OF THE QUALIFIED REPLACEMENT PROPERTY (AS OF THE
DATE OF ITS ACQUISITION) EXCEEDS THE FAIR MARKET VALUE OF  THE  REPLACED
PROPERTY (AS OF THE DATE OF ITS DISPOSITION).
  (C) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  QUALIFIED  REPLACEMENT PROPERTY.--THE TERM "QUALIFIED REPLACEMENT
PROPERTY" MEANS ANY REAL PROPERTY WHICH IS--
  (I) ACQUIRED IN AN EXCHANGE WHICH QUALIFIES UNDER SECTION 1031, OR
  (II) THE ACQUISITION OF WHICH RESULTS IN THE  NONRECOGNITION  OF  GAIN
UNDER SECTION 1033.
  SUCH TERM SHALL ONLY INCLUDE PROPERTY WHICH IS USED FOR THE SAME QUAL-
IFIED USE AS THE REPLACED PROPERTY WAS BEING USED BEFORE THE EXCHANGE.
  (II) REPLACED PROPERTY.--THE TERM "REPLACED PROPERTY" MEANS--
  (I)  THE  PROPERTY  TRANSFERRED  IN THE EXCHANGE WHICH QUALIFIES UNDER
SECTION 1031, OR
  (II) THE PROPERTY COMPULSORILY OR INVOLUNTARILY CONVERTED (WITHIN  THE
MEANING OF SECTION 1033).
  (F) STATUTE OF LIMITATIONS.--IF QUALIFIED REAL PROPERTY IS DISPOSED OF
OR CEASES TO BE USED FOR A QUALIFIED USE, THEN--
  (1)  THE  STATUTORY  PERIOD  FOR  THE ASSESSMENT OF ANY ADDITIONAL TAX
UNDER SUBSECTION (C) ATTRIBUTABLE TO SUCH DISPOSITION OR CESSATION SHALL
NOT EXPIRE BEFORE THE EXPIRATION OF 3 YEARS FROM THE DATE THE  SECRETARY
IS  NOTIFIED  (IN  SUCH  MANNER  AS  THE  SECRETARY  MAY  BY REGULATIONS
PRESCRIBE) OF SUCH DISPOSITION OR CESSATION (OR IF LATER IN THE CASE  OF
AN  INVOLUNTARY  CONVERSION  OR  EXCHANGE TO WHICH SUBSECTION (H) OR (I)

S. 6359--C                         234

APPLIES, 3 YEARS FROM THE DATE THE SECRETARY IS NOTIFIED OF THE REPLACE-
MENT OF THE CONVERTED PROPERTY OR OF AN INTENTION NOT TO REPLACE  OR  OF
THE EXCHANGE OF PROPERTY), AND
  (2)  SUCH ADDITIONAL TAX MAY BE ASSESSED BEFORE THE EXPIRATION OF SUCH
3-YEAR PERIOD NOTWITHSTANDING THE PROVISIONS OF ANY OTHER LAW OR RULE OF
LAW WHICH WOULD OTHERWISE PREVENT SUCH ASSESSMENT.
  (G) APPLICATION OF THIS SECTION AND  SECTION  6324B  TO  INTERESTS  IN
PARTNERSHIPS,  CORPORATIONS,  AND TRUSTS.--THE SECRETARY SHALL PRESCRIBE
REGULATIONS SETTING FORTH THE APPLICATION OF THIS  SECTION  AND  SECTION
6324B IN THE CASE OF AN INTEREST IN A PARTNERSHIP, CORPORATION, OR TRUST
WHICH,  WITH  RESPECT  TO THE DECEDENT, IS AN INTEREST IN A CLOSELY HELD
BUSINESS (WITHIN THE MEANING OF PARAGRAPH (1) OF SECTION  6166(B)).  FOR
PURPOSES OF THE PRECEDING SENTENCE, AN INTEREST IN A DISCRETIONARY TRUST
ALL THE BENEFICIARIES OF WHICH ARE QUALIFIED HEIRS SHALL BE TREATED AS A
PRESENT INTEREST.
  (H)  SPECIAL RULES FOR INVOLUNTARY CONVERSIONS OF QUALIFIED REAL PROP-
ERTY.--
  (1) TREATMENT OF CONVERTED PROPERTY.--
  (A) IN GENERAL.--IF THERE IS AN INVOLUNTARY CONVERSION OF AN  INTEREST
IN QUALIFIED REAL PROPERTY--
  (I)  NO  TAX  SHALL BE IMPOSED BY SUBSECTION (C) ON SUCH CONVERSION IF
THE COST OF THE QUALIFIED REPLACEMENT PROPERTY  EQUALS  OR  EXCEEDS  THE
AMOUNT REALIZED ON SUCH CONVERSION, OR
  (II)  IF  CLAUSE  (I) DOES NOT APPLY, THE AMOUNT OF THE TAX IMPOSED BY
SUBSECTION (C) ON SUCH CONVERSION SHALL BE THE AMOUNT  DETERMINED  UNDER
SUBPARAGRAPH (B).
  (B)  AMOUNT  OF  TAX  WHERE  THERE  IS NOT COMPLETE REINVESTMENT.--THE
AMOUNT DETERMINED UNDER THIS SUBPARAGRAPH WITH RESPECT TO  ANY  INVOLUN-
TARY CONVERSION IS THE AMOUNT OF THE TAX WHICH (BUT FOR THIS SUBSECTION)
WOULD HAVE BEEN IMPOSED ON SUCH CONVERSION REDUCED BY AN AMOUNT WHICH--
  (I) BEARS THE SAME RATIO TO SUCH TAX, AS
  (II)  THE  COST  OF  THE  QUALIFIED  REPLACEMENT PROPERTY BEARS TO THE
AMOUNT REALIZED ON THE CONVERSION.
  (2) TREATMENT OF REPLACEMENT  PROPERTY.--FOR  PURPOSES  OF  SUBSECTION
(C)--
  (A)  ANY  QUALIFIED  REPLACEMENT PROPERTY SHALL BE TREATED IN THE SAME
MANNER AS IF IT WERE A PORTION OF THE INTEREST IN QUALIFIED REAL PROPER-
TY WHICH WAS INVOLUNTARILY CONVERTED; EXCEPT THAT WITH RESPECT  TO  SUCH
QUALIFIED REPLACEMENT PROPERTY THE 10-YEAR PERIOD UNDER PARAGRAPH (1) OF
SUBSECTION (C) SHALL BE EXTENDED BY ANY PERIOD, BEYOND THE 2-YEAR PERIOD
REFERRED TO IN SECTION 1033(A)(2)(B)(I), DURING WHICH THE QUALIFIED HEIR
WAS ALLOWED TO REPLACE THE QUALIFIED REAL PROPERTY,
  (B)  ANY  TAX  IMPOSED BY SUBSECTION (C) ON THE INVOLUNTARY CONVERSION
SHALL BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
  (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED--
  (I) BY NOT TAKING INTO ACCOUNT PERIODS AFTER THE  INVOLUNTARY  CONVER-
SION  AND  BEFORE THE ACQUISITION OF THE QUALIFIED REPLACEMENT PROPERTY,
AND
  (II) BY TREATING MATERIAL PARTICIPATION WITH RESPECT TO THE  CONVERTED
PROPERTY  AS  MATERIAL  PARTICIPATION  WITH  RESPECT  TO  THE  QUALIFIED
REPLACEMENT PROPERTY.
  (3) DEFINITIONS AND SPECIAL RULES.--FOR PURPOSES OF THIS SUBSECTION--
  (A) INVOLUNTARY CONVERSION.--THE TERM "INVOLUNTARY CONVERSION" MEANS A
COMPULSORY OR INVOLUNTARY CONVERSION WITHIN THE MEANING OF SECTION 1033.
  (B) QUALIFIED REPLACEMENT PROPERTY.--THE TERM  "QUALIFIED  REPLACEMENT
PROPERTY" MEANS--

S. 6359--C                         235

  (I)  IN  THE  CASE  OF  AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION
1033(A)(1), ANY REAL PROPERTY INTO WHICH THE QUALIFIED REAL PROPERTY  IS
CONVERTED, OR
  (II)  IN  THE  CASE  OF AN INVOLUNTARY CONVERSION DESCRIBED IN SECTION
1033(A)(2), ANY REAL PROPERTY PURCHASED BY THE QUALIFIED HEIR DURING THE
PERIOD SPECIFIED IN SECTION 1033(A)(2)(B) FOR PURPOSES OF REPLACING  THE
QUALIFIED REAL PROPERTY.
  SUCH TERM ONLY INCLUDES PROPERTY WHICH IS TO BE USED FOR THE QUALIFIED
USE  SET  FORTH  IN  SUBPARAGRAPH  (A) OR (B) OF SUBSECTION (B)(2) UNDER
WHICH THE QUALIFIED REAL PROPERTY QUALIFIED UNDER SUBSECTION (A).
  (4) CERTAIN RULES MADE APPLICABLE.--THE RULES OF THE LAST SENTENCE  OF
SECTION 1033(A)(2)(A) SHALL APPLY FOR PURPOSES OF PARAGRAPH (3)(B)(II).
  (I) EXCHANGES OF QUALIFIED REAL PROPERTY.--
  (1) TREATMENT OF PROPERTY EXCHANGED.--
  (A)  EXCHANGES SOLELY FOR QUALIFIED EXCHANGE PROPERTY.--IF AN INTEREST
IN QUALIFIED REAL PROPERTY IS EXCHANGED SOLELY FOR AN INTEREST IN QUALI-
FIED EXCHANGE PROPERTY IN A TRANSACTION WHICH  QUALIFIES  UNDER  SECTION
1031,  NO  TAX  SHALL  BE  IMPOSED  BY  SUBSECTION (C) BY REASON OF SUCH
EXCHANGE.
  (B) EXCHANGES WHERE OTHER PROPERTY RECEIVED.--IF AN INTEREST IN QUALI-
FIED REAL PROPERTY IS EXCHANGED FOR AN INTEREST  IN  QUALIFIED  EXCHANGE
PROPERTY  AND  OTHER  PROPERTY  IN  A  TRANSACTION WHICH QUALIFIES UNDER
SECTION 1031, THE AMOUNT OF THE TAX IMPOSED BY SUBSECTION (C) BY  REASON
OF SUCH EXCHANGE SHALL BE THE AMOUNT OF TAX WHICH (BUT FOR THIS SUBPARA-
GRAPH) WOULD HAVE BEEN IMPOSED ON SUCH EXCHANGE UNDER SUBSECTION (C)(1),
REDUCED BY AN AMOUNT WHICH--
  (I) BEARS THE SAME RATIO TO SUCH TAX, AS
  (II) THE FAIR MARKET VALUE OF THE QUALIFIED EXCHANGE PROPERTY BEARS TO
THE FAIR MARKET VALUE OF THE QUALIFIED REAL PROPERTY EXCHANGED.
  FOR  PURPOSES  OF  CLAUSE  (II) OF THE PRECEDING SENTENCE, FAIR MARKET
VALUE SHALL BE DETERMINED AS OF THE TIME OF THE EXCHANGE.
  (2)  TREATMENT  OF  QUALIFIED  EXCHANGE  PROPERTY.--FOR  PURPOSES   OF
SUBSECTION (C)--
  (A)  ANY  INTEREST  IN QUALIFIED EXCHANGE PROPERTY SHALL BE TREATED IN
THE SAME MANNER AS IF IT WERE A PORTION OF  THE  INTEREST  IN  QUALIFIED
REAL PROPERTY WHICH WAS EXCHANGED,
  (B)  ANY TAX IMPOSED BY SUBSECTION (C) BY REASON OF THE EXCHANGE SHALL
BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
  (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED BY TREATING MATE-
RIAL PARTICIPATION WITH RESPECT TO THE EXCHANGED  PROPERTY  AS  MATERIAL
PARTICIPATION WITH RESPECT TO THE QUALIFIED EXCHANGE PROPERTY.
  (3) QUALIFIED EXCHANGE PROPERTY.--FOR PURPOSES OF THIS SUBSECTION, THE
TERM  "QUALIFIED  EXCHANGE  PROPERTY" MEANS REAL PROPERTY WHICH IS TO BE
USED FOR THE QUALIFIED USE SET FORTH  IN  SUBPARAGRAPH  (A)  OR  (B)  OF
SUBSECTION  (B)(2)  UNDER  WHICH  THE  REAL  PROPERTY EXCHANGED THEREFOR
ORIGINALLY QUALIFIED UNDER SUBSECTION (A).
  S 2033. PROPERTY IN WHICH THE DECEDENT HAD AN INTEREST. THE  VALUE  OF
THE  GROSS  ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE EXTENT
OF THE INTEREST THEREIN OF THE DECEDENT AT THE TIME OF HIS DEATH.
  S 2034. DOWER OR CURTESY INTERESTS. THE  VALUE  OF  THE  GROSS  ESTATE
SHALL  INCLUDE  THE  VALUE OF ALL PROPERTY TO THE EXTENT OF ANY INTEREST
THEREIN OF THE SURVIVING SPOUSE, EXISTING AT THE TIME OF THE  DECEDENT'S
DEATH  AS DOWER OR CURTESY, OR BY VIRTUE OF A STATUTE CREATING AN ESTATE
IN LIEU OF DOWER OR CURTESY.

S. 6359--C                         236

  S 2035. ADJUSTMENTS FOR CERTAIN  GIFTS  MADE  WITHIN  THREE  YEARS  OF
DECEDENT'S   DEATH.   (A)   INCLUSION   OF  CERTAIN  PROPERTY  IN  GROSS
ESTATE.--IF--
  (1)  THE DECEDENT MADE A TRANSFER (BY TRUST OR OTHERWISE) OF AN INTER-
EST IN ANY PROPERTY, OR RELINQUISHED A POWER WITH RESPECT TO ANY PROPER-
TY, DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH,
AND
  (2) THE VALUE OF SUCH PROPERTY (OR AN  INTEREST  THEREIN)  WOULD  HAVE
BEEN  INCLUDED  IN THE DECEDENT'S GROSS ESTATE UNDER SECTION 2036, 2037,
2038, OR 2042 IF SUCH TRANSFERRED INTEREST  OR  RELINQUISHED  POWER  HAD
BEEN RETAINED BY THE DECEDENT ON THE DATE OF HIS DEATH,
  THE  VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ANY PROPERTY
(OR INTEREST THEREIN) WHICH WOULD HAVE BEEN SO INCLUDED.
  (B) INCLUSION OF  GIFT  TAX  ON  GIFTS  MADE  DURING  3  YEARS  BEFORE
DECEDENT'S  DEATH.--THE  AMOUNT  OF THE GROSS ESTATE (DETERMINED WITHOUT
REGARD TO THIS SUBSECTION) SHALL BE INCREASED BY THE AMOUNT OF  ANY  TAX
PAID  UNDER CHAPTER 12 BY THE DECEDENT OR HIS ESTATE ON ANY GIFT MADE BY
THE DECEDENT OR HIS SPOUSE DURING THE 3-YEAR PERIOD ENDING ON  THE  DATE
OF THE DECEDENT'S DEATH.
  (C) OTHER RULES RELATING TO TRANSFERS WITHIN 3 YEARS OF DEATH.--
  (1) IN GENERAL.--FOR PURPOSES OF--
  (A)  SECTION  303(B) (RELATING TO DISTRIBUTIONS IN REDEMPTION OF STOCK
TO PAY DEATH TAXES),
  (B) SECTION 2032A (RELATING TO SPECIAL  VALUATION  OF  CERTAIN  FARMS,
ETC., REAL PROPERTY), AND
  (C) SUBCHAPTER C OF CHAPTER 64 (RELATING TO LIEN FOR TAXES),
  THE  VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY
TO THE EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT HAS  AT  ANY
TIME  MADE  A  TRANSFER, BY TRUST OR OTHERWISE, DURING THE 3-YEAR PERIOD
ENDING ON THE DATE OF THE DECEDENT'S DEATH.
  (2) COORDINATION WITH SECTION 6166.--AN ESTATE  SHALL  BE  TREATED  AS
MEETING  THE  35 PERCENT OF ADJUSTED GROSS ESTATE REQUIREMENT OF SECTION
6166(A)(1) ONLY IF THE ESTATE MEETS SUCH REQUIREMENT BOTH WITH AND WITH-
OUT THE APPLICATION OF SUBSECTION (A).
  (3) MARITAL AND SMALL TRANSFERS.--PARAGRAPH (1) SHALL NOT APPLY TO ANY
TRANSFER (OTHER THAN A TRANSFER WITH RESPECT TO A LIFE INSURANCE POLICY)
MADE DURING A CALENDAR YEAR  TO  ANY  DONEE  IF  THE  DECEDENT  WAS  NOT
REQUIRED  BY  SECTION  6019 (OTHER THAN BY REASON OF SECTION 6019(2)) TO
FILE ANY GIFT TAX RETURN FOR SUCH YEAR WITH RESPECT TO TRANSFERS TO SUCH
DONEE.
  (D) EXCEPTION.--SUBSECTION (A) AND PARAGRAPH  (1)  OF  SUBSECTION  (C)
SHALL NOT APPLY TO ANY BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER-
ATION IN MONEY OR MONEY'S WORTH.
  (E)   TREATMENT  OF  CERTAIN  TRANSFERS  FROM  REVOCABLE  TRUSTS.--FOR
PURPOSES OF THIS SECTION AND SECTION 2038, ANY TRANSFER FROM ANY PORTION
OF A TRUST DURING ANY PERIOD THAT SUCH PORTION WAS TREATED UNDER SECTION
676 AS OWNED BY THE DECEDENT BY REASON OF A POWER IN THE GRANTOR (DETER-
MINED WITHOUT REGARD TO SECTION 672(E)) SHALL BE TREATED AS  A  TRANSFER
MADE DIRECTLY BY THE DECEDENT.
  S  2036.  TRANSFERS  WITH RETAINED LIFE ESTATE. (A) GENERAL RULE.--THE
VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE
EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT  HAS  AT  ANY  TIME
MADE  A TRANSFER (EXCEPT IN CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH), BY  TRUST  OR  OTHERWISE,
UNDER  WHICH  HE  HAS RETAINED FOR HIS LIFE OR FOR ANY PERIOD NOT ASCER-

S. 6359--C                         237

TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
IN FACT END BEFORE HIS DEATH--
  (1)  THE  POSSESSION OR ENJOYMENT OF, OR THE RIGHT TO THE INCOME FROM,
THE PROPERTY, OR
  (2) THE RIGHT, EITHER ALONE OR IN  CONJUNCTION  WITH  ANY  PERSON,  TO
DESIGNATE  THE  PERSONS  WHO  SHALL POSSESS OR ENJOY THE PROPERTY OR THE
INCOME THEREFROM.
  (B) VOTING RIGHTS.--
  (1) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1), THE  RETENTION  OF
THE  RIGHT  TO  VOTE  (DIRECTLY  OR  INDIRECTLY)  SHARES  OF  STOCK OF A
CONTROLLED CORPORATION SHALL BE CONSIDERED TO  BE  A  RETENTION  OF  THE
ENJOYMENT OF TRANSFERRED PROPERTY.
  (2)  CONTROLLED  CORPORATION.--FOR PURPOSES OF PARAGRAPH (1), A CORPO-
RATION SHALL BE TREATED AS A CONTROLLED  CORPORATION  IF,  AT  ANY  TIME
AFTER  THE  TRANSFER OF THE PROPERTY AND DURING THE 3-YEAR PERIOD ENDING
ON THE DATE OF THE DECEDENT'S DEATH, THE DECEDENT OWNED (WITH THE APPLI-
CATION OF SECTION 318), OR HAD THE RIGHT (EITHER ALONE OR IN CONJUNCTION
WITH ANY PERSON) TO VOTE, STOCK POSSESSING AT LEAST 20  PERCENT  OF  THE
TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK.
  (3)  COORDINATION WITH SECTION 2035.--FOR PURPOSES OF APPLYING SECTION
2035 WITH RESPECT TO PARAGRAPH (1), THE RELINQUISHMENT OR  CESSATION  OF
VOTING  RIGHTS  SHALL  BE  TREATED AS A TRANSFER OF PROPERTY MADE BY THE
DECEDENT.
  (C) LIMITATION ON APPLICATION OF GENERAL RULE.--THIS SECTION SHALL NOT
APPLY TO A TRANSFER MADE BEFORE MARCH 4, 1931; NOR TO  A  TRANSFER  MADE
AFTER MARCH 3, 1931, AND BEFORE JUNE 7, 1932, UNLESS THE PROPERTY TRANS-
FERRED  WOULD  HAVE  BEEN  INCLUDIBLE  IN THE DECEDENT'S GROSS ESTATE BY
REASON OF THE AMENDATORY LANGUAGE OF THE JOINT RESOLUTION  OF  MARCH  3,
1931 (46 STAT. 1516).
  S 2037. TRANSFERS TAKING EFFECT AT DEATH. (A) GENERAL RULE.--THE VALUE
OF  THE  GROSS  ESTATE  SHALL  INCLUDE  THE VALUE OF ALL PROPERTY TO THE
EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT  HAS  AT  ANY  TIME
AFTER  SEPTEMBER 7, 1916, MADE A TRANSFER (EXCEPT IN CASE OF A BONA FIDE
SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S  WORTH),
BY TRUST OR OTHERWISE, IF--
  (1)  POSSESSION OR ENJOYMENT OF THE PROPERTY CAN, THROUGH OWNERSHIP OF
SUCH INTEREST, BE OBTAINED ONLY BY SURVIVING THE DECEDENT, AND
  (2) THE DECEDENT HAS RETAINED A REVERSIONARY INTEREST IN THE  PROPERTY
(BUT IN THE CASE OF A TRANSFER MADE BEFORE OCTOBER 8, 1949, ONLY IF SUCH
REVERSIONARY  INTEREST  AROSE  BY THE EXPRESS TERMS OF THE INSTRUMENT OF
TRANSFER), AND THE  VALUE  OF  SUCH  REVERSIONARY  INTEREST  IMMEDIATELY
BEFORE  THE DEATH OF THE DECEDENT EXCEEDS 5 PERCENT OF THE VALUE OF SUCH
PROPERTY.
  (B) SPECIAL RULES.--FOR PURPOSES OF THIS SECTION, THE TERM "REVERSION-
ARY INTEREST" INCLUDES A POSSIBILITY THAT PROPERTY  TRANSFERRED  BY  THE
DECEDENT--
  (1) MAY RETURN TO HIM OR HIS ESTATE, OR
  (2) MAY BE SUBJECT TO A POWER OF DISPOSITION BY HIM,
  BUT  SUCH  TERM  DOES  NOT INCLUDE A POSSIBILITY THAT THE INCOME ALONE
FROM SUCH PROPERTY MAY RETURN TO HIM OR BECOME SUBJECT  TO  A  POWER  OF
DISPOSITION  BY  HIM.  THE  VALUE OF A REVERSIONARY INTEREST IMMEDIATELY
BEFORE THE DEATH OF THE DECEDENT SHALL BE DETERMINED (WITHOUT REGARD  TO
THE FACT OF THE DECEDENT'S DEATH) BY USUAL METHODS OF VALUATION, INCLUD-
ING THE USE OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, UNDER REGU-
LATIONS  PRESCRIBED  BY  THE  SECRETARY.  IN  DETERMINING THE VALUE OF A
POSSIBILITY THAT PROPERTY MAY BE SUBJECT TO A POWER  OF  DISPOSITION  BY

S. 6359--C                         238

THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A POSSIBIL-
ITY  THAT  SUCH  PROPERTY  MAY  RETURN  TO  THE  DECEDENT OR HIS ESTATE.
NOTWITHSTANDING THE FOREGOING, AN INTEREST SO TRANSFERRED SHALL  NOT  BE
INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER THIS SECTION IF POSSESSION
OR ENJOYMENT OF THE PROPERTY COULD HAVE BEEN OBTAINED BY ANY BENEFICIARY
DURING  THE  DECEDENT'S  LIFE THROUGH THE EXERCISE OF A GENERAL POWER OF
APPOINTMENT (AS DEFINED IN SECTION 2041) WHICH IN FACT  WAS  EXERCISABLE
IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
  S  2038.  REVOCABLE TRANSFERS. (A) IN GENERAL.--THE VALUE OF THE GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1) TRANSFERS AFTER JUNE 22, 1936.--TO  THE  EXTENT  OF  ANY  INTEREST
THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME MADE A TRANSFER (EXCEPT IN
CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY
OR  MONEY'S  WORTH),  BY TRUST OR OTHERWISE, WHERE THE ENJOYMENT THEREOF
WAS SUBJECT AT THE DATE OF HIS DEATH TO ANY CHANGE THROUGH THE  EXERCISE
OF  A  POWER (IN WHATEVER CAPACITY EXERCISABLE) BY THE DECEDENT ALONE OR
BY THE DECEDENT IN CONJUNCTION WITH ANY OTHER PERSON (WITHOUT REGARD  TO
WHEN  OR  FROM  WHAT SOURCE THE DECEDENT ACQUIRED SUCH POWER), TO ALTER,
AMEND, REVOKE, OR TERMINATE, OR WHERE ANY  SUCH  POWER  IS  RELINQUISHED
DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH.
  (2) TRANSFERS ON OR BEFORE JUNE 22, 1936.--TO THE EXTENT OF ANY INTER-
EST  THEREIN  OF  WHICH  THE  DECEDENT  HAS  AT ANY TIME MADE A TRANSFER
(EXCEPT IN CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND  FULL  CONSIDER-
ATION  IN  MONEY  OR  MONEY'S  WORTH),  BY TRUST OR OTHERWISE, WHERE THE
ENJOYMENT THEREOF WAS SUBJECT AT THE DATE OF HIS  DEATH  TO  ANY  CHANGE
THROUGH  THE  EXERCISE  OF  A  POWER, EITHER BY THE DECEDENT ALONE OR IN
CONJUNCTION WITH ANY PERSON, TO ALTER, AMEND, OR REVOKE,  OR  WHERE  THE
DECEDENT  RELINQUISHED ANY SUCH POWER DURING THE 3-YEAR PERIOD ENDING ON
THE DATE OF THE DECEDENT'S DEATH. EXCEPT IN THE CASE OF  TRANSFERS  MADE
AFTER  JUNE 22, 1936, NO INTEREST OF THE DECEDENT OF WHICH HE HAS MADE A
TRANSFER SHALL BE INCLUDED IN  THE  GROSS  ESTATE  UNDER  PARAGRAPH  (1)
UNLESS IT IS INCLUDIBLE UNDER THIS PARAGRAPH.
  (B)  DATE  OF  EXISTENCE  OF POWER.--FOR PURPOSES OF THIS SECTION, THE
POWER TO ALTER, AMEND, REVOKE, OR TERMINATE SHALL BE CONSIDERED TO EXIST
ON THE DATE OF THE DECEDENT'S DEATH EVEN  THOUGH  THE  EXERCISE  OF  THE
POWER  IS  SUBJECT  TO  A  PRECEDENT GIVING OF NOTICE OR EVEN THOUGH THE
ALTERATION, AMENDMENT, REVOCATION, OR TERMINATION TAKES EFFECT  ONLY  ON
THE  EXPIRATION  OF  A  STATED  PERIOD  AFTER THE EXERCISE OF THE POWER,
WHETHER OR NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE  HAS
BEEN GIVEN OR THE POWER HAS BEEN EXERCISED. IN SUCH CASES PROPER ADJUST-
MENT  SHALL  BE  MADE  REPRESENTING  THE INTERESTS WHICH WOULD HAVE BEEN
EXCLUDED FROM THE POWER IF THE DECEDENT HAD LIVED, AND FOR SUCH PURPOSE,
IF THE NOTICE HAS NOT BEEN GIVEN OR THE POWER HAS NOT BEEN EXERCISED  ON
OR BEFORE THE DATE OF HIS DEATH, SUCH NOTICE SHALL BE CONSIDERED TO HAVE
BEEN GIVEN, OR THE POWER EXERCISED, ON THE DATE OF HIS DEATH.
  S  2039.  ANNUITIES.  (A) GENERAL.--THE GROSS ESTATE SHALL INCLUDE THE
VALUE OF AN ANNUITY OR OTHER PAYMENT RECEIVABLE BY  ANY  BENEFICIARY  BY
REASON OF SURVIVING THE DECEDENT UNDER ANY FORM OF CONTRACT OR AGREEMENT
ENTERED INTO AFTER MARCH 3, 1931 (OTHER THAN AS INSURANCE UNDER POLICIES
ON  THE  LIFE OF THE DECEDENT), IF, UNDER SUCH CONTRACT OR AGREEMENT, AN
ANNUITY OR OTHER PAYMENT WAS PAYABLE TO THE DECEDENT,  OR  THE  DECEDENT
POSSESSED  THE RIGHT TO RECEIVE SUCH ANNUITY OR PAYMENT, EITHER ALONE OR
IN CONJUNCTION WITH ANOTHER FOR HIS LIFE OR FOR ANY  PERIOD  NOT  ASCER-
TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
IN FACT END BEFORE HIS DEATH.

S. 6359--C                         239

  (B)  AMOUNT  INCLUDIBLE.--SUBSECTION (A) SHALL APPLY TO ONLY SUCH PART
OF THE VALUE OF THE ANNUITY  OR  OTHER  PAYMENT  RECEIVABLE  UNDER  SUCH
CONTRACT  OR  AGREEMENT AS IS PROPORTIONATE TO THAT PART OF THE PURCHASE
PRICE THEREFOR  CONTRIBUTED  BY  THE  DECEDENT.  FOR  PURPOSES  OF  THIS
SECTION,  ANY CONTRIBUTION BY THE DECEDENT'S EMPLOYER OR FORMER EMPLOYER
TO THE PURCHASE PRICE OF SUCH CONTRACT OR AGREEMENT (WHETHER OR  NOT  TO
AN  EMPLOYEE'S TRUST OR FUND FORMING PART OF A PENSION, ANNUITY, RETIRE-
MENT, BONUS OR PROFIT SHARING PLAN) SHALL BE CONSIDERED TO  BE  CONTRIB-
UTED BY THE DECEDENT IF MADE BY REASON OF HIS EMPLOYMENT.
  S  2040.  JOINT  INTERESTS.  (A) GENERAL RULE.--THE VALUE OF THE GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY  TO  THE  EXTENT  OF  THE
INTEREST THEREIN HELD AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP BY THE
DECEDENT  AND  ANY  OTHER  PERSON,  OR AS TENANTS BY THE ENTIRETY BY THE
DECEDENT AND SPOUSE, OR DEPOSITED, WITH ANY PERSON CARRYING ON THE BANK-
ING BUSINESS, IN THEIR JOINT NAMES AND PAYABLE TO EITHER OR  THE  SURVI-
VOR,  EXCEPT  SUCH  PART  THEREOF  AS  MAY  BE  SHOWN TO HAVE ORIGINALLY
BELONGED TO SUCH OTHER  PERSON  AND  NEVER  TO  HAVE  BEEN  RECEIVED  OR
ACQUIRED  BY  THE LATTER FROM THE DECEDENT FOR LESS THAN AN ADEQUATE AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH: PROVIDED, THAT WHERE  SUCH
PROPERTY  OR  ANY  PART THEREOF, OR PART OF THE CONSIDERATION WITH WHICH
SUCH PROPERTY WAS ACQUIRED, IS SHOWN TO HAVE BEEN AT ANY  TIME  ACQUIRED
BY  SUCH  OTHER  PERSON  FROM THE DECEDENT FOR LESS THAN AN ADEQUATE AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH, THERE  SHALL  BE  EXCEPTED
ONLY  SUCH PART OF THE VALUE OF SUCH PROPERTY AS IS PROPORTIONATE TO THE
CONSIDERATION FURNISHED BY SUCH OTHER  PERSON:  PROVIDED  FURTHER,  THAT
WHERE ANY PROPERTY HAS BEEN ACQUIRED BY GIFT, BEQUEST, DEVISE, OR INHER-
ITANCE, AS A TENANCY BY THE ENTIRETY BY THE DECEDENT AND SPOUSE, THEN TO
THE  EXTENT  OF  ONE-HALF OF THE VALUE THEREOF, OR, WHERE SO ACQUIRED BY
THE DECEDENT AND ANY OTHER PERSON AS JOINT TENANTS WITH RIGHT OF  SURVI-
VORSHIP AND THEIR INTERESTS ARE NOT OTHERWISE SPECIFIED OR FIXED BY LAW,
THEN TO THE EXTENT OF THE VALUE OF A FRACTIONAL PART TO BE DETERMINED BY
DIVIDING  THE  VALUE OF THE PROPERTY BY THE NUMBER OF JOINT TENANTS WITH
RIGHT OF SURVIVORSHIP.
  (B) CERTAIN JOINT INTERESTS OF HUSBAND AND WIFE.--
  (1) INTERESTS OF SPOUSE EXCLUDED FROM  GROSS  ESTATE.--NOTWITHSTANDING
SUBSECTION  (A),  IN THE CASE OF ANY QUALIFIED JOINT INTEREST, THE VALUE
INCLUDED IN THE GROSS ESTATE WITH RESPECT TO SUCH INTEREST BY REASON  OF
THIS SECTION IS ONE-HALF OF THE VALUE OF SUCH QUALIFIED JOINT INTEREST.
  (2)  QUALIFIED JOINT INTEREST DEFINED.--FOR PURPOSES OF PARAGRAPH (1),
THE TERM "QUALIFIED JOINT INTEREST" MEANS ANY INTEREST IN PROPERTY  HELD
BY THE DECEDENT AND THE DECEDENT'S SPOUSE AS--
  (A) TENANTS BY THE ENTIRETY, OR
  (B) JOINT TENANTS WITH RIGHT OF SURVIVORSHIP, BUT ONLY IF THE DECEDENT
AND THE SPOUSE OF THE DECEDENT ARE THE ONLY JOINT TENANTS.
  S 2041. POWERS OF APPOINTMENT. (A) IN GENERAL.--THE VALUE OF THE GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1)  POWERS  OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942.--TO
THE EXTENT OF ANY PROPERTY WITH RESPECT TO  WHICH  A  GENERAL  POWER  OF
APPOINTMENT  CREATED  ON OR BEFORE OCTOBER 21, 1942, IS EXERCISED BY THE
DECEDENT--
  (A) BY WILL, OR
  (B) BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A  TRANS-
FER OF PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY WOULD BE INCLUDIBLE
IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035 TO 2038, INCLUSIVE;
  BUT  THE  FAILURE  TO EXERCISE SUCH A POWER OR THE COMPLETE RELEASE OF
SUCH A POWER SHALL NOT BE DEEMED AN EXERCISE THEREOF. IF A GENERAL POWER

S. 6359--C                         240

OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, HAS BEEN PARTIALLY
RELEASED SO THAT IT IS NO LONGER A GENERAL  POWER  OF  APPOINTMENT,  THE
EXERCISE  OF  SUCH  POWER  SHALL  NOT  BE DEEMED TO BE THE EXERCISE OF A
GENERAL POWER OF APPOINTMENT IF--
  (I) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
  (II)  THE  DONEE OF SUCH POWER WAS UNDER A LEGAL DISABILITY TO RELEASE
SUCH POWER ON OCTOBER 21, 1942, AND SUCH PARTIAL  RELEASE  OCCURRED  NOT
LATER THAN 6 MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
  (2) POWERS CREATED AFTER OCTOBER 21, 1942.--TO THE EXTENT OF ANY PROP-
ERTY  WITH  RESPECT TO WHICH THE DECEDENT HAS AT THE TIME OF HIS DEATH A
GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER  21,  1942,  OR  WITH
RESPECT TO WHICH THE DECEDENT HAS AT ANY TIME EXERCISED OR RELEASED SUCH
A  POWER OF APPOINTMENT BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF
IT WERE A TRANSFER OF PROPERTY OWNED  BY  THE  DECEDENT,  SUCH  PROPERTY
WOULD  BE  INCLUDIBLE IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035
TO 2038, INCLUSIVE. FOR PURPOSES OF THIS PARAGRAPH  (2),  THE  POWER  OF
APPOINTMENT  SHALL  BE CONSIDERED TO EXIST ON THE DATE OF THE DECEDENT'S
DEATH EVEN THOUGH THE EXERCISE OF THE POWER IS SUBJECT  TO  A  PRECEDENT
GIVING  OF  NOTICE OR EVEN THOUGH THE EXERCISE OF THE POWER TAKES EFFECT
ONLY ON THE EXPIRATION OF A STATED PERIOD AFTER ITS EXERCISE, WHETHER OR
NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS BEEN  GIVEN
OR THE POWER HAS BEEN EXERCISED.
  (3)  CREATION OF ANOTHER POWER IN CERTAIN CASES.--TO THE EXTENT OF ANY
PROPERTY WITH RESPECT TO WHICH THE DECEDENT--
  (A) BY WILL, OR
  (B) BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A  TRANS-
FER  OF PROPERTY OWNED BY THE DECEDENT SUCH PROPERTY WOULD BE INCLUDIBLE
IN THE DECEDENT'S GROSS ESTATE UNDER SECTION 2035, 2036, OR 2037,
  EXERCISES A POWER OF APPOINTMENT CREATED AFTER OCTOBER  21,  1942,  BY
CREATING  ANOTHER  POWER OF APPOINTMENT WHICH UNDER THE APPLICABLE LOCAL
LAW CAN BE VALIDLY EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE
OR INTEREST IN SUCH PROPERTY, OR SUSPEND THE ABSOLUTE OWNERSHIP OR POWER
OF ALIENATION OF SUCH  PROPERTY,  FOR  A  PERIOD  ASCERTAINABLE  WITHOUT
REGARD TO THE DATE OF THE CREATION OF THE FIRST POWER.
  (B) DEFINITIONS.--FOR PURPOSES OF SUBSECTION (A)--
  (1) GENERAL POWER OF APPOINTMENT.--THE TERM "GENERAL POWER OF APPOINT-
MENT"  MEANS  A POWER WHICH IS EXERCISABLE IN FAVOR OF THE DECEDENT, HIS
ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT--
  (A) A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE  BENE-
FIT OF THE DECEDENT WHICH IS LIMITED BY AN ASCERTAINABLE STANDARD RELAT-
ING  TO  THE  HEALTH, EDUCATION, SUPPORT, OR MAINTENANCE OF THE DECEDENT
SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (B) A POWER OF APPOINTMENT CREATED ON  OR  BEFORE  OCTOBER  21,  1942,
WHICH  IS  EXERCISABLE  BY THE DECEDENT ONLY IN CONJUNCTION WITH ANOTHER
PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (C) IN THE CASE OF A POWER OF APPOINTMENT CREATED  AFTER  OCTOBER  21,
1942,  WHICH  IS  EXERCISABLE  BY  THE DECEDENT ONLY IN CONJUNCTION WITH
ANOTHER PERSON--
  (I) IF THE POWER IS NOT EXERCISABLE BY THE DECEDENT EXCEPT IN CONJUNC-
TION WITH THE CREATOR OF THE POWER--SUCH POWER SHALL  NOT  BE  DEEMED  A
GENERAL POWER OF APPOINTMENT.
  (II)  IF  THE  POWER  IS  NOT  EXERCISABLE  BY  THE DECEDENT EXCEPT IN
CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST IN THE PROPERTY,
SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
OF THE DECEDENT--SUCH POWER SHALL NOT  BE  DEEMED  A  GENERAL  POWER  OF
APPOINTMENT.  FOR  THE  PURPOSES  OF THIS CLAUSE A PERSON WHO, AFTER THE

S. 6359--C                         241

DEATH OF THE DECEDENT, MAY BE POSSESSED OF A POWER OF APPOINTMENT  (WITH
RESPECT  TO  THE  PROPERTY SUBJECT TO THE DECEDENT'S POWER) WHICH HE MAY
EXERCISE IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST  IN  THE
PROPERTY  AND  SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH EXERCISE OF
THE DECEDENT'S POWER.
  (III) IF (AFTER THE APPLICATION OF CLAUSES (I) AND (II)) THE POWER  IS
A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH OTHER
PERSON--SUCH  POWER  SHALL BE DEEMED A GENERAL POWER OF APPOINTMENT ONLY
IN RESPECT OF A FRACTIONAL PART OF THE PROPERTY SUBJECT TO  SUCH  POWER,
SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY BY THE
NUMBER  OF  SUCH  PERSONS (INCLUDING THE DECEDENT) IN FAVOR OF WHOM SUCH
POWER IS EXERCISABLE.
  FOR PURPOSES OF CLAUSES (II) AND (III), A POWER SHALL BE DEEMED TO  BE
EXERCISABLE  IN  FAVOR OF A PERSON IF IT IS EXERCISABLE IN FAVOR OF SUCH
PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
  (2) LAPSE OF POWER.--THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
SHALL BE CONSIDERED A RELEASE OF  SUCH  POWER.  THE  PRECEDING  SENTENCE
SHALL APPLY WITH RESPECT TO THE LAPSE OF POWERS DURING ANY CALENDAR YEAR
ONLY TO THE EXTENT THAT THE PROPERTY, WHICH COULD HAVE BEEN APPOINTED BY
EXERCISE  OF  SUCH LAPSED POWERS, EXCEEDED IN VALUE, AT THE TIME OF SUCH
LAPSE, THE GREATER OF THE FOLLOWING AMOUNTS:
  (A) $5,000, OR
  (B) 5 PERCENT OF THE AGGREGATE VALUE, AT THE TIME OF  SUCH  LAPSE,  OF
THE  ASSETS  OUT OF WHICH, OR THE PROCEEDS OF WHICH, THE EXERCISE OF THE
LAPSED POWERS COULD HAVE BEEN SATISFIED.
  (3) DATE OF CREATION OF POWER.--FOR PURPOSES OF THIS SECTION, A  POWER
OF APPOINTMENT CREATED BY A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
  S  2042.  PROCEEDS  OF  LIFE  INSURANCE. THE VALUE OF THE GROSS ESTATE
SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1) RECEIVABLE BY THE EXECUTOR.--TO THE EXTENT OF THE  AMOUNT  RECEIV-
ABLE  BY  THE  EXECUTOR  AS  INSURANCE UNDER POLICIES ON THE LIFE OF THE
DECEDENT.
  (2) RECEIVABLE BY OTHER BENEFICIARIES.--TO THE EXTENT  OF  THE  AMOUNT
RECEIVABLE BY ALL OTHER BENEFICIARIES AS INSURANCE UNDER POLICIES ON THE
LIFE OF THE DECEDENT WITH RESPECT TO WHICH THE DECEDENT POSSESSED AT HIS
DEATH  ANY OF THE INCIDENTS OF OWNERSHIP, EXERCISABLE EITHER ALONE OR IN
CONJUNCTION WITH  ANY  OTHER  PERSON.  FOR  PURPOSES  OF  THE  PRECEDING
SENTENCE,  THE  TERM  "INCIDENT  OF  OWNERSHIP"  INCLUDES A REVERSIONARY
INTEREST (WHETHER ARISING BY THE EXPRESS TERMS OF THE  POLICY  OR  OTHER
INSTRUMENT  OR BY OPERATION OF LAW) ONLY IF THE VALUE OF SUCH REVERSION-
ARY INTEREST EXCEEDED 5 PERCENT OF THE VALUE OF THE  POLICY  IMMEDIATELY
BEFORE  THE  DEATH  OF THE DECEDENT. AS USED IN THIS PARAGRAPH, THE TERM
"REVERSIONARY INTEREST" INCLUDES A POSSIBILITY THAT THE POLICY,  OR  THE
PROCEEDS OF THE POLICY, MAY RETURN TO THE DECEDENT OR HIS ESTATE, OR MAY
BE SUBJECT TO A POWER OF DISPOSITION BY HIM. THE VALUE OF A REVERSIONARY
INTEREST  AT ANY TIME SHALL BE DETERMINED (WITHOUT REGARD TO THE FACT OF
THE DECEDENT'S DEATH) BY USUAL METHODS OF VALUATION, INCLUDING  THE  USE
OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, PURSUANT TO REGULATIONS
PRESCRIBED  BY  THE SECRETARY. IN DETERMINING THE VALUE OF A POSSIBILITY
THAT THE POLICY OR PROCEEDS THEREOF MAY BE SUBJECT TO A POWER OF  DISPO-
SITION BY THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A

S. 6359--C                         242

POSSIBILITY  THAT  SUCH POLICY OR PROCEEDS MAY RETURN TO THE DECEDENT OR
HIS ESTATE.
  S  2043. TRANSFERS FOR INSUFFICIENT CONSIDERATION. (A) IN GENERAL.--IF
ANY ONE OF THE TRANSFERS, TRUSTS, INTERESTS, RIGHTS, OR  POWERS  ENUMER-
ATED AND DESCRIBED IN SECTIONS 2035 TO 2038, INCLUSIVE, AND SECTION 2041
IS  MADE,  CREATED,  EXERCISED,  OR  RELINQUISHED FOR A CONSIDERATION IN
MONEY OR MONEY'S WORTH, BUT IS NOT A BONA FIDE SALE FOR AN ADEQUATE  AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH, THERE SHALL BE INCLUDED IN
THE GROSS ESTATE ONLY THE EXCESS OF THE FAIR MARKET VALUE AT THE TIME OF
DEATH OF THE PROPERTY OTHERWISE TO BE INCLUDED ON ACCOUNT OF SUCH TRANS-
ACTION,  OVER  THE  VALUE  OF THE CONSIDERATION RECEIVED THEREFOR BY THE
DECEDENT.
  (B) MARITAL RIGHTS NOT TREATED AS CONSIDERATION.--
  (1) IN GENERAL.--FOR PURPOSES OF THIS  CHAPTER,  A  RELINQUISHMENT  OR
PROMISED  RELINQUISHMENT  OF  DOWER OR CURTESY, OR OF A STATUTORY ESTATE
CREATED IN LIEU OF DOWER OR CURTESY, OR OF OTHER MARITAL RIGHTS  IN  THE
DECEDENT'S  PROPERTY  OR ESTATE, SHALL NOT BE CONSIDERED TO ANY EXTENT A
CONSIDERATION "IN MONEY OR MONEY'S WORTH".
  (2) EXCEPTION.--FOR PURPOSES OF SECTION 2053  (RELATING  TO  EXPENSES,
INDEBTEDNESS,  AND  TAXES),  A  TRANSFER OF PROPERTY WHICH SATISFIES THE
REQUIREMENTS OF PARAGRAPH (1) OF SECTION 2516 (RELATING TO CERTAIN PROP-
ERTY SETTLEMENTS) SHALL BE CONSIDERED TO BE MADE  FOR  AN  ADEQUATE  AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH.
  S  2044.  CERTAIN  PROPERTY FOR WHICH MARITAL DEDUCTION WAS PREVIOUSLY
ALLOWED. (A) GENERAL RULE.--THE VALUE OF THE GROSS ESTATE SHALL  INCLUDE
THE  VALUE  OF  ANY  PROPERTY TO WHICH THIS SECTION APPLIES IN WHICH THE
DECEDENT HAD A QUALIFYING INCOME INTEREST FOR LIFE.
  (B) PROPERTY TO WHICH THIS SECTION APPLIES.--THIS SECTION  APPLIES  TO
ANY PROPERTY IF--
  (1) A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF SUCH PROP-
ERTY TO THE DECEDENT--
  (A) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
  (B) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF, AND
  (2)  SECTION  2519  (RELATING TO DISPOSITIONS OF CERTAIN LIFE ESTATES)
DID NOT APPLY WITH RESPECT TO A DISPOSITION BY THE DECEDENT OF  PART  OR
ALL OF SUCH PROPERTY.
  (C)  PROPERTY TREATED AS HAVING PASSED FROM DECEDENT.--FOR PURPOSES OF
THIS CHAPTER AND CHAPTER 13, PROPERTY INCLUDIBLE IN THE GROSS ESTATE  OF
THE  DECEDENT  UNDER SUBSECTION (A) SHALL BE TREATED AS PROPERTY PASSING
FROM THE DECEDENT.
  S 2045. PRIOR INTERESTS. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED  BY
LAW,  SECTIONS  2034  TO  2042, INCLUSIVE, SHALL APPLY TO THE TRANSFERS,
TRUSTS,  ESTATES,  INTERESTS,  RIGHTS,  POWERS,  AND  RELINQUISHMENT  OF
POWERS,  AS  SEVERALLY  ENUMERATED AND DESCRIBED THEREIN, WHENEVER MADE,
CREATED, ARISING, EXISTING, EXERCISED, OR RELINQUISHED.
  S 2046. DISCLAIMERS. FOR PROVISIONS RELATING TO THE EFFECT OF A QUALI-
FIED DISCLAIMER FOR PURPOSES OF THIS CHAPTER, SEE SECTION 2518.
  S 2053. EXPENSES, INDEBTEDNESS,  AND  TAXES.  (A)  GENERAL  RULE.--FOR
PURPOSES  OF  THE  TAX IMPOSED BY SECTION 2001, THE VALUE OF THE TAXABLE
ESTATE SHALL BE DETERMINED BY DEDUCTING FROM  THE  VALUE  OF  THE  GROSS
ESTATE SUCH AMOUNTS--
  (1) FOR FUNERAL EXPENSES,
  (2) FOR ADMINISTRATION EXPENSES,
  (3) FOR CLAIMS AGAINST THE ESTATE, AND
  (4)  FOR UNPAID MORTGAGES ON, OR ANY INDEBTEDNESS IN RESPECT OF, PROP-
ERTY WHERE THE VALUE OF THE DECEDENT'S INTEREST THEREIN, UNDIMINISHED BY

S. 6359--C                         243

SUCH MORTGAGE OR INDEBTEDNESS, IS INCLUDED IN THE  VALUE  OF  THE  GROSS
ESTATE,
  AS  ARE  ALLOWABLE  BY THE LAWS OF THE JURISDICTION, WHETHER WITHIN OR
WITHOUT THE UNITED STATES, UNDER WHICH THE ESTATE IS BEING ADMINISTERED.
  (B) OTHER ADMINISTRATION  EXPENSES.--SUBJECT  TO  THE  LIMITATIONS  IN
PARAGRAPH  (1) OF SUBSECTION (C), THERE SHALL BE DEDUCTED IN DETERMINING
THE TAXABLE ESTATE AMOUNTS REPRESENTING EXPENSES INCURRED IN ADMINISTER-
ING PROPERTY NOT SUBJECT TO CLAIMS WHICH IS INCLUDED IN THE GROSS ESTATE
TO THE SAME EXTENT SUCH AMOUNTS WOULD BE ALLOWABLE AS A DEDUCTION  UNDER
SUBSECTION (A) IF SUCH PROPERTY WERE SUBJECT TO CLAIMS, AND SUCH AMOUNTS
ARE  PAID  BEFORE THE EXPIRATION OF THE PERIOD OF LIMITATION FOR ASSESS-
MENT PROVIDED IN SECTION 6501.
  (C) LIMITATIONS.--
  (1) LIMITATIONS APPLICABLE TO SUBSECTIONS (A) AND (B).--
  (A) CONSIDERATION FOR CLAIMS.--THE DEDUCTION ALLOWED BY  THIS  SECTION
IN  THE  CASE  OF  CLAIMS  AGAINST  THE ESTATE, UNPAID MORTGAGES, OR ANY
INDEBTEDNESS SHALL, WHEN FOUNDED ON A PROMISE OR AGREEMENT,  BE  LIMITED
TO  THE  EXTENT  THAT THEY WERE CONTRACTED BONA FIDE AND FOR AN ADEQUATE
AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH;  EXCEPT  THAT  IN  ANY
CASE IN WHICH ANY SUCH CLAIM IS FOUNDED ON A PROMISE OR AGREEMENT OF THE
DECEDENT  TO  MAKE A CONTRIBUTION OR GIFT TO OR FOR THE USE OF ANY DONEE
DESCRIBED IN SECTION  2055  FOR  THE  PURPOSES  SPECIFIED  THEREIN,  THE
DEDUCTION  FOR SUCH CLAIMS SHALL NOT BE SO LIMITED, BUT SHALL BE LIMITED
TO THE EXTENT THAT IT WOULD BE ALLOWABLE AS A  DEDUCTION  UNDER  SECTION
2055 IF SUCH PROMISE OR AGREEMENT CONSTITUTED A BEQUEST.
  (B)  CERTAIN  TAXES.--ANY  INCOME  TAXES  ON INCOME RECEIVED AFTER THE
DEATH OF THE DECEDENT, OR PROPERTY TAXES NOT ACCRUED BEFORE  HIS  DEATH,
OR  ANY  ESTATE,  SUCCESSION, LEGACY, OR INHERITANCE TAXES, SHALL NOT BE
DEDUCTIBLE UNDER THIS SECTION.
  (C) CERTAIN CLAIMS BY REMAINDERMEN.--NO  DEDUCTION  SHALL  BE  ALLOWED
UNDER  THIS  SECTION  FOR  A  CLAIM AGAINST THE ESTATE BY A REMAINDERMAN
RELATING TO ANY PROPERTY DESCRIBED IN SECTION 2044.
  (D) SECTION 6166 INTEREST.--NO DEDUCTION SHALL BE ALLOWED  UNDER  THIS
SECTION  FOR  ANY  INTEREST  PAYABLE  UNDER  SECTION  6601 ON ANY UNPAID
PORTION OF THE TAX IMPOSED BY SECTION 2001 FOR THE PERIOD  DURING  WHICH
AN  EXTENSION OF TIME FOR PAYMENT OF SUCH TAX IS IN EFFECT UNDER SECTION
6166.
  (2) LIMITATIONS APPLICABLE ONLY TO SUBSECTION (A).--IN THE CASE OF THE
AMOUNTS DESCRIBED IN SUBSECTION  (A),  THERE  SHALL  BE  DISALLOWED  THE
AMOUNT  BY  WHICH  THE DEDUCTIONS SPECIFIED THEREIN EXCEED THE VALUE, AT
THE TIME OF THE DECEDENT'S DEATH, OF PROPERTY SUBJECT TO CLAIMS,  EXCEPT
TO  THE  EXTENT  THAT  SUCH DEDUCTIONS REPRESENT AMOUNTS PAID BEFORE THE
DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN. FOR PURPOSES OF
THIS SECTION, THE TERM  "PROPERTY  SUBJECT  TO  CLAIMS"  MEANS  PROPERTY
INCLUDIBLE  IN  THE GROSS ESTATE OF THE DECEDENT WHICH, OR THE AVAILS OF
WHICH, WOULD UNDER THE APPLICABLE LAW, BEAR THE BURDEN OF THE PAYMENT OF
SUCH DEDUCTIONS IN THE FINAL ADJUSTMENT AND SETTLEMENT  OF  THE  ESTATE,
EXCEPT  THAT THE VALUE OF THE PROPERTY SHALL BE REDUCED BY THE AMOUNT OF
THE DEDUCTION UNDER SECTION 2054 ATTRIBUTABLE TO SUCH PROPERTY.
  (D) CERTAIN FOREIGN DEATH TAXES.--
  (1)  IN  GENERAL.--NOTWITHSTANDING  THE   PROVISIONS   OF   SUBSECTION
(C)(1)(B), FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE VALUE OF
THE  TAXABLE  ESTATE MAY BE DETERMINED, IF THE EXECUTOR SO ELECTS BEFORE
THE EXPIRATION OF THE PERIOD OF LIMITATION FOR  ASSESSMENT  PROVIDED  IN
SECTION 6501, BY DEDUCTING FROM THE VALUE OF THE GROSS ESTATE THE AMOUNT
(AS  DETERMINED  IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE SECRE-

S. 6359--C                         244

TARY) OF ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX  IMPOSED  BY
AND  ACTUALLY  PAID  TO  ANY FOREIGN COUNTRY, IN RESPECT OF ANY PROPERTY
SITUATED WITHIN SUCH FOREIGN COUNTRY AND INCLUDED IN THE GROSS ESTATE OF
A CITIZEN OR RESIDENT OF THE UNITED STATES, UPON A TRANSFER BY THE DECE-
DENT  FOR  PUBLIC,  CHARITABLE,  OR  RELIGIOUS USES DESCRIBED IN SECTION
2055. THE DETERMINATION UNDER THIS PARAGRAPH OF THE COUNTRY WITHIN WHICH
PROPERTY IS SITUATED SHALL BE MADE IN ACCORDANCE WITH THE RULES APPLICA-
BLE UNDER SUBCHAPTER B (SEC. 2101 AND FOLLOWING) IN DETERMINING  WHETHER
PROPERTY  IS SITUATED WITHIN OR WITHOUT THE UNITED STATES.  ANY ELECTION
UNDER THIS PARAGRAPH SHALL BE EXERCISED IN ACCORDANCE  WITH  REGULATIONS
PRESCRIBED BY THE SECRETARY.
  (2)  CONDITION  FOR  ALLOWANCE  OF  DEDUCTION.--NO  DEDUCTION SHALL BE
ALLOWED UNDER PARAGRAPH (1) FOR A FOREIGN DEATH  TAX  SPECIFIED  THEREIN
UNLESS  THE  DECREASE  IN  THE TAX IMPOSED BY SECTION 2001 WHICH RESULTS
FROM THE DEDUCTION PROVIDED IN PARAGRAPH (1) WILL INURE SOLELY  FOR  THE
BENEFIT OF THE PUBLIC, CHARITABLE, OR RELIGIOUS TRANSFEREES DESCRIBED IN
SECTION  2055  OR SECTION 2106(A)(2).  IN ANY CASE WHERE THE TAX IMPOSED
BY SECTION 2001 IS EQUITABLY APPORTIONED AMONG ALL  THE  TRANSFEREES  OF
PROPERTY  INCLUDED  IN  THE  GROSS  ESTATE, INCLUDING THOSE DESCRIBED IN
SECTIONS 2055 AND 2106(A)(2) (TAKING INTO ACCOUNT ANY EXEMPTIONS,  CRED-
ITS,  OR  DEDUCTIONS  ALLOWED  BY  THIS  CHAPTER),  IN  DETERMINING SUCH
DECREASE, THERE SHALL BE DISREGARDED ANY DECREASE IN THE FEDERAL  ESTATE
TAX  WHICH  ANY  TRANSFEREES OTHER THAN THOSE DESCRIBED IN SECTIONS 2055
AND 2106(A)(2) ARE REQUIRED TO PAY.
  (3) EFFECT ON CREDIT FOR FOREIGN DEATH TAXES OF DEDUCTION  UNDER  THIS
SUBSECTION.--
  (A)  ELECTION.--AN  ELECTION  UNDER  THIS SUBSECTION SHALL BE DEEMED A
WAIVER OF THE RIGHT TO CLAIM A CREDIT, AGAINST THE FEDERAL  ESTATE  TAX,
UNDER  A  DEATH  TAX  CONVENTION WITH ANY FOREIGN COUNTRY FOR ANY TAX OR
PORTION THEREOF IN RESPECT OF WHICH A  DEDUCTION  IS  TAKEN  UNDER  THIS
SUBSECTION.
  (B) CROSS REFERENCE.--
  SEE  SECTION  2011(D)  FOR  THE EFFECT OF A DEDUCTION TAKEN UNDER THIS
PARAGRAPH ON THE CREDIT FOR FOREIGN DEATH TAXES.
  (E) MARITAL RIGHTS.--
  FOR PROVISIONS TREATING CERTAIN RELINQUISHMENTS OF MARITAL  RIGHTS  AS
CONSIDERATION IN MONEY OR MONEY'S WORTH, SEE SECTION 2043(B)(2).
  S  2054.  LOSSES. FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE
VALUE OF THE TAXABLE ESTATE SHALL BE DETERMINED BY  DEDUCTING  FROM  THE
VALUE  OF  THE  GROSS  ESTATE  LOSSES  INCURRED DURING THE SETTLEMENT OF
ESTATES ARISING FROM FIRES, STORMS, SHIPWRECKS, OR OTHER CASUALTIES,  OR
FROM  THEFT,  WHEN  SUCH  LOSSES ARE NOT COMPENSATED FOR BY INSURANCE OR
OTHERWISE.
  S 2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
  (A) IN GENERAL.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001,  THE
VALUE  OF  THE  TAXABLE ESTATE SHALL BE DETERMINED BY DEDUCTING FROM THE
VALUE OF THE GROSS ESTATE THE AMOUNT OF ALL BEQUESTS, LEGACIES, DEVISES,
OR TRANSFERS--
  (1) TO OR FOR THE USE OF THE UNITED STATES, ANY STATE,  ANY  POLITICAL
SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC
PURPOSES;
  (2) TO OR FOR THE USE OF ANY CORPORATION ORGANIZED AND OPERATED EXCLU-
SIVELY  FOR  RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR EDUCATIONAL
PURPOSES, INCLUDING THE ENCOURAGEMENT OF ART, OR TO FOSTER  NATIONAL  OR
INTERNATIONAL  AMATEUR  SPORTS  COMPETITION  (BUT ONLY IF NO PART OF ITS
ACTIVITIES INVOLVE THE PROVISION OF ATHLETIC FACILITIES  OR  EQUIPMENT),

S. 6359--C                         245

AND THE PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO PART OF THE NET
EARNINGS  OF  WHICH  INURES TO THE BENEFIT OF ANY PRIVATE STOCKHOLDER OR
INDIVIDUAL, WHICH IS NOT DISQUALIFIED FOR TAX  EXEMPTION  UNDER  SECTION
501(C)(3)  BY  REASON  OF ATTEMPTING TO INFLUENCE LEGISLATION, AND WHICH
DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUDING  THE  PUBLISHING  OR
DISTRIBUTING  OF STATEMENTS), ANY POLITICAL CAMPAIGN ON BEHALF OF (OR IN
OPPOSITION TO) ANY CANDIDATE FOR PUBLIC OFFICE;
  (3) TO A TRUSTEE OR TRUSTEES, OR A FRATERNAL SOCIETY, ORDER, OR  ASSO-
CIATION OPERATING UNDER THE LODGE SYSTEM, BUT ONLY IF SUCH CONTRIBUTIONS
OR  GIFTS ARE TO BE USED BY SUCH TRUSTEE OR TRUSTEES, OR BY SUCH FRATER-
NAL SOCIETY, ORDER, OR ASSOCIATION, EXCLUSIVELY FOR RELIGIOUS,  CHARITA-
BLE,   SCIENTIFIC,   LITERARY,  OR  EDUCATIONAL  PURPOSES,  OR  FOR  THE
PREVENTION OF CRUELTY TO CHILDREN  OR  ANIMALS,  SUCH  TRUST,  FRATERNAL
SOCIETY,  ORDER,  OR  ASSOCIATION  WOULD  NOT  BE  DISQUALIFIED  FOR TAX
EXEMPTION UNDER SECTION 501(C)(3) BY REASON OF ATTEMPTING  TO  INFLUENCE
LEGISLATION,  AND  SUCH  TRUSTEE OR TRUSTEES, OR SUCH FRATERNAL SOCIETY,
ORDER, OR ASSOCIATION, DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
CAMPAIGN  ON  BEHALF  OF  (OR IN OPPOSITION TO) ANY CANDIDATE FOR PUBLIC
OFFICE;
  (4) TO OR FOR THE USE OF ANY VETERANS'  ORGANIZATION  INCORPORATED  BY
ACT  OF  CONGRESS,  OR OF ITS DEPARTMENTS OR LOCAL CHAPTERS OR POSTS, NO
PART OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF  ANY  PRIVATE
SHAREHOLDER OR INDIVIDUAL; OR
  (5)  TO AN EMPLOYEE STOCK OWNERSHIP PLAN IF SUCH TRANSFER QUALIFIES AS
A QUALIFIED GRATUITOUS TRANSFER OF QUALIFIED EMPLOYER SECURITIES  WITHIN
THE MEANING OF SECTION 664(G).
  FOR  PURPOSES  OF THIS SUBSECTION, THE COMPLETE TERMINATION BEFORE THE
DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN OF  A  POWER  TO
CONSUME,  INVADE, OR APPROPRIATE PROPERTY FOR THE BENEFIT OF AN INDIVID-
UAL BEFORE SUCH POWER HAS BEEN EXERCISED BY REASON OF THE DEATH OF  SUCH
INDIVIDUAL  OR FOR ANY OTHER REASON SHALL BE CONSIDERED AND DEEMED TO BE
A QUALIFIED DISCLAIMER WITH THE SAME FULL FORCE AND EFFECT AS THOUGH  HE
HAD  FILED  SUCH  QUALIFIED  DISCLAIMER.   RULES SIMILAR TO THE RULES OF
SECTION 501(J) SHALL APPLY FOR PURPOSES OF PARAGRAPH (2).
  (B) POWERS OF  APPOINTMENT.--PROPERTY  INCLUDIBLE  IN  THE  DECEDENT'S
GROSS  ESTATE  UNDER  SECTION  2041  (RELATING TO POWERS OF APPOINTMENT)
RECEIVED BY A DONEE DESCRIBED IN THIS SECTION  SHALL,  FOR  PURPOSES  OF
THIS SECTION, BE CONSIDERED A BEQUEST OF SUCH DECEDENT.
  (C)  DEATH  TAXES  PAYABLE  OUT  OF  BEQUESTS.--IF  THE TAX IMPOSED BY
SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR  INHERITANCE  TAXES,
ARE,  EITHER  BY  THE  TERMS OF THE WILL, BY THE LAW OF THE JURISDICTION
UNDER WHICH THE ESTATE IS ADMINISTERED, OR BY THE LAW OF  THE  JURISDIC-
TION IMPOSING THE PARTICULAR TAX, PAYABLE IN WHOLE OR IN PART OUT OF THE
BEQUESTS,  LEGACIES, OR DEVISES OTHERWISE DEDUCTIBLE UNDER THIS SECTION,
THEN THE AMOUNT DEDUCTIBLE UNDER THIS SECTION SHALL  BE  THE  AMOUNT  OF
SUCH BEQUESTS, LEGACIES, OR DEVISES REDUCED BY THE AMOUNT OF SUCH TAXES.
  (D)  LIMITATION  ON DEDUCTION.--THE AMOUNT OF THE DEDUCTION UNDER THIS
SECTION FOR ANY TRANSFER SHALL NOT EXCEED THE VALUE OF  THE  TRANSFERRED
PROPERTY REQUIRED TO BE INCLUDED IN THE GROSS ESTATE.
  (E) DISALLOWANCE OF DEDUCTIONS IN CERTAIN CASES.--
  (1) NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR A TRANSFER TO
OR  FOR  THE USE OF AN ORGANIZATION OR TRUST DESCRIBED IN SECTION 508(D)
OR 4948(C)(4) SUBJECT TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.
  (2) WHERE AN INTEREST IN PROPERTY (OTHER THAN AN INTEREST DESCRIBED IN
SECTION 170(F)(3)(B)) PASSES OR  HAS  PASSED  FROM  THE  DECEDENT  TO  A

S. 6359--C                         246

PERSON,  OR  FOR  A  USE,  DESCRIBED  IN SUBSECTION (A), AND AN INTEREST
(OTHER THAN AN INTEREST WHICH IS EXTINGUISHED UPON THE DECEDENT'S DEATH)
IN THE SAME PROPERTY PASSES OR HAS PASSED (FOR LESS THAN AN ADEQUATE AND
FULL  CONSIDERATION  IN  MONEY  OR MONEY'S WORTH) FROM THE DECEDENT TO A
PERSON, OR FOR A USE, NOT DESCRIBED  IN  SUBSECTION  (A),  NO  DEDUCTION
SHALL BE ALLOWED UNDER THIS SECTION FOR THE INTEREST WHICH PASSES OR HAS
PASSED  TO  THE  PERSON,  OR  FOR  THE  USE, DESCRIBED IN SUBSECTION (A)
UNLESS--
  (A) IN THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN  A  TRUST
WHICH  IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE REMAINDER
UNITRUST (DESCRIBED IN SECTION 664) OR A POOLED INCOME  FUND  (DESCRIBED
IN SECTION 642(C)(5)), OR
  (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
A  GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF THE
FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
  (3) REFORMATIONS TO COMPLY WITH PARAGRAPH (2).--
  (A) IN GENERAL.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A)  IN
RESPECT OF ANY QUALIFIED REFORMATION.
  (B)  QUALIFIED  REFORMATION.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
"QUALIFIED REFORMATION" MEANS A CHANGE  OF  A  GOVERNING  INSTRUMENT  BY
REFORMATION,  AMENDMENT,  CONSTRUCTION,  OR  OTHERWISE  WHICH  CHANGES A
REFORMABLE INTEREST INTO A QUALIFIED INTEREST BUT ONLY IF--
  (I) ANY DIFFERENCE BETWEEN--
  (I) THE ACTUARIAL VALUE (DETERMINED AS OF THE DATE OF  THE  DECEDENT'S
DEATH) OF THE QUALIFIED INTEREST, AND
  (II)  THE  ACTUARIAL VALUE (AS SO DETERMINED) OF THE REFORMABLE INTER-
EST,
  DOES NOT EXCEED 5 PERCENT OF THE ACTUARIAL VALUE (AS SO DETERMINED) OF
THE REFORMABLE INTEREST,
  (II) IN THE CASE OF--
  (I) A CHARITABLE REMAINDER INTEREST, THE NONREMAINDER INTEREST (BEFORE
AND AFTER THE QUALIFIED REFORMATION) TERMINATED AT THE SAME TIME, OR
  (II) ANY OTHER INTEREST, THE REFORMABLE  INTEREST  AND  THE  QUALIFIED
INTEREST ARE FOR THE SAME PERIOD, AND
  (III) SUCH CHANGE IS EFFECTIVE AS OF THE DATE OF THE DECEDENT'S DEATH.
  A  NONREMAINDER  INTEREST  (BEFORE REFORMATION) FOR A TERM OF YEARS IN
EXCESS OF 20 YEARS SHALL BE  TREATED  AS  SATISFYING  SUBCLAUSE  (I)  OF
CLAUSE  (II)  IF  SUCH  INTEREST (AFTER REFORMATION) IS FOR A TERM OF 20
YEARS.
  (C) REFORMABLE INTEREST.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) IN GENERAL.--THE TERM "REFORMABLE INTEREST" MEANS ANY INTEREST FOR
WHICH A DEDUCTION WOULD BE ALLOWABLE UNDER SUBSECTION (A) AT THE TIME OF
THE DECEDENT'S DEATH BUT FOR PARAGRAPH (2).
  (II) BENEFICIARY'S  INTEREST  MUST  BE  FIXED.--THE  TERM  "REFORMABLE
INTEREST"  DOES  NOT  INCLUDE  ANY INTEREST UNLESS, BEFORE THE REMAINDER
VESTS IN POSSESSION, ALL PAYMENTS TO PERSONS OTHER THAN AN  ORGANIZATION
DESCRIBED  IN  SUBSECTION  (A)  ARE EXPRESSED EITHER IN SPECIFIED DOLLAR
AMOUNTS OR A FIXED PERCENTAGE OF THE FAIR MARKET VALUE OF THE  PROPERTY.
FOR PURPOSES OF DETERMINING WHETHER ALL SUCH PAYMENTS ARE EXPRESSED AS A
FIXED  PERCENTAGE  OF  THE  FAIR  MARKET  VALUE OF THE PROPERTY, SECTION
664(D)(3) SHALL BE TAKEN INTO ACCOUNT.
  (III) SPECIAL RULE WHERE TIMELY COMMENCEMENT  OF  REFORMATION.--CLAUSE
(II)  SHALL  NOT  APPLY  TO  ANY  INTEREST  IF  A JUDICIAL PROCEEDING IS
COMMENCED TO CHANGE SUCH INTEREST INTO A QUALIFIED  INTEREST  NOT  LATER
THAN THE 90TH DAY AFTER--
  (I) IF AN ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE

S. 6359--C                         247

(INCLUDING EXTENSIONS) FOR FILING SUCH RETURN, OR
  (II)  IF  NO  ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE
(INCLUDING EXTENSIONS) FOR FILING THE INCOME  TAX  RETURN  FOR  THE  1ST
TAXABLE  YEAR  FOR  WHICH  SUCH  A RETURN IS REQUIRED TO BE FILED BY THE
TRUST.
  (IV) SPECIAL RULE FOR WILL EXECUTED BEFORE JANUARY 1,  1979,  ETC.--IN
THE CASE OF ANY INTEREST PASSING UNDER A WILL EXECUTED BEFORE JANUARY 1,
1979,  OR  UNDER A TRUST CREATED BEFORE SUCH DATE, CLAUSE (II) SHALL NOT
APPLY.
  (D) QUALIFIED INTEREST.--FOR PURPOSES  OF  THIS  PARAGRAPH,  THE  TERM
"QUALIFIED  INTEREST"  MEANS AN INTEREST FOR WHICH A DEDUCTION IS ALLOW-
ABLE UNDER SUBSECTION (A).
  (E) LIMITATION.--THE DEDUCTION REFERRED TO IN SUBPARAGRAPH  (A)  SHALL
NOT  EXCEED  THE AMOUNT OF THE DEDUCTION WHICH WOULD HAVE BEEN ALLOWABLE
FOR THE REFORMABLE INTEREST BUT FOR PARAGRAPH (2).
  (F) SPECIAL RULE WHERE INCOME BENEFICIARY DIES.--IF (BY REASON OF  THE
DEATH OF ANY INDIVIDUAL, OR BY TERMINATION OR DISTRIBUTION OF A TRUST IN
ACCORDANCE  WITH  THE TERMS OF THE TRUST INSTRUMENT) BY THE DUE DATE FOR
FILING THE ESTATE TAX RETURN (INCLUDING ANY EXTENSION THEREOF) A REFORM-
ABLE INTEREST IS IN A WHOLLY CHARITABLE TRUST OR PASSES  DIRECTLY  TO  A
PERSON  OR  FOR  A USE DESCRIBED IN SUBSECTION (A), A DEDUCTION SHALL BE
ALLOWED FOR SUCH REFORMABLE INTEREST AS IF IT HAD MET  THE  REQUIREMENTS
OF  PARAGRAPH  (2)  ON THE DATE OF THE DECEDENT'S DEATH. FOR PURPOSES OF
THE PRECEDING SENTENCE, THE TERM "WHOLLY CHARITABLE TRUST" MEANS A CHAR-
ITABLE TRUST  WHICH,  UPON  THE  ALLOWANCE  OF  A  DEDUCTION,  WOULD  BE
DESCRIBED IN SECTION 4947(A)(1).
  (G)  STATUTE  OF LIMITATIONS.--THE PERIOD FOR ASSESSING ANY DEFICIENCY
OF ANY TAX ATTRIBUTABLE TO THE APPLICATION OF THIS PARAGRAPH  SHALL  NOT
EXPIRE  BEFORE  THE DATE 1 YEAR AFTER THE DATE ON WHICH THE SECRETARY IS
NOTIFIED THAT SUCH REFORMATION (OR OTHER PROCEEDING PURSUANT TO SUBPARA-
GRAPH (J)1 HAS OCCURRED.
  (H) REGULATIONS.--THE SECRETARY SHALL PRESCRIBE  SUCH  REGULATIONS  AS
MAY  BE NECESSARY TO CARRY OUT THE PURPOSES OF THIS PARAGRAPH, INCLUDING
REGULATIONS  PROVIDING  SUCH  ADJUSTMENTS  IN  THE  APPLICATION  OF  THE
PROVISIONS OF SECTION 508 (RELATING TO SPECIAL RULES RELATING TO SECTION
501(C)(3)  ORGANIZATIONS),  SUBCHAPTER  J  (RELATING TO ESTATES, TRUSTS,
BENEFICIARIES, AND DECEDENTS), AND CHAPTER 42 (RELATING TO PRIVATE FOUN-
DATIONS) AS MAY BE NECESSARY BY REASON OF THE QUALIFIED REFORMATION.
  (I) REFORMATIONS PERMITTED IN CASE OF REMAINDER INTERESTS IN RESIDENCE
OR FARM, POOLED INCOME FUNDS, ETC.--THE SECRETARY SHALL PRESCRIBE  REGU-
LATIONS  (CONSISTENT  WITH  THE PROVISIONS OF THIS PARAGRAPH) PERMITTING
REFORMATIONS IN THE CASE OF ANY FAILURE--
  (I) TO MEET THE REQUIREMENTS  OF  SECTION  170(F)(3)(B)  (RELATING  TO
REMAINDER INTERESTS IN PERSONAL RESIDENCE OR FARM, ETC.), OR
  (II) TO MEET THE REQUIREMENTS OF SECTION 642(C)(5).
  (J)  VOID  OR REFORMED TRUST IN CASES OF INSUFFICIENT REMAINDER INTER-
ESTS.--IN THE CASE OF A TRUST THAT WOULD QUALIFY (OR COULD  BE  REFORMED
TO  QUALIFY PURSUANT TO SUBPARAGRAPH (B)) BUT FOR FAILURE TO SATISFY THE
REQUIREMENT OF PARAGRAPH (1)(D) OR (2)(D) OF SECTION 664(D), SUCH  TRUST
MAY BE--
  (I) DECLARED NULL AND VOID AB INITIO, OR
  (II)  CHANGED  BY  REFORMATION,  AMENDMENT,  OR OTHERWISE TO MEET SUCH
REQUIREMENT BY REDUCING THE PAYOUT RATE OR THE DURATION (OR BOTH) OF ANY
NONCHARITABLE BENEFICIARY'S INTEREST TO THE EXTENT NECESSARY TO  SATISFY
SUCH REQUIREMENT,

S. 6359--C                         248

  PURSUANT  TO A PROCEEDING THAT IS COMMENCED WITHIN THE PERIOD REQUIRED
IN SUBPARAGRAPH  (C)(III).  IN  A  CASE  DESCRIBED  IN  CLAUSE  (I),  NO
DEDUCTION  SHALL  BE  ALLOWED  UNDER  THIS TITLE FOR ANY TRANSFER TO THE
TRUST AND ANY TRANSACTIONS ENTERED INTO BY  THE  TRUST  PRIOR  TO  BEING
DECLARED VOID SHALL BE TREATED AS ENTERED INTO BY THE TRANSFEROR.
  (4)  WORKS  OF ART AND THEIR COPYRIGHTS TREATED AS SEPARATE PROPERTIES
IN CERTAIN CASES.--
  (A) IN GENERAL.--IN THE CASE OF A QUALIFIED CONTRIBUTION OF A WORK  OF
ART,  THE  WORK  OF  ART  AND THE COPYRIGHT ON SUCH WORK OF ART SHALL BE
TREATED AS SEPARATE PROPERTIES FOR PURPOSES OF PARAGRAPH (2).
  (B) WORK OF ART DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,  THE  TERM
"WORK OF ART" MEANS ANY TANGIBLE PERSONAL PROPERTY WITH RESPECT TO WHICH
THERE IS A COPYRIGHT UNDER FEDERAL LAW.
  (C)  QUALIFIED  CONTRIBUTION DEFINED.--FOR PURPOSES OF THIS PARAGRAPH,
THE TERM "QUALIFIED CONTRIBUTION" MEANS ANY TRANSFER OF  PROPERTY  TO  A
QUALIFIED ORGANIZATION IF THE USE OF THE PROPERTY BY THE ORGANIZATION IS
RELATED  TO  THE  PURPOSE  OR  FUNCTION  CONSTITUTING  THE BASIS FOR ITS
EXEMPTION UNDER SECTION 501.
  (D) QUALIFIED ORGANIZATION DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,
THE  TERM  "QUALIFIED  ORGANIZATION" MEANS ANY ORGANIZATION DESCRIBED IN
SECTION 501(C)(3) OTHER THAN A PRIVATE FOUNDATION (AS DEFINED IN SECTION
509).  FOR PURPOSES OF THE PRECEDING SENTENCE, A PRIVATE OPERATING FOUN-
DATION (AS DEFINED IN SECTION 4942(J)(3)) SHALL  NOT  BE  TREATED  AS  A
PRIVATE FOUNDATION.
  (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.--A  DEDUCTION OTHERWISE
ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF--
  (A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT--
  (I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR
  (II) A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN  SECTION
4943(F)(5)(A))  WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT-
ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
  (B) THE TAXPAYER  OBTAINS  A  CONTEMPORANEOUS  WRITTEN  ACKNOWLEDGMENT
(DETERMINED  UNDER  RULES  SIMILAR TO THE RULES OF SECTION 170(F)(8)(C))
FROM THE SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH  DONOR  ADVISED
FUND  THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE ASSETS
CONTRIBUTED.
  (F) SPECIAL RULE  FOR  IRREVOCABLE  TRANSFERS  OF  EASEMENTS  IN  REAL
PROPERTY.--A  DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT
OF ANY TRANSFER OF A QUALIFIED REAL PROPERTY  INTEREST  (AS  DEFINED  IN
SECTION  170(H)(2)(C))  WHICH  MEETS  THE REQUIREMENTS OF SECTION 170(H)
(WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
  (G) CROSS REFERENCES.--
  (1) FOR OPTION AS TO TIME FOR VALUATION FOR PURPOSE OF DEDUCTION UNDER
THIS SECTION, SEE SECTION 2032.
  (2) FOR TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD  CARE,  SEE
SECTION 501(K).
  (3)  FOR  EXEMPTION  OF  GIFTS  AND  BEQUESTS TO OR FOR THE BENEFIT OF
LIBRARY OF CONGRESS, SEE SECTION 5 OF THE  ACT  OF  MARCH  3,  1925,  AS
AMENDED (2 U.S.C. 161).
  (4)  FOR  TREATMENT OF GIFTS AND BEQUESTS FOR THE BENEFIT OF THE NAVAL
HISTORICAL CENTER AS GIFTS OR BEQUESTS TO OR FOR THE USE OF  THE  UNITED
STATES, SEE SECTION 7222 OF TITLE 10, UNITED STATES CODE.
  (5)  FOR  TREATMENT  OF  GIFTS  AND  BEQUESTS TO OR FOR THE BENEFIT OF
NATIONAL PARK FOUNDATION AS GIFTS OR BEQUESTS TO OR FOR THE USE  OF  THE

S. 6359--C                         249

UNITED  STATES, SEE SECTION 8 OF THE ACT OF DECEMBER 18, 1967 (16 U.S.C.
191).
  (6)  FOR  TREATMENT  OF  GIFTS,  DEVISES,  OR BEQUESTS ACCEPTED BY THE
SECRETARY OF STATE, THE  DIRECTOR  OF  THE  INTERNATIONAL  COMMUNICATION
AGENCY,  OR  THE DIRECTOR OF THE UNITED STATES INTERNATIONAL DEVELOPMENT
COOPERATION AGENCY AS GIFTS, DEVISES, OR BEQUESTS TO OR FOR THE  USE  OF
THE UNITED STATES, SEE SECTION 25 OF THE STATE DEPARTMENT BASIC AUTHORI-
TIES ACT OF 1956.
  (7) FOR TREATMENT OF GIFTS OR BEQUESTS OF MONEY ACCEPTED BY THE ATTOR-
NEY  GENERAL  FOR CREDIT TO "COMMISSARY FUNDS, FEDERAL PRISONS" AS GIFTS
OR BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE SECTION 4043  OF
TITLE 18, UNITED STATES CODE.
  (8)  FOR  PAYMENT  OF TAX ON GIFTS AND BEQUESTS OF UNITED STATES OBLI-
GATIONS TO THE UNITED STATES, SEE SECTION 3113(E) OF  TITLE  31,  UNITED
STATES CODE.
  (9) FOR TREATMENT OF GIFTS AND BEQUESTS FOR BENEFIT OF THE NAVAL ACAD-
EMY  AS  GIFTS  OR  BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE
SECTION 6973 OF TITLE 10, UNITED STATES CODE.
  (10) FOR TREATMENT OF GIFTS AND BEQUESTS  FOR  BENEFIT  OF  THE  NAVAL
ACADEMY  MUSEUM  AS  GIFTS  OR  BEQUESTS TO OR FOR THE USE OF THE UNITED
STATES, SEE SECTION 6974 OF TITLE 10, UNITED STATES CODE.
  (11) FOR EXEMPTION OF GIFTS AND BEQUESTS RECEIVED BY NATIONAL ARCHIVES
TRUST FUND BOARD, SEE SECTION 2308 OF TITLE 44, UNITED STATES CODE.
  (12) FOR TREATMENT OF GIFTS AND BEQUESTS TO OR FOR THE USE  OF  INDIAN
TRIBAL GOVERNMENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
  S  2056. BEQUESTS, ETC., TO SURVIVING SPOUSE. (A) ALLOWANCE OF MARITAL
DEDUCTION.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001,  THE  VALUE
OF  THE  TAXABLE  ESTATE  SHALL, EXCEPT AS LIMITED BY SUBSECTION (B), BE
DETERMINED BY DEDUCTING FROM THE VALUE OF THE  GROSS  ESTATE  AN  AMOUNT
EQUAL  TO  THE  VALUE  OF  ANY  INTEREST IN PROPERTY WHICH PASSES OR HAS
PASSED FROM THE DECEDENT TO HIS SURVIVING SPOUSE, BUT ONLY TO THE EXTENT
THAT SUCH INTEREST IS INCLUDED IN DETERMINING THE  VALUE  OF  THE  GROSS
ESTATE.
  (B)  LIMITATION  IN THE CASE OF LIFE ESTATE OR OTHER TERMINABLE INTER-
EST.--
  (1) GENERAL RULE.--WHERE, ON THE LAPSE OF TIME, ON THE  OCCURRENCE  OF
AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF AN EVENT OR CONTINGENCY TO
OCCUR,  AN  INTEREST  PASSING  TO THE SURVIVING SPOUSE WILL TERMINATE OR
FAIL, NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION WITH  RESPECT  TO
SUCH INTEREST--
  (A)  IF  AN  INTEREST  IN SUCH PROPERTY PASSES OR HAS PASSED (FOR LESS
THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH)  FROM
THE  DECEDENT  TO  ANY  PERSON  OTHER THAN SUCH SURVIVING SPOUSE (OR THE
ESTATE OF SUCH SPOUSE); AND
  (B) IF BY REASON OF SUCH PASSING SUCH PERSON (OR HIS HEIRS OR ASSIGNS)
MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY AFTER SUCH TERMINATION OR
FAILURE OF THE INTEREST SO PASSING TO THE SURVIVING SPOUSE;
  AND NO DEDUCTION SHALL BE ALLOWED WITH RESPECT TO SUCH INTEREST  (EVEN
IF SUCH DEDUCTION IS NOT DISALLOWED UNDER SUBPARAGRAPHS (A) AND (B))--
  (C)  IF  SUCH  INTEREST  IS  TO  BE ACQUIRED FOR THE SURVIVING SPOUSE,
PURSUANT TO DIRECTIONS OF THE DECEDENT, BY HIS EXECUTOR OR BY THE  TRUS-
TEE OF A TRUST.
  FOR PURPOSES OF THIS PARAGRAPH, AN INTEREST SHALL NOT BE CONSIDERED AS
AN INTEREST WHICH WILL TERMINATE OR FAIL MERELY BECAUSE IT IS THE OWNER-
SHIP  OF  A BOND, NOTE, OR SIMILAR CONTRACTUAL OBLIGATION, THE DISCHARGE
OF WHICH WOULD NOT HAVE THE EFFECT OF AN ANNUITY FOR LIFE OR FOR A TERM.

S. 6359--C                         250

  (2) INTEREST IN UNIDENTIFIED ASSETS.--WHERE THE  ASSETS  (INCLUDED  IN
THE  DECEDENT'S GROSS ESTATE) OUT OF WHICH, OR THE PROCEEDS OF WHICH, AN
INTEREST PASSING TO THE SURVIVING SPOUSE  MAY  BE  SATISFIED  INCLUDE  A
PARTICULAR  ASSET  OR ASSETS WITH RESPECT TO WHICH NO DEDUCTION WOULD BE
ALLOWED IF SUCH ASSET OR ASSETS PASSED FROM THE DECEDENT TO SUCH SPOUSE,
THEN  THE  VALUE  OF  SUCH  INTEREST  PASSING  TO SUCH SPOUSE SHALL, FOR
PURPOSES OF SUBSECTION (A), BE REDUCED BY THE AGGREGATE  VALUE  OF  SUCH
PARTICULAR ASSETS.
  (3)   INTEREST   OF   SPOUSE   CONDITIONAL  ON  SURVIVAL  FOR  LIMITED
PERIOD.--FOR PURPOSES OF THIS SUBSECTION, AN  INTEREST  PASSING  TO  THE
SURVIVING  SPOUSE  SHALL  NOT  BE  CONSIDERED  AS AN INTEREST WHICH WILL
TERMINATE OR FAIL ON THE DEATH OF SUCH SPOUSE IF--
  (A) SUCH DEATH WILL CAUSE A TERMINATION OR FAILURE  OF  SUCH  INTEREST
ONLY  IF  IT  OCCURS  WITHIN  A  PERIOD NOT EXCEEDING 6 MONTHS AFTER THE
DECEDENT'S DEATH, OR ONLY IF IT OCCURS AS A RESULT OF A COMMON  DISASTER
RESULTING IN THE DEATH OF THE DECEDENT AND THE SURVIVING SPOUSE, OR ONLY
IF IT OCCURS IN THE CASE OF EITHER SUCH EVENT; AND
  (B) SUCH TERMINATION OR FAILURE DOES NOT IN FACT OCCUR.
  (4) VALUATION OF INTEREST PASSING TO SURVIVING SPOUSE.--IN DETERMINING
FOR  PURPOSES  OF  SUBSECTION  (A) THE VALUE OF ANY INTEREST IN PROPERTY
PASSING TO THE SURVIVING SPOUSE FOR WHICH A DEDUCTION IS ALLOWED BY THIS
SECTION--
  (A) THERE SHALL BE TAKEN INTO ACCOUNT THE EFFECT WHICH THE TAX IMPOSED
BY SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE  TAX,
HAS ON THE NET VALUE TO THE SURVIVING SPOUSE OF SUCH INTEREST; AND
  (B)  WHERE  SUCH  INTEREST OR PROPERTY IS ENCUMBERED IN ANY MANNER, OR
WHERE THE SURVIVING SPOUSE INCURS ANY OBLIGATION IMPOSED BY THE DECEDENT
WITH RESPECT TO THE PASSING OF SUCH INTEREST, SUCH ENCUMBRANCE OR  OBLI-
GATION  SHALL  BE TAKEN INTO ACCOUNT IN THE SAME MANNER AS IF THE AMOUNT
OF A GIFT TO SUCH SPOUSE OF SUCH INTEREST WERE BEING DETERMINED.
  (5) LIFE ESTATE WITH POWER OF APPOINTMENT IN SURVIVING SPOUSE.--IN THE
CASE OF AN INTEREST IN  PROPERTY  PASSING  FROM  THE  DECEDENT,  IF  HIS
SURVIVING  SPOUSE IS ENTITLED FOR LIFE TO ALL THE INCOME FROM THE ENTIRE
INTEREST, OR ALL THE INCOME FROM A  SPECIFIC  PORTION  THEREOF,  PAYABLE
ANNUALLY  OR  AT  MORE  FREQUENT  INTERVALS, WITH POWER IN THE SURVIVING
SPOUSE TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC  PORTION  (EXER-
CISABLE  IN  FAVOR  OF  SUCH  SURVIVING SPOUSE, OR OF THE ESTATE OF SUCH
SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER OR NOT IN EACH CASE THE
POWER IS EXERCISABLE IN FAVOR OF OTHERS), AND WITH NO POWER IN ANY OTHER
PERSON TO APPOINT ANY PART OF THE INTEREST, OR SUCH SPECIFIC PORTION, TO
ANY PERSON OTHER THAN THE SURVIVING SPOUSE--
  (A) THE INTEREST  OR  SUCH  PORTION  THEREOF  SO  PASSING  SHALL,  FOR
PURPOSES  OF  SUBSECTION  (A), BE CONSIDERED AS PASSING TO THE SURVIVING
SPOUSE, AND
  (B) NO PART OF THE INTEREST SO PASSING SHALL, FOR  PURPOSES  OF  PARA-
GRAPH  (1)(A),  BE  CONSIDERED  AS  PASSING TO ANY PERSON OTHER THAN THE
SURVIVING SPOUSE.
  THIS PARAGRAPH SHALL APPLY ONLY IF SUCH POWER IN THE SURVIVING  SPOUSE
TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC PORTION THEREOF, WHETH-
ER  EXERCISABLE  BY  WILL  OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE
ALONE AND IN ALL EVENTS.
  (6) LIFE INSURANCE OR ANNUITY PAYMENTS WITH POWER  OF  APPOINTMENT  IN
SURVIVING  SPOUSE.--IN  THE CASE OF AN INTEREST IN PROPERTY PASSING FROM
THE DECEDENT CONSISTING OF PROCEEDS UNDER A LIFE  INSURANCE,  ENDOWMENT,
OR  ANNUITY  CONTRACT,  IF UNDER THE TERMS OF THE CONTRACT SUCH PROCEEDS
ARE PAYABLE IN INSTALLMENTS OR ARE HELD BY THE  INSURER  SUBJECT  TO  AN

S. 6359--C                         251

AGREEMENT  TO  PAY INTEREST THEREON (WHETHER THE PROCEEDS, ON THE TERMI-
NATION OF ANY INTEREST PAYMENTS, ARE PAYABLE IN A LUMP SUM OR IN  ANNUAL
OR  MORE  FREQUENT  INSTALLMENTS),  AND  SUCH  INSTALLMENT  OR  INTEREST
PAYMENTS  ARE PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, COMMENCING
NOT LATER THAN 13 MONTHS AFTER THE DECEDENT'S DEATH, AND ALL AMOUNTS, OR
A SPECIFIC PORTION OF ALL SUCH AMOUNTS, PAYABLE DURING THE LIFE  OF  THE
SURVIVING  SPOUSE  ARE  PAYABLE ONLY TO SUCH SPOUSE, AND SUCH SPOUSE HAS
THE POWER TO APPOINT ALL AMOUNTS,  OR  SUCH  SPECIFIC  PORTION,  PAYABLE
UNDER  SUCH  CONTRACT (EXERCISABLE IN FAVOR OF SUCH SURVIVING SPOUSE, OR
OF THE ESTATE OF SUCH SURVIVING SPOUSE, OR IN FAVOR OF  EITHER,  WHETHER
OR  NOT  IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF OTHERS), WITH
NO POWER IN ANY OTHER PERSON TO APPOINT SUCH AMOUNTS TO ANY PERSON OTHER
THAN THE SURVIVING SPOUSE--
  (A) SUCH AMOUNTS SHALL, FOR PURPOSES OF SUBSECTION (A), BE  CONSIDERED
AS PASSING TO THE SURVIVING SPOUSE, AND
  (B)  NO  PART OF SUCH AMOUNTS SHALL, FOR PURPOSES OF PARAGRAPH (1)(A),
BE CONSIDERED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
  THIS PARAGRAPH SHALL APPLY ONLY IF, UNDER THE TERMS OF  THE  CONTRACT,
SUCH  POWER  IN  THE  SURVIVING  SPOUSE TO APPOINT SUCH AMOUNTS, WHETHER
EXERCISABLE BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE  ALONE
AND IN ALL EVENTS.
  (7) ELECTION WITH RESPECT TO LIFE ESTATE FOR SURVIVING SPOUSE.--
  (A)  IN GENERAL.--IN THE CASE OF QUALIFIED TERMINABLE INTEREST PROPER-
TY--
  (I) FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED  AS
PASSING TO THE SURVIVING SPOUSE, AND
  (II)  FOR PURPOSES OF PARAGRAPH (1)(A), NO PART OF SUCH PROPERTY SHALL
BE TREATED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
  (B) QUALIFIED TERMINABLE INTEREST PROPERTY DEFINED.--FOR  PURPOSES  OF
THIS PARAGRAPH--
  (I)  IN  GENERAL.--THE  TERM  "QUALIFIED TERMINABLE INTEREST PROPERTY"
MEANS PROPERTY--
  (I) WHICH PASSES FROM THE DECEDENT,
  (II) IN WHICH THE SURVIVING SPOUSE HAS A  QUALIFYING  INCOME  INTEREST
FOR LIFE, AND
  (III) TO WHICH AN ELECTION UNDER THIS PARAGRAPH APPLIES.
  (II)  QUALIFYING INCOME INTEREST FOR LIFE.--THE SURVIVING SPOUSE HAS A
QUALIFYING INCOME INTEREST FOR LIFE IF--
  (I) THE SURVIVING SPOUSE IS ENTITLED TO ALL THE INCOME FROM THE  PROP-
ERTY,  PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, OR HAS A USUFRUCT
INTEREST FOR LIFE IN THE PROPERTY, AND
  (II) NO PERSON HAS A POWER TO APPOINT ANY PART OF THE PROPERTY TO  ANY
PERSON OTHER THAN THE SURVIVING SPOUSE.
  SUBCLAUSE (II) SHALL NOT APPLY TO A POWER EXERCISABLE ONLY AT OR AFTER
THE  DEATH  OF  THE  SURVIVING  SPOUSE.  TO THE EXTENT PROVIDED IN REGU-
LATIONS, AN ANNUITY SHALL BE TREATED IN A MANNER SIMILAR  TO  AN  INCOME
INTEREST  IN PROPERTY (REGARDLESS OF WHETHER THE PROPERTY FROM WHICH THE
ANNUITY IS PAYABLE CAN BE SEPARATELY IDENTIFIED).
  (III)  PROPERTY  INCLUDES  INTEREST  THEREIN.--THE   TERM   "PROPERTY"
INCLUDES AN INTEREST IN PROPERTY.
  (IV)  SPECIFIC  PORTION  TREATED  AS  SEPARATE  PROPERTY.--A  SPECIFIC
PORTION OF PROPERTY SHALL BE TREATED AS SEPARATE PROPERTY.
  (V) ELECTION.--AN ELECTION UNDER THIS PARAGRAPH WITH  RESPECT  TO  ANY
PROPERTY  SHALL  BE MADE BY THE EXECUTOR ON THE RETURN OF TAX IMPOSED BY
SECTION 2001. SUCH AN ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.

S. 6359--C                         252

  (C) TREATMENT OF  SURVIVOR  ANNUITIES.--IN  THE  CASE  OF  AN  ANNUITY
INCLUDED  IN THE GROSS ESTATE OF THE DECEDENT UNDER SECTION 2039 (OR, IN
THE CASE OF AN INTEREST IN AN ANNUITY ARISING UNDER THE COMMUNITY  PROP-
ERTY LAWS OF A STATE, INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER
SECTION  2033)  WHERE ONLY THE SURVIVING SPOUSE HAS THE RIGHT TO RECEIVE
PAYMENTS BEFORE THE DEATH OF SUCH SURVIVING SPOUSE--
  (I) THE INTEREST OF SUCH SURVIVING SPOUSE SHALL BE TREATED AS A QUALI-
FYING INCOME INTEREST FOR LIFE, AND
  (II) THE EXECUTOR SHALL BE TREATED AS HAVING MADE  AN  ELECTION  UNDER
THIS  SUBSECTION WITH RESPECT TO SUCH ANNUITY UNLESS THE EXECUTOR OTHER-
WISE ELECTS ON THE RETURN OF TAX IMPOSED BY SECTION 2001.
  AN ELECTION UNDER CLAUSE (II), ONCE MADE, SHALL BE IRREVOCABLE.
  (8) SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS.--
  (A) IN GENERAL.--IF THE SURVIVING SPOUSE OF THE DECEDENT IS  THE  ONLY
BENEFICIARY OF A QUALIFIED CHARITABLE REMAINDER TRUST WHO IS NOT A CHAR-
ITABLE  BENEFICIARY  NOR  AN  ESOP  BENEFICIARY, PARAGRAPH (1) SHALL NOT
APPLY TO ANY INTEREST IN SUCH TRUST WHICH PASSES OR HAS PASSED FROM  THE
DECEDENT TO SUCH SURVIVING SPOUSE.
  (B) DEFINITIONS.--FOR PURPOSES OF SUBPARAGRAPH (A)--
  (I)  CHARITABLE  BENEFICIARY.--THE TERM "CHARITABLE BENEFICIARY" MEANS
ANY BENEFICIARY WHICH IS AN ORGANIZATION DESCRIBED IN SECTION 170(C).
  (II) ESOP BENEFICIARY.--THE TERM "ESOP BENEFICIARY" MEANS ANY  BENEFI-
CIARY  WHICH  IS AN EMPLOYEE STOCK OWNERSHIP PLAN (AS DEFINED IN SECTION
4975(E)(7)) THAT HOLDS A REMAINDER INTEREST IN QUALIFIED EMPLOYER  SECU-
RITIES  (AS DEFINED IN SECTION 664(G)(4)) TO BE TRANSFERRED TO SUCH PLAN
IN A QUALIFIED GRATUITOUS TRANSFER (AS DEFINED IN SECTION 664(G)(1)).
  (III) QUALIFIED CHARITABLE REMAINDER TRUST.--THE TERM "QUALIFIED CHAR-
ITABLE REMAINDER TRUST" MEANS A CHARITABLE REMAINDER ANNUITY TRUST OR  A
CHARITABLE REMAINDER UNITRUST (DESCRIBED IN SECTION 664).
  (9)  DENIAL OF DOUBLE DEDUCTION.--NOTHING IN THIS SECTION OR ANY OTHER
PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-
ERTY TO BE DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE  WITH  RESPECT  TO
THE SAME DECEDENT.
  (10)  SPECIFIC  PORTION.--FOR  PURPOSES  OF  PARAGRAPHS  (5), (6), AND
(7)(B)(IV), THE TERM "SPECIFIC PORTION" ONLY INCLUDES A  PORTION  DETER-
MINED ON A FRACTIONAL OR PERCENTAGE BASIS.
  (C) DEFINITION.--FOR PURPOSES OF THIS SECTION, AN INTEREST IN PROPERTY
SHALL  BE  CONSIDERED  AS PASSING FROM THE DECEDENT TO ANY PERSON IF AND
ONLY IF--
  (1) SUCH INTEREST IS BEQUEATHED OR DEVISED TO SUCH PERSON BY THE DECE-
DENT;
  (2) SUCH INTEREST IS INHERITED BY SUCH PERSON FROM THE DECEDENT;
  (3) SUCH INTEREST IS THE  DOWER  OR  CURTESY  INTEREST  (OR  STATUTORY
INTEREST  IN  LIEU  THEREOF)  OF  SUCH PERSON AS SURVIVING SPOUSE OF THE
DECEDENT;
  (4) SUCH INTEREST HAS BEEN TRANSFERRED TO SUCH PERSON BY THE  DECEDENT
AT ANY TIME;
  (5)  SUCH  INTEREST  WAS, AT THE TIME OF THE DECEDENT'S DEATH, HELD BY
SUCH PERSON AND THE DECEDENT (OR BY THEM AND ANY OTHER PERSON) IN  JOINT
OWNERSHIP WITH RIGHT OF SURVIVORSHIP;
  (6)  THE DECEDENT HAD A POWER (EITHER ALONE OR IN CONJUNCTION WITH ANY
PERSON) TO APPOINT SUCH INTEREST AND IF HE  APPOINTS  OR  HAS  APPOINTED
SUCH  INTEREST  TO SUCH PERSON, OR IF SUCH PERSON TAKES SUCH INTEREST IN
DEFAULT ON THE RELEASE OR NONEXERCISE OF SUCH POWER; OR
  (7) SUCH INTEREST CONSISTS OF PROCEEDS OF INSURANCE ON THE LIFE OF THE
DECEDENT RECEIVABLE BY SUCH PERSON.

S. 6359--C                         253

  EXCEPT AS PROVIDED IN PARAGRAPH (5) OR (6) OF SUBSECTION (B), WHERE AT
THE TIME OF THE DECEDENT'S DEATH IT IS NOT  POSSIBLE  TO  ASCERTAIN  THE
PARTICULAR  PERSON  OR  PERSONS TO WHOM AN INTEREST IN PROPERTY MAY PASS
FROM THE DECEDENT, SUCH INTEREST SHALL, FOR  PURPOSES  OF  SUBPARAGRAPHS
(A)  AND  (B)  OF  SUBSECTION  (B)(1), BE CONSIDERED AS PASSING FROM THE
DECEDENT TO A PERSON OTHER THAN THE SURVIVING SPOUSE.
  S 2103. DEFINITION OF GROSS ESTATE. FOR THE PURPOSE OF THE TAX IMPOSED
BY SECTION 2101, THE VALUE OF THE GROSS ESTATE OF EVERY DECEDENT NONRES-
IDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE THAT PART OF HIS GROSS
ESTATE (DETERMINED AS PROVIDED IN SECTION 2031) WHICH AT THE TIME OF HIS
DEATH IS SITUATED IN THE UNITED STATES.
  S 2104. PROPERTY WITHIN THE  UNITED  STATES.  (A)  STOCK  IN  CORPORA-
TION.--FOR PURPOSES OF THIS SUBCHAPTER SHARES OF STOCK OWNED AND HELD BY
A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE DEEMED PROPER-
TY WITHIN THE UNITED STATES ONLY IF ISSUED BY A DOMESTIC CORPORATION.
  (B)  REVOCABLE  TRANSFERS  AND TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR
PURPOSES OF THIS SUBCHAPTER, ANY PROPERTY OF WHICH THE DECEDENT HAS MADE
A TRANSFER, BY TRUST OR OTHERWISE, WITHIN THE MEANING OF  SECTIONS  2035
TO 2038, INCLUSIVE, SHALL BE DEEMED TO BE SITUATED IN THE UNITED STATES,
IF  SO SITUATED EITHER AT THE TIME OF THE TRANSFER OR AT THE TIME OF THE
DECEDENT'S DEATH.
  (C) DEBT OBLIGATIONS.--FOR PURPOSES OF  THIS  SUBCHAPTER,  DEBT  OBLI-
GATIONS OF-
  (1) A UNITED STATES PERSON, OR
  (2)  THE  UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF,
OR THE DISTRICT OF COLUMBIA,
  OWNED AND HELD BY A NONRESIDENT NOT A CITIZEN  OF  THE  UNITED  STATES
SHALL  BE  DEEMED  PROPERTY  WITHIN  THE  UNITED STATES. WITH RESPECT TO
ESTATES OF DECEDENTS DYING AFTER DECEMBER  31,  1969,  DEPOSITS  WITH  A
DOMESTIC  BRANCH  OF A FOREIGN CORPORATION, IF SUCH BRANCH IS ENGAGED IN
THE COMMERCIAL BANKING BUSINESS, SHALL, FOR PURPOSES OF THIS SUBCHAPTER,
BE DEEMED PROPERTY WITHIN THE UNITED STATES. THIS SUBSECTION  SHALL  NOT
APPLY TO A DEBT OBLIGATION TO WHICH SECTION 2105(B) APPLIES.
  S 2105. PROPERTY WITHOUT THE UNITED STATES. (A) PROCEEDS OF LIFE INSU-
RANCE.--FOR PURPOSES OF THIS SUBCHAPTER, THE AMOUNT RECEIVABLE AS INSUR-
ANCE  ON  THE  LIFE  OF A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES
SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES.
  (B) BANK DEPOSITS AND CERTAIN OTHER DEBT OBLIGATIONS.--FOR PURPOSES OF
THIS SUBCHAPTER, THE FOLLOWING SHALL NOT BE DEEMED PROPERTY  WITHIN  THE
UNITED STATES--
  (1)  AMOUNTS  DESCRIBED  IN SECTION 871(I)(3), IF ANY INTEREST THEREON
WOULD NOT BE SUBJECT TO TAX BY REASON OF  SECTION  871(I)(1)  WERE  SUCH
INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS DEATH,
  (2) DEPOSITS WITH A FOREIGN BRANCH OF A DOMESTIC CORPORATION OR DOMES-
TIC  PARTNERSHIP,  IF  SUCH  BRANCH IS ENGAGED IN THE COMMERCIAL BANKING
BUSINESS,
  (3) DEBT OBLIGATIONS, IF, WITHOUT REGARD TO WHETHER A STATEMENT  MEET-
ING  THE REQUIREMENTS OF SECTION 871(H)(5) HAS BEEN RECEIVED, ANY INTER-
EST THEREON WOULD BE ELIGIBLE FOR THE EXEMPTION FROM TAX  UNDER  SECTION
871(H)(1) WERE SUCH INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS
DEATH, AND
  (4)  OBLIGATIONS WHICH WOULD BE ORIGINAL ISSUE DISCOUNT OBLIGATIONS AS
DEFINED IN SECTION 871(G)(1) BUT FOR SUBPARAGRAPH (B)(I) THEREOF, IF ANY
INTEREST THEREON (WERE SUCH INTEREST RECEIVED BY  THE  DECEDENT  AT  THE
TIME  OF  HIS DEATH) WOULD NOT BE EFFECTIVELY CONNECTED WITH THE CONDUCT
OF A TRADE OR BUSINESS WITHIN THE UNITED STATES.

S. 6359--C                         254

  NOTWITHSTANDING THE PRECEDING SENTENCE, IF ANY PORTION OF THE INTEREST
ON AN OBLIGATION REFERRED TO IN PARAGRAPH (3) WOULD NOT BE ELIGIBLE  FOR
THE  EXEMPTION  REFERRED  TO  IN  PARAGRAPH  (3)  BY  REASON  OF SECTION
871(H)(4) IF THE INTEREST WERE RECEIVED BY THE DECEDENT AT THE  TIME  OF
HIS  DEATH,  THEN  AN  APPROPRIATE  PORTION  (AS  DETERMINED IN A MANNER
PRESCRIBED BY THE SECRETARY) OF THE VALUE (AS DETERMINED FOR PURPOSES OF
THIS CHAPTER) OF SUCH DEBT OBLIGATION SHALL BE  DEEMED  PROPERTY  WITHIN
THE UNITED STATES.
  (C)  WORKS  OF  ART  ON  LOAN  FOR  EXHIBITION.--FOR  PURPOSES OF THIS
SUBCHAPTER, WORKS OF ART OWNED BY A NONRESIDENT NOT  A  CITIZEN  OF  THE
UNITED  STATES  SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES IF
SUCH WORKS OF ART ARE--
  (1) IMPORTED INTO THE UNITED STATES SOLELY FOR EXHIBITION PURPOSES,
  (2) LOANED FOR SUCH PURPOSES, TO A PUBLIC GALLERY OR MUSEUM,  NO  PART
OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE STOCK-
HOLDER OR INDIVIDUAL, AND
  (3)  AT  THE TIME OF THE DEATH OF THE OWNER, ON EXHIBITION, OR ENROUTE
TO OR FROM EXHIBITION, IN SUCH A PUBLIC GALLERY OR MUSEUM.
  S 2503. (A) GENERAL DEFINITION - THE TERM "TAXABLE  GIFTS"  MEANS  THE
TOTAL  AMOUNT  OF  GIFTS  MADE DURING THE CALENDAR YEAR, LESS DEDUCTIONS
PROVIDED IN SUBCHAPTER C (SECTION 2522 AND FOLLOWING).
  (B) EXCLUSIONS FROM GIFTS. (1)  IN  GENERAL.--IN  THE  CASE  OF  GIFTS
(OTHER THAN GIFTS OF FUTURE INTERESTS IN PROPERTY) MADE TO ANY PERSON BY
THE  DONOR  DURING THE CALENDAR YEAR, THE FIRST $10,000 OF SUCH GIFTS TO
SUCH PERSON SHALL NOT, FOR PURPOSES OF SUBSECTION (A),  BE  INCLUDED  IN
THE  TOTAL AMOUNT OF GIFTS MADE DURING SUCH YEAR. WHERE THERE HAS BEEN A
TRANSFER TO ANY PERSON OF A PRESENT INTEREST IN PROPERTY, THE  POSSIBIL-
ITY  THAT  SUCH  INTEREST  MAY  BE DIMINISHED BY THE EXERCISE OF A POWER
SHALL BE DISREGARDED IN APPLYING THIS SUBSECTION, IF  NO  PART  OF  SUCH
INTEREST WILL AT ANY TIME PASS TO ANY OTHER PERSON.
  (2)  INFLATION  ADJUSTMENT.--IN  THE  CASE OF GIFTS MADE IN A CALENDAR
YEAR AFTER 1998, THE $10,000 AMOUNT CONTAINED IN PARAGRAPH (1) SHALL  BE
INCREASED BY AN AMOUNT EQUAL TO--
  (A) $10,000, MULTIPLIED BY
  (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
SUCH  CALENDAR  YEAR  BY SUBSTITUTING "CALENDAR YEAR 1997" FOR "CALENDAR
YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.
  IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
PLE OF $1,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST  MULTIPLE
OF $1,000.
  (C)  TRANSFER  FOR  THE  BENEFIT  OF MINOR. -- NO PART OF A GIFT TO AN
INDIVIDUAL WHO HAS NOT ATTAINED THE AGE OF 21 YEARS ON THE DATE OF  SUCH
TRANSFER SHALL BE CONSIDERED A GIFT OF A FUTURE INTEREST IN PROPERTY FOR
PURPOSES OF SUBSECTION (B) IF THE PROPERTY AND THE INCOME THEREFROM-
  (1)  MAY  BE  EXPENDED BY, OR FOR THE BENEFIT OF, THE DONEE BEFORE HIS
ATTAINING THE AGE OF 21 YEARS, AND
  (2) WILL TO THE EXTENT NOT SO EXPENDED-
  (A) PASS TO THE DONEE ON HIS ATTAINING THE AGE OF 21 YEARS, AND
  (B) IN THE EVENT THE DONEE DIES BEFORE ATTAINING THE AGE OF 21  YEARS,
BE  PAYABLE  TO  THE  ESTATE  OF  THE DONEE OR AS HE MAY APPOINT UNDER A
GENERAL POWER OF APPOINTMENT AS DEFINED IN SECTION 2514(C).
  {(D) REPEALED. PUB. L. 97-34, TITLE III, S 311(H)(5), AUG.  13,  1981,
95 STAT.  282}
  (E)  EXCLUSION  FOR  CERTAIN  TRANSFERS  FOR  EDUCATIONAL  EXPENSES OR
MEDICAL EXPENSES. (1) IN GENERAL. ANY QUALIFIED TRANSFER  SHALL  NOT  BE
TREATED AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.

S. 6359--C                         255

  (2)  QUALIFIED  TRANSFER.  FOR  PURPOSES  OF THIS SUBSECTION, THE TERM
"QUALIFIED TRANSFER" MEANS ANY AMOUNT PAID ON BEHALF OF AN INDIVIDUAL-
  (A)  AS  TUITION  TO  AN EDUCATIONAL ORGANIZATION DESCRIBED IN SECTION
170(B)(1)(A)(II) FOR THE EDUCATION OR TRAINING OF SUCH INDIVIDUAL, OR
  (B) TO ANY PERSON WHO PROVIDES MEDICAL CARE  (AS  DEFINED  IN  SECTION
213(D))  WITH  RESPECT  TO  SUCH  INDIVIDUAL AS PAYMENT FOR SUCH MEDICAL
CARE.
  (F) WAIVER OF CERTAIN PENSION RIGHTS. IF ANY INDIVIDUAL WAIVES, BEFORE
THE DEATH OF A PARTICIPANT, ANY SURVIVOR BENEFIT, OR RIGHT TO SUCH BENE-
FIT, UNDER SECTION 401(A)(11) OR 417, SUCH WAIVER SHALL NOT  BE  TREATED
AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
  (G)  TREATMENT  OF  CERTAIN  LOANS  OF  ARTWORKS.  (1) IN GENERAL. FOR
PURPOSES OF THIS SUBTITLE, ANY LOAN OF A QUALIFIED WORK OF ART SHALL NOT
BE TREATED AS A TRANSFER (AND THE VALUE OF SUCH QUALIFIED  WORK  OF  ART
SHALL BE DETERMINED AS IF SUCH LOAN HAD NOT BEEN MADE) IF-
  (A) SUCH LOAN IS TO AN ORGANIZATION DESCRIBED IN SECTION 501(C)(3) AND
EXEMPT  FROM TAX UNDER SECTION 501(C) (OTHER THAN A PRIVATE FOUNDATION),
AND
  (B) THE USE OF SUCH WORK  BY  SUCH  ORGANIZATION  IS  RELATED  TO  THE
PURPOSE  OR  FUNCTION  CONSTITUTING  THE  BASIS  FOR ITS EXEMPTION UNDER
SECTION 501.
  (2) DEFINITIONS. FOR PURPOSES OF THIS SECTION-
  (A) QUALIFIED WORK OF ART. THE TERM "QUALIFIED WORK OF ART" MEANS  ANY
ARCHAEOLOGICAL, HISTORIC, OR CREATIVE TANGIBLE PERSONAL PROPERTY.
  (B)  PRIVATE FOUNDATION. THE TERM "PRIVATE FOUNDATION" HAS THE MEANING
GIVEN SUCH TERM BY SECTION 509, EXCEPT THAT SUCH TERM SHALL NOT  INCLUDE
ANY PRIVATE OPERATING FOUNDATION (AS DEFINED IN SECTION 4942(J)(3)).
  S  2511.  TRANSFERS  IN GENERAL. (A) SCOPE. SUBJECT TO THE LIMITATIONS
CONTAINED IN THIS CHAPTER, THE TAX IMPOSED BY SECTION 2501  SHALL  APPLY
WHETHER  THE  TRANSFER  IS  IN  TRUST  OR OTHERWISE, WHETHER THE GIFT IS
DIRECT OR INDIRECT, AND WHETHER THE PROPERTY IS REAL OR PERSONAL, TANGI-
BLE OR INTANGIBLE; BUT IN THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
UNITED STATES, SHALL APPLY TO A TRANSFER ONLY IF THE PROPERTY  IS  SITU-
ATED WITHIN THE UNITED STATES.
  (B)  INTANGIBLE PROPERTY. FOR PURPOSES OF THIS CHAPTER, IN THE CASE OF
A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES WHO  IS  EXCEPTED  FROM
THE APPLICATION OF SECTION 2501(A)(2)-
  (1) SHARES OF STOCK ISSUED BY A DOMESTIC CORPORATION, AND
  (2) DEBT OBLIGATIONS OF-
--(A) A UNITED STATES PERSON, OR
--(B)  THE  UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF,
OR THE DISTRICT OF COLUMBIA,
--WHICH ARE OWNED AND HELD BY SUCH NONRESIDENT SHALL  BE  DEEMED  TO  BE
PROPERTY SITUATED WITHIN THE UNITED STATES.
  S  2512.  VALUATION OF GIFTS. (A) IF THE GIFT IS MADE IN PROPERTY, THE
VALUE THEREOF AT THE DATE OF THE GIFT SHALL BE CONSIDERED THE AMOUNT  OF
THE GIFT.
  (B)  WHERE  PROPERTY IS TRANSFERRED FOR LESS THAN AN ADEQUATE AND FULL
CONSIDERATION IN MONEY OR MONEY'S WORTH, THEN THE AMOUNT  BY  WHICH  THE
VALUE  OF  THE PROPERTY EXCEEDED THE VALUE OF THE CONSIDERATION SHALL BE
DEEMED A GIFT, AND SHALL BE INCLUDED IN COMPUTING THE  AMOUNT  OF  GIFTS
MADE DURING THE CALENDAR YEAR.
  S 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY. (A) CONSIDERED AS MADE
ONE-HALF  BY  EACH.  (1)  IN  GENERAL.  A GIFT MADE BY ONE SPOUSE TO ANY
PERSON OTHER THAN HIS SPOUSE SHALL, FOR THE PURPOSES OF THIS CHAPTER, BE
CONSIDERED AS MADE ONE-HALF BY HIM AND ONE-HALF BY HIS SPOUSE, BUT  ONLY

S. 6359--C                         256

IF  AT  THE TIME OF THE GIFT EACH SPOUSE IS A CITIZEN OR RESIDENT OF THE
UNITED STATES. THIS PARAGRAPH SHALL NOT APPLY WITH RESPECT TO A GIFT  BY
A SPOUSE OF AN INTEREST IN PROPERTY IF HE CREATES IN HIS SPOUSE A GENER-
AL POWER OF APPOINTMENT, AS DEFINED IN SECTION 2514(C), OVER SUCH INTER-
EST.  FOR PURPOSES OF THIS SECTION, AN INDIVIDUAL SHALL BE CONSIDERED AS
THE SPOUSE OF ANOTHER INDIVIDUAL ONLY IF HE IS MARRIED TO SUCH  INDIVID-
UAL AT THE TIME OF THE GIFT AND DOES NOT REMARRY DURING THE REMAINDER OF
THE CALENDAR YEAR.
  (2)  CONSENT  OF  BOTH SPOUSES. PARAGRAPH (1) SHALL APPLY ONLY IF BOTH
SPOUSES HAVE SIGNIFIED (UNDER THE REGULATIONS PROVIDED FOR IN SUBSECTION
(B)) THEIR CONSENT TO THE APPLICATION OF PARAGRAPH (1) IN  THE  CASE  OF
ALL  SUCH GIFTS MADE DURING THE CALENDAR YEAR BY EITHER WHILE MARRIED TO
THE OTHER.
  (B) MANNER AND TIME OF SIGNIFYING CONSENT. (1) MANNER. A CONSENT UNDER
THIS SECTION SHALL BE SIGNIFIED IN SUCH  MANNER  AS  IS  PROVIDED  UNDER
REGULATIONS PRESCRIBED BY THE SECRETARY.
  (2) TIME. SUCH CONSENT MAY BE SO SIGNIFIED AT ANY TIME AFTER THE CLOSE
OF  THE CALENDAR YEAR IN WHICH THE GIFT WAS MADE, SUBJECT TO THE FOLLOW-
ING LIMITATIONS-
--(A) THE CONSENT MAY NOT BE SIGNIFIED  AFTER  THE  15TH  DAY  OF  APRIL
FOLLOWING  THE CLOSE OF SUCH YEAR, UNLESS BEFORE SUCH 15TH DAY NO RETURN
HAS BEEN FILED FOR SUCH YEAR BY EITHER SPOUSE, IN WHICH CASE THE CONSENT
MAY NOT BE SIGNIFIED AFTER A RETURN FOR SUCH YEAR  IS  FILED  BY  EITHER
SPOUSE.
--(B) THE CONSENT MAY NOT BE SIGNIFIED AFTER A NOTICE OF DEFICIENCY WITH
RESPECT  TO  THE  TAX  FOR  SUCH  YEAR HAS BEEN SENT TO EITHER SPOUSE IN
ACCORDANCE WITH SECTION 6212(A).
  (C) REVOCATION OF CONSENT. REVOCATION OF A CONSENT  PREVIOUSLY  SIGNI-
FIED  SHALL  BE  MADE  IN  SUCH  MANNER AS IN PROVIDED UNDER REGULATIONS
PRESCRIBED BY THE SECRETARY, BUT THE RIGHT TO REVOKE A CONSENT PREVIOUS-
LY SIGNIFIED WITH RESPECT TO A CALENDAR YEAR-
  (1) SHALL NOT EXIST AFTER THE 15TH DAY OF APRIL FOLLOWING THE CLOSE OF
SUCH YEAR IF THE CONSENT WAS SIGNIFIED ON OR BEFORE SUCH 15TH DAY; AND
  (2) SHALL NOT EXIST IF THE CONSENT WAS NOT SIGNIFIED UNTIL AFTER  SUCH
15TH DAY.
  (D)  JOINT  AND  SEVERAL LIABILITY FOR TAX. IF THE CONSENT REQUIRED BY
SUBSECTION (A)(2) IS SIGNIFIED WITH RESPECT TO A GIFT MADE IN ANY CALEN-
DAR YEAR, THE LIABILITY WITH RESPECT TO THE ENTIRE TAX IMPOSED  BY  THIS
CHAPTER OF EACH SPOUSE FOR SUCH YEAR SHALL BE JOINT AND SEVERAL.
  S 2514. POWERS OF APPOINTMENT. (A) POWERS CREATED ON OR BEFORE OCTOBER
21,  1942.  AN  EXERCISE OF A GENERAL POWER OF APPOINTMENT CREATED ON OR
BEFORE OCTOBER 21, 1942, SHALL BE DEEMED A TRANSFER OF PROPERTY  BY  THE
INDIVIDUAL  POSSESSING  SUCH  POWER;  BUT THE FAILURE TO EXERCISE SUCH A
POWER OR THE COMPLETE RELEASE OF SUCH A POWER SHALL  NOT  BE  DEEMED  AN
EXERCISE THEREOF. IF A GENERAL POWER OF APPOINTMENT CREATED ON OR BEFORE
OCTOBER  21, 1942, HAS BEEN PARTIALLY RELEASED SO THAT IT IS NO LONGER A
GENERAL POWER OF APPOINTMENT, THE  SUBSEQUENT  EXERCISE  OF  SUCH  POWER
SHALL NOT BE DEEMED TO BE THE EXERCISE OF A GENERAL POWER OF APPOINTMENT
IF-
  (1) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
  (2)  THE  DONEE  OF SUCH POWER WAS UNDER A LEGAL DISABILITY TO RELEASE
SUCH POWER ON OCTOBER 21, 1942, AND SUCH PARTIAL  RELEASE  OCCURRED  NOT
LATER THAN SIX MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
  (B)  POWERS CREATED AFTER OCTOBER 21, 1942. THE EXERCISE OR RELEASE OF
A GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, SHALL  BE
DEEMED A TRANSFER OF PROPERTY BY THE INDIVIDUAL POSSESSING SUCH POWER.

S. 6359--C                         257

  (C)  DEFINITION  OF GENERAL POWER OF APPOINTMENT. FOR PURPOSES OF THIS
SECTION, THE TERM "GENERAL POWER OF APPOINTMENT" MEANS A POWER WHICH  IS
EXERCISABLE  IN  FAVOR OF THE INDIVIDUAL POSSESSING THE POWER (HEREAFTER
IN THIS SUBSECTION REFERRED TO AS  THE  "POSSESSOR"),  HIS  ESTATE,  HIS
CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT-
  (1)  A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENE-
FIT OF THE POSSESSOR WHICH  IS  LIMITED  BY  AN  ASCERTAINABLE  STANDARD
RELATING  TO  THE  HEALTH,  EDUCATION,  SUPPORT,  OR  MAINTENANCE OF THE
POSSESSOR SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (2) A POWER OF APPOINTMENT CREATED ON  OR  BEFORE  OCTOBER  21,  1942,
WHICH  IS  EXERCISABLE BY THE POSSESSOR ONLY IN CONJUNCTION WITH ANOTHER
PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (3) IN THE CASE OF A POWER OF APPOINTMENT CREATED  AFTER  OCTOBER  21,
1942,  WHICH  IS  EXERCISABLE  BY THE POSSESSOR ONLY IN CONJUNCTION WITH
ANOTHER PERSON-
--(A) IF THE POWER  IS  NOT  EXERCISABLE  BY  THE  POSSESSOR  EXCEPT  IN
CONJUNCTION WITH THE CREATOR OF THE POWER-SUCH POWER SHALL NOT BE DEEMED
A GENERAL POWER OF APPOINTMENT;
--(B)  IF  THE  POWER  IS  NOT  EXERCISABLE  BY  THE POSSESSOR EXCEPT IN
CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST, IN THE PROPERTY
SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
OF THE POSSESSOR-SUCH POWER SHALL NOT  BE  DEEMED  A  GENERAL  POWER  OF
APPOINTMENT.  FOR  THE PURPOSES OF THIS SUBPARAGRAPH A PERSON WHO, AFTER
THE DEATH OF THE POSSESSOR, MAY BE POSSESSED OF A POWER  OF  APPOINTMENT
(WITH RESPECT TO THE PROPERTY SUBJECT TO THE POSSESSOR'S POWER) WHICH HE
MAY  EXERCISE  IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST IN
THE PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH  EXERCISE
OF THE POSSESSOR'S POWER;
--(C)  IF (AFTER THE APPLICATION OF SUBPARAGRAPHS (A) AND (B)) THE POWER
IS A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN  FAVOR  OF  SUCH
OTHER  PERSON-SUCH  POWER SHALL BE DEEMED A GENERAL POWER OF APPOINTMENT
ONLY IN RESPECT OF A FRACTIONAL PART OF THE  PROPERTY  SUBJECT  TO  SUCH
POWER, SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY
BY THE NUMBER OF SUCH PERSONS (INCLUDING THE POSSESSOR) IN FAVOR OF WHOM
SUCH POWER IS EXERCISABLE.
--FOR  PURPOSES OF SUBPARAGRAPHS (B) AND (C), A POWER SHALL BE DEEMED TO
BE EXERCISABLE IN FAVOR OF A PERSON IF IT IS  EXERCISABLE  IN  FAVOR  OF
SUCH PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
  (D) CREATION OF ANOTHER POWER IN CERTAIN CASES. IF A POWER OF APPOINT-
MENT  CREATED  AFTER  OCTOBER 21, 1942, IS EXERCISED BY CREATING ANOTHER
POWER OF APPOINTMENT WHICH, UNDER  THE  APPLICABLE  LOCAL  LAW,  CAN  BE
VALIDLY  EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE OR INTER-
EST IN THE PROPERTY WHICH WAS SUBJECT TO THE FIRST POWER, OR SUSPEND THE
ABSOLUTE OWNERSHIP OR POWER OF ALIENATION OF SUCH PROPERTY, FOR A PERIOD
ASCERTAINABLE WITHOUT REGARD TO THE DATE OF THE CREATION  OF  THE  FIRST
POWER,  SUCH  EXERCISE  OF  THE  FIRST POWER SHALL, TO THE EXTENT OF THE
PROPERTY SUBJECT TO THE SECOND POWER, BE DEEMED A TRANSFER  OF  PROPERTY
BY THE INDIVIDUAL POSSESSING SUCH POWER.
  (E)  LAPSE OF POWER. THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
SHALL BE CONSIDERED A RELEASE OF SUCH POWER. THE RULE OF  THE  PRECEDING
SENTENCE  SHALL  APPLY  WITH  RESPECT  TO THE LAPSE OF POWERS DURING ANY
CALENDAR YEAR ONLY TO THE EXTENT THAT THE PROPERTY WHICH COULD HAVE BEEN
APPOINTED BY EXERCISE OF SUCH LAPSED POWERS EXCEEDS IN VALUE THE GREATER
OF THE FOLLOWING AMOUNTS:
  (1) $5,000, OR

S. 6359--C                         258

  (2) 5 PERCENT OF THE AGGREGATE VALUE OF THE ASSETS OUT  OF  WHICH,  OR
THE PROCEEDS OF WHICH, THE EXERCISE OF THE LAPSED POWERS COULD BE SATIS-
FIED.
  (F) DATE OF CREATION OF POWER. FOR PURPOSES OF THIS SECTION A POWER OF
APPOINTMENT  CREATED  BY  A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
  S 2516. CERTAIN PROPERTY SETTLEMENTS. WHERE A HUSBAND AND  WIFE  ENTER
INTO  A  WRITTEN AGREEMENT RELATIVE TO THEIR MARITAL AND PROPERTY RIGHTS
AND DIVORCE OCCURS WITHIN THE 3-YEAR PERIOD BEGINNING ON THE DATE 1 YEAR
BEFORE SUCH AGREEMENT IS ENTERED INTO (WHETHER OR NOT SUCH AGREEMENT  IS
APPROVED  BY THE DIVORCE DECREE), ANY TRANSFERS OF PROPERTY OR INTERESTS
IN PROPERTY MADE PURSUANT TO SUCH AGREEMENT-
  (1) TO EITHER SPOUSE IN SETTLEMENT OF HIS OR HER MARITAL  OR  PROPERTY
RIGHTS, OR
  (2)  TO PROVIDE A REASONABLE ALLOWANCE FOR THE SUPPORT OF ISSUE OF THE
MARRIAGE DURING MINORITY,
  --SHALL BE DEEMED TO BE TRANSFERS MADE FOR A FULL AND ADEQUATE CONSID-
ERATION IN MONEY OR MONEY'S WORTH.
  S 2518. DISCLAIMERS. (A) GENERAL RULE. - FOR PURPOSES OF  THIS  SUBTI-
TLE, IF A PERSON MAKES A QUALIFIED DISCLAIMER WITH RESPECT TO ANY INTER-
EST IN PROPERTY, THIS SUBTITLE SHALL APPLY WITH RESPECT TO SUCH INTEREST
AS IF THE INTEREST HAD NEVER BEEN TRANSFERRED TO SUCH PERSON.
  (B)  QUALIFIED  DISCLAIMER  DEFINED. - FOR PURPOSES OF SUBSECTION (A),
THE TERM "QUALIFIED DISCLAIMER" MEANS  AN  IRREVOCABLE  AND  UNQUALIFIED
REFUSAL BY A PERSON TO ACCEPT AN INTEREST IN PROPERTY BUT ONLY IF -
  (1) SUCH REFUSAL IS IN WRITING,
  (2)  SUCH  WRITING  IS RECEIVED BY THE TRANSFEROR OF THE INTEREST, HIS
LEGAL REPRESENTATIVE, OR THE HOLDER OF THE LEGAL TITLE TO  THE  PROPERTY
TO  WHICH THE INTEREST RELATES NOT LATER THAN THE DATE WHICH IS 9 MONTHS
AFTER THE LATER OF -
  (A) THE DATE ON WHICH THE  TRANSFER  CREATING  THE  INTEREST  IN  SUCH
PERSON IS MADE, OR
  (B) THE DAY ON WHICH SUCH PERSON ATTAINS AGE 21,
  (3)  SUCH PERSON HAS NOT ACCEPTED THE INTEREST OR ANY OF ITS BENEFITS,
AND
  (4) AS A RESULT OF SUCH  REFUSAL,  THE  INTEREST  PASSES  WITHOUT  ANY
DIRECTION  ON  THE  PART  OF THE PERSON MAKING THE DISCLAIMER AND PASSES
EITHER -
  (A) TO THE SPOUSE OF THE DECEDENT, OR
  (B) TO A PERSON OTHER THAN THE PERSON MAKING THE DISCLAIMER.
  (C) OTHER RULES. FOR PURPOSES OF SUBSECTION (A)-
  (1) DISCLAIMER OF UNDIVIDED PORTION OF  INTEREST.  A  DISCLAIMER  WITH
RESPECT  TO AN UNDIVIDED PORTION OF AN INTEREST WHICH MEETS THE REQUIRE-
MENTS OF  THE  PRECEDING  SENTENCE  SHALL  BE  TREATED  AS  A  QUALIFIED
DISCLAIMER OF SUCH PORTION OF THE INTEREST.
  (2)  POWERS.  A  POWER WITH RESPECT TO PROPERTY SHALL BE TREATED AS AN
INTEREST IN SUCH PROPERTY.
  (3) CERTAIN TRANSFERS TREATED AS DISCLAIMERS. A  WRITTEN  TRANSFER  OF
THE TRANSFEROR'S ENTIRE INTEREST IN THE PROPERTY-
  (A) WHICH MEETS REQUIREMENTS SIMILAR TO THE REQUIREMENTS OF PARAGRAPHS
(2) AND (3) OF SUBSECTION (B), AND
  (B)  WHICH IS TO A PERSON OR PERSONS WHO WOULD HAVE RECEIVED THE PROP-
ERTY HAD THE TRANSFEROR MADE A QUALIFIED DISCLAIMER (WITHIN THE  MEANING
OF SUBSECTION (B)),

S. 6359--C                         259

  --SHALL BE TREATED AS A QUALIFIED DISCLAIMER.
  S 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES. (A) GENERAL RULE
  --FOR  PURPOSES OF THIS CHAPTER AND CHAPTER 11, ANY DISPOSITION OF ALL
OR PART OF A QUALIFYING INCOME INTEREST FOR  LIFE  IN  ANY  PROPERTY  TO
WHICH  THIS SECTION APPLIES SHALL BE TREATED AS A TRANSFER OF ALL INTER-
ESTS IN SUCH PROPERTY OTHER THAN THE QUALIFYING INCOME INTEREST.
  (B) PROPERTY TO WHICH THIS SUBSECTION APPLIES. THIS SECTION APPLIES TO
ANY PROPERTY IF A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER  OF
SUCH PROPERTY TO THE DONOR-
  (1) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
  (2) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF.
  (C) CROSS REFERENCE
--FOR  RIGHT OF RECOVERY FOR GIFT TAX IN THE CASE OF PROPERTY TREATED AS
TRANSFERRED UNDER THIS SECTION, SEE SECTION 2207A(B).
  S 2522. CHARITABLE AND SIMILAR GIFTS. (A) CITIZENS  OR  RESIDENTS.  IN
COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR, THERE SHALL BE ALLOWED AS
A DEDUCTION IN THE CASE OF A CITIZEN OR RESIDENT THE AMOUNT OF ALL GIFTS
MADE DURING SUCH YEAR TO OR FOR THE USE OF-
  (1)  THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE-
OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
  (2) A CORPORATION, OR TRUST, OR COMMUNITY CHEST, FUND, OR  FOUNDATION,
ORGANIZED  AND OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIF-
IC, LITERARY, OR EDUCATIONAL PURPOSES, OR TO FOSTER NATIONAL OR INTERNA-
TIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF NO PART OF ITS ACTIVITIES
INVOLVE THE PROVISION OF ATHLETIC FACILITIES  OR  EQUIPMENT),  INCLUDING
THE  ENCOURAGEMENT  OF  ART AND THE PREVENTION OF CRUELTY TO CHILDREN OR
ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE  BENEFIT  OF
ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALIFIED FOR TAX
EXEMPTION  UNDER  SECTION 501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE
LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
CAMPAIGN  ON  BEHALF  OF  (OR IN OPPOSITION TO) ANY CANDIDATE FOR PUBLIC
OFFICE;
  (3) A FRATERNAL SOCIETY, ORDER, OR ASSOCIATION,  OPERATING  UNDER  THE
LODGE  SYSTEM,  BUT  ONLY  IF  SUCH GIFTS ARE TO BE USED EXCLUSIVELY FOR
RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY,  OR  EDUCATIONAL  PURPOSES,
INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND THE PREVENTION OF CRUELTY TO
CHILDREN OR ANIMALS;
  (4) POSTS OR ORGANIZATIONS OF WAR  VETERANS,  OR  AUXILIARY  UNITS  OR
SOCIETIES  OF  ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH POSTS, ORGANIZA-
TIONS, UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY  OF
ITS  POSSESSIONS,  AND  IF  NO PART OF THEIR NET EARNINGS INSURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
  RULES SIMILAR TO THE RULES OF SECTION 501(J) SHALL APPLY FOR  PURPOSES
OF PARAGRAPH (2).
  (B)  NONRESIDENTS.  IN  THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
UNITED STATES, THERE SHALL BE ALLOWED AS A DEDUCTION THE AMOUNT  OF  ALL
GIFTS MADE DURING SUCH YEAR TO OR FOR THE USE OF-
  (1)  THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE-
OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
  (2) A DOMESTIC CORPORATION  ORGANIZED  AND  OPERATED  EXCLUSIVELY  FOR
RELIGIOUS,  CHARITABLE,  SCIENTIFIC,  LITERARY, OR EDUCATIONAL PURPOSES,
INCLUDING THE ENCOURAGEMENT OF ART AND  THE  PREVENTION  OF  CRUELTY  TO
CHILDREN  OR ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALI-
FIED FOR TAX EXEMPTION UNDER SECTION 501(C)(3) BY REASON  OF  ATTEMPTING

S. 6359--C                         260

TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
PUBLIC OFFICE;
  (3)  A  TRUST,  OR COMMUNITY CHEST, FUND, OR FOUNDATION, ORGANIZED AND
OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO SUBSTANTIAL PART OF THE
ACTIVITIES  OF WHICH IS CARRYING ON PROPAGANDA, OR OTHERWISE ATTEMPTING,
TO INFLUENCE LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN,  OR  INTER-
VENE  IN  (INCLUDING  THE PUBLISHING OR DISTRIBUTING OF STATEMENTS), ANY
POLITICAL CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE  FOR
PUBLIC  OFFICE;  BUT ONLY IF SUCH GIFTS ARE TO BE USED WITHIN THE UNITED
STATES EXCLUSIVELY FOR SUCH PURPOSES;
  (4) A FRATERNAL SOCIETY, ORDER, OR ASSOCIATION,  OPERATING  UNDER  THE
LODGE  SYSTEM,  BUT  ONLY IF SUCH GIFTS ARE TO BE USED WITHIN THE UNITED
STATES EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC,  LITERARY,  OR
EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS;
  (5) POSTS OR ORGANIZATIONS OF WAR  VETERANS,  OR  AUXILIARY  UNITS  OR
SOCIETIES  OF  ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH POSTS, ORGANIZA-
TIONS, UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY  OF
ITS  POSSESSIONS,  AND  IF  NO  PART OF THEIR NET EARNINGS INURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
  (C) DISALLOWANCE OF DEDUCTIONS IN  CERTAIN  CASES.  (1)  NO  DEDUCTION
SHALL BE ALLOWED UNDER THIS SECTION FOR A GIFT TO OF 1 FOR THE USE OF AN
ORGANIZATION  OR TRUST DESCRIBED IN SECTION 508(D) OR 4948(C)(4) SUBJECT
TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.
  (2) WHERE A DONOR TRANSFERS AN INTEREST IN  PROPERTY  (OTHER  THAN  AN
INTEREST  DESCRIBED  IN SECTION 170(F)(3)(B)) TO A PERSON, OR FOR A USE,
DESCRIBED IN SUBSECTION (A) OR (B) AND AN INTEREST IN THE SAME  PROPERTY
IS RETAINED BY THE DONOR, OR IS TRANSFERRED OR HAS BEEN TRANSFERRED (FOR
LESS  THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH)
FROM THE DONOR TO A PERSON, OR FOR A USE, NOT  DESCRIBED  IN  SUBSECTION
(A)  OR  (B),  NO  DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR THE
INTEREST WHICH IS, OR HAS BEEN TRANSFERRED TO THE  PERSON,  OR  FOR  THE
USE, DESCRIBED IN SUBSECTION (A) OR (B), UNLESS-
  (A)  IN  THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN A TRUST
WHICH IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE  REMAINDER
UNITRUST  (DESCRIBED  IN SECTION 664) OR A POOLED INCOME FUND (DESCRIBED
IN SECTION 642(C)(5)), OR
  (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
A GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF  THE
FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
  (3)  RULES  SIMILAR TO THE RULES OF SECTION 2055(E)(4) SHALL APPLY FOR
PURPOSES OF PARAGRAPH (2).
  (4) REFORMATIONS TO COMPLY WITH PARAGRAPH (2). (A)  IN  GENERAL  --  A
DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF ANY QUALI-
FIED REFORMATION (WITHIN THE MEANING OF SECTION 2055(E)(3)(B)).
  (B)  RULES  SIMILAR  TO SECTION 2055(E)(3) TO APPLY -- FOR PURPOSES OF
THIS PARAGRAPH, RULES SIMILAR TO THE RULES OF SECTION  2055(E)(3)  SHALL
APPLY.
  (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.  A  DEDUCTION OTHERWISE
ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF-

S. 6359--C                         261

--(A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT-
--(I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR
--(II)  A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN SECTION
4943(F)(5)(A)) WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III  SUPPORT-
ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
--(B)  THE  TAXPAYER  OBTAINS  A  CONTEMPORANEOUS WRITTEN ACKNOWLEDGMENT
(DETERMINED UNDER RULES SIMILAR TO THE RULES  OF  SECTION  170(F)(8)(C))
FROM  THE  SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH DONOR ADVISED
FUND THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE  ASSETS
CONTRIBUTED.
  (D)  SPECIAL RULE FOR IRREVOCABLE TRANSFERS OF EASEMENTS IN REAL PROP-
ERTY. A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A)  IN  RESPECT  OF
ANY  TRANSFER  OF  A  QUALIFIED  REAL  PROPERTY  INTEREST (AS DEFINED IN
SECTION 170(H)(2)(C)) WHICH MEETS THE  REQUIREMENTS  OF  SECTION  170(H)
(WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
  (E) SPECIAL RULES FOR FRACTIONAL GIFTS
  (1) DENIAL OF DEDUCTION IN CERTAIN CASES
  (A) IN GENERAL
--NO  DEDUCTION  SHALL  BE  ALLOWED  FOR  A CONTRIBUTION OF AN UNDIVIDED
PORTION OF A TAXPAYER'S ENTIRE INTEREST IN  TANGIBLE  PERSONAL  PROPERTY
UNLESS  ALL  INTERESTS  IN THE PROPERTY ARE HELD IMMEDIATELY BEFORE SUCH
CONTRIBUTION BY-
--(I) THE TAXPAYER, OR
--(II) THE TAXPAYER AND THE DONEE.
  (B) EXCEPTIONS
--THE SECRETARY MAY, BY REGULATION, PROVIDE FOR EXCEPTIONS  TO  SUBPARA-
GRAPH (A) IN CASES WHERE ALL PERSONS WHO HOLD AN INTEREST IN THE PROPER-
TY MAKE PROPORTIONAL CONTRIBUTIONS OF AN UNDIVIDED PORTION OF THE ENTIRE
INTEREST HELD BY SUCH PERSONS.
  (2) RECAPTURE OF DEDUCTION IN CERTAIN CASES; ADDITION TO TAX
  (A)  IN  GENERAL.  THE SECRETARY SHALL PROVIDE FOR THE RECAPTURE OF AN
AMOUNT EQUAL TO ANY DEDUCTION ALLOWED UNDER THIS SECTION (PLUS INTEREST)
WITH RESPECT TO ANY CONTRIBUTION OF AN UNDIVIDED PORTION OF A TAXPAYER'S
ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY-
--(I) IN ANY CASE IN WHICH THE DONOR DOES  NOT  CONTRIBUTE  ALL  OF  THE
REMAINING  INTERESTS IN SUCH PROPERTY TO THE DONEE (OR, IF SUCH DONEE IS
NO LONGER IN EXISTENCE, TO ANY PERSON DESCRIBED IN SECTION 170(C)) ON OR
BEFORE THE EARLIER OF-
--(I) THE DATE THAT IS 10 YEARS AFTER THE DATE OF THE INITIAL FRACTIONAL
CONTRIBUTION, OR
--(II) THE DATE OF THE DEATH OF THE DONOR, AND
--(II) IN ANY CASE IN WHICH THE DONEE HAS NOT, DURING THE PERIOD  BEGIN-
NING  ON  THE  DATE OF THE INITIAL FRACTIONAL CONTRIBUTION AND ENDING ON
THE DATE DESCRIBED IN CLAUSE (I)-
--(I) HAD SUBSTANTIAL PHYSICAL POSSESSION OF THE PROPERTY, AND
--(II) USED THE PROPERTY IN A USE WHICH IS RELATED TO A PURPOSE OR FUNC-
TION CONSTITUTING THE  BASIS  FOR  THE  ORGANIZATIONS'  EXEMPTION  UNDER
SECTION 501.
  (B)  ADDITION TO TAX. THE TAX IMPOSED UNDER THIS CHAPTER FOR ANY TAXA-
BLE YEAR FOR WHICH THERE IS A RECAPTURE UNDER SUBPARAGRAPH (A) SHALL  BE
INCREASED BY 10 PERCENT OF THE AMOUNT SO RECAPTURED.
  (C)  INITIAL  FRACTIONAL CONTRIBUTION. FOR PURPOSES OF THIS PARAGRAPH,
THE TERM "INITIAL FRACTIONAL CONTRIBUTION" MEANS, WITH  RESPECT  TO  ANY
DONOR,  THE  FIRST  GIFT  OF  AN UNDIVIDED PORTION OF THE DONOR'S ENTIRE

S. 6359--C                         262

INTEREST IN ANY TANGIBLE PERSONAL PROPERTY  FOR  WHICH  A  DEDUCTION  IS
ALLOWED UNDER SUBSECTION (A) OR (B).
  (F) CROSS REFERENCES
--(1)  FOR  TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD CARE, SEE
SECTION 501(K).
--(2) FOR EXEMPTION OF CERTAIN GIFTS TO OR FOR THE BENEFIT OF THE UNITED
STATES AND FOR RULES OF CONSTRUCTION WITH RESPECT TO  CERTAIN  BEQUESTS,
SEE SECTION 2055(F).
--(3)  FOR TREATMENT OF GIFTS TO OR FOR THE USE OF INDIAN TRIBAL GOVERN-
MENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
  S 2523. GIFT TO SPOUSE (A)  ALLOWANCE  OF  DEDUCTION.  WHERE  A  DONOR
TRANSFERS  DURING THE CALENDAR YEAR BY GIFT AN INTEREST IN PROPERTY TO A
DONEE WHO AT THE TIME OF THE GIFT IS THE DONOR'S SPOUSE, THERE SHALL  BE
ALLOWED  AS A DEDUCTION IN COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR
AN AMOUNT WITH RESPECT TO SUCH INTEREST EQUAL TO ITS VALUE.
  (B) LIFE ESTATE OR OTHER TERMINABLE INTEREST. WHERE, ON THE  LAPSE  OF
TIME, ON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF
AN  EVENT  OR  CONTINGENCY  TO  OCCUR,  SUCH INTEREST TRANSFERRED TO THE
SPOUSE WILL TERMINATE OR  FAIL,  NO  DEDUCTION  SHALL  BE  ALLOWED  WITH
RESPECT TO SUCH INTEREST-
  (1)  IF  THE DONOR RETAINS IN HIMSELF, OR TRANSFERS OR HAS TRANSFERRED
(FOR LESS THAN AN ADEQUATE AND FULL CONSIDERATION IN  MONEY  OR  MONEY'S
WORTH) TO ANY PERSON OTHER THAN SUCH DONEE SPOUSE (OR THE ESTATE OF SUCH
SPOUSE),  AN  INTEREST  IN  SUCH  PROPERTY,  AND  IF  BY  REASON OF SUCH
RETENTION OR TRANSFER THE DONOR (OR HIS HEIRS OR ASSIGNS) OR SUCH PERSON
(OR HIS HEIRS OR ASSIGNS) MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY
AFTER SUCH TERMINATION OR FAILURE OF THE  INTEREST  TRANSFERRED  TO  THE
DONEE SPOUSE; OR
  (2)  IF  THE  DONOR IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE
HAS A POWER TO APPOINT AN INTEREST IN SUCH PROPERTY WHICH HE  CAN  EXER-
CISE  (EITHER  ALONE  OR  IN CONJUNCTION WITH ANY PERSON) IN SUCH MANNER
THAT THE APPOINTEE MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY  AFTER
SUCH  TERMINATION  OR  FAILURE  OF THE INTEREST TRANSFERRED TO THE DONEE
SPOUSE. FOR PURPOSES OF THIS PARAGRAPH, THE DONOR SHALL BE CONSIDERED AS
HAVING IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE SUCH POWER  TO
APPOINT EVEN THOUGH SUCH POWER CANNOT BE EXERCISED UNTIL AFTER THE LAPSE
OF TIME, UPON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAIL-
URE OF AN EVENT OR CONTINGENCY TO OCCUR.
  AN  EXERCISE  OR  RELEASE AT ANY TIME BY THE DONOR, EITHER ALONE OR IN
CONJUNCTION WITH ANY PERSON, OF A POWER TO APPOINT AN INTEREST IN  PROP-
ERTY, EVEN THOUGH NOT OTHERWISE A TRANSFER, SHALL, FOR PURPOSES OF PARA-
GRAPH  (1),  BE  CONSIDERED  AS A TRANSFER BY HIM. EXCEPT AS PROVIDED IN
SUBSECTION (E), WHERE AT THE TIME OF THE TRANSFER IT  IS  IMPOSSIBLE  TO
ASCERTAIN  THE  PARTICULAR  PERSON  OR  PERSONS WHO MAY RECEIVE FROM THE
DONOR AN INTEREST IN PROPERTY  SO  TRANSFERRED  BY  HIM,  SUCH  INTEREST
SHALL,  FOR PURPOSES OF PARAGRAPH (1), BE CONSIDERED AS TRANSFERRED TO A
PERSON OTHER THAN THE DONEE SPOUSE.
  (C) INTEREST IN UNIDENTIFIED ASSETS. WHERE THE ASSETS OUT OF WHICH, OR
THE PROCEEDS OF WHICH, THE INTEREST TRANSFERRED TO THE DONEE SPOUSE  MAY
BE  SATISFIED INCLUDE A PARTICULAR ASSET OR ASSETS WITH RESPECT TO WHICH
NO DEDUCTION WOULD BE ALLOWED IF SUCH ASSET OR ASSETS  WERE  TRANSFERRED
FROM  THE  DONOR  TO  SUCH SPOUSE, THEN THE VALUE OF THE INTEREST TRANS-
FERRED TO SUCH SPOUSE SHALL, FOR PURPOSES OF SUBSECTION (A), BE  REDUCED
BY THE AGGREGATE VALUE OF SUCH PARTICULAR ASSETS.
  (D)  JOINT  INTERESTS.  IF  THE  INTEREST  IS TRANSFERRED TO THE DONEE
SPOUSE AS SOLE JOINT TENANT WITH THE DONOR OR AS TENANT BY THE ENTIRETY,

S. 6359--C                         263

THE INTEREST OF THE DONOR IN THE PROPERTY WHICH EXISTS SOLELY BY  REASON
OF  THE POSSIBILITY THAT THE DONOR MAY SURVIVE THE DONEE SPOUSE, OR THAT
THERE MAY OCCUR A SEVERANCE OF THE TENANCY, SHALL NOT BE CONSIDERED  FOR
PURPOSES  OF  SUBSECTION  (B)  AS  AN  INTEREST RETAINED BY THE DONOR IN
HIMSELF.
  (E) LIFE ESTATE WITH POWER OF APPOINTMENT IN DONEE SPOUSE.  WHERE  THE
DONOR  TRANSFERS AN INTEREST IN PROPERTY, IF BY SUCH TRANSFER HIS SPOUSE
IS ENTITLED FOR LIFE TO ALL OF THE INCOME FROM THE ENTIRE  INTEREST,  OR
ALL  THE  INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE ANNUALLY OR AT
MORE FREQUENT INTERVALS, WITH POWER IN THE DONEE SPOUSE TO  APPOINT  THE
ENTIRE  INTEREST, OR SUCH SPECIFIC PORTION (EXERCISABLE IN FAVOR OF SUCH
DONEE SPOUSE, OR OF THE ESTATE OF SUCH DONEE  SPOUSE,  OR  IN  FAVOR  OF
EITHER, WHETHER OR NOT IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF
OTHERS),  AND  WITH  NO POWER IN ANY OTHER PERSON TO APPOINT ANY PART OF
SUCH INTEREST, OR SUCH PORTION, TO  ANY  PERSON  OTHER  THAN  THE  DONEE
SPOUSE-
  (1)  THE INTEREST, OR SUCH PORTION, SO TRANSFERRED SHALL, FOR PURPOSES
OF SUBSECTION (A) BE CONSIDERED AS TRANSFERRED TO THE DONEE SPOUSE, AND
  (2) NO PART OF THE INTEREST, OR SUCH PORTION,  SO  TRANSFERRED  SHALL,
FOR  PURPOSES  OF  SUBSECTION  (B)(1),  BE CONSIDERED AS RETAINED IN THE
DONOR OR TRANSFERRED TO ANY PERSON OTHER THAN THE DONEE SPOUSE.
  THIS SUBSECTION SHALL APPLY ONLY IF, BY SUCH TRANSFER, SUCH  POWER  IN
THE DONEE SPOUSE TO APPOINT THE INTEREST, OR SUCH PORTION, WHETHER EXER-
CISABLE  BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE ALONE AND
IN ALL EVENTS.   FOR PURPOSES OF THIS  SUBSECTION,  THE  TERM  "SPECIFIC
PORTION"  ONLY INCLUDES A PORTION DETERMINED ON A FRACTIONAL OR PERCENT-
AGE BASIS.
  (F) ELECTION WITH RESPECT TO LIFE ESTATE  FOR  DONEE  SPOUSE.  (1)  IN
GENERAL
  IN THE CASE OF QUALIFIED TERMINABLE INTEREST PROPERTY-
  (A)  FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED AS
TRANSFERRED TO THE DONEE SPOUSE, AND
  (B) FOR PURPOSES OF SUBSECTION (B)(1), NO PART OF SUCH PROPERTY  SHALL
BE  CONSIDERED  AS  RETAINED  IN  THE DONOR OR TRANSFERRED TO ANY PERSON
OTHER THAN THE DONEE SPOUSE.
  (2) QUALIFIED TERMINABLE  INTEREST  PROPERTY.  FOR  PURPOSES  OF  THIS
SUBSECTION,  THE TERM "QUALIFIED TERMINABLE INTEREST PROPERTY" MEANS ANY
PROPERTY-
  (A) WHICH IS TRANSFERRED BY THE DONOR SPOUSE,
  (B) IN WHICH THE DONEE SPOUSE HAS A  QUALIFYING  INCOME  INTEREST  FOR
LIFE, AND
  (C) TO WHICH AN ELECTION UNDER THIS SUBSECTION APPLIES.
  (3)  CERTAIN  RULES  MADE APPLICABLE. FOR PURPOSES OF THIS SUBSECTION,
RULES SIMILAR TO THE RULES OF CLAUSES (II), (III), AND (IV)  OF  SECTION
2056(B)(7)(B)  SHALL  APPLY  AND  THE RULES OF SECTION 2056(B)(10) SHALL
APPLY.
  (4) ELECTION. (A) TIME AND MANNER. AN ELECTION UNDER  THIS  SUBSECTION
WITH  RESPECT  TO  ANY  PROPERTY  SHALL  BE  MADE  ON OR BEFORE THE DATE
PRESCRIBED BY SECTION 6075(B) FOR FILING A GIFT TAX RETURN WITH  RESPECT
TO THE TRANSFER (DETERMINED WITHOUT REGARD TO SECTION 6019(2)) AND SHALL
BE MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
  (B)  ELECTION  IRREVOCABLE.  AN  ELECTION  UNDER THIS SUBSECTION, ONCE
MADE, SHALL BE IRREVOCABLE.
  (5) TREATMENT OF INTEREST RETAINED BY DONOR SPOUSE. (A) IN GENERAL. IN
THE CASE OF ANY QUALIFIED TERMINABLE INTEREST PROPERTY-

S. 6359--C                         264

  (I) SUCH PROPERTY SHALL NOT BE INCLUDIBLE IN THE GROSS ESTATE  OF  THE
DONOR SPOUSE, AND
  (II)  ANY  SUBSEQUENT  TRANSFER  BY THE DONOR SPOUSE OF AN INTEREST IN
SUCH PROPERTY SHALL NOT BE TREATED AS A TRANSFER FOR  PURPOSES  OF  THIS
CHAPTER.
  (B)  SUBPARAGRAPH  (A)  NOT  TO  APPLY AFTER TRANSFER BY DONEE SPOUSE.
SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO ANY PROPERTY AFTER  THE
DONEE  SPOUSE  IS  TREATED  AS  HAVING  TRANSFERRED  SUCH PROPERTY UNDER
SECTION 2519, OR SUCH PROPERTY IS INCLUDIBLE IN THE DONEE SPOUSE'S GROSS
ESTATE UNDER SECTION 2044.
  (6) TREATMENT OF JOINT AND SURVIVOR ANNUITIES. IN THE CASE OF A  JOINT
AND  SURVIVOR  ANNUITY WHERE ONLY THE DONOR SPOUSE AND DONEE SPOUSE HAVE
THE RIGHT TO RECEIVE PAYMENTS BEFORE THE DEATH OF  THE  LAST  SPOUSE  TO
DIE-
--(A)  THE  DONEE  SPOUSE'S  INTEREST  SHALL  BE TREATED AS A QUALIFYING
INCOME INTEREST FOR LIFE,
--(B) THE DONOR SPOUSE SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER
THIS SUBSECTION WITH RESPECT TO SUCH ANNUITY  UNLESS  THE  DONOR  SPOUSE
OTHERWISE ELECTS ON OR BEFORE THE DATE SPECIFIED IN PARAGRAPH (4)(A),
--(C)  PARAGRAPH  (5)  AND  SECTION  2519  SHALL  NOT APPLY TO THE DONOR
SPOUSE'S INTEREST IN THE ANNUITY, AND
--(D) IF THE DONEE SPOUSE DIES BEFORE THE DONOR SPOUSE, NO AMOUNT  SHALL
BE INCLUDIBLE IN THE GROSS ESTATE OF THE DONEE SPOUSE UNDER SECTION 2044
WITH RESPECT TO SUCH ANNUITY.
  AN ELECTION UNDER SUBPARAGRAPH (B), ONCE MADE, SHALL BE IRREVOCABLE.
  (G)  SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS. (1) IN GENERAL. IF,
AFTER THE TRANSFER, THE DONEE SPOUSE IS THE ONLY NONCHARITABLE BENEFICI-
ARY (OTHER THAN THE DONOR) OF A QUALIFIED  CHARITABLE  REMAINDER  TRUST,
SUBSECTION  (B)  SHALL  NOT APPLY TO THE INTEREST IN SUCH TRUST WHICH IS
TRANSFERRED TO THE DONEE SPOUSE.
  (2) DEFINITIONS. FOR PURPOSES OF PARAGRAPH (1), THE TERM  "NONCHARITA-
BLE  BENEFICIARY"  AND  "QUALIFIED  CHARITABLE REMAINDER TRUST" HAVE THE
MEANINGS GIVEN TO SUCH TERMS BY SECTION 2056(B)(8)(B).
  (H) DENIAL OF DOUBLE DEDUCTION. NOTHING IN THIS SECTION OR  ANY  OTHER
PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-
ERTY  TO  BE  DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE WITH RESPECT TO
THE SAME DONOR.
  S 2524. EXTENT OF DEDUCTIONS. THE DEDUCTIONS PROVIDED IN SECTIONS 2522
AND 2523 SHALL BE ALLOWED ONLY TO THE  EXTENT  THAT  THE  GIFTS  THEREIN
SPECIFIED  ARE  INCLUDED  IN  THE  AMOUNT  OF  GIFTS  AGAINST WHICH SUCH
DEDUCTIONS ARE APPLIED.
  S 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CERTAIN INTER-
ESTS IN CORPORATIONS OR PARTNERSHIPS. (A) VALUATION RULES. (1) IN GENER-
AL.  SOLELY FOR PURPOSES OF DETERMINING WHETHER A TRANSFER OF AN  INTER-
EST  IN A CORPORATION OR PARTNERSHIP TO (OR FOR THE BENEFIT OF) A MEMBER
OF THE TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE OF  SUCH  TRANSFER),
THE VALUE OF ANY RIGHT-
--(A)  WHICH  IS  DESCRIBED  IN  SUBPARAGRAPH  (A)  OR (B) OF SUBSECTION
(B)(1), AND
--(B) WHICH IS WITH RESPECT TO ANY APPLICABLE RETAINED INTEREST THAT  IS
HELD  BY THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER IMMEDIATELY AFTER
THE TRANSFER,
  --SHALL BE DETERMINED UNDER PARAGRAPH (3). THIS  PARAGRAPH  SHALL  NOT
APPLY  TO  THE  TRANSFER OF ANY INTEREST FOR WHICH MARKET QUOTATIONS ARE
READILY AVAILABLE (AS OF THE DATE OF TRANSFER) ON AN ESTABLISHED SECURI-
TIES MARKET.

S. 6359--C                         265

  (2) EXCEPTIONS FOR MARKETABLE RETAINED INTERESTS, ETC.  PARAGRAPH  (1)
SHALL  NOT  APPLY  TO  ANY  RIGHT WITH RESPECT TO AN APPLICABLE RETAINED
INTEREST IF-
--(A)  MARKET  QUOTATIONS  ARE  READILY AVAILABLE (AS OF THE DATE OF THE
TRANSFER) FOR SUCH INTEREST ON AN ESTABLISHED SECURITIES MARKET,
--(B) SUCH INTEREST IS OF THE SAME CLASS AS THE TRANSFERRED INTEREST, OR
--(C) SUCH INTEREST IS PROPORTIONALLY THE SAME AS THE TRANSFERRED INTER-
EST, WITHOUT REGARD TO NONLAPSING DIFFERENCES IN VOTING POWER (OR, FOR A
PARTNERSHIP, NONLAPSING DIFFERENCES WITH RESPECT TO MANAGEMENT AND LIMI-
TATIONS ON LIABILITY).
--SUBPARAGRAPH (C) SHALL NOT APPLY TO ANY INTEREST IN A  PARTNERSHIP  IF
THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER HAS THE RIGHT TO ALTER THE
LIABILITY  OF  THE  TRANSFEREE  OF  THE  TRANSFERRED PROPERTY. EXCEPT AS
PROVIDED BY THE SECRETARY, ANY DIFFERENCE DESCRIBED IN SUBPARAGRAPH  (C)
WHICH LAPSES BY REASON OF ANY FEDERAL OR STATE LAW SHALL BE TREATED AS A
NONLAPSING DIFFERENCE FOR PURPOSES OF SUCH SUBPARAGRAPH.
  (3)  VALUATION OF RIGHTS TO WHICH PARAGRAPH (1) APPLIES. (A) IN GENER-
AL.  THE VALUE OF ANY RIGHT DESCRIBED IN PARAGRAPH  (1),  OTHER  THAN  A
DISTRIBUTION  RIGHT  WHICH  CONSISTS  OF  A RIGHT TO RECEIVE A QUALIFIED
PAYMENT, SHALL BE TREATED AS BEING ZERO.
  (B) VALUATION OF CERTAIN QUALIFIED PAYMENTS. IF-
--(I) ANY APPLICABLE RETAINED  INTEREST  CONFERS  A  DISTRIBUTION  RIGHT
WHICH CONSISTS OF THE RIGHT TO A QUALIFIED PAYMENT, AND
--(II)  THERE ARE 1 OR MORE LIQUIDATION, PUT, CALL, OR CONVERSION RIGHTS
WITH RESPECT TO SUCH INTEREST, THE VALUE OF ALL  SUCH  RIGHTS  SHALL  BE
DETERMINED  AS  IF EACH LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT WERE
EXERCISED IN THE MANNER RESULTING IN THE LOWEST VALUE  BEING  DETERMINED
FOR ALL SUCH RIGHTS.
  (C)  VALUATION  OF  QUALIFIED  PAYMENTS  WHERE  NO  LIQUIDATION,  ETC.
RIGHTS. IN  THE  CASE  OF  AN  APPLICABLE  RETAINED  INTEREST  WHICH  IS
DESCRIBED IN SUBPARAGRAPH (B)(I) BUT NOT SUBPARAGRAPH (B)(II), THE VALUE
OF  THE  DISTRIBUTION  RIGHT  SHALL BE DETERMINED WITHOUT REGARD TO THIS
SECTION.
  (4) MINIMUM VALUATION OF JUNIOR EQUITY. (A) IN GENERAL. IN THE CASE OF
A TRANSFER DESCRIBED IN PARAGRAPH (1) OF A JUNIOR EQUITY INTEREST  IN  A
CORPORATION OR PARTNERSHIP, SUCH INTEREST SHALL IN NO EVENT BE VALUED AT
AN  AMOUNT  LESS  THAN  THE VALUE WHICH WOULD BE DETERMINED IF THE TOTAL
VALUE OF ALL OF THE JUNIOR EQUITY INTERESTS IN THE ENTITY WERE EQUAL  TO
10 PERCENT OF THE SUM OF-
--(I)  THE  TOTAL  VALUE  OF ALL OF THE EQUITY INTERESTS IN SUCH ENTITY,
PLUS
--(II) THE TOTAL AMOUNT OF INDEBTEDNESS OF SUCH ENTITY TO THE TRANSFEROR
(OR AN APPLICABLE FAMILY MEMBER).
  (B) DEFINITIONS. FOR PURPOSES OF THIS PARAGRAPH-
  (I) JUNIOR EQUITY INTEREST. THE TERM "JUNIOR  EQUITY  INTEREST"  MEANS
COMMON  STOCK OR, IN THE CASE OF A PARTNERSHIP, ANY PARTNERSHIP INTEREST
UNDER WHICH THE RIGHTS AS TO INCOME  AND  CAPITAL  (OR,  TO  THE  EXTENT
PROVIDED  IN REGULATIONS, THE RIGHTS AS TO EITHER INCOME OR CAPITAL) ARE
JUNIOR TO THE RIGHTS OF ALL OTHER CLASSES OF EQUITY INTERESTS.
  (II) EQUITY INTEREST. THE TERM "EQUITY INTEREST" MEANS  STOCK  OR  ANY
INTEREST AS A PARTNER, AS THE CASE MAY BE.
  (B) APPLICABLE RETAINED INTERESTS. FOR PURPOSES OF THIS SECTION-
  (1)  IN  GENERAL.  THE  TERM  "APPLICABLE RETAINED INTEREST" MEANS ANY
INTEREST IN AN ENTITY WITH RESPECT TO WHICH THERE IS-
--(A) A DISTRIBUTION RIGHT, BUT ONLY IF, IMMEDIATELY BEFORE THE TRANSFER
DESCRIBED IN SUBSECTION (A)(1), THE  TRANSFEROR  AND  APPLICABLE  FAMILY

S. 6359--C                         266

MEMBERS  HOLD  (AFTER  APPLICATION  OF SUBSECTION (E)(3)) CONTROL OF THE
ENTITY, OR
--(B) A LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT.
  (2) CONTROL. FOR PURPOSES OF PARAGRAPH (1)-
  (A)  CORPORATIONS.  IN  THE  CASE OF A CORPORATION, THE TERM "CONTROL"
MEANS THE HOLDING OF AT LEAST 50 PERCENT (BY VOTE OR VALUE) OF THE STOCK
OF THE CORPORATION.
  (B) PARTNERSHIPS. IN THE CASE OF A  PARTNERSHIP,  THE  TERM  "CONTROL"
MEANS-
--(I)  THE  HOLDING  OF  AT  LEAST  50 PERCENT OF THE CAPITAL OR PROFITS
INTERESTS IN THE PARTNERSHIP, OR
--(II) IN THE CASE OF A LIMITED PARTNERSHIP, THE HOLDING OF ANY INTEREST
AS A GENERAL PARTNER.
  (C) APPLICABLE FAMILY MEMBER. FOR PURPOSES  OF  THIS  SUBSECTION,  THE
TERM  "APPLICABLE  FAMILY  MEMBER" INCLUDES ANY LINEAL DESCENDANT OF ANY
PARENT OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE.
  (C) DISTRIBUTION AND OTHER RIGHTS; QUALIFIED PAYMENTS. FOR PURPOSES OF
THIS SECTION-
  (1) DISTRIBUTION RIGHT. (A) IN GENERAL. THE TERM "DISTRIBUTION  RIGHT"
MEANS-
--(I)  A  RIGHT  TO DISTRIBUTIONS FROM A CORPORATION WITH RESPECT TO ITS
STOCK, AND
--(II) A RIGHT TO DISTRIBUTIONS FROM A PARTNERSHIP  WITH  RESPECT  TO  A
PARTNER'S INTEREST IN THE PARTNERSHIP.
  (B) EXCEPTIONS. THE TERM "DISTRIBUTION RIGHT" DOES NOT INCLUDE-
--(I)  A  RIGHT  TO  DISTRIBUTIONS WITH RESPECT TO ANY INTEREST WHICH IS
JUNIOR TO THE RIGHTS OF THE TRANSFERRED INTEREST,
--(II) ANY LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT, OR
--(III) ANY RIGHT TO RECEIVE ANY GUARANTEED PAYMENT DESCRIBED IN SECTION
707(C) OF A FIXED AMOUNT.
  (2) LIQUIDATION, ETC. RIGHTS. (A) IN GENERAL. THE  TERM  "LIQUIDATION,
PUT,  CALL,  OR  CONVERSION  RIGHT" MEANS ANY LIQUIDATION, PUT, CALL, OR
CONVERSION RIGHT, OR ANY SIMILAR RIGHT, THE EXERCISE OR  NONEXERCISE  OF
WHICH AFFECTS THE VALUE OF THE TRANSFERRED INTEREST.
  (B) EXCEPTION FOR FIXED RIGHTS. (I) IN GENERAL. THE TERM "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH MUST BE
EXERCISED AT A SPECIFIC TIME AND AT A SPECIFIC AMOUNT.
  (II)  TREATMENT  OF  CERTAIN RIGHTS. IF A RIGHT IS ASSUMED TO BE EXER-
CISED IN A PARTICULAR MANNER  UNDER  SUBSECTION  (A)(3)(B),  SUCH  RIGHT
SHALL BE TREATED AS SO EXERCISED FOR PURPOSES OF CLAUSE (I).
  (C)  EXCEPTION  FOR  CERTAIN RIGHTS TO CONVERT. THE TERM "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH-
--(I) IS A RIGHT TO CONVERT INTO A FIXED NUMBER (OR A FIXED  PERCENTAGE)
OF SHARES OF THE SAME CLASS OF STOCK IN A CORPORATION AS THE TRANSFERRED
STOCK  IN SUCH CORPORATION UNDER SUBSECTION (A)(1) (OR STOCK WHICH WOULD
BE OF THE SAME CLASS BUT FOR NONLAPSING DIFFERENCES IN VOTING POWER),
--(II) IS NONLAPSING,
--(III) IS SUBJECT TO PROPORTIONATE  ADJUSTMENTS  FOR  SPLITS,  COMBINA-
TIONS, RECLASSIFICATIONS, AND SIMILAR CHANGES IN THE CAPITAL STOCK, AND
--(IV)  IS  SUBJECT  TO  ADJUSTMENTS  SIMILAR  TO  THE ADJUSTMENTS UNDER
SUBSECTION (D) FOR ACCUMULATED BUT UNPAID DISTRIBUTIONS.
--A RULE SIMILAR TO THE RULE OF THE PRECEDING SENTENCE SHALL  APPLY  FOR
PARTNERSHIPS.
  (3) QUALIFIED PAYMENT. (A) IN GENERAL. EXCEPT AS OTHERWISE PROVIDED IN
THIS  PARAGRAPH, THE TERM "QUALIFIED PAYMENT" MEANS ANY DIVIDEND PAYABLE
ON A PERIODIC BASIS UNDER ANY CUMULATIVE PREFERRED STOCK (OR A  COMPARA-

S. 6359--C                         267

BLE  PAYMENT  UNDER  ANY  PARTNERSHIP  INTEREST) TO THE EXTENT THAT SUCH
DIVIDEND (OR COMPARABLE PAYMENT) IS DETERMINED AT A FIXED RATE.
  (B)  TREATMENT OF VARIABLE RATE PAYMENTS. FOR PURPOSES OF SUBPARAGRAPH
(A), A PAYMENT SHALL BE TREATED AS FIXED AS TO RATE IF SUCH  PAYMENT  IS
DETERMINED  AT  A  RATE  WHICH BEARS A FIXED RELATIONSHIP TO A SPECIFIED
MARKET INTEREST RATE.
  (C) ELECTIONS. (I) IN GENERAL. PAYMENTS UNDER ANY INTEREST HELD  BY  A
TRANSFEROR  WHICH  (WITHOUT  REGARD  TO THIS SUBPARAGRAPH) ARE QUALIFIED
PAYMENTS SHALL BE TREATED AS QUALIFIED PAYMENTS  UNLESS  THE  TRANSFEROR
ELECTS  NOT  TO  TREAT  SUCH  PAYMENTS  AS  QUALIFIED PAYMENTS. PAYMENTS
DESCRIBED IN THE PRECEDING SENTENCE WHICH  ARE  HELD  BY  AN  APPLICABLE
FAMILY MEMBER SHALL BE TREATED AS QUALIFIED PAYMENTS ONLY IF SUCH MEMBER
ELECTS TO TREAT SUCH PAYMENTS AS QUALIFIED PAYMENTS.
  (II)  ELECTION  TO  HAVE  INTEREST  TREATED  AS  QUALIFIED  PAYMENT. A
TRANSFEROR OR APPLICABLE FAMILY MEMBER HOLDING  ANY  DISTRIBUTION  RIGHT
WHICH  (WITHOUT  REGARD TO THIS SUBPARAGRAPH) IS NOT A QUALIFIED PAYMENT
MAY ELECT TO TREAT SUCH RIGHT AS A QUALIFIED PAYMENT, TO BE PAID IN  THE
AMOUNTS  AND  AT  THE  TIMES  SPECIFIED  IN SUCH ELECTION. THE PRECEDING
SENTENCE SHALL APPLY ONLY TO THE EXTENT THAT THE AMOUNTS  AND  TIMES  SO
SPECIFIED  ARE  NOT  INCONSISTENT  WITH  THE UNDERLYING LEGAL INSTRUMENT
GIVING RISE TO SUCH RIGHT.
  (III) ELECTIONS IRREVOCABLE. ANY ELECTION UNDER THIS SUBPARAGRAPH WITH
RESPECT TO AN INTEREST SHALL, ONCE MADE, BE IRREVOCABLE.
  (D) TRANSFER TAX TREATMENT OF CUMULATIVE BUT UNPAID DISTRIBUTIONS. (1)
IN GENERAL. IF A TAXABLE EVENT OCCURS WITH RESPECT TO  ANY  DISTRIBUTION
RIGHT  TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED, THE FOLLOWING SHALL
BE INCREASED BY THE AMOUNT DETERMINED UNDER PARAGRAPH (2):
--(A) THE TAXABLE ESTATE OF THE TRANSFEROR IN  THE  CASE  OF  A  TAXABLE
EVENT DESCRIBED IN PARAGRAPH (3)(A)(I).
--(B) THE TAXABLE GIFTS OF THE TRANSFEROR FOR THE CALENDAR YEAR IN WHICH
THE  TAXABLE  EVENT  OCCURS  IN THE CASE OF A TAXABLE EVENT DESCRIBED IN
PARAGRAPH (3)(A)(II) OR (III).
  (2) AMOUNT OF INCREASE. (A) IN GENERAL. THE  AMOUNT  OF  THE  INCREASE
DETERMINED UNDER THIS PARAGRAPH SHALL BE THE EXCESS (IF ANY) OF-
--(I)  THE  VALUE  OF  THE  QUALIFIED PAYMENTS PAYABLE DURING THE PERIOD
BEGINNING ON THE DATE OF THE TRANSFER UNDER SUBSECTION (A)(1) AND ENDING
ON THE DATE OF THE TAXABLE EVENT DETERMINED AS IF-
--(I) ALL SUCH PAYMENTS WERE PAID ON THE DATE PAYMENT WAS DUE, AND
--(II) ALL SUCH PAYMENTS WERE REINVESTED BY THE  TRANSFEROR  AS  OF  THE
DATE  OF PAYMENT AT A YIELD EQUAL TO THE DISCOUNT RATE USED IN DETERMIN-
ING  THE  VALUE  OF  THE  APPLICABLE  RETAINED  INTEREST  DESCRIBED   IN
SUBSECTION (A)(1), OVER
  (II) THE VALUE OF SUCH PAYMENTS PAID DURING SUCH PERIOD COMPUTED UNDER
CLAUSE  (I)  ON  THE  BASIS OF THE TIME WHEN SUCH PAYMENTS WERE ACTUALLY
PAID.
  (B) LIMITATION ON AMOUNT OF INCREASE. (I) IN GENERAL.  THE  AMOUNT  OF
THE  INCREASE  UNDER  SUBPARAGRAPH  (A)  SHALL NOT EXCEED THE APPLICABLE
PERCENTAGE OF THE EXCESS (IF ANY) OF-
--(I) THE VALUE (DETERMINED AS OF THE DATE OF THE TAXABLE EVENT) OF  ALL
EQUITY  INTERESTS  IN  THE  ENTITY  WHICH  ARE  JUNIOR TO THE APPLICABLE
RETAINED INTEREST, OVER
--(II) THE VALUE OF SUCH INTERESTS (DETERMINED AS OF  THE  DATE  OF  THE
TRANSFER TO WHICH SUBSECTION (A)(1) APPLIED).
  (II) APPLICABLE PERCENTAGE. FOR PURPOSES OF CLAUSE (I), THE APPLICABLE
PERCENTAGE IS THE PERCENTAGE DETERMINED BY DIVIDING-

S. 6359--C                         268

--(I)  THE  NUMBER  OF SHARES IN THE CORPORATION HELD (AS OF THE DATE OF
THE TAXABLE EVENT) BY  THE  TRANSFEROR  WHICH  ARE  APPLICABLE  RETAINED
INTERESTS OF THE SAME CLASS, BY
--(II)  THE TOTAL NUMBER OF SHARES IN SUCH CORPORATION (AS OF SUCH DATE)
WHICH ARE OF THE SAME CLASS AS THE CLASS DESCRIBED IN SUBCLAUSE (I).
--A SIMILAR PERCENTAGE SHALL BE DETERMINED IN THE CASE OF INTERESTS IN A
PARTNERSHIP.
  (III) DEFINITION. FOR PURPOSES OF THIS SUBPARAGRAPH, THE TERM  "EQUITY
INTEREST" HAS THE MEANING GIVEN SUCH TERM BY SUBSECTION (A)(4)(B).
  (C) GRACE PERIOD. FOR PURPOSES OF SUBPARAGRAPH (A), ANY PAYMENT OF ANY
DISTRIBUTION DURING THE 4-YEAR PERIOD BEGINNING ON ITS DUE DATE SHALL BE
TREATED AS HAVING BEEN MADE ON SUCH DUE DATE.
  (3) TAXABLE EVENTS. FOR PURPOSES OF THIS SUBSECTION-
  (A) IN GENERAL. THE TERM "TAXABLE EVENT" MEANS ANY OF THE FOLLOWING:
--(I)  THE  DEATH  OF THE TRANSFEROR IF THE APPLICABLE RETAINED INTEREST
CONFERRING THE DISTRIBUTION RIGHT IS INCLUDIBLE IN  THE  ESTATE  OF  THE
TRANSFEROR.
--(II) THE TRANSFER OF SUCH APPLICABLE RETAINED INTEREST.
--(III)  AT  THE  ELECTION OF THE TAXPAYER, THE PAYMENT OF ANY QUALIFIED
PAYMENT AFTER THE PERIOD DESCRIBED IN PARAGRAPH (2)(C),  BUT  ONLY  WITH
RESPECT TO SUCH PAYMENT.
  (B) EXCEPTION WHERE SPOUSE IS TRANSFEREE. (I) DEATHTIME TRANSFERS
--SUBPARAGRAPH  (A)(I) SHALL NOT APPLY TO ANY INTEREST INCLUDIBLE IN THE
GROSS ESTATE OF THE TRANSFEROR IF  A  DEDUCTION  WITH  RESPECT  TO  SUCH
INTEREST IS ALLOWABLE UNDER SECTION 2056 OR 2106(A)(3).
  (II)  LIFETIME  TRANSFERS.  A TRANSFER TO THE SPOUSE OF THE TRANSFEROR
SHALL NOT BE TREATED AS A TAXABLE EVENT UNDER  SUBPARAGRAPH  (A)(II)  IF
SUCH TRANSFER DOES NOT RESULT IN A TAXABLE GIFT BY REASON OF-
--(I)  ANY  DEDUCTION ALLOWED UNDER SECTION 2523, OR THE EXCLUSION UNDER
SECTION 2503(B), OR
--(II) CONSIDERATION FOR THE TRANSFER PROVIDED BY THE SPOUSE.
  (III) SPOUSE SUCCEEDS TO TREATMENT OF TRANSFEROR. IF AN EVENT  IS  NOT
TREATED AS A TAXABLE EVENT BY REASON OF THIS SUBPARAGRAPH, THE TRANSFER-
EE  SPOUSE  OR SURVIVING SPOUSE (AS THE CASE MAY BE) SHALL BE TREATED IN
THE SAME MANNER AS THE  TRANSFEROR  IN  APPLYING  THIS  SUBSECTION  WITH
RESPECT TO THE INTEREST INVOLVED.
  (4)  SPECIAL  RULES  FOR  APPLICABLE FAMILY MEMBERS. (A) FAMILY MEMBER
TREATED IN SAME MANNER AS TRANSFEROR. FOR PURPOSES OF  THIS  SUBSECTION,
AN  APPLICABLE  FAMILY MEMBER SHALL BE TREATED IN THE SAME MANNER AS THE
TRANSFEROR WITH RESPECT TO ANY DISTRIBUTION RIGHT RETAINED BY SUCH FAMI-
LY MEMBER TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED.
  (B) TRANSFER TO APPLICABLE FAMILY MEMBER. IN THE  CASE  OF  A  TAXABLE
EVENT  DESCRIBED  IN  PARAGRAPH  (3)(A)(II) INVOLVING THE TRANSFER OF AN
APPLICABLE RETAINED INTEREST TO AN APPLICABLE FAMILY MEMBER (OTHER  THAN
THE  SPOUSE  OF  THE  TRANSFEROR), THE APPLICABLE FAMILY MEMBER SHALL BE
TREATED IN THE SAME MANNER AS THE TRANSFEROR IN APPLYING THIS SUBSECTION
TO DISTRIBUTIONS ACCUMULATING WITH RESPECT TO SUCH INTEREST  AFTER  SUCH
TAXABLE EVENT.
  (C)  TRANSFER TO TRANSFERORS. IN THE CASE OF A TAXABLE EVENT DESCRIBED
IN PARAGRAPH (3)(A)(II) INVOLVING A TRANSFER OF AN  APPLICABLE  RETAINED
INTEREST  FROM  AN  APPLICABLE  FAMILY  MEMBER  TO  A  TRANSFEROR,  THIS
SUBSECTION SHALL CONTINUE TO APPLY TO THE TRANSFEROR DURING  ANY  PERIOD
THE TRANSFEROR HOLDS SUCH INTEREST.
  (5)  TRANSFER TO INCLUDE TERMINATION. FOR PURPOSES OF THIS SUBSECTION,
ANY TERMINATION OF AN INTEREST SHALL BE TREATED AS A TRANSFER.
  (E) OTHER DEFINITIONS AND RULES. FOR PURPOSES OF THIS SECTION-

S. 6359--C                         269

  (1) MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS,  WITH
RESPECT TO ANY TRANSFEROR-
--(A) THE TRANSFEROR'S SPOUSE,
--(B)  A LINEAL DESCENDANT OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE,
AND
--(C) THE SPOUSE OF ANY SUCH DESCENDANT.
  (2) APPLICABLE FAMILY MEMBER.  THE  TERM  "APPLICABLE  FAMILY  MEMBER"
MEANS, WITH RESPECT TO ANY TRANSFEROR-
--(A) THE TRANSFEROR'S SPOUSE,
--(B) AN ANCESTOR OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE, AND
--(C) THE SPOUSE OF ANY SUCH ANCESTOR.
  (3)  ATTRIBUTION  OF  INDIRECT  HOLDINGS  AND TRANSFERS. AN INDIVIDUAL
SHALL BE TREATED AS HOLDING ANY INTEREST TO THE EXTENT SUCH INTEREST  IS
HELD  INDIRECTLY  BY SUCH INDIVIDUAL THROUGH A CORPORATION, PARTNERSHIP,
TRUST, OR OTHER ENTITY. IF ANY INDIVIDUAL  IS  TREATED  AS  HOLDING  ANY
INTEREST BY REASON OF THE PRECEDING SENTENCE, ANY TRANSFER WHICH RESULTS
IN  SUCH  INTEREST  BEING  TREATED  AS NO LONGER HELD BY SUCH INDIVIDUAL
SHALL BE TREATED AS A TRANSFER OF SUCH INTEREST.
  (4) EFFECT OF ADOPTION. A RELATIONSHIP  BY  LEGAL  ADOPTION  SHALL  BE
TREATED AS A RELATIONSHIP BY BLOOD.
  (5)  CERTAIN CHANGES TREATED AS TRANSFERS. EXCEPT AS PROVIDED IN REGU-
LATIONS, A CONTRIBUTION TO CAPITAL OR A REDEMPTION, RECAPITALIZATION, OR
OTHER CHANGE IN THE CAPITAL STRUCTURE OF A  CORPORATION  OR  PARTNERSHIP
SHALL  BE  TREATED  AS A TRANSFER OF AN INTEREST IN SUCH ENTITY TO WHICH
THIS SECTION APPLIES IF THE TAXPAYER OR AN APPLICABLE FAMILY MEMBER-
--(A) RECEIVES AN APPLICABLE RETAINED INTEREST IN SUCH  ENTITY  PURSUANT
TO SUCH TRANSACTION, OR
--(B)  UNDER REGULATIONS, OTHERWISE HOLDS, IMMEDIATELY AFTER SUCH TRANS-
ACTION, AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY.
--THIS PARAGRAPH SHALL NOT  APPLY  TO  ANY  TRANSACTION  (OTHER  THAN  A
CONTRIBUTION  TO  CAPITAL)  IF  THE  INTERESTS IN THE ENTITY HELD BY THE
TRANSFEROR, APPLICABLE FAMILY MEMBERS, AND MEMBERS OF  THE  TRANSFEROR'S
FAMILY BEFORE AND AFTER THE TRANSACTION ARE SUBSTANTIALLY IDENTICAL.
  (6)  ADJUSTMENTS.  UNDER  REGULATIONS  PRESCRIBED BY THE SECRETARY, IF
THERE IS ANY SUBSEQUENT TRANSFER, OR INCLUSION IN THE GROSS  ESTATE,  OF
ANY  APPLICABLE  RETAINED  INTEREST  WHICH WAS VALUED UNDER THE RULES OF
SUBSECTION (A), APPROPRIATE ADJUSTMENTS SHALL BE MADE  FOR  PURPOSES  OF
CHAPTER 11, 12, OR 13 TO REFLECT THE INCREASE IN THE AMOUNT OF ANY PRIOR
TAXABLE  GIFT MADE BY THE TRANSFEROR OR DECEDENT BY REASON OF SUCH VALU-
ATION OR TO REFLECT THE APPLICATION OF SUBSECTION (D).
  (7) TREATMENT AS SEPARATE INTERESTS. THE SECRETARY MAY  BY  REGULATION
PROVIDE  THAT  ANY APPLICABLE RETAINED INTEREST SHALL BE TREATED AS 2 OR
MORE SEPARATE INTERESTS FOR PURPOSES OF THIS SECTION.
  S 2702. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF  INTERESTS  IN
TRUSTS.    (A)  VALUATION  RULES. (1) IN GENERAL. SOLELY FOR PURPOSES OF
DETERMINING WHETHER A TRANSFER OF AN INTEREST IN TRUST TO  (OR  FOR  THE
BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE
OF  SUCH  TRANSFER), THE VALUE OF ANY INTEREST IN SUCH TRUST RETAINED BY
THE TRANSFEROR OR ANY APPLICABLE FAMILY MEMBER (AS  DEFINED  IN  SECTION
2701(E)(2)) SHALL BE DETERMINED AS PROVIDED IN PARAGRAPH (2).
  (2)  VALUATION OF RETAINED INTERESTS. (A) IN GENERAL. THE VALUE OF ANY
RETAINED INTEREST WHICH IS NOT A QUALIFIED INTEREST SHALL BE TREATED  AS
BEING ZERO.
  (B)  VALUATION OF QUALIFIED INTEREST. THE VALUE OF ANY RETAINED INTER-
EST WHICH IS A QUALIFIED INTEREST  SHALL  BE  DETERMINED  UNDER  SECTION
7520.

S. 6359--C                         270

  (3) EXCEPTIONS. (A) IN GENERAL. THIS SUBSECTION SHALL NOT APPLY TO ANY
TRANSFER-
--(I) IF SUCH TRANSFER IS AN INCOMPLETE GIFT,
--(II)  IF  SUCH  TRANSFER INVOLVES THE TRANSFER OF AN INTEREST IN TRUST
ALL THE PROPERTY IN WHICH CONSISTS OF  A  RESIDENCE  TO  BE  USED  AS  A
PERSONAL RESIDENCE BY PERSONS HOLDING TERM INTERESTS IN SUCH TRUST, OR
--(III) TO THE EXTENT THAT REGULATIONS PROVIDE THAT SUCH TRANSFER IS NOT
INCONSISTENT WITH THE PURPOSES OF THIS SECTION.
  (B)  INCOMPLETE  GIFT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A), THE TERM
"INCOMPLETE GIFT" MEANS ANY TRANSFER WHICH WOULD NOT  BE  TREATED  AS  A
GIFT WHETHER OR NOT CONSIDERATION WAS RECEIVED FOR SUCH TRANSFER.
  (B) QUALIFIED INTEREST. FOR PURPOSES OF THIS SECTION, THE TERM "QUALI-
FIED INTEREST" MEANS-
  (1)  ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE FIXED AMOUNTS
PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY,
  (2) ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE AMOUNTS  WHICH
ARE PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY AND ARE A FIXED PERCENTAGE
OF  THE FAIR MARKET VALUE OF THE PROPERTY IN THE TRUST (DETERMINED ANNU-
ALLY), AND
  (3) ANY NONCONTINGENT REMAINDER INTEREST IF ALL OF THE OTHER INTERESTS
IN THE TRUST CONSIST OF INTERESTS DESCRIBED IN PARAGRAPH (1) OR (2).
  (C) CERTAIN PROPERTY TREATED AS HELD IN TRUST. FOR  PURPOSES  OF  THIS
SECTION-  (1)  IN  GENERAL. THE TRANSFER OF AN INTEREST IN PROPERTY WITH
RESPECT TO WHICH THERE IS 1 OR MORE TERM INTERESTS SHALL BE TREATED AS A
TRANSFER OF AN INTEREST IN A TRUST.
  (2) JOINT PURCHASES. IF 2 OR MORE MEMBERS OF THE SAME  FAMILY  ACQUIRE
INTERESTS  IN ANY PROPERTY DESCRIBED IN PARAGRAPH (1) IN THE SAME TRANS-
ACTION (OR A SERIES OF RELATED TRANSACTIONS), THE  PERSON  (OR  PERSONS)
ACQUIRING THE TERM INTERESTS IN SUCH PROPERTY SHALL BE TREATED AS HAVING
ACQUIRED  THE  ENTIRE PROPERTY AND THEN TRANSFERRED TO THE OTHER PERSONS
THE INTERESTS ACQUIRED BY SUCH OTHER  PERSONS  IN  THE  TRANSACTION  (OR
SERIES  OF  TRANSACTIONS).  SUCH  TRANSFER  SHALL  BE TREATED AS MADE IN
EXCHANGE FOR THE CONSIDERATION (IF ANY) PROVIDED BY SUCH  OTHER  PERSONS
FOR THE ACQUISITION OF THEIR INTERESTS IN SUCH PROPERTY.
  (3) TERM INTEREST. THE TERM "TERM INTEREST" MEANS-
  (A) A LIFE INTEREST IN PROPERTY, OR
  (B) AN INTEREST IN PROPERTY FOR A TERM OF YEARS.
  (4)  VALUATION  RULE FOR CERTAIN TERM INTERESTS. IF THE NONEXERCISE OF
RIGHTS UNDER A TERM INTEREST IN  TANGIBLE  PROPERTY  WOULD  NOT  HAVE  A
SUBSTANTIAL  EFFECT  ON  THE VALUATION OF THE REMAINDER INTEREST IN SUCH
PROPERTY-
  (A) SUBPARAGRAPH (A) OF SUBSECTION (A)(2) SHALL NOT APPLY TO SUCH TERM
INTEREST, AND
  (B)  THE  VALUE  OF  SUCH  TERM  INTEREST  FOR  PURPOSES  OF  APPLYING
SUBSECTION  (A)(1)  SHALL  BE  THE  AMOUNT  WHICH THE HOLDER OF THE TERM
INTEREST ESTABLISHES AS THE AMOUNT FOR WHICH SUCH INTEREST COULD BE SOLD
TO AN UNRELATED THIRD PARTY.
  (D) TREATMENT OF TRANSFERS OF INTERESTS IN PORTION OF TRUST.   IN  THE
CASE  OF A TRANSFER OF AN INCOME OR REMAINDER INTEREST WITH RESPECT TO A
SPECIFIED PORTION OF THE PROPERTY IN A TRUST, ONLY SUCH PORTION SHALL BE
TAKEN INTO ACCOUNT IN APPLYING THIS SECTION TO SUCH TRANSFER.
  (E) MEMBER OF THE FAMILY. FOR  PURPOSES  OF  THIS  SECTION,  THE  TERM
"MEMBER OF THE FAMILY" SHALL HAVE THE MEANING GIVEN SUCH TERM BY SECTION
2704(C)(2).
  S 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED

S. 6359--C                         271

  (A)  GENERAL  RULE.  FOR  PURPOSES  OF THIS SUBTITLE, THE VALUE OF ANY
PROPERTY SHALL BE DETERMINED WITHOUT REGARD TO-
  (1)  ANY OPTION, AGREEMENT, OR OTHER RIGHT TO ACQUIRE OR USE THE PROP-
ERTY AT A PRICE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY (WITHOUT
REGARD TO SUCH OPTION, AGREEMENT, OR RIGHT), OR
  (2) ANY RESTRICTION ON THE RIGHT TO SELL OR USE SUCH PROPERTY.
  (B) EXCEPTIONS. SUBSECTION (A) SHALL NOT APPLY TO ANY  OPTION,  AGREE-
MENT,  RIGHT,  OR RESTRICTION WHICH MEETS EACH OF THE FOLLOWING REQUIRE-
MENTS:
  (1) IT IS A BONA FIDE BUSINESS ARRANGEMENT.
  (2) IT IS NOT A DEVICE TO TRANSFER SUCH PROPERTY  TO  MEMBERS  OF  THE
DECEDENT'S FAMILY FOR LESS THAN FULL AND ADEQUATE CONSIDERATION IN MONEY
OR MONEY'S WORTH.
  (3)  ITS  TERMS ARE COMPARABLE TO SIMILAR ARRANGEMENTS ENTERED INTO BY
PERSONS IN AN ARMS' LENGTH TRANSACTION
  S 2704. TREATMENT OF CERTAIN LAPSING RIGHTS  AND  RESTRICTIONS.    (A)
TREATMENT  OF  LAPSED  VOTING OR LIQUIDATION RIGHTS. (1) IN GENERAL. FOR
PURPOSES OF THIS SUBTITLE, IF-
--(A) THERE IS A LAPSE OF ANY VOTING OR LIQUIDATION RIGHT  IN  A  CORPO-
RATION OR PARTNERSHIP, AND
--(B) THE INDIVIDUAL HOLDING SUCH RIGHT IMMEDIATELY BEFORE THE LAPSE AND
MEMBERS  OF  SUCH  INDIVIDUAL'S  FAMILY  HOLD, BOTH BEFORE AND AFTER THE
LAPSE, CONTROL OF THE ENTITY,
  SUCH LAPSE SHALL BE TREATED AS A TRANSFER BY SUCH INDIVIDUAL BY  GIFT,
OR  A  TRANSFER WHICH IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT,
WHICHEVER IS APPLICABLE, IN THE AMOUNT DETERMINED UNDER PARAGRAPH (2).
  (2) AMOUNT OF TRANSFER. FOR PURPOSES  OF  PARAGRAPH  (1),  THE  AMOUNT
DETERMINED UNDER THIS PARAGRAPH IS THE EXCESS (IF ANY) OF-
--(A)  THE  VALUE  OF ALL INTERESTS IN THE ENTITY HELD BY THE INDIVIDUAL
DESCRIBED IN PARAGRAPH (1) IMMEDIATELY BEFORE THE LAPSE  (DETERMINED  AS
IF THE VOTING AND LIQUIDATION RIGHTS WERE NONLAPSING), OVER
--(B) THE VALUE OF SUCH INTERESTS IMMEDIATELY AFTER THE LAPSE.
  (3)  SIMILAR  RIGHTS.  THE  SECRETARY  MAY  BY  REGULATIONS APPLY THIS
SUBSECTION TO RIGHTS SIMILAR TO VOTING AND LIQUIDATION RIGHTS.
  (B) CERTAIN RESTRICTIONS ON LIQUIDATION DISREGARDED. (1)  IN  GENERAL.
FOR PURPOSES OF THIS SUBTITLE, IF-
--(A) THERE IS A TRANSFER OF AN INTEREST IN A CORPORATION OR PARTNERSHIP
TO (OR FOR THE BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY, AND
--(B)  THE TRANSFEROR AND MEMBERS OF THE TRANSFEROR'S FAMILY HOLD, IMME-
DIATELY BEFORE THE TRANSFER, CONTROL OF THE ENTITY,
  --ANY APPLICABLE RESTRICTION SHALL BE DISREGARDED IN  DETERMINING  THE
VALUE OF THE TRANSFERRED INTEREST.
  (2)  APPLICABLE RESTRICTION. FOR PURPOSES OF THIS SUBSECTION, THE TERM
"APPLICABLE RESTRICTION" MEANS ANY RESTRICTION-
  (A) WHICH EFFECTIVELY LIMITS THE ABILITY OF THE CORPORATION  OR  PART-
NERSHIP TO LIQUIDATE, AND
  (B) WITH RESPECT TO WHICH EITHER OF THE FOLLOWING APPLIES:
--(I)  THE  RESTRICTION  LAPSES, IN WHOLE OR IN PART, AFTER THE TRANSFER
REFERRED TO IN PARAGRAPH (1).
--(II) THE TRANSFEROR OR ANY MEMBER OF THE TRANSFEROR'S  FAMILY,  EITHER
ALONE  OR  COLLECTIVELY, HAS THE RIGHT AFTER SUCH TRANSFER TO REMOVE, IN
WHOLE OR IN PART, THE RESTRICTION.
  (3) EXCEPTIONS. THE TERM "APPLICABLE RESTRICTION" SHALL NOT INCLUDE-
--(A) ANY COMMERCIALLY REASONABLE RESTRICTION WHICH ARISES  AS  PART  OF
ANY FINANCING BY THE CORPORATION OR PARTNERSHIP WITH A PERSON WHO IS NOT

S. 6359--C                         272

RELATED  TO  THE  TRANSFEROR OR TRANSFEREE, OR A MEMBER OF THE FAMILY OF
EITHER, OR
--(B) ANY RESTRICTION IMPOSED, OR REQUIRED TO BE IMPOSED, BY ANY FEDERAL
OR STATE LAW.
  (4)  OTHER RESTRICTIONS. THE SECRETARY MAY BY REGULATIONS PROVIDE THAT
OTHER RESTRICTIONS SHALL BE DISREGARDED IN DETERMINING THE VALUE OF  THE
TRANSFER  OF ANY INTEREST IN A CORPORATION OR PARTNERSHIP TO A MEMBER OF
THE TRANSFEROR'S FAMILY IF SUCH RESTRICTION HAS THE EFFECT  OF  REDUCING
THE  VALUE OF THE TRANSFERRED INTEREST FOR PURPOSES OF THIS SUBTITLE BUT
DOES NOT ULTIMATELY REDUCE THE VALUE OF SUCH INTEREST TO THE TRANSFEREE.
  (C) DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
  (1) CONTROL. THE TERM "CONTROL" HAS THE MEANING  GIVEN  SUCH  TERM  BY
SECTION 2701(B)(2).
  (2)  MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS, WITH
RESPECT TO ANY INDIVIDUAL-
  (A) SUCH INDIVIDUAL'S SPOUSE,
  (B) ANY ANCESTOR OR LINEAL DESCENDANT OF SUCH INDIVIDUAL OR SUCH INDI-
VIDUAL'S SPOUSE,
  (C) ANY BROTHER OR SISTER OF THE INDIVIDUAL, AND
  (D) ANY SPOUSE OF ANY INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (B) OR
(C).
  (3) ATTRIBUTION. THE  RULE  OF  SECTION  2701(E)(3)  SHALL  APPLY  FOR
PURPOSES OF DETERMINING THE INTERESTS HELD BY ANY INDIVIDUAL.
  S 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES
  (A)  TREATMENT  OF  GIFT  LOANS AND DEMAND LOANS. (1) IN GENERAL.  FOR
PURPOSES OF THIS TITLE, IN THE CASE OF ANY BELOW-MARKET  LOAN  TO  WHICH
THIS  SECTION  APPLIES  AND  WHICH  IS A GIFT LOAN OR A DEMAND LOAN, THE
FORGONE INTEREST SHALL BE TREATED AS-
--(A) TRANSFERRED FROM THE LENDER TO THE BORROWER, AND
--(B) RETRANSFERRED BY THE BORROWER TO THE LENDER AS INTEREST.
  (2) TIME WHEN TRANSFERS MADE. EXCEPT AS OTHERWISE  PROVIDED  IN  REGU-
LATIONS  PRESCRIBED  BY THE SECRETARY, ANY FORGONE INTEREST ATTRIBUTABLE
TO PERIODS DURING ANY CALENDAR YEAR SHALL BE TREATED AS TRANSFERRED (AND
RETRANSFERRED) UNDER PARAGRAPH (1) ON THE  LAST  DAY  OF  SUCH  CALENDAR
YEAR.
  (B)  TREATMENT  OF  OTHER  BELOW-MARKET  LOANS.  (1) IN GENERAL.   FOR
PURPOSES OF THIS TITLE, IN THE CASE OF ANY BELOW-MARKET  LOAN  TO  WHICH
THIS  SECTION APPLIES AND TO WHICH SUBSECTION (A)(1) DOES NOT APPLY, THE
LENDER SHALL BE TREATED AS HAVING TRANSFERRED ON THE DATE THE  LOAN  WAS
MADE  (OR,  IF  LATER, ON THE FIRST DAY ON WHICH THIS SECTION APPLIES TO
SUCH LOAN), AND THE BORROWER SHALL BE TREATED AS HAVING RECEIVED ON SUCH
DATE, CASH IN AN AMOUNT EQUAL TO THE EXCESS OF-
--(A) THE AMOUNT LOANED, OVER
--(B) THE PRESENT VALUE OF ALL PAYMENTS WHICH ARE REQUIRED  TO  BE  MADE
UNDER THE TERMS OF THE LOAN.
  (2) OBLIGATION TREATED AS HAVING ORIGINAL ISSUE DISCOUNT. FOR PURPOSES
OF THIS TITLE-
  (A)  IN  GENERAL. ANY BELOW-MARKET LOAN TO WHICH PARAGRAPH (1) APPLIES
SHALL BE TREATED AS HAVING ORIGINAL ISSUE DISCOUNT IN AN AMOUNT EQUAL TO
THE EXCESS DESCRIBED IN PARAGRAPH (1).
  (B) AMOUNT IN ADDITION TO OTHER ORIGINAL ISSUE DISCOUNT. ANY  ORIGINAL
ISSUE  DISCOUNT  WHICH A LOAN IS TREATED AS HAVING BY REASON OF SUBPARA-
GRAPH (A) SHALL BE IN ADDITION TO ANY OTHER ORIGINAL ISSUE  DISCOUNT  ON
SUCH LOAN (DETERMINED WITHOUT REGARD TO SUBPARAGRAPH (A)).

S. 6359--C                         273

  (C)  BELOW-MARKET  LOANS  TO  WHICH  SECTION  APPLIES. (1) IN GENERAL.
EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION AND SUBSECTION (G), THIS
SECTION SHALL APPLY TO-
  (A) GIFTS. ANY BELOW-MARKET LOAN WHICH IS A GIFT LOAN.
  (B)  COMPENSATION-RELATED  LOANS.  ANY  BELOW-MARKET  LOAN DIRECTLY OR
INDIRECTLY BETWEEN-
--(I) AN EMPLOYER AND AN EMPLOYEE, OR
--(II) AN INDEPENDENT CONTRACTOR AND A PERSON FOR WHOM SUCH  INDEPENDENT
CONTRACTOR PROVIDES SERVICES.
  (C)  CORPORATION-SHAREHOLDER  LOANS. ANY BELOW-MARKET LOAN DIRECTLY OR
INDIRECTLY BETWEEN A CORPORATION AND  ANY  SHAREHOLDER  OF  SUCH  CORPO-
RATION.
  (D)  TAX  AVOIDANCE  LOANS.  ANY  BELOW-MARKET LOAN 1 OF THE PRINCIPAL
PURPOSES OF THE INTEREST ARRANGEMENTS OF WHICH IS THE AVOIDANCE  OF  ANY
FEDERAL TAX.
  (E)  OTHER  BELOW-MARKET LOANS. TO THE EXTENT PROVIDED IN REGULATIONS,
ANY BELOW-MARKET LOAN WHICH IS NOT DESCRIBED IN SUBPARAGRAPH  (A),  (B),
(C), OR (F) IF THE INTEREST ARRANGEMENTS OF SUCH LOAN HAVE A SIGNIFICANT
EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
  (F)  LOANS  TO  QUALIFIED  CONTINUING CARE FACILITIES. ANY LOAN TO ANY
QUALIFIED  CONTINUING  CARE  FACILITY  PURSUANT  TO  A  CONTINUING  CARE
CONTRACT.
  (2)  $10,000  DE MINIMIS EXCEPTION FOR GIFT LOANS BETWEEN INDIVIDUALS.
(A) IN GENERAL. IN THE CASE OF ANY GIFT LOAN DIRECTLY  BETWEEN  INDIVID-
UALS,  THIS  SECTION  SHALL  NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE
OUTSTANDING AMOUNT OF LOANS BETWEEN SUCH  INDIVIDUALS  DOES  NOT  EXCEED
$10,000.
  (B)  DE MINIMIS EXCEPTION NOT TO APPLY TO LOANS ATTRIBUTABLE TO ACQUI-
SITION OF INCOME-PRODUCING ASSETS.
--SUBPARAGRAPH (A) SHALL NOT APPLY TO ANY GIFT LOAN  DIRECTLY  ATTRIBUT-
ABLE TO THE PURCHASE OR CARRYING OF INCOME-PRODUCING ASSETS.
  (C)  CROSS  REFERENCE.  FOR  LIMITATION  ON AMOUNT TREATED AS INTEREST
WHERE LOANS DO NOT EXCEED $100,000, SEE SUBSECTION (D)(1).
  (3) $10,000 DE MINIMIS EXCEPTION FOR COMPENSATION-RELATED  AND  CORPO-
RATE-SHAREHOLDER  LOANS.  (A)  IN  GENERAL.  IN  THE  CASE  OF  ANY LOAN
DESCRIBED IN SUBPARAGRAPH (B) OR (C)  OF  PARAGRAPH  (1),  THIS  SECTION
SHALL  NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE OUTSTANDING AMOUNT OF
LOANS BETWEEN THE BORROWER AND LENDER DOES NOT EXCEED $10,000.
  (B) EXCEPTION NOT TO APPLY WHERE 1 OF PRINCIPAL PURPOSES IS TAX AVOID-
ANCE.   SUBPARAGRAPH (A) SHALL  NOT  APPLY  TO  ANY  LOAN  THE  INTEREST
ARRANGEMENTS  OF  WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES THE AVOID-
ANCE OF ANY FEDERAL TAX.
  (D) SPECIAL RULES FOR GIFT LOANS. (1) LIMITATION ON  INTEREST  ACCRUAL
FOR  PURPOSES OF INCOME TAXES WHERE LOANS DO NOT EXCEED $100,000. (A) IN
GENERAL. FOR PURPOSES OF SUBTITLE A, IN THE CASE OF A GIFT LOAN DIRECTLY
BETWEEN INDIVIDUALS, THE AMOUNT TREATED AS RETRANSFERRED BY THE BORROWER
TO THE LENDER AS OF THE CLOSE OF ANY YEAR SHALL NOT EXCEED  THE  BORROW-
ER'S NET INVESTMENT INCOME FOR SUCH YEAR.
  (B)  LIMITATION  NOT  TO  APPLY  WHERE  1 OF PRINCIPAL PURPOSES IS TAX
AVOIDANCE.  SUBPARAGRAPH (A) SHALL NOT APPLY TO ANY  LOAN  THE  INTEREST
ARRANGEMENTS  OF  WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES THE AVOID-
ANCE OF ANY FEDERAL TAX.
  (C) SPECIAL RULE WHERE MORE THAN 1 GIFT LOAN OUTSTANDING. FOR PURPOSES
OF SUBPARAGRAPH (A), IN ANY CASE IN WHICH  A  BORROWER  HAS  OUTSTANDING
MORE  THAN 1 GIFT LOAN, THE NET INVESTMENT INCOME OF SUCH BORROWER SHALL
BE ALLOCATED AMONG SUCH LOANS IN PROPORTION TO  THE  RESPECTIVE  AMOUNTS

S. 6359--C                         274

WHICH  WOULD  BE TREATED AS RETRANSFERRED BY THE BORROWER WITHOUT REGARD
TO THIS PARAGRAPH.
  (D)  LIMITATION  NOT  TO  APPLY WHERE AGGREGATE AMOUNT OF LOANS EXCEED
$100,000.  THIS PARAGRAPH SHALL NOT APPLY TO ANY LOAN MADE BY  A  LENDER
TO  A  BORROWER FOR ANY DAY ON WHICH THE AGGREGATE OUTSTANDING AMOUNT OF
LOANS BETWEEN THE BORROWER AND LENDER EXCEEDS $100,000.
  (E) NET INVESTMENT INCOME. FOR PURPOSES OF THIS PARAGRAPH-
  (I) IN GENERAL. THE TERM "NET INVESTMENT INCOME" HAS THE MEANING GIVEN
SUCH TERM BY SECTION 163(D)(4).
  (II) DE MINIMIS RULE. IF THE NET INVESTMENT INCOME OF ANY BORROWER FOR
ANY YEAR DOES NOT EXCEED $1,000,  THE  NET  INVESTMENT  INCOME  OF  SUCH
BORROWER FOR SUCH YEAR SHALL BE TREATED AS ZERO.
  (III)  ADDITIONAL  AMOUNTS TREATED AS INTEREST. IN DETERMINING THE NET
INVESTMENT INCOME OF A PERSON FOR ANY YEAR, ANY AMOUNT  WHICH  WOULD  BE
INCLUDED  IN  THE GROSS INCOME OF SUCH PERSON FOR SUCH YEAR BY REASON OF
SECTION 1272 IF SUCH SECTION APPLIED TO ALL DEFERRED PAYMENT OBLIGATIONS
SHALL BE TREATED AS INTEREST RECEIVED BY SUCH PERSON FOR SUCH YEAR.
  (IV) DEFERRED PAYMENT OBLIGATIONS. THE TERM  "DEFERRED  PAYMENT  OBLI-
GATION" INCLUDES ANY MARKET DISCOUNT BOND, SHORT-TERM OBLIGATION, UNITED
STATES SAVINGS BOND, ANNUITY, OR SIMILAR OBLIGATION.
  (2) SPECIAL RULE FOR GIFT TAX. IN THE CASE OF ANY GIFT LOAN WHICH IS A
TERM  LOAN,  SUBSECTION  (B)(1) (AND NOT SUBSECTION (A)) SHALL APPLY FOR
PURPOSES OF CHAPTER 12.
  (E)  DEFINITIONS  OF  BELOW-MARKET  LOAN  AND  FORGONE  INTEREST.  FOR
PURPOSES OF THIS SECTION-
  (1) BELOW-MARKET LOAN. THE TERM "BELOW-MARKET LOAN" MEANS ANY LOAN IF-
--(A) IN THE CASE OF A DEMAND LOAN, INTEREST IS PAYABLE ON THE LOAN AT A
RATE LESS THAN THE APPLICABLE FEDERAL RATE, OR
--(B)  IN THE CASE OF A TERM LOAN, THE AMOUNT LOANED EXCEEDS THE PRESENT
VALUE OF ALL PAYMENTS DUE UNDER THE LOAN.
  (2) FORGONE INTEREST. THE TERM "FORGONE INTEREST" MEANS, WITH  RESPECT
TO ANY PERIOD DURING WHICH THE LOAN IS OUTSTANDING, THE EXCESS OF-
--(A)  THE  AMOUNT OF INTEREST WHICH WOULD HAVE BEEN PAYABLE ON THE LOAN
FOR THE PERIOD IF INTEREST ACCRUED ON THE LOAN AT THE APPLICABLE FEDERAL
RATE AND WERE PAYABLE ANNUALLY ON THE  DAY  REFERRED  TO  IN  SUBSECTION
(A)(2), OVER
--(B)  ANY INTEREST PAYABLE ON THE LOAN PROPERLY ALLOCABLE TO SUCH PERI-
OD.
  (F) OTHER DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
  (1) PRESENT VALUE. THE PRESENT VALUE OF ANY PAYMENT  SHALL  BE  DETER-
MINED IN THE MANNER PROVIDED BY REGULATIONS PRESCRIBED BY THE SECRETARY-
--(A) AS OF THE DATE OF THE LOAN, AND
--(B) BY USING A DISCOUNT RATE EQUAL TO THE APPLICABLE FEDERAL RATE.
  (2)  APPLICABLE  FEDERAL RATE. (A) TERM LOANS. IN THE CASE OF ANY TERM
LOAN, THE APPLICABLE FEDERAL RATE SHALL BE THE APPLICABLE  FEDERAL  RATE
IN  EFFECT  UNDER  SECTION  1274(D) (AS OF THE DAY ON WHICH THE LOAN WAS
MADE), COMPOUNDED SEMIANNUALLY.
  (B) DEMAND LOANS. IN THE CASE OF A DEMAND LOAN, THE APPLICABLE FEDERAL
RATE SHALL BE THE  FEDERAL  SHORT-TERM  RATE  IN  EFFECT  UNDER  SECTION
1274(D) FOR THE PERIOD FOR WHICH THE AMOUNT OF FORGONE INTEREST IS BEING
DETERMINED, COMPOUNDED SEMIANNUALLY.
  (3)  GIFT LOAN. THE TERM "GIFT LOAN" MEANS ANY BELOW-MARKET LOAN WHERE
THE FORGOING OF INTEREST IS IN THE NATURE OF A GIFT.
  (4) AMOUNT LOANED. THE TERM "AMOUNT LOANED" MEANS THE AMOUNT  RECEIVED
BY THE BORROWER.

S. 6359--C                         275

  (5)  DEMAND LOAN. THE TERM "DEMAND LOAN" MEANS ANY LOAN WHICH IS PAYA-
BLE IN FULL AT ANY TIME ON THE DEMAND OF  THE  LENDER.  SUCH  TERM  ALSO
INCLUDES  (FOR  PURPOSES  OTHER  THAN DETERMINING THE APPLICABLE FEDERAL
RATE UNDER PARAGRAPH (2)) ANY LOAN  IF  THE  BENEFITS  OF  THE  INTEREST
ARRANGEMENTS  OF  SUCH  LOAN ARE NOT TRANSFERABLE AND ARE CONDITIONED ON
THE FUTURE PERFORMANCE OF SUBSTANTIAL SERVICES BY AN INDIVIDUAL. TO  THE
EXTENT PROVIDED IN REGULATIONS, SUCH TERM ALSO INCLUDES ANY LOAN WITH AN
INDEFINITE MATURITY.
  (6)  TERM  LOAN.  THE  TERM  "TERM LOAN" MEANS ANY LOAN WHICH IS NOT A
DEMAND LOAN.
  (7) HUSBAND AND WIFE TREATED AS 1 PERSON. A HUSBAND AND WIFE SHALL  BE
TREATED AS 1 PERSON.
  (8)  LOANS TO WHICH SECTION 483, 643(I), OR 1274 APPLIES. THIS SECTION
SHALL NOT APPLY TO ANY LOAN  TO  WHICH  SECTION  483,  643(I),  OR  1274
APPLIES.
  (9)  NO WITHHOLDING. NO AMOUNT SHALL BE WITHHELD UNDER CHAPTER 24 WITH
RESPECT TO-
--(A)  ANY  AMOUNT  TREATED  AS  TRANSFERRED  OR   RETRANSFERRED   UNDER
SUBSECTION (A), AND
--(B) ANY AMOUNT TREATED AS RECEIVED UNDER SUBSECTION (B).
  (10)  SPECIAL RULE FOR TERM LOANS. IF THIS SECTION APPLIES TO ANY TERM
LOAN ON ANY DAY, THIS SECTION SHALL  CONTINUE  TO  APPLY  TO  SUCH  LOAN
NOTWITHSTANDING PARAGRAPHS (2) AND (3) OF SUBSECTION (C). IN THE CASE OF
A  GIFT  LOAN,  THE  PRECEDING SENTENCE SHALL ONLY APPLY FOR PURPOSES OF
CHAPTER 12.
  (11) TIME FOR  DETERMINING  RATE  APPLICABLE  TO  EMPLOYEE  RELOCATION
LOANS.  (A) IN GENERAL. IN THE CASE OF ANY TERM LOAN MADE BY AN EMPLOYER
TO AN EMPLOYEE THE PROCEEDS  OF  WHICH  ARE  USED  BY  THE  EMPLOYEE  TO
PURCHASE  A PRINCIPAL RESIDENCE (WITHIN THE MEANING OF SECTION 121), THE
DETERMINATION OF THE APPLICABLE FEDERAL RATE SHALL BE  MADE  AS  OF  THE
DATE THE WRITTEN CONTRACT TO PURCHASE SUCH RESIDENCE WAS ENTERED INTO.
  (B)  PARAGRAPH  ONLY  TO  APPLY TO CASES TO WHICH SECTION 217 APPLIES.
SUBPARAGRAPH (A) SHALL ONLY APPLY TO THE PURCHASE OF A  PRINCIPAL  RESI-
DENCE  IN  CONNECTION  WITH THE COMMENCEMENT OF WORK BY AN EMPLOYEE OR A
CHANGE IN THE PRINCIPAL PLACE OF WORK OF AN EMPLOYEE  TO  WHICH  SECTION
217 APPLIES.
  (G)  EXCEPTION  FOR CERTAIN LOANS TO QUALIFIED CONTINUING CARE FACILI-
TIES.  (1) IN GENERAL. THIS SECTION SHALL NOT  APPLY  FOR  ANY  CALENDAR
YEAR TO ANY BELOW-MARKET LOAN MADE BY A LENDER TO A QUALIFIED CONTINUING
CARE  FACILITY  PURSUANT TO A CONTINUING CARE CONTRACT IF THE LENDER (OR
THE LENDER'S SPOUSE) ATTAINS AGE 65 BEFORE THE CLOSE OF SUCH YEAR.
  (2) $90,000 LIMIT. PARAGRAPH (1) SHALL APPLY ONLY TO THE  EXTENT  THAT
THE  AGGREGATE  OUTSTANDING  AMOUNT  OF ANY LOAN TO WHICH SUCH PARAGRAPH
APPLIES (DETERMINED WITHOUT REGARD TO THIS PARAGRAPH), WHEN ADDED TO THE
AGGREGATE OUTSTANDING AMOUNT OF ALL OTHER  PREVIOUS  LOANS  BETWEEN  THE
LENDER (OR THE LENDER'S SPOUSE) AND ANY QUALIFIED CONTINUING CARE FACIL-
ITY TO WHICH PARAGRAPH (1) APPLIES, DOES NOT EXCEED $90,000.
  (3)  CONTINUING  CARE CONTRACT. FOR PURPOSES OF THIS SECTION, THE TERM
"CONTINUING CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN  INDIVID-
UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
--(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
ING CARE FACILITY FOR THEIR LIFE OR LIVES,
--(B) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE-
--(I) WILL FIRST-

S. 6359--C                         276

--(I)  RESIDE  IN  A  SEPARATE,  INDEPENDENT LIVING UNIT WITH ADDITIONAL
FACILITIES OUTSIDE SUCH UNIT  FOR  THE  PROVIDING  OF  MEALS  AND  OTHER
PERSONAL CARE, AND
--(II) NOT REQUIRE LONG-TERM NURSING CARE, AND
--(II)  THEN  WILL BE PROVIDED LONG-TERM AND SKILLED NURSING CARE AS THE
HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S SPOUSE REQUIRES, AND
--(C) NO ADDITIONAL SUBSTANTIAL PAYMENT IS REQUIRED IF  SUCH  INDIVIDUAL
OR  INDIVIDUAL'S  SPOUSE  REQUIRES  INCREASED  PERSONAL CARE SERVICES OR
LONG-TERM AND SKILLED NURSING CARE.
  (4) QUALIFIED CONTINUING CARE FACILITY. (A) IN GENERAL.  FOR  PURPOSES
OF  THIS  SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY" MEANS 1
OR MORE FACILITIES-
--(I) WHICH ARE DESIGNED  TO  PROVIDE  SERVICES  UNDER  CONTINUING  CARE
CONTRACTS, AND
--(II)  SUBSTANTIALLY  ALL  OF  THE  RESIDENTS  OF  WHICH ARE COVERED BY
CONTINUING CARE CONTRACTS.
  (B) SUBSTANTIALLY ALL FACILITIES MUST BE OWNED OR OPERATED BY  BORROW-
ER.  A  FACILITY  SHALL  NOT  BE  TREATED AS A QUALIFIED CONTINUING CARE
FACILITY UNLESS SUBSTANTIALLY ALL FACILITIES WHICH ARE USED  TO  PROVIDE
SERVICES  WHICH  ARE  REQUIRED  TO  BE  PROVIDED UNDER A CONTINUING CARE
CONTRACT ARE OWNED OR OPERATED BY THE BORROWER.
  (C) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
ITY" SHALL NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH  IS  TRADI-
TIONALLY CONSIDERED A NURSING HOME.
  (5)  ADJUSTMENT OF LIMIT FOR INFLATION. (A) IN GENERAL. IN THE CASE OF
ANY LOAN MADE DURING ANY CALENDAR YEAR AFTER 1986 TO WHICH PARAGRAPH (1)
APPLIES, THE DOLLAR AMOUNT IN PARAGRAPH (2) SHALL BE  INCREASED  BY  THE
INFLATION  ADJUSTMENT  FOR  SUCH  CALENDAR  YEAR. ANY INCREASE UNDER THE
PRECEDING SENTENCE SHALL BE ROUNDED TO THE NEAREST MULTIPLE OF $100 (OR,
IF SUCH INCREASE IS A MULTIPLE OF $50, SUCH INCREASE SHALL BE  INCREASED
TO THE NEAREST MULTIPLE OF $100).
  (B)  INFLATION  ADJUSTMENT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A), THE
INFLATION ADJUSTMENT FOR ANY CALENDAR YEAR IS THE PERCENTAGE (IF ANY) BY
WHICH-
--(I) THE CPI FOR THE PRECEDING CALENDAR YEAR EXCEEDS
--(II) THE CPI FOR CALENDAR YEAR 1985.
  1. FOR PURPOSES OF THE PRECEDING SENTENCE, THE CPI  FOR  ANY  CALENDAR
YEAR  IS  THE AVERAGE OF THE CONSUMER PRICE INDEX AS OF THE CLOSE OF THE
12-MONTH PERIOD ENDING ON SEPTEMBER 30 OF SUCH CALENDAR YEAR.
  (6) SUSPENSION OF APPLICATION. PARAGRAPH (1) SHALL NOT APPLY  FOR  ANY
CALENDAR YEAR TO WHICH SUBSECTION (H) APPLIES.
  (H)  EXCEPTION  FOR LOANS TO QUALIFIED CONTINUING CARE FACILITIES. (1)
IN GENERAL. THIS SECTION SHALL NOT APPLY FOR ANY CALENDAR  YEAR  TO  ANY
BELOW-MARKET  LOAN OWED BY A FACILITY WHICH ON THE LAST DAY OF SUCH YEAR
IS A QUALIFIED CONTINUING CARE FACILITY, IF SUCH LOAN WAS MADE  PURSUANT
TO A CONTINUING CARE CONTRACT AND IF THE LENDER (OR THE LENDER'S SPOUSE)
ATTAINS AGE 62 BEFORE THE CLOSE OF SUCH YEAR.
  (2)  CONTINUING  CARE CONTRACT. FOR PURPOSES OF THIS SECTION, THE TERM
"CONTINUING CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN  INDIVID-
UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
--(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
ING CARE FACILITY FOR THEIR LIFE OR LIVES,
--(B)  THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE WILL BE PROVIDED WITH HOUS-
ING, AS APPROPRIATE FOR THE HEALTH OF SUCH  INDIVIDUAL  OR  INDIVIDUAL'S
SPOUSE-

S. 6359--C                         277

--(I)  IN  AN  INDEPENDENT  LIVING  UNIT (WHICH HAS ADDITIONAL AVAILABLE
FACILITIES OUTSIDE SUCH UNIT  FOR  THE  PROVISION  OF  MEALS  AND  OTHER
PERSONAL CARE), AND
--(II)  IN  AN  ASSISTED  LIVING  FACILITY  OR A NURSING FACILITY, AS IS
AVAILABLE IN THE CONTINUING CARE FACILITY, AND
--(C) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE WILL  BE  PROVIDED  ASSISTED
LIVING  OR NURSING CARE AS THE HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S
SPOUSE REQUIRES, AND AS IS AVAILABLE IN THE CONTINUING CARE FACILITY.
--THE SECRETARY SHALL ISSUE GUIDANCE WHICH LIMITS SUCH TERM TO CONTRACTS
WHICH PROVIDE ONLY FACILITIES, CARE,  AND  SERVICES  DESCRIBED  IN  THIS
PARAGRAPH.
  (3)  QUALIFIED  CONTINUING CARE FACILITY. (A) IN GENERAL. FOR PURPOSES
OF THIS SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY"  MEANS  1
OR MORE FACILITIES-
--(I)  WHICH  ARE  DESIGNED  TO  PROVIDE  SERVICES UNDER CONTINUING CARE
CONTRACTS,
--(II) WHICH INCLUDE AN INDEPENDENT LIVING UNIT, PLUS AN ASSISTED LIVING
OR NURSING FACILITY, OR BOTH, AND
--(III) SUBSTANTIALLY ALL OF THE INDEPENDENT LIVING  UNIT  RESIDENTS  OF
WHICH ARE COVERED BY CONTINUING CARE CONTRACTS.
  (B) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
ITY"  SHALL  NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH IS TRADI-
TIONALLY CONSIDERED A NURSING HOME.
  (I) REGULATIONS. (1) IN GENERAL. THE SECRETARY  SHALL  PRESCRIBE  SUCH
REGULATIONS AS MAY BE NECESSARY OR APPROPRIATE TO CARRY OUT THE PURPOSES
OF THIS SECTION, INCLUDING-
--(A)  REGULATIONS  PROVIDING  THAT WHERE, BY REASON OF VARYING RATES OF
INTEREST, CONDITIONAL INTEREST PAYMENTS, WAIVERS OF  INTEREST,  DISPOSI-
TION  OF  THE  LENDER'S  OR  BORROWER'S  INTEREST  IN THE LOAN, OR OTHER
CIRCUMSTANCES, THE PROVISIONS OF THIS  SECTION  DO  NOT  CARRY  OUT  THE
PURPOSES  OF THIS SECTION, ADJUSTMENTS TO THE PROVISIONS OF THIS SECTION
WILL BE MADE TO THE EXTENT NECESSARY TO CARRY OUT THE PURPOSES  OF  THIS
SECTION,
--(B)  REGULATIONS FOR THE PURPOSE OF ASSURING THAT THE POSITIONS OF THE
BORROWER AND LENDER ARE CONSISTENT AS TO THE APPLICATION (OR NONAPPLICA-
TION) OF THIS SECTION, AND
--(C) REGULATIONS EXEMPTING FROM THE APPLICATION  OF  THIS  SECTION  ANY
CLASS OF TRANSACTIONS THE INTEREST ARRANGEMENTS OF WHICH HAVE NO SIGNIF-
ICANT EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
  (2)  ESTATE  TAX  COORDINATION.  UNDER  REGULATIONS  PRESCRIBED BY THE
SECRETARY, ANY LOAN WHICH IS MADE WITH DONATIVE INTENT AND  WHICH  IS  A
TERM  LOAN  SHALL  BE TAKEN INTO ACCOUNT FOR PURPOSES OF CHAPTER 11 IN A
MANNER CONSISTENT WITH THE PROVISIONS OF SUBSECTION (B).
  S 6166. EXTENSION OF TIME FOR  PAYMENT  OF  ESTATE  TAX  WHERE  ESTATE
CONSISTS LARGELY OF INTEREST IN CLOSELY HELD BUSINESS. (A) 5-YEAR DEFER-
RAL; 10-YEAR INSTALLMENT PAYMENT.--
  (1)  IN  GENERAL.--IF THE VALUE OF AN INTEREST IN A CLOSELY HELD BUSI-
NESS WHICH IS INCLUDED IN DETERMINING THE GROSS ESTATE OF A DECEDENT WHO
WAS (AT THE DATE OF HIS DEATH) A  CITIZEN  OR  RESIDENT  OF  THE  UNITED
STATES EXCEEDS 35 PERCENT OF THE ADJUSTED GROSS ESTATE, THE EXECUTOR MAY
ELECT TO PAY PART OR ALL OF THE TAX IMPOSED BY SECTION 2001 IN 2 OR MORE
(BUT NOT EXCEEDING 10) EQUAL INSTALLMENTS.
  (2)  LIMITATION.--THE  MAXIMUM  AMOUNT  OF  TAX  WHICH  MAY BE PAID IN
INSTALLMENTS UNDER THIS SUBSECTION SHALL BE AN AMOUNT  WHICH  BEARS  THE
SAME  RATIO  TO  THE TAX IMPOSED BY SECTION 2001 (REDUCED BY THE CREDITS
AGAINST SUCH TAX) AS--

S. 6359--C                         278

  (A) THE CLOSELY HELD BUSINESS AMOUNT, BEARS TO
  (B) THE AMOUNT OF THE ADJUSTED GROSS ESTATE.
  (3)  DATE  FOR  PAYMENT OF INSTALLMENTS.--IF AN ELECTION IS MADE UNDER
PARAGRAPH (1), THE FIRST INSTALLMENT SHALL BE PAID ON OR BEFORE THE DATE
SELECTED BY THE EXECUTOR WHICH IS NOT MORE THAN 5 YEARS AFTER  THE  DATE
PRESCRIBED  BY SECTION 6151(A) FOR PAYMENT OF THE TAX, AND EACH SUCCEED-
ING INSTALLMENT SHALL BE PAID ON OR BEFORE THE  DATE  WHICH  IS  1  YEAR
AFTER THE DATE PRESCRIBED BY THIS PARAGRAPH FOR PAYMENT OF THE PRECEDING
INSTALLMENT.
  (B) DEFINITIONS AND SPECIAL RULES.--
  (1)  INTEREST IN CLOSELY HELD BUSINESS.--FOR PURPOSES OF THIS SECTION,
THE TERM "INTEREST IN A CLOSELY HELD BUSINESS" MEANS--
  (A) AN INTEREST AS A PROPRIETOR IN A TRADE OR BUSINESS CARRIED ON AS A
PROPRIETORSHIP;
  (B) AN INTEREST AS A PARTNER IN A PARTNERSHIP CARRYING ON A  TRADE  OR
BUSINESS, IF--
  (I)  20 PERCENT OR MORE OF THE TOTAL CAPITAL INTEREST IN SUCH PARTNER-
SHIP IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
  (II) SUCH PARTNERSHIP HAD 45 OR FEWER PARTNERS; OR
  (C) STOCK IN A CORPORATION CARRYING ON A TRADE OR BUSINESS IF--
  (I) 20 PERCENT OR MORE IN VALUE OF THE VOTING  STOCK  OF  SUCH  CORPO-
RATION IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
  (II) SUCH CORPORATION HAD 45 OR FEWER SHAREHOLDERS.
  (2) RULES FOR APPLYING PARAGRAPH (1).--FOR PURPOSES OF PARAGRAPH (1)--
  (A)  TIME  FOR  TESTING.--DETERMINATIONS  SHALL BE MADE AS OF THE TIME
IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
  (B) CERTAIN INTERESTS HELD BY HUSBAND AND WIFE.--STOCK OR  A  PARTNER-
SHIP INTEREST WHICH--
  (I)  IS  COMMUNITY  PROPERTY OF A HUSBAND AND WIFE (OR THE INCOME FROM
WHICH IS COMMUNITY INCOME) UNDER THE APPLICABLE COMMUNITY  PROPERTY  LAW
OF A STATE, OR
  (II)  IS  HELD  BY A HUSBAND AND WIFE AS JOINT TENANTS, TENANTS BY THE
ENTIRETY, OR TENANTS IN COMMON, SHALL BE TREATED AS OWNED BY ONE  SHARE-
HOLDER OR ONE PARTNER, AS THE CASE MAY BE.
  (C) INDIRECT OWNERSHIP.--PROPERTY OWNED, DIRECTLY OR INDIRECTLY, BY OR
FOR  A CORPORATION, PARTNERSHIP, ESTATE, OR TRUST SHALL BE CONSIDERED AS
BEING OWNED PROPORTIONATELY BY OR FOR  ITS  SHAREHOLDERS,  PARTNERS,  OR
BENEFICIARIES. FOR PURPOSES OF THE PRECEDING SENTENCE, A PERSON SHALL BE
TREATED  AS A BENEFICIARY OF ANY TRUST ONLY IF SUCH PERSON HAS A PRESENT
INTEREST IN THE TRUST.
  (D) CERTAIN INTERESTS HELD BY MEMBERS OF DECEDENT'S FAMILY.--ALL STOCK
AND ALL PARTNERSHIP INTERESTS HELD BY THE DECEDENT OR BY ANY  MEMBER  OF
HIS FAMILY (WITHIN THE MEANING OF SECTION 267(C)(4)) SHALL BE TREATED AS
OWNED BY THE DECEDENT.
  (3)  FARMHOUSES  AND CERTAIN OTHER STRUCTURES TAKEN INTO ACCOUNT.--FOR
PURPOSES OF THE 35-PERCENT REQUIREMENT OF SUBSECTION (A)(1), AN INTEREST
IN A CLOSELY HELD BUSINESS WHICH IS THE BUSINESS OF FARMING INCLUDES  AN
INTEREST  IN  RESIDENTIAL BUILDINGS AND RELATED IMPROVEMENTS ON THE FARM
WHICH ARE OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF THE FARM
OR BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR PURPOSES OF OPERATING
OR MAINTAINING THE FARM.
  (4) VALUE.--FOR PURPOSES OF THIS SECTION, VALUE SHALL BE VALUE  DETER-
MINED FOR PURPOSES OF CHAPTER 11 (RELATING TO ESTATE TAX).
  (5)  CLOSELY  HELD BUSINESS AMOUNT.--FOR PURPOSES OF THIS SECTION, THE
TERM "CLOSELY HELD BUSINESS AMOUNT" MEANS THE VALUE OF THE INTEREST IN A
CLOSELY HELD BUSINESS WHICH QUALIFIES UNDER SUBSECTION (A)(1).

S. 6359--C                         279

  (6) ADJUSTED GROSS ESTATE.--FOR PURPOSES OF THIS  SECTION,  THE  TERM,
"ADJUSTED  GROSS  ESTATE" MEANS THE VALUE OF THE GROSS ESTATE REDUCED BY
THE SUM OF THE AMOUNTS ALLOWABLE AS A DEDUCTION UNDER  SECTION  2053  OR
2054. SUCH SUM SHALL BE DETERMINED ON THE BASIS OF THE FACTS AND CIRCUM-
STANCES  IN  EXISTENCE ON THE DATE (INCLUDING EXTENSIONS) FOR FILING THE
RETURN OF TAX IMPOSED BY SECTION 2001 (OR, IF EARLIER, THE DATE ON WHICH
SUCH RETURN IS FILED).
  (7) PARTNERSHIP INTERESTS AND STOCK WHICH IS NOT READILY TRADABLE.--
  (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE BENEFITS OF THIS PARAGRAPH
(AT SUCH TIME AND IN SUCH MANNER AS THE SECRETARY SHALL  BY  REGULATIONS
PRESCRIBE), THEN--
  (I)  FOR  PURPOSES  OF  PARAGRAPH (1)(B)(I) OR (1)(C)(I) (WHICHEVER IS
APPROPRIATE) AND FOR PURPOSES OF SUBSECTION (C), ANY CAPITAL INTEREST IN
A PARTNERSHIP AND ANY NON-READILY-TRADABLE STOCK WHICH (AFTER THE APPLI-
CATION OF PARAGRAPH (2)) IS TREATED AS OWNED BY THE  DECEDENT  SHALL  BE
TREATED  AS  INCLUDED  IN  DETERMINING THE VALUE OF THE DECEDENT'S GROSS
ESTATE,
  (II) THE EXECUTOR SHALL BE TREATED AS HAVING SELECTED UNDER SUBSECTION
(A)(3) THE DATE PRESCRIBED BY SECTION 6151(A), AND
  (III) FOR PURPOSES OF APPLYING SECTION 6601(J), THE 2-PERCENT  PORTION
(AS DEFINED IN SUCH SECTION) SHALL BE TREATED AS BEING ZERO.
  (B)  NON-READILY-TRADABLE  STOCK  DEFINED.--FOR PURPOSES OF THIS PARA-
GRAPH, THE TERM "NON-READILY-TRADABLE STOCK" MEANS STOCK FOR  WHICH,  AT
THE  TIME  OF  THE  DECEDENT'S  DEATH,  THERE  WAS  NO MARKET ON A STOCK
EXCHANGE OR IN AN OVER-THE-COUNTER MARKET.
  (8) STOCK IN HOLDING COMPANY TREATED  AS  BUSINESS  COMPANY  STOCK  IN
CERTAIN CASES.--
  (A)  IN  GENERAL.--IF  THE  EXECUTOR ELECTS THE BENEFITS OF THIS PARA-
GRAPH, THEN--
  (I) HOLDING COMPANY STOCK  TREATED  AS  BUSINESS  COMPANY  STOCK.--FOR
PURPOSES OF THIS SECTION, THE PORTION OF THE STOCK OF ANY HOLDING COMPA-
NY WHICH REPRESENTS DIRECT OWNERSHIP (OR INDIRECT OWNERSHIP THROUGH 1 OR
MORE  OTHER  HOLDING  COMPANIES)  BY  SUCH COMPANY IN A BUSINESS COMPANY
SHALL BE DEEMED TO BE STOCK IN SUCH BUSINESS COMPANY.
  (II) 5-YEAR DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE  EXECUTOR  SHALL
BE   TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE  DATE
PRESCRIBED BY SECTION 6151(A).
  (III) 2-PERCENT INTEREST RATE NOT TO APPLY.--FOR PURPOSES OF  APPLYING
SECTION  6601(J),  THE  2-PERCENT  PORTION  (AS DEFINED IN SUCH SECTION)
SHALL BE TREATED AS BEING ZERO.
  (B) ALL STOCK MUST BE NON-READILY-TRADABLE STOCK.--
  (I) IN GENERAL.--NO STOCK SHALL BE TAKEN INTO ACCOUNT FOR PURPOSES  OF
APPLYING THIS PARAGRAPH UNLESS IT IS NON-READILY-TRADABLE STOCK
  (WITHIN THE MEANING OF PARAGRAPH (7)(B)).
  (II) SPECIAL APPLICATION WHERE ONLY HOLDING COMPANY STOCK IS NON-READ-
ILY-TRADABLE  STOCK.--IF THE REQUIREMENTS OF CLAUSE (I) ARE NOT MET, BUT
ALL OF THE STOCK OF EACH HOLDING COMPANY TAKEN INTO ACCOUNT IS NON-READ-
ILY-TRADABLE, THEN THIS PARAGRAPH SHALL  APPLY,  BUT  SUBSECTION  (A)(1)
SHALL BE APPLIED BY SUBSTITUTING "5" FOR "10".
  (C)   APPLICATION   OF   VOTING   STOCK   REQUIREMENT   OF   PARAGRAPH
(1)(C)(I).--FOR PURPOSES OF CLAUSE (I) OF PARAGRAPH (1)(C),  THE  DEEMED
STOCK RESULTING FROM THE APPLICATION OF SUBPARAGRAPH (A) SHALL BE TREAT-
ED AS VOTING STOCK TO THE EXTENT THAT VOTING STOCK IN THE HOLDING COMPA-
NY OWNS DIRECTLY (OR THROUGH THE VOTING STOCK OF 1 OR MORE OTHER HOLDING
COMPANIES) VOTING STOCK IN THE BUSINESS COMPANY.
  (D) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--

S. 6359--C                         280

  (I) HOLDING COMPANY.--THE TERM "HOLDING COMPANY" MEANS ANY CORPORATION
HOLDING STOCK IN ANOTHER CORPORATION.
  (II)  BUSINESS  COMPANY.--THE TERM "BUSINESS COMPANY" MEANS ANY CORPO-
RATION CARRYING ON A TRADE OR BUSINESS.
  (9) DEFERRAL NOT AVAILABLE FOR PASSIVE ASSETS.--
  (A) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1) AND DETERMINING THE
CLOSELY HELD BUSINESS AMOUNT (BUT NOT FOR PURPOSES OF  SUBSECTION  (G)),
THE  VALUE  OF ANY INTEREST IN A CLOSELY HELD BUSINESS SHALL NOT INCLUDE
THE VALUE OF THAT PORTION OF SUCH  INTEREST  WHICH  IS  ATTRIBUTABLE  TO
PASSIVE ASSETS HELD BY THE BUSINESS.
  (B) PASSIVE ASSET DEFINED.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  IN  GENERAL.--THE TERM "PASSIVE ASSET" MEANS ANY ASSET OTHER THAN
AN ASSET USED IN CARRYING ON A TRADE OR BUSINESS.
  (II)  STOCK  TREATED  AS  PASSIVE  ASSET.--THE  TERM  "PASSIVE  ASSET"
INCLUDES ANY STOCK IN ANOTHER CORPORATION UNLESS--
  (I)  SUCH  STOCK  IS  TREATED  AS HELD BY THE DECEDENT BY REASON OF AN
ELECTION UNDER PARAGRAPH (8), AND
  (II) SUCH STOCK QUALIFIED UNDER SUBSECTION (A)(1).
  (III) EXCEPTION FOR ACTIVE CORPORATIONS.--IF--
  (I) A CORPORATION OWNS 20 PERCENT OR MORE IN VALUE OF THE VOTING STOCK
OF ANOTHER CORPORATION, OR SUCH OTHER CORPORATION HAS 45 OR FEWER SHARE-
HOLDERS, AND
  (II) 80 PERCENT OR MORE OF THE VALUE OF THE ASSETS OF EACH SUCH CORPO-
RATION IS ATTRIBUTABLE TO ASSETS USED IN CARRYING ON A  TRADE  OR  BUSI-
NESS,  THEN  SUCH  CORPORATIONS  SHALL  BE  TREATED AS 1 CORPORATION FOR
PURPOSES OF CLAUSE (II). FOR PURPOSES OF APPLYING SUBCLAUSE (II) TO  THE
CORPORATION HOLDING THE STOCK OF THE OTHER CORPORATION, SUCH STOCK SHALL
NOT BE TAKEN INTO ACCOUNT.
  (10) STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS STOCK
IN AN ACTIVE TRADE OR BUSINESS COMPANY.--
  (A)  IN  GENERAL.--IF  THE  EXECUTOR ELECTS THE BENEFITS OF THIS PARA-
GRAPH, THEN--
  (I) STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS  STOCK
IN  AN  ACTIVE TRADE OR BUSINESS COMPANY.--FOR PURPOSES OF THIS SECTION,
ANY ASSET USED IN A QUALIFYING LENDING AND  FINANCE  BUSINESS  SHALL  BE
TREATED AS AN ASSET WHICH IS USED IN CARRYING ON A TRADE OR BUSINESS.
  (II)  5-YEAR  DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE EXECUTOR SHALL
BE  TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE   DATE
PRESCRIBED BY SECTION 6151(A).
  (III)   5   EQUAL  INSTALLMENTS  ALLOWED.--FOR  PURPOSES  OF  APPLYING
SUBSECTION
  (A)(1), "5" SHALL BE SUBSTITUTED FOR "10".
  (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) QUALIFYING LENDING AND  FINANCE  BUSINESS.--THE  TERM  "QUALIFYING
LENDING AND FINANCE BUSINESS" MEANS A LENDING AND FINANCE BUSINESS, IF--
  (I)  BASED  ON  ALL THE FACTS AND CIRCUMSTANCES IMMEDIATELY BEFORE THE
DATE OF THE  DECEDENT'S  DEATH,  THERE  WAS  SUBSTANTIAL  ACTIVITY  WITH
RESPECT TO THE LENDING AND FINANCE BUSINESS, OR
  (II)  DURING  AT LEAST 3 OF THE 5 TAXABLE YEARS ENDING BEFORE THE DATE
OF THE DECEDENT'S DEATH, SUCH BUSINESS HAD AT LEAST 1 FULL-TIME EMPLOYEE
SUBSTANTIALLY ALL OF WHOSE SERVICES WERE THE ACTIVE MANAGEMENT  OF  SUCH
BUSINESS,  10  FULL-TIME,  NONOWNER EMPLOYEES SUBSTANTIALLY ALL OF WHOSE
SERVICES WERE DIRECTLY RELATED TO SUCH BUSINESS, AND $5,000,000 IN GROSS
RECEIPTS FROM ACTIVITIES DESCRIBED IN CLAUSE (II).
  (II) LENDING AND FINANCE  BUSINESS.--THE  TERM  "LENDING  AND  FINANCE
BUSINESS" MEANS A TRADE OR BUSINESS OF--

S. 6359--C                         281

  (I) MAKING LOANS,
  (II) PURCHASING OR DISCOUNTING ACCOUNTS RECEIVABLE, NOTES, OR INSTALL-
MENT OBLIGATIONS,
  (III)  ENGAGING  IN  RENTAL  AND LEASING OF REAL AND TANGIBLE PERSONAL
PROPERTY, INCLUDING ENTERING INTO LEASES AND PURCHASING, SERVICING,  AND
DISPOSING OF LEASES AND LEASED ASSETS,
  (IV) RENDERING SERVICES OR MAKING FACILITIES AVAILABLE IN THE ORDINARY
COURSE OF A LENDING OR FINANCE BUSINESS, AND
  (V)  RENDERING  SERVICES  OR MAKING FACILITIES AVAILABLE IN CONNECTION
WITH ACTIVITIES DESCRIBED IN SUBCLAUSES (I) THROUGH (IV) CARRIED  ON  BY
THE  CORPORATION  RENDERING  SERVICES OR MAKING FACILITIES AVAILABLE, OR
ANOTHER CORPORATION WHICH IS A MEMBER OF THE SAME AFFILIATED  GROUP  (AS
DEFINED IN SECTION 1504 WITHOUT REGARD TO SECTION 1504(B)(3)).
  (III)  LIMITATION.--THE TERM "QUALIFYING LENDING AND FINANCE BUSINESS"
SHALL NOT INCLUDE ANY INTEREST IN AN ENTITY, IF THE  STOCK  OR  DEBT  OF
SUCH  ENTITY  OR A CONTROLLED GROUP (AS DEFINED IN SECTION 267(F)(1)) OF
WHICH SUCH ENTITY WAS A MEMBER WAS READILY TRADABLE  ON  AN  ESTABLISHED
SECURITIES  MARKET  OR SECONDARY MARKET (AS DEFINED BY THE SECRETARY) AT
ANY TIME WITHIN 3 YEARS BEFORE THE DATE OF THE DECEDENT'S DEATH.
  (C) SPECIAL RULE FOR INTEREST IN 2  OR  MORE  CLOSELY  HELD  BUSINESS-
ES.--FOR  PURPOSES  OF  THIS SECTION, INTEREST IN 2 OR MORE CLOSELY HELD
BUSINESSES, WITH RESPECT TO EACH OF WHICH THERE IS INCLUDED IN DETERMIN-
ING THE VALUE OF THE DECEDENT'S GROSS ESTATE 20 PERCENT OR MORE  OF  THE
TOTAL  VALUE OF EACH SUCH BUSINESS, SHALL BE TREATED AS AN INTEREST IN A
SINGLE CLOSELY HELD BUSINESS. FOR PURPOSES OF THE 20-PERCENT REQUIREMENT
OF THE PRECEDING SENTENCE, AN INTEREST IN A CLOSELY HELD BUSINESS  WHICH
REPRESENTS THE SURVIVING SPOUSE'S INTEREST IN PROPERTY HELD BY THE DECE-
DENT AND THE SURVIVING SPOUSE AS COMMUNITY PROPERTY OR AS JOINT TENANTS,
TENANTS BY THE ENTIRETY, OR TENANTS IN COMMON SHALL BE TREATED AS HAVING
BEEN INCLUDED IN DETERMINING THE VALUE OF THE DECEDENT'S GROSS ESTATE.
  (D)  ELECTION.--ANY  ELECTION  UNDER  SUBSECTION (A) SHALL BE MADE NOT
LATER THAN THE TIME PRESCRIBED BY SECTION 6075(A) FOR FILING THE  RETURN
OF TAX IMPOSED BY SECTION 2001 (INCLUDING EXTENSIONS THEREOF), AND SHALL
BE  MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
IF AN ELECTION UNDER SUBSECTION (A) IS  MADE,  THE  PROVISIONS  OF  THIS
SUBTITLE SHALL APPLY AS THOUGH THE SECRETARY WERE EXTENDING THE TIME FOR
PAYMENT OF THE TAX.
  (E)  PRORATION  OF DEFICIENCY TO INSTALLMENTS.--IF AN ELECTION IS MADE
UNDER SUBSECTION (A) TO PAY ANY PART OF THE TAX IMPOSED BY SECTION  2001
IN INSTALLMENTS AND A DEFICIENCY HAS BEEN ASSESSED, THE DEFICIENCY SHALL
(SUBJECT TO THE LIMITATION PROVIDED BY SUBSECTION (A)(2)) BE PRORATED TO
THE INSTALLMENTS PAYABLE UNDER SUBSECTION (A). THE PART OF THE DEFICIEN-
CY  SO PRORATED TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS NOT
ARRIVED SHALL BE COLLECTED AT THE SAME TIME AS, AND AS A PART  OF,  SUCH
INSTALLMENT.  THE  PART OF THE DEFICIENCY SO PRORATED TO ANY INSTALLMENT
THE DATE FOR PAYMENT OF WHICH HAS ARRIVED SHALL BE PAID UPON NOTICE  AND
DEMAND  FROM THE SECRETARY. THIS SUBSECTION SHALL NOT APPLY IF THE DEFI-
CIENCY IS DUE TO NEGLIGENCE, TO INTENTIONAL DISREGARD OF RULES AND REGU-
LATIONS, OR TO FRAUD WITH INTENT TO EVADE TAX.
  (F) TIME FOR PAYMENT OF INTEREST.--IF THE  TIME  FOR  PAYMENT  OF  ANY
AMOUNT OF TAX HAS BEEN EXTENDED UNDER THIS SECTION--
  (1)  INTEREST  FOR FIRST 5 YEARS.--INTEREST PAYABLE UNDER SECTION 6601
OF ANY UNPAID PORTION OF SUCH AMOUNT ATTRIBUTABLE TO THE FIRST  5  YEARS
AFTER  THE  DATE  PRESCRIBED  BY  SECTION 6151(A) FOR PAYMENT OF THE TAX
SHALL BE PAID ANNUALLY.

S. 6359--C                         282

  (2) INTEREST FOR PERIODS AFTER FIRST 5 YEARS.--INTEREST PAYABLE  UNDER
SECTION  6601  ON  ANY UNPAID PORTION OF SUCH AMOUNT ATTRIBUTABLE TO ANY
PERIOD AFTER THE 5-YEAR PERIOD REFERRED TO IN  PARAGRAPH  (1)  SHALL  BE
PAID  ANNUALLY  AT  THE SAME TIME AS, AND AS A PART OF, EACH INSTALLMENT
PAYMENT OF THE TAX.
  (3)  INTEREST  IN  THE CASE OF CERTAIN DEFICIENCIES.--IN THE CASE OF A
DEFICIENCY TO WHICH SUBSECTION (E) APPLIES WHICH IS ASSESSED  AFTER  THE
CLOSE  OF  THE  5-YEAR  PERIOD  REFERRED  TO  IN PARAGRAPH (1), INTEREST
ATTRIBUTABLE TO SUCH 5-YEAR PERIOD, AND INTEREST  ASSIGNED  UNDER  PARA-
GRAPH  (2)  TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS ARRIVED
ON OR BEFORE THE DATE OF THE ASSESSMENT OF THE DEFICIENCY, SHALL BE PAID
UPON NOTICE AND DEMAND FROM THE SECRETARY.
  (4) SELECTION OF SHORTER PERIOD.--IF THE EXECUTOR HAS SELECTED A PERI-
OD SHORTER THAN 5 YEARS UNDER SUBSECTION  (A)(3),  SUCH  SHORTER  PERIOD
SHALL BE SUBSTITUTED FOR 5 YEARS IN PARAGRAPHS (1), (2), AND (3) OF THIS
SUBSECTION.
  (G) ACCELERATION OF PAYMENT.--
  (1) DISPOSITION OF INTEREST; WITHDRAWAL OF FUNDS FROM BUSINESS.--
  (A) IF--
  (I)(I)  ANY  PORTION  OF  AN INTEREST IN A CLOSELY HELD BUSINESS WHICH
QUALIFIES UNDER SUBSECTION (A)(1) IS DISTRIBUTED,  SOLD,  EXCHANGED,  OR
OTHERWISE DISPOSED OF, OR
  (II)  MONEY  AND  OTHER  PROPERTY  ATTRIBUTABLE TO SUCH AN INTEREST IS
WITHDRAWN FROM SUCH TRADE OR BUSINESS, AND
  (II) THE AGGREGATE OF SUCH DISTRIBUTIONS, SALES, EXCHANGES,  OR  OTHER
DISPOSITIONS  AND  WITHDRAWALS EQUALS OR EXCEEDS 50 PERCENT OF THE VALUE
OF SUCH INTEREST, THEN THE EXTENSION OF TIME FOR PAYMENT OF TAX PROVIDED
IN SUBSECTION (A) SHALL CEASE TO APPLY, AND THE UNPAID  PORTION  OF  THE
TAX  PAYABLE  IN  INSTALLMENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM
THE SECRETARY.
  (B) IN THE CASE OF A DISTRIBUTION IN  REDEMPTION  OF  STOCK  TO  WHICH
SECTION  303  (OR  SO  MUCH  OF  SECTION  304 AS RELATES TO SECTION 303)
APPLIES--
  (I) THE REDEMPTION OF SUCH STOCK, AND  THE  WITHDRAWAL  OF  MONEY  AND
OTHER PROPERTY DISTRIBUTED IN SUCH REDEMPTION, SHALL NOT BE TREATED AS A
DISTRIBUTION OR WITHDRAWAL FOR PURPOSES OF SUBPARAGRAPH (A), AND
  (II)  FOR  PURPOSES  OF SUBPARAGRAPH (A), THE VALUE OF THE INTEREST IN
THE CLOSELY HELD BUSINESS SHALL BE CONSIDERED TO BE SUCH  VALUE  REDUCED
BY THE VALUE OF THE STOCK REDEEMED.
  THIS  SUBPARAGRAPH  SHALL  APPLY  ONLY  IF,  ON  OR  BEFORE  THE  DATE
PRESCRIBED BY SUBSECTION (A)(3) FOR THE PAYMENT OF THE FIRST INSTALLMENT
WHICH BECOMES DUE AFTER THE DATE OF THE DISTRIBUTION (OR, IF EARLIER, ON
OR BEFORE THE DAY WHICH IS 1 YEAR AFTER THE DATE OF  THE  DISTRIBUTION),
THERE IS PAID AN AMOUNT OF THE TAX IMPOSED BY SECTION 2001 NOT LESS THAN
THE AMOUNT OF MONEY AND OTHER PROPERTY DISTRIBUTED.
  (C)  SUBPARAGRAPH (A)(I) DOES NOT APPLY TO AN EXCHANGE OF STOCK PURSU-
ANT TO A PLAN OF REORGANIZATION DESCRIBED IN SUBPARAGRAPH (D),  (E),  OR
(F)  OF SECTION 368(A)(1) NOR TO AN EXCHANGE TO WHICH SECTION 355 (OR SO
MUCH OF SECTION 356 AS RELATES TO SECTION 355) APPLIES;  BUT  ANY  STOCK
RECEIVED  IN  SUCH AN EXCHANGE SHALL BE TREATED FOR PURPOSES OF SUBPARA-
GRAPH (A)(I) AS AN INTEREST QUALIFYING UNDER SUBSECTION (A)(1).
  (D) SUBPARAGRAPH (A)(I) DOES NOT APPLY TO A TRANSFER  OF  PROPERTY  OF
THE  DECEDENT  TO A PERSON ENTITLED BY REASON OF THE DECEDENT'S DEATH TO
RECEIVE SUCH PROPERTY UNDER THE DECEDENT'S WILL, THE APPLICABLE  LAW  OF
DESCENT  AND DISTRIBUTION, OR A TRUST CREATED BY THE DECEDENT. A SIMILAR
RULE SHALL APPLY IN THE CASE OF A SERIES OF SUBSEQUENT TRANSFERS OF  THE

S. 6359--C                         283

PROPERTY  BY  REASON OF DEATH SO LONG AS EACH TRANSFER IS TO A MEMBER OF
THE FAMILY (WITHIN THE MEANING OF SECTION 267(C)(4)) OF  THE  TRANSFEROR
IN SUCH TRANSFER.
  (E) CHANGES IN INTEREST IN HOLDING COMPANY.--IF ANY STOCK IN A HOLDING
COMPANY  IS  TREATED  AS  STOCK  IN  A  BUSINESS  COMPANY  BY  REASON OF
SUBSECTION (B)(8)(A)--
  (I) ANY DISPOSITION OF ANY INTEREST IN  SUCH  STOCK  IN  SUCH  HOLDING
COMPANY  WHICH WAS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECE-
DENT, OR
  (II) ANY WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM  SUCH  HOLDING
COMPANY  ATTRIBUTABLE  TO ANY INTEREST INCLUDED IN DETERMINING THE GROSS
ESTATE OF THE DECEDENT,
  SHALL BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION  OF
(OR  A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER SUBSECTION
(A)(1).
  (F) CHANGES IN INTEREST IN BUSINESS COMPANY.--IF ANY STOCK IN A  HOLD-
ING  COMPANY  IS  TREATED  AS  STOCK  IN A BUSINESS COMPANY BY REASON OF
SUBSECTION (B)(8)(A)--
  (I) ANY DISPOSITION OF ANY INTEREST IN  SUCH  STOCK  IN  THE  BUSINESS
COMPANY BY SUCH HOLDING COMPANY, OR
  (II)  ANY WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM SUCH BUSINESS
COMPANY ATTRIBUTABLE TO SUCH STOCK BY SUCH HOLDING COMPANY  OWNING  SUCH
STOCK,
  SHALL  BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION OF
(OR A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER  SUBSECTION
(A)(1).
  (2) UNDISTRIBUTED INCOME OF ESTATE.--
  (A)  IF  AN  ELECTION  IS  MADE  UNDER THIS SECTION AND THE ESTATE HAS
UNDISTRIBUTED NET INCOME FOR ANY TAXABLE YEAR ENDING ON OR AFTER THE DUE
DATE FOR THE FIRST INSTALLMENT, THE EXECUTOR SHALL,  ON  OR  BEFORE  THE
DATE PRESCRIBED BY LAW FOR FILING THE INCOME TAX RETURN FOR SUCH TAXABLE
YEAR  (INCLUDING EXTENSIONS THEREOF), PAY AN AMOUNT EQUAL TO SUCH UNDIS-
TRIBUTED NET INCOME IN LIQUIDATION OF THE  UNPAID  PORTION  OF  THE  TAX
PAYABLE IN INSTALLMENTS.
  (B)  FOR PURPOSES OF SUBPARAGRAPH (A), THE UNDISTRIBUTED NET INCOME OF
THE ESTATE FOR ANY TAXABLE YEAR IS THE AMOUNT BY WHICH THE DISTRIBUTABLE
NET INCOME OF THE ESTATE FOR SUCH TAXABLE YEAR (AS  DEFINED  IN  SECTION
643) EXCEEDS THE SUM OF--
  (I)  THE AMOUNTS FOR SUCH TAXABLE YEAR SPECIFIED IN PARAGRAPHS (1) AND
(2) OF SECTION 661(A) (RELATING TO DEDUCTIONS FOR DISTRIBUTIONS, ETC.);
  (II) THE AMOUNT OF TAX IMPOSED FOR THE  TAXABLE  YEAR  ON  THE  ESTATE
UNDER CHAPTER 1; AND
  (III)  THE AMOUNT OF THE TAX IMPOSED BY SECTION 2001 (INCLUDING INTER-
EST) PAID BY THE EXECUTOR DURING THE TAXABLE YEAR (OTHER THAN ANY AMOUNT
PAID PURSUANT TO THIS PARAGRAPH).
  (C) FOR PURPOSES OF THIS PARAGRAPH, IF ANY STOCK IN A  CORPORATION  IS
TREATED  AS  STOCK  IN  ANOTHER  CORPORATION  BY  REASON  OF  SUBSECTION
(B)(8)(A), ANY DIVIDENDS PAID BY SUCH OTHER CORPORATION  TO  THE  CORPO-
RATION  SHALL  BE  TREATED  AS PAID TO THE ESTATE OF THE DECEDENT TO THE
EXTENT ATTRIBUTABLE TO THE STOCK QUALIFYING UNDER SUBSECTION (A)(1).
  (3) FAILURE TO MAKE PAYMENT OF PRINCIPAL OR INTEREST.--
  (A) IN GENERAL.--EXCEPT  AS  PROVIDED  IN  SUBPARAGRAPH  (B),  IF  ANY
PAYMENT  OF  PRINCIPAL  OR INTEREST UNDER THIS SECTION IS NOT PAID ON OR
BEFORE THE DATE FIXED FOR ITS PAYMENT BY  THIS  SECTION  (INCLUDING  ANY
EXTENSION  OF  TIME),  THE UNPAID PORTION OF THE TAX PAYABLE IN INSTALL-
MENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM THE SECRETARY.

S. 6359--C                         284

  (B) PAYMENT WITHIN 6 MONTHS.--IF ANY PAYMENT OF PRINCIPAL OR  INTEREST
UNDER  THIS  SECTION  IS NOT PAID ON OR BEFORE THE DATE DETERMINED UNDER
SUBPARAGRAPH (A) BUT IS PAID WITHIN 6 MONTHS OF SUCH DATE--
  (I) THE PROVISIONS OF SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO
SUCH PAYMENT,
  (II) THE PROVISIONS OF SECTION 6601(J) SHALL NOT APPLY WITH RESPECT TO
THE DETERMINATION OF INTEREST ON SUCH PAYMENT, AND
  (III)  THERE  IS  IMPOSED  A PENALTY IN AN AMOUNT EQUAL TO THE PRODUCT
OF--
  (I) 5 PERCENT OF THE AMOUNT OF SUCH PAYMENT, MULTIPLIED BY
  (II) THE NUMBER OF MONTHS (OR FRACTIONS THEREOF) AFTER SUCH  DATE  AND
BEFORE PAYMENT IS MADE.  THE PENALTY IMPOSED UNDER CLAUSE (III) SHALL BE
TREATED  IN  THE  SAME MANNER AS A PENALTY IMPOSED UNDER SUBCHAPTER B OF
CHAPTER 68.
  (H) ELECTION IN CASE OF CERTAIN DEFICIENCIES.--
  (1) IN GENERAL.--IF--
  (A) A DEFICIENCY IN THE TAX IMPOSED BY SECTION 2001 IS ASSESSED,
  (B) THE ESTATE QUALIFIES UNDER SUBSECTION (A)(1), AND
  (C) THE EXECUTOR HAS NOT MADE AN ELECTION UNDER  SUBSECTION  (A),  THE
EXECUTOR  MAY  ELECT  TO  PAY  THE  DEFICIENCY  IN  INSTALLMENTS.   THIS
SUBSECTION SHALL NOT APPLY IF THE DEFICIENCY IS DUE  TO  NEGLIGENCE,  TO
INTENTIONAL  DISREGARD OF RULES AND REGULATIONS, OR TO FRAUD WITH INTENT
TO EVADE TAX.
  (2) TIME OF ELECTION.--AN ELECTION UNDER THIS SUBSECTION SHALL BE MADE
NOT LATER THAN 60 DAYS AFTER ISSUANCE OF NOTICE AND DEMAND BY THE SECRE-
TARY FOR THE PAYMENT OF THE DEFICIENCY, AND SHALL BE MADE IN SUCH MANNER
AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
  (3) EFFECT OF ELECTION ON PAYMENT.--IF AN ELECTION IS MADE UNDER  THIS
SUBSECTION,  THE DEFICIENCY SHALL (SUBJECT TO THE LIMITATION PROVIDED BY
SUBSECTION (A)(2)) BE PRORATED TO THE INSTALLMENTS WHICH WOULD HAVE BEEN
DUE IF AN ELECTION HAD BEEN TIMELY MADE UNDER SUBSECTION (A) AT THE TIME
THE ESTATE TAX RETURN WAS FILED. THE PART OF THE DEFICIENCY SO  PRORATED
TO  ANY  INSTALLMENT  THE  DATE  FOR PAYMENT OF WHICH WOULD HAVE ARRIVED
SHALL BE PAID AT THE TIME OF THE  MAKING  OF  THE  ELECTION  UNDER  THIS
SUBSECTION.  THE  PORTION  OF THE DEFICIENCY SO PRORATED TO INSTALLMENTS
THE DATE FOR PAYMENT OF WHICH WOULD NOT HAVE SO ARRIVED SHALL BE PAID AT
THE TIME SUCH INSTALLMENTS WOULD HAVE BEEN DUE IF SUCH AN  ELECTION  HAD
BEEN MADE.
  (I)  SPECIAL  RULE  FOR  CERTAIN  DIRECT SKIPS.--TO THE EXTENT THAT AN
INTEREST IN A CLOSELY HELD BUSINESS IS THE  SUBJECT  OF  A  DIRECT  SKIP
(WITHIN  THE  MEANING  OF SECTION 2612(C)) OCCURRING AT THE SAME TIME AS
AND AS A RESULT OF THE DECEDENT'S  DEATH,  THEN  FOR  PURPOSES  OF  THIS
SECTION ANY TAX IMPOSED BY SECTION 2601 ON THE TRANSFER OF SUCH INTEREST
SHALL BE TREATED AS IF IT WERE ADDITIONAL TAX IMPOSED BY SECTION 2001.
  (J)  REGULATIONS.--THE  SECRETARY  SHALL PRESCRIBE SUCH REGULATIONS AS
MAY BE NECESSARY TO THE APPLICATION OF THIS SECTION.
  (K) CROSS REFERENCES.--
  (1) SECURITY.-- FOR AUTHORITY OF THE SECRETARY TO REQUIRE SECURITY  IN
THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6165.
  (2) LIEN.--FOR SPECIAL LIEN (IN LIEU OF BOND) IN THE CASE OF AN EXTEN-
SION UNDER THIS SECTION, SEE SECTION 6324A.
  (3)  PERIOD  OF LIMITATION.--FOR EXTENSION OF THE PERIOD OF LIMITATION
IN THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6503(D).
  (4) INTEREST.--FOR PROVISIONS RELATING TO INTEREST ON TAX  PAYABLE  IN
INSTALLMENTS UNDER THIS SECTION, SEE SUBSECTION (J) OF SECTION 6601.

S. 6359--C                         285

  (5)  TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR SPECIAL RULE FOR QUALIFY-
ING AN ESTATE UNDER THIS SECTION WHERE  PROPERTY  HAS  BEEN  TRANSFERRED
WITHIN 3 YEARS OF DECEDENT'S DEATH, SEE SECTION 2035(C)(2).
  S  11.  This  act  shall  take effect April 1, 2014 and shall apply to
estates of decedents dying on and after that  date;  provided,  however,
that the amendments to subsection (c) of section 951 of the tax law made
by  section  one  of  this  act  shall  not  affect  the  repeal of such
subsection and shall be deemed repealed therewith.

                                 PART Y

                          Intentionally Omitted

                                 PART Z

  Section 1. Clause (F) of subparagraph (ii) of paragraph 1 of  subdivi-
sion  b of section 1612 of the tax law, as amended by chapter 174 of the
laws of 2013, is amended to read as follows:
  (F) notwithstanding clauses (A), (B), (C), (D) and (E) of this subpar-
agraph, when a vendor track, is located in Sullivan  county  and  within
sixty  miles  from any gaming facility in a contiguous state such vendor
fee shall, for a period of [six] SEVEN years commencing April first, two
thousand eight, be at a rate of forty-one percent of the  total  revenue
wagered  at  the  vendor  track after payout for prizes pursuant to this
chapter, after which time such rate shall be as for all tracks in clause
(C) of this subparagraph.
  S 2. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2014.

                                 PART AA

  Section  1.  Paragraph  (a)  of  subdivision  1 of section 1003 of the
racing, pari-mutuel wagering and breeding law, as amended by chapter 174
of the laws of 2013, is amended to read as follows:
  (a) Any  racing  association  or  corporation  or  regional  off-track
betting  corporation,  authorized  to conduct pari-mutuel wagering under
this chapter, desiring to display the simulcast of horse races on  which
pari-mutuel  betting shall be permitted in the manner and subject to the
conditions provided for in this article may apply to the commission  for
a  license so to do.  Applications for licenses shall be in such form as
may be prescribed by the commission and shall contain  such  information
or  other material or evidence as the commission may require. No license
shall be issued by the commission authorizing the simulcast transmission
of thoroughbred races from a track located in Suffolk  county.  The  fee
for  such  licenses shall be five hundred dollars per simulcast facility
and for account wagering licensees that do not operate either  a  simul-
cast facility that is open to the public within the state of New York or
a  licensed racetrack within the state, twenty thousand dollars per year
payable by the licensee to the commission for deposit into  the  general
fund.  Except  as  provided  in  this  section, the commission shall not
approve any application to conduct simulcasting into individual or group
residences, homes or other areas for the purposes of  or  in  connection
with pari-mutuel wagering. The [board] COMMISSION may approve simulcast-
ing into residences, homes or other areas to be conducted jointly by one
or  more  regional off-track betting corporations and one or more of the

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following: a franchised corporation, thoroughbred racing corporation  or
a harness racing corporation or association; provided (i) the simulcast-
ing consists only of those races on which pari-mutuel betting is author-
ized by this chapter at one or more simulcast facilities for each of the
contracting  off-track  betting  corporations which shall include wagers
made in accordance with  section  one  thousand  fifteen,  one  thousand
sixteen  and  one  thousand  seventeen of this article; provided further
that the contract provisions or other simulcast  arrangements  for  such
simulcast  facility  shall  be no less favorable than those in effect on
January first, two thousand  five;  (ii)  that  each  off-track  betting
corporation  having  within  its  geographic boundaries such residences,
homes or other areas technically  capable  of  receiving  the  simulcast
signal  shall be a contracting party; (iii) the distribution of revenues
shall be subject to contractual agreement of  the  parties  except  that
statutory  payments  to  non-contracting  parties,  if  any,  may not be
reduced; provided, however, that nothing herein to  the  contrary  shall
prevent a track from televising its races on an irregular basis primari-
ly for promotional or marketing purposes as found by the [board] COMMIS-
SION.    For  purposes  of this paragraph, the provisions of section one
thousand thirteen of this article shall not apply. Any agreement author-
izing  an  in-home  simulcasting  experiment  commencing  prior  to  May
fifteenth,  nineteen  hundred  ninety-five,  may,  and all its terms, be
extended  until  June  thirtieth,  two  thousand   [fourteen]   FIFTEEN;
provided,  however, that any party to such agreement may elect to termi-
nate such agreement upon conveying written notice to all  other  parties
of  such  agreement at least forty-five days prior to the effective date
of the termination, via registered  mail.  Any  party  to  an  agreement
receiving such notice of an intent to terminate, may request the [board]
COMMISSION  to mediate between the parties new terms and conditions in a
replacement agreement between the parties as will permit continuation of
an in-home experiment until  June  thirtieth,  two  thousand  [fourteen]
FIFTEEN;  and  (iv)  no in-home simulcasting in the thoroughbred special
betting district shall  occur  without  the  approval  of  the  regional
thoroughbred track.
  S  2.  Subparagraph  (iii)  of paragraph d of subdivision 3 of section
1007 of the racing, pari-mutuel wagering and breeding law, as amended by
section 2 of part U of chapter 59 of the laws of  2013,  is  amended  to
read as follows:
  (iii) Of the sums retained by a receiving track located in Westchester
county  on  races received from a franchised corporation, for the period
commencing January first, two thousand eight and continuing through June
thirtieth, two thousand [fourteen] FIFTEEN, the amount used  exclusively
for  purses  to  be  awarded  at races conducted by such receiving track
shall be computed as follows: of the sums so retained, two and  one-half
percent  of the total pools. Such amount shall be increased or decreased
in the amount of fifty percent of the difference  in  total  commissions
determined by comparing the total commissions available after July twen-
ty-first,  nineteen  hundred  ninety-five  to the total commissions that
would have been available to such  track  prior  to  July  twenty-first,
nineteen hundred ninety-five.
  S  3.  The  opening  paragraph of subdivision 1 of section 1014 of the
racing, pari-mutuel wagering and breeding law, as amended by  section  3
of  part  U  of  chapter  59  of the laws of 2013, is amended to read as
follows:
  The provisions of this section shall govern the simulcasting of  races
conducted  at thoroughbred tracks located in another state or country on

S. 6359--C                         287

any day during which a franchised corporation is conducting a race meet-
ing in Saratoga county at Saratoga  thoroughbred  racetrack  until  June
thirtieth,  two thousand [fourteen] FIFTEEN and on any day regardless of
whether  or not a franchised corporation is conducting a race meeting in
Saratoga county at Saratoga thoroughbred racetrack after June thirtieth,
two thousand [fourteen] FIFTEEN.   On any  day  on  which  a  franchised
corporation has not scheduled a racing program but a thoroughbred racing
corporation  located  within  the state is conducting racing, every off-
track betting corporation branch office and every simulcasting  facility
licensed  in  accordance  with  section  one  thousand  seven (that have
entered into a written agreement  with  such  facility's  representative
horsemen's  organization,  as  approved  by the [board] COMMISSION), one
thousand eight, or one thousand nine of this article shall be authorized
to accept wagers and display the live simulcast signal from thoroughbred
tracks located in another  state  or  foreign  country  subject  to  the
following provisions:
  S 4. Subdivision 1 of section 1015 of the racing, pari-mutuel wagering
and breeding law, as amended by section 4 of part U of chapter 59 of the
laws of 2013, is amended to read as follows:
  1.  The  provisions  of  this section shall govern the simulcasting of
races conducted at harness tracks located in another  state  or  country
during  the period July first, nineteen hundred ninety-four through June
thirtieth, two thousand [fourteen] FIFTEEN.  This section  shall  super-
sede all inconsistent provisions of this chapter.
  S  5.  The  opening  paragraph of subdivision 1 of section 1016 of the
racing, pari-mutuel wagering and breeding law, as amended by  section  5
of  part  U  of  chapter  59  of the laws of 2013, is amended to read as
follows:
  The provisions of this section shall govern the simulcasting of  races
conducted  at thoroughbred tracks located in another state or country on
any day during which a franchised corporation is not conducting  a  race
meeting in Saratoga county at Saratoga thoroughbred racetrack until June
thirtieth,  two  thousand  [fourteen] FIFTEEN.   Every off-track betting
corporation branch office and every simulcasting  facility  licensed  in
accordance  with  section  one  thousand  seven that have entered into a
written agreement with such facility's representative horsemen's  organ-
ization as approved by the [board] COMMISSION, one thousand eight or one
thousand  nine  of this article shall be authorized to accept wagers and
display the live  full-card  simulcast  signal  of  thoroughbred  tracks
(which  may  include  quarter  horse or mixed meetings provided that all
such wagering on such races shall be construed to be thoroughbred races)
located in another state or foreign country, subject  to  the  following
provisions;  provided,  however,  no  such  written  agreement  shall be
required of a franchised corporation licensed in accordance with section
one thousand seven of this article:
  S 6. The opening paragraph of section 1018 of the racing,  pari-mutuel
wagering  and breeding law, as amended by section 6 of part U of chapter
59 of the laws of 2013, is amended to read as follows:
  Notwithstanding any other provision of this chapter,  for  the  period
July  twenty-fifth, two thousand one through September eighth, two thou-
sand [thirteen] FOURTEEN, when a franchised corporation is conducting  a
race  meeting  within the state at Saratoga Race Course, every off-track
betting  corporation  branch  office  and  every  simulcasting  facility
licensed in accordance with section one thousand seven (that has entered
into  a written agreement with such facility's representative horsemen's
organization as approved by the [board] COMMISSION), one thousand  eight

S. 6359--C                         288

or  one  thousand  nine  of  this  article shall be authorized to accept
wagers and display the live simulcast signal  from  thoroughbred  tracks
located  in  another  state,  provided  that  such facility shall accept
wagers  on  races  run  at  all  in-state  thoroughbred tracks which are
conducting  racing  programs  subject  to  the   following   provisions;
provided,  however,  no  such  written  agreement shall be required of a
franchised corporation licensed in accordance with section one  thousand
seven of this article.
  S  7.  Section  32  of  chapter  281 of the laws of 1994, amending the
racing, pari-mutuel wagering and breeding law  and other  laws  relating
to  simulcasting, as amended by section 7 of part U of chapter 59 of the
laws of 2013, is amended to read as follows:
  S 32. This act shall take effect immediately and the  pari-mutuel  tax
reductions  in  section  six  of  this  act  shall  expire and be deemed
repealed on  July  1,  [2014]  2015;  provided,  however,  that  nothing
contained  herein  shall be deemed to affect the application, qualifica-
tion, expiration, or repeal of any  provision  of  law  amended  by  any
section  of  this act, and such provisions shall be applied or qualified
or shall expire or be deemed repealed in the same manner,  to  the  same
extent  and on the same date as the case may be as otherwise provided by
law; provided further, however, that sections twenty-three  and  twenty-
five of this act shall remain in full force and effect only until May 1,
1997 and at such time shall be deemed to be repealed.
  S  8.  Section  54  of  chapter  346 of the laws of 1990, amending the
racing, pari-mutuel wagering and breeding law and other laws relating to
simulcasting and the imposition of certain taxes, as amended by  section
8  of  part  U  of chapter 59 of the laws of 2013, is amended to read as
follows:
  S 54. This act  shall  take  effect  immediately;  provided,  however,
sections  three  through twelve of this act shall take effect on January
1, 1991, and section 1013 of the racing, pari-mutuel wagering and breed-
ing law, as added by section thirty-eight of this act, shall expire  and
be  deemed repealed on July 1, [2014] 2015; and section eighteen of this
act shall take effect on July 1, 2008 and sections fifty-one and  fifty-
two  of this act shall take effect as of the same date as chapter 772 of
the laws of 1989 took effect.
  S 9. Paragraph (a) of subdivision 1 of  section  238  of  the  racing,
pari-mutuel wagering and breeding law, as amended by section 9 of part U
of chapter 59 of the laws of 2013, is amended to read as follows:
  (a)  The  franchised  corporation  authorized  under  this  chapter to
conduct pari-mutuel betting at a race meeting or races run thereat shall
distribute all sums deposited in any pari-mutuel pool to the holders  of
winning  tickets therein, provided such tickets be presented for payment
before April first of the year following the  year  of  their  purchase,
less  an  amount  which  shall be established and retained by such fran-
chised corporation of between twelve to  seventeen  per  centum  of  the
total  deposits in pools resulting from on-track regular bets, and four-
teen to twenty-one per centum of the total deposits in  pools  resulting
from on-track multiple bets and fifteen to twenty-five per centum of the
total  deposits in pools resulting from on-track exotic bets and fifteen
to thirty-six per centum of the total deposits in pools  resulting  from
on-track  super  exotic  bets, plus the breaks. The retention rate to be
established is subject to the prior approval of the [racing and wagering
board] GAMING COMMISSION. Such rate may not be changed  more  than  once
per  calendar  quarter  to be effective on the first day of the calendar
quarter. "Exotic bets" and "multiple bets" shall have the  meanings  set

S. 6359--C                         289

forth  in  section five hundred nineteen of this chapter.  "Super exotic
bets" shall have the meaning set forth in section three hundred  one  of
this  chapter. For purposes of this section, a "pick six bet" shall mean
a single bet or wager on the outcomes of six races. The breaks are here-
by defined as the odd cents over any multiple of five for payoffs great-
er  than  one  dollar  five  cents  but less than five dollars, over any
multiple of ten for payoffs greater than  five  dollars  but  less  than
twenty-five dollars, over any multiple of twenty-five for payoffs great-
er  than twenty-five dollars but less than two hundred fifty dollars, or
over any multiple of fifty for payoffs over two hundred  fifty  dollars.
Out  of  the  amount  so retained there shall be paid by such franchised
corporation to the commissioner of taxation and finance, as a reasonable
tax by the state for the privilege of conducting pari-mutuel betting  on
the  races run at the race meetings held by such franchised corporation,
the following percentages of the total pool  for  regular  and  multiple
bets  five  per  centum  of regular bets and four per centum of multiple
bets plus twenty per centum of the breaks; for exotic wagers  seven  and
one-half  per centum plus twenty per centum of the breaks, and for super
exotic bets seven and one-half per centum plus fifty per centum  of  the
breaks.  For the period June first, nineteen hundred ninety-five through
September ninth, nineteen  hundred  ninety-nine,  such  tax  on  regular
wagers  shall  be three per centum and such tax on multiple wagers shall
be two and one-half per centum, plus twenty per centum  of  the  breaks.
For  the  period  September  tenth, nineteen hundred ninety-nine through
March thirty-first, two thousand one, such tax on all  wagers  shall  be
two  and six-tenths per centum and for the period April first, two thou-
sand one through December thirty-first, two thousand [fourteen] FIFTEEN,
such tax on all wagers shall be one and six-tenths per centum, plus,  in
each  such  period,  twenty per centum of the breaks. Payment to the New
York state thoroughbred breeding and development fund by such franchised
corporation shall be one-half of one per centum of total daily  on-track
pari-mutuel  pools  resulting from regular, multiple and exotic bets and
three per centum of super exotic bets provided, however,  that  for  the
period September tenth, nineteen hundred ninety-nine through March thir-
ty-first,  two thousand one, such payment shall be six-tenths of one per
centum of regular, multiple and exotic pools and for  the  period  April
first,  two  thousand  one  through  December thirty-first, two thousand
[fourteen] FIFTEEN, such payment shall be seven-tenths of one per centum
of such pools.
  S 10. This act shall take effect immediately.

                                 PART BB

  Section 1. Clause (G) of subparagraph (ii) of paragraph 1 of  subdivi-
sion  b  of  section 1612 of the tax law, as added by chapter 174 of the
laws of 2013, is amended to read as follows:
  (G) Notwithstanding any provision to the  contrary,  EXCEPT  SUBCLAUSE
ONE  OF  CLAUSE  (J)  OF  THIS  SUBPARAGRAPH,  BUT  ONLY WHERE SUCH ITEM
APPLIES, when a vendor track is located within regions one, two, or five
of development zone two as defined by section thirteen  hundred  ten  of
the  racing,  pari-mutuel  wagering  and breeding law, such vendor track
shall receive an additional commission at a rate equal to the percentage
of revenue wagered at the vendor track after payout for prizes  pursuant
to  this  chapter less ten percent retained by the commission for opera-
tion, administration,  and  procurement  purposes  and  payment  of  the
vendor's  fee,  marketing  allowance, and capital award paid pursuant to

S. 6359--C                         290

this chapter and the effective tax rate paid on all gross gaming revenue
paid by a gaming facility within the same  region  pursuant  to  section
thirteen  hundred  fifty-one  of  the  racing,  pari-mutuel wagering and
breeding  law.  The  additional  commission  shall be paid to the vendor
track within sixty days after the conclusion of the  state  fiscal  year
based on the calculated percentage during the previous fiscal year.
  S  2.  Clause (H) of subparagraph (ii) of paragraph 1 of subdivision b
of section 1612 of the tax law, as separately amended  by  chapters  174
and 175 of the laws of 2013, is amended to read as follows:
  (H)  notwithstanding  clauses (A), (B), (C), (D), (E), (F) [and], (G),
AND (J) of this subparagraph, the track operator of a vendor track shall
be eligible for a vendor's capital award of up to four  percent  of  the
total revenue wagered at the vendor track after payout for prizes pursu-
ant to this chapter, which shall be used exclusively for capital project
investments  to improve the facilities of the vendor track which promote
or encourage increased attendance at the video lottery  gaming  facility
including,  but  not limited to hotels, other lodging facilities, enter-
tainment  facilities,  retail  facilities,  dining  facilities,   events
arenas,  parking  garages  and  other improvements that enhance facility
amenities; provided that such capital investments shall be  approved  by
the  division, in consultation with the state racing and wagering board,
and that such vendor track demonstrates that such  capital  expenditures
will  increase  patronage at such vendor track's facilities and increase
the amount of revenue generated to support state education programs. The
annual amount of such vendor's capital awards that a vendor track  shall
be  eligible  to  receive  shall  be limited to two million five hundred
thousand dollars, except for Aqueduct racetrack, for which  there  shall
be  no  vendor's  capital awards. Except for tracks having less than one
thousand one hundred video gaming machines,  and  except  for  a  vendor
track  located west of State Route 14 from Sodus Point to the Pennsylva-
nia border within New York, each track operator  shall  be  required  to
co-invest  an  amount  of  capital  expenditure  equal to its cumulative
vendor's capital award. For all tracks, except for  Aqueduct  racetrack,
the amount of any vendor's capital award that is not used during any one
year  period  may  be  carried  over into subsequent years ending before
April first, two thousand [fourteen] FIFTEEN.   Any amount  attributable
to  a  capital  expenditure  approved prior to April first, two thousand
[fourteen] FIFTEEN  and  completed  before  April  first,  two  thousand
[sixteen]  SEVENTEEN;  or  approved  prior  to April first, two thousand
[eighteen] NINETEEN and  completed  before  April  first,  two  thousand
[twenty]  TWENTY-ONE  for  a vendor track located west of State Route 14
from Sodus Point to the Pennsylvania border within New  York,  shall  be
eligible  to  receive  the  vendor's  capital award. In the event that a
vendor track's capital expenditures, approved by the division  prior  to
April  first,  two  thousand  [fourteen]  FIFTEEN and completed prior to
April first, two thousand [sixteen] SEVENTEEN, exceed the vendor track's
cumulative capital award during the five year period ending April first,
two thousand [fourteen] FIFTEEN, the vendor shall  continue  to  receive
the  capital  award  after  April first, two thousand [fourteen] FIFTEEN
until such approved capital expenditures are paid to  the  vendor  track
subject  to  any  required  co-investment.  In no event shall any vendor
track that receives a vendor fee pursuant to clause (F)  [or],  (G),  OR
(J)  of this subparagraph be eligible for a vendor's capital award under
this section. Any operator of  a  vendor  track  which  has  received  a
vendor's  capital  award,  choosing  to  divest  the capital improvement
toward which the award was applied, prior to the  full  depreciation  of

S. 6359--C                         291

the capital improvement in accordance with generally accepted accounting
principles,  shall  reimburse the state in amounts equal to the total of
any such awards. Any capital award not approved for a  capital  expendi-
ture  at  a  video  lottery gaming facility by April first, two thousand
[fourteen] FIFTEEN shall be deposited into the state  lottery  fund  for
education aid; and
  S  3.  Subparagraph  (iii)  of paragraph 1 of subdivision b of section
1612 of the tax law, as separately amended by chapters 174  and  175  of
the laws of 2013, is amended to read as follows:
  (iii) less an additional vendor's marketing allowance at a rate of ten
percent  for  the  first  one hundred million dollars annually and eight
percent thereafter of the total revenue  wagered  at  the  vendor  track
after payout for prizes to be used by the vendor track for the marketing
and  promotion  and  associated  costs of its video lottery gaming oper-
ations and pari-mutuel horse racing operations,  as  long  as  any  such
costs associated with pari-mutuel horse racing operations simultaneously
encourage  increased  attendance  at  such vendor's video lottery gaming
facilities, consistent with the customary manner of marketing comparable
operations in the industry and subject to the overall supervision of the
division; provided, however,  that  the  additional  vendor's  marketing
allowance shall not exceed eight percent in any year for any operator of
a  racetrack  located  in the county of Westchester or Queens; provided,
however, a vendor track that receives a vendor fee  pursuant  to  clause
(G)  OR (J) of subparagraph (ii) of this paragraph shall not receive the
additional vendor's marketing allowance; provided, however, except for a
vendor track located west of State Route 14  from  Sodus  Point  to  the
Pennsylvania  border within New York shall continue to receive a market-
ing allowance of ten percent on total  revenue  wagered  at  the  vendor
track  after  payout for prizes in excess of one hundred million dollars
annually provided, however, a vendor that receives a vendor fee pursuant
to clause (G-1) of subparagraph (ii) of this paragraph shall receive  an
additional  marketing  allowance  at  a rate of ten percent of the total
revenue wagered at the video lottery gaming facility  after  payout  for
prizes. In establishing the vendor fee,
  S 4. Subparagraph (ii) of paragraph 1 of subdivision b of section 1612
of the tax law is amended by adding a new clause (J) to read as follows:
  (J)(1)  NOTWITHSTANDING  CLAUSES (A), (B), (C), (D), (E), (F), AND (G)
OF THIS SUBPARAGRAPH, WHEN NO MORE THAN ONE VENDOR TRACK LOCATED IN  THE
TOWN  OF  THOMPSON  IN SULLIVAN COUNTY AT THE SITE OF THE FORMER CONCORD
RESORT AT WHICH QUALIFIED CAPITAL INVESTMENT HAS BEEN MADE AND NO  FEWER
THAN  ONE THOUSAND FULL-TIME, PERMANENT EMPLOYEES HAVE BEEN NEWLY HIRED,
IS LOCATED IN SULLIVAN COUNTY AND IS WITHIN SIXTY MILES FROM ANY  GAMING
FACILITY  IN  A  CONTIGUOUS  STATE, THEN FOR A PERIOD OF FORTY YEARS THE
VENDOR'S FEE SHALL EQUAL THE TOTAL REVENUE WAGERED AT THE  VENDOR  TRACK
AFTER  PAYOUT  OF  PRIZES  PURSUANT  TO  THIS SUBDIVISION REDUCED BY THE
GREATER OF (I) TWENTY-FIVE PERCENT OF TOTAL  REVENUE  AFTER  PAYOUT  FOR
PRIZES  FOR  "VIDEO  LOTTERY GAMES" OR (II) FOR THE FIRST EIGHT YEARS OF
OPERATION THIRTY-EIGHT MILLION DOLLARS, AND BEGINNING IN THE NINTH  YEAR
OF  OPERATION  SUCH  AMOUNT SHALL INCREASE ANNUALLY BY THE LESSER OF THE
INCREASE IN THE CONSUMER PRICE INDEX OR TWO PERCENT, PLUS SEVEN  PERCENT
OF  TOTAL  REVENUE AFTER PAYOUT OF PRIZES. IN ADDITION, IN THE EVENT THE
VENDOR FEE IS CALCULATED PURSUANT TO ITEM (I)  OF  THIS  SUBCLAUSE,  THE
VENDOR'S  FEE SHALL BE FURTHER REDUCED BY 11.11 PERCENT OF THE AMOUNT BY
WHICH TOTAL REVENUE AFTER PAYOUT FOR PRIZES EXCEEDS TWO HUNDRED  FIFTEEN
MILLION  DOLLARS,  BUT  IN  NO  EVENT  SHALL  SUCH REDUCTION EXCEED FIVE
MILLION DOLLARS.

S. 6359--C                         292

  PROVIDED, HOWEVER, THAT IN THE CASE OF NO MORE THAN ONE  VENDOR  TRACK
LOCATED  IN  THE  TOWN OF THOMPSON IN SULLIVAN COUNTY AT THE SITE OF THE
FORMER CONCORD RESORT WITH A QUALIFIED CAPITAL INVESTMENT, AND ONE THOU-
SAND FULL-TIME, PERMANENT EMPLOYEES IF AT ANY TIME AFTER THREE YEARS  OF
OPENING  OPERATIONS  OF  THE  LICENSED VIDEO GAMING FACILITY OR LICENSED
VENDOR TRACK, THE VENDOR TRACK EXPERIENCES AN EMPLOYMENT SHORTFALL, THEN
THE RECAPTURE AMOUNT SHALL APPLY, FOR ONLY SUCH PERIOD AS THE  SHORTFALL
EXISTS.
  FOR  THE PURPOSES OF THIS SECTION "QUALIFIED CAPITAL INVESTMENT" SHALL
MEAN AN INVESTMENT OF A  MINIMUM  OF  SIX  HUNDRED  MILLION  DOLLARS  AS
REFLECTED  BY  AUDITED FINANCIAL STATEMENTS OF WHICH NOT LESS THAN THREE
HUNDRED MILLION DOLLARS SHALL BE COMPRISED OF  EQUITY  AND/OR  MEZZANINE
FINANCING  AS  AN INITIAL INVESTMENT IN A COUNTY WHERE TWELVE PERCENT OF
THE POPULATION IS BELOW THE FEDERAL POVERTY LEVEL  AS  MEASURED  BY  THE
MOST  RECENT  BUREAU OF CENSUS STATISTICS PRIOR TO THE QUALIFIED CAPITAL
INVESTMENT COMMENCING THAT RESULTS IN THE CONSTRUCTION,  DEVELOPMENT  OR
IMPROVEMENT  OF  AT    LEAST  ONE  EIGHTEEN  HOLE  GOLF  COURSE, AND THE
CONSTRUCTION AND ISSUANCE OF CERTIFICATES OF OCCUPANCY FOR HOTELS, LODG-
ING, SPAS, DINING, RETAIL AND ENTERTAINMENT VENUES, PARKING GARAGES  AND
OTHER  CAPITAL  IMPROVEMENTS AT OR ADJACENT TO THE LICENSED VIDEO GAMING
FACILITY OR LICENSED VENDOR TRACK WHICH PROMOTE OR  ENCOURAGE  INCREASED
ATTENDANCE AT SUCH FACILITIES.
  FOR  THE  PURPOSES  OF  THIS  SECTION, "FULL-TIME, PERMANENT EMPLOYEE"
SHALL MEAN AN EMPLOYEE WHO HAS WORKED  AT  THE  VIDEO  GAMING  FACILITY,
VENDOR  TRACK  OR RELATED AND ADJACENT FACILITIES FOR A MINIMUM OF THIR-
TY-FIVE HOURS PER WEEK FOR NOT LESS THAN FOUR CONSECUTIVE WEEKS AND  WHO
IS  ENTITLED TO RECEIVE THE USUAL AND CUSTOMARY FRINGE BENEFITS EXTENDED
TO OTHER EMPLOYEES WITH COMPARABLE RANK AND  DUTIES;  OR  TWO  PART-TIME
EMPLOYEES  WHO HAVE WORKED AT THE VIDEO GAMING FACILITY, VENDOR TRACK OR
RELATED AND ADJACENT FACILITIES FOR A COMBINED  MINIMUM  OF  THIRTY-FIVE
HOURS  PER  WEEK  FOR  NOT  LESS THAN FOUR CONSECUTIVE WEEKS AND WHO ARE
ENTITLED TO RECEIVE THE USUAL AND CUSTOMARY FRINGE BENEFITS EXTENDED  TO
OTHER EMPLOYEES WITH COMPARABLE RANK AND DUTIES.
  FOR THE PURPOSE OF THIS SECTION "EMPLOYMENT GOAL" SHALL MEAN ONE THOU-
SAND  FIVE  HUNDRED  FULL-TIME  PERMANENT EMPLOYEES AFTER THREE YEARS OF
OPENING OPERATIONS OF THE LICENSED VIDEO  GAMING  FACILITY  OR  LICENSED
VENDOR TRACK.
  FOR  THE  PURPOSE  OF THIS SECTION "EMPLOYMENT SHORTFALL" SHALL MEAN A
LEVEL OF EMPLOYMENT THAT FALLS BELOW THE EMPLOYMENT GOAL,  AS  CERTIFIED
ANNUALLY  BY  VENDOR'S  CERTIFIED  ACCOUNTANTS  AND  THE CHAIRMAN OF THE
EMPIRE STATE DEVELOPMENT CORPORATION.
  FOR THE PURPOSES OF THIS SECTION "RECAPTURE  AMOUNT"  SHALL  MEAN  THE
DIFFERENCE BETWEEN THE AMOUNT OF THE VENDOR'S FEE PAID TO A VENDOR TRACK
WITH  A QUALIFIED CAPITAL INVESTMENT, AND THE VENDOR FEE OTHERWISE PAYA-
BLE TO A VENDOR TRACK PURSUANT TO CLAUSE (F) OF THIS SUBPARAGRAPH,  THAT
IS REIMBURSABLE BY THE VENDOR TRACK TO THE DIVISION FOR PAYMENT INTO THE
STATE  TREASURY,  TO  THE  CREDIT  OF  THE STATE LOTTERY FUND CREATED BY
SECTION NINETY-TWO-C OF THE STATE FINANCE  LAW,  DUE  TO  AN  EMPLOYMENT
SHORTFALL  PURSUANT TO THE FOLLOWING SCHEDULE ONLY FOR THE PERIOD OF THE
EMPLOYMENT SHORTFALL:
  (I) ONE HUNDRED PERCENT OF THE  RECAPTURE  AMOUNT  IF  THE  EMPLOYMENT
SHORTFALL  IS  GREATER  THAN  SIXTY-SIX  AND  TWO-THIRDS  PERCENT OF THE
EMPLOYMENT GOAL;
  (II) SEVENTY-FIVE PERCENT OF THE RECAPTURE AMOUNT  IF  THE  EMPLOYMENT
SHORTFALL  IS  GREATER  THAN  THIRTY-THREE  AND ONE-THIRD PERCENT OF THE
EMPLOYMENT GOAL;

S. 6359--C                         293

  (III) FORTY-NINE AND ONE-HALF PERCENT OF THE RECAPTURE AMOUNT  IF  THE
EMPLOYMENT  SHORTFALL  IS  GREATER THAN THIRTY PERCENT OF THE EMPLOYMENT
GOAL;
  (IV)  TWENTY-TWO  PERCENT  OF  THE  RECAPTURE AMOUNT IF THE EMPLOYMENT
SHORTFALL IS GREATER THAN TWENTY PERCENT OF THE EMPLOYMENT GOAL;
  (V) ELEVEN PERCENT OF THE RECAPTURE AMOUNT IF THE EMPLOYMENT SHORTFALL
IS GREATER THAN TEN PERCENT OF THE EMPLOYMENT GOAL.
  (2) SUBCLAUSE ONE OF THIS CLAUSE SHALL NOT APPLY UPON THE AWARD  OF  A
GAMING FACILITY LICENSE PURSUANT TO TITLE TWO OF ARTICLE THIRTEEN OF THE
RACING,  PARI-MUTUEL  WAGERING AND BREEDING LAW WHERE SUCH LICENSE WOULD
BE USED TO ESTABLISH A GAMING FACILITY AT THE SITE OF THE FORMER CONCORD
RESORT LOCATED IN THE TOWN OF THOMPSON IN SULLIVAN COUNTY.
  S 5. The opening paragraph of paragraph 2 of subdivision b of  section
1612  of  the tax law, as amended by chapter 175 of the laws of 2013, is
amended to read as follows:
  As consideration for the operation of a video lottery gaming facility,
the division, shall cause the investment in the  racing  industry  of  a
portion  of  the  vendor  fee received pursuant to paragraph one of this
subdivision in the manner set forth in this subdivision. With the excep-
tion of Aqueduct racetrack or a facility in  the  county  of  Nassau  or
Suffolk  operated  by a corporation established pursuant to section five
hundred two of the racing, pari-mutuel wagering and breeding  law,  each
such  track shall dedicate a portion of its vendor fees, received pursu-
ant to clause (A), (B), (C), (D), (E), (F), [or] (G), OR (J) of subpara-
graph (ii) of paragraph one of this subdivision, solely for the  purpose
of  enhancing  purses  at  such  track,  in an amount equal to eight and
three-quarters percent of the total revenue wagered at the vendor  track
after  pay  out for prizes. One percent of such purse enhancement amount
shall be paid to the gaming commission to be used exclusively to promote
and ensure equine health and safety in New York.  Any  portion  of  such
funding  to  the  gaming commission unused during a fiscal year shall be
returned to the video lottery gaming operators on a pro  rata  basis  in
accordance  with the amounts originally contributed by each operator and
shall be used for the purpose of enhancing  purses  at  such  track.  In
addition,  with the exception of Aqueduct racetrack or a facility in the
county of Nassau or Suffolk operated by a corporation established pursu-
ant to section five hundred two of the racing, pari-mutuel wagering  and
breeding  law,  one  and one-quarter percent of total revenue wagered at
the vendor track after pay out for prizes, received pursuant  to  clause
(A),  (B),  (C), (D), (E), (F), [or] (G), OR (J) of subparagraph (ii) of
paragraph one of this subdivision, shall be distributed to the appropri-
ate breeding fund for the manner of racing conducted by such track.
  S 6. This act shall take effect immediately.

                                 PART CC

  Section 1. Article 12 of the tax law is REPEALED.
  S 2. Subdivision fourth of section 171 of the tax law is REPEALED.
  S 3. Subparagraph (iii) of paragraph (b) of subdivision 1  of  section
173-a of the tax law is REPEALED.
  S 4. Section 176 of the tax law, as amended by chapter 267 of the laws
of 1987, is amended to read as follows:
  S  176.  Transfer  of  the  powers  and  duties  of the comptroller in
relation to the assessment or collection of certain taxes. On and  after
July  first,  nineteen hundred twenty-one, all the powers and duties now
conferred or imposed upon the state comptroller in relation to the taxa-

S. 6359--C                         294

tion of corporations under articles nine and nine-A of this chapter,  in
relation  to the taxation of transfers of property, under article ten of
this chapter, [in relation to the taxation of transfers of stock,  under
article  twelve  of  this chapter,] and in relation to taxation upon and
with respect to personal income, under article sixteen of  this  chapter
(as  such  article was in effect on December thirtieth, nineteen hundred
sixty), shall be transferred to and thereafter shall  be  exercised  and
performed  by  the  commissioner,  except as powers and duties under any
such article are expressly conferred upon  or  continued  in  the  state
comptroller  by  acts of the legislature of nineteen hundred twenty-one,
enacted subsequent to chapter ninety of the  laws  of  nineteen  hundred
twenty-one.
  S 5. Subparagraph 5 of paragraph (a) and subparagraph 4-a of paragraph
(b)  of  subdivision  9 of section 208 of the tax law, subparagraph 5 of
paragraph (a) as amended by chapter 61 of the laws of 1989,  clause  (i)
of subparagraph 5 as amended by section 2 of part C of chapter 25 of the
laws  of 2009, and subparagraph 4-a of paragraph (b) of subdivision 9 of
section 208 of the tax law, as amended by chapter 760  of  the  laws  of
1992, are amended to read as follows:
  (5)  (i)  any  refund  or  credit of a tax imposed under this article,
article twenty-three, or article thirty-two of this chapter,  for  which
tax  no exclusion or deduction was allowed in determining the taxpayer's
entire net income under this article, article twenty-three,  or  article
thirty-two  of  this  chapter  for  any prior year, OR (ii) [a refund or
credit of general corporation  tax  allowed  by  subdivision  eleven  of
section  11-604  of  the administrative code of the city of New York, or
(iii)] any refund or credit of a tax imposed under sections one  hundred
eighty-three, one hundred eighty-three-a, one hundred eighty-four or one
hundred eighty-four-a of this chapter, and
  (4-a)(A) [the entire amount allowable as an exclusion or deduction for
stock transfer taxes imposed by article twelve of this chapter in deter-
mining  the  entire  taxable  income  which  the taxpayer is required to
report to the United States treasury department but only to  the  extent
that  such  taxes  are  incurred and paid in market making transactions,
(B)] in those instances where a credit for the special additional  mort-
gage  recording tax credit is allowed under paragraph (a) of subdivision
seventeen of section two hundred ten of this article, the amount allowed
as an exclusion or deduction for the special additional mortgage record-
ing tax imposed by subdivision one-a of section two hundred  fifty-three
of  this  chapter  in  determining  the  entire taxable income which the
taxpayer is required to report to the United States treasury department,
and [(C)] (B) unless the credit allowed pursuant to  subdivision  seven-
teen  of  section  two  hundred  ten of this article is reflected in the
computation of the gain or loss so as to result in an increase  in  such
gain or decrease of such loss, for federal income tax purposes, from the
sale  or  other  disposition  of  the property with respect to which the
special additional mortgage recording tax imposed pursuant  to  subdivi-
sion  one-a of section two hundred fifty-three of this chapter was paid,
the amount of the special additional mortgage recording tax  imposed  by
subdivision  one-a  of  section  two hundred fifty-three of this chapter
which was paid and which is reflected in the computation of the basis of
the property so as to result in a decrease in such gain or  increase  in
such  loss for federal income tax purposes from the sale or other dispo-
sition of the property with respect to which such tax was paid.

S. 6359--C                         295

  S 6. Subdivision 1 of section 472 of the tax law, as amended by  chap-
ter  629  of  the laws of 1996, and as further amended by section 104 of
part A of chapter 62 of the laws of 2011, is amended to read as follows:
  1.  The  commissioner  shall  prescribe, prepare and furnish stamps of
such denominations and quantities as may be necessary for the payment of
the tax on cigarettes imposed by this article, and may from time to time
and as often as he deems advisable provide for the issuance  and  exclu-
sive  use  of stamps of a new design and forbid the use of stamps of any
other design[, in the manner and with the effect provided in section two
hundred seventy-four of this chapter]. THE COMMISSIONER MAY MAKE,  ENTER
INTO  AND  EXECUTE  FOR  AND  IN  BEHALF  OF  THE STATE SUCH CONTRACT OR
CONTRACTS FOR DIES, PLATES AND PRINTING NECESSARY FOR THE MANUFACTURE OF
THE STAMPS PROVIDED FOR BY THIS ARTICLE, AND HIRE STAFF AND PROVIDE SUCH
STATIONARY TOGETHER WITH  SUCH  BOOKS  AND  BLANKS  AS  IN  HIS  OR  HER
DISCRETION MAY BE NECESSARY FOR PUTTING INTO OPERATION THE PROVISIONS OF
THIS  ARTICLE;  THE  COMMISSIONER  SHALL BE THE CUSTODIAN OF ALL STAMPS,
DIES, PLATES OR OTHER MATERIAL OR THING FURNISHED AND USED IN THE  MANU-
FACTURE  OF  SUCH  STATE TAX STAMPS, AND ALL EXPENSES INCURRED UNDER THE
COMMISSIONER'S DIRECTION IN CARRYING OUT THE PROVISIONS OF THIS  ARTICLE
SHALL BE PAID TO THE COMMISSIONER BY THE STATE TREASURER FROM ANY MONEYS
APPROPRIATED  FOR  SUCH  PURPOSE. The commissioner shall make provisions
for the sale of such stamps at such places and at such times as  he  may
deem necessary and may license agents for such purpose. The commissioner
may  license  dealers  in  cigarettes, who maintain separate warehousing
facilities for the purpose of receiving and distributing cigarettes  and
conducting  their  business, who have received commitments from at least
two cigarette manufacturers whose aggregate market  share  is  at  least
forty  percent  of  the  New York state cigarette market, and importers,
exporters and manufacturers of cigarettes, and other persons  within  or
without  the state as agents to buy or affix stamps to be used in paying
the tax herein imposed, but an agent shall at all times have  the  right
to  appoint  the  person in his employ who is to affix the stamps to any
cigarettes under the agent's control. The fee for filing  such  applica-
tion  for an agent's license shall be one thousand five hundred dollars,
unless such fee has been paid during the  preceding  twelve  months,  in
which case, the fee for a new license shall be one thousand dollars. All
of  the  provisions of section four hundred eighty relating to wholesale
dealers' licenses, including the procedure for  suspension,  revocation,
refusal  to  license and for hearings, except for paragraphs (c) and (g)
of subdivision one of such  section,  shall  be  applicable  to  agents'
licenses  applied  for  or  granted pursuant to this section, as if such
provisions had been set forth  in  full  in  this  subdivision  and  had
expressly  referred  to  the applicant for, or the holder of, an agent's
license. Whenever the commissioner shall sell and deliver  to  any  such
agent  any  such  stamps,  such  agent  shall  be entitled to receive as
compensation for his services and expenses as such agent in  selling  or
affixing  such stamps, and to retain out of the moneys to be paid by him
for such stamps, a commission on the par value thereof. The commissioner
is hereby authorized to prescribe a schedule of commissions, not exceed-
ing five per centum, allowable to such agent  for  buying  and  affixing
such  stamps. Such schedule shall be uniform with respect to the differ-
ent types of stamps used, and may be on a graduated scale  with  respect
to  the  number  of  stamps  purchased.  The  commissioner  may,  in his
discretion, permit an agent to pay for such stamps  within  thirty  days
after  the  date of purchase and may require any such agent to file with
the department of taxation and finance a bond issued by a surety company

S. 6359--C                         296

approved by the superintendent of financial services as to solvency  and
responsibility and authorized to transact business in the state or other
security  acceptable  to the commissioner, in such amount as the commis-
sioner  may  fix,  to secure the payment of any sums due from such agent
pursuant to this article. If securities are deposited as security  under
this  subdivision,  such  securities shall be kept in the custody of the
commissioner and may be sold by the commissioner if it becomes necessary
so to do in order to recover any sums due from such  agent  pursuant  to
this article, but no such sale shall be had until after such agent shall
have had opportunity to litigate the validity of any tax if it elects so
to do. Upon any such sale, the surplus, if any, above the sums due under
this article shall be returned to such agent.
  S  7.  Section  463 of the banking law, as added by chapter 608 of the
laws of 1996, is amended to read as follows:
  S 463. [Exemptions and individual] INDIVIDUAL liability of  sharehold-
ers.  [The transfer of the shares of any credit union shall not be taxa-
ble under the provisions of article twelve of the tax law.]
  The  shareholders  of  a credit union shall not be individually liable
for the payment of the credit union's debts.
  S 8. Subdivision 6 of section 3012 of the public authorities  law,  as
amended  by  chapter  868  of  the  laws  of 1975, is amended to read as
follows:
  6. Anything in this article ten to the contrary  notwithstanding,  any
agreement or agreements with the holders of notes or bonds issued by any
municipal  assistance corporation created by or pursuant to any title of
this article shall contain  a  clause  stating  in  substance  that  any
provision  in  this article or in any such agreement or agreements which
relate to taxes  imposed  under  [article  twelve  or]  sections  eleven
hundred  seven or eleven hundred eight of the tax law of the state or to
the funds created by sections ninety-two-b, ninety-two-d or ninety-two-e
of the state finance law shall be deemed executory only to the extent of
the moneys available to the state in such funds from time to time and no
liability on account thereof shall be incurred by the state  beyond  the
moneys available in such funds.
  S 9. Section 92-b of the state finance law is REPEALED.
  S 10. Section 92-i of the state finance law is REPEALED.
  S  11. Subparagraph 6 of paragraph j of subdivision 1 of section 54 of
the state finance law is REPEALED.
  S 12. Subdivision (c) of section 11-503 of the administrative code  of
the city of New York is REPEALED.
  S 13. Paragraph 4 of subdivision (b) of section 11-506 of the adminis-
trative code of the city of New York is REPEALED.
  S  14. Subdivision (g) of section 11-512 of the administrative code of
the city of New York is REPEALED.
  S 15. Subdivision (g) of section 11-514 of the administrative code  of
the city of New York is REPEALED.
  S 16. Clause (A) of subparagraph 4-a of paragraph (b) of subdivision 8
of  section 11-602 of the administrative code of the city of New York is
REPEALED.
  S 17. Subdivision 11 of section 11-604 of the administrative  code  of
the city of New York is REPEALED.
  S  18. Paragraph (a) of subdivision 12 of section 11-604 of the admin-
istrative code of the city of New York is amended to read as follows:
  (a) [In addition to the credit allowed by subdivision eleven  of  this
section, a] A taxpayer shall be allowed a credit against the tax imposed
by  this subchapter to be credited or refunded in the manner hereinafter

S. 6359--C                         297

provided in this section. The amount of such credit shall be the  excess
of (A) the amount of sales and compensating use taxes imposed by section
eleven  hundred  seven of the tax law during the taxpayer's taxable year
which  became  legally  due  on  or  after and was paid on or after July
first, nineteen hundred seventy-seven, less any credits  or  refunds  of
such  taxes,  with  respect  to  the  purchase or use by the taxpayer of
machinery or equipment for use or consumption directly and predominantly
in the production  of  tangible  personal  property,  gas,  electricity,
refrigeration  or steam for sale, by manufacturing, processing, generat-
ing, assembling, refining, mining or extracting,  or  telephone  central
office  equipment or station apparatus or comparable telegraph equipment
for use directly and predominantly in receiving at destination or initi-
ating and  switching  telephone  or  telegraph  communication,  but  not
including  parts  with  a  useful  life  of one year or less or tools or
supplies used in connection with such machinery, equipment or  apparatus
over  (B)  the  amount of any credit for such sales and compensating use
taxes allowed or allowable against the taxes imposed by  subchapter  two
of  chapter  eleven  of  this  title for any periods embraced within the
taxable year of the taxpayer under this subchapter.
  S 19. Subdivision 3 of section 11-606 of the  administrative  code  of
the city of New York is REPEALED.
  S  20.  Subdivision 11 of section 11-608 of the administrative code of
the city of New York is REPEALED.
  S 21. (a) Notwithstanding the repeal of article 12 of the tax  law  by
this  act, all provisions of such article 12 and any regulations adopted
thereunder, in respect to the assessment, payment, payment over,  deter-
mination,  collection  and refund of tax imposed thereunder, the rebates
provided for in section 280-a of the tax law, the filing  of  forms  and
returns  and  the  preservation  of  records for the purposes of the tax
imposed by article 12, the secrecy of returns, the disposition of reven-
ues, and the civil and criminal penalties applicable to the violation of
the provisions of such article 12, shall  continue  in  full  force  and
effect  with  respect  to  all  such tax accrued up to the date this act
takes effect; all actions and proceedings, civil or criminal,  commenced
or  authorized  to  be  commenced under or by virtue of any provision of
such article 12 so repealed, and pending or able to be  commenced  prior
to  the  taking  effect of such repeal, may be commenced, prosecuted and
defended to final effect in the  same  manner  as  they  might  if  such
provisions were not so repealed.
  (b)  Notwithstanding any provision of law in article 12 of the tax law
or subdivision (a) of this section to the contrary, any application  for
a  rebate  of  tax  paid  under such article 12 must be filed within two
years from the effective date of this act.
  S 22. This act shall take effect June 1, 2014; provided  that  section
ten of this act shall take effect July 1, 2016.

                                 PART DD

  Section  1.  Subsection (b) of section 804 of the tax law, as added by
section 1 of part C of chapter 25 of the laws of  2009,  is  amended  to
read as follows:
  (b)  Individuals  with  net earnings from self-employment. Individuals
with earnings from self-employment must make estimated tax  payments  of
the  tax  imposed by this article for the taxable year on the same dates
specified in [subsection (a) of this section for the quarterly  payments
of the tax imposed on the payroll expense of employers] PARAGRAPH ONE OF

S. 6359--C                         298

SUBSECTION  (C)  OF SECTION SIX HUNDRED EIGHTY-FIVE OF THIS CHAPTER.  In
addition, these self-employed individuals must file  a  return  for  the
taxable  year  by  the  [thirtieth]  FIFTEENTH  day  of the fourth month
following the close of the taxable year. Paragraph one of subsection (d)
of  section  six  hundred eighty-five of this chapter shall not apply to
the estimated tax payments required by this subsection.
  S 2. Section 806 of the tax law, as added by section 1 of  part  C  of
chapter 25 of the laws of 2009, is amended to read as follows:
  S  806.  Procedural provisions. (A) GENERAL. All provisions of article
twenty-two of this chapter will apply to the provisions of this  article
in the same manner and with the same force and effect as if the language
of article twenty-two of this chapter had been incorporated in full into
this  article  and  had  been  specifically  adjusted  for and expressly
referred to the tax imposed by this article, except to the  extent  that
any provision is either inconsistent with a provision of this article or
is not relevant to this article. Notwithstanding the preceding sentence,
no  credit against tax in article twenty-two of this chapter can be used
to offset the tax due under this article.
  (B) COMBINED FILINGS. NOTWITHSTANDING ANY  OTHER  PROVISIONS  OF  THIS
ARTICLE:
  (1)  THE  COMMISSIONER  MAY  REQUIRE  THE  FILING OF A COMBINED RETURN
WHICH, IN ADDITION TO THE RETURN  PROVIDED  FOR  IN  SUBSECTION  (B)  OF
SECTION  EIGHT HUNDRED FOUR OF THIS ARTICLE, MAY ALSO INCLUDE ANY OF THE
RETURNS REQUIRED TO BE FILED BY A RESIDENT INDIVIDUAL OF NEW YORK  STATE
PURSUANT  TO  THE  PROVISIONS  OF  SECTION SIX HUNDRED FIFTY-ONE OF THIS
CHAPTER AND WHICH MAY BE REQUIRED TO BE FILED BY SUCH INDIVIDUAL  PURSU-
ANT  TO ANY LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
TY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
  (2) WHERE A COMBINED RETURN IS  REQUIRED,  AND  WITH  RESPECT  TO  THE
PAYMENT  OF ESTIMATED TAX, THE COMMISSIONER MAY ALSO REQUIRE THE PAYMENT
TO IT OF A SINGLE AMOUNT WHICH SHALL EQUAL  THE  TOTAL  OF  THE  AMOUNTS
(TOTAL TAXES LESS ANY CREDITS OR REFUNDS) WHICH WOULD HAVE BEEN REQUIRED
TO  BE  PAID WITH THE RETURNS OR IN PAYMENT OF ESTIMATED TAX PURSUANT TO
THE PROVISIONS OF THIS ARTICLE, THE PROVISIONS OF ARTICLE TWENTY-TWO  OF
THIS CHAPTER, AND THE PROVISIONS OF LOCAL LAWS ENACTED UNDER THE AUTHOR-
ITY OF ARTICLE THIRTY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
  (3)  Notwithstanding  any  other law to the contrary, the commissioner
may require that all filings of forms or returns under this article must
be filed electronically and all payments of tax must be  paid  electron-
ically.
  S  3.  The  tax  law is amended by adding a new section 807 to read as
follows:
  S 807. ENFORCEMENT WITH OTHER TAXES. (A) JOINT ASSESSMENT. IF THERE IS
ASSESSED A TAX UNDER THIS ARTICLE AND  THERE  IS  ALSO  ASSESSED  A  TAX
AGAINST THE SAME TAXPAYER PURSUANT TO ARTICLE TWENTY-TWO OF THIS CHAPTER
OR  UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
TY, ARTICLE THIRTY-A, OR ARTICLE THIRTY-B OF THIS CHAPTER,  AND  PAYMENT
OF  A  SINGLE  AMOUNT  IS REQUIRED UNDER THE PROVISIONS OF THIS ARTICLE,
SUCH PAYMENT SHALL BE DEEMED TO HAVE BEEN MADE WITH RESPECT TO THE TAXES
SO ASSESSED IN PROPORTION TO THE AMOUNTS OF SUCH  TAXES  DUE,  INCLUDING
TAX, PENALTIES, INTERESTED AND ADDITIONS TO TAX.
  (B)  JOINT ACTION. IF THE COMMISSIONER TAKES ACTION UNDER SUCH ARTICLE
TWENTY-TWO OR UNDER A LOCAL LAW ENACTED PURSUANT  TO  THE  AUTHORITY  OF
ARTICLE  THIRTY,  THIRTY-A,  OR THIRTY-B OF THIS CHAPTER WITH RESPECT TO
THE ENFORCEMENT AND COLLECTION OF THE TAX OR TAXES ASSESSED  UNDER  SUCH
ARTICLES,  THE  COMMISSIONER  SHALL,  WHENEVER  POSSIBLE  AND NECESSARY,

S. 6359--C                         299

ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION  UNDER  SIMILAR  ENFORCEMENT
AND COLLECTION PROVISIONS OF THE TAX IMPOSED BY THIS ARTICLE.
  (C)  APPORTIONMENT  OF  MONEYS  COLLECTED  BY JOINT ACTION. ANY MONEYS
COLLECTED AS A RESULT OF SUCH JOINT ACTION SHALL BE DEEMED TO HAVE  BEEN
COLLECTED  IN  PROPORTION  TO THE AMOUNTS DUE, INCLUDING TAX, PENALTIES,
INTEREST AND ADDITIONS TO TAX, UNDER ARTICLE TWENTY-TWO OF THIS  CHAPTER
OR  UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
TY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER AND THE TAX  IMPOSED  BY  THIS
ARTICLE.
  (D)  JOINT  DEFICIENCY  ACTION.  WHENEVER  THE  COMMISSIONER TAKES ANY
ACTION WITH RESPECT TO A DEFICIENCY OF INCOME TAX UNDER ARTICLE  TWENTY-
TWO OF THIS CHAPTER OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHOR-
ITY OF ARTICLE THIRTY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER, OTHER THAN
THE ACTION SET FORTH IN SUBSECTION (A) OF THIS SECTION, THE COMMISSIONER
MAY IN HIS OR HER DISCRETION ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION
UNDER THIS ARTICLE.
  S 4. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2015.

                                 PART EE

  Section  1. Subdivision 4 of section 97-nnnn of the state finance law,
as added by chapter 174 of the laws of  2013,  is  amended  to  read  as
follows:
  4.  a.  As  used  in this section, the term "base year gaming revenue"
shall mean the sum of all revenue generated to  support  education  from
video  lottery  gaming as defined by section sixteen hundred seventeen-a
of the tax law in the twelve  months  preceding  the  operation  of  any
gaming facility pursuant to either article thirteen of the racing, pari-
mutuel wagering and breeding law or pursuant to paragraph four of SUBDI-
VISION  A  OF  section [one thousand six] SIXTEEN hundred seventeen-a of
the tax law.
  b. Amounts APPROPRIATED OR transferred in any year to support  elemen-
tary and secondary education shall be calculated as follows:
  (i)  an  amount  equal to the positive difference, if any, between the
base year gaming revenue amount and the sum of all revenue generated  to
support  education  from  video  lottery  gaming  as  defined by section
sixteen hundred seventeen-a of the tax law in the  current  fiscal  year
provided  that such positive amount, if any, shall be transferred to the
state lottery fund[;]. FOR THE PURPOSES OF THIS  PARAGRAPH,  THE  CALCU-
LATION  OF  THIS  POSITIVE DIFFERENCE SHALL BE ESTIMATED AND TRANSFERRED
MONTHLY BASED ON THE CUMULATIVE POSITIVE DIFFERENCE, IF ANY, IN THE SAME
CUMULATIVE MONTHS OF THE BASE YEAR AND  THE  CUMULATIVE  MONTHS  OF  THE
CURRENT  FISCAL YEAR TO DATE, LESS AMOUNTS PREVIOUSLY TRANSFERRED IN THE
CURRENT FISCAL YEAR. PROVIDED, HOWEVER, IF THE AMOUNT PREVIOUSLY  TRANS-
FERRED  IN  THE  CURRENT  FISCAL  YEAR  EXCEEDS  THE CUMULATIVE POSITIVE
DIFFERENCE, AN AMOUNT EQUAL TO THE EXCESS TRANSFERRED MAY BE TRANSFERRED
BACK FROM THE STATE LOTTERY FUND; and
  (ii) the amount of revenue collected [in the prior state fiscal year,]
to be distributed pursuant to paragraph a of subdivision three  of  this
section,  and  in excess of any amounts transferred pursuant to subpara-
graph (i) of this paragraph [in such prior fiscal year], if any.
  c. Notwithstanding any provision  of  law  to  the  contrary,  amounts
appropriated  or  transferred  from  the  commercial gaming revenue fund
pursuant to subparagraph (ii) of this paragraph shall  not  be  included
in: (i) the allowable growth amount computed pursuant to paragraph dd of

S. 6359--C                         300

subdivision  one of section thirty-six hundred two of the education law,
(ii) the preliminary growth amount computed pursuant to paragraph ff  of
subdivision  one of section thirty-six hundred two of the education law,
and  (iii) the allocable growth amount computed pursuant to paragraph gg
of subdivision one of section thirty-six hundred two  of  the  education
law.
  S  2.  Subdivision  5  of section 97-nnnn of the state finance law, as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  5. Notwithstanding the foregoing, monies received pursuant to:
  a. sections one thousand three hundred  forty-five  and  one  thousand
three  hundred  forty-eight  of  [this  article] THE RACING, PARI-MUTUEL
WAGERING AND BREEDING LAW  shall  be  exclusively  appropriated  to  the
office of alcoholism and substance abuse services to be used for problem
gambling education and treatment purposes.
  b. section one thousand three hundred forty-nine of [this article] THE
RACING,  PARI-MUTUEL  WAGERING  AND  BREEDING  LAW  shall be exclusively
appropriated to the commission for regulatory investigations.
  c. section one thousand three hundred  fifty  of  [this  article]  THE
RACING,  PARI-MUTUEL  WAGERING  AND  BREEDING  LAW  shall be exclusively
appropriated to the commission for costs regulation.
  S 3. Subdivisions (b) and (c) of section 52 of chapter 174 of the laws
of 2013 enacting the upstate New York gaming economic development act of
2013, are amended to read as follows:
  (b) sections six, seven, fourteen and sixteen of this act  shall  take
effect  on  the  same date as the agreement between the Oneida Nation of
New York and the state of New York entered into on the sixteenth day  of
May, 2013 takes effect; provided, further, that the amendments to subdi-
vision 2 of section 99-h of the state finance law made by section six of
this  act  shall  take  effect on the same date as the reversion of such
section as provided in section 2 of chapter 747 of the laws of 2006,  as
amended;  provided,  further,  that  the  amendments to subdivision 3 of
section 99-h of the state finance law made by section seven of this  act
shall  be subject to the expiration and reversion of such subdivision as
provided in section 3 of part W of chapter 60 of the laws  of  2011,  as
amended  when  upon  such date the provisions of section seven-a of this
act shall take effect; provided, further, that the amendments to  subdi-
vision  3  of  section  99-h  of  the  state finance law made by section
seven-a of this act shall be subject to the the expiration and reversion
of such section as provided in section 2 of chapter 747 of the  laws  of
2006,  as amended when upon such date the provisions of section eight of
this act shall take effect; [provided, further, however, that the amend-
ment to section 99-h of the state finance law made by  section  nine  of
this  act  shall  not affect the expiration of such section and shall be
deemed repealed therewith;] provided, further,  that  the  state  gaming
commission  shall  notify  the legislative bill drafting commission upon
the occurrence of such agreement between the Oneida Nation and the state
of New York becoming effective in order that the commission may maintain
an accurate and timely effective data base of the official text  of  the
laws of the state of New York in furtherance of effecting the provisions
of  section  44  of  the  legislative law and section 70-b of the public
officers law;
  (c) section [1368] 1367 of the racing, pari-mutuel wagering and breed-
ing law, as added by section two of this act, shall take effect  upon  a
change in federal law authorizing the activity permitted by such section
or upon a ruling by a court of competent jurisdiction that such activity
is lawful. The state gaming commission shall notify the legislative bill

S. 6359--C                         301

drafting  commission upon the occurrence of the change in federal law or
upon the ruling of a court of competent jurisdiction in order  that  the
commission  may  maintain  an accurate and timely effective data base of
the official text of the laws of the state of New York in furtherance of
effecting  the  provisions  of  section  44  of  the legislative law and
section 70-b of the public officers law;
  S 4. Subdivision 3-a of section 99-h of  the  state  finance  law,  as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  3-a.  Ten  percent  of any of the funds actually received by the state
pursuant to the tribal-state compacts and agreements described in subdi-
vision two of this section [that are retained  in  the  fund  after  the
distributions  required by subdivision three of this section, but] prior
to the transfer of unsegregated moneys to the general fund  required  by
such  subdivision,  shall  be distributed to counties in each respective
exclusivity zone provided they do not otherwise receive a share of  said
revenues pursuant to this section. Such distribution shall be made among
such  counties  on  a  per capita basis, excluding the population of any
municipality that receives a distribution pursuant to subdivision  three
of this section.
  S 5. Subdivision g of section 1617-a of the tax law, as added by chap-
ter 174 of the laws of 2013, is amended to read as follows:
  g.  Every  video  lottery  gaming  license, and every renewal license,
shall be valid for a period of five  years,  except  that  video  gaming
licenses  issued  before the effective date of this subdivision shall be
for a term expiring on THE  APPLICANT'S  NEXT  BIRTHDAY  FOLLOWING  June
thirtieth, two thousand fourteen.
  The  gaming  commission  may decline to renew any license after notice
and an opportunity for hearing if it determines that:
  (1) the licensee has violated section one thousand six  hundred  seven
of this article;
  (2)  the  licensee  has  violated any rule, regulation or order of the
gaming commission;
  (3) the applicant or its officers, directors or significant stockhold-
ers, as determined by the gaming commission, have been  convicted  of  a
crime involving moral turpitude; or
  (4)  that  the  character or fitness of the licensee and its officers,
directors, and significant stockholders, as  determined  by  the  gaming
commission  is  such  that  the  participation of the applicant in video
lottery gaming or related activities  would  be  inconsistent  with  the
public  interest, convenience or necessity or with the best interests of
video gaming generally.
  S 6. This act shall take effect immediately;  provided,  that  section
one of this act shall take effect April 1, 2015; provided, further, that
the amendments made to section three of this act shall be deemed to have
taken  effect  on the same date and in the same manner as chapter 174 of
the laws of 2013.

                                 PART FF

                          Intentionally Omitted

                                 PART GG

  Section 1. This act enacts into law major  components  of  legislation
relating  to lower Manhattan.  Each component is wholly contained within

S. 6359--C                         302

a Subpart identified as Subparts A through G.  The  effective  date  for
each  particular provision contained within such Subpart is set forth in
the last section  of  such  Subpart.    Any  provision  in  any  section
contained within a Subpart, including the effective date of the Subpart,
which  makes  a  reference  to  a  section  "of  this act", when used in
connection with that particular component, shall be deemed to  mean  and
refer  to the corresponding section of the Subpart in which it is found.
Section three of this act sets forth the general effective date of  this
act.

                                SUBPART A

  Section  1.  Subparagraph  (A)  of  paragraph 7 of subdivision (ee) of
section 1115 of the tax law, as amended by section 2 of chapter  203  of
the laws of 2009, is amended to read as follows:
  (A)  "Tenant" means a person who, as lessee, enters into a space lease
with a landlord for a term of ten years or more commencing on  or  after
September first, two thousand five, but not later than, in the case of a
space lease with respect to leased premises located in eligible areas as
defined  in  clause (i) of subparagraph (D) of this paragraph, September
first, two thousand [thirteen] FIFTEEN and, in the case of a space lease
with respect to leased premises located in eligible areas as defined  in
clause (ii) of subparagraph (D) of this paragraph not later than Septem-
ber  first,  two  thousand  [fifteen]  SEVENTEEN, of premises for use as
commercial office space in buildings located or to  be  located  in  the
eligible  areas.  A  person  who  currently occupies premises for use as
commercial office space under an existing lease in  a  building  in  the
eligible  areas  shall not be eligible for exemption under this subdivi-
sion unless such existing lease, in the  case  of  a  space  lease  with
respect  to  leased  premises  located  in  eligible areas as defined in
clause (i) of subparagraph (D) of this paragraph  expires  according  to
its  terms  before  September  first, two thousand [thirteen] FIFTEEN or
such existing lease, in the case of a space lease with respect to leased
premises located in eligible areas as defined in clause (ii) of subpara-
graph (D) of this paragraph and such person enters into a  space  lease,
for  a term of ten years or more commencing on or after September first,
two thousand five, of premises for use as commercial office space  in  a
building  located  or to be located in the eligible areas, provided that
such space lease with respect to leased  premises  located  in  eligible
areas  as  defined  in  clause (i) of subparagraph (D) of this paragraph
commences  no  later  than  September  first,  two  thousand  [thirteen]
FIFTEEN, and provided that such space lease with respect to leased prem-
ises located in eligible areas as defined in clause (ii) of subparagraph
(D) of this paragraph commences no later than September first, two thou-
sand  [fifteen]  SEVENTEEN  and provided, further, that such space lease
shall expire no earlier than ten  years  after  the  expiration  of  the
original lease.
  S  2.    Section 2 of part C of chapter 2 of the laws of 2005 amending
the tax law relating to exemptions from sales and use taxes, as  amended
by chapter 203 of the laws of 2009, is amended to read as follows:
  S 2. This act shall take effect September 1, 2005 and shall expire and
be  deemed repealed on December 1, [2016] 2018, and shall apply to sales
made, uses occurring and services rendered on or  after  such  effective
date,  in  accordance  with  the  applicable  transitional provisions of
sections 1106 and 1217 of the tax law; except that clause (i) of subpar-
agraph (D) of paragraph seven of subdivision (ee) of section 1115 of the

S. 6359--C                         303

tax law, as added by section one of this act, shall expire and be deemed
repealed December 1, [2014] 2016.
  S  3.  This act shall take effect immediately; provided, however, that
the amendments to subparagraph (A) of paragraph 7 of subdivision (ee) of
section 1115 of the tax law made by section one of this  act  shall  not
affect the repeal of such subdivision and shall be deemed repealed ther-
ewith.

                                SUBPART B

  Section  1. Subdivisions 5 and 9 of section 499-a of the real property
tax law, as amended by chapter 22 of the laws of 2010,  are  amended  to
read as follows:
  5.  "Benefit  period." The period commencing with the first day of the
month immediately following the rent commencement date  and  terminating
no  later  than  sixty  months  thereafter, provided, however, that with
respect to a lease commencing on or after April first, nineteen  hundred
ninety-seven with an initial lease term of less than five years, but not
less  than  three years, the period commencing with the first day of the
month immediately following the rent commencement date  and  terminating
no  later than thirty-six months thereafter. Notwithstanding the forego-
ing sentence, a benefit period shall expire no later than March  thirty-
first, two thousand [twenty] TWENTY-TWO.
  9.  "Eligibility  period." The period commencing April first, nineteen
hundred ninety-five and terminating  March  thirty-first,  two  thousand
[fourteen] SIXTEEN.
  S 2. Paragraph (a) of subdivision 3 of section 499-c of the real prop-
erty  tax  law, as amended by chapter 22 of the laws of 2010, is amended
to read as follows:
  (a) For purposes of determining whether  the  amount  of  expenditures
required by subdivision one of this section have been satisfied, expend-
itures on improvements to the common areas of an eligible building shall
be included only if work on such improvements commenced and the expendi-
tures are made on or after April first, nineteen hundred ninety-five and
on  or  before  September  thirtieth,  two  thousand [fourteen] SIXTEEN;
provided, however, that expenditures on improvements to the common areas
of an eligible building made prior  to  three  years  before  the  lease
commencement date shall not be included.
  S  3.  Subdivision 8 of section 499-d of the real property tax law, as
amended by chapter 22 of the  laws  of  2010,  is  amended  to  read  as
follows:
  8.  Leases  commencing on or after April first, nineteen hundred nine-
ty-seven shall be subject to the provisions of this title as amended  by
chapter  six hundred twenty-nine of the laws of nineteen hundred ninety-
seven, chapter one hundred eighteen of the laws  of  two  thousand  one,
chapter  four  hundred  forty of the laws of two thousand three, chapter
sixty of the laws of two thousand seven [and the], chapter TWENTY-TWO of
the laws of two thousand ten [that added this phrase] AND THE CHAPTER OF
THE LAWS OF TWO THOUSAND FOURTEEN THAT ADDED THIS PHRASE.  Notwithstand-
ing  any  other provision of law to the contrary, with respect to leases
commencing on or after April first, nineteen  hundred  ninety-seven,  an
application  for  a  certificate of abatement shall be considered timely
filed if filed within  one  hundred  eighty  days  following  the  lease
commencement  date  or  within sixty days following the date chapter six
hundred twenty-nine of the laws of nineteen hundred ninety-seven  became
a law, whichever is later.

S. 6359--C                         304

  S  4.  Subparagraph  (a)  of  paragraph  2 of subdivision i of section
11-704 of the administrative code of the city of New York, as amended by
chapter 22 of the laws of 2010, is amended to read as follows:
  (a) An eligible tenant of eligible taxable premises shall be allowed a
special reduction in determining the taxable base rent for such eligible
taxable  premises.  Such special reduction shall be allowed with respect
to the rent for such eligible taxable premises for a period not  exceed-
ing  sixty  months  or,  with  respect to a lease commencing on or after
April first, nineteen hundred ninety-seven with an initial lease term of
less than five years, but not less than three years, for  a  period  not
exceeding  thirty-six  months,  commencing on the rent commencement date
applicable to such eligible taxable premises, provided, however, that in
no event shall any special reduction be allowed for any period beginning
after  March  thirty-first,  two  thousand  [twenty]  TWENTY-TWO.    For
purposes  of applying such special reduction, the base rent for the base
year shall, where necessary to  determine  the  amount  of  the  special
reduction  allowable with respect to any number of months falling within
a tax period, be prorated by dividing the base rent for the base year by
twelve and multiplying the result by such number of months.
  S 5. This act shall take effect immediately; provided,  however,  that
if  this  act shall have become law after March 31, 2014, this act shall
take effect immediately and shall be deemed to have been in  full  force
and effect on and after March 31, 2014.

                                SUBPART C

  Section 1. Paragraph (a) of subdivision 1 of section 489-dddddd of the
real  property tax law, as amended by chapter 28 of the laws of 2011, is
amended to read as follows:
  (a) Application for benefits pursuant to this title may be made  imme-
diately  following the effective date of a local law enacted pursuant to
this title and continuing until  March  first,  two  thousand  [fifteen]
SEVENTEEN.
  S  2.    Subdivision  3 of section 489-dddddd of the real property tax
law, as added by chapter 28 of the laws of 2011, is amended to  read  as
follows:
  3.  (a)  No  benefits  pursuant  to  this  title  shall be granted for
construction work performed pursuant to a building permit  issued  after
April first, two thousand [fifteen] SEVENTEEN.
  (b)  If  no building permit was required, then no benefits pursuant to
this title shall be granted for  construction  work  that  is  commenced
after April first, two thousand [fifteen] SEVENTEEN.
  S  3.   Paragraph 1 of subdivision a of section 11-271 of the adminis-
trative code of the city of New York, as amended by chapter  28  of  the
laws of 2011, is amended to read as follows:
  (1)  Application  for benefits pursuant to this part may be made imme-
diately following the effective date of the local law  that  added  this
section  and continuing until March first, two thousand [fifteen] SEVEN-
TEEN.
  S 4.  Subdivision c of section 11-271 of the  administrative  code  of
the  city  of  New  York, as added by chapter 28 of the laws of 2011, is
amended to read as follows:
  c. (1) No  benefits  pursuant  to  this  part  shall  be  granted  for
construction  work  performed pursuant to a building permit issued after
April first, two thousand [fifteen] SEVENTEEN.

S. 6359--C                         305

  (2) If no building permit was required, then no benefits  pursuant  to
this part shall be granted for construction work that is commenced after
April first, two thousand [fifteen] SEVENTEEN.
  S 5.  This act shall take effect immediately.

                                SUBPART D

  Section 1. Subdivision (b) of section 25-z of the general city law, as
amended  by  chapter  131  of  the  laws  of 2008, is amended to read as
follows:
  (b) No eligible business shall be authorized to receive a credit under
any local law enacted pursuant to this article until the  premises  with
respect  to which it is claiming the credit meet the requirements in the
definition of eligible premises and until  it  has  obtained  a  certif-
ication  of  eligibility from the mayor of such city or an agency desig-
nated by such mayor, and an annual certification from such mayor  or  an
agency  designated  by such mayor as to the number of eligible aggregate
employment shares maintained by such eligible business that may  qualify
for  obtaining a tax credit for the eligible business' taxable year. Any
written documentation submitted to such mayor or such agency or agencies
in order to obtain any such certification  shall  be  deemed  a  written
instrument  for  purposes of section 175.00 of the penal law. Such local
law may provide for application fees to be determined by such  mayor  or
such  agency  or agencies. No such certification of eligibility shall be
issued under any local law enacted pursuant to this article to an eligi-
ble business on or after July first,  two  thousand  [thirteen]  FIFTEEN
unless:
  (1)  prior to such date such business has purchased, leased or entered
into a contract to purchase or lease particular premises or a parcel  on
which  will  be constructed such premises or already owned such premises
or parcel;
  (2) prior to such date improvements have been commenced on such  prem-
ises  or parcel, which improvements will meet the requirements of subdi-
vision (e) of section twenty-five-y of this article relating to expendi-
tures for improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such particular  premises;
and
  (4) such business relocates to such particular premises not later than
thirty-six  months  or, in a case in which the expenditures made for the
improvements specified in paragraph  two  of  this  subdivision  are  in
excess  of fifty million dollars within seventy-two months from the date
of submission of such preliminary application.
  S 2. Subdivision (b) of section 25-ee of  the  general  city  law,  as
amended  by  chapter  131  of  the  laws  of 2008, is amended to read as
follows:
  (b) No eligible business or special eligible business shall be author-
ized to receive a credit against tax under any local law enacted  pursu-
ant  to  this  article  until  the  premises with respect to which it is
claiming the credit meet the requirements in the definition of  eligible
premises  and  until it has obtained a certification of eligibility from
the mayor of such city or any agency designated by such  mayor,  and  an
annual  certification  from  such  mayor or an agency designated by such
mayor as to the number of eligible  aggregate  employment  shares  main-
tained  by such eligible business or such special eligible business that

S. 6359--C                         306

may qualify for obtaining a tax credit for the eligible business'  taxa-
ble  year. No special eligible business shall be authorized to receive a
credit against tax under the  provisions  of  this  article  unless  the
number of relocated employee base shares calculated pursuant to subdivi-
sion (o) of section twenty-five-dd of this article is equal to or great-
er than the lesser of twenty-five percent of the number of New York city
base  shares  calculated pursuant to subdivision (p) of such section and
two hundred fifty employment shares. Any written documentation submitted
to such mayor or such agency or agencies in order  to  obtain  any  such
certification  shall  be  deemed  a  written  instrument for purposes of
section 175.00 of the penal law. Such local law may provide for applica-
tion fees to be determined by such mayor or such agency or agencies.  No
certification of eligibility shall be issued under any local law enacted
pursuant to this article to an eligible business on or after July first,
two thousand [thirteen] FIFTEEN unless:
  (1)  prior to such date such business has purchased, leased or entered
into a contract to purchase or lease  premises  in  the  eligible  Lower
Manhattan area or a parcel on which will be constructed such premises;
  (2)  prior to such date improvements have been commenced on such prem-
ises or parcel, which improvements will meet the requirements of  subdi-
vision (e) of section twenty-five-dd of this article relating to expend-
itures for improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such premises; and
  (4)  such  business relocates to such premises as provided in subdivi-
sion (j) of section twenty-five-dd of this article not later than  thir-
ty-six  months  or,  in  a  case  in which the expenditures made for the
improvements specified in paragraph  two  of  this  subdivision  are  in
excess  of fifty million dollars within seventy-two months from the date
of submission of such preliminary application.
  S 3. Subdivision (b) of section 22-622 of the administrative  code  of
the  city of New York, as amended by chapter 131 of the laws of 2008, is
amended to read as follows:
  (b) No eligible business shall  be  authorized  to  receive  a  credit
against  tax  or  a  reduction  in  base  rent  subject to tax under the
provisions of this chapter, and of title eleven of the code as described
in subdivision (a) of this section, until the premises with  respect  to
which  it is claiming the credit meet the requirements in the definition
of eligible premises and until it has obtained a certification of eligi-
bility from the mayor or an agency designated by the mayor, and an annu-
al certification from the mayor or an agency designated by the mayor  as
to the number of eligible aggregate employment shares maintained by such
eligible  business  that  may qualify for obtaining a tax credit for the
eligible business' taxable year. Any written documentation submitted  to
the mayor or such agency or agencies in order to obtain any such certif-
ication  shall  be  deemed  a written instrument for purposes of section
175.00 of the penal law. Application fees for such certifications  shall
be  determined by the mayor or such agency or agencies. No certification
of eligibility shall be issued to an eligible business on or after  July
first, two thousand [thirteen] FIFTEEN unless:
  (1)  prior to such date such business has purchased, leased or entered
into a contract to purchase or lease particular premises or a parcel  on
which  will  be constructed such premises or already owned such premises
or parcel;

S. 6359--C                         307

  (2) prior to such date improvements have been commenced on such  prem-
ises or parcel which improvements will meet the requirements of subdivi-
sion  (e) of section 22-621 of this chapter relating to expenditures for
improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies  with respect to a proposed relocation to such particular premises;
and
  (4) such business relocates to such particular premises not later than
thirty-six months or, in a case  in  which  the  expenditures  made  for
improvements  specified  in  paragraph  two  of  this subdivision are in
excess of fifty million dollars within seventy-two months from the  date
of submission of such preliminary application.
  S  4.  Subdivision (b) of section 22-624 of the administrative code of
the city of New York, as amended by chapter 131 of the laws of 2008,  is
amended to read as follows:
  (b) No eligible business or special eligible business shall be author-
ized  to receive a credit against tax under the provisions of this chap-
ter, and of title eleven of the code as described in subdivision (a)  of
this  section,  until  the premises with respect to which it is claiming
the credit meet the requirements in the definition of eligible  premises
and  until it has obtained a certification of eligibility from the mayor
or an agency designated by the mayor, and an annual  certification  from
the  mayor  or  an  agency  designated  by the mayor as to the number of
eligible aggregate employment shares maintained by such  eligible  busi-
ness  or  special eligible business that may qualify for obtaining a tax
credit for the eligible business'  taxable  year.  No  special  eligible
business  shall  be authorized to receive a credit against tax under the
provisions of this chapter and of title eleven of the  code  unless  the
number of relocated employee base shares calculated pursuant to subdivi-
sion  (o)  of section 22-623 of this chapter is equal to or greater than
the lesser of twenty-five percent of the number of New  York  city  base
shares  calculated  pursuant  to subdivision (p) of such section 22-623,
and two hundred  fifty  employment  shares.  Any  written  documentation
submitted to the mayor or such agency or agencies in order to obtain any
such  certification shall be deemed a written instrument for purposes of
section 175.00 of the penal  law.  Application  fees  for  such  certif-
ications shall be determined by the mayor or such agency or agencies. No
certification  of eligibility shall be issued to an eligible business on
or after July first, two thousand [thirteen] FIFTEEN unless:
  (1) prior to such date such business has purchased, leased or  entered
into  a  contract  to  purchase  or lease premises in the eligible Lower
Manhattan area or a parcel on which will be constructed such premises;
  (2) prior to such date improvements have been commenced on such  prem-
ises  or parcel, which improvements will meet the requirements of subdi-
vision (e) of section 22-623 of this chapter  relating  to  expenditures
for improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such premises; and
  (4) such business relocates to such premises not later than thirty-six
months or, in a case in which the expenditures made for the improvements
specified  in  paragraph  two of this subdivision are in excess of fifty
million dollars within seventy-two months from the date of submission of
such preliminary application.

S. 6359--C                         308

  S 5. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after June 30, 2013.

                                SUBPART E

  Section  1.  Paragraph  1  of  subdivision  (b) of section 25-s of the
general city law, as amended by chapter 406 of  the  laws  of  2010,  is
amended to read as follows:
  (1)  non-residential  premises  that  are wholly contained in property
that is eligible to obtain benefits under title two-D or two-F of  arti-
cle  four  of the real property tax law, or would be eligible to receive
benefits under such article except that such  property  is  exempt  from
real property taxation and the requirements of paragraph (b) of subdivi-
sion seven of section four hundred eighty-nine-dddd of such title two-D,
or the requirements of subparagraph (ii) of paragraph (b) of subdivision
five  of  section  four  hundred eighty-nine-cccccc of such title two-F,
whichever is applicable, have not been satisfied, provided that applica-
tion for such benefits was made after May third, nineteen hundred eight-
y-five and prior to July first, two thousand  [thirteen]  FIFTEEN,  that
construction or renovation of such premises was described in such appli-
cation,  that  such  premises  have  been substantially improved by such
construction or renovation  so  described,  that  the  minimum  required
expenditure as defined in such title two-D or two-F, whichever is appli-
cable,  has  been  made,  and  that  such real property is located in an
eligible area; or
  S 2. Paragraph 3 of subdivision (b) of section  25-s  of  the  general
city  law,  as amended by chapter 406 of the laws of 2010, is amended to
read as follows:
  (3) non-residential premises that are wholly contained in real proper-
ty that has obtained approval after October thirty-first,  two  thousand
and  prior  to July first, two thousand [thirteen] FIFTEEN for financing
by an industrial development  agency  established  pursuant  to  article
eighteen-A  of  the  general municipal law, provided that such financing
has been used in whole or in part to substantially improve such premises
(by construction or renovation), and that expenditures  have  been  made
for  improvements  to  such real property in excess of ten per centum of
the value at which such real property was assessed for tax purposes  for
the  tax  year  in which such improvements commenced, that such expendi-
tures have been made within thirty-six months after the earlier  of  (i)
the  issuance  by  such  agency of bonds for such financing, or (ii) the
conveyance of title to such property to such agency, and that such  real
property is located in an eligible area; or
  S  3.  Paragraph  5  of subdivision (b) of section 25-s of the general
city law, as amended by chapter 406 of the laws of 2010, is  amended  to
read as follows:
  (5) non-residential premises that are wholly contained in real proper-
ty  owned  by  such  city or the New York state urban development corpo-
ration, or a subsidiary thereof, a  lease  for  which  was  approved  in
accordance with the applicable provisions of the charter of such city or
by  the  board  of  directors of such corporation, and such approval was
obtained after October thirty-first, two  thousand  and  prior  to  July
first,  two  thousand  [thirteen]  FIFTEEN, provided, however, that such
premises were constructed or renovated subsequent to such approval, that
expenditures have been made subsequent to such approval for improvements
to such real property (by construction or renovation) in excess  of  ten
per centum of the value at which such real property was assessed for tax

S. 6359--C                         309

purposes  for  the  tax  year in which such improvements commenced, that
such expenditures have been made  within  thirty-six  months  after  the
effective  date of such lease, and that such real property is located in
an eligible area; or
  S  4.  Paragraph  2  of subdivision (c) of section 25-t of the general
city law, as amended by chapter 406 of the laws of 2010, is  amended  to
read as follows:
  (2)  No  eligible energy user, qualified eligible energy user, on-site
cogenerator, or clean on-site cogenerator shall receive a rebate  pursu-
ant  to  this  article  until  it  has obtained a certification from the
appropriate city agency in accordance with a local law enacted  pursuant
to  this  section. No such certification for a qualified eligible energy
user shall be issued on or after November first, two thousand.  No  such
certification of any other eligible energy user, on-site cogenerator, or
clean  on-site  cogenerator  shall be issued on or after July first, two
thousand [thirteen] FIFTEEN.
  S 5. Paragraph 1 of subdivision (a) of section 25-aa  of  the  general
city  law,  as amended by chapter 406 of the laws of 2010, is amended to
read as follows:
  (1) is eligible to obtain benefits under title two-D or two-F of arti-
cle four of the real property tax law, or would be eligible  to  receive
benefits  under such title except that such property is exempt from real
property taxation and the requirements of paragraph (b)  of  subdivision
seven  of  section four hundred eighty-nine-dddd of such title two-D, or
the requirements of subparagraph (ii) of paragraph  (b)  of  subdivision
five  of  section  four  hundred eighty-nine-cccccc of such title two-F,
whichever is applicable, of the real property  tax  law  have  not  been
satisfied,  provided  that  application for such benefits was made after
the thirtieth day of June, nineteen hundred ninety-five and  before  the
first day of July, two thousand [thirteen] FIFTEEN, that construction or
renovation  of such building or structure was described in such applica-
tion, that such building or structure has been substantially improved by
such construction or renovation,  and  (i)  that  the  minimum  required
expenditure  as defined in such title has been made, or (ii) where there
is  no  applicable  minimum  required  expenditure,  the  building   was
constructed  within  such period or periods of time established by title
two-D or two-F, whichever is applicable, of article  four  of  the  real
property tax law for construction of a new building or structure; or
  S  6.  Paragraphs  2  and 3 of subdivision (a) of section 25-aa of the
general city law, as amended by chapter 406 of the  laws  of  2010,  are
amended to read as follows:
  (2)  has  obtained  approval after the thirtieth day of June, nineteen
hundred ninety-five and before the  first  day  of  July,  two  thousand
[thirteen]  FIFTEEN,  for  financing by an industrial development agency
established pursuant to article eighteen-A of the general municipal law,
provided that such financing has been  used  in  whole  or  in  part  to
substantially  improve  such  building  or  structure by construction or
renovation, that expenditures have been made for  improvements  to  such
real  property in excess of twenty per centum of the value at which such
real property was assessed for tax purposes for the tax  year  in  which
such  improvements  commenced, and that such expenditures have been made
within thirty-six months after the earlier of (i) the issuance  by  such
agency  of  bonds for such financing, or (ii) the conveyance of title to
such building or structure to such agency; or
  (3) is owned by the city of New York  or  the  New  York  state  urban
development  corporation,  or  a subsidiary corporation thereof, a lease

S. 6359--C                         310

for which was approved in accordance with the applicable  provisions  of
the  charter  of  such  city or by the board of directors of such corpo-
ration, as the case may be, and such approval  was  obtained  after  the
thirtieth day of June, nineteen hundred ninety-five and before the first
day of July, two thousand [thirteen] FIFTEEN, provided that expenditures
have been made for improvements to such real property in excess of twen-
ty  per centum of the value at which such real property was assessed for
tax purposes for the tax year in which such improvements commenced,  and
that such expenditures have been made within thirty-six months after the
effective date of such lease; or
  S  7.  Subdivision  (f)  of  section 25-bb of the general city law, as
amended by chapter 406 of the laws  of  2010,  is  amended  to  read  as
follows:
  (f) Application and certification. An owner or lessee of a building or
structure  located  in  an  eligible revitalization area, or an agent of
such owner or lessee, may apply to such  department  of  small  business
services  for certification that such building or structure is an eligi-
ble building or targeted  eligible  building  meeting  the  criteria  of
subdivision  (a)  or  (q)  of  section  twenty-five-aa  of this article.
Application for such certification must be filed after the thirtieth day
of June, nineteen hundred ninety-five and before a  building  permit  is
issued  for the construction or renovation required by such subdivisions
and before the first day  of  July,  two  thousand  [thirteen]  FIFTEEN,
provided that no certification for a targeted eligible building shall be
issued  after October thirty-first, two thousand. Such application shall
identify expenditures to be made that will affect eligibility under such
subdivision (a) or (q). Upon completion of such expenditures, an  appli-
cant shall supplement such application to provide information (i) estab-
lishing  that the criteria of such subdivision (a) or (q) have been met;
(ii) establishing a basis for determining the amount of special rebates,
including a basis for an allocation of the special rebate among eligible
revitalization area energy users purchasing or otherwise receiving ener-
gy services from an eligible redistributor  of  energy  or  a  qualified
eligible  redistributor of energy; and (iii) supporting an allocation of
charges for energy services between eligible charges and other  charges.
Such  department  shall  certify  a building or structure as an eligible
building or targeted eligible building after receipt and review of  such
information  and  upon a determination that such information establishes
that the building or structure qualifies  as  an  eligible  building  or
targeted  eligible  building.  Such  department  shall mail such certif-
ication or notice thereof to the applicant upon issuance.  Such  certif-
ication  shall  remain  in effect provided the eligible redistributor of
energy or qualified eligible redistributor of energy reports any changes
that materially affect the amount of the special rebates to which it  is
entitled  or the amount of reduction required by subdivision (c) of this
section in an energy services bill of an  eligible  revitalization  area
energy  user  and otherwise complies with the requirements of this arti-
cle. Such department shall notify the private utility or public  utility
service  required  to make a special rebate to such redistributor of the
amount of such special rebate established at the time  of  certification
and any changes in such amount and any suspension or termination by such
department  of certification under this subdivision. Such department may
require some or all of the information required as part of  an  applica-
tion or other report be provided by a licensed engineer.

S. 6359--C                         311

  S  8. Paragraph 1 of subdivision (i) of section 22-601 of the adminis-
trative code of the city of New York, as amended by chapter 406  of  the
laws of 2010, is amended to read as follows:
  (1)  Non-residential  premises  that  are wholly contained in property
that is eligible to obtain benefits under part  four  or  part  five  of
subchapter  two of chapter two of title eleven of this code, or would be
eligible to receive benefits under such chapter except that such proper-
ty is exempt from real property taxation and the requirements  of  para-
graph  two  of  subdivision  g  of  section  11-259 of this code, or the
requirements of subparagraph (b) of paragraph two of  subdivision  e  of
section  11-270  of  this  code,  whichever is applicable, have not been
satisfied, provided that application for such benefits  was  made  after
May  third,  nineteen  hundred  eighty-five and prior to July first, two
thousand [thirteen] FIFTEEN, that construction  or  renovation  of  such
premises was described in such application, that such premises have been
substantially  improved by such construction or renovation so described,
that the minimum required expenditure as defined in such  part  four  or
part  five,  whichever  is applicable, has been made, and that such real
property is located in an eligible area; or
  S 9. Paragraph 3 of subdivision (i) of section 22-601 of the  adminis-
trative  code  of the city of New York, as amended by chapter 406 of the
laws of 2010, is amended to read as follows:
  (3) non-residential premises that are wholly contained in real proper-
ty that has obtained approval after October thirty-first,  two  thousand
and  prior  to July first, two thousand [thirteen] FIFTEEN for financing
by an industrial development  agency  established  pursuant  to  article
eighteen-A  of  the  general municipal law, provided that such financing
has been used in whole or in part to substantially improve such premises
(by construction or renovation), and that expenditures  have  been  made
for  improvements  to  such real property in excess of ten per centum of
the value at which such real property was assessed for tax purposes  for
the  tax  year  in which such improvements commenced, that such expendi-
tures have been made within thirty-six months after the earlier  of  (i)
the  issuance  by  such  agency of bonds for such financing, or (ii) the
conveyance of title to such property to such agency, and that such  real
property is located in an eligible area; or
  S 10. Paragraph 5 of subdivision (i) of section 22-601 of the adminis-
trative  code  of the city of New York, as amended by chapter 406 of the
laws of 2010, is amended to read as follows:
  (5) non-residential premises that are wholly contained in real proper-
ty owned by such city or the New York  state  urban  development  corpo-
ration,  or  a  subsidiary  thereof,  a  lease for which was approved in
accordance with the applicable provisions of the charter of such city or
by the board of directors of such corporation,  and  such  approval  was
obtained  after  October  thirty-first,  two  thousand and prior to July
first, two thousand [thirteen] FIFTEEN,  provided,  however,  that  such
premises were constructed or renovated subsequent to such approval, that
expenditures have been made subsequent to such approval for improvements
to  such  real property (by construction or renovation) in excess of ten
per centum of the value at which such real property was assessed for tax
purposes for the tax year in which  such  improvements  commenced,  that
such  expenditures  have  been  made  within thirty-six months after the
effective date of such lease, and that such real property is located  in
an eligible area; or

S. 6359--C                         312

  S 11. Paragraph 1 of subdivision (c) of section 22-602 of the adminis-
trative  code  of the city of New York, as amended by chapter 406 of the
laws of 2010, is amended to read as follows:
  (1)  No  eligible energy user, qualified eligible energy user, on-site
cogenerator, clean on-site cogenerator or special eligible  energy  user
shall  receive a rebate pursuant to this chapter until it has obtained a
certification as an eligible  energy  user,  qualified  eligible  energy
user, on-site cogenerator, clean on-site cogenerator or special eligible
energy  user,  respectively,  from  the  commissioner  of small business
services. No such certification for a  qualified  eligible  energy  user
shall  be  issued  on  or  after July first, two thousand three. No such
certification of any other eligible energy user, on-site cogenerator  or
clean  on-site  cogenerator  shall be issued on or after July first, two
thousand  [thirteen]  FIFTEEN.  The  commissioner  of   small   business
services,  after  notice  and hearing, may revoke a certification issued
pursuant to this subdivision where it is found that eligibility criteria
have not been met or  that  compliance  with  conditions  for  continued
eligibility  has  not been maintained. The corporation counsel may main-
tain a civil action to recover an amount equal to any benefits improper-
ly obtained.
  S 12. This act shall take effect immediately and shall  be  deemed  to
have been in full force and effect on and after June 30, 2013.

                                SUBPART F

  Section  1.  Subparagraph  (b-2)  of  paragraph  2 of subdivision i of
section 11-704 of the administrative code of the city of  New  York,  as
amended  by  chapter  203  of  the  laws  of 2009, is amended to read as
follows:
  (b-2) The amount of the special reduction allowed by this  subdivision
with  respect  to  a lease other than a sublease commencing between July
first, two thousand five and June  thirtieth,  two  thousand  [thirteen]
FIFTEEN  with  an  initial  or renewal lease term of at least five years
shall be determined as follows:
  (i) For the base year the amount of such special  reduction  shall  be
equal to the base rent for the base year.
  (ii)  For  the  first,  second,  third and fourth twelve-month periods
following the base year the amount of such special  reduction  shall  be
equal  to  the  lesser  of  (A) the base rent for each such twelve-month
period or (B) the base rent for the base year.
  S 2. Subparagraph (a) of paragraph  5  of  subdivision  i  of  section
11-704  of the administrative code of the city of New York is amended by
adding a new clause (iii) to read as follows:
  (III) NOTWITHSTANDING ANY OTHER PROVISIONS OF LAW TO THE CONTRARY,  AN
APPLICATION  FOR  THE SPECIAL REDUCTION ALLOWED BY SUBPARAGRAPH (B-2) OF
PARAGRAPH TWO OF THIS SUBDIVISION SHALL BE CONSIDERED  TIMELY  FILED  IF
FILED BY SUCH TENANT WITH THE DEPARTMENT OF FINANCE ON OR AFTER THE DATE
ON WHICH THE LEASE FOR THE ELIGIBLE PREMISES IS EXECUTED BY THE LANDLORD
AND  TENANT  BUT IN NO EVENT MORE THAN ONE HUNDRED EIGHTY DAYS FOLLOWING
THE RENT COMMENCEMENT DATE OR SIXTY DAYS FOLLOWING THE EFFECTIVE DATE OF
THIS CLAUSE, WHICHEVER IS LATER, AND NO SUCH SPECIAL REDUCTION SHALL  BE
PERMITTED UNLESS SUCH APPLICATION IS FILED WITHIN SUCH TIME.
  S  3.  This  act shall take effect immediately; and shall be deemed to
have been in full force and effect on and after June 30, 2013.

                                SUBPART G

S. 6359--C                         313

  Section 1. Subdivision 9 of section 499-aa of the   real property  tax
law,  as  amended by chapter 306 of the laws of 2010, is amended to read
as follows:
  9.  "Eligibility  period." The period commencing April first, nineteen
hundred ninety-five and terminating  March  thirty-first,  two  thousand
one,  provided,  however, that with respect to eligible premises defined
in subparagraph (i) of paragraph (b) of subdivision ten of this section,
the period commencing July first,  two  thousand  and  terminating  June
thirtieth,  two  thousand  [fourteen]  SIXTEEN,  and  provided, further,
however, that with respect to eligible premises defined in  subparagraph
(ii)  of  paragraph  (b)  or  paragraph  (c)  of subdivision ten of this
section, the period commencing July first, two thousand five and  termi-
nating June thirtieth, two thousand [fourteen] SIXTEEN.
  S  2.  Subparagraph (iii) of paragraph (a) of subdivision 3 of section
499-cc of the real property tax law, as amended by chapter  306  of  the
laws of 2010, is amended to read as follows:
  (iii)  With  respect  to the eligible premises defined in subparagraph
(ii) of paragraph (b) or paragraph (c) of  subdivision  ten  of  section
four  hundred ninety-nine-aa of this title and for purposes of determin-
ing whether the amount of expenditures required by  subdivision  one  of
this  section  have  been satisfied, expenditures on improvements to the
common areas of an eligible building shall be included only if  work  on
such  improvements  commenced  and the expenditures are made on or after
July first, two thousand five and on or  before  December  thirty-first,
two thousand [fourteen] SIXTEEN; provided, however, that expenditures on
improvements  to  the common areas of an eligible building made prior to
three years before the lease commencement date shall not be included.
  S 3. This act shall take effect immediately; provided,  however,  that
if  it  shall become law after June 30, 2014, this act shall take effect
immediately and shall be deemed to have been in full force and effect on
and after June 30, 2013.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion, section or part of this act shall be  adjudged  by  any  court  of
competent  jurisdiction  to  be invalid, such judgment shall not affect,
impair, or invalidate the remainder thereof, but shall  be  confined  in
its  operation  to the clause, sentence, paragraph, subdivision, section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the legislature that this act would  have  been  enacted  even  if  such
invalid provisions had not been included herein.
  S  3.  This  act shall take effect immediately provided, however, that
the applicable effective date of Subparts A through G of this act  shall
be as specifically set forth in the last section of such Subparts.

                                 PART HH

  Section 1. The state finance law is amended by adding a new article 17
to read as follows:
                               ARTICLE 17
                     ANNUAL SPENDING GROWTH CAP ACT
SECTION 244. DEFINITIONS.
        245. ESTABLISHMENT OF ANNUAL SPENDING GROWTH CAP.
        246. PROVISIONS REGARDING DECLARATION OF EMERGENCY.
  S 244. DEFINITIONS. AS USED IN THIS ARTICLE, THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING MEANINGS, UNLESS OTHERWISE SPECIFIED:

S. 6359--C                         314

  1.  "ANNUAL SPENDING GROWTH CAP" SHALL MEAN A PERCENTAGE DETERMINED BY
ADDING THE INFLATION RATES FROM EACH OF THE THREE CALENDAR  YEARS  IMME-
DIATELY PRIOR TO THE COMMENCEMENT OF A GIVEN FISCAL YEAR AND THEN DIVID-
ING THAT SUM BY THREE PROVIDED THAT EACH PERCENTAGE SHALL NOT EXCEED TWO
PERCENT.
  2. "STATE OPERATING FUNDS SPENDING" SHALL MEAN ANNUAL DISBURSEMENTS OF
ALL GOVERNMENTAL FUND TYPES INCLUDED IN THE CASH-BASIS FINANCIAL PLAN OF
THE  STATE,  EXCLUDING  DISBURSEMENTS  FROM  FEDERAL  FUNDS  AND CAPITAL
PROJECT FUNDS.
  3.  "INFLATION  RATE"  SHALL  MEAN  THE  PERCENTAGE  CHANGE   IN   THE
TWELVE-MONTH AVERAGE OF THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS
AS  PUBLISHED  BY THE UNITED STATES DEPARTMENT OF LABOR, BUREAU OF LABOR
STATISTICS OR ANY SUCCESSOR AGENCY FOR A GIVEN CALENDAR YEAR COMPARED TO
THE PRIOR CALENDAR YEAR.
  4.  "EXECUTIVE BUDGET" SHALL MEAN THE BUDGET SUBMITTED ANNUALLY BY THE
GOVERNOR PURSUANT TO SECTION ONE OF ARTICLE VII OF THE  STATE  CONSTITU-
TION.
  5.   "STATE BUDGET AS ENACTED" SHALL MEAN THE BUDGET ACTED UPON BY THE
LEGISLATURE IN A GIVEN FISCAL YEAR, AS SUBJECT TO SECTION FOUR OF  ARTI-
CLE VII OF THE STATE CONSTITUTION AND SECTION SEVEN OF ARTICLE IV OF THE
STATE CONSTITUTION.
  6.  "EMERGENCY" SHALL MEAN AN EXTRAORDINARY, UNFORESEEN, OR UNEXPECTED
OCCURRENCE, OR COMBINATION OF CIRCUMSTANCES, INCLUDING BUT  NOT  LIMITED
TO A NATURAL DISASTER, INVASION, TERRORIST ATTACK, OR ECONOMIC CALAMITY.
  S 245. ESTABLISHMENT OF ANNUAL SPENDING GROWTH CAP.  1. THERE IS HERE-
BY ESTABLISHED AN ANNUAL SPENDING GROWTH CAP.
  2.  THE  GOVERNOR  SHALL NOT SUBMIT, AND THE LEGISLATURE SHALL NOT ACT
UPON, A BUDGET THAT CONTAINS A PERCENTAGE INCREASE OVER THE PRIOR FISCAL
YEAR IN STATE OPERATING FUNDS SPENDING WHICH EXCEEDS THE ANNUAL SPENDING
GROWTH CAP.
  3. THE GOVERNOR SHALL CERTIFY IN WRITING THAT  STATE  OPERATING  FUNDS
SPENDING  IN  THE  EXECUTIVE  BUDGET DOES NOT EXCEED THE ANNUAL SPENDING
GROWTH CAP. IF FINAL INFLATION RATE DATA FOR THE PRIOR CALENDAR YEAR  IS
NOT  YET AVAILABLE AT THE TIME THE GOVERNOR SUBMITS HIS OR HER EXECUTIVE
BUDGET, HE OR SHE SHALL FURNISH A  REASONABLE  ESTIMATE  OF  SUCH  PRIOR
CALENDAR YEAR INFLATION RATE.
  4.  THE  COMPTROLLER  SHALL PROVIDE, WITHIN FIVE DAYS OF ACTION BY THE
LEGISLATURE UPON THE BUDGET, A DETERMINATION AS  TO  WHETHER  THE  STATE
OPERATING  FUNDS  SPENDING  AS  SET FORTH IN THE STATE BUDGET AS ENACTED
EXCEEDS THE ANNUAL SPENDING GROWTH CAP.
  5. IF THE COMPTROLLER FINDS THAT STATE OPERATING FUNDS SPENDING AS SET
FORTH IN THE STATE BUDGET AS ENACTED EXCEEDS THE ANNUAL SPENDING  GROWTH
CAP, THE GOVERNOR SHALL TAKE CORRECTIVE ACTION TO ENSURE THAT FUNDING IS
LIMITED TO THE AMOUNT OF THE ANNUAL SPENDING CAP.
  6.  ON THE LAST DAY OF EACH FISCAL YEAR AND AFTER ANY NECESSARY DEPOS-
ITS TO THE RAINY DAY RESERVE FUND, THE COMPTROLLER  SHALL  DEPOSIT  INTO
THE TAX FREEDOM FUND, ESTABLISHED BY SECTION NINETY-NINE-V OF THIS CHAP-
TER,  ANY  REVENUE  THAT  CONSTITUTES REVENUE ABOVE WHAT IS NECESSARY TO
FUND STATE SPENDING THAT IS AT OR BELOW THE ANNUAL SPENDING GROWTH CAP.
  S 246. PROVISIONS REGARDING DECLARATION OF EMERGENCY.  1. UPON A FIND-
ING OF AN EMERGENCY BY THE GOVERNOR, HE OR SHE MAY DECLARE AN  EMERGENCY
BY  AN EXECUTIVE ORDER WHICH SHALL SET FORTH THE REASONS FOR SUCH DECLA-
RATION.
  2. BASED UPON SUCH DECLARATION,  THE  GOVERNOR  MAY  SUBMIT,  AND  THE
LEGISLATURE  MAY  AUTHORIZE,  BY  A  TWO-THIRDS  SUPERMAJORITY, A BUDGET

S. 6359--C                         315

CONTAINING A PERCENTAGE INCREASE OVER THE PRIOR  FISCAL  YEAR  IN  STATE
OPERATING FUNDS SPENDING THAT EXCEEDS THE ANNUAL SPENDING GROWTH CAP.
  S  2. The state finance law is amended by adding a new section 99-v to
read as follows:
  S 99-V. TAX FREEDOM FUND. 1. THERE IS HEREBY ESTABLISHED IN THE  JOINT
CUSTODY  OF  THE  STATE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND
FINANCE A SPECIAL FUND TO BE KNOWN AS THE "TAX FREEDOM FUND."
  2. THIS FUND SHALL CONTAIN ALL MONEYS DEPOSITED AS  A  RESULT  OF  THE
PROVISIONS  OF  ARTICLE  SEVENTEEN OF THIS CHAPTER. SUCH MONEYS SHALL BE
USED ONLY TO PAY FOR THE ANTICIPATED FIRST YEAR  FISCAL  IMPACT  OF  TAX
CUTS  ENACTED BY THE LEGISLATURE IN THE FISCAL YEAR FOLLOWING THE DEPOS-
ITING OF THE FUNDS.
  3. FUNDS SHALL BE TRANSFERRED TO THE  GENERAL  FUND  AS  NECESSARY  TO
REPLACE  THE  ANTICIPATED  REDUCTION  IN  STATE  REVENUE  RESULTING FROM
ENACTED TAX REDUCTIONS. HOWEVER, FUNDS SHALL NOT BE TRANSFERRED  TO  THE
GENERAL FUND FOR UNANTICIPATED REVENUE SHORTFALLS.
  S  3.  This  act shall take effect on the thirtieth day after it shall
have become a law.

                                 PART II

  Section 1. Section 601 of the tax law  is  amended  by  adding  a  new
subsection (d-3) to read as follows:
  (D-3)   OPTIONAL   ALTERNATE  SIMPLE  CALCULATION.     NOTWITHSTANDING
SUBSECTIONS (A) THROUGH (D-2) OF THIS SECTION, A RESIDENT TAXPAYER  WITH
FEDERAL  ADJUSTED  GROSS INCOME LESS THAN ONE MILLION DOLLARS MAY CHOOSE
TO CALCULATE TAX LIABILITY AS FOLLOWS:
  (1) IMPOSITION OF TAX. (A) RESIDENT MARRIED INDIVIDUALS  FILING  JOINT
RETURNS AND RESIDENT SURVIVING SPOUSES. THERE IS HEREBY IMPOSED FOR EACH
TAXABLE  YEAR  ON  THE NEW YORK TAXABLE INCOME OF EVERY RESIDENT MARRIED
INDIVIDUAL WHO MAKES A SINGLE RETURN JOINTLY  WITH  HIS  OR  HER  SPOUSE
UNDER  SUBSECTION  (B)  OF SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE
AND ON THE NEW YORK TAXABLE INCOME OF EVERY RESIDENT SURVIVING SPOUSE  A
TAX  DETERMINED  IN  ACCORDANCE  WITH  THE FOLLOWING CALCULATION: SIMPLE
TAXABLE INCOME MULTIPLIED BY THE MARRIED JOINT EFFECTIVE TAX RATE.
  (B) RESIDENT HEADS OF HOUSEHOLDS. THERE IS  HEREBY  IMPOSED  FOR  EACH
TAXABLE  YEAR ON THE NEW YORK TAXABLE INCOME OF EVERY RESIDENT HEAD OF A
HOUSEHOLD A TAX DETERMINED IN ACCORDANCE WITH THE FOLLOWING CALCULATION:
SIMPLE TAXABLE INCOME MULTIPLIED BY THE HEADS OF HOUSEHOLD EFFECTIVE TAX
RATE.
  (C)  RESIDENT  UNMARRIED  INDIVIDUALS,  RESIDENT  MARRIED  INDIVIDUALS
FILING SEPARATE RETURNS AND RESIDENT ESTATES AND TRUSTS. THERE IS HEREBY
IMPOSED  FOR  EACH  TAXABLE YEAR ON THE NEW YORK TAXABLE INCOME OF EVERY
RESIDENT INDIVIDUAL WHO IS NOT A MARRIED INDIVIDUAL WHO MAKES  A  SINGLE
RETURN  JOINTLY  WITH  HIS OR HER SPOUSE UNDER SUBSECTION (B) OF SECTION
SIX HUNDRED FIFTY-ONE OF THIS ARTICLE OR A RESIDENT HEAD OF A  HOUSEHOLD
OR  A  RESIDENT  SURVIVING SPOUSE, AND ON THE NEW YORK TAXABLE INCOME OF
EVERY RESIDENT ESTATE AND TRUST A TAX DETERMINED IN ACCORDANCE WITH  THE
FOLLOWING  CALCULATION:  SIMPLE  TAXABLE INCOME MULTIPLIED BY THE SINGLE
EFFECTIVE TAX RATE.
  (2) MEANING OF TERMS. (A) SIMPLE TAXABLE INCOME. FOR THE  PURPOSES  OF
THIS  SUBSECTION,  SIMPLE  TAXABLE  INCOME  OF A TAXPAYER SHALL MEAN HIS
FEDERAL ADJUSTED GROSS INCOME LESS THE MODIFICATIONS SPECIFIED IN  PARA-
GRAPHS THREE, THREE-A, THREE-B, AND THREE-C OF SUBSECTION (C) OF SECTION
SIX HUNDRED TWELVE OF THIS ARTICLE.

S. 6359--C                         316

  (B) EFFECTIVE TAX RATE. FOR THE PURPOSES OF THIS SUBSECTION, EFFECTIVE
TAX  RATE  SHALL BE DETERMINED BY THE COMMISSIONER BY DIVIDING THE TOTAL
TAX LIABILITY AFTER CREDITS FOR ALL TAXPAYERS WITHIN A  LIABILITY  GROUP
BY  THE TOTAL FEDERAL ADJUSTED GROSS INCOME FOR ALL TAXPAYERS WITHIN THE
SAME  LIABILITY GROUP ON PERSONAL INCOME TAX RETURNS FILED FOR THE TAXA-
BLE YEAR TWO YEARS PRIOR. A LIABILITY GROUP SHALL BE DETERMINED  BY  (I)
EACH  FILING  STATUS  LISTED IN SUBPARAGRAPHS (A), (B), AND (C) OF PARA-
GRAPH ONE OF THIS SUBSECTION AND (II) NUMBER OF DEPENDENTS  AS  FOLLOWS:
NO  DEPENDENTS,  ONE  DEPENDENT, TWO DEPENDENTS, OR THREE OR MORE DEPEN-
DENTS.  A LIABILITY GROUP SHALL BE ALL RESIDENT TAXPAYERS  WITH  FEDERAL
ADJUSTED  GROSS  INCOME:  WITHIN  FIVE  THOUSAND  DOLLAR  INCREMENTS FOR
INCOMES OVER FIVE THOUSAND DOLLARS AND LESS THAN OR EQUAL TO ONE HUNDRED
FIFTY THOUSAND  DOLLARS;  WITHIN  TEN  THOUSAND  DOLLAR  INCREMENTS  FOR
INCOMES  OVER  ONE HUNDRED FIFTY THOUSAND DOLLARS AND LESS THAN OR EQUAL
TO THREE HUNDRED THOUSAND DOLLARS; AND WITHIN FIFTY THOUSAND DOLLARS FOR
INCOMES OVER THREE HUNDRED THOUSAND DOLLARS AND LESS  THAN  ONE  MILLION
DOLLARS. THE EFFECTIVE TAX RATE SHALL BE CALCULATED TO NO MORE THAN FOUR
DECIMAL PLACES.
  (C)  MARRIED  JOINT EFFECTIVE TAX RATE SHALL BE THE EFFECTIVE TAX RATE
CALCULATED UNDER SUBPARAGRAPH (B) OF THIS PARAGRAPH FOR  TAXPAYERS  THAT
FILE  IN  ACCORDANCE  WITH  SUBPARAGRAPH  (A)  OF  PARAGRAPH ONE OF THIS
SUBSECTION.
  (D) HEADS OF HOUSEHOLDS EFFECTIVE TAX RATE SHALL BE THE EFFECTIVE  TAX
RATE  CALCULATED  UNDER SUBPARAGRAPH (B) OF THIS PARAGRAPH FOR TAXPAYERS
THAT FILE IN ACCORDANCE WITH SUBPARAGRAPH (B) OF PARAGRAPH ONE  OF  THIS
SUBSECTION.
  (E)  SINGLE  EFFECTIVE TAX RATE SHALL BE THE EFFECTIVE TAX RATE CALCU-
LATED UNDER SUBPARAGRAPH (B) OF THIS PARAGRAPH FOR TAXPAYERS  THAT  FILE
IN ACCORDANCE WITH SUBPARAGRAPH (C) OF PARAGRAPH ONE OF THIS SUBSECTION.
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

                                 PART JJ

  Section  1. Subsection (a) of section 601-a of the tax law, as amended
by section 10 of part FF of chapter 59 of the laws of 2013,  is  amended
to read as follows:
  (a)  For  tax  year two thousand thirteen, the commissioner, not later
than September first, two thousand twelve, shall  multiply  the  amounts
specified  in  subsection  (b) of this section for tax year two thousand
twelve by one plus the cost of living adjustment described in subsection
(c) of this section. For tax year two thousand fourteen, the commission-
er, not later than September first, two thousand thirteen, shall  multi-
ply the amounts specified in subsection (b) of this section for tax year
two  thousand  thirteen  by  one plus the cost of living adjustment. For
each succeeding tax year after  tax  year  two  thousand  fourteen  [and
before tax year two thousand eighteen], the commissioner, not later than
September  first  of such tax year, shall multiply the amounts specified
in subsection (b) of this section for such tax year by one plus the cost
of living adjustment described in subsection (c)  of  this  section  for
such tax year.
  S 2. This act shall take effect immediately.

                                 PART KK

S. 6359--C                         317

  Section  1.  The  general  municipal  law  is  amended by adding a new
section 959-c to read as follows:
  S 959-C. CERTIFIED STARTUP BUSINESS ENTERPRISE. (A) CERTIFICATION. (I)
THE COMMISSIONER SHALL APPROVE APPLICATIONS FOR QUALIFICATION OF A BUSI-
NESS  ENTERPRISE AS A CERTIFIED STARTUP BUSINESS ENTERPRISE. AS A CONDI-
TION FOR APPROVAL OF SUCH APPLICATION, THE COMMISSIONER IS AUTHORIZED TO
SPECIFY CERTAIN REQUIREMENTS TO BE SATISFIED AS A CONDITION FOR APPROVAL
OF A BUSINESS ENTERPRISE AS A CERTIFIED STARTUP BUSINESS  ENTERPRISE  AS
THE  COMMISSIONER DEEMS NECESSARY TO ENSURE THE QUALIFYING ANGEL INVEST-
MENT WILL MAKE A SUBSTANTIAL CONTRIBUTION TO THE ECONOMIC DEVELOPMENT OF
THIS STATE, INCLUDING THE USE OF  A  SYSTEM  OF  EVALUATION  OF  VARIOUS
APPLICANT BUSINESS ENTERPRISES IN A COMPETITIVE FASHION.
  (II)  WITH  RESPECT  TO AN APPROVED APPLICATION FOR QUALIFICATION OF A
BUSINESS ENTERPRISE AS A  CERTIFIED  STARTUP  BUSINESS  ENTERPRISE,  THE
COMMISSIONER  SHALL  ISSUE  TO SUCH BUSINESS ENTERPRISE A CERTIFICATE OF
QUALIFICATION AS A CERTIFIED STARTUP BUSINESS ENTERPRISE  SETTING  FORTH
THE  EFFECTIVE  DATE  OF  THE CERTIFICATION AND THE AMOUNT OF QUALIFYING
ANGEL INVESTMENT AWARDED TO SUCH BUSINESS ENTERPRISE, WHICH AMOUNT SHALL
BE NO LESS THAN ONE HUNDRED  THOUSAND  DOLLARS  AND  NO  MORE  THAN  ONE
MILLION DOLLARS.
  (III)  FOR  THE  PERIOD JULY FIRST, TWO THOUSAND FOURTEEN THROUGH JUNE
THIRTIETH, TWO THOUSAND FIFTEEN, THE  COMMISSIONER  MAY  CERTIFY  UP  TO
SEVEN  MILLION  DOLLARS  IN  QUALIFYING ANGEL INVESTMENT. FOR THE PERIOD
JULY FIRST, TWO THOUSAND FIFTEEN THROUGH JUNE  THIRTIETH,  TWO  THOUSAND
SIXTEEN,  THE  COMMISSIONER  MAY  CERTIFY UP TO SEVEN MILLION DOLLARS IN
QUALIFYING ANGEL INVESTMENT. FOR THE PERIOD  JULY  FIRST,  TWO  THOUSAND
SIXTEEN THROUGH JUNE THIRTIETH, TWO THOUSAND SEVENTEEN, THE COMMISSIONER
MAY CERTIFY UP TO SEVEN MILLION DOLLARS IN QUALIFYING ANGEL INVESTMENT.
  (B)  DEFINITIONS.  AS  USED IN THIS SECTION, THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING MEANINGS:
  (I) "CERTIFIED STARTUP BUSINESS  ENTERPRISE"  SHALL  MEAN  A  BUSINESS
ENTERPRISE LOCATED IN NEW YORK STATE:
  (1) WITH LESS THAN FIVE MILLION DOLLARS IN ANNUAL REVENUES;
  (2)  WHOSE  PRIMARY  ACTIVITY  CONSISTS  OF A QUALIFYING TECHNOLOGY OR
INNOVATION ACTIVITY; AND
  (3) THAT HAS BEEN CERTIFIED AS A CERTIFIED STARTUP BUSINESS ENTERPRISE
BY THE COMMISSIONER.
  (II) "QUALIFYING TECHNOLOGY OR INNOVATION ACTIVITY" SHALL MEAN:
  (1) BIOTECHNOLOGIES, WHICH SHALL BE DEFINED AS TECHNOLOGIES  INVOLVING
THE  SCIENTIFIC  MANIPULATION  OF  LIVING  ORGANISMS,  ESPECIALLY AT THE
MOLECULAR AND/OR THE SUB-MOLECULAR GENETIC LEVEL,  TO  PRODUCE  PRODUCTS
CONDUCIVE  TO  IMPROVING  THE  LIVES  AND HEALTH OF PLANTS, ANIMALS, AND
HUMANS; AND THE ASSOCIATED SCIENTIFIC RESEARCH, PHARMACOLOGICAL, MECHAN-
ICAL, AND COMPUTATIONAL APPLICATIONS AND SERVICES CONNECTED  WITH  THESE
IMPROVEMENTS;
  (2)  INFORMATION AND COMMUNICATION TECHNOLOGIES, EQUIPMENT AND SYSTEMS
THAT INVOLVE ADVANCED  COMPUTER  SOFTWARE  AND  HARDWARE,  VISUALIZATION
TECHNOLOGIES, AND HUMAN INTERFACE TECHNOLOGIES;
  (3)  ADVANCED  MATERIALS  AND PROCESSING TECHNOLOGIES THAT INVOLVE THE
DEVELOPMENT, MODIFICATION, OR IMPROVEMENT OF ONE OR  MORE  MATERIALS  OR
METHODS  TO  PRODUCE  DEVICES  AND  STRUCTURES WITH IMPROVED PERFORMANCE
CHARACTERISTICS OR SPECIAL FUNCTIONAL ATTRIBUTES, OR TO ACTIVATE,  SPEED
UP, OR OTHERWISE ALTER CHEMICAL, BIOCHEMICAL, OR MEDICAL PROCESSES;
  (4)  ELECTRONIC AND PHOTONIC DEVICES AND COMPONENTS FOR USE IN PRODUC-
ING ELECTRONIC, OPTOELECTRONIC, MECHANICAL  EQUIPMENT  AND  PRODUCTS  OF
ELECTRONIC DISTRIBUTION WITH INTERACTIVE MEDIA CONTENT;

S. 6359--C                         318

  (5)  ENERGY  EFFICIENCY,  RENEWABLE ENERGY AND ENVIRONMENTAL TECHNOLO-
GIES, PRODUCTS, DEVICES AND SERVICES; OR
  (6) SMALL SCALE SYSTEMS INTEGRATION AND PACKAGING.
  (III)  "QUALIFYING  ANGEL INVESTMENT" SHALL MEAN A CONTRIBUTION TO THE
CAPITAL OF A CERTIFIED STARTUP BUSINESS ENTERPRISE, PROVIDED  THAT  SUCH
CONTRIBUTION TO CAPITAL IS MADE WITHIN TWELVE MONTHS AFTER THE EFFECTIVE
DATE  OF THE CERTIFIED TECHNOLOGY VENTURE'S CERTIFICATE OF QUALIFICATION
AS A CERTIFIED TECHNOLOGY VENTURE AND SUCH CONTRIBUTION  IS  APPLIED  BY
THE  CERTIFIED  STARTUP  BUSINESS  ENTERPRISE  AGAINST ITS ALLOCATION OF
QUALIFYING ANGEL INVESTMENT. TOGETHER WITH ALL  OTHER  QUALIFYING  ANGEL
INVESTMENTS  MADE TO A SINGLE CERTIFIED STARTUP BUSINESS ENTERPRISE, THE
TOTAL QUALIFYING ANGEL INVESTMENT MAY NOT EXCEED  ONE  MILLION  DOLLARS.
NOTHING HEREIN SHALL PROHIBIT A PERSON MAKING A QUALIFYING ANGEL INVEST-
MENT  FROM  MAKING ADDITIONAL CONTRIBUTIONS TO THE CAPITAL OF THE CERTI-
FIED STARTUP BUSINESS ENTERPRISE OR MAKING LOANS TO OR OTHER INVESTMENTS
IN THE CERTIFIED STARTUP BUSINESS ENTERPRISE,  PROVIDED,  HOWEVER,  THAT
SUCH  OTHER CONTRIBUTIONS, LOANS AND INVESTMENTS SHALL NOT BE TREATED AS
QUALIFYING ANGEL INVESTMENTS.
  S 2. Section 210 of the tax law is amended by adding a new subdivision
12-H to read as follows:
  12-H. ANGEL TAX CREDIT.  (A) ALLOWANCE OF CREDIT. A TAXPAYER THAT  HAS
MADE A QUALIFYING ANGEL INVESTMENT, AS SUCH TERM IS DEFINED IN PARAGRAPH
(III)  OF  SUBDIVISION  (B)  OF SECTION NINE HUNDRED FIFTY-NINE-C OF THE
GENERAL MUNICIPAL LAW, SHALL BE ALLOWED A CREDIT  EQUAL  TO  THIRTY-FIVE
PERCENT OF THE AMOUNT OF SUCH QUALIFYING ANGEL INVESTMENT.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE HIGHER OF THE AMOUNTS PRESCRIBED IN PARAGRAPHS (C) AND  (D)  OF
SUBDIVISION  ONE  OF  THIS  SECTION.  HOWEVER,  IF  THE AMOUNT OF CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE  TAX  TO
SUCH  AMOUNT,  ANY  AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF  TAX  TO  BE  CREDITED  OR
REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION TEN HUNDRED EIGHT-
Y-SIX  OF  THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION
(C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING,
NO INTEREST SHALL BE PAID THEREON.
  S 3. Subsections (yy) and (zz) of section  606  of  the  tax  law,  as
relettered  by section 5 of part H of chapter 1 of the laws of 2003, are
relettered subsections (yyy) and (zzz) and  a  new  subsection  (xx)  is
added to read as follows:
  (XX)  ANGEL  TAX  CREDIT. (1) ALLOWANCE OF CREDIT. A TAXPAYER THAT HAS
MADE A QUALIFYING ANGEL INVESTMENT, AS SUCH TERM IS DEFINED IN PARAGRAPH
(III) OF SUBDIVISION (B) OF SECTION NINE  HUNDRED  FIFTY-NINE-C  OF  THE
GENERAL  MUNICIPAL  LAW,  OR  THAT IS A MEMBER OF A PARTNERSHIP THAT HAS
MADE A QUALIFYING ANGEL INVESTMENT, SHALL BE ALLOWED A CREDIT  EQUAL  TO
THIRTY-FIVE  PERCENT  OF  THE AMOUNT OF SUCH QUALIFYING ANGEL INVESTMENT
OR, IN THE CASE OF A TAXPAYER WHO IS A MEMBER OF A PARTNERSHIP THAT  HAS
MADE  A  QUALIFYING ANGEL INVESTMENT, A PORTION OF SUCH QUALIFYING ANGEL
INVESTMENT EQUAL TO THE PORTION OF  ITEMS  OF  INCOME,  GAIN,  LOSS  AND
DEDUCTION ASSOCIATED WITH THE QUALIFYING ANGEL INVESTMENT PROPERLY ALLO-
CABLE  TO  SUCH  TAXPAYER UNDER SECTION 704 OF THE INTERNAL REVENUE CODE
FOR THE TAXABLE YEAR.
  (2) APPLICATION OF CREDIT. IF THE AMOUNT OF THE CREDIT  ALLOWED  UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR
SUCH  YEAR,  THE  EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE
CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS  OF  SECTION  SIX

S. 6359--C                         319

HUNDRED  EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST
SHALL BE PAID THEREON.
  S  4.  Section 1456 of the tax law is amended by adding a new subdivi-
sion (aa) to read as follows:
  (AA) ANGEL TAX CREDIT. (1) ALLOWANCE OF CREDIT. A  TAXPAYER  THAT  HAS
MADE A QUALIFYING ANGEL INVESTMENT, AS SUCH TERM IS DEFINED IN PARAGRAPH
(III)  OF  SUBDIVISION  (B)  OF SECTION NINE HUNDRED FIFTY-NINE-C OF THE
GENERAL MUNICIPAL LAW, SHALL BE ALLOWED A CREDIT  EQUAL  TO  THIRTY-FIVE
PERCENT OF THE AMOUNT OF SUCH QUALIFYING ANGEL INVESTMENT.
  (2)  APPLICATION  OF  CREDIT. THE CREDIT ALLOWED UNDER THIS SUBSECTION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN THE MINIMUM TAX FIXED BY SUBSECTION (B) OF SECTION FOURTEEN HUNDRED
FIFTY-FIVE  OF  THIS  ARTICLE.  HOWEVER, IF THE AMOUNT OF CREDIT ALLOWED
UNDER THIS SUBSECTION FOR ANY TAXABLE  YEAR  REDUCES  THE  TAX  TO  SUCH
AMOUNT,  THEN  ANY  AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR SHALL BE TREATED AS  AN  OVERPAYMENT  OF  TAX  TO  BE  CREDITED  OR
REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION TEN HUNDRED EIGHT-
Y-SIX  OF  THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION
(C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING,
NO INTEREST SHALL BE PAID THEREON.
  S 5. Section 1511 of the tax law is amended by adding a  new  subdivi-
sion (dd) to read as follows:
  (DD)  ANGEL  TAX  CREDIT. (1) ALLOWANCE OF CREDIT. A TAXPAYER THAT HAS
MADE A QUALIFYING ANGEL INVESTMENT, AS SUCH TERM IS DEFINED IN PARAGRAPH
(III) OF SUBDIVISION (B) OF SECTION NINE  HUNDRED  FIFTY-NINE-C  OF  THE
GENERAL  MUNICIPAL  LAW,  SHALL BE ALLOWED A CREDIT EQUAL TO THIRTY-FIVE
PERCENT OF THE AMOUNT OF SUCH QUALIFYING ANGEL INVESTMENT.
  (2) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE MINIMUM TAX FIXED BY  PARAGRAPH  FOUR  OF  SUBDIVISION  (A)  OF
SECTION  FIFTEEN  HUNDRED  TWO  OF  THIS  ARTICLE  OR BY SECTION FIFTEEN
HUNDRED TWO-A OF THIS ARTICLE, WHICHEVER IS APPLICABLE. HOWEVER, IF  THE
AMOUNT  OF  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT, THEN  ANY  AMOUNT  OF  CREDIT  THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  TEN  HUNDRED EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF THIS
CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  S 6. This act shall take effect immediately.

                                 PART LL

  Section 1. Subsection (c) of section 612 of the tax law is amended  by
adding a new paragraph 41 to read as follows:
  (41) THE AMOUNT OF ANY AWARD PAID TO A VOLUNTEER FIREFIGHTER OR VOLUN-
TEER AMBULANCE WORKER FROM A LENGTH OF SERVICE DEFINED CONTRIBUTION PLAN
OR DEFINED BENEFIT PLAN AS PROVIDED FOR IN ARTICLES ELEVEN-A, ELEVEN-AA,
ELEVEN-AAA  AND  ELEVEN-AAAA OF THE GENERAL MUNICIPAL LAW, TO THE EXTENT
THAT SUCH AWARD IS INCLUDABLE IN GROSS INCOME  FOR  FEDERAL  INCOME  TAX
PURPOSES;  PROVIDED,  HOWEVER, THAT SUCH AWARD IS NOT DISTRIBUTED IN THE
FORM OF A LUMP SUM; AND  PROVIDED,  FURTHER,  THAT  SUCH  AWARD  IS  NOT
DISTRIBUTED TO A TAXPAYER WHO HAS NOT ATTAINED THE AGE OF FIFTY-NINE AND
ONE-HALF YEARS.
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on and after January 1, 2014.

S. 6359--C                         320

                                 PART MM

  Section 1. Article 28 of the tax law is amended by adding a new part 6
to read as follows:
                                 PART VI
       PUBLIC SAFETY COMMUNICATIONS SURCHARGE ON PREPAID WIRELESS
                       TELECOMMUNICATIONS SERVICES
SECTION 1155. PUBLIC SAFETY COMMUNICATIONS SURCHARGE ON PREPAID WIRELESS
                TELECOMMUNICATIONS SERVICES.
  S  1155.  PUBLIC  SAFETY  COMMUNICATIONS SURCHARGE ON PREPAID WIRELESS
TELECOMMUNICATIONS SERVICES.  (A) DEFINITIONS. AS USED IN THIS  SECTION,
WHERE  NOT OTHERWISE SPECIFICALLY DEFINED AND UNLESS A DIFFERENT MEANING
IS CLEARLY REQUIRED:
  (1) "CONSUMER" MEANS A PERSON WHO PURCHASES PREPAID WIRELESS  TELECOM-
MUNICATIONS SERVICE IN A RETAIL TRANSACTION.
  (2)  "SURCHARGE"  MEANS  THE PUBLIC SAFETY COMMUNICATIONS SURCHARGE ON
PREPAID WIRELESS TELECOMMUNICATIONS SERVICES  THAT  IS  REQUIRED  TO  BE
COLLECTED  BY  A  VENDOR  FROM  A  CONSUMER IN THE AMOUNT ESTABLISHED IN
SUBDIVISION (B) OF THIS SECTION.
  (3) "PREPAID WIRELESS TELECOMMUNICATIONS  SERVICE"  MEANS  A  WIRELESS
TELECOMMUNICATIONS  SERVICE  THAT  ALLOWS A CALLER TO DIAL 911 TO ACCESS
THE 911 SYSTEM, WHICH SERVICE MUST BE PAID FOR IN ADVANCE AND IS SOLD IN
PREDETERMINED UNITS OR DOLLARS OF WHICH THE NUMBER DECLINES WITH USE  IN
A KNOWN AMOUNT.
  (4)  "PROVIDER" MEANS A PERSON THAT PROVIDES PREPAID WIRELESS TELECOM-
MUNICATIONS SERVICE PURSUANT TO A LICENSE ISSUED BY THE FEDERAL COMMUNI-
CATIONS COMMISSION.
  (5) "RETAIL TRANSACTION" MEANS THE PURCHASE OF PREPAID WIRELESS  TELE-
COMMUNICATIONS  SERVICE FROM A VENDOR FOR ANY PURPOSE OTHER THAN RESALE.
EACH INDIVIDUAL PREPAID TELECOMMUNICATION DEVICE, ADDITION OF MINUTES OR
ADDITION OF FUNDS SHALL CONSTITUTE A SEPARATE TRANSACTION.
  (6) "VENDOR" MEANS A PERSON WHO SELLS  PREPAID  WIRELESS  TELECOMMUNI-
CATIONS SERVICE TO ANOTHER PERSON.
  (7)  "WIRELESS  TELECOMMUNICATIONS  SERVICE"  MEANS  COMMERCIAL MOBILE
RADIO SERVICE AS DEFINED IN SECTION 20.3 OF TITLE  47  OF  THE  CODE  OF
FEDERAL REGULATIONS, AS AMENDED.
  (B)  PUBLIC  SAFETY COMMUNICATIONS SURCHARGE ON PREPAID WIRELESS TELE-
COMMUNICATIONS SERVICES. (1) A SURCHARGE ON  PREPAID  WIRELESS  COMMUNI-
CATIONS  SERVICE  PROVIDED  TO  A  CONSUMER  IS IMPOSED AT A RATE OF ONE
DOLLAR AND TWENTY CENTS PER RETAIL TRANSACTION, AND THAT RATE WHICH  MAY
BE  IMPOSED  BY LOCAL LAW PURSUANT TO SECTION THREE HUNDRED THREE OF THE
COUNTY LAW.
  (2) A VENDOR CONDUCTING A RETAIL TRANSACTION FOR  A  PREPAID  WIRELESS
TELECOMMUNICATIONS  DEVICE, OR FOR THE ADDITION OF MINUTES OR FUNDS TO A
PREPAID WIRELESS TELECOMMUNICATIONS DEVICE, SHALL ACT  AS  A  COLLECTION
AGENT  FOR  THE STATE FOR THE COLLECTION OF THE SURCHARGE. THE AMOUNT OF
THE SURCHARGE SHALL BE EITHER SEPARATELY STATED ON THE INVOICE,  RECEIPT
OR  OTHER  SALES DOCUMENT THAT IS PROVIDED TO THE CONSUMER, OR OTHERWISE
DISCLOSED TO THE CONSUMER. THE  SURCHARGE  SHALL  BE  COLLECTED  BY  THE
VENDOR  ON  ALL POINT OF SALE RETAIL TRANSACTIONS WITHIN NEW YORK STATE,
AND FOR ALL INTERNET, PHONE AND OTHER REMOTE RETAIL TRANSACTIONS,  OTHER
THAN  FOR  RESALE,  THE  SURCHARGE  SHALL  BE COLLECTED WHEN THE BILLING
ADDRESS FOR THE PAYMENT METHOD OR THE SHIPPING ADDRESS  ARE  WITHIN  NEW
YORK STATE.
  (3)  THE  AMOUNT OF THE SURCHARGE THAT IS COLLECTED BY A VENDOR FROM A
CONSUMER, IF SUCH AMOUNT IS SEPARATELY STATED ON AN INVOICE, RECEIPT  OR

S. 6359--C                         321

OTHER  SALES  DOCUMENT PROVIDED TO THE CONSUMER BY THE VENDOR, SHALL NOT
BE INCLUDED IN THE BASE FOR MEASURING ANY TAX, FEE, SURCHARGE, OR  OTHER
CHARGE  THAT  IS IMPOSED BY THIS STATE, ANY POLITICAL SUBDIVISION OF THE
STATE, OR ANY INTERGOVERNMENTAL AGENCY.
  (4)  SURCHARGE  RECEIPTS COLLECTED BY VENDORS SHALL BE REMITTED TO THE
COMMISSIONER AT THE SAME TIME AND IN THE SAME MANNER  AS  PRESCRIBED  IN
PART  FOUR  OF THIS ARTICLE. THOSE PORTIONS OF THE RECEIPTS ATTRIBUTABLE
TO THE SURCHARGE ESTABLISHED UNDER SECTION TWELVE  HUNDRED  NINETEEN  OF
THIS  CHAPTER SHALL BE HANDLED BY THE COMMISSIONER IN THE SAME MANNER AS
PRESCRIBED IN SECTION TWELVE HUNDRED SIXTY-ONE OF THIS CHAPTER.
  (5) EACH VENDOR IS ENTITLED TO RETAIN, AS AN  ADMINISTRATIVE  FEE,  AN
AMOUNT  EQUAL  TO TWO PERCENT OF FIFTY-EIGHT AND THREE-TENTHS PERCENT OF
THE TOTAL COLLECTIONS OF THE SURCHARGE IMPOSED BY THIS SECTION, PROVIDED
THAT THE VENDOR FILES ANY REQUIRED RETURN AND REMITS THE  SURCHARGE  DUE
TO THE COMMISSIONER ON OR BEFORE ITS DUE DATE.
  (6)  NOTWITHSTANDING  ANY  PROVISION  OF  LAW  TO  THE  CONTRARY,  ALL
SURCHARGE MONIES COLLECTED AND RECEIVED BY THE COMMISSIONER  UNDER  THIS
SECTION  MUST  BE  DEPOSITED DAILY TO THE CREDIT OF THE COMPTROLLER WITH
THOSE RESPONSIBLE BANKS, BANKING HOUSES OR  TRUST  COMPANIES  THE  COMP-
TROLLER  MAY  DESIGNATE.  THOSE DEPOSITS MUST BE KEPT SEPARATE AND APART
FROM ALL OTHER MONIES IN THE POSSESSION OF THE  COMPTROLLER.  THE  COMP-
TROLLER  MUST REQUIRE ADEQUATE SECURITY FROM ALL SUCH DEPOSITORIES.  THE
COMPTROLLER MUST, ON OR BEFORE THE TENTH DAY  OF  EACH  MONTH,  PAY  ALL
SURCHARGE  MONIES  COLLECTED  AND  RECEIVED  UNDER THIS SECTION INTO THE
SERVICE ACCOUNT OF  THE  MISCELLANEOUS  SPECIAL  REVENUE  FUND,  CREATED
PURSUANT TO SECTION NINETY-SEVEN-QQ OF THE STATE FINANCE LAW.
  (7)  THE  STATE OF NEW YORK AND ANY OF ITS AGENCIES, INSTRUMENTALITIES
AND POLITICAL SUBDIVISIONS ARE EXEMPT FROM THE SURCHARGE IMPOSED BY THIS
SECTION.
  S 2. The tax law is amended by adding a new section 1219  to  read  as
follows:
  S  1219.  PUBLIC  SAFETY  COMMUNICATIONS SURCHARGE ON PREPAID WIRELESS
TELECOMMUNICATIONS SERVICES. (A) NOTWITHSTANDING THE PROVISIONS  OF  ANY
LAW TO THE CONTRARY, ANY COUNTY OF THIS STATE, ACTING THROUGH ITS BOARD,
IS  HEREBY AUTHORIZED AND EMPOWERED TO ADOPT, AMEND OR REPEAL LOCAL LAWS
TO IMPOSE A SURCHARGE IN AN AMOUNT NOT TO EXCEED  THIRTY-FIVE  CENTS  ON
EACH  "RETAIL  TRANSACTION"  FOR  "PREPAID  WIRELESS  TELECOMMUNICATIONS
SERVICE", AS SUCH TERMS ARE DEFINED IN SECTION ELEVEN HUNDRED FIFTY-FIVE
OF THIS CHAPTER, FROM A  VENDOR  FOR  ANY  PURPOSE  OTHER  THAN  RESALE;
PROVIDED, HOWEVER, THAT ANY COUNTY THAT IS A CITY HAVING A POPULATION OF
ONE  MILLION  OR MORE IS HEREBY AUTHORIZED AND EMPOWERED TO ADOPT, AMEND
OR REPEAL LOCAL LAWS TO IMPOSE A SURCHARGE IN AN AMOUNT  NOT  TO  EXCEED
ONE DOLLAR PER RETAIL TRANSACTION.
  (B)  ANY  SUCH  LOCAL LAW SHALL STATE THE AMOUNT OF THE SURCHARGE, THE
DATE ON WHICH THE VENDOR SHALL BEGIN TO ADD SUCH SURCHARGE TO THE RETAIL
TRANSACTIONS OF ITS CUSTOMERS AND, TO THE EXTENT PRACTICABLE,  THE  DATE
ON WHICH SUCH E911 SERVICE IS TO BEGIN. SUCH LOCAL LAW MAY AUTHORIZE THE
SERVICE SUPPLIER TO BEGIN BILLING ITS CUSTOMERS FOR SUCH SURCHARGE PRIOR
TO THE DATE THE E911 SYSTEM SERVICE IS TO BEGIN.
  (C)  ANY  VENDOR  WITHIN  A MUNICIPALITY WHICH HAS IMPOSED A SURCHARGE
PURSUANT TO THE PROVISIONS OF THIS SECTION SHALL BE GIVEN A  MINIMUM  OF
FORTY-FIVE  DAYS  WRITTEN NOTICE PRIOR TO THE DATE IT SHALL BEGIN TO ADD
SUCH SURCHARGE TO RETAIL TRANSACTIONS OF ITS CUSTOMERS OR PRIOR  TO  ANY
MODIFICATION TO OR CHANGE IN THE SURCHARGE AMOUNT.
  (D)  THE  SURCHARGE PROVIDED FOR HEREIN SHALL BE COLLECTED PURSUANT TO
SECTION ELEVEN HUNDRED FIFTY-FIVE OF THIS CHAPTER.

S. 6359--C                         322

  S 3. Subdivision (a) of section 1261 of the tax  law,  as  amended  by
chapter 182 of the laws of 2005, is amended to read as follows:
  (a)  All  taxes, penalties and interest imposed by cities, counties or
school districts under the authority  of  section  twelve  hundred  ten,
twelve  hundred  eleven,  twelve  hundred  twelve  [or],  twelve hundred
twelve-A,  OR  TWELVE  HUNDRED  NINETEEN  of  this  article,  which  are
collected  by  the  commissioner,  shall  be  deposited  daily with such
responsible banks, banking houses or trust companies, as may  be  desig-
nated  by  the  state  comptroller, to the credit of the comptroller, in
trust for the cities, counties or school districts imposing the  tax  or
for  (i) the Nassau county interim finance authority or (ii) the Buffalo
fiscal stability authority or (iii) the  Erie  county  fiscal  stability
authority, created by the public authorities law, (i) to the extent that
net  collections  from taxes imposed by Nassau county are payable to the
Nassau county interim finance authority or (ii) to the extent  that  net
collections  from taxes imposed by Erie county or by the city of Buffalo
are payable to the Buffalo fiscal stability authority or  (iii)  to  the
extent  that net collections from taxes imposed by Erie county are paya-
ble to the Erie county fiscal stability authority,  or  for  any  public
benefit  corporation  to  which  the tax may be payable pursuant to law.
Such deposits and deposits  received  pursuant  to  subdivision  (b)  of
section  twelve hundred fifty-two of this article shall be kept in trust
and separate and apart from all other monies in the  possession  of  the
comptroller.  The  comptroller  shall require adequate security from all
such depositories of such revenue collected by the commissioner, includ-
ing the deposits received pursuant to subdivision (b) of section  twelve
hundred  fifty-two  of this article. Any amount payable to such authori-
ties pursuant to the public authorities law shall, at  the  time  it  is
otherwise  payable to (i) Nassau county, (ii) Erie county or the city of
Buffalo, or (iii)  Erie  county,  respectively,  as  specified  in  this
section,  be paid instead to such respective authority. Any amount paya-
ble to a public benefit corporation pursuant to law shall, at  the  time
it  is otherwise payable to the taxing jurisdiction as specified in this
section, be paid instead to such public benefit corporation.
  S 4. This act shall take effect on the ninetieth day  after  it  shall
have  become  a  law;  provided,  however, that effective immediately, a
county may act to adopt,  amend  or  repeal  local  laws  to  enact  the
surcharge authorized in section two of this act.

                                 PART NN

  Section  1.  Paragraph 1 of subdivision (a) of section 1102 of the tax
law, as amended by section 8 of part W1 of chapter 109 of  the  laws  of
2006, is amended to read as follows:
  (1)  Every  distributor  of  motor  fuel shall pay, as a prepayment on
account of the taxes imposed by this article and pursuant to the author-
ity of article twenty-nine of this chapter, a  tax  on  each  gallon  of
motor fuel (i) which he imports or causes to be imported into this state
for  use,  distribution,  storage  or  sale  in  the  state or produces,
refines, manufactures or compounds in this state, IN ADDITION, PRIOR  TO
DELIVERY  TO A FILLING STATION EVERY DISTRIBUTOR OF MOTOR FUEL SHALL PAY
AS A PREPAYMENT AN AMOUNT THAT REFLECTS THE MOTOR FUEL PRICES POSTED  AT
SUCH  FILLING  STATION ON THE DAY OF DELIVERY AND THE TAX RATE IN EFFECT
PURSUANT TO THE AUTHORITY OF THIS ARTICLE AND OF ARTICLE TWENTY-NINE  OF
THIS CHAPTER LESS THE AMOUNT PAID PURSUANT TO SUBDIVISION (E) OF SECTION
ELEVEN  HUNDRED  ELEVEN  OF THIS ARTICLE or (ii) if the tax has not been

S. 6359--C                         323

imposed prior to its sale in this state,  which  he  sells  (which  acts
shall in regard to motor fuel hereinafter in this article be encompassed
by  the  phrase "imported, manufactured or sold"), except when imported,
manufactured  or  sold under circumstances which preclude the collection
of such tax by reason of the United States constitution and of the  laws
of  the United States enacted pursuant thereto or when imported or manu-
factured by an organization described in paragraph one or two of  subdi-
vision (a) of section eleven hundred sixteen of this article or a hospi-
tal  included  in  the organizations described in paragraph four of such
subdivision for its own use and consumption  and  except  kero-jet  fuel
when  imported  by  an airline for use in its airplanes, and except CNG,
and except hydrogen, and except E85 when delivered to a filling  station
and  placed in a storage tank of such filling station for such E85 to be
dispensed directly into a motor vehicle for use in the operation of such
vehicle.
  S 2. Paragraph 1 of subdivision (a) of section 1102 of the tax law, as
amended by chapter 261 of the laws  of  1988,  is  amended  to  read  as
follows:
  (1)  Every  distributor  of  motor  fuel shall pay, as a prepayment on
account of the taxes imposed by this article and pursuant to the author-
ity of article twenty-nine of this chapter, a  tax  on  each  gallon  of
motor fuel (i) which he imports or causes to be imported into this state
for  use,  distribution,  storage  or  sale  in  the  state or produces,
refines, manufactures or compounds in this state, IN ADDITION, PRIOR  TO
DELIVERY  TO A FILLING STATION EVERY DISTRIBUTOR OF MOTOR FUEL SHALL PAY
AS A PREPAYMENT AN AMOUNT THAT REFLECTS THE MOTOR FUEL PRICES POSTED  AT
SUCH  FILLING  STATION ON THE DAY OF DELIVERY AND THE TAX RATE IN EFFECT
PURSUANT TO THE AUTHORITY OF THIS ARTICLE AND OF ARTICLE TWENTY-NINE  OF
THIS CHAPTER LESS THE AMOUNT PAID PURSUANT TO SUBDIVISION (E) OF SECTION
ELEVEN  HUNDRED  ELEVEN  OF THIS ARTICLE or (ii) if the tax has not been
imposed prior to its sale in this state,  which  he  sells  (which  acts
shall in regard to motor fuel hereinafter in this article be encompassed
by  the  phrase "imported, manufactured or sold"), except when imported,
manufactured or sold under circumstances which preclude  the  collection
of  such tax by reason of the United States constitution and of the laws
of the United States enacted pursuant thereto or when imported or  manu-
factured  by an organization described in paragraph one or two of subdi-
vision (a) of section eleven hundred sixteen of this article or a hospi-
tal included in the organizations described in paragraph  four  of  such
subdivision  for  its  own  use and consumption and except kero-jet fuel
when imported by an airline for use in its airplanes.
  S 3. Paragraph 2 of subdivision (a) of section 1102 of the tax law, as
amended by section 9 of part W of chapter 59 of the  laws  of  2013,  is
amended to read as follows:
  (2)  Every distributor of diesel motor fuel shall pay, as a prepayment
on account of the taxes imposed by this  article  and  pursuant  to  the
authority of article twenty-nine of this chapter, a tax upon the sale or
use  of diesel motor fuel in this state. The tax shall be computed based
upon the number of gallons of diesel motor fuel sold or used.  IN  ADDI-
TION, PRIOR TO DELIVERY TO A FILLING STATION EVERY DISTRIBUTOR OF DIESEL
MOTOR  FUEL  SHALL PAY AS A PREPAYMENT AN AMOUNT THAT REFLECTS THE MOTOR
FUEL PRICES POSTED AT SUCH FILLING STATION ON THE DAY  OF  DELIVERY  AND
THE  TAX RATE IN EFFECT PURSUANT TO THE AUTHORITY OF THIS ARTICLE AND OF
ARTICLE TWENTY-NINE OF THIS CHAPTER LESS THE  AMOUNT  PAID  PURSUANT  TO
SUBDIVISION  (E)  OF  SECTION  ELEVEN  HUNDRED  ELEVEN  OF THIS ARTICLE.
Provided, however, if the tax has not been  imposed  prior  thereto,  it

S. 6359--C                         324

shall  be  imposed  on  the  removal of highway diesel motor fuel from a
terminal, other than by pipeline, barge, tanker or other vessel, or  the
delivery  of  diesel  motor  fuel  to  a  retail  service  station.  The
collection  of  such tax shall not be made applicable to the sale or use
of diesel motor fuel under circumstances which preclude  the  collection
of  such  tax by reason of the United States constitution and of laws of
the United States enacted pursuant thereto. The prepaid  tax  on  diesel
motor  fuel  shall not apply to (i) the sale of non-highway Diesel motor
fuel to a person registered as a distributor of Diesel motor fuel  other
than  a  sale  to  such  person  which  involves a delivery at a filling
station or into a repository which is equipped  with  a  hose  or  other
apparatus  by  which  such fuel can be dispensed into the fuel tank of a
motor vehicle; (ii) the sale to or delivery  at  a  filling  station  or
other  retail  vendor  of  water-white  kerosene  provided  such filling
station or other retail vendor  only  sells  such  water-white  kerosene
exclusively  for  heating  purposes in containers of no more than twenty
gallons or to the sale of CNG or hydrogen; (iii) the sale of  previously
untaxed  qualified  biodiesel, as defined in subdivision twenty-three of
section two hundred eighty-two of this chapter, to a  person  registered
under  article twelve-A of this chapter as a distributor of Diesel motor
fuel other than (A) a retail sale to such person or (B) a sale  to  such
person  which involves a delivery at a filling station or into a reposi-
tory which is equipped with a hose or  other  apparatus  by  which  such
qualified biodiesel can be dispensed into the fuel tank of a motor vehi-
cle; or (iv) the sale of previously untaxed highway diesel motor fuel by
a person registered under article twelve-A of this chapter as a distrib-
utor  of  diesel  motor  fuel  to a person registered under such article
twelve-A as a distributor of diesel motor fuel where the highway  diesel
motor  fuel  is either: (A) being delivered by pipeline, railcar, barge,
tanker or other vessel to a terminal, the operator of which terminal  is
registered  under section two hundred eighty-three-b of this chapter, or
(B) within such a terminal where it has been so  delivered.    Provided,
however,  that  the  exemption  set forth in this subparagraph shall not
apply to any highway diesel motor fuel if it is removed from a terminal,
other than by pipeline, barge, tanker or other vessel.
  S 4. Paragraph 2 of subdivision (a) of section 1102 of the tax law, as
amended by section 10 of part W of chapter 59 of the laws  of  2013,  is
amended to read as follows:
  (2)  Every distributor of diesel motor fuel shall pay, as a prepayment
on account of the taxes imposed by this  article  and  pursuant  to  the
authority of article twenty-nine of this chapter, a tax upon the sale or
use  of diesel motor fuel in this state. The tax shall be computed based
upon the number of gallons of diesel motor fuel sold or used.  IN  ADDI-
TION, PRIOR TO DELIVERY TO A FILLING STATION EVERY DISTRIBUTOR OF DIESEL
MOTOR  FUEL  SHALL PAY AS A PREPAYMENT AN AMOUNT THAT REFLECTS THE MOTOR
FUEL PRICES POSTED AT SUCH FILLING STATION ON THE DAY  OF  DELIVERY  AND
THE  TAX RATE IN EFFECT PURSUANT TO THE AUTHORITY OF THIS ARTICLE AND OF
ARTICLE TWENTY-NINE OF THIS CHAPTER LESS THE  AMOUNT  PAID  PURSUANT  TO
SUBDIVISION  (E)  OF  SECTION  ELEVEN  HUNDRED  ELEVEN  OF THIS ARTICLE.
Provided, however, if the tax has not been  imposed  prior  thereto,  it
shall  be  imposed  on  the  removal of highway diesel motor fuel from a
terminal, other than by pipeline, barge, tanker or other vessel, or  the
delivery  of  diesel  motor  fuel  to  a  retail  service  station.  The
collection of such tax shall not be made applicable to the sale  or  use
of  diesel  motor fuel under circumstances which preclude the collection
of such tax by reason of the United States constitution and of  laws  of

S. 6359--C                         325

the  United  States  enacted pursuant thereto. The prepaid tax on diesel
motor fuel shall not apply to (i) the sale of non-highway  Diesel  motor
fuel  to a person registered as a distributor of Diesel motor fuel other
than  a  sale  to  such  person  which  involves a delivery at a filling
station or into a repository which is equipped  with  a  hose  or  other
apparatus  by  which  such fuel can be dispensed into the fuel tank of a
motor vehicle; (ii) the sale to or delivery  at  a  filling  station  or
other  retail  vendor  of  water-white  kerosene  provided  such filling
station or other retail vendor  only  sells  such  water-white  kerosene
exclusively  for  heating  purposes in containers of no more than twenty
gallons; (iii) the sale of previously untaxed  qualified  biodiesel,  as
defined in subdivision twenty-three of section two hundred eighty-two of
this chapter to a person registered under article twelve-A of this chap-
ter  as  a distributor of Diesel motor fuel other than (A) a retail sale
to such person or (B) a sale to such person which involves a delivery at
a filling station or into a repository which is equipped with a hose  or
other  apparatus by which such qualified biodiesel can be dispensed into
the fuel tank of a motor vehicle; or (iv) the sale of previously untaxed
highway diesel motor fuel by a person registered under article  twelve-A
of this chapter as a distributor of diesel motor fuel to a person regis-
tered  under such article twelve-A as a distributor of diesel motor fuel
where the highway diesel motor fuel is either: (A)  being  delivered  by
pipeline,  railcar,  barge,  tanker  or  other vessel to a terminal, the
operator of which terminal  is  registered  under  section  two  hundred
eighty-three-b  of  this chapter, or (B) within such a terminal where it
has been so delivered. Provided, however, that the exemption  set  forth
in  this  subparagraph  shall not apply to any highway diesel motor fuel
once it is removed from a terminal, other than by pipeline, barge, tank-
er or other vessel.
  S 5. Paragraph 2 of subdivision (e) of section 1111 of the tax law, as
amended by section 6 of part M1 of chapter 109 of the laws of  2006,  is
amended to read as follows:
  (2)  (i) Where the motor fuel is imported, manufactured or sold in, or
diesel motor fuel is sold or used in the region referred to in  subpara-
graph  (i)  of paragraph one of this subdivision, the tax required to be
prepaid pursuant to section eleven hundred two of this article  on  each
gallon  of  such  fuel  shall  be [fourteen and three-quarters] EIGHTEEN
cents.
  (ii) Where motor fuel is imported, manufactured or sold in, or  diesel
motor  fuel  is  sold  or used in the region referred to in subparagraph
(ii) of paragraph one of  this  subdivision,  the  tax  required  to  be
prepaid  pursuant  to section eleven hundred two of this article on each
gallon of such fuel shall be [fourteen] SIXTEEN cents.
  S 6. This act shall take effect on the first  day  of  the  sales  tax
quarter  next  succeeding  the  thirtieth day after the date on which it
shall have become a law; provided that;
  1. the amendments to paragraph 1 of subdivision (a) of section 1102 of
the tax law made by section one of this act  shall  be  subject  to  the
expiration  and  reversion  of  such paragraph pursuant to section 19 of
part W1 of chapter 109 of the laws of 2006, as amended, when  upon  such
date the provisions of section two of this act shall take effect;
  2. the amendments to paragraph 2 of subdivision (a) of section 1102 of
the  tax  law  made by section three of this act shall be subject to the
expiration and reversion of such paragraph pursuant  to  section  19  of
part  W1  of chapter 109 of the laws of 2006, as amended, when upon such
date the provisions of section four of this act shall take effect; and

S. 6359--C                         326

  3. section five of this act shall take  effect  on  the  sixtieth  day
after it shall have become a law.

                                 PART OO

  Section  1. Paragraphs 3 and 4 of subsection (b) of section 800 of the
tax law, paragraph 3 as amended and paragraph 4 as added by section 1 of
part B of chapter 56 of the laws of 2011, are amended and  a  new  para-
graph 5 is added to read as follows:
  (3)  an interstate agency or public corporation created pursuant to an
agreement or compact with another state or the Dominion of Canada; [or]
  (4) [Any] ANY eligible educational institution.  An  "eligible  educa-
tional  institution"  shall  mean any public school district, a board of
cooperative educational  services,  a  public  elementary  or  secondary
school, a school approved pursuant to article eighty-five or eighty-nine
of  the education law to serve students with disabilities of school age,
or a nonpublic elementary or secondary school that provides  instruction
in grade one or above[.]; OR
  (5)  ANY  COUNTY,  TOWN,  CITY, VILLAGE OR OTHER POLITICAL SUBDIVISION
EXCEPT A CITY WITH A POPULATION OF ONE MILLION INHABITANTS OR MORE.
  S 2. This act shall take effect immediately.

                                 PART PP

  Section 1. Subparagraph (A) of  paragraph  1  of  subsection  (oo)  of
section 606 of the tax law, as amended by section 1 of part F of chapter
59 of the laws of 2013, is amended to read as follows:
  (A)  For  taxable years beginning on or after January first, two thou-
sand ten and before January first, two thousand twenty, a taxpayer shall
be allowed a credit as hereinafter provided, against the tax imposed  by
this article, in an amount equal to one hundred percent of the amount of
credit  allowed the taxpayer with respect to a certified historic struc-
ture under subsection (a) (2) of section  47  of  the  federal  internal
revenue  code  with  respect  to  a certified historic structure located
within the state. Provided, however, the credit shall not exceed  [five]
SEVEN  million  dollars  IN  STATE FISCAL YEAR TWO THOUSAND SIXTEEN--TWO
THOUSAND SEVENTEEN, NINE MILLION DOLLARS IN STATE FISCAL YEAR TWO  THOU-
SAND  SEVENTEEN--TWO  THOUSAND  EIGHTEEN  AND  TWELVE MILLION DOLLARS IN
STATE FISCAL YEAR TWO THOUSAND EIGHTEEN--TWO  THOUSAND  NINETEEN.    For
taxable  years beginning on or after January first, two thousand twenty,
a taxpayer shall be allowed a credit as  hereinafter  provided,  against
the tax imposed by this article, in an amount equal to thirty percent of
the  amount  of  credit allowed the taxpayer with respect to a certified
historic structure under subsection (a)(2) of section 47 of the  federal
internal  revenue  code  with  respect to a certified historic structure
located within the state; provided, however, the credit shall not exceed
one hundred thousand dollars.
  S 2. Subparagraph (A) of paragraph 1 of subdivision 40 of section  210
of  the  tax law, as amended by section 2 of part F of chapter 59 of the
laws of 2013, is amended to read as follows:
  (A) For taxable years beginning on or after January first,  two  thou-
sand ten and before January first, two thousand twenty, a taxpayer shall
be  allowed a credit as hereinafter provided, against the tax imposed by
this article, in an amount equal to one hundred percent of the amount of
credit allowed the taxpayer with respect to a certified historic  struc-
ture  under  subsection  (a)  (2)  of section 47 of the federal internal

S. 6359--C                         327

revenue code with respect to  a  certified  historic  structure  located
within  the state. Provided, however, the credit shall not exceed [five]
SEVEN million dollars IN STATE FISCAL  YEAR  TWO  THOUSAND  SIXTEEN--TWO
THOUSAND  SEVENTEEN, NINE MILLION DOLLARS IN STATE FISCAL YEAR TWO THOU-
SAND SEVENTEEN--TWO THOUSAND EIGHTEEN  AND  TWELVE  MILLION  DOLLARS  IN
STATE  FISCAL  YEAR  TWO  THOUSAND EIGHTEEN--TWO THOUSAND NINETEEN.  For
taxable years beginning on or after January first, two thousand  twenty,
a  taxpayer  shall  be allowed a credit as hereinafter provided, against
the tax imposed by this article, in an amount equal to thirty percent of
the amount of credit allowed the taxpayer with respect  to  a  certified
historic  structure under subsection (a)(2) of section 47 of the federal
internal revenue code with respect to  a  certified  historic  structure
located within the state. Provided, however, the credit shall not exceed
one hundred thousand dollars.
  S 3. Subparagraph (A) of paragraph 1 of subsection (u) of section 1456
of  the  tax law, as amended by section 3 of part F of chapter 59 of the
laws of 2013, is amended to read as follows:
  (A) For taxable years beginning on or after January first,  two  thou-
sand ten and before January first, two thousand twenty, a taxpayer shall
be  allowed a credit as hereinafter provided, against the tax imposed by
this article, in an amount equal to one hundred percent of the amount of
credit allowed the taxpayer with respect to a certified historic  struc-
ture  under  subsection  (a)(2)  of  section  47 of the federal internal
revenue code with respect to  a  certified  historic  structure  located
within  the state. Provided, however, the credit shall not exceed [five]
SEVEN million dollars IN STATE FISCAL  YEAR  TWO  THOUSAND  SIXTEEN--TWO
THOUSAND  SEVENTEEN, NINE MILLION DOLLARS IN STATE FISCAL YEAR TWO THOU-
SAND SEVENTEEN--TWO THOUSAND EIGHTEEN  AND  TWELVE  MILLION  DOLLARS  IN
STATE  FISCAL  YEAR  TWO  THOUSAND EIGHTEEN--TWO THOUSAND NINETEEN.  For
taxable years beginning on or after January first, two thousand  twenty,
a  taxpayer  shall  be allowed a credit as hereinafter provided, against
the tax imposed by this article, in an amount equal to thirty percent of
the amount of credit allowed the taxpayer with respect  to  a  certified
historic  structure under subsection (a)(2) of section 47 of the federal
internal revenue code with respect to  a  certified  historic  structure
located within the state. Provided, however, the credit shall not exceed
one hundred thousand dollars.
  S  4.  Subparagraph  (A)  of paragraph 1 of subdivision (y) of section
1511 of the tax law, as amended by section 4 of part F of chapter 59  of
the laws of 2013, is amended to read as follows:
  (A)  For  taxable years beginning on or after January first, two thou-
sand ten and before January first, two thousand twenty, a taxpayer shall
be allowed a credit as hereinafter provided, against the tax imposed  by
this article, in an amount equal to one hundred percent of the amount of
credit  allowed the taxpayer with respect to a certified historic struc-
ture under subsection (a)(2) of  section  47  of  the  federal  internal
revenue  code  with  respect  to  a certified historic structure located
within the state. Provided, however, the credit shall not exceed  [five]
SEVEN  million  dollars  IN  STATE FISCAL YEAR TWO THOUSAND SIXTEEN--TWO
THOUSAND SEVENTEEN, NINE MILLION DOLLARS IN STATE FISCAL YEAR TWO  THOU-
SAND  SEVENTEEN--TWO  THOUSAND  EIGHTEEN  AND  TWELVE MILLION DOLLARS IN
STATE FISCAL YEAR TWO THOUSAND EIGHTEEN--TWO  THOUSAND  NINETEEN.    For
taxable  years beginning on or after January first, two thousand twenty,
a taxpayer shall be allowed a credit as  hereinafter  provided,  against
the tax imposed by this article, in an amount equal to thirty percent of
the  amount  of  credit allowed the taxpayer with respect to a certified

S. 6359--C                         328

historic structure under subsection (a)(2) of section 47 of the  federal
internal  revenue  code  with  respect to a certified historic structure
located within the state. Provided, however, the credit shall not exceed
one hundred thousand dollars.
  S 5. This act shall take effect immediately and shall apply to taxable
years  beginning  on  and  after  January 1, 2014 provided that this act
shall expire and be deemed repealed on and after December 31, 2020.

                                 PART QQ

  Section 1.  Legislative intent. The legislature hereby finds that this
amendment of the laws governing the security necessary to stay  enforce-
ment  of a judgment while on appeal is necessary to preserve the revenue
stream to the state provided under the master settlement agreement.
  S 2. The civil practice law and rules  is  amended  by  adding  a  new
section 5519-a to read as follows:
  S  5519-A. STAY OF ENFORCEMENT FOR MASTER SETTLEMENT AGREEMENT PARTIC-
IPATING AND NON-PARTICIPATING MANUFACTURERS OR THEIR SUCCESSORS. (A)  IN
CIVIL LITIGATION UNDER ANY LEGAL THEORY THAT INVOLVES A PARTICIPATING OR
NON-PARTICIPATING MANUFACTURER, AS THOSE TERMS ARE DEFINED IN THE MASTER
SETTLEMENT  AGREEMENT, OR ANY OF THEIR PARENTS OR SUCCESSORS, THE UNDER-
TAKING REQUIRED DURING THE PENDENCY  OF  ALL  APPEALS  OR  DISCRETIONARY
REVIEWS  BY  ANY  APPELLATE COURTS IN ORDER TO STAY THE EXECUTION OF ANY
JUDGMENT OR ORDER GRANTING LEGAL, EQUITABLE OR OTHER RELIEF  DURING  THE
ENTIRE COURSE OF APPELLATE REVIEW, INCLUDING REVIEW BY THE UNITED STATES
SUPREME COURT, SHALL BE SET PURSUANT TO THE APPLICABLE PROVISIONS OF LAW
OR  COURT  RULES; PROVIDED, HOWEVER, THAT THE TOTAL UNDERTAKING REQUIRED
OF ALL APPELLANTS  COLLECTIVELY  SHALL  NOT  EXCEED  TWO  HUNDRED  FIFTY
MILLION  DOLLARS,  REGARDLESS  OF  THE  VALUE  OF THE JUDGMENT APPEALED.
WHERE THE COURT SETS THE UNDERTAKING IN AN AMOUNT LESS  THAN  THE  JUDG-
MENT,  THE  APPEAL SHALL BE DILIGENTLY PROSECUTED IN GOOD FAITH.  IF THE
APPEAL IS NOT DILIGENTLY PROSECUTED IN GOOD FAITH, THE  COURT  MAY  LIFT
THE  STAY  OF ENFORCEMENT. IN ADDITION, IF A DEFENDANT FAILS TO MAKE ANY
PAYMENTS TO THE STATE OR ITS POLITICAL SUBDIVISIONS AS MAY  BE  REQUIRED
UNDER  THE  MASTER  SETTLEMENT  AGREEMENT,  EXCEPT FOR PAYMENTS THAT ARE
DISPUTED IN GOOD FAITH, THE COURT SHALL HAVE DISCRETION TO LIFT THE STAY
OF ENFORCEMENT.
  (B) NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION (A) OF THIS SECTION,
UPON A FINDING BY THE COURT THAT  AN  APPELLANT  IS  DISSIPATING  ASSETS
OUTSIDE  THE COURSE OF ORDINARY BUSINESS TO AVOID PAYMENT OF A JUDGMENT,
THE COURT MAY LIFT THE STAY OF ENFORCEMENT OR REQUIRE THE  APPELLANT  TO
POST A BOND IN AN AMOUNT UP TO THE TOTAL AMOUNT OF THE JUDGMENT.
  (C)  UPON A SHOWING OF GOOD CAUSE THAT THE APPELLANT IS NOT DILIGENTLY
PROSECUTING THE APPEAL IN GOOD FAITH AS SET FORTH IN SUBDIVISION (A)  OF
THIS SECTION OR IS DISSIPATING ASSETS AS SET FORTH IN SUBDIVISION (B) OF
THIS  SECTION,  AN  APPELLATE  COURT MAY LIFT THE STAY OF ENFORCEMENT OR
REQUIRE APPELLANT TO POST A BOND IN AN AMOUNT UP TO THE TOTAL AMOUNT  OF
THE JUDGMENT.
  (D)  AS USED IN THIS SECTION, "MASTER SETTLEMENT AGREEMENT" SHALL HAVE
THE SAME MEANING AS SET FORTH IN SUBDIVISION FIVE  OF  SECTION  THIRTEEN
HUNDRED NINETY-NINE-OO OF THE PUBLIC HEALTH LAW.
  (E)  NOTHING  CONTAINED  IN  THIS SECTION SHALL BE READ TO ALLOW:  (I)
SUCH PARTICIPATING MANUFACTURER  TO  CURTAIL  ITS  FINANCIAL  OBLIGATION
UNDER  THE  MASTER  SETTLEMENT AGREEMENT; OR (II) SUCH NON-PARTICIPATING
MANUFACTURER TO CURTAIL ITS OBLIGATION TO PLACE THE AMOUNTS SPECIFIED IN
SUBDIVISION TWO OF SECTION THIRTEEN HUNDRED NINETY-NINE-PP OF THE PUBLIC

S. 6359--C                         329

HEALTH LAW INTO A QUALIFIED ESCROW FUND AS DEFINED IN SUBDIVISION SIX OF
SECTION THIRTEEN HUNDRED NINETY-NINE-OO OF THE PUBLIC HEALTH LAW.
  S  3.  This  act shall take effect on the thirtieth day after it shall
have become a law, and shall apply to any cause of action pending on  or
filed on or after such effective date.

                                 PART RR

  Section  1. Paragraph 34 of subdivision (b) of section 1101 of the tax
law is REPEALED.
  S 2. Paragraph 10 of subdivision (c) of section 1105 of the tax law is
REPEALED.
  S 3. Subdivision (1) of section 1106 of the tax law is REPEALED.
  S 4. Subdivision (o) of section 1111 of the tax law is REPEALED.
  S 5. Section 1213 of the tax law, as amended by section 2 of  part  WW
of chapter 57 of the laws of 2010, is amended to read as follows:
  S  1213. Deliveries outside the jurisdiction where sale is made. Where
a sale of tangible personal  property  or  services,  including  prepaid
telephone  calling  services, but not including other services described
in subdivision (b) of section  eleven  hundred  five  of  this  chapter,
including  an  agreement therefor, is made in any city, county or school
district, but the property sold, the property upon  which  the  services
were  performed or prepaid telephone calling or other service is or will
be delivered to the purchaser elsewhere, such sale shall not be  subject
to  tax  by  such  city, county or school district. However, if delivery
occurs or will occur in a city, county or school district imposing a tax
on the sale or use of such property, prepaid telephone calling or  other
services, the vendor shall be required to collect from the purchaser, as
provided  in  section  twelve  hundred  fifty-four  of this article, the
aggregate sales or compensating use taxes imposed by the city,  if  any,
county  and  school district in which delivery occurs or will occur, for
distribution by the commissioner to such taxing jurisdiction  or  juris-
dictions.  For  the purposes of this section delivery shall be deemed to
include transfer of possession to the purchaser and the receiving of the
property or of the service, including prepaid telephone calling service,
by the purchaser. [Notwithstanding the foregoing, where a transportation
service described in paragraph ten of subdivision (c) of section  eleven
hundred  five  of  this  chapter  begins in one jurisdiction but ends in
another jurisdiction, any tax imposed pursuant to the authority of  this
article shall be due the jurisdiction or jurisdictions where the service
commenced.]
  S  6.  This  act  shall take effect immediately and shall apply to the
quarterly period, as described in subdivision (b) of section 1136 of the
tax law, next commencing September 1, 2015 and shall apply in accordance
with the applicable transitional provisions in sections 1106 and 1217 of
the tax law.

                                 PART SS

  Section 1. Paragraph 1 of subdivision (a) of section 1115 of  the  tax
law,  as  amended  by  section  1 of part O of chapter 63 of the laws of
2000, is amended to read as follows:
  (1) Food, food products, beverages, dietary foods and  health  supple-
ments,  sold  for  human  consumption  but  not  including (i) candy and
confectionery, (ii) fruit drinks which contain less than seventy percent
of natural fruit juice, (iii) soft drinks, sodas and beverages  such  as

S. 6359--C                         330

are  ordinarily  dispensed  at soda fountains or in connection therewith
(other than coffee, tea and cocoa) and (iv) beer, wine or other alcohol-
ic beverages, all of which shall be subject  to  the  retail  sales  and
compensating  use taxes, whether or not the item is sold in liquid form.
The food and drink excluded from the exemption provided  by  this  para-
graph under subparagraphs (i), (ii) and (iii) of this paragraph shall be
exempt  under  this  paragraph  when  sold  for [seventy-five cents] ONE
DOLLAR AND FIFTY CENTS or less through any vending machine activated  by
the use of coin, currency, credit card or debit card. With the exception
of  the  provision  in  this  paragraph  providing  for an exemption for
certain food or drink sold for [seventy-five cents] ONE DOLLAR AND FIFTY
CENTS  or  less  through  vending  machines,  nothing  herein  shall  be
construed as exempting food or drink from the tax imposed under subdivi-
sion (d) of section eleven hundred five OF THIS ARTICLE.
  S 2. This act shall take effect April 1, 2014.

                                 PART TT

  Section 1. The tax law is amended by adding a new section 24-a to read
as follows:
  S 24-A. MUSICAL AND THEATRICAL PRODUCTION CREDIT. (A) (1) ALLOWANCE OF
CREDIT. A TAXPAYER WHICH IS A QUALIFIED PRODUCTION FACILITY, OR WHICH IS
A  SOLE  PROPRIETOR OF OR A MEMBER OF A PARTNERSHIP WHICH IS A QUALIFIED
PRODUCTION FACILITY, AND WHICH SUBJECT TO TAX UNDER  ARTICLE  NINE-A  OR
TWENTY-TWO  OF THIS CHAPTER, SHALL BE ALLOWED A CREDIT AGAINST SUCH TAX,
PURSUANT TO THE PROVISIONS  REFERRED  TO  IN  SUBDIVISION  (C)  OF  THIS
SECTION, AND TO BE COMPUTED AS PROVIDED IN THIS SECTION.
  (2)  THE  AMOUNT OF THE CREDIT SHALL BE THE PRODUCT (OR PRO RATA SHARE
OF THE PRODUCT, IN THE CASE OF A MEMBER OF A PARTNERSHIP) OF TWENTY-FIVE
PERCENT AND THE SUM OF THE PRODUCTION AND PERFORMANCE  EXPENDITURES  AND
THE TRANSPORTATION EXPENDITURES. IF THE AMOUNT OF THE CREDIT IS AT LEAST
ONE MILLION DOLLARS BUT LESS THAN FIVE MILLION DOLLARS, THE CREDIT SHALL
BE CLAIMED OVER A TWO YEAR PERIOD BEGINNING IN THE FIRST TAXABLE YEAR IN
WHICH THE CREDIT MAY BE CLAIMED AND IN THE NEXT SUCCEEDING TAXABLE YEAR,
WITH  ONE-HALF  OF  THE  AMOUNT  OF CREDIT ALLOWED BEING CLAIMED IN EACH
YEAR. IF THE AMOUNT OF THE CREDIT IS AT LEAST FIVE MILLION DOLLARS,  THE
CREDIT  SHALL BE CLAIMED OVER A THREE YEAR PERIOD BEGINNING IN THE FIRST
TAXABLE YEAR IN WHICH THE CREDIT MAY BE CLAIMED  AND  IN  THE  NEXT  TWO
SUCCEEDING  TAXABLE  YEARS,  WITH  ONE-THIRD OF THE AMOUNT OF THE CREDIT
ALLOWED BEING CLAIMED IN EACH YEAR.
  (3) NO  PRODUCTION  AND  PERFORMANCE  EXPENDITURES  OR  TRANSPORTATION
EXPENDITURES USED BY A TAXPAYER EITHER AS THE BASIS FOR THE ALLOWANCE OF
THE  CREDIT  PROVIDED FOR PURSUANT TO THIS SECTION OR USED IN THE CALCU-
LATION OF THE CREDIT PROVIDED PURSUANT TO THIS SECTION SHALL BE USED  BY
SUCH  TAXPAYER  TO CLAIM ANY OTHER CREDIT ALLOWED PURSUANT TO THIS CHAP-
TER.
  (B) DEFINITIONS. AS USED IN THIS SECTION, THE  FOLLOWING  TERMS  SHALL
HAVE THE FOLLOWING MEANINGS:
  (1)  "ACCREDITED  THEATER  PRODUCTION"  MEANS  A FOR-PROFIT LIVE STAGE
PRESENTATION IN A QUALIFIED PRODUCTION FACILITY  AND  CERTIFIED  BY  THE
GOVERNOR'S  OFFICE  OF MOTION PICTURE AND TELEVISION DEVELOPMENT THAT IS
EITHER:  (I)  A  PRE-BROADWAY  PRODUCTION,  OR  (II)   A   POST-BROADWAY
PRODUCTION.
  (2)   "ADVERTISING  AND  PUBLIC  RELATIONS  EXPENDITURE"  MEANS  COSTS
INCURRED WITHIN THE STATE BY  THE  ACCREDITED  THEATER  PRODUCTIONS  FOR
GOODS  OR  SERVICES RELATED TO THE NATIONAL MARKETING, PUBLIC RELATIONS,

S. 6359--C                         331

CREATION AND PLACEMENT OF PRINT, ELECTRONIC, TELEVISION, BILLBOARDS  AND
OTHER FORMS OF ADVERTISING TO PROMOTE THE ACCREDITED THEATER PRODUCTION.
  (3)  "PAYROLL" MEANS ALL SALARIES, WAGES, FEES, AND OTHER COMPENSATION
INCLUDING RELATED BENEFITS FOR SERVICES  PERFORMED  AND  COSTS  INCURRED
WITHIN THE STATE.
  (4)  "PRE-BROADWAY  PRODUCTION" MEANS A LIVE STAGE PRODUCTION THAT, IN
ITS ORIGINAL OR ADAPTIVE VERSION, IS PERFORMED IN A QUALIFIED PRODUCTION
FACILITY HAVING A PRESENTATION SCHEDULED FOR BROADWAY'S THEATER DISTRICT
IN THE CITY OF NEW YORK WITHIN  TWELVE  MONTHS  AFTER  ITS  PRESENTATION
OUTSIDE OF THE CITY OF NEW YORK.
  (5)  "POST-BROADWAY PRODUCTION" MEANS A LIVE STAGE PRODUCTION THAT, IN
ITS ORIGINAL OR ADAPTIVE VERSION, IS PERFORMED IN A QUALIFIED PRODUCTION
FACILITY AND OPENS ITS NATIONAL TOUR IN THIS STATE, BUT OUTSIDE  OF  THE
CITY  OF NEW YORK, AFTER A PRESENTATION SCHEDULED FOR BROADWAY'S THEATER
DISTRICT IN THE CITY OF NEW YORK.
  (6) "PRODUCTION AND PERFORMANCE EXPENDITURES" MEANS A  CONTEMPORANEOUS
EXCHANGE  OF  CASH  OR  CASH EQUIVALENT FOR GOODS OR SERVICES RELATED TO
DEVELOPMENT, PRODUCTION, PERFORMANCE OR OPERATING EXPENDITURES  INCURRED
IN  THIS  STATE  FOR  A  QUALIFIED THEATER PRODUCTION INCLUDING, BUT NOT
LIMITED TO, EXPENDITURES FOR DESIGN, CONSTRUCTION AND OPERATION, INCLUD-
ING SETS, SPECIAL AND  VISUAL  EFFECTS,  COSTUMES,  WARDROBES,  MAKE-UP,
ACCESSORIES,  COSTS  ASSOCIATED  WITH SOUND, LIGHTING, STAGING, PAYROLL,
TRANSPORTATION EXPENDITURES, ADVERTISING AND PUBLIC  RELATIONS  EXPENDI-
TURES,  FACILITY  EXPENSES, RENTALS, PER DIEMS, ACCOMMODATIONS AND OTHER
RELATED COSTS.
  (7) "QUALIFIED PRODUCTION FACILITY" MEANS A FACILITY  LOCATED  IN  THE
STATE  IN  WHICH LIVE THEATRICAL PRODUCTIONS ARE, OR ARE INTENDED TO BE,
EXCLUSIVELY PRESENTED THAT CONTAINS AT LEAST ONE STAGE, A SEATING CAPAC-
ITY OF ONE THOUSAND FIVE HUNDRED OR  MORE  SEATS,  AND  DRESSING  ROOMS,
STORAGE  AREAS,  AND OTHER ANCILLARY AMENITIES NECESSARY FOR THE ACCRED-
ITED THEATER PRODUCTION.
  (8) (I) "TRANSPORTATION EXPENDITURES" MEANS EXPENDITURES FOR THE PACK-
AGING, CRATING, AND TRANSPORTATION BOTH TO THE STATE FOR USE IN A QUALI-
FIED THEATER PRODUCTION OF SETS, COSTUMES, OR  OTHER  TANGIBLE  PROPERTY
CONSTRUCTED  OR  MANUFACTURED  OUT OF STATE, AND/OR FROM THE STATE AFTER
USE IN A QUALIFIED THEATER PRODUCTION OF SETS, COSTUMES, OR OTHER TANGI-
BLE PROPERTY CONSTRUCTED OR MANUFACTURED IN THIS STATE AND THE TRANSPOR-
TATION OF THE CAST AND CREW TO AND  FROM  THE  STATE.  SUCH  TERM  SHALL
INCLUDE  THE PACKAGING, CRATING, AND TRANSPORTING OF PROPERTY AND EQUIP-
MENT USED FOR SPECIAL AND VISUAL EFFECTS, SOUND, LIGHTING, AND  STAGING,
COSTUMES,  WARDROBES,  MAKE-UP AND RELATED ACCESSORIES AND MATERIALS, AS
WELL AS ANY OTHER PERFORMANCE OR PRODUCTION-RELATED PROPERTY AND  EQUIP-
MENT.
  (II) TRANSPORTATION EXPENDITURES SHALL NOT INCLUDE ANY COSTS TO TRANS-
PORT  PROPERTY  AND  EQUIPMENT  TO BE USED ONLY FOR FILMING AND NOT IN A
QUALIFIED THEATER PRODUCTION, ANY INDIRECT COSTS, AND EXPENDITURES  THAT
ARE  LATER  REIMBURSED BY A THIRD PARTY, OR ANY AMOUNTS THAT ARE PAID TO
PERSONS OR ENTITIES AS A RESULT OF THEIR PARTICIPATION IN  PROFITS  FROM
THE EXPLOITATION OF THE PRODUCTION.
  (C)  CROSS-REFERENCES.  FOR  APPLICATION OF THE CREDIT PROVIDED FOR IN
THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  (1) ARTICLE 9-A: SECTION 210: SUBDIVISION 36-A.
  (2) ARTICLE 22: SECTION 606: SUBSECTION (U).
  (D) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER, EMPLOYEES AND OFFI-
CERS OF THE GOVERNOR'S OFFICE OF MOTION PICTURE AND TELEVISION  DEVELOP-
MENT  AND  THE DEPARTMENT SHALL BE ALLOWED AND ARE DIRECTED TO SHARE AND

S. 6359--C                         332

EXCHANGE INFORMATION REGARDING THE  CREDITS  APPLIED  FOR,  ALLOWED,  OR
CLAIMED  PURSUANT  TO  THIS  SECTION  AND TAXPAYERS WHO ARE APPLYING FOR
CREDITS OR WHO ARE CLAIMING CREDITS, INCLUDING INFORMATION CONTAINED  IN
OR  DERIVED  FROM  CREDIT  CLAIM  FORMS  SUBMITTED TO THE DEPARTMENT AND
APPLICATIONS FOR CERTIFICATION SUBMITTED TO  THE  GOVERNOR'S  OFFICE  OF
MOTION PICTURE AND TELEVISION DEVELOPMENT.
  S 2. Section 210 of the tax law is amended by adding a new subdivision
36-a to read as follows:
  36-A. MUSICAL AND THEATRICAL PRODUCTION CREDIT. (A) ALLOWANCE OF CRED-
IT.    A  TAXPAYER  WHO IS ELIGIBLE PURSUANT TO SECTION TWENTY-FOUR-A OF
THIS CHAPTER SHALL BE ALLOWED A CREDIT TO BE  COMPUTED  AS  PROVIDED  IN
SUCH SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  THE  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF  THIS  SECTION.
PROVIDED, HOWEVER, THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS
SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX  TO  SUCH  AMOUNT,  THE
EXCESS  SHALL  BE  TREATED  AS  AN  OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  FURTHER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  S  3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new clause  (xxxvii)  to  read  as
follows:
(XXXVII) MUSICAL AND THEATRICAL      AMOUNT OF CREDIT FOR
PRODUCTION CREDIT UNDER              THE SUM OF THE PRODUCTION AND
SUBSECTION (U)                       PERFORMANCE EXPENDITURES AND
                                     THE TRANSPORTATION EXPENDITURES
                                     IN AN ACCREDITED THEATRE
                                     PRODUCTION UNDER SUBDIVISION
                                     THIRTY-SIX-A OF SECTION TWO
                                     HUNDRED TEN
  S  4. Section 606 of the tax law is amended by adding a new subsection
(u) to read as follows:
  (U) MUSICAL AND THEATRICAL PRODUCTION CREDIT. (1) ALLOWANCE OF CREDIT.
A TAXPAYER WHO IS ELIGIBLE PURSUANT TO  SECTION  TWENTY-FOUR-A  OF  THIS
CHAPTER  SHALL  BE  ALLOWED  A CREDIT TO BE COMPUTED AS PROVIDED IN SUCH
SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (2) APPLICATION OF CREDIT. IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR EXCEEDS THE TAXPAYER'S TAX FOR SUCH
YEAR, THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDIT-
ED OR REFUNDED AS PROVIDED IN SECTION SIX  HUNDRED  EIGHTY-SIX  OF  THIS
ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  S 5. This act shall take effect January 1, 2015.

                                 PART UU

  Section 1. Subsections (yy) and (zz) of section 606 of the tax law, as
relettered  by section 5 of part H of chapter 1 of the laws of 2003, are
relettered subsections (yyy) and (zzz) and  a  new  subsection  (xx)  is
added to read as follows:
  (XX)  CREDIT  FOR  REHABILITATION OF DISTRESSED COMMERCIAL PROPERTIES.
(1) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOUSAND
FOURTEEN,  A TAXPAYER SHALL BE ALLOWED A CREDIT AS HEREINAFTER PROVIDED,
AGAINST THE TAX IMPOSED BY THIS ARTICLE, IN AN AMOUNT  EQUAL  TO  THIRTY

S. 6359--C                         333

PERCENT OF THE QUALIFIED REHABILITATION EXPENDITURES MADE BY THE TAXPAY-
ER WITH RESPECT TO A QUALIFIED DISTRESSED COMMERCIAL PROPERTY. PROVIDED,
HOWEVER, THE CREDIT SHALL NOT EXCEED ONE HUNDRED THOUSAND DOLLARS.
  (2)  TAX  CREDITS ALLOWED PURSUANT TO THIS SUBSECTION SHALL BE ALLOWED
IN THE TAXABLE YEAR IN WHICH THE PROPERTY IS DEEMED A CERTIFIED REHABIL-
ITATION.
  (3) IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER  THIS  SUBSECTION  FOR
ANY  TAXABLE  YEAR  SHALL  EXCEED  THE TAXPAYER'S TAX FOR SUCH YEAR, THE
EXCESS MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS,  AND  MAY  BE
APPLIED AGAINST THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS, BUT SHALL NOT
EXCEED TWENTY-FIVE THOUSAND DOLLARS.
  (4)  (A)  THE  TERM  "QUALIFIED REHABILITATION EXPENDITURE" MEANS, FOR
PURPOSES OF THIS SUBSECTION, ANY AMOUNT PROPERLY CHARGEABLE TO A CAPITAL
ACCOUNT:
  (I) IN CONNECTION WITH THE CERTIFIED  REHABILITATION  OF  A  QUALIFIED
DISTRESSED COMMERCIAL PROPERTY, AND
  (II)  FOR  PROPERTY  FOR  WHICH  DEPRECIATION WOULD BE ALLOWABLE UNDER
SECTION 168 OF THE INTERNAL REVENUE CODE.
  (B) SUCH TERM SHALL NOT INCLUDE (I) THE COST OF ACQUIRING ANY BUILDING
OR INTEREST THEREIN, (II) ANY EXPENDITURE ATTRIBUTABLE TO  THE  ENLARGE-
MENT  OF  AN  EXISTING  BUILDING, OR (III) ANY EXPENDITURE MADE PRIOR TO
JANUARY FIRST, TWO THOUSAND FOURTEEN OR AFTER DECEMBER THIRTY-FIRST, TWO
THOUSAND NINETEEN.
  (5) THE TERM "CERTIFIED REHABILITATION" MEANS, FOR  PURPOSES  OF  THIS
SUBSECTION,  ANY  REHABILITATION  OF  A  CERTIFIED DISTRESSED COMMERCIAL
PROPERTY WHICH HAS BEEN APPROVED AND CERTIFIED BY A LOCAL GOVERNMENT  AS
BEING  COMPLETED,  WITH  A CERTIFICATE OF OCCUPANCY ISSUED, AND THAT THE
COSTS ARE CONSISTENT WITH THE WORK COMPLETED. SUCH  CERTIFICATION  SHALL
BE  ACCEPTABLE  AS PROOF THAT THE EXPENDITURES RELATED TO SUCH REHABILI-
TATION QUALIFY AS QUALIFIED REHABILITATION EXPENDITURES FOR PURPOSES  OF
THE CREDIT ALLOWED UNDER PARAGRAPH ONE OF THIS SUBSECTION.
  (6) (A) THE TERM "QUALIFIED DISTRESSED COMMERCIAL PROPERTY" MEANS, FOR
PURPOSES  OF  THIS  SUBSECTION, A DISTRESSED COMMERCIAL PROPERTY LOCATED
WITHIN NEW YORK STATE:
  (I) WHICH HAS BEEN SUBSTANTIALLY REHABILITATED,
  (II) WHICH IS OWNED BY THE TAXPAYER, AND
  (III) WHICH IS LOCATED WITHIN A DISTRESSED COMMERCIAL AREA, AS IDENTI-
FIED BY EACH LOCALITY THROUGH LOCAL LAW, THAT IS DEEMED AN AREA IN  NEED
OF COMMUNITY RENEWAL DUE TO DILAPIDATION AND VACANCIES.
  (B)  IF  THE  DISTRESSED  COMMERCIAL PROPERTY IS RENTAL PROPERTY, SUCH
PROPERTY SHALL HAVE BEEN MORE THAN  THIRTY  PERCENT  VACANT  FOR  TWELVE
MONTHS WHILE ACTIVELY MARKETED FOR LEASE.
  (C) A BUILDING SHALL BE TREATED AS HAVING BEEN "SUBSTANTIALLY REHABIL-
ITATED" IF THE QUALIFIED REHABILITATION EXPENDITURES IN RELATION TO SUCH
BUILDING TOTAL TEN THOUSAND DOLLARS OR MORE.
  (7)  (A)  IF  THE TAXPAYER DISPOSES OF SUCH TAXPAYER'S INTEREST IN THE
QUALIFIED DISTRESSED COMMERCIAL PROPERTY, OR SUCH PROPERTY CEASES TO  BE
USED  AS  A  COMMERCIAL  PROPERTY  OF  THE TAXPAYER WITHIN FIVE YEARS OF
RECEIVING THE CREDIT UNDER THIS SUBSECTION, THE TAXPAYER'S  TAX  IMPOSED
BY THIS ARTICLE FOR THE TAXABLE YEAR IN WHICH SUCH DISPOSITION OR CESSA-
TION  OCCURS  SHALL  BE INCREASED BY THE RECAPTURE PORTION OF THE CREDIT
ALLOWED UNDER THIS SUBSECTION FOR ALL PRIOR TAXABLE YEARS  WITH  RESPECT
TO SUCH REHABILITATION.
  (B)  FOR PURPOSES OF SUBPARAGRAPH (A) OF THIS PARAGRAPH, THE RECAPTURE
PORTION SHALL BE THE PRODUCT OF THE AMOUNT  OF  CREDIT  CLAIMED  BY  THE
TAXPAYER MULTIPLIED BY A RATIO, THE NUMERATOR OF WHICH IS EQUAL TO SIXTY

S. 6359--C                         334

LESS  THE  NUMBER  OF MONTHS THE BUILDING IS OWNED OR USED AS COMMERCIAL
PROPERTY BY THE TAXPAYER AND THE DENOMINATOR OF WHICH IS SIXTY.
  S  2. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new clause  (xxxvii)  to  read  as
follows:
(XXXVII) CREDIT FOR REHABILITATION    AMOUNT OF CREDIT UNDER
OF DISTRESSED COMMERCIAL PROPERTIES   SUBDIVISION FORTY-EIGHT
UNDER SUBSECTION (XX)                 OF SECTION TWO HUNDRED TEN
  S 3. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. CREDIT FOR REHABILITATION OF DISTRESSED COMMERCIAL PROPERTIES. (1)
FOR  TAXABLE  YEARS  BEGINNING  ON  OR AFTER JANUARY FIRST, TWO THOUSAND
FOURTEEN, A TAXPAYER SHALL BE ALLOWED A CREDIT AS HEREINAFTER  PROVIDED,
AGAINST  THE  TAX  IMPOSED BY THIS ARTICLE, IN AN AMOUNT EQUAL TO THIRTY
PERCENT OF THE QUALIFIED REHABILITATION EXPENDITURES MADE BY THE TAXPAY-
ER WITH RESPECT TO A QUALIFIED DISTRESSED COMMERCIAL PROPERTY. PROVIDED,
HOWEVER, THE CREDIT SHALL NOT EXCEED ONE HUNDRED THOUSAND DOLLARS.
  (2) TAX CREDITS ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE  ALLOWED
IN THE TAXABLE YEAR IN WHICH THE PROPERTY IS DEEMED A CERTIFIED REHABIL-
ITATION.
  (3)  IF  THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR
ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S  TAX  FOR  SUCH  YEAR,  THE
EXCESS  MAY  BE  CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, AND MAY BE
APPLIED AGAINST THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS, BUT SHALL NOT
EXCEED TWENTY-FIVE THOUSAND DOLLARS.
  (4) (A) THE TERM "QUALIFIED  REHABILITATION  EXPENDITURE"  MEANS,  FOR
PURPOSES  OF THIS SUBDIVISION, ANY AMOUNT PROPERLY CHARGEABLE TO A CAPI-
TAL ACCOUNT:
  (I) IN CONNECTION WITH THE CERTIFIED  REHABILITATION  OF  A  QUALIFIED
COMMERCIAL PROPERTY, AND
  (II)  FOR  PROPERTY  FOR  WHICH  DEPRECIATION WOULD BE ALLOWABLE UNDER
SECTION 168 OF THE INTERNAL REVENUE CODE.
  (B) SUCH TERM SHALL NOT INCLUDE (I) THE COST OF ACQUIRING ANY BUILDING
OR INTEREST THEREIN, (II) ANY EXPENDITURE ATTRIBUTABLE TO  THE  ENLARGE-
MENT  OF  AN  EXISTING  BUILDING, OR (III) ANY EXPENDITURE MADE PRIOR TO
JANUARY FIRST, TWO THOUSAND FOURTEEN OR AFTER DECEMBER THIRTY-FIRST, TWO
THOUSAND NINETEEN.
  (5) THE TERM "CERTIFIED REHABILITATION" MEANS, FOR  PURPOSES  OF  THIS
SUBDIVISION,  ANY  REHABILITATION  OF  A CERTIFIED DISTRESSED COMMERCIAL
PROPERTY WHICH HAS BEEN APPROVED AND CERTIFIED BY A LOCAL GOVERNMENT  AS
BEING  COMPLETED,  WITH  A CERTIFICATE OF OCCUPANCY ISSUED, AND THAT THE
COSTS ARE CONSISTENT WITH THE WORK COMPLETED. SUCH  CERTIFICATION  SHALL
BE  ACCEPTABLE  AS PROOF THAT THE EXPENDITURES RELATED TO SUCH REHABILI-
TATION QUALIFY AS QUALIFIED REHABILITATION EXPENDITURES FOR PURPOSES  OF
THE CREDIT ALLOWED UNDER PARAGRAPH ONE OF THIS SUBDIVISION.
  (6) (A) THE TERM "QUALIFIED DISTRESSED COMMERCIAL PROPERTY" MEANS, FOR
PURPOSES  OF  THIS SUBDIVISION, A DISTRESSED COMMERCIAL PROPERTY LOCATED
WITHIN NEW YORK STATE:
  (I) WHICH HAS BEEN SUBSTANTIALLY REHABILITATED,
  (II) WHICH IS OWNED BY THE TAXPAYER, AND
  (III) WHICH IS LOCATED WITHIN A DISTRESSED COMMERCIAL AREA, AS IDENTI-
FIED BY EACH LOCALITY THROUGH LOCAL LAW, THAT IS DEEMED AN AREA IN  NEED
OF COMMUNITY RENEWAL DUE TO DILAPIDATION AND VACANCIES.
  (B)  IF  THE  DISTRESSED  COMMERCIAL PROPERTY IS RENTAL PROPERTY, SUCH
PROPERTY SHALL HAVE BEEN MORE THAN  THIRTY  PERCENT  VACANT  FOR  TWELVE
MONTHS WHILE ACTIVELY MARKETED FOR LEASE.

S. 6359--C                         335

  (C) A BUILDING SHALL BE TREATED AS HAVING BEEN "SUBSTANTIALLY REHABIL-
ITATED" IF THE QUALIFIED REHABILITATION EXPENDITURES IN RELATION TO SUCH
BUILDING TOTAL TEN THOUSAND DOLLARS OR MORE.
  (7)  (A)  IF  THE TAXPAYER DISPOSES OF SUCH TAXPAYER'S INTEREST IN THE
QUALIFIED DISTRESSED COMMERCIAL PROPERTY, OR SUCH PROPERTY CEASES TO  BE
USED  AS  A  COMMERCIAL  PROPERTY  OF  THE TAXPAYER WITHIN FIVE YEARS OF
RECEIVING THE CREDIT UNDER THIS SUBDIVISION, THE TAXPAYER'S TAX  IMPOSED
BY THIS ARTICLE FOR THE TAXABLE YEAR IN WHICH SUCH DISPOSITION OR CESSA-
TION  OCCURS  SHALL  BE INCREASED BY THE RECAPTURE PORTION OF THE CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ALL PRIOR TAXABLE YEARS WITH  RESPECT
TO SUCH REHABILITATION.
  (B)  FOR PURPOSES OF SUBPARAGRAPH (A) OF THIS PARAGRAPH, THE RECAPTURE
PORTION SHALL BE THE PRODUCT OF THE AMOUNT  OF  CREDIT  CLAIMED  BY  THE
TAXPAYER MULTIPLIED BY A RATIO, THE NUMERATOR OF WHICH IS EQUAL TO SIXTY
LESS  THE  NUMBER  OF MONTHS THE BUILDING IS OWNED OR USED AS COMMERCIAL
PROPERTY BY THE TAXPAYER AND THE DENOMINATOR OF WHICH IS SIXTY.
  S 4. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

                                 PART VV

  Section 1. Subdivisions 2, 3, 4, 5 and 6 of section 4 of  chapter  912
of  the  laws of 1920 relating to the regulation of boxing, sparring and
wrestling, subdivisions 2 and 6 as amended by chapter 437 of the laws of
2002 and subdivisions 3, 4 and 5 as added by chapter 603 of the laws  of
1981, are amended to read as follows:
  2. The advisory board shall have power and it shall be the duty of the
board  to  prepare and submit to the commission for approval regulations
and standards for the physical examination of  professional  boxers  AND
PROFESSIONAL  COMBATIVE  SPORTS  PARTICIPANTS including, without limita-
tion, pre-fight and/or post-fight examinations and  periodic  comprehen-
sive  examinations.  The  board  shall  continue to serve in an advisory
capacity to the commission and from time to time prepare and  submit  to
the  commission  for approval, such additional regulations and standards
of examination as in their judgment will safeguard the physical  welfare
of  professional  boxers  licensed by the commission. The advisory board
shall recommend to the commission  from  time  to  time  such  qualified
physicians,  for  the  purpose  of  conducting  physical examinations of
professional boxers AND PROFESSIONAL COMBATIVE SPORTS  PARTICIPANTS  and
other  services  as the rules of the commission shall provide; and shall
recommend to the commission a schedule of fees to be paid to  physicians
for such examinations and other services as required by this act.
  3.  The  advisory  board  shall  develop appropriate medical education
programs for all commission personnel involved in the conduct of  boxing
and  sparring  matches  or  exhibitions OR PROFESSIONAL COMBATIVE SPORTS
MATCHES OR EXHIBITIONS so that such personnel can recognize and act upon
evidence of potential or actual adverse medical indications in a partic-
ipant prior to or during the course of a match OR EXHIBITION.
  4. The advisory board shall review the credentials and performance  of
each  commission  physician  on  an annual basis as a condition of reap-
pointment of  each  such  physician,  including  each  such  physician's
comprehension of the medical literature on boxing OR PROFESSIONAL COMBA-
TIVE SPORTS referred to in subdivision five of this section.
  5.  The advisory board shall recommend to the commission a compilation
of medical publications on the medical aspects of boxing OR PROFESSIONAL
COMBATIVE SPORTS which shall be maintained by the commission and be made

S. 6359--C                         336

available for review to all commission personnel involved in the conduct
of any boxing or sparring match or exhibition OR PROFESSIONAL  COMBATIVE
SPORTS MATCH OR EXHIBITION.
  6. The advisory board shall also advise the commission on any study of
equipment, procedures or personnel which will, in their opinion, promote
the  safety  of  boxing  participants  AND PROFESSIONAL COMBATIVE SPORTS
PARTICIPANTS.
  S 2. Section 5-a of chapter 912 of the laws of 1920  relating  to  the
regulation  of boxing, sparring and wrestling, as added by chapter 14 of
the laws of 1997, is amended to read as follows:
  S 5-a. Combative sports. 1. DEFINITIONS. AS USED IN THIS SECTION:
  (A) "BOARD" MEANS MEDICAL ADVISORY BOARD  AS  ESTABLISHED  IN  SECTION
FOUR OF THIS ACT.
  (B)  A  "combative sport" shall mean any professional match or exhibi-
tion other than boxing, sparring, wrestling or martial arts wherein  the
contestants deliver, or are not forbidden by the applicable rules there-
of from delivering kicks, punches or blows of any kind to the body of an
opponent  or  opponents.  For  the  purposes  of  this section, the term
"martial arts" shall include any professional match or exhibition  OF  A
SINGLE  DISCIPLINE sanctioned by AN ORGANIZATION APPROVED BY THE COMMIS-
SION, INCLUDING, BUT NOT LIMITED TO, any of the following organizations:
U.S. Judo Association, U.S. Judo, Inc., U.S. Judo Federation,  U.S.  Tae
Kwon  Do  Union,  North American Sport Karate Association, U.S.A. Karate
Foundation, U.S. Karate, Inc., World  Karate  Association,  Professional
Karate  Association,  Karate  International, International Kenpo Associ-
ation, or World Wide Kenpo Association. The  commission  [is  authorized
to]  SHALL  promulgate  regulations  which  would establish a process to
allow for the inclusion or removal of martial  arts  organizations  from
the above list. Such process shall include but not be limited to consid-
eration  of  the  following  factors:    [(a)] (1) is the organization's
primary purpose to provide instruction in self defense techniques; [(b)]
(2) does the organization require  the  use  of  hand,  feet  and  groin
protection during any competition or bout; and [(c)] (3) does the organ-
ization  have  an  established  set  of rules that require the immediate
termination of any competition or bout when any participant has received
severe punishment or is in danger of suffering serious physical injury.
  (C) "COMMISSION" MEANS THE STATE ATHLETIC COMMISSION AS  PROVIDED  FOR
IN  SECTION  ONE OF THIS CHAPTER OR AN AGENT OF THE COMMISSION ACTING ON
ITS BEHALF.
  (D) "MIXED MARTIAL  ARTS"  MEANS  ANY  PROFESSIONAL  COMBATIVE  SPORTS
COMPETITION  WHEREIN THE RULES OF SUCH COMPETITION SUBJECT TO THE APPLI-
CABLE LIMITATIONS AS SET FORTH BY THE COMMISSION AUTHORIZE  PROFESSIONAL
COMBATIVE  SPORTS MATCHES OR EXHIBITIONS BETWEEN VARIOUS FIGHTING DISCI-
PLINES, INCLUDING THE UTILIZATION OF PERMITTED MARTIAL ARTS  TECHNIQUES,
INCLUDING  STRIKING,  KICKING  AND  GRAPPLING.  NO  NON-PROFESSIONAL  OR
AMATEUR BOUT, EXHIBITION OR PARTICIPANT  SHALL  BE  AUTHORIZED  BY  THIS
SECTION.
  (E) "PROFESSIONAL COMBATIVE SPORTS PARTICIPANT" OR "PARTICIPANT" SHALL
MEAN A COMBATIVE SPORTS FIGHTER WHO COMPETES FOR A MONEY PRIZE OR TEACH-
ES  OR  PURSUES  OR  ASSISTS  IN THE PRACTICE OF MIXED MARTIAL ARTS AS A
MEANS OF OBTAINING A LIVELIHOOD  OR  PECUNIARY  GAIN,  AND  ANY  CONTEST
CONFORMING TO THE RULES, REGULATIONS AND REQUIREMENTS OF THIS SECTION.
  (F) "PROFESSIONAL COMBATIVE SPORTS MATCH OR EXHIBITION" SHALL MEAN ANY
MATCH  OR  EXHIBITION  THAT  MUST  BE  APPROVED  BY THE COMMISSION WHERE
PROFESSIONAL COMBATIVE SPORTS PARTICIPANTS RECEIVE CONSIDERATION OF  ANY
VALUE OR AN ADMISSION IS CHARGED.

S. 6359--C                         337

  1-A.  COMMISSION REVIEW. THE COMMISSION SHALL REVIEW EACH MARTIAL ARTS
SANCTIONING ORGANIZATION, INCLUDING THOSE LISTED IN SUBDIVISION  ONE  OF
THIS  SECTION,  AT  LEAST  BIENNIALLY, OR SOONER IF DETERMINED NECESSARY
BASED UPON THE PERIODIC COMPLIANCE CHECKS OR COMPLAINTS TO  THE  COMMIS-
SION,  TO  DETERMINE  CONTINUATION  OF  THE  COMMISSION'S  APPROVAL. THE
COMMISSION SHALL CONTINUE APPROVAL OR SHALL SUSPEND OR  REVOKE  APPROVAL
BASED  UPON COMPLIANCE OF THE ORGANIZATION WITH THE APPROVED SANCTIONING
STANDARDS AND ITS ABILITY TO  SUPERVISE  MATCHES  IN  THE  STATE.    THE
COMMISSION  SHALL  ACT UPON ANY APPLICATION FOR INCLUSION IN THE LIST IN
PARAGRAPH (B) OF SUBDIVISION ONE OF THIS SECTION WITHIN  SIXTY  DAYS  OF
THE DATE SUCH APPLICATION IS MADE TO THE COMMISSION.
  1-B.  MIXED  MARTIAL ARTS COMPETITION. THE COMMISSION SHALL PROMULGATE
RULES AND REGULATIONS TO ALLOW FOR MIXED MARTIAL ARTS COMPETITIONS TO BE
CONDUCTED, HELD, OR GIVEN WITHIN THE STATE OF NEW YORK AND  SHALL  ALLOW
FOR  LICENSES TO BE APPROVED BY THE COMMISSION FOR SUCH MATCHES OR EXHI-
BITIONS. THE COMMISSION IS AUTHORIZED  TO  PROMULGATE  RULES  AND  REGU-
LATIONS  TO CARRY OUT THE PROVISIONS OF THIS SUBDIVISION. SUCH RULES AND
REGULATIONS SHALL INCLUDE, BUT  NOT  BE  LIMITED  TO,  THE  ADOPTION  OF
UNIFIED RULES OF MIXED MARTIAL ARTS, A LICENSING PROCESS FOR MATCHES AND
EXHIBITIONS,  A  FEE SCHEDULE FOR SUCH LICENSES, PROCEDURES TO ALLOW FOR
THE PARTICIPATION, PROMOTION, AND ADVANCEMENT OF SUCH EVENTS, THE HEALTH
AND SAFETY OF PARTICIPANTS, AND THE BEST INTERESTS OF MIXED MARTIAL ARTS
AND THE ADOPTION OF RULES AND REGULATIONS FOR LICENSING  AND  REGULATION
OF  ANY AND ALL GYMS, CLUBS, TRAINING CAMPS AND OTHER ORGANIZATIONS THAT
MAINTAIN TRAINING FACILITIES PROVIDING CONTACT SPARRING FOR PERSONS  WHO
PREPARE FOR PARTICIPATION IN SUCH PROFESSIONAL COMBATIVE SPORTS OR EXHI-
BITIONS, EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION.
  (B)  THE  COMMISSION  IS  AUTHORIZED  AND DIRECTED TO REQUIRE THAT ALL
SITES WHEREIN PROFESSIONAL COMBATIVE SPORTS ARE CONDUCTED  SHALL  COMPLY
WITH  STATE  AND  APPLICABLE  LOCAL SANITARY CODES APPROPRIATE TO SCHOOL
ATHLETIC FACILITIES.
  2. [No combative sport shall be conducted, held or  given  within  the
state of New York, and no licenses may be approved by the commission for
such matches or exhibitions.
  3.  (a)  A  person  who knowingly advances or profits from a combative
sport activity shall be guilty of a class A misdemeanor,  and  shall  be
guilty of a class E felony if he or she has been convicted in the previ-
ous five years of violating this subdivision.
  (b)  A  person  advances a combative sport activity when, acting other
than as a spectator, he or she engages in conduct which materially  aids
any combative sport. Such conduct includes but is not limited to conduct
directed  toward  the creation, establishment or performance of a comba-
tive sport, toward the acquisition or maintenance of premises, parapher-
nalia, equipment or  apparatus  therefor,  toward  the  solicitation  or
inducement of persons to attend or participate therein, toward the actu-
al  conduct of the performance thereof, toward the arrangement of any of
its financial or promotional phases, or toward  any  other  phase  of  a
combative  sport.  One  advances a combative sport activity when, having
substantial proprietary or other  authoritative  control  over  premises
being  used  with his or her knowledge for purposes of a combative sport
activity, he or she permits such to occur or continue or makes no effort
to prevent its occurrence or continuation.
  (c) A person profits from a combative sport activity when  he  or  she
accepts  or  receives money or other property with intent to participate
in the proceeds of a combative sport activity, or pursuant to an  agree-

S. 6359--C                         338

ment  or understanding with any person whereby he or she participates or
is to participate in the proceeds of a combative sport activity.
  (d)  Any  person  who  knowingly  advances or profits from a combative
sport activity shall also be subject to a civil penalty  not  to  exceed
for the first violation ten thousand dollars or twice the amount of gain
derived  therefrom  whichever  is greater, or for a subsequent violation
twenty thousand dollars or twice the amount of  gain  derived  therefrom
whichever  is  greater.  The  attorney  general  is  hereby empowered to
commence judicial proceedings to recover such penalties  and  to  obtain
injunctive  relief  to  enforce the provisions of this section.] PROFES-
SIONAL COMBATIVE SPORTS MATCHES AND EXHIBITIONS AUTHORIZED. NO COMBATIVE
SPORTS MATCH OR EXHIBITION SHALL BE CONDUCTED, HELD OR GIVEN WITHIN  THE
STATE  EXCEPT  IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION AND THE
RULES AND REGULATIONS PROMULGATED BY THE  COMMISSION  PURSUANT  THERETO.
THE COMMISSION SHALL DIRECT A REPRESENTATIVE TO BE PRESENT AT EACH PLACE
WHERE COMBATIVE SPORTS ARE TO BE HELD PURSUANT TO THE PROVISIONS OF THIS
SECTION.  SUCH  REPRESENTATIVE  SHALL  ASCERTAIN  THE  EXACT  CONDITIONS
SURROUNDING SUCH MATCH OR EXHIBITION AND MAKE A WRITTEN  REPORT  OF  THE
SAME IN THE MANNER AND FORM PRESCRIBED BY THE COMMISSION. SUCH COMBATIVE
SPORTS  MATCHES OR EXHIBITIONS MAY BE HELD IN ANY BUILDING FOR WHICH THE
COMMISSION IN ITS DISCRETION MAY ISSUE A LICENSE. WHERE  SUCH  MATCH  OR
EXHIBITION IS AUTHORIZED TO BE HELD IN A STATE OR CITY OWNED ARMORY, THE
PROVISION  OF THE MILITARY LAW IN RESPECT THERETO MUST BE COMPLIED WITH,
BUT NO SUCH MATCH OR EXHIBITION SHALL BE HELD IN A BUILDING WHOLLY  USED
FOR RELIGIOUS SERVICES.
  3. JURISDICTION OF COMMISSION. (A) THE COMMISSION SHALL HAVE AND HERE-
BY  IS VESTED WITH THE SOLE DIRECTION, MANAGEMENT, CONTROL AND JURISDIC-
TION OVER ALL PROFESSIONAL COMBATIVE SPORTS MATCHES OR EXHIBITIONS TO BE
CONDUCTED, HELD OR GIVEN WITHIN THE STATE  OF  NEW  YORK  AND  OVER  ALL
LICENSES TO ANY AND ALL PERSONS WHO PARTICIPATE IN SUCH COMBATIVE SPORTS
MATCHES  OR EXHIBITIONS AND OVER ANY AND ALL GYMS, CLUBS, TRAINING CAMPS
AND OTHER ORGANIZATIONS  THAT  MAINTAIN  TRAINING  FACILITIES  PROVIDING
CONTACT  SPARRING  FOR  PERSONS  WHO  PREPARE  FOR PARTICIPATION IN SUCH
PROFESSIONAL  COMBATIVE  SPORTS  OR  EXHIBITIONS,  EXCEPT  AS  OTHERWISE
PROVIDED IN THIS SECTION.
  (B)  THE  COMMISSION  IS  AUTHORIZED  AND DIRECTED TO REQUIRE THAT ALL
SITES WHEREIN PROFESSIONAL COMBATIVE SPORTS ARE CONDUCTED  SHALL  COMPLY
WITH  STATE  AND  APPLICABLE  LOCAL SANITARY CODES APPROPRIATE TO SCHOOL
ATHLETIC FACILITIES.
  4. ENTITIES  REQUIRED  TO  PROCURE  LICENSES;  PROFESSIONAL  COMBATIVE
SPORTS PARTICIPANTS DEFINED. EXCEPT AS OTHERWISE PROVIDED IN SUBDIVISION
SIX OF THIS SECTION, ALL CORPORATIONS, PERSONS, LIMITED LIABILITY COMPA-
NIES,  REFEREES,  JUDGES, CORPORATION TREASURERS, PROFESSIONAL COMBATIVE
SPORTS PARTICIPANTS,  THEIR  MANAGERS,  PROMOTERS,  TRAINERS  AND  CHIEF
SECONDS SHALL BE LICENSED BY THE COMMISSION, AND NO SUCH ENTITY SHALL BE
PERMITTED  TO PARTICIPATE, EITHER DIRECTLY OR INDIRECTLY, IN ANY PROFES-
SIONAL COMBATIVE SPORTS MATCH OR EXHIBITION,  OR  THE  HOLDING  THEREOF,
UNLESS  SUCH ENTITY SHALL HAVE FIRST PROCURED A LICENSE FROM THE COMMIS-
SION. THE COMMISSION SHALL ESTABLISH BY RULE  AND  REGULATION  LICENSING
STANDARDS  FOR REFEREES, JUDGES, MANAGERS, PROMOTERS, TRAINERS AND CHIEF
SECONDS.  ANY MATCH OR EXHIBITION CONFORMING TO THE  RULES,  REGULATIONS
AND  REQUIREMENTS  OF  THIS SECTION SHALL BE DEEMED TO BE A PROFESSIONAL
COMBATIVE SPORTS MATCH OR EXHIBITION.
  5. LICENSE TO ENTITIES. (A) THE COMMISSION  MAY,  IN  ITS  DISCRETION,
ISSUE A LICENSE TO CONDUCT OR HOLD PROFESSIONAL COMBATIVE SPORTS MATCHES
OR  EXHIBITIONS, SUBJECT TO THE PROVISIONS HEREOF, TO ANY PERSON, CORPO-

S. 6359--C                         339

RATION OR LIMITED LIABILITY COMPANY DULY INCORPORATED OR FORMED, HEREIN-
AFTER REFERRED TO AS "ENTITY".
  (B) A PROSPECTIVE LICENSEE MUST SUBMIT TO THE COMMISSION PROOF THAT IT
CAN FURNISH SUITABLE PREMISES IN WHICH SUCH MATCH OR EXHIBITION IS TO BE
HELD.
  (C)  UPON WRITTEN APPLICATION AND THE PAYMENT OF A FEE OF FIVE HUNDRED
DOLLARS WHICH MUST ACCOMPANY THE APPLICATION, THE COMMISSION  MAY  GRANT
TO ANY ENTITY HOLDING A LICENSE ISSUED HEREUNDER, THE PRIVILEGE OF HOLD-
ING SUCH A MATCH OR EXHIBITION ON A SPECIFIED DATE IN OTHER PREMISES, OR
IN  ANOTHER  LOCATION, THAN THE PREMISES OF LOCATION PREVIOUSLY APPROVED
BY THE COMMISSION, SUBJECT HOWEVER TO APPROVAL OF THE COMMISSION AND THE
RULES AND REGULATIONS OF THE COMMISSION.
  (D) ALL PENALTIES IMPOSED AND COLLECTED BY  THE  COMMISSION  FROM  ANY
ENTITY LICENSED UNDER THE PROVISIONS OF THIS ACT, WHICH FINES AND PENAL-
TIES  ARE  IMPOSED AND COLLECTED UNDER THE AUTHORITY HEREBY VESTED SHALL
WITHIN THIRTY DAYS AFTER THE RECEIPT THEREOF BY THE COMMISSION  BE  PAID
BY THEM INTO THE STATE TREASURY.
  6. TEMPORARY WORKING PERMITS FOR PROFESSIONAL COMBATIVE SPORTS PARTIC-
IPANTS,  MANAGERS,  TRAINERS AND CHIEF SECONDS. THE COMMISSION MAY ISSUE
TEMPORARY WORKING PERMITS TO PROFESSIONAL COMBATIVE SPORTS PARTICIPANTS,
THEIR MANAGERS, TRAINERS AND CHIEF SECONDS. A TEMPORARY  WORKING  PERMIT
SHALL AUTHORIZE THE EMPLOYMENT OF THE HOLDER OF SUCH PERMIT TO ENGAGE IN
A  SINGLE MATCH OR EXHIBITION AT A SPECIFIED TIME AND PLACE. A TEMPORARY
WORKING PERMIT MAY BE ISSUED IF IN THE JUDGMENT OF  THE  COMMISSION  THE
PARTICIPATION  OF  THE HOLDER THEREOF IN A PROFESSIONAL COMBATIVE SPORTS
MATCH OR EXHIBITION WILL BE CONSISTENT WITH THE PURPOSES AND  PROVISIONS
OF  THIS  SECTION, THE BEST INTERESTS OF COMBATIVE SPORTS GENERALLY, AND
THE PUBLIC  INTEREST,  CONVENIENCE  OR  NECESSITY.  THE  COMMISSION  MAY
REQUIRE  THAT  PROFESSIONAL  COMBATIVE  SPORTS PARTICIPANTS APPLYING FOR
TEMPORARY WORKING PERMITS UNDERGO A PHYSICAL  EXAMINATION,  NEUROLOGICAL
OR  NEUROPSYCHOLOGICAL  TEST OR PROCEDURE, INCLUDING COMPUTED TOMOGRAPHY
OR MEDICALLY EQUIVALENT PROCEDURE. THE FEE FOR  SUCH  TEMPORARY  WORKING
PERMIT SHALL BE TWENTY DOLLARS.
  7.  LICENSE  FEES;  TERM  OF  LICENSES; RENEWALS. EACH APPLICANT FOR A
PROMOTER LICENSE SHALL, BEFORE A LICENSE IS ISSUED  BY  THE  COMMISSION,
PAY  TO  THE  COMMISSION,  AN  ANNUAL LICENSE FEE AS FOLLOWS:  WHERE THE
SEATING CAPACITY IS NOT  MORE  THAN  TWO  THOUSAND  FIVE  HUNDRED,  FIVE
HUNDRED  DOLLARS;  WHERE  THE SEATING CAPACITY IS MORE THAN TWO THOUSAND
FIVE HUNDRED BUT NOT MORE THAN  FIVE  THOUSAND,  ONE  THOUSAND  DOLLARS;
WHERE  THE SEATING CAPACITY IS MORE THAN FIVE THOUSAND BUT NOT MORE THAN
FIFTEEN THOUSAND, ONE THOUSAND FIVE HUNDRED DOLLARS; WHERE  THE  SEATING
CAPACITY  IS  MORE  THAN  FIFTEEN THOUSAND BUT NOT MORE THAN TWENTY-FIVE
THOUSAND, TWO THOUSAND FIVE HUNDRED DOLLARS; WHERE THE SEATING  CAPACITY
IS  MORE THAN TWENTY-FIVE THOUSAND, THREE THOUSAND FIVE HUNDRED DOLLARS;
REFEREE, ONE HUNDRED DOLLARS; JUDGES, ONE HUNDRED DOLLARS;  PROFESSIONAL
COMBATIVE  SPORTS  PARTICIPANTS, FIFTY DOLLARS; MANAGERS, FIFTY DOLLARS;
TRAINERS, FIFTY DOLLARS; AND CHIEF SECONDS, FORTY DOLLARS. EACH  LICENSE
OR RENEWAL THEREOF ISSUED PURSUANT TO THIS SUBDIVISION ON OR AFTER OCTO-
BER  FIRST SHALL BE EFFECTIVE FOR A LICENSE YEAR EXPIRING ON THE THIRTI-
ETH DAY OF SEPTEMBER FOLLOWING THE DATE  OF  ITS  ISSUANCE.  THE  ANNUAL
LICENSE  FEE PRESCRIBED BY THIS SUBDIVISION SHALL BE THE LICENSE FEE DUE
AND PAYABLE THEREFOR AND SHALL BE PAID IN ADVANCE AT THE  TIME  APPLICA-
TION  IS MADE THEREFOR, AND EACH SUCH LICENSE MAY BE RENEWED FOR PERIODS
OF ONE YEAR UPON THE PAYMENT OF THE ANNUAL  LICENSE  FEE  PRESCRIBED  BY
THIS  SUBDIVISION.  WITHIN THREE YEARS FROM THE DATE OF PAYMENT AND UPON
THE AUDIT OF THE COMPTROLLER, THE COMMISSION MAY REFUND ANY FEE,  UNFOR-

S. 6359--C                         340

FEITED  POSTED GUARANTEE OR TAX PAID PURSUANT TO THIS SECTION, FOR WHICH
NO LICENSE IS ISSUED OR NO SERVICE RENDERED OR REFUND  THAT  PORTION  OF
THE PAYMENT THAT IS IN EXCESS OF THE AMOUNT PRESCRIBED BY STATUTE.
  8.  APPLICATION FOR LICENSE; FINGERPRINTS. (A) EVERY APPLICATION FOR A
LICENSE SHALL BE IN WRITING, SHALL BE ADDRESSED TO THE COMMISSION, SHALL
BE SUBSCRIBED BY THE APPLICANT, AND AFFIRMED BY HIM AS  TRUE  UNDER  THE
PENALTIES  OF  PERJURY, AND SHALL SET FORTH SUCH FACTS AS THE PROVISIONS
HEREOF AND THE RULES AND REGULATIONS OF THE COMMISSION MAY REQUIRE.
  (B) WHEN AN APPLICATION IS MADE FOR A LICENSE UNDER THIS SECTION,  THE
COMMISSION  MAY  CAUSE  THE  FINGERPRINTS  OF SUCH APPLICANT, OR IF SUCH
APPLICANT BE A CORPORATION, OF THE OFFICERS OF SUCH CORPORATION,  OR  IF
SUCH  APPLICANT  BE  A  LIMITED  LIABILITY  COMPANY, THE MANAGER OF SUCH
LIMITED LIABILITY COMPANY TO BE TAKEN IN DUPLICATE. THE APPLICANT  SHALL
BE  RESPONSIBLE  FOR THE COST OF HAVING HIS FINGERPRINTS TAKEN.  IF SUCH
FINGERPRINTS ARE TAKEN, ONE COPY SHALL BE TRANSMITTED TO THE DIVISION OF
CRIMINAL JUSTICE SERVICES IN ACCORDANCE WITH THE RULES  AND  REGULATIONS
OF  THE  DIVISION  OF  CRIMINAL JUSTICE SERVICES AND ONE SHALL REMAIN ON
FILE IN THE OFFICE  OF  THE  COMMISSION.  NO  SUCH  FINGERPRINT  MAY  BE
INSPECTED  BY ANY PERSON, OTHER THAN A PEACE OFFICER, EXCEPT ON ORDER OF
A JUDGE OR JUSTICE OF A COURT OF RECORD.  THE DIVISION IS HEREBY AUTHOR-
IZED TO TRANSMIT CRIMINAL HISTORY INFORMATION TO THE COMMISSION FOR  THE
PURPOSES  OF THIS PARAGRAPH.  THE INFORMATION OBTAINED BY ANY SUCH FING-
ERPRINT EXAMINATION SHALL BE FOR THE GUIDANCE OF THE COMMISSION  IN  THE
EXERCISE  OF ITS DISCRETION IN GRANTING OR WITHHOLDING THE LICENSE.  THE
COMMISSION SHALL PROVIDE SUCH APPLICANT WITH A COPY OF HIS OR HER CRIMI-
NAL  HISTORY  RECORD,  IF  ANY,  TOGETHER  WITH  A   COPY   OF   ARTICLE
TWENTY-THREE-A  OF  THE CORRECTION LAW, AND INFORM SUCH APPLICANT OF HIS
OR HER RIGHT TO SEEK CORRECTION OF ANY INCORRECT  INFORMATION  CONTAINED
IN SUCH RECORD PURSUANT TO REGULATIONS AND PROCEDURES ESTABLISHED BY THE
DIVISION  OF  CRIMINAL  JUSTICE  SERVICES.  ALL DETERMINATIONS TO ISSUE,
RENEW, SUSPEND OR REVOKE A LICENSE SHALL  BE  MADE  IN  ACCORDANCE  WITH
SUBDIVISION  SIXTEEN  OF SECTION TWO HUNDRED NINETY-SIX OF THE EXECUTIVE
LAW AND ARTICLE TWENTY-THREE-A OF THE CORRECTION LAW.
  9. STANDARDS FOR THE ISSUANCE OF LICENSES. (A) IF IN THE  JUDGMENT  OF
THE  COMMISSION  THE FINANCIAL RESPONSIBILITY, EXPERIENCE, CHARACTER AND
GENERAL FITNESS OF AN APPLICANT, INCLUDING IN THE CASE  OF  CORPORATIONS
ITS  OFFICERS  AND STOCKHOLDERS, ARE SUCH THAT THE PARTICIPATION OF SUCH
APPLICANT WILL BE  CONSISTENT  WITH  THE  BEST  INTERESTS  OF  COMBATIVE
SPORTS,  THE  PURPOSES  OF  THIS SECTION INCLUDING THE SAFETY OF PROFES-
SIONAL COMBATIVE  SPORTS  PARTICIPANTS,  AND  IN  THE  PUBLIC  INTEREST,
CONVENIENCE  OR  NECESSITY,  THE  COMMISSION  SHALL  GRANT  A LICENSE IN
ACCORDANCE WITH THE PROVISIONS CONTAINED IN THIS SUBDIVISION.
  (B) ANY PROFESSIONAL  COMBATIVE  SPORTS  PARTICIPANT  APPLYING  FOR  A
LICENSE  OR  RENEWAL OF A LICENSE UNDER THIS SUBDIVISION SHALL UNDERGO A
COMPREHENSIVE PHYSICAL EXAMINATION INCLUDING CLINICAL  NEUROLOGICAL  AND
NEUROPSYCHOLOGICAL  EXAMINATIONS  BY A PHYSICIAN APPROVED BY THE COMMIS-
SION. IF, AT THE TIME OF SUCH EXAMINATION, THERE IS  ANY  INDICATION  OF
BRAIN  INJURY,  OR FOR ANY OTHER REASON THE PHYSICIAN DEEMS IT APPROPRI-
ATE, THE PROFESSIONAL COMBATIVE SPORTS PARTICIPANT SHALL BE REQUIRED  TO
UNDERGO  FURTHER  NEUROLOGICAL  AND NEUROPSYCHOLOGICAL EXAMINATIONS BY A
NEUROLOGIST INCLUDING, BUT NOT LIMITED  TO,  A  COMPUTED  TOMOGRAPHY  OR
MEDICALLY EQUIVALENT PROCEDURE. THE COMMISSION SHALL NOT ISSUE A LICENSE
TO  A  PROFESSIONAL COMBATIVE SPORTS PARTICIPANT UNTIL SUCH EXAMINATIONS
ARE COMPLETED AND REVIEWED BY THE COMMISSION. THE RESULTS  OF  ALL  SUCH
EXAMINATIONS  HEREIN  REQUIRED  SHALL  BECOME A PART OF THE PROFESSIONAL
COMBATIVE SPORTS PARTICIPANT'S PERMANENT MEDICAL RECORD AS MAINTAINED BY

S. 6359--C                         341

THE COMMISSION. THE COST OF ALL SUCH EXAMINATIONS  CALLED  FOR  IN  THIS
SUBDIVISION  SHALL  BE  ASSUMED  BY  THE  STATE IF SUCH EXAMINATIONS ARE
PERFORMED BY A PHYSICIAN OR NEUROLOGIST APPROVED BY THE COMMISSION.
  (C)  ANY PROFESSIONAL COMBATIVE SPORTS PARTICIPANT LICENSED UNDER THIS
CHAPTER SHALL, AS A CONDITION OF LICENSURE, WAIVE RIGHT OF CONFIDENTIAL-
ITY OF MEDICAL RECORDS RELATING TO TREATMENT OF ANY  PHYSICAL  CONDITION
WHICH RELATES TO HIS ABILITY TO FIGHT. ALL MEDICAL REPORTS SUBMITTED TO,
AND  ALL MEDICAL RECORDS OF THE MEDICAL ADVISORY BOARD OR THE COMMISSION
RELATIVE TO THE PHYSICAL EXAMINATION OR CONDITION  OF  COMBATIVE  SPORTS
PARTICIPANTS  SHALL  BE  CONSIDERED  CONFIDENTIAL,  AND SHALL BE OPEN TO
EXAMINATION ONLY TO THE COMMISSION OR ITS AUTHORIZED REPRESENTATIVE,  TO
THE  LICENSED PARTICIPANT, MANAGER OR CHIEF SECOND UPON WRITTEN APPLICA-
TION TO EXAMINE SAID RECORDS, OR UPON THE ORDER OF A COURT OF  COMPETENT
JURISDICTION IN AN APPROPRIATE CASE.
  10.  FINANCIAL  INTEREST IN PROFESSIONAL COMBATIVE SPORTS PARTICIPANTS
PROHIBITED. NO ENTITY SHALL HAVE, EITHER  DIRECTLY  OR  INDIRECTLY,  ANY
FINANCIAL  INTEREST  IN  A  PROFESSIONAL  COMBATIVE  SPORTS  PARTICIPANT
COMPETING ON PREMISES OWNED OR LEASED BY THE ENTITY, OR  IN  WHICH  SUCH
ENTITY  IS  OTHERWISE INTERESTED EXCEPT PURSUANT TO THE SPECIFIC WRITTEN
AUTHORIZATION OF THE COMMISSION.
  11. PAYMENTS NOT TO BE MADE BEFORE CONTESTS. NO PROFESSIONAL COMBATIVE
SPORTS PARTICIPANT SHALL BE PAID FOR SERVICES BEFORE  THE  CONTEST,  AND
SHOULD  IT BE DETERMINED BY THE COMMISSION THAT SUCH PARTICIPANT DID NOT
GIVE AN HONEST EXHIBITION OF HIS SKILL, SUCH SERVICE SHALL NOT  BE  PAID
FOR.
  12.  SHAM  OR  COLLUSIVE  EVENTS. (A) ANY PERSON, INCLUDING ANY CORPO-
RATION AND THE OFFICERS THEREOF, ANY PHYSICIAN, LIMITED LIABILITY COMPA-
NY, REFEREE, JUDGE, PROFESSIONAL COMBATIVE SPORTS PARTICIPANT,  MANAGER,
TRAINER OR CHIEF SECOND, WHO SHALL PROMOTE, CONDUCT, GIVE OR PARTICIPATE
IN  ANY SHAM OR COLLUSIVE PROFESSIONAL COMBATIVE SPORTS MATCH OR EXHIBI-
TION, SHALL BE DEPRIVED OF HIS LICENSE BY THE COMMISSION.
  (B) NO LICENSED ENTITY SHALL KNOWINGLY ENGAGE IN A COURSE  OF  CONDUCT
IN  WHICH  PROFESSIONAL  COMBATIVE  SPORTS  MATCHES  OR  EXHIBITIONS ARE
ARRANGED WHERE ONE PROFESSIONAL COMBATIVE SPORTS PARTICIPANT HAS  SKILLS
OR  EXPERIENCE  SIGNIFICANTLY IN EXCESS OF THE OTHER PROFESSIONAL COMBA-
TIVE SPORTS PARTICIPANT SO THAT A MISMATCH RESULTS WITH THE POTENTIAL OF
PHYSICAL HARM TO THE PROFESSIONAL COMBATIVE SPORTS PARTICIPANT. IF  SUCH
ACTION  OCCURS,  THE  COMMISSION  MAY  EXERCISE ITS POWERS TO DISCIPLINE
UNDER SUBDIVISIONS THIRTEEN AND FOURTEEN OF THIS SECTION, PROVIDED  THAT
NOTHING  IN THIS SUBDIVISION SHALL AUTHORIZE THE COMMISSION TO INTERVENE
OR PROHIBIT A PROFESSIONAL COMBATIVE SPORTS MATCH OR  EXHIBITION  SOLELY
ON  THE BASIS OF THE DIFFERENCE BETWEEN RESPECTIVE PARTICIPANT'S MARTIAL
ARTS DISCIPLINES.
  13. IMPOSITION OF PENALTIES FOR VIOLATIONS. ANY ENTITY, LICENSED UNDER
THE PROVISIONS OF THIS SECTION, THAT SHALL KNOWINGLY VIOLATE ANY RULE OR
ORDER OF THE COMMISSION OR ANY PROVISION OF THIS SECTION, IN ADDITION TO
ANY OTHER PENALTY BY LAW PRESCRIBED, SHALL BE LIABLE TO A CIVIL  PENALTY
NOT  EXCEEDING FIVE THOUSAND DOLLARS TO BE IMPOSED BY THE COMMISSION, TO
BE SUED FOR BY THE ATTORNEY GENERAL IN THE NAME OF  THE  PEOPLE  OF  THE
STATE  OF  NEW  YORK  IF  DIRECTED  BY THE COMMISSION. THE AMOUNT OF THE
PENALTY COLLECTED BY THE COMMISSION OR RECOVERED IN ANY SUCH ACTION,  OR
PAID  TO THE COMMISSION UPON A COMPROMISE AS HEREINAFTER PROVIDED, SHALL
BE TRANSMITTED BY THE DEPARTMENT OF STATE INTO THE  STATE  TREASURY  AND
CREDITED  TO  THE  GENERAL  FUND.  THE  COMMISSION, FOR CAUSE SHOWN, MAY
EXTEND THE TIME FOR THE PAYMENT OF SUCH PENALTY AND, BY COMPROMISE,  MAY

S. 6359--C                         342

ACCEPT  LESS  THAN  THE  AMOUNT OF SUCH PENALTY AS IMPOSED IN SETTLEMENT
THEREOF.
  14. REVOCATION OR SUSPENSION OF LICENSES. (A) ANY LICENSE ISSUED UNDER
THE  PROVISIONS  OF  THIS  SECTION  MAY  BE  REVOKED OR SUSPENDED BY THE
COMMISSION FOR THE REASON THEREIN STATED, THAT THE LICENSEE HAS, IN  THE
JUDGMENT  OF  THE  COMMISSION,  BEEN GUILTY OF AN ACT DETRIMENTAL TO THE
INTERESTS OF COMBATIVE SPORTS  GENERALLY  OR  TO  THE  PUBLIC  INTEREST,
CONVENIENCE OR NECESSITY.
  (B)  WITHOUT  OTHERWISE  LIMITING  THE DISCRETION OF THE COMMISSION AS
PROVIDED IN THIS SECTION, THE COMMISSION MAY SUSPEND OR REVOKE A LICENSE
OR REFUSE TO RENEW OR ISSUE A LICENSE, IF IT SHALL FIND THAT THE  APPLI-
CANT  OR PARTICIPANT: (1) HAS BEEN CONVICTED OF A CRIME IN ANY JURISDIC-
TION; (2) IS ASSOCIATING OR  CONSORTING  WITH  ANY  PERSON  WHO  HAS  OR
PERSONS WHO HAVE BEEN CONVICTED OF A CRIME OR CRIMES IN ANY JURISDICTION
OR  JURISDICTIONS;  (3)  HAS  BEEN  GUILTY  OF OR ATTEMPTED ANY FRAUD OR
MISREPRESENTATION IN CONNECTION WITH COMBATIVE SPORTS; (4) HAS  VIOLATED
OR  ATTEMPTED TO VIOLATE ANY LAW WITH RESPECT TO COMBATIVE SPORTS IN ANY
JURISDICTION OR ANY RULE, REGULATION OR  ORDER  OF  THE  COMMISSION,  OR
SHALL  HAVE  VIOLATED ANY RULE OF COMBATIVE SPORTS WHICH SHALL HAVE BEEN
APPROVED OR ADOPTED BY THE COMMISSION, OR HAS BEEN GUILTY OF OR  ENGAGED
IN  SIMILAR, RELATED OR LIKE PRACTICES; OR (5) HAS NOT ACTED IN THE BEST
INTEREST OF MIXED MARTIAL ARTS.   ALL DETERMINATIONS  TO  ISSUE,  RENEW,
SUSPEND OR REVOKE A LICENSE SHALL BE MADE IN ACCORDANCE WITH SUBDIVISION
SIXTEEN OF SECTION TWO HUNDRED NINETY-SIX OF THE EXECUTIVE LAW AND ARTI-
CLE TWENTY-THREE-A OF THE CORRECTION LAW AS APPLICABLE.
  (C)  NO  SUCH  PARTICIPANT  MAY, UNDER ANY   CIRCUMSTANCES, COMPETE OR
APPEAR IN A PROFESSIONAL COMBATIVE SPORTS  MATCH  OR  EXHIBITION  WITHIN
NINETY  DAYS  OF HAVING SUFFERED A KNOCKOUT OR TECHNICAL KNOCKOUT IN ANY
SUCH MATCH OR EXHIBITION WITHOUT CLEARANCE BY THE BOARD, OR WITHIN NINE-
TY DAYS OF BEING RENDERED UNCONSCIOUS IN ANY SUCH  MATCH  OR  EXHIBITION
WHERE  THERE  IS  EVIDENCE OF HEAD TRAUMA AS DETERMINED BY THE ATTENDING
COMMISSION PHYSICIAN AND SHALL UNDERGO  SUCH  EXAMINATIONS  AS  REQUIRED
UNDER  PARAGRAPH  (B) OF SUBDIVISION TWENTY OF THIS SECTION. THE PROFES-
SIONAL COMBATIVE SPORTS PARTICIPANT SHALL BE CONSIDERED  SUSPENDED  FROM
PROFESSIONAL  COMBATIVE  SPORTS MATCHES OR EXHIBITIONS BY THE COMMISSION
AND SHALL FORFEIT HIS LICENSE TO THE COMMISSION DURING SUCH  PERIOD  AND
SUCH  LICENSE SHALL NOT BE RETURNED TO THE PARTICIPANT UNTIL THE PARTIC-
IPANT HAS MET ALL REQUIREMENTS, MEDICAL AND OTHERWISE, FOR REINSTATEMENT
OF SUCH LICENSE. ALL SUCH SUSPENSIONS SHALL BE RECORDED IN  THE  PARTIC-
IPANT'S LICENSE BY A COMMISSION OFFICIAL.
  (D)  THE  COMMISSION MAY AT ANY TIME SUSPEND, REVOKE OR DENY A PARTIC-
IPANT'S LICENSE OR TEMPORARY WORKING PERMIT FOR MEDICAL REASONS  AT  THE
RECOMMENDATION OF THE BOARD.
  (E)  NOTWITHSTANDING  ANY  OTHER  PROVISION OF LAW, IF ANY OTHER STATE
SHALL REVOKE A LICENSEE'S LICENSE TO COMPETE OR APPEAR IN A PROFESSIONAL
COMBATIVE SPORTS MATCH OR EXHIBITION IN THAT STATE BASED  ON  A  KNOWING
AND  INTENTIONAL  ENGAGEMENT  IN ANY PROHIBITED PRACTICES OF SUCH STATE,
THE COMMISSION MAY ACT TO REVOKE ANY LICENSE TO COMPETE OR APPEAR  IN  A
PROFESSIONAL  COMBATIVE SPORTS MATCH OR EXHIBITION ISSUED TO SUCH LICEN-
SEE PURSUANT TO THE PROVISIONS OF THIS SECTION.
  (F) THE COMMISSION MAY SUSPEND ANY LICENSE IT HAS ISSUED  BY  A  DATED
NOTICE  TO THAT EFFECT TO THE SUSPENDED LICENSEE, MAILED OR DELIVERED TO
THE LICENSEE, AND SPECIFYING THE EFFECTIVE DATE AND TERM OF THE  SUSPEN-
SION, PROVIDED HOWEVER THAT THE COMMISSION REPRESENTATIVE IN CHARGE OF A
CONTEST OR EXHIBITION MAY THEN AND THERE TEMPORARILY SUSPEND ANY LICENSE
ISSUED  BY  THE COMMISSION WITHOUT SUCH NOTICE. IN THE EVENT OF A TEMPO-

S. 6359--C                         343

RARY SUSPENSION, THE COMMISSION SHALL MAIL OR DELIVER THE NOTICE TO  THE
SUSPENDED  LICENSEE  WITHIN  THREE  BUSINESS  DAYS  AFTER  THE TEMPORARY
SUSPENSION. IN EITHER CASE SUCH SUSPENSION MAY BE  WITHOUT  ANY  ADVANCE
HEARING.  UPON  THE  RECEIPT OF SUCH NOTICE OF SUSPENSION, THE SUSPENDED
LICENSEE MAY APPLY TO THE COMMISSION FOR A  HEARING  ON  THE  MATTER  TO
DETERMINE  WHETHER SUCH SUSPENSION SHOULD BE RESCINDED. SUCH APPLICATION
FOR A HEARING MUST BE IN WRITING AND MUST BE RECEIVED BY THE  COMMISSION
WITHIN  THIRTY  DAYS AFTER THE DATE OF NOTICE OF SUSPENSION. THE COMMIS-
SION SHALL HAVE THE AUTHORITY TO REVOKE ANY LICENSE ISSUED BY IT. BEFORE
ANY LICENSE IS SO REVOKED, THE LICENSEE WILL BE OFFERED THE  OPPORTUNITY
AT  A  HEARING  HELD BY OR ON BEHALF OF THE COMMISSION TO SHOW CAUSE WHY
THE LICENSE SHOULD NOT BE REVOKED. THE COMMISSION SHALL OFFER THE OPPOR-
TUNITY FOR A HEARING TO AN  AFFECTED  PERSON  BEFORE  TAKING  ANY  FINAL
ACTION NEGATIVELY AFFECTING SUCH PERSON'S INDIVIDUAL PRIVILEGES OR PROP-
ERTY  GRANTED  BY  A LICENSE DULY ISSUED BY THE COMMISSION OR A CONTRACT
APPROVED BY AND FILED WITH THE COMMISSION. IN ALL SUCH HEARINGS,  LICEN-
SEES  AND OTHER WITNESSES SHALL TESTIFY UNDER OATH OR AFFIRMATION, WHICH
MAY BE ADMINISTERED BY ANY COMMISSIONER OR AUTHORIZED REPRESENTATIVE  OF
THE  COMMISSION ACTUALLY PRESENT. THE COMMISSION SHALL BE THE SOLE JUDGE
OF THE RELEVANCY AND COMPETENCY OF TESTIMONY  AND  OTHER  EVIDENCE,  THE
CREDIBILITY  OF WITNESSES, AND THE SUFFICIENCY OF EVIDENCE. HEARINGS MAY
BE CONDUCTED BY REPRESENTATIVES OF THE COMMISSION IN THE  DISCRETION  OF
THE COMMISSION. IN SUCH CASES, THE COMMISSION REPRESENTATIVES CONDUCTING
THE  HEARING  SHALL  SUBMIT  FINDINGS OF FACT AND RECOMMENDATIONS TO THE
COMMISSION, WHICH SHALL NOT BE BINDING ON THE COMMISSION.
  15. ADVERTISING MATTER TO STATE ADMISSION PRICE. IT SHALL BE THE  DUTY
OF  EVERY ENTITY PROMOTING OR CONDUCTING A PROFESSIONAL COMBATIVE SPORTS
MATCH OR EXHIBITION SUBJECT TO THE PROVISIONS OF THIS SECTION  TO  CAUSE
TO  BE INSERTED IN EACH SHOW CARD, BILL, POSTER, NEWSPAPER ADVERTISEMENT
OF ANY PROFESSIONAL COMBATIVE SPORTS MATCH OR EXHIBITION  GIVEN  BY  IT,
THE  PRICE  OF  ADMISSION  THERETO.  VIOLATION OF THE PROVISIONS OF THIS
SUBDIVISION SHALL SUBJECT THE ENTITY TO A FINE OF ONE HUNDRED DOLLARS.
  16. TICKETS TO INDICATE PURCHASE PRICE. ALL TICKETS  OF  ADMISSION  TO
ANY SUCH COMBATIVE SPORTS MATCH OR EXHIBITION SHALL BE CONTROLLED BY THE
PROVISIONS  OF ARTICLE TWENTY-FIVE OF THE ARTS AND CULTURAL AFFAIRS LAW.
IT SHALL BE UNLAWFUL FOR ANY ENTITY TO ADMIT TO SUCH MATCH OR EXHIBITION
A NUMBER OF PEOPLE GREATER THAN THE SEATING CAPACITY OF THE PLACE  WHERE
SUCH MATCH OR EXHIBITION IS HELD. VIOLATION OF THIS SUBDIVISION SHALL BE
A  MISDEMEANOR  AND  SHALL  BE  PUNISHABLE AS SUCH AND IN ADDITION SHALL
INCUR FORFEITURE OF LICENSE.
  17. EQUIPMENT OF BUILDINGS FOR MATCHES OR EXHIBITIONS.  ALL  BUILDINGS
OR  STRUCTURES  USED  OR  INTENDED TO BE USED FOR HOLDING OR GIVING SUCH
PROFESSIONAL COMBATIVE SPORTS MATCHES OR EXHIBITIONS SHALL  BE  PROPERLY
VENTILATED  AND  PROVIDED  WITH  FIRE EXITS AND FIRE ESCAPES, AND IN ALL
MANNER CONFORM TO THE LAWS, ORDINANCES  AND  REGULATIONS  PERTAINING  TO
BUILDINGS IN THE CITY, TOWN OR VILLAGE WHERE SITUATED.
  18.  AGE  OF  PARTICIPANTS AND SPECTATORS.  NO PERSON UNDER THE AGE OF
EIGHTEEN YEARS SHALL PARTICIPATE IN ANY  PROFESSIONAL  COMBATIVE  SPORTS
MATCH  OR  EXHIBITION, AND NO PERSON UNDER SIXTEEN YEARS OF AGE SHALL BE
PERMITTED TO ATTEND AS A SPECTATOR; PROVIDED,  HOWEVER,  THAT  A  PERSON
UNDER  THE AGE OF SIXTEEN SHALL BE PERMITTED TO ATTEND AS A SPECTATOR IF
ACCOMPANIED BY A PARENT OR GUARDIAN.
  19. REGULATION OF CONDUCT OF MATCHES OR EXHIBITIONS.  (A)  EXCEPT  FOR
CHAMPIONSHIP  MATCHES,  WHICH  SHALL  NOT  BE  MORE THAN FIVE ROUNDS, NO
COMBATIVE SPORTS MATCH OR EXHIBITION SHALL BE MORE THAN THREE ROUNDS  IN
LENGTH.    NO  PARTICIPANT  SHALL BE ALLOWED TO PARTICIPATE IN MORE THAN

S. 6359--C                         344

THREE MATCHES OR EXHIBITIONS OR COMPETE  FOR  MORE  THAN  SIXTY  MINUTES
WITHIN  SEVENTY-TWO  CONSECUTIVE HOURS.  NO PARTICIPANT SHALL BE ALLOWED
TO COMPETE IN ANY SUCH MATCH OR EXHIBITION WITHOUT WEARING A  MOUTHGUARD
AND A PROTECTIVE GROIN CUP.  AT EACH PROFESSIONAL COMBATIVE SPORTS MATCH
OR  EXHIBITION, THERE SHALL BE IN ATTENDANCE A DULY LICENSED REFEREE WHO
SHALL DIRECT AND CONTROL THE SAME.  BEFORE  STARTING  SUCH  CONTEST  THE
REFEREE SHALL ASCERTAIN FROM EACH PARTICIPANT THE NAME OF HIS MANAGER OR
CHIEF  SECOND,  AND  SHALL HOLD SUCH MANAGER OR CHIEF SECOND RESPONSIBLE
FOR THE CONDUCT OF HIS ASSISTANT SECONDS  DURING  THE  PROGRESS  OF  THE
MATCH  OR  EXHIBITION.    THE  COMMISSION  SHALL  HAVE  THE POWER IN ITS
DISCRETION TO DECLARE FORFEITED ANY PRIZE, REMUNERATION OR PURSE, OR ANY
PART THEREOF, BELONGING TO THE PARTICIPANTS OR ONE OF THEM, OR THE SHARE
THEREOF OF ANY MANAGER OR CHIEF SECOND IF IN ITS JUDGMENT, SUCH  PARTIC-
IPANT  OR  PARTICIPANTS ARE NOT HONESTLY COMPETING OR THE PARTICIPANT OR
MANAGER OR CHIEF SECOND OF A  PARTICIPANT,  AS  THE  CASE  MAY  BE,  HAS
COMMITTED  AN  ACT  IN  THE  PREMISES IN VIOLATION OF ANY RULE, ORDER OR
REGULATION OF THE COMMISSION. THE AMOUNT  SO  FORFEITED  SHALL  BE  PAID
WITHIN  FORTY-EIGHT  HOURS  TO  THE  COMMISSION.  THERE SHALL ALSO BE IN
ATTENDANCE, THREE DULY LICENSED JUDGES WHO SHALL AT THE  TERMINATION  OF
EACH  SUCH  COMBATIVE  SPORTS MATCH OR EXHIBITION RENDER THEIR DECISION.
THE WINNER OF SUCH MATCH OR EXHIBITION SHALL BE DETERMINED IN ACCORDANCE
WITH A SCORING SYSTEM PRESCRIBED BY THE COMMISSION.  PROVIDED,  HOWEVER,
THAT A PARTICIPANT MAY TERMINATE THE CONTEST BY SIGNALLING TO THE REFER-
EE THAT SUCH PARTICIPANT SUBMITS TO THE OPPONENT.
  (B) THE COMMISSION MAY BY RULE, REGULATION OR ORDER, REQUIRE THE PRES-
ENCE  OF ANY MEDICAL EQUIPMENT AND PERSONNEL AT EACH PROFESSIONAL COMBA-
TIVE SPORTS MATCH OR EXHIBITION AS IS NECESSARY OR  BENEFICIAL  FOR  THE
SAFETY AND PROTECTION OF THE CONTESTANTS; AND MAY ALSO REQUIRE THE PRES-
ENCE OF AN AMBULANCE OR OTHER APPARATUS AT THE SITE OF ANY SUCH MATCH OR
EXHIBITION  OR  THE  PROMULGATION  OF  AN EMERGENCY MEDICAL PLAN IN LIEU
THEREOF.
  (C) THE COMMISSION SHALL PRESCRIBE BY RULE OR REGULATION THE RESPONSI-
BILITIES OF MANAGERS, TRAINERS AND CHIEF SECONDS PRIOR  TO,  DURING  AND
AFTER  A  COMBATIVE  SPORTS  MATCH OR EXHIBITION IN ORDER TO PROMOTE THE
SAFETY OF THE PARTICIPANTS AT ALL TIMES.
  (D) THE COMMISSION SHALL  REQUIRE  BY  RULE  OR  REGULATION  THAT  ANY
PROFESSIONAL  COMBATIVE  SPORTS  PARTICIPANT LICENSED UNDER THIS SECTION
PRESENT TO A DESIGNATED COMMISSION OFFICIAL, BEFORE EACH MATCH OR  EXHI-
BITION  IN  WHICH HE FIGHTS IN THIS STATE, A LICENSE WHICH SHALL INCLUDE
BUT NOT BE LIMITED TO THE FOLLOWING INFORMATION: (1)  THE  PARTICIPANT'S
NAME, PHOTOGRAPH, SOCIAL SECURITY NUMBER, DATE OF BIRTH, AND OTHER IDEN-
TIFYING  INFORMATION;  (2)  THE  PARTICIPANT'S PRIOR MATCH OR EXHIBITION
HISTORY INCLUDING THE DATES, LOCATION, AND DECISION OF SUCH  MATCHES  OR
EXHIBITIONS;  AND (3) THE PARTICIPANT'S MEDICAL HISTORY, RELATING TO ANY
PHYSICAL CONDITION, MEDICAL TEST OR PROCEDURE WHICH RELATES TO HIS ABIL-
ITY TO FIGHT, AND A RECORD OF ALL MEDICAL SUSPENSIONS.
  20. EXAMINATION BY PHYSICIAN; COST. (A) ALL PARTICIPANTS MUST BE EXAM-
INED BY A PHYSICIAN DESIGNATED BY THE  COMMISSION  BEFORE  ENTERING  THE
RING  AND EACH SUCH PHYSICIAN SHALL IMMEDIATELY FILE WITH THE COMMISSION
A WRITTEN REPORT OF SUCH EXAMINATION. THE COST OF ANY SUCH  EXAMINATION,
AS PRESCRIBED BY A SCHEDULE OF FEES ESTABLISHED BY THE COMMISSION, SHALL
BE  PAID BY THE ENTITY CONDUCTING THE MATCH OR EXHIBITION TO THE COMMIS-
SION, WHICH SHALL THEN PAY THE FEE COVERING SUCH COST TO  THE  EXAMINING
PHYSICIAN, IN ACCORDANCE WITH THE RULES OF THE COMMISSION.
  (B)  ANY PROFESSIONAL COMBATIVE SPORTS PARTICIPANT LICENSED OR PERMIT-
TED UNDER THIS SECTION RENDERED UNCONSCIOUS OR SUFFERING HEAD TRAUMA  AS

S. 6359--C                         345

DETERMINED  BY  THE ATTENDING PHYSICIAN SHALL BE IMMEDIATELY EXAMINED BY
THE ATTENDING COMMISSION PHYSICIAN AND  SHALL  BE  REQUIRED  TO  UNDERGO
NEUROLOGICAL   AND  NEUROPSYCHOLOGICAL  EXAMINATIONS  BY  A  NEUROLOGIST
INCLUDING  BUT  NOT LIMITED TO A COMPUTED TOMOGRAPHY OR MEDICALLY EQUIV-
ALENT PROCEDURE. ANY PARTICIPANT SO INJURED  SHALL  NOT  APPEAR  IN  ANY
MATCH  OR  EXHIBITION UNTIL RESULTS OF SUCH EXAMINATIONS ARE REVIEWED BY
THE COMMISSION. THE RESULTS OF ALL  SUCH  EXAMINATIONS  HEREIN  REQUIRED
SHALL  BECOME  A  PART OF THE PARTICIPANT'S PERMANENT MEDICAL RECORDS AS
MAINTAINED BY THE COMMISSION AND SHALL BE  USED  BY  THE  COMMISSION  TO
DETERMINE  WHETHER  A  PARTICIPANT  SHALL  BE PERMITTED TO APPEAR IN ANY
FUTURE PROFESSIONAL COMBATIVE SPORTS MATCH OR EXHIBITION.  THE COSTS  OF
ALL  SUCH  EXAMINATIONS CALLED FOR IN THIS PARAGRAPH SHALL BE ASSUMED BY
THE ENTITY OR PROMOTER IF SUCH EXAMINATIONS ARE PERFORMED BY A PHYSICIAN
APPROVED BY THE COMMISSION.
  (C) THE COMMISSION MAY AT ANY TIME REQUIRE  A  LICENSED  OR  PERMITTED
PARTICIPANT  TO UNDERGO A PHYSICAL EXAMINATION, INCLUDING ANY NEUROLOGI-
CAL OR NEUROPSYCHOLOGICAL TEST OR PROCEDURE. THE COST OF SUCH EXAM SHALL
BE ASSUMED BY THE STATE.
  21. PHYSICIAN TO BE IN ATTENDANCE; POWERS OF SUCH  PHYSICIAN.  (A)  IT
SHALL BE THE DUTY OF EVERY ENTITY LICENSED TO CONDUCT A COMBATIVE SPORTS
MATCH  OR EXHIBITION, TO HAVE IN ATTENDANCE AT EVERY MATCH OR EXHIBITION
AT LEAST ONE PHYSICIAN DESIGNATED BY THE COMMISSION AS THE  RULES  SHALL
PROVIDE.  THE  COMMISSION MAY ESTABLISH A SCHEDULE OF FEES TO BE PAID BY
THE LICENSEE TO COVER THE COST OF SUCH ATTENDANCE. SUCH  FEES  SHALL  BE
PAID TO THE COMMISSION, WHICH SHALL THEN PAY SUCH FEES TO THE PHYSICIANS
ENTITLED THERETO, IN ACCORDANCE WITH THE RULES OF THE COMMISSION.
  (B)  THE  PHYSICIAN  SHALL TERMINATE ANY PROFESSIONAL COMBATIVE SPORTS
MATCH OR EXHIBITION IF IN THE OPINION OF SUCH PHYSICIAN ANY  PARTICIPANT
HAS RECEIVED SEVERE PUNISHMENT OR IS IN DANGER OF SERIOUS PHYSICAL INJU-
RY.  IN  THE  EVENT OF ANY SERIOUS PHYSICAL INJURY, SUCH PHYSICIAN SHALL
IMMEDIATELY RENDER ANY EMERGENCY TREATMENT NECESSARY, RECOMMEND  FURTHER
TREATMENT  OR  HOSPITALIZATION  IF REQUIRED, AND FULLY REPORT THE ENTIRE
MATTER TO THE COMMISSION WITHIN  TWENTY-FOUR  HOURS  AND  IF  NECESSARY,
SUBSEQUENTLY  THEREAFTER.  SUCH  PHYSICIAN  MAY  ALSO  REQUIRE  THAT THE
INJURED PARTICIPANT AND HIS MANAGER OR CHIEF SECOND REMAIN IN  THE  RING
OR  ON  THE  PREMISES OR REPORT TO A HOSPITAL AFTER THE CONTEST FOR SUCH
PERIOD OF TIME AS SUCH PHYSICIAN DEEMS ADVISABLE.
  (C) SUCH PHYSICIAN MAY ENTER THE RING AT ANY  TIME  DURING  A  PROFES-
SIONAL  COMBATIVE SPORTS MATCH OR EXHIBITION AND MAY TERMINATE THE MATCH
OR EXHIBITION IF IN HIS OPINION THE SAME IS NECESSARY TO PREVENT  SEVERE
PUNISHMENT OR SERIOUS PHYSICAL INJURY TO A PARTICIPANT.
  22.  BOND. BEFORE A LICENSE SHALL BE GRANTED TO AN ENTITY TO CONDUCT A
PROFESSIONAL COMBATIVE SPORTS MATCH OR EXHIBITION, THE  APPLICANT  SHALL
EXECUTE  AND  FILE WITH THE COMPTROLLER A BOND IN AN AMOUNT TO BE DETER-
MINED BY THE COMMISSION, TO BE APPROVED AS TO FORM  AND  SUFFICIENCY  OF
SURETIES  THEREON  BY  THE  COMPTROLLER,  CONDITIONED  FOR  THE FAITHFUL
PERFORMANCE BY SUCH ENTITY OF THE PROVISIONS OF  THIS  SECTION  AND  THE
RULES  AND  REGULATIONS  OF  THE  COMMISSION,  AND  UPON  THE FILING AND
APPROVAL OF SUCH BOND THE COMPTROLLER SHALL ISSUE TO  SUCH  APPLICANT  A
CERTIFICATE  OF  SUCH FILING AND APPROVAL, WHICH SHALL BE BY SUCH APPLI-
CANT FILED IN THE OFFICE OF THE  COMMISSION  WITH  ITS  APPLICATION  FOR
LICENSE,  AND  NO  SUCH  LICENSE  SHALL BE ISSUED UNTIL SUCH CERTIFICATE
SHALL BE FILED. IN CASE OF DEFAULT IN SUCH PERFORMANCE,  THE  COMMISSION
MAY IMPOSE UPON THE DELINQUENT A PENALTY IN THE SUM OF NOT MORE THAN ONE
THOUSAND  DOLLARS FOR EACH OFFENSE, WHICH MAY BE RECOVERED BY THE ATTOR-
NEY GENERAL IN THE NAME OF THE PEOPLE OF THE STATE OF NEW  YORK  IN  THE

S. 6359--C                         346

SAME  MANNER  AS  OTHER  PENALTIES  ARE  RECOVERED BY LAW; ANY AMOUNT SO
RECOVERED SHALL BE PAID INTO THE TREASURY.
  23.  BOND  FOR PURSES, SALARIES AND OTHER EXPENSES. IN ADDITION TO THE
BOND REQUIRED BY SUBDIVISION TWENTY-TWO OF THIS SECTION, EACH  APPLICANT
FOR  A LICENSE TO CONDUCT PROFESSIONAL COMBATIVE SPORTS MATCHES OR EXHI-
BITIONS SHALL EXECUTE AND FILE WITH THE COMPTROLLER A BOND IN AN  AMOUNT
TO  BE DETERMINED BY THE COMMISSION TO BE APPROVED AS TO FORM AND SUFFI-
CIENCY OF SURETIES THEREON BY THE COMPTROLLER, CONDITIONED FOR AND GUAR-
ANTEEING THE PAYMENT  OF  PROFESSIONAL  COMBATIVE  SPORTS  PARTICIPANTS'
PURSES,  SALARIES  OF CLUB EMPLOYEES LICENSED BY THE COMMISSION, AND THE
LEGITIMATE EXPENSES OF PRINTING TICKETS AND ALL ADVERTISING MATERIAL.
  24. DUTY TO PROVIDE  INSURANCE  FOR  LICENSED  PROFESSIONAL  COMBATIVE
SPORTS  PARTICIPANTS.    (A)  ALL  ENTITIES HAVING LICENSES AS PROMOTERS
SHALL CONTINUOUSLY PROVIDE INSURANCE  FOR  THE  PROTECTION  OF  LICENSED
PROFESSIONAL  COMBATIVE  SPORTS  PARTICIPANTS, APPEARING IN PROFESSIONAL
COMBATIVE SPORTS MATCHES OR EXHIBITIONS.  SUCH INSURANCE COVERAGE  SHALL
PROVIDE  FOR REIMBURSEMENT TO THE LICENSED ATHLETE FOR MEDICAL, SURGICAL
AND HOSPITAL CARE, WITH A MINIMUM LIMIT OF FIFTY  THOUSAND  DOLLARS  FOR
INJURIES SUSTAINED WHILE PARTICIPATING IN ANY PROGRAM OPERATED UNDER THE
CONTROL OF SUCH LICENSED PROMOTER AND FOR A PAYMENT OF ONE HUNDRED THOU-
SAND  DOLLARS  TO THE ESTATE OF ANY DECEASED ATHLETE WHERE SUCH DEATH IS
OCCASIONED BY INJURIES RECEIVED DURING THE COURSE OF A MATCH OR  EXHIBI-
TION  IN WHICH SUCH LICENSED ATHLETE PARTICIPATED UNDER THE PROMOTION OR
CONTROL OF ANY LICENSED PROMOTER.  THE COMMISSION MAY FROM TIME TO TIME,
IN ITS DISCRETION, INCREASE THE AMOUNT OF SUCH MINIMUM LIMITS.
  (B) THE FAILURE TO PAY PREMIUMS ON SUCH INSURANCE AS  IS  REQUIRED  BY
PARAGRAPH  (A)  OF THIS SUBDIVISION SHALL BE CAUSE FOR THE SUSPENSION OR
THE REVOCATION OF THE LICENSE OF SUCH DEFAULTING PROMOTER.
  25. NOTICE OF CONTEST; COLLECTION OF TAX. (A) EVERY ENTITY HOLDING ANY
PROFESSIONAL COMBATIVE SPORTS MATCH OR EXHIBITION FOR WHICH AN ADMISSION
FEE IS CHARGED OR RECEIVED, SHALL NOTIFY  THE  ATHLETIC  COMMISSION  TEN
DAYS IN ADVANCE OF THE HOLDING OF SUCH CONTEST. ALL TICKETS OF ADMISSION
TO  ANY  SUCH  MATCH OR EXHIBITION SHALL BE PROCURED FROM A PRINTER DULY
AUTHORIZED BY THE STATE ATHLETIC COMMISSION TO PRINT  SUCH  TICKETS  AND
SHALL BEAR CLEARLY UPON THE FACE THEREOF THE PURCHASE PRICE AND LOCATION
OF  SAME.  AN  ENTITY FAILING TO FULLY COMPLY WITH THIS SECTION SHALL BE
SUBJECT TO A PENALTY OF FIVE HUNDRED DOLLARS TO BE COLLECTED BY AND PAID
TO THE DEPARTMENT OF STATE. AN ENTITY IS PROHIBITED FROM  OPERATING  ANY
MATCHES OR EXHIBITIONS UNTIL ALL PENALTIES DUE PURSUANT TO THIS SUBDIVI-
SION  AND TAXES, INTEREST AND PENALTIES DUE PURSUANT TO ARTICLE NINETEEN
OF THE TAX LAW HAVE BEEN PAID.
  (B) PURSUANT TO DIRECTION BY THE COMMISSIONER OF TAXATION AND FINANCE,
EMPLOYEES OR OFFICERS OF THE ATHLETIC COMMISSION SHALL ACT AS AGENTS  OF
THE  COMMISSIONER  OF TAXATION AND FINANCE TO COLLECT THE TAX IMPOSED BY
ARTICLE NINETEEN OF THE TAX LAW. THE ATHLETIC COMMISSION  SHALL  PROVIDE
THE COMMISSIONER OF TAXATION AND FINANCE WITH SUCH INFORMATION AND TECH-
NICAL  ASSISTANCE  AS  MAY BE NECESSARY FOR THE PROPER ADMINISTRATION OF
SUCH TAX.
  26. REGULATION OF JUDGES. (A) JUDGES FOR  ANY  PROFESSIONAL  COMBATIVE
SPORTS  MATCH  OR  EXHIBITION  UNDER  THE JURISDICTION OF THE COMMISSION
SHALL BE SELECTED BY THE COMMISSION FROM A LIST  OF  QUALIFIED  LICENSED
JUDGES MAINTAINED BY THE COMMISSION.
  (B)  ANY  PROFESSIONAL  COMBATIVE  SPORT PARTICIPANT, MANAGER OR CHIEF
SECOND MAY PROTEST THE ASSIGNMENT OF A JUDGE TO A PROFESSIONAL COMBATIVE
SPORTS MATCH OR EXHIBITION AND  THE  PROTESTING  PROFESSIONAL  COMBATIVE
SPORTS  PARTICIPANT, MANAGER OR CHIEF SECOND MAY BE HEARD BY THE COMMIS-

S. 6359--C                         347

SION OR ITS DESIGNEE IF SUCH  PROTEST  IS  TIMELY.  IF  THE  PROTEST  IS
UNTIMELY IT SHALL BE SUMMARILY REJECTED.
  (C)  EACH  PERSON  SEEKING TO BE LICENSED AS A JUDGE BY THE COMMISSION
SHALL BE REQUIRED TO SUBMIT TO OR PROVIDE PROOF OF  AN  EYE  EXAMINATION
AND  ANNUALLY  THEREAFTER  ON  THE  ANNIVERSARY  OF  THE ISSUANCE OF THE
LICENSE. EACH PERSON SEEKING TO BE A PROFESSIONAL COMBATIVE SPORTS JUDGE
IN THE STATE SHALL BE CERTIFIED AS HAVING COMPLETED A  TRAINING  PROGRAM
AS  APPROVED  BY THE COMMISSION AND SHALL HAVE PASSED A WRITTEN EXAMINA-
TION APPROVED BY THE COMMISSION COVERING ASPECTS OF PROFESSIONAL  COMBA-
TIVE  SPORTS  INCLUDING, BUT NOT LIMITED TO, THE RULES OF THE SPORT, THE
LAW OF THE STATE RELATING TO THE COMMISSION, AND BASIC  FIRST  AID.  THE
COMMISSION  SHALL ESTABLISH CONTINUING EDUCATION PROGRAMS TO KEEP LICEN-
SEES CURRENT ON AREAS OF REQUIRED KNOWLEDGE.
  (D) EACH PERSON SEEKING A  LICENSE  TO  BE  A  PROFESSIONAL  COMBATIVE
SPORTS  JUDGE  IN  THIS  STATE SHALL BE REQUIRED TO FILL OUT A FINANCIAL
QUESTIONNAIRE CERTIFYING UNDER PENALTY OF PERJURY FULL DISCLOSURE OF THE
JUDGE'S FINANCIAL SITUATION ON A QUESTIONNAIRE TO BE PROMULGATED BY  THE
COMMISSION. SUCH QUESTIONNAIRE SHALL BE IN A FORM AND MANNER APPROVED BY
THE  COMMISSION  AND  SHALL PROVIDE INFORMATION AS TO AREAS OF ACTUAL OR
POTENTIAL  CONFLICTS  OF  INTEREST  AS  WELL  AS  APPEARANCES  OF   SUCH
CONFLICTS,  INCLUDING FINANCIAL RESPONSIBILITY. WITHIN FORTY-EIGHT HOURS
OF ANY PROFESSIONAL COMBATIVE SPORTS MATCH OR EXHIBITION, EACH COMBATIVE
SPORTS JUDGE SHALL FILE  WITH  THE  COMMISSION  A  FINANCIAL  DISCLOSURE
STATEMENT  IN SUCH FORM AND MANNER AS SHALL BE ACCEPTABLE TO THE COMMIS-
SION.
  (E) ONLY A PERSON LICENSED BY THE COMMISSION MAY JUDGE A  PROFESSIONAL
COMBATIVE SPORTS MATCH OR EXHIBITION.
  27. TRAINING FACILITIES. (A) THE COMMISSION MAY, IN ITS DISCRETION AND
IN  ACCORDANCE WITH REGULATIONS ADOPTED BY THE COMMISSION TO PROTECT THE
HEALTH AND SAFETY OF PROFESSIONAL COMBATIVE SPORT PARTICIPANTS IN TRAIN-
ING, ISSUE A LICENSE TO OPERATE A TRAINING  FACILITY  PROVIDING  CONTACT
SPARRING MAINTAINED EITHER EXCLUSIVELY OR IN PART FOR THE USE OF PROFES-
SIONAL  COMBATIVE  SPORT PARTICIPANTS. THE REGULATIONS OF THE COMMISSION
SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING SUBJECTS TO  PROTECT
THE HEALTH AND SAFETY OF PROFESSIONAL COMBATIVE SPORT PARTICIPANTS:
  (1) REQUIREMENTS FOR FIRST AID MATERIALS TO BE STORED IN AN ACCESSIBLE
LOCATION  ON  THE  PREMISES  AND  FOR  THE PRESENCE ON THE PREMISES OF A
PERSON TRAINED AND CERTIFIED IN THE USE OF SUCH MATERIALS AND PROCEDURES
FOR CARDIO-PULMONARY RESUSCITATION AT ALL TIMES DURING WHICH THE FACILI-
TY IS OPEN FOR TRAINING PURPOSES;
  (2) PROMINENT POSTING ADJACENT TO AN ACCESSIBLE TELEPHONE OF THE TELE-
PHONE NUMBER FOR EMERGENCY MEDICAL SERVICES AT THE NEAREST HOSPITAL;
  (3) CLEAN AND SANITARY BATHROOMS, SHOWER ROOMS, LOCKER ROOMS AND  FOOD
SERVING AND STORAGE AREAS;
  (4)  ADEQUATE  VENTILATION  AND  LIGHTING  OF  ACCESSIBLE AREAS OF THE
TRAINING FACILITY;
  (5) ESTABLISHMENT OF A POLICY CONCERNING THE RESTRICTION OF SMOKING IN
TRAINING AREAS, INCLUDING PROVISIONS FOR ITS ENFORCEMENT BY THE FACILITY
OPERATOR;
  (6) COMPLIANCE WITH STATE AND LOCAL FIRE ORDINANCES;
  (7) INSPECTION AND APPROVAL OF RINGS AS REQUIRED BY SUBDIVISION THIRTY
OF THIS SECTION; AND
  (8) ESTABLISHMENT OF A  POLICY  FOR  POSTING  ALL  COMMISSION  LICENSE
SUSPENSIONS AND LICENSE REVOCATIONS RECEIVED FROM THE COMMISSION INCLUD-
ING  PROVISIONS  FOR  ENFORCEMENT OF SUCH SUSPENSIONS AND REVOCATIONS BY
THE FACILITY OPERATOR.

S. 6359--C                         348

  (B) A PROSPECTIVE LICENSEE SHALL SUBMIT TO THE COMMISSION  PROOF  THAT
IT  CAN  FURNISH  SUITABLE  FACILITIES  IN  WHICH  THE TRAINING IS TO BE
CONDUCTED, INCLUDING THE MAKING OF SUCH  TRAINING  FACILITIES  AVAILABLE
FOR INSPECTION BY THE COMMISSION AT ANY TIME DURING WHICH TRAINING IS IN
PROGRESS.
  28.  TEMPORARY  TRAINING  FACILITIES.  ANY TRAINING FACILITY PROVIDING
CONTACT SPARRING ESTABLISHED AND MAINTAINED ON A TEMPORARY BASIS FOR THE
PURPOSE OF PREPARING A PROFESSIONAL COMBATIVE SPORT  PARTICIPANT  FOR  A
SPECIFIC  PROFESSIONAL  COMBATIVE  SPORTS  MATCH  OR  EXHIBITION  TO  BE
CONDUCTED, HELD OR GIVEN WITHIN THE STATE OF NEW YORK  SHALL  BE  EXEMPT
FROM  THIS  ACT  INSOFAR AS IT CONCERNS THE LICENSING OF SUCH FACILITIES
IF, IN THE JUDGMENT OF THE COMMISSION, ESTABLISHMENT AND MAINTENANCE  OF
SUCH  FACILITY  WILL  BE  CONSISTENT WITH THE PURPOSES AND PROVISIONS OF
THIS CHAPTER, THE BEST INTERESTS OF PROFESSIONAL COMBATIVE SPORTS GENER-
ALLY, AND THE PUBLIC INTEREST, CONVENIENCE OR NECESSITY.
  29. WEIGHTS; CLASSES AND RULES. THE WEIGHTS AND CLASSES  OF  COMBATIVE
SPORT  PARTICIPANTS AND THE RULES AND REGULATIONS OF PROFESSIONAL COMBA-
TIVE SPORTS SHALL BE PRESCRIBED BY THE COMMISSION.
  30. RINGS OR FIGHTING AREAS.  NO PROFESSIONAL COMBATIVE  SPORTS  MATCH
OR  EXHIBITION  OR  TRAINING  ACTIVITY SHALL BE PERMITTED IN ANY RING OR
FIGHTING AREA UNLESS SUCH RING OR FIGHTING AREA HAS BEEN  INSPECTED  AND
APPROVED  BY  THE  COMMISSION.  THE  COMMISSION SHALL PRESCRIBE STANDARD
ACCEPTABLE SIZE AND QUALITY REQUIREMENTS FOR RINGS OR FIGHTING AREAS AND
APPURTENANCES THERETO.
  31. MISDEMEANOR. ANY ENTITY WHO INTENTIONALLY, DIRECTLY OR  INDIRECTLY
CONDUCTS,  HOLDS OR GIVES A PROFESSIONAL COMBATIVE SPORTS MATCH OR EXHI-
BITION OR PARTICIPATES EITHER DIRECTLY OR INDIRECTLY IN ANY  SUCH  MATCH
OR  EXHIBITION  AS A REFEREE, JUDGE, CORPORATION TREASURER, PROFESSIONAL
COMBATIVE  SPORTS  PARTICIPANT,  MANAGER,  PROMOTER,  TRAINER  OR  CHIEF
SECOND,  WITHOUT  FIRST HAVING PROCURED AN APPROPRIATE LICENSE OR PERMIT
AS PRESCRIBED IN THIS SECTION SHALL BE GUILTY OF A MISDEMEANOR.
  S 3. Section 6 of chapter 912 of the laws  of  1920  relating  to  the
regulation  of boxing, sparring and wrestling, as amended by chapter 437
of the laws of 2002 and subdivision 1 as designated and subdivision 2 as
added by chapter 673 of the laws of 2003, is amended to read as follows:
  S 6. Jurisdiction of commission. 1.  The  commission  shall  have  and
hereby is vested with the sole direction, management, control and juris-
diction  over  all  such  boxing  and sparring matches or exhibitions OR
PROFESSIONAL COMBATIVE SPORTS MATCHES OR EXHIBITIONS  to  be  conducted,
held  or given within the state of New York and over all licenses to any
and all persons who participate in such boxing or  sparring  matches  or
exhibitions  OR PROFESSIONAL COMBATIVE SPORTS MATCHES OR EXHIBITIONS and
over any and all gyms, clubs, training  camps  and  other  organizations
that maintain training facilities providing contact sparring for persons
who  prepare  for  participation  in  such boxing or sparring matches or
exhibitions OR PROFESSIONAL COMBATIVE SPORTS MATCHES OR EXHIBITIONS, and
over the promotion of professional wrestling exhibitions OR PROFESSIONAL
COMBATIVE SPORTS MATCHES OR EXHIBITIONS to the extent  provided  for  in
sections  5,  9, 19, 20, 28-a, 28-b and 33 of this act, except as other-
wise provided in this act.
  2. The commission is authorized and directed to require that all sites
wherein boxing,  sparring  and  wrestling  matches  and  exhibitions  OR
PROFESSIONAL COMBATIVE SPORTS MATCHES OR EXHIBITIONS are conducted shall
comply  with  state  and  applicable local sanitary codes appropriate to
school athletic facilities.

S. 6359--C                         349

  S 4. Subdivision 1 of section 451  of  the  tax  law,  as  amended  by
section  1  of  part F of chapter 407 of the laws of 1999, is amended to
read as follows:
  1.  "Gross  receipts  from  ticket  sales"  shall mean the total gross
receipts of every person from the sale of tickets to any professional or
amateur boxing, sparring or wrestling match or exhibition OR ANY PROFES-
SIONAL COMBATIVE SPORTS MATCH OR EXHIBITION  held  in  this  state,  and
without  any  deduction  whatsoever for commissions, brokerage, distrib-
ution fees, advertising or any other expenses, charges  and  recoupments
in respect thereto.
  S  5. Section 452 of the tax law, as amended by section 2 of part F of
chapter 407 of the laws of 1999, is amended to read as follows:
  S 452. Imposition of tax.    On  and  after  October  first,  nineteen
hundred  ninety-nine, a tax is hereby imposed and shall be paid upon the
gross receipts of every  person  holding  any  professional  or  amateur
boxing,  PROFESSIONAL  COMBATIVE  SPORTS, sparring or wrestling match or
exhibition in this state. Such  tax  shall  be  imposed  on  such  gross
receipts, exclusive of any federal taxes, as follows:
  (a)  three percent of gross receipts from ticket sales, except that in
no event shall the tax imposed by this subdivision exceed fifty thousand
dollars for any match or exhibition;
  (b) three percent of gross receipts from broadcasting  rights,  except
that  in no event shall the tax imposed by this subdivision exceed fifty
thousand dollars for any match or exhibition.
  (C) ON AND AFTER THE EFFECTIVE DATE OF  THIS  SUBDIVISION,  A  TAX  IS
HEREBY IMPOSED AND SHALL BE PAID UPON THE GROSS RECEIPTS OF EVERY PERSON
HOLDING  ANY  PROFESSIONAL  COMBATIVE SPORTS MATCH OR EXHIBITION IN THIS
STATE. SUCH TAX SHALL BE IMPOSED ON SUCH GROSS  RECEIPTS,  EXCLUSIVE  OF
ANY FEDERAL TAXES, AS FOLLOWS:
  (I)  EIGHT  AND  ONE-HALF PERCENT OF GROSS RECEIPTS FROM TICKET SALES;
AND
  (II) THREE PERCENT OF GROSS RECEIPTS FROM BROADCASTING RIGHTS,  EXCEPT
THAT  IN  NO  EVENT SHALL THE TAX IMPOSED BY THIS PARAGRAPH EXCEED FIFTY
THOUSAND DOLLARS FOR ANY MATCH OR EXHIBITION.
  S 6. Paragraph (b) of subdivision 6-c of section 106 of the  alcoholic
beverage  control  law,  as added by chapter 254 of the laws of 2001, is
amended to read as follows:
  (b) The prohibition contained in paragraph (a)  of  this  subdivision,
however,  shall  not  be applied to any professional match or exhibition
which consists of boxing, PROFESSIONAL COMBATIVE SPORTS, sparring, wres-
tling, or martial arts [and which is] THAT ARE excepted from  the  defi-
nition  of  the  term  "combative sport" contained in subdivision one of
section five-a of chapter nine hundred twelve of the  laws  of  nineteen
hundred  twenty,  as  added  by chapter fourteen of the laws of nineteen
hundred ninety-seven.
  S 7. This act shall take effect on the ninetieth day  after  it  shall
have  become  a  law; provided, however, that effective immediately, the
addition, amendment and/or repeal of any rule  or  regulation  necessary
for  the  implementation of this act on its effective date is authorized
and directed to be made and completed on or before such effective date.

                                 PART WW

  Section 1. The tax law is amended by adding a new section 23-a to read
as follows:

S. 6359--C                         350

  S 23-A. ASBESTOS REMEDIATION CREDIT. (A) DEFINITIONS. AS USED IN  THIS
SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
  (1) QUALIFIED STRUCTURE. "QUALIFIED STRUCTURE" SHALL MEAN (I) A BUILD-
ING,  PRINCIPALLY  USED  BY  THE  TAXPAYER  FOR RESIDENTIAL, INDUSTRIAL,
COMMERCIAL, RECREATIONAL OR  ENVIRONMENTAL  CONSERVATION  PURPOSES,  AND
(II)  WHICH  WAS ORIGINALLY PLACED IN SERVICE AT LEAST TWENTY-FIVE YEARS
PRIOR TO THE TAXABLE YEAR IN WHICH THE CREDIT IS CLAIMED.
  (2) ELIGIBLE COSTS. "ELIGIBLE COSTS" SHALL MEAN ALL  AMOUNTS  PROPERLY
CHARGEABLE TO A CAPITAL ACCOUNT, WHICH ARE INCURRED IN DIRECT CONNECTION
TO ASBESTOS REMEDIATION OF A QUALIFIED ASBESTOS PROJECT.
  (3)  QUALIFIED ASBESTOS PROJECT. "QUALIFIED ASBESTOS PROJECT" SHALL BE
AN ASBESTOS PROJECT AS DEFINED IN SECTION NINE HUNDRED ONE OF THE  LABOR
LAW  AND  UNDERTAKEN  BY  THE  TAXPAYER,  ON  A QUALIFIED STRUCTURE, AND
COMPLETED PURSUANT TO THE APPLICABLE REGULATIONS AT  PART  FIFTY-SIX  OF
TITLE TWELVE OF THE OFFICIAL COMPILATION OF RULES AND REGULATIONS OF THE
STATE.
  (B)  ASBESTOS  REMEDIATION CREDIT. (1) ALLOWANCE OF CREDIT. A TAXPAYER
WHO HAS UNDERTAKEN A QUALIFIED ASBESTOS PROJECT ON  A  QUALIFIED  STRUC-
TURE, AND WHO IS SUBJECT TO TAX UNDER ARTICLE NINE, NINE-A OR TWENTY-TWO
OF THIS CHAPTER, SHALL BE ALLOWED A CREDIT AGAINST SUCH TAX, PURSUANT TO
THE PROVISIONS REFERENCED IN SUBDIVISION (C) OF THIS SECTION.
  (2) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL BE TWENTY PERCENT
OF  ALL  ELIGIBLE  COSTS  WHICH  ARE  INCURRED IN THE TAXABLE YEAR, AS A
RESULT OF ASBESTOS  REMEDIATION  WITH  A  COMPLETED  QUALIFIED  ASBESTOS
PROJECT.  THE  CREDIT SHALL BE ALLOWED FOR THE TAXABLE YEAR IN WHICH THE
QUALIFIED ASBESTOS PROJECT IS FIRST  COMMENCED  AND  FOR  THE  NEXT  TWO
SUCCEEDING TAXABLE YEARS. THE CREDIT AUTHORIZED PURSUANT TO THIS SECTION
SHALL  NOT  EXCEED  THE  TOTAL  SUM OF ONE MILLION DOLLARS FOR THE THREE
TAXABLE YEARS ALLOWED AND CLAIMED. THE COSTS, EXPENSES AND OTHER AMOUNTS
FOR WHICH A CREDIT IS ALLOWED AND CLAIMED UNDER THIS  SUBDIVISION  SHALL
NOT  BE  USED  IN THE CALCULATION OF ANY OTHER CREDIT ALLOWED UNDER THIS
CHAPTER.
  (C) CROSS-REFERENCES. FOR APPLICATION OF THE CREDIT  PROVIDED  FOR  IN
THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  ARTICLE 9: SECTION 187-T.
  ARTICLE 9-A: SECTION 210, SUBDIVISION 48.
  ARTICLE 22: SECTION 606, SUBSECTIONS (I) AND (XX).
  S  2.  The tax law is amended by adding a new section 187-t to read as
follows:
  S 187-T. ASBESTOS  REMEDIATION  CREDIT.  1.  ALLOWANCE  OF  CREDIT.  A
TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS PROVIDED IN
SECTION TWENTY-THREE-A OF THIS CHAPTER, AGAINST  THE  TAXES  IMPOSED  BY
THIS  ARTICLE.  PROVIDED, HOWEVER, THAT THE AMOUNT OF SUCH CREDIT ALLOW-
ABLE AGAINST THE TAX IMPOSED BY SECTION ONE HUNDRED EIGHTY-FOUR OF  THIS
ARTICLE SHALL BE THE EXCESS OF THE AMOUNT OF SUCH CREDIT OVER THE AMOUNT
OF ANY CREDIT ALLOWED BY THIS SECTION AGAINST THE TAX IMPOSED BY SECTION
ONE HUNDRED EIGHTY-THREE OF THIS ARTICLE.
  2.  APPLICATION OF CREDIT. THE CREDIT UNDER THIS SECTION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
APPLICABLE  MINIMUM  TAX  PRESCRIBED  BY  THIS ARTICLE. IF, HOWEVER, THE
AMOUNT OF CREDIT ALLOWABLE UNDER  THIS  SECTION  FOR  ANY  TAXABLE  YEAR
REDUCES  THE  TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR SHALL BE TREATED  AS  AN  OVERPAYMENT  OF  TAX  TO  BE
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF

S. 6359--C                         351

SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  S 3. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48.  ASBESTOS  REMEDIATION CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
WHO HAS UNDERTAKEN A QUALIFIED ASBESTOS PROJECT ON AN EXISTING STRUCTURE
SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN  SECTION  TWEN-
TY-THREE-A OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE HIGHER AMOUNT PRESCRIBED IN PARAGRAPHS (C) AND (D) OF SUBDIVI-
SION ONE OF THIS SECTION. HOWEVER, IF  THE  AMOUNT  OF  CREDITS  ALLOWED
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH  TAXABLE  YEAR
SHALL  BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS  CHAPTER.    PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF
SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTANDING,  NO
INTEREST SHALL BE PAID THEREON.
  S  4. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new clause  (xxxvii)  to  read  as
follows:

(XXXVII) ASBESTOS REMEDIATION        AMOUNT OF CREDIT UNDER
CREDIT UNDER SUBSECTION (XX)         SUBDIVISION FORTY-EIGHT OF
                                     SECTION TWO HUNDRED TEN
  S 5. Subsection (yy) and (zz) of section 606 of the tax law, as relet-
tered  by  section  5  of  part  H of chapter 1 of the laws of 2003, are
relettered subsections (yyy) and (zzz) and  a  new  subsection  (xx)  is
added to read as follows:
  (XX)  ASBESTOS REMEDIATION CREDIT. (1) ALLOWANCE OF CREDIT. A TAXPAYER
WHO HAS UNDERTAKEN A QUALIFIED ASBESTOS PROJECT ON AN EXISTING STRUCTURE
SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN  SECTION  TWEN-
TY-THREE-A OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (2)  APPLICATION  OF CREDIT. IF THE AMOUNT OF THE CREDIT ALLOWED UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR
SUCH YEAR, THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF  TAX  TO  BE
CREDITED  OR  REFUNDED  IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX
HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO  INTEREST
SHALL BE PAID THEREON.
  S 6. This act shall take effect immediately and shall apply to taxable
years commencing on or after January 1, 2014.

                                 PART XX

  Section  1.  Short  title. This act shall be known and may be cited as
the "New York aviation jobs act".
  S 2. Paragraph 1 of subdivision (dd) of section 1115 of the  tax  law,
as  added  by  section 1 of part L of chapter 60 of the laws of 2004, is
amended to read as follows:
  (1) Services otherwise taxable under paragraph  three  of  subdivision
(c)  of  section eleven hundred five or under section eleven hundred ten
of this article,  SALES  OF  GENERAL  AVIATION  AIRCRAFT,  and  tangible
personal  property  purchased  and  used  by  the  person who sells such
services in performing such services,  where  such  property  becomes  a
physical  component  part  of  the  property upon which the services are

S. 6359--C                         352

performed or where such property is a  lubricant  applied  to  aircraft,
shall  be  exempt  from  tax  under this article where such services are
performed on aircraft.
  S 3. The commissioner of taxation and finance, in conjunction with the
commissioner of transportation, shall review and analyze all statistical
data  available  for the purpose of determining the economic and revenue
impact of the sales and compensating use tax exemption for the  sale  of
general  aviation  aircraft  enacted  by  section  two of this act. Such
review and analysis shall include, but not be limited to, any  increases
in  aviation-related  employment,  aircraft basing, aircraft maintenance
and aircraft hangering within the state. The commissioner shall  compile
his  or  her  findings  into  a  report, which shall be submitted, on or
before November 1, 2019, to the governor, the temporary president of the
senate and the speaker of the assembly.
  S 4. This act shall take effect April 1,  2015,  and  shall  apply  to
sales  of  general aviation aircraft made and uses occurring on or after
such effective date  in  accordance  with  the  applicable  transitional
provisions of sections 1106 and 1107 of the tax law, but shall not apply
to  sales  occurring  after  March 31, 2020, and section two of this act
shall expire and be deemed repealed April 1,  2020.  Provided,  however,
that  aircraft  subject to exemption pursuant to paragraph 1 of subdivi-
sion (dd) of section 1115 of the tax law, as amended by section  two  of
this  act,  shall  remain  so  exempt after the expiration and repeal of
section two of this act,  including  instances  where  the  aircraft  is
subsequently  sold  or the ownership is transferred or assigned, for the
useful life of the aircraft. Provided, further, that the commissioner of
taxation and finance shall be immediately authorized to adopt and  amend
any   rules  or  regulations  and  to  issue  any  procedure,  forms  or
instructions necessary to implement section  two  of  this  act  on  its
effective date.

                                 PART YY

  Section  1. Section 28 of the tax law, as added by section 1 of part X
of chapter 62 of the laws of 2006, subdivision (a) as amended by section
1 of part K of chapter 59 of the laws of 2012, is renumbered section  41
and amended to read as follows:
  S  41.  Biofuel production credit.  (a) General. A taxpayer subject to
tax under article nine, nine-A or twenty-two of this  chapter  shall  be
allowed  a credit against such tax pursuant to the provisions referenced
in subdivision (d) of this section. The credit (or  pro  rata  share  of
earned  credit  in the case of a partnership) for each gallon of biofuel
produced at a biofuel plant on or after January first, two thousand  six
shall equal fifteen cents per gallon OR TWENTY-FIVE CENTS PER GALLON FOR
PRODUCTION OF CELLULOSIC ETHANOL after the production of the first forty
thousand  gallons  per  year  presented to market. The credit under this
section shall be capped at two and one-half million dollars per taxpayer
per taxable year for up to no more than four consecutive  taxable  years
per  biofuel  plant.  If  the  taxpayer is a partner in a partnership or
shareholder of a New York S corporation, then the  cap  imposed  by  the
preceding  sentence  shall  be  applied at the entity level, so that the
aggregate credit allowed to all the partners  or  shareholders  of  each
such entity in the taxable year does not exceed two and one-half million
dollars.  The tax credit allowed pursuant to this section shall apply to
taxable years beginning before January first, two thousand twenty.

S. 6359--C                         353

  (b) Definitions. For the purpose of this section, the following  terms
shall have the following meanings:
  (1)  "Biofuel"  means a fuel which includes biodiesel and ethanol. The
term "biodiesel" shall mean a fuel comprised exclusively  of  mono-alkyl
esters  of  long chain fatty acids derived from vegetable oils or animal
fats, designated B100, which meets the specifications of American Socie-
ty of Testing and Materials designation D 6751-02.  The  term  "ethanol"
shall  mean  ethyl  alcohol  manufactured  in  the United States and its
territories and sold (i) for fuel use and which has been rendered  unfit
for  beverage  use  in  a  manner  and  which  is produced at a facility
approved by the federal bureau of alcohol, tobacco and firearms for  the
production  of  ethanol  for  fuel, or (ii) as denatured ethanol used by
blenders and refiners which has been rendered unfit  for  beverage  use.
The  term  "biofuel" may also include any other standard approved by the
New York state energy and research development authority.
  (2) "CELLULOSIC ETHANOL" MEANS THE PRODUCTION OF ETHANOL  FROM  LIGNO-
CELLULOSIC  BIOMASS  FEEDSTOCKS  NOT  USED  FOR FOOD PRODUCTION THAT ARE
ALTERED THROUGH ACTIVITIES REFERENCED IN SUBPARAGRAPH FIVE OF  PARAGRAPH
(B) OF SUBDIVISION ONE OF SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC
AUTHORITIES  LAW.  SUCH  LIGNOCELLULOSIC BIOMASS FEEDSTOCKS MAY INCLUDE,
BUT ARE NOT NECESSARILY LIMITED TO, SWITCHGRASSES OR  WILLOWS,  AGRICUL-
TURAL  AND FORESTRY RESIDUES, CLEAN WOOD AND WOOD WASTES, PULP AND PAPER
MILL WASTES OR EXTRACTS, AND NON-RECYCLABLE PAPER. ANY  QUESTION  AS  TO
WHETHER ANY FEEDSTOCK QUALIFIES UNDER THIS PARAGRAPH SHALL BE DETERMINED
BY  THE  PRESIDENT OF THE NEW YORK STATE ENERGY AND RESEARCH DEVELOPMENT
AUTHORITY IN CONSULTATION WITH THE COMMISSIONER OF ENVIRONMENTAL CONSER-
VATION AND THE COMMISSIONER OF AGRICULTURE AND MARKETS.
  (3) "Biofuel plant" means a commercial facility located  in  New  York
state  at  which one or more biofuels are produced.  FOR THE PURPOSES OF
THIS SECTION,  ANY  COMMERCIAL  FACILITY  WHERE  CELLULOSIC  ETHANOL  IS
PRODUCED SHALL BE CONSIDERED A SEPARATE BIOFUEL PLANT.
  (c) Reporting requirements. A taxpayer wishing to claim a credit under
this section shall annually certify to the commissioner (i) that biofuel
produced  at the eligible biofuel plant meets all existing standards for
biofuel and (ii) the amount of biofuel produced at the eligible  biofuel
plant during a taxable year.
  (d)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-c.
  (2) Article 9-A: Section 210, subdivision 38.
  (3) Article 22: Section 606, subsections (i) and (jj).
  S 2. Section 187-c of the tax law, as amended by section 2 of  part  K
of chapter 59 of the laws of 2012, is amended to read as follows:
  S  187-c.  Biofuel  production  credit.  A taxpayer shall be allowed a
credit to be computed as provided in section [twenty-eight] FORTY-ONE of
this chapter, [as added by part X of chapter sixty-two of  the  laws  of
two  thousand  six,]  against the tax imposed by this article. Provided,
however, that the amount of such credit allowed against the tax  imposed
by  section  one hundred eighty-four of this article shall be the excess
of the amount of such credit over the amount of any  credit  allowed  by
this section against the tax imposed by section one hundred eighty-three
of  this  article.  In  no  event shall the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable  minimum tax fixed by section one hundred eighty-three or one
hundred eighty-five of this article. If,  however,  the  amount  of  the
credit  allowed  under this section for any taxable year reduces the tax

S. 6359--C                         354

to such amount, the excess shall be treated as an overpayment of tax  to
be credited or refunded in accordance with the provisions of section six
hundred eighty-six of this chapter. Provided, however, the provisions of
subsection  (c)  of  section  one  thousand eighty-eight of this chapter
notwithstanding, no interest shall  be  paid  thereon.  The  tax  credit
allowed  pursuant to this section shall apply to taxable years beginning
before January first, two thousand twenty.
  S 3. Subdivision 38 of section 210 of  the  tax  law,  as  amended  by
section  3  of  part  K of chapter 59 of the laws of 2012, is amended to
read as follows:
  38. Biofuel production credit. A taxpayer shall be allowed  a  credit,
to  be  computed as provided in section [twenty-eight] FORTY-ONE of this
chapter, [as added by part X of chapter sixty-two of  the  laws  of  two
thousand  six,]  against  the  tax  imposed  by this article. The credit
allowed under this subdivision for any taxable year shall not reduce the
tax due for such year to less than the higher of the amounts  prescribed
in  paragraphs  (c) and (d) of subdivision one of this section. However,
if the amount of credit allowed under this subdivision for  any  taxable
year  reduces  the  tax  to  such  amount, any amount of credit thus not
deductible in such taxable year shall be treated as  an  overpayment  of
tax  to  be  credited  or  refunded in accordance with the provisions of
section one thousand eighty-six of this chapter. Provided, however,  the
provisions  of  subsection  (c)  of section one thousand eighty-eight of
this chapter notwithstanding, no interest shall be paid thereon. The tax
credit allowed pursuant to this section shall  apply  to  taxable  years
beginning before January first, two thousand twenty.
  S  4.  Subsection  (jj)  of  section 606 of the tax law, as amended by
section 4 of part K of chapter 59 of the laws of  2012,  is  amended  to
read as follows:
  (jj)  Biofuel  production credit. A taxpayer shall be allowed a credit
to be computed as provided in section [twenty-eight] FORTY-ONE  of  this
chapter,  [as  added  by  part X of chapter sixty-two of the laws of two
thousand six,] against the tax imposed by this article. If the amount of
the credit allowed under this subsection  for  any  taxable  year  shall
exceed  the taxpayer's tax for such year, the excess shall be treated as
an overpayment of tax to be credited or refunded in accordance with  the
provisions  of section six hundred eighty-six of this article, provided,
however, that no interest shall be paid thereon. The tax credit  allowed
pursuant  to  this section shall apply to taxable years beginning before
January first, two thousand twenty.
  S 5. This act shall take effect immediately.

                                 PART ZZ

  Section 1. Subdivision 9 of section 208 of the tax law is  amended  by
adding a new paragraph (r) to read as follows:
  (R)  IN THE EVENT THE TAXPAYER CLAIMS THE NATURAL RESOURCE IMPROVEMENT
CREDIT FOR FARMLANDS AND FORESTLANDS ESTABLISHED PURSUANT TO SUBDIVISION
FORTY-EIGHT OF SECTION TWO HUNDRED  TEN  OF  THIS  ARTICLE,  ENTIRE  NET
INCOME  SHALL  BE INCREASED BY THE AMOUNT OF ANY EXPENDITURES DEFINED IN
INTERNAL REVENUE CODE SECTION 175(C)(1) THAT THE TAXPAYER DEDUCTED  FROM
ITS TOTAL NET INCOME ON ITS FEDERAL TAX RETURN FOR THE TAX YEAR.
  S 2. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. NATURAL RESOURCE IMPROVEMENT CREDIT FOR FARMLANDS AND FORESTLANDS.
(A) ALLOWANCE OF CREDIT. FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY

S. 6359--C                         355

FIRST,  TWO  THOUSAND  FIFTEEN,  A  TAXPAYER  SHALL  BE ALLOWED A CREDIT
AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE  IN  AN  AMOUNT  EQUAL  TO
TWENTY-FIVE  PERCENT  OF THE TAXPAYER'S ELIGIBLE EXPENDITURES DURING THE
TAX YEAR FOR A NATURAL RESOURCES IMPROVEMENT PROJECT. PROVIDED, HOWEVER,
THAT  THE  CREDIT  GRANTED  FOR ANY NATURAL RESOURCE IMPROVEMENT PROJECT
PURSUANT TO THIS SUBDIVISION SHALL NOT EXCEED FIFTY THOUSAND DOLLARS.
  (B) DEFINITIONS. FOR THE PURPOSES OF THIS SUBDIVISION,  THE  FOLLOWING
DEFINITIONS SHALL APPLY:
  (1) "ELIGIBLE EXPENDITURES" SHALL MEAN FEES FOR ARCHITECTURAL, ARCHEO-
LOGICAL,  GEOLOGICAL  AND  ENGINEERING SERVICES; THE COSTS OF DEVELOPING
PLANS AND SPECIFICATIONS; FEES FOR CONSULTANT AND  LEGAL  SERVICES;  AND
ANY  EXPENDITURE  DEFINED  IN  INTERNAL  REVENUE CODE SECTION 175(C)(1),
INCLUDING EXPENDITURES RELATED TO THE APPLICATION OF LIME AND  FERTILIZ-
ER,  IMPROVEMENT  OF  DRAINAGE  IN THE CASE OF OPEN AREAS THAT HAVE BEEN
USED FOR AGRICULTURAL PURPOSES AT ANY TIME IN THE PAST, AND EXPENDITURES
RELATED TO THE DECONSTRUCTION AND REMOVAL OF  FENCES,  STREAM  CROSSINGS
AND  NECESSARY  RIPARIAN BUFFERS AND FORESTLAND IMPROVEMENTS AS REQUIRED
BY THE NATURAL RESOURCES IMPROVEMENT PROJECT.
  (2) "FARMLAND AND FORESTLAND" SHALL MEAN LAND WHICH, DURING THE  TAXA-
BLE YEAR IN WHICH THE CREDIT IS CLAIMED PURSUANT TO THIS SUBDIVISION, IS
ELIGIBLE   FOR   AN   AGRICULTURAL   ASSESSMENT   PURSUANT   TO  ARTICLE
TWENTY-FIVE-AA OF THE AGRICULTURE AND MARKETS  LAW  OR  ELIGIBLE  FOR  A
FOREST  ASSESSMENT UNDER SECTION FOUR HUNDRED EIGHTY-A OF THE REAL PROP-
ERTY TAX LAW.
  (3) "NATURAL RESOURCES IMPROVEMENT PROJECT" SHALL MEAN THE RESTORATION
OF FARMLAND AND FORESTLAND FOR THE PRODUCTION OF AGRICULTURAL  PERENNIAL
CROPS, INCLUDING THOSE CROPS INTENDED FOR ENERGY PRODUCTION PURPOSES, BY
IMPROVING  SUCH  LAND WHICH HAS NOT BEEN USED IN AGRICULTURAL PRODUCTION
FOR TWO OR MORE YEARS PRIOR TO THE INITIATION  OF  SUCH  RESTORATION  OR
FORESTLAND IMPROVEMENTS REQUIRED IN THE MANAGEMENT PLAN.
  (C)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
THAN  THE  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS
SECTION. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CRED-
IT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR WILL BE TREATED AS AN  OVER-
PAYMENT  OF  TAX  TO  BE  CREDITED  OR  REFUNDED  IN ACCORDANCE WITH THE
PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT-
Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST WILL BE PAID THERE-
ON.
  S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is amended by adding a new clause (xxxvii) to read as
follows:
(XXXVII) NATURAL RESOURCE            AMOUNT OF CREDIT FOR ELIGIBLE
IMPROVEMENT CREDIT FOR               EXPENDITURES FOR A NATURAL
FARMLANDS AND                        RESOURCES IMPROVEMENT PROJECT
FORESTLANDS UNDER                    UNDER SUBDIVISION FORTY-EIGHT
SUBSECTION (U)                       OF SECTION TWO HUNDRED TEN
  S 4. Section 606 of the tax law is amended by adding a new  subsection
(u) to read as follows:
  (U) NATURAL RESOURCE IMPROVEMENT CREDIT FOR FARMLANDS AND FORESTLANDS.
(1) ALLOWANCE OF CREDIT. FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY
FIRST,  TWO  THOUSAND  FIFTEEN,  A  TAXPAYER  SHALL  BE ALLOWED A CREDIT
AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE  IN  AN  AMOUNT  EQUAL  TO
TWENTY-FIVE  PERCENT  OF THE TAXPAYER'S ELIGIBLE EXPENDITURES DURING THE

S. 6359--C                         356

TAX YEAR FOR A NATURAL RESOURCE IMPROVEMENT PROJECT. PROVIDED,  HOWEVER,
THAT  THE  CREDIT  GRANTED  FOR ANY NATURAL RESOURCE IMPROVEMENT PROJECT
PURSUANT TO THIS SUBSECTION SHALL NOT EXCEED FIFTY THOUSAND DOLLARS.
  (2)  DEFINITIONS.  FOR  THE PURPOSES OF THIS SUBSECTION, THE FOLLOWING
DEFINITIONS SHALL APPLY:
  (A) "ELIGIBLE EXPENDITURES" SHALL MEAN FEES FOR ARCHITECTURAL, ARCHEO-
LOGICAL, GEOLOGICAL AND ENGINEERING SERVICES; THE  COSTS  OF  DEVELOPING
PLANS  AND  SPECIFICATIONS;  FEES FOR CONSULTANT AND LEGAL SERVICES; AND
ANY EXPENDITURE DEFINED IN  INTERNAL  REVENUE  CODE  SECTION  175(C)(1),
INCLUDING  EXPENDITURES RELATED TO THE APPLICATION OF LIME AND FERTILIZ-
ER, IMPROVEMENT OF DRAINAGE IN THE CASE OF OPEN  AREAS  THAT  HAVE  BEEN
USED FOR AGRICULTURAL PURPOSES AT ANY TIME IN THE PAST, AND EXPENDITURES
RELATED  TO  THE  DECONSTRUCTION AND REMOVAL OF FENCES, STREAM CROSSINGS
AND NECESSARY RIPARIAN BUFFERS AND FORESTLAND IMPROVEMENTS  AS  REQUIRED
BY THE NATURAL RESOURCE IMPROVEMENT PROJECT.
  (B)  "FARMLAND AND FORESTLAND" SHALL MEAN LAND WHICH, DURING THE TAXA-
BLE YEAR IN WHICH THE CREDIT IS CLAIMED PURSUANT TO THIS SUBSECTION,  IS
ELIGIBLE   FOR   AN   AGRICULTURAL   ASSESSMENT   PURSUANT   TO  ARTICLE
TWENTY-FIVE-AA OF THE AGRICULTURE AND MARKETS  LAW  OR  ELIGIBLE  FOR  A
FOREST  ASSESSMENT UNDER SECTION FOUR HUNDRED EIGHTY-A OF THE REAL PROP-
ERTY TAX LAW.
  (C) "NATURAL RESOURCE IMPROVEMENT PROJECT" SHALL MEAN THE  RESTORATION
OF  FARMLAND AND FORESTLAND FOR THE PRODUCTION OF AGRICULTURAL PERENNIAL
CROPS, INCLUDING THOSE CROPS INTENDED FOR ENERGY PRODUCTION PURPOSES, BY
IMPROVING SUCH LAND WHICH HAS NOT BEEN USED IN  AGRICULTURAL  PRODUCTION
FOR TWO OR MORE YEARS PRIOR TO THE COMPLETION OF SUCH RESTORATION OR HAD
A COMMERCIAL TIMBER HARVEST WITHIN THE PAST FIVE YEARS.
  (3)  APPLICATION  OF CREDIT. IF THE AMOUNT OF THE CREDIT ALLOWED UNDER
THIS SUBSECTION SHALL EXCEED THE  TAXPAYER'S  TAX  FOR  SUCH  YEAR,  THE
TAXPAYER  MAY  RECEIVE  AND THE COMPTROLLER, SUBJECT TO A CERTIFICATE OF
THE COMMISSIONER, SHALL PAY AS AN  OVERPAYMENT,  WITHOUT  INTEREST,  THE
AMOUNT OF SUCH EXCESS.
  S  5.  Paragraph 4 of subsection (b) of section 612 of the tax law, as
amended by chapter 406 of the laws  of  1990,  is  amended  to  read  as
follows:
  (4)  Interest  on  indebtedness  incurred  or continued to purchase or
carry obligations or securities the interest on which is exempt from tax
under this article, to the  extent  deductible  in  determining  federal
adjusted  gross  income;  PROVIDED THAT IN THE EVENT THE TAXPAYER CLAIMS
THE NATURAL RESOURCE IMPROVEMENT CREDIT FOR  FARMLANDS  AND  FORESTLANDS
ESTABLISHED  PURSUANT  TO  SUBSECTION  (U) OF SECTION SIX HUNDRED SIX OF
THIS ARTICLE, THE AMOUNT OF ANY EXPENDITURES DEFINED IN INTERNAL REVENUE
CODE SECTION 175(C)(1) THAT THE TAXPAYER DEDUCTED FROM HIS OR HER FEDER-
AL GROSS INCOME ON HIS OR HER FEDERAL TAX RETURN FOR THE TAX YEAR.
  S 6. This act shall take effect immediately and shall apply to  resto-
ration projects initiated on or after such date.

                                PART AAA

  Section  1. Subsection (c) of section 612 of the tax law is amended by
adding a new paragraph 41 to read as follows:
  (41) THE AMOUNT THAT MAY BE SUBTRACTED  FROM  FEDERAL  ADJUSTED  GROSS
INCOME PURSUANT TO SUBSECTION (W) OF THIS SECTION.
  S  2. Section 612 of the tax law is amended by adding a new subsection
(w) to read as follows:

S. 6359--C                         357

  (W) CONTRIBUTIONS MADE TO A FARM RESERVE ACCOUNT. (1) THERE  SHALL  BE
SUBTRACTED  FROM  FEDERAL ADJUSTED GROSS INCOME CONTRIBUTIONS MADE BY AN
ELIGIBLE FARMER TO A FARM RESERVE ACCOUNT, PROVIDED  SUCH  CONTRIBUTIONS
SHALL  NOT  EXCEED  FIVE THOUSAND DOLLARS FOR AN INDIVIDUAL TAXPAYER AND
SHALL NOT EXCEED TEN THOUSAND DOLLARS FOR MARRIED TAXPAYERS.
  (2)  ELIGIBLE  FARMER.  FOR  THE PURPOSES OF THIS SUBSECTION, THE TERM
"ELIGIBLE FARMER" MEANS A TAXPAYER WHOSE FEDERAL GROSS INCOME FROM FARM-
ING FOR THE TAXABLE YEAR IS AT LEAST TWO-THIRDS OF EXCESS FEDERAL  GROSS
INCOME.
  (3)  FOR  PURPOSES  OF  THIS SUBSECTION A "FARM RESERVE ACCOUNT" SHALL
MEAN AN ACCOUNT ORGANIZED OR CREATED IN THIS  STATE  FOR  THE  EXCLUSIVE
BENEFIT OF AN INDIVIDUAL AND HIS OR HER SPOUSE WHO IS AN ELIGIBLE FARMER
FOR  THE  PURPOSE OF MITIGATING THE LOSS OF INCOME RESULTING FROM DIMIN-
ISHED  YIELDS  OR  PRODUCTION  DUE  TO  NATURAL  DISASTER,  INFESTATION,
DISEASE,  INVASIVE  SPECIES, OR OTHER CONDITIONS TO BE DETERMINED BY THE
COMMISSIONER OF AGRICULTURE AND MARKETS. EVERY SUCH ACCOUNT SHALL COMPLY
WITH THE FOLLOWING REQUIREMENTS:
  (I) THE ACCOUNT SHALL BE HELD IN A BANKING ORGANIZATION, AS DEFINED IN
SECTION TWO OF THE BANKING  LAW,  NATIONAL  BANKING  ASSOCIATION,  STATE
CHARTERED CREDIT UNION, FEDERAL MUTUAL SAVINGS BANK, FEDERAL SAVINGS AND
LOAN  ASSOCIATION,  OR  FEDERAL CREDIT UNION AND SUCH ACCOUNT WAS ESTAB-
LISHED PURSUANT TO THIS SUBSECTION.
  (II) ANY AMOUNT IN THE ACCOUNT IS NONFORFEITABLE.
  (III) THE FUNDS IN SUCH ACCOUNT SHALL NOT BE COMMINGLED WITH ANY OTHER
MONIES OF THE INDIVIDUAL BY THE TRUSTEE.
  (4) WITHIN SIXTY DAYS AFTER WITHDRAWAL OF MONEYS FROM A FARM  PURCHASE
ACCOUNT,  AN  INDIVIDUAL  SHALL SUBMIT SATISFACTORY PROOF TO THE COMMIS-
SIONER, UPON FORMS PROVIDED BY THE DEPARTMENT, THAT THE MONIES WITHDRAWN
WERE USED TO MITIGATE THE LOSS OF INCOME. IN THE EVENT THAT AN  INDIVID-
UAL  WITHDRAWS  ALL  OR  ANY  PART OF THE MONIES FROM THE ACCOUNT IN THE
ABSENCE  OF  LOSS  OF  INCOME  PURSUANT  TO  PARAGRAPH  THREE  OF   THIS
SUBSECTION, OR FAILS TO SUBMIT TO THE COMMISSIONER THE PROOF AS REQUIRED
PURSUANT  TO  THIS  PARAGRAPH,  SUCH  INDIVIDUAL  SHALL  HAVE THE ENTIRE
ACCOUNT TAXED AS THOUGH IT WAS INCOME IN THE YEARS THAT THE MONIES  FROM
THE ACCOUNT WERE DEPOSITED.
  (5)  THE  COMMISSIONER  IS HEREBY DIRECTED TO PROMULGATE ALL RULES AND
REGULATIONS,  AFTER  CONSULTATION  WITH  THE  DEPARTMENT  OF   FINANCIAL
SERVICES  AND  THE  DEPARTMENT  OF AGRICULTURE AND MARKETS, NECESSARY TO
IMPLEMENT THE PROVISIONS OF THIS SUBSECTION AND TO MAXIMIZE  THE  EFFECT
OF  THIS  SUBSECTION.  THE COMMISSIONER AND THE BANKING BOARD ARE HEREBY
DIRECTED TO COOPERATE WITH EACH OTHER IN THE ESTABLISHMENT,  SUPERVISION
AND REGULATION OF THE INDIVIDUAL FARM PURCHASE ACCOUNTS AUTHORIZED TO BE
CREATED IN THIS SUBSECTION.
  S 3. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2015.

                                PART BBB

  Section  1.    Clauses (E) and (F) of subparagraph 5 of paragraph b of
subdivision 1 of section 1016 of the racing,  pari-mutuel  wagering  and
breeding law are REPEALED.
  S  2.  Section  1017  of the racing, pari-mutuel wagering and breeding
law, as amended by chapter 18 of the laws  of  2008,  subdivision  2  as
amended  by  chapter  174  of  the  laws  of 2013, is amended to read as
follows:

S. 6359--C                         358

  S 1017. Out-of-state or out-of-country races. [1.] Licensed  simulcast
facilities  may  accept wagers and display the signal of out-of-state or
out-of-country thoroughbred tracks after 7Labor P.M. in accordance  with
the  provisions  of  this  section.  Such simulcasting may include mixed
meetings  if  such meetings are integral to such racing programs and all
such wagering on such races shall be construed to be thoroughbred races.
For  facilities  located  within  the  special  betting  district,  such
approval  shall  also be required from a thoroughbred racing corporation
during the period a racing program is being  conducted  at  such  track.
Such  approval shall not be required on any day such thoroughbred racing
corporation is also accepting an out-of-state or  out-of-country  signal
and  wager, as authorized by this section. The provisions of section one
thousand sixteen of this article shall be applicable to the  conduct  of
such  simulcasting and the provisions of clauses (A) and (B) of subpara-
graph four of paragraph b of subdivision one  of  section  one  thousand
sixteen  of  this  article  shall  apply to those facilities licensed in
accordance with sections one thousand eight and  one  thousand  nine  of
this  article  and the provisions of clauses (A) and (B) of subparagraph
six of paragraph b of subdivision one of section one thousand sixteen of
this article shall apply to those facilities licensed in accordance with
section one thousand seven of this article, when such provisions are  in
full  force  and effect pursuant to such section. Provided, however, the
provisions of section one thousand fourteen of  this  article  shall  be
applicable to the conduct of such simulcasting, when such provisions are
in full force and effect pursuant to such section.
  [2.  a. Maintenance of effort. Any off-track betting corporation which
engages in accepting wagers on the simulcasts of thoroughbred races from
out-of-state or out-of-country as permitted  under  subdivision  one  of
this  section shall submit to the commission, for its approval, a sched-
ule of payments to be made in any year or  portion  thereof,  that  such
off-track corporation engages in nighttime thoroughbred simulcasting. In
order  to  be  approved by the commission, the payment schedule shall be
identical to the actual payments and distributions of such  payments  to
[tracks  and]  purses made by such off-track corporation pursuant to the
provisions of section one thousand fifteen of this  article  during  the
year  two  thousand  two,  as  derived  from  out-of-state harness races
displayed after 6:00 P.M. If approved by the commission, such  scheduled
payments  shall  be  made  from  revenues  derived from any simulcasting
conducted pursuant to this section and section one thousand  fifteen  of
this article.
  b.  Additional payments. During each calendar year, to the extent, and
at such time in the event,  that  aggregate  statewide  wagering  handle
after  7Labor P.M. on out-of-state and out-of-country thoroughbred races
exceeds one hundred million dollars, each off-track betting  corporation
conducting  such simulcasting shall pay to its regional harness track or
tracks, an amount equal to two percent of  its  proportionate  share  of
such  excess  handle. In any region where there are two or more regional
harness tracks, such two percent shall be divided between or  among  the
tracks in a proportion equal to the proportion of handle on live harness
races conducted at such tracks during the preceding calendar year. Fifty
percent  of  the  sum  received by each track pursuant to this paragraph
shall be used exclusively for increasing purses, stakes  and  prizes  at
that regional harness track. For the purpose of determining whether such
aggregate  statewide  handle  exceeds  one  hundred million dollars, all
wagering on such thoroughbred races accepted by licensed multi-jurisdic-

S. 6359--C                         359

tional account wagering providers from customers within New  York  state
shall be excluded.]
  S  3. Subdivision 2 of section 529 of the racing, pari-mutuel wagering
and breeding law is amended to read as follows:
  2. [Ninety-five percent of  the  balance  of  such  account  remaining
unclaimed  as  of the last day of February of such year shall be paid to
the state tax commission by March fifteenth. On or before April tenth of
each year the balance of such account and any  other  unclaimed  amounts
received  in the course of conducting off-track betting shall be paid by
such corporation to the state tax commission. A penalty of five  percent
and  interest  at the rate of one percent per month from the due date to
the date of payment of the unclaimed  balance  due  March  fifteenth  or
April  tenth,  as the case may be, shall be payable in case such balance
is not  paid  when  due.  Such  amounts,  interest  and  penalties  when
collected by the state tax commission shall be deposited into the gener-
al  fund  of the state treasury] ON APRIL FIRST OF EACH YEAR, THE AMOUNT
OF TICKETS REMAINING UNCLAIMED FROM THE  PRIOR  YEAR  MAY  BE  USED  FOR
CORPORATE PURPOSES.
  S 4. Paragraph b of subdivision 3 of section 1009 of the racing, pari-
mutuel  wagering  and breeding law, as amended by chapter 18 of the laws
of 2008, is amended to read as follows:
  b. Letters of consent to the application from any regional track which
is not a party to the operation of  the  proposed  theater  unless  such
track is located more than [forty] TEN miles from the proposed simulcast
theater;  and  a  copy  of  any agreement between the applicant and such
corporation pursuant to which such consent has been  given,  subject  to
the  provision  of subdivision two of section one thousand seven of this
article. Notwithstanding the foregoing, the Nassau region may  apply  to
locate  [one  simulcast theater] ANY FAST TRACK BETTING LOCATIONS within
Nassau County without a letter of  consent  from  the  operator  of  the
regional  track  [provided  the proposed simulcast theater is not within
fifteen miles of the closest border of any racing facility operated by a
franchised corporation].
  S 5. Section 503 of the racing, pari-mutuel wagering and breeding  law
is amended by adding a new subdivision 14 to read as follows:
  14.  ON  AND  AFTER  MAY  FIRST,  TWO  THOUSAND FOURTEEN, ANY REGIONAL
OFF-TRACK BETTING CORPORATION WITH A CAPITAL RESERVE FUND IN  EXCESS  OF
FIVE  MILLION DOLLARS SHALL DISBURSE ANY EXCESS FUNDS TO ITS PARTICIPAT-
ING COUNTIES IN PROPORTION TO SUCH COUNTY'S POPULATION MEASURED  AGAINST
THE TOTAL POPULATION OF THE REGION.
  S 6. Subdivision 1 of section 1012 of the racing, pari-mutuel wagering
and  breeding  law,  as  amended  by chapter 174 of the laws of 2013, is
amended to read as follows:
  1. Racing  associations  and  corporations,  franchised  corporations,
off-track betting corporations and multi-jurisdictional account wagering
providers  may  form  partnerships,  joint ventures, or any other affil-
iations or contractual arrangement in order to further the  purposes  of
this  section.  Multi-jurisdictional account wagering providers involved
in such joint affiliations or contractual arrangements shall follow  the
same  distributional  policy  with  respect  to  retained commissions as
[their in-state affiliate or contractual partner] A MULTI-JURISDICTIONAL
ACCOUNT WAGERING PROVIDER DEFINED IN THIS  ARTICLE;  PROVIDED,  HOWEVER,
THAT  SUCH  JOINT AFFILIATION OR CONTRACTUAL ARRANGEMENT ENTERED INTO ON
OR AFTER THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS OF  TWO  THOUSAND
FOURTEEN  THAT  AMENDED  THIS SUBDIVISION SHALL BE SUBJECT TO THE REVIEW
AND APPROVAL OF THE NEW YORK STATE GAMING  COMMISSION  TO  DETERMINE  IF

S. 6359--C                         360

SUCH  AFFILIATION  OR CONTRACTUAL ARRANGEMENT IS IN THE BEST INTEREST OF
THE RACING INDUSTRY OF THIS STATE.
  S  7.  This  act  shall take effect immediately, provided however that
section six of this act shall be deemed to have been in full  force  and
effect on and after January 1, 2014.

                                PART CCC

  Section  1. Subdivision b of section 1617-a of the tax law, as amended
by section 5 of part K of chapter 57 of the laws of 2010, is amended  to
read as follows:
  b. Video lottery gaming shall only be permitted for no more than twen-
ty  consecutive  hours  per  day  and  on no day shall such operation be
conducted past [4:00] 6:00 a.m.
  S 2. Paragraph 3 of subdivision f of section 1617-a of the tax law, as
added by section 2 of part O of chapter 61  of  the  laws  of  2011,  is
amended to read as follows:
  (3) For each video lottery facility, the annual value of the free play
allowance  credits  authorized  for use by the operator pursuant to this
subdivision shall not exceed an amount equal to [ten] FIFTEEN percent of
the total amount wagered on video lottery games after payout of  prizes.
The  division shall establish procedures to assure that free play allow-
ance credits do not exceed such amount.
  S 3. Paragraph 4 of subdivision a of section 1617-a of the tax law, as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  (4) at a maximum of two facilities, neither to exceed [one] TWO  thou-
sand  video  lottery  gaming devices, established within region three of
zone one as defined by section one thousand three  hundred  ten  of  the
racing,  pari-mutuel  wagering  and breeding law, one each operated by a
corporation established pursuant to section  five  hundred  two  of  the
racing,  pari-mutuel wagering and breeding law in the Suffolk region and
the Nassau region to be located within a facility authorized pursuant to
sections one thousand eight or one thousand nine of the racing, pari-mu-
tuel wagering and breeding law. The facilities  authorized  pursuant  to
this paragraph shall be deemed vendors for all purposes under this arti-
cle.
  S 4. This act shall take effect immediately.

                                PART DDD

  Section  1.  Subparagraph  (iii)  of  paragraph  1 of subdivision b of
section 1612 of the tax law, as separately amended by chapters  174  and
175 of the laws of 2013, is amended to read as follows:
  (iii) less an additional vendor's marketing allowance at a rate of ten
percent  for  the first one hundred million dollars annually AND FOR ANY
VENDOR TRACK LOCATED WEST OF STATE ROUTE 14  FROM  SODUS  POINT  TO  THE
PENNSYLVANIA BORDER WITHIN NEW YORK AND ANY VENDOR TRACK IN ONEIDA COUN-
TY  AT  A  RATE OF TWELVE AND ONE-HALF PERCENT FOR THE FIRST ONE HUNDRED
MILLION DOLLARS ANNUALLY and  eight  percent  thereafter  of  the  total
revenue  wagered  at the vendor track after payout for prizes to be used
by the vendor track for the marketing and promotion and associated costs
of its video lottery gaming  operations  and  pari-mutuel  horse  racing
operations,  as long as any such costs associated with pari-mutuel horse
racing operations simultaneously encourage increased attendance at  such
vendor's  video lottery gaming facilities, consistent with the customary
manner of marketing comparable operations in the industry and subject to

S. 6359--C                         361

the overall supervision of the division;  provided,  however,  that  the
additional  vendor's  marketing allowance shall not exceed eight percent
in any year for any operator of a racetrack located  in  the  county  of
Westchester or Queens; provided, however, a vendor track that receives a
vendor fee pursuant to clause (G) of subparagraph (ii) of this paragraph
shall not receive the additional vendor's marketing allowance; provided,
however, except [for] THAT a vendor track located west of State Route 14
from  Sodus  Point  to  the  Pennsylvania border within New York AND ANY
VENDOR TRACK IN ONEIDA COUNTY shall  continue  to  receive  a  marketing
allowance  of [ten] TWELVE AND ONE-HALF percent on total revenue wagered
at the vendor track after payout for prizes in  excess  of  one  hundred
million  dollars  annually  provided,  however, a vendor that receives a
vendor fee pursuant to clause (G-1) of subparagraph (ii) of  this  para-
graph  shall  receive an additional marketing allowance at a rate of ten
percent of the total revenue wagered at the video lottery gaming facili-
ty after payout for prizes. In establishing the vendor fee,
  S 2. This act shall take effect immediately.

                                PART EEE

  Section 1. Clause (D) of subparagraph (i) of paragraph 1  of  subdivi-
sion  b of section 1612 of the tax law, as amended by chapter 174 of the
laws of 2013, is amended to read as follows:
  (D) notwithstanding clauses (A), (B) and  (C)  of  this  subparagraph,
when the vendor track is located within [fifteen miles of a Native Amer-
ican  class  III gaming facility] REGION FOUR OR SIX OF DEVELOPMENT ZONE
TWO AS DEFINED BY SECTION THIRTEEN HUNDRED TEN OF THE RACING, PARI-MUTU-
EL WAGERING AND BREEDING LAW at a rate of forty-one percent of the total
revenue wagered at the vendor track after payout for prizes pursuant  to
this chapter;
  S 2. This act shall take effect immediately.

                                PART FFF

  Section  1.  Paragraph  1  of subdivision f of section 1612 of the tax
law, as amended by chapter 174 of the laws of 2013, is amended  to  read
as follows:
  1.  Six  and  one-half  percent  of  the total wagered after payout of
prizes for the first year of operation of video lottery gaming at  Aque-
duct  racetrack,  seven  percent  of  the  total wagered after payout of
prizes for the second year of operation, and seven and one-half  percent
of the total wagered after payout of prizes for the third year of opera-
tion  and  thereafter,  for  the purpose of enhancing purses at Aqueduct
racetrack, Belmont Park racetrack and Saratoga race course. One  percent
of  such purse enhancement amount shall be paid to the gaming commission
to be used exclusively to promote and ensure equine health and safety in
New York.  ADDITIONALLY, TWO PERCENT OF SUCH PURSE ENHANCEMENT,  BUT  NO
LESS  THAN  ONE  MILLION THREE HUNDRED THOUSAND DOLLARS SHALL BE PAID TO
THE JOCKEY'S ORGANIZATION WHICH ON THE EFFECTIVE DATE OF THE CHAPTER  OF
THE  LAWS  OF TWO THOUSAND FOURTEEN WHICH AMENDED THIS PARAGRAPH REPRES-
ENTS AT LEAST FIFTY-ONE PERCENT OF THE JOCKEYS  WHO  REGULARLY  RACE  AT
THOROUGHBRED  RACE  TRACKS  IN  NEW  YORK STATE. SUCH FUND SHALL BE USED
EXCLUSIVELY BY SUCH JOCKEY'S ORGANIZATION TO PROVIDE HEALTH, LIFE, DISA-
BILITY OR PENSION BENEFITS FOR ACTIVE, RETIRED OR DISABLED  JOCKEYS  WHO
REGULARLY  RACE  OR RACED AT THOROUGHBRED RACE TRACKS IN NEW YORK STATE.
ANY PORTION OF SUCH FUNDING TO SUCH JOCKEY'S ORGANIZATION UNUSED  DURING

S. 6359--C                         362

THE FISCAL YEAR SHALL BE RETURNED ON A PRO RATA BASIS IN ACCORDANCE WITH
THE  AMOUNTS ORIGINALLY CONTRIBUTED AND SHALL BE USED FOR THE PURPOSE OF
ENHANCING PURSES AT SUCH TRACKS.  ADDITIONALLY, TWO HUNDRED FIFTY  THOU-
SAND DOLLARS FROM SUCH PURSE ENHANCEMENT SHALL BE PROVIDED TO THE GAMING
COMMISSION  ANNUALLY  TO  BE  USED  EXCLUSIVELY FOR FAN DEVELOPMENT. Any
portion of such funding to the gaming commission unused during a  fiscal
year  shall  be  returned  on  a  pro  rata basis in accordance with the
amounts originally contributed and shall be  used  for  the  purpose  of
enhancing purses at such tracks.
  S 2. This act shall take effect immediately.

                                PART GGG

  Section 1. Section 1016 of the racing, pari-mutuel wagering and breed-
ing law is amended by adding a new subdivision 3 to read as follows:
  3.  NOTWITHSTANDING  SUBDIVISIONS  ONE AND TWO OF THIS SECTION AND ANY
OTHER APPLICABLE LAWS TO THE CONTRARY, ON DAYS WHEN  THERE  IS  NO  LIVE
RACE  MEETING  AT  BELMONT  PARK  AND  THE  NEW  YORK RACING ASSOCIATION
("NYRA") IS ACCEPTING WAGERING  ON  NON-NYRA  TRACKS  AT  BELMONT  PARK,
NASSAU REGIONAL OFF-TRACK BETTING CORPORATION SHALL RECEIVE ON A MONTHLY
BASIS,  FROM  ALL  NON-NYRA TRACKS WAGERS MADE AT BELMONT PARK, THE SAME
ABOVE PERCENTAGE HANDLE BASED  ON  TYPE  OF  WAGER  AS  NASSAU  REGIONAL
OFF-TRACK  BETTING CORPORATION PAYS A FRANCHISED CORPORATION PURSUANT TO
THIS SECTION.
  S 2. This act shall take effect immediately.

                                PART HHH

  Section 1. The opening paragraph of paragraph 1 of  subdivision  b  of
section  1612  of  the tax law, as amended by chapter 174 of the laws of
2013, is amended to read as follows;
  Notwithstanding section one hundred twenty-one of  the  state  finance
law,  on  or  before the twentieth day of each month, the division shall
pay into the state treasury, to the credit of  the  state  lottery  fund
created  by section ninety-two-c of the state finance law, not less than
forty-five percent of the total amount for which tickets have been  sold
for  games  defined  in  paragraph four of subdivision a of this section
during the preceding month, not less than  thirty-five  percent  of  the
total amount for which tickets have been sold for games defined in para-
graph three of subdivision a of this section during the preceding month,
not  less than twenty percent of the total amount for which tickets have
been sold for games defined in paragraph two of subdivision  a  of  this
section during the preceding month, provided however that for games with
a  prize  payout  of  seventy-five percent of the total amount for which
tickets have been sold, the division shall pay not less than ten percent
of sales into the state treasury and not less than  twenty-five  percent
of  the  total amount for which tickets have been sold for games defined
in paragraph one of subdivision a of this section during  the  preceding
month;  THE  BALANCE  OF  THE  TOTAL REVENUE AFTER PAYOUT FOR PRIZES FOR
GAMES KNOWN AS "VIDEO LOTTERY GAMING," INCLUDING ANY JOINT, MULTI-JURIS-
DICTION, AND OUT-OF-STATE VIDEO LOTTERY GAMING (I) LESS FIVE PERCENT  OF
SUCH  TOTAL  REVENUE TO BE RETAINED BY THE COMMISSION FOR ADMINISTRATION
PURPOSES; AND (II) LESS A VENDER'S FEE OF TWENTY-FIVE  PERCENT  OF  SUCH
TOTAL  REVENUE  TO  BE PAID TO THE AIRPORT CONCESSIONAIRE FOR SERVING AS
THE LOTTERY AGENT and the balance of the total revenue after payout  for
prizes  for  games known as "video lottery gaming," including any joint,

S. 6359--C                         363

multi-jurisdiction, and out-of-state video lottery gaming, (i) less  ten
percent  of  the  total  revenue  wagered  after payout for prizes to be
retained by the division for operation, administration, and  procurement
purposes; (ii) less a vendor's fee the amount of which is to be paid for
serving  as  a  lottery agent to the track operator of a vendor track or
the operator of a resort facility or the operator  of  any  other  video
lottery  gaming facility authorized pursuant to section one thousand six
hundred seventeen a of this article:
  S 2. The opening paragraph of subdivision a of section 1617-a  of  the
tax  law,  as amended by section 2 of part O-1 of chapter 57 of the laws
of 2009, is amended to read as follows:
  The division of the lottery is hereby authorized to license,  pursuant
to  rules  and  regulations  to  be  promulgated  by the division of the
lottery, the operation of video lottery gaming: (A) at Aqueduct,  Monti-
cello,  Yonkers,  Finger Lakes, and Vernon Downs racetracks, [or] (B) at
any other racetrack licensed pursuant to article three  of  the  racing,
pari-mutuel  wagering  and  breeding law that are located in a county or
counties in which video lottery gaming has been authorized  pursuant  to
local  law,  excluding  the  licensed  racetrack commonly referred to in
article three of the racing, pari-mutuel wagering and  breeding  law  as
the  "New  York  state exposition" held in Onondaga county and the race-
tracks of the non-profit racing association known as Belmont Park  race-
track  and the Saratoga thoroughbred racetrack, OR (C) IN THE POST SECU-
RITY  DEPARTURE  AREAS  OF   AN   INTERNATIONAL   AIRPORT   BY   AIRPORT
CONCESSIONAIRES  LICENSED  BY  THE  DIVISION;  PROVIDED  THAT SUCH VIDEO
LOTTERY GAMING IS CONDUCTED ON DEVICES PROVIDED BY THE  AIRPORT  CONCES-
SIONAIRES  AND  APPROVED BY THE DIVISION. THE AIRPORT CONCESSIONAIRES AT
FACILITIES AUTHORIZED PURSUANT TO THIS PARAGRAPH SHALL BE DEEMED VENDORS
FOR ALL PURPOSES UNDER THIS ARTICLE, AND NEED NOT BE LICENSED  THOROUGH-
BRED  OR  HARNESS RACING ASSOCIATIONS OR CORPORATIONS. THE VIDEO LOTTERY
DEVICES PROVIDED BY AIRPORT CONCESSIONAIRES AND APPROVED BY THE DIVISION
MAY BE ANY FORM OF TABLET OR SIMILAR MULTI-FUNCTION DEVICE AND NEED  NOT
BE  SINGLE  PURPOSE LOTTERY TERMINALS. FOR THE PURPOSES OF THIS ARTICLE,
AN INTERNATIONAL AIRPORT SHALL MEAN AN AIRPORT LOCATED WITHIN A CITY  OF
A  POPULATION  OF  ONE MILLION OR MORE WITH REGULARLY SCHEDULED DOMESTIC
AND INTERNATIONAL, INCLUDING  CROSS-BORDER,  PASSENGER  FLIGHTS.    Such
rules  and  regulations shall provide, as a condition of licensure, that
racetracks to be licensed are certified to be  in  compliance  with  all
state  and  local  fire  and safety codes, that the division is afforded
adequate space, infrastructure, and amenities consistent  with  industry
standards  for  such  video  gaming operations as found at racetracks in
other states, that racetrack employees  involved  in  the  operation  of
video lottery gaming pursuant to this section are licensed by the racing
and  wagering board, and such other terms and conditions of licensure as
the division may establish. Notwithstanding any  inconsistent  provision
of  law,  video  lottery  gaming at a racetrack pursuant to this section
shall be deemed an approved activity for such racetrack under the  rele-
vant  city,  county,  town,  or  village  land use or zoning ordinances,
rules, or regulations. No entity  licensed  by  the  division  operating
video  lottery  gaming  pursuant  to  this section may house such gaming
activity in a structure deemed or approved by the  division  as  "tempo-
rary"  for  a duration of longer than [eighteen-months] EIGHTEEN MONTHS.
Nothing in this section shall prohibit the division  from  licensing  an
entity  to  operate  video  lottery  gaming  at an existing racetrack as
authorized in this subdivision whether or  not  a  different  entity  is
licensed  to conduct horse racing and pari-mutuel wagering at such race-

S. 6359--C                         364

track pursuant to article two or three of the racing, pari-mutuel wager-
ing and breeding law.
  S 3. This act shall take effect immediately.

                                PART III

  Section  1.  Paragraph (c) of subdivision 30 of section 210 of the tax
law is relettered paragraph (d) and a new paragraph (c) is added to read
as follows:
  (C) TREATMENT OF CREDIT. THE AMOUNT OF THE CREDIT ALLOWED  UNDER  THIS
SUBDIVISION  SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED, PROVIDED THAT THE CREDITS: (1) HAVE AN  ELIGIBILITY  STATEMENT
ISSUED  BY THE COMMISSIONER OF HOUSING AND COMMUNITY RENEWAL PURSUANT TO
ARTICLE TWO-A OF THE PUBLIC HOUSING LAW, AND (2) ARE AVAILABLE  PURSUANT
TO  LAW  ENACTED  AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN.  PROVIDED,
HOWEVER, THAT  NOTWITHSTANDING  THE  PROVISIONS  OF  SUBSECTION  (C)  OF
SECTION  ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER, NO INTEREST SHALL BE
PAID THEREON.
  S 2. Paragraph 3 of subsection (x) of section 606 of the  tax  law  is
renumbered  paragraph  4  and  a  new  paragraph  3  is added to read as
follows:
  (3) TREATMENT OF CREDIT. THE AMOUNT OF THE CREDIT ALLOWED  UNDER  THIS
SUBSECTION  SHALL  BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED AS PROVIDED IN SECTION SIX HUNDRED EIGHTY-SIX OF THIS  ARTICLE,
PROVIDED  THAT  THE CREDITS: (I) HAVE AN ELIGIBILITY STATEMENT ISSUED BY
THE COMMISSIONER OF HOUSING AND COMMUNITY RENEWAL  PURSUANT  TO  ARTICLE
TWO-A  OF THE PUBLIC HOUSING LAW, AND (II) ARE AVAILABLE PURSUANT TO LAW
ENACTED AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN.  PROVIDED,  HOWEVER,
THAT NO INTEREST SHALL BE PAID THEREON.
  S  3.  Paragraph 3 of subsection (1) of section 1456 of the tax law is
renumbered paragraph 4 and a  new  paragraph  3  is  added  to  read  as
follows:
  (3)  TREATMENT  OF CREDIT. THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS
SUBSECTION SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE  CREDITED  OR
REFUNDED,  PROVIDED  THAT THE CREDITS: (A) HAVE AN ELIGIBILITY STATEMENT
ISSUED BY THE COMMISSIONER OF HOUSING AND COMMUNITY RENEWAL PURSUANT  TO
ARTICLE  TWO-A OF THE PUBLIC HOUSING LAW, AND (B) ARE AVAILABLE PURSUANT
TO LAW ENACTED AFTER JANUARY FIRST, TWO THOUSAND  FOURTEEN.    PROVIDED,
HOWEVER,  THAT  NOTWITHSTANDING  THE  PROVISIONS  OF  SUBSECTION  (C) OF
SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER, NO INTEREST SHALL  BE
PAID THEREON.
  S  4. Paragraph 3 of subdivision (n) of section 1511 of the tax law is
renumbered paragraph 4 and a  new  paragraph  3  is  added  to  read  as
follows:
  (3)  TREATMENT  OF CREDIT. THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS
SUBDIVISION SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED  OR
REFUNDED,  PROVIDED  THAT THE CREDITS: (A) HAVE AN ELIGIBILITY STATEMENT
ISSUED BY THE COMMISSIONER OF HOUSING AND COMMUNITY RENEWAL PURSUANT  TO
ARTICLE  TWO-A OF THE PUBLIC HOUSING LAW, AND (B) ARE AVAILABLE PURSUANT
TO LAW ENACTED AFTER JANUARY FIRST, TWO THOUSAND  FOURTEEN.    PROVIDED,
HOWEVER,  THAT  NOTWITHSTANDING  THE  PROVISIONS  OF  SUBSECTION  (C) OF
SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER, NO INTEREST SHALL  BE
PAID THEREON.
  S  5.  This  act  shall take effect immediately and shall apply to tax
years commencing on or after January 1, 2014.

S. 6359--C                         365

                                PART JJJ

  Section  1.  Short  title. This act shall be known and may be cited as
the "education investment incentives act".
  S 2.  The tax law is amended by adding a new section  41  to  read  as
follows:
  S  41.  EDUCATION  INVESTMENT  TAX  CREDIT.   (A) DEFINITIONS. FOR THE
PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE  THE  FOLLOWING
MEANINGS:
  1.  "AUTHORIZED  CONTRIBUTION"  MEANS  THE CONTRIBUTION AMOUNT THAT IS
LISTED ON THE  CONTRIBUTION  AUTHORIZATION  CERTIFICATE  ISSUED  TO  THE
TAXPAYER.
  2.  "CONTRIBUTION"  MEANS  A  DONATION PAID BY CASH, CHECK, ELECTRONIC
FUNDS TRANSFER, DEBIT CARD OR CREDIT CARD THAT IS MADE BY  THE  TAXPAYER
DURING THE TAXABLE YEAR.
  3.  "EDUCATIONAL  PROGRAM"  MEANS  AN ACADEMIC OR SIMILAR PROGRAM OF A
PUBLIC SCHOOL THAT ENHANCES THE CURRICULUM OR ACADEMIC  PROGRAM  OF  THE
PUBLIC  SCHOOL,  OR  PROVIDES  A  PRE-KINDERGARTEN PROGRAM TO THE PUBLIC
SCHOOL. FOR PURPOSES OF THIS  DEFINITION,  THE  INSTRUCTION,  MATERIALS,
PROGRAMS  AND  OTHER  ACTIVITIES  OFFERED  BY  OR THROUGH AN EDUCATIONAL
PROGRAM MAY INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING FEATURES: (I)
INSTRUCTION OR MATERIALS PROMOTING HEALTH, PHYSICAL EDUCATION, AND FAMI-
LY AND CONSUMER SCIENCES; LITERARY, PERFORMING AND  VISUAL  ARTS;  MATH-
EMATICS,  SOCIAL  STUDIES,  TECHNOLOGY  AND SCIENTIFIC ACHIEVEMENT; (II)
INSTRUCTION OR PROGRAMMING  TO  MEET  THE  EDUCATION  NEEDS  OF  AT-RISK
STUDENTS  OR  STUDENTS  WITH  DISABILITIES,  INCLUDING TUTORING OR COUN-
SELING;  OR  (III)  THE  USE  OF  SPECIALIZED  INSTRUCTIONAL  MATERIALS,
INSTRUCTORS OR INSTRUCTION NOT PROVIDED BY A PUBLIC SCHOOL.
  4.  "EDUCATIONAL SCHOLARSHIP ORGANIZATION" MEANS AN ENTITY THAT (I) IS
EXEMPT FROM TAXATION UNDER PARAGRAPH THREE OF SUBSECTION (C) OF  SECTION
FIVE HUNDRED ONE OF THE INTERNAL REVENUE CODE, (II) USES AT LEAST NINETY
PERCENT OF THE QUALIFIED CONTRIBUTIONS RECEIVED DURING THE CALENDAR YEAR
AND  ANY  INCOME  DERIVED FROM SUCH QUALIFIED CONTRIBUTIONS FOR SCHOLAR-
SHIPS, (III) PROVIDES SCHOLARSHIPS TO ELIGIBLE PUPILS  FOR  USE  AT  NOT
FEWER  THAN  THREE  QUALIFIED SCHOOLS, (IV) DEPOSITS AND HOLDS QUALIFIED
CONTRIBUTIONS AND ANY INCOME DERIVED FROM QUALIFIED CONTRIBUTIONS IN  AN
ACCOUNT  THAT  IS  SEPARATE  FROM  THE ORGANIZATION'S OPERATING OR OTHER
FUNDS UNTIL SUCH QUALIFIED CONTRIBUTIONS OR  INCOME  ARE  WITHDRAWN  FOR
USE,  AND  (V)  IS APPROVED TO ISSUE CERTIFICATES OF RECEIPT PURSUANT TO
ARTICLE TWENTY-FIVE OF THE EDUCATION LAW.
  5. "ELIGIBLE PUPIL" MEANS A CHILD WHO (I) IS A RESIDENT,  (II)  IS  OF
SCHOOL  AGE  IN  ACCORDANCE  WITH  SUBDIVISION ONE OF SECTION THIRTY-TWO
HUNDRED TWO OF THE EDUCATION LAW OR WHO IS  FOUR  YEARS  OF  AGE  ON  OR
BEFORE  DECEMBER  FIRST OF THE YEAR IN WHICH SUCH CHILD IS ENROLLED IN A
PRE-KINDERGARTEN PROGRAM, (III) ATTENDS OR IS ABOUT TO ATTEND  A  QUALI-
FIED SCHOOL, AND (IV) RESIDES IN A HOUSEHOLD THAT HAS A FEDERAL ADJUSTED
GROSS INCOME OF FIVE HUNDRED THOUSAND DOLLARS OR LESS, PROVIDED HOWEVER,
FOR  HOUSEHOLDS WITH THREE OR MORE DEPENDENT CHILDREN, SUCH INCOME LEVEL
SHALL BE INCREASED BY TEN THOUSAND DOLLARS PER DEPENDENT CHILD,  NOT  TO
EXCEED FIVE HUNDRED FIFTY THOUSAND DOLLARS.
  6.  "LOCAL  EDUCATION FUND" MEANS A NOT-FOR-PROFIT ENTITY WHICH (I) IS
EXEMPT FROM TAXATION UNDER PARAGRAPH THREE OF SUBSECTION (C) OF  SECTION
FIVE  HUNDRED  ONE OF THE INTERNAL REVENUE CODE, (II) IS ESTABLISHED FOR
THE PURPOSE OF SUPPORTING AT LEAST ONE PUBLIC SCHOOL  OR  PUBLIC  SCHOOL
DISTRICT,  (III)  USES AT LEAST NINETY PERCENT OF THE QUALIFIED CONTRIB-
UTIONS RECEIVED DURING THE CALENDAR YEAR AND  ANY  INCOME  DERIVED  FROM

S. 6359--C                         366

SUCH  QUALIFIED CONTRIBUTIONS TO SUPPORT THE PUBLIC SCHOOL OR SCHOOLS OR
PUBLIC SCHOOL DISTRICT OR DISTRICTS THAT SUCH FUND HAS BEEN  ESTABLISHED
TO  SUPPORT,  (IV)  DEPOSITS  AND  HOLDS QUALIFIED CONTRIBUTIONS AND ANY
INCOME  DERIVED FROM QUALIFIED CONTRIBUTIONS IN AN ACCOUNT THAT IS SEPA-
RATE FROM THE FUND'S OPERATING  OR  OTHER  FUNDS  UNTIL  SUCH  QUALIFIED
CONTRIBUTIONS  OR  INCOME  ARE WITHDRAWN FOR USE, AND (V) IS APPROVED TO
ISSUE CERTIFICATES OF RECEIPT PURSUANT TO  ARTICLE  TWENTY-FIVE  OF  THE
EDUCATION LAW.
  7.  "NON-PUBLIC  SCHOOL"  MEANS  ANY  NOT-FOR-PROFIT  PRE-KINDERGARTEN
PROGRAM OR ELEMENTARY OR  SECONDARY  SECTARIAN  OR  NONSECTARIAN  SCHOOL
LOCATED  IN  THIS  STATE,  OTHER  THAN  A  PUBLIC  SCHOOL, THAT PROVIDES
INSTRUCTION AT ONE OR MORE LOCATIONS  TO  STUDENTS  IN  ACCORDANCE  WITH
SUBDIVISION TWO OF SECTION THIRTY-TWO HUNDRED FOUR OF THE EDUCATION LAW.
  8.  "PUBLIC EDUCATION ENTITY" MEANS A PUBLIC SCHOOL OR A PUBLIC SCHOOL
DISTRICT, PROVIDED THAT SUCH PUBLIC SCHOOL OR PUBLIC SCHOOL DISTRICT (I)
DEPOSITS AND HOLDS QUALIFIED CONTRIBUTIONS AND ANY INCOME  DERIVED  FROM
SUCH  QUALIFIED  CONTRIBUTIONS  IN  AN ACCOUNT THAT IS SEPARATE FROM THE
PUBLIC SCHOOL OR PUBLIC SCHOOL DISTRICT'S OPERATING OR OTHER FUNDS UNTIL
SUCH QUALIFIED CONTRIBUTIONS OR INCOME ARE WITHDRAWN FOR USE,  AND  (II)
IS  APPROVED  TO ISSUE CERTIFICATES OF RECEIPT PURSUANT TO ARTICLE TWEN-
TY-FIVE OF THE EDUCATION LAW.
  9. "PUBLIC SCHOOL" MEANS ANY FREE ELEMENTARY OR  SECONDARY  SCHOOL  IN
THIS STATE GUARANTEED BY ARTICLE ELEVEN OF THE CONSTITUTION, AND A CHAR-
TER SCHOOL AUTHORIZED BY ARTICLE FIFTY-SIX OF THE EDUCATION LAW.
  10. "QUALIFIED CONTRIBUTION" MEANS THE AUTHORIZED CONTRIBUTION MADE BY
A  TAXPAYER  TO  A PUBLIC EDUCATION ENTITY, SCHOOL IMPROVEMENT ORGANIZA-
TION, LOCAL EDUCATION FUND, OR EDUCATIONAL SCHOLARSHIP ORGANIZATION  FOR
WHICH  A  CONTRIBUTION  AUTHORIZATION CERTIFICATE HAS BEEN ISSUED TO THE
TAXPAYER AND FOR WHICH  THE  TAXPAYER  HAS  RECEIVED  A  CERTIFICATE  OF
RECEIPT FROM SUCH ENTITY, FUND OR ORGANIZATION.
  11.  "QUALIFIED  EDUCATOR"  MEANS  AN  INDIVIDUAL  WHO IS A TEACHER OR
INSTRUCTOR IN A QUALIFIED SCHOOL FOR AT LEAST NINE HUNDRED HOURS  DURING
A SCHOOL YEAR.
  12.  "QUALIFIED  SCHOOL"  MEANS  A  PUBLIC SCHOOL OR NON-PUBLIC SCHOOL
LOCATED IN THIS STATE.
  13. "SCHOLARSHIP" MEANS AN EDUCATIONAL SCHOLARSHIP  OR  TUITION  GRANT
AWARDED  TO  AN ELIGIBLE PUPIL TO ATTEND A QUALIFIED SCHOOL IN AN AMOUNT
NOT TO EXCEED THE TUITION CHARGED TO ATTEND SUCH SCHOOL LESS  ANY  OTHER
EDUCATIONAL SCHOLARSHIP OR TUITION GRANT RECEIVED BY SUCH ELIGIBLE PUPIL
OR  HIS  OR  HER  PARENT,  PARENTS  OR  LEGAL GUARDIAN FOR SUCH ELIGIBLE
PUPIL'S TUITION; PROVIDED, HOWEVER, IN THE CASE  OF  AN  ELIGIBLE  PUPIL
ATTENDING  A  PUBLIC  SCHOOL  IN  A PUBLIC SCHOOL DISTRICT OF WHICH SUCH
PUPIL IS NOT A RESIDENT, THE AMOUNT OF THE  EDUCATIONAL  SCHOLARSHIP  OR
TUITION  GRANT  AWARDED MAY NOT EXCEED THE TUITION CHARGED BY THE PUBLIC
SCHOOL PURSUANT TO PARAGRAPH D OF SUBDIVISION FOUR OF SECTION THIRTY-TWO
HUNDRED TWO OF THE EDUCATION LAW LESS ANY OTHER EDUCATIONAL  SCHOLARSHIP
OR  TUITION  GRANT RECEIVED BY SUCH ELIGIBLE PUPIL OR HIS OR HER PARENT,
PARENTS OR GUARDIAN FOR SUCH ELIGIBLE PUPIL'S TUITION, BUT ONLY  IF  THE
PUBLIC SCHOOL DISTRICT OF WHICH SUCH PUPIL IS A RESIDENT IS NOT REQUIRED
TO PAY FOR SUCH TUITION.
  14.  "SCHOOL  IMPROVEMENT  ORGANIZATION" MEANS A NOT-FOR-PROFIT ENTITY
WHICH (I) IS EXEMPT FROM TAXATION UNDER PARAGRAPH  THREE  OF  SUBSECTION
(C)  OF SECTION FIVE HUNDRED ONE OF THE INTERNAL REVENUE CODE, (II) USES
AT LEAST NINETY PERCENT OF THE QUALIFIED CONTRIBUTIONS  RECEIVED  DURING
THE  CALENDAR  YEAR  AND ANY INCOME DERIVED FROM SUCH QUALIFIED CONTRIB-
UTIONS DURING SUCH MONTHS TO ASSIST  PUBLIC  SCHOOLS  OR  PUBLIC  SCHOOL

S. 6359--C                         367

DISTRICTS  LOCATED  IN  THIS  STATE  IN  THEIR  PROVISION OF EDUCATIONAL
PROGRAMS, EITHER BY MAKING CONTRIBUTIONS TO ONE OR MORE  PUBLIC  SCHOOLS
OR  PUBLIC  SCHOOL  DISTRICTS  LOCATED IN THIS STATE OR PROVIDING EDUCA-
TIONAL  PROGRAMS  TO, OR IN CONJUNCTION WITH, ONE OR MORE PUBLIC SCHOOLS
OR PUBLIC SCHOOL DISTRICTS LOCATED IN THIS  STATE,  (III)  DEPOSITS  AND
HOLDS QUALIFIED CONTRIBUTIONS AND ANY INCOME DERIVED FROM SUCH QUALIFIED
CONTRIBUTIONS  IN  AN  ACCOUNT  THAT IS SEPARATE FROM THE ORGANIZATION'S
OPERATING OR OTHER FUNDS UNTIL SUCH QUALIFIED  CONTRIBUTIONS  OR  INCOME
ARE  WITHDRAWN  FOR  USE,  AND (IV) IS APPROVED TO ISSUE CERTIFICATES OF
RECEIPT PURSUANT TO ARTICLE TWENTY-FIVE OF THE EDUCATION LAW. SUCH  TERM
INCLUDES A PRE-KINDERGARTEN PROGRAM OR NOT-FOR-PROFIT ENTITY THAT ALLOWS
THE  TAXPAYER  TO  CHOOSE  TO DONATE TO A PROGRAM, PROJECT OR INITIATIVE
IDENTIFIED BY A QUALIFIED EDUCATOR FOR USE IN A PUBLIC SCHOOL.
  (B) ALLOWANCE OF CREDIT. A  TAXPAYER  SUBJECT  TO  TAX  UNDER  ARTICLE
NINE-A  OR  TWENTY-TWO  OF  THIS CHAPTER SHALL BE ALLOWED CREDIT AGAINST
SUCH TAX, PURSUANT TO THE PROVISIONS REFERENCED IN  SUBDIVISION  (L)  OF
THIS  SECTION,  WITH  RESPECT TO QUALIFIED CONTRIBUTIONS MADE DURING THE
TAXABLE YEAR.
  (C) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL BE NINETY PERCENT
OF THE TAXPAYER'S TOTAL QUALIFIED CONTRIBUTIONS, CAPPED AT  ONE  MILLION
DOLLARS.    A  TAXPAYER  THAT IS A PARTNER IN A PARTNERSHIP, MEMBER OF A
LIMITED LIABILITY COMPANY OR SHAREHOLDER IN AN S  CORPORATION  SHALL  BE
ALLOWED TO CLAIM ITS PRO RATA SHARE OF THE CREDIT EARNED BY THE PARTNER-
SHIP,  LIMITED  LIABILITY COMPANY OR S CORPORATION, PROVIDED THAT SUCH A
TAXPAYER SHALL NOT CLAIM CREDIT IN EXCESS OF THE LIMIT  IMPOSED  BY  THE
PRECEDING SENTENCE.
  (D) INFORMATION TO BE POSTED ON THE DEPARTMENT'S WEBSITE. BEGINNING ON
THE  SIXTEENTH DAY OF JANUARY OF EACH YEAR, THE COMMISSIONER SHALL MAIN-
TAIN ON THE DEPARTMENT'S WEBSITE A RUNNING TOTAL OF THE AMOUNT OF AVAIL-
ABLE CREDIT FOR WHICH TAXPAYERS MAY  APPLY  PURSUANT  TO  THIS  SECTION.
SUCH  RUNNING TOTAL SHALL BE UPDATED ON A DAILY BASIS. ADDITIONALLY, THE
COMMISSIONER SHALL MAINTAIN ON THE DEPARTMENT'S WEBSITE A  LIST  OF  THE
SCHOOL  IMPROVEMENT ORGANIZATIONS, LOCAL EDUCATION FUNDS AND EDUCATIONAL
SCHOLARSHIP ORGANIZATIONS APPROVED  TO  ISSUE  CERTIFICATES  OF  RECEIPT
PURSUANT  TO  ARTICLE TWENTY-FIVE OF THE EDUCATION LAW. THE COMMISSIONER
SHALL ALSO MAINTAIN ON THE DEPARTMENT'S WEBSITE A LIST OF PUBLIC  EDUCA-
TION  ENTITIES,  SCHOOL IMPROVEMENT ORGANIZATIONS, LOCAL EDUCATION FUNDS
AND  EDUCATIONAL  SCHOLARSHIP  ORGANIZATIONS  WHOSE  APPROVAL  TO  ISSUE
CERTIFICATES  OF  RECEIPT  HAS  BEEN REVOKED ALONG WITH THE DATE OF SUCH
REVOCATION.
  (E) APPLICATIONS FOR CONTRIBUTION AUTHORIZATION CERTIFICATES. PRIOR TO
MAKING A CONTRIBUTION TO A PUBLIC EDUCATION ENTITY,  SCHOOL  IMPROVEMENT
ORGANIZATION, LOCAL EDUCATION FUND, OR EDUCATIONAL SCHOLARSHIP ORGANIZA-
TION,  THE  TAXPAYER  SHALL  APPLY  TO THE DEPARTMENT FOR A CONTRIBUTION
AUTHORIZATION CERTIFICATE FOR SUCH CONTRIBUTION. SUCH APPLICATION  SHALL
BE  IN THE FORM AND MANNER PRESCRIBED BY THE DEPARTMENT.  THE DEPARTMENT
MAY ALLOW TAXPAYERS TO MAKE MULTIPLE  APPLICATIONS  ON  THE  SAME  FORM,
PROVIDED  THAT  EACH  CONTRIBUTION  LISTED  ON SUCH APPLICATION SHALL BE
TREATED AS A SEPARATE APPLICATION AND THAT THE  DEPARTMENT  SHALL  ISSUE
SEPARATE  CONTRIBUTION AUTHORIZATION CERTIFICATES FOR EACH SUCH APPLICA-
TION.
  (F) CONTRIBUTION AUTHORIZATION CERTIFICATES. 1.  ISSUANCE  OF  CERTIF-
ICATES.  THE COMMISSIONER SHALL ISSUE CONTRIBUTION AUTHORIZATION CERTIF-
ICATES  IN  TWO PHASES.   IN PHASE ONE, WHICH BEGINS ON THE FIRST DAY OF
JANUARY AND ENDS ON THE FIFTEENTH DAY OF JANUARY, THE COMMISSIONER SHALL
ACCEPT APPLICATIONS  FOR  CONTRIBUTION  AUTHORIZATION  CERTIFICATES  BUT

S. 6359--C                         368

SHALL  NOT  ISSUE ANY SUCH CERTIFICATES.  COMMENCING AFTER THE SIXTEENTH
DAY OF JANUARY, THE COMMISSIONER SHALL ISSUE CONTRIBUTION  AUTHORIZATION
CERTIFICATES  FOR  APPLICATIONS RECEIVED DURING PHASE ONE, PROVIDED THAT
IF  THE AGGREGATE TOTAL OF THE CONTRIBUTIONS FOR WHICH APPLICATIONS HAVE
BEEN RECEIVED DURING PHASE ONE EXCEEDS THE AMOUNT OF THE CREDIT  CAP  IN
SUBDIVISION  (H)  OF  THIS  SECTION,  THE AUTHORIZED CONTRIBUTION AMOUNT
LISTED ON EACH CONTRIBUTION AUTHORIZATION CERTIFICATE  SHALL  EQUAL  THE
PRO-RATA  SHARE  OF  THE CREDIT CAP.  IF THE CREDIT CAP IS NOT EXCEEDED,
PHASE  TWO  COMMENCES  ON  FEBRUARY  FIRST  AND  ENDS  ON  THE  DECEMBER
THIRTY-FIRST.  THE  COMMISSIONER  SHALL ISSUE CONTRIBUTION AUTHORIZATION
CERTIFICATES ON A FIRST-COME FIRST SERVE BASIS BASED UPON THE  DATE  THE
DEPARTMENT  RECEIVED  THE  TAXPAYER'S  APPLICATION FOR SUCH CERTIFICATE;
PROVIDED, HOWEVER, THAT IF ON ANY DAY THE DEPARTMENT  RECEIVES  APPLICA-
TIONS  REQUESTING  CONTRIBUTION  AUTHORIZATION CERTIFICATES FOR CONTRIB-
UTIONS THAT IN THE AGGREGATE EXCEED THE AMOUNT OF THE CREDIT CAP ON SUCH
DAY, THE AUTHORIZED CONTRIBUTION  AMOUNT  LISTED  IN  EACH  CONTRIBUTION
AUTHORIZATION  CERTIFICATE SHALL BE THE TAXPAYER'S PRO-RATA SHARE OF THE
CREDIT CAP. FOR PURPOSES OF DETERMINING A TAXPAYER'S PRO-RATA  SHARE  OF
CREDIT  CAP, THE COMMISSIONER SHALL MULTIPLY THE AMOUNT OF CREDIT CAP BY
A FRACTION, THE NUMERATOR OF WHICH EQUALS THE TOTAL CONTRIBUTION  AMOUNT
LISTED ON THE TAXPAYER'S APPLICATION AND THE DENOMINATOR OF WHICH EQUALS
THE  AGGREGATE  AMOUNT  OF  CONTRIBUTIONS LISTED ON THE APPLICATIONS FOR
CONTRIBUTION AUTHORIZATION  CERTIFICATES  WERE  RECEIVED  ON  SUCH  DAY.
CONTRIBUTION AUTHORIZATION CERTIFICATES FOR APPLICATIONS RECEIVED DURING
PHASE  ONE  SHALL  BE MAILED NO LATER THAN THE TWENTIETH DAY OF JANUARY.
CONTRIBUTION AUTHORIZATION CERTIFICATES FOR APPLICATIONS RECEIVED DURING
PHASE TWO SHALL BE MAILED WITHIN FIVE DAYS OF RECEIPT OF  SUCH  APPLICA-
TIONS.  PROVIDED,  HOWEVER,  THAT  NO CONTRIBUTION AUTHORIZATION CERTIF-
ICATES FOR APPLICATIONS RECEIVED DURING PHASE TWO SHALL BE ISSUED  UNTIL
ALL  OF  THE  CONTRIBUTION  AUTHORIZATION  CERTIFICATES FOR APPLICATIONS
RECEIVED DURING PHASE ONE HAVE BEEN ISSUED.
  2. CONTRIBUTION AUTHORIZATION CERTIFICATE CONTENTS. EACH  CONTRIBUTION
AUTHORIZATION  CERTIFICATE SHALL STATE (I) THE DATE SUCH CERTIFICATE WAS
ISSUED, (II) THE DATE BY WHICH THE AUTHORIZED CONTRIBUTION LISTED ON THE
CERTIFICATE MUST BE MADE, WHICH SHALL BE NO LATER THAN NOVEMBER  THIRTI-
ETH OF THE YEAR FOR WHICH THE CONTRIBUTION AUTHORIZATION CERTIFICATE WAS
ISSUED,  (III)  THE  AMOUNT OF AUTHORIZED CONTRIBUTION, (IV) THE CERTIF-
ICATE NUMBER, (V) THE TAXPAYER'S NAME AND ADDRESS,  (VI)  THE  NAME  AND
ADDRESS OF THE PUBLIC EDUCATION ENTITY, SCHOOL IMPROVEMENT ORGANIZATION,
LOCAL  EDUCATION  FUND  OR EDUCATIONAL SCHOLARSHIP ORGANIZATION TO WHICH
THE TAXPAYER MAY MAKE THE AUTHORIZED CONTRIBUTION, AND (VII)  ANY  OTHER
INFORMATION THAT THE COMMISSIONER DEEMS NECESSARY.
  3.  NOTIFICATION  OF  THE  ISSUANCE  OF  A  CONTRIBUTION AUTHORIZATION
CERTIFICATE. UPON THE ISSUANCE OF A CONTRIBUTION  AUTHORIZATION  CERTIF-
ICATE  TO A TAXPAYER, THE COMMISSIONER SHALL NOTIFY THE PUBLIC EDUCATION
ENTITY, SCHOOL IMPROVEMENT ORGANIZATION, LOCAL EDUCATION FUND OR  EDUCA-
TIONAL  SCHOLARSHIP  ORGANIZATION  OF  THE ISSUANCE OF SUCH CONTRIBUTION
AUTHORIZATION CERTIFICATE.  SUCH  NOTIFICATION  SHALL  INCLUDE  (I)  THE
TAXPAYER'S  NAME AND ADDRESS, (II) THE DATE SUCH CERTIFICATE WAS ISSUED,
(III) THE DATE BY  WHICH  THE  AUTHORIZED  CONTRIBUTION  LISTED  IN  THE
NOTIFICATION  MUST  BE  MADE  BY  THE  TAXPAYER,  (IV) THE AMOUNT OF THE
AUTHORIZED CONTRIBUTION,  (V)  THE  CONTRIBUTION  AUTHORIZATION  CERTIF-
ICATE'S  CERTIFICATE  NUMBER,  AND  (VI)  ANY OTHER INFORMATION THAT THE
COMMISSIONER DEEMS NECESSARY.
  (G) CERTIFICATE OF RECEIPT. 1. IN GENERAL. NO PUBLIC EDUCATION ENTITY,
SCHOOL IMPROVEMENT ORGANIZATION, LOCAL EDUCATION  FUND,  OR  EDUCATIONAL

S. 6359--C                         369

SCHOLARSHIP  ORGANIZATION  SHALL  ISSUE A CERTIFICATE OF RECEIPT FOR ANY
CONTRIBUTION MADE BY A TAXPAYER UNLESS  SUCH  PUBLIC  EDUCATION  ENTITY,
SCHOOL  IMPROVEMENT  ORGANIZATION,  LOCAL EDUCATION FUND, OR EDUCATIONAL
SCHOLARSHIP  ORGANIZATION  HAS  BEEN  APPROVED  TO ISSUE CERTIFICATES OF
RECEIPT PURSUANT TO ARTICLE TWENTY-FIVE OF THE EDUCATION LAW. NO  PUBLIC
EDUCATION ENTITY, SCHOOL IMPROVEMENT ORGANIZATION, LOCAL EDUCATION FUND,
OR  EDUCATIONAL  SCHOLARSHIP  ORGANIZATION  SHALL ISSUE A CERTIFICATE OF
RECEIPT FOR A CONTRIBUTION MADE BY A TAXPAYER UNLESS SUCH PUBLIC  EDUCA-
TION  ENTITY,  SCHOOL IMPROVEMENT ORGANIZATION, LOCAL EDUCATION FUND, OR
EDUCATIONAL  SCHOLARSHIP  ORGANIZATION  HAS  RECEIVED  NOTICE  FROM  THE
DEPARTMENT THAT THE DEPARTMENT ISSUED A CREDIT AUTHORIZATION CERTIFICATE
TO THE TAXPAYER FOR SUCH CONTRIBUTION.
  2. TIMELY CONTRIBUTION. IF A TAXPAYER MAKES AN AUTHORIZED CONTRIBUTION
TO  THE  PUBLIC EDUCATION ENTITY, SCHOOL IMPROVEMENT ORGANIZATION, LOCAL
EDUCATION FUND, OR EDUCATIONAL SCHOLARSHIP ORGANIZATION SET FORTH ON THE
CONTRIBUTION AUTHORIZATION CERTIFICATE ISSUED TO THE TAXPAYER  NO  LATER
THAN  THE  DATE  BY WHICH SUCH AUTHORIZED CONTRIBUTION IS REQUIRED TO BE
MADE, SUCH PUBLIC EDUCATION  ENTITY,  SCHOOL  IMPROVEMENT  ORGANIZATION,
LOCAL  EDUCATION  FUND,  OR  EDUCATIONAL SCHOLARSHIP ORGANIZATION SHALL,
WITHIN THIRTY DAYS OF RECEIPT OF THE AUTHORIZED CONTRIBUTION,  ISSUE  TO
THE  TAXPAYER  A  CERTIFICATE OF RECEIPT; PROVIDED, HOWEVER, THAT IF THE
TAXPAYER CONTRIBUTES AN AMOUNT THAT IS LESS THAN THE  AMOUNT  LISTED  ON
THE  TAXPAYER'S  CONTRIBUTION  AUTHORIZATION  CERTIFICATE,  THE TAXPAYER
SHALL NOT BE ISSUED A CERTIFICATE OF RECEIPT FOR SUCH CONTRIBUTION.
  3. CERTIFICATE OF RECEIPT CONTENTS. EACH CERTIFICATE OF RECEIPT  SHALL
STATE  (I)  THE NAME AND ADDRESS OF THE ISSUING PUBLIC EDUCATION ENTITY,
SCHOOL IMPROVEMENT ORGANIZATION, LOCAL EDUCATION  FUND,  OR  EDUCATIONAL
SCHOLARSHIP  ORGANIZATION,  (II)  THE TAXPAYER'S NAME AND ADDRESS, (III)
THE DATE FOR EACH CONTRIBUTION, (IV) THE AMOUNT OF EACH CONTRIBUTION AND
THE CORRESPONDING CONTRIBUTION AUTHORIZATION CERTIFICATE NUMBER, (V) THE
TOTAL AMOUNT OF CONTRIBUTIONS, (VI) CERTIFICATE OF  RECEIPT  NUMBER  AND
(VII) ANY OTHER INFORMATION THAT THE COMMISSIONER MAY DEEM NECESSARY.
  4. NOTIFICATION TO THE DEPARTMENT FOR THE ISSUANCE OF A CERTIFICATE OF
RECEIPT.  UPON  THE  ISSUANCE  OF  A CERTIFICATE OF RECEIPT, THE ISSUING
PUBLIC EDUCATION ENTITY, SCHOOL IMPROVEMENT ORGANIZATION,  LOCAL  EDUCA-
TION  FUND, OR EDUCATIONAL SCHOLARSHIP ORGANIZATION SHALL, WITHIN THIRTY
DAYS OF ISSUING THE CERTIFICATE OF RECEIPT, PROVIDE THE DEPARTMENT  WITH
NOTIFICATION  OF THE ISSUANCE OF SUCH CERTIFICATE IN THE FORM AND MANNER
PRESCRIBED BY THE DEPARTMENT.
  5. NOTIFICATION TO THE DEPARTMENT OF THE NON-ISSUANCE OF A CERTIFICATE
OF RECEIPT. EACH PUBLIC EDUCATION ENTITY, SCHOOL  IMPROVEMENT  ORGANIZA-
TION, LOCAL EDUCATION FUND, OR EDUCATIONAL SCHOLARSHIP ORGANIZATION THAT
RECEIVED NOTIFICATION FROM THE DEPARTMENT PURSUANT TO SUBDIVISION (F) OF
THIS  SECTION  REGARDING  THE  ISSUANCE  OF A CONTRIBUTION AUTHORIZATION
CERTIFICATE TO A TAXPAYER SHALL, WITHIN THIRTY DAYS  OF  THE  EXPIRATION
DATE  FOR  SUCH  AUTHORIZED  CONTRIBUTION,  PROVIDE  NOTIFICATION TO THE
DEPARTMENT FOR EACH TAXPAYER THAT FAILED TO MAKE THE AUTHORIZED CONTRIB-
UTION TO SUCH PUBLIC EDUCATION ENTITY, SCHOOL IMPROVEMENT  ORGANIZATION,
LOCAL  EDUCATION  FUND,  OR  EDUCATIONAL SCHOLARSHIP ORGANIZATION IN THE
FORM AND MANNER PRESCRIBED BY THE DEPARTMENT.
  6. FAILURE TO NOTIFY THE DEPARTMENT. WITHIN THIRTY DAYS OF THE DISCOV-
ERY OF THE FAILURE OF ANY PUBLIC EDUCATION  ENTITY,  SCHOOL  IMPROVEMENT
PROGRAM,  LOCAL  EDUCATION FUND, OR EDUCATIONAL SCHOLARSHIP ORGANIZATION
TO COMPLY WITH THE NOTIFICATION REQUIREMENTS  PRESCRIBED  BY  PARAGRAPHS
FOUR AND FIVE OF THIS SUBDIVISION, THE COMMISSIONER SHALL ISSUE A NOTICE
OF  COMPLIANCE  FAILURE  TO SUCH ENTITY, PROGRAM, FUND, OR ORGANIZATION.

S. 6359--C                         370

SUCH ENTITY, PROGRAM, FUND, OR ORGANIZATION SHALL HAVE THIRTY DAYS  FROM
THE  DATE  OF  SUCH NOTICE TO MAKE THE NOTIFICATIONS PRESCRIBED BY PARA-
GRAPHS FOUR AND FIVE OF THIS SUBDIVISION. SUCH PERIOD  MAY  BE  EXTENDED
FOR  AN  ADDITIONAL THIRTY DAYS UPON THE REQUEST OF THE ENTITY, PROGRAM,
FUND, OR ORGANIZATION. UPON THE EXPIRATION OF PERIOD FOR COMPLIANCE  SET
FORTH IN THE NOTICE PRESCRIBED BY THIS PARAGRAPH, THE COMMISSIONER SHALL
NOTIFY  THE BOARD OF REGENTS AND THE COMMISSIONER OF EDUCATION THAT SUCH
ENTITY, PROGRAM, FUND, OR ORGANIZATION FAILED TO MAKE THE  NOTIFICATIONS
PRESCRIBED BY PARAGRAPHS FOUR AND FIVE OF THIS SUBDIVISION.
  (H)  CREDIT  CAP.  THE  MAXIMUM  PERMITTED  CREDITS UNDER THIS SECTION
AVAILABLE TO ALL TAXPAYERS FOR QUALIFIED CONTRIBUTIONS FOR CALENDAR YEAR
TWO THOUSAND FIFTEEN SHALL BE ONE  HUNDRED  FIFTY  MILLION  DOLLARS.  IN
CALENDAR  YEAR TWO THOUSAND SIXTEEN, THE MAXIMUM PERMITTED CREDITS UNDER
THIS SECTION AVAILABLE TO ALL TAXPAYERS SHALL BE TWO HUNDRED TWENTY-FIVE
MILLION DOLLARS PLUS ANY AMOUNTS THAT ARE REQUIRED TO BE  ADDED  TO  THE
CAP  PURSUANT TO SUBDIVISION (I) OF THIS SECTION.  FOR CALENDAR YEAR TWO
THOUSAND SEVENTEEN  AND  EACH  CALENDAR  YEAR  THEREAFTER,  THE  MAXIMUM
PERMITTED  CREDITS  AVAILABLE  TO  ALL  TAXPAYERS SHALL BE THREE HUNDRED
MILLION DOLLARS.  THE MAXIMUM PERMITTED CREDITS UNDER THIS  SECTION  FOR
QUALIFIED  CONTRIBUTIONS  SHALL  BE  ALLOCATED  FIFTY  PERCENT TO PUBLIC
EDUCATION ENTITIES, SCHOOL IMPROVEMENT ORGANIZATIONS, AND  LOCAL  EDUCA-
TION FUNDS AND FIFTY PERCENT TO EDUCATIONAL SCHOLARSHIP ORGANIZATIONS.
  (I)  ADDITIONS  TO  CREDIT CAP. UNISSUED CERTIFICATES OF RECEIPT.  ANY
AMOUNTS FOR WHICH THE DEPARTMENT RECEIVES NOTIFICATION  OF  NON-ISSUANCE
OF  A  CERTIFICATE  OF  RECEIPT  SHALL BE ADDED TO THE CAP PRESCRIBED IN
SUBDIVISION (H) OF THIS SECTION FOR THE IMMEDIATELY FOLLOWING YEAR.
  (J) OTHER REQUIREMENTS; MISCELLANEOUS. 1. RECORD KEEPING. EACH TAXPAY-
ER SHALL, FOR EACH TAXABLE YEAR FOR WHICH THE EDUCATION  INVESTMENT  TAX
CREDIT  PROVIDED  FOR UNDER THIS SECTION IS CLAIMED, MAINTAIN RECORDS OF
THE FOLLOWING INFORMATION: (I) CONTRIBUTION  AUTHORIZATION  CERTIFICATES
OBTAINED  PURSUANT  TO SUBDIVISION (F) OF THIS SECTION, AND (II) CERTIF-
ICATES OF RECEIPT OBTAINED PURSUANT TO SUBDIVISION (G) OF THIS SECTION.
  2. REGULATIONS. THE COMMISSIONER IS HEREBY  AUTHORIZED  TO  PROMULGATE
AND  ADOPT ON AN EMERGENCY BASIS REGULATIONS NECESSARY FOR THE IMPLEMEN-
TATION OF THIS SECTION.
  (K) REPORTS. 1. REPORTS TO THE COMMISSIONER. ON OR BEFORE THE LAST DAY
OF JANUARY FOR EACH CALENDAR YEAR, EACH PUBLIC EDUCATION ENTITY,  SCHOOL
IMPROVEMENT ORGANIZATION, LOCAL EDUCATION FUND, AND EDUCATIONAL SCHOLAR-
SHIP  ORGANIZATION THAT ISSUED ONE OR MORE CERTIFICATES OF RECEIPT SHALL
REPORT TO THE COMMISSIONER THE NUMBER OF SUCH  CERTIFICATES  ISSUED  AND
THE  AGGREGATE  AMOUNT  OF  QUALIFIED CONTRIBUTIONS MADE TO SUCH ENTITY,
FUND, OR ORGANIZATION DURING THE IMMEDIATELY PRECEDING CALENDAR YEAR.
  2. JOINT ANNUAL REPORT. ON OR BEFORE THE LAST  DAY  OF  MAY  FOR  EACH
CALENDAR  YEAR, FOR THE IMMEDIATELY PRECEDING YEAR, THE COMMISSIONER AND
THE COMMISSIONER OF EDUCATION SHALL JOINTLY SUBMIT A WRITTEN  REPORT  TO
THE  GOVERNOR, THE TEMPORARY PRESIDENT OF THE SENATE, THE SPEAKER OF THE
ASSEMBLY, THE CHAIRMAN OF THE SENATE FINANCE COMMITTEE AND THE  CHAIRMAN
OF  THE  ASSEMBLY  WAYS  AND  MEANS COMMITTEE REGARDING THE CREDIT. SUCH
REPORT SHALL CONTAIN INFORMATION FOR  ARTICLES  NINE-A  AND  TWENTY-TWO,
RESPECTIVELY,  REGARDING:  (I) THE NUMBER OF APPLICATIONS RECEIVED; (II)
THE NUMBER OF AND AGGREGATE  VALUE  OF  THE  CONTRIBUTION  AUTHORIZATION
CERTIFICATES  ISSUED  FOR  CONTRIBUTIONS  TO  PUBLIC EDUCATION ENTITIES,
SCHOOL IMPROVEMENT ORGANIZATIONS, LOCAL EDUCATION FUNDS, AND SCHOLARSHIP
ORGANIZATIONS, RESPECTIVELY;  (III)  THE  GEOGRAPHICAL  DISTRIBUTION  BY
COUNTY  OF  (A)  THE APPLICATIONS FOR CONTRIBUTION AUTHORIZATION CERTIF-
ICATES, DISTRIBUTION BY COUNTY OF (B)  THE  PUBLIC  EDUCATION  ENTITIES,

S. 6359--C                         371

SCHOOL IMPROVEMENT ORGANIZATIONS, LOCAL EDUCATION FUNDS, AND EDUCATIONAL
SCHOLARSHIP  ORGANIZATIONS  LISTED  ON  THE ISSUED CONTRIBUTION AUTHORI-
ZATION  CERTIFICATES;  AND  (IV)  INFORMATION,  INCLUDING   GEOGRAPHICAL
DISTRIBUTION  BY  COUNTY, OF THE NUMBER OF ELIGIBLE PUPILS THAT RECEIVED
SCHOLARSHIPS, THE NUMBER  OF  QUALIFIED  SCHOOLS  ATTENDED  BY  ELIGIBLE
PUPILS  THAT RECEIVED SUCH SCHOLARSHIPS, AND THE AVERAGE VALUE OF SCHOL-
ARSHIPS RECEIVED BY SUCH ELIGIBLE PUPILS. THE  COMMISSIONER  AND  DESIG-
NATED  EMPLOYEES OF THE DEPARTMENT, THE BOARD OF REGENTS AND ALL MEMBERS
OF THE BOARD OF REGENTS, INCLUDING THE  COMMISSIONER  OF  EDUCATION  AND
DESIGNATED  EMPLOYEES  OF  THE DEPARTMENT OF EDUCATION, SHALL BE ALLOWED
AND ARE DIRECTED TO SHARE AND EXCHANGE INFORMATION REGARDING THE  SCHOOL
IMPROVEMENT  ORGANIZATIONS, LOCAL EDUCATION FUNDS AND EDUCATIONAL SCHOL-
ARSHIP ORGANIZATIONS THAT APPLIED  FOR  APPROVAL  TO  BE  AUTHORIZED  TO
RECEIVE  QUALIFIED  CONTRIBUTIONS;  AND  THE  PUBLIC EDUCATION ENTITIES,
SCHOOL IMPROVEMENT ORGANIZATIONS, LOCAL EDUCATION FUNDS, AND EDUCATIONAL
SCHOLARSHIP ORGANIZATIONS AUTHORIZED TO ISSUE CERTIFICATES  OF  RECEIPT,
INCLUDING INFORMATION CONTAINED IN OR DERIVED FROM APPLICATION FORMS AND
REPORTS SUBMITTED TO THE DEPARTMENT OF EDUCATION OR BOARD OF REGENTS.
  (L)  CROSS  REFERENCES.  FOR APPLICATION OF THE CREDIT PROVIDED FOR IN
THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  1. ARTICLE 9-A: SECTION 210; SUBDIVISION 48;
  2. ARTICLE 22: SECTION 606; SUBSECTIONS (I) AND (XX).
  S 3. Paragraph (b) of subdivision 9 of section 208 of the tax  law  is
amended by adding a new subparagraph 21 to read as follows:
  (21)  THE  AMOUNT  OF  ANY  DEDUCTION  ALLOWED PURSUANT TO SECTION ONE
HUNDRED SEVENTY OF THE INTERNAL REVENUE  CODE  FOR  WHICH  A  CREDIT  IS
CLAIMED  PURSUANT  TO SUBDIVISION FORTY-EIGHT OF SECTION TWO HUNDRED TEN
OF THIS ARTICLE.
  S 4. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. EDUCATION INVESTMENT  TAX  CREDIT.  (A)  ALLOWANCE  OF  CREDIT.  A
TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS PROVIDED IN
SECTION FORTY-ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR THAT YEAR TO LESS
THAN THE HIGHER OF THE AMOUNTS PRESCRIBED IN PARAGRAPHS (C)  OR  (D)  OF
SUBDIVISION  ONE  OF  THIS  SECTION.  HOWEVER,  IF  THE AMOUNT OF CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR QUALIFIED CONTRIBUTIONS FOR ANY TAXA-
BLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUC-
TIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO  THE  SUCCEEDING  FIVE
YEARS  AND  MAY  BE  DEDUCTED  FROM  THE TAXPAYER'S TAX FOR SUCH YEAR OR
YEARS.
  S 5. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is amended by adding a new clause (xxxvii) to read as
follows:
(XXXVII) EDUCATION INVESTMENT        AMOUNT OF CREDIT UNDER SUBDIVISION
TAX CREDIT UNDER SUBSECTION (XX)     FORTY-EIGHT OF SECTION TWO HUNDRED
                                     TEN
  S 6. Section 606  of  the  tax  law  is  amended  by  adding  two  new
subsections (w) and (w-1) to read as follows:
  (W)  HOME-BASED INSTRUCTIONAL MATERIALS CREDIT.  (1) FOR TAXABLE YEARS
BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND  FIFTEEN,  A  TAXPAYER
SHALL  BE  ALLOWED  A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE FOR
THE PURCHASE OF INSTRUCTIONAL MATERIALS APPROVED BY  THE  DEPARTMENT  OF
EDUCATION  OR  BOARD  OF REGENTS FOR USE IN NON-PUBLIC HOME-BASED EDUCA-

S. 6359--C                         372

TIONAL PROGRAMS; PROVIDED, THAT THE AMOUNT OF CREDIT  CLAIMED  DOES  NOT
EXCEED  THE  LESSER OF ONE HUNDRED DOLLARS OR ONE HUNDRED PERCENT OF THE
COST OF SUCH PURCHASES MADE BY THE TAXPAYER DURING THE TAXABLE YEAR.
  (2) A HUSBAND AND WIFE WHO FILE SEPARATE RETURNS FOR A TAXABLE YEAR IN
WHICH  THEY COULD HAVE FILED A JOINT RETURN MAY EACH CLAIM ONLY ONE-HALF
OF THE TAX CREDIT THAT WOULD HAVE BEEN ALLOWED FOR A JOINT RETURN.
  (3) IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR  ANY
TAXABLE  YEAR  SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS
SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN
ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS
ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  (W-1)  INSTRUCTIONAL  MATERIALS  AND SUPPLIES CREDIT.  (1) FOR TAXABLE
YEARS BEGINNING ON AND AFTER JANUARY  FIRST,  TWO  THOUSAND  FIFTEEN,  A
TAXPAYER  SHALL  BE  ALLOWED  A CREDIT EQUAL TO THE LESSER OF THE AMOUNT
PAID BY THE TAXPAYER DURING THE TAXABLE YEAR FOR INSTRUCTIONAL MATERIALS
AND SUPPLIES, OR TWO HUNDRED DOLLARS; PROVIDED THAT THE  TAXPAYER  IS  A
TEACHER  OR  INSTRUCTOR  IN  A  QUALIFIED  SCHOOL, AS DEFINED IN SECTION
FORTY-ONE OF THIS CHAPTER, FOR AT LEAST  NINE  HUNDRED  HOURS  DURING  A
SCHOOL  YEAR.  FOR  PURPOSES OF THIS SUBSECTION, THE TERM "MATERIALS AND
SUPPLIES" MEANS INSTRUCTIONAL MATERIALS OR SUPPLIES THAT ARE USED IN THE
CLASSROOM IN ANY QUALIFIED SCHOOL.
  (2) A HUSBAND AND WIFE WHO FILE SEPARATE RETURNS FOR A TAXABLE YEAR IN
WHICH THEY COULD HAVE FILED A JOINT RETURN MAY EACH CLAIM ONLY  ONE-HALF
OF THE TAX CREDIT THAT WOULD HAVE BEEN ALLOWED FOR A JOINT RETURN.
  (3)  IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY
TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR,  THE  EXCESS
SHALL  BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS
ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  S 7. Section 606 of the tax law is amended by adding a new  subsection
(xx) to read as follows:
  (XX)  EDUCATION  INVESTMENT  TAX  CREDIT.  (1)  ALLOWANCE OF CREDIT. A
TAXPAYER SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN SECTION
FORTY-ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (2) APPLICATION OF CREDIT. IF THE AMOUNT OF THE CREDIT  ALLOWED  UNDER
THIS  SUBSECTION  FOR  ANY  QUALIFIED CONTRIBUTIONS FOR ANY TAXABLE YEAR
EXCEEDS THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS MAY BE CARRIED OVER
TO THE SUCCEEDING FIVE YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX
FOR SUCH YEAR OR YEARS.
  S 8. Subdivision (c) of section 615 of  the  tax  law  is  amended  by
adding a new paragraph 9 to read as follows:
  (9)  THE  AMOUNT  OF  ANY FEDERAL DEDUCTION FOR CONTRIBUTIONS MADE FOR
WHICH A TAXPAYER CLAIMS A CREDIT UNDER SUBSECTION (XX)  OF  SECTION  SIX
HUNDRED SIX OF THIS ARTICLE.
  S  9.  The education law is amended by adding a new article 25 to read
as follows:
                               ARTICLE 25
                 EDUCATION INVESTMENT TAX CREDIT PROGRAM
SECTION 1209. SHORT TITLE.
        1210. DEFINITIONS.
        1211. APPROVAL TO ISSUE CERTIFICATES OF RECEIPT.
        1212. APPLICATIONS  FOR  APPROVAL  TO  ISSUE   CERTIFICATES   OF
                RECEIPT.
        1213. APPLICATION APPROVAL.
        1214. REVOCATION OF APPROVAL TO ISSUE CERTIFICATES OF RECEIPT.
        1215. REPORTING AND RECORDKEEPING.

S. 6359--C                         373

        1216. JOINT ANNUAL REPORT.
        1217. COMMISSIONER; POWERS.
  S  1209.  SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS
THE "EDUCATION INVESTMENT TAX CREDIT PROGRAM".
  S 1210. DEFINITIONS. AS USED IN  THIS  ARTICLE,  THE  FOLLOWING  TERMS
SHALL HAVE THE FOLLOWING MEANINGS:
  (1)  "AUTHORIZED CONTRIBUTION" MEANS THE CONTRIBUTION AMOUNT LISTED ON
THE CONTRIBUTION AUTHORIZATION CERTIFICATE ISSUED TO A TAXPAYER.
  (2) "CONTRIBUTION" MEANS A DONATION PAID BY  CASH,  CHECK,  ELECTRONIC
FUNDS  TRANSFER,  DEBIT  CARD OR CREDIT CARD MADE BY THE TAXPAYER DURING
THE TAX YEAR.
  (3) "EDUCATIONAL PROGRAM" MEANS AN ACADEMIC OR SIMILAR  PROGRAM  OF  A
PUBLIC  SCHOOL  THAT  ENHANCES THE CURRICULUM OR ACADEMIC PROGRAM OF THE
PUBLIC SCHOOL, OR PROVIDES A  PRE-KINDERGARTEN  PROGRAM  TO  THE  PUBLIC
SCHOOL.  FOR  PURPOSES  OF  THIS DEFINITION, THE INSTRUCTION, MATERIALS,
PROGRAMS OR OTHER  ACTIVITIES  OFFERED  BY  OR  THROUGH  AN  EDUCATIONAL
PROGRAM MAY INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING FEATURES: (A)
INSTRUCTION OR MATERIALS PROMOTING HEALTH, PHYSICAL EDUCATION, AND FAMI-
LY  AND  CONSUMER  SCIENCES; LITERARY, PERFORMING AND VISUAL ARTS; MATH-
EMATICS, SOCIAL STUDIES,  TECHNOLOGY  AND  SCIENTIFIC  ACHIEVEMENT;  (B)
INSTRUCTION  OR  PROGRAMMING  TO  MEET  THE  EDUCATION  NEEDS OF AT-RISK
STUDENTS OR STUDENTS WITH  DISABILITIES,  INCLUDING  TUTORING  OR  COUN-
SELING;  OR  (C) USE OF SPECIALIZED INSTRUCTIONAL MATERIALS, INSTRUCTORS
OR INSTRUCTION NOT PROVIDED BY A PUBLIC SCHOOL.
  (4) "EDUCATIONAL  SCHOLARSHIP  ORGANIZATION"  MEANS  A  NOT-FOR-PROFIT
ENTITY  WHICH  (A)  IS  EXEMPT  FROM  TAXATION  UNDER PARAGRAPH THREE OF
SUBSECTION (C) OF SECTION FIVE HUNDRED ONE OF THE INTERNAL REVENUE CODE,
(B) USES AT LEAST NINETY PERCENT OF THE REVENUE FROM QUALIFIED  CONTRIB-
UTIONS  RECEIVED  DURING  THE  CALENDAR YEAR AND ANY INCOME DERIVED FROM
QUALIFIED CONTRIBUTIONS FOR SCHOLARSHIPS, (C) DEPOSITS AND HOLDS  QUALI-
FIED  CONTRIBUTIONS  AND ANY INCOME DERIVED FROM QUALIFIED CONTRIBUTIONS
IN AN ACCOUNT THAT IS SEPARATE  FROM  THE  ORGANIZATION'S  OPERATING  OR
OTHER  FUNDS  UNTIL SUCH QUALIFIED CONTRIBUTIONS OR INCOME ARE WITHDRAWN
FOR USE, AND (D) PROVIDES SCHOLARSHIPS TO ELIGIBLE PUPILS FOR USE AT  NO
FEWER THAN THREE QUALIFIED SCHOOLS.
  (5)  "ELIGIBLE  PUPIL"  MEANS  A  CHILD  WHO (A) IS A RESIDENT OF THIS
STATE, (B) IS SCHOOL AGE IN ACCORDANCE WITH SUBDIVISION ONE  OF  SECTION
THIRTY-TWO HUNDRED TWO OF THIS CHAPTER OR WHO IS FOUR YEARS OF AGE ON OR
BEFORE  DECEMBER  FIRST  OF  THE  YEAR  IN  WHICH THEY ARE ENROLLED IN A
PRE-KINDERGARTEN PROGRAM, (C) ATTENDS OR IS ABOUT TO ATTEND A  QUALIFIED
SCHOOL, AND (D) RESIDES IN A HOUSEHOLD THAT HAS A FEDERAL ADJUSTED GROSS
INCOME  OF  FIVE HUNDRED THOUSAND DOLLARS OR LESS, PROVIDED HOWEVER, FOR
HOUSEHOLDS WITH THREE OR MORE  DEPENDENT  CHILDREN,  SUCH  INCOME  LEVEL
SHALL  BE  INCREASED BY TEN THOUSAND DOLLARS PER DEPENDENT CHILD, NOT TO
EXCEED FIVE HUNDRED FIFTY THOUSAND DOLLARS.
  (6) "LOCAL EDUCATION FUND" MEANS A NOT-FOR-PROFIT ENTITY WHICH (A)  IS
EXEMPT  FROM TAXATION UNDER PARAGRAPH THREE OF SUBSECTION (C) OF SECTION
FIVE HUNDRED ONE OF THE INTERNAL REVENUE CODE, (B)  IS  ESTABLISHED  FOR
THE  PURPOSE  OF SUPPORTING AT LEAST ONE PUBLIC SCHOOL, OR PUBLIC SCHOOL
DISTRICT, (C) USES AT LEAST NINETY PERCENT  OF  THE  QUALIFIED  CONTRIB-
UTIONS  RECEIVED  DURING  THE  CALENDAR YEAR AND ANY INCOME DERIVED FROM
QUALIFIED CONTRIBUTIONS TO SUPPORT  THE  PUBLIC  SCHOOL  OR  SCHOOLS  OR
PUBLIC  SCHOOL DISTRICT OR DISTRICTS THAT SUCH FUND HAS BEEN ESTABLISHED
TO SUPPORT, AND (D) DEPOSITS AND HOLDS QUALIFIED CONTRIBUTIONS  AND  ANY
INCOME  DERIVED FROM QUALIFIED CONTRIBUTIONS IN AN ACCOUNT THAT IS SEPA-

S. 6359--C                         374

RATE FROM THE FUND'S OPERATING  OR  OTHER  FUNDS  UNTIL  SUCH  QUALIFIED
CONTRIBUTIONS OR INCOME ARE WITHDRAWN FOR USE.
  (7)  "NONPUBLIC  SCHOOL"  MEANS  ANY  NOT-FOR-PROFIT  PRE-KINDERGARTEN
PROGRAM  OR  ELEMENTARY,  SECONDARY  SECTARIAN  OR  NONSECTARIAN  SCHOOL
LOCATED  IN  THIS  STATE,  OTHER THAN A PUBLIC SCHOOL, THAT IS PROVIDING
INSTRUCTION AT ONE OR MORE LOCATIONS TO A  STUDENT  IN  ACCORDANCE  WITH
SUBDIVISION TWO OF SECTION THIRTY-TWO HUNDRED FOUR OF THIS CHAPTER.
  (8) "PUBLIC EDUCATION ENTITY" MEANS A PUBLIC SCHOOL OR A PUBLIC SCHOOL
DISTRICT,  PROVIDED  THAT  SUCH PUBLIC SCHOOL, OR PUBLIC SCHOOL DISTRICT
DEPOSITS AND HOLDS QUALIFIED CONTRIBUTIONS AND ANY INCOME  DERIVED  FROM
QUALIFIED  CONTRIBUTIONS  IN AN ACCOUNT THAT IS SEPARATE FROM THE PUBLIC
SCHOOL OR PUBLIC SCHOOL DISTRICT'S OPERATING OR OTHER FUNDS  UNTIL  SUCH
QUALIFIED CONTRIBUTIONS OR INCOME ARE WITHDRAWN FOR USE, AND IS APPROVED
TO ISSUE CERTIFICATES OF RECEIPT PURSUANT TO THIS ARTICLE.
  (9)  "PUBLIC  SCHOOL" MEANS ANY FREE ELEMENTARY OR SECONDARY SCHOOL IN
THIS STATE GUARANTEED BY ARTICLE ELEVEN OF THE NEW YORK CONSTITUTION  OR
CHARTER SCHOOL AUTHORIZED BY ARTICLE FIFTY-SIX OF THIS CHAPTER.
  (10)  "QUALIFIED  CONTRIBUTION" MEANS THE AUTHORIZED CONTRIBUTION MADE
BY A TAXPAYER TO THE PUBLIC EDUCATION ENTITY, SCHOOL IMPROVEMENT  ORGAN-
IZATION,  LOCAL  EDUCATION FUND, OR EDUCATIONAL SCHOLARSHIP ORGANIZATION
THAT IS LISTED ON THE CONTRIBUTION AUTHORIZATION CERTIFICATE  ISSUED  TO
THE  TAXPAYER  AND  FOR WHICH THE TAXPAYER HAS RECEIVED A CERTIFICATE OF
RECEIPT FROM SUCH ENTITY, FUND, OR ORGANIZATION.
  (11) "QUALIFIED EDUCATOR" MEANS AN INDIVIDUAL  WHO  IS  A  TEACHER  OR
INSTRUCTOR  IN A QUALIFIED SCHOOL FOR AT LEAST NINE HUNDRED HOURS DURING
A SCHOOL YEAR.
  (12) "QUALIFIED SCHOOL" MEANS A PUBLIC SCHOOL OR NONPUBLIC SCHOOL.
  (13) "SCHOLARSHIP" MEANS AN EDUCATIONAL SCHOLARSHIP OR  TUITION  GRANT
AWARDED  TO  AN ELIGIBLE PUPIL TO ATTEND A QUALIFIED SCHOOL IN AN AMOUNT
NOT TO EXCEED THE TUITION CHARGED TO ATTEND SUCH SCHOOL LESS  ANY  OTHER
EDUCATIONAL SCHOLARSHIP OR TUITION GRANT RECEIVED BY SUCH ELIGIBLE PUPIL
OR  HIS  OR  HER  PARENT,  PARENTS OR GUARDIAN FOR SUCH ELIGIBLE PUPIL'S
TUITION; PROVIDED, HOWEVER, IN THE CASE OF AN ELIGIBLE PUPIL ATTENDING A
PUBLIC SCHOOL IN A PUBLIC SCHOOL DISTRICT OF WHICH SUCH PUPIL IS  NOT  A
RESIDENT,  THE  AMOUNT  OF  THE EDUCATIONAL SCHOLARSHIP OR TUITION GRANT
AWARDED MAY NOT EXCEED THE TUITION CHARGED BY THE PUBLIC SCHOOL PURSUANT
TO PARAGRAPH D OF SUBDIVISION FOUR OF SECTION THIRTY-TWO HUNDRED TWO  OF
THIS  CHAPTER  LESS  ANY  OTHER EDUCATIONAL SCHOLARSHIP OR TUITION GRANT
RECEIVED BY SUCH ELIGIBLE PUPIL OR HIS OR HER PARENT, PARENTS OR GUARDI-
AN FOR SUCH ELIGIBLE PUPIL'S TUITION, BUT  ONLY  IF  THE  PUBLIC  SCHOOL
DISTRICT  OF  WHICH  SUCH PUPIL IS A RESIDENT IS NOT REQUIRED TO PAY FOR
SUCH TUITION.
  (14) "SCHOOL IMPROVEMENT ORGANIZATION" MEANS A  NOT-FOR-PROFIT  ENTITY
WHICH  (I)  IS  EXEMPT FROM TAXATION UNDER PARAGRAPH THREE OF SUBSECTION
(C) OF SECTION FIVE HUNDRED ONE OF THE INTERNAL REVENUE CODE, (II)  USES
AT  LEAST  NINETY PERCENT OF THE QUALIFIED CONTRIBUTIONS RECEIVED DURING
THE CALENDAR YEAR AND ANY INCOME DERIVED FROM  SUCH  QUALIFIED  CONTRIB-
UTIONS  DURING  SUCH  MONTHS  TO  ASSIST PUBLIC SCHOOLS OR PUBLIC SCHOOL
DISTRICTS LOCATED IN  THIS  STATE  IN  THEIR  PROVISION  OF  EDUCATIONAL
PROGRAMS,  EITHER  BY MAKING CONTRIBUTIONS TO ONE OR MORE PUBLIC SCHOOLS
OR PUBLIC SCHOOL DISTRICTS LOCATED IN THIS  STATE  OR  PROVIDING  EDUCA-
TIONAL  PROGRAMS  TO, OR IN CONJUNCTION WITH, ONE OR MORE PUBLIC SCHOOLS
OR PUBLIC SCHOOL DISTRICTS LOCATED IN THIS  STATE,  (III)  DEPOSITS  AND
HOLDS QUALIFIED CONTRIBUTIONS AND ANY INCOME DERIVED FROM SUCH QUALIFIED
CONTRIBUTIONS  IN  AN  ACCOUNT  THAT IS SEPARATE FROM THE ORGANIZATION'S
OPERATING OR OTHER FUNDS UNTIL SUCH QUALIFIED  CONTRIBUTIONS  OR  INCOME

S. 6359--C                         375

ARE  WITHDRAWN  FOR  USE,  AND (IV) IS APPROVED TO ISSUE CERTIFICATES OF
RECEIPT PURSUANT TO THIS ARTICLE. SUCH TERM INCLUDES A  PRE-KINDERGARTEN
PROGRAM  OR  NOT-FOR-PROFIT ENTITY THAT ALLOWS THE TAXPAYER TO CHOOSE TO
DONATE  TO  A  PROGRAM,  PROJECT OR INITIATIVE IDENTIFIED BY A QUALIFIED
EDUCATOR FOR USE IN A PUBLIC SCHOOL.
  S 1211. APPROVAL TO ISSUE CERTIFICATES OF RECEIPT. 1.  PUBLIC  SCHOOLS
AND  PUBLIC  SCHOOL  DISTRICTS.  ALL  PUBLIC  SCHOOLS  AND PUBLIC SCHOOL
DISTRICTS SHALL BE APPROVED TO ISSUE CERTIFICATES OF  RECEIPT  PROVIDED,
THAT  A PUBLIC SCHOOL OR PUBLIC SCHOOL DISTRICT SHALL NOT BE APPROVED IF
EITHER (A) THE PUBLIC SCHOOL OR PUBLIC SCHOOL DISTRICT FAILS TO  DEPOSIT
AND  HOLD  QUALIFIED CONTRIBUTIONS AND ANY INCOME DERIVED FROM QUALIFIED
CONTRIBUTIONS IN AN ACCOUNT THAT IS SEPARATE FROM THE SCHOOL  OR  SCHOOL
DISTRICT'S  OPERATING  OR OTHER FUNDS UNTIL SUCH QUALIFIED CONTRIBUTIONS
OR INCOME ARE WITHDRAWN FOR USE, OR (B) THE BOARD OF REGENTS HAS REVOKED
SUCH APPROVAL FOR SUCH PUBLIC SCHOOL OR PUBLIC SCHOOL DISTRICT  PURSUANT
TO SECTION TWELVE HUNDRED FOURTEEN OF THIS ARTICLE.
  2. SCHOOL IMPROVEMENT ORGANIZATIONS, EDUCATIONAL SCHOLARSHIP ORGANIZA-
TIONS  AND  LOCAL  EDUCATION  FUNDS. NO SCHOOL IMPROVEMENT ORGANIZATION,
EDUCATIONAL SCHOLARSHIP ORGANIZATION OR LOCAL EDUCATION FUND SHALL ISSUE
ANY CERTIFICATES OF RECEIPT WITHOUT FILING AN  APPLICATION  PURSUANT  TO
SECTION  TWELVE  HUNDRED  TWELVE  OF THIS ARTICLE AND RECEIVING APPROVAL
PURSUANT TO SECTION TWELVE HUNDRED THIRTEEN OF THIS ARTICLE.
  S 1212. APPLICATIONS FOR APPROVAL TO ISSUE  CERTIFICATES  OF  RECEIPT.
EACH  SCHOOL IMPROVEMENT ORGANIZATION, EDUCATIONAL SCHOLARSHIP ORGANIZA-
TION, AND LOCAL EDUCATION FUND SHALL SUBMIT AN APPLICATION TO THE  BOARD
OF REGENTS FOR APPROVAL TO ISSUE CERTIFICATES OF RECEIPT IN THE FORM AND
MANNER PRESCRIBED BY THE BOARD.
  S  1213.  APPLICATION  APPROVAL.  1.  IN GENERAL. THE BOARD OF REGENTS
SHALL REVIEW EACH APPLICATION TO ISSUE CERTIFICATES OF RECEIPT  PURSUANT
TO  THIS  ARTICLE. APPROVAL OR DENIAL OF AN APPLICATION SHALL BE MADE AT
THE NEXT SCHEDULED MEETING OF THE BOARD  OF  REGENTS  THAT  FOLLOWS  THE
RECEIPT OF SUCH APPLICATION, PROVIDED, HOWEVER THAT IF IT IS NOT PRACTI-
CABLE  FOR THE BOARD TO REVIEW AN APPLICATION THAT IS RECEIVED LESS THAN
THREE DAYS BEFORE A SCHEDULED MEETING, THE BOARD SHALL APPROVE  OR  DENY
SUCH AN APPLICATION AT THE IMMEDIATELY FOLLOWING SCHEDULED MEETING.
  2. NOTIFICATION. APPLICANTS SHALL BE NOTIFIED OF THE BOARD OF REGENTS'
DETERMINATION WITHIN THREE BUSINESS DAYS OF THE BOARD'S DETERMINATION.
  S  1214.  REVOCATION OF APPROVAL TO ISSUE CERTIFICATES OF RECEIPT. THE
BOARD OF REGENTS, IN CONSULTATION WITH THE COMMISSIONER OF TAXATION  AND
FINANCE,  MAY  REVOKE THE APPROVAL OF A SCHOOL IMPROVEMENT ORGANIZATION,
EDUCATIONAL  SCHOLARSHIP  ORGANIZATION,  LOCAL  EDUCATION  FUND,  PUBLIC
SCHOOL OR PUBLIC SCHOOL DISTRICT TO ISSUE CERTIFICATES OF RECEIPT UPON A
FINDING  THAT  SUCH  ORGANIZATION,  FUND,  SCHOOL OR SCHOOL DISTRICT HAS
VIOLATED THIS ARTICLE  OR  SECTION  FORTY-ONE  OF  THE  TAX  LAW.  THESE
VIOLATIONS  SHALL  INCLUDE, BUT NOT BE LIMITED TO, ANY OF THE FOLLOWING:
(1) FAILURE  TO  MEET  THE  REQUIREMENTS  OF  THIS  ARTICLE  OR  SECTION
FORTY-ONE  OF THE TAX LAW, (2) THE FAILURE TO MAINTAIN FULL AND ADEQUATE
RECORDS WITH RESPECT TO THE RECEIPT OF QUALIFIED CONTRIBUTIONS, (3)  THE
FAILURE  TO SUPPLY SUCH RECORDS TO THE COMMISSIONER, DEPARTMENT OF TAXA-
TION AND FINANCE OR BOARD OF REGENTS WHEN REQUESTED BY THE DEPARTMENT OR
BOARD, OR (4) THE FAILURE TO PROVIDE NOTICE TO THE DEPARTMENT  OF  TAXA-
TION  AND  FINANCE  OF  THE  ISSUANCE  OR NONISSUANCE OF CERTIFICATES OF
RECEIPT PURSUANT TO SECTION FORTY-ONE OF THE TAX LAW; PROVIDED  HOWEVER,
THAT  THE  BOARD  OF  REGENTS SHALL NOT REVOKE APPROVAL PURSUANT TO THIS
SECTION BASED UPON A VIOLATION OF THE TAX LAW UNLESS THE COMMISSIONER OF
TAXATION AND FINANCE AGREES THAT REVOCATION IS WARRANTED;  AND  PROVIDED

S. 6359--C                         376

FURTHER  THAT  THE  BOARD  SHALL  NOT  REVOKE  APPROVAL PURSUANT TO THIS
SECTION WHEN THE FAILURE TO COMPLY IS DUE  TO  CLERICAL  ERROR  AND  NOT
NEGLIGENCE OR INTENTIONAL DISREGARD FOR THE LAW. WITHIN FIVE DAYS OF THE
DETERMINATION  REVOKING APPROVAL, THE BOARD SHALL PROVIDE NOTICE OF SUCH
REVOCATION TO THE EDUCATIONAL SCHOLARSHIP ORGANIZATION, SCHOOL  IMPROVE-
MENT ORGANIZATION, LOCAL EDUCATION FUND, PUBLIC SCHOOL, OR PUBLIC SCHOOL
DISTRICT AND TO THE DEPARTMENT OF TAXATION AND FINANCE.
  S  1215.  REPORTING AND RECORDKEEPING. 1. EACH EDUCATIONAL SCHOLARSHIP
ORGANIZATION, LOCAL EDUCATION  FUND,  SCHOOL  IMPROVEMENT  ORGANIZATION,
PUBLIC  SCHOOL  AND  PUBLIC  SCHOOL  DISTRICT  THAT  RECEIVES  QUALIFIED
CONTRIBUTIONS SHALL REPORT TO THE COMMISSIONER AND THE BOARD OF  REGENTS
BY  JANUARY  THIRTY-FIRST OF EACH CALENDAR YEAR. SUCH REPORT SHALL BE IN
THE FORM AND MANNER PRESCRIBED BY THE COMMISSIONER IN CONSULTATION  WITH
THE BOARD OF REGENTS.
  2.  RECORDKEEPING.   EACH SCHOOL IMPROVEMENT ORGANIZATION, EDUCATIONAL
SCHOLARSHIP ORGANIZATION, LOCAL EDUCATION FUND, PUBLIC SCHOOL AND PUBLIC
SCHOOL DISTRICT THAT ISSUED AT LEAST ONE CERTIFICATE  OF  RECEIPT  SHALL
MAINTAIN  RECORDS  INCLUDING (A) NOTIFICATIONS RECEIVED FROM THE DEPART-
MENT OF TAXATION AND FINANCE, (B) NOTIFICATIONS MADE TO  THE  DEPARTMENT
OF TAXATION AND FINANCE, (C) COPIES OF QUALIFIED CONTRIBUTIONS RECEIVED,
(D) COPIES OF THE DEPOSIT OF SUCH QUALIFIED CONTRIBUTIONS, (E) COPIES OF
ISSUED  CERTIFICATES OF RECEIPT, (F) ANNUAL FINANCIAL STATEMENTS, (G) IN
THE CASE OF SCHOOL IMPROVEMENT  ORGANIZATIONS,  EDUCATIONAL  SCHOLARSHIP
ORGANIZATIONS  AND  LOCAL  EDUCATION  FUNDS,  THE  APPLICATION SUBMITTED
PURSUANT TO SECTION TWELVE  HUNDRED  TWELVE  OF  THIS  ARTICLE  AND  THE
APPROVAL  ISSUED  BY THE BOARD OF REGENTS, AND (H) ANY OTHER INFORMATION
AS PRESCRIBED BY REGULATION PROMULGATED  BY  THE  COMMISSIONER  OR  RULE
PROMULGATED BY THE BOARD OF REGENTS.
  S 1216. JOINT ANNUAL REPORT. ON OR BEFORE THE LAST DAY OF MAY FOR EACH
CALENDAR  YEAR, THE COMMISSIONER OF TAXATION AND FINANCE AND THE COMMIS-
SIONER, JOINTLY, SHALL SUBMIT A WRITTEN REPORT AS PROVIDED IN  PARAGRAPH
TWO OF SUBDIVISION (K) OF SECTION FORTY-ONE OF THE TAX LAW.
  S  1217. COMMISSIONER; POWERS. THE COMMISSIONER SHALL PROMULGATE ON AN
EMERGENCY BASIS REGULATIONS NECESSARY FOR  THE  IMPLEMENTATION  OF  THIS
SECTION.  THE  COMMISSIONER  SHALL  MAKE  ANY APPLICATION REQUIRED TO BE
FILED PURSUANT TO THIS ARTICLE AVAILABLE TO APPLICANTS WITHIN SIXTY DAYS
OF THE EFFECTIVE DATE OF THIS ARTICLE.
  S 10. The education law is amended by adding a new section  1503-a  to
read as follows:
  S  1503-A.  POWER  TO  ACCEPT AND SOLICIT GIFTS AND DONATIONS.  1. ALL
SCHOOL DISTRICTS ORGANIZED BY SPECIAL LAWS OR PURSUANT TO THE PROVISIONS
OF A GENERAL LAW ARE HEREBY AUTHORIZED AND EMPOWERED  TO  ACCEPT  GIFTS,
DONATIONS, AND CONTRIBUTIONS TO THE DISTRICT AND TO SOLICIT THE SAME.
  2. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR OF ANY OTHER
GENERAL  OR  SPECIAL  LAW  TO  THE  CONTRARY, THE RECEIPT OF SUCH GIFTS,
DONATIONS, CONTRIBUTIONS AND OTHER FUNDS, AND ANY INCOME DERIVED  THERE-
FROM,  SHALL  BE  DISREGARDED  FOR  THE  PURPOSES OF ALL APPORTIONMENTS,
COMPUTATIONS, AND DETERMINATIONS OF STATE AID.
  S 11. Severability. If any provision of this section or  the  applica-
tion  thereof to any person or circumstances is held invalid, such inva-
lidity shall not affect other provisions or applications of the  section
which  can be given effect without the invalid provision or application,
and to this end the provisions of this section are declared to be sever-
able.
  S 12. This act shall take effect immediately and shall apply to  taxa-
ble years beginning after December 31, 2014.

S. 6359--C                         377

                                PART KKK

  Section  1.  The  labor law is amended by adding a new section 25-b to
read as follows:
  S 25-B. POWER TO ADMINISTER THE WORKERS WITH DISABILITIES  TAX  CREDIT
PROGRAM.  (A) THE COMMISSIONER IS AUTHORIZED TO ESTABLISH AND ADMINISTER
THE WORKERS WITH DISABILITIES TAX CREDIT PROGRAM TO PROVIDE  TAX  INCEN-
TIVES TO EMPLOYERS FOR EMPLOYING INDIVIDUALS WITH DEVELOPMENTAL DISABIL-
ITIES.    THE  COMMISSIONER  IS AUTHORIZED TO ALLOCATE UP TO SIX MILLION
DOLLARS OF TAX CREDITS ANNUALLY.
  (B) DEFINITIONS. (1) THE TERM "QUALIFIED EMPLOYER" MEANS  AN  EMPLOYER
THAT  HAS BEEN CERTIFIED BY THE COMMISSIONER TO PARTICIPATE IN THE WORK-
ERS WITH DISABILITIES TAX CREDIT PROGRAM AND THAT EMPLOYS  ONE  OR  MORE
QUALIFIED EMPLOYEES.
  (2) THE TERM "QUALIFIED EMPLOYEE" MEANS AN INDIVIDUAL:
  (I)  WHO IS DEEMED TO HAVE A DEVELOPMENTAL DISABILITY, AS THAT TERM IS
DEFINED IN SUBDIVISION TWENTY-TWO OF SECTION 1.03 OF THE MENTAL  HYGIENE
LAW  AND  WHO IS CERTIFIED BY THE EDUCATION DEPARTMENT OR THE OFFICE FOR
PEOPLE WITH DEVELOPMENTAL DISABILITIES:
  (A) AS A PERSON WITH A DISABILITY WHICH CONSTITUTES OR  RESULTS  IN  A
SUBSTANTIAL HANDICAP TO EMPLOYMENT; AND
  (B)  AS  A  PERSON  HAVING COMPLETED OR AS RECEIVING SERVICES UNDER AN
INDIVIDUALIZED WRITTEN REHABILITATION PLAN  APPROVED  BY  THE  EDUCATION
DEPARTMENT  OR  OTHER  STATE AGENCY RESPONSIBLE FOR PROVIDING VOCATIONAL
REHABILITATION SERVICES TO SUCH INDIVIDUAL; AND
  (II) WHO IS A CURRENT EMPLOYEE OF  A  SHELTERED  WORKSHOP,  WHICH  FOR
PURPOSES  OF  THIS SUBDIVISION IS DEFINED AS AN ORGANIZATION OR ENVIRON-
MENT THAT EMPLOYS PEOPLE WITH DISABILITIES SEGREGATED  FROM  OTHERS;  OR
WHO WAS UNEMPLOYED FOR AT LEAST THREE MONTHS PRIOR TO JANUARY FIRST, TWO
THOUSAND FIFTEEN; AND
  (III) WHO WILL BE WORKING FOR THE QUALIFIED EMPLOYER IN A FULL-TIME OR
PART-TIME POSITION THAT PAYS WAGES THAT ARE EQUIVALENT TO THE WAGES PAID
FOR SIMILAR JOBS, WITH APPROPRIATE ADJUSTMENTS FOR EXPERIENCE AND TRAIN-
ING,  AND  FOR WHICH NO OTHER EMPLOYEE HAS BEEN TERMINATED, OR WHERE THE
EMPLOYER HAS NOT OTHERWISE REDUCED ITS WORKFORCE BY  INVOLUNTARY  TERMI-
NATIONS  WITH  THE  INTENTION  OF  FILLING THE VACANCY BY CREATING A NEW
HIRE.
  (C) A QUALIFIED EMPLOYER SHALL BE ENTITLED TO A TAX CREDIT.   THE  TAX
CREDITS  SHALL  BE  CLAIMED  BY  THE  QUALIFIED EMPLOYER AS SPECIFIED IN
SUBDIVISION FORTY-EIGHT OF SECTION TWO HUNDRED TEN AND  SUBSECTION  (XX)
OF SECTION SIX HUNDRED SIX OF THE TAX LAW.
  (D)  TO  PARTICIPATE  IN THE DEVELOPMENTALLY DISABLED WORKS TAX CREDIT
PROGRAM, AN EMPLOYER MUST SUBMIT AN APPLICATION (IN A FORM PRESCRIBED BY
THE COMMISSIONER) TO THE COMMISSIONER NO LATER THAN NOVEMBER  THIRTIETH,
TWO THOUSAND FOURTEEN FOR PROGRAM ONE, AFTER JANUARY FIRST, TWO THOUSAND
FIFTEEN  BUT  NO LATER THAN NOVEMBER THIRTIETH, TWO THOUSAND FIFTEEN FOR
PROGRAM TWO, AFTER JANUARY FIRST, TWO THOUSAND SIXTEEN BUT NO LATER THAN
NOVEMBER THIRTIETH, TWO THOUSAND SIXTEEN FOR PROGRAM THREE, AFTER  JANU-
ARY  FIRST, TWO THOUSAND SEVENTEEN BUT NO LATER THAN NOVEMBER THIRTIETH,
TWO THOUSAND SEVENTEEN FOR PROGRAM FOUR, AND AFTER  JANUARY  FIRST,  TWO
THOUSAND  EIGHTEEN  BUT  NO  LATER THAN NOVEMBER THIRTIETH, TWO THOUSAND
EIGHTEEN FOR PROGRAM FIVE. THE  QUALIFIED  EMPLOYEES  MUST  START  THEIR
EMPLOYMENT ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN BUT NO LATER
THAN DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN FOR PROGRAM ONE, ON OR
AFTER  JANUARY  FIRST,  TWO  THOUSAND FIFTEEN BUT NO LATER THAN DECEMBER
THIRTY-FIRST, TWO THOUSAND FIFTEEN FOR PROGRAM TWO, ON OR AFTER  JANUARY

S. 6359--C                         378

FIRST, TWO THOUSAND SIXTEEN BUT NO LATER THAN DECEMBER THIRTY-FIRST, TWO
THOUSAND SIXTEEN FOR PROGRAM THREE, ON OR AFTER JANUARY FIRST, TWO THOU-
SAND  SEVENTEEN  BUT  NO  LATER THAN DECEMBER THIRTY-FIRST, TWO THOUSAND
SEVENTEEN  FOR PROGRAM FOUR, AND ON OR AFTER JANUARY FIRST, TWO THOUSAND
EIGHTEEN BUT NO LATER THAN DECEMBER THIRTY-FIRST, TWO THOUSAND  EIGHTEEN
FOR PROGRAM FIVE. THE COMMISSIONER SHALL ESTABLISH GUIDELINES AND CRITE-
RIA  THAT  SPECIFY  REQUIREMENTS  FOR  EMPLOYERS  TO  PARTICIPATE IN THE
PROGRAM INCLUDING CRITERIA FOR CERTIFYING QUALIFIED EMPLOYEES. ANY REGU-
LATIONS THAT THE COMMISSIONER DETERMINES ARE NECESSARY MAY BE ADOPTED ON
AN EMERGENCY BASIS NOTWITHSTANDING ANYTHING TO THE CONTRARY  IN  SECTION
TWO HUNDRED TWO OF THE STATE ADMINISTRATIVE PROCEDURE ACT. SUCH REQUIRE-
MENTS MAY INCLUDE THE TYPES OF INDUSTRIES THAT THE EMPLOYERS ARE ENGAGED
IN.  THE  COMMISSIONER MAY GIVE PREFERENCE TO EMPLOYERS THAT ARE ENGAGED
IN DEMAND OCCUPATIONS OR INDUSTRIES, OR IN REGIONAL GROWTH SECTORS, SUCH
AS CLEAN ENERGY, HEALTHCARE, ADVANCED MANUFACTURING AND CONSERVATION. IN
ADDITION, THE COMMISSIONER MAY GIVE PREFERENCE TO  EMPLOYERS  WHO  OFFER
ADVANCEMENT, INCLUDING BUT NOT LIMITED TO INCREASED HOURS OF EMPLOYMENT,
OR INCREASED WAGES, AND EMPLOYEE BENEFIT PACKAGES TO THE QUALIFIED INDI-
VIDUALS.
  (E)  IF, AFTER REVIEWING THE APPLICATION SUBMITTED BY AN EMPLOYER, THE
COMMISSIONER DETERMINES THAT SUCH EMPLOYER IS ELIGIBLE TO PARTICIPATE IN
THE WORKERS WITH DISABILITIES TAX CREDIT PROGRAM, THE COMMISSIONER SHALL
ISSUE THE EMPLOYER A CERTIFICATE OF  ELIGIBILITY  THAT  ESTABLISHES  THE
EMPLOYER  AS  A QUALIFIED EMPLOYER. THE CERTIFICATE OF ELIGIBILITY SHALL
SPECIFY THE MAXIMUM AMOUNT OF WORKERS WITH DISABILITIES TAX CREDIT  THAT
THE EMPLOYER WILL BE ALLOWED TO CLAIM.
  S 2. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. WORKERS WITH DISABILITIES TAX CREDIT.  (A) THE AMOUNT OF THE CRED-
IT SHALL BE FIFTEEN PERCENT OF THE QUALIFIED WAGES PAID TO THE QUALIFIED
EMPLOYEE  AFTER  JANUARY FIRST, TWO THOUSAND FIFTEEN; PROVIDED, HOWEVER,
THAT THE QUALIFIED EMPLOYEE IS EMPLOYED FOR NOT LESS THAN SIX MONTHS AND
IS FULL TIME TOTALING AT LEAST THIRTY HOURS PER WEEK. A  QUALIFIED  PART
TIME  EMPLOYEE  WHO  WORKS AT LEAST EIGHT HOURS PER WEEK AND IS EMPLOYED
FOR NOT LESS THAN SIX MONTHS SHALL RECEIVE A CREDIT OF  TEN  PERCENT  OF
THE  QUALIFIED WAGES PAID TO THE QUALIFIED EMPLOYEE AFTER JANUARY FIRST,
TWO THOUSAND FIFTEEN. THE CREDIT ALLOWED PURSUANT  TO  THIS  SUBDIVISION
SHALL NOT EXCEED, DURING ANY TAXABLE YEAR, FIVE THOUSAND DOLLARS FOR ANY
QUALIFIED  FULL  TIME EMPLOYEE AND TWO THOUSAND FIVE HUNDRED DOLLARS FOR
ANY QUALIFIED PART TIME EMPLOYEE. "QUALIFIED WAGES" MEANS WAGES PAID  OR
INCURRED  BY  THE QUALIFIED TAXPAYER DURING THE TAXABLE YEAR TO A QUALI-
FIED EMPLOYEE WHICH ARE ATTRIBUTABLE, WITH RESPECT TO SUCH EMPLOYEE,  TO
SERVICES RENDERED BY THE QUALIFIED EMPLOYEE.
  (B) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  THIS  SECTION.
HOWEVER,  IF  THE  AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR
ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY  AMOUNT  OF  CREDIT
NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING
THREE  YEARS,  AND MAY BE DEDUCTED FROM THE QUALIFIED TAXPAYER'S TAX FOR
SUCH YEARS.
  (C) THE TAXPAYER MAY BE REQUIRED TO  ATTACH  TO  ITS  TAX  RETURN  ITS
CERTIFICATE  OF ELIGIBILITY ISSUED BY THE COMMISSIONER OF LABOR PURSUANT
TO SECTION TWENTY-FIVE-B OF THE LABOR LAW. IN NO EVENT SHALL THE TAXPAY-
ER BE ALLOWED A CREDIT GREATER THAN THE AMOUNT OF THE CREDIT  LISTED  ON
THE  CERTIFICATE  OF ELIGIBILITY.  NOTWITHSTANDING ANY PROVISION OF THIS

S. 6359--C                         379

CHAPTER TO THE CONTRARY, THE COMMISSIONER AND THE COMMISSIONER'S  DESIG-
NEES  MAY  RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER CLAIMING THIS
CREDIT AND THE AMOUNT OF THE CREDIT EARNED BY  THE  TAXPAYER.  PROVIDED,
HOWEVER,  IF  A  TAXPAYER CLAIMS THIS CREDIT BECAUSE IT IS A MEMBER OF A
LIMITED LIABILITY COMPANY OR A PARTNER IN A PARTNERSHIP, ONLY THE AMOUNT
OF CREDIT EARNED BY THE ENTITY AND NOT THE AMOUNT OF CREDIT  CLAIMED  BY
THE TAXPAYER MAY BE RELEASED.
  S  3.    Subsections  (yy)  and (zz) of section 606 of the tax law, as
relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
relettered  subsections  (yyy)  and  (zzz)  and a new subsection (xx) is
added to read as follows:
  (XX) WORKERS WITH DISABILITIES TAX CREDIT.   (1)  THE  AMOUNT  OF  THE
CREDIT SHALL BE FIFTEEN PERCENT OF THE QUALIFIED WAGES PAID TO THE QUAL-
IFIED  EMPLOYEE  AFTER  JANUARY  FIRST,  TWO THOUSAND FIFTEEN; PROVIDED,
HOWEVER, THAT THE QUALIFIED EMPLOYEE IS EMPLOYED FOR NOT LESS  THAN  SIX
MONTHS AND IS FULL TIME TOTALING AT LEAST THIRTY HOURS PER WEEK. A QUAL-
IFIED  PART  TIME EMPLOYEE WHO WORKS AT LEAST FIFTEEN HOURS PER WEEK AND
IS EMPLOYED FOR NOT LESS THAN SIX MONTHS SHALL RECEIVE A CREDIT  OF  TEN
PERCENT  OF  THE  QUALIFIED  WAGES  PAID TO THE QUALIFIED EMPLOYEE AFTER
JANUARY FIRST, TWO THOUSAND FIFTEEN. THE CREDIT ALLOWED PURSUANT TO THIS
SUBSECTION SHALL NOT EXCEED, DURING  ANY  TAXABLE  YEAR,  FIVE  THOUSAND
DOLLARS  FOR  ANY  QUALIFIED  FULL  TIME  EMPLOYEE AND TWO THOUSAND FIVE
HUNDRED DOLLARS FOR ANY QUALIFIED PART TIME EMPLOYEE. "QUALIFIED  WAGES"
MEANS  WAGES PAID OR INCURRED BY THE QUALIFIED TAXPAYER DURING THE TAXA-
BLE YEAR TO A QUALIFIED EMPLOYEE WHICH ARE ATTRIBUTABLE, WITH RESPECT TO
SUCH EMPLOYEE, TO SERVICES RENDERED BY THE QUALIFIED EMPLOYEE.
  (2) IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS  SUBSECTION  FOR  ANY
TAXABLE  YEAR  SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR, ANY AMOUNT
OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE
FOLLOWING THREE YEARS, AND MAY BE DEDUCTED FOR THE QUALIFIED  TAXPAYER'S
TAX FOR SUCH YEARS.
  (3)  THE  TAXPAYER  MAY  BE  REQUIRED  TO ATTACH TO ITS TAX RETURN ITS
CERTIFICATE OF ELIGIBILITY ISSUED BY THE COMMISSIONER OF LABOR  PURSUANT
TO SECTION TWENTY-FIVE-B OF THE LABOR LAW. IN NO EVENT SHALL THE TAXPAY-
ER  BE  ALLOWED A CREDIT GREATER THAN THE AMOUNT OF THE CREDIT LISTED ON
THE CERTIFICATE OF ELIGIBILITY.  NOTWITHSTANDING ANY PROVISION  OF  THIS
CHAPTER  TO THE CONTRARY, THE COMMISSIONER AND THE COMMISSIONER'S DESIG-
NEES MAY RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER  CLAIMING  THIS
CREDIT  AND  THE  AMOUNT OF THE CREDIT EARNED BY THE TAXPAYER. PROVIDED,
HOWEVER, IF A TAXPAYER CLAIMS THIS CREDIT BECAUSE IT IS A  MEMBER  OF  A
LIMITED  LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP, OR A SHAREHOLDER
IN A SUBCHAPTER S CORPORATION, ONLY THE AMOUNT OF CREDIT EARNED  BY  THE
ENTITY  AND  NOT  THE  AMOUNT  OF  CREDIT CLAIMED BY THE TAXPAYER MAY BE
RELEASED.
  S 4. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is amended by adding a new clause (xxxvii) to read as
follows:
(XXXVII) WORKERS WITH DISABILITIES   AMOUNT OF
TAX CREDIT UNDER SUBSECTION (XX)     CREDIT UNDER SUBDIVISION
                                     FORTY-EIGHT OF SECTION TWO
                                     HUNDRED TEN
  S 5. This act shall take effect July 30, 2014.

                                PART LLL

S. 6359--C                         380

  Section 1. Section 1604 of the tax law is amended by adding  four  new
subdivisions d, e, f and g to read as follows:
  D.  THE  COMMISSION MAY CONTRACT WITH ONE OR MORE PERSONS TO ALLOW THE
PLACEMENT OF ADVERTISING OR  PROMOTIONAL  MATERIAL  ON  AVAILABLE  MEDIA
RELATED TO ANY ONLINE LOTTERY GAME OR TO SPONSOR INDIVIDUAL DRAWS IN ANY
ONLINE LOTTERY GAME. IF THE COMMISSION ENTERS INTO A CONTRACT UNDER THIS
SUBDIVISION,  THE  COMMISSION  SHALL  ALLOW  AT LEAST ONE MINUTE BETWEEN
DRAWS OF ONLINE LOTTERY GAMES DURING WHICH ONE  OR  MORE  ADVERTISEMENTS
MAY BE EXHIBITED.
  E.  A  CONTRACT ENTERED INTO UNDER SUBDIVISION D OF THIS SECTION SHALL
PROVIDE THAT  ANY  ADVERTISEMENTS  EXHIBITED  BETWEEN  DRAWS  OF  ONLINE
LOTTERY GAMES SHALL COMPLY WITH CONTENT REGULATIONS FOR TELEVISED BROAD-
CAST  ADOPTED  BY THE FEDERAL COMMUNICATIONS COMMISSION, WITH THE EXCEP-
TION THAT THE ADVERTISING  UNDER  SUBDIVISION  D  OF  THIS  SECTION  MAY
INCLUDE ADVERTISEMENTS FOR ALCOHOLIC BEVERAGES WITH RESTRICTIONS IMPOSED
ONLY BY THE COMMISSION.
  F.  THE  COMMISSION  SHALL  SOLICIT  BIDS FROM RESPONSIBLE PERSONS FOR
ADVERTISING  OR  PROMOTIONAL  CONTRACTS  UNDER  SUBDIVISION  D  OF  THIS
SECTION.  THE COMMISSION SHALL SELECT FROM AMONG THE BIDS RECEIVED SO AS
TO PRODUCE THE MAXIMUM AMOUNT OF NET REVENUE FOR  THE  STATE  CONSISTENT
WITH  THE  GENERAL  WELFARE  OF  THE  CITIZENS OF THE STATE. IN DECIDING
WHETHER TO ENTER INTO A CONTRACT UNDER SUBDIVISION D  OF  THIS  SECTION,
THE  COMMISSION  SHALL  CONSIDER  WHETHER  THE TERMS OF THE CONTRACT ARE
COMPARABLE TO THE TERMS OF SIMILAR ADVERTISING OR PROMOTIONAL  CONTRACTS
RELATING TO LOTTERY OR OTHER GAMING IN OTHER STATES.
  G.  THE  COMMISSION,  SUBJECT  TO  APPLICABLE  LAWS RELATING TO PUBLIC
CONTRACTS, MAY ENTER INTO CONTRACTS WITH ONE OR MORE  PERSONS  TO  ALLOW
THE  PLACEMENT OF ADVERTISING OR PROMOTIONAL MATERIAL, INCLUDING BUT NOT
LIMITED TO, THE PLACEMENT OF  DISCOUNT  COUPONS  FOR  RETAIL  GOODS,  ON
LOTTERY  TICKETS, SHARES, AND OTHER AVAILABLE MEDIA UNDER THE CONTROL OF
THE DIVISION. HOWEVER, EXCEPT FOR ADVERTISING THAT PROMOTES  RESPONSIBLE
CONSUMPTION  OF  ALCOHOLIC BEVERAGES, THE COMMISSION SHALL NOT ALLOW THE
PLACEMENT OF ADVERTISING FOR THE PROMOTION OF THE CONSUMPTION  OF  ALCO-
HOLIC BEVERAGES OR TOBACCO PRODUCTS ON LOTTERY TICKETS UNDER THE CONTROL
OF THE COMMISSION.
  S 2. This act shall take effect immediately.

                                PART MMM

  Section  1.  For  the purposes of this act, the term "equipment" shall
mean a machine or system, and any part or subassembly thereof.
  S 2. Equipment shall be considered to be "directly and  predominantly"
used,  as  such term is used in clause (i) of paragraph 1 of subdivision
(z) of section 1115 of the tax law, as repealed by section 30, part  S-1
of chapter 57 of the laws of 2009 and last amended by section 17 of part
CC of chapter 85 of the laws of 2002, for the purposes of any department
of  taxation  and  finance audit or enforcement proceeding, or any other
administrative matter or proceeding of such  department,  involving  the
interpretation,  enforcement, or administration of such provision of the
tax law, when such equipment was received, inventoried or organized, and
then prepared for distribution at an empire zone location by the  quali-
fied  empire  zone  enterprise operating at such location, provided that
such equipment, upon distribution,  is  stocked,  repaired,  cleaned  or
otherwise  handled for the purpose of maintenance or upkeep by employees
of such qualified empire zone enterprise whose duties  related  to  such

S. 6359--C                         381

service  work  originate  from,  and  terminate at, the same empire zone
location.
  S  3.  Notwithstanding sections 2006, 2012, 2014, 2016 and 2018 of the
tax law, part 3000 of the tax appeals tribunal  rules  of  practice  and
procedure,  or  any  determination  of  the division of tax appeals, the
division of tax appeals shall accept a petition from any person or enti-
ty that contests a determination or decision  of  the  division  of  tax
appeals related to the interpretation of the term "directly and predomi-
nantly",  as  such term is used in the section of the tax law referenced
in section two of this act, provided that such original determination or
decision of the division of tax appeals was contrary  to  definition  of
such term as established by section two of this act. The division of tax
appeals shall process and review, provide for a hearing of, and render a
determination  and  decision in response to any such petition in accord-
ance with the process set forth in part 3000 of the tax appeals tribunal
rules of practice and procedure. Any determination or decision issued by
the division of tax appeals pursuant to this  act  shall  supersede  any
inconsistent  determination  or  decision, be deemed conclusive upon all
parties and shall not be subject to review by  any  other  unit  in  the
division  of tax appeals, by the tax appeals tribunal or by any court of
the state.
  S 4. This act shall take effect immediately, shall be deemed  to  have
been  in  full  force  and  effect on and after March 1, 2001, and shall
apply to any audit or enforcement proceeding of the department of  taxa-
tion  and  finance,  or any other administrative matter or proceeding of
such department, commencing on or after March 1, 2001.

                                PART NNN

  Section 1. The environmental conservation law is amended by  adding  a
new section 3-0308 to read as follows:
S 3-0308. GREEN ROOF PROGRAM, INSPECTION AND CERTIFICATION.
  1.  THE  COMMISSIONER  SHALL  DEVELOP  STANDARDS FOR THE CONSTRUCTION,
INSTALLATION AND CERTIFICATION OF GREEN ROOFS THAT CAN BE  ELIGIBLE  FOR
THE  GREEN  ROOF  INSTALLATION  PERSONAL  INCOME  TAX CREDIT PURSUANT TO
SUBSECTION (U) OF SECTION SIX HUNDRED SIX OF THE TAX LAW.   SUCH  STAND-
ARDS  SHALL  INCLUDE  CRITERIA FOR INSPECTION AND CERTIFICATION OF GREEN
ROOF PLANS PRIOR TO INSTALLATION AND INSPECTION AFTER SUCH INSTALLATION.
SUCH PRE-INSTALLATION CRITERIA FOR CERTIFICATION MAY INCLUDE, BUT NOT BE
LIMITED TO:  PLANT GROWTH RATE AND DROUGHT TOLERANCE,  APPROPRIATE  ROOT
SYSTEMS  FOR SUCH GREEN ROOFS, APPROPRIATE PLANT IRRIGATION, NUTRITIONAL
AND MAINTENANCE REQUIREMENTS, POTENTIAL GENERATION OF ALLERGENS AND  THE
POSSIBLE  NEED  FOR  REMEDIAL  INDOOR  AIR FILTRATION TO THE SUBJECT AND
ADJACENT BUILDINGS.  INSPECTION AND CERTIFICATION AFTER INSTALLATION MAY
INCLUDE, IN ADDITION TO PRE-INSTALLATION CRITERIA, THE TESTING OF RUNOFF
WATER FOR ENVIRONMENTALLY UNACCEPTABLE LEVELS OF POLLUTANTS.
  2. THE COMMISSIONER MAY DELEGATE TO MUNICIPAL BUILDING INSPECTORS  THE
DUTIES  TO REVIEW AND APPROVE PLANS AND ISSUE THE CERTIFICATION REQUIRED
IN SUBDIVISION ONE OF THIS SECTION.
  3. FOR PURPOSES OF THIS SECTION:
  A. "GREEN ROOF" MEANS ROOFING ON AN ELIGIBLE BUILDING THAT  COVERS  AT
LEAST  FIFTY  PERCENT  OF  SUCH  BUILDING'S  ELIGIBLE  ROOFTOP SPACE AND
INCLUDES (1) A WEATHERPROOF AND WATERPROOF ROOFING MEMBRANE LAYER, (2) A
ROOT BARRIER  LAYER,  (3)  IF  APPROPRIATE,  AN  INSULATION  LAYER  THAT
COMPLIES  WITH  THE  STATE  ENERGY CONSERVATION CONSTRUCTION CODE, (4) A
DRAINAGE LAYER THAT COMPLIES WITH THE STATE UNIFORM FIRE PREVENTION  AND

S. 6359--C                         382

BUILDING  CODE  AND  IS  DESIGNED  SO  THE  DRAINS  CAN BE INSPECTED AND
CLEANED, (5) A GROWTH MEDIUM, INCLUDING NATURAL OR SIMULATED SOIL,  WITH
A DEPTH OF AT LEAST TWO INCHES, (6) IF THE DEPTH OF THE GROWTH MEDIUM IS
LESS  THAN  THREE  INCHES,  AN  INDEPENDENT  WATER HOLDING LAYER THAT IS
DESIGNED TO PREVENT THE RAPID DRYING OUT OF SUCH MEDIUM MAY BE REQUIRED,
UNLESS THE GREEN  ROOF  CONTAINS  A  SUFFICIENT  PERCENTAGE  OF  DROUGHT
RESISTANT  PLANTS TO SURVIVE, AND (7) A VEGETATION LAYER COVERED BY LIVE
PLANTS SUCH AS (I) SEDUM OR EQUALLY DROUGHT RESISTANT  AND  HARDY  PLANT
SPECIES,  (II)  NATIVE  PLANT  SPECIES,  AND/OR (III) AGRICULTURAL PLANT
SPECIES.
  B. "ELIGIBLE BUILDING"  MEANS  A  RESIDENTIAL  BUILDING  OR  MIXED-USE
BUILDING WITH RESIDENTIAL UNITS.
  C.  "ELIGIBLE  ROOFTOP  SPACE"  MEANS  THE TOTAL SPACE AVAILABLE ON AN
ELIGIBLE BUILDING TO SUPPORT A GREEN ROOF.
  S 2. Section 606 of the tax law is amended by adding a new  subsection
(u) to read as follows:
  (U) GREEN ROOF INSTALLATION CREDIT. (1) GENERAL. AN INDIVIDUAL TAXPAY-
ER  SHALL  BE  ALLOWED  A CREDIT FOR TAXABLE YEARS BEGINNING ON OR AFTER
JANUARY FIRST, TWO THOUSAND SIXTEEN AGAINST  THE  TAX  IMPOSED  BY  THIS
ARTICLE  FOR  THE  INSTALLATION  OF  A QUALIFIED GREEN ROOF AS CERTIFIED
PURSUANT TO SECTION 3-0308 OF THE ENVIRONMENTAL  CONSERVATION  LAW.  THE
AMOUNT OF THE CREDIT SHALL BE FIFTY-FIVE PERCENT OF QUALIFIED GREEN ROOF
INSTALLATION  EXPENDITURES,  BUT  SHALL NOT EXCEED THE MAXIMUM CREDIT OF
FIVE THOUSAND DOLLARS.
  (2) QUALIFIED GREEN  ROOF  INSTALLATION  EXPENDITURES.  (A)  THE  TERM
"QUALIFIED  GREEN ROOF INSTALLATION EXPENDITURES" MEANS EXPENDITURES FOR
THE PURCHASE, CONSTRUCTION AND INSTALLATION OF A CERTIFIED  GREEN  ROOF,
AS  PROVIDED  IN  SECTION  3-0308 OF THE ENVIRONMENTAL CONSERVATION LAW,
WHICH IS INSTALLED IN CONNECTION WITH RESIDENTIAL PROPERTY OR  MIXED-USE
PROPERTY, WHICH IS (I) LOCATED IN THIS STATE; (II) WHICH IS OWNED BY THE
TAXPAYER;  AND (III) WHICH IS USED BY THE TAXPAYER AS HIS OR HER PRINCI-
PAL RESIDENCE.
  (B) SUCH QUALIFIED EXPENDITURES SHALL INCLUDE EXPENDITURES  FOR  PLANT
MATERIAL,  NATURAL  OR  SIMULATED  SOIL IRRIGATION AND DRAINAGE SYSTEMS,
ESTABLISHMENT OF ROOT SYSTEMS AND THE LABOR COSTS PROPERLY ALLOCABLE  TO
ON-SITE  PREPARATION,  ASSEMBLY AND ORIGINAL INSTALLATION, ARCHITECTURAL
AND ENGINEERING SERVICES, PRE-INSTALLATION CRITERIA FOR INSTALLATION AND
DESIGNS AND PLANS DIRECTLY RELATED TO THE CONSTRUCTION  OR  INSTALLATION
OF THE QUALIFIED GREEN ROOF.
  (C)  SUCH  QUALIFIED  EXPENDITURES SHALL NOT INCLUDE INTEREST OR OTHER
FINANCE CHARGES.
  (3)  GREEN  ROOF  PRE-INSTALLATION  CRITERIA.  THE  TERM  "GREEN  ROOF
PRE-INSTALLATION  CRITERIA" MAY INCLUDE, BUT NOT BE LIMITED TO, CRITERIA
SUCH AS GROWTH RATE AND DROUGHT TOLERANCE OF SELECTED PLANTS,  APPROPRI-
ATE  PLANT  IRRIGATION, NUTRITIONAL AND MAINTENANCE REQUIREMENTS, GENER-
ATION OF ALLERGENS AND THE POSSIBLE NEED FOR REMEDIAL AIR FILTRATION  TO
THE  SUBJECT  AND  ADJACENT  BUILDINGS  AS PRESCRIBED IN ACCORDANCE WITH
SECTION 3-0308 OF THE ENVIRONMENTAL CONSERVATION LAW.
  (4) CONDOMINIUM/COOPERATIVE HOUSING. WHERE A QUALIFIED GREEN  ROOF  IS
INSTALLED BY A CONDOMINIUM MANAGEMENT ASSOCIATION OR A COOPERATIVE HOUS-
ING  CORPORATION, A TAXPAYER WHO IS A MEMBER OF SUCH ASSOCIATION OR IS A
TENANT-STOCKHOLDER MAY FOR  THE  PURPOSE  OF  THIS  SUBSECTION  CLAIM  A
PROPORTIONATE  SHARE  OF  THE  TOTAL  EXPENSES  AS  EXPENDITURE  FOR THE
PURPOSES OF THE CREDIT ATTRIBUTABLE TO HIS OR HER PRINCIPAL RESIDENCE.
  (5) MULTIPLE TAXPAYERS. WHERE A QUALIFIED GREEN ROOF IS PURCHASED  AND
INSTALLED  IN A PRINCIPAL RESIDENCE SHARED BY TWO OR MORE TAXPAYERS, THE

S. 6359--C                         383

AMOUNT OF THE CREDIT ALLOWABLE  UNDER  THIS  SUBSECTION  FOR  EACH  SUCH
TAXPAYER  SHALL  BE  PRORATED  ACCORDING  TO THE PERCENTAGE OF THE TOTAL
EXPENDITURE FOR SUCH ROOF CONTRIBUTED BY EACH TAXPAYER.
  (6)  GRANTS. FOR PURPOSES OF DETERMINING THE AMOUNT OF THE EXPENDITURE
INCURRED IN PURCHASING AND INSTALLING THE GREEN ROOF, THE AMOUNT OF  ANY
FEDERAL,  STATE  OR LOCAL GRANT RECEIVED BY THE TAXPAYER, WHICH WAS USED
FOR THE PURCHASE AND/OR INSTALLATION OF SUCH  ROOF  AND  WHICH  WAS  NOT
INCLUDED  IN  THE  FEDERAL  GROSS  INCOME  OF THE TAXPAYER, SHALL NOT BE
INCLUDED IN THE AMOUNT OF SUCH EXPENDITURES.
  (7) WHEN CREDIT ALLOWED. THE CREDIT PROVIDED FOR  IN  THIS  SUBSECTION
SHALL  BE  ALLOWED  WITH  RESPECT  TO THE TAXABLE YEAR, COMMENCING AFTER
JANUARY FIRST,  TWO  THOUSAND  SIXTEEN,  IN  WHICH  THE  GREEN  ROOF  IS
INSTALLED.
  (8)  CARRYOVER  OF CREDIT. IF THE AMOUNT OF THE CREDIT, AND CARRYOVERS
OF SUCH CREDIT, ALLOWABLE UNDER THIS SUBSECTION  FOR  ANY  TAXABLE  YEAR
SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR, SUCH EXCESS AMOUNT MAY BE
CARRIED  OVER  TO THE FIVE TAXABLE YEARS NEXT FOLLOWING THE TAXABLE YEAR
WITH RESPECT TO WHICH THE CREDIT IS ALLOWED AND MAY BE DEDUCTED FROM THE
TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  S 3. This act shall take effect immediately provided that section  one
of  this act shall take effect on the one hundred eightieth day after it
shall have become a law and that section two of this act shall apply  to
taxable years commencing on or after January 1, 2016; provided, however,
that effective immediately, the addition, amendment and/or repeal of any
rule  or  regulation necessary for the implementation of this act on its
effective date is authorized and directed to be made and completed on or
before such effective date.

                                PART OOO

  Section 1. The tax law is amended by adding a new section 608 to  read
as follows:
  S 608. STUDY AND STAY PROGRAM. (A) FOR THE PURPOSES OF THIS SECTION:
  (1) "ELIGIBLE TAXPAYER" MEANS A RESIDENT TAXPAYER WHO RECEIVED A BACH-
ELOR'S  DEGREE  AWARDED  BY  AN  INSTITUTION OF HIGHER EDUCATION IN THIS
STATE AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, WHO DOES NOT HAVE   NOR
EVER HAD AN OWNERSHIP INTEREST IN THE RESIDENTIAL REAL PROPERTY IN WHICH
HE  OR  SHE RESIDED. FURTHERMORE, AN ELIGIBLE TAXPAYER SHALL NOT HAVE AN
OWNERSHIP IN ANY OTHER RESIDENTIAL  REAL  PROPERTY,  INCLUDING  VACATION
HOMES OR RESIDENTIAL RENTAL PROPERTY.
  (2)  "OWNERSHIP  INTEREST" MEANS AND INCLUDES A FEE SIMPLE INTEREST, A
JOINT TENANCY, A TENANCY IN COMMON,  A  TENANCY  BY  THE  ENTIRETY,  THE
INTEREST  OF  A  TENANT-SHAREHOLDER IN A RESIDENTIAL COOPERATIVE, A LIFE
ESTATE AND A LAND CONTRACT. SUCH TERM SHALL NOT INCLUDE:
  (A) REMAINDER INTERESTS;
  (B) A LEASE WITH OR WITHOUT AN OPTION TO PURCHASE;
  (C) A MERE EXPECTANCY TO INHERIT AN INTEREST IN RESIDENTIAL REAL PROP-
ERTY;
  (D) THE  INTEREST  THAT  A  PURCHASER  OF  RESIDENTIAL  REAL  PROPERTY
ACQUIRES UPON THE EXECUTION OF A PURCHASE CONTRACT; OR
  (E) AN INTEREST IN REAL ESTATE OTHER THAN RESIDENTIAL REAL PROPERTY.
  (B)  THERE  SHALL  BE  ESTABLISHED  BY THE DEPARTMENT A STUDY AND STAY
PROGRAM WHEREBY ELIGIBLE TAXPAYERS MAY DESIGNATE, FOR A  PERIOD  OF  NOT
MORE  THAN THE TEN TAX YEARS FOLLOWING SUCH TAXPAYER'S RECEIPT OF HIS OR
HER BACHELOR'S DEGREE, NOT MORE THAN FIVE THOUSAND DOLLARS OF HIS OR HER
PAYMENT OF THE TAXES IMPOSED PURSUANT TO THIS ARTICLE FOR A TAX YEAR FOR

S. 6359--C                         384

DEPOSIT INTO AN ACCOUNT DESIGNATED FOR SUCH TAXPAYER  WITHIN  THE  STUDY
AND  STAY  PROGRAM  FUND ESTABLISHED BY SECTION EIGHTY-FIVE OF THE STATE
FINANCE LAW. THE MONEYS SO DEPOSITED INTO AN ELIGIBLE TAXPAYER'S ACCOUNT
SHALL  ONLY BE WITHDRAWN THEREFROM AND EXPENDED BY SUCH TAXPAYER FOR THE
PAYMENT OF THE DOWN PAYMENT FOR HIS OR HER FIRST PURCHASE OF OWNER-OCCU-
PIED RESIDENTIAL REAL PROPERTY.
  (C) THE DESIGNATION OF ALL OR ANY PORTION OF  AN  ELIGIBLE  TAXPAYER'S
TAX  PAYMENT  DURING  ANY TAX YEAR, SHALL NOT BE DEEMED TO INCREASE SUCH
TAXPAYER'S LIABILITY FOR TAXES PURSUANT TO THIS ARTICLE. THE COMMISSION-
ER SHALL INCLUDE A SPACE ON THE PERSONAL INCOME TAX  RETURNS  TO  ENABLE
ELIGIBLE  TAXPAYERS  TO  DESIGNATE MONEYS FOR DEPOSIT INTO THE STUDY AND
STAY PROGRAM FUND.
  (D) EACH TAX YEAR, THE COMMISSIONER SHALL TRANSFER, TO THE STATE COMP-
TROLLER, FOR DEPOSIT INTO THE APPROPRIATE ACCOUNTS WITHIN THE STUDY  AND
STAY  PROGRAM FUND, ALL MONEYS DESIGNATED BY ELIGIBLE TAXPAYERS PURSUANT
TO THIS SECTION; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL MORE THAN TEN
MILLION DOLLARS, IN THE AGGREGATE, BE SO DESIGNATED DURING ANY TAX YEAR.
  (E) DURING THE FIRST YEAR THAT AN ELIGIBLE TAXPAYER DESIGNATES  MONEYS
FOR  DEPOSIT  INTO  THE STUDY AND STAY PROGRAM FUND, SUCH TAXPAYER SHALL
SUBMIT, TO THE DEPARTMENT, SUCH PROOF OF RECEIPT AND THE DATE OF RECEIPT
OF A BACHELOR'S DEGREE FROM AN INSTITUTION OF HIGHER  EDUCATION  LOCATED
IN THIS STATE, AS THE COMMISSIONER SHALL DESIGNATE.
  S  2.  The  state finance law is amended by adding a new section 85 to
read as follows:
  S 85. STUDY AND STAY PROGRAM FUND. 1. THERE IS HEREBY  ESTABLISHED  IN
THE JOINT CUSTODY OF THE STATE COMPTROLLER AND THE COMMISSIONER OF TAXA-
TION  AND  FINANCE  A  SPECIAL  FUND  TO BE KNOWN AS THE "STUDY AND STAY
PROGRAM FUND".
  2. THE COMPTROLLER SHALL ESTABLISH A SEPARATE  AND  DISTINCT  ACCOUNT,
WITHIN  THE  STUDY AND STAY PROGRAM FUND, FOR EACH ELIGIBLE TAXPAYER WHO
DESIGNATES MONEYS FOR DEPOSIT INTO THE  FUND  PURSUANT  TO  SECTION  SIX
HUNDRED EIGHT OF THE TAX LAW.
  3.  THE FUND SHALL CONSIST OF ALL MONEYS DEPOSITED THEREIN PURSUANT TO
SECTION SIX HUNDRED EIGHT OF THE TAX LAW.
  4. MONEYS IN EACH ACCOUNT OF THE STUDY AND STAY  FUND  SHALL  BE  KEPT
SEPARATE AND SHALL NOT BE COMMINGLED WITH OTHER MONEYS IN THE CUSTODY OF
THE STATE COMPTROLLER.
  5.  THE  MONEYS  IN  THE ACCOUNT OF AN ELIGIBLE TAXPAYER SHALL BE MADE
AVAILABLE, WITHIN TEN DAYS OF SUBMISSION OF AN APPLICATION THEREFOR,  TO
SUCH  TAXPAYER SOLELY FOR THE PURPOSE OF THE PAYMENT OF THE DOWN PAYMENT
FOR HIS OR HER FIRST PURCHASE OF RESIDENTIAL REAL PROPERTY  OCCUPIED  BY
SUCH  TAXPAYER  AS  HIS  OR  HER PRIMARY RESIDENCE, INCLUDING A MULTIPLE
DWELLING HAVING NOT MORE THAN TWO HOUSING UNITS. NO SUCH MONEYS SHALL BE
EXPENDED IN AN AMOUNT IN EXCESS OF SUCH DOWN  PAYMENT,  NOR  SHALL  SUCH
MONEYS  BE  EXPENDED FOR REAL PROPERTY USED IN A BUSINESS OR TRADE, USED
AS A VACATION RESIDENCE OR USED AS  AN  INVESTMENT,  EXCEPT  A  MULTIPLE
DWELLING  HAVING  NOT  MORE  THAN  TWO HOUSING UNITS IN ONE OF WHICH THE
ELIGIBLE TAXPAYER HAS HIS OR HER PRIMARY RESIDENCE.
  6. EACH ELIGIBLE TAXPAYER SHALL,  WITHIN  SIXTY  DAYS  OF  RECEIPT  OF
MONEYS  IN  HIS  OR  HER  ACCOUNT  PURSUANT  TO SUBDIVISION FIVE OF THIS
SECTION, SUBMIT A SWORN STATEMENT  TO  THE  STATE  COMPTROLLER  AND  THE
COMMISSIONER  OF TAXATION AND FINANCE, IN SUCH FORM AND CONTENT AS SHALL
BE DETERMINED BY THE COMMISSIONER OF TAXATION  AND  FINANCE,  CERTIFYING
THAT  SUCH  MONEYS EXPENDED AS REQUIRED PURSUANT TO SUCH SUBDIVISION AND
RETURNING TO THE STATE COMPTROLLER  ALL  MONEYS  NOT  SO  EXPENDED.  ALL
MONEYS NOT SO EXPENDED AND REPAID TO THE STATE COMPTROLLER SHALL CONSTI-

S. 6359--C                         385

TUTE  TAX  MONEYS  PAYABLE  TO  THE  DEPARTMENT OF TAXATION AND FINANCE,
PURSUANT TO ARTICLE TWENTY-TWO OF THE TAX LAW.
  7.  THE  FOLLOWING  MONEYS  IN AN ELIGIBLE TAXPAYER'S ACCOUNT SHALL BE
TRANSFERRED TO AND DEPOSITED INTO THE GENERAL FUND:
  (A) ANY MONEYS REMAINING IN THE  ACCOUNT  AFTER  DISBURSEMENT  TO  THE
ELIGIBLE TAXPAYER PURSUANT TO SUBDIVISION FIVE OF THIS SECTION;
  (B)  ANY  MONEYS  REMAINING IN THE ACCOUNT OF THE ELIGIBLE TAXPAYER IN
THE ELEVENTH TAX YEAR AFTER SUCH TAXPAYER RECEIVED HIS OR HER BACHELOR'S
DEGREE; AND
  (C) ANY MONEYS REMAINING IN THE ACCOUNT OF THE ELIGIBLE TAXPAYER  WHEN
HE OR SHE CEASES TO BE A RESIDENT OF THE STATE.
  8.  (A) AN ELIGIBLE TAXPAYER WHO MAKES A DOWN PAYMENT FOR THE PURCHASE
OF HIS OR HER PRIMARY RESIDENCE WITH MONEYS  FROM  HIS  OR  HER  ACCOUNT
WITHIN THE STUDY AND STAY PROGRAM FUND, SHALL BE LIABLE TO THE STATE FOR
A  PENALTY  IN  THE  FOLLOWING AMOUNTS WHEN SUCH TAXPAYER CEASES TO BE A
RESIDENT OF THIS STATE  WITHIN  THE  FOLLOWING  PERIODS  OF  TIME  AFTER
RECEIPT OF MONEYS FROM HIS OR HER ACCOUNT:
     (I) ONE YEAR                  ALL MONEYS RECEIVED FROM THE ACCOUNT;
     (II) TWO YEARS                EIGHTY PERCENT OF THE MONEYS RECEIVED
                                   FROM THE ACCOUNT;
     (III) THREE YEARS             SIXTY PERCENT OF THE MONEYS RECEIVED
                                   FROM THE ACCOUNT;
     (IV) FOUR YEARS               FORTY PERCENT OF THE MONEYS RECEIVED
                                   FROM THE ACCOUNT;
     (V) FIVE YEARS                TWENTY PERCENT OF THE MONEYS RECEIVED
                                   FROM THE ACCOUNT; AND
     (VI) MORE THAN FIVE YEARS     NO PENALTY.
  (B)  PENALTIES  IMPOSED  PURSUANT TO THIS SUBDIVISION SHALL CONSTITUTE
PERSONAL INCOME TAX PAYABLE PURSUANT TO ARTICLE TWENTY-TWO  OF  THE  TAX
LAW.
  (C)  THE PENALTIES IMPOSED BY PARAGRAPH (A) OF THIS SUBDIVISION MAY BE
WAIVED, IN THE DISCRETION OF THE COMMISSIONER OF TAXATION  AND  FINANCE,
UPON  DEMONSTRATION  THAT  THE ELIGIBLE TAXPAYER CEASED RESIDENCY IN THE
STATE DUE TO:
  (I) AN EMPLOYMENT RELOCATION OUTSIDE OF THE STATE WHICH REQUIRED RESI-
DENCY IN ANOTHER STATE; OR
  (II) THE SEVERE FINANCIAL HARDSHIP OF THE ELIGIBLE TAXPAYER OR HIS  OR
HER DEPENDENT.
  S 3. This act shall take effect immediately.

                                PART PPP

  Section  1.  The  tax  law is amended by adding a new section 629-a to
read as follows:
  S 629-A. GIFT FOR ELIMINATING THE STIGMA RELATING TO  MENTAL  ILLNESS.
EFFECTIVE  FOR  ANY  TAX  YEAR COMMENCING ON OR AFTER JANUARY FIRST, TWO
THOUSAND FOURTEEN, AN INDIVIDUAL  IN  ANY  TAXABLE  YEAR  MAY  ELECT  TO
CONTRIBUTE  TO  THE  MENTAL  ILLNESS ANTI-STIGMA FUND. SUCH CONTRIBUTION
SHALL BE IN ANY WHOLE DOLLAR AMOUNT AND SHALL NOT REDUCE THE  AMOUNT  OF
STATE  TAX OWED BY SUCH INDIVIDUAL. THE COMMISSIONER SHALL INCLUDE SPACE
ON THE PERSONAL INCOME TAX RETURN TO ENABLE  A  TAXPAYER  TO  MAKE  SUCH
CONTRIBUTION.  NOTWITHSTANDING  ANY  OTHER PROVISION OF LAW, ALL REVENUE
COLLECTED PURSUANT TO THIS SECTION  SHALL  BE  CREDITED  TO  THE  MENTAL
ILLNESS  ANTI-STIGMA FUND AND USED ONLY FOR THOSE PURPOSES ENUMERATED IN
SECTION NINETY-FIVE-H OF THE STATE FINANCE LAW.

S. 6359--C                         386

  S 2. The state finance law is amended by adding a new section 95-h  to
read as follows:
  S  95-H.  MENTAL  ILLNESS  ANTI-STIGMA FUND. 1. THERE IS HEREBY ESTAB-
LISHED IN THE JOINT CUSTODY OF THE COMMISSIONER OF TAXATION AND  FINANCE
AND  THE  STATE  COMPTROLLER,  A SPECIAL FUND TO BE KNOWN AS THE "MENTAL
ILLNESS ANTI-STIGMA FUND".
  2. SUCH FUND SHALL CONSIST OF ALL REVENUES RECEIVED  PURSUANT  TO  THE
PROVISIONS  OF  SECTION  SIX  HUNDRED  TWENTY-NINE-A OF THE TAX LAW, ALL
REVENUES RECEIVED PURSUANT TO APPROPRIATIONS BY THE LEGISLATURE, AND ALL
MONEYS APPROPRIATED, CREDITED OR TRANSFERRED THERETO FROM ANY OTHER FUND
OR SOURCE PURSUANT TO LAW.  NO MONEYS CREDITED TO SUCH FUND PURSUANT  TO
SECTION  SIX  HUNDRED  TWENTY-NINE-A  OF  THE TAX LAW SHALL BE DEEMED TO
AUTHORIZE THE REDUCTION OF THE AMOUNT OF MONIES  OTHERWISE  APPROPRIATED
BY  THE  STATE  FOR  THE  PURPOSE  OF ELIMINATING THE STIGMA ATTACHED TO
MENTAL ILLNESS.
  3. THE MONIES OF THE FUND SHALL BE MADE AVAILABLE  TO  THE  OFFICE  OF
MENTAL HEALTH FOR THE PURPOSE OF PROVIDING GRANTS TO ORGANIZATIONS DEDI-
CATED  TO  ELIMINATING THE STIGMA ATTACHED TO MENTAL ILLNESS AND PERSONS
WITH MENTAL HEALTH NEEDS PURSUANT TO SECTION 7.45 OF THE MENTAL  HYGIENE
LAW.
  4.  THE  MONIES OF THE FUND SHALL BE PAID OUT ON THE AUDIT AND WARRANT
OF THE STATE COMPTROLLER  ON  VOUCHERS  CERTIFIED  OR  APPROVED  BY  THE
COMMISSIONER  OF  MENTAL  HEALTH,  OR  BY  AN OFFICER OR EMPLOYEE OF THE
OFFICE OF MENTAL HEALTH DESIGNATED BY SUCH COMMISSIONER.
  S 3. The mental hygiene law is amended by adding a new section 7.45 to
read as follows:
S 7.45 MENTAL ILLNESS ANTI-STIGMA GRANTS.
  THE OFFICE SHALL DEVELOP AND IMPLEMENT A PROGRAM WHICH PROVIDES GRANTS
TO ORGANIZATIONS  ENGAGED  IN  ACTIVITIES  WHICH  ELIMINATE  THE  STIGMA
ATTACHED TO MENTAL ILLNESS AND THOSE WITH MENTAL HEALTH NEEDS.
  S 4. This act shall take effect immediately.

                                PART QQQ

  Section 1.  Section 89-e of the state finance law, as added by chapter
590 of the laws of 1999, subdivision 2 as amended and subdivision 2-a as
added by chapter 359 of the laws of 2002, is amended to read as follows:
  S 89-e. Alzheimer's disease assistance fund. 1. There is hereby estab-
lished  in the joint custody of the commissioner of taxation and finance
and the comptroller, a special fund to  be  known  as  the  "Alzheimer's
disease assistance fund".
  2.  Such fund shall consist of all revenues received by the department
of taxation and finance, pursuant  to  the  provisions  of  section  six
hundred  twenty-nine  of  the tax law and all other moneys appropriated,
credited, or transferred thereto from any other fund or source  pursuant
to  law.  For each state fiscal year, there shall be appropriated to the
fund by the state, in addition to all other moneys required to be depos-
ited into such fund, an amount equal to the amounts of monies  collected
and  deposited into the fund pursuant to section six hundred twenty-nine
of the tax law during the preceding calendar year, as certified  by  the
comptroller.  Nothing  contained  herein  shall  prevent  the state from
receiving grants, gifts or bequests for the  purposes  of  the  fund  as
defined  in  this section and depositing them into the fund according to
law.
  2-a. On or before the first day of February each year, the comptroller
shall certify to the governor, temporary president of the senate, speak-

S. 6359--C                         387

er of the assembly, chair of the senate finance committee  [and],  chair
of  the  assembly ways and means committee, CHAIR OF THE SENATE STANDING
COMMITTEE ON HEALTH, AND CHAIR OF THE ASSEMBLY COMMITTEE ON  HEALTH  the
amount  of  money  deposited in the Alzheimer's research fund during the
preceding calendar year as the result of  revenue  derived  pursuant  to
section six hundred twenty-nine of the tax law.
  2-B. (A) ON OR BEFORE THE FIRST DAY OF FEBRUARY EACH YEAR, THE DEPART-
MENT OF HEALTH SHALL PROVIDE AN ANNUAL REPORT TO THE GOVERNOR, TEMPORARY
PRESIDENT  OF  THE  SENATE, SPEAKER OF THE ASSEMBLY, CHAIR OF THE SENATE
FINANCE COMMITTEE, CHAIR OF THE ASSEMBLY WAYS AND MEANS COMMITTEE, CHAIR
OF THE SENATE STANDING  COMMITTEE  ON  HEALTH,  CHAIR  OF  THE  ASSEMBLY
COMMITTEE  ON  HEALTH, AND THE PUBLIC, REGARDING THE MANNER IN WHICH THE
ALZHEIMER'S DISEASE ASSISTANCE FUND MONIES ARE UTILIZED.
  (B) THE ANNUAL REPORT SHALL INCLUDE BUT NOT BE LIMITED TO:
  (1) THE AMOUNT OF MONEY DISBURSED FROM THE FUND;
  (2) A JUSTIFICATION IN THE EVENT THAT ALL FUNDS WERE NOT DISBURSED AND
A REMEDIAL PLAN TO ENSURE THE TIMELY AND EFFECTIVE USE OF THE  REMAINING
FUNDS;
  (3) THE MANNER IN WHICH THE FUNDS WERE REWARDED;
  (4) THE AMOUNT AWARDED TO EACH RECIPIENT OR RECIPIENTS; AND
  (5) THE PURPOSE OF THE DISBURSED FUNDS.
  3.  Moneys  in  the  Alzheimer's disease assistance fund shall be kept
separate and shall not be commingled with any other moneys in the custo-
dy of the commissioner of taxation and finance and the comptroller.
  4. NOTWITHSTANDING ANY OTHER PROVISIONS, MONIES OF THE FUND SHALL  NOT
BE  TRANSFERRED  INTO THE GENERAL FUND FOR ANY PURPOSE AND TO THE EXTENT
PRACTICABLE, THE COMMISSIONER OF HEALTH SHALL  ENSURE  THAT  ALL  MONIES
RECEIVED  DURING  A  FISCAL  YEAR  ARE EXPENDED PRIOR TO THE END OF THAT
FISCAL YEAR.
  5. The moneys in such fund shall be expended  only  for  the  purposes
spelled  out in paragraph (b) of subdivision six of section twenty-seven
hundred one of the public health law.
  [5.] 6. All payments [form] FROM  such  fund  shall  be  made  by  the
department  of taxation and finance after audit and warrant of the comp-
troller on vouchers approved by the commissioner of health.
  S 2. Section 97-yy of the state finance law, as added by  chapter  279
of the laws of 1996, subdivisions 2 and 2-a as amended by chapter 385 of
the laws of 2007, is amended to read as follows:
  S 97-yy. Breast cancer research and education fund. 1. There is hereby
established  in  the  joint  custody of the commissioner of taxation and
finance and the comptroller, a special fund to be known as  the  "breast
cancer research and education fund".
  2.  Such fund shall consist of all revenues received by the department
of taxation and finance, pursuant  to  the  provisions  of  section  two
hundred  nine-D and section six hundred twenty-seven of the tax law, all
moneys collected pursuant to section four hundred four-q of the  vehicle
and  traffic  law,  as added by chapter five hundred twenty-eight of the
laws of nineteen hundred ninety-nine, and all other moneys appropriated,
credited, or transferred thereto from any other fund or source  pursuant
to  law.  For each state fiscal year, there shall be appropriated to the
fund by the state, in addition to all other moneys required to be depos-
ited into such fund, an amount equal to the amounts of monies  collected
and  deposited into the fund pursuant to sections two hundred nine-D and
six hundred twenty-seven of the tax law and section four hundred  four-q
of  the  vehicle and traffic law, as added by chapter five hundred twen-
ty-eight of the laws of nineteen hundred ninety-nine, and the amounts of

S. 6359--C                         388

moneys received and deposited into  the  fund  from  grants,  gifts  and
bequests  during  the preceding calendar year, as certified by the comp-
troller. Nothing contained herein shall prevent the state from receiving
grants,  gifts  or  bequests  for the purposes of the fund as defined in
this section and depositing them into the fund according to law.
  2-a. On or before the first day of February each year, the comptroller
shall certify to the governor, temporary president of the senate, speak-
er of the assembly, chair of the senate finance committee  [and],  chair
of  the  assembly ways and means committee, CHAIR OF THE SENATE STANDING
COMMITTEE ON HEALTH, AND CHAIR OF THE ASSEMBLY COMMITTEE ON  HEALTH  the
amount  of  money  deposited in the breast cancer research and education
fund during the preceding calendar year as the result of revenue derived
pursuant to sections two hundred nine-D and six hundred twenty-seven  of
the  tax  law and section four hundred four-q of the vehicle and traffic
law, as added by chapter five hundred twenty-eight of the laws of  nine-
teen hundred ninety-nine, and from grants, gifts and bequests.
  2-B. (A) ON OR BEFORE THE FIRST DAY OF FEBRUARY EACH YEAR, THE DEPART-
MENT OF HEALTH SHALL PROVIDE AN ANNUAL REPORT TO THE GOVERNOR, TEMPORARY
PRESIDENT  OF  THE  SENATE, SPEAKER OF THE ASSEMBLY, CHAIR OF THE SENATE
FINANCE COMMITTEE, CHAIR OF THE ASSEMBLY WAYS AND MEANS COMMITTEE, CHAIR
OF THE SENATE STANDING  COMMITTEE  ON  HEALTH,  CHAIR  OF  THE  ASSEMBLY
COMMITTEE  ON  HEALTH, AND THE PUBLIC, REGARDING THE MANNER IN WHICH THE
BREAST CANCER RESEARCH AND EDUCATION FUND MONIES ARE UTILIZED.
  (B) THE ANNUAL REPORT SHALL INCLUDE BUT NOT BE LIMITED TO:
  (1) THE AMOUNT OF MONEY DISBURSED FROM THE FUND;
  (2) A JUSTIFICATION IN THE EVENT THAT ALL FUNDS  WERE  NOT  DISBURSED,
AND  A  REMEDIAL  PLAN  TO  ENSURE  THE  TIMELY AND EFFECTIVE USE OF THE
REMAINING FUNDS;
  (3) THE MANNER IN WHICH THE FUNDS WERE AWARDED;
  (4) THE AMOUNT AWARDED TO EACH RECIPIENT OR RECIPIENTS; AND
  (5) THE PURPOSE OF THE DISBURSED FUNDS.
  3. Monies of the  fund  shall  be  expended  only  for  breast  cancer
research and educational projects AND MONIES FROM THIS FUND SHALL NOT BE
TRANSFERRED  TO SUPPORT GENERAL FUND SPENDING.  As used in this section,
"breast  cancer  research  and  education  projects"  means   scientific
research or educational projects which, pursuant to section two thousand
four  hundred  eleven  of  the  public  health  law, are approved by the
department of health, upon the recommendation  of  the  health  research
science board.
  4.  Monies  shall be payable from the fund on the audit and warrant of
the comptroller on vouchers approved and certified by  the  commissioner
of health.
  5.  To the extent practicable, the commissioner of health shall ensure
that all monies received during a fiscal year are expended prior to  the
end of that fiscal year.
  S  3.  Section 630 of the tax law, as added by chapter 273 of the laws
of 2004, is amended to read as follows:
  S 630. Gift for prostate AND TESTICULAR cancer  research[,  detection]
and  education.  Effective for any tax year commencing on or after Janu-
ary first, two thousand four, an individual  in  any  taxable  year  may
elect  to contribute to the New York [state] STATE prostate AND TESTICU-
LAR cancer research[, detection] and education fund.  Such  contribution
shall  be  in any whole dollar amount and shall not reduce the amount of
state tax owed by such individual. The commissioner shall include  space
on  the  personal  income  tax  return to enable a taxpayer to make such
contribution. Notwithstanding any other provision of  law  all  revenues

S. 6359--C                         389

collected  pursuant  to  this  section shall be credited to the New York
[state] STATE prostate AND TESTICULAR cancer research[,  detection]  and
education  fund  and  used only for those purposes enumerated in section
ninety-five-e of the state finance law.
  S 4. Section 209-E of the tax law, as added by chapter 273 of the laws
of 2004, is amended to read as follows:
  S 209-E. Gift for prostate AND TESTICULAR cancer research[, detection]
and  education.  Effective for any tax year commencing on or after Janu-
ary first, two thousand four, a taxpayer in any taxable year  may  elect
to  contribute to the support of the New York [state] STATE prostate AND
TESTICULAR  cancer  research[,  detection]  and  education  fund.   Such
contribution  shall  be  in any whole dollar amount and shall not reduce
the amount of the state tax owed  by  such  taxpayer.  The  commissioner
shall  include  space  on  the  corporate  income tax return to enable a
taxpayer to make such contribution.  Notwithstanding any other provision
of law, all revenues collected pursuant to this section shall be credit-
ed to  the  New  York  [state]  STATE  prostate  AND  TESTICULAR  cancer
research[,  detection]  and  education  fund  and shall be used only for
those purposes enumerated in section ninety-five-e of the state  finance
law.
  S 5. This act shall take effect immediately.

                                PART RRR

  Section  1.  The tax law is amended by adding a new section 41 to read
as follows:
  S 41. CREDIT FOR PROVISION OF EMPLOYEE FEDERAL  QUALIFIED  TRANSPORTA-
TION  FRINGE  BENEFITS.  (A)  ALLOWANCE  OF CREDIT. FOR THE TAXABLE YEAR
COMMENCING ON JANUARY FIRST, TWO THOUSAND FOURTEEN, A  TAXPAYER  SUBJECT
TO   TAX   UNDER   ARTICLE   NINE,  NINE-A,  TWENTY-TWO,  THIRTY-TWO  OR
THIRTY-THREE OF THIS CHAPTER SHALL BE ALLOWED A CREDIT AGAINST SUCH TAX,
PURSUANT TO  THE  PROVISIONS  REFERENCED  IN  SUBDIVISION  (D)  OF  THIS
SECTION.  THE  CREDIT  SHALL BE ALLOWED WHERE A TAXPAYER HAS ESTABLISHED
AND IMPLEMENTED FEDERAL QUALIFIED TRANSPORTATION FRINGE BENEFITS FOR ITS
EMPLOYEES DURING THE TAXABLE YEAR IN WHICH SUCH CREDIT IS  CLAIMED,  AND
THE  TAXPAYER HAS NOT PROVIDED SUCH BENEFITS TO ITS EMPLOYEES DURING ANY
PRIOR TAXABLE YEAR. THE CREDIT SHALL BE EQUAL TO FIFTY DOLLARS FOR  EACH
EMPLOYEE  OF  THE  TAXPAYER WHO ELECTED TO PARTICIPATE IN THE TAXPAYER'S
FEDERAL QUALIFIED TRANSPORTATION  FRINGE  BENEFITS  PROGRAM  DURING  THE
TAXABLE  YEAR  IN WHICH SUCH PROGRAM IS ESTABLISHED BY THE TAXPAYER. THE
AMOUNT OF THE CREDIT GRANTED TO ANY TAXPAYER PURSUANT  TO  THIS  SECTION
SHALL NOT EXCEED FIFTY THOUSAND DOLLARS.
  (B)  DEFINITION. AS USED IN THIS SECTION, "FEDERAL QUALIFIED TRANSPOR-
TATION FRINGE BENEFITS" MEANS A QUALIFIED FEDERAL TRANSPORTATION  FRINGE
BENEFITS PROGRAM ESTABLISHED AND IMPLEMENTED BY A TAXPAYER IN ACCORDANCE
WITH  SECTION  132(F)  OF  THE INTERNAL REVENUE CODE AND THE REGULATIONS
ADOPTED PURSUANT THERETO.  EVERY SUCH PROGRAM SHALL BE ADMINISTERED BY A
THIRD PARTY PROGRAM ADMINISTRATOR.
  (C) CROSS REFERENCES. FOR APPLICATION OF THE CREDIT  PROVIDED  FOR  IN
THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  (1) ARTICLE 9: SECTION 187-T,
  (2) ARTICLE 9-A: SECTION 210, SUBDIVISION 48,
  (3) ARTICLE 22: SECTION 606, SUBSECTIONS (I) AND (U),
  (4) ARTICLE 32: SECTION 1456, SUBSECTION (AA),
  (5) ARTICLE 33: SECTION 1511, SUBDIVISION (DD).

S. 6359--C                         390

  (D)  ALLOCATION  OF CREDIT. THE AGGREGATE OF TAX CREDITS ALLOWED UNDER
THIS  SECTION,   SECTION   ONE   HUNDRED   EIGHTY-SEVEN-T,   SUBDIVISION
FORTY-EIGHT  OF SECTION TWO HUNDRED TEN, CLAUSE (XXXVII) OF SUBPARAGRAPH
(B) OF PARAGRAPH ONE OF SUBSECTION (I) AND SUBSECTION (U) OF SECTION SIX
HUNDRED  SIX,  SUBSECTION (AA) OF SECTION FOURTEEN HUNDRED FIFTY-SIX AND
SUBDIVISION (DD) OF SECTION FIFTEEN HUNDRED ELEVEN OF THIS CHAPTER SHALL
NOT EXCEED FIVE MILLION DOLLARS.
  S 2. The tax law is amended by adding a new section 187-t to  read  as
follows:
  S  187-T. CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED TRANSPOR-
TATION FRINGE BENEFITS. 1. ALLOWANCE OF  CREDIT.  A  TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT,  TO  BE COMPUTED AS PROVIDED IN SECTION FORTY-ONE OF
THIS CHAPTER, AGAINST THE TAXES IMPOSED BY SECTIONS ONE HUNDRED  EIGHTY-
THREE, ONE HUNDRED EIGHTY-FOUR AND ONE HUNDRED EIGHTY-FIVE OF THIS ARTI-
CLE.    PROVIDED,  HOWEVER,  THAT  THE  AMOUNT  OF SUCH CREDIT ALLOWABLE
AGAINST THE TAX IMPOSED BY SECTION ONE HUNDRED EIGHTY-FOUR OF THIS ARTI-
CLE SHALL BE THE EXCESS OF THE AMOUNT OF SUCH CREDIT OVER THE AMOUNT  OF
ANY  CREDIT  ALLOWED  BY THIS SECTION AGAINST THE TAX IMPOSED BY SECTION
ONE HUNDRED EIGHTY-THREE OF THIS ARTICLE.
  2. APPLICATION OF CREDIT. IN NO EVENT  SHALL  THE  CREDIT  UNDER  THIS
SECTION  BE  ALLOWED  IN  AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO
LESS THAN THE APPLICABLE MINIMUM TAX FIXED BY SECTION ONE HUNDRED EIGHT-
Y-THREE OR ONE HUNDRED EIGHTY-FIVE OF THIS ARTICLE.
  S 3. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED  TRANSPORTATION
FRINGE  BENEFITS. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION FORTY-ONE OF THIS CHAPTER,
AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
SHALL  NOT  REDUCE  THE  TAX  DUE TO LESS THAN THE HIGHER OF THE AMOUNTS
PRESCRIBED IN PARAGRAPHS (C) AND (D) OF SUBDIVISION ONE OF THIS SECTION.
  S 4. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is amended by adding a new clause (xxxvii) to read as
follows:
(XXXVII) CREDIT FOR PROVISION OF     AMOUNT OF CREDIT UNDER SUBDIVISION
EMPLOYEE FEDERAL QUALIFIED           FORTY-EIGHT OF SECTION TWO HUNDRED
TRANSPORTATION FRINGE BENEFITS       TEN, SUBSECTION (AA) OF SECTION
UNDER SUBSECTION (U)                 FOURTEEN HUNDRED FIFTY-SIX OR
                                     SUBDIVISION (DD) OF SECTION FIFTEEN
                                     HUNDRED ELEVEN
  S 5. Section 606 of the tax law is amended by adding a new  subsection
(u) to read as follows:
  (U)  CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED TRANSPORTATION
FRINGE BENEFITS. ALLOWANCE OF CREDIT. A  TAXPAYER  SHALL  BE  ALLOWED  A
CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION FORTY-ONE OF THIS CHAPTER,
AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  S 6. Section 1456 of the tax law is amended by adding a new subsection
(aa) to read as follows:
  (AA) CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED TRANSPORTATION
FRINGE  BENEFITS. (1) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION FORTY-ONE OF THIS CHAPTER,
AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (2) APPLICATION OF CREDIT. THE CREDIT ALLOWED  UNDER  THIS  SUBSECTION
SHALL  NOT  REDUCE  THE  TAX  DUE  TO LESS THAN THE MINIMUM TAX FIXED BY
SUBSECTION (B) OF SECTION FOURTEEN HUNDRED FIFTY-FIVE OF THIS ARTICLE.

S. 6359--C                         391

  S 7. Section 1511 of the tax law is amended by adding a  new  subdivi-
sion (dd) to read as follows:
  (DD) CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED TRANSPORTATION
FRINGE  BENEFITS. (1) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION FORTY-ONE OF THIS CHAPTER,
AGAINST THE TAXES IMPOSED BY THIS ARTICLE.
  (2) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
SHALL NOT REDUCE THE TAX DUE TO LESS THAN THE MINIMUM TAX FIXED BY PARA-
GRAPH  FOUR  OF  SUBDIVISION  (A) OF SECTION FIFTEEN HUNDRED TWO OF THIS
ARTICLE OR BY SECTION FIFTEEN HUNDRED TWO-A OF THIS  ARTICLE,  WHICHEVER
IS APPLICABLE.
  S 8. This act shall take effect immediately.

                                PART SSS

  Section  1.  Paragraph  4  of subsection (b) of section 800 of the tax
law, as added by section 1 of part B of chapter 56 of the laws of  2011,
is amended to read as follows:
  (4)  Any  eligible  educational  institution. An "eligible educational
institution" shall mean any public school district, a board  of  cooper-
ative  educational  services, a public elementary or secondary school, a
school approved pursuant to article eighty-five or  eighty-nine  of  the
education  law  to  serve students with disabilities of school age, or a
nonpublic elementary or secondary school that  provides  instruction  in
grade one or above, ALL PUBLIC LIBRARY SYSTEMS AS DEFINED IN SUBDIVISION
ONE  OF  SECTION  TWO  HUNDRED SEVENTY-TWO OF THE EDUCATION LAW, AND ALL
PUBLIC AND FREE ASSOCIATION LIBRARIES  AS  SUCH  TERMS  ARE  DEFINED  IN
SUBDIVISION TWO OF SECTION TWO HUNDRED FIFTY-THREE OF THE EDUCATION LAW.
  S 2. This act shall take effect immediately.

                                PART TTT

  Section  1.  Section  210  of  the  tax law is amended by adding a new
subdivision 48 to read as follows:
  48. CREDIT FOR FARMERS WHO SELL OR RENT THEIR AGRICULTURAL LAND  TO  A
YOUNG  FARMER.   (A) ALLOWANCE OF CREDIT. A TAXPAYER THAT IS AN AGRICUL-
TURAL BUSINESS PRINCIPALLY ENGAGED IN FARMING, AS SUCH TERM  IS  DEFINED
IN  PARAGRAPH  NINETEEN OF SUBDIVISION (B) OF SECTION ELEVEN HUNDRED ONE
OF THIS CHAPTER SHALL BE ALLOWED A CREDIT AGAINST  THE  TAX  IMPOSED  BY
THIS ARTICLE FOR THE SALE OR RENT OF THEIR AGRICULTURAL LANDS TO A YOUNG
FARMER,  AS DEFINED IN THIS SECTION. SUCH CREDIT SHALL BE TEN PERCENT OF
THE PURCHASE PRICE OR RENTAL AMOUNT OF THE AGRICULTURAL LANDS.
  (B) FOR PURPOSES OF THIS SUBDIVISION,  "YOUNG  FARMER"  SHALL  MEAN  A
FARMER  WHO  HAS  NOT PRODUCED AN AGRICULTURAL PRODUCT FOR MORE THAN TEN
CONSECUTIVE YEARS, WHERE AGRICULTURAL PRODUCT MEANS ANY AGRICULTURAL  OR
AQUACULTURAL  PRODUCT OF THE SOIL OR WATER, INCLUDING BUT NOT LIMITED TO
FRUITS, VEGETABLES, EGGS, DAIRY PRODUCTS, MEAT AND MEAT PRODUCTS,  POUL-
TRY  AND  POULTRY  PRODUCTS,  FISH  AND  FISH  PRODUCTS, GRAIN AND GRAIN
PRODUCTS, HONEY, NUTS, PRESERVES, MAPLE SAP PRODUCTS, APPLE CIDER, FRUIT
JUICE, HORTICULTURAL SPECIALTIES, AND CHRISTMAS TREES AND WHO WILL MATE-
RIALLY AND SUBSTANTIALLY PARTICIPATE IN THE PRODUCTION  OF  AN  AGRICUL-
TURAL PROJECT.
  (C)  PRIOR TO SALE, THE SELLER SHALL CONVEY TO THE DEPARTMENT OF AGRI-
CULTURE AND MARKETS, AN EASEMENT, THE TERMS OF WHICH  LIMIT  DEVELOPMENT
OF  THE LAND TO AGRICULTURAL BUSINESS, PRINCIPALLY FARMING, AS SUCH TERM
IS DEFINED IN PARAGRAPH NINETEEN OF SUBDIVISION (B)  OF  SECTION  ELEVEN

S. 6359--C                         392

HUNDRED ONE OF THIS CHAPTER. THE EASEMENT SHALL EXPIRE NOT LESS THAN TEN
YEARS FROM THE DATE OF SALE.
  S  2.  Subsections  (yy)  and  (zz)  of section 606 of the tax law, as
relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
relettered  subsections  (yyy)  and  (zzz)  and a new subsection (xx) is
added to read as follows:
  (XX) CREDIT FOR THE SALE OR RENT OF AGRICULTURAL LAND TO A YOUNG FARM-
ER. (1) ALLOWANCE OF CREDIT. A TAXPAYER WHOSE FEDERAL GROSS INCOME  FROM
FARMING  FOR  THE  TAXABLE YEAR IS AT LEAST TWO-THIRDS OF EXCESS FEDERAL
GROSS INCOME SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED  BY  THIS
ARTICLE  FOR  THE  SALE  OR  RENT OF AGRICULTURAL LAND OR EQUIPMENT TO A
YOUNG FARMER, AS DEFINED BY SECTION TWO HUNDRED  TEN  OF  THIS  CHAPTER.
SUCH  CREDIT SHALL BE TEN PERCENT OF THE PURCHASE PRICE OF RENTAL AMOUNT
OF  THE  AGRICULTURAL  LAND,  AND  SHALL  BE   ALLOWED   NOTWITHSTANDING
SUBSECTION (KK) OF THIS SECTION.
  (2)  DEFINITIONS. FOR PURPOSES OF THIS SUBSECTION, THE FOLLOWING DEFI-
NITIONS SHALL APPLY:
  (A) "EXCESS FEDERAL GROSS INCOME" MEANS THE AMOUNT  OF  FEDERAL  GROSS
INCOME  FROM ALL SOURCES FOR THE TAXABLE YEAR REDUCED BY THE SUM (NOT TO
EXCEED THIRTY THOUSAND DOLLARS, OF THOSE ITEMS INCLUDED IN FEDERAL GROSS
INCOME WHICH CONSIST OF:
  (I) EARNED INCOME,
  (II) PENSION PAYMENTS, INCLUDING SOCIAL SECURITY PAYMENTS,
  (III) INTEREST, AND
  (IV) DIVIDENDS.
  (B) FOR PURPOSES OF THIS PARAGRAPH, THE  TERM  "EARNED  INCOME"  SHALL
MEAN  WAGES,  SALARIES,  TIPS AND OTHER EMPLOYEE COMPENSATION, AND THOSE
ITEMS OF GROSS INCOME WHICH ARE INCLUDIBLE IN  THE  COMPUTATION  OF  NET
EARNINGS  FROM  SELF-EMPLOYMENT.  FOR  THE  PURPOSES  OF THIS PARAGRAPH,
PAYMENTS FROM THE STATE'S FARMLAND PROTECTION PROGRAM,  ADMINISTERED  BY
THE  DEPARTMENT OF AGRICULTURE AND MARKETS, SHALL BE INCLUDED AS FEDERAL
GROSS INCOME FROM FARMING.
  (3) APPLICATION OF CREDIT. IF THE AMOUNT OF THE CREDIT  ALLOWED  UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR
SUCH  YEAR,  THE  EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE
CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS  OF  SECTION  SIX
HUNDRED  EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST
SHALL BE PAID THEREON.
  S 3. This act shall take effect immediately and shall apply to taxable
years beginning on and after January 1, 2015.

                                PART UUU

  Section 1. Subsections (yy) and (zz) of section 606 of the tax law, as
relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
relettered subsections (yyy) and (zzz) and a new subsection (u) is added
to read as follows:
  (U)  STAY  IN  NEW  YORK  CREDIT. (1) GENERAL. (A) A RESIDENT TAXPAYER
SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY  THIS  ARTICLE  FOR
ALLOWABLE  COLLEGE  EXPENSES. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO
TWENTY-FIVE PERCENT OF ALLOWABLE COLLEGE EXPENSES, CAPPED AT THREE THOU-
SAND DOLLARS. THE CREDIT SHALL BE ALLOWED ONLY IN THE FIRST TAXABLE YEAR
SUBSEQUENT TO THE TAXPAYER'S COMPLETION OF A COURSE OF STUDY LEADING  TO
THE  GRANTING  OF  A  BACCALAUREATE DEGREE AND IN EACH OF THE NEXT THREE
TAXABLE YEARS.
  (B) IN ORDER TO QUALIFY FOR THE CREDIT, THE ELIGIBLE TAXPAYER SHALL:

S. 6359--C                         393

  (I) HAVE COMPLETED THE COURSE OF STUDY LEADING TO THE  GRANTING  OF  A
BACCALAUREATE DEGREE FROM AN INSTITUTION OF HIGHER EDUCATION WITHIN FOUR
YEARS  FROM THE COMMENCEMENT OF SUCH COURSE OF STUDY. PROVIDED, HOWEVER,
IF THE ELIGIBLE TAXPAYER WAS EMPLOYED IN EXCESS OF THREE  HUNDRED  HOURS
PER  SEMESTER,  THE ELIGIBLE TAXPAYER SHALL HAVE COMPLETED THE COURSE OF
STUDY LEADING TO THE GRANTING OF  A  BACCALAUREATE  DEGREE  WITHIN  FIVE
YEARS FROM THE COMMENCEMENT OF SUCH COURSE OF STUDY;
  (II) BE EMPLOYED FULL-TIME WITHIN THE STATE; AND
  (III) HAVE COMPLETED TWENTY HOURS OF COMMUNITY SERVICE PER SEMESTER OF
ENROLLMENT IN AN INSTITUTION OF HIGHER EDUCATION. PROVIDED, HOWEVER, FOR
THOSE  ELIGIBLE  TAXPAYERS  WHO  HAVE  BEEN GRANTED DEGREES WITHIN THREE
YEARS OF THE EFFECTIVE DATE OF THIS  SUBSECTION,  SUCH  TAXPAYERS  SHALL
COMPLETE  THE  COMMUNITY  SERVICE WITHIN THE FIRST TAXABLE YEAR IN WHICH
THE CREDIT IS CLAIMED.
  (C) FOR ELIGIBLE TAXPAYERS WHO ENROLL IN A COURSE OF STUDY LEADING  TO
THE GRANTING OF A POST BACCALAUREATE OR OTHER GRADUATE DEGREE IMMEDIATE-
LY  FOLLOWING THE RECEIPT OF A BACCALAUREATE DEGREE, THE CREDIT SHALL BE
ALLOWED  IN  THE  FIRST  TAXABLE  YEAR  SUBSEQUENT  TO  THE   TAXPAYER'S
COMPLETION OF SUCH DEGREE OR WHEN SUCH TAXPAYER CEASES TO BE ENROLLED IN
SUCH  COURSE  OF  STUDY  AND  IN  EACH  OF  THE NEXT THREE TAXABLE YEARS
PROVIDED ALL OTHER QUALIFICATIONS OF THIS SUBSECTION ARE MET.
  (2) ALLOWABLE AND QUALIFIED COLLEGE EXPENSES. FOR THE PURPOSES OF THIS
CREDIT:
  (A) THE TERM "ALLOWABLE COLLEGE EXPENSES" SHALL MEAN THE TOTAL  AMOUNT
OF  QUALIFIED  COLLEGE  EXPENSES  INCURRED  BY  THE  TAXPAYER DURING THE
TAXPAYER'S ENROLLMENT IN A COURSE OF STUDY LEADING TO THE GRANTING OF  A
BACCALAUREATE DEGREE FROM AN INSTITUTION OF HIGHER EDUCATION.
  (B)  THE  TERM  "QUALIFIED  COLLEGE  EXPENSES"  SHALL MEAN THE TUITION
REQUIRED FOR THE ENROLLMENT OR ATTENDANCE OF THE TAXPAYER AT AN INSTITU-
TION OF HIGHER EDUCATION.   PROVIDED,  HOWEVER,  TUITION  PAYMENTS  MADE
PURSUANT  TO  THE  RECEIPT OF ANY SCHOLARSHIPS OR FINANCIAL AID SHALL BE
EXCLUDED FROM THE DEFINITION OF "QUALIFIED COLLEGE EXPENSES".
  (3) INSTITUTION OF HIGHER EDUCATION. FOR THE PURPOSES OF THIS  CREDIT,
THE TERM "INSTITUTION OF HIGHER EDUCATION" SHALL MEAN ANY INSTITUTION OF
HIGHER  EDUCATION  LOCATED  IN THE STATE, RECOGNIZED AND APPROVED BY THE
REGENTS, OR ANY SUCCESSOR ORGANIZATION, OF THE UNIVERSITY OF  THE  STATE
OF  NEW YORK OR ACCREDITED BY A NATIONALLY RECOGNIZED ACCREDITING AGENCY
OR ASSOCIATION ACCEPTED AS SUCH BY THE REGENTS, OR ANY SUCCESSOR  ORGAN-
IZATION,  OF  THE  UNIVERSITY OF THE STATE OF NEW YORK, WHICH PROVIDES A
COURSE OF STUDY LEADING TO THE  GRANTING  OF  A  POST-SECONDARY  DEGREE,
CERTIFICATE OR DIPLOMA.
  (4)  REFUNDABILITY.  THE CREDIT UNDER THIS SUBSECTION SHALL BE ALLOWED
AGAINST THE TAXES IMPOSED BY THIS ARTICLE FOR THE TAXABLE  YEAR  REDUCED
BY  THE CREDITS PERMITTED BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE TAX
AS SO REDUCED, THE TAXPAYER MAY RECEIVE, AND THE COMPTROLLER, SUBJECT TO
A CERTIFICATE OF THE COMMISSIONER, SHALL PAY AS AN OVERPAYMENT,  WITHOUT
INTEREST, THE AMOUNT OF SUCH EXCESS.
  S  2. Subparagraph (A) of paragraph 2 of subsection (t) of section 606
of the tax law, as amended by section 1 of part N of chapter 85  of  the
laws of 2002, is amended to read as follows:
  (A)  The  term  "allowable  college  tuition  expenses" shall mean the
amount of qualified college tuition expenses of eligible  students  paid
by  the  taxpayer  during  the  taxable year[,]. THE AMOUNT OF QUALIFIED
COLLEGE TUITION EXPENSES SHALL BE limited [to] AS FOLLOWS:  FOR  TAXABLE
YEARS  BEGINNING AFTER TWO THOUSAND AND BEFORE TWO THOUSAND FIFTEEN, ten
thousand dollars for each such student; FOR TAXABLE YEARS  BEGINNING  IN

S. 6359--C                         394

TWO  THOUSAND  FIFTEEN,  TWELVE  THOUSAND  DOLLARS FOR EACH STUDENT; FOR
TAXABLE YEARS BEGINNING  IN  TWO  THOUSAND  SIXTEEN,  FOURTEEN  THOUSAND
DOLLARS  FOR  EACH  STUDENT; FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND
SEVENTEEN,  SIXTEEN THOUSAND DOLLARS FOR EACH STUDENT; FOR TAXABLE YEARS
BEGINNING IN TWO THOUSAND EIGHTEEN, EIGHTEEN THOUSAND DOLLARS  FOR  EACH
STUDENT;  AND  FOR  TAXABLE YEARS BEGINNING AFTER TWO THOUSAND EIGHTEEN,
TWENTY THOUSAND DOLLARS PER STUDENT;
  S 3. Paragraph 4 of subsection (t) of section 606 of the tax  law,  as
added  by  section  1  of  part DD of chapter 63 of the laws of 2000, is
amended to read as follows:
  (4) Amount of credit. [If allowable college tuition expenses are  less
than five thousand dollars, the amount of the credit provided under this
subsection  shall be equal to the applicable percentage of the lesser of
allowable college tuition expenses or two hundred dollars. If  allowable
college  tuition  expenses are five thousand dollars or more, the amount
of the credit provided under this  subsection  shall  be  equal  to  the
applicable  percentage  of the allowable college tuition expenses multi-
plied by four percent.]
  THE AMOUNT OF THE CREDIT SHALL BE DETERMINED IN  ACCORDANCE  WITH  THE
FOLLOWING SCHEDULES:
  (A)  FOR  TAXABLE  YEARS  BEGINNING  AFTER TWO THOUSAND AND BEFORE TWO
THOUSAND FIFTEEN:
IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN FIVE THOUSAND DOLLARS     THE APPLICABLE PERCENTAGE OF THE
                                    LESSER OF ALLOWABLE COLLEGE TUITION
                                    EXPENSES OR TWO HUNDRED DOLLARS
FIVE THOUSAND DOLLARS OR MORE       THE APPLICABLE PERCENTAGE OF
                                    ALLOWABLE COLLEGE TUITION EXPENSES
                                    MULTIPLIED BY FOUR PERCENT
  (B) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND FIFTEEN:
IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN SIX THOUSAND DOLLARS      THE LESSER OF ALLOWABLE COLLEGE
                                    TUITION EXPENSES OR TWO HUNDRED
                                    FORTY DOLLARS
SIX THOUSAND DOLLARS OR MORE        THE ALLOWABLE COLLEGE TUITION
                                    EXPENSES MULTIPLIED BY FOUR PERCENT
  (C) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND SIXTEEN:
IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN SEVEN THOUSAND DOLLARS    THE LESSER OF ALLOWABLE COLLEGE
                                    TUITION EXPENSES OR TWO HUNDRED
                                    EIGHTY DOLLARS
SEVEN THOUSAND DOLLARS OR MORE      THE ALLOWABLE COLLEGE TUITION
                                    EXPENSES MULTIPLIED BY FOUR PERCENT
  (D) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND SEVENTEEN:
IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN EIGHT THOUSAND DOLLARS    THE LESSER OF ALLOWABLE COLLEGE
                                    TUITION EXPENSES OR THREE HUNDRED
                                    TWENTY DOLLARS
EIGHT THOUSAND DOLLARS OR MORE      THE ALLOWABLE COLLEGE TUITION
                                    EXPENSES MULTIPLIED BY FOUR PERCENT
  (E) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND EIGHTEEN:

S. 6359--C                         395

IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN NINE THOUSAND DOLLARS     THE LESSER OF ALLOWABLE COLLEGE
                                    TUITION EXPENSES OR THREE HUNDRED
                                    SIXTY DOLLARS
NINE THOUSAND DOLLARS OR MORE       THE ALLOWABLE COLLEGE TUITION
                                    EXPENSES MULTIPLIED BY FOUR PERCENT
  (F) FOR TAXABLE YEARS BEGINNING AFTER TWO THOUSAND EIGHTEEN:
IF ALLOWABLE COLLEGE TUITION        THE TAX CREDIT IS EQUAL TO:
EXPENSES ARE:
LESS THAN TEN THOUSAND DOLLARS      THE LESSER OF ALLOWABLE COLLEGE
                                    TUITION EXPENSES OR FOUR HUNDRED
                                    DOLLARS
TEN THOUSAND DOLLARS OR MORE        THE ALLOWABLE COLLEGE TUITION
                                    EXPENSES MULTIPLIED BY FOUR PERCENT
  Such  applicable  percentage  shall be twenty-five percent for taxable
years beginning in two thousand one, fifty  percent  for  taxable  years
beginning  in  two  thousand two, seventy-five percent for taxable years
beginning in two thousand three and  one  hundred  percent  for  taxable
years beginning after two thousand three.
  S 4. Subsection (t) of section 606 of the tax law is amended by adding
a new paragraph 4-a to read as follows:
  (4-A)  INFLATION  ADJUSTMENT.  (A)  FOR  TAXABLE YEARS BEGINNING IN OR
AFTER TWO THOUSAND NINETEEN, THE DOLLAR AMOUNTS IN SUBPARAGRAPH  (A)  OF
PARAGRAPH  TWO AND PARAGRAPH FOUR OF THIS SUBSECTION SHALL BE MULTIPLIED
BY ONE PLUS THE INFLATION ADJUSTMENT.
  (B) THE INFLATION  ADJUSTMENT  FOR  ANY  TAXABLE  YEAR  SHALL  BE  THE
PERCENTAGE,  IF  ANY,  BY WHICH THE HIGHER EDUCATION PRICE INDEX FOR THE
ACADEMIC FISCAL YEAR ENDING IN THE IMMEDIATELY  PRECEDING  TAXABLE  YEAR
EXCEEDS  THE  HIGHER  EDUCATION PRICE INDEX FOR THE ACADEMIC FISCAL YEAR
ENDING JUNE, TWO THOUSAND EIGHTEEN. FOR THE PURPOSES OF THIS  PARAGRAPH,
THE  HIGHER EDUCATION PRICE INDEX MEANS THE HIGHER EDUCATION PRICE INDEX
PUBLISHED BY THE COMMONFUND INSTITUTE.
  (C) IF THE PRODUCT OF THE AMOUNTS IN SUBPARAGRAPHS (A) AND (B) OF THIS
PARAGRAPH IS NOT A MULTIPLE OF FIVE  DOLLARS,  SUCH  INCREASE  SHALL  BE
ROUNDED TO THE NEXT MULTIPLE OF FIVE DOLLARS.
  S 5. This act shall take effect immediately and shall apply to taxable
years  beginning  on  or  after January 1, 2015; provided, however, that
section one of this act shall apply to taxable  years  beginning  on  or
after January 1, 2016.

                                PART VVV

  Section  1.  Subdivision (a) of section 1115 of the tax law is amended
by adding a new paragraph 44 to read as follows:
  (44) SCHOOL BUSES AS SUCH TERM  IS  DEFINED  IN  SECTION  ONE  HUNDRED
FORTY-TWO  OF  THE VEHICLE AND TRAFFIC LAW, AND PARTS, EQUIPMENT, LUBRI-
CANTS AND FUEL PURCHASED AND USED IN THEIR OPERATION.
  S 2. This act shall take effect on the first day of a quarterly  sales
tax  period,  as set forth in subdivision (b) of section 1136 of the tax
law, next succeeding April 1, 2017. Provided, however, that the  commis-
sioner  of  taxation  and  finance may take any action necessary for the
timely implementation of this act on or before  the  date  on  which  it
shall have become a law.

                                PART WWW

S. 6359--C                         396

  Section  1.  Legislative intent. The legislature hereby finds that the
educational and entertainment game industry makes up a large and rapidly
growing share of the national  and  world  economy,  outselling  movies,
music,  and  DVDs;  that its diversity includes entertainment and educa-
tional  games, triple-A games and apps, large and small companies, indi-
vidual entrepreneurs, and a strong higher education academic  component;
that it pays high annual average salaries to its employees; and that its
audience  is adult and large, with 58 percent of Americans playing video
games, 45 percent of whom are female players, and that the  average  age
of  a  game  player is 30 years old and the average age of most frequent
game purchasers is 35 years old.
  The legislature further finds that New  York's  game  development  and
publishing  companies are among the foremost in the country and that its
academic game design institutions are cited as among the country's best,
yet it lags other states in industry jobs, opportunities, and economics,
ranking 4th among states as of 2009 with a contribution of 268.8 million
dollars to the economy, and 5,474 direct and indirect jobs, behind Cali-
fornia, where the industry contributes 2.2 billion dollars to the econo-
my, Washington with a contribution of 480  million  dollars,  and  Texas
with a contribution of 492 million dollars; that many students leave New
York  to  seek opportunities for creative work in other states; and that
companies are moving employees to areas that make more economic sense to
their bottom lines, despite a stated desire to stay in New York.
  The legislature further finds and declares, based in  discussions  and
interviews  with  game  development  and  publishing  industry  leaders,
academics, entrepreneurs, and  students,  that  provisions  of  existing
economic development programs and incentives can be targeted to increase
employment  and  economic activity in this industry in New York and that
new incentives and programs can also help the industry to achieve  crit-
ical mass which in turn will lead to more rapid growth.
  The  legislature  therefore  declares  that the provisions of this act
will help New York state reach its potential as a home to game  develop-
ment  and publishing companies and entrepreneurs, increasing employment,
growth and opportunity for all citizens of this state, and  raising  New
York's profile as a game development capital, and that enactment of this
act  is  therefore in every sense in the interests of the people of this
state.
  S 2. Section 433 of the economic development law is amended by  adding
a new subdivision 5 to read as follows:
  5. THE COMMISSIONER MAY ISSUE A CERTIFICATE OF ELIGIBILITY UPON APPLI-
CATION  BY  A  COMPANY  THAT  IS  AN  ANCHOR  TENANT PURSUANT TO SECTION
SIXTEEN-W OF THE URBAN DEVELOPMENT CORPORATION ACT THAT IS ENGAGED OR IS
ABOUT TO ENGAGE IN AN ELIGIBLE PRODUCTION. THE  COMMISSIONER  MAY  GRANT
APPROVAL OF SUCH CERTIFICATE OF ELIGIBILITY WHEN THE COMPANY PROVIDES AN
AUDIT BY A CERTIFIED PUBLIC ACCOUNTANT WHO MEETS CRITERIA ESTABLISHED BY
THE  COMMISSIONER  OF THE QUALIFIED PRODUCTION THAT INCLUDES AN ITEMIZED
REPORT OF QUALIFIED EXPENDITURES  AND  SUCH  OTHER  INFORMATION  AS  THE
COMMISSIONER  MAY  REQUIRE  SHOWING  THAT THE PRODUCTION MET ELIGIBILITY
REQUIREMENTS ESTABLISHED IN SECTION THIRTY-NINE-C OF THE TAX LAW.    FOR
PURPOSES  OF  THIS  SUBDIVISION,  AN ELIGIBLE PRODUCTION IS A PRODUCTION
WITH QUALIFIED EXPENDITURES OF FIVE HUNDRED THOUSAND DOLLARS OR MORE, OF
WHICH AT LEAST SIXTY PERCENT ARE INCURRED  IN  THIS  STATE.    QUALIFIED
EXPENDITURES  MUST  BE  CUSTOMARY  AND  REASONABLE PURCHASES OF TANGIBLE
PERSONAL PROPERTY OR SERVICES FROM A BUSINESS IN THIS STATE ON OR  AFTER
THE  DATE  ON  WHICH AN APPLICANT SUBMITS AN APPLICATION FOR THE CERTIF-
ICATE OF ELIGIBILITY, WHICH SHALL BE NOT EARLIER THAN JANUARY FIRST, TWO

S. 6359--C                         397

THOUSAND FIFTEEN.  THE COMMISSIONER SHALL FORWARD A COPY OF ANY  CERTIF-
ICATE OF ELIGIBILITY AND ANY APPROVAL THEREOF TO THE COMMISSIONER OF THE
DEPARTMENT  OF  TAXATION  AND  FINANCE. SUCH CERTIFICATE SHALL INCLUDE A
CALCULATION  OF  THE AMOUNT AND SCHEDULE UNDER WHICH SUCH CREDITS MAY BE
CLAIMED BY THE ANCHOR TENANT OVER A FOUR YEAR PERIOD.  QUALIFIED EXPEND-
ITURES FOR AN ELIGIBLE PRODUCTION INCLUDE:  THE  PAYROLL  FOR  NEW  YORK
STATE  RESIDENTS  PROVIDING SERVICES IN THIS STATE TO THE PRODUCTION FOR
CODING AND DESIGN, SET CONSTRUCTION AND  OPERATION,  PHOTOGRAPHY,  SOUND
AND  LIGHTING, FILMING, FILM PROCESSING AND FILM EDITING, EDITING, SOUND
MIXING, ART, DIGITAL PROGRAMMING, ONLINE PROGRAMMING, QUALITY  ASSURANCE
TESTING, MOTION CAPTURE, SPECIAL EFFECTS, VISUAL EFFECTS AND OTHER POST-
PRODUCTION  SERVICES,  TO  A MAXIMUM OF ONE HUNDRED THOUSAND DOLLARS PER
SUCH RESIDENT, INDEXED FOR INFLATION; PAYMENT FOR  BELOW-THE-LINE  GOODS
OR  SERVICES  PROVIDED BY A NEW YORK BUSINESS RELATED TO THE PRODUCTION,
AS DEFINED FURTHER BY THE COMMISSIONER AFTER CONSULTATION WITH THE URBAN
DEVELOPMENT CORPORATION AND THE NEW YORK DIGITAL GAME DEVELOPMENT  ADVI-
SORY  BOARD  ESTABLISHED  IN  SECTION SIXTEEN-W OF THE URBAN DEVELOPMENT
CORPORATION ACT; AND ANY OTHER TRANSACTION, SERVICE OR  ACTIVITY  DEEMED
ESSENTIAL TO SUCH PRODUCTION AND AUTHORIZED BY THE COMMISSIONER.
  S  3.  Section  1 of chapter 174 of the laws of 1968, constituting the
New York state urban development corporation act, is amended by adding a
new section 16-w to read as follows:
  S 16-W. THE NEW YORK STATE DIGITAL GAME DEVELOPMENT AND INCENTIVE ACT.
1. AS USED IN THIS SECTION:
  A. "DIGITAL GAME DEVELOPMENT" OR  "DIGITAL  GAME  SOFTWARE"  COMPANIES
(COLLECTIVELY,  "DIGITAL  GAME  COMPANIES") AND PUBLISHERS ARE COMPANIES
ENGAGED IN DEVELOPING, PRODUCING, OR PUBLISHING  ENTERTAINMENT  SOFTWARE
FOR  ONE OR MULTIPLE PLATFORMS OR PLAYING DEVICES THAT MAY OR MAY NOT BE
DOWNLOADED ELECTRONICALLY, INCLUDING COMPANIES  THAT  ARE  OR  WOULD  BE
CLASSIFIED UNDER NAIC CODE 511210 OR ANY SUCCESSOR THERETO;
  B. THE "NEW YORK DIGITAL GAME DEVELOPMENT ADVISORY BOARD" OR "ADVISORY
BOARD" MEANS THE NEW YORK GAME DEVELOPMENT ADVISORY BOARD CREATED PURSU-
ANT TO THIS SECTION;
  C.  "NEW YORK STATE INCUBATOR" OR "NEW YORK STATE INNOVATION HOT SPOT"
HAVE THE SAME MEANINGS AS "NEW YORK  STATE  INCUBATORS"  AND  "NEW  YORK
STATE INNOVATION HOT SPOTS" AS USED IN SECTION SIXTEEN-V OF THIS ACT;
  D.  "ANCHOR  TENANT"  MEANS  ENTITIES  OR PERSONS SO DESIGNATED BY THE
COMMISSIONER OF ECONOMIC DEVELOPMENT THAT ARE DIGITAL GAME COMPANIES, OR
ARE SUBSIDIARIES OF OR NEW VENTURES OWNED WHOLLY OR IN PART  BY  DIGITAL
GAME COMPANIES. AN ENTITY OR PERSON CANNOT BE AN ANCHOR TENANT UNLESS IT
IS RESIDENT IN NEW YORK STATE AND ESTABLISHES OPERATIONS PURSUANT TO THE
START-UP NY PROGRAM AUTHORIZED UNDER ARTICLE 21 OF THE ECONOMIC DEVELOP-
MENT LAW IN AN INDUSTRY CLUSTER OF DIGITAL GAME COMPANIES.
  2.  THE  CORPORATION  SHALL  TAKE THE STEPS AUTHORIZED AND REQUIRED IN
THIS SECTION, IN ORDER TO ENHANCE ECONOMIC DEVELOPMENT  IN  THE  DIGITAL
GAME  INDUSTRY AND TO CREATE OPPORTUNITIES FOR EMPLOYMENT, JOB CREATION,
AND PRODUCT DEVELOPMENT IN NEW YORK STATE, AND RECOGNITION  OF  EMERGING
AND CURRENT TALENT. THOSE STEPS INCLUDE BUT ARE NOT LIMITED TO CREATION,
PLANNING, DEVELOPMENT, AND IMPLEMENTATION OF:
  A. THE NEW YORK STATE DIGITAL GAME DEVELOPMENT ADVISORY BOARD;
  B. THE NEW YORK DIGITAL GAME SUMMIT AND SUPPORT OF EVENTS;
  C. THE NEW YORK DIGITAL GAME DEVELOPMENT COMPETITION;
  D.  ADMINISTRATION  AND IMPLEMENTATION OF INDUSTRY CLUSTERS OF DIGITAL
GAME COMPANIES ESTABLISHED PURSUANT TO ARTICLE 21 OF THE ECONOMIC DEVEL-
OPMENT LAW;

S. 6359--C                         398

  E. DEVELOPMENT OF COLLABORATIONS WITH  NEW  YORK  STATE-BASED  DIGITAL
GAME COMPANIES AND ENTREPRENEURS, GAME DESIGN ACADEMIC INSTITUTIONS, NEW
YORK  INCUBATORS AND NEW YORK INNOVATION HOT SPOTS TO FURTHER THE INTENT
OF THIS PROGRAM;
  F. TARGETED TAX INCENTIVES AND BENEFITS FOR THE DIGITAL GAME INDUSTRY;
  G. HIGH SPEED INTERNET CONNECTION GRANTS;
  H. ADMINISTRATION OF THE NEW YORK STATE DIGITAL GAME DEVELOPMENT FUND.
  3. THERE IS HEREBY CREATED THE NEW YORK STATE DIGITAL GAME DEVELOPMENT
ADVISORY  BOARD,  WHOSE  PURPOSE SHALL BE TO ADVISE AND CONSULT WITH THE
CORPORATION ON THE DEVELOPMENT OF THE PROGRAM CREATED BY  THIS  SECTION.
THE  BOARD SHALL CONSIST OF TWELVE MEMBERS APPOINTED BY THE GOVERNOR; OF
THE TWELVE, TWO SHALL BE ON THE RECOMMENDATION OF  THE  SPEAKER  OF  THE
ASSEMBLY,  TWO BY THE TEMPORARY PRESIDENT AND MAJORITY COALITION LEADERS
OF THE SENATE, AND ONE EACH BY THE MINORITY LEADERS OF  THE  SENATE  AND
THE  ASSEMBLY.  MEMBERS OF THE BOARD SHALL BE EXECUTIVES OF DIGITAL GAME
COMPANIES RESIDENT IN NEW YORK STATE, ACADEMICS OR DEANS  FROM  ACADEMIC
GAME  DESIGN  PROGRAMS,  AND SUCCESSFUL ENTREPRENEURS WITH AT LEAST FIVE
YEARS EXPERIENCE IN THE INDUSTRY AND ONE OR MORE SUCCESSFUL GAMES.
  4. THE CORPORATION IS AUTHORIZED AND  DIRECTED,  WITHIN  AMOUNTS  MADE
AVAILABLE  TO  IT  BY  APPROPRIATION  THEREFOR AND SUCH OTHER PUBLIC AND
PRIVATE FUNDS AS SHALL ADDITIONALLY BE MADE AVAILABLE, TO PROVIDE  LOANS
AND  GRANTS FOR SERVICES AND EXPENSES RELATED TO PLANNING AND IMPLEMENT-
ING A NEW YORK STATE DIGITAL GAME SUMMIT, TO SUPPORT AND  PROMOTE  OTHER
LOCAL  AND REGIONAL DIGITAL GAME EVENTS, AND TO ORGANIZE STATE REPRESEN-
TATION AT NATIONAL DIGITAL GAME EVENTS DEEMED  AFTER  CONSULTATION  WITH
THE NEW YORK STATE DIGITAL GAME DEVELOPMENT ADVISORY BOARD TO BE SIGNIF-
ICANT  AND  APPROPRIATE  TO RAISING NEW YORK'S PROFILE AND STATUS IN THE
GAME DEVELOPMENT INDUSTRY. PRIOR TO TAKING SUCH ACTIONS, THE CORPORATION
SHALL CONSULT WITH AND DEVELOP A PLAN TO MAXIMIZE  THE  EFFECT  OF  SUCH
ACTIVITIES  WITH  THE  NEW YORK DIGITAL GAME DEVELOPMENT ADVISORY BOARD.
GENERAL REQUIREMENTS AND PARAMETERS FOR THESE  ACTIVITIES  SHALL  BE  AS
FOLLOWS:
  A.  NEW  YORK  STATE  GAME  SUMMIT SHALL BE A MULTI-DAY CONVENTION AND
CELEBRATION OF NEW YORK'S DIGITAL  GAME  INDUSTRY,  INCLUDING  ENTREPRE-
NEURS, STUDENTS, ACADEMIC INSTITUTIONS, AND COMPANIES, TO BE HELD IN NEW
YORK  CITY  AT A TIME WHEN THERE IS THE LEAST AMOUNT OF COMPETITION FROM
OTHER NATIONAL AND IN-STATE EVENTS, AT A VENUE WITH A HISTORY AND INTER-
EST IN DIGITAL GAMING OR IN CONVENTIONS WHICH  ARE  ABLE  TO  HOUSE  THE
LAUNCH  OF A GROWING EVENT. THE GAME SUMMIT WILL ALSO INCLUDE THE FINALS
OF THE NEW  YORK  DIGITAL  GAME  DEVELOPMENT  COMPETITION,  CREATED  AND
AUTHORIZED  BY  THIS  SECTION,  AND  SHALL  INCLUDE  DEMONSTRATIONS  AND
DISCUSSIONS OF GAMES, EDUCATIONAL FORUMS IN WHICH  EDUCATORS  CAN  LEARN
ABOUT  USING  GAMES IN THE CLASSROOM, AND OTHER ACTIVITIES DEEMED APPRO-
PRIATE BY THE CORPORATION TO SUCH AN EVENT.  THE CORPORATION SHALL PART-
NER WITH AND SUPPORT ONE OR MORE PRIVATE ENTITIES AND TRADE ASSOCIATIONS
THAT CREATE AND IMPLEMENT THE SUMMIT.
  B. REGIONAL SUPPORT SHALL INCLUDE SUPPORT OF AND  COLLABORATIONS  WITH
REGIONAL AND LOCAL DIGITAL GAME PUBLISHERS AND DEVELOPER EVENTS, FOR THE
PURPOSE  OF  CREATING  AN ECOSYSTEM OF RELATED GATHERINGS, MEETINGS, AND
COMPETITIONS IN THIS STATE.
  C. REPRESENTATION AT EVENTS WILL  ENTAIL  THE  CORPORATION  ORGANIZING
AND/OR  PARTICIPATING  IN REPRESENTATION OF NEW YORK DIGITAL GAME COMPA-
NIES, ENTREPRENEURS, ACADEMICS, AND OTHERS  AT  MAJOR  GAME  EVENTS  AND
VENUES.
  5.  THE CORPORATION IS AUTHORIZED, WITHIN AMOUNTS MADE AVAILABLE TO IT
BY APPROPRIATION THEREFOR AND WITH SUCH OTHER PUBLIC AND  PRIVATE  FUNDS

S. 6359--C                         399

AS  SHALL  ADDITIONALLY BE MADE AVAILABLE, TO PLAN AND IMPLEMENT THE NEW
YORK STATE DIGITAL GAME DEVELOPMENT COMPETITION, THE  PURPOSE  OF  WHICH
SHALL  BE  TO  ANNUALLY  RECOGNIZE AND ENCOURAGE EMERGING TALENT IN GAME
DEVELOPMENT  IN  THIS STATE THROUGH A THREE STAGE JUDGED COMPETITION FOR
PRIZES OVER A PERIOD NOT LONGER THAN TWENTY-FOUR MONTHS. THE CORPORATION
SHALL CONSULT WITH AND DEVELOP A PLAN FOR THE GAME DEVELOPMENT  COMPETI-
TION  WITH THE NEW YORK DIGITAL GAME DEVELOPMENT ADVISORY BOARD. GENERAL
REQUIREMENTS AND PARAMETERS FOR THESE ACTIVITIES ARE AS FOLLOWS:
  A. THE FIRST COMPETITION SHALL TAKE PLACE WITHIN EACH ECONOMIC  DEVEL-
OPMENT  REGION IN THE STATE, AND SHALL RESULT IN TEN WINNERS PER REGION.
NOTHING CONTAINED HEREIN SHALL PREVENT TWO OR MORE REGIONS FROM  COLLAB-
ORATING  IN  THIS  STAGE  OF  THE COMPETITION, AND THE CORPORATION SHALL
ESTABLISH RULES OR GUIDELINES TO GOVERN SUCH COLLABORATIONS. THE  SECOND
COMPETITION SHALL TAKE PLACE AMONG THE WINNERS OF THE FIRST COMPETITION,
AND  SHALL RESULT IN TEN WINNERS. THIS COMPETITION SHALL BE SCHEDULED AT
DIFFERENT VENUES WITHIN THE  STATE  EACH  YEAR  TO  ASSURE  GEOGRAPHICAL
BALANCE.  THE FINAL COMPETITION SHALL RESULT IN TWO WINNERS AND SHALL BE
CONDUCTED AS PART OF THE NEW YORK STATE DIGITAL GAME SUMMIT. WINNERS  OF
THE FIRST COMPETITION SHALL RECEIVE PRIZES OF TEN THOUSAND DOLLARS EACH.
WINNERS  OF THE SECOND COMPETITION SHALL RECEIVE MATCHING FUND PRIZES OF
UP TO ONE HUNDRED THOUSAND DOLLARS EACH. WINNERS OF THE  THIRD  COMPETI-
TION SHALL RECEIVE PRIZES OF FIVE HUNDRED THOUSAND DOLLARS EACH.
  B.  EACH COMPETITION SHALL BE JUDGED BY A SEVEN-MEMBER PANEL OF INDUS-
TRY OFFICIALS, ENTREPRENEURS, ACADEMICS, AND ECONOMIC DEVELOPMENT  OFFI-
CIALS  IN  THE REGION OR IN THE STATE AS APPROPRIATE TO THE LEVEL OF THE
COMPETITION, SELECTED BY THE CORPORATION BASED ON  RECOMMENDATIONS  FROM
THE  COMMUNITY,  THE GAMING INDUSTRY, AND GOVERNMENT AND OTHER OFFICIALS
IN THE REGION. THE PANELS SHOULD INCLUDE A PREPONDERANCE OF  JUDGES  WHO
ARE INDUSTRY OFFICIALS, ENTREPRENEURS, ACADEMICS, AND SUCH JUDGES SHOULD
HAVE A BACKGROUND IN OR KNOWLEDGE OF DIGITAL GAMES, GAME PUBLISHING, AND
GAME  DEVELOPMENT AND AN UNDERSTANDING OF COMMERCIAL APPEAL AND MARKETA-
BILITY OF GAMES.
  C. THE CORPORATION SHALL ESTABLISH CRITERIA FOR ELIGIBILITY OF  COMPE-
TITION  ENTRANTS  THAT  REQUIRE  RESIDENCY  IN THIS STATE AND THAT LIMIT
ENTRANTS TO NEW AND EMERGING TALENT AND EARLY SEED STAGE STARTUP  ENTRE-
PRENEURS  AS  EVIDENCED  BY  FACTORS  SUCH  AS  THAT THE ENTRANT HAS NOT
PUBLISHED A GAME PREVIOUSLY OR, IF SUCH ENTRANT HAS PUBLISHED A GAME  IT
HAS EARNED A SMALL AMOUNT AS DETERMINED BY THE CORPORATION, OR THAT SUCH
ENTRANT  IS CURRENTLY A CLIENT OF A NEW YORK STATE INCUBATOR OR NEW YORK
STATE INNOVATION HOT SPOT, AND THE COMPANY HAS  BEEN  IN  EXISTENCE  FOR
LESS THAN THREE YEARS, AND OTHER SIMILAR FACTORS.
  D. FACTORS TO BE INCLUDED IN JUDGING EACH PHASE OF THE COMPETITION ARE
AS FOLLOWS:
  (I)  FOR  THE  FIRST  PHASE  ENTRANTS SHOULD SHOW CONCEPTUALIZATION, A
DESIGN DOCUMENT, AND PRE-PRODUCTION WITH CODING COMPLETED TO AT LEAST  A
DIGITAL  PROTOTYPE THAT SHOWS HOW THE GAME WOULD WORK. ADDITIONALLY, THE
JUDGES SHALL CONSIDER THE QUALITY OF THE GAME CONCEPT, THE PITCH OF  THE
INDIVIDUAL  TEAMS, THE TEAM DYNAMIC, AND THE LEVEL OF REAL, SUBSTANTIAL,
AND CONTINUING CONTROL OF THE I.P. WINNERS SHALL USE THE FUNDS  TO  LINK
WITH  NEW  YORK  STATE  INCUBATORS  FOR  COUNSELING AND MENTORING AND TO
DEVELOP THE NECESSARY BUSINESS ATTRIBUTES AS WELL AS ADDITIONAL  PRODUCT
COMPLETION NECESSARY FOR THE NEXT PHASE OF THE COMPETITION;
  (II)  FOR  THE SECOND PHASE COMPETITION AMONG THE WINNERS OF THE FIRST
PHASE, ENTRANTS SHOULD BE IN  PRE-PRODUCTION,  AND  SHOULD  HAVE  RAISED
FUNDS FROM INVESTORS OR FUNDING SITES OR OTHER SOURCES. PRIZES WILL BE A
MATCH  TO SUCH FUNDS, UP TO ONE HUNDRED THOUSAND DOLLARS, PLUS ACCESS TO

S. 6359--C                         400

INCUBATOR SPACE AND MENTORING, SKILL BUILDING, AND OTHER SERVICES AVAIL-
ABLE TO BEING AN INCUBATOR CLIENT, AS NEGOTIATED AND  DEVELOPED  BY  THE
CORPORATION.  JUDGES  WILL LOOK AT ASPECTS OF THE PRODUCT AS WELL AS THE
BUSINESS  PROPOSAL.  COMPETITORS  SHOULD  HAVE  COMPLETED  AND SUBMITTED
EVIDENCE SATISFACTORY TO THE CORPORATION OF:
  (A) A BUSINESS TEAM (BAIL TEAM) AND A BUSINESS AND MARKETING PLAN;
  (B) A STRATEGIC MONETIZATION INVESTMENT AND FUNDING PLAN;
  (C) A BUSINESS (INCLUDING A DBA, OR ANY OTHER FORM OF BUSINESS  ORGAN-
IZATION);
  (D) A COMPLETED PRODUCT PLAN FOR MARKETING AND FINAL DEVELOPMENT;
  (E)  PROOF OF CONCEPT CONSISTING AT LEAST OF A "VERTICAL SLICE" OF THE
GAME, MEANING AT LEAST ONE LEVEL OF PLAY, POLISH AND  FINISH,  WITH  THE
INFRASTRUCTURE LARGELY COMPLETED;
  (F)  PUBLIC TESTING OR ACCEPTANCE OR OTHER EVIDENCE OF MARKETING VALUE
OF THE GAME;
  (III) FOR THE THIRD PHASE COMPETITION  AMONG  WINNERS  OF  THE  SECOND
PHASE,  ENTRANTS  MUST  HAVE A COMPLETED GAME SUBMITTED FOR JUDGING, AND
UPDATE THE INFORMATION REQUIRED IN PHASE TWO OF THE COMPETITION. CONTES-
TANTS SHOULD ALSO REVEAL WHAT THEY INTEND TO DO WITH THE AWARD MONEY  IF
THEY WIN.
  E.  AS  A  CONDITION  OF  RECEIPT OF AWARDS RECEIVED IN PHASES TWO AND
THREE, CONTESTANTS SHALL AGREE TO REMAIN RESIDENT IN THE STATE FOR  GAME
DEVELOPMENT PURPOSES FOR A PERIOD OF FIVE YEARS, AND TO RETURN THE AWARD
TO  THE  STATE  SHOULD  THEY  LEAVE OR SELL THE GAME OR THE GAME COMPANY
PRIOR TO THAT FIVE-YEAR PERIOD. WINNERS IN PHASES ONE AND TWO SHALL ALSO
AGREE, AS A CONDITION OF RECEIPT OF THE AWARD, TO CONTRIBUTE ONE PERCENT
OF PROFITS OF THE GAME TO THE NEW YORK STATE  DIGITAL  GAME  DEVELOPMENT
FUND  CREATED  PURSUANT  TO SECTION 99-V OF THE STATE FINANCE LAW, FOR A
PERIOD OF THREE YEARS AFTER PUBLICATION OF THE GAME, OR UNTIL THE AMOUNT
CONTRIBUTED MATCHES THE AMOUNT OF THE  AWARD  RECEIVED,  WHICHEVER  TIME
PERIOD IS LESS.
  F.  THE  CORPORATION SHALL TAKE SUCH STEPS AS ARE NECESSARY OR CONVEN-
IENT IN ASSOCIATION WITH GAME PUBLISHERS TO  PROVIDE  OPPORTUNITIES  FOR
PHASE  TWO  AWARD  RECIPIENTS  TO OBTAIN CONSIDERATION OF PUBLICATION OF
THEIR GAMES.
  6. THE CORPORATION IS AUTHORIZED TO  WORK  WITH  THE  COMMISSIONER  OF
ECONOMIC  DEVELOPMENT  TO  PROVIDE  SERVICES  TO  DESIGNATED CLUSTERS OF
DIGITAL  GAME  DEVELOPMENT  AND  DIGITAL  GAME  SOFTWARE  COMPANIES  AND
PUBLISHERS APPROVED BY THE COMMISSIONER OF ECONOMIC DEVELOPMENT PURSUANT
TO  ARTICLE  21  OF  THE  ECONOMIC  DEVELOPMENT  LAW  AND  THE FOLLOWING
PROVISIONS, WHICH SHALL BE CONTROLLING  IN  THE  CASE  OF  ANY  CONFLICT
REGARDING  OR LIMITING THE SPONSORSHIP OF PLANS AND ELIGIBILITY OF BUSI-
NESSES, INCLUDING ANY PROVISIONS OF SUBDIVISION 2-A OF  SECTION  433  OF
THE  ECONOMIC  DEVELOPMENT  LAW LIMITING THE ELIGIBILITY OF THE TYPES OF
BUSINESSES THAT MAY PARTICIPATE IN THE START-UP  NY  PROGRAM  AUTHORIZED
UNDER  ARTICLE  21  OF  THE  ECONOMIC  DEVELOPMENT LAW IN NASSAU COUNTY,
SUFFOLK COUNTY, WESTCHESTER  COUNTY,  OR  ANY  PROVISIONS  OF  SUCH  LAW
REGARDING NEW YORK CITY.
  A.  THE  COMMISSIONER OF ECONOMIC DEVELOPMENT MAY APPROVE ELEVEN PLANS
FOR CLUSTERS OF DIGITAL GAME DEVELOPMENT OR DIGITAL GAME SOFTWARE COMPA-
NIES AND PUBLISHERS AND SUPPORT COMPANIES SUBMITTED OR  AMENDED  BY  THE
PRESIDENT  OR  CHIEF  EXECUTIVE  OFFICER OF ANY STATE UNIVERSITY CAMPUS,
COMMUNITY COLLEGE OR CITY  UNIVERSITY  CAMPUS,  OR  PRIVATE  COLLEGE  OR
UNIVERSITY,  THAT  IS ELIGIBLE TO SPONSOR A TAX-FREE NY AREA PURSUANT TO
SECTIONS 432 AND 435 OF THE  ECONOMIC  DEVELOPMENT  LAW  AND  THAT  ALSO
OFFERS  A  BACHELOR'S OR MASTER'S DEGREE IN GAME DESIGN OR A SPECIALIZA-

S. 6359--C                         401

TION IN GAME PROGRAMMING AS PART OF ITS COMPUTER SCIENCE  BACHELOR'S  OR
MASTER'S  PROGRAM.  SUCH SUBMITTED OR AMENDED PLANS MAY INCLUDE ALL OR A
PORTION OF THE ELIGIBLE LAND OF SUCH STATE UNIVERSITY CAMPUS,  COMMUNITY
COLLEGE  OR CITY UNIVERSITY CAMPUS, OR PRIVATE COLLEGE OR UNIVERSITY. IN
EVERY CASE SUCH PLANS AND THE ELIGIBLE BUSINESSES  THAT  LOCATE  IN  THE
AREA  DESIGNATED  BY  THE PLAN AND APPROVED BY THE COMMISSIONER SHALL BE
DEEMED TO BE PART OF THE START-UP NY PROGRAM, AUTHORIZED BY SUCH ARTICLE
21 OF THE ECONOMIC DEVELOPMENT LAW, AND APPROVED PURSUANT TO  SUCH  LAW.
SUCH APPROVAL SHALL ALSO BE DEEMED SUFFICIENT TO QUALIFY FOR ELIGIBILITY
FOR  TAX  BENEFITS AVAILABLE TO BUSINESSES LOCATED IN A TAX-FREE NY AREA
PURSUANT TO SECTION 39 OF THE TAX LAW AND SUCH OTHER SECTIONS OF LAW  AS
ARE  DESCRIBED  IN  SUCH  SECTION,  PROVIDED THAT SUCH BUSINESS SHALL BE
SUBJECT TO THE REQUIREMENTS OF SUCH SECTION.
  B. APPROVALS OF SUCH PLANS SHALL INCLUDE AT LEAST ONE IN EACH ECONOMIC
DEVELOPMENT REGION OF THE STATE WHERE THERE IS AN APPLICANT, AND TWO  IN
THE NEW YORK CITY ZONE.
  C.  IN  SUCH  PLANS, THE TYPES OF ELIGIBLE BUSINESS OR BUSINESSES THAT
MAY LOCATE ON THAT TAX-FREE NY AREA OR SPACE SHALL INCLUDE DIGITAL  GAME
DEVELOPMENT  AND  DIGITAL  GAME  SOFTWARE  COMPANIES  AND PUBLISHERS AND
SUPPORT COMPANIES, WHICH FOR  PURPOSES  OF  THIS  SUBDIVISION  SHALL  BE
DEEMED TO INCLUDE DATA CENTERS, UTILITIES, MOTION CAPTURE STUDIOS, SOFT-
WARE  AND HARDWARE MANUFACTURERS, GAME-SPECIFIC SCRIPTWRITERS, ANIMATION
AND PROGRAMMING OUTSOURCERS, AUDIO FACILITIES AND RECRUITING AGENCIES OR
SIMILAR SERVICES.
  D. SUCH PLANS MAY INCLUDE, IN ADDITION TO OTHER  ELIGIBLE  BUSINESSES,
PROVISION FOR ONE OR MORE ANCHOR TENANTS THAT ARE SUBSIDIARIES OF OR NEW
VENTURES  OWNED  WHOLLY  OR  IN  PART  BY COMPANIES RESIDENT IN NEW YORK
STATE, NOTWITHSTANDING THAT THEY MAY BE RELATED PERSONS WITHIN THE MEAN-
ING OF SUBDIVISION 8 OF SECTION 431 OF  THE  ECONOMIC  DEVELOPMENT  LAW,
PROVIDED  THAT  THEY MEET THE CRITERIA OF ADDING NET NEW JOBS AS DEFINED
IN SUBDIVISION 5 OF SUCH SECTION AND REQUIRED PURSUANT TO SECTION 433 OF
SUCH LAW.
  E. SUCH PLANS MAY ALSO UTILIZE AN ELIGIBLE  SPACE  THAT  IS  OWNED  OR
CONTROLLED  BY SUCH COLLEGE, CAMPUS, OR UNIVERSITY IN AN URBAN CORE AREA
OR AN AREA DESCRIBED IN PARAGRAPH (B) OF SUBDIVISION 1 OF SECTION 432 OF
THE ECONOMIC DEVELOPMENT LAW, NOTWITHSTANDING  ITS  LOCATION  IN  NASSAU
COUNTY, SUFFOLK COUNTY, OR WESTCHESTER COUNTY, OR IN NEW YORK CITY.
  F.  ANY  SUCH  PLAN  MUST INCLUDE AN AFFILIATION WITH A NEW YORK STATE
INCUBATOR OR NEW YORK STATE INNOVATION HOT SPOT, TO PROVIDE SERVICES  TO
ELIGIBLE COMPANIES THAT LOCATE IN THE TAX-FREE NY AREA.
  G.  SUCH  PLANS  MAY  ALSO  ALLOW  FOR  COLLABORATION OF SUCH COLLEGE,
CAMPUS, OR UNIVERSITY WITH ONE OR  MORE  OTHER  COLLEGES,  CAMPUSES,  OR
UNIVERSITIES.
  H.  IN NO CASE SHALL A PLAN AUTHORIZED PURSUANT TO THIS SECTION EXCEED
THE TOTAL SQUARE FOOTAGE REQUIREMENTS OF PLANS  AUTHORIZED  PURSUANT  TO
SUCH ARTICLE 21 OF THE ECONOMIC DEVELOPMENT LAW, EXCEPT WITH THE PERMIS-
SION OF THE COMMISSIONER OF ECONOMIC DEVELOPMENT.
  I.  FOR  PURPOSES OF THIS SECTION AND SECTION 39-C OF THE TAX LAW, THE
TERMS "COMPETITION" AND "WOULD COMPETE" IN SECTION 440 AND IN ARTICLE 21
OF THE ECONOMIC DEVELOPMENT LAW SHALL BE DEEMED IN THE CASE  OF  DIGITAL
GAME  COMPANIES  TO  REFER  SOLELY  TO THE SAME OR SUBSTANTIALLY SIMILAR
ENTERTAINMENT SOFTWARE.
  7. ANY OTHER PROVISION OF ANY OTHER LAW TO THE CONTRARY  NOTWITHSTAND-
ING,  DIGITAL  GAME  DEVELOPMENT AND DIGITAL GAME SOFTWARE COMPANIES AND
PUBLISHERS SHALL BE DEEMED  ELIGIBLE  BUSINESSES  FOR  THE  PURPOSES  OF

S. 6359--C                         402

SUBSECTIONS  (G)  AND (R) OF SECTION 606 OF THE TAX LAW, AND OF SUBDIVI-
SIONS 12-E AND 12-F OF SECTION 210 OF SUCH LAW.
  8.  THE CORPORATION IS AUTHORIZED, WITHIN AMOUNTS MADE AVAILABLE TO IT
BY APPROPRIATION THEREFOR AND WITH SUCH OTHER PUBLIC AND  PRIVATE  FUNDS
AS SHALL ADDITIONALLY BE MADE AVAILABLE, TO PROVIDE MATCHING GRANT FUNDS
TO  COLLEGES,  CAMPUSES, AND UNIVERSITIES WHOSE PLANS HAVE BEEN APPROVED
PURSUANT TO SUBDIVISION 6 OF THIS SECTION OR TO NEW YORK  STATE  INCUBA-
TORS  OR  NEW  YORK STATE INNOVATION HOT SPOTS WHICH ARE AFFILIATED WITH
SUCH PLANS IN AMOUNTS NOT TO EXCEED ONE  HUNDRED  THOUSAND  DOLLARS  PER
SCHOOL  OR  INCUBATOR  FOR HIGH-SPEED INTERNET SERVICES AND DEVELOPMENT.
THIS SUBDIVISION SHALL EXPIRE AND BE OF NO FURTHER EFFECT ON  AND  AFTER
JANUARY 1, 2015.
  9.  THE  CORPORATION  AND  THE NEW YORK STATE DIGITAL GAME DEVELOPMENT
ADVISORY BOARD SHALL DEVELOP A PLAN FOR A  DIGITAL  GAME  AND  INCUBATOR
OUTREACH  PROGRAM  TO DEVELOP GAMES THAT ADDRESS COURSE REQUIREMENTS FOR
USE IN SCHOOLS IN THIS STATE. SUCH PLAN SHALL BE PRESENTED TO THE GOVER-
NOR AND THE LEGISLATURE NOT LATER THAN JANUARY 30, 2015.
  10. THE CORPORATION SHALL PREPARE AN ANNUAL REPORT TO THE GOVERNOR AND
THE LEGISLATURE. SUCH REPORT SHALL INCLUDE THE FOLLOWING DATA CONCERNING
ACTIVITIES PURSUANT TO THIS SECTION: THE NUMBER OF BUSINESS  APPLICANTS,
NUMBER OF BUSINESSES APPROVED, THE NAMES AND ADDRESSES OF THE BUSINESSES
LOCATED  WITHIN THE TAX-FREE NY AREAS, TOTAL AMOUNT OF BENEFITS DISTRIB-
UTED, BENEFITS RECEIVED PER BUSINESS, NUMBER OF NET  NEW  JOBS  CREATED,
NET  NEW  JOBS  CREATED  PER  BUSINESS, NEW INVESTMENT PER BUSINESS, THE
TYPES OF INDUSTRIES  REPRESENTED  AND  SUCH  OTHER  INFORMATION  AS  THE
COMMISSIONER  DETERMINES  NECESSARY  TO  EVALUATE  THE  PROGRESS  OF THE
PROGRAM. THE REPORT SHALL ALSO PROVIDE INFORMATION  AND  RECOMMENDATIONS
ON  THE  NUMBER  OF PERSONS NEEDED TO APPROPRIATELY STAFF THE PROGRAM BY
THE CORPORATION.  THE FIRST REPORT SHALL BE DUE JANUARY THIRTY-FIRST  OF
THE SECOND CALENDAR YEAR AFTER THIS SECTION SHALL HAVE TAKEN EFFECT.
  S  4. The state finance law is amended by adding a new section 99-v to
read as follows:
  S 99-V. NEW YORK STATE DIGITAL GAME DEVELOPMENT FUND.    1.  THERE  IS
HEREBY  ESTABLISHED  IN  THE  JOINT  CUSTODY  OF THE COMPTROLLER AND THE
COMMISSIONER OF ECONOMIC DEVELOPMENT AN  ACCOUNT  IN  THE  MISCELLANEOUS
SPECIAL  REVENUE  FUND  TO  BE KNOWN AS THE "NEW YORK STATE DIGITAL GAME
DEVELOPMENT FUND".
  2. SUCH ACCOUNT SHALL CONSIST OF MONIES DEPOSITED  INTO  IT  FROM  THE
REQUIREMENTS  ESTABLISHED PURSUANT TO PARAGRAPH E OF SUBDIVISION FIVE OF
SECTION SIXTEEN-W OF THE URBAN DEVELOPMENT CORPORATION ACT.
  3. ALL MONIES IN THE ACCOUNT SHALL BE AVAILABLE, SUBJECT TO  APPROPRI-
ATION,  FOR  THE  PAYMENT OF EXPENSES AND PRIZES OF THE NEW YORK DIGITAL
GAME DEVELOPMENT COMPETITION.
  S 5. The tax law is amended by adding a new section 39-c  to  read  as
follows:
  S 39-C. DIGITAL GAME DEVELOPMENT TAX CREDIT.  (A) ALLOWANCE OF CREDIT.
A  TAXPAYER  SUBJECT  TO  TAX UNDER ARTICLE NINE-A OR TWENTY-TWO OF THIS
CHAPTER SHALL BE ALLOWED A CREDIT AGAINST SUCH TAX.  THE AMOUNT  OF  THE
CREDIT, ALLOWABLE FOR FOUR CONSECUTIVE TAX YEARS, IS EQUAL TO THE AMOUNT
DETERMINED  BY  THE  COMMISSIONER OF ECONOMIC DEVELOPMENT, BUT SHALL NOT
EXCEED NINETEEN  PERCENT  OF  QUALIFIED  EXPENDITURES,  INCLUDING  BONUS
AMOUNTS AS HEREIN PROVIDED.  THE CREDIT ALLOWED UNDER THIS SECTION SHALL
BE ALLOWED IN ADDITION TO ANY OTHER CREDITS ALLOWED UNDER THIS CHAPTER.
  (B)  ELIGIBILITY.  TO BE ELIGIBLE FOR THE DIGITAL GAME DEVELOPMENT TAX
CREDIT, THE TAXPAYER SHALL BE  AN  ANCHOR  TENANT  PURSUANT  TO  SECTION
SIXTEEN-W  OF  THE URBAN DEVELOPMENT CORPORATION ACT AND SHALL HAVE BEEN

S. 6359--C                         403

ISSUED AN APPROVED CERTIFICATE OF ELIGIBILITY  BY  THE  COMMISSIONER  OF
ECONOMIC  DEVELOPMENT  PURSUANT  TO  SUBDIVISION  FIVE  OF  SECTION FOUR
HUNDRED THIRTY-THREE OF THE ECONOMIC DEVELOPMENT LAW. THE TAXPAYER SHALL
BE  ALLOWED  TO  CLAIM  ONLY THE AMOUNT LISTED ON THE CERTIFICATE OF TAX
CREDIT FOR EACH TAXABLE YEAR.
  (C) THE CREDIT AUTHORIZED BY THIS SECTION SHALL BE FOR FIFTEEN PERCENT
OF QUALIFIED EXPENDITURES. THE TAXPAYER SHALL RECEIVE AN ADDITIONAL FOUR
PERCENT OF QUALIFIED EXPENDITURES IF MORE THAN  TWENTY-FIVE  PERCENT  OF
SUCH  EXPENDITURES  OCCURRED FOR PURCHASE OF SERVICES, GOODS, AND USE OF
PERSONNEL FROM WITHIN THE CLUSTER OF DIGITAL GAME DEVELOPMENT OR DIGITAL
GAME SOFTWARE COMPANIES AND PUBLISHERS AND SUPPORT COMPANIES  WHERE  THE
ANCHOR TENANT IS RESIDENT.
  (D)  CREDITS  AUTHORIZED  PURSUANT  TO THIS SECTION SHALL NOT EXCEED A
TOTAL  AMOUNT  OF  SIX  MILLION  DOLLARS  FOR  ANY  INDIVIDUAL  ELIGIBLE
PRODUCTION  UNDERTAKEN  BY  ANY  SUCH  ANCHOR  TENANT TAXPAYER AND SHALL
EXPIRE FOUR YEARS AFTER THE DATE ON WHICH THE TAX CREDITS ARE ISSUED. IF
THE AMOUNT OF THE CREDIT AND CARRYOVERS OF  SUCH  CREDIT  ALLOWED  UNDER
THIS  SECTION  FOR  ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR
SUCH YEAR, ANY AMOUNT OF CREDIT OR CARRYOVERS OF SUCH  CREDIT  THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING
YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.
  (E) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER, THE COMMISSIONER OR
THE COMMISSIONER'S DESIGNEE IS AUTHORIZED TO RELEASE THE  NAME  OF  EACH
TAXPAYER CLAIMING THE CREDIT AND THE AMOUNT OF THE CREDIT EARNED BY EACH
TAXPAYER.  HOWEVER, IF THE TAXPAYER CLAIMS A CREDIT BECAUSE THE TAXPAYER
IS  A  MEMBER OF A LIMITED LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP
OR A SHAREHOLDER IN A SUBCHAPTER S  CORPORATION,  ONLY  THE  NAME  OF  A
LIMITED  LIABILITY  COMPANY, PARTNERSHIP OR SUBCHAPTER S CORPORATION AND
THE AMOUNT OF CREDIT EARNED BY THAT ENTITY MAY BE RELEASED.
  (F) CREDIT RECAPTURE. IF A CERTIFICATE OF ELIGIBILITY  ISSUED  BY  THE
COMMISSIONER  OF  ECONOMIC  DEVELOPMENT IS REVOKED, THE AMOUNT OF CREDIT
DESCRIBED IN THIS SECTION AND CLAIMED BY  THE  TAXPAYER  PRIOR  TO  THAT
REVOCATION  SHALL  BE ADDED BACK TO TAX IN THE TAXABLE YEAR IN WHICH ANY
SUCH REVOCATION BECOMES FINAL.
  (G) ALLOCATION OF CREDIT. THE AGGREGATE AMOUNT OF TAX CREDITS  ALLOWED
UNDER  THIS  SUBDIVISION,  IN  ANY  CALENDAR  YEAR SHALL BE FIVE MILLION
DOLLARS IN TWO THOUSAND FIFTEEN, TWO THOUSAND SIXTEEN AND  TWO  THOUSAND
SEVENTEEN, AND SEVEN MILLION DOLLARS IN TWO THOUSAND EIGHTEEN AND THERE-
AFTER.  SUCH  AGGREGATE  AMOUNT OF CREDITS SHALL BE ALLOCATED BASED UPON
THE DATE OF FILING AN APPLICATION FOR ALLOCATION OF CREDIT. IF THE TOTAL
AMOUNT OF ALLOCATED CREDITS APPLIED FOR IN ANY PARTICULAR  YEAR  EXCEEDS
THE  AGGREGATE  AMOUNT  OF  TAX CREDITS ALLOWED FOR SUCH YEAR UNDER THIS
SECTION, SUCH EXCESS SHALL BE TREATED AS HAVING BEEN APPLIED FOR ON  THE
FIRST DAY OF THE SUBSEQUENT YEAR.
  S  6.  Severability.  If any clause, sentence, paragraph, subdivision,
section or part of this act shall be adjudged by any court of  competent
jurisdiction  to  be invalid, such judgment shall not affect, impair, or
invalidate the remainder thereof, but shall be confined in its operation
to the clause, sentence, paragraph, subdivision, section or part thereof
directly involved in the controversy in which such judgment  shall  have
been rendered. It is hereby declared to be the intent of the legislature
that  this  act  would have been enacted even if such invalid provisions
had not been included herein.
  S 7. This act shall take effect on the ninetieth day  after  it  shall
have  become  a  law;  provided that section five of this act shall take
effect January 1, 2015.

S. 6359--C                         404

                                PART XXX

  Section  1.  Subdivision 8 of section 16-v of section 1 of chapter 174
of the laws of 1968 constituting the urban development corporation  act,
as  added  by  section 1 of part C of chapter 59 of the laws of 2013, is
amended to read as follows:
  8. (A) New York state innovation hot spots may certify  clients  which
meet  the  requirements of subdivision nine of this section as qualified
entities eligible for New York state innovation  hot  spot  program  tax
benefits  pursuant  to  section  thirty-eight  of  the tax law. Under no
circumstance may business enterprises of incubators  designated  as  New
York  state  incubators  under  paragraph (b) of subdivision one of this
section be eligible for tax benefits under section thirty-eight  of  the
tax law.
  (B) BUSINESS ENTERPRISES DESIGNATED AS NEW YORK STATE INCUBATORS UNDER
PARAGRAPH  (B)  OF  SUBDIVISION ONE OF THIS SECTION OR AS NEW YORK STATE
INNOVATION HOT SPOTS MAY CERTIFY CLIENTS WHICH MEET THE REQUIREMENTS  OF
QUALIFIED   ENTITIES   ELIGIBLE   FOR   TAX   BENEFITS   UNDER   SECTION
THIRTY-EIGHT-A OF THE TAX LAW.  SUCH CERTIFICATION AND  ANY  CHANGES  IN
CERTIFICATION  SHALL  BE  FILED WITH THE CORPORATION, WHICH SHALL NOTIFY
THE DEPARTMENT OF TAXATION AND FINANCE. CERTIFICATIONS REGARDING INVEST-
MENTS AND TAX CREDITS REQUIRED TO BE PROVIDED TO NEW YORK STATE  INCUBA-
TORS  UNDER  SECTION  THIRTY-EIGHT-A  OF THE TAX LAW SHALL ALSO BE FILED
WITH THE CORPORATION. A QUALIFIED ENTITY  SHALL  SURRENDER  ITS  CERTIF-
ICATION IF IT LEAVES OR GRADUATES THE INCUBATOR PROGRAM OR IF IT IS SOLD
OR  OTHERWISE  DISPOSED  OF,  OR LEAVES THE STATE, OR IF ITS CERTIFICATE
OTHERWISE EXPIRES.
  S 2. The tax law is amended by adding a new section 38-a  to  read  as
follows:
  S  38-A.  NEW  YORK STATE INCUBATOR AND INNOVATION HOTSPOT PROGRAM TAX
BENEFITS. (A) A BUSINESS OR OWNER OF A BUSINESS IN THE CASE OF  A  BUSI-
NESS  TAXED AS A PARTNERSHIP OR NEW YORK S CORPORATION, THAT IS A QUALI-
FIED ENTITY AND MEETS THE REQUIREMENTS OF THIS SECTION, IS ELIGIBLE  FOR
THE TAX BENEFITS DESCRIBED IN THIS SECTION. AS USED IN THIS CHAPTER,
  (1) "NEW YORK STATE INCUBATOR" AND "NEW YORK STATE INNOVATION HOTSPOT"
HAVE  THE  SAME MEANING AS UNDER SECTION SIXTEEN-V OF THE NEW YORK STATE
URBAN DEVELOPMENT CORPORATION ACT.
  (2) "QUALIFIED ENTITY" MEANS A  BUSINESS  ENTERPRISE  THAT  MEETS  THE
APPLICABLE  REQUIREMENTS  OF THIS SECTION AND PARAGRAPHS (I) AND (II) OF
SUBDIVISION NINE OF SECTION SIXTEEN-V OF THE NEW YORK STATE URBAN DEVEL-
OPMENT CORPORATION ACT, AND INCLUDES A CORPORATION, A LIMITED  LIABILITY
CORPORATION,  PARTNERSHIP,  OR  OTHER  BUSINESS  ENTITY,  BUT NOT A SOLE
PROPRIETOR.
  (3) "RELATED PERSON" MEANS A "RELATED PERSON" AS SUCH TERM IS  DEFINED
IN  SUBDIVISION EIGHT OF SECTION FOUR HUNDRED THIRTY-ONE OF THE ECONOMIC
DEVELOPMENT LAW.
  (4) "AFFILIATES" MEANS THOSE ENTITIES THAT ARE  MEMBERS  OF  THE  SAME
AFFILIATED  GROUP  (AS  DEFINED  IN  SECTION FIFTEEN HUNDRED FOUR OF THE
INTERNAL REVENUE CODE) AS THE ENTITY.
  (5) "QUALIFIED EMERGING TECHNOLOGY COMPANY" HAS THE SAME MEANING AS IN
PARAGRAPH (C) OF SUBDIVISION ONE OF SECTION THIRTY-ONE HUNDRED TWO-E  OF
THE  PUBLIC  AUTHORITIES  LAW,  EXCEPT  THAT  IT ALSO HAS FEWER THAN ONE
HUNDRED EMPLOYEES OF WHOM AT LEAST SEVENTY-FIVE PERCENT ARE  LOCATED  IN
NEW  YORK  STATE, AND SHALL HAVE INVESTED RESEARCH AND DEVELOPMENT FUNDS
IN AN AMOUNT EQUAL TO SIX PERCENT OR MORE OF NET SALES DURING ITS  TAXA-
BLE YEAR.

S. 6359--C                         405

  (B)  ANGEL  INVESTMENT  CREDIT.  (1)  A  QUALIFIED  INVESTOR THAT IS A
TAXPAYER UNDER ARTICLE TWENTY-TWO OF THIS CHAPTER  SHALL  BE  ALLOWED  A
CREDIT  AGAINST  SUCH  TAX  TO  BE COMPUTED AS HEREINAFTER PROVIDED. THE
AMOUNT OF THE CREDIT SHALL BE EQUAL TO THIRTY PERCENT OF EACH  QUALIFIED
INVESTMENT IN A QUALIFIED ENTITY MADE DURING THE TAXABLE YEAR.
  (I) A QUALIFIED INVESTMENT IS AN INVESTMENT OF TWO HUNDRED FIFTY THOU-
SAND DOLLARS OR LESS, INCLUDING AT LEAST TWENTY-FIVE THOUSAND DOLLARS IN
CASH  OR  CASH EQUIVALENT, COMPRISED OF EQUITY SECURITY IN COMMON STOCK,
PREFERRED STOCK, AN INTEREST  IN  A  PARTNERSHIP  OR  LIMITED  LIABILITY
COMPANY,  A  SECURITY THAT IS CONVERTIBLE INTO AN EQUITY SECURITY OR ANY
OTHER EQUITY SECURITY DETERMINED AS ELIGIBLE BY THE  COMMISSIONER  AFTER
CONSULTATION  WITH THE DEPARTMENT OF ECONOMIC DEVELOPMENT. AN INVESTMENT
WHICH COMPRISES ACQUISITION OR CONTROL OF THE ELIGIBLE ENTITY OR  ACQUI-
SITION  OF  THE ASSETS AND LIABILITIES OF SUCH ELIGIBLE ENTITY, OR WHICH
IS NOT REPORTED TO THE NEW YORK STATE INCUBATOR OF  WHICH  THE  ELIGIBLE
ENTITY  IS  A  CLIENT WITHIN SIXTY CALENDAR DAYS AFTER THE INVESTMENT IS
MADE WILL NOT BE DEEMED A QUALIFIED INVESTMENT.
  (II) A  QUALIFIED  INVESTOR,  INCLUDING  THE  AFFILIATES  AND  RELATED
PERSONS  OF  THE  QUALIFIED  INVESTOR, SHALL NOT HAVE OWNED OR POSSESSED
MORE THAN THIRTY PERCENT OF THE TOTAL VOTING POWER OF ALL EQUITY SECURI-
TIES OF THE QUALIFIED ENTITY PRIOR TO THE INVESTMENT.
  (III) A QUALIFIED ENTITY, IN ADDITION TO  REQUIREMENTS  SET  FORTH  BY
SUBDIVISION (A) OF THIS SECTION, MUST ALSO:
  A.  HAVE  ASSETS OF LESS THAN TEN MILLION DOLLARS, EXCLUSIVE OF QUALI-
FIED INVESTMENTS. AS USED IN THIS SUBPARAGRAPH, THE TERM  "ASSET"  MEANS
ANY  OWNED  PROPERTY  THAT  HAS  VALUE  INCLUDING FINANCIAL AND PHYSICAL
ASSETS, BUT NOT INTELLECTUAL PROPERTY;
  B. CURRENTLY BE CERTIFIED AS A CLIENT OF A NEW YORK STATE INCUBATOR OR
NEW YORK STATE INNOVATION HOTSPOT, AND HAVE BEEN A CLIENT OF SUCH  INCU-
BATOR OR HOTSPOT FOR FOUR YEARS OR LESS;
  C.  MAINTAIN  AT LEAST SEVENTY-FIVE PERCENT OF ITS OPERATIONS AND FULL
TIME COMPENSATED PERSONNEL (IF ANY) IN THIS STATE.
  (2) A QUALIFIED ENTITY MAY RECEIVE UP TO ONE MILLION DOLLARS IN QUALI-
FIED INVESTMENTS BY QUALIFIED INVESTORS IN ANY CALENDAR YEAR.
  (3) A QUALIFIED INVESTOR MAY CLAIM ONE-THIRD OF THE  CREDIT  RESULTING
FROM  ITS  QUALIFIED  INVESTMENT  IN A TAXABLE YEAR FOR THREE SUCCESSIVE
YEARS. IF THE AMOUNT OF THE CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED
UNDER THIS SECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S  TAX
FOR  SUCH  YEAR,  ANY  AMOUNT OF CREDIT OR CARRYOVERS OF SUCH CREDIT NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED  OVER  TO  THE  FOLLOWING
YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS. A
QUALIFIED  INVESTOR SHALL CERTIFY TO THE COMMISSIONER THAT THE QUALIFIED
INVESTMENT WILL NOT BE SOLD, TRANSFERRED, TRADED, OR DISPOSED OF  DURING
THE THREE YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED,
SEPARATE  FROM  ANY  SALE  OR  OTHER DISPOSITION OF THE ELIGIBLE ENTITY.
QUALIFIED INVESTORS SHALL INCLUDE A COPY OF THE CERTIFICATE OF ELIGIBIL-
ITY WITH THEIR TAX RETURN.
  (4) CREDIT RECAPTURE. IF A CERTIFICATE OF ELIGIBILITY  IS  REVOKED  OR
SURRENDERED  BECAUSE  THE  QUALIFIED ENTITY HAS BEEN SOLD, EXCHANGED, OR
TRANSFERRED, THE AMOUNT OF CREDIT  DESCRIBED  IN  THIS  SUBDIVISION  AND
CLAIMED  BY THE TAXPAYER PRIOR TO THAT REVOCATION SHALL BE ADDED BACK TO
TAX IN THE TAXABLE YEAR IN WHICH  ANY  SUCH  REVOCATION  BECOMES  FINAL.
THIS PROVISION SHALL NOT APPLY IN THE CASE OF A BANKRUPTCY.
  (5)  ALLOCATION OF CREDIT. THE AGGREGATE AMOUNT OF TAX CREDITS ALLOWED
UNDER THIS SUBDIVISION, IN ANY  CALENDAR  YEAR  SHALL  BE  FIVE  MILLION
DOLLARS  IN  TWO THOUSAND FIFTEEN, TWO THOUSAND SIXTEEN AND TWO THOUSAND

S. 6359--C                         406

SEVENTEEN, AND SEVEN MILLION DOLLARS IN TWO THOUSAND EIGHTEEN AND THERE-
AFTER. SUCH AGGREGATE AMOUNT OF CREDITS SHALL BE  ALLOCATED  BASED  UPON
THE DATE OF FILING AN APPLICATION FOR ALLOCATION OF CREDIT. IF THE TOTAL
AMOUNT  OF  ALLOCATED CREDITS APPLIED FOR IN ANY PARTICULAR YEAR EXCEEDS
THE AGGREGATE AMOUNT OF TAX CREDITS ALLOWED FOR  SUCH  YEAR  UNDER  THIS
SECTION,  SUCH EXCESS SHALL BE TREATED AS HAVING BEEN APPLIED FOR ON THE
FIRST DAY OF THE SUBSEQUENT YEAR.
  (C) RESEARCH AND DEVELOPMENT CREDIT. (1) A QUALIFIED  ENTITY  THAT  IS
ALSO  A  QUALIFIED  EMERGING TECHNOLOGY COMPANY THAT IS A TAXPAYER UNDER
ARTICLE TWENTY-TWO OR ARTICLE NINE-A OF THIS CHAPTER AND IS A CLIENT  OF
A  NEW YORK STATE INCUBATOR OR A NEW YORK STATE INNOVATION HOTSPOT SHALL
BE ALLOWED CREDITS AGAINST  SUCH  TAX  TO  BE  COMPUTED  AS  HEREINAFTER
PROVIDED.
  (2)  THE  RESEARCH  AND  DEVELOPMENT PROPERTY CREDIT SHALL BE EIGHTEEN
PERCENT OF THE COST OR OTHER BASIS FOR FEDERAL INCOME  TAX  PURPOSES  OF
RESEARCH AND DEVELOPMENT PROPERTY ACQUIRED BY THE TAXPAYER AND PLACED IN
SERVICE  DURING  THE TAXABLE YEAR, PROVIDED THAT IT MEETS THE DEFINITION
OF CLAUSE (II) OF SUBPARAGRAPH (B) OF PARAGRAPH TWO OF SUBSECTION (A) OF
SECTION SIX HUNDRED SIX OF THIS CHAPTER AND WOULD QUALIFY FOR  A  CREDIT
UNDER  SECTION 41 OF THE INTERNAL REVENUE CODE.  SUCH PROPERTY SHALL NOT
INCLUDE LAND OR BUILDINGS. THE COSTS, EXPENSES  AND  OTHER  AMOUNTS  FOR
WHICH  A CREDIT IS ALLOWED AND CLAIMED UNDER THIS PARAGRAPH SHALL NOT BE
USED IN THE CALCULATION OF ANY OTHER CREDIT ALLOWED UNDER THIS ARTICLE.
  (3) THE RESEARCH AND DEVELOPMENT TECHNOLOGY EXPENDITURES CREDIT  SHALL
BE NINE PERCENT OF QUALIFIED RESEARCH AND DEVELOPMENT EXPENDITURES, PAID
OR INCURRED BY THE TAXPAYER IN THE TAXABLE YEAR IN EMERGING TECHNOLOGIES
DEFINED  BY  PARAGRAPH  (B)  OF  SUBDIVISION  ONE  OF SECTION THIRTY-ONE
HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW. FOR PURPOSES OF THIS  PARA-
GRAPH,  "QUALIFIED  RESEARCH  AND  DEVELOPMENT  EXPENDITURES"  MEANS THE
EXPENSES OF THE QUALIFIED ENTITY THAT ARE  QUALIFIED  RESEARCH  EXPENSES
UNDER   THE  FEDERAL  RESEARCH  AND  DEVELOPMENT  CREDIT  UNDER  SECTION
FORTY-ONE OF THE INTERNAL REVENUE CODE AND ARE  ATTRIBUTABLE  TO  ACTIV-
ITIES  CONDUCTED  IN  THE STATE. IF THE FEDERAL RESEARCH AND DEVELOPMENT
CREDIT HAS EXPIRED, THEN THE RESEARCH AND DEVELOPMENT EXPENDITURES SHALL
BE CALCULATED AS IF THE FEDERAL RESEARCH AND DEVELOPMENT  CREDIT  STRUC-
TURE AND DEFINITION IN EFFECT IN FEDERAL TAX YEAR TWO THOUSAND NINE WERE
STILL  IN  EFFECT.  SUCH QUALIFIED RESEARCH AND DEVELOPMENT EXPENDITURES
SHALL ALSO INCLUDE COSTS  ASSOCIATED  WITH  THE  PREPARATION  OF  PATENT
APPLICATIONS,  PATENT  APPLICATION  FILING  FEES,  PATENT RESEARCH FEES,
PATENT EXAMINATIONS FEES, PATENT POST ALLOWANCE FEES AND PATENT  MAINTE-
NANCE  FEES,  BUT NOT ADVERTISING OR PROMOTION THROUGH MEDIA OR EXPENSES
FOR LITIGATION OR THE CHALLENGE OF ANOTHER ENTITY'S INTELLECTUAL PROPER-
TY RIGHTS.
  (4) A QUALIFIED ENTITY MAY CLAIM CREDITS UNDER  THIS  SUBDIVISION  FOR
FOUR  CONSECUTIVE  TAXABLE  YEARS, OR FOR SO LONG AS IT IS A CLIENT OF A
NEW YORK STATE INCUBATOR OR A NEW YORK STATE INNOVATION HOTSPOT,  WHICH-
EVER  PERIOD  IS  SHORTER.  IN  NO  CASE  SHALL THE AMOUNT OF THE CREDIT
ALLOWED BY THIS SUBDIVISION TO A TAXPAYER EXCEED TWO HUNDRED FIFTY THOU-
SAND DOLLARS PER YEAR. IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP  OR
SHAREHOLDER  OF  A NEW YORK S CORPORATION, THEN THE LIMIT IMPOSED BY THE
PRECEDING SENTENCE SHALL BE APPLIED AT THE ENTITY  LEVEL,  SO  THAT  THE
AGGREGATE  CREDIT  ALLOWED  TO  ALL THE PARTNERS OR SHAREHOLDERS OF EACH
SUCH ENTITY IN THE TAXABLE YEAR DOES NOT EXCEED TWO HUNDRED FIFTY  THOU-
SAND DOLLARS. IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR
ANY  TAXABLE  YEAR  SHALL  EXCEED  THE TAXPAYER'S TAX FOR SUCH YEAR, THE
EXCESS SHALL BE TREATED AS AN OVERPAYMENT  OF  TAX  TO  BE  CREDITED  OR

S. 6359--C                         407

REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHT-
Y-SIX OF THIS CHAPTER, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID
THEREON.
  (5)  CREDIT  RECAPTURE.  IF A CERTIFICATE OF ELIGIBILITY IS REVOKED OR
SURRENDERED BECAUSE THE QUALIFIED ENTITY HAS BEEN  SOLD,  EXCHANGED,  OR
TRANSFERRED,  THE  AMOUNT  OF  CREDIT  DESCRIBED IN THIS SUBDIVISION AND
CLAIMED BY THE TAXPAYER PRIOR TO THAT REVOCATION SHALL BE ADDED BACK  TO
TAX  IN  THE  TAXABLE  YEAR  IN WHICH ANY SUCH REVOCATION BECOMES FINAL.
THIS PROVISION SHALL NOT APPLY IN THE CASE OF A BANKRUPTCY.
  (6) ALLOCATION OF CREDIT. THE AGGREGATE AMOUNT OF TAX CREDITS  ALLOWED
UNDER  THIS  SECTION, IN ANY CALENDAR YEAR SHALL BE FIVE MILLION DOLLARS
IN TWO THOUSAND FIFTEEN, TWO THOUSAND SIXTEEN AND  TWO  THOUSAND  SEVEN-
TEEN, AND SEVEN MILLION DOLLARS IN TWO THOUSAND EIGHTEEN AND THEREAFTER.
SUCH  AGGREGATE AMOUNT OF CREDITS SHALL BE ALLOCATED BASED UPON THE DATE
OF FILING AN APPLICATION FOR ALLOCATION OF CREDIT. IF THE  TOTAL  AMOUNT
OF  ALLOCATED  CREDITS  APPLIED  FOR  IN ANY PARTICULAR YEAR EXCEEDS THE
AGGREGATE AMOUNT OF  TAX  CREDITS  ALLOWED  FOR  SUCH  YEAR  UNDER  THIS
SECTION,  SUCH EXCESS SHALL BE TREATED AS HAVING BEEN APPLIED FOR ON THE
FIRST DAY OF THE SUBSEQUENT YEAR.
  (7) CROSS-REFERENCES. FOR APPLICATION OF THE TAX BENEFITS PROVIDED FOR
IN THIS SUBDIVISION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  (I) ARTICLE 9-A, SECTION 210, SUBDIVISION 48.
  (II) ARTICLE 22, SECTION 606, SUBSECTION (BBB).
  S 3.  Subsections (yy) and (zz) of section 606  of  the  tax  law,  as
relettered  by section 5 of part H of chapter 1 of the laws of 2003, are
relettered subsections (yyy) and (zzz) and a  new  subsection  (bbb)  is
added to read as follows:
  (BBB)  RESEARCH  AND DEVELOPMENT CREDIT. A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS PROVIDED IN  SECTION  THIRTY-EIGHT-A  OF  THIS
CHAPTER,  AGAINST  THE TAX IMPOSED BY THIS ARTICLE. IF THE AMOUNT OF THE
CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY TAXABLE YEAR  SHALL  EXCEED
THE  TAXPAYER'S  TAX  FOR  SUCH  YEAR, THE EXCESS SHALL BE TREATED AS AN
OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
PROVISIONS  OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED,
HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  S 4. Section 210 of the tax law is amended by adding a new subdivision
48 to read as follows:
  48. RESEARCH AND DEVELOPMENT CREDIT. A TAXPAYER  SHALL  BE  ALLOWED  A
CREDIT,  TO  BE  COMPUTED  AS PROVIDED IN SECTION THIRTY-EIGHT-A OF THIS
CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. IF THE AMOUNT  OF  THE
CREDIT  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL EXCEED
THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS  SHALL  BE  TREATED  AS  AN
OVERPAYMENT  OF  TAX  TO  BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION TEN HUNDRED EIGHTY-SIX OF THIS CHAPTER,  PROVIDED,
HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT-
Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THER-
EON.
  S  5. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new clause  (xxxvii)  to  read  as
follows:

(XXXVII) RESEARCH AND                AMOUNT OF CREDIT
DEVELOPMENT  CREDIT                  UNDER SUBDIVISION
UNDER SUBSECTION (BBB)               FORTY-EIGHT OF
                                     SECTION TWO HUNDRED TEN

S. 6359--C                         408

  S  6.  Paragraph (a) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 19 to read as follows:
  (19)  ANY  OTHER  PROVISION  OF ANY OTHER LAW TO THE CONTRARY NOTWITH-
STANDING, FOR QUALIFIED PROPERTY AS DESCRIBED IN SECTION 167, 168 OR 179
OF THE INTERNAL REVENUE CODE WHICH WAS ACQUIRED BY AN ENTITY  DESIGNATED
AS  A  NEW  YORK  STATE  INCUBATOR  OR NEW YORK STATE INNOVATION HOTSPOT
PURSUANT TO SECTION SIXTEEN-V OF THE URBAN DEVELOPMENT CORPORATION  ACT,
OR  BY A TAXPAYER WHICH IS CURRENTLY, OR WHICH WAS A TENANT IN OR CLIENT
OF SUCH NEW YORK STATE INCUBATOR OR HOTSPOT  BUT  GRADUATED  WITHIN  THE
PREVIOUS  TWO  YEARS,  THAT  WAS PLACED IN SERVICE DURING A TAXABLE YEAR
BEGINNING WITH A TAXABLE YEAR DURING WHICH THE TAXPAYER WAS A TENANT  IN
OR  CLIENT  OF A NEW YORK STATE INCUBATOR OR HOTSPOT OR WITHIN TWO YEARS
OF GRADUATION THEREFROM AND ENDING ON THE FIFTH TAXABLE YEAR THEREAFTER,
THE TAXPAYER MAY ELECT TO DEDUCT DEPRECIATION FOR SUCH  PROPERTY  IN  AN
AMOUNT  THAT  IS EQUAL TO ONE HUNDRED PERCENT OF THE DEPRECIATION OF THE
QUALIFIED PROPERTY FOR THE TOTAL OF ITS USEFUL LIFE THAT WOULD OTHERWISE
BE ALLOWED PURSUANT TO SUCH SECTION 167, 168  OR  179  OF  THE  INTERNAL
REVENUE  CODE,  PROVIDED  THAT FOR ANY QUALIFIED PROPERTY FOR WHICH SUCH
TAXPAYER DOES NOT MAKE SUCH ELECTION, THE TAXPAYER SHALL BE ALLOWED  THE
DEPRECIATION  DEDUCTION  ALLOWED  PURSUANT TO SECTION 167, 168 OR 179 OF
THE INTERNAL REVENUE CODE. A TAXPAYER WHO ELECTS TO DEDUCT  DEPRECIATION
IN AN AMOUNT THAT IS EQUAL TO ONE HUNDRED PERCENT OF THE COST OF PROPER-
TY  PLACED  IN  SERVICE  DURING THE TAXABLE YEAR MAY NOT CLAIM ANY OTHER
DEDUCTION ON THE COST OF SUCH PROPERTY. IF PROPERTY  ON  WHICH  DEPRECI-
ATION HAS BEEN TAKEN IS DISPOSED OF PRIOR TO THE END OF ITS USEFUL LIFE,
THE  TAXPAYER  SHALL  IN THE YEAR OF DISPOSITION ADD BACK THE DIFFERENCE
BETWEEN THE DEPRECIATION TAKEN AND THE DEPRECIATION  ALLOWABLE  PURSUANT
TO SECTION 167 OF THE INTERNAL REVENUE CODE FOR EACH YEAR OF THE REMAIN-
ING USEFUL LIFE OF THE PROPERTY.
  S  7. Paragraph (o) of subdivision 9 of section 208 of the tax law, as
added by section 3 of part O3 of chapter 62 of  the  laws  of  2003,  is
amended to read as follows:
  (o) For taxable years beginning after December thirty-first, two thou-
sand  two,  in the case of qualified property described in paragraph two
of subsection k of section 168 of the internal revenue code, other  than
qualified  resurgence  zone  property described in paragraph (q) of this
subdivision, and other than qualified New  York  Liberty  Zone  property
described  in  paragraph  two  of  subsection  b of section 1400L of the
internal revenue code (without regard to clause (i) of subparagraph  (C)
of  such paragraph), which was placed in service on or after June first,
two thousand three, AND OTHER THAN PROPERTY ACQUIRED BY A NEW YORK STATE
INCUBATOR OR NEW YORK STATE INNOVATION HOTSPOT  DESIGNATED  PURSUANT  TO
SECTION  SIXTEEN-V  OF  THE  URBAN  DEVELOPMENT CORPORATION ACT, OR BY A
TAXPAYER WHICH IS CURRENTLY, OR WHICH WAS A  CLIENT  OF  SUCH  NEW  YORK
STATE INCUBATOR OR HOTSPOT DURING A PERIOD OF FIVE TAXABLE YEARS, BEGIN-
NING  WITH THE FIRST TAXABLE YEAR DURING WHICH THE TAXPAYER WAS A TENANT
IN OR CLIENT OF SUCH NEW YORK STATE INCUBATOR OR  WITHIN  TWO  YEARS  OF
GRADUATION  THEREFROM,  a taxpayer shall be allowed with respect to such
property the depreciation deduction allowable under section 167  of  the
internal revenue code as such section would have applied to such proper-
ty had it been acquired by the taxpayer on September tenth, two thousand
one.
  S  8.  Section  16-v  of  section 1 of chapter 174 of the laws of 1968
constituting the urban development corporation act is amended by  adding
two new subdivisions 6-a and 6-b to read as follows:

S. 6359--C                         409

  6-A.  PROCUREMENT.  A CLIENT OF A NEW YORK STATE INCUBATOR OR NEW YORK
STATE INNOVATION HOTSPOT DESIGNATED PURSUANT TO THIS  SECTION  SHALL  BE
DEEMED  A  SMALL BUSINESS CONCERN PURSUANT TO SUBDIVISION SIX OF SECTION
ONE HUNDRED SIXTY-THREE AND PARAGRAPH N OF SUBDIVISION  TWO  OF  SECTION
ONE  HUNDRED  SIXTY-ONE  OF THE STATE FINANCE LAW. THE CORPORATION SHALL
COLLABORATE WITH THE COMMISSIONER OF THE OFFICE OF GENERAL SERVICES, AND
THE COMMISSIONER OF THE DEPARTMENT OF ECONOMIC  DEVELOPMENT,  WHO  SHALL
USE  HIS OR HER MEMBERSHIP ON THE STATE PROCUREMENT COUNCIL, TO ADVANCE,
TARGET, AND DEVELOP PROCUREMENT PROGRAMS FOR THE  PURCHASE  OF  SERVICES
AND COMMODITIES, INCLUDING TECHNOLOGIES OR COMMODITIES THAT ARE RECYCLED
OR  REMANUFACTURED,  TOWARD  CLIENTS  OF  NEW YORK STATE INCUBATORS. THE
CORPORATION SHALL ADDITIONALLY, THROUGH MEMBERSHIP ON THE STATE PROCURE-
MENT COUNCIL AND COLLABORATION WITH THE CORPORATION OF GENERAL  SERVICES
AND OTHER STATE AGENCIES, DEVELOP OPPORTUNITIES FOR TEAMING ON CONTRACTS
BETWEEN  SMALL  BUSINESS  CONCERNS  WHICH  ARE CLIENTS OF NEW YORK STATE
INCUBATORS OR NEW YORK STATE  INNOVATION  HOTSPOTS  AND  OTHER  BUSINESS
ENTITIES  WHICH  MAY  PROVIDE  RESOURCES  OR  CREDIT  NECESSARY  FOR THE
SUCCESSFUL COMPLETION OF CONTRACT  REQUIREMENTS  FOR  SUCH  COMMODITIES,
SERVICES, OR TECHNOLOGIES BY SUCH SMALL BUSINESS CONCERNS.
  6-B. INCUBATORS AS EDUCATIONAL ENTITIES. REAL PROPERTY OWNED OR LEASED
BY A NEW YORK STATE INCUBATOR OR NEW YORK STATE INNOVATION HOTSPOT WHICH
IS  A  NONPROFIT  ORGANIZATION  HAVING  TAX  EXEMPT STATUS UNDER SECTION
501(C)(3) OF THE INTERNAL REVENUE CODE, OR WHICH IS  A  NEW  YORK  STATE
INCUBATOR  OR NEW YORK STATE INNOVATION HOTSPOT OWNED AND SPONSORED BY A
NONPROFIT ORGANIZATION HAVING SUCH TAX EXEMPT STATUS, OR WHICH IS AFFIL-
IATED WITH A COLLEGE CHARTERED BY THE REGENTS OF THE STATE OF  NEW  YORK
OR  A  COLLEGE INCORPORATED BY SPECIAL ACT OF THE LEGISLATURE, AND WHICH
IS USED FOR THE PURPOSES DESCRIBED IN THIS SECTION OF TRAINING,  EDUCAT-
ING,  MENTORING,  AND DEVELOPING CLIENT ENTREPRENEURS AND BUSINESS ENTI-
TIES, WHICH ARE THE CRITERIA FOR DESIGNATION OF A PROGRAM AS A NEW  YORK
STATE INCUBATOR OR NEW YORK STATE INNOVATION HOTSPOT, SHALL BE DEEMED TO
BE  PROPERTY  OF AN EDUCATIONAL CORPORATION FOR PURPOSES OF SECTION FOUR
HUNDRED TWENTY-A OF THE REAL PROPERTY TAX LAW, INCLUDING ANY CLASSROOMS,
CONFERENCE ROOMS, LABORATORY, MEETING SPACE, ADMINISTRATION AREA, KITCH-
EN AREA, PARKING, STORAGE, OR OTHER AREA  WHICH  IS  USED  PRIMARILY  TO
PROVIDE DIRECT AND INDIRECT SERVICES TO RESIDENT CLIENTS OF SUCH FACILI-
TY,  AND  INCLUDING  SPACE  FOR  RESIDENT  CLIENTS OFFICES PURSUANT TO A
LICENSE OR LEASE BETWEEN SUCH INCUBATOR AND RESIDENT  CLIENTS,  NOTWITH-
STANDING  THAT  SUCH RESIDENT CLIENTS MAY, OR MAY NOT BE, NOT-FOR-PROFIT
ORGANIZATIONS. ANY PORTION OF SUCH REAL  PROPERTY  WHICH  IS  LEASED  OR
LICENSED  TO  AN  INDIVIDUAL  OR BUSINESS ENTITY WHICH IS NOT A RESIDENT
CLIENT OF THE NEW YORK STATE INCUBATOR  OR  NEW  YORK  STATE  INNOVATION
HOTSPOT  OR  THE PROGRAM DESCRIBED IN THIS SUBDIVISION WHICH IS ELIGIBLE
TO RECEIVE OR IS RECEIVING  STABILIZATION  GRANTS,  OR  WHICH  DOES  NOT
OTHERWISE  MEET  THE  REQUIREMENTS  OF  SUBDIVISION  ONE OF SECTION FOUR
HUNDRED TWENTY-A OF THE REAL PROPERTY TAX LAW, SHALL BE SUBJECT  TO  THE
PROVISIONS  OF  SUBDIVISION  TWO OF SECTION FOUR HUNDRED TWENTY-A OF THE
REAL PROPERTY TAX LAW.
  S 9. Subdivision 12-c of section 66 of  the  public  service  law,  as
added  by  chapter  686  of  the laws of 1986, and as further amended by
section 15 of part GG of chapter 63 of the laws of 2000, is  amended  to
read as follows:
  12-c.  Notwithstanding any other provision of law, upon application of
a gas or electric  corporation,  the  commission  shall  authorize  such
corporation  to  charge  a  special empire zone rate equal to the incre-
mental cost of providing service to customers certified as eligible  for

S. 6359--C                         410

such  rate  pursuant to article eighteen-B of the general municipal law,
OR AN INCUBATOR RATE EQUAL TO THE INCREMENTAL COST OF PROVIDING  SERVICE
TO  CUSTOMERS  TO THOSE ENTITIES DESIGNATED AS NEW YORK STATE INCUBATORS
OR  NEW  YORK STATE INNOVATION HOTSPOTS PURSUANT TO SECTION SIXTEEN-V OF
THE URBAN DEVELOPMENT CORPORATION ACT, AND TO CLIENTS OF SUCH  INCUBATOR
PROGRAMS  AND  FOR  TWO  SUCCESSIVE CALENDAR YEARS AFTER THEY SHALL HAVE
GRADUATED FROM SUCH INCUBATOR PROGRAMS, SUCH CLIENTS TO BE DESIGNATED BY
THE INCUBATORS.
  S 10. This act shall take effect January 1, 2015.

                                PART YYY

  Section 1. Article 2-A of the public housing law, as added by  section
1 of part CC of chapter 63 of the laws of 2000, subdivision 4 of section
22  as amended by section 2 of part J of chapter 59 of the laws of 2012,
is amended to read as follows:
                               ARTICLE 2-A
               NEW YORK STATE LOW INCOME AND MIDDLE INCOME
                       HOUSING TAX CREDIT PROGRAM
Section 21. Definitions.
        22. Allowance of credit, amount and limitations.
        23. Project monitoring.
        24. Credit recapture.
        25. Regulations, coordination with  federal  low-income  housing
              credit provisions.
  S  21.  Definitions.  1.  (a)  "Applicable  percentage" means, FOR THE
PURPOSES OF AN ELIGIBLE LOW-INCOME BUILDING, the appropriate  percentage
(depending  on  whether a building is new, existing, or federally subsi-
dized) prescribed by the secretary  of  the  treasury  for  purposes  of
section  42  of  the  internal  revenue code AND, FOR THE PURPOSES OF AN
ELIGIBLE MIDDLE-INCOME BUILDING, THIRTY PERCENT OF THE  QUALIFIED  BASIS
OF  THE  BUILDING  AS  DETERMINED PURSUANT TO SECTION 42 OF THE INTERNAL
REVENUE CODE, for the month which is the earlier of:
  (i) the month in which the eligible low-income building OR THE  ELIGI-
BLE MIDDLE-INCOME BUILDING is placed in service, or
  (ii) at the election of the taxpayer,
  (A) the month in which the taxpayer and the commissioner enter into an
agreement with respect to such building (which is binding on the commis-
sioner,  the taxpayer, and all successors in interest) as to the housing
credit dollar amount to be allocated to such building, or
  (B) in the case of any building to which subsection (h)(4)(B) of  such
section  42  applies,  the month in which the tax-exempt obligations are
issued.
  (b) A month may be elected under subparagraph (ii) of paragraph (a) of
this subdivision only if the election is made not later than  the  fifth
day  after  the  close of such month. Such election, once made, shall be
irrevocable.
  (c) If, as of the close of any taxable year in the credit period,  the
qualified  basis  of  an  eligible  low-income  building  OR AN ELIGIBLE
MIDDLE-INCOME BUILDING exceeds such basis as of the close of  the  first
year  of  the credit period, the applicable percentage which shall apply
to  such  excess  shall  be  two-thirds  of  the  applicable  percentage
originally ascribed to such building.
  2. "Compliance period" means, with respect to any building, the period
of  fifteen  taxable  years beginning with the first taxable year of the
credit period with respect to such building.

S. 6359--C                         411

  3. "Credit period" means, with  respect  to  any  eligible  low-income
building  OR  ELIGIBLE MIDDLE-INCOME BUILDING, the period of ten taxable
years beginning with
  (a) the taxable year in which the building is placed in service, or
  (b) at the election of the taxpayer, the succeeding taxable year,
but  only  if  the building is an eligible low-income building as of the
close of the first year of such period. The election under paragraph (b)
of this subdivision, once made, shall be irrevocable.
  4. "Eligibility statement" means a statement issued by the commission-
er certifying that a building is an eligible low-income building  OR  AN
ELIGIBLE  MIDDLE-INCOME  BUILDING.  Such  statement  shall set forth the
taxable year in which such building is placed  in  service,  the  dollar
amount  of  low-income  housing  credit  OR MIDDLE-INCOME HOUSING CREDIT
allocated by the commissioner to such building as provided  in  subdivi-
sion five of section twenty-two of this article, the applicable percent-
age and maximum qualified basis with respect to such building taken into
account  in  determining  such  dollar amount, sufficient information to
identify each such building and the taxpayer or taxpayers  with  respect
to  each  such building, and such other information as the commissioner,
in consultation with the commissioner of  taxation  and  finance,  shall
prescribe.  Such  statement shall be first issued following the close of
the first taxable year in the credit  period,  and  thereafter,  to  the
extent  required  by the commissioner of taxation and finance, following
the close of each taxable year of the compliance period.
  5. "Eligible low-income building" means a  building  located  in  this
state which either
  (a)  is a qualified low-income building as defined in section 42(c) of
the internal revenue code, or
  (b) would be a qualified low-income building under such section if the
20-50 test specified in subsection (g)(1) of such  section  were  disre-
garded  and  the 40-60 test specified in such subsection (requiring that
at least forty percent of residential units be both rent-restricted  and
occupied  by  individuals  whose income is sixty percent or less of area
median gross income) were a 40-90 test.
  5-A. "ELIGIBLE MIDDLE-INCOME BUILDING" MEANS  A  BUILDING  LOCATED  IN
THIS  STATE  WHICH IS COMPOSED OF MULTIPLE RESIDENTIAL UNITS WHICH WILL,
UPON COMPLETION, BE AFFORDABLE BY ELIGIBLE MIDDLE-INCOME HOUSEHOLDS.
  5-B. "ELIGIBLE MIDDLE-INCOME HOUSEHOLD" MEANS (A) IN CITIES  HAVING  A
POPULATION  OF  ONE  MILLION  OR  MORE, A PERSON OR FAMILY RESIDING IN A
RESIDENTIAL UNIT WHOSE INCOME DOES NOT EXCEED ONE HUNDRED THIRTY PERCENT
OF THE MEDIAN INCOME FOR THE METROPOLITAN STATISTICAL AREA IN  WHICH  AN
ELIGIBLE MIDDLE-INCOME BUILDING IS LOCATED; OR (B) IN ANY PORTION OF THE
STATE  OUTSIDE  OF A CITY HAVING A POPULATION OF ONE MILLION OR MORE AND
(I) WITHIN A METROPOLITAN STATISTICAL AREA, A PERSON OR FAMILY  RESIDING
IN  A  RESIDENTIAL  UNIT WHOSE INCOME DOES NOT EXCEED ONE HUNDRED THIRTY
PERCENT OF THE MEDIAN INCOME FOR THE METROPOLITAN  STATISTICAL  AREA  IN
WHICH  AN  ELIGIBLE  MIDDLE-INCOME  BUILDING  IS LOCATED, OR ONE HUNDRED
THIRTY PERCENT OF THE STATEWIDE MEDIAN INCOME, WHICHEVER SHALL BE  LESS,
OR  (II)  OUTSIDE  OF  METROPOLITAN STATISTICAL AREA, A PERSON OR FAMILY
RESIDING IN A RESIDENTIAL UNIT WHOSE INCOME DOES NOT EXCEED ONE  HUNDRED
THIRTY  PERCENT OF THE MEDIAN INCOME FOR THE COUNTY IN WHICH AN ELIGIBLE
MIDDLE-INCOME BUILDING IS LOCATED, OR ONE HUNDRED THIRTY PERCENT OF  THE
STATEWIDE MEDIAN INCOME, WHICHEVER SHALL BE LESS.
  6. "Qualified basis" of an eligible low-income building OR AN ELIGIBLE
MIDDLE-INCOME BUILDING means the qualified basis of such building deter-
mined  under  section  42(c)  of  the  internal revenue code, or, FOR AN

S. 6359--C                         412

ELIGIBLE LOW-INCOME BUILDING,  which  would  be  determined  under  such
section if the 40-90 test specified in paragraph (b) of subdivision five
of  this  section  applied  under  such  section 42 to determine if such
building were part of a qualified low-income housing project.
  7.  References  in  this article to section 42 of the internal revenue
code shall mean such section as amended from time to time.
  S 22. Allowance of credit,  amount  and  limitations.  1.  A  taxpayer
subject  to  tax under article nine-A, twenty-two, thirty-two or thirty-
three of the tax law which owns an interest  in  one  or  more  eligible
low-income  buildings  OR  ELIGIBLE  MIDDLE-INCOME  BUILDINGS  shall  be
allowed a credit against such tax for the amount of  low-income  housing
credit  OR  FOR  THE  AMOUNT OF THE MIDDLE-INCOME HOUSING CREDIT, AS THE
CASE MAY BE, allocated by the commissioner to each such building. Except
as provided in subdivision two of this section,  the  credit  amount  so
allocated shall be allowed as a credit against the tax for the ten taxa-
ble years in the credit period.
  2. Adjustment of first-year credit allowed in eleventh year. The cred-
it  allowable  for  the  first  taxable  year  of the credit period with
respect to any building shall be adjusted using  the  rules  of  section
42(f)(2) of the internal revenue code (relating to first-year adjustment
of  qualified basis by the weighted average of low-income to total resi-
dential units, OR BY THE WEIGHTED  AVERAGE  OF  MIDDLE-INCOME  TO  TOTAL
RESIDENTIAL  UNITS, AS THE CASE MAY BE), and any reduction in first-year
credit by reason of such adjustment shall be  allowable  for  the  first
taxable year following the credit period.
  3.  Amount of credit. Except as provided in subdivisions four and five
of this section, the amount of low-income housing credit AND  MIDDLE-IN-
COME  HOUSING CREDIT shall be the applicable percentage of the qualified
basis  of  each  eligible  low-income  building  OR  OF  EACH   ELIGIBLE
MIDDLE-INCOME BUILDING.
  4.  Statewide  limitation. The aggregate dollar amount of credit which
the commissioner may allocate to  eligible  low-income  buildings  under
this  article shall be forty-eight million dollars. THE AGGREGATE DOLLAR
AMOUNT OF  CREDIT  WHICH  THE  COMMISSIONER  MAY  ALLOCATE  TO  ELIGIBLE
MIDDLE-INCOME  BUILDINGS  UNDER  THIS  ARTICLE  SHALL BE FIFTEEN MILLION
DOLLARS. The limitation provided by this  subdivision  applies  only  to
allocation of the aggregate dollar amount of credit by the commissioner,
and does not apply to allowance to a taxpayer of the credit with respect
to an eligible low-income building OR AN ELIGIBLE MIDDLE-INCOME BUILDING
for each year of the credit period.
  5.  Building  limitation. The dollar amount of credit allocated to any
building shall not exceed the  amount  the  commissioner  determines  is
necessary for the financial feasibility of the project and the viability
of  the  building  as  an eligible low-income building OR AS AN ELIGIBLE
MIDDLE-INCOME BUILDING throughout the credit  period.  In  allocating  a
dollar  amount of credit to any building, the commissioner shall specify
the applicable percentage and the maximum qualified basis which  may  be
taken into account under this article with respect to such building. The
applicable  percentage and the maximum qualified basis with respect to a
building shall not exceed the amounts determined in subdivisions one and
six, respectively, of section twenty-one of this article.
  6.  Long-term  commitment  to  low-income  OR  MIDDLE-INCOME   housing
required. (A) No credit shall be allowed under this article with respect
to  [a]  AN  ELIGIBLE LOW-INCOME building for the taxable year unless an
extended low-income housing commitment is in effect as  of  the  end  of
such  taxable  year.  For  purposes of this [subdivision] PARAGRAPH, the

S. 6359--C                         413

term "extended low-income housing commitment" means an agreement between
the taxpayer and the commissioner substantially similar to the agreement
specified in section 42(h)(6)(B) of the internal revenue code.
  (B)  NO  CREDIT SHALL BE ALLOWED UNDER THIS ARTICLE WITH RESPECT TO AN
ELIGIBLE MIDDLE-INCOME BUILDING FOR THE TAXABLE YEAR UNLESS AN  EXTENDED
MIDDLE-INCOME  HOUSING  COMMITMENT  IS  IN  EFFECT AS OF THE END OF SUCH
TAXABLE YEAR. FOR THE PURPOSES OF THIS  PARAGRAPH,  THE  TERM  "EXTENDED
MIDDLE-INCOME HOUSING COMMITMENT" MEANS AN AGREEMENT BETWEEN THE TAXPAY-
ER AND THE COMMISSIONER WHICH HAS BEEN DETERMINED BY THE COMMISSIONER TO
BE  SIMILAR  TO  THE  AGREEMENT  SPECIFIED IN SECTION 42(H)(6)(B) OF THE
INTERNAL REVENUE CODE.
  7. Credit to successor owner. If a credit is allowed under subdivision
one of this section with respect to an eligible low-income  building  OR
AN  ELIGIBLE  MIDDLE-INCOME  BUILDING, and such building (or an interest
therein) is sold during the credit period, the  credit  for  the  period
after  the  sale  which would have been allowable under such subdivision
one to the prior owner had the building not been sold shall be allowable
to the new owner. Credit for the year of sale shall be allocated between
the parties on the basis of the number of days during such year that the
building or interest was held by each.
  S 23. Project monitoring. The commissioner shall establish such proce-
dures as he OR SHE deems  necessary  for  monitoring  compliance  of  an
eligible  low-income building OR AN ELIGIBLE MIDDLE-INCOME BUILDING with
the provisions of this article, and for notifying  the  commissioner  of
taxation  and  finance  of  any  such  noncompliance  of which he OR SHE
becomes aware.
  S 24. Credit recapture. If, as of the close of any taxable year in the
compliance period, the amount of the qualified  basis  of  any  building
with respect to the taxpayer is less than the amount of such basis as of
the  close  of the preceding taxable year, the credit under this article
may be recaptured as provided in section eighteen OR EIGHTEEN-A  of  the
tax law.
  S 25. Regulations, coordination with federal low-income housing credit
provisions.  1.  The commissioner shall promulgate rules and regulations
necessary to administer the provisions of this act.
  2. The provisions of section 42 of the  internal  revenue  code  shall
apply  to the credit under this article, provided however, to the extent
such provisions are inconsistent with this article,  the  provisions  of
this article shall control.
  S  2.  The  tax law is amended by adding a new section 18-a to read as
follows:
  S 18-A. MIDDLE-INCOME HOUSING  CREDIT.  (A)  ALLOWANCE  OF  CREDIT.  A
TAXPAYER  SUBJECT TO TAX UNDER ARTICLE NINE-A, TWENTY-TWO, THIRTY-TWO OR
THIRTY-THREE OF THIS CHAPTER SHALL BE ALLOWED A CREDIT AGAINST SUCH TAX,
PURSUANT TO  THE  PROVISIONS  REFERENCED  IN  SUBDIVISION  (D)  OF  THIS
SECTION,  WITH RESPECT TO THE OWNERSHIP OF ELIGIBLE MIDDLE-INCOME BUILD-
INGS FOR WHICH AN ELIGIBILITY STATEMENT HAS BEEN ISSUED BY  THE  COMMIS-
SIONER  OF HOUSING AND COMMUNITY RENEWAL. THE AMOUNT OF THE CREDIT SHALL
BE THE CREDIT AMOUNT FOR EACH SUCH BUILDING ALLOCATED  BY  SUCH  COMMIS-
SIONER AS PROVIDED IN ARTICLE TWO-A OF THE PUBLIC HOUSING LAW. THE CRED-
IT  AMOUNT  SHALL  BE  ALLOWED  FOR EACH OF THE TEN TAXABLE YEARS IN THE
CREDIT PERIOD, AND ANY REDUCTION IN FIRST-YEAR  CREDIT  AS  PROVIDED  IN
SUBDIVISION  TWO  OF  SECTION TWENTY-TWO OF SUCH LAW SHALL BE ALLOWED IN
THE ELEVENTH TAXABLE YEAR.
  (B) CREDIT RECAPTURE. (1) GENERAL. IF,

S. 6359--C                         414

  (A) AS OF THE CLOSE OF ANY TAXABLE YEAR IN THE COMPLIANCE PERIOD,  THE
AMOUNT  OF  THE  QUALIFIED  BASIS  OF  ANY  BUILDING WITH RESPECT TO THE
TAXPAYER IS LESS THAN
  (B)  THE AMOUNT OF SUCH BASIS AS OF THE CLOSE OF THE PRECEDING TAXABLE
YEAR,
  (C) THEN THE CREDIT RECAPTURE AMOUNT MUST BE ADDED BACK FOR THE  TAXA-
BLE YEAR.
  (2)  CREDIT RECAPTURE AMOUNT. THE CREDIT RECAPTURE AMOUNT IS AN AMOUNT
EQUAL TO THE SUM OF
  (A) THE AGGREGATE DECREASE IN THE  CREDITS  ALLOWED  TO  THE  TAXPAYER
UNDER THIS SECTION FOR ALL PRIOR TAXABLE YEARS WHICH WOULD HAVE RESULTED
IF  THE  ACCELERATED  PORTION  OF THE CREDIT ALLOWABLE BY REASON OF THIS
SECTION WERE NOT ALLOWED FOR ALL PRIOR TAXABLE YEARS WITH RESPECT TO THE
EXCESS OF THE AMOUNT DESCRIBED IN SUBPARAGRAPH (B) OF PARAGRAPH  (1)  OF
THIS  SUBDIVISION  OVER THE AMOUNT DESCRIBED IN SUBPARAGRAPH (A) OF SUCH
PARAGRAPH, PLUS
  (B) INTEREST AT THE OVERPAYMENT RATE  ESTABLISHED  UNDER  SECTION  ONE
THOUSAND  NINETY-SIX  OF  THIS  CHAPTER  ON  THE AMOUNT DETERMINED UNDER
SUBPARAGRAPH (A) OF THIS PARAGRAPH FOR EACH PRIOR TAXABLE YEAR  FOR  THE
PERIOD  BEGINNING  ON  THE  DUE DATE FOR FILING THE REPORT FOR THE PRIOR
TAXABLE YEAR INVOLVED.
  (3) ACCELERATED PORTION OF CREDIT. FOR PURPOSES OF  PARAGRAPH  TWO  OF
THIS  SUBDIVISION,  THE  ACCELERATED PORTION OF THE CREDIT FOR THE PRIOR
TAXABLE YEARS WITH RESPECT TO ANY AMOUNT OF BASIS IS THE EXCESS OF
  (A) THE AGGREGATE CREDIT ALLOWED BY REASON OF  THIS  SECTION  (WITHOUT
REGARD  TO  THIS SUBDIVISION) FOR SUCH YEARS WITH RESPECT TO SUCH BASIS,
OVER
  (B) THE AGGREGATE CREDIT WHICH WOULD BE ALLOWABLE BY  REASON  OF  THIS
SECTION FOR SUCH YEARS WITH RESPECT TO SUCH BASIS IF THE AGGREGATE CRED-
IT  WHICH  WOULD  (BUT  FOR  THIS SUBDIVISION) HAVE BEEN ALLOWED FOR THE
ENTIRE COMPLIANCE PERIOD WERE ALLOWABLE RATABLY OVER FIFTEEN YEARS.
  (4) SPECIAL RULES. FOR PURPOSES OF  THIS  SUBDIVISION,  THE  RULES  OF
SECTION 42 (J)(4)(B) AND (C) OF THE INTERNAL REVENUE CODE SHALL APPLY IN
DETERMINING THE CREDIT RECAPTURE AMOUNT.
  (5)  EXCEPTIONS  TO  RECAPTURE. RECAPTURE UNDER THIS SUBDIVISION SHALL
NOT APPLY TO A REDUCTION IN QUALIFIED BASIS
  (A) BY REASON OF A CASUALTY LOSS, IF THE COMMISSIONER, IN CONSULTATION
WITH THE COMMISSIONER OF HOUSING AND COMMUNITY RENEWAL, DETERMINES  THAT
SUCH  LOSS IS RESTORED BY RECONSTRUCTION OR REPLACEMENT WITHIN A REASON-
ABLE PERIOD, OR
  (B) BY REASON OF A CHANGE IN  FLOOR  SPACE  DEVOTED  TO  MIDDLE-INCOME
UNITS  IN A BUILDING, IF SUCH BUILDING REMAINS AN ELIGIBLE MIDDLE-INCOME
BUILDING AFTER SUCH CHANGE, AND IF  THE  COMMISSIONER,  IN  CONSULTATION
WITH  THE COMMISSIONER OF HOUSING AND COMMUNITY RENEWAL, DETERMINES THAT
SUCH CHANGE IS DE MINIMIS, OR
  (C) BY REASON OF ERROR IN  COMPLYING  WITH  MIDDLE-INCOME  ELIGIBILITY
TESTS  REFERRED  TO  IN  SUBDIVISION  FIVE  OF SECTION TWENTY-ONE OF THE
PUBLIC HOUSING LAW,  IF  THE  COMMISSIONER,  IN  CONSULTATION  WITH  THE
COMMISSIONER  OF  HOUSING  AND  COMMUNITY  RENEWAL, DETERMINES THAT SUCH
ERROR IS DE MINIMIS.
  (6) RECAPTURE BY PARTNERS OF A PARTNERSHIP. IN THE CASE  OF  OWNERSHIP
OF A BUILDING OR INTEREST THEREIN BY A PARTNERSHIP WHICH HAS THIRTY-FIVE
OR  MORE  PARTNERS,  THE  PROVISIONS OF SECTION 42(J)(5) OF THE INTERNAL
REVENUE CODE SHALL APPLY TO ANY RECAPTURE UNDER THIS SUBDIVISION  UNLESS
THE PARTNERSHIP ELECTS NOT TO HAVE SUCH PROVISIONS APPLY.

S. 6359--C                         415

  (7)  (A) THE CREDIT RECAPTURE REQUIRED UNDER THIS SUBDIVISION WILL NOT
APPLY SOLELY BY REASON OF THE DISPOSITION OF A BUILDING OR  AN  INTEREST
THEREIN IF IT IS REASONABLY EXPECTED THAT SUCH BUILDING WILL CONTINUE TO
BE  OPERATED  AS  AN  ELIGIBLE  MIDDLE-INCOME BUILDING FOR THE REMAINING
COMPLIANCE PERIOD WITH RESPECT TO SUCH BUILDING.
  (B)  STATUTE OF LIMITATIONS. IF A BUILDING (OR AN INTEREST THEREIN) IS
DISPOSED OF DURING ANY TAXABLE YEAR AND THERE IS ANY  REDUCTION  IN  THE
QUALIFIED  BASIS  OF  SUCH  BUILDING WHICH RESULTS IN AN INCREASE IN TAX
UNDER THIS SECTION FOR SUCH TAXABLE OR ANY SUBSEQUENT TAXABLE YEAR, THEN
  (I) THE STATUTORY PERIOD FOR THE ASSESSMENT  OF  ANY  DEFICIENCY  WITH
RESPECT TO SUCH INCREASE IN TAX WILL NOT EXPIRE BEFORE THE EXPIRATION OF
THREE  YEARS  FROM  THE  DATE  THE COMMISSIONER OF HOUSING AND COMMUNITY
RENEWAL IS NOTIFIED BY THE TAXPAYER (IN SUCH MANNER AS THE  COMMISSIONER
OF  HOUSING  AND  COMMUNITY  RENEWAL MAY PRESCRIBE) OF SUCH REDUCTION IN
QUALIFIED BASIS, AND
  (II) SUCH DEFICIENCY MAY BE ASSESSED BEFORE  THE  EXPIRATION  OF  SUCH
THREE-YEAR  PERIOD  NOTWITHSTANDING  THE  PROVISIONS OF ANY OTHER LAW OR
RULE OF LAW WHICH WOULD OTHERWISE PREVENT SUCH ASSESSMENT.
  (C) CONSTRUCTION WITH PUBLIC HOUSING LAW; DEFINITIONS. THE  PROVISIONS
OF THIS SECTION SHALL BE CONSTRUED IN CONJUNCTION WITH THE PROVISIONS OF
ARTICLE TWO-A OF THE PUBLIC HOUSING LAW. FOR DEFINITIONS RELATING TO THE
MIDDLE-INCOME HOUSING CREDIT, SEE SECTION TWENTY-ONE OF SUCH LAW.
  (D)  CROSS-REFERENCES.  FOR  APPLICATION OF THE CREDIT PROVIDED FOR IN
THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  (1) ARTICLE 9-A: SECTION 210: SUBDIVISION 30-A,
  (2) ARTICLE 22: SECTION 606: SUBSECTIONS (I) AND (X-1),
  (3) ARTICLE 32: SECTION 1456: SUBSECTION (L-1),
  (4) ARTICLE 33: SECTION 1511: SUBDIVISION (N-1).
  S 3. Section 210 of the tax law is amended by adding a new subdivision
30-a to read as follows:
  30-A. MIDDLE-INCOME HOUSING CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAY-
ER SHALL BE ALLOWED A CREDIT AGAINST THE TAX  IMPOSED  BY  THIS  ARTICLE
WITH  RESPECT  TO  THE  OWNERSHIP  OF  ELIGIBLE MIDDLE-INCOME BUILDINGS,
COMPUTED AS PROVIDED IN SECTION EIGHTEEN-A OF THIS CHAPTER.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT, IN THE AGGREGATE, REDUCE THE TAX DUE FOR
SUCH  YEAR  TO  LESS  THAN THE HIGHER OF THE AMOUNTS PRESCRIBED IN PARA-
GRAPHS (C) AND (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER,  IF  THE
AMOUNT  OF  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE
IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT  OF  TAX  TO  BE
CREDITED  OR  REFUNDED  IN ACCORDANCE WITH THE PROVISIONS OF SECTION TWO
HUNDRED EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF
SUBSECTION (C) OF SECTION  TEN  HUNDRED  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (C)  CREDIT  RECAPTURE.  FOR PROVISIONS REQUIRING RECAPTURE OF CREDIT,
SEE SUBDIVISION (B) OF SECTION EIGHTEEN-A OF THIS CHAPTER.
  S 4. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is amended by adding a new clause (xiii-a) to read as
follows:

(XIII-A) MIDDLE-INCOME HOUSING       CREDIT AMOUNT UNDER SUBDIVISION
CREDIT UNDER SUBSECTION (X-L)        THIRTY-A OF SECTION TWO HUNDRED
                                     TEN OR SUBSECTION (L-1) OF SECTION
                                     FOURTEEN HUNDRED FIFTY-SIX

S. 6359--C                         416

  S 5. Section 606 of the tax law is amended by adding a new  subsection
(x-1) to read as follows:
  (X-1) MIDDLE-INCOME HOUSING CREDIT. (1) ALLOWANCE OF CREDIT. A TAXPAY-
ER  SHALL  BE  ALLOWED  A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE
WITH RESPECT TO  THE  OWNERSHIP  OF  ELIGIBLE  MIDDLE-INCOME  BUILDINGS,
COMPUTED AS PROVIDED IN SECTION EIGHTEEN-A OF THIS CHAPTER.
  (2)  APPLICATION  OF  CREDIT.  IF THE AMOUNT OF CREDIT ALLOWABLE UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR
SUCH YEAR, THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF  TAX  TO  BE
CREDITED  OR  REFUNDED  IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX
HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO  INTEREST
SHALL BE PAID THEREON.
  (3)  CREDIT  RECAPTURE.  FOR PROVISIONS REQUIRING RECAPTURE OF CREDIT,
SEE SUBDIVISION (B) OF SECTION EIGHTEEN-A OF THIS CHAPTER.
  S 6. Section 1456 of the tax law is amended by adding a new subsection
(l-1) to read as follows:
  (L-1) MIDDLE-INCOME HOUSING CREDIT. (1) ALLOWANCE OF CREDIT. A TAXPAY-
ER SHALL BE ALLOWED A CREDIT AGAINST THE TAX  IMPOSED  BY  THIS  ARTICLE
WITH  RESPECT  TO  THE  OWNERSHIP  OF  ELIGIBLE MIDDLE-INCOME BUILDINGS,
COMPUTED AS PROVIDED IN SECTION EIGHTEEN-A OF THIS CHAPTER.
  (2) APPLICATION OF CREDIT. THE CREDIT ALLOWED  UNDER  THIS  SUBSECTION
FOR ANY TAXABLE YEAR SHALL NOT, IN THE AGGREGATE, REDUCE THE TAX DUE FOR
SUCH  YEAR  TO  LESS  THAN  THE  MINIMUM  TAX FIXED BY SUBSECTION (B) OF
SECTION FOURTEEN HUNDRED FIFTY-FIVE OF THIS  ARTICLE.  HOWEVER,  IF  THE
AMOUNT  OF  CREDIT  ALLOWED  UNDER  THIS SUBSECTION FOR ANY TAXABLE YEAR
REDUCES THE TAX TO SUCH AMOUNT, THEN  ANY  AMOUNT  OF  CREDIT  THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  TEN  HUNDRED EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF THIS
CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (3) CREDIT RECAPTURE. FOR PROVISIONS REQUIRING  RECAPTURE  OF  CREDIT,
SEE SUBDIVISION (B) OF SECTION EIGHTEEN-A OF THIS CHAPTER.
  S  7.  Section 1511 of the tax law is amended by adding a new subdivi-
sion (n-1) to read as follows:
  (N-1) MIDDLE-INCOME HOUSING CREDIT. (1) ALLOWANCE OF CREDIT. A TAXPAY-
ER SHALL BE ALLOWED A CREDIT AGAINST THE TAX  IMPOSED  BY  THIS  ARTICLE
WITH  RESPECT  TO  THE  OWNERSHIP  OF  ELIGIBLE MIDDLE-INCOME BUILDINGS,
COMPUTED AS PROVIDED IN SECTION EIGHTEEN-A OF THIS CHAPTER.
  (2) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT, IN THE AGGREGATE, REDUCE THE TAX DUE FOR
SUCH YEAR TO LESS THAN THE MINIMUM TAX FIXED BY PARAGRAPH FOUR OF SUBDI-
VISION  (A) OF SECTION FIFTEEN HUNDRED TWO OF THIS ARTICLE OR BY SECTION
FIFTEEN HUNDRED TWO-A OF THIS ARTICLE, WHICHEVER IS APPLICABLE.   HOWEV-
ER, IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR REDUCES THE TAX TO SUCH AMOUNT, THEN ANY AMOUNT OF CREDIT THUS
NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT
OF  TAX  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION TEN HUNDRED EIGHTY-SIX OF THIS CHAPTER. PROVIDED,  HOWEVER,  THE
PROVISIONS OF SUBSECTION (C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF THIS
CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (3)  CREDIT  RECAPTURE.  FOR PROVISIONS REQUIRING RECAPTURE OF CREDIT,
SEE SUBDIVISION (B) OF SECTION EIGHTEEN-A OF THIS CHAPTER.
  S 8. This act shall take effect immediately.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion, section or part of this act shall be  adjudged  by  any  court  of

S. 6359--C                         417

competent  jurisdiction  to  be invalid, such judgment shall not affect,
impair, or invalidate the remainder thereof, but shall  be  confined  in
its  operation  to the clause, sentence, paragraph, subdivision, section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the  legislature  that  this  act  would  have been enacted even if such
invalid provisions had not been included herein.
  S 3. This act shall take effect immediately  provided,  however,  that
the  applicable  effective date of Parts A through YYY of this act shall
be as specifically set forth in the last section of such Parts.

2013-S6359D (ACTIVE) - Details

See Assembly Version of this Bill:: A8559
Law Section:: Budget Bills
Laws Affected:: Amd Various Laws, generally

2013-S6359D (ACTIVE) - Summary

2013-S6359D (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

    S. 6359--D                                            A. 8559--D

                      S E N A T E - A S S E M B L Y

                            January 21, 2014
                               ___________

IN  SENATE -- A BUDGET BILL, submitted by the Governor pursuant to arti-
  cle seven of the Constitution -- read twice and ordered  printed,  and
  when  printed to be committed to the Committee on Finance -- committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee  --  committee  discharged,  bill  amended,  ordered
  reprinted  as  amended  and recommitted to said committee -- committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

IN  ASSEMBLY  --  A  BUDGET  BILL, submitted by the Governor pursuant to
  article seven of the Constitution -- read once  and  referred  to  the
  Committee  on  Ways  and  Means -- committee discharged, bill amended,
  ordered reprinted as amended and  recommitted  to  said  committee  --
  again  reported from said committee with amendments, ordered reprinted
  as amended and recommitted to said committee --  again  reported  from
  said  committee  with  amendments,  ordered  reprinted  as amended and
  recommitted to said committee -- again reported  from  said  committee
  with  amendments, ordered reprinted as amended and recommitted to said
  committee

AN ACT to amend the tax law, the general municipal law, the urban devel-
  opment corporation act, the business corporation law, and the  general
  associations law, in relation to reforming taxation of business corpo-
  rations;  and  to  repeal  various  provisions of the tax law relating
  thereto (Part A); to amend the real property tax law, in  relation  to
  the  STAR  registration  program (Part B); to amend chapter 540 of the
  laws of 1992, amending the real property tax law relating to  oil  and
  gas  charges,  in relation to the effective date of such chapter (Part
  C); intentionally omitted (Part D); to amend the tax law, in  relation
  to  modifying the signature requirement on e-filed returns prepared by
  tax professionals (Part E); intentionally omitted (Part F);  to  amend
  part  I of chapter 58 of the laws of 2006, amending the tax law relat-
  ing to providing an enhanced earned income tax credit, in relation  to
  the effectiveness thereof (Part G); intentionally omitted (Part H); to
  amend the tax law and the administrative code of the city of New York,
  in  relation  to  taxing residents who are grantors of exempt resident
  trusts that qualify as  non-grantor  incomplete  gift  trusts  on  the

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD12674-07-4

S. 6359--D                          2                         A. 8559--D

  income  from such trusts and taxing residents who are beneficiaries of
  all other exempt resident trusts or nonresident trusts on the distrib-
  utions of accumulated income that they receive from such trusts  (Part
  I);  to  amend  the tax law and the administrative code of the city of
  New York, in relation to eliminating the personal  income  tax  add-on
  minimum  tax;  and  to repeal certain provisions of such laws relating
  thereto (Part J); to amend the tax law, in relation to establishing an
  enhanced real property tax circuit  breaker;  and  providing  for  the
  repeal  of  such  provisions  upon expiration thereof (Part K); inten-
  tionally omitted (Part L); to amend the tax law, in  relation  to  the
  prepayment  element  of  the family tax relief credit (Part M); inten-
  tionally omitted (Part N); to  amend  the  tax  law,  in  relation  to
  extending  the empire state commercial production tax credit (Part O);
  to amend the public housing law, in relation to extending  the  credit
  against  income  tax  for  persons or entities investing in low-income
  housing (Part P); intentionally omitted (Part Q);  to  amend  the  tax
  law,  in relation to providing a tax credit for real property taxes to
  New York manufacturers;  and  providing  for  the  repeal  of  certain
  provisions  upon  expiration  thereof  (Part R); to amend the economic
  development law, the tax law, the transportation law, the  administra-
  tive  code of the city of New York and the New York state urban devel-
  opment corporation act, in relation to repealing the franchise tax  on
  farmers',  fruit  growers',  and  other like agricultural corporations
  organized and operated on a co-operative basis; and to repeal  section
  185  of the tax law relating to franchise tax on farmers', fruit grow-
  ers', and other like agricultural corporations organized and  operated
  on  a  co-operative  basis;  to  repeal  sections 187-j, 187-k, 187-l,
  187-m, 187-q, 187-r and 187-s of the tax law relating to  certain  tax
  credits; to repeal paragraph 1 of subdivision (h) of section 15, para-
  graph 1 of subdivision (g) of section 31, and certain other provisions
  of  the tax law, in relation to making conforming changes (Part S); to
  amend the tax law, in relation to providing a credit for excise tax on
  telecommunication services for businesses located in tax-free NY areas
  and providing for the repeal of  certain  provisions  upon  expiration
  thereof  (Part  T);  to amend the tax law, in relation to reducing the
  number of hours of part-time work needed  by  employees  for  employer
  qualification  for  the  New York youth works tax credit; and to amend
  the labor law, in relation to the New  York  youth  works  tax  credit
  (Part  U);  to  amend chapter 109 of the laws of 2006 amending the tax
  law and other laws relating to  providing  exemptions,  reimbursements
  and  credits  from  various  taxes  for  certain alternative fuels, in
  relation to extending the alternative fuels  tax  exemptions  for  two
  years  (Part V); to amend chapter 63 of the laws of 2000, amending the
  tax law and other laws relating to modifying the distribution of funds
  from the motor vehicle fuel excise tax and  the  vehicle  and  traffic
  law,  in  relation  to simplifying the methodology for distribution of
  motor vehicle receipts (Part W); to amend the tax law, in relation  to
  the  estate  tax;  to  repeal section 2 of chapter 1013 of the laws of
  1962, amending the tax law relating to imposing a tax on the  transfer
  of  estates  of  decedents  dying  on  or  after April first, nineteen
  hundred sixty-three, relating to an appendix  of  applicable  internal
  revenue  code  provisions,  and to repeal article 26-B of the tax law,
  relating to the generation skipping  transfer  tax  (Part  X);  inten-
  tionally omitted (Part Y); to amend the tax law, in relation to vendor
  fees  paid to vendor tracks (Part Z); to amend the racing, pari-mutuel
  wagering and breeding law,  in  relation  to  licenses  for  simulcast

S. 6359--D                          3                         A. 8559--D

  facilities,  sums  relating  to  track simulcast, simulcast of out-of-
  state thoroughbred races, simulcasting of races  run  by  out-of-state
  harness  tracks  and  distributions of wagers; to amend chapter 281 of
  the  laws of 1994 amending the racing, pari-mutuel wagering and breed-
  ing law and other laws relating to simulcasting and chapter 346 of the
  laws of 1990 amending the racing, pari-mutuel  wagering  and  breeding
  law  and  other  laws  relating  to simulcasting and the imposition of
  certain taxes, in relation to extending  certain  provisions  thereof;
  and  to  amend  the  racing, pari-mutuel wagering and breeding law, in
  relation to extending certain provisions thereof (Part AA);  to  amend
  the tax law, in relation to capital awards to vendor tracks (Part BB);
  intentionally  omitted (Part CC); to amend the tax law, in relation to
  conforming the due dates for the metropolitan commuter  transportation
  mobility  tax  for taxpayers with income from self-employment with the
  due dates for the personal income tax (Part DD); to  amend  the  state
  finance  law,  the upstate New York gaming economic development act of
  2013 and the tax law, in relation to  moneys  appropriated  or  trans-
  ferred from the commercial gaming revenue fund (Part EE); to amend the
  tax  law,  the  education law, the general municipal law, and the real
  property tax law, in relation to a real property tax freeze (Part FF);
  to amend the tax law, in relation  to  the  temporary  exemption  from
  sales  and  use taxes for premises used for commercial office space in
  lower Manhattan; and to amend part C of chapter 2 of the laws of  2005
  amending  the tax law relating to exemptions from sales and use taxes,
  in relation to the effectiveness thereof (Subpart  A);  to  amend  the
  real  property  tax law and the administrative code of the city of New
  York, in relation to extending a real property tax  abatement  program
  for certain commercial properties in cities having a population of one
  million or more and in relation to extending a special reduction under
  the  commercial rent tax in the city of New York (Subpart B); to amend
  the real property tax law and the administrative code of the  city  of
  New  York,  in  relation to applications for tax abatements for indus-
  trial and commercial construction work on properties in a city of  one
  million or more persons (Subpart C); to amend the general city law and
  the  administrative  code  of  the  city  of  New York, in relation to
  extending the relocation and employment  assistance  program  and  the
  Lower  Manhattan relocation and employment assistance program (Subpart
  D); to amend the general city law and the administrative code  of  the
  city  of  New  York,  in relation to extending the special rebates and
  discounts provided pursuant to the energy cost savings program and the
  Lower Manhattan energy program (Subpart E); to amend  the  administra-
  tive  code  of  the  city  of  New  York, in relation to the amount of
  special reduction allowed (Subpart F); and to amend the real  property
  tax law and the administrative code  of  the  city  of  New  York,  in
  relation  to  a  real estate tax abatement program for certain commer-
  cial, industrial and manufacturing properties in a city of one million
  or more persons (Subpart G) (Part  GG);  to  amend  the  tax  law,  in
  relation  to a musical and theatrical production credit; and providing
  for the repeal of such provisions upon expiration thereof  (Part  HH);
  to  amend  the  tax law, in relation to the sale of food and beverages
  through vending machines (Part II); to amend the tax law, in  relation
  to  requiring  that  services  eligible  for  the  empire  state  film
  production tax credit take place in certain  counties  (Part  JJ);  to
  amend the tax law and the administrative code of the city of New York,
  in  relation to exempting the proceeds from service award programs for
  volunteer firefighters and  ambulance  workers  from  personal  income

S. 6359--D                          4                         A. 8559--D

  taxes  (Part KK); to amend the tax law, in relation to the regions and
  rate of the prepaid sales tax on fuels (Part LL); to amend  the  labor
  law  and  the tax law, in relation to the creation of the workers with
  disabilities  tax credit program; and providing for the repeal of such
  provisions upon expiration thereof (Part MM); to amend the real  prop-
  erty  tax law, in relation to permitting senior citizens whose spouses
  are deceased to substitute a more recent year's income for purposes of
  determining eligibility for the  enhanced  exemption  for  school  tax
  relief (Part NN); and to amend the tax law and the racing, pari-mutuel
  wagering and breeding law, in relation to health insurance for jockeys
  (Part OO)

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. This act enacts into law major  components  of  legislation
which are necessary to implement the state fiscal plan for the 2014-2015
state  fiscal  year.  Each  component  is wholly contained within a Part
identified as Parts A through OO. The effective date for each particular
provision contained within such Part is set forth in the last section of
such Part. Any provision in any section contained within a Part, includ-
ing the effective date of the Part, which makes a reference to a section
"of this act", when used in connection with that  particular  component,
shall  be  deemed  to mean and refer to the corresponding section of the
Part in which it is found. Section three of  this  act  sets  forth  the
general effective date of this act.

                                 PART A

  Section 1. Article 32 of the tax law is REPEALED.
  S 2. Section 180 of the tax law is REPEALED.
  S 3. Section 181 of the tax law is REPEALED.
  S  4.  Section 208 of the tax law, as added by chapter 415 of the laws
of 1944, subdivision 1 as amended by chapter 576 of the  laws  of  1994,
subdivision  1-A as amended by chapter 166 of the laws of 1991, subdivi-
sion 1-B as added by section 45 of part A and paragraph (k) of  subdivi-
sion  9  as  added by section 46 of part A of chapter 389 of the laws of
1997, subdivision 3, the opening paragraph, subparagraphs 6  and  11  of
paragraph (b), and the opening paragraph of paragraph (g) of subdivision
9  as  amended and subdivision 8-B and subparagraph 3-a of paragraph (b)
of subdivision 9 as added by chapter 817 of the laws of  1987,  subdivi-
sion  4  as  amended by section 1, subdivision 6 as amended by section 2
and subparagraph 2 of paragraph (a)  of  subdivision  9  as  amended  by
section  7  of part M of chapter 407 of the laws of 1999, subdivisions 5
and 7, paragraph (a) of subdivision 8-B, subparagraph  10  of  paragraph
(b)  and  paragraph  (j)  of  subdivision 9 as amended, paragraph (d) of
subdivision 8-B and paragraph (c-1) of subdivision 9 as added and  para-
graphs  (e)  and  (f) of subdivision 8-B as relettered by chapter 170 of
the laws of 1994, subdivisions 8 and 10 as amended by chapter 133 of the
laws of 1945, subdivision 8-A as added and subparagraph 1  of  paragraph
(a)  of  subdivision  9  as  amended by chapter 778 of the laws of 1972,
paragraph (b) of subdivision 8-A and paragraph (i) of subdivision  9  as
amended  by chapter 779 of the laws of 1972, subdivision 9 as amended by
chapter 713 of the laws of 1961,  paragraph  (a)  of  subdivision  9  as
amended by chapter 203 of the laws of 1962, subparagraphs 5, 9 and 10 of

S. 6359--D                          5                         A. 8559--D

paragraph  (a) and subparagraphs 8 and 9 of paragraph (b) of subdivision
9 as amended by chapter 61 of the laws of  1989  and  paragraph  (f)  of
subdivision  9  as separately amended by sections 278 and 347 of chapter
61 of the laws of 1989, clause (i) of subparagraph 5 of paragraph (a) of
subdivision  9  as amended by section 2 and subparagraph 20 of paragraph
(b) of subdivision 9 as added by section 3 of part C of  chapter  25  of
the  laws  of  2009, subparagraph 6 of paragraph (a) of subdivision 9 as
added by chapter 895 of the laws of 1975 and as  renumbered  by  chapter
613  of the laws of 1976, subparagraph 7 of paragraph (a) of subdivision
9 as added by chapter 33 of the laws of 1978, subparagraph  8  of  para-
graph  (a)  and  subparagraph  7  of  paragraph  (b) of subdivision 9 as
amended by chapter 639 of the laws of 1986, subparagraph 11 of paragraph
(a) of subdivision 9 as added by chapter 15 of the laws of 1983, subpar-
agraph 12 of paragraph  (a),  subparagraph  4-a  of  paragraph  (b)  and
subparagraph 2 of paragraph (h) of subdivision 9 as amended and subpara-
graph  13  of  paragraph (a) of subdivision 9 as added by chapter 760 of
the laws of 1992, subparagraph 14 of paragraph (a) of subdivision  9  as
added  by  section  101  and  paragraphs (l) and (m) of subdivision 9 as
added by section 102 of part A of  chapter  56  of  the  laws  of  1998,
subparagraph  15 of paragraph (a) of subdivision 9 as amended by section
1 of part ZZ of chapter 63 of the laws of 2003, subparagraph 16 of para-
graph (a) of subdivision 9 as added by section 1 of  part  K3,  subpara-
graph 16 of paragraph (b) of subdivision 9 as added by section 2 of part
K3,  subparagraph  17  of  paragraph  (b)  of  subdivision 9 as added by
section 2 of part O3, and paragraphs (o), (p) and (q) of  subdivision  9
as  added  by  section  3  of part O3 of chapter 62 of the laws of 2003,
subparagraph 18 of paragraph (a) of subdivision 9 as added by section  3
of  part C and paragraph (o) of subdivision 9 as amended by section 2 of
part E of chapter 59 of the laws of 2013, subparagraph  3  of  paragraph
(b)  of  subdivision  9  as  amended by chapter 895 of the laws of 1975,
subparagraph 4 of paragraph (b) and subparagraph 4 of paragraph  (f)  of
subdivision  9  as  amended by chapter 190 of the laws of 1990, subpara-
graph 15 of paragraph (b) of subdivision 9 as added by  chapter  309  of
the  laws  of 1996, subparagraph 18 of paragraph (b) of subdivision 9 as
added by section 21 of part H of chapter 1 of the laws of 2003, subpara-
graph 19 of paragraph (b) of subdivision 9 as added by section 1 of part
HH1 of chapter 57 of the laws of 2008, paragraphs  (c-2)  and  (c-3)  of
subdivision 9 as added by section 10 of part Y of chapter 63 of the laws
of  2000,  paragraph (g) of subdivision 9 as added by chapter 178 of the
laws of 1965, subparagraph 1 and clauses (B) and (C) of  subparagraph  3
of  paragraph (g) of subdivision 9 as amended by chapter 613 of the laws
of 1976, clause (A) of subparagraph 1 of paragraph (g) of subdivision  9
as  separately  amended  by  chapters  675  and 836 of the laws of 1977,
clause (B) of subparagraph 1, clause (A) of subparagraph  2  and  clause
(A)  of  subparagraph  3 of paragraph (g) of subdivision 9 as amended by
chapter 675 of the laws of 1977, item 1 of clause (B) of subparagraph  1
of  paragraph (g) of subdivision 9 as amended by chapter 972 of the laws
of 1984, clause (B) of subparagraph 2 of paragraph (g) of subdivision  9
as  amended  by  chapter 365 of the laws of 1979, clause (C) of subpara-
graph 2 of paragraph (g) of subdivision 9 as amended by chapter 1005  of
the  laws  of 1970, paragraph (h) of subdivision 9 as amended by chapter
606 of the laws of 1984, paragraph (n) of  subdivision  9  as  added  by
section 1 of part O of chapter 85 of the laws of 2002, subdivision 12 as
added  by  chapter  828  of the laws of 1977, subdivision 19 as added by
chapter 681 of the laws of 1997, is amended to read as follows:
  S 208. Definitions. As used in this article:

S. 6359--D                          6                         A. 8559--D

  1. The term "corporation" includes (a) an association within the mean-
ing of paragraph  three  of  subsection  (a)  of  section  seventy-seven
hundred  one of the internal revenue code (including a limited liability
company), (b) a joint-stock company or association, (c) a publicly trad-
ed  partnership  treated  as  a corporation for purposes of the internal
revenue code pursuant to section seventy-seven hundred four thereof  and
(d)  any business conducted by a trustee or trustees wherein interest or
ownership is evidenced  by  certificate  or  other  written  instrument.
"DISC"  and  "former DISC" mean any corporation which meets the require-
ments of subsection (a) of section nine hundred ninety-two of the inter-
nal revenue code[;].
  1-A. The term "New York S corporation"  means,  with  respect  to  any
taxable  year, a corporation subject to tax under this article for which
an election is in effect pursuant  to  subsection  (a)  of  section  six
hundred  sixty  of  this  chapter  for such year, any such year shall be
denominated a "New York S year", and such election shall be  denominated
a  "New  York S election". The term "New York C corporation" means, with
respect to any taxable year, a corporation subject  to  tax  under  this
article  which  is not a New York S corporation, and any such year shall
be denominated a "New York C year". The term  "termination  year"  means
any  taxable  year of a corporation during which the New York S election
terminates on a day other than the first day of such year.  The  portion
of  the  taxable  year ending before the first day for which such termi-
nation is effective shall be denominated the "S  short  year",  and  the
portion  of  such  year beginning on such first day shall be denominated
the "C short year". The term "New York S  termination  year"  means  any
termination  year  which  is  not also an S termination year for federal
purposes.
  1-B. The term "QSSS" means a corporation which is a qualified subchap-
ter S subsidiary as defined in subparagraph (B) of  paragraph  three  of
subsection  (b)  of  section  thirteen hundred sixty-one of the internal
revenue code. The term "exempt QSSS" means a QSSS exempt from tax  under
this  article  as  provided in paragraph (k) of subdivision nine of this
section, or a QSSS described in subclause (i) of clause (B) of  subpara-
graph  two of paragraph (k) of subdivision nine of this section, wherein
the parent corporation of the QSSS is subject to tax under this article,
and the assets, liabilities, income  and  deductions  of  the  QSSS  are
treated  as the assets, liabilities, income and deductions of the parent
corporation. Where a QSSS is an exempt QSSS, then for all purposes under
this article:
  (a) the assets, liabilities, income,  deductions,  property,  payroll,
receipts, capital, credits, and all other tax attributes and elements of
economic  activity of the QSSS shall be deemed to be those of the parent
corporation,
  (b) the stocks, bonds and other securities issued by, and any  indebt-
edness  from, the QSSS shall not be [subsidiary,] investment or business
capital of the parent corporation,
  (c) transactions between the parent corporation and the QSSS,  includ-
ing  the  payment  of  interest  and  dividends, shall not be taken into
account, and
  (d) general executive officers of the  QSSS  shall  be  deemed  to  be
general executive officers of the parent corporation.
  2. The term "taxpayer" means any corporation subject to tax under this
article[;].
  3.  The  term  "subsidiary"  means  a  corporation of which over fifty
percent of the number of shares of stock entitling the  holders  thereof

S. 6359--D                          7                         A. 8559--D

to  vote  for  the  election  of  directors  or trustees is owned by the
taxpayer[;].
  4.  The  term  ["subsidiary capital" means investments in the stock of
subsidiaries  and  any  indebtedness  from  subsidiaries,  exclusive  of
accounts receivable acquired in the ordinary course of trade or business
for  services  rendered or for sales of property held primarily for sale
to customers, whether or not evidenced by written instrument,  on  which
interest  is  not claimed and deducted by the subsidiary for purposes of
taxation under article nine-A, thirty-two or thirty-three of this  chap-
ter,  provided,  however,  that,  in the discretion of the commissioner,
there shall be deducted from subsidiary capital  any  liabilities  which
are  directly  or indirectly attributable to subsidiary capital] "STOCK"
MEANS AN INTEREST IN A CORPORATION THAT IS TREATED AS EQUITY FOR FEDERAL
INCOME TAX PURPOSES.
  5. (A) The term "investment capital"  means  investments  in  stocks[,
bonds  and  other securities, corporate and governmental,] THAT ARE HELD
BY THE TAXPAYER FOR MORE THAN SIX CONSECUTIVE MONTHS BUT  ARE  not  held
for  sale  to customers in the regular course of business, [exclusive of
subsidiary capital] OR, IF THE TAXPAYER MAKES THE ELECTION PROVIDED  FOR
IN  SUBPARAGRAPH ONE OF PARAGRAPH (A) OF SUBDIVISION FIVE OF SECTION TWO
HUNDRED TEN-A OF THIS ARTICLE, ARE NOT QUALIFIED  FINANCIAL  INSTRUMENTS
AS  DESCRIBED  IN  SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS
ARTICLE. STOCK IN A CORPORATION THAT IS CONDUCTING  A  UNITARY  BUSINESS
WITH THE TAXPAYER, STOCK IN A CORPORATION THAT IS INCLUDED IN A COMBINED
REPORT  WITH  THE TAXPAYER PURSUANT TO THE COMMONLY OWNED GROUP ELECTION
IN SUBDIVISION THREE OF SECTION TWO HUNDRED TEN-C OF THIS  ARTICLE,  and
stock   issued  by  the  taxpayer[,  provided,  however,  that,  in  the
discretion of the commissioner, there] SHALL NOT  CONSTITUTE  INVESTMENT
CAPITAL.  FOR  PURPOSES  OF  THIS  SUBDIVISION,  IF THE TAXPAYER OWNS OR
CONTROLS, DIRECTLY OR INDIRECTLY, LESS THAN TWENTY PERCENT OF THE VOTING
POWER OF THE STOCK OF A CORPORATION, THAT CORPORATION WILL  BE  PRESUMED
TO BE CONDUCTING A BUSINESS THAT IS NOT UNITARY WITH THE BUSINESS OF THE
TAXPAYER.
  (B)  THERE  shall  be deducted from investment capital any liabilities
which are directly or indirectly attributable  to  investment  capital[;
and  provided, further, that investment]. IF THE AMOUNT OF THOSE LIABIL-
ITIES EXCEEDS THE AMOUNT OF INVESTMENT CAPITAL, THE AMOUNT OF INVESTMENT
CAPITAL WILL BE ZERO.
  (C) INVESTMENT capital shall not  include  any  such  investments  the
income  from  which  is  excluded from entire net income pursuant to the
provisions of paragraph (c-1) of subdivision nine of this  section,  and
that  investment capital shall be computed without regard to liabilities
directly or indirectly attributable to such investments, but only if air
carriers organized in the United States and  operating  in  the  foreign
country  or  countries in which the taxpayer has its major base of oper-
ations and in which it is organized, resident or headquartered  (if  not
in  the same country as its major base of operations) are not subject to
any tax based on or measured by capital imposed by such foreign  country
or  countries  or  any  political  subdivision thereof, or if taxed, are
provided an exemption, equivalent to that provided for herein, from  any
tax  based  on or measured by capital imposed by such foreign country or
countries and from any such tax imposed  by  any  political  subdivision
thereof[;].
  (D) IF A TAXPAYER ACQUIRES STOCK DURING THE SECOND HALF OF ITS TAXABLE
YEAR AND OWNS THAT STOCK ON THE LAST DAY OF THE TAXABLE YEAR, IT WILL BE
PRESUMED THAT THE TAXPAYER HELD THAT STOCK FOR MORE THAN SIX CONSECUTIVE

S. 6359--D                          8                         A. 8559--D

MONTHS  DURING  THE  TAXABLE  YEAR. HOWEVER, IF THE TAXPAYER DOES NOT IN
FACT HOLD THAT STOCK FOR MORE THAN SIX CONSECUTIVE MONTHS, THE  TAXPAYER
MUST  INCREASE  ITS TOTAL BUSINESS CAPITAL IN THE IMMEDIATELY SUCCEEDING
TAXABLE  YEAR  BY  THE  AMOUNT  INCLUDED  IN INVESTMENT CAPITAL FOR THAT
STOCK, NET OF ANY LIABILITIES ATTRIBUTABLE TO  THAT  STOCK  COMPUTED  AS
PROVIDED  IN  PARAGRAPH  (B)  OF  THIS SUBDIVISION AND MUST INCREASE ITS
BUSINESS INCOME IN THE IMMEDIATELY SUCCEEDING TAXABLE YEAR BY THE AMOUNT
OF INCOME AND NET GAINS  (BUT  NOT  LESS  THAN  ZERO)  FROM  THAT  STOCK
INCLUDED  IN INVESTMENT INCOME, LESS ANY INTEREST DEDUCTIONS DIRECTLY OR
INDIRECTLY ATTRIBUTABLE TO THAT STOCK, AS PROVIDED IN SUBDIVISION SIX OF
THIS SECTION.
  (E) WHEN INCOME OR GAIN FROM  A  DEBT  OBLIGATION  OR  OTHER  SECURITY
CANNOT  BE  APPORTIONED  TO  THE  STATE  USING  THE  BUSINESS ALLOCATION
PERCENTAGE AS A RESULT OF UNITED STATES CONSTITUTIONAL  PRINCIPLES,  THE
DEBT  OBLIGATION  OR OTHER SECURITY WILL BE INCLUDED IN INVESTMENT CAPI-
TAL.
  (F) FOR PURPOSES OF DETERMINING WHETHER A TAXPAYER HAS HELD A SECURITY
FOR MORE THAN SIX CONSECUTIVE MONTHS, THE COMMISSIONER SHALL  TAKE  INTO
ACCOUNT OFFSETTING POSITIONS THE TAXPAYER TAKES IN SUCH OR SIMILAR SECU-
RITIES.
  6.  (A)  The  term "investment income" means income, including capital
gains in excess of capital  losses,  from  investment  capital,  to  the
extent  included  in computing entire net income, less, [(a)] (I) in the
discretion of the commissioner, any  INTEREST  deductions  allowable  in
computing  entire  net income which are directly or indirectly attribut-
able to investment capital or investment income, and [(b)  such  portion
of  any  net  operating loss deduction allowable in computing entire net
income, as the investment income, before such deduction, bears to entire
net income, before such deduction,] (II) THE TAXPAYER'S LOSS,  DEDUCTION
AND/OR  EXPENSE  ATTRIBUTABLE  TO  ANY  TRANSACTION, OR SERIES OF TRANS-
ACTIONS, ENTERED INTO TO MANAGE THE RISK OF PRICE  CHANGES  OR  CURRENCY
FLUCTUATIONS WITH RESPECT TO ANY ITEM OF INVESTMENT CAPITAL THAT IS HELD
OR  TO BE HELD BY THE TAXPAYER, OR THE AGGREGATE INVESTMENT CAPITAL THAT
IS HELD OR TO BE HELD BY THE TAXPAYER, IF ALL OF THE RISK, OR ALL BUT  A
DE  MINIMIS  AMOUNT  OF THE RISK, IS WITH RESPECT TO INVESTMENT CAPITAL,
provided, however, that in no case shall investment income exceed entire
net income[;]. IF  THE  AMOUNT  SUBTRACTED  UNDER  SUBPARAGRAPH  (I)  OR
SUBPARAGRAPH (II) OF THIS PARAGRAPH OR UNDER BOTH OF THOSE SUBPARAGRAPHS
EXCEEDS  INVESTMENT  INCOME,  THE  EXCESS OF SUCH AMOUNT OVER INVESTMENT
INCOME MUST BE ADDED BACK TO ENTIRE NET INCOME.
  (B) IN LIEU OF SUBTRACTING FROM INVESTMENT INCOME THE AMOUNT OF  THOSE
INTEREST  DEDUCTIONS, THE TAXPAYER MAY ELECT TO REDUCE ITS TOTAL INVEST-
MENT INCOME BY FORTY PERCENT. IF THE TAXPAYER MAKES THIS  ELECTION,  THE
TAXPAYER MUST ALSO MAKE THE ELECTIONS PROVIDED FOR IN PARAGRAPHS (B) AND
(C) OF SUBDIVISION SIX-A OF THIS SECTION. A TAXPAYER WHICH DOES NOT MAKE
THIS ELECTION BECAUSE IT HAS NO INVESTMENT CAPITAL WILL NOT BE PRECLUDED
FROM MAKING THOSE OTHER ELECTIONS.
  (C)  INVESTMENT  INCOME  SHALL NOT INCLUDE ANY AMOUNT TREATED AS DIVI-
DENDS PURSUANT TO SECTION SEVENTY-EIGHT OF THE INTERNAL REVENUE CODE.
  6-A. (A) THE TERM "OTHER EXEMPT INCOME" MEANS THE SUM  OF  EXEMPT  CFC
INCOME AND EXEMPT UNITARY CORPORATION DIVIDENDS.
  (B)  "EXEMPT  CFC  INCOME" MEANS THE INCOME REQUIRED TO BE INCLUDED IN
THE TAXPAYER'S FEDERAL  GROSS  INCOME  PURSUANT  TO  SUBSECTION  (A)  OF
SECTION  951  OF  THE INTERNAL REVENUE CODE, RECEIVED FROM A CORPORATION
THAT IS CONDUCTING A UNITARY BUSINESS  WITH  THE  TAXPAYER  BUT  IS  NOT
INCLUDED IN A COMBINED REPORT WITH THE TAXPAYER, LESS, IN THE DISCRETION

S. 6359--D                          9                         A. 8559--D

OF  THE  COMMISSIONER,  ANY  INTEREST  DEDUCTIONS DIRECTLY OR INDIRECTLY
ATTRIBUTABLE TO THAT INCOME.  IN LIEU OF SUBTRACTING FROM ITS EXEMPT CFC
INCOME THE AMOUNT OF THOSE INTEREST DEDUCTIONS, THE TAXPAYER  MAY  ELECT
TO  REDUCE ITS TOTAL EXEMPT CFC INCOME BY FORTY PERCENT. IF THE TAXPAYER
MAKES THIS ELECTION, THE TAXPAYER MUST ALSO MAKE THE ELECTIONS  PROVIDED
FOR  IN  PARAGRAPH  (B) OF SUBDIVISION SIX OF THIS SECTION AND PARAGRAPH
(C) OF THIS SUBDIVISION.  A TAXPAYER WHICH DOES NOT MAKE  THIS  ELECTION
BECAUSE  IT  HAS  NO EXEMPT CFC INCOME WILL NOT BE PRECLUDED FROM MAKING
THOSE OTHER ELECTIONS.
  (C) "EXEMPT UNITARY CORPORATION DIVIDENDS" MEANS THOSE DIVIDENDS  FROM
A  CORPORATION  THAT  IS CONDUCTING A UNITARY BUSINESS WITH THE TAXPAYER
BUT IS NOT INCLUDED IN A COMBINED REPORT WITH THE TAXPAYER, LESS, IN THE
DISCRETION OF THE COMMISSIONER,  ANY  INTEREST  DEDUCTIONS  DIRECTLY  OR
INDIRECTLY  ATTRIBUTABLE  TO  SUCH  INCOME.   OTHER THAN DIVIDEND INCOME
RECEIVED FROM CORPORATIONS  THAT  ARE  TAXABLE  UNDER  A  FRANCHISE  TAX
IMPOSED BY ARTICLE NINE OR ARTICLE THIRTY-THREE OF THIS CHAPTER OR WOULD
BE  TAXABLE  UNDER  A  FRANCHISE  TAX IMPOSED BY ARTICLE NINE OR ARTICLE
THIRTY-THREE OF THIS CHAPTER IF SUBJECT TO TAX, IN LIEU  OF  SUBTRACTING
FROM  THIS  DIVIDEND  INCOME THOSE INTEREST DEDUCTIONS, THE TAXPAYER MAY
ELECT TO REDUCE THE TOTAL  AMOUNT  OF  THIS  DIVIDEND  INCOME  BY  FORTY
PERCENT.  IF  THE  TAXPAYER  MAKES THIS ELECTION, THE TAXPAYER MUST ALSO
MAKE THE ELECTIONS PROVIDED FOR IN PARAGRAPH (B) OF SUBDIVISION  SIX  OF
THIS  SECTION  AND  PARAGRAPH  (B) OF THIS SUBDIVISION. A TAXPAYER WHICH
DOES NOT MAKE THIS ELECTION BECAUSE  IT  HAS  NOT  RECEIVED  ANY  EXEMPT
UNITARY  CORPORATION DIVIDENDS OR IS PRECLUDED FROM MAKING THIS ELECTION
FOR DIVIDENDS RECEIVED FROM CORPORATIONS TAXABLE UNDER A  FRANCHISE  TAX
IMPOSED BY ARTICLE NINE OR ARTICLE THIRTY-THREE OF THIS CHAPTER OR WOULD
BE  TAXABLE  UNDER  A  FRANCHISE  TAX IMPOSED BY ARTICLE NINE OR ARTICLE
THIRTY-THREE OF THIS CHAPTER IF SUBJECT TO TAX  WILL  NOT  BE  PRECLUDED
FROM MAKING THOSE OTHER ELECTIONS.
  (D)  IF  THE  TAXPAYER  ATTRIBUTES INTEREST DEDUCTIONS TO OTHER EXEMPT
INCOME AND THE AMOUNT SUBTRACTED EXCEEDS OTHER EXEMPT INCOME, THE EXCESS
OF THE INTEREST DEDUCTIONS OVER OTHER EXEMPT INCOME MUST BE  ADDED  BACK
TO ENTIRE NET INCOME. IN NO CASE SHALL OTHER EXEMPT INCOME EXCEED ENTIRE
NET INCOME.
  (E)  OTHER EXEMPT INCOME SHALL NOT INCLUDE ANY AMOUNT TREATED AS DIVI-
DENDS PURSUANT TO SECTION SEVENTY-EIGHT OF THE INTERNAL REVENUE CODE.
  7. (a) The term  "business  capital"  means  all  assets,  other  than
[subsidiary capital,] investment capital and stock issued by the taxpay-
er,  less liabilities not deducted from [subsidiary or] investment capi-
tal [except that cash on hand and on deposit shall be treated as invest-
ment capital  or  as  business  capital  as  the  taxpayer  may  elect].
BUSINESS  CAPITAL  SHALL  INCLUDE  ONLY THOSE ASSETS THE INCOME, LOSS OR
EXPENSE OF WHICH ARE PROPERLY REFLECTED (OR  WOULD  HAVE  BEEN  PROPERLY
REFLECTED  IF  NOT  FULLY  DEPRECIATED  OR  EXPENSED  OR  DEPRECIATED OR
EXPENSED TO A NOMINAL AMOUNT) IN THE COMPUTATION OF  ENTIRE  NET  INCOME
FOR THE TAXABLE YEAR.
  (b)  Provided, however, "business capital" shall not include assets to
the extent employed for  the  purpose  of  generating  income  which  is
excluded  from entire net income pursuant to the provisions of paragraph
(c-1) of subdivision nine of this section and shall be computed  without
regard  to  liabilities  directly  or  indirectly  attributable  to such
assets, but only if air carriers organized  in  the  United  States  and
operating  in the foreign country or countries in which the taxpayer has
its major base of operations and in which it is organized,  resident  or
headquartered  (if  not  in  the same country as its major base of oper-

S. 6359--D                         10                         A. 8559--D

ations) are not subject to any tax  based  on  or  measured  by  capital
imposed  by  such foreign country or countries or any political subdivi-
sion thereof, or if taxed, are provided an exemption, equivalent to that
provided  for  herein,  from  any  tax  based  on or measured by capital
imposed by such foreign country or  countries  and  from  any  such  tax
imposed by any political subdivision thereof[;].
  8. The term "business income" means entire net income minus investment
income[;]  AND OTHER EXEMPT INCOME. IN NO EVENT SHALL THE SUM OF INVEST-
MENT INCOME AND OTHER EXEMPT INCOME EXCEED ENTIRE  NET  INCOME.  IF  THE
TAXPAYER  MAKES  THE  ELECTION PROVIDED FOR IN SUBPARAGRAPH ONE OF PARA-
GRAPH (A) OF SUBDIVISION FIVE OF SECTION TWO HUNDRED TEN-A OF THIS ARTI-
CLE, THEN ALL INCOME FROM QUALIFIED FINANCIAL INSTRUMENTS SHALL  CONSTI-
TUTE BUSINESS INCOME.
  8-A.  Provided, however, that with respect to a DISC or a former DISC,
the following provisions shall apply:
  (a) investments in the stocks, bonds or other securities of a DISC  or
any  indebtedness from a DISC shall not be treated as [either subsidiary
capital or] investment capital under [subdivisions four or]  SUBDIVISION
five of this section,
  (b)  any amounts deemed distributed from a DISC or a former DISC which
are taxable as dividends pursuant to  subsection  (b)  of  section  nine
hundred  ninety-five  of  the  internal revenue code of nineteen hundred
fifty-four shall be treated as business income, except any such  amounts
from  a  former  DISC attributable to amounts includible in a taxpayer's
entire net income for a prior taxable year  under  subparagraph  (B)  of
paragraph (i) of subdivision nine of this section shall be excluded from
entire net income,
  (c)  any gain recognized for federal income tax purposes on the dispo-
sition of stock in a DISC, and any gain recognized on the disposition of
stock in a former DISC, includible in gross income as a dividend  pursu-
ant  to subsection (c) of section nine hundred ninety-five of the inter-
nal revenue code of nineteen hundred fifty-four,  shall  be  treated  as
business income, and
  (d)  except  as  provided in paragraph (i) of subdivision nine of this
section, any actual distribution from a DISC or a former DISC  shall  be
treated  as  business  income  except  an  actual distribution which for
federal income tax purposes is treated as made out  of  "other  earnings
and  profits"  under  section  nine  hundred  ninety-six of the internal
revenue code of nineteen hundred fifty-four, in which case  such  actual
distribution  shall  be treated as [either subsidiary income or] invest-
ment income under this article.
  [8-B. (a) The term "minimum taxable income" shall mean the entire  net
income of the taxpayer for the taxable year:
  (1) increased by the amount of the federal items of tax preference set
forth  in  section  fifty-seven  of  the internal revenue code (with the
modifications set forth in paragraph (b)  of  this  subdivision),  which
items  of  tax preference shall have the same meaning and be computed in
the same manner as under section fifty-seven  of  the  internal  revenue
code,
  (2) determined with the federal adjustments described in paragraph (c)
of  this  subdivision, which adjustments shall have the same meaning and
be computed in the same manner as under sections  fifty-six  and  fifty-
eight of the internal revenue code,
  (3)  increased  by  the net operating loss deduction otherwise allowed
under paragraph (f) of subdivision nine of this section, and

S. 6359--D                         11                         A. 8559--D

  (4) reduced, for taxable years beginning after nineteen hundred  nine-
ty-three, by the alternative net operating loss deduction, as defined in
paragraph (d) of this subdivision.
  (b)  The federal items of tax preference referred to hereinabove shall
be modified by deducting "tax-exempt interest" and "accelerated depreci-
ation or amortization on certain property placed in service before Janu-
ary  1,  1987",  as  determined  under  paragraphs  five  and  seven  of
subsection (a) of section fifty-seven of the internal revenue code.
  (c) The adjustments referred to hereinabove shall be:
  (1) "Depreciation" as determined under paragraph one of subsection (a)
of  section fifty-six of the internal revenue code. For purposes of this
subparagraph, the depreciation item  of  adjustment  provided  for  here
shall  not include any amount attributable to property for which the tax
benefits of the accelerated cost recovery system are not available under
this article by reason of subparagraph ten of paragraph (b) of  subdivi-
sion nine of this section;
  (2)  "Mining  exploration  and  development costs" as determined under
paragraph two of subsection (a) of section  fifty-six  of  the  internal
revenue code;
  (3)  "Treatment  of  certain  long-term contracts" as determined under
paragraph three of subsection (a) of section fifty-six of  the  internal
revenue code;
  (4)  "Installment sales of certain property" as determined under para-
graph six of subsection (a) of section fifty-six of the internal revenue
code;
  (5) "Circulation expenditures of personal holding companies" as deter-
mined under subparagraph (C) of  paragraph  two  of  subsection  (b)  of
section fifty-six of the internal revenue code;
  (6)  "Merchant  marine capital construction funds" as determined under
paragraph two of subsection (c) of section  fifty-six  of  the  internal
revenue code;
  (7)  "Disallowance  of  passive  activity  loss"  as  determined under
subsection (b) of section fifty-eight of the internal revenue code; and
  (8) "Adjusted basis", as it appears in paragraph seven  of  subsection
(a)  of  section  fifty-six  of  the  internal revenue code, but without
taking  into  account  the  references  therein  to  paragraph  five  of
subsection (a) of section fifty-six of the internal revenue code.
  (d)  The term "alternative net operating loss deduction" means the net
operating loss deduction allowed for the taxable  year  under  paragraph
(f) of subdivision nine of this section, except as provided herein.
  (1)(A)  The  net  operating loss for any year beginning after nineteen
hundred eighty-nine which is  included  in  determining  such  deduction
shall be determined with the adjustments provided in subparagraph two of
paragraph  (a) of this subdivision, and shall be reduced by the items of
tax preference determined under subparagraph one  of  paragraph  (a)  of
this  subdivision,  attributable to such year. An item of tax preference
shall be taken into account only to the extent such item  increased  the
amount  of  the  net operating loss for the taxable year under paragraph
(f) of subdivision nine of this section.
  (B) In the case of loss years beginning before nineteen hundred  nine-
ty,  the  amount  of the net operating loss which may be carried over to
taxable years beginning after  nineteen  hundred  eighty-nine  shall  be
equal  to an amount which may be carried from the loss year to the first
taxable year of the taxpayer beginning after  nineteen  hundred  eighty-
nine.

S. 6359--D                         12                         A. 8559--D

  (2)  In  determining  the amount of such deduction, loss carryforwards
and carrybacks shall, subject to the provisions of subparagraph five  of
paragraph  (f)  of  subdivision nine of this section, be computed in the
manner set forth in paragraph two  of  subsection  (b)  of  section  one
hundred  seventy-two  of the internal revenue code, except that, for the
reference therein to taxable income,  there  shall  be  substituted  the
phrase  "ninety  percent  of  minimum  taxable income determined without
regard to the alternative net operating loss deduction".
  (3) The amount of such deduction shall not exceed  ninety  percent  of
minimum  taxable  income  determined  without  regard to such deduction,
provided, however, the term "ninety percent" shall be  read  as  "forty-
five  percent"  with  respect  to  taxable  years  beginning in nineteen
hundred ninety-four.
  (e) The tax commission may, whenever necessary in  order  to  properly
reflect  the  minimum taxable income of any taxpayer, determine the year
or period in which any item of income or deduction  shall  be  included,
without regard to the method of accounting employed by the taxpayer.
  (f) If the period covered by a report under this article is other than
the  period  covered by the report to the United States treasury depart-
ment, the minimum taxable income shall be appropriately modified  pursu-
ant to regulations promulgated by the tax commission.]
  9. The term "entire net income" means total net income from all sourc-
es,  which  shall  be  presumably  the same as the entire taxable income
[(but not alternative minimum taxable income)], WHICH, EXCEPT AS HEREIN-
AFTER PROVIDED IN THIS SUBDIVISION,
  (i) [which] the taxpayer is required to report to  the  United  States
treasury department, or
  (ii)  [which]  the  taxpayer would have been required to report to the
United States treasury department if it had not made an  election  under
subchapter s of chapter one of the internal revenue code, or
  (iii)  [which]  the  taxpayer,  in  the case of a corporation which is
exempt from federal income tax (other than the tax on unrelated business
taxable income imposed under section 511 of the internal  revenue  code)
but which is subject to tax under this article, would have been required
to  report  to  the  United  States  treasury  department  but  for such
exemption, [except as hereinafter provided, and subject to any modifica-
tion required by paragraphs (d) and (e) of subdivision three of  section
two hundred ten of this article] OR
  (IV)  IN  THE CASE OF AN ALIEN CORPORATION THAT UNDER ANY PROVISION OF
THE INTERNAL REVENUE CODE IS NOT TREATED AS A "DOMESTIC CORPORATION"  AS
DEFINED  IN  SECTION  SEVEN  THOUSAND  SEVEN HUNDRED ONE OF SUCH CODE IS
EFFECTIVELY CONNECTED WITH THE CONDUCT OF A TRADE OR BUSINESS WITHIN THE
UNITED STATES AS DETERMINED UNDER SECTION 882 OF  THE  INTERNAL  REVENUE
CODE.
  (a) Entire net income shall not include:
  [(1)  income,  gains  and  losses from subsidiary capital which do not
include the amount of a recovery in respect of any war loss  except  for
such  amounts  from  a  former DISC which are treated as business income
under subdivision eight-A of this section,
  (2) fifty percent of dividends (A) other than from  subsidiaries,  and
(B)  other  than  amounts  treated  as business income under subdivision
eight-A of this section,  on  shares  of  stock  which  conform  to  the
requirements  of  subsection (c) of section two hundred forty-six of the
internal revenue code.]
  (3) bona fide gifts,

S. 6359--D                         13                         A. 8559--D

  (4) income and deductions with respect to amounts received from school
districts and from corporations and associations, organized and operated
exclusively for religious, charitable or educational purposes,  no  part
of the net earnings of which inures to the benefit of any private share-
holder or individual, for the operation of school buses,
  (5)  (i)  any  refund  or  credit of a tax imposed under this article,
article twenty-three, or FORMER article thirty-two of this chapter,  for
which  tax  no  exclusion  or  deduction  was allowed in determining the
taxpayer's entire net income under this article,  article  twenty-three,
or  FORMER article thirty-two of this chapter for any prior year, (ii) a
refund or credit of general corporation tax allowed by subdivision elev-
en of section 11-604 of the administrative code of the city of New York,
or (iii) any refund or credit  of  a  tax  imposed  under  sections  one
hundred  eighty-three,  one  hundred eighty-three-a, one hundred eighty-
four or one hundred eighty-four-a of this chapter, and
  (6) any amount treated as dividends pursuant to section  seventy-eight
of the internal revenue code [and not otherwise deductible under subpar-
agraphs one and two of this paragraph];
  (7)  that portion of wages and salaries paid or incurred for the taxa-
ble year for which a deduction is not allowed pursuant to the provisions
of section two hundred eighty-C of the internal revenue code.
  [(8) in the case of a taxpayer who is separately or as a partner of  a
partnership  doing  an  insurance  business  as a member of the New York
insurance exchange described in section six thousand two hundred one  of
the  insurance  law, any item of income, gain, loss or deduction of such
business which is the taxpayer's distributive  or  pro  rata  share  for
federal  income  tax  purposes or which the taxpayer is required to take
into account separately for federal income tax purposes.]
  (9) for taxable years beginning after December thirty-first,  nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other
than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine,  any  amount  which  is  included  in  the
taxpayer's federal taxable income solely as a result of an election made
pursuant  to  the provisions of such paragraph eight as it was in effect
for agreements entered into prior to  January  first,  nineteen  hundred
eighty-four;
  (10) for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other
than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine, any amount which the taxpayer  could  have
excluded  from  federal  taxable  income  had  it  not made the election
provided for in such paragraph eight as it was in effect for  agreements
entered into prior to January first, nineteen hundred eighty-four;
  (11)  the amount deductible pursuant to paragraph (j) of this subdivi-
sion; and

S. 6359--D                         14                         A. 8559--D

  (12) upon the disposition of property to which paragraph (j)  of  this
subdivision  applies,  the amount, if any, by which the aggregate of the
amounts described in subparagraph ten of paragraph (b) of this  subdivi-
sion  attributable to such property exceeds the aggregate of the amounts
described  in  paragraph  (j)  of  this subdivision attributable to such
property; and
  [(13) if the added tax provided for in either (i)  former  subdivision
two  of section one hundred eighty-two of this chapter (relating to real
estate corporations) or (ii) former subdivision  one-a  of  section  two
hundred  nine of this chapter (relating to real estate corporations) has
been imposed upon the taxpayer,  any  income  which  has  been  used  in
computing such tax.]
  (14)   The  amount  deductible  pursuant  to  paragraph  (l)  of  this
[subsection] SUBDIVISION.
  [(15) In the case of an attorney-in-fact,  with  respect  to  which  a
mutual  insurance  company,  which  is  an  interinsurer or a reciprocal
insurer and is subject to tax under subdivision (a) of  section  fifteen
hundred  ten  of  this chapter, has made the election provided for under
section eight hundred thirty-five  of  the  Internal  Revenue  Code,  an
amount  equal  to the excess, if any, of the amounts paid or incurred by
such interinsurer or reciprocal insurer  in  the  taxable  year  to  the
attorney-in-fact  over  the  deduction  allowed  to such interinsurer or
reciprocal insurer with respect to amounts paid or incurred in the taxa-
ble year to the attorney-in-fact under subsection (b)  of  such  section
eight hundred thirty-five of the Internal Revenue Code.]
  (16) In the case of a taxpayer subject to the modification provided by
subparagraph  sixteen  of  paragraph (b) of this subdivision, the amount
required to be recaptured pursuant to subsection (d) of section  179  of
the  internal  revenue  code  with  respect  to property upon which such
modification was based.
  (17) FOR TAXABLE YEARS  BEGINNING  AFTER  DECEMBER  THIRTY-FIRST,  TWO
THOUSAND  TWO, THE AMOUNT DEDUCTIBLE PURSUANT TO PARAGRAPH (N-1) OF THIS
SUBDIVISION.
  (18) the amount of income or gain included in federal  taxable  income
of  a taxpayer that is a partner in a qualified entity or is a qualified
entity that is located both within and without a New  York  state  inno-
vation  hot  spot, to the extent that the income or gain is attributable
to the operations of a qualified entity at or as part of  the  New  York
state  innovation  hot  spot as provided in section thirty-eight of this
chapter.
  (19) THE AMOUNT COMPUTED PURSUANT TO PARAGRAPH (R), (S) OR (T) OF THIS
SUBDIVISION, BUT ONLY THE AMOUNT DETERMINED  PURSUANT  TO  ONE  OF  SUCH
PARAGRAPHS.
  (b)  Entire  net  income  shall  be  determined without the exclusion,
deduction or credit of:
  (1) [the amount of any specific exemption or credit allowed in any law
of the United States imposing any tax on or measured by  the  income  of
corporations,]  IN  THE  CASE  OF  AN  ALIEN  CORPORATION THAT UNDER ANY
PROVISION OF THE INTERNAL REVENUE CODE IS NOT  TREATED  AS  A  "DOMESTIC
CORPORATION"  AS  DEFINED IN SECTION SEVEN THOUSAND SEVEN HUNDRED ONE OF
SUCH CODE, (I) ANY PART OF ANY INCOME FROM DIVIDENDS OR INTEREST ON  ANY
KIND  OF  STOCK,  SECURITIES OR INDEBTEDNESS, BUT ONLY IF SUCH INCOME IS
TREATED AS EFFECTIVELY CONNECTED WITH THE CONDUCT OF A TRADE OR BUSINESS
IN THE UNITED STATES PURSUANT TO SECTION 864  OF  THE  INTERNAL  REVENUE
CODE, (II) ANY INCOME EXEMPT FROM FEDERAL TAXABLE INCOME UNDER ANY TREA-
TY  OBLIGATION  OF  THE  UNITED STATES, BUT ONLY IF SUCH INCOME WOULD BE

S. 6359--D                         15                         A. 8559--D

TREATED AS EFFECTIVELY CONNECTED IN ABSENCE OF SUCH  EXEMPTION  PROVIDED
THAT  SUCH  TREATY  OBLIGATION  DOES  NOT  PRECLUDE THE TAXATION OF SUCH
INCOME BY A STATE, OR (III) ANY INCOME WHICH WOULD BE TREATED AS  EFFEC-
TIVELY  CONNECTED  IF  SUCH  INCOME  WERE NOT EXCLUDED FROM GROSS INCOME
PURSUANT TO SUBSECTION (A) OF SECTION 103 OF THE INTERNAL REVENUE CODE;
  (2) any part of any income from dividends or interest on any  kind  of
stock,  securities  or  indebtedness, [except as provided in clauses (1)
and (2) of paragraph (a) hereof,]
  (3) taxes on or measured by profits or income paid or accrued  to  the
United  States[,] OR any of its possessions [or to any foreign country],
TERRITORIES OR COMMONWEALTHS, including taxes in  lieu  of  any  of  the
foregoing  taxes  otherwise generally imposed by [any foreign country or
by] any possession, TERRITORY OR COMMONWEALTH of the United States,
  (3-a) taxes on or measured by profits  or  income,  or  which  include
profits  or  income  as a measure, paid or accrued to any other state of
the United States, or any  political  subdivision  thereof,  or  to  the
District  of  Columbia,  including taxes expressly in lieu of any of the
foregoing taxes otherwise generally imposed by any other  state  of  the
United  States, or any political subdivision thereof, or the District of
Columbia;
  (4) taxes imposed under this article  and  article  thirty-two  AS  IN
EFFECT  ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN and sections one
hundred eighty-three, one hundred eighty-three-a,  one  hundred  eighty-
four and one hundred eighty-four-a of this chapter,
  (4-a)(A) [the entire amount allowable as an exclusion or deduction for
stock transfer taxes imposed by article twelve of this chapter in deter-
mining  the  entire  taxable  income  which  the taxpayer is required to
report to the United States treasury department but only to  the  extent
that  such  taxes  are  incurred and paid in market making transactions,
(B)] in those instances where a credit for the special additional  mort-
gage  recording  tax credit is allowed under [paragraph (a) of] subdivi-
sion [seventeen] NINE of section two hundred [ten] TEN-B of  this  arti-
cle,  the  amount  allowed  as an exclusion or deduction for the special
additional mortgage  recording  tax  imposed  by  subdivision  one-a  of
section  two  hundred  fifty-three  of  this  chapter in determining the
entire taxable income which the taxpayer is required to  report  to  the
United  States  treasury  department,  and  [(C)]  (B) unless the credit
allowed pursuant to subdivision [seventeen] NINE of section two  hundred
[ten]  TEN-B of this article is reflected in the computation of the gain
or loss so as to result in an increase in such gain or decrease of  such
loss,  for  federal income tax purposes, from the sale or other disposi-
tion of the property with respect to which the special additional  mort-
gage  recording tax imposed pursuant to subdivision one-a of section two
hundred fifty-three of this chapter was paid, the amount of the  special
additional  mortgage  recording  tax  imposed  by  subdivision  one-a of
section two hundred fifty-three of this chapter which was paid and which
is reflected in the computation of the basis of the property  so  as  to
result  in  a decrease in such gain or increase in such loss for federal
income tax purposes from the sale or other disposition of  the  property
with respect to which such tax was paid.
  (6)  [in  the discretion of the tax commission, any amount of interest
directly or indirectly and  any  other  amount  directly  or  indirectly
attributable  as a carrying charge or otherwise to subsidiary capital or
to income, gains or losses from subsidiary capital] ANY  AMOUNT  ALLOWED
AS  A  DEDUCTION  FOR THE TAXABLE YEAR UNDER SECTION 172 OF THE INTERNAL

S. 6359--D                         16                         A. 8559--D

REVENUE CODE, INCLUDING CARRYOVERS  OF  DEDUCTIONS  FROM  PRIOR  TAXABLE
YEARS.
  [(7)  in the case of a taxpayer who is separately or as a partner of a
partnership doing an insurance business as a  member  of  the  New  York
insurance  exchange described in section six thousand two hundred one of
the insurance law, such taxpayer's distributive or pro rata share of the
allocated entire  net  income  of  such  business  as  determined  under
sections fifteen hundred three and fifteen hundred four of this chapter,
provided  however,  in  the  event such allocated entire net income is a
loss, such taxpayer's distributive or pro rata share of such loss  shall
not  be  subtracted  from federal taxable income in computing entire net
income under this subdivision.]
  (8) for taxable years beginning after December thirty-first,  nineteen
hundred eighty-one, except with respect to property which is a qualified
mass  commuting vehicle described in subparagraph (D) of paragraph eight
of subsection (f) of section one hundred  sixty-eight  of  the  internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty  of  a taxpayer principally engaged in the conduct of aviation (other
than air freight forwarders acting as principal and  like  indirect  air
carriers)  which  is placed in service before taxable years beginning in
nineteen hundred eighty-nine, any amount which the taxpayer claimed as a
deduction in computing its federal taxable income solely as a result  of
an  election  made pursuant to the provisions of such paragraph eight as
it was in effect for agreements entered into  prior  to  January  first,
nineteen hundred eighty-four;
  (9)  for taxable years beginning after December thirty-first, nineteen
hundred eighty-one, except with respect to property which is a qualified
mass commuting vehicle described in subparagraph (D) of paragraph  eight
of  subsection  (f)  of  section one hundred sixty-eight of the internal
revenue code (relating to qualified mass commuting vehicles) and proper-
ty of a taxpayer principally engaged in the conduct of  aviation  (other
than  air  freight  forwarders acting as principal and like indirect air
carriers) which is placed in service before taxable years  beginning  in
nineteen  hundred  eighty-nine, any amount which the taxpayer would have
been required to include in  the  computation  of  its  federal  taxable
income had it not made the election permitted pursuant to such paragraph
eight  as  it was in effect for agreements entered into prior to January
first, nineteen hundred eighty-four;
  (10) in the case of property placed in service in taxable years begin-
ning before nineteen hundred ninety-four, for  taxable  years  beginning
after  December  thirty-first,  nineteen hundred eighty-one, except with
respect to property subject to the provisions  of  section  two  hundred
eighty-F   of  the  internal  revenue  code,  property  subject  to  the
provisions of section one hundred sixty-eight of  the  internal  revenue
code which is placed in service in this state in taxable years beginning
after  December  thirty-first, nineteen hundred eighty-four and property
of a taxpayer principally engaged in the conduct of aviation (other than
air freight forwarders acting as principal and like indirect air  carri-
ers)  which is placed in service before taxable years beginning in nine-
teen  hundred  [eight-nine]  EIGHTY-NINE,  the  amount  allowable  as  a
deduction determined under section one hundred sixty-eight of the inter-
nal revenue code;
  (11)  upon  the disposition of property to which paragraph (j) of this
subdivision applies, the amount, if any, by which the aggregate  of  the
amounts  described  in  such paragraph (j) attributable to such property

S. 6359--D                         17                         A. 8559--D

exceeds the aggregate of the amounts described in  subparagraph  ten  of
this paragraph attributable to such property.
  (15)  Real  property taxes paid on qualified agricultural property and
deducted in determining federal taxable income, to  the  extent  of  the
amount of the agricultural property tax credit allowed under subdivision
[twenty-two] ELEVEN of section two hundred [ten] TEN-B of this article.
  (16)  In  the  case  of  a taxpayer which is not an eligible farmer as
defined in paragraph (b) of subdivision [twenty-two] ELEVEN  of  section
two  hundred  [ten]  TEN-B  of this article, the amount of any deduction
claimed pursuant to section  179  of  the  internal  revenue  code  with
respect  to  a sport utility vehicle which is not a passenger automobile
as defined in paragraph 5 of subsection  (d)  of  section  280F  of  the
internal revenue code.
  (17)  for  taxable  years  beginning  after December thirty-first, two
thousand two, in the case of qualified property described  in  paragraph
two  of  subsection k of section 168 of the internal revenue code, other
than qualified resurgence zone property described in  paragraph  (q)  of
this subdivision, and other than qualified New York Liberty Zone proper-
ty  described  in  paragraph two of subsection b of section 1400L of the
internal revenue code (without regard to clause (i) of subparagraph  (C)
of  such paragraph), which was placed in service on or after June first,
two thousand three, the amount allowable as a  deduction  under  section
167 of the internal revenue code.
  (18) Premiums paid for environmental remediation insurance, as defined
in  section  twenty-three  of  this chapter, and deducted in determining
federal taxable income, to the extent of the amount of the environmental
remediation insurance credit allowed under such section twenty-three and
subdivision [thirty-five] NINETEEN of section two hundred [ten] TEN-B of
this article.
  (19) The amount of any  deduction  allowed  pursuant  to  section  one
hundred ninety-nine of the internal revenue code.
  (20) The amount of any federal deduction for taxes imposed under arti-
cle twenty-three of this chapter.
  (20-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF
THE  CALCULATION OF THE TAX-FREE NY AREA EXCISE TAX ON TELECOMMUNICATION
SERVICES CREDIT ALLOWED UNDER  SUBDIVISION  FORTY-FOUR  OF  SECTION  TWO
HUNDRED TEN-B OF THIS ARTICLE.
  (21)  THE  AMOUNT  OF ANY FEDERAL DEDUCTION FOR REAL PROPERTY TAXES TO
THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF THE  CALCULATION  OF  THE
REAL  PROPERTY  TAX  CREDIT  FOR MANUFACTURERS ALLOWED UNDER SUBDIVISION
FORTY-THREE OF SECTION TWO HUNDRED TEN-B OF THIS ARTICLE.
  [(c) Entire net income shall include income  within  and  without  the
United States;]
  (c-1)(1)  Notwithstanding  any other provision of this article, in the
case of a taxpayer which is a foreign air carrier holding a foreign  air
carrier  permit issued by the United States department of transportation
pursuant to section four hundred two of  the  federal  aviation  act  of
nineteen  hundred  fifty-eight, as amended, and which is qualified under
subparagraph two of this paragraph, entire net income shall not include,
and shall be computed without the  deduction  of,  amounts  directly  or
indirectly  attributable  to,  (i)  any income derived from the interna-
tional operation  of  aircraft  as  described  in  and  subject  to  the
provisions of section eight hundred eighty-three of the internal revenue
code,  (ii)  income  without the United States which is derived from the
operation of aircraft, and (iii) income without the United States  which

S. 6359--D                         18                         A. 8559--D

is  of  a  type  described  in  subdivision (a) of section eight hundred
eighty-one of the internal revenue code except that it is  derived  from
sources  without  the  United  States.  Entire  net income shall include
income  described in clauses (i), (ii) and (iii) of this subparagraph in
the case of taxpayers not described in the previous sentence.
  (2) A taxpayer is qualified under this subparagraph  if  air  carriers
organized  in  the United States and operating in the foreign country or
countries in which the taxpayer has its major base of operations and  in
which  it  is  organized,  resident or headquartered (if not in the same
country as its major base of operations) are not subject to  any  income
tax  or  other tax based on or measured by income or receipts imposed by
such foreign country or countries or any political subdivision  thereof,
or  if  so  subject to such tax, are provided an exemption from such tax
equivalent to that provided for herein.
  (c-2) Adjustments by qualified public utilities. (1) In the case of  a
taxpayer which is a qualified public utility, entire net income shall be
computed with the adjustments set forth in this paragraph.
  (2)  Definitions.  (A)  Qualified  public utility. The term "qualified
public utility" means a taxpayer which: (i)  on  December  thirty-first,
nineteen  hundred ninety-nine, was subject to the ratemaking supervision
of the state department of public service, and (ii) for the year  ending
on  December  thirty-first, nineteen hundred ninety-nine, was subject to
tax under former section one hundred eighty-six of this chapter.
  (B) Transition property. The term "transition property" means property
placed in service by the taxpayer before January  first,  two  thousand,
for  which a depreciation deduction is allowed under section one hundred
sixty-seven of the internal revenue code.
  (3) Federal depreciation disallowed. With respect to transition  prop-
erty,  the  deduction  for  federal income tax purposes for depreciation
shall not be allowed.
  (4) New York depreciation. With  respect  to  transition  property,  a
deduction  shall  be  allowed  for the depreciation expense shown on the
books and records of the taxpayer for the taxable year and determined in
accordance with generally accepted accounting principles.
  (5) Regulatory assets. A deduction shall be allowed for amounts recog-
nized as expense on the books and records of the taxpayer for the  taxa-
ble  year,  which  amounts were recognized as expense for federal income
tax purposes in a taxable year ending  on  or  before  December  thirty-
first,  nineteen  hundred ninety-nine, where: (A) such amounts represent
expenditures which, when made, were charged to a deferred debit  account
or  similar  asset account on the books and records of the taxpayer, and
where (B) the recognition of expense on the books  and  records  of  the
taxpayer  is  matched by revenue stemming from a procedure or adjustment
allowing the recovery of such expenditures, and where (C)  such  revenue
is recognized for federal income tax purposes in the taxable year.
  (6)  Basis for gain or loss. (A) Recognition transactions. (i) General
rule - book basis. Except as provided in subclause (ii) of this  clause,
where  transition property is sold or otherwise disposed of in the taxa-
ble year in a transaction of the type requiring recognition of  gain  or
loss  for  federal  income  tax  purposes, the basis for determining the
amount of such gain or loss under this article shall be the cost of  the
property less the accumulated depreciation on the property determined on
the  books  and  records  of  the  taxpayer in accordance with generally
accepted accounting principles.
  (ii) Qualified gain - New York basis.  Where  a  sale  or  disposition
described in subclause (i) of this clause results in recognition of gain

S. 6359--D                         19                         A. 8559--D

for  federal  income tax purposes, and where either (I) such recognition
occurs in a taxable year ending after nineteen hundred  ninety-nine  and
before  two  thousand ten, or (II) such recognition is with respect to a
nuclear  electric  generating  facility,  the  basis for determining the
amount of such gain under this article shall be the cost of the property
less the aggregate of the New York depreciation deductions on the  prop-
erty determined under subparagraph four of this paragraph.
  (iii)  No  conversion  of  gain  to  loss. In the event that the basis
determined under subclause (ii) of this clause results in  determination
of  a  loss  on the sale or disposition of the property, no gain or loss
shall be recognized under this article with  respect  to  such  sale  or
disposition.
  (B)  Nonrecognition transactions. (i) Carryover basis. (I) where tran-
sition property is disposed of ("original disposition") in a transaction
of a type requiring deferral of recognition of gain or loss for  federal
income tax purposes, and where (II) there is a subsequent recognition of
gain  or loss for federal income tax purposes ("clause B gain or loss"),
the amount of which is determined by reference, in whole or in part,  to
the  basis  of  such transition property ("underlying transition proper-
ty"), then (III) the amount of such clause B gain  or  loss  under  this
article shall be adjusted as provided in subclause (ii) or (iii) of this
clause.
  (ii)  General  rule  -  book  basis  adjustment. Except as provided in
subclause (iii) of this clause, the amount of clause  B  gain  shall  be
reduced,  or  the  amount  of  clause B loss increased, by the amount by
which the book basis of the underlying transition property on  the  date
of  original  disposition  (determined using the provisions of subclause
(i) of clause (A) of this subparagraph) exceeds the federal  income  tax
basis of such property on such date.
  (iii)  Qualified gain - New York basis adjustment. Where clause B gain
either (I) occurs in a taxable year ending after nineteen hundred  nine-
ty-nine and before two thousand ten, or (II) is with respect to a nucle-
ar  electric  generating  facility,  the  amount of such gain under this
article shall be reduced, but not below zero, by the amount by which the
New York basis of the underlying transition  property  on  the  date  of
original  disposition (determined using the provisions of subclause (ii)
of clause (A) of this subparagraph) exceeds the federal income tax basis
of such property on such date.
  (iv) Application to replacement  property  and  transferee  taxpayers.
This  clause  shall apply whether the clause B gain or loss: (I) is with
respect to either transition property or depreciable property the  basis
of  which  is determined by reference to transition property, or (II) is
recognized by either a qualified public utility or by a  taxpayer  which
is  a  transferee of transition property (whether or not such transferee
is a qualified public utility, notwithstanding subparagraph one of  this
paragraph).
  (c-3)  Depreciation adjustments by qualified power producers and pipe-
line companies. (1) In the case of  a  qualified  taxpayer,  entire  net
income  shall be computed with the depreciation adjustments set forth in
this paragraph.
  (2) Definitions. (A) Qualified taxpayer. The term "qualified taxpayer"
means a qualified power producer or a qualified pipeline.
  (B) Qualified power producer.  The  term  "qualified  power  producer"
means  a  taxpayer which: (i) on December thirty-first, nineteen hundred
ninety-nine, was not subject to the ratemaking supervision of the  state
department  of  public service, and (ii) for the year ending on December

S. 6359--D                         20                         A. 8559--D

thirty-first, nineteen hundred ninety-nine, was  subject  to  tax  under
former  section one hundred eighty-six of this chapter on account of its
being principally engaged in the business of supplying electricity.
  (C) Qualified pipeline. The term "qualified pipeline" means a taxpayer
which:  (i)  on December thirty-first, nineteen hundred ninety-nine, was
subject to the ratemaking supervision of either the federal energy regu-
latory commission or the state department of public  service,  and  (ii)
for  the  year ending on December thirty-first, nineteen hundred ninety-
nine, was subject to tax under sections one hundred eighty-three and one
hundred eighty-four of this chapter on account of its being  principally
engaged in the business of pipeline transmission.
  (D) Transition property. The term "transition property" means property
placed  in  service  by  a  qualified taxpayer before January first, two
thousand, for which a depreciation deduction is  allowed  under  section
one hundred sixty-seven of the internal revenue code.
  (3)  Federal depreciation disallowed. With respect to transition prop-
erty, the deduction for federal income  tax  purposes  for  depreciation
shall not be allowed.
  (4)  New  York  depreciation.  With  respect to transition property, a
deduction shall be allowed for  the  depreciation  expense  computed  as
provided  in this subparagraph. (A) All transition property shown on the
books and records of the taxpayer on January first, two  thousand  shall
be  treated  as  a  single asset placed in service on such date. The New
York basis for purposes of computing the depreciation deduction on  such
single  asset  shall  be  the net book value of such transition property
determined on the first day of the federal taxable year  ending  in  two
thousand  (or  on  the  date  any such property is placed in service, if
later) adjusted as provided in clause (B) of this subparagraph.
  (B) If transition property is sold or otherwise disposed of,  the  New
York basis of the single asset shall be reduced on the date of such sale
or  disposition  by the amount of the adjusted federal tax basis of such
property on such date.
  (C) The New York depreciation deduction allowed for any  taxable  year
with  respect to such single asset shall be computed using the straight-
line method, a twenty-year life, and a salvage value of zero.
  (D) For purposes of this subparagraph, the term "net book value" means
cost reduced by accumulated depreciation shown on the books and  records
of the taxpayer and determined, in the case of a qualified power produc-
er,  in accordance with generally accepted accounting principles; and in
the case of a qualified pipeline,  in  accordance  with  the  taxpayer's
regulatory  reports  filed with the federal energy regulatory commission
or state department of public service.
  (d) The [tax commission] COMMISSIONER may, whenever necessary in order
properly to reflect the entire net income of any taxpayer, determine the
year or period in which  any  item  of  income  or  deduction  shall  be
included,  without  regard  to  the method of accounting employed by the
taxpayer[;].
  (e) The entire net income of any bridge commission created by  act  of
congress  to  construct  a bridge across an international boundary means
its gross income less the expense of maintaining and operating its prop-
erties, the annual interest upon its bonds and  other  obligations,  and
the  annual  charge  for  the retirement of such bonds or obligations at
maturity[;].
  [(f) A net operating loss deduction shall be allowed  which  shall  be
presumably  the  same  as the net operating loss deduction allowed under
section one hundred seventy-two of the internal revenue code,  or  which

S. 6359--D                         21                         A. 8559--D

would  have  been allowed if the taxpayer had not made an election under
subchapter s of chapter one of the internal revenue code, except that in
every instance where such deduction is allowed under this article:
  (1)  any  net  operating  loss  included in determining such deduction
shall be adjusted to reflect the inclusions and exclusions  from  entire
net income required by paragraphs (a), (b) and (g) hereof,
  (2)  such deduction shall not include any net operating loss sustained
during any taxable year  beginning  prior  to  January  first,  nineteen
hundred  sixty-one, or during any taxable year in which the taxpayer was
not subject to the tax imposed by this article,
  (3) such deduction shall not exceed the deduction for the taxable year
allowed under section one hundred seventy-two of  the  internal  revenue
code,  or  the  deduction  for  the  taxable  year which would have been
allowed if the taxpayer had not made an election under subchapter  s  of
chapter one of the internal revenue code,
  (4)  in the case of a New York S corporation, such deduction shall not
include any net operating loss sustained during a New  York  C  year  or
during a New York S year beginning prior to nineteen hundred ninety, and
in  the  case  of  a  New  York  C corporation, such deduction shall not
include any net operating loss sustained  during  a  New  York  S  year,
provided,  however, a New York S year shall be treated as a taxable year
for purposes of determining the number of taxable years to which  a  net
operating loss may be carried back or carried forward, and
  (5) the net operating loss deduction allowed under section one hundred
seventy-two  of  the  internal  revenue  code shall for purposes of this
paragraph be determined as  if  the  taxpayer  had  elected  under  such
section  to  relinquish  the entire carryback period with respect to net
operating losses, except with respect to the first ten thousand  dollars
of each of such losses, sustained during taxable years ending after June
thirtieth, nineteen hundred eighty-nine.
  (g)  For  taxable  years  commencing  prior to January first, nineteen
hundred eighty-seven, at the election of the taxpayer, a deduction shall
be allowed for expenditures paid or incurred during the taxable year for
the construction, reconstruction,  erection  or  improvement  of  either
industrial  waste  treatment facilities or air pollution control facili-
ties, or, with respect to taxable years beginning on  or  after  January
first, nineteen hundred seventy-seven and before January first, nineteen
hundred eighty-one, industrial waste treatment controlled process facil-
ities or air pollution controlled process facilities.
  (1)  (A)  (1)  The  term "industrial waste treatment facilities" shall
mean facilities for the treatment, neutralization  or  stabilization  of
industrial  waste  and other wastes (as the terms "industrial waste" and
"other wastes" are defined  in  section  17-0105  of  the  environmental
conservation  law)  from a point immediately preceding the point of such
treatment, neutralization or stabilization to  the  point  of  disposal,
including the necessary pumping and transmitting facilities.
  (2)  The term "industrial waste treatment controlled process facility"
shall mean such portion of the cost of an industrial production facility
designed for the purpose of obviating  the  need  for  industrial  waste
treatment  facilities  as  defined  in  item one of this clause as shall
exceed the cost of an industrial production facility of equal production
capacity which if constructed would require industrial  waste  treatment
facilities  to meet emission standards in compliance with the provisions
of the environmental conservation law and the codes, rules, regulations,
permits or orders issued pursuant thereto but only to the extent of  the
cost of such industrial waste treatment facilities.

S. 6359--D                         22                         A. 8559--D

  (B) (1) The term "air pollution control facilities" shall mean facili-
ties which remove, reduce, or render less noxious air contaminants emit-
ted from an air contamination source (as the terms "air contaminant" and
"air  contamination  source" are defined in section 19-0107 of the envi-
ronmental conservation law) from a point immediately preceding the point
of  such  removal,  reduction  or rendering to the point of discharge of
air, meeting emission standards as  established  by  the  department  of
environmental  conservation, but excluding such facilities installed for
the primary purpose of salvaging materials which are usable in the manu-
facturing process or are marketable and excluding those facilities which
rely for their efficacy on dilution, dispersion or assimilation  of  air
contaminants  in the ambient air after emission. Such term shall further
include flue gas desulfurization equipment and attendant sludge disposal
facilities, fluidized bed boilers, precombustion coal  cleaning  facili-
ties  or  other  facilities that conform with this subdivision and which
comply with the provisions of the state acid deposition control act  set
forth  in  title nine of article nineteen of the environmental conserva-
tion law.
  (2) The term "air pollution controlled process  facility"  shall  mean
such  portion  of the cost of an industrial production facility designed
for the purpose of obviating the need for air pollution control  facili-
ties  as  defined in item one of this clause as shall exceed the cost of
an industrial production facility of equal productive capacity which  if
constructed  would  require  air  pollution  control facilities to inert
emission standards as established pursuant to  title  three  of  article
nineteen of the environmental conservation law but only to the extent of
the cost of such air pollution control facilities.
  (2) However, such deduction shall be allowed only
  (A)  with  respect to tangible property which is depreciable, pursuant
to section one hundred sixty-seven of the internal revenue code,  having
a  situs in this state and used in the taxpayer's trade or business, the
construction, reconstruction, erection or improvement of which,  in  the
case  of industrial waste treatment facilities, is initiated on or after
January first, nineteen hundred sixty-five or which, in the case of  air
pollution  control  facilities,  is initiated on or after January first,
nineteen hundred sixty-six, or which in the  case  of  industrial  waste
treatment  controlled  process  facilities  or  air pollution controlled
process facilities is initiated on and  after  January  first,  nineteen
hundred seventy-seven, and
  (B) on condition that such facilities have been certified by the state
commissioner  of  environmental conservation or his designated represen-
tative, pursuant to section 19-0309 of  the  environmental  conservation
law,  as  complying  with  applicable  provisions  of  the environmental
conservation law, the public health law, the  state  sanitary  code  and
codes,  rules,  regulations,  permits or orders issued pursuant thereto,
and
  (C) on condition that entire net income for the taxable year  and  all
succeeding  taxable  years  be  computed without any deductions for such
expenditures or for depreciation or amortization of  the  same  property
other  than  the deductions allowed by this paragraph (g), except to the
extent that the basis of the property may  be  attributable  to  factors
other than such expenditures, or in case a deduction is allowable pursu-
ant to this paragraph for only a part of such expenditures, on condition
that  any  deduction  allowed  for  federal income tax purposes for such
expenditures or for depreciation or amortization of the same property be

S. 6359--D                         23                         A. 8559--D

proportionately reduced in computing entire net income for  the  taxable
year and all succeeding taxable years, and
  (D)  where  the  election provided for in paragraph (d) of subdivision
three of section two hundred ten of this chapter has not been  exercised
in respect to the same property.
  (3)  (A)  If  expenditures in respect to an industrial waste treatment
facility, an air pollution control facility, an industrial waste  treat-
ment  controlled process facility or an air pollution controlled process
facility have been deducted as provided herein and if within  ten  years
from  the  end  of  the taxable year in which such deduction was allowed
such property or any part thereof is used for  the  primary  purpose  of
salvaging materials which are usable in the manufacturing process or are
marketable,  the  taxpayer shall report such change of use in its report
for the first taxable year during which it occurs, and the  tax  commis-
sion  may  recompute  the  tax  for  the  year  or  years for which such
deduction was allowed and any  carryback  or  carryover  year,  and  may
assess  any  additional tax resulting from such recomputation within the
time fixed by paragraph nine of subsection (c) of  section  ten  hundred
eighty-three of this chapter.
  (B) If a deduction is allowed as herein provided for expenditures paid
or  incurred during any taxable year on the basis of a temporary certif-
icate of compliance issued pursuant to  the  environmental  conservation
law  and  if  the  taxpayer  fails  to obtain a permanent certificate of
compliance upon completion of the facilities with respect to which  such
temporary certificate was issued, the taxpayer shall report such failure
in  its  report  for  the  taxable year during which such facilities are
completed, and the tax commission may recompute the tax for the year  or
years  for  which such deduction was allowed and any carryback or carry-
over year, and may assess any additional  tax  resulting  from  in  such
recomputation  within the time fixed by paragraph nine of subsection (c)
of section ten hundred eighty-three.
  (C) If a deduction is allowed as herein provided for expenditures paid
or incurred during any taxable year  in  respect  to  an  air  pollution
control  facility  on  the  basis  of a certificate of compliance issued
pursuant to the environmental conservation law and  the  certificate  is
revoked pursuant to subdivision three of section 19-0309 of the environ-
mental  conservation  law,  the tax commission may recompute the tax for
the year or years for which the facility is not or was not in compliance
with the applicable provisions of the  environmental  conservation  law,
the  state sanitary code or codes, rules, regulations, permits or orders
promulgated pursuant thereto, and for which a deduction was allowed,  as
well  as for any carryback or carryover year to which such deduction was
carried, and may assess any additional tax resulting from such  recompu-
tation  within  the  time  fixed  by paragraph nine of subsection (c) of
section ten hundred eighty-three.
  (4) In any taxable year when property is sold  or  otherwise  disposed
of,  with respect to which a deduction has been allowed pursuant to this
paragraph, such deduction shall be  disregarded  in  computing  gain  or
loss,  and  the  gain  or  loss on the sale or other disposition of such
property shall be the gain or loss  entering  into  the  computation  of
entire  taxable  income  which the taxpayer is required to report to the
United States treasury department for such taxable year.]
  (h) If the period covered by a report under this article is other than
the period covered by the report to the United States  treasury  depart-
ment,

S. 6359--D                         24                         A. 8559--D

  (1)  except  as provided in subparagraph two hereof, entire net income
shall be determined by multiplying the taxable income reported  to  such
department  (as  adjusted pursuant to the provisions of this article) by
the number of calendar months or major  parts  thereof  covered  by  the
report  under this article and dividing by the number of calendar months
or major parts thereof covered by the report to such department.  If  it
shall  appear that such method of determining entire net income does not
properly reflect the taxpayer's income during the period covered by  the
report  under  this  article, the [tax commission] COMMISSIONER shall be
authorized in its discretion to determine such entire net income  solely
on  the  basis of the taxpayer's income during the period covered by its
report under this article[;].
  (2) [in] IN the case of a  New  York  S  termination  year,  an  equal
portion of entire net income shall be assigned to each day of such year.
The  portion  of  such entire net income thereby assigned to the S short
year and the C short year shall be included in  the  respective  reports
for  the  S short year and the C short year under this article. However,
where paragraph three of subsection (s) of section six hundred twelve of
this chapter applies, the portion of such entire net income assigned  to
the  S  short year and the C short year shall be determined under normal
tax accounting rules.
  (i) With respect to a DISC which during any taxable year or  reporting
year  (1)  received  more  than five percent of its gross sales from the
sale of inventory or other property which it purchased from  its  stock-
holders,  (2)  received more than five percent of its gross rentals from
the rental of property which it purchased or rented from its  stockhold-
ers  or  (3) received more than five percent of its total receipts other
than sales and rentals from its stockholders, the  following  provisions
shall apply.
  (A)  For any taxable year in which sub-paragraph (B) of this paragraph
is in effect and not rendered invalid, a DISC  meeting  the  above  test
shall be exempt from all taxes imposed by this article.
  (B)  Supplemental to the provisions of subdivision five of section two
hundred eleven of this article, any taxpayer required to compute  a  tax
under  this  article, which during the taxable year being reported was a
stockholder in any DISC meeting the test prescribed in  this  paragraph,
shall  for any taxable year ending after December thirty-first, nineteen
hundred seventy-one adjust each item of its receipts,  expenses,  assets
and  liabilities,  as  otherwise  computed under this article, by adding
thereto its attributable share of each such DISC's  receipts,  expenses,
assets  and  liabilities  as  reportable by each such DISC to the United
States Treasury Department for its annual reporting period ending during
the current taxable year of such taxpayer; provided, however,  (1)  that
all transactions between the taxpayer and each such DISC shall be elimi-
nated  from  the  taxpayer's  adjusted  receipts,  expenses,  assets and
liabilities; (2) that the taxpayer's  entire  net  income  as  otherwise
computed  under this section, shall be reduced by subtracting the amount
of the deemed distribution of current income, if  any,  from  each  such
DISC  already  included  in  the  entire  net income of such taxpayer by
virtue of having been included in its entire  taxable  income  for  that
taxable  year  as reported to the United States Treasury Department; and
(3) that in the event this paragraph should  be  rendered  invalid,  all
DISC's  and  their stockholders taxable hereunder shall be taxed instead
under the remaining portions of this article.
  (j) in the case of property placed in service in taxable years  begin-
ning  before  nineteen  hundred ninety-four, for taxable years beginning

S. 6359--D                         25                         A. 8559--D

after December thirty-first, nineteen hundred  eighty-one,  except  with
respect  to  property  subject  to the provisions of section two hundred
eighty-F of the internal  revenue  code  and  property  subject  to  the
provisions  of  section  one hundred sixty-eight of the internal revenue
code which is placed in service in this state in taxable years beginning
after December thirty-first, nineteen hundred eighty-four, and  provided
a  deduction  has  not  been excluded from entire net income pursuant to
subparagraph eight of paragraph (b)  of  this  subdivision,  a  taxpayer
shall  be  allowed  with  respect  to  property  which is subject to the
provisions of section one hundred sixty-eight of  the  internal  revenue
code  the  depreciation  deduction  allowable  under section one hundred
sixty-seven of the internal revenue code  as  such  section  would  have
applied to property placed in service on December thirty-first, nineteen
hundred eighty. This paragraph shall not apply to property of a taxpayer
principally  engaged  in the conduct of aviation (other than air freight
forwarders acting as principal and like indirect air carriers) which  is
placed  in  service  before  taxable years beginning in nineteen hundred
eighty-nine.
  (k) QSSS. (1) New York S corporation. In the case  of  a  New  York  S
corporation  which  is the parent of a qualified subchapter S subsidiary
(QSSS) with respect to a taxable year:
  (A) where the QSSS is not an excluded corporation,
  (i) in determining the entire net income of such  parent  corporation,
all  assets,  liabilities,  income  and  deductions of the QSSS shall be
treated as assets, liabilities, income  and  deductions  of  the  parent
corporation, and
  (ii)  the QSSS shall be exempt from all taxes imposed by this article,
and
  (B) where the QSSS is an excluded corporation, the entire  net  income
of  the  parent  corporation  shall be determined as if the federal QSSS
election had not been made.
  (2) New York C corporation. In the case of a New  York  C  corporation
which is the parent of a QSSS with respect to a taxable year:
  (A) where the QSSS is a taxpayer,
  (i)  in  determining the entire net income of such parent corporation,
all assets, liabilities, income and deductions  of  the  QSSS  shall  be
treated  as  assets,  liabilities,  income  and deductions of the parent
corporation, and
  (ii) the QSSS shall be exempt from all taxes imposed by this  article,
and
  (B) where the QSSS is not a taxpayer,
  (i) if the QSSS is not an excluded corporation, the parent corporation
may  make  a QSSS inclusion election to include all assets, liabilities,
income and deductions of the QSSS as  assets,  liabilities,  income  and
deductions of the parent corporation, and
  (ii) in the absence of such election, or where the QSSS is an excluded
corporation,  the  entire  net income of the parent corporation shall be
determined as if the federal QSSS election had not been made.
  (3) Non-New York S corporation not excluded.  In  the  case  of  an  S
corporation which is not a taxpayer and not an excluded corporation, and
which  is  the parent of a QSSS which is a taxpayer, the shareholders of
the parent corporation shall be entitled to make the New York S election
under subsection (a) of section six hundred sixty of this chapter.
  (A) For any taxable year for which such election  is  in  effect,  the
parent  corporation  shall be subject to tax under this article as a New

S. 6359--D                         26                         A. 8559--D

York S corporation, and the provisions of clause (A) of subparagraph one
of this paragraph shall apply.
  (B) For any taxable year for which such election is not in effect, the
QSSS shall be a New York C corporation, and the entire net income of the
QSSS  shall  be  determined as if the federal QSSS election had not been
made. For purposes of such determination, the taxable year of the parent
corporation shall constitute the taxable year of  the  QSSS,  excluding,
however, any portion of such year during which the QSSS is not a taxpay-
er.
  (4)  S  corporation excluded. In the case of an S corporation which is
an excluded corporation and which is the parent of a  QSSS  which  is  a
taxpayer,  the QSSS shall be a New York C corporation and the provisions
of clause (B) of subparagraph three of this paragraph shall apply.
  (5) Excluded corporation. The  term  "excluded  corporation"  means  a
corporation  subject  to  tax  under  sections  one hundred eighty-three
through one hundred eighty-six, inclusive, or  article  [thirty-two  or]
thirty-three  of  this  chapter, or a foreign corporation not taxable by
this state which, if it were taxable, would be subject to tax under  any
of such sections or [articles] ARTICLE.
  (6)  Taxpayer.  For  purposes  of  this paragraph, the term "taxpayer"
means a parent corporation or QSSS subject to tax  under  this  article,
determined without regard to the provisions of this paragraph.
  (7)  QSSS  inclusion  election.  The  election  under subclause (i) of
clause (B) of subparagraph two of this paragraph shall be effective  for
the  taxable year for which made and for all succeeding taxable years of
the corporation until such election is terminated. An election or termi-
nation shall be made on such form and in such manner as the commissioner
may prescribe by regulation or instruction.
  (l) Emerging technology investment deferral. In the case of  any  sale
of a qualified emerging technologies investment held for more than thir-
ty-six months and with respect to which the taxpayer elects the applica-
tion  of this paragraph, gain from such sale shall be recognized only to
the extent that the amount realized on such sale exceeds the cost of any
qualified emerging technologies investment  purchased  by  the  taxpayer
during  the three hundred sixty-five-day period beginning on the date of
such sale, reduced by any portion of such  cost  previously  taken  into
account under this paragraph. For purposes of this paragraph the follow-
ing shall apply:
  (1)  A  qualified investment is stock of a corporation or an interest,
other than as a creditor, in a partnership or limited liability  company
that was acquired by the taxpayer as provided in Internal Revenue Code S
1202(c)(1)(B),  except  that  the  reference to the term "stock" in such
section shall be read as "investment," or by the taxpayer from a  person
who had acquired such stock or interest in such a manner.
  (2)  A qualified emerging technology investment is a qualified invest-
ment, that was held by the taxpayer for at least thirty-six months, in a
company defined in paragraph (c) of subdivision one of  section  thirty-
one  hundred  two-e  of the public authorities law or an investment in a
partnership or limited liability company that is taxed as a  partnership
to the extent that such partnership or limited liability company invests
in qualified emerging technology companies.
  (3)  For  purposes  of  determining whether the nonrecognition of gain
under this subsection  applies  to  a  qualified  emerging  technologies
investment  that is sold, the taxpayer's holding period for such invest-
ment  and  the  qualified  emerging  technologies  investment  that   is

S. 6359--D                         27                         A. 8559--D

purchased  shall be determined without regard to Internal Revenue Code S
1223.
  (m)  Amounts deferred. The amount deferred under paragraph (l) of this
subdivision shall be added to entire net income when the reinvestment in
the New York qualified emerging technology  company  which  qualified  a
taxpayer for such deferral is sold.
  [(n) Qualified gas transportation contracts.
  (1) Any tax paid under this article allocable to receipts attributable
to  a  "qualified  gas  transportation contract" shall be deemed to have
been paid under article nine of this chapter for all purposes of law for
taxable years commencing  on  or  after  January  first,  two  thousand,
computed as hereinafter provided, if all of the following conditions are
met:
  (i)  For  periods  ending  prior  to  January first, two thousand, the
taxpayer paid the franchise tax due under section  one  hundred  eighty-
four of this chapter.
  (ii)  For  the  taxable  year,  all  of the receipts from the pipeline
transportation of natural gas attributable to the taxpayer and  included
in  the  taxpayer's entire net income (without regard to this paragraph)
are solely from the transportation of natural gas for wholesale  custom-
ers and commercial retail customers.
  (iii)  The  taxpayer's  franchise tax liability under this article for
the taxable year (computed without regard to this paragraph)  is  deter-
mined  under paragraph (a) of subdivision one of section two hundred ten
of this article, and such tax liability (without regard  to  this  para-
graph)  is  greater  than the liability the taxpayer would have incurred
under sections one hundred eighty-three and one hundred  eighty-four  of
this  chapter  (as such sections existed on December thirty-first, nine-
teen hundred ninety-nine) based on the same taxable period.
  (iv) The taxpayer is  a  party  to  a  "qualified  gas  transportation
contract," as defined herein.
  (2)  The provisions of this paragraph shall apply only for the taxable
years during which such qualified gas transportation contract is in full
force and effect, and shall apply only to the receipts of  the  taxpayer
less  any  expenses of the taxpayer (but not less than zero), during the
taxable year, to the extent included in entire  net  income,  which  are
attributable   to  any  such  qualified  gas  transportation  contracts.
Provided, further, in any event, the  characterization  hereunder  shall
expire  and be of no further force and effect for taxable years commenc-
ing on or after January first, two thousand fifteen.
  (3) The term "qualified gas  transportation  contract"  shall  mean  a
service  agreement for the transportation of natural gas for an end-user
which is a qualified cogeneration facility with a rated capacity of  one
thousand  megawatts  or  more, which (i) was entered into before January
first, two thousand, and was in full force and effect and binding on the
parties thereto as of such date, (ii) as originally executed, was for  a
term of at least twenty years, and (iii) the terms of which prohibit the
pass-through  to  such  customer of the franchise tax imposed under this
article, while allowing the recovery of the gross earnings  tax  imposed
under  section one hundred eighty-four of this chapter. A contract shall
not qualify as a qualified gas transportation contract if there is:  (i)
any  renewal  or  extension of an otherwise qualified gas transportation
contract occurring on or after January first, two thousand, or (ii)  any
material amendment to, or supplementation of, an otherwise qualified gas
transportation  contract on or after such date. Such renewal, extension,
or material amendment or supplementation shall have the same  force  and

S. 6359--D                         28                         A. 8559--D

effect  of terminating the characterization hereunder as if the qualify-
ing contract had expired by its own terms.
  (o)]  (N-1)  For  taxable years beginning after December thirty-first,
two thousand two, in the case of qualified property described  in  para-
graph  two  of subsection k of section 168 of the internal revenue code,
other than qualified resurgence zone property described in paragraph (q)
of this subdivision, and other than  qualified  New  York  Liberty  Zone
property  described in paragraph two of subsection b of section 1400L of
the internal revenue code (without regard to clause (i) of  subparagraph
(C)  of  such  paragraph),  which was placed in service on or after June
first, two thousand three, a taxpayer shall be allowed with  respect  to
such  property the depreciation deduction allowable under section 167 of
the internal revenue code as such section would  have  applied  to  such
property  had  it  been acquired by the taxpayer on September tenth, two
thousand one.
  (o) Related members expense add back.  (1)  Definitions.  (A)  Related
member.  "Related  member" means a related person as defined in subpara-
graph (c) of paragraph three of subsection (b) of section  four  hundred
sixty-five  of  the  internal  revenue code, except that "fifty percent"
shall be substituted for "ten percent".
  (B) Effective rate of tax. "Effective rate of tax" means,  as  to  any
state  or  U.S. possession, the maximum statutory rate of tax imposed by
the state or possession on or measured by a related member's net  income
multiplied  by  the  apportionment percentage, if any, applicable to the
related member under the laws of said jurisdiction. For purposes of this
definition, the effective rate of tax as to any state or U.S. possession
is zero where the related member's net  income  tax  liability  in  said
jurisdiction  is reported on a combined or consolidated return including
both the taxpayer and the related member where the reported transactions
between the taxpayer and the related member are  eliminated  or  offset.
Also, for purposes of this definition, when computing the effective rate
of  tax  for  a  jurisdiction  in which a related member's net income is
eliminated or offset by a credit or similar adjustment that is dependent
upon the related member either maintaining or managing intangible  prop-
erty  or  collecting  interest  income in that jurisdiction, the maximum
statutory rate of tax imposed by said jurisdiction shall be decreased to
reflect the statutory rate of tax that applies to the related member  as
effectively reduced by such credit or similar adjustment.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by   the   commissioner,  and  include  amounts  allowable  as  interest
deductions under section one hundred sixty-three of the internal revenue
code to the extent such amounts are directly or indirectly for,  related
to  or  in  connection with the acquisition, use, maintenance or manage-
ment, ownership,  sale,  exchange  or  disposition  of  such  intangible
assets.
  (D)  Valid  Business  Purpose. A valid business purpose is one or more
business purposes, other than the avoidance or  reduction  of  taxation,
which alone or in combination constitute the primary motivation for some
business  activity or transaction, which activity or transaction changes
in a meaningful way, apart from tax effects, the  economic  position  of
the taxpayer. The economic position of the taxpayer includes an increase

S. 6359--D                         29                         A. 8559--D

in  the  market share of the taxpayer, or the entry by the taxpayer into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in a combined report with a related member pursuant to [subdivision four
of]  section two hundred [eleven] TEN-C of this article, for the purpose
of computing entire net income or  other  applicable  taxable  basis,  a
taxpayer  must  add  back  royalty payments directly or indirectly paid,
accrued, or incurred in connection with one or more direct  or  indirect
transactions with one or more related members during the taxable year to
the extent deductible in calculating federal taxable income.
  (B)  Exceptions.  (i)  The adjustment required in this paragraph shall
not apply to the portion of the royalty payment that the taxpayer estab-
lishes, by clear and convincing evidence of the type  and  in  the  form
specified  by the commissioner, meets all of the following requirements:
(I) the related member was subject to tax in this state or another state
or possession of the United States or a foreign nation or some  combina-
tion  thereof  on  a  tax  base  that included the royalty payment paid,
accrued or incurred by the taxpayer; (II) the related member during  the
same  taxable year directly or indirectly paid, accrued or incurred such
portion to a person that is not a related member; and (III)  the  trans-
action  giving  rise to the royalty payment between the taxpayer and the
related member was undertaken for a valid business purpose.
  (ii) The adjustment required in this paragraph shall not apply if  the
taxpayer  establishes,  by clear and convincing evidence of the type and
in the form specified by the commissioner, that: (I) the related  member
was  subject  to  tax  on or measured by its net income in this state or
another state or possession of the United  States  or  some  combination
thereof;  (II)  the  tax  base for said tax included the royalty payment
paid, accrued or incurred by  the  taxpayer;  and  (III)  the  aggregate
effective  rate  of tax applied to the related member in those jurisdic-
tions is no less than eighty percent of the statutory rate of  tax  that
applied  to  the  taxpayer under section two hundred ten of this article
for the taxable year.
  (iii) The adjustment required in this paragraph shall not apply if the
taxpayer establishes, by clear and convincing evidence of the  type  and
in the form specified by the commissioner, that: (I) the royalty payment
was  paid,  accrued  or incurred to a related member organized under the
laws of a country  other  than  the  United  States;  (II)  the  related
member's  income  from  the  transaction  was subject to a comprehensive
income tax treaty between such country and the United States; (III)  the
related member was subject to tax in a foreign nation on a tax base that
included  the royalty payment paid, accrued or incurred by the taxpayer;
(IV) the related member's income from the transaction was taxed in  such
country  at  an  effective rate of tax at least equal to that imposed by
this state; and (V) the royalty payment was paid,  accrued  or  incurred
pursuant  to  a  transaction  that  was  undertaken for a valid business
purpose and using terms that reflect an arm's length relationship.
  (iv) The adjustment required in this paragraph shall not apply if  the
taxpayer and the commissioner agree in writing to the application or use
of alternative adjustments or computations. The commissioner may, in his
or  her  discretion,  agree  to  the  application  or use of alternative
adjustments or computations when he or she concludes that in the absence
of such agreement the income of  the  taxpayer  would  not  be  properly
reflected.
  (p) For taxable years beginning after December thirty-first, two thou-
sand  two,  upon  the  disposition  of property to which paragraph [(o)]

S. 6359--D                         30                         A. 8559--D

(N-1) of this subdivision applies, the amount of any gain or loss inclu-
dible in entire net income shall be adjusted to reflect  the  inclusions
and exclusions from entire net income pursuant to subparagraph seventeen
of  paragraph  (a)  and  subparagraph seventeen of paragraph (b) of this
subdivision attributable to such property.
  (q) For purposes of paragraphs [(o)] (N-1) and (p)  of  this  subdivi-
sion,  qualified  resurgence zone property shall mean qualified property
described in paragraph two of subsection k of section 168 of the  inter-
nal  revenue code substantially all of the use of which is in the resur-
gence zone, as defined below, and is in the active conduct of a trade or
business by the taxpayer in such zone, and the original use of which  in
the  resurgence  zone commences with the taxpayer after December thirty-
first, two thousand two. The resurgence zone shall mean the area of  New
York county bounded on the south by a line running from the intersection
of  the Hudson River with the Holland Tunnel, and running thence east to
Canal Street, then running along the centerline of Canal Street  to  the
intersection  of the Bowery and Canal Street, running thence in a south-
easterly direction diagonally across  Manhattan  Bridge  Plaza,  to  the
Manhattan Bridge and thence along the centerline of the Manhattan Bridge
to  the  point where the centerline of the Manhattan Bridge would inter-
sect with the easterly bank of the East River, and bounded on the  north
by  a  line  running  from the intersection of the Hudson River with the
Holland Tunnel and running thence north along West Avenue to the  inter-
section  of  Clarkson  Street  then running east along the centerline of
Clarkson Street to the intersection of Washington Avenue,  then  running
south  along  the centerline of Washington Avenue to the intersection of
West Houston Street, then east along  the  centerline  of  West  Houston
Street,  then at the intersection of the Avenue of the Americas continu-
ing east along the centerline of East Houston  Street  to  the  easterly
bank of the East River.
  (R)  SUBTRACTION  MODIFICATION  FOR QUALIFIED RESIDENTIAL LOAN PORTFO-
LIOS. (1)(A) A TAXPAYER THAT IS EITHER A THRIFT INSTITUTION  AS  DEFINED
IN SUBPARAGRAPH THREE OF THIS PARAGRAPH OR A QUALIFIED COMMUNITY BANK AS
DEFINED  IN  SUBPARAGRAPH  TWO  OF PARAGRAPH (S) OF THIS SUBDIVISION AND
MAINTAINS A QUALIFIED RESIDENTIAL LOAN PORTFOLIO AS DEFINED IN  SUBPARA-
GRAPH TWO OF THIS PARAGRAPH SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING
ENTIRE NET INCOME THE AMOUNT, IF ANY, BY WHICH (I) THIRTY-TWO PERCENT OF
ITS  ENTIRE  NET  INCOME  DETERMINED  WITHOUT  REGARD  TO THIS PARAGRAPH
EXCEEDS (II) THE AMOUNTS DEDUCTED BY THE TAXPAYER PURSUANT  TO  SECTIONS
166  AND  585  OF THE INTERNAL REVENUE CODE LESS ANY AMOUNTS INCLUDED IN
FEDERAL TAXABLE INCOME AS A RESULT OF A RECOVERY OF A LOAN.
  (B)(I) IF THE TAXPAYER IS IN  A  COMBINED  REPORT  UNDER  SECTION  TWO
HUNDRED  TEN-C  OF  THIS  ARTICLE,  THIS DEDUCTION WILL BE COMPUTED ON A
COMBINED BASIS. IN THAT INSTANCE, THE ENTIRE NET INCOME OF THE  COMBINED
REPORTING  GROUP FOR PURPOSES OF THIS PARAGRAPH SHALL BE MULTIPLIED BY A
FRACTION, THE NUMERATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF ALL  THE
THRIFT  INSTITUTIONS  AND  QUALIFIED  COMMUNITY  BANKS  INCLUDED  IN THE
COMBINED REPORT AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS
OF ALL THE CORPORATIONS INCLUDED IN THE COMBINED REPORT.
  (II) MEASUREMENT OF ASSETS. (I) TOTAL ASSETS ARE THOSE ASSETS THAT ARE
PROPERLY REFLECTED ON A BALANCE SHEET, COMPUTED IN THE SAME MANNER AS IS
REQUIRED BY THE BANKING REGULATOR  OF  THE  TAXPAYERS  INCLUDED  IN  THE
COMBINED RETURN.
  (II)  ASSETS  WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH
ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED  IF  NOT
FULLY  DEPRECIATED  OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL

S. 6359--D                         31                         A. 8559--D

AMOUNT) IN THE COMPUTATION OF THE COMBINED GROUP'S ENTIRE NET INCOME FOR
THE TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTAN-
GIBLE ASSETS IDENTIFIED AS "GOODWILL".
  (III)  TANGIBLE  REAL  AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND,
MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST. LEASED ASSETS WILL  BE
VALUED AT THE ANNUAL LEASE PAYMENT MULTIPLIED BY EIGHT. INTANGIBLE PROP-
ERTY,  SUCH  AS  LOANS  AND  INVESTMENTS,  SHALL BE VALUED AT BOOK VALUE
EXCLUSIVE OF RESERVES.
  (IV)  INTERCORPORATE  STOCKHOLDINGS  AND  BILLS,  NOTES  AND  ACCOUNTS
RECEIVABLE,  AND  OTHER  INTERCORPORATE  INDEBTEDNESS BETWEEN THE CORPO-
RATIONS INCLUDED IN THE COMBINED REPORT SHALL BE ELIMINATED.
  (V) AVERAGE ASSETS ARE COMPUTED USING THE ASSETS MEASURED ON THE FIRST
DAY OF THE TAXABLE YEAR, AND ON THE LAST DAY OF EACH SUBSEQUENT  QUARTER
OF THE TAXABLE YEAR OR MONTH OR DAY DURING THE TAXABLE YEAR.
  (2)  QUALIFIED  RESIDENTIAL LOAN PORTFOLIO. (A) A TAXPAYER MAINTAINS A
QUALIFIED RESIDENTIAL LOAN PORTFOLIO IF AT LEAST SIXTY  PERCENT  OF  THE
AMOUNT  OF  THE  TOTAL  ASSETS  AT  THE CLOSE OF THE TAXABLE YEAR OF THE
THRIFT INSTITUTION OR QUALIFIED COMMUNITY BANK CONSISTS  OF  THE  ASSETS
DESCRIBED  IN  ITEMS (I) THROUGH (XII) OF THIS CLAUSE, WITH THE APPLICA-
TION OF THE RULE IN ITEM (XIII). IF  THE  TAXPAYER  IS  A  MEMBER  OF  A
COMBINED  GROUP, THE DETERMINATION OF WHETHER THERE IS A QUALIFIED RESI-
DENTIAL LOAN PORTFOLIO WILL BE MADE BY AGGREGATING  THE  ASSETS  OF  THE
THRIFT  INSTITUTIONS  AND  QUALIFIED COMMUNITY BANKS THAT ARE MEMBERS OF
THE COMBINED GROUP.
  ASSETS:
  (I) CASH, WHICH INCLUDES CASH  AND  CASH  EQUIVALENTS  INCLUDING  CASH
ITEMS  IN THE PROCESS OF COLLECTION, DEPOSIT WITH OTHER FINANCIAL INSTI-
TUTIONS,  INCLUDING  CORPORATE  CREDIT  UNIONS,  BALANCES  WITH  FEDERAL
RESERVE  BANKS AND FEDERAL HOME LOAN BANKS, FEDERAL FUNDS SOLD, AND CASH
AND CASH EQUIVALENTS ON HAND. CASH SHALL NOT INCLUDE ANY BALANCES  SERV-
ING AS COLLATERAL FOR SECURITIES LENDING TRANSACTIONS;
  (II)  OBLIGATIONS  OF  THE  UNITED  STATES  OR OF A STATE OR POLITICAL
SUBDIVISION THEREOF, AND STOCK OR OBLIGATIONS OF A CORPORATION WHICH  IS
AN  INSTRUMENTALITY  OR  A GOVERNMENT SPONSORED ENTERPRISE OF THE UNITED
STATES OR OF A STATE OR POLITICAL SUBDIVISION THEREOF;
  (III) LOANS SECURED BY A DEPOSIT OR SHARE OF A MEMBER;
  (IV) LOANS SECURED BY AN INTEREST IN REAL PROPERTY WHICH IS  (OR  FROM
THE PROCEEDS OF THE LOAN, WILL BECOME) RESIDENTIAL REAL PROPERTY OR REAL
PROPERTY USED PRIMARILY FOR CHURCH PURPOSES, LOANS MADE FOR THE IMPROVE-
MENT  OF  RESIDENTIAL  REAL PROPERTY OR REAL PROPERTY USED PRIMARILY FOR
CHURCH PURPOSES, PROVIDED THAT FOR PURPOSES OF  THIS  ITEM,  RESIDENTIAL
REAL PROPERTY SHALL INCLUDE SINGLE OR MULTI-FAMILY DWELLINGS, FACILITIES
IN  RESIDENTIAL DEVELOPMENTS DEDICATED TO PUBLIC USE OR PROPERTY USED ON
A NONPROFIT BASIS FOR RESIDENTS, AND MOBILE HOMES NOT USED  ON  A  TRAN-
SIENT BASIS;
  (V)  PROPERTY  ACQUIRED  THROUGH  THE  LIQUIDATION  OF DEFAULTED LOANS
DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
  (VI) ANY REGULAR OR RESIDUAL INTEREST IN A  REMIC,  AS  SUCH  TERM  IS
DEFINED  IN  SECTION  860D OF THE INTERNAL REVENUE CODE, BUT ONLY IN THE
PROPORTION WHICH THE ASSETS OF SUCH REMIC CONSIST OF PROPERTY  DESCRIBED
IN ANY OF THE PRECEDING ITEMS OF THIS CLAUSE, EXCEPT THAT IF NINETY-FIVE
PERCENT  OR  MORE  OF  THE  ASSETS OF SUCH REMIC ARE ASSETS DESCRIBED IN
ITEMS (I) THROUGH (V) OF THIS CLAUSE, THE ENTIRE INTEREST IN  THE  REMIC
SHALL QUALIFY;
  (VII)  ANY  MORTGAGE-BACKED  SECURITY  WHICH REPRESENTS OWNERSHIP OF A
FRACTIONAL UNDIVIDED INTEREST IN A TRUST, THE ASSETS  OF  WHICH  CONSIST

S. 6359--D                         32                         A. 8559--D

PRIMARILY  OF  MORTGAGE  LOANS,  PROVIDED  THAT  THE REAL PROPERTY WHICH
SERVES AS SECURITY FOR THE LOANS IS (OR FROM THE PROCEEDS OF  THE  LOAN,
WILL  BECOME) THE TYPE OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE
AND  ANY  COLLATERALIZED  MORTGAGE  OBLIGATION,  THE  SECURITY FOR WHICH
CONSISTS PRIMARILY OF MORTGAGE LOANS THAT MAINTAIN AS SECURITY THE  TYPE
OF PROPERTY DESCRIBED IN ITEM (IV) OF THIS CLAUSE;
  (VIII)  CERTIFICATES  OF  DEPOSIT IN, OR OBLIGATIONS OF, A CORPORATION
ORGANIZED UNDER A STATE LAW WHICH SPECIFICALLY  AUTHORIZES  SUCH  CORPO-
RATION TO INSURE THE DEPOSITS OR SHARE ACCOUNTS OF MEMBER ASSOCIATIONS;
  (IX)  LOANS  SECURED BY AN INTEREST IN EDUCATIONAL, HEALTH, OR WELFARE
INSTITUTIONS OR FACILITIES, INCLUDING STRUCTURES DESIGNED OR USED PRIMA-
RILY FOR RESIDENTIAL PURPOSES FOR STUDENTS, RESIDENTS, AND PERSONS UNDER
CARE, EMPLOYEES, OR MEMBERS OF THE STAFF OF SUCH INSTITUTIONS OR FACILI-
TIES;
  (X) LOANS MADE FOR THE PAYMENT OF EXPENSES OF  COLLEGE  OR  UNIVERSITY
EDUCATION OR VOCATIONAL TRAINING;
  (XI)  PROPERTY  USED  BY  THE  TAXPAYER  IN  SUPPORT OF BUSINESS WHICH
CONSISTS PRINCIPALLY OF ACQUIRING THE SAVINGS OF THE PUBLIC AND  INVEST-
ING IN LOANS; AND
  (XII) LOANS FOR WHICH THE TAXPAYER IS THE CREDITOR AND WHICH ARE WHOL-
LY SECURED BY LOANS DESCRIBED IN ITEM (IV) OF THIS CLAUSE.
  (XIII)  THE  VALUE OF ACCRUED INTEREST RECEIVABLE AND ANY LOSS-SHARING
COMMITMENT OR OTHER LOAN GUARANTY  BY  A  GOVERNMENTAL  AGENCY  WILL  BE
CONSIDERED  PART OF THE BASIS IN THE LOANS TO WHICH THE ACCRUED INTEREST
OR LOSS PROTECTION APPLIES.
  (B) AT THE ELECTION OF  THE  TAXPAYER,  THE  PERCENTAGE  SPECIFIED  IN
CLAUSE  (A)  OF  THIS  SUBPARAGRAPH SHALL BE APPLIED ON THE BASIS OF THE
AVERAGE ASSETS OUTSTANDING DURING THE TAXABLE YEAR, IN LIEU OF THE CLOSE
OF THE TAXABLE YEAR. THE TAXPAYER CAN ELECT TO COMPUTE AN AVERAGE  USING
THE ASSETS MEASURED ON THE FIRST DAY OF THE TAXABLE YEAR AND ON THE LAST
DAY OF EACH SUBSEQUENT QUARTER, OR MONTH OR DAY DURING THE TAXABLE YEAR.
THIS ELECTION MAY BE MADE ANNUALLY.
  (C) FOR PURPOSES OF ITEM (IV) OF CLAUSE (A) OF THIS SUBPARAGRAPH, IF A
MULTIFAMILY STRUCTURE SECURING A LOAN IS USED IN PART FOR NONRESIDENTIAL
USE PURPOSES, THE ENTIRE LOAN IS DEEMED A RESIDENTIAL REAL PROPERTY LOAN
IF  THE PLANNED RESIDENTIAL USE EXCEEDS EIGHTY PERCENT OF THE PROPERTY'S
PLANNED USE (MEASURED, AT  THE  TAXPAYER'S  ELECTION,  BY  USING  SQUARE
FOOTAGE  OR GROSS RENTAL REVENUE, AND DETERMINED AS OF THE TIME THE LOAN
IS MADE).
  (D) FOR PURPOSES OF ITEM (IV) OF  CLAUSE  (A)  OF  THIS  SUBPARAGRAPH,
LOANS  MADE  TO  FINANCE THE ACQUISITION OR DEVELOPMENT OF LAND SHALL BE
DEEMED TO BE LOANS SECURED BY AN INTEREST IN RESIDENTIAL  REAL  PROPERTY
IF  THERE  IS A REASONABLE ASSURANCE THAT THE PROPERTY WILL BECOME RESI-
DENTIAL REAL PROPERTY WITHIN A PERIOD OF THREE YEARS FROM  THE  DATE  OF
ACQUISITION  OF  SUCH  LAND;  BUT  THIS SENTENCE SHALL NOT APPLY FOR ANY
TAXABLE YEAR UNLESS, WITHIN SUCH THREE YEAR PERIOD,  SUCH  LAND  BECOMES
RESIDENTIAL  REAL  PROPERTY.  FOR  PURPOSES  OF  DETERMINING WHETHER ANY
INTEREST IN A REMIC QUALIFIES UNDER ITEM (VI)  OF  CLAUSE  (A)  OF  THIS
SUBPARAGRAPH,  ANY  REGULAR INTEREST IN ANOTHER REMIC HELD BY SUCH REMIC
SHALL BE TREATED AS A LOAN DESCRIBED IN A PRECEDING ITEM  UNDER  PRINCI-
PLES  SIMILAR  TO  THE  PRINCIPLE OF SUCH ITEM (VI), EXCEPT THAT IS SUCH
REMICS ARE PART OF A TIERED STRUCTURE, THEY  SHALL  BE  TREATED  AS  ONE
REMIC FOR PURPOSES OF SUCH ITEM (VI).
  (3)  FOR  PURPOSES  OF  THIS  PARAGRAPH,  A  "THRIFT INSTITUTION" IS A
SAVINGS BANK, A SAVINGS AND LOAN ASSOCIATION, OR OTHER SAVINGS  INSTITU-
TION CHARTERED AND SUPERVISED AS SUCH UNDER FEDERAL OR STATE LAW.

S. 6359--D                         33                         A. 8559--D

  (S)  SUBTRACTION  MODIFICATION  FOR COMMUNITY BANKS AND SMALL THRIFTS.
(1) A TAXPAYER THAT IS A QUALIFIED COMMUNITY BANK AS DEFINED IN SUBPARA-
GRAPH TWO OF THIS PARAGRAPH OR A SMALL THRIFT INSTITUTION AS DEFINED  IN
SUBPARAGRAPH  TWO-A  OF  THIS  PARAGRAPH SHALL BE ALLOWED A DEDUCTION IN
COMPUTING  ENTIRE NET INCOME EQUAL TO THE AMOUNT COMPUTED UNDER SUBPARA-
GRAPH THREE OF THIS PARAGRAPH.
  (2) TO BE A QUALIFIED COMMUNITY BANK,  A  TAXPAYER  MUST  SATISFY  THE
FOLLOWING CONDITIONS.
  (A)  IT  IS  A BANK OR TRUST COMPANY ORGANIZED UNDER OR SUBJECT TO THE
PROVISIONS OF ARTICLE THREE OF THE BANKING LAW OR A COMPARABLE PROVISION
OF THE LAWS OF ANOTHER STATE, OR A NATIONAL BANKING ASSOCIATION.
  (B) THE AVERAGE VALUE DURING THE TAXABLE YEAR OF  THE  ASSETS  OF  THE
TAXPAYER,  OR THE ASSETS OF THE COMBINED REPORTING GROUP OF THE TAXPAYER
UNDER SECTION TWO HUNDRED TEN-C OF THIS ARTICLE, MUST NOT  EXCEED  EIGHT
BILLION DOLLARS.
  (2-A)  TO  BE  A SMALL THRIFT INSTITUTION, A TAXPAYER MUST SATISFY THE
FOLLOWING CONDITIONS.
  (A) IT IS A SAVINGS BANK, A SAVINGS AND  LOAN  ASSOCIATION,  OR  OTHER
SAVINGS  INSTITUTION  CHARTERED  AND SUPERVISED AS SUCH UNDER FEDERAL OR
STATE LAW.
  (B) THE AVERAGE VALUE DURING THE TAXABLE YEAR OF  THE  ASSETS  OF  THE
TAXPAYER,  OR THE ASSETS OF THE COMBINED REPORTING GROUP OF THE TAXPAYER
UNDER SECTION TWO HUNDRED TEN-C OF THIS ARTICLE, MUST NOT  EXCEED  EIGHT
BILLION DOLLARS.
  (3)(A) THE SUBTRACTION MODIFICATION SHALL BE COMPUTED AS FOLLOWS:
  (I)  MULTIPLY THE TAXPAYER'S NET INTEREST INCOME FROM LOANS DURING THE
TAXABLE YEAR BY A FRACTION, THE NUMERATOR OF WHICH IS THE GROSS INTEREST
INCOME DURING THE TAXABLE YEAR FROM QUALIFYING LOANS AND THE DENOMINATOR
OF WHICH IS THE GROSS INTEREST INCOME DURING THE TAXABLE YEAR  FROM  ALL
LOANS.
  (II)  MULTIPLY  THE  AMOUNT DETERMINED IN CLAUSE (I) BY FIFTY PERCENT.
THIS PRODUCT IS THE AMOUNT OF THE DEDUCTION  ALLOWED  UNDER  THIS  PARA-
GRAPH.
  (B)(I) NET INTEREST INCOME FROM LOANS SHALL MEAN GROSS INTEREST INCOME
FROM  LOANS  LESS  GROSS  INTEREST  EXPENSE  FROM  LOANS. GROSS INTEREST
EXPENSE FROM LOANS IS DETERMINED BY MULTIPLYING GROSS  INTEREST  EXPENSE
BY  A  FRACTION,  THE  NUMERATOR  OF WHICH IS THE AVERAGE TOTAL VALUE OF
LOANS OWNED BY THE THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXA-
BLE YEAR AND THE DENOMINATOR OF WHICH IS THE AVERAGE TOTAL ASSETS OF THE
THRIFT INSTITUTION OR COMMUNITY BANK DURING THE TAXABLE YEAR.
  (II) MEASUREMENT OF ASSETS. (I) TOTAL ASSETS ARE THOSE ASSETS THAT ARE
PROPERLY REFLECTED ON A BALANCE SHEET, COMPUTED IN THE SAME MANNER AS IS
REQUIRED BY THE BANKING REGULATOR  OF  THE  TAXPAYERS  INCLUDED  IN  THE
COMBINED RETURN.
  (II)  ASSETS  WILL ONLY BE INCLUDED IF THE INCOME OR EXPENSES OF WHICH
ARE PROPERLY REFLECTED (OR WOULD HAVE BEEN  PROPERLY  REFLECTED  IF  NOT
FULLY  DEPRECIATED  OR EXPENSED, OR DEPRECIATED OR EXPENSED TO A NOMINAL
AMOUNT) IN THE COMPUTATION OF THE TAXPAYER'S ENTIRE NET INCOME  FOR  THE
TAXABLE YEAR. ASSETS WILL NOT INCLUDE DEFERRED TAX ASSETS AND INTANGIBLE
ASSETS IDENTIFIED AS "GOODWILL".
  (III)  TANGIBLE  REAL  AND PERSONAL PROPERTY, SUCH AS BUILDINGS, LAND,
MACHINERY, AND EQUIPMENT SHALL BE VALUED AT COST. LEASED ASSETS WILL  BE
VALUED    AT  THE  ANNUAL  LEASE PAYMENT MULTIPLIED BY EIGHT. INTANGIBLE
PROPERTY, SUCH AS LOANS AND INVESTMENTS, SHALL BE VALUED AT  BOOK  VALUE
EXCLUSIVE OF RESERVES.

S. 6359--D                         34                         A. 8559--D

  (IV)  AVERAGE  ASSETS  ARE  COMPUTED  USING THE ASSETS MEASURED ON THE
FIRST DAY OF THE TAXABLE YEAR, AND ON THE LAST DAY  OF  EACH  SUBSEQUENT
QUARTER OF THE TAXABLE YEAR OR MONTH OR DAY DURING THE TAXABLE YEAR.
  (C) A QUALIFYING LOAN IS A LOAN THAT MEETS THE CONDITIONS SPECIFIED IN
SUBCLAUSE (I) OF THIS CLAUSE AND SUBCLAUSE (II) OF THIS CLAUSE.
  (I)  THE  LOAN  IS ORIGINATED BY THE QUALIFIED COMMUNITY BANK OR SMALL
THRIFT INSTITUTION OR PURCHASED BY THE QUALIFIED COMMUNITY BANK OR SMALL
THRIFT INSTITUTION IMMEDIATELY AFTER ITS ORIGINATION IN CONNECTION  WITH
A COMMITMENT TO PURCHASE MADE BY THE BANK OR THRIFT INSTITUTION PRIOR TO
THE LOAN'S ORIGINATION.
  (II) THE LOAN IS A SMALL BUSINESS LOAN OR A RESIDENTIAL MORTGAGE LOAN,
THE  PRINCIPAL AMOUNT OF WHICH LOAN IS FIVE MILLION DOLLARS OR LESS, AND
EITHER THE BORROWER IS LOCATED IN THIS STATE AS DETERMINED UNDER SECTION
TWO HUNDRED TEN-A OF THIS ARTICLE AND THE LOAN IS NOT  SECURED  BY  REAL
PROPERTY, OR THE LOAN IS SECURED BY REAL PROPERTY LOCATED IN NEW YORK.
  (III) A LOAN THAT MEETS THE DEFINITION OF A QUALIFYING LOAN IN A PRIOR
TAXABLE  YEAR (INCLUDING YEARS PRIOR TO THE EFFECTIVE DATE OF THIS PARA-
GRAPH) REMAINS A QUALIFYING LOAN IN TAXABLE YEARS DURING AND AFTER WHICH
SUCH LOAN IS ACQUIRED BY ANOTHER CORPORATION IN THE TAXPAYER'S  COMBINED
REPORTING GROUP UNDER SECTION TWO HUNDRED TEN-C OF THIS ARTICLE.
  (T)  A  SMALL  THRIFT  INSTITUTION  OR  A QUALIFIED COMMUNITY BANK, AS
DEFINED IN PARAGRAPH (S) OF THIS SUBDIVISION, THAT MAINTAINED A  CAPTIVE
REIT  ON  APRIL  FIRST,  TWO  THOUSAND  FOURTEEN  SHALL  UTILIZE  A REIT
SUBTRACTION EQUAL TO ONE HUNDRED SIXTY PERCENT  OF  THE  DIVIDENDS  PAID
DEDUCTIONS ALLOWED TO THAT CAPTIVE REIT FOR THE TAXABLE YEAR FOR FEDERAL
INCOME  TAX PURPOSES AND SHALL NOT BE ALLOWED TO UTILIZE THE SUBTRACTION
MODIFICATION FOR QUALIFIED RESIDENTIAL LOAN PORTFOLIOS  UNDER  PARAGRAPH
(R)  OF  THIS  SUBDIVISION OR THE SUBTRACTION MODIFICATION FOR COMMUNITY
BANKS AND SMALL THRIFTS UNDER PARAGRAPH (S) OF THIS SUBDIVISION  IN  ANY
TAX  YEAR  IN  WHICH SUCH THRIFT INSTITUTION OR COMMUNITY BANK MAINTAINS
THAT CAPTIVE REIT.
  10. The term "calendar year" means a period of twelve calendar  months
(or  any  shorter  period  beginning  on  the  date the taxpayer becomes
subject to the tax imposed by this article) ending on  the  thirty-first
day  of  December, provided the taxpayer keeps its books on the basis of
such period or on the basis of any period ending on any day  other  than
the last day of a calendar month, or provided the taxpayer does not keep
books,  and  includes,  in  case  the taxpayer changes the period on the
basis of which it keeps its books from a fiscal year to a calendar year,
the period from the close of its last old fiscal year up to and  includ-
ing  the following December thirty-first. The term "fiscal year" means a
period of twelve calendar months (or any shorter period beginning on the
date the taxpayer becomes subject to the tax imposed  by  this  article)
ending  on  the  last day of any month other than December, provided the
taxpayer keeps its books on the basis of such period, and  includes,  in
case  the  taxpayer changes the period on the basis of which it keeps it
books from a calendar year to a fiscal year or from one fiscal  year  to
another  fiscal year, the period from the close of its last old calendar
or fiscal year up to the date designated as the close of its new  fiscal
year.
  11.  The  term  "tangible  personal property" means corporeal personal
property,  such  as  machinery,  tools,  implements,  goods,  wares  and
merchandise,  and  does  not  mean  money,  deposits in banks, shares of
stock, bonds, notes, credits or evidences of an interest in property and
evidences of debt.

S. 6359--D                         35                         A. 8559--D

  12. The term elected or appointed officer shall include the  chairman,
president,  vice-president,  secretary,  assistant secretary, treasurer,
assistant treasurer, comptroller, and also any other officer,  irrespec-
tive  of  his title, who is charged with and performs any of the regular
functions  of  any  such  officer, unless the total compensation of such
officer is derived exclusively from the receipt of commissions. A direc-
tor shall be considered an elected  or  appointed  officer  only  if  he
performs duties ordinarily performed by an officer.
  [19.  The  term "fulfillment services" shall mean any of the following
services performed by an entity on its premises on behalf of a  purchas-
er:
  (a)  the  acceptance  of  orders electronically or by mail, telephone,
telefax or internet;
  (b) responses to consumer correspondence or  inquiries  electronically
or by mail, telephone, telefax or internet;
  (c) billing and collection activities; or
  (d)  the  shipment of orders from an inventory of products offered for
sale by the purchaser.]
  S 5. Subdivisions 1, 2, 2-a, 4, 5, 6, 7 and 8 of section  209  of  the
tax  law,  subdivisions 1 and 6 as amended by chapter 817 of the laws of
1987, subdivision 2 as amended by chapter 75 of the laws of 1998, subdi-
vision 2-a as added by chapter 340 of the laws of 1998, subdivision 4 as
amended by section 27 of part S of this act, subdivisions  5  and  7  as
amended by section 2 of part FF-1 of chapter 57 of the laws of 2008, and
subdivision  8 as added by section 1 of part O of chapter 61 of the laws
of 2006, are amended to read as follows:
  1. (A) For the privilege of exercising its corporate franchise, or  of
doing business, or of employing capital, or of owning or leasing proper-
ty in this state in a corporate or organized capacity, or of maintaining
an  office  in this state, OR OF DERIVING RECEIPTS FROM ACTIVITY IN THIS
STATE, for all or any part of each of  its  fiscal  or  calendar  years,
every  domestic or foreign corporation, except corporations specified in
subdivision four of this section, shall annually pay  a  franchise  tax,
upon  the  basis  of its [entire net] BUSINESS income base, or upon such
other basis as may be  applicable  as  hereinafter  provided,  for  such
fiscal  or  calendar  year  or  part thereof, on a report which shall be
filed, except as hereinafter provided, on or before the fifteenth day of
March next succeeding the close of each such year, or, in the case of  a
corporation  which reports on the basis of a fiscal year, within two and
one-half months after the close of such fiscal year, and shall  be  paid
as hereinafter provided.
  (B)  A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE IF
IT HAS RECEIPTS WITHIN THIS STATE OF ONE MILLION DOLLARS OR MORE IN  THE
TAXABLE  YEAR.  FOR  PURPOSES OF THIS SECTION, THE TERM "RECEIPTS" MEANS
THE RECEIPTS THAT ARE SUBJECT TO THE APPORTIONMENT RULES  SET  FORTH  IN
SECTION TWO HUNDRED TEN-A OF THIS ARTICLE, AND THE TERM "RECEIPTS WITHIN
THIS  STATE"  MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPOR-
TIONMENT FACTOR DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTI-
CLE. FOR PURPOSES OF THIS PARAGRAPH,  RECEIPTS  FROM  PROCESSING  CREDIT
CARD  TRANSACTIONS FOR MERCHANTS INCLUDE MERCHANT DISCOUNT FEES RECEIVED
BY THE CORPORATION.
  (C) A CORPORATION IS DOING BUSINESS IN THIS STATE IF (I) IT HAS ISSUED
CREDIT CARDS TO ONE THOUSAND  OR  MORE  CUSTOMERS  WHO  HAVE  A  MAILING
ADDRESS  WITHIN  THIS STATE AS OF THE LAST DAY OF ITS TAXABLE YEAR, (II)
IT HAS MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE  TOTAL  NUMBER
OF  LOCATIONS  COVERED  BY  THOSE  CONTRACTS EQUALS ONE THOUSAND OR MORE

S. 6359--D                         36                         A. 8559--D

LOCATIONS IN THIS STATE TO WHOM THE CORPORATION  REMITTED  PAYMENTS  FOR
CREDIT  CARD  TRANSACTIONS  DURING THE TAXABLE YEAR, OR (III) THE SUM OF
THE NUMBER OF CUSTOMERS DESCRIBED IN SUBPARAGRAPH (I) OF THIS  PARAGRAPH
PLUS  THE  NUMBER  OF  LOCATIONS  COVERED  BY ITS CONTRACTS DESCRIBED IN
SUBPARAGRAPH (II) OF THIS PARAGRAPH EQUALS ONE THOUSAND OR MORE. AS USED
IN THIS SUBDIVISION, THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAV-
EL AND ENTERTAINMENT CARDS.
  (D)(I) A CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT  AT  LEAST
TEN  THOUSAND  DOLLARS  OF  RECEIPTS WITHIN THIS STATE IN A TAXABLE YEAR
THAT IS PART OF A COMBINED REPORTING GROUP  UNDER  SECTION  TWO  HUNDRED
TEN-C  OF  THIS ARTICLE IS DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE
IF THE RECEIPTS WITHIN THIS STATE OF THE MEMBERS OF THE COMBINED REPORT-
ING GROUP THAT HAVE AT LEAST TEN THOUSAND  DOLLARS  OF  RECEIPTS  WITHIN
THIS  STATE  IN  THE AGGREGATE MEET THE THRESHOLD SET FORTH IN PARAGRAPH
(B) OF THIS SUBDIVISION.
  (II) A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET  FORTH
IN  PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS, OR
LOCATIONS, OR CUSTOMERS AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C)  OF
THIS  SUBDIVISION,  AND  IS  PART  OF  A  COMBINED REPORTING GROUP UNDER
SECTION TWO HUNDRED TEN-C OF THIS ARTICLE THAT IS DOING BUSINESS IN THIS
STATE IF THE NUMBER OF CUSTOMERS, LOCATIONS, OR CUSTOMERS AND LOCATIONS,
WITHIN THIS STATE OF THE MEMBERS OF THE COMBINED  REPORTING  GROUP  THAT
HAVE  AT  LEAST  TEN  CUSTOMERS,  LOCATIONS, OR CUSTOMERS AND LOCATIONS,
WITHIN THIS STATE IN THE AGGREGATE MEETS ANY OF THE THRESHOLDS SET FORTH
IN PARAGRAPH (C) OF THIS SUBDIVISION.
  (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
TIVE PERCENTAGE CHANGE IN THE CONSUMER  PRICE  INDEX.  THE  COMMISSIONER
SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
CONSUMER  PRICE  INDEX  HAS CHANGED BY TEN PERCENT OR MORE SINCE JANUARY
FIRST, TWO THOUSAND FIFTEEN, OR SINCE THE DATE THAT THE THRESHOLDS  WERE
LAST  ADJUSTED  UNDER THIS SUBDIVISION. THE THRESHOLDS SHALL BE ADJUSTED
TO REFLECT THAT CUMULATIVE  PERCENTAGE  CHANGE  IN  THE  CONSUMER  PRICE
INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE THOU-
SAND  DOLLARS.  AS  USED IN THIS PARAGRAPH, "CONSUMER PRICE INDEX" MEANS
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE  FORM
THE BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR.
ANY  ADJUSTMENT  SHALL APPLY TO TAX PERIODS THAT BEGIN AFTER THE ADJUST-
MENT IS MADE.
  (F) IF A PARTNERSHIP IS DOING BUSINESS, EMPLOYING CAPITAL,  OWNING  OR
LEASING  PROPERTY  IN THIS STATE, MAINTAINING AN OFFICE IN THE STATE, OR
DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, ANY CORPORATION THAT IS A
PARTNER IN SUCH PARTNERSHIP SHALL BE SUBJECT TO TAX UNDER  THIS  ARTICLE
AS DESCRIBED IN THE REGULATIONS OF THE COMMISSIONER.
  2.  A  foreign  corporation  shall not be deemed to be doing business,
employing capital, owning or leasing property, or maintaining an  office
in this state, OR DERIVING RECEIPTS FROM ACTIVITY IN THIS STATE, for the
purposes  of  this  article,  by  reason  of (a) the maintenance of cash
balances with banks or trust companies in this state, or (b) the  owner-
ship  of  shares of stock or securities kept in this state, if kept in a
safe deposit box,  safe,  vault  or  other  receptacle  rented  for  the
purpose,  or if pledged as collateral security, or if deposited with one
or more banks or trust companies, or brokers who are members of a recog-
nized security exchange, in safekeeping or custody accounts, or (c)  the
taking  of any action by any such bank or trust company or broker, which
is incidental to the rendering of safekeeping or  custodian  service  to
such  corporation,  or (d) the maintenance of an office in this state by

S. 6359--D                         37                         A. 8559--D

one or more officers or directors of the corporation who are not employ-
ees of the corporation if the corporation otherwise is not  doing  busi-
ness in this state, and does not employ capital or own or lease property
in  this  state, or (e) the keeping of books or records of a corporation
in this state if such books or records are not kept by employees of such
corporation and such corporation does not otherwise do business,  employ
capital,  own  or lease property or maintain an office in this state, or
(f) [the use of fulfillment services of a person other  than  an  affil-
iated  person  and  the  ownership of property stored on the premises of
such person in conjunction with such services, or (g)]  any  combination
of  the foregoing activities. [For purposes of this subdivision, persons
are affiliated persons with respect to each  other  where  one  of  such
persons  has  an  ownership  interest of more than five percent, whether
direct or indirect, in the other, or where an ownership interest of more
than five percent, whether direct or indirect, is held in each  of  such
persons  by  another  person  or  by  a group of other persons which are
affiliated persons with respect to each other. The term "person" in  the
preceding  sentence  and in paragraph (f) of this subdivision shall have
the meaning ascribed  thereto  by  subdivision  (a)  of  section  eleven
hundred one of this chapter.]
  2-a.  An  alien  corporation shall not be deemed to be doing business,
employing capital, owning or leasing property, or maintaining an  office
in  this  state,  for the purposes of this article, if its activities in
this state are limited solely to (a) investing or trading in stocks  and
securities  for  its  own  account  within the meaning of clause (ii) of
subparagraph (A) of paragraph (2) of subsection  (b)  of  section  eight
hundred  sixty-four  of  the  internal  revenue code or (b) investing or
trading in commodities for its own account within the meaning of  clause
(ii)  of  subparagraph (B) of paragraph (2) of subsection (b) of section
eight hundred sixty-four of the internal revenue code or (c) any  combi-
nation  of activities described in paragraphs (a) and (b) of this subdi-
vision.  AN ALIEN CORPORATION THAT UNDER ANY PROVISION OF  THE  INTERNAL
REVENUE  CODE  IS  NOT TREATED AS A "DOMESTIC CORPORATION" AS DEFINED IN
SECTION SEVEN THOUSAND SEVEN HUNDRED ONE OF SUCH CODE AND HAS NO  EFFEC-
TIVELY  CONNECTED INCOME FOR THE TAXABLE YEAR PURSUANT TO CLAUSE (IV) OF
THE OPENING PARAGRAPH OF SUBDIVISION NINE OF SECTION TWO  HUNDRED  EIGHT
OF  THIS ARTICLE SHALL NOT BE SUBJECT TO TAX UNDER THIS ARTICLE FOR THAT
TAXABLE YEAR. For purposes  of  this  [subdivision]  ARTICLE,  an  alien
corporation  is  a corporation organized under the laws of a country, or
any political subdivision thereof, other  than  the  United  States,  OR
ORGANIZED  UNDER  THE LAWS OF A POSSESSION, TERRITORY OR COMMONWEALTH OF
THE UNITED STATES.
  4. Corporations liable to tax under sections one hundred  eighty-three
to  one  hundred  eighty-four-a,  inclusive,  corporations taxable under
[articles thirty-two and] ARTICLE  thirty-three  of  this  chapter,  any
trust  company  organized  under a law of this state all of the stock of
which is owned by not less than twenty savings banks organized  under  a
law  of  this state, [bank holding companies filing a combined return in
accordance with subsection (f) of section fourteen hundred sixty-two  of
this  chapter,] a captive REIT or a captive RIC filing a combined return
under [either subsection (f) of section fourteen hundred  sixty-two  or]
subdivision  (f) of section fifteen hundred fifteen of this chapter, and
housing companies organized and operating pursuant to the provisions  of
article two or article five of the private housing finance law and hous-
ing  development  fund companies organized pursuant to the provisions of

S. 6359--D                         38                         A. 8559--D

article eleven of the private housing finance law shall not  be  subject
to tax under this article.
  5.  For  any taxable year of a real estate investment trust as defined
in section eight hundred fifty-six of the internal revenue code in which
such trust is subject to federal income  taxation  under  section  eight
hundred  fifty-seven  of such code, such trust shall be subject to a tax
computed under either paragraph (a) [, (c)] or (d) of subdivision one of
section two  hundred  ten  of  this  chapter,  whichever  is  [greatest]
GREATER,  and  shall not be subject to any tax under article [thirty-two
or article] thirty-three of this  chapter  except  for  a  captive  REIT
required  to  file  a  combined return under [subdivision (f) of section
fourteen hundred  sixty-two  or]  subdivision  (f)  of  section  fifteen
hundred  fifteen  of  this  chapter.  In  the case of such a real estate
investment trust, including a captive REIT as defined in section two  of
this chapter, the term "entire net income" means "real estate investment
trust  taxable income" as defined in paragraph two of subdivision (b) of
section eight hundred fifty-seven (as modified by section eight  hundred
fifty-eight)  of the internal revenue code plus the amount taxable under
paragraph three of subdivision (b) of section eight hundred  fifty-seven
of  such  code,  subject to the [modification] MODIFICATIONS required by
subdivision nine of section two hundred eight of  this  article  [(other
than  the  modification  required  by  subparagraph two of paragraph (a)
thereof) including the modifications required by paragraphs (d) and  (e)
of subdivision three of section two hundred ten of this article].
  6. For any taxable year of a DISC, not exempt from tax under paragraph
(i)  of  subdivision  nine of section two hundred eight of this article,
the taxes imposed by subdivision one of this section shall  be  computed
only under either paragraph (b) or (d) of subdivision one of section two
hundred ten of this chapter, whichever is greater[, and paragraph (e) of
such subdivision].
  7. For any taxable year, beginning on or after January first, nineteen
hundred  eighty of a regulated investment company, as defined in section
eight hundred fifty-one of the internal  revenue  code,  in  which  such
company  is  subject  to  federal  income  taxation  under section eight
hundred fifty-two of such code, such company shall be subject to  a  tax
computed  under either paragraph (a)[, (c)] or (d) of subdivision one of
section two  hundred  ten  of  this  chapter,  whichever  is  [greatest]
GREATER,  and  shall not be subject to any tax under article [thirty-two
or article] thirty-three of  this  chapter  except  for  a  captive  RIC
required  to  file  a  combined return under [subdivision (f) of section
fourteen hundred  sixty-two  or]  subdivision  (f)  of  section  fifteen
hundred fifteen of this chapter. In the case of such a regulated invest-
ment  company, including a captive RIC as defined in section two of this
chapter, the term "entire net income" means "investment company  taxable
income"  as defined in paragraph two of subdivision (b) of section eight
hundred fifty-two, as modified by section eight hundred  fifty-five,  of
the  internal revenue code plus the amount taxable under paragraph three
of subdivision (b) of section  eight  hundred  fifty-two  of  such  code
subject to the [modification] MODIFICATIONS required by subdivision nine
of  section two hundred eight of this chapter[, other than the modifica-
tion required by subparagraph two of paragraph (a) and by paragraph  (f)
thereof,  including  the modification required by paragraphs (d) and (e)
of subdivision three of section two hundred ten of this chapter].
  8. For any taxable year beginning on or after January first, two thou-
sand six, a corporation that is  no  longer  doing  business,  employing
capital, or owning or leasing property, OR DERIVING RECEIPTS FROM ACTIV-

S. 6359--D                         39                         A. 8559--D

ITY  in this state in a corporate or organized capacity that has filed a
final tax return with the department for the last tax year it was  doing
business  and has no outstanding tax liability for such final tax return
or  any  tax  return  for prior tax years shall be exempt from all taxes
imposed by paragraph (d) of subdivision one of section two  hundred  ten
of  this  article for tax years following the last year such corporation
was doing business.
  S 6. Section 209-A of the tax law is REPEALED.
  S 7. The section heading and subdivision 1 of section 209-B of the tax
law, the section heading as amended by chapter 11 of the  laws  of  1983
and subdivision 1 as amended by section 4 of part A of chapter 59 of the
laws of 2013, are amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge.  1. (A) For the privilege of exercising its  corporate  fran-
chise,  or  of  doing business, or of employing capital, or of owning or
leasing property in a corporate or organized capacity, or of maintaining
an office, OR OF DERIVING RECEIPTS FROM  ACTIVITY  in  the  metropolitan
commuter  transportation  district,  for  all or any part of its taxable
year, there is hereby imposed on every corporation,  other  than  a  New
York  S  corporation,  subject  to tax under section two hundred nine of
this article, or any receiver, referee, trustee, assignee or other fidu-
ciary, or any officer or agent appointed by any court, who conducts  the
business  of  any such corporation, [for the taxable years commencing on
or after January first, nineteen hundred eighty-two  but  ending  before
December thirty-first, two thousand eighteen,] a tax surcharge, in addi-
tion  to the tax imposed under section two hundred nine of this article,
to be computed at the rate of [eighteen percent of the tax imposed under
such section two hundred nine for such taxable years or any part of such
taxable years ending  before  December  thirty-first,  nineteen  hundred
eighty-three  after  the  deduction  of  any credits otherwise allowable
under this article, and at the rate of] seventeen  percent  of  the  tax
imposed  under  such  section for such taxable years or any part of such
taxable years ending on or after December thirty-first, nineteen hundred
eighty-three AND BEFORE JANUARY FIRST, TWO THOUSAND  FIFTEEN  after  the
deduction  of  any  credits  otherwise  allowable  under  this article[;
provided, however, that], AT THE  RATE  OF  TWENTY-FIVE  AND  SIX-TENTHS
PERCENT  OF  THE TAX IMPOSED UNDER SUCH SECTION FOR TAXABLE YEARS BEGIN-
NING ON OR AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN AND BEFORE  JANUARY
FIRST,  TWO  THOUSAND SIXTEEN BEFORE THE DEDUCTION OF ANY CREDITS OTHER-
WISE ALLOWABLE UNDER THIS ARTICLE, AND AT THE  RATE  DETERMINED  BY  THE
COMMISSIONER  PURSUANT  TO  PARAGRAPH (F) OF THIS SUBDIVISION OF THE TAX
IMPOSED UNDER SUCH SECTION, FOR TAXABLE  YEARS  BEGINNING  ON  OR  AFTER
JANUARY  FIRST, TWO THOUSAND SIXTEEN BEFORE THE DEDUCTION OF ANY CREDITS
OTHERWISE ALLOWABLE UNDER THIS ARTICLE.  HOWEVER, such [rates]  RATE  of
tax  surcharge  shall be applied only to that portion of the tax imposed
under section two hundred  nine  of  this  article  [after]  BEFORE  the
deduction of any credits otherwise allowable under this article which is
attributable  to  the taxpayer's business activity carried on within the
metropolitan commuter transportation district;  and  provided,  further,
[that  the  tax  surcharge  imposed by this section shall not be imposed
upon any taxpayer for more than four hundred thirty-two months. Provided
however, that for taxable years commencing on or after July first, nine-
teen hundred ninety-eight, such surcharge shall be calculated as if  the
tax  imposed  under section two hundred ten of this article were imposed
under the law in effect for taxable years commencing on  or  after  July
first,  nineteen  hundred  ninety-seven  and before July first, nineteen

S. 6359--D                         40                         A. 8559--D

hundred ninety-eight. Provided however, that for taxable years  commenc-
ing  on or after January first, two thousand seven, such surcharge shall
be calculated using the highest of the tax  bases  imposed  pursuant  to
paragraphs  (a),  (b),  (c)  or  (d)  of  subdivision one of section two
hundred ten of this article and the amount imposed under  paragraph  (e)
of  subdivision  one  of  such  section two hundred ten, for the taxable
year; and, provided further that, if such highest amount is the tax base
imposed under paragraph (a), (b) or (c) of such  subdivision,  then  the
surcharge  shall  be  computed as if the tax rates and limitations under
such paragraph were the tax rates and limitations under  such  paragraph
in  effect for taxable years commencing on or after July first, nineteen
hundred ninety-seven and before July  first,  nineteen  hundred  ninety-
eight]  THE  SURCHARGE  COMPUTED  ON  A  COMBINED REPORT SHALL INCLUDE A
SURCHARGE ON THE FIXED  DOLLAR  MINIMUM  TAX  FOR  EACH  MEMBER  OF  THE
COMBINED GROUP SUBJECT TO THE SURCHARGE UNDER THIS SUBDIVISION.
  (B)  A CORPORATION IS DERIVING RECEIPTS FROM ACTIVITY IN THE METROPOL-
ITAN COMMUTER TRANSPORTATION DISTRICT IF  IT  HAS  RECEIPTS  WITHIN  THE
METROPOLITAN  COMMUTER TRANSPORTATION DISTRICT OF ONE MILLION DOLLARS OR
MORE IN  A  TAXABLE  YEAR.  FOR  PURPOSES  OF  THIS  SECTION,  THE  TERM
"RECEIPTS"  MEANS  THE  RECEIPTS  THAT  ARE SUBJECT TO THE APPORTIONMENT
RULES SET FORTH IN SECTION TWO HUNDRED TEN-A OF THIS  ARTICLE,  AND  THE
TERM "RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT"
MEANS THE RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FACTOR
DETERMINED  UNDER  SUBDIVISION TWO OF THIS SECTION. FOR PURPOSES OF THIS
PARAGRAPH,  RECEIPTS  FROM  PROCESSING  CREDIT  CARD  TRANSACTIONS   FOR
MERCHANTS INCLUDE MERCHANT DISCOUNT FEES RECEIVED BY THE CORPORATION.
  (C)  A  CORPORATION  IS  DOING  BUSINESS  IN THE METROPOLITAN COMMUTER
TRANSPORTATION DISTRICT IF (I) IT HAS ISSUED CREDIT CARDS TO  ONE  THOU-
SAND  OR  MORE CUSTOMERS WHO HAVE A MAILING ADDRESS WITHIN THE METROPOL-
ITAN COMMUTER TRANSPORTATION DISTRICT AS OF THE LAST DAY OF ITS  TAXABLE
YEAR,  (II)  IT  HAS  MERCHANT CUSTOMER CONTRACTS WITH MERCHANTS AND THE
TOTAL NUMBER OF LOCATIONS COVERED BY THOSE CONTRACTS EQUALS ONE THOUSAND
OR MORE LOCATIONS IN THE METROPOLITAN COMMUTER  TRANSPORTATION  DISTRICT
TO  WHOM  THE CORPORATION REMITTED PAYMENTS FOR CREDIT CARD TRANSACTIONS
DURING THE TAXABLE YEAR, OR (III) THE SUM OF  THE  NUMBER  OF  CUSTOMERS
DESCRIBED  IN  SUBPARAGRAPH  (I)  OF  THIS  PARAGRAPH PLUS THE NUMBER OF
LOCATIONS COVERED BY ITS CONTRACTS DESCRIBED  IN  SUBPARAGRAPH  (II)  OF
THIS  PARAGRAPH  EQUALS ONE THOUSAND OR MORE. AS USED IN THIS PARAGRAPH,
THE TERM "CREDIT CARD" INCLUDES BANK, CREDIT, TRAVEL  AND  ENTERTAINMENT
CARDS.
  (D)(I)  A  CORPORATION WITH LESS THAN ONE MILLION DOLLARS BUT AT LEAST
TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANS-
PORTATION DISTRICT IN A TAXABLE YEAR THAT IS PART OF A COMBINED  REPORT-
ING  GROUP  UNDER  SECTION TWO HUNDRED TEN-C OF THIS ARTICLE IS DERIVING
RECEIPTS FROM  ACTIVITY  IN  THE  METROPOLITAN  COMMUTER  TRANSPORTATION
DISTRICT IF THE RECEIPTS WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION
DISTRICT  OF  THE  MEMBERS  OF THE COMBINED REPORTING GROUP THAT HAVE AT
LEAST TEN THOUSAND DOLLARS OF RECEIPTS WITHIN THE METROPOLITAN  COMMUTER
TRANSPORTATION DISTRICT IN THE AGGREGATE MEET THE THRESHOLD SET FORTH IN
PARAGRAPH (B) OF THIS SUBDIVISION.
  (II)  A CORPORATION THAT DOES NOT MEET ANY OF THE THRESHOLDS SET FORTH
IN PARAGRAPH (C) OF THIS SUBDIVISION BUT HAS AT LEAST TEN CUSTOMERS,  OR
LOCATIONS,  OR  CUSTOMERS  AND LOCATIONS, AS DESCRIBED IN PARAGRAPH (C),
AND IS PART OF A COMBINED REPORTING  GROUP  UNDER  SECTION  TWO  HUNDRED
TEN-C  OF THIS ARTICLE THAT IS DOING BUSINESS IN THE METROPOLITAN COMMU-
TER TRANSPORTATION DISTRICT IF THE NUMBER OF  CUSTOMERS,  LOCATIONS,  OR

S. 6359--D                         41                         A. 8559--D

CUSTOMERS AND LOCATIONS, WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION
DISTRICT  OF  THE  MEMBERS  OF THE COMBINED REPORTING GROUP THAT HAVE AT
LEAST TEN CUSTOMERS, LOCATIONS, OR CUSTOMERS AND LOCATIONS,  WITHIN  THE
METROPOLITAN COMMUTER TRANSPORTATION DISTRICT IN THE AGGREGATE MEETS ANY
OF THE THRESHOLDS SET FORTH IN PARAGRAPH (C) OF THIS SUBDIVISION.
  (E) AT THE END OF EACH YEAR, THE COMMISSIONER SHALL REVIEW THE CUMULA-
TIVE  PERCENTAGE  CHANGE  IN  THE CONSUMER PRICE INDEX. THE COMMISSIONER
SHALL ADJUST THE RECEIPT THRESHOLDS SET FORTH IN THIS SUBDIVISION IF THE
CONSUMER PRICE INDEX HAS CHANGED BY TEN PERCENT OR MORE SINCE THE  JANU-
ARY  FIRST,  TWO  THOUSAND FIFTEEN OR SINCE THE DATE THAT THE THRESHOLDS
WERE LAST ADJUSTED UNDER  THIS  SUBDIVISION.  THE  THRESHOLDS  SHALL  BE
ADJUSTED  TO  REFLECT  THAT CUMULATIVE PERCENTAGE CHANGE IN THE CONSUMER
PRICE INDEX. THE ADJUSTED THRESHOLDS SHALL BE ROUNDED TO THE NEAREST ONE
THOUSAND DOLLARS. AS USED IN  THIS  PARAGRAPH,  "CONSUMER  PRICE  INDEX"
MEANS THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) AVAILABLE
FROM  THE  BUREAU OF LABOR STATISTICS OF THE UNITED STATES DEPARTMENT OF
LABOR. ANY ADJUSTMENT SHALL APPLY TO TAX PERIODS THAT  BEGIN  AFTER  THE
ADJUSTMENT IS MADE.
  (F) THE COMMISSIONER SHALL DETERMINE THE RATE OF TAX FOR TAXABLE YEARS
BEGINNING  ON  OR AFTER JANUARY FIRST, TWO THOUSAND SIXTEEN BY ADJUSTING
THE RATE FOR TAXABLE YEARS BEGINNING ON  OR  AFTER  JANUARY  FIRST,  TWO
THOUSAND  FIFTEEN  AND  BEFORE  JANUARY  FIRST,  TWO THOUSAND SIXTEEN AS
NECESSARY TO ENSURE THAT THE RECEIPTS ATTRIBUTABLE TO SUCH SURCHARGE, AS
IMPACTED BY THE CHAPTER OF THE LAWS OF TWO THOUSAND FOURTEEN WHICH ADDED
THIS PARAGRAPH, WILL MEET AND NOT EXCEED THE FINANCIAL  PROJECTIONS  FOR
STATE  FISCAL  YEAR  TWO  THOUSAND  SIXTEEN-TWO  THOUSAND  SEVENTEEN, AS
REFLECTED IN STATE FISCAL YEAR TWO THOUSAND FIFTEEN-TWO THOUSAND SIXTEEN
ENACTED BUDGET. THE COMMISSIONER SHALL ANNUALLY DETERMINE THE RATE THER-
EAFTER USING THE FINANCIAL PROJECTIONS FOR THE STATE  FISCAL  YEAR  THAT
COMMENCES  IN  THE  YEAR FOR WHICH THE RATE IS TO BE SET AS REFLECTED IN
THE ENACTED BUDGET FOR THE FISCAL YEAR COMMENCING ON THE PREVIOUS  APRIL
FIRST.
  S  8.  Subdivision  2  of  section 209-B of the tax law, as amended by
chapter 11 of the laws of 1983, paragraph (a) as amended by chapter  760
of  the  laws  of 1992 and subparagraph 2 of paragraph (b) as amended by
section 3 of part K of chapter 63 of the laws of  2000,  is  amended  to
read as follows:
  2.  The  portion of the taxpayer's business activity carried on within
the metropolitan commuter transportation district shall be determined by
multiplying the tax imposed under section two hundred nine of this arti-
cle BEFORE THE DEDUCTION OF ANY CREDITS OTHERWISE ALLOWABLE  UNDER  THIS
ARTICLE by a percentage to be determined as follows:
  (a) ascertaining the percentage which the average value of the taxpay-
er's real and tangible personal property, whether owned or rented to it,
within  the  metropolitan  commuter  transportation  district during the
period covered by its report bears to  the  average  value  of  all  the
taxpayer's  real and tangible personal property, whether owned or rented
to it, within the state during  such  period;  provided  that  the  term
"value  of  the  taxpayer's  real  and tangible personal property" shall
[have the same meaning as is ascribed to that term by  subparagraph  one
of  paragraph  (a) of subdivision three of section two hundred ten] MEAN
THE ADJUSTED BASES OF SUCH PROPERTIES FOR FEDERAL  INCOME  TAX  PURPOSES
(EXCEPT  THAT  IN  THE CASE OF RENTED PROPERTY SUCH VALUE SHALL MEAN THE
PRODUCT OF (I) EIGHT AND (II) THE GROSS RENTS PAYABLE FOR THE RENTAL  OF
SUCH  PROPERTY  DURING  THE  TAXABLE  YEAR); PROVIDED, HOWEVER, THAT THE
TAXPAYER MAY MAKE A ONE-TIME, REVOCABLE  ELECTION  TO  USE  FAIR  MARKET

S. 6359--D                         42                         A. 8559--D

VALUE  AS  THE  VALUE OF ALL OF ITS REAL AND TANGIBLE PERSONAL PROPERTY,
PROVIDED THAT SUCH ELECTION IS MADE ON OR BEFORE THE DUE DATE FOR FILING
A REPORT UNDER SECTION TWO HUNDRED ELEVEN FOR THE TAXPAYER'S FIRST TAXA-
BLE  YEAR COMMENCING ON OR AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN AND
PROVIDED THAT SUCH ELECTION SHALL NOT APPLY TO  ANY  TAXABLE  YEAR  WITH
RESPECT  TO  WHICH  THE TAXPAYER IS INCLUDED ON A COMBINED REPORT UNLESS
EACH OF THE TAXPAYERS INCLUDED ON SUCH REPORT HAS MADE SUCH AN  ELECTION
WHICH REMAINS IN EFFECT FOR SUCH YEAR;
  (b)  ascertaining  the percentage [which the receipts of the taxpayer,
computed on the cash  or  accrual  basis  according  to  the  method  of
accounting  used  in  the  computation of its entire net income, arising
during such period from:
  (1) sales of its tangible personal property where shipments  are  made
to points within the metropolitan commuter transportation district,
  (2) services performed within the metropolitan commuter transportation
district,  provided, however, that (i) in the case of a taxpayer engaged
in the business of publishing newspapers or periodicals, receipts  aris-
ing  from  sales of advertising contained in such newspapers and period-
icals shall be deemed to arise from services performed within the metro-
politan  commuter  transportation  district  to  the  extent  that  such
newspapers  and periodicals are delivered to points within the metropol-
itan commuter transportation district, (ii) receipts from an  investment
company  from  the  sale  of  management, administration or distribution
services to such investment  company  shall  be  deemed  to  arise  from
services  performed  within  the  metropolitan  commuter  transportation
district to the extent set forth in subparagraph six of paragraph (a) of
subdivision three of section two hundred ten  of  this  chapter  (except
that  references  in such subparagraph six to the state shall be deemed,
for purposes of application to this clause,  to  be  references  to  the
metropolitan  commuter  transportation  district),  (iii) in the case of
taxpayers principally engaged in the activity of air freight  forwarding
acting as principal and like indirect air carriage receipts arising from
such  activity  shall arise from services performed within the metropol-
itan commuter transportation district as follows: one hundred percent of
such receipts if both the  pickup  and  delivery  associated  with  such
receipts  are  made in the metropolitan commuter transportation district
and fifty percent of such receipts if  either  the  pickup  or  delivery
associated  with  such  receipts  is  made  in the metropolitan commuter
transportation district, and (iv) in the case of a taxpayer which  is  a
registered  securities  or  commodities  broker  or dealer, the receipts
specified in subparagraph nine of paragraph (a) of subdivision three  of
section  two  hundred  ten of this article shall be deemed to arise from
services  performed  within  the  metropolitan  commuter  transportation
district  to the extent set forth in such subparagraph nine (except that
references in such subparagraph nine to the state shall be  deemed,  for
purposes  of  the  application  of  this clause, to be references to the
metropolitan commuter transportation district),
  (3) rentals from property situated  and  royalties  from  the  use  of
patents  or  copyrights  within the metropolitan commuter transportation
district, and receipts from the sales of rights for  closed-circuit  and
cable  television transmissions of an event (other than events occurring
on a regularly scheduled basis) taking  place  within  the  metropolitan
commuter  transportation  district  as  a  result  of  the  rendition of
services by employees of the corporation, as athletes,  entertainers  or
performing  artists,  but  only  to  the  extent  that such receipts are

S. 6359--D                         43                         A. 8559--D

attributable to such transmissions  received  or  exhibited  within  the
metropolitan communter transportation district, and
  (4)  all other business receipts earned within the metropolitan commu-
ter transportation district, bear to the total amount of the  taxpayer's
receipts,  similarly computed, arising during such period from all sales
of  its  tangible  personal  property,  services,  rentals,   royalties,
receipts  from  the  sales  of rights for closed-circuit and cable tele-
vision transmissions and all other  business  transactions,  within  the
state;]  OF  THE  TAXPAYER'S  RECEIPTS  WITHIN THE METROPOLITAN COMMUTER
TRANSPORTATION DISTRICT PURSUANT TO THE METHOD PRESCRIBED IN SECTION TWO
HUNDRED TEN-A OF THIS ARTICLE, EXCEPT THAT
  (I) THE NUMERATOR OF THE APPORTIONMENT FRACTION UNDER SUCH SECTION TWO
HUNDRED TEN-A SHALL BE THE DENOMINATOR  OF  THE  APPORTIONMENT  FRACTION
UNDER THIS PARAGRAPH,
  (II)  THE NUMERATOR OF THE APPORTIONMENT FRACTION UNDER THIS PARAGRAPH
SHALL BE DETERMINED BY APPLYING THE RULES IN SUCH  SECTION  TWO  HUNDRED
TEN-A  RELATING  TO  THE  NUMERATOR  OF THE APPORTIONMENT FRACTION AS IF
THOSE RULES REFERENCED THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT
RATHER THAN THIS STATE,
  (III) TO THE EXTENT THAT A PROVISION IN SUCH SECTION TWO HUNDRED TEN-A
PROVIDES THAT EIGHT PERCENT OF THE RECEIPTS SPECIFIED IN THAT  PROVISION
SHOULD BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION, NINE-
TY  PERCENT  OF SUCH EIGHT PERCENT AMOUNT SHALL BE CONSIDERED WITHIN THE
METROPOLITAN COMMUTER TRANSPORTATION DISTRICT AND ONE HUNDRED PERCENT OF
SUCH EIGHT PERCENT AMOUNT SHALL BE CONSIDERED TO BE  WITHIN  THE  STATE,
AND
  (IV)  TO THE EXTENT THAT A PROVISION IN SUCH SECTION TWO HUNDRED TEN-A
OF THIS ARTICLE PROVIDES THAT THE RECEIPTS SPECIFIED IN  THAT  PROVISION
SHALL  NOT  BE  INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
UNDER SUCH SECTION  TWO  HUNDRED  TEN-A,  SUCH  RECEIPTS  SHALL  NOT  BE
INCLUDED  IN DETERMINING THE PORTION OF THE TAXPAYER'S BUSINESS ACTIVITY
CARRIED ON WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT;
  (c) ascertaining the percentage of the total wages, salaries and other
personal service compensation, similarly computed, during  such  period,
of  employees  within the metropolitan commuter transportation district,
except general executive officers, to  the  total  wages,  salaries  and
other  personal  service  compensation,  similarly computed, during such
period, of all the taxpayer's employees within the state, except general
executive officers; and
  (d) adding together the percentages so  determined  and  dividing  the
result by the number of percentages.
  S 9. Intentionally omitted.
  S  10.  Subdivisions  2-a  and 2-b of section 209-B of the tax law are
REPEALED.
  S 11. Subdivisions 3 and 5 of section 209-B of the tax  law,  subdivi-
sion 3 as amended by chapter 11 of the laws of 1983 and subdivision 5 as
amended  by  chapter  166  of  the  laws of 1991, are amended to read as
follows:
  3. A corporation shall not be deemed to be doing  business,  employing
capital, owning or leasing property, or maintaining an office, OR DERIV-
ING  RECEIPTS  FROM ACTIVITY in the metropolitan commuter transportation
district, for the purposes of this section, by reason of (a) the mainte-
nance of cash balances with banks or trust companies in the metropolitan
commuter transportation district, or (b)  the  ownership  of  shares  of
stock  or  securities  kept  in the metropolitan commuter transportation
district, if kept in a safe deposit box, safe, vault or other receptacle

S. 6359--D                         44                         A. 8559--D

rented for the purpose, or if pledged  as  collateral  security,  or  if
deposited  with one or more banks or trust companies, or brokers who are
members of a recognized security exchange,  in  safekeeping  or  custody
accounts,  or  (c)  the  taking  of any action by any such bank or trust
company or broker, which is incidental to the rendering  of  safekeeping
or  custodian  service to such corporation, or (d) the maintenance of an
office in the metropolitan commuter transportation district  by  one  or
more  officers  or directors of the corporation who are not employees of
the corporation if the corporation otherwise is not  doing  business  in
the  metropolitan  commuter transportation district, and does not employ
capital or own or lease property in the metropolitan commuter  transpor-
tation district, or (e) the keeping of books or records of a corporation
in  the  metropolitan  commuter transportation district if such books or
records are not kept by employees of such corporation  and  such  corpo-
ration  does  not  otherwise  do  business, employ capital, own or lease
property or maintain an office in the metropolitan commuter  transporta-
tion district, or (f) any combination of the foregoing activities.
  5.  The  provisions  concerning  reports  under [section] SECTIONS TWO
HUNDRED TEN-C AND  two  hundred  eleven  shall  be  applicable  to  this
section,  except  that  for  purposes  of an automatic extension for six
months for filing a report covering the tax surcharge  imposed  by  this
section,  such  automatic  extension shall be allowed only if a taxpayer
files with the commissioner an application for extension in such form as
said commissioner may prescribe by regulation and pays on or before  the
date of such filing in addition to any other amounts required under this
article,  either  ninety percent of the entire tax surcharge required to
be paid under this section for the applicable period, or not  less  than
the tax surcharge shown on the taxpayer's return for the preceding taxa-
ble  year,  if  such preceding taxable year was a taxable year of twelve
months; provided, however, that in no event shall such  amount  be  less
than  the  product of the following three amounts: (1) the tax surcharge
rate in effect for the taxable year pursuant to subdivision one of  this
section,  (2)  the  fixed  dollar minimum applicable to such taxpayer as
determined under paragraph (d) of subdivision one of section two hundred
ten of this chapter for the taxable year, and (3) the percentage  deter-
mined  under  subdivision  two of this section for the preceding taxable
year, unless the taxpayer was not subject to the tax  surcharge  imposed
pursuant  to  this section with respect to such year, in which case such
percentage shall be deemed to be one hundred percent. The tax  surcharge
imposed  by this section shall be payable to the commissioner in full at
the time the report is required to be filed, and such tax  surcharge  or
the  balance  thereof,  imposed on any taxpayer which ceases to exercise
its franchise or be subject to the tax surcharge imposed by this section
shall be payable to the commissioner at the time the report is  required
to be filed, provided such tax surcharge of a domestic corporation which
continues to possess its franchise shall be subject to adjustment as the
circumstances  may require; all other tax surcharges of any such taxpay-
er, which pursuant to the foregoing provisions  of  this  section  would
otherwise  be  payable subsequent to the time such report is required to
be filed, shall nevertheless  be  payable  at  such  time.  All  of  the
provisions  of  this  article presently applicable are applicable to the
tax surcharge imposed by this section.
  S 12. Subdivision 1 of section 210 of the tax law, as added by chapter
817 of the laws of 1987, the opening paragraph as amended by  section  1
of part D and paragraph (g) as amended by section 2 of part A of chapter
63 of the laws of 2000, paragraph (a) as amended by  section 2 of part N

S. 6359--D                         45                         A. 8559--D

of  chapter  60  of the laws of 2007, subparagraph 2 of paragraph (b) as
amended by section 1 of part GG-1 of chapter 57 of  the  laws  of  2008,
subparagraph 3 of paragraph (b) as added by section 2 of part Z of chap-
ter  59  of  the  laws  of  2013,  subparagraph (ii) of paragraph (c) as
amended by section 2 of part C and subparagraph 5 of  paragraph  (d)  as
added by section 3 of part C of chapter 56 of the laws of 2011, subpara-
graph (vi) of paragraph (a) as amended by section 1 of part C of chapter
56 of the laws of 2011, subparagraph (vii) as added by section 1 of part
Z of chapter 59 of the laws of 2013, subparagraph (iii) of paragraph (c)
as  added  by  section  3  of  part Z of chapter 59 of the laws of 2013,
subparagraph 6 of paragraph (d) as added by section 4 of part Z of chap-
ter 59 of the laws of 2013, paragraph (b) as amended  by  section  1  of
part  GG1,  subparagraph  3  of paragraph (d) as amended by section 3 of
part AA1, subparagraph 4 of paragraph (d) as added by section 2 of  part
AA1  and subparagraph 1 of paragraph (g) as amended by section 4 of part
AA1 of chapter 57 of the laws of  2008,  paragraph  (c)  as  amended  by
section  10  of part A and subparagraph 1 of paragraph (d) as amended by
section 12 of part A of chapter 56 of the laws of 1998, paragraph (d) as
amended by chapter 760 of the laws of 1992, paragraph (e) as amended  by
section  1  of  part P of chapter 407 of the laws of 1999, and paragraph
(f) as amended by section 2 of part E of chapter 61 of the laws of 2005,
is amended to read as follows:
  1. The tax imposed by subdivision one of section two hundred  nine  of
this chapter shall be: (A) in the case of each taxpayer other than a New
York  S  corporation  or a qualified homeowners association, the [sum of
(1) the] highest of the amounts prescribed in paragraphs (a), (b), [(c)]
and (d) of this subdivision [and (2) the amount prescribed in  paragraph
(e)  of  this  subdivision],  (B)  in the case of each New York S corpo-
ration, the amount prescribed in paragraph [(g)] (D)  of  this  subdivi-
sion,  and  (C)  in  the case of a qualified homeowners association, the
[sum of (1) the] highest of the amounts prescribed in paragraphs  (a)[,]
AND  (b) [and (c)] of this subdivision [and (2) the amount prescribed in
paragraph (e) of this subdivision]. For purposes of this paragraph,  the
term  "qualified homeowners association" means a homeowners association,
as such term is defined in subsection (c) of section five hundred  twen-
ty-eight of the internal revenue code without regard to subparagraph (E)
of  paragraph  one of such subsection (relating to elections to be taxed
pursuant to such section), which has no homeowners  association  taxable
income,  as  such  term  is  defined  in subsection (d) of such section.
Provided, however, that in the case of a small business taxpayer  (other
than  a  New  York  S  corporation)  as defined in paragraph (f) of this
subdivision, FOR TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO THOU-
SAND SIXTEEN, if the amount prescribed in such paragraph (b)  is  higher
than the amount prescribed in such paragraph (a) solely by reason of the
application  of  the  rate  applicable to small business taxpayers, then
with respect to such taxpayer  the  tax  referred  to  in  the  previous
sentence  shall  be  [the  sum of (1) the highest] HIGHER of the amounts
prescribed in paragraphs (a)[, (c)] and (d) of this subdivision [and (2)
the amount prescribed in paragraph (e) of this subdivision].
  (a) [Entire net] BUSINESS income base. [For  taxable  years  beginning
before  July  first, nineteen hundred ninety-nine, the amount prescribed
by this paragraph shall be computed at the rate of nine percent  of  the
taxpayer's  entire  net  income  base. For taxable years beginning after
June thirtieth, nineteen hundred ninety-nine and before July first,  two
thousand,  the  amount prescribed by this paragraph shall be computed at
the rate of eight and one-half percent  of  the  taxpayer's  entire  net

S. 6359--D                         46                         A. 8559--D

income base. For taxable years beginning after June thirtieth, two thou-
sand  and  before July first, two thousand one, the amount prescribed by
this paragraph shall be computed at the rate of  eight  percent  of  the
taxpayer's  entire  net  income  base. For taxable years beginning after
June thirtieth, two thousand one and before January first, two  thousand
seven,  the amount prescribed by this paragraph shall be computed at the
rate of seven and one-half percent of the taxpayer's entire  net  income
base.]  For  taxable years beginning [on or after] BEFORE January first,
two thousand [seven] SIXTEEN, the amount prescribed  by  this  paragraph
shall  be  computed  at  the  rate of seven and one-tenth percent of the
taxpayer's [entire net] BUSINESS income base. FOR TAXABLE  YEARS  BEGIN-
NING  ON  OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND  SIXTEEN, THE AMOUNT
PRESCRIBED BY THIS PARAGRAPH SHALL BE SIX AND ONE-HALF  PERCENT  OF  THE
TAXPAYER'S  BUSINESS  INCOME  BASE. The taxpayer's [entire net] BUSINESS
income base shall mean the portion of the taxpayer's [entire net]  BUSI-
NESS income allocated within the state as hereinafter provided[, subject
to  any  modification  required by paragraphs (d) and (e) of subdivision
three of this section]. However, in the case of a small business taxpay-
er, as  defined  in  paragraph  (f)  of  this  subdivision,  the  amount
prescribed  by this paragraph shall be computed pursuant to subparagraph
(iv) of this paragraph and in the case of a manufacturer, as defined  in
subparagraph (vi) of this paragraph, the amount prescribed by this para-
graph shall be computed pursuant to subparagraph (vi) of this paragraph.
  [(i)  if the entire net income base is not more than two hundred thou-
sand dollars, (1) for taxable years beginning before July  first,  nine-
teen  hundred  ninety-nine,  the  amount  shall  be eight percent of the
entire net income base; (2) for taxable years beginning after June thir-
tieth, nineteen hundred ninety-nine and before July first, two  thousand
three,  the amount shall be seven and one-half percent of the entire net
income base; and (3) for taxable years beginning after  June  thirtieth,
two  thousand  three  and  before  January first, two thousand five, the
amount shall be 6.85 percent of the entire net income base;
  (ii) if the entire net income base is more than two  hundred  thousand
dollars  but not over two hundred ninety thousand dollars, (1) for taxa-
ble years beginning before July first, nineteen hundred ninety-nine, the
amount shall be the sum  of  (a)  sixteen  thousand  dollars,  (b)  nine
percent  of  the  excess  of the entire net income base over two hundred
thousand dollars and (c) five percent of the excess of  the  entire  net
income  base  over  two  hundred fifty thousand dollars; (2) for taxable
years beginning after June thirtieth, nineteen hundred  ninety-nine  and
before  July  first,  two  thousand,  the amount shall be the sum of (a)
fifteen thousand dollars, (b) eight and one-half percent of  the  excess
of  the entire net income base over two hundred thousand dollars and (c)
five percent of the excess of  the  entire  net  income  base  over  two
hundred  fifty  thousand  dollars; (3) for taxable years beginning after
June thirtieth, two thousand and before July first,  two  thousand  one,
the  amount  shall be the sum of (a) fifteen thousand dollars, (b) eight
percent of the excess of the entire net income  base  over  two  hundred
thousand  dollars  and (c) two and one-half percent of the excess of the
entire net income base over two hundred fifty thousand dollars; (4)  for
taxable  years  beginning  after  June  thirtieth,  two thousand one and
before July first, two thousand three, the amount  shall  be  seven  and
one-half  percent  of  the  entire  net income base; and (5) for taxable
years beginning after June thirtieth,  two  thousand  three  and  before
January  first,  two  thousand  five, the amount shall be the sum of (a)
thirteen thousand seven hundred dollars, (b) 7.5 percent of  the  excess

S. 6359--D                         47                         A. 8559--D

of  the entire net income base over two hundred thousand dollars and (c)
3.25 percent of the excess of  the  entire  net  income  base  over  two
hundred fifty thousand dollars;
  (iii) for taxable years beginning on or after January first, two thou-
sand  five  and  ending before January first, two thousand seven, if the
entire net income base is not more  than  two  hundred  ninety  thousand
dollars  the  amount shall be six and one-half percent of the entire net
income base; if the entire net income base  is  more  than  two  hundred
ninety  thousand  dollars  but  not  over  three hundred ninety thousand
dollars the amount shall be the  sum  of  (1)  eighteen  thousand  eight
hundred  fifty  dollars, (2) seven and one-half percent of the excess of
the entire net income base over two hundred ninety thousand dollars  but
not  over  three  hundred ninety thousand dollars and (3) seven and one-
quarter percent of the excess of the entire net income base  over  three
hundred  fifty  thousand dollars but not over three hundred ninety thou-
sand dollars;]
  (iv) for taxable years beginning [on or after] BEFORE  January  first,
two  thousand  [seven] SIXTEEN, if the [entire net] BUSINESS income base
is not more than two hundred ninety thousand dollars the amount shall be
six and one-half percent of the [entire net] BUSINESS  income  base;  if
the  [entire  net]  BUSINESS income base is more than two hundred ninety
thousand dollars but not over three hundred ninety thousand dollars  the
amount  shall  be  the  sum of (1) eighteen thousand eight hundred fifty
dollars, (2) seven and one-tenth percent of the excess  of  the  [entire
net]  BUSINESS  income base over two hundred ninety thousand dollars but
not over three hundred ninety thousand dollars and (3) four and  thirty-
five  hundredths  percent  of  the  excess  of the [entire net] BUSINESS
income base over three hundred fifty thousand dollars but not over three
hundred ninety thousand dollars;
  (v) if the taxable period to which [subparagraphs  (i),  (ii),  (iii),
and]  SUBPARAGRAPH  (iv)  of this paragraph [apply] APPLIES is less than
twelve months, the amount prescribed by this paragraph shall be computed
as follows:
  (A) Multiply the [entire net] BUSINESS income base for  such  taxpayer
by twelve;
  (B)  Divide  the result obtained in (A) by the number of months in the
taxable year;
  (C) Compute an amount pursuant to [subparagraphs (i) and (ii)] SUBPAR-
AGRAPH (IV) as if the result obtained in (B) were the taxpayer's [entire
net] BUSINESS income base;
  (D) Multiply the result obtained in (C) by the number of months in the
taxpayer's taxable year;
  (E) Divide the result obtained in (D) by twelve.
  (vi) for taxable years beginning on or  after  January  [thirty-first]
FIRST,  two  thousand  [seven]  FOURTEEN,  the amount prescribed by this
paragraph for a taxpayer which is a  qualified  New  York  manufacturer,
shall  be  computed at the rate of [six and one-half (6.5)] ZERO percent
of the taxpayer's [entire net] BUSINESS income base. [For taxable  years
beginning  on  or  after  January  first, two thousand twelve and before
January first, two thousand fifteen, the amount prescribed by this para-
graph for a taxpayer which is an eligible qualified New York manufactur-
er shall be computed at the rate of three and one-quarter (3.25) percent
of the taxpayer's entire net income base.] The term "manufacturer" shall
mean a taxpayer which during the taxable year is principally engaged  in
the production of goods by manufacturing, processing, assembling, refin-
ing,  mining,  extracting, farming, agriculture, horticulture, floricul-

S. 6359--D                         48                         A. 8559--D

ture, viticulture or commercial fishing.  However,  the  generation  and
distribution  of  electricity,  the distribution of natural gas, and the
production of steam associated with the generation of electricity  shall
not be qualifying activities for a manufacturer under this subparagraph.
Moreover,  the  combined  group shall be considered a "manufacturer" for
purposes of this subparagraph only if  the  combined  group  during  the
taxable  year is principally engaged in the activities set forth in this
paragraph, or any combination thereof. A taxpayer or  a  combined  group
shall  be "principally engaged" in activities described above if, during
the taxable year, more than fifty percent of the gross receipts  of  the
taxpayer or combined group, respectively, are derived from receipts from
the  sale  of goods produced by such activities. In computing a combined
group's gross receipts, intercorporate receipts shall be  eliminated.  A
"qualified  New  York manufacturer" is a manufacturer which has property
in New York which is described in [clause (A)  of  subparagraph  (i)  of
paragraph  (b)  of]  subdivision [twelve of this section] ONE OF SECTION
TWO HUNDRED TEN-B OF THIS ARTICLE and either (I) the adjusted  basis  of
such  property for federal income tax purposes at the close of the taxa-
ble year is at least one million dollars or (II) all  of  its  real  and
personal property is located in New York. [In addition, a "qualified New
York  manufacturer"  means  a  taxpayer  which is defined as a qualified
emerging technology company under paragraph (c) of  subdivision  one  of
section  thirty-one  hundred two-e of the public authorities law regard-
less of the ten million dollar limitation expressed in subparagraph  one
of  such  paragraph (c). The commissioner shall establish guidelines and
criteria that specify requirements by which a manufacturer may be  clas-
sified  as  an  eligible  qualified  New York manufacturer. Criteria may
include but not be limited to factors such as regional unemployment, the
economic impact that manufacturing has  on  the  surrounding  community,
population decline within the region and median income within the region
in  which  the manufacturer is located. In establishing these guidelines
and criteria, the commissioner shall endeavor that the total annual cost
of the lower rates shall not  exceed  twenty-five  million  dollars.]  A
TAXPAYER  OR,  IN  THE CASE OF A COMBINED REPORT, A COMBINED GROUP, THAT
DOES NOT SATISFY THE PRINCIPALLY ENGAGED TEST MAY  BE  A  QUALIFIED  NEW
YORK  MANUFACTURER  IF THE TAXPAYER OR THE COMBINED GROUP EMPLOYS DURING
THE TAXABLE YEAR AT LEAST TWO THOUSAND FIVE HUNDRED EMPLOYEES  IN  MANU-
FACTURING IN NEW YORK AND THE TAXPAYER OR THE COMBINED GROUP HAS PROPER-
TY  IN  THE STATE USED IN MANUFACTURING, THE ADJUSTED BASIS OF WHICH FOR
FEDERAL INCOME TAX PURPOSES AT THE CLOSE OF THE TAXABLE YEAR IS AT LEAST
ONE HUNDRED MILLION DOLLARS.
  (vii) For a TAXPAYER THAT IS DEFINED AS A qualified [New York manufac-
turer, as defined in subparagraph  (vi)  of  this  paragraph,]  EMERGING
TECHNOLOGY  COMPANY  UNDER  PARAGRAPH  (C) OF SUBDIVISION ONE OF SECTION
THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW REGARDLESS OF THE
TEN MILLION DOLLAR LIMITATION EXPRESSED  IN  SUBPARAGRAPH  ONE  OF  SUCH
PARAGRAPH  (C) the rate at which the tax is computed in effect for taxa-
ble years beginning on or after January first, two thousand thirteen and
before January first, two thousand fourteen for SUCH qualified [New York
manufacturers] EMERGING TECHNOLOGY COMPANIES shall be  reduced  by  nine
and  two-tenths percent for taxable years commencing on or after January
first, two thousand fourteen and  before  January  first,  two  thousand
fifteen, twelve and three-tenths percent for taxable years commencing on
or  after  January first, two thousand fifteen and before January first,
two thousand sixteen, fifteen and four-tenths percent for taxable  years
commencing  on  or  after January first, two thousand sixteen and before

S. 6359--D                         49                         A. 8559--D

January first, two thousand eighteen, and twenty-five percent for  taxa-
ble years beginning on or after January first, two thousand eighteen.
  (VIII)  (A)  IN COMPUTING THE BUSINESS INCOME BASE, TAXPAYERS SHALL BE
ALLOWED BOTH A PRIOR NET OPERATING  LOSS  CONVERSION  SUBTRACTION  UNDER
THIS  SUBPARAGRAPH AND A NET OPERATING LOSS DEDUCTION UNDER SUBPARAGRAPH
(IX)  OF  THIS  PARAGRAPH.  THE  PRIOR  NET  OPERATING  LOSS  CONVERSION
SUBTRACTION  COMPUTED  UNDER  THIS SUBPARAGRAPH SHALL BE APPLIED AGAINST
THE BUSINESS  INCOME  BASE  BEFORE  THE  NET  OPERATING  LOSS  DEDUCTION
COMPUTED UNDER SUBPARAGRAPH (IX) OF THIS PARAGRAPH.
  (B) PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION.
  (1) DEFINITIONS.
  (I)  "BASE  YEAR"  MEANS  THE  LAST TAXABLE YEAR BEGINNING ON OR AFTER
JANUARY FIRST, TWO THOUSAND FOURTEEN AND BEFORE JANUARY FIRST, TWO THOU-
SAND FIFTEEN.
  (II) "UNABSORBED NET OPERATING LOSS" MEANS THE UNABSORBED  PORTION  OF
NET OPERATING LOSS AS CALCULATED UNDER PARAGRAPH (F) OF SUBDIVISION NINE
OF  SECTION  TWO  HUNDRED  EIGHT  OF THIS ARTICLE OR SUBSECTION (K-1) OF
SECTION FOURTEEN HUNDRED FIFTY-THREE OF THIS CHAPTER  AS  SUCH  SECTIONS
WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN, THAT WAS
NOT  DEDUCTIBLE IN PREVIOUS TAXABLE YEARS AND WAS ELIGIBLE FOR CARRYOVER
ON THE LAST DAY  OF  THE  BASE  YEAR  SUBJECT  TO  THE  LIMITATIONS  FOR
DEDUCTION   UNDER  SUCH  SECTIONS,  INCLUDING  ANY  NET  OPERATING  LOSS
SUSTAINED BY THE TAXPAYER DURING THE BASE YEAR.
  (III)  "BASE  YEAR  BAP"  MEANS  THE  TAXPAYER'S  BUSINESS  ALLOCATION
PERCENTAGE  AS  CALCULATED  UNDER  PARAGRAPH (A) OF SUBDIVISION THREE OF
THIS SECTION FOR THE BASE YEAR, OR THE TAXPAYER'S ALLOCATION  PERCENTAGE
AS  CALCULATED UNDER SECTION FOURTEEN HUNDRED FIFTY-FOUR OF THIS CHAPTER
FOR PURPOSES OF CALCULATING ENTIRE NET INCOME FOR THE BASE YEAR, AS SUCH
SECTIONS WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (IV) "BASE YEAR TAX RATE" MEANS THE TAXPAYER'S TAX RATE FOR  THE  BASE
YEAR  AS  CALCULATED  UNDER  THIS PARAGRAPH OR SUBSECTION (A) OF SECTION
FOURTEEN HUNDRED FIFTY-FIVE OF THIS CHAPTER, AS SUCH PROVISIONS WERE  IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (2)  THE  PRIOR  NET  OPERATING  LOSS  CONVERSION SUBTRACTION SHALL BE
CALCULATED AS FOLLOWS:
  (I) THE TAXPAYER SHALL FIRST CALCULATE THE TAX VALUE OF ITS UNABSORBED
NET OPERATING LOSS FOR THE BASE YEAR. THE VALUE IS EQUAL TO THE  PRODUCT
OF  (I) THE AMOUNT OF THE TAXPAYER'S UNABSORBED NET OPERATING LOSS, (II)
THE TAXPAYER'S BASE YEAR BAP, AND (III) THE  TAXPAYER'S  BASE  YEAR  TAX
RATE.
  (II)  THE  PRODUCT DETERMINED UNDER ITEM (I) OF THIS SUBCLAUSE IS THEN
DIVIDED BY SIX AND ONE-HALF PERCENT, OR IN THE CASE OF A  QUALIFIED  NEW
YORK  MANUFACTURER,  FIVE  AND  SEVEN-TENTHS  PERCENT. THIS RESULT SHALL
EQUAL THE TAXPAYER'S PRIOR NET  OPERATING  LOSS  CONVERSION  SUBTRACTION
POOL.
  (III)  THE  TAXPAYER'S PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION
FOR THE TAXABLE YEAR SHALL EQUAL ONE-TENTH OF  ITS  NET  OPERATING  LOSS
CONVERSION  SUBTRACTION POOL PLUS ANY AMOUNT OF UNUSED PRIOR NET OPERAT-
ING LOSS CONVERSION SUBTRACTION FROM PRECEDING TAXABLE YEARS.  PROVIDED,
HOWEVER, THE PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION OF A  SMALL
BUSINESS  CORPORATION,  AS DEFINED IN PARAGRAPH (F) OF THIS SUBDIVISION,
AS OF THE LAST DAY OF THE  BASE  YEAR,  SHALL  NOT  BE  SUBJECT  TO  THE
ONE-TENTH LIMITATION IN THE PREVIOUS SENTENCE.
  (IV)  IN  LIEU  OF  THE  SUBTRACTION  DESCRIBED  IN ITEM (III) OF THIS
SUBCLAUSE, IF THE TAXPAYER SO ELECTS, THE TAXPAYER'S PRIOR NET OPERATING
LOSS CONVERSION SUBTRACTION FOR THE TAX  YEARS  BEGINNING  ON  OR  AFTER

S. 6359--D                         50                         A. 8559--D

JANUARY  FIRST, TWO THOUSAND FIFTEEN AND BEFORE JANUARY FIRST, TWO THOU-
SAND SEVENTEEN SHALL EQUAL IN EACH YEAR, NOT MORE THAN ONE-HALF  OF  ITS
NET  OPERATING LOSS CONVERSION SUBTRACTION POOL. THE TAXPAYER SHALL MAKE
SUCH ELECTION ON ITS RETURN FOR THE TAX YEAR BEGINNING ON OR AFTER JANU-
ARY  FIRST,  TWO THOUSAND FIFTEEN AND BEFORE JANUARY FIRST, TWO THOUSAND
SIXTEEN BY THE DUE DATE FOR  SUCH  RETURN  (DETERMINED  WITH  REGARD  TO
EXTENSIONS).
  (3)  COMBINED  GROUPS.  (I)  WHERE A TAXPAYER WAS PROPERLY INCLUDED OR
REQUIRED TO BE INCLUDED IN A COMBINED REPORT FOR THE BASE YEAR  PURSUANT
TO SECTION TWO HUNDRED ELEVEN OF THIS ARTICLE OR A COMBINED RETURN UNDER
SECTION  FOURTEEN  HUNDRED  SIXTY-TWO  OF THIS CHAPTER, AS SUCH SECTIONS
WERE IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN, AND  THE
MEMBERS  OF  THE  COMBINED  GROUP  FOR THE BASE YEAR ARE THE SAME AS THE
MEMBERS OF THE COMBINED GROUP FOR THE TAXABLE YEAR IMMEDIATELY  SUCCEED-
ING  THE  BASE  YEAR,  THE  COMBINED GROUP SHALL CALCULATE ITS PRIOR NET
OPERATING LOSS CONVERSION SUBTRACTION POOL USING  THE  COMBINED  GROUP'S
TOTAL  UNABSORBED  NET  OPERATING LOSS, BASE YEAR BAP, AND BASE YEAR TAX
RATE.
  (II) IF A COMBINED GROUP INCLUDES ADDITIONAL MEMBERS  IN  THE  TAXABLE
YEAR  IMMEDIATELY SUCCEEDING THE BASE YEAR THAT WERE NOT INCLUDED IN THE
COMBINED GROUP DURING THE BASE YEAR, EACH BASE YEAR COMBINED  GROUP  AND
EACH  TAXPAYER THAT FILED SEPARATELY IN THE BASE YEAR BUT IS INCLUDED IN
THE COMBINED GROUP IN THE TAXABLE YEAR SUCCEEDING THE  BASE  YEAR  SHALL
CALCULATE  ITS PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION POOL, AND
THE SUM OF THE POOLS SHALL BE THE  COMBINED  PRIOR  NET  OPERATING  LOSS
CONVERSION SUBTRACTION POOL OF THE COMBINED GROUP.
  (III) IF A TAXPAYER WAS PROPERLY INCLUDED IN A COMBINED REPORT FOR THE
BASE YEAR AND FILES A SEPARATE REPORT IN A SUBSEQUENT TAXABLE YEAR, THEN
THE  AMOUNT OF REMAINING PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION
ALLOWED TO THE TAXPAYER FILING SUCH SEPARATE  REPORT  SHALL  BE  PROPOR-
TIONATE  TO  THE  AMOUNT THAT SUCH TAXPAYER CONTRIBUTED TO THE PRIOR NET
OPERATING LOSS CONVERSION SUBTRACTION POOL ON A COMBINED BASIS, AND  THE
REMAINING PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION ALLOWED TO THE
REMAINING MEMBERS OF THE COMBINED GROUP SHALL BE REDUCED ACCORDINGLY.
  (IV)  IF  A  TAXPAYER FILED A SEPARATE REPORT FOR THE BASE YEAR AND IS
PROPERLY INCLUDED IN A COMBINED REPORT IN  A  SUBSEQUENT  TAXABLE  YEAR,
THEN  THE  PRIOR  NET  OPERATING LOSS CONVERSION SUBTRACTION POOL OF THE
COMBINED GROUP SHALL BE INCREASED BY THE AMOUNT  OF  THE  REMAINING  NET
OPERATING  LOSS  CONVERSION  SUBTRACTION  ALLOWED TO THE TAXPAYER AT THE
TIME THE TAXPAYER IS PROPERLY INCLUDED IN THE COMBINED GROUP.
  (4) THE PRIOR NET OPERATING LOSS CONVERSION SUBTRACTION MAY BE USED TO
REDUCE THE TAXPAYER'S TAX ON ALLOCATED BUSINESS INCOME TO THE HIGHER  OF
THE  TAX  ON THE CAPITAL BASE UNDER PARAGRAPH (B) OF THIS SUBDIVISION OR
THE FIXED DOLLAR MINIMUM UNDER PARAGRAPH (D) OF  THIS  SUBDIVISION.  ANY
AMOUNT  OF UNUSED SUBTRACTION SHALL BE CARRIED FORWARD TO SUBSEQUENT TAX
YEAR OR YEARS UNTIL TAX YEARS BEGINNING ON OR AFTER JANUARY  FIRST,  TWO
THOUSAND  THIRTY-SIX.   SUCH AMOUNT CARRIED FORWARD SHALL NOT BE SUBJECT
TO THE ONE-TENTH LIMITATION FOR THE SUBSEQUENT TAX YEAR OR YEARS. HOWEV-
ER, IF THE TAXPAYER ELECTS TO  COMPUTE  ITS  PRIOR  NET  OPERATING  LOSS
CONVERSION  SUBTRACTION  PURSUANT  TO ITEM (IV) OF SUBCLAUSE TWO OF THIS
CLAUSE, THE  TAXPAYER  SHALL  NOT  CARRY  FORWARD  ANY  AMOUNT  OF  SUCH
SUBTRACTION BEYOND ITS TAX YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO
THOUSAND SIXTEEN AND BEFORE JANUARY FIRST, TWO THOUSAND SEVENTEEN.
  (IX)  NET  OPERATING LOSS DEDUCTION.  IN COMPUTING THE BUSINESS INCOME
BASE, A NET OPERATING LOSS DEDUCTION SHALL BE ALLOWED. A  NET  OPERATING
LOSS DEDUCTION IS THE AMOUNT OF NET OPERATING LOSS OR LOSSES FROM ONE OR

S. 6359--D                         51                         A. 8559--D

MORE TAXABLE YEARS THAT ARE CARRIED FORWARD TO A PARTICULAR INCOME YEAR.
A  NET  OPERATING  LOSS  IS  THE AMOUNT OF A BUSINESS LOSS INCURRED IN A
PARTICULAR TAX YEAR MULTIPLIED BY THE APPORTIONMENT FACTOR FOR THAT YEAR
AS DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS ARTICLE. THE MAXI-
MUM  NET  OPERATING  DEDUCTION  THAT IS ALLOWED IN A TAXABLE YEAR IS THE
AMOUNT THAT REDUCES THE TAXPAYER'S TAX ON ALLOCATED BUSINESS  INCOME  TO
THE  HIGHER  OF THE TAX ON THE CAPITAL BASE OR THE FIXED DOLLAR MINIMUM.
SUCH DEDUCTION AND LOSS ARE DETERMINED IN ACCORDANCE WITH THE FOLLOWING:
  (1) SUCH NET OPERATING LOSS DEDUCTION IS NOT  LIMITED  TO  THE  AMOUNT
ALLOWED  UNDER  SECTION  ONE HUNDRED SEVENTY-TWO OF THE INTERNAL REVENUE
CODE OR THE AMOUNT THAT WOULD HAVE BEEN ALLOWED IF THE TAXPAYER HAD  NOT
MADE  AN  ELECTION  UNDER  SUBCHAPTER  S  OF CHAPTER ONE OF THE INTERNAL
REVENUE CODE.
  (2) SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET  OPER-
ATING  LOSS  INCURRED DURING ANY TAXABLE YEAR BEGINNING PRIOR TO JANUARY
FIRST, TWO THOUSAND FIFTEEN, OR DURING ANY TAXABLE  YEAR  IN  WHICH  THE
TAXPAYER WAS NOT SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE.
  (3) A TAXPAYER THAT FILES AS PART OF A FEDERAL CONSOLIDATED RETURN BUT
ON  A  SEPARATE  BASIS  FOR  PURPOSES  OF  THIS ARTICLE MUST COMPUTE ITS
DEDUCTION AND LOSS AS IF IT WERE FILING ON A SEPARATE BASIS FOR  FEDERAL
INCOME TAX PURPOSES.
  (4)  A NET OPERATING LOSS MAY BE CARRIED FORWARD TO EACH OF THE TWENTY
TAXABLE YEARS FOLLOWING THE TAXABLE YEAR OF THE LOSS.  A  NET  OPERATING
LOSS  MAY  BE  CARRIED BACK TO EACH OF THE THREE TAXABLE YEARS PRECEDING
THE TAXABLE YEAR OF THE LOSS; PROVIDED, HOWEVER NO LOSS CAN  BE  CARRIED
BACK  TO  A  TAX YEAR PRIOR TO A TAX YEAR BEGINNING ON OR AFTER JANUARY,
FIRST, TWO THOUSAND FIFTEEN. A TAXPAYER MUST APPLY BOTH OF THESE LIMITA-
TIONS IN COMPUTING SUCH NET OPERATING LOSS DEDUCTION.
  (5) SUCH NET OPERATING LOSS DEDUCTION SHALL NOT INCLUDE ANY NET  OPER-
ATING  LOSS  INCURRED DURING A NEW YORK S YEAR; PROVIDED, HOWEVER, A NEW
YORK S YEAR MUST BE TREATED AS A TAXABLE YEAR FOR PURPOSES OF  DETERMIN-
ING  THE  NUMBER  OF  TAXABLE YEARS TO WHICH A NET OPERATING LOSS MAY BE
CARRIED FORWARD.
  (6) WHERE THERE ARE TWO OR MORE ALLOCATED  NET  OPERATING  LOSSES,  OR
PORTIONS  THEREOF,  CARRIED FORWARD TO BE DEDUCTED IN ONE PARTICULAR TAX
YEAR  FROM  ALLOCATED  BUSINESS  INCOME,  THE  EARLIEST  ALLOCATED  LOSS
INCURRED MUST BE APPLIED FIRST.
  (b)  Capital  base.  (1)  The [amount prescribed by this paragraph for
taxable years beginning before January first, two thousand  eight  shall
be  computed  at .178  percent  for  each dollar of the taxpayer's total
business and investment capital, or the portion thereof allocated within
the state as hereinafter provided. For taxable  years  beginning  on  or
after  January first, two thousand eight, the] amount prescribed by this
paragraph shall be computed  at .15  percent  for  each  dollar  of  the
taxpayer's total business [and investment] capital, or the portion ther-
eof allocated within the state as hereinafter provided FOR TAXABLE YEARS
BEGINNING  BEFORE  JANUARY  FIRST, TWO THOUSAND SIXTEEN. However, in the
case of a cooperative housing corporation as  defined  in  the  internal
revenue  code,  the  applicable  rate shall be .04 percent UNTIL TAXABLE
YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOUSAND  TWENTY.    THE
RATE  OF  TAX FOR SUBSEQUENT TAX YEARS SHALL BE AS FOLLOWS: .125 PERCENT
FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND
SIXTEEN  AND  BEFORE JANUARY FIRST, TWO THOUSAND SEVENTEEN; .100 PERCENT
FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND
SEVENTEEN  AND BEFORE JANUARY FIRST, TWO THOUSAND EIGHTEEN; .075 PERCENT
FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND

S. 6359--D                         52                         A. 8559--D

EIGHTEEN  AND  BEFORE JANUARY FIRST, TWO THOUSAND NINETEEN; .050 PERCENT
FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND
NINETEEN AND BEFORE JANUARY FIRST, TWO THOUSAND TWENTY; .025 PERCENT FOR
TAXABLE  YEARS  BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND TWENTY
AND BEFORE JANUARY FIRST, TWO THOUSAND TWENTY-ONE; AND ZERO PERCENT  FOR
YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND TWENTY-ONE.  THE
RATE  OF  TAX FOR A QUALIFIED NEW YORK MANUFACTURER FOR TAX YEARS SUBSE-
QUENT TO TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND
FIFTEEN AND BEFORE JANUARY FIRST, TWO THOUSAND  SIXTEEN  SHALL  BE  .106
PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
SAND  SIXTEEN  AND  BEFORE  JANUARY  FIRST, TWO THOUSAND SEVENTEEN, .085
PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
SAND SEVENTEEN AND BEFORE JANUARY FIRST,  TWO  THOUSAND  EIGHTEEN;  .056
PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
SAND  EIGHTEEN  AND  BEFORE  JANUARY  FIRST, TWO THOUSAND NINETEEN; .038
PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
SAND NINETEEN AND BEFORE JANUARY FIRST, THOUSAND  TWENTY;  .019  PERCENT
FOR  TAXABLE  YEARS  BEGINNING  ON  OR AFTER JANUARY FIRST, TWO THOUSAND
TWENTY AND BEFORE JANUARY  FIRST,  TWO  THOUSAND  TWENTY-ONE;  AND  ZERO
PERCENT  FOR  YEARS  BEGINNING  ON  OR AFTER JANUARY FIRST, TWO THOUSAND
TWENTY-ONE. In no event shall the amount prescribed  by  this  paragraph
exceed  three  hundred  fifty  thousand  dollars  for qualified New York
manufacturers and for all other taxpayers  [ten]  FIVE  million  dollars
[for  taxable  years  beginning  on or after January first, two thousand
eight but before January first, two  thousand  eleven  and  one  million
dollars for taxable years beginning on or after January first, two thou-
sand eleven].
  (2)  For  purposes  of  subparagraph  one  of this paragraph, the term
"manufacturer" shall mean a taxpayer which during the  taxable  year  is
principally  engaged  in the production of goods by manufacturing, proc-
essing, assembling, refining, mining, extracting, farming,  agriculture,
horticulture, floriculture, viticulture or commercial fishing. Moreover,
for  purposes  of  computing  the capital base in a combined report, the
combined group shall be considered a "manufacturer" for purposes of this
subparagraph only if the combined group during the taxable year is prin-
cipally engaged in the activities set forth in this subparagraph, or any
combination thereof. A taxpayer or a combined group shall be "principal-
ly engaged" in activities described above if, during the  taxable  year,
more  than  fifty  percent  of  the  gross  receipts  of the taxpayer or
combined group, respectively, are derived from receipts from the sale of
goods produced by such activities. In computing a combined group's gross
receipts, intercorporate receipts shall be eliminated. A "qualified  New
York  manufacturer" is a manufacturer that has property in New York that
is described in [clause (A) of subparagraph (i)  of  paragraph  (b)  of]
subdivision  [twelve of this section] ONE OF SECTION 210-B OF THIS ARTI-
CLE and either (i) the adjusted  basis  of  that  property  for  federal
income  tax  purposes  at  the close of the taxable year is at least one
million dollars or (ii) all of its real and personal property is located
in New York. In addition, a "qualified New York  manufacturer"  means  a
taxpayer  that  is  defined  as  a qualified emerging technology company
under paragraph (c) of subdivision one  of  section  thirty-one  hundred
two-e of the public authorities law regardless of the ten million dollar
limitation  expressed in subparagraph one of such paragraph.  A TAXPAYER
OR, IN THE CASE OF A COMBINED REPORT, A COMBINED GROUP,  THAT  DOES  NOT
SATISFY  THE  PRINCIPALLY  ENGAGED  TEST  MAY  BE  A  QUALIFIED NEW YORK
MANUFACTURER IF THE TAXPAYER OR THE COMBINED GROUP  EMPLOYS  DURING  THE

S. 6359--D                         53                         A. 8559--D

TAXABLE YEAR AT LEAST TWO THOUSAND FIVE HUNDRED EMPLOYEES IN MANUFACTUR-
ING  IN  NEW YORK AND THE TAXPAYER OR THE COMBINED GROUP HAS PROPERTY IN
THE STATE USED IN MANUFACTURING, THE ADJUSTED BASIS OF WHICH FOR FEDERAL
INCOME  TAX  PURPOSES  AT  THE CLOSE OF THE TAXABLE YEAR IS AT LEAST ONE
HUNDRED MILLION DOLLARS.
  [(3) For a qualified New York manufacturer, as defined in subparagraph
two of this paragraph, the rate at which the tax is computed  in  effect
for  taxable  years  beginning  on  or after January first, two thousand
thirteen and before  January  first,  two  thousand  fourteen  shall  be
reduced  by  nine and two-tenths percent for taxable years commencing on
or after January first, two thousand fourteen and before January  first,
two  thousand fifteen, twelve and three-tenths percent for taxable years
commencing on or after January first, two thousand  fifteen  and  before
January first, two thousand sixteen, fifteen and four-tenths percent for
taxable years commencing on or after January first, two thousand sixteen
and before January first, two thousand eighteen, and twenty-five percent
for  taxable  years  beginning  on  or after January first, two thousand
eighteen.
  (c) Minimum taxable income bases.  (i)  For  taxable  years  beginning
after  nineteen  hundred  eighty-six and before nineteen hundred eighty-
nine, the amount prescribed by this paragraph shall be computed  at  the
rate  of  three  and  one-half  percent  of  the taxpayer's pre-nineteen
hundred ninety minimum taxable income base. For taxable years  beginning
in nineteen hundred eighty-nine, the amount prescribed by this paragraph
shall  be  computed  at  the rate of five percent of the taxpayer's pre-
nineteen hundred ninety minimum taxable income base. A "taxpayer's  pre-
nineteen  hundred  ninety  minimum  taxable  income base" shall mean the
portion of the taxpayer's entire net income allocated within  the  state
as  hereinafter  provided, subject to any modification required by para-
graphs (d) and (e) of subdivision three of this section;
  (ii) (A) For taxable years beginning on or after  January  first,  two
thousand  seven,  the  amount  prescribed  by  this  paragraph  shall be
computed at the rate of one and one-half percent of the taxpayer's mini-
mum taxable income base. The "taxpayer's minimum  taxable  income  base"
shall  mean  the  portion of the taxpayer's minimum taxable income allo-
cated within the state as hereinafter provided, subject to any modifica-
tions required by paragraphs (d) and (e) of subdivision  three  of  this
section.
  (B)  For  taxable years beginning on or after January first, two thou-
sand twelve and before January first, two thousand fifteen,  the  amount
prescribed by this paragraph for an eligible qualified New York manufac-
turer  shall  be  computed  at the rate of seventy-five hundredths (.75)
percent of the taxpayer's minimum taxable income base. For  purposes  of
this  clause,  the term "eligible qualified New York manufacturer" shall
have the same meaning as in subparagraph (vi) of paragraph (a)  of  this
subdivision.
  (iii)  For  a  qualified New York manufacturer, as defined in subpara-
graph (vi) of paragraph (a) of this subdivision, the rate at  which  the
tax  is computed in effect for taxable years beginning on or after Janu-
ary first, two thousand thirteen and before January first, two  thousand
fourteen  for  qualified New York manufacturers shall be reduced by nine
and two-tenths percent for taxable years commencing on or after  January
first,  two  thousand  fourteen  and  before January first, two thousand
fifteen, twelve and three-tenths percent for taxable years commencing on
or after January first, two thousand fifteen and before  January  first,
two  thousand sixteen, fifteen and four-tenths percent for taxable years

S. 6359--D                         54                         A. 8559--D

commencing on or after January first, two thousand  sixteen  and  before
January  first, two thousand eighteen, and twenty-five percent for taxa-
ble years beginning on or after January first, two thousand eighteen.]
  (d) Fixed dollar minimum. (1) The [amount prescribed by this paragraph
shall be for a taxpayer which during the taxable year has:
  (A)  a gross payroll of six million two hundred fifty thousand dollars
or more, one thousand five hundred dollars;
  (B) a gross payroll of less than six million two hundred  fifty  thou-
sand dollars but more than one million dollars, four hundred twenty-five
dollars;
  (C)  a gross payroll of no more than one million dollars but more than
five hundred thousand dollars, three hundred twenty-five dollars;
  (D) a gross payroll of no more than five hundred thousand dollars  but
more  than  two  hundred fifty thousand dollars, two hundred twenty-five
dollars;
  (E) a gross payroll of two hundred  fifty  thousand  dollars  or  less
(except  as  prescribed in clause (F) of this subparagraph), one hundred
dollars;
  (F) a gross payroll of  one  thousand  dollars  or  less,  with  total
receipts  within and without this state of one thousand dollars or less,
and the average value of the assets of which are one thousand dollars or
less, eight hundred dollars.
  (2) For purposes of this paragraph:
  (A) gross payroll shall be the same as the total wages,  salaries  and
other  personal  service  compensation  of all the taxpayer's employees,
within and without this state, as defined in subparagraph three of para-
graph (a) of subdivision three of  this  section,  except  that  general
executive officers shall not be excluded.
  (B)  total  receipts  shall be the same as receipts within and without
this state as defined in subparagraph two of paragraph (a)  of  subdivi-
sion three of this section.
  (C)  average  value  of  the assets shall be the same as prescribed by
subdivision two of this section without reduction for liabilities.
  (3) If the taxable  year  is  less  than  twelve  months,  the  amount
prescribed  by this paragraph shall be reduced by twenty-five percent if
the period for which the taxpayer is subject to tax  is  more  than  six
months  but not more than nine months and by fifty percent if the period
for which the taxpayer is subject to tax is not more  than  six  months.
Provided,  however,  that in determining the amount of gross payroll and
total receipts for purposes of subparagraph one of this paragraph, where
the taxable year is less than twelve months, the amount of each shall be
determined by dividing the amount of each with respect  to  the  taxable
year  by  the  number of months in such taxable year and multiplying the
result by twelve. If the taxable year is less than  twelve  months,  the
amount  of  New  York receipts for purposes of subparagraph four of this
paragraph is determined by dividing the amount of the receipts  for  the
taxable year by the number of months in the taxable year and multiplying
the result by twelve.
  (4)  Notwithstanding  subparagraphs one and two of this paragraph, for
taxable years beginning on or after January first, two  thousand  eight,
the]  amount  prescribed  by  this paragraph for New York S corporations
will be determined in accordance with the following table:

If New York receipts are:                The fixed dollar minimum tax is:
 not more than $100,000                               $   25
 more than $100,000 but not over $250,000             $   50

S. 6359--D                         55                         A. 8559--D

 more than $250,000 but not over $500,000             $  175
 more than $500,000 but not over $1,000,000           $  300
 more than $1,000,000 but not over $5,000,000         $1,000
 more than $5,000,000 but not over $25,000,000        $3,000
 Over $25,000,000                                     $4,500

[Otherwise the amount prescribed by this paragraph will be determined in
accordance with the following table:]
PROVIDED  FURTHER,  THE AMOUNT PRESCRIBED BY THIS PARAGRAPH FOR A QUALI-
FIED NEW YORK MANUFACTURER, AS DEFINED IN SUBPARAGRAPH (VI) OF PARAGRAPH
(A) OF THIS SUBDIVISION, AND A  QUALIFIED  EMERGING  TECHNOLOGY  COMPANY
UNDER  PARAGRAPH  (C)  OF  SUBDIVISION ONE OF SECTION THIRTY-ONE HUNDRED
TWO-E OF THE PUBLIC AUTHORITIES LAW REGARDLESS OF THE TEN MILLION DOLLAR
LIMITATION EXPRESSED IN SUBPARAGRAPH ONE OF SUCH PARAGRAPH (C)  WILL  BE
DETERMINED IN ACCORDANCE WITH THE FOLLOWING TABLES:
FOR  TAX  YEARS BEGINNING ON OR AFTER JANUARY 1, 2014 AND BEFORE JANUARY
1, 2015:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   23
 MORE THAN $100,000 BUT NOT OVER $250,000             $   68
 MORE THAN $250,000 BUT NOT OVER $500,000             $  159
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  454
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,362
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,178
 OVER $25,000,000                                     $4,500

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2015 AND  BEFORE  JANUARY
1, 2016:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   22
 MORE THAN $100,000 BUT NOT OVER $250,000             $   66
 MORE THAN $250,000 BUT NOT OVER $500,000             $  153
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  439
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,316
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $3,070
 OVER $25,000,000                                     $4,385

FOR  TAX  YEARS BEGINNING ON OR AFTER JANUARY 1, 2016 AND BEFORE JANUARY
1, 2018:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   21
 MORE THAN $100,000 BUT NOT OVER $250,000             $   63
 MORE THAN $250,000 BUT NOT OVER $500,000             $  148
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  423
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,269
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,961
 OVER $25,000,000                                     $4,230

FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2018:

IF NEW YORK RECEIPTS ARE:                THE FIXED DOLLAR MINIMUM TAX IS:
 NOT MORE THAN $100,000                               $   19
 MORE THAN $100,000 BUT NOT OVER $250,000             $   56

S. 6359--D                         56                         A. 8559--D

 MORE THAN $250,000 BUT NOT OVER $500,000             $  131
 MORE THAN $500,000 BUT NOT OVER $1,000,000           $  375
 MORE THAN $1,000,000 BUT NOT OVER $5,000,000         $1,125
 MORE THAN $5,000,000 BUT NOT OVER $25,000,000        $2,625
 OVER $25,000,000                                     $3,750

OTHERWISE  THE AMOUNT PRESCRIBED BY THIS PARAGRAPH WILL BE DETERMINED IN
ACCORDANCE WITH THE FOLLOWING TABLE:

If New York receipts are:                The fixed dollar minimum tax is:
 not more than $100,000                               $   25
 more than $100,000 but not over $250,000             $   75
 more than $250,000 but not over $500,000             $  175
 more than $500,000 but not over $1,000,000           $  500
 more than $1,000,000 but not over $5,000,000         $1,500
 more than $5,000,000 but not over $25,000,000        $3,500
 [Over] MORE THAN $25,000,000
 BUT NOT OVER $50,000,000                             $5,000
 MORE THAN $50,000,000 BUT NOT OVER $100,000,000      $10,000
 MORE THAN $100,000,000 BUT NOT OVER $250,000,000     $20,000
 MORE THAN $250,000,000 BUT NOT OVER $500,000,000     $50,000
 MORE THAN $500,000,000 BUT NOT OVER $1,000,000,000   $100,000
 OVER $1,000,000,000                                  $200,000

For purposes of this paragraph,  New  York  receipts  are  the  receipts
[computed in accordance with subparagraph two of paragraph (a) of subdi-
vision  three  of  this]  INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT
FACTOR DETERMINED UNDER section TWO HUNDRED TEN-A for the taxable year.
  (2) IF THE TAXABLE YEAR IS LESS THAN TWELVE MONTHS, THE AMOUNT OF  NEW
YORK  RECEIPTS  IS DETERMINED BY DIVIDING THE AMOUNT OF THE RECEIPTS FOR
THE TAXABLE YEAR BY THE NUMBER OF MONTHS IN THE TAXABLE YEAR AND  MULTI-
PLYING  THE RESULT BY TWELVE. IN THE CASE OF A TERMINATION YEAR OF A NEW
YORK S CORPORATION, THE SUM OF THE TAX COMPUTED UNDER THIS PARAGRAPH FOR
THE S SHORT YEAR AND FOR THE C SHORT YEAR SHALL NOT  BE  LESS  THAN  THE
AMOUNT  COMPUTED  UNDER  THIS PARAGRAPH AS IF THE CORPORATION WERE A NEW
YORK C CORPORATION FOR THE ENTIRE TAXABLE YEAR.
  [(5) For taxable years beginning on or after January first, two  thou-
sand  twelve and before January first, two thousand fifteen, the amounts
prescribed in subparagraphs one and four of this paragraph as the  fixed
dollar minimum tax for an eligible qualified New York manufacturer shall
be  one-half  of the amounts stated in those subparagraphs. For purposes
of this subparagraph, the term "eligible qualified New York  manufactur-
er" shall have the same meaning as in subparagraph (vi) of paragraph (a)
of this subdivision.
  (6)  For a qualified New York manufacturer, as defined in subparagraph
(vi) of paragraph (a) of this subdivision,  the  amounts  prescribed  in
subparagraphs one and four of this paragraph in effect for taxable years
beginning  on  or  after January first, two thousand thirteen and before
January first, two thousand fourteen for qualified New York  manufactur-
ers  shall  be  reduced by nine and two-tenths percent for taxable years
commencing on or after January first, two thousand fourteen  and  before
January first, two thousand fifteen, twelve and three-tenths percent for
taxable years commencing on or after January first, two thousand fifteen
and  before January first, two thousand sixteen, fifteen and four-tenths
percent for taxable years commencing on  or  after  January  first,  two
thousand  sixteen  and  before January first, two thousand eighteen, and

S. 6359--D                         57                         A. 8559--D

twenty-five percent for taxable years  beginning  on  or  after  January
first, two thousand eighteen.
  (e)  Subsidiary  capital base. (1) The amount prescribed by this para-
graph shall be computed at the rate of nine-tenths of a  mill  for  each
dollar  of  the  portion  of the taxpayer's subsidiary capital allocated
within the state as hereinafter provided.
  (2) For purposes of this paragraph,  the  amount  of  such  subsidiary
capital,  prior  to  allocation,  shall  be  reduced  by  the applicable
percentage of the taxpayer's (i) investments in the stock  of,  and  any
indebtedness from, subsidiaries subject to tax under section one hundred
eighty-six  of this chapter (but only to the extent such indebtedness is
included in subsidiary capital), and (ii) investments in the  stock  of,
and  any  indebtedness  from,  subsidiaries subject to tax under article
thirty-two or thirty-three of this chapter (but only to the extent  such
indebtedness  is included in subsidiary capital). For purposes of clause
(i) of this subparagraph, the  applicable  percentage  shall  be  thirty
percent  for  taxable  years  beginning in two thousand, and one hundred
percent for taxable years beginning after two thousand. For purposes  of
clause (ii) of this subparagraph, the applicable percentage shall be one
hundred percent for taxable years beginning after nineteen hundred nine-
ty-nine.]
  (f)  For  purposes of this section, the term "small business taxpayer"
shall mean a taxpayer (i) which has an entire net  income  of  not  more
than  three  hundred  ninety thousand dollars for the taxable year; (ii)
[which constitutes a small business as defined in section 1244(c)(3)  of
internal revenue code (without regard to the second sentence of subpara-
graph (A) thereof) as of the last day of the taxable year] THE AGGREGATE
AMOUNT  OF  MONEY  AND  OTHER  PROPERTY  RECEIVED BY THE CORPORATION FOR
STOCK, AS A CONTRIBUTION TO CAPITAL, AND AS PAID-IN  SURPLUS,  DOES  NOT
EXCEED  ONE  MILLION DOLLARS; [and] (iii) which is not part of an affil-
iated group, as defined in section 1504 of the  internal  revenue  code,
unless  such  group,  if  it  had filed a report under this article on a
combined basis, would have itself qualified as a "small business taxpay-
er" pursuant to this subdivision; AND (IV) WHICH HAS AN  AVERAGE  NUMBER
OF INDIVIDUALS, EXCLUDING GENERAL EXECUTIVE OFFICERS, EMPLOYED FULL-TIME
IN  THE  STATE  DURING THE TAXABLE YEAR OF ONE HUNDRED OR FEWER.  If the
taxable period to which subparagraph (i) of this  paragraph  applies  is
less than twelve months, entire net income under such subparagraph shall
be  placed  on  an  annual basis by multiplying the entire net income by
twelve and dividing the result by the number of months  in  the  period.
FOR  PURPOSES  OF  SUBPARAGRAPH (II) OF THIS PARAGRAPH, THE AMOUNT TAKEN
INTO ACCOUNT WITH RESPECT TO ANY PROPERTY OTHER THAN MONEY SHALL BE  THE
AMOUNT  EQUAL  TO THE ADJUSTED BASIS TO THE CORPORATION OF SUCH PROPERTY
FOR DETERMINING GAIN, REDUCED BY ANY LIABILITY TO WHICH THE PROPERTY WAS
SUBJECT OR WHICH WAS ASSUMED BY THE CORPORATION. THE DETERMINATION UNDER
THE PRECEDING SENTENCE SHALL BE MADE AS OF THE  TIME  THE  PROPERTY  WAS
RECEIVED  BY THE CORPORATION. FOR PURPOSES OF SUBPARAGRAPH (III) OF THIS
SECTION, "AVERAGE NUMBER OF  INDIVIDUALS,  EXCLUDING  GENERAL  EXECUTIVE
OFFICERS,  EMPLOYED  FULL-TIME"  SHALL  BE  COMPUTED BY ASCERTAINING THE
NUMBER OF SUCH INDIVIDUALS EMPLOYED BY THE TAXPAYER ON THE  THIRTY-FIRST
DAY  OF MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER
AND THE THIRTY-FIRST DAY OF DECEMBER DURING EACH TAXABLE YEAR  OR  OTHER
APPLICABLE  PERIOD,  BY  ADDING  TOGETHER THE NUMBER OF SUCH INDIVIDUALS
ASCERTAINED ON EACH OF SUCH DATES AND DIVIDING THE SUM  SO  OBTAINED  BY
THE  NUMBER  OF  SUCH  DATES OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER
APPLICABLE PERIOD. AN INDIVIDUAL EMPLOYED FULL-TIME MEANS AN EMPLOYEE IN

S. 6359--D                         58                         A. 8559--D

A JOB CONSISTING OF AT LEAST THIRTY-FIVE HOURS PER WEEK, OR TWO OR  MORE
EMPLOYEES  WHO  ARE IN JOBS THAT TOGETHER CONSTITUTE THE EQUIVALENT OF A
JOB  AT  LEAST  THIRTY-FIVE  HOURS  PER  WEEK  (FULL-TIME   EQUIVALENT).
FULL-TIME EQUIVALENT EMPLOYEES IN THE STATE INCLUDES ALL EMPLOYEES REGU-
LARLY CONNECTED WITH OR WORKING OUT OF AN OFFICE OR PLACE OF BUSINESS OF
THE TAXPAYER WITHIN THE STATE.
  [(g)  New  York S corporations.  (1) General. The amount prescribed by
this paragraph shall be, in the case of each New York S corporation, (i)
the higher of the amounts prescribed in paragraphs (a) and (d)  of  this
subdivision  (other  than  the  amount prescribed in the final clause of
subparagraph one of that paragraph (d))  (ii)  reduced  by  the  article
twenty-two  tax  equivalent;  provided,  however,  that  the amount thus
determined shall not be less than the lowest of the  amounts  prescribed
in  subparagraph  one  of that paragraph (d) (applying the provisions of
subparagraph three of that paragraph as necessary).  Provided,  however,
notwithstanding any provision of this paragraph, in taxable years begin-
ning  in  two  thousand  three and before two thousand eight, the amount
prescribed by this paragraph shall be the amount prescribed in  subpara-
graph one of that paragraph (d) (applying the provisions of subparagraph
three  of  that  paragraph as necessary) and applying the calculation of
that amount in the case of a termination year as set forth  in  subpara-
graph four of this paragraph as necessary. In taxable years beginning in
two  thousand  eight and thereafter, the amount prescribed by this para-
graph is the amount prescribed in subparagraph four  of  that  paragraph
(d)  (applying the provisions of subparagraph three of that paragraph as
necessary) and applying the calculation of that amount in the case of  a
termination  year as set forth in subparagraph four of this paragraph as
necessary.
  (2) Article twenty-two tax equivalent.  For  taxable  years  beginning
before  July first, nineteen hundred ninety-nine, the article twenty-two
tax equivalent is the amount computed under paragraph (a) of this subdi-
vision by substituting for the rate therein the rate of  7.875  percent.
For taxable years beginning after June thirtieth, nineteen hundred nine-
ty-nine  and before July first, two thousand, the article twenty-two tax
equivalent is the amount computed under paragraph (a) of  this  subdivi-
sion by substituting for the rate therein the rate of 7.525 percent. For
taxable  years  beginning  after June thirtieth, two thousand and before
July first, two thousand one, the article twenty-two tax  equivalent  is
the  amount  computed under paragraph (a) of this subdivision by substi-
tuting for the rate therein the rate of 7.175 percent. For taxable years
beginning after June thirtieth, two thousand one and before July  first,
two  thousand three, the article twenty-two tax equivalent is the amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 6.85 percent. For taxable years beginning after
June thirtieth, two thousand three, the article  twenty-two  tax  equiv-
alent  is the amount computed under paragraph (a) of this subdivision by
substituting for the rate therein the rate of 7.1425 percent.
  (3)  Small  business  taxpayers.  Notwithstanding  the  provisions  of
subparagraphs one and two of this paragraph, in the case of a New York S
corporation  which is a small business taxpayer, as defined in paragraph
(f) of this subdivision, the following provisions shall apply:
  (A) For taxable years beginning before July  first,  nineteen  hundred
ninety-nine,  the  article  twenty-two  tax  equivalent  is  the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.875 percent.

S. 6359--D                         59                         A. 8559--D

  (B) For taxable years beginning after June thirtieth, nineteen hundred
ninety-nine and before  July  first,  two  thousand  three,  the  amount
computed  under  paragraph  (a)  of  this subdivision, as referred to in
subparagraph one of this paragraph, shall be  computed  by  substituting
for the rate therein the rate of 7.5 percent, and the article twenty-two
tax equivalent under paragraph (a) of this subdivision shall be computed
as follows:
  (i)  if  the entire net income base is not more than two hundred thou-
sand dollars, the  article  twenty-two  tax  equivalent  is  the  amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.45 percent;
  (ii)  if  the entire net income base is more than two hundred thousand
dollars but not over two hundred ninety thousand  dollars,  the  article
twenty-two  tax  equivalent shall be computed as the sum of (I) fourteen
thousand nine hundred  dollars,  (II)  six  and  eighty-five  hundredths
percent  of the first fifty thousand dollars in excess of the entire net
income base over two hundred  thousand  dollars,  and  (III)  three  and
eighty-five  hundredths percent of the excess, if any, of the entire net
income base over two hundred fifty thousand dollars.
  (C) For taxable years beginning after  June  thirtieth,  two  thousand
three,  the  amount computed under paragraph (a) of this subdivision, as
referred to in subparagraph one of this paragraph, shall be computed  by
substituting for the rate therein the rate of 7.5 percent, and the arti-
cle  twenty-two  tax  equivalent under paragraph (a) of this subdivision
shall be computed as follows:
  (i) if the entire net income base is not more than two  hundred  thou-
sand  dollars,  the  article  twenty-two  tax  equivalent  is the amount
computed under paragraph (a) of this subdivision by substituting for the
rate therein the rate of 7.4725 percent;
  (ii) if the entire net income base is more than two  hundred  thousand
dollars  but  not  over two hundred ninety thousand dollars, the article
twenty-two tax equivalent shall be computed as the sum of  (I)  fourteen
thousand  nine  hundred  forty-five  dollars, (II) 7.1425 percent of the
first fifty thousand dollars in excess of the  entire  net  income  base
over  two  hundred  thousand  dollars,  and  (III) 5.4925 percent of the
excess, if any, of the entire net income base  over  two  hundred  fifty
thousand dollars.
  (4)  Termination  year. In the case of a termination year, the tax for
the S short year shall be computed under this paragraph  without  regard
to  the  fixed  dollar  minimum  tax prescribed in paragraph (d) of this
subdivision, and the tax for the C short year shall  be  computed  under
the  opening  paragraph  of this subdivision without regard to the fixed
dollar minimum tax prescribed under such paragraph (d), but in no  event
shall  the  sum  of  the  tax for the S short year and the tax for the C
short year be less than the fixed dollar minimum tax under paragraph (d)
of this subdivision computed as if the corporation were  a  New  York  C
corporation for the entire taxable year.]
  S  13.  Subdivision  1-c  of section 210 of the tax law, as amended by
chapter 1043 of the laws of 1981, the opening  paragraph  and  paragraph
(a)  as amended by chapter 817 of the laws of 1987, and paragraph (b) as
amended by section 12 of part Y of chapter 63 of the laws  of  2000,  is
amended to read as follows:
  1-c. The computations specified in paragraph (b) of subdivision one of
this section shall not apply to the first two taxable years of a taxpay-
er  which,  for  one or both such years, is a small business [concern. A
small business concern:

S. 6359--D                         60                         A. 8559--D

  (a) is a taxpayer which is a small business corporation as defined  in
paragraph  three  of subsection (c) of section twelve hundred forty-four
of the internal revenue code (without regard to the second  sentence  of
subparagraph (A) thereof) as of the last day of the taxable year,
  (b) is not a corporation over fifty percent of the number of shares of
stock of which entitling the holders thereof to vote for the election of
directors or trustees is owned by a taxpayer which (1) is subject to tax
under this article; section one hundred eighty-three, one hundred eight-
y-four or one hundred eighty-five of article nine; article thirty-two or
thirty-three  of this chapter, and (2) does not qualify as a small busi-
ness corporation as defined in paragraph  three  of  subsection  (c)  of
section  twelve hundred forty-four of the internal revenue code (without
regard to the second sentence of subparagraph (A)  thereof)  as  of  the
last  day  of its taxable year ending within or with the taxable year of
the taxpayer,
  (c) is not a corporation which is substantially similar  in  operation
and  in  ownership to a business entity (or entities) taxable, or previ-
ously taxable, under this article; section one hundred eighty-three, one
hundred eighty-four, one hundred eighty-five or one  hundred  eighty-six
of  article  nine;  article  thirty-two or thirty-three of this chapter;
article twenty-three of this chapter or which would have been subject to
tax under such article twenty-three (as such article was  in  effect  on
January  first,  nineteen  hundred  eighty) or the income (or losses) of
which is (or was) includable under article twenty-two of  this  chapter,
and
  (d)  at least ninety percent of the assets of such corporation (valued
at original cost) were located and employed in  this  state  during  the
taxable year and eighty percent of the employees of such corporation (as
ascertained within the meaning and intent of subparagraph three of para-
graph  (a)  of  subdivision  three  of  this  section)  were principally
employed in this state during the taxable year] TAXPAYER AS  DEFINED  IN
PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION.
  S 14. Subdivision 2 of section 210 of the tax law, as amended by chap-
ter 760 of the laws of 1992, is amended to read as follows:
  2. The amount of [subsidiary capital,] investment capital and business
capital  shall  each  be  determined  by taking the average value of the
assets included therein (less liabilities deductible therefrom  pursuant
to  the provisions of subdivisions [four,] five and seven of section two
hundred eight), and, if the period covered by the report is other than a
period of twelve calendar months,  by  multiplying  such  value  by  the
number  of calendar months or major parts thereof included in such peri-
od, and dividing the product thus obtained by twelve.  For  purposes  of
this  subdivision,  real  property  and  marketable  securities shall be
valued at fair market value and the value  of  personal  property  other
than marketable securities shall be the value thereof shown on the books
and  records  of  the  taxpayer  in  accordance  with generally accepted
accounting principles.
  S 15. Subdivisions 3, 3-a, 4, 5, 6, 7, 8, 9, 10, 11, 12,  12-A,  12-B,
12-C,  12-D, 12-E, 12-F, 12-G, 13, 14, 15, 16, 17, 18, 19, 20, 21, 21-a,
22, 23, 23-a, 24, 25, 25-a, 26, 26-a, 27, 28, 30, 31, 32,  33,  34,  35,
36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, and 47 of section 210 of the
tax law are REPEALED.
  S 15-a. Section 210 of the tax law is amended by adding a new subdivi-
sion 3 to read as follows:
  3.  A CORPORATION THAT IS A PARTNER IN A PARTNERSHIP SHALL COMPUTE TAX
UNDER THIS ARTICLE USING THE AGGREGATE METHOD AS DEFINED  IN  THE  REGU-

S. 6359--D                         61                         A. 8559--D

LATIONS  OF  THE  COMMISSIONER, UNLESS ANOTHER METHOD FOR COMPUTING SUCH
TAX IS REQUIRED OR ALLOWED BY  SUCH  REGULATIONS.  UNDER  THE  AGGREGATE
METHOD,  A  CORPORATION  THAT IS A PARTNER IN A PARTNERSHIP IS VIEWED AS
HAVING  AN  UNDIVIDED INTEREST IN THE PARTNERSHIP'S ASSETS, LIABILITIES,
AND ITEMS OF RECEIPTS, INCOME,  GAIN,  LOSS  AND  DEDUCTION.  UNDER  THE
AGGREGATE  METHOD, THE CORPORATION THAT IS A PARTNER IN A PARTNERSHIP IS
TREATED AS PARTICIPATING IN THE PARTNERSHIP'S  TRANSACTIONS  AND  ACTIV-
ITIES.
  S  16. The tax law is amended by adding a new section 210-A to read as
follows:
  S 210-A. APPORTIONMENT. 1. GENERAL. BUSINESS INCOME AND CAPITAL  SHALL
BE  APPORTIONED  TO  THE  STATE  BY  THE APPORTIONMENT FACTOR DETERMINED
PURSUANT TO THIS SECTION. THE APPORTIONMENT FACTOR IS A FRACTION, DETER-
MINED BY INCLUDING ONLY THOSE RECEIPTS, NET INCOME, NET GAINS, AND OTHER
ITEMS DESCRIBED IN THIS SECTION THAT ARE INCLUDED IN THE COMPUTATION  OF
THE  TAXPAYER'S  BUSINESS INCOME FOR THE TAXABLE YEAR.  THE NUMERATOR OF
THE APPORTIONMENT FRACTION SHALL BE EQUAL TO THE SUM OF ALL THE  AMOUNTS
REQUIRED  TO  BE INCLUDED IN THE NUMERATOR PURSUANT TO THE PROVISIONS OF
THIS SECTION AND THE DENOMINATOR OF THE APPORTIONMENT FRACTION SHALL  BE
EQUAL  TO  THE  SUM  OF  ALL  THE AMOUNTS REQUIRED TO BE INCLUDED IN THE
DENOMINATOR PURSUANT TO THE PROVISIONS OF THIS SECTION.
  2. SALES OF TANGIBLE PERSONAL PROPERTY, ELECTRICITY, AND REAL  PROPER-
TY.  (A)  RECEIPTS  FROM SALES OF TANGIBLE PERSONAL PROPERTY WHERE SHIP-
MENTS ARE MADE TO POINTS WITHIN THE STATE  OR  THE  DESTINATION  OF  THE
PROPERTY  IS  A POINT IN THE STATE SHALL BE INCLUDED IN THE NUMERATOR OF
THE APPORTIONMENT FRACTION. RECEIPTS FROM  SALES  OF  TANGIBLE  PERSONAL
PROPERTY WHERE SHIPMENTS ARE MADE TO POINTS WITHIN AND WITHOUT THE STATE
OR  THE DESTINATION IS WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED IN
THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (B) RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN  THE
STATE  SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.
RECEIPTS FROM SALES OF ELECTRICITY DELIVERED TO POINTS WITHIN AND  WITH-
OUT  THE STATE SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT
FRACTION.
  (C) RECEIPTS FROM SALES OF TANGIBLE PERSONAL PROPERTY AND  ELECTRICITY
THAT ARE TRADED AS COMMODITIES AS DESCRIBED IN SECTION 475 OF THE INTER-
NAL  REVENUE  CODE ARE INCLUDED IN THE APPORTIONMENT FRACTION IN ACCORD-
ANCE WITH CLAUSE (I) OF SUBPARAGRAPH TWO OF PARAGRAPH (A) OF SUBDIVISION
FIVE OF THIS SECTION.
  (D) NET GAINS (NOT LESS THAN ZERO) FROM THE  SALES  OF  REAL  PROPERTY
LOCATED  WITHIN  THE  STATE  SHALL  BE  INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION. NET GAINS (NOT LESS THAN ZERO) FROM THE SALES OF
REAL PROPERTY LOCATED WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED  IN
THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  3. RENTALS AND ROYALTIES. (A) RECEIPTS FROM RENTALS OF REAL AND TANGI-
BLE  PERSONAL  PROPERTY  LOCATED  WITHIN  THE  STATE ARE INCLUDED IN THE
NUMERATOR OF THE APPORTIONMENT FRACTION. RECEIPTS FROM RENTALS  OF  REAL
AND  TANGIBLE  PERSONAL  PROPERTY  LOCATED  WITHIN AND WITHOUT THE STATE
SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (B) RECEIPTS OF ROYALTIES FROM THE USE OF PATENTS, COPYRIGHTS,  TRADE-
MARKS,  AND  SIMILAR  INTANGIBLE  PERSONAL PROPERTY WITHIN THE STATE ARE
INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRACTION.  RECEIPTS  OF
ROYALTIES  FROM  THE  USE OF PATENTS, COPYRIGHTS, TRADEMARKS AND SIMILAR
INTANGIBLES WITHIN AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR
OF THE APPORTIONMENT FRACTION. A PATENT, COPYRIGHT, TRADEMARK OR SIMILAR

S. 6359--D                         62                         A. 8559--D

INTANGIBLE PROPERTY IS USED IN THE STATE TO THE EXTENT THAT  THE  ACTIV-
ITIES THEREUNDER ARE CARRIED ON IN THE STATE.
  (C)  RECEIPTS  FROM  THE  SALES OF RIGHTS FOR CLOSED-CIRCUIT AND CABLE
TELEVISION TRANSMISSIONS OF AN EVENT (OTHER THAN EVENTS OCCURRING  ON  A
REGULARLY  SCHEDULED BASIS) TAKING PLACE WITHIN THE STATE AS A RESULT OF
THE RENDITION OF SERVICES BY EMPLOYEES OF THE CORPORATION, AS  ATHLETES,
ENTERTAINERS  OR PERFORMING ARTISTS ARE INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION TO THE EXTENT THAT SUCH RECEIPTS ARE ATTRIBUTABLE
TO SUCH TRANSMISSIONS RECEIVED OR EXHIBITED WITHIN THE  STATE.  RECEIPTS
FROM  ALL SALES OF RIGHTS FOR CLOSED-CIRCUIT AND CABLE TELEVISION TRANS-
MISSIONS OF AN EVENT ARE INCLUDED IN THE DENOMINATOR OF  THE  APPORTION-
MENT FRACTION.
  4. DIGITAL PRODUCTS. (A) FOR PURPOSES OF DETERMINING THE APPORTIONMENT
FRACTION  UNDER THIS SECTION, THE TERM "DIGITAL PRODUCT" MEANS ANY PROP-
ERTY OR SERVICE, OR COMBINATION THEREOF, OF WHATEVER NATURE DELIVERED TO
THE PURCHASER THROUGH THE USE OF WIRE, CABLE, FIBER-OPTIC, LASER, MICRO-
WAVE, RADIO WAVE, SATELLITE OR SIMILAR SUCCESSOR MEDIA, OR ANY  COMBINA-
TION  THEREOF. DIGITAL PRODUCT INCLUDES, BUT IS NOT LIMITED TO, AN AUDIO
WORK, AUDIOVISUAL WORK, VISUAL WORK,  BOOK  OR  LITERARY  WORK,  GRAPHIC
WORK,  GAME,  INFORMATION  OR  ENTERTAINMENT SERVICE, STORAGE OF DIGITAL
PRODUCTS AND COMPUTER SOFTWARE BY WHATEVER  MEANS  DELIVERED.  THE  TERM
"DELIVERED  TO"  INCLUDES  FURNISHED  OR  PROVIDED  TO OR ACCESSED BY. A
DIGITAL PRODUCT DOES NOT INCLUDE LEGAL, MEDICAL,  ACCOUNTING,  ARCHITEC-
TURAL, RESEARCH, ANALYTICAL, ENGINEERING OR CONSULTING SERVICES PROVIDED
BY THE TAXPAYER.
  (B)  RECEIPTS  FROM THE SALE OF, LICENCE TO USE, OR GRANTING OF REMOTE
ACCESS TO DIGITAL PRODUCTS WITHIN THE STATE, DETERMINED ACCORDING TO THE
HIERARCHY OF METHODS SET FORTH IN  SUBPARAGRAPHS  ONE  THROUGH  FOUR  OF
PARAGRAPH (C) OF THIS SUBDIVISION, SHALL BE INCLUDED IN THE NUMERATOR OF
THE  APPORTIONMENT  FRACTION. RECEIPTS FROM THE SALE OF, LICENSE TO USE,
OR GRANTING OF REMOTE ACCESS TO DIGITAL PRODUCTS WITHIN AND WITHOUT  THE
STATE  SHALL  BE  INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC-
TION. THE  TAXPAYER  MUST  EXERCISE  DUE  DILIGENCE  UNDER  EACH  METHOD
DESCRIBED  IN  PARAGRAPH (C) OF THIS SUBDIVISION BEFORE REJECTING IT AND
PROCEEDING TO THE NEXT METHOD IN THE HIERARCHY, AND MUST BASE ITS DETER-
MINATION ON INFORMATION KNOWN TO THE TAXPAYER OR INFORMATION THAT  WOULD
BE  KNOWN TO THE TAXPAYER UPON REASONABLE INQUIRY.  IF THE RECEIPT FOR A
DIGITAL PRODUCT IS COMPRISED OF A COMBINATION OF PROPERTY AND  SERVICES,
IT  CANNOT  BE  DIVIDED INTO SEPARATE COMPONENTS AND IS CONSIDERED TO BE
ONE RECEIPT REGARDLESS OF WHETHER IT IS SEPARATELY  STATED  FOR  BILLING
PURPOSES. THE ENTIRE RECEIPT MUST BE ALLOCATED BY THIS HIERARCHY.
  (C)  HIERARCHY  OF  SOURCING  METHODS.  (1) THE CUSTOMER'S PRIMARY USE
LOCATION OF THE DIGITAL PRODUCT;
  (2) THE LOCATION WHERE THE DIGITAL PRODUCT IS RECEIVED BY THE  CUSTOM-
ER, OR IS RECEIVED BY A PERSON DESIGNATED FOR RECEIPT BY THE CUSTOMER;
  (3) THE APPORTIONMENT FRACTION DETERMINED PURSUANT TO THIS SUBDIVISION
FOR THE PRECEDING TAXABLE YEAR FOR SUCH DIGITAL PRODUCT; OR
  (4)  THE  APPORTIONMENT FRACTION IN THE CURRENT TAXABLE YEAR FOR THOSE
DIGITAL PRODUCTS THAT CAN BE SOURCED USING  THE  HIERARCHY  OF  SOURCING
METHODS IN SUBPARAGRAPHS ONE AND TWO OF THIS PARAGRAPH.
  5.  FINANCIAL  TRANSACTIONS.  (A)  FINANCIAL  INSTRUMENTS. A FINANCIAL
INSTRUMENT IS A "QUALIFIED FINANCIAL INSTRUMENT"  IF  IT  IS  MARKED  TO
MARKET  UNDER  SECTION 475 OR SECTION 1256 OF THE INTERNAL REVENUE CODE,
PROVIDED THAT LOANS SECURED BY REAL  PROPERTY  SHALL  NOT  BE  QUALIFIED
FINANCIAL  INSTRUMENTS. A FINANCIAL INSTRUMENT IS A "NONQUALIFIED FINAN-
CIAL INSTRUMENT" IF IT IS NOT A QUALIFIED FINANCIAL INSTRUMENT.

S. 6359--D                         63                         A. 8559--D

  (1) FIXED PERCENTAGE METHOD FOR QUALIFIED  FINANCIAL  INSTRUMENTS.  IN
DETERMINING  THE  INCLUSION  OF  RECEIPTS  AND  NET GAINS FROM QUALIFIED
FINANCIAL INSTRUMENTS IN THE APPORTIONMENT FRACTION, TAXPAYERS MAY ELECT
TO USE THE FIXED PERCENTAGE METHOD DESCRIBED IN  THIS  SUBPARAGRAPH  FOR
QUALIFIED FINANCIAL INSTRUMENTS. THE ELECTION IS IRREVOCABLE, APPLIES TO
ALL QUALIFIED FINANCIAL INSTRUMENTS, AND MUST BE MADE ON AN ANNUAL BASIS
ON  THE TAXPAYER'S ORIGINAL, TIMELY FILED RETURN. IF THE TAXPAYER ELECTS
THE FIXED PERCENTAGE METHOD, THEN ALL INCOME, GAIN OR LOSS, FROM  QUALI-
FIED FINANCIAL INSTRUMENTS CONSTITUTES BUSINESS INCOME, GAIN OR LOSS. IF
THE  TAXPAYER  DOES  NOT  ELECT TO USE THE FIXED PERCENTAGE METHOD, THEN
RECEIPTS AND NET GAINS ARE INCLUDED IN  THE  APPORTIONMENT  FRACTION  IN
ACCORDANCE  WITH  THE CUSTOMER SOURCING METHOD DESCRIBED IN SUBPARAGRAPH
TWO OF THIS PARAGRAPH. UNDER THE FIXED PERCENTAGE METHOD, EIGHT  PERCENT
OF  ALL NET INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRU-
MENTS IS INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRACTION.  ALL
NET  INCOME (NOT LESS THAN ZERO) FROM QUALIFIED FINANCIAL INSTRUMENTS IS
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (2) CUSTOMER SOURCING METHOD. RECEIPTS AND NET  GAINS  FROM  QUALIFIED
FINANCIAL  INSTRUMENTS, IN CASES WHERE THE TAXPAYER DID NOT ELECT TO USE
THE FIXED PERCENTAGE METHOD DESCRIBED IN SUBPARAGRAPH ONE OF THIS  PARA-
GRAPH,  AND  FROM NONQUALIFIED FINANCIAL INSTRUMENTS ARE INCLUDED IN THE
APPORTIONMENT  FRACTION  IN  ACCORDANCE  WITH  THIS  SUBPARAGRAPH.   FOR
PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL IS DEEMED TO BE LOCATED IN THE
STATE  IF  HIS OR HER BILLING ADDRESS IS IN THE STATE. A BUSINESS ENTITY
IS DEEMED TO BE LOCATED IN THE  STATE  IF  ITS  COMMERCIAL  DOMICILE  IS
LOCATED IN THE STATE.
  (A)  LOANS.  (I)  RECEIPTS CONSTITUTING INTEREST FROM LOANS SECURED BY
REAL PROPERTY LOCATED WITHIN THE STATE SHALL BE INCLUDED IN THE  NUMERA-
TOR  OF  THE APPORTIONMENT FRACTION. RECEIPTS CONSTITUTING INTEREST FROM
LOANS SECURED BY REAL PROPERTY LOCATED  WITHIN  AND  WITHOUT  THE  STATE
SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (II)  RECEIPTS  CONSTITUTING  INTEREST  FROM LOANS NOT SECURED BY REAL
PROPERTY SHALL BE INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRAC-
TION  IF  THE  BORROWER  IS  LOCATED IN THE STATE. RECEIPTS CONSTITUTING
INTEREST FROM LOANS NOT SECURED BY REAL PROPERTY, WHETHER  THE  BORROWER
IS LOCATED WITHIN OR WITHOUT THE STATE, SHALL BE INCLUDED IN THE DENOMI-
NATOR OF THE APPORTIONMENT FRACTION.
  (III)  NET  GAINS  (NOT LESS THAN ZERO) FROM SALES OF LOANS SECURED BY
REAL PROPERTY ARE INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRAC-
TION  AS  PROVIDED  IN  THIS SUBCLAUSE. THE AMOUNT OF NET GAINS FROM THE
SALE OF LOANS SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR OF  THE
APPORTIONMENT  FRACTION  IS DETERMINED BY MULTIPLYING THE NET GAINS BY A
FRACTION THE NUMERATOR OF WHICH IS THE AMOUNT  OF  GROSS  PROCEEDS  FROM
SALES OF LOANS SECURED BY REAL PROPERTY LOCATED WITHIN THE STATE AND THE
DENOMINATOR  OF  WHICH IS THE GROSS PROCEEDS FROM SALES OF LOANS SECURED
BY REAL PROPERTY WITHIN AND WITHOUT THE STATE. GROSS PROCEEDS  SHALL  BE
DETERMINED AFTER THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS
BUT  SHALL  NOT  BE  LESS THAN ZERO. NET GAINS (NOT LESS THAN ZERO) FROM
SALES OF LOANS SECURED BY REAL PROPERTY WITHIN AND WITHOUT THE STATE ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (IV) NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS NOT SECURED BY
REAL PROPERTY ARE INCLUDED IN THE NUMERATOR OF THE  APPORTIONMENT  FRAC-
TION  AS  PROVIDED  IN  THIS SUBCLAUSE. THE AMOUNT OF NET GAINS FROM THE
SALE OF LOANS NOT SECURED BY REAL PROPERTY INCLUDED IN THE NUMERATOR  OF
THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET GAINS BY
A  FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM

S. 6359--D                         64                         A. 8559--D

SALES OF LOANS NOT SECURED BY REAL PROPERTY TO PURCHASERS LOCATED WITHIN
THE STATE AND THE DENOMINATOR OF WHICH IS THE AMOUNT OF  GROSS  RECEIPTS
FROM  SALES  OF LOANS NOT SECURED BY REAL PROPERTY TO PURCHASERS LOCATED
WITHIN  AND  WITHOUT THE STATE. GROSS PROCEEDS SHALL BE DETERMINED AFTER
THE DEDUCTION OF ANY COST INCURRED TO ACQUIRE THE LOANS BUT SHALL NOT BE
LESS THAN ZERO.  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF LOANS  NOT
SECURED  BY  REAL PROPERTY ARE INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION.
  (B) FEDERAL, STATE, AND MUNICIPAL DEBT. RECEIPTS CONSTITUTING INTEREST
AND NET GAINS FROM SALES  OF  DEBT  INSTRUMENTS  ISSUED  BY  THE  UNITED
STATES,  ANY  STATE,  OR  POLITICAL  SUBDIVISION OF A STATE SHALL NOT BE
INCLUDED IN  THE  NUMERATOR  OF  THE  APPORTIONMENT  FRACTION.  RECEIPTS
CONSTITUTING  INTEREST  AND NET GAINS (NOT LESS THAN ZERO) FROM SALES OF
DEBT INSTRUMENTS ISSUED BY THE UNITED STATES AND THE STATE OF  NEW  YORK
OR  ITS  POLITICAL  SUBDIVISIONS SHALL BE INCLUDED IN THE DENOMINATOR OF
THE APPORTIONMENT FRACTION. FIFTY PERCENT OF THE  RECEIPTS  CONSTITUTING
INTEREST  AND  NET GAINS (NOT LESS THAN ZERO) FROM SALES OF DEBT INSTRU-
MENTS ISSUED BY OTHER STATES OR THEIR POLITICAL  SUBDIVISIONS  SHALL  BE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (C)  ASSET  BACKED SECURITIES AND OTHER GOVERNMENT AGENCY DEBT.  EIGHT
PERCENT OF THE INTEREST INCOME FROM ASSET  BACKED  SECURITIES  OR  OTHER
SECURITIES  ISSUED  BY GOVERNMENT AGENCIES, INCLUDING BUT NOT LIMITED TO
SECURITIES  ISSUED  BY  THE  GOVERNMENT  NATIONAL  MORTGAGE  ASSOCIATION
(GNMA),  THE  FEDERAL  NATIONAL MORTGAGE ASSOCIATION (FNMA), THE FEDERAL
HOME LOAN MORTGAGE CORPORATION (FHLMC), OR THE SMALL  BUSINESS  ADMINIS-
TRATION,  OR  ASSET  BACKED SECURITIES ISSUED BY OTHER ENTITIES SHALL BE
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.  EIGHT  PERCENT
OF  THE  NET  GAINS  (NOT LESS THAN ZERO) FROM (I) SALES OF ASSET BACKED
SECURITIES OR OTHER SECURITIES ISSUED BY GOVERNMENT AGENCIES,  INCLUDING
BUT  NOT LIMITED TO SECURITIES ISSUED BY GNMA, FNMA, OR FHLMC, THE SMALL
BUSINESS ADMINISTRATION, OR (II) SALES OF OTHER ASSET BACKED  SECURITIES
THAT  ARE  SOLD  THROUGH  A  REGISTERED  SECURITIES  BROKER OR DEALER OR
THROUGH A LICENSED EXCHANGE, SHALL BE INCLUDED IN THE NUMERATOR  OF  THE
APPORTIONMENT  FRACTION.  THE  AMOUNT  OF NET GAINS (NOT LESS THAN ZERO)
FROM SALES OF OTHER ASSET BACKED SECURITIES NOT REFERENCED IN  SUBCLAUSE
(I)  OR  (II) OF THIS CLAUSE INCLUDED IN THE NUMERATOR OF THE APPORTION-
MENT FRACTION IS DETERMINED BY MULTIPLYING SUCH NET GAINS BY A FRACTION,
THE NUMERATOR OF WHICH IS THE AMOUNT OF GROSS PROCEEDS FROM  SUCH  SALES
TO  PURCHASERS  LOCATED IN THE STATE AND THE DENOMINATOR OF WHICH IS THE
AMOUNT OF GROSS PROCEEDS FROM SUCH SALES TO  PURCHASERS  LOCATED  WITHIN
AND  WITHOUT THE STATE. RECEIPTS CONSTITUTING INTEREST FROM ASSET BACKED
SECURITIES AND OTHER SECURITIES REFERENCED IN THIS CLAUSE AND NET  GAINS
(NOT  LESS  THAN  ZERO)  FROM SALES OF ASSET BACKED SECURITIES AND OTHER
SECURITIES REFERENCED IN THIS CLAUSE ARE INCLUDED IN THE DENOMINATOR  OF
THE APPORTIONMENT FRACTION. GROSS PROCEEDS SHALL BE DETERMINED AFTER THE
DEDUCTION  OF  ANY  COST TO ACQUIRE THE SECURITIES BUT SHALL NOT BE LESS
THAN ZERO.
  (D) CORPORATE BONDS. RECEIPTS  CONSTITUTING  INTEREST  FROM  CORPORATE
BONDS ARE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IF THE
COMMERCIAL  DOMICILE  OF THE ISSUING CORPORATION IS IN THE STATE.  EIGHT
PERCENT OF THE NET GAINS (NOT LESS THAN ZERO) FROM  SALES  OF  CORPORATE
BONDS SOLD THROUGH A REGISTERED SECURITIES BROKER OR DEALER OR THROUGH A
LICENSED  EXCHANGE  IS  INCLUDED  IN  THE NUMERATOR OF THE APPORTIONMENT
FRACTION. THE AMOUNT OF NET GAINS (NOT LESS THAN ZERO) FROM OTHER  SALES
OF  CORPORATE BONDS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRAC-
TION IS DETERMINED BY MULTIPLYING SUCH NET  GAINS  BY  A  FRACTION,  THE

S. 6359--D                         65                         A. 8559--D

NUMERATOR  OF  WHICH  IS THE AMOUNT OF GROSS PROCEEDS FROM SUCH SALES TO
PURCHASERS LOCATED IN THE STATE AND THE  DENOMINATOR  OF  WHICH  IS  THE
AMOUNT  OF  GROSS  PROCEEDS  FROM SALES TO PURCHASERS LOCATED WITHIN AND
WITHOUT  THE STATE. RECEIPTS CONSTITUTING INTEREST FROM CORPORATE BONDS,
WHETHER THE ISSUING CORPORATION'S COMMERCIAL DOMICILE IS WITHIN OR WITH-
OUT THE STATE, AND NET GAINS (NOT LESS THAN ZERO) FROM SALES  OF  CORPO-
RATE  BONDS  TO  PURCHASERS WITHIN AND WITHOUT THE STATE ARE INCLUDED IN
THE DENOMINATOR OF THE APPORTIONMENT FRACTION. GROSS PROCEEDS  SHALL  BE
DETERMINED  AFTER  THE  DEDUCTION  OF  ANY COST TO ACQUIRE THE BONDS BUT
SHALL NOT BE LESS THAN ZERO.
  (E) REVERSE REPURCHASE AGREEMENTS AND SECURITIES BORROWING AGREEMENTS.
EIGHT PERCENT OF NET INTEREST INCOME (NOT LESS THAN ZERO)  FROM  REVERSE
REPURCHASE  AGREEMENTS  AND  SECURITIES  BORROWING  AGREEMENTS  SHALL BE
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT  FRACTION.  NET  INTEREST
INCOME (NOT LESS THAN ZERO) FROM REVERSE REPURCHASE AGREEMENTS AND SECU-
RITIES BORROWING AGREEMENTS IS INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT  FRACTION.  NET  INTEREST INCOME FROM REVERSE REPURCHASE AGREE-
MENTS AND SECURITIES BORROWING AGREEMENTS IS DETERMINED FOR PURPOSES  OF
THIS  SUBDIVISION  AFTER  THE DEDUCTION OF THE INTEREST EXPENSE FROM THE
TAXPAYER'S REPURCHASE AGREEMENTS AND SECURITIES LENDING  AGREEMENTS  BUT
CANNOT  BE  LESS  THAN  ZERO.  FOR  THIS CALCULATION, THE AMOUNT OF SUCH
INTEREST EXPENSE IS THE INTEREST EXPENSE ASSOCIATED WITH THE SUM OF  THE
VALUE   OF   THE  TAXPAYER'S  REPURCHASE  AGREEMENTS  WHERE  IT  IS  THE
SELLER/BORROWER PLUS THE VALUE  OF  THE  TAXPAYER'S  SECURITIES  LENDING
AGREEMENTS  WHERE  IT  IS  THE  SECURITIES  LENDER, PROVIDED SUCH SUM IS
LIMITED TO THE SUM OF THE VALUE OF  THE  TAXPAYER'S  REVERSE  REPURCHASE
AGREEMENTS  WHERE  IT  IS  THE  PURCHASER/LENDER  PLUS  THE VALUE OF THE
TAXPAYER'S SECURITIES LENDING AGREEMENTS  WHERE  IT  IS  THE  SECURITIES
BORROWER.
  (F)  FEDERAL  FUNDS.  EIGHT PERCENT OF THE NET INTEREST (NOT LESS THAN
ZERO) FROM FEDERAL FUNDS IS INCLUDED IN THE NUMERATOR OF THE  APPORTION-
MENT  FRACTION. THE NET INTEREST (NOT LESS THAN ZERO) FROM FEDERAL FUNDS
IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INTER-
EST FROM FEDERAL FUNDS IS DETERMINED AFTER DEDUCTION OF INTEREST EXPENSE
FROM FEDERAL FUNDS.
  (G) DIVIDENDS AND NET GAINS FROM SALES OF STOCK OR PARTNERSHIP  INTER-
ESTS. DIVIDENDS FROM STOCK, NET GAINS (NOT LESS THAN ZERO) FROM SALES OF
STOCK  AND  NET  GAINS (NOT LESS THAN ZERO) FROM THE SALE OF PARTNERSHIP
INTERESTS ARE NOT INCLUDED IN EITHER THE NUMERATOR OR DENOMINATOR OF THE
APPORTIONMENT FRACTION UNLESS THE COMMISSIONER  DETERMINES  PURSUANT  TO
SUBDIVISION  ELEVEN OF THIS SECTION THAT INCLUSION OF SUCH DIVIDENDS AND
NET GAINS (NOT LESS THAN ZERO) IS  NECESSARY  TO  PROPERLY  REFLECT  THE
BUSINESS INCOME OR CAPITAL OF THE TAXPAYER.
  (H)  OTHER  FINANCIAL  INSTRUMENTS. (I) RECEIPTS CONSTITUTING INTEREST
FROM OTHER FINANCIAL INSTRUMENTS SHALL BE INCLUDED IN THE  NUMERATOR  OF
THE  APPORTIONMENT  FRACTION  IF  THE  PAYOR  IS  LOCATED  IN THE STATE.
RECEIPTS CONSTITUTING INTEREST FROM OTHER FINANCIAL INSTRUMENTS, WHETHER
THE PAYOR IS WITHIN OR WITHOUT THE STATE, ARE INCLUDED IN THE  DENOMINA-
TOR OF THE APPORTIONMENT FRACTION.
  (II)  NET  GAINS  (NOT  LESS  THAN ZERO) FROM SALES OF OTHER FINANCIAL
INSTRUMENTS AND OTHER INCOME (NOT LESS THAN ZERO) FROM  OTHER  FINANCIAL
INSTRUMENTS  WHERE  THE  PURCHASER  OR PAYOR IS LOCATED IN THE STATE ARE
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION, PROVIDED  THAT,
IF THE PURCHASER OR PAYOR IS A REGISTERED SECURITIES BROKER OR DEALER OR
THE  TRANSACTION IS MADE THROUGH A LICENSED EXCHANGE, THEN EIGHT PERCENT
OF THE NET GAINS (NOT LESS THAN ZERO) OR OTHER  INCOME  (NOT  LESS  THAN

S. 6359--D                         66                         A. 8559--D

ZERO)  IS  INCLUDED  IN THE NUMERATOR OF THE APPORTIONMENT FRACTION. NET
GAINS (NOT LESS THAN ZERO) FROM SALES OF OTHER FINANCIAL INSTRUMENTS AND
OTHER INCOME (NOT LESS THAN ZERO) FROM OTHER FINANCIAL  INSTRUMENTS  ARE
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (I)  PHYSICAL  COMMODITIES. NET INCOME (NOT LESS THAN ZERO) FROM SALES
OF PHYSICAL COMMODITIES ARE INCLUDED IN THE NUMERATOR OF THE  APPORTION-
MENT FRACTION AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF NET INCOME
FROM  SALES  OF  PHYSICAL  COMMODITIES  INCLUDED IN THE NUMERATOR OF THE
APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE NET INCOME  FROM
SALES  OF  PHYSICAL COMMODITIES BY A FRACTION, THE NUMERATOR OF WHICH IS
THE AMOUNT OF RECEIPTS  FROM  SALES  OF  PHYSICAL  COMMODITIES  ACTUALLY
DELIVERED  TO POINTS WITHIN THE STATE OR, IF THERE IS NO ACTUAL DELIVERY
OF THE PHYSICAL COMMODITY, SOLD TO PURCHASERS LOCATED IN THE STATE,  AND
THE  DENOMINATOR  OF WHICH IS THE AMOUNT OF RECEIPTS FROM SALES OF PHYS-
ICAL COMMODITIES ACTUALLY DELIVERED TO POINTS  WITHIN  AND  WITHOUT  THE
STATE  OR  SOLD  TO PURCHASERS LOCATED WITHIN AND WITHOUT THE STATE. NET
INCOME (NOT LESS THAT  ZERO)  FROM  SALES  OF  PHYSICAL  COMMODITIES  IS
INCLUDED  IN  THE  DENOMINATOR OF THE APPORTIONMENT FRACTION. NET INCOME
(NOT LESS THAN ZERO) FROM SALES OF PHYSICAL  COMMODITIES  IS  DETERMINED
AFTER  THE  DEDUCTION  OF  THE  COST  TO ACQUIRE OR PRODUCE THE PHYSICAL
COMMODITIES.
  (B) OTHER RECEIPTS FROM BROKER OR DEALER  ACTIVITIES.  RECEIPTS  OF  A
REGISTERED  SECURITIES  BROKER  OR DEALER FROM SECURITIES OR COMMODITIES
BROKER OR DEALER ACTIVITIES DESCRIBED IN THIS PARAGRAPH SHALL BE  DEEMED
TO  BE  GENERATED  WITHIN  THE  STATE  AS DESCRIBED IN SUBPARAGRAPHS ONE
THROUGH EIGHT OF THIS PARAGRAPH. RECEIPTS FROM SUCH ACTIVITIES GENERATED
WITHIN THE STATE SHALL BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT
FRACTION. RECEIPTS FROM SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE
STATE SHALL BE INCLUDED IN THE DENOMINATOR OF  THE  APPORTIONMENT  FRAC-
TION.  FOR  THE  PURPOSES OF THIS PARAGRAPH, THE TERM "SECURITIES" SHALL
HAVE THE SAME MEANING AS IN SECTION 475(C)(2) OF  THE  INTERNAL  REVENUE
CODE  AND  THE  TERM  "COMMODITIES"  SHALL  HAVE  THE SAME MEANING AS IN
SECTION 475(E)(2) OF THE INTERNAL REVENUE CODE.
  (1) RECEIPTS  CONSTITUTING  BROKERAGE  COMMISSIONS  DERIVED  FROM  THE
EXECUTION  OF SECURITIES OR COMMODITIES PURCHASE OR SALES ORDERS FOR THE
ACCOUNTS OF CUSTOMERS SHALL BE DEEMED TO BE GENERATED WITHIN  THE  STATE
IF  THE  MAILING  ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE CUSTOMER
WHO IS RESPONSIBLE FOR PAYING SUCH COMMISSIONS IS WITHIN THE STATE.
  (2) RECEIPTS CONSTITUTING MARGIN INTEREST EARNED ON BEHALF OF  BROKER-
AGE  ACCOUNTS  SHALL  BE  DEEMED TO BE GENERATED WITHIN THE STATE IF THE
MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE  CUSTOMER  WHO  IS
RESPONSIBLE FOR PAYING SUCH MARGIN INTEREST IS WITHIN THE STATE.
  (3)(A)  RECEIPTS CONSTITUTING FEES EARNED BY THE TAXPAYER FOR ADVISORY
SERVICES TO A CUSTOMER IN CONNECTION WITH THE UNDERWRITING OF SECURITIES
FOR SUCH CUSTOMER (SUCH CUSTOMER BEING THE ENTITY THAT IS  CONTEMPLATING
ISSUING  OR  IS  ISSUING  SECURITIES) OR FEES EARNED BY THE TAXPAYER FOR
MANAGING AN UNDERWRITING SHALL BE DEEMED  TO  BE  GENERATED  WITHIN  THE
STATE  IF  THE  MAILING  ADDRESS  IN THE RECORDS OF THE TAXPAYER OF SUCH
CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
  (B) RECEIPTS CONSTITUTING THE PRIMARY  SPREAD  OF  SELLING  CONCESSION
FROM  UNDERWRITTEN SECURITIES SHALL BE DEEMED TO BE GENERATED WITHIN THE
STATE IF THE CUSTOMER IS LOCATED IN THE STATE.
  (C) THE TERM "PRIMARY SPREAD" MEANS THE DIFFERENCE BETWEEN  THE  PRICE
PAID  BY THE TAXPAYER TO THE ISSUER OF THE SECURITIES BEING MARKETED AND
THE PRICE RECEIVED FROM THE SUBSEQUENT SALE OF THE UNDERWRITTEN  SECURI-
TIES  AT  THE INITIAL PUBLIC OFFERING PRICE, LESS ANY SELLING CONCESSION

S. 6359--D                         67                         A. 8559--D

AND ANY FEES PAID TO THE TAXPAYER FOR ADVISORY SERVICES OR ANY MANAGER'S
FEES, IF SUCH FEES ARE NOT PAID BY THE CUSTOMER TO  THE  TAXPAYER  SEPA-
RATELY.  THE TERM "PUBLIC OFFERING PRICE" MEANS THE PRICE AGREED UPON BY
THE TAXPAYER AND THE ISSUER AT WHICH THE SECURITIES ARE TO BE OFFERED TO
THE  PUBLIC.  THE TERM "SELLING CONCESSION" MEANS THE AMOUNT PAID TO THE
TAXPAYER FOR PARTICIPATING IN THE UNDERWRITING OF A SECURITY  WHERE  THE
TAXPAYER IS NOT THE LEAD UNDERWRITER.
  (4)  RECEIPTS CONSTITUTING ACCOUNT MAINTENANCE FEES SHALL BE DEEMED TO
BE GENERATED WITHIN THE STATE IF THE MAILING ADDRESS IN  THE  RECORD  OF
THE  TAXPAYER OF THE CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH ACCOUNT
MAINTENANCE FEES IS WITHIN THE STATE.
  (5) RECEIPTS CONSTITUTING FEES FOR MANAGEMENT  OR  ADVISORY  SERVICES,
INCLUDING  FEES  FOR ADVISORY SERVICES IN RELATION TO MERGER OR ACQUISI-
TION ACTIVITIES, BUT EXCLUDING FEES PAID FOR SERVICES DESCRIBED IN PARA-
GRAPH (D) OF THIS SUBDIVISION, SHALL BE DEEMED TO  BE  GENERATED  WITHIN
THE  STATE  IF THE MAILING ADDRESS IN THE RECORDS OF THE TAXPAYER OF THE
CUSTOMER WHO IS RESPONSIBLE FOR PAYING SUCH FEES IS WITHIN THE STATE.
  (6) RECEIPTS CONSTITUTING INTEREST EARNED BY THE TAXPAYER ON LOANS AND
ADVANCES MADE BY THE TAXPAYER  TO  A  CORPORATION  AFFILIATED  WITH  THE
TAXPAYER  BUT  WITH  WHICH  THE TAXPAYER IS NOT PERMITTED OR REQUIRED TO
FILE A COMBINED REPORT PURSUANT TO SECTION TWO  HUNDRED  TEN-C  OF  THIS
ARTICLE  SHALL BE DEEMED TO ARISE FROM SERVICES PERFORMED AT THE PRINCI-
PAL PLACE OF BUSINESS OF SUCH AFFILIATED CORPORATION.
  (7) IF THE TAXPAYER RECEIVES ANY OF THE RECEIPTS ENUMERATED IN SUBPAR-
AGRAPHS ONE THROUGH FOUR OF THIS PARAGRAPH AS A RESULT OF  A  SECURITIES
CORRESPONDENT  RELATIONSHIP  SUCH  TAXPAYER  HAS  WITH ANOTHER BROKER OR
DEALER WITH THE TAXPAYER ACTING IN THIS  RELATIONSHIP  AS  THE  CLEARING
FIRM,  SUCH RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO
EXTENT SET FORTH IN EACH OF  SUCH  SUBPARAGRAPHS.  THE  AMOUNT  OF  SUCH
RECEIPTS SHALL EXCLUDE THE AMOUNT THE TAXPAYER IS REQUIRED TO PAY TO THE
CORRESPONDENT  FIRM FOR SUCH CORRESPONDENT RELATIONSHIP. IF THE TAXPAYER
RECEIVES ANY OF THE RECEIPTS ENUMERATED  IN  SUBPARAGRAPHS  ONE  THROUGH
FOUR  OF  THIS  PARAGRAPH  AS  AS  RESULT  OF A SECURITIES CORRESPONDENT
RELATIONSHIP SUCH TAXPAYER HAS WITH ANOTHER BROKER OR  DEALER  WITH  THE
TAXPAYER  ACTING  IN  THIS  RELATIONSHIP  AS  THE INTRODUCING FIRM, SUCH
RECEIPTS SHALL BE DEEMED TO BE GENERATED WITHIN THE STATE TO THE  EXTENT
SET FORTH IN EACH OF SUCH SUBPARAGRAPHS.
  (8) IF, FOR PURPOSES OF SUBPARAGRAPHS ONE, TWO, CLAUSE (A) OF SUBPARA-
GRAPH THREE, FOUR, OR FIVE OF THIS PARAGRAPH THE TAXPAYER IS UNABLE FROM
ITS  RECORDS  TO  DETERMINE  THE  MAILING ADDRESS OF THE CUSTOMER, EIGHT
PERCENT OF THE RECEIPTS IS INCLUDED IN THE NUMERATOR OF  THE  APPORTION-
MENT FRACTION.
  (C)  RECEIPTS FROM CREDIT CARD AND SIMILAR ACTIVITIES. RECEIPTS RELAT-
ING TO THE  BANK,  CREDIT,  TRAVEL  AND  ENTERTAINMENT  CARD  ACTIVITIES
DESCRIBED  IN  THIS PARAGRAPH SHALL BE DEEMED TO BE GENERATED WITHIN THE
STATE AS DESCRIBED IN SUBPARAGRAPHS ONE THROUGH FOUR OF THIS  PARAGRAPH.
RECEIPTS  FROM  SUCH  ACTIVITIES  GENERATED  WITHIN  THE  STATE SHALL BE
INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION.  RECEIPTS  FROM
SUCH ACTIVITIES GENERATED WITHIN AND WITHOUT THE STATE SHALL BE INCLUDED
IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (1)  RECEIPTS  CONSTITUTING  INTEREST,  AND  FEES AND PENALTIES IN THE
NATURE OF INTEREST, FROM BANK, CREDIT,  TRAVEL  AND  ENTERTAINMENT  CARD
RECEIVABLES  SHALL  BE  DEEMED  TO  BE GENERATED WITHIN THE STATE IF THE
MAILING ADDRESS OF THE CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS  IN
THE STATE;

S. 6359--D                         68                         A. 8559--D

  (2)  RECEIPTS  FROM  SERVICE CHARGES AND FEES FROM SUCH CARDS SHALL BE
DEEMED TO BE GENERATED WITHIN THE STATE IF THE MAILING  ADDRESS  OF  THE
CARD HOLDER IN THE RECORDS OF THE TAXPAYER IS IN THE STATE; AND
  (3)  RECEIPTS  FROM MERCHANT DISCOUNTS SHALL BE DEEMED TO BE GENERATED
WITHIN THE STATE IF THE MERCHANT IS LOCATED WITHIN  THE  STATE.  IN  THE
CASE  OF  A  MERCHANT  WITH  LOCATIONS  BOTH WITHIN AND WITHOUT NEW YORK
STATE, ONLY RECEIPTS FROM MERCHANT DISCOUNTS ATTRIBUTABLE TO SALES  MADE
FROM LOCATIONS WITHIN NEW YORK STATE ARE ALLOCATED TO NEW YORK STATE. IT
SHALL  BE  PRESUMED  THAT THE LOCATION OF THE MERCHANT IS THE ADDRESS OF
THE MERCHANT SHOWN ON THE INVOICE  SUBMITTED  BY  THE  MERCHANT  TO  THE
TAXPAYER.
  (4)  RECEIPTS  FROM CREDIT CARD AUTHORIZATION PROCESSING, AND CLEARING
AND SETTLEMENT PROCESSING RECEIVED BY CREDIT CARD  PROCESSORS  SHALL  BE
DEEMED TO BE GENERATED WITHIN THE STATE IF THE LOCATION WHERE THE CREDIT
CARD  PROCESSOR'S  CUSTOMER ACCESSES THE CREDIT CARD PROCESSOR'S NETWORK
IS LOCATED WITHIN THE STATE. THE AMOUNT OF ALL OTHER  RECEIPTS  RECEIVED
BY CREDIT CARD PROCESSORS NOT SPECIFICALLY ADDRESSED IN SUBDIVISIONS ONE
THROUGH  NINE  OF  THIS  SECTION DEEMED TO BE GENERATED WITHIN THE STATE
SHALL BE DETERMINED BY  MULTIPLYING  THE  TOTAL  AMOUNT  OF  SUCH  OTHER
RECEIPTS BY THE AVERAGE OF (I) EIGHT PERCENT AND (II) THE PERCENT OF ITS
NEW  YORK  ACCESS  POINTS.  THE PERCENT OF NEW YORK ACCESS POINTS IS THE
NUMBER OF LOCATIONS IN NEW YORK FROM WHICH THE CREDIT  CARD  PROCESSOR'S
CUSTOMERS  ACCESS  THE  CREDIT  CARD  PROCESSOR'S NETWORK DIVIDED BY THE
TOTAL NUMBER OF LOCATIONS IN THE UNITED STATES  WHERE  THE  CREDIT  CARD
PROCESSOR'S CUSTOMERS ACCESS THE CREDIT CARD PROCESSOR'S NETWORK.
  (D)  RECEIPTS FROM CERTAIN SERVICES TO INVESTMENT COMPANIES.  RECEIPTS
RECEIVED FROM AN INVESTMENT COMPANY ARISING FROM THE SALE OF MANAGEMENT,
ADMINISTRATION OR DISTRIBUTION SERVICES TO SUCH INVESTMENT  COMPANY  ARE
INCLUDED  IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.  THE PORTION
OF SUCH RECEIPTS INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
(SUCH PORTION REFERRED TO HEREIN AS  THE  NEW  YORK  PORTION)  SHALL  BE
DETERMINED AS PROVIDED IN THIS PARAGRAPH.
  (1)  THE  NEW  YORK  PORTION SHALL BE THE PRODUCT OF THE TOTAL OF SUCH
RECEIPTS FROM THE SALE OF SUCH SERVICES AND A FRACTION. THE NUMERATOR OF
THAT FRACTION IS THE SUM OF THE MONTHLY PERCENTAGES (AS DEFINED  HEREIN-
AFTER)  DETERMINED  FOR  EACH  MONTH OF THE INVESTMENT COMPANY'S TAXABLE
YEAR FOR FEDERAL INCOME TAX PURPOSES WHICH TAXABLE YEAR ENDS WITHIN  THE
TAXABLE  YEAR  OF THE TAXPAYER (BUT EXCLUDING ANY MONTH DURING WHICH THE
INVESTMENT COMPANY HAD NO OUTSTANDING SHARES).  THE  MONTHLY  PERCENTAGE
FOR  EACH  SUCH  MONTH IS DETERMINED BY DIVIDING THE NUMBER OF SHARES IN
THE INVESTMENT COMPANY THAT ARE OWNED ON THE LAST DAY OF  THE  MONTH  BY
SHAREHOLDERS THAT ARE LOCATED IN THE STATE BY THE TOTAL NUMBER OF SHARES
IN  THE INVESTMENT COMPANY OUTSTANDING ON THAT DATE.  THE DENOMINATOR OF
THE FRACTION IS THE NUMBER OF SUCH MONTHLY PERCENTAGES.
  (2)(A) FOR PURPOSES OF THIS PARAGRAPH, AN INDIVIDUAL, ESTATE OR  TRUST
IS  DEEMED TO BE LOCATED IN THE STATE IF HIS, HER OR ITS MAILING ADDRESS
ON THE RECORDS OF THE INVESTMENT COMPANY IS IN  THE  STATE.  A  BUSINESS
ENTITY  IS  DEEMED TO BE LOCATED IN THE STATE IF ITS COMMERCIAL DOMICILE
IS LOCATED IN THE STATE.
  (B) FOR PURPOSES OF THIS  PARAGRAPH,  THE  TERM  "INVESTMENT  COMPANY"
MEANS  A  REGULATED INVESTMENT COMPANY, AS DEFINED IN SECTION 851 OF THE
INTERNAL REVENUE CODE, AND A PARTNERSHIP TO WHICH SECTION 7704(A) OF THE
INTERNAL REVENUE CODE APPLIES (BY VIRTUE OF SECTION 7704(C)(3)  OF  SUCH
CODE)  AND  THAT  MEETS THE REQUIREMENTS OF SECTION 851(B) OF SUCH CODE.
THE PRECEDING SENTENCE SHALL BE APPLIED TO THE TAXABLE YEAR FOR  FEDERAL
INCOME  TAX  PURPOSES OF THE BUSINESS ENTITY THAT IS ASSERTED TO CONSTI-

S. 6359--D                         69                         A. 8559--D

TUTE AN INVESTMENT COMPANY THAT ENDS WITHIN  THE  TAXABLE  YEAR  OF  THE
TAXPAYER.
  (C)  FOR PURPOSES OF THIS PARAGRAPH THE TERM "RECEIPTS FROM AN INVEST-
MENT COMPANY" INCLUDES AMOUNTS  RECEIVED  DIRECTLY  FROM  AN  INVESTMENT
COMPANY  AS  WELL  AS  AMOUNTS  RECEIVED  FROM  THE SHAREHOLDERS IN SUCH
INVESTMENT COMPANY, IN THEIR CAPACITY AS SUCH.
  (D) FOR PURPOSES OF THIS PARAGRAPH,  THE  TERM  "MANAGEMENT  SERVICES"
MEANS  THE  RENDERING  OF  INVESTMENT  ADVICE  TO AN INVESTMENT COMPANY,
MAKING DETERMINATIONS AS TO WHEN SALES AND PURCHASES OF  SECURITIES  ARE
TO  BE  MADE  ON  BEHALF  OF  AN  INVESTMENT  COMPANY, OR THE SELLING OR
PURCHASING OF SECURITIES CONSTITUTING ASSETS OF AN  INVESTMENT  COMPANY,
AND  RELATED  ACTIVITIES, BUT ONLY WHERE SUCH ACTIVITY OR ACTIVITIES ARE
PERFORMED PURSUANT TO A CONTRACT WITH  THE  INVESTMENT  COMPANY  ENTERED
INTO  PURSUANT TO SECTION 15(A) OF THE FEDERAL INVESTMENT COMPANY ACT OF
NINETEEN HUNDRED FORTY, AS AMENDED.
  (E) FOR PURPOSES OF THIS PARAGRAPH, THE TERM  "DISTRIBUTION  SERVICES"
MEANS  THE SERVICES OF ADVERTISING, SERVICING INVESTOR ACCOUNTS (INCLUD-
ING REDEMPTIONS), MARKETING SHARES OR SELLING SHARES  OF  AN  INVESTMENT
COMPANY,  BUT,  IN  THE CASE OF ADVERTISING, SERVICING INVESTOR ACCOUNTS
(INCLUDING REDEMPTIONS) OR MARKETING SHARES, ONLY WHERE SUCH SERVICE  IS
PERFORMED BY A PERSON WHO IS (OR WAS, IN THE CASE OF A CLOSED END COMPA-
NY)  ALSO  ENGAGED IN THE SERVICE OF SELLING SUCH SHARES. IN THE CASE OF
AN OPEN END COMPANY, SUCH SERVICE OF SELLING SHARES  MUST  BE  PERFORMED
PURSUANT  TO  A  CONTRACT  ENTERED INTO PURSUANT TO SECTION 15(B) OF THE
FEDERAL INVESTMENT COMPANY ACT OF NINETEEN HUNDRED FORTY, AS AMENDED.
  (F) FOR PURPOSES OF THIS PARAGRAPH, THE TERM "ADMINISTRATION SERVICES"
INCLUDES CLERICAL, ACCOUNTING, BOOKKEEPING,  DATA  PROCESSING,  INTERNAL
AUDITING, LEGAL AND TAX SERVICES PERFORMED FOR AN INVESTMENT COMPANY BUT
ONLY IF THE PROVIDER OF SUCH SERVICE OR SERVICES DURING THE TAXABLE YEAR
IN  WHICH  SUCH  SERVICE  OR  SERVICES ARE SOLD ALSO SELLS MANAGEMENT OR
DISTRIBUTION SERVICES, AS DEFINED HEREINABOVE, TO SUCH INVESTMENT COMPA-
NY.
  (E) FOR PURPOSES OF THIS SUBDIVISION, A TAXPAYER SHALL USE THE FOLLOW-
ING HIERARCHY TO DETERMINE THE COMMERCIAL DOMICILE OF A BUSINESS ENTITY,
BASED ON THE INFORMATION KNOWN TO THE TAXPAYER OR INFORMATION THAT WOULD
BE KNOWN UPON REASONABLE INQUIRY: (I) THE LOCATION OF THE TREASURY FUNC-
TION OF THE BUSINESS ENTITY; (II) THE SEAT OF MANAGEMENT AND CONTROL  OF
THE BUSINESS ENTITY; AND (III) THE BILLING ADDRESS OF THE BUSINESS ENTI-
TY  IN THE TAXPAYER'S RECORDS.  THE TAXPAYER MUST EXERCISE DUE DILIGENCE
BEFORE REJECTING A METHOD IN THIS HIERARCHY AND PROCEEDING TO  THE  NEXT
METHOD.
  (F)  FOR PURPOSES OF THIS SUBDIVISION, THE TERM "REGISTERED SECURITIES
BROKER OR DEALER" MEANS A BROKER OR DEALER REGISTERED  AS  SUCH  BY  THE
SECURITIES  AND  EXCHANGE COMMISSION OR A BROKER OR DEALER REGISTERED AS
SUCH BY THE COMMODITIES FUTURES TRADING COMMISSION, AND SHALL INCLUDE AN
OTC DERIVATIVES DEALER AS DEFINED UNDER REGULATIONS  OF  THE  SECURITIES
AND EXCHANGE COMMISSION AT TITLE 17, PART 240, SECTION 3B-12 OF THE CODE
OF FEDERAL REGULATIONS (17 CFR 240.3B-12).
  6.  RECEIPTS  FROM  RAILROAD  AND TRUCKING BUSINESS. RECEIPTS FROM THE
CONDUCT OF A RAILROAD BUSINESS (INCLUDING SURFACE RAILROAD,  WHETHER  OR
NOT OPERATED BY STEAM, SUBWAY RAILROAD, ELEVATED RAILROAD, PALACE CAR OR
SLEEPING CAR BUSINESS) OR A TRUCKING BUSINESS ARE INCLUDED IN THE NUMER-
ATOR  OF  THE  APPORTIONMENT FRACTION AS FOLLOWS. THE AMOUNT OF RECEIPTS
FROM THE CONDUCT OF A RAILROAD BUSINESS OR A TRUCKING BUSINESS  INCLUDED
IN  THE  NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY MULTI-
PLYING THE AMOUNT OF RECEIPTS FROM SUCH  BUSINESS  BY  A  FRACTION,  THE

S. 6359--D                         70                         A. 8559--D

NUMERATOR OF WHICH IS THE MILES IN SUCH BUSINESS WITHIN THE STATE DURING
THE PERIOD COVERED BY THE TAXPAYER'S REPORT AND THE DENOMINATOR OF WHICH
IS  THE  MILES IN SUCH BUSINESS WITHIN AND WITHOUT THE STATE DURING SUCH
PERIOD.   RECEIPTS FROM THE CONDUCT OF THE RAILROAD BUSINESS OR A TRUCK-
ING BUSINESS ARE INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT  FRAC-
TION.
  7.  RECEIPTS  FROM  AVIATION  SERVICES.  (A)  AIR  FREIGHT FORWARDING.
RECEIPTS OF A TAXPAYER FROM  THE  ACTIVITY  OF  AIR  FREIGHT  FORWARDING
ACTING  AS PRINCIPAL AND LIKE INDIRECT AIR CARRIER RECEIPTS ARISING FROM
SUCH ACTIVITY SHALL BE INCLUDED IN THE NUMERATOR  OF  THE  APPORTIONMENT
FRACTION  AS  FOLLOWS:  ONE HUNDRED PERCENT OF SUCH RECEIPTS IF BOTH THE
PICKUP AND DELIVERY ASSOCIATED WITH SUCH RECEIPTS ARE MADE IN THE  STATE
AND  FIFTY  PERCENT  OF  SUCH  RECEIPTS IF EITHER THE PICKUP OR DELIVERY
ASSOCIATED WITH SUCH RECEIPTS IS MADE IN THIS  STATE.    SUCH  RECEIPTS,
WHETHER THE PICKUP OR DELIVERY ASSOCIATED WITH THE RECEIPTS IS WITHIN OR
WITHOUT  THE  STATE,  SHALL BE INCLUDED IN THE DENOMINATOR OF THE APPOR-
TIONMENT FRACTION.
  (B) OTHER AVIATION SERVICES. (1)(A)  THE  PORTION  OF  RECEIPTS  OF  A
TAXPAYER  FROM AVIATION SERVICES (OTHER THAN SERVICES DESCRIBED IN PARA-
GRAPH (A) OF THIS SUBDIVISION) TO BE INCLUDED IN THE  NUMERATOR  OF  THE
APPORTIONMENT  FRACTION  SHALL BE DETERMINED BY MULTIPLYING ITS RECEIPTS
FROM SUCH AVIATION SERVICES BY A PERCENTAGE WHICH IS EQUAL TO THE ARITH-
METIC AVERAGE OF THE FOLLOWING THREE PERCENTAGES:
  (I) THE  PERCENTAGE  DETERMINED  BY  DIVIDING  SIXTY  PERCENT  OF  THE
AIRCRAFT  ARRIVALS  AND  DEPARTURES  WITHIN  THIS  STATE BY THE TAXPAYER
DURING THE PERIOD COVERED BY ITS REPORT BY THE TOTAL  AIRCRAFT  ARRIVALS
AND  DEPARTURES  WITHIN  AND  WITHOUT  THIS  STATE  DURING  SUCH PERIOD;
PROVIDED, HOWEVER, ARRIVALS AND DEPARTURES  SOLELY  FOR  MAINTENANCE  OR
REPAIR,  REFUELING  (WHERE  NO  DEBARKATION  OR  EMBARKATION  OF TRAFFIC
OCCURS), ARRIVALS AND DEPARTURES OF FERRY AND PERSONNEL TRAINING FLIGHTS
OR ARRIVALS AND DEPARTURES IN THE EVENT OF  EMERGENCY  SITUATIONS  SHALL
NOT  BE  INCLUDED  IN  COMPUTING  SUCH ARRIVAL AND DEPARTURE PERCENTAGE;
PROVIDED, FURTHER, THE COMMISSIONER MAY ALSO EXEMPT FROM SUCH PERCENTAGE
AIRCRAFT ARRIVALS AND DEPARTURES OF ALL  NON-REVENUE  FLIGHTS  INCLUDING
FLIGHTS  INVOLVING THE TRANSPORTATION OF OFFICERS OR EMPLOYEES RECEIVING
AIR TRANSPORTATION TO PERFORM MAINTENANCE OR REPAIR  SERVICES  OR  WHERE
SUCH  OFFICERS OR EMPLOYEES ARE TRANSPORTED IN CONJUNCTION WITH AN EMER-
GENCY SITUATION OR THE INVESTIGATION OF AN AIR DISASTER (OTHER THAN ON A
SCHEDULED FLIGHT); PROVIDED, HOWEVER, THAT ARRIVALS  AND  DEPARTURES  OF
FLIGHTS TRANSPORTING OFFICERS AND EMPLOYEES RECEIVING AIR TRANSPORTATION
FOR PURPOSES OTHER THAN SPECIFIED ABOVE (WITHOUT REGARD TO REMUNERATION)
SHALL BE INCLUDED IN COMPUTING SUCH ARRIVAL AND DEPARTURE PERCENTAGE;
  (II) THE PERCENTAGE DETERMINED BY DIVIDING SIXTY PERCENT OF THE REVEN-
UE  TONS  HANDLED  BY  THE TAXPAYER AT AIRPORTS WITHIN THIS STATE DURING
SUCH PERIOD BY THE TOTAL REVENUE TONS HANDLED BY IT AT  AIRPORTS  WITHIN
AND WITHOUT THIS STATE DURING SUCH PERIOD; AND
  (III)  THE  PERCENTAGE  DETERMINED  BY  DIVIDING  SIXTY PERCENT OF THE
TAXPAYER'S ORIGINATING REVENUE WITHIN THIS STATE FOR SUCH PERIOD BY  ITS
TOTAL ORIGINATING REVENUE WITHIN AND WITHOUT THIS STATE FOR SUCH PERIOD.
  (B)  AS  USED HEREIN THE TERM "AIRCRAFT ARRIVALS AND DEPARTURES" MEANS
THE NUMBER OF LANDINGS AND TAKEOFFS OF THE AIRCRAFT OF THE TAXPAYER  AND
THE NUMBER OF AIR PICKUPS AND DELIVERIES BY THE AIRCRAFT OF SUCH TAXPAY-
ER;  THE  TERM  "ORIGINATING REVENUE" MEANS REVENUE TO THE TAXPAYER FROM
THE TRANSPORTATION OR REVENUE  PASSENGERS  AND  REVENUE  PROPERTY  FIRST
RECEIVED  BY THE TAXPAYER EITHER AS ORIGINATING OR CONNECTING TRAFFIC AT
AIRPORTS; AND THE  TERM  "REVENUE  TONS  HANDLED"  BY  THE  TAXPAYER  AT

S. 6359--D                         71                         A. 8559--D

AIRPORTS  MEANS THE WEIGHT IN TONS OF REVENUE PASSENGERS (AT TWO HUNDRED
POUNDS PER PASSENGER) AND REVENUE CARGO FIRST RECEIVED EITHER AS  ORIGI-
NATING  OR  CONNECTING  TRAFFIC OR FINALLY DISCHARGED BY THE TAXPAYER AT
AIRPORTS;
  (2)  ALL  SUCH RECEIPTS OF A TAXPAYER FROM AVIATION SERVICES DESCRIBED
IN THIS PARAGRAPH ARE INCLUDED IN THE DENOMINATOR OF  THE  APPORTIONMENT
FRACTION.
  8. RECEIPTS FROM SALES OF ADVERTISING. (A) THE AMOUNT OF RECEIPTS FROM
SALES OF ADVERTISING IN NEWSPAPERS OR PERIODICALS INCLUDED IN THE NUMER-
ATOR  OF  THE  APPORTIONMENT  FRACTION  IS DETERMINED BY MULTIPLYING THE
TOTAL OF SUCH RECEIPTS BY A FRACTION, THE  NUMERATOR  OF  WHICH  IS  THE
NUMBER  OF  NEWSPAPERS  AND  PERIODICALS  DELIVERED TO POINTS WITHIN THE
STATE AND THE DENOMINATOR OF WHICH IS THE NUMBER OF NEWSPAPERS AND PERI-
ODICALS DELIVERED TO POINTS WITHIN AND WITHOUT THE STATE. THE  TOTAL  OF
SUCH  RECEIPTS FROM SALES OF ADVERTISING IN NEWSPAPERS OR PERIODICALS IS
INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRACTION.
  (B) THE AMOUNT OF RECEIPTS FROM SALES OF ADVERTISING ON TELEVISION  OR
RADIO  INCLUDED IN THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLY-
ING THE TOTAL OF SUCH RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH  IS
THE  NUMBER OF VIEWERS OR LISTENERS WITHIN THE STATE AND THE DENOMINATOR
OF WHICH IS THE NUMBER OF VIEWERS OR LISTENERS WITHIN  AND  WITHOUT  THE
STATE.  THE  TOTAL  OF  SUCH RECEIPTS FROM SALES OF ADVERTISING ON TELE-
VISION AND RADIO IS INCLUDED IN THE  DENOMINATOR  OF  THE  APPORTIONMENT
FRACTION.
  (C)  THE AMOUNT OF RECEIPTS FROM SALES OF ADVERTISING NOT DESCRIBED IN
PARAGRAPH (A) OR (B) OF THIS SUBDIVISION THAT IS FURNISHED, PROVIDED  OR
DELIVERED  TO,  OR ACCESSED BY THE VIEWER OR LISTENER THROUGH THE USE OF
WIRE, CABLE, FIBER-OPTIC, LASER, MICROWAVE,  RADIO  WAVE,  SATELLITE  OR
SIMILAR  SUCCESSOR  MEDIA  OR  ANY  COMBINATION THEREOF, INCLUDED IN THE
NUMERATOR OF THE APPORTIONMENT FRACTION IS DETERMINED BY MULTIPLYING THE
TOTAL OF SUCH RECEIPTS BY A FRACTION, THE  NUMERATOR  OF  WHICH  IS  THE
NUMBER  OF  VIEWERS OR LISTENERS WITHIN THE STATE AND THE DENOMINATOR OF
WHICH IS THE NUMBER OF VIEWERS  OR  LISTENERS  WITHIN  AND  WITHOUT  THE
STATE. THE TOTAL OF SUCH RECEIPTS FROM SALES OF ADVERTISING DESCRIBED IN
THIS PARAGRAPH IS INCLUDED IN THE DENOMINATOR OF THE APPORTIONMENT FRAC-
TION.
  9.  RECEIPTS FROM TRANSPORTATION OR TRANSMISSION OF GAS THROUGH PIPES.
RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION OF  GAS  THROUGH  PIPES
ARE  INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION AS FOLLOWS.
THE AMOUNT OF RECEIPTS FROM THE TRANSPORTATION OR  TRANSMISSION  OF  GAS
THROUGH PIPES INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION IS
DETERMINED  BY  MULTIPLYING THE TOTAL AMOUNT OF SUCH RECEIPTS BY A FRAC-
TION, THE NUMERATOR OF WHICH  IS  THE  TAXPAYER'S  TRANSPORTATION  UNITS
WITHIN  THE  STATE AND THE DENOMINATOR OF WHICH IS THE TAXPAYER'S TRANS-
PORTATION UNITS WITHIN AND WITHOUT THE STATE. A TRANSPORTATION  UNIT  IS
THE TRANSPORTATION OF ONE CUBIC FOOT OF GAS OVER A DISTANCE OF ONE MILE.
THE  TOTAL AMOUNT OF RECEIPTS FROM THE TRANSPORTATION OR TRANSMISSION OF
GAS THROUGH PIPES IS INCLUDED IN THE DENOMINATOR  OF  THE  APPORTIONMENT
FRACTION.
  10.  (A)  RECEIPTS  FROM  OTHER  SERVICES AND OTHER BUSINESS RECEIPTS.
RECEIPTS FROM SERVICES NOT ADDRESSED IN SUBDIVISIONS ONE THROUGH NINE OF
THIS SECTION AND OTHER BUSINESS RECEIPTS NOT ADDRESSED IN SUCH  SUBDIVI-
SIONS  SHALL  BE INCLUDED IN THE NUMERATOR OF THE APPORTIONMENT FRACTION
IF THE LOCATION OF THE CUSTOMER IS WITHIN THE STATE. SUCH RECEIPTS  FROM
CUSTOMERS  WITHIN  AND WITHOUT THE STATE ARE INCLUDED IN THE DENOMINATOR
OF THE APPORTIONMENT FRACTION. WHETHER THE RECEIPTS ARE INCLUDED IN  THE

S. 6359--D                         72                         A. 8559--D

NUMERATOR  OF  THE APPORTIONMENT FRACTION IS DETERMINED ACCORDING TO THE
HIERARCHY OF METHOD SET FORTH IN PARAGRAPH (B) OF THIS SUBDIVISION.  THE
TAXPAYER MUST EXERCISE DUE DILIGENCE UNDER EACH METHOD DESCRIBED IN SUCH
PARAGRAPH  (B)  BEFORE REJECTING IT AND PROCEEDING TO THE NEXT METHOD IN
THE HIERARCHY, AND MUST BASE ITS DETERMINATION ON INFORMATION  KNOWN  TO
THE  TAXPAYER  OR  INFORMATION  THAT WOULD BE KNOWN TO THE TAXPAYER UPON
REASONABLE INQUIRY.
  (B) HIERARCHY OF METHODS. (1) THE BENEFIT IS RECEIVED IN THIS STATE;
  (2) DELIVERY DESTINATION;
  (3) THE APPORTIONMENT FRACTION FOR  SUCH  RECEIPTS  WITHIN  THE  STATE
DETERMINED  PURSUANT TO THIS SUBDIVISION FOR THE PRECEDING TAXABLE YEAR;
OR
  (4) THE APPORTIONMENT FRACTION IN THE CURRENT TAXABLE YEAR  DETERMINED
PURSUANT  TO  THIS  SUBDIVISION  FOR  THOSE RECEIPTS THAT CAN BE SOURCED
USING THE HIERARCHY OF SOURCING METHODS IN SUBPARAGRAPHS ONE AND TWO  OF
THIS PARAGRAPH.
  11.  IF  IT  SHALL  APPEAR  THAT THE APPORTIONMENT FRACTION DETERMINED
PURSUANT TO THIS SECTION DOES NOT RESULT IN A PROPER REFLECTION  OF  THE
TAXPAYER'S BUSINESS INCOME OR CAPITAL WITHIN THE STATE, THE COMMISSIONER
IS AUTHORIZED IN HIS OR HER DISCRETION TO ADJUST IT, OR THE TAXPAYER MAY
REQUEST  THAT  THE  COMMISSIONER ADJUST IT, BY (A) EXCLUDING ONE OR MORE
ITEMS IN SUCH DETERMINATION, (B) INCLUDING ONE OR MORE  OTHER  ITEMS  IN
SUCH  DETERMINATION, OR (C) ANY OTHER SIMILAR OR DIFFERENT METHOD CALCU-
LATED TO EFFECT A FAIR AND PROPER APPORTIONMENT OF THE  BUSINESS  INCOME
AND  CAPITAL  REASONABLY ATTRIBUTED TO THE STATE.  THE PARTY SEEKING THE
ADJUSTMENT SHALL BEAR THE BURDEN OF PROOF TO DEMONSTRATE THAT THE APPOR-
TIONMENT FRACTION DETERMINED PURSUANT TO THIS SECTION DOES NOT RESULT IN
A PROPER REFLECTION OF THE TAXPAYER'S BUSINESS INCOME OR CAPITAL  WITHIN
THE STATE AND THAT THE PROPOSED ADJUSTMENT IS APPROPRIATE.
  S  17. The tax law is amended by adding a new section 210-B to read as
follows:
  S 210-B. CREDITS. 1. INVESTMENT TAX CREDIT  (ITC).    (A)  A  TAXPAYER
SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS HEREINAFTER PROVIDED,
AGAINST THE TAX IMPOSED BY THIS ARTICLE. THE AMOUNT OF THE CREDIT  SHALL
BE  THE  PERCENT PROVIDED FOR HEREINBELOW OF THE INVESTMENT CREDIT BASE.
THE INVESTMENT CREDIT BASE IS THE COST OR OTHER BASIS FOR FEDERAL INCOME
TAX PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE  PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN
PARAGRAPH  (B)  OF THIS SUBDIVISION, LESS THE AMOUNT OF THE NONQUALIFIED
NONRECOURSE FINANCING WITH RESPECT TO SUCH PROPERTY TO THE  EXTENT  SUCH
FINANCING  WOULD  BE EXCLUDIBLE FROM THE CREDIT BASE PURSUANT TO SECTION
46(C)(8) OF THE INTERNAL REVENUE CODE (TREATING SUCH PROPERTY AS SECTION
THIRTY-EIGHT PROPERTY IRRESPECTIVE OF WHETHER OR NOT IT IN FACT  CONSTI-
TUTES SECTION THIRTY-EIGHT PROPERTY). IF, AT THE CLOSE OF A TAXABLE YEAR
FOLLOWING THE TAXABLE YEAR IN WHICH SUCH PROPERTY WAS PLACED IN SERVICE,
THERE  IS  A  NET  DECREASE  IN  THE  AMOUNT OF NONQUALIFIED NONRECOURSE
FINANCING WITH RESPECT TO SUCH PROPERTY,  SUCH  NET  DECREASE  SHALL  BE
TREATED  AS  IF IT WERE THE COST OR OTHER BASIS OF PROPERTY DESCRIBED IN
PARAGRAPH (B) OF THIS SUBDIVISION ACQUIRED,  CONSTRUCTED,  RECONSTRUCTED
OR ERECTED DURING THE YEAR OF THE DECREASE IN THE AMOUNT OF NONQUALIFIED
NONRECOURSE FINANCING. IN THE CASE OF A COMBINED REPORT THE TERM INVEST-
MENT  CREDIT  BASE  SHALL  MEAN THE SUM OF THE INVESTMENT CREDIT BASE OF
EACH CORPORATION INCLUDED ON SUCH REPORT. THE PERCENTAGE TO BE  USED  TO
COMPUTE  THE  CREDIT  ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE FIVE
PERCENT WITH RESPECT TO THE FIRST THREE HUNDRED FIFTY MILLION DOLLARS OF
THE INVESTMENT CREDIT BASE, AND FOUR PERCENT WITH RESPECT TO THE INVEST-

S. 6359--D                         73                         A. 8559--D

MENT CREDIT BASE IN EXCESS  OF  THREE  HUNDRED  FIFTY  MILLION  DOLLARS,
EXCEPT  THAT  IN  THE  CASE  OF RESEARCH AND DEVELOPMENT PROPERTY AT THE
OPTION OF THE TAXPAYER THE APPLICABLE PERCENTAGE SHALL BE NINE.
  (B)  (I) A CREDIT SHALL BE ALLOWED UNDER THIS SUBDIVISION WITH RESPECT
TO TANGIBLE PERSONAL PROPERTY AND  OTHER  TANGIBLE  PROPERTY,  INCLUDING
BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH ARE: DEPRECIABLE
PURSUANT  TO  SECTION  ONE  HUNDRED  SIXTY-SEVEN OF THE INTERNAL REVENUE
CODE, HAVE A USEFUL LIFE OF FOUR YEARS OR MORE, ARE ACQUIRED BY PURCHASE
AS DEFINED IN SECTION ONE  HUNDRED  SEVENTY-NINE  (D)  OF  THE  INTERNAL
REVENUE CODE, HAVE A SITUS IN THIS STATE AND ARE (A) PRINCIPALLY USED BY
THE  TAXPAYER  IN  THE PRODUCTION OF GOODS BY MANUFACTURING, PROCESSING,
ASSEMBLING, REFINING, MINING, EXTRACTING, FARMING,  AGRICULTURE,  HORTI-
CULTURE, FLORICULTURE, VITICULTURE OR COMMERCIAL FISHING, (B) INDUSTRIAL
WASTE  TREATMENT FACILITIES OR AIR POLLUTION CONTROL FACILITIES, USED IN
THE TAXPAYER'S TRADE OR BUSINESS, (C) RESEARCH AND DEVELOPMENT PROPERTY,
OR (D) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE  TAXPAYER'S  TRADE
OR  BUSINESS  AS  A  BROKER OR DEALER IN CONNECTION WITH THE PURCHASE OR
SALE (WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE  ISSUANCE,  ENTERING
INTO,  ASSUMPTION,  OFFSET,  ASSIGNMENT,  TERMINATION,  OR  TRANSFER) OF
STOCKS, BONDS OR OTHER SECURITIES AS DEFINED  IN  SECTION  FOUR  HUNDRED
SEVENTY-FIVE  (C)(2)  OF THE INTERNAL REVENUE CODE, OR OF COMMODITIES AS
DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
CODE, (E) PRINCIPALLY USED IN THE  ORDINARY  COURSE  OF  THE  TAXPAYER'S
TRADE  OR BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES FOR A REGU-
LATED INVESTMENT COMPANY AS DEFINED IN SECTION EIGHT  HUNDRED  FIFTY-ONE
OF THE INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT OR LOAN ORIG-
INATION  SERVICES  TO  CUSTOMERS IN CONNECTION WITH THE PURCHASE OR SALE
(WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING  INTO,
ASSUMPTION,  OFFSET, ASSIGNMENT, TERMINATION, OR TRANSFER) OF SECURITIES
AS DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (C)(2) OF  THE  INTERNAL
REVENUE  CODE, (F) ORIGINALLY USED IN THE ORDINARY COURSE OF THE TAXPAY-
ER'S BUSINESS  AS  AN  EXCHANGE  REGISTERED  AS  A  NATIONAL  SECURITIES
EXCHANGE  WITHIN THE MEANING OF SECTIONS 3(A)(1) AND 6(A) OF THE SECURI-
TIES EXCHANGE ACT OF 1934 OR A BOARD OF  TRADE  AS  DEFINED  IN  SECTION
1410(A)(1) OF THE NEW YORK NOT-FOR-PROFIT CORPORATION LAW OR AS AN ENTI-
TY  THAT  IS  WHOLLY  OWNED  BY  ONE  OR  MORE  SUCH NATIONAL SECURITIES
EXCHANGES OR BOARDS OF TRADE AND THAT PROVIDES AUTOMATION  OR  TECHNICAL
SERVICES THERETO, OR (G) PRINCIPALLY USED AS A QUALIFIED FILM PRODUCTION
FACILITY  INCLUDING  QUALIFIED FILM PRODUCTION FACILITIES HAVING A SITUS
IN AN EMPIRE ZONE DESIGNATED AS SUCH PURSUANT TO ARTICLE  EIGHTEEN-B  OF
THE GENERAL MUNICIPAL LAW, WHERE THE TAXPAYER IS PROVIDING THREE OR MORE
SERVICES  TO  ANY  QUALIFIED FILM PRODUCTION COMPANY USING THE FACILITY,
INCLUDING SUCH SERVICES AS A STUDIO LIGHTING  GRID,  LIGHTING  AND  GRIP
EQUIPMENT,  MULTI-LINE  PHONE  SERVICE, BROADBAND INFORMATION TECHNOLOGY
ACCESS, INDUSTRIAL SCALE ELECTRICAL CAPACITY,  FOOD  SERVICES,  SECURITY
SERVICES,  AND  HEATING,  VENTILATION  AND  AIR  CONDITIONING. PROVIDED,
HOWEVER, A TAXPAYER SHALL NOT BE ALLOWED THE CREDIT PROVIDED BY  CLAUSES
(D),  (E) AND (F) OF THIS SUBPARAGRAPH UNLESS (I) EIGHTY PERCENT OR MORE
OF THE EMPLOYEES PERFORMING THE  ADMINISTRATIVE  AND  SUPPORT  FUNCTIONS
RESULTING  FROM  OR RELATED TO THE QUALIFYING USES OF SUCH EQUIPMENT ARE
LOCATED IN THIS STATE OR (II)  THE  AVERAGE  NUMBER  OF  EMPLOYEES  THAT
PERFORM  THE  ADMINISTRATIVE  AND  SUPPORT  FUNCTIONS  RESULTING FROM OR
RELATED TO THE QUALIFYING USES OF SUCH EQUIPMENT AND ARE LOCATED IN THIS
STATE DURING THE TAXABLE YEAR FOR WHICH THE CREDIT IS CLAIMED  IS  EQUAL
TO  OR GREATER THAN NINETY-FIVE PERCENT OF THE AVERAGE NUMBER OF EMPLOY-
EES THAT PERFORM THESE FUNCTIONS AND ARE LOCATED IN  THIS  STATE  DURING

S. 6359--D                         74                         A. 8559--D

THE THIRTY-SIX MONTHS IMMEDIATELY PRECEDING THE YEAR FOR WHICH THE CRED-
IT  IS  CLAIMED,  OR (III) THE NUMBER OF EMPLOYEES LOCATED IN THIS STATE
DURING THE TAXABLE YEAR FOR WHICH THE CREDIT IS CLAIMED IS EQUAL  TO  OR
GREATER  THAN  NINETY PERCENT OF THE NUMBER OF EMPLOYEES LOCATED IN THIS
STATE ON DECEMBER THIRTY-FIRST, NINETEEN HUNDRED NINETY-EIGHT OR, IF THE
TAXPAYER  WAS  NOT  A  CALENDAR  YEAR  TAXPAYER  IN   NINETEEN   HUNDRED
NINETY-EIGHT, THE LAST DAY OF ITS FIRST TAXABLE YEAR ENDING AFTER DECEM-
BER THIRTY-FIRST, NINETEEN HUNDRED NINETY-EIGHT. IF THE TAXPAYER BECOMES
SUBJECT  TO  TAX IN THIS STATE AFTER THE TAXABLE YEAR BEGINNING IN NINE-
TEEN HUNDRED NINETY-EIGHT, THEN THE TAXPAYER IS NOT REQUIRED TO  SATISFY
THE  EMPLOYMENT TEST PROVIDED IN THE PRECEDING SENTENCE OF THIS SUBPARA-
GRAPH FOR ITS FIRST TAXABLE YEAR. FOR PURPOSES OF CLAUSE (III)  OF  THIS
SUBPARAGRAPH  THE EMPLOYMENT TEST WILL BE BASED ON THE NUMBER OF EMPLOY-
EES LOCATED IN THIS STATE ON THE LAST DAY OF THE FIRST TAXABLE YEAR  THE
TAXPAYER  IS  SUBJECT TO TAX IN THIS STATE.  IF THE USES OF THE PROPERTY
MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY IS PRINCIPALLY USED
IN QUALIFYING USES, THEN EITHER EACH AFFILIATE USING THE  PROPERTY  MUST
SATISFY  THIS  EMPLOYMENT TEST OR THIS EMPLOYMENT TEST MUST BE SATISFIED
THROUGH THE AGGREGATION OF THE EMPLOYEES OF THE TAXPAYER, ITS AFFILIATED
REGULATED BROKER, DEALER, AND REGISTERED INVESTMENT  ADVISER  USING  THE
PROPERTY.   FOR PURPOSES OF THIS SUBDIVISION, THE TERM "GOODS" SHALL NOT
INCLUDE ELECTRICITY.
  (II) FOR PURPOSES OF THIS PARAGRAPH, THE FOLLOWING  DEFINITIONS  SHALL
APPLY--
  (A) MANUFACTURING SHALL MEAN THE PROCESS OF WORKING RAW MATERIALS INTO
WARES  SUITABLE  FOR  USE  OR WHICH GIVES NEW SHAPES, NEW QUALITY OR NEW
COMBINATIONS TO MATTER WHICH ALREADY HAS GONE  THROUGH  SOME  ARTIFICIAL
PROCESS  BY  THE  USE  OF MACHINERY, TOOLS, APPLIANCES AND OTHER SIMILAR
EQUIPMENT. PROPERTY USED  IN  THE  PRODUCTION  OF  GOODS  SHALL  INCLUDE
MACHINERY,  EQUIPMENT  OR  OTHER  TANGIBLE PROPERTY WHICH IS PRINCIPALLY
USED IN THE REPAIR AND SERVICE OF OTHER MACHINERY,  EQUIPMENT  OR  OTHER
TANGIBLE  PROPERTY USED PRINCIPALLY IN THE PRODUCTION OF GOODS AND SHALL
INCLUDE ALL FACILITIES USED IN THE PRODUCTION OPERATION, INCLUDING STOR-
AGE OF MATERIAL TO BE USED IN PRODUCTION AND OF THE  PRODUCTS  THAT  ARE
PRODUCED.
  (B)  RESEARCH  AND  DEVELOPMENT  PROPERTY SHALL MEAN PROPERTY WHICH IS
USED FOR PURPOSES OF RESEARCH AND DEVELOPMENT  IN  THE  EXPERIMENTAL  OR
LABORATORY SENSE. SUCH PURPOSES SHALL NOT BE DEEMED TO INCLUDE THE ORDI-
NARY TESTING OR INSPECTION OF MATERIALS OR PRODUCTS FOR QUALITY CONTROL,
EFFICIENCY  SURVEYS,  MANAGEMENT STUDIES, CONSUMER SURVEYS, ADVERTISING,
PROMOTIONS, OR RESEARCH IN CONNECTION WITH LITERARY, HISTORICAL OR SIMI-
LAR PROJECTS.
  (C) INDUSTRIAL WASTE TREATMENT FACILITIES SHALL MEAN PROPERTY  CONSTI-
TUTING  FACILITIES FOR THE TREATMENT, NEUTRALIZATION OR STABILIZATION OF
INDUSTRIAL WASTE AND OTHER WASTES (AS THE TERMS "INDUSTRIAL  WASTE"  AND
"OTHER  WASTES"  ARE  DEFINED  IN  SECTION  17-0105 OF THE ENVIRONMENTAL
CONSERVATION LAW) FROM A POINT IMMEDIATELY PRECEDING THE POINT  OF  SUCH
TREATMENT,  NEUTRALIZATION  OR  STABILIZATION  TO THE POINT OF DISPOSAL,
INCLUDING THE NECESSARY PUMPING AND TRANSMITTING FACILITIES, BUT EXCLUD-
ING SUCH FACILITIES INSTALLED FOR THE PRIMARY PURPOSE OF SALVAGING MATE-
RIALS WHICH ARE USABLE IN THE MANUFACTURING PROCESS OR ARE MARKETABLE.
  (D) AIR POLLUTION CONTROL FACILITIES SHALL MEAN PROPERTY  CONSTITUTING
FACILITIES WHICH REMOVE, REDUCE, OR RENDER LESS NOXIOUS AIR CONTAMINANTS
EMITTED FROM AN AIR CONTAMINATION SOURCE (AS THE TERMS "AIR CONTAMINANT"
AND  "AIR  CONTAMINATION  SOURCE"  ARE DEFINED IN SECTION 19-0107 OF THE
ENVIRONMENTAL CONSERVATION LAW) FROM A POINT IMMEDIATELY  PRECEDING  THE

S. 6359--D                         75                         A. 8559--D

POINT  OF SUCH REMOVAL, REDUCTION OR RENDERING TO THE POINT OF DISCHARGE
OF AIR, MEETING EMISSION STANDARDS AS ESTABLISHED BY THE  DEPARTMENT  OF
ENVIRONMENTAL  CONSERVATION, BUT EXCLUDING SUCH FACILITIES INSTALLED FOR
THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH ARE USABLE IN THE MANU-
FACTURING PROCESS OR ARE MARKETABLE AND EXCLUDING THOSE FACILITIES WHICH
RELY  FOR  THEIR EFFICACY ON DILUTION, DISPERSION OR ASSIMILATION OF AIR
CONTAMINANTS IN THE AMBIENT AIR AFTER EMISSION. SUCH TERM SHALL  FURTHER
INCLUDE FLUE GAS DESULFURIZATION EQUIPMENT AND ATTENDANT SLUDGE DISPOSAL
FACILITIES,  FLUIDIZED  BED BOILERS, PRECOMBUSTION COAL CLEANING FACILI-
TIES OR OTHER FACILITIES THAT CONFORM WITH THIS  SUBDIVISION  AND  WHICH
COMPLY  WITH THE PROVISIONS OF THE STATE ACID DEPOSITION CONTROL ACT SET
FORTH IN TITLE NINE OF ARTICLE NINETEEN OF THE  ENVIRONMENTAL  CONSERVA-
TION LAW.
  (E) THE TERMS "QUALIFIED FILM PRODUCTION FACILITY" AND "QUALIFIED FILM
PRODUCTION   COMPANY"   SHALL  HAVE  THE  SAME  MEANING  AS  IN  SECTION
TWENTY-FOUR OF THIS CHAPTER.
  (III) HOWEVER, SUCH CREDIT SHALL BE ALLOWED WITH RESPECT TO INDUSTRIAL
WASTE TREATMENT FACILITIES AND AIR POLLUTION CONTROL FACILITIES ONLY  ON
CONDITION  THAT SUCH FACILITIES HAVE BEEN CERTIFIED BY THE STATE COMMIS-
SIONER OF ENVIRONMENTAL CONSERVATION OR HIS  DESIGNATED  REPRESENTATIVE,
PURSUANT  TO  SUBDIVISION  ONE  OF SECTION 17-0707 OR SUBDIVISION ONE OF
SECTION 19-0309 OF THE ENVIRONMENTAL CONSERVATION LAW, AS COMPLYING WITH
APPLICABLE PROVISIONS OF THE ENVIRONMENTAL CONSERVATION LAW, THE  PUBLIC
HEALTH  LAW,  THE  STATE  SANITARY  CODE  AND CODES, RULES, REGULATIONS,
PERMITS OR ORDERS ISSUED PURSUANT THERETO.
  (C) A TAXPAYER SHALL NOT BE ALLOWED A CREDIT  UNDER  THIS  SUBDIVISION
WITH  RESPECT TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS  OF  BUILDINGS,  WHICH  IT
LEASES TO ANY OTHER PERSON OR CORPORATION EXCEPT WHERE A TAXPAYER LEASES
PROPERTY  TO  AN AFFILIATED REGULATED BROKER, DEALER, REGISTERED INVEST-
MENT ADVISER, NATIONAL SECURITIES EXCHANGE OR BOARD OF TRADE  (OR  OTHER
ENTITY  DESCRIBED  IN CLAUSE (F) OF SUBPARAGRAPH (I) OF PARAGRAPH (B) OF
THIS SUBDIVISION) THAT USES SUCH PROPERTY IN ACCORDANCE WITH CLAUSE (D),
(E) OR (F) OF SUBPARAGRAPH (I) OF PARAGRAPH  (B)  OF  THIS  SUBDIVISION.
FOR  PURPOSES  OF  THE  PRECEDING SENTENCE, ANY CONTRACT OR AGREEMENT TO
LEASE OR RENT OR FOR A LICENSE TO USE SUCH PROPERTY SHALL BE  CONSIDERED
A  LEASE.  PROVIDED, HOWEVER, IN DETERMINING WHETHER A TAXPAYER SHALL BE
ALLOWED A CREDIT UNDER THIS SUBDIVISION WITH RESPECT TO  SUCH  PROPERTY,
ANY  ELECTION  MADE  WITH  RESPECT  TO  SUCH  PROPERTY  PURSUANT  TO THE
PROVISIONS OF PARAGRAPH EIGHT OF SUBSECTION (F) OF SECTION  ONE  HUNDRED
SIXTY-EIGHT  OF  THE  INTERNAL  REVENUE  CODE,  AS SUCH PARAGRAPH WAS IN
EFFECT FOR AGREEMENTS ENTERED INTO  PRIOR  TO  JANUARY  FIRST,  NINETEEN
HUNDRED  EIGHTY-FOUR,  SHALL  BE DISREGARDED. FOR PURPOSES OF THIS PARA-
GRAPH, THE USE OF A QUALIFIED FILM PRODUCTION FACILITY  BY  A  QUALIFIED
FILM PRODUCTION COMPANY SHALL NOT BE CONSIDERED A LEASE OF SUCH FACILITY
TO SUCH COMPANY.
  (D) EXCEPT AS OTHERWISE PROVIDED IN THIS PARAGRAPH, THE CREDIT ALLOWED
UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE
FOR SUCH YEAR TO LESS THAN THE HIGHER OF THE AMOUNTS PRESCRIBED IN PARA-
GRAPHS  (C)  AND (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER, IF THE
AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR
REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT ALLOWED FOR A TAXA-
BLE YEAR COMMENCING PRIOR TO JANUARY FIRST, NINETEEN HUNDRED EIGHTY-SEV-
EN  AND  NOT  DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE
FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX  FOR
SUCH  YEAR OR YEARS BUT IN NO EVENT SHALL SUCH CREDIT BE CARRIED OVER TO

S. 6359--D                         76                         A. 8559--D

TAXABLE YEARS COMMENCING ON OR AFTER JANUARY FIRST,  TWO  THOUSAND  TWO,
AND  ANY  AMOUNT  OF  CREDIT ALLOWED FOR A TAXABLE YEAR COMMENCING ON OR
AFTER JANUARY FIRST, NINETEEN HUNDRED EIGHTY-SEVEN AND NOT DEDUCTIBLE IN
SUCH  YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS NEXT FOLLOW-
ING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE  TAXPAYER'S  TAX  FOR
SUCH  YEAR  OR YEARS. IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER WHICH
QUALIFIES AS A NEW BUSINESS UNDER PARAGRAPH (J) OF THIS SUBDIVISION  MAY
ELECT  TO TREAT THE AMOUNT OF SUCH CARRYOVER AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION TEN
HUNDRED EIGHTY-SIX OF THIS CHAPTER, PROVIDED, HOWEVER, THE PROVISIONS OF
SUBSECTION (C) OF SECTION  TEN  HUNDRED  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (E)  (1)  WITH  RESPECT  TO  PROPERTY WHICH IS DEPRECIABLE PURSUANT TO
SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE BUT IS  NOT
SUBJECT  TO  THE  PROVISIONS  OF SECTION ONE HUNDRED SIXTY-EIGHT OF SUCH
CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO
THE  END  OF  THE  TAXABLE  YEAR IN WHICH THE CREDIT IS TO BE TAKEN, THE
AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF THE CREDIT PROVIDED FOR IN
THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE MONTHS  OF  QUALI-
FIED  USE BEAR TO THE MONTHS OF USEFUL LIFE. IF PROPERTY ON WHICH CREDIT
HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO
THE  END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND
THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED  BACK  IN  THE  YEAR  OF
DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEAS-
ES  TO  BE  IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR MORE
THAN TWELVE CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE
CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT  OF  CREDIT  ALLOWED
FOR ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY
THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS OF USEFUL
LIFE.  FOR  PURPOSES OF THIS SUBPARAGRAPH, USEFUL LIFE OF PROPERTY SHALL
BE THE SAME AS THE TAXPAYER USES FOR DEPRECIATION PURPOSES WHEN  COMPUT-
ING HIS FEDERAL INCOME TAX LIABILITY.
  (2) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH FOUR OF
THIS  PARAGRAPH APPLIES, WITH RESPECT TO THREE-YEAR PROPERTY, AS DEFINED
IN SUBSECTION (E) OF SECTION ONE HUNDRED  SIXTY-EIGHT  OF  THE  INTERNAL
REVENUE  CODE,  WHICH  IS  DISPOSED  OF OR CEASES TO BE IN QUALIFIED USE
PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF  THE  CREDIT  PROVIDED
FOR  IN  THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE MONTHS OF
QUALIFIED USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH CREDIT  HAS  BEEN
TAKEN  IS  DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END
OF THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN THE CREDIT  TAKEN  AND  THE
CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSI-
TION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY
MULTIPLYING  THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS OF QUALI-
FIED USE BEAR TO THIRTY-SIX.
  (3) EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH FOUR OF
THIS  PARAGRAPH  APPLIES,  WITH  RESPECT  TO  PROPERTY  SUBJECT  TO  THE
PROVISIONS  OF  SECTION  ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE
CODE, OTHER THAN THREE-YEAR PROPERTY AS DEFINED  IN  SUBSECTION  (E)  OF
SUCH  SECTION  ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO
BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO SIXTY. IF  PROPERTY  ON  WHICH
CREDIT  HAS  BEEN  TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE

S. 6359--D                         77                         A. 8559--D

PRIOR TO THE END OF SIXTY MONTHS,  THE  DIFFERENCE  BETWEEN  THE  CREDIT
TAKEN  AND  THE  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE
YEAR OF DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL  USE  SHALL
BE  DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH THE
MONTHS OF QUALIFIED USE BEAR TO SIXTY.
  (4) WITH  RESPECT  TO  ANY  PROPERTY  TO  WHICH  SECTION  ONE  HUNDRED
SIXTY-EIGHT OF THE INTERNAL REVENUE CODE APPLIES, WHICH IS A BUILDING OR
A  STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES
TO BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS  THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
OF  OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD OVER
WHICH THE TAXPAYER CHOOSES TO DEDUCT THE  PROPERTY  UNDER  THE  INTERNAL
REVENUE  CODE,  THE  DIFFERENCE  BETWEEN THE CREDIT TAKEN AND THE CREDIT
ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE  YEAR  OF  DISPOSITION.
PROVIDED,  HOWEVER,  IF  SUCH PROPERTY IS DISPOSED OF OR CEASES TO BE IN
QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR  MORE  THAN  TWELVE
CONSECUTIVE  YEARS,  IT SHALL NOT BE NECESSARY TO ADD BACK THE CREDIT AS
PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED  FOR  ACTUAL
USE  SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE  TOTAL  NUMBER  OF  MONTHS
OVER  WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER-
NAL REVENUE CODE.
  (5) FOR PURPOSES OF THIS PARAGRAPH, PROPERTY (I) WHICH IS DESCRIBED IN
SUBPARAGRAPH TWO, THREE OR FOUR OF THIS PARAGRAPH,  AND  (II)  WHICH  IS
SUBJECT  TO SUBPARAGRAPH ELEVEN OF PARAGRAPH (A) OF SUBDIVISION NINE AND
SUBPARAGRAPH TEN OF PARAGRAPH (B) OF SUBDIVISION  NINE  OF  SECTION  TWO
HUNDRED  EIGHT  OF  THIS  CHAPTER, SHALL BE TREATED AS PROPERTY WHICH IS
DEPRECIABLE PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE  INTERNAL
REVENUE  CODE  BUT  IS NOT SUBJECT TO SECTION ONE HUNDRED SIXTY-EIGHT OF
SUCH CODE.
  (6) FOR PURPOSES OF THIS PARAGRAPH, WHERE A  CREDIT  IS  ALLOWED  WITH
RESPECT  TO  AN AIR POLLUTION CONTROL FACILITY ON THE BASIS OF A CERTIF-
ICATE OF COMPLIANCE ISSUED PURSUANT TO  THE  ENVIRONMENTAL  CONSERVATION
LAW  AND  THE  CERTIFICATE  IS  REVOKED PURSUANT TO SUBDIVISION THREE OF
SECTION 19-0309 OF THE ENVIRONMENTAL CONSERVATION LAW,  SUCH  REVOCATION
SHALL  CONSTITUTE  A DISPOSAL OR CESSATION OF QUALIFIED USE, UNLESS SUCH
FACILITY IS DESCRIBED IN CLAUSE (A) OR (C) OF SUBPARAGRAPH (II) OF PARA-
GRAPH (B) OF THIS SUBDIVISION. ALSO FOR PURPOSES OF  THIS  SUBPARAGRAPH,
THE  USE  OF  AN  AIR  POLLUTION CONTROL FACILITY OR AN INDUSTRIAL WASTE
TREATMENT FACILITY FOR THE PRIMARY PURPOSE OF SALVAGING MATERIALS  WHICH
ARE  USABLE IN THE MANUFACTURING PROCESS OR ARE MARKETABLE SHALL CONSTI-
TUTE A CESSATION OF QUALIFIED USE, UNLESS SUCH FACILITY IS DESCRIBED  IN
CLAUSE (A) OR (C) OF SUBPARAGRAPH (II) OF PARAGRAPH (B) OF THIS SUBDIVI-
SION.
  (7)  FOR  TAXABLE YEARS COMMENCING ON OR AFTER JANUARY FIRST, NINETEEN
HUNDRED EIGHTY-SEVEN, THE AMOUNT REQUIRED TO BE ADDED BACK  PURSUANT  TO
THIS  PARAGRAPH  SHALL BE AUGMENTED BY AN AMOUNT EQUAL TO THE PRODUCT OF
SUCH AMOUNT AND THE UNDERPAYMENT RATE OF  INTEREST  (WITHOUT  REGARD  TO
COMPOUNDING),  SET  BY THE COMMISSIONER OF TAXATION AND FINANCE PURSUANT
TO SUBSECTION (E) OF SECTION ONE THOUSAND NINETY-SIX, IN EFFECT  ON  THE
LAST DAY OF THE TAXABLE YEAR.

S. 6359--D                         78                         A. 8559--D

  (8)  IF,  AS OF THE CLOSE OF THE TAXABLE YEAR, THERE IS A NET INCREASE
WITH RESPECT TO THE TAXPAYER IN THE AMOUNT OF  NONQUALIFIED  NONRECOURSE
FINANCING  (WITHIN  THE  MEANING  OF  SECTION  46(C) (8) OF THE INTERNAL
REVENUE CODE) WITH RESPECT TO ANY PROPERTY WITH  RESPECT  TO  WHICH  THE
CREDIT UNDER THIS SUBDIVISION WAS LIMITED BASED ON ATTRIBUTABLE NONQUAL-
IFIED  NONRECOURSE  FINANCING,  THEN  AN AMOUNT EQUAL TO THE DECREASE IN
SUCH CREDIT WHICH WOULD HAVE RESULTED FROM REDUCING, BY  THE  AMOUNT  OF
SUCH  NET  INCREASE,  THE  COST  OR  OTHER BASIS TAKEN INTO ACCOUNT WITH
RESPECT TO SUCH PROPERTY MUST BE ADDED BACK IN SUCH  TAXABLE  YEAR.  THE
AMOUNT  OF  NONQUALIFIED  NONRECOURSE  FINANCING SHALL NOT BE TREATED AS
INCREASED BY REASON OF A TRANSFER OF  (OR  AGREEMENT  TO  TRANSFER)  ANY
EVIDENCE  OF  AN INDEBTEDNESS IF SUCH TRANSFER OCCURS (OR SUCH AGREEMENT
IS ENTERED INTO) MORE THAN ONE YEAR AFTER THE DATE SUCH INDEBTEDNESS WAS
INCURRED.
  (9) (A) WHERE PROPERTY WITH RESPECT TO WHICH CREDIT HAS  BEEN  ALLOWED
UNDER  THIS  SUBDIVISION IS DISPOSED OF BY TRANSFER TO THE TAXPAYER IN A
QUALIFIED TRANSACTION, AND SUCH DISPOSITION REQUIRES, PURSUANT  TO  THIS
PARAGRAPH  (WITHOUT  REGARD  TO  THIS  SUBPARAGRAPH) THAT SUCH CREDIT BE
DECREASED (WHERE THE DISPOSITION OCCURS IN THE TAXABLE YEAR IN WHICH THE
PROPERTY IS PLACED IN SERVICE BY THE TRANSFEROR) OR THAT  A  PORTION  OF
SUCH  CREDIT  BE ADDED BACK BY THE TRANSFEROR, THEN CLAUSE (B) OR CLAUSE
(C) OF THIS SUBPARAGRAPH SHALL APPLY.
  (B) IF THE TAXPAYER AND THE TRANSFEROR JOINTLY ELECT, AT SUCH TIME AND
IN SUCH MANNER AS THE COMMISSIONER MAY PRESCRIBE,  THE  FOLLOWING  SHALL
APPLY:
  (I)  SUCH  PORTION  SHALL  NOT  BE  REQUIRED  TO  BE ADDED BACK BY THE
TRANSFEROR,
  (II) THE AMOUNT OF UNUSED CREDIT SHALL NOT BE DEDUCTED FROM TAX OTHER-
WISE DUE BY THE TRANSFEROR ON ANY RETURN (INCLUDING AN AMENDED  RETURN),
AND  SHALL  NOT  BE  SO  DEDUCTED AS PART OF ANY AUDIT ADJUSTMENT OR ANY
OTHER DETERMINATION, AND
  (III) THE AMOUNT OF UNUSED CREDIT SHALL BE TREATED  AS  AN  AMOUNT  OF
CREDIT  OF  THE  TAXPAYER  UNDER THIS SUBDIVISION CARRIED FORWARD BY THE
TAXPAYER TO ITS TAXABLE YEAR IN WHICH SUCH TRANSFER OCCURRED, AS IF  THE
CREDIT  ALLOWED  TO  THE  TRANSFEROR  WITH  RESPECT TO SUCH PROPERTY HAD
ORIGINALLY BEEN ALLOWED TO THE TAXPAYER BOTH AS TO AMOUNT AND FIRST DATE
OF QUALIFIED USE, AND AS IF THE PERIOD OF QUALIFIED USE BY THE  TRANSFE-
ROR PRIOR TO THE TRANSFER HAD BEEN A PERIOD OF SUCH USE BY THE TAXPAYER.
ANY  AMOUNT  OF  CREDIT  TREATED  AS CARRIED FORWARD TO THE TAXABLE YEAR
PURSUANT TO THIS SUBPARAGRAPH SHALL BE APPLIED AS PROVIDED IN CLAUSE (H)
OF THIS SUBPARAGRAPH.
  (C) IF THE TAXPAYER AND  THE  TRANSFEROR  DO  NOT  MAKE  THE  ELECTION
DESCRIBED  IN CLAUSE (B) OF THIS SUBPARAGRAPH, THEN THE AMOUNT OF CREDIT
REQUIRED PURSUANT TO THIS PARAGRAPH TO BE ADDED BACK BY  THE  TRANSFEROR
SHALL  BE  TREATED  AS  AN  AMOUNT  OF CREDIT OF THE TAXPAYER UNDER THIS
SUBDIVISION TO BE CARRIED FORWARD BY THE TAXPAYER TO ITS TAXABLE YEAR IN
WHICH SUCH TRANSFER OCCURRED, AS IF THE CREDIT ALLOWED TO THE TRANSFEROR
WITH RESPECT TO SUCH PROPERTY HAD ORIGINALLY BEEN ALLOWED TO THE TAXPAY-
ER BOTH AS TO AMOUNT AND FIRST DATE OF QUALIFIED  USE,  AND  AS  IF  THE
PERIOD OF QUALIFIED USE BY THE TRANSFEROR PRIOR TO THE TRANSFER HAD BEEN
A  PERIOD  OF  SUCH USE BY THE TAXPAYER. ANY AMOUNT OF CREDIT TREATED AS
CARRIED FORWARD TO THE TAXABLE YEAR PURSUANT TO THIS SUBPARAGRAPH  SHALL
BE APPLIED AS PROVIDED IN CLAUSE (H) OF THIS SUBPARAGRAPH.
  (D) THE TERM "QUALIFIED TRANSACTION" SHALL MEAN A TRANSACTION WHICH IS
A  REORGANIZATION  DESCRIBED  IN  SECTION  368(A)(1)(D)  OF THE INTERNAL
REVENUE CODE, WHEREIN  (I)  SUBSTANTIALLY  ALL  OF  THE  ASSETS  OF  THE

S. 6359--D                         79                         A. 8559--D

TRANSFEROR  NECESSARY  TO  CONTINUE THE OPERATION OF A DIVISION OR DIVI-
SIONS OF THE TRANSFEROR ARE TRANSFERRED TO THE TAXPAYER IN A TRANSACTION
TO WHICH SECTION 351 OF SUCH CODE APPLIES, AND (II) STOCK OR  SECURITIES
OF  THE  TAXPAYER  HELD  BY  THE  TRANSFEROR ARE DISTRIBUTED PURSUANT TO
SECTION 355 OF SUCH CODE.
  (E) THE TERM "UNUSED CREDIT" SHALL MEAN THE AMOUNT OF CREDIT SHOWN  AS
CARRIED  FORWARD  TO THE TRANSACTION YEAR ON THE TRANSFEROR'S TAX RETURN
FOR ITS TAXABLE YEAR IMMEDIATELY PRECEDING  THE  TRANSACTION  YEAR  WITH
RESPECT TO THE PROPERTY DESCRIBED IN CLAUSE (A) OF THIS SUBPARAGRAPH.
  (F)  THE  TERM  "TRANSACTION YEAR" MEANS THE TAXABLE YEAR IN WHICH THE
QUALIFIED TRANSACTION OCCURS.
  (G) NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, IN THE
CASE OF ALLOWANCE OF CREDIT PURSUANT TO THIS SUBPARAGRAPH TO A  TAXPAYER
THE  COMMISSIONER SHALL HAVE THE AUTHORITY TO REVEAL TO THE TAXPAYER ANY
INFORMATION, WITH RESPECT TO THE CREDIT OF THE TRANSFEROR, WHICH IS  THE
BASIS  FOR  THE DENIAL IN WHOLE OR IN PART OF THE CREDIT CLAIMED BY SUCH
TAXPAYER.
  (H) WHERE A CREDIT IS ALLOWED TO A TAXPAYER PURSUANT TO THIS  SUBPARA-
GRAPH,  THE  TAXPAYER MAY TREAT THE AMOUNT OF SUCH CREDIT AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF SECTION TEN HUNDRED EIGHTY-SIX OF THIS  CHAPTER,  PROVIDED,  HOWEVER,
THE  PROVISIONS OF SUBSECTION (C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE  PAID  THEREON.  SUCH
CREDIT  SHALL  BE  ALLOWED  AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH
RESPECT TO THE SECOND SUCCEEDING TAXABLE YEAR NEXT FOLLOWING THE  TRANS-
ACTION  YEAR,  PROVIDED  THAT  NOT MORE THAN ONE-FOURTH OF THE AMOUNT OF
SUCH CREDIT MAY BE APPLIED BY THE TAXPAYER, WHETHER TO REDUCE TAX OTHER-
WISE DUE OR TO BE TREATED AS AN OVERPAYMENT TO BE CREDITED OR  REFUNDED,
WITH RESPECT TO SUCH SECOND SUCCEEDING TAXABLE YEAR AND EACH OF THE NEXT
THREE TAXABLE YEARS FOLLOWING SUCH SECOND SUCCEEDING TAXABLE YEAR.
  (F)  FOR PURPOSES OF PARAGRAPH (D) OF THIS SUBDIVISION, A NEW BUSINESS
SHALL INCLUDE ANY CORPORATION, EXCEPT A CORPORATION WHICH:
  (1) OVER FIFTY PERCENT OF THE NUMBER OF SHARES OF STOCK ENTITLING  THE
HOLDERS  THEREOF  TO  VOTE  FOR THE ELECTION OF DIRECTORS OR TRUSTEES IS
OWNED OR CONTROLLED,  EITHER  DIRECTLY  OR  INDIRECTLY,  BY  A  TAXPAYER
SUBJECT TO TAX UNDER THIS ARTICLE; SECTION ONE HUNDRED EIGHTY-THREE, ONE
HUNDRED EIGHTY-FOUR OR ONE HUNDRED EIGHTY-FIVE OF ARTICLE NINE; OR ARTI-
CLE THIRTY-THREE OF THIS CHAPTER; OR
  (2)  IS SUBSTANTIALLY SIMILAR IN OPERATION AND IN OWNERSHIP TO A BUSI-
NESS ENTITY (OR ENTITIES) TAXABLE, OR  PREVIOUSLY  TAXABLE,  UNDER  THIS
ARTICLE;  SECTION  ONE  HUNDRED  EIGHTY-THREE,  ONE HUNDRED EIGHTY-FOUR,
FORMER SECTION ONE HUNDRED EIGHTY-FIVE OR  FORMER  SECTION  ONE  HUNDRED
EIGHTY-SIX  OF  ARTICLE NINE; ARTICLE THIRTY-TWO OF THIS CHAPTER AS SUCH
ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO  THOUSAND  FOURTEEN;
ARTICLE THIRTY-THREE OF THIS CHAPTER; ARTICLE TWENTY-THREE OF THIS CHAP-
TER  OR  WHICH  WOULD  HAVE  BEEN  SUBJECT  TO  TAX  UNDER  SUCH ARTICLE
TWENTY-THREE (AS SUCH ARTICLE WAS IN EFFECT ON JANUARY  FIRST,  NINETEEN
HUNDRED  EIGHTY) OR THE INCOME (OR LOSSES) OF WHICH IS (OR WAS) INCLUDA-
BLE UNDER ARTICLE TWENTY-TWO OF THIS  CHAPTER  WHEREBY  THE  INTENT  AND
PURPOSE  OF  THIS  PARAGRAPH  AND PARAGRAPH (D) OF THIS SUBDIVISION WITH
RESPECT TO REFUNDING OF CREDIT TO NEW BUSINESS WOULD BE EVADED; OR
  (3) HAS BEEN SUBJECT TO TAX UNDER THIS ARTICLE OR FORMER ARTICLE THIR-
TY-TWO OF THIS CHAPTER FOR MORE THAN FIVE TAXABLE YEARS (EXCLUDING SHORT
TAXABLE YEARS).
  2. EMPLOYMENT INCENTIVE CREDIT (EIC). (A)(I)  APPLICATION  OF  CREDIT.
WHERE  A  TAXPAYER  IS  ALLOWED  A  CREDIT UNDER SUBDIVISION ONE OF THIS

S. 6359--D                         80                         A. 8559--D

SECTION, OTHER THAN AT THE OPTIONAL  RATE  APPLICABLE  TO  RESEARCH  AND
DEVELOPMENT PROPERTY, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF
THE  TWO  YEARS  NEXT  SUCCEEDING  THE TAXABLE YEAR FOR WHICH THE CREDIT
UNDER  SUCH  SUBDIVISION  ONE  IS ALLOWED WITH RESPECT TO SUCH PROPERTY,
WHETHER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT  TAXABLE
YEARS  PURSUANT  TO  PARAGRAPH  (D)  OF  SUCH SUBDIVISION ONE. PROVIDED,
HOWEVER, THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY  TAXA-
BLE YEAR SHALL BE ALLOWED ONLY IF THE AVERAGE NUMBER OF EMPLOYEES DURING
SUCH  TAXABLE  YEAR  IS  AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE
NUMBER OF EMPLOYEES DURING THE EMPLOYMENT BASE YEAR. THE EMPLOYMENT BASE
YEAR SHALL BE THE TAXABLE YEAR IMMEDIATELY PRECEDING  THE  TAXABLE  YEAR
FOR  WHICH  THE CREDIT UNDER SUCH SUBDIVISION ONE IS ALLOWED EXCEPT THAT
IF THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE A  TAXABLE  YEAR
IMMEDIATELY  PRECEDING  THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER SUCH
SUBDIVISION ONE OF THIS SECTION IS ALLOWED,  THE  EMPLOYMENT  BASE  YEAR
SHALL BE THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION ONE
IS ALLOWED.
  (II)  AMOUNT  OF  CREDIT.  THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS
SUBDIVISION SHALL BE AS SET FORTH IN THE FOLLOWING TABLE:
AVERAGE NUMBER OF EMPLOYEES DURING THE      CREDIT ALLOWED UNDER THIS
TAXABLE YEAR EXPRESSED AS A PERCENTAGE      SUBDIVISION EXPRESSED AS A
OF AVERAGE EMPLOYEES IN EMPLOYMENT          PERCENTAGE OF THE APPLICABLE
BASE YEARS                                  INVESTMENT CREDIT BASIS
LESS THAN 102%                              1.5%
AT LEAST 102% AND LESS THAN 103%            2%
AT LEAST 103%                               2.5%
  (B) AVERAGE NUMBER OF EMPLOYEES. THE AVERAGE NUMBER OF EMPLOYEES IN  A
TAXABLE  YEAR  SHALL BE COMPUTED BY ASCERTAINING THE NUMBER OF EMPLOYEES
WITHIN THE STATE, EXCEPT GENERAL EXECUTIVE  OFFICERS,  EMPLOYED  BY  THE
TAXPAYER  ON  THE  THIRTY-FIRST DAY OF MARCH, THE THIRTIETH DAY OF JUNE,
THE THIRTIETH DAY OF SEPTEMBER AND THE THIRTY-FIRST DAY OF  DECEMBER  IN
THE TAXABLE YEAR, BY ADDING TOGETHER THE NUMBER OF EMPLOYEES ASCERTAINED
ON  EACH OF SUCH DATES AND DIVIDING THE SUM SO OBTAINED BY THE NUMBER OF
SUCH ABOVE MENTIONED DATES OCCURRING WITHIN THE TAXABLE  YEAR.  HOWEVER,
WITH RESPECT TO THE EMPLOYMENT BASE YEAR, THERE SHALL BE EXCLUDED THERE-
FROM  ANY  EMPLOYEE  WITH  RESPECT  TO  WHOM A CREDIT PROVIDED FOR UNDER
SUBDIVISION SIX OF THIS SECTION IS CLAIMED, FOR THE TAXABLE YEAR,  BASED
ON  EMPLOYMENT WITHIN A ZONE EQUIVALENT AREA DESIGNATED AS SUCH PURSUANT
TO ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW.
  (C) CARRYOVER. IN NO EVENT SHALL THE CREDIT  HEREIN  PROVIDED  FOR  BE
ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES
THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON
THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE  IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FIFTEEN TAXABLE YEARS IMME-
DIATELY FOLLOWING SUCH TAXABLE YEAR AND MAY BE DEDUCTED FROM THE TAXPAY-
ER'S TAX FOR SUCH YEAR OR YEARS.
  3. EMPIRE ZONE INVESTMENT TAX CREDIT (EZ-ITC). (A) A TAXPAYER SHALL BE
ALLOWED  A  CREDIT,  TO  BE COMPUTED AS HEREIN PROVIDED, AGAINST THE TAX
IMPOSED BY THIS ARTICLE IF THE TAXPAYER HAS BEEN CERTIFIED  PURSUANT  TO
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW. THE AMOUNT OF THE CRED-
IT  SHALL  BE  TEN PERCENT OF THE COST OR OTHER BASIS FOR FEDERAL INCOME
TAX PURPOSES OF TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE  PROPERTY,
INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, DESCRIBED IN

S. 6359--D                         81                         A. 8559--D

PARAGRAPH  (B)  OF  THIS  SUBDIVISION, WHICH IS LOCATED WITHIN AN EMPIRE
ZONE DESIGNATED AS SUCH PURSUANT TO ARTICLE EIGHTEEN-B OF SUCH LAW,  BUT
ONLY  IF  THE  ACQUISITION,  CONSTRUCTION, RECONSTRUCTION OR ERECTION OF
SUCH  PROPERTY  OCCURRED  OR  WAS COMMENCED ON OR AFTER THE DATE OF SUCH
DESIGNATION AND PRIOR TO THE EXPIRATION THEREOF. PROVIDED, HOWEVER, THAT
IN THE CASE OF AN ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR  ERECTION
WHICH WAS COMMENCED DURING SUCH PERIOD AND CONTINUED OR COMPLETED SUBSE-
QUENTLY,  SUCH CREDIT SHALL BE TEN PERCENT OF THE PORTION OF THE COST OR
OTHER BASIS FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH PERIOD,
WHICH PORTION SHALL BE ASCERTAINED BY MULTIPLYING SUCH COST OR BASIS  BY
A  FRACTION  THE  NUMERATOR  OF  WHICH SHALL BE THE EXPENDITURES PAID OR
INCURRED DURING SUCH PERIOD FOR SUCH PURPOSES  AND  THE  DENOMINATOR  OF
WHICH  SHALL  BE THE TOTAL OF ALL EXPENDITURES PAID OR INCURRED FOR SUCH
ACQUISITION, CONSTRUCTION, RECONSTRUCTION OR ERECTION.
  (B) QUALIFIED PROPERTY. A CREDIT SHALL BE ALLOWED UNDER THIS  SUBDIVI-
SION WITH RESPECT TO TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROP-
ERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPONENTS OF BUILDINGS, WHICH
  (I) ARE DEPRECIABLE PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE
INTERNAL REVENUE CODE,
  (II) HAVE A USEFUL LIFE OF FOUR YEARS OR MORE,
  (III)  ARE  ACQUIRED  BY  PURCHASE  AS  DEFINED IN SECTION ONE HUNDRED
SEVENTY-NINE (D) OF THE INTERNAL REVENUE CODE,
  (IV) HAVE A SITUS IN AN EMPIRE ZONE DESIGNATED  AS  SUCH  PURSUANT  TO
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW, AND
  (V)  ARE  (A)  PRINCIPALLY  USED  BY THE TAXPAYER IN THE PRODUCTION OF
GOODS  BY  MANUFACTURING,  PROCESSING,  ASSEMBLING,  REFINING,   MINING,
EXTRACTING,  FARMING,  AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICUL-
TURE OR COMMERCIAL FISHING,
  (B) INDUSTRIAL WASTE TREATMENT FACILITIES  OR  AIR  POLLUTION  CONTROL
FACILITIES USED IN THE TAXPAYER'S TRADE OR BUSINESS,
  (C) RESEARCH AND DEVELOPMENT PROPERTY,
  (D) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS  AS  A BROKER OR DEALER IN CONNECTION WITH THE PURCHASE OR SALE
(WHICH SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING  INTO,
ASSUMPTION,  OFFSET,  ASSIGNMENT,  TERMINATION,  OR TRANSFER) OF STOCKS,
BONDS  OR  OTHER  SECURITIES  AS  DEFINED  IN   SECTION   FOUR   HUNDRED
SEVENTY-FIVE  (C)(2)  OF THE INTERNAL REVENUE CODE, OR OF COMMODITIES AS
DEFINED IN SECTION FOUR HUNDRED SEVENTY-FIVE (E) OF THE INTERNAL REVENUE
CODE,
  (E) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS OF PROVIDING  INVESTMENT  ADVISORY  SERVICES  FOR  A  REGULATED
INVESTMENT  COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE OF THE
INTERNAL REVENUE CODE, OR LENDING, LOAN ARRANGEMENT, OR LOAN ORIGINATION
SERVICES TO CUSTOMERS IN CONNECTION WITH THE  PURCHASE  OR  SALE  (WHICH
SHALL INCLUDE BUT NOT BE LIMITED TO THE ISSUANCE, ENTERING INTO, ASSUMP-
TION,  OFFSET,  ASSIGNMENT,  TERMINATION  OR  TRANSFER) OF SECURITIES AS
DEFINED IN SECTION FOUR HUNDRED  SEVENTY-FIVE  (C)(2)  OF  THE  INTERNAL
REVENUE CODE,
  (E-1)  PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE
OR BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES OR THE SERVICE  OF
MANAGING INVESTMENT PORTFOLIOS TO ACHIEVE SPECIFIC INVESTMENT OBJECTIVES
FOR  ACCOUNTS  OVER ONE MILLION DOLLARS OF ACCREDITED INVESTORS (AS THAT
TERM IS DEFINED IN RULE 501 OF REGULATION D OF  THE  SECURITIES  ACT  OF
1933), IF THE TAXPAYER SATISFIES THE FOLLOWING CRITERIA:
  (I)  THE TAXPAYER IS A REGULATED BROKER OR DEALER OR AN AFFILIATE OF A
REGULATED BROKER OR DEALER,

S. 6359--D                         82                         A. 8559--D

  (II) THE TAXPAYER IS REGISTERED AS AN INVESTMENT ADVISER UNDER SECTION
TWO HUNDRED THREE OF THE INVESTMENT ADVISERS ACT OF  1940,  AS  AMENDED,
AND
  (III)  AT  LEAST  ONE CLIENT OF THE TAXPAYER IS A REGULATED INVESTMENT
COMPANY AS DEFINED IN SECTION EIGHT HUNDRED FIFTY-ONE  OF  THE  INTERNAL
REVENUE CODE THAT HAS ASSETS OF ONE HUNDRED MILLION DOLLARS, OR
  (F) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S BUSINESS
AS  AN  EXCHANGE REGISTERED AS A NATIONAL SECURITIES EXCHANGE WITHIN THE
MEANING OF SECTIONS 3(A)(1) AND 6(A) OF THE SECURITIES EXCHANGE  ACT  OF
1934  OR A BOARD OF TRADE AS DEFINED IN SUBDIVISION ONE OF PARAGRAPH (A)
OF SECTION FOURTEEN HUNDRED TEN OF THE NOT-FOR-PROFIT CORPORATION LAW OR
AS AN ENTITY THAT IS WHOLLY OWNED BY ONE OR MORE SUCH  NATIONAL  SECURI-
TIES  EXCHANGES OR BOARDS OR TRADE AND THAT PROVIDES AUTOMATION OR TECH-
NICAL SERVICES THERETO.
  (VI) FOR PURPOSES OF CLAUSES (D), (E), (E-1) AND (F)  OF  SUBPARAGRAPH
(V)  OF THIS PARAGRAPH, PROPERTY PURCHASED BY A TAXPAYER AFFILIATED WITH
A REGULATED BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL
SECURITIES  EXCHANGE  OR  BOARD  OF TRADE IS ALLOWED A CREDIT UNDER THIS
SUBDIVISION IF THE PROPERTY IS USED BY ITS AFFILIATED REGULATED  BROKER,
DEALER, REGISTERED INVESTMENT ADVISER OR NATIONAL SECURITIES EXCHANGE OR
BOARD  OF  TRADE  IN  ACCORDANCE  WITH THIS SUBDIVISION. FOR PURPOSES OF
DETERMINING IF THE PROPERTY IS PRINCIPALLY USED IN QUALIFYING USES,  THE
USES BY THE TAXPAYER DESCRIBED IN CLAUSES (D), (E) AND (E-1) OF SUBPARA-
GRAPH  (V) OF THIS PARAGRAPH MAY BE AGGREGATED. IN ADDITION, THE USES BY
THE TAXPAYER, ITS AFFILIATED REGULATED  BROKER,  DEALER  AND  REGISTERED
INVESTMENT  ADVISER  UNDER  ANY  OF  THOSE  CLAUSES  MAY  BE AGGREGATED.
PROVIDED, HOWEVER, A TAXPAYER SHALL NOT BE ALLOWED THE  CREDIT  PROVIDED
BY CLAUSES (D), (E), (E-1) AND (F) OF SUBPARAGRAPH (V) OF THIS PARAGRAPH
UNLESS
  (I) EIGHTY PERCENT OR MORE OF THE EMPLOYEES PERFORMING THE ADMINISTRA-
TIVE  AND  SUPPORT FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING
USES OF SUCH EQUIPMENT ARE LOCATED IN THIS STATE, OR
  (II) THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM  THE  ADMINISTRATIVE
AND  SUPPORT  FUNCTIONS RESULTING FROM OR RELATED TO THE QUALIFYING USES
OF SUCH EQUIPMENT AND ARE LOCATED IN THIS STATE DURING THE TAXABLE  YEAR
FOR  WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN NINETY-FIVE
PERCENT OF THE AVERAGE NUMBER OF EMPLOYEES THAT PERFORM THESE  FUNCTIONS
AND  ARE  LOCATED IN THIS STATE DURING THE THIRTY-SIX MONTHS IMMEDIATELY
PRECEDING THE YEAR FOR WHICH THE CREDIT IS CLAIMED, OR
  (III) THE NUMBER OF EMPLOYEES LOCATED IN THIS STATE DURING THE TAXABLE
YEAR FOR WHICH THE CREDIT IS CLAIMED IS EQUAL TO OR GREATER THAN  NINETY
PERCENT  OF  THE  NUMBER  OF EMPLOYEES LOCATED IN THIS STATE ON DECEMBER
THIRTY-FIRST, NINETEEN HUNDRED NINETY-EIGHT OR, IF THE TAXPAYER WAS  NOT
A  CALENDAR YEAR TAXPAYER IN NINETEEN HUNDRED NINETY-EIGHT, THE LAST DAY
OF ITS FIRST TAXABLE YEAR ENDING AFTER DECEMBER  THIRTY-FIRST,  NINETEEN
HUNDRED  NINETY-EIGHT.  IF  THE  TAXPAYER BECOMES SUBJECT TO TAX IN THIS
STATE AFTER THE TAXABLE YEAR BEGINNING IN NINETEEN HUNDRED NINETY-EIGHT,
THEN THE TAXPAYER  IS  NOT  REQUIRED  TO  SATISFY  THE  EMPLOYMENT  TEST
PROVIDED  IN  THE  PRECEDING SENTENCE OF THIS SUBPARAGRAPH FOR ITS FIRST
TAXABLE YEAR.
  (VII) FOR THE PURPOSES OF CLAUSE (III) OF SUBPARAGRAPH  (VI)  OF  THIS
PARAGRAPH  THE  EMPLOYMENT TEST WILL BE BASED ON THE NUMBER OF EMPLOYEES
LOCATED IN THIS STATE ON THE LAST DAY OF  THE  FIRST  TAXABLE  YEAR  THE
TAXPAYER  IS  SUBJECT  TO TAX IN THIS STATE. IF THE USES OF THE PROPERTY
MUST BE AGGREGATED TO DETERMINE WHETHER THE PROPERTY IS PRINCIPALLY USED
IN QUALIFYING USES, THEN EITHER EACH AFFILIATE USING THE  PROPERTY  MUST

S. 6359--D                         83                         A. 8559--D

SATISFY  THIS  EMPLOYMENT TEST OR THIS EMPLOYMENT TEST MUST BE SATISFIED
THROUGH THE AGGREGATION OF THE EMPLOYEES OF THE TAXPAYER, ITS AFFILIATED
REGULATED BROKER, DEALER, AND REGISTERED INVESTMENT  ADVISER  USING  THE
PROPERTY.
  (VIII) FOR THE PURPOSE OF THIS SUBDIVISION, THE TERM "GOODS" SHALL NOT
INCLUDE ELECTRICITY.
  (IX)  FOR PURPOSES OF THIS SUBDIVISION, "MANUFACTURING" SHALL MEAN THE
PROCESS OF WORKING RAW MATERIALS INTO WARES SUITABLE FOR  USE  OR  WHICH
GIVES  NEW  SHAPES,  NEW  QUALITY  OR  NEW  COMBINATIONS TO MATTER WHICH
ALREADY HAS GONE THROUGH SOME ARTIFICIAL PROCESS BY THE USE  OF  MACHIN-
ERY, TOOLS, APPLIANCES AND OTHER SIMILAR EQUIPMENT. PROPERTY USED IN THE
PRODUCTION OF GOODS SHALL INCLUDE MACHINERY, EQUIPMENT OR OTHER TANGIBLE
PROPERTY  WHICH  IS  PRINCIPALLY USED IN THE REPAIR AND SERVICE OF OTHER
MACHINERY, EQUIPMENT OR OTHER TANGIBLE PROPERTY USED PRINCIPALLY IN  THE
PRODUCTION  OF  GOODS  AND  SHALL  INCLUDE  ALL  FACILITIES  USED IN THE
PRODUCTION OPERATION, INCLUDING  STORAGE  OF  MATERIAL  TO  BE  USED  IN
PRODUCTION  AND  OF THE PRODUCTS THAT ARE PRODUCED. FOR PURPOSES OF THIS
SUBDIVISION, THE TERMS "RESEARCH AND DEVELOPMENT PROPERTY",  "INDUSTRIAL
WASTE  TREATMENT  FACILITIES",  AND  "AIR  POLLUTION CONTROL FACILITIES"
SHALL HAVE THE MEANINGS ASCRIBED THERETO BY CLAUSES (B),  (C)  AND  (D),
RESPECTIVELY,  OF  SUBPARAGRAPH (IV) OF PARAGRAPH (B) OF SUBDIVISION ONE
OF THIS SECTION, AND THE PROVISIONS OF SUBPARAGRAPH (V)  OF  SUCH  PARA-
GRAPH (B) SHALL APPLY.
  (C)  NONQUALIFIED  PROPERTY.  A TAXPAYER SHALL NOT BE ALLOWED A CREDIT
UNDER THIS SUBDIVISION WITH RESPECT TO ANY  TANGIBLE  PERSONAL  PROPERTY
AND  OTHER  TANGIBLE PROPERTY, INCLUDING BUILDINGS AND STRUCTURAL COMPO-
NENTS OF BUILDINGS, WHICH IT LEASES TO ANY OTHER PERSON  OR  CORPORATION
EXCEPT  WHERE  A  TAXPAYER  LEASES  PROPERTY  TO AN AFFILIATED REGULATED
BROKER,  DEALER,  REGISTERED  INVESTMENT  ADVISER,  NATIONAL  SECURITIES
EXCHANGE  OR  BOARD  OF TRADE OR OTHER ENTITY DESCRIBED IN CLAUSE (F) OF
SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS  SUBDIVISION  THAT  USES  SUCH
PROPERTY  IN  ACCORDANCE  WITH CLAUSE (D), (E), (E-1) OR (F) OF SUBPARA-
GRAPH (V) OF PARAGRAPH (B) OF THIS  SUBDIVISION.  FOR  PURPOSES  OF  THE
PRECEDING  SENTENCE, ANY CONTRACT OR AGREEMENT TO LEASE OR RENT OR FOR A
LICENSE TO USE SUCH PROPERTY SHALL BE CONSIDERED  A  LEASE.    PROVIDED,
HOWEVER,  IN  DETERMINING  WHETHER  A TAXPAYER SHALL BE ALLOWED A CREDIT
UNDER THIS SUBDIVISION WITH RESPECT TO SUCH PROPERTY, ANY ELECTION  MADE
WITH  RESPECT  TO  SUCH PROPERTY PURSUANT TO THE PROVISIONS OF PARAGRAPH
EIGHT OF SUBSECTION (F) OF SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTER-
NAL REVENUE CODE, AS SUCH PARAGRAPH WAS IN EFFECT FOR AGREEMENTS ENTERED
INTO PRIOR TO JANUARY FIRST,  NINETEEN  HUNDRED  EIGHTY-FOUR,  SHALL  BE
DISREGARDED.
  (D) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT
IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF  CREDIT  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING
YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH  YEAR
OR  YEARS.  IN LIEU OF SUCH CARRYOVER, ANY SUCH TAXPAYER WHICH QUALIFIES
AS A NEW BUSINESS UNDER PARAGRAPH (F) OF SUBDIVISION ONE OF THIS SECTION
MAY ELECT, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO WHICH SUCH
CREDIT IS ALLOWED, TO TREAT FIFTY PERCENT OF THE AMOUNT OF  SUCH  CARRY-
OVER  AS  AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE

S. 6359--D                         84                         A. 8559--D

WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS  CHAPTER.
IN  ADDITION, ANY TAXPAYER WHICH IS APPROVED AS THE OWNER OF A QUALIFIED
INVESTMENT PROJECT OR A SIGNIFICANT CAPITAL INVESTMENT PROJECT  PURSUANT
TO  SUBDIVISION  (W)  OF  SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL
MUNICIPAL LAW, ON ITS REPORT FOR ITS TAXABLE YEAR WITH RESPECT TO  WHICH
SUCH  CREDIT  IS  ALLOWED, IN LIEU OF SUCH CARRYOVER, MAY ELECT TO TREAT
FIFTY PERCENT OF THE AMOUNT OF SUCH CARRYOVER WHICH IS  ATTRIBUTABLE  TO
THE  CREDIT ALLOWED UNDER THIS SUBDIVISION FOR PROPERTY WHICH IS PART OF
SUCH PROJECT AS AN OVERPAYMENT OF TAX TO  BE  CREDITED  OR  REFUNDED  IN
ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, SUCH OWNER SHALL BE ALLOWED SUCH REFUND
FOR A MAXIMUM OF TEN  TAXABLE  YEARS  WITH  RESPECT  TO  SUCH  QUALIFIED
INVESTMENT  PROJECT  AND  EACH  SIGNIFICANT  CAPITAL INVESTMENT PROJECT,
STARTING WITH THE FIRST TAXABLE YEAR IN WHICH PROPERTY  COMPRISING  SUCH
PROJECT IS PLACED IN SERVICE. PROVIDED, FURTHER, HOWEVER, THE PROVISIONS
OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (D-1) ANY CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL  NOT  BE
ALLOWED  IF  AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT ISSUED PURSUANT
TO SUBDIVISION (W) OF SECTION NINE HUNDRED  FIFTY-NINE  OF  THE  GENERAL
MUNICIPAL  LAW  TO  THE EMPIRE ZONE ENTERPRISE WHICH IS THE BASIS OF THE
CREDIT.
  (E) AT THE OPTION OF THE TAXPAYER, THE TAXPAYER MAY  CHOOSE  TO  CLAIM
THE  CREDIT  DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION FOR PROPERTY
WHICH ALSO QUALIFIES FOR THE CREDIT PROVIDED UNDER  SUBDIVISION  ONE  OF
THIS SECTION. A TAXPAYER SHALL NOT BE ALLOWED A CREDIT UNDER THIS SUBDI-
VISION  WITH  RESPECT TO ANY PROPERTY DESCRIBED IN PARAGRAPH (A) OF THIS
SUBDIVISION IF A CREDIT IS TAKEN PURSUANT TO  SUBDIVISION  ONE  OF  THIS
SECTION.
  (F)  RECAPTURE.  (I)  WITH  RESPECT  TO  PROPERTY WHICH IS DEPRECIABLE
PURSUANT TO SECTION ONE HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE
BUT IS NOT SUBJECT TO THE PROVISIONS OF SECTION ONE HUNDRED  SIXTY-EIGHT
OF  SUCH  CODE AND WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE
PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT IS TO BE TAKEN,
THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF  THE  CREDIT  PROVIDED
FOR  IN  THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH THE MONTHS OF
QUALIFIED USE BEAR TO THE MONTHS OF USEFUL LIFE. IF  PROPERTY  ON  WHICH
CREDIT  HAS  BEEN  TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE
PRIOR TO THE END OF ITS USEFUL LIFE, THE DIFFERENCE BETWEEN  THE  CREDIT
TAKEN  AND  THE  CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE
YEAR OF DISPOSITION. PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED  OF
OR  CEASES TO BE IN QUALIFIED USE AFTER IT HAS BEEN IN QUALIFIED USE FOR
MORE THAN TWELVE CONSECUTIVE YEARS, IT SHALL NOT  BE  NECESSARY  TO  ADD
BACK  THE  CREDIT AS PROVIDED IN THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT
ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY MULTIPLYING  THE  ORIGINAL
CREDIT BY THE RATIO WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE MONTHS
OF  USEFUL LIFE. FOR PURPOSES OF THIS SUBPARAGRAPH, USEFUL LIFE OF PROP-
ERTY SHALL BE THE SAME AS THE TAXPAYER USES  FOR  DEPRECIATION  PURPOSES
WHEN COMPUTING HIS FEDERAL INCOME TAX LIABILITY.
  (II)  EXCEPT  WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH (IV)
OF THIS PARAGRAPH APPLIES,  WITH  RESPECT  TO  THREE-YEAR  PROPERTY,  AS
DEFINED  IN  SUBSECTION  (E)  OF  SECTION ONE HUNDRED SIXTY-EIGHT OF THE
INTERNAL REVENUE CODE, WHICH IS DISPOSED OF OR CEASES TO BE IN QUALIFIED
USE PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT  IS  TO  BE
TAKEN,  THE  AMOUNT  OF  THE  CREDIT SHALL BE THAT PORTION OF THE CREDIT
PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE  RATIO  WHICH  THE

S. 6359--D                         85                         A. 8559--D

MONTHS  OF QUALIFIED USE BEAR TO THIRTY-SIX. IF PROPERTY ON WHICH CREDIT
HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO
THE  END  OF  THIRTY-SIX MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN
AND  THE CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF
DISPOSITION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETER-
MINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE RATIO WHICH  THE  MONTHS
OF QUALIFIED USE BEAR TO THIRTY-SIX.
  (III)  EXCEPT WITH RESPECT TO THAT PROPERTY TO WHICH SUBPARAGRAPH (IV)
OF THIS PARAGRAPH APPLIES, WITH  RESPECT  TO  PROPERTY  SUBJECT  TO  THE
PROVISIONS  OF  SECTION  ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE
CODE OTHER THAN THREE-YEAR PROPERTY AS DEFINED IN SUBSECTION (E) OF SUCH
SECTION ONE HUNDRED SIXTY-EIGHT WHICH IS DISPOSED OF OR CEASES TO BE  IN
QUALIFIED  USE  PRIOR TO THE END OF THE TAXABLE YEAR IN WHICH THE CREDIT
IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT  PORTION  OF  THE
CREDIT PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO WHICH
THE  MONTHS  OF QUALIFIED USE BEAR TO SIXTY. IF PROPERTY ON WHICH CREDIT
HAS BEEN TAKEN IS DISPOSED OF OR CEASES TO BE IN QUALIFIED USE PRIOR  TO
THE END OF SIXTY MONTHS, THE DIFFERENCE BETWEEN THE CREDIT TAKEN AND THE
CREDIT ALLOWED FOR ACTUAL USE MUST BE ADDED BACK IN THE YEAR OF DISPOSI-
TION. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL USE SHALL BE DETERMINED BY
MULTIPLYING  THE ORIGINAL CREDIT BY THE RATIO WHICH THE MONTHS OF QUALI-
FIED USE BEAR TO SIXTY.
  (IV) WITH RESPECT TO ANY PROPERTY TO WHICH SECTION ONE HUNDRED  SIXTY-
EIGHT  OF  THE  INTERNAL  REVENUE CODE APPLIES, WHICH IS A BUILDING OR A
STRUCTURAL COMPONENT OF A BUILDING AND WHICH IS DISPOSED OF OR CEASES TO
BE IN QUALIFIED USE PRIOR TO THE END OF THE TAXABLE YEAR  IN  WHICH  THE
CREDIT IS TO BE TAKEN, THE AMOUNT OF THE CREDIT SHALL BE THAT PORTION OF
THE  CREDIT  PROVIDED FOR IN THIS SUBDIVISION WHICH REPRESENTS THE RATIO
WHICH THE MONTHS OF QUALIFIED USE BEAR TO THE  TOTAL  NUMBER  OF  MONTHS
OVER  WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE INTER-
NAL REVENUE CODE. IF PROPERTY ON WHICH CREDIT HAS BEEN TAKEN IS DISPOSED
OF OR CEASES TO BE IN QUALIFIED USE PRIOR TO THE END OF THE PERIOD  OVER
WHICH  THE  TAXPAYER  CHOOSES  TO DEDUCT THE PROPERTY UNDER THE INTERNAL
REVENUE CODE, THE DIFFERENCE BETWEEN THE CREDIT  TAKEN  AND  THE  CREDIT
ALLOWED  FOR  ACTUAL  USE MUST BE ADDED BACK IN THE YEAR OF DISPOSITION.
PROVIDED, HOWEVER, IF SUCH PROPERTY IS DISPOSED OF OR CEASES  TO  BE  IN
QUALIFIED  USE  AFTER  IT HAS BEEN IN QUALIFIED USE FOR MORE THAN TWELVE
CONSECUTIVE YEARS, IT SHALL NOT BE NECESSARY TO ADD BACK THE  CREDIT  AS
PROVIDED  IN  THIS SUBPARAGRAPH. THE AMOUNT OF CREDIT ALLOWED FOR ACTUAL
USE SHALL BE DETERMINED BY MULTIPLYING THE ORIGINAL CREDIT BY THE  RATIO
WHICH  THE  MONTHS  OF  QUALIFIED USE BEAR TO THE TOTAL NUMBER OF MONTHS
OVER WHICH THE TAXPAYER CHOOSES TO DEDUCT THE PROPERTY UNDER THE  INTER-
NAL REVENUE CODE.
  (V) FOR PURPOSES OF THIS PARAGRAPH, DISPOSAL OR CESSATION OF QUALIFIED
USE  SHALL NOT BE DEEMED TO HAVE OCCURRED SOLELY BY REASON OF THE TERMI-
NATION OR EXPIRATION OF AN EMPIRE ZONE'S DESIGNATION AS SUCH.
  (VI)(A) FOR PURPOSES OF THIS PARAGRAPH, THE DECERTIFICATION OF A BUSI-
NESS ENTERPRISE WITH RESPECT  TO  AN  EMPIRE  ZONE  SHALL  CONSTITUTE  A
DISPOSAL  OR  CESSATION  OF  QUALIFIED  USE OF THE PROPERTY ON WHICH THE
CREDIT WAS TAKEN WHICH IS LOCATED IN THE ZONE  TO  WHICH  THE  DECERTIF-
ICATION APPLIES, ON THE EFFECTIVE DATE OF SUCH DECERTIFICATION.
  (B)  WHERE A BUSINESS ENTERPRISE HAS BEEN DECERTIFIED BASED ON A FIND-
ING PURSUANT TO CLAUSE ONE, TWO, OR FIVE OF SUBDIVISION (A)  OF  SECTION
NINE  HUNDRED  FIFTY-NINE  OF  THE  GENERAL  MUNICIPAL  LAW,  THE AMOUNT
REQUIRED TO BE ADDED BACK BY REASON OF THIS PARAGRAPH SHALL BE  (I)  THE
AMOUNT  OF  CREDIT, WITH RESPECT TO THE PROPERTY WHICH IS DISPOSED OF OR

S. 6359--D                         86                         A. 8559--D

CEASES TO BE IN QUALIFIED USE, WHICH WAS DEDUCTED  FROM  THE  TAXPAYER'S
TAX  OTHERWISE  DUE  UNDER  THIS  ARTICLE  FOR  ALL PRIOR TAXABLE YEARS,
REDUCED (BUT NOT BELOW ZERO) BY (II) THE CREDIT ALLOWED FOR ACTUAL  USE.
FOR  PURPOSES OF THIS SUBPARAGRAPH, THE ATTRIBUTION TO SPECIFIC PROPERTY
OF CREDIT AMOUNTS DEDUCTED FROM TAX SHALL BE ESTABLISHED  IN  ACCORDANCE
WITH  THE  DATE  OF  PLACEMENT IN SERVICE OF SUCH PROPERTY IN THE EMPIRE
ZONE.
  (C) IN NO EVENT SHALL THE AMOUNT OF THE  CREDIT  ALLOWED  PURSUANT  TO
THIS  SUBDIVISION  BE  RENDERED,  SOLELY BY REASON OF CLAUSE (A) OF THIS
SUBPARAGRAPH, LESS THAN THE AMOUNT OF THE CREDIT TO WHICH  THE  TAXPAYER
WOULD OTHERWISE BE ENTITLED UNDER SUBDIVISION ONE OF THIS SECTION.
  (D)  NOTWITHSTANDING  ANY  OTHER PROVISION OF THIS SUBDIVISION, IN THE
CASE OF A BUSINESS ENTERPRISE WHICH HAS BEEN DECERTIFIED, ANY AMOUNT  OF
CREDIT  ALLOWED WITH RESPECT TO THE PROPERTY OF SUCH BUSINESS ENTERPRISE
LOCATED IN THE ZONE  TO  WHICH  THE  DECERTIFICATION  APPLIES  WHICH  IS
CARRIED  OVER PURSUANT TO PARAGRAPH (D) OF THIS SUBDIVISION SHALL NOT BE
CARRIED OVER BEYOND THE SEVENTH TAXABLE YEAR NEXT FOLLOWING THE  TAXABLE
YEAR  WITH  RESPECT TO WHICH THE CREDIT PROVIDED FOR IN THIS SUBDIVISION
WAS ALLOWED.
  (VII) FOR PURPOSES OF THIS PARAGRAPH, WHERE A CREDIT IS  ALLOWED  WITH
RESPECT  TO  AN AIR POLLUTION CONTROL FACILITY ON THE BASIS OF A CERTIF-
ICATE OF COMPLIANCE ISSUED PURSUANT TO  THE  ENVIRONMENTAL  CONSERVATION
LAW  AND  THE  CERTIFICATE  IS  REVOKED PURSUANT TO SUBDIVISION THREE OF
SECTION 19-0309 OF THE ENVIRONMENTAL CONSERVATION LAW,  SUCH  REVOCATION
SHALL  CONSTITUTE  A DISPOSAL OR CESSATION OF QUALIFIED USE, EXCEPT WITH
RESPECT TO PROPERTY CONTAINED IN OR COMPRISING SUCH  FACILITY  WHICH  IS
DESCRIBED  IN  CLAUSE  (A), (B), OR (C) OF SUBPARAGRAPH (V) OF PARAGRAPH
(B) OF THIS SUBDIVISION OTHER THAN AS  PART  OF  OR  COMPRISING  AN  AIR
POLLUTION CONTROL FACILITY. ALSO FOR PURPOSES OF THIS PARAGRAPH, THE USE
OF  AN  AIR  POLLUTION CONTROL FACILITY OR AN INDUSTRIAL WASTE TREATMENT
FACILITY FOR THE PRIMARY PURPOSE OF SALVAGING MATERIALS WHICH ARE USABLE
IN THE MANUFACTURING PROCESS OR ARE MARKETABLE SHALL CONSTITUTE A CESSA-
TION OF QUALIFIED USE, EXCEPT WITH RESPECT TO PROPERTY CONTAINED  IN  OR
COMPRISING  SUCH  FACILITY  WHICH  IS  DESCRIBED IN CLAUSE (A) OR (C) OF
SUBPARAGRAPH (V) OF PARAGRAPH (B) OF THIS SUBDIVISION.
  (VIII) EXCEPT AS PROVIDED IN THIS SUBPARAGRAPH, THIS  PARAGRAPH  SHALL
NOT  APPLY TO A CREDIT ALLOWED BY THIS SUBDIVISION TO A TAXPAYER THAT IS
A PARTNER IN A  PARTNERSHIP  IN  THE  CASE  OF  MANUFACTURING  PROPERTY;
PROVIDED,  AT THE TIME SUCH PROPERTY WAS PLACED IN SERVICE BY SUCH PART-
NERSHIP IN AN EMPIRE ZONE THE BASIS FOR FEDERAL INCOME TAX PURPOSES  FOR
SUCH  PROPERTY  (OR  A  PROJECT  THAT INCLUDES SUCH PROPERTY) EQUALED OR
EXCEEDED THREE HUNDRED MILLION DOLLARS AND SUCH PARTNER OWNED ITS  PART-
NERSHIP  INTEREST  FOR  AT LEAST THREE YEARS FROM THE DATE SUCH PROPERTY
WAS PLACED IN SERVICE. IF SUCH PROPERTY CEASES TO BE  IN  QUALIFIED  USE
AFTER  IT IS PLACED IN SERVICE, THIS PARAGRAPH SHALL APPLY TO SUCH PART-
NER IN THE YEAR SUCH PROPERTY CEASES TO BE IN QUALIFYING USE.
  (IX) IF A TAXPAYER, WHICH IS APPROVED BY THE COMMISSIONER OF  ECONOMIC
DEVELOPMENT  AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIF-
ICANT CAPITAL INVESTMENT PROJECT PURSUANT TO SUBDIVISION (W) OF  SECTION
NINE  HUNDRED  FIFTY-NINE  OF  THE  GENERAL  MUNICIPAL LAW, FAILS TO (A)
CREATE AT LEAST THE MINIMUM NUMBER OF JOBS AT SUCH PROJECT  AS  REQUIRED
BY  THE  PROVISIONS  OF  SUBDIVISION  (S) OR (T) OF SECTION NINE HUNDRED
FIFTY-SEVEN AND SUBDIVISION (W) OF SECTION NINE  HUNDRED  FIFTY-NINE  OF
THE  GENERAL  MUNICIPAL  LAW OR (B) PLACE IN SERVICE PROPERTY COMPRISING
SUCH QUALIFIED INVESTMENT  PROJECT  OR  SIGNIFICANT  CAPITAL  INVESTMENT
PROJECT WITH A BASIS FOR FEDERAL INCOME TAX PURPOSES EQUALING OR EXCEED-

S. 6359--D                         87                         A. 8559--D

ING  THE  APPLICABLE MINIMUM REQUIRED BASIS AS PROVIDED IN SUCH SUBDIVI-
SION (S) OR (T), WHICHEVER IS RELEVANT, BY THE LAST  DAY  OF  THE  FIFTH
TAXABLE  YEAR  FOLLOWING  THE  TAXABLE  YEAR  IN WHICH A CREDIT IS FIRST
ALLOWED  UNDER  THIS  SUBDIVISION  FOR THE PROPERTY WHICH COMPRISES SUCH
QUALIFIED INVESTMENT PROJECT  OR  SUCH  SIGNIFICANT  CAPITAL  INVESTMENT
PROJECT,  THE  TOTAL AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ALL TAXABLE YEARS WITH RESPECT TO THE PROPERTY WHICH COMPRISES  SUCH
PROJECT  WHICH HAS BEEN REFUNDED TO SUCH TAXPAYER SHALL BE ADDED BACK IN
SUCH TAXABLE YEAR.
  (G) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF  THE  GENERAL  MUNICIPAL LAW, A TAXPAYER THAT IS
CERTIFIED AS A QUALIFIED INVESTMENT PROJECT  PURSUANT  TO  SUCH  ARTICLE
EIGHT-B  ON  THE  DAY  IMMEDIATELY  PRECEDING  THE  DAY THE EMPIRE ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
EIGHTEEN-B FOR PURPOSES OF THIS SUBDIVISION FOR  THE  REMAINDER  OF  THE
TAXABLE  YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT SUCCEED-
ING NINE TAXABLE YEARS. IN ADDITION,  THE  AREAS  DESIGNATED  AS  EMPIRE
ZONES  IN  WHICH  THE  TAXPAYER  IS  CERTIFIED AS A QUALIFIED INVESTMENT
PROJECT ON THE DAY  IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE  ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF
THIS  SUBDIVISION  FOR  THE  REMAINDER  OF THE TAXABLE YEAR IN WHICH THE
EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
  (H) NOTWITHSTANDING THE EXPIRATION OF THE EMPIRE ZONES  PROGRAM  UNDER
ARTICLE  EIGHTEEN-B  OF THE GENERAL MUNICIPAL LAW AND EXCEPT AS PROVIDED
IN PARAGRAPH (G) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
EMPIRE ZONE BUSINESS PURSUANT TO SUCH  ARTICLE  EIGHTEEN-B  ON  THE  DAY
IMMEDIATELY  PRECEDING  THE  DAY  THE  EMPIRE ZONE PROGRAM EXPIRED SHALL
CONTINUE TO BE  DEEMED  CERTIFIED  UNDER  SUCH  ARTICLE  EIGHTEEN-B  FOR
PURPOSES  OF  THIS SUBDIVISION UNTIL APRIL FIRST, TWO THOUSAND FOURTEEN.
IN ADDITION, THE AREAS DESIGNATED AS EMPIRE ZONES IN WHICH THE  TAXPAYER
IS CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE DAY IMMEDIATELY PRECEDING
THE  DAY  THE  EMPIRE  ZONES PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED
EMPIRE ZONES FOR PURPOSES OF THIS SUBDIVISIONS UNTIL  APRIL  FIRST,  TWO
THOUSAND FOURTEEN.
  4.  EMPIRE  ZONE EMPLOYMENT INCENTIVE CREDIT (EZ-EIC). (A) APPLICATION
OF CREDIT. WHERE A TAXPAYER IS ALLOWED A CREDIT UNDER SUBDIVISION  THREE
OF  THIS SECTION, THE TAXPAYER SHALL BE ALLOWED A CREDIT FOR EACH OF THE
THREE YEARS NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT  UNDER
SUCH SUBDIVISION THREE IS ALLOWED, WITH RESPECT TO SUCH PROPERTY, WHETH-
ER OR NOT DEDUCTIBLE IN SUCH TAXABLE YEAR OR IN SUBSEQUENT TAXABLE YEARS
PURSUANT  TO  PARAGRAPH (D) OF SUCH SUBDIVISION THREE, OF THIRTY PERCENT
OF THE CREDIT ALLOWABLE UNDER SUCH SUBDIVISION THREE; PROVIDED, HOWEVER,
THAT THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR  ANY  TAXABLE  YEAR
SHALL ONLY BE ALLOWED IF THE AVERAGE NUMBER OF EMPLOYEES EMPLOYED BY THE
TAXPAYER  IN  THE EMPIRE ZONE, DESIGNATED PURSUANT TO ARTICLE EIGHTEEN-B
OF THE GENERAL MUNICIPAL LAW, IN WHICH SUCH PROPERTY IS  LOCATED  DURING
SUCH  TAXABLE  YEAR  IS  AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE
NUMBER OF EMPLOYEES EMPLOYED BY THE TAXPAYER IN SUCH EMPIRE ZONE, DURING
THE TAXABLE YEAR IMMEDIATELY PRECEDING THE TAXABLE YEAR  FOR  WHICH  THE
CREDIT  UNDER  SUCH  SUBDIVISION THREE IS ALLOWED AND PROVIDED, FURTHER,
THAT IF THE TAXPAYER WAS NOT SUBJECT TO TAX AND DID NOT HAVE  A  TAXABLE
YEAR  IMMEDIATELY  PRECEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER
SUBDIVISION THREE OF THIS SECTION IS ALLOWED, THE CREDIT ALLOWABLE UNDER
THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL BE ALLOWED  IF  THE  AVERAGE
NUMBER OF EMPLOYEES EMPLOYED IN SUCH EMPIRE ZONE IN SUCH TAXABLE YEAR IS
AT LEAST ONE HUNDRED ONE PERCENT OF THE AVERAGE NUMBER OF SUCH EMPLOYEES

S. 6359--D                         88                         A. 8559--D

DURING THE TAXABLE YEAR IN WHICH THE CREDIT UNDER SUCH SUBDIVISION THREE
IS ALLOWED.
  (B)  AVERAGE  NUMBER  OF  EMPLOYEES.  THE  AVERAGE NUMBER OF EMPLOYEES
EMPLOYED IN AN EMPIRE ZONE IN A TAXABLE YEAR SHALL BE COMPUTED BY ASCER-
TAINING THE NUMBER OF SUCH EMPLOYEES WITHIN  SUCH  ZONE  EXCEPT  GENERAL
EXECUTIVE  OFFICERS, EMPLOYED BY THE TAXPAYER ON THE THIRTY-FIRST DAY OF
MARCH, THE THIRTIETH DAY OF JUNE, THE THIRTIETH DAY OF SEPTEMBER AND THE
THIRTY-FIRST DAY OF DECEMBER IN THE TAXABLE YEAR, BY ADDING TOGETHER THE
NUMBER OF EMPLOYEES ASCERTAINED ON EACH OF SUCH DATES AND  DIVIDING  THE
SUM  SO  OBTAINED  BY THE NUMBER OF SUCH ABOVE-MENTIONED DATES OCCURRING
WITHIN THE TAXABLE YEAR.
  (C) CARRYOVER. IN NO EVENT SHALL THE CREDIT  HEREIN  PROVIDED  FOR  BE
ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT
IF THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT
DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED  OVER  TO  THE  FOLLOWING
YEAR  OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR
OR YEARS. IN LIEU  OF  SUCH  CARRYOVER,  ANY  SUCH  TAXPAYER,  WHICH  IS
APPROVED AS THE OWNER OF A QUALIFIED INVESTMENT PROJECT OR A SIGNIFICANT
CAPITAL  INVESTMENT  PROJECT PURSUANT TO SUBDIVISION (V) OF SECTION NINE
HUNDRED FIFTY-NINE OF THE GENERAL  MUNICIPAL  LAW,  MAY  ELECT,  ON  ITS
REPORT  FOR  ITS  TAXABLE  YEAR  WITH  RESPECT  TO  WHICH SUCH CREDIT IS
ALLOWED, TO TREAT FIFTY PERCENT OF THE AMOUNT OF SUCH  CARRYOVER  AS  AN
OVERPAYMENT  OF  TAX  TO  BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER, IN THE CASE OF SUCH OWNER OF A QUALIFIED INVESTMENT PROJECT  OR
A  SIGNIFICANT  CAPITAL  INVESTMENT  PROJECT,  ONLY FIFTY PERCENT OF THE
AMOUNT OF SUCH CARRYOVER WHICH IS ATTRIBUTABLE  TO  THE  CREDIT  ALLOWED
UNDER  THIS  SUBDIVISION  WITH RESPECT TO PROPERTY WHICH IS PART OF SUCH
PROJECT SHALL BE ALLOWED TO BE CREDITED OR REFUNDED AND SUCH OWNER SHALL
BE ALLOWED SUCH CREDIT OR REFUND ONLY FOR THOSE TAXABLE YEARS  IN  WHICH
SUCH  OWNER  WOULD  BE  ALLOWED  A  CREDIT  OR REFUND OF THE EMPIRE ZONE
INVESTMENT TAX CREDIT PURSUANT TO PARAGRAPH (D) OF SUBDIVISION THREE  OF
THIS  SECTION.  PROVIDED, FURTHER, HOWEVER, THE PROVISIONS OF SUBSECTION
(C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTAND-
ING, NO INTEREST SHALL BE PAID THEREON.
  (C-1)  ANY  CARRYOVER OF A CREDIT FROM PRIOR TAXABLE YEARS WILL NOT BE
ALLOWED IF AN EMPIRE ZONE RETENTION CERTIFICATE IS NOT  ISSUED  PURSUANT
TO  SUBDIVISION  (W)  OF  SECTION NINE HUNDRED FIFTY-NINE OF THE GENERAL
MUNICIPAL LAW TO THE EMPIRE ZONE ENTERPRISE WHICH IS THE  BASIS  OF  THE
CREDIT.
  (D)  NOTWITHSTANDING  THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL  LAW,  A  TAXPAYER  THAT  IS
CERTIFIED  AS  A  QUALIFIED  INVESTMENT PROJECT PURSUANT TO SUCH ARTICLE
EIGHTEEN-B ON THE DAY IMMEDIATELY PRECEDING THE  DAY  THE  EMPIRE  ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED CERTIFIED UNDER SUCH ARTICLE
EIGHTEEN-B  FOR  PURPOSES  OF  THIS SUBDIVISION FOR THE REMAINDER OF THE
TAXABLE YEAR IN WHICH THE EXPIRATION OCCURRED AND FOR THE NEXT  SUCCEED-
ING  NINE  TAXABLE  YEARS.  IN  ADDITION, THE AREAS DESIGNATED AS EMPIRE
ZONES IN WHICH THE TAXPAYER  IS  CERTIFIED  AS  A  QUALIFIED  INVESTMENT
PROJECT  ON  THE  DAY  IMMEDIATELY  PRECEDING  THE  DAY THE EMPIRE ZONES
PROGRAM EXPIRED SHALL CONTINUE TO BE DEEMED EMPIRE ZONES FOR PURPOSES OF

S. 6359--D                         89                         A. 8559--D

THIS SUBDIVISION FOR THE REMAINDER OF THE  TAXABLE  YEAR  IN  WHICH  THE
EXPIRATION OCCURRED AND FOR THE NEXT SUCCEEDING NINE TAXABLE YEARS.
  (E)  NOTWITHSTANDING  THE EXPIRATION OF THE EMPIRE ZONES PROGRAM UNDER
ARTICLE EIGHTEEN-B OF THE GENERAL MUNICIPAL LAW AND EXCEPT  AS  PROVIDED
IN PARAGRAPH (D) OF THIS SUBDIVISION, A TAXPAYER THAT IS CERTIFIED AS AN
EMPIRE  ZONE  BUSINESS  PURSUANT  TO  SUCH ARTICLE EIGHTEEN-B ON THE DAY
IMMEDIATELY PRECEDING THE DAY THE EMPIRE  ZONES  PROGRAM  EXPIRED  SHALL
CONTINUE  TO  BE  DEEMED  IN  THE  EMPIRE ZONE IN WHICH THE TAXPAYER WAS
CERTIFIED AS AN EMPIRE ZONE BUSINESS ON THE  DAY  IMMEDIATELY  PRECEDING
THE  DAY  THE  EMPIRE  ZONES PROGRAM EXPIRED FOR EACH OF THE THREE YEARS
NEXT SUCCEEDING THE TAXABLE YEAR FOR WHICH THE CREDIT UNDER  SUBDIVISION
THREE OF THIS SECTION IS ALLOWED.
  5.  QEZE  CREDIT  FOR  REAL PROPERTY TAXES. (A) ALLOWANCE OF CREDIT. A
TAXPAYER WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED  A
CREDIT  FOR  ELIGIBLE REAL PROPERTY TAXES, TO BE COMPUTED AS PROVIDED IN
SECTION FIFTEEN OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY  THIS  ARTI-
CLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES  THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX
BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  6.  QEZE  TAX  REDUCTION  CREDIT.  (A) ALLOWANCE OF CREDIT. A TAXPAYER
WHICH IS A QUALIFIED EMPIRE ZONE ENTERPRISE SHALL BE ALLOWED A QEZE  TAX
REDUCTION  CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION SIXTEEN OF THIS
CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED,
HOWEVER, THIS PARAGRAPH SHALL NOT APPLY TO A TAXPAYER WITH A ZONE  ALLO-
CATION FACTOR OF ONE HUNDRED PERCENT.
  7. QUALIFIED EMERGING TECHNOLOGY COMPANY EMPLOYMENT CREDIT. (A) APPLI-
CATION  OF  CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED
AS HEREINAFTER PROVIDED,  AGAINST  THE  TAX  IMPOSED  BY  THIS  ARTICLE,
PROVIDED:
  (I)  THE  TAXPAYER IS A QUALIFIED EMERGING TECHNOLOGY COMPANY PURSUANT
TO THE PROVISIONS OF SECTION THIRTY-ONE  HUNDRED  TWO-E  OF  THE  PUBLIC
AUTHORITIES LAW; AND
  (II)  THE  AVERAGE  NUMBER  OF  INDIVIDUALS  EMPLOYED FULL TIME BY THE
TAXPAYER IN NEW YORK STATE DURING THE  TAXABLE  YEAR  IS  AT  LEAST  ONE
HUNDRED  ONE  PERCENT  OF  THE  TAXPAYER'S BASE YEAR EMPLOYMENT. FOR THE
PURPOSES OF THIS SUBDIVISION, "BASE YEAR EMPLOYMENT" MEANS  THE  AVERAGE
NUMBER  OF  INDIVIDUALS  EMPLOYED FULL-TIME BY THE TAXPAYER IN THE STATE
DURING THE THREE TAXABLE YEARS IMMEDIATELY PRECEDING THE  FIRST  TAXABLE
YEAR  IN  WHICH  THE  CREDIT  IS  CLAIMED.  WHERE  THE TAXPAYER PROVIDED
FULL-TIME EMPLOYMENT WITHIN THE STATE DURING  ONLY  A  PORTION  OF  SUCH
THREE-YEAR PERIOD, THEN THE FIRST EFFECTIVE DATE FOR THE COMPANY TO TAKE
ADVANTAGE OF THIS CREDIT SHALL BE THE NEXT YEAR FOLLOWING THE FIRST FULL

S. 6359--D                         90                         A. 8559--D

TAXABLE  YEAR  THAT  THE  COMPANY  HAD  FULL-TIME EMPLOYMENT IN NEW YORK
STATE. FOR THE PURPOSES OF THIS PARAGRAPH THE TERM "THREE  YEARS"  SHALL
BE  DEEMED  TO  REFER  INSTEAD  TO THE PRIOR YEAR'S FULL-TIME EMPLOYMENT
AFTER  THE  FIRST  YEAR  AND  THE AVERAGE OF THE FIRST EIGHT QUARTERS OF
EMPLOYMENT AFTER THE FIRST TWO TAXABLE YEARS IN NEW YORK STATE.
  (B) CREDIT LIMITATION. THE CREDIT SHALL BE ALLOWED ONLY IN  THE  FIRST
TAXABLE  YEAR IN WHICH THE CREDIT IS CLAIMED AND IN EACH OF THE NEXT TWO
TAXABLE YEARS, PROVIDED THAT THE CONDITIONS OF  PARAGRAPH  (A)  OF  THIS
SUBDIVISION ARE SATISFIED IN EACH TAXABLE YEAR.
  (C) AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME. FOR THE PURPOSES
OF  THIS  SUBDIVISION,  AVERAGE NUMBER OF INDIVIDUALS EMPLOYED FULL-TIME
SHALL BE COMPUTED BY ADDING THE NUMBER OF SUCH INDIVIDUALS  EMPLOYED  BY
THE  TAXPAYER  AT  THE  END  OF EACH QUARTER DURING EACH TAXABLE YEAR OR
OTHER APPLICABLE PERIOD AND DIVIDING THE SUM SO OBTAINED BY  THE  NUMBER
OF  SUCH QUARTERS OCCURRING WITHIN SUCH TAXABLE YEAR OR OTHER APPLICABLE
PERIOD; PROVIDED HOWEVER, EXCEPT THAT IN COMPUTING BASE YEAR EMPLOYMENT,
THERE SHALL BE EXCLUDED THEREFROM ANY EMPLOYEE WITH RESPECT  TO  WHOM  A
CREDIT PROVIDED FOR UNDER SUBDIVISION SIX OF THIS SECTION IS CLAIMED FOR
THE TAXABLE YEAR.
  (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL EQUAL THE PRODUCT
OF  ONE  THOUSAND  DOLLARS  TIMES  THE  NUMBER  OF  INDIVIDUALS EMPLOYED
FULL-TIME BY THE TAXPAYER IN THE TAXABLE YEAR THAT ARE IN EXCESS OF  ONE
HUNDRED PERCENT OF THE TAXPAYER'S BASE YEAR EMPLOYMENT.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D)  OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  REDUCES
THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON
THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCT-
IBLE  IN  SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS
OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  8. QUALIFIED EMERGING  TECHNOLOGY  COMPANY  CAPITAL  TAX  CREDIT.  (A)
AMOUNT  OF  CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX
IMPOSED BY THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO  ONE
OF  THE FOLLOWING PERCENTAGES, PER EACH QUALIFIED INVESTMENT IN A QUALI-
FIED EMERGING  TECHNOLOGY  COMPANY  AS  DEFINED  IN  SECTION  THIRTY-ONE
HUNDRED  TWO-E  OF  THE  PUBLIC AUTHORITIES LAW, MADE DURING THE TAXABLE
YEAR, AND CERTIFIED BY THE COMMISSIONER, EITHER:
  (1) TEN PERCENT OF QUALIFIED INVESTMENTS IN QUALIFIED  EMERGING  TECH-
NOLOGY  COMPANIES,  EXCEPT  FOR  INVESTMENTS  MADE BY OR ON BEHALF OF AN
OWNER OF THE BUSINESS, INCLUDING, BUT NOT  LIMITED  TO,  A  STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH  (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
TAXPAYER CERTIFIES TO THE COMMISSIONER  THAT  THE  QUALIFIED  INVESTMENT
WILL  NOT  BE  SOLD, TRANSFERRED, TRADED, OR DISPOSED OF DURING THE FOUR
YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED; OR
  (2) TWENTY PERCENT OF  QUALIFIED  INVESTMENTS  IN  QUALIFIED  EMERGING
TECHNOLOGY  COMPANIES, EXCEPT FOR INVESTMENTS MADE BY OR ON BEHALF OF AN
OWNER OF THE BUSINESS, INCLUDING, BUT NOT  LIMITED  TO,  A  STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH  (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED

S. 6359--D                         91                         A. 8559--D

SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND PROVIDED, HOWEVER, THAT THE
TAXPAYER CERTIFIES TO THE COMMISSIONER  THAT  THE  QUALIFIED  INVESTMENT
WILL  NOT  BE  SOLD, TRANSFERRED, TRADED, OR DISPOSED OF DURING THE NINE
YEARS FOLLOWING THE YEAR IN WHICH THE CREDIT IS FIRST CLAIMED.
  (B)  QUALIFIED  INVESTMENT.  "QUALIFIED INVESTMENT" MEANS THE CONTRIB-
UTION OF PROPERTY TO A CORPORATION IN EXCHANGE FOR ORIGINAL ISSUE  CAPI-
TAL STOCK OR OTHER OWNERSHIP INTEREST, THE CONTRIBUTION OF PROPERTY TO A
PARTNERSHIP  IN EXCHANGE FOR AN INTEREST IN THE PARTNERSHIP, AND SIMILAR
CONTRIBUTIONS IN THE CASE OF A BUSINESS ENTITY NOT IN CORPORATE OR PART-
NERSHIP FORM IN EXCHANGE FOR AN OWNERSHIP INTEREST IN SUCH ENTITY.   THE
TOTAL  AMOUNT OF CREDIT ALLOWABLE TO A TAXPAYER UNDER THIS PROVISION FOR
ALL YEARS, TAKEN IN THE AGGREGATE, SHALL NOT EXCEED  ONE  HUNDRED  FIFTY
THOUSAND  DOLLARS  IN  THE CASE OF INVESTMENTS MADE PURSUANT TO SUBPARA-
GRAPH ONE OF PARAGRAPH (A) OF THIS  SUBDIVISION  AND  SHALL  NOT  EXCEED
THREE  HUNDRED THOUSAND DOLLARS IN THE CASE OF INVESTMENTS MADE PURSUANT
TO SUBPARAGRAPH TWO OF PARAGRAPH (A) OF THIS SUBDIVISION.
  (C) CARRYOVER. IN NO EVENT SHALL THE  CREDIT  AND  CARRYOVER  OF  SUCH
CREDIT  ALLOWED  UNDER  THIS  SUBDIVISION  FOR  ANY TAXABLE YEAR, IN THE
AGGREGATE, REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  FIXED
DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF THE AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF  THE  TAXPAYER
OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, OR IF ANY
PART OF THE CREDIT OR CARRYOVERS OF SUCH CREDIT MAY NOT BE DEDUCTED FROM
THE TAX OTHERWISE DUE BY REASON OF THE FINAL SENTENCE OF THIS PARAGRAPH,
ANY AMOUNT OF CREDIT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND
MAY BE DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.  IN  ADDITION,  THE
AMOUNT  OF  SUCH  CREDIT,  AND  CARRYOVERS OF SUCH CREDIT TO THE TAXABLE
YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY  NOT,  IN  THE  AGGREGATE,
EXCEED  FIFTY  PERCENT OF THE TAX IMPOSED UNDER SECTION TWO HUNDRED NINE
OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY CREDIT  PROVIDED  FOR  BY
THIS SECTION.
  (D)  RECAPTURE.  (1)  WHERE  A  TAXPAYER SELLS, TRANSFERS OR OTHERWISE
DISPOSES OF CORPORATE STOCK, A PARTNERSHIP INTEREST OR  OTHER  OWNERSHIP
INTEREST ARISING FROM THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE
BASIS, IN WHOLE OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR
UNDER SUBPARAGRAPH ONE OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN
INVESTMENT  WHICH  WAS  THE  BASIS FOR SUCH ALLOWANCE IS, IN WHOLE OR IN
PART, RECOVERED BY SUCH  TAXPAYER,  AND  SUCH  DISPOSITION  OR  RECOVERY
OCCURS  DURING  THE  TAXABLE  YEAR OR WITHIN FORTY-EIGHT MONTHS FROM THE
CLOSE OF THE TAXABLE YEAR WITH RESPECT TO WHICH SUCH CREDIT IS  ALLOWED,
THE  TAXPAYER  SHALL ADD BACK, WITH RESPECT TO THE TAXABLE YEAR IN WHICH
THE DISPOSITION OR  RECOVERY  DESCRIBED  ABOVE  OCCURRED,  THE  REQUIRED
PORTION OF THE CREDIT ORIGINALLY ALLOWED.
  (2)  WHERE A TAXPAYER SELLS, TRANSFERS OR OTHERWISE DISPOSES OF CORPO-
RATE STOCK, A PARTNERSHIP INTEREST OR OTHER OWNERSHIP  INTEREST  ARISING
FROM  THE MAKING OF A QUALIFIED INVESTMENT WHICH WAS THE BASIS, IN WHOLE
OR IN PART, FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR UNDER  SUBPARA-
GRAPH  TWO  OF PARAGRAPH (A) OF THIS SUBDIVISION, OR WHERE AN INVESTMENT
WHICH WAS THE BASIS FOR SUCH ALLOWANCE IS IN ANY MANNER, IN WHOLE OR  IN
PART,  RECOVERED  BY  SUCH  TAXPAYER,  AND  SUCH DISPOSITION OR RECOVERY
OCCURS DURING THE TAXABLE YEAR OR WITHIN ONE HUNDRED EIGHT  MONTHS  FROM
THE  CLOSE  OF  THE  TAXABLE  YEAR  WITH RESPECT TO WHICH SUCH CREDIT IS
ALLOWED, THE TAXPAYER SHALL ADD BACK, WITH RESPECT TO THE  TAXABLE  YEAR

S. 6359--D                         92                         A. 8559--D

IN  WHICH  THE  DISPOSITION OR RECOVERY DESCRIBED IN SUBPARAGRAPH ONE OF
THIS PARAGRAPH OCCURRED THE REQUIRED PORTION OF  THE  CREDIT  ORIGINALLY
ALLOWED.
  (3) THE REQUIRED PORTION OF THE CREDIT ORIGINALLY ALLOWED SHALL BE THE
PRODUCT  OF  (A) THE PORTION OF SUCH CREDIT ATTRIBUTABLE TO THE PROPERTY
DISPOSED OF AND (B) THE APPLICABLE PERCENTAGE.
  (4) THE APPLICABLE PERCENTAGE SHALL BE:
  (A) FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)
OF THIS SUBDIVISION:
  (I)  ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS WITHIN
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED  OR  WITHIN
TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
  (II)  SEVENTY-FIVE PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE
THAN TWELVE BUT NOT MORE THAN TWENTY-FOUR MONTHS AFTER THE  END  OF  THE
TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (III)  FIFTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
TWENTY-FOUR MONTHS BUT NOT MORE THAN THIRTY-SIX MONTHS AFTER THE END  OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
  (IV)  TWENTY-FIVE  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE
THAN THIRTY-SIX MONTHS BUT NOT MORE THAN FORTY-EIGHT  MONTHS  AFTER  THE
END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED; OR
  (B)  FOR CREDITS ALLOWED PURSUANT TO SUBPARAGRAPH TWO OF PARAGRAPH (A)
OF THIS SUBDIVISION:
  (I) ONE HUNDRED PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  WITHIN
THE  TAXABLE  YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED OR WITHIN
TWELVE MONTHS OF THE END OF SUCH TAXABLE YEAR,
  (II) EIGHTY PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS  MORE  THAN
TWELVE BUT NOT MORE THAN FORTY-EIGHT MONTHS AFTER THE END OF THE TAXABLE
YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (III)  SIXTY  PERCENT, IF THE DISPOSITION OR RECOVERY OCCURS MORE THAN
FORTY-EIGHT MONTHS BUT NOT MORE THAN SEVENTY-TWO MONTHS AFTER THE END OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED,
  (IV) FORTY PERCENT, IF THE DISPOSITION OR RECOVERY  OCCURS  MORE  THAN
SEVENTY-TWO  MONTHS BUT NOT MORE THAN NINETY-SIX MONTHS AFTER THE END OF
THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED, OR
  (V) TWENTY PERCENT, IF THE DISPOSITION OR RECOVERY  OCCURS  MORE  THAN
NINETY-SIX  MONTHS  BUT NOT MORE THAN ONE HUNDRED EIGHT MONTHS AFTER THE
END OF THE TAXABLE YEAR WITH RESPECT TO WHICH THE CREDIT IS ALLOWED.
  9. CREDIT FOR THE  SPECIAL  ADDITIONAL  MORTGAGE  RECORDING  TAX.  (A)
APPLICATION OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE CRED-
ITED AGAINST THE TAX IMPOSED BY THIS ARTICLE, EQUAL TO THE AMOUNT OF THE
SPECIAL  ADDITIONAL MORTGAGE RECORDING TAX PAID BY THE TAXPAYER PURSUANT
TO  THE  PROVISIONS  OF  SUBDIVISION  ONE-A  OF  SECTION   TWO   HUNDRED
FIFTY-THREE OF THIS CHAPTER OR MORTGAGES RECORDED. PROVIDED, HOWEVER, NO
CREDIT  SHALL  BE  ALLOWED  WITH  RESPECT TO A MORTGAGE OF REAL PROPERTY
PRINCIPALLY IMPROVED OR  TO  BE  IMPROVED  BY  ONE  OR  MORE  STRUCTURES
CONTAINING  IN  THE  AGGREGATE  NOT  MORE  THAN SIX RESIDENTIAL DWELLING
UNITS, EACH DWELLING UNIT HAVING ITS OWN  SEPARATE  COOKING  FACILITIES,
WHERE  THE  REAL  PROPERTY  IS  LOCATED  IN  ONE OR MORE OF THE COUNTIES
COMPRISING  THE  METROPOLITAN  COMMUTER  TRANSPORTATION  AREA.  PROVIDED
FURTHER,  HOWEVER, NO CREDIT SHALL BE ALLOWED WITH RESPECT TO A MORTGAGE
OF REAL PROPERTY PRINCIPALLY IMPROVED OR TO BE IMPROVED BY ONE  OR  MORE
STRUCTURES  CONTAINING  IN  THE  AGGREGATE NOT MORE THAN SIX RESIDENTIAL
DWELLING UNITS, EACH DWELLING  UNIT  HAVING  ITS  OWN  SEPARATE  COOKING
FACILITIES, WHERE THE REAL PROPERTY IS LOCATED IN THE COUNTY OF ERIE.

S. 6359--D                         93                         A. 8559--D

  (B)  CARRYOVER.  IN  NO  EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE
ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. IF, HOWEVER, THE  AMOUNT
OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR, INCLUD-
ING  ANY  CREDIT CARRIED OVER FROM A PRIOR TAXABLE YEAR, REDUCES THE TAX
TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXA-
BLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  10. CREDIT FOR SERVICING CERTAIN MORTGAGES. (A) GENERAL. EVERY TAXPAY-
ER MEETING THE REQUIREMENTS OF THE STATE OF  NEW  YORK  MORTGAGE  AGENCY
APPLICABLE  TO THE SERVICING OF MORTGAGES ACQUIRED BY SUCH AGENCY PURSU-
ANT TO THE STATE OF NEW YORK  MORTGAGE  AGENCY  ACT,  WHICH  SHALL  HAVE
ENTERED  INTO  A  CONTRACT WITH THE STATE OF NEW YORK MORTGAGE AGENCY TO
SERVICE MORTGAGES ACQUIRED BY SUCH AGENCY PURSUANT TO THE STATE  OF  NEW
YORK  MORTGAGE  AGENCY ACT, SHALL HAVE CREDITED TO IT ANNUALLY AN AMOUNT
EQUAL TO TWO AND NINETY-THREE ONE HUNDREDTHS PER  CENTUM  OF  THE  TOTAL
PRINCIPAL AND INTEREST COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR
ON  EACH  SUCH  MORTGAGE  SECURED BY A LIEN ON REAL ESTATE IMPROVED BY A
ONE-FAMILY TO FOUR-FAMILY RESIDENTIAL STRUCTURE AND AN AMOUNT  EQUAL  TO
THE  INTEREST  COLLECTED BY THE TAXPAYER DURING ITS TAXABLE YEAR ON EACH
SUCH MORTGAGE SECURED BY A LIEN ON REAL PROPERTY IMPROVED BY A STRUCTURE
OCCUPIED AS THE RESIDENCE OF FIVE OR MORE FAMILIES LIVING  INDEPENDENTLY
OF  EACH  OTHER, MULTIPLIED BY A FRACTION THE DENOMINATOR OF WHICH SHALL
BE THE INTEREST RATE PAYABLE ON THE MORTGAGE (COMPUTED TO  FIVE  DECIMAL
PLACES) AND THE NUMERATOR OF WHICH SHALL BE .00125 IN THE CASE OF SUCH A
MORTGAGE  ACQUIRED BY SUCH AGENCY FOR LESS THAN ONE MILLION DOLLARS, AND
.00100 IN THE CASE OF SUCH A MORTGAGE ACQUIRED BY SUCH  AGENCY  FOR  ONE
MILLION DOLLARS OR MORE. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER THIS
SUBDIVISION  REDUCE THE TAX TO LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
TEN  OF  THIS ARTICLE. IN COMPUTING SUCH TAX CREDIT FOR THE SERVICING OF
MORTGAGES ON  ONE-FAMILY  TO  FOUR-FAMILY  RESIDENTIAL  STRUCTURES,  THE
TAXPAYER  SHALL NOT BE ENTITLED TO CREDIT FOR THE COLLECTION OF CURTAIL-
MENT OR PAYMENTS IN DISCHARGE OF ANY SUCH MORTGAGE. FOR THE PURPOSES  OF
THIS SUBDIVISION,
  (B)(I) A "CURTAILMENT" SHALL MEAN AMOUNTS PAID BY MORTGAGORS
  (A)  IN  EXCESS  OF  THE  MONTHLY  CONSTANT  DUE  DURING  THE MONTH OF
COLLECTION AND
  (B) IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE  MORTGAGE;  IN
THE ABSENCE OF CLEAR EVIDENCE TO THE CONTRARY, AMOUNTS PAID IN EXCESS OF
THE  MONTHLY CONSTANT DUE DURING THE MONTH OF COLLECTION SHALL BE DEEMED
TO BE IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE; AND
  (II) "MONTHLY CONSTANT" SHALL MEAN THE AMOUNT OF PRINCIPAL AND  INTER-
EST WHICH IS DUE AND PAYABLE ACCORDING TO THE MORTGAGE DOCUMENTS ON EACH
PERIODIC PAYMENT DATE.
  11.  AGRICULTURAL  PROPERTY  TAX CREDIT. (A) GENERAL. IN THE CASE OF A
TAXPAYER WHICH IS AN ELIGIBLE FARMER OR AN ELIGIBLE FARMER WHO HAS  PAID
TAXES  PURSUANT  TO A LAND CONTRACT, THERE SHALL BE ALLOWED A CREDIT FOR
THE ALLOWABLE SCHOOL DISTRICT PROPERTY TAXES. THE TERM "ALLOWABLE SCHOOL
DISTRICT PROPERTY TAXES" MEANS THE SCHOOL DISTRICT PROPERTY  TAXES  PAID
DURING  THE  TAXABLE YEAR ON QUALIFIED AGRICULTURAL PROPERTY, SUBJECT TO
THE ACREAGE LIMITATION PROVIDED IN PARAGRAPH (E) OF THIS SUBDIVISION AND
THE INCOME LIMITATION PROVIDED IN PARAGRAPH (F) OF THIS SUBDIVISION.

S. 6359--D                         94                         A. 8559--D

  (B) ELIGIBLE FARMER.  FOR  PURPOSES  OF  THIS  SUBDIVISION,  THE  TERM
"ELIGIBLE FARMER" MEANS A TAXPAYER WHOSE FEDERAL GROSS INCOME FROM FARM-
ING  FOR THE TAXABLE YEAR IS AT LEAST TWO-THIRDS OF EXCESS FEDERAL GROSS
INCOME. THE TERM "ELIGIBLE FARMER" ALSO  INCLUDES  A  CORPORATION  OTHER
THAN  THE  TAXPAYER  OF RECORD FOR QUALIFIED AGRICULTURAL LAND WHICH HAS
PAID THE SCHOOL DISTRICT PROPERTY TAXES  ON  SUCH  LAND  PURSUANT  TO  A
CONTRACT FOR THE FUTURE PURCHASE OF SUCH LAND; PROVIDED THAT SUCH CORPO-
RATION  HAS  A  FEDERAL  GROSS  INCOME FROM FARMING FOR THE TAXABLE YEAR
WHICH IS AT  LEAST  TWO-THIRDS  OF  EXCESS  FEDERAL  GROSS  INCOME;  AND
PROVIDED FURTHER THAT, IN DETERMINING SUCH INCOME ELIGIBILITY, A TAXPAY-
ER  MAY,  FOR  ANY  TAXABLE  YEAR, USE THE AVERAGE OF SUCH FEDERAL GROSS
INCOME FROM FARMING FOR THAT TAXABLE YEAR AND SUCH INCOME  FOR  THE  TWO
CONSECUTIVE  TAXABLE  YEARS  IMMEDIATELY  PRECEDING  SUCH  TAXABLE YEAR.
EXCESS FEDERAL GROSS INCOME MEANS THE AMOUNT  OF  FEDERAL  GROSS  INCOME
FROM  ALL  SOURCES  FOR  THE  TAXABLE  YEAR IN EXCESS OF THIRTY THOUSAND
DOLLARS. FOR THE PURPOSES OF THIS PARAGRAPH, PAYMENTS FROM  THE  STATE'S
FARMLAND  PROTECTION PROGRAM, ADMINISTERED BY THE DEPARTMENT OF AGRICUL-
TURE AND MARKETS, SHALL BE INCLUDED AS FEDERAL GROSS INCOME FROM FARMING
FOR OTHERWISE ELIGIBLE FARMERS.
  (C) SCHOOL DISTRICT PROPERTY TAXES. FOR PURPOSES OF THIS  SUBDIVISION,
THE  TERM  "SCHOOL  DISTRICT  PROPERTY  TAXES" MEANS ALL PROPERTY TAXES,
SPECIAL AD VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE  OF  PENAL-
TIES  AND INTEREST, LEVIED FOR SCHOOL DISTRICT PURPOSES ON THE QUALIFIED
AGRICULTURAL PROPERTY OWNED BY THE TAXPAYER.
  (D) QUALIFIED AGRICULTURAL PROPERTY. FOR PURPOSES OF THIS SUBDIVISION,
THE TERM "QUALIFIED AGRICULTURAL PROPERTY" MEANS LAND  LOCATED  IN  THIS
STATE  WHICH  IS USED IN AGRICULTURAL PRODUCTION, AND LAND IMPROVEMENTS,
STRUCTURES AND BUILDINGS (EXCLUDING BUILDINGS USED  FOR  THE  TAXPAYER'S
RESIDENTIAL  PURPOSE) LOCATED ON SUCH LAND WHICH ARE USED OR OCCUPIED TO
CARRY OUT SUCH PRODUCTION. QUALIFIED AGRICULTURAL PROPERTY ALSO INCLUDES
LAND SET ASIDE OR RETIRED UNDER A  FEDERAL  SUPPLY  MANAGEMENT  OR  SOIL
CONSERVATION  PROGRAM  OR  LAND THAT AT THE TIME IT BECOMES SUBJECT TO A
CONSERVATION EASEMENT MET THE REQUIREMENTS UNDER THIS PARAGRAPH.
  (E) ACREAGE LIMITATION. (I) ELIGIBLE TAXES.  IN  THE  EVENT  THAT  THE
QUALIFIED  AGRICULTURAL  PROPERTY OWNED BY THE TAXPAYER INCLUDES LAND IN
EXCESS OF THE BASE ACREAGE AS PROVIDED IN THIS PARAGRAPH, THE AMOUNT  OF
SCHOOL  DISTRICT  PROPERTY TAXES ELIGIBLE FOR CREDIT UNDER THIS SUBDIVI-
SION SHALL BE THAT PORTION OF THE SCHOOL DISTRICT PROPERTY  TAXES  WHICH
BEARS  THE  SAME  RATIO TO THE TOTAL SCHOOL DISTRICT PROPERTY TAXES PAID
DURING THE TAXABLE YEAR, AS THE ACREAGE ALLOWABLE UNDER  THIS  PARAGRAPH
BEARS TO THE ENTIRE ACREAGE OF SUCH LAND.
  (II)  ALLOWABLE  ACREAGE. THE ALLOWABLE ACREAGE IS THE SUM OF THE BASE
ACREAGE SET FORTH BELOW AND FIFTY PERCENT OF  THE  INCREMENTAL  ACREAGE.
THE INCREMENTAL ACREAGE IS THE EXCESS OF THE ENTIRE ACREAGE OF QUALIFIED
AGRICULTURAL LAND OWNED BY THE TAXPAYER OVER THE BASE ACREAGE. EXCEPT AS
PROVIDED  IN  SUBPARAGRAPH  (III) OF THIS PARAGRAPH, THE BASE ACREAGE IS
THREE HUNDRED FIFTY ACRES.
THE TOTAL BASE ACREAGE MAY BE  INCREASED  BY  ANY  ACREAGE  ENROLLED  OR
PARTICIPATING DURING THE TAXABLE YEAR IN A FEDERAL ENVIRONMENTAL CONSER-
VATION  ACREAGE  RESERVE  PROGRAM PURSUANT TO TITLE THREE OF THE FEDERAL
AGRICULTURE IMPROVEMENT AND REFORM ACT OF NINETEEN HUNDRED NINETY-SIX.
  (III) BASE ACREAGE OF RELATED PERSONS. WHERE THE TAXPAYER AND  ONE  OR
MORE  RELATED  PERSONS  EACH  OWN QUALIFIED AGRICULTURAL PROPERTY ON THE
FIRST DAY OF MARCH OF ANY YEAR, THE BASE ACREAGE UNDER SUBPARAGRAPH (II)
OF THIS PARAGRAPH SHALL  BE  DIVIDED  EQUALLY  AND  ALLOTTED  AMONG  THE
TAXPAYER  AND  SUCH RELATED PERSONS, AND THE TAXPAYER'S BASE ACREAGE FOR

S. 6359--D                         95                         A. 8559--D

THE TAXABLE YEAR WHICH INCLUDES SUCH MARCH FIRST SHALL BE LIMITED TO ITS
ALLOTTED SHARE. PROVIDED, HOWEVER, IF THE TAXPAYER AND ALL SUCH  RELATED
PERSONS CONSENT (AT SUCH TIME AND IN SUCH MANNER AS THE COMMISSIONER MAY
PRESCRIBE)  TO AN UNEQUAL DIVISION, THE TAXPAYER'S BASE ACREAGE FOR SUCH
TAXABLE YEAR SHALL BE LIMITED TO ITS ALLOTTED SHARE UNDER  SUCH  UNEQUAL
DIVISION.
  (IV)  RELATED  PERSONS. (A) FOR PURPOSES OF SUBPARAGRAPH (III) OF THIS
PARAGRAPH, THE TERM "RELATED PERSON" MEANS:
  (I) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, WHERE THE TAXPAY-
ER AND THE CORPORATION ARE MEMBERS OF  THE  SAME  CONTROLLED  GROUP,  AS
DEFINED IN SECTION 267(F) OF THE INTERNAL REVENUE CODE;
  (II)  AN  INDIVIDUAL,  PARTNERSHIP,  ESTATE  OR TRUST, WHERE MORE THAN
FIFTY PERCENT IN VALUE OF THE  OUTSTANDING  STOCK  OF  THE  TAXPAYER  IS
OWNED,  DIRECTLY  OR INDIRECTLY, BY OR FOR SUCH INDIVIDUAL, PARTNERSHIP,
ESTATE OR TRUST OR BY OR FOR THE GRANTOR OF SUCH TRUST;
  (III) A CORPORATION SUBJECT TO TAX UNDER THIS ARTICLE, OR  A  PARTNER-
SHIP,  ESTATE  OR TRUST, IF THE SAME PERSON OWNS MORE THAN FIFTY PERCENT
IN VALUE OF THE OUTSTANDING STOCK OF THE TAXPAYER AND  MORE  THAN  FIFTY
PERCENT  IN  VALUE OF  THE OUTSTANDING STOCK OF THE CORPORATION, OR MORE
THAN FIFTY PERCENT OF THE CAPITAL OR PROFITS INTEREST  IN  THE  PARTNER-
SHIP,  OR  MORE  THAN  FIFTY  PERCENT  OF THE BENEFICIAL INTEREST IN THE
ESTATE OR TRUST;
  (IV) A PARTNERSHIP, ESTATE  OR  TRUST  OF  WHICH  THE  TAXPAYER  OWNS,
DIRECTLY  OR INDIRECTLY, MORE THAN FIFTY PERCENT OF THE CAPITAL, PROFITS
OR BENEFICIAL INTEREST.
  (B) IN DETERMINING WHETHER A PERSON IS A  RELATED  PERSON  WITHIN  THE
MEANING OF THIS SUBPARAGRAPH:
  (I)  STOCK  OWNED,  DIRECTLY  OR  INDIRECTLY, BY OR FOR A CORPORATION,
PARTNERSHIP, ESTATE OR TRUST SHALL BE CONSIDERED AS BEING OWNED  PROPOR-
TIONATELY BY OR FOR ITS SHAREHOLDERS, PARTNERS OR BENEFICIARIES;
  (II)  AN  INDIVIDUAL  SHALL  BE  CONSIDERED AS OWNING THE STOCK OWNED,
DIRECTLY OR INDIRECTLY, BY OR FOR HIS SPOUSE;
  (III) STOCK CONSTRUCTIVELY OWNED BY A PERSON BY REASON OF THE APPLICA-
TION OF ITEM (I) OF THIS CLAUSE SHALL, FOR THE PURPOSE OF APPLYING  ITEM
(I) OR (II) OF THIS CLAUSE, BE TREATED AS ACTUALLY OWNED BY SUCH PERSON.
  (F)  INCOME  LIMITATION. (I) IN THE EVENT THAT THE MODIFIED ENTIRE NET
INCOME OF THE TAXPAYER EXCEEDS TWO HUNDRED THOUSAND DOLLARS, THE  ALLOW-
ABLE SCHOOL DISTRICT PROPERTY TAXES UNDER PARAGRAPH (A) OF THIS SUBDIVI-
SION SHALL BE THE ELIGIBLE TAXES UNDER SUBPARAGRAPH (I) OF PARAGRAPH (E)
OF  THIS SUBDIVISION REDUCED BY THE PRODUCT OF THE AMOUNT OF SUCH ELIGI-
BLE TAXES AND A PERCENTAGE, SUCH PERCENTAGE TO BE DETERMINED  BY  MULTI-
PLYING  ONE HUNDRED PERCENT BY A FRACTION, THE NUMERATOR OF WHICH IS THE
LESSER OF ONE HUNDRED THOUSAND DOLLARS OR THE EXCESS OF  THE  TAXPAYER'S
MODIFIED  ENTIRE  NET  INCOME  OVER TWO HUNDRED THOUSAND DOLLARS AND THE
DENOMINATOR OF WHICH IS ONE HUNDRED THOUSAND DOLLARS.  FOR  PURPOSES  OF
THE  PRECEDING  SENTENCE,  THE  TERM "ELIGIBLE TAXES", WHERE THE ACREAGE
LIMITATION OF PARAGRAPH (E) OF THIS SUBDIVISION DOES  NOT  APPLY,  SHALL
MEAN  THE  TOTAL  SCHOOL DISTRICT PROPERTY TAXES PAID DURING THE TAXABLE
YEAR.
  (II) THE TERM "MODIFIED ENTIRE NET INCOME" MEANS THE ENTIRE NET INCOME
FOR THE TAXABLE YEAR REDUCED BY THE AMOUNT OF  PRINCIPAL  PAID  ON  FARM
INDEBTEDNESS DURING THE TAXABLE YEAR. THE TERM "FARM INDEBTEDNESS" MEANS
DEBT INCURRED OR REFINANCED WHICH IS SECURED BY FARM PROPERTY, WHERE THE
PROCEEDS  OF  THE  DEBT  ARE  DISBURSED FOR EXPENDITURES INCURRED IN THE
BUSINESS OF FARMING.

S. 6359--D                         96                         A. 8559--D

  (G) CARRYOVER. IN NO EVENT SHALL THE CREDIT PROVIDED HEREIN BE ALLOWED
IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS  THAN  THE  FIXED
DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE.  IF,  HOWEVER,  THE  AMOUNT  OF
CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND  MAY
BE  DEDUCTED  FROM  THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. PROVIDED,
HOWEVER, IN LIEU OF CARRYING OVER THE UNUSED PORTION OF SUCH CREDIT, THE
TAXPAYER MAY ELECT TO TREAT SUCH UNUSED PORTION AS AN OVERPAYMENT OF TAX
TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF  SECTION
ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER EXCEPT THAT NO INTEREST SHALL BE
PAID ON SUCH OVERPAYMENT.
  (H)  NONQUALIFIED  USE. (I) NO CREDIT IN CONVERSION YEAR. IN THE EVENT
THAT QUALIFIED AGRICULTURAL PROPERTY IS CONVERTED  BY  THE  TAXPAYER  TO
NONQUALIFIED  USE,  CREDIT  UNDER  THIS SUBDIVISION SHALL NOT BE ALLOWED
WITH RESPECT TO SUCH PROPERTY FOR THE TAXABLE YEAR  OF  CONVERSION  (THE
CONVERSION YEAR).
  (II)  CREDIT RECAPTURE. IF THE CONVERSION BY THE TAXPAYER OF QUALIFIED
AGRICULTURAL PROPERTY TO NONQUALIFIED USE OCCURS DURING  THE  PERIOD  OF
THE  TWO  TAXABLE  YEARS FOLLOWING THE TAXABLE YEAR FOR WHICH THE CREDIT
UNDER THIS SUBDIVISION WAS FIRST CLAIMED WITH RESPECT TO SUCH  PROPERTY,
THE  CREDIT  ALLOWED WITH RESPECT TO SUCH PROPERTY FOR THE TAXABLE YEARS
PRIOR TO THE CONVERSION YEAR MUST BE ADDED BACK IN THE CONVERSION  YEAR.
WHERE  THE PROPERTY CONVERTED INCLUDES LAND, AND WHERE THE CONVERSION IS
OF ONLY A PORTION OF SUCH LAND, THE CREDIT ALLOWED WITH RESPECT  TO  THE
PROPERTY  CONVERTED SHALL BE DETERMINED BY MULTIPLYING THE ENTIRE CREDIT
UNDER THIS SUBDIVISION FOR THE TAXABLE YEARS  PRIOR  TO  THE  CONVERSION
YEAR  BY A FRACTION, THE NUMERATOR OF WHICH IS THE ACREAGE CONVERTED AND
THE DENOMINATOR OF WHICH IS THE ENTIRE ACREAGE OF SUCH LAND OWNED BY THE
TAXPAYER IMMEDIATELY PRIOR TO THE CONVERSION.
  (III) EXCEPTION TO RECAPTURE.  SUBPARAGRAPH  (II)  OF  THIS  PARAGRAPH
SHALL NOT APPLY TO THE CONVERSION OF PROPERTY WHERE THE CONVERSION IS BY
REASON  OF  INVOLUNTARY  CONVERSION,  WITHIN  THE MEANING OF SECTION ONE
THOUSAND THIRTY-THREE OF THE INTERNAL REVENUE CODE.
  (IV) CONVERSION TO NONQUALIFIED USE. FOR PURPOSES OF THIS PARAGRAPH, A
SALE OR OTHER DISPOSITION OF QUALIFIED AGRICULTURAL PROPERTY ALONE SHALL
NOT CONSTITUTE A CONVERSION TO A NONQUALIFIED USE.
  (I) SPECIAL RULES. FOR PURPOSES OF THIS SUBDIVISION, THE TERM "FEDERAL
GROSS  INCOME  FROM  FARMING"  SHALL  INCLUDE  GROSS  INCOME  FROM   THE
PRODUCTION OF MAPLE SYRUP, CIDER, CHRISTMAS TREES DERIVED FROM A MANAGED
CHRISTMAS  TREE  OPERATION WHETHER DUG FOR TRANSPLANTING OR CUT FROM THE
STUMP, OR FROM A COMMERCIAL  HORSE  BOARDING  OPERATION  AS  DEFINED  IN
SUBDIVISION THIRTEEN OF SECTION THREE HUNDRED ONE OF THE AGRICULTURE AND
MARKETS  LAW,  OR  FROM  THE SALE OF WINE FROM A LICENSED FARM WINERY AS
PROVIDED FOR IN ARTICLE SIX OF THE ALCOHOLIC BEVERAGE  CONTROL  LAW,  OR
FROM  THE  SALE  OF CIDER FROM A LICENSED FARM CIDERY AS PROVIDED FOR IN
SECTION FIFTY-EIGHT-C OF THE ALCOHOLIC BEVERAGE CONTROL LAW.
  (J) ELECTION TO DEEM GROSS INCOME OF NEW YORK C CORPORATION TO  SHARE-
HOLDERS.  FOR  PURPOSES  OF  THIS SUBDIVISION, FEDERAL GROSS INCOME FROM
FARMING SHALL BE ZERO FOR ANY TAXABLE YEAR OF A NEW YORK  C  CORPORATION
FOR WHICH THE ELECTION UNDER PARAGRAPH NINE OF SUBSECTION (N) OF SECTION
SIX HUNDRED SIX OF THIS CHAPTER IS IN EFFECT.
  12.  CREDIT FOR EMPLOYMENT OF PERSONS WITH DISABILITIES. (A) ALLOWANCE
OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HERE-

S. 6359--D                         97                         A. 8559--D

INAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, FOR EMPLOYING
WITHIN THE STATE A QUALIFIED EMPLOYEE.
  (B) QUALIFIED EMPLOYEE. A QUALIFIED EMPLOYEE IS AN INDIVIDUAL:
  (1) WHO IS CERTIFIED BY THE EDUCATION DEPARTMENT, OR IN THE CASE OF AN
INDIVIDUAL  WHO  IS  BLIND  OR VISUALLY HANDICAPPED, BY THE STATE AGENCY
RESPONSIBLE FOR PROVISION OF VOCATIONAL REHABILITATION SERVICES  TO  THE
BLIND  AND VISUALLY HANDICAPPED: (I) AS A PERSON WITH A DISABILITY WHICH
CONSTITUTES OR RESULTS IN A SUBSTANTIAL HANDICAP TO EMPLOYMENT AND  (II)
AS  HAVING  COMPLETED  OR  AS RECEIVING SERVICES UNDER AN INDIVIDUALIZED
WRITTEN REHABILITATION PLAN APPROVED  BY  THE  EDUCATION  DEPARTMENT  OR
OTHER  STATE  AGENCY RESPONSIBLE FOR PROVIDING VOCATIONAL REHABILITATION
SERVICES TO SUCH INDIVIDUAL; AND
  (2) WHO HAS WORKED ON A FULL-TIME BASIS FOR THE EMPLOYER WHO IS CLAIM-
ING THE CREDIT FOR AT LEAST ONE HUNDRED  EIGHTY  DAYS  OR  FOUR  HUNDRED
HOURS.
  (C)  AMOUNT  OF  CREDIT.  EXCEPT  AS PROVIDED IN PARAGRAPH (D) OF THIS
SUBDIVISION, THE AMOUNT OF CREDIT SHALL BE THIRTY-FIVE  PERCENT  OF  THE
FIRST  SIX THOUSAND DOLLARS IN QUALIFIED FIRST-YEAR WAGES EARNED BY EACH
QUALIFIED EMPLOYEE. "QUALIFIED FIRST-YEAR WAGES"  MEANS  WAGES  PAID  OR
INCURRED  BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED EMPLOYEES
WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE,  TO  SERVICES
RENDERED  DURING THE ONE-YEAR PERIOD BEGINNING WITH THE DAY THE EMPLOYEE
BEGINS WORK FOR THE TAXPAYER.
  (D) CREDIT WHERE FEDERAL WORK OPPORTUNITY  TAX  CREDIT  APPLIES.  WITH
RESPECT TO ANY QUALIFIED EMPLOYEE WHOSE QUALIFIED FIRST-YEAR WAGES UNDER
PARAGRAPH  (C)  OF THIS SUBDIVISION ALSO CONSTITUTE QUALIFIED FIRST-YEAR
WAGES FOR PURPOSES OF THE WORK OPPORTUNITY  TAX  CREDIT  FOR  VOCATIONAL
REHABILITATION REFERRALS UNDER SECTION FIFTY-ONE OF THE INTERNAL REVENUE
CODE,  THE AMOUNT OF CREDIT UNDER  THIS SUBDIVISION SHALL BE THIRTY-FIVE
PERCENT OF THE FIRST SIX THOUSAND DOLLARS IN QUALIFIED SECOND-YEAR WAGES
EARNED BY EACH SUCH EMPLOYEE. "QUALIFIED SECOND-YEAR WAGES" MEANS  WAGES
PAID  OR  INCURRED  BY THE TAXPAYER DURING THE TAXABLE YEAR TO QUALIFIED
EMPLOYEES WHICH ARE ATTRIBUTABLE, WITH RESPECT TO ANY SUCH EMPLOYEE,  TO
SERVICES  RENDERED  DURING  THE ONE-YEAR PERIOD BEGINNING ONE YEAR AFTER
THE EMPLOYEE BEGINS WORK FOR THE TAXPAYER.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
FIXED  DOLLAR  MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF  THE  AMOUNT
OF  CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES
THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS  TAX  BASED  ON
THE  FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN
SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING  YEAR  OR  YEARS,
AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (F)  COORDINATION  WITH  FEDERAL  WORK  OPPORTUNITY  TAX  CREDIT.  THE
PROVISIONS OF SECTION FIFTY-ONE AND FIFTY-TWO OF  THE  INTERNAL  REVENUE
CODE,  AS SUCH SECTIONS APPLIED ON OCTOBER FIRST, NINETEEN HUNDRED NINE-
TY-SIX, THAT APPLY TO THE FEDERAL WORK OPPORTUNITY TAX CREDIT FOR  VOCA-
TIONAL  REHABILITATION  REFERRALS  SHALL  APPLY TO THE CREDIT UNDER THIS
SUBDIVISION TO THE EXTENT THAT SUCH SECTIONS  ARE  CONSISTENT  WITH  THE
SPECIFIC PROVISIONS OF THIS SUBDIVISION, PROVIDED THAT IN THE EVENT OF A
CONFLICT THE PROVISIONS OF THIS SUBDIVISION SHALL CONTROL.
  13.  CREDIT  FOR  PURCHASE  OF  AN AUTOMATED EXTERNAL DEFIBRILLATOR. A
TAXPAYER SHALL BE ALLOWED  A  CREDIT,  TO  BE  COMPUTED  AS  HEREINAFTER
PROVIDED,  AGAINST  THE  TAX  IMPOSED BY THIS ARTICLE, FOR THE PURCHASE,
OTHER THAN FOR RESALE, OF AN AUTOMATED EXTERNAL DEFIBRILLATOR,  AS  SUCH

S. 6359--D                         98                         A. 8559--D

TERM  IS  DEFINED  IN SECTION THREE THOUSAND-B OF THE PUBLIC HEALTH LAW.
THE AMOUNT OF CREDIT SHALL BE THE COST  TO  THE  TAXPAYER  OF  AUTOMATED
EXTERNAL  DEFIBRILLATORS  PURCHASED DURING THE TAXABLE YEAR, SUCH CREDIT
NOT  TO EXCEED FIVE HUNDRED DOLLARS WITH RESPECT TO EACH UNIT PURCHASED.
THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS CHAPTER.
  14. CREDIT FOR PURCHASE OF LONG-TERM CARE INSURANCE.  (A)  GENERAL.  A
TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE  EQUAL TO TWENTY PERCENT OF THE PREMIUM PAID DURING THE TAXABLE YEAR
FOR LONG-TERM CARE INSURANCE. IN ORDER TO QUALIFY FOR SUCH  CREDIT,  THE
TAXPAYER'S PREMIUM PAYMENT MUST BE FOR THE PURCHASE OF OR FOR CONTINUING
COVERAGE UNDER A LONG-TERM CARE INSURANCE POLICY THAT QUALIFIES FOR SUCH
CREDIT  PURSUANT  TO  SECTION  ONE THOUSAND ONE HUNDRED SEVENTEEN OF THE
INSURANCE LAW.
  (B) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED DOLLAR
MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION
TWO  HUNDRED  TEN  OF  THIS  ARTICLE.  IF, HOWEVER, THE AMOUNT OF CREDIT
ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO
SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX  BASED  ON  THE  FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXA-
BLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  15. LOW-INCOME HOUSING CREDIT. (A) ALLOWANCE  OF  CREDIT.  A  TAXPAYER
SHALL  BE  ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE WITH
RESPECT TO THE OWNERSHIP OF ELIGIBLE LOW-INCOME BUILDINGS,  COMPUTED  AS
PROVIDED IN SECTION EIGHTEEN OF THIS CHAPTER.
  (B)  APPLICATION  OF  CREDIT. THE CREDIT AND CARRYOVERS OF SUCH CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL  NOT,  IN  THE
AGGREGATE,  REDUCE  THE  TAX  DUE  FOR  SUCH YEAR TO LESS THAN THE FIXED
DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT OR CARRYOVERS OF SUCH CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION
FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER
OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY  AMOUNT
OF CREDIT OR CARRYOVERS OF SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXA-
BLE  YEAR  MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE
DEDUCTED FROM THE TAX FOR SUCH YEAR OR YEARS.
  (C) CREDIT RECAPTURE. FOR PROVISIONS REQUIRING  RECAPTURE  OF  CREDIT,
SEE SUBDIVISION (B) OF SECTION EIGHTEEN OF THIS CHAPTER.
  16.  GREEN  BUILDING CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL
BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION  NINETEEN  OF
THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) CARRYOVERS. THE CREDIT AND CARRYOVERS OF SUCH CREDIT ALLOWED UNDER
THIS  SUBDIVISION  FOR  ANY  TAXABLE  YEAR  SHALL NOT, IN THE AGGREGATE,
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE FIXED  DOLLAR  MINIMUM
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT OR  CARRY-
OVERS  OF  SUCH  CREDIT, OR BOTH, ALLOWED UNDER THIS SUBDIVISION FOR ANY
TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE
PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF  CREDIT
OR  CARRYOVERS  OF  SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY  BE  DEDUCTED
FROM THE TAX FOR SUCH YEAR OR YEARS.

S. 6359--D                         99                         A. 8559--D

  17.  BROWNFIELD  REDEVELOPMENT  TAX CREDIT. (A) ALLOWANCE OF CREDIT. A
TAXPAYER SHALL BE ALLOWED A  CREDIT,  TO  BE  COMPUTED  AS  PROVIDED  IN
SECTION  TWENTY-ONE  OF  THIS  CHAPTER,  AGAINST THE TAX IMPOSED BY THIS
ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE  AMOUNT  OF  CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS
NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS  AN  OVERPAYMENT
OF  TAX  TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE
PROVISIONS  OF  SUBSECTION  (C)  OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  18. REMEDIATED BROWNFIELD CREDIT FOR REAL PROPERTY TAXES FOR QUALIFIED
SITES. (A) ALLOWANCE OF CREDIT. A TAXPAYER WHICH IS  A  DEVELOPER  OF  A
QUALIFIED  SITE  SHALL  BE  ALLOWED  A CREDIT FOR ELIGIBLE REAL PROPERTY
TAXES, TO BE COMPUTED AS PROVIDED IN SUBDIVISION (B) OF SECTION  TWENTY-
TWO  OF  THIS  CHAPTER,  AGAINST  THE  TAX  IMPOSED BY THIS ARTICLE. FOR
PURPOSES OF THIS SUBDIVISION, THE TERMS "QUALIFIED SITE" AND "DEVELOPER"
SHALL HAVE THE SAME MEANING AS SET FORTH IN PARAGRAPHS  TWO  AND  THREE,
RESPECTIVELY, OF SUBDIVISION (A) OF SECTION TWENTY-TWO OF THIS CHAPTER.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES  THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX
BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  19. ENVIRONMENTAL REMEDIATION INSURANCE CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN
SECTION  TWENTY-THREE  OF  THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS
ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF
THE AMOUNT OF CREDITS ALLOWED UNDER THIS  SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT  THUS
NOT  DEDUCTIBLE  IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT
OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  20.  EMPIRE  STATE  FILM PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT. A
TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION TWENTY-FOUR OF THIS CHAPTER
SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS  PROVIDED  IN  SUCH  SECTION
TWENTY-FOUR AGAINST THE TAX IMPOSED BY THIS ARTICLE.

S. 6359--D                         100                        A. 8559--D

  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI-
SION FOR ANY TAXABLE YEAR REDUCES THE TAX  TO  SUCH  AMOUNT  OR  IF  THE
TAXPAYER  OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT,
THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE  CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  21. SECURITY TRAINING TAX CREDIT. (A) ALLOWANCE OF CREDIT. A  TAXPAYER
SHALL  BE  ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION TWEN-
TY-SIX OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE FIXED DOLLAR MINIMUM AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF
SUBDIVISION  ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER. HOWEVER, IF
THE AMOUNT OF CREDITS ALLOWED UNDER THIS  SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT  THUS
NOT  DEDUCTIBLE  IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT
OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  22.  CONSERVATION EASEMENT TAX CREDIT. (A) CREDIT ALLOWED. IN THE CASE
OF A TAXPAYER WHO OWNS LAND THAT IS SUBJECT TO A  CONSERVATION  EASEMENT
HELD  BY A PUBLIC OR PRIVATE CONSERVATION AGENCY, THERE SHALL BE ALLOWED
A CREDIT FOR TWENTY-FIVE PERCENT OF THE ALLOWABLE SCHOOL DISTRICT, COUN-
TY AND TOWN REAL PROPERTY TAXES ON SUCH LAND. IN NO SUCH CASE SHALL  THE
CREDIT  ALLOWED  UNDER  THIS  SUBDIVISION  IN COMBINATION WITH ANY OTHER
CREDIT FOR SUCH SCHOOL DISTRICT, COUNTY AND  TOWN  REAL  PROPERTY  TAXES
UNDER THIS SECTION EXCEED SUCH TAXES.
  (B)  CONSERVATION EASEMENT. FOR PURPOSES OF THIS SUBDIVISION, THE TERM
"CONSERVATION EASEMENT" MEANS A  PERPETUAL  AND  PERMANENT  CONSERVATION
EASEMENT AS DEFINED IN ARTICLE FORTY-NINE OF THE ENVIRONMENTAL CONSERVA-
TION  LAW  THAT SERVES TO PROTECT OPEN SPACE, SCENIC, NATURAL RESOURCES,
BIODIVERSITY,  AGRICULTURAL,  WATERSHED  AND/OR  HISTORIC   PRESERVATION
RESOURCES.  ANY  CONSERVATION EASEMENT FOR WHICH A TAX CREDIT IS CLAIMED
UNDER THIS SUBDIVISION SHALL BE FILED WITH THE  DEPARTMENT  OF  ENVIRON-
MENTAL  CONSERVATION, AS PROVIDED FOR IN ARTICLE FORTY-NINE OF THE ENVI-
RONMENTAL CONSERVATION LAW AND SUCH CONSERVATION EASEMENT  SHALL  COMPLY
WITH  THE  PROVISIONS OF TITLE THREE OF SUCH ARTICLE, AND THE PROVISIONS
OF SUBDIVISION (H) OF SECTION 170 OF THE INTERNAL  REVENUE  CODE.  DEDI-
CATIONS  OF  LAND  FOR  OPEN SPACE THROUGH THE EXECUTION OF CONSERVATION
EASEMENTS FOR THE PURPOSE OF FULFILLING DENSITY REQUIREMENTS  TO  OBTAIN
SUBDIVISION  OR  BUILDING PERMITS SHALL NOT BE CONSIDERED A CONSERVATION
EASEMENT UNDER THIS SUBDIVISION.
  (C) LAND. FOR PURPOSES OF THIS SUBDIVISION, THE TERM  "LAND"  MEANS  A
FEE SIMPLE TITLE TO REAL PROPERTY LOCATED IN THIS STATE, WITH OR WITHOUT
IMPROVEMENTS  THEREON;  RIGHTS  OF WAY; WATER AND RIPARIAN RIGHTS; EASE-
MENTS; PRIVILEGES AND ALL OTHER RIGHTS  OR  INTERESTS  OF  ANY  LAND  OR
DESCRIPTION  IN,  RELATING TO OR CONNECTED WITH REAL PROPERTY, EXCLUDING
BUILDINGS, STRUCTURES, OR IMPROVEMENTS.

S. 6359--D                         101                        A. 8559--D

  (D) PUBLIC OR PRIVATE CONSERVATION AGENCY. FOR PURPOSES OF THIS SUBDI-
VISION, THE TERM "PUBLIC  OR  PRIVATE  CONSERVATION  AGENCY"  MEANS  ANY
STATE,  LOCAL, OR FEDERAL GOVERNMENTAL BODY; OR ANY PRIVATE NOT-FOR-PRO-
FIT CHARITABLE CORPORATION OR TRUST WHICH IS AUTHORIZED TO  DO  BUSINESS
IN  THE STATE OF NEW YORK, IS ORGANIZED AND OPERATED TO PROTECT LAND FOR
NATURAL RESOURCES, CONSERVATION OR HISTORIC  PRESERVATION  PURPOSES,  IS
EXEMPT  FROM  FEDERAL  INCOME  TAXATION  UNDER  SECTION 501(C)(3) OF THE
INTERNAL REVENUE CODE, AND HAS THE POWER TO ACQUIRE, HOLD  AND  MAINTAIN
LAND AND/OR INTERESTS IN LAND FOR SUCH PURPOSES.
  (E) CREDIT LIMITATION. THE AMOUNT OF THE CREDIT THAT MAY BE CLAIMED BY
A  TAXPAYER  PURSUANT  TO THIS SUBSECTION SHALL NOT EXCEED FIVE THOUSAND
DOLLARS IN ANY GIVEN YEAR.
  (F) APPLICATION OF THE CREDIT. THE CREDIT ALLOWED UNDER THIS  SUBDIVI-
SION  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO
LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE  AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE
YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF THE  TAXPAYER  OTHERWISE  PAYS
TAX  BASED  ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF THE CREDIT
THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER,
EXCEPT THAT, NO INTEREST SHALL BE PAID THEREON.
  23.  EMPIRE STATE COMMERCIAL PRODUCTION CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER THAT IS ELIGIBLE PURSUANT TO PROVISIONS OF SECTION TWEN-
TY-EIGHT OF THIS CHAPTER SHALL BE ALLOWED A CREDIT  TO  BE  COMPUTED  AS
PROVIDED IN SUCH SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  ARTICLE.  PROVIDED,
HOWEVER,  THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVI-
SION FOR ANY TAXABLE YEAR REDUCES THE TAX  TO  SUCH  AMOUNT  OR  IF  THE
TAXPAYER  OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT,
FIFTY PERCENT OF THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS
OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF  SUCH
CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE CARRIED OVER
TO  THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM THE
TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT OF CRED-
IT OVER THE TAX FOR SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN OVERPAY-
MENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS
OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER.  PROVIDED,  HOWEVER,
THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (C)  EXPIRATION  OF  CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
SHALL NOT BE APPLICABLE TO TAXABLE YEARS BEGINNING ON OR AFTER  DECEMBER
THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
  24.  BIOFUEL  PRODUCTION  CREDIT.  (A)  GENERAL.  A  TAXPAYER SHALL BE
ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION TWENTY-EIGHT  OF
THIS  CHAPTER  ADDED  AS  PART X OF CHAPTER SIXTY-TWO OF THE LAWS OF TWO
THOUSAND SIX, AGAINST THE  TAX  IMPOSED  BY  THIS  ARTICLE.  THE  CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX  DUE  FOR  SUCH  YEAR  TO  LESS THAN THE FIXED DOLLAR MINIMUM AMOUNT

S. 6359--D                         102                        A. 8559--D

PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  SECTION  TWO  HUNDRED
TEN  OF  THIS  ARTICLE.   HOWEVER, IF THE AMOUNT OF CREDIT ALLOWED UNDER
THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT  OR
IF  THE  TAXPAYER  OTHERWISE  PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM
AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH  TAXABLE  YEAR
SHALL  BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF SUBSECTION (C) OF
SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS  CHAPTER  NOTWITHSTANDING,  NO
INTEREST  SHALL BE PAID THEREON. THE TAX CREDIT ALLOWED PURSUANT TO THIS
SECTION SHALL APPLY TO TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO
THOUSAND TWENTY.
  25. CLEAN HEATING FUEL  CREDIT.  (A)  GENERAL.  A  TAXPAYER  SHALL  BE
ALLOWED  A  CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE. SUCH CREDIT,
TO BE COMPUTED AS HEREINAFTER PROVIDED, SHALL BE  ALLOWED  FOR  BIOHEAT,
USED  FOR SPACE HEATING OR HOT WATER PRODUCTION FOR RESIDENTIAL PURPOSES
WITHIN THIS STATE PURCHASED BEFORE JANUARY FIRST,  TWO  THOUSAND  SEVEN-
TEEN.  SUCH CREDIT SHALL BE $0.01 PER PERCENT OF BIODIESEL PER GALLON OF
BIOHEAT, NOT TO EXCEED  TWENTY  CENTS  PER  GALLON,  PURCHASED  BY  SUCH
TAXPAYER.
  (B) DEFINITIONS. FOR PURPOSES OF THIS SUBDIVISION, THE FOLLOWING DEFI-
NITIONS SHALL APPLY:
  (I)  "BIODIESEL" SHALL MEAN A FUEL COMPRISED EXCLUSIVELY OF MONO-ALKYL
ESTERS OF LONG CHAIN FATTY ACIDS DERIVED FROM VEGETABLE OILS  OR  ANIMAL
FATS, DESIGNATED B100, WHICH MEETS THE SPECIFICATIONS OF AMERICAN SOCIE-
TY OF TESTING AND MATERIALS DESIGNATION D 6751.
  (II)  "BIOHEAT"  SHALL MEAN A FUEL COMPRISED OF BIODIESEL BLENDED WITH
CONVENTIONAL HOME HEATING OIL, WHICH MEETS  THE  SPECIFICATIONS  OF  THE
AMERICAN SOCIETY OF TESTING AND MATERIALS DESIGNATION D 396 OR D 975.
  (C)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  FIXED  DOLLAR  MINIMUM  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER,  IF
THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
REDUCES  THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX
BASED ON THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  26.  CREDIT FOR REHABILITATION OF HISTORIC PROPERTIES. (A) APPLICATION
OF CREDIT. (I) FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,
TWO  THOUSAND  TEN,  AND  BEFORE  JANUARY  FIRST, TWO THOUSAND TWENTY, A
TAXPAYER SHALL BE ALLOWED A CREDIT AS HEREINAFTER PROVIDED, AGAINST  THE
TAX  IMPOSED  BY THIS ARTICLE, IN AN AMOUNT EQUAL TO ONE HUNDRED PERCENT
OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME  TAXABLE  YEAR
WITH  RESPECT  TO A CERTIFIED HISTORIC STRUCTURE UNDER SUBSECTION (C)(2)
OF SECTION 47 OF THE INTERNAL REVENUE CODE WITH RESPECT TO  A  CERTIFIED
HISTORIC  STRUCTURE  LOCATED  WITHIN  THE  STATE. PROVIDED, HOWEVER, THE
CREDIT SHALL NOT EXCEED FIVE MILLION DOLLARS.
  (II) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOU-
SAND  TWENTY,  A  TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT AS HEREINAFTER
PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE, IN AN AMOUNT EQUAL TO
THIRTY PERCENT OF THE AMOUNT OF CREDIT ALLOWED THE TAXPAYER FOR THE SAME
TAXABLE YEAR WITH  RESPECT  TO  A  CERTIFIED  HISTORIC  STRUCTURE  UNDER

S. 6359--D                         103                        A. 8559--D

SUBSECTION  (C)(3)  OF  SECTION  47  OF  THE  INTERNAL REVENUE CODE WITH
RESPECT TO A CERTIFIED HISTORIC  STRUCTURE  LOCATED  WITHIN  THE  STATE.
PROVIDED,  HOWEVER,  THE  CREDIT  SHALL  NOT EXCEED ONE HUNDRED THOUSAND
DOLLARS.
  (B)  IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP OR A SHAREHOLDER IN
A NEW YORK S CORPORATION, THEN THE CREDIT CAPS IMPOSED  IN  SUBPARAGRAPH
(A)  OF THIS PARAGRAPH SHALL BE APPLIED AT THE ENTITY LEVEL, SO THAT THE
AGGREGATE CREDIT ALLOWED TO ALL THE PARTNERS  OR  SHAREHOLDERS  OF  EACH
SUCH  ENTITY  IN THE TAXABLE YEAR DOES NOT EXCEED THE CREDIT CAP THAT IS
APPLICABLE IN THAT TAXABLE YEAR.
  (B) TAX CREDITS ALLOWED PURSUANT TO THIS SUBDIVISION SHALL BE  ALLOWED
IN  THE  TAXABLE  YEAR  THAT  THE  QUALIFIED REHABILITATION IS PLACED IN
SERVICE UNDER SECTION 167 OF THE FEDERAL INTERNAL REVENUE CODE.
  (C) IF THE CREDIT ALLOWED THE TAXPAYER PURSUANT TO SECTION 47  OF  THE
INTERNAL  REVENUE  CODE  WITH  RESPECT  TO A QUALIFIED REHABILITATION IS
RECAPTURED PURSUANT TO SUBSECTION (A) OF  SECTION  50  OF  THE  INTERNAL
REVENUE CODE, A PORTION OF THE CREDIT ALLOWED UNDER THIS SUBSECTION MUST
BE ADDED BACK IN THE SAME TAXABLE YEAR AND IN THE SAME PROPORTION AS THE
FEDERAL CREDIT.
  (D)  THE  CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS  THAN  THE  AMOUNT
PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED  UNDER
THIS  SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR
IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON  THE  FIXED  DOLLAR  MINIMUM
AMOUNT,  ANY  AMOUNT  OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE RECREDITED  OR  REFUNDED
IN  ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
SECTION  ONE  THOUSAND  EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO
INTEREST SHALL BE PAID THEREON.
  (E) TO BE ELIGIBLE FOR THE CREDIT ALLOWABLE  UNDER  THIS  SUBDIVISION,
THE REHABILITATION PROJECT SHALL BE IN WHOLE OR IN PART LOCATED WITHIN A
CENSUS  TRACT  WHICH  IS  IDENTIFIED  AS  BEING  AT OR BELOW ONE HUNDRED
PERCENT OF THE STATE MEDIAN FAMILY INCOME AS CALCULATED  AS  OF  JANUARY
FIRST  OF  EACH  YEAR  USING THE MOST RECENT FIVE YEAR ESTIMATE FROM THE
AMERICAN COMMUNITY SURVEY PUBLISHED BY THE UNITED STATES CENSUS BUREAU.
  27. CREDITS OF NEW YORK S CORPORATIONS. (A)  GENERAL.  NOTWITHSTANDING
THE  PROVISIONS  OF  THIS SECTION, NO CARRYOVER OF CREDIT ALLOWABLE IN A
NEW YORK C YEAR SHALL BE DEDUCTED FROM THE TAX OTHERWISE DUE UNDER  THIS
ARTICLE  IN  A  NEW YORK S YEAR, AND NO CREDIT ALLOWABLE IN A NEW YORK S
YEAR, OR CARRYOVER OF SUCH  CREDIT,  SHALL  BE  DEDUCTED  FROM  THE  TAX
IMPOSED BY THIS ARTICLE.  HOWEVER, A NEW YORK S YEAR SHALL BE TREATED AS
A  TAXABLE  YEAR FOR PURPOSES OF DETERMINING THE NUMBER OF TAXABLE YEARS
TO WHICH A CREDIT MAY BE CARRIED OVER UNDER THIS SECTION.  NOTWITHSTAND-
ING  THE FIRST SENTENCE OF THIS SUBDIVISION, HOWEVER, THE CREDIT FOR THE
SPECIAL ADDITIONAL MORTGAGE RECORDING TAX SHALL BE ALLOWED  AS  PROVIDED
IN  SUBDIVISION  FIFTEEN  OF THIS SECTION, AND THE CARRYOVER OF ANY SUCH
CREDIT SHALL BE DETERMINED WITHOUT  REGARD  TO  WHETHER  THE  CREDIT  IS
CARRIED FROM A NEW YORK C YEAR TO A NEW YORK S YEAR OR VICE-VERSA.
  29.  HIRE  A  VET  CREDIT.  (A) ALLOWANCE OF CREDIT. FOR TAXABLE YEARS
BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOUSAND  FIFTEEN  AND  BEFORE
JANUARY  FIRST,  TWO  THOUSAND  SEVENTEEN, A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS PROVIDED IN THIS SUBDIVISION, AGAINST THE  TAX
IMPOSED BY THIS ARTICLE, FOR HIRING AND EMPLOYING, FOR NOT LESS THAN ONE
YEAR  AND  FOR  NOT  LESS  THAN THIRTY-FIVE HOURS EACH WEEK, A QUALIFIED

S. 6359--D                         104                        A. 8559--D

VETERAN WITHIN THE STATE. THE TAXPAYER MAY CLAIM THE CREDIT IN THE  YEAR
IN  WHICH  THE QUALIFIED VETERAN COMPLETES ONE YEAR OF EMPLOYMENT BY THE
TAXPAYER. IF THE TAXPAYER CLAIMS THE CREDIT ALLOWED UNDER THIS  SUBDIVI-
SION, THE TAXPAYER MAY NOT USE THE HIRING OF A QUALIFIED VETERAN THAT IS
THE BASIS FOR THIS CREDIT IN THE BASIS OF ANY OTHER CREDIT ALLOWED UNDER
THIS ARTICLE.
  (B) QUALIFIED VETERAN. A QUALIFIED VETERAN IS AN INDIVIDUAL:
  (1)  WHO  SERVED  ON  ACTIVE DUTY IN THE UNITED STATES ARMY, NAVY, AIR
FORCE, MARINE CORPS, COAST GUARD OR THE RESERVES THEREOF, OR WHO  SERVED
IN  ACTIVE MILITARY SERVICE OF THE UNITED STATES AS A MEMBER OF THE ARMY
NATIONAL GUARD, AIR NATIONAL GUARD, NEW YORK GUARD  OR  NEW  YORK  NAVAL
MILITIA;  WHO  WAS  RELEASED  FROM  ACTIVE  DUTY BY GENERAL OR HONORABLE
DISCHARGE AFTER SEPTEMBER ELEVENTH, TWO THOUSAND ONE;
  (2) WHO COMMENCES EMPLOYMENT BY THE QUALIFIED  TAXPAYER  ON  OR  AFTER
JANUARY  FIRST,  TWO  THOUSAND  FOURTEEN,  AND BEFORE JANUARY FIRST, TWO
THOUSAND SIXTEEN; AND
  (3) WHO CERTIFIES BY SIGNED AFFIDAVIT, UNDER PENALTY OF PERJURY,  THAT
HE OR SHE HAS NOT BEEN EMPLOYED FOR THIRTY-FIVE OR MORE HOURS DURING ANY
WEEK  IN  THE  ONE HUNDRED EIGHTY DAY PERIOD IMMEDIATELY PRIOR TO HIS OR
HER EMPLOYMENT BY THE TAXPAYER.
  (C) EMPLOYER PROHIBITION. AN EMPLOYER SHALL NOT DISCHARGE AN  EMPLOYEE
AND  HIRE  A QUALIFYING VETERAN SOLELY FOR THE PURPOSE OF QUALIFYING FOR
THIS CREDIT.
  (D) AMOUNT OF CREDIT. THE AMOUNT OF THE CREDIT SHALL BE TEN PERCENT OF
THE TOTAL AMOUNT OF WAGES PAID  TO  THE  QUALIFIED  VETERAN  DURING  THE
VETERAN'S FIRST FULL YEAR OF EMPLOYMENT. PROVIDED, HOWEVER, THAT, IF THE
QUALIFIED  VETERAN IS A DISABLED VETERAN, AS DEFINED IN PARAGRAPH (B) OF
SUBDIVISION ONE OF SECTION EIGHTY-FIVE OF THE  CIVIL  SERVICE  LAW,  THE
AMOUNT  OF  THE  CREDIT  SHALL BE FIFTEEN PERCENT OF THE TOTAL AMOUNT OF
WAGES PAID TO THE QUALIFIED VETERAN DURING THE VETERAN'S FIRST FULL YEAR
OF EMPLOYMENT. THE CREDIT ALLOWED PURSUANT TO THIS SUBDIVISION SHALL NOT
EXCEED IN ANY TAXABLE YEAR, FIVE  THOUSAND  DOLLARS  FOR  ANY  QUALIFIED
VETERAN  AND FIFTEEN THOUSAND DOLLARS FOR ANY QUALIFIED VETERAN WHO IS A
DISABLED VETERAN.
  (E) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT  ALLOWABLE
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED  DOLLAR
MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
MAY  BE  CARRIED  OVER  TO THE FOLLOWING THREE YEARS AND MAY BE DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  30. ALTERNATIVE FUELS AND ELECTRIC VEHICLE RECHARGING PROPERTY CREDIT.
(A) GENERAL. A TAXPAYER SHALL BE ALLOWED A CREDIT,  TO  BE  COMPUTED  AS
HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE FOR ALTER-
NATIVE  FUEL  VEHICLE REFUELING AND ELECTRIC VEHICLE RECHARGING PROPERTY
PLACED IN SERVICE DURING THE TAXABLE YEAR.
  (B) ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY AND  ELECTRIC  VEHICLE
RECHARGING  PROPERTY.  THE CREDIT UNDER THIS SUBDIVISION FOR ALTERNATIVE
FUEL VEHICLE REFUELING PROPERTY AND ELECTRIC VEHICLE RECHARGING PROPERTY
SHALL EQUAL FOR EACH INSTALLATION OF PROPERTY THE LESSER OF  FIVE  THOU-
SAND DOLLARS OR FIFTY PERCENT OF THE COST OF ANY SUCH PROPERTY:
  (I) WHICH IS LOCATED IN THIS STATE;
  (II)  WHICH CONSTITUTES ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY OR
ELECTRIC VEHICLE RECHARGING PROPERTY; AND

S. 6359--D                         105                        A. 8559--D

  (III) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM  THE  PROCEEDS
OF  GRANTS, INCLUDING GRANTS FROM THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  (C)  DEFINITIONS.  (I)  THE  TERM  "ALTERNATIVE FUEL VEHICLE REFUELING
PROPERTY" MEANS ALL OF THE EQUIPMENT NEEDED  TO  DISPENSE  ANY  FUEL  AT
LEAST EIGHTY-FIVE PERCENT OF THE VOLUME OF WHICH CONSISTS OF ONE OR MORE
OF THE FOLLOWING: NATURAL GAS, LIQUIFIED NATURAL GAS, LIQUIFIED PETROLE-
UM, OR HYDROGEN.
  (II)  THE TERM "ELECTRIC VEHICLE RECHARGING PROPERTY" MEANS ALL OF THE
EQUIPMENT NEEDED TO CONVEY ELECTRIC POWER  FROM  THE  ELECTRIC  GRID  OR
ANOTHER POWER SOURCE TO AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  (D) CARRYOVERS. IN NO EVENT SHALL THE CREDIT UNDER THIS SUBDIVISION BE
ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS ARTICLE. PROVIDED, HOWEVER, THAT IF THE AMOUNT OF
CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX  BASED  ON  THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (E) CREDIT RECAPTURE. IF, AT ANY TIME BEFORE THE END OF  ITS  RECOVERY
PERIOD,  ALTERNATIVE FUEL VEHICLE REFUELING OR ELECTRIC VEHICLE RECHARG-
ING PROPERTY CEASES TO BE QUALIFIED, A RECAPTURE AMOUNT  MUST  BE  ADDED
BACK IN THE YEAR IN WHICH SUCH CESSATION OCCURS.
  (I)  ALTERNATIVE  FUEL  VEHICLE REFUELING PROPERTY OR ELECTRIC VEHICLE
RECHARGING PROPERTY CEASES TO BE QUALIFIED IF:
  (I) THE PROPERTY NO LONGER QUALIFIES AS ALTERNATIVE FUEL VEHICLE REFU-
ELING PROPERTY OR ELECTRIC VEHICLE RECHARGING PROPERTY; OR
  (II) FIFTY PERCENT OR MORE OF THE USE OF THE  PROPERTY  IN  A  TAXABLE
YEAR IS OTHER THAN IN A TRADE OR BUSINESS IN THIS STATE; OR
  (III)  THE  TAXPAYER RECEIVING THE CREDIT UNDER THIS SUBDIVISION SELLS
OR DISPOSES OF THE PROPERTY AND KNOWS OR HAS REASON  TO  KNOW  THAT  THE
PROPERTY  WILL  BE USED IN A MANNER DESCRIBED IN CLAUSES (I) AND (II) OF
THIS SUBPARAGRAPH.
  (II) RECAPTURE AMOUNT. THE RECAPTURE AMOUNT IS  EQUAL  TO  THE  CREDIT
ALLOWABLE UNDER THIS SUBDIVISION MULTIPLIED BY A FRACTION, THE NUMERATOR
OF  WHICH IS THE TOTAL RECOVERY PERIOD FOR THE PROPERTY MINUS THE NUMBER
OF RECOVERY YEARS PRIOR TO, BUT NOT INCLUDING, THE RECAPTURE  YEAR,  AND
THE DENOMINATOR OF WHICH IS THE TOTAL RECOVERY PERIOD.
  (F)  TERMINATION. THE CREDIT ALLOWED BY PARAGRAPH (B) OF THIS SUBDIVI-
SION  SHALL  NOT  APPLY  IN  TAXABLE  YEARS  BEGINNING  AFTER   DECEMBER
THIRTY-FIRST, TWO THOUSAND SEVENTEEN.
  31. EXCELSIOR JOBS PROGRAM CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER
WILL  BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION THIRTY-
ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY  TAXABLE  YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED
DOLLAR  MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF

S. 6359--D                         106                        A. 8559--D

SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  32. EMPIRE STATE FILM POST PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT.
A  TAXPAYER WHO IS ELIGIBLE PURSUANT TO SECTION THIRTY-ONE OF THIS CHAP-
TER SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN SUCH SECTION
THIRTY-ONE AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION  TWO HUNDRED TEN OF THIS ARTICLE. PROVIDED, HOWEVER, THAT IF THE
AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE
YEAR  REDUCES  THE  TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS
TAX BASED ON THE FIXED DOLLAR  MINIMUM  AMOUNT,  FIFTY  PERCENT  OF  THE
EXCESS  SHALL  BE  TREATED  AS  AN  OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING,  NO INTEREST SHALL BE PAID THEREON. THE BALANCE OF SUCH
CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY BE A  CARRYOVER
TO  THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE DEDUCTED FROM THE
TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF THE AMOUNT  OF  THE
CREDIT  OVER  THE  TAX  FOR  SUCH SUCCEEDING YEAR SHALL BE TREATED AS AN
OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED  IN  ACCORDANCE  WITH  THE
PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT-
Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THER-
EON.
  33.  TEMPORARY  DEFERRAL NONREFUNDABLE PAYOUT CREDIT. (A) ALLOWANCE OF
CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
IN SUBDIVISION ONE OF SECTION THIRTY-FOUR OF THIS CHAPTER,  AGAINST  THE
TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR THAT YEAR TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY
BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  34. TEMPORARY DEFERRAL REFUNDABLE  PAYOUT  CREDIT.  (A)  ALLOWANCE  OF
CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED
IN  SUBDIVISION  TWO OF SECTION THIRTY-FOUR OF THIS CHAPTER, AGAINST THE
TAX IMPOSED BY THIS ARTICLE.
  (B) APPLICATION OF CREDIT. IN NO EVENT SHALL  THE  CREDIT  UNDER  THIS
SUBDIVISION  BE  ALLOWED  IN AN AMOUNT WHICH WILL REDUCE THE TAX TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION  TWO  HUNDRED  TEN  OF  THIS ARTICLE. IF, HOWEVER, THE AMOUNT OF
CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE
TAX  TO  SUCH  AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE REFUNDED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION  ONE  THOUSAND  EIGHTY-SIX  OF
THIS CHAPTER, PROVIDED HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  35.  ECONOMIC  TRANSFORMATION  AND  FACILITY REDEVELOPMENT PROGRAM TAX
CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED  A  CREDIT,

S. 6359--D                         107                        A. 8559--D

TO  BE  COMPUTED  AS  PROVIDED  IN  SECTION THIRTY-FIVE OF THIS CHAPTER,
AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  36.  NEW  YORK  YOUTH  WORKS  TAX CREDIT. (A) A TAXPAYER THAT HAS BEEN
CERTIFIED BY THE COMMISSIONER OF LABOR AS A QUALIFIED EMPLOYER  PURSUANT
TO  SECTION  TWENTY-FIVE-A  OF  THE  LABOR LAW SHALL BE ALLOWED A CREDIT
AGAINST THE TAX IMPOSED BY  THIS  ARTICLE  EQUAL  TO  (I)  FIVE  HUNDRED
DOLLARS  PER  MONTH FOR UP TO SIX MONTHS FOR EACH QUALIFIED EMPLOYEE THE
EMPLOYER EMPLOYS IN A FULL-TIME JOB OR TWO  HUNDRED  FIFTY  DOLLARS  PER
MONTH  FOR  UP  TO  SIX  MONTHS FOR EACH QUALIFIED EMPLOYEE THE EMPLOYER
EMPLOYS IN A PART-TIME JOB OF AT LEAST TWENTY  HOURS  PER  WEEK  OR  TEN
HOURS  PER  WEEK  WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH SCHOOL
FULL-TIME, (II) ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO  IS
EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY THE QUALIFIED EMPLOYER
IN  A  FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE
WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL SIX MONTHS BY  THE  QUALIFIED
EMPLOYER  IN  A  PART-TIME  JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN
HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED  IN  HIGH  SCHOOL
FULL-TIME,  AND (III) AN ADDITIONAL ONE THOUSAND DOLLARS FOR EACH QUALI-
FIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER  THE
FIRST  YEAR  OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A
FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS
EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER THE  FIRST  YEAR  OF  THE
EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT
LEAST  TWENTY  HOURS  PER  WEEK OR TEN HOURS PER WEEK WHEN THE QUALIFIED
EMPLOYEE IS ENROLLED IN HIGH SCHOOL  FULL-TIME.  FOR  PURPOSES  OF  THIS
SUBDIVISION,  THE  TERM "QUALIFIED EMPLOYEE" SHALL HAVE THE SAME MEANING
AS SET FORTH IN SUBDIVISION (B) OF SECTION TWENTY-FIVE-A  OF  THE  LABOR
LAW.  THE  PORTION  OF  THE CREDIT DESCRIBED IN SUBPARAGRAPH (I) OF THIS
PARAGRAPH SHALL BE ALLOWED FOR THE TAXABLE YEAR IN WHICH THE  WAGES  ARE
PAID  TO THE QUALIFIED EMPLOYEE, AND THE PORTION OF THE CREDIT DESCRIBED
IN SUBPARAGRAPH (II) OF THIS PARAGRAPH SHALL BE ALLOWED IN  THE  TAXABLE
YEAR IN WHICH THE ADDITIONAL SIX MONTH PERIOD ENDS.
  (B) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR MAY
NOT  REDUCE THE TAX DUE FOR THAT YEAR TO LESS THAN THE AMOUNT PRESCRIBED
IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN  OF  THIS
ARTICLE.  HOWEVER, IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBDI-
VISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO THAT  AMOUNT  OR  IF  THE
TAXPAYER  OTHERWISE  PAYS  TAX BASED ON THE FIXED DOLLAR MINIMUM AMOUNT,
ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN THAT TAXABLE YEAR WILL BE TREATED
AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH
THE  PROVISIONS  OF  SECTION  ONE  THOUSAND  EIGHTY-SIX OF THIS CHAPTER.
PROVIDED, HOWEVER, NO INTEREST WILL BE PAID THEREON.
  (C) THE TAXPAYER MAY BE REQUIRED TO  ATTACH  TO  ITS  TAX  RETURN  ITS
CERTIFICATE  OF ELIGIBILITY ISSUED BY THE COMMISSIONER OF LABOR PURSUANT

S. 6359--D                         108                        A. 8559--D

TO SECTION TWENTY-FIVE-A OF THE LABOR LAW. IN NO EVENT SHALL THE TAXPAY-
ER BE ALLOWED A CREDIT GREATER THAN THE AMOUNT OF THE CREDIT  LISTED  ON
THE  CERTIFICATE  OF  ELIGIBILITY. NOTWITHSTANDING ANY PROVISION OF THIS
CHAPTER  TO THE CONTRARY, THE COMMISSIONER AND THE COMMISSIONER'S DESIG-
NEES MAY RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER  CLAIMING  THIS
CREDIT  AND  THE AMOUNT OF THE CREDIT EARNED BY THE TAXPAYER.  PROVIDED,
HOWEVER, IF A TAXPAYER CLAIMS THIS CREDIT BECAUSE IT IS A  MEMBER  OF  A
LIMITED LIABILITY COMPANY OR A PARTNER IN A PARTNERSHIP, ONLY THE AMOUNT
OF  CREDIT  EARNED BY THE ENTITY AND NOT THE AMOUNT OF CREDIT CLAIMED BY
THE TAXPAYER MAY BE RELEASED.
  37. EMPIRE STATE JOBS RETENTION PROGRAM CREDIT. (A) ALLOWANCE OF CRED-
IT.  A TAXPAYER WILL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED  IN
SECTION  THIRTY-SIX  OF  THIS CHAPTER, AGAINST THE TAXES IMPOSED BY THIS
ARTICLE.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY  TAXABLE YEAR WILL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED  IN  PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX
TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED
DOLLAR  MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  38. CREDIT FOR COMPANIES WHO  PROVIDE  TRANSPORTATION  TO  INDIVIDUALS
WITH  DISABILITIES.  (A) ALLOWANCE AND AMOUNT OF CREDIT. A TAXPAYER, WHO
PROVIDES  A  TAXICAB  SERVICE  AS  DEFINED  IN   SECTION   ONE   HUNDRED
FORTY-EIGHT-A  OF  THE  VEHICLE  AND TRAFFIC LAW, OR A LIVERY SERVICE AS
DEFINED IN SECTION ONE HUNDRED TWENTY-ONE-E OF THE VEHICLE  AND  TRAFFIC
LAW,  SHALL  BE  ALLOWED  A  CREDIT,  TO BE COMPUTED AS PROVIDED IN THIS
SUBDIVISION, AGAINST THE TAX IMPOSED BY THIS ARTICLE. THE AMOUNT OF  THE
CREDIT  SHALL BE EQUAL TO THE INCREMENTAL COST ASSOCIATED WITH UPGRADING
A VEHICLE SO THAT IT IS ACCESSIBLE BY INDIVIDUALS WITH  DISABILITIES  AS
DEFINED  IN  PARAGRAPH  (B) OF THIS SUBDIVISION. PROVIDED, HOWEVER, THAT
SUCH CREDIT SHALL NOT EXCEED  TEN  THOUSAND  DOLLARS  PER  VEHICLE.  FOR
PURPOSES  OF  THIS  SUBDIVISION,  PURCHASES  OF  NEW  VEHICLES  THAT ARE
INITIALLY MANUFACTURED TO BE ACCESSIBLE FOR INDIVIDUALS  WITH  DISABILI-
TIES  AND  FOR WHICH THERE IS NO COMPARABLE MAKE AND MODEL THAT DOES NOT
INCLUDE THE EQUIPMENT NECESSARY TO PROVIDE ACCESSIBILITY TO  INDIVIDUALS
WITH DISABILITIES, THE CREDIT SHALL BE TEN THOUSAND DOLLARS PER VEHICLE.
  (B) DEFINITION. THE TERM "ACCESSIBLE BY INDIVIDUALS WITH DISABILITIES"
SHALL,  FOR  THE  PURPOSES  OF THIS SUBDIVISION, REFER TO A VEHICLE THAT
COMPLIES WITH FEDERAL REGULATIONS PROMULGATED PURSUANT TO THE  AMERICANS
WITH  DISABILITIES  ACT  APPLICABLE  TO  VANS  UNDER  TWENTY-TWO FEET IN
LENGTH, BY THE FEDERAL DEPARTMENT OF TRANSPORTATION, IN CODE OF  FEDERAL
REGULATIONS,  TITLE 49, PARTS 37 AND 38, AND BY THE FEDERAL ARCHITECTURE
AND TRANSPORTATION BARRIERS COMPLIANCE BOARD, IN CODE OF  FEDERAL  REGU-
LATIONS, TITLE 36, SECTION 1192.23, AND THE FEDERAL MOTOR VEHICLE SAFETY
STANDARDS, CODE OF FEDERAL REGULATIONS, TITLE 49, PART 57.
  (C)  APPLICATION OF CREDIT. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER
THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR  SUCH  YEAR
TO  LESS  THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF  THE  AMOUNT  OF
CREDIT  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE

S. 6359--D                         109                        A. 8559--D

TAX TO SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX  BASED  ON  THE
FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN
SUCH  TAXABLE YEAR SHALL BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS,
AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  39.  BEER  PRODUCTION CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO
BE COMPUTED AS PROVIDED IN SECTION THIRTY-SEVEN OF THIS CHAPTER, AGAINST
THE TAX IMPOSED BY THIS ARTICLE. IN NO EVENT SHALL  THE  CREDIT  ALLOWED
UNDER  THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH
YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF  SUBDIVISION
ONE  OF  SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT
OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY  TAXABLE  YEAR  REDUCES
THE  TAX  TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON
THE FIXED DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCT-
IBLE  IN  SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE
THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER,  THE  PROVISIONS
OF  SUBSECTION  (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  40. MINIMUM WAGE REIMBURSEMENT CREDIT.  (A)  ALLOWANCE  OF  CREDIT.  A
TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT,  TO  BE COMPUTED AS PROVIDED IN
SECTION THIRTY-EIGHT OF THIS CHAPTER, AGAINST THE TAX  IMPOSED  BY  THIS
ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO  SUCH AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED
DOLLAR MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN  SUCH
TAXABLE  YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST WILL BE PAID THEREON.
  41.  THE  TAX-FREE NY AREA TAX ELIMINATION CREDIT. A TAXPAYER SHALL BE
ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN  SECTION  FORTY  OF  THIS
CHAPTER,  AGAINST  THE  TAX IMPOSED BY THIS ARTICLE. UNLESS THE TAXPAYER
HAS A TAX-FREE NY AREA ALLOCATION FACTOR OF  ONE  HUNDRED  PERCENT,  THE
CREDIT  ALLOWED  UNDER  THIS  SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT  PRESCRIBED  IN
PARAGRAPH  (D)  OF  SUBDIVISION  ONE  OF SECTION TWO HUNDRED TEN OF THIS
ARTICLE. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE  IN  SUCH  TAXABLE
YEAR  SHALL  BE  TREATED  AS  AN  OVERPAYMENT  OF  TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  42.  ALTERNATIVE  BASE CREDIT. (A) IF THE TAX IMPOSED ON A TAXPAYER BY
SUBDIVISION ONE OF SECTION TWO HUNDRED  NINE  OF  THIS  ARTICLE  IS  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (B) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE, THE TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT
AGAINST  THE  TAX  IMPOSED UNDER THIS ARTICLE EQUAL TO THE AMOUNT OF TAX
PAID TO ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE  TAX  BASE
PRESCRIBED  IN  SUCH  PARAGRAPH (B). IF THE TAX IMPOSED ON A TAXPAYER BY
SUBDIVISION ONE OF SECTION TWO HUNDRED  NINE  OF  THIS  ARTICLE  IS  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO

S. 6359--D                         110                        A. 8559--D

HUNDRED TEN OF THIS ARTICLE, THE TAXPAYER  SHALL  BE  ALLOWED  A  CREDIT
AGAINST  THE  TAX  IMPOSED UNDER THIS ARTICLE EQUAL TO THE AMOUNT OF TAX
PAID TO ANOTHER STATE COMPUTED ON A TAX BASE IDENTICAL TO THE  TAX  BASE
PRESCRIBED IN SUCH PARAGRAPH (D).
  (B)  IN  NO  EVENT SHALL THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR
ANY TAXABLE YEAR REDUCE THE TAX DUE FOR  SUCH  YEAR  TO  LESS  THAN  THE
AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT  OF  CREDIT  ALLOWED
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT OR IF THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE  FIXED  DOLLAR
MINIMUM AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR  SHALL  BE  CARRIED OVER TO THE FOLLOWING YEAR OR YEARS, AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  43. REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (A)  A  QUALIFIED  NEW
YORK  MANUFACTURER,  AS DEFINED IN SUBPARAGRAPH (VI) OF PARAGRAPH (A) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN  OF  THIS  ARTICLE,  WILL  BE
ALLOWED  A  CREDIT  EQUAL  TO TWENTY PERCENT OF THE REAL PROPERTY TAX IT
PAID DURING THE TAXABLE YEAR FOR REAL PROPERTY OWNED BY SUCH MANUFACTUR-
ER IN NEW YORK WHICH WAS PRINCIPALLY USED DURING THE  TAXABLE  YEAR  FOR
MANUFACTURING  TO  THE  EXTENT  NOT DEDUCTED IN DETERMINING   ENTIRE NET
INCOME. THIS CREDIT WILL NOT BE ALLOWED IF THE REAL PROPERTY TAXES  THAT
ARE THE BASIS FOR THIS CREDIT ARE INCLUDED IN THE CALCULATION OF ANOTHER
CREDIT CLAIMED BY THE TAXPAYER.
  (B)  (1)  FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX
MEANS A CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF  A  COUNTY,
CITY,  TOWN, VILLAGE OR SCHOOL DISTRICT FOR MUNICIPAL OR SCHOOL DISTRICT
PURPOSES, PROVIDED THAT THE CHARGE IS  LEVIED  FOR  THE  GENERAL  PUBLIC
WELFARE  BY  THE  PROPER  TAXING  AUTHORITIES AT A LIKE RATE AGAINST ALL
PROPERTY OVER WHICH SUCH AUTHORITIES  HAVE  JURISDICTION,  AND  PROVIDED
THAT  WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN OF
THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
DETERMINED FOR THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED  BY  SUCH
ARTICLE  EIGHTEEN  OR  NINETEEN,  WHICHEVER IS APPLICABLE. THE TERM REAL
PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
ABLE TO MAINTENANCE OR INTEREST, WHEN (I) THE PROPERTY  SUBJECT  TO  THE
CHARGE IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (II)
THE  AMOUNT  OF  THE CHARGE IS DETERMINED BY THE BENEFIT TO THE PROPERTY
ASSESSED, OR (III) THE IMPROVEMENT FOR  WHICH  THE  CHARGE  IS  ASSESSED
TENDS TO INCREASE THE PROPERTY VALUE.
  (2) IN ADDITION, THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY THE
TAXPAYER  UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR BY
THE TAXPAYER IN MANUFACTURING WHERE THE TAXPAYER LEASES SUCH REAL  PROP-
ERTY  FROM  AN  UNRELATED  THIRD  PARTY  IF THE FOLLOWING CONDITIONS ARE
SATISFIED: (I) THE TAX MUST BE PAID BY THE TAXPAYER AS  LESSEE  PURSUANT
TO  EXPLICIT  REQUIREMENTS  IN A WRITTEN LEASE, AND (II) THE TAXPAYER AS
LESSEE HAS PAID SUCH TAXES DIRECTLY TO  THE  TAXING  AUTHORITY  AND  HAS
RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI-
TY.  IN  THE  CASE  OF A COMBINED GROUP THAT CONSTITUTES A QUALIFIED NEW
YORK MANUFACTURER, THE CONDITIONS IN THE PRECEDING SENTENCE  ARE  SATIS-
FIED  IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND ANOTHER
CORPORATION IN THE COMBINED GROUP  MAKES  THE  PAYMENTS  TO  THE  TAXING
AUTHORITY.
  (3)  THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY THE
TAXPAYER IN CONNECTION WITH AN AGREEMENT FOR  THE  PAYMENT  IN  LIEU  OF

S. 6359--D                         111                        A. 8559--D

TAXES  ON REAL PROPERTY, WHETHER SUCH PROPERTY IS OWNED OR LEASED BY THE
TAXPAYER.
  (4)  THE  REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE YEAR
SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY.
  (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (1)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2)  THE
AMOUNT  OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES.
IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE  YEAR,
THE  TAXPAYER  MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE
TO EACH YEAR COVERED BY SUCH FINAL ORDER AND  CALCULATE  THE  AMOUNT  OF
CREDIT  WHICH  IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH
YEAR BASED ON SUCH REDUCTION.
  (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR
SHALL  NOT  REDUCE  THE  TAX  DUE FOR SUCH YEAR TO LESS THAN TWENTY-FIVE
DOLLARS.
  44. THE TAX-FREE NY AREA  EXCISE  TAX  ON  TELECOMMUNICATION  SERVICES
CREDIT.  A  TAXPAYER  THAT  IS A BUSINESS OR OWNER OF A BUSINESS THAT IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED  A  CREDIT  EQUAL  TO  THE
EXCISE  TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED
EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS  DURING
THE  TAXABLE  YEAR  TO  THE  EXTENT  NOT OTHERWISE DEDUCTED IN COMPUTING
ENTIRE NET INCOME UNDER THIS ARTICLE. HOWEVER, ANY AMOUNT OF CREDIT  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED IN  ACCORDANCE  WITH  THE  PROVISIONS  OF
SECTION  ONE  THOUSAND  EIGHTY-SIX  OF  THIS CHAPTER. THIS CREDIT MAY BE
CLAIMED  ONLY  WHERE  ANY  TAX  IMPOSED  BY  SUCH  SECTION  ONE  HUNDRED
EIGHTY-SIX-E  HAS  BEEN SEPARATELY STATED ON A BILL FROM THE PROVIDER OF
TELECOMMUNICATION SERVICES AND PAID BY SUCH  BUSINESS  WITH  RESPECT  TO
SUCH  SERVICES  RENDERED  WITHIN  A  TAX-FREE NY AREA DURING THE TAXABLE
YEAR. UNLESS THE TAXPAYER HAS A TAX-FREE NY AREA  ALLOCATION  FACTOR  OF
ONE  HUNDRED  PERCENT, THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY
TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION  ONE  OF  SECTION  TWO
HUNDRED  TEN  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE PROVISIONS OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  45.  ORDER  OF CREDITS. (A) CREDITS ALLOWABLE UNDER THIS ARTICLE WHICH
CANNOT BE CARRIED OVER AND WHICH ARE NOT REFUNDABLE  SHALL  BE  DEDUCTED
FIRST.  THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION SHALL
BE DEDUCTED IMMEDIATELY AFTER THE DEDUCTION  OF  ALL  CREDITS  ALLOWABLE
UNDER  THIS  ARTICLE  WHICH  CANNOT  BE  CARRIED  OVER AND WHICH ARE NOT
REFUNDABLE, WHETHER OR NOT A  PORTION  OF  SUCH  CREDIT  IS  REFUNDABLE.
CREDITS  ALLOWABLE  UNDER  THIS  ARTICLE  WHICH CAN BE CARRIED OVER, AND
CARRYOVERS OF SUCH CREDITS, SHALL BE DEDUCTED NEXT AFTER  THE  DEDUCTION
OF THE CREDIT ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION, AND AMONG
SUCH  CREDITS,  THOSE  WHOSE  CARRYOVER  IS OF LIMITED DURATION SHALL BE
DEDUCTED BEFORE THOSE WHOSE CARRYOVER IS OF UNLIMITED DURATION.  CREDITS
ALLOWABLE UNDER THIS ARTICLE WHICH ARE REFUNDABLE (OTHER THAN THE CREDIT
ALLOWABLE UNDER SUBDIVISION SIX OF THIS SECTION) SHALL BE DEDUCTED LAST.

S. 6359--D                         112                        A. 8559--D

  46.  NOTWITHSTANDING  THE REPEAL OF THE CREDIT PROVISIONS CONTAINED IN
SECTION TWO HUNDRED TEN OF THIS ARTICLE OR IN ARTICLE THIRTY-TWO OF THIS
CHAPTER AND THE ENACTMENT OF THIS SECTION BY A CHAPTER OF  THE  LAWS  OF
TWO THOUSAND FOURTEEN:
  (A) A TAXPAYER SHALL BE ALLOWED TO UTILIZE ANY CARRYFORWARD AMOUNTS OF
CREDITS  TO WHICH THE TAXPAYER WAS ENTITLED AS OF THE CLOSE OF THE TAXA-
BLE YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN  AND
BEFORE  JANUARY FIRST, TWO THOUSAND FIFTEEN, OTHER THAN THE CARRYFORWARD
AMOUNT OF THE MINIMUM TAX CREDIT PROVIDED UNDER SUBDIVISION THIRTEEN  OF
SECTION  TWO  HUNDRED TEN, AS THAT SUBDIVISION WAS IN EFFECT ON DECEMBER
THIRTY-FIRST, TWO THOUSAND FOURTEEN.
  (B) A TAXPAYER SHALL BE REQUIRED IN A TAXABLE  YEAR  BEGINNING  ON  OR
AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN, TO RECAPTURE ALL OR A PORTION
OF  A CREDIT ALLOWED UNDER A CREDIT PROVISION IN SECTION TWO HUNDRED TEN
OR ARTICLE THIRTY-TWO OF THIS CHAPTER FOR A TAXABLE YEAR BEGINNING PRIOR
TO JANUARY FIRST, TWO THOUSAND FIFTEEN  IF  RECAPTURE  WOULD  HAVE  BEEN
REQUIRED UNDER SUCH CREDIT PROVISION.
  S  18. The tax law is amended by adding a new section 210-C to read as
follows:
  S 210-C. COMBINED REPORTS. 1. TAX. THE TAX ON A COMBINED REPORT  SHALL
BE  THE  HIGHEST  OF (I) THE COMBINED BUSINESS INCOME BASE MULTIPLIED BY
THE TAX RATE SPECIFIED IN PARAGRAPH (A) OF SUBDIVISION  ONE  OF  SECTION
TWO  HUNDRED  TEN OF THIS ARTICLE; (II) THE COMBINED CAPITAL BASE MULTI-
PLIED BY THE TAX RATE SPECIFIED IN PARAGRAPH (B) OF SUBDIVISION  ONE  OF
SECTION  TWO  HUNDRED TEN OF THIS ARTICLE, BUT NOT EXCEEDING THE LIMITA-
TION PROVIDED FOR IN THAT PARAGRAPH (B); OR (III) THE FIXED DOLLAR MINI-
MUM THAT IS ATTRIBUTABLE TO THE DESIGNATED AGENT OF THE COMBINED  GROUP.
IN ADDITION, THE TAX ON A COMBINED REPORT SHALL INCLUDE THE FIXED DOLLAR
MINIMUM TAX SPECIFIED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED TEN OF THIS ARTICLE FOR EACH MEMBER OF THE COMBINED GROUP, OTHER
THAN THE DESIGNATED AGENT, THAT IS A TAXPAYER.
  (B)  THE  COMBINED  BUSINESS INCOME BASE IS THE AMOUNT OF THE COMBINED
BUSINESS INCOME OF THE COMBINED GROUP THAT IS APPORTIONED TO THE  STATE,
REDUCED BY ANY NET OPERATING LOSS DEDUCTION FOR THE COMBINED GROUP.  THE
COMBINED  CAPITAL  BASE  IS  THE  AMOUNT  OF THE COMBINED CAPITAL OF THE
COMBINED GROUP THAT IS APPORTIONED TO THE STATE.
  2. COMBINED REPORTS REQUIRED. (A) EXCEPT AS PROVIDED IN PARAGRAPH  (C)
OF  THIS  SUBDIVISION,  ANY  TAXPAYER  (I) WHICH OWNS OR CONTROLS EITHER
DIRECTLY OR INDIRECTLY MORE THAN FIFTY PERCENT OF THE  VOTING  POWER  OF
THE  CAPITAL  STOCK OF ONE OR MORE OTHER CORPORATIONS, OR (II) MORE THAN
FIFTY PERCENT OF THE VOTING POWER OF THE CAPITAL STOCK OF WHICH IS OWNED
OR CONTROLLED EITHER DIRECTLY OR INDIRECTLY BY ONE OR MORE OTHER  CORPO-
RATIONS,  OR  (III)  MORE  THAN FIFTY PERCENT OF THE VOTING POWER OF THE
CAPITAL STOCK OF WHICH AND THE CAPITAL STOCK OF ONE OR MORE OTHER CORPO-
RATIONS, IS OWNED OR CONTROLLED, DIRECTLY OR  INDIRECTLY,  BY  THE  SAME
INTERESTS,  AND  (IV)  THAT  IS ENGAGED IN A UNITARY BUSINESS WITH THOSE
CORPORATIONS (HEREINAFTER REFERRED TO AS "RELATED CORPORATIONS"),  SHALL
MAKE A COMBINED REPORT WITH THOSE OTHER CORPORATIONS.
  (B)  A CORPORATION REQUIRED TO MAKE A COMBINED REPORT WITHIN THE MEAN-
ING OF THIS SECTION SHALL ALSO INCLUDE (I) A CAPTIVE REIT AND A  CAPTIVE
RIC IF THE CAPTIVE REIT OR CAPTIVE RIC IS NOT REQUIRED TO BE INCLUDED IN
A  COMBINED  REPORT  UNDER  ARTICLE THIRTY-THREE OF THIS CHAPTER; (II) A
COMBINABLE CAPTIVE INSURANCE COMPANY; AND  (III)  AN  ALIEN  CORPORATION
THAT  SATISFIES  THE  CONDITIONS IN PARAGRAPH (A) OF THIS SUBDIVISION IF
(I) UNDER ANY PROVISION OF THE INTERNAL REVENUE CODE,  THAT  CORPORATION
IS TREATED AS A "DOMESTIC CORPORATION" AS DEFINED IN SECTION SEVEN THOU-

S. 6359--D                         113                        A. 8559--D

SAND  SEVEN  HUNDRED  ONE  OF  THE INTERNAL REVENUE CODE, OR (II) IT HAS
EFFECTIVELY CONNECTED INCOME FOR THE TAXABLE  YEAR  PURSUANT  TO  CLAUSE
(IV) OF THE OPENING PARAGRAPH OF SUBDIVISION NINE OF SECTION TWO HUNDRED
EIGHT OF THIS ARTICLE.
  (C)  A  CORPORATION  REQUIRED  OR  PERMITTED TO MAKE A COMBINED REPORT
UNDER THIS SECTION DOES NOT INCLUDE (I) A CORPORATION  THAT  IS  TAXABLE
UNDER A FRANCHISE TAX IMPOSED BY ARTICLE NINE OR ARTICLE THIRTY-THREE OF
THIS  CHAPTER OR WOULD BE TAXABLE UNDER A FRANCHISE TAX IMPOSED BY ARTI-
CLE NINE OR THIRTY-THREE OF THIS CHAPTER IF SUBJECT TO TAX; (II) A  REIT
THAT IS NOT A CAPTIVE REIT, AND A RIC THAT IS NOT A CAPTIVE RIC; (III) A
NEW  YORK  S  CORPORATION;  OR  (IV) AN ALIEN CORPORATION THAT UNDER ANY
PROVISION OF THE INTERNAL REVENUE CODE IS NOT  TREATED  AS  A  "DOMESTIC
CORPORATION"  AS  DEFINED IN SECTION SEVEN THOUSAND SEVEN HUNDRED ONE OF
SUCH CODE AND HAS NO EFFECTIVELY CONNECTED INCOME FOR THE  TAXABLE  YEAR
PURSUANT  TO CLAUSE (IV) OF THE OPENING PARAGRAPH OF SUBDIVISION NINE OF
SECTION TWO HUNDRED EIGHT OF THIS ARTICLE.  IF A CORPORATION IS  SUBJECT
TO  TAX  UNDER  THIS  ARTICLE  SOLELY  AS A RESULT OF ITS OWNERSHIP OF A
LIMITED PARTNER INTEREST IN A LIMITED PARTNERSHIP THAT  IS  DOING  BUSI-
NESS,  EMPLOYING  CAPITAL,  OWNING  OR  LEASING PROPERTY, MAINTAINING AN
OFFICE IN THIS STATE, OR DERIVING RECEIPTS FROM ACTIVITY IN THIS  STATE,
AND  NONE  OF  THE CORPORATION'S RELATED CORPORATIONS ARE SUBJECT TO TAX
UNDER THIS ARTICLE, SUCH CORPORATION SHALL NOT BE REQUIRED OR  PERMITTED
TO  FILE  A  COMBINED REPORT UNDER THIS SECTION WITH SUCH RELATED CORPO-
RATIONS.
  (D) A COMBINED REPORT SHALL BE FILED BY THE DESIGNATED  AGENT  OF  THE
COMBINED GROUP AS DETERMINED UNDER SUBDIVISION SEVEN OF THIS SECTION.
  3.  COMMONLY  OWNED  GROUP  ELECTION. (A) SUBJECT TO THE PROVISIONS OF
PARAGRAPH (C) OF SUBDIVISION TWO OF THIS SECTION, A TAXPAYER  MAY  ELECT
TO  TREAT AS ITS COMBINED GROUP ALL CORPORATIONS THAT MEET THE OWNERSHIP
REQUIREMENTS DESCRIBED IN PARAGRAPH  (A)  OF  SUBDIVISION  TWO  OF  THIS
SECTION  (SUCH CORPORATIONS COLLECTIVELY REFERRED TO IN THIS SUBDIVISION
AS THE "COMMONLY OWNED GROUP"). IF THAT ELECTION IS MADE,  THE  COMMONLY
OWNED GROUP SHALL CALCULATE THE COMBINED BUSINESS INCOME, COMBINED CAPI-
TAL,  AND  FIXED  DOLLAR  MINIMUM  BASES  OF ALL MEMBERS OF THE GROUP IN
ACCORDANCE WITH PARAGRAPH FOUR OF THIS SUBDIVISION, WHETHER OR NOT  THAT
BUSINESS INCOME OR BUSINESS CAPITAL IS FROM A SINGLE UNITARY BUSINESS.
  (B)  THE ELECTION UNDER THIS SUBDIVISION SHALL BE MADE ON AN ORIGINAL,
TIMELY FILED RETURN OF THE COMBINED GROUP. ANY  CORPORATION  ENTERING  A
COMMONLY  OWNED  GROUP  SUBSEQUENT  TO  THE  YEAR  OF  ELECTION SHALL BE
INCLUDED IN THE COMBINED GROUP AND IS  CONSIDERED  TO  HAVE  WAIVED  ANY
OBJECTION TO ITS INCLUSION IN THE COMBINED GROUP.
  (C)  THE ELECTION SHALL BE IRREVOCABLE, AND BINDING FOR AND APPLICABLE
TO THE TAXABLE YEAR FOR WHICH IT IS MADE AND FOR THE  NEXT  SIX  TAXABLE
YEARS.  THE  ELECTION  WILL  AUTOMATICALLY  BE RENEWED FOR ANOTHER SEVEN
TAXABLE YEARS AFTER IT HAS BEEN IN EFFECT FOR SEVEN TAXABLE YEARS UNLESS
IT IS  AFFIRMATIVELY  REVOKED.  THE  REVOCATION  SHALL  BE  MADE  ON  AN
ORIGINAL,  TIMELY  FILED  RETURN  FOR  THE  FIRST TAXABLE YEAR AFTER THE
COMPLETION OF A SEVEN YEAR PERIOD  FOR  WHICH  AN  ELECTION  UNDER  THIS
SUBDIVISION  WAS  IN  PLACE. IN THE CASE OF A REVOCATION, A NEW ELECTION
UNDER THIS SUBDIVISION SHALL NOT BE PERMITTED IN ANY OF THE  IMMEDIATELY
FOLLOWING  THREE  TAXABLE YEARS. IN DETERMINING THE SEVEN AND THREE YEAR
PERIODS DESCRIBED IN THIS PARAGRAPH, SHORT TAXABLE YEARS  SHALL  NOT  BE
CONSIDERED OR COUNTED.
  4. COMPUTATION OF TAX BASES ON A COMBINED REPORT. (A) IN COMPUTING THE
TAX  BASES  FOR A COMBINED REPORT, THE COMBINED GROUP SHALL GENERALLY BE
TREATED AS A SINGLE  CORPORATION,  EXCEPT  AS  OTHERWISE  PROVIDED,  AND

S. 6359--D                         114                        A. 8559--D

SUBJECT TO ANY REGULATIONS OR GUIDANCE ISSUED BY THE COMMISSIONER OR THE
DEPARTMENT.
  (B)(I) IN COMPUTING COMBINED BUSINESS INCOME, ALL INTERCORPORATE DIVI-
DENDS  SHALL  BE  ELIMINATED,  AND ALL OTHER INTERCORPORATE TRANSACTIONS
SHALL BE DEFERRED IN A MANNER SIMILAR  TO  THE  UNITED  STATES  TREASURY
REGULATIONS  RELATING TO INTERCOMPANY TRANSACTIONS UNDER SECTION FIFTEEN
HUNDRED TWO OF THE INTERNAL REVENUE CODE.
  (II) IN COMPUTING COMBINED CAPITAL, ALL INTERCORPORATE  STOCKHOLDINGS,
INTERCORPORATE  BILLS,  INTERCORPORATE  NOTES  RECEIVABLE  AND  PAYABLE,
INTERCORPORATE ACCOUNTS RECEIVABLE AND PAYABLE, AND OTHER INTERCORPORATE
INDEBTEDNESS, SHALL BE ELIMINATED.
  (C) QUALIFICATION FOR  CREDITS,  INCLUDING  ANY  LIMITATIONS  THEREON,
SHALL  BE  DETERMINED SEPARATELY FOR EACH OF THE MEMBERS OF THE COMBINED
GROUP, AND SHALL NOT BE DETERMINED ON A COMBINED GROUP BASIS, EXCEPT  AS
OTHERWISE  PROVIDED.  HOWEVER,  THE CREDITS SHALL BE APPLIED AGAINST THE
COMBINED TAX OF THE GROUP. TO THE EXTENT THAT A PROVISION OF SECTION TWO
HUNDRED TEN-B OF THIS ARTICLE LIMITS A CREDIT TO THE FIXED DOLLAR  MINI-
MUM AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO
HUNDRED  TEN  OF THIS ARTICLE, SUCH FIXED DOLLAR MINIMUM AMOUNT SHALL BE
THE FIXED DOLLAR MINIMUM AMOUNT THAT IS ATTRIBUTABLE TO  THE  DESIGNATED
AGENT OF THE COMBINED GROUP.
  (D)(I)  A  NET  OPERATING  LOSS  DEDUCTION IS ALLOWED IN COMPUTING THE
COMBINED BUSINESS INCOME BASE. SUCH DEDUCTION MAY REDUCE THE TAX ON  THE
COMBINED  BUSINESS  INCOME BASE TO THE HIGHER OF THE TAX ON THE COMBINED
CAPITAL BASE OR THE FIXED DOLLAR MINIMUM AMOUNT THAT IS ATTRIBUTABLE  TO
THE  DESIGNATED  AGENT  OF THE COMBINED GROUP.  A COMBINED NET OPERATING
LOSS DEDUCTION IS EQUAL TO THE AMOUNT OF COMBINED NET OPERATING LOSS  OR
LOSSES  FROM  ONE  OR  MORE  TAXABLE YEARS THAT ARE CARRIED FORWARD TO A
PARTICULAR INCOME YEAR. A COMBINED NET OPERATING LOSS  IS  THE  COMBINED
BUSINESS  LOSS  INCURRED  IN A PARTICULAR TAXABLE YEAR MULTIPLIED BY THE
COMBINED APPORTIONMENT FACTOR FOR THAT YEAR DETERMINED  AS  PROVIDED  IN
SUBDIVISION FIVE OF THIS SECTION.
  (II)  THE COMBINED NET OPERATING LOSS DEDUCTION AND COMBINED NET OPER-
ATING LOSS ARE ALSO SUBJECT TO THE PROVISIONS CONTAINED IN  CLAUSES  ONE
THROUGH  SIX OF SUBPARAGRAPH (IX) OF PARAGRAPH (A) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  (III) IN THE CASE OF A  CORPORATION  THAT  FILES  A  COMBINED  REPORT,
EITHER  IN THE YEAR THE NET OPERATING LOSS IS INCURRED OR IN THE YEAR IN
WHICH A DEDUCTION IS CLAIMED ON ACCOUNT OF THE LOSS,  THE  COMBINED  NET
OPERATING  LOSS  DEDUCTION  IS  DETERMINED AS IF THE COMBINED GROUP IS A
SINGLE CORPORATION AND, TO THE EXTENT POSSIBLE AND NOT OTHERWISE  INCON-
SISTENT  WITH  THIS SUBDIVISION, IS SUBJECT TO THE SAME LIMITATIONS THAT
WOULD APPLY FOR FEDERAL INCOME TAX PURPOSES UNDER THE  INTERNAL  REVENUE
CODE  AND  THE  CODE  OF  FEDERAL REGULATIONS AS IF SUCH CORPORATION HAD
FILED FOR SUCH TAXABLE YEAR A CONSOLIDATED  FEDERAL  INCOME  TAX  RETURN
WITH  THE SAME CORPORATIONS INCLUDED IN THE COMBINED REPORT. IF A CORPO-
RATION FILES A COMBINED REPORT, REGARDLESS OF WHETHER IT FILED  A  SEPA-
RATE  RETURN OR CONSOLIDATED RETURN FOR FEDERAL INCOME TAX PURPOSES, THE
NET OPERATING LOSS AND NET OPERATING LOSS  DEDUCTION  FOR  THE  COMBINED
GROUP  MUST  BE  COMPUTED AS IF THE CORPORATION HAD FILED A CONSOLIDATED
RETURN FOR THE SAME CORPORATIONS FOR FEDERAL INCOME TAX PURPOSES.
  (IV) IN GENERAL, ANY NET OPERATING LOSS CARRYOVER FROM A YEAR IN WHICH
A COMBINED REPORT WAS FILED SHALL BE BASED ON THE COMBINED NET OPERATING
LOSS OF THE GROUP OF CORPORATIONS FILING SUCH REPORT. THE PORTION OF THE
COMBINED LOSS ATTRIBUTABLE TO ANY MEMBER OF THE GROUP THAT FILES A SEPA-
RATE REPORT FOR A SUCCEEDING TAXABLE YEAR WILL BE AN AMOUNT BEARING  THE

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SAME  RELATION  TO  THE  COMBINED LOSS AS THE NET OPERATING LOSS OF SUCH
CORPORATION BEARS TO THE TOTAL NET OPERATING LOSS OF ALL MEMBERS OF  THE
GROUP  HAVING SUCH LOSSES TO THE EXTENT THAT THEY ARE TAKEN INTO ACCOUNT
IN COMPUTING THE COMBINED NET OPERATING LOSS.
  (D-1)  A  NET  OPERATING  LOSS  CONVERSION  SUBTRACTION  IS ALLOWED IN
COMPUTING THE COMBINED BUSINESS INCOME BASE, AS PROVIDED IN SUBPARAGRAPH
(VIII) OF PARAGRAPH (A) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF
THIS ARTICLE. SUCH SUBTRACTION MAY REDUCE THE TAX ON THE COMBINED  BUSI-
NESS  INCOME  BASE TO THE HIGHER OF THE TAX ON THE COMBINED CAPITAL BASE
OR THE FIXED DOLLAR MINIMUM AMOUNT THAT IS ATTRIBUTABLE  TO  THE  DESIG-
NATED AGENT OF THE COMBINED GROUP.
  (E)  ANY  ELECTION  MADE PURSUANT TO PARAGRAPH (B) OF SUBDIVISION SIX,
AND PARAGRAPHS (B) AND (C) OF SUBDIVISION SIX-A OF SECTION  TWO  HUNDRED
EIGHT OF THIS ARTICLE SHALL APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
  (F)(I)  IN  THE  CASE  OF A CAPTIVE REIT OR CAPTIVE RIC REQUIRED UNDER
THIS SECTION TO BE INCLUDED IN A  COMBINED  REPORT,  ENTIRE  NET  INCOME
SHALL  BE  COMPUTED AS REQUIRED UNDER SUBDIVISION FIVE (IN THE CASE OF A
CAPTIVE REIT) OR SUBDIVISION SEVEN (IN THE CASE OF  A  CAPTIVE  RIC)  OF
SECTION  TWO  HUNDRED NINE OF THIS ARTICLE. HOWEVER, THE DEDUCTION UNDER
THE INTERNAL REVENUE CODE FOR DIVIDENDS PAID  BY  THE  CAPTIVE  REIT  OR
CAPTIVE  RIC  TO  ANY  MEMBER  OF THE AFFILIATED GROUP THAT INCLUDES THE
CORPORATION THAT DIRECTLY OR INDIRECTLY OWNS OVER FIFTY PERCENT  OF  THE
VOTING  STOCK  OF  THE CAPTIVE REIT OR CAPTIVE RIC SHALL NOT BE ALLOWED.
FOR PURPOSES OF THIS SUBPARAGRAPH, THE  TERM  "AFFILIATED  GROUP"  MEANS
"AFFILIATED  GROUP"  AS  DEFINED  IN SECTION FIFTEEN HUNDRED FOUR OF THE
INTERNAL REVENUE CODE, BUT WITHOUT REGARD TO THE EXCEPTIONS PROVIDED FOR
IN SUBSECTION (B) OF THAT SECTION.
  (II) IN THE CASE OF A COMBINABLE CAPTIVE  INSURANCE  COMPANY  REQUIRED
UNDER  THIS  SECTION  TO  BE  INCLUDED  IN A COMBINED REPORT, ENTIRE NET
INCOME SHALL BE COMPUTED AS REQUIRED BY SUBDIVISION NINE OF SECTION  TWO
HUNDRED EIGHT OF THIS ARTICLE.
  (G) IF MORE THAN ONE MEMBER OF A COMBINED GROUP IS ELIGIBLE FOR ANY OF
THE  MODIFICATIONS  DESCRIBED IN PARAGRAPHS (R), (S) AND (T) OF SUBDIVI-
SION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE, ALL SUCH MEMBERS
MUST UTILIZE THE SAME MODIFICATION.
  5. APPORTIONMENT ON A COMBINED REPORT. (A) IN DETERMINING  THE  APPOR-
TIONMENT  FACTOR  FOR  A  COMBINED REPORT, THE RECEIPTS, NET INCOME, NET
GAINS AND OTHER ITEMS OF ALL MEMBERS OF THE COMBINED GROUP,  WHETHER  OR
NOT  THEY  ARE  A  TAXPAYER,  ARE  INCLUDED AND INTERCORPORATE RECEIPTS,
INCOME AND GAINS ARE ELIMINATED. RECEIPTS, NET  INCOME,  NET  GAINS  AND
OTHER  ITEMS  ARE  SOURCED, AND THE AMOUNTS ALLOWED IN THE APPORTIONMENT
FACTOR ARE DETERMINED, AS PROVIDED IN SECTION TWO HUNDRED TEN-A OF  THIS
ARTICLE.
  (B)  AN  ELECTION  MADE  TO APPORTION INCOME AND GAINS FROM QUALIFYING
FINANCIAL INSTRUMENTS PURSUANT TO SUBPARAGRAPH ONE OF PARAGRAPH  (A)  OF
SUBDIVISION  FIVE  OF  SECTION  TWO  HUNDRED TEN-A OF THIS ARTICLE SHALL
APPLY TO ALL MEMBERS OF THE COMBINED GROUP.
  6. LIABILITY OF COMBINED GROUP MEMBERS. EVERY MEMBER OF  THE  COMBINED
GROUP  THAT  IS  SUBJECT  TO TAX UNDER THIS ARTICLE SHALL BE JOINTLY AND
SEVERALLY LIABLE FOR THE TAX DUE PURSUANT TO A COMBINED REPORT.
  7. DESIGNATED AGENT. EACH COMBINED GROUP  SHALL  HAVE  ONE  DESIGNATED
AGENT,  WHICH  SHALL  BE  A TAXPAYER. THE DESIGNATED AGENT IS THE PARENT
CORPORATION OF THE COMBINED GROUP. IF THERE IS  NO  SUCH  PARENT  CORPO-
RATION, OR THE PARENT CORPORATION IS NOT A TAXPAYER, THEN ANOTHER MEMBER
OF  THE COMBINED GROUP THAT IS A TAXPAYER MAY BE APPOINTED AS THE DESIG-

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NATED AGENT. ONLY THE DESIGNATED AGENT MAY ACT ON BEHALF OF THE  MEMBERS
OF THE COMBINED GROUP FOR MATTERS RELATING TO THE COMBINED REPORT.
  S  19.  Subdivisions  2-a,  3,  4 and 5 of section 211 of the tax law,
subdivision 2-a as added and subdivision 5 as amended by chapter 817  of
the laws of 1987, subdivision 3 as amended by chapter 770 of the laws of
1992,  subdivision 4 as amended by section 2 of part T of chapter 407 of
the laws of 1999, the opening  paragraph  and  the  second  undesignated
paragraph  of  paragraph  (a)  of subdivision 4 as amended by section 1,
subparagraph 4 of paragraph (a) of subdivision 4 as amended  by  section
2,  and  subparagraph  5 of paragraph (a) of subdivision 4 as amended by
section 3 of part J of chapter 60 of the laws of 2007, subparagraph 6 of
paragraph (a) of subdivision 4 as added by section  3  of  part  FF1  of
chapter  57  of  the  laws  of  2008, subparagraph 7 of paragraph (a) of
subdivision 4 as added by section 2 and subparagraph 1 of paragraph  (b)
of subdivision 4 as amended by section 3 of part E1 of chapter 57 of the
laws of 2009, are amended to read as follows:
  2-a.  The  [tax commission] COMMISSIONER may prescribe regulations and
instructions requiring returns of information to be made  and  filed  in
conjunction  with  the reports required to be filed pursuant to [section
two hundred eleven] THIS ARTICLE, relating to payments  made  to  share-
holders  owning,  directly  or indirectly, individually or in the aggre-
gate, more than fifty percent of the issued capital stock of the taxpay-
er, where such payments are treated  as  payments  of  interest  in  the
computation of entire net income [or minimum taxable income] reported on
such reports.
  3.  If  the  amount  of taxable income [or alternative minimum taxable
income] for any year of any taxpayer (including any taxpayer  which  has
elected  to  be  taxed under subchapter s of chapter one of the internal
revenue code), as returned to the United States treasury  department  is
changed  or  corrected  by the commissioner of internal revenue or other
officer of the United States or other competent authority,  or  where  a
renegotiation  of  a  contract  or  subcontract  with  the United States
results in a change in taxable income [or  alternative  minimum  taxable
income],  such  taxpayer  shall report such changed or corrected taxable
income [or alternative minimum taxable income], or the results  of  such
renegotiation,  within  ninety  days (or one hundred twenty days, in the
case of a taxpayer making a combined report under this article for  such
year)  after  the  final  determination  of such change or correction or
renegotiation, or as required by the commissioner, and shall concede the
accuracy of such determination or state wherein  it  is  erroneous.  The
allowance of a tentative carryback adjustment based upon a net operating
loss  carryback or net capital loss carryback pursuant to section sixty-
four hundred eleven of the internal revenue code, as amended,  shall  be
treated  as  a final determination for purposes of this subdivision. Any
taxpayer filing an amended return with such department shall  also  file
within ninety days (OR ONE HUNDRED TWENTY DAYS, IN THE CASE OF A TAXPAY-
ER MAKING A COMBINED REPORT UNDER THIS ARTICLE FOR SUCH YEAR) thereafter
an amended report with the commissioner.
  4.  [(a)  Combined  reports permitted or required. Any taxpayer, which
owns or controls either directly or  indirectly  substantially  all  the
capital  stock  of  one or more other corporations, or substantially all
the capital stock of which is owned or  controlled  either  directly  or
indirectly  by  one or more other corporations or by interests which own
or control either directly or indirectly substantially all  the  capital
stock  of  one  or  more other corporations, (hereinafter referred to in
this paragraph as "related corporations"), shall make a combined  report

S. 6359--D                         117                        A. 8559--D

covering  any  related corporations if there are substantial intercorpo-
rate transactions among the  related  corporations,  regardless  of  the
transfer price for such intercorporate transactions. It is not necessary
that  there  be  substantial intercorporate transactions between any one
corporation and every other related corporation. It is necessary, howev-
er, that there be substantial intercorporate  transactions  between  the
taxpayer  and  a  related  corporation  or collectively, a group of such
related corporations. The report shall set forth such information as the
commissioner may require, subject to the provisions of subparagraphs one
through five of this paragraph.
  In determining whether there  are  substantial  intercorporate  trans-
actions, the commissioner shall consider and evaluate all activities and
transactions  of  the  taxpayer and its related corporations. Activities
and transactions that will be considered include, but  are  not  limited
to:  (i)  manufacturing,  acquiring  goods  or  property,  or performing
services, for related corporations; (ii)  selling  goods  acquired  from
related  corporations;  (iii)  financing  sales of related corporations;
(iv) performing related customer services using  common  facilities  and
employees for related corporations; (v) incurring expenses that benefit,
directly  or  indirectly,  one  or  more  related corporations, and (vi)
transferring assets,  including  such  assets  as  accounts  receivable,
patents or trademarks from one or more related corporations.
  (1)  Any  corporation  which owns or controls either directly or indi-
rectly substantially all the capital stock of a DISC not exempt from tax
under paragraph (i) of subdivision nine of section two hundred eight  of
this  article  shall be allowed, at the election of such corporation, to
make a report on a combined basis covering such DISC, but the failure of
such corporation to make such election shall not  prohibit  the  commis-
sioner  from  requiring  a combined report covering such corporation and
such DISC.
  (2)(i) No taxpayer may be permitted to make a  report  on  a  combined
basis  covering  any  such other corporations where such taxpayer or any
such other corporation  allocates  in  accordance  with  clause  (A)  of
subparagraph  seven of paragraph (a) of subdivision three of section two
hundred ten of this article (relating to aviation corporations) and such
taxpayer or any such other corporation does not so allocate, unless such
taxpayer or such other corporation is a qualified air freight  forwarder
with  respect  to such other corporation or such taxpayer, respectively,
and all taxpayers included on such combined report elect, by filing such
combined report,  to  have  such  qualified  air  freight  forwarder  so
included.
  (ii)  A  corporation is a qualified air freight forwarder with respect
to another corporation:
  (A) if it owns or controls either directly or indirectly  all  of  the
capital  stock of such other corporation, or if all of its capital stock
is owned or controlled either  directly  or  indirectly  by  such  other
corporation,  or  if  all  of  the capital stock of both corporations is
owned or controlled either directly or indirectly by the same interests,
  (B) if it is principally  engaged  in  the  business  of  air  freight
forwarding, and
  (C)  if  its air freight forwarding business is carried on principally
with the airline or airlines operated by such other corporation.
  (3) No taxpayer may be permitted to make a report on a combined  basis
covering  any  such  other  corporations where such taxpayer or any such
other corporation allocates in accordance  with  subparagraph  eight  of
paragraph  (a)  of  subdivision three of section two hundred ten of this

S. 6359--D                         118                        A. 8559--D

article (relating  to  railroad  and  trucking  corporations)  and  such
taxpayer or any such other corporation does not so allocate.
  (4)  Except  as  provided  in the first undesignated paragraph of this
paragraph, no combined report covering any corporation shall be required
unless the commissioner  deems  such  a  report  necessary,  because  of
inter-company transactions or some agreement, understanding, arrangement
or transaction referred to in subdivision five of this section, in order
properly to reflect the tax liability under this article.
  (5) A corporation organized under the laws of a country other than the
United  States  shall not be required or permitted to make a report on a
combined basis.
  (6) (i) For purposes of this subparagraph, the term "closest  control-
ling stockholder" means the corporation that indirectly owns or controls
over fifty percent of the voting stock of a captive REIT or captive RIC,
is subject to tax under this article, article thirty-two or thirty-three
of  this  chapter  or  otherwise  required  to be included in a combined
return or report under this article, article thirty-two or  thirty-three
of  this  chapter,  and  is the fewest tiers of corporations away in the
ownership structure from the captive REIT or captive RIC.   The  commis-
sioner  is  authorized  to prescribe by regulation or published guidance
the criteria for determining the closest controlling stockholder.
  (ii) A captive REIT or a captive RIC must be included  in  a  combined
report  with  the  corporation that directly owns or controls over fifty
percent of the voting stock of the captive REIT or captive RIC  if  that
corporation  is  subject to tax or required to be included in a combined
report under this article.
  (iii) If over fifty percent of the voting stock of a captive  REIT  or
captive RIC is not directly owned or controlled by a corporation that is
subject  to  tax  or  required to be included in a combined report under
this article, then the captive REIT or captive RIC must be included in a
combined return or report with  the  corporation  that  is  the  closest
controlling stockholder of the captive REIT or captive RIC. If the clos-
est  controlling  stockholder  of  the  captive  REIT  or captive RIC is
subject to tax or otherwise required to be included in a combined report
under this article, then  the  captive  REIT  or  captive  RIC  must  be
included in a combined report under this article.
  (iv)  If  the  corporation  that  directly owns or controls the voting
stock of the captive REIT or captive RIC is  described  in  subparagraph
two,  three  or five of this paragraph as a corporation not permitted to
make a combined report, then the provisions  in  clause  (iii)  of  this
subparagraph  must  be  applied  to  determine  the corporation in whose
combined return or report the captive REIT  or  captive  RIC  should  be
included.  If,  under clause (iii) of this subparagraph, the corporation
that is the closest controlling  stockholder  of  the  captive  REIT  or
captive  RIC  is  described  in  subparagraph two, three or five of this
paragraph as a corporation not permitted to make a combined return, then
that corporation is deemed to not be in the ownership structure  of  the
captive  REIT  or  captive  RIC, and the closest controlling stockholder
will be determined without regard to that corporation.
  (v) If a captive REIT owns the stock of a  qualified  REIT  subsidiary
(as  defined in paragraph two of subsection (i) of section eight hundred
fifty-six of the internal revenue code), then the qualified REIT subsid-
iary must be included in a combined report with the captive REIT.
  (vi) If a captive REIT or a captive RIC is required under this subpar-
agraph to be included in a combined report with another corporation, and
that other corporation is also required to be  included  in  a  combined

S. 6359--D                         119                        A. 8559--D

report with another related corporation or corporations under this para-
graph, then the captive REIT or the captive RIC must be included in that
combined report with those corporations.
  (vii)  If  a  captive  REIT  or  a  captive  RIC is not required to be
included in a combined report with another corporation under clause (ii)
or (iii) of this  subparagraph,  or  in  a  combined  return  under  the
provisions of either subparagraph (v) of paragraph two of subsection (f)
of  section  fourteen hundred sixty-two or paragraph four of subdivision
(f) of section fifteen hundred fifteen of this chapter, then the captive
REIT or captive RIC is subject to the opening provisions of  this  para-
graph  and  the  provisions  of subparagraph four of this paragraph. The
captive REIT or captive RIC must be included in a combined report  under
this  article  with another corporation if either the substantial inter-
corporate transactions requirement in the  opening  provisions  of  this
paragraph or the inter-company transactions or agreement, understanding,
arrangement  or  transaction  requirement  of  subparagraph four of this
paragraph is satisfied and more than fifty percent of the  voting  stock
of  the  captive  REIT  or  the captive RIC and substantially all of the
capital stock of  that  other  corporation  are  owned  and  controlled,
directly or indirectly, by the same corporation.
  (7)  (i) For purposes of this subparagraph, the term "closest control-
ling stockholder" means the corporation that indirectly owns or controls
over fifty percent of the voting stock  of  an  overcapitalized  captive
insurance company; is subject to tax under this article or article thir-
ty-two  of  this  chapter,  or is otherwise required to be included in a
combined return or report under this article or  article  thirty-two  of
this chapter; and is the fewest tiers of corporations away in the owner-
ship  structure from the overcapitalized captive insurance company.  The
commissioner is authorized to prescribe by regulation or published guid-
ance the criteria for determining the closest controlling stockholder.
  (ii) An overcapitalized captive insurance company must be included  in
a  combined  report  with the corporation that directly owns or controls
over fifty percent of the voting stock of  the  overcapitalized  captive
insurance  company  if that corporation is subject to tax or required to
be included in a combined report under this article.
  (iii) If over fifty percent of the voting stock of an  overcapitalized
captive  insurance  company  is  not  directly  owned or controlled by a
corporation that is subject to tax or  required  to  be  included  in  a
combined  report  under  this  article, then the overcapitalized captive
insurance company must be included in a combined return or  report  with
the corporation that is the closest controlling stockholder of the over-
capitalized captive insurance company. If the closest controlling stock-
holder  of  the  overcapitalized captive insurance company is subject to
tax or otherwise required to be included in a combined report under this
article, then the overcapitalized  captive  insurance  company  must  be
included in a combined report under this article.
  (iv)  If  the  corporation  that  directly owns or controls the voting
stock of the overcapitalized captive insurance company is  described  in
subparagraph  two, three, or five of this paragraph as a corporation not
permitted to make a combined report, then the provisions in clause (iii)
of this subparagraph must be applied to  determine  the  corporation  in
whose  combined  return  or report the overcapitalized captive insurance
company should be included. If, under clause (iii) of this subparagraph,
the corporation that is the closest controlling stockholder of the over-
capitalized captive insurance company is described in subparagraph  two,
three or five of this paragraph as a corporation not permitted to make a

S. 6359--D                         120                        A. 8559--D

combined return, then that corporation is deemed not to be in the owner-
ship structure of the overcapitalized captive insurance company, and the
closest  controlling  stockholder  will  be determined without regard to
that corporation.
  (v)  If an overcapitalized captive insurance company is required under
this subparagraph to be included  in  a  combined  report  with  another
corporation,  and that other corporation is also required to be included
in a combined report with another related  corporation  or  corporations
under this paragraph, then the overcapitalized captive insurance company
must be included in that combined report with those corporations.
  (vi)  If  an overcapitalized captive insurance company is not required
to be included in a  combined  report  with  another  corporation  under
clause (ii) or (iii) of this subparagraph, or in a combined return under
the provisions of subparagraph (v) of paragraph two of subsection (f) of
section  fourteen  hundred sixty-two of this chapter, then the overcapi-
talized captive insurance company is subject to the  opening  provisions
of  this paragraph and the provisions of subparagraph four of this para-
graph. The overcapitalized captive insurance company must be included in
a combined report under this article with another corporation if  either
the  substantial  intercorporate transactions requirement in the opening
provisions of this paragraph or the inter-company transactions or agree-
ment, understanding, arrangement or transaction requirement of  subpara-
graph  four  of  this  paragraph  is satisfied, and both more than fifty
percent of the voting stock of  the  overcapitalized  captive  insurance
company  and substantially all of the capital stock of that other corpo-
ration are owned and controlled, directly or  indirectly,  by  the  same
corporation.
  (b) Computation. (1) Tax. (i) In the case of a combined report the tax
shall  be  measured  by the combined entire net income, combined minimum
taxable income, combined pre-nineteen  hundred  ninety  minimum  taxable
income  or  combined  capital,  of  all the corporations included in the
report, including any  captive  REIT,  captive  RIC  or  overcapitalized
captive  insurance company; provided, however, in no event shall the tax
measured by combined capital exceed the limitation provided for in para-
graph (b) of subdivision one of section two hundred ten of this article.
  (ii) In the case of a captive REIT or captive RIC required under  this
subdivision  to be included in a combined report, entire net income must
be computed as required under subdivision five (in the case of a captive
REIT) or subdivision seven (in the case of a captive RIC) of section two
hundred nine of this article. However, the deduction under the  internal
revenue  code  for  dividends paid by the captive REIT or captive RIC to
any member of the affiliated group that includes  the  corporation  that
directly  or  indirectly  owns over fifty percent of the voting stock of
the captive REIT or captive RIC shall not be allowed for  taxable  years
beginning  on  or  after  January  first,  two  thousand eight. The term
"affiliated group"  means  "affiliated  group"  as  defined  in  section
fifteen hundred four of the internal revenue code, but without regard to
the exceptions provided for in subsection (b) of that section.
  (iii)  In  the  case  of  an overcapitalized captive insurance company
required under this subdivision to be included  in  a  combined  report,
entire  net  income  must be computed as required by subdivision nine of
section two hundred eight of this article.
  (2) Tax bases. In computing combined entire net income, combined mini-
mum taxable income or combined pre-nineteen hundred ninety minimum taxa-
ble income intercorporate dividends shall be  eliminated,  in  computing
combined  business  and  investment capital intercorporate stockholdings

S. 6359--D                         121                        A. 8559--D

and intercorporate bills, notes and accounts receivable and payable  and
other  intercorporate  indebtedness shall be eliminated and in computing
combined subsidiary capital intercorporate stockholdings shall be elimi-
nated, provided, however, that intercorporate dividends from a DISC or a
former  DISC not exempt from tax under paragraph (i) of subdivision nine
of section two hundred eight of this article which are taxable as  busi-
ness income under this article shall not be eliminated.
  (3)  Air freight forwarders: allocation. Notwithstanding any provision
of law to the contrary, where a combined report includes a qualified air
freight forwarder and a corporation described in subparagraph  seven  of
paragraph  (a)  of  subdivision three of section two hundred ten of this
chapter (relating to aviation corporations), in computing  the  combined
business  allocation percentage such subparagraph seven shall be applied
with respect to such qualified air  freight  forwarder]  FOR  PROVISIONS
RELATING  TO  COMBINED  REPORTS,  SEE  SECTION TWO HUNDRED TEN-C OF THIS
ARTICLE.
  5. In case it shall appear to the [tax commission]  COMMISSIONER  that
any  agreement, understanding or arrangement exists between the taxpayer
and any other corporation or any person or firm, whereby  the  activity,
business,  income or capital of the taxpayer within the state is improp-
erly or inaccurately reflected, the  [tax  commission]  COMMISSIONER  is
authorized  and empowered, in [its] THE COMMISSIONER'S discretion and in
such manner as [it] THE COMMISSIONER may determine, to adjust  items  of
income, deductions and capital, and to eliminate assets in computing any
[allocation]  APPORTIONMENT  percentage  provided  only  that any income
directly traceable thereto be also  excluded  from  entire  net  income,
[minimum  taxable  income or pre-nineteen hundred ninety minimum taxable
income,] so as equitably to determine the tax. Where  (a)  any  taxpayer
conducts  its  activity  or business under any agreement, arrangement or
understanding in such manner as either directly or indirectly to benefit
its members or stockholders, or any of them, or any  person  or  persons
directly  or  indirectly  interested  in  such  activity or business, by
entering into any transaction at more or less than a fair  price  which,
but  for  such  agreement, arrangement or understanding, might have been
paid or received therefor, or (b) any taxpayer, a substantial portion of
whose capital stock is owned either directly or  indirectly  by  another
corporation,  enters into any transaction with such other corporation on
such terms as to create an improper loss or net income, the [tax commis-
sion] COMMISSIONER may include in the entire net income[, minimum  taxa-
ble income or pre-nineteen hundred ninety minimum taxable income] of the
taxpayer  the fair profits which, but for such agreement, arrangement or
understanding, the taxpayer might have derived  from  such  transaction.
WHERE ANY TAXPAYER OWNS, DIRECTLY OR INDIRECTLY, MORE THAN FIFTY PERCENT
OF THE CAPITAL STOCK OF ANOTHER CORPORATION SUBJECT TO TAX UNDER SECTION
FIFTEEN HUNDRED TWO-A OF THIS CHAPTER AND FIFTY PERCENT OR LESS OF WHOSE
GROSS RECEIPTS FOR THE TAXABLE YEAR CONSIST OF PREMIUMS, THE COMMISSION-
ER  MAY  INCLUDE  IN  THE ENTIRE NET INCOME OF THE TAXPAYER, AS A DEEMED
DISTRIBUTION, THE AMOUNT OF THE NET INCOME OF THE OTHER CORPORATION THAT
IS IN EXCESS OF ITS NET PREMIUM INCOME.
  S 19-a. Subdivision 13 of section 211 of the tax law is REPEALED.
  S 20.  Subdivision 11 of section 2 of the tax law, as added by section
1 of part E-1 of chapter 57 of the laws of 2009, is amended to  read  as
follows:
  11.  The term "[overcapitalized] COMBINABLE captive insurance company"
means an entity that is treated as an association taxable  as  a  corpo-
ration  under  the  internal revenue code (a) more than fifty percent of

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the voting stock of which is owned or controlled, directly or  indirect-
ly,  by  a  single entity that is treated as an association taxable as a
corporation under the internal revenue code and not exempt from  federal
income  tax;  (b)  that is licensed as a captive insurance company under
the laws of this state  or  another  jurisdiction;  (c)  whose  business
includes  providing,  directly  and indirectly, insurance or reinsurance
covering the risks of its parent and/or members of its affiliated group;
and (d) fifty percent or less of whose gross receipts  for  the  taxable
year consist of premiums FROM ARRANGEMENTS THAT CONSTITUTE INSURANCE FOR
FEDERAL  INCOME  TAX PURPOSES. For purposes of this subdivision, "affil-
iated group" has the same meaning as that term is given in section  1504
of the internal revenue code, except that the term "common parent corpo-
ration"  in  that  section  is  deemed to mean any person, as defined in
section 7701 of the internal revenue code[;] AND references to "at least
eighty percent" in section 1504 of the internal revenue code are  to  be
read  as  "fifty  percent or more;" section 1504 of the internal revenue
code is to be read without regard to  the  exclusions  provided  for  in
subsection  (b) of that section; "premiums" has the same meaning as that
term is given in paragraph one of subdivision  (c)  of  section  fifteen
hundred  ten  of this chapter, except that it includes consideration for
annuity contracts and excludes any part of the consideration for  insur-
ance,  reinsurance  or  annuity  contracts that do not provide bona fide
insurance,  reinsurance  or  annuity  benefits;  and  "gross   receipts"
includes  the amounts included in gross receipts for purposes of section
501(c) (15) of the internal revenue code, except that those amounts also
include all premiums as defined in this subdivision.
  S 21. Subdivision (a) of section 1500 of the tax  law,  as  separately
amended by section 1 of part B-1 and section 8 of part E-1 of chapter 57
of the laws of 2009, is amended to read as follows:
  (a)  The  term "insurance corporation" includes a corporation, associ-
ation, joint stock company or association, person, society,  aggregation
or  partnership,  by  whatever  name known, doing an insurance business,
and, notwithstanding the provisions of section fifteen hundred twelve of
this article, shall include (1) a risk retention  group  as  defined  in
subsection  (n)  of section five thousand nine hundred two of the insur-
ance law, (2) the state insurance fund and (3)  a  corporation,  associ-
ation,  joint stock company or association, person, society, aggregation
or partnership doing an insurance business as a member of the  New  York
insurance  exchange described in section six thousand two hundred one of
the  insurance  law.  The  definition  of  the  "state  insurance  fund"
contained  in  this  subdivision  shall  be limited in its effect to the
provisions of this article and the related provisions  of  this  chapter
and  shall  have  no  force  and  effect other than with respect to such
provisions. The  term  "insurance  corporation"  shall  also  include  a
captive insurance company doing a captive insurance business, as defined
in  subsections (c) and (b), respectively, of section seven thousand two
of the insurance law; provided, however, "insurance  corporation"  shall
not include the metropolitan transportation authority, or a public bene-
fit  corporation  or  not-for-profit corporation formed by a city with a
population of one million or more pursuant to subsection (a) of  section
seven  thousand  five  of  the insurance law, each of which is expressly
exempt from the payment of fees, taxes or assessments, whether state  or
local; and provided further "insurance corporation" does not include any
[overcapitalized] COMBINABLE captive insurance company. The term "insur-
ance  corporation"  shall also include an unauthorized insurer operating
from  an  office  within  the  state,  pursuant  to  paragraph  five  of

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subsection  (b)  of  section one thousand one hundred one and subsection
(i) of section two thousand one hundred seventeen of the insurance  law.
The  term  "insurance  corporation"  also  includes a health maintenance
organization required to obtain a certificate of authority under article
forty-four of the public health law.
  S  22. Subdivision (a) of section 1502-b of the tax law, as amended by
section 9 of part E-1 of chapter 57 of the laws of 2009 and  as  further
amended  by  section 104 of part A of chapter 62 of the laws of 2011, is
amended to read as follows:
  (a) In lieu of the taxes and tax surcharge imposed by sections fifteen
hundred one, fifteen hundred two-a, fifteen hundred five-a, and  fifteen
hundred ten of this article, every captive insurance company licensed by
the  superintendent  of financial services pursuant to the provisions of
article seventy of the insurance law, other than the metropolitan trans-
portation authority and a public benefit corporation  or  not-for-profit
corporation  formed  by  a city with a population of one million or more
pursuant to subsection (a) of section seven thousand five of the  insur-
ance  law,  each  of which is expressly exempt from the payment of fees,
taxes or assessments whether state or local, and other than [an overcap-
italized] COMBINABLE captive insurance company, shall, for the privilege
of exercising its corporate franchise, pay a tax on (1) all gross direct
premiums, less return premiums thereon,  written  on  risks  located  or
resident  in  this  state and (2) all assumed reinsurance premiums, less
return premiums thereon, written on risks located or  resident  in  this
state.  The  rate  of  the tax imposed on gross direct premiums shall be
four-tenths of one percent on all  or  any  part  of  the  first  twenty
million  dollars  of premiums, three-tenths of one percent on all or any
part of the second twenty million dollars of premiums, two-tenths of one
percent on all or any part of the third twenty million dollars of premi-
ums, and seventy-five thousandths of  one  percent  on  each  dollar  of
premiums thereafter. The rate of the tax on assumed reinsurance premiums
shall  be  two  hundred twenty-five thousandths of one percent on all or
any part of the first twenty million dollars of  premiums,  one  hundred
and  fifty  thousandths  of one percent on all or any part of the second
twenty million dollars of premiums, fifty thousandths of one percent  on
all  or  any  part  of  the third twenty million dollars of premiums and
twenty-five thousandths of one percent on each dollar of premiums there-
after. The tax imposed by this section shall be equal to the greater  of
(i)  the  sum  of  the  tax imposed on gross direct premiums and the tax
imposed on assumed reinsurance premiums or (ii) five thousand dollars.
  S 23. Paragraph 4 of subdivision (f) of section 1515 of the  tax  law,
as amended by section 16 of part FF-1 of chapter 57 of the laws of 2008,
is amended to read as follows:
  (4)(i)  For  purposes of this paragraph, the term "closest controlling
stockholder" means the corporation that indirectly owns or controls over
fifty percent of the voting stock of a captive REIT or captive  RIC,  is
subject  to  tax under section fifteen hundred one of this article[,] OR
article nine-A [or article thirty-two] of this chapter or required to be
included in a combined return or report under this article[,] OR article
nine-A [or article thirty-two] of this chapter, and is the fewest  tiers
of corporations away in the ownership structure from the captive REIT or
captive  RIC.  The commissioner is authorized to prescribe by regulation
or published guidance the criteria for determining the closest  control-
ling stockholder.
  (ii)  A  captive  REIT or a captive RIC must be included in a combined
return with the corporation that directly owns or  controls  over  fifty

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percent  of  the voting stock of the captive REIT or captive RIC if that
corporation is a life insurance corporation and is  subject  to  tax  or
required to be included in a combined return under this article.
  (iii)  If  over fifty percent of the voting stock of a captive REIT or
captive RIC is not directly owned or  controlled  by  a  life  insurance
corporation  that  is  subject  to  tax  or required to be included in a
combined return under this article, [then the captive  REIT  or  captive
RIC must be included in a combined report or return with the corporation
that  is  the  closest  controlling  stockholder  of the captive REIT or
captive RIC. If] AND the closest controlling stockholder of the  captive
REIT  or  captive RIC is a life insurance corporation that is subject to
tax or required to be included in a combined return under this  article,
then  the  captive  REIT  or  captive RIC must be included in a combined
return WITH THE CLOSEST CONTROLLING STOCKHOLDER under this article.
  (iv) If a captive REIT owns the stock of a qualified  REIT  subsidiary
(as  defined in paragraph two of subsection (i) of section eight hundred
fifty-six of the internal revenue code) AND THE CAPTIVE REIT IS REQUIRED
TO BE INCLUDED IN A COMBINED RETURN UNDER SUBPARAGRAPHS (II) OR (III) OF
THIS PARAGRAPH, then the qualified REIT subsidiary must be  included  in
any  combined  return  required to be made by the captive REIT that owns
the stock of the qualified REIT subsidiary.
  (v) If a captive REIT or a captive RIC is required  under  this  para-
graph  to be included in a combined return with another corporation, and
that other corporation is required to be included in a  combined  return
with  another  [related]  corporation  under  this subdivision, then the
captive REIT or the captive RIC must be included in that combined return
with the other [related] corporation.
  S 24. Subdivisions (a), (b) and (c) of section 12 of the tax  law,  as
added  by  chapter  615  of  the  laws  of  1998, are amended to read as
follows:
  (a) For purposes of subdivision (b) of this section, the term "person"
shall mean a corporation, joint stock company or association,  insurance
corporation,  or  banking  corporation,  as  such  terms  are defined in
section one  hundred  eighty-three,  one  hundred  eighty-four,  or  one
hundred  eighty-six,  or in article nine-A[, thirty-two] or thirty-three
of this chapter, imposing tax on such entities.
  (b) No person shall be subject to the taxes imposed under section  one
hundred eighty-three, one hundred eighty-four or one hundred eighty-six,
or  article nine-A[, thirty-two] or thirty-three of this chapter, solely
by reason of (1)  having its advertising stored on  a  server  or  other
computer  equipment  located in this state (other than a server or other
computer equipment owned or leased by such person), or  (2)  having  its
advertising  disseminated  or displayed on the Internet by an individual
or entity subject to tax under section  one  hundred  eighty-three,  one
hundred  eighty-four or one hundred eighty-six, or article nine-A, twen-
ty-two[, thirty-two] or thirty-three of this chapter.
  (c) A person, as such term is defined in subdivision  (a)  of  section
eleven  hundred one of this chapter, shall not be deemed to be a vendor,
for purposes of article twenty-eight of this chapter, solely  by  reason
of  (1)    having  its  advertising stored on a server or other computer
equipment located in this state (other than a server or  other  computer
equipment owned or leased by such person), or (2) having its advertising
disseminated  or  displayed  on  the Internet by an individual or entity
subject to tax under  section  one  hundred  eighty-three,  one  hundred
eighty-four  or  one hundred eighty-six, or article nine-A, twenty-two[,
thirty-two] or thirty-three of this chapter.

S. 6359--D                         125                        A. 8559--D

  S 25. Paragraph 1 of subdivision (a) of section 14 of the tax law,  as
amended  by  section 3 of part V1 of chapter 109 of the laws of 2006, is
amended to read as follows:
  (1)  except as provided in paragraphs one-a and one-b of this subdivi-
sion, for purposes of section one hundred  eighty-seven-j  and  articles
nine-A,  twenty-two[,  thirty-two] and thirty-three of this chapter, for
each of the taxable years within  the  "business  tax  benefit  period,"
which  period  shall consist of (A) in the case of a business enterprise
with a test date occurring on or before December thirty-first, two thou-
sand one, the first fifteen taxable years beginning on or after  January
first, two thousand one, (B) in the case of a business enterprise with a
test  date  occurring  on  or after January first, two thousand two, but
prior to April first, two thousand five, the fifteen taxable years  next
following  the business enterprise's test year, and (C) in the case of a
business enterprise which is first certified under article eighteen-B of
the general municipal law on or after April first,  two  thousand  five,
the  ten taxable years starting with the taxable year in which the busi-
ness enterprise's first date of certification under  article  eighteen-B
of  the  general  municipal law occurs, but only with respect to each of
such business tax benefit period years for which the employment test  is
met,
  S  26.  Subdivision  (f)  of  section 14 of the tax law, as amended by
section 10 of part CC of chapter 85 of the laws of 2002, is  amended  to
read as follows:
  (f)  Taxable  year.  The term "taxable year" means the taxable year of
the business enterprise under  section  one  hundred  eighty-three,  one
hundred  eighty-four,  one  hundred  eighty-five  or  former section one
hundred eighty-six of article nine, or  under  article  nine-A,  twenty-
two[,  thirty-two] or thirty-three of this chapter. If a business enter-
prise does not have a taxable year because it is exempt from taxation or
otherwise not required to file a return under any of  such  sections  of
article  nine or under article nine-A, twenty-two[, thirty-two] or thir-
ty-three, then the term "taxable year" means  (i)  the  business  enter-
prise's federal taxable year, or, (ii) if the enterprise does not have a
federal taxable year, the calendar year.
  S  27. Paragraph 1 of subdivision (i) of section 14 of the tax law, as
amended by section 5 of part A of chapter 63 of the  laws  of  2005,  is
amended to read as follows:
  (1)  for  purposes  of  section  one hundred eighty-seven-j of article
nine, and articles nine-A, twenty-two[, thirty-two] and thirty-three  of
this  chapter, on the first day of the taxable year during which revoca-
tion of its certification under article eighteen-B of the general munic-
ipal law occurs, and
  S 28. Paragraphs 1 and 2 of subdivision (j) of section 14 of  the  tax
law,  as  amended  by section 10 of part CC of chapter 85 of the laws of
2002, are amended to read as follows:
  (1) A new business shall include any corporation, except a corporation
which is substantially similar in operation and in ownership to a  busi-
ness  entity (or entities) taxable, or previously taxable, under section
one hundred eighty-three, one hundred eighty-four, one  hundred  eighty-
five or one hundred eighty-six of article nine; article nine-A[, article
thirty-two]  or  thirty-three  of  this chapter; article twenty-three of
this chapter or which would have been subject to tax under such  article
twenty-three  (as  such article was in effect on January first, nineteen
hundred eighty), ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD  HAVE
BEEN  SUBJECT  TO TAX UNDER SUCH ARTICLE THIRTY-TWO (AS SUCH ARTICLE WAS

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IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN) or the income
(or losses) of which is (or was) includable under article twenty-two  of
this chapter.
  (2)  For purposes of article twenty-two of this chapter, an individual
who is either a sole proprietor or a member of a partnership shall qual-
ify as an owner of a new business unless the business of which the indi-
vidual is an owner is substantially similar in operation and  in  owner-
ship  to a business entity taxable, or previously taxable, under section
one hundred eighty-three, one hundred eighty-four, one  hundred  eighty-
five  or  one hundred eighty-six of article nine; article nine-A[, thir-
ty-two] or ARTICLE thirty-three of this chapter; article twenty-three of
this chapter or which would have been subject to tax under such  article
twenty-three  (as  such article was in effect on January first, nineteen
hundred eighty); ARTICLE THIRTY-TWO OF THIS CHAPTER OR WHICH WOULD  HAVE
BEEN SUBJECT TO TAX UNDER SUCH ARTICLE THIRTY-TWO AS SUCH ARTICLE WAS IN
EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN or the income (or
losses) of which is (or was) includable under article twenty-two.
  S  29.  Clauses  (i)  and  (ii)  of subparagraph (A) of paragraph 4 of
subdivision (j) of section 14 of the tax law, as added by section  5  of
part  A  of  chapter  63  of  the  laws  of 2005, are amended to read as
follows:
  (i) Notwithstanding paragraphs one and two of this subdivision, a  new
business  shall  include any corporation which is identical in operation
and ownership to a business entity (or entities) taxable  under  section
one  hundred eighty-three, one hundred eighty-four or one hundred eight-
y-five of article nine; article nine-A[, article thirty-two] or  thirty-
three  of  this chapter or the income (or losses) of which is includable
under article twenty-two of this chapter, provided such corporation  and
such  business entity or entities are operating in different counties in
the state.
  (ii) Notwithstanding paragraphs one and two of  this  subdivision,  an
individual  who is either a sole proprietor or a member of a partnership
shall qualify as an owner of a new business if the business of which the
individual is an owner is identical in operation and in ownership  to  a
business  entity (or entities) taxable under section one hundred eighty-
three, one hundred eighty-four or one  hundred  eighty-five  of  article
nine; article nine-A[, article thirty-two] or thirty-three of this chap-
ter or the income (or losses) of which is includable under article twen-
ty-two  of this chapter, provided such business and such business entity
or entities are operating in different counties in the state.
  S 30. Subparagraph (B) of paragraph 4 of subdivision (j) of section 14
of the tax law, as amended by chapter  161  of  the  laws  of  2005,  is
amended to read as follows:
  (B) Notwithstanding any provisions of this subdivision to the contrary
and  notwithstanding  subdivision  c  of  section eighteen of part CC of
chapter eighty-five of the laws of two thousand two,  a  corporation  or
partnership,  which  was first certified under article eighteen-B of the
general municipal law before August first, two thousand two, has a  base
period  of  zero  years  or  zero employment for its base period, and is
similar in operation and in ownership to a business entity  or  entities
taxable,  or  previously  taxable, under sections specified in paragraph
one or two of this subdivision or which would have been subject  to  tax
under  article  twenty-three  of  this  chapter  (as such article was in
effect on January first, nineteen hundred eighty) OR  WHICH  WOULD  HAVE
BEEN  SUBJECT  TO  TAX UNDER ARTICLE THIRTY-TWO OF THIS CHAPTER (AS SUCH
ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO  THOUSAND  FOURTEEN)

S. 6359--D                         127                        A. 8559--D

or  the  income  or  losses  of which is or was includable under article
twenty-two of this chapter shall not be deemed a new business if it  was
not  formed  for  a  valid  business purpose, as such term is defined in
clause  (D)  of subparagraph one of paragraph (o) of subdivision nine of
section two hundred eight of this chapter and was formed solely to  gain
empire zone benefits.
  S  31.  Subdivision  (k)  of  section 14 of the tax law, as amended by
section 5 of part A of chapter 63 of the laws of  2005,  is  amended  to
read as follows:
  (k)  If  the  designation of an area as an empire zone is no longer in
effect because section nine hundred sixty-nine of the general  municipal
law  was not amended to extend the effective date of such designation so
that the designations of all empire zones pursuant to article eighteen-B
of the general municipal law have expired, a  business  enterprise  that
was  certified  pursuant  to article eighteen-B of the general municipal
law on the day immediately preceding the day on which  such  designation
expired  shall  be deemed to continue to be certified under such article
eighteen-B for purposes of this section, and sections fifteen,  sixteen,
section one hundred eighty-seven-j, subdivisions [twenty-seven] FIVE and
[twenty-eight]  SIX of section two hundred [ten] TEN-B, subsections (bb)
and (cc) of section six hundred six, subdivision (z) of  section  eleven
hundred  fifteen[,  subsections  (o) and (p) of section fourteen hundred
fifty-six,] and subdivisions (r) and  (s)  of  section  fifteen  hundred
eleven of this chapter. In addition, if the designation of an area as an
empire  zone  is no longer in effect because section nine hundred sixty-
nine of the general municipal law was not amended to extend  the  effec-
tive  date  of  such  designation so that the designations of all empire
zones pursuant to article eighteen-B of the general municipal  law  have
expired,  all references to empire zones in the provisions of this chap-
ter listed in the previous sentence  shall  be  read  as  meaning  areas
designated  as  empire zones on the day immediately preceding the day on
which such designation expired.
  S 32. Subdivisions (a) and (h) of  section  15  of  the  tax  law,  as
amended  by  section  5 of part A of chapter 63 of the laws of 2005, are
amended to read as follows:
  (a) Allowance of credit. A taxpayer which is a qualified  empire  zone
enterprise  (QEZE),  or which is a sole proprietor of a QEZE or a member
of a partnership which is a QEZE, and which  is  subject  to  tax  under
article  nine-A,  twenty-two[, thirty-two] or thirty-three of this chap-
ter, shall be allowed  a  credit  against  such  tax,  pursuant  to  the
provisions  referenced  in subdivision (h) of this section, for eligible
real property taxes.
  (h) Definitions and cross-references. For definitions of terms used in
this section see section fourteen of this article.  For  application  of
the credit provided for in this section, see the following provisions of
this chapter:
  (1) Article 9: Section 187-j.
  (2) Article 9-A: Section [210] 210-B: subdivision [27] 5.
  (3) Article 22: Section 606: subsections (i) and (bb).
  (4) [Article 32: Section 1456: subsection (o).
  (5)] Article 33: Section 1511: subdivision (r).
  S  33.  Subdivision  (a)  of  section  16  of the tax law, as added by
section 2 of part GG of chapter 63 of the laws of 2000,  is  amended  to
read as follows:
  (a)  Allowance  of credit. A taxpayer which is a qualified empire zone
enterprise (QEZE), or which is a sole proprietor of a QEZE or  a  member

S. 6359--D                         128                        A. 8559--D

of  a  partnership  which  is  a QEZE, and which is subject to tax under
article nine-A, twenty-two[, thirty-two] or thirty-three of  this  chap-
ter,  shall  be  allowed  a  credit  against  such  tax, pursuant to the
provisions referenced in subdivision (g) of this section, to be computed
as hereinafter provided.
  S 34. Paragraph 1, clause (ii) of subparagraph (B) of paragraph 2, and
subparagraph  (A) of paragraph 3 of subdivision (f) of section 16 of the
tax law, as amended by section 14 of part CC of chapter 85 of  the  laws
of 2002, are amended to read as follows:
  (1) General. The tax factor shall be, in the case of article nine-A of
this  chapter,  the [larger of the amounts] AMOUNT of tax determined for
the taxable year under [paragraphs] PARAGRAPH (a) [and (c)] of  subdivi-
sion  one  of  section  two  hundred ten of such article. The tax factor
shall be, in the case of article twenty-two of  this  chapter,  the  tax
determined  for  the  taxable  year under subsections (a) through (d) of
section six hundred one of such article. [The tax factor  shall  be,  in
the  case  of  article  thirty-two  of  this  chapter, the larger of the
amounts of tax determined for the taxable year under subsection (a)  and
paragraph  two  of subsection (b) of section fourteen hundred fifty-five
of such article.] The tax factor shall be, in the case of article  thir-
ty-three  of  this  chapter, the larger of the amounts of tax determined
for the taxable year under paragraphs one and three of  subdivision  (a)
of section fifteen hundred two of such article.
  (ii)  For  purposes of article nine-A[, thirty-two or thirty-three] of
this chapter, the term "partner's income  from  the  partnership"  means
partnership  items  of  income,  gain,  loss and deduction, and New York
modifications thereto, entering  into  [entire  net]  BUSINESS  income[,
minimum  taxable  income,  alternative  entire  net income or entire net
income plus compensation] and the term "partner's entire  income"  means
[entire  net]  BUSINESS  income[,  minimum  taxable  income, alternative
entire net income or entire net  income  plus  compensation,]  allocated
within the state.  FOR PURPOSES OF ARTICLE THIRTY-THREE OF THIS CHAPTER,
THE TERM "PARTNER'S INCOME FROM THE PARTNERSHIP" MEANS PARTNERSHIP ITEMS
OF INCOME, GAIN, LOSS AND DEDUCTION, AND NEW YORK MODIFICATIONS THERETO,
ENTERING  INTO  ENTIRE NET INCOME OR ENTIRE NET INCOME PLUS COMPENSATION
AND THE TERM "PARTNER'S ENTIRE  INCOME"  MEANS  ENTIRE  NET  INCOME,  OR
ENTIRE  NET  INCOME  PLUS  COMPENSATION, ALLOCATED WITHIN THE STATE. For
purposes of article twenty-two of  this  chapter,  the  term  "partner's
income  from  the  partnership" means partnership items of income, gain,
loss and deduction, and New York modifications  thereto,  entering  into
New  York  adjusted gross income, and the term "partner's entire income"
means New York adjusted gross income.
  (A) Where the taxpayer is a qualified empire zone  enterprise  and  is
required  or  permitted  to  make a return or report on a combined basis
under article nine-A[, thirty-two] or ARTICLE thirty-three of this chap-
ter, the taxpayer's tax factor shall be the amount determined  in  para-
graph one of this subdivision which is attributable to the income of the
qualified  empire  zone  enterprise.   Such attribution shall be made in
accordance with the ratio of  the  qualified  empire  zone  enterprise's
income  allocated within the state to the combined group's income, or in
accordance with such other methods as the commissioner may prescribe  as
providing  an apportionment which reasonably reflects the portion of the
combined group's tax attributable to the income of the qualified  empire
zone enterprise. In no event may the ratio so determined exceed 1.0.

S. 6359--D                         129                        A. 8559--D

  S  35.  Subdivision  (g)  of  section  16  of the tax law, as added by
section 2 of part GG of chapter 63 of the laws of 2000,  is  amended  to
read as follows:
  (g) Definitions and cross-references. For definitions of terms used in
this  section  see  sections  fourteen  and fifteen of this article. For
application of the credit provided for in this section, see the  follow-
ing provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B:  subdivision [28]6.
  (2) Article 22: Section 606: subsections (i) and (cc).
  (3) [Article 32: Section 1456: subsection (p).
  (4)] Article 33: Section 1511: subdivision (s).
  S  36. Paragraph 1 of subdivision (b) of section 17 of the tax law, as
added by section 43 of part S1 of chapter 57 of the  laws  of  2009,  is
amended to read as follows:
  (1)  The  empire  zones tax benefits report must contain the following
information about the empire zone tax  credits  claimed  under  articles
nine,  nine-A, twenty-two[, thirty-two] and thirty-three of this chapter
during the previous calendar year:
  (A) the name of each taxpayer claiming a credit; and
  (B) the amount of each credit earned by each taxpayer.
  S 37. Subdivisions (a) and (d) of section 18 of the tax law, as  added
by  section  2 of part CC of chapter 63 of the laws of 2000, are amended
to read as follows:
  (a) Allowance of credit. A  taxpayer  subject  to  tax  under  article
nine-A,  twenty-two[,  thirty-two] or thirty-three of this chapter shall
be allowed a credit against such tax, pursuant to the provisions  refer-
enced  in subdivision (d) of this section, with respect to the ownership
of eligible low-income buildings for which an eligibility statement  has
been  issued  by  the commissioner of housing and community renewal. The
amount of the credit shall be the credit amount for each  such  building
allocated  by  such  commissioner  as  provided  in article two-A of the
public housing law. The credit amount shall be allowed for each  of  the
ten  taxable years in the credit period, and any reduction in first-year
credit as provided in subdivision two of section twenty-two of such  law
shall be allowed in the eleventh taxable year.
  (d)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B:  subdivision [30] 15,
  (2) Article 22: Section 606: subsections (i) and (x),
  (3) [Article 32: Section 1456: subsection (l),
  (4)] Article 33: Section 1511: subdivision (n).
  S 38. Subparagraph (A) of paragraph 1 of subdivision (a) and  subdivi-
sion  (f) of section 19 of the tax law, as added by section 2 of part II
of chapter 63 of the laws of 2000, are amended to read as follows:
  (A) Green building credit. A taxpayer subject  to  tax  under  article
nine,  nine-A,  twenty-two[, thirty-two] or thirty-three of this chapter
shall be allowed a green building credit against such tax,  pursuant  to
the  provisions referenced in subdivision (f) of this section. Provided,
however, no credit shall  be  allowed  under  this  section  unless  the
taxpayer  has complied with the applicable requirements of paragraph two
of subdivision (d) of this section (relating to  reports  to  DEC).  The
amount of the credit shall be the sum of the credit components specified
in  paragraphs two through seven of this subdivision. Provided, however,
the amount of each such credit component shall not exceed the limit  set
forth  in  the initial credit component certificate obtained pursuant to
subdivision (c) of this section. In the  determination  of  such  credit

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components,  no cost paid or incurred by the taxpayer shall be the basis
for more than one such component.
  (f)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article nine: Section one hundred eighty-seven-d;
  (2) Article nine-A: Subdivision [thirty-one] SIXTEEN  of  section  two
hundred [ten] TEN-B;
  (3) Article twenty-two: Subsections (i) and (y) of section six hundred
six;
  (4)  [Article  thirty-two:  Subsection (m) of section fourteen hundred
fifty-six;
  (5)] Article thirty-three: Subdivision (o) of section fifteen  hundred
eleven.
  S  39.  Paragraphs 1 and 5 of subdivision (a) of section 21 of the tax
law, as amended by section 1 of part H of chapter 577  of  the  laws  of
2004, are amended to read as follows:
  (1)  General.  A  taxpayer  subject to tax under article nine, nine-A,
twenty-two[, thirty-two]  or  thirty-three  of  this  chapter  shall  be
allowed a credit against such tax, pursuant to the provisions referenced
in  subdivision  (f)  of this section. Such credit shall be allowed with
respect to a qualified site, as such term is defined in paragraph one of
subdivision (b) of this section. The amount of the credit in  a  taxable
year  shall  be the sum of the credit components specified in paragraphs
two, three and four of this subdivision applicable in such year.
  (5) Applicable percentage. For purposes of paragraphs two,  three  and
four  of  this  subdivision,  the  applicable percentage shall be twelve
percent in the case of credits  claimed  under  article  nine,  nine-A[,
thirty-two] or thirty-three of this chapter, and ten percent in the case
of credits claimed under article twenty-two of this chapter, except that
where  at least fifty percent of the area of the qualified site relating
to the credit provided for in this section is  located  in  an  environ-
mental  zone  as  defined  in  paragraph  six of subdivision (b) of this
section, the applicable percentage shall be increased by  an  additional
eight  percent. Provided, however, as afforded in section 27-1419 of the
environmental conservation law, if the certificate of  completion  indi-
cates  that  the  qualified  site has been remediated to Track 1 as that
term is described in subdivision four of section 27-1415 of the environ-
mental conservation law, the applicable  percentage  set  forth  in  the
first sentence of this paragraph shall be increased by an additional two
percent.
  S  39-a.  Subdivisions  (c)  and  (f) of section 21 of the tax law, as
added by section 1 of part H of chapter 1  of  the  laws  of  2003,  are
amended to read as follows:
  (c)  Qualifying  property.  Property  which  qualifies  for the credit
provided for under this section and also for a credit provided  for  (1)
under either subdivision [twelve] ONE or subdivision [twelve-B] THREE of
section  two  hundred  [ten]  TEN-B  of  this  chapter,  or both, OR (2)
subsection (a) or subsection (j) of section  six  hundred  six  of  this
chapter,  or  both[, (3) the credit provided for under subsection (i) of
section fourteen hundred fifty-six of this chapter, or  (4)  the  credit
provided under subdivision (q) of section fifteen hundred eleven of this
chapter]  may be the basis for either the credit provided for under this
section or one of the credits enumerated in paragraph  one[,]  OR  two[,
three or four] of this subdivision, but not both.
  (f)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:

S. 6359--D                         131                        A. 8559--D

  (1) Article 9: Section 187-g
  (2) Article 9-A: Section [210] 210-B, subdivision [33] 17
  (3) Article 22: Section 606, subsections (i) and (dd)
  (4) [Article 32: Section 1456, subsection (q)
  (5)] Article 33: Section 1511, subdivision (u).
  S  40. Paragraph 3 of subdivision (a) and paragraphs 1 and 9 of subdi-
vision (b) of section 22 of the tax law, as amended by section 4 of part
H of chapter 577 of the laws of 2004, are amended to read as follows:
  (3) Developer. (i) A "developer" is a  taxpayer  under  article  nine,
nine-A,  twenty-two[, thirty-two] or thirty-three of this chapter who or
which either (I) has  been  issued  a  certificate  of  completion  with
respect  to  a  qualified site or (II) has purchased or in any other way
has been conveyed all or any portion of a qualified site from a taxpayer
or any other party who  or  which  has  been  issued  a  certificate  of
completion  with respect to such site provided, such purchase or convey-
ance occurs within seven years of the effective date of the  certificate
of  completion  issued  with  respect to such qualified site.   Provided
further, that the taxpayer who or which is purchasing all or any portion
of a qualified site and the taxpayer or any other party who or which has
been issued a certificate of completion with respect to  such  site  may
not  be  related persons, as such term is defined in subparagraph (C) of
paragraph three of subsection (b) of section four hundred sixty-five  of
the internal revenue code.
  (ii)  Where  the  entity  to whom a certificate of completion has been
issued is a partnership, or where the entity which has purchased all  or
any  portion  of  a qualified site from a taxpayer who or which has been
issued a certificate of completion with respect to such site within  the
applicable  time limit is a partnership, any partner in such partnership
who or which is taxable under article nine, nine-A,  twenty-two[,  thir-
ty-two]  or thirty-three of this chapter shall be a developer under this
paragraph. Where the entity to whom a certificate of completion has been
issued is a New York S  corporation,  or  where  the  entity  which  has
purchased  all or any portion of a qualified site from a taxpayer who or
which has been issued a certificate of completion with respect  to  such
site  within  the applicable time limit is a New York S corporation, any
shareholder in such New York S corporation shall be  a  developer  under
this paragraph.
  (1)  Allowance of credit. A developer of a qualified site who or which
is subject to tax under article nine, nine-A,  twenty-two[,  thirty-two]
or  thirty-three of this chapter, shall be allowed a credit against such
tax, pursuant to the provisions referenced in  paragraph  nine  of  this
subdivision, for eligible real property taxes imposed on such site.
  (9)  Cross-references.  For  application of the credit provided for in
this subdivision, see the following provisions of this chapter:
  (i) Article 9: Section 187-h.
  (ii) Article 9-A: Section [210] 210-B:  subdivision [34] 18.
  (iii) Article 22: Section 606: subsections (i) and (ee).
  (iv) [Article 32: Section 1456: subsection (r).
  (v)] Article 33: Section 1511: subdivision (v).
  S 41. Subdivision (a) of section 23 of the  tax  law,  as  amended  by
section 10 of part H chapter 577 of the laws of 2004, is amended to read
as follows:
  (a)  Allowance  of  credit.  General.  A taxpayer subject to tax under
article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter  shall  be  allowed  a  credit against such tax, pursuant to the
provisions referenced in subdivision (e) of this section. The amount  of

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such  credit  shall be equal to the lesser of thirty thousand dollars or
fifty percent of the premiums paid on or after the date  of  the  brown-
field site cleanup agreement executed by the taxpayer and the department
of  environmental  conservation pursuant to section 27-1409 of the envi-
ronmental conservation law by the taxpayer for environmental remediation
insurance issued with respect to a qualified site.
  S 42. Subdivision (e) of section 23  of  the  tax  law,  as  added  by
section  19  of  part  H of chapter 1 of the laws of 2003, is amended to
read as follows:
  (e) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-i
  (2) Article 9-A: Section [210] 210-B, subdivision [35] 19
  (3) Article 22: Section 606, subsections (i) and (ff)
  (4) [Article 32: Section 1456, subsection (s)
  (5)] Article 33: Section 1511, subdivision (w).
  S 43. Paragraphs 1 and 2 of subdivision (a) and clause (i) of subpara-
graph  (D)  of  paragraph  1 of subdivision (b) of section 25 of the tax
law, as added by section 1 of part N of chapter 61 of the laws of  2005,
are amended to read as follows:
  (1)  Every  taxpayer,  or  person as defined in section seven thousand
seven hundred one of the internal  revenue  code,  required  to  file  a
disclosure  statement  with  the  internal  revenue  service pursuant to
section six thousand eleven of the internal revenue code, or  the  regu-
lations promulgated thereunder, related to a reportable transaction or a
listed  transaction, as those terms are defined in such section or regu-
lations, must attach a duplicate of such  disclosure  statement  to  the
return or report required to be filed by such taxpayer or person for the
taxable  year  under  article  nine, nine-A, twenty-two[, thirty-two] or
thirty-three of this chapter, and provide such other information related
to such disclosure as prescribed by the  commissioner.  Such  disclosure
shall be made notwithstanding that one member of an affiliated group, as
defined  by  section  fifteen hundred four of the internal revenue code,
may file such disclosure statement with the internal revenue service  on
behalf of its affiliates including such taxpayer or person.
  (2)  Every  taxpayer  or  such  person  who participates in a New York
reportable transaction for a taxable year  must  disclose  such  partic-
ipation  with  its  return  or report required to be filed under article
nine, nine-A, twenty-two[, thirty-two] or thirty-three of  this  chapter
for  the  taxable  year  in  a  form prescribed by the commissioner, and
provide such other information related to such transaction as prescribed
by the commissioner. A New York reportable transaction is a  transaction
that  has  the potential to be a tax avoidance transaction as determined
by the commissioner.
  (i) the list required to be maintained  by  such  person  pursuant  to
section  six  thousand  one  hundred twelve of the internal revenue code
identifies or is required to identify a taxpayer subject  to  tax  under
article  nine,  nine-A, twenty-two[, thirty-two] or thirty-three of this
chapter, and
  S 44. Subdivisions (a) and (f) of section 26 of the tax law, as  added
by chapter 537 of the laws of 2005, are amended to read as follows:
  (a)  Allowance  of  credit.  A taxpayer, which is subject to tax under
article nine, nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter  and  which  is  a  qualified building owner, shall be allowed a
credit against such tax.  The amount of the credit  allowed  under  this
section shall equal the sum of the number of qualified security officers

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providing  protection  to  a building or buildings owned by the taxpayer
multiplied by three thousand dollars. Provided,  however,  that  in  the
case  of  a worker not so employed for a full year, such amount shall be
prorated  to  reflect the length of such employment under regulations of
the commissioner.
  (f) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) article 9: section 187-n.
  (2) article 9-A: section [210] 210-B:  subdivision [37] 21.
  (3) article 22: section 606: subsection (ii).
  (4) [article 32: section 1456: subsection (t).
  (5)] article 33: section 1511: subdivision (x).
  S 45. Paragraph 3 of subdivision (a) and subdivision (c) of section 28
of  the  tax  law,  as added by section 2 of part V of chapter 62 of the
laws of 2006, are amended to read as follows:
  (3) No qualified production costs used by a  taxpayer  either  as  the
basis for the allowance of the credit provided for under this section or
used  in  the  calculation of the credit provided for under this section
shall be used by such taxpayer to claim any other credit allowed  pursu-
ant to this chapter.
  Notwithstanding  any  provisions  of  this  section to the contrary, a
corporation or partnership, which otherwise  qualifies  as  a  qualified
commercial production company, and is similar in operation and in owner-
ship  to  a  business entity or entities taxable, or previously taxable,
under section one hundred eighty-three, one hundred eighty-four  or  one
hundred  eighty-five  of  article nine; article nine-A[, article thirty-
two] or thirty-three of this chapter or which would have been subject to
tax under article twenty-three of this chapter (as such article  was  in
effect  on  January  first, nineteen hundred eighty) OR WHICH WOULD HAVE
BEEN SUBJECT TO TAX UNDER ARTICLE THIRTY-TWO OF THIS  CHAPTER  (AS  SUCH
ARTICLE  WAS  IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND FOURTEEN)
or the income or losses of which is  or  was  includable  under  article
twenty-two  of  this chapter shall not be deemed a new or separate busi-
ness, and therefore shall not be eligible for  empire  state  commercial
production  benefits, if it was not formed for a valid business purpose,
as such term is defined in clause (D) of subparagraph one  of  paragraph
(o) of subdivision nine of section two hundred eight of this chapter and
was  formed  solely  to  gain  empire state commercial production credit
benefits.
  (c) Cross-references. For application of the credit  provided  for  in
this section, see the following provision of this chapter:
  (1) article 9-A: section [210] 210-B:  subdivision [38] 23.
  (2) article 22: section 606: subsection (jj).
  S  46.  Subdivision  (d)  of  section  28  of the tax law, as added by
section 1 of part X of chapter 62 of the laws of  2006,  is  amended  to
read as follows:
  (d)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9: Section 187-c.
  (2) Article 9-A: Section [210] 210-B, subdivision [38] 24.
  (3) Article 22: Section 606, subsections (i) and (jj).
  S 47. The opening paragraph of subdivision (a)  and  subdivisions  (c)
and  (g) of section 31 of the tax law, the opening paragraph of subdivi-
sion (a) and subdivision (g) as amended by section 7 of part G of  chap-
ter  61  of  the  laws of 2011, subdivision (c) as added by section 2 of

S. 6359--D                         134                        A. 8559--D

part MM of chapter 59 of the laws  of  2010,  are  amended  to  read  as
follows:
  General.  A  taxpayer subject to tax under section one hundred eighty-
five, article nine-A, twenty-two[, thirty-two] or thirty-three  of  this
chapter  shall  be  allowed  a  credit against such tax, pursuant to the
provisions referenced in subdivision (g) of this section. The amount  of
the  credit,  allowable  for up to ten consecutive taxable years, is the
sum of the following four credit components:
  (c) Election of credit. A taxpayer who or which is qualified to  claim
the  excelsior  investment tax credit component and is also qualified to
claim the investment tax credit provided for under subdivision  [twelve]
ONE of section two hundred [ten,] TEN-B OR subsection (a) of section six
hundred  six[,  or subsection (i) of section fourteen hundred fifty-six]
of this chapter, may claim either the excelsior  investment  tax  credit
component  or  the  investment tax credit, but not both with regard to a
particular piece of property. In addition, a taxpayer who  or  which  is
qualified  to claim the excelsior investment tax credit component and is
also qualified to claim the brownfield tangible property  credit  compo-
nent  under  section twenty-one of this article, as added by chapter one
of the laws of two  thousand  three,  may  claim  either  the  excelsior
investment  tax credit component or such tangible property credit compo-
nent, but not both with regard to a particular piece  of  property.  The
election  to  claim  the  excelsior investment tax credit component, the
investment tax credit or the brownfield tangible property credit  compo-
nent, with regard to the same property, is irrevocable.
  (g)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9: section 187-q.
  (2) article 9-A: section [210] 210-B: subdivision [41] 31.
  (3) article 22: section 606: subsection (qq).
  (4) [article 32: section 1456: subsection (u).
  (5)] article 33: section 1511: subdivision (y).
  S 48. Subdivision (d) of section 31  of  the  tax  law,  as  added  by
section  12  of  part Q of chapter 57 of the laws of 2010, is amended to
read as follows:
  (d) Cross-references. For application of the credit  provided  for  in
this section, see the following provisions of this chapter:
  (1) article 9-A: section [210] 210-B: subdivision [41] 32.
  (2) article 22: section 606: subsection (qq).
  S  49. Subdivision 3 of section 34 of the tax law, as added by section
2 of part Y of chapter 57 of the laws of 2010, is  amended  to  read  as
follows:
  3.  (a) For application of the temporary deferral nonrefundable payout
credit, see the following provisions of this chapter:
  (1) Article 9: section [187-0] 187-O
  (2) Article 9-A: section [210(41)] 210-B(33)
  (3) Article 22: section 606(qq)
  (4) [Article 32: section 1456(v)
  (5)] Article 33: section 1511(y)
  (b) For application of the temporary deferral refundable payout  cred-
it, see the following provisions of this chapter:
  (1) Article 9: section 187-p
  (2) Article 9-A: section [210(42)] 210-B(34)
  (3) Article 22: section 606(rr)
  (4) [Article 32: section 1456(w)
  (5)] Article 33: section 1511(z)

S. 6359--D                         135                        A. 8559--D

  S  50.  The  opening paragraph of subdivision (a), subparagraph (C) of
paragraph 2 of subdivision (e), and subdivision (f) of section 35 of the
tax law, as added by section 3 of part V of chapter 61 of  the  laws  of
2011, are amended to read as follows:
  A taxpayer which is a participant or the owner of a participant in the
economic transformation and facility redevelopment program under article
eighteen  of  the  economic development law that is subject to tax under
section one hundred eighty-five of  article  nine,  or  article  nine-A,
twenty-two[,  thirty-two]  or  thirty-three  of  this  chapter  shall be
allowed the sum of following components against such  tax,  pursuant  to
the provisions referenced in subdivision (f) of this section.
  (C) the business entity must not be substantially similar in ownership
and  operation  to  another taxpayer taxable or previously taxable under
section one hundred eighty-three, one hundred eighty-four or one hundred
eighty-five of article nine, former section one  hundred  eighty-six  of
this chapter or article nine-A, twenty-two[, thirty-two] or thirty-three
of  this  chapter  OR  FORMER  ARTICLE THIRTY-TWO OF THIS CHAPTER or the
income or losses of which is or was includable under article  twenty-two
of this chapter;
  (f)  Cross-references.  For application of the credits provided for in
this section, see the following provisions of this chapter:
  (1) section 185: section 187-r.
  (2) article 9-A: section [210(43)] 210-B(35).
  (3) article 22: section 606 (ss).
  (4) [article 32: section 1456(x).
  (5)] article 33: section 1511 (aa).
  S 51. Subdivisions (a) and (e) of section 36 of the tax law, as  added
by section 2 of part E of chapter 56 of the laws of 2011, are amended to
read as follows:
  (a)  Allowance  of  credit.  A  taxpayer  subject to tax under article
nine-A, twenty-two[, thirty-two] or thirty-three of this  chapter  shall
be  allowed a credit against such tax, pursuant to the provisions refer-
enced in subdivision (e) of this section.  The  amount  of  the  credit,
allowable  for  ten consecutive tax years, is equal to the amount deter-
mined pursuant to section  four  hundred  twenty-five  of  the  economic
development law.
  (e)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) article 9-A: section [210] 210-B, subdivision [44] 37;
  (2) article 22: section 606, subsection (tt);
  (3) [article 32: section 1456, subsection (y);
  (4)] article 33, section 1511, subdivision (bb).
  S 52. Subdivision (c) of section 37 of the tax law, as added by  chap-
ter 109 of the laws of 2012, is amended to read as follows:
  (c)  Cross-references.  For  application of the credit provided for in
this section, see the following provisions of this chapter:
  (1) Article 9-A: Section [210] 210-B, subdivision [45] 39.
  (2) Article 22: Section 606, subsections (i) and (uu).
  S 52-a. Subdivision (c) of section 39 of the tax law is REPEALED.
  S 53. Paragraphs 2, 3 and 4 of subdivision (k) of section  39  of  the
tax  law,  paragraphs 2 and 3 as added by section 2 of part A of chapter
68 of the laws of 2013, paragraph 4 as added by section 2 of part  A  of
chapter 68 of the laws of 2013, are amended to read as follows:
  [(2) Article 9: section 180, subdivision 3.
  (3) Article 9: section 181, subdivision 3.]

S. 6359--D                         136                        A. 8559--D

  (4) Article 9-A: section [210] 210-B, subdivision [47] 41 AND SUBDIVI-
SION 44.
  S  54.  Subdivision  1  of section 171-a of the tax law, as amended by
section 1 of part R of chapter 60 of the laws of  2004,  is  amended  to
read as follows:
  1.  All  taxes,  interest, penalties and fees collected or received by
the commissioner or the commissioner's duly authorized agent under arti-
cles nine (except section one hundred eighty-two-a thereof and except as
otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
twelve-A  (except  as  otherwise provided in section two hundred eighty-
four-d thereof), thirteen, thirteen-A (except as otherwise  provided  in
section  three  hundred  twelve  thereof),  eighteen,  nineteen,  twenty
(except as otherwise provided in section four hundred eighty-two  there-
of),  twenty-one,  twenty-two,  twenty-six,  twenty-six-B,  twenty-eight
(except as otherwise provided in section eleven hundred  two  or  eleven
hundred  three thereof), twenty-eight-A, thirty-one (except as otherwise
provided in section fourteen hundred twenty-one thereof),  [thirty-two,]
thirty-three and thirty-three-A of this chapter shall be deposited daily
in  one  account  with  such  responsible banks, banking houses or trust
companies as may be designated by the comptroller, to the credit of  the
comptroller.  Such  an account may be established in one or more of such
depositories. Such deposits shall be kept separate and  apart  from  all
other  money in the possession of the comptroller. The comptroller shall
require adequate security from  all  such  depositories.  Of  the  total
revenue  collected  or received under such articles of this chapter, the
comptroller shall retain in the comptroller's hands such amount  as  the
commissioner may determine to be necessary for refunds or reimbursements
under  such  articles  of  this chapter [and article ten thereof] out of
which amount the comptroller shall pay any refunds or reimbursements  to
which  taxpayers shall be entitled under the provisions of such articles
of this chapter [and article ten  thereof].  The  commissioner  and  the
comptroller  shall  maintain  a system of accounts showing the amount of
revenue collected or received from each of the  taxes  imposed  by  such
articles.  The  comptroller,  after  reserving  the  amount  to pay such
refunds or reimbursements, shall, on or before the  tenth  day  of  each
month, pay into the state treasury to the credit of the general fund all
revenue deposited under this section during the preceding calendar month
and  remaining  to  the  comptroller's  credit  on  the last day of such
preceding month, (i) except that the comptroller shall pay to the  state
department of social services that amount of overpayments of tax imposed
by  article  twenty-two  of this chapter and the interest on such amount
which is certified to the comptroller by the commissioner as the  amount
to  be  credited against past-due support pursuant to subdivision six of
section one hundred seventy-one-c of this [chapter]  ARTICLE,  (ii)  and
except  that  the  comptroller  shall  pay  to the New York state higher
education services corporation and the state university of New  York  or
the city university of New York respectively that amount of overpayments
of tax imposed by article twenty-two of this chapter and the interest on
such amount which is certified to the comptroller by the commissioner as
the amount to be credited against the amount of defaults in repayment of
guaranteed  student  loans and state university loans or city university
loans pursuant to subdivision five of section one hundred  seventy-one-d
and  subdivision six of section one hundred seventy-one-e of this [chap-
ter] ARTICLE, (iii) and except further that,  notwithstanding  any  law,
the  comptroller shall credit to the revenue arrearage account, pursuant
to section ninety-one-a of the state finance law, that amount  of  over-

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payment  of  tax  imposed  by  article nine, nine-A, twenty-two, thirty,
thirty-A, thirty-B[, thirty-two] or thirty-three of  this  chapter,  and
any  interest  thereon,  which  is  certified  to the comptroller by the
commissioner  as  the  amount  to be credited against a past-due legally
enforceable debt owed to a state agency pursuant  to  paragraph  (a)  of
subdivision  six  of  section one hundred seventy-one-f of this article,
provided, however, he shall  credit  to  the  special  offset  fiduciary
account,  pursuant to section ninety-one-c of the state finance law, any
such amount creditable as a liability as set forth in paragraph  (b)  of
subdivision  six  of  section one hundred seventy-one-f of this article,
(iv) and except further that the comptroller shall pay to  the  city  of
New  York  that  amount  of  overpayment of tax imposed by article nine,
nine-A, twenty-two, thirty, thirty-A, thirty-B[, thirty-two,]  or  thir-
ty-three  of  this chapter and any interest thereon that is certified to
the comptroller by the commissioner as the amount to be credited against
city of New York tax warrant  judgment  debt  pursuant  to  section  one
hundred  seventy-one-l  of this article, (v) and except further that the
comptroller shall pay to a non-obligated spouse that amount of  overpay-
ment of tax imposed by article twenty-two of this chapter and the inter-
est  on  such  amount  which  has  been credited pursuant to section one
hundred seventy-one-c, one hundred seventy-one-d, one  hundred  seventy-
one-e,  one  hundred  seventy-one-f or one hundred seventy-one-l of this
article and which is certified to the comptroller by the commissioner as
the amount due such non-obligated spouse pursuant to  paragraph  six  of
subsection  (b)  of  section  six hundred fifty-one of this chapter; and
(vi) the comptroller shall deduct a like amount  which  the  comptroller
shall  pay  into  the  treasury  to  the credit of the general fund from
amounts subsequently payable to the department of social  services,  the
state  university  of  New York, the city university of New York, or the
higher education services corporation, or the revenue arrearage  account
or  special offset fiduciary account pursuant to section ninety-one-a or
ninety-one-c of the state finance law, as the case may be, whichever had
been credited the amount originally withheld from such overpayment,  and
(vii)  with respect to amounts originally withheld from such overpayment
pursuant to section one hundred seventy-one-l of this article  and  paid
to  the  city  of  New York, the comptroller shall collect a like amount
from the city of New York.
  S 55. Subdivision 2 of section 171-a of the tax  law,  as  amended  by
chapter 57 of the laws of 1993, is amended to read as follows:
  2.  Notwithstanding  subdivision  one  of  this  section  or any other
provision of law to the contrary, the taxes imposed pursuant to sections
one hundred eighty-three-a,  one  hundred  eighty-four-a,  [one  hundred
eighty-six-b,]  one  hundred  eighty-six-c, [one hundred eighty-nine-a,]
two hundred nine-B[, fourteen hundred fifty-five-b] and fifteen  hundred
five-a  of  this chapter, reduced by an amount for administrative costs,
shall be deposited to the credit of the metropolitan mass transportation
operating  assistance  account  in  the  mass  transportation  operating
assistance fund, created pursuant to section eighty-eight-a of the state
finance  law,  as such taxes are received. The amount for administrative
costs shall be determined by the commissioner  to  represent  reasonable
costs  of  the  department  of  taxation  and  finance in administering,
collecting, determining and distributing such taxes. Of the total reven-
ue collected or received under such sections of this chapter, the  comp-
troller  shall  retain  in his hands such amount as the commissioner may
determine to be necessary  for  refunds  or  reimbursements  under  such
sections  of  this chapter out of which amount the comptroller shall pay

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any refunds or reimbursements to which taxpayers shall be entitled under
provisions of such sections. The tax commissioner  and  the  comptroller
shall  maintain  a  system  of  accounts  showing  the amount of revenue
collected or received from each of the taxes imposed by such sections.
  S  56. Paragraphs (b) and (c) of subdivision 1 of section 171-f of the
tax law, as amended by chapter 81 of the laws of 1995,  are  amended  to
read as follows:
  (b)  "taxpayer"  shall mean a corporation, association, company, part-
nership, estate, trust, liquidator, fiduciary or other entity  or  indi-
vidual who or which is liable for any tax or other imposition imposed by
or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
ty-B[,  thirty-two,] or thirty-three of this chapter or article two-E of
the general city law, which tax or other imposition is  administered  by
the  commissioner  of  taxation  and finance, or who or which is under a
duty to perform an act under or pursuant  to  such  tax  or  imposition,
excluding  a  state agency, a municipal corporation or a district corpo-
ration; and (c) "overpayment" shall mean an overpayment which  has  been
requested  or determined to be refunded, a refund or a reimbursement, of
a tax or other imposition  imposed  by  or  pursuant  to  article  nine,
nine-A,  twenty-two,  thirty, thirty-A, thirty-B[, thirty-two,] or thir-
ty-three of this chapter or article two-E of the general city law, which
is administered by the commissioner of taxation and finance.
  S 57. Subdivision 2 of section 171-f of the tax law, as added by chap-
ter 55 of the laws of 1992, is amended to read as follows:
  (2) The commissioner of taxation and finance, upon agreement with  the
state  comptroller  and  acting  as  an agent for the state comptroller,
shall set forth the  procedures  for  crediting  any  overpayment  by  a
taxpayer  of  any tax or other imposition imposed by or authorized to be
imposed pursuant to article nine, nine-A, twenty-two, thirty,  thirty-A,
thirty-B[, thirty-two,] or thirty-three of this chapter or article two-E
of  the  general  city law, which is administered by the commissioner of
taxation and finance, and the interest on any such overpayments, against
the amount of a past-due legally enforceable debt owed by such  taxpayer
to  a  state  agency.  An  implementation plan shall be developed by the
division of the budget and the department of taxation and finance  which
shall  provide,  but not be limited to, guidance with respect to coordi-
nation of debt collection pursuant to this section and subdivision twen-
ty-seventh of section one hundred  seventy-one  of  this  article.  This
section  shall  not be deemed to abrogate or limit in any way the powers
and authority of the state comptroller to set off debts owed  the  state
against  payments from the state, under the constitution of the state or
any other law.
  S 58. Paragraphs (a) and (b) of subdivision 1 of section 171-l of  the
tax  law,  as  added by section 6 of part R of chapter 60 of the laws of
2004, are amended to read as follows:
  (a) "taxpayer" shall mean a corporation, association,  company,  part-
nership,  estate,  trust, liquidator, fiduciary or other entity or indi-
vidual who or which is liable for any tax or other imposition imposed by
or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thir-
ty-B[, thirty-two,] or thirty-three of this chapter, which tax or  other
imposition  is administered by the commissioner of taxation and finance,
or who or which is under a duty to perform an act under or  pursuant  to
such  tax  or  imposition,  excluding a state agency, a municipal corpo-
ration or a district corporation;
  (b) "overpayment" shall mean an overpayment which has  been  requested
or  determined  to be refunded, a refund or a reimbursement, of a tax or

S. 6359--D                         139                        A. 8559--D

other imposition imposed by or pursuant to article nine,  nine-A,  twen-
ty-two,  thirty,  thirty-A,  thirty-B[,  thirty-two,] or thirty-three of
this chapter, which is administered by the commissioner of taxation  and
finance; and
  S 59. Paragraph (b) of subdivision 1 of section 183 of the tax law, as
amended  by  section  1  of part Y of chapter 63 of the laws of 2000, is
amended to read as follows:
  (b) For the privilege of exercising its  corporate  franchise,  or  of
doing business, or of employing capital, or of owning or leasing proper-
ty in this state in a corporate or organized capacity, or of maintaining
an office in this state, every domestic corporation, joint-stock company
or  association  formed  for  or  principally  engaged in the conduct of
canal, steamboat, ferry (except a ferry company operating between any of
the boroughs of the city of New York under a lease granted by the city),
express, navigation, pipe  line,  transfer,  baggage  express,  omnibus,
taxicab,  telegraph, or telephone business, or formed for or principally
engaged in the conduct of two or more  of  such  businesses,  and  every
domestic  corporation,  joint-stock company or association formed for or
principally engaged in the conduct of a railroad, palace  car,  sleeping
car  or  trucking  business  or formed for or principally engaged in the
conduct of two or more of such businesses and which has made an election
pursuant to subdivision ten of this section, and  every  other  domestic
corporation,  joint-stock  company or association principally engaged in
the conduct of a  transportation  or  transmission  business,  except  a
corporation, joint-stock company or association formed for or principal-
ly  engaged  in  the  conduct of a railroad, palace car, sleeping car or
trucking business or formed for or principally engaged in the conduct of
two or more of such businesses and  which  has  not  made  the  election
provided  for  in  subdivision  ten of this section, and except a corpo-
ration, joint-stock company or association principally  engaged  in  the
conduct  of aviation (including air freight forwarders acting as princi-
pal and like indirect air carriers) and except a corporation principally
engaged in providing telecommunication  services  between  aircraft  and
dispatcher,  aircraft  and  air  traffic  control  or ground station and
ground station (or any combination of the foregoing),  at  least  ninety
percent  of  the voting stock of which corporation is owned, directly or
indirectly, by air carriers and which corporation's  principal  function
is  to  fulfill  the  requirements  of (i) the federal aviation adminis-
tration (or the successor  thereto)  or  (ii)  the  international  civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and  air  traffic  control  or ground station and ground station (or any
combination of the foregoing) for the purposes of air safety and naviga-
tion [and except  a  corporation,  joint-stock  company  or  association
subject  to  taxation  under  article thirty-two of this chapter,] shall
pay, in advance, an annual tax to be computed  upon  the  basis  of  the
amount of its capital stock within this state during the preceding year,
and  upon  each dollar of such amount. Provided, however, a corporation,
joint-stock company or association formed for or principally engaged  in
the  transportation, transmission or distribution of gas, electricity or
steam shall not be subject to tax under  this  section  or  section  one
hundred eighty-four of this article.
  S  60. Subdivision 10 of section 183 of the tax law, as added by chap-
ter 309 of the laws of 1996, is amended to read as follows:
  10. Election. [With respect to taxable years beginning after  nineteen
hundred  ninety-seven,  every] EVERY corporation, joint-stock company or

S. 6359--D                         140                        A. 8559--D

association formed for or principally engaged in the conduct of a  rail-
road  (including  surface  railroad,  whether  or not operated by steam,
subway railroad or elevated  railroad),  palace  car,  sleeping  car  or
trucking business or formed for or principally engaged in the conduct of
two or more of such businesses, which would be subject to article nine-A
[or  thirty-two] of this chapter if the election provided for under this
subdivision were not made, may elect to be subject to the provisions  of
this section and, as applicable, section one hundred eighty-four of this
article,  rather  than the provisions of such article nine-A [or thirty-
two]. [In the case of such a corporation, joint-stock company or associ-
ation subject to the tax imposed under this section and, as  applicable,
section  one  hundred  eighty-four of this article, for the taxable year
ending December thirty-first, nineteen hundred ninety-seven, such corpo-
ration, joint-stock company or association must make such election on or
before March fifteenth, nineteen hundred ninety-eight, and such election
shall apply to the taxable year ending on December  thirty-first,  nine-
teen  hundred  ninety-eight  and  to  succeeding  taxable  years,  until
revoked. In the case of such a corporation, joint-stock company or asso-
ciation which is not subject to the tax imposed under this section  and,
as  applicable,  section one hundred eighty-four of this article for the
taxable year ending December thirty-first, nineteen hundred  ninety-sev-
en,  but  thereafter would be subject to article nine-A or thirty-two of
this chapter if the election provided for under  this  subdivision  were
not  made,  such]  SUCH  corporation, joint-stock company or association
must make such election by the first  day  on  which  such  corporation,
joint-stock company or association would be required to file a return or
report  (without regard to extensions) under this section or section one
hundred eighty-four of this article,  or  section  one  hundred  eighty-
three-a  or  one  hundred[-]eighty-four-a  of  this  article, or article
nine-A [or thirty-two] of this chapter. An  election  made  pursuant  to
this  subdivision  shall  continue  to be in effect until revoked by the
taxpayer. A revocation of the election to be  subject  to  this  section
and,  as  applicable,  section  one hundred eighty-four of this article,
shall be irrevocable. Such election, and a revocation thereof, shall  be
made in the manner prescribed by the commissioner, whether by regulation
or otherwise. Such revocation shall apply as of the first day of January
next  following  the  end  of  a  taxable year with respect to which the
taxpayer had been subject to this section and,  as  applicable,  section
one  hundred  eighty-four of this article, by reason of an election made
pursuant to this subdivision.
  S 61. The section heading and subdivisions 1 and 5 of section 183-a of
the tax law, the section heading as added by chapter 931 of the laws  of
1982,  subdivision  1 as amended by section 1 of part A of chapter 59 of
the laws of 2013 and subdivision 5 as amended by chapter 945 of the laws
of 1990, are amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge  on  transportation  and transmission corporations and associ-
ations.  1. The term "corporation" as used in this section shall include
an association, within the meaning of paragraph three of subsection  (a)
of  section  seventy-seven  hundred  one  of  the  internal revenue code
(including a limited liability company), a publicly  traded  partnership
treated  as  a  corporation  for  purposes  of the internal revenue code
pursuant to section seventy-seven hundred four thereof and any  business
conducted  by  a  trustee  or  trustees wherein interest or ownership is
evidenced by certificates or other  written  instruments.  Every  corpo-
ration,  joint-stock  company  or  association formed for or principally

S. 6359--D                         141                        A. 8559--D

engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease granted by the city), express, navigation,  pipe  line,  transfer,
baggage  express, omnibus, taxicab, telegraph, or telephone business, or
formed for or principally engaged in the conduct of  two  or  more  such
businesses,  and  every  corporation, joint-stock company or association
formed for or principally engaged in the conduct of a  railroad,  palace
car,  sleeping  car  or  trucking  business or formed for or principally
engaged in the conduct of two or more of such businesses and  which  has
made  an  election  pursuant  to  subdivision ten of section one hundred
eighty-three of this article, and every other  corporation,  joint-stock
company or association principally engaged in the conduct of a transpor-
tation  or  transmission  business,  except  a  corporation, joint-stock
company or association formed for or principally engaged in the  conduct
of  a  railroad, palace car, sleeping car or trucking business or formed
for or principally engaged in the conduct of two or more of  such  busi-
nesses  and  which has not made the election provided for in subdivision
ten of section one hundred eighty-three of this article,  and  except  a
corporation,  joint-stock  company or association principally engaged in
the conduct of aviation (including  air  freight  forwarders  acting  as
principal and like indirect air carriers) and except a corporation prin-
cipally engaged in providing telecommunication services between aircraft
and  dispatcher,  aircraft and air traffic control or ground station and
ground station (or any combination of the foregoing),  at  least  ninety
percent  of  the voting stock of which corporation is owned, directly or
indirectly, by air carriers and which corporation's  principal  function
is  to  fulfill  the  requirements  of (i) the federal aviation adminis-
tration (or the successor  thereto)  or  (ii)  the  international  civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and  air  traffic  control  or ground station and ground station (or any
combination of the foregoing) for the purposes of air safety and naviga-
tion [and except a corporation, joint-stock company or association which
is liable to taxation under article thirty-two of this  chapter],  shall
pay for the privilege of exercising its corporate franchise, or of doing
business,  or  of employing capital, or of owning or leasing property in
the metropolitan commuter transportation district in such  corporate  or
organized  capacity, or of maintaining an office in such district, a tax
surcharge [for all or any part of its years commencing on or after Janu-
ary first, nineteen hundred eighty-two but ending before December  thir-
ty-first,  two  thousand  eighteen], which tax surcharge, in addition to
the tax imposed by section one hundred  eighty-three  of  this  article,
shall  be  computed  at the rate of [eighteen percent of the tax imposed
under such section one hundred eighty-three for such years or  any  part
of  such  years  ending  before  December thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article,  and  at the rate of] seventeen percent of the tax
imposed under such section for such years or  any  part  of  such  years
[ending  on  or  after  December  thirty-first, nineteen hundred eighty-
three] after the deduction of any credits otherwise allowable under this
article; provided, however, that such rates of tax  surcharge  shall  be
applied  only  to  that  portion  of  the  tax imposed under section one
hundred eighty-three of this article after the deduction of any  credits
otherwise  allowable  under  this  article  which is attributable to the
taxpayer's business activity carried on within the metropolitan commuter
transportation district as so determined in the manner prescribed by the

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rules and regulations promulgated by the  commissioner[;  and  provided,
further,  that  the  tax  surcharge imposed by this section shall not be
imposed upon any taxpayer for more than four hundred thirty-two months].
  5.  [The  report  covering  the tax surcharge which must be calculated
pursuant to this section based upon the tax reportable on the report due
by March  fifteenth,  nineteen  hundred  eighty-two  under  section  one
hundred  eighty-three  of this article shall be filed on or before March
fifteenth, nineteen hundred eighty-three. The report  covering  the  tax
surcharge  which  must be calculated pursuant to this section based upon
the tax reportable on  the  report  due  by  March  fifteenth,  nineteen
hundred  eighty-three  under  section  one  hundred eighty-three of this
article shall be filed on or before March  fifteenth,  nineteen  hundred
eighty-four.  The report covering the tax surcharge which must be calcu-
lated pursuant to this section based upon  the  tax  reportable  on  the
report  due  by  March  fifteenth,  nineteen  hundred  eighty-four under
section one hundred eighty-three of this article shall be  filed  on  or
before  March fifteenth, nineteen hundred eighty-five. The report cover-
ing the tax surcharge which must be calculated pursuant to this  section
based  upon  the  tax  reportable  on the report due by March fifteenth,
nineteen hundred eighty-five under section one hundred  eighty-three  of
this  article  shall  be  filed  on  or before March fifteenth, nineteen
hundred eighty-six. The report covering the tax surcharge which must  be
calculated pursuant to this section based upon the tax reportable on the
report due by March fifteenth, nineteen hundred eighty-six under section
one  hundred  eighty-three  of  this article shall be filed on or before
March fifteenth, nineteen hundred eighty-seven. The report covering  the
tax  surcharge  which  must be calculated pursuant to this section based
upon the tax reportable on the report due by March  fifteenth,  nineteen
hundred  eighty-seven  under  section  one  hundred eighty-three of this
article shall be filed on or before March  fifteenth,  nineteen  hundred
eighty-eight. The report covering the tax surcharge which must be calcu-
lated  pursuant  to  this  section  based upon the tax reportable on the
report due by  March  fifteenth,  nineteen  hundred  eighty-eight  under
section  one  hundred  eighty-three of this article shall be filed on or
before March fifteenth, nineteen hundred eighty-nine. The report  cover-
ing  the tax surcharge which must be calculated pursuant to this section
based upon the tax reportable on the  report  due  by  March  fifteenth,
nineteen  hundred  eighty-nine under section one hundred eighty-three of
this article shall be filed  on  or  before  March  fifteenth,  nineteen
hundred  ninety.]  The  report  covering the tax surcharge which must be
calculated pursuant to this section based upon the tax reportable on the
report due by March  fifteenth  of  any  year  [subsequent  to  nineteen
hundred  eighty-nine]  under  section  one  hundred eighty-three of this
article shall be filed on or before March fifteenth  of  the  year  next
succeeding such year. An extension pursuant to section one hundred nine-
ty-three  OF THIS ARTICLE shall be allowed only if a taxpayer files with
the commissioner an application for  extension  in  such  form  as  said
commissioner  may prescribe by regulation and pays on or before the date
of such filing in addition to any  other  amounts  required  under  this
article,  either  ninety percent of the entire tax surcharge required to
be paid under this section for the applicable period, or not  less  than
the tax surcharge shown on the taxpayer's report for the preceding year,
if  such  preceding  year  consisted of twelve months. The tax surcharge
imposed by this section shall be payable to the commissioner in full  at
the  time  the report is required to be filed, and such tax surcharge or
the balance thereof, imposed on any taxpayer which  ceases  to  exercise

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its franchise or be subject to the tax surcharge imposed by this section
shall  be payable to the commissioner at the time the report is required
to be filed, provided such tax surcharge of a domestic corporation which
continues to possess its franchise shall be subject to adjustment as the
circumstances  may require; all other tax surcharges of any such taxpay-
er, which pursuant to the foregoing provisions  of  this  section  would
otherwise  be  payable subsequent to the time such report is required to
be filed, shall nevertheless  be  payable  at  such  time.  All  of  the
provisions  of  this article presently applicable to section one hundred
eighty-three of this article are applicable to the tax surcharge imposed
by this section except for section one hundred ninety-two of this  arti-
cle.
  S  62.  Subdivision  1  of  section  184 of the tax law, as amended by
section 2 of part Y of chapter 63 of the laws of  2000,  is  amended  to
read as follows:
  1.  The  term  "corporation"  as used in this section shall include an
association, within the meaning of paragraph three of subsection (a)  of
section  seventy-seven hundred one of the internal revenue code (includ-
ing a limited liability company), a publicly traded partnership  treated
as  a  corporation for purposes of the internal revenue code pursuant to
section seventy-seven hundred four thereof.
  Every corporation, joint-stock company or association  formed  for  or
principally  engaged in the conduct of canal, steamboat, ferry (except a
ferry company operating between any of the boroughs of the city  of  New
York under a lease granted by the city), express, navigation, pipe line,
transfer,  baggage  express,  omnibus, taxicab, telegraph or local tele-
phone business, or formed for or principally engaged in the  conduct  of
two  or  more  of  such  businesses,  and every corporation, joint-stock
company or association formed for or principally engaged in the  conduct
of  surface railroad, whether or not operated by steam, subway railroad,
elevated railroad, palace car, sleeping  car  or  trucking  business  or
formed  for  or  principally  engaged in the conduct of two or more such
businesses and which has made an election pursuant to subdivision ten of
section one hundred eighty-three of this article, and every other corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged  in  the  conduct  of  a transportation or transmission business
(other than a telephone business),  except  a  corporation,  joint-stock
company  or association formed for or principally engaged in the conduct
of a surface railroad, whether or not operated by  steam,  subway  rail-
road,  elevated  railroad, palace car, sleeping car or trucking business
or formed for or principally engaged in the conduct of two  or  more  of
such  businesses  and  which  has  not made the election provided for in
subdivision ten of section one hundred  eighty-three  of  this  article,
and, except a corporation, joint-stock company or association principal-
ly  engaged in the conduct of aviation (including air freight forwarders
acting as principal and like indirect air carriers) and except a  corpo-
ration  principally  engaged  in  providing  telecommunication  services
between aircraft and dispatcher, aircraft and  air  traffic  control  or
ground station and ground station (or any combination of the foregoing),
at  least  ninety  percent  of  the voting stock of which corporation is
owned, directly or indirectly, by air carriers and  which  corporation's
principal  function  is  to  fulfill the requirements of (i) the federal
aviation administration (or the successor thereto) or (ii) the  interna-
tional  civil aviation organization (or the successor thereto), relating
to  the  existence  of  a  communication  system  between  aircraft  and
dispatcher,  aircraft  and  air  traffic  control  or ground station and

S. 6359--D                         144                        A. 8559--D

ground station (or any combination of the foregoing) for the purposes of
air safety and navigation and [except a corporation, joint-stock company
or association which is liable to taxation under article  thirty-two  of
this  chapter,] for the privilege of exercising its corporate franchise,
or of doing business, or of employing capital, or of owning  or  leasing
property  in  this  state in a corporate or organized capacity, or main-
taining an office in this state, shall pay a franchise tax  which  shall
be  equal to [(i) three-quarters of one percent for taxable years ending
before two thousand one, provided that for a taxable year ending in  two
thousand  the  rate  shall  be  reduced  to three-eighths of one percent
effective July first, two thousand with the result that for purposes  of
implementation  of  such  change  in rate the applicable rate for such a
year shall be nine-sixteenths of one percent, and (ii)] three-eighths of
one percent for taxable years commencing after two  thousand,  upon  its
gross  earnings  from  all  sources within this state; except that, [for
taxable years commencing on or after  January  first,  nineteen  hundred
eighty-five  and  ending  on  or  before December thirty-first, nineteen
hundred eighty-nine, every corporation, joint-stock company  or  associ-
ation  formed  for or principally engaged in the conduct of telephone or
telegraph business shall pay a franchise tax which  shall  be  equal  to
three-tenths  of one per centum upon its gross earnings from all sources
within this state and,] for taxable years commencing on or after January
first, nineteen hundred ninety, every corporation,  joint-stock  company
or association formed for or principally engaged in the conduct of local
telephone  business,  or  telegraph  business  shall pay a franchise tax
which shall be equal to [(i) three-quarters of one percent  for  taxable
years  ending  before two thousand one, provided that for a taxable year
ending in two thousand the rate shall be reduced to three-eighths of one
percent effective July first, two thousand  with  the  result  that  for
purposes  of  implementation  of such change in rate the applicable rate
for such a year shall be  nine-sixteenths  of  one  percent,  and  (ii)]
three-eighths  of  one  percent  for  taxable years commencing after two
thousand, upon its gross earnings from all sources  within  this  state,
except that a corporation, joint-stock company or association formed for
or  principally  engaged  in  the  conduct of a local telephone business
shall exclude the following earnings (but  not  in  any  event  earnings
derived  by such taxpayer from the provision of carrier access services)
derived by such taxpayer from sales for ultimate consumption of telecom-
munications service to its customers (i) thirty  percent  of  separately
charged  intra-LATA  toll  service (which shall also include interregion
regional calling plan service) and (ii) one hundred percent of separate-
ly charged inter-LATA, interstate  or  international  telecommunications
service; and except that [corporations, joint-stock companies or associ-
ations formed for or principally engaged in the conduct of surface rail-
road,  whether or not operated by steam, subway railroad, elevated rail-
road, palace car or sleeping car,  business  or  any  other  corporation
formed for or principally engaged in the conduct of a railroad business,
for  taxable  years  prior to nineteen hundred ninety-seven, and] corpo-
rations, joint-stock companies or associations formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease granted by the city), navigation or any corporation formed for  or
principally  engaged  in the operation of vessels, shall pay a franchise
tax which shall be equal to three-quarters of one per  centum  upon  its
gross  earnings  from  all sources within this state, excluding earnings
derived from business of an interstate or foreign character; except that

S. 6359--D                         145                        A. 8559--D

for taxable years beginning in nineteen hundred ninety-seven  or  there-
after,  in the case of a corporation, joint-stock company or association
which, with respect to taxable years beginning  after  nineteen  hundred
ninety-seven,  has  made  an  election  pursuant  to  subdivision ten of
section one hundred eighty-three of this article and which is formed for
or principally engaged in the conduct of surface  railroad,  whether  or
not  operated  by steam, subway railroad, elevated railroad, palace car,
sleeping car or trucking business or formed for or  principally  engaged
in  the  conduct  of  two  or more of such businesses, such corporation,
joint-stock company or association shall pay a franchise tax which shall
be equal to [(i) six-tenths of one  percent  for  taxable  years  ending
before  two thousand one, provided that for a taxable year ending in two
thousand the rate shall be  reduced  to  three-eighths  of  one  percent
effective  July first, two thousand with the result that for purposes of
implementation of such change in rate the applicable  rate  for  such  a
year  shall  be  thirty-nine eightieths of one percent, and (ii)] three-
eighths of one percent for taxable years commencing after two  thousand,
upon  its  gross  earnings  from all sources within this state, provided
that in the case of a corporation, joint-stock  company  or  association
formed  for  or  principally engaged in the conduct of surface railroad,
whether or not operated by steam, subway  railroad,  elevated  railroad,
palace  car  or  sleeping  car  business,  or  formed for or principally
engaged in the conduct of two or more of  such  businesses,  such  gross
earnings  shall  not include earnings derived from business of an inter-
state or foreign character.
  Provided, however, with respect to railroad, elevated railroad, palace
car or sleeping car business or any  other  corporation  formed  for  or
principally  engaged  in  the  conduct of a railroad business and canal,
steamboat, ferry (except a ferry company operating between  any  of  the
boroughs  of  the  city  of New York under a lease granted by the city),
navigation or any corporation formed for or principally engaged  in  the
operation  of  vessels where the gross earnings from such transportation
business both originating and terminating within this state and travers-
ing both this state and another state or  states  or  country  shall  be
subject  to the franchise tax imposed by this section (except where such
corporation, joint-stock company or association is formed for or princi-
pally engaged in the conduct of a railroad (including surface  railroad,
whether or not operated by steam, subway railroad or elevated railroad),
palace car or sleeping car business or formed for or principally engaged
in  the  conduct of two or more of such businesses, and has not made the
election provided for under  subdivision  ten  of  section  one  hundred
eighty-three  of  this  article) and such earnings shall be allocated to
this state in the same ratio that the mileage within the state bears  to
the  total  mileage  of such business. Provided, further, a corporation,
joint-stock company or association formed for or principally engaged  in
the  transportation, transmission or distribution of gas, electricity or
steam shall not be subject to tax under  this  section  or  section  one
hundred eighty-three of this article.
  The  term "local telephone business" means the provision or furnishing
of telecommunication services for hire wherein the service furnished  by
the  provider  thereof consists of carrier access service or the service
originates and terminates within the same  local  access  and  transport
area  ("LATA"),  a local access and transport area being that geographic
area as established and approved, and as so set and in existence on July
first, nineteen hundred ninety-four, pursuant  to  the  modification  of
final  judgment  in  United  States  v.  Western Electric Company (civil

S. 6359--D                         146                        A. 8559--D

action no. 82-0192) in the United States district court for the District
of Columbia or within the LATA-like Rochester non-associated independent
area.
  The  term "telecommunication services" shall have the meaning ascribed
to such term in section one hundred eighty-six-e of this article.
  S 63. The section heading and the opening paragraph of  subdivision  1
of section 184-a of the tax law, the section heading as added by chapter
931  of  the  laws of 1982 and the opening paragraph of subdivision 1 as
amended by section 2 of part A of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  Additional   [temporary]   metropolitan  transportation  business  tax
surcharge on transportation and transmission  corporations  and  associ-
ations services.
  The  term "corporation" as used in this section shall include an asso-
ciation, within the meaning of paragraph  three  of  subsection  (a)  of
section  seventy-seven hundred one of the internal revenue code (includ-
ing a limited liability company),  and  a  publicly  traded  partnership
treated  as  a  corporation  for  purposes  of the internal revenue code
pursuant to section seventy-seven hundred four thereof.    Every  corpo-
ration,  joint-stock  company  or  association formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease granted by the city), express, navigation,  pipe  line,  transfer,
baggage  express,  omnibus,  taxicab, telegraph or local telephone busi-
ness, or formed for or principally engaged in the conduct of two or more
such businesses, and every corporation, joint-stock company  or  associ-
ation  formed  for  or  principally  engaged in the conduct of a surface
railroad, whether or not operated by steam,  subway  railroad,  elevated
railroad,  palace  car, sleeping car or trucking business or principally
engaged in the conduct of two or more such businesses and which has made
an election pursuant to subdivision ten of section one  hundred  eighty-
three  of this article, and every other corporation, joint-stock company
or association formed for or principally engaged in  the  conduct  of  a
transportation  or  transmission  business (other than a telephone busi-
ness) except a corporation, joint-stock company  or  association  formed
for or principally engaged in the conduct of a surface railroad, whether
or  not  operated  by  steam, subway railroad, elevated railroad, palace
car, sleeping car or trucking business or  principally  engaged  in  the
conduct  of  two  or  more  such  businesses  and which has not made the
election provided for in subdivision ten of section one hundred  eighty-
three  of this article, and except a corporation, joint-stock company or
association principally engaged in the conduct  of  aviation  (including
air  freight forwarders acting as principal and like indirect air carri-
ers) and except a corporation principally engaged in providing  telecom-
munication  services  between  aircraft and dispatcher, aircraft and air
traffic control or ground station and ground station (or any combination
of the foregoing), at least ninety percent of the voting stock of  which
corporation  is owned, directly or indirectly, by air carriers and which
corporation's principal function is to fulfill the requirements  of  (i)
the  federal  aviation administration (or the successor thereto) or (ii)
the international civil aviation organization (or the  successor  there-
to),  relating  to  the  existence  of  a  communication  system between
aircraft and dispatcher, aircraft and  air  traffic  control  or  ground
station and ground station (or any combination of the foregoing) for the
purposes  of air safety and navigation [and except a corporation, joint-
stock company or association which is liable to taxation  under  article

S. 6359--D                         147                        A. 8559--D

thirty-two  of  this chapter], shall pay for the privilege of exercising
its corporate franchise, or of doing business, or of employing  capital,
or  of owning or leasing property in the metropolitan commuter transpor-
tation district in such corporate or organized capacity, or of maintain-
ing  an office in such district, a tax surcharge [for all or any part of
its taxable years commencing on or after January first, nineteen hundred
eighty-two, but ending before December thirty-first, two thousand  eigh-
teen],  which  tax  surcharge, in addition to the tax imposed by section
one hundred eighty-four of this article, shall be computed at  the  rate
of  [eighteen  percent of the tax imposed under such section one hundred
eighty-four for such taxable years or any part  of  such  taxable  years
ending before December thirty-first, nineteen hundred eighty-three after
the deduction of any credits otherwise allowable under this article, and
at  the rate of] seventeen percent of the tax imposed under such section
for such taxable years or any part of such taxable years [ending  on  or
after  December  thirty-first,  nineteen hundred eighty-three] after the
deduction  of  any  credits  otherwise  allowable  under  this  article;
provided,  however,  that  such  rates of tax surcharge shall be applied
only to that portion of the tax imposed under section one hundred eight-
y-four of this article after the  deduction  of  any  credits  otherwise
allowable  under  this  article  which is attributable to the taxpayer's
business activity carried on within the metropolitan commuter  transpor-
tation  district[; and provided, further, that the tax surcharge imposed
by this section on corporations, joint-stock companies and  associations
formed  for  or principally engaged in the conduct of telephone or tele-
graph business shall be computed in accordance with this subdivision and
paragraph (c) of subdivision two of this section as if  the  three-quar-
ters  of  one  percent  rate  of  tax provided for in subdivision one of
section one hundred eighty-four of this article were applicable to  such
telephone  and  telegraph  businesses for taxable years commencing on or
after January first, nineteen  hundred  eighty-five  and  ending  on  or
before   December   thirty-first,   nineteen  hundred  eighty-nine;  and
provided, further, that the tax surcharge imposed by this section  shall
not  be  imposed upon any taxpayer for more than four hundred thirty-two
months].  Provided, however, that for taxable  years  beginning  in  two
thousand  and  thereafter,  for  purposes  of  this  subdivision the tax
imposed under section one hundred eighty-four of this article  shall  be
deemed  to  have  been  imposed  at  the  rate  of three-quarters of one
percent, except that in the case of a corporation,  joint-stock  company
or association which has made an election pursuant to subdivision ten of
section  one  hundred eighty-three of this article, for purposes of this
subdivision the tax imposed under section  one  hundred  eighty-four  of
this  article  shall  be deemed to have been imposed at the rate of six-
tenths of one percent.
  S 64. Subdivision 8 of section 186-a of the tax law is REPEALED.
  S 65.  The section heading and subdivision 1 of section 186-c  of  the
tax  law,  the  section  heading  as amended by chapter 2 of the laws of
1995, subdivision 1 as amended by section 3 of part II-1 of  chapter  57
of the laws of 2008, subparagraph 1 of paragraph (a) of subdivision 1 as
amended  by  section  3 of part A of chapter 59 of the laws of 2013, are
amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge  on  utility  services  and excise tax on sale of telecommuni-
cation services.  1. (a) (1) Every utility doing business in the  metro-
politan  commuter  transportation district shall pay a tax surcharge, in
addition to the tax imposed by section one hundred eighty-six-a of  this

S. 6359--D                         148                        A. 8559--D

article[,  for  all  or  any parts of its taxable years commencing on or
after January first,  nineteen  hundred  eighty-two  but  ending  before
December  thirty-first,  two  thousand eighteen], to be computed [at the
rate  of  eighteen  percent of the tax imposed under section one hundred
eighty-six-a of this article for such taxable years or any part of  such
taxable  years  ending  before  December  thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article,  and]  at the rate of seventeen percent of the tax
imposed under such section [for such taxable years or any part  of  such
taxable years ending on or after December thirty-first, nineteen hundred
eighty-three]  after  the deduction of credits otherwise allowable under
this article except any utility credit provided  for  by  article  thir-
teen-A  of  this  chapter;  provided,  however,  that  such rates of tax
surcharge shall be applied only to that portion of the tax imposed under
section one hundred eighty-six-a of this article after the deduction  of
credits otherwise allowable under this article, except any utility cred-
it  provided for by article thirteen-A of this chapter, which is attrib-
utable to the taxpayer's gross income or  gross  operating  income  from
business  activity carried on within the metropolitan commuter transpor-
tation district[; and provided, further, that the tax surcharge  imposed
by  this  section  shall  not be imposed upon any taxpayer for more than
four hundred thirty-two months].
  (2) Provided however, that [commencing January first,  two  thousand,]
in the case of the tax imposed under paragraph (a) of subdivision one of
section  one hundred eighty-six-a of this article (relating to providers
of telecommunications services) such tax surcharge shall  be  calculated
as  if  the  tax  imposed under section one hundred eighty-six-a of this
article were imposed at a rate of three and one-half percent.
  (b) In addition to the surcharge imposed  by  paragraph  (a)  of  this
subdivision,  there  is hereby imposed a surcharge on the gross receipts
from telecommunication services relating to  the  metropolitan  commuter
transportation  district  at  the rate of seventeen percent of the state
tax rate under section one hundred eighty-six-e of this article [for all
or part of taxable years commencing on and after January first, nineteen
hundred ninety-five but ending before December thirty-first,  two  thou-
sand  thirteen]. All the definitions and other provisions of section one
hundred eighty-six-e of this article shall apply to the tax  imposed  by
this paragraph with such modification and limitation as may be necessary
(including  substituting the words "metropolitan commuter transportation
district" for "state" where appropriate) in order to adapt the  language
of  such  section  one  hundred  eighty-six-e  of  this  article  to the
surcharge imposed by this paragraph within  such  metropolitan  commuter
transportation district so as to include (1) any intra-district telecom-
munication  services,  except  any  telecommunication services the gross
receipts from which are subject to tax under subparagraph four  of  this
paragraph, (2) any inter-district telecommunication services which orig-
inate or terminate in such district and are charged to a service address
therein  regardless  of  where the amounts charged for such services are
billed or ultimately paid, except any  telecommunications  services  the
gross  receipts from which are subject to tax under subparagraph four of
this paragraph, (3) as apportioned to such district, private  telecommu-
nication  services,  except  any  telecommunication  services  the gross
receipts from which are subject to tax under subparagraph four  of  this
paragraph,  and (4) mobile telecommunications service provided by a home
service provider where the place of primary use is within such metropol-
itan commuter transportation  district.  Provided  however,  [commencing

S. 6359--D                         149                        A. 8559--D

October  first,  nineteen hundred ninety-eight] such tax surcharge shall
be calculated as if the tax imposed under section  one  hundred  eighty-
six-e  of  this  article  were  imposed  at a rate of three and one-half
percent.
  S  66.  Clause  (iii) of subparagraph (D) of paragraph 3 of subsection
(b) of section 605 of the tax law, as added by chapter 658 of  the  laws
of 2003, is amended to read as follows:
  (iii)  Provided  further,  that for the purposes of item (I) of clause
(i) of this subparagraph, a trustee which is a  banking  corporation  as
defined  in subsection (a) of section fourteen hundred fifty-two of this
chapter, AS SUCH SECTION WAS IN EFFECT  ON  DECEMBER  THIRTY-FIRST,  TWO
THOUSAND  FOURTEEN, and which is domiciled outside the state of New York
at the time it becomes a trustee of the trust shall be deemed to contin-
ue to be a trustee domiciled outside the state of New York notwithstand-
ing that it thereafter otherwise becomes  a  trustee  domiciled  in  the
state  of New York by virtue of being acquired by, or becoming an office
or branch of, a corporate trustee domiciled  within  the  state  of  New
York.
  S  67.  Subparagraph  (A) of paragraph 10 of subsection (a) of section
606 of the tax law, as amended by section 3 of part CC of chapter 85  of
the laws of 2002, is amended to read as follows:
  (A)  the business of which the individual is an owner is substantially
similar in operation and in ownership to a business entity  taxable,  or
previously  taxable, under section one hundred eighty-three, one hundred
eighty-four[,] OR one hundred eighty-five [or one hundred eighty-six] of
article nine; article nine-A[, thirty-two] or thirty-three of this chap-
ter; article twenty-three of this  chapter  or  which  would  have  been
subject  to  tax under such article twenty-three (as such article was in
effect on January first, nineteen hundred eighty), ARTICLE THIRTY-TWO OF
THIS CHAPTER OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH  ARTICLE
THIRTY-TWO  (AS SUCH ARTICLE WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO
THOUSAND FOURTEEN) or the income  (or  losses)  of  which  is  (or  was)
includable  under  article twenty-two of this chapter whereby the intent
and purpose of this paragraph and paragraph five of this subsection with
respect to refunding of credit to new business would be evaded; or
  S 68. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law, as amended by section 7 of part C-1 of chapter 57 of the
laws of 2009, clause (ix) as amended by section 4 of part G  of  chapter
59  of  the laws of 2013, clause (xxxi) as added by section 5 of part MM
of chapter 59 of the laws of 2010, clause (xxxi) as added by section  14
of  part Q of chapter 57 of the laws of 2010, clause (xxxii) as added by
section 6 of part V of chapter 61 of the laws of 2011,  clause  (xxxiii)
as  added  by  section  4  of  part D of chapter 56 of the laws of 2011,
clause (xxxiii) as added by section 5 of part E of  chapter  56  of  the
laws  of  2011,  clause  (xxxiii) as added by chapter 604 of the laws of
2011, clause (xxxiv) as added by chapter 109 of the laws of 2012, clause
(xxxv) as added by section 2 of part AA of chapter 59  of  the  laws  of
2013,  clause  (xxxv)  as added by section 4 of part EE of chapter 59 of
the laws of 2013, and clause (xxxvi) as added by section 8 of part A  of
chapter 68 of the laws of 2013, is amended to read as follows:
  (B)  shall  be  treated as the owner of a new business with respect to
such share if the corporation qualifies as a new  business  pursuant  to
paragraph  [(j)]  (F) of subdivision [twelve] ONE of section two hundred
[ten] TEN-B of this chapter.

With respect to the following        The corporation's credit base under

S. 6359--D                         150                        A. 8559--D

credit under this section:           section two hundred [ten or section
                                     fourteen hundred fifty-six] TEN-B
                                     of this chapter is:

(i) Investment tax credit under      Investment credit base or qualified
subsection (a)                       rehabilitation expenditures under
                                     subdivision [twelve] ONE of section
                                     two hundred [ten] TEN-B

(ii) Empire zone investment          Cost or other basis under
tax credit under subsection (j)      subdivision [twelve-B] THREE
                                     of section two hundred [ten] TEN-B

[(iii) Empire zone wage tax credit   Eligible wages under subdivision
under subsection (k)                 nineteen of section two hundred
                                     ten or subsection (e) of section
                                     fourteen hundred fifty-six

(iv) Empire zone capital tax         Qualified investments and
credit under subsection (l)          contributions under subdivision
                                     twenty of section two hundred ten
                                     or subsection (d) of section
                                     fourteen hundred fifty-six]

(v) Agricultural property tax        Allowable school district property
credit under subsection (n)          taxes under subdivision
                                     [twenty-two] ELEVEN of
                                     section two hundred [ten]
                                     TEN-B

(vi) Credit for employment of        Qualified first-year wages or
persons with disabilities            qualified second-year wages under
under subsection (o)                 subdivision [twenty-three] TWELVE
                                     of section two hundred [ten or
                                     subsection (f) of section
                                     fourteen hundred fifty-six] TEN-B

(vii) Employment incentive credit    Applicable investment credit base
under subsection (a-1)               under subdivision [twelve-D] TWO
                                     of section two hundred [ten]
                                     TEN-B

(viii) Empire zone employment        Applicable investment credit
incentive credit under subsection    under subdivision [twelve-C]
(j-1)                                FOUR of section
                                     two hundred [ten] TEN-B

(ix) Alternative fuels               Amount of credit under subdivision
and electric vehicle                 [twenty-four] THIRTY of section
recharging property                  two hundred [ten] TEN-B
credit under subsection (p)

(x) Qualified emerging technology    Applicable credit base under
company employment credit under      subdivision [twelve-E] SEVEN
subsection (q)                       of section two hundred [ten] TEN-B

S. 6359--D                         151                        A. 8559--D

(xi) Qualified emerging technology   Qualified investments under
company capital tax credit under     subdivision [twelve-F] EIGHT
subsection (r)                       of section two hundred [ten] TEN-B

(xii) Credit for purchase of an      Cost of an automated external
automated external defibrillator     defibrillator under subdivision
under subsection (s)                 [twenty-five] THIRTEEN of section
                                     two hundred [ten or subsection
                                     (j) of section fourteen hundred
                                     fifty-six] TEN-B

(xiii) Low-income housing credit     Credit amount under subdivision
under subsection (x)                 [thirty] FIFTEEN of section
                                     two hundred [ten or subsection
                                     (l) of section fourteen
                                     hundred fifty-six] TEN-B

[(xiv) Credit for transportation     For taxable years beginning
improvement contributions under      before January first, two thousand
subsection (z)                       nine, amount of credit under
                                     subdivision thirty-two of
                                     section two hundred ten
                                     or subsection (n) of section
                                     fourteen hundred fifty-six]

(xv) QEZE credit for real property   Amount of credit under subdivision
taxes under subsection (bb)          [twenty-seven] FIVE of
                                     section two hundred [ten
                                     or subsection (o) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xvi) QEZE tax reduction credit      Amount of benefit period factor,
under subsection (cc)                employment increase factor and zone
                                     allocation factor (without regard
                                     to pro ration) under subdivision
                                     [twenty-eight] SIX of
                                     section two hundred [ten
                                     or subsection (p) of section
                                     fourteen hundred fifty-six]
                                     TEN-B and amount
                                     of tax factor as determined under
                                     subdivision (f) of section sixteen

(xvii) Green building credit under   Amount of green building credit
subsection (y)                       under subdivision [thirty-one]
                                     SIXTEEN of section two
                                     hundred [ten or subsection (m)
                                     of section fourteen hundred
                                     fifty-six] TEN-B

(xviii) Credit for long-term care    Qualified costs under subdivision
insurance premiums under subsection  [twenty-five-a] FOURTEEN
(aa)                                 of section two hundred [ten
                                     or subsection (k) of
                                     section fourteen hundred fifty-six]

S. 6359--D                         152                        A. 8559--D

                                     TEN-B

(xix) Brownfield redevelopment       Amount of credit under subdivision
credit under subsection (dd)         [thirty-three] SEVENTEEN
                                     of section two hundred
                                     [ten or subsection (q) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xx) Remediated brownfield credit    Amount of credit under subdivision
for real property taxes for          [thirty-four] EIGHTEEN
qualified sites under subsection     of section two hundred
(ee)                                 [ten of subsection (r) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxi) Environmental remediation      Amount of credit under subdivision
insurance credit under subsection    [thirty-five] NINETEEN
(ff)                                 of section two hundred
                                     [ten or subsection (s) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxii) Empire state film             Amount of credit for qualified
production credit under              production costs in production of a
subsection (gg)                      qualified film under subdivision
                                     [thirty-six] TWENTY of
                                     section two hundred [ten] TEN-B

[(xxiii) Qualified emerging          Qualifying expenditures and
technology company facilities,       development activities under
operations and training credit       subdivision twelve-G of section two
under subsection (nn)                hundred ten]

(xxiv) Security training tax credit  Amount of credit under subdivision
under subsection (ii)                [thirty-seven] TWENTY-ONE
                                     of section two hundred
                                     [ten or under subsection (t) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

[(xxv) Credit for qualified fuel     For taxable years beginning before
cell electric generating             January first, two thousand nine,
equipment expenditures               amount of credit under subdivision
under subsection (g-2)               thirty-seven of section two hundred
                                     ten or subsection (t) of section
                                     fourteen hundred fifty-six]

(xxvi) Empire state commercial       Amount of credit for qualified
production credit under subsection   production costs in production of
(jj)                                 a qualified commercial under
                                     subdivision [thirty-eight]
                                     TWENTY-THREE of
                                     section two hundred [ten]
                                     TEN-B

S. 6359--D                         153                        A. 8559--D

(xxvii) Biofuel production tax       Amount of credit under subdivision
credit under subsection (jj)         [thirty-eight] TWENTY-FOUR
                                     of section two hundred [ten]
                                     TEN-B

(xxviii) Clean heating fuel credit   Amount of credit under subdivision
under subsection (mm)                [thirty-nine] TWENTY-FIVE of
                                     section two hundred [ten]
                                     TEN-B

(xxix) Credit for rehabilitation     Amount of credit under subdivision
of historic properties under         [forty] TWENTY-SIX of
subsection (oo)                      section two hundred [ten]
                                     TEN-B

 (xxxi) Excelsior jobs program tax   Amount of credit under subdivision
credit under subsection (qq)         [forty-one] THIRTY-ONE of
                                     section two hundred [ten
                                     or under subdivision (u) of
                                     section fourteen hundred fifty-six]
                                     TEN-B

(xxxi) Empire state film             Amount of credit for
post production credit under         qualified post production
subsection (qq)                      costs of a qualified film
                                     under subdivision [forty-one]
                                     THIRTY-TWO of section
                                     two hundred [ten] TEN-B

 (xxxii) Economic transformation     Amount of credit under subdivision
and facility redevelopment credit    [forty-three] THIRTY-FIVE
                                     of section [210 or under
                                     subsection (x) of section fourteen
                                     hundred fifty-six] TWO HUNDRED
                                     TEN-B

 (xxxiii) New York youth works       Amount of credit under
tax credit                           subdivision [forty-four] THIRTY-SIX
                                     of section two hundred [ten]
                                     TEN-B

 (xxxiii) Empire state jobs          Amount of credit under
retention program credit             subdivision [forty-four]
                                     THIRTY-SEVEN of section
                                     two hundred [ten or under
                                     subsection (y) of section
                                     fourteen hundred fifty-six]
                                     TEN-B

(xxxiii) Credit for companies who    Amount of credit under
provide transportation to            subdivision [forty-four]
individuals with disabilities        THIRTY-EIGHT of section
under subsection (tt)                two hundred [ten] TEN-B

(xxxiv) Beer production credit       Amount of credit under
under subsection (uu)                [subdivision] subdivision

S. 6359--D                         154                        A. 8559--D

                                     [forty-five] THIRTY-NINE of
                                     section two hundred [ten]
                                     TEN-B

(xxxv) Hire a vet credit             Amount of credit under subdivision
under subsection (a-2)               [twenty-three-a] TWENTY-NINE
                                     of section two hundred [ten
                                     or subsection (e-1) of
                                     of section fourteen hundred
                                     fifty-six] TEN-B

(xxxv) Minimum wage reimbursement    Amount of credit under subdivision
credit under subsection (aaa)        [forty-six] FORTY
                                     of section two hundred
                                     [ten or subsection (z) of
                                     section fourteen hundred
                                     fifty-six] TEN-B

(xxxvi) Tax-free NY area tax         Amount of credit under
elimination credit                   subdivision [forty-seven] FORTY-ONE
                                     of section two hundred [ten]
                                     TEN-B

(XXXVII) REAL PROPERTY TAX           AMOUNT OF CREDIT UNDER
CREDIT FOR MANUFACTURERS             SUBDIVISION
UNDER SUBSECTION (XX)                FORTY-THREE OF SECTION
                                     TWO HUNDRED TEN-B

(XXXVIII) TAX-FREE NY AREA           AMOUNT OF CREDIT UNDER
EXCISE TAX ON                        SUBDIVISION
TELECOMMUNICATIONS SERVICES          FORTY-FOUR OF SECTION
CREDIT UNDER SUBSECTION (YY)         TWO HUNDRED TEN-B

  S  69.  Subparagraphs  (A) and (B) of paragraph 3 of subsection (i) of
section 606 of the tax law, as added by chapter 170 of the laws of 1994,
are amended to read as follows:
  (A) Credit carryover. Any excess  credit  under  subparagraph  (A)  of
paragraph  one of this subsection, as it was in effect for taxable years
beginning before nineteen hundred ninety-four, may be  carried  over  to
the  shareholder's following year or years and may be deducted from such
shareholder's tax for such year or years, except that any excess  credit
attributable  to  subdivision  [twelve] ONE of section two hundred [ten]
TEN-B of this chapter shall in no event be carried over beyond  the  ten
taxable years next following the taxable year of origin.
  (B)  Credit  recapture. Any redetermination of credit required by this
subsection as it was in effect for taxable years beginning before  nine-
teen hundred ninety-four, upon disposition or cessation of qualified use
of property pursuant to paragraph [(g)] (E) of subdivision [twelve] ONE,
OR  paragraph  (f) of subdivision [twelve-B or paragraph (f) of subdivi-
sion eighteen] THREE of section two hundred [ten] TEN-B of this  chapter
shall  be  attributed  in  pro  rata shares to the shareholders who were
allowed credit under this subsection with respect to such property,  and
the  reduction  of a shareholder's proportionate stock interest shall be
treated as a disposition of property  for  which  a  redetermination  of
credit under such paragraphs is required with respect to such sharehold-
er.

S. 6359--D                         155                        A. 8559--D

  S  70.  Subparagraph (B) of paragraph 3 and paragraph 21 of subsection
(b) and paragraph 21 of subsection (c) of section 612 of  the  tax  law,
subparagraph  (B) of paragraph 3 of subsection (b) as amended by section
57, paragraph 21 of subsection (b) as amended by section  59  and  para-
graph 21 of subsection (c) as amended by section 60 of part A of chapter
389 of the laws of 1997, are amended to read as follows:
  (B) Shareholders of S corporations. In the case of a shareholder of an
S  corporation,  with  respect  to  taxes imposed upon or payable by the
corporation, the term "income taxes" in subparagraph (A) of  this  para-
graph  shall  also  include  the  taxes imposed under [articles] ARTICLE
nine-A [and thirty-two] of this chapter, regardless of  the  measure  of
such  tax,  but shall not otherwise include taxes imposed by this or any
other state of the United States, or any political subdivision  of  this
or any other state, or the District of Columbia.
  (21)  In  relation  to  the  disposition of stock or indebtedness of a
corporation which elected under subchapter  s  of  chapter  one  of  the
internal  revenue  code  for any taxable year of such corporation begin-
ning, in the case of a corporation taxable under article nine-A of  this
chapter,  after  December thirty-first, nineteen hundred eighty, [and in
the case of a corporation taxable under article thirty-two of this chap-
ter, after December  thirty-first,  nineteen  hundred  ninety-six,]  the
amount required to be added to federal adjusted gross income pursuant to
subsection (n) of this section.
  (21)  In  relation  to  the  disposition of stock or indebtedness of a
corporation which elected under subchapter  s  of  chapter  one  of  the
internal  revenue  code  for any taxable year of such corporation begin-
ning, in the case of a corporation taxable under article nine-A of  this
chapter,  after  December thirty-first, nineteen hundred eighty, [and in
the case of a corporation taxable under article thirty-two of this chap-
ter, after December  thirty-first,  nineteen  hundred  ninety-six,]  the
amounts  required  to  be  subtracted from federal adjusted gross income
pursuant to subsection (n) of this section.
  S 71. Paragraph 2 of subsection (a) of section 632 of the tax law,  as
amended  by  section  2  of part C of chapter 57 of the laws of 2010, is
amended to read as follows:
  (2) In determining New York source income of a nonresident shareholder
of an S corporation where the election provided for in subsection (a) of
section six hundred sixty of this article is in effect, there  shall  be
included only the portion derived from or connected with New York sourc-
es  of  such  shareholder's  pro  rata  share  of items of S corporation
income, loss and deduction entering  into  his  federal  adjusted  gross
income,  increased  by  reductions for taxes described in paragraphs two
and three of subsection (f) of section thirteen hundred sixty-six of the
internal revenue code, as such portion shall be determined  under  regu-
lations  of  the commissioner consistent with the applicable methods and
rules for allocation under article nine-A [or thirty-two] of this  chap-
ter,  regardless of whether or not such item or reduction is included in
entire net income under article nine-A [or thirty-two] for the tax year.
If a nonresident is a shareholder in an S corporation where the election
provided for in subsection (a) of section  six  hundred  sixty  of  this
article  is in effect, and the S corporation has distributed an install-
ment obligation under section 453(h)(1)(A) of the Internal Revenue Code,
then any gain recognized on the receipt of payments from the installment
obligation for federal income tax purposes will be treated as  New  York
source income allocated in a manner consistent with the applicable meth-
ods  and  rules  for  allocation under article nine-A [or thirty-two] of

S. 6359--D                         156                        A. 8559--D

this chapter in the year that the assets were sold. In addition, if  the
shareholders  of  the  S corporation have made an election under section
338(h)(10) of the Internal Revenue Code, then any gain recognized on the
deemed asset sale for federal income tax purposes will be treated as New
York  source income allocated in a manner consistent with the applicable
methods and rules for allocation under article nine-A [or thirty-two] of
this  chapter  in  the  year  that  the  shareholder  made  the  section
338(h)(10) election. For purposes of a section 338(h)(10) election, when
a  nonresident  shareholder  exchanges his or her S corporation stock as
part of the deemed liquidation, any gain or  loss  recognized  shall  be
treated  as the disposition of an intangible asset and will not increase
or offset any gain recognized on the deemed assets sale as a  result  of
the section 338(h)(10) election.
  S 72. Subparagraph (A) of paragraph 4 of subsection (c) of section 658
of the tax law, as amended by section 1 of part DD of chapter 686 of the
laws of 2003, is amended to read as follows:
  (A) General. Every entity which is a partnership, other than a public-
ly traded partnership as defined in section 7704 of the federal Internal
Revenue Code, subchapter K limited liability company or an S corporation
for  which  the  election  provided for in subsection (a) of section six
hundred sixty of this [article] PART is in effect, which  has  partners,
members  or  shareholders  who  are  nonresident individuals, as defined
under subsection (b) of section six hundred five of this article,  or  C
corporations,  and  which  has any income derived from New York sources,
determined in accordance  with  the  applicable  rules  of  section  six
hundred thirty-one of this article as in the case of a nonresident indi-
vidual,  shall  pay estimated tax on such income on behalf of such part-
ners, members or shareholders in the manner and at the times  prescribed
by  subsection  (c)  of section six hundred eighty-five of this article.
For purposes of this paragraph, the term "estimated tax"  shall  mean  a
partner's,  member's  or  shareholder's  distributive  share or pro rata
share of the entity income derived from New York sources, multiplied  by
the  highest  rate  of tax prescribed by section six hundred one of this
article for the taxable year of any partner, member or  shareholder  who
is  an  individual  taxpayer,  or  paragraph  (a)  of subdivision one of
section two hundred ten of this chapter for  the  taxable  year  of  any
partner,  member or shareholder which is a C corporation, whether or not
such C corporation is subject to tax under article nine, nine-A[,  thir-
ty-two,]  or  thirty-three of this chapter, and reduced by the distribu-
tive share or pro rata share of any credits determined under section one
hundred eighty-seven, one  hundred  eighty-seven-a,  six  hundred  six[,
fourteen  hundred  fifty-six] or fifteen hundred eleven of this chapter,
whichever is applicable, derived from the entity.
  S 73. Subsections  (a)  and  (h)  of  section  660  of  the  tax  law,
subsection (a) as amended by section 50 and subsection (h) as amended by
section  66 of part A of chapter 389 of the laws of 1997, are amended to
read as follows:
  (a) Election. If a corporation  is  an  eligible  S  corporation,  the
shareholders  of  the  corporation  may elect in the manner set forth in
subsection (b) of this section to  take  into  account,  to  the  extent
provided for in this article (or in article thirteen of this chapter, in
the case of a shareholder which is a taxpayer under such article), the S
corporation  items  of  income, loss, deduction and reductions for taxes
described in paragraphs two and three of subsection (f) of section thir-
teen hundred sixty-six of the internal revenue code which are taken into
account for federal  income  tax  purposes  for  the  taxable  year.  No

S. 6359--D                         157                        A. 8559--D

election  under this subsection shall be effective unless all sharehold-
ers of the corporation have so elected. An eligible S corporation is (i)
an S corporation which is subject to tax under article nine-A [or  thir-
ty-two] of this chapter, OR (ii) an S corporation which is the parent of
a qualified subchapter S subsidiary subject to tax under article nine-A,
where  the  shareholders of such parent corporation are entitled to make
the election under this subsection by reason of  subparagraph  three  of
paragraph  (k)  of subdivision nine of section two hundred eight of this
chapter[; or (iii) an S corporation which is the parent of  a  qualified
subchapter  S corporation subject to tax under article thirty-two, where
the shareholders of such parent are entitled to make the election  under
this  subsection  by  reason  of  paragraph  three  of subsection (o) of
section fourteen hundred fifty-three of this chapter].
  (h) Cross reference. For definitions relating to S  corporations,  see
subdivision  one-A of section two hundred eight [and subsections (f) and
(g) of section fourteen hundred fifty] of this chapter.
  S 74. Paragraph 1 of subsection (i) of section 660 of the tax law,  as
added  by  section  1  of  part  L of chapter 60 of the laws of 2007, is
amended to read as follows:
  (1) Notwithstanding the provisions in subsection (a) of this  section,
in  the  case  of an eligible S corporation for which the election under
subsection (a) of this section is not in effect for the current  taxable
year,  the  shareholders of an eligible S corporation are deemed to have
made that election effective for the  eligible  S  corporation's  entire
current  taxable year, if the eligible S corporation's investment income
for the current taxable year is more than fifty percent of  its  federal
gross  income  for  such  year  [provided that this subsection shall not
apply to an eligible S corporation that is subject to tax under  article
thirty-two  of this chapter]. IN DETERMINING AN ELIGIBLE S CORPORATION'S
INVESTMENT INCOME, THE INVESTMENT INCOME OF  A  QUALIFIED  SUBCHAPTER  S
SUBSIDIARY  OWNED  DIRECTLY  OR INDIRECTLY BY THE ELIGIBLE S CORPORATION
SHALL BE INCLUDED.
  S 75. Paragraph 3 of subsection (c) of section 1085 of the tax law, as
amended by section 15 of part Y of chapter 63 of the laws  of  2000,  is
amended to read as follows:
  (3)  The  provisions of this subsection and subsections (d) and (e) of
this section shall apply to the failure of a taxpayer to file a declara-
tion of estimated tax surcharge or the failure to pay all or any part of
an amount which is applied as an installment against such estimated  tax
surcharge  pursuant  to sections one hundred ninety-seven-a, one hundred
ninety-seven-b, two hundred thirteen-a, two hundred  thirteen-b,  [four-
teen  hundred  sixty, fourteen hundred sixty-one,] fifteen hundred thir-
teen and fifteen hundred fourteen  of  this  chapter.  For  purposes  of
applying this section and subsections (d) and (e) of this section to the
estimated  tax surcharge, where appropriate the term "tax" shall be read
to mean "tax surcharge," and the terms "amount  required  to  be  paid,"
"amount  which  would  be  required to be paid," and "amount which would
have been required to be paid" shall be computed as the product  of  (1)
such  amount computed without regard to the tax surcharges imposed under
sections  one  hundred  eighty-four-a,  one  hundred  eighty-six-c,  one
hundred  eighty-eight, two hundred nine-A, two hundred nine-B, [fourteen
hundred fifty-five-A, fourteen hundred  fifty-five-B,]  fifteen  hundred
five-a,  and  fifteen  hundred  twenty  of this chapter, and (2) the MTA
percentage. The term "MTA percentage" shall mean the product of (A)  the
tax rate applicable under such sections imposing such surcharges and (B)
the  percentage  utilized  in  determining the portion of the taxpayer's

S. 6359--D                         158                        A. 8559--D

business activity carried on within the metropolitan commuter  transpor-
tation district under such sections.
  S  76.  The  opening  paragraph  of subparagraph (A) of paragraph 3 of
subsection (d) of section 1085 of the tax law, as amended by chapter 170
of the laws of 1994, is amended to read as follows:
  An amount equal to ninety-one percent of the tax for the taxable  year
computed  on all items entering into the computation of the tax or taxes
of the taxpayer for the taxable year under article nine, nine-A[,  thir-
ty-two]  or  thirty-three of this chapter. For purposes of computing the
tax, all items of receipts, income and expenses shall be  placed  on  an
annualized basis--
  S  77. Clause (i) of subparagraph (A) of paragraph 4 of subsection (d)
of section 1085 of the tax law, as amended by chapter 57 of the laws  of
1993, is amended to read as follows:
  (i)  take  the items entering into the computation of the tax or taxes
of the taxpayer for the taxable year under article nine, nine-A[,  thir-
ty-two] or thirty-three of this chapter, for all months during the taxa-
ble year preceding the filing month,
  S 78. Paragraph 5 of subsection (d) of section 1085 of the tax law, as
added by chapter 61 of the laws of 1989, is amended to read as follows:
  (5)  In the case of any declaration installment, any reduction in such
installment resulting from the application of paragraph three or four of
this subsection shall be recaptured by increasing the amount of the next
installment determined under paragraph one or two of this subsection  or
paragraph  one  of  subsection (c) of this section by the amount of such
reduction (and by increasing subsequent installments to the extent  that
the  reduction has not previously been recaptured under this paragraph).
For purposes of the preceding sentence, a declaration installment  means
any installment of estimated tax other than the mandatory first install-
ment  required  under  paragraph  (a)  of subdivision one of section one
hundred ninety-seven-b, subdivision (a) of  section  two  hundred  thir-
teen-b[, subsection (a) of section fourteen hundred sixty-one] or subdi-
vision (a) of section fifteen hundred fourteen of this chapter.
  S 79. Paragraph 1 of subsection (e) of section 1085 of the tax law, as
amended  by  section 28-p of part H-3 of chapter 62 of the laws of 2003,
is amended to read as follows:
  (1) Paragraphs (1) and (2) of subsection (d) of this section shall not
apply in the case of any corporation (or  any  predecessor  corporation)
which had [entire net] BUSINESS income, or the portion thereof allocated
within  the  state,  of one million dollars or more for any taxable year
during the three taxable years immediately preceding  the  taxable  year
involved;  provided,  however, that in the case of a corporation subject
to tax under section fifteen hundred two-a of this  chapter,  paragraphs
(1)  and  (2)  of subsection (d) of this section shall not apply if such
corporation had entire net income,  or  the  portion  thereof  allocated
within  the  state,  of one million dollars or more for any of the three
taxable years immediately preceding the taxable year involved, or if the
direct premiums subject to tax under section fifteen  hundred  two-a  of
this  chapter of the corporation for any of such three preceding taxable
years beginning on or after January first, two thousand three equals  or
exceeds three million seven hundred fifty thousand dollars.
  S  80.  Subsections  (m)  and  (o)  of section 1085 of the tax law are
REPEALED.
  S 81. Clause (ii) of subparagraph (B) of  paragraph  2  of  subsection
(q),  paragraph  3  of subsection (s) and the closing paragraph of para-
graph 1 of subsection (t) of section 1085 of the tax law,  as  added  by

S. 6359--D                         159                        A. 8559--D

section  10  of part N of chapter 61 of the laws of 2005, are amended to
read as follows:
  (ii)  fifty percent of the gross income that the organizer or material
advisor derived with respect to activities that were the basis  for  the
requirement to file, disclose or provide information pursuant to section
six  thousand  eleven  of  the internal revenue code, to the extent such
gross income is attributable to the avoidance of any tax  imposed  under
article nine, nine-A[, thirty-two,] or thirty-three of this chapter.
  (3)  For  purposes  of  this  subsection,  the term "understatement of
liability" means any understatement  of  the  net  amount  payable  with
respect  to any tax imposed under article nine, nine-A[, thirty-two,] or
thirty-three of this chapter or any  overstatement  of  the  net  amount
creditable or refundable with respect to any such tax.
shall  pay,  with respect to each activity described in subparagraph (A)
of this paragraph, a penalty equal to one thousand dollars  or,  if  the
person  establishes  that it is lesser, one hundred percent of the gross
income derived (or to be derived) by such person from such  activity  to
the  extent  such gross income is attributed to the avoidance of any tax
imposed under articles nine, nine-A[,  thirty-two]  or  thirty-three  of
this  chapter;  provided,  however,  that if an activity with respect to
which a penalty imposed  under  this  subsection  involves  a  statement
described  in  clause  (i)  of subparagraph (B) of paragraph one of this
subsection, the penalty shall be equal to fifty  percent  of  the  gross
income derived (or to be derived) from that activity within the state by
the  person on which the penalty is imposed. For purposes of the preced-
ing sentence, activities described in clause (i) of subparagraph (A)  of
this  paragraph  with  respect  to  each  entity or arrangement shall be
treated as a separate activity and participation in each sale  described
in  clause (ii) of subparagraph (A) of this paragraph shall be so treat-
ed.
  S 82. The opening paragraph of subsection (c) of section 1087  of  the
tax  law,  as  separately amended by chapters 760 and 770 of the laws of
1992, is amended to read as follows:
  If a taxpayer is required by subdivision three of section two  hundred
eleven[,  subsection (e) of section fourteen hundred sixty-two] or para-
graph one of subdivision (e) of section fifteen hundred fifteen OF  THIS
CHAPTER, to file a report or amended return in respect of (i) a decrease
or  increase  in  federal  taxable income or federal alternative minimum
taxable income or federal tax, or (ii) a federal change or correction or
renegotiation, or computation or recomputation of tax, which is  treated
in  the  same manner as if it were an overpayment for federal income tax
purposes, claim for credit or refund of any resulting overpayment of tax
shall be filed by the taxpayer within  two  years  from  the  time  such
report  or amended return was required to be filed with the commissioner
[of taxation and finance]. If the report or amended return  required  by
any  such provision of law is not filed within the period therein speci-
fied, no interest shall be payable on any claim for credit or refund  of
the  overpayment  attributable  to the federal change or correction. The
amount of such credit or refund--
  S 83. Subsection (g) of section 1088 of the tax  law,  as  amended  by
chapter  61 of the laws of 1989 and relettered by chapter 55 of the laws
of 1992, is amended to read as follows:
  (g) Cross-reference.--For provision with  respect  to  interest  after
failure  to  file  a report or amended return under subdivision three of
section two hundred eleven[, subsection (e) of section fourteen  hundred
sixty-two]  or  paragraph  one  of  subdivision  (e)  of section fifteen

S. 6359--D                         160                        A. 8559--D

hundred fifteen, see subsection (c) of section one thousand  eighty-sev-
en.
  S 84. Paragraph 2 of subsection (b) of section 1096 of the tax law, as
amended  by  chapter  411  of  the  laws  of 1986, is amended to read as
follows:
  (2) The [tax commission] COMMISSIONER may take any action under  para-
graph  one  of  this  subdivision  to  inquire into the commission of an
offense connected with the administration or enforcement of this article
or article nine, [nine-a] NINE-A,  thirteen,  [thirteen-a,  thirty-two,]
THIRTEEN-A  or  thirty-three  of  this  chapter, provided, however, that
notwithstanding the provisions of section one  hundred  seventy-four  of
this  chapter  no  such  action  shall  be  taken when a referral by the
department or the [tax commission] COMMISSIONER to the attorney general,
a district attorney or any other  prosecutorial  agency  is  in  effect.
Provided,  however,  the [tax commission] COMMISSIONER shall have power,
during the period when such referral is in  effect,  to  examine  or  to
cause  to have examined, by any agent or representative designated by it
for that purpose, any books, papers, records or memoranda  bearing  upon
the  matters  required  to  be included in the return, where such books,
papers, records or memoranda are in its possession, or where such books,
papers, records or memoranda are  in  the  possession  of  the  attorney
general,  district  attorney or other prosecutorial agency to which such
referral is made.
  S 85. Paragraph 1 of subsection (e) of section 1096 of the tax law, as
amended by section 8 of subpart D of part V1 of chapter 57 of  the  laws
of 2009, is amended to read as follows:
  (1)  Authority to set interest rates.---The commissioner shall set the
overpayment and underpayment rates of interest to be  paid  pursuant  to
sections  two  hundred  thirteen,  two  hundred  thirteen-b, two hundred
fifty-eight, two hundred sixty-three, two hundred ninety-four, one thou-
sand eighty-four, one thousand eighty-five[,] AND one  thousand  eighty-
eight[,  fourteen hundred sixty-one and fourteen hundred sixty-three] of
this chapter, but if no such rate or rates of  interest  are  set,  such
overpayment  rate shall be deemed to be set at six percent per annum and
such underpayment rate shall be deemed to be set at seven  and  one-half
percent  per annum. Such overpayment and underpayment rates shall be the
rates prescribed in paragraph two of this subsection, but the  underpay-
ment  rate  shall not be less than seven and one-half percent per annum.
Any such rates set by the commissioner shall  apply  to  taxes,  or  any
portion  thereof, which remain or become due or overpaid on or after the
date on which such rates become effective  and  shall  apply  only  with
respect  to  interest  computed or computable for periods or portions of
periods occurring in the period during which such rates are in effect.
  S 86. Subdivision (b) of section 1201-a of the tax law, as amended  by
section  5  of  part  Y of chapter 62 of the laws of 2006, is amended to
read as follows:
  (b) Empire state film production credit. Any city in this state having
a population of one million or more, acting through its  local  legisla-
tive body, is hereby authorized to adopt and amend local laws to allow a
credit  against the general corporation tax and the unincorporated busi-
ness tax imposed pursuant to the  authority  of  chapter  seven  hundred
seventy-two  of  the  laws  of nineteen hundred sixty-six which shall be
substantially identical to the credit allowed under section  twenty-four
of  this chapter, except that (A) the percentage of qualified production
costs used to calculate such credit shall be five percent, (B)  whenever
such  section twenty-four references the state, such words shall be read

S. 6359--D                         161                        A. 8559--D

as referencing the city, (C) such credit shall  be  allowed  only  to  a
taxpayer  which  is  a  qualified  film  production company, and (D) the
effective date of such credit shall be July  first,  two  thousand  six.
Such  credit  shall  be  applied  in a manner consistent with the credit
allowed under subdivision [thirty-six] TWENTY  of  section  two  hundred
[ten]  TEN-B  of  this  chapter  except as may be necessary to take into
account differences between the general corporation tax and the unincor-
porated business tax.
  S 87. Subdivision (c) of section 1201-a of the tax law, as amended  by
chapter 300 of the laws of 2007, is amended to read as follows:
  (c)  Empire state commercial production credit. Any city in this state
having a population of one million or more,  acting  through  its  local
legislative  body, is hereby authorized to adopt and amend local laws to
allow a credit against the general corporation tax and the unincorporat-
ed business tax imposed pursuant  to  the  authority  of  chapter  seven
hundred  seventy-two  of  the  laws  of nineteen hundred sixty-six which
shall be  substantially  identical  to  the  credit  allowed  under  the
provisions  of section twenty-eight of this chapter, except that (A) the
percentage of qualified production costs used to calculate  such  credit
shall be five percent, (B) whenever such section twenty-eight references
the  state,  such  words shall be read as referencing the city, (C) such
credit shall be allowed only to a taxpayer that is a  qualified  commer-
cial production company, and (D) the effective date of such credit shall
be  as  provided in local laws. Such credit shall be applied in a manner
consistent with the  credit  allowed  under  subdivision  [thirty-eight]
TWENTY-THREE  of  section two hundred [ten] TEN-B of this chapter except
as may be necessary to take into account differences between the general
corporation tax and unincorporated business tax.
  S 88. The section heading and paragraphs 1 and 3 of subdivision (a) of
section 1505-a of the tax law, the section heading as added  by  chapter
11  of  the  laws  of  1983 and paragraphs 1 and 3 of subdivision (a) as
amended by section 6 of part A of chapter 59 of the laws  of  2013,  are
amended to read as follows:
  [Temporary  metropolitan]  METROPOLITAN  transportation  business  tax
surcharge on insurance corporations.
  (1) Every domestic insurance corporation and every  foreign  or  alien
insurance corporation, and every life insurance corporation described in
subdivision  (b) of section fifteen hundred one of this article, for the
privilege of exercising its corporate franchise, or of  doing  business,
or  of employing capital, or of owning or leasing property in the metro-
politan commuter transportation district in  a  corporate  or  organized
capacity,  or  of  maintaining  an  office  in the metropolitan commuter
transportation district, [for all or  any  part  of  its  taxable  years
commencing  on  or after January first, nineteen hundred eighty-two, but
ending before December  thirty-first,  two  thousand  eighteen,]  except
corporations  specified  in  subdivision  (c) of section fifteen hundred
twelve of this article, shall annually pay, in  addition  to  the  taxes
otherwise  imposed by this article, a tax surcharge on the taxes imposed
under this article after the deduction of any credits  otherwise  allow-
able  under this article as allocated to such district. Such taxes shall
be allocated to  such  district  for  purposes  of  computing  such  tax
surcharge upon taxpayers subject to tax under subdivision (b) of section
fifteen  hundred ten of this article by applying the methodology, proce-
dures and computations set forth in subdivisions (a) and (b) of  section
fifteen  hundred  four  of this article, except that references to terms
denoting New York premiums, and total wages, salaries, personal  service

S. 6359--D                         162                        A. 8559--D

compensation  and  commissions within New York shall be read as denoting
within the  metropolitan  commuter  transportation  district  and  terms
denoting  total  premiums  and  total  wages, salaries, personal service
compensation and commissions shall be read as denoting within the state.
If it shall appear to the commissioner that the application of the meth-
odology,  procedures and computations set forth in such subdivisions (a)
and (b) does not properly reflect the activity, business or income of  a
taxpayer  within the metropolitan commuter transportation district, then
the commissioner shall be authorized, in the commissioner's  discretion,
to  adjust such methodology, procedures and computations for the purpose
of allocating such taxes by:
  (A) excluding one or more factors therein;
  (B) including one or more other factors  therein,  such  as  expenses,
purchases,  receipts  other  than  premiums,  real  property or tangible
personal property; or
  (C) any other similar or different method which allocates  such  taxes
by  attributing a fair and proper portion of such taxes to the metropol-
itan commuter transportation district. The  commissioner  from  time  to
time  shall  publish all rulings of general public interest with respect
to any application of the provisions  of  the  preceding  sentence.  The
commissioner  may  promulgate rules and regulations to further implement
the provisions of this section.
  (3) Such tax surcharge shall be computed  at  the  rate  of  [eighteen
percent  of  the  taxes  imposed  under sections fifteen hundred one and
fifteen hundred ten of  this  article  as  limited  by  section  fifteen
hundred  five  of  this article, as allocated to such district, for such
taxable years or any part of such taxable years ending  before  December
thirty-first,  nineteen  hundred eighty-three after the deduction of any
credits otherwise allowable under this article, at the rate of seventeen
percent of the taxes imposed under such sections as limited  by  section
fifteen hundred five of this article, as allocated to such district, for
such  taxable years or any part of such taxable years ending on or after
December thirty-first, nineteen hundred eighty-three and before  January
first,  two  thousand three after the deduction of any credits otherwise
allowable under this article, and at the rate of] seventeen  percent  of
the  taxes  imposed  under sections fifteen hundred one, fifteen hundred
two-a, and fifteen hundred ten of this article, as limited or  otherwise
determined  by subdivision (a) or (b) of section fifteen hundred five of
this article, as allocated to such district, [for such taxable years  or
any  part  of such taxable years ending after December thirty-first, two
thousand two] after the deduction of  any  credits  otherwise  allowable
under  this  article[; provided, however, that the tax surcharge imposed
by this section shall not be imposed upon any  taxpayer  for  more  than
four  hundred  thirty-two  months].  Provided  however, that for taxable
years commencing on or after July first, two thousand, and in  the  case
of  taxpayers subject to tax under section fifteen hundred two-a of this
article, for taxable years of such taxpayers beginning on or after  July
first,  two  thousand and before January first, two thousand three, such
surcharge shall be calculated as if (i) the rate  of  the  tax  computed
under paragraph one of subdivision (a) of section fifteen hundred two of
this article was nine percent and (ii) the rate of the limitation on tax
set  forth in section fifteen hundred five of this article for domestic,
foreign and alien insurance corporations except  life  insurance  corpo-
rations was two and six-tenths percent.
  S  89.  Section 1825 of the tax law, as amended by section 2 of part E
of chapter 25 of the laws of 2009, is amended to read as follows:

S. 6359--D                         163                        A. 8559--D

  S 1825. Violation of secrecy provisions of the  tax  law.--Any  person
who  violates  the  provisions of subdivision (b) of section twenty-one,
subdivision one of section two hundred two, subdivision eight of section
two hundred eleven, subdivision (a) of section three  hundred  fourteen,
subdivision  one  or  two  of section four hundred thirty-seven, section
four hundred eighty-seven,  subdivision  one  or  two  of  section  five
hundred  fourteen,  subsection  (e) of section six hundred ninety-seven,
subsection (a) of section nine hundred ninety-four, subdivision  (a)  of
section  eleven  hundred forty-six, section twelve hundred eighty-seven,
subdivision (a) of section fourteen hundred eighteen, [subsection (a) of
section  fourteen  hundred  sixty-seven,]  subdivision  (a)  of  section
fifteen  hundred  eighteen,  subdivision  (a) of section fifteen hundred
fifty-five of this chapter, and subdivision (e) of  section  11-1797  of
the  administrative  code  of  the city of New York shall be guilty of a
misdemeanor.
  S 90. Subdivisions (s) and (t) of section 957 of the general municipal
law, as amended by section 1 of part S1 of chapter 57  of  the  laws  of
2009, are amended to read as follows:
  (s)  "Qualified  investment  project" shall mean a project (i) located
within an empire zone, (ii) at which five hundred or more jobs  will  be
created,  provided such jobs are new to the state and are in addition to
any other jobs previously created by the owner of such  project  in  the
state,  and  (iii)  which will consist of tangible personal property and
other tangible property, including buildings and  structural  components
of  buildings,  described  in  subparagraphs  (i), (ii), (iii), (iv) and
clause (A) or (C) of subparagraph (v) of paragraph  (b)  of  subdivision
[twelve-B]  THREE of section two hundred [ten] TEN-B of the tax law, the
basis of which for federal income tax  purposes  will  equal  or  exceed
seven hundred fifty million dollars. Provided however, the owner of such
project  does  not  employ more than two hundred persons in the state at
the time such project is commenced.
  (t) "Significant capital investment project" shall mean a project  (i)
located  within  an  empire  zone,  (ii)  which  will  be either a newly
constructed facility or a newly constructed addition to or expansion  of
a qualified investment project, consisting of tangible personal property
and  other  tangible property, including buildings and structural compo-
nents of buildings, described in subparagraphs (i),  (ii),  (iii),  (iv)
and  clause  (A) or (C) of subparagraph (v) of paragraph (b) of subdivi-
sion [twelve-B] THREE of section two hundred [ten] TEN-B of the tax law,
the basis of which for federal income tax purposes will equal or  exceed
seven  hundred  fifty  million dollars, (iii) which is constructed after
the basis for federal income tax purposes  of  the  property  comprising
such  qualified investment project equals or exceeds seven hundred fifty
million dollars, and (iv) at which five hundred or  more  jobs  will  be
created,  provided such jobs are new to the state and are in addition to
any other jobs previously created by the owner of such  project  in  the
state.
  S 91. Intentionally omitted.
  S 92. Intentionally omitted.
  S 93. Intentionally omitted.
  S 94. Intentionally omitted.
  S 95. Intentionally omitted.
  S 96. Intentionally omitted.
  S 97. Intentionally omitted.
  S 98. Intentionally omitted.

S. 6359--D                         164                        A. 8559--D

  S  99.  Notwithstanding  any  provisions  of  law  to the contrary and
notwithstanding the repeal of article 32 of the tax law by  section  one
of  this act, the repeal of section 180 of the tax law by section two of
this act and the repeal of section 181 of the tax law by  section  three
of  this  act,  all  provisions  of  such  article and such sections, in
respect to the imposition, exemption, assessment, payment, payment over,
determination, collection, and credit or refund  of  tax,  interest  and
penalty imposed thereunder, the filing of forms and returns, the preser-
vation  of records for the purposes of such tax, the secrecy of returns,
the disposition of revenues, and the civil and criminal penalties appli-
cable to the violation of the provisions of such  article  32  and  such
sections  180  and  181,  shall  continue  in full force and effect with
respect to all such tax accrued for taxable years beginning before Janu-
ary 1, 2015;  and  all  actions  and  proceedings,  civil  or  criminal,
commenced  or  authorized  to  be  commenced  under  or by virtue of any
provision of such article 32 or by  virtue  of  any  provision  of  such
section  180  or  181  so  repealed, and pending or able to be commenced
immediately prior to the taking effect of such repeal, may be commenced,
prosecuted and defended to final effect in the same manner as they might
if such provisions were not so repealed.
  S 100. Subdivision 1 of section 187 of the  tax  law,  as  amended  by
chapter 2 of the laws of 1995, is amended to read as follows:
  1.  A  taxpayer  shall be allowed a credit, to be credited against the
taxes imposed by this article, other than the taxes and fees imposed  by
sections  [one  hundred  eighty,  one  hundred  eighty-one,] one hundred
eighty-six-a and one hundred eighty-six-e of this chapter. The amount of
the credit shall be  the  amount  of  the  special  additional  mortgage
recording  tax paid by the taxpayer pursuant to the provisions of subdi-
vision one-a of section two hundred fifty-three of this chapter on mort-
gages recorded on and after January  first,  nineteen  hundred  seventy-
nine.  Provided,  however,  that  the  amount  of  such credit allowable
against the tax imposed by section one hundred eighty-four of this chap-
ter shall be the excess of the amount of such special  additional  mort-
gage  recording  tax  paid over the amount of any credit allowed by this
section against the tax imposed by section one hundred  eighty-three  of
this chapter. Provided further, however, no credit shall be allowed with
respect  to  a  mortgage  of real property principally improved or to be
improved by one or more structures containing in the aggregate not  more
than  six  residential dwelling units, each dwelling unit having its own
separate cooking facilities, where the real property is located  in  one
or more of the counties comprising the metropolitan commuter transporta-
tion  district and where the mortgage is recorded on or after May first,
nineteen hundred eighty-seven.  Provided  further,  however,  no  credit
shall be allowed with respect to a mortgage of real property principally
improved  or  to be improved by one or more structures containing in the
aggregate not more than six residential dwelling  units,  each  dwelling
unit having its own separate cooking facilities, where the real property
is  located  in the county of Erie and where the mortgage is recorded on
or after May first, nineteen hundred eighty-seven.
  S 101. Subdivision 1 of section 187-a of the  tax  law,  as  added  by
chapter 142 of the laws of 1997, is amended to read as follows:
  1.    Allowance of credit. A taxpayer shall be allowed a credit, to be
computed as hereinafter provided, against  the  taxes  imposed  by  this
article,  other  than the taxes imposed by sections [one hundred eighty,
one hundred eighty-one,] one hundred eighty-six-a, one  hundred  eighty-
six-e  and one hundred eighty-nine of this article, for employing within

S. 6359--D                         165                        A. 8559--D

the state a qualified employee. Provided, however, the amount of  credit
allowed  by  this section against the tax imposed by section one hundred
eighty-four of this article shall be the excess of the  credit  computed
under  this  section  over  the amount of credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  S  102.  Subdivision  1  of  section 190 of the tax law, as amended by
section 17 of part B of chapter 58 of the laws of 2004,  is  amended  to
read as follows:
  1.  General.  A  taxpayer  shall  be  allowed a credit against the tax
imposed by this article[, other than  the  taxes  and  fees  imposed  by
sections one hundred eighty and one hundred eighty-one of this article,]
equal  to twenty percent of the premium paid during the taxable year for
long-term care insurance. In order  to  qualify  for  such  credit,  the
taxpayer's premium payment must be for the purchase of or for continuing
coverage under a long-term care insurance policy that qualifies for such
credit  pursuant  to  section  one thousand one hundred seventeen of the
insurance law.
  S 103. Subdivision 5 of section 192 of the tax law is REPEALED.
  S 104. Clauses 1 and 2 of subparagraph (A)  and  subparagraph  (B)  of
paragraph (iii) of subdivision 9 of section 16-v of section 1 of chapter
174  of  the laws of 1968 constituting the urban development corporation
act, as added by section 1 of part C of chapter 59 of the laws of  2013,
is amended to read as follows:
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under the following provisions of the  tax  law:  article
nine-A; section one hundred eighty-three, OR one hundred eighty-four [or
one  hundred eighty-five] of article nine; [article thirty-two] or arti-
cle thirty-three; or
  (2) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable  or  previously  taxable under the
following provisions of the tax law: article nine-A; section one hundred
eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
y-five or former section one hundred eighty-six of article nine;  FORMER
article thirty-two; article thirty-three; article twenty-three, or would
have  been subject to tax under such article twenty-three (as such arti-
cle was in effect on January first,  nineteen  hundred  eighty)  or  the
income  (or  losses) of which is (or was) includable under article twen-
ty-two; or
  (B) a sole proprietorship, partnership, limited  partnership,  limited
liability  company,  or  New  York  subchapter S corporation that is not
substantially similar in operation and in ownership to a business entity
(or entities) taxable, or previously taxable, under  article  nine-A  of
the  tax law, section one hundred eighty-three, one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  former  section  one  hundred
eighty-six  of article nine of the tax law, FORMER article thirty-two or
ARTICLE thirty-three of the tax law, article twenty-three of the tax law
or which would have been subject to tax under such article  twenty-three
(as  such  article  was  in  effect  on  January first, nineteen hundred
eighty) or the income (or losses) of which is (or was) includable  under
article twenty-two of the tax law; and
  S  105. Section 206 of the tax law, as added by chapter 69 of the laws
of 1978, is amended to read as follows:

S. 6359--D                         166                        A. 8559--D

  S 206.   Deposit and disposition of  revenue.    The  [license  fees,]
taxes,  percentage,  interest  and other charges imposed by this article
shall be collected and deposited and receipts  therefor  issued  by  the
[tax  commission,  except  that  such  license  fees, taxes, percentage,
interest and other charges imposed by section one hundred eighty of this
chapter shall be collected and deposited and receipts therefor issued by
the  proper  state officer in accordance with the provisions of subdivi-
sion two of section one hundred eighty of  this  chapter,]  COMMISSIONER
and  all  revenues  so  collected  or  received  shall  be deposited and
disposed of pursuant to the provisions of section one  hundred  seventy-
one-a of this chapter.
  S  106.  Subsection  (a)  of  section 1080 of the tax law, as added by
chapter 188 of the laws of 1964, is amended to read as follows:
  (a) General.--- The provisions of this  article  shall  apply  to  the
administration  of  and the procedures with respect to the taxes imposed
by articles nine [(except section one  hundred  eighty)],  AND  nine-a[,
nine-b  and  nine-c] of this chapter for taxable years or periods ending
on or after December thirty-first, nineteen hundred sixty-four.
  S 107. Subdivisions (a) and (c) of section 1809 of  the  tax  law,  as
added  by  section 1 of subpart A of part S of chapter 57 of the laws of
2010, are amended to read as follows:
  (a) Any person who, with intent to evade payment of  any  tax  imposed
under  article nine [(other than under section one hundred eighty or one
hundred eighty-one)], nine-A, thirteen,  [thirty-two,]  thirty-three  or
thirty-three-A  of  this  chapter,  fails to file a return or report for
three consecutive taxable years shall be guilty of  a  class  E  felony,
provided  that such person had an unpaid tax liability, in excess of the
threshold amount with respect to each of the three  consecutive  taxable
years.  The threshold amount in the case of a taxable year under article
nine-A of this chapter ending after  June  thirtieth,  nineteen  hundred
eighty-nine  is  the  applicable  fixed  dollar minimum prescribed under
paragraph (d) of subdivision one of section  two  hundred  ten  of  this
chapter. In the event such fixed dollar minimum is less than two hundred
fifty  dollars, the threshold amount in the case of such taxable year is
two hundred fifty dollars. In all other cases the  threshold  amount  is
two hundred fifty dollars.
  (c)  As  used  in  this section, the terms "return" and "report" shall
mean a return or report required under section one  hundred  ninety-two,
two  hundred  eleven,  two hundred ninety-four, [fourteen hundred sixty-
two,] fifteen hundred fifteen or  fifteen  hundred  fifty-four  of  this
chapter.    It  shall  not  include  any return or report referred to in
section one hundred ninety-seven-a, two  hundred  thirteen-a,  [fourteen
hundred sixty] or fifteen hundred thirteen of this chapter.
  S  108.  Paragraphs (d), (e), (g), (h) and (q) of section 104-A of the
business corporation law, subdivisions (d), (e) and (q)  as  amended  by
chapter 166 of the laws of 1991, subdivision (g) as added by chapter 591
of  the  laws  of 1982, and subdivision (h) as amended by chapter 117 of
the laws of 1986, are amended to read as follows:
  (d) For filing a certificate of incorporation pursuant to section four
hundred two of this chapter, one hundred twenty-five dollars  [plus  the
tax on shares prescribed by section one hundred eighty of the tax law].
  (e)  For  filing  a certificate of amendment pursuant to section eight
hundred five of this chapter, sixty dollars  [plus  the  tax  on  shares
prescribed  by section one hundred eighty of the tax law if such certif-
icate shows a change of shares].

S. 6359--D                         167                        A. 8559--D

  (g) For filing a restated certificate  of  incorporation  pursuant  to
section eight hundred seven of this chapter, sixty dollars [plus the tax
on  shares  prescribed  by  section one hundred eighty of the tax law if
such certificate shows a change of shares].
  (h)  For  filing  a certificate of merger or consolidation pursuant to
section nine hundred four of this chapter, or a certificate of  exchange
pursuant  to  section nine hundred thirteen (other than paragraph (g) of
section nine hundred thirteen) of this chapter, sixty dollars [plus  the
tax on shares prescribed by section one hundred eighty of the tax law if
such certificate shows a change of shares].
  (q)  For  filing  a  certificate  of  incorporation  by a professional
service corporation pursuant to section fifteen hundred  three  of  this
chapter,  one  hundred  twenty-five  dollars  [plus  the  tax  on shares
prescribed by section one hundred eighty of the tax law].
  S 109. Subdivision 8 of section 7-a of the general  associations  law,
as  added  by  chapter  575  of  the laws of 1964, is amended to read as
follows:
  8. The provisions of section ninety-six of the executive law prescrib-
ing the fee to be collected by the department  of  state  for  filing  a
certificate  of  incorporation  under the business corporation law shall
apply to the certificate of incorporation to be filed pursuant  to  this
section[,  and  the  organization  tax payable under section one hundred
eighty of the tax law in respect of a corporation formed under the busi-
ness corporation law shall be paid before the department of state  shall
file such certificate of incorporation].
  S  110. Paragraphs 1 and 2 of subdivision (l) of section 11-640 of the
administrative code of the city of New York, as amended by section 3  of
part R of chapter 59 of the laws of 2012, is amended to read as follows:
  (1) Notwithstanding anything to the contrary contained in this section
other  than  subdivision  (m) of this section, a corporation that was in
existence before January first, two thousand [twelve] FOURTEEN  and  was
subject to tax under subchapter two of this chapter for its last taxable
year  beginning  before  January  first, two thousand [twelve] FOURTEEN,
shall continue to be taxable under such subchapter for all taxable years
beginning on or after January first, two thousand [twelve] FOURTEEN  and
before  January  first, two thousand [fifteen] SEVENTEEN.  The preceding
sentence shall not apply to any taxable year during  which  such  corpo-
ration  is  a  banking  corporation  described in paragraphs one through
eight of subdivision (a) of this section.   Notwithstanding anything  to
the  contrary  contained  in  this section other than subdivision (m) of
this section, a banking corporation or corporation that was in existence
before January first, two thousand [twelve] FOURTEEN and was subject  to
tax  under  this  subchapter  for its last taxable year beginning before
January first, two thousand [twelve]  FOURTEEN,  shall  continue  to  be
taxable  under  this  subchapter  for  all taxable years beginning on or
after January first, two thousand [twelve] FOURTEEN and  before  January
first,  two  thousand  [fifteen]  SEVENTEEN only if the corporation is a
banking corporation as defined in subdivision (a) of this section or the
corporation satisfies the requirements for a corporation to elect to  be
taxable  under  this  subchapter. Provided further, that nothing in this
subdivision shall prohibit a corporation that elected pursuant to subdi-
vision (d) of this section to be taxable under subchapter  two  of  this
chapter  from  revoking that election in accordance with subdivision (d)
of this section. For purposes of this paragraph, a corporation shall  be
considered to be subject to tax under subchapter two of this chapter for
a  taxable  year if such corporation was not a taxpayer but was properly

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included in a combined report filed  pursuant  to  subdivision  four  of
section  11-605  of this chapter for such taxable year and a corporation
shall be considered to be subject to tax under  this  subchapter  for  a
taxable  year  if  such  corporation was not a taxpayer but was properly
included in a combined report filed pursuant to subdivision (f)  or  (g)
of section 11-646 of this part for such taxable year. A corporation that
was  in  existence  before January first, two thousand [twelve] FOURTEEN
but first becomes a taxpayer in a taxable year  beginning  on  or  after
January  first, two thousand [twelve] FOURTEEN and before January first,
two thousand [fifteen] SEVENTEEN, shall be considered  for  purposes  of
this  paragraph to have been subject to tax under subchapter two of this
chapter for its last taxable year beginning before  January  first,  two
thousand  [twelve]  FOURTEEN if such corporation would have been subject
to tax under such subchapter for such taxable year  if  it  had  been  a
taxpayer  during  such taxable year. A corporation that was in existence
before January first, two thousand [twelve] FOURTEEN but first becomes a
taxpayer in a taxable year beginning on  or  after  January  first,  two
thousand  [twelve]  FOURTEEN  and  before  January  first,  two thousand
[fifteen] SEVENTEEN, shall be considered for purposes of this  paragraph
to  have  been subject to tax under this subchapter for its last taxable
year beginning before January first, two thousand [twelve]  FOURTEEN  if
such  corporation  would  have been subject to tax under this subchapter
for such taxable year if it had been  a  taxpayer  during  such  taxable
year.
  (2) Notwithstanding anything to the contrary contained in this section
other  than  subdivision (m) of this section, a corporation formed on or
after January first, two thousand [twelve] FOURTEEN and  before  January
first,  two  thousand [fifteen] SEVENTEEN may elect to be subject to tax
under this subchapter or under subchapter two of this  chapter  for  its
first  taxable  year  beginning  on or after January first, two thousand
[twelve] FOURTEEN and  before  January  first,  two  thousand  [fifteen]
SEVENTEEN  in  which either (i) sixty-five percent or more of its voting
stock is owned or controlled, directly  or  indirectly  by  a  financial
holding company, provided the corporation whose voting stock is so owned
or controlled is principally engaged in activities that are described in
section  4(k)(4)  or  4(k)(5) of the federal bank holding company act of
nineteen hundred fifty-six, as amended and the  regulations  promulgated
pursuant  to  the  authority  of  such section or (ii) it is a financial
subsidiary. An election under this paragraph may not be made by a corpo-
ration described in paragraphs one through eight of subdivision  (a)  of
this  section  or  in  subdivision  (e) of this section. In addition, an
election under this paragraph may not be made by a corporation that is a
party to a reorganization, as defined in subsection (a) of  section  368
of  the  internal  revenue  code  of  1986, as amended, of a corporation
described in paragraph one of this subdivision if both corporations were
sixty-five percent or more owned or controlled, directly  or  indirectly
by the same interests at the time of the reorganization.
  An  election  under  this paragraph must be made by the taxpayer on or
before the due date for filing its return  (determined  with  regard  to
extensions  of  time  for  filing)  for the applicable taxable year. The
election to be taxed under subchapter two of this chapter shall be  made
by  the  taxpayer  by filing the return required pursuant to subdivision
one of section 11-605 of this chapter and the election to be taxed under
this subchapter shall be made by  the  taxpayer  by  filing  the  return
required pursuant to subdivision (a) of section 11-646 of this part. Any
election  made pursuant to this paragraph shall be irrevocable and shall

S. 6359--D                         169                        A. 8559--D

apply to each subsequent taxable year  beginning  on  or  after  January
first,  two  thousand  [twelve]  FOURTEEN  and before January first, two
thousand [fifteen] SEVENTEEN, provided  that  the  stock  ownership  and
activities  requirements described in subparagraph (i) of this paragraph
are met or such corporation described in subparagraph (ii) of this para-
graph continues as a financial subsidiary.
  S 111. Subparagraph (iv) of paragraph 2 of subdivision (f) of  section
11-646 of the administrative code of the city of New York, as amended by
section  4  of  part  R of chapter 59 of the laws of 2012, is amended to
read as follows:
  (iv) (A) Notwithstanding any provision of  this  paragraph,  any  bank
holding  company exercising its corporate franchise or doing business in
the city may make a return on  a  combined  basis  without  seeking  the
permission  of  the commissioner with any banking corporation exercising
its corporate franchise or doing business in the city in a corporate  or
organized  capacity  sixty-five percent or more of whose voting stock is
owned or controlled, directly or indirectly, by such bank holding compa-
ny, for the first taxable year beginning on or after January first,  two
thousand  and  before  January  first,  two thousand [fifteen] SEVENTEEN
during which such bank holding company  registers  for  the  first  time
under  the federal bank holding company act, as amended, and also elects
to be a financial holding company.  In  addition,  for  each  subsequent
taxable  year  beginning  after  January  first, two thousand and before
January first, two thousand [fifteen] SEVENTEEN, any such  bank  holding
company  may  file on a combined basis without seeking the permission of
the commissioner with any banking corporation  that  is  exercising  its
corporate franchise or doing business in the city and sixty-five percent
or  more of whose voting stock is owned or controlled, directly or indi-
rectly, by such bank holding company if either such banking  corporation
is exercising its corporate franchise or doing business in the city in a
corporate  or  organized  capacity for the first time during such subse-
quent taxable year, or sixty-five percent or more of the voting stock of
such banking corporation is owned or controlled, directly or indirectly,
by such bank holding company for the first time during  such  subsequent
taxable year.  Provided however, for each subsequent taxable year begin-
ning  after  January  first,  two thousand and before January first, two
thousand [fifteen] SEVENTEEN, a banking corporation described in  either
of  the two preceding sentences which filed on a combined basis with any
such bank holding company in a previous taxable year, must  continue  to
file  on a combined basis with such bank holding company if such banking
corporation, during such subsequent taxable year, continues to  exercise
its  corporate  franchise  or  do business in the city in a corporate or
organized capacity and sixty-five percent or more of such banking corpo-
ration's voting stock continues to be owned or controlled,  directly  or
indirectly,  by  such bank holding company, unless the permission of the
commissioner has been obtained to file on  a  separate  basis  for  such
subsequent  taxable year. Provided further, however, for each subsequent
taxable year beginning after January  first,  two  thousand  and  before
January  first,  two thousand [fifteen] SEVENTEEN, a banking corporation
described in either of the first two sentences of this clause which  did
not  file  on  a  combined basis with any such bank holding company in a
previous taxable year, may not file on a combined basis with  such  bank
holding  company  during  any  such  subsequent  taxable year unless the
permission of the commissioner has been obtained to file on  a  combined
basis for such subsequent taxable year.

S. 6359--D                         170                        A. 8559--D

  (B)  Notwithstanding any provision of this paragraph other than clause
(A) of this subparagraph, the commissioner may not require a bank  hold-
ing  company  which, during a taxable year beginning on or after January
first, two thousand and before January  first,  two  thousand  [fifteen]
SEVENTEEN,  registers  for the first time during such taxable year under
the federal bank holding company act, as amended, and also elects to  be
a  financial  holding  company, to make a return on a combined basis for
any taxable year beginning on or after January first, two  thousand  and
before  January  first,  two thousand [fifteen] SEVENTEEN with a banking
corporation sixty-five percent or more of whose voting stock is owned or
controlled, directly or indirectly, by such bank holding company.
  S 112. Severability. If any provision of this act shall for any reason
be finally adjudged by any court of competent jurisdiction to be  inval-
id,  such judgment shall not affect, impair, or invalidate the remainder
of this act, but shall be confined in its  operation  to  the  provision
directly  involved  in the controversy in which such judgment shall have
been rendered. It is hereby declared to be in the intent of the legisla-
ture that this  act  would  have  been  enacted  even  if  such  invalid
provision  had  not  been  included  in this act. Provided further, if a
court of final, competent jurisdiction adjudges the tax rates imposed on
qualified New York manufacturers  to  be  invalid,  qualified  New  York
manufacturers  shall  be  subject  to  the  same  tax rates as all other
taxpayers subject to tax under article 9-A  of  the  tax  law.  Provided
further,  if  a  court of final, competent jurisdiction adjudges the tax
rate of the metropolitan transportation business tax  surcharge  imposed
under  section  209-B  of  the  tax  law to be invalid, the rate of such
surcharge shall be twenty-seven and one tenth percent. Provided further,
if a court of final, competent jurisdiction adjudges that any of the tax
credits provided by this act to be invalid, such credit or credits shall
be deemed repealed and shall be of no force and effect as to any taxpay-
ers.
  S 113. This act shall take effect January 1, 2015 and shall  apply  to
taxable years commencing on or after such date; provided that the amend-
ments  to  section 25 of the tax law made by section forty-three of this
act shall not affect the repeal of such  section  and  shall  be  deemed
repealed  therewith; provided, further, that the amendments to the open-
ing paragraph of subdivision (a), subparagraph (C)  of  paragraph  2  of
subdivision (e) and subdivision (f) of section 35 of the tax law made by
section fifty of this act shall not affect the repeal of such provisions
and  shall  be  deemed  repealed  therewith; provided, further, that the
amendments to clause (xxxii) of  subparagraph  (B)  of  paragraph  1  of
subsection (i) of section 606 of the tax law made by section sixty-eight
of  this  act  shall  not  affect the repeal of such clause and shall be
deemed repealed therewith; provided, further,  that  the  amendments  to
clause  (xxxiii) of subparagraph (B) of paragraph 1 of subsection (i) of
section 606 of the tax law made by section sixty-eight of this act shall
not affect the repeal of such clause and shall be deemed repealed there-
with; and provided, further, that  the  amendments  to  clause  (ii)  of
subparagraph  (B)  of  paragraph  2  of  subsection  (q), paragraph 3 of
subsection (s) and the closing paragraph of paragraph  1  of  subsection
(t)  of  section  1085 of the tax law made by section eighty-one of this
act shall not affect the repeal of such provisions and shall  be  deemed
repealed therewith.

                                 PART B

S. 6359--D                         171                        A. 8559--D

  Section  1.  Subparagraph  (iii) of paragraph (a) of subdivision 14 of
section 425 of the real property tax law, as added by section 1 of  part
J of chapter 57 of the laws of 2013, is amended to read as follows:
  (iii)  An  owner who fails to register by the registration deadline so
established shall be permitted to file a petition with the  commissioner
requesting  that  the commissioner excuse such failure and accept a late
registration, provided that such petition shall explain why such failure
occurred and shall be filed no later than one year after such  deadline,
AND  PROVIDED  FURTHER THAT IF THE COMMISSIONER ACCEPTS A LATE REGISTRA-
TION AFTER HAVING DIRECTED THE REMOVAL OF THE BASIC STAR EXEMPTION  FROM
THE PROPERTY TO WHICH THE REGISTRATION PERTAINS, THEN IN LIEU OF DIRECT-
ING  THE EXEMPTION TO BE RESTORED, THE COMMISSIONER IS AUTHORIZED IN HIS
OR HER DISCRETION TO REMIT DIRECTLY TO THE PROPERTY OWNER OR OWNERS  THE
TAX  SAVINGS  THAT  THE  EXEMPTION  WOULD  HAVE  YIELDED HAD IT NOT BEEN
REMOVED, AND TO FURTHER DIRECT THE ASSESSOR TO RESTORE THE EXEMPTION  ON
A  PROSPECTIVE  BASIS  WITHOUT A NEW APPLICATION UNLESS THE ASSESSOR HAS
REASON TO BELIEVE THAT THE PROPERTY OWNER  IS  NO  LONGER  ELIGIBLE  FOR
REASONS OTHER THAN A FAILURE TO REGISTER;
  S  2.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 2014.

                                 PART C

  Section 1. Section 2 of chapter 540 of the laws of 1992, amending  the
real  property  tax  law  relating to oil and gas charges, as amended by
section 1 of part A of chapter 59 of the laws of  2012,  is  amended  to
read as follows:
  S  2.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 1992; provided,
however that any charges imposed by section 593 of the real property tax
law as added by section one of this act shall first be  due  for  values
for assessment rolls with tentative completion dates after July 1, 1992,
and  provided  further,  that  this  act  shall remain in full force and
effect until March 31, [2015] 2018, at which time  section  593  of  the
real  property  tax  law  as  added  by section one of this act shall be
repealed.
  S 2. This act shall take effect immediately.

                                 PART D

                          Intentionally Omitted

                                 PART E

  Section 1. Subsection (a) of section 653 of the tax law, as amended by
chapter 65 of the laws of 1985, is amended to read as follows:
  (a) General. (1) Any return, statement or other document  required  to
be  made  pursuant  to  this  article shall be signed in accordance with
regulations or instructions prescribed by the [tax  commission]  COMMIS-
SIONER.    The  fact  that  an  individual's name is signed to a return,
statement, or other document, shall be  prima  facie  evidence  for  all
purposes  that  the  return,  statement  or  other document was actually
signed by him OR HER.
  (2) IN THE CASE  OF  AN  ELECTRONICALLY  FILED  INDIVIDUAL'S  PERSONAL
INCOME  TAX  RETURN PREPARED BY A TAX PREPARER, AN AUTHORIZATION TO FILE

S. 6359--D                         172                        A. 8559--D

ANY RETURN, STATEMENT OR OTHER DOCUMENT REQUIRED TO BE MADE PURSUANT  TO
THIS  ARTICLE  SIGNED BY THE TAXPAYER IN ACCORDANCE WITH THE REGULATIONS
OR INSTRUCTIONS PRESCRIBED BY THE COMMISSIONER  AND  RECEIVED  ELECTRON-
ICALLY  BY  THE  TAX  PREPARER  SHALL SATISFY THE SIGNATURE REQUIREMENTS
UNDER THIS ARTICLE.
  S 2. This act shall take effect immediately and shall apply to returns
filed for taxable years beginning on or after January 1, 2014.

                                 PART F

                          Intentionally Omitted

                                 PART G

  Section 1. Section 2 of part I of chapter 58  of  the  laws  of  2006,
relating  to  providing an enhanced earned income tax credit, as amended
by section 1 of part L of chapter 59 of the laws of 2012, is amended  to
read as follows:
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2006 and before January 1, [2015]
2017.
  S 2. This act shall take effect immediately.

                                 PART H

                          Intentionally Omitted

                                 PART I

  Section  1. Subsection (b) of section 612 of the tax law is amended by
adding a new paragraph 40 to read as follows:
  (40) IN THE CASE OF A BENEFICIARY OF A TRUST THAT,  IN  ANY  TAX  YEAR
AFTER  ITS CREATION INCLUDING ITS FIRST TAX YEAR, WAS NOT SUBJECT TO TAX
PURSUANT TO SUBPARAGRAPH (D) OF PARAGRAPH THREE  OF  SUBSECTION  (B)  OF
SECTION  SIX HUNDRED FIVE OF THIS ARTICLE (EXCEPT FOR AN INCOMPLETE GIFT
NON-GRANTOR  TRUST,  AS  DEFINED  BY   PARAGRAPH   FORTY-ONE   OF   THIS
SUBSECTION),  THE  AMOUNT DESCRIBED IN THE FIRST SENTENCE OF SECTION SIX
HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE FOR THE TAX YEAR TO THE
EXTENT NOT ALREADY INCLUDED IN FEDERAL GROSS INCOME FOR  THE  TAX  YEAR,
EXCEPT  THAT,  IN COMPUTING THE AMOUNT TO BE ADDED UNDER THIS PARAGRAPH,
SUCH BENEFICIARY SHALL DISREGARD  (I)  SUBSECTION  (C)  OF  SECTION  SIX
HUNDRED  SIXTY-FIVE OF THE INTERNAL REVENUE CODE; (II) THE INCOME EARNED
BY SUCH TRUST IN ANY TAX YEAR IN WHICH THE  TRUST  WAS  SUBJECT  TO  TAX
UNDER THIS ARTICLE; AND (III) THE INCOME EARNED BY SUCH TRUST IN A TAXA-
BLE  YEAR  PRIOR  TO WHEN THE BENEFICIARY FIRST BECAME A RESIDENT OF THE
STATE OR IN ANY TAXABLE YEAR STARTING BEFORE JANUARY FIRST, TWO THOUSAND
FOURTEEN.  EXCEPT AS OTHERWISE PROVIDED IN THIS PARAGRAPH,  ALL  OF  THE
PROVISIONS  OF  THE INTERNAL REVENUE CODE THAT ARE RELEVANT TO COMPUTING
THE AMOUNT DESCRIBED IN THE FIRST SENTENCE OF SUBSECTION (A) OF  SECTION
SIX  HUNDRED SIXTY-SEVEN OF THE INTERNAL REVENUE CODE SHALL APPLY TO THE
PROVISIONS OF THIS PARAGRAPH WITH THE SAME FORCE AND EFFECT  AS  IF  THE
LANGUAGE OF THOSE INTERNAL REVENUE CODE PROVISIONS HAD BEEN INCORPORATED
IN  FULL  INTO  THIS  PARAGRAPH,  EXCEPT  TO  THE  EXTENT  THAT ANY SUCH
PROVISION IS EITHER INCONSISTENT WITH OR NOT RELEVANT TO THIS PARAGRAPH.

S. 6359--D                         173                        A. 8559--D

  S 2. Subsection (b) of section 612 of the tax law is amended by adding
a new paragraph 41 to read as follows:
  (41)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
DEDUCTIONS  OF  THE  TRUST,  TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
TY-FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
THEREUNDER.
  S 3. Section 621 of the tax law, as added by chapter 272 of  the  laws
of  1963  and  subsection  (a)  as amended by chapter 267 of the laws of
1987, is amended to read as follows:
  S 621. [Credit] CREDITS to trust  beneficiary  receiving  accumulation
distribution.   (a) General. A resident beneficiary of a trust whose New
York adjusted gross income includes  all  or  part  of  an  accumulation
distribution by such trust, as defined in section six hundred sixty-five
of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
MAKE  THE  MODIFICATION REQUIRED BY PARAGRAPH FORTY OF SUBSECTION (B) OF
SECTION SIX HUNDRED TWELVE OF THIS PART, shall be allowed (1)  a  credit
against  the  tax  otherwise due under this article for all or a propor-
tionate part of any tax paid by the trust under this  article  or  under
FORMER article sixteen of this chapter (as such article was in effect on
or before December thirtieth, nineteen hundred sixty), for any preceding
taxable  year which would not have been payable if the trust had in fact
made distributions to its beneficiaries at the times and in the  amounts
specified in section six hundred sixty-six of the internal revenue code;
AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE FOR THE TAXA-
BLE YEAR FOR ANY INCOME TAX IMPOSED ON THE TRUST FOR THE TAXABLE YEAR OR
ANY  PRIOR  TAXABLE  YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLI-
TICAL SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, UPON INCOME BOTH
DERIVED THEREFROM AND SUBJECT TO TAX UNDER THIS ARTICLE,  PROVIDED  THAT
THE  AMOUNT  OF  THE  CREDIT  SHALL NOT EXCEED THE PERCENTAGE OF THE TAX
OTHERWISE DUE UNDER THIS ARTICLE DETERMINED BY DIVIDING THE  PORTION  OF
THE  INCOME THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION
AND TAXABLE TO THE BENEFICIARY UNDER THIS ARTICLE BY THE TOTAL AMOUNT OF
THE BENEFICIARY'S NEW YORK INCOME.
  (b) Limitation. The [credit] CREDITS  under  this  section  shall  not
reduce  the tax otherwise due from the beneficiary under this article to
an amount less than would have been due if the accumulation distribution
or his part thereof were excluded  from  his  New  York  adjusted  gross
income.
  S  4. Section 658 of the tax law is amended by adding a new subsection
(f) to read as follows:
   (F) (1) EVERY TRUST DESCRIBED BY SUBPARAGRAPH (D) OF PARAGRAPH  THREE
OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE SHALL MAKE
A RETURN FOR ANY TAXABLE YEAR IN WHICH IT MAKES AN ACCUMULATION DISTRIB-
UTION  WITHIN  THE  MEANING  OF  SUBDIVISION  (B) OF SECTION SIX HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE TO A BENEFICIARY WHO IS A  RESI-
DENT,  WHICH RETURN SHALL INCLUDE (I) INFORMATION IDENTIFYING SUCH RESI-
DENT, (II) THE AMOUNT OF SUCH ACCUMULATION DISTRIBUTION, AND (III)  SUCH

S. 6359--D                         174                        A. 8559--D

OTHER  INFORMATION  AS  THE  COMMISSIONER  MAY REQUIRE.   IN DETERMINING
WHETHER THERE HAS BEEN AN ACCUMULATION DISTRIBUTION FOR PURPOSES OF THIS
PARAGRAPH, SUCH TRUST SHALL EXCLUDE DISTRIBUTIONS FROM INCOME EARNED  BY
THE TRUST PRIOR TO THE BENEFICIARY'S BIRTH OR ATTAINING THE AGE OF TWEN-
TY-ONE.
  (2)  EVERY  RESIDENT  TRUST  THAT DOES NOT FILE THE RETURN REQUIRED BY
SECTION SIX HUNDRED FIFTY-ONE OF THIS PART ON THE GROUND THAT IT IS  NOT
SUBJECT  TO  TAX  PURSUANT  TO  SUBPARAGRAPH  (D)  OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION SIX HUNDRED FIVE OF THIS ARTICLE FOR THE TAXA-
BLE YEAR SHALL MAKE A RETURN FOR SUCH TAXABLE  YEAR  SUBSTANTIATING  ITS
ENTITLEMENT  TO  THAT  EXEMPTION AND PROVIDING SUCH OTHER INFORMATION AS
THE COMMISSIONER MAY REQUIRE.
  (3) THE RETURNS REQUIRED BY THIS  SUBSECTION  SHALL  BE  FILED  ON  OR
BEFORE THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF EACH
TAXABLE  YEAR.  FOR  PURPOSES  OF THIS PARAGRAPH, "TAXABLE YEAR" MEANS A
YEAR OR A PERIOD WHICH WOULD BE A TAXABLE YEAR OF THE TRUST IF  IT  WERE
SUBJECT TO TAX UNDER THIS ARTICLE.
  S  5.  Paragraph 2 of subsection (h) of section 685 of the tax law, as
amended by chapter 190 of the laws  of  1990,  is  amended  to  read  as
follows:
  (2)  If any partnership [or], S corporation, OR TRUST required to file
a return or report under subsection (c) OR SUBSECTION (F) of section six
hundred fifty-eight or under section  six  hundred  fifty-nine  OF  THIS
ARTICLE  for any taxable year fails to file such return or report at the
time prescribed therefor (determined with regard  to  any  extension  of
time  for  filing),  or files a return or report which fails to show the
information required under such subsection (c) or  section  six  hundred
fifty-nine  OF THIS ARTICLE, unless it is shown that such failure is due
to reasonable cause and not due to willful neglect,  there  shall,  upon
notice  and demand by the commissioner and in the same manner as tax, be
paid by the partnership or S corporation a penalty for  each  month  (or
fraction thereof) during which such failure continues (but not to exceed
five months). The amount of such penalty for any month is the product of
fifty  dollars,  multiplied by the number of partners in the partnership
or shareholders in the S corporation during any part of the taxable year
who were subject to tax under this article during any part of such taxa-
ble year, EXCEPT THAT, IN THE CASE OF A  TRUST,  THE  PENALTY  SHALL  BE
EQUAL  TO  ONE  HUNDRED FIFTY DOLLARS A MONTH UP TO A MAXIMUM OF FIFTEEN
HUNDRED DOLLARS PER TAXABLE YEAR.
  S 6. Subdivision (b) of section 11-1712 of the administrative code  of
the  city of New York is amended by adding a new paragraph 36 to read as
follows:
  (36) IN THE CASE OF A BENEFICIARY OF A TRUST THAT,  IN  ANY  TAX  YEAR
AFTER  ITS CREATION INCLUDING ITS FIRST TAX YEAR, WAS NOT SUBJECT TO TAX
PURSUANT TO SUBPARAGRAPH (D) OF PARAGRAPH THREE  OF  SUBSECTION  (B)  OF
SECTION 11-1705 OF THIS CHAPTER (EXCEPT FOR AN INCOMPLETE GIFT NON-GRAN-
TOR  TRUST,  AS  DEFINED BY PARAGRAPH THIRTY-SEVEN OF THIS SUBDIVISION),
THE AMOUNT DESCRIBED IN  THE  FIRST  SENTENCE  OF  SECTION  SIX  HUNDRED
SIXTY-SEVEN  OF THE INTERNAL REVENUE CODE FOR THE TAX YEAR TO THE EXTENT
NOT ALREADY INCLUDED IN FEDERAL GROSS INCOME FOR THE  TAX  YEAR,  EXCEPT
THAT,  IN  COMPUTING  THE  AMOUNT TO BE ADDED UNDER THIS PARAGRAPH, SUCH
BENEFICIARY SHALL DISREGARD (I) SUBSECTION (C) OF  SECTION  SIX  HUNDRED
SIXTY-FIVE  OF THE INTERNAL REVENUE CODE; (II) THE INCOME EARNED BY SUCH
TRUST IN ANY TAX YEAR IN WHICH THE TRUST WAS SUBJECT TO TAX  UNDER  THIS
ARTICLE;  AND  (III)  THE  INCOME EARNED BY SUCH TRUST IN A TAXABLE YEAR
PRIOR TO WHEN THE BENEFICIARY FIRST BECAME A RESIDENT OF THE CITY OR  IN

S. 6359--D                         175                        A. 8559--D

ANY  TAXABLE  YEAR STARTING BEFORE JANUARY FIRST, TWO THOUSAND FOURTEEN.
EXCEPT AS OTHERWISE PROVIDED IN THIS PARAGRAPH, ALL OF THE PROVISIONS OF
THE INTERNAL REVENUE CODE THAT ARE  RELEVANT  TO  COMPUTING  THE  AMOUNT
DESCRIBED IN THE FIRST SENTENCE OF SUBSECTION (A) OF SECTION SIX HUNDRED
SIXTY-SEVEN  OF  THE INTERNAL REVENUE CODE SHALL APPLY TO THE PROVISIONS
OF THIS PARAGRAPH WITH THE SAME FORCE AND EFFECT AS IF THE  LANGUAGE  OF
THOSE  INTERNAL  REVENUE  CODE  PROVISIONS HAD BEEN INCORPORATED IN FULL
INTO THIS PARAGRAPH, EXCEPT TO THE EXTENT THAT  ANY  SUCH  PROVISION  IS
EITHER INCONSISTENT WITH OR NOT RELEVANT TO THIS PARAGRAPH.
  S  7. Subdivision (b) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 37 to read  as
follows:
  (37)  IN  THE CASE OF A TAXPAYER WHO TRANSFERRED PROPERTY TO AN INCOM-
PLETE GIFT  NON-GRANTOR  TRUST,  THE  INCOME  OF  THE  TRUST,  LESS  ANY
DEDUCTIONS  OF  SUCH  TRUST, TO THE EXTENT SUCH INCOME AND DEDUCTIONS OF
SUCH TRUST WOULD BE TAKEN  INTO  ACCOUNT  IN  COMPUTING  THE  TAXPAYER'S
FEDERAL  TAXABLE  INCOME IF SUCH TRUST IN ITS ENTIRETY WERE TREATED AS A
GRANTOR TRUST FOR FEDERAL TAX PURPOSES. FOR PURPOSES OF THIS  PARAGRAPH,
AN "INCOMPLETE GIFT NON-GRANTOR TRUST" MEANS A RESIDENT TRUST THAT MEETS
THE  FOLLOWING  CONDITIONS:  (I) THE TRUST DOES NOT QUALIFY AS A GRANTOR
TRUST UNDER SECTION SIX HUNDRED SEVENTY-ONE THROUGH SIX  HUNDRED  SEVEN-
TY-NINE  OF THE INTERNAL REVENUE CODE, AND (2) THE GRANTOR'S TRANSFER OF
ASSETS TO THE TRUST IS TREATED AS AN INCOMPLETE GIFT UNDER SECTION TWEN-
TY FIVE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE, AND THE REGULATIONS
THEREUNDER.
  S 8. Section 11-1721 of the administrative code of  the  city  of  New
York, subdivisions (a) and (b) as amended by section 72 and such section
as  renumbered  by  section  43  of  chapter 639 of the laws of 1986, is
amended to read as follows:
  S 11-1721 [Credit] CREDITS to trust beneficiary receiving accumulation
distribution. (a) General. A city resident beneficiary of a trust  whose
city  adjusted  gross  income  includes  all  or part of an accumulation
distribution by such trust, as defined in section six hundred sixty-five
of the internal revenue code, INCLUDING A BENEFICIARY WHO IS REQUIRED TO
MAKE THE MODIFICATION REQUIRED BY PARAGRAPH  THIRTY-SIX  OF  SUBDIVISION
(B) OF SECTION 11-1712 OF THIS SUBCHAPTER, shall be allowed (1) a credit
against  the  tax  otherwise due under this chapter for all or a propor-
tionate part of any tax paid by the trust under this  chapter  or  under
FORMER  title  T  of chapter forty-six of this code, as it was in effect
prior to September first, nineteen hundred eighty-six, for any preceding
taxable year which would not have been payable if the trust had in  fact
made  distributions to its beneficiaries at the times and in the amounts
specified in section six hundred sixty-six of the internal revenue code;
AND (2) A CREDIT AGAINST THE TAXES IMPOSED BY THIS CHAPTER FOR THE TAXA-
BLE YEAR FOR ANY INCOME TAX IMPOSED FOR THE TAXABLE YEAR  OR  ANY  PRIOR
TAXABLE YEAR BY ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVI-
SION  THEREOF,  OR  THE  DISTRICT  OF COLUMBIA, UPON INCOME BOTH DERIVED
THEREFROM AND SUBJECT TO TAX  UNDER  THIS  CHAPTER,  PROVIDED  THAT  THE
AMOUNT  OF  THE CREDIT SHALL NOT EXCEED THE PERCENTAGE OF THE TAX OTHER-
WISE DUE UNDER THIS CHAPTER DETERMINED BY DIVIDING THE  PORTION  OF  THE
INCOME  THAT IS BOTH TAXABLE TO THE TRUST IN SUCH OTHER JURISDICTION AND
TAXABLE TO THE BENEFICIARY UNDER THIS CHAPTER BY THE TOTAL AMOUNT OF THE
BENEFICIARY'S NEW YORK CITY INCOME.
  (b) Limitation. The [credit] CREDITS  under  this  section  shall  not
reduce  the tax otherwise due from the beneficiary under this chapter to
an amount less than would have been due if the accumulation distribution

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or his or her part thereof were excluded from his or her  city  adjusted
gross income.
  S 9. This act shall take effect immediately and shall apply to taxable
years  beginning on or after January 1, 2014, provided that sections one
and six of this act shall not apply to income of a nonresident trust  or
an  exempt resident trust paid to a beneficiary before June 1, 2014, and
sections two and seven of this act shall not  apply  to  income  from  a
trust that is liquidated before June 1, 2014.

                                 PART J

  Section 1. Section 602 of the tax law is REPEALED.
  S  2.  Paragraph 4 of subsection (c) and paragraph 4 of subsection (d)
of section 606 of the tax law, paragraph 4 of subsection (c) as added by
chapter 309 of the laws of 1996 and paragraph 4  of  subsection  (d)  as
amended  by  chapter  2  of  the  laws  of  1995, are amended to read as
follows:
  (4) Part-year residents. In the case of a part-year resident taxpayer,
the credit under this subsection shall be allowed against the tax deter-
mined under subsections (a) through  (d)  of  section  six  hundred  one
reduced  by  the  credit permitted under subsection (b) of this section,
and any excess credit after such application shall  be  allowed  against
the  [taxes]  TAX  imposed by [sections six hundred two and] SECTION six
hundred three. Any remaining excess, after such  application,  shall  be
refunded  as  provided  in paragraph two hereof, provided, however, that
any overpayment under such paragraph shall be limited to the  amount  of
the remaining excess multiplied by a fraction, the numerator of which is
federal  adjusted  gross income for the period of residence, computed as
if the taxable year for federal income tax purposes were limited to  the
period  of  residence,  and the denominator of which is federal adjusted
gross income for the taxable year.
  (4) Part-year residents. In the case of a part-year resident taxpayer,
the credit under this subsection shall be allowed against the tax deter-
mined under subsections (a) through  (d)  of  section  six  hundred  one
reduced  by  the credits permitted under subsections (b), (c) and (m) of
this section, and any excess credit  after  such  application  shall  be
allowed  against  the  [taxes]  TAX imposed by [sections six hundred two
and] SECTION six hundred three. Any remaining excess, after such  appli-
cation, shall be refunded as provided in paragraph two hereof, provided,
however,  that  any overpayment under such paragraph shall be limited to
the amount of the remaining excess multiplied by a fraction, the numera-
tor of which is federal adjusted gross income for the  period  of  resi-
dence,  computed  as if the taxable year for federal income tax purposes
were limited to the period of residence, and the denominator of which is
federal adjusted gross income for the taxable year.
  S 3. Section 622 of the tax law is REPEALED.
  S 4. Section 636 of the tax law is REPEALED.
  S 5. Subsections (a), (b) and (c) of section 639 of the  tax  law,  as
added  by  chapter  170  of  the  laws  of  1994, are amended to read as
follows:
  (a) If an individual changes status from resident  to  nonresident  he
shall,  regardless  of his method of accounting, accrue to the period of
residence any items of income, gain,  loss,  deduction,  [items  of  tax
preference] or ordinary income portion of a lump sum distribution accru-
ing prior to the change of status, with the applicable modifications and
adjustments  to federal adjusted gross income[,] AND itemized deductions

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[and items of tax preference] under sections six hundred  twelve[,]  AND
six hundred fifteen [and six hundred twenty-two], if not otherwise prop-
erly  includible  or allowable for New York income tax purposes for such
period or a prior taxable year under his method of accounting.
  (b)  If  an  individual changes status from nonresident to resident he
shall, regardless of his method of accounting, accrue to the  period  of
nonresidence any items of income, gain, loss or deduction, [items of tax
preference] or ordinary income portion of a lump sum distribution accru-
ing prior to the change of status, with the applicable modifications and
adjustments  to federal adjusted gross income[,] AND itemized deductions
[and items of tax preference] under sections six hundred  twelve[,]  AND
six  hundred  fifteen  [and  six  hundred  twenty-two], other than items
derived from or connected with New York sources, if not otherwise  prop-
erly  includible  or allowable for New York income tax purposes for such
period or for a prior taxable year under his method of accounting.
  (c) No item of income, gain, loss, deduction,  [item  of  tax  prefer-
ence,]  ordinary  income portion of a lump sum distribution or modifica-
tion or adjustment which is accrued under this section  shall  be  taken
into  account  in  determining the tax under this article for any subse-
quent taxable year.
  S 6. Paragraphs 1, 2, 3 and 4 of subsection (a) of section 651 of  the
tax  law,  paragraph  1  as  amended by chapter 333 of the laws of 1987,
paragraph 2 as amended by chapter 28 of the laws of 1987, and paragraphs
3 and 4 as amended by chapter 170 of the laws of 1994,  are  amended  to
read as follows:
  (1)  every  resident  individual (A) required to file a federal income
tax return for the taxable year, or (B) having  federal  adjusted  gross
income  for  the  taxable  year,  increased  by  the modifications under
subsection (b) of section six hundred twelve, in excess of four thousand
dollars, or in excess of his New York standard deduction, if  lower,  or
(C)  [subject  to  tax  under  section  six  hundred two, or (D)] having
received during the taxable year a lump sum distribution any portion  of
which is subject to tax under section six hundred three;
  (2)  every  resident estate or trust required to file a federal income
tax return for the taxable year, or having any New York  taxable  income
for the taxable year, determined under section six hundred eighteen, [or
subject to tax under section six hundred two,] or having received during
the taxable year a lump sum distribution any portion of which is subject
to tax under section six hundred three;
  (3) every nonresident or part-year resident individual having New York
source  income  for  the taxable year, determined under part III of this
article, and having New York adjusted gross income for the taxable year,
determined under part II of this article, in excess  of  the  taxpayer's
New  York  standard  deduction,  [or  subject  to  tax under section six
hundred two,] or having received during the  taxable  year  a  lump  sum
distribution  any  portion  of which is subject to tax under section six
hundred three; and
  (4) every nonresident estate or  trust  or  part-year  resident  trust
having  New  York  source  income for the taxable year, determined under
part III of this article, and having New York adjusted gross income  for
the  taxable  year, determined under paragraph four of subsection (e) of
section six hundred one, [or subject to tax under  section  six  hundred
two,] or having received during the taxable year a lump sum distribution
any portion of which is subject to tax under section six hundred three.

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  S  7.  Paragraph 6 of subsection (b) of section 654 of the tax law, as
added by section 5 of part Q of chapter 407 of  the  laws  of  1999,  is
amended to read as follows:
  (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
"section  1  or  55"  shall  be read as "section six hundred one [or six
hundred two] of this article".
  S 8. Section 659 of the tax law, as amended by chapter 577 of the laws
of 1997, is amended to read as follows:
  S 659.  Report of federal changes, corrections or disallowances.    If
the amount of a taxpayer's federal taxable income, [federal items of tax
preference,]  total  taxable amount or ordinary income portion of a lump
sum distribution or includible gain of a trust reported on  his  federal
income  tax  return  for any taxable year, or the amount of a taxpayer's
earned income credit or credit for employment-related expenses set forth
on such return, or the amount of any federal foreign tax credit  affect-
ing  the  calculation  of the credit for Canadian provincial taxes under
section six hundred twenty or six hundred twenty-A of this  article,  or
the  amount of any claim of right adjustment, is changed or corrected by
the United States internal revenue service or other competent  authority
or  as  the  result of a renegotiation of a contract or subcontract with
the United States, or the amount an employer is required to  deduct  and
withhold  from  wages  for  federal  income  tax withholding purposes is
changed or corrected by such service or authority  or  if  a  taxpayer's
claim  for credit or refund of federal income tax is disallowed in whole
or in part, the  taxpayer  or  employer  shall  report  such  change  or
correction  or  disallowance within ninety days after the final determi-
nation of such change, correction, renegotiation or disallowance, or  as
otherwise  required  by the commissioner, and shall concede the accuracy
of such determination or state wherein it is erroneous.   The  allowance
of  a  tentative  carryback  adjustment  based upon a net operating loss
carryback pursuant to section sixty-four hundred eleven of the  internal
revenue  code  shall be treated as a final determination for purposes of
this section.  Any taxpayer filing an amended federal income tax  return
and any employer filing an amended federal return of income tax withheld
shall  also  file  within ninety days thereafter an amended return under
this article, and shall give such information as  the  commissioner  may
require.    The commissioner may by regulation prescribe such exceptions
to the requirements of this section as he or she deems appropriate.  For
purposes of this section, (i) the term "taxpayer" shall include a  part-
nership  having a resident partner or having any income derived from New
York sources, and a corporation with respect to which the  taxable  year
of  such  change,  correction,  disallowance or amendment is a year with
respect to which the election provided for in subsection (a) of  section
six  hundred  sixty  of  this  article  is  in effect, and (ii) the term
"federal income tax return" shall include the returns of income required
under sections six thousand thirty-one and six thousand thirty-seven  of
the  internal  revenue  code.    In the case of such a corporation, such
report shall  also  include  any  change  or  correction  of  the  taxes
described in paragraphs two and three of subsection (f) of section thir-
teen hundred sixty-six of the internal revenue code.  Reports made under
this  section by a partnership or corporation shall indicate the portion
of the change in each item of income, gain, loss or deduction  (and,  in
the case of a corporation, of each change in, or disallowance of a claim
for  credit  or  refund of, a tax referred to in the preceding sentence)
allocable to each partner or shareholder and shall set forth such  iden-

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tifying  information  with respect to such partner or shareholder as may
be prescribed by the commissioner.
  S 9. Subsection (d) of section 683 of the tax law, as amended by chap-
ter 170 of the laws of 1994, is amended to read as follows:
  (d) Omission of income, [item of tax preference,] total taxable amount
or  ordinary  income  portion of a lump sum distribution on return.--The
tax may be assessed at any time within six years after  the  return  was
filed if--
  (1)  an individual omits from his New York adjusted gross income, [the
sum of his items of tax preference,] or  the  total  taxable  amount  or
ordinary  income  portion  of a lump sum distribution an amount properly
includible therein which is in excess  of  twenty-five  percent  of  the
amount  of  New York adjusted gross income, [the sum of the items of tax
preference,] or the total taxable amount or ordinary income portion of a
lump sum distribution stated in the return, or
  (2) an estate or trust omits from its New York adjusted gross  income,
[the sum of its items of tax preference,] or the total taxable amount or
ordinary  income  portion  of a lump sum distribution an amount properly
includible therein which is in excess  of  twenty-five  percent  of  the
amount stated in the return of New York adjusted gross income determined
in  accordance  with  paragraph  four  of  subsection (e) of section six
hundred one, [or the sum of the items of tax preference,] or  the  total
taxable  amount  or  ordinary income portion of a lump sum distribution,
respectively. For purposes of this subsection there shall not  be  taken
into account any amount which is omitted in the return if such amount is
disclosed  in the return, or in a statement attached to the return, in a
manner adequate to apprise the commissioner of the nature and amount  of
the  item  of income, [tax preference,] total taxable amount or ordinary
income portion of a lump sum distribution.
  S 10. Subparagraph (B) of paragraph 4 of subsection (c) of section 685
of the tax law, as amended by chapter 28 of the laws of 1987, is amended
to read as follows:
  (B) Determination of annualized income installment.--In  the  case  of
any  required  installment,  the  annualized  income  installment is the
excess, if any, of an amount equal to the applicable percentage  of  the
tax  for the taxable year computed by placing on an annualized basis the
taxable income [and minimum taxable income] for months  in  the  taxable
year  ending before the due date for the installment, over the aggregate
amount of any prior required installments  for  the  taxable  year.  The
applicable  percentage  of  the  tax  shall  be  twenty-two and one-half
percent in the case of the first installment, forty-five percent in  the
case  of the second installment, sixty-seven and one-half percent in the
case of the third installment and ninety percent  in  the  case  of  the
fourth installment, and shall be computed without regard to any increase
in  the  rates  applicable  to the taxable year unless such increase was
enacted at least thirty days prior to the due date of the installment.
  S 11. Paragraphs 2 and 3 of subsection (a) of section 1301 of the  tax
law,  as amended by chapter 209 of the laws of 2011, are amended to read
as follows:
  (2) [for taxable years beginning before two thousand fifteen,  a  city
minimum income tax on such residents, and
  (3)] for taxable years beginning after nineteen hundred seventy-six, a
separate tax on the ordinary income portion of lump sum distributions of
such  residents,  at  the  rates  provided  for herein, such taxes to be
administered, collected and distributed by the commissioner as  provided
for in this article.

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  S 12. Section 1301-A of the tax law is REPEALED.
  S  13.  Subsection  (a)  of section 1302 of the tax law, as amended by
chapter 333 of the laws of 1987, is amended to read as follows:
  (a) Imposition of tax. The city personal income tax  (other  than  the
[city  minimum  income  tax  and  the] city separate tax on the ordinary
income portion of  lump  sum  distributions)  imposed  pursuant  to  the
authority  of this article shall be imposed for each taxable year on the
city taxable income of every city resident individual, estate and trust.
A taxpayer's taxable year for purposes of a tax imposed pursuant to  the
authority  of  this  article shall be the same as his taxable year under
article twenty-two of this chapter.
  S 14. The opening paragraph of subsection (a) of section 1304  of  the
tax  law, as amended by section 134 of part A of chapter 389 of the laws
of 1997, is amended to read as follows:
  A tax (other than the [city minimum income tax, the] city separate tax
relating to qualified higher education funds and the city  separate  tax
on the ordinary income portion of lump sum distributions) imposed pursu-
ant  to  the  authority  of section thirteen hundred one of this article
shall be determined as follows:
  S 15. Subsection (c) of section 1307 of the tax  law,  as  amended  by
chapter 712 of the laws of 2004, is amended to read as follows:
  (c)  When  an individual changes his status from city resident to city
nonresident, or from  city  nonresident  to  city  resident,  he  shall,
regardless  of  his  method  of  accounting, accrue any items of income,
gain, loss, deduction[, items of  tax  preference]  or  ordinary  income
portion  of  a  lump  sum  distribution  accruing prior to the change of
status, with the applicable modifications  and  adjustments  to  federal
adjusted gross income[,] AND itemized deductions [and items of tax pref-
erence]  under  sections  six  hundred twelve[,] AND six hundred fifteen
[and six hundred twenty-two], if not otherwise  properly  includible  or
allowable  for  New  York income tax purposes for such period or a prior
taxable year under his method of accounting. Such accruals shall be made
as provided in section six hundred thirty-nine of this chapter.
  S 16. Subsection (a) of section 1306 of the tax  law,  as  amended  by
chapter 333 of the laws of 1987, is amended to read as follows:
  (a)  General.  On  or  before  the  fifteenth  day of the fourth month
following the close of a taxable year, an income tax return under a city
tax imposed pursuant to the authority of this article shall be made  and
filed by or for every city resident individual, estate or trust required
to  file  a  New  York  state  personal income tax (including [a minimum
income tax and] a city separate tax on the ordinary  income  portion  of
lump sum distributions) return for the taxable year.
  S  17.  Section  11-1702 of the administrative code of the city of New
York is REPEALED.
  S 18. Subdivision (a) of section 11-1704 of the administrative code of
the city of New York, as amended by chapter 17 of the laws of  1997,  is
amended to read as follows:
  (a)  In  addition  to the taxes imposed by sections 11-1701[, 11-1702]
and 11-1703, there is hereby imposed for  each  taxable  year  beginning
after  nineteen  hundred eighty-nine but before nineteen hundred ninety-
nine, a tax surcharge on the city taxable income of every city  resident
individual, estate and trust.
  S 19. Subdivision (c) of section 11-1704 of the administrative code of
the  city of New York, as amended by chapter 271 of the laws of 1991, is
amended to read as follows:

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  (c) The tax surcharge imposed pursuant to this section shall be admin-
istered, collected and distributed by the commissioner of  taxation  and
finance  in  the  same  manner as the taxes imposed pursuant to sections
11-1701[, 11-1702] and 11-1703, and all of the provisions of this  chap-
ter, including sections 11-1706, 11-1721 and 11-1773, shall apply to the
tax surcharge imposed by this section.
  S  20.  Section  11-1722 of the administrative code of the city of New
York is REPEALED.
  S 21. Subdivision (a) of section 11-1751 of the administrative code of
the city of New York, as amended by chapter 333 of the laws of 1987,  is
amended to read as follows:
  (a)  General.  On  or  before  the  fifteenth  day of the fourth month
following the close of a taxable year, an income tax return  under  this
chapter  shall  be made and filed by or for every city resident individ-
ual, estate or trust required to file a New York state  personal  income
tax  (including  a [minimum income tax and] separate tax on the ordinary
income portion of lump sum distributions) return for the taxable year.
  S 22. Subdivision (b) of section 11-1754 of the administrative code of
the city of New York, as amended by chapter 712 of the laws of 2004,  is
amended to read as follows:
  (b)  City  taxable  income  [and  city minimum taxable income] as city
resident. The city taxable income [and city minimum taxable income]  for
the  portion of the year during which he or she is a city resident shall
be determined, except as provided in subdivision (c), as if his  or  her
taxable  year for federal income tax purposes were limited to the period
of his or her city resident status.
  S 23. Paragraph 6 of subdivision (b) of section 11-1755 of the  admin-
istrative code of the city of New York, as added by section 17 of part Q
of chapter 407 of the laws of 1999, is amended to read as follows:
  (6) In subparagraph (B) of paragraph two of subsection (d), the phrase
"section 1 or 55" shall be read as "section 11-1701 [or 11-1702] of this
chapter".
  S  24.  Section  11-1759 of the administrative code of the city of New
York, as amended by chapter 577 of the laws of 1997, is amended to  read
as follows:
  S  11-1759 Report of federal changes, corrections or disallowances. If
the amount of a taxpayer's federal taxable income, [federal items of tax
preference,] total taxable amount or ordinary income portion of  a  lump
sum  distribution  or includible gain of a trust reported on his federal
income tax return for any taxable year, or the amount of  any  claim  of
right  adjustment, is changed or corrected by the United States internal
revenue service or other competent authority, or  as  the  result  of  a
renegotiation of a contract or subcontract with the United States or the
amount  an  employer  is  required to deduct and withhold from wages for
federal income tax withholding purposes is changed or corrected by  such
service  or  authority  or if a taxpayer's claim for credit or refund of
federal income tax is disallowed in whole or in part,  the  taxpayer  or
employer  shall  report such change or correction or disallowance within
ninety days after the final determination of  such  change,  correction,
renegotiation,  or disallowance, or as otherwise required by the commis-
sioner, and shall concede the accuracy of such  determination  or  state
wherein  it is erroneous. The allowance of a tentative carryback adjust-
ment based upon a net  operating  loss  carryback  pursuant  to  section
sixty-four  hundred eleven of the internal revenue code shall be treated
as a final determination for purposes  of  this  section.  Any  taxpayer
filing  an  amended federal income tax return and any employer filing an

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amended federal return of income tax withheld  shall  also  file  within
ninety  days  thereafter an amended return under this chapter, and shall
give such information as the commissioner may require. The  commissioner
may  by regulation prescribe such exceptions to the requirements of this
section as he or she deems appropriate. For purposes  of  this  section,
(i)  the  term  "taxpayer" shall include a partnership having a resident
partner or having any income derived from New York sources, and a corpo-
ration  with  respect  to  which  the  taxable  year  of  such   change,
correction,  disallowance  or  amendment is a year with respect to which
the election provided for in subsection (a) of section six hundred sixty
of the tax law is in effect, and  (ii)  the  term  "federal  income  tax
return"  shall include the returns of income required under sections six
thousand thirty-one and six thousand thirty-seven of the internal reven-
ue code. In the case of such  a  corporation,  such  report  shall  also
include  any  change  or correction of the taxes described in paragraphs
two and three of subsection (f) of section thirteen hundred sixty-six of
the internal revenue code. Reports made under this section by a partner-
ship or corporation shall indicate the portion of  the  change  in  each
item  of  income,  gain, loss or deduction (and, in the case of a corpo-
ration, of each change in, or disallowance of  a  claim  for  credit  or
refund  of,  a  tax  referred to in the preceding sentence) allocable to
each partner or shareholder and shall set forth such identifying  infor-
mation  with respect to such partner or shareholder as may be prescribed
by the commissioner.
  S 25. Subdivision (d) of section 11-1783 of the administrative code of
the city of New York, as amended by chapter 170 of the laws of 1994,  is
amended to read as follows:
  (d) Omission of income, [item of tax preference,] total taxable amount
or ordinary income portion of a lump sum distribution on return. The tax
may  be assessed at any time within six years after the return was filed
if:
  (1) an individual omits from his city adjusted gross income[, the  sum
of his items of tax preference, or] the total taxable amount or ordinary
income  portion of a lump sum distribution an amount properly includible
therein which is in excess of twenty-five percent of the amount of  city
adjusted  gross  income[, the sum of the items of tax preference] or the
total taxable amount or ordinary income portion of a lump  sum  distrib-
ution stated in the return, or
  (2) an estate or trust omits from its city adjusted gross income, [the
sum  of  its  items  of  tax preference,] or the total taxable amount or
ordinary income portion of a lump sum distribution  an  amount  properly
includible  therein  which  is  in  excess of twenty-five percent of the
amount stated in the return of city adjusted gross income, [or  the  sum
of the items of tax preference,] or the total taxable amount or ordinary
income portion of a lump sum distribution, respectively. For purposes of
this paragraph, city adjusted gross income means New York adjusted gross
income  as  determined under paragraph four of subsection (e) of section
six hundred one of the tax law.
  For purposes of this subdivision there shall not be taken into account
any amount which is omitted in the return if such amount is disclosed in
the return, or in a statement  attached  to  the  return,  in  a  manner
adequate  to  apprise  the  commissioner of the nature and amount of the
item of income, [tax preference,] the total taxable amount  or  ordinary
income portion of a lump sum distribution.

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  S  26.  Subparagraph  (B) of paragraph 4 of subdivision (c) of section
11-1785 of the administrative code of the city of New York,  as  amended
by chapter 333 of the laws of 1987, is amended to read as follows:
  (B) Determination of annualized income installment. In the case of any
required  installment,  the annualized income installment is the excess,
if any, of an amount equal to the applicable percentage of the  tax  for
the  taxable year computed by placing on an annualized basis the taxable
income [and minimum taxable income]  for  months  in  the  taxable  year
ending  before  the  due  date  for  the installment, over the aggregate
amount of any prior required installments  for  the  taxable  year.  The
applicable  percentage  of  the  tax  shall  be  twenty-two and one-half
percent in the case of the first installment, forty-five percent in  the
case  of the second installment, sixty-seven and one-half percent in the
case of the third installment and ninety percent  in  the  case  of  the
fourth installment, and shall be computed without regard to any increase
in  the  rates  applicable  to the taxable year unless such increase was
enacted at least thirty days prior to the due date of the installment.
  S 27. This act shall take effect  immediately  and  apply  to  taxable
years beginning on or after January 1, 2014.

                                 PART K

  Section  1.  Subsection  (e-1) of section 606 of the tax law is relet-
tered subsection (e-2).
  S 2. Section 606 of the tax law is amended by adding a new  subsection
(e-1) to read as follows:
  (E-1)  ENHANCED  REAL  PROPERTY  TAX  CIRCUIT  BREAKER CREDIT. (1) FOR
PURPOSES OF THIS SUBSECTION:
  (A) "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE, WHO
(I) IS A RESIDENT OF A CITY WITH A POPULATION OVER ONE MILLION, (II) HAS
OCCUPIED THE SAME RESIDENCE FOR SIX MONTHS OR MORE OF THE TAXABLE  YEAR,
AND (III) IS REQUIRED OR CHOOSES TO FILE A RETURN UNDER THIS ARTICLE.
  (B)  "HOUSEHOLD"  OR  "MEMBERS  OF  THE  HOUSEHOLD"  MEANS A QUALIFIED
TAXPAYER AND ALL OTHER PERSONS, NOT NECESSARILY RELATED,  WHO  HAVE  THE
SAME RESIDENCE AND SHARE ITS FURNISHINGS, FACILITIES AND ACCOMMODATIONS.
SUCH  TERMS SHALL NOT INCLUDE A TENANT, SUBTENANT, ROOMER OR BOARDER WHO
IS NOT RELATED TO THE QUALIFIED TAXPAYER  IN  ANY  DEGREE  SPECIFIED  IN
PARAGRAPHS  ONE  THROUGH  EIGHT OF SUBSECTION (A) OF SECTION ONE HUNDRED
FIFTY-TWO OF THE INTERNAL REVENUE CODE.   PROVIDED, HOWEVER,  NO  PERSON
MAY BE A MEMBER OF MORE THAN ONE HOUSEHOLD AT ONE TIME.
  (C) "HOUSEHOLD GROSS INCOME" MEANS THE AGGREGATE ADJUSTED GROSS INCOME
OF  ALL  MEMBERS  OF  THE HOUSEHOLD FOR THE TAXABLE YEAR AS REPORTED FOR
FEDERAL INCOME TAX PURPOSES, OR WHICH  WOULD  BE  REPORTED  AS  ADJUSTED
GROSS  INCOME  IF A FEDERAL INCOME TAX RETURN WERE REQUIRED TO BE FILED,
WITH THE MODIFICATIONS IN SUBSECTION (B) OF SECTION SIX  HUNDRED  TWELVE
OF  THIS ARTICLE BUT WITHOUT THE MODIFICATIONS IN SUBSECTION (C) OF SUCH
SECTION, PLUS ANY PORTION OF THE GAIN FROM THE SALE OR EXCHANGE OF PROP-
ERTY OTHERWISE EXCLUDED FROM SUCH AMOUNT;  EARNED  INCOME  FROM  SOURCES
WITHOUT  THE  UNITED  STATES  EXCLUDABLE  FROM  FEDERAL  GROSS INCOME BY
SECTION NINE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE; SUPPORT  MONEY
NOT  INCLUDED  IN  ADJUSTED  GROSS  INCOME;  NONTAXABLE STRIKE BENEFITS;
SUPPLEMENTAL SECURITY INCOME PAYMENTS; THE GROSS AMOUNT OF  ANY  PENSION
OR  ANNUITY  BENEFITS  TO THE EXTENT NOT INCLUDED IN SUCH ADJUSTED GROSS
INCOME (INCLUDING, BUT NOT LIMITED TO, RAILROAD RETIREMENT BENEFITS  AND
ALL  PAYMENTS  RECEIVED UNDER THE FEDERAL SOCIAL SECURITY ACT AND VETER-
ANS' DISABILITY PENSIONS); NONTAXABLE INTEREST RECEIVED FROM  THE  STATE

S. 6359--D                         184                        A. 8559--D

OF  NEW  YORK,  ITS AGENCIES, INSTRUMENTALITIES, PUBLIC CORPORATIONS, OR
POLITICAL SUBDIVISIONS (INCLUDING A PUBLIC CORPORATION CREATED  PURSUANT
TO  AGREEMENT OR COMPACT WITH ANOTHER STATE OR CANADA); WORKERS' COMPEN-
SATION;  THE GROSS AMOUNT OF "LOSS-OF-TIME" INSURANCE; AND THE AMOUNT OF
CASH PUBLIC ASSISTANCE AND RELIEF, OTHER THAN MEDICAL ASSISTANCE FOR THE
NEEDY, PAID TO OR FOR THE BENEFIT OF THE QUALIFIED TAXPAYER  OR  MEMBERS
OF  HIS  OR  HER  HOUSEHOLD.  HOUSEHOLD  GROSS  INCOME SHALL NOT INCLUDE
SURPLUS FOODS OR OTHER RELIEF IN KIND OR PAYMENTS  MADE  TO  INDIVIDUALS
BECAUSE  OF  THEIR  STATUS  AS VICTIMS OF NAZI PERSECUTION AS DEFINED IN
P.L. 103-286. PROVIDED,  FURTHER,  HOUSEHOLD  GROSS  INCOME  SHALL  ONLY
INCLUDE  ALL  SUCH INCOME RECEIVED BY ALL MEMBERS OF THE HOUSEHOLD WHILE
MEMBERS OF SUCH HOUSEHOLD. IN COMPUTING HOUSEHOLD GROSS INCOME, THE  NET
AMOUNT  OF  LOSS  REPORTED  ON  FEDERAL SCHEDULE C, D, E, OR F SHALL NOT
EXCEED THREE THOUSAND DOLLARS PER SCHEDULE. IN ADDITION, THE NET  AMOUNT
OF  ANY  OTHER SEPARATE CATEGORY OF LOSS SHALL NOT EXCEED THREE THOUSAND
DOLLARS. THE AGGREGATE AMOUNT OF ALL LOSSES INCLUDED IN COMPUTING HOUSE-
HOLD GROSS INCOME SHALL NOT EXCEED FIFTEEN THOUSAND DOLLARS.
  (D) "RESIDENCE" MEANS A DWELLING IN THIS STATE OWNED OR RENTED BY  THE
TAXPAYER,  AND  SO MUCH OF THE LAND ABUTTING IT, NOT EXCEEDING ONE ACRE,
AS IS REASONABLY NECESSARY FOR USE OF THE DWELLING AS A  HOME,  AND  MAY
CONSIST  OF A PART OF A MULTI-DWELLING OR MULTI-PURPOSE BUILDING INCLUD-
ING A COOPERATIVE OR CONDOMINIUM,  AND  RENTAL  UNITS  WITHIN  A  SINGLE
DWELLING.  RESIDENCE INCLUDES A TRAILER OR MOBILE HOME, USED EXCLUSIVELY
FOR  RESIDENTIAL PURPOSES AND DEFINED AS REAL PROPERTY PURSUANT TO PARA-
GRAPH (G) OF SUBDIVISION TWELVE OF SECTION ONE HUNDRED TWO OF  THE  REAL
PROPERTY TAX LAW.
  (E)  "QUALIFYING  REAL  PROPERTY TAXES" MEANS ALL REAL PROPERTY TAXES,
SPECIAL AD VALOREM LEVIES AND SPECIAL ASSESSMENTS, EXCLUSIVE  OF  PENAL-
TIES  AND  INTEREST, LEVIED ON THE RESIDENCE OF A QUALIFIED TAXPAYER AND
PAID DURING THE TAXABLE YEAR. A QUALIFIED TAXPAYER MAY ELECT TO  INCLUDE
ANY  ADDITIONAL  AMOUNT THAT WOULD HAVE BEEN LEVIED IN THE ABSENCE OF AN
EXEMPTION FROM REAL PROPERTY TAXATION PURSUANT TO SECTION  FOUR  HUNDRED
SIXTY-SEVEN  OF  THE  REAL PROPERTY TAX LAW. IF TENANT-STOCKHOLDERS IN A
COOPERATIVE HOUSING CORPORATION HAVE MET THE REQUIREMENTS OF SECTION TWO
HUNDRED SIXTEEN OF THE INTERNAL REVENUE CODE BY WHICH THEY ARE ALLOWED A
DEDUCTION FOR REAL ESTATE TAXES, THE AMOUNT OF TAXES  SO  ALLOWABLE,  OR
WHICH  WOULD  BE  ALLOWABLE  IF THE TAXPAYER HAD FILED RETURNS ON A CASH
BASIS, SHALL BE QUALIFYING REAL PROPERTY TAXES. IF A RESIDENCE IS  OWNED
BY  TWO  OR  MORE INDIVIDUALS AS JOINT TENANTS OR TENANTS IN COMMON, AND
ONE OR MORE THAN ONE INDIVIDUAL IS NOT A MEMBER OF THE HOUSEHOLD, QUALI-
FYING REAL PROPERTY TAXES IS THAT PART OF SUCH TAXES  ON  THE  RESIDENCE
WHICH  REFLECTS  THE  OWNERSHIP PERCENTAGE OF THE QUALIFIED TAXPAYER AND
MEMBERS OF HIS OR HER HOUSEHOLD. IF A RESIDENCE IS AN INTEGRAL PART OF A
LARGER UNIT, QUALIFYING REAL PROPERTY TAXES SHALL  BE  LIMITED  TO  THAT
AMOUNT OF SUCH TAXES PAID AS MAY BE REASONABLY APPORTIONED TO SUCH RESI-
DENCE.  IF  A  HOUSEHOLD OWNS AND OCCUPIES TWO OR MORE RESIDENCES DURING
DIFFERENT PERIODS IN THE SAME TAXABLE  YEAR,  QUALIFYING  REAL  PROPERTY
TAXES  SHALL  BE  THE SUM OF THE PRORATED QUALIFYING REAL PROPERTY TAXES
ATTRIBUTABLE TO THE HOUSEHOLD DURING THE PERIODS SUCH HOUSEHOLD OCCUPIES
EACH OF SUCH RESIDENCES. IF THE HOUSEHOLD OWNS AND OCCUPIES A  RESIDENCE
FOR  PART OF THE TAXABLE YEAR AND RENTS A RESIDENCE FOR PART OF THE SAME
TAXABLE YEAR, IT MAY INCLUDE THE PRORATION OF QUALIFYING  REAL  PROPERTY
TAXES  ON  THE RESIDENCE OWNED.   PROVIDED, HOWEVER, FOR PURPOSES OF THE
CREDIT ALLOWED UNDER THIS SUBSECTION, QUALIFYING REAL PROPERTY TAXES MAY
BE INCLUDED BY A QUALIFIED TAXPAYER ONLY TO THE EXTENT THAT SUCH TAXPAY-
ER OR THE SPOUSE OF SUCH TAXPAYER,  OCCUPYING  SUCH  RESIDENCE  FOR  ONE

S. 6359--D                         185                        A. 8559--D

HUNDRED EIGHTY-THREE DAYS OR MORE OF THE TAXABLE YEAR, OWNS OR HAS OWNED
THE RESIDENCE AND PAID SUCH TAXES.
  (F)  "REAL  PROPERTY  TAX EQUIVALENT" MEANS FIFTEEN AND THREE-QUARTERS
PERCENT OF THE ADJUSTED RENT ACTUALLY PAID IN  THE  TAXABLE  YEAR  BY  A
HOUSEHOLD  SOLELY  FOR  THE RIGHT OF OCCUPANCY OF ITS NEW YORK RESIDENCE
FOR THE TAXABLE YEAR. IF (I) A RESIDENCE IS RENTED TO TWO OR MORE  INDI-
VIDUALS  AS  COTENANTS,  OR  SUCH  INDIVIDUALS SHARE IN THE PAYMENT OF A
SINGLE RENT FOR THE RIGHT OF OCCUPANCY OF SUCH RESIDENCE, AND (II)  EACH
OF SUCH INDIVIDUALS IS A MEMBER OF A DIFFERENT HOUSEHOLD, ONE OR MORE OF
WHICH INDIVIDUALS SHARES SUCH RESIDENCE, REAL PROPERTY TAX EQUIVALENT IS
THAT  PORTION OF FIFTEEN AND THREE-QUARTERS PERCENT OF THE ADJUSTED RENT
PAID IN THE TAXABLE YEAR WHICH REFLECTS THAT PORTION OF THE RENT ATTRIB-
UTABLE TO THE QUALIFIED TAXPAYER AND THE MEMBERS OF HIS  OR  HER  HOUSE-
HOLD.
  (G)  "ADJUSTED RENT" MEANS RENTAL PAID FOR THE RIGHT OF OCCUPANCY OF A
RESIDENCE, EXCLUDING CHARGES FOR HEAT, GAS, ELECTRICITY, FURNISHINGS AND
BOARD.  WHERE CHARGES FOR HEAT, GAS, ELECTRICITY, FURNISHINGS  OR  BOARD
ARE INCLUDED IN RENTAL BUT WHERE SUCH CHARGES AND THE AMOUNT THEREOF ARE
NOT  SEPARATELY SET FORTH IN A WRITTEN RENTAL AGREEMENT, FOR PURPOSES OF
DETERMINING ADJUSTED RENT THE QUALIFIED  TAXPAYER  SHALL  REDUCE  RENTAL
PAID AS FOLLOWS:
  (I) FOR HEAT, OR HEAT AND GAS, DEDUCT SIX PERCENT OF RENTAL PAID.
  (II)  FOR  HEAT,  GAS  AND ELECTRICITY, DEDUCT EIGHT PERCENT OF RENTAL
PAID.
  (III) FOR HEAT, GAS, ELECTRICITY AND FURNISHINGS, DEDUCT  TEN  PERCENT
OF RENTAL PAID.
  (IV)  FOR HEAT, GAS, ELECTRICITY, FURNISHINGS AND BOARD, DEDUCT TWENTY
PERCENT OF RENTAL PAID.
  IF THE COMMISSIONER DETERMINES THAT THE ADJUSTED  RENT  SHOWN  ON  THE
RETURN IS EXCESSIVE, THE COMMISSIONER MAY REDUCE SUCH RENT, FOR PURPOSES
OF  THE COMPUTATION OF THE CREDIT, TO AN AMOUNT SUBSTANTIALLY EQUIVALENT
TO RENT FOR A COMPARABLE ACCOMMODATION.
  (2) A QUALIFIED TAXPAYER SHALL BE ALLOWED  A  CREDIT  AS  PROVIDED  IN
PARAGRAPH  THREE  OF  THIS  SUBSECTION AGAINST THE TAXES IMPOSED BY THIS
ARTICLE REDUCED BY THE CREDITS PERMITTED BY THIS ARTICLE. IF THE  CREDIT
EXCEEDS  THE  TAX  AS  SO  REDUCED FOR SUCH YEAR UNDER THIS ARTICLE, THE
EXCESS SHALL BE TREATED AS AN OVERPAYMENT, TO BE CREDITED  OR  REFUNDED,
WITHOUT  INTEREST.  IF  A  QUALIFIED  TAXPAYER IS NOT REQUIRED TO FILE A
RETURN PURSUANT TO SECTION SIX HUNDRED  FIFTY-ONE  OF  THIS  ARTICLE,  A
QUALIFIED TAXPAYER MAY NEVERTHELESS RECEIVE THE FULL AMOUNT OF THE CRED-
IT TO BE CREDITED OR REPAID AS AN OVERPAYMENT, WITHOUT INTEREST.
  (3)  DETERMINATION  OF  CREDIT.   FOR TAXABLE YEARS AFTER TWO THOUSAND
THIRTEEN AND PRIOR TO TWO THOUSAND SIXTEEN, THE  AMOUNT  OF  THE  CREDIT
ALLOWABLE UNDER THIS SUBSECTION SHALL BE DETERMINED AS FOLLOWS:
IF HOUSEHOLD GROSS INCOME    EXCESS REAL PROPERTY    THE CREDIT AMOUNT IS
FOR THE TAXABLE YEAR IS:     TAXES ARE THE EXCESS    THE FOLLOWING
                             OF REAL PROPERTY TAX    PERCENTAGE OF EXCESS
                             EQUIVALENT OR THE       PROPERTY TAXES:
                             EXCESS OF QUALIFYING
                             REAL PROPERTY TAXES
                             OVER THE FOLLOWING
                             PERCENTAGE OF
                             HOUSEHOLD GROSS
                             INCOME:
LESS THAN $100,000                   4                    4.5
$100,000 TO LESS THAN                5                    3.0

S. 6359--D                         186                        A. 8559--D

$150,000
$150,000 TO LESS THAN                6                    1.5
$200,000
  NOTWITHSTANDING  THE  FOREGOING  PROVISIONS, THE MAXIMUM CREDIT DETER-
MINED UNDER THIS SUBPARAGRAPH MAY NOT EXCEED FIVE HUNDRED DOLLARS.
  (4) IF A QUALIFIED TAXPAYER OCCUPIES A RESIDENCE FOR A PERIOD OF  LESS
THAN TWELVE MONTHS DURING THE TAXABLE YEAR OR OCCUPIES TWO OR MORE RESI-
DENCES DURING DIFFERENT PERIODS IN SUCH TAXABLE YEAR, THE CREDIT ALLOWED
PURSUANT  TO  THIS  SUBSECTION  SHALL  BE COMPUTED IN SUCH MANNER AS THE
COMMISSIONER MAY, BY REGULATION, PRESCRIBE IN ORDER TO PROPERLY  REFLECT
THE  CREDIT  OR  PORTION THEREOF ATTRIBUTABLE TO SUCH RESIDENCE OR RESI-
DENCES AND SUCH PERIOD OR PERIODS.
  (5)  THE  COMMISSIONER  MAY  PRESCRIBE  THAT  THE  CREDIT  UNDER  THIS
SUBSECTION  SHALL BE DETERMINED IN WHOLE OR IN PART BY THE USE OF TABLES
PRESCRIBED BY SUCH COMMISSIONER. SUCH TABLES SHALL SET FORTH THE  CREDIT
TO THE NEAREST DOLLAR.
  (6)  ONLY ONE CREDIT PER HOUSEHOLD AND PER QUALIFIED TAXPAYER SHALL BE
ALLOWED PER TAXABLE YEAR UNDER THIS SUBSECTION. WHEN TWO OR MORE MEMBERS
OF A HOUSEHOLD ARE ABLE TO  MEET  THE  QUALIFICATIONS  FOR  A  QUALIFIED
TAXPAYER,  THE  CREDIT  SHALL  BE  EQUALLY DIVIDED BETWEEN OR AMONG SUCH
INDIVIDUALS UNLESS SUCH INDIVIDUALS FILE WITH THE COMMISSIONER A WRITTEN
AGREEMENT AMONG SUCH INDIVIDUALS SETTING FORTH A DIFFERENT DIVISION.
  (A) PROVIDED, HOWEVER, WHERE A JOINT INCOME TAX RETURN HAS BEEN  FILED
PURSUANT  TO  THE  PROVISIONS  OF  SECTION SIX HUNDRED FIFTY-ONE OF THIS
ARTICLE BY A QUALIFIED TAXPAYER AND HIS OR HER  SPOUSE  (OR  WHERE  BOTH
SPOUSES  ARE  QUALIFIED TAXPAYERS AND HAVE FILED SUCH JOINT RETURN), THE
CREDIT, OR THE PORTION OF THE CREDIT IF DIVIDED, TO  WHICH  THE  SPOUSES
ARE  ENTITLED  SHALL  BE APPLIED AGAINST THE TAX OF BOTH SPOUSES AND ANY
OVERPAYMENT SHALL BE MADE TO BOTH SPOUSES.
  (B) WHERE ANY RETURN REQUIRED TO BE FILED PURSUANT TO  THE  PROVISIONS
OF  SECTION  SIX  HUNDRED FIFTY-ONE OF THIS ARTICLE IS COMBINED WITH ANY
RETURN OF TAX IMPOSED PURSUANT TO THE AUTHORITY OF THIS CHAPTER  OR  ANY
OTHER LAW IF SUCH TAX IS ADMINISTERED BY THE COMMISSIONER, THE CREDIT OR
THE  PORTION OF THE CREDIT IF DIVIDED, ALLOWED TO THE QUALIFIED TAXPAYER
MAY BE APPLIED BY THE COMMISSIONER TOWARD ANY LIABILITY FOR  THE  AFORE-
MENTIONED TAXES.
  (7) NO CREDIT SHALL BE GRANTED UNDER THIS SUBSECTION:
  (A)  IF  HOUSEHOLD GROSS INCOME FOR THE TAXABLE YEAR EQUALS OR EXCEEDS
TWO HUNDRED THOUSAND DOLLARS.
  (B) TO A PROPERTY OWNER UNLESS: (I) THE PROPERTY IS USED FOR  RESIDEN-
TIAL  PURPOSES,  (II) NOT MORE THAN TWENTY PERCENT OF THE RENTAL INCOME,
IF ANY, FROM THE PROPERTY IS FROM RENTAL FOR NONRESIDENTIAL PURPOSES AND
(III) THE PROPERTY IS OCCUPIED AS A RESIDENCE IN WHOLE OR IN PART BY ONE
OR MORE OF THE OWNERS OF THE PROPERTY.
  (C) TO AN INDIVIDUAL WITH RESPECT TO WHOM A DEDUCTION UNDER SUBSECTION
(C) OF SECTION ONE HUNDRED FIFTY-ONE OF THE  INTERNAL  REVENUE  CODE  IS
ALLOWABLE TO ANOTHER TAXPAYER FOR THE TAXABLE YEAR.
  (D)  WITH  RESPECT  TO  A  RESIDENCE THAT IS WHOLLY EXEMPTED FROM REAL
PROPERTY TAXATION.
  (E) TO AN INDIVIDUAL WHO IS NOT A RESIDENT INDIVIDUAL OF A CITY, WITH-
IN THE STATE, WITH A POPULATION OVER ONE MILLION, FOR THE ENTIRE TAXABLE
YEAR.
  (8) THE RIGHT TO CLAIM A CREDIT OR THE PORTION OF A CREDIT, WHERE SUCH
CREDIT HAS BEEN DIVIDED UNDER THIS SUBSECTION, SHALL BE PERSONAL TO  THE
QUALIFIED  TAXPAYER  AND  SHALL  NOT  SURVIVE HIS OR HER DEATH, BUT SUCH

S. 6359--D                         187                        A. 8559--D

RIGHT MAY BE EXERCISED ON BEHALF OF A CLAIMANT BY HIS OR HER LEGAL GUAR-
DIAN OR ATTORNEY IN FACT DURING HIS OR HER LIFETIME.
  (9)  RETURNS. IF A QUALIFIED TAXPAYER IS NOT REQUIRED TO FILE A RETURN
PURSUANT TO SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE, A CLAIM FOR A
CREDIT MAY BE TAKEN ON A RETURN FILED WITH THE COMMISSIONER WITHIN THREE
YEARS FROM THE TIME IT WOULD HAVE BEEN REQUIRED THAT A RETURN  BE  FILED
PURSUANT  TO  SUCH SECTION HAD THE QUALIFIED TAXPAYER HAD A TAXABLE YEAR
ENDING ON DECEMBER THIRTY-FIRST.  RETURNS UNDER THIS PARAGRAPH SHALL  BE
IN  SUCH  FORM  AS  SHALL BE PRESCRIBED BY THE COMMISSIONER, WHICH SHALL
MAKE AVAILABLE SUCH FORMS AND INSTRUCTIONS FOR FILING SUCH RETURNS.
  (10) PROOF OF CLAIM. THE COMMISSIONER MAY REQUIRE A QUALIFIED TAXPAYER
TO FURNISH THE FOLLOWING INFORMATION IN SUPPORT OF HIS CLAIM FOR  CREDIT
UNDER  THIS  SUBSECTION:  HOUSEHOLD  GROSS  INCOME,  REAL PROPERTY TAXES
LEVIED OR THAT WOULD HAVE BEEN LEVIED IN THE  ABSENCE  OF  AN  EXEMPTION
FROM  REAL  PROPERTY TAX PURSUANT TO SECTION FOUR HUNDRED SIXTY-SEVEN OF
THE REAL PROPERTY TAX LAW, THE NAMES OF MEMBERS  OF  THE  HOUSEHOLD  AND
OTHER  QUALIFYING TAXPAYERS OCCUPYING THE SAME RESIDENCE AND THEIR IDEN-
TIFYING NUMBERS  INCLUDING  SOCIAL  SECURITY  NUMBERS,  HOUSEHOLD  GROSS
INCOME,  SIZE  AND NATURE OF PROPERTY CLAIMED AS RESIDENCE AND ALL OTHER
INFORMATION WHICH MAY BE REQUIRED BY THE COMMISSIONER TO  DETERMINE  THE
CREDIT.
  (11)  ADMINISTRATION.  THE  PROVISIONS  OF THIS ARTICLE, INCLUDING THE
PROVISIONS OF SECTIONS SIX HUNDRED FIFTY-THREE, SIX HUNDRED FIFTY-EIGHT,
AND SIX HUNDRED FIFTY-NINE OF THIS ARTICLE AND THE  PROVISIONS  OF  PART
SIX  OF THIS ARTICLE RELATING TO PROCEDURE AND ADMINISTRATION, INCLUDING
THE JUDICIAL REVIEW OF THE DECISIONS OF THE COMMISSIONER, EXCEPT SO MUCH
OF SECTION SIX HUNDRED EIGHTY-SEVEN OF  THIS  ARTICLE  WHICH  PERMITS  A
CLAIM  FOR CREDIT OR REFUND TO BE FILED AFTER THE PERIOD PROVIDED FOR IN
PARAGRAPH NINE OF  THIS  SUBSECTION  AND  EXCEPT  SECTIONS  SIX  HUNDRED
FIFTY-SEVEN, SIX HUNDRED EIGHTY-EIGHT AND SIX HUNDRED NINETY-SIX OF THIS
ARTICLE,  SHALL  APPLY  TO THE PROVISIONS OF THIS SUBSECTION IN THE SAME
MANNER AND WITH THE SAME FORCE AND EFFECT AS IF THE  LANGUAGE  OF  THOSE
PROVISIONS  HAD  BEEN  INCORPORATED IN FULL INTO THIS SUBSECTION AND HAD
EXPRESSLY REFERRED TO THE CREDIT ALLOWED OR  RETURNS  FILED  UNDER  THIS
SUBSECTION,  EXCEPT  TO  THE  EXTENT  THAT  ANY SUCH PROVISION IS EITHER
INCONSISTENT WITH A PROVISION OF THIS SUBSECTION OR IS NOT  RELEVANT  TO
THIS  SUBSECTION.  AS  USED  IN  SUCH  SECTIONS  AND SUCH PART, THE TERM
"TAXPAYER" SHALL INCLUDE A QUALIFIED TAXPAYER UNDER THIS SUBSECTION AND,
NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (E) OF SECTION SIX  HUNDRED
NINETY-SEVEN  OF  THIS ARTICLE, WHERE A QUALIFIED TAXPAYER HAS PROTESTED
THE DENIAL OF A CLAIM FOR CREDIT UNDER THIS SUBSECTION AND THE  TIME  TO
FILE  A  PETITION  FOR REDETERMINATION OF A DEFICIENCY OR FOR REFUND HAS
NOT EXPIRED, HE SHALL, SUBJECT TO SUCH CONDITIONS AS MAY BE SET  BY  THE
COMMISSIONER,  RECEIVE  SUCH  INFORMATION  (A) WHICH IS CONTAINED IN ANY
RETURN FILED UNDER THIS ARTICLE BY A MEMBER OF HIS OR HER HOUSEHOLD  FOR
THE  TAXABLE  YEAR  FOR  WHICH  THE CREDIT IS CLAIMED, AND (B) WHICH THE
COMMISSIONER FINDS IS RELEVANT AND MATERIAL TO THE ISSUE OF WHETHER SUCH
CLAIM WAS PROPERLY DENIED.
  (12) NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE,  THE  CREDIT
ALLOWED  UNDER  THIS  SUBSECTION  SHALL BE DETERMINED AFTER THE DETERMI-
NATION  AND  APPLICATION  OF  ANY  OTHER  CREDITS  PERMITTED  UNDER  THE
PROVISIONS OF THIS ARTICLE.
  (13)  THE  COMMISSIONER  SHALL PREPARE A WRITTEN REPORT AFTER DECEMBER
THIRTY-FIRST OF EACH CALENDAR  YEAR,  WHICH  SHALL  CONTAIN  STATISTICAL
INFORMATION  REGARDING THE CREDITS GRANTED ON OR BEFORE SUCH DATES UNDER
THIS SUBSECTION DURING SUCH CALENDAR YEAR. COPIES OF THE REPORT SHALL BE

S. 6359--D                         188                        A. 8559--D

SUBMITTED BY THE COMMISSIONER TO THE GOVERNOR, THE  TEMPORARY  PRESIDENT
OF  THE  SENATE, THE SPEAKER OF THE ASSEMBLY, THE CHAIRMAN OF THE SENATE
FINANCE COMMITTEE AND THE  CHAIRMAN  OF  THE  ASSEMBLY  WAYS  AND  MEANS
COMMITTEE  WITHIN  FORTY-FIVE DAYS OF DECEMBER THIRTY-FIRST. SUCH REPORT
SHALL CONTAIN, BUT NEED NOT BE LIMITED TO, THE NUMBER OF CREDITS AND THE
AVERAGE AMOUNT OF SUCH CREDITS ALLOWED; AND  OF  THOSE,  THE  NUMBER  OF
CREDITS  AND  THE  AVERAGE  AMOUNT  OF SUCH CREDITS ALLOWED TO QUALIFIED
TAXPAYERS IN EACH COUNTY; AND OF THOSE, THE NUMBER OF  CREDITS  AND  THE
AVERAGE  AMOUNT  OF  SUCH  CREDITS  ALLOWED TO QUALIFIED TAXPAYERS WHOSE
HOUSEHOLD GROSS INCOME FALLS WITHIN EACH OF THE HOUSEHOLD  GROSS  INCOME
RANGES SET FORTH IN PARAGRAPH THREE OF THIS SUBSECTION.
  S 3. This act shall take effect immediately and shall apply to taxable
years  beginning  on  or  after  January 1, 2014 and shall expire and be
deemed repealed January 1, 2016.

                                 PART L

                          Intentionally Omitted

                                 PART M

  Section 1. Paragraphs 2, 4 and 5 of subsection (vv) of section 606  of
the  tax law, as added by section 1 of part CC of chapter 59 of the laws
of 2013, are amended to read as follows:
  2. To be eligible for the credit, the taxpayer  (or  taxpayers  filing
joint  returns)  on the personal income tax return filed for the taxable
year [two years prior], must  [have]  (a)  [been]  BE  a  resident,  (b)
[claimed] CLAIM one or more dependent children who were under the age of
seventeen  on  the last day of the taxable year, (c) [had] HAVE New York
adjusted gross income of at least forty thousand dollars but no  greater
than  three hundred thousand dollars, and (d) [had] HAVE a tax liability
as determined under paragraph three of this subsection of  greater  than
or equal to zero.
  4.  [For  each  year  this  credit  is  allowed,  on or before October
fifteenth of such year, the commissioner shall determine the  taxpayer's
eligibility  for  this credit utilizing the information available to the
commissioner on the taxpayer's personal income tax return filed for  the
taxable  year two years prior to the taxable year in which the credit is
allowed. For those taxpayers whom the commissioner has determined eligi-
ble for this credit, the commissioner shall advance a payment  of  three
hundred  fifty  dollars. When a taxpayer files his or her return for the
taxable year, such taxpayer shall properly reconcile that payment on his
or her return.
  5.] If the amount of the credit allowed under  this  subsection  shall
exceed  the  taxpayer's  tax  for  the taxable year, the excess shall be
treated as an overpayment of tax to be credited or refunded  in  accord-
ance with the provisions of SECTION six hundred eighty-six of this arti-
cle, provided, however, that no interest shall be paid thereon.
  S 2. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2015.

                                 PART N

                          Intentionally Omitted

S. 6359--D                         189                        A. 8559--D

                                 PART O

  Section  1.  Paragraph  1  of subdivision (a) of section 28 of the tax
law, as amended by section 1 of part I of chapter  59  of  the  laws  of
2012, is amended to read as follows:
  (1)  A taxpayer which is a qualified commercial production company, or
which is a sole proprietor of a qualified commercial production company,
and which is subject to tax under article nine-A or twenty-two  of  this
chapter,  shall  be  allowed  a credit against such tax, pursuant to the
provisions referenced in subdivision (c) of this section, to be computed
as provided in this section. Provided, however, to be eligible for  such
credit, at least seventy-five percent of the production costs (excluding
post  production  costs)  paid or incurred directly and predominantly in
the actual filming or recording of  the  qualified  commercial  must  be
costs  incurred  in  New  York state. The tax credit allowed pursuant to
this section shall apply  to  taxable  years  beginning  before  January
first, two thousand [fifteen] SEVENTEEN.
  S  2.  Subparagraph (iii) of paragraph 2 of subdivision (a) of section
28 of the tax law, as amended by section 2 of part I of  chapter  59  of
the laws of 2012, is amended to read as follows:
  (iii)  The  state  annually  will  disburse three million of the total
seven million in tax credits to all eligible  production  companies  who
film or record a qualified commercial outside of the metropolitan commu-
ter  transportation district as defined in section twelve hundred sixty-
two of the public authorities law; provided,  however,  that  if,  after
JULY  THIRTY-FIRST  the  state  reviews  all  applications from eligible
production companies who film or record a qualified  commercial  outside
of  the  metropolitan  commuter  district  for a given year, tax credits
remain unallocated under  this  subparagraph,  those  credits  shall  be
allotted  to the credits set forth in subparagraph (i) of this paragraph
for use consistent with the purposes of such subparagraph. The amount of
the credit shall be the product (or pro rata share of  the  product,  in
the  case of a member of a partnership) of five percent of the qualified
production costs paid or incurred  in  the  production  of  a  qualified
commercial,  provided  that  the  qualified  production  costs  paid  or
incurred are attributable  to  the  use  of  tangible  property  or  the
performance of services within the state in the production of such qual-
ified  commercial.  To  be  eligible for said credit the total qualified
production costs of a qualified production company must be greater  than
[two]  ONE hundred thousand dollars in the aggregate during the calendar
year. Such credit will be applied to qualified production costs  exceed-
ing [two] ONE hundred thousand dollars in a calendar year.
  S  3.   Paragraph (a) of subdivision 38 of section 210 of the tax law,
as amended by section 3 of part I of chapter 59 of the laws of 2012,  is
amended to read as follows:
  (a)  Allowance  of  credit.  A  taxpayer  that is eligible pursuant to
provisions of section twenty-eight of this chapter shall  be  allowed  a
credit  to  be  computed  as  provided  in  such section against the tax
imposed by this article. The tax credit allowed pursuant to this section
shall apply to taxable years beginning before January first,  two  thou-
sand [fifteen] SEVENTEEN.
  S  4. Paragraph 1 of subsection (jj) of section 606 of the tax law, as
amended by section 4 of part I of chapter 59 of the  laws  of  2012,  is
amended to read as follows:
  (1)  Allowance  of credit. A taxpayer that is eligible pursuant to the
provisions of section twenty-eight of this chapter shall  be  allowed  a

S. 6359--D                         190                        A. 8559--D

credit  to  be  computed  as  provided  in  such section against the tax
imposed by this article. The tax credit allowed pursuant to this section
shall apply to taxable years beginning before January first,  two  thou-
sand [fifteen] SEVENTEEN.
  S 5. This act shall take effect immediately.

                                 PART P

  Section  1.  Subdivision 4 of section 22 of the public housing law, as
amended by section 2 of part J of chapter 59 of the  laws  of  2012,  is
amended to read as follows:
  4.  Statewide  limitation. The aggregate dollar amount of credit which
the commissioner may allocate to  eligible  low-income  buildings  under
this article shall be [forty-eight] FIFTY-SIX million dollars. The limi-
tation  provided  by  this subdivision applies only to allocation of the
aggregate dollar amount of credit by  the  commissioner,  and  does  not
apply to allowance to a taxpayer of the credit with respect to an eligi-
ble low-income building for each year of the credit period.
  S 2. Subdivision 4 of section 22 of the public housing law, as amended
by section one of this act, is amended to read as follows:
  4.  Statewide  limitation. The aggregate dollar amount of credit which
the commissioner may allocate to  eligible  low-income  buildings  under
this  article shall be [fifty-six] SIXTY-FOUR million dollars. The limi-
tation provided by this subdivision applies only to  allocation  of  the
aggregate  dollar  amount  of  credit  by the commissioner, and does not
apply to allowance to a taxpayer of the credit with respect to an eligi-
ble low-income building for each year of the credit period.
  S 3. This act shall take effect immediately; provided,  however,  that
section two of this act shall take effect April 1, 2015.

                                 PART Q

                          Intentionally Omitted

                                 PART R

  Section  1.    Section  210  of the tax law is amended by adding a new
subdivision 48 to read as follows:
  48. REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (A)  A  QUALIFIED  NEW
YORK  MANUFACTURER,  AS DEFINED IN SUBPARAGRAPH (VI) OF PARAGRAPH (A) OF
SUBDIVISION ONE OF THIS SECTION, WILL BE ALLOWED A CREDIT EQUAL TO TWEN-
TY PERCENT OF THE REAL PROPERTY TAX IT PAID DURING THE TAXABLE YEAR  FOR
REAL  PROPERTY  OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCI-
PALLY USED DURING THE TAXABLE YEAR FOR MANUFACTURING TO THE  EXTENT  NOT
DEDUCTED  IN  DETERMINING  ENTIRE  NET  INCOME.  THIS CREDIT WILL NOT BE
ALLOWED IF THE REAL PROPERTY TAXES THAT ARE THE BASIS  FOR  THIS  CREDIT
ARE INCLUDED IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAY-
ER.
  (B)  (1)  FOR PURPOSES OF THIS SUBDIVISION, THE TERM REAL PROPERTY TAX
MEANS A CHARGE IMPOSED UPON REAL PROPERTY BY OR ON BEHALF OF  A  COUNTY,
CITY,  TOWN, VILLAGE OR SCHOOL DISTRICT FOR MUNICIPAL OR SCHOOL DISTRICT
PURPOSES, PROVIDED THAT THE CHARGE IS  LEVIED  FOR  THE  GENERAL  PUBLIC
WELFARE  BY  THE  PROPER  TAXING  AUTHORITIES AT A LIKE RATE AGAINST ALL
PROPERTY OVER WHICH SUCH AUTHORITIES  HAVE  JURISDICTION,  AND  PROVIDED
THAT  WHERE TAXES ARE LEVIED PURSUANT TO ARTICLE EIGHTEEN OR NINETEEN OF

S. 6359--D                         191                        A. 8559--D

THE REAL PROPERTY TAX LAW, THE PROPERTY MUST HAVE BEEN TAXED AT THE RATE
DETERMINED FOR THE CLASS IN WHICH IT IS CONTAINED, AS PROVIDED  BY  SUCH
ARTICLE  EIGHTEEN  OR  NINETEEN,  WHICHEVER IS APPLICABLE. THE TERM REAL
PROPERTY TAX DOES NOT INCLUDE A CHARGE FOR LOCAL BENEFITS, INCLUDING ANY
PORTION OF THAT CHARGE THAT IS PROPERLY ALLOCATED TO THE COSTS ATTRIBUT-
ABLE  TO  MAINTENANCE  OR INTEREST, WHEN (I) THE PROPERTY SUBJECT TO THE
CHARGE IS LIMITED TO THE PROPERTY THAT BENEFITS FROM THE CHARGE, OR (II)
THE AMOUNT OF THE CHARGE IS DETERMINED BY THE BENEFIT  TO  THE  PROPERTY
ASSESSED,  OR  (III)  THE  IMPROVEMENT  FOR WHICH THE CHARGE IS ASSESSED
TENDS TO INCREASE THE PROPERTY VALUE.
  (2) IN ADDITION, THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY THE
TAXPAYER UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR  BY
THE  TAXPAYER IN MANUFACTURING WHERE THE TAXPAYER LEASES SUCH REAL PROP-
ERTY FROM AN UNRELATED THIRD  PARTY  IF  THE  FOLLOWING  CONDITIONS  ARE
SATISFIED:  (I)  THE TAX MUST BE PAID BY THE TAXPAYER AS LESSEE PURSUANT
TO EXPLICIT REQUIREMENTS IN A WRITTEN LEASE, AND (II)  THE  TAXPAYER  AS
LESSEE  HAS  PAID  SUCH  TAXES  DIRECTLY TO THE TAXING AUTHORITY AND HAS
RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI-
TY. IN THE CASE OF A COMBINED GROUP THAT  CONSTITUTES  A  QUALIFIED  NEW
YORK  MANUFACTURER,  THE CONDITIONS IN THE PRECEDING SENTENCE ARE SATIS-
FIED IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND  ANOTHER
CORPORATION  IN  THE  COMBINED  GROUP  MAKES  THE PAYMENTS TO THE TAXING
AUTHORITY.
  (3) THE TERM REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY  THE
TAXPAYER  IN  CONNECTION  WITH  AN  AGREEMENT FOR THE PAYMENT IN LIEU OF
TAXES ON REAL PROPERTY, WHETHER SUCH PROPERTY IS OWNED OR LEASED BY  THE
TAXPAYER.
  (4)  THE  REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE YEAR
SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY.
  (C) CREDIT RECAPTURE. WHERE A QUALIFIED NEW YORK  MANUFACTURER'S  REAL
PROPERTY  TAXES  WHICH  WERE  THE  BASIS FOR THE ALLOWANCE OF THE CREDIT
PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK,  IN
THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (1)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (2)  THE
AMOUNT  OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY TAXES.
IF SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE  YEAR,
THE  TAXPAYER  MUST DETERMINE HOW MUCH OF SUCH REDUCTION IS ATTRIBUTABLE
TO EACH YEAR COVERED BY SUCH FINAL ORDER AND  CALCULATE  THE  AMOUNT  OF
CREDIT  WHICH  IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED FOR EACH
YEAR BASED ON SUCH REDUCTION.
  (D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR
SHALL  NOT  REDUCE  THE  TAX  DUE FOR SUCH YEAR TO LESS THAN TWENTY-FIVE
DOLLARS.
  S 2. Paragraph (b) of subdivision 9 of section 208 of the tax  law  is
amended by adding a new subparagraph 21 to read as follows:
  (21)  THE  AMOUNT  OF ANY FEDERAL DEDUCTION FOR REAL PROPERTY TAXES TO
THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF THE  CALCULATION  OF  THE
REAL  PROPERTY  TAX  CREDIT  FOR MANUFACTURERS ALLOWED UNDER SUBDIVISION
FORTY-EIGHT OF SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law is amended by adding a new clause (xxxviii) to read as
follows:

(XXXVIII) REAL PROPERTY TAX           AMOUNT OF CREDIT UNDER

S. 6359--D                         192                        A. 8559--D

CREDIT FOR MANUFACTURERS UNDER        SUBDIVISION FORTY-EIGHT OF
SUBSECTION (XX)                       SECTION TWO HUNDRED TEN

  S  4.  Subsections  (yy)  and  (zz)  of section 606 of the tax law, as
relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
relettered  subsections  (yyy)  and  (zzz)  and a new subsection (xx) is
added to read as follows:
  (XX) REAL PROPERTY TAX CREDIT FOR MANUFACTURERS. (1) A  QUALIFIED  NEW
YORK  MANUFACTURER  WILL  BE ALLOWED A CREDIT EQUAL TO TWENTY PERCENT OF
THE REAL PROPERTY TAX IT PAID DURING THE TAXABLE YEAR FOR REAL  PROPERTY
OWNED BY SUCH MANUFACTURER IN NEW YORK WHICH WAS PRINCIPALLY USED DURING
THE TAXABLE YEAR FOR MANUFACTURING TO THE EXTENT NOT DEDUCTED IN COMPUT-
ING  FEDERAL  ADJUSTED  GROSS INCOME. THIS CREDIT WILL NOT BE ALLOWED IF
THE REAL PROPERTY TAXES THAT ARE THE BASIS FOR THIS CREDIT ARE  INCLUDED
IN THE CALCULATION OF ANOTHER CREDIT CLAIMED BY THE TAXPAYER.
  (2)(A)  THE  TERM QUALIFIED NEW YORK MANUFACTURER HAS THE SAME MEANING
AS UNDER SUBPARAGRAPH (VI)  OF  PARAGRAPH  (A)  OF  SUBDIVISION  ONE  OF
SECTION TWO HUNDRED TEN OF THIS CHAPTER.
  (B)  (I)  THE  TERM REAL PROPERTY TAX MEANS A CHARGE IMPOSED UPON REAL
PROPERTY BY OR ON BEHALF OF A COUNTY,  CITY,  TOWN,  VILLAGE  OR  SCHOOL
DISTRICT  FOR  MUNICIPAL  OR SCHOOL DISTRICT PURPOSES, PROVIDED THAT THE
CHARGE IS LEVIED FOR THE GENERAL PUBLIC WELFARE  BY  THE  PROPER  TAXING
AUTHORITIES AT A LIKE RATE AGAINST ALL PROPERTY OVER WHICH SUCH AUTHORI-
TIES  HAVE JURISDICTION, AND PROVIDED THAT WHERE TAXES ARE LEVIED PURSU-
ANT TO ARTICLE EIGHTEEN OR NINETEEN OF THE REAL PROPERTY  TAX  LAW,  THE
PROPERTY  MUST  HAVE  BEEN TAXED AT THE RATE DETERMINED FOR THE CLASS IN
WHICH IT IS CONTAINED, AS PROVIDED BY SUCH ARTICLE EIGHTEEN OR NINETEEN,
WHICHEVER IS APPLICABLE. THE TERM REAL PROPERTY TAX DOES NOT  INCLUDE  A
CHARGE  FOR LOCAL BENEFITS, INCLUDING ANY PORTION OF THAT CHARGE THAT IS
PROPERLY ALLOCATED TO THE COSTS ATTRIBUTABLE TO MAINTENANCE OR INTEREST,
WHEN (I) THE PROPERTY SUBJECT TO THE CHARGE IS LIMITED TO  THE  PROPERTY
THAT  BENEFITS  FROM  THE  CHARGE,  OR  (II) THE AMOUNT OF THE CHARGE IS
DETERMINED BY THE  BENEFIT  TO  THE  PROPERTY  ASSESSED,  OR  (III)  THE
IMPROVEMENT FOR WHICH THE CHARGE IS ASSESSED TENDS TO INCREASE THE PROP-
ERTY VALUE.
  (II)  IN  ADDITION,  THE TERM REAL PROPERTY TAX INCLUDES TAXES PAID BY
THE TAXPAYER UPON REAL PROPERTY PRINCIPALLY USED DURING THE TAXABLE YEAR
BY THE TAXPAYER IN MANUFACTURING WHERE THE  TAXPAYER  LEASES  SUCH  REAL
PROPERTY  FROM  AN UNRELATED THIRD PARTY IF THE FOLLOWING CONDITIONS ARE
SATISFIED: (I) THE TAX MUST BE PAID BY THE TAXPAYER AS  LESSEE  PURSUANT
TO  EXPLICIT  REQUIREMENTS  IN A WRITTEN LEASE, AND (II) THE TAXPAYER AS
LESSEE HAS PAID SUCH TAXES DIRECTLY TO  THE  TAXING  AUTHORITY  AND  HAS
RECEIVED A WRITTEN RECEIPT FOR PAYMENT OF TAXES FROM THE TAXING AUTHORI-
TY.  IN  THE  CASE  OF A COMBINED GROUP THAT CONSTITUTES A QUALIFIED NEW
YORK MANUFACTURER, THE CONDITIONS IN THE PRECEDING SENTENCE  ARE  SATIS-
FIED  IF ONE CORPORATION IN THE COMBINED GROUP IS THE LESSEE AND ANOTHER
CORPORATION IN THE COMBINED GROUP  MAKES  THE  PAYMENTS  TO  THE  TAXING
AUTHORITY.
  (III)  THE  TERM  REAL PROPERTY TAX DOES NOT INCLUDE A PAYMENT MADE BY
THE TAXPAYER IN CONNECTION WITH AN AGREEMENT FOR THE PAYMENT IN LIEU  OF
TAXES  ON REAL PROPERTY, WHETHER SUCH PROPERTY IS OWNED OR LEASED BY THE
TAXPAYER.
  (IV) THE REAL PROPERTY TAXES MUST BE PAID BY THE TAXPAYER IN THE  YEAR
SUCH TAXES BECOME A LIEN ON THE REAL PROPERTY.
  (3)  CREDIT  RECAPTURE. WHERE A QUALIFIED NEW YORK MANUFACTURER'S REAL
PROPERTY TAXES WHICH WERE THE BASIS FOR  THE  ALLOWANCE  OF  THE  CREDIT

S. 6359--D                         193                        A. 8559--D

PROVIDED FOR UNDER THIS SUBDIVISION ARE SUBSEQUENTLY REDUCED AS A RESULT
OF A FINAL ORDER IN ANY PROCEEDING UNDER ARTICLE SEVEN OF THE REAL PROP-
ERTY  TAX LAW OR OTHER PROVISION OF LAW, THE TAXPAYER SHALL ADD BACK, IN
THE  TAXABLE YEAR IN WHICH SUCH FINAL ORDER IS ISSUED, THE EXCESS OF (I)
THE AMOUNT OF CREDIT ORIGINALLY ALLOWED FOR A TAXABLE YEAR OVER (II) THE
AMOUNT OF CREDIT DETERMINED BASED UPON THE REDUCED REAL PROPERTY  TAXES.
IF  SUCH FINAL ORDER REDUCES REAL PROPERTY TAXES FOR MORE THAN ONE YEAR,
THE TAXPAYER MUST DETERMINE HOW MUCH OF SUCH REDUCTION  IS  ATTRIBUTABLE
TO  EACH  YEAR  COVERED  BY SUCH FINAL ORDER AND CALCULATE THE AMOUNT OF
CREDIT WHICH IS REQUIRED BY THIS SUBDIVISION TO BE RECAPTURED  FOR  EACH
YEAR BASED ON SUCH REDUCTION.
  (4)  IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY
TAXABLE YEAR EXCEEDS THE TAXPAYER'S TAX FOR SUCH YEAR, THE  EXCESS  WILL
BE  TREATED  AS  AN OVERPAYMENT TO BE CREDITED OR REFUNDED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF  THIS  ARTICLE,
PROVIDED HOWEVER, NO INTEREST WILL BE PAID THEREON.
  S  4-a.  Subsection  (b)  of  section 612 of the tax law is amended by
adding a new paragraph 40 to read as follows:
  (40) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR REAL  PROPERTY  TAXES  TO
THE  EXTENT  SUCH  TAXES ARE USED AS THE BASIS OF THE CALCULATION OF THE
REAL PROPERTY TAX CREDIT FOR MANUFACTURERS ALLOWED UNDER SUBSECTION (XX)
OF SECTION SIX HUNDRED SIX OF THIS ARTICLE.
  S 5. Subparagraphs (vi) and (vii) of paragraph (a) of subdivision 1 of
section 210 of the tax law, subparagraph (vi) as amended by section 1 of
part C of chapter 56 of the laws of 2011 and subparagraph (vii) as added
by section 1 of part Z of chapter 59 of the laws of 2013, are amended to
read as follows:
  (vi) for taxable years beginning on or  after  January  [thirty-first]
FIRST,  two  thousand  [seven]  FOURTEEN,  the amount prescribed by this
paragraph for a taxpayer which is a  qualified  New  York  manufacturer,
shall  be  computed at the rate of [six and one-half (6.5)] ZERO percent
of the taxpayer's entire net income base. For taxable years beginning on
or after January first, two thousand twelve and  before  January  first,
two  thousand  fifteen,  the  amount  prescribed by this paragraph for a
taxpayer which is an eligible qualified New York manufacturer  shall  be
computed  at  the  rate  of  three and one-quarter (3.25) percent of the
taxpayer's entire net income base.  The term "manufacturer" shall mean a
taxpayer which during the taxable year is  principally  engaged  in  the
production  of goods by manufacturing, processing, assembling, refining,
mining, extracting, farming,  agriculture,  horticulture,  floriculture,
viticulture  or commercial fishing. However, the generation and distrib-
ution  of  electricity,  the  distribution  of  natural  gas,  and   the
production  of steam associated with the generation of electricity shall
not be qualifying activities for a manufacturer under this subparagraph.
Moreover, the combined group shall be considered  a  "manufacturer"  for
purposes  of  this  subparagraph  only  if the combined group during the
taxable year is principally engaged in the activities set forth in  this
paragraph,  or  any  combination thereof. A taxpayer or a combined group
shall be "principally engaged" in activities described above if,  during
the  taxable  year, more than fifty percent of the gross receipts of the
taxpayer or combined group, respectively, are derived from receipts from
the sale of goods produced by such activities. In computing  a  combined
group's  gross  receipts, intercorporate receipts shall be eliminated. A
"qualified New York manufacturer" is a manufacturer which  has  property
in  New  York  which  is  described in clause (A) of subparagraph (i) of
paragraph (b) of subdivision twelve of this section and either  (I)  the

S. 6359--D                         194                        A. 8559--D

adjusted  basis  of such property for federal income tax purposes at the
close of the taxable year is at least one million dollars or (II) all of
its real and personal property is located in New York. [In  addition,  a
"qualified  New York manufacturer" means a taxpayer which is defined as]
A TAXPAYER OR, IN THE CASE OF A COMBINED REPORT, A COMBINED GROUP,  THAT
DOES  NOT  SATISFY  THE  PRINCIPALLY ENGAGED TEST MAY BE A QUALIFIED NEW
YORK MANUFACTURER IF THE TAXPAYER OR THE COMBINED GROUP  EMPLOYS  DURING
THE  TAXABLE  YEAR AT LEAST TWO THOUSAND FIVE HUNDRED EMPLOYEES IN MANU-
FACTURING IN NEW YORK AND THE TAXPAYER OR THE COMBINED GROUP HAS PROPER-
TY IN THE STATE USED IN MANUFACTURING, THE ADJUSTED BASIS OF  WHICH  FOR
FEDERAL INCOME TAX PURPOSES AT THE CLOSE OF THE TAXABLE YEAR IS AT LEAST
ONE HUNDRED MILLION DOLLARS. THE AMOUNT PRESCRIBED BY THIS PARAGRAPH FOR
A  TAXPAYER  THAT IS a qualified emerging technology company under para-
graph (c) of subdivision one of section thirty-one hundred two-e of  the
public  authorities  law regardless of the ten million dollar limitation
expressed in subparagraph one of such paragraph (c) SHALL BE COMPUTED AT
THE RATE OF FIVE AND NINE-TENTHS PERCENT OF THE  TAXPAYER'S  ENTIRE  NET
INCOME  BASE.  The  commissioner shall establish guidelines and criteria
that specify requirements by which a manufacturer may be  classified  as
an  eligible  qualified  New York manufacturer. Criteria may include but
not be limited to factors such as regional  unemployment,  the  economic
impact  that  manufacturing has on the surrounding community, population
decline within the region and median income within the region  in  which
the manufacturer is located. In establishing these guidelines and crite-
ria,  the  commissioner shall endeavor that the total annual cost of the
lower rates shall not exceed twenty-five million dollars.
  [(vii) For a qualified New York manufacturer, as defined  in  subpara-
graph  (vi)  of this paragraph, the rate at which the tax is computed in
effect for taxable years beginning on or after January first, two  thou-
sand thirteen and before January first, two thousand fourteen for quali-
fied  New  York  manufacturers  shall  be reduced by nine and two-tenths
percent for taxable years commencing on  or  after  January  first,  two
thousand fourteen and before January first, two thousand fifteen, twelve
and  three-tenths percent for taxable years commencing on or after Janu-
ary first, two thousand fifteen and before January first,  two  thousand
sixteen, fifteen and four-tenths percent for taxable years commencing on
or  after  January first, two thousand sixteen and before January first,
two thousand eighteen, and twenty-five percent for taxable years  begin-
ning on or after January first, two thousand eighteen.]
  S  6.  Subparagraph 2 of paragraph (b) of subdivision 1 of section 210
of the tax law, as amended by section 1 of part GG-1 of  chapter  57  of
the laws of 2008, is amended to read as follows:
  (2)  For  purposes  of  subparagraph  one  of this paragraph, the term
"manufacturer" shall mean a taxpayer which during the  taxable  year  is
principally  engaged  in the production of goods by manufacturing, proc-
essing, assembling, refining, mining, extracting, farming,  agriculture,
horticulture, floriculture, viticulture or commercial fishing. Moreover,
for  purposes  of  computing  the capital base in a combined report, the
combined group shall be considered a "manufacturer" for purposes of this
subparagraph only if the combined group during the taxable year is prin-
cipally engaged in the activities set forth in this subparagraph, or any
combination thereof. A taxpayer or a combined group shall be "principal-
ly engaged" in activities described above if, during the  taxable  year,
more  than  fifty  percent  of  the  gross  receipts  of the taxpayer or
combined group, respectively, are derived from receipts from the sale of
goods produced by such activities. In computing a combined group's gross

S. 6359--D                         195                        A. 8559--D

receipts, intercorporate receipts shall be eliminated. A "qualified  New
York  manufacturer" is a manufacturer that has property in New York that
is described in clause (A) of  subparagraph  (i)  of  paragraph  (b)  of
subdivision  twelve of this section and either (i) the adjusted basis of
that property for federal income tax purposes at the close of the  taxa-
ble  year  is  at  least one million dollars or (ii) all of its real and
personal property is located in New York. In addition, a "qualified  New
York  manufacturer"  means  a  taxpayer  that  is defined as a qualified
emerging technology company under paragraph (c) of  subdivision  one  of
section  thirty-one  hundred two-e of the public authorities law regard-
less of the ten million dollar limitation expressed in subparagraph  one
of  such paragraph.   A TAXPAYER OR, IN THE CASE OF A COMBINED REPORT, A
COMBINED GROUP, THAT DOES NOT SATISFY THE PRINCIPALLY ENGAGED  TEST  MAY
BE  A  QUALIFIED  NEW  YORK MANUFACTURER IF THE TAXPAYER OR THE COMBINED
GROUP EMPLOYS DURING THE TAXABLE YEAR AT LEAST TWO THOUSAND FIVE HUNDRED
EMPLOYEES IN MANUFACTURING IN NEW YORK AND THE TAXPAYER OR THE  COMBINED
GROUP  HAS  PROPERTY  IN  THE  STATE USED IN MANUFACTURING, THE ADJUSTED
BASIS OF WHICH FOR FEDERAL INCOME TAX PURPOSES AT THE CLOSE OF THE TAXA-
BLE YEAR IS AT LEAST ONE HUNDRED MILLION DOLLARS.
  S 7. Subparagraph (iii) of paragraph (c) of subdivision 1  of  section
210 of the tax law, as added by section 3 of part Z of chapter 59 of the
laws of 2013, is amended to read as follows:
  (iii)  For  a  qualified New York manufacturer, as defined in subpara-
graph (vi) of paragraph (a) of this subdivision AND A QUALIFIED EMERGING
TECHNOLOGY COMPANY UNDER PARAGRAPH (C) OF  SUBDIVISION  ONE  OF  SECTION
THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW REGARDLESS OF THE
TEN  MILLION  DOLLAR  LIMITATION  EXPRESSED  IN SUBPARAGRAPH ONE OF SUCH
PARAGRAPH (C), the rate at which the tax is computed in effect for taxa-
ble years beginning on or after January first, two thousand thirteen and
before January first, two  thousand  fourteen  for  qualified  New  York
manufacturers  shall be reduced by nine and two-tenths percent for taxa-
ble years commencing on or after January first,  two  thousand  fourteen
and  before January first, two thousand fifteen, twelve and three-tenths
percent for taxable years commencing on  or  after  January  first,  two
thousand fifteen and before January first, two thousand sixteen, fifteen
and four-tenths percent for taxable years commencing on or after January
first, two thousand sixteen and before January first, two thousand eigh-
teen,  and  twenty-five  percent for taxable years beginning on or after
January first, two thousand eighteen.
  S 8. Subparagraph 6 of paragraph (d) of subdivision 1 of  section  210
of  the  tax  law,  as added by section 4 of part Z of chapter 59 of the
laws of 2013, is amended to read as follows:
  (6) For a qualified New York manufacturer, as defined in  subparagraph
(vi)  of  paragraph  (a)  of  this subdivision, AND A QUALIFIED EMERGING
TECHNOLOGY COMPANY UNDER PARAGRAPH (C) OF  SUBDIVISION  ONE  OF  SECTION
THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW REGARDLESS OF THE
TEN  MILLION  DOLLAR  LIMITATION  EXPRESSED  IN SUBPARAGRAPH ONE OF SUCH
PARAGRAPH (C), the amounts prescribed in subparagraphs one and  four  of
this paragraph in effect for taxable years beginning on or after January
first,  two  thousand  thirteen  and  before January first, two thousand
fourteen for qualified New York manufacturers shall be reduced  by  nine
and  two-tenths percent for taxable years commencing on or after January
first, two thousand fourteen and  before  January  first,  two  thousand
fifteen, twelve and three-tenths percent for taxable years commencing on
or  after  January first, two thousand fifteen and before January first,
two thousand sixteen, fifteen and four-tenths percent for taxable  years

S. 6359--D                         196                        A. 8559--D

commencing  on  or  after January first, two thousand sixteen and before
January first, two thousand eighteen, and twenty-five percent for  taxa-
ble years beginning on or after January first, two thousand eighteen.
  S  9.  Severability.  The  legislature  intends by this act to provide
needed tax relief to New York manufacturers.  However,  if  a  court  of
final,  competent  jurisdiction adjudges the tax rates imposed on quali-
fied New York manufacturers to be invalid, qualified New  York  manufac-
turers  shall  be  subject  to the same tax rates as all other taxpayers
subject to tax under article 9-A of the tax law. Provided further, if  a
court  of  final,  competent  jurisdiction adjudges that the tax credits
provided by this act to qualified New York manufacturers to be  invalid,
such  credits  shall  be  deemed  repealed  and shall be of no force and
effect as to any taxpayers.
  S 10. This act shall take effect immediately and shall apply to  taxa-
ble  years  beginning on or after January 1, 2014 provided that sections
one, two, three, five, six, seven, eight and  nine  of  this  act  shall
expire  December  31,  2014 when upon such date such provisions shall be
deemed repealed.

                                 PART S

  Section 1. Sections 185, 187-j, 187-k, 187-l, 187-m, 187-q, 187-r  and
187-s of the tax law are REPEALED.
  S  2.  Paragraph  (c)  of subdivision 9 of section 400 of the economic
development law, as added by section 2 of part V of chapter  61  of  the
laws of 2011, is amended to read as follows:
  (c) the business entity must not be substantially similar in ownership
and  operation  to  another taxpayer taxable or previously taxable under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION one hundred eighty-five of  article  nine,  former  section  one
hundred  eighty-six or article nine-A, twenty-two, thirty-two or thirty-
three of the tax law or the income or losses of which is or was includa-
ble under article twenty-two of the tax law;
  S 3. Paragraph (c) of subdivision 6 of section  431  of  the  economic
development  law,  as  added by section 1 of part A of chapter 68 of the
laws of 2013, is amended to read as follows:
  (c) the business is not substantially  similar  in  operation  and  in
ownership  to  a  business  entity  (or entities) taxable, or previously
taxable within the last five taxable years, under  section  one  hundred
eighty-three[,]  OR  one hundred eighty-four, FORMER SECTION one hundred
eighty-five or FORMER SECTION one hundred eighty-six  of  the  tax  law,
article nine-A, thirty-two or thirty-three of the tax law, article twen-
ty-three  of  the  tax law or which would have been subject to tax under
such article twenty-three (as such article  was  in  effect  on  January
first,  nineteen  hundred eighty), or the income (or losses) of which is
(or was) includable under article twenty-two of the tax law; and
  S 4. Paragraph 1 of subdivision (a), subdivision (f), paragraph  1  of
subdivision  (i)  and  subdivisions (j) and (k) of section 14 of the tax
law, paragraph 1 of subdivision (a) as amended by section 3 of  part  V1
of  chapter 109 of the laws of 2006, subdivisions (f) and (j) as amended
by section 10 of part CC of chapter 85 of the laws of 2002, paragraph  1
of  subdivision  (i)  and  subdivision (k) as amended and paragraph 4 of
subdivision (j) as added by section 5 of part A of  chapter  63  of  the
laws  of  2005,  subparagraph  (B)  of paragraph 4 of subdivision (j) as
amended by chapter 161 of the laws of 2005 and paragraph 5  of  subdivi-

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sion  (j)  as amended by section 4 of part V1 of chapter 109 of the laws
of 2006, are amended to read as follows:
  (1)  except as provided in paragraphs one-a and one-b of this subdivi-
sion, for purposes of [section one hundred eighty-seven-j and]  articles
nine-A,  twenty-two,  thirty-two  and  thirty-three of this chapter, for
each of the taxable years within  the  "business  tax  benefit  period,"
which  period  shall consist of (A) in the case of a business enterprise
with a test date occurring on or before December thirty-first, two thou-
sand one, the first fifteen taxable years beginning on or after  January
first, two thousand one, (B) in the case of a business enterprise with a
test  date  occurring  on  or after January first, two thousand two, but
prior to April first, two thousand five, the fifteen taxable years  next
following  the business enterprise's test year, and (C) in the case of a
business enterprise which is first certified under article eighteen-B of
the general municipal law on or after April first,  two  thousand  five,
the  ten taxable years starting with the taxable year in which the busi-
ness enterprise's first date of certification under  article  eighteen-B
of  the  general  municipal law occurs, but only with respect to each of
such business tax benefit period years for which the employment test  is
met,
  (f)  Taxable  year.  The term "taxable year" means the taxable year of
the business enterprise under section one hundred eighty-three[,] OR one
hundred eighty-four[, one hundred eighty-five]  or  former  section  one
hundred eighty-six of article nine, or under article nine-A, twenty-two,
thirty-two  or  thirty-three  of  this chapter. If a business enterprise
does not have a taxable year because  it  is  exempt  from  taxation  or
otherwise  not  required  to file a return under any of such sections of
article nine or under article nine-A, twenty-two, thirty-two or  thirty-
three,  then the term "taxable year" means (i) the business enterprise's
federal taxable year, or, (ii) if the enterprise does not have a federal
taxable year, the calendar year.
  (1) for purposes of [section one  hundred  eighty-seven-j  of  article
nine,  and]  articles nine-A, twenty-two, thirty-two and thirty-three of
this chapter, on the first day of the taxable year during which  revoca-
tion of its certification under article eighteen-B of the general munic-
ipal law occurs, and
  (j)  New  business.  (1) A new business shall include any corporation,
except a corporation which is substantially similar in operation and  in
ownership  to  a  business  entity  (or entities) taxable, or previously
taxable, under section one hundred  eighty-three,  one  hundred  eighty-
four,  FORMER  SECTION  one  hundred  eighty-five  or FORMER SECTION one
hundred eighty-six of article nine; article nine-A,  article  thirty-two
or thirty-three of this chapter; article twenty-three of this chapter or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the  income  (or  losses)  of which is (or was) includable under article
twenty-two of this chapter.
  (2) For purposes of article twenty-two of this chapter, an  individual
who is either a sole proprietor or a member of a partnership shall qual-
ify as an owner of a new business unless the business of which the indi-
vidual  is  an owner is substantially similar in operation and in owner-
ship to a business entity taxable, or previously taxable, under  section
one  hundred  eighty-three,  one hundred eighty-four, FORMER SECTION one
hundred eighty-five or FORMER SECTION one hundred eighty-six of  article
nine;  article nine-A, thirty-two or thirty-three of this chapter; arti-
cle twenty-three of this chapter or which would have been subject to tax

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under such article twenty-three (as such article was in effect on  Janu-
ary  first,  nineteen hundred eighty) or the income (or losses) of which
is (or was) includable under article twenty-two.
  (3)  For purposes of article twenty-two of this chapter, a shareholder
of a New York S corporation shall be treated as the owner of a new busi-
ness with respect to such share if the corporation qualifies  as  a  new
business pursuant to paragraph one of this subdivision.
  (4) (A)(i) Notwithstanding paragraphs one and two of this subdivision,
a new business shall include any corporation which is identical in oper-
ation  and  ownership  to  a business entity (or entities) taxable under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION one hundred eighty-five of article nine; article nine-A, article
thirty-two or thirty-three of this chapter or the income (or losses)  of
which  is  includable under article twenty-two of this chapter, provided
such corporation and such business entity or entities are  operating  in
different counties in the state.
  (ii)  Notwithstanding  paragraphs  one and two of this subdivision, an
individual who is either a sole proprietor or a member of a  partnership
shall qualify as an owner of a new business if the business of which the
individual  is  an owner is identical in operation and in ownership to a
business entity (or entities) taxable under section one hundred  eighty-
three[,] OR one hundred eighty-four or FORMER SECTION one hundred eight-
y-five  of  article  nine; article nine-A, article thirty-two or thirty-
three of this chapter or the income (or losses) of which  is  includable
under  article  twenty-two  of  this chapter, provided such business and
such business entity or entities are operating in different counties  in
the state.
  (iii)  Any  corporation qualifying as a new business or any individual
qualifying as an owner of a new business as a result of  the  provisions
of this subparagraph shall have the same business tax benefit period and
sales  and  use tax benefit period as the business entity to which it is
identical in operation and in ownership.
  (B) Notwithstanding any provisions of this subdivision to the contrary
and notwithstanding subdivision c of section  eighteen  of  part  CC  of
chapter  eighty-five  of  the laws of two thousand two, a corporation or
partnership, which was first certified under article eighteen-B  of  the
general  municipal law before August first, two thousand two, has a base
period of zero years or zero employment for  its  base  period,  and  is
similar  in  operation and in ownership to a business entity or entities
taxable, or previously taxable, under sections  specified  in  paragraph
one  or  two of this subdivision or which would have been subject to tax
under article twenty-three of this  chapter  (as  such  article  was  in
effect on January first, nineteen hundred eighty) or the income or loss-
es  of which is or was includable under article twenty-two of this chap-
ter shall not be deemed a new business if it was not formed for a  valid
business  purpose, as such term is defined in clause (D) of subparagraph
one of paragraph (o) of subdivision nine of section two hundred eight of
this chapter and was formed solely to gain empire zone benefits.
  (5) Notwithstanding any other provision of this  section,  a  business
enterprise which is approved by the commissioner of economic development
as  the owner of a qualified investment project or a significant capital
investment project pursuant to subdivision (w) of section  nine  hundred
fifty-nine of the general municipal law, has a base period of zero years
and  places in service property (or a project that includes such proper-
ty) which comprises such qualified investment project  or  such  signif-
icant  capital  investment project[,], shall be deemed to be a new busi-

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ness under this section. Provided, however, to be deemed a new  business
under  this  paragraph,  such  business  enterprise  shall have received
certification under article eighteen-B of the general  business  law  by
December thirty-first, two thousand seven.
  (k)  If  the  designation of an area as an empire zone is no longer in
effect because section nine hundred sixty-nine of the general  municipal
law  was not amended to extend the effective date of such designation so
that the designations of all empire zones pursuant to article eighteen-B
of the general municipal law have expired, a  business  enterprise  that
was  certified  pursuant  to article eighteen-B of the general municipal
law on the day immediately preceding the day on which  such  designation
expired  shall  be deemed to continue to be certified under such article
eighteen-B for purposes of this section, and sections fifteen,  sixteen,
[section  one  hundred  eighty-seven-j,]  subdivisions  twenty-seven and
twenty-eight of section two hundred ten, subsections (bb)  and  (cc)  of
section six hundred six, subdivision [(z)] (D) of section eleven hundred
[fifteen]  NINETEEN, subsections (o) and (p) of section fourteen hundred
fifty-six, and subdivisions (r) and (s) of section fifteen hundred elev-
en of this chapter. In addition, if the designation of  an  area  as  an
empire  zone  is no longer in effect because section nine hundred sixty-
nine of the general municipal law was not amended to extend  the  effec-
tive  date  of  such  designation so that the designations of all empire
zones pursuant to article eighteen-B of the general municipal  law  have
expired,  all references to empire zones in the provisions of this chap-
ter listed in the previous sentence  shall  be  read  as  meaning  areas
designated  as  empire zones on the day immediately preceding the day on
which such designation expired.
  S 5. Paragraph 1 of subdivision (h) of section 15 of the  tax  law  is
REPEALED.
  S 6. The closing paragraph of subdivision (a) of section 28 of the tax
law,  as added by section 2 of part V of chapter 62 of the laws of 2006,
is amended to read as follows:
  (4) Notwithstanding any provisions of this section to the contrary,  a
corporation  or  partnership,  which  otherwise qualifies as a qualified
commercial production company, and is similar in operation and in owner-
ship to a business entity or entities taxable,  or  previously  taxable,
under  section one hundred eighty-three[,] OR one hundred eighty-four or
FORMER SECTION one hundred eighty-five of article nine; article  nine-A,
article  thirty-two  or thirty-three of this chapter or which would have
been subject to tax under article twenty-three of this chapter (as  such
article  was in effect on January first, nineteen hundred eighty) or the
income or losses of which is or was includable under article  twenty-two
of  this  chapter  shall  not  be deemed a new or separate business, and
therefore shall not be eligible for empire state  commercial  production
benefits,  if  it  was  not formed for a valid business purpose, as such
term is defined in clause (D) of subparagraph one of  paragraph  (o)  of
subdivision  nine  of  section two hundred eight of this chapter and was
formed solely to gain empire state commercial  production  credit  bene-
fits.
  S  7.  Subdivision  (a)  of  section  31 of the tax law, as amended by
section 7 of part G of chapter 61 of the laws of  2011,  is  amended  to
read as follows:
  (a)  General.  A  taxpayer  subject  to tax under [section one hundred
eighty-five,] article nine-A, twenty-two, thirty-two or thirty-three  of
this chapter shall be allowed a credit against such tax, pursuant to the
provisions  referenced in subdivision (g) of this section. The amount of

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the credit, allowable for up to ten consecutive taxable  years,  is  the
sum of the following four credit components:
  (1) the excelsior jobs tax credit component;
  (2) the excelsior investment tax credit component;
  (3) the excelsior research and development tax credit component; and
  (4) the excelsior real property tax credit component.
  S  8.  Paragraph  1 of subdivision (g) of section 31 of the tax law is
REPEALED.
  S 9. The opening paragraph of  paragraph  1  of  subdivision  (a)  and
subparagraph  (C) of paragraph 2 of subdivision (e) of section 35 of the
tax law, as added by section 3 of part V of chapter 61 of  the  laws  of
2011, are amended to read as follows:
  A taxpayer which is a participant or the owner of a participant in the
economic transformation and facility redevelopment program under article
eighteen  of  the  economic development law that is subject to tax under
[section one hundred eighty-five of article nine,  or]  article  nine-A,
twenty-two,  thirty-two or thirty-three of this chapter shall be allowed
the sum of following  components  against  such  tax,  pursuant  to  the
provisions referenced in subdivision (f) of this section.
  (C) the business entity must not be substantially similar in ownership
and  operation  to  another taxpayer taxable or previously taxable under
section one hundred eighty-three[,] OR one hundred eighty-four or FORMER
SECTION one hundred eighty-five of  article  nine,  former  section  one
hundred  eighty-six of this chapter or article nine-A, twenty-two, thir-
ty-two or thirty-three of this chapter or the income or losses of  which
is or was includable under article twenty-two of this chapter;
  S  10. Paragraph 1 of subdivision (f) of section 35 of the tax law, as
added by section 3 of part V of chapter 61  of  the  laws  of  2011,  is
REPEALED.
  S  11. Paragraph 1 of subdivision (e) of section 38 of the tax law, as
added by section 1 of part EE of chapter 59 of  the  laws  of  2013,  is
REPEALED.
  S 12. Subdivision 2 of section 187 of the tax law, as added by chapter
788 of the laws of 1978, is amended to read as follows:
  2.  In  no event shall the credit herein provided for be allowed in an
amount which will reduce the tax payable to  less  than  the  applicable
minimum  tax  fixed  by  section  one hundred eighty-three[, one hundred
eighty-five] or FORMER SECTION one hundred eighty-six. If, however,  the
amount  of  credit  allowable  under  this  section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such taxable year may be carried over to the following year or years and
may be deducted from the taxpayer's tax for such year or years.
  S 13. Subdivision 5 of section 187-a of the tax law, as added by chap-
ter 142 of the laws of 1997, is amended to read as follows:
  5.  Carryover.  In  no  event  shall  the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable  minimum  tax fixed by section one hundred eighty-three[, one
hundred eighty-five] or FORMER SECTION one hundred  eighty-six  of  this
article.  If, however, the amount of credit allowable under this section
for any taxable year reduces the tax to such amount, any amount of cred-
it  not  deductible  in  such  taxable  year  may be carried over to the
following year or years and may be deducted from the taxpayer's tax  for
such year or years.
  S 14. Subdivisions 1 and 4 of section 187-b of the tax law, as amended
by section 1 of part G of chapter 59 of the laws of 2013, are amended to
read as follows:

S. 6359--D                         201                        A. 8559--D

  1.  General.  A  taxpayer  shall  be  allowed a credit, to be credited
against the taxes imposed under sections one hundred eighty-three[,] AND
one hundred eighty-four[, and one hundred eighty-five] of this  article.
Such  credit,  to  be computed as hereinafter provided, shall be allowed
for  alternative  fuel vehicle refueling and electric vehicle recharging
property placed in service during the taxable year.  Provided,  however,
that  the  amount  of  such  credit allowable against the tax imposed by
section one hundred eighty-four of this article shall be the  excess  of
the credit allowed by this section over the amount of such credit allow-
able against the tax imposed by section one hundred eighty-three of this
article.
  4.  Carryovers.  In  no  event  shall the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable minimum tax fixed by section one hundred eighty-three [or one
hundred  eighty-five] of this article. If, however, the amount of credit
allowable under this section for any taxable year  reduces  the  tax  to
such  amount,  any  amount of credit not deductible in such taxable year
may be carried over to the following year or years and may  be  deducted
from the taxpayer's tax for such year or years.
  S  15. Section 187-c of the tax law, as amended by section 2 of part K
of chapter 59 of the laws of 2012, is amended to read as follows:
  S 187-c. Biofuel production credit. A  taxpayer  shall  be  allowed  a
credit  to be computed as provided in section twenty-eight of this chap-
ter, as added by part X of chapter sixty-two of the laws of two thousand
six, against the tax imposed by this article.  Provided,  however,  that
the amount of such credit allowed against the tax imposed by section one
hundred eighty-four of this article shall be the excess of the amount of
such  credit  over  the  amount  of  any  credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.  In  no event shall the credit under this section be allowed in
an amount which will reduce the tax payable to less than the  applicable
minimum  tax  fixed  by section one hundred eighty-three [or one hundred
eighty-five] of this article. If, however,  the  amount  of  the  credit
allowed  under this section for any taxable year reduces the tax to such
amount, the excess shall be treated as an overpayment of tax to be cred-
ited or refunded in  accordance  with  the  provisions  of  section  six
hundred eighty-six of this chapter. Provided, however, the provisions of
subsection  (c)  of  section  one  thousand eighty-eight of this chapter
notwithstanding, no interest shall  be  paid  thereon.  The  tax  credit
allowed  pursuant to this section shall apply to taxable years beginning
before January first, two thousand twenty.
  S 16. Section 187-d of the tax law, as added by section 3 of  part  II
of chapter 63 of the laws of 2000, is amended to read as follows:
  S  187-d.  Green  building  credit. 1. Allowance of credit. A taxpayer
shall be allowed a credit, to be computed as provided in  section  nine-
teen  of this chapter, against the taxes imposed by sections one hundred
eighty-three, one hundred eighty-four[,  one  hundred  eighty-five]  and
FORMER  SECTION one hundred eighty-six of this article. Provided, howev-
er, that the amount of such credit allowable against the tax imposed  by
section  one  hundred eighty-four of this article shall be the excess of
the amount of such credit over the amount of any credit allowed by  this
section  against  the tax imposed by section one hundred eighty-three of
this article.
  2. Carryovers. In no event shall the  credit  under  this  section  be
allowed  in an amount which will reduce the tax payable to less than the
applicable minimum tax fixed by section one hundred  eighty-three[,  one

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hundred  eighty-five]  or  FORMER SECTION one hundred eighty-six of this
article. If, however, the amount of credit allowable under this  section
for any taxable year reduces the tax to such amount, any amount of cred-
it  not  deductible  in  such  taxable  year  may be carried over to the
following year or years and may be deducted from the taxpayer's tax  for
such year or years.
  S  17.  Subdivisions 1 and 2 of section 187-e of the tax law, as added
by section 2 of part I of chapter 63 of the laws of 2000, are amended to
read as follows:
  1. Allowance of credit. A taxpayer shall be allowed a  credit,  to  be
computed  as  provided  in  section  twenty of this chapter, against the
taxes imposed by sections one hundred eighty-three, one hundred  eighty-
four[,  one  hundred eighty-five] and FORMER SECTION one hundred eighty-
six of this article. Provided, however, that the amount of  such  credit
allowable  against the tax imposed by section one hundred eighty-four of
this article shall be the excess of the amount of such credit  over  the
amount  of any credit allowed by this section against the tax imposed by
section one hundred eighty-three of this article.
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed  in  an amount which will reduce the tax payable to
less than the applicable minimum tax fixed by section one hundred eight-
y-three[, one hundred eighty-five] or FORMER SECTION one hundred  eight-
y-six of this article. If, however, the amount of credit allowable under
this  section  for  any taxable year reduces the tax to such amount, any
amount of credit not thus deductible  in  such  taxable  year  shall  be
treated  as  an overpayment of tax to be credited or refunded in accord-
ance with the provisions of section ten hundred eighty-six of this chap-
ter. Provided, however, the provisions of subsection (c) of section  ten
hundred  eighty-eight of this chapter notwithstanding, no interest shall
be paid thereon.
  S 18. Section 187-g of the tax law, as added by section 2 of part H of
chapter 1 of the laws of 2003, is amended to read as follows:
  S 187-g. Brownfield redevelopment tax credit. 1. Allowance of  credit.
A  taxpayer  shall  be  allowed  a credit, to be computed as provided in
section twenty-one  of  this  chapter,  against  the  taxes  imposed  by
sections  one  hundred  eighty-three[,] AND one hundred eighty-four [and
one hundred eighty-five] of this article. Provided,  however,  that  the
amount  of  such credit allowable against the tax imposed by section one
hundred eighty-four of this article shall be the excess of the amount of
such credit over the amount  of  any  credit  allowed  by  this  section
against  the  tax  imposed  by  section one hundred eighty-three of this
article.
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed  in  an amount which will reduce the tax payable to
less than the applicable minimum tax fixed by section one hundred eight-
y-three [or one hundred eighty-five] of this article. If,  however,  the
amount  of  credit  allowable  under  this  section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such  taxable  year  shall  be  treated  as  an overpayment of tax to be
refunded in accordance with the provisions of section ten hundred eight-
y-six of this chapter. Provided, however, the provisions  of  subsection
(c) of section ten hundred eighty-eight of this chapter notwithstanding,
no interest shall be paid thereon.
  S  19.  Section 187-h of the tax law, as added by section 13 of part H
of chapter 1 of the laws of 2003, subdivision 1 as amended by section  5

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of  part  H  of  chapter  577 of the laws of 2004, is amended to read as
follows:
  S  187-h.  Remediated  brownfield  credit  for real property taxes for
qualified sites. 1. Allowance of credit. A taxpayer shall be  allowed  a
credit,  to  be computed as provided in subdivision (b) of section twen-
ty-two of this chapter,  against  the  taxes  imposed  by  sections  one
hundred  eighty-three[,]  AND  one  hundred eighty-four [and one hundred
eighty-five] of this article. Provided, however, that the amount of such
credit allowed against the tax imposed by section  one  hundred  eighty-
four  of  this  article shall be the excess of the amount of such credit
over the amount of any credit allowed by this section  against  the  tax
imposed by section one hundred eighty-three of this article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  [or  one hundred eighty-five] of this article. If, however, the
amount of credit allowed under this section for any taxable year reduces
the tax to such amount, any amount of credit not thus deductible in such
taxable year shall be treated as an overpayment of tax to be credited or
refunded in accordance with the provisions of section ten hundred eight-
y-six of this chapter. Provided, however, the provisions  of  subsection
(c) of section ten hundred eighty-eight of this chapter notwithstanding,
no interest shall be paid thereon.
  S  20.  Section 187-i of the tax law, as added by section 20 of part H
of chapter 1 of the laws of 2003, is amended to read as follows:
  S 187-i. Environmental remediation insurance credit. 1.  Allowance  of
credit. A taxpayer shall be allowed a credit, to be computed as provided
in  section  twenty-three  of this chapter, against the taxes imposed by
sections one hundred eighty-three[,] AND one  hundred  eighty-four  [and
one  hundred  eighty-five]  of this article. Provided, however, that the
amount of such credit allowable against the tax imposed by  section  one
hundred eighty-four of this article shall be the excess of the amount of
such  credit  over  the  amount  of  any  credit allowed by this section
against the tax imposed by section  one  hundred  eighty-three  of  this
article.
  2.  Application  of  credit.  In  no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less  than  the  applicable  minimum  tax  fixed  by section one hundred
eighty-three [or one hundred eighty-five] of this article. If,  however,
the  amount  of credit allowable under this section for any taxable year
reduces the tax to such amount, any amount of credit not  deductible  in
such  taxable  year  shall  be  treated  as  an overpayment of tax to be
refunded in accordance with  the  provisions  of  section  one  thousand
eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
subsection (c) of section one  thousand  eighty-eight  of  this  chapter
notwithstanding, no interest shall be paid thereon.
  S  21.  Subdivision  2  of  section  187-n of the tax law, as added by
chapter 537 of the laws of 2005, is amended to read as follows:
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed  in  an amount which will reduce the tax payable to
less than the applicable  minimum  tax  fixed  by  section  one  hundred
eighty-three  [or one hundred eighty-five] of this article. If, however,
the amount of credit allowable under this section for any  taxable  year
reduces  the  tax to such amount, any amount of credit not deductible in
such taxable year shall be treated  as  an  overpayment  of  tax  to  be
refunded  in  accordance  with  the  provisions  of section one thousand

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eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
subsection  (c)  of  section  one  thousand eighty-eight of this chapter
notwithstanding, no interest shall be paid thereon.
  S  22.  Subdivisions 1 and 3 of section 187-n of the tax law, subdivi-
sion 1 as amended by section 1 of part C1 of chapter 57 of the  laws  of
2009  and subdivision 3 as added by chapter 446 of the laws of 2005, are
amended to read as follows:
  (1) Allowance of credit. For taxable years  beginning  before  January
first, two thousand nine, a taxpayer whose business is not substantially
engaged  in  the  commercial  generation, distribution, transmission, or
servicing of energy or energy products shall be allowed a credit against
the taxes imposed  by  sections  one  hundred  eighty-three[,]  AND  one
hundred eighty-four [and one hundred eighty-five] of this article, equal
to  its  qualified fuel cell electric generating equipment expenditures.
Provided, however, that the amount of such credit allowable against  the
tax  imposed by section one hundred eighty-four of this article shall be
the excess of the amount of such credit over the amount  of  any  credit
allowed  by  this section against the tax imposed by section one hundred
eighty-three of this article. This credit shall not exceed one  thousand
five  hundred  dollars  per  generating unit with respect to any taxable
year. The credit provided for herein shall be allowed  with  respect  to
the taxable year in which the fuel cell electric generating equipment is
placed in service.
  (3)  Application  of  credit.  In no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  [or  one hundred eighty-five] of this article. If, however, the
amount of credit allowable under  this  section  for  any  taxable  year
reduces  the  tax to such amount, any amount of credit not deductible in
such taxable year may be carried over to the following year or years and
may be deducted from the taxpayer's tax for such year or years.
  S 23. Section 187-o of the tax law, as added by section 3 of part Y of
chapter 57 of the laws of 2010, is amended to read as follows:
  S 187-o. Temporary deferral nonrefundable payout credit. 1.  Allowance
of  credit.  A  taxpayer  shall  be  allowed a credit, to be computed as
provided in subdivision one of  section  thirty-four  of  this  chapter,
against either the taxes imposed by sections one hundred eighty-three[,]
AND  one  hundred eighty-four, [and one hundred eighty-five,] or the tax
imposed by section one hundred eighty-six-a of  this  article.  However,
the amount of such credit against the tax imposed by section one hundred
eighty-four  of  this  article shall be the excess of the amount of that
credit over the amount of any credit allowed by this section against the
tax imposed by section one hundred eighty-three of this article.
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed in an amount which will reduce the tax to less than
the applicable minimum tax fixed by section one hundred eighty-three [or
one hundred eighty-five] of this article. If,  however,  the  amount  of
credit  allowed  under this section for any taxable year reduces the tax
to such amount, any amount of credit not deductible in such taxable year
may be carried over to the following year or years and may  be  deducted
from the taxpayer's tax for such year or years.
  S 24. Section 187-p of the tax law, as added by section 3 of part Y of
chapter 57 of the laws of 2010, is amended to read as follows:
  S  187-p. Temporary deferral refundable payout credit. 1. Allowance of
credit. A taxpayer shall be allowed a credit, to be computed as provided
in subdivision two of section thirty-four of this chapter,  against  the

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taxes  imposed  by  sections one hundred eighty-three[,] AND one hundred
eighty-four [and one hundred eighty-five] of this article,  or  the  tax
imposed  by  section  one hundred eighty-six-a of this article. However,
the amount of such credit against the tax imposed by section one hundred
eighty-four  of  this  article shall be the excess of the amount of that
credit over the amount of any credit allowed by this section against the
tax imposed by section one hundred eighty-three of this article.
  2. Application of credit. In no event  shall  the  credit  under  this
section  be  allowed in an amount which will reduce the tax to less than
the applicable minimum tax fixed by section one hundred eighty-three [or
one hundred eighty-five] of this article. If,  however,  the  amount  of
credit  allowed  under this section for any taxable year reduces the tax
to such amount, any amount of credit not deductible in such taxable year
shall be treated as an overpayment of tax to be refunded  in  accordance
with  the provisions of section one thousand eighty-six of this chapter,
provided however, that no interest shall be paid thereon.
  S 25. Subdivisions 2 and 3 of section 190 of the tax law, as added  by
section  1  of  part E of chapter 63 of the laws of 2000, are amended to
read as follows:
  2. Computation. The credit allowed by  this  section  shall  first  be
deducted  from  the  taxes imposed by section one hundred eighty-three[,
one hundred eighty-five] or FORMER SECTION  one  hundred  eighty-six  of
this  article.  The  amount  of  any such credit remaining shall next be
deducted from the taxes imposed by section one  hundred  eighty-four  of
this article.
  3.  Carryover.  In  no  event shall the amount of credit allowed under
this section reduce the tax payable to less than the minimum  tax  fixed
by section one hundred eighty-three[, one hundred eighty-five] or FORMER
SECTION  one hundred eighty-six of this article. If, however, the amount
of credit allowable under this section for any taxable year reduces  the
tax  to such amount, any amount of credit not deductible in such taxable
year may be carried over to the following  year  or  years  and  may  be
deducted from the taxpayer's tax for such year or years.
  S 26. Subdivision 1 of section 192 of the tax law, as amended by chap-
ter 96 of the laws of 1976, is amended to read as follows:
  1.  Corporations  paying franchise tax. Every corporation, association
or joint-stock company liable to pay a tax  under  section  one  hundred
eighty-three  [or  one hundred eighty-five] of this chapter shall, on or
before March fifteenth in each year, make a written report  to  the  tax
commission  of its condition at the close of its business on the preced-
ing December thirty-first, stating the amount of its authorized  capital
stock, the amount of stock paid in, the date and rate per centum of each
dividend  paid  by  it  during the year ending with such day, the entire
amount of the capital of such corporation, and the capital  employed  by
it in this state during such year.
  S  27.  Subdivision  4  of  section  209 of the tax law, as amended by
section 2 of part FF1 of chapter 57 of the laws of 2008, is  amended  to
read as follows:
  4.  Corporations liable to tax under sections one hundred eighty-three
to one  hundred  [eighty-five]  EIGHTY-FOUR-A,  inclusive,  corporations
taxable  under articles thirty-two and thirty-three of this chapter, any
trust company organized under a law of this state all of  the  stock  of
which  is  owned by not less than twenty savings banks organized under a
law of this state, bank holding companies filing a  combined  return  in
accordance with [subdivision] SUBSECTION (f) of section fourteen hundred
sixty-two  of  this  chapter,  a  captive REIT or a captive RIC filing a

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combined return under either [subdivision]  SUBSECTION  (f)  of  section
fourteen hundred sixty-two or subdivision (f) of section fifteen hundred
fifteen  of  this chapter, and housing companies organized and operating
pursuant to the provisions of article two or article five of the private
housing  finance  law  and  housing development fund companies organized
pursuant to the provisions of article  eleven  of  the  private  housing
finance law shall not be subject to tax under this article.
  S  28.  Section 209 of the tax law is amended by adding a new subdivi-
sion 12 to read as follows:
  12. ALL FARMERS', FRUIT GROWERS' AND OTHER  LIKE  AGRICULTURAL  CORPO-
RATIONS  ORGANIZED AND OPERATED ON A CO-OPERATIVE BASIS FOR THE PURPOSES
EXPRESSED IN AND AS PROVIDED UNDER THE CO-OPERATIVE CORPORATIONS LAW  OF
THE  STATE  OF  NEW  YORK, WHETHER OR NOT SUCH CORPORATIONS HAVE CAPITAL
STOCK, SHALL BE EXEMPT FROM TAXATION UNDER THE PROVISIONS OF THIS  ARTI-
CLE.
  S 29. Paragraphs (b) and (c) of subdivision 1-c, clause (i) of subpar-
agraph 1 of paragraph (b) of subdivision 3, and subparagraphs 1 and 2 of
paragraph (j) of subdivision 12 of section 210 of the tax law, paragraph
(b)  of subdivision 1-c as amended by section 12 of part Y of chapter 63
of the laws of 2000, paragraph (c) of subdivision 1-c and subparagraph 2
of paragraph (j) of subdivision 12 as amended by  chapter  1043  of  the
laws  of 1981, clause (i) of subparagraph 1 of paragraph (b) of subdivi-
sion 3 as amended by chapter 61 of the laws of 1989 and  subparagraph  1
of paragraph (j) of subdivision 12 as amended by section 14 of part Y of
chapter 63 of the laws of 2000, are amended to read as follows:
  (b) is not a corporation over fifty percent of the number of shares of
stock of which entitling the holders thereof to vote for the election of
directors or trustees is owned by a taxpayer which (1) is subject to tax
under  this  article; section one hundred eighty-three[,] OR SECTION one
hundred eighty-four or FORMER SECTION one hundred eighty-five of article
nine; article thirty-two or thirty-three of this chapter, and  (2)  does
not  qualify  as  a  small  business corporation as defined in paragraph
three of subsection (c) of section  twelve  hundred  forty-four  of  the
internal revenue code (without regard to the second sentence of subpara-
graph  (A) thereof) as of the last day of its taxable year ending within
or with the taxable year of the taxpayer,
  (c) is not a corporation which is substantially similar  in  operation
and  in  ownership to a business entity (or entities) taxable, or previ-
ously taxable, under this article; section one hundred eighty-three, one
hundred eighty-four, OR FORMER SECTION one hundred eighty-five or FORMER
SECTION one hundred eighty-six of article nine;  article  thirty-two  or
thirty-three  of  this  chapter; article twenty-three of this chapter or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the income (or losses) of which is (or  was)  includable  under  article
twenty-two of this chapter, and
  (i)  In  the case of an issuer or obligor subject to tax under section
one hundred eighty-three[, one hundred eighty-five]  or  FORMER  SECTION
one  hundred eighty-six of this chapter or under this article or article
thirty-three of this chapter (except for  savings  and  insurance  banks
described  in  subdivision  (b) of section fifteen hundred of this chap-
ter), the issuer's allocation percentage shall be the percentage of  the
appropriate  measure  (as  defined  hereinafter) which is required to be
allocated within the state on the report, if any, required of the issuer
or obligor under this chapter for the preceding  year.  The  appropriate
measure  referred  to in the preceding sentence shall be: in the case of

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an issuer or obligor subject to section one hundred eighty-three of this
chapter, issued capital stock; in the  case  of  an  issuer  or  obligor
[subject  to  section  one  hundred  eighty-five]  EXEMPT FROM TAX UNDER
SUBDIVISION  TWELVE  OF  SECTION  TWO  HUNDRED  NINE  of  this [chapter]
ARTICLE, issued capital stock; in the  case  of  an  issuer  or  obligor
subject  to FORMER section one hundred eighty-six of this chapter, gross
earnings; in the case of an issuer or obligor subject to  this  article,
entire capital; and in the case of an issuer or obligor subject to arti-
cle thirty-three of this chapter, gross direct premiums.
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred eighty-four or FORMER SECTION one hundred eighty-five of article
nine; article thirty-two or thirty-three of this chapter; or
  (2) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable, or previously taxable, under this
article; section one  hundred  eighty-three,  one  hundred  eighty-four,
FORMER  SECTION  one  hundred  eighty-five or FORMER SECTION one hundred
eighty-six of article nine; article thirty-two or thirty-three  of  this
chapter;  article  twenty-three of this chapter or which would have been
subject to tax under such article twenty-three (as such article  was  in
effect  on  January  first,  nineteen  hundred eighty) or the income (or
losses) of which is (or was) includable under article twenty-two of this
chapter whereby the intent and purpose of this paragraph  and  paragraph
(e) of this subdivision with respect to refunding of credit to new busi-
ness would be evaded; or
  S  30.  Subparagraph  (A) of paragraph 10 of subsection (a) of section
606 of the tax law, as amended by section 3 of part CC of chapter 85  of
the laws of 2002, is amended to read as follows:
  (A)  the business of which the individual is an owner is substantially
similar in operation and in ownership to a business entity  taxable,  or
previously  taxable, under section one hundred eighty-three, one hundred
eighty-four, FORMER SECTION one hundred eighty-five  or  FORMER  SECTION
one  hundred  eighty-six  of article nine; article nine-A, thirty-two or
thirty-three of this chapter; article twenty-three of  this  chapter  or
which would have been subject to tax under such article twenty-three (as
such article was in effect on January first, nineteen hundred eighty) or
the  income  (or  losses)  of which is (or was) includable under article
twenty-two of this chapter whereby the intent and purpose of this  para-
graph and paragraph five of this subsection with respect to refunding of
credit to new business would be evaded; or
  S  31.  Subparagraphs  (A) and (B) of paragraph 8 of subsection (i) of
section 1456 of the tax law, as added by section 27 of part A of chapter
56 of the laws of 1998, are amended to read as follows:
  (A) over fifty percent of the number of shares of stock entitling  the
holders  thereof  to  vote  for the election of directors or trustees is
owned or controlled,  either  directly  or  indirectly,  by  a  taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred  eighty-four,  FORMER  SECTION one hundred eighty-five or FORMER
SECTION one hundred eighty-six of article nine; article nine-A or  arti-
cle thirty-three of this chapter; or
  (B)  is substantially similar in operation and in ownership to a busi-
ness entity (or entities) taxable, or  previously  taxable,  under  this
article;  section  one  hundred  eighty-three,  one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  FORMER  SECTION  one  hundred

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eighty-six  of  article  nine; article nine-A or article thirty-three of
this chapter; article twenty-three of this chapter or which  would  have
been subject to tax under such article twenty-three (as such article was
in  effect  on January first, nineteen hundred eighty) or the income (or
losses) of which is (or was) includable under article twenty-two of this
chapter whereby the intent and purpose of this paragraph  and  paragraph
five of this subsection with respect to refunding of credit to new busi-
ness would be evaded; or
  S  32.  Subparagraph  (A) of paragraph 7 of subdivision (q) of section
1511 of the tax law, as added by section 1 of part L of  chapter  63  of
the laws of 2000, is amended to read as follows:
  (A)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under this article; section one hundred eighty-three, one
hundred eighty-four, FORMER SECTION one hundred  eighty-five  or  FORMER
SECTION  one hundred eighty-six of article nine; article nine-A or arti-
cle thirty-two of this chapter; or
  S 33. Subdivision 13 of section 171  of  the  transportation  law,  as
added by chapter 478 of the laws of 1991, is amended to read as follows:
  13.  The  transportation for compensation performed by an agricultural
cooperative corporation[, which corporation  is  subject  to  tax  under
section one hundred eighty-five of the tax law,] for non-members who are
not  farmers  or  cooperative  corporations  when such transportation is
limited to that which is  incidental  to  the  agricultural  cooperative
corporation's  primary transportation operation and is necessary for its
effective performance. Such transportation shall be provided only  after
the  agricultural  cooperative  corporation notifies the commissioner in
writing of its intent to provide the transportation  and  it  shall  not
exceed twenty-five percent of the agricultural cooperative corporation's
total transportation services in each calendar year measured in terms of
tonnage.  The  commissioner may prescribe the records to be kept and the
information to be furnished by all agricultural cooperative corporations
performing transportation pursuant to this subdivision.
  S 34. Subclause 2 of clause (v) of subparagraph (B) of paragraph 1  of
subdivision  (o)  of  section  11-1712 of the administrative code of the
city of New York, such subdivision as relettered by chapter 639  of  the
laws of 1986, is amended to read as follows:
  (2)  A  new  business  does not include: (i) any new business of which
twenty-five percent or more of the number of shares of stock that  enti-
tle  the  holders thereof to vote for the election of directors or trus-
tees is owned, directly or indirectly, by  a  taxpayer  subject  to  tax
under  section one hundred eighty-three, one hundred eighty-four, FORMER
SECTION one hundred eighty-five or FORMER SECTION one hundred eighty-six
of article nine of the tax law, or under article [nine-a] NINE-A,  thir-
ty-two  or thirty-three of the tax law or (ii) any new business substan-
tially similar in operation and in ownership, directly or indirectly, to
a business entity (or entities) taxable, or  previously  taxable,  under
such section, such article, article twenty-three of the tax law or which
would  have been subject to tax under such article twenty-three (as such
article was in effect on January first, nineteen hundred eighty) or  the
income  (or  losses) of which is (or was) includible under article twen-
ty-two of such tax law whereby the intent and purpose  of  this  section
would be evaded.
  S 35. Paragraph (iii) of subdivision 9 of section 16-v of section 1 of
chapter  174  of the laws of 1968, constituting the New York state urban

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development corporation act, as added by section 1 of part C of  chapter
59 of the laws of 2013, is amended to read as follows:
  (iii) either: (A) any corporation, except a corporation which:
  (1)  over fifty percent of the number of shares of stock entitling the
holders thereof to vote for the election of  directors  or  trustees  is
owned  or  controlled,  either  directly  or  indirectly,  by a taxpayer
subject to tax under the following provisions of the  tax  law:  article
nine-A;  section  one hundred eighty-three[,] OR one hundred eighty-four
or FORMER SECTION one hundred eighty-five of article nine; article thir-
ty-two or article thirty-three; or
  (2) is substantially similar in operation and in ownership to a  busi-
ness  entity  (or  entities)  taxable  or  previously  taxable under the
following provisions of the tax law: article nine-A; section one hundred
eighty-three, one hundred eighty-four, FORMER SECTION one hundred eight-
y-five or former section one hundred eighty-six of article nine; article
thirty-two; article thirty-three; article twenty-three,  or  would  have
been subject to tax under such article twenty-three (as such article was
in  effect  on January first, nineteen hundred eighty) or the income (or
losses) of which is (or was) includable under article twenty-two; or
  (B) a sole proprietorship, partnership, limited  partnership,  limited
liability  company,  or  New  York  subchapter S corporation that is not
substantially similar in operation and in ownership to a business entity
(or entities) taxable, or previously taxable, under  article  nine-A  of
the  tax law, section one hundred eighty-three, one hundred eighty-four,
FORMER SECTION one hundred eighty-five or  former  section  one  hundred
eighty-six  of  article nine of the tax law, article thirty-two or thir-
ty-three of the tax law, article twenty-three of the tax  law  or  which
would  have been subject to tax under such article twenty-three (as such
article was in effect on January first, nineteen hundred eighty) or  the
income  (or  losses) of which is (or was) includable under article twen-
ty-two of the tax law; and
  S 36. Notwithstanding the repeal of section 185  of  the  tax  law  by
section  one of this act, all provisions of such section 185, in respect
to the imposition, exemption, assessment, payment, payment over,  deter-
mination,  collection,  and  credit or refund of tax imposed thereunder,
the filing of forms and returns, the preservation  of  records  for  the
purposes  of such tax, the secrecy of returns, the disposition of reven-
ues, and the civil and criminal penalties applicable to the violation of
the provisions of such section 185, shall continue  in  full  force  and
effect with respect to all such tax accrued up to December 31, 2017; all
actions  and  proceedings, civil or criminal, commenced or authorized to
be commenced under or by virtue of any provision of such section 185  so
repealed,  and pending or able to commence prior to the taking effect of
such repeal, may be commenced, prosecuted and defended to  final  effect
in  the  same  manner  as  they  might  if  such  provisions were not so
repealed.
  S 37. This act shall take effect January 1, 2018 and  shall  apply  to
taxable  years  beginning on or after January 1, 2018; provided, however
that:
  a. the amendments to subdivision 9 of  section  400  of  the  economic
development  law  made  by  section two of this act shall not affect the
repeal of such section and shall be deemed repealed therewith; and
  b. the amendments to subdivisions (a) and (e) of section 35 of the tax
law made by section nine of this act shall not affect the repeal of such
section and shall be deemed repealed therewith.

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                                 PART T

  Section 1. Section 39 of the tax law is amended by adding a new subdi-
vision (c-1) to read as follows:
  (C-1) EXCISE TAX ON TELECOMMUNICATION SERVICES. SUCH BUSINESS OR OWNER
OF  A BUSINESS SHALL BE ELIGIBLE FOR A CREDIT OF THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED  EIGHTY-SIX-E  OF
THIS  CHAPTER  THAT  IS PASSED THROUGH TO SUCH BUSINESS, PURSUANT TO THE
PROVISIONS REFERENCED IN SUBDIVISION (K) OF THIS SECTION.
  S 2. Paragraph 4 of subdivision (k) of section 39 of the tax  law,  as
added  by  section  2  of  part  A of chapter 68 of the laws of 2013, is
amended to read as follows:
  (4) Article 9-A: section 210, subdivision 47 AND SUBDIVISION 49.
  S 2-a. Paragraph 6 of subdivision (k) of section 39 of the tax law, as
added by section 2 of part A of chapter 68  of  the  laws  of  2013,  is
amended to read as follows:
  (6) Article 22: section 606, subsection (ww) AND SUBSECTION (YY).
  S 2-b. Paragraph (b) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 20-a to read as follows:
  (20-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF
THE  CALCULATION OF THE TAX-FREE NY AREA EXCISE TAX ON TELECOMMUNICATION
SERVICES CREDIT ALLOWED UNDER  SUBDIVISION  FORTY-NINE  OF  SECTION  TWO
HUNDRED TEN OF THIS ARTICLE.
  S 3. Section 210 of the tax law is amended by adding a new subdivision
49 to read as follows:
  49.  THE  TAX-FREE  NY  AREA  EXCISE TAX ON TELECOMMUNICATION SERVICES
CREDIT. A TAXPAYER THAT IS A BUSINESS OR OWNER OF  A  BUSINESS  THAT  IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE  ECONOMIC  DEVELOPMENT  LAW  SHALL  BE ALLOWED A CREDIT EQUAL TO THE
EXCISE TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE  HUNDRED
EIGHTY-SIX-E  OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS DURING
THE TAXABLE YEAR TO THE  EXTENT  NOT  OTHERWISE  DEDUCTED  IN  COMPUTING
ENTIRE  NET INCOME. HOWEVER, ANY AMOUNT OF CREDIT NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER. THIS CREDIT MAY BE CLAIMED ONLY WHERE ANY
TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPARATELY
STATED ON A BILL FROM THE PROVIDER  OF  TELECOMMUNICATION  SERVICES  AND
PAID  BY  SUCH  BUSINESS WITH RESPECT TO SUCH SERVICES RENDERED WITHIN A
TAX-FREE NY AREA DURING THE TAXABLE YEAR.  UNLESS  THE  TAXPAYER  HAS  A
TAX-FREE  NY  AREA  ALLOCATION FACTOR OF ONE HUNDRED PERCENT, THE CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE
TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT  PRESCRIBED  IN  PARAGRAPH
(D)   OF  SUBDIVISION  ONE  OF  THIS  SECTION.  PROVIDED,  HOWEVER,  THE
PROVISIONS OF SUBSECTION (C) OF SECTION  ONE  THOUSAND  EIGHTY-EIGHT  OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  S  4. Section 606 of the tax law is amended by adding a new subsection
(yy) to read as follows:
  (YY) THE TAX-FREE NY AREA EXCISE  TAX  ON  TELECOMMUNICATION  SERVICES
CREDIT.  A  TAXPAYER  THAT  IS A BUSINESS OR OWNER OF A BUSINESS THAT IS
LOCATED IN A TAX-FREE NY AREA APPROVED PURSUANT TO ARTICLE TWENTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW SHALL BE ALLOWED  A  CREDIT  EQUAL  TO  THE
EXCISE  TAX ON TELECOMMUNICATION SERVICES IMPOSED BY SECTION ONE HUNDRED
EIGHTY-SIX-E OF THIS CHAPTER AND PASSED THROUGH TO SUCH BUSINESS  DURING
THE  TAXABLE  YEAR  TO  THE  EXTENT  NOT OTHERWISE DEDUCTED IN COMPUTING

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FEDERAL ADJUSTED GROSS INCOME.  THIS CREDIT MAY BE  CLAIMED  ONLY  WHERE
ANY  TAX IMPOSED BY SUCH SECTION ONE HUNDRED EIGHTY-SIX-E HAS BEEN SEPA-
RATELY STATED ON A BILL FROM THE PROVIDER OF TELECOMMUNICATION  SERVICES
AND  PAID BY SUCH TAXPAYER WITH RESPECT TO SUCH SERVICES RENDERED WITHIN
A TAX-FREE NY AREA DURING THE TAXABLE YEAR. IF THE AMOUNT OF THE  CREDIT
ALLOWED  UNDER  THIS SUBSECTION FOR ANY TAXABLE YEAR EXCEEDS THE TAXPAY-
ER'S TAX FOR SUCH YEAR, THE EXCESS WILL BE TREATED AS AN OVERPAYMENT  TO
BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX
HUNDRED  EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST
WILL BE PAID THEREON.
  S 5. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law is amended by adding a new clause (xxxviii) to read as
follows:
(XXXVIII) TAX FREE NY AREA EXCISE       AMOUNT OF CREDIT UNDER
TAX ON TELECOMMUNICATION SERVICES       SUBDIVISION FORTY-NINE
CREDIT UNDER SUBSECTION (YY)            OF SECTION TWO HUNDRED TEN
  S 5-a. Subsection (b) of section 612 of the  tax  law  is  amended  by
adding a new paragraph 39-a to read as follows:
  (39-A) THE AMOUNT OF ANY FEDERAL DEDUCTION FOR THE EXCISE TAX ON TELE-
COMMUNICATION SERVICES TO THE EXTENT SUCH TAXES ARE USED AS THE BASIS OF
THE  CALCULATION  OF  TAX-FREE  NY  AREA EXCISE TAX ON TELECOMMUNICATION
SERVICES CREDIT ALLOWED UNDER SUBSECTION (YY) OF SECTION SIX HUNDRED SIX
OF THIS ARTICLE.
  S 6. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014; provided that sections two,
two-b, three and five of this act shall expire December  31,  2014  when
upon such date such provisions shall be deemed repealed.

                                 PART U

  Section  1.  Paragraph (a) of subdivision 44 of section 210 of the tax
law, as amended by section 2 of part T of chapter  59  of  the  laws  of
2012, is amended to read as follows:
  (a) A taxpayer that has been certified by the commissioner of labor as
a  qualified employer pursuant to section twenty-five-a of the labor law
shall be allowed a credit against the tax imposed by this article  equal
to  (i)  five  hundred  dollars  per month for up to six months for each
qualified employee the employer  employs  in  a  full-time  job  or  two
hundred  fifty dollars per month for up to six months for each qualified
employee the employer employs in a part-time  job  of  at  least  twenty
hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
ENROLLED IN HIGH SCHOOL FULL-TIME, and (ii)  one  thousand  dollars  for
each  qualified  employee who is employed for at least an additional six
months by the qualified employer in a  full-time  job  or  five  hundred
dollars  for  each  qualified  employee  who is employed for at least an
additional six months by the qualified employer in a part-time job of at
least twenty hours per week OR TEN HOURS PER  WEEK  WHEN  THE  QUALIFIED
EMPLOYEE  IS  ENROLLED IN HIGH SCHOOL FULL-TIME, AND (III) AN ADDITIONAL
ONE THOUSAND DOLLARS FOR EACH QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR  AT
LEAST  AN ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOY-
MENT BY THE QUALIFIED EMPLOYER  IN  A  FULL-TIME  JOB  OR  FIVE  HUNDRED
DOLLARS  FOR  EACH  QUALIFIED  EMPLOYEE  WHO IS EMPLOYED FOR AT LEAST AN
ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
QUALIFIED EMPLOYER IN A PART-TIME JOB OF AT LEAST TWENTY HOURS PER  WEEK
OR  TEN  HOURS  PER WEEK WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH
SCHOOL FULL-TIME.  For purposes of this subdivision, the term "qualified

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employee" shall have the same meaning as set forth in subdivision (b) of
section twenty-five-a of the  labor  law.  The  portion  of  the  credit
described in subparagraph (i) of this paragraph shall be allowed for the
taxable  year in which the wages are paid to the qualified employee, and
the portion of the credit described in subparagraph (ii) of  this  para-
graph  shall  be allowed in the taxable year in which the additional six
month period ends.
  S 2. Paragraph 1 of subsection (tt) of section 606 of the tax law,  as
amended  by  section  3  of part T of chapter 59 of the laws of 2012, is
amended to read as follows:
  (1) A taxpayer that has been certified by the commissioner of labor as
a qualified employer pursuant to section twenty-five-a of the labor  law
shall  be allowed a credit against the tax imposed by this article equal
to (A) five hundred dollars per month for up  to  six  months  for  each
qualified  employee  the  employer  employs  in  a  full-time job or two
hundred fifty dollars per month for up to six months for each  qualified
employee  the  employer  employs  in  a part-time job of at least twenty
hours per week OR TEN HOURS PER WEEK  WHEN  THE  QUALIFIED  EMPLOYEE  IS
ENROLLED IN HIGH SCHOOL FULL-TIME, and (B) one thousand dollars for each
qualified employee who is employed for at least an additional six months
by the qualified employer in a full-time job or five hundred dollars for
each  qualified  employee who is employed for at least an additional six
months by the qualified employer in a part-time job of at  least  twenty
hours  per  week  OR  TEN  HOURS PER WEEK WHEN THE QUALIFIED EMPLOYEE IS
ENROLLED IN HIGH SCHOOL FULL-TIME, AND (C) AN  ADDITIONAL  ONE  THOUSAND
DOLLARS  FOR  EACH  QUALIFIED  EMPLOYEE  WHO IS EMPLOYED FOR AT LEAST AN
ADDITIONAL YEAR AFTER THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE
QUALIFIED EMPLOYER IN A FULL-TIME JOB OR FIVE HUNDRED DOLLARS  FOR  EACH
QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER
THE FIRST YEAR OF THE EMPLOYEE'S EMPLOYMENT BY THE QUALIFIED EMPLOYER IN
A  PART-TIME JOB OF AT LEAST TWENTY HOURS PER WEEK OR TEN HOURS PER WEEK
WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH  SCHOOL  FULL-TIME.    A
taxpayer that is a partner in a partnership, member of a limited liabil-
ity  company  or shareholder in an S corporation that has been certified
by the commissioner of labor as a qualified employer pursuant to section
twenty-five-a of the labor law shall be allowed its pro  rata  share  of
the  credit  earned  by  the partnership, limited liability company or S
corporation. For  purposes  of  this  subsection,  the  term  "qualified
employee" shall have the same meaning as set forth in subdivision (b) of
section  twenty-five-a  of  the  labor  law.  The  portion of the credit
described in subparagraph (A) of this paragraph shall be allowed for the
taxable year in which the wages are paid to the qualified employee,  and
the  portion  of  the credit described in subparagraph (B) of this para-
graph shall be allowed in the taxable year in which the  additional  six
month period ends.
  S  3.  Subdivision (a) of section 25-a of the labor law, as amended by
section 2 of part DD of chapter 59 of the laws of 2013,  is  amended  to
read as follows:
  (a) The commissioner is authorized to establish and administer the New
York youth works tax credit program to provide tax incentives to employ-
ers  for  employing  at risk youth in part-time and full-time positions.
There will be five distinct pools of tax incentives.  Program  one  will
cover  tax incentives allocated for two thousand twelve and two thousand
thirteen. Program two will cover tax incentives allocated in  two  thou-
sand  fourteen to be used in two thousand fourteen and fifteen.  Program
three will cover tax incentives allocated in two thousand fifteen to  be

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used  in  two  thousand fifteen and sixteen. Program four will cover tax
incentives allocated in two thousand sixteen to be used in two  thousand
sixteen  and seventeen. Program five will cover tax incentives allocated
in two thousand seventeen to be used in two thousand seventeen and eigh-
teen.  The  commissioner  is  authorized  to  allocate up to twenty-five
million dollars of tax credits under  program  one,  [six]  TEN  million
dollars  of  tax credits under program two, [six] TEN million dollars of
tax credits under program three, [and six] TEN million  dollars  of  tax
credits under program four, and [six] TEN million dollars of tax credits
under program five.
  S  4.  Subdivision (c) of section 25-a of the labor law, as amended by
chapter 536 of the laws of 2013, is amended to read as follows:
  (c) A qualified employer shall be entitled to a tax  credit  equal  to
(1)  five hundred dollars per month for up to six months for each quali-
fied employee the employer employs in a full-time  job  or  two  hundred
fifty dollars per month for up to six months for each qualified employee
the  employer  employs  in  a part-time job of at least twenty hours per
week or ten hours per week when the qualified employee  is  enrolled  in
high school full-time, [and] (2) one thousand dollars for each qualified
employee  who  is  employed for at least an additional six months by the
qualified employer in a full-time job or five hundred dollars  for  each
qualified employee who is employed for at least an additional six months
by  the  qualified  employer in a part-time job of at least twenty hours
per week or ten hours per week when the qualified employee  is  enrolled
in high school full-time, AND (3) AN ADDITIONAL ONE THOUSAND DOLLARS FOR
EACH  QUALIFIED EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR
AFTER THE FIRST YEAR OF  THE  EMPLOYEE'S  EMPLOYMENT  BY  THE  QUALIFIED
EMPLOYER  IN  A FULL-TIME JOB OR FIVE HUNDRED DOLLARS FOR EACH QUALIFIED
EMPLOYEE WHO IS EMPLOYED FOR AT LEAST AN ADDITIONAL YEAR AFTER THE FIRST
YEAR OF THE  EMPLOYEE'S  EMPLOYMENT  BY  THE  QUALIFIED  EMPLOYER  IN  A
PART-TIME  JOB  OF  AT LEAST TWENTY HOURS PER WEEK OR TEN HOURS PER WEEK
WHEN THE QUALIFIED EMPLOYEE IS ENROLLED IN HIGH SCHOOL  FULL  TIME.  The
tax  credits  shall be claimed by the qualified employer as specified in
subdivision forty-four of section two hundred ten and subsection (tt) of
section six hundred six of the tax law.
  S 5. Section 25-a of the labor law is amended by adding a new subdivi-
sion (f) to read as follows:
  (F) THE COMMISSIONER SHALL ANNUALLY PUBLISH A REPORT. SUCH REPORT MUST
CONTAIN THE NAMES AND ADDRESSES OF ANY EMPLOYER ISSUED A CERTIFICATE  OF
ELIGIBILITY UNDER THIS SECTION, AND THE MAXIMUM AMOUNT OF NEW YORK YOUTH
WORKS  TAX  CREDIT  ALLOWED TO THE EMPLOYER AS SPECIFIED ON SUCH CERTIF-
ICATE OF ELIGIBILITY.
  S 6. This  act  shall  take  effect  immediately;  provided,  however,
sections  one and two of this act shall apply to taxable years beginning
on or after January 1, 2014.

                                 PART V

  Section 1. Section 19 of Part W-1 of chapter 109 of the laws  of  2006
amending  the  tax  law and other laws relating to providing exemptions,
reimbursements and credits from various taxes  for  certain  alternative
fuels,  as  amended  by section 1 of part D of chapter 59 of the laws of
2012, is amended to read as follows:
  S 19. This act shall take effect immediately; provided, however,  that
sections one through thirteen of this act shall take effect September 1,
2006  and  shall be deemed repealed on September 1, [2014] 2016 and such

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repeal shall  apply  in  accordance  with  the  applicable  transitional
provisions  of sections 1106 and 1217 of the tax law, and shall apply to
sales made, fuel compounded or manufactured, and uses  occurring  on  or
after  such  date,  and with respect to sections seven through eleven of
this act, in  accordance  with  applicable  transitional  provisions  of
sections  1106  and  1217  of  the  tax law; provided, however, that the
commissioner of taxation and finance shall be authorized  on  and  after
the  date  this act shall have become a law to adopt and amend any rules
or regulations  and  to  take  any  steps  necessary  to  implement  the
provisions  of this act; provided further that sections fourteen through
sixteen of this act shall take effect immediately  and  shall  apply  to
taxable years beginning on or after January 1, 2006.
  S 2. This act shall take effect immediately.

                                 PART W

  Section  1.  Section  11 of part EE of chapter 63 of the laws of 2000,
amending the tax law and other laws relating to modifying  the  distrib-
ution  of  funds  from  the motor vehicle fuel excise tax, as amended by
section 1 of part M of chapter 61 of the laws of  2011,  is  amended  to
read as follows:
  S 11. Notwithstanding any other law, rule or regulation to the contra-
ry,  the  comptroller  is  hereby  authorized and directed to deposit in
equal monthly installments and distribute pursuant to the provisions  of
subdivision  (d) of section 301-j of the tax law amounts listed below to
the credit of the dedicated highway and bridge trust fund and the  dedi-
cated mass transportation trust fund from all motor vehicle receipts now
deposited  into  the  general fund pursuant to provisions of the vehicle
and traffic law:   twenty-eight million four  hundred  thousand  dollars
from  April  1,  2002  through  March 31, 2003, sixty-seven million nine
hundred thousand dollars from April 1, 2003 through March 31, 2004,  one
hundred  seventy million one hundred thousand dollars from April 1, 2004
through March 31, 2005, and one hundred percent  of  all  motor  vehicle
receipts  pursuant to provisions of the vehicle and traffic law that are
not otherwise directed to be deposited in a fund other than the  general
fund from April 1, 2005 through March 31, 2006, and the same amount each
year  thereafter  UNTIL MARCH 31, 2014. FROM APRIL 1, 2014 THROUGH MARCH
31, 2015, AND EACH YEAR THEREAFTER, THE COMPTROLLER SHALL, ON A QUARTER-
LY BASIS, CERTIFY AND TRANSFER SIXTEEN MILLION FOUR HUNDRED NINETY-EIGHT
THOUSAND TWO HUNDRED FIFTY-FIVE DOLLARS TO  THE  DEDICATED  HIGHWAY  AND
BRIDGE  TRUST  FUND  AND FIFTEEN MILLION SIX HUNDRED SIXTY-FIVE THOUSAND
TWO HUNDRED FORTY-FIVE DOLLARS  TO  THE  DEDICATED  MASS  TRANSPORTATION
TRUST FUND.
  S  2. Paragraph (f) of subdivision 4 of section 503 of the vehicle and
traffic law, as added by section 1 of part W of chapter 59 of  the  laws
of 2006, is amended to read as follows:
  (f)  Notwithstanding  any  other  provision  of  law  to the contrary,
commencing April first, two thousand six and ending March  thirty-first,
two  thousand  [seven]  FOURTEEN,  IN EACH YEAR, the first forty million
seven hundred thousand dollars of fees collected pursuant to this subdi-
vision and section eleven hundred ninety-nine of this  chapter,  in  the
aggregate, shall be paid to the state comptroller who shall deposit such
money  in  the state treasury pursuant to section one hundred twenty-one
of the state finance law to the credit of the  general  fund.  Any  such
fees  collected  in excess of such amount shall be paid to the credit of
the comptroller on account of the dedicated  highway  and  bridge  trust

S. 6359--D                         215                        A. 8559--D

fund  established pursuant to section eighty-nine-b of the state finance
law. [Commencing April first, two thousand seven and ending March  thir-
ty-first,  two thousand eight, and for each such fiscal year thereafter,
the first forty million seven hundred thousand dollars of fees collected
pursuant  to  this subdivision and section eleven hundred ninety-nine of
this chapter, in the aggregate, shall be paid to the  state  comptroller
who  shall  deposit such money in the state treasury pursuant to section
one hundred twenty-one of the state finance law to  the  credit  of  the
general  fund. Any such fees collected in excess of such amount for each
such state fiscal year, shall be paid to the credit of  the  comptroller
on  account  of  the dedicated highway and bridge trust fund established
pursuant to section eighty-nine-b of the state finance law.]  COMMENCING
APRIL  FIRST, TWO THOUSAND FOURTEEN AND FOR EACH SUCH FISCAL YEAR THERE-
AFTER, ANY SUCH FEES COLLECTED PURSUANT TO THIS SUBDIVISION AND  SECTION
ELEVEN  HUNDRED  NINETY-NINE OF THIS CHAPTER SHALL BE PAID TO THE CREDIT
OF THE COMPTROLLER ON ACCOUNT OF THE DEDICATED HIGHWAY AND BRIDGE  TRUST
FUND  ESTABLISHED PURSUANT TO SECTION EIGHTY-NINE-B OF THE STATE FINANCE
LAW.
  S 3. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2014.

                                 PART X

  Section 1. Section 951 of the tax law, as amended by chapter 67 of the
laws  of 1978, subsection (a) as amended by section 1 of part T of chap-
ter 57 of the laws of 2010, subsection (b) as amended by  section  5  of
part A of chapter 389 of the laws of 1997 and subsection (c) as added by
chapter 538 of the laws of 2013, is amended to read as follows:
  S  951.  Applicable  internal  revenue code provisions.-- (a) [Dates]
GENERAL.  For purposes of this article, any reference  to  the  internal
revenue code means the United States Internal Revenue Code of 1986, with
all  amendments  enacted  on  or  before  [July  twenty-second, nineteen
hundred ninety-eight,] JANUARY FIRST, TWO THOUSAND FOURTEEN and,  unless
specifically provided otherwise in this article, any reference to Decem-
ber  thirty-first,  nineteen hundred seventy-six or January first, nine-
teen hundred seventy-seven contained in  the  provisions  of  such  code
which  are  applicable  to  the determination of the tax imposed by this
article shall be read as a reference to June thirtieth, nineteen hundred
seventy-eight or July first, nineteen hundred seventy-eight, respective-
ly. [Notwithstanding the  foregoing,  the  unified  credit  against  the
estate  tax provided in section two thousand ten of the internal revenue
code shall, for purposes of this article, be the amount allowable as  if
the federal applicable exclusion amount were one million dollars.]
  (b)  [Applicable  generation-skipping  transfer tax provisions.--Where
any reference is made in this article  (or  in  the  provisions  of  the
internal  revenue  code  which  are  made  applicable by section two, as
amended, of chapter one  thousand  thirteen  of  the  laws  of  nineteen
hundred sixty-two, to the determination of the tax imposed by this arti-
cle  and  appended  thereto)  to provisions of the internal revenue code
contained in section one thousand  twenty-five  of  this  chapter,  such
internal  revenue code provisions contained in such section one thousand
twenty-five shall apply to the provisions of this article  in  the  same
manner  and  with  the  same force and effect as if the language of such
provisions of the internal revenue code had been  incorporated  in  full
into this article except to the extent that any such provision is either

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inconsistent  with a provision of this article or is not relevant there-
to.
  (c)]  Disposition to surviving spouse who is not a United States citi-
zen. In the case of an estate where a federal estate tax return  is  not
required  for  federal estate tax purposes, a disposition to a surviving
spouse that would qualify for the federal estate tax  marital  deduction
under  section  2056 of the internal revenue code if not for the limita-
tion imposed by subsection (d)(1) of such section shall  nonetheless  be
treated  as  qualifying for the federal estate tax marital deduction for
purposes of computing the tax imposed by section nine hundred  fifty-two
of  this  part,  without  requiring  that  such  disposition pass to the
surviving spouse in a qualified domestic trust as required  for  federal
purposes by internal revenue code section 2056(d)(2).
  S  2.  Section  952 of the tax law, as added by section 9 of part A of
chapter 389 of the laws of 1997, subsection (b) as amended by section  3
of  part  I  of  chapter  60  of the laws of 2004, is amended to read as
follows:
  S 952. Tax imposed. (a) A tax is hereby imposed on the transfer of the
New York estate by every deceased individual who at his or her death was
a resident of New York state. [The tax imposed by this subsection  shall
be  an  amount equal to the maximum amount allowable against the federal
estate tax as a credit for state death taxes under section two  thousand
eleven of the internal revenue code.]
  (b)  [If the transfer of any part of the estate of a deceased resident
includes real or tangible  personal  property  having  an  actual  situs
outside  New  York  state,  the  tax  imposed  by subsection (a) of this
section shall be reduced by an  amount  determined  by  multiplying  the
maximum  amount  of  the federal credit for state death taxes by a frac-
tion, the numerator of which is  the  decedent's  federal  gross  estate
reduced by his or her New York gross estate and the denominator of which
is his or her federal gross estate.] COMPUTATION OF TAX. THE TAX IMPOSED
BY  THIS  SECTION  SHALL BE COMPUTED ON THE DECEASED RESIDENT'S NEW YORK
TAXABLE ESTATE AS FOLLOWS:
IN THE CASE OF DECEDENTS DYING ON OR AFTER  APRIL  1,  2014  AND  BEFORE
APRIL 1, 2015
IF THE NEW YORK TAXABLE ESTATE IS:      THE TAX IS:
NOT OVER $500,000                       3.06% OF TAXABLE ESTATE
OVER $500,000 BUT NOT OVER $1,000,000   $15,300 PLUS 5.0% OF EXCESS OVER
                                        $500,000
OVER $1,000,000 BUT NOT OVER $1,500,000 $40,300 PLUS 5.5% OF EXCESS OVER
                                        $1,000,000
OVER $1,500,000 BUT NOT OVER $2,100,000 $67,800 PLUS 6.5% OF EXCESS OVER
                                        $1,500,000
OVER $2,100,000 BUT NOT OVER $2,600,000 $106,800 PLUS 8.0% OF EXCESS
                                        OVER $2,100,000
OVER $2,600,000 BUT NOT OVER $3,100,000 $146,800 PLUS 8.8% OF EXCESS OVER
                                        $2,600,000
OVER $3,100,000 BUT NOT OVER $3,600,000 $190,800 PLUS 9.6% OF EXCESS OVER
                                        $3,100,000
OVER $3,600,000 BUT NOT OVER $4,100,000 $238,800 PLUS 10.4% OF EXCESS
                                        OVER $3,600,000
OVER $4,100,000 BUT NOT OVER $5,100,000 $290,800 PLUS 11.2% OF EXCESS
                                        OVER $4,100,000
OVER $5,100,000 BUT NOT OVER $6,100,000 $402,800 PLUS 12.0% OF EXCESS
                                        OVER $5,100,000
OVER $6,100,000 BUT NOT OVER $7,100,000 $522,800 PLUS 12.8% OF EXCESS

S. 6359--D                         217                        A. 8559--D

                                        OVER $6,100,000
OVER $7,100,000 BUT NOT OVER $8,100,000 $650,800 PLUS 13.6% OF EXCESS
                                        OVER $7,100,000
OVER $8,100,000 BUT NOT OVER $9,100,000 $786,800 PLUS 14.4% OF EXCESS
                                        OVER $8,100,000
OVER $9,100,000 BUT NOT OVER            $930,800 PLUS 15.2% OF EXCESS OVER
$10,100,000                             $9,100,000
OVER $10,100,000                        $1,082,800 PLUS 16.0% OF EXCESS
                                        OVER $10,100,000
  (C)  APPLICABLE  CREDIT  AMOUNT. (1) A CREDIT OF THE APPLICABLE CREDIT
AMOUNT SHALL BE ALLOWED AGAINST THE  TAX  IMPOSED  BY  THIS  SECTION  AS
PROVIDED  IN  THIS  SUBSECTION. IN THE CASE OF A DECEDENT WHOSE NEW YORK
TAXABLE ESTATE IS LESS THAN OR EQUAL TO THE BASIC EXCLUSION AMOUNT,  THE
APPLICABLE  CREDIT  AMOUNT  SHALL BE THE AMOUNT OF TAX THAT WOULD BE DUE
UNDER SUBSECTION (B) OF THIS SECTION ON SUCH DECEDENT'S NEW YORK TAXABLE
ESTATE. IN THE CASE OF A DECEDENT WHOSE NEW YORK TAXABLE ESTATE  EXCEEDS
THE  BASIC  EXCLUSION  AMOUNT BY AN AMOUNT THAT IS LESS THAN OR EQUAL TO
FIVE PERCENT OF SUCH AMOUNT, THE APPLICABLE CREDIT AMOUNT SHALL  BE  THE
AMOUNT  OF TAX THAT WOULD BE DUE UNDER SUBSECTION (B) OF THIS SECTION IF
THE AMOUNT ON WHICH THE TAX IS TO BE COMPUTED WERE EQUAL  TO  THE  BASIC
EXCLUSION  AMOUNT  MULTIPLIED  BY ONE MINUS A FRACTION, THE NUMERATOR OF
WHICH IS THE DECEDENT'S NEW YORK TAXABLE ESTATE MINUS THE  BASIC  EXCLU-
SION  AMOUNT,  AND THE DENOMINATOR OF WHICH IS FIVE PERCENT OF THE BASIC
EXCLUSION AMOUNT.  PROVIDED, HOWEVER, THAT THE CREDIT  ALLOWED  BY  THIS
SUBSECTION  SHALL  NOT  EXCEED  THE  TAX IMPOSED BY THIS SECTION, AND NO
CREDIT SHALL BE ALLOWED TO THE ESTATE OF ANY  DECEDENT  WHOSE  NEW  YORK
TAXABLE  ESTATE  EXCEEDS ONE HUNDRED FIVE PERCENT OF THE BASIC EXCLUSION
AMOUNT.
  (2) (A) FOR PURPOSES OF THIS SECTION, THE BASIC EXCLUSION AMOUNT SHALL
BE AS FOLLOWS:
IN THE CASE OF DECEDENTS DYING ON OR AFTER: THE BASIC  EXCLUSION  AMOUNT
IS:
APRIL 1, 2014 AND BEFORE APRIL 1, 2015       $ 2,062,500
APRIL 1, 2015 AND BEFORE APRIL 1, 2016       3,125,000
APRIL 1, 2016 AND BEFORE APRIL 1, 2017       4,187,500
APRIL 1, 2017 AND BEFORE JANUARY 1, 2019     5,250,000
  (B)  IN THE CASE OF ANY DECEDENT DYING IN A CALENDAR YEAR BEGINNING ON
OR AFTER JANUARY FIRST,  TWO  THOUSAND  NINETEEN,  THE  BASIC  EXCLUSION
AMOUNT SHALL BE EQUAL TO:
  (I) FIVE MILLION DOLLARS, MULTIPLIED BY
  (II)  ONE  PLUS  THE  COST-OF-LIVING  ADJUSTMENT,  WHICH  SHALL BE THE
PERCENTAGE BY WHICH THE CONSUMER PRICE INDEX FOR THE PRECEDING  CALENDAR
YEAR  EXCEEDS  THE  CONSUMER  PRICE INDEX FOR CALENDAR YEAR TWO THOUSAND
TEN.
  (C) (I) FOR PURPOSES OF THIS PARAGRAPH, "CONSUMER PRICE  INDEX"  MEANS
THE  MOST  RECENT CONSUMER PRICE INDEX FOR ALL-URBAN CONSUMERS PUBLISHED
BY THE UNITED STATES DEPARTMENT OF LABOR.
  (II) FOR PURPOSES OF CLAUSE (II) OF SUBPARAGRAPH  (B)  OF  THIS  PARA-
GRAPH, THE CONSUMER PRICE INDEX FOR ANY CALENDAR YEAR SHALL BE THE AVER-
AGE  OF  THE  CONSUMER  PRICE  INDEX AS OF THE CLOSE OF THE TWELVE-MONTH
PERIOD ENDING ON AUGUST THIRTY-FIRST OF SUCH CALENDAR YEAR.
  (III) IF ANY AMOUNT ADJUSTED UNDER THIS PARAGRAPH IS NOT A MULTIPLE OF
TEN THOUSAND DOLLARS, SUCH AMOUNT SHALL BE ROUNDED TO THE NEAREST MULTI-
PLE OF TEN THOUSAND DOLLARS.
  S 3. Section 954 of the tax law, as amended by chapter 67 of the  laws
of  1978,  paragraph  1  of  subsection (a) as amended by section 10 and

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subsection (b) as amended by section 11 of part A of chapter 389 of  the
laws  of  1997,  subsection (c) as amended by chapter 916 of the laws of
1982, paragraph 1 of subsection (c) as amended by section 3 of part A of
chapter 407 of the laws of 1999 and such subsection (c) as relettered by
section  12  of part A of chapter 389 of the laws of 1997, is amended to
read as follows:
  S 954. Resident's New York gross estate. (a) General.-- The  New  York
gross  estate  of  a  deceased  resident  means his OR HER federal gross
estate as defined in the internal revenue code (whether or not a federal
estate tax return is required to be filed) modified as follows:
  (1) Reduced by the value of real or tangible personal property  having
an actual situs outside New York state.
  (2)  Increased  by  the  amount  determined under section nine hundred
fifty-seven OF THIS PART (relating  to  limited  powers  of  appointment
created prior to September first, nineteen hundred thirty).
  (3)  INCREASED BY THE AMOUNT OF ANY TAXABLE GIFT UNDER SECTION 2503 OF
THE INTERNAL REVENUE CODE  NOT  OTHERWISE  INCLUDED  IN  THE  DECEDENT'S
FEDERAL  GROSS  ESTATE,  MADE DURING THE THREE YEAR PERIOD ENDING ON THE
DECEDENT'S DATE OF DEATH, BUT NOT INCLUDING ANY GIFT MADE: (1) WHEN  THE
DECEDENT  WAS  NOT A RESIDENT OF NEW YORK STATE; (2) BEFORE APRIL FIRST,
TWO THOUSAND FOURTEEN; OR (3) ON OR AFTER JANUARY  FIRST,  TWO  THOUSAND
NINETEEN.
  (b)  Valuation. -- (1) The New York gross estate shall be valued as of
the TIME OF THE DECEDENT'S DEATH, EXCEPT THAT IF A  FEDERAL  ESTATE  TAX
RETURN  IS  FILED  AND THE ALTERNATE VALUATION UNDER SECTION 2032 OF THE
INTERNAL REVENUE CODE IS ELECTED FOR FEDERAL ESTATE  TAX  PURPOSES,  THE
NEW YORK GROSS ESTATE SHALL BE VALUED AS OF THE applicable federal valu-
ation date or dates. Any real property qualified under section two thou-
sand thirty-two-A of the internal revenue code shall have the same value
for  purposes  of the New York gross estate as it has for federal estate
tax purposes.
  (2) IF SUCH ALTERNATE VALUATION COULD HAVE BEEN  ELECTED  PURSUANT  TO
PARAGRAPH  ONE  OF  THIS  SUBSECTION,  BUT  FOR THE ABSENCE OF AN ESTATE
SUFFICIENT TO REQUIRE THE FILING OF A FEDERAL RETURN, THE NEW YORK GROSS
ESTATE MAY, UPON THE ELECTION OF THE  EXECUTOR,  BE  VALUED  AS  OF  THE
FEDERAL  VALUATION  DATE  OR DATES WHICH WOULD HAVE APPLIED IF A FEDERAL
RETURN HAD BEEN FILED. HOWEVER, NO ELECTION MAY BE MADE UNDER THIS PARA-
GRAPH UNLESS SUCH ELECTION WILL DECREASE THE VALUE OF THE NEW YORK GROSS
ESTATE AND THE AMOUNT OF TAX IMPOSED BY THIS ARTICLE (REDUCED BY CREDITS
ALLOWABLE AGAINST SUCH TAX). ANY  ELECTION  MADE  UNDER  THIS  PARAGRAPH
SHALL  BE  IRREVOCABLE.  THE ELECTION ALLOWED BY THIS PARAGRAPH SHALL BE
MADE NO LATER THAN THE DATE PRESCRIBED FOR  THE  FILING  OF  THE  RETURN
UNDER  THIS ARTICLE (INCLUDING EXTENSIONS) OR ANY TIME THEREAFTER AS THE
COMMISSIONER MAY PRESCRIBE.
  (c) Cross references.-- (1) For provisions  of  the  internal  revenue
code defining the federal gross estate, see:
  Sec. 2031. Definition of gross estate.
  Sec. 2032. Alternate valuation.
  Sec. 2032A. Valuation of certain farm, etc., real property.
  Sec. 2033. Property in which the decedent had an interest.
  Sec. 2034. Dower or curtesy interest.
  Sec. 2035. Adjustments for gifts made within three years of decedent's
death.
  Sec. 2036. Transfers with retained life estate.
  Sec. 2037. Transfers taking effect at death.
  Sec. 2038. Revocable transfers.

S. 6359--D                         219                        A. 8559--D

  Sec. 2039. Annuities.
  Sec. 2040. Joint interests.
  Sec. 2041. Powers of appointment.
  Sec. 2042. Proceeds of life insurance.
  Sec. 2043. Transfers for insufficient consideration.
  Sec. 2044. Certain property for which marital deduction was previously
allowed.
  Sec. 2045. Prior interests.
  Sec. 2046. Disclaimers.
  (2)  FOR  PROVISIONS OF THE INTERNAL REVENUE CODE WHICH, EXCEPT TO THE
EXTENT THEY ARE INCONSISTENT WITH THE PROVISIONS OF  THIS  ARTICLE,  ARE
PERTINENT  TO  THE  COMPUTATION  OF TAXABLE GIFTS AND THE TAX UNDER THIS
ARTICLE, SEE:
  SEC. 2503. TAXABLE GIFTS.
  SEC. 2511. TRANSFERS IN GENERAL.
  SEC. 2512. VALUATION OF GIFTS.
  SEC. 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY.
  SEC. 2514. POWERS OF APPOINTMENT.
  SEC. 2516. CERTAIN PROPERTY SETTLEMENTS.
  SEC. 2518. DISCLAIMERS.
  SEC. 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES.
  SEC. 2522. CHARITABLE AND SIMILAR GIFTS.
  SEC. 2523. GIFT TO SPOUSE.
  SEC. 2524. EXTENT OF DEDUCTIONS.
  SEC. 2701. SPECIAL VALUATION RULES IN CASE  OF  TRANSFERS  OF  CERTAIN
INTERESTS IN CORPORATIONS OR PARTNERSHIPS.
  SEC.  2702.  SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS
IN TRUSTS.
  SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED.
  SEC. 2704. TREATMENT OF CERTAIN LAPSING RIGHTS AND RESTRICTIONS.
  SEC. 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES.
  (3) For effect of federal estate tax determinations, see section  nine
hundred sixty-one of this article.
  S  4.  The  tax  law is amended by adding a new section 955 to read as
follows:
  S 955. RESIDENT'S NEW YORK TAXABLE ESTATE.  (A) GENERAL.--THE  TAXABLE
ESTATE OF A NEW YORK RESIDENT SHALL BE HIS OR HER NEW YORK GROSS ESTATE,
MINUS  THE DEDUCTIONS ALLOWABLE FOR DETERMINING HIS OR HER FEDERAL TAXA-
BLE ESTATE UNDER THE INTERNAL REVENUE CODE (WHETHER  OR  NOT  A  FEDERAL
ESTATE  TAX  RETURN  IS REQUIRED TO BE FILED), EXCEPT TO THE EXTENT THAT
SUCH DEDUCTIONS RELATE TO REAL OR  TANGIBLE  PERSONAL  PROPERTY  SITUSED
OUTSIDE NEW YORK STATE.
  (B)  WAIVER  OF  DEDUCTIONS.-- IF THE RIGHT TO ANY DEDUCTION OTHERWISE
ALLOWABLE IS WAIVED FOR FEDERAL ESTATE TAX PURPOSES, IT SHALL BE CONSID-
ERED WAIVED FOR NEW YORK ESTATE TAX PURPOSES.
  (C) QUALIFIED  TERMINABLE  INTEREST  PROPERTY  ELECTION.--  EXCEPT  AS
OTHERWISE PROVIDED IN THIS SUBSECTION, THE ELECTION REFERRED TO IN PARA-
GRAPH (7) OF SUBSECTION (B) OF SECTION 2056 OF THE INTERNAL REVENUE CODE
SHALL  NOT  BE  ALLOWED UNDER THIS ARTICLE UNLESS SUCH ELECTION WAS MADE
WITH RESPECT TO THE FEDERAL ESTATE TAX RETURN REQUIRED TO BE FILED UNDER
THE PROVISIONS OF THE INTERNAL REVENUE CODE. IF SUCH ELECTION  WAS  MADE
FOR THE PURPOSES OF THE FEDERAL ESTATE TAX, THEN SUCH ELECTION MUST ALSO
BE  MADE  BY THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY THIS ARTI-
CLE. WHERE NO FEDERAL ESTATE TAX RETURN IS REQUIRED  TO  BE  FILED,  THE
EXECUTOR  MAY  MAKE  THE ELECTION REFERRED TO IN SUCH PARAGRAPH (7) WITH
RESPECT TO THE TAX IMPOSED BY THIS ARTICLE ON  THE  RETURN  OF  THE  TAX

S. 6359--D                         220                        A. 8559--D

IMPOSED  BY  THIS ARTICLE. ANY ELECTION MADE UNDER THIS SUBSECTION SHALL
BE IRREVOCABLE.
  (D)  CROSS  REFERENCES.--  FOR PROVISIONS OF THE INTERNAL REVENUE CODE
SPECIFYING THE DEDUCTIONS ALLOWABLE FOR  FEDERAL  ESTATE  TAX  PURPOSES,
SEE:
  SEC.2032(B). ALTERNATE VALUATION--SPECIAL RULE FOR DEDUCTIONS.
  SEC.2046. DISCLAIMERS.
  SEC.2053. EXPENSES, INDEBTEDNESS, AND TAXES.
  SEC.2054. LOSSES.
  SEC.2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
  SEC.2056. BEQUESTS, ETC., TO SURVIVING SPOUSE.
  S 5. Subsections (b) and (d) of section 960 of the tax law, subsection
(b)  as amended by section 4 of part I of chapter 60 of the laws of 2004
and subsection (d) as added by section 190  of  the  laws  of  1980  and
relettered  by  section 15 of part A of chapter 389 of the laws of 1997,
are amended to read as follows:
  (b) Computation of tax.--The tax imposed under subsection (a) shall be
the same as the tax that would be due, if the decedent had died a  resi-
dent,  under  subsection  (a)  of section nine hundred fifty-two, except
that for purposes of [allocating] COMPUTING the tax under subsection (b)
of section nine hundred fifty-two, "New York [gross]  TAXABLE  estate"[,
in  the  numerator in subsection (b) of section nine hundred fifty-two,]
shall not include the value of any intangible personal  property  other-
wise  includible in the deceased individual's New York gross estate, AND
SHALL NOT INCLUDE THE AMOUNT OF ANY GIFT UNLESS SUCH  GIFT  CONSISTS  OF
REAL  OR  TANGIBLE  PERSONAL PROPERTY HAVING AN ACTUAL SITUS IN NEW YORK
STATE OR INTANGIBLE PERSONAL PROPERTY EMPLOYED IN A BUSINESS,  TRADE  OR
PROFESSION CARRIED ON IN THIS STATE.
  (d)  Works  of art on loan for exhibition. Notwithstanding the forego-
ing, the tax imposed under subsection (a) OF THIS SECTION on the  trans-
fer,  from  any  deceased  individual  who at his OR HER death was not a
resident of the state of New York, of works  of  art  having  an  actual
situs  in  the state of New York and either (i) includible in his OR HER
federal gross estate or (ii) which would be includible in his OR HER New
York gross estate pursuant to section nine hundred fifty-seven (relating
to certain limited powers of appointment) if he OR SHE were  a  resident
of  the  state  of  New  York, shall [be an amount equal to the transfer
taxes or death taxes of every character in respect of personal  property
which  would  be  imposed  on  such transfer or such works of art if the
actual situs of such works of art were the state  or  territory  of  the
United States of residence of such individual] NOT BE SUBJECT TO THE TAX
IMPOSED  BY THIS SECTION if such works of art are [sited in the state of
New York solely for exhibition purposes,] loaned [for such] TO A  PUBLIC
GALLERY  LOCATED  WITHIN  THE  STATE  OF  NEW YORK SOLELY FOR EXHIBITION
purposes [to a public gallery or museum (] BUT ONLY IF no  part  of  the
net earnings of [which] SUCH PUBLIC GALLERY OR MUSEUM inure to the bene-
fit of any private stockholder or individual[)], and [(], at the time of
the  death  of such individual[)] SUCH WORKS OF ART ARE on exhibition or
en route to or from exhibition in  such  a  public  gallery  or  museum.
[Provided  however,  that if the state or territory of the United States
of residence of such individual imposes transfer taxes or death taxes on
such works of art which are sited in the  state  of  New  York  for  the
purposes  herein  specified, then such works of art shall not be subject
to the tax imposed by this section.]

S. 6359--D                         221                        A. 8559--D

  S 6. Subsection (a) of section 971 of the tax law, as added by section
17 of part A of chapter 389 of the laws of 1997, is amended to  read  as
follows:
  (a)  Returns  by executor. (1) Residents. In the case of the estate of
every individual dying on or after [February first, two thousand]  APRIL
FIRST,  TWO THOUSAND FOURTEEN, who at his or her death was a resident of
New York state, [if] his or her executor [is required to file  a  return
with  respect to the federal estate tax (determined as if the limitation
contained in subsection (a) of section nine hundred  fifty-one  of  this
article were applicable in determining whether such executor is required
to  file  such  federal  return), the executor] shall make a return with
respect to the estate tax imposed by section nine hundred  fifty-two  of
this  article  IF  THE DECEDENT'S FEDERAL GROSS ESTATE, INCREASED BY THE
AMOUNT OF ANY GIFT INCLUDIBLE IN HIS  OR  HER  NEW  YORK  GROSS  ESTATE,
EXCEEDS  THE BASIC EXCLUSION AMOUNT APPLICABLE TO THE DECEDENT'S DATE OF
DEATH IN PARAGRAPH TWO OF SUBSECTION (C) OF SECTION NINE HUNDRED  FIFTY-
TWO OF THIS ARTICLE.
  (2)  Nonresidents. In the case of the estate of every individual DYING
ON OR AFTER APRIL FIRST, TWO THOUSAND FOURTEEN, who at his or her  death
was  not  a  resident  of  New  York  state,  [if his or her executor is
required to file a return with respect to the federal estate tax (deter-
mined as if the limitation contained in subsection (a) of  section  nine
hundred fifty-one of this article were applicable in determining whether
such  executor  is  required  to  file such federal return) and] if such
individual's federal gross estate includes  real  or  tangible  personal
property  having  an  actual situs in New York state, the executor shall
make a return with respect to the estate tax  imposed  by  section  nine
hundred  sixty  of  this article IF THE DECEDENT'S FEDERAL GROSS ESTATE,
INCREASED BY THE AMOUNT OF ANY GIFT INCLUDIBLE IN HIS OR  HER  NEW  YORK
GROSS  ESTATE,  EXCEEDS  THE  BASIC  EXCLUSION  AMOUNT APPLICABLE TO THE
DECEDENT'S DATE OF DEATH IN PARAGRAPH TWO OF SUBSECTION (C)  OF  SECTION
NINE HUNDRED FIFTY-TWO OF THIS ARTICLE.
  S  7.  Subsection  (a)  of  section  997 of the tax law, as amended by
section 27 of part A of chapter 389 of the laws of 1997, is  amended  to
read as follows:
  (a)  The  phrase  "adjusted  gross  estate" shall be read as "adjusted
federal gross estate determined  without  reference  to  paragraphs  (1)
[and], (2) AND (3) of subsection (a) of section nine hundred fifty-four"
of this article.
  S 8. Article 26-B of the tax law is REPEALED.
  S  9.  Section  2 of chapter 1013 of the laws of 1962 amending the tax
law relating to imposing a tax on the transfer of estates  of  decedents
dying on or after April first, nineteen hundred sixty-three is REPEALED.
  S  10. The tax law is amended by adding a new section 999-a to read as
follows:
  S 999-A. APPENDIX TO ARTICLE TWENTY-SIX.  THE FOLLOWING PROVISIONS  OF
THE  UNITED  STATES  INTERNAL  REVENUE CODE OF 1986, WITH ALL AMENDMENTS
ENACTED ON OR BEFORE JANUARY FIRST, TWO THOUSAND FOURTEEN,  SHALL  APPLY
TO  THE  TAX  IMPOSED  BY  THIS ARTICLE, TO THE EXTENT SPECIFIED IN THIS
ARTICLE.
  S 2031. DEFINITION OF GROSS ESTATE.
  (A) GENERAL.--THE VALUE OF THE GROSS ESTATE OF THE DECEDENT  SHALL  BE
DETERMINED  BY  INCLUDING  TO  THE EXTENT PROVIDED FOR IN THIS PART, THE
VALUE AT THE TIME OF HIS DEATH OF ALL PROPERTY, REAL OR PERSONAL, TANGI-
BLE OR INTANGIBLE, WHEREVER SITUATED.

S. 6359--D                         222                        A. 8559--D

  (B) VALUATION OF UNLISTED STOCK AND SECURITIES.--IN THE CASE OF  STOCK
AND  SECURITIES  OF A CORPORATION THE VALUE OF WHICH, BY REASON OF THEIR
NOT BEING LISTED ON AN EXCHANGE AND BY REASON OF THE  ABSENCE  OF  SALES
THEREOF,  CANNOT BE DETERMINED WITH REFERENCE TO BID AND ASKED PRICES OR
WITH REFERENCE TO SALES PRICES, THE VALUE THEREOF SHALL BE DETERMINED BY
TAKING  INTO  CONSIDERATION, IN ADDITION TO ALL OTHER FACTORS, THE VALUE
OF STOCK OR SECURITIES OF CORPORATIONS ENGAGED IN THE SAME OR A  SIMILAR
LINE OF BUSINESS WHICH ARE LISTED ON AN EXCHANGE.
  (C)  ESTATE  TAX WITH RESPECT TO LAND SUBJECT TO A QUALIFIED CONSERVA-
TION EASEMENT.--
  (1) IN GENERAL.--IF THE EXECUTOR MAKES THE ELECTION DESCRIBED IN PARA-
GRAPH (6), THEN, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION,  THERE
SHALL BE EXCLUDED FROM THE GROSS ESTATE THE LESSER OF--
  (A) THE APPLICABLE PERCENTAGE OF THE VALUE OF LAND SUBJECT TO A QUALI-
FIED CONSERVATION EASEMENT, REDUCED BY THE AMOUNT OF ANY DEDUCTION UNDER
SECTION 2055(F) WITH RESPECT TO SUCH LAND, OR
  (B) THE EXCLUSION LIMITATION.
  (2)  APPLICABLE  PERCENTAGE.--FOR  PURPOSES OF PARAGRAPH (1), THE TERM
"APPLICABLE PERCENTAGE" MEANS 40 PERCENT REDUCED (BUT NOT BELOW ZERO) BY
2 PERCENTAGE POINTS FOR EACH PERCENTAGE POINT (OR FRACTION  THEREOF)  BY
WHICH  THE  VALUE OF THE QUALIFIED CONSERVATION EASEMENT IS LESS THAN 30
PERCENT OF THE VALUE OF THE LAND (DETERMINED WITHOUT REGARD TO THE VALUE
OF SUCH EASEMENT AND REDUCED BY THE VALUE OF  ANY  RETAINED  DEVELOPMENT
RIGHT (AS DEFINED IN PARAGRAPH (5)). THE VALUES TAKEN INTO ACCOUNT UNDER
THE  PRECEDING  SENTENCE  SHALL  BE  SUCH  VALUES  AS OF THE DATE OF THE
CONTRIBUTION REFERRED TO IN PARAGRAPH (8)(B).
  (3) EXCLUSION LIMITATION.--FOR PURPOSES OF PARAGRAPH (1),  THE  EXCLU-
SION  LIMITATION  IS  THE  LIMITATION  DETERMINED IN ACCORDANCE WITH THE
FOLLOWING TABLE:
IN THE CASE OF ESTATES OF DECEDENTS DYING THE EXCLUSION LIMITATION
DURING:                                   IS:
1998..................................... 100,000
1999..................................... 200,000
2000..................................... 300,000
2001..................................... 400,000
2002 OR THEREAFTER....................... 500,000
  (4) TREATMENT OF CERTAIN INDEBTEDNESS.--
  (A) IN GENERAL.--THE EXCLUSION PROVIDED IN  PARAGRAPH  (1)  SHALL  NOT
APPLY TO THE EXTENT THAT THE LAND IS DEBT-FINANCED PROPERTY.
  (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  DEBT-FINANCED  PROPERTY.--THE TERM "DEBT-FINANCED PROPERTY" MEANS
ANY PROPERTY WITH RESPECT TO WHICH THERE IS AN ACQUISITION  INDEBTEDNESS
(AS DEFINED IN CLAUSE (II)) ON THE DATE OF THE DECEDENT'S DEATH.
  (II)  ACQUISITION  INDEBTEDNESS.--THE  TERM "ACQUISITION INDEBTEDNESS"
MEANS, WITH RESPECT TO DEBT-FINANCED PROPERTY, THE UNPAID AMOUNT OF--
  (I) THE INDEBTEDNESS INCURRED BY THE DONOR IN ACQUIRING SUCH PROPERTY,
  (II) THE INDEBTEDNESS INCURRED BEFORE THE ACQUISITION OF SUCH PROPERTY
IF SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH  ACQUISI-
TION,
  (III) THE INDEBTEDNESS INCURRED AFTER THE ACQUISITION OF SUCH PROPERTY
IF  SUCH INDEBTEDNESS WOULD NOT HAVE BEEN INCURRED BUT FOR SUCH ACQUISI-
TION AND THE INCURRENCE OF SUCH INDEBTEDNESS WAS REASONABLY  FORESEEABLE
AT THE TIME OF SUCH ACQUISITION, AND
  (IV)  THE EXTENSION, RENEWAL, OR REFINANCING OF AN ACQUISITION INDEBT-
EDNESS.
  (5) TREATMENT OF RETAINED DEVELOPMENT RIGHT.--

S. 6359--D                         223                        A. 8559--D

  (A) IN GENERAL.--PARAGRAPH (1) SHALL NOT APPLY TO  THE  VALUE  OF  ANY
DEVELOPMENT RIGHT RETAINED BY THE DONOR IN THE CONVEYANCE OF A QUALIFIED
CONSERVATION EASEMENT.
  (B)  TERMINATION  OF  RETAINED  DEVELOPMENT RIGHT.--IF EVERY PERSON IN
BEING WHO HAS AN INTEREST (WHETHER OR NOT IN  POSSESSION)  IN  THE  LAND
EXECUTES  AN  AGREEMENT  TO  EXTINGUISH  PERMANENTLY  SOME OR ALL OF ANY
DEVELOPMENT RIGHTS (AS DEFINED IN  SUBPARAGRAPH  (D))  RETAINED  BY  THE
DONOR  ON OR BEFORE THE DATE FOR FILING THE RETURN OF THE TAX IMPOSED BY
SECTION 2001, THEN ANY TAX IMPOSED BY  SECTION  2001  SHALL  BE  REDUCED
ACCORDINGLY.  SUCH  AGREEMENT  SHALL BE FILED WITH THE RETURN OF THE TAX
IMPOSED BY SECTION 2001. THE AGREEMENT SHALL BE  IN  SUCH  FORM  AS  THE
SECRETARY SHALL PRESCRIBE.
  (C)  ADDITIONAL TAX.--ANY FAILURE TO IMPLEMENT THE AGREEMENT DESCRIBED
IN SUBPARAGRAPH (B) NOT LATER THAN THE EARLIER OF--
  (I) THE DATE WHICH IS 2 YEARS AFTER THE DATE OF THE DECEDENT'S  DEATH,
OR
  (II)  THE  DATE  OF  THE  SALE  OF  SUCH LAND SUBJECT TO THE QUALIFIED
CONSERVATION EASEMENT,
  SHALL RESULT IN THE IMPOSITION OF AN ADDITIONAL TAX IN THE  AMOUNT  OF
THE  TAX  WHICH  WOULD  HAVE BEEN DUE ON THE RETAINED DEVELOPMENT RIGHTS
SUBJECT TO SUCH AGREEMENT. SUCH ADDITIONAL TAX SHALL BE DUE AND  PAYABLE
ON THE LAST DAY OF THE 6TH MONTH FOLLOWING SUCH DATE.
  (D)  DEVELOPMENT  RIGHT  DEFINED.--FOR PURPOSES OF THIS PARAGRAPH, THE
TERM "DEVELOPMENT RIGHT" MEANS ANY RIGHT TO USE THE LAND SUBJECT TO  THE
QUALIFIED  CONSERVATION EASEMENT IN WHICH SUCH RIGHT IS RETAINED FOR ANY
COMMERCIAL PURPOSE WHICH IS NOT SUBORDINATE TO AND  DIRECTLY  SUPPORTIVE
OF THE USE OF SUCH LAND AS A FARM FOR FARMING PURPOSES (WITHIN THE MEAN-
ING OF SECTION 2032A(E)(5)).
  (6)  ELECTION.--THE ELECTION UNDER THIS SUBSECTION SHALL BE MADE ON OR
BEFORE THE DUE DATE (INCLUDING EXTENSIONS) FOR FILING THE RETURN OF  TAX
IMPOSED  BY  SECTION  2001  AND  SHALL  BE  MADE ON SUCH RETURN. SUCH AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (7) CALCULATION OF ESTATE TAX DUE.--AN EXECUTOR  MAKING  THE  ELECTION
DESCRIBED IN PARAGRAPH (6) SHALL, FOR PURPOSES OF CALCULATING THE AMOUNT
OF  TAX  IMPOSED  BY  SECTION 2001, INCLUDE THE VALUE OF ANY DEVELOPMENT
RIGHT (AS DEFINED IN PARAGRAPH (5)) RETAINED BY THE DONOR IN THE CONVEY-
ANCE OF SUCH QUALIFIED CONSERVATION EASEMENT. THE COMPUTATION OF TAX  ON
ANY  RETAINED  DEVELOPMENT  RIGHT  PRESCRIBED IN THIS PARAGRAPH SHALL BE
DONE IN SUCH MANNER AND ON SUCH FORMS AS THE SECRETARY SHALL PRESCRIBE.
  (8) DEFINITIONS.--FOR PURPOSES OF THIS SUBSECTION--
  (A) LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.--THE TERM "LAND
SUBJECT TO A QUALIFIED CONSERVATION EASEMENT" MEANS LAND--
  (I) WHICH IS LOCATED IN THE UNITED STATES OR  ANY  POSSESSION  OF  THE
UNITED STATES,
  (II)  WHICH  WAS  OWNED  BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S
FAMILY AT ALL TIMES DURING THE 3-YEAR PERIOD ENDING ON THE DATE  OF  THE
DECEDENT'S DEATH, AND
  (III) WITH RESPECT TO WHICH A QUALIFIED CONSERVATION EASEMENT HAS BEEN
MADE  BY  AN INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (C), AS OF THE DATE OF
THE ELECTION DESCRIBED IN PARAGRAPH (6).
  (B) QUALIFIED CONSERVATION EASEMENT.--THE TERM "QUALIFIED CONSERVATION
EASEMENT" MEANS A QUALIFIED CONSERVATION  CONTRIBUTION  (AS  DEFINED  IN
SECTION  170(H)(1)) OF A QUALIFIED REAL PROPERTY INTEREST (AS DEFINED IN
SECTION 170(H)(2)(C)), EXCEPT THAT CLAUSE (IV) OF  SECTION  170(H)(4)(A)
SHALL  NOT  APPLY,  AND  THE  RESTRICTION  ON  THE  USE OF SUCH INTEREST

S. 6359--D                         224                        A. 8559--D

DESCRIBED IN SECTION 170(H)(2)(C) SHALL INCLUDE A  PROHIBITION  ON  MORE
THAN A DE MINIMIS USE FOR A COMMERCIAL RECREATIONAL ACTIVITY.
  (C) INDIVIDUAL DESCRIBED.--AN INDIVIDUAL IS DESCRIBED IN THIS SUBPARA-
GRAPH IF SUCH INDIVIDUAL IS--
  (I) THE DECEDENT,
  (II) A MEMBER OF THE DECEDENT'S FAMILY,
  (III) THE EXECUTOR OF THE DECEDENT'S ESTATE, OR
  (IV)  THE  TRUSTEE OF A TRUST THE CORPUS OF WHICH INCLUDES THE LAND TO
BE SUBJECT TO THE QUALIFIED CONSERVATION EASEMENT.
  (D) MEMBER OF FAMILY.--THE TERM  "MEMBER  OF  THE  DECEDENT'S  FAMILY"
MEANS  ANY  MEMBER  OF THE FAMILY (AS DEFINED IN SECTION 2032A(E)(2)) OF
THE DECEDENT.
  (9) TREATMENT OF EASEMENTS GRANTED AFTER DEATH.--IN ANY CASE IN  WHICH
THE  QUALIFIED  CONSERVATION  EASEMENT  IS GRANTED AFTER THE DATE OF THE
DECEDENT'S DEATH AND ON OR BEFORE THE DUE  DATE  (INCLUDING  EXTENSIONS)
FOR  FILING  THE  RETURN  OF  TAX IMPOSED BY SECTION 2001, THE DEDUCTION
UNDER SECTION 2055(F) WITH RESPECT TO SUCH EASEMENT SHALL BE ALLOWED  TO
THE  ESTATE BUT ONLY IF NO CHARITABLE DEDUCTION IS ALLOWED UNDER CHAPTER
1 TO ANY PERSON WITH RESPECT TO THE GRANT OF SUCH EASEMENT.
  (10) APPLICATION OF THIS SECTION TO INTERESTS IN PARTNERSHIPS,  CORPO-
RATIONS, AND TRUSTS.--THIS SECTION SHALL APPLY TO AN INTEREST IN A PART-
NERSHIP,  CORPORATION,  OR TRUST IF AT LEAST 30 PERCENT OF THE ENTITY IS
OWNED (DIRECTLY OR INDIRECTLY) BY THE DECEDENT, AS DETERMINED UNDER  THE
RULES DESCRIBED IN SECTION 2057(E)(3).
  (D) CROSS REFERENCE.--
  FOR  EXECUTOR'S RIGHT TO BE FURNISHED ON REQUEST A STATEMENT REGARDING
ANY VALUATION MADE BY THE SECRETARY WITHIN THE GROSS ESTATE, SEE SECTION
7517.
  S 2032. ALTERNATE VALUATION.
  (A) GENERAL.--THE VALUE OF THE GROSS ESTATE MAY BE DETERMINED, IF  THE
EXECUTOR  SO  ELECTS,  BY VALUING ALL THE PROPERTY INCLUDED IN THE GROSS
ESTATE AS FOLLOWS:
  (1) IN THE CASE OF PROPERTY DISTRIBUTED, SOLD, EXCHANGED, OR OTHERWISE
DISPOSED OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S  DEATH  SUCH  PROPERTY
SHALL BE VALUED AS OF THE DATE OF DISTRIBUTION, SALE, EXCHANGE, OR OTHER
DISPOSITION.
  (2)  IN  THE  CASE  OF  PROPERTY  NOT DISTRIBUTED, SOLD, EXCHANGED, OR
OTHERWISE DISPOSED OF, WITHIN 6 MONTHS AFTER THE DECEDENT'S  DEATH  SUCH
PROPERTY  SHALL  BE  VALUED AS OF THE DATE 6 MONTHS AFTER THE DECEDENT'S
DEATH.
  (3) ANY INTEREST OR ESTATE WHICH IS AFFECTED BY  MERE  LAPSE  OF  TIME
SHALL  BE  INCLUDED AT ITS VALUE AS OF THE TIME OF DEATH (INSTEAD OF THE
LATER DATE) WITH ADJUSTMENT FOR ANY DIFFERENCE IN ITS VALUE  AS  OF  THE
LATER DATE NOT DUE TO MERE LAPSE OF TIME.
  (B)  SPECIAL RULES.--NO DEDUCTION UNDER THIS CHAPTER OF ANY ITEM SHALL
BE ALLOWED IF ALLOWANCE FOR SUCH ITEMS IS IN EFFECT GIVEN BY THE  ALTER-
NATE   VALUATION  PROVIDED  BY  THIS  SECTION.  WHEREVER  IN  ANY  OTHER
SUBSECTION OR SECTION OF THIS CHAPTER REFERENCE IS MADE TO THE VALUE  OF
PROPERTY  AT  THE  TIME OF THE DECEDENT'S DEATH, SUCH REFERENCE SHALL BE
DEEMED TO REFER TO THE VALUE OF SUCH PROPERTY USED  IN  DETERMINING  THE
VALUE  OF  THE GROSS ESTATE. IN CASE OF AN ELECTION MADE BY THE EXECUTOR
UNDER THIS SECTION, THEN--
  (1) FOR PURPOSES OF THE CHARITABLE DEDUCTION  UNDER  SECTION  2055  OR
2106(A)(2), ANY BEQUEST, LEGACY, DEVISE, OR TRANSFER ENUMERATED THEREIN,
AND

S. 6359--D                         225                        A. 8559--D

  (2)  FOR  THE PURPOSE OF THE MARITAL DEDUCTION UNDER SECTION 2056, ANY
INTEREST IN PROPERTY PASSING TO THE SURVIVING SPOUSE,
  SHALL BE VALUED AS OF THE DATE OF THE DECEDENT'S DEATH WITH ADJUSTMENT
FOR ANY DIFFERENCE IN VALUE (NOT DUE TO MERE LAPSE OF TIME OR THE OCCUR-
RENCE  OR NONOCCURRENCE OF A CONTINGENCY) OF THE PROPERTY AS OF THE DATE
6 MONTHS AFTER THE DECEDENT'S DEATH (SUBSTITUTING, IN THE CASE OF  PROP-
ERTY  DISTRIBUTED  BY  THE  EXECUTOR  OR TRUSTEE, OR SOLD, EXCHANGED, OR
OTHERWISE DISPOSED OF, DURING SUCH 6-MONTH PERIOD, THE DATE THEREOF).
  (C) ELECTION MUST DECREASE GROSS ESTATE AND ESTATE  TAX.--NO  ELECTION
MAY  BE  MADE  UNDER  THIS SECTION WITH RESPECT TO AN ESTATE UNLESS SUCH
ELECTION WILL DECREASE--
  (1) THE VALUE OF THE GROSS ESTATE, AND
  (2) THE SUM OF THE TAX IMPOSED BY THIS CHAPTER AND THE TAX IMPOSED  BY
CHAPTER  13  WITH RESPECT TO PROPERTY INCLUDIBLE IN THE DECEDENT'S GROSS
ESTATE (REDUCED BY CREDITS ALLOWABLE AGAINST SUCH TAXES).
  (D) ELECTION.--
  (1) IN GENERAL.--THE ELECTION PROVIDED FOR IN THIS  SECTION  SHALL  BE
MADE  BY  THE EXECUTOR ON THE RETURN OF THE TAX IMPOSED BY THIS CHAPTER.
SUCH ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (2) EXCEPTION.--NO ELECTION MAY BE MADE UNDER  THIS  SECTION  IF  SUCH
RETURN  IS  FILED  MORE  THAN  1  YEAR  AFTER THE TIME PRESCRIBED BY LAW
(INCLUDING EXTENSIONS) FOR FILING SUCH RETURN.
  S 2032A. VALUATION OF CERTAIN FARM, ETC., REAL PROPERTY.
  (A) VALUE BASED ON USE UNDER WHICH PROPERTY QUALIFIES.--
  (1) GENERAL RULE.--IF--
  (A) THE DECEDENT WAS (AT THE TIME OF HIS DEATH) A CITIZEN OR  RESIDENT
OF THE UNITED STATES, AND
  (B)  THE EXECUTOR ELECTS THE APPLICATION OF THIS SECTION AND FILES THE
AGREEMENT REFERRED TO IN SUBSECTION (D)(2),
  THEN, FOR PURPOSES OF THIS CHAPTER, THE VALUE OF QUALIFIED REAL  PROP-
ERTY  SHALL  BE  ITS  VALUE  FOR THE USE UNDER WHICH IT QUALIFIES, UNDER
SUBSECTION (B), AS QUALIFIED REAL PROPERTY.
  (2) LIMITATION ON  AGGREGATE  REDUCTION  IN  FAIR  MARKET  VALUE.--THE
AGGREGATE  DECREASE  IN  THE VALUE OF QUALIFIED REAL PROPERTY TAKEN INTO
ACCOUNT FOR PURPOSES OF THIS CHAPTER WHICH RESULTS FROM THE  APPLICATION
OF PARAGRAPH (1) WITH RESPECT TO ANY DECEDENT SHALL NOT EXCEED $750,000.
  (3)  INFLATION  ADJUSTMENT.--IN THE CASE OF ESTATES OF DECEDENTS DYING
IN A CALENDAR YEAR AFTER 1998, THE $750,000 AMOUNT  CONTAINED  IN  PARA-
GRAPH (2) SHALL BE INCREASED BY AN AMOUNT EQUAL TO--
  (A) $750,000, MULTIPLIED BY
  (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
SUCH  CALENDAR  YEAR  BY SUBSTITUTING "CALENDAR YEAR 1997" FOR "CALENDAR
YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.
  IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
PLE OF $10,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST MULTIPLE
OF $10,000.
  (B) QUALIFIED REAL PROPERTY.--
  (1) IN GENERAL.--FOR PURPOSES OF THIS  SECTION,  THE  TERM  "QUALIFIED
REAL  PROPERTY"  MEANS  REAL PROPERTY LOCATED IN THE UNITED STATES WHICH
WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR OF THE
DECEDENT AND WHICH, ON THE DATE OF THE DECEDENT'S DEATH, WAS BEING  USED
FOR  A QUALIFIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S FAMI-
LY, BUT ONLY IF--
  (A) 50 PERCENT OR MORE OF THE  ADJUSTED  VALUE  OF  THE  GROSS  ESTATE
CONSISTS OF THE ADJUSTED VALUE OF REAL OR PERSONAL PROPERTY WHICH--

S. 6359--D                         226                        A. 8559--D

  (I)  ON  THE DATE OF THE DECEDENT'S DEATH, WAS BEING USED FOR A QUALI-
FIED USE BY THE DECEDENT OR A MEMBER OF THE DECEDENT'S FAMILY, AND
  (II) WAS ACQUIRED FROM OR PASSED FROM THE DECEDENT TO A QUALIFIED HEIR
OF THE DECEDENT.
  (B)  25  PERCENT  OR  MORE  OF  THE ADJUSTED VALUE OF THE GROSS ESTATE
CONSISTS OF THE ADJUSTED VALUE OF REAL PROPERTY WHICH MEETS THE REQUIRE-
MENTS OF SUBPARAGRAPHS (A)(II) AND (C),
  (C) DURING THE 8-YEAR PERIOD ENDING ON  THE  DATE  OF  THE  DECEDENT'S
DEATH THERE HAVE BEEN PERIODS AGGREGATING 5 YEARS OR MORE DURING WHICH--
  (I)  SUCH  REAL  PROPERTY WAS OWNED BY THE DECEDENT OR A MEMBER OF THE
DECEDENT'S FAMILY AND USED FOR A QUALIFIED USE  BY  THE  DECEDENT  OR  A
MEMBER OF THE DECEDENT'S FAMILY, AND
  (II)  THERE  WAS MATERIAL PARTICIPATION BY THE DECEDENT OR A MEMBER OF
THE DECEDENT'S FAMILY IN THE OPERATION OF THE FARM  OR  OTHER  BUSINESS,
AND
  (D)  SUCH  REAL PROPERTY IS DESIGNATED IN THE AGREEMENT REFERRED TO IN
SUBSECTION (D)(2).
  (2) QUALIFIED USE.--FOR PURPOSES OF THIS SECTION, THE TERM  "QUALIFIED
USE" MEANS THE DEVOTION OF THE PROPERTY TO ANY OF THE FOLLOWING:
  (A) USE AS A FARM FOR FARMING PURPOSES, OR
  (B)  USE  IN  A  TRADE OR BUSINESS OTHER THAN THE TRADE OR BUSINESS OF
FARMING.
  (3) ADJUSTED VALUE.--FOR PURPOSES OF PARAGRAPH (1), THE TERM "ADJUSTED
VALUE" MEANS--
  (A) IN THE CASE OF THE GROSS ESTATE, THE VALUE OF THE GROSS ESTATE FOR
PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD  TO  THIS  SECTION),
REDUCED  BY  ANY AMOUNTS ALLOWABLE AS A DEDUCTION UNDER PARAGRAPH (4) OF
SECTION 2053(A), OR
  (B) IN THE CASE OF ANY REAL OR PERSONAL PROPERTY, THE  VALUE  OF  SUCH
PROPERTY FOR PURPOSES OF THIS CHAPTER (DETERMINED WITHOUT REGARD TO THIS
SECTION),  REDUCED BY ANY AMOUNTS ALLOWABLE AS A DEDUCTION IN RESPECT OF
SUCH PROPERTY UNDER PARAGRAPH (4) OF SECTION 2053(A).
  (4) DECEDENTS WHO ARE RETIRED OR DISABLED.--
  (A) IN GENERAL.--IF, ON THE DATE OF THE DECEDENT'S DEATH, THE REQUIRE-
MENTS OF PARAGRAPH (1)(C)(II) WITH RESPECT TO THE DECEDENT FOR ANY PROP-
ERTY ARE NOT MET, AND THE DECEDENT--
  (I) WAS RECEIVING OLD-AGE BENEFITS UNDER TITLE II OF THE SOCIAL  SECU-
RITY ACT FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE, OR
  (II) WAS DISABLED FOR A CONTINUOUS PERIOD ENDING ON SUCH DATE,
  THEN  PARAGRAPH (1)(C)(II) SHALL BE APPLIED WITH RESPECT TO SUCH PROP-
ERTY BY SUBSTITUTING "THE DATE ON WHICH THE LONGER  OF  SUCH  CONTINUOUS
PERIODS  BEGAN"  FOR  "THE  DATE  OF  THE DECEDENT'S DEATH" IN PARAGRAPH
(1)(C).
  (B) DISABLED DEFINED.--FOR PURPOSES OF SUBPARAGRAPH (A), AN INDIVIDUAL
SHALL BE DISABLED IF SUCH INDIVIDUAL HAS A MENTAL OR PHYSICAL IMPAIRMENT
WHICH RENDERS HIM UNABLE TO MATERIALLY PARTICIPATE IN THE  OPERATION  OF
THE FARM OR OTHER BUSINESS.
  (C)   COORDINATION   WITH   RECAPTURE.--FOR   PURPOSES  OF  SUBSECTION
(C)(6)(B)(I), IF THE REQUIREMENTS OF PARAGRAPH (1)(C)(II) ARE  MET  WITH
RESPECT TO ANY DECEDENT BY REASON OF SUBPARAGRAPH (A), THE PERIOD ENDING
ON  THE  DATE  ON  WHICH  THE CONTINUOUS PERIOD TAKEN INTO ACCOUNT UNDER
SUBPARAGRAPH (A) BEGAN SHALL BE TREATED AS THE PERIOD IMMEDIATELY BEFORE
THE DECEDENT'S DEATH.
  (5) SPECIAL RULES FOR SURVIVING SPOUSES.--
  (A) IN GENERAL.--IF PROPERTY IS QUALIFIED REAL PROPERTY  WITH  RESPECT
TO  A  DECEDENT (HEREINAFTER IN THIS PARAGRAPH REFERRED TO AS THE "FIRST

S. 6359--D                         227                        A. 8559--D

DECEDENT") AND SUCH PROPERTY WAS ACQUIRED FROM OR PASSED FROM THE  FIRST
DECEDENT  TO THE SURVIVING SPOUSE OF THE FIRST DECEDENT, FOR PURPOSES OF
APPLYING THIS SUBSECTION AND SUBSECTION (C) IN THE CASE OF THE ESTATE OF
SUCH  SURVIVING  SPOUSE, ACTIVE MANAGEMENT OF THE FARM OR OTHER BUSINESS
BY THE SURVIVING SPOUSE SHALL BE TREATED AS  MATERIAL  PARTICIPATION  BY
SUCH SURVIVING SPOUSE IN THE OPERATION OF SUCH FARM OR BUSINESS.
  (B)  SPECIAL RULE.--FOR THE PURPOSES OF SUBPARAGRAPH (A), THE DETERMI-
NATION OF WHETHER PROPERTY IS QUALIFIED REAL PROPERTY  WITH  RESPECT  TO
THE  FIRST  DECEDENT SHALL BE MADE WITHOUT REGARD TO SUBPARAGRAPH (D) OF
PARAGRAPH (1) AND WITHOUT REGARD  TO  WHETHER  AN  ELECTION  UNDER  THIS
SECTION WAS MADE.
  (C)  COORDINATION  WITH  PARAGRAPH (4).--IN ANY CASE IN WHICH TO DO SO
WILL ENABLE THE REQUIREMENTS OF PARAGRAPH  (1)(C)(II)  TO  BE  MET  WITH
RESPECT  TO  THE  SURVIVING  SPOUSE,  THIS SUBSECTION AND SUBSECTION (C)
SHALL BE APPLIED BY TAKING INTO ACCOUNT  ANY  APPLICATION  OF  PARAGRAPH
(4).
  (C)  TAX  TREATMENT  OF DISPOSITIONS AND FAILURES TO USE FOR QUALIFIED
USE.--
  (1) IMPOSITION OF ADDITIONAL ESTATE TAX.--IF, WITHIN  10  YEARS  AFTER
THE DECEDENT'S DEATH AND BEFORE THE DEATH OF THE QUALIFIED HEIR--
  (A)  THE  QUALIFIED  HEIR  DISPOSES  OF ANY INTEREST IN QUALIFIED REAL
PROPERTY (OTHER THAN BY A DISPOSITION TO A MEMBER OF HIS FAMILY), OR
  (B) THE QUALIFIED HEIR CEASES TO USE FOR THE QUALIFIED USE THE  QUALI-
FIED REAL PROPERTY WHICH WAS ACQUIRED (OR PASSED) FROM THE DECEDENT,
  THEN, THERE IS HEREBY IMPOSED AN ADDITIONAL ESTATE TAX.
  (2) AMOUNT OF ADDITIONAL TAX.--
  (A) IN GENERAL.--THE AMOUNT OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH
(1) WITH RESPECT TO ANY INTEREST SHALL BE THE AMOUNT EQUAL TO THE LESSER
OF--
  (I) THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO SUCH INTEREST, OR
  (II)  THE  EXCESS  OF THE AMOUNT REALIZED WITH RESPECT TO THE INTEREST
(OR, IN ANY CASE OTHER THAN A SALE OR EXCHANGE AT ARM'S LENGTH, THE FAIR
MARKET VALUE OF THE INTEREST) OVER THE VALUE OF THE INTEREST  DETERMINED
UNDER SUBSECTION (A).
  (B) ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO INTEREST.--FOR PURPOSES OF
SUBPARAGRAPH  (A), THE ADJUSTED TAX DIFFERENCE ATTRIBUTABLE TO AN INTER-
EST IS THE AMOUNT WHICH BEARS THE SAME RATIO TO THE ADJUSTED TAX DIFFER-
ENCE WITH RESPECT TO THE ESTATE (DETERMINED UNDER SUBPARAGRAPH (C)) AS--
  (I) THE EXCESS OF THE VALUE OF SUCH  INTEREST  FOR  PURPOSES  OF  THIS
CHAPTER  (DETERMINED WITHOUT REGARD TO SUBSECTION (A)) OVER THE VALUE OF
SUCH INTEREST DETERMINED UNDER SUBSECTION (A), BEARS TO
  (II) A SIMILAR EXCESS DETERMINED FOR ALL QUALIFIED REAL PROPERTY.
  (C) ADJUSTED TAX DIFFERENCE WITH RESPECT TO THE ESTATE.--FOR  PURPOSES
OF  SUBPARAGRAPH  (B), THE TERM "ADJUSTED TAX DIFFERENCE WITH RESPECT TO
THE ESTATE" MEANS THE EXCESS OF WHAT WOULD  HAVE  BEEN  THE  ESTATE  TAX
LIABILITY  BUT  FOR  SUBSECTION  (A)  OVER THE ESTATE TAX LIABILITY. FOR
PURPOSES OF THIS SUBPARAGRAPH, THE TERM "ESTATE TAX LIABILITY" MEANS THE
TAX IMPOSED BY SECTION 2001 REDUCED BY  THE  CREDITS  ALLOWABLE  AGAINST
SUCH TAX.
  (D)  PARTIAL  DISPOSITIONS.--FOR PURPOSES OF THIS PARAGRAPH, WHERE THE
QUALIFIED HEIR DISPOSES OF A PORTION OF THE  INTEREST  ACQUIRED  BY  (OR
PASSING  TO)  SUCH  HEIR (OR A PREDECESSOR QUALIFIED HEIR) OR THERE IS A
CESSATION OF USE OF SUCH A PORTION--
  (I) THE VALUE DETERMINED UNDER SUBSECTION (A) TAKEN INTO ACCOUNT UNDER
SUBPARAGRAPH (A)(II) WITH RESPECT TO SUCH PORTION SHALL BE ITS PRO  RATA
SHARE OF SUCH VALUE OF SUCH INTEREST, AND

S. 6359--D                         228                        A. 8559--D

  (II)  THE  ADJUSTED  TAX DIFFERENCE ATTRIBUTABLE TO THE INTEREST TAKEN
INTO ACCOUNT WITH RESPECT TO THE TRANSACTION INVOLVING THE SECOND OR ANY
SUCCEEDING PORTION SHALL BE REDUCED BY THE AMOUNT OF THE TAX IMPOSED  BY
THIS  SUBSECTION  WITH  RESPECT  TO  ALL  PRIOR  TRANSACTIONS  INVOLVING
PORTIONS OF SUCH INTEREST.
  (E)  SPECIAL RULE FOR DISPOSITION OF TIMBER.--IN THE CASE OF QUALIFIED
WOODLAND TO WHICH AN ELECTION UNDER SUBSECTION  (E)(13)(A)  APPLIES,  IF
THE  QUALIFIED  HEIR DISPOSES OF (OR SEVERS) ANY STANDING TIMBER ON SUCH
QUALIFIED WOODLAND--
  (I) SUCH DISPOSITION (OR SEVERANCE) SHALL BE TREATED AS A  DISPOSITION
OF A PORTION OF THE INTEREST OF THE QUALIFIED HEIR IN SUCH PROPERTY, AND
  (II)  THE  AMOUNT  OF THE ADDITIONAL TAX IMPOSED BY PARAGRAPH (1) WITH
RESPECT TO SUCH DISPOSITION SHALL BE AN AMOUNT EQUAL TO THE LESSER OF--
  (I) THE AMOUNT REALIZED ON SUCH DISPOSITION (OR,  IN  ANY  CASE  OTHER
THAN  A  SALE  OR EXCHANGE AT ARM'S LENGTH, THE FAIR MARKET VALUE OF THE
PORTION OF THE INTEREST DISPOSED OR SEVERED), OR
  (II) THE AMOUNT OF ADDITIONAL  TAX  DETERMINED  UNDER  THIS  PARAGRAPH
(WITHOUT  REGARD  TO  THIS  SUBPARAGRAPH)  IF THE ENTIRE INTEREST OF THE
QUALIFIED HEIR IN THE QUALIFIED WOODLAND HAD BEEN DISPOSED OF, LESS  THE
SUM  OF  THE  AMOUNT  OF  THE ADDITIONAL TAX IMPOSED WITH RESPECT TO ALL
PRIOR TRANSACTIONS INVOLVING SUCH WOODLAND TO  WHICH  THIS  SUBPARAGRAPH
APPLIED.
  FOR  PURPOSES OF THE PRECEDING SENTENCE, THE DISPOSITION OF A RIGHT TO
SEVER SHALL BE TREATED AS THE DISPOSITION OF THE  STANDING  TIMBER.  THE
AMOUNT  OF  ADDITIONAL  TAX  IMPOSED  UNDER PARAGRAPH (1) IN ANY CASE IN
WHICH A QUALIFIED HEIR DISPOSES OF HIS ENTIRE INTEREST IN THE  QUALIFIED
WOODLAND  SHALL  BE REDUCED BY ANY AMOUNT DETERMINED UNDER THIS SUBPARA-
GRAPH WITH RESPECT TO SUCH WOODLAND.
  (3) ONLY 1 ADDITIONAL TAX IMPOSED WITH RESPECT TO ANY  1  PORTION.--IN
THE CASE OF AN INTEREST ACQUIRED FROM (OR PASSING FROM) ANY DECEDENT, IF
SUBPARAGRAPH  (A)  OR  (B) OF PARAGRAPH (1) APPLIES TO ANY PORTION OF AN
INTEREST, SUBPARAGRAPH (B) OR (A), AS THE CASE MAY BE, OF PARAGRAPH  (1)
SHALL NOT APPLY WITH RESPECT TO THE SAME PORTION OF SUCH INTEREST.
  (4)  DUE  DATE.--THE  ADDITIONAL  TAX IMPOSED BY THIS SUBSECTION SHALL
BECOME DUE AND PAYABLE ON THE DAY WHICH IS 6 MONTHS AFTER  THE  DATE  OF
THE DISPOSITION OR CESSATION REFERRED TO IN PARAGRAPH (1).
  (5)  LIABILITY  FOR TAX; FURNISHING OF BOND.--THE QUALIFIED HEIR SHALL
BE PERSONALLY LIABLE FOR THE ADDITIONAL TAX IMPOSED BY  THIS  SUBSECTION
WITH  RESPECT  TO  HIS INTEREST UNLESS THE HEIR HAS FURNISHED BOND WHICH
MEETS THE REQUIREMENTS OF SUBSECTION (E)(11).
  (6) CESSATION OF QUALIFIED USE.--FOR  PURPOSES  OF  PARAGRAPH  (1)(B),
REAL PROPERTY SHALL CEASE TO BE USED FOR THE QUALIFIED USE IF--
  (A) SUCH PROPERTY CEASES TO BE USED FOR THE QUALIFIED USE SET FORTH IN
SUBPARAGRAPH  (A)  OR  (B) OF SUBSECTION (B)(2) UNDER WHICH THE PROPERTY
QUALIFIED UNDER SUBSECTION (B), OR
  (B) DURING ANY PERIOD  OF  8  YEARS  ENDING  AFTER  THE  DATE  OF  THE
DECEDENT'S DEATH AND BEFORE THE DATE OF THE DEATH OF THE QUALIFIED HEIR,
THERE HAD BEEN PERIODS AGGREGATING MORE THAN 3 YEARS DURING WHICH--
  (I)  IN  THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY THE
DECEDENT, THERE WAS NO MATERIAL PARTICIPATION BY  THE  DECEDENT  OR  ANY
MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER BUSINESS, AND
  (II)  IN THE CASE OF PERIODS DURING WHICH THE PROPERTY WAS HELD BY ANY
QUALIFIED HEIR, THERE WAS NO MATERIAL PARTICIPATION  BY  SUCH  QUALIFIED
HEIR  OR  ANY MEMBER OF HIS FAMILY IN THE OPERATION OF THE FARM OR OTHER
BUSINESS.
  (7) SPECIAL RULES.--

S. 6359--D                         229                        A. 8559--D

  (A) NO TAX IF USE BEGINS WITHIN 2 YEARS.--IF THE  DATE  ON  WHICH  THE
QUALIFIED HEIR BEGINS TO USE THE QUALIFIED REAL PROPERTY (HEREINAFTER IN
THIS  SUBPARAGRAPH  REFERRED  TO AS THE COMMENCEMENT DATE) IS BEFORE THE
DATE 2 YEARS AFTER THE DECEDENT'S DEATH--
  (I) NO TAX SHALL BE IMPOSED UNDER PARAGRAPH (1) BY REASON OF THE FAIL-
URE  BY  THE QUALIFIED HEIR TO SO USE SUCH PROPERTY BEFORE THE COMMENCE-
MENT DATE, AND
  (II) THE 10-YEAR PERIOD UNDER PARAGRAPH (1) SHALL BE EXTENDED  BY  THE
PERIOD AFTER THE DECEDENT'S DEATH AND BEFORE THE COMMENCEMENT DATE.
  (B)  ACTIVE  MANAGEMENT BY ELIGIBLE QUALIFIED HEIR TREATED AS MATERIAL
PARTICIPATION.--FOR PURPOSES OF PARAGRAPH (6)(B)(II), THE ACTIVE MANAGE-
MENT OF A FARM OR OTHER BUSINESS BY--
  (I) AN ELIGIBLE QUALIFIED HEIR, OR
  (II) A FIDUCIARY OF AN ELIGIBLE QUALIFIED  HEIR  DESCRIBED  IN  CLAUSE
(II) OR (III) OF SUBPARAGRAPH (C),
  SHALL  BE TREATED AS MATERIAL PARTICIPATION BY SUCH ELIGIBLE QUALIFIED
HEIR IN THE OPERATION OF SUCH FARM OR BUSINESS. IN THE CASE OF AN ELIGI-
BLE QUALIFIED HEIR DESCRIBED IN CLAUSE (II), (III), OR (IV) OF  SUBPARA-
GRAPH (C), THE PRECEDING SENTENCE SHALL APPLY ONLY DURING PERIODS DURING
WHICH SUCH HEIR MEETS THE REQUIREMENTS OF SUCH CLAUSE.
  (C) ELIGIBLE QUALIFIED HEIR.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM
"ELIGIBLE QUALIFIED HEIR" MEANS A QUALIFIED HEIR WHO--
  (I) IS THE SURVIVING SPOUSE OF THE DECEDENT,
  (II) HAS NOT ATTAINED THE AGE OF 21,
  (III) IS DISABLED (WITHIN THE MEANING OF SUBSECTION (B)(4)(B)), OR
  (IV) IS A STUDENT.
  (D) STUDENT.--FOR PURPOSES OF SUBPARAGRAPH (C), AN INDIVIDUAL SHALL BE
TREATED AS A STUDENT WITH RESPECT TO PERIODS DURING ANY CALENDAR YEAR IF
(AND  ONLY  IF)  SUCH  INDIVIDUAL  IS  A  STUDENT (WITHIN THE MEANING OF
SECTION 152(F)(2)) FOR SUCH CALENDAR YEAR.
  (E) CERTAIN RENTS TREATED AS  QUALIFIED  USE.--FOR  PURPOSES  OF  THIS
SUBSECTION,  A  SURVIVING  SPOUSE  OR  LINEAL DESCENDANT OF THE DECEDENT
SHALL NOT BE TREATED AS FAILING TO USE  QUALIFIED  REAL  PROPERTY  IN  A
QUALIFIED  USE SOLELY BECAUSE SUCH SPOUSE OR DESCENDANT RENTS SUCH PROP-
ERTY TO A MEMBER OF THE FAMILY OF SUCH SPOUSE OR  DESCENDANT  ON  A  NET
CASH  BASIS.  FOR  PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED
CHILD OF AN INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH  INDIVIDUAL
BY BLOOD.
  (8) QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.--A QUAL-
IFIED  CONSERVATION  CONTRIBUTION (AS DEFINED IN SECTION 170(H)) BY GIFT
OR  OTHERWISE  SHALL  NOT  BE  DEEMED  A  DISPOSITION  UNDER  SUBSECTION
(C)(1)(A).
  (D) ELECTION; AGREEMENT.--
  (1)  ELECTION.--THE  ELECTION  UNDER THIS SECTION SHALL BE MADE ON THE
RETURN OF THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL  BE  MADE
IN  SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (2) AGREEMENT.--THE AGREEMENT REFERRED TO IN THIS PARAGRAPH IS A WRIT-
TEN AGREEMENT SIGNED BY EACH PERSON IN BEING WHO HAS AN INTEREST (WHETH-
ER OR NOT IN POSSESSION) IN ANY PROPERTY DESIGNATED  IN  SUCH  AGREEMENT
CONSENTING  TO  THE  APPLICATION  OF SUBSECTION (C) WITH RESPECT TO SUCH
PROPERTY.
  (3) MODIFICATION OF  ELECTION  AND  AGREEMENT  TO  BE  PERMITTED.--THE
SECRETARY  SHALL  PRESCRIBE PROCEDURES WHICH PROVIDE THAT IN ANY CASE IN
WHICH THE EXECUTOR MAKES AN ELECTION UNDER PARAGRAPH  (1)  (AND  SUBMITS

S. 6359--D                         230                        A. 8559--D

THE  AGREEMENT  REFERRED TO IN PARAGRAPH (2)) WITHIN THE TIME PRESCRIBED
THEREFOR, BUT--
  (A)  THE  NOTICE  OF ELECTION, AS FILED, DOES NOT CONTAIN ALL REQUIRED
INFORMATION, OR
  (B) SIGNATURES OF 1 OR MORE PERSONS REQUIRED TO ENTER INTO THE  AGREE-
MENT  DESCRIBED  IN  PARAGRAPH  (2) ARE NOT INCLUDED ON THE AGREEMENT AS
FILED, OR THE AGREEMENT DOES NOT CONTAIN ALL REQUIRED INFORMATION,
  THE EXECUTOR WILL HAVE A REASONABLE PERIOD OF TIME (NOT  EXCEEDING  90
DAYS) AFTER NOTIFICATION OF SUCH FAILURES TO PROVIDE SUCH INFORMATION OR
SIGNATURES.
  (E) DEFINITIONS; SPECIAL RULES.--FOR PURPOSES OF THIS SECTION--
  (1)  QUALIFIED HEIR.--THE TERM "QUALIFIED HEIR" MEANS, WITH RESPECT TO
ANY PROPERTY, A MEMBER OF THE DECEDENT'S FAMILY WHO ACQUIRED SUCH  PROP-
ERTY (OR TO WHOM SUCH PROPERTY PASSED) FROM THE DECEDENT. IF A QUALIFIED
HEIR  DISPOSES  OF ANY INTEREST IN QUALIFIED REAL PROPERTY TO ANY MEMBER
OF HIS FAMILY, SUCH MEMBER SHALL THEREAFTER BE TREATED AS THE  QUALIFIED
HEIR WITH RESPECT TO SUCH INTEREST.
  (2)  MEMBER  OF  FAMILY.--THE  TERM "MEMBER OF THE FAMILY" MEANS, WITH
RESPECT TO ANY INDIVIDUAL, ONLY--
  (A) AN ANCESTOR OF SUCH INDIVIDUAL,
  (B) THE SPOUSE OF SUCH INDIVIDUAL,
  (C) A LINEAL DESCENDANT  OF  SUCH  INDIVIDUAL,  OF  SUCH  INDIVIDUAL'S
SPOUSE, OR OF A PARENT OF SUCH INDIVIDUAL, OR
  (D) THE SPOUSE OF ANY LINEAL DESCENDANT DESCRIBED IN SUBPARAGRAPH (C).
  FOR  PURPOSES OF THE PRECEDING SENTENCE, A LEGALLY ADOPTED CHILD OF AN
INDIVIDUAL SHALL BE TREATED AS THE CHILD OF SUCH INDIVIDUAL BY BLOOD.
  (3) CERTAIN REAL PROPERTY INCLUDED.--IN  THE  CASE  OF  REAL  PROPERTY
WHICH  MEETS  THE REQUIREMENTS OF SUBPARAGRAPH (C) OF SUBSECTION (B)(1),
RESIDENTIAL BUILDINGS AND RELATED IMPROVEMENTS  ON  SUCH  REAL  PROPERTY
OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF SUCH REAL PROPERTY
OR  BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR THE PURPOSE OF OPER-
ATING OR MAINTAINING SUCH REAL PROPERTY, AND ROADS, BUILDINGS, AND OTHER
STRUCTURES AND IMPROVEMENTS FUNCTIONALLY RELATED TO  THE  QUALIFIED  USE
SHALL BE TREATED AS REAL PROPERTY DEVOTED TO THE QUALIFIED USE.
  (4)  FARM.--THE  TERM  "FARM"  INCLUDES  STOCK, DAIRY, POULTRY, FRUIT,
FURBEARING ANIMAL, AND TRUCK  FARMS,  PLANTATIONS,  RANCHES,  NURSERIES,
RANGES,  GREENHOUSES  OR OTHER SIMILAR STRUCTURES USED PRIMARILY FOR THE
RAISING OF AGRICULTURAL OR HORTICULTURAL COMMODITIES, AND  ORCHARDS  AND
WOODLANDS.
  (5) FARMING PURPOSES.--THE TERM "FARMING PURPOSES" MEANS-
  (A)  CULTIVATING THE SOIL OR RAISING OR HARVESTING ANY AGRICULTURAL OR
HORTICULTURAL  COMMODITY  (INCLUDING  THE  RAISING,  SHEARING,  FEEDING,
CARING FOR, TRAINING, AND MANAGEMENT OF ANIMALS) ON A FARM;
  (B) HANDLING, DRYING, PACKING, GRADING, OR STORING ON A FARM ANY AGRI-
CULTURAL  OR  HORTICULTURAL  COMMODITY  IN ITS UNMANUFACTURED STATE, BUT
ONLY IF THE OWNER, TENANT, OR OPERATOR OF THE  FARM  REGULARLY  PRODUCES
MORE THAN ONE-HALF OF THE COMMODITY SO TREATED; AND
  (C)(I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
  (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
  (6)  MATERIAL  PARTICIPATION.--MATERIAL  PARTICIPATION SHALL BE DETER-
MINED IN A MANNER SIMILAR TO THE MANNER USED FOR PURPOSES  OF  PARAGRAPH
(1) OF SECTION 1402(A) (RELATING TO NET EARNINGS FROM SELF-EMPLOYMENT).
  (7) METHOD OF VALUING FARMS.--
  (A)  IN GENERAL.--EXCEPT AS PROVIDED IN SUBPARAGRAPH (B), THE VALUE OF
A FARM FOR FARMING PURPOSES SHALL BE DETERMINED BY DIVIDING--

S. 6359--D                         231                        A. 8559--D

  (I) THE EXCESS OF THE AVERAGE ANNUAL GROSS CASH RENTAL FOR  COMPARABLE
LAND  USED FOR FARMING PURPOSES AND LOCATED IN THE LOCALITY OF SUCH FARM
OVER THE AVERAGE ANNUAL STATE AND  LOCAL  REAL  ESTATE  TAXES  FOR  SUCH
COMPARABLE LAND, BY
  (II)  THE  AVERAGE  ANNUAL EFFECTIVE INTEREST RATE FOR ALL NEW FEDERAL
LAND BANK LOANS.
  FOR PURPOSES OF THE PRECEDING SENTENCE, EACH AVERAGE  ANNUAL  COMPUTA-
TION  SHALL  BE  MADE  ON  THE BASIS OF THE 5 MOST RECENT CALENDAR YEARS
ENDING BEFORE THE DATE OF THE DECEDENT'S DEATH.
  (B) VALUE BASED ON NET SHARE RENTAL IN CERTAIN CASES.--
  (I) IN GENERAL.--IF THERE IS NO COMPARABLE LAND FROM WHICH THE AVERAGE
ANNUAL GROSS CASH RENTAL MAY BE DETERMINED BUT THERE IS COMPARABLE  LAND
FROM  WHICH THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED, SUBPARAGRAPH
(A)(I) SHALL BE  APPLIED  BY  SUBSTITUTING  "AVERAGE  ANNUAL  NET  SHARE
RENTAL" FOR "AVERAGE ANNUAL GROSS CASH RENTAL".
  (II)  NET SHARE RENTAL.--FOR PURPOSES OF THIS PARAGRAPH, THE TERM "NET
SHARE RENTAL" MEANS THE EXCESS OF--
  (I) THE VALUE OF THE PRODUCE RECEIVED BY THE LESSOR  OF  THE  LAND  ON
WHICH SUCH PRODUCE IS GROWN, OVER
  (II)  THE CASH OPERATING EXPENSES OF GROWING SUCH PRODUCE WHICH, UNDER
THE LEASE, ARE PAID BY THE LESSOR.
  (C) EXCEPTION.--THE FORMULA PROVIDED BY SUBPARAGRAPH (A) SHALL NOT  BE
USED--
  (I)  WHERE  IT  IS  ESTABLISHED  THAT THERE IS NO COMPARABLE LAND FROM
WHICH THE AVERAGE ANNUAL GROSS CASH RENTAL MAY BE DETERMINED, OR
  (II) WHERE THE EXECUTOR ELECTS TO HAVE THE VALUE OF THE FARM FOR FARM-
ING PURPOSES DETERMINED AND THAT THERE IS NO COMPARABLE LAND FROM  WHICH
THE AVERAGE NET SHARE RENTAL MAY BE DETERMINED UNDER PARAGRAPH (8).
  (8)  METHOD  OF  VALUING CLOSELY HELD BUSINESS INTERESTS, ETC.--IN ANY
CASE TO WHICH PARAGRAPH (7)(A) DOES NOT  APPLY,  THE  FOLLOWING  FACTORS
SHALL APPLY IN DETERMINING THE VALUE OF ANY QUALIFIED REAL PROPERTY:
  (A) THE CAPITALIZATION OF INCOME WHICH THE PROPERTY CAN BE EXPECTED TO
YIELD  FOR  FARMING  OR CLOSELY HELD BUSINESS PURPOSES OVER A REASONABLE
PERIOD OF TIME  UNDER  PRUDENT  MANAGEMENT  USING  TRADITIONAL  CROPPING
PATTERNS  FOR  THE  AREA,  TAKING  INTO  ACCOUNT  SOIL CAPACITY, TERRAIN
CONFIGURATION, AND SIMILAR FACTORS,
  (B) THE CAPITALIZATION OF THE FAIR RENTAL VALUE OF THE LAND FOR  FARM-
LAND OR CLOSELY HELD BUSINESS PURPOSES,
  (C)  ASSESSED  LAND VALUES IN A STATE WHICH PROVIDES A DIFFERENTIAL OR
USE VALUE ASSESSMENT LAW FOR FARMLAND OR CLOSELY HELD BUSINESS,
  (D) COMPARABLE SALES OF OTHER FARM OR CLOSELY HELD  BUSINESS  LAND  IN
THE  SAME  GEOGRAPHICAL  AREA  FAR ENOUGH REMOVED FROM A METROPOLITAN OR
RESORT AREA SO THAT NONAGRICULTURAL USE IS NOT A SIGNIFICANT  FACTOR  IN
THE SALES PRICE, AND
  (E)  ANY  OTHER  FACTOR  WHICH  FAIRLY VALUES THE FARM OR CLOSELY HELD
BUSINESS VALUE OF THE PROPERTY.
  (9) PROPERTY ACQUIRED FROM DECEDENT.--PROPERTY SHALL BE CONSIDERED  TO
HAVE BEEN ACQUIRED FROM OR TO HAVE PASSED FROM THE DECEDENT IF--
  (A)  SUCH PROPERTY IS SO CONSIDERED UNDER SECTION 1014(B) (RELATING TO
BASIS OF PROPERTY ACQUIRED FROM A DECEDENT),
  (B) SUCH PROPERTY IS ACQUIRED BY ANY PERSON FROM THE ESTATE, OR
  (C) SUCH PROPERTY IS ACQUIRED BY ANY  PERSON  FROM  A  TRUST  (TO  THE
EXTENT SUCH PROPERTY IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT).
  (10)  COMMUNITY PROPERTY.--IF THE DECEDENT AND HIS SURVIVING SPOUSE AT
ANY TIME HELD QUALIFIED REAL PROPERTY AS COMMUNITY PROPERTY, THE  INTER-
EST OF THE SURVIVING SPOUSE IN SUCH PROPERTY SHALL BE TAKEN INTO ACCOUNT

S. 6359--D                         232                        A. 8559--D

UNDER  THIS  SECTION  TO  THE EXTENT NECESSARY TO PROVIDE A RESULT UNDER
THIS SECTION WITH RESPECT TO SUCH PROPERTY WHICH IS CONSISTENT WITH  THE
RESULT WHICH WOULD HAVE OBTAINED UNDER THIS SECTION IF SUCH PROPERTY HAD
NOT BEEN COMMUNITY PROPERTY.
  (11)  BOND IN LIEU OF PERSONAL LIABILITY.--IF THE QUALIFIED HEIR MAKES
WRITTEN APPLICATION TO THE SECRETARY FOR DETERMINATION  OF  THE  MAXIMUM
AMOUNT OF THE ADDITIONAL TAX WHICH MAY BE IMPOSED BY SUBSECTION (C) WITH
RESPECT  TO  THE  QUALIFIED  HEIR'S  INTEREST, THE SECRETARY (AS SOON AS
POSSIBLE, AND IN ANY EVENT WITHIN 1 YEAR AFTER THE MAKING OF SUCH APPLI-
CATION) SHALL NOTIFY THE HEIR OF  SUCH  MAXIMUM  AMOUNT.  THE  QUALIFIED
HEIR,  ON FURNISHING A BOND IN SUCH AMOUNT AND FOR SUCH PERIOD AS MAY BE
REQUIRED, SHALL BE DISCHARGED FROM PERSONAL LIABILITY FOR ANY ADDITIONAL
TAX IMPOSED BY SUBSECTION (C) AND SHALL BE  ENTITLED  TO  A  RECEIPT  OR
WRITING SHOWING SUCH DISCHARGE.
  (12) ACTIVE MANAGEMENT.--THE TERM "ACTIVE MANAGEMENT" MEANS THE MAKING
OF  THE MANAGEMENT DECISIONS OF A BUSINESS (OTHER THAN THE DAILY OPERAT-
ING DECISIONS).
  (13) SPECIAL RULES FOR WOODLANDS.--
  (A) IN GENERAL.--IN THE CASE OF ANY QUALIFIED WOODLAND WITH RESPECT TO
WHICH THE EXECUTOR ELECTS TO HAVE THIS SUBPARAGRAPH APPLY, TREES GROWING
ON SUCH WOODLAND SHALL NOT BE TREATED AS A CROP.
  (B) QUALIFIED WOODLAND.--THE TERM "QUALIFIED WOODLAND" MEANS ANY  REAL
PROPERTY WHICH--
  (I) IS USED IN TIMBER OPERATIONS, AND
  (II) IS AN IDENTIFIABLE AREA OF LAND SUCH AS AN ACRE OR OTHER AREA FOR
WHICH RECORDS ARE NORMALLY MAINTAINED IN CONDUCTING TIMBER OPERATIONS.
  (C) TIMBER OPERATIONS.--THE TERM "TIMBER OPERATIONS" MEANS--
  (I) THE PLANTING, CULTIVATING, CARING FOR, OR CUTTING OF TREES, OR
  (II) THE PREPARATION (OTHER THAN MILLING) OF TREES FOR MARKET.
  (D) ELECTION.--AN ELECTION UNDER SUBPARAGRAPH (A) SHALL BE MADE ON THE
RETURN  OF  THE TAX IMPOSED BY SECTION 2001. SUCH ELECTION SHALL BE MADE
IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE. SUCH  AN
ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (14)  TREATMENT  OF  REPLACEMENT  PROPERTY ACQUIRED IN SECTION 1031 OR
1033 TRANSACTIONS.--
  (A) IN GENERAL.--IN THE CASE OF ANY  QUALIFIED  REPLACEMENT  PROPERTY,
ANY  PERIOD DURING WHICH THERE WAS OWNERSHIP, QUALIFIED USE, OR MATERIAL
PARTICIPATION WITH RESPECT TO THE REPLACED PROPERTY BY THE  DECEDENT  OR
ANY MEMBER OF HIS FAMILY SHALL BE TREATED AS A PERIOD DURING WHICH THERE
WAS  SUCH OWNERSHIP, USE, OR MATERIAL PARTICIPATION (AS THE CASE MAY BE)
WITH RESPECT TO THE QUALIFIED REPLACEMENT PROPERTY.
  (B) LIMITATION.--SUBPARAGRAPH (A) SHALL NOT APPLY TO THE  EXTENT  THAT
THE  FAIR  MARKET VALUE OF THE QUALIFIED REPLACEMENT PROPERTY (AS OF THE
DATE OF ITS ACQUISITION) EXCEEDS THE FAIR MARKET VALUE OF  THE  REPLACED
PROPERTY (AS OF THE DATE OF ITS DISPOSITION).
  (C) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  QUALIFIED  REPLACEMENT PROPERTY.--THE TERM "QUALIFIED REPLACEMENT
PROPERTY" MEANS ANY REAL PROPERTY WHICH IS--
  (I) ACQUIRED IN AN EXCHANGE WHICH QUALIFIES UNDER SECTION 1031, OR
  (II) THE ACQUISITION OF WHICH RESULTS IN THE  NONRECOGNITION  OF  GAIN
UNDER SECTION 1033.
  SUCH TERM SHALL ONLY INCLUDE PROPERTY WHICH IS USED FOR THE SAME QUAL-
IFIED USE AS THE REPLACED PROPERTY WAS BEING USED BEFORE THE EXCHANGE.
  (II) REPLACED PROPERTY.--THE TERM "REPLACED PROPERTY" MEANS--
  (I)  THE  PROPERTY  TRANSFERRED  IN THE EXCHANGE WHICH QUALIFIES UNDER
SECTION 1031, OR

S. 6359--D                         233                        A. 8559--D

  (II) THE PROPERTY COMPULSORILY OR INVOLUNTARILY CONVERTED (WITHIN  THE
MEANING OF SECTION 1033).
  (F) STATUTE OF LIMITATIONS.--IF QUALIFIED REAL PROPERTY IS DISPOSED OF
OR CEASES TO BE USED FOR A QUALIFIED USE, THEN--
  (1)  THE  STATUTORY  PERIOD  FOR  THE ASSESSMENT OF ANY ADDITIONAL TAX
UNDER SUBSECTION (C) ATTRIBUTABLE TO SUCH DISPOSITION OR CESSATION SHALL
NOT EXPIRE BEFORE THE EXPIRATION OF 3 YEARS FROM THE DATE THE  SECRETARY
IS  NOTIFIED  (IN  SUCH  MANNER  AS  THE  SECRETARY  MAY  BY REGULATIONS
PRESCRIBE) OF SUCH DISPOSITION OR CESSATION (OR IF LATER IN THE CASE  OF
AN  INVOLUNTARY  CONVERSION  OR  EXCHANGE TO WHICH SUBSECTION (H) OR (I)
APPLIES, 3 YEARS FROM THE DATE THE SECRETARY IS NOTIFIED OF THE REPLACE-
MENT OF THE CONVERTED PROPERTY OR OF AN INTENTION NOT TO REPLACE  OR  OF
THE EXCHANGE OF PROPERTY), AND
  (2)  SUCH ADDITIONAL TAX MAY BE ASSESSED BEFORE THE EXPIRATION OF SUCH
3-YEAR PERIOD NOTWITHSTANDING THE PROVISIONS OF ANY OTHER LAW OR RULE OF
LAW WHICH WOULD OTHERWISE PREVENT SUCH ASSESSMENT.
  (G) APPLICATION OF THIS SECTION AND  SECTION  6324B  TO  INTERESTS  IN
PARTNERSHIPS,  CORPORATIONS,  AND TRUSTS.--THE SECRETARY SHALL PRESCRIBE
REGULATIONS SETTING FORTH THE APPLICATION OF THIS  SECTION  AND  SECTION
6324B IN THE CASE OF AN INTEREST IN A PARTNERSHIP, CORPORATION, OR TRUST
WHICH,  WITH  RESPECT  TO THE DECEDENT, IS AN INTEREST IN A CLOSELY HELD
BUSINESS (WITHIN THE MEANING OF PARAGRAPH (1) OF SECTION  6166(B)).  FOR
PURPOSES OF THE PRECEDING SENTENCE, AN INTEREST IN A DISCRETIONARY TRUST
ALL THE BENEFICIARIES OF WHICH ARE QUALIFIED HEIRS SHALL BE TREATED AS A
PRESENT INTEREST.
  (H)  SPECIAL RULES FOR INVOLUNTARY CONVERSIONS OF QUALIFIED REAL PROP-
ERTY.--
  (1) TREATMENT OF CONVERTED PROPERTY.--
  (A) IN GENERAL.--IF THERE IS AN INVOLUNTARY CONVERSION OF AN  INTEREST
IN QUALIFIED REAL PROPERTY--
  (I)  NO  TAX  SHALL BE IMPOSED BY SUBSECTION (C) ON SUCH CONVERSION IF
THE COST OF THE QUALIFIED REPLACEMENT PROPERTY  EQUALS  OR  EXCEEDS  THE
AMOUNT REALIZED ON SUCH CONVERSION, OR
  (II)  IF  CLAUSE  (I) DOES NOT APPLY, THE AMOUNT OF THE TAX IMPOSED BY
SUBSECTION (C) ON SUCH CONVERSION SHALL BE THE AMOUNT  DETERMINED  UNDER
SUBPARAGRAPH (B).
  (B)  AMOUNT  OF  TAX  WHERE  THERE  IS NOT COMPLETE REINVESTMENT.--THE
AMOUNT DETERMINED UNDER THIS SUBPARAGRAPH WITH RESPECT TO  ANY  INVOLUN-
TARY CONVERSION IS THE AMOUNT OF THE TAX WHICH (BUT FOR THIS SUBSECTION)
WOULD HAVE BEEN IMPOSED ON SUCH CONVERSION REDUCED BY AN AMOUNT WHICH--
  (I) BEARS THE SAME RATIO TO SUCH TAX, AS
  (II)  THE  COST  OF  THE  QUALIFIED  REPLACEMENT PROPERTY BEARS TO THE
AMOUNT REALIZED ON THE CONVERSION.
  (2) TREATMENT OF REPLACEMENT  PROPERTY.--FOR  PURPOSES  OF  SUBSECTION
(C)--
  (A)  ANY  QUALIFIED  REPLACEMENT PROPERTY SHALL BE TREATED IN THE SAME
MANNER AS IF IT WERE A PORTION OF THE INTEREST IN QUALIFIED REAL PROPER-
TY WHICH WAS INVOLUNTARILY CONVERTED; EXCEPT THAT WITH RESPECT  TO  SUCH
QUALIFIED REPLACEMENT PROPERTY THE 10-YEAR PERIOD UNDER PARAGRAPH (1) OF
SUBSECTION (C) SHALL BE EXTENDED BY ANY PERIOD, BEYOND THE 2-YEAR PERIOD
REFERRED TO IN SECTION 1033(A)(2)(B)(I), DURING WHICH THE QUALIFIED HEIR
WAS ALLOWED TO REPLACE THE QUALIFIED REAL PROPERTY,
  (B)  ANY  TAX  IMPOSED BY SUBSECTION (C) ON THE INVOLUNTARY CONVERSION
SHALL BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
  (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED--

S. 6359--D                         234                        A. 8559--D

  (I) BY NOT TAKING INTO ACCOUNT PERIODS AFTER THE  INVOLUNTARY  CONVER-
SION  AND  BEFORE THE ACQUISITION OF THE QUALIFIED REPLACEMENT PROPERTY,
AND
  (II)  BY TREATING MATERIAL PARTICIPATION WITH RESPECT TO THE CONVERTED
PROPERTY  AS  MATERIAL  PARTICIPATION  WITH  RESPECT  TO  THE  QUALIFIED
REPLACEMENT PROPERTY.
  (3) DEFINITIONS AND SPECIAL RULES.--FOR PURPOSES OF THIS SUBSECTION--
  (A) INVOLUNTARY CONVERSION.--THE TERM "INVOLUNTARY CONVERSION" MEANS A
COMPULSORY OR INVOLUNTARY CONVERSION WITHIN THE MEANING OF SECTION 1033.
  (B)  QUALIFIED  REPLACEMENT PROPERTY.--THE TERM "QUALIFIED REPLACEMENT
PROPERTY" MEANS--
  (I) IN THE CASE OF AN  INVOLUNTARY  CONVERSION  DESCRIBED  IN  SECTION
1033(A)(1),  ANY REAL PROPERTY INTO WHICH THE QUALIFIED REAL PROPERTY IS
CONVERTED, OR
  (II) IN THE CASE OF AN INVOLUNTARY  CONVERSION  DESCRIBED  IN  SECTION
1033(A)(2), ANY REAL PROPERTY PURCHASED BY THE QUALIFIED HEIR DURING THE
PERIOD  SPECIFIED IN SECTION 1033(A)(2)(B) FOR PURPOSES OF REPLACING THE
QUALIFIED REAL PROPERTY.
  SUCH TERM ONLY INCLUDES PROPERTY WHICH IS TO BE USED FOR THE QUALIFIED
USE SET FORTH IN SUBPARAGRAPH (A) OR  (B)  OF  SUBSECTION  (B)(2)  UNDER
WHICH THE QUALIFIED REAL PROPERTY QUALIFIED UNDER SUBSECTION (A).
  (4)  CERTAIN RULES MADE APPLICABLE.--THE RULES OF THE LAST SENTENCE OF
SECTION 1033(A)(2)(A) SHALL APPLY FOR PURPOSES OF PARAGRAPH (3)(B)(II).
  (I) EXCHANGES OF QUALIFIED REAL PROPERTY.--
  (1) TREATMENT OF PROPERTY EXCHANGED.--
  (A) EXCHANGES SOLELY FOR QUALIFIED EXCHANGE PROPERTY.--IF AN  INTEREST
IN QUALIFIED REAL PROPERTY IS EXCHANGED SOLELY FOR AN INTEREST IN QUALI-
FIED  EXCHANGE  PROPERTY  IN A TRANSACTION WHICH QUALIFIES UNDER SECTION
1031, NO TAX SHALL BE IMPOSED  BY  SUBSECTION  (C)  BY  REASON  OF  SUCH
EXCHANGE.
  (B) EXCHANGES WHERE OTHER PROPERTY RECEIVED.--IF AN INTEREST IN QUALI-
FIED  REAL  PROPERTY  IS EXCHANGED FOR AN INTEREST IN QUALIFIED EXCHANGE
PROPERTY AND OTHER PROPERTY  IN  A  TRANSACTION  WHICH  QUALIFIES  UNDER
SECTION  1031, THE AMOUNT OF THE TAX IMPOSED BY SUBSECTION (C) BY REASON
OF SUCH EXCHANGE SHALL BE THE AMOUNT OF TAX WHICH (BUT FOR THIS SUBPARA-
GRAPH) WOULD HAVE BEEN IMPOSED ON SUCH EXCHANGE UNDER SUBSECTION (C)(1),
REDUCED BY AN AMOUNT WHICH--
  (I) BEARS THE SAME RATIO TO SUCH TAX, AS
  (II) THE FAIR MARKET VALUE OF THE QUALIFIED EXCHANGE PROPERTY BEARS TO
THE FAIR MARKET VALUE OF THE QUALIFIED REAL PROPERTY EXCHANGED.
  FOR PURPOSES OF CLAUSE (II) OF THE  PRECEDING  SENTENCE,  FAIR  MARKET
VALUE SHALL BE DETERMINED AS OF THE TIME OF THE EXCHANGE.
  (2)   TREATMENT  OF  QUALIFIED  EXCHANGE  PROPERTY.--FOR  PURPOSES  OF
SUBSECTION (C)--
  (A) ANY INTEREST IN QUALIFIED EXCHANGE PROPERTY SHALL  BE  TREATED  IN
THE  SAME  MANNER  AS  IF IT WERE A PORTION OF THE INTEREST IN QUALIFIED
REAL PROPERTY WHICH WAS EXCHANGED,
  (B) ANY TAX IMPOSED BY SUBSECTION (C) BY REASON OF THE EXCHANGE  SHALL
BE TREATED AS A TAX IMPOSED ON A PARTIAL DISPOSITION, AND
  (C) PARAGRAPH (6) OF SUBSECTION (C) SHALL BE APPLIED BY TREATING MATE-
RIAL  PARTICIPATION  WITH  RESPECT TO THE EXCHANGED PROPERTY AS MATERIAL
PARTICIPATION WITH RESPECT TO THE QUALIFIED EXCHANGE PROPERTY.
  (3) QUALIFIED EXCHANGE PROPERTY.--FOR PURPOSES OF THIS SUBSECTION, THE
TERM "QUALIFIED EXCHANGE PROPERTY" MEANS REAL PROPERTY WHICH  IS  TO  BE
USED  FOR  THE  QUALIFIED  USE  SET  FORTH IN SUBPARAGRAPH (A) OR (B) OF

S. 6359--D                         235                        A. 8559--D

SUBSECTION (B)(2) UNDER  WHICH  THE  REAL  PROPERTY  EXCHANGED  THEREFOR
ORIGINALLY QUALIFIED UNDER SUBSECTION (A).
  S  2033.  PROPERTY IN WHICH THE DECEDENT HAD AN INTEREST. THE VALUE OF
THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO  THE  EXTENT
OF THE INTEREST THEREIN OF THE DECEDENT AT THE TIME OF HIS DEATH.
  S  2034.  DOWER  OR  CURTESY  INTERESTS. THE VALUE OF THE GROSS ESTATE
SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE EXTENT  OF  ANY  INTEREST
THEREIN  OF THE SURVIVING SPOUSE, EXISTING AT THE TIME OF THE DECEDENT'S
DEATH AS DOWER OR CURTESY, OR BY VIRTUE OF A STATUTE CREATING AN  ESTATE
IN LIEU OF DOWER OR CURTESY.
  S  2035.  ADJUSTMENTS  FOR  CERTAIN  GIFTS  MADE WITHIN THREE YEARS OF
DECEDENT'S  DEATH.  (A)  INCLUSION  OF   CERTAIN   PROPERTY   IN   GROSS
ESTATE.--IF--
  (1)  THE DECEDENT MADE A TRANSFER (BY TRUST OR OTHERWISE) OF AN INTER-
EST IN ANY PROPERTY, OR RELINQUISHED A POWER WITH RESPECT TO ANY PROPER-
TY, DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH,
AND
  (2) THE VALUE OF SUCH PROPERTY (OR AN  INTEREST  THEREIN)  WOULD  HAVE
BEEN  INCLUDED  IN THE DECEDENT'S GROSS ESTATE UNDER SECTION 2036, 2037,
2038, OR 2042 IF SUCH TRANSFERRED INTEREST  OR  RELINQUISHED  POWER  HAD
BEEN RETAINED BY THE DECEDENT ON THE DATE OF HIS DEATH,
  THE  VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ANY PROPERTY
(OR INTEREST THEREIN) WHICH WOULD HAVE BEEN SO INCLUDED.
  (B) INCLUSION OF  GIFT  TAX  ON  GIFTS  MADE  DURING  3  YEARS  BEFORE
DECEDENT'S  DEATH.--THE  AMOUNT  OF THE GROSS ESTATE (DETERMINED WITHOUT
REGARD TO THIS SUBSECTION) SHALL BE INCREASED BY THE AMOUNT OF  ANY  TAX
PAID  UNDER CHAPTER 12 BY THE DECEDENT OR HIS ESTATE ON ANY GIFT MADE BY
THE DECEDENT OR HIS SPOUSE DURING THE 3-YEAR PERIOD ENDING ON  THE  DATE
OF THE DECEDENT'S DEATH.
  (C) OTHER RULES RELATING TO TRANSFERS WITHIN 3 YEARS OF DEATH.--
  (1) IN GENERAL.--FOR PURPOSES OF--
  (A)  SECTION  303(B) (RELATING TO DISTRIBUTIONS IN REDEMPTION OF STOCK
TO PAY DEATH TAXES),
  (B) SECTION 2032A (RELATING TO SPECIAL  VALUATION  OF  CERTAIN  FARMS,
ETC., REAL PROPERTY), AND
  (C) SUBCHAPTER C OF CHAPTER 64 (RELATING TO LIEN FOR TAXES),
  THE  VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY
TO THE EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT HAS  AT  ANY
TIME  MADE  A  TRANSFER, BY TRUST OR OTHERWISE, DURING THE 3-YEAR PERIOD
ENDING ON THE DATE OF THE DECEDENT'S DEATH.
  (2) COORDINATION WITH SECTION 6166.--AN ESTATE  SHALL  BE  TREATED  AS
MEETING  THE  35 PERCENT OF ADJUSTED GROSS ESTATE REQUIREMENT OF SECTION
6166(A)(1) ONLY IF THE ESTATE MEETS SUCH REQUIREMENT BOTH WITH AND WITH-
OUT THE APPLICATION OF SUBSECTION (A).
  (3) MARITAL AND SMALL TRANSFERS.--PARAGRAPH (1) SHALL NOT APPLY TO ANY
TRANSFER (OTHER THAN A TRANSFER WITH RESPECT TO A LIFE INSURANCE POLICY)
MADE DURING A CALENDAR YEAR  TO  ANY  DONEE  IF  THE  DECEDENT  WAS  NOT
REQUIRED  BY  SECTION  6019 (OTHER THAN BY REASON OF SECTION 6019(2)) TO
FILE ANY GIFT TAX RETURN FOR SUCH YEAR WITH RESPECT TO TRANSFERS TO SUCH
DONEE.
  (D) EXCEPTION.--SUBSECTION (A) AND PARAGRAPH  (1)  OF  SUBSECTION  (C)
SHALL NOT APPLY TO ANY BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDER-
ATION IN MONEY OR MONEY'S WORTH.
  (E)   TREATMENT  OF  CERTAIN  TRANSFERS  FROM  REVOCABLE  TRUSTS.--FOR
PURPOSES OF THIS SECTION AND SECTION 2038, ANY TRANSFER FROM ANY PORTION
OF A TRUST DURING ANY PERIOD THAT SUCH PORTION WAS TREATED UNDER SECTION

S. 6359--D                         236                        A. 8559--D

676 AS OWNED BY THE DECEDENT BY REASON OF A POWER IN THE GRANTOR (DETER-
MINED WITHOUT REGARD TO SECTION 672(E)) SHALL BE TREATED AS  A  TRANSFER
MADE DIRECTLY BY THE DECEDENT.
  S  2036.  TRANSFERS  WITH RETAINED LIFE ESTATE. (A) GENERAL RULE.--THE
VALUE OF THE GROSS ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY TO THE
EXTENT OF ANY INTEREST THEREIN OF WHICH THE DECEDENT  HAS  AT  ANY  TIME
MADE  A TRANSFER (EXCEPT IN CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH), BY  TRUST  OR  OTHERWISE,
UNDER  WHICH  HE  HAS RETAINED FOR HIS LIFE OR FOR ANY PERIOD NOT ASCER-
TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
IN FACT END BEFORE HIS DEATH--
  (1) THE POSSESSION OR ENJOYMENT OF, OR THE RIGHT TO THE  INCOME  FROM,
THE PROPERTY, OR
  (2)  THE  RIGHT,  EITHER  ALONE  OR IN CONJUNCTION WITH ANY PERSON, TO
DESIGNATE THE PERSONS WHO SHALL POSSESS OR ENJOY  THE  PROPERTY  OR  THE
INCOME THEREFROM.
  (B) VOTING RIGHTS.--
  (1)  IN  GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1), THE RETENTION OF
THE RIGHT TO  VOTE  (DIRECTLY  OR  INDIRECTLY)  SHARES  OF  STOCK  OF  A
CONTROLLED  CORPORATION  SHALL  BE  CONSIDERED  TO BE A RETENTION OF THE
ENJOYMENT OF TRANSFERRED PROPERTY.
  (2) CONTROLLED CORPORATION.--FOR PURPOSES OF PARAGRAPH (1),  A  CORPO-
RATION  SHALL  BE  TREATED  AS  A CONTROLLED CORPORATION IF, AT ANY TIME
AFTER THE TRANSFER OF THE PROPERTY AND DURING THE 3-YEAR  PERIOD  ENDING
ON THE DATE OF THE DECEDENT'S DEATH, THE DECEDENT OWNED (WITH THE APPLI-
CATION OF SECTION 318), OR HAD THE RIGHT (EITHER ALONE OR IN CONJUNCTION
WITH  ANY  PERSON)  TO VOTE, STOCK POSSESSING AT LEAST 20 PERCENT OF THE
TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK.
  (3) COORDINATION WITH SECTION 2035.--FOR PURPOSES OF APPLYING  SECTION
2035  WITH  RESPECT TO PARAGRAPH (1), THE RELINQUISHMENT OR CESSATION OF
VOTING RIGHTS SHALL BE TREATED AS A TRANSFER OF  PROPERTY  MADE  BY  THE
DECEDENT.
  (C) LIMITATION ON APPLICATION OF GENERAL RULE.--THIS SECTION SHALL NOT
APPLY  TO  A  TRANSFER MADE BEFORE MARCH 4, 1931; NOR TO A TRANSFER MADE
AFTER MARCH 3, 1931, AND BEFORE JUNE 7, 1932, UNLESS THE PROPERTY TRANS-
FERRED WOULD HAVE BEEN INCLUDIBLE IN  THE  DECEDENT'S  GROSS  ESTATE  BY
REASON  OF  THE  AMENDATORY LANGUAGE OF THE JOINT RESOLUTION OF MARCH 3,
1931 (46 STAT. 1516).
  S 2037. TRANSFERS TAKING EFFECT AT DEATH. (A) GENERAL RULE.--THE VALUE
OF THE GROSS ESTATE SHALL INCLUDE THE  VALUE  OF  ALL  PROPERTY  TO  THE
EXTENT  OF  ANY  INTEREST  THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME
AFTER SEPTEMBER 7, 1916, MADE A TRANSFER (EXCEPT IN CASE OF A BONA  FIDE
SALE  FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH),
BY TRUST OR OTHERWISE, IF--
  (1) POSSESSION OR ENJOYMENT OF THE PROPERTY CAN, THROUGH OWNERSHIP  OF
SUCH INTEREST, BE OBTAINED ONLY BY SURVIVING THE DECEDENT, AND
  (2)  THE DECEDENT HAS RETAINED A REVERSIONARY INTEREST IN THE PROPERTY
(BUT IN THE CASE OF A TRANSFER MADE BEFORE OCTOBER 8, 1949, ONLY IF SUCH
REVERSIONARY INTEREST AROSE BY THE EXPRESS TERMS OF  THE  INSTRUMENT  OF
TRANSFER),  AND  THE  VALUE  OF  SUCH  REVERSIONARY INTEREST IMMEDIATELY
BEFORE THE DEATH OF THE DECEDENT EXCEEDS 5 PERCENT OF THE VALUE OF  SUCH
PROPERTY.
  (B) SPECIAL RULES.--FOR PURPOSES OF THIS SECTION, THE TERM "REVERSION-
ARY  INTEREST"  INCLUDES  A POSSIBILITY THAT PROPERTY TRANSFERRED BY THE
DECEDENT--
  (1) MAY RETURN TO HIM OR HIS ESTATE, OR

S. 6359--D                         237                        A. 8559--D

  (2) MAY BE SUBJECT TO A POWER OF DISPOSITION BY HIM,
  BUT  SUCH  TERM  DOES  NOT INCLUDE A POSSIBILITY THAT THE INCOME ALONE
FROM SUCH PROPERTY MAY RETURN TO HIM OR BECOME SUBJECT  TO  A  POWER  OF
DISPOSITION  BY  HIM.  THE  VALUE OF A REVERSIONARY INTEREST IMMEDIATELY
BEFORE THE DEATH OF THE DECEDENT SHALL BE DETERMINED (WITHOUT REGARD  TO
THE FACT OF THE DECEDENT'S DEATH) BY USUAL METHODS OF VALUATION, INCLUD-
ING THE USE OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, UNDER REGU-
LATIONS  PRESCRIBED  BY  THE  SECRETARY.  IN  DETERMINING THE VALUE OF A
POSSIBILITY THAT PROPERTY MAY BE SUBJECT TO A POWER  OF  DISPOSITION  BY
THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A POSSIBIL-
ITY  THAT  SUCH  PROPERTY  MAY  RETURN  TO  THE  DECEDENT OR HIS ESTATE.
NOTWITHSTANDING THE FOREGOING, AN INTEREST SO TRANSFERRED SHALL  NOT  BE
INCLUDED IN THE DECEDENT'S GROSS ESTATE UNDER THIS SECTION IF POSSESSION
OR ENJOYMENT OF THE PROPERTY COULD HAVE BEEN OBTAINED BY ANY BENEFICIARY
DURING  THE  DECEDENT'S  LIFE THROUGH THE EXERCISE OF A GENERAL POWER OF
APPOINTMENT (AS DEFINED IN SECTION 2041) WHICH IN FACT  WAS  EXERCISABLE
IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
  S  2038.  REVOCABLE TRANSFERS. (A) IN GENERAL.--THE VALUE OF THE GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1) TRANSFERS AFTER JUNE 22, 1936.--TO  THE  EXTENT  OF  ANY  INTEREST
THEREIN OF WHICH THE DECEDENT HAS AT ANY TIME MADE A TRANSFER (EXCEPT IN
CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY
OR  MONEY'S  WORTH),  BY TRUST OR OTHERWISE, WHERE THE ENJOYMENT THEREOF
WAS SUBJECT AT THE DATE OF HIS DEATH TO ANY CHANGE THROUGH THE  EXERCISE
OF  A  POWER (IN WHATEVER CAPACITY EXERCISABLE) BY THE DECEDENT ALONE OR
BY THE DECEDENT IN CONJUNCTION WITH ANY OTHER PERSON (WITHOUT REGARD  TO
WHEN  OR  FROM  WHAT SOURCE THE DECEDENT ACQUIRED SUCH POWER), TO ALTER,
AMEND, REVOKE, OR TERMINATE, OR WHERE ANY  SUCH  POWER  IS  RELINQUISHED
DURING THE 3-YEAR PERIOD ENDING ON THE DATE OF THE DECEDENT'S DEATH.
  (2) TRANSFERS ON OR BEFORE JUNE 22, 1936.--TO THE EXTENT OF ANY INTER-
EST  THEREIN  OF  WHICH  THE  DECEDENT  HAS  AT ANY TIME MADE A TRANSFER
(EXCEPT IN CASE OF A BONA FIDE SALE FOR AN ADEQUATE AND  FULL  CONSIDER-
ATION  IN  MONEY  OR  MONEY'S  WORTH),  BY TRUST OR OTHERWISE, WHERE THE
ENJOYMENT THEREOF WAS SUBJECT AT THE DATE OF HIS  DEATH  TO  ANY  CHANGE
THROUGH  THE  EXERCISE  OF  A  POWER, EITHER BY THE DECEDENT ALONE OR IN
CONJUNCTION WITH ANY PERSON, TO ALTER, AMEND, OR REVOKE,  OR  WHERE  THE
DECEDENT  RELINQUISHED ANY SUCH POWER DURING THE 3-YEAR PERIOD ENDING ON
THE DATE OF THE DECEDENT'S DEATH. EXCEPT IN THE CASE OF  TRANSFERS  MADE
AFTER  JUNE 22, 1936, NO INTEREST OF THE DECEDENT OF WHICH HE HAS MADE A
TRANSFER SHALL BE INCLUDED IN  THE  GROSS  ESTATE  UNDER  PARAGRAPH  (1)
UNLESS IT IS INCLUDIBLE UNDER THIS PARAGRAPH.
  (B)  DATE  OF  EXISTENCE  OF POWER.--FOR PURPOSES OF THIS SECTION, THE
POWER TO ALTER, AMEND, REVOKE, OR TERMINATE SHALL BE CONSIDERED TO EXIST
ON THE DATE OF THE DECEDENT'S DEATH EVEN  THOUGH  THE  EXERCISE  OF  THE
POWER  IS  SUBJECT  TO  A  PRECEDENT GIVING OF NOTICE OR EVEN THOUGH THE
ALTERATION, AMENDMENT, REVOCATION, OR TERMINATION TAKES EFFECT  ONLY  ON
THE  EXPIRATION  OF  A  STATED  PERIOD  AFTER THE EXERCISE OF THE POWER,
WHETHER OR NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE  HAS
BEEN GIVEN OR THE POWER HAS BEEN EXERCISED. IN SUCH CASES PROPER ADJUST-
MENT  SHALL  BE  MADE  REPRESENTING  THE INTERESTS WHICH WOULD HAVE BEEN
EXCLUDED FROM THE POWER IF THE DECEDENT HAD LIVED, AND FOR SUCH PURPOSE,
IF THE NOTICE HAS NOT BEEN GIVEN OR THE POWER HAS NOT BEEN EXERCISED  ON
OR BEFORE THE DATE OF HIS DEATH, SUCH NOTICE SHALL BE CONSIDERED TO HAVE
BEEN GIVEN, OR THE POWER EXERCISED, ON THE DATE OF HIS DEATH.
  S  2039.  ANNUITIES.  (A) GENERAL.--THE GROSS ESTATE SHALL INCLUDE THE
VALUE OF AN ANNUITY OR OTHER PAYMENT RECEIVABLE BY  ANY  BENEFICIARY  BY

S. 6359--D                         238                        A. 8559--D

REASON OF SURVIVING THE DECEDENT UNDER ANY FORM OF CONTRACT OR AGREEMENT
ENTERED INTO AFTER MARCH 3, 1931 (OTHER THAN AS INSURANCE UNDER POLICIES
ON  THE  LIFE OF THE DECEDENT), IF, UNDER SUCH CONTRACT OR AGREEMENT, AN
ANNUITY  OR  OTHER  PAYMENT WAS PAYABLE TO THE DECEDENT, OR THE DECEDENT
POSSESSED THE RIGHT TO RECEIVE SUCH ANNUITY OR PAYMENT, EITHER ALONE  OR
IN  CONJUNCTION  WITH  ANOTHER FOR HIS LIFE OR FOR ANY PERIOD NOT ASCER-
TAINABLE WITHOUT REFERENCE TO HIS DEATH OR FOR ANY PERIOD WHICH DOES NOT
IN FACT END BEFORE HIS DEATH.
  (B) AMOUNT INCLUDIBLE.--SUBSECTION (A) SHALL APPLY TO ONLY  SUCH  PART
OF  THE  VALUE  OF  THE  ANNUITY  OR OTHER PAYMENT RECEIVABLE UNDER SUCH
CONTRACT OR AGREEMENT AS IS PROPORTIONATE TO THAT PART OF  THE  PURCHASE
PRICE  THEREFOR  CONTRIBUTED  BY  THE  DECEDENT.  FOR  PURPOSES  OF THIS
SECTION, ANY CONTRIBUTION BY THE DECEDENT'S EMPLOYER OR FORMER  EMPLOYER
TO  THE  PURCHASE PRICE OF SUCH CONTRACT OR AGREEMENT (WHETHER OR NOT TO
AN EMPLOYEE'S TRUST OR FUND FORMING PART OF A PENSION, ANNUITY,  RETIRE-
MENT,  BONUS  OR PROFIT SHARING PLAN) SHALL BE CONSIDERED TO BE CONTRIB-
UTED BY THE DECEDENT IF MADE BY REASON OF HIS EMPLOYMENT.
  S 2040. JOINT INTERESTS. (A) GENERAL RULE.--THE  VALUE  OF  THE  GROSS
ESTATE  SHALL  INCLUDE  THE  VALUE  OF ALL PROPERTY TO THE EXTENT OF THE
INTEREST THEREIN HELD AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP BY THE
DECEDENT AND ANY OTHER PERSON, OR AS TENANTS  BY  THE  ENTIRETY  BY  THE
DECEDENT AND SPOUSE, OR DEPOSITED, WITH ANY PERSON CARRYING ON THE BANK-
ING  BUSINESS,  IN THEIR JOINT NAMES AND PAYABLE TO EITHER OR THE SURVI-
VOR, EXCEPT SUCH PART  THEREOF  AS  MAY  BE  SHOWN  TO  HAVE  ORIGINALLY
BELONGED  TO  SUCH  OTHER  PERSON  AND  NEVER  TO  HAVE BEEN RECEIVED OR
ACQUIRED BY THE LATTER FROM THE DECEDENT FOR LESS THAN AN  ADEQUATE  AND
FULL  CONSIDERATION IN MONEY OR MONEY'S WORTH: PROVIDED, THAT WHERE SUCH
PROPERTY OR ANY PART THEREOF, OR PART OF THE  CONSIDERATION  WITH  WHICH
SUCH  PROPERTY  WAS ACQUIRED, IS SHOWN TO HAVE BEEN AT ANY TIME ACQUIRED
BY SUCH OTHER PERSON FROM THE DECEDENT FOR LESS  THAN  AN  ADEQUATE  AND
FULL  CONSIDERATION  IN  MONEY OR MONEY'S WORTH, THERE SHALL BE EXCEPTED
ONLY SUCH PART OF THE VALUE OF SUCH PROPERTY AS IS PROPORTIONATE TO  THE
CONSIDERATION  FURNISHED  BY  SUCH  OTHER PERSON: PROVIDED FURTHER, THAT
WHERE ANY PROPERTY HAS BEEN ACQUIRED BY GIFT, BEQUEST, DEVISE, OR INHER-
ITANCE, AS A TENANCY BY THE ENTIRETY BY THE DECEDENT AND SPOUSE, THEN TO
THE EXTENT OF ONE-HALF OF THE VALUE THEREOF, OR, WHERE  SO  ACQUIRED  BY
THE  DECEDENT AND ANY OTHER PERSON AS JOINT TENANTS WITH RIGHT OF SURVI-
VORSHIP AND THEIR INTERESTS ARE NOT OTHERWISE SPECIFIED OR FIXED BY LAW,
THEN TO THE EXTENT OF THE VALUE OF A FRACTIONAL PART TO BE DETERMINED BY
DIVIDING THE VALUE OF THE PROPERTY BY THE NUMBER OF JOINT  TENANTS  WITH
RIGHT OF SURVIVORSHIP.
  (B) CERTAIN JOINT INTERESTS OF HUSBAND AND WIFE.--
  (1)  INTERESTS  OF SPOUSE EXCLUDED FROM GROSS ESTATE.--NOTWITHSTANDING
SUBSECTION (A), IN THE CASE OF ANY QUALIFIED JOINT INTEREST,  THE  VALUE
INCLUDED  IN THE GROSS ESTATE WITH RESPECT TO SUCH INTEREST BY REASON OF
THIS SECTION IS ONE-HALF OF THE VALUE OF SUCH QUALIFIED JOINT INTEREST.
  (2) QUALIFIED JOINT INTEREST DEFINED.--FOR PURPOSES OF PARAGRAPH  (1),
THE  TERM "QUALIFIED JOINT INTEREST" MEANS ANY INTEREST IN PROPERTY HELD
BY THE DECEDENT AND THE DECEDENT'S SPOUSE AS--
  (A) TENANTS BY THE ENTIRETY, OR
  (B) JOINT TENANTS WITH RIGHT OF SURVIVORSHIP, BUT ONLY IF THE DECEDENT
AND THE SPOUSE OF THE DECEDENT ARE THE ONLY JOINT TENANTS.
  S 2041. POWERS OF APPOINTMENT. (A) IN GENERAL.--THE VALUE OF THE GROSS
ESTATE SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1) POWERS OF APPOINTMENT CREATED ON OR BEFORE OCTOBER  21,  1942.--TO
THE  EXTENT  OF  ANY  PROPERTY  WITH RESPECT TO WHICH A GENERAL POWER OF

S. 6359--D                         239                        A. 8559--D

APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, IS EXERCISED  BY  THE
DECEDENT--
  (A) BY WILL, OR
  (B)  BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A TRANS-
FER OF PROPERTY OWNED BY THE DECEDENT, SUCH PROPERTY WOULD BE INCLUDIBLE
IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035 TO 2038, INCLUSIVE;
  BUT THE FAILURE TO EXERCISE SUCH A POWER OR THE  COMPLETE  RELEASE  OF
SUCH A POWER SHALL NOT BE DEEMED AN EXERCISE THEREOF. IF A GENERAL POWER
OF APPOINTMENT CREATED ON OR BEFORE OCTOBER 21, 1942, HAS BEEN PARTIALLY
RELEASED  SO  THAT  IT  IS NO LONGER A GENERAL POWER OF APPOINTMENT, THE
EXERCISE OF SUCH POWER SHALL NOT BE DEEMED  TO  BE  THE  EXERCISE  OF  A
GENERAL POWER OF APPOINTMENT IF--
  (I) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
  (II)  THE  DONEE OF SUCH POWER WAS UNDER A LEGAL DISABILITY TO RELEASE
SUCH POWER ON OCTOBER 21, 1942, AND SUCH PARTIAL  RELEASE  OCCURRED  NOT
LATER THAN 6 MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
  (2) POWERS CREATED AFTER OCTOBER 21, 1942.--TO THE EXTENT OF ANY PROP-
ERTY  WITH  RESPECT TO WHICH THE DECEDENT HAS AT THE TIME OF HIS DEATH A
GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER  21,  1942,  OR  WITH
RESPECT TO WHICH THE DECEDENT HAS AT ANY TIME EXERCISED OR RELEASED SUCH
A  POWER OF APPOINTMENT BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF
IT WERE A TRANSFER OF PROPERTY OWNED  BY  THE  DECEDENT,  SUCH  PROPERTY
WOULD  BE  INCLUDIBLE IN THE DECEDENT'S GROSS ESTATE UNDER SECTIONS 2035
TO 2038, INCLUSIVE. FOR PURPOSES OF THIS PARAGRAPH  (2),  THE  POWER  OF
APPOINTMENT  SHALL  BE CONSIDERED TO EXIST ON THE DATE OF THE DECEDENT'S
DEATH EVEN THOUGH THE EXERCISE OF THE POWER IS SUBJECT  TO  A  PRECEDENT
GIVING  OF  NOTICE OR EVEN THOUGH THE EXERCISE OF THE POWER TAKES EFFECT
ONLY ON THE EXPIRATION OF A STATED PERIOD AFTER ITS EXERCISE, WHETHER OR
NOT ON OR BEFORE THE DATE OF THE DECEDENT'S DEATH NOTICE HAS BEEN  GIVEN
OR THE POWER HAS BEEN EXERCISED.
  (3)  CREATION OF ANOTHER POWER IN CERTAIN CASES.--TO THE EXTENT OF ANY
PROPERTY WITH RESPECT TO WHICH THE DECEDENT--
  (A) BY WILL, OR
  (B) BY A DISPOSITION WHICH IS OF SUCH NATURE THAT IF IT WERE A  TRANS-
FER  OF PROPERTY OWNED BY THE DECEDENT SUCH PROPERTY WOULD BE INCLUDIBLE
IN THE DECEDENT'S GROSS ESTATE UNDER SECTION 2035, 2036, OR 2037,
  EXERCISES A POWER OF APPOINTMENT CREATED AFTER OCTOBER  21,  1942,  BY
CREATING  ANOTHER  POWER OF APPOINTMENT WHICH UNDER THE APPLICABLE LOCAL
LAW CAN BE VALIDLY EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE
OR INTEREST IN SUCH PROPERTY, OR SUSPEND THE ABSOLUTE OWNERSHIP OR POWER
OF ALIENATION OF SUCH  PROPERTY,  FOR  A  PERIOD  ASCERTAINABLE  WITHOUT
REGARD TO THE DATE OF THE CREATION OF THE FIRST POWER.
  (B) DEFINITIONS.--FOR PURPOSES OF SUBSECTION (A)--
  (1) GENERAL POWER OF APPOINTMENT.--THE TERM "GENERAL POWER OF APPOINT-
MENT"  MEANS  A POWER WHICH IS EXERCISABLE IN FAVOR OF THE DECEDENT, HIS
ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT--
  (A) A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE  BENE-
FIT OF THE DECEDENT WHICH IS LIMITED BY AN ASCERTAINABLE STANDARD RELAT-
ING  TO  THE  HEALTH, EDUCATION, SUPPORT, OR MAINTENANCE OF THE DECEDENT
SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (B) A POWER OF APPOINTMENT CREATED ON  OR  BEFORE  OCTOBER  21,  1942,
WHICH  IS  EXERCISABLE  BY THE DECEDENT ONLY IN CONJUNCTION WITH ANOTHER
PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (C) IN THE CASE OF A POWER OF APPOINTMENT CREATED  AFTER  OCTOBER  21,
1942,  WHICH  IS  EXERCISABLE  BY  THE DECEDENT ONLY IN CONJUNCTION WITH
ANOTHER PERSON--

S. 6359--D                         240                        A. 8559--D

  (I) IF THE POWER IS NOT EXERCISABLE BY THE DECEDENT EXCEPT IN CONJUNC-
TION WITH THE CREATOR OF THE POWER--SUCH POWER SHALL  NOT  BE  DEEMED  A
GENERAL POWER OF APPOINTMENT.
  (II)  IF  THE  POWER  IS  NOT  EXERCISABLE  BY  THE DECEDENT EXCEPT IN
CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST IN THE PROPERTY,
SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
OF THE DECEDENT--SUCH POWER SHALL NOT  BE  DEEMED  A  GENERAL  POWER  OF
APPOINTMENT.  FOR  THE  PURPOSES  OF THIS CLAUSE A PERSON WHO, AFTER THE
DEATH OF THE DECEDENT, MAY BE POSSESSED OF A POWER OF APPOINTMENT  (WITH
RESPECT  TO  THE  PROPERTY SUBJECT TO THE DECEDENT'S POWER) WHICH HE MAY
EXERCISE IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST  IN  THE
PROPERTY  AND  SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH EXERCISE OF
THE DECEDENT'S POWER.
  (III) IF (AFTER THE APPLICATION OF CLAUSES (I) AND (II)) THE POWER  IS
A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN FAVOR OF SUCH OTHER
PERSON--SUCH  POWER  SHALL BE DEEMED A GENERAL POWER OF APPOINTMENT ONLY
IN RESPECT OF A FRACTIONAL PART OF THE PROPERTY SUBJECT TO  SUCH  POWER,
SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY BY THE
NUMBER  OF  SUCH  PERSONS (INCLUDING THE DECEDENT) IN FAVOR OF WHOM SUCH
POWER IS EXERCISABLE.
  FOR PURPOSES OF CLAUSES (II) AND (III), A POWER SHALL BE DEEMED TO  BE
EXERCISABLE  IN  FAVOR OF A PERSON IF IT IS EXERCISABLE IN FAVOR OF SUCH
PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
  (2) LAPSE OF POWER.--THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
SHALL BE CONSIDERED A RELEASE OF  SUCH  POWER.  THE  PRECEDING  SENTENCE
SHALL APPLY WITH RESPECT TO THE LAPSE OF POWERS DURING ANY CALENDAR YEAR
ONLY TO THE EXTENT THAT THE PROPERTY, WHICH COULD HAVE BEEN APPOINTED BY
EXERCISE  OF  SUCH LAPSED POWERS, EXCEEDED IN VALUE, AT THE TIME OF SUCH
LAPSE, THE GREATER OF THE FOLLOWING AMOUNTS:
  (A) $5,000, OR
  (B) 5 PERCENT OF THE AGGREGATE VALUE, AT THE TIME OF  SUCH  LAPSE,  OF
THE  ASSETS  OUT OF WHICH, OR THE PROCEEDS OF WHICH, THE EXERCISE OF THE
LAPSED POWERS COULD HAVE BEEN SATISFIED.
  (3) DATE OF CREATION OF POWER.--FOR PURPOSES OF THIS SECTION, A  POWER
OF APPOINTMENT CREATED BY A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
  S  2042.  PROCEEDS  OF  LIFE  INSURANCE. THE VALUE OF THE GROSS ESTATE
SHALL INCLUDE THE VALUE OF ALL PROPERTY--
  (1) RECEIVABLE BY THE EXECUTOR.--TO THE EXTENT OF THE  AMOUNT  RECEIV-
ABLE  BY  THE  EXECUTOR  AS  INSURANCE UNDER POLICIES ON THE LIFE OF THE
DECEDENT.
  (2) RECEIVABLE BY OTHER BENEFICIARIES.--TO THE EXTENT  OF  THE  AMOUNT
RECEIVABLE BY ALL OTHER BENEFICIARIES AS INSURANCE UNDER POLICIES ON THE
LIFE OF THE DECEDENT WITH RESPECT TO WHICH THE DECEDENT POSSESSED AT HIS
DEATH  ANY OF THE INCIDENTS OF OWNERSHIP, EXERCISABLE EITHER ALONE OR IN
CONJUNCTION WITH  ANY  OTHER  PERSON.  FOR  PURPOSES  OF  THE  PRECEDING
SENTENCE,  THE  TERM  "INCIDENT  OF  OWNERSHIP"  INCLUDES A REVERSIONARY
INTEREST (WHETHER ARISING BY THE EXPRESS TERMS OF THE  POLICY  OR  OTHER
INSTRUMENT  OR BY OPERATION OF LAW) ONLY IF THE VALUE OF SUCH REVERSION-
ARY INTEREST EXCEEDED 5 PERCENT OF THE VALUE OF THE  POLICY  IMMEDIATELY
BEFORE  THE  DEATH  OF THE DECEDENT. AS USED IN THIS PARAGRAPH, THE TERM
"REVERSIONARY INTEREST" INCLUDES A POSSIBILITY THAT THE POLICY,  OR  THE
PROCEEDS OF THE POLICY, MAY RETURN TO THE DECEDENT OR HIS ESTATE, OR MAY

S. 6359--D                         241                        A. 8559--D

BE SUBJECT TO A POWER OF DISPOSITION BY HIM. THE VALUE OF A REVERSIONARY
INTEREST  AT ANY TIME SHALL BE DETERMINED (WITHOUT REGARD TO THE FACT OF
THE DECEDENT'S DEATH) BY USUAL METHODS OF VALUATION, INCLUDING  THE  USE
OF TABLES OF MORTALITY AND ACTUARIAL PRINCIPLES, PURSUANT TO REGULATIONS
PRESCRIBED  BY  THE SECRETARY. IN DETERMINING THE VALUE OF A POSSIBILITY
THAT THE POLICY OR PROCEEDS THEREOF MAY BE SUBJECT TO A POWER OF  DISPO-
SITION BY THE DECEDENT, SUCH POSSIBILITY SHALL BE VALUED AS IF IT WERE A
POSSIBILITY  THAT  SUCH POLICY OR PROCEEDS MAY RETURN TO THE DECEDENT OR
HIS ESTATE.
  S 2043. TRANSFERS FOR INSUFFICIENT CONSIDERATION. (A) IN  GENERAL.--IF
ANY  ONE  OF THE TRANSFERS, TRUSTS, INTERESTS, RIGHTS, OR POWERS ENUMER-
ATED AND DESCRIBED IN SECTIONS 2035 TO 2038, INCLUSIVE, AND SECTION 2041
IS MADE, CREATED, EXERCISED, OR  RELINQUISHED  FOR  A  CONSIDERATION  IN
MONEY  OR MONEY'S WORTH, BUT IS NOT A BONA FIDE SALE FOR AN ADEQUATE AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH, THERE SHALL BE INCLUDED IN
THE GROSS ESTATE ONLY THE EXCESS OF THE FAIR MARKET VALUE AT THE TIME OF
DEATH OF THE PROPERTY OTHERWISE TO BE INCLUDED ON ACCOUNT OF SUCH TRANS-
ACTION, OVER THE VALUE OF THE CONSIDERATION  RECEIVED  THEREFOR  BY  THE
DECEDENT.
  (B) MARITAL RIGHTS NOT TREATED AS CONSIDERATION.--
  (1)  IN  GENERAL.--FOR  PURPOSES  OF THIS CHAPTER, A RELINQUISHMENT OR
PROMISED RELINQUISHMENT OF DOWER OR CURTESY, OR OF  A  STATUTORY  ESTATE
CREATED  IN  LIEU OF DOWER OR CURTESY, OR OF OTHER MARITAL RIGHTS IN THE
DECEDENT'S PROPERTY OR ESTATE, SHALL NOT BE CONSIDERED TO ANY  EXTENT  A
CONSIDERATION "IN MONEY OR MONEY'S WORTH".
  (2)  EXCEPTION.--FOR  PURPOSES  OF SECTION 2053 (RELATING TO EXPENSES,
INDEBTEDNESS, AND TAXES), A TRANSFER OF  PROPERTY  WHICH  SATISFIES  THE
REQUIREMENTS OF PARAGRAPH (1) OF SECTION 2516 (RELATING TO CERTAIN PROP-
ERTY  SETTLEMENTS)  SHALL  BE  CONSIDERED TO BE MADE FOR AN ADEQUATE AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH.
  S 2044. CERTAIN PROPERTY FOR WHICH MARITAL  DEDUCTION  WAS  PREVIOUSLY
ALLOWED.  (A) GENERAL RULE.--THE VALUE OF THE GROSS ESTATE SHALL INCLUDE
THE VALUE OF ANY PROPERTY TO WHICH THIS SECTION  APPLIES  IN  WHICH  THE
DECEDENT HAD A QUALIFYING INCOME INTEREST FOR LIFE.
  (B)  PROPERTY  TO WHICH THIS SECTION APPLIES.--THIS SECTION APPLIES TO
ANY PROPERTY IF--
  (1) A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER OF SUCH PROP-
ERTY TO THE DECEDENT--
  (A) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
  (B) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF, AND
  (2) SECTION 2519 (RELATING TO DISPOSITIONS OF  CERTAIN  LIFE  ESTATES)
DID  NOT  APPLY WITH RESPECT TO A DISPOSITION BY THE DECEDENT OF PART OR
ALL OF SUCH PROPERTY.
  (C) PROPERTY TREATED AS HAVING PASSED FROM DECEDENT.--FOR PURPOSES  OF
THIS  CHAPTER AND CHAPTER 13, PROPERTY INCLUDIBLE IN THE GROSS ESTATE OF
THE DECEDENT UNDER SUBSECTION (A) SHALL BE TREATED AS  PROPERTY  PASSING
FROM THE DECEDENT.
  S  2045. PRIOR INTERESTS. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY
LAW, SECTIONS 2034 TO 2042, INCLUSIVE, SHALL  APPLY  TO  THE  TRANSFERS,
TRUSTS,  ESTATES,  INTERESTS,  RIGHTS,  POWERS,  AND  RELINQUISHMENT  OF
POWERS, AS SEVERALLY ENUMERATED AND DESCRIBED  THEREIN,  WHENEVER  MADE,
CREATED, ARISING, EXISTING, EXERCISED, OR RELINQUISHED.
  S 2046. DISCLAIMERS. FOR PROVISIONS RELATING TO THE EFFECT OF A QUALI-
FIED DISCLAIMER FOR PURPOSES OF THIS CHAPTER, SEE SECTION 2518.
  S  2053.  EXPENSES,  INDEBTEDNESS,  AND  TAXES. (A) GENERAL RULE.--FOR
PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE VALUE  OF  THE  TAXABLE

S. 6359--D                         242                        A. 8559--D

ESTATE  SHALL  BE  DETERMINED  BY  DEDUCTING FROM THE VALUE OF THE GROSS
ESTATE SUCH AMOUNTS--
  (1) FOR FUNERAL EXPENSES,
  (2) FOR ADMINISTRATION EXPENSES,
  (3) FOR CLAIMS AGAINST THE ESTATE, AND
  (4)  FOR UNPAID MORTGAGES ON, OR ANY INDEBTEDNESS IN RESPECT OF, PROP-
ERTY WHERE THE VALUE OF THE DECEDENT'S INTEREST THEREIN, UNDIMINISHED BY
SUCH MORTGAGE OR INDEBTEDNESS, IS INCLUDED IN THE  VALUE  OF  THE  GROSS
ESTATE,
  AS  ARE  ALLOWABLE  BY THE LAWS OF THE JURISDICTION, WHETHER WITHIN OR
WITHOUT THE UNITED STATES, UNDER WHICH THE ESTATE IS BEING ADMINISTERED.
  (B) OTHER ADMINISTRATION  EXPENSES.--SUBJECT  TO  THE  LIMITATIONS  IN
PARAGRAPH  (1) OF SUBSECTION (C), THERE SHALL BE DEDUCTED IN DETERMINING
THE TAXABLE ESTATE AMOUNTS REPRESENTING EXPENSES INCURRED IN ADMINISTER-
ING PROPERTY NOT SUBJECT TO CLAIMS WHICH IS INCLUDED IN THE GROSS ESTATE
TO THE SAME EXTENT SUCH AMOUNTS WOULD BE ALLOWABLE AS A DEDUCTION  UNDER
SUBSECTION (A) IF SUCH PROPERTY WERE SUBJECT TO CLAIMS, AND SUCH AMOUNTS
ARE  PAID  BEFORE THE EXPIRATION OF THE PERIOD OF LIMITATION FOR ASSESS-
MENT PROVIDED IN SECTION 6501.
  (C) LIMITATIONS.--
  (1) LIMITATIONS APPLICABLE TO SUBSECTIONS (A) AND (B).--
  (A) CONSIDERATION FOR CLAIMS.--THE DEDUCTION ALLOWED BY  THIS  SECTION
IN  THE  CASE  OF  CLAIMS  AGAINST  THE ESTATE, UNPAID MORTGAGES, OR ANY
INDEBTEDNESS SHALL, WHEN FOUNDED ON A PROMISE OR AGREEMENT,  BE  LIMITED
TO  THE  EXTENT  THAT THEY WERE CONTRACTED BONA FIDE AND FOR AN ADEQUATE
AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH;  EXCEPT  THAT  IN  ANY
CASE IN WHICH ANY SUCH CLAIM IS FOUNDED ON A PROMISE OR AGREEMENT OF THE
DECEDENT  TO  MAKE A CONTRIBUTION OR GIFT TO OR FOR THE USE OF ANY DONEE
DESCRIBED IN SECTION  2055  FOR  THE  PURPOSES  SPECIFIED  THEREIN,  THE
DEDUCTION  FOR SUCH CLAIMS SHALL NOT BE SO LIMITED, BUT SHALL BE LIMITED
TO THE EXTENT THAT IT WOULD BE ALLOWABLE AS A  DEDUCTION  UNDER  SECTION
2055 IF SUCH PROMISE OR AGREEMENT CONSTITUTED A BEQUEST.
  (B)  CERTAIN  TAXES.--ANY  INCOME  TAXES  ON INCOME RECEIVED AFTER THE
DEATH OF THE DECEDENT, OR PROPERTY TAXES NOT ACCRUED BEFORE  HIS  DEATH,
OR  ANY  ESTATE,  SUCCESSION, LEGACY, OR INHERITANCE TAXES, SHALL NOT BE
DEDUCTIBLE UNDER THIS SECTION.
  (C) CERTAIN CLAIMS BY REMAINDERMEN.--NO  DEDUCTION  SHALL  BE  ALLOWED
UNDER  THIS  SECTION  FOR  A  CLAIM AGAINST THE ESTATE BY A REMAINDERMAN
RELATING TO ANY PROPERTY DESCRIBED IN SECTION 2044.
  (D) SECTION 6166 INTEREST.--NO DEDUCTION SHALL BE ALLOWED  UNDER  THIS
SECTION  FOR  ANY  INTEREST  PAYABLE  UNDER  SECTION  6601 ON ANY UNPAID
PORTION OF THE TAX IMPOSED BY SECTION 2001 FOR THE PERIOD  DURING  WHICH
AN  EXTENSION OF TIME FOR PAYMENT OF SUCH TAX IS IN EFFECT UNDER SECTION
6166.
  (2) LIMITATIONS APPLICABLE ONLY TO SUBSECTION (A).--IN THE CASE OF THE
AMOUNTS DESCRIBED IN SUBSECTION  (A),  THERE  SHALL  BE  DISALLOWED  THE
AMOUNT  BY  WHICH  THE DEDUCTIONS SPECIFIED THEREIN EXCEED THE VALUE, AT
THE TIME OF THE DECEDENT'S DEATH, OF PROPERTY SUBJECT TO CLAIMS,  EXCEPT
TO  THE  EXTENT  THAT  SUCH DEDUCTIONS REPRESENT AMOUNTS PAID BEFORE THE
DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN. FOR PURPOSES OF
THIS SECTION, THE TERM  "PROPERTY  SUBJECT  TO  CLAIMS"  MEANS  PROPERTY
INCLUDIBLE  IN  THE GROSS ESTATE OF THE DECEDENT WHICH, OR THE AVAILS OF
WHICH, WOULD UNDER THE APPLICABLE LAW, BEAR THE BURDEN OF THE PAYMENT OF
SUCH DEDUCTIONS IN THE FINAL ADJUSTMENT AND SETTLEMENT  OF  THE  ESTATE,
EXCEPT  THAT THE VALUE OF THE PROPERTY SHALL BE REDUCED BY THE AMOUNT OF
THE DEDUCTION UNDER SECTION 2054 ATTRIBUTABLE TO SUCH PROPERTY.

S. 6359--D                         243                        A. 8559--D

  (D) CERTAIN FOREIGN DEATH TAXES.--
  (1)   IN   GENERAL.--NOTWITHSTANDING   THE  PROVISIONS  OF  SUBSECTION
(C)(1)(B), FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE VALUE OF
THE TAXABLE ESTATE MAY BE DETERMINED, IF THE EXECUTOR SO  ELECTS  BEFORE
THE  EXPIRATION  OF  THE PERIOD OF LIMITATION FOR ASSESSMENT PROVIDED IN
SECTION 6501, BY DEDUCTING FROM THE VALUE OF THE GROSS ESTATE THE AMOUNT
(AS DETERMINED IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY  THE  SECRE-
TARY)  OF  ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX IMPOSED BY
AND ACTUALLY PAID TO ANY FOREIGN COUNTRY, IN  RESPECT  OF  ANY  PROPERTY
SITUATED WITHIN SUCH FOREIGN COUNTRY AND INCLUDED IN THE GROSS ESTATE OF
A CITIZEN OR RESIDENT OF THE UNITED STATES, UPON A TRANSFER BY THE DECE-
DENT  FOR  PUBLIC,  CHARITABLE,  OR  RELIGIOUS USES DESCRIBED IN SECTION
2055. THE DETERMINATION UNDER THIS PARAGRAPH OF THE COUNTRY WITHIN WHICH
PROPERTY IS SITUATED SHALL BE MADE IN ACCORDANCE WITH THE RULES APPLICA-
BLE UNDER SUBCHAPTER B (SEC. 2101 AND FOLLOWING) IN DETERMINING  WHETHER
PROPERTY  IS SITUATED WITHIN OR WITHOUT THE UNITED STATES.  ANY ELECTION
UNDER THIS PARAGRAPH SHALL BE EXERCISED IN ACCORDANCE  WITH  REGULATIONS
PRESCRIBED BY THE SECRETARY.
  (2)  CONDITION  FOR  ALLOWANCE  OF  DEDUCTION.--NO  DEDUCTION SHALL BE
ALLOWED UNDER PARAGRAPH (1) FOR A FOREIGN DEATH  TAX  SPECIFIED  THEREIN
UNLESS  THE  DECREASE  IN  THE TAX IMPOSED BY SECTION 2001 WHICH RESULTS
FROM THE DEDUCTION PROVIDED IN PARAGRAPH (1) WILL INURE SOLELY  FOR  THE
BENEFIT OF THE PUBLIC, CHARITABLE, OR RELIGIOUS TRANSFEREES DESCRIBED IN
SECTION  2055  OR SECTION 2106(A)(2).  IN ANY CASE WHERE THE TAX IMPOSED
BY SECTION 2001 IS EQUITABLY APPORTIONED AMONG ALL  THE  TRANSFEREES  OF
PROPERTY  INCLUDED  IN  THE  GROSS  ESTATE, INCLUDING THOSE DESCRIBED IN
SECTIONS 2055 AND 2106(A)(2) (TAKING INTO ACCOUNT ANY EXEMPTIONS,  CRED-
ITS,  OR  DEDUCTIONS  ALLOWED  BY  THIS  CHAPTER),  IN  DETERMINING SUCH
DECREASE, THERE SHALL BE DISREGARDED ANY DECREASE IN THE FEDERAL  ESTATE
TAX  WHICH  ANY  TRANSFEREES OTHER THAN THOSE DESCRIBED IN SECTIONS 2055
AND 2106(A)(2) ARE REQUIRED TO PAY.
  (3) EFFECT ON CREDIT FOR FOREIGN DEATH TAXES OF DEDUCTION  UNDER  THIS
SUBSECTION.--
  (A)  ELECTION.--AN  ELECTION  UNDER  THIS SUBSECTION SHALL BE DEEMED A
WAIVER OF THE RIGHT TO CLAIM A CREDIT, AGAINST THE FEDERAL  ESTATE  TAX,
UNDER  A  DEATH  TAX  CONVENTION WITH ANY FOREIGN COUNTRY FOR ANY TAX OR
PORTION THEREOF IN RESPECT OF WHICH A  DEDUCTION  IS  TAKEN  UNDER  THIS
SUBSECTION.
  (B) CROSS REFERENCE.--
  SEE  SECTION  2011(D)  FOR  THE EFFECT OF A DEDUCTION TAKEN UNDER THIS
PARAGRAPH ON THE CREDIT FOR FOREIGN DEATH TAXES.
  (E) MARITAL RIGHTS.--
  FOR PROVISIONS TREATING CERTAIN RELINQUISHMENTS OF MARITAL  RIGHTS  AS
CONSIDERATION IN MONEY OR MONEY'S WORTH, SEE SECTION 2043(B)(2).
  S  2054.  LOSSES. FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001, THE
VALUE OF THE TAXABLE ESTATE SHALL BE DETERMINED BY  DEDUCTING  FROM  THE
VALUE  OF  THE  GROSS  ESTATE  LOSSES  INCURRED DURING THE SETTLEMENT OF
ESTATES ARISING FROM FIRES, STORMS, SHIPWRECKS, OR OTHER CASUALTIES,  OR
FROM  THEFT,  WHEN  SUCH  LOSSES ARE NOT COMPENSATED FOR BY INSURANCE OR
OTHERWISE.
  S 2055. TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES.
  (A) IN GENERAL.--FOR PURPOSES OF THE TAX IMPOSED BY SECTION 2001,  THE
VALUE  OF  THE  TAXABLE ESTATE SHALL BE DETERMINED BY DEDUCTING FROM THE
VALUE OF THE GROSS ESTATE THE AMOUNT OF ALL BEQUESTS, LEGACIES, DEVISES,
OR TRANSFERS--

S. 6359--D                         244                        A. 8559--D

  (1) TO OR FOR THE USE OF THE UNITED STATES, ANY STATE,  ANY  POLITICAL
SUBDIVISION THEREOF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC
PURPOSES;
  (2) TO OR FOR THE USE OF ANY CORPORATION ORGANIZED AND OPERATED EXCLU-
SIVELY  FOR  RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR EDUCATIONAL
PURPOSES, INCLUDING THE ENCOURAGEMENT OF ART, OR TO FOSTER  NATIONAL  OR
INTERNATIONAL  AMATEUR  SPORTS  COMPETITION  (BUT ONLY IF NO PART OF ITS
ACTIVITIES INVOLVE THE PROVISION OF ATHLETIC FACILITIES  OR  EQUIPMENT),
AND THE PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO PART OF THE NET
EARNINGS  OF  WHICH  INURES TO THE BENEFIT OF ANY PRIVATE STOCKHOLDER OR
INDIVIDUAL, WHICH IS NOT DISQUALIFIED FOR TAX  EXEMPTION  UNDER  SECTION
501(C)(3)  BY  REASON  OF ATTEMPTING TO INFLUENCE LEGISLATION, AND WHICH
DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUDING  THE  PUBLISHING  OR
DISTRIBUTING  OF STATEMENTS), ANY POLITICAL CAMPAIGN ON BEHALF OF (OR IN
OPPOSITION TO) ANY CANDIDATE FOR PUBLIC OFFICE;
  (3) TO A TRUSTEE OR TRUSTEES, OR A FRATERNAL SOCIETY, ORDER, OR  ASSO-
CIATION OPERATING UNDER THE LODGE SYSTEM, BUT ONLY IF SUCH CONTRIBUTIONS
OR  GIFTS ARE TO BE USED BY SUCH TRUSTEE OR TRUSTEES, OR BY SUCH FRATER-
NAL SOCIETY, ORDER, OR ASSOCIATION, EXCLUSIVELY FOR RELIGIOUS,  CHARITA-
BLE,   SCIENTIFIC,   LITERARY,  OR  EDUCATIONAL  PURPOSES,  OR  FOR  THE
PREVENTION OF CRUELTY TO CHILDREN  OR  ANIMALS,  SUCH  TRUST,  FRATERNAL
SOCIETY,  ORDER,  OR  ASSOCIATION  WOULD  NOT  BE  DISQUALIFIED  FOR TAX
EXEMPTION UNDER SECTION 501(C)(3) BY REASON OF ATTEMPTING  TO  INFLUENCE
LEGISLATION,  AND  SUCH  TRUSTEE OR TRUSTEES, OR SUCH FRATERNAL SOCIETY,
ORDER, OR ASSOCIATION, DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
CAMPAIGN  ON  BEHALF  OF  (OR IN OPPOSITION TO) ANY CANDIDATE FOR PUBLIC
OFFICE;
  (4) TO OR FOR THE USE OF ANY VETERANS'  ORGANIZATION  INCORPORATED  BY
ACT  OF  CONGRESS,  OR OF ITS DEPARTMENTS OR LOCAL CHAPTERS OR POSTS, NO
PART OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF  ANY  PRIVATE
SHAREHOLDER OR INDIVIDUAL; OR
  (5)  TO AN EMPLOYEE STOCK OWNERSHIP PLAN IF SUCH TRANSFER QUALIFIES AS
A QUALIFIED GRATUITOUS TRANSFER OF QUALIFIED EMPLOYER SECURITIES  WITHIN
THE MEANING OF SECTION 664(G).
  FOR  PURPOSES  OF THIS SUBSECTION, THE COMPLETE TERMINATION BEFORE THE
DATE PRESCRIBED FOR THE FILING OF THE ESTATE TAX RETURN OF  A  POWER  TO
CONSUME,  INVADE, OR APPROPRIATE PROPERTY FOR THE BENEFIT OF AN INDIVID-
UAL BEFORE SUCH POWER HAS BEEN EXERCISED BY REASON OF THE DEATH OF  SUCH
INDIVIDUAL  OR FOR ANY OTHER REASON SHALL BE CONSIDERED AND DEEMED TO BE
A QUALIFIED DISCLAIMER WITH THE SAME FULL FORCE AND EFFECT AS THOUGH  HE
HAD  FILED  SUCH  QUALIFIED  DISCLAIMER.   RULES SIMILAR TO THE RULES OF
SECTION 501(J) SHALL APPLY FOR PURPOSES OF PARAGRAPH (2).
  (B) POWERS OF  APPOINTMENT.--PROPERTY  INCLUDIBLE  IN  THE  DECEDENT'S
GROSS  ESTATE  UNDER  SECTION  2041  (RELATING TO POWERS OF APPOINTMENT)
RECEIVED BY A DONEE DESCRIBED IN THIS SECTION  SHALL,  FOR  PURPOSES  OF
THIS SECTION, BE CONSIDERED A BEQUEST OF SUCH DECEDENT.
  (C)  DEATH  TAXES  PAYABLE  OUT  OF  BEQUESTS.--IF  THE TAX IMPOSED BY
SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR  INHERITANCE  TAXES,
ARE,  EITHER  BY  THE  TERMS OF THE WILL, BY THE LAW OF THE JURISDICTION
UNDER WHICH THE ESTATE IS ADMINISTERED, OR BY THE LAW OF  THE  JURISDIC-
TION IMPOSING THE PARTICULAR TAX, PAYABLE IN WHOLE OR IN PART OUT OF THE
BEQUESTS,  LEGACIES, OR DEVISES OTHERWISE DEDUCTIBLE UNDER THIS SECTION,
THEN THE AMOUNT DEDUCTIBLE UNDER THIS SECTION SHALL  BE  THE  AMOUNT  OF
SUCH BEQUESTS, LEGACIES, OR DEVISES REDUCED BY THE AMOUNT OF SUCH TAXES.

S. 6359--D                         245                        A. 8559--D

  (D)  LIMITATION  ON DEDUCTION.--THE AMOUNT OF THE DEDUCTION UNDER THIS
SECTION FOR ANY TRANSFER SHALL NOT EXCEED THE VALUE OF  THE  TRANSFERRED
PROPERTY REQUIRED TO BE INCLUDED IN THE GROSS ESTATE.
  (E) DISALLOWANCE OF DEDUCTIONS IN CERTAIN CASES.--
  (1) NO DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION FOR A TRANSFER TO
OR  FOR  THE USE OF AN ORGANIZATION OR TRUST DESCRIBED IN SECTION 508(D)
OR 4948(C)(4) SUBJECT TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.
  (2) WHERE AN INTEREST IN PROPERTY (OTHER THAN AN INTEREST DESCRIBED IN
SECTION 170(F)(3)(B)) PASSES OR  HAS  PASSED  FROM  THE  DECEDENT  TO  A
PERSON,  OR  FOR  A  USE,  DESCRIBED  IN SUBSECTION (A), AND AN INTEREST
(OTHER THAN AN INTEREST WHICH IS EXTINGUISHED UPON THE DECEDENT'S DEATH)
IN THE SAME PROPERTY PASSES OR HAS PASSED (FOR LESS THAN AN ADEQUATE AND
FULL CONSIDERATION IN MONEY OR MONEY'S WORTH) FROM  THE  DECEDENT  TO  A
PERSON,  OR  FOR  A  USE,  NOT DESCRIBED IN SUBSECTION (A), NO DEDUCTION
SHALL BE ALLOWED UNDER THIS SECTION FOR THE INTEREST WHICH PASSES OR HAS
PASSED TO THE PERSON, OR  FOR  THE  USE,  DESCRIBED  IN  SUBSECTION  (A)
UNLESS--
  (A)  IN  THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN A TRUST
WHICH IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE  REMAINDER
UNITRUST  (DESCRIBED  IN SECTION 664) OR A POOLED INCOME FUND (DESCRIBED
IN SECTION 642(C)(5)), OR
  (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
A GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF  THE
FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
  (3) REFORMATIONS TO COMPLY WITH PARAGRAPH (2).--
  (A)  IN GENERAL.--A DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN
RESPECT OF ANY QUALIFIED REFORMATION.
  (B) QUALIFIED REFORMATION.--FOR PURPOSES OF THIS PARAGRAPH,  THE  TERM
"QUALIFIED  REFORMATION"  MEANS  A  CHANGE  OF A GOVERNING INSTRUMENT BY
REFORMATION, AMENDMENT,  CONSTRUCTION,  OR  OTHERWISE  WHICH  CHANGES  A
REFORMABLE INTEREST INTO A QUALIFIED INTEREST BUT ONLY IF--
  (I) ANY DIFFERENCE BETWEEN--
  (I)  THE  ACTUARIAL VALUE (DETERMINED AS OF THE DATE OF THE DECEDENT'S
DEATH) OF THE QUALIFIED INTEREST, AND
  (II) THE ACTUARIAL VALUE (AS SO DETERMINED) OF THE  REFORMABLE  INTER-
EST,
  DOES NOT EXCEED 5 PERCENT OF THE ACTUARIAL VALUE (AS SO DETERMINED) OF
THE REFORMABLE INTEREST,
  (II) IN THE CASE OF--
  (I) A CHARITABLE REMAINDER INTEREST, THE NONREMAINDER INTEREST (BEFORE
AND AFTER THE QUALIFIED REFORMATION) TERMINATED AT THE SAME TIME, OR
  (II)  ANY  OTHER  INTEREST,  THE REFORMABLE INTEREST AND THE QUALIFIED
INTEREST ARE FOR THE SAME PERIOD, AND
  (III) SUCH CHANGE IS EFFECTIVE AS OF THE DATE OF THE DECEDENT'S DEATH.
  A NONREMAINDER INTEREST (BEFORE REFORMATION) FOR A TERM  OF  YEARS  IN
EXCESS  OF  20  YEARS  SHALL  BE  TREATED AS SATISFYING SUBCLAUSE (I) OF
CLAUSE (II) IF SUCH INTEREST (AFTER REFORMATION) IS FOR  A  TERM  OF  20
YEARS.
  (C) REFORMABLE INTEREST.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) IN GENERAL.--THE TERM "REFORMABLE INTEREST" MEANS ANY INTEREST FOR
WHICH A DEDUCTION WOULD BE ALLOWABLE UNDER SUBSECTION (A) AT THE TIME OF
THE DECEDENT'S DEATH BUT FOR PARAGRAPH (2).
  (II)  BENEFICIARY'S  INTEREST  MUST  BE  FIXED.--THE  TERM "REFORMABLE
INTEREST" DOES NOT INCLUDE ANY INTEREST  UNLESS,  BEFORE  THE  REMAINDER
VESTS  IN POSSESSION, ALL PAYMENTS TO PERSONS OTHER THAN AN ORGANIZATION
DESCRIBED IN SUBSECTION (A) ARE EXPRESSED  EITHER  IN  SPECIFIED  DOLLAR

S. 6359--D                         246                        A. 8559--D

AMOUNTS  OR A FIXED PERCENTAGE OF THE FAIR MARKET VALUE OF THE PROPERTY.
FOR PURPOSES OF DETERMINING WHETHER ALL SUCH PAYMENTS ARE EXPRESSED AS A
FIXED PERCENTAGE OF THE FAIR  MARKET  VALUE  OF  THE  PROPERTY,  SECTION
664(D)(3) SHALL BE TAKEN INTO ACCOUNT.
  (III)  SPECIAL  RULE WHERE TIMELY COMMENCEMENT OF REFORMATION.--CLAUSE
(II) SHALL NOT APPLY  TO  ANY  INTEREST  IF  A  JUDICIAL  PROCEEDING  IS
COMMENCED  TO  CHANGE  SUCH INTEREST INTO A QUALIFIED INTEREST NOT LATER
THAN THE 90TH DAY AFTER--
  (I) IF AN ESTATE TAX RETURN IS REQUIRED TO BE FILED, THE LAST DATE
(INCLUDING EXTENSIONS) FOR FILING SUCH RETURN, OR
  (II) IF NO ESTATE TAX RETURN IS REQUIRED TO BE FILED,  THE  LAST  DATE
(INCLUDING  EXTENSIONS)  FOR  FILING  THE  INCOME TAX RETURN FOR THE 1ST
TAXABLE YEAR FOR WHICH SUCH A RETURN IS REQUIRED  TO  BE  FILED  BY  THE
TRUST.
  (IV)  SPECIAL  RULE FOR WILL EXECUTED BEFORE JANUARY 1, 1979, ETC.--IN
THE CASE OF ANY INTEREST PASSING UNDER A WILL EXECUTED BEFORE JANUARY 1,
1979, OR UNDER A TRUST CREATED BEFORE SUCH DATE, CLAUSE (II)  SHALL  NOT
APPLY.
  (D)  QUALIFIED  INTEREST.--FOR  PURPOSES  OF  THIS PARAGRAPH, THE TERM
"QUALIFIED INTEREST" MEANS AN INTEREST FOR WHICH A DEDUCTION  IS  ALLOW-
ABLE UNDER SUBSECTION (A).
  (E)  LIMITATION.--THE  DEDUCTION REFERRED TO IN SUBPARAGRAPH (A) SHALL
NOT EXCEED THE AMOUNT OF THE DEDUCTION WHICH WOULD HAVE  BEEN  ALLOWABLE
FOR THE REFORMABLE INTEREST BUT FOR PARAGRAPH (2).
  (F)  SPECIAL RULE WHERE INCOME BENEFICIARY DIES.--IF (BY REASON OF THE
DEATH OF ANY INDIVIDUAL, OR BY TERMINATION OR DISTRIBUTION OF A TRUST IN
ACCORDANCE WITH THE TERMS OF THE TRUST INSTRUMENT) BY THE DUE  DATE  FOR
FILING THE ESTATE TAX RETURN (INCLUDING ANY EXTENSION THEREOF) A REFORM-
ABLE  INTEREST  IS  IN A WHOLLY CHARITABLE TRUST OR PASSES DIRECTLY TO A
PERSON OR FOR A USE DESCRIBED IN SUBSECTION (A), A  DEDUCTION  SHALL  BE
ALLOWED  FOR  SUCH REFORMABLE INTEREST AS IF IT HAD MET THE REQUIREMENTS
OF PARAGRAPH (2) ON THE DATE OF THE DECEDENT'S DEATH.  FOR  PURPOSES  OF
THE PRECEDING SENTENCE, THE TERM "WHOLLY CHARITABLE TRUST" MEANS A CHAR-
ITABLE  TRUST  WHICH,  UPON  THE  ALLOWANCE  OF  A  DEDUCTION,  WOULD BE
DESCRIBED IN SECTION 4947(A)(1).
  (G) STATUTE OF LIMITATIONS.--THE PERIOD FOR ASSESSING  ANY  DEFICIENCY
OF  ANY  TAX ATTRIBUTABLE TO THE APPLICATION OF THIS PARAGRAPH SHALL NOT
EXPIRE BEFORE THE DATE 1 YEAR AFTER THE DATE ON WHICH THE  SECRETARY  IS
NOTIFIED THAT SUCH REFORMATION (OR OTHER PROCEEDING PURSUANT TO SUBPARA-
GRAPH (J)1 HAS OCCURRED.
  (H)  REGULATIONS.--THE  SECRETARY  SHALL PRESCRIBE SUCH REGULATIONS AS
MAY BE NECESSARY TO CARRY OUT THE PURPOSES OF THIS PARAGRAPH,  INCLUDING
REGULATIONS  PROVIDING  SUCH  ADJUSTMENTS  IN  THE  APPLICATION  OF  THE
PROVISIONS OF SECTION 508 (RELATING TO SPECIAL RULES RELATING TO SECTION
501(C)(3) ORGANIZATIONS), SUBCHAPTER J  (RELATING  TO  ESTATES,  TRUSTS,
BENEFICIARIES, AND DECEDENTS), AND CHAPTER 42 (RELATING TO PRIVATE FOUN-
DATIONS) AS MAY BE NECESSARY BY REASON OF THE QUALIFIED REFORMATION.
  (I) REFORMATIONS PERMITTED IN CASE OF REMAINDER INTERESTS IN RESIDENCE
OR  FARM, POOLED INCOME FUNDS, ETC.--THE SECRETARY SHALL PRESCRIBE REGU-
LATIONS (CONSISTENT WITH THE PROVISIONS OF  THIS  PARAGRAPH)  PERMITTING
REFORMATIONS IN THE CASE OF ANY FAILURE--
  (I)  TO  MEET  THE  REQUIREMENTS  OF SECTION 170(F)(3)(B) (RELATING TO
REMAINDER INTERESTS IN PERSONAL RESIDENCE OR FARM, ETC.), OR
  (II) TO MEET THE REQUIREMENTS OF SECTION 642(C)(5).
  (J) VOID OR REFORMED TRUST IN CASES OF INSUFFICIENT  REMAINDER  INTER-
ESTS.--IN  THE  CASE OF A TRUST THAT WOULD QUALIFY (OR COULD BE REFORMED

S. 6359--D                         247                        A. 8559--D

TO QUALIFY PURSUANT TO SUBPARAGRAPH (B)) BUT FOR FAILURE TO SATISFY  THE
REQUIREMENT  OF PARAGRAPH (1)(D) OR (2)(D) OF SECTION 664(D), SUCH TRUST
MAY BE--
  (I) DECLARED NULL AND VOID AB INITIO, OR
  (II)  CHANGED  BY  REFORMATION,  AMENDMENT,  OR OTHERWISE TO MEET SUCH
REQUIREMENT BY REDUCING THE PAYOUT RATE OR THE DURATION (OR BOTH) OF ANY
NONCHARITABLE BENEFICIARY'S INTEREST TO THE EXTENT NECESSARY TO  SATISFY
SUCH REQUIREMENT,
  PURSUANT  TO A PROCEEDING THAT IS COMMENCED WITHIN THE PERIOD REQUIRED
IN SUBPARAGRAPH  (C)(III).  IN  A  CASE  DESCRIBED  IN  CLAUSE  (I),  NO
DEDUCTION  SHALL  BE  ALLOWED  UNDER  THIS TITLE FOR ANY TRANSFER TO THE
TRUST AND ANY TRANSACTIONS ENTERED INTO BY  THE  TRUST  PRIOR  TO  BEING
DECLARED VOID SHALL BE TREATED AS ENTERED INTO BY THE TRANSFEROR.
  (4)  WORKS  OF ART AND THEIR COPYRIGHTS TREATED AS SEPARATE PROPERTIES
IN CERTAIN CASES.--
  (A) IN GENERAL.--IN THE CASE OF A QUALIFIED CONTRIBUTION OF A WORK  OF
ART,  THE  WORK  OF  ART  AND THE COPYRIGHT ON SUCH WORK OF ART SHALL BE
TREATED AS SEPARATE PROPERTIES FOR PURPOSES OF PARAGRAPH (2).
  (B) WORK OF ART DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,  THE  TERM
"WORK OF ART" MEANS ANY TANGIBLE PERSONAL PROPERTY WITH RESPECT TO WHICH
THERE IS A COPYRIGHT UNDER FEDERAL LAW.
  (C)  QUALIFIED  CONTRIBUTION DEFINED.--FOR PURPOSES OF THIS PARAGRAPH,
THE TERM "QUALIFIED CONTRIBUTION" MEANS ANY TRANSFER OF  PROPERTY  TO  A
QUALIFIED ORGANIZATION IF THE USE OF THE PROPERTY BY THE ORGANIZATION IS
RELATED  TO  THE  PURPOSE  OR  FUNCTION  CONSTITUTING  THE BASIS FOR ITS
EXEMPTION UNDER SECTION 501.
  (D) QUALIFIED ORGANIZATION DEFINED.--FOR PURPOSES OF  THIS  PARAGRAPH,
THE  TERM  "QUALIFIED  ORGANIZATION" MEANS ANY ORGANIZATION DESCRIBED IN
SECTION 501(C)(3) OTHER THAN A PRIVATE FOUNDATION (AS DEFINED IN SECTION
509).  FOR PURPOSES OF THE PRECEDING SENTENCE, A PRIVATE OPERATING FOUN-
DATION (AS DEFINED IN SECTION 4942(J)(3)) SHALL  NOT  BE  TREATED  AS  A
PRIVATE FOUNDATION.
  (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.--A  DEDUCTION OTHERWISE
ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF--
  (A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT--
  (I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR
  (II) A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN  SECTION
4943(F)(5)(A))  WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT-
ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
  (B) THE TAXPAYER  OBTAINS  A  CONTEMPORANEOUS  WRITTEN  ACKNOWLEDGMENT
(DETERMINED  UNDER  RULES  SIMILAR TO THE RULES OF SECTION 170(F)(8)(C))
FROM THE SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH  DONOR  ADVISED
FUND  THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE ASSETS
CONTRIBUTED.
  (F) SPECIAL RULE  FOR  IRREVOCABLE  TRANSFERS  OF  EASEMENTS  IN  REAL
PROPERTY.--A  DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT
OF ANY TRANSFER OF A QUALIFIED REAL PROPERTY  INTEREST  (AS  DEFINED  IN
SECTION  170(H)(2)(C))  WHICH  MEETS  THE REQUIREMENTS OF SECTION 170(H)
(WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
  (G) CROSS REFERENCES.--
  (1) FOR OPTION AS TO TIME FOR VALUATION FOR PURPOSE OF DEDUCTION UNDER
THIS SECTION, SEE SECTION 2032.
  (2) FOR TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD  CARE,  SEE
SECTION 501(K).

S. 6359--D                         248                        A. 8559--D

  (3)  FOR  EXEMPTION  OF  GIFTS  AND  BEQUESTS TO OR FOR THE BENEFIT OF
LIBRARY OF CONGRESS, SEE SECTION 5 OF THE  ACT  OF  MARCH  3,  1925,  AS
AMENDED (2 U.S.C. 161).
  (4)  FOR  TREATMENT OF GIFTS AND BEQUESTS FOR THE BENEFIT OF THE NAVAL
HISTORICAL CENTER AS GIFTS OR BEQUESTS TO OR FOR THE USE OF  THE  UNITED
STATES, SEE SECTION 7222 OF TITLE 10, UNITED STATES CODE.
  (5)  FOR  TREATMENT  OF  GIFTS  AND  BEQUESTS TO OR FOR THE BENEFIT OF
NATIONAL PARK FOUNDATION AS GIFTS OR BEQUESTS TO OR FOR THE USE  OF  THE
UNITED  STATES, SEE SECTION 8 OF THE ACT OF DECEMBER 18, 1967 (16 U.S.C.
191).
  (6) FOR TREATMENT OF GIFTS,  DEVISES,  OR  BEQUESTS  ACCEPTED  BY  THE
SECRETARY  OF  STATE,  THE  DIRECTOR  OF THE INTERNATIONAL COMMUNICATION
AGENCY, OR THE DIRECTOR OF THE UNITED STATES  INTERNATIONAL  DEVELOPMENT
COOPERATION  AGENCY  AS GIFTS, DEVISES, OR BEQUESTS TO OR FOR THE USE OF
THE UNITED STATES, SEE SECTION 25 OF THE STATE DEPARTMENT BASIC AUTHORI-
TIES ACT OF 1956.
  (7) FOR TREATMENT OF GIFTS OR BEQUESTS OF MONEY ACCEPTED BY THE ATTOR-
NEY GENERAL FOR CREDIT TO "COMMISSARY FUNDS, FEDERAL PRISONS"  AS  GIFTS
OR  BEQUESTS TO OR FOR THE USE OF THE UNITED STATES, SEE SECTION 4043 OF
TITLE 18, UNITED STATES CODE.
  (8) FOR PAYMENT OF TAX ON GIFTS AND BEQUESTS OF  UNITED  STATES  OBLI-
GATIONS  TO  THE  UNITED STATES, SEE SECTION 3113(E) OF TITLE 31, UNITED
STATES CODE.
  (9) FOR TREATMENT OF GIFTS AND BEQUESTS FOR BENEFIT OF THE NAVAL ACAD-
EMY AS GIFTS OR BEQUESTS TO OR FOR THE USE OF  THE  UNITED  STATES,  SEE
SECTION 6973 OF TITLE 10, UNITED STATES CODE.
  (10)  FOR  TREATMENT  OF  GIFTS  AND BEQUESTS FOR BENEFIT OF THE NAVAL
ACADEMY MUSEUM AS GIFTS OR BEQUESTS TO OR FOR  THE  USE  OF  THE  UNITED
STATES, SEE SECTION 6974 OF TITLE 10, UNITED STATES CODE.
  (11) FOR EXEMPTION OF GIFTS AND BEQUESTS RECEIVED BY NATIONAL ARCHIVES
TRUST FUND BOARD, SEE SECTION 2308 OF TITLE 44, UNITED STATES CODE.
  (12)  FOR  TREATMENT OF GIFTS AND BEQUESTS TO OR FOR THE USE OF INDIAN
TRIBAL GOVERNMENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
  S 2056. BEQUESTS, ETC., TO SURVIVING SPOUSE. (A) ALLOWANCE OF  MARITAL
DEDUCTION.--FOR  PURPOSES  OF THE TAX IMPOSED BY SECTION 2001, THE VALUE
OF THE TAXABLE ESTATE SHALL, EXCEPT AS LIMITED  BY  SUBSECTION  (B),  BE
DETERMINED  BY  DEDUCTING  FROM  THE VALUE OF THE GROSS ESTATE AN AMOUNT
EQUAL TO THE VALUE OF ANY INTEREST  IN  PROPERTY  WHICH  PASSES  OR  HAS
PASSED FROM THE DECEDENT TO HIS SURVIVING SPOUSE, BUT ONLY TO THE EXTENT
THAT  SUCH  INTEREST  IS  INCLUDED IN DETERMINING THE VALUE OF THE GROSS
ESTATE.
  (B) LIMITATION IN THE CASE OF LIFE ESTATE OR OTHER  TERMINABLE  INTER-
EST.--
  (1)  GENERAL  RULE.--WHERE, ON THE LAPSE OF TIME, ON THE OCCURRENCE OF
AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF AN EVENT OR CONTINGENCY TO
OCCUR, AN INTEREST PASSING TO THE SURVIVING  SPOUSE  WILL  TERMINATE  OR
FAIL,  NO  DEDUCTION SHALL BE ALLOWED UNDER THIS SECTION WITH RESPECT TO
SUCH INTEREST--
  (A) IF AN INTEREST IN SUCH PROPERTY PASSES OR  HAS  PASSED  (FOR  LESS
THAN  AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S WORTH) FROM
THE DECEDENT TO ANY PERSON OTHER THAN  SUCH  SURVIVING  SPOUSE  (OR  THE
ESTATE OF SUCH SPOUSE); AND
  (B) IF BY REASON OF SUCH PASSING SUCH PERSON (OR HIS HEIRS OR ASSIGNS)
MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY AFTER SUCH TERMINATION OR
FAILURE OF THE INTEREST SO PASSING TO THE SURVIVING SPOUSE;

S. 6359--D                         249                        A. 8559--D

  AND  NO DEDUCTION SHALL BE ALLOWED WITH RESPECT TO SUCH INTEREST (EVEN
IF SUCH DEDUCTION IS NOT DISALLOWED UNDER SUBPARAGRAPHS (A) AND (B))--
  (C)  IF  SUCH  INTEREST  IS  TO  BE ACQUIRED FOR THE SURVIVING SPOUSE,
PURSUANT TO DIRECTIONS OF THE DECEDENT, BY HIS EXECUTOR OR BY THE  TRUS-
TEE OF A TRUST.
  FOR PURPOSES OF THIS PARAGRAPH, AN INTEREST SHALL NOT BE CONSIDERED AS
AN INTEREST WHICH WILL TERMINATE OR FAIL MERELY BECAUSE IT IS THE OWNER-
SHIP  OF  A BOND, NOTE, OR SIMILAR CONTRACTUAL OBLIGATION, THE DISCHARGE
OF WHICH WOULD NOT HAVE THE EFFECT OF AN ANNUITY FOR LIFE OR FOR A TERM.
  (2) INTEREST IN UNIDENTIFIED ASSETS.--WHERE THE  ASSETS  (INCLUDED  IN
THE  DECEDENT'S GROSS ESTATE) OUT OF WHICH, OR THE PROCEEDS OF WHICH, AN
INTEREST PASSING TO THE SURVIVING SPOUSE  MAY  BE  SATISFIED  INCLUDE  A
PARTICULAR  ASSET  OR ASSETS WITH RESPECT TO WHICH NO DEDUCTION WOULD BE
ALLOWED IF SUCH ASSET OR ASSETS PASSED FROM THE DECEDENT TO SUCH SPOUSE,
THEN THE VALUE OF SUCH  INTEREST  PASSING  TO  SUCH  SPOUSE  SHALL,  FOR
PURPOSES  OF  SUBSECTION  (A), BE REDUCED BY THE AGGREGATE VALUE OF SUCH
PARTICULAR ASSETS.
  (3)  INTEREST  OF  SPOUSE  CONDITIONAL   ON   SURVIVAL   FOR   LIMITED
PERIOD.--FOR  PURPOSES  OF  THIS  SUBSECTION, AN INTEREST PASSING TO THE
SURVIVING SPOUSE SHALL NOT BE  CONSIDERED  AS  AN  INTEREST  WHICH  WILL
TERMINATE OR FAIL ON THE DEATH OF SUCH SPOUSE IF--
  (A)  SUCH  DEATH  WILL CAUSE A TERMINATION OR FAILURE OF SUCH INTEREST
ONLY IF IT OCCURS WITHIN A PERIOD  NOT  EXCEEDING  6  MONTHS  AFTER  THE
DECEDENT'S  DEATH, OR ONLY IF IT OCCURS AS A RESULT OF A COMMON DISASTER
RESULTING IN THE DEATH OF THE DECEDENT AND THE SURVIVING SPOUSE, OR ONLY
IF IT OCCURS IN THE CASE OF EITHER SUCH EVENT; AND
  (B) SUCH TERMINATION OR FAILURE DOES NOT IN FACT OCCUR.
  (4) VALUATION OF INTEREST PASSING TO SURVIVING SPOUSE.--IN DETERMINING
FOR PURPOSES OF SUBSECTION (A) THE VALUE OF  ANY  INTEREST  IN  PROPERTY
PASSING TO THE SURVIVING SPOUSE FOR WHICH A DEDUCTION IS ALLOWED BY THIS
SECTION--
  (A) THERE SHALL BE TAKEN INTO ACCOUNT THE EFFECT WHICH THE TAX IMPOSED
BY  SECTION 2001, OR ANY ESTATE, SUCCESSION, LEGACY, OR INHERITANCE TAX,
HAS ON THE NET VALUE TO THE SURVIVING SPOUSE OF SUCH INTEREST; AND
  (B) WHERE SUCH INTEREST OR PROPERTY IS ENCUMBERED IN  ANY  MANNER,  OR
WHERE THE SURVIVING SPOUSE INCURS ANY OBLIGATION IMPOSED BY THE DECEDENT
WITH  RESPECT TO THE PASSING OF SUCH INTEREST, SUCH ENCUMBRANCE OR OBLI-
GATION SHALL BE TAKEN INTO ACCOUNT IN THE SAME MANNER AS IF  THE  AMOUNT
OF A GIFT TO SUCH SPOUSE OF SUCH INTEREST WERE BEING DETERMINED.
  (5) LIFE ESTATE WITH POWER OF APPOINTMENT IN SURVIVING SPOUSE.--IN THE
CASE  OF  AN  INTEREST  IN  PROPERTY  PASSING  FROM THE DECEDENT, IF HIS
SURVIVING SPOUSE IS ENTITLED FOR LIFE TO ALL THE INCOME FROM THE  ENTIRE
INTEREST,  OR  ALL  THE  INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE
ANNUALLY OR AT MORE FREQUENT INTERVALS,  WITH  POWER  IN  THE  SURVIVING
SPOUSE  TO  APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC PORTION (EXER-
CISABLE IN FAVOR OF SUCH SURVIVING SPOUSE, OR  OF  THE  ESTATE  OF  SUCH
SURVIVING SPOUSE, OR IN FAVOR OF EITHER, WHETHER OR NOT IN EACH CASE THE
POWER IS EXERCISABLE IN FAVOR OF OTHERS), AND WITH NO POWER IN ANY OTHER
PERSON TO APPOINT ANY PART OF THE INTEREST, OR SUCH SPECIFIC PORTION, TO
ANY PERSON OTHER THAN THE SURVIVING SPOUSE--
  (A)  THE  INTEREST  OR  SUCH  PORTION  THEREOF  SO  PASSING SHALL, FOR
PURPOSES OF SUBSECTION (A), BE CONSIDERED AS PASSING  TO  THE  SURVIVING
SPOUSE, AND
  (B)  NO  PART  OF THE INTEREST SO PASSING SHALL, FOR PURPOSES OF PARA-
GRAPH (1)(A), BE CONSIDERED AS PASSING TO  ANY  PERSON  OTHER  THAN  THE
SURVIVING SPOUSE.

S. 6359--D                         250                        A. 8559--D

  THIS  PARAGRAPH SHALL APPLY ONLY IF SUCH POWER IN THE SURVIVING SPOUSE
TO APPOINT THE ENTIRE INTEREST, OR SUCH SPECIFIC PORTION THEREOF, WHETH-
ER EXERCISABLE BY WILL OR DURING LIFE, IS  EXERCISABLE  BY  SUCH  SPOUSE
ALONE AND IN ALL EVENTS.
  (6)  LIFE  INSURANCE  OR ANNUITY PAYMENTS WITH POWER OF APPOINTMENT IN
SURVIVING SPOUSE.--IN THE CASE OF AN INTEREST IN PROPERTY  PASSING  FROM
THE  DECEDENT  CONSISTING OF PROCEEDS UNDER A LIFE INSURANCE, ENDOWMENT,
OR ANNUITY CONTRACT, IF UNDER THE TERMS OF THE  CONTRACT  SUCH  PROCEEDS
ARE  PAYABLE  IN  INSTALLMENTS  OR ARE HELD BY THE INSURER SUBJECT TO AN
AGREEMENT TO PAY INTEREST THEREON (WHETHER THE PROCEEDS, ON  THE  TERMI-
NATION  OF ANY INTEREST PAYMENTS, ARE PAYABLE IN A LUMP SUM OR IN ANNUAL
OR  MORE  FREQUENT  INSTALLMENTS),  AND  SUCH  INSTALLMENT  OR  INTEREST
PAYMENTS  ARE PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, COMMENCING
NOT LATER THAN 13 MONTHS AFTER THE DECEDENT'S DEATH, AND ALL AMOUNTS, OR
A SPECIFIC PORTION OF ALL SUCH AMOUNTS, PAYABLE DURING THE LIFE  OF  THE
SURVIVING  SPOUSE  ARE  PAYABLE ONLY TO SUCH SPOUSE, AND SUCH SPOUSE HAS
THE POWER TO APPOINT ALL AMOUNTS,  OR  SUCH  SPECIFIC  PORTION,  PAYABLE
UNDER  SUCH  CONTRACT (EXERCISABLE IN FAVOR OF SUCH SURVIVING SPOUSE, OR
OF THE ESTATE OF SUCH SURVIVING SPOUSE, OR IN FAVOR OF  EITHER,  WHETHER
OR  NOT  IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF OTHERS), WITH
NO POWER IN ANY OTHER PERSON TO APPOINT SUCH AMOUNTS TO ANY PERSON OTHER
THAN THE SURVIVING SPOUSE--
  (A) SUCH AMOUNTS SHALL, FOR PURPOSES OF SUBSECTION (A), BE  CONSIDERED
AS PASSING TO THE SURVIVING SPOUSE, AND
  (B)  NO  PART OF SUCH AMOUNTS SHALL, FOR PURPOSES OF PARAGRAPH (1)(A),
BE CONSIDERED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
  THIS PARAGRAPH SHALL APPLY ONLY IF, UNDER THE TERMS OF  THE  CONTRACT,
SUCH  POWER  IN  THE  SURVIVING  SPOUSE TO APPOINT SUCH AMOUNTS, WHETHER
EXERCISABLE BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE  ALONE
AND IN ALL EVENTS.
  (7) ELECTION WITH RESPECT TO LIFE ESTATE FOR SURVIVING SPOUSE.--
  (A)  IN GENERAL.--IN THE CASE OF QUALIFIED TERMINABLE INTEREST PROPER-
TY--
  (I) FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED  AS
PASSING TO THE SURVIVING SPOUSE, AND
  (II)  FOR PURPOSES OF PARAGRAPH (1)(A), NO PART OF SUCH PROPERTY SHALL
BE TREATED AS PASSING TO ANY PERSON OTHER THAN THE SURVIVING SPOUSE.
  (B) QUALIFIED TERMINABLE INTEREST PROPERTY DEFINED.--FOR  PURPOSES  OF
THIS PARAGRAPH--
  (I)  IN  GENERAL.--THE  TERM  "QUALIFIED TERMINABLE INTEREST PROPERTY"
MEANS PROPERTY--
  (I) WHICH PASSES FROM THE DECEDENT,
  (II) IN WHICH THE SURVIVING SPOUSE HAS A  QUALIFYING  INCOME  INTEREST
FOR LIFE, AND
  (III) TO WHICH AN ELECTION UNDER THIS PARAGRAPH APPLIES.
  (II)  QUALIFYING INCOME INTEREST FOR LIFE.--THE SURVIVING SPOUSE HAS A
QUALIFYING INCOME INTEREST FOR LIFE IF--
  (I) THE SURVIVING SPOUSE IS ENTITLED TO ALL THE INCOME FROM THE  PROP-
ERTY,  PAYABLE ANNUALLY OR AT MORE FREQUENT INTERVALS, OR HAS A USUFRUCT
INTEREST FOR LIFE IN THE PROPERTY, AND
  (II) NO PERSON HAS A POWER TO APPOINT ANY PART OF THE PROPERTY TO  ANY
PERSON OTHER THAN THE SURVIVING SPOUSE.
  SUBCLAUSE (II) SHALL NOT APPLY TO A POWER EXERCISABLE ONLY AT OR AFTER
THE  DEATH  OF  THE  SURVIVING  SPOUSE.  TO THE EXTENT PROVIDED IN REGU-
LATIONS, AN ANNUITY SHALL BE TREATED IN A MANNER SIMILAR  TO  AN  INCOME

S. 6359--D                         251                        A. 8559--D

INTEREST  IN PROPERTY (REGARDLESS OF WHETHER THE PROPERTY FROM WHICH THE
ANNUITY IS PAYABLE CAN BE SEPARATELY IDENTIFIED).
  (III)   PROPERTY   INCLUDES  INTEREST  THEREIN.--THE  TERM  "PROPERTY"
INCLUDES AN INTEREST IN PROPERTY.
  (IV)  SPECIFIC  PORTION  TREATED  AS  SEPARATE  PROPERTY.--A  SPECIFIC
PORTION OF PROPERTY SHALL BE TREATED AS SEPARATE PROPERTY.
  (V)  ELECTION.--AN  ELECTION  UNDER THIS PARAGRAPH WITH RESPECT TO ANY
PROPERTY SHALL BE MADE BY THE EXECUTOR ON THE RETURN OF TAX  IMPOSED  BY
SECTION 2001. SUCH AN ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
  (C)  TREATMENT  OF  SURVIVOR  ANNUITIES.--IN  THE  CASE  OF AN ANNUITY
INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER SECTION 2039 (OR,  IN
THE  CASE OF AN INTEREST IN AN ANNUITY ARISING UNDER THE COMMUNITY PROP-
ERTY LAWS OF A STATE, INCLUDED IN THE GROSS ESTATE OF THE DECEDENT UNDER
SECTION 2033) WHERE ONLY THE SURVIVING SPOUSE HAS THE RIGHT  TO  RECEIVE
PAYMENTS BEFORE THE DEATH OF SUCH SURVIVING SPOUSE--
  (I) THE INTEREST OF SUCH SURVIVING SPOUSE SHALL BE TREATED AS A QUALI-
FYING INCOME INTEREST FOR LIFE, AND
  (II)  THE  EXECUTOR  SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER
THIS SUBSECTION WITH RESPECT TO SUCH ANNUITY UNLESS THE EXECUTOR  OTHER-
WISE ELECTS ON THE RETURN OF TAX IMPOSED BY SECTION 2001.
  AN ELECTION UNDER CLAUSE (II), ONCE MADE, SHALL BE IRREVOCABLE.
  (8) SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS.--
  (A)  IN  GENERAL.--IF THE SURVIVING SPOUSE OF THE DECEDENT IS THE ONLY
BENEFICIARY OF A QUALIFIED CHARITABLE REMAINDER TRUST WHO IS NOT A CHAR-
ITABLE BENEFICIARY NOR AN ESOP  BENEFICIARY,  PARAGRAPH  (1)  SHALL  NOT
APPLY  TO ANY INTEREST IN SUCH TRUST WHICH PASSES OR HAS PASSED FROM THE
DECEDENT TO SUCH SURVIVING SPOUSE.
  (B) DEFINITIONS.--FOR PURPOSES OF SUBPARAGRAPH (A)--
  (I) CHARITABLE BENEFICIARY.--THE TERM "CHARITABLE  BENEFICIARY"  MEANS
ANY BENEFICIARY WHICH IS AN ORGANIZATION DESCRIBED IN SECTION 170(C).
  (II)  ESOP BENEFICIARY.--THE TERM "ESOP BENEFICIARY" MEANS ANY BENEFI-
CIARY WHICH IS AN EMPLOYEE STOCK OWNERSHIP PLAN (AS DEFINED  IN  SECTION
4975(E)(7))  THAT HOLDS A REMAINDER INTEREST IN QUALIFIED EMPLOYER SECU-
RITIES (AS DEFINED IN SECTION 664(G)(4)) TO BE TRANSFERRED TO SUCH  PLAN
IN A QUALIFIED GRATUITOUS TRANSFER (AS DEFINED IN SECTION 664(G)(1)).
  (III) QUALIFIED CHARITABLE REMAINDER TRUST.--THE TERM "QUALIFIED CHAR-
ITABLE  REMAINDER TRUST" MEANS A CHARITABLE REMAINDER ANNUITY TRUST OR A
CHARITABLE REMAINDER UNITRUST (DESCRIBED IN SECTION 664).
  (9) DENIAL OF DOUBLE DEDUCTION.--NOTHING IN THIS SECTION OR ANY  OTHER
PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-
ERTY  TO  BE  DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE WITH RESPECT TO
THE SAME DECEDENT.
  (10) SPECIFIC PORTION.--FOR  PURPOSES  OF  PARAGRAPHS  (5),  (6),  AND
(7)(B)(IV),  THE  TERM "SPECIFIC PORTION" ONLY INCLUDES A PORTION DETER-
MINED ON A FRACTIONAL OR PERCENTAGE BASIS.
  (C) DEFINITION.--FOR PURPOSES OF THIS SECTION, AN INTEREST IN PROPERTY
SHALL BE CONSIDERED AS PASSING FROM THE DECEDENT TO ANY  PERSON  IF  AND
ONLY IF--
  (1) SUCH INTEREST IS BEQUEATHED OR DEVISED TO SUCH PERSON BY THE DECE-
DENT;
  (2) SUCH INTEREST IS INHERITED BY SUCH PERSON FROM THE DECEDENT;
  (3)  SUCH  INTEREST  IS  THE  DOWER  OR CURTESY INTEREST (OR STATUTORY
INTEREST IN LIEU THEREOF) OF SUCH PERSON  AS  SURVIVING  SPOUSE  OF  THE
DECEDENT;
  (4)  SUCH INTEREST HAS BEEN TRANSFERRED TO SUCH PERSON BY THE DECEDENT
AT ANY TIME;

S. 6359--D                         252                        A. 8559--D

  (5) SUCH INTEREST WAS, AT THE TIME OF THE DECEDENT'S  DEATH,  HELD  BY
SUCH  PERSON AND THE DECEDENT (OR BY THEM AND ANY OTHER PERSON) IN JOINT
OWNERSHIP WITH RIGHT OF SURVIVORSHIP;
  (6)  THE DECEDENT HAD A POWER (EITHER ALONE OR IN CONJUNCTION WITH ANY
PERSON) TO APPOINT SUCH INTEREST AND IF HE  APPOINTS  OR  HAS  APPOINTED
SUCH  INTEREST  TO SUCH PERSON, OR IF SUCH PERSON TAKES SUCH INTEREST IN
DEFAULT ON THE RELEASE OR NONEXERCISE OF SUCH POWER; OR
  (7) SUCH INTEREST CONSISTS OF PROCEEDS OF INSURANCE ON THE LIFE OF THE
DECEDENT RECEIVABLE BY SUCH PERSON.
  EXCEPT AS PROVIDED IN PARAGRAPH (5) OR (6) OF SUBSECTION (B), WHERE AT
THE TIME OF THE DECEDENT'S DEATH IT IS NOT  POSSIBLE  TO  ASCERTAIN  THE
PARTICULAR  PERSON  OR  PERSONS TO WHOM AN INTEREST IN PROPERTY MAY PASS
FROM THE DECEDENT, SUCH INTEREST SHALL, FOR  PURPOSES  OF  SUBPARAGRAPHS
(A)  AND  (B)  OF  SUBSECTION  (B)(1), BE CONSIDERED AS PASSING FROM THE
DECEDENT TO A PERSON OTHER THAN THE SURVIVING SPOUSE.
  S 2103. DEFINITION OF GROSS ESTATE. FOR THE PURPOSE OF THE TAX IMPOSED
BY SECTION 2101, THE VALUE OF THE GROSS ESTATE OF EVERY DECEDENT NONRES-
IDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE THAT PART OF HIS GROSS
ESTATE (DETERMINED AS PROVIDED IN SECTION 2031) WHICH AT THE TIME OF HIS
DEATH IS SITUATED IN THE UNITED STATES.
  S 2104. PROPERTY WITHIN THE  UNITED  STATES.  (A)  STOCK  IN  CORPORA-
TION.--FOR PURPOSES OF THIS SUBCHAPTER SHARES OF STOCK OWNED AND HELD BY
A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES SHALL BE DEEMED PROPER-
TY WITHIN THE UNITED STATES ONLY IF ISSUED BY A DOMESTIC CORPORATION.
  (B)  REVOCABLE  TRANSFERS  AND TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR
PURPOSES OF THIS SUBCHAPTER, ANY PROPERTY OF WHICH THE DECEDENT HAS MADE
A TRANSFER, BY TRUST OR OTHERWISE, WITHIN THE MEANING OF  SECTIONS  2035
TO 2038, INCLUSIVE, SHALL BE DEEMED TO BE SITUATED IN THE UNITED STATES,
IF  SO SITUATED EITHER AT THE TIME OF THE TRANSFER OR AT THE TIME OF THE
DECEDENT'S DEATH.
  (C) DEBT OBLIGATIONS.--FOR PURPOSES OF  THIS  SUBCHAPTER,  DEBT  OBLI-
GATIONS OF-
  (1) A UNITED STATES PERSON, OR
  (2)  THE  UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF,
OR THE DISTRICT OF COLUMBIA,
  OWNED AND HELD BY A NONRESIDENT NOT A CITIZEN  OF  THE  UNITED  STATES
SHALL  BE  DEEMED  PROPERTY  WITHIN  THE  UNITED STATES. WITH RESPECT TO
ESTATES OF DECEDENTS DYING AFTER DECEMBER  31,  1969,  DEPOSITS  WITH  A
DOMESTIC  BRANCH  OF A FOREIGN CORPORATION, IF SUCH BRANCH IS ENGAGED IN
THE COMMERCIAL BANKING BUSINESS, SHALL, FOR PURPOSES OF THIS SUBCHAPTER,
BE DEEMED PROPERTY WITHIN THE UNITED STATES. THIS SUBSECTION  SHALL  NOT
APPLY TO A DEBT OBLIGATION TO WHICH SECTION 2105(B) APPLIES.
  S 2105. PROPERTY WITHOUT THE UNITED STATES. (A) PROCEEDS OF LIFE INSU-
RANCE.--FOR PURPOSES OF THIS SUBCHAPTER, THE AMOUNT RECEIVABLE AS INSUR-
ANCE  ON  THE  LIFE  OF A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES
SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES.
  (B) BANK DEPOSITS AND CERTAIN OTHER DEBT OBLIGATIONS.--FOR PURPOSES OF
THIS SUBCHAPTER, THE FOLLOWING SHALL NOT BE DEEMED PROPERTY  WITHIN  THE
UNITED STATES--
  (1)  AMOUNTS  DESCRIBED  IN SECTION 871(I)(3), IF ANY INTEREST THEREON
WOULD NOT BE SUBJECT TO TAX BY REASON OF  SECTION  871(I)(1)  WERE  SUCH
INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS DEATH,
  (2) DEPOSITS WITH A FOREIGN BRANCH OF A DOMESTIC CORPORATION OR DOMES-
TIC  PARTNERSHIP,  IF  SUCH  BRANCH IS ENGAGED IN THE COMMERCIAL BANKING
BUSINESS,

S. 6359--D                         253                        A. 8559--D

  (3) DEBT OBLIGATIONS, IF, WITHOUT REGARD TO WHETHER A STATEMENT  MEET-
ING  THE REQUIREMENTS OF SECTION 871(H)(5) HAS BEEN RECEIVED, ANY INTER-
EST THEREON WOULD BE ELIGIBLE FOR THE EXEMPTION FROM TAX  UNDER  SECTION
871(H)(1) WERE SUCH INTEREST RECEIVED BY THE DECEDENT AT THE TIME OF HIS
DEATH, AND
  (4)  OBLIGATIONS WHICH WOULD BE ORIGINAL ISSUE DISCOUNT OBLIGATIONS AS
DEFINED IN SECTION 871(G)(1) BUT FOR SUBPARAGRAPH (B)(I) THEREOF, IF ANY
INTEREST THEREON (WERE SUCH INTEREST RECEIVED BY  THE  DECEDENT  AT  THE
TIME  OF  HIS DEATH) WOULD NOT BE EFFECTIVELY CONNECTED WITH THE CONDUCT
OF A TRADE OR BUSINESS WITHIN THE UNITED STATES.
  NOTWITHSTANDING THE PRECEDING SENTENCE, IF ANY PORTION OF THE INTEREST
ON AN OBLIGATION REFERRED TO IN PARAGRAPH (3) WOULD NOT BE ELIGIBLE  FOR
THE  EXEMPTION  REFERRED  TO  IN  PARAGRAPH  (3)  BY  REASON  OF SECTION
871(H)(4) IF THE INTEREST WERE RECEIVED BY THE DECEDENT AT THE  TIME  OF
HIS  DEATH,  THEN  AN  APPROPRIATE  PORTION  (AS  DETERMINED IN A MANNER
PRESCRIBED BY THE SECRETARY) OF THE VALUE (AS DETERMINED FOR PURPOSES OF
THIS CHAPTER) OF SUCH DEBT OBLIGATION SHALL BE  DEEMED  PROPERTY  WITHIN
THE UNITED STATES.
  (C)  WORKS  OF  ART  ON  LOAN  FOR  EXHIBITION.--FOR  PURPOSES OF THIS
SUBCHAPTER, WORKS OF ART OWNED BY A NONRESIDENT NOT  A  CITIZEN  OF  THE
UNITED  STATES  SHALL NOT BE DEEMED PROPERTY WITHIN THE UNITED STATES IF
SUCH WORKS OF ART ARE--
  (1) IMPORTED INTO THE UNITED STATES SOLELY FOR EXHIBITION PURPOSES,
  (2) LOANED FOR SUCH PURPOSES, TO A PUBLIC GALLERY OR MUSEUM,  NO  PART
OF THE NET EARNINGS OF WHICH INURES TO THE BENEFIT OF ANY PRIVATE STOCK-
HOLDER OR INDIVIDUAL, AND
  (3)  AT  THE TIME OF THE DEATH OF THE OWNER, ON EXHIBITION, OR ENROUTE
TO OR FROM EXHIBITION, IN SUCH A PUBLIC GALLERY OR MUSEUM.
  S 2503. (A) GENERAL DEFINITION - THE TERM "TAXABLE  GIFTS"  MEANS  THE
TOTAL  AMOUNT  OF  GIFTS  MADE DURING THE CALENDAR YEAR, LESS DEDUCTIONS
PROVIDED IN SUBCHAPTER C (SECTION 2522 AND FOLLOWING).
  (B) EXCLUSIONS FROM GIFTS. (1)  IN  GENERAL.--IN  THE  CASE  OF  GIFTS
(OTHER THAN GIFTS OF FUTURE INTERESTS IN PROPERTY) MADE TO ANY PERSON BY
THE  DONOR  DURING THE CALENDAR YEAR, THE FIRST $10,000 OF SUCH GIFTS TO
SUCH PERSON SHALL NOT, FOR PURPOSES OF SUBSECTION (A),  BE  INCLUDED  IN
THE  TOTAL AMOUNT OF GIFTS MADE DURING SUCH YEAR. WHERE THERE HAS BEEN A
TRANSFER TO ANY PERSON OF A PRESENT INTEREST IN PROPERTY, THE  POSSIBIL-
ITY  THAT  SUCH  INTEREST  MAY  BE DIMINISHED BY THE EXERCISE OF A POWER
SHALL BE DISREGARDED IN APPLYING THIS SUBSECTION, IF  NO  PART  OF  SUCH
INTEREST WILL AT ANY TIME PASS TO ANY OTHER PERSON.
  (2)  INFLATION  ADJUSTMENT.--IN  THE  CASE OF GIFTS MADE IN A CALENDAR
YEAR AFTER 1998, THE $10,000 AMOUNT CONTAINED IN PARAGRAPH (1) SHALL  BE
INCREASED BY AN AMOUNT EQUAL TO--
  (A) $10,000, MULTIPLIED BY
  (B) THE COST-OF-LIVING ADJUSTMENT DETERMINED UNDER SECTION 1(F)(3) FOR
SUCH  CALENDAR  YEAR  BY SUBSTITUTING "CALENDAR YEAR 1997" FOR "CALENDAR
YEAR 1992" IN SUBPARAGRAPH (B) THEREOF.
  IF ANY AMOUNT AS ADJUSTED UNDER THE PRECEDING SENTENCE IS NOT A MULTI-
PLE OF $1,000, SUCH AMOUNT SHALL BE ROUNDED TO THE NEXT LOWEST  MULTIPLE
OF $1,000.
  (C)  TRANSFER  FOR  THE  BENEFIT  OF MINOR. -- NO PART OF A GIFT TO AN
INDIVIDUAL WHO HAS NOT ATTAINED THE AGE OF 21 YEARS ON THE DATE OF  SUCH
TRANSFER SHALL BE CONSIDERED A GIFT OF A FUTURE INTEREST IN PROPERTY FOR
PURPOSES OF SUBSECTION (B) IF THE PROPERTY AND THE INCOME THEREFROM-
  (1)  MAY  BE  EXPENDED BY, OR FOR THE BENEFIT OF, THE DONEE BEFORE HIS
ATTAINING THE AGE OF 21 YEARS, AND

S. 6359--D                         254                        A. 8559--D

  (2) WILL TO THE EXTENT NOT SO EXPENDED-
  (A) PASS TO THE DONEE ON HIS ATTAINING THE AGE OF 21 YEARS, AND
  (B)  IN THE EVENT THE DONEE DIES BEFORE ATTAINING THE AGE OF 21 YEARS,
BE PAYABLE TO THE ESTATE OF THE DONEE OR  AS  HE  MAY  APPOINT  UNDER  A
GENERAL POWER OF APPOINTMENT AS DEFINED IN SECTION 2514(C).
  {(D)  REPEALED.  PUB. L. 97-34, TITLE III, S 311(H)(5), AUG. 13, 1981,
95 STAT.  282}
  (E) EXCLUSION  FOR  CERTAIN  TRANSFERS  FOR  EDUCATIONAL  EXPENSES  OR
MEDICAL  EXPENSES.  (1)  IN GENERAL. ANY QUALIFIED TRANSFER SHALL NOT BE
TREATED AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
  (2) QUALIFIED TRANSFER. FOR PURPOSES  OF  THIS  SUBSECTION,  THE  TERM
"QUALIFIED TRANSFER" MEANS ANY AMOUNT PAID ON BEHALF OF AN INDIVIDUAL-
  (A)  AS  TUITION  TO  AN EDUCATIONAL ORGANIZATION DESCRIBED IN SECTION
170(B)(1)(A)(II) FOR THE EDUCATION OR TRAINING OF SUCH INDIVIDUAL, OR
  (B) TO ANY PERSON WHO PROVIDES MEDICAL CARE  (AS  DEFINED  IN  SECTION
213(D))  WITH  RESPECT  TO  SUCH  INDIVIDUAL AS PAYMENT FOR SUCH MEDICAL
CARE.
  (F) WAIVER OF CERTAIN PENSION RIGHTS. IF ANY INDIVIDUAL WAIVES, BEFORE
THE DEATH OF A PARTICIPANT, ANY SURVIVOR BENEFIT, OR RIGHT TO SUCH BENE-
FIT, UNDER SECTION 401(A)(11) OR 417, SUCH WAIVER SHALL NOT  BE  TREATED
AS A TRANSFER OF PROPERTY BY GIFT FOR PURPOSES OF THIS CHAPTER.
  (G)  TREATMENT  OF  CERTAIN  LOANS  OF  ARTWORKS.  (1) IN GENERAL. FOR
PURPOSES OF THIS SUBTITLE, ANY LOAN OF A QUALIFIED WORK OF ART SHALL NOT
BE TREATED AS A TRANSFER (AND THE VALUE OF SUCH QUALIFIED  WORK  OF  ART
SHALL BE DETERMINED AS IF SUCH LOAN HAD NOT BEEN MADE) IF-
  (A) SUCH LOAN IS TO AN ORGANIZATION DESCRIBED IN SECTION 501(C)(3) AND
EXEMPT  FROM TAX UNDER SECTION 501(C) (OTHER THAN A PRIVATE FOUNDATION),
AND
  (B) THE USE OF SUCH WORK  BY  SUCH  ORGANIZATION  IS  RELATED  TO  THE
PURPOSE  OR  FUNCTION  CONSTITUTING  THE  BASIS  FOR ITS EXEMPTION UNDER
SECTION 501.
  (2) DEFINITIONS. FOR PURPOSES OF THIS SECTION-
  (A) QUALIFIED WORK OF ART. THE TERM "QUALIFIED WORK OF ART" MEANS  ANY
ARCHAEOLOGICAL, HISTORIC, OR CREATIVE TANGIBLE PERSONAL PROPERTY.
  (B)  PRIVATE FOUNDATION. THE TERM "PRIVATE FOUNDATION" HAS THE MEANING
GIVEN SUCH TERM BY SECTION 509, EXCEPT THAT SUCH TERM SHALL NOT  INCLUDE
ANY PRIVATE OPERATING FOUNDATION (AS DEFINED IN SECTION 4942(J)(3)).
  S  2511.  TRANSFERS  IN GENERAL. (A) SCOPE. SUBJECT TO THE LIMITATIONS
CONTAINED IN THIS CHAPTER, THE TAX IMPOSED BY SECTION 2501  SHALL  APPLY
WHETHER  THE  TRANSFER  IS  IN  TRUST  OR OTHERWISE, WHETHER THE GIFT IS
DIRECT OR INDIRECT, AND WHETHER THE PROPERTY IS REAL OR PERSONAL, TANGI-
BLE OR INTANGIBLE; BUT IN THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
UNITED STATES, SHALL APPLY TO A TRANSFER ONLY IF THE PROPERTY  IS  SITU-
ATED WITHIN THE UNITED STATES.
  (B)  INTANGIBLE PROPERTY. FOR PURPOSES OF THIS CHAPTER, IN THE CASE OF
A NONRESIDENT NOT A CITIZEN OF THE UNITED STATES WHO  IS  EXCEPTED  FROM
THE APPLICATION OF SECTION 2501(A)(2)-
  (1) SHARES OF STOCK ISSUED BY A DOMESTIC CORPORATION, AND
  (2) DEBT OBLIGATIONS OF-
--(A) A UNITED STATES PERSON, OR
--(B)  THE  UNITED STATES, A STATE OR ANY POLITICAL SUBDIVISION THEREOF,
OR THE DISTRICT OF COLUMBIA,
--WHICH ARE OWNED AND HELD BY SUCH NONRESIDENT SHALL  BE  DEEMED  TO  BE
PROPERTY SITUATED WITHIN THE UNITED STATES.

S. 6359--D                         255                        A. 8559--D

  S  2512.  VALUATION OF GIFTS. (A) IF THE GIFT IS MADE IN PROPERTY, THE
VALUE THEREOF AT THE DATE OF THE GIFT SHALL BE CONSIDERED THE AMOUNT  OF
THE GIFT.
  (B)  WHERE  PROPERTY IS TRANSFERRED FOR LESS THAN AN ADEQUATE AND FULL
CONSIDERATION IN MONEY OR MONEY'S WORTH, THEN THE AMOUNT  BY  WHICH  THE
VALUE  OF  THE PROPERTY EXCEEDED THE VALUE OF THE CONSIDERATION SHALL BE
DEEMED A GIFT, AND SHALL BE INCLUDED IN COMPUTING THE  AMOUNT  OF  GIFTS
MADE DURING THE CALENDAR YEAR.
  S 2513. GIFT BY HUSBAND OR WIFE TO THIRD PARTY. (A) CONSIDERED AS MADE
ONE-HALF  BY  EACH.  (1)  IN  GENERAL.  A GIFT MADE BY ONE SPOUSE TO ANY
PERSON OTHER THAN HIS SPOUSE SHALL, FOR THE PURPOSES OF THIS CHAPTER, BE
CONSIDERED AS MADE ONE-HALF BY HIM AND ONE-HALF BY HIS SPOUSE, BUT  ONLY
IF  AT  THE TIME OF THE GIFT EACH SPOUSE IS A CITIZEN OR RESIDENT OF THE
UNITED STATES. THIS PARAGRAPH SHALL NOT APPLY WITH RESPECT TO A GIFT  BY
A SPOUSE OF AN INTEREST IN PROPERTY IF HE CREATES IN HIS SPOUSE A GENER-
AL POWER OF APPOINTMENT, AS DEFINED IN SECTION 2514(C), OVER SUCH INTER-
EST.  FOR PURPOSES OF THIS SECTION, AN INDIVIDUAL SHALL BE CONSIDERED AS
THE SPOUSE OF ANOTHER INDIVIDUAL ONLY IF HE IS MARRIED TO SUCH  INDIVID-
UAL AT THE TIME OF THE GIFT AND DOES NOT REMARRY DURING THE REMAINDER OF
THE CALENDAR YEAR.
  (2)  CONSENT  OF  BOTH SPOUSES. PARAGRAPH (1) SHALL APPLY ONLY IF BOTH
SPOUSES HAVE SIGNIFIED (UNDER THE REGULATIONS PROVIDED FOR IN SUBSECTION
(B)) THEIR CONSENT TO THE APPLICATION OF PARAGRAPH (1) IN  THE  CASE  OF
ALL  SUCH GIFTS MADE DURING THE CALENDAR YEAR BY EITHER WHILE MARRIED TO
THE OTHER.
  (B) MANNER AND TIME OF SIGNIFYING CONSENT. (1) MANNER. A CONSENT UNDER
THIS SECTION SHALL BE SIGNIFIED IN SUCH  MANNER  AS  IS  PROVIDED  UNDER
REGULATIONS PRESCRIBED BY THE SECRETARY.
  (2) TIME. SUCH CONSENT MAY BE SO SIGNIFIED AT ANY TIME AFTER THE CLOSE
OF  THE CALENDAR YEAR IN WHICH THE GIFT WAS MADE, SUBJECT TO THE FOLLOW-
ING LIMITATIONS-
--(A) THE CONSENT MAY NOT BE SIGNIFIED  AFTER  THE  15TH  DAY  OF  APRIL
FOLLOWING  THE CLOSE OF SUCH YEAR, UNLESS BEFORE SUCH 15TH DAY NO RETURN
HAS BEEN FILED FOR SUCH YEAR BY EITHER SPOUSE, IN WHICH CASE THE CONSENT
MAY NOT BE SIGNIFIED AFTER A RETURN FOR SUCH YEAR  IS  FILED  BY  EITHER
SPOUSE.
--(B) THE CONSENT MAY NOT BE SIGNIFIED AFTER A NOTICE OF DEFICIENCY WITH
RESPECT  TO  THE  TAX  FOR  SUCH  YEAR HAS BEEN SENT TO EITHER SPOUSE IN
ACCORDANCE WITH SECTION 6212(A).
  (C) REVOCATION OF CONSENT. REVOCATION OF A CONSENT  PREVIOUSLY  SIGNI-
FIED  SHALL  BE  MADE  IN  SUCH  MANNER AS IN PROVIDED UNDER REGULATIONS
PRESCRIBED BY THE SECRETARY, BUT THE RIGHT TO REVOKE A CONSENT PREVIOUS-
LY SIGNIFIED WITH RESPECT TO A CALENDAR YEAR-
  (1) SHALL NOT EXIST AFTER THE 15TH DAY OF APRIL FOLLOWING THE CLOSE OF
SUCH YEAR IF THE CONSENT WAS SIGNIFIED ON OR BEFORE SUCH 15TH DAY; AND
  (2) SHALL NOT EXIST IF THE CONSENT WAS NOT SIGNIFIED UNTIL AFTER  SUCH
15TH DAY.
  (D)  JOINT  AND  SEVERAL LIABILITY FOR TAX. IF THE CONSENT REQUIRED BY
SUBSECTION (A)(2) IS SIGNIFIED WITH RESPECT TO A GIFT MADE IN ANY CALEN-
DAR YEAR, THE LIABILITY WITH RESPECT TO THE ENTIRE TAX IMPOSED  BY  THIS
CHAPTER OF EACH SPOUSE FOR SUCH YEAR SHALL BE JOINT AND SEVERAL.
  S 2514. POWERS OF APPOINTMENT. (A) POWERS CREATED ON OR BEFORE OCTOBER
21,  1942.  AN  EXERCISE OF A GENERAL POWER OF APPOINTMENT CREATED ON OR
BEFORE OCTOBER 21, 1942, SHALL BE DEEMED A TRANSFER OF PROPERTY  BY  THE
INDIVIDUAL  POSSESSING  SUCH  POWER;  BUT THE FAILURE TO EXERCISE SUCH A
POWER OR THE COMPLETE RELEASE OF SUCH A POWER SHALL  NOT  BE  DEEMED  AN

S. 6359--D                         256                        A. 8559--D

EXERCISE THEREOF. IF A GENERAL POWER OF APPOINTMENT CREATED ON OR BEFORE
OCTOBER  21, 1942, HAS BEEN PARTIALLY RELEASED SO THAT IT IS NO LONGER A
GENERAL POWER OF APPOINTMENT, THE  SUBSEQUENT  EXERCISE  OF  SUCH  POWER
SHALL NOT BE DEEMED TO BE THE EXERCISE OF A GENERAL POWER OF APPOINTMENT
IF-
  (1) SUCH PARTIAL RELEASE OCCURRED BEFORE NOVEMBER 1, 1951, OR
  (2)  THE  DONEE  OF SUCH POWER WAS UNDER A LEGAL DISABILITY TO RELEASE
SUCH POWER ON OCTOBER 21, 1942, AND SUCH PARTIAL  RELEASE  OCCURRED  NOT
LATER THAN SIX MONTHS AFTER THE TERMINATION OF SUCH LEGAL DISABILITY.
  (B)  POWERS CREATED AFTER OCTOBER 21, 1942. THE EXERCISE OR RELEASE OF
A GENERAL POWER OF APPOINTMENT CREATED AFTER OCTOBER 21, 1942, SHALL  BE
DEEMED A TRANSFER OF PROPERTY BY THE INDIVIDUAL POSSESSING SUCH POWER.
  (C)  DEFINITION  OF GENERAL POWER OF APPOINTMENT. FOR PURPOSES OF THIS
SECTION, THE TERM "GENERAL POWER OF APPOINTMENT" MEANS A POWER WHICH  IS
EXERCISABLE  IN  FAVOR OF THE INDIVIDUAL POSSESSING THE POWER (HEREAFTER
IN THIS SUBSECTION REFERRED TO AS  THE  "POSSESSOR"),  HIS  ESTATE,  HIS
CREDITORS, OR THE CREDITORS OF HIS ESTATE; EXCEPT THAT-
  (1)  A POWER TO CONSUME, INVADE, OR APPROPRIATE PROPERTY FOR THE BENE-
FIT OF THE POSSESSOR WHICH  IS  LIMITED  BY  AN  ASCERTAINABLE  STANDARD
RELATING  TO  THE  HEALTH,  EDUCATION,  SUPPORT,  OR  MAINTENANCE OF THE
POSSESSOR SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (2) A POWER OF APPOINTMENT CREATED ON  OR  BEFORE  OCTOBER  21,  1942,
WHICH  IS  EXERCISABLE BY THE POSSESSOR ONLY IN CONJUNCTION WITH ANOTHER
PERSON SHALL NOT BE DEEMED A GENERAL POWER OF APPOINTMENT.
  (3) IN THE CASE OF A POWER OF APPOINTMENT CREATED  AFTER  OCTOBER  21,
1942,  WHICH  IS  EXERCISABLE  BY THE POSSESSOR ONLY IN CONJUNCTION WITH
ANOTHER PERSON-
--(A) IF THE POWER  IS  NOT  EXERCISABLE  BY  THE  POSSESSOR  EXCEPT  IN
CONJUNCTION WITH THE CREATOR OF THE POWER-SUCH POWER SHALL NOT BE DEEMED
A GENERAL POWER OF APPOINTMENT;
--(B)  IF  THE  POWER  IS  NOT  EXERCISABLE  BY  THE POSSESSOR EXCEPT IN
CONJUNCTION WITH A PERSON HAVING A SUBSTANTIAL INTEREST, IN THE PROPERTY
SUBJECT TO THE POWER, WHICH IS ADVERSE TO EXERCISE OF THE POWER IN FAVOR
OF THE POSSESSOR-SUCH POWER SHALL NOT  BE  DEEMED  A  GENERAL  POWER  OF
APPOINTMENT.  FOR  THE PURPOSES OF THIS SUBPARAGRAPH A PERSON WHO, AFTER
THE DEATH OF THE POSSESSOR, MAY BE POSSESSED OF A POWER  OF  APPOINTMENT
(WITH RESPECT TO THE PROPERTY SUBJECT TO THE POSSESSOR'S POWER) WHICH HE
MAY  EXERCISE  IN HIS OWN FAVOR SHALL BE DEEMED AS HAVING AN INTEREST IN
THE PROPERTY AND SUCH INTEREST SHALL BE DEEMED ADVERSE TO SUCH  EXERCISE
OF THE POSSESSOR'S POWER;
--(C)  IF (AFTER THE APPLICATION OF SUBPARAGRAPHS (A) AND (B)) THE POWER
IS A GENERAL POWER OF APPOINTMENT AND IS EXERCISABLE IN  FAVOR  OF  SUCH
OTHER  PERSON-SUCH  POWER SHALL BE DEEMED A GENERAL POWER OF APPOINTMENT
ONLY IN RESPECT OF A FRACTIONAL PART OF THE  PROPERTY  SUBJECT  TO  SUCH
POWER, SUCH PART TO BE DETERMINED BY DIVIDING THE VALUE OF SUCH PROPERTY
BY THE NUMBER OF SUCH PERSONS (INCLUDING THE POSSESSOR) IN FAVOR OF WHOM
SUCH POWER IS EXERCISABLE.
--FOR  PURPOSES OF SUBPARAGRAPHS (B) AND (C), A POWER SHALL BE DEEMED TO
BE EXERCISABLE IN FAVOR OF A PERSON IF IT IS  EXERCISABLE  IN  FAVOR  OF
SUCH PERSON, HIS ESTATE, HIS CREDITORS, OR THE CREDITORS OF HIS ESTATE.
  (D) CREATION OF ANOTHER POWER IN CERTAIN CASES. IF A POWER OF APPOINT-
MENT  CREATED  AFTER  OCTOBER 21, 1942, IS EXERCISED BY CREATING ANOTHER
POWER OF APPOINTMENT WHICH, UNDER  THE  APPLICABLE  LOCAL  LAW,  CAN  BE
VALIDLY  EXERCISED SO AS TO POSTPONE THE VESTING OF ANY ESTATE OR INTER-
EST IN THE PROPERTY WHICH WAS SUBJECT TO THE FIRST POWER, OR SUSPEND THE
ABSOLUTE OWNERSHIP OR POWER OF ALIENATION OF SUCH PROPERTY, FOR A PERIOD

S. 6359--D                         257                        A. 8559--D

ASCERTAINABLE WITHOUT REGARD TO THE DATE OF THE CREATION  OF  THE  FIRST
POWER,  SUCH  EXERCISE  OF  THE  FIRST POWER SHALL, TO THE EXTENT OF THE
PROPERTY SUBJECT TO THE SECOND POWER, BE DEEMED A TRANSFER  OF  PROPERTY
BY THE INDIVIDUAL POSSESSING SUCH POWER.
  (E)  LAPSE OF POWER. THE LAPSE OF A POWER OF APPOINTMENT CREATED AFTER
OCTOBER 21, 1942, DURING THE LIFE OF THE INDIVIDUAL POSSESSING THE POWER
SHALL BE CONSIDERED A RELEASE OF SUCH POWER. THE RULE OF  THE  PRECEDING
SENTENCE  SHALL  APPLY  WITH  RESPECT  TO THE LAPSE OF POWERS DURING ANY
CALENDAR YEAR ONLY TO THE EXTENT THAT THE PROPERTY WHICH COULD HAVE BEEN
APPOINTED BY EXERCISE OF SUCH LAPSED POWERS EXCEEDS IN VALUE THE GREATER
OF THE FOLLOWING AMOUNTS:
  (1) $5,000, OR
  (2) 5 PERCENT OF THE AGGREGATE VALUE OF THE ASSETS OUT  OF  WHICH,  OR
THE PROCEEDS OF WHICH, THE EXERCISE OF THE LAPSED POWERS COULD BE SATIS-
FIED.
  (F) DATE OF CREATION OF POWER. FOR PURPOSES OF THIS SECTION A POWER OF
APPOINTMENT  CREATED  BY  A WILL EXECUTED ON OR BEFORE OCTOBER 21, 1942,
SHALL BE CONSIDERED A POWER CREATED ON OR BEFORE SUCH DATE IF THE PERSON
EXECUTING SUCH WILL DIES BEFORE JULY 1, 1949, WITHOUT HAVING REPUBLISHED
SUCH WILL, BY CODICIL OR OTHERWISE, AFTER OCTOBER 21, 1942.
  S 2516. CERTAIN PROPERTY SETTLEMENTS. WHERE A HUSBAND AND  WIFE  ENTER
INTO  A  WRITTEN AGREEMENT RELATIVE TO THEIR MARITAL AND PROPERTY RIGHTS
AND DIVORCE OCCURS WITHIN THE 3-YEAR PERIOD BEGINNING ON THE DATE 1 YEAR
BEFORE SUCH AGREEMENT IS ENTERED INTO (WHETHER OR NOT SUCH AGREEMENT  IS
APPROVED  BY THE DIVORCE DECREE), ANY TRANSFERS OF PROPERTY OR INTERESTS
IN PROPERTY MADE PURSUANT TO SUCH AGREEMENT-
  (1) TO EITHER SPOUSE IN SETTLEMENT OF HIS OR HER MARITAL  OR  PROPERTY
RIGHTS, OR
  (2)  TO PROVIDE A REASONABLE ALLOWANCE FOR THE SUPPORT OF ISSUE OF THE
MARRIAGE DURING MINORITY,
  --SHALL BE DEEMED TO BE TRANSFERS MADE FOR A FULL AND ADEQUATE CONSID-
ERATION IN MONEY OR MONEY'S WORTH.
  S 2518. DISCLAIMERS. (A) GENERAL RULE. - FOR PURPOSES OF  THIS  SUBTI-
TLE, IF A PERSON MAKES A QUALIFIED DISCLAIMER WITH RESPECT TO ANY INTER-
EST IN PROPERTY, THIS SUBTITLE SHALL APPLY WITH RESPECT TO SUCH INTEREST
AS IF THE INTEREST HAD NEVER BEEN TRANSFERRED TO SUCH PERSON.
  (B)  QUALIFIED  DISCLAIMER  DEFINED. - FOR PURPOSES OF SUBSECTION (A),
THE TERM "QUALIFIED DISCLAIMER" MEANS  AN  IRREVOCABLE  AND  UNQUALIFIED
REFUSAL BY A PERSON TO ACCEPT AN INTEREST IN PROPERTY BUT ONLY IF -
  (1) SUCH REFUSAL IS IN WRITING,
  (2)  SUCH  WRITING  IS RECEIVED BY THE TRANSFEROR OF THE INTEREST, HIS
LEGAL REPRESENTATIVE, OR THE HOLDER OF THE LEGAL TITLE TO  THE  PROPERTY
TO  WHICH THE INTEREST RELATES NOT LATER THAN THE DATE WHICH IS 9 MONTHS
AFTER THE LATER OF -
  (A) THE DATE ON WHICH THE  TRANSFER  CREATING  THE  INTEREST  IN  SUCH
PERSON IS MADE, OR
  (B) THE DAY ON WHICH SUCH PERSON ATTAINS AGE 21,
  (3)  SUCH PERSON HAS NOT ACCEPTED THE INTEREST OR ANY OF ITS BENEFITS,
AND
  (4) AS A RESULT OF SUCH  REFUSAL,  THE  INTEREST  PASSES  WITHOUT  ANY
DIRECTION  ON  THE  PART  OF THE PERSON MAKING THE DISCLAIMER AND PASSES
EITHER -
  (A) TO THE SPOUSE OF THE DECEDENT, OR
  (B) TO A PERSON OTHER THAN THE PERSON MAKING THE DISCLAIMER.
  (C) OTHER RULES. FOR PURPOSES OF SUBSECTION (A)-

S. 6359--D                         258                        A. 8559--D

  (1) DISCLAIMER OF UNDIVIDED PORTION OF  INTEREST.  A  DISCLAIMER  WITH
RESPECT  TO AN UNDIVIDED PORTION OF AN INTEREST WHICH MEETS THE REQUIRE-
MENTS OF  THE  PRECEDING  SENTENCE  SHALL  BE  TREATED  AS  A  QUALIFIED
DISCLAIMER OF SUCH PORTION OF THE INTEREST.
  (2)  POWERS.  A  POWER WITH RESPECT TO PROPERTY SHALL BE TREATED AS AN
INTEREST IN SUCH PROPERTY.
  (3) CERTAIN TRANSFERS TREATED AS DISCLAIMERS. A  WRITTEN  TRANSFER  OF
THE TRANSFEROR'S ENTIRE INTEREST IN THE PROPERTY-
  (A) WHICH MEETS REQUIREMENTS SIMILAR TO THE REQUIREMENTS OF PARAGRAPHS
(2) AND (3) OF SUBSECTION (B), AND
  (B)  WHICH IS TO A PERSON OR PERSONS WHO WOULD HAVE RECEIVED THE PROP-
ERTY HAD THE TRANSFEROR MADE A QUALIFIED DISCLAIMER (WITHIN THE  MEANING
OF SUBSECTION (B)),
  --SHALL BE TREATED AS A QUALIFIED DISCLAIMER.
  S 2519. DISPOSITIONS OF CERTAIN LIFE ESTATES. (A) GENERAL RULE
  --FOR  PURPOSES OF THIS CHAPTER AND CHAPTER 11, ANY DISPOSITION OF ALL
OR PART OF A QUALIFYING INCOME INTEREST FOR  LIFE  IN  ANY  PROPERTY  TO
WHICH  THIS SECTION APPLIES SHALL BE TREATED AS A TRANSFER OF ALL INTER-
ESTS IN SUCH PROPERTY OTHER THAN THE QUALIFYING INCOME INTEREST.
  (B) PROPERTY TO WHICH THIS SUBSECTION APPLIES. THIS SECTION APPLIES TO
ANY PROPERTY IF A DEDUCTION WAS ALLOWED WITH RESPECT TO THE TRANSFER  OF
SUCH PROPERTY TO THE DONOR-
  (1) UNDER SECTION 2056 BY REASON OF SUBSECTION (B)(7) THEREOF, OR
  (2) UNDER SECTION 2523 BY REASON OF SUBSECTION (F) THEREOF.
  (C) CROSS REFERENCE
--FOR  RIGHT OF RECOVERY FOR GIFT TAX IN THE CASE OF PROPERTY TREATED AS
TRANSFERRED UNDER THIS SECTION, SEE SECTION 2207A(B).
  S 2522. CHARITABLE AND SIMILAR GIFTS. (A) CITIZENS  OR  RESIDENTS.  IN
COMPUTING TAXABLE GIFTS FOR THE CALENDAR YEAR, THERE SHALL BE ALLOWED AS
A DEDUCTION IN THE CASE OF A CITIZEN OR RESIDENT THE AMOUNT OF ALL GIFTS
MADE DURING SUCH YEAR TO OR FOR THE USE OF-
  (1)  THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE-
OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
  (2) A CORPORATION, OR TRUST, OR COMMUNITY CHEST, FUND, OR  FOUNDATION,
ORGANIZED  AND OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIF-
IC, LITERARY, OR EDUCATIONAL PURPOSES, OR TO FOSTER NATIONAL OR INTERNA-
TIONAL AMATEUR SPORTS COMPETITION (BUT ONLY IF NO PART OF ITS ACTIVITIES
INVOLVE THE PROVISION OF ATHLETIC FACILITIES  OR  EQUIPMENT),  INCLUDING
THE  ENCOURAGEMENT  OF  ART AND THE PREVENTION OF CRUELTY TO CHILDREN OR
ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE  BENEFIT  OF
ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALIFIED FOR TAX
EXEMPTION  UNDER  SECTION 501(C)(3) BY REASON OF ATTEMPTING TO INFLUENCE
LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTERVENE IN (INCLUD-
ING  THE  PUBLISHING  OR  DISTRIBUTING  OF  STATEMENTS),  ANY  POLITICAL
CAMPAIGN  ON  BEHALF  OF  (OR IN OPPOSITION TO) ANY CANDIDATE FOR PUBLIC
OFFICE;
  (3) A FRATERNAL SOCIETY, ORDER, OR ASSOCIATION,  OPERATING  UNDER  THE
LODGE  SYSTEM,  BUT  ONLY  IF  SUCH GIFTS ARE TO BE USED EXCLUSIVELY FOR
RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY,  OR  EDUCATIONAL  PURPOSES,
INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND THE PREVENTION OF CRUELTY TO
CHILDREN OR ANIMALS;
  (4) POSTS OR ORGANIZATIONS OF WAR  VETERANS,  OR  AUXILIARY  UNITS  OR
SOCIETIES  OF  ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH POSTS, ORGANIZA-
TIONS, UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY  OF
ITS  POSSESSIONS,  AND  IF  NO PART OF THEIR NET EARNINGS INSURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.

S. 6359--D                         259                        A. 8559--D

  RULES SIMILAR TO THE RULES OF SECTION 501(J) SHALL APPLY FOR  PURPOSES
OF PARAGRAPH (2).
  (B)  NONRESIDENTS.  IN  THE CASE OF A NONRESIDENT NOT A CITIZEN OF THE
UNITED STATES, THERE SHALL BE ALLOWED AS A DEDUCTION THE AMOUNT  OF  ALL
GIFTS MADE DURING SUCH YEAR TO OR FOR THE USE OF-
  (1)  THE UNITED STATES, ANY STATE, OR ANY POLITICAL SUBDIVISION THERE-
OF, OR THE DISTRICT OF COLUMBIA, FOR EXCLUSIVELY PUBLIC PURPOSES;
  (2) A DOMESTIC CORPORATION  ORGANIZED  AND  OPERATED  EXCLUSIVELY  FOR
RELIGIOUS,  CHARITABLE,  SCIENTIFIC,  LITERARY, OR EDUCATIONAL PURPOSES,
INCLUDING THE ENCOURAGEMENT OF ART AND  THE  PREVENTION  OF  CRUELTY  TO
CHILDREN  OR ANIMALS, NO PART OF THE NET EARNINGS OF WHICH INURES TO THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL, WHICH IS NOT DISQUALI-
FIED FOR TAX EXEMPTION UNDER SECTION 501(C)(3) BY REASON  OF  ATTEMPTING
TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
PUBLIC OFFICE;
  (3) A TRUST, OR COMMUNITY CHEST, FUND, OR  FOUNDATION,  ORGANIZED  AND
OPERATED EXCLUSIVELY FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS, NO SUBSTANTIAL PART OF THE
ACTIVITIES OF WHICH IS CARRYING ON PROPAGANDA, OR OTHERWISE  ATTEMPTING,
TO  INFLUENCE  LEGISLATION, AND WHICH DOES NOT PARTICIPATE IN, OR INTER-
VENE IN (INCLUDING THE PUBLISHING OR DISTRIBUTING  OF  STATEMENTS),  ANY
POLITICAL  CAMPAIGN ON BEHALF OF (OR IN OPPOSITION TO) ANY CANDIDATE FOR
PUBLIC OFFICE; BUT ONLY IF SUCH GIFTS ARE TO BE USED WITHIN  THE  UNITED
STATES EXCLUSIVELY FOR SUCH PURPOSES;
  (4)  A  FRATERNAL  SOCIETY, ORDER, OR ASSOCIATION, OPERATING UNDER THE
LODGE SYSTEM, BUT ONLY IF SUCH GIFTS ARE TO BE USED  WITHIN  THE  UNITED
STATES  EXCLUSIVELY  FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR
EDUCATIONAL  PURPOSES,  INCLUDING  THE  ENCOURAGEMENT  OF  ART  AND  THE
PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS;
  (5)  POSTS  OR  ORGANIZATIONS  OF  WAR VETERANS, OR AUXILIARY UNITS OR
SOCIETIES OF ANY SUCH POSTS OR ORGANIZATIONS, IF SUCH  POSTS,  ORGANIZA-
TIONS,  UNITS, OR SOCIETIES ARE ORGANIZED IN THE UNITED STATES OR ANY OF
ITS POSSESSIONS, AND IF NO PART OF THEIR  NET  EARNINGS  INURES  TO  THE
BENEFIT OF ANY PRIVATE SHAREHOLDER OR INDIVIDUAL.
  (C)  DISALLOWANCE  OF  DEDUCTIONS  IN  CERTAIN CASES. (1) NO DEDUCTION
SHALL BE ALLOWED UNDER THIS SECTION FOR A GIFT TO OF 1 FOR THE USE OF AN
ORGANIZATION OR TRUST DESCRIBED IN SECTION 508(D) OR 4948(C)(4)  SUBJECT
TO THE CONDITIONS SPECIFIED IN SUCH SECTIONS.
  (2)  WHERE  A  DONOR  TRANSFERS AN INTEREST IN PROPERTY (OTHER THAN AN
INTEREST DESCRIBED IN SECTION 170(F)(3)(B)) TO A PERSON, OR FOR  A  USE,
DESCRIBED  IN SUBSECTION (A) OR (B) AND AN INTEREST IN THE SAME PROPERTY
IS RETAINED BY THE DONOR, OR IS TRANSFERRED OR HAS BEEN TRANSFERRED (FOR
LESS THAN AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S  WORTH)
FROM  THE  DONOR  TO A PERSON, OR FOR A USE, NOT DESCRIBED IN SUBSECTION
(A) OR (B), NO DEDUCTION SHALL BE ALLOWED UNDER  THIS  SECTION  FOR  THE
INTEREST  WHICH  IS,  OR  HAS BEEN TRANSFERRED TO THE PERSON, OR FOR THE
USE, DESCRIBED IN SUBSECTION (A) OR (B), UNLESS-
  (A) IN THE CASE OF A REMAINDER INTEREST, SUCH INTEREST IS IN  A  TRUST
WHICH  IS A CHARITABLE REMAINDER ANNUITY TRUST OR A CHARITABLE REMAINDER
UNITRUST (DESCRIBED IN SECTION 664) OR A POOLED INCOME  FUND  (DESCRIBED
IN SECTION 642(C)(5)), OR

S. 6359--D                         260                        A. 8559--D

  (B) IN THE CASE OF ANY OTHER INTEREST, SUCH INTEREST IS IN THE FORM OF
A  GUARANTEED ANNUITY OR IS A FIXED PERCENTAGE DISTRIBUTED YEARLY OF THE
FAIR MARKET VALUE OF THE PROPERTY (TO BE DETERMINED YEARLY).
  (3)  RULES  SIMILAR TO THE RULES OF SECTION 2055(E)(4) SHALL APPLY FOR
PURPOSES OF PARAGRAPH (2).
  (4) REFORMATIONS TO COMPLY WITH PARAGRAPH (2). (A)  IN  GENERAL  --  A
DEDUCTION SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF ANY QUALI-
FIED REFORMATION (WITHIN THE MEANING OF SECTION 2055(E)(3)(B)).
  (B)  RULES  SIMILAR  TO SECTION 2055(E)(3) TO APPLY -- FOR PURPOSES OF
THIS PARAGRAPH, RULES SIMILAR TO THE RULES OF SECTION  2055(E)(3)  SHALL
APPLY.
  (5)  CONTRIBUTIONS  TO  DONOR  ADVISED  FUNDS.  A  DEDUCTION OTHERWISE
ALLOWED UNDER SUBSECTION (A) FOR ANY CONTRIBUTION  TO  A  DONOR  ADVISED
FUND (AS DEFINED IN SECTION 4966(D)(2)) SHALL ONLY BE ALLOWED IF-
--(A)  THE  SPONSORING  ORGANIZATION  (AS DEFINED IN SECTION 4966(D)(1))
WITH RESPECT TO SUCH DONOR ADVISED FUND IS NOT-
--(I) DESCRIBED IN PARAGRAPH (3) OR (4) OF SUBSECTION (A), OR
--(II) A  TYPE  III  SUPPORTING  ORGANIZATION  (AS  DEFINED  IN  SECTION
4943(F)(5)(A))  WHICH IS NOT A FUNCTIONALLY INTEGRATED TYPE III SUPPORT-
ING ORGANIZATION (AS DEFINED IN SECTION 4943(F)(5)(B)), AND
--(B) THE TAXPAYER  OBTAINS  A  CONTEMPORANEOUS  WRITTEN  ACKNOWLEDGMENT
(DETERMINED  UNDER  RULES  SIMILAR TO THE RULES OF SECTION 170(F)(8)(C))
FROM THE SPONSORING ORGANIZATION (AS SO DEFINED) OF SUCH  DONOR  ADVISED
FUND  THAT SUCH ORGANIZATION HAS EXCLUSIVE LEGAL CONTROL OVER THE ASSETS
CONTRIBUTED.
  (D) SPECIAL RULE FOR IRREVOCABLE TRANSFERS OF EASEMENTS IN REAL  PROP-
ERTY.  A  DEDUCTION  SHALL BE ALLOWED UNDER SUBSECTION (A) IN RESPECT OF
ANY TRANSFER OF A  QUALIFIED  REAL  PROPERTY  INTEREST  (AS  DEFINED  IN
SECTION  170(H)(2)(C))  WHICH  MEETS  THE REQUIREMENTS OF SECTION 170(H)
(WITHOUT REGARD TO PARAGRAPH (4)(A) THEREOF).
  (E) SPECIAL RULES FOR FRACTIONAL GIFTS
  (1) DENIAL OF DEDUCTION IN CERTAIN CASES
  (A) IN GENERAL
--NO DEDUCTION SHALL BE ALLOWED  FOR  A  CONTRIBUTION  OF  AN  UNDIVIDED
PORTION  OF  A  TAXPAYER'S ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY
UNLESS ALL INTERESTS IN THE PROPERTY ARE HELD  IMMEDIATELY  BEFORE  SUCH
CONTRIBUTION BY-
--(I) THE TAXPAYER, OR
--(II) THE TAXPAYER AND THE DONEE.
  (B) EXCEPTIONS
--THE  SECRETARY  MAY, BY REGULATION, PROVIDE FOR EXCEPTIONS TO SUBPARA-
GRAPH (A) IN CASES WHERE ALL PERSONS WHO HOLD AN INTEREST IN THE PROPER-
TY MAKE PROPORTIONAL CONTRIBUTIONS OF AN UNDIVIDED PORTION OF THE ENTIRE
INTEREST HELD BY SUCH PERSONS.
  (2) RECAPTURE OF DEDUCTION IN CERTAIN CASES; ADDITION TO TAX
  (A) IN GENERAL. THE SECRETARY SHALL PROVIDE FOR THE  RECAPTURE  OF  AN
AMOUNT EQUAL TO ANY DEDUCTION ALLOWED UNDER THIS SECTION (PLUS INTEREST)
WITH RESPECT TO ANY CONTRIBUTION OF AN UNDIVIDED PORTION OF A TAXPAYER'S
ENTIRE INTEREST IN TANGIBLE PERSONAL PROPERTY-
--(I)  IN  ANY  CASE  IN  WHICH THE DONOR DOES NOT CONTRIBUTE ALL OF THE
REMAINING INTERESTS IN SUCH PROPERTY TO THE DONEE (OR, IF SUCH DONEE  IS
NO LONGER IN EXISTENCE, TO ANY PERSON DESCRIBED IN SECTION 170(C)) ON OR
BEFORE THE EARLIER OF-
--(I) THE DATE THAT IS 10 YEARS AFTER THE DATE OF THE INITIAL FRACTIONAL
CONTRIBUTION, OR
--(II) THE DATE OF THE DEATH OF THE DONOR, AND

S. 6359--D                         261                        A. 8559--D

--(II)  IN ANY CASE IN WHICH THE DONEE HAS NOT, DURING THE PERIOD BEGIN-
NING ON THE DATE OF THE INITIAL FRACTIONAL CONTRIBUTION  AND  ENDING  ON
THE DATE DESCRIBED IN CLAUSE (I)-
--(I) HAD SUBSTANTIAL PHYSICAL POSSESSION OF THE PROPERTY, AND
--(II) USED THE PROPERTY IN A USE WHICH IS RELATED TO A PURPOSE OR FUNC-
TION  CONSTITUTING  THE  BASIS  FOR  THE  ORGANIZATIONS' EXEMPTION UNDER
SECTION 501.
  (B) ADDITION TO TAX. THE TAX IMPOSED UNDER THIS CHAPTER FOR ANY  TAXA-
BLE  YEAR FOR WHICH THERE IS A RECAPTURE UNDER SUBPARAGRAPH (A) SHALL BE
INCREASED BY 10 PERCENT OF THE AMOUNT SO RECAPTURED.
  (C) INITIAL FRACTIONAL CONTRIBUTION. FOR PURPOSES OF  THIS  PARAGRAPH,
THE  TERM  "INITIAL  FRACTIONAL CONTRIBUTION" MEANS, WITH RESPECT TO ANY
DONOR, THE FIRST GIFT OF AN UNDIVIDED  PORTION  OF  THE  DONOR'S  ENTIRE
INTEREST  IN  ANY  TANGIBLE  PERSONAL  PROPERTY FOR WHICH A DEDUCTION IS
ALLOWED UNDER SUBSECTION (A) OR (B).
  (F) CROSS REFERENCES
--(1) FOR TREATMENT OF CERTAIN ORGANIZATIONS PROVIDING CHILD  CARE,  SEE
SECTION 501(K).
--(2) FOR EXEMPTION OF CERTAIN GIFTS TO OR FOR THE BENEFIT OF THE UNITED
STATES  AND  FOR RULES OF CONSTRUCTION WITH RESPECT TO CERTAIN BEQUESTS,
SEE SECTION 2055(F).
--(3) FOR TREATMENT OF GIFTS TO OR FOR THE USE OF INDIAN TRIBAL  GOVERN-
MENTS (OR THEIR SUBDIVISIONS), SEE SECTION 7871.
  S  2523.  GIFT  TO  SPOUSE  (A)  ALLOWANCE OF DEDUCTION. WHERE A DONOR
TRANSFERS DURING THE CALENDAR YEAR BY GIFT AN INTEREST IN PROPERTY TO  A
DONEE  WHO AT THE TIME OF THE GIFT IS THE DONOR'S SPOUSE, THERE SHALL BE
ALLOWED AS A DEDUCTION IN COMPUTING TAXABLE GIFTS FOR THE CALENDAR  YEAR
AN AMOUNT WITH RESPECT TO SUCH INTEREST EQUAL TO ITS VALUE.
  (B)  LIFE  ESTATE OR OTHER TERMINABLE INTEREST. WHERE, ON THE LAPSE OF
TIME, ON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAILURE OF
AN EVENT OR CONTINGENCY TO  OCCUR,  SUCH  INTEREST  TRANSFERRED  TO  THE
SPOUSE  WILL  TERMINATE  OR  FAIL,  NO  DEDUCTION  SHALL BE ALLOWED WITH
RESPECT TO SUCH INTEREST-
  (1) IF THE DONOR RETAINS IN HIMSELF, OR TRANSFERS OR  HAS  TRANSFERRED
(FOR  LESS  THAN  AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEY'S
WORTH) TO ANY PERSON OTHER THAN SUCH DONEE SPOUSE (OR THE ESTATE OF SUCH
SPOUSE), AN INTEREST  IN  SUCH  PROPERTY,  AND  IF  BY  REASON  OF  SUCH
RETENTION OR TRANSFER THE DONOR (OR HIS HEIRS OR ASSIGNS) OR SUCH PERSON
(OR HIS HEIRS OR ASSIGNS) MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY
AFTER  SUCH  TERMINATION  OR  FAILURE OF THE INTEREST TRANSFERRED TO THE
DONEE SPOUSE; OR
  (2) IF THE DONOR IMMEDIATELY AFTER THE TRANSFER TO  THE  DONEE  SPOUSE
HAS  A  POWER TO APPOINT AN INTEREST IN SUCH PROPERTY WHICH HE CAN EXER-
CISE (EITHER ALONE OR IN CONJUNCTION WITH ANY  PERSON)  IN  SUCH  MANNER
THAT  THE APPOINTEE MAY POSSESS OR ENJOY ANY PART OF SUCH PROPERTY AFTER
SUCH TERMINATION OR FAILURE OF THE INTEREST  TRANSFERRED  TO  THE  DONEE
SPOUSE. FOR PURPOSES OF THIS PARAGRAPH, THE DONOR SHALL BE CONSIDERED AS
HAVING  IMMEDIATELY AFTER THE TRANSFER TO THE DONEE SPOUSE SUCH POWER TO
APPOINT EVEN THOUGH SUCH POWER CANNOT BE EXERCISED UNTIL AFTER THE LAPSE
OF TIME, UPON THE OCCURRENCE OF AN EVENT OR CONTINGENCY, OR ON THE FAIL-
URE OF AN EVENT OR CONTINGENCY TO OCCUR.
  AN EXERCISE OR RELEASE AT ANY TIME BY THE DONOR, EITHER  ALONE  OR  IN
CONJUNCTION  WITH ANY PERSON, OF A POWER TO APPOINT AN INTEREST IN PROP-
ERTY, EVEN THOUGH NOT OTHERWISE A TRANSFER, SHALL, FOR PURPOSES OF PARA-
GRAPH (1), BE CONSIDERED AS A TRANSFER BY HIM.  EXCEPT  AS  PROVIDED  IN
SUBSECTION  (E),  WHERE  AT THE TIME OF THE TRANSFER IT IS IMPOSSIBLE TO

S. 6359--D                         262                        A. 8559--D

ASCERTAIN THE PARTICULAR PERSON OR PERSONS  WHO  MAY  RECEIVE  FROM  THE
DONOR  AN  INTEREST  IN  PROPERTY  SO  TRANSFERRED BY HIM, SUCH INTEREST
SHALL, FOR PURPOSES OF PARAGRAPH (1), BE CONSIDERED AS TRANSFERRED TO  A
PERSON OTHER THAN THE DONEE SPOUSE.
  (C) INTEREST IN UNIDENTIFIED ASSETS. WHERE THE ASSETS OUT OF WHICH, OR
THE  PROCEEDS OF WHICH, THE INTEREST TRANSFERRED TO THE DONEE SPOUSE MAY
BE SATISFIED INCLUDE A PARTICULAR ASSET OR ASSETS WITH RESPECT TO  WHICH
NO  DEDUCTION  WOULD BE ALLOWED IF SUCH ASSET OR ASSETS WERE TRANSFERRED
FROM THE DONOR TO SUCH SPOUSE, THEN THE VALUE  OF  THE  INTEREST  TRANS-
FERRED  TO SUCH SPOUSE SHALL, FOR PURPOSES OF SUBSECTION (A), BE REDUCED
BY THE AGGREGATE VALUE OF SUCH PARTICULAR ASSETS.
  (D) JOINT INTERESTS. IF THE  INTEREST  IS  TRANSFERRED  TO  THE  DONEE
SPOUSE AS SOLE JOINT TENANT WITH THE DONOR OR AS TENANT BY THE ENTIRETY,
THE  INTEREST OF THE DONOR IN THE PROPERTY WHICH EXISTS SOLELY BY REASON
OF THE POSSIBILITY THAT THE DONOR MAY SURVIVE THE DONEE SPOUSE, OR  THAT
THERE  MAY OCCUR A SEVERANCE OF THE TENANCY, SHALL NOT BE CONSIDERED FOR
PURPOSES OF SUBSECTION (B) AS AN  INTEREST  RETAINED  BY  THE  DONOR  IN
HIMSELF.
  (E)  LIFE ESTATE WITH POWER OF APPOINTMENT IN DONEE SPOUSE.  WHERE THE
DONOR TRANSFERS AN INTEREST IN PROPERTY, IF BY SUCH TRANSFER HIS  SPOUSE
IS  ENTITLED  FOR LIFE TO ALL OF THE INCOME FROM THE ENTIRE INTEREST, OR
ALL THE INCOME FROM A SPECIFIC PORTION THEREOF, PAYABLE ANNUALLY  OR  AT
MORE  FREQUENT  INTERVALS, WITH POWER IN THE DONEE SPOUSE TO APPOINT THE
ENTIRE INTEREST, OR SUCH SPECIFIC PORTION (EXERCISABLE IN FAVOR OF  SUCH
DONEE  SPOUSE,  OR  OF  THE  ESTATE OF SUCH DONEE SPOUSE, OR IN FAVOR OF
EITHER, WHETHER OR NOT IN EACH CASE THE POWER IS EXERCISABLE IN FAVOR OF
OTHERS), AND WITH NO POWER IN ANY OTHER PERSON TO APPOINT  ANY  PART  OF
SUCH  INTEREST,  OR  SUCH  PORTION,  TO  ANY PERSON OTHER THAN THE DONEE
SPOUSE-
  (1) THE INTEREST, OR SUCH PORTION, SO TRANSFERRED SHALL, FOR  PURPOSES
OF SUBSECTION (A) BE CONSIDERED AS TRANSFERRED TO THE DONEE SPOUSE, AND
  (2)  NO  PART  OF THE INTEREST, OR SUCH PORTION, SO TRANSFERRED SHALL,
FOR PURPOSES OF SUBSECTION (B)(1), BE  CONSIDERED  AS  RETAINED  IN  THE
DONOR OR TRANSFERRED TO ANY PERSON OTHER THAN THE DONEE SPOUSE.
  THIS  SUBSECTION  SHALL APPLY ONLY IF, BY SUCH TRANSFER, SUCH POWER IN
THE DONEE SPOUSE TO APPOINT THE INTEREST, OR SUCH PORTION, WHETHER EXER-
CISABLE BY WILL OR DURING LIFE, IS EXERCISABLE BY SUCH SPOUSE ALONE  AND
IN  ALL  EVENTS.    FOR  PURPOSES OF THIS SUBSECTION, THE TERM "SPECIFIC
PORTION" ONLY INCLUDES A PORTION DETERMINED ON A FRACTIONAL OR  PERCENT-
AGE BASIS.
  (F)  ELECTION  WITH  RESPECT  TO  LIFE ESTATE FOR DONEE SPOUSE. (1) IN
GENERAL
  IN THE CASE OF QUALIFIED TERMINABLE INTEREST PROPERTY-
  (A) FOR PURPOSES OF SUBSECTION (A), SUCH PROPERTY SHALL BE TREATED  AS
TRANSFERRED TO THE DONEE SPOUSE, AND
  (B)  FOR PURPOSES OF SUBSECTION (B)(1), NO PART OF SUCH PROPERTY SHALL
BE CONSIDERED AS RETAINED IN THE DONOR  OR  TRANSFERRED  TO  ANY  PERSON
OTHER THAN THE DONEE SPOUSE.
  (2)  QUALIFIED  TERMINABLE  INTEREST  PROPERTY.  FOR  PURPOSES OF THIS
SUBSECTION, THE TERM "QUALIFIED TERMINABLE INTEREST PROPERTY" MEANS  ANY
PROPERTY-
  (A) WHICH IS TRANSFERRED BY THE DONOR SPOUSE,
  (B)  IN  WHICH  THE  DONEE SPOUSE HAS A QUALIFYING INCOME INTEREST FOR
LIFE, AND
  (C) TO WHICH AN ELECTION UNDER THIS SUBSECTION APPLIES.

S. 6359--D                         263                        A. 8559--D

  (3) CERTAIN RULES MADE APPLICABLE. FOR PURPOSES  OF  THIS  SUBSECTION,
RULES  SIMILAR  TO THE RULES OF CLAUSES (II), (III), AND (IV) OF SECTION
2056(B)(7)(B) SHALL APPLY AND THE RULES  OF  SECTION  2056(B)(10)  SHALL
APPLY.
  (4)  ELECTION.  (A) TIME AND MANNER. AN ELECTION UNDER THIS SUBSECTION
WITH RESPECT TO ANY PROPERTY  SHALL  BE  MADE  ON  OR  BEFORE  THE  DATE
PRESCRIBED  BY SECTION 6075(B) FOR FILING A GIFT TAX RETURN WITH RESPECT
TO THE TRANSFER (DETERMINED WITHOUT REGARD TO SECTION 6019(2)) AND SHALL
BE MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
  (B) ELECTION IRREVOCABLE. AN  ELECTION  UNDER  THIS  SUBSECTION,  ONCE
MADE, SHALL BE IRREVOCABLE.
  (5) TREATMENT OF INTEREST RETAINED BY DONOR SPOUSE. (A) IN GENERAL. IN
THE CASE OF ANY QUALIFIED TERMINABLE INTEREST PROPERTY-
  (I)  SUCH  PROPERTY SHALL NOT BE INCLUDIBLE IN THE GROSS ESTATE OF THE
DONOR SPOUSE, AND
  (II) ANY SUBSEQUENT TRANSFER BY THE DONOR SPOUSE  OF  AN  INTEREST  IN
SUCH  PROPERTY  SHALL  NOT BE TREATED AS A TRANSFER FOR PURPOSES OF THIS
CHAPTER.
  (B) SUBPARAGRAPH (A) NOT TO APPLY  AFTER  TRANSFER  BY  DONEE  SPOUSE.
SUBPARAGRAPH  (A) SHALL NOT APPLY WITH RESPECT TO ANY PROPERTY AFTER THE
DONEE SPOUSE IS  TREATED  AS  HAVING  TRANSFERRED  SUCH  PROPERTY  UNDER
SECTION 2519, OR SUCH PROPERTY IS INCLUDIBLE IN THE DONEE SPOUSE'S GROSS
ESTATE UNDER SECTION 2044.
  (6)  TREATMENT OF JOINT AND SURVIVOR ANNUITIES. IN THE CASE OF A JOINT
AND SURVIVOR ANNUITY WHERE ONLY THE DONOR SPOUSE AND DONEE  SPOUSE  HAVE
THE  RIGHT  TO  RECEIVE  PAYMENTS BEFORE THE DEATH OF THE LAST SPOUSE TO
DIE-
--(A) THE DONEE SPOUSE'S INTEREST  SHALL  BE  TREATED  AS  A  QUALIFYING
INCOME INTEREST FOR LIFE,
--(B) THE DONOR SPOUSE SHALL BE TREATED AS HAVING MADE AN ELECTION UNDER
THIS  SUBSECTION  WITH  RESPECT  TO SUCH ANNUITY UNLESS THE DONOR SPOUSE
OTHERWISE ELECTS ON OR BEFORE THE DATE SPECIFIED IN PARAGRAPH (4)(A),
--(C) PARAGRAPH (5) AND SECTION  2519  SHALL  NOT  APPLY  TO  THE  DONOR
SPOUSE'S INTEREST IN THE ANNUITY, AND
--(D)  IF THE DONEE SPOUSE DIES BEFORE THE DONOR SPOUSE, NO AMOUNT SHALL
BE INCLUDIBLE IN THE GROSS ESTATE OF THE DONEE SPOUSE UNDER SECTION 2044
WITH RESPECT TO SUCH ANNUITY.
  AN ELECTION UNDER SUBPARAGRAPH (B), ONCE MADE, SHALL BE IRREVOCABLE.
  (G) SPECIAL RULE FOR CHARITABLE REMAINDER TRUSTS. (1) IN GENERAL.  IF,
AFTER THE TRANSFER, THE DONEE SPOUSE IS THE ONLY NONCHARITABLE BENEFICI-
ARY  (OTHER  THAN  THE DONOR) OF A QUALIFIED CHARITABLE REMAINDER TRUST,
SUBSECTION (B) SHALL NOT APPLY TO THE INTEREST IN SUCH  TRUST  WHICH  IS
TRANSFERRED TO THE DONEE SPOUSE.
  (2)  DEFINITIONS. FOR PURPOSES OF PARAGRAPH (1), THE TERM "NONCHARITA-
BLE BENEFICIARY" AND "QUALIFIED CHARITABLE  REMAINDER  TRUST"  HAVE  THE
MEANINGS GIVEN TO SUCH TERMS BY SECTION 2056(B)(8)(B).
  (H)  DENIAL  OF DOUBLE DEDUCTION. NOTHING IN THIS SECTION OR ANY OTHER
PROVISION OF THIS CHAPTER SHALL ALLOW THE VALUE OF ANY INTEREST IN PROP-
ERTY TO BE DEDUCTED UNDER THIS CHAPTER MORE THAN ONCE  WITH  RESPECT  TO
THE SAME DONOR.
  S 2524. EXTENT OF DEDUCTIONS. THE DEDUCTIONS PROVIDED IN SECTIONS 2522
AND  2523  SHALL  BE  ALLOWED  ONLY TO THE EXTENT THAT THE GIFTS THEREIN
SPECIFIED ARE INCLUDED  IN  THE  AMOUNT  OF  GIFTS  AGAINST  WHICH  SUCH
DEDUCTIONS ARE APPLIED.
  S 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CERTAIN INTER-
ESTS IN CORPORATIONS OR PARTNERSHIPS. (A) VALUATION RULES. (1) IN GENER-

S. 6359--D                         264                        A. 8559--D

AL.   SOLELY FOR PURPOSES OF DETERMINING WHETHER A TRANSFER OF AN INTER-
EST IN A CORPORATION OR PARTNERSHIP TO (OR FOR THE BENEFIT OF) A  MEMBER
OF  THE  TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE OF SUCH TRANSFER),
THE VALUE OF ANY RIGHT-
--(A)  WHICH  IS  DESCRIBED  IN  SUBPARAGRAPH  (A)  OR (B) OF SUBSECTION
(B)(1), AND
--(B) WHICH IS WITH RESPECT TO ANY APPLICABLE RETAINED INTEREST THAT  IS
HELD  BY THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER IMMEDIATELY AFTER
THE TRANSFER,
  --SHALL BE DETERMINED UNDER PARAGRAPH (3). THIS  PARAGRAPH  SHALL  NOT
APPLY  TO  THE  TRANSFER OF ANY INTEREST FOR WHICH MARKET QUOTATIONS ARE
READILY AVAILABLE (AS OF THE DATE OF TRANSFER) ON AN ESTABLISHED SECURI-
TIES MARKET.
  (2) EXCEPTIONS FOR MARKETABLE RETAINED INTERESTS, ETC.  PARAGRAPH  (1)
SHALL  NOT  APPLY  TO  ANY  RIGHT WITH RESPECT TO AN APPLICABLE RETAINED
INTEREST IF-
--(A) MARKET QUOTATIONS ARE READILY AVAILABLE (AS OF  THE  DATE  OF  THE
TRANSFER) FOR SUCH INTEREST ON AN ESTABLISHED SECURITIES MARKET,
--(B) SUCH INTEREST IS OF THE SAME CLASS AS THE TRANSFERRED INTEREST, OR
--(C) SUCH INTEREST IS PROPORTIONALLY THE SAME AS THE TRANSFERRED INTER-
EST, WITHOUT REGARD TO NONLAPSING DIFFERENCES IN VOTING POWER (OR, FOR A
PARTNERSHIP, NONLAPSING DIFFERENCES WITH RESPECT TO MANAGEMENT AND LIMI-
TATIONS ON LIABILITY).
--SUBPARAGRAPH  (C)  SHALL NOT APPLY TO ANY INTEREST IN A PARTNERSHIP IF
THE TRANSFEROR OR AN APPLICABLE FAMILY MEMBER HAS THE RIGHT TO ALTER THE
LIABILITY OF THE TRANSFEREE  OF  THE  TRANSFERRED  PROPERTY.  EXCEPT  AS
PROVIDED  BY THE SECRETARY, ANY DIFFERENCE DESCRIBED IN SUBPARAGRAPH (C)
WHICH LAPSES BY REASON OF ANY FEDERAL OR STATE LAW SHALL BE TREATED AS A
NONLAPSING DIFFERENCE FOR PURPOSES OF SUCH SUBPARAGRAPH.
  (3) VALUATION OF RIGHTS TO WHICH PARAGRAPH (1) APPLIES. (A) IN  GENER-
AL.    THE  VALUE  OF ANY RIGHT DESCRIBED IN PARAGRAPH (1), OTHER THAN A
DISTRIBUTION RIGHT WHICH CONSISTS OF A  RIGHT  TO  RECEIVE  A  QUALIFIED
PAYMENT, SHALL BE TREATED AS BEING ZERO.
  (B) VALUATION OF CERTAIN QUALIFIED PAYMENTS. IF-
--(I)  ANY  APPLICABLE  RETAINED  INTEREST  CONFERS A DISTRIBUTION RIGHT
WHICH CONSISTS OF THE RIGHT TO A QUALIFIED PAYMENT, AND
--(II) THERE ARE 1 OR MORE LIQUIDATION, PUT, CALL, OR CONVERSION  RIGHTS
WITH  RESPECT  TO  SUCH  INTEREST, THE VALUE OF ALL SUCH RIGHTS SHALL BE
DETERMINED AS IF EACH LIQUIDATION, PUT, CALL, OR CONVERSION  RIGHT  WERE
EXERCISED  IN  THE MANNER RESULTING IN THE LOWEST VALUE BEING DETERMINED
FOR ALL SUCH RIGHTS.
  (C)  VALUATION  OF  QUALIFIED  PAYMENTS  WHERE  NO  LIQUIDATION,  ETC.
RIGHTS.  IN  THE  CASE  OF  AN  APPLICABLE  RETAINED  INTEREST  WHICH IS
DESCRIBED IN SUBPARAGRAPH (B)(I) BUT NOT SUBPARAGRAPH (B)(II), THE VALUE
OF THE DISTRIBUTION RIGHT SHALL BE DETERMINED  WITHOUT  REGARD  TO  THIS
SECTION.
  (4) MINIMUM VALUATION OF JUNIOR EQUITY. (A) IN GENERAL. IN THE CASE OF
A  TRANSFER  DESCRIBED IN PARAGRAPH (1) OF A JUNIOR EQUITY INTEREST IN A
CORPORATION OR PARTNERSHIP, SUCH INTEREST SHALL IN NO EVENT BE VALUED AT
AN AMOUNT LESS THAN THE VALUE WHICH WOULD BE  DETERMINED  IF  THE  TOTAL
VALUE  OF ALL OF THE JUNIOR EQUITY INTERESTS IN THE ENTITY WERE EQUAL TO
10 PERCENT OF THE SUM OF-
--(I) THE TOTAL VALUE OF ALL OF THE EQUITY  INTERESTS  IN  SUCH  ENTITY,
PLUS
--(II) THE TOTAL AMOUNT OF INDEBTEDNESS OF SUCH ENTITY TO THE TRANSFEROR
(OR AN APPLICABLE FAMILY MEMBER).

S. 6359--D                         265                        A. 8559--D

  (B) DEFINITIONS. FOR PURPOSES OF THIS PARAGRAPH-
  (I)  JUNIOR  EQUITY  INTEREST. THE TERM "JUNIOR EQUITY INTEREST" MEANS
COMMON STOCK OR, IN THE CASE OF A PARTNERSHIP, ANY PARTNERSHIP  INTEREST
UNDER  WHICH  THE  RIGHTS  AS  TO  INCOME AND CAPITAL (OR, TO THE EXTENT
PROVIDED IN REGULATIONS, THE RIGHTS AS TO EITHER INCOME OR CAPITAL)  ARE
JUNIOR TO THE RIGHTS OF ALL OTHER CLASSES OF EQUITY INTERESTS.
  (II)  EQUITY  INTEREST.  THE TERM "EQUITY INTEREST" MEANS STOCK OR ANY
INTEREST AS A PARTNER, AS THE CASE MAY BE.
  (B) APPLICABLE RETAINED INTERESTS. FOR PURPOSES OF THIS SECTION-
  (1) IN GENERAL. THE TERM  "APPLICABLE  RETAINED  INTEREST"  MEANS  ANY
INTEREST IN AN ENTITY WITH RESPECT TO WHICH THERE IS-
--(A) A DISTRIBUTION RIGHT, BUT ONLY IF, IMMEDIATELY BEFORE THE TRANSFER
DESCRIBED  IN  SUBSECTION  (A)(1),  THE TRANSFEROR AND APPLICABLE FAMILY
MEMBERS HOLD (AFTER APPLICATION OF SUBSECTION  (E)(3))  CONTROL  OF  THE
ENTITY, OR
--(B) A LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT.
  (2) CONTROL. FOR PURPOSES OF PARAGRAPH (1)-
  (A)  CORPORATIONS.  IN  THE  CASE OF A CORPORATION, THE TERM "CONTROL"
MEANS THE HOLDING OF AT LEAST 50 PERCENT (BY VOTE OR VALUE) OF THE STOCK
OF THE CORPORATION.
  (B) PARTNERSHIPS. IN THE CASE OF A  PARTNERSHIP,  THE  TERM  "CONTROL"
MEANS-
--(I)  THE  HOLDING  OF  AT  LEAST  50 PERCENT OF THE CAPITAL OR PROFITS
INTERESTS IN THE PARTNERSHIP, OR
--(II) IN THE CASE OF A LIMITED PARTNERSHIP, THE HOLDING OF ANY INTEREST
AS A GENERAL PARTNER.
  (C) APPLICABLE FAMILY MEMBER. FOR PURPOSES  OF  THIS  SUBSECTION,  THE
TERM  "APPLICABLE  FAMILY  MEMBER" INCLUDES ANY LINEAL DESCENDANT OF ANY
PARENT OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE.
  (C) DISTRIBUTION AND OTHER RIGHTS; QUALIFIED PAYMENTS. FOR PURPOSES OF
THIS SECTION-
  (1) DISTRIBUTION RIGHT. (A) IN GENERAL. THE TERM "DISTRIBUTION  RIGHT"
MEANS-
--(I)  A  RIGHT  TO DISTRIBUTIONS FROM A CORPORATION WITH RESPECT TO ITS
STOCK, AND
--(II) A RIGHT TO DISTRIBUTIONS FROM A PARTNERSHIP  WITH  RESPECT  TO  A
PARTNER'S INTEREST IN THE PARTNERSHIP.
  (B) EXCEPTIONS. THE TERM "DISTRIBUTION RIGHT" DOES NOT INCLUDE-
--(I)  A  RIGHT  TO  DISTRIBUTIONS WITH RESPECT TO ANY INTEREST WHICH IS
JUNIOR TO THE RIGHTS OF THE TRANSFERRED INTEREST,
--(II) ANY LIQUIDATION, PUT, CALL, OR CONVERSION RIGHT, OR
--(III) ANY RIGHT TO RECEIVE ANY GUARANTEED PAYMENT DESCRIBED IN SECTION
707(C) OF A FIXED AMOUNT.
  (2) LIQUIDATION, ETC. RIGHTS. (A) IN GENERAL. THE  TERM  "LIQUIDATION,
PUT,  CALL,  OR  CONVERSION  RIGHT" MEANS ANY LIQUIDATION, PUT, CALL, OR
CONVERSION RIGHT, OR ANY SIMILAR RIGHT, THE EXERCISE OR  NONEXERCISE  OF
WHICH AFFECTS THE VALUE OF THE TRANSFERRED INTEREST.
  (B) EXCEPTION FOR FIXED RIGHTS. (I) IN GENERAL. THE TERM "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH MUST BE
EXERCISED AT A SPECIFIC TIME AND AT A SPECIFIC AMOUNT.
  (II)  TREATMENT  OF  CERTAIN RIGHTS. IF A RIGHT IS ASSUMED TO BE EXER-
CISED IN A PARTICULAR MANNER  UNDER  SUBSECTION  (A)(3)(B),  SUCH  RIGHT
SHALL BE TREATED AS SO EXERCISED FOR PURPOSES OF CLAUSE (I).
  (C)  EXCEPTION  FOR  CERTAIN RIGHTS TO CONVERT. THE TERM "LIQUIDATION,
PUT, CALL, OR CONVERSION RIGHT" DOES NOT INCLUDE ANY RIGHT WHICH-

S. 6359--D                         266                        A. 8559--D

--(I) IS A RIGHT TO CONVERT INTO A FIXED NUMBER (OR A FIXED  PERCENTAGE)
OF SHARES OF THE SAME CLASS OF STOCK IN A CORPORATION AS THE TRANSFERRED
STOCK  IN SUCH CORPORATION UNDER SUBSECTION (A)(1) (OR STOCK WHICH WOULD
BE OF THE SAME CLASS BUT FOR NONLAPSING DIFFERENCES IN VOTING POWER),
--(II) IS NONLAPSING,
--(III)  IS  SUBJECT  TO  PROPORTIONATE ADJUSTMENTS FOR SPLITS, COMBINA-
TIONS, RECLASSIFICATIONS, AND SIMILAR CHANGES IN THE CAPITAL STOCK, AND
--(IV) IS SUBJECT  TO  ADJUSTMENTS  SIMILAR  TO  THE  ADJUSTMENTS  UNDER
SUBSECTION (D) FOR ACCUMULATED BUT UNPAID DISTRIBUTIONS.
--A  RULE  SIMILAR TO THE RULE OF THE PRECEDING SENTENCE SHALL APPLY FOR
PARTNERSHIPS.
  (3) QUALIFIED PAYMENT. (A) IN GENERAL. EXCEPT AS OTHERWISE PROVIDED IN
THIS PARAGRAPH, THE TERM "QUALIFIED PAYMENT" MEANS ANY DIVIDEND  PAYABLE
ON  A PERIODIC BASIS UNDER ANY CUMULATIVE PREFERRED STOCK (OR A COMPARA-
BLE PAYMENT UNDER ANY PARTNERSHIP INTEREST)  TO  THE  EXTENT  THAT  SUCH
DIVIDEND (OR COMPARABLE PAYMENT) IS DETERMINED AT A FIXED RATE.
  (B)  TREATMENT OF VARIABLE RATE PAYMENTS. FOR PURPOSES OF SUBPARAGRAPH
(A), A PAYMENT SHALL BE TREATED AS FIXED AS TO RATE IF SUCH  PAYMENT  IS
DETERMINED  AT  A  RATE  WHICH BEARS A FIXED RELATIONSHIP TO A SPECIFIED
MARKET INTEREST RATE.
  (C) ELECTIONS. (I) IN GENERAL. PAYMENTS UNDER ANY INTEREST HELD  BY  A
TRANSFEROR  WHICH  (WITHOUT  REGARD  TO THIS SUBPARAGRAPH) ARE QUALIFIED
PAYMENTS SHALL BE TREATED AS QUALIFIED PAYMENTS  UNLESS  THE  TRANSFEROR
ELECTS  NOT  TO  TREAT  SUCH  PAYMENTS  AS  QUALIFIED PAYMENTS. PAYMENTS
DESCRIBED IN THE PRECEDING SENTENCE WHICH  ARE  HELD  BY  AN  APPLICABLE
FAMILY MEMBER SHALL BE TREATED AS QUALIFIED PAYMENTS ONLY IF SUCH MEMBER
ELECTS TO TREAT SUCH PAYMENTS AS QUALIFIED PAYMENTS.
  (II)  ELECTION  TO  HAVE  INTEREST  TREATED  AS  QUALIFIED  PAYMENT. A
TRANSFEROR OR APPLICABLE FAMILY MEMBER HOLDING  ANY  DISTRIBUTION  RIGHT
WHICH  (WITHOUT  REGARD TO THIS SUBPARAGRAPH) IS NOT A QUALIFIED PAYMENT
MAY ELECT TO TREAT SUCH RIGHT AS A QUALIFIED PAYMENT, TO BE PAID IN  THE
AMOUNTS  AND  AT  THE  TIMES  SPECIFIED  IN SUCH ELECTION. THE PRECEDING
SENTENCE SHALL APPLY ONLY TO THE EXTENT THAT THE AMOUNTS  AND  TIMES  SO
SPECIFIED  ARE  NOT  INCONSISTENT  WITH  THE UNDERLYING LEGAL INSTRUMENT
GIVING RISE TO SUCH RIGHT.
  (III) ELECTIONS IRREVOCABLE. ANY ELECTION UNDER THIS SUBPARAGRAPH WITH
RESPECT TO AN INTEREST SHALL, ONCE MADE, BE IRREVOCABLE.
  (D) TRANSFER TAX TREATMENT OF CUMULATIVE BUT UNPAID DISTRIBUTIONS. (1)
IN GENERAL. IF A TAXABLE EVENT OCCURS WITH RESPECT TO  ANY  DISTRIBUTION
RIGHT  TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED, THE FOLLOWING SHALL
BE INCREASED BY THE AMOUNT DETERMINED UNDER PARAGRAPH (2):
--(A) THE TAXABLE ESTATE OF THE TRANSFEROR IN  THE  CASE  OF  A  TAXABLE
EVENT DESCRIBED IN PARAGRAPH (3)(A)(I).
--(B) THE TAXABLE GIFTS OF THE TRANSFEROR FOR THE CALENDAR YEAR IN WHICH
THE  TAXABLE  EVENT  OCCURS  IN THE CASE OF A TAXABLE EVENT DESCRIBED IN
PARAGRAPH (3)(A)(II) OR (III).
  (2) AMOUNT OF INCREASE. (A) IN GENERAL. THE  AMOUNT  OF  THE  INCREASE
DETERMINED UNDER THIS PARAGRAPH SHALL BE THE EXCESS (IF ANY) OF-
--(I)  THE  VALUE  OF  THE  QUALIFIED PAYMENTS PAYABLE DURING THE PERIOD
BEGINNING ON THE DATE OF THE TRANSFER UNDER SUBSECTION (A)(1) AND ENDING
ON THE DATE OF THE TAXABLE EVENT DETERMINED AS IF-
--(I) ALL SUCH PAYMENTS WERE PAID ON THE DATE PAYMENT WAS DUE, AND
--(II) ALL SUCH PAYMENTS WERE REINVESTED BY THE  TRANSFEROR  AS  OF  THE
DATE  OF PAYMENT AT A YIELD EQUAL TO THE DISCOUNT RATE USED IN DETERMIN-
ING  THE  VALUE  OF  THE  APPLICABLE  RETAINED  INTEREST  DESCRIBED   IN
SUBSECTION (A)(1), OVER

S. 6359--D                         267                        A. 8559--D

  (II) THE VALUE OF SUCH PAYMENTS PAID DURING SUCH PERIOD COMPUTED UNDER
CLAUSE  (I)  ON  THE  BASIS OF THE TIME WHEN SUCH PAYMENTS WERE ACTUALLY
PAID.
  (B)  LIMITATION  ON  AMOUNT OF INCREASE. (I) IN GENERAL. THE AMOUNT OF
THE INCREASE UNDER SUBPARAGRAPH (A)  SHALL  NOT  EXCEED  THE  APPLICABLE
PERCENTAGE OF THE EXCESS (IF ANY) OF-
--(I)  THE VALUE (DETERMINED AS OF THE DATE OF THE TAXABLE EVENT) OF ALL
EQUITY INTERESTS IN THE  ENTITY  WHICH  ARE  JUNIOR  TO  THE  APPLICABLE
RETAINED INTEREST, OVER
--(II)  THE  VALUE  OF  SUCH INTERESTS (DETERMINED AS OF THE DATE OF THE
TRANSFER TO WHICH SUBSECTION (A)(1) APPLIED).
  (II) APPLICABLE PERCENTAGE. FOR PURPOSES OF CLAUSE (I), THE APPLICABLE
PERCENTAGE IS THE PERCENTAGE DETERMINED BY DIVIDING-
--(I) THE NUMBER OF SHARES IN THE CORPORATION HELD (AS OF  THE  DATE  OF
THE  TAXABLE  EVENT)  BY  THE  TRANSFEROR  WHICH ARE APPLICABLE RETAINED
INTERESTS OF THE SAME CLASS, BY
--(II) THE TOTAL NUMBER OF SHARES IN SUCH CORPORATION (AS OF SUCH  DATE)
WHICH ARE OF THE SAME CLASS AS THE CLASS DESCRIBED IN SUBCLAUSE (I).
--A SIMILAR PERCENTAGE SHALL BE DETERMINED IN THE CASE OF INTERESTS IN A
PARTNERSHIP.
  (III)  DEFINITION. FOR PURPOSES OF THIS SUBPARAGRAPH, THE TERM "EQUITY
INTEREST" HAS THE MEANING GIVEN SUCH TERM BY SUBSECTION (A)(4)(B).
  (C) GRACE PERIOD. FOR PURPOSES OF SUBPARAGRAPH (A), ANY PAYMENT OF ANY
DISTRIBUTION DURING THE 4-YEAR PERIOD BEGINNING ON ITS DUE DATE SHALL BE
TREATED AS HAVING BEEN MADE ON SUCH DUE DATE.
  (3) TAXABLE EVENTS. FOR PURPOSES OF THIS SUBSECTION-
  (A) IN GENERAL. THE TERM "TAXABLE EVENT" MEANS ANY OF THE FOLLOWING:
--(I) THE DEATH OF THE TRANSFEROR IF THE  APPLICABLE  RETAINED  INTEREST
CONFERRING  THE  DISTRIBUTION  RIGHT  IS INCLUDIBLE IN THE ESTATE OF THE
TRANSFEROR.
--(II) THE TRANSFER OF SUCH APPLICABLE RETAINED INTEREST.
--(III) AT THE ELECTION OF THE TAXPAYER, THE PAYMENT  OF  ANY  QUALIFIED
PAYMENT  AFTER  THE  PERIOD DESCRIBED IN PARAGRAPH (2)(C), BUT ONLY WITH
RESPECT TO SUCH PAYMENT.
  (B) EXCEPTION WHERE SPOUSE IS TRANSFEREE. (I) DEATHTIME TRANSFERS
--SUBPARAGRAPH (A)(I) SHALL NOT APPLY TO ANY INTEREST INCLUDIBLE IN  THE
GROSS  ESTATE  OF  THE  TRANSFEROR  IF  A DEDUCTION WITH RESPECT TO SUCH
INTEREST IS ALLOWABLE UNDER SECTION 2056 OR 2106(A)(3).
  (II) LIFETIME TRANSFERS. A TRANSFER TO THE SPOUSE  OF  THE  TRANSFEROR
SHALL  NOT  BE  TREATED AS A TAXABLE EVENT UNDER SUBPARAGRAPH (A)(II) IF
SUCH TRANSFER DOES NOT RESULT IN A TAXABLE GIFT BY REASON OF-
--(I) ANY DEDUCTION ALLOWED UNDER SECTION 2523, OR THE  EXCLUSION  UNDER
SECTION 2503(B), OR
--(II) CONSIDERATION FOR THE TRANSFER PROVIDED BY THE SPOUSE.
  (III)  SPOUSE  SUCCEEDS TO TREATMENT OF TRANSFEROR. IF AN EVENT IS NOT
TREATED AS A TAXABLE EVENT BY REASON OF THIS SUBPARAGRAPH, THE TRANSFER-
EE SPOUSE OR SURVIVING SPOUSE (AS THE CASE MAY BE) SHALL BE  TREATED  IN
THE  SAME  MANNER  AS  THE  TRANSFEROR  IN APPLYING THIS SUBSECTION WITH
RESPECT TO THE INTEREST INVOLVED.
  (4) SPECIAL RULES FOR APPLICABLE FAMILY  MEMBERS.  (A)  FAMILY  MEMBER
TREATED  IN  SAME MANNER AS TRANSFEROR. FOR PURPOSES OF THIS SUBSECTION,
AN APPLICABLE FAMILY MEMBER SHALL BE TREATED IN THE SAME MANNER  AS  THE
TRANSFEROR WITH RESPECT TO ANY DISTRIBUTION RIGHT RETAINED BY SUCH FAMI-
LY MEMBER TO WHICH SUBSECTION (A)(3)(B) OR (C) APPLIED.
  (B)  TRANSFER  TO  APPLICABLE  FAMILY MEMBER. IN THE CASE OF A TAXABLE
EVENT DESCRIBED IN PARAGRAPH (3)(A)(II) INVOLVING  THE  TRANSFER  OF  AN

S. 6359--D                         268                        A. 8559--D

APPLICABLE  RETAINED INTEREST TO AN APPLICABLE FAMILY MEMBER (OTHER THAN
THE SPOUSE OF THE TRANSFEROR), THE APPLICABLE  FAMILY  MEMBER  SHALL  BE
TREATED IN THE SAME MANNER AS THE TRANSFEROR IN APPLYING THIS SUBSECTION
TO  DISTRIBUTIONS  ACCUMULATING WITH RESPECT TO SUCH INTEREST AFTER SUCH
TAXABLE EVENT.
  (C) TRANSFER TO TRANSFERORS. IN THE CASE OF A TAXABLE EVENT  DESCRIBED
IN  PARAGRAPH  (3)(A)(II) INVOLVING A TRANSFER OF AN APPLICABLE RETAINED
INTEREST  FROM  AN  APPLICABLE  FAMILY  MEMBER  TO  A  TRANSFEROR,  THIS
SUBSECTION  SHALL  CONTINUE TO APPLY TO THE TRANSFEROR DURING ANY PERIOD
THE TRANSFEROR HOLDS SUCH INTEREST.
  (5) TRANSFER TO INCLUDE TERMINATION. FOR PURPOSES OF THIS  SUBSECTION,
ANY TERMINATION OF AN INTEREST SHALL BE TREATED AS A TRANSFER.
  (E) OTHER DEFINITIONS AND RULES. FOR PURPOSES OF THIS SECTION-
  (1)  MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS, WITH
RESPECT TO ANY TRANSFEROR-
--(A) THE TRANSFEROR'S SPOUSE,
--(B) A LINEAL DESCENDANT OF THE TRANSFEROR OR THE TRANSFEROR'S  SPOUSE,
AND
--(C) THE SPOUSE OF ANY SUCH DESCENDANT.
  (2)  APPLICABLE  FAMILY  MEMBER.  THE  TERM "APPLICABLE FAMILY MEMBER"
MEANS, WITH RESPECT TO ANY TRANSFEROR-
--(A) THE TRANSFEROR'S SPOUSE,
--(B) AN ANCESTOR OF THE TRANSFEROR OR THE TRANSFEROR'S SPOUSE, AND
--(C) THE SPOUSE OF ANY SUCH ANCESTOR.
  (3) ATTRIBUTION OF INDIRECT  HOLDINGS  AND  TRANSFERS.  AN  INDIVIDUAL
SHALL  BE TREATED AS HOLDING ANY INTEREST TO THE EXTENT SUCH INTEREST IS
HELD INDIRECTLY BY SUCH INDIVIDUAL THROUGH A  CORPORATION,  PARTNERSHIP,
TRUST,  OR  OTHER  ENTITY.  IF  ANY INDIVIDUAL IS TREATED AS HOLDING ANY
INTEREST BY REASON OF THE PRECEDING SENTENCE, ANY TRANSFER WHICH RESULTS
IN SUCH INTEREST BEING TREATED AS NO  LONGER  HELD  BY  SUCH  INDIVIDUAL
SHALL BE TREATED AS A TRANSFER OF SUCH INTEREST.
  (4)  EFFECT  OF  ADOPTION.  A  RELATIONSHIP BY LEGAL ADOPTION SHALL BE
TREATED AS A RELATIONSHIP BY BLOOD.
  (5) CERTAIN CHANGES TREATED AS TRANSFERS. EXCEPT AS PROVIDED IN  REGU-
LATIONS, A CONTRIBUTION TO CAPITAL OR A REDEMPTION, RECAPITALIZATION, OR
OTHER  CHANGE  IN  THE CAPITAL STRUCTURE OF A CORPORATION OR PARTNERSHIP
SHALL BE TREATED AS A TRANSFER OF AN INTEREST IN SUCH  ENTITY  TO  WHICH
THIS SECTION APPLIES IF THE TAXPAYER OR AN APPLICABLE FAMILY MEMBER-
--(A)  RECEIVES  AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY PURSUANT
TO SUCH TRANSACTION, OR
--(B) UNDER REGULATIONS, OTHERWISE HOLDS, IMMEDIATELY AFTER SUCH  TRANS-
ACTION, AN APPLICABLE RETAINED INTEREST IN SUCH ENTITY.
--THIS  PARAGRAPH  SHALL  NOT  APPLY  TO  ANY  TRANSACTION (OTHER THAN A
CONTRIBUTION TO CAPITAL) IF THE INTERESTS IN  THE  ENTITY  HELD  BY  THE
TRANSFEROR,  APPLICABLE  FAMILY MEMBERS, AND MEMBERS OF THE TRANSFEROR'S
FAMILY BEFORE AND AFTER THE TRANSACTION ARE SUBSTANTIALLY IDENTICAL.
  (6) ADJUSTMENTS. UNDER REGULATIONS PRESCRIBED  BY  THE  SECRETARY,  IF
THERE  IS  ANY SUBSEQUENT TRANSFER, OR INCLUSION IN THE GROSS ESTATE, OF
ANY APPLICABLE RETAINED INTEREST WHICH WAS VALUED  UNDER  THE  RULES  OF
SUBSECTION  (A),  APPROPRIATE  ADJUSTMENTS SHALL BE MADE FOR PURPOSES OF
CHAPTER 11, 12, OR 13 TO REFLECT THE INCREASE IN THE AMOUNT OF ANY PRIOR
TAXABLE GIFT MADE BY THE TRANSFEROR OR DECEDENT BY REASON OF SUCH  VALU-
ATION OR TO REFLECT THE APPLICATION OF SUBSECTION (D).
  (7)  TREATMENT  AS SEPARATE INTERESTS. THE SECRETARY MAY BY REGULATION
PROVIDE THAT ANY APPLICABLE RETAINED INTEREST SHALL BE TREATED AS  2  OR
MORE SEPARATE INTERESTS FOR PURPOSES OF THIS SECTION.

S. 6359--D                         269                        A. 8559--D

  S  2702.  SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS IN
TRUSTS.  (A) VALUATION RULES. (1) IN GENERAL.  SOLELY  FOR  PURPOSES  OF
DETERMINING  WHETHER  A  TRANSFER OF AN INTEREST IN TRUST TO (OR FOR THE
BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY IS A GIFT (AND THE VALUE
OF  SUCH  TRANSFER), THE VALUE OF ANY INTEREST IN SUCH TRUST RETAINED BY
THE TRANSFEROR OR ANY APPLICABLE FAMILY MEMBER (AS  DEFINED  IN  SECTION
2701(E)(2)) SHALL BE DETERMINED AS PROVIDED IN PARAGRAPH (2).
  (2)  VALUATION OF RETAINED INTERESTS. (A) IN GENERAL. THE VALUE OF ANY
RETAINED INTEREST WHICH IS NOT A QUALIFIED INTEREST SHALL BE TREATED  AS
BEING ZERO.
  (B)  VALUATION OF QUALIFIED INTEREST. THE VALUE OF ANY RETAINED INTER-
EST WHICH IS A QUALIFIED INTEREST  SHALL  BE  DETERMINED  UNDER  SECTION
7520.
  (3) EXCEPTIONS. (A) IN GENERAL. THIS SUBSECTION SHALL NOT APPLY TO ANY
TRANSFER-
--(I) IF SUCH TRANSFER IS AN INCOMPLETE GIFT,
--(II)  IF  SUCH  TRANSFER INVOLVES THE TRANSFER OF AN INTEREST IN TRUST
ALL THE PROPERTY IN WHICH CONSISTS OF  A  RESIDENCE  TO  BE  USED  AS  A
PERSONAL RESIDENCE BY PERSONS HOLDING TERM INTERESTS IN SUCH TRUST, OR
--(III) TO THE EXTENT THAT REGULATIONS PROVIDE THAT SUCH TRANSFER IS NOT
INCONSISTENT WITH THE PURPOSES OF THIS SECTION.
  (B)  INCOMPLETE  GIFT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A), THE TERM
"INCOMPLETE GIFT" MEANS ANY TRANSFER WHICH WOULD NOT  BE  TREATED  AS  A
GIFT WHETHER OR NOT CONSIDERATION WAS RECEIVED FOR SUCH TRANSFER.
  (B) QUALIFIED INTEREST. FOR PURPOSES OF THIS SECTION, THE TERM "QUALI-
FIED INTEREST" MEANS-
  (1)  ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE FIXED AMOUNTS
PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY,
  (2) ANY INTEREST WHICH CONSISTS OF THE RIGHT TO RECEIVE AMOUNTS  WHICH
ARE PAYABLE NOT LESS FREQUENTLY THAN ANNUALLY AND ARE A FIXED PERCENTAGE
OF  THE FAIR MARKET VALUE OF THE PROPERTY IN THE TRUST (DETERMINED ANNU-
ALLY), AND
  (3) ANY NONCONTINGENT REMAINDER INTEREST IF ALL OF THE OTHER INTERESTS
IN THE TRUST CONSIST OF INTERESTS DESCRIBED IN PARAGRAPH (1) OR (2).
  (C) CERTAIN PROPERTY TREATED AS HELD IN TRUST. FOR  PURPOSES  OF  THIS
SECTION-  (1)  IN  GENERAL. THE TRANSFER OF AN INTEREST IN PROPERTY WITH
RESPECT TO WHICH THERE IS 1 OR MORE TERM INTERESTS SHALL BE TREATED AS A
TRANSFER OF AN INTEREST IN A TRUST.
  (2) JOINT PURCHASES. IF 2 OR MORE MEMBERS OF THE SAME  FAMILY  ACQUIRE
INTERESTS  IN ANY PROPERTY DESCRIBED IN PARAGRAPH (1) IN THE SAME TRANS-
ACTION (OR A SERIES OF RELATED TRANSACTIONS), THE  PERSON  (OR  PERSONS)
ACQUIRING THE TERM INTERESTS IN SUCH PROPERTY SHALL BE TREATED AS HAVING
ACQUIRED  THE  ENTIRE PROPERTY AND THEN TRANSFERRED TO THE OTHER PERSONS
THE INTERESTS ACQUIRED BY SUCH OTHER  PERSONS  IN  THE  TRANSACTION  (OR
SERIES  OF  TRANSACTIONS).  SUCH  TRANSFER  SHALL  BE TREATED AS MADE IN
EXCHANGE FOR THE CONSIDERATION (IF ANY) PROVIDED BY SUCH  OTHER  PERSONS
FOR THE ACQUISITION OF THEIR INTERESTS IN SUCH PROPERTY.
  (3) TERM INTEREST. THE TERM "TERM INTEREST" MEANS-
  (A) A LIFE INTEREST IN PROPERTY, OR
  (B) AN INTEREST IN PROPERTY FOR A TERM OF YEARS.
  (4)  VALUATION  RULE FOR CERTAIN TERM INTERESTS. IF THE NONEXERCISE OF
RIGHTS UNDER A TERM INTEREST IN  TANGIBLE  PROPERTY  WOULD  NOT  HAVE  A
SUBSTANTIAL  EFFECT  ON  THE VALUATION OF THE REMAINDER INTEREST IN SUCH
PROPERTY-
  (A) SUBPARAGRAPH (A) OF SUBSECTION (A)(2) SHALL NOT APPLY TO SUCH TERM
INTEREST, AND

S. 6359--D                         270                        A. 8559--D

  (B)  THE  VALUE  OF  SUCH  TERM  INTEREST  FOR  PURPOSES  OF  APPLYING
SUBSECTION  (A)(1)  SHALL  BE  THE  AMOUNT  WHICH THE HOLDER OF THE TERM
INTEREST ESTABLISHES AS THE AMOUNT FOR WHICH SUCH INTEREST COULD BE SOLD
TO AN UNRELATED THIRD PARTY.
  (D)  TREATMENT  OF TRANSFERS OF INTERESTS IN PORTION OF TRUST.  IN THE
CASE OF A TRANSFER OF AN INCOME OR REMAINDER INTEREST WITH RESPECT TO  A
SPECIFIED PORTION OF THE PROPERTY IN A TRUST, ONLY SUCH PORTION SHALL BE
TAKEN INTO ACCOUNT IN APPLYING THIS SECTION TO SUCH TRANSFER.
  (E)  MEMBER  OF  THE  FAMILY.  FOR  PURPOSES OF THIS SECTION, THE TERM
"MEMBER OF THE FAMILY" SHALL HAVE THE MEANING GIVEN SUCH TERM BY SECTION
2704(C)(2).
  S 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED
  (A) GENERAL RULE. FOR PURPOSES OF THIS  SUBTITLE,  THE  VALUE  OF  ANY
PROPERTY SHALL BE DETERMINED WITHOUT REGARD TO-
  (1)  ANY OPTION, AGREEMENT, OR OTHER RIGHT TO ACQUIRE OR USE THE PROP-
ERTY AT A PRICE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY (WITHOUT
REGARD TO SUCH OPTION, AGREEMENT, OR RIGHT), OR
  (2) ANY RESTRICTION ON THE RIGHT TO SELL OR USE SUCH PROPERTY.
  (B) EXCEPTIONS. SUBSECTION (A) SHALL NOT APPLY TO ANY  OPTION,  AGREE-
MENT,  RIGHT,  OR RESTRICTION WHICH MEETS EACH OF THE FOLLOWING REQUIRE-
MENTS:
  (1) IT IS A BONA FIDE BUSINESS ARRANGEMENT.
  (2) IT IS NOT A DEVICE TO TRANSFER SUCH PROPERTY  TO  MEMBERS  OF  THE
DECEDENT'S FAMILY FOR LESS THAN FULL AND ADEQUATE CONSIDERATION IN MONEY
OR MONEY'S WORTH.
  (3)  ITS  TERMS ARE COMPARABLE TO SIMILAR ARRANGEMENTS ENTERED INTO BY
PERSONS IN AN ARMS' LENGTH TRANSACTION
  S 2704. TREATMENT OF CERTAIN LAPSING RIGHTS  AND  RESTRICTIONS.    (A)
TREATMENT  OF  LAPSED  VOTING OR LIQUIDATION RIGHTS. (1) IN GENERAL. FOR
PURPOSES OF THIS SUBTITLE, IF-
--(A) THERE IS A LAPSE OF ANY VOTING OR LIQUIDATION RIGHT  IN  A  CORPO-
RATION OR PARTNERSHIP, AND
--(B) THE INDIVIDUAL HOLDING SUCH RIGHT IMMEDIATELY BEFORE THE LAPSE AND
MEMBERS  OF  SUCH  INDIVIDUAL'S  FAMILY  HOLD, BOTH BEFORE AND AFTER THE
LAPSE, CONTROL OF THE ENTITY,
  SUCH LAPSE SHALL BE TREATED AS A TRANSFER BY SUCH INDIVIDUAL BY  GIFT,
OR  A  TRANSFER WHICH IS INCLUDIBLE IN THE GROSS ESTATE OF THE DECEDENT,
WHICHEVER IS APPLICABLE, IN THE AMOUNT DETERMINED UNDER PARAGRAPH (2).
  (2) AMOUNT OF TRANSFER. FOR PURPOSES  OF  PARAGRAPH  (1),  THE  AMOUNT
DETERMINED UNDER THIS PARAGRAPH IS THE EXCESS (IF ANY) OF-
--(A)  THE  VALUE  OF ALL INTERESTS IN THE ENTITY HELD BY THE INDIVIDUAL
DESCRIBED IN PARAGRAPH (1) IMMEDIATELY BEFORE THE LAPSE  (DETERMINED  AS
IF THE VOTING AND LIQUIDATION RIGHTS WERE NONLAPSING), OVER
--(B) THE VALUE OF SUCH INTERESTS IMMEDIATELY AFTER THE LAPSE.
  (3)  SIMILAR  RIGHTS.  THE  SECRETARY  MAY  BY  REGULATIONS APPLY THIS
SUBSECTION TO RIGHTS SIMILAR TO VOTING AND LIQUIDATION RIGHTS.
  (B) CERTAIN RESTRICTIONS ON LIQUIDATION DISREGARDED. (1)  IN  GENERAL.
FOR PURPOSES OF THIS SUBTITLE, IF-
--(A) THERE IS A TRANSFER OF AN INTEREST IN A CORPORATION OR PARTNERSHIP
TO (OR FOR THE BENEFIT OF) A MEMBER OF THE TRANSFEROR'S FAMILY, AND
--(B)  THE TRANSFEROR AND MEMBERS OF THE TRANSFEROR'S FAMILY HOLD, IMME-
DIATELY BEFORE THE TRANSFER, CONTROL OF THE ENTITY,
  --ANY APPLICABLE RESTRICTION SHALL BE DISREGARDED IN  DETERMINING  THE
VALUE OF THE TRANSFERRED INTEREST.
  (2)  APPLICABLE RESTRICTION. FOR PURPOSES OF THIS SUBSECTION, THE TERM
"APPLICABLE RESTRICTION" MEANS ANY RESTRICTION-

S. 6359--D                         271                        A. 8559--D

  (A) WHICH EFFECTIVELY LIMITS THE ABILITY OF THE CORPORATION  OR  PART-
NERSHIP TO LIQUIDATE, AND
  (B) WITH RESPECT TO WHICH EITHER OF THE FOLLOWING APPLIES:
--(I)  THE  RESTRICTION  LAPSES, IN WHOLE OR IN PART, AFTER THE TRANSFER
REFERRED TO IN PARAGRAPH (1).
--(II) THE TRANSFEROR OR ANY MEMBER OF THE TRANSFEROR'S  FAMILY,  EITHER
ALONE  OR  COLLECTIVELY, HAS THE RIGHT AFTER SUCH TRANSFER TO REMOVE, IN
WHOLE OR IN PART, THE RESTRICTION.
  (3) EXCEPTIONS. THE TERM "APPLICABLE RESTRICTION" SHALL NOT INCLUDE-
--(A) ANY COMMERCIALLY REASONABLE RESTRICTION WHICH ARISES  AS  PART  OF
ANY FINANCING BY THE CORPORATION OR PARTNERSHIP WITH A PERSON WHO IS NOT
RELATED  TO  THE  TRANSFEROR OR TRANSFEREE, OR A MEMBER OF THE FAMILY OF
EITHER, OR
--(B) ANY RESTRICTION IMPOSED, OR REQUIRED TO BE IMPOSED, BY ANY FEDERAL
OR STATE LAW.
  (4) OTHER RESTRICTIONS. THE SECRETARY MAY BY REGULATIONS PROVIDE  THAT
OTHER  RESTRICTIONS SHALL BE DISREGARDED IN DETERMINING THE VALUE OF THE
TRANSFER OF ANY INTEREST IN A CORPORATION OR PARTNERSHIP TO A MEMBER  OF
THE  TRANSFEROR'S  FAMILY IF SUCH RESTRICTION HAS THE EFFECT OF REDUCING
THE VALUE OF THE TRANSFERRED INTEREST FOR PURPOSES OF THIS SUBTITLE  BUT
DOES NOT ULTIMATELY REDUCE THE VALUE OF SUCH INTEREST TO THE TRANSFEREE.
  (C) DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
  (1)  CONTROL.  THE  TERM  "CONTROL" HAS THE MEANING GIVEN SUCH TERM BY
SECTION 2701(B)(2).
  (2) MEMBER OF THE FAMILY. THE TERM "MEMBER OF THE FAMILY" MEANS,  WITH
RESPECT TO ANY INDIVIDUAL-
  (A) SUCH INDIVIDUAL'S SPOUSE,
  (B) ANY ANCESTOR OR LINEAL DESCENDANT OF SUCH INDIVIDUAL OR SUCH INDI-
VIDUAL'S SPOUSE,
  (C) ANY BROTHER OR SISTER OF THE INDIVIDUAL, AND
  (D) ANY SPOUSE OF ANY INDIVIDUAL DESCRIBED IN SUBPARAGRAPH (B) OR
(C).
  (3)  ATTRIBUTION.  THE  RULE  OF  SECTION  2701(E)(3)  SHALL APPLY FOR
PURPOSES OF DETERMINING THE INTERESTS HELD BY ANY INDIVIDUAL.
  S 7872. TREATMENT OF LOANS WITH BELOW-MARKET INTEREST RATES
  (A) TREATMENT OF GIFT LOANS AND DEMAND LOANS. (1)  IN  GENERAL.    FOR
PURPOSES  OF  THIS  TITLE, IN THE CASE OF ANY BELOW-MARKET LOAN TO WHICH
THIS SECTION APPLIES AND WHICH IS A GIFT LOAN  OR  A  DEMAND  LOAN,  THE
FORGONE INTEREST SHALL BE TREATED AS-
--(A) TRANSFERRED FROM THE LENDER TO THE BORROWER, AND
--(B) RETRANSFERRED BY THE BORROWER TO THE LENDER AS INTEREST.
  (2)  TIME  WHEN  TRANSFERS MADE. EXCEPT AS OTHERWISE PROVIDED IN REGU-
LATIONS PRESCRIBED BY THE SECRETARY, ANY FORGONE  INTEREST  ATTRIBUTABLE
TO PERIODS DURING ANY CALENDAR YEAR SHALL BE TREATED AS TRANSFERRED (AND
RETRANSFERRED)  UNDER  PARAGRAPH  (1)  ON  THE LAST DAY OF SUCH CALENDAR
YEAR.
  (B) TREATMENT OF OTHER  BELOW-MARKET  LOANS.  (1)  IN  GENERAL.    FOR
PURPOSES  OF  THIS  TITLE, IN THE CASE OF ANY BELOW-MARKET LOAN TO WHICH
THIS SECTION APPLIES AND TO WHICH SUBSECTION (A)(1) DOES NOT APPLY,  THE
LENDER  SHALL  BE TREATED AS HAVING TRANSFERRED ON THE DATE THE LOAN WAS
MADE (OR, IF LATER, ON THE FIRST DAY ON WHICH THIS  SECTION  APPLIES  TO
SUCH LOAN), AND THE BORROWER SHALL BE TREATED AS HAVING RECEIVED ON SUCH
DATE, CASH IN AN AMOUNT EQUAL TO THE EXCESS OF-
--(A) THE AMOUNT LOANED, OVER
--(B)  THE  PRESENT  VALUE OF ALL PAYMENTS WHICH ARE REQUIRED TO BE MADE
UNDER THE TERMS OF THE LOAN.

S. 6359--D                         272                        A. 8559--D

  (2) OBLIGATION TREATED AS HAVING ORIGINAL ISSUE DISCOUNT. FOR PURPOSES
OF THIS TITLE-
  (A)  IN  GENERAL. ANY BELOW-MARKET LOAN TO WHICH PARAGRAPH (1) APPLIES
SHALL BE TREATED AS HAVING ORIGINAL ISSUE DISCOUNT IN AN AMOUNT EQUAL TO
THE EXCESS DESCRIBED IN PARAGRAPH (1).
  (B) AMOUNT IN ADDITION TO OTHER ORIGINAL ISSUE DISCOUNT. ANY  ORIGINAL
ISSUE  DISCOUNT  WHICH A LOAN IS TREATED AS HAVING BY REASON OF SUBPARA-
GRAPH (A) SHALL BE IN ADDITION TO ANY OTHER ORIGINAL ISSUE  DISCOUNT  ON
SUCH LOAN (DETERMINED WITHOUT REGARD TO SUBPARAGRAPH (A)).
  (C)  BELOW-MARKET  LOANS  TO  WHICH  SECTION  APPLIES. (1) IN GENERAL.
EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION AND SUBSECTION (G), THIS
SECTION SHALL APPLY TO-
  (A) GIFTS. ANY BELOW-MARKET LOAN WHICH IS A GIFT LOAN.
  (B) COMPENSATION-RELATED LOANS.  ANY  BELOW-MARKET  LOAN  DIRECTLY  OR
INDIRECTLY BETWEEN-
--(I) AN EMPLOYER AND AN EMPLOYEE, OR
--(II)  AN INDEPENDENT CONTRACTOR AND A PERSON FOR WHOM SUCH INDEPENDENT
CONTRACTOR PROVIDES SERVICES.
  (C) CORPORATION-SHAREHOLDER LOANS. ANY BELOW-MARKET LOAN  DIRECTLY  OR
INDIRECTLY  BETWEEN  A  CORPORATION  AND  ANY SHAREHOLDER OF SUCH CORPO-
RATION.
  (D) TAX AVOIDANCE LOANS. ANY BELOW-MARKET  LOAN  1  OF  THE  PRINCIPAL
PURPOSES  OF  THE INTEREST ARRANGEMENTS OF WHICH IS THE AVOIDANCE OF ANY
FEDERAL TAX.
  (E) OTHER BELOW-MARKET LOANS. TO THE EXTENT PROVIDED  IN  REGULATIONS,
ANY  BELOW-MARKET  LOAN WHICH IS NOT DESCRIBED IN SUBPARAGRAPH (A), (B),
(C), OR (F) IF THE INTEREST ARRANGEMENTS OF SUCH LOAN HAVE A SIGNIFICANT
EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
  (F) LOANS TO QUALIFIED CONTINUING CARE FACILITIES.  ANY  LOAN  TO  ANY
QUALIFIED  CONTINUING  CARE  FACILITY  PURSUANT  TO  A  CONTINUING  CARE
CONTRACT.
  (2) $10,000 DE MINIMIS EXCEPTION FOR GIFT LOANS  BETWEEN  INDIVIDUALS.
(A)  IN  GENERAL. IN THE CASE OF ANY GIFT LOAN DIRECTLY BETWEEN INDIVID-
UALS, THIS SECTION SHALL NOT APPLY TO ANY DAY  ON  WHICH  THE  AGGREGATE
OUTSTANDING  AMOUNT  OF  LOANS  BETWEEN SUCH INDIVIDUALS DOES NOT EXCEED
$10,000.
  (B) DE MINIMIS EXCEPTION NOT TO APPLY TO LOANS ATTRIBUTABLE TO  ACQUI-
SITION OF INCOME-PRODUCING ASSETS.
--SUBPARAGRAPH  (A)  SHALL NOT APPLY TO ANY GIFT LOAN DIRECTLY ATTRIBUT-
ABLE TO THE PURCHASE OR CARRYING OF INCOME-PRODUCING ASSETS.
  (C) CROSS REFERENCE. FOR LIMITATION  ON  AMOUNT  TREATED  AS  INTEREST
WHERE LOANS DO NOT EXCEED $100,000, SEE SUBSECTION (D)(1).
  (3)  $10,000  DE MINIMIS EXCEPTION FOR COMPENSATION-RELATED AND CORPO-
RATE-SHAREHOLDER LOANS.  (A)  IN  GENERAL.  IN  THE  CASE  OF  ANY  LOAN
DESCRIBED  IN  SUBPARAGRAPH  (B)  OR  (C) OF PARAGRAPH (1), THIS SECTION
SHALL NOT APPLY TO ANY DAY ON WHICH THE AGGREGATE OUTSTANDING AMOUNT  OF
LOANS BETWEEN THE BORROWER AND LENDER DOES NOT EXCEED $10,000.
  (B) EXCEPTION NOT TO APPLY WHERE 1 OF PRINCIPAL PURPOSES IS TAX AVOID-
ANCE.    SUBPARAGRAPH  (A)  SHALL  NOT  APPLY  TO  ANY LOAN THE INTEREST
ARRANGEMENTS OF WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES  THE  AVOID-
ANCE OF ANY FEDERAL TAX.
  (D)  SPECIAL  RULES FOR GIFT LOANS. (1) LIMITATION ON INTEREST ACCRUAL
FOR PURPOSES OF INCOME TAXES WHERE LOANS DO NOT EXCEED $100,000. (A)  IN
GENERAL. FOR PURPOSES OF SUBTITLE A, IN THE CASE OF A GIFT LOAN DIRECTLY
BETWEEN INDIVIDUALS, THE AMOUNT TREATED AS RETRANSFERRED BY THE BORROWER

S. 6359--D                         273                        A. 8559--D

TO  THE  LENDER AS OF THE CLOSE OF ANY YEAR SHALL NOT EXCEED THE BORROW-
ER'S NET INVESTMENT INCOME FOR SUCH YEAR.
  (B)  LIMITATION  NOT  TO  APPLY  WHERE  1 OF PRINCIPAL PURPOSES IS TAX
AVOIDANCE.  SUBPARAGRAPH (A) SHALL NOT APPLY TO ANY  LOAN  THE  INTEREST
ARRANGEMENTS  OF  WHICH HAVE AS 1 OF THEIR PRINCIPAL PURPOSES THE AVOID-
ANCE OF ANY FEDERAL TAX.
  (C) SPECIAL RULE WHERE MORE THAN 1 GIFT LOAN OUTSTANDING. FOR PURPOSES
OF SUBPARAGRAPH (A), IN ANY CASE IN WHICH  A  BORROWER  HAS  OUTSTANDING
MORE  THAN 1 GIFT LOAN, THE NET INVESTMENT INCOME OF SUCH BORROWER SHALL
BE ALLOCATED AMONG SUCH LOANS IN PROPORTION TO  THE  RESPECTIVE  AMOUNTS
WHICH  WOULD  BE TREATED AS RETRANSFERRED BY THE BORROWER WITHOUT REGARD
TO THIS PARAGRAPH.
  (D) LIMITATION NOT TO APPLY WHERE AGGREGATE  AMOUNT  OF  LOANS  EXCEED
$100,000.    THIS PARAGRAPH SHALL NOT APPLY TO ANY LOAN MADE BY A LENDER
TO A BORROWER FOR ANY DAY ON WHICH THE AGGREGATE OUTSTANDING  AMOUNT  OF
LOANS BETWEEN THE BORROWER AND LENDER EXCEEDS $100,000.
  (E) NET INVESTMENT INCOME. FOR PURPOSES OF THIS PARAGRAPH-
  (I) IN GENERAL. THE TERM "NET INVESTMENT INCOME" HAS THE MEANING GIVEN
SUCH TERM BY SECTION 163(D)(4).
  (II) DE MINIMIS RULE. IF THE NET INVESTMENT INCOME OF ANY BORROWER FOR
ANY  YEAR  DOES  NOT  EXCEED  $1,000,  THE NET INVESTMENT INCOME OF SUCH
BORROWER FOR SUCH YEAR SHALL BE TREATED AS ZERO.
  (III) ADDITIONAL AMOUNTS TREATED AS INTEREST. IN DETERMINING  THE  NET
INVESTMENT  INCOME  OF  A PERSON FOR ANY YEAR, ANY AMOUNT WHICH WOULD BE
INCLUDED IN THE GROSS INCOME OF SUCH PERSON FOR SUCH YEAR BY  REASON  OF
SECTION 1272 IF SUCH SECTION APPLIED TO ALL DEFERRED PAYMENT OBLIGATIONS
SHALL BE TREATED AS INTEREST RECEIVED BY SUCH PERSON FOR SUCH YEAR.
  (IV)  DEFERRED  PAYMENT  OBLIGATIONS. THE TERM "DEFERRED PAYMENT OBLI-
GATION" INCLUDES ANY MARKET DISCOUNT BOND, SHORT-TERM OBLIGATION, UNITED
STATES SAVINGS BOND, ANNUITY, OR SIMILAR OBLIGATION.
  (2) SPECIAL RULE FOR GIFT TAX. IN THE CASE OF ANY GIFT LOAN WHICH IS A
TERM LOAN, SUBSECTION (B)(1) (AND NOT SUBSECTION (A))  SHALL  APPLY  FOR
PURPOSES OF CHAPTER 12.
  (E)  DEFINITIONS  OF  BELOW-MARKET  LOAN  AND  FORGONE  INTEREST.  FOR
PURPOSES OF THIS SECTION-
  (1) BELOW-MARKET LOAN. THE TERM "BELOW-MARKET LOAN" MEANS ANY LOAN IF-
--(A) IN THE CASE OF A DEMAND LOAN, INTEREST IS PAYABLE ON THE LOAN AT A
RATE LESS THAN THE APPLICABLE FEDERAL RATE, OR
--(B) IN THE CASE OF A TERM LOAN, THE AMOUNT LOANED EXCEEDS THE  PRESENT
VALUE OF ALL PAYMENTS DUE UNDER THE LOAN.
  (2)  FORGONE INTEREST. THE TERM "FORGONE INTEREST" MEANS, WITH RESPECT
TO ANY PERIOD DURING WHICH THE LOAN IS OUTSTANDING, THE EXCESS OF-
--(A) THE AMOUNT OF INTEREST WHICH WOULD HAVE BEEN PAYABLE ON  THE  LOAN
FOR THE PERIOD IF INTEREST ACCRUED ON THE LOAN AT THE APPLICABLE FEDERAL
RATE  AND  WERE  PAYABLE  ANNUALLY  ON THE DAY REFERRED TO IN SUBSECTION
(A)(2), OVER
--(B) ANY INTEREST PAYABLE ON THE LOAN PROPERLY ALLOCABLE TO SUCH  PERI-
OD.
  (F) OTHER DEFINITIONS AND SPECIAL RULES. FOR PURPOSES OF THIS SECTION-
  (1)  PRESENT  VALUE.  THE PRESENT VALUE OF ANY PAYMENT SHALL BE DETER-
MINED IN THE MANNER PROVIDED BY REGULATIONS PRESCRIBED BY THE SECRETARY-
--(A) AS OF THE DATE OF THE LOAN, AND
--(B) BY USING A DISCOUNT RATE EQUAL TO THE APPLICABLE FEDERAL RATE.
  (2) APPLICABLE FEDERAL RATE. (A) TERM LOANS. IN THE CASE OF  ANY  TERM
LOAN,  THE  APPLICABLE FEDERAL RATE SHALL BE THE APPLICABLE FEDERAL RATE

S. 6359--D                         274                        A. 8559--D

IN EFFECT UNDER SECTION 1274(D) (AS OF THE DAY ON  WHICH  THE  LOAN  WAS
MADE), COMPOUNDED SEMIANNUALLY.
  (B) DEMAND LOANS. IN THE CASE OF A DEMAND LOAN, THE APPLICABLE FEDERAL
RATE  SHALL  BE  THE  FEDERAL  SHORT-TERM  RATE  IN EFFECT UNDER SECTION
1274(D) FOR THE PERIOD FOR WHICH THE AMOUNT OF FORGONE INTEREST IS BEING
DETERMINED, COMPOUNDED SEMIANNUALLY.
  (3) GIFT LOAN. THE TERM "GIFT LOAN" MEANS ANY BELOW-MARKET LOAN  WHERE
THE FORGOING OF INTEREST IS IN THE NATURE OF A GIFT.
  (4)  AMOUNT LOANED. THE TERM "AMOUNT LOANED" MEANS THE AMOUNT RECEIVED
BY THE BORROWER.
  (5) DEMAND LOAN. THE TERM "DEMAND LOAN" MEANS ANY LOAN WHICH IS  PAYA-
BLE  IN  FULL  AT  ANY  TIME ON THE DEMAND OF THE LENDER. SUCH TERM ALSO
INCLUDES (FOR PURPOSES OTHER THAN  DETERMINING  THE  APPLICABLE  FEDERAL
RATE  UNDER  PARAGRAPH  (2))  ANY  LOAN  IF THE BENEFITS OF THE INTEREST
ARRANGEMENTS OF SUCH LOAN ARE NOT TRANSFERABLE AND  ARE  CONDITIONED  ON
THE  FUTURE PERFORMANCE OF SUBSTANTIAL SERVICES BY AN INDIVIDUAL. TO THE
EXTENT PROVIDED IN REGULATIONS, SUCH TERM ALSO INCLUDES ANY LOAN WITH AN
INDEFINITE MATURITY.
  (6) TERM LOAN. THE TERM "TERM LOAN" MEANS ANY  LOAN  WHICH  IS  NOT  A
DEMAND LOAN.
  (7)  HUSBAND AND WIFE TREATED AS 1 PERSON. A HUSBAND AND WIFE SHALL BE
TREATED AS 1 PERSON.
  (8) LOANS TO WHICH SECTION 483, 643(I), OR 1274 APPLIES. THIS  SECTION
SHALL  NOT  APPLY  TO  ANY  LOAN  TO  WHICH SECTION 483, 643(I), OR 1274
APPLIES.
  (9) NO WITHHOLDING. NO AMOUNT SHALL BE WITHHELD UNDER CHAPTER 24  WITH
RESPECT TO-
--(A)   ANY   AMOUNT  TREATED  AS  TRANSFERRED  OR  RETRANSFERRED  UNDER
SUBSECTION (A), AND
--(B) ANY AMOUNT TREATED AS RECEIVED UNDER SUBSECTION (B).
  (10) SPECIAL RULE FOR TERM LOANS. IF THIS SECTION APPLIES TO ANY  TERM
LOAN  ON  ANY  DAY,  THIS  SECTION  SHALL CONTINUE TO APPLY TO SUCH LOAN
NOTWITHSTANDING PARAGRAPHS (2) AND (3) OF SUBSECTION (C). IN THE CASE OF
A GIFT LOAN, THE PRECEDING SENTENCE SHALL ONLY  APPLY  FOR  PURPOSES  OF
CHAPTER 12.
  (11)  TIME  FOR  DETERMINING  RATE  APPLICABLE  TO EMPLOYEE RELOCATION
LOANS. (A) IN GENERAL. IN THE CASE OF ANY TERM LOAN MADE BY AN  EMPLOYER
TO  AN  EMPLOYEE  THE  PROCEEDS  OF  WHICH  ARE  USED BY THE EMPLOYEE TO
PURCHASE A PRINCIPAL RESIDENCE (WITHIN THE MEANING OF SECTION 121),  THE
DETERMINATION  OF  THE  APPLICABLE  FEDERAL RATE SHALL BE MADE AS OF THE
DATE THE WRITTEN CONTRACT TO PURCHASE SUCH RESIDENCE WAS ENTERED INTO.
  (B) PARAGRAPH ONLY TO APPLY TO CASES TO  WHICH  SECTION  217  APPLIES.
SUBPARAGRAPH  (A)  SHALL ONLY APPLY TO THE PURCHASE OF A PRINCIPAL RESI-
DENCE IN CONNECTION WITH THE COMMENCEMENT OF WORK BY AN  EMPLOYEE  OR  A
CHANGE  IN  THE  PRINCIPAL PLACE OF WORK OF AN EMPLOYEE TO WHICH SECTION
217 APPLIES.
  (G) EXCEPTION FOR CERTAIN LOANS TO QUALIFIED CONTINUING  CARE  FACILI-
TIES.    (1)  IN  GENERAL. THIS SECTION SHALL NOT APPLY FOR ANY CALENDAR
YEAR TO ANY BELOW-MARKET LOAN MADE BY A LENDER TO A QUALIFIED CONTINUING
CARE FACILITY PURSUANT TO A CONTINUING CARE CONTRACT IF THE  LENDER  (OR
THE LENDER'S SPOUSE) ATTAINS AGE 65 BEFORE THE CLOSE OF SUCH YEAR.
  (2)  $90,000  LIMIT. PARAGRAPH (1) SHALL APPLY ONLY TO THE EXTENT THAT
THE AGGREGATE OUTSTANDING AMOUNT OF ANY LOAN  TO  WHICH  SUCH  PARAGRAPH
APPLIES (DETERMINED WITHOUT REGARD TO THIS PARAGRAPH), WHEN ADDED TO THE
AGGREGATE  OUTSTANDING  AMOUNT  OF  ALL OTHER PREVIOUS LOANS BETWEEN THE

S. 6359--D                         275                        A. 8559--D

LENDER (OR THE LENDER'S SPOUSE) AND ANY QUALIFIED CONTINUING CARE FACIL-
ITY TO WHICH PARAGRAPH (1) APPLIES, DOES NOT EXCEED $90,000.
  (3)  CONTINUING  CARE CONTRACT. FOR PURPOSES OF THIS SECTION, THE TERM
"CONTINUING CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN  INDIVID-
UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
--(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
ING CARE FACILITY FOR THEIR LIFE OR LIVES,
--(B) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE-
--(I) WILL FIRST-
--(I)  RESIDE  IN  A  SEPARATE,  INDEPENDENT LIVING UNIT WITH ADDITIONAL
FACILITIES OUTSIDE SUCH UNIT  FOR  THE  PROVIDING  OF  MEALS  AND  OTHER
PERSONAL CARE, AND
--(II) NOT REQUIRE LONG-TERM NURSING CARE, AND
--(II)  THEN  WILL BE PROVIDED LONG-TERM AND SKILLED NURSING CARE AS THE
HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S SPOUSE REQUIRES, AND
--(C) NO ADDITIONAL SUBSTANTIAL PAYMENT IS REQUIRED IF  SUCH  INDIVIDUAL
OR  INDIVIDUAL'S  SPOUSE  REQUIRES  INCREASED  PERSONAL CARE SERVICES OR
LONG-TERM AND SKILLED NURSING CARE.
  (4) QUALIFIED CONTINUING CARE FACILITY. (A) IN GENERAL.  FOR  PURPOSES
OF  THIS  SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY" MEANS 1
OR MORE FACILITIES-
--(I) WHICH ARE DESIGNED  TO  PROVIDE  SERVICES  UNDER  CONTINUING  CARE
CONTRACTS, AND
--(II)  SUBSTANTIALLY  ALL  OF  THE  RESIDENTS  OF  WHICH ARE COVERED BY
CONTINUING CARE CONTRACTS.
  (B) SUBSTANTIALLY ALL FACILITIES MUST BE OWNED OR OPERATED BY  BORROW-
ER.  A  FACILITY  SHALL  NOT  BE  TREATED AS A QUALIFIED CONTINUING CARE
FACILITY UNLESS SUBSTANTIALLY ALL FACILITIES WHICH ARE USED  TO  PROVIDE
SERVICES  WHICH  ARE  REQUIRED  TO  BE  PROVIDED UNDER A CONTINUING CARE
CONTRACT ARE OWNED OR OPERATED BY THE BORROWER.
  (C) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
ITY" SHALL NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH  IS  TRADI-
TIONALLY CONSIDERED A NURSING HOME.
  (5)  ADJUSTMENT OF LIMIT FOR INFLATION. (A) IN GENERAL. IN THE CASE OF
ANY LOAN MADE DURING ANY CALENDAR YEAR AFTER 1986 TO WHICH PARAGRAPH (1)
APPLIES, THE DOLLAR AMOUNT IN PARAGRAPH (2) SHALL BE  INCREASED  BY  THE
INFLATION  ADJUSTMENT  FOR  SUCH  CALENDAR  YEAR. ANY INCREASE UNDER THE
PRECEDING SENTENCE SHALL BE ROUNDED TO THE NEAREST MULTIPLE OF $100 (OR,
IF SUCH INCREASE IS A MULTIPLE OF $50, SUCH INCREASE SHALL BE  INCREASED
TO THE NEAREST MULTIPLE OF $100).
  (B)  INFLATION  ADJUSTMENT.  FOR  PURPOSES  OF  SUBPARAGRAPH  (A), THE
INFLATION ADJUSTMENT FOR ANY CALENDAR YEAR IS THE PERCENTAGE (IF ANY) BY
WHICH-
--(I) THE CPI FOR THE PRECEDING CALENDAR YEAR EXCEEDS
--(II) THE CPI FOR CALENDAR YEAR 1985.
  1. FOR PURPOSES OF THE PRECEDING SENTENCE, THE CPI  FOR  ANY  CALENDAR
YEAR  IS  THE AVERAGE OF THE CONSUMER PRICE INDEX AS OF THE CLOSE OF THE
12-MONTH PERIOD ENDING ON SEPTEMBER 30 OF SUCH CALENDAR YEAR.
  (6) SUSPENSION OF APPLICATION. PARAGRAPH (1) SHALL NOT APPLY  FOR  ANY
CALENDAR YEAR TO WHICH SUBSECTION (H) APPLIES.
  (H)  EXCEPTION  FOR LOANS TO QUALIFIED CONTINUING CARE FACILITIES. (1)
IN GENERAL. THIS SECTION SHALL NOT APPLY FOR ANY CALENDAR  YEAR  TO  ANY
BELOW-MARKET  LOAN OWED BY A FACILITY WHICH ON THE LAST DAY OF SUCH YEAR
IS A QUALIFIED CONTINUING CARE FACILITY, IF SUCH LOAN WAS MADE  PURSUANT
TO A CONTINUING CARE CONTRACT AND IF THE LENDER (OR THE LENDER'S SPOUSE)
ATTAINS AGE 62 BEFORE THE CLOSE OF SUCH YEAR.

S. 6359--D                         276                        A. 8559--D

  (2)  CONTINUING  CARE CONTRACT. FOR PURPOSES OF THIS SECTION, THE TERM
"CONTINUING CARE CONTRACT" MEANS A WRITTEN CONTRACT BETWEEN AN  INDIVID-
UAL AND A QUALIFIED CONTINUING CARE FACILITY UNDER WHICH-
--(A) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE MAY USE A QUALIFIED CONTINU-
ING CARE FACILITY FOR THEIR LIFE OR LIVES,
--(B)  THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE WILL BE PROVIDED WITH HOUS-
ING, AS APPROPRIATE FOR THE HEALTH OF SUCH  INDIVIDUAL  OR  INDIVIDUAL'S
SPOUSE-
--(I)  IN  AN  INDEPENDENT  LIVING  UNIT (WHICH HAS ADDITIONAL AVAILABLE
FACILITIES OUTSIDE SUCH UNIT  FOR  THE  PROVISION  OF  MEALS  AND  OTHER
PERSONAL CARE), AND
--(II)  IN  AN  ASSISTED  LIVING  FACILITY  OR A NURSING FACILITY, AS IS
AVAILABLE IN THE CONTINUING CARE FACILITY, AND
--(C) THE INDIVIDUAL OR INDIVIDUAL'S SPOUSE WILL  BE  PROVIDED  ASSISTED
LIVING  OR NURSING CARE AS THE HEALTH OF SUCH INDIVIDUAL OR INDIVIDUAL'S
SPOUSE REQUIRES, AND AS IS AVAILABLE IN THE CONTINUING CARE FACILITY.
--THE SECRETARY SHALL ISSUE GUIDANCE WHICH LIMITS SUCH TERM TO CONTRACTS
WHICH PROVIDE ONLY FACILITIES, CARE,  AND  SERVICES  DESCRIBED  IN  THIS
PARAGRAPH.
  (3)  QUALIFIED  CONTINUING CARE FACILITY. (A) IN GENERAL. FOR PURPOSES
OF THIS SECTION, THE TERM "QUALIFIED CONTINUING CARE FACILITY"  MEANS  1
OR MORE FACILITIES-
--(I)  WHICH  ARE  DESIGNED  TO  PROVIDE  SERVICES UNDER CONTINUING CARE
CONTRACTS,
--(II) WHICH INCLUDE AN INDEPENDENT LIVING UNIT, PLUS AN ASSISTED LIVING
OR NURSING FACILITY, OR BOTH, AND
--(III) SUBSTANTIALLY ALL OF THE INDEPENDENT LIVING  UNIT  RESIDENTS  OF
WHICH ARE COVERED BY CONTINUING CARE CONTRACTS.
  (B) NURSING HOMES EXCLUDED. THE TERM "QUALIFIED CONTINUING CARE FACIL-
ITY"  SHALL  NOT INCLUDE ANY FACILITY WHICH IS OF A TYPE WHICH IS TRADI-
TIONALLY CONSIDERED A NURSING HOME.
  (I) REGULATIONS. (1) IN GENERAL. THE SECRETARY  SHALL  PRESCRIBE  SUCH
REGULATIONS AS MAY BE NECESSARY OR APPROPRIATE TO CARRY OUT THE PURPOSES
OF THIS SECTION, INCLUDING-
--(A)  REGULATIONS  PROVIDING  THAT WHERE, BY REASON OF VARYING RATES OF
INTEREST, CONDITIONAL INTEREST PAYMENTS, WAIVERS OF  INTEREST,  DISPOSI-
TION  OF  THE  LENDER'S  OR  BORROWER'S  INTEREST  IN THE LOAN, OR OTHER
CIRCUMSTANCES, THE PROVISIONS OF THIS  SECTION  DO  NOT  CARRY  OUT  THE
PURPOSES  OF THIS SECTION, ADJUSTMENTS TO THE PROVISIONS OF THIS SECTION
WILL BE MADE TO THE EXTENT NECESSARY TO CARRY OUT THE PURPOSES  OF  THIS
SECTION,
--(B)  REGULATIONS FOR THE PURPOSE OF ASSURING THAT THE POSITIONS OF THE
BORROWER AND LENDER ARE CONSISTENT AS TO THE APPLICATION (OR NONAPPLICA-
TION) OF THIS SECTION, AND
--(C) REGULATIONS EXEMPTING FROM THE APPLICATION  OF  THIS  SECTION  ANY
CLASS OF TRANSACTIONS THE INTEREST ARRANGEMENTS OF WHICH HAVE NO SIGNIF-
ICANT EFFECT ON ANY FEDERAL TAX LIABILITY OF THE LENDER OR THE BORROWER.
  (2)  ESTATE  TAX  COORDINATION.  UNDER  REGULATIONS  PRESCRIBED BY THE
SECRETARY, ANY LOAN WHICH IS MADE WITH DONATIVE INTENT AND  WHICH  IS  A
TERM  LOAN  SHALL  BE TAKEN INTO ACCOUNT FOR PURPOSES OF CHAPTER 11 IN A
MANNER CONSISTENT WITH THE PROVISIONS OF SUBSECTION (B).
  S 6166. EXTENSION OF TIME FOR  PAYMENT  OF  ESTATE  TAX  WHERE  ESTATE
CONSISTS LARGELY OF INTEREST IN CLOSELY HELD BUSINESS. (A) 5-YEAR DEFER-
RAL; 10-YEAR INSTALLMENT PAYMENT.--
  (1)  IN  GENERAL.--IF THE VALUE OF AN INTEREST IN A CLOSELY HELD BUSI-
NESS WHICH IS INCLUDED IN DETERMINING THE GROSS ESTATE OF A DECEDENT WHO

S. 6359--D                         277                        A. 8559--D

WAS (AT THE DATE OF HIS DEATH) A  CITIZEN  OR  RESIDENT  OF  THE  UNITED
STATES EXCEEDS 35 PERCENT OF THE ADJUSTED GROSS ESTATE, THE EXECUTOR MAY
ELECT TO PAY PART OR ALL OF THE TAX IMPOSED BY SECTION 2001 IN 2 OR MORE
(BUT NOT EXCEEDING 10) EQUAL INSTALLMENTS.
  (2)  LIMITATION.--THE  MAXIMUM  AMOUNT  OF  TAX  WHICH  MAY BE PAID IN
INSTALLMENTS UNDER THIS SUBSECTION SHALL BE AN AMOUNT  WHICH  BEARS  THE
SAME  RATIO  TO  THE TAX IMPOSED BY SECTION 2001 (REDUCED BY THE CREDITS
AGAINST SUCH TAX) AS--
  (A) THE CLOSELY HELD BUSINESS AMOUNT, BEARS TO
  (B) THE AMOUNT OF THE ADJUSTED GROSS ESTATE.
  (3) DATE FOR PAYMENT OF INSTALLMENTS.--IF AN ELECTION  IS  MADE  UNDER
PARAGRAPH (1), THE FIRST INSTALLMENT SHALL BE PAID ON OR BEFORE THE DATE
SELECTED  BY  THE EXECUTOR WHICH IS NOT MORE THAN 5 YEARS AFTER THE DATE
PRESCRIBED BY SECTION 6151(A) FOR PAYMENT OF THE TAX, AND EACH  SUCCEED-
ING  INSTALLMENT  SHALL  BE  PAID  ON OR BEFORE THE DATE WHICH IS 1 YEAR
AFTER THE DATE PRESCRIBED BY THIS PARAGRAPH FOR PAYMENT OF THE PRECEDING
INSTALLMENT.
  (B) DEFINITIONS AND SPECIAL RULES.--
  (1) INTEREST IN CLOSELY HELD BUSINESS.--FOR PURPOSES OF THIS  SECTION,
THE TERM "INTEREST IN A CLOSELY HELD BUSINESS" MEANS--
  (A) AN INTEREST AS A PROPRIETOR IN A TRADE OR BUSINESS CARRIED ON AS A
PROPRIETORSHIP;
  (B)  AN  INTEREST AS A PARTNER IN A PARTNERSHIP CARRYING ON A TRADE OR
BUSINESS, IF--
  (I) 20 PERCENT OR MORE OF THE TOTAL CAPITAL INTEREST IN SUCH  PARTNER-
SHIP IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
  (II) SUCH PARTNERSHIP HAD 45 OR FEWER PARTNERS; OR
  (C) STOCK IN A CORPORATION CARRYING ON A TRADE OR BUSINESS IF--
  (I)  20  PERCENT  OR  MORE IN VALUE OF THE VOTING STOCK OF SUCH CORPO-
RATION IS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECEDENT, OR
  (II) SUCH CORPORATION HAD 45 OR FEWER SHAREHOLDERS.
  (2) RULES FOR APPLYING PARAGRAPH (1).--FOR PURPOSES OF PARAGRAPH (1)--
  (A) TIME FOR TESTING.--DETERMINATIONS SHALL BE MADE  AS  OF  THE  TIME
IMMEDIATELY BEFORE THE DECEDENT'S DEATH.
  (B)  CERTAIN  INTERESTS HELD BY HUSBAND AND WIFE.--STOCK OR A PARTNER-
SHIP INTEREST WHICH--
  (I) IS COMMUNITY PROPERTY OF A HUSBAND AND WIFE (OR  THE  INCOME  FROM
WHICH  IS  COMMUNITY INCOME) UNDER THE APPLICABLE COMMUNITY PROPERTY LAW
OF A STATE, OR
  (II) IS HELD BY A HUSBAND AND WIFE AS JOINT TENANTS,  TENANTS  BY  THE
ENTIRETY,  OR TENANTS IN COMMON, SHALL BE TREATED AS OWNED BY ONE SHARE-
HOLDER OR ONE PARTNER, AS THE CASE MAY BE.
  (C) INDIRECT OWNERSHIP.--PROPERTY OWNED, DIRECTLY OR INDIRECTLY, BY OR
FOR A CORPORATION, PARTNERSHIP, ESTATE, OR TRUST SHALL BE CONSIDERED  AS
BEING  OWNED  PROPORTIONATELY  BY  OR FOR ITS SHAREHOLDERS, PARTNERS, OR
BENEFICIARIES. FOR PURPOSES OF THE PRECEDING SENTENCE, A PERSON SHALL BE
TREATED AS A BENEFICIARY OF ANY TRUST ONLY IF SUCH PERSON HAS A  PRESENT
INTEREST IN THE TRUST.
  (D) CERTAIN INTERESTS HELD BY MEMBERS OF DECEDENT'S FAMILY.--ALL STOCK
AND  ALL  PARTNERSHIP INTERESTS HELD BY THE DECEDENT OR BY ANY MEMBER OF
HIS FAMILY (WITHIN THE MEANING OF SECTION 267(C)(4)) SHALL BE TREATED AS
OWNED BY THE DECEDENT.
  (3) FARMHOUSES AND CERTAIN OTHER STRUCTURES TAKEN  INTO  ACCOUNT.--FOR
PURPOSES OF THE 35-PERCENT REQUIREMENT OF SUBSECTION (A)(1), AN INTEREST
IN  A CLOSELY HELD BUSINESS WHICH IS THE BUSINESS OF FARMING INCLUDES AN
INTEREST IN RESIDENTIAL BUILDINGS AND RELATED IMPROVEMENTS ON  THE  FARM

S. 6359--D                         278                        A. 8559--D

WHICH ARE OCCUPIED ON A REGULAR BASIS BY THE OWNER OR LESSEE OF THE FARM
OR BY PERSONS EMPLOYED BY SUCH OWNER OR LESSEE FOR PURPOSES OF OPERATING
OR MAINTAINING THE FARM.
  (4)  VALUE.--FOR PURPOSES OF THIS SECTION, VALUE SHALL BE VALUE DETER-
MINED FOR PURPOSES OF CHAPTER 11 (RELATING TO ESTATE TAX).
  (5) CLOSELY HELD BUSINESS AMOUNT.--FOR PURPOSES OF THIS  SECTION,  THE
TERM "CLOSELY HELD BUSINESS AMOUNT" MEANS THE VALUE OF THE INTEREST IN A
CLOSELY HELD BUSINESS WHICH QUALIFIES UNDER SUBSECTION (A)(1).
  (6)  ADJUSTED  GROSS  ESTATE.--FOR PURPOSES OF THIS SECTION, THE TERM,
"ADJUSTED GROSS ESTATE" MEANS THE VALUE OF THE GROSS ESTATE  REDUCED  BY
THE  SUM  OF  THE AMOUNTS ALLOWABLE AS A DEDUCTION UNDER SECTION 2053 OR
2054. SUCH SUM SHALL BE DETERMINED ON THE BASIS OF THE FACTS AND CIRCUM-
STANCES IN EXISTENCE ON THE DATE (INCLUDING EXTENSIONS) FOR  FILING  THE
RETURN OF TAX IMPOSED BY SECTION 2001 (OR, IF EARLIER, THE DATE ON WHICH
SUCH RETURN IS FILED).
  (7) PARTNERSHIP INTERESTS AND STOCK WHICH IS NOT READILY TRADABLE.--
  (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE BENEFITS OF THIS PARAGRAPH
(AT  SUCH  TIME AND IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS
PRESCRIBE), THEN--
  (I) FOR PURPOSES OF PARAGRAPH (1)(B)(I)  OR  (1)(C)(I)  (WHICHEVER  IS
APPROPRIATE) AND FOR PURPOSES OF SUBSECTION (C), ANY CAPITAL INTEREST IN
A PARTNERSHIP AND ANY NON-READILY-TRADABLE STOCK WHICH (AFTER THE APPLI-
CATION  OF  PARAGRAPH  (2)) IS TREATED AS OWNED BY THE DECEDENT SHALL BE
TREATED AS INCLUDED IN DETERMINING THE VALUE  OF  THE  DECEDENT'S  GROSS
ESTATE,
  (II) THE EXECUTOR SHALL BE TREATED AS HAVING SELECTED UNDER SUBSECTION
(A)(3) THE DATE PRESCRIBED BY SECTION 6151(A), AND
  (III)  FOR PURPOSES OF APPLYING SECTION 6601(J), THE 2-PERCENT PORTION
(AS DEFINED IN SUCH SECTION) SHALL BE TREATED AS BEING ZERO.
  (B) NON-READILY-TRADABLE STOCK DEFINED.--FOR PURPOSES  OF  THIS  PARA-
GRAPH,  THE  TERM "NON-READILY-TRADABLE STOCK" MEANS STOCK FOR WHICH, AT
THE TIME OF THE DECEDENT'S  DEATH,  THERE  WAS  NO  MARKET  ON  A  STOCK
EXCHANGE OR IN AN OVER-THE-COUNTER MARKET.
  (8)  STOCK  IN  HOLDING  COMPANY  TREATED AS BUSINESS COMPANY STOCK IN
CERTAIN CASES.--
  (A) IN GENERAL.--IF THE EXECUTOR ELECTS THE  BENEFITS  OF  THIS  PARA-
GRAPH, THEN--
  (I)  HOLDING  COMPANY  STOCK  TREATED  AS BUSINESS COMPANY STOCK.--FOR
PURPOSES OF THIS SECTION, THE PORTION OF THE STOCK OF ANY HOLDING COMPA-
NY WHICH REPRESENTS DIRECT OWNERSHIP (OR INDIRECT OWNERSHIP THROUGH 1 OR
MORE OTHER HOLDING COMPANIES) BY SUCH  COMPANY  IN  A  BUSINESS  COMPANY
SHALL BE DEEMED TO BE STOCK IN SUCH BUSINESS COMPANY.
  (II)  5-YEAR  DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE EXECUTOR SHALL
BE  TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE   DATE
PRESCRIBED BY SECTION 6151(A).
  (III)  2-PERCENT INTEREST RATE NOT TO APPLY.--FOR PURPOSES OF APPLYING
SECTION 6601(J), THE 2-PERCENT PORTION  (AS  DEFINED  IN  SUCH  SECTION)
SHALL BE TREATED AS BEING ZERO.
  (B) ALL STOCK MUST BE NON-READILY-TRADABLE STOCK.--
  (I)  IN GENERAL.--NO STOCK SHALL BE TAKEN INTO ACCOUNT FOR PURPOSES OF
APPLYING THIS PARAGRAPH UNLESS IT IS NON-READILY-TRADABLE STOCK
  (WITHIN THE MEANING OF PARAGRAPH (7)(B)).
  (II) SPECIAL APPLICATION WHERE ONLY HOLDING COMPANY STOCK IS NON-READ-
ILY-TRADABLE STOCK.--IF THE REQUIREMENTS OF CLAUSE (I) ARE NOT MET,  BUT
ALL OF THE STOCK OF EACH HOLDING COMPANY TAKEN INTO ACCOUNT IS NON-READ-

S. 6359--D                         279                        A. 8559--D

ILY-TRADABLE,  THEN  THIS  PARAGRAPH  SHALL APPLY, BUT SUBSECTION (A)(1)
SHALL BE APPLIED BY SUBSTITUTING "5" FOR "10".
  (C)   APPLICATION   OF   VOTING   STOCK   REQUIREMENT   OF   PARAGRAPH
(1)(C)(I).--FOR PURPOSES OF CLAUSE (I) OF PARAGRAPH (1)(C),  THE  DEEMED
STOCK RESULTING FROM THE APPLICATION OF SUBPARAGRAPH (A) SHALL BE TREAT-
ED AS VOTING STOCK TO THE EXTENT THAT VOTING STOCK IN THE HOLDING COMPA-
NY OWNS DIRECTLY (OR THROUGH THE VOTING STOCK OF 1 OR MORE OTHER HOLDING
COMPANIES) VOTING STOCK IN THE BUSINESS COMPANY.
  (D) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) HOLDING COMPANY.--THE TERM "HOLDING COMPANY" MEANS ANY CORPORATION
HOLDING STOCK IN ANOTHER CORPORATION.
  (II)  BUSINESS  COMPANY.--THE TERM "BUSINESS COMPANY" MEANS ANY CORPO-
RATION CARRYING ON A TRADE OR BUSINESS.
  (9) DEFERRAL NOT AVAILABLE FOR PASSIVE ASSETS.--
  (A) IN GENERAL.--FOR PURPOSES OF SUBSECTION (A)(1) AND DETERMINING THE
CLOSELY HELD BUSINESS AMOUNT (BUT NOT FOR PURPOSES OF  SUBSECTION  (G)),
THE  VALUE  OF ANY INTEREST IN A CLOSELY HELD BUSINESS SHALL NOT INCLUDE
THE VALUE OF THAT PORTION OF SUCH  INTEREST  WHICH  IS  ATTRIBUTABLE  TO
PASSIVE ASSETS HELD BY THE BUSINESS.
  (B) PASSIVE ASSET DEFINED.--FOR PURPOSES OF THIS PARAGRAPH--
  (I)  IN  GENERAL.--THE TERM "PASSIVE ASSET" MEANS ANY ASSET OTHER THAN
AN ASSET USED IN CARRYING ON A TRADE OR BUSINESS.
  (II)  STOCK  TREATED  AS  PASSIVE  ASSET.--THE  TERM  "PASSIVE  ASSET"
INCLUDES ANY STOCK IN ANOTHER CORPORATION UNLESS--
  (I)  SUCH  STOCK  IS  TREATED  AS HELD BY THE DECEDENT BY REASON OF AN
ELECTION UNDER PARAGRAPH (8), AND
  (II) SUCH STOCK QUALIFIED UNDER SUBSECTION (A)(1).
  (III) EXCEPTION FOR ACTIVE CORPORATIONS.--IF--
  (I) A CORPORATION OWNS 20 PERCENT OR MORE IN VALUE OF THE VOTING STOCK
OF ANOTHER CORPORATION, OR SUCH OTHER CORPORATION HAS 45 OR FEWER SHARE-
HOLDERS, AND
  (II) 80 PERCENT OR MORE OF THE VALUE OF THE ASSETS OF EACH SUCH CORPO-
RATION IS ATTRIBUTABLE TO ASSETS USED IN CARRYING ON A  TRADE  OR  BUSI-
NESS,  THEN  SUCH  CORPORATIONS  SHALL  BE  TREATED AS 1 CORPORATION FOR
PURPOSES OF CLAUSE (II). FOR PURPOSES OF APPLYING SUBCLAUSE (II) TO  THE
CORPORATION HOLDING THE STOCK OF THE OTHER CORPORATION, SUCH STOCK SHALL
NOT BE TAKEN INTO ACCOUNT.
  (10) STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS STOCK
IN AN ACTIVE TRADE OR BUSINESS COMPANY.--
  (A)  IN  GENERAL.--IF  THE  EXECUTOR ELECTS THE BENEFITS OF THIS PARA-
GRAPH, THEN--
  (I) STOCK IN QUALIFYING LENDING AND FINANCE BUSINESS TREATED AS  STOCK
IN  AN  ACTIVE TRADE OR BUSINESS COMPANY.--FOR PURPOSES OF THIS SECTION,
ANY ASSET USED IN A QUALIFYING LENDING AND  FINANCE  BUSINESS  SHALL  BE
TREATED AS AN ASSET WHICH IS USED IN CARRYING ON A TRADE OR BUSINESS.
  (II)  5-YEAR  DEFERRAL FOR PRINCIPAL NOT TO APPLY.--THE EXECUTOR SHALL
BE  TREATED  AS  HAVING  SELECTED  UNDER  SUBSECTION  (A)(3)  THE   DATE
PRESCRIBED BY SECTION 6151(A).
  (III)   5   EQUAL  INSTALLMENTS  ALLOWED.--FOR  PURPOSES  OF  APPLYING
SUBSECTION
  (A)(1), "5" SHALL BE SUBSTITUTED FOR "10".
  (B) DEFINITIONS.--FOR PURPOSES OF THIS PARAGRAPH--
  (I) QUALIFYING LENDING AND  FINANCE  BUSINESS.--THE  TERM  "QUALIFYING
LENDING AND FINANCE BUSINESS" MEANS A LENDING AND FINANCE BUSINESS, IF--

S. 6359--D                         280                        A. 8559--D

  (I)  BASED  ON  ALL THE FACTS AND CIRCUMSTANCES IMMEDIATELY BEFORE THE
DATE OF THE  DECEDENT'S  DEATH,  THERE  WAS  SUBSTANTIAL  ACTIVITY  WITH
RESPECT TO THE LENDING AND FINANCE BUSINESS, OR
  (II)  DURING  AT LEAST 3 OF THE 5 TAXABLE YEARS ENDING BEFORE THE DATE
OF THE DECEDENT'S DEATH, SUCH BUSINESS HAD AT LEAST 1 FULL-TIME EMPLOYEE
SUBSTANTIALLY ALL OF WHOSE SERVICES WERE THE ACTIVE MANAGEMENT  OF  SUCH
BUSINESS,  10  FULL-TIME,  NONOWNER EMPLOYEES SUBSTANTIALLY ALL OF WHOSE
SERVICES WERE DIRECTLY RELATED TO SUCH BUSINESS, AND $5,000,000 IN GROSS
RECEIPTS FROM ACTIVITIES DESCRIBED IN CLAUSE (II).
  (II) LENDING AND FINANCE  BUSINESS.--THE  TERM  "LENDING  AND  FINANCE
BUSINESS" MEANS A TRADE OR BUSINESS OF--
  (I) MAKING LOANS,
  (II) PURCHASING OR DISCOUNTING ACCOUNTS RECEIVABLE, NOTES, OR INSTALL-
MENT OBLIGATIONS,
  (III)  ENGAGING  IN  RENTAL  AND LEASING OF REAL AND TANGIBLE PERSONAL
PROPERTY, INCLUDING ENTERING INTO LEASES AND PURCHASING, SERVICING,  AND
DISPOSING OF LEASES AND LEASED ASSETS,
  (IV) RENDERING SERVICES OR MAKING FACILITIES AVAILABLE IN THE ORDINARY
COURSE OF A LENDING OR FINANCE BUSINESS, AND
  (V)  RENDERING  SERVICES  OR MAKING FACILITIES AVAILABLE IN CONNECTION
WITH ACTIVITIES DESCRIBED IN SUBCLAUSES (I) THROUGH (IV) CARRIED  ON  BY
THE  CORPORATION  RENDERING  SERVICES OR MAKING FACILITIES AVAILABLE, OR
ANOTHER CORPORATION WHICH IS A MEMBER OF THE SAME AFFILIATED  GROUP  (AS
DEFINED IN SECTION 1504 WITHOUT REGARD TO SECTION 1504(B)(3)).
  (III)  LIMITATION.--THE TERM "QUALIFYING LENDING AND FINANCE BUSINESS"
SHALL NOT INCLUDE ANY INTEREST IN AN ENTITY, IF THE  STOCK  OR  DEBT  OF
SUCH  ENTITY  OR A CONTROLLED GROUP (AS DEFINED IN SECTION 267(F)(1)) OF
WHICH SUCH ENTITY WAS A MEMBER WAS READILY TRADABLE  ON  AN  ESTABLISHED
SECURITIES  MARKET  OR SECONDARY MARKET (AS DEFINED BY THE SECRETARY) AT
ANY TIME WITHIN 3 YEARS BEFORE THE DATE OF THE DECEDENT'S DEATH.
  (C) SPECIAL RULE FOR INTEREST IN 2  OR  MORE  CLOSELY  HELD  BUSINESS-
ES.--FOR  PURPOSES  OF  THIS SECTION, INTEREST IN 2 OR MORE CLOSELY HELD
BUSINESSES, WITH RESPECT TO EACH OF WHICH THERE IS INCLUDED IN DETERMIN-
ING THE VALUE OF THE DECEDENT'S GROSS ESTATE 20 PERCENT OR MORE  OF  THE
TOTAL  VALUE OF EACH SUCH BUSINESS, SHALL BE TREATED AS AN INTEREST IN A
SINGLE CLOSELY HELD BUSINESS. FOR PURPOSES OF THE 20-PERCENT REQUIREMENT
OF THE PRECEDING SENTENCE, AN INTEREST IN A CLOSELY HELD BUSINESS  WHICH
REPRESENTS THE SURVIVING SPOUSE'S INTEREST IN PROPERTY HELD BY THE DECE-
DENT AND THE SURVIVING SPOUSE AS COMMUNITY PROPERTY OR AS JOINT TENANTS,
TENANTS BY THE ENTIRETY, OR TENANTS IN COMMON SHALL BE TREATED AS HAVING
BEEN INCLUDED IN DETERMINING THE VALUE OF THE DECEDENT'S GROSS ESTATE.
  (D)  ELECTION.--ANY  ELECTION  UNDER  SUBSECTION (A) SHALL BE MADE NOT
LATER THAN THE TIME PRESCRIBED BY SECTION 6075(A) FOR FILING THE  RETURN
OF TAX IMPOSED BY SECTION 2001 (INCLUDING EXTENSIONS THEREOF), AND SHALL
BE  MADE IN SUCH MANNER AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
IF AN ELECTION UNDER SUBSECTION (A) IS  MADE,  THE  PROVISIONS  OF  THIS
SUBTITLE SHALL APPLY AS THOUGH THE SECRETARY WERE EXTENDING THE TIME FOR
PAYMENT OF THE TAX.
  (E)  PRORATION  OF DEFICIENCY TO INSTALLMENTS.--IF AN ELECTION IS MADE
UNDER SUBSECTION (A) TO PAY ANY PART OF THE TAX IMPOSED BY SECTION  2001
IN INSTALLMENTS AND A DEFICIENCY HAS BEEN ASSESSED, THE DEFICIENCY SHALL
(SUBJECT TO THE LIMITATION PROVIDED BY SUBSECTION (A)(2)) BE PRORATED TO
THE INSTALLMENTS PAYABLE UNDER SUBSECTION (A). THE PART OF THE DEFICIEN-
CY  SO PRORATED TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS NOT
ARRIVED SHALL BE COLLECTED AT THE SAME TIME AS, AND AS A PART  OF,  SUCH
INSTALLMENT.  THE  PART OF THE DEFICIENCY SO PRORATED TO ANY INSTALLMENT

S. 6359--D                         281                        A. 8559--D

THE DATE FOR PAYMENT OF WHICH HAS ARRIVED SHALL BE PAID UPON NOTICE  AND
DEMAND  FROM THE SECRETARY. THIS SUBSECTION SHALL NOT APPLY IF THE DEFI-
CIENCY IS DUE TO NEGLIGENCE, TO INTENTIONAL DISREGARD OF RULES AND REGU-
LATIONS, OR TO FRAUD WITH INTENT TO EVADE TAX.
  (F)  TIME  FOR  PAYMENT  OF  INTEREST.--IF THE TIME FOR PAYMENT OF ANY
AMOUNT OF TAX HAS BEEN EXTENDED UNDER THIS SECTION--
  (1) INTEREST FOR FIRST 5 YEARS.--INTEREST PAYABLE UNDER  SECTION  6601
OF  ANY  UNPAID PORTION OF SUCH AMOUNT ATTRIBUTABLE TO THE FIRST 5 YEARS
AFTER THE DATE PRESCRIBED BY SECTION 6151(A)  FOR  PAYMENT  OF  THE  TAX
SHALL BE PAID ANNUALLY.
  (2)  INTEREST FOR PERIODS AFTER FIRST 5 YEARS.--INTEREST PAYABLE UNDER
SECTION 6601 ON ANY UNPAID PORTION OF SUCH AMOUNT  ATTRIBUTABLE  TO  ANY
PERIOD  AFTER  THE  5-YEAR  PERIOD REFERRED TO IN PARAGRAPH (1) SHALL BE
PAID ANNUALLY AT THE SAME TIME AS, AND AS A PART  OF,  EACH  INSTALLMENT
PAYMENT OF THE TAX.
  (3)  INTEREST  IN  THE CASE OF CERTAIN DEFICIENCIES.--IN THE CASE OF A
DEFICIENCY TO WHICH SUBSECTION (E) APPLIES WHICH IS ASSESSED  AFTER  THE
CLOSE  OF  THE  5-YEAR  PERIOD  REFERRED  TO  IN PARAGRAPH (1), INTEREST
ATTRIBUTABLE TO SUCH 5-YEAR PERIOD, AND INTEREST  ASSIGNED  UNDER  PARA-
GRAPH  (2)  TO ANY INSTALLMENT THE DATE FOR PAYMENT OF WHICH HAS ARRIVED
ON OR BEFORE THE DATE OF THE ASSESSMENT OF THE DEFICIENCY, SHALL BE PAID
UPON NOTICE AND DEMAND FROM THE SECRETARY.
  (4) SELECTION OF SHORTER PERIOD.--IF THE EXECUTOR HAS SELECTED A PERI-
OD SHORTER THAN 5 YEARS UNDER SUBSECTION  (A)(3),  SUCH  SHORTER  PERIOD
SHALL BE SUBSTITUTED FOR 5 YEARS IN PARAGRAPHS (1), (2), AND (3) OF THIS
SUBSECTION.
  (G) ACCELERATION OF PAYMENT.--
  (1) DISPOSITION OF INTEREST; WITHDRAWAL OF FUNDS FROM BUSINESS.--
  (A) IF--
  (I)(I)  ANY  PORTION  OF  AN INTEREST IN A CLOSELY HELD BUSINESS WHICH
QUALIFIES UNDER SUBSECTION (A)(1) IS DISTRIBUTED,  SOLD,  EXCHANGED,  OR
OTHERWISE DISPOSED OF, OR
  (II)  MONEY  AND  OTHER  PROPERTY  ATTRIBUTABLE TO SUCH AN INTEREST IS
WITHDRAWN FROM SUCH TRADE OR BUSINESS, AND
  (II) THE AGGREGATE OF SUCH DISTRIBUTIONS, SALES, EXCHANGES,  OR  OTHER
DISPOSITIONS  AND  WITHDRAWALS EQUALS OR EXCEEDS 50 PERCENT OF THE VALUE
OF SUCH INTEREST, THEN THE EXTENSION OF TIME FOR PAYMENT OF TAX PROVIDED
IN SUBSECTION (A) SHALL CEASE TO APPLY, AND THE UNPAID  PORTION  OF  THE
TAX  PAYABLE  IN  INSTALLMENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM
THE SECRETARY.
  (B) IN THE CASE OF A DISTRIBUTION IN  REDEMPTION  OF  STOCK  TO  WHICH
SECTION  303  (OR  SO  MUCH  OF  SECTION  304 AS RELATES TO SECTION 303)
APPLIES--
  (I) THE REDEMPTION OF SUCH STOCK, AND  THE  WITHDRAWAL  OF  MONEY  AND
OTHER PROPERTY DISTRIBUTED IN SUCH REDEMPTION, SHALL NOT BE TREATED AS A
DISTRIBUTION OR WITHDRAWAL FOR PURPOSES OF SUBPARAGRAPH (A), AND
  (II)  FOR  PURPOSES  OF SUBPARAGRAPH (A), THE VALUE OF THE INTEREST IN
THE CLOSELY HELD BUSINESS SHALL BE CONSIDERED TO BE SUCH  VALUE  REDUCED
BY THE VALUE OF THE STOCK REDEEMED.
  THIS  SUBPARAGRAPH  SHALL  APPLY  ONLY  IF,  ON  OR  BEFORE  THE  DATE
PRESCRIBED BY SUBSECTION (A)(3) FOR THE PAYMENT OF THE FIRST INSTALLMENT
WHICH BECOMES DUE AFTER THE DATE OF THE DISTRIBUTION (OR, IF EARLIER, ON
OR BEFORE THE DAY WHICH IS 1 YEAR AFTER THE DATE OF  THE  DISTRIBUTION),
THERE IS PAID AN AMOUNT OF THE TAX IMPOSED BY SECTION 2001 NOT LESS THAN
THE AMOUNT OF MONEY AND OTHER PROPERTY DISTRIBUTED.

S. 6359--D                         282                        A. 8559--D

  (C)  SUBPARAGRAPH (A)(I) DOES NOT APPLY TO AN EXCHANGE OF STOCK PURSU-
ANT TO A PLAN OF REORGANIZATION DESCRIBED IN SUBPARAGRAPH (D),  (E),  OR
(F)  OF SECTION 368(A)(1) NOR TO AN EXCHANGE TO WHICH SECTION 355 (OR SO
MUCH OF SECTION 356 AS RELATES TO SECTION 355) APPLIES;  BUT  ANY  STOCK
RECEIVED  IN  SUCH AN EXCHANGE SHALL BE TREATED FOR PURPOSES OF SUBPARA-
GRAPH (A)(I) AS AN INTEREST QUALIFYING UNDER SUBSECTION (A)(1).
  (D) SUBPARAGRAPH (A)(I) DOES NOT APPLY TO A TRANSFER  OF  PROPERTY  OF
THE  DECEDENT  TO A PERSON ENTITLED BY REASON OF THE DECEDENT'S DEATH TO
RECEIVE SUCH PROPERTY UNDER THE DECEDENT'S WILL, THE APPLICABLE  LAW  OF
DESCENT  AND DISTRIBUTION, OR A TRUST CREATED BY THE DECEDENT. A SIMILAR
RULE SHALL APPLY IN THE CASE OF A SERIES OF SUBSEQUENT TRANSFERS OF  THE
PROPERTY  BY  REASON OF DEATH SO LONG AS EACH TRANSFER IS TO A MEMBER OF
THE FAMILY (WITHIN THE MEANING OF SECTION 267(C)(4)) OF  THE  TRANSFEROR
IN SUCH TRANSFER.
  (E) CHANGES IN INTEREST IN HOLDING COMPANY.--IF ANY STOCK IN A HOLDING
COMPANY  IS  TREATED  AS  STOCK  IN  A  BUSINESS  COMPANY  BY  REASON OF
SUBSECTION (B)(8)(A)--
  (I) ANY DISPOSITION OF ANY INTEREST IN  SUCH  STOCK  IN  SUCH  HOLDING
COMPANY  WHICH WAS INCLUDED IN DETERMINING THE GROSS ESTATE OF THE DECE-
DENT, OR
  (II) ANY WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM  SUCH  HOLDING
COMPANY  ATTRIBUTABLE  TO ANY INTEREST INCLUDED IN DETERMINING THE GROSS
ESTATE OF THE DECEDENT,
  SHALL BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION  OF
(OR  A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER SUBSECTION
(A)(1).
  (F) CHANGES IN INTEREST IN BUSINESS COMPANY.--IF ANY STOCK IN A  HOLD-
ING  COMPANY  IS  TREATED  AS  STOCK  IN A BUSINESS COMPANY BY REASON OF
SUBSECTION (B)(8)(A)--
  (I) ANY DISPOSITION OF ANY INTEREST IN  SUCH  STOCK  IN  THE  BUSINESS
COMPANY BY SUCH HOLDING COMPANY, OR
  (II)  ANY WITHDRAWAL OF ANY MONEY OR OTHER PROPERTY FROM SUCH BUSINESS
COMPANY ATTRIBUTABLE TO SUCH STOCK BY SUCH HOLDING COMPANY  OWNING  SUCH
STOCK,
  SHALL  BE TREATED FOR PURPOSES OF SUBPARAGRAPH (A) AS A DISPOSITION OF
(OR A WITHDRAWAL WITH RESPECT TO) THE STOCK QUALIFYING UNDER  SUBSECTION
(A)(1).
  (2) UNDISTRIBUTED INCOME OF ESTATE.--
  (A)  IF  AN  ELECTION  IS  MADE  UNDER THIS SECTION AND THE ESTATE HAS
UNDISTRIBUTED NET INCOME FOR ANY TAXABLE YEAR ENDING ON OR AFTER THE DUE
DATE FOR THE FIRST INSTALLMENT, THE EXECUTOR SHALL,  ON  OR  BEFORE  THE
DATE PRESCRIBED BY LAW FOR FILING THE INCOME TAX RETURN FOR SUCH TAXABLE
YEAR  (INCLUDING EXTENSIONS THEREOF), PAY AN AMOUNT EQUAL TO SUCH UNDIS-
TRIBUTED NET INCOME IN LIQUIDATION OF THE  UNPAID  PORTION  OF  THE  TAX
PAYABLE IN INSTALLMENTS.
  (B)  FOR PURPOSES OF SUBPARAGRAPH (A), THE UNDISTRIBUTED NET INCOME OF
THE ESTATE FOR ANY TAXABLE YEAR IS THE AMOUNT BY WHICH THE DISTRIBUTABLE
NET INCOME OF THE ESTATE FOR SUCH TAXABLE YEAR (AS  DEFINED  IN  SECTION
643) EXCEEDS THE SUM OF--
  (I)  THE AMOUNTS FOR SUCH TAXABLE YEAR SPECIFIED IN PARAGRAPHS (1) AND
(2) OF SECTION 661(A) (RELATING TO DEDUCTIONS FOR DISTRIBUTIONS, ETC.);
  (II) THE AMOUNT OF TAX IMPOSED FOR THE  TAXABLE  YEAR  ON  THE  ESTATE
UNDER CHAPTER 1; AND
  (III)  THE AMOUNT OF THE TAX IMPOSED BY SECTION 2001 (INCLUDING INTER-
EST) PAID BY THE EXECUTOR DURING THE TAXABLE YEAR (OTHER THAN ANY AMOUNT
PAID PURSUANT TO THIS PARAGRAPH).

S. 6359--D                         283                        A. 8559--D

  (C) FOR PURPOSES OF THIS PARAGRAPH, IF ANY STOCK IN A  CORPORATION  IS
TREATED  AS  STOCK  IN  ANOTHER  CORPORATION  BY  REASON  OF  SUBSECTION
(B)(8)(A), ANY DIVIDENDS PAID BY SUCH OTHER CORPORATION  TO  THE  CORPO-
RATION  SHALL  BE  TREATED  AS PAID TO THE ESTATE OF THE DECEDENT TO THE
EXTENT ATTRIBUTABLE TO THE STOCK QUALIFYING UNDER SUBSECTION (A)(1).
  (3) FAILURE TO MAKE PAYMENT OF PRINCIPAL OR INTEREST.--
  (A)  IN  GENERAL.--EXCEPT  AS  PROVIDED  IN  SUBPARAGRAPH  (B), IF ANY
PAYMENT OF PRINCIPAL OR INTEREST UNDER THIS SECTION IS NOT  PAID  ON  OR
BEFORE  THE  DATE  FIXED  FOR ITS PAYMENT BY THIS SECTION (INCLUDING ANY
EXTENSION OF TIME), THE UNPAID PORTION OF THE TAX  PAYABLE  IN  INSTALL-
MENTS SHALL BE PAID UPON NOTICE AND DEMAND FROM THE SECRETARY.
  (B)  PAYMENT WITHIN 6 MONTHS.--IF ANY PAYMENT OF PRINCIPAL OR INTEREST
UNDER THIS SECTION IS NOT PAID ON OR BEFORE THE  DATE  DETERMINED  UNDER
SUBPARAGRAPH (A) BUT IS PAID WITHIN 6 MONTHS OF SUCH DATE--
  (I) THE PROVISIONS OF SUBPARAGRAPH (A) SHALL NOT APPLY WITH RESPECT TO
SUCH PAYMENT,
  (II) THE PROVISIONS OF SECTION 6601(J) SHALL NOT APPLY WITH RESPECT TO
THE DETERMINATION OF INTEREST ON SUCH PAYMENT, AND
  (III)  THERE  IS  IMPOSED  A PENALTY IN AN AMOUNT EQUAL TO THE PRODUCT
OF--
  (I) 5 PERCENT OF THE AMOUNT OF SUCH PAYMENT, MULTIPLIED BY
  (II) THE NUMBER OF MONTHS (OR FRACTIONS THEREOF) AFTER SUCH  DATE  AND
BEFORE PAYMENT IS MADE.  THE PENALTY IMPOSED UNDER CLAUSE (III) SHALL BE
TREATED  IN  THE  SAME MANNER AS A PENALTY IMPOSED UNDER SUBCHAPTER B OF
CHAPTER 68.
  (H) ELECTION IN CASE OF CERTAIN DEFICIENCIES.--
  (1) IN GENERAL.--IF--
  (A) A DEFICIENCY IN THE TAX IMPOSED BY SECTION 2001 IS ASSESSED,
  (B) THE ESTATE QUALIFIES UNDER SUBSECTION (A)(1), AND
  (C) THE EXECUTOR HAS NOT MADE AN ELECTION UNDER  SUBSECTION  (A),  THE
EXECUTOR  MAY  ELECT  TO  PAY  THE  DEFICIENCY  IN  INSTALLMENTS.   THIS
SUBSECTION SHALL NOT APPLY IF THE DEFICIENCY IS DUE  TO  NEGLIGENCE,  TO
INTENTIONAL  DISREGARD OF RULES AND REGULATIONS, OR TO FRAUD WITH INTENT
TO EVADE TAX.
  (2) TIME OF ELECTION.--AN ELECTION UNDER THIS SUBSECTION SHALL BE MADE
NOT LATER THAN 60 DAYS AFTER ISSUANCE OF NOTICE AND DEMAND BY THE SECRE-
TARY FOR THE PAYMENT OF THE DEFICIENCY, AND SHALL BE MADE IN SUCH MANNER
AS THE SECRETARY SHALL BY REGULATIONS PRESCRIBE.
  (3) EFFECT OF ELECTION ON PAYMENT.--IF AN ELECTION IS MADE UNDER  THIS
SUBSECTION,  THE DEFICIENCY SHALL (SUBJECT TO THE LIMITATION PROVIDED BY
SUBSECTION (A)(2)) BE PRORATED TO THE INSTALLMENTS WHICH WOULD HAVE BEEN
DUE IF AN ELECTION HAD BEEN TIMELY MADE UNDER SUBSECTION (A) AT THE TIME
THE ESTATE TAX RETURN WAS FILED. THE PART OF THE DEFICIENCY SO  PRORATED
TO  ANY  INSTALLMENT  THE  DATE  FOR PAYMENT OF WHICH WOULD HAVE ARRIVED
SHALL BE PAID AT THE TIME OF THE  MAKING  OF  THE  ELECTION  UNDER  THIS
SUBSECTION.  THE  PORTION  OF THE DEFICIENCY SO PRORATED TO INSTALLMENTS
THE DATE FOR PAYMENT OF WHICH WOULD NOT HAVE SO ARRIVED SHALL BE PAID AT
THE TIME SUCH INSTALLMENTS WOULD HAVE BEEN DUE IF SUCH AN  ELECTION  HAD
BEEN MADE.
  (I)  SPECIAL  RULE  FOR  CERTAIN  DIRECT SKIPS.--TO THE EXTENT THAT AN
INTEREST IN A CLOSELY HELD BUSINESS IS THE  SUBJECT  OF  A  DIRECT  SKIP
(WITHIN  THE  MEANING  OF SECTION 2612(C)) OCCURRING AT THE SAME TIME AS
AND AS A RESULT OF THE DECEDENT'S  DEATH,  THEN  FOR  PURPOSES  OF  THIS
SECTION ANY TAX IMPOSED BY SECTION 2601 ON THE TRANSFER OF SUCH INTEREST
SHALL BE TREATED AS IF IT WERE ADDITIONAL TAX IMPOSED BY SECTION 2001.

S. 6359--D                         284                        A. 8559--D

  (J)  REGULATIONS.--THE  SECRETARY  SHALL PRESCRIBE SUCH REGULATIONS AS
MAY BE NECESSARY TO THE APPLICATION OF THIS SECTION.
  (K) CROSS REFERENCES.--
  (1)  SECURITY.-- FOR AUTHORITY OF THE SECRETARY TO REQUIRE SECURITY IN
THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6165.
  (2) LIEN.--FOR SPECIAL LIEN (IN LIEU OF BOND) IN THE CASE OF AN EXTEN-
SION UNDER THIS SECTION, SEE SECTION 6324A.
  (3) PERIOD OF LIMITATION.--FOR EXTENSION OF THE PERIOD  OF  LIMITATION
IN THE CASE OF AN EXTENSION UNDER THIS SECTION, SEE SECTION 6503(D).
  (4)  INTEREST.--FOR  PROVISIONS RELATING TO INTEREST ON TAX PAYABLE IN
INSTALLMENTS UNDER THIS SECTION, SEE SUBSECTION (J) OF SECTION 6601.
  (5) TRANSFERS WITHIN 3 YEARS OF DEATH.--FOR SPECIAL RULE FOR  QUALIFY-
ING  AN  ESTATE  UNDER  THIS SECTION WHERE PROPERTY HAS BEEN TRANSFERRED
WITHIN 3 YEARS OF DECEDENT'S DEATH, SEE SECTION 2035(C)(2).
  S 11. This act shall take effect April 1,  2014  and  shall  apply  to
estates  of  decedents  dying on and after that date; provided, however,
that the amendments to subsection (c) of section 951 of the tax law made
by section one  of  this  act  shall  not  affect  the  repeal  of  such
subsection and shall be deemed repealed therewith.

                                 PART Y

                          Intentionally Omitted

                                 PART Z

  Section  1. Clause (F) of subparagraph (ii) of paragraph 1 of subdivi-
sion b of section 1612 of the tax law, as amended by chapter 174 of  the
laws of 2013, is amended to read as follows:
  (F) notwithstanding clauses (A), (B), (C), (D) and (E) of this subpar-
agraph,  when  a  vendor track, is located in Sullivan county and within
sixty miles from any gaming facility in a contiguous state  such  vendor
fee shall, for a period of [six] SEVEN years commencing April first, two
thousand  eight,  be at a rate of forty-one percent of the total revenue
wagered at the vendor track after payout for  prizes  pursuant  to  this
chapter, after which time such rate shall be as for all tracks in clause
(C) of this subparagraph.
  S  2.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 2014.

                                 PART AA

  Section 1. Paragraph (a) of subdivision  1  of  section  1003  of  the
racing, pari-mutuel wagering and breeding law, as amended by chapter 174
of the laws of 2013, is amended to read as follows:
  (a)  Any  racing  association  or  corporation  or  regional off-track
betting corporation, authorized to conduct  pari-mutuel  wagering  under
this  chapter, desiring to display the simulcast of horse races on which
pari-mutuel betting shall be permitted in the manner and subject to  the
conditions  provided for in this article may apply to the commission for
a license so to do.  Applications for licenses shall be in such form  as
may  be  prescribed by the commission and shall contain such information
or other material or evidence as the commission may require. No  license
shall be issued by the commission authorizing the simulcast transmission
of  thoroughbred  races  from a track located in Suffolk county. The fee

S. 6359--D                         285                        A. 8559--D

for such licenses shall be five hundred dollars per  simulcast  facility
and  for  account wagering licensees that do not operate either a simul-
cast facility that is open to the public within the state of New York or
a  licensed racetrack within the state, twenty thousand dollars per year
payable by the licensee to the commission for deposit into  the  general
fund.  Except  as  provided  in  this  section, the commission shall not
approve any application to conduct simulcasting into individual or group
residences, homes or other areas for the purposes of  or  in  connection
with pari-mutuel wagering. The [board] COMMISSION may approve simulcast-
ing into residences, homes or other areas to be conducted jointly by one
or  more  regional off-track betting corporations and one or more of the
following: a franchised corporation, thoroughbred racing corporation  or
a harness racing corporation or association; provided (i) the simulcast-
ing consists only of those races on which pari-mutuel betting is author-
ized by this chapter at one or more simulcast facilities for each of the
contracting  off-track  betting  corporations which shall include wagers
made in accordance with  section  one  thousand  fifteen,  one  thousand
sixteen  and  one  thousand  seventeen of this article; provided further
that the contract provisions or other simulcast  arrangements  for  such
simulcast  facility  shall  be no less favorable than those in effect on
January first, two thousand  five;  (ii)  that  each  off-track  betting
corporation  having  within  its  geographic boundaries such residences,
homes or other areas technically  capable  of  receiving  the  simulcast
signal  shall be a contracting party; (iii) the distribution of revenues
shall be subject to contractual agreement of  the  parties  except  that
statutory  payments  to  non-contracting  parties,  if  any,  may not be
reduced; provided, however, that nothing herein to  the  contrary  shall
prevent a track from televising its races on an irregular basis primari-
ly for promotional or marketing purposes as found by the [board] COMMIS-
SION.    For  purposes  of this paragraph, the provisions of section one
thousand thirteen of this article shall not apply. Any agreement author-
izing  an  in-home  simulcasting  experiment  commencing  prior  to  May
fifteenth,  nineteen  hundred  ninety-five,  may,  and all its terms, be
extended  until  June  thirtieth,  two  thousand   [fourteen]   FIFTEEN;
provided,  however, that any party to such agreement may elect to termi-
nate such agreement upon conveying written notice to all  other  parties
of  such  agreement at least forty-five days prior to the effective date
of the termination, via registered  mail.  Any  party  to  an  agreement
receiving such notice of an intent to terminate, may request the [board]
COMMISSION  to mediate between the parties new terms and conditions in a
replacement agreement between the parties as will permit continuation of
an in-home experiment until  June  thirtieth,  two  thousand  [fourteen]
FIFTEEN;  and  (iv)  no in-home simulcasting in the thoroughbred special
betting district shall  occur  without  the  approval  of  the  regional
thoroughbred track.
  S  2.  Subparagraph  (iii)  of paragraph d of subdivision 3 of section
1007 of the racing, pari-mutuel wagering and breeding law, as amended by
section 2 of part U of chapter 59 of the laws of  2013,  is  amended  to
read as follows:
  (iii) Of the sums retained by a receiving track located in Westchester
county  on  races received from a franchised corporation, for the period
commencing January first, two thousand eight and continuing through June
thirtieth, two thousand [fourteen] FIFTEEN, the amount used  exclusively
for  purses  to  be  awarded  at races conducted by such receiving track
shall be computed as follows: of the sums so retained, two and  one-half
percent  of the total pools. Such amount shall be increased or decreased

S. 6359--D                         286                        A. 8559--D

in the amount of fifty percent of the difference  in  total  commissions
determined by comparing the total commissions available after July twen-
ty-first,  nineteen  hundred  ninety-five  to the total commissions that
would  have  been  available  to  such track prior to July twenty-first,
nineteen hundred ninety-five.
  S 3. The opening paragraph of subdivision 1 of  section  1014  of  the
racing,  pari-mutuel  wagering and breeding law, as amended by section 3
of part U of chapter 59 of the laws of  2013,  is  amended  to  read  as
follows:
  The  provisions of this section shall govern the simulcasting of races
conducted at thoroughbred tracks located in another state or country  on
any day during which a franchised corporation is conducting a race meet-
ing  in  Saratoga  county  at Saratoga thoroughbred racetrack until June
thirtieth, two thousand [fourteen] FIFTEEN and on any day regardless  of
whether  or not a franchised corporation is conducting a race meeting in
Saratoga county at Saratoga thoroughbred racetrack after June thirtieth,
two thousand [fourteen] FIFTEEN.   On any  day  on  which  a  franchised
corporation has not scheduled a racing program but a thoroughbred racing
corporation  located  within  the state is conducting racing, every off-
track betting corporation branch office and every simulcasting  facility
licensed  in  accordance  with  section  one  thousand  seven (that have
entered into a written agreement  with  such  facility's  representative
horsemen's  organization,  as  approved  by the [board] COMMISSION), one
thousand eight, or one thousand nine of this article shall be authorized
to accept wagers and display the live simulcast signal from thoroughbred
tracks located in another  state  or  foreign  country  subject  to  the
following provisions:
  S 4. Subdivision 1 of section 1015 of the racing, pari-mutuel wagering
and breeding law, as amended by section 4 of part U of chapter 59 of the
laws of 2013, is amended to read as follows:
  1.  The  provisions  of  this section shall govern the simulcasting of
races conducted at harness tracks located in another  state  or  country
during  the period July first, nineteen hundred ninety-four through June
thirtieth, two thousand [fourteen] FIFTEEN.  This section  shall  super-
sede all inconsistent provisions of this chapter.
  S  5.  The  opening  paragraph of subdivision 1 of section 1016 of the
racing, pari-mutuel wagering and breeding law, as amended by  section  5
of  part  U  of  chapter  59  of the laws of 2013, is amended to read as
follows:
  The provisions of this section shall govern the simulcasting of  races
conducted  at thoroughbred tracks located in another state or country on
any day during which a franchised corporation is not conducting  a  race
meeting in Saratoga county at Saratoga thoroughbred racetrack until June
thirtieth,  two  thousand  [fourteen] FIFTEEN.   Every off-track betting
corporation branch office and every simulcasting  facility  licensed  in
accordance  with  section  one  thousand  seven that have entered into a
written agreement with such facility's representative horsemen's  organ-
ization as approved by the [board] COMMISSION, one thousand eight or one
thousand  nine  of this article shall be authorized to accept wagers and
display the live  full-card  simulcast  signal  of  thoroughbred  tracks
(which  may  include  quarter  horse or mixed meetings provided that all
such wagering on such races shall be construed to be thoroughbred races)
located in another state or foreign country, subject  to  the  following
provisions;  provided,  however,  no  such  written  agreement  shall be
required of a franchised corporation licensed in accordance with section
one thousand seven of this article:

S. 6359--D                         287                        A. 8559--D

  S 6. The opening paragraph of section 1018 of the racing,  pari-mutuel
wagering  and breeding law, as amended by section 6 of part U of chapter
59 of the laws of 2013, is amended to read as follows:
  Notwithstanding  any  other  provision of this chapter, for the period
July twenty-fifth, two thousand one through September eighth, two  thou-
sand  [thirteen] FOURTEEN, when a franchised corporation is conducting a
race meeting within the state at Saratoga Race Course,  every  off-track
betting  corporation  branch  office  and  every  simulcasting  facility
licensed in accordance with section one thousand seven (that has entered
into a written agreement with such facility's representative  horsemen's
organization  as approved by the [board] COMMISSION), one thousand eight
or one thousand nine of this  article  shall  be  authorized  to  accept
wagers  and  display  the live simulcast signal from thoroughbred tracks
located in another state,  provided  that  such  facility  shall  accept
wagers  on  races  run  at  all  in-state  thoroughbred tracks which are
conducting  racing  programs  subject  to  the   following   provisions;
provided,  however,  no  such  written  agreement shall be required of a
franchised corporation licensed in accordance with section one  thousand
seven of this article.
  S  7.  Section  32  of  chapter  281 of the laws of 1994, amending the
racing, pari-mutuel wagering and breeding law  and other  laws  relating
to  simulcasting, as amended by section 7 of part U of chapter 59 of the
laws of 2013, is amended to read as follows:
  S 32. This act shall take effect immediately and the  pari-mutuel  tax
reductions  in  section  six  of  this  act  shall  expire and be deemed
repealed on  July  1,  [2014]  2015;  provided,  however,  that  nothing
contained  herein  shall be deemed to affect the application, qualifica-
tion, expiration, or repeal of any  provision  of  law  amended  by  any
section  of  this act, and such provisions shall be applied or qualified
or shall expire or be deemed repealed in the same manner,  to  the  same
extent  and on the same date as the case may be as otherwise provided by
law; provided further, however, that sections twenty-three  and  twenty-
five of this act shall remain in full force and effect only until May 1,
1997 and at such time shall be deemed to be repealed.
  S  8.  Section  54  of  chapter  346 of the laws of 1990, amending the
racing, pari-mutuel wagering and breeding law and other laws relating to
simulcasting and the imposition of certain taxes, as amended by  section
8  of  part  U  of chapter 59 of the laws of 2013, is amended to read as
follows:
  S 54. This act  shall  take  effect  immediately;  provided,  however,
sections  three  through twelve of this act shall take effect on January
1, 1991, and section 1013 of the racing, pari-mutuel wagering and breed-
ing law, as added by section thirty-eight of this act, shall expire  and
be  deemed repealed on July 1, [2014] 2015; and section eighteen of this
act shall take effect on July 1, 2008 and sections fifty-one and  fifty-
two  of this act shall take effect as of the same date as chapter 772 of
the laws of 1989 took effect.
  S 9. Paragraph (a) of subdivision 1 of  section  238  of  the  racing,
pari-mutuel wagering and breeding law, as amended by section 9 of part U
of chapter 59 of the laws of 2013, is amended to read as follows:
  (a)  The  franchised  corporation  authorized  under  this  chapter to
conduct pari-mutuel betting at a race meeting or races run thereat shall
distribute all sums deposited in any pari-mutuel pool to the holders  of
winning  tickets therein, provided such tickets be presented for payment
before April first of the year following the  year  of  their  purchase,
less  an  amount  which  shall be established and retained by such fran-

S. 6359--D                         288                        A. 8559--D

chised corporation of between twelve to  seventeen  per  centum  of  the
total  deposits in pools resulting from on-track regular bets, and four-
teen to twenty-one per centum of the total deposits in  pools  resulting
from on-track multiple bets and fifteen to twenty-five per centum of the
total  deposits in pools resulting from on-track exotic bets and fifteen
to thirty-six per centum of the total deposits in pools  resulting  from
on-track  super  exotic  bets, plus the breaks. The retention rate to be
established is subject to the prior approval of the [racing and wagering
board] GAMING COMMISSION. Such rate may not be changed  more  than  once
per  calendar  quarter  to be effective on the first day of the calendar
quarter. "Exotic bets" and "multiple bets" shall have the  meanings  set
forth  in  section five hundred nineteen of this chapter.  "Super exotic
bets" shall have the meaning set forth in section three hundred  one  of
this  chapter. For purposes of this section, a "pick six bet" shall mean
a single bet or wager on the outcomes of six races. The breaks are here-
by defined as the odd cents over any multiple of five for payoffs great-
er than one dollar five cents but  less  than  five  dollars,  over  any
multiple  of  ten  for  payoffs  greater than five dollars but less than
twenty-five dollars, over any multiple of twenty-five for payoffs great-
er than twenty-five dollars but less than two hundred fifty dollars,  or
over  any  multiple of fifty for payoffs over two hundred fifty dollars.
Out of the amount so retained there shall be  paid  by  such  franchised
corporation to the commissioner of taxation and finance, as a reasonable
tax  by the state for the privilege of conducting pari-mutuel betting on
the races run at the race meetings held by such franchised  corporation,
the  following  percentages  of  the total pool for regular and multiple
bets five per centum of regular bets and four  per  centum  of  multiple
bets  plus  twenty per centum of the breaks; for exotic wagers seven and
one-half per centum plus twenty per centum of the breaks, and for  super
exotic  bets  seven and one-half per centum plus fifty per centum of the
breaks. For the period June first, nineteen hundred ninety-five  through
September  ninth,  nineteen  hundred  ninety-nine,  such  tax on regular
wagers shall be three per centum and such tax on multiple  wagers  shall
be  two  and  one-half per centum, plus twenty per centum of the breaks.
For the period September tenth,  nineteen  hundred  ninety-nine  through
March  thirty-first,  two  thousand one, such tax on all wagers shall be
two and six-tenths per centum and for the period April first, two  thou-
sand one through December thirty-first, two thousand [fourteen] FIFTEEN,
such  tax on all wagers shall be one and six-tenths per centum, plus, in
each such period, twenty per centum of the breaks. Payment  to  the  New
York state thoroughbred breeding and development fund by such franchised
corporation  shall be one-half of one per centum of total daily on-track
pari-mutuel pools resulting from regular, multiple and exotic  bets  and
three  per  centum  of super exotic bets provided, however, that for the
period September tenth, nineteen hundred ninety-nine through March thir-
ty-first, two thousand one, such payment shall be six-tenths of one  per
centum  of  regular,  multiple and exotic pools and for the period April
first, two thousand one  through  December  thirty-first,  two  thousand
[fourteen] FIFTEEN, such payment shall be seven-tenths of one per centum
of such pools.
  S 10. This act shall take effect immediately.

                                 PART BB

S. 6359--D                         289                        A. 8559--D

  Section  1. Clause (H) of subparagraph (ii) of paragraph 1 of subdivi-
sion b of section 1612 of the tax law, as separately amended by chapters
174 and 175 of the laws of 2013, is amended to read as follows:
  (H)  notwithstanding  clauses  (A), (B), (C), (D), (E), (F) and (G) of
this subparagraph, the track operator of a vendor track shall be  eligi-
ble  for  a  vendor's  capital  award of up to four percent of the total
revenue wagered at the vendor track after payout for prizes pursuant  to
this  chapter,  which  shall  be  used  exclusively  for capital project
investments to improve the facilities of the vendor track which  promote
or  encourage  increased attendance at the video lottery gaming facility
including, but not limited to hotels, other lodging  facilities,  enter-
tainment   facilities,  retail  facilities,  dining  facilities,  events
arenas, parking garages and other  improvements  that  enhance  facility
amenities;  provided  that such capital investments shall be approved by
the division, in consultation with the state racing and wagering  board,
and  that  such vendor track demonstrates that such capital expenditures
will increase patronage at such vendor track's facilities  and  increase
the amount of revenue generated to support state education programs. The
annual  amount of such vendor's capital awards that a vendor track shall
be eligible to receive shall be limited  to  two  million  five  hundred
thousand  dollars,  except for Aqueduct racetrack, for which there shall
be no vendor's capital awards. Except for tracks having  less  than  one
thousand  one  hundred  video  gaming  machines, and except for a vendor
track located west of State Route 14 from Sodus Point to the  Pennsylva-
nia  border  within  New  York, each track operator shall be required to
co-invest an amount of  capital  expenditure  equal  to  its  cumulative
vendor's  capital  award. For all tracks, except for Aqueduct racetrack,
the amount of any vendor's capital award that is not used during any one
year period may be carried over  into  subsequent  years  ending  before
April  first,  two thousand [fourteen] FIFTEEN.  Any amount attributable
to a capital expenditure approved prior to  April  first,  two  thousand
[fourteen]  FIFTEEN  and  completed  before  April  first,  two thousand
[sixteen] SEVENTEEN; or approved prior  to  April  first,  two  thousand
[eighteen]  NINETEEN  and  completed  before  April  first, two thousand
[twenty] TWENTY-ONE for a vendor track located west of  State  Route  14
from  Sodus  Point  to the Pennsylvania border within New York, shall be
eligible to receive the vendor's capital award.  In  the  event  that  a
vendor  track's  capital expenditures, approved by the division prior to
April first, two thousand [fourteen]  FIFTEEN  and  completed  prior  to
April first, two thousand [sixteen] SEVENTEEN, exceed the vendor track's
cumulative capital award during the five year period ending April first,
two  thousand  [fourteen]  FIFTEEN, the vendor shall continue to receive
the capital award after April first,  two  thousand  [fourteen]  FIFTEEN
until  such  approved  capital expenditures are paid to the vendor track
subject to any required co-investment. In  no  event  shall  any  vendor
track  that  receives a vendor fee pursuant to clause (F) or (G) of this
subparagraph be  eligible  for  a  vendor's  capital  award  under  this
section.  Any  operator  of a vendor track which has received a vendor's
capital award, choosing to divest the capital improvement  toward  which
the  award  was  applied,  prior to the full depreciation of the capital
improvement in accordance with generally accepted accounting principles,
shall reimburse the state in amounts equal to  the  total  of  any  such
awards.  Any  capital  award not approved for a capital expenditure at a
video lottery gaming facility by April first,  two  thousand  [fourteen]
FIFTEEN  shall  be  deposited  into the state lottery fund for education
aid; and

S. 6359--D                         290                        A. 8559--D

  S 2. This act shall take effect immediately.

                                 PART CC

                          Intentionally Omitted

                                 PART DD

  Section  1.  Subsection (b) of section 804 of the tax law, as added by
section 1 of part C of chapter 25 of the laws of  2009,  is  amended  to
read as follows:
  (b)  Individuals  with  net earnings from self-employment. Individuals
with earnings from self-employment must make estimated tax  payments  of
the  tax  imposed by this article for the taxable year on the same dates
specified in [subsection (a) of this section for the quarterly  payments
of the tax imposed on the payroll expense of employers] PARAGRAPH ONE OF
SUBSECTION  (C)  OF SECTION SIX HUNDRED EIGHTY-FIVE OF THIS CHAPTER.  In
addition, these self-employed individuals must file  a  return  for  the
taxable  year  by  the  [thirtieth]  FIFTEENTH  day  of the fourth month
following the close of the taxable year. Paragraph one of subsection (d)
of section six hundred eighty-five of this chapter shall  not  apply  to
the estimated tax payments required by this subsection.
  S  2.  Section  806 of the tax law, as added by section 1 of part C of
chapter 25 of the laws of 2009, is amended to read as follows:
  S 806. Procedural provisions. (A) GENERAL. All provisions  of  article
twenty-two  of this chapter will apply to the provisions of this article
in the same manner and with the same force and effect as if the language
of article twenty-two of this chapter had been incorporated in full into
this article and  had  been  specifically  adjusted  for  and  expressly
referred  to  the tax imposed by this article, except to the extent that
any provision is either inconsistent with a provision of this article or
is not relevant to this article. Notwithstanding the preceding sentence,
no credit against tax in article twenty-two of this chapter can be  used
to offset the tax due under this article.
  (B)  COMBINED  FILINGS.  NOTWITHSTANDING  ANY OTHER PROVISIONS OF THIS
ARTICLE:
  (1) THE COMMISSIONER MAY REQUIRE  THE  FILING  OF  A  COMBINED  RETURN
WHICH,  IN  ADDITION  TO  THE  RETURN  PROVIDED FOR IN SUBSECTION (B) OF
SECTION EIGHT HUNDRED FOUR OF THIS ARTICLE, MAY ALSO INCLUDE ANY OF  THE
RETURNS  REQUIRED TO BE FILED BY A RESIDENT INDIVIDUAL OF NEW YORK STATE
PURSUANT TO THE PROVISIONS OF SECTION  SIX  HUNDRED  FIFTY-ONE  OF  THIS
CHAPTER  AND WHICH MAY BE REQUIRED TO BE FILED BY SUCH INDIVIDUAL PURSU-
ANT TO ANY LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE  THIR-
TY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
  (2)  WHERE  A  COMBINED  RETURN  IS  REQUIRED, AND WITH RESPECT TO THE
PAYMENT OF ESTIMATED TAX, THE COMMISSIONER MAY ALSO REQUIRE THE  PAYMENT
TO  IT  OF  A  SINGLE  AMOUNT WHICH SHALL EQUAL THE TOTAL OF THE AMOUNTS
(TOTAL TAXES LESS ANY CREDITS OR REFUNDS) WHICH WOULD HAVE BEEN REQUIRED
TO BE PAID WITH THE RETURNS OR IN PAYMENT OF ESTIMATED TAX  PURSUANT  TO
THE  PROVISIONS OF THIS ARTICLE, THE PROVISIONS OF ARTICLE TWENTY-TWO OF
THIS CHAPTER, AND THE PROVISIONS OF LOCAL LAWS ENACTED UNDER THE AUTHOR-
ITY OF ARTICLE THIRTY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
  (3) Notwithstanding any other law to the  contrary,  the  commissioner
may require that all filings of forms or returns under this article must

S. 6359--D                         291                        A. 8559--D

be  filed  electronically and all payments of tax must be paid electron-
ically.
  S  3.  The  tax  law is amended by adding a new section 807 to read as
follows:
  S 807. ENFORCEMENT WITH OTHER TAXES. (A) JOINT ASSESSMENT. IF THERE IS
ASSESSED A TAX UNDER THIS ARTICLE AND  THERE  IS  ALSO  ASSESSED  A  TAX
AGAINST THE SAME TAXPAYER PURSUANT TO ARTICLE TWENTY-TWO OF THIS CHAPTER
OR  UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
TY, ARTICLE THIRTY-A, OR ARTICLE THIRTY-B OF THIS CHAPTER,  AND  PAYMENT
OF  A  SINGLE  AMOUNT  IS REQUIRED UNDER THE PROVISIONS OF THIS ARTICLE,
SUCH PAYMENT SHALL BE DEEMED TO HAVE BEEN MADE WITH RESPECT TO THE TAXES
SO ASSESSED IN PROPORTION TO THE AMOUNTS OF SUCH  TAXES  DUE,  INCLUDING
TAX, PENALTIES, INTERESTED AND ADDITIONS TO TAX.
  (B)  JOINT ACTION. IF THE COMMISSIONER TAKES ACTION UNDER SUCH ARTICLE
TWENTY-TWO OR UNDER A LOCAL LAW ENACTED PURSUANT  TO  THE  AUTHORITY  OF
ARTICLE  THIRTY,  THIRTY-A,  OR THIRTY-B OF THIS CHAPTER WITH RESPECT TO
THE ENFORCEMENT AND COLLECTION OF THE TAX OR TAXES ASSESSED  UNDER  SUCH
ARTICLES,  THE  COMMISSIONER  SHALL,  WHENEVER  POSSIBLE  AND NECESSARY,
ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION  UNDER  SIMILAR  ENFORCEMENT
AND COLLECTION PROVISIONS OF THE TAX IMPOSED BY THIS ARTICLE.
  (C)  APPORTIONMENT  OF  MONEYS  COLLECTED  BY JOINT ACTION. ANY MONEYS
COLLECTED AS A RESULT OF SUCH JOINT ACTION SHALL BE DEEMED TO HAVE  BEEN
COLLECTED  IN  PROPORTION  TO THE AMOUNTS DUE, INCLUDING TAX, PENALTIES,
INTEREST AND ADDITIONS TO TAX, UNDER ARTICLE TWENTY-TWO OF THIS  CHAPTER
OR  UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
TY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER AND THE TAX  IMPOSED  BY  THIS
ARTICLE.
  (D)  JOINT  DEFICIENCY  ACTION.  WHENEVER  THE  COMMISSIONER TAKES ANY
ACTION WITH RESPECT TO A DEFICIENCY OF INCOME TAX UNDER ARTICLE  TWENTY-
TWO OF THIS CHAPTER OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHOR-
ITY OF ARTICLE THIRTY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER, OTHER THAN
THE ACTION SET FORTH IN SUBSECTION (A) OF THIS SECTION, THE COMMISSIONER
MAY IN HIS OR HER DISCRETION ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION
UNDER THIS ARTICLE.
  S 4. This act shall take effect immediately and apply to taxable years
beginning on or after January 1, 2015.

                                 PART EE

  Section  1. Subdivision 4 of section 97-nnnn of the state finance law,
as added by chapter 174 of the laws of  2013,  is  amended  to  read  as
follows:
  4.  a.  As  used  in this section, the term "base year gaming revenue"
shall mean the sum of all revenue generated to  support  education  from
video  lottery  gaming as defined by section sixteen hundred seventeen-a
of the tax law in the twelve  months  preceding  the  operation  of  any
gaming facility pursuant to either article thirteen of the racing, pari-
mutuel wagering and breeding law or pursuant to paragraph four of SUBDI-
VISION  A  OF  section [one thousand six] SIXTEEN hundred seventeen-a of
the tax law.
  b. Amounts APPROPRIATED OR transferred in any year to support  elemen-
tary and secondary education shall be calculated as follows:
  (i)  an  amount  equal to the positive difference, if any, between the
base year gaming revenue amount and the sum of all revenue generated  to
support  education  from  video  lottery  gaming  as  defined by section
sixteen hundred seventeen-a of the tax law in the  current  fiscal  year

S. 6359--D                         292                        A. 8559--D

provided  that such positive amount, if any, shall be transferred to the
state lottery fund[;]. FOR THE PURPOSES OF THIS  PARAGRAPH,  THE  CALCU-
LATION  OF  THIS  POSITIVE DIFFERENCE SHALL BE ESTIMATED AND TRANSFERRED
MONTHLY BASED ON THE CUMULATIVE POSITIVE DIFFERENCE, IF ANY, IN THE SAME
CUMULATIVE  MONTHS  OF  THE  BASE  YEAR AND THE CUMULATIVE MONTHS OF THE
CURRENT FISCAL YEAR TO DATE, LESS AMOUNTS PREVIOUSLY TRANSFERRED IN  THE
CURRENT  FISCAL YEAR. PROVIDED, HOWEVER, IF THE AMOUNT PREVIOUSLY TRANS-
FERRED IN THE  CURRENT  FISCAL  YEAR  EXCEEDS  THE  CUMULATIVE  POSITIVE
DIFFERENCE, AN AMOUNT EQUAL TO THE EXCESS TRANSFERRED MAY BE TRANSFERRED
BACK FROM THE STATE LOTTERY FUND; and
  (ii) the amount of revenue collected [in the prior state fiscal year,]
to  be  distributed pursuant to paragraph a of subdivision three of this
section, and in excess of any amounts transferred pursuant  to  subpara-
graph (i) of this paragraph [in such prior fiscal year], if any.
  c.  Notwithstanding  any  provision  of  law  to the contrary, amounts
appropriated or transferred from  the  commercial  gaming  revenue  fund
pursuant  to  subparagraph  (ii) of this paragraph shall not be included
in: (i) the allowable growth amount computed pursuant to paragraph dd of
subdivision one of section thirty-six hundred two of the education  law,
(ii)  the preliminary growth amount computed pursuant to paragraph ff of
subdivision one of section thirty-six hundred two of the education  law,
and  (iii) the allocable growth amount computed pursuant to paragraph gg
of subdivision one of section thirty-six hundred two  of  the  education
law.
  S  2.  Subdivision  5  of section 97-nnnn of the state finance law, as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  5. Notwithstanding the foregoing, monies received pursuant to:
  a. sections one thousand three hundred  forty-five  and  one  thousand
three  hundred  forty-eight  of  [this  article] THE RACING, PARI-MUTUEL
WAGERING AND BREEDING LAW  shall  be  exclusively  appropriated  to  the
office of alcoholism and substance abuse services to be used for problem
gambling education and treatment purposes.
  b. section one thousand three hundred forty-nine of [this article] THE
RACING,  PARI-MUTUEL  WAGERING  AND  BREEDING  LAW  shall be exclusively
appropriated to the commission for regulatory investigations.
  c. section one thousand three hundred  fifty  of  [this  article]  THE
RACING,  PARI-MUTUEL  WAGERING  AND  BREEDING  LAW  shall be exclusively
appropriated to the commission for costs regulation.
  S 3. Subdivisions (b) and (c) of section 52 of chapter 174 of the laws
of 2013 enacting the upstate New York gaming economic development act of
2013, are amended to read as follows:
  (b) sections six, seven, fourteen and sixteen of this act  shall  take
effect  on  the  same date as the agreement between the Oneida Nation of
New York and the state of New York entered into on the sixteenth day  of
May, 2013 takes effect; provided, further, that the amendments to subdi-
vision 2 of section 99-h of the state finance law made by section six of
this  act  shall  take  effect on the same date as the reversion of such
section as provided in section 2 of chapter 747 of the laws of 2006,  as
amended;  provided,  further,  that  the  amendments to subdivision 3 of
section 99-h of the state finance law made by section seven of this  act
shall  be subject to the expiration and reversion of such subdivision as
provided in section 3 of part W of chapter 60 of the laws  of  2011,  as
amended  when  upon  such date the provisions of section seven-a of this
act shall take effect; provided, further, that the amendments to  subdi-
vision  3  of  section  99-h  of  the  state finance law made by section
seven-a of this act shall be subject to the the expiration and reversion

S. 6359--D                         293                        A. 8559--D

of such section as provided in section 2 of chapter 747 of the  laws  of
2006,  as amended when upon such date the provisions of section eight of
this act shall take effect; [provided, further, however, that the amend-
ment  to  section  99-h of the state finance law made by section nine of
this act shall not affect the expiration of such section  and  shall  be
deemed  repealed  therewith;]  provided,  further, that the state gaming
commission shall notify the legislative bill  drafting  commission  upon
the occurrence of such agreement between the Oneida Nation and the state
of New York becoming effective in order that the commission may maintain
an  accurate  and timely effective data base of the official text of the
laws of the state of New York in furtherance of effecting the provisions
of section 44 of the legislative law and  section  70-b  of  the  public
officers law;
  (c) section [1368] 1367 of the racing, pari-mutuel wagering and breed-
ing  law,  as added by section two of this act, shall take effect upon a
change in federal law authorizing the activity permitted by such section
or upon a ruling by a court of competent jurisdiction that such activity
is lawful. The state gaming commission shall notify the legislative bill
drafting commission upon the occurrence of the change in federal law  or
upon  the  ruling of a court of competent jurisdiction in order that the
commission may maintain an accurate and timely effective  data  base  of
the official text of the laws of the state of New York in furtherance of
effecting  the  provisions  of  section  44  of  the legislative law and
section 70-b of the public officers law;
  S 4. Subdivision 3-a of section 99-h of  the  state  finance  law,  as
added by chapter 174 of the laws of 2013, is amended to read as follows:
  3-a.  Ten  percent  of any of the funds actually received by the state
pursuant to the tribal-state compacts and agreements described in subdi-
vision two of this section [that are retained  in  the  fund  after  the
distributions  required by subdivision three of this section, but] prior
to the transfer of unsegregated moneys to the general fund  required  by
such  subdivision,  shall  be distributed to counties in each respective
exclusivity zone provided they do not otherwise receive a share of  said
revenues pursuant to this section. Such distribution shall be made among
such  counties  on  a  per capita basis, excluding the population of any
municipality that receives a distribution pursuant to subdivision  three
of this section.
  S 5. Subdivision g of section 1617-a of the tax law, as added by chap-
ter 174 of the laws of 2013, is amended to read as follows:
  g.  Every  video  lottery  gaming  license, and every renewal license,
shall be valid for a period of five  years,  except  that  video  gaming
licenses  issued  before the effective date of this subdivision shall be
for a term expiring on THE  APPLICANT'S  NEXT  BIRTHDAY  FOLLOWING  June
thirtieth, two thousand fourteen.
  The  gaming  commission  may decline to renew any license after notice
and an opportunity for hearing if it determines that:
  (1) the licensee has violated section one thousand six  hundred  seven
of this article;
  (2)  the  licensee  has  violated any rule, regulation or order of the
gaming commission;
  (3) the applicant or its officers, directors or significant stockhold-
ers, as determined by the gaming commission, have been  convicted  of  a
crime involving moral turpitude; or
  (4)  that  the  character or fitness of the licensee and its officers,
directors, and significant stockholders, as  determined  by  the  gaming
commission  is  such  that  the  participation of the applicant in video

S. 6359--D                         294                        A. 8559--D

lottery gaming or related activities  would  be  inconsistent  with  the
public  interest, convenience or necessity or with the best interests of
video gaming generally.
  S  6.  This  act shall take effect immediately; provided, that section
one of this act shall take effect April 1, 2015; provided, further, that
the amendments made to section three of this act shall be deemed to have
taken effect on the same date and in the same manner as chapter  174  of
the laws of 2013.

                                 PART FF

  Section 1. Subsections (yy) and (zz) of section 606 of the tax law, as
relettered  by section 5 of part H of chapter 1 of the laws of 2003, are
relettered (yyy) and (zzz) and a new subsection (bbb) is added  to  read
as follows:
  (BBB) REAL PROPERTY TAX FREEZE CREDIT. (1) AS USED IN THIS SUBSECTION:
  (A)  THE  TERM  "FREEZE-COMPLIANT  BUDGET"  MEANS A BUDGET OF A TAXING
JURISDICTION THAT HAS MET THE REQUIREMENTS OF SECTION TWO THOUSAND TWEN-
TY-THREE-B OF THE EDUCATION LAW OR SECTION THREE-D OF THE GENERAL MUNIC-
IPAL LAW, WHICHEVER IS APPLICABLE.
  (B) THE TERMS "INDEPENDENT SPECIAL  DISTRICT"  AND  "DEPENDENT  SCHOOL
DISTRICT"  HAVE  THE SAME MEANING AS SET FORTH IN SECTION THREE-D OF THE
GENERAL MUNICIPAL LAW.
  (C) THE TERM "STAR EXEMPTION" MEANS THE SCHOOL  TAX  RELIEF  EXEMPTION
AUTHORIZED  BY SECTION FOUR HUNDRED TWENTY-FIVE OF THE REAL PROPERTY TAX
LAW.
  (D) THE  TERM  "TAXING  JURISDICTION"  MEANS  A  COUNTY,  CITY,  TOWN,
VILLAGE, SCHOOL DISTRICT OR AN INDEPENDENT SPECIAL DISTRICT, EXCEPT THAT
SUCH  TERM  SHALL NOT INCLUDE A CITY WITH A POPULATION OF ONE MILLION OR
MORE, NOR SHALL IT INCLUDE A COUNTY WHOLLY LOCATED WITHIN SUCH A CITY.
  (E) THE TERM "LEVY CREDIT FACTOR"  MEANS  THE  ALLOWABLE  LEVY  GROWTH
FACTOR  FOR  A  TAXING  JURISDICTION,  AS DETERMINED PURSUANT TO SECTION
THREE-C  OF  THE  GENERAL  MUNICIPAL  LAW  OR   SECTION   TWO   THOUSAND
TWENTY-THREE-A OF THE EDUCATION LAW, MINUS ONE.
  (2)  AN  INDIVIDUAL  TAXPAYER  WHO MEETS THE ELIGIBILITY STANDARDS SET
FORTH IN PARAGRAPH THREE OF THIS SUBSECTION AND WHOSE PRIMARY  RESIDENCE
IS  LOCATED  IN A TAXING JURISDICTION THAT HAS A FREEZE-COMPLIANT BUDGET
FOR THE FISCAL YEAR STARTING IN  TWO  THOUSAND  FOURTEEN,  TWO  THOUSAND
FIFTEEN  OR  TWO  THOUSAND  SIXTEEN,  WHICHEVER  IS APPLICABLE, SHALL BE
ALLOWED A CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE.  SUBJECT  TO
THE PROVISIONS OF PARAGRAPH SIX OF THIS SUBSECTION, SUCH CREDIT SHALL BE
DETERMINED AS FOLLOWS:
  (A)  IF A SCHOOL DISTRICT OTHER THAN A DEPENDENT SCHOOL DISTRICT HAS A
FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR  STARTING  IN  TWO  THOUSAND
FOURTEEN,  A  CREDIT  SHALL  BE  ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO
THOUSAND FOURTEEN TAXABLE YEAR IN THE AMOUNT THAT IS THE GREATER OF  (I)
THE  AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE
BY OR ON BEHALF OF THAT SCHOOL DISTRICT FOR THE FISCAL YEAR STARTING  IN
TWO THOUSAND FOURTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL  YEAR  STARTING  IN TWO THOUSAND THIRTEEN, OR (II) THE PRODUCT OF
THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY OR ON  BEHALF  OF
THAT  SCHOOL DISTRICT FOR THE FISCAL YEAR STARTING IN TWO THOUSAND THIR-
TEEN MULTIPLIED BY THE LEVY CREDIT FACTOR FOR THAT SCHOOL  DISTRICT  FOR
THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
  (B)  IF  A TAXING JURISDICTION, OTHER THAN A SCHOOL DISTRICT OR A CITY
WITH A DEPENDENT SCHOOL DISTRICT, HAS A FREEZE-COMPLIANT BUDGET FOR  ITS

S. 6359--D                         295                        A. 8559--D

FISCAL  YEAR STARTING IN TWO THOUSAND FIFTEEN, A CREDIT SHALL BE ALLOWED
FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND FIFTEEN  TAXABLE  YEAR  IN  THE
AMOUNT  THAT IS THE GREATER OF (I) THE AMOUNT BY WHICH THE REAL PROPERTY
TAXES  IMPOSED UPON SUCH RESIDENCE BY OR ON BEHALF OF THAT TAXING JURIS-
DICTION FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS THE
REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING IN TWO THOU-
SAND FOURTEEN, OR (II) THE PRODUCT OF THE REAL  PROPERTY  TAXES  IMPOSED
UPON  SUCH RESIDENCE BY OR ON BEHALF OF THAT TAXING JURISDICTION FOR THE
FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN  MULTIPLIED  BY  THE  LEVY
CREDIT  FACTOR FOR THAT TAXING JURISDICTION FOR THE FISCAL YEAR STARTING
IN TWO THOUSAND FIFTEEN.
  (C) IF A SCHOOL DISTRICT OTHER THAN A DEPENDENT SCHOOL DISTRICT HAS  A
FREEZE-COMPLIANT  BUDGET  FOR  ITS  FISCAL YEAR STARTING IN TWO THOUSAND
FIFTEEN, A CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOU-
SAND FIFTEEN TAXABLE YEAR IN THE AMOUNT BY WHICH THE REAL PROPERTY TAXES
IMPOSED UPON SUCH RESIDENCE BY OR ON BEHALF OF SUCH SCHOOL DISTRICT  FOR
THE  FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS THE REAL PROP-
ERTY TAXES SO IMPOSED FOR THE FISCAL YEAR IDENTIFIED AS FOLLOWS:
  (I) IF THE SCHOOL DISTRICT'S BUDGET FOR THE FISCAL  YEAR  STARTING  IN
TWO  THOUSAND  FOURTEEN WAS A FREEZE-COMPLIANT BUDGET, A CREDIT SHALL BE
ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND FIFTEEN TAXABLE YEAR IN
THE AMOUNT OF THE CREDIT FOR  SCHOOL  DISTRICT  TAXES  ALLOWED  FOR  THE
ELIGIBLE  TAXPAYER'S  TWO  THOUSAND FOURTEEN TAXABLE YEAR; TOGETHER WITH
THE AMOUNT THAT IS THE GREATER OF (I) THE AMOUNT BY WHICH THE REAL PROP-
ERTY TAXES IMPOSED UPON SUCH RESIDENCE BY OR ON BEHALF  OF  THAT  SCHOOL
DISTRICT  FOR  THE  FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS
THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING  IN  TWO
THOUSAND  FOURTEEN,  OR  (II)  THE  PRODUCT  OF  THE REAL PROPERTY TAXES
IMPOSED UPON SUCH RESIDENCE BY OR ON BEHALF OF SUCH SCHOOL DISTRICT  FOR
THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN MULTIPLIED BY THE LEVY
CREDIT  FACTOR  FOR THAT SCHOOL DISTRICT FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FIFTEEN.
  (II) IF THE SCHOOL DISTRICT'S BUDGET FOR THE FISCAL YEAR  STARTING  IN
TWO  THOUSAND FOURTEEN WAS NOT A FREEZE-COMPLIANT BUDGET, A CREDIT SHALL
BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND FIFTEEN TAXABLE YEAR
IN THE AMOUNT THAT IS THE GREATER OF (I) THE AMOUNT BY  WHICH  THE  REAL
PROPERTY  TAXES  IMPOSED  UPON  SUCH  RESIDENCE  BY ON OR BEHALF OF THAT
SCHOOL DISTRICT FOR THE FISCAL YEAR STARTING  IN  TWO  THOUSAND  FIFTEEN
EXCEEDS  THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING
IN TWO THOUSAND FOURTEEN, OR (II) THE PRODUCT OF THE REAL PROPERTY TAXES
IMPOSED UPON SUCH RESIDENCE BY OR ON BEHALF OF SUCH SCHOOL DISTRICT  FOR
THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN MULTIPLIED BY THE LEVY
CREDIT  FACTOR  FOR SUCH SCHOOL DISTRICT FOR THE FISCAL YEAR STARTING IN
TWO THOUSAND FIFTEEN.
  (D) IF A TAXING JURISDICTION, OTHER THAN A SCHOOL DISTRICT OR  A  CITY
WITH  A DEPENDENT SCHOOL DISTRICT, HAS A FREEZE-COMPLIANT BUDGET FOR ITS
FISCAL YEAR STARTING IN TWO THOUSAND SIXTEEN:
  (I) IF THE TAXING JURISDICTION'S BUDGET FOR THE FISCAL  YEAR  STARTING
IN TWO THOUSAND FIFTEEN WAS A FREEZE-COMPLIANT BUDGET, A CREDIT SHALL BE
ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN TAXABLE YEAR IN
THE  AMOUNT  OF THE CREDIT FOR THE TAXES IMPOSED BY OR ON BEHALF OF SUCH
TAXING JURISDICTION ALLOWED FOR THE  ELIGIBLE  TAXPAYER'S  TWO  THOUSAND
FIFTEEN  TAXABLE  YEAR;  TOGETHER WITH THE AMOUNT THAT IS THE GREATER OF
(I) THE AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESI-
DENCE  BY  OR  ON BEHALF OF SUCH TAXING JURISDICTION FOR THE FISCAL YEAR
STARTING IN TWO THOUSAND SIXTEEN EXCEEDS THE REAL PROPERTY TAXES IMPOSED

S. 6359--D                         296                        A. 8559--D

UPON SUCH RESIDENCE BY OR ON BEHALF OF THAT TAXING JURISDICTION FOR  THE
FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN, OR (II) THE PRODUCT OF THE
REAL  PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY OR ON BEHALF OF SUCH
TAXING JURISDICTION FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN
MULTIPLIED  BY  THE  LEVY CREDIT FACTOR FOR SUCH TAXING JURISDICTION FOR
THE FISCAL YEAR STARTING IN TWO THOUSAND SIXTEEN.
  (II) IF THE TAXING JURISDICTION'S BUDGET FOR THE FISCAL YEAR  STARTING
IN  TWO  THOUSAND  FIFTEEN  WAS  NOT A FREEZE-COMPLIANT BUDGET, A CREDIT
SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN  TAXA-
BLE  YEAR  IN  THE AMOUNT THAT IS THE GREATER OF (I) THE AMOUNT BY WHICH
THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY OR ON  BEHALF  OF
SUCH  TAXING  JURISDICTION  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
SIXTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE  FISCAL  YEAR
STARTING  IN TWO THOUSAND FIFTEEN, OR (II) THE PRODUCT OF THE REAL PROP-
ERTY TAXES IMPOSED UPON SUCH RESIDENCE BY OR ON BEHALF  OF  SUCH  TAXING
JURISDICTION FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN MULTI-
PLIED  BY  THE  LEVY  CREDIT FACTOR FOR SUCH TAXING JURISDICTION FOR THE
FISCAL YEAR STARTING IN TWO THOUSAND SIXTEEN.
  (E) IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A  FREEZE-COMPLIANT
BUDGET  FOR  ITS  FISCAL  YEAR  STARTING IN TWO THOUSAND FOURTEEN, A TAX
CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO  THOUSAND  FOUR-
TEEN TAXABLE YEAR IN THE AMOUNT EQUIVALENT TO SIXTY-SEVEN PERCENT OF THE
AMOUNT  THAT IS THE GREATER OF (I) THE AMOUNT BY WHICH THE REAL PROPERTY
TAXES IMPOSED UPON SUCH RESIDENCE BY OR ON BEHALF OF THAT CITY  FOR  THE
FISCAL  YEAR STARTING IN TWO THOUSAND FOURTEEN EXCEEDS THE REAL PROPERTY
TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING IN TWO THOUSAND  THIRTEEN,
OR  (II)  THE PRODUCT OF THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESI-
DENCE BY OR ON BEHALF OF SUCH CITY FOR THE FISCAL YEAR STARTING  IN  TWO
THOUSAND THIRTEEN MULTIPLIED BY THE LEVY CREDIT FACTOR FOR SUCH CITY FOR
THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
  (F)  IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A FREEZE-COMPLIANT
BUDGET FOR ITS FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN:
  (I) IF THE CITY'S BUDGET FOR THE FISCAL YEAR STARTING IN TWO  THOUSAND
FOURTEEN  WAS  A  FREEZE-COMPLIANT BUDGET, A CREDIT SHALL BE ALLOWED FOR
THE ELIGIBLE TAXPAYER'S TWO THOUSAND FIFTEEN TAXABLE YEAR IN  AN  AMOUNT
EQUIVALENT  TO THIRTY-THREE PERCENT OF THE AMOUNT THAT IS THE GREATER OF
(I) THE AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH  RESI-
DENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN
EXCEEDS  THE REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING
IN TWO THOUSAND THIRTEEN, OR (II) THE PRODUCT OF THE REAL PROPERTY TAXES
IMPOSED UPON SUCH RESIDENCE BY OR ON BEHALF OF SUCH CITY FOR THE  FISCAL
YEAR  STARTING  IN  TWO  THOUSAND THIRTEEN MULTIPLIED BY THE LEVY CREDIT
FACTOR FOR SUCH CITY FOR THE FISCAL YEAR STARTING IN TWO THOUSAND  FOUR-
TEEN; TOGETHER WITH THE AMOUNT OF THE CREDIT FOR THE TAXES IMPOSED BY OR
ON  BEHALF OF SUCH CITY ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND
FOURTEEN TAXABLE YEAR; AND TOGETHER WITH AN AMOUNT EQUIVALENT TO  SIXTY-
SEVEN  PERCENT  OF  THE  AMOUNT THAT IS THE GREATER OF (I) THE AMOUNT BY
WHICH THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY  THAT  CITY
FOR  THE  FISCAL  YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS THE REAL
PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING IN  TWO  THOUSAND
FOURTEEN;  OR  (II)  THE PRODUCT OF THE REAL PROPERTY TAXES IMPOSED UPON
SUCH RESIDENCE BY OR ON BEHALF OF SUCH CITY FOR THE FISCAL YEAR STARTING
IN TWO THOUSAND FOURTEEN MULTIPLIED BY THE LEVY CREDIT FACTOR  FOR  SUCH
CITY  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN; AND A CREDIT
SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND SIXTEEN  TAXA-
BLE  YEAR  IN AN AMOUNT EQUIVALENT TO THIRTY-THREE PERCENT OF THE AMOUNT

S. 6359--D                         297                        A. 8559--D

THAT IS THE GREATER OF (I) THE AMOUNT BY WHICH THE REAL  PROPERTY  TAXES
IMPOSED UPON SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN
TWO  THOUSAND FIFTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE
FISCAL  YEAR  STARTING  IN TWO THOUSAND FOURTEEN, OR (II) THE PRODUCT OF
THE REAL PROPERTY TAXES IMPOSED UPON SUCH RESIDENCE BY OR ON  BEHALF  OF
SUCH  CITY  FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN MULTI-
PLIED BY THE LEVY CREDIT FACTOR FOR SUCH CITY FOR THE FISCAL YEAR START-
ING IN TWO THOUSAND FIFTEEN; TOGETHER WITH AN AMOUNT EQUIVALENT TO 49.25
PERCENT OF THE AMOUNT OF THE CREDIT FOR  THE  TAXES  IMPOSED  BY  OR  ON
BEHALF  OF  SUCH  CITY  ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO THOUSAND
FOURTEEN TAXABLE YEAR.
  (II) IF THE CITY'S BUDGET FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
FOURTEEN WAS NOT A FREEZE-COMPLIANT BUDGET, A CREDIT  SHALL  BE  ALLOWED
FOR  THE  ELIGIBLE  TAXPAYER'S  TWO  THOUSAND FIFTEEN TAXABLE YEAR IN AN
AMOUNT EQUIVALENT TO SIXTY-SEVEN PERCENT  OF  THE  AMOUNT  THAT  IS  THE
GREATER  OF (I) THE AMOUNT BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON
SUCH RESIDENCE BY THAT CITY FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
FIFTEEN EXCEEDS THE REAL PROPERTY TAXES SO IMPOSED FOR THE  FISCAL  YEAR
STARTING  IN TWO THOUSAND FOURTEEN OR (II) THE PRODUCT OF THE REAL PROP-
ERTY TAXES IMPOSED UPON SUCH RESIDENCE BY OR ON BEHALF OF SUCH CITY  FOR
THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN MULTIPLIED BY THE LEVY
CREDIT FACTOR FOR SUCH CITY FOR THE FISCAL YEAR STARTING IN TWO THOUSAND
FIFTEEN;  AND  A CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAYER'S TWO
THOUSAND SIXTEEN TAXABLE YEAR IN AN AMOUNT  EQUIVALENT  TO  THIRTY-THREE
PERCENT OF THE AMOUNT THAT IS THE GREATER OF (I) THE AMOUNT BY WHICH THE
REAL  PROPERTY  TAXES  IMPOSED  UPON SUCH RESIDENCE BY THAT CITY FOR THE
FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN EXCEEDS THE  REAL  PROPERTY
TAXES  SO  IMPOSED FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN
OR (II) THE PRODUCT OF THE REAL PROPERTY TAXES IMPOSED UPON  SUCH  RESI-
DENCE  BY  OR ON BEHALF OF SUCH CITY FOR THE FISCAL YEAR STARTING IN TWO
THOUSAND FOURTEEN MULTIPLIED BY THE LEVY CREDIT FACTOR FOR SUCH CITY FOR
THE FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN.
  (G) IF A CITY WITH A DEPENDENT SCHOOL DISTRICT HAS A  FREEZE-COMPLIANT
BUDGET  FOR  ITS  FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN BUT DOES
NOT HAVE A FREEZE-COMPLIANT BUDGET FOR ITS FISCAL YEAR STARTING  IN  TWO
THOUSAND FIFTEEN, A TAX CREDIT SHALL BE ALLOWED FOR THE ELIGIBLE TAXPAY-
ER'S   TWO   THOUSAND   FIFTEEN  TAXABLE  YEAR  AN  AMOUNT  REPRESENTING
THIRTY-THREE PERCENT OF THE AMOUNT THAT IS THE GREATER OF (I) THE AMOUNT
BY WHICH THE REAL PROPERTY TAXES IMPOSED UPON  SUCH  RESIDENCE  BY  THAT
CITY  FOR  THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN EXCEEDS THE
REAL PROPERTY TAXES SO IMPOSED FOR THE FISCAL YEAR STARTING IN TWO THOU-
SAND THIRTEEN OR (II) THE PRODUCT OF THE  REAL  PROPERTY  TAXES  IMPOSED
UPON  SUCH  RESIDENCE  BY  OR ON BEHALF OF SUCH CITY FOR THE FISCAL YEAR
STARTING IN TWO THOUSAND THIRTEEN MULTIPLIED BY THE LEVY  CREDIT  FACTOR
FOR SUCH CITY FOR THE FISCAL YEAR STARTING IN TWO THOUSAND FOURTEEN.
  (3)  TO BE ELIGIBLE FOR SUCH CREDIT, THE TAXPAYER (OR TAXPAYERS FILING
JOINT RETURNS) MUST MEET THE FOLLOWING CRITERIA:
  (A) FOR THE TWO THOUSAND FOURTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
RESIDENCE MUST HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE  TWO  THOU-
SAND FOURTEEN--TWO THOUSAND FIFTEEN SCHOOL YEAR, OR WOULD HAVE SO QUALI-
FIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIMELY
MANNER.
  (B)  FOR THE TWO THOUSAND FIFTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
RESIDENCE MUST HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE  TWO  THOU-
SAND  FIFTEEN--TWO THOUSAND SIXTEEN SCHOOL YEAR, OR WOULD HAVE SO QUALI-

S. 6359--D                         298                        A. 8559--D

FIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIMELY
MANNER.
  (C)  FOR THE TWO THOUSAND SIXTEEN TAXABLE YEAR, THE TAXPAYER'S PRIMARY
RESIDENCE MUST HAVE QUALIFIED FOR THE STAR EXEMPTION FOR THE  TWO  THOU-
SAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR, OR WOULD HAVE SO QUAL-
IFIED IF AN APPLICATION FOR SUCH EXEMPTION HAD BEEN SUBMITTED IN A TIME-
LY MANNER.
  (4)  FOR  EACH  YEAR  THIS  CREDIT  IS ALLOWED, THE COMMISSIONER SHALL
DETERMINE THE TAXPAYER'S  ELIGIBILITY  FOR  THIS  CREDIT  UTILIZING  THE
INFORMATION  AVAILABLE  TO  THE  COMMISSIONER. WHEN THE COMMISSIONER HAS
DETERMINED A TAXPAYER TO BE ELIGIBLE FOR THIS CREDIT,  THE  COMMISSIONER
SHALL ADVANCE A PAYMENT OF THE AMOUNT DETERMINED IN ACCORDANCE WITH THIS
SUBSECTION.  THE TAXPAYER SHALL NOT APPLY FOR SUCH CREDIT IN CONJUNCTION
WITH  THE  FILING  OF  HIS  OR  HER RETURN. A TAXPAYER WHO HAS FAILED TO
RECEIVE AN ADVANCE PAYMENT THAT HE OR SHE BELIEVES WAS  DUE  TO  HIM  OR
HER,  OR  WHO HAS RECEIVED AN ADVANCE PAYMENT THAT HE OR SHE BELIEVES IS
LESS THAN THE AMOUNT THAT WAS DUE TO HIM OR HER, MAY REQUEST PAYMENT  OF
THE CLAIMED DEFICIENCY IN A MANNER PRESCRIBED BY THE COMMISSIONER.
  (5) IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION, IF ANY,
SHALL  EXCEED  THE TAXPAYER'S TAX FOR THE TAXABLE YEAR, THE EXCESS SHALL
BE TREATED AS AN OVERPAYMENT OF  TAX  TO  BE  CREDITED  OR  REFUNDED  IN
ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS
ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  (6)  THE  FOLLOWING  PROVISIONS  SHALL APPLY TO THE CALCULATION OF THE
CREDIT PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION:
  (A) IF THE TAX BILL PERTAINING  TO  THE  ELIGIBLE  TAXPAYER'S  PRIMARY
RESIDENCE  INCLUDES  TAXES  LEVIED  BY  OR  ON BEHALF OF MULTIPLE TAXING
JURISDICTIONS, THE CREDIT SHALL BE BASED UPON THE CHANGE IN  THE  AGGRE-
GATE TAX LIABILITY OF SUCH RESIDENCE, PROVIDED THAT ANY TAX APPEARING ON
THE TAX BILL THAT IS NOT ATTRIBUTABLE TO A FREEZE-COMPLIANT BUDGET SHALL
BE  DISREGARDED  WHEN  DETERMINING  THE  AGGREGATE TAX LIABILITY OF SUCH
RESIDENCE.
  (B) IF THE TAX BILL PERTAINING  TO  THE  ELIGIBLE  TAXPAYER'S  PRIMARY
RESIDENCE  INCLUDES  RELEVIED  TAXES OR OTHER TAXES THAT WERE PREVIOUSLY
BILLED BUT NOT PAID, THOSE TAXES SHALL BE DISREGARDED  WHEN  DETERMINING
THE AGGREGATE TAX LIABILITY OF SUCH RESIDENCE.
  (C)  IF  THE  TAX  BILL  PERTAINING TO THE ELIGIBLE TAXPAYER'S PRIMARY
RESIDENCE INCLUDES USAGE CHARGES, UNIT CHARGES OR OTHER CHARGES THAT ARE
BASED UPON THE CONSUMPTION OF A SERVICE, THOSE CHARGES SHALL  BE  DISRE-
GARDED WHEN DETERMINING THE AGGREGATE TAX LIABILITY OF SUCH RESIDENCE.
  (D)  NOTWITHSTANDING  THE  FOREGOING PROVISIONS OF THIS SUBSECTION, NO
CREDIT SHALL BE ALLOWED TO THE EXTENT THAT  THE  TAX  LIABILITY  OF  THE
ELIGIBLE  TAXPAYER'S  PRIMARY  RESIDENCE INCREASED DUE TO ONE OR MORE OF
THE FOLLOWING EVENTS:
  (I) A PHYSICAL IMPROVEMENT TO THE ELIGIBLE  TAXPAYER'S  PRIMARY  RESI-
DENCE.
  (II) A REMOVAL OR REDUCTION OF AN EXEMPTION ON THE ELIGIBLE TAXPAYER'S
PRIMARY  RESIDENCE,  INCLUDING  A  REDUCTION  OF  THE STAR EXEMPT AMOUNT
CALCULATED  PURSUANT  TO  SUBDIVISION  TWO  OF  SECTION   FOUR   HUNDRED
TWENTY-FIVE OF THE REAL PROPERTY TAX LAW.
  (III) A REVALUATION THAT CAUSED THE ASSESSMENT OF THE ELIGIBLE TAXPAY-
ER'S  PRIMARY RESIDENCE TO INCREASE BY A PERCENTAGE THAT IS GREATER THAN
THE APPLICABLE CHANGE IN LEVEL OF ASSESSMENT. AS USED HEREIN, THE  TERMS
"REVALUATION"  AND  "CHANGE  IN LEVEL OF ASSESSMENT" SHALL HAVE THE SAME
MEANINGS AS SET FORTH IN SECTIONS ONE HUNDRED  TWO  AND  TWELVE  HUNDRED
TWENTY OF THE REAL PROPERTY TAX LAW, RESPECTIVELY.

S. 6359--D                         299                        A. 8559--D

  (E)  IN  THE  CASE  OF  PROPERTY CONSISTING OF A COOPERATIVE APARTMENT
CORPORATION THAT IS DESCRIBED BY PARAGRAPH (K)  OF  SUBDIVISION  TWO  OF
SECTION FOUR HUNDRED TWENTY-FIVE OF THE REAL PROPERTY TAX LAW, AN ELIGI-
BLE OWNER SHALL BE ALLOWED A CREDIT IN THE AMOUNT EQUAL TO SIXTY PERCENT
OF  THE  AVERAGE  TAX CREDIT IN THAT TAXING JURISDICTION FOR THAT FISCAL
YEAR, AS DETERMINED BY THE COMMISSIONER, OR IN THE CASE OF A COOPERATIVE
APARTMENT CORPORATION THAT IS DESCRIBED BY SUBPARAGRAPH  (IV)  OF  PARA-
GRAPH  (K) OF SUBDIVISION TWO OF SECTION FOUR HUNDRED TWENTY-FIVE OF THE
REAL PROPERTY TAX LAW, A CREDIT OF TWENTY PERCENT OF  SUCH  AVERAGE  TAX
CREDIT.
  (F)  IN  THE  CASE  OF  PROPERTY  CONSISTING  OF A MOBILE HOME THAT IS
DESCRIBED BY PARAGRAPH (L) OF SUBDIVISION TWO OF  SECTION  FOUR  HUNDRED
TWENTY-FIVE  OF  THE  REAL  PROPERTY TAX LAW, AN ELIGIBLE OWNER SHALL BE
ALLOWED A CREDIT IN THE AMOUNT EQUAL TO TWENTY-FIVE PERCENT OF THE AVER-
AGE TAX CREDIT IN THAT TAXING JURISDICTION  FOR  THAT  FISCAL  YEAR,  AS
DETERMINED BY THE COMMISSIONER.
  (G)  IN  THE CASE OF A CITY WITH A DEPENDENT SCHOOL DISTRICT, IT SHALL
BE PRESUMED THAT SIXTY-SEVEN PERCENT OF THE CITY TAX BILL IS FOR  SCHOOL
DISTRICT  PURPOSES  AND  THAT  THIRTY-THREE  PERCENT IS FOR GENERAL CITY
PURPOSES.
  (H) THE AMOUNT OF THE CREDIT SHALL BE ROUNDED TO THE  NEAREST  DOLLAR,
EXCEPT  WHERE  SUCH AMOUNT IS GREATER THAN ZERO AND LESS THAN ONE DOLLAR
AND FIFTY CENTS, IN WHICH CASE THE AMOUNT OF THE CREDIT SHALL BE ROUNDED
UP TO TWO DOLLARS.
  (7) NO CREDIT SHALL BE ALLOWED UNDER THIS SUBSECTION  IN  RELATION  TO
PROPERTY LOCATED WITHIN A CITY WITH A POPULATION OF ONE MILLION OR MORE.
  S  2.  The  education law is amended by adding a new section 2023-b to
read as follows:
  S  2023-B.  CERTIFICATION  OF  COMPLIANCE  WITH  PROPERTY  TAX  FREEZE
REQUIREMENTS.  A  SCHOOL  DISTRICT  THAT IS SUBJECT TO THE PROVISIONS OF
SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART MUST  COMPLY  WITH  THE
REQUIREMENTS  OF  SUBDIVISION TWO OF THIS SECTION IN ORDER TO RENDER ITS
TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT AUTHORIZED BY
SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A  FISCAL
YEAR  STARTING  IN TWO THOUSAND FOURTEEN.  THE PROPERTY TAX CUTS WILL BE
EXTENDED FOR A SECOND YEAR IN JURISDICTIONS WHICH COMPLY  WITH  THE  TAX
CAP  AND  HAVE  A STATE APPROVED GOVERNMENT EFFICIENCY PLAN WHICH DEMON-
STRATE THREE YEAR SAVINGS AND EFFICIENCIES OF AT LEAST ONE  PERCENT  PER
YEAR  FROM  SHARED  SERVICES,  COOPERATION  AGREEMENTS AND/OR MERGERS OR
EFFICIENCIES. THE DIRECTOR OF THE BUDGET SHALL CONSIDER  PAST  EFFICIEN-
CIES,  SHARED  SERVICES  AND  REFORMS  IN  THEIR APPROVAL PROCESS. WHILE
LOCALITIES MAY OFFER A VARIETY OF APPROACHES IT IS ANTICIPATED THAT  THE
COUNTY  GOVERNMENT  OR  BOARD  OF  COOPERATIVE EDUCATIONAL SERVICES WILL
CONVENE AND FACILITATE A PROCESS AND SUBMIT A COUNTY WIDE  OR  BOARD  OF
COOPERATIVE  EDUCATIONAL  SERVICES  REGION  WIDE  PLAN FOR APPROVAL.   A
SCHOOL DISTRICT THAT IS SUBJECT TO THE PROVISIONS OF SECTION  TWO  THOU-
SAND  TWENTY-THREE-A  OF  THIS PART MUST COMPLY WITH THE REQUIREMENTS OF
SUBDIVISION TWO AND EITHER SUBDIVISION THREE OR SUBDIVISION FOUR OF THIS
SECTION IN ORDER TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL  PROPERTY
TAX  FREEZE CREDIT AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX HUNDRED
SIX OF THE TAX LAW FOR A FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN.
  1. DEFINITIONS.  AS USED IN THIS SECTION:
  A. "MERGERS"  MEANS:  REORGANIZATIONS  OF  ELIGIBLE  SCHOOL  DISTRICTS
PURSUANT  TO  SECTIONS  FIFTEEN  HUNDRED  FIVE,  FIFTEEN  HUNDRED ELEVEN
THROUGH FIFTEEN HUNDRED THIRTEEN, FIFTEEN HUNDRED  TWENTY-FOUR,  FIFTEEN
HUNDRED TWENTY-SIX, SEVENTEEN HUNDRED FIVE, EIGHTEEN HUNDRED ONE THROUGH

S. 6359--D                         300                        A. 8559--D

EIGHTEEN  HUNDRED THREE, OR TWENTY-TWO HUNDRED EIGHTEEN OF THE EDUCATION
LAW; OR REORGANIZATIONS, CONSOLIDATIONS,  OR  DISSOLUTIONS  OF  ELIGIBLE
SCHOOL  DISTRICTS  IN  WHICH  ONE  OR MORE ELIGIBLE SCHOOL DISTRICTS ARE
TERMINATED  AND  ANOTHER  ELIGIBLE  SCHOOL DISTRICT ASSUMES JURISDICTION
OVER THE TERMINATED SCHOOL DISTRICT OR DISTRICTS PURSUANT TO  ANY  OTHER
PROVISION OF LAW.
  B.  "COOPERATION  AGREEMENTS"  MEANS  AGREEMENTS  ENTERED INTO BETWEEN
ELIGIBLE SCHOOL DISTRICTS TO IMPLEMENT THE SHARING OR  CONSOLIDATION  OF
FUNCTIONS  OR  SERVICES, INCLUDING BUT NOT LIMITED TO: PROCUREMENT, REAL
ESTATE AND FACILITY MANAGEMENT, FLEET MANAGEMENT, BUSINESS AND FINANCIAL
SERVICES, ADMINISTRATIVE  SERVICES,  PAYROLL  ADMINISTRATION,  TIME  AND
ATTENDANCE,   BENEFITS  ADMINISTRATION  AND  OTHER  TRANSACTIONAL  HUMAN
RESOURCES FUNCTIONS, CONTRACT MANAGEMENT, GRANTS MANAGEMENT, TRANSPORTA-
TION SERVICES, FACILITIES AND FUNCTION, HUMAN  SERVICES  FACILITIES  AND
FUNCTIONS,  CUSTOMER  SERVICE  FACILITIES  AND FUNCTIONS AND INFORMATION
TECHNOLOGY INFRASTRUCTURE, PROCESS, SERVICES AND FUNCTIONS.
  C. "ELIGIBLE SCHOOL DISTRICT" MEANS A SCHOOL DISTRICT THAT IS  SUBJECT
TO  SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART, BUT SHALL NOT MEAN
A SCHOOL DISTRICT THAT IS SUBJECT TO ARTICLE FIFTY-TWO OF THIS CHAPTER.
  D. "GOVERNMENT EFFICIENCY PLAN" MEANS A PLAN THAT  IDENTIFIES  COOPER-
ATION  AGREEMENTS,  SHARED SERVICES AND/OR MERGERS OR EFFICIENCIES TO BE
FULLY IMPLEMENTED BY ONE OR MORE  ELIGIBLE  SCHOOL  DISTRICTS  THAT  ARE
SIGNATORIES TO THE PLAN.
  E.  "LEAD DISTRICT" MEANS THE ELIGIBLE SCHOOL DISTRICT THAT IS PARTIC-
IPATING IN A GOVERNMENT EFFICIENCY PLAN WITH  MORE  THAN  ONE  SIGNATORY
THAT  HAS ELECTED TO SUBMIT THE GOVERNMENT EFFICIENCY PLAN TO THE DIREC-
TOR OF THE BUDGET ON BEHALF OF ALL SIGNATORIES TO THE PLAN.
  F. "SHARED SERVICES" MEANS  FUNCTIONAL  CONSOLIDATIONS  BY  WHICH  ONE
ELIGIBLE  SCHOOL  DISTRICT COMPLETELY PROVIDES A SERVICE OR FUNCTION FOR
ANOTHER ELIGIBLE SCHOOL DISTRICT, WHICH NO LONGER ENGAGES IN THAT  FUNC-
TION OR SERVICE; SHARED OR COOPERATIVE SERVICES BETWEEN AND AMONG ELIGI-
BLE  SCHOOL DISTRICTS; AND REGIONALIZED DELIVERY OF SERVICES BETWEEN AND
AMONG ELIGIBLE SCHOOL  DISTRICTS.  THESE  SHARED  SERVICES  MAY  BE  FOR
SERVICES  OR  FUNCTIONS  INCLUDING BUT NOT LIMITED TO: PROCUREMENT, REAL
ESTATE AND FACILITY MANAGEMENT, FLEET MANAGEMENT, BUSINESS AND FINANCIAL
SERVICES, ADMINISTRATIVE  SERVICES,  PAYROLL  ADMINISTRATION,  TIME  AND
ATTENDANCE,   BENEFITS  ADMINISTRATION  AND  OTHER  TRANSACTIONAL  HUMAN
RESOURCES FUNCTIONS, CONTRACT MANAGEMENT, GRANTS MANAGEMENT, TRANSPORTA-
TION SERVICES, FACILITIES AND FUNCTIONS, HUMAN SERVICES  FACILITIES  AND
FUNCTIONS,  CUSTOMER  SERVICE  FACILITIES  AND FUNCTIONS AND INFORMATION
TECHNOLOGY INFRASTRUCTURE, PROCESSES, SERVICES AND FUNCTIONS.
  2. CERTIFICATION OF COMPLIANCE  WITH  TAX  LEVY  LIMIT.  A.  UPON  THE
ADOPTION  OF THE BUDGET OF AN ELIGIBLE SCHOOL DISTRICT, THE CHIEF EXECU-
TIVE OFFICER OF SUCH SCHOOL DISTRICT SHALL CERTIFY TO  THE  STATE  COMP-
TROLLER,  THE  COMMISSIONER OF TAXATION AND FINANCE AND THE COMMISSIONER
THAT THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT PRESCRIBED
BY SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART. SUCH  CERTIFICATION
SHALL  BE  MADE IN A FORM AND MANNER PRESCRIBED BY THE STATE COMPTROLLER
IN CONSULTATION WITH THE COMMISSIONER OF TAXATION AND  FINANCE  AND  THE
COMMISSIONER.
  B. IN ORDER FOR SUCH CERTIFICATION TO GIVE RISE TO A REAL PROPERTY TAX
FREEZE  CREDIT  UNDER SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE
TAX LAW, SUCH CERTIFICATION SHALL BE MADE NO LATER THAN THE TWENTY-FIRST
DAY OF THE FISCAL YEAR TO WHICH IT APPLIES.
  C. IF SUCH A CERTIFICATION HAS BEEN MADE AND THE ACTUAL  TAX  LEVY  OF
THE  SCHOOL  DISTRICT  EXCEEDS THE APPLICABLE TAX LEVY LIMIT, THE EXCESS

S. 6359--D                         301                        A. 8559--D

AMOUNT SHALL BE PLACED IN RESERVE AND USED IN THE MANNER  PRESCRIBED  BY
SUBDIVISION  FIVE  OF  SECTION TWO THOUSAND TWENTY-THREE-A OF THIS PART,
EVEN IF A TAX LEVY IN EXCESS OF THE TAX LEVY LIMIT HAD BEEN DULY AUTHOR-
IZED FOR THE APPLICABLE FISCAL YEAR BY THE SCHOOL DISTRICT VOTERS.
  D.  NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, EVERY SCHOOL
DISTRICT THAT IS SUBJECT TO THE PROVISIONS OF SECTION TWO THOUSAND TWEN-
TY-THREE-A OF THIS PART SHALL REPORT BOTH ITS PROPOSED  BUDGET  AND  ITS
ADOPTED  BUDGET  TO  THE OFFICE OF THE STATE COMPTROLLER AND THE COMMIS-
SIONER AT THE TIME AND IN THE MANNER AS THEY MAY PRESCRIBE,  WHETHER  OR
NOT SUCH BUDGET HAS BEEN OR WILL BE CERTIFIED AS PROVIDED BY THIS SUBDI-
VISION.
  3.  SCHOOL  DISTRICT  GOVERNMENT  EFFICIENCY  PLANS  SUBMITTED BY LEAD
DISTRICT. A. THE SUPERINTENDENT OF EACH LEAD DISTRICT  SHALL  SUBMIT  TO
THE  DIRECTOR  OF  THE  BUDGET  BY  JUNE  FIRST, TWO THOUSAND FIFTEEN, A
GOVERNMENT EFFICIENCY PLAN THAT  DEMONSTRATES  THREE  YEAR  SAVINGS  AND
EFFICIENCIES  OF  AT  LEAST  ONE  PERCENT PER YEAR FROM SHARED SERVICES,
COOPERATION AGREEMENTS AND/OR MERGERS OR EFFICIENCIES OVER THE AGGREGATE
TWO THOUSAND FOURTEEN--TWO THOUSAND FIFTEEN SCHOOL YEAR TAX  LEVIES  FOR
ALL ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN.
  (I)  THE  SUPERINTENDENT  OF  EACH  ELIGIBLE SCHOOL DISTRICT THAT IS A
SIGNATORY TO A GOVERNMENT EFFICIENCY PLAN SHALL  SUBMIT  TO  THE  SUPER-
INTENDENT OF THE LEAD DISTRICT BY MAY FIFTEENTH, TWO THOUSAND FIFTEEN, A
WRITTEN CERTIFICATION THAT THE ELIGIBLE SCHOOL DISTRICT AGREES TO UNDER-
TAKE  ITS BEST EFFORTS TO FULLY IMPLEMENT BY THE END OF THE TWO THOUSAND
SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR THE COOPERATION  AGREEMENTS,
MERGERS,  EFFICIENCIES AND/OR SHARED SERVICES SPECIFIED FOR THE ELIGIBLE
SCHOOL DISTRICT IN SUCH PLAN.
  (II) THE CHIEF FINANCIAL OFFICER OF A SCHOOL DISTRICT THAT IS A SIGNA-
TORY TO A GOVERNMENT EFFICIENCY PLAN SHALL SUBMIT TO THE  SUPERINTENDENT
OF  THE  LEAD DISTRICT BY MAY FIFTEENTH, TWO THOUSAND FIFTEEN, A WRITTEN
CERTIFICATION THAT IN HIS OR HER PROFESSIONAL OPINION, FULL  IMPLEMENTA-
TION  BY  THE  END  OF  THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN
SCHOOL YEAR OF THE COOPERATION AGREEMENTS, MERGERS, EFFICIENCIES  AND/OR
SHARED  SERVICES  THAT ARE TO BE TAKEN BY SUCH SCHOOL DISTRICT ITSELF AS
SPECIFIED IN SUCH PLAN WILL RESULT IN THE SAVINGS SET FORTH IN SUCH PLAN
ATTRIBUTABLE TO SUCH SCHOOL DISTRICT.
  (III) THE CHIEF FINANCIAL OFFICER OF  EACH  ELIGIBLE  SCHOOL  DISTRICT
THAT  IS A SIGNATORY TO A GOVERNMENT EFFICIENCY PLAN SHALL SUBMIT TO THE
LEAD DISTRICT BY MAY FIFTEENTH, TWO THOUSAND FIFTEEN, A WRITTEN  CERTIF-
ICATION  THAT IN HIS OR HER PROFESSIONAL OPINION, FULL IMPLEMENTATION OF
THE COOPERATION AGREEMENTS, MERGERS, EFFICIENCIES AND/OR SHARED SERVICES
AS SPECIFIED FOR ALL OF THE ELIGIBLE SCHOOL DISTRICTS THAT ARE  SIGNATO-
RIES TO SUCH PLAN WILL RESULT IN SAVINGS OVER THE AGGREGATE TWO THOUSAND
FOURTEEN--TWO  THOUSAND  FIFTEEN SCHOOL YEAR TAX LEVIES FOR ALL ELIGIBLE
SCHOOL DISTRICTS THAT ARE SIGNATORIES TO  SUCH  PLAN  OF  AT  LEAST  ONE
PERCENT IN EACH OF THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN, THE
TWO THOUSAND SEVENTEEN--TWO THOUSAND EIGHTEEN AND THE TWO THOUSAND EIGH-
TEEN--TWO THOUSAND NINETEEN SCHOOL YEARS.
  B.  THE CHIEF FINANCIAL OFFICER OF EACH LEAD DISTRICT SHALL SUBMIT THE
FOLLOWING DOCUMENTS TO THE DIRECTOR OF THE  BUDGET  ON  OR  BEFORE  JUNE
FIRST, TWO THOUSAND FIFTEEN:  (I) THE GOVERNMENT EFFICIENCY PLAN; (II) A
LIST OF ALL ELIGIBLE SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN;
(III) ALL OF THE CERTIFICATIONS REQUIRED BY PARAGRAPH A OF THIS SUBDIVI-
SION;  AND (IV) AN ANALYSIS OF THE AGGREGATE AMOUNT OF SAVINGS SET FORTH
IN SUCH PLAN ATTRIBUTABLE TO ALL  ELIGIBLE  SCHOOL  DISTRICTS  THAT  ARE
SIGNATORIES TO SUCH PLAN THAT WILL BE ACHIEVED IF THE COOPERATION AGREE-

S. 6359--D                         302                        A. 8559--D

MENTS,  MERGERS,  EFFICIENCIES AND/OR SHARED SERVICES IDENTIFIED IN SUCH
PLAN ARE FULLY IMPLEMENTED BY THE END OF THE TWO  THOUSAND  SIXTEEN--TWO
THOUSAND SEVENTEEN SCHOOL YEAR.  THE DIRECTOR OF THE BUDGET SHALL REVIEW
SUCH DOCUMENTS AND SHALL CONSIDER PAST EFFICIENCIES, SHARED SERVICES AND
REFORMS  IN THEIR APPROVAL PROCESS TO DETERMINE WHETHER THE REQUIREMENTS
OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT TO EACH  ELIGIBLE  SCHOOL
DISTRICT THAT IS A SIGNATORY TO THE GOVERNMENT EFFICIENCY PLAN AND SHALL
NOTIFY  THE  COMMISSIONER OF TAXATION AND FINANCE OF SUCH DETERMINATIONS
NO LATER THAN JULY THIRTY-FIRST, TWO THOUSAND FIFTEEN.
  4. SCHOOL DISTRICT GOVERNMENT EFFICIENCY PLANS SUBMITTED BY  A  SINGLE
ELIGIBLE  SCHOOL  DISTRICT.  A.  WHILE LOCALITIES MAY OFFER A VARIETY OF
APPROACHES IT IS ANTICIPATED THAT THE  COUNTY  GOVERNMENT  OR  BOARD  OF
COOPERATIVE  EDUCATIONAL  SERVICES WILL CONVENE AND FACILITATE A PROCESS
AND SUBMIT A COUNTY WIDE OR BOARD OF  COOPERATIVE  EDUCATIONAL  SERVICES
REGION  WIDE  PLAN  FOR APPROVAL. AS SUCH, ELIGIBLE SCHOOL DISTRICTS ARE
STRONGLY ENCOURAGED TO DEVELOP A SINGLE GOVERNMENT EFFICIENCY  PLAN  FOR
ALL  OF  THE  ELIGIBLE  SCHOOL  DISTRICTS  IN THEIR BOARD OF COOPERATION
EDUCATIONAL SERVICES  DISTRICT.  HOWEVER,  THE  SUPERINTENDENT  OF  EACH
ELIGIBLE SCHOOL DISTRICT THAT IS NOT PARTICIPATING IN A GOVERNMENT EFFI-
CIENCY  PLAN  WITH MORE THAN ONE SIGNATORY MAY SUBMIT TO THE DIRECTOR OF
THE BUDGET BY JUNE FIRST, TWO THOUSAND FIFTEEN, A GOVERNMENT  EFFICIENCY
PLAN  THAT  DEMONSTRATES THREE YEAR SAVINGS AND EFFICIENCIES OF AT LEAST
ONE PERCENT PER YEAR FROM SHARED SERVICES, COOPERATION AGREEMENTS AND/OR
MERGERS OR EFFICIENCIES OVER SUCH ELIGIBLE SCHOOL DISTRICT'S  TWO  THOU-
SAND FOURTEEN--TWO THOUSAND FIFTEEN SCHOOL YEAR TAX LEVY.
  (I)  IN THE EVENT AN ELIGIBLE SCHOOL DISTRICT CHOOSES TO SUBMIT SUCH A
GOVERNMENT EFFICIENCY PLAN, THE SUPERINTENDENT OF SUCH  ELIGIBLE  SCHOOL
DISTRICT  SHALL  SUBMIT TO THE DIRECTOR OF THE BUDGET BY JUNE FIRST, TWO
THOUSAND FIFTEEN, A WRITTEN  CERTIFICATION  THAT  SUCH  ELIGIBLE  SCHOOL
DISTRICT  AGREES TO UNDERTAKE ITS BEST EFFORTS TO FULLY IMPLEMENT BY THE
END OF THE TWO THOUSAND SIXTEEN--TWO THOUSAND SEVENTEEN SCHOOL YEAR  THE
COOPERATION  AGREEMENTS,  MERGERS,  EFFICIENCIES  AND/OR SHARED SERVICES
SPECIFIED IN SUCH PLAN.
  (II) IN THE EVENT A SCHOOL DISTRICT CHOOSES TO SUBMIT SUCH  A  GOVERN-
MENT  EFFICIENCY  PLAN,  THE  CHIEF  FINANCIAL  OFFICER OF SUCH ELIGIBLE
SCHOOL DISTRICT SHALL SUBMIT TO THE  DIRECTOR  OF  THE  BUDGET  BY  JUNE
FIRST,  TWO  THOUSAND  FIFTEEN,  AN ANALYSIS OF THE SAVINGS SET FORTH IN
SUCH PLAN THAT WILL BE ACHIEVED IF THE  COOPERATION  AGREEMENTS,  SHARED
SERVICES  AND/OR  MERGERS  OR  EFFICIENCIES  IDENTIFIED IN SUCH PLAN ARE
FULLY IMPLEMENTED BY THE END OF THE TWO THOUSAND  SIXTEEN--TWO  THOUSAND
SEVENTEEN SCHOOL YEAR, AS WELL AS A WRITTEN CERTIFICATION THAT IN HIS OR
HER  PROFESSIONAL OPINION, FULL IMPLEMENTATION OF THE COOPERATION AGREE-
MENTS, MERGERS, EFFICIENCIES AND/OR SHARED SERVICES AS SPECIFIED IN SUCH
PLAN WILL RESULT IN SAVINGS OVER ITS TWO THOUSAND FOURTEEN--TWO THOUSAND
FIFTEEN SCHOOL YEAR TAX LEVY OF AT LEAST ONE PERCENT IN EACH OF THE  TWO
THOUSAND    SIXTEEN--TWO    THOUSAND   SEVENTEEN,   THE   TWO   THOUSAND
SEVENTEEN--TWO THOUSAND EIGHTEEN  AND  THE  TWO  THOUSAND  EIGHTEEN--TWO
THOUSAND NINETEEN SCHOOL YEARS.
  B.  THE  DIRECTOR OF THE BUDGET SHALL REVIEW THE DOCUMENTS REFERRED TO
IN PARAGRAPH A OF THIS SUBDIVISION AND SHALL CONSIDER PAST EFFICIENCIES,
SHARED SERVICES AND REFORMS  IN  THEIR  APPROVAL  PROCESS  TO  DETERMINE
WHETHER  THE REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT
TO AN ELIGIBLE SCHOOL DISTRICT THAT HAS SUBMITTED A GOVERNMENT EFFICIEN-
CY PLAN AND SHALL NOTIFY THE COMMISSIONER OF  TAXATION  AND  FINANCE  OF
SUCH  DETERMINATION  NO  LATER  THAN  JULY  THIRTY-FIRST,  TWO  THOUSAND
FIFTEEN.

S. 6359--D                         303                        A. 8559--D

  S 3. The general municipal law is amended by adding a new section  3-d
to read as follows:
  S  3-D.  CERTIFICATION OF COMPLIANCE WITH PROPERTY TAX FREEZE REQUIRE-
MENTS. A MUNICIPAL CORPORATION OR AN INDEPENDENT SPECIAL  DISTRICT  THAT
IS  SUBJECT  TO  THE  PROVISIONS OF SECTION THREE-C OF THIS ARTICLE MUST
COMPLY WITH THE REQUIREMENTS OF SUBDIVISION TWO OF THIS SECTION IN ORDER
TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE REAL PROPERTY TAX FREEZE CREDIT
AUTHORIZED BY SUBSECTION (BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW
FOR A FISCAL YEAR STARTING IN TWO THOUSAND FIFTEEN.   THE  PROPERTY  TAX
CUTS  WILL  BE  EXTENDED FOR A SECOND YEAR IN JURISDICTIONS WHICH COMPLY
WITH THE TAX CAP AND HAVE A STATE APPROVED  GOVERNMENT  EFFICIENCY  PLAN
WHICH  DEMONSTRATE  THREE  YEAR SAVINGS AND EFFICIENCIES OF AT LEAST ONE
PERCENT PER YEAR FROM SHARED  SERVICES,  COOPERATION  AGREEMENTS  AND/OR
MERGERS  OR EFFICIENCIES. THE DIRECTOR OF THE BUDGET SHALL CONSIDER PAST
EFFICIENCIES, SHARED SERVICES AND REFORMS  IN  THEIR  APPROVAL  PROCESS.
WHILE  LOCALITIES  MAY  OFFER  A VARIETY OF APPROACHES IT IS ANTICIPATED
THAT THE COUNTY GOVERNMENT OR BOARD OF COOPERATIVE EDUCATIONAL  SERVICES
WILL  CONVENE AND FACILITATE A PROCESS AND SUBMIT A COUNTY WIDE OR BOARD
OF COOPERATIVE EDUCATIONAL SERVICES REGION WIDE PLAN FOR  APPROVAL.    A
MUNICIPAL CORPORATION OR AN INDEPENDENT SPECIAL DISTRICT THAT IS SUBJECT
TO  THE  PROVISIONS  OF SECTION THREE-C OF THIS ARTICLE MUST COMPLY WITH
THE REQUIREMENTS OF SUBDIVISION TWO  AND  EITHER  SUBDIVISION  THREE  OR
SUBDIVISION FOUR OF THIS SECTION IN ORDER TO RENDER ITS TAXPAYERS ELIGI-
BLE  FOR  THE  REAL  PROPERTY TAX FREEZE CREDIT AUTHORIZED BY SUBSECTION
(BBB) OF SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A FISCAL YEAR START-
ING IN TWO THOUSAND SIXTEEN.  PROVIDED  HOWEVER,  THAT  A  CITY  WITH  A
DEPENDENT  SCHOOL DISTRICT MUST COMPLY WITH THE REQUIREMENTS OF SUBDIVI-
SION TWO OF THIS SECTION IN ORDER TO RENDER ITS TAXPAYERS  ELIGIBLE  FOR
THE  REAL  PROPERTY  TAX FREEZE CREDIT AUTHORIZED BY SUBSECTION (BBB) OF
SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A FISCAL YEAR STARTING IN TWO
THOUSAND FOURTEEN AND COMPLY WITH THE REQUIREMENTS OF SUBDIVISION TWO OF
THIS SECTION, AND BOTH THE CITY AND ITS DEPENDENT SCHOOL  DISTRICT  MUST
JOINTLY COMPLY WITH THE REQUIREMENTS OF SUBDIVISION THREE OR SUBDIVISION
FOUR  OF THIS SECTION, IN ORDER TO RENDER ITS TAXPAYERS ELIGIBLE FOR THE
REAL PROPERTY TAX  FREEZE  CREDIT  AUTHORIZED  BY  SUBSECTION  (BBB)  OF
SECTION SIX HUNDRED SIX OF THE TAX LAW FOR A FISCAL YEAR STARTING IN TWO
THOUSAND FIFTEEN OR TWO THOUSAND SIXTEEN.
  1. DEFINITIONS.  AS USED IN THIS SECTION:
  (A)  "MERGERS"  MEANS: CONSOLIDATIONS OR DISSOLUTIONS OF LOCAL GOVERN-
MENT UNITS IN ACCORDANCE WITH ARTICLE SEVENTEEN-A  OF  THIS  CHAPTER  OR
REORGANIZATIONS,  CONSOLIDATIONS,  OR  DISSOLUTIONS  OF LOCAL GOVERNMENT
UNITS IN WHICH ONE OR MORE LOCAL GOVERNMENT  UNITS  ARE  TERMINATED  AND
ANOTHER  LOCAL  GOVERNMENT UNIT ASSUMES JURISDICTION OVER THE TERMINATED
LOCAL GOVERNMENT UNIT  OR UNITS PURSUANT TO ANY OTHER PROVISION OF LAW.
  (B) "COOPERATION AGREEMENTS" MEANS  AGREEMENTS  ENTERED  INTO  BETWEEN
LOCAL  GOVERNMENT  UNITS  TO  IMPLEMENT  THE SHARING OR CONSOLIDATION OF
FUNCTIONS OR SERVICES, INCLUDING BUT NOT LIMITED TO:  PROCUREMENT,  REAL
ESTATE AND FACILITY MANAGEMENT, FLEET MANAGEMENT, BUSINESS AND FINANCIAL
SERVICES,  ADMINISTRATIVE  SERVICES,  PAYROLL  ADMINISTRATION,  TIME AND
ATTENDANCE,  BENEFITS  ADMINISTRATION  AND  OTHER  TRANSACTIONAL   HUMAN
RESOURCES FUNCTIONS, CONTRACT MANAGEMENT, GRANTS MANAGEMENT, TRANSPORTA-
TION  SERVICES,  FACILITIES  AND FUNCTION, HUMAN SERVICES FACILITIES AND
FUNCTIONS, CUSTOMER SERVICE FACILITIES  AND  FUNCTIONS  AND  INFORMATION
TECHNOLOGY INFRASTRUCTURE, PROCESS, SERVICES AND FUNCTIONS.

S. 6359--D                         304                        A. 8559--D

  (C)  "DEPENDENT  SCHOOL  DISTRICT"  MEANS  A  SCHOOL  DISTRICT THAT IS
SUBJECT TO ARTICLE FIFTY-TWO OF THE EDUCATION LAW AND THAT HAS  A  POPU-
LATION OF LESS THAN ONE MILLION.
  (D)  "GOVERNMENT EFFICIENCY PLAN" MEANS A PLAN THAT IDENTIFIES COOPER-
ATION AGREEMENTS, SHARED SERVICES AND/OR MERGERS OR EFFICIENCIES  TO  BE
FULLY  IMPLEMENTED BY ONE OR MORE LOCAL GOVERNMENT UNITS THAT ARE SIGNA-
TORIES TO THE PLAN.
  (E) "INDEPENDENT SPECIAL DISTRICT" MEANS A SPECIAL DISTRICT AS DEFINED
BY SECTION ONE HUNDRED TWO OF THE REAL PROPERTY TAX LAW THAT EITHER  (I)
HAS  A  SEPARATE INDEPENDENT ELECTED BOARD, AND EITHER HAS THE AUTHORITY
TO LEVY A TAX, OR CAN REQUIRE A MUNICIPAL CORPORATION TO LEVY A  TAX  ON
ITS  BEHALF,  OR  (II) HAS A SEPARATE INDEPENDENT BOARD APPOINTED BY THE
GOVERNING BODY OF ANOTHER  MUNICIPAL  CORPORATION  AND  EITHER  HAS  THE
AUTHORITY TO LEVY A TAX OR CAN REQUIRE A MUNICIPAL CORPORATION TO LEVY A
TAX ON ITS BEHALF.
  (F)  "LEAD LOCAL GOVERNMENT UNIT" MEANS THE LOCAL GOVERNMENT UNIT THAT
IS PARTICIPATING IN A GOVERNMENT EFFICIENCY  PLAN  WITH  MORE  THAN  ONE
SIGNATORY  THAT  HAS ELECTED TO SUBMIT THE GOVERNMENT EFFICIENCY PLAN TO
THE DIRECTOR OF THE BUDGET ON BEHALF OF ALL SIGNATORIES TO THE PLAN.
  (G) "LOCAL GOVERNMENT UNIT" MEANS A MUNICIPAL CORPORATION OR AN  INDE-
PENDENT  SPECIAL  DISTRICT  THAT IS SUBJECT TO THE PROVISIONS OF SECTION
THREE-C OF THIS ARTICLE.
  (H) "SHARED SERVICES" MEANS FUNCTIONAL  CONSOLIDATIONS  BY  WHICH  ONE
LOCAL  GOVERNMENT  UNIT  COMPLETELY  PROVIDES  A SERVICE OR FUNCTION FOR
ANOTHER LOCAL GOVERNMENT UNIT, WHICH NO LONGER ENGAGES IN THAT  FUNCTION
OR  SERVICE;  SHARED  OR  COOPERATIVE  SERVICES  BETWEEN AND AMONG LOCAL
GOVERNMENT UNITS; AND REGIONALIZED  DELIVERY  OF  SERVICES  BETWEEN  AND
AMONG LOCAL GOVERNMENT UNITS.  THESE SHARED SERVICES MAY BE FOR SERVICES
OR FUNCTIONS INCLUDING BUT NOT LIMITED TO:  PROCUREMENT, REAL ESTATE AND
FACILITY  MANAGEMENT, FLEET MANAGEMENT, BUSINESS AND FINANCIAL SERVICES,
ADMINISTRATIVE SERVICES, PAYROLL ADMINISTRATION,  TIME  AND  ATTENDANCE,
BENEFITS  ADMINISTRATION  AND  OTHER TRANSACTIONAL HUMAN RESOURCES FUNC-
TIONS, CONTRACT MANAGEMENT, GRANTS MANAGEMENT, TRANSPORTATION  SERVICES,
FACILITIES  AND  FUNCTIONS,  HUMAN  SERVICES  FACILITIES  AND FUNCTIONS,
CUSTOMER SERVICE FACILITIES AND  FUNCTIONS  AND  INFORMATION  TECHNOLOGY
INFRASTRUCTURE, PROCESSES, SERVICES AND FUNCTIONS.
  2.  CERTIFICATION  OF  COMPLIANCE  WITH  TAX  LEVY LIMIT. (A) UPON THE
ADOPTION OF THE BUDGET OF A LOCAL GOVERNMENT UNIT, THE  CHIEF  EXECUTIVE
OFFICER OR BUDGET OFFICER OF SUCH LOCAL GOVERNMENT UNIT SHALL CERTIFY TO
THE  STATE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND FINANCE THAT
THE BUDGET SO ADOPTED DOES NOT EXCEED THE TAX LEVY LIMIT  PRESCRIBED  IN
SECTION  THREE-C OF THIS ARTICLE AND, IF THE GOVERNING BODY OF THE LOCAL
GOVERNMENT UNIT DID ENACT A LOCAL LAW OR APPROVE A RESOLUTION  TO  OVER-
RIDE  THE  TAX  LEVY LIMIT, THAT SUCH LOCAL LAW OR RESOLUTION WAS SUBSE-
QUENTLY REPEALED. SUCH CERTIFICATION SHALL BE MADE IN A FORM AND  MANNER
PRESCRIBED BY THE STATE COMPTROLLER IN CONSULTATION WITH THE COMMISSION-
ER OF TAXATION AND FINANCE.
  (B)  IN  ORDER  FOR SUCH CERTIFICATION TO GIVE RISE TO A REAL PROPERTY
TAX FREEZE CREDIT UNDER SUBSECTION (BBB) OF SECTION SIX HUNDRED  SIX  OF
THE  TAX LAW, SUCH CERTIFICATION SHALL BE MADE NO LATER THAN THE TWENTY-
FIRST DAY OF THE FISCAL YEAR TO WHICH IT APPLIES.
  (C) NOTWITHSTANDING ANY OTHER LAW TO THE CONTRARY, IF SUCH  A  CERTIF-
ICATION  HAS  BEEN  MADE AND THE ACTUAL TAX LEVY OF THE LOCAL GOVERNMENT
UNIT EXCEEDS THE APPLICABLE TAX LEVY LIMIT, THE EXCESS AMOUNT  SHALL  BE
PLACED  IN  RESERVE AND USED IN THE MANNER PRESCRIBED BY SUBDIVISION SIX
OF SECTION THREE-C OF THIS ARTICLE, EVEN IF A TAX LEVY IN EXCESS OF  THE

S. 6359--D                         305                        A. 8559--D

TAX  LEVY  LIMIT HAD BEEN AUTHORIZED FOR THE APPLICABLE FISCAL YEAR BY A
DULY ADOPTED LOCAL LAW OR RESOLUTION.
  (D)  NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, EVERY LOCAL
GOVERNMENT UNIT SHALL REPORT BOTH ITS PROPOSED BUDGET  AND  ITS  ADOPTED
BUDGET  TO  THE  OFFICE  OF THE STATE COMPTROLLER AT THE TIME AND IN THE
MANNER AS HE OR SHE MAY PRESCRIBE, WHETHER OR NOT SUCH BUDGET  HAS  BEEN
OR WILL BE CERTIFIED AS PROVIDED BY THIS SUBDIVISION.
  3.  LOCAL  GOVERNMENT  GOVERNMENT  EFFICIENCY  PLANS SUBMITTED BY LEAD
LOCAL GOVERNMENT UNIT. (A) THE CHIEF EXECUTIVE OFFICER OR BUDGET OFFICER
OF EACH LEAD LOCAL GOVERNMENT UNIT SHALL SUBMIT TO THE DIRECTOR  OF  THE
BUDGET BY JUNE FIRST, TWO THOUSAND FIFTEEN, A GOVERNMENT EFFICIENCY PLAN
THAT  DEMONSTRATES  THREE  YEAR SAVINGS AND EFFICIENCIES OF AT LEAST ONE
PERCENT PER YEAR FROM SHARED  SERVICES,  COOPERATION  AGREEMENTS  AND/OR
MERGERS  OR  EFFICIENCIES OVER THE AGGREGATE TAX LEVIES FOR FISCAL YEARS
BEGINNING IN TWO THOUSAND FOURTEEN FOR ALL LOCAL  GOVERNMENT  UNITS  AND
DEPENDENT SCHOOL DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN.
  (I)  THE  CHIEF  EXECUTIVE  OFFICER  OR  BUDGET  OFFICER OF EACH LOCAL
GOVERNMENT UNIT AND DEPENDENT SCHOOL DISTRICT THAT IS A SIGNATORY  TO  A
GOVERNMENT  EFFICIENCY  PLAN SHALL SUBMIT TO THE CHIEF EXECUTIVE OFFICER
OR BUDGET OFFICER OF THE LEAD LOCAL GOVERNMENT UNIT  BY  MAY  FIFTEENTH,
TWO  THOUSAND FIFTEEN, A WRITTEN CERTIFICATION THAT THE LOCAL GOVERNMENT
UNIT OR DEPENDENT SCHOOL DISTRICT AGREES TO UNDERTAKE ITS  BEST  EFFORTS
TO  FULLY IMPLEMENT BY THE END OF THE LOCAL FISCAL YEAR BEGINNING IN TWO
THOUSAND SEVENTEEN THE  COOPERATION  AGREEMENTS,  MERGERS,  EFFICIENCIES
AND/OR  SHARED  SERVICES  SPECIFIED  FOR  THE  LOCAL  GOVERNMENT UNIT OR
DEPENDENT SCHOOL DISTRICT IN SUCH PLAN.
  (II) THE CHIEF FINANCIAL OFFICER OF A LOCAL GOVERNMENT  UNIT  AND  THE
CHIEF  FISCAL OFFICER OF THE DEPENDENT SCHOOL DISTRICT, THAT IS A SIGNA-
TORY TO A GOVERNMENT EFFICIENCY PLAN SHALL SUBMIT TO THE CHIEF EXECUTIVE
OFFICER OF THE LEAD LOCAL GOVERNMENT UNIT BY MAY FIFTEENTH, TWO THOUSAND
FIFTEEN, A WRITTEN CERTIFICATION THAT IN HIS OR HER  PROFESSIONAL  OPIN-
ION,  FULL  IMPLEMENTATION BY THE END OF THE LOCAL FISCAL YEAR BEGINNING
IN TWO THOUSAND SEVENTEEN, OF THE COOPERATION AGREEMENTS, MERGERS, EFFI-
CIENCIES AND/OR SHARED SERVICES THAT ARE  TO  BE  TAKEN  BY  SUCH  LOCAL
GOVERNMENT  UNIT  ITSELF  AS  SPECIFIED  IN SUCH PLAN WILL RESULT IN THE
SAVINGS SET FORTH IN THE GOVERNMENT EFFICIENCY PLAN ATTRIBUTABLE TO SUCH
LOCAL GOVERNMENT UNIT OR DEPENDENT SCHOOL DISTRICT.
  (III) THE CHIEF FINANCIAL OFFICER OF EACH LOCAL  GOVERNMENT  UNIT  AND
DEPENDENT SCHOOL DISTRICT THAT IS A SIGNATORY TO A GOVERNMENT EFFICIENCY
PLAN  SHALL  SUBMIT  TO THE LEAD LOCAL GOVERNMENT UNIT BY MAY FIFTEENTH,
TWO THOUSAND FIFTEEN, A WRITTEN CERTIFICATION THAT IN HIS OR HER PROFES-
SIONAL OPINION, FULL IMPLEMENTATION OF THE COOPERATION AGREEMENTS, MERG-
ERS, EFFICIENCIES AND/OR SHARED SERVICES AS SPECIFIED  FOR  ALL  OF  THE
LOCAL  GOVERNMENT UNITS AND DEPENDENT SCHOOL DISTRICTS THAT ARE SIGNATO-
RIES TO SUCH PLAN WILL RESULT IN SAVINGS OVER THE AGGREGATE  TAX  LEVIES
FOR  FISCAL  YEARS  BEGINNING  IN  TWO  THOUSAND  FOURTEEN FOR ALL LOCAL
GOVERNMENT UNITS THAT ARE SIGNATORIES TO  SUCH  PLAN  OF  AT  LEAST  ONE
PERCENT IN EACH OF THE FISCAL YEARS BEGINNING IN TWO THOUSAND SEVENTEEN,
BEGINNING  IN  TWO THOUSAND EIGHTEEN AND BEGINNING IN TWO THOUSAND NINE-
TEEN.
  (B) THE CHIEF FINANCIAL OFFICER OF EACH  LEAD  LOCAL  GOVERNMENT  UNIT
SHALL SUBMIT THE FOLLOWING DOCUMENTS TO THE DIRECTOR OF THE BUDGET ON OR
BEFORE  JUNE FIRST, TWO THOUSAND FIFTEEN:  (I) THE GOVERNMENT EFFICIENCY
PLAN; (II) A LIST OF ALL LOCAL GOVERNMENT  UNITS  AND  DEPENDENT  SCHOOL
DISTRICTS  THAT  ARE  SIGNATORIES TO SUCH PLAN; (III) ALL OF THE CERTIF-
ICATIONS REQUIRED BY PARAGRAPH (A) OF  THIS  SUBDIVISION;  AND  (IV)  AN

S. 6359--D                         306                        A. 8559--D

ANALYSIS  OF  THE  AGGREGATE  AMOUNT  OF  SAVINGS SET FORTH IN SUCH PLAN
ATTRIBUTABLE  TO  ALL  LOCAL  GOVERNMENT  UNITS  AND  DEPENDENT   SCHOOL
DISTRICTS THAT ARE SIGNATORIES TO SUCH PLAN THAT WILL BE ACHIEVED IF THE
COOPERATION  AGREEMENTS,  SHARED SERVICES AND/OR MERGERS OR EFFICIENCIES
IDENTIFIED IN SUCH PLAN ARE FULLY IMPLEMENTED BY THE END  OF  THE  LOCAL
FISCAL  YEAR  BEGINNING  IN  TWO THOUSAND SEVENTEEN. THE DIRECTOR OF THE
BUDGET SHALL REVIEW SUCH DOCUMENTS AND SHALL CONSIDER PAST EFFICIENCIES,
SHARED SERVICES AND REFORMS  IN  THEIR  APPROVAL  PROCESS  TO  DETERMINE
WHETHER  THE REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH RESPECT
TO EACH LOCAL GOVERNMENT UNIT AND DEPENDENT SCHOOL DISTRICT  THAT  IS  A
SIGNATORY TO THE GOVERNMENT EFFICIENCY PLAN AND SHALL NOTIFY THE COMMIS-
SIONER OF TAXATION AND FINANCE OF SUCH DETERMINATIONS NO LATER THAN JULY
THIRTY-FIRST, TWO THOUSAND FIFTEEN.
  4.  LOCAL GOVERNMENT GOVERNMENT EFFICIENCY PLANS SUBMITTED BY A SINGLE
LOCAL GOVERNMENT UNIT. (A) WHILE  LOCALITIES  MAY  OFFER  A  VARIETY  OF
APPROACHES  IT  IS  ANTICIPATED  THAT  THE COUNTY GOVERNMENT OR BOARD OF
COOPERATIVE EDUCATIONAL SERVICES WILL CONVENE AND FACILITATE  A  PROCESS
AND  SUBMIT  A  COUNTY WIDE OR BOARD OF COOPERATIVE EDUCATIONAL SERVICES
REGION WIDE PLAN FOR APPROVAL.  AS  SUCH,  LOCAL  GOVERNMENT  UNITS  ARE
STRONGLY  ENCOURAGED  TO DEVELOP A SINGLE GOVERNMENT EFFICIENCY PLAN FOR
ALL OF THE LOCAL GOVERNMENT UNITS IN THEIR COUNTY.  HOWEVER,  THE  CHIEF
EXECUTIVE  OFFICER  OR BUDGET OFFICER OF EACH LOCAL GOVERNMENT UNIT THAT
IS NOT PARTICIPATING IN A GOVERNMENT EFFICIENCY PLAN WITH MORE THAN  ONE
SIGNATORY  MAY  SUBMIT  TO THE DIRECTOR OF THE BUDGET BY JUNE FIRST, TWO
THOUSAND FIFTEEN, A GOVERNMENT EFFICIENCY PLAN THAT  DEMONSTRATES  THREE
YEAR  SAVINGS  AND  EFFICIENCIES  OF  AT LEAST ONE PERCENT PER YEAR FROM
SHARED SERVICES, COOPERATION AGREEMENTS AND/OR MERGERS  OR  EFFICIENCIES
OVER SUCH LOCAL GOVERNMENT UNIT'S TAX LEVY FOR THE FISCAL YEAR BEGINNING
IN TWO THOUSAND FOURTEEN.
  (I)  IN  THE  EVENT  A  LOCAL GOVERNMENT UNIT CHOOSES TO SUBMIT SUCH A
GOVERNMENT EFFICIENCY PLAN, THE CHIEF EXECUTIVE OFFICER OR BUDGET  OFFI-
CER  OF  SUCH  LOCAL GOVERNMENT UNIT SHALL SUBMIT TO THE DIRECTOR OF THE
BUDGET BY JUNE FIRST, TWO THOUSAND FIFTEEN, A WRITTEN CERTIFICATION THAT
SUCH LOCAL GOVERNMENT UNIT AGREES TO UNDERTAKE ITS BEST EFFORTS TO FULLY
IMPLEMENT BY THE END OF THE LOCAL FISCAL YEAR BEGINNING IN TWO  THOUSAND
SEVENTEEN  THE  COOPERATION  AGREEMENTS,  MERGERS,  EFFICIENCIES  AND/OR
SHARED SERVICES SPECIFIED IN SUCH PLAN.
  (II) IN THE EVENT A LOCAL GOVERNMENT UNIT CHOOSES  TO  SUBMIT  SUCH  A
GOVERNMENT  EFFICIENCY  PLAN,  THE CHIEF FINANCIAL OFFICER OF SUCH LOCAL
GOVERNMENT UNIT SHALL SUBMIT TO THE  DIRECTOR  OF  THE  BUDGET  BY  JUNE
FIRST,  TWO  THOUSAND  FIFTEEN,  AN ANALYSIS OF THE SAVINGS SET FORTH IN
SUCH PLAN THAT WILL BE ACHIEVED IF THE  COOPERATION  AGREEMENTS,  SHARED
SERVICES  AND/OR  MERGERS  OR  EFFICIENCIES  IDENTIFIED IN SUCH PLAN ARE
FULLY IMPLEMENTED BY THE END OF THE LOCAL FISCAL YEAR BEGINNING  IN  TWO
THOUSAND  SEVENTEEN,  AS  WELL AS A WRITTEN CERTIFICATION THAT IN HIS OR
HER PROFESSIONAL OPINION, FULL IMPLEMENTATION OF THE COOPERATION  AGREE-
MENTS, MERGERS, EFFICIENCIES AND/OR SHARED SERVICES AS SPECIFIED IN SUCH
PLAN WILL RESULT IN SAVINGS OVER ITS TAX LEVY FOR THE FISCAL YEAR BEGIN-
NING  IN  TWO  THOUSAND  FOURTEEN OF AT LEAST ONE PERCENT IN EACH OF THE
FISCAL YEARS BEGINNING IN TWO THOUSAND SEVENTEEN, BEGINNING IN TWO THOU-
SAND EIGHTEEN AND BEGINNING IN TWO THOUSAND NINETEEN.
  (B) THE DIRECTOR OF THE BUDGET SHALL REVIEW THE DOCUMENTS REFERRED  TO
IN PARAGRAPH A OF THIS SUBDIVISION AND SHALL CONSIDER PAST EFFICIENCIES,
SHARED  SERVICES  AND  REFORMS  IN  THEIR  APPROVAL PROCESS TO DETERMINE
WHETHER THE REQUIREMENTS OF THIS SUBDIVISION HAVE BEEN MET WITH  RESPECT
TO  A  LOCAL  GOVERNMENT UNIT THAT HAS SUBMITTED A GOVERNMENT EFFICIENCY

S. 6359--D                         307                        A. 8559--D

PLAN AND SHALL NOTIFY THE COMMISSIONER OF TAXATION AND FINANCE  OF  SUCH
DETERMINATION NO LATER THAN JULY THIRTY-FIRST, TWO THOUSAND FIFTEEN.
  S  4. Section 1590 of the real property tax law is amended by adding a
new subdivision 3 to read as follows:
  3. EACH MUNICIPAL CORPORATION SHALL SUBMIT  TO  THE  COMMISSIONER  THE
DATA FILES USED TO PREPARE ITS TAX ROLLS AND TAX BILLS NO LATER THAN TEN
DAYS AFTER THE ANNEXATION OF THE WARRANT FOR THE COLLECTION OF TAXES FOR
THE  APPLICABLE  FISCAL  YEAR,  OR  WHERE NO SUCH WARRANT IS ANNEXED, NO
LATER THAN TEN DAYS AFTER THE LAST DATE PRESCRIBED BY LAW FOR  THE  LEVY
OF  TAXES  OF THE APPLICABLE FISCAL YEAR, PROVIDED THAT IF ITS TAX ROLLS
OR TAX BILLS, OR BOTH, ARE PREPARED BY A DIFFERENT GOVERNMENTAL  ENTITY,
THAT  ENTITY  SHALL BE JOINTLY RESPONSIBLE FOR SUBMITTING THE APPLICABLE
DATA FILES TO THE COMMISSIONER.
  S 5. This  act  shall  take  effect  immediately,  provided  that  the
provisions of subdivision 3 of section 1590 of the real property tax law
as  added  by  section four of this act shall apply to tax rolls and tax
bills of school districts and cities with a  population  of  125,000  or
more  for  fiscal  years  starting  on or after July 1, 2013, and to tax
rolls and tax bills for other municipal corporations  for  fiscal  years
starting  on  or  after  January 1, 2014, except that in the case of tax
rolls and tax bills for fiscal years that started prior to the effective
date of this act, the data files used to prepare tax rolls and tax bills
shall be submitted to the commissioner of taxation and finance no  later
than 60 days after the effective date of this act.

                                 PART GG

  Section  1.  This  act enacts into law major components of legislation
relating to lower Manhattan.  Each component is wholly contained  within
a  Subpart  identified  as  Subparts A through G. The effective date for
each particular provision contained within such Subpart is set forth  in
the  last  section  of  such  Subpart.    Any  provision  in any section
contained within a Subpart, including the effective date of the Subpart,
which makes a reference to  a  section  "of  this  act",  when  used  in
connection  with  that particular component, shall be deemed to mean and
refer to the corresponding section of the Subpart in which it is  found.
Section  three of this act sets forth the general effective date of this
act.

                                SUBPART A

  Section 1. Subparagraph (A) of paragraph  7  of  subdivision  (ee)  of
section  1115  of the tax law, as amended by section 2 of chapter 203 of
the laws of 2009, is amended to read as follows:
  (A) "Tenant" means a person who, as lessee, enters into a space  lease
with  a  landlord for a term of ten years or more commencing on or after
September first, two thousand five, but not later than, in the case of a
space lease with respect to leased premises located in eligible areas as
defined in clause (i) of subparagraph (D) of this  paragraph,  September
first, two thousand [thirteen] FIFTEEN and, in the case of a space lease
with  respect to leased premises located in eligible areas as defined in
clause (ii) of subparagraph (D) of this paragraph not later than Septem-
ber first, two thousand [fifteen] SEVENTEEN,  of  premises  for  use  as
commercial  office  space  in  buildings located or to be located in the
eligible areas. A person who currently  occupies  premises  for  use  as
commercial  office  space  under  an existing lease in a building in the

S. 6359--D                         308                        A. 8559--D

eligible areas shall not be eligible for exemption under  this  subdivi-
sion  unless  such  existing  lease,  in  the case of a space lease with
respect to leased premises located  in  eligible  areas  as  defined  in
clause  (i)  of  subparagraph (D) of this paragraph expires according to
its terms before September first, two  thousand  [thirteen]  FIFTEEN  or
such existing lease, in the case of a space lease with respect to leased
premises located in eligible areas as defined in clause (ii) of subpara-
graph  (D)  of this paragraph and such person enters into a space lease,
for a term of ten years or more commencing on or after September  first,
two  thousand  five, of premises for use as commercial office space in a
building located or to be located in the eligible areas,  provided  that
such  space  lease  with  respect to leased premises located in eligible
areas as defined in clause (i) of subparagraph  (D)  of  this  paragraph
commences  no  later  than  September  first,  two  thousand  [thirteen]
FIFTEEN, and provided that such space lease with respect to leased prem-
ises located in eligible areas as defined in clause (ii) of subparagraph
(D) of this paragraph commences no later than September first, two thou-
sand [fifteen] SEVENTEEN and provided, further, that  such  space  lease
shall  expire  no  earlier  than  ten  years after the expiration of the
original lease.
  S 2.  Section 2 of part C of chapter 2 of the laws  of  2005  amending
the  tax law relating to exemptions from sales and use taxes, as amended
by chapter 203 of the laws of 2009, is amended to read as follows:
  S 2. This act shall take effect September 1, 2005 and shall expire and
be deemed repealed on December 1, [2016] 2018, and shall apply to  sales
made,  uses  occurring  and services rendered on or after such effective
date, in accordance  with  the  applicable  transitional  provisions  of
sections 1106 and 1217 of the tax law; except that clause (i) of subpar-
agraph (D) of paragraph seven of subdivision (ee) of section 1115 of the
tax law, as added by section one of this act, shall expire and be deemed
repealed December 1, [2014] 2016.
  S  3.  The  commissioner  of  taxation and finance shall prescribe the
methods to allow the tenants, landlord and contractors,  who  have  made
purchases  which,  but  for the expiration of the provisions of subpara-
graph (A) of paragraph 7 of subdivision (ee) of section 1115 of the  tax
law  would  have  been  qualified  purchases,  after August 31, 2013 and
before the date this act became law to receive a credit or refund of the
tax paid even if a person did not receive an exemption for a  qualifying
purchase  made  between  September  1, 2013 and the date this act became
law.
  S 4. This act shall take effect immediately and  shall  be  deemed  to
have  been  in  full  force  and effect after August 31, 2013; provided,
however, that the amendments to  subparagraph  (A)  of  paragraph  7  of
subdivision  (ee)  of section 1115 of the tax law made by section one of
this act shall not affect the repeal of such subdivision  and  shall  be
deemed repealed therewith.

                                SUBPART B

  Section  1. Subdivisions 5 and 9 of section 499-a of the real property
tax law, as amended by chapter 22 of the laws of 2010,  are  amended  to
read as follows:
  5.  "Benefit  period." The period commencing with the first day of the
month immediately following the rent commencement date  and  terminating
no  later  than  sixty  months  thereafter, provided, however, that with
respect to a lease commencing on or after April first, nineteen  hundred

S. 6359--D                         309                        A. 8559--D

ninety-seven with an initial lease term of less than five years, but not
less  than  three years, the period commencing with the first day of the
month immediately following the rent commencement date  and  terminating
no  later than thirty-six months thereafter. Notwithstanding the forego-
ing sentence, a benefit period shall expire no later than March  thirty-
first, two thousand [twenty] TWENTY-TWO.
  9.  "Eligibility  period." The period commencing April first, nineteen
hundred ninety-five and terminating  March  thirty-first,  two  thousand
[fourteen] SIXTEEN.
  S 2. Paragraph (a) of subdivision 3 of section 499-c of the real prop-
erty  tax  law, as amended by chapter 22 of the laws of 2010, is amended
to read as follows:
  (a) For purposes of determining whether  the  amount  of  expenditures
required by subdivision one of this section have been satisfied, expend-
itures on improvements to the common areas of an eligible building shall
be included only if work on such improvements commenced and the expendi-
tures are made on or after April first, nineteen hundred ninety-five and
on  or  before  September  thirtieth,  two  thousand [fourteen] SIXTEEN;
provided, however, that expenditures on improvements to the common areas
of an eligible building made prior  to  three  years  before  the  lease
commencement date shall not be included.
  S  3.  Subdivision 8 of section 499-d of the real property tax law, as
amended by chapter 22 of the  laws  of  2010,  is  amended  to  read  as
follows:
  8.  Leases  commencing on or after April first, nineteen hundred nine-
ty-seven shall be subject to the provisions of this title as amended  by
chapter  six hundred twenty-nine of the laws of nineteen hundred ninety-
seven, chapter one hundred eighteen of the laws  of  two  thousand  one,
chapter  four  hundred  forty of the laws of two thousand three, chapter
sixty of the laws of two thousand seven [and the], chapter TWENTY-TWO of
the laws of two thousand ten [that added this phrase] AND THE CHAPTER OF
THE LAWS OF TWO THOUSAND FOURTEEN THAT ADDED THIS PHRASE.  Notwithstand-
ing  any  other provision of law to the contrary, with respect to leases
commencing on or after April first, nineteen  hundred  ninety-seven,  an
application  for  a  certificate of abatement shall be considered timely
filed if filed within  one  hundred  eighty  days  following  the  lease
commencement  date  or  within sixty days following the date chapter six
hundred twenty-nine of the laws of nineteen hundred ninety-seven  became
a law, whichever is later.
  S  4.  Subparagraph  (a)  of  paragraph  2 of subdivision i of section
11-704 of the administrative code of the city of New York, as amended by
chapter 22 of the laws of 2010, is amended to read as follows:
  (a) An eligible tenant of eligible taxable premises shall be allowed a
special reduction in determining the taxable base rent for such eligible
taxable premises. Such special reduction shall be allowed  with  respect
to  the rent for such eligible taxable premises for a period not exceed-
ing sixty months or, with respect to a  lease  commencing  on  or  after
April first, nineteen hundred ninety-seven with an initial lease term of
less  than  five  years, but not less than three years, for a period not
exceeding thirty-six months, commencing on the  rent  commencement  date
applicable to such eligible taxable premises, provided, however, that in
no event shall any special reduction be allowed for any period beginning
after  March  thirty-first,  two  thousand  [twenty]  TWENTY-TWO.    For
purposes of applying such special reduction, the base rent for the  base
year  shall,  where  necessary  to  determine  the amount of the special
reduction allowable with respect to any number of months falling  within

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a tax period, be prorated by dividing the base rent for the base year by
twelve and multiplying the result by such number of months.
  S  5.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect after March 31, 2014.

                                SUBPART C

  Section 1. Paragraph (a) of subdivision 1 of section 489-dddddd of the
real property tax law, as amended by chapter 28 of the laws of 2011,  is
amended to read as follows:
  (a)  Application for benefits pursuant to this title may be made imme-
diately following the effective date of a local law enacted pursuant  to
this  title  and  continuing  until  March first, two thousand [fifteen]
SEVENTEEN.
  S 2.  Subdivision 3 of section 489-dddddd of  the  real  property  tax
law,  as  added by chapter 28 of the laws of 2011, is amended to read as
follows:
  3. (a) No benefits  pursuant  to  this  title  shall  be  granted  for
construction  work  performed pursuant to a building permit issued after
April first, two thousand [fifteen] SEVENTEEN.
  (b) If no building permit was required, then no benefits  pursuant  to
this  title  shall  be  granted  for construction work that is commenced
after April first, two thousand [fifteen] SEVENTEEN.
  S 3.  Paragraph 1 of subdivision a of section 11-271 of  the  adminis-
trative  code  of  the city of New York, as amended by chapter 28 of the
laws of 2011, is amended to read as follows:
  (1) Application for benefits pursuant to this part may be  made  imme-
diately  following  the  effective date of the local law that added this
section and continuing until March first, two thousand [fifteen]  SEVEN-
TEEN.
  S  4.    Subdivision c of section 11-271 of the administrative code of
the city of New York, as added by chapter 28 of the  laws  of  2011,  is
amended to read as follows:
  c.  (1)  No  benefits  pursuant  to  this  part  shall  be granted for
construction work performed pursuant to a building permit  issued  after
April first, two thousand [fifteen] SEVENTEEN.
  (2)  If  no building permit was required, then no benefits pursuant to
this part shall be granted for construction work that is commenced after
April first, two thousand [fifteen] SEVENTEEN.
  S 5.  This act shall take effect immediately.

                                SUBPART D

  Section 1. Subdivision (b) of section 25-z of the general city law, as
amended by chapter 131 of the laws  of  2008,  is  amended  to  read  as
follows:
  (b) No eligible business shall be authorized to receive a credit under
any  local  law enacted pursuant to this article until the premises with
respect to which it is claiming the credit meet the requirements in  the
definition  of  eligible  premises  and  until it has obtained a certif-
ication of eligibility from the mayor of such city or an  agency  desig-
nated  by  such mayor, and an annual certification from such mayor or an
agency designated by such mayor as to the number of  eligible  aggregate
employment  shares maintained by such eligible business that may qualify
for obtaining a tax credit for the eligible business' taxable year.  Any
written documentation submitted to such mayor or such agency or agencies

S. 6359--D                         311                        A. 8559--D

in  order  to  obtain  any  such certification shall be deemed a written
instrument for purposes of section 175.00 of the penal law.  Such  local
law  may  provide for application fees to be determined by such mayor or
such  agency  or agencies. No such certification of eligibility shall be
issued under any local law enacted pursuant to this article to an eligi-
ble business on or after July first,  two  thousand  [thirteen]  FIFTEEN
unless:
  (1)  prior to such date such business has purchased, leased or entered
into a contract to purchase or lease particular premises or a parcel  on
which  will  be constructed such premises or already owned such premises
or parcel;
  (2) prior to such date improvements have been commenced on such  prem-
ises  or parcel, which improvements will meet the requirements of subdi-
vision (e) of section twenty-five-y of this article relating to expendi-
tures for improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such particular  premises;
and
  (4) such business relocates to such particular premises not later than
thirty-six  months  or, in a case in which the expenditures made for the
improvements specified in paragraph  two  of  this  subdivision  are  in
excess  of fifty million dollars within seventy-two months from the date
of submission of such preliminary application.
  S 2. Subdivision (b) of section 25-ee of  the  general  city  law,  as
amended  by  chapter  131  of  the  laws  of 2008, is amended to read as
follows:
  (b) No eligible business or special eligible business shall be author-
ized to receive a credit against tax under any local law enacted  pursu-
ant  to  this  article  until  the  premises with respect to which it is
claiming the credit meet the requirements in the definition of  eligible
premises  and  until it has obtained a certification of eligibility from
the mayor of such city or any agency designated by such  mayor,  and  an
annual  certification  from  such  mayor or an agency designated by such
mayor as to the number of eligible  aggregate  employment  shares  main-
tained  by such eligible business or such special eligible business that
may qualify for obtaining a tax credit for the eligible business'  taxa-
ble  year. No special eligible business shall be authorized to receive a
credit against tax under the  provisions  of  this  article  unless  the
number of relocated employee base shares calculated pursuant to subdivi-
sion (o) of section twenty-five-dd of this article is equal to or great-
er than the lesser of twenty-five percent of the number of New York city
base  shares  calculated pursuant to subdivision (p) of such section and
two hundred fifty employment shares. Any written documentation submitted
to such mayor or such agency or agencies in order  to  obtain  any  such
certification  shall  be  deemed  a  written  instrument for purposes of
section 175.00 of the penal law. Such local law may provide for applica-
tion fees to be determined by such mayor or such agency or agencies.  No
certification of eligibility shall be issued under any local law enacted
pursuant to this article to an eligible business on or after July first,
two thousand [thirteen] FIFTEEN unless:
  (1)  prior to such date such business has purchased, leased or entered
into a contract to purchase or lease  premises  in  the  eligible  Lower
Manhattan area or a parcel on which will be constructed such premises;
  (2)  prior to such date improvements have been commenced on such prem-
ises or parcel, which improvements will meet the requirements of  subdi-

S. 6359--D                         312                        A. 8559--D

vision (e) of section twenty-five-dd of this article relating to expend-
itures for improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such premises; and
  (4)  such  business relocates to such premises as provided in subdivi-
sion (j) of section twenty-five-dd of this article not later than  thir-
ty-six  months  or,  in  a  case  in which the expenditures made for the
improvements specified in paragraph  two  of  this  subdivision  are  in
excess  of fifty million dollars within seventy-two months from the date
of submission of such preliminary application.
  S 3. Subdivision (b) of section 22-622 of the administrative  code  of
the  city of New York, as amended by chapter 131 of the laws of 2008, is
amended to read as follows:
  (b) No eligible business shall  be  authorized  to  receive  a  credit
against  tax  or  a  reduction  in  base  rent  subject to tax under the
provisions of this chapter, and of title eleven of the code as described
in subdivision (a) of this section, until the premises with  respect  to
which  it is claiming the credit meet the requirements in the definition
of eligible premises and until it has obtained a certification of eligi-
bility from the mayor or an agency designated by the mayor, and an annu-
al certification from the mayor or an agency designated by the mayor  as
to the number of eligible aggregate employment shares maintained by such
eligible  business  that  may qualify for obtaining a tax credit for the
eligible business' taxable year. Any written documentation submitted  to
the mayor or such agency or agencies in order to obtain any such certif-
ication  shall  be  deemed  a written instrument for purposes of section
175.00 of the penal law. Application fees for such certifications  shall
be  determined by the mayor or such agency or agencies. No certification
of eligibility shall be issued to an eligible business on or after  July
first, two thousand [thirteen] FIFTEEN unless:
  (1)  prior to such date such business has purchased, leased or entered
into a contract to purchase or lease particular premises or a parcel  on
which  will  be constructed such premises or already owned such premises
or parcel;
  (2) prior to such date improvements have been commenced on such  prem-
ises or parcel which improvements will meet the requirements of subdivi-
sion  (e) of section 22-621 of this chapter relating to expenditures for
improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such particular  premises;
and
  (4) such business relocates to such particular premises not later than
thirty-six  months  or,  in  a  case  in which the expenditures made for
improvements specified in paragraph  two  of  this  subdivision  are  in
excess  of fifty million dollars within seventy-two months from the date
of submission of such preliminary application.
  S 4. Subdivision (b) of section 22-624 of the administrative  code  of
the  city of New York, as amended by chapter 131 of the laws of 2008, is
amended to read as follows:
  (b) No eligible business or special eligible business shall be author-
ized to receive a credit against tax under the provisions of this  chap-
ter,  and of title eleven of the code as described in subdivision (a) of
this section, until the premises with respect to which  it  is  claiming
the  credit meet the requirements in the definition of eligible premises

S. 6359--D                         313                        A. 8559--D

and until it has obtained a certification of eligibility from the  mayor
or  an  agency designated by the mayor, and an annual certification from
the mayor or an agency designated by the  mayor  as  to  the  number  of
eligible  aggregate  employment shares maintained by such eligible busi-
ness or special eligible business that may qualify for obtaining  a  tax
credit  for  the  eligible  business'  taxable year. No special eligible
business shall be authorized to receive a credit against tax  under  the
provisions  of  this  chapter and of title eleven of the code unless the
number of relocated employee base shares calculated pursuant to subdivi-
sion (o) of section 22-623 of this chapter is equal to or  greater  than
the  lesser  of  twenty-five percent of the number of New York city base
shares calculated pursuant to subdivision (p) of  such  section  22-623,
and  two  hundred  fifty  employment  shares.  Any written documentation
submitted to the mayor or such agency or agencies in order to obtain any
such certification shall be deemed a written instrument for purposes  of
section  175.00  of  the  penal  law.  Application fees for such certif-
ications shall be determined by the mayor or such agency or agencies. No
certification of eligibility shall be issued to an eligible business  on
or after July first, two thousand [thirteen] FIFTEEN unless:
  (1)  prior to such date such business has purchased, leased or entered
into a contract to purchase or lease  premises  in  the  eligible  Lower
Manhattan area or a parcel on which will be constructed such premises;
  (2)  prior to such date improvements have been commenced on such prem-
ises or parcel, which improvements will meet the requirements of  subdi-
vision  (e)  of  section 22-623 of this chapter relating to expenditures
for improvements;
  (3) prior to such date such business submits a preliminary application
for a certification of eligibility to such mayor or such agency or agen-
cies with respect to a proposed relocation to such premises; and
  (4) such business relocates to such premises not later than thirty-six
months or, in a case in which the expenditures made for the improvements
specified in paragraph two of this subdivision are in  excess  of  fifty
million dollars within seventy-two months from the date of submission of
such preliminary application.
  S  5.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect after June 30, 2013.

                                SUBPART E

  Section 1. Paragraph 1 of subdivision  (b)  of  section  25-s  of  the
general  city  law,  as  amended  by chapter 406 of the laws of 2010, is
amended to read as follows:
  (1) non-residential premises that are  wholly  contained  in  property
that  is eligible to obtain benefits under title two-D or two-F of arti-
cle four of the real property tax law, or would be eligible  to  receive
benefits  under  such  article  except that such property is exempt from
real property taxation and the requirements of paragraph (b) of subdivi-
sion seven of section four hundred eighty-nine-dddd of such title two-D,
or the requirements of subparagraph (ii) of paragraph (b) of subdivision
five of section four hundred eighty-nine-cccccc  of  such  title  two-F,
whichever is applicable, have not been satisfied, provided that applica-
tion for such benefits was made after May third, nineteen hundred eight-
y-five  and  prior  to July first, two thousand [thirteen] FIFTEEN, that
construction or renovation of such premises was described in such appli-
cation, that such premises have  been  substantially  improved  by  such
construction  or  renovation  so  described,  that  the minimum required

S. 6359--D                         314                        A. 8559--D

expenditure as defined in such title two-D or two-F, whichever is appli-
cable, has been made, and that such  real  property  is  located  in  an
eligible area; or
  S  2.  Paragraph  3  of subdivision (b) of section 25-s of the general
city law, as amended by chapter 406 of the laws of 2010, is  amended  to
read as follows:
  (3) non-residential premises that are wholly contained in real proper-
ty  that  has obtained approval after October thirty-first, two thousand
and prior to July first, two thousand [thirteen] FIFTEEN  for  financing
by  an  industrial  development  agency  established pursuant to article
eighteen-A of the general municipal law, provided  that  such  financing
has been used in whole or in part to substantially improve such premises
(by  construction  or  renovation), and that expenditures have been made
for improvements to such real property in excess of ten  per  centum  of
the  value at which such real property was assessed for tax purposes for
the tax year in which such improvements commenced,  that  such  expendi-
tures  have  been made within thirty-six months after the earlier of (i)
the issuance by such agency of bonds for such  financing,  or  (ii)  the
conveyance  of title to such property to such agency, and that such real
property is located in an eligible area; or
  S 3. Paragraph 5 of subdivision (b) of section  25-s  of  the  general
city  law,  as amended by chapter 406 of the laws of 2010, is amended to
read as follows:
  (5) non-residential premises that are wholly contained in real proper-
ty owned by such city or the New York  state  urban  development  corpo-
ration,  or  a  subsidiary  thereof,  a  lease for which was approved in
accordance with the applicable provisions of the charter of such city or
by the board of directors of such corporation,  and  such  approval  was
obtained  after  October  thirty-first,  two  thousand and prior to July
first, two thousand [thirteen] FIFTEEN,  provided,  however,  that  such
premises were constructed or renovated subsequent to such approval, that
expenditures have been made subsequent to such approval for improvements
to  such  real property (by construction or renovation) in excess of ten
per centum of the value at which such real property was assessed for tax
purposes for the tax year in which  such  improvements  commenced,  that
such  expenditures  have  been  made  within thirty-six months after the
effective date of such lease, and that such real property is located  in
an eligible area; or
  S  4.  Paragraph  2  of subdivision (c) of section 25-t of the general
city law, as amended by chapter 406 of the laws of 2010, is  amended  to
read as follows:
  (2)  No  eligible energy user, qualified eligible energy user, on-site
cogenerator, or clean on-site cogenerator shall receive a rebate  pursu-
ant  to  this  article  until  it  has obtained a certification from the
appropriate city agency in accordance with a local law enacted  pursuant
to  this  section. No such certification for a qualified eligible energy
user shall be issued on or after November first, two thousand.  No  such
certification of any other eligible energy user, on-site cogenerator, or
clean  on-site  cogenerator  shall be issued on or after July first, two
thousand [thirteen] FIFTEEN.
  S 5. Paragraph 1 of subdivision (a) of section 25-aa  of  the  general
city  law,  as amended by chapter 406 of the laws of 2010, is amended to
read as follows:
  (1) is eligible to obtain benefits under title two-D or two-F of arti-
cle four of the real property tax law, or would be eligible  to  receive
benefits  under such title except that such property is exempt from real

S. 6359--D                         315                        A. 8559--D

property taxation and the requirements of paragraph (b)  of  subdivision
seven  of  section four hundred eighty-nine-dddd of such title two-D, or
the requirements of subparagraph (ii) of paragraph  (b)  of  subdivision
five  of  section  four  hundred eighty-nine-cccccc of such title two-F,
whichever is applicable, of the real property  tax  law  have  not  been
satisfied,  provided  that  application for such benefits was made after
the thirtieth day of June, nineteen hundred ninety-five and  before  the
first day of July, two thousand [thirteen] FIFTEEN, that construction or
renovation  of such building or structure was described in such applica-
tion, that such building or structure has been substantially improved by
such construction or renovation,  and  (i)  that  the  minimum  required
expenditure  as defined in such title has been made, or (ii) where there
is  no  applicable  minimum  required  expenditure,  the  building   was
constructed  within  such period or periods of time established by title
two-D or two-F, whichever is applicable, of article  four  of  the  real
property tax law for construction of a new building or structure; or
  S  6.  Paragraphs  2  and 3 of subdivision (a) of section 25-aa of the
general city law, as amended by chapter 406 of the  laws  of  2010,  are
amended to read as follows:
  (2)  has  obtained  approval after the thirtieth day of June, nineteen
hundred ninety-five and before the  first  day  of  July,  two  thousand
[thirteen]  FIFTEEN,  for  financing by an industrial development agency
established pursuant to article eighteen-A of the general municipal law,
provided that such financing has been  used  in  whole  or  in  part  to
substantially  improve  such  building  or  structure by construction or
renovation, that expenditures have been made for  improvements  to  such
real  property in excess of twenty per centum of the value at which such
real property was assessed for tax purposes for the tax  year  in  which
such  improvements  commenced, and that such expenditures have been made
within thirty-six months after the earlier of (i) the issuance  by  such
agency  of  bonds for such financing, or (ii) the conveyance of title to
such building or structure to such agency; or
  (3) is owned by the city of New York  or  the  New  York  state  urban
development  corporation,  or  a subsidiary corporation thereof, a lease
for which was approved in accordance with the applicable  provisions  of
the  charter  of  such  city or by the board of directors of such corpo-
ration, as the case may be, and such approval  was  obtained  after  the
thirtieth day of June, nineteen hundred ninety-five and before the first
day of July, two thousand [thirteen] FIFTEEN, provided that expenditures
have been made for improvements to such real property in excess of twen-
ty  per centum of the value at which such real property was assessed for
tax purposes for the tax year in which such improvements commenced,  and
that such expenditures have been made within thirty-six months after the
effective date of such lease; or
  S  7.  Subdivision  (f)  of  section 25-bb of the general city law, as
amended by chapter 406 of the laws  of  2010,  is  amended  to  read  as
follows:
  (f) Application and certification. An owner or lessee of a building or
structure  located  in  an  eligible revitalization area, or an agent of
such owner or lessee, may apply to such  department  of  small  business
services  for certification that such building or structure is an eligi-
ble building or targeted  eligible  building  meeting  the  criteria  of
subdivision  (a)  or  (q)  of  section  twenty-five-aa  of this article.
Application for such certification must be filed after the thirtieth day
of June, nineteen hundred ninety-five and before a  building  permit  is
issued  for the construction or renovation required by such subdivisions

S. 6359--D                         316                        A. 8559--D

and before the first day  of  July,  two  thousand  [thirteen]  FIFTEEN,
provided that no certification for a targeted eligible building shall be
issued  after October thirty-first, two thousand. Such application shall
identify expenditures to be made that will affect eligibility under such
subdivision  (a) or (q). Upon completion of such expenditures, an appli-
cant shall supplement such application to provide information (i) estab-
lishing that the criteria of such subdivision (a) or (q) have been  met;
(ii) establishing a basis for determining the amount of special rebates,
including a basis for an allocation of the special rebate among eligible
revitalization area energy users purchasing or otherwise receiving ener-
gy  services  from  an  eligible  redistributor of energy or a qualified
eligible redistributor of energy; and (iii) supporting an allocation  of
charges  for energy services between eligible charges and other charges.
Such department shall certify a building or  structure  as  an  eligible
building  or targeted eligible building after receipt and review of such
information and upon a determination that such  information  establishes
that  the  building  or  structure  qualifies as an eligible building or
targeted eligible building. Such  department  shall  mail  such  certif-
ication  or  notice thereof to the applicant upon issuance. Such certif-
ication shall remain in effect provided the  eligible  redistributor  of
energy or qualified eligible redistributor of energy reports any changes
that  materially affect the amount of the special rebates to which it is
entitled or the amount of reduction required by subdivision (c) of  this
section  in  an  energy services bill of an eligible revitalization area
energy user and otherwise complies with the requirements of  this  arti-
cle.  Such department shall notify the private utility or public utility
service required to make a special rebate to such redistributor  of  the
amount  of  such special rebate established at the time of certification
and any changes in such amount and any suspension or termination by such
department of certification under this subdivision. Such department  may
require  some  or all of the information required as part of an applica-
tion or other report be provided by a licensed engineer.
  S 8. Paragraph 1 of subdivision (i) of section 22-601 of the  adminis-
trative  code  of the city of New York, as amended by chapter 406 of the
laws of 2010, is amended to read as follows:
  (1) Non-residential premises that are  wholly  contained  in  property
that  is  eligible  to  obtain  benefits under part four or part five of
subchapter two of chapter two of title eleven of this code, or would  be
eligible to receive benefits under such chapter except that such proper-
ty  is  exempt from real property taxation and the requirements of para-
graph two of subdivision g of  section  11-259  of  this  code,  or  the
requirements  of  subparagraph  (b) of paragraph two of subdivision e of
section 11-270 of this code, whichever  is  applicable,  have  not  been
satisfied,  provided  that  application for such benefits was made after
May third, nineteen hundred eighty-five and prior  to  July  first,  two
thousand  [thirteen]  FIFTEEN,  that  construction or renovation of such
premises was described in such application, that such premises have been
substantially improved by such construction or renovation so  described,
that  the  minimum  required expenditure as defined in such part four or
part five, whichever is applicable, has been made, and  that  such  real
property is located in an eligible area; or
  S  9. Paragraph 3 of subdivision (i) of section 22-601 of the adminis-
trative code of the city of New York, as amended by chapter 406  of  the
laws of 2010, is amended to read as follows:
  (3) non-residential premises that are wholly contained in real proper-
ty  that  has obtained approval after October thirty-first, two thousand

S. 6359--D                         317                        A. 8559--D

and prior to July first, two thousand [thirteen] FIFTEEN  for  financing
by  an  industrial  development  agency  established pursuant to article
eighteen-A of the general municipal law, provided  that  such  financing
has been used in whole or in part to substantially improve such premises
(by  construction  or  renovation), and that expenditures have been made
for improvements to such real property in excess of ten  per  centum  of
the  value at which such real property was assessed for tax purposes for
the tax year in which such improvements commenced,  that  such  expendi-
tures  have  been made within thirty-six months after the earlier of (i)
the issuance by such agency of bonds for such  financing,  or  (ii)  the
conveyance  of title to such property to such agency, and that such real
property is located in an eligible area; or
  S 10. Paragraph 5 of subdivision (i) of section 22-601 of the adminis-
trative code of the city of New York, as amended by chapter 406  of  the
laws of 2010, is amended to read as follows:
  (5) non-residential premises that are wholly contained in real proper-
ty  owned  by  such  city or the New York state urban development corpo-
ration, or a subsidiary thereof, a  lease  for  which  was  approved  in
accordance with the applicable provisions of the charter of such city or
by  the  board  of  directors of such corporation, and such approval was
obtained after October thirty-first, two  thousand  and  prior  to  July
first,  two  thousand  [thirteen]  FIFTEEN, provided, however, that such
premises were constructed or renovated subsequent to such approval, that
expenditures have been made subsequent to such approval for improvements
to such real property (by construction or renovation) in excess  of  ten
per centum of the value at which such real property was assessed for tax
purposes  for  the  tax  year in which such improvements commenced, that
such expenditures have been made  within  thirty-six  months  after  the
effective  date of such lease, and that such real property is located in
an eligible area; or
  S 11. Paragraph 1 of subdivision (c) of section 22-602 of the adminis-
trative code of the city of New York, as amended by chapter 406  of  the
laws of 2010, is amended to read as follows:
  (1)  No  eligible energy user, qualified eligible energy user, on-site
cogenerator, clean on-site cogenerator or special eligible  energy  user
shall  receive a rebate pursuant to this chapter until it has obtained a
certification as an eligible  energy  user,  qualified  eligible  energy
user, on-site cogenerator, clean on-site cogenerator or special eligible
energy  user,  respectively,  from  the  commissioner  of small business
services. No such certification for a  qualified  eligible  energy  user
shall  be  issued  on  or  after July first, two thousand three. No such
certification of any other eligible energy user, on-site cogenerator  or
clean  on-site  cogenerator  shall be issued on or after July first, two
thousand  [thirteen]  FIFTEEN.  The  commissioner  of   small   business
services,  after  notice  and hearing, may revoke a certification issued
pursuant to this subdivision where it is found that eligibility criteria
have not been met or  that  compliance  with  conditions  for  continued
eligibility  has  not been maintained. The corporation counsel may main-
tain a civil action to recover an amount equal to any benefits improper-
ly obtained.
  S 12. This act shall take effect immediately and shall  be  deemed  to
have been in full force and effect after June 30, 2013.

                                SUBPART F

S. 6359--D                         318                        A. 8559--D

  Section  1.  Subparagraph  (b-2)  of  paragraph  2 of subdivision i of
section 11-704 of the administrative code of the city of  New  York,  as
amended  by  chapter  203  of  the  laws  of 2009, is amended to read as
follows:
  (b-2)  The amount of the special reduction allowed by this subdivision
with respect to a lease other than a sublease  commencing  between  July
first,  two  thousand  five  and June thirtieth, two thousand [thirteen]
FIFTEEN with an initial or renewal lease term of  at  least  five  years
shall be determined as follows:
  (i)  For  the  base year the amount of such special reduction shall be
equal to the base rent for the base year.
  (ii) For the first, second,  third  and  fourth  twelve-month  periods
following  the  base  year the amount of such special reduction shall be
equal to the lesser of (A) the base  rent  for  each  such  twelve-month
period or (B) the base rent for the base year.
  S  2.  Subparagraph  (a)  of  paragraph  5 of subdivision i of section
11-704 of the administrative code of the city of New York is amended  by
adding a new clause (iii) to read as follows:
  (III)  NOTWITHSTANDING ANY OTHER PROVISIONS OF LAW TO THE CONTRARY, AN
APPLICATION FOR THE SPECIAL REDUCTION ALLOWED BY SUBPARAGRAPH  (B-2)  OF
PARAGRAPH  TWO  OF  THIS SUBDIVISION SHALL BE CONSIDERED TIMELY FILED IF
FILED BY SUCH TENANT WITH THE DEPARTMENT OF FINANCE ON OR AFTER THE DATE
ON WHICH THE LEASE FOR THE ELIGIBLE PREMISES IS EXECUTED BY THE LANDLORD
AND TENANT BUT IN NO EVENT MORE THAN ONE HUNDRED EIGHTY  DAYS  FOLLOWING
THE  RENT  COMMENCEMENT  DATE  OR SIXTY DAYS FOLLOWING THE DATE THAT THE
CHAPTER OF THE LAWS OF TWO THOUSAND  FOURTEEN  THAT  ADDED  THIS  CLAUSE
BECAME A LAW, WHICHEVER IS LATER, AND NO SUCH SPECIAL REDUCTION SHALL BE
PERMITTED UNLESS SUCH APPLICATION IS FILED WITHIN SUCH TIME.
  S  3.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect after June 30, 2013.

                                SUBPART G

  Section 1. Subdivision 9 of section 499-aa of the   real property  tax
law,  as  amended by chapter 306 of the laws of 2010, is amended to read
as follows:
  9. "Eligibility period." The period commencing April  first,  nineteen
hundred  ninety-five  and  terminating  March thirty-first, two thousand
one, provided, however, that with respect to eligible  premises  defined
in subparagraph (i) of paragraph (b) of subdivision ten of this section,
the  period  commencing  July  first,  two thousand and terminating June
thirtieth, two  thousand  [fourteen]  SIXTEEN,  and  provided,  further,
however,  that with respect to eligible premises defined in subparagraph
(ii) of paragraph (b) or  paragraph  (c)  of  subdivision  ten  of  this
section,  the period commencing July first, two thousand five and termi-
nating June thirtieth, two thousand [fourteen] SIXTEEN.
  S 2.  Subparagraph (iii) of paragraph (a) of subdivision 3 of  section
499-cc  of  the  real property tax law, as amended by chapter 306 of the
laws of 2010, is amended to read as follows:
  (iii) With respect to the eligible premises  defined  in  subparagraph
(ii)  of  paragraph  (b)  or paragraph (c) of subdivision ten of section
four hundred ninety-nine-aa of this title and for purposes of  determin-
ing  whether  the  amount of expenditures required by subdivision one of
this section have been satisfied, expenditures on  improvements  to  the
common  areas  of an eligible building shall be included only if work on
such improvements commenced and the expenditures are made  on  or  after

S. 6359--D                         319                        A. 8559--D

July  first,  two  thousand five and on or before December thirty-first,
two thousand [fourteen] SIXTEEN; provided, however, that expenditures on
improvements to the common areas of an eligible building made  prior  to
three years before the lease commencement date shall not be included.
  S 3. This act shall take effect immediately.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion,  section  or  part  of  this act shall be adjudged by any court of
competent jurisdiction to be invalid, such judgment  shall  not  affect,
impair,  or  invalidate  the remainder thereof, but shall be confined in
its operation to the clause, sentence, paragraph,  subdivision,  section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the  legislature  that  this  act  would  have been enacted even if such
invalid provisions had not been included herein.
  S 3. This act shall take effect immediately  provided,  however,  that
the  applicable effective date of Subparts A through G of this act shall
be as specifically set forth in the last section of such Subparts.

                                 PART HH

  Section 1. The tax law is amended by adding a new section 24-a to read
as follows:
  S 24-A. MUSICAL AND THEATRICAL PRODUCTION CREDIT. (A)(1) ALLOWANCE  OF
CREDIT.   A  TAXPAYER  WHICH  IS  A  QUALIFIED  MUSICAL  AND  THEATRICAL
PRODUCTION COMPANY, OR WHICH IS A SOLE PROPRIETOR OF OR A  MEMBER  OF  A
PARTNERSHIP  WHICH  IS  A  QUALIFIED  MUSICAL  AND THEATRICAL PRODUCTION
COMPANY, AND WHICH IS SUBJECT TO TAX UNDER ARTICLE NINE-A OR  TWENTY-TWO
OF THIS CHAPTER, SHALL BE ALLOWED A CREDIT AGAINST SUCH TAX, PURSUANT TO
THE PROVISIONS REFERRED TO IN SUBDIVISION (C) OF THIS SECTION, AND TO BE
COMPUTED AS PROVIDED IN THIS SECTION.
  (2)  THE  AMOUNT OF THE CREDIT SHALL BE THE PRODUCT (OR PRO RATA SHARE
OF THE PRODUCT, IN THE CASE OF A MEMBER OF A PARTNERSHIP) OF TWENTY-FIVE
PERCENT AND THE SUM OF THE QUALIFIED  PRODUCTION  EXPENDITURES  AND  THE
TRANSPORTATION EXPENDITURES.
  (3)  NO  QUALIFIED  PRODUCTION EXPENDITURES OR TRANSPORTATION EXPENDI-
TURES USED BY A TAXPAYER EITHER AS THE BASIS FOR THE  ALLOWANCE  OF  THE
CREDIT  PROVIDED FOR PURSUANT TO THIS SECTION OR USED IN THE CALCULATION
OF THE CREDIT PROVIDED PURSUANT TO THIS SECTION SHALL BE  USED  BY  SUCH
TAXPAYER TO CLAIM ANY OTHER CREDIT ALLOWED PURSUANT TO THIS CHAPTER.
  (B)  DEFINITIONS.  AS  USED IN THIS SECTION, THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING MEANINGS:
  (1) "QUALIFIED MUSICAL AND THEATRICAL PRODUCTION" MEANS  A  FOR-PROFIT
LIVE,  DRAMATIC  STAGE  PRESENTATION IN A QUALIFIED PRODUCTION FACILITY,
CERTIFIED PURSUANT TO RULES AND REGULATIONS PROMULGATED BY  THE  DEPART-
MENT OF ECONOMIC DEVELOPMENT, AS A QUALIFIED TOURING PRODUCTION.
  (2)  "QUALIFIED  TOURING  PRODUCTION"  MEANS  A  LIVE,  DRAMATIC STAGE
PRODUCTION THAT, IN ITS ORIGINAL OR ADAPTIVE VERSION, IS PERFORMED IN  A
QUALIFIED  PRODUCTION  FACILITY,  AND  HAS  BEGUN  OR WILL BEGIN A TOUR,
CONSISTING OF EIGHT OR MORE SHOWS IN THREE OR MORE LOCALITIES.
  (3) "QUALIFIED PRODUCTION EXPENDITURE" MEANS ANY  COSTS  FOR  TANGIBLE
PROPERTY  USED  AND SERVICES PERFORMED DIRECTLY AND PREDOMINANTLY IN THE
PRODUCTION OF A QUALIFIED MUSICAL AND THEATRICAL PRODUCTION  WITHIN  THE
STATE  INCLUDING:  (I)  EXPENDITURES FOR DESIGN, CONSTRUCTION AND OPERA-
TION, INCLUDING SETS, SPECIAL AND VISUAL EFFECTS,  COSTUMES,  WARDROBES,
MAKE-UP,  ACCESSORIES  AND  COSTS  ASSOCIATED  WITH SOUND, LIGHTING, AND
STAGING, (II) ALL SALARIES, WAGES, FEES, AND OTHER COMPENSATION  INCLUD-

S. 6359--D                         320                        A. 8559--D

ING RELATED BENEFITS FOR SERVICES PERFORMED OF WHICH THE TOTAL ALLOWABLE
EXPENSE  SHALL  NOT  EXCEED  TWO  HUNDRED THOUSAND DOLLARS PER WEEK, AND
(III) TECHNICAL AND CREW PRODUCTION  COSTS,  SUCH  AS  EXPENDITURES  FOR
QUALIFIED  PRODUCTION  FACILITIES,  OR ANY PART THEREOF, PROPS, MAKE-UP,
WARDROBE, COSTUMES, EQUIPMENT USED FOR SPECIAL AND VISUAL EFFECTS, SOUND
RECORDING, SET CONSTRUCTION, AND LIGHTING.
  (4) "QUALIFIED PRODUCTION FACILITY" MEANS A FACILITY  LOCATED  IN  THE
STATE  BUT  OUTSIDE  THE  CITY  OF NEW YORK (I) IN WHICH LIVE THEATRICAL
PRODUCTIONS ARE OR ARE INTENDED TO BE  PRIMARILY  PRESENTED,  (II)  THAT
CONTAINS  AT LEAST ONE STAGE, A SEATING CAPACITY OF ONE THOUSAND OR MORE
SEATS, AND DRESSING ROOMS, STORAGE AREAS, AND OTHER ANCILLARY  AMENITIES
NECESSARY FOR THE QUALIFIED MUSICAL AND THEATRICAL PRODUCTION, (III) FOR
WHICH  RECEIPTS  ATTRIBUTABLE  TO  TICKET  SALES CONSTITUTE SEVENTY-FIVE
PERCENT OR MORE OF GROSS RECEIPTS OF THE FACILITY, AND (IV) WHICH IS NOT
A LICENSEE, OR AFFILIATED WITH A LICENSEE, OF THE NEW YORK STATE  GAMING
COMMISSION UNDER THE RACING, PARI-MUTUEL WAGERING AND BREEDING LAW.
  (5)  "QUALIFIED MUSICAL AND THEATRICAL PRODUCTION COMPANY" IS A CORPO-
RATION, PARTNERSHIP, LIMITED PARTNERSHIP, OR OTHER ENTITY OR  INDIVIDUAL
WHICH  OR  WHO  IS  PRINCIPALLY ENGAGED IN THE PRODUCTION OF A QUALIFIED
MUSICAL OR THEATRICAL PRODUCTION AND PERFORMS IN A QUALIFIED  PRODUCTION
FACILITY.
  (6)  (I)  "TRANSPORTATION  EXPENDITURES" MEANS TRANSPORTATION EXPENDI-
TURES INCURRED AND PAID DIRECTLY AND PREDOMINANTLY IN THE PRODUCTION  OF
A  QUALIFIED  MUSICAL AND THEATRICAL PRODUCTION. SUCH EXPENDITURES SHALL
INCLUDE THE PACKAGING, CRATING, AND TRANSPORTATION WITHIN THE STATE  FOR
USE IN A QUALIFIED THEATER PRODUCTION OF SETS, COSTUMES, OR OTHER TANGI-
BLE  PROPERTY  CONSTRUCTED  OR MANUFACTURED IN AND OUT OF STATE, AND THE
TRANSPORTATION OF THE CAST AND CREW WITHIN THE STATE.  SUCH  TERM  SHALL
INCLUDE  THE  PACKAGING,  CRATING,  AND TRANSPORTING WITHIN THE STATE OF
PROPERTY AND EQUIPMENT USED  FOR  SPECIAL  AND  VISUAL  EFFECTS,  SOUND,
LIGHTING  AND STAGING, COSTUMES, WARDROBES, MAKE-UP AND RELATED ACCESSO-
RIES AND MATERIALS, AS WELL AS ANY OTHER PERFORMANCE  OR  PRODUCTION-RE-
LATED PROPERTY AND EQUIPMENT.
  (II) TRANSPORTATION EXPENDITURES SHALL NOT INCLUDE ANY COSTS TO TRANS-
PORT  PROPERTY  AND  EQUIPMENT  TO BE USED ONLY FOR FILMING AND NOT IN A
QUALIFIED THEATER PRODUCTION, ANY INDIRECT COSTS, AND EXPENDITURES  THAT
ARE  LATER  REIMBURSED BY A THIRD PARTY, OR ANY AMOUNTS THAT ARE PAID TO
PERSONS OR ENTITIES AS A RESULT OF THEIR PARTICIPATION IN  PROFITS  FROM
THE EXPLOITATION OF THE PRODUCTION.
  (C)  CROSS-REFERENCES.  FOR  APPLICATION OF THE CREDIT PROVIDED FOR IN
THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  (1) ARTICLE 9-A: SECTION 210-B: SUBDIVISION 47.
  (2) ARTICLE 22: SECTION 606: SUBSECTION (U).
  (D) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER, (I)  EMPLOYEES  AND
OFFICERS  OF  THE  DEPARTMENT OF ECONOMIC DEVELOPMENT AND THE DEPARTMENT
SHALL BE ALLOWED AND ARE DIRECTED  TO  SHARE  AND  EXCHANGE  INFORMATION
REGARDING  THE CREDITS APPLIED FOR, ALLOWED, OR CLAIMED PURSUANT TO THIS
SECTION AND TAXPAYERS WHO ARE APPLYING FOR CREDITS OR WHO  ARE  CLAIMING
CREDITS, INCLUDING INFORMATION CONTAINED IN OR DERIVED FROM CREDIT CLAIM
FORMS  SUBMITTED  TO  THE  DEPARTMENT AND APPLICATIONS FOR CERTIFICATION
SUBMITTED TO THE  DEPARTMENT  OF  ECONOMIC  DEVELOPMENT,  AND  (II)  THE
COMMISSIONER AND THE COMMISSIONER OF THE DEPARTMENT OF ECONOMIC DEVELOP-
MENT  MAY  RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER CLAIMING THIS
CREDIT AND THE AMOUNT OF THE CREDIT EARNED BY THE TAXPAYER.    PROVIDED,
HOWEVER,  IF  A  TAXPAYER CLAIMS THIS CREDIT BECAUSE IT IS A MEMBER OF A
LIMITED LIABILITY COMPANY OR A PARTNER IN A PARTNERSHIP, ONLY THE AMOUNT

S. 6359--D                         321                        A. 8559--D

OF CREDIT EARNED BY THE ENTITY AND NOT THE AMOUNT OF CREDIT  CLAIMED  BY
THE TAXPAYER MAY BE RELEASED.
  (E) MAXIMUM AMOUNT OF CREDITS. (1) THE AGGREGATE AMOUNT OF TAX CREDITS
ALLOWED  UNDER  THIS  SECTION,  SUBDIVISION  FORTY-SEVEN  OF SECTION TWO
HUNDRED TEN-B AND SUBSECTION (U) OF SECTION  SIX  HUNDRED  SIX  OF  THIS
CHAPTER  IN ANY CALENDAR YEAR SHALL BE FOUR MILLION DOLLARS. SUCH AGGRE-
GATE AMOUNT OF CREDITS SHALL BE ALLOCATED BY THE DEPARTMENT OF  ECONOMIC
DEVELOPMENT  AMONG TAXPAYERS IN ORDER OF PRIORITY BASED UPON THE DATE OF
FILING  AN  APPLICATION  FOR  ALLOCATION  OF  MUSICAL   AND   THEATRICAL
PRODUCTION CREDIT WITH SUCH DEPARTMENT. IF THE TOTAL AMOUNT OF ALLOCATED
CREDITS  APPLIED FOR IN ANY PARTICULAR YEAR EXCEEDS THE AGGREGATE AMOUNT
OF TAX CREDITS ALLOWED FOR SUCH YEAR UNDER  THIS  SECTION,  SUCH  EXCESS
SHALL  BE  TREATED  AS  HAVING  BEEN APPLIED FOR ON THE FIRST DAY OF THE
SUBSEQUENT YEAR.
  (2) THE COMMISSIONER OF ECONOMIC DEVELOPMENT,  AFTER  CONSULTING  WITH
THE  COMMISSIONER, SHALL PROMULGATE REGULATIONS BY OCTOBER THIRTY-FIRST,
TWO THOUSAND FOURTEEN TO ESTABLISH PROCEDURES FOR THE ALLOCATION OF  TAX
CREDITS  AS  REQUIRED BY SUBDIVISION (A) OF THIS SECTION. SUCH RULES AND
REGULATIONS SHALL INCLUDE PROVISIONS DESCRIBING THE APPLICATION PROCESS,
THE DUE DATES FOR SUCH APPLICATIONS, THE STANDARDS WHICH SHALL  BE  USED
TO EVALUATE THE APPLICATIONS, THE DOCUMENTATION THAT WILL BE PROVIDED TO
TAXPAYERS  TO  SUBSTANTIATE  TO THE DEPARTMENT THE AMOUNT OF TAX CREDITS
ALLOCATED TO SUCH TAXPAYERS, AND SUCH OTHER PROVISIONS AS DEEMED  NECES-
SARY  AND  APPROPRIATE.  NOTWITHSTANDING  ANY  OTHER  PROVISIONS  TO THE
CONTRARY IN THE STATE ADMINISTRATIVE PROCEDURE ACT, SUCH RULES AND REGU-
LATIONS MAY BE ADOPTED ON AN EMERGENCY BASIS IF NECESSARY TO  MEET  SUCH
OCTOBER THIRTY-FIRST, TWO THOUSAND FOURTEEN DEADLINE.
  (F)  THE DEPARTMENT OF ECONOMIC DEVELOPMENT SHALL SUBMIT TO THE GOVER-
NOR, THE TEMPORARY PRESIDENT OF THE  SENATE,  AND  THE  SPEAKER  OF  THE
ASSEMBLY,  AN  ANNUAL  REPORT  TO BE SUBMITTED ON FEBRUARY FIRST OF EACH
YEAR  EVALUATING  THE  EFFECTIVENESS  OF  THE  MUSICAL  AND   THEATRICAL
PRODUCTION TAX CREDIT PROVIDED BY THIS SECTION IN STIMULATING THE GROWTH
OF  THE  MUSICAL AND THEATRICAL INDUSTRY IN THE STATE. SUCH REPORT SHALL
INCLUDE, BUT NEED NOT BE LIMITED TO, IN TOTAL AND BY  QUALIFIED  MUSICAL
AND  THEATRICAL PRODUCTION, THE NUMBER OF QUALIFIED MUSICAL AND THEATRI-
CAL PRODUCTIONS WHICH RECEIVED A MUSICAL AND THEATRICAL PRODUCTION CRED-
IT, THE QUALIFIED PRODUCTION EXPENDITURES, THE  TRANSPORTATION  EXPENDI-
TURES,  THE  QUALIFIED  PRODUCTION  FACILITIES,  AND  THE CREDIT AMOUNTS
CLAIMED BY EACH QUALIFIED MUSICAL AND THEATRICAL PRODUCTION, AS WELL  AS
THE IMPACT ON EMPLOYMENT AND THE ECONOMY OF THE STATE. SUCH REPORT SHALL
INCLUDE (1) THE CREDIT-ELIGIBLE MAN HOURS FOR EACH PROJECT AND THE TOTAL
WAGES FOR SUCH CREDIT-ELIGIBLE MAN HOURS FOR EACH PROJECT AS WELL AS THE
NAME  OF  EACH  TAXPAYER ALLOCATED A TAX CREDIT FOR EACH PROJECT AND THE
COUNTY OF RESIDENCE OR INCORPORATION OF SUCH TAXPAYER OR, IF THE TAXPAY-
ER DOES NOT RESIDE OR IS NOT INCORPORATED IN NEW YORK, THEN THE STATE OF
RESIDENCE OR INCORPORATION; PROVIDED HOWEVER, IF THE TAXPAYER  CLAIMS  A
TAX  CREDIT  BECAUSE  THE  TAXPAYER  IS  A MEMBER OF A LIMITED LIABILITY
COMPANY, A PARTNER IN A PARTNERSHIP OR A SHAREHOLDER IN A  SUBCHAPTER  S
CORPORATION,  THE NAME OF EACH LIMITED LIABILITY COMPANY, PARTNERSHIP OR
SUBCHAPTER S CORPORATION EARNING  ANY  OF  THOSE  TAX  CREDITS  MUST  BE
INCLUDED  IN THE REPORT INSTEAD OF INFORMATION ABOUT THE TAXPAYER CLAIM-
ING THE TAX CREDIT; AND (2) THE AMOUNT OF TAX CREDIT ALLOCATED  TO  EACH
TAXPAYER; PROVIDED, HOWEVER, IF THE TAXPAYER CLAIMS A TAX CREDIT BECAUSE
THE  TAXPAYER IS A MEMBER OF A LIMITED LIABILITY COMPANY, A PARTNER IN A
PARTNERSHIP OR A SHAREHOLDER IN A SUBCHAPTER S CORPORATION,  THE  AMOUNT
OF  TAX  CREDIT  EARNED  BY  EACH  ENTITY MUST BE INCLUDED IN THE REPORT

S. 6359--D                         322                        A. 8559--D

INSTEAD OF INFORMATION ABOUT THE TAXPAYER CLAIMING THE TAX  CREDIT,  AND
INFORMATION  IDENTIFYING  THE  PROJECT ASSOCIATED WITH EACH TAXPAYER FOR
WHICH A TAX CREDIT WAS CLAIMED UNDER THIS SECTION, INCLUDING THE NAME OF
THE MUSICAL AND THEATRICAL PRODUCTION AND COUNTY IN WHICH THE PRODUCTION
IS PERFORMED MUST BE INCLUDED IN SUCH REPORT. SUCH REPORT SHALL BE BASED
ON  DATA  AVAILABLE  FROM  THE  APPLICATION FILED WITH THE DEPARTMENT OF
ECONOMIC DEVELOPMENT FOR ALLOCATION OF MUSICAL AND THEATRICAL PRODUCTION
CREDITS. NOTWITHSTANDING ANY PROVISION  OF  LAW  TO  THE  CONTRARY,  THE
INFORMATION  CONTAINED  IN  THE  REPORT SHALL BE PUBLIC INFORMATION. THE
REPORT MAY ALSO INCLUDE ANY RECOMMENDATIONS OF  CHANGES  IN  THE  CALCU-
LATION  OR ADMINISTRATION OF THE CREDIT, AND ANY OTHER RECOMMENDATION OF
THE COMMISSIONER OF THE DEPARTMENT  OF  ECONOMIC  DEVELOPMENT  REGARDING
CONTINUING  MODIFICATION, REPEAL OF SUCH ACT, AND SUCH OTHER INFORMATION
REGARDING THE ACT AS THE COMMISSIONER  OF  THE  DEPARTMENT  OF  ECONOMIC
DEVELOPMENT MAY FEEL USEFUL AND APPROPRIATE.
  S 2. Section 210-B of the tax law, as added by section 17 of part A of
this act, is amended by adding a new subdivision 47 to read as follows:
  47. MUSICAL AND THEATRICAL PRODUCTION CREDIT. (A) ALLOWANCE OF CREDIT.
A  TAXPAYER  WHO  IS  ELIGIBLE PURSUANT TO SECTION TWENTY-FOUR-A OF THIS
CHAPTER SHALL BE ALLOWED A CREDIT TO BE COMPUTED  AS  PROVIDED  IN  SUCH
SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
THAN  THE  AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS
SECTION.  PROVIDED, HOWEVER, THAT IF THE AMOUNT OF THE CREDIT  ALLOWABLE
UNDER  THIS  SUBDIVISION  FOR  ANY  TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT, THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CRED-
ITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE  THOU-
SAND  EIGHTY-SIX  OF  THIS CHAPTER. PROVIDED, FURTHER, THE PROVISIONS OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  S  3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new  clause  (xxxix)  to  read  as
follows:
(XXXIX) MUSICAL AND THEATRICAL       AMOUNT OF CREDIT FOR
PRODUCTION CREDIT UNDER              THE SUM OF THE QUALIFIED
SUBSECTION (U)                       PRODUCTION EXPENDITURES AND
                                     THE TRANSPORTATION EXPENDITURES
                                     IN A QUALIFIED MUSICAL AND
                                     THEATRICAL PRODUCTION UNDER
                                     SUBDIVISION FORTY-SEVEN OF
                                     SECTION TWO HUNDRED TEN-B
  S  4. Section 606 of the tax law is amended by adding a new subsection
(u) to read as follows:
  (U) MUSICAL AND THEATRICAL PRODUCTION CREDIT. (1) ALLOWANCE OF CREDIT.
A TAXPAYER WHO IS ELIGIBLE PURSUANT TO  SECTION  TWENTY-FOUR-A  OF  THIS
CHAPTER  SHALL  BE  ALLOWED  A CREDIT TO BE COMPUTED AS PROVIDED IN SUCH
SECTION AGAINST THE TAX IMPOSED BY THIS ARTICLE.
  (2) APPLICATION OF CREDIT. IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR EXCEEDS THE TAXPAYER'S TAX FOR SUCH
YEAR, THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDIT-
ED OR REFUNDED AS PROVIDED IN SECTION SIX  HUNDRED  EIGHTY-SIX  OF  THIS
ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
  S 5. This act shall take effect immediately, provided that section two
of  this  act  shall  take effect on January 1, 2015, and shall apply to
taxable years beginning on or after January 1,  2015,  with  respect  to

S. 6359--D                         323                        A. 8559--D

"qualified  production  expenditures"  and "transportation expenditures"
paid or incurred on or after such effective date, regardless of  whether
the  production  of  the  qualified  musical  or  theatrical  production
commenced  before such date, provided further that this act shall expire
and be deemed repealed 4 years after such date.

                                 PART II

  Section 1. Paragraph 1 of subdivision (a) of section 1115 of  the  tax
law,  as  amended  by  section  1 of part O of chapter 63 of the laws of
2000, is amended to read as follows:
  (1) Food, food products, beverages, dietary foods and  health  supple-
ments,  sold  for  human  consumption  but  not  including (i) candy and
confectionery, (ii) fruit drinks which contain less than seventy percent
of natural fruit juice, (iii) soft drinks, sodas and beverages  such  as
are  ordinarily  dispensed  at soda fountains or in connection therewith
(other than coffee, tea and cocoa) and (iv) beer, wine or other alcohol-
ic beverages, all of which shall be subject  to  the  retail  sales  and
compensating  use taxes, whether or not the item is sold in liquid form.
The food and drink excluded from the exemption provided  by  this  para-
graph under subparagraphs (i), (ii) and (iii) of this paragraph shall be
exempt  under  this  paragraph  when  sold  for [seventy-five cents] ONE
DOLLAR AND FIFTY CENTS or less through any vending machine activated  by
the use of coin, currency, credit card or debit card. With the exception
of  the  provision  in  this  paragraph  providing  for an exemption for
certain food or drink sold for [seventy-five cents] ONE DOLLAR AND FIFTY
CENTS  or  less  through  vending  machines,  nothing  herein  shall  be
construed as exempting food or drink from the tax imposed under subdivi-
sion (d) of section eleven hundred five OF THIS ARTICLE.
  S 2. This act shall take effect June 1, 2014.

                                 PART JJ

  Section  1.  Paragraph  5  of subdivision (a) of section 24 of the tax
law, as added by section 7 of part B of chapter 59 of the laws of  2013,
is amended to read as follows:
  (5) For the period two thousand fifteen through two thousand nineteen,
in addition to the amount of credit established in paragraph two of this
subdivision,  a  taxpayer shall be allowed a credit equal to the product
(or pro rata share of the product, in the case of a member of a partner-
ship) of ten percent and the amount of wages or salaries paid  to  indi-
viduals  directly  employed (excluding those employed as writers, direc-
tors, music directors, producers and  performers,  including  background
actors with no scripted lines) by a qualified film production company or
a  qualified  independent film production company for services performed
by those individuals in one of the counties specified in this  paragraph
in  connection  with  a  qualified  film  with  a minimum budget of five
hundred thousand dollars.  For purposes of this additional  credit,  the
services  must  be  performed  in one or more of the following counties:
ALBANY, Allegany,  Broome,  Cattaraugus,  Cayuga,  Chautauqua,  Chemung,
Chenango,  Clinton,  Cortland,  Delaware, Erie, Essex, Franklin, Fulton,
Genesee, Hamilton,  Herkimer,  Jefferson,  Lewis,  Livingston,  Madison,
Monroe, Montgomery, Niagara, Oneida, Onondaga, Ontario, Orleans, Oswego,
Otsego, SCHENECTADY, Schoharie, Schuyler, Seneca, St. Lawrence, Steuben,
Tioga,  Tompkins, Wayne, Wyoming, or Yates.  The aggregate amount of tax
credits allowed pursuant to the authority of  this  paragraph  shall  be

S. 6359--D                         324                        A. 8559--D

five  million  dollars  each year during the period two thousand fifteen
through two thousand nineteen of the annual allocation made available to
the program pursuant to  paragraph  four  of  subdivision  (e)  of  this
section.  Such  aggregate  amount  of  credits shall be allocated by the
governor's office for motion picture and  television  development  among
taxpayers in order of priority based upon the date of filing an applica-
tion  for  allocation of film production credit with such office. If the
total amount of allocated credits applied for under  this  paragraph  in
any  year  exceeds  the aggregate amount of tax credits allowed for such
year under this paragraph, such excess shall be treated as  having  been
applied  for  on  the first day of the next year. If the total amount of
allocated tax credits applied for under this paragraph at the conclusion
of any year is less than five million dollars, the  remainder  shall  be
treated  as  part of the annual allocation made available to the program
pursuant to paragraph four of subdivision (e) of this section.  However,
in  no event may the total of the credits allocated under this paragraph
and the credits allocated under paragraph five  of  subdivision  (a)  of
section  thirty-one  of  this article exceed five million dollars in any
year during the period two thousand fifteen through two  thousand  nine-
teen.
  S  2.  Paragraph 5 of subdivision (a) of section 31 of the tax law, as
added by section 8 of part B of chapter 59  of  the  laws  of  2013,  is
amended to read as follows:
  [(5)]  (6)  For  the  period two thousand fifteen through two thousand
nineteen, in addition to the amount of credit established  in  paragraph
two  of  subdivision  (a) of this section, a taxpayer shall be allowed a
credit equal to the product (or pro rata share of the  product,  in  the
case  of  a  member  of  a partnership) of ten percent and the amount of
wages or salaries paid to individuals directly employed (excluding those
employed as writers, directors, music directors, producers and  perform-
ers,  including  background  actors with no scripted lines) for services
performed by those individuals in one of the counties specified in  this
paragraph  in  connection  with  the post production work on a qualified
film with a minimum budget of five hundred thousand dollars at a  quali-
fied  post  production  facility  in  one of the counties listed in this
paragraph. For purposes of this additional credit, the services must  be
performed  in  one or more of the following counties:  ALBANY, Allegany,
Broome, Cattaraugus, Cayuga,  Chautauqua,  Chemung,  Chenango,  Clinton,
Cortland,  Delaware,  Erie,  Essex, Franklin, Fulton, Genesee, Hamilton,
Herkimer, Jefferson, Lewis,  Livingston,  Madison,  Monroe,  Montgomery,
Niagara,  Oneida, Onondaga, Ontario, Orleans, Oswego, Otsego, SCHENECTA-
DY, Schoharie, Schuyler, Seneca, St. Lawrence, Steuben, Tioga, Tompkins,
Wayne, Wyoming, or Yates. The aggregate amount of  tax  credits  allowed
pursuant  to  the  authority  of  this  paragraph  shall be five million
dollars each year during the period two  thousand  fifteen  through  two
thousand  nineteen of the annual allocation made available to the empire
state film post production credit pursuant to paragraph four of subdivi-
sion (e) of section twenty-four of this article. Such  aggregate  amount
of  credits  shall  be  allocated  by  the  governor's office for motion
picture and television development among taxpayers in order of  priority
based  upon  the  date  of  filing an application for allocation of post
production credit with such office. If the  total  amount  of  allocated
credits  applied for under this paragraph in any year exceeds the aggre-
gate amount of tax credits allowed for such year under  this  paragraph,
such excess shall be treated as having been applied for on the first day
of  the  next year. If the total amount of allocated tax credits applied

S. 6359--D                         325                        A. 8559--D

for under this paragraph at the conclusion of any year is less than five
million dollars, the remainder shall be treated as part  of  the  annual
allocation for two thousand seventeen made available to the empire state
film  post  production  credit pursuant to paragraph four of subdivision
(e) of section twenty-four of this article. However, in no event may the
total of the credits allocated under  this  paragraph  and  the  credits
allocated under paragraph five of subdivision (a) of section twenty-four
of this article exceed five million dollars in any year during the peri-
od two thousand fifteen through two thousand nineteen.
  S 3. This act shall take effect January 1, 2015.

                                 PART KK

  Section  1. Subsection (c) of section 612 of the tax law is amended by
adding a new paragraph 41 to read as follows:
  (41) THE AMOUNT OF ANY AWARD PAID TO A VOLUNTEER FIREFIGHTER OR VOLUN-
TEER AMBULANCE WORKER FROM A LENGTH OF SERVICE DEFINED CONTRIBUTION PLAN
OR DEFINED BENEFIT PLAN AS PROVIDED FOR IN ARTICLES ELEVEN-A, ELEVEN-AA,
ELEVEN-AAA AND ELEVEN-AAAA OF THE GENERAL MUNICIPAL LAW, TO  THE  EXTENT
THAT  SUCH  AWARD  IS  INCLUDABLE IN GROSS INCOME FOR FEDERAL INCOME TAX
PURPOSES; PROVIDED, HOWEVER, THAT SUCH AWARD IS NOT DISTRIBUTED  IN  THE
FORM OF A LUMP SUM DISTRIBUTION, AS DEFINED IN SUBPARAGRAPH (A) OF PARA-
GRAPH FOUR OF SUBSECTION (E) OF SECTION FOUR HUNDRED TWO OF THE INTERNAL
REVENUE  CODE AND TAXED UNDER SECTION SIX HUNDRED THREE OF THIS ARTICLE;
AND PROVIDED, FURTHER, THAT SUCH AWARD IS NOT DISTRIBUTED TO A  TAXPAYER
WHO HAS NOT ATTAINED THE AGE OF FIFTY-NINE AND ONE-HALF YEARS.
  S  2. Subdivision (c) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 37 to read  as
follows:
  (37) THE AMOUNT OF ANY AWARD PAID TO A VOLUNTEER FIREFIGHTER OR VOLUN-
TEER AMBULANCE WORKER FROM A LENGTH OF SERVICE DEFINED CONTRIBUTION PLAN
OR DEFINED BENEFIT PLAN AS PROVIDED FOR IN ARTICLES ELEVEN-A, ELEVEN-AA,
ELEVEN-AAA  AND  ELEVEN-AAAA OF THE GENERAL MUNICIPAL LAW, TO THE EXTENT
THAT SUCH AWARD IS INCLUDABLE IN GROSS INCOME  FOR  FEDERAL  INCOME  TAX
PURPOSES;  PROVIDED,  HOWEVER, THAT SUCH AWARD IS NOT DISTRIBUTED IN THE
FORM OF A LUMP SUM DISTRIBUTION, AS DEFINED IN SUBPARAGRAPH (A) OF PARA-
GRAPH FOUR OF SUBSECTION (E) OF SECTION FOUR HUNDRED TWO OF THE INTERNAL
REVENUE CODE AND TAXED UNDER SECTION SIX HUNDRED THREE OF THE  TAX  LAW;
AND  PROVIDED, FURTHER, THAT SUCH AWARD IS NOT DISTRIBUTED TO A TAXPAYER
WHO HAS NOT ATTAINED THE AGE OF FIFTY-NINE AND ONE-HALF YEARS.
  S 3. This act shall take effect immediately and shall apply to taxable
years beginning on and after January 1, 2014.

                                 PART LL

  Section 1. Subdivision (e) of section 1111 of the tax law, as  amended
by  chapter 261 of the laws of 1988, paragraph 2 as amended by section 6
of part M1 of chapter 109 of the laws of 2006, is  amended  to  read  as
follows:
  (e)  (1)  There  are  hereby  created and established within the state
[two] THREE regions for purposes of the payment of the  tax  imposed  by
section  eleven  hundred two of this article. (i) [One] THE FIRST region
shall consist of the localities included in  the  metropolitan  commuter
transportation  district  created  and  established  pursuant to section
twelve hundred sixty-two of the public authorities  law,  EXCLUDING  ALL
LOCALITIES  INCLUDED  IN  THE  COUNTIES OF NASSAU AND SUFFOLK.  (ii) THE

S. 6359--D                         326                        A. 8559--D

SECOND REGION SHALL CONSIST OF THE LOCALITIES INCLUDED IN  THE  COUNTIES
OF  NASSAU  AND SUFFOLK. (III) The [other] THIRD region shall consist of
the area of the state  outside  the  [region]  REGIONS  referred  to  in
[subparagraph] SUBPARAGRAPHS (i) AND (II) of this paragraph.
  (2)  (i) Where the motor fuel is imported, manufactured or sold in, or
diesel motor fuel is sold or used in the region referred to in  subpara-
graph  (i)  of paragraph one of this subdivision, the tax required to be
prepaid pursuant to section eleven hundred two of this article  on  each
gallon of such fuel shall be [fourteen and three-quarters] SEVENTEEN AND
ONE-HALF cents.
  (ii)  Where motor fuel is imported, manufactured or sold in, or diesel
motor fuel is sold or used in the region  referred  to  in  subparagraph
(ii)  of  paragraph  one  of  this  subdivision,  the tax required to be
prepaid pursuant to section eleven hundred two of this article  on  each
gallon of such fuel shall be [fourteen] TWENTY-ONE cents.
  (III) WHERE MOTOR FUEL IS IMPORTED, MANUFACTURED OR SOLD IN, OR DIESEL
MOTOR  FUEL  IS  SOLD  OR USED IN THE REGION REFERRED TO IN SUBPARAGRAPH
(III) OF PARAGRAPH ONE OF THIS  SUBDIVISION,  THE  TAX  REQUIRED  TO  BE
PREPAID  PURSUANT  TO SECTION ELEVEN HUNDRED TWO OF THIS ARTICLE ON EACH
GALLON OF SUCH FUEL SHALL BE SIXTEEN CENTS.
  S 2. This act shall take effect June 1, 2014.

                                 PART MM

  Section 1. The labor law is amended by adding a new  section  25-b  to
read as follows:
  S  25-B.  POWER TO ADMINISTER THE WORKERS WITH DISABILITIES TAX CREDIT
PROGRAM. (A) THE COMMISSIONER IS AUTHORIZED TO ESTABLISH AND  ADMINISTER
THE  WORKERS  WITH DISABILITIES TAX CREDIT PROGRAM TO PROVIDE TAX INCEN-
TIVES TO EMPLOYERS FOR EMPLOYING INDIVIDUALS WITH DEVELOPMENTAL DISABIL-
ITIES.  THE COMMISSIONER IS AUTHORIZED TO ALLOCATE  UP  TO  SIX  MILLION
DOLLARS OF TAX CREDITS ANNUALLY.
  (B)  DEFINITIONS.  (1) THE TERM "QUALIFIED EMPLOYER" MEANS AN EMPLOYER
THAT HAS BEEN CERTIFIED BY THE COMMISSIONER TO PARTICIPATE IN THE  WORK-
ERS  WITH  DISABILITIES  TAX CREDIT PROGRAM AND THAT EMPLOYS ONE OR MORE
QUALIFIED EMPLOYEES.
  (2) THE TERM "QUALIFIED EMPLOYEE" MEANS AN INDIVIDUAL:
  (I) WHO IS DEEMED TO HAVE A DEVELOPMENTAL DISABILITY, AS THAT TERM  IS
DEFINED  IN SUBDIVISION TWENTY-TWO OF SECTION 1.03 OF THE MENTAL HYGIENE
LAW AND WHO IS CERTIFIED BY THE EDUCATION DEPARTMENT OR THE  OFFICE  FOR
PEOPLE WITH DEVELOPMENTAL DISABILITIES:
  (A)  AS  A  PERSON WITH A DISABILITY WHICH CONSTITUTES OR RESULTS IN A
SUBSTANTIAL HANDICAP TO EMPLOYMENT; AND
  (B) AS A PERSON HAVING COMPLETED OR AS  RECEIVING  SERVICES  UNDER  AN
INDIVIDUALIZED  WRITTEN  REHABILITATION  PLAN  APPROVED BY THE EDUCATION
DEPARTMENT OR OTHER STATE AGENCY RESPONSIBLE  FOR  PROVIDING  VOCATIONAL
REHABILITATION SERVICES TO SUCH INDIVIDUAL; AND
  (II)  WHO  IS  A  CURRENT  EMPLOYEE OF A SHELTERED WORKSHOP, WHICH FOR
PURPOSES OF THIS SUBDIVISION IS DEFINED AS AN ORGANIZATION  OR  ENVIRON-
MENT  THAT  EMPLOYS  PEOPLE WITH DISABILITIES SEGREGATED FROM OTHERS; OR
WHO WAS UNEMPLOYED FOR AT LEAST THREE MONTHS PRIOR TO JANUARY FIRST, TWO
THOUSAND FIFTEEN; AND
  (III) WHO HAS WORKED FOR THE QUALIFIED  EMPLOYER  IN  A  FULL-TIME  OR
PART-TIME POSITION THAT PAYS WAGES THAT ARE EQUIVALENT TO THE WAGES PAID
FOR SIMILAR JOBS, WITH APPROPRIATE ADJUSTMENTS FOR EXPERIENCE AND TRAIN-
ING,  AND  FOR WHICH NO OTHER EMPLOYEE HAS BEEN TERMINATED, OR WHERE THE

S. 6359--D                         327                        A. 8559--D

EMPLOYER HAS NOT OTHERWISE REDUCED ITS WORKFORCE BY  INVOLUNTARY  TERMI-
NATIONS  WITH  THE  INTENTION  OF  FILLING THE VACANCY BY CREATING A NEW
HIRE; AND
  (IV) WHO HAS NOT WORKED FOR AN ENTITY RELATED TO THE QUALIFIED EMPLOY-
ER IN THE PAST TWENTY-FOUR MONTHS; AND
  (V) IS EMPLOYED IN NEW YORK AT A LOCATION IN NEW YORK STATE.
  (C)  A  QUALIFIED EMPLOYER SHALL BE ENTITLED TO A TAX CREDIT.  THE TAX
CREDITS SHALL BE CLAIMED BY  THE  QUALIFIED  EMPLOYER  AS  SPECIFIED  IN
SUBDIVISION FORTY-EIGHT OF SECTION TWO HUNDRED TEN-B AND SUBSECTION (ZZ)
OF SECTION SIX HUNDRED SIX OF THE TAX LAW.
  (D)  TO  PARTICIPATE  IN THE DEVELOPMENTALLY DISABLED WORKS TAX CREDIT
PROGRAM, AN EMPLOYER MUST SUBMIT AN APPLICATION (IN A FORM PRESCRIBED BY
THE COMMISSIONER) TO THE COMMISSIONER NO LATER THAN  NOVEMBER  THIRTIETH
OF  THE  PRIOR  YEAR.   THE COMMISSIONER SHALL ESTABLISH GUIDELINES THAT
SPECIFY REQUIREMENTS FOR EMPLOYERS TO PARTICIPATE IN THE PROGRAM INCLUD-
ING CRITERIA FOR CERTIFYING QUALIFIED EMPLOYEES.  ANY  REGULATIONS  THAT
THE COMMISSIONER DETERMINES ARE NECESSARY MAY BE ADOPTED ON AN EMERGENCY
BASIS  NOTWITHSTANDING  ANYTHING  TO THE CONTRARY IN SECTION TWO HUNDRED
TWO OF THE STATE ADMINISTRATIVE PROCEDURE  ACT.  SUCH  REQUIREMENTS  MAY
INCLUDE THE TYPES OF INDUSTRIES THAT THE EMPLOYERS ARE ENGAGED IN.
  (E)  IF, AFTER REVIEWING THE APPLICATION SUBMITTED BY AN EMPLOYER, THE
COMMISSIONER DETERMINES THAT SUCH EMPLOYER IS ELIGIBLE TO PARTICIPATE IN
THE WORKERS WITH DISABILITIES TAX CREDIT PROGRAM, THE COMMISSIONER SHALL
ISSUE THE EMPLOYER A PRELIMINARY CERTIFICATE OF ELIGIBILITY THAT  ESTAB-
LISHES  THE  EMPLOYER AS A QUALIFIED EMPLOYER. THE CERTIFICATE OF ELIGI-
BILITY SHALL SPECIFY THE MAXIMUM AMOUNT OF WORKERS WITH DISABILITIES TAX
CREDIT THAT THE EMPLOYER WILL BE ALLOWED TO CLAIM.   AT THE END  OF  THE
TAXABLE  YEAR,  A  QUALIFIED EMPLOYER MUST OBTAIN A FINAL CERTIFICATE OF
ELIGIBILITY FROM THE COMMISSIONER TO FILE WITH  A  RETURN  CLAIMING  THE
CREDIT.  THE  FINAL  CERTIFICATE  MUST CONTAIN THE CERTIFICATE'S TAXABLE
YEAR TO WHICH THE CREDIT APPLIES,  THE  MAXIMUM  AMOUNT  OF  THE  CREDIT
ALLOWED,  THE  QUALIFIED  EMPLOYER'S  NAME  AND  EMPLOYER IDENTIFICATION
NUMBER, THE EMPLOYER'S BUSINESS ADDRESS WHERE THE CLAIMED EMPLOYEES WERE
EMPLOYED, THE SOCIAL SECURITY NUMBERS OF  CLAIMED  EMPLOYEES  AND  THEIR
HIRE AND TERMINATION DATES, VERIFICATION THAT THE CLAIMED EMPLOYEES HAVE
MET  THE  STATUTORY DEFINITION OF "QUALIFIED EMPLOYEE", AND EACH EMPLOY-
EE'S TOTAL HOURS WORKED EACH QUARTER,  HOURLY  WAGE,  AND  FULL-TIME  OR
PART-TIME STATUS.
  S 2. Section 210-B of the tax law, as added by section 17 of part A of
this act, is amended by adding a new subdivision 48 to read as follows:
  48.  WORKERS  WITH DISABILITIES TAX CREDIT.  (A) A QUALIFIED EMPLOYER,
AS DEFINED IN PARAGRAPH ONE OF SUBDIVISION (B) OF SECTION  TWENTY-FIVE-B
OF  THE LABOR LAW, SHALL BE ENTITLED TO A CREDIT AGAINST THE TAX IMPOSED
BY THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE: FIFTEEN  PERCENT  OF
THE  QUALIFIED WAGES PAID AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN TO A
QUALIFIED FULL-TIME EMPLOYEE WHO IS  EMPLOYED  FOR  NOT  LESS  THAN  SIX
MONTHS  AND  WHO  WORKS AT LEAST THIRTY HOURS PER WEEK; AND SHALL BE TEN
PERCENT OF THE QUALIFIED WAGES PAID AFTER JANUARY  FIRST,  TWO  THOUSAND
FIFTEEN  TO  A QUALIFIED PART-TIME EMPLOYEE WHO IS EMPLOYED FOR NOT LESS
THAN SIX MONTHS AND WORKS AT LEAST EIGHT HOURS PER  WEEK.    THE  CREDIT
ALLOWED  PURSUANT TO THIS SUBDIVISION SHALL NOT EXCEED, DURING ANY TAXA-
BLE YEAR, FIVE THOUSAND DOLLARS FOR ANY QUALIFIED FULL TIME EMPLOYEE AND
TWO THOUSAND FIVE HUNDRED DOLLARS FOR ANY QUALIFIED PART TIME  EMPLOYEE.
"QUALIFIED WAGES" MEANS WAGES PAID OR INCURRED BY THE QUALIFIED EMPLOYER
DURING  THE TAXABLE YEAR TO A QUALIFIED EMPLOYEE WHICH ARE ATTRIBUTABLE,

S. 6359--D                         328                        A. 8559--D

WITH RESPECT TO SUCH EMPLOYEE, TO SERVICES  RENDERED  BY  THE  QUALIFIED
EMPLOYEE.
  (B) CARRYOVER. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXA-
BLE  YEAR  SHALL  NOT  REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE
AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF  THIS  SECTION.
HOWEVER,  IF  THE  AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR
ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY  AMOUNT  OF  CREDIT
NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING
THREE  YEARS,  AND MAY BE DEDUCTED FROM THE QUALIFIED EMPLOYER'S TAX FOR
SUCH YEARS.
  (C) THE TAXPAYER SHALL ATTACH TO ITS TAX RETURN ITS FINAL  CERTIFICATE
OF  ELIGIBILITY  ISSUED BY THE COMMISSIONER OF LABOR PURSUANT TO SECTION
TWENTY-FIVE-B OF THE LABOR LAW FOR EACH TAXABLE YEAR THAT THE CREDIT  IS
CLAIMED.    IN  NO  EVENT SHALL THE TAXPAYER BE ALLOWED A CREDIT GREATER
THAN THE AMOUNT OF THE CREDIT LISTED ON THE FINAL CERTIFICATE OF  ELIGI-
BILITY.   NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER TO THE CONTRARY,
THE COMMISSIONER AND THE COMMISSIONER'S DESIGNEES MAY RELEASE THE  NAMES
AND ADDRESSES OF ANY TAXPAYER CLAIMING THIS CREDIT AND THE AMOUNT OF THE
CREDIT EARNED BY THE TAXPAYER.
  (D)  A  QUALIFIED EMPLOYER MAY NOT CLAIM THE WORKERS WITH DISABILITIES
TAX CREDIT IF IT CLAIMS ANY OF  THE  OTHER  CREDITS  FOR  EMPLOYMENT  OF
PERSONS  WITH  DISABILITIES  UNDER  EITHER SUBSECTION (O) OF SECTION SIX
HUNDRED SIX, SUBDIVISION TWELVE OF THIS SECTION, OR SUBDIVISION  (J)  OF
SECTION FIFTEEN HUNDRED ELEVEN OF THIS CHAPTER.
  S  3.    Subsections  (yy)  and (zz) of section 606 of the tax law, as
relettered by section 5 of part H of chapter 1 of the laws of 2003,  are
relettered  subsections  (yyy)  and  (zzz)  and a new subsection (zz) is
added to read as follows:
  (ZZ) WORKERS WITH DISABILITIES TAX CREDIT.  (1) A QUALIFIED  EMPLOYER,
AS  DEFINED IN PARAGRAPH ONE OF SUBDIVISION (B) OF SECTION TWENTY-FIVE-B
OF THE LABOR LAW, SHALL BE ENTITLED TO A CREDIT AGAINST THE TAX  IMPOSED
BY  THIS  ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE: FIFTEEN PERCENT OF
THE QUALIFIED WAGES PAID AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN TO  A
QUALIFIED  FULL-TIME  EMPLOYEE  WHO  IS  EMPLOYED  FOR NOT LESS THAN SIX
MONTHS AND WHO WORKS AT LEAST THIRTY HOURS PER WEEK; AND  SHALL  BE  TEN
PERCENT  OF  THE  QUALIFIED WAGES PAID AFTER JANUARY FIRST, TWO THOUSAND
FIFTEEN TO A QUALIFIED PART-TIME EMPLOYEE WHO IS EMPLOYED FOR  NOT  LESS
THAN  SIX  MONTHS  AND  WORKS AT LEAST EIGHT HOURS PER WEEK.  THE CREDIT
ALLOWED PURSUANT TO THIS SUBSECTION SHALL NOT EXCEED, DURING ANY TAXABLE
YEAR, FIVE THOUSAND DOLLARS FOR ANY QUALIFIED FULL TIME EMPLOYEE AND TWO
THOUSAND FIVE HUNDRED DOLLARS FOR  ANY  QUALIFIED  PART  TIME  EMPLOYEE.
"QUALIFIED WAGES" MEANS WAGES PAID OR INCURRED BY THE QUALIFIED EMPLOYER
DURING  THE TAXABLE YEAR TO A QUALIFIED EMPLOYEE WHICH ARE ATTRIBUTABLE,
WITH RESPECT TO SUCH EMPLOYEE, TO SERVICES  RENDERED  BY  THE  QUALIFIED
EMPLOYEE.
  (2)  IF  THE  AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBSECTION FOR ANY
TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR,  ANY  AMOUNT
OF CREDIT NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE
FOLLOWING  THREE YEARS, AND MAY BE DEDUCTED FOR THE QUALIFIED EMPLOYER'S
TAX FOR SUCH YEARS.
  (3) THE TAXPAYER SHALL ATTACH TO ITS TAX RETURN ITS FINAL  CERTIFICATE
OF  ELIGIBILITY  ISSUED BY THE COMMISSIONER OF LABOR PURSUANT TO SECTION
TWENTY-FIVE-B OF THE LABOR LAW.  IN  NO  EVENT  SHALL  THE  TAXPAYER  BE
ALLOWED  A  CREDIT  GREATER  THAN THE AMOUNT OF THE CREDIT LISTED ON THE
FINAL CERTIFICATE OF ELIGIBILITY.  NOTWITHSTANDING ANY PROVISION OF THIS
CHAPTER TO THE CONTRARY, THE COMMISSIONER AND THE COMMISSIONER'S  DESIG-

S. 6359--D                         329                        A. 8559--D

NEES  MAY  RELEASE THE NAMES AND ADDRESSES OF ANY TAXPAYER CLAIMING THIS
CREDIT AND THE AMOUNT OF THE CREDIT EARNED BY THE TAXPAYER.
  (4)  A  QUALIFIED EMPLOYER MAY NOT CLAIM THE WORKERS WITH DISABILITIES
TAX CREDIT IF IT CLAIMS ANY OF  THE  OTHER  CREDITS  FOR  EMPLOYMENT  OF
PERSONS  WITH  DISABILITIES  UNDER  EITHER SUBSECTION (O) OF SECTION SIX
HUNDRED SIX, SUBDIVISION TWELVE OF SECTION TWO HUNDRED TEN-B, OR  SUBDI-
VISION (J) OF SECTION FIFTEEN HUNDRED ELEVEN OF THIS CHAPTER.
  S  4. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by  adding  a  new  clause  (xl)  to  read  as
follows:
(XL) WORKERS WITH DISABILITIES       AMOUNT OF
TAX CREDIT UNDER SUBSECTION (ZZ)     CREDIT UNDER SUBDIVISION
                                     FORTY-EIGHT OF SECTION TWO
                                     HUNDRED TEN-B
  S  5.  This  act shall take effect January 1, 2015, and shall apply to
taxable years beginning on and after that date; provided, however,  that
this act shall expire and be deemed repealed January 1, 2020.

                                 PART NN

  Section  1.  Subparagraph  (i)  of  paragraph  (b) of subdivision 4 of
section 425 of the real property tax law is  amended  by  adding  a  new
clause (C-1) to read as follows:
  (C-1)  NOTWITHSTANDING  THE  PROVISIONS OF CLAUSE (C) OF THIS SUBPARA-
GRAPH, IN THE EVENT THAT A SENIOR CITIZEN, AS A RESULT OF THE  DEATH  OF
HIS  OR HER SPOUSE, EXPERIENCES A DECREASE IN INCOME SUCH THAT HE OR SHE
WOULD QUALIFY FOR THE ENHANCED EXEMPTION IF HIS OR HER ELIGIBILITY  WERE
BASED  UPON HIS OR HER INCOME FOR THE INCOME TAX YEAR IMMEDIATELY SUBSE-
QUENT TO THE INCOME TAX YEAR THAT WOULD OTHERWISE BE APPLICABLE PURSUANT
TO CLAUSE (C) OF THIS SUBPARAGRAPH, THEN THE ELIGIBILITY OF SUCH  SENIOR
CITIZEN FOR THE ENHANCED EXEMPTION ON THE APPLICABLE TAXABLE STATUS DATE
SHALL  BE  DETERMINED BASED UPON HIS OR HER INCOME FOR SUCH LATER INCOME
TAX YEAR; PROVIDED THAT THE INCOME TAX RETURN FOR  SUCH  YEAR  HAS  BEEN
FILED  WITH  THE  APPROPRIATE STATE OR FEDERAL AGENCY AND A COPY THEREOF
HAS BEEN FILED WITH THE ASSESSOR ON OR  BEFORE  THE  APPLICABLE  TAXABLE
STATUS DATE, OR OTHER DOCUMENTATION OF INCOME ELIGIBILITY HAS BEEN FILED
WITH THE ASSESSOR ON OR BEFORE THE APPLICABLE TAXABLE STATUS DATE.
  S 2. This act shall take effect immediately.

                                 PART OO

  Section  1. Paragraphs 2 and 3 of subdivision b of section 1612 of the
tax law, as amended by chapter 174 of the  laws  of  2013,  the  opening
paragraph  of paragraph 2 as amended by chapter 175 of the laws of 2013,
are amended to read as follows:
  2. As consideration for the operation of a video lottery gaming facil-
ity, the division, shall cause the investment in the racing industry  of
a  portion  of the vendor fee received pursuant to paragraph one of this
subdivision in the manner set forth in this subdivision. With the excep-
tion of Aqueduct racetrack or a facility in  the  county  of  Nassau  or
Suffolk  operated  by a corporation established pursuant to section five
hundred two of the racing, pari-mutuel wagering and breeding  law,  each
such  track shall dedicate a portion of its vendor fees, received pursu-
ant to clause (A), (B), (C), (D), (E), (F), or (G) of subparagraph  (ii)
of  paragraph  one  of  this  subdivision,  [solely]  for the purpose of
enhancing purses at such track, in an amount equal to eight  and  three-

S. 6359--D                         330                        A. 8559--D

quarters  percent of the total revenue wagered at the vendor track after
pay out for prizes. One percent of [such] THE  GROSS  purse  enhancement
amount,  AS  REQUIRED  BY  THIS SUBDIVISION, shall be paid to the gaming
commission  to  be  used exclusively to promote and ensure equine health
and safety in New York. Any  portion  of  such  funding  to  the  gaming
commission  unused  during  a fiscal year shall be returned to the video
lottery gaming operators on a pro rata  basis  in  accordance  with  the
amounts  originally  contributed  by each operator and shall be used for
the purpose of enhancing purses at such track.  ONE AND ONE-HALF PERCENT
OF THE GROSS PURSE  ENHANCEMENT  AMOUNT  AT  A  THOROUGHBRED  TRACK,  AS
REQUIRED  BY  THIS  SUBDIVISION, SHALL BE PAID TO AN ACCOUNT ESTABLISHED
PURSUANT TO SECTION TWO HUNDRED TWENTY-ONE-A OF THE RACING,  PARI-MUTUEL
WAGERING  AND  BREEDING  LAW  TO  BE  USED EXCLUSIVELY TO PROVIDE HEALTH
INSURANCE FOR JOCKEYS. In addition, with the exception of Aqueduct race-
track or a facility in the county of Nassau or  Suffolk  operated  by  a
corporation  established  pursuant  to  section  five hundred two of the
racing, pari-mutuel wagering  and  breeding  law,  one  and  one-quarter
percent  of  total revenue wagered at the vendor track after pay out for
prizes, received pursuant to clause (A), (B), (C), (D), (E), (F), or (G)
of subparagraph (ii) of paragraph one  of  this  subdivision,  shall  be
distributed  to  the  appropriate breeding fund for the manner of racing
conducted by such track.
  Provided, further, that nothing in this paragraph shall  prevent  each
track  from  entering  into an agreement, not to exceed five years, with
the organization authorized to represent its  horsemen  to  increase  or
decrease  the portion of its vendor fee dedicated to enhancing purses at
such track during the years of participation by such track, or  to  race
fewer dates than required herein.
  3.  Nothing  in  paragraph  two  of  this subdivision shall affect any
agreement in effect on or before the effective date of  this  paragraph,
except  that  the  obligation  to  pay funds to the gaming commission to
promote and ensure equine health and safety AND THE  OBLIGATION  TO  PAY
FUNDS  TO AN ACCOUNT ESTABLISHED PURSUANT TO SECTION TWO HUNDRED TWENTY-
ONE-A OF THE RACING, PARI-MUTUEL WAGERING AND BREEDING LAW  TO  BE  USED
EXCLUSIVELY  TO PROVIDE HEALTH INSURANCE FOR JOCKEYS shall supersede any
provision to the contrary in any such agreement.
  S 2. Paragraph 1 of subdivision f of section 1612 of the tax  law,  as
amended  by  chapter  174  of  the  laws  of 2013, is amended to read as
follows:
  1. Six and one-half percent of  the  total  wagered  after  payout  of
prizes  for the first year of operation of video lottery gaming at Aque-
duct racetrack, seven percent of  the  total  wagered  after  payout  of
prizes  for the second year of operation, and seven and one-half percent
of the total wagered after payout of prizes for the third year of opera-
tion and thereafter, for the purpose of  enhancing  purses  at  Aqueduct
racetrack,  Belmont Park racetrack and Saratoga race course. One percent
of [such] THE GROSS purse enhancement amount, AS REQUIRED BY THIS SUBDI-
VISION, shall be paid to the gaming commission to be used exclusively to
promote and ensure equine health and safety in New York. Any portion  of
such  funding to the gaming commission unused during a fiscal year shall
be returned  on  a  pro  rata  basis  in  accordance  with  the  amounts
originally  contributed  and  shall be used for the purpose of enhancing
purses at such tracks. ONE AND  ONE-HALF  PERCENT  OF  THE  GROSS  PURSE
ENHANCEMENT AMOUNT, AS REQUIRED BY THIS SUBDIVISION, SHALL BE PAID TO AN
ACCOUNT  ESTABLISHED PURSUANT TO SECTION TWO HUNDRED TWENTY-ONE-A OF THE

S. 6359--D                         331                        A. 8559--D

RACING, PARI-MUTUEL WAGERING AND BREEDING LAW TO BE USED EXCLUSIVELY  TO
PROVIDE HEALTH INSURANCE FOR JOCKEYS.
  S  3.  The racing, pari-mutuel wagering and breeding law is amended by
adding a new section 221-a to read as follows:
  S 221-A. HEALTH INSURANCE FOR JOCKEYS.  1.  A  FRANCHISED  CORPORATION
SHALL,  AS  A CONDITION OF RACING, ESTABLISH A PROGRAM TO ADMINISTER THE
PURCHASE OF HEALTH INSURANCE FOR ELIGIBLE JOCKEYS.
  SUCH PROGRAM SHALL BE FUNDED THROUGH THE DEPOSIT OF ONE  AND  ONE-HALF
PERCENT  OF THE GROSS PURSE ENHANCEMENT AMOUNT FROM VIDEO LOTTERY GAMING
AT A THOROUGHBRED TRACK PURSUANT TO PARAGRAPH TWO OF SUBDIVISION  B  AND
PARAGRAPH  ONE OF SUBDIVISION F OF SECTION SIXTEEN HUNDRED TWELVE OF THE
TAX LAW. THE FRANCHISED CORPORATION SHALL ESTABLISH A SEGREGATED ACCOUNT
FOR THE RECEIPT OF THESE MONIES AND THESE MONIES SHALL  REMAIN  SEPARATE
FROM  ANY  OTHER FUNDS. ANY CORPORATION OR ASSOCIATION LICENSED PURSUANT
TO THIS ARTICLE SHALL PAY INTO SUCH ACCOUNT ANY AMOUNT  DUE  WITHIN  TEN
DAYS  OF  THE  RECEIPT  OF  REVENUE  PURSUANT TO SECTION SIXTEEN HUNDRED
TWELVE OF THE TAX LAW. ANY PORTION OF SUCH FUNDING TO THE ACCOUNT UNUSED
DURING A CALENDAR YEAR, LESS AN AMOUNT SUFFICIENT TO  COVER  ANTICIPATED
PREMIUM LIABILITIES OVER THE NEXT SIXTY DAYS, SHALL BE RETURNED ON A PRO
RATA  BASIS  IN  ACCORDANCE  WITH THE AMOUNTS ORIGINALLY CONTRIBUTED AND
SHALL BE USED FOR THE  PURPOSE  OF  ENHANCING  PURSES  AT  SUCH  TRACKS.
PROVIDED,  HOWEVER, IF A CORPORATION OR ASSOCIATION LICENSED PURSUANT TO
THIS ARTICLE PROVIDES AN ALTERNATIVE SOURCE OF FUNDING FOR THIS PROGRAM,
AN AMOUNT EQUAL TO THIS ALTERNATIVE FUNDING, BUT NOT IN  EXCESS  OF  THE
AMOUNT  ORIGINALLY  CONTRIBUTED  DURING  THE  YEAR  FROM THE GROSS PURSE
ENHANCEMENT AMOUNT FROM VIDEO LOTTERY GAMING ATTRIBUTABLE TO SUCH CORPO-
RATION OR ASSOCIATION, SHALL BE RETURNED TO THE CORPORATION  OR  ASSOCI-
ATION  AND  USED  FOR  THE  PURPOSE  OF  ENHANCING PURSES AT SUCH TRACK.
PROVIDED, FURTHER, ANY  SUCH  ALTERNATIVE  SOURCE  OF  FUNDING  MUST  BE
APPROVED BY THE GAMING COMMISSION.
  2.  THE FRANCHISED CORPORATION SHALL ENTER INTO A MEMORANDUM OF UNDER-
STANDING WITH THE JOCKEY'S ORGANIZATION THAT REPRESENTS AT LEAST  FIFTY-
ONE  PERCENT OF ELIGIBLE ACTIVE JOCKEYS ESTABLISHING A PLAN OF OPERATION
FOR THE PROGRAM, PROVIDED THAT SUCH MEMORANDUM OF UNDERSTANDING SHALL BE
APPROVED BY THE GAMING COMMISSION AND INCLUDE, BUT NOT  BE  LIMITED  TO,
THE FOLLOWING CONDITIONS:
  A.  HEALTH  INSURANCE POLICIES MUST BE PURCHASED ON AN AMERICAN HEALTH
BENEFIT EXCHANGE ESTABLISHED PURSUANT TO 42 U.S.C.  S  18031(B)  BY  THE
INSURED;
  B.  HEALTH  INSURANCE  POLICIES  ELIGIBLE  TO  BE  PURCHASED UNDER THE
PROGRAM SHALL BE ANY POLICY THAT IS SILVER LEVEL OF COVERAGE OR LOWER AS
DEFINED BY 42 U.S.C.S18022(D). PROVIDED, HOWEVER, THE INSURED MAY  ELECT
TO  PURCHASE A GOLD LEVEL OR PLATINUM LEVEL OF COVERAGE AS DEFINED BY 42
U.S.C. S 18022(D) IF THE INSURED PAYS THE DIFFERENCE IN PREMIUMS BETWEEN
SUCH POLICY AND THE PREMIUM FOR THE SILVER LEVEL POLICY OFFERED  BY  THE
SAME  INSURER.  SUCH PAYMENTS SHALL BE PAID INTO THE ACCOUNT ESTABLISHED
IN SUBDIVISION ONE OF THIS SECTION AND SHALL BE GOVERNED BY THE TERMS OF
THE MEMORANDUM OF UNDERSTANDING REQUIRED BY THIS SECTION;
  C. THE PAYMENT OF PREMIUMS SHALL BE MADE ON BEHALF OF ELIGIBLE JOCKEYS
PURSUANT TO PARAGRAPH D OF THIS SUBDIVISION  BY  THE  FRANCHISED  CORPO-
RATION FROM MONIES IN THE ACCOUNT ESTABLISHED IN SUBDIVISION ONE OF THIS
SECTION  DIRECTLY TO THE HEALTH PLAN SELECTED PURSUANT TO PARAGRAPH B OF
THIS SUBDIVISION;
  D. TO BE ELIGIBLE TO RECEIVE HEALTH INSURANCE THROUGH THIS PROGRAM, AN
INDIVIDUAL MUST MEET ONE OF THE FOLLOWING REQUIREMENTS:

S. 6359--D                         332                        A. 8559--D

  (I) HAVE RIDDEN IN AT LEAST TWO HUNDRED FIFTY RACES CONDUCTED  BY  THE
FRANCHISED  CORPORATION  DURING  THE PRIOR CALENDAR  YEAR OR IN AT LEAST
ONE HUNDRED FIFTY RACES CONDUCTED BY ANY OTHER  CORPORATION  OR  ASSOCI-
ATION  LICENSED PURSUANT TO THIS ARTICLE DURING THE PRIOR CALENDAR YEAR;
PROVIDED,  HOWEVER, IF AN INDIVIDUAL QUALIFIED FOR COVERAGE IN ANY PRIOR
YEAR AND FAILS TO MEET THE QUALIFICATION DUE TO AN INJURY NOT  RESULTING
IN  A  PERMANENT DISABILITY, THAT INDIVIDUAL SHALL BE DEEMED TO HAVE MET
THE QUALIFICATION; OR
  (II) HAVE RETIRED FROM RACING ON OR AFTER JANUARY FIRST, TWO  THOUSAND
TEN AFTER HAVING RIDDEN IN AT LEAST SEVENTY-FIVE HUNDRED RACES CONDUCTED
BY ANY CORPORATION OR ASSOCIATION LICENSED PURSUANT TO THIS ARTICLE. FOR
THE  PURPOSES OF THIS SECTION, AN INDIVIDUAL SHALL BE CONSIDERED RETIRED
FROM RACING IF THEY HAVE RIDDEN IN FEWER THAN FIFTY RACES AT  ANY  TRACK
IN  THE NATION LICENSED TO CONDUCT THOROUGHBRED RACING DURING THE CALEN-
DAR YEAR; OR
  (III) HAVE BECOME PERMANENTLY DISABLED DUE TO A RACING ACCIDENT  WHILE
ELIGIBLE  TO  RECEIVE BENEFITS OR WOULD BECOME ELIGIBLE TO RECEIVE BENE-
FITS IN THE FOLLOWING YEAR PURSUANT TO SUBPARAGRAPH (I)  OF  THIS  PARA-
GRAPH;  PROVIDED, HOWEVER, IF AN INDIVIDUAL FAILS TO MEET THE QUALIFICA-
TION OF SUCH SUBPARAGRAPH (I) DUE TO AN INJURY RESULTING IN A  PERMANENT
DISABILITY,  THAT  INDIVIDUAL SHALL BE DEEMED TO HAVE MET THE QUALIFICA-
TION; AND
  E. THE GAMING COMMISSION SHALL HAVE THE FOLLOWING POWERS:
  (I) TO RULE ON ELIGIBILITY IN THE EVENT OF A DENIAL OF COVERAGE PURSU-
ANT TO PARAGRAPH D OF THIS SUBDIVISION.   IN THE EVENT OF  A  DENIAL  OF
COVERAGE,  SUCH  INDIVIDUAL  DENIED ELIGIBILITY MAY APPEAL TO THE GAMING
COMMISSION;
  (II) TO MAKE A DETERMINATION IF AN  INDIVIDUAL  WOULD  HAVE  QUALIFIED
PURSUANT  TO  SUBPARAGRAPH (I) OF PARAGRAPH D OF THIS SUBDIVISION IN THE
EVENT THAT THE INDIVIDUAL SUFFERS AN INJURY AND CONTENDS THAT HE OR  SHE
WOULD HAVE QUALIFIED HAD THEY NOT SUFFERED SUCH INJURY; AND
  (III) TO AUDIT THE BOOKS AND RECORDS OF THE PROGRAM.
  S  4.  This  act  shall  take  effect  immediately; provided, however,
payment of premiums shall begin no later  than  60  days  following  the
approval  by  the  gaming  commission  of  a memorandum of understanding
establishing a plan of operation as required by  section  221-a  of  the
racing, pari-mutuel wagering and breeding law, as added by section three
of this act.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion,  section  or  part  of  this act shall be adjudged by any court of
competent jurisdiction to be invalid, such judgment  shall  not  affect,
impair,  or  invalidate  the remainder thereof, but shall be confined in
its operation to the clause, sentence, paragraph,  subdivision,  section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the  legislature  that  this  act  would  have been enacted even if such
invalid provisions had not been included herein.
  S 3. This act shall take effect immediately  provided,  however,  that
the applicable effective date of Parts A through OO of this act shall be
as specifically set forth in the last section of such Parts.

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